FORWARD-LOOKING STATEMENTS

This Quarterly Report on Form 10-Q, including Management's Discussion and Analysis of Financial Condition and Results of Operations, contains forward-looking statements regarding future events and our future results that are subject to the safe harbor provisions created under the Securities Act of 1933 and the Securities Exchange Act of 1934. 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, including those identified below, as well as under the heading "Risk Factors," and elsewhere herein. 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.

OVERVIEW

We are a leading provider of consulting, engineering, program management, construction and technical services focusing on resource management, infrastructure and the environment. We serve our clients by providing cost-effective and innovative solutions to fundamental needs for water, environmental and energy services. We typically begin at the earliest stage of a project by applying science to problems and developing solutions tailored to our clients' needs and resources. Our solutions may span the entire life cycle of the project and include applied science, research and technology, engineering, design, construction management, construction, operations and maintenance, and information technology.

Since our initial public offering in December 1991, we have increased the size and scope of our business, expanded our service offerings, and diversified our client base and the markets we serve through internal growth and strategic acquisitions. Today we are a full-service company with a global reach in the areas of water programs, environmental management and remediation, energy and supporting infrastructure. We continue to focus on organic and acquisitive growth to expand our geographic reach and increase the breadth and depth of our service offerings to address existing and emerging markets. As of March 2009, we had approximately 10,000 employees worldwide, located primarily in North America.

We derive revenue from fees for professional, technical, project management and construction services. As primarily a service-based company, we are labor-intensive rather than capital-intensive. Our revenue is driven by our ability to attract and retain qualified and productive employees, identify business opportunities, secure new and renew existing client contracts, provide outstanding services to our clients and execute projects successfully.

We provide services to a diverse base of federal and state and local government agencies, as well as commercial and international clients. The following table presents the approximate percentage of our revenue, net of subcontractor costs, by client sector:

                                Three Months Ended         Six Months Ended
                             March 29,     March 30,    March 29,    March 30,
                                2009          2008         2009         2008
Client Sector
Federal government              47.5 %         46.6 %      45.2 %        46.2 %
State and local government      14.8           16.2        15.0          18.2
Commercial                      30.1           36.1        35.1          34.8
International (1)                7.6            1.1         4.7           0.8
                               100.0 %        100.0 %     100.0 %       100.0 %

(1) Includes revenue generated from our international clients. Revenue related to projects performed in foreign countries for U.S. government and U.S. commercial clients was reported as part of our federal government and commercial client sectors, respectively.

In the first quarter of fiscal 2009, we began reporting under four new reportable segments with reclassification of the prior year segment results to conform to the new basis of presentation. Each of the new reportable segments is comprised of similar activities that focus on the services it provides, the markets it serves, the distribution method of its services, its contracting mechanisms, the organization and execution of its projects, the education and discipline of its workforce, and the metrics by which its client projects and staff are measured. In addition, each of our operating groups, which are also our reportable segments, is managed by its own president, who has responsibility for the segment's business units. Each president directly reports to our Chief Executive Officer, who is our CODM. The CODM regularly reviews the four reportable segments, allocates resources to these segments and assesses each segment's performance. The reportable segments are as follows:

Environmental Consulting Services. ECS provides front-end science and consulting services and project management skills in the areas of water resources, groundwater services, watershed management, mining and geotechnical sciences, environmental management, and information technology and modeling consulting.

Technical Support Services. TSS advises clients, studies, designs and implements projects, and conducts research in the areas of remedial and developmental planning, regulatory consulting, climate change and carbon management services, disaster management, systems test and support services, and program management for complex federal government and international development projects.

Engineering and Architecture Services. EAS provides engineering, architecture, interior and exterior design, LEED, and program administration services for projects that include water and wastewater conveyance and treatment, building construction, land development and transportation services.

Remediation and Construction Management. RCM provides a wide array of services, including program management, engineering, procurement and construction, construction management, and operations and maintenance focused on federal construction, environmental remediation including UXO and wetland restoration, and energy projects including wind, nuclear engineering and other alternative energies, and communications development and construction.

