BUFFALO, N.Y., Dec. 13 /PRNewswire-FirstCall/ -- HIGHLIGHTS - Revenues for Ecology and Environment, Inc. (E&E, Amex: EEI) for the first quarter of fiscal year 2008 were $25.7 million, up 6% from the $24.2 million reported in fiscal year 2007. The Company reported net income for the first quarter of fiscal year 2008 of $501,000 or $.12 per share, compared to net income of $721,000 or $.17 per share in the first quarter of the prior year. DETAILS - The Company reported an increase of $1.5 million in revenue during the first quarter of fiscal year 2008 mainly attributable to increases in work performed by EEI's majority owned subsidiaries E&E do Brasil and Walsh Environmental. Revenues from E&E do Brasil were $2.1 million for fiscal year 2008, an increase of $1.0 million or 91% over the prior year due mainly to increased work in the public and private power industries. Revenues from Walsh Environmental were $6.7 million for the first quarter of fiscal year 2008, an increase of 20% from the $5.6 million reported in the first quarter of fiscal year 2007. The increase in Walsh Environmental revenues was mainly attributable to increased activity in the environmental remediation and asbestos markets. The Company adopted the FASB Interpretation No. 48 "Uncertainty in Income Taxes" ("FIN 48") as of August 1, 2007. The Company recorded a decrease to retained earnings of $2,845,845 as a cumulative effect of a change in accounting principle for the adoption of FIN 48. The majority of this cumulative effect is related to the issue of taxes in Kuwait. Under the new guidance for uncertain tax positions, the Company does not believe that the tax exempt order claimed to have been received by its customer, the Public Authority for Assessment of Compensation for Damages Resulting from Iraqi Aggression (PAAC), will meet the more likely than not threshold to obtain benefit, and has therefore accrued a cumulative impact of adoption related to the Kuwait income taxes. The Company has continued its assertion of a contractual obligation for reimbursement from PAAC should any tax liability be agreed to with the Kuwait Ministry of Finance, however the assessment of this reimbursement is not permitted under FIN 48. E&E's management believes that, given the contract's provision providing for reimbursement of any Kuwait income taxes, this liability recorded for estimated income taxes in Kuwait may lead to volatility in the Company's future reported earnings when the Company's actual exposure is settled. Net income for the first quarter of fiscal year 2008 decreased $220,000 compared with the first quarter of the prior year. Gross profits increased as a result of the increased revenues reported at Walsh Environmental and E&E do Brasil and a decrease in corporate wide subcontractor costs. The increased gross profits were offset by higher indirect costs attributable to increased staffing levels, increased business development costs worldwide and a significant increase in bid and proposal costs. The volume of proposals increased 51% while the value of the proposals submitted increased 285% to $77 million during the first quarter of fiscal year 2008. These expenditures should result in increased contract bookings and revenues in future periods. For the three months ended October 27, 2007, E&E accrued additional expenses of approximately $107,000 ($.02 per share) related to the FIN 48 tax accrual. The majority of this expense is related to the Kuwait taxes. This document contains forward-looking statements regarding future events and our future results that are subject to the safe harbors created under the Securities Act of 1933 (the "Securities Act") and the Securities Exchange Act of 1934 (the "Exchange Act"). All statements other than statements of historical facts are statements that could be deemed forward-looking statements. These statements are based on current expectations, estimates, forecasts, and projections about the industries in which we operate and the beliefs and assumptions of our management. Words such as "expects," "anticipates," "targets," "goals," "projects," "intends," "plans," "believes," "seeks," "estimates," "continues," "may," variations of such words and similar expressions are intended to identify such forward-looking statements. In addition, any statements that refer to projections of our future financial performance, our anticipated growth and trends in our businesses, and other characterizations of future events or circumstances are forward-looking statements. Readers are cautioned that these forward-looking statements are only predictions and are subject to risks, uncertainties, and assumptions that are difficult to predict. Therefore, actual results may differ materially and adversely from those expressed in any forward-looking statements. We undertake no obligation to revise or update any forward-looking statements for any reason. Further, information on risks and uncertainties is available in our filings with the Securities and Exchange Commission, which are incorporated by reference. Ecology and Environment, Inc is headquartered in Lancaster, New York, a suburb of Buffalo. Its common stock is listed on the American Stock Exchange under the symbol EEI. E & E can be located on the World Wide Web at http://www.ene.com/. Financial Report - (In thousands, except per share information) Three Months Ending October 27, 2007 October 28, 2006 Revenue $25,707 $24,194 Net Income From Continuing Operations 501 756 Net Loss From Discontinued Operations - (35) Net Income 501 721 Net Income (Loss) Per Common Share: Basic Total Continuing Operations $0.12 $0.18 Discontinued Operations - (0.01) Net Income Per Common Share: Basic $0.12 $0.17 Net Income (Loss) Per Common Share: Diluted Continuing Operations $0.12 $0.18 Discontinued Operations - (0.01) Net Income Per Common Share: Diluted $0.12 $0.17 DATASOURCE: Ecology and Environment, Inc. CONTACT: Ronald Frank, Ecology and Environment, Inc., +1-716-684-8060 Web site: http://www.ene.com/

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