10-K

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-K

þ Annual report pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934

For the fiscal year ended July 31, 2014

o Transition report pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934

For the transition period from __________ to __________

Commission File Number 1-9065

ECOLOGY AND ENVIRONMENT, INC.

(Exact name of registrant as specified in its charter)

New York	16-0971022
(State or other jurisdiction of incorporation or organization)	(IRS Employer Identification Number)
368 Pleasant View Drive, Lancaster, NY	14086
(Address of principal executive offices)	(Zip code)

716-684-8060

(Registrant's telephone number, including area code)

Securities registered pursuant to section 12(b) of the Act:

Title of each class	Name of each exchange on which registered
Class A Common Stock par value $.01 per share	NASDAQ Stock Exchange

Securities registered pursuant to section 12(g) of the Act:

None

(Title of class)

Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act.  Yes o   No þ

Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Act. Yes o  No þ

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months, (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.  Yes þ    No o

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate website, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulations S-T during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).   Yes o    No þ

Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K is not contained herein, and will not be contained, to the best of registrant's knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendments to this Form 10-K.  o

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company (as defined by Rule 12b-2 of the Exchange Act).

Large accelerated filer	o	Accelerated filer	o
Non-accelerated filer  (Do not check if a smaller reporting company)	o	Smaller reporting company	þ

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).   Yes o   No þ

Exhibit Index on Page 69

The aggregate market value of the Class A Common Stock held by non-affiliates as of January 31, 2014 (the last business day of the registrant’s most recently completed second fiscal quarter) was $29,159,296.  This amount is based on the closing price of the registrant’s Class A Common Stock on the National Association of Securities Dealers Automated Quotations (NASDAQ) Stock Market for that date.  Shares of Class A Common Stock held by the executive officers and directors of the registrant are not included in this computation.

As of September 30, 2014, 2,659,174 shares of the registrant's Class A Common Stock, $.01 par value (the "Class A Common Stock") were outstanding, and 1,643,773 shares of the registrant's Class B Common Stock, $.01 par value (the "Class B Common Stock") were outstanding.

DOCUMENTS INCORPORATED BY REFERENCE

Portions of the Registrant's Registration Statement on Form S-1, as amended by Amendment Nos. 1 and 2 (Registration No. 33-11543), portions of the Company's Form 10-K for fiscal years ended July 31, 2002, 2003, 2004, 2010 and 2011, and portions of the Company’s Definitive Proxy Statement (Schedule 14A) dated December 13, 2011 are incorporated by reference in Part IV of this Form 10-K.

Table of Contents

PART I		Page
Item 1.	Business:	3
	Organization and Background	3
	Fiscal Year 2014 Operations Overview	3
	Environmental Consulting Services Offered	4
	Contract Backlog	10
	Business Development	10
	Competition	10
	Management Team and Employees	11
	Corporate Governance / Security Exchange Rules	11
Item 1A.	Risk Factors	12
Item 1B.	Unresolved Staff Comments	15
Item 2.	Properties	15
Item 3.	Legal Proceedings	15
Item 4.	Mine Safety Disclosures	16
PART II
Item 5.	Market for the Registrant's Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities	17
Item 6.	Selected Financial Data	19
Item 7.	Management's Discussion and Analysis of Financial Condition and Results of Operation	19
Item 8.	Financial Statements and Supplementary Data	33
Item 9.	Changes in and Disagreements With Accountants on Accounting and Financial Disclosure	57
Item 9A.	Controls and Procedures	57
Item 9B.	Other Information	58
PART III
Item 10.	Directors and Executive Officers of the Registrant	59
Item 11.	Executive Compensation	62
Item 12.	Security Ownership of Certain Beneficial Owners and Management and Related Stockholders Matters	65
Item 13.	Certain Relationships and Related Transactions	67
Item 14.	Principal Accounting Fees and Services	67
PART IV
Item 15.	Exhibits, Financial Statement Schedules	68

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PART 1

Item 1. Business

References in this Annual Report on Form 10-K (the “Annual Report”) to “EEI” refer to Ecology and Environment, Inc., a New York corporation.  References to “the Company,” “we,” “us,” “our,” or similar terms refer to EEI together with its consolidated subsidiaries.

Organization and Background

EEI was incorporated in February 1970 as a global broad-based environmental consulting firm whose underlying philosophy is to provide professional services worldwide so that sustainable economic and human development may proceed with acceptable impact on the environment.  Together with its subsidiaries, EEI has direct and indirect ownership in eleven active wholly-owned and majority-owned operating subsidiaries in six countries.  Our staff is comprised of individuals representing more than 80 scientific, engineering, health, and social disciplines working together in multidisciplinary teams to provide innovative environmental solutions.  We have completed more than 50,000 projects for a wide variety of clients in more than 120 countries, providing environmental solutions in nearly every ecosystem on the planet.  Our revenues originate from federal, state and local governments, domestic private clients, and private and governmental international clients.

Fiscal Year 2014 Operations Overview

For fiscal year 2014, we incurred a loss before income tax provision of $0.4 million, which was $0.5 million lower than the $0.9 million loss incurred during the previous fiscal year.  Lower revenues and higher software amortization costs were offset by lower contract adjustments recorded as net reductions from revenue, lower direct project-related costs and lower indirect expenses during fiscal year 2014.

Gross revenue less subcontract costs, which is a key performance measurement for us, decreased $12.7 million (11%) for fiscal year 2014.  Lower project work volumes in domestic government, energy, mining and asbestos inspection market sectors were partially offset by growth in mining and energy sectors in our South American operations.  We also recorded lower revenue from certain projects in the Middle East and China for which the Company has not had any project activity during fiscal year 2014.  Refer to Results of Operations in Item 7 of this Annual Report for additional analysis of revenues.

Net contract adjustments recorded as a reduction of revenue decreased $6.1 million (97%) during fiscal year 2014, as compared with the prior fiscal year.  During fiscal year 2013, we recorded $6.3 million of contract adjustments related to projects in China.  During the fourth quarter of fiscal year 2013, management suspended all project activity related to these contracts, and no revenue or contract adjustments were recorded during fiscal year 2014.

Refer to Results of Operations in Item 7 of this Annual Report for additional analysis of contract adjustments.

Abandonment and Conversion of Operating Software

During fiscal years 2012 and 2013, the Company acquired and developed a new operating and financial software system for use by EEI and its U.S. and foreign subsidiaries.  Through July 31, 2013, the Company capitalized $4.1 million of expenditures for the acquisition and development of this system, which was being amortized over a 10 year useful life.  During the quarter ended July 31, 2013, management assessed the utility and effectiveness of various modules included in the software package, and determined that certain software modules do not meet the needs of users that rely on the system and would not provide any future service potential.  As a result, the Company recorded a software impairment charge of $0.8 million during the three months ended July 31, 2013, which was included in administrative and indirect operating expenses on the consolidated statements of operations.

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In November 2013, after an extensive assessment process, management decided to abandon the Company’s existing operating and financial software system and migrate to new system software.  The Company acquired and developed the new software during fiscal year 2014, and began utilizing the new software effective August 1, 2014 for the Company’s U.S. operations.  The process to evaluate, select and develop new operating and financial software systems for the Company’s significant foreign operations is expected to be completed in January 2015.  The total capitalized cost of the new software system, when fully developed, is expected to approximate $1.7 million for the Company’s U.S. operations and $0.2 million for its foreign operations.  The Company recorded software development costs of $1.4 million in property, plant and equipment during the fiscal year ended July 31, 2014.

The Company continued to utilize the previous software system through July 31, 2014, at which time the previous system was abandoned.  As a result, amortization of software development costs capitalized for the previous system was accelerated so that the system was completely amortized by July 31, 2014.  Total software amortization expense was $2.6 million, $0.4 million, and $0.2 million for the fiscal years ended July 31, 2014, 2013 and 2012, respectively.

Operating Expense Management

Direct project-related expenses decreased $4.6 million (9%) while total indirect expenses decreased $4.1 million (7%) during fiscal year 2014, due to lower project work volumes and to managed cost reductions.  Management at EEI and its U.S. subsidiaries critically reviewed technical and indirect staffing levels, other expenses necessary to support current project work levels and key administrative processes, particularly in our domestic subsidiaries and operations.  As a result of this review, the number of full time employees in various technical and indirect departments at EEI and its U.S. subsidiaries decreased by a combined 16% and 9% during fiscal years 2014 and 2013, respectively.  Utilization of contracted services was also reviewed and reduced at EEI.  Management continues to critically evaluate its organizational and cost structure to identify ways to operate more efficiently and cost effectively.

Refer to Results of Operations in Item 7 of this Annual Report for additional analysis of operating expenses.

Environmental Consulting Services Offered

We render consulting services to commercial and government clients in a variety of service sectors, which include the following:

Government START Contracts

We provide support services to the United States Environmental Protection Agency (the “EPA”) for response and site assessment activities related to the release and threat of release of oil, petroleum products, hazardous substances, weapons of mass destruction or pollutants or contaminants that pose an actual or potential threat to human health or welfare, or to the environment.

In December 2005, the United States Environmental Protection Agency (the “EPA”) awarded us a contract known as START III to provide continuing support to EPA Region 10, which covers the four state territory of Alaska, Idaho, Washington and Oregon.  This was a combination time and materials/cost plus contract with a base term of three years plus options for an additional four years which were exercised through fiscal year 2013.  In July 2013, we were awarded a renewal of this contract by the EPA for a base term of three years and two two-year option periods, for a total potential contract term of seven years.  We recognized $5.6 million, $5.9 million and $5.5 million of revenue under this contract during fiscal years 2014, 2013 and 2012, respectively.

In May 2008, the EPA awarded us a START contract to provide technical support to EPA Region 9 which covers the four state area of California, Nevada, Arizona, Hawaii, and U.S. territories in the Pacific.  This was a combination time and materials/cost plus contract with a two year base period and two 18-month option periods that were exercised through 2013.  This contract was also extended for an additional six month period beyond the original contract term that was to expire on November 15, 2013.  In September 2013, as a result of a competitive bid and proposal process, we were notified by the EPA that we were not selected for renewal of the START contract for EPA Region 9.  In October 2013, we filed a protest with the U.S. Government Accountability Office (the “GAO”) requesting reconsideration of the award process and conclusion.  In November 2013, the EPA agreed to reevaluate the proposals for the EPA Region 9 START contract, and to extend our current contract pending completion of this review process.  In April 2014, the EPA reaffirmed its original decision not to award the contract to us.  Our current EPA Region 9 START contract will terminate in November 2014.  We recognized $4.8 million, $6.3 million and $6.3 million of revenue under this contract during fiscal years 2014, 2013 and 2012, respectively.

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These contracts contain termination provisions under which the EPA may, without penalty, terminate the contract during the contract term upon written notice to us.  In the event of termination, we would be paid only termination costs in accordance with the contract.  We have never had a contract terminated by the EPA during the contract term.

Government Task Order Contracts

We have numerous task order contracts with state and federal governmental agencies which contain indefinite order quantities and/or option periods ranging from one to seven years.  Services under these contracts include oversight of pollution remediation, numerous projects with the U.S. Navy and hazardous waste remediation activities for various state entities.  We also prepare environmental impact documents for federal land management agencies such as the Bureau of Land Management.

Energy

New technology and increasing demand for less carbon intensive and more sustainable use of resources presents complex challenges to energy developers and providers.  To keep pace with growing energy needs worldwide, we provide services to all phases of energy development by conducting critical feature/fatal flaw analyses, social and health impact assessments, feasibility and siting studies, field surveys, permitting, construction inspection and compliance monitoring.  As public participation has become increasingly important, EEI has developed specialized tools and techniques for successful stakeholder engagement.

· Electric Transmission

Our comprehensive approach to transmission project siting and permitting has developed from experience on over 15,000 miles of transmission line, including underwater and underground DC lines, urban rebuilds, and renewable generation interconnections.  We prepare feasibility studies, evaluate alternative routes, analyze environmental impacts, and acquire needed certificates, approvals, and permits for electric transmission facilities worldwide to bring renewable energy from its source to regional population centers as well as to upgrade aging infrastructure.  Recognizing the increasing need for proactive public involvement, we work closely with our clients to effectively engage stakeholders and identify environmental constraints, community concerns, and permitting requirements early.

· Pipelines

To date, we have worked on more than 200 projects in the pipeline industry involving more than 50,000 miles of pipeline systems.  Our extensive experience includes route selection, evaluation of alternatives, field surveys, regulatory compliance and permit support, and preparation of environmental monitoring and restoration plans, including development of quality assurance specifications.

· Offshore Energy

Global demand for renewable energy has stimulated the development of new technologies for generating energy from ocean currents, tides, waves, and thermal resources.  The rising demand for fossil fuels, particularly natural gas, has expanded the exploration and production of offshore oil and gas reserves and global trade of liquefied natural gas (“LNG”).

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We have extensive experience conducting siting, environmental analyses, and permitting for offshore energy projects worldwide, including wind farms, wave energy converters, LNG terminals, deep water ports, floating production storage and offloading facilities (“FPSOs”), and subsea pipeline and electrical transmission cables.  We guide clients in developing successful permitting strategies and provide comprehensive environmental and regulatory support for offshore energy projects.

We prepare third-party Environmental Impact Statements (“EISs”) and Environmental Impact Assessments (“EIAs”), Deepwater Port Applications, and Federal Energy Regulation Commission (“FERC”) Environmental Reports (“ERs”); perform siting/feasibility studies, plankton surveys, marine mammal acoustic impact modeling, dredging impact studies, coastal zone consistency evaluations, risk assessments, and marine vessel traffic studies, and develop and implement comprehensive plans for stakeholder engagement/outreach.

· Wind Energy

We have extensive experience providing strategic environmental consulting services to wind energy developers and are a consulting member of the American Wind Energy Association (“AWEA”).  Our nationwide team has collectively worked on more than 420 wind energy projects in 37 states, helping clients successfully develop wind projects capable of producing more than 6,000 MW of environmentally safe, renewable electricity.  Our direct experience with wind energy development, from initial siting studies through construction and mitigation monitoring of completed wind energy projects, allows us to anticipate potential project delays and resolve issues to keep client projects on schedule.

We provide strategic consulting in all facets of environmental permitting and compliance, environmental evaluation, threatened and endangered species, avian and bat surveys, and land use studies.  Our civil engineering support services include design of structure foundations and roadways and coordination for gathering line placement, substation, and transmission line requirements.  In addition, we recognize that public outreach efforts are an important component of any wind power project and, therefore, maintain in-house public relations experts and graphic artists, who work as an integrated team to design outreach programs geared toward landowners and officials.

· Solar Energy

We have assisted solar developers to permit and build projects powering more than 4,000 MWs of clean, renewable energy in 15 states.  We support all phases of solar energy development, including critical issues analyses, feasibility and siting studies, permitting and due diligence audits, environmental impact assessments, project permitting and construction monitoring and operational compliance.

· Geothermal Energy

Geothermal energy as a source of base load power is widely recognized as a clean and safe alternative to nonrenewable energy sources.  However, construction of a geothermal power plant comes with the potential for adverse effects on land stability within the region surrounding the project, as well as other socioeconomic and waste disposal concerns.  We offer planning and consulting services to address environmental and socioeconomic impacts associated with geothermal energy development.

· Nuclear Energy

With the focus on reduced carbon emissions, there is a renewed interest in nuclear power worldwide.  The U. S. Nuclear Regulatory Commission (NRC) has received over 20 early site permits or combined license applications to build nuclear power plants and over half of the operating plants have applied for license extensions.  We assist our clients through the environmental hurdles of the licensing process by performing siting studies and environmental investigations and preparing environmental reports.

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Natural Resource Management/Restoration

Our approach to restoration design focuses on mimicking natural systems in form, function, and process—developing practical strategies for sustainable design and uplift.  We conceive and design environmental restoration projects that restore affected habitat through the efficient and innovative integration of biological and engineering solutions.  We assist our clients in meeting their goals through the application of restoration measures to mine reclamation, contaminated sediment remediation, land development strategies, recreational planning, comprehensive watershed planning, and threatened and endangered species protection.  Current work also includes helping clients such as the US Army Corps of Engineers address invasive species such as hydrilla and algal blooms in the Great Lakes watershed.  Through our work with The Nature Conservancy, we are also helping to restore areas on the Gulf Coast.

Sustainability, Resiliency, and Climate Adaptation

E & E planning teams are working with communities around the world with development and implementation of sustainable approaches for projects as varied as neighborhood-scale urban redevelopment, large-scale green city planning and design, and regional sustainability plans.   We help organizations and government agencies to plan for, respond to, and recover from extreme disruptive events that can result in a wide range of cascading emergencies, with an emphasis on building more resilient communities.  For example, we led the preparation of five community reconstruction zone plans developed as part of the New York Rising Community Reconstruction Program to help communities recently affected by extreme weather events build more resilient communities to better withstand storms of the future.

Planning

· Environmental Planning and Assessment

Environmental impact assessment is at the core of our business.  Since EEI’s inception, this work has included numerous major EIS and ER projects, initial studies and EAs, and has mitigated negative declarations in accordance with the National Environmental Policy Act (“NEPA”) and various state requirements.  We also prepare similar documents under state laws, such as the California Environmental Quality Act.

· Military Master Planning

In response to the advances seen in military master planning under taken by the Department of Defense (“DOD”) over the past few years, we have developed a team of experienced professionals in the areas of real property master planning, military programming, geospatial data and systems support, database management, and water resources planning.  Through our experience with modern military facility planning, we develop technologically advanced military master planning tools by leveraging the latest in Geographic Information System (“GIS”) and information technology.  We assist DOD installations in reducing their environmental footprint while sustaining mission requirements and maintaining positive relationships with the surrounding communities.

Emergency Planning and Management

Events around the world involving terrorism, bioterrorism, and natural disasters continue to raise concerns for public health and safety as well as environmental protection.  We provide logistical support, emergency response/management services, and comprehensive planning to businesses and state, county, and municipal governments in all phases of incident management, including preparedness, mitigation, response, and recovery.  In providing these multifaceted services, we determine local vulnerabilities and hazards and the in-place resources/assets to address those hazards in the context of applicable state and federal laws and regulations.

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Hazardous and Radioactive Material Services

We have conducted hazardous waste site evaluations throughout the United States, providing site investigation, engineering design, and operation and maintenance for a wide range of industrial and governmental clients.  We inventory and collect sample materials on site and then evaluate waste management practices, potential off-site impacts, and liability concerns.  We then design, implement, and monitor associated cleanup programs. Our field investigation services primarily involve the development of work plans, health and safety plans, and quality assurance/quality control plans to govern and conduct field investigations to define the nature and extent of contaminants at a site. After field investigation services have been completed and the necessary approvals obtained, our engineering specialists develop plans and specifications for remedial cleanup activities.  This work includes development of methods and standard operating procedures to assess contamination problems; and to identify, develop, and design appropriate pollution-control schemes.  Alternative cleanup strategies are evaluated and conceptual engineering approaches are formulated.  We also provide supervision of actual cleanup or remedial construction work performed by other contractors.

International

Since EEI’s incorporation in 1970, we have completed more than 50,000 environmental assignments in more than 120 countries worldwide.  Many of the services provided for our foreign clients are similar to the services we provide in the U.S. and help our clients to meet local expectations and regulatory requirements.  With an understanding of cultural, political, economic, operational, and legal factors that influence the solution to a given environmental problem, we aid international governments and lending institutions in their efforts to advance institutional systems for environmental management.  We have completed assignments involving environmental assessment; management and financial planning; institutional strengthening and standards development; water supply and development; wastewater treatment; and solid waste project construction supervision.  More recently, issues of public health, sustainability, and social and economic development have been added to that portfolio.

As modernizing economies outside of the U.S., Western Europe and Japan continue to develop, demand for global environmental services has also grown.  Most countries now have environmental laws to protect and regulate development of natural resources.  Many countries are also investing in infrastructure-related projects like bridges, roads, mines, water supply, power generation, communications networks, and ports, all of which present opportunities for us to provide environmental services.  Frequent and dramatic natural disasters in recent years have spurred many governments around the world to address disaster response and prevention strategies and the impacts of climate change, such as sea-level rise and storm intensity and frequency. Through our U.S. and South American operations, we believe that we are well-positioned to benefit from these growth opportunities.

Regulatory Compliance

The United States Congress and most state legislatures have enacted a series of laws to prevent and correct environmental problems.  These laws and their implementing regulations help to create the demand for the multidisciplinary consulting services offered by us.  Some of the principal federal legislation and corresponding regulatory programs which affect our business are described below:

· The National Environmental Policy Act (“NEPA”)

NEPA generally requires that a detailed environmental impact statement (“EIS”) be prepared for every major federal action significantly affecting the quality of the human environment.  With limited exceptions, all federal agencies are subject to NEPA. Most states have EIS requirements similar to NEPA.  We frequently engage in NEPA related projects (or state equivalent) for both public and private clients.