The following table represents the approximate percentage of our revenue, net of subcontractor costs, by reportable segment:

                        Three Months Ended         Six Months Ended
                     March 29,     March 30,    March 29,    March 30,
                        2009          2008         2009         2008
Reportable Segment
ECS                     31.9 %         28.8 %      29.3 %        28.2 %
TSS                     23.7           23.2        23.4          23.1
EAS                     18.7           22.8        19.1          22.6
RCM                     25.7           25.2        28.2          26.1
                       100.0 %        100.0 %     100.0 %       100.0 %

Our services are provided under three principal types of contracts:
fixed-price, time-and-materials and cost-plus. The following table presents the approximate percentage of our revenue, net of subcontractor costs, by contract type:

                        Three Months Ended         Six Months Ended
                     March 29,     March 30,    March 29,    March 30,
                        2009          2008         2009         2008
Contract Type
Fixed-price             34.4 %         33.8 %      36.4 %        35.3 %
Time-and-materials      42.4           43.5        41.9          42.6
Cost-plus               23.2           22.7        21.7          22.1
                       100.0 %        100.0 %     100.0 %       100.0 %

Contract revenue and contract costs are recorded primarily using the percentage-of-completion (cost-to-cost) method. Under this method, revenue is recognized in the ratio that contract costs incurred bear to total estimated costs. Revenue and profit on these contracts are subject to revision throughout the duration of the contracts and any required adjustments are made in the period in which the revisions become known. Losses on contracts are recorded in full as they are identified.

In the course of providing our services, we routinely subcontract services and, under certain USAID programs, issue grants. Generally, these subcontractor costs and grants are passed through to our clients and, in accordance with industry practice and GAAP, are included in revenue when it is our responsibility to procure and manage these activities under a contract. The grants are reported as part of our "Subcontractor costs" on our condensed consolidated statements of income. Because subcontractor services can change significantly from project to project and from period to period, changes in revenue may not be indicative of our business trends. Accordingly, we also report revenue less the cost of subcontractor services, and our discussion and analysis of financial condition and results of operations uses revenue, net of subcontractor costs, as a point of reference.

For analytical purposes only, we categorize our revenue into two types:
acquisitive and organic. Acquisitive revenue consists of revenue derived from newly acquired companies that are reported individually as separate operating units during the first 12 months following their respective acquisition dates. Organic revenue consists of our total revenue less any acquisitive revenue.

Our other contract costs include professional compensation and related benefits, together with certain direct and indirect overhead costs such as rents, utilities and travel. Professional compensation represents a large portion of these costs. Our SG&A expenses are comprised primarily of marketing and bid and proposal costs, and our corporate headquarters' costs related to the executive offices, finance, accounting, administration and information technology. In addition, we include the non-contract related portion of stock-based compensation, depreciation of property and equipment, and the full amount of amortization of identifiable intangible assets, in SG&A expenses. Most of these costs are unrelated to a specific client or project and can vary as expenses are incurred to support corporate activities and initiatives.

Our revenue, expenses and operating results may fluctuate significantly from quarter to quarter as a result of numerous factors, including:

†          General economic or political conditions;



†          Unanticipated changes in contract performance that may affect
profitability, particularly with contracts that are fixed-price or have funding
limits;

† Seasonality of the spending cycle of our public sector clients, notably the U.S. government, the spending patterns of our commercial sector clients, and weather conditions;

† Budget constraints experienced by our federal, state and local government clients;

† Acquisitions or integration of acquired companies;

† Divestiture or discontinuance of operating units;

† Employee hiring, utilization and turnover rates;

† The number and significance of client contracts commenced and completed during a quarter;

† Creditworthiness and solvency of clients;

† The ability of our clients to terminate contracts without penalties;

† Delays incurred in connection with a contract;

† The size, scope and payment terms of contracts;

† Contract negotiations on change orders and collections of related accounts receivable;

† The timing of expenses incurred for corporate initiatives;

† Reductions in the prices of services offered by our competitors;

† Threatened or pending litigation;

† The impairment of our goodwill or identifiable intangible assets; and

† Changes in accounting rules.

We experience seasonal trends in our business. Our revenue is typically lower in the first half of the fiscal year, primarily due to the Thanksgiving, Christmas and New Year's holidays. Many of our clients' employees, as well as our own employees, take vacations during these holiday periods. Further, seasonal inclement weather conditions occasionally cause some of our offices to close temporarily or may hamper our project field work. These occurrences result in fewer billable hours worked on projects and, correspondingly, less revenue recognized. Our revenue is typically higher in the second half of the fiscal year, due to favorable weather conditions during spring and summer months that result in higher billable hours. In addition, our revenue is typically higher in the fourth fiscal quarter due to the federal government's fiscal year-end spending.

BUSINESS TREND ANALYSIS

General. Overall, we continued to deliver strong financial results in the second quarter of fiscal 2009, which reflected improvement compared to the same quarter last year. Our performance was driven by our continuing focus on long-term value creation through the execution of our growth strategy. We invested in business development activities to grow our business organically and made strategic acquisitions to enhance our service offerings and further expand our geographical presence. In addition, we continued to implement and enforce project management policies and programs that focus on contract execution and risk management controls. We also focused on cost control and the strategic management of our portfolio of businesses.