· The Comprehensive Environmental Response, Compensation, And Liability Act Of 1980, As Amended (“CERCLA,” “Superfund” or the “Superfund Act”)

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CERCLA is a remedial statute which generally authorizes the federal government to order responsible parties to study and clean up inactive hazardous substance disposal sites, or, to itself undertake and fund such activities.  This legislation has four basic provisions: (i) creation of an information gathering and analysis program; (ii) grant of federal authority to respond to emergencies associated with contamination by hazardous substances, and to clean up sites contaminated with hazardous substances; (iii) imposition of joint, several, and strict liability on persons connected with the treatment or disposal of hazardous substances which results in a release or threatened release into the environment; and (iv) creation of a federally managed trust fund to pay for the clean-up and restoration of sites contaminated with hazardous substances when voluntary clean-up by responsible parties cannot be accomplished.  EEI provides a full range of assessment and remediation services that alleviate contamination related to hazardous materials, including radioactive materials.

· The Resource Conservation and Recovery Act Of 1976 (“RCRA”)

RCRA generally provides “cradle to grave” coverage of hazardous wastes.  It seeks to achieve this goal by imposing performance, testing and record keeping requirements on persons who generate, transport, treat, store, or dispose of hazardous wastes.  We assist hazardous waste generators in the storage, transportation and disposal of wastes; prepare permit applications and engineering designs for treatment, storage and disposal facilities; design and oversee underground storage tank installations and removals; perform corrective measure studies and remedial oversight at RCRA regulated facilities; and perform RCRA compliance audits.

· Clean Air Act (“CAA”)

The CAA is the comprehensive federal law that regulates air emissions from stationary and mobile sources. Among other things, this law authorizes EPA to establish National Ambient Air Quality Standards (“NAAQS”) to protect public health and public welfare and to regulate emissions of hazardous air pollutants.One of the goals of the CAA was to set and achieve NAAQS in every state by 1975 in order to address the public health and welfare risks posed by certain widespread air pollutants.  The CAA was amended in 1977 and 1990 primarily to set new goals (dates) for achieving attainment of NAAQS since many areas of the country had failed to meet the deadlines.The setting of these pollutant standards was coupled with directing the states to develop state implementation plans (“SIPs”) applicable to appropriate industrial sources in the state, in order to achieve these standards.

We help clients to estimate emissions, develop air permitting strategies, and prepare permit applications.  We also prepare the technical studies and engineering documents (e.g., emissions and greenhouse gas estimates, air modeling, risk analysis, design drawings) necessary to support permit applications.

· Safe Drinking Water Act of 1996 (“SDWA”) And Clean Water Act (“CWA”)

The SDWA and regulatory changes under the CWA work together in order to ensure that the public is provided with safe drinking and recreational waters by utilizing watershed approaches and applying similar principles (Total Maximum Daily Load, National Pollution Discharge Elimination System, Source Water Assessment Program, Storm Water Program).  Thus, they supplement and help one another more effectively reach each other's goals.  We assist public and private clients in developing and establishing pollution prevention programs, assisting clients in monitoring ground, waste and storm water systems, and helping clients with water permitting and compliance issues.

· Migratory Bird Treaty Act and Golden Eagle Protection Act

The protective provisions of these regulations present challenges to construction projects.  We prepare plans that consolidate all avian issues in a single document and streamline and activities to address them, which facilitates agency review and approval, helps construction contractors meet their obligations and enhances transparency.

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· Other

Our operations are also influenced by other federal, state, and international laws and regulations protecting the environment.  In the U.S. market, such regulatory rules and provisions include the Atomic Energy Act (“AEA”) and the Oil Pollution Control Act (“OPA”).  Examples of services provided by us as a result of these laws include the development of spill prevention control and emergency prevention procedures, as well as countermeasure plans for various facilities potentially affecting human health and the environment. Related laws such as the Occupational Safety and Health Act ("OSHA"), which regulates exposures of employees to toxic chemicals and other physical agents in the workplace, also have a significant impact on our operations. An example is the process safety regulation issued by OSHA which requires safety and hazard analysis and accidental release contingency planning activity to be performed if certain chemicals are used in the work place.

Contract Backlog

At any point in time, we have a backlog of uncompleted projects and outstanding indefinite task order contracts that are expected to provide future revenue over a period of 1 to 7 years.  These projects include a substantial amount of work to be performed under contracts which contain termination provisions that may be exercised without penalty at any time by our clients upon written notice to us.  The likelihood of obtaining the full value under these contracts cannot be determined at this time.

The backlog of uncompleted projects and maximum potential revenues from indefinite task order contracts are summarized in the following table.

	Amount as of July 31,
	2014		2013
	(in millions)
Total firm backlog of uncompleted contracts	$	66.7	$	61.8
Anticipated completion of firm backlog in next twelve months		52.4		51.2
Maximum potential revenue from task order contracts		192.2		123.1

Business Development

Our business development activities take place everywhere we work.  Although we have a dedicated business development group that includes sales, marketing and communications professionals, the technical staff is also active in identifying opportunities and developing business relationships.  We meet with existing and potential clients to understand their needs and anticipate new markets.  We participate in professional organizations and often speak at seminars and conferences to enhance our professional knowledge and relationships.  We also attend and participate in trade shows and professional seminars relating to our business.  We monitor numerous environmental, business and other publications to identify potential clients and their needs.

We closely track government contract procurements, respond to requests for proposals, bids, and qualifications, and develop proposals to win new or repeat business.  We also monitor government regulations, environmental and social trends, and other events that may affect our clients and thereby generate new business.

Competition

We are subject to competition with respect to each of the services that we provide.  No entity currently dominates the environmental services industry and no one organization has the capability to serve the entire market.  Some of our competitors are larger than us, have greater financial and other resources than we do, or may be more specialized in certain disciplines or locations.  We compete primarily on the basis of our reputation, quality of service, expertise, responsiveness and price.

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Management Team and Employees

Our management and staff is comprised of individuals with advanced degrees representing scientific and engineering disciplines working together in multidisciplinary teams to provide innovative solutions.  The members of our executive management team have extensive experience in the environmental consulting industry.  The professional backgrounds of our executive management team are described in Item 10 of this Annual Report.

As of July 31, 2014, including all of our subsidiaries, we had 1,013 employees (855 full-time) in all of our offices, which included 618 employees (479 full-time) in domestic offices and 395 employees (376 full-time) in foreign offices.  The majority of our employees hold bachelor's and/or advanced degrees in such areas as chemical, civil, mechanical, sanitary, soil, structural and transportation engineering, biology, geology, hydrogeology, ecology, urban and regional planning and oceanography.  The employees at our majority-owned subsidiary in Brazil (152 full time employees as of July 31, 2014) are represented by a labor organization.  We believe that our relationship with the labor organization in Brazil and with all of our employees is good.

Corporate Governance / Security Exchange Rules

Our shares of Class A Common Stock are listed on the National Association of Securities Dealers Automated Quotations (NASDAQ) Stock Market.  NASDAQ requires all of its listing companies to be in compliance with NASDAQ’s standards of corporate governance set forth in the NASDAQ Marketplace Rules (NASDAQ CG Rules).  We have certified to the NASDAQ that we are in compliance with the NASDAQ CG Rules except for those NASDAQ CG Rules relating to the Director Nominations Process, the Compensation of Officers and Board Compensation.   For these items, we relied upon the “controlled company” exception found in the NASDAQ CG Rules.  A “controlled company” is a listing company where more than 50 percent of the voting power of the listing company is in the control of a group.  As of July 31, 2014, a group that holds more than 50 percent of the voting power of our Class A Common Stock, consisting of Messrs. Frank B. Silvestro, Ronald L. Frank, Gerald A. Strobel, Gerard A. Gallagher and Harvey J. Gross, the Estate of Mr. Gerhard Neumaier and members of their families, does exist.  Therefore, we are a “controlled company” for purposes of the NASDAQ CG Rules.

The Board of Directors will consider nominees for Directors recommended by shareholders.  Shareholders wishing to recommend a director candidate for consideration by the Board of Directors can do so by writing to the Secretary of Ecology and Environment, Inc., 368 Pleasant View Drive, Lancaster, New York, 14086; giving the candidate’s name, biographical data and qualifications.  Any such notice of recommendation should be accompanied by a current resume of the individual and a written statement from the individual of his or her consent to be named as a candidate and, if nominated and elected, to serve as a director.  Nominations must be received at least 60 days prior to the annual shareholders meeting.

In evaluating candidates, the Board considers the entirety of each candidate’s credentials to ensure that the Board consists of individuals who collectively provide meaningful counsel to management.  The Board does not maintain a specific diversity policy.  It believes that diversity is an expansive attribute that includes differing points of view, professional experience and expertise, and education, as well as more traditional diversity concepts.  The Board considers the candidates’ character, integrity, experience, understanding of strategy and policy-setting, and reputation for working well with others.  If candidates are recommended by our shareholders, then such candidates will be evaluated using the same criteria.  With respect to nomination of continuing directors for re-election, the individual’s past contributions to the Board are also considered.

The Company has adopted a code of ethics that applies to its principal executive officer, principal financial officer, principal accounting officer and controller, as well as all other employees and the directors of the Company.  The code of ethics, which the Company calls its Code of Business Conduct and Ethics, was filed as an exhibit to the Company’s annual report on Form 10-K for the fiscal year ended July 31, 2004 and is posted on the Company's website at www.ene.com.  If the Company makes any substantive amendments to, or grants a waiver (including an implicit waiver) from, a provision of its code of ethics that applies to its principal executive officer, principal financial officer, principal accounting officer or controller, and that relates to any element of the code of ethics definition enumerated in Item 406(b) of Regulation S-K, the Company will disclose the nature of such amendment or waiver in a current report on Form 8-K.

11

Item 1A. Risk Factors

In addition to other information referenced in this report, we are subject to a number of specific risks, which are outlined below. If any of these events occur, our business, financial condition, profitability and the market price of our Class A Common Stock could be materially affected.

Changes in environmental laws and regulations could reduce demand for our services.

Most of our business is driven by laws and regulations related to the protection of the environment. Any relaxation or repeal of these laws, or changes in governmental policies regarding the funding or enforcement of these laws, would have an adverse impact on our revenues.  Also, reduced spending by governments may increase competition within our industry which may directly affect future revenue and profits.

As a government contractor, we are subject to a number of procurement laws and regulations, as well as government agency audits.  Any violation of these laws could result in economic harm to our operations.

We must comply with federal, state, and foreign laws relating to the procurement and administration of government contracts.  Such laws include the Federal Acquisition Regulation (FAR), the Truth in Negotiations Act (TINA), the Cost Accounting Standards (CAS), and the Service Contract Act (SCA). These laws impact how we do business with government clients and can increase the cost of doing business. Government agencies such as EPA and the Defense Contract Audit Agency (DCAA), as well as numerous state agencies routinely audit government contractors and their performance under specific contracts to determine if a contractor’s cost structure is compliant with applicable laws and regulations.  They may question the incurrence of certain costs based on the FAR and CAS and disallow those costs on their contracts.  These audits may occur several years after payment for services has been received.  Historically, we have been able to successfully defend against the disallowance of any significant costs.  However, there is no assurance that future audits will not result in the material disallowances for costs incurred in the future. Such material disallowances could negatively affect revenue, profits and cash flow.

We depend on municipal, state and federal government work for a significant portion of our revenues.  Inability to win or renew government contracts during procurement cycles could significantly reduce our revenue and profits.

Revenues from all municipal, state and federal government contracts represented 24%, 29% and 27% of total revenues for fiscal years 2014, 2013 and 2012, respectively.  Inability to win or renew government contracts could adversely affect our operations and significantly reduce our revenue and profits.

Government contracts are typically awarded through a highly regulated procurement process.  Some government contracts are awarded to multiple competitors, causing increased competition and downward pricing pressure.  If we cannot reduce or control costs associated with these contracts, we may not be able to bid competitively, or unexpected losses on these contracts may occur.

Current economic uncertainty could affect our public and private sector work.

Poor global and domestic economic conditions could impact the availability of funding for certain private environmental projects.  In addition, governmental budget cuts or delays in governmental spending could defer or halt work on public environmental programs.  These economic uncertainties could adversely affect our operations and significantly reduce our profits.

International operations are subject to a number of risks.

Revenues from international operations represented 36%, 32%, and 37% of total revenues for fiscal years 2014, 2013, and 2012, respectively.  International operations are subject to a number of risks, including:

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· greater counterparty risk, leading to longer collection cycles and potentially uncollectible accounts;

· currency fluctuations;

· logistical and communication challenges;

· exposure to liability and sanctions under the Foreign Corrupt Practices Act;

· exposure to liability and sanctions under laws and regulations established by foreign jurisdictions in which we conduct business;

· lack of developed legal systems to enforce our contractual rights;

· general economic and political conditions in foreign markets;

· civil disturbance, unrest or violence; and

· difficulties in staffing international operations with appropriately credentialed and trained personnel.

Failure to manage these risks effectively may result in harm to our overall operations and significantly reduce our future revenues, earnings and available liquidity.

We must be able to accurately estimate and control contract costs to prevent losses on contracts.

We have three basic types of contracts with our clients: time and materials, fixed price and cost-plus.  The percentage of our revenues associated with these contract types are summarized in the following table.

	Twelve Months Ended July 31,
	2014			2013			2012
Time and materials		54	%		48	%		49	%
Fixed price		39			43			44
Cost-plus		7			9			7
Total revenue		100	%		100	%		100	%

We must control direct contract costs in order to maintain positive profit margins.  Under cost-plus contracts, which may be subject to various types of ceilings, we are reimbursed for allowable costs plus a negotiated profit.  If costs exceed ceilings or are otherwise deemed unallowable under provisions of the contract or regulations, we may not be reimbursed for all of our costs.  Under fixed price contracts, we are paid a fixed price regardless of the actual costs incurred. Consequently, a profit is realized on fixed price contracts only if we are able to control costs and avoid overruns.  Under time and material contracts, we are paid for our direct labor hours at fixed rates plus reimbursement of allocable other direct costs.  Profitability is dependent on a consistently high utilization of staff and our ability to control our overhead costs.

The use of annual percentage of completion method of accounting could result in a reduction or reversal of previously recorded revenues and profits.

A portion of our revenues and profit margins are measured and recognized using the percentage of completion method of accounting which is discussed further in Note 3 of the Consolidated Financial Statements. The use of this method results in the recognition of revenues and profit margins ratably over the life of a contract. The effect of revisions to revenues and estimated costs is recorded when the amounts are known or can be reasonably estimated. Such revisions could occur in subsequent periods and their effects could be material. Although we have historically been able to make reasonably accurate estimates of work progress, the uncertainties inherent in the estimating process make it possible for actual costs to vary from estimates in a material amount, including reductions or reversals of previously recorded revenues and profits.

Subcontractor performance and pricing could expose us to loss of reputation and additional financial or performance obligations that could result in reduced profits or losses.

We often hire subcontractors for our projects.  The success of these projects depends, in varying degrees, on the satisfactory performance of our subcontractors and our ability to successfully manage subcontractor costs and pass them through to our customers.  If our subcontractors do not meet their obligations or we are unable to manage or pass through costs, we may be unable to profitably perform and deliver our contracted services.  Under these circumstances, we may be required to make additional investments and expend additional resources to ensure the adequate performance and delivery of the contracted services.  In addition, the inability of our subcontractors to adequately perform or our inability to manage subcontractor costs on certain projects could hurt our competitive reputation and ability to obtain future projects.

13

Actual results could differ from the estimates and assumptions used to prepare financial statements, which may reduce or eliminate profits.

To prepare financial statements in conformity with accounting principles generally accepted in the United States of America, management is required to make estimates and assumptions as of the date of the financial statements, which affect the reported values of assets and liabilities and revenues and expenses and disclosures of contingent assets and liabilities.  Areas requiring significant estimates by management include:

· the application of the percentage of completion method of accounting and revenue recognition on contracts

· provisions for uncollectible receivables and contract adjustments

· provisions for income taxes and related valuation reserves

· accruals for estimated liabilities, including litigation reserves

· accruals for uncertain tax positions

· evaluation of the impairment of goodwill and other long-lived assets

Failure to attract and retain key employees could impair our ability to provide quality service to clients.

We provide professional and technical services that depend on our ability to attract, retain and train our professional employees to conduct our business and perform our obligations to ensure success.  It may be difficult to attract and retain qualified expertise within timeframes demanded by clients.  Senior managements’ experience is essential to the success of any company and our ability to retain such talent is crucial to our profitability.  Further, the loss of key management personnel could adversely affect our ability to develop and pursue our business strategies.

Failure to complete a project timely or failure to meet a required performance standard on a project could cause us to incur a loss which may affect overall profitability.

Completion dates and performance standards may be important requirements to a client on a given project.  If we are unable to complete a project within specified deadlines or fail to meet performance criteria set forth by a client, we may incur additional costs or the client may hold us responsible for costs they incur to rectify the problem.  The uncertainty involved in the timing of certain projects could also negatively affect our staff utilization, causing a drop in efficiency and reduced profits.

Failure to manage our information technology environment effectively could be detrimental to our operations.

We rely on information technology for all aspects of our operations, including but not limited to our project proposal, contract management, project management, labor management, client billing, vendor payment, tax management, liquidity management and financial reporting processes.  During fiscal year 2014, we substantially completed the conversion of our operating software for our U.S. operations.  During fiscal year 2015, we intend to complete operating software conversions for certain of our South American subsidiaries.  Failure to adequately manage the worldwide implementation and utilization of system software could negatively impact our ability to manage our operations and our ability to accurately report our financial results on a timely basis.

Failure to comply with tax accounting and reporting requirements in all of our markets could have a detrimental impact on our business decision-making and on our financial results.

We operate in numerous tax jurisdictions within the United States and in foreign countries.  Accurate tax accounting and reporting for all jurisdictions is essential for us to continue to operate in our markets.  In addition, understanding the tax impacts of various financial transactions is also essential for us to make sound and informed business decisions.  Therefore, failure to identify, understand, interpret and comply with tax requirements could result in uninformed business decisions and financial reporting errors.

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Our services could expose us to significant liability not covered by insurance.

The services we provide expose us to significant risks of professional and other liabilities.  Our contracts generally require us to maintain certain insurance coverages and to indemnify our clients for claims, damages or losses for personal injury or property damage relating to performance of our duties unless such injury or damage is the result of the client's negligence or willful acts.  Currently, we are able to obtain insurance coverage to meet the requirements of our contracts, subject to certain pollution exclusions.  Additionally, we have an errors and omissions insurance policy that covers our environmental consulting services, including legal liability for pollution conditions resulting therefrom.  Where possible, we require that our clients cross-indemnify us for asserted claims.  There can be no assurance, however, that any such cross-indemnification agreements, together with our general liability insurance and errors and omissions coverage, will be sufficient to protect us against any asserted claim.

We are unable to predict the total amount of all potential liabilities that could arise under contracts with our clients.  While we believe that we hold an appropriate level of coverage, we acknowledge that insurance may be inadequate or unavailable in the future to protect us for such liabilities and risks.

Management's voting rights could block or discourage a change in control.

Our current senior officers owned more than 40%  of the outstanding shares of Class B Common Stock as of July 31, 2014, which has one vote per share while the Class A Common Stock has one-tenth of a vote per share.  Therefore, current management could block a change in control, which could adversely affect the value of the Class A Common Stock.

We are subject to heightened risk of natural disasters in certain of our markets.  Catastrophic natural disasters in these areas could have a detrimental impact on our operations.

We have offices and projects in coastal regions of the United States and foreign countries where there is heightened risk of natural disasters such as earthquakes and hurricanes.  In addition, we have offices and projects in inland areas of the United States where there is heightened risk of flooding and tornados.  If they occur, catastrophic natural disasters could have a significant detrimental impact on our operations that cannot be anticipated or planned for.  Therefore, if they occur, catastrophic natural disasters could result in reduced revenues, higher expenses, loss of Company assets and loss of key staff and other critical resources for extended periods of time.

Item 1B. Unresolved Staff Comments

None to report.

Item 2. Properties

We own our corporate headquarters (60,000 square feet), which is located in Lancaster, New York, a suburb of Buffalo.  We also own additional property in Lancaster, New York that includes a warehouse and office facility (35,000 square feet).  We also lease forty-one (41) regional offices in the United States and eleven (11) offices in foreign locations.

Item 3. Legal Proceedings

From time to time, the Company is a named defendant in legal actions arising out of the normal course of business.  The Company is not a party to any pending legal proceeding, the resolution of which the management believes will have a material adverse effect on the Company’s results of operations, financial condition or cash flows, or to any other pending legal proceedings other than ordinary, routine litigation incidental to its business.  The Company maintains liability insurance against risks arising out of the normal course of business.