Due to the general weakness in the economy, we anticipate that our revenue will grow moderately in fiscal 2009. In addition, we expect that the federal government's stimulus plan contained in the recently enacted American Recovery and Reinvestment Act of 2009 ("ARRA"), which is intended to create jobs, jump-start the economy and loosen the credit markets, will provide us with additional business opportunities. However, because the timing and magnitude of any potential benefit to our business from the ARRA are uncertain, contributions from the ARRA have not been factored into our outlook or guidance. Furthermore, we expect a continuing period of considerable weakness in the economy even if government stimulus efforts succeed. As such, we recognize that the current economic forces that have severely impacted both the domestic and international economies could affect our future work for the U.S. federal government, state and local government, commercial and international businesses, which constituted approximately 52%, 13%, 30% and 5% of our revenue in the second quarter of fiscal 2009, respectively.

Federal Government. In the second quarter of fiscal 2009, our federal government business grew compared to the same quarter last year. This growth was driven primarily by USAID, the U.S. Department of Energy ("DOE"), and domestic U.S. Department of Defense ("DoD") projects. However, the wind-down of our Iraq-related projects for the DoD largely offset this growth. During periods of economic volatility, our federal government business has historically been the most stable and predictable. Due to the DoD's current funding practices on projects in Iraq and the changing geopolitical landscape in Iraq and the United States, our revenue from federal government projects is anticipated to be flat in fiscal 2009. We have also experienced some delays in existing and near-term projects due to the diversion of attention to ARRA project planning efforts at some federal contracting offices.

State and Local Government. In the second quarter of fiscal 2009, our state and local government business was flat compared to the same quarter last year. This flatness resulted primarily from the economic conditions described below, offset by increased activity on water and environmental projects in several states. Many state and local government agencies are continuing to face challenging economic conditions, including budget deficits, declining tax revenues and difficult cost-cutting decisions. Simultaneously, states are facing major long-term infrastructure needs, including the maintenance, repair and upgrading of existing critical infrastructure and the need to build new facilities. The funding risks associated with our state and local government programs are partially mitigated by the regulatory requirements driving some of these programs, such as regulatory-mandated consent decrees, as well as demographic shifts and increasing demand for water and wastewater services. As a result, some programs will generally progress despite budget pressures, and we anticipate that infrastructure projects, especially those focused on the need for demand-driven water resource requirements, will be initiated and funded in fiscal 2009. However, due to the economic weakness across most states, we expect that our state and local government revenue will decline moderately in fiscal 2009. We will remain vigilant in monitoring and evaluating state and local government budgets, and will continue to assess any potential impact on our state and local government business, including the potential uncertainty of our clients' ability to sell their infrastructure bonds and/or fund their ongoing operating requirements.

Commercial. In the second quarter of fiscal 2009, our commercial business experienced strong growth compared to the same quarter last year. This growth was driven by increased demand for our wind and other alternative energy services, as well as water programs. To a lesser extent, our growth was attributable to environmental engineering and development projects. We anticipate that our commercial business will experience strong growth in fiscal 2009 compared to fiscal 2008 due to our backlog for wind and other alternative energy services, as well as water programs. We also anticipate some growth in the transmission requirements for renewable energy sources. However, we may experience lower revenue than anticipated if planned alternative energy projects are delayed or cancelled due to declining energy prices or other reasons. Additionally, due to the current economic conditions, we will most likely experience project delays and reduced workload related to our real estate development and mining and industrial sectors during the remainder of fiscal 2009.

International. In the second quarter of fiscal 2009, we expanded our international presence through the acquisition of Wardrop, which specializes in resource management, energy and infrastructure design for commercial clients throughout Canada and elsewhere worldwide. As a result of this acquisition, we anticipate that our international business will experience significant growth in fiscal 2009 compared to fiscal 2008. However, as with the U.S. commercial business, global economic weakness could result in lower revenue than anticipated if planned mining or energy projects are delayed or cancelled due to declining commodity or energy prices.

ACQUISITIONS

We continuously evaluate the marketplace for strategic acquisition opportunities. Due to our reputation, size, financial resources, geographic presence and range of services, we have numerous opportunities to acquire both privately held companies and subsidiaries of publicly held companies. During our evaluation, we examine the effect an acquisition may have on our long-range business strategy and results of operations. Generally, we proceed with an acquisition if we believe that it would have a positive effect on future operations and could strategically expand our service offerings. As successful integration and implementation are essential to achieving favorable results, no assurance can be given that all acquisitions will provide accretive results. Our strategy is to position ourselves to address existing and emerging markets. We view acquisitions as a key component of our growth strategy, and we

intend to use both cash and securities, as we deem appropriate, to fund acquisitions. We may acquire other businesses that we believe are synergistic and will ultimately increase our revenue and net income, strengthen our ability to achieve our strategic goals, provide critical mass with existing clients and further expand our lines of service. Because we typically acquire service businesses with limited tangible assets, our acquisitions generally result in recognition of goodwill and other identifiable intangible assets.