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On September 21, 2012, the Colorado Department of Public Health and Environment (the "Department") issued a proposed Compliance Order on Consent (the " Proposed Consent Order") to the City and County of Denver ("Denver") and to Walsh Environmental Scientists and Engineers, LLC (“Walsh”).  On the date that the Proposed Consent Order was issued, Walsh was a majority-owned subsidiary of Ecology and Environment, Inc.  The Proposed Consent Order concerns construction improvement activities of certain property owned by Denver which was the subject of asbestos remediation.  Denver had entered into a contract with Walsh for Walsh to provide certain environmental consulting services (asbestos monitoring services) in connection with the asbestos containment and/or removal performed by other contractors at Denver's real property.  Without admitting liability or the Department’s version of the underlying facts, Walsh on February 13, 2013 entered into a Compliance Order on Consent with the Department and paid a penalty of less than $0.1 million and paid for a Supplemental Environmental Project to benefit the public at large in an amount less than $0.1 million.  Denver was served with a final Compliance Order and Assessment of Administrative Penalty against Denver alone for approximately $0.2 million.  Under Walsh's environmental consulting contract with Denver, Walsh has agreed to indemnify Denver for certain liabilities where Walsh could potentially be held responsible for a portion of the penalty imposed upon Denver.  Walsh has put its professional liability and general liability carriers on notice of this indemnification claim by Denver.  The Company believes that this administrative proceeding involving Walsh will not have an adverse material effect on the operations of the Company.

On February 4, 2011, the Chico Mendes Institute of Biodiversity Conservation of Brazil (the “Institute”) issued a Notice of Infraction to E & E Brasil.  E&E Brasil is a majority-owned subsidiary of Ecology and Environment, Inc.  The Notice of Infraction concerns the taking and collecting species of wild animal specimens without authorization by the competent authority and imposes a fine of 520,000 Reais, which has a value of approximately $0.2 million at July 31, 2014.  No claim has been made against Ecology and Environment, Inc.  The Institute has also filed Notices of Infraction against four employees of E&E Brasil alleging the same claims and has imposed fines against those individuals that, in the aggregate, are equal to the fine imposed against E&E Brasil.  E&E Brasil has filed administrative responses with the Institute for itself and its employees that: (a) denies the jurisdiction of the Institute, (b) states that the Notice of Infraction is constitutionally vague and (c) affirmatively stated that E&E Brasil had obtained the necessary permits for the surveys and collections of specimens under applicable Brazilian regulations and that the protected conservation area is not clearly marked to show its boundaries.  At this time, E&E Brasil has attended one meeting where depositions were taken. The Company believes that these administrative proceedings in Brazil will not have an adverse material effect on the operations of the Company.

Item 4. Mining Safety Disclosures

Not Applicable.

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PART II

Item 5. Market for the Registrant's Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities

Principal Market for EEI Common Stock

The Company’s Class A Common Stock is listed on NASDAQ.  There is no separate market for the Company’s Class B Common Stock.

High and Low Stock Prices for Class A Common Stock

The range of high and low prices for the Company's Class A Common Stock, as reported by NASDAQ, are summarized in the following table.

	High  Share Price		Low Share Price
Fiscal Year Ended July 31, 2014:
First Quarter (commencing August 1, 2013 - October 31, 2013)	$	12.25	$	10.52
Second Quarter (commencing November 1, 2013 - January 31, 2014)		11.88		10.41
Third Quarter (commencing February 1, 2014 - April 30, 2014)		12.78		9.02
Fourth Quarter (commencing May 1, 2014 - July 31, 2014)		11.25		9.49
Fiscal Year Ended July 31, 2013:
First Quarter (commencing August 1, 2012 - October 31, 2012)	$	13.00	$	11.60
Second Quarter (commencing November 1, 2012 - January 31, 2013)		13.36		10.70
Third Quarter (commencing February 1, 2013 - April 30, 2013)		14.42		11.75
Fourth Quarter (commencing May 1, 2013 - July 31, 2013)		13.00		10.05

Holders of Common Stock

As of September 30, 2014, 2,659,174 shares of the Company's Class A Common Stock were outstanding and there were 345 holders of record of the Company's Class A Common Stock.  We estimate that the Company has a significantly greater number of Class A Common Stock shareholders because a substantial number of the Company's shares are held in street name.

As of September 30, 2014, 1,629,197 shares of the Company's Class B Common Stock were outstanding and there were 57 holders of record of the Class B Common Stock.

Dividends

Including the fiscal year ended July 31, 2014, the Company has declared semi-annual dividends for 28 consecutive years.  The Company declared dividends totaling $0.48 per common share during the fiscal years ended July 31, 2014, 2013 and 2012.

The Company's Certificate of Incorporation provides that any cash or property dividend paid on Class A Common Stock must be at least equal to the cash or property dividend paid on Class B Common Stock on a per share basis.

The amount, if any, of future dividends remains within the discretion of the Company's Board of Directors and will depend upon the Company's future earnings, financial condition and requirements and other factors as determined by the Board of Directors.

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Equity Compensation Plan Information

Equity compensation plan information as of July 31, 2014 is summarized in the following table.

Plan category	Number of Securities to be Issued Upon Exercise of Outstanding Options, Warrants and Rights		Weighted Average Exercise Price of Outstanding Options, Warrants and Rights		Number of Securities Remaining Available for Future Issuance
Equity compensation plans approved by security holders:
2011 Stock Award Plan		---		---		183,613
Total		---		---		183,613

Refer to Note 12 to Consolidated Financial Statements, included in Item 8 of this Annual Report, for additional information regarding the Company’s equity compensation plans.

Purchased Equity Securities

In August 2010, the Company’s Board of Directors approved a 200,000 share repurchase program.  The following table summarizes the Company's purchases of its common stock during the fiscal year ended July 31, 2014 under this share repurchase program.

Fiscal Year 2014 Reporting Month	Total Number of Shares Purchased		Average Price Paid Per Share		Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs		Maximum Number of Shares That May Yet Be Purchased Under the Plans or Programs
August		---		---		---		93,173
September		---		---		---		93,173
October		---		---		---		93,173
November		16,091	$	10.77		---		77,082
December		---		---		---		77,082
January		---		---		---		77,082
February		---		---		---		77,082
March		---		---		---		77,082
April		---		---		---		77,082
May		---		---		---		77,082
June		---		---		---		77,082
July		---		---		---		77,082

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Item 6. Selected Consolidated Financial Data

	Fiscal Year Ended July 31,
	2014			2013			2012		2011		2010
	(In thousands, except per share amounts)
Operating data:
Revenues, net	$	128,427		$	134,937		$	155,410	$	169,173	$	144,098
(Loss) income from operations		(507	)		(898	)		4,784		12,386		9,893
(Loss) income before income tax provision (benefit)		(447	)		(968	)		4,398		12,755		10,459
Net (loss) income attributable to Ecology and Environment, Inc.		(1,383	)		(2,130	)		774		6,960		4,258
Net (loss) income per common share (basic and diluted)		(0.32	)		(0.50	)		0.18		1.65		1.02
Cash dividends declared per common share (basic and diluted)	$	0.48		$	0.48		$	0.48	$	0.46	$	0.42
Weighted average common shares outstanding (basic and diluted)		4,283,984			4,247,821			4,233,883		4,222,688		4,160,816

	Balance at July 31,
	2014			2013			2012			2011			2010
	(In thousands, except per share amounts)
Balance sheet data:
Working capital		$	31,203		$	34,288		$	38,511		$	41,979		$	38,950
Total assets			71,708			81,682			97,512			94,268			79,959
Outstanding advances under lines of credit			1,572			6,529			12,309			---			---
Long-term debt and capital lease obligations (current and long-term portions)			842			451			591			2,138			1,695
Ecology and Environment, Inc. shareholders’ equity			37,678			43,544			48,146			50,034			44,864
Book value per share (basic and diluted)		$	8.80		$	10.25		$	11.37		$	11.85		$	10.78

Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations

Liquidity and Capital Resources

Cash and cash equivalents decreased $2.6 million during fiscal year 2014, primarily due to the following non-operating expenditures that were approved by the Board of Directors on a discretionary basis:

· $2.1 million for dividend payments to shareholders;

· $0.7 million for acquisition of all remaining minority interests in Walsh Environmental Scientists & Engineers, LLC (“Walsh”); and

· $0.2 million for purchases of treasury stock.

Excluding these discretionary cash outflows, net cash generated from operations of $8.1 million during fiscal year 2014 was adequate to fund investing and financing activities required to maintain our current operations and to reduce our outstanding lines of credit by $5.0 million during the period.

We believe that cash flows from U.S. operations, available cash and cash equivalent balances in our domestic subsidiaries and remaining amounts available under lines of credit will be sufficient to cover working capital requirements of our U.S. operations during the next twelve months and the foreseeable future.  Our foreign subsidiaries generate adequate cash flow to fund their operations.  We intend to reinvest net cash generated from undistributed foreign earnings into opportunities outside the U.S.  If the foreign cash and cash equivalents were needed to fund domestic operations, we would be required to accrue and pay taxes on any amounts repatriated.

Cash and cash equivalents activity and balances are summarized in the following table.

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	Fiscal Year Ended July 31,
	2014			2013			2012
Cash provided by (used in):
Operating activities	$	8,102,798		$	11,943,124		$	(360,288	)
Investing activities		(2,601,349	)		(2,557,656	)		(5,533,398	)
Financing activities		(8,013,694	)		(9,950,867	)		7,988,123
Effect of exchange rate changes on cash and cash equivalents		(43,172	)		(457,711	)		(156,509	)
Net (decrease) increase in cash and cash equivalents	$	(2,555,417	)	$	(1,023,110	)	$	1,937,928
Cash and cash equivalents, by location:
U.S. operations	$	3,822,933		$	6,244,053		$	4,398,921
Foreign operations		3,066,310			3,200,607			6,068,849
Total cash and cash equivalents	$	6,889,243		$	9,440,660		$	10,467,770

Net cash provided by operations during fiscal year 2014 resulted mainly from the following activity:

· Net income (after adjustment for non-cash items) provided $3.2 million of operating cash;

· Net collections of contract receivables provided $1.9 million of operating cash; and

· A federal tax refund received during the third quarter of fiscal year 2014 provided $1.5 million of operating cash; and

· Other working capital activity provided $1.5 million of operating cash.

Net cash used in investment activities during fiscal year 2014 resulted mainly from the following activity:

· Purchases of property, building and equipment resulted in a $2.0 million use of cash, $1.4 million of which related to software acquisition costs; and

· Acquisitions of noncontrolling interests in Walsh by EEI resulted in a $0.7 million use of cash.

Net cash used in financing activities during fiscal year 2014 resulted mainly from the following activity:

· Dividend payments to common shareholders resulted in a $2.1 million use of cash;

· Net repayment of borrowings against our lines of credit resulted in a $5.0 million use of cash;

· Repayment of debt and capital lease obligations resulted in a $0.7 million use of cash;

· Distributions to non-controlling interests resulted in a $0.7 million use of cash;

· Purchases of treasury stock resulted in a $0.2 million use of cash; and

· Proceeds from debt provided $0.6 million of cash.

We have unsecured lines of credit available to provide cash and letters of credit for operations.  Contractual interest rates ranged from 2.50% to 3.00% at July 31, 2014.  Our lenders have reaffirmed the lines of credit within the past twelve months.  Our lines of credit are summarized in the following table.

	Balance at July 31,
	2014			2013
Outstanding cash draws, recorded as lines of credit on the accompanying consolidated balance sheets		$	1,572,466		$	6,528,691
Outstanding letters of credit to support operations			1,944,994			3,080,938
Total amounts used under lines of credit			3,517,460			9,609,629
Remaining amounts available under lines of credit			30,851,540			24,759,371
Total approved unsecured lines of credit		$	34,369,000		$	34,369,000

Balance Sheets

Contract Receivables, net

Contract receivables, net are summarized in the following table.

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	Balance at July 31,
	2014				2013
Contract Receivables:
Billed		$	26,863,708			$	36,284,950
Unbilled			23,694,451				16,441,857
			50,558,159				52,726,807
Allowance for doubtful accounts and contract adjustments			(6,126,854	)			(5,592,800	)
Contract receivables, net		$	44,431,305			$	47,134,007

Contract Receivable Concentrations

Significant concentrations of contract receivables and the allowance for doubtful accounts and contract adjustments are summarized in the following table.

	Balance at July 31, 2014						Balance at July 31, 2013
Region	Contract Receivables			Allowance for Doubtful Accounts and Contract Adjustments			Contract Receivables			Allowance for Doubtful Accounts and Contract Adjustments
United States, Canada and South America		$	43,394,442		$	1,611,068		$	41,302,180		$	1,576,746
Middle East and Africa			7,010,225			4,386,240			10,876,151			3,886,508
Asia			153,492			129,546			548,476			129,546
Totals		$	50,558,159		$	6,126,854		$	52,726,807		$	5,592,800

Combined contract receivables related to projects in the Middle East, Africa and Asia represented 14% and 22% of total contract receivables at July 31, 2014 and 2013, respectively, while the combined allowance for doubtful accounts and contract adjustments related to these projects represented 74% and 72%, respectively, of the total allowance for doubtful accounts and contract adjustments at those same period end dates.  These allowance percentages highlight the Company’s experience of heightened operating risks (i.e., political, regulatory and cultural risks) within these foreign regions in comparison with similar risks in the United States, Canada and South America.  These heightened operating risks have resulted in increased collection risks and the Company expending resources that it may not recover for several months, or at all.

Results of Operations

Revenue, net

Revenue, net and revenue, net less subcontract costs, by business entity, are summarized in the following table.

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	Fiscal Year Ended July 31,
	2014			2013			2012
Revenue by entity:
EEI and its wholly owned subsidiaries (excluding Walsh)	$	69,446,427		$	82,358,140		$	85,150,365
Walsh and EEI’s majority-owned subsidiaries:
Walsh		33,168,180			28,263,579			39,295,981
Ecology & Environment do Brasil, Ltda (“E&E Brasil”)		13,811,391			15,125,046			15,702,130
Gestion Ambiental Consultores S.A. (“GAC”)		8,808,052			10,640,382			11,298,271
ECSI, LLC (“ECSI”)		3,366,793			4,869,394			5,539,993
Total gross revenue		128,600,843			141,256,541			156,986,740
Net contract adjustments recorded as a reduction from revenue		(173,967	)		(6,319,650	)		(1,576,641	)
Revenue, net per consolidated statements of operations	$	128,426,876		$	134,936,891		$	155,410,099

Gross revenue less subcontract costs, by entity:
EEI and its wholly owned subsidiaries (excluding Walsh)	$	59,627,259	$	69,691,641	$	72,290,708
Walsh and EEI’s majority-owned subsidiaries:
Walsh		20,796,673		20,796,180		26,003,190
E&E Brasil		12,833,626		13,778,136		14,433,459
GAC		6,958,103		7,327,335		6,620,988
ECSI		3,272,119		4,621,818		5,323,216
Total	$	103,487,780	$	116,215,110	$	124,671,561

Fiscal Year 2014 Versus 2013

The decrease in consolidated gross revenue for fiscal year 2014, as compared with the prior fiscal year, primarily resulted from the net impact of the following activity:

· Lower revenue for EEI and its wholly-owned subsidiaries (excluding Walsh) for fiscal year 2014 resulted primarily from the following activity:

o EEI recorded $3.8 million of gross revenue related to projects in China during fiscal year 2013.  All project activity related to these contracts was suspended during the fourth quarter of fiscal year 2013, and no revenue related to these projects was recorded during fiscal year 2014; and

o generally lower sales volume, particularly within domestic state and federal government markets, as expired contracts were not renewed or replaced with new work.

· Consolidated Walsh revenue for fiscal year 2014 was relatively unchanged from the prior fiscal year, which was the net result of the following activity:

o higher energy sector revenues from Walsh’s South American operations; which was partially offset by

o lower sales volumes from asbestos inspection, energy and mining sectors in the U.S., as expiring contracts were not renewed or replaced by new work.

· Lower E&E Brasil revenue for fiscal year 2014 was primarily due to lower sales volumes in the energy transmission sector and weakening of the local currency (Reais) against the U.S. dollar.

· Lower GAC revenue for fiscal year 2014 mainly resulted from the following net activity:

o lower sales volume from the commercial mining market, mainly due to a general decline in the Chilean economy; and

o a decline in the value of the Chilean Peso against the U.S. dollar throughout the year; which were partially offset by

o lower utilization of subcontracted labor, which resulted in higher utilization of GAC employees.

· Lower ECSI revenue during fiscal year 2014 mainly resulted from lower sales volumes in the mining sector, as projects completed during fiscal year 2013 were not renewed or replaced during the current year.

Fiscal Year 2013 Versus 2012

The overall decrease in consolidated revenue less subcontract costs for the fiscal year ended July 31, 2013, as compared with the prior fiscal year, resulted from the net impact of the following entity activity:

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· Lower EEI and wholly-owned subsidiary revenue resulted from lower sales volume, particularly within domestic state and federal government markets.

· Lower Walsh revenue primarily resulted from lower sales volume, particularly within the energy and mining sectors in its U.S. and foreign markets.

· Lower E&E Brasil revenue was primarily due to weakening of the local currency (Reais) against the U.S. dollar.  In the local currency, revenue for E&E Brasil increased 9% during the fiscal year ended July 31, 2013, primarily due to higher revenues in the energy transmission sector.

· Higher GAC revenue less subcontract costs was primarily due to a significant decrease in subcontract costs, which was partially offset by lower sales volume in the mining sector, as a mining project completed during fiscal year 2012 was not renewed or replaced during fiscal year 2013.

· Lower ECSI revenue primarily resulted from lower sales volume in the mining sector, as a mining project completed during fiscal year 2012 were not renewed or replaced during fiscal year 2013.

Contract Adjustments

Net contract adjustments recorded as reductions from revenue are summarized by region in the following table.

	Fiscal Year Ended July 31,
Region	2014			2013			2012
United States, Canada and South America	$	309,651		$	(73,534	)	$	355,643
Middle East and Africa		(483,618	)		72,024			(1,314,058	)
Asia		---			(6,318,140	)		(618,226	)
Totals	$	(173,967	)	$	(6,319,650	)	$	(1,576,641	)

Fiscal Year 2014 Activity

Net contract adjustments recorded for projects in the U.S., Canada and South America includes net adjustments resulting from revenues that are deemed to be unrealizable or that may become unrealizable in the future, as well as adjustments to estimated liabilities for project disallowances that are recorded in other accrued liabilities.  During fiscal year 2014, as a result of a revised estimate of a settlement liability recorded in a prior fiscal year, we recorded a $0.3 million reduction on our reserves for project disallowances recorded in other accrued liabilities.

Net contract adjustments recorded for projects in the Middle East and Africa mainly resulted from a $1.5 million increase in the reserve for contract adjustments associated with a specific project in the Middle East, which was partially offset by $1.0 million of reserve reversals resulting from cash receipts or approvals of task orders related to receivables that had been previously reserved.

Fiscal Year 2013 Activity

In January 2013, the Company announced that it had entered into a contract to provide environmental consulting services to a client in China.  This contract replaced a previous agreement from fiscal year 2011.  Through July 31, 2013, the Company recorded $6.8 million of contract receivables related to these agreements in China.  Since inception of these agreements, the Company encountered significant transitional issues and delays in collecting payments due to us.

After considering the age of the related contract receivables, non-payment of advanced payments owed to the Company and the lack of any other cash collections to date, management concluded during the fourth quarter of fiscal year 2013 that the contract receivables from the client in China were uncollectible.  During fiscal year 2013, we recorded $6.3 million of contract adjustments related to these contract receivables.  The total allowance for doubtful accounts and contract adjustments related to these contracts was $6.8 million at July 31, 2013, which represented 100% of the related contract receivable balances.  During the fourth quarter of fiscal year 2013, management suspended all project activity related to these contracts, and no revenue was recorded during fiscal year 2014.

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Operating Expenses

During fiscal years 2014 and 2013, management at EEI and its U.S. subsidiaries critically reviewed technical and indirect staffing levels, other expenses necessary to support current project work levels and key administrative processes, particularly in our domestic subsidiaries and operations.  As a result of this review, the number of full time employees in various technical and indirect departments at EEI and its U.S. subsidiaries decreased by a combined 16% and 9% during fiscal years 2014 and 2013, respectively.  Utilization of contracted services was also reviewed and reduced at EEI.  Management continues to critically evaluate its organizational and cost structure to identify ways to operate more efficiently and cost effectively.

The cost of professional services and other direct operating expenses represents labor and other direct costs of providing services to our clients under our project agreements.  These costs, and fluctuations in these costs, generally correlate directly with related project revenues.  The cost of professional services and other direct operating expenses, by business entity, are summarized in the following table.

	Fiscal Year Ended July 31,
	2014		2013		2012
EEI and its wholly owned subsidiaries (excluding Walsh)	$	26,407,023	$	29,408,179	$	33,152,707
Walsh and EEI’s majority-owned subsidiaries:
Walsh		5,118,715		6,034,926		7,709,299
E&E Brasil		7,322,385		7,524,216		8,413,975
GAC		5,133,125		5,258,000		4,499,132
ECSI		1,183,785		1,529,296		1,857,168
Total cost of professional services and other direct operating expenses	$	45,165,033	$	49,754,617	$	55,632,281

Indirect operating expenses include administrative and indirect operating expenses, as well as marketing and related costs.  Combined indirect operating expenses by business entity, excluding depreciation and amortization expenses, are summarized in the following table.

	Fiscal Year Ended July 31,
	2014		2013		2012
EEI and its wholly owned subsidiaries (excluding Walsh)	$	32,907,360	$	36,239,243	$	38,957,028
Walsh and EEI’s majority-owned subsidiaries:
Walsh		12,690,944		12,707,123		12,953,357
E&E Brasil		4,946,171		5,480,397		4,847,879
GAC		1,376,842		1,161,575		923,723
ECSI		2,559,021		3,021,712		2,836,756
Total administrative and indirect operating expenses and marketing and related costs	$	54,480,338	$	58,610,050	$	60,518,743

Fiscal Year 2014 Versus 2013

The consolidated cost of professional services and other direct operating expenses decreased $4.6 million (9%) during fiscal year 2014, as compared with the prior fiscal year.  These net decreases were primarily due to lower consolidated revenues and lower service levels provided during the current year, and managed reductions in technical staff levels in U.S. operations.  Expense reductions in the U.S. were partially offset by a higher volume of project activity and related expenses in certain South American subsidiaries.

Consolidated administrative and indirect operating expenses and marketing and related costs decreased $4.1 million (7%) during fiscal year 2014.  During fiscal years 2013 and 2014, management at EEI and its U.S. subsidiaries critically reviewed key administrative processes, reduced indirect staffing levels, and reduced utilization of contracted services in certain indirect departments.  These cost reductions in the U.S. were partially offset by higher indirect expenses to support growth in certain South American subsidiaries.

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Depreciation and amortization expense increased $1.7 million (72%) during fiscal year 2014 primarily due to accelerated amortization of the Company’s previous operating software system, which was abandoned at the end of fiscal year 2014 in favor of a new software system.

Fiscal Year 2013 Versus 2012

The consolidated cost of professional services and other direct operating expenses decreased $5.9 million (11%) during fiscal year 2013.  This net decrease was primarily due to lower consolidated revenues at EEI and its U.S. subsidiaries, which resulted from lower service levels provided during the year and to managed reductions in technical staff levels.  Expense reductions in the U.S. were partially offset by a higher volume of project activity and related expenses in South American subsidiaries.

Consolidated administrative and indirect operating expenses and marketing and related costs decreased $1.9 million (3%) during fiscal year 2013.  During the year, management at EEI and its U.S. subsidiaries critically reviewed indirect staffing levels and key administrative processes, and reduced staff counts and utilization of contracted services in certain indirect departments.  These cost reductions in the U.S. were partially offset by higher indirect expenses to support growth in South American subsidiaries and by a $0.8 million software impairment charge recorded by EEI during the fourth quarter of fiscal year 2013 (refer to Item 1 of this Annual Report).

Depreciation and amortization expense increased $0.3 million (12%) during fiscal year 2013, which resulted from acquisitions of depreciable assets of $1.8 million and $4.4 million during fiscal years 2013 and 2012, respectively.

Income Taxes

The income tax provision (benefit) resulting from domestic and foreign operations is summarized in the following table.

	Fiscal Year Ended July 31,
	2014				2013				2012
Income tax (benefit) provision from:
Domestic operations		$	(802,558	)		$	(782,672	)		$	65,885
Foreign operations			1,145,621				1,036,906				1,292,031
Income tax provision, as reported on the consolidated statements of operations		$	343,063			$	254,234			$	1,357,916

A reconciliation of the income tax provision using the statutory U.S. income tax rate compared with the actual income tax provision reported on the consolidated statements of operations is summarized in the following table.

	Fiscal Year Ended July 31,
	2014			2013			2012
Income tax (benefit) provision at the U.S. federal statutory income tax rate	$	(152,113	)	$	(329,057	)	$	1,495,206
Income from "pass-through" entities taxable to noncontrolling partners		35,309			(102,933	)		(255,065	)
International rate differences		(143,493	)		(197,217	)		(329,825	)
Other foreign taxes, net of federal benefit		(34,419	)		94,528			211,088
Foreign dividend income		596,631			481,287			329,825
State taxes, net of federal benefit		27,739			3,871			13,193
Re-evaluation and settlements of tax contingencies		(19,533	)		(58,105	)		(180,304	)
Peru non-deductible expenses		44,077			173,707			211,000
Canada valuation allowance		(83,257	)		130,950			---
Other permanent differences		72,122			57,203			(137,202	)
Income tax provision, as reported on the consolidated statements of operations	$	343,063		$	254,234		$	1,357,916

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Fiscal Year 2014 Versus 2013

The majority of the income or loss generated by the Company occurs in tax jurisdictions with combined income tax rates between 30 percent and 40 percent.  However, the mix of domestic and foreign earnings that created a small consolidated pre-tax loss, and the impact of permanent book-to-tax differences that are recognized regardless of pre-tax income or loss, resulted in an unusual negative effective income tax rate for fiscal year 2014.  The most significant of these permanent differences resulted from foreign dividend income that is taxed in the U.S. as a result of a reduced foreign tax credit created from the Company’s overall foreign loss.

During the fiscal year ended July 31, 2014 and 2013, the Company generated operating losses in the U.S. of $1.7 million and $3.8 million, respectively.  The net operating loss from fiscal year 2014 will be carried forward to future fiscal years.  The net operating loss from fiscal year 2013 was carried back to an earlier year and was fully utilized.  As of July 31, 2014, net operating losses attributable to operations in Brazil, Canada and China and net operating losses for state income tax purposes still exist.

Fiscal Year 2013 Versus 2012

The majority of the income or loss generated by the Company occurs in tax jurisdictions with combined income tax rates between 30 percent and 40 percent.  However, the mix of domestic and foreign earnings that created a small consolidated pre-tax loss, and the impact of permanent book-to-tax differences that are recognized regardless of pre-tax income or loss, resulted in an unusual negative effective income tax rate for fiscal year 2013.  These permanent differences primarily include non-deductible expenses in the U.S. and Peru, the establishment of a valuation allowance for losses in Canada and foreign dividend income that is taxed in the U.S. as a result of a reduced foreign tax credit created from the Company’s overall foreign loss.

The income tax provision decreased $1.1 million (81%) during fiscal year 2013, primarily as a result of decreased pre-tax income in both foreign and domestic operations.  Lower pre-tax income was partially offset by higher dividends from our foreign subsidiaries, for which we did not receive a foreign tax credit that we benefited from in prior years, and establishment of a valuation allowance for losses in Canada.

Recent Accounting Pronouncements

Accounting Pronouncements Not Yet Adopted as of July 31, 2014

In July 2013, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) No. 2013-11 Income Taxes (Topic 740): Presentation of an Unrecognized Tax Benefit When a Net Operating Loss Carryforward, a Similar Tax Loss, or a Tax Credit Carryforward Exists (“ASU 2013-11”).  ASU 2013-11 requires that an unrecognized tax benefit, or a portion of an unrecognized tax benefit, should be presented in the financial statements as a reduction to a deferred tax asset for a net operating loss carryforward, a similar tax loss, or a tax credit carryforward, except as follows.  To the extent a net operating loss carryforward, a similar tax loss, or a tax credit carryforward is not available at the reporting date under the tax law of the applicable jurisdiction to settle any additional income taxes that would result from the disallowance of a tax position or the tax law of the applicable jurisdiction does not require the entity to use, and the entity does not intend to use, the deferred tax asset for such purpose, the unrecognized tax benefit should be presented in the financial statements as a liability and should not be combined with deferred tax assets. The Company adopted the provisions of ASU 2013-11 effective August 1, 2014 and applied its provisions retrospectively.  The adoption of this standard did not have a material impact on the Company’s consolidated financial statements.

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In May 2014, FASB issued ASU No. 2014-09 Revenue from Contracts with Customers (Topic 606) (“ASU 2014-09”).  ASU 2014-09 is the result of a joint project of FASB and the International Accounting Standards Board to clarify the principles for recognizing revenue and to develop a common revenue standard for use in the U.S and internationally.  ASU 2014-09 supersedes the revenue recognition requirements in Topic 605 of FASB’s Accounting Standards Codification (the “Codification”) and most industry-specific guidance throughout the Industry Topics of the Codification.  ASU 2014-09 enhances comparability of revenue recognition practices across entities, industries, jurisdictions and capital markets, reduces the number of requirements an entity must consider for recognizing revenue, and requires improved disclosures to help users of financial statements better understand the nature, amount, timing, and uncertainty of revenue that is recognized.  ASU 2014-09 is effective for annual reporting periods beginning after December 15, 2016, including interim periods within the annual reporting period.  The Company intends to implement the provisions of ASU 2014-09 effective August 1, 2017.  ASU 2014-09 requires either retrospective application by restating each prior period presented in the financial statements, or retrospective application by recording the cumulative effect on prior reporting periods to beginning retained earnings in the year that the standard becomes effective.  Management is currently assessing the provisions of ASU 2014-09 and has not yet estimated the impact of this ASU.

Critical Accounting Policies

The preceding discussion and analysis of our financial condition and results of operating results are based on our consolidated financial statements, which have been prepared in conformity with accounting principles generally accepted in the United States.  The significant accounting policies used in the preparation of our consolidated financial statements are more fully described in the consolidated financial statements included in Item 8 of this Annual Report.

Many of our significant accounting policies require complex judgments to estimate values of assets and liabilities.  In making these judgments, management must make certain estimates and assumptions that affect the reported amounts of assets, liabilities, revenues and expenses.  Because changes in such estimates and assumptions could significantly affect our reported financial position and results of operations, detailed policies and control procedures have been established to ensure that valuation methods, including judgments made as part of such methods, are well controlled, independently reviewed, and are applied consistently from period to period.

On an on-going basis, we evaluate our estimates to ensure that they are based on assumptions that we believe to be reasonable under current circumstances.  Our actual results may differ from these estimates and assumptions.

Of the significant policies used to prepare our consolidated financial statements, the items discussed below require critical accounting estimates involving a high degree of judgment and complexity.  For all of these critical policies, we caution that future events rarely develop exactly as forecasted, and the best estimates routinely require adjustment.  This information should be read in conjunction with our consolidated financial statements included herein.

Revenue Recognition

Our revenues are derived primarily from the professional and technical services performed by its employees or, in certain cases, by subcontractors engaged to perform on under contracts entered into with our clients. The revenues recognized, therefore, are derived from our ability to charge clients for those services under the contracts.  Sales and cost of sales at our South American subsidiaries exclude tax assessments by governmental authorities, which are collected from clients and then remitted to governmental authorities.

Substantially all of our revenue is derived from environmental consulting work.  The consulting revenue is principally derived from the sale of labor hours.  The consulting work is performed under a mix of fixed price, cost-type, and time and material contracts.  Contracts are required from all clients.  Revenue is recognized as follows:

Contract Type	Work Type	Revenue Recognition Policy
Time and materials	Consulting	As incurred at contract rates.
Fixed price	Consulting	Percentage of completion, approximating the ratio of either total costs or Level of Effort (LOE) hours incurred to date to total estimated costs or LOE hours.
Cost-plus	Consulting	Costs as incurred plus fees.  Fees are recognized as revenue using percentage of completion determined by the percentage of LOE hours incurred to total LOE hours in the respective contracts.

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Revenues associated with these contract types are summarized in the following table.

	Twelve Months Ended July 31,
	2014		2013		2012
Time and materials	$	69,136,988	$	64,522,639	$	76,889,583
Fixed price		50,077,507		58,244,072		67,638,479
Cost-plus		9,212,381		12,170,180		10,882,037
Total revenue	$	128,426,876	$	134,936,891	$	155,410,099

Time and material contracts are accounted for over the period of performance, in proportion to the costs of performance, predominately based on labor hours incurred.  Time and materials contracts generally represent the time spent by our professional staff at stated or negotiated billing rates, plus materials used during project work.  Many time and materials contracts contain “not to exceed” provisions that effectively cap the amount of revenue that we can bill to the client.  In order to record revenue that exceeds the billing cap, we must obtain written approval from the client for expanded scope or increased pricing.

Fixed price contracts are accounted for using the “percentage-of-completion” method, wherein revenue is recognized as project progress occurs.  Fixed-price contracts generally present the highest level of financial and performance risk, but often also provide the highest potential financial returns.

Cost-plus contracts provide for payment of allowable incurred costs, to the extent prescribed in the contract, plus fees that we record as revenue.  These contracts establish an estimate of total cost and an invoicing ceiling that the contractor may not exceed without the approval of the client.  Cost-plus contracts present a lower risk, but generally provide lower returns and often include more onerous terms and conditions.

Our project management teams continuously monitor the budgets, costs to date and estimated costs to complete project work.  If the estimated costs at completion on any contract indicates that a loss will be incurred, the entire estimated loss is charged to operations as a reduction of revenue in the period the loss becomes evident.

The percentage of completion revenue recognition method requires the use of estimates and judgment regarding a project’s expected revenues, costs and the extent of progress towards completion.  We have a history of making reasonably dependable estimates of the extent of progress towards completion, contract revenue and contract completion costs.  However, due to uncertainties inherent in the estimation process, actual completion costs may vary significantly from estimates.

Most of our percentage-of-completion projects follow a method which approximates the “cost-to-cost” method of determining the percentage of completion.  Under the cost-to-cost method, we make periodic estimates of our progress towards project completion by analyzing costs incurred to date, plus an estimate of the amount of costs that we expect to incur until the completion of the project.  Revenue is then calculated on a cumulative basis (project-to-date) as the total contract value multiplied by the current percentage-of-completion.  The revenue for the current period is calculated as cumulative revenues less project revenues already recognized.  The recognition of revenues and profit is dependent upon a variety of estimates which can be difficult to accurately determine until a project is significantly underway.

For projects where the cost-to-cost method does not appropriately reflect the progress on the projects, we use alternative methods such as actual labor hours, for measuring progress on the project and recognize revenue accordingly.  For instance, in a project where a large amount of equipment is purchased or an extensive amount of mobilization is involved, including these costs in calculating the percentage-of-completion may overstate the actual progress on the project.  For these types of projects, actual labor hours spent on the project may be a more appropriate measure of the progress on the project.

Our contracts with the U.S. government contain provisions requiring compliance with the Federal Acquisition Regulation (“FAR”), and the Cost Accounting Standards (“CAS”).  These regulations are generally applicable to all of our federal government contracts and are partially or fully incorporated in many local and state agency contracts.  They limit the recovery of certain specified indirect costs on contracts subject to the FAR.  Cost-plus contracts covered by the FAR provide for upward or downward adjustments if actual recoverable costs differ from the estimate billed.  Most of our federal government contracts are subject to termination at the convenience of the client.  Contracts typically provide for reimbursement of costs incurred and payment of fees earned through the date of such termination.

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Federal government contracts are subject to the FAR and some state and local governmental agencies require audits, which are performed for the most part by the Defense Contract Audit Agency (“DCAA”).  The DCAA audits overhead rates, cost proposals, incurred government contract costs, and internal control systems.  During the course of its audits, the DCAA may question incurred costs if it believes we have accounted for such costs in a manner inconsistent with the requirements of the FAR or CAS and recommend that our U.S. government financial administrative contracting officer disallow such costs.  Historically, we have not experienced significant disallowed costs as a result of such audits.  However, we can provide no assurance that such audits will not result in material disallowances of incurred costs in the future.

We maintain an allowance for project disallowances in other accrued liabilities for potential cost disallowances resulting from government audits and project close-outs.  Government audits have been completed and final rates have been negotiated for fiscal years through 2007.  We have estimated our exposure based on completed audits, historical experience and discussions with the government auditors.  If these estimates or their related assumptions change, we may be required to adjust its recorded allowance for project disallowances.

Allowance for Doubtful Accounts and Contract Adjustments

We reduce our contract receivables by recording an allowance for doubtful accounts for estimated credit losses resulting from a client’s inability or unwillingness to pay valid obligations to us.  The resulting provision for bad debts is recorded within administrative and indirect operating expenses on the consolidated statements of operations.  The likelihood that the client will pay is based on the judgment of those closest to the related project and the client.  At a minimum, management considers the following factors to determine the collectability of contract receivables for any specific project:

· Client acknowledgment of amount owed to us;

· Client liquidity/ability to pay;

· Historical experience with collections from the client;

· Amount of time elapsed since last payment; and

· Economic, geopolitical and cultural considerations for the home country of the client.

We recognize that there is a high degree of subjectivity and imprecision inherent in the process of estimating future credit losses that are based on historical trends and client data.  As a result, actual credit losses can differ from these estimates.

We also reduce contract receivables by establishing an allowance for contract adjustments related to revenues that are deemed to be unrealizable, or that may become unrealizable in the future.  Management reviews contract receivables and determines allowances amounts based on:

· our operating performance related to the adequacy of the services performed under the contract;

· the status of change orders and claims;

· our historical experience with the client for settling change orders and claims; and

· economic, geopolitical and cultural considerations for the home country of the client.

Because of the high degree of subjectivity and imprecision inherent in the process of estimating allowances that are based on historical trends and client data, actual contract losses can differ from these estimates.

Goodwill

Goodwill of $1.2 million on our consolidated balance sheets represents the excess of purchase price over the fair value of identifiable net assets acquired in various business acquisitions.  Goodwill is not amortized, but is reviewed for impairment annually during the fourth quarter of our fiscal year, or more frequently if events, transactions or changes in circumstances indicate that the carrying amount may not be recoverable.  We utilize a discounted cash flows methodology for determining the fair value of the business units to which goodwill has been assigned.  Our discounted cash flows methodology includes the following critical assumptions:

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· Growth rates applied to projected earnings

· Discount rates and terminal year growth rates applied to future cash flow projections

Our impairment testing of goodwill is considered to be a critical accounting estimate due to the significant judgment required for certain assumptions utilized in the models to determine fair value.  Assumptions used involve a high degree of subjectivity that is based on historical experience and internal forecasts of future results.  Actual results in future periods may not necessarily approximate historical experience or forecasts.

We completed our annual goodwill impairment test as of July 31, 2014, and concluded that our recorded goodwill was not at risk for impairment as of that date.  As of July 31, 2014, the estimated fair values exceeded the carrying values of each of the individual business units to which goodwill has been assigned.

Income Taxes

We operate within multiple tax jurisdictions in the United States and in foreign countries.  The calculations of income tax expense or benefit and related balance sheet amounts involve a high degree of management judgment regarding estimates of the timing and probability of recognition of revenue and deductions.  The interpretation of tax laws involves uncertainty, since tax authorities may interpret laws differently than we do.  We are subject to audit in all of our tax jurisdictions, which may involve complex issues and may require an extended period of time to resolve.  Ultimate resolution of tax matters may result in favorable or unfavorable impacts to our net income and/or cash flows.  In management’s opinion, adequate reserves have been recorded for any future taxes that may be owed as a result of examination by any taxing authority.

A tax position is a position in a previously filed tax return or a position expected to be taken in a future tax filing that is reflected in measuring current or deferred income tax assets and liabilities. Tax positions shall be recognized only when it is more likely than not (likelihood of greater than 50%), based on technical merits, that the position will be sustained.   Tax positions that meet the more likely than not threshold should be measured using a probability weighted approach as the largest amount of tax benefit that is greater than 50% likely of being realized upon settlement.  We recognize interest accrued related to unrecognized tax benefits in interest expense and penalties in administrative and indirect operating expenses.  Whether the more-likely-than-not recognition threshold is met for a tax position, is a matter of judgment based on the individual facts and circumstances of that position evaluated in light of all available evidence.  Based on available evidence, management has estimated that uncertain tax positions did not exceed $0.1 million at July 31, 2014 or 2013.

Deferred income taxes reflect the net tax effects of temporary differences between the carrying amount of assets and liabilities for financial reporting purposes and the amounts used for income tax purposes using enacted tax rates expected to be in effect for the year in which the temporary differences are expected to reverse.  Our policy is to establish a valuation allowance if it is “more likely than not” that the related tax benefits will not be realized.  At July 31, 2014 and 2013, we determined based on available evidence, including historical financial results for the last three years and forecasts of future results, that it is “more likely than not” that a portion of these items may not be recoverable in the future.  Accordingly, we recorded total valuation allowances of $0.4 million and $0.6 million at July 31, 2014 and 2013, respectively, as a reduction of deferred tax assets.

The valuation allowance related to deferred tax assets is considered to be a critical estimate because, in assessing the likelihood of realization of deferred tax assets, management considers taxable income trends and forecasts.  Actual income taxes expensed and/or paid could vary from estimated amounts due to the impacts of various factors, including:

· changes to tax laws enacted by taxing authorities;

· final review of filed tax returns by taxing authorities; and

· actual financial condition and results of operations for future periods that could differ from forecasted amounts.