In the second quarter of fiscal 2009, we acquired Wardrop, a Canadian firm that specializes in resource management, energy and infrastructure design and is included in our ECS segment. This acquisition significantly expands our worldwide presence, adding 13 offices throughout Canada and offices in the United Kingdom and India. During the first half of fiscal 2009, we made other acquisitions in the TSS segment that expand our service offerings to USAID, and in the ECS segment that broaden our energy services to the federal government and commercial clients.

RESULTS OF OPERATIONS

Overall, our results for the second quarter of fiscal 2009 improved compared to the same quarter last year due to our focus on organic growth and the strategic pursuit of acquisitions that enhance our service offerings and expand our geographical presence. Our business continued to experience revenue growth organically and from acquisitions. The organic growth was driven primarily by demand in our commercial business for wind energy and water programs. Our federal government business also grew due primarily to increased activity on BRAC and USAID contracts, largely offset by the wind-down and completion of reconstruction and UXO projects in Iraq.

Consolidated Results



                               Three Months Ended                               Six Months Ended
                   March 29,    March 30,         Change           March 29,    March 30,          Change
                      2009         2008         $         %          2009          2008          $         %
                                                         ($ in thousands)

Revenue            $  522,305   $  461,386   $ 60,919   13.2%     $ 1,160,988   $  931,773   $ 229,215   24.6%
Subcontractor
costs                (190,091 )   (174,035 )  (16,056 ) (9.2)        (498,748 )   (367,261 )  (131,487 ) (35.8)
Revenue, net of
subcontractor
costs                 332,214      287,351     44,863    15.6         662,240      564,512      97,728    17.3
Other contract
costs                (265,893 )   (229,583 )  (36,310 ) (15.8)       (531,578 )   (450,495 )   (81,083 ) (18.0)
Gross profit           66,321       57,768      8,553    14.8         130,662      114,017      16,645    14.6
Selling, general
and
administrative
expenses              (38,491 )    (32,939 )   (5,552 ) (16.9)        (74,216 )    (66,477 )    (7,739 ) (11.6)
Income from
operations             27,830       24,829      3,001    12.1          56,446       47,540       8,906    18.7
Interest expense
- net                    (852 )     (1,456 )      604    41.5          (1,768 )     (2,116 )       348    16.4
Income before
income tax
expense                26,978       23,373      3,605    15.4          54,678       45,424       9,254    20.4
Income tax
expense                (7,764 )     (9,700 )    1,936    20.0         (19,156 )    (18,851 )      (305 ) (1.6)

Net income         $   19,214   $   13,673   $  5,541   40.5%     $    35,522   $   26,573   $   8,949   33.7%

The following table presents the percentage relationship of certain items to revenue, net of subcontractor costs:

                                                   Three Months Ended            Six Months Ended
                                                March 29,      March 30,     March 29,      March 30,
                                                   2009          2008           2009          2008

Revenue, net of subcontractor costs               100.0 %        100.0 %       100.0 %        100.0 %
Other contract costs                              (80.0 )        (79.9 )       (80.3 )        (79.8 )
Gross profit                                       20.0           20.1          19.7           20.2
Selling, general and administrative expenses      (11.6 )        (11.5 )       (11.2 )        (11.8 )
Income from operations                              8.4            8.6           8.5            8.4
Interest expense - net                             (0.3 )         (0.5 )        (0.2 )         (0.4 )
Income before income tax expense                    8.1            8.1           8.3            8.0
Income tax expense                                 (2.3 )         (3.3 )        (2.9 )         (3.3 )
Net income                                          5.8 %          4.8 %         5.4 %          4.7 %

For the three and six months ended March 29, 2009, revenue increased $60.9 million, or 13.2%, and $229.2 million, or 24.6%, compared to the same periods last year, respectively. For both periods, we experienced revenue growth in our commercial business due primarily to demand for our wind energy and water programs, our international business resulting from our Wardrop acquisition, and our federal government business driven primarily by increased activity on BRAC and USAID programs, largely offset by the wind-down and completion of Iraq-related projects. For the six-month period, the growth was partially offset by revenue declines from our state and local government clients due to budget and spending constraints as well as the completion of several large contracts.

For the three and six months ended March 29, 2009, revenue, net of subcontractor costs, increased $44.9 million, or 15.6%, and $97.7 million, or 17.3%, compared to the same periods last year, respectively, for the reasons described above. The growth rates deviated from our revenue growth due to contract mix as subcontractor services can change significantly from project to project and from period to period. More specifically, the level of our subcontracting activities declined for the three-month period due to the wind-down and completion of Iraq-related contracts, which were subcontracted in large part to local Iraqis. . . .