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Changes in Corporate Entities

Noncontrolling interests are disclosed as a separate component of consolidated shareholders’ equity on the accompanying consolidated balance sheets.  Earnings and other comprehensive (loss) income are separately attributed to both the controlling and noncontrolling interests.  Earnings per share is calculated based on net (loss) income attributable to our controlling interests.

Transactions with noncontrolling shareholders for the fiscal years ended July 31, 2014, 2013 and 2012 were recorded at amounts that approximated fair value.  Effects on shareholders’ equity resulting from changes in EEI’s ownership interest in its subsidiaries are summarized in the following table.

	Fiscal Years Ended July 31,
	2014			2013			2012
Sales of noncontrolling interest:
Sale of 600 Gustavson common shares	$	---		$	---		$	41,634
Total sales of noncontrolling interests (10)		---			---			41,634
Purchases of noncontrolling interests:
Purchase of 344 Walsh common shares (1)	$	(5,653	)		---			---
Purchase of 3,705 Walsh common shares (2)		(1,120,749	)		---			---
Purchase of 100 Walsh common shares (3)		(30,250	)		---			---
Purchase of 50 Walsh common shares (4)		---			(18,316	)		---
Purchase of 25 Lowham common shares (5)		---			(8,737	)		---
Purchase of 495 Walsh common shares (6)		---			(243,653	)		---
Purchase of 2,800 Gustavson common shares (7)		---			(293,102	)		---
Purchase of 370 Walsh common shares (8)		---			(182,125	)		---
Purchase of 75 Lowham common shares (9)		---			(30,002	)		---
Purchase of 25 Gestion Ambiental Consultores common shares		---			---			(7,452	)
Purchase of 166 Walsh common shares		---			---			(97,634	)
Purchase of  496 Walsh common shares		---			---			(277,514	)
Purchase of  5,389 Brazil common shares		---			---			77,539
Purchase of 26,482 Walsh Peru common shares		---			---			(238,677	)
Purchase of 152 Walsh common shares		---			---			(76,037	)
Total purchases of noncontrolling interests (10)		(1,156,652	)		(775,935	)		(619,775	)
Net transfers from noncontrolling interests	$	(1,156,652	)	$	(775,935	)	$	(578,141	)

(1) In January 2014, EEI purchased an additional 0.9% of Walsh Environmental Scientists and Engineers, LLC (“Walsh”) from noncontrolling shareholders for $0.1 million in cash.  Walsh became a wholly-owned subsidiary of EEI as a result of these transactions.

(2) In October 2013, EEI purchased an additional 9.4% of Walsh for $1.6 million.  The purchase price was paid as follows: (i) one third in cash payable on the transaction consummation date; (ii) one third payable with EEI Common Stock on the transaction consummation date; and (iii) one third with a promissory note payable in two annual installments of one half the principal plus interest accrued at 3.25% per annum.

(3) In October 2013, EEI purchased an additional 0.2% of Walsh for less than $0.1 million in cash.

(4) In April 2013, EEI purchased an additional 0.1% of Walsh from noncontrolling shareholders for less than $0.1 million in cash.

(5) In March 2013, Lowham-Walsh Engineering & Environment Services LLC (“Lowham”), a subsidiary of Walsh, purchased shares from noncontrolling shareholders for less than $0.1 million in cash.

(6) In January 2013, EEI purchased an additional 1.3% of Walsh from noncontrolling shareholders for $0.2 million.  Two thirds of the purchase price was paid in cash while the remaining one third was paid for with EEI stock.

(7) In December 2012, Gustavson Associates, LLC (“Gustavson”) purchased an additional 6.7% of its shares from noncontrolling shareholders for $0.4 million.  Half of the purchase price was paid in cash and Gustavson issued a three year note for the other half.

(8) In December 2012, EEI purchased an additional 0.9% of Walsh from noncontrolling shareholders for $0.2 million in cash.

(9) During the three months ending October 31, 2012, Lowham purchased shares from noncontrolling shareholders for less than $0.1 million in cash.

(10) Sales (purchases) of additional noncontrolling interests are recorded as additions (reductions) of shareholders’ equity on the consolidated statements of changes in shareholders’ equity.

31

Inflation

During the fiscal years ended July 31, 2014, 2013 and 2012, inflation did not have a material impact on our business because a significant amount of our contracts are either cost based or contain commercial rates for services that are adjusted annually.

Off-Balance Sheet Arrangements

We did not have any off-balance sheet arrangements as of July 31, 2014 or 2013.

32

Item 8. Financial Statements and Supplementary Data

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

To the Board of Directors and Shareholders

of Ecology and Environment, Inc.

We have audited the accompanying consolidated balance sheets of Ecology and Environment, Inc. and its subsidiaries (collectively, the Company) as of July 31, 2014 and 2013, and the related consolidated statements of operations, comprehensive income (loss), changes in shareholders’ equity, and cash flows for each of the years in the three-year period ended July 31, 2014.  The Company’s management is responsible for these financial statements.  Our responsibility is to express an opinion on these financial statements based on our audits.

We conducted our audits in accordance with the standards of the Public Company Accounting Oversight Board (United States).  Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the consolidated financial statements are free of material misstatement. The Company is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting.  Our audit included consideration of internal control over financial reporting as a basis for designing audit procedures that are appropriate in the circumstances, but not for purpose of expressing an opinion on the effectiveness of the Company’s internal control over financial reporting.  Accordingly, we express no such opinion.  An audit also includes examining, on a test basis, evidence supporting the amounts and disclosures in the consolidated financial statements, assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation.  We believe that our audits provide a reasonable basis for our opinion.

In our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the financial position of the Company as of July 31, 2014 and 2013, and the results of its operations and its cash flows for each of the years in the three-year period ended July 31, 2014 in conformity with accounting principles generally accepted in the United States of America.

/s/ Schneider Downs & Co., Inc.

Pittsburgh, Pennsylvania

October 29, 2014

33

Ecology and Environment, Inc.

Consolidated Balance Sheets

	Balance at July 31,
Assets	2014			2013
Current assets:
Cash and cash equivalents	$	6,889,243		$	9,444,660
Investment securities available for sale		1,407,277			1,463,864
Contract receivables, net of allowance for doubtful accounts and contract adjustments of $6,126,854 and $5,592,800, respectively		44,431,305			47,134,007
Deferred income taxes		4,534,437			4,308,538
Income tax receivable		1,107,983			4,355,260
Other current assets		1,589,646			1,784,826
Total current assets		59,959,891			68,491,155
Property, building and equipment, net of accumulated depreciation of $28,615,915 and $24,569,139, respectively		7,941,455			10,122,801
Deferred income taxes		1,865,798			1,089,060
Other assets		1,941,178			1,978,668
Total assets	$	71,708,322		$	81,681,684
Liabilities and Shareholders' Equity
Current liabilities:
Accounts payable	$	9,874,649		$	9,864,138
Lines of credit		1,572,466			6,528,691
Accrued payroll costs		7,650,077			7,102,910
Current portion of long-term debt and capital lease obligations		420,737			199,658
Billings in excess of revenue		5,003,413			6,437,730
Other accrued liabilities		4,235,262			4,070,073
Total current liabilities		28,756,604			34,203,200
Income taxes payable		107,035			124,793
Deferred income taxes		631,083			462,787
Long-term debt and capital lease obligations		421,769			251,614
Commitments and contingencies (Note 18)		-			-
Shareholders' equity:
Preferred stock, par value $.01 per share (2,000,000 shares authorized; no shares issued)		-			-
Class A common stock, par value $.01 per share (6,000,000 shares authorized; 2,685,151 shares issued)		26,851			26,851
Class B common stock, par value $.01 per share; (10,000,000 shares authorized; 1,708,574 shares issued)		17,087			17,087
Capital in excess of par value		17,124,339			20,016,873
Retained earnings		21,916,575			25,365,853
Accumulated other comprehensive loss		(182,735	)		(84,527	)
Treasury stock, at cost (Class A common: 40,553 and 79,110 shares, respectively; Class B common: 64,801 shares)		(1,223,899	)		(1,798,233	)
Total Ecology and Environment, Inc. shareholders' equity		37,678,218			43,543,904
Noncontrolling interests		4,113,613			3,095,386
Total shareholders' equity		41,791,831			46,639,290
Total liabilities and shareholders' equity	$	71,708,322		$	81,681,684

The accompanying notes are an integral part of these consolidated financial statements.

34

Ecology and Environment, Inc.

Consolidated Statements of Operations

	Fiscal Year Ended July 31,
	2014			2013			2012
Revenue, net	$	128,426,876		$	134,936,891		$	155,410,099
Cost of professional services and other direct operating expenses		45,165,033			49,754,617			55,632,281
Subcontract costs		25,113,063			25,041,431			32,315,179
Administrative and indirect operating expenses		41,464,204			44,563,873			44,917,631
Marketing and related costs		13,016,134			14,046,177			15,601,112
Depreciation and amortization		4,175,801			2,428,844			2,160,062
(Loss) income from operations		(507,359	)		(898,051	)		4,783,834
Interest income		154,441			244,191			174,743
Interest expense		(150,315	)		(303,403	)		(364,305	)
Other income (expense)		67,587			(40,127	)		206,813
Gain on sale of assets and investment securities		13,045			80,415			-
Net foreign exchange loss		(24,789	)		(50,839	)		(403,419	)
(Loss) income before income tax provision		(447,390	)		(967,814	)		4,397,666
Income tax provision		343,063			254,234			1,357,916
Net (loss) income	$	(790,453	)	$	(1,222,048	)	$	3,039,750
Net income attributable to the noncontrolling interest		(592,203	)		(908,386	)		(2,266,171	)
Net (loss) income attributable to Ecology and Environment, Inc.	$	(1,382,656	)	$	(2,130,434	)	$	773,579
Net (loss) income per common share: basic and diluted	$	(0.32	)	$	(0.50	)	$	0.18
Weighted average common shares outstanding: basic and diluted		4,283,984			4,247,821			4,233,883

The accompanying notes are an integral part of these consolidated financial statements.

35

Ecology and Environment, Inc.

Consolidated Statements of Comprehensive Income (Loss)

	Fiscal Year Ended July 31,
	2014			2013			2012
Comprehensive (loss) income:
Net (loss) income including noncontrolling interests	$	(790,453	)	$	(1,222,048	)	$	3,039,750
Foreign currency translation adjustments		(298,200	)		(883,865	)		(708,489	)
Unrealized investment gains, net		1,412			(28,675	)		17,597
Comprehensive (loss) income		(1,087,241	)		(2,134,588	)		2,348,858
Comprehensive income attributable to noncontrolling interests		(457,916	)		(792,215	)		(2,390,626	)
Comprehensive loss attributable to Ecology and Environment, Inc.	$	(1,545,157	)	$	(2,926,803	)	$	(41,768	)

The accompanying notes are an integral part of these consolidated financial statements.

36

Ecology and Environment, Inc.

Consolidated Statements of Cash Flows

	Fiscal Year Ended July 31,
	2014			2013			2012
Cash flows from operating activities:
Net (loss) income	$	(790,453	)	$	(1,222,048	)	$	3,039,750
Adjustments to reconcile net (loss) income to net cash provided by (used in) operating activities:
Impairment of long-lived assets		-			846,000			-
Depreciation and amortization		4,175,801			2,428,844			2,160,062
(Provision) benefit for deferred income taxes		(817,896	)		203,165			113,717
Share based compensation expense		353,295			507,796			731,583
Tax impact of share-based compensation		(31,695	)		(74,429	)		105,988
Gain on sale of assets and investment securities		(13,045	)		(80,415	)		-
Provision for contract adjustments and doubtful accounts		173,967			6,319,650			1,635,311
Bad debt expense		90,087			(287,426	)		689,657
Decrease (increase) in:
- contract receivables		1,855,027			7,228,782			(2,287,607	)
- other current assets		192,013			(97,563	)		314,587
- income tax receivable		3,247,277			(1,832,096	)		(2,502,431	)
- other non-current assets		29,656			6,951			31,973
(Decrease) increase in:
- accounts payable		23,739			(628,189	)		(1,859,530	)
- accrued payroll costs		630,156			(172,087	)		(1,458,928	)
- income taxes payable		(41,155	)		(69,230	)		(1,375,614	)
- billings in excess of revenue		(1,419,481	)		(1,430,143	)		1,237,329
- other accrued liabilities		445,505			295,562			(936,135	)
Net cash provided by (used in) operating activities		8,102,798			11,943,124			(360,288	)
Cash flows from investing activities:
Acquistion of noncontrolling interest of subsidiaries		(689,361	)		(595,556	)		(908,892	)
Purchase of property, building and equipment		(1,964,663	)		(1,845,241	)		(4,727,033	)
Proceeds from sale of investments		-			1,554,425			138,141
Sale (purchase) of investment securities		52,675			(1,671,284	)		(35,614	)
Net cash used in investing activities		(2,601,349	)		(2,557,656	)		(5,533,398	)
Cash flows from financing activities:
Dividends paid		(2,053,506	)		(2,037,323	)		(2,046,657	)
Proceeds from debt		544,027			255,487			145,401
Repayment of debt and capital lease obligations		(710,009	)		(853,127	)		(974,644	)
Net (repayments of) borrowings under of lines of credit		(4,956,225	)		(5,782,992	)		12,309,335
Distributions to noncontrolling interests		(664,703	)		(1,532,912	)		(1,123,896	)
Proceeds from sale of subsidiary shares to noncontrolling interests		-			-			41,634
Purchase of treasury stock		(173,278	)		-			(363,050	)
Net cash (used in) provided by financing activities		(8,013,694	)		(9,950,867	)		7,988,123
Effect of exchange rate changes on cash and cash equivalents		(43,172	)		(457,711	)		(156,509	)
Net (decrease) increase in cash and cash equivalents		(2,555,417	)		(1,023,110	)		1,937,928
Cash and cash equivalents at beginning of period		9,444,660			10,467,770			8,529,842
Cash and cash equivalents at end of period	$	6,889,243		$	9,444,660		$	10,467,770
Supplemental disclosure of cash flow information:
Cash paid during the period for:
Interest	$	145,880		$	301,154		$	395,146
Income taxes		(2,303,231	)		1,596,760			6,510,514
Supplemental disclosure of non-cash items:
Dividends declared and not paid		1,033,071			1,018,783			1,028,881
Acquistion of noncontrolling interest of subsidiaries (loans and stock)		1,072,944			212,401			795,856
Change in accounts payable due to equipment purchases		-			670,678			(283,071	)

The accompanying notes are an integral part of these consolidated financial statements.

37

Ecology and Environment, Inc.

Consolidated Statements of Changes in Shareholders' Equity

	Class A Common Stock Shares		Class A Common Stock Amount		Class B Common Stock Shares		Class B Common Stock Amount		Capital in Excess of Par Value			Retained Earnings			Accumulated Other Comprehensive Income (Loss)			Treasury Stock Shares			Treasury Stock Amount			Noncontrolling Interest
Balance at July 31, 2011		2,685,151	$	26,851		1,708,574	$	17,087	$	19,983,029		$	30,797,763		$	1,527,189			190,724		$	(2,317,515	)	$	3,923,429
Net income		-		-		-		-		-			773,579			-			-			-			2,266,171
Foreign currency translation adjustment		-		-		-		-		-			-			(871,476	)		-			-			124,455
Cash dividends declared ($0.48 per share)		-		-		-		-		-			(2,036,559	)		-			-			-			-
Unrealized investment gain, net		-		-		-		-		-			-			17,597			-			-			-
Repurchase of Class A common stock		-		-		-		-		-			-			-			22,825			(363,050	)		-
Issuance of stock under stock award plan		-		-		-		-		(716,662	)		-			-			(62,099	)		716,662			-
Share-based compensation expense		-		-		-		-		731,583			-			-			-			-			-
Tax impact of share based compensation		-		-		-		-		105,988			-			-			-			-			-
Sale of subsidiary shares to noncontrolling interests		-		-		-		-		-			-			-			-			-			41,634
Distributions to noncontrolling interests		-		-		-		-		-			-			-			-			-			(1,123,896	)
Purchase of additional noncontrolling interests		-		-		-		-		(351,946	)		-			38,532			(5,208	)		66,871			(619,775	)
Stock award plan forfeitures		-		-		-		-		-			-			-			3,289			-			-
Balance at July 31, 2012		2,685,151	$	26,851		1,708,574	$	17,087	$	19,751,992		$	29,534,783		$	711,842			149,531		$	(1,897,032	)	$	4,612,018
Net (loss) income		-		-		-		-		-			(2,130,434	)		-			-			-			908,386
Foreign currency translation adjustment		-		-		-		-		-			-			(790,464	)		-			-			(116,171	)
Cash dividends declared ($0.48 per share)		-		-		-		-		-			(2,038,496	)		-			-			-			-
Unrealized investment loss, net		-		-		-		-		-			-			(28,675	)		-			-			-
Share-based compensation expense		-		-		-		-		507,796			-			-			-			-			-
Tax impact of share based compensation		-		-		-		-		(74,429	)		-			-			-			-			-
Distributions to noncontrolling interests		-		-		-		-		-			-			-			-			-			(1,532,912	)
Purchase of additional noncontrolling interests		-		-		-		-		(168,486	)		-			22,770			(7,804	)		98,799			(775,935	)
Stock award plan forfeitures		-		-		-		-		-			-			-			2,184			-			-
Balance at July 31, 2013		2,685,151	$	26,851		1,708,574	$	17,087	$	20,016,873		$	25,365,853		$	(84,527	)		143,911		$	(1,798,233	)	$	3,095,386
Net (loss) income		-		-		-		-		-			(1,382,656	)		-			-			-			592,203
Foreign currency translation adjustment		-		-		-		-		-			-			(163,913	)		-			-			(134,287	)
Cash dividends declared ($0.48 per share)		-		-		-		-		-			(2,066,622	)		-			-			-			-
Unrealized investment gain, net		-		-		-		-		-			-			1,412			-			-			-
Repurchase of Class A common stock		-		-		-		-		-			-			-			16,091			(173,278	)		-
Issuance of stock under stock award plan		-		-		-		-		(194,454	)		-			-			(16,387	)		194,454			-
Share-based compensation expense		-		-		-		-		353,295			-			-			-			-			-
Tax impact of share based compensation		-		-		-		-		(31,695	)		-			-			-			-			-
Distributions to noncontrolling interests		-		-		-		-		-			-			-			-			-			(664,703	)
Reclassification adjustment for prior period acquisitions of noncontrolling interests		-		-		-		-		(2,414,027	)		-			-			-			-			2,381,666
Purchase of additional noncontrolling interests		-		-		-		-		(605,653	)		-			64,293			(44,260	)		553,158			(1,156,652	)
Stock award plan forfeitures		-		-		-		-		-			-			-			5,999			-			-
Balance at July 31, 2014		2,685,151	$	26,851		1,708,574	$	17,087	$	17,124,339		$	21,916,575		$	(182,735	)		105,354		$	(1,223,899	)	$	4,113,613

The accompanying notes are an integral part of these consolidated financial statements.

38

Ecology and Environment, Inc.

Notes to Consolidated Financial Statements

1. Organization and Basis of Presentation

Ecology and Environment, Inc., (“EEI” or the “Parent Company”) was incorporated in 1970 as a global broad-based environmental consulting firm whose underlying philosophy is to provide professional services worldwide so that sustainable economic and human development may proceed with acceptable impact on the environment.  Together with its subsidiaries (collectively, the “Company”), EEI has direct or indirect ownership in 19 wholly owned and majority owned operating subsidiaries in 12 countries.  The Company’s staff is comprised of individuals representing more than 80 scientific, engineering, health, and social disciplines working together in multidisciplinary teams to provide innovative environmental solutions.  The Company has completed more than 50,000 projects for a wide variety of clients in more than 120 countries, providing environmental solutions in nearly every ecosystem on the planet.

The consolidated financial statements included herein have been prepared by the Company pursuant to the rules and regulations of the Securities and Exchange Commission and in accordance with accounting principles generally accepted in the United States of America.  The financial statements reflect all adjustments that are, in the opinion of management, necessary for a fair presentation of such information.  All such adjustments are of a normal recurring nature.  Certain prior year amounts were reclassified to conform to the consolidated financial statement presentation for the fiscal year ended July 31, 2014.

2. Recent Accounting Pronouncements

Accounting Pronouncements Not Yet Adopted as of July 31, 2014

In July 2013, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) No. 2013-11 Income Taxes (Topic 740): Presentation of an Unrecognized Tax Benefit When a Net Operating Loss Carryforward, a Similar Tax Loss, or a Tax Credit Carryforward Exists (“ASU 2013-11”).  ASU 2013-11 requires that an unrecognized tax benefit, or a portion of an unrecognized tax benefit, should be presented in the financial statements as a reduction to a deferred tax asset for a net operating loss carryforward, a similar tax loss, or a tax credit carryforward, except as follows.  To the extent a net operating loss carryforward, a similar tax loss, or a tax credit carryforward is not available at the reporting date under the tax law of the applicable jurisdiction to settle any additional income taxes that would result from the disallowance of a tax position or the tax law of the applicable jurisdiction does not require the entity to use, and the entity does not intend to use, the deferred tax asset for such purpose, the unrecognized tax benefit should be presented in the financial statements as a liability and should not be combined with deferred tax assets. The Company adopted the provisions of ASU 2013-11 effective August 1, 2014 and applied its provisions retrospectively.  The adoption of this standard did not have a material impact on the Company’s consolidated financial statements.

In May 2014, FASB issued ASU No. 2014-09 Revenue from Contracts with Customers (Topic 606) (“ASU 2014-09”).  ASU 2014-09 is the result of a joint project of FASB and the International Accounting Standards Board to clarify the principles for recognizing revenue and to develop a common revenue standard for use in the U.S and internationally.  ASU 2014-09 supersedes the revenue recognition requirements in Topic 605 of FASB’s Accounting Standards Codification (the “Codification”) and most industry-specific guidance throughout the Industry Topics of the Codification.  ASU 2014-09 enhances comparability of revenue recognition practices across entities, industries, jurisdictions and capital markets, reduces the number of requirements an entity must consider for recognizing revenue, and requires improved disclosures to help users of financial statements better understand the nature, amount, timing, and uncertainty of revenue that is recognized.  ASU 2014-09 is effective for annual reporting periods beginning after December 15, 2016, including interim periods within the annual reporting period.  The Company intends to implement the provisions of ASU 2014-09 effective August 1, 2017.  ASU 2014-09 requires either retrospective application by restating each prior period presented in the financial statements, or retrospective application by recording the cumulative effect on prior reporting periods to beginning retained earnings in the year that the standard becomes effective.  Management is currently assessing the provisions of ASU 2014-09 and has not yet estimated the impact of this ASU.

39

3. Summary of Significant Accounting Policies

Consolidation

The consolidated financial statements include the accounts of the EEI and its wholly owned and majority owned subsidiaries.  All intercompany transactions and balances have been eliminated.

Use of Estimates

The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions as of the date of the financial statements, which affect the reported values of assets and liabilities and revenues and expenses and disclosures of contingent assets and liabilities.  Actual results may differ from those estimates.

Revenue Recognition and Contract Receivables, Net

Substantially all of the Company's revenue is derived from environmental consulting work.  The consulting revenue is principally derived from the sale of labor hours.  The consulting work is performed under a mix of fixed price, cost-type, and time and material contracts.  Contracts are required from all customers.  Revenue is recognized as follows:

Contract Type	Work Type	Revenue Recognition Policy
Time and materials	Consulting	As incurred at contract rates.
Fixed price	Consulting	Percentage of completion, approximating the ratio of either total costs or Level of Effort (LOE) hours incurred to date to total estimated costs or LOE hours.
Cost-plus	Consulting	Costs as incurred plus fees.  Fees are recognized as revenue using percentage of completion determined by the percentage of LOE hours incurred to total LOE hours in the respective contracts.

Revenues reflected in the Company's consolidated statements of operations represent services rendered for which the Company maintains a primary contractual relationship with its customers.  Included in revenues are certain services outside the Company's normal operations which the Company has elected to subcontract to other contractors.

Time and material contracts are accounted for over the period of performance, in proportion to the costs of performance, predominately based on labor hours incurred.  Revenue earned from fixed price and cost-plus contracts is recognized using the “percentage-of-completion” method, wherein revenue is recognized as project progress occurs.  If an estimate of costs at completion on any contract indicates that a loss will be incurred, the entire estimated loss is charged to operations in the period the loss becomes evident.

Substantially all of the Company's cost-type work is with federal governmental agencies and, as such, is subject to audits after contract completion.  Under these cost-type contracts, provisions for adjustments to accrued revenue are recognized on a quarterly basis and based on past audit settlement history.  Government audits have been completed and final rates have been negotiated through fiscal year 2007.  The Company records an allowance for project disallowances in other accrued liabilities for potential disallowances resulting from government audits (refer to Note 11 of these consolidated financial statements).

Change orders can occur when changes in scope are made after project work has begun, and can be initiated by either the Company or its clients.  Claims are amounts in excess of the agreed contract price which the Company seeks to recover from a client for customer delays and /or errors or unapproved change orders that are in dispute.  Costs related to change orders and claims are recognized as incurred.  Revenues and profit are recognized on change orders when it is probable that the change order will be approved and the amount can be reasonably estimated.  Revenues are recognized only up to the amount of costs incurred on contract claims when realization is probable, estimable and reasonable support from the customer exists.

40

All bid and proposal and other pre-contract costs are expensed as incurred.  Out of pocket expenses such as travel, meals, field supplies, and other costs billed direct to contracts are included in both revenues and cost of professional services.  Sales and cost of sales at the Company’s South American subsidiaries exclude tax assessments by governmental authorities, which are collected by the Company from its customers and then remitted to governmental authorities.

Billed contract receivables represent amounts billed to clients in accordance with contracted terms, which have not been collected from clients as of the end of the reporting period.  Billed contract receivables may include: (1) amounts billed for revenues from incurred costs and fees that have been earned in accordance with contractual terms; and (2) progress billings in accordance with contractual terms that include revenue not yet earned as of the end of the reporting period.

Unbilled contract receivables result from: (i) revenues from incurred costs and fees which have been earned, but are not billed as of period-end; and (ii) differences between year-to-date provisional billings and year-to-date actual contract costs incurred.

The Company reduces contract receivables by recording an allowance for doubtful accounts to account for the estimated impact of collection issues resulting from a client’s inability or unwillingness to pay valid obligations to the Company.  The resulting provision for bad debts is recorded within administrative and indirect operating expenses on the consolidated statements of operations.

The Company also reduces contract receivables by establishing an allowance for contract adjustments related to revenues that are deemed to be unrealizable, or that may become unrealizable in the future.  Management reviews contract receivables and determines allowance amounts based on the adequacy of the Company’s performance under the contract, the status of change orders and claims, historical experience with the client for settling change orders and claims, and economic, geopolitical and cultural considerations for the home country of the client.  Such contract adjustments are recorded as direct adjustments to revenue in the consolidated statements of operations.

Investment Securities Available for Sale

Investment securities have been classified as available for sale and are stated at fair value.  Unrealized gains or losses related to investment securities available for sale are recorded in accumulated other comprehensive income, net of applicable income taxes in the accompanying consolidated balance sheets and consolidated statements of changes in shareholders' equity.  The cost basis of securities sold is based on the specific identification method.

Property, Building and Equipment, Depreciation and Amortization

Property, building and equipment are stated at the lower of depreciated or amortized cost or fair value.  Land and land improvements are not depreciated or amortized.  Methods of depreciation or amortization and useful lives for all other long-lived assets are summarized in the following table.

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	Depreciation / Amortization Method	Useful Lives
Buildings	Straight-line	32-40 Years
Building Improvements	Straight-line	7-15 Years
Field Equipment	Straight-line	3-7 Years
Computer equipment	Straight-line and Accelerated	3-7 Years
Computer software	Straight-line	10 Years
Office furniture and equipment	Straight-line	3-7 Years
Vehicles	Straight-line	3-5 Years
Leasehold improvements	Straight-line	(1)

(1) Leasehold improvements are amortized for book purposes over the terms of the leases or the estimated useful lives of the assets, whichever is shorter.

Expenditures for maintenance and repairs are charged to expense as incurred.  Expenditures for improvements are capitalized when either the value or useful life of the related asset have been increased.  When property or equipment is retired or sold, any gain or loss on the transaction is reflected in the current year's earnings.

The Company capitalizes costs of software acquisition and development projects, including costs related to software design, configuration, coding, installation, testing and parallel processing. Capitalized software costs are recorded in fixed assets, net of accumulated amortization, on the consolidated balance sheets. Capitalized software development costs generally include:

· external direct costs of materials and services consumed to obtain or develop software for internal use;

· payroll and payroll-related costs for employees who are directly associated with and who devote time to the project, to the extent of time spent directly on the project;

· costs to obtain or develop software that allows for access or conversion of old data by new systems;

· costs of upgrades and/or enhancements that result in additional functionality for existing software; and

· interest costs incurred while developing internal-use software that could have been avoided if the expenditures had not been made.

The costs of computer software obtained or developed for internal use is amortized on a straight-line basis over the estimated useful life of the software.  Amortization begins when the software and all related software modules on which it is functionally dependent are ready for their intended use.  Amortization expense is recorded in depreciation and amortization in the consolidated statements of operations.  The Company’s amortization period does not exceed ten years for any capitalized software project.

The following software-related costs are generally expensed as incurred and recorded in general and administrative expenses on the consolidated statements of operations:

· research costs, such as costs related to the determination of needed technology and the formulation, evaluation and selection of alternatives;

· costs to determine system performance requirements for a proposed software project;

· costs of selecting a vendor for acquired software;

· costs of selecting a consultant to assist in the development or installation of new software;

· internal or external training costs related to software;

· internal or external maintenance costs related to software;

· costs associated with the process of converting data from old to new systems, including purging or cleansing existing data, reconciling or balancing of data in the old and new systems and creation of new data;

· updates and minor modifications; and

· fees paid for general systems consulting and overall control reviews that are not directly associated with the development of software.

Capitalized software costs are evaluated for recoverability/impairment whenever events or changes in circumstances indicate that its carrying amount may not be recoverable, including when:

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· existing software is not expected to provide future service potential;

· it is no longer probable that software under development will be completed and placed in service; and

· costs of developing or modifying internal-use software significantly exceed expected development costs or costs of comparable third-party software.

Refer to Note 7 of these consolidated financial statements for additional disclosures regarding the Company’s property, building and equipment.

Fair Value of Financial Instruments

The Company’s financial assets or liabilities are measured using inputs from the three levels of the fair value hierarchy.  The asset’s or liability’s classification within the fair value hierarchy is based on the lowest level of any input that is significant to the fair value measurement.  Valuation techniques used need to maximize the use of observable inputs and minimize the use of unobservable inputs.  The Company has not elected a fair value option on any assets or liabilities. The three levels of the hierarchy are as follows:

Level 1 Inputs – Unadjusted quoted prices in active markets that are accessible at the measurement date for identical, unrestricted assets or liabilities. Generally this includes debt and equity securities and derivative contracts that are traded on an active exchange market (e.g., New York Stock Exchange) as well as certain U.S. Treasury and U.S. Government and agency mortgage-backed securities that are highly liquid and are actively traded in over-the-counter markets.

Level 2 Inputs – Quoted prices for similar assets or liabilities in active markets; quoted prices for identical or similar assets or liabilities in inactive markets; or valuations based on models where the significant inputs are observable (e.g., interest rates, yield curves, credit risks, etc.) or can be corroborated by observable market data.  The Company’s investment securities classified as Level 2 are comprised of international and domestic corporate and municipal bonds.

Level 3 Inputs – Valuations based on models where significant inputs are not observable.  The unobservable inputs reflect the Company’s own assumptions about the assumptions that market participants would use.

The availability of observable market data is monitored to assess the appropriate classification of financial instruments within the fair value hierarchy.  Changes in economic conditions or model-based valuation techniques may require the transfer of financial instruments from one fair value level to another.  In such instances, the transfer is reported at the beginning of the reporting period.

Refer to Note 5 of these consolidated financial statements for additional disclosures regarding the fair value of the Company’s financial instruments.

Goodwill

Goodwill of $1.2 million is included in other assets on the accompanying consolidated balance sheets.  Goodwill is subject to an annual assessment for impairment by comparing the estimated fair values of reporting units to which Goodwill has been assigned, as calculated using a discounted cash flow method, to the recorded book value of the respective reporting units.  The Company’s most recent annual impairment assessment for goodwill was completed during the fourth quarter of fiscal year 2014.  The results of this assessment showed that the fair values of the reporting units to which goodwill is assigned was in excess of the book values of the respective reporting units, resulting in the identification of no goodwill impairment.

Goodwill is also assessed for impairment between annual assessments whenever events or circumstances make it more likely than not that an impairment may have occurred.  The Company identified no events or changes in circumstances during the fiscal year ended July 31, 2014 that necessitated an evaluation for impairment of goodwill.

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Impairment of Long-Lived Assets

The Company assesses recoverability of the carrying value of long-lived assets by estimating the future net cash flows (undiscounted) expected to result from the asset, including eventual disposition.  If the future net cash flows are less than the carrying value of the asset, an impairment loss is recorded equal to the difference between the asset's carrying value and fair value.

Foreign Currencies

The financial statements of foreign subsidiaries where the local currency is the functional currency are translated into U.S. dollars using exchange rates in effect at period end for assets and liabilities and average exchange rates during each reporting period for results of operations.  Translation adjustments are deferred in accumulated other comprehensive income.  Transaction gains and losses that arise from exchange rate fluctuations on transactions denominated in a currency other than the functional currency are included in the results of operations as incurred.  The Company recorded foreign currency transaction (losses) gains of less than $(0.1) million, $(0.1) million and $(0.4) million for the fiscal years ended July 31, 2014, 2013 and 2012, respectively.

The financial statements of foreign subsidiaries located in highly inflationary economies are remeasured as if the functional currency were the U.S. dollar.  The remeasurement of local currencies into U.S. dollars creates transaction adjustments which are included in net income.  The Company did not record any highly inflationary economy translation adjustments for the fiscal years ended July 31, 2014, 2013 or 2012.

Income Taxes

The Company follows the asset and liability approach to account for income taxes.  This approach requires the recognition of deferred tax liabilities and assets for the expected future tax consequences of temporary differences between the carrying amounts and the tax bases of assets and liabilities.  Although realization is not assured, management believes it is more likely than not that the recorded net deferred tax assets will be realized.  Since in some cases management has utilized estimates, the amount of the net deferred tax asset considered realizable could be reduced in the near term.  No provision has been made for United States income taxes applicable to undistributed earnings of foreign subsidiaries as it is the intention of the Company to indefinitely reinvest those earnings in the operations of those entities.

Income tax expense includes U.S. and international income taxes, determined using the applicable statutory rates.  A deferred tax liability is recognized for all taxable temporary differences, and a deferred tax asset is recognized for all deductible temporary differences and net operating loss carryforwards.

The Company has significant deferred tax assets, resulting principally from contract reserves and accrued expenses.  The Company periodically evaluates the likelihood of realization of deferred tax assets, and provides for a valuation allowance when necessary.

Additionally, the Financial Accounting Standards Board (“FASB”) Accounting Standard Codification (“ASC”) Topic Income Taxes, prescribes a recognition threshold and measurement principles for financial statement disclosure of tax positions taken or expected to be taken on a tax return.   A tax position is a position in a previously filed tax return or a position expected to be taken in a future tax filing that is reflected in measuring current or deferred income tax assets and liabilities.  Tax positions shall be recognized only when it is more likely than not (likelihood of greater than 50%), based on technical merits, that the position will be sustained. Tax positions that meet the more likely than not threshold should be measured using a probability weighted approach as the largest amount of tax benefit that is greater than 50% likely of being realized upon settlement. Whether the more-likely-than-not recognition threshold is met for a tax position, is a matter of judgment based on the individual facts and circumstances of that position evaluated in light of all available evidence.  The Company recognizes interest accrued related to unrecognized tax benefits in interest expense and penalties in administrative and indirect operating expenses.

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Refer to Note 10 of these consolidated financial statements for additional disclosures regarding income taxes.

Defined Contribution Plans

EEI has a non-contributory defined contribution plan providing deferred benefits for substantially all of its employees.  The annual expense of the defined contribution plan is based on a percentage of eligible wages as authorized by EEI’s Board of Directors.

Walsh Environmental Scientists & Engineers, LLC (“Walsh”), a wholly-owned subsidiary of EEI, has a defined contribution plan providing deferred benefits for substantially all of its employees.  Walsh contributes a percentage of eligible wages up to a maximum of 4%.

Refer to Note 15 of these consolidated financial statements for additional disclosures regarding the Company’s defined contribution plans.

Stock-Based Compensation

The company expenses the value of employee stock awards over the vesting period of the respective award.  Share-based awards are measured at fair value on the respective grant date, based on the estimated number of awards that are expected to vest.  Compensation cost for awards that vest is not reversed if the awards expire without being exercised.

Refer to Note 12 of these consolidated financial statements for additional disclosures regarding the Company’s stock-based compensation plans.

Earnings per Share

Basic and diluted earnings per share (“EPS”) is computed by dividing income available to common shareholders by the weighted average number of common shares outstanding for the reporting period.  The Company allocates undistributed earnings between the classes on a one-to-one basis when computing EPS.  As a result, basic and fully diluted earnings per Class A and Class B shares are equal amounts.  Refer to Note 16 of these consolidated financial statements for additional disclosures regarding EPS.

Comprehensive (Loss) Income

Comprehensive (loss) income is defined as "the change in equity of a business enterprise during a period from transactions and other events and circumstances from non-owner sources."  Comprehensive (loss) income includes total net earnings plus other comprehensive (loss) income during a reporting period.  Other comprehensive (loss) income includes currency translation adjustments on foreign subsidiaries and unrealized gains or losses on available-for-sale securities.

4. Cash and Cash Equivalents

The Company considers all highly liquid instruments purchased with a maturity of three months or less to be cash equivalents.  The Company invests cash in excess of operating requirements in income-producing short-term investments.  Money market funds of $0.3 million and $1.5 million were included in cash and cash equivalents in the accompanying consolidated balance sheets and consolidated statements of cash flows at July 31, 2014 and 2013, respectively.  Bank overdrafts of $0.7 million were classified as accounts payable at July 31, 2013.

5. Fair Value of Financial Instruments

The fair value of the Company’s assets and liabilities that are measured at fair value on a recurring basis is summarized by level within the fair value hierarchy in the following table.

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	Balance at July 31, 2014
	Level 1			Level 2			Level 3			Total
Assets
Investment securities available for sale		$	1,407,277		$	---		$	---		$	1,407,277

	Balance at July 31, 2013
	Level 1			Level 2			Level 3			Total
Assets
Investment securities available for sale		$	1,463,864		$	---		$	---		$	1,463,864

Investment securities available for sale includes mutual funds are valued at the net asset value of shares (“NAV”) held by the Company at period end.  Mutual funds held by the Company are open-end mutual funds that are registered with the Securities and Exchange Commission.  These funds are required to publish their daily NAV and to transact at that price, and are deemed to be actively traded.  Reclassification adjustments out of accumulated other comprehensive (loss) income resulting from realized gains or losses from the sale of investment securities available for sale are included in gain on sale of assets and investment securities on the accompanying consolidated statements of operations.  The Company recorded gross unrealized gains of less than $0.1 million related to these funds in accumulated other comprehensive (loss) income at July 31, 2014 and 2013.

The carrying amount of cash and cash equivalents approximated fair value at July 31, 2014 and 2013.  These assets were classified as level 1 instruments at both dates.

Long-term debt consists of bank loans and capitalized equipment leases.  Lines of credit consist of borrowings for working capital requirements.  Based on the Company's assessment of the current financial market and corresponding risks associated with the debt and line of credit borrowings, management believes that the carrying amount of these liabilities approximated fair value at July 31, 2014 and 2013.  These liabilities were classified as level 2 instruments at both dates.

There were no financial instruments classified as level 3 at July 31, 2014 or 2013.

6. Contract Receivables, net

Contract receivables, net are summarized in the following table.

	Balance at July 31,
	2014				2013
Contract Receivables:
Billed		$	26,863,708			$	36,284,950
Unbilled			23,694,451				16,441,857
			50,558,159				52,726,807
Allowance for doubtful accounts and contract adjustments			(6,126,854	)			(5,592,800	)
Contract receivables, net		$	44,431,305			$	47,134,007

Billed contract receivables did not include any contractual retainage balances at July 31, 2014 or 2013.  Management anticipates that the July 31, 2014 unbilled receivables will be substantially billed and collected within one year.

Contract Receivable Concentrations

Significant concentrations of contract receivables and the allowance for doubtful accounts and contract adjustments are summarized in the following table.

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	Balance at July 31, 2014						Balance at July 31, 2013
Region	Contract Receivables			Allowance for Doubtful Accounts and Contract Adjustments			Contract Receivables			Allowance for Doubtful Accounts and Contract Adjustments
United States, Canada and South America		$	43,394,442		$	1,611,068		$	41,302,180		$	1,576,746
Middle East and Africa			7,010,225			4,386,240			10,876,151			3,886,508
Asia			153,492			129,546			548,476			129,546
Totals		$	50,558,159		$	6,126,068		$	52,726,807		$	5,592,800

Combined contract receivables related to projects in the Middle East, Africa and Asia represented 14% and 22% of total contract receivables at July 31, 2014 and 2013, respectively, while the combined allowance for doubtful accounts and contract adjustments related to these projects represented 74% and 72%, respectively, of the total allowance for doubtful accounts and contract adjustments at those same period end dates.  These allowance percentages highlight the Company’s experience of heightened operating risks (i.e., political, regulatory and cultural risks) within these foreign regions in comparison with similar risks in the United States, Canada and South America.  These heightened operating risks have resulted in increased collection risks and the Company expending resources that it may not recover for several months, or at all.

Middle East and Africa

During fiscal year 2014, the Company collected $4.1 million of cash related to aged receivables in the Middle East and Africa.  However, the Company also recorded net increases of $0.5 million to the allowance for contract adjustments due mainly to continued issues with a specific problem project in the Middle East.

Allowance for Doubtful Accounts and Contract Adjustments

Activity within the allowance for doubtful accounts and contract adjustments is summarized in the following table.

	Fiscal Year Ended July 31,
	2014			2013			2012
Balance at beginning of period	$	5,592,800		$	10,238,391		$	6,755,087
Net increase (decrease) due to adjustments in the allowance for:
Contract adjustments (1)		473,967			6,319,650			1,635,311
Doubtful accounts (2)		90,087			(287,426	)		689,657
Transfer of reserves (to) from allowance for project disallowances (3)		(30,000	)		61,123			1,158,336
Specific write-off of contract receivables and reserves during the period (4)		---			(10,738,938	)		---
Balance at end of period	$	6,126,854		$	5,592,800		$	10,238,391

(1) Increases (decreases) to the allowance for contract adjustments on the consolidated balance sheets are also recorded as (decreases) increases to revenue on the consolidated statements of operations.

(2) Increases (decreases) to the allowance for doubtful accounts on the consolidated balance sheets are also recorded as increases (decreases) to administrative and other indirect operating expenses on the consolidated statements of operations.

(3) The allowance for project disallowances is included in other accrued liabilities on the consolidated balance sheets.  Refer to Note 11 of these consolidated financial statements.

(4) Approximately $7.3 million of contract receivables related to projects in China and $3.4 million of contract receivables from projects in the Middle East and Africa were fully reserved and written off during the last quarter of fiscal year 2013, resulting in corresponding decreases in contract receivables and the allowance for contract adjustments during fiscal year 2013.

7. Property, Building and Equipment, net

Property, plant and equipment is summarized in the following table.

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	Balance at July 31,
	2014			2013
Land and land improvements	$	393,051		$	393,051
Buildings and building improvements		12,231,788			12,231,788
Field equipment		3,273,725			3,128,859
Computer equipment		9,128,027			8,931,030
Computer software		5,030,472			3,617,527
Office furniture and equipment		4,095,659			4,023,004
Vehicles		1,658,273			1,548,901
Other		746,375			817,780
		36,557,370			34,691,940
Accumulated depreciation and amortization		(28,615,915	)		(24,569,139	)
Property, building and equipment, net	$	7,941,455		$	10,122,801

During fiscal years 2012 and 2013, the Company acquired and developed a new operating and financial software system for use by EEI and its U.S. and foreign subsidiaries.  Through July 31, 2013, the Company capitalized $4.1 million of expenditures for the acquisition and development of this system, which was being amortized over a 10 year useful life.  During the quarter ended July 31, 2013, management assessed the utility and effectiveness of various modules included in the software package, and determined that certain software modules do not meet the needs of users that rely on the system and will not provide any future service potential.  As a result, the Company recorded a software impairment charge of $0.8 million during the three months ended July 31, 2013, which was included in administrative and indirect operating expenses on the accompanying consolidated statements of operations.

In November 2013, after an extensive assessment process, management decided to abandon the Company’s existing operating and financial software system and migrate to new system software.  The Company acquired and developed the new software during fiscal year 2014, and began utilizing the new software effective August 1, 2014 for the Company’s U.S. operations.  The process to evaluate, select and develop new operating and financial software systems for the Company’s significant foreign operations is expected to be completed in January 2015.  The Company recorded software development costs of $1.4 million in property, plant and equipment during the fiscal year ended July 31, 2014.

The Company continued to utilize the previous software system through July 31, 2014, at which time the previous system was abandoned.  As a result, amortization of software development costs capitalized for the previous system was accelerated so that the system was completely amortized by July 31, 2014.  Total software amortization expense was $2.6 million, $0.4 million, and $0.2 million for the fiscal years ended July 31, 2014, 2013 and 2012, respectively.

8. Lines of Credit

Unsecured lines of credit are summarized in the following table.

	Balance at July 31,
	2014			2013
Outstanding cash draws, recorded as lines of credit on the accompanying consolidated balance sheets		$	1,572,466		$	6,528,691
Outstanding letters of credit to support operations			1,944,994			3,080,938
Total amounts used under lines of credit			3,517,460			9,609,629
Remaining amounts available under lines of credit			30,851,540			24,759,371
Total approved unsecured lines of credit		$	34,369,000		$	34,369,000

Contractual interest rates ranged from 2.50% to 3.00% at July 31, 2014.  The Company’s lenders have reaffirmed the lines of credit within the past twelve months.

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9. Debt and Capital Lease Obligations

Debt and capital lease obligations are summarized in the following table.

	Balance at July 31,
	2014				2013
Various loans and advances at interest rates ranging from 3.25% to 14%		$	676,874			$	276,934
Capital lease obligations at varying interest rates averaging 11%			165,632				174,338
			842,506				451,272
Current portion of long-term debt and capital lease obligations			(420,737	)			(199,658	)
Long-term debt and capital lease obligations		$	421,769			$	251,614

The aggregate maturities of long-term debt and capital lease obligations as of July 31, 2014 are summarized in the following table.

August 2014 – July 2015	$	420,737
August 2015 – July 2016		375,724
August 2016 – July 2017		35,697
August 2017 – July 2018		10,348
Thereafter		---
Total	$	842,506

10. Income Taxes

Income (loss) from continuing operations before provision (benefit) for income taxes and noncontrolling interest is summarized in the following table.

	Fiscal Year Ended July 31,
	2014				2013				2012
Domestic		$	(4,305,768	)		$	(3,055,338	)		$	(993,959	)
Foreign			3,858,378				2,087,524				5,391,625
		$	(447,390	)		$	(967,814	)		$	4,397,666

The income tax provision is summarized in the following table.

	Fiscal Year Ended July 31,
	2014			2013			2012
Current:
Federal	$	86,062		$	(985,865	)	$	(175,203	)
State		62,761			181,434			(232,800	)
Foreign		1,012,136			855,500			1,652,202
Total current		1,160,959			51,069			1,244,199
Deferred:
Federal		(975,519	)		200,197			509,161
State		24,138			(178,438	)		(35,273	)
Foreign		133,485			181,406			(360,171	)
Total deferred		(817,896	)		203,165			113,717
Total income tax provision	$	343,063		$	254,234		$	1,357,916

A reconciliation of the income tax provision using the statutory U.S. income tax rate compared with the actual income tax provision reported on the consolidated statements of operations is summarized in the following table.

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	Fiscal Year Ended July 31,
	2014			2013			2012
Income tax (benefit) provision at the U.S. federal statutory income tax rate	$	(152,113	)	$	(329,057	)	$	1,495,206
Income from "pass-through" entities taxable to noncontrolling partners		35,309			(102,933	)		(255,065	)
International rate differences		(143,493	)		(197,217	)		(329,825	)
Other foreign taxes, net of federal benefit		(34,419	)		94,528			211,088
Foreign dividend income		596,631			481,287			329,825
State taxes, net of federal benefit		27,739			3,871			13,193
Re-evaluation and settlements of tax contingencies		(19,533	)		(58,105	)		(180,304	)
Peru non-deductible expenses		44,077			173,707			211,000
Canada valuation allowance		(83,257	)		130,950			---
Other permanent differences		72,122			57,203			(137,202	)
Income tax provision, as reported on the consolidated statements of operations	$	343,063		$	254,234		$	1,357,916

The significant components of deferred tax assets and liabilities are summarized in the following table.

	Balance at July 31, 2014						Balance at July 31, 2013
	Current			Noncurrent			Current			Noncurrent
Deferred tax assets:
Contract and other reserves	$	3,409,234		$	---		$	3,273,465		$	---
Accrued compensation and expenses		1,250,286			378,632			1,349,318			476,214
Net operating loss carryforwards		---			1,213,010			---			613,097
Foreign and state income taxes		---			54,398			---			52,375
Federal benefit on state deferred taxes		(184,523	)		(103,098	)		(183,987	)		(110,520	)
Foreign tax credit		---			296,326			---			461,154
Valuation Allowance		(192,213	)		(206,070	)		(343,245	)		(287,751	)
Other		---			74,370			---			89,208
Net deferred tax assets	$	4,282,784		$	1,707,568		$	4,095,551		$	1,293,777
Deferred tax liabilities:
Fixed assets and intangibles	$	---		$	58,934		$	---		$	(308,845	)
Other		251,678			(531,812	)		212,987			(358,659	)
Net deferred tax liabilities	$	251,678		$	(472,878	)	$	212,987		$	(667,504	)

For fiscal years 2014 and 2013, there was no one item that significantly impacted the change in the deferred tax assets and liabilities.  The Company recorded a valuation allowance of $0.4 million and $0.6 million at July 31, 2014 and 2013, respectively, which was primarily related to excess foreign tax credit carryforwards, the utilization of which is dependent on future foreign source income, and to operating losses in Asia and Canada.

The Company has not recorded income taxes applicable to undistributed earnings of all foreign subsidiaries that are indefinitely reinvested in those operations.  At July 31, 2014, the Company’s operations in Chile, Peru and Ecuador had $5.4 million of undistributed earnings that were indefinitely reinvested in those operations.

The Company files numerous consolidated and separate income tax returns in the U.S. federal jurisdiction and in many state and foreign jurisdictions.  During fiscal year 2013, the IRS completed the examination of fiscal year 2010 and 2011 income tax returns, which were settled without material adjustment.  The Company’s tax matters for the fiscal years 2012, 2013 and 2014 remain subject to examination by the IRS.  During fiscal year 2012, the Company was audited by New York State for fiscal years 2008 through 2010, which resulted in no adjustments.  The Company’s tax matters in other material jurisdictions remain subject to examination by the respective state, local, and foreign tax jurisdiction authorities.  No waivers have been executed that would extend the period subject to examination beyond the period prescribed by statute.

During the fiscal year ended July 31, 2014 and 2013, the Company generated operating losses in the U.S. of $1.7 million and $3.8 million, respectively.  The net operating loss from fiscal year 2014 will be carried forward to future fiscal years.  The net operating loss from fiscal year 2013 was carried back to an earlier year and was fully utilized.  As of July 31, 2014, net operating losses attributable to operations in Brazil, Canada and China and net operating losses for state income tax purposes still exist.

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At July 31, 2014, 2013 and 2012, the Company had $0.1 million of gross unrecognized tax benefits (“UTPs”) that if realized, would favorably affect the effective income tax rate in future periods.  It is reasonably possible that the liability associated with UTPs will increase or decrease within the next twelve months.  At this time, an estimate of the range of the reasonably possible outcomes cannot be made.  The Company’s UTPs are summarized in the following table.

	Fiscal Year Ended July 31,
	2014			2013			2012
Balance at beginning of period	$	91,100		$	131,300		$	530,500
Additions for tax positions of prior years		---			---			23,100
Reductions for tax positions of prior years for:
Changes in judgment		---			(23,100	)		---
Settlements during the period		(17,700	)		(29,000	)		(422,300	)
Changes in non-controlling interests		---			11,900			---
Balance at end of period	$	73,400		$	91,100		$	131,300

The net liability for UTPs and associated interest and penalties are included in noncurrent income taxes payable on the accompanying consolidated balance sheets.  The Company recognized interest and penalties expense of approximately $0.1million related to liabilities for UTPs during fiscal years 2014, 2013 and 2012.  The Company had approximately $0.1 million of accrued interest and penalties at July 31, 2014 and 2013.

11. Other Accrued Liabilities

Other accrued liabilities are summarized in the following table.

	Balance at July 31,
	2014			2013
Allowance for project disallowances		$	2,393,351		$	2,663,351
Other			1,841,911			1,406,722
Total other accrued liabilities		$	4,235,262		$	4,070,073

The allowance for project disallowances represents potential disallowances of amounts billed and collected resulting from contract close-outs and government audits.  Allowances for project disallowances are recorded when the amounts are estimable.  Activity within the allowance for project disallowances is summarized in the following table.

	Fiscal Year Ended July 31,
	2014			2013			2012
Balance at beginning of period	$	2,663,351		$	2,724,474		$	3,882,810
Reduction of reserves recorded in prior fiscal years		(300,000	)		---			---
Net change during the period, recorded as a transfer of reserves from allowance for doubtful accounts and contract adjustments		30,000			(61,123	)		(1,158,336
Balance at end of period	$	2,393,351		$	2,663,351		$	2,724,474

12. Stock Award Plan

EEI adopted the 1998 Stock Award Plan effective March 16, 1998 (the “1998 Award Plan”).  The following supplemental plans were adopted subsequent to adoption of the 1998 Award Plan:

· The 2003 Stock Award Plan (the “2003 Award Plan”), which was adopted by the Board of Directors in October 2004, approved by shareholders in January 2004, and terminated in October 2008;

· The 2007 Stock Award Plan (the “2007 Award Plan”), which was adopted by the Board of Directors in October 2007, approved by shareholders in January 2008, and terminated in October 2012; and

· The 2011 Stock Award Plan (the “2011 Award Plan”), which was adopted by the Board of Directors in October 2011, approved by shareholders in January 2012, and will terminate in October 2016.

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The 1998 Award Plan and all supplemental plans are collectively referred to as the “Award Plan”.  The Award Plan permits grants of the award for a period of five (5) years from the date of adoption by the Board of Directors.  The Award Plan is not a qualified plan Section 401(a) of the Internal Revenue Code.

The Company awarded 62,099 Class A shares valued at $0.9 million in October 2011 and 16,387 Class A shares valued at $0.2 million in July 2013 pursuant to the Award Plan.  These awards have a three year vesting period.  Total gross compensation expense is recognized over the vesting period.  The Company recorded non-cash compensation expense of $0.4 million, $0.5 million and $0.7 million during the fiscal years ended July 31, 2014, 2013 and 2012, respectively, in connection with outstanding stock compensation awards.  The Company expects to record less than $0.1 million of non-cash compensation expense during the fiscal year ended July 31, 2015.  The "pool" of excess tax benefits accumulated in Capital in Excess of Par Value was $0.1 million and $0.2 million at July 31, 2014 and 2013, respectively.

13. Shareholders' Equity

Class A and Class B Common Stock

The relative rights, preferences and limitations of the Company's Class A and Class B common stock are summarized as follows: Holders of Class A shares are entitled to elect 25% of the Board of Directors so long as the number of outstanding Class A shares is at least 10% of the combined total number of outstanding Class A and Class B common shares. Holders of Class A common shares have one-tenth the voting power of Class B common shares with respect to most other matters.

In addition, Class A shares are eligible to receive dividends in excess of (and not less than) those paid to holders of Class B shares. Holders of Class B shares have the option to convert at any time, each share of Class B common stock into one share of Class A common stock. Upon sale or transfer, shares of Class B common stock will automatically convert into an equal number of shares of Class A common stock, except that sales or transfers of Class B common stock to an existing holder of Class B common stock or to an immediate family member will not cause such shares to automatically convert into Class A common stock.

Restrictive Shareholder Agreement

Messrs. Gerhard J. Neumaier (deceased), Frank B. Silvestro, Ronald L. Frank, and Gerald A. Strobel entered into a Stockholders’ Agreement dated May 12, 1970, as amended January 24, 2011, which governs the sale of certain shares of Ecology and Environment, Inc. common stock (now classified as Class B Common Stock) owned by them, certain children of those individuals and any such shares subsequently transferred to their spouses and/or children outright or in trust for their benefit upon the demise of a signatory to the Agreement (“Permitted Transferees”).  The Agreement provides that prior to accepting a bona fide offer to purchase some or all of their shares of Class B Common Stock governed by the Agreement, that the selling party must first allow the other signatories to the Agreement (not including any Permitted Transferee) the opportunity to acquire on a pro rata basis, with right of over-allotment, all of such shares covered by the offer on the same terms and conditions proposed by the offer.

Cash Dividends

The Company declared and paid cash dividends of $2.0 million during the fiscal years ended July 31, 2014, 2013 and 2012.  The Company paid dividends of $1.0 million in August 2014 and 2013 that were declared and accrued in prior periods.

Stock Repurchase

In August 2010, the Company’s Board of Directors approved a program for repurchase of 200,000 shares of Class A common stock.  During the fiscal year ended July 31, 2014, the Company acquired 16,091 shares of Class A stock under this program for a total acquisition cost of approximately $0.2 million.  As of July 31, 2014, 122,918 Class A shares were repurchased and 77,082 shares had yet to be repurchased under this program.

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Noncontrolling Interests

Noncontrolling interests are disclosed as a separate component of consolidated shareholders’ equity on the accompanying consolidated balance sheets.  Earnings and other comprehensive (loss) income are separately attributed to both the controlling and noncontrolling interests.  Earnings per share is calculated based on net (loss) income attributable to the Company’s controlling interests.

Transactions with noncontrolling shareholders for the fiscal years ended July 31, 2014, 2013 and 2012 were recorded at amounts that approximated fair value.  Effects on shareholders’ equity resulting from changes in EEI’s ownership interest in its subsidiaries are summarized in the following table.

	Fiscal Years Ended July 31,
	2014			2013			2012
Sales of noncontrolling interest:
Sale of 600 Gustavson common shares	$	---		$	---		$	41,634
Total sales of noncontrolling interests (10)		---			---			41,634
Purchases of noncontrolling interests:
Purchase of 344 Walsh common shares (1)	$	(5,653	)		---			---
Purchase of 3,705 Walsh common shares (2)		(1,120,749	)		---			---
Purchase of 100 Walsh common shares (3)		(30,250	)		---			---
Purchase of 50 Walsh common shares (4)		---			(18,316	)		---
Purchase of 25 Lowham common shares (5)		---			(8,737	)		---
Purchase of 495 Walsh common shares (6)		---			(243,653	)		---
Purchase of 2,800 Gustavson common shares (7)		---			(293,102	)		---
Purchase of 370 Walsh common shares (8)		---			(182,125	)		---
Purchase of 75 Lowham common shares (9)		---			(30,002	)		---
Purchase of 25 Gestion Ambiental Consultores common shares		---			---			(7,452	)
Purchase of 166 Walsh common shares		---			---			(97,634	)
Purchase of  496 Walsh common shares		---			---			(277,514	)
Purchase of  5,389 Brazil common shares		---			---			77,539
Purchase of 26,482 Walsh Peru common shares		---			---			(238,677	)
Purchase of 152 Walsh common shares		---			---			(76,037	)
Total purchases of noncontrolling interests (10)		(1,156,652	)		(775,935	)		(619,775	)
Net transfers from noncontrolling interests	$	(1,156,652	)	$	(775,935	)	$	(578,141	)

(1) In January 2014, EEI purchased an additional 0.9% of Walsh Environmental Scientists and Engineers, LLC (“Walsh”) from noncontrolling shareholders for $0.1 million in cash.  Walsh became a wholly-owned subsidiary of EEI as a result of these transactions.

(2) In October 2013, EEI purchased an additional 9.4% of Walsh for $1.6 million.  The purchase price was paid as follows: (i) one third in cash payable on the transaction consummation date; (ii) one third payable with EEI Common Stock on the transaction consummation date; and (iii) one third with a promissory note payable in two annual installments of one half the principal plus interest accrued at 3.25% per annum.

(3) In October 2013, EEI purchased an additional 0.2% of Walsh for less than $0.1 million in cash.

(4) In April 2013, EEI purchased an additional 0.1% of Walsh from noncontrolling shareholders for less than $0.1 million in cash.

(5) In March 2013, Lowham-Walsh Engineering & Environment Services LLC (“Lowham”), a subsidiary of Walsh, purchased shares from noncontrolling shareholders for less than $0.1 million in cash.

(6) In January 2013, EEI purchased an additional 1.3% of Walsh from noncontrolling shareholders for $0.2 million.  Two thirds of the purchase price was paid in cash while the remaining one third was paid for with EEI stock.

(7) In December 2012, Gustavson Associates, LLC (“Gustavson”) purchased an additional 6.7% of its shares from noncontrolling shareholders for $0.4 million.  Half of the purchase price was paid in cash and Gustavson issued a three year note for the other half.

(8) In December 2012, EEI purchased an additional 0.9% of Walsh from noncontrolling shareholders for $0.2 million in cash.

(9) During the three months ending October 31, 2012, Lowham purchased shares from noncontrolling shareholders for less than $0.1 million in cash.

(10) Sales (purchases) of additional noncontrolling interests are recorded as additions (reductions) of shareholders’ equity on the consolidated statements of changes in shareholders’ equity.

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14. Lease Commitments

The Company rents certain office facilities and equipment under non-cancelable operating leases and certain other facilities for servicing project sites over the term of the related long-term government contracts.  Future minimum rental commitments under these leases as of July 31, 2014 are summarized in the following table.

Fiscal Year Ended July 31,	Amount
2015	$	2,546,713
2016		1,916,230
2017		1,680,192
2018		1,642,781
2019		1,283,343
Thereafter		2,426,378

Lease agreements may contain step rent provisions and/or free rent concessions.   Lease payments based on a price index have rent expense recognized on a straight line or substantially equivalent basis, and are included in the calculation of minimum lease payments.  Gross rental expense associated with lease commitments was $3.9 million, $4.2 million and $3.6 million for the fiscal years ended July 31, 2014, 2013 and 2012, respectively.

15. Defined Contribution Plans

Contributions to EEI’s defined contribution plan and supplemental retirement plan are discretionary and determined annually by its Board of Directors.  Walsh’s defined contribution plan provides for mandatory employer contributions to match 100% of employee contributions up to 4% of each participant’s compensation.  The total expense under the plans was $1.7 million, $2.2 million, and $1.8 million for the fiscal years ended July 31, 2014, 2013 and 2012, respectively.

16. Earnings Per Share

Basic and diluted EPS is computed by dividing the net (loss) income attributable to Ecology and Environment, Inc. common shareholders by the weighted average number of common shares outstanding for the period.  After consideration of all the rights and privileges of the Class A and Class B stockholders summarized in Note 13, in particular the right of the holders of the Class B common stock to elect no less than 75% of the Board of Directors making it highly unlikely that the Company will pay a dividend on Class A common stock in excess of Class B common stock, the Company allocates undistributed earnings between the classes on a one-to-one basis when computing earnings per share.  As a result, basic and fully diluted earnings per Class A and Class B share are equal amounts.

The Company has determined that its unvested share-based payment awards that contain non-forfeitable rights to dividends or dividend equivalents (whether paid or unpaid) are participating securities.  These securities are included in the weighted average shares outstanding calculation.

The computation of basic earnings per share is included in the following table.

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	Fiscal Year Ended July 31,
	2014			2013			2012
Net (loss) income attributable to Ecology and Environment, Inc.	$	(1,382,656	)	$	(2,130,434	)	$	773,579
Dividend declared		2,066,622			2,038,496			2,036,559
Undistributed earnings	$	(3,449,278	)	$	(4,168,930	)	$	(1,262,980	)
Weighted-average common shares outstanding (basic and diluted)		4,283,984			4,247,821			4,233,883
Distributed earnings per share	$	0.48		$	0.48		$	0.48
Undistributed earnings per share		(0.80	)		(0.98	)		(0.30	)
Total earnings per share	$	(0.32	)	$	(0.50	)	$	0.18

17. Segment Reporting

The Company reports segment information based on the geographic location of its customers (for revenues) and the location of its offices (for long-lived assets). Revenue and long-lived assets by business segment are summarized in the following tables.

	Fiscal Years Ended July 31,
	2014			2013			2012
Revenue by geographic location:
United States		$	82,370,480		$	91,451,247		$	98,558,099
Foreign countries (1)			46,056,396			43,485,644			56,852,000

(1) Significant foreign revenues included revenues in Peru ($19.5 million, $11.5 million and $17.2 million for fiscal years 2014, 2013 and 2012, respectively), Brazil ($13.8 million, $15.1 million and $15.7 million for fiscal years 2014, 2013 and 2012, respectively) and Chile ($8.8 million, $10.6 million and $11.3 million for fiscal years 2014, 2013 and 2012, respectively).

	Balance at July 31,
	2014			2013			2012
Long-lived assets by geographic location:
United States		$	31,170,634		$	29,508,055		$	29,506,036
Foreign countries			5,386,736			5,183,885			5,191,000

18. Commitments and Contingencies

From time to time, the Company is a named defendant in legal actions arising out of the normal course of business.  The Company is not a party to any pending legal proceeding, the resolution of which the management believes will have a material adverse effect on the Company’s results of operations, financial condition or cash flows, or to any other pending legal proceedings other than ordinary, routine litigation incidental to its business.  The Company maintains liability insurance against risks arising out of the normal course of business.

Certain contracts contain termination provisions under which the customer may, without penalty, terminate the contracts upon written notice to the Company.  In the event of termination, the Company would be paid only termination costs in accordance with the particular contract.  Generally, termination costs include unpaid costs incurred to date, earned fees and any additional costs directly allocable to the termination.

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On September 21, 2012, the Colorado Department of Public Health and Environment (the "Department") issued a proposed Compliance Order on Consent (the " Proposed Consent Order") to the City and County of Denver ("Denver") and to Walsh Environmental Scientists and Engineers, LLC (“Walsh”).  Walsh is a majority-owned subsidiary of Ecology and Environment, Inc.  The Proposed Consent Order concerns construction improvement activities of certain property owned by Denver which was the subject of asbestos remediation.  Denver had entered into a contract with Walsh for Walsh to provide certain environmental consulting services (asbestos monitoring services) in connection with the asbestos containment and/or removal performed by other contractors at Denver's real property.  Without admitting liability or the Department’s version of the underlying facts, Walsh on February 13, 2013 entered into a Compliance Order on Consent with the Department and paid a penalty of less than $0.1 million and paid for a Supplemental Environmental Project to benefit the public at large in an amount less than $0.1 million.  Denver was served with a final Compliance Order and Assessment of Administrative Penalty against Denver alone for approximately $0.2 million.  Under Walsh's environmental consulting contract with Denver, Walsh has agreed to indemnify Denver for certain liabilities where Walsh could potentially be held responsible for a portion of the penalty imposed upon Denver.  Walsh has put its professional liability and general liability carriers on notice of this indemnification claim by Denver.  The Company believes that this administrative proceeding involving Walsh will not have an adverse material effect upon the operations of the Company.

On February 4, 2011, the Chico Mendes Institute of Biodiversity Conservation of Brazil (the “Institute”) issued a Notice of Infraction to E&E Brasil.  E&E Brasil is a majority-owned subsidiary of Ecology and Environment, Inc.  The Notice of Infraction concerns the taking and collecting species of wild animal specimens without authorization by the competent authority and imposes a fine of 520,000 Reais, which had a value of approximately $0.2 million at July 31, 2014.  No claim has been made against Ecology and Environment, Inc.  The Institute has also filed Notices of Infraction against four employees of E&E Brasil alleging the same claims and has imposed fines against those individuals that, in the aggregate, are equal to the fine imposed against E&E Brasil.  E&E Brasil has filed administrative responses with the Institute for itself and its employees that: (a) denies the jurisdiction of the Institute, (b) states that the Notice of Infraction is constitutionally vague and (c) affirmatively stated that E&E Brasil had obtained the necessary permits for the surveys and collections of specimens under applicable Brazilian regulations and that the protected conservation area is not clearly marked to show its boundaries.  At this time, E&E Brasil has attended one meeting where depositions were taken. The Company believes that these administrative proceedings in Brazil will not have an adverse material effect upon the operations of the Company.

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Item 9. Changes In and Disagreements With Accountants on Accounting and Financial Disclosures

None to report.

Item 9A. Controls and Procedures

Disclosure Controls and Procedures

As of the end of the period covered by this Annual Report on Form 10-K, under the supervision and with the participation of management, including our Chief Executive Officer and Chief Financial Officer, we performed an evaluation of the effectiveness of disclosure controls and procedures (as defined in Rules 13a-15(f) and 15d-15(f) under the Securities Exchange Act of 1934 (the “Exchange Act”)).  Based upon this evaluation, management has concluded that our disclosure controls and procedures: (1) were designed to ensure that material information relating to our Company is accumulated and made known to our management, including our chief executive officer and chief financial officer, in a timely manner, particularly during the period in which this report was being prepared; and (2) were effective, in that they provide reasonable assurance that information we are required to disclose in the reports that we file or submit under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in the SEC’s rules and forms.

Changes in Internal Control Over Financial Reporting

No changes in internal control over financial reporting (as defined in Rules 13a-15(f) and 15d-15(f) under the Exchange Act) occurred during the fiscal year ended July 31, 2014 that materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

Management’s Annual Report on Internal Control Over Financial Reporting

Our management is responsible for establishing and maintaining adequate internal control over financial reporting as defined in Exchange Act Rule 13a-15(f).  Our internal control over financial reporting is designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of consolidated financial statements for external purposes in accordance with U.S. GAAP and includes those policies and procedures that: (1) pertain to the maintenance of records that in reasonable detail accurately and fairly reflect our transactions and dispositions of our assets; (2) provide reasonable assurance that our transactions are recorded as necessary to permit preparation of financial statements in accordance with U.S. GAAP and that our receipts and expenditures are being made only in accordance with authorizations; and (3) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use or disposition of our assets that could have a material effect on our consolidated financial statements.

Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.  Accordingly, even effective internal control over financial reporting can only provide reasonable assurance of achieving their control objectives.

Under the supervision and with the participation of our management, including our Chief Executive Officer and Chief Financial Officer, we assessed the effectiveness of our internal control over financial reporting as of July 31, 2014 using the criteria set forth by the Committee of Sponsoring Organizations of the Treadway Commission (“COSO”) in Internal Control—Integrated Framework (1992).  Based upon this assessment, management has concluded that our internal control over financial reporting was effective as of July 31, 2014.

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This annual report does not include an attestation report of the Company’s registered public accounting firm regarding internal control over financial reporting.

By:	/s/Gerald A. Strobel	By:	/s/H. John Mye III
	Gerald A. Strobel		H. John Mye III
	Chief Executive Officer		Chief Financial and Accounting Officer

Item 9B. Other Information

None to report.

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PART III

Item 10. Directors and Executive Officers of the Registrant

The names, ages and positions of the Directors and executive officers of the Company are included in the following table.

Name	Age	Position
Gerald A. Strobel	74	Chief Executive Officer, Executive Vice President and Director
Frank B. Silvestro	77	Chairman of the Board, Executive Vice President and Director
Ronald L. Frank	76	Executive Vice President, Secretary, and Director
Gerard A. Gallagher III	57	President
Fred J. McKosky	60	Senior Vice President, Chief Operating Officer
H. John Mye III	62	Vice President, Chief Financial and Accounting Officer, and Treasurer
Laurence M. Brickman	70	Senior Vice President
Gerard A. Gallagher, Jr.	83	Director
Ross M. Cellino	82	Director
Michael C. Gross	54	Director
Michael S. Betrus	61	Director

Each Director is elected to hold office until the next annual meeting of shareholders and until his successor is elected and qualified.  Executive officers are elected annually and serve at the discretion of the Board of Directors.  Specific experience, qualifications, attributes and skills for each Director and executive officer follow.

Mr. Gerald A. Strobel is a founder of the Company and has served as a Vice President and a Director since its inception in 1970.  In August 1986, he became Executive Vice President of Technical Services.  In August 2013, Mr. Strobel was appointed as the Company’s Chief Executive Officer by the Board of Directors.  Mr. Strobel is a registered Professional Engineer in the state of New York, and has a B.S. in civil engineering and a M.S. in sanitary engineering.

Mr. Frank B. Silvestro is a founder of the Company and has served as a Vice President and a Director since its inception in 1970.  In August 1986, he became Executive Vice President.  In August 2013, he was appointed Chairman of the Board of Directors.  He also serves on the Pension Review Committee.  Mr. Silvestro has a B.A. in physics and an M.A. in biophysics.

Mr. Ronald L. Frank is a founder of the Company and has served as Secretary, Treasurer, Vice President of Finance and a Director since its inception in 1970.  In August 1986, he became Executive Vice President of Finance.  On January 18, 2008, Mr. Frank resigned his position as Chief Financial Officer and Treasurer of the Company.  Mr. Frank continues in his positions as Executive Vice President, Secretary and Director of the Company, and also serves as Chairman of the Pension Review Committee.  Mr. Frank has a B.S. in engineering and a M.S. in biophysics.

Messrs. Silvestro, Strobel and Frank each have over forty years of work experience in managing the Company and knowing its customers, which makes them uniquely qualified to serve as Directors.

Mr. Gerard A. Gallagher III has served as the President of the Company Since January 2014.  He has been employed by the Company for 33 years, and previously served as Senior Vice President of Environmental Sustainability, Vice President and Regional Manager for the Company’s Southern U.S. operations.  Mr. Gallagher has a B.A. in physical geography.

Mr. Fred J. McKosky serves as the Chief Operating Officer of the Company.  He has been employed by the Company for 36 years, and previously served as Senior Vice President and Director of Corporate Operations.  Mr. McKosky has an M.S. in environmental engineering and a B.S. in environmental science, and is a registered Professional Engineer in the state of New York.

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Mr. H. John Mye III was appointed Chief Financial Officer, a Vice President and Treasurer of the Company on January 18, 2008.  Mr. Mye has an MBA and is a registered professional engineer in New York. Mr. Mye was an employee at Strategic Investments, Inc. for ten years (1983-1993) where he was responsible for mergers and acquisitions.  He then became the director of finance for American Precision Industries, a Fortune 500 company from 1993 to 2000.  Thereafter from 2000 to 2002 he was a vice president with responsibility for financial planning for FAI, Inc., a start-up company located in Buffalo, NY.  Starting in 2002 and until 2007 he was employed by Vishay Intertechnology, a high technology company, as the finance director and was responsible for all finance functions including sales, earnings and cash flow reporting.

Mr. Laurence M. Brickman joined the Company in 1971.  He became Vice President in April 1988 and became a Senior Vice President in August, 1994.  Mr. Brickman has a B.S., M.S. and Ph.D. in biology.

Mr. Gerard A. Gallagher, Jr. joined the Company in 1972, has served as a Director since 1986, and retired from the Company in February 2001 as a Senior Vice President.  Mr. Gallagher has a B.S. in physics.  Mr. Gallagher’s tenure of over 42 years with the Company, principally in government contracting, provides an important understanding of the Company’s markets that makes him a valuable member of the Board of Directors.

Mr. Ross M. Cellino has been a Director of the Company since its inception in 1970, and currently serves as Chairman of the Audit Committee and a member of the Pension Review Committee.  Mr. Cellino has an undergraduate major in economics and is an attorney and counselor-at-law retired from private practice.  Mr. Cellino’s experience as the founder and managing partner of a Buffalo, NY law firm and over 40 year association with the Company provides valuable managerial perspective and insight to the Board of Directors. In October 2014, Mr. Cellino notified the Company's Board of Directors of his intent to resign as a director effective January 1, 2015.

Mr. Michael C. Gross has been a Director of the Company since 2010, and currently serves on the Audit Committee and the Pension Review Committee.  Mr. Gross has been employed by New York State Department of Taxation and Finance as an auditor since 1983.  He has a B.S. in accounting and is a licensed property and casualty insurance broker.  Mr. Gross’ accounting and insurance experience provide valuable experience and perspective to the Board of Directors.

Mr. Michael S. Betrus has been a director of the Company since May 2014, and currently serves on the Audit Committee.  Mr. Betrus currently is Senior Vice President and Chief Financial Officer of Power Drives, Inc, a manufacturing and industrial distribution company located in Buffalo, New York.  He previously served as the Company’s Accounting and Contracts Manager from 1994 to 2005.  He has an M.S. in accounting and is a Certified Public Accountant in New York State.  Mr. Betrus has been designated as the Audit Committee financial expert.  With over 35 years of accounting, financial management, contractual oversight and forecasting experience, Mr. Betrus provides valuable financial perspective and insight to the Board of Directors.

Code of Ethics

The Company has adopted a code of ethics that applies to its principal executive officer, principal financial officer, principal accounting officer and controller, as well as all other employees and the directors of the Company.  The code of ethics, which the Company calls its Code of Business Conduct and Ethics, was filed as an exhibit to the Company’s annual report on Form 10-K for the fiscal year ended July 31, 2004 and is posted on the Company's website at www.ene.com.  If the Company makes any substantive amendments to, or grants a waiver (including an implicit waiver) from, a provision of its code of ethics that applies to its principal executive officer, principal financial officer, principal accounting officer or controller, and that relates to any element of the code of ethics definition enumerated in Item 406(b) of Regulation S-K, the Company will disclose the nature of such amendment or waiver in a current report on Form 8-K.

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Board of Directors Leadership, Structure and Risk Oversight

The Board of Directors operates under the leadership of the Chairman.  There is no prohibition in the Company’s bylaws that precludes the Chairman from also assuming the role of Chief Executive Officer.  Since August 1, 2008, it has been the Company’s practice to fill the roles of Chairman and Chief Executive Officer with different individuals, except for during times of transition when the same person may fill both roles in an interim capacity while an appropriate candidate is found to assume the vacant position.  E&E believes the current leadership structure provides the appropriate balance of oversight, independence, administration and hands-on involvement in activities of the Board of Directors that are required for the efficient conduct of corporate governance activities.

The Company has a standing Audit Committee established in accordance with section 3 (a)(58)(A) of the Securities Exchange Act of 1934 and the requirements of NASDAQ.  The members of the Audit Committee are Messrs. Cellino, Gross and Betrus.  The Board of Directors has designated Mr. Betrus as the financial expert serving on its Audit Committee.  Messrs. Cellino, Gross and Betrus are each independent, as that term is used in Item 407 (a) (as to Messrs. Cellino, Gross and Betrus) and 407 (d)(5)(i)(B) (as to just Mr. Betrus) of Regulation S-K and Rule 5605 (a)(2) of the NASDAQ listing standards in that none of them is an employee of the Company, nor is there any family relationship of those three individuals to the Company’s other Directors or any Executive Officer of the Company.

The Board of Directors is responsible for overseeing the Company’s risk profile and management’s processes for managing risk.  This oversight is conducted primarily through the Audit Committee.  The Audit Committee focuses on financial risks, including those that could arise from accounting and financial reporting processes, as well as review of overall risk function and senior management’s establishment of appropriate systems and processes for managing areas of material risk to the Company, including, but not limited to, operational, financial, legal, regulatory and strategic risks.

The Board of Directors has a standing Pension Review Committee, the principal functions of which are to review changes to retirement plans necessitated by law or regulation and to determine whether retirement plans meet the compensation goals for the Company’s employees as established by the Board of Directors.  Messrs. Frank (Chairman), Silvestro, Cellino and Gross serve on the Pension Review Committee.

In October 2014, Mr. Cellino notified the Company's Board of Directors of his intent to resign as a director effective January 1, 2015. At the Company's annual meeting of shareholders held on January 16, 2014, Mr. Cellino was elected to a one-year term as a Director by holders of the Company's Class A Common Stock. The Company's Board of Directors is conducting a search for candidates to succeed Mr. Cellino.

Section 16(a) Beneficial Ownership Reporting Compliance

Section 16(a) of the Securities Exchange Act of 1934 requires the Company’s Executive Officers and Directors, and persons who beneficially own more than ten percent (10%) of the Company’s stock, to file initial reports of ownership and reports of changes in ownership with the Securities and Exchange Commission.  Executive Officers, Directors and greater than ten percent (10%) beneficial owners are required by SEC regulations to furnish the Company with copies of all Section 16(a) forms they file.

Based solely on a review of the copies of such forms furnished to the Company and written representations from the Company’s Executive Officers and Directors, the Company believes that during the fiscal year ending July 31, 2014 all Section 16(a) filing requirements applicable to its Executive Officers, Directors and greater than ten percent (10%) beneficial owners were complied with by such persons, except for the following: (1) the filing of the a Form 4 statement by Frank B. Silvestro for the purchase of 1,000 Class A Shares of Common Stock that occurred on August 9, 2013 but which statement was not filed until October 30, 2013 as a result of the temporary unavailability of stock transaction information; and (2) the filing of Form 4 statements by Ronald L. Frank for the purchase of 64 Class A Shares of Common Stock through his IRA account that occurred on December 27, 2013 but which statement was not filed until January 6, 2014, the purchase of 100 Class A Shares of Common Stock through his IRA account that occurred on December 30, 2013 but which statement was not filed until January 6, 2014 and the purchase of 836 Class A Shares of Common Stock through his IRA account that occurred on January 17, 2014 but which statement was not filed until January 24, 2014, as Mr. Frank was out of town.

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Item 11. Executive Compensation

The Company's Board of Directors, acting as a Compensation Committee of the whole, is responsible for overseeing all of the executive compensation and equity plans and programs to ensure that its officers and senior staff are compensated in a manner that is consistent with its competitively based annual and long term performance goals.

The Board of Directors is responsible for establishing and approving our policies governing the compensation of our executive officers.  We provide what we believe is a competitive total compensation package to our executive team through a combination of base salary, cash bonuses, equity plans (for Company officers other than its Executive Vice Presidents) and other broad-based benefit programs.  Our compensation philosophy, policies, and practices with respect to all of the Company’s officers, including the CEO, President, and our two most highly compensated officers as of July 31, 2014, is described below.

Objectives and Philosophy of Our Executive Compensation Program

Our primary objectives with respect to executive compensation are to:

· attract, retain, and motivate talented executives by offering executive compensation that is competitive with our peer group;

· promote the achievement of key financial and strategic performance measures by linking short- and long-term cash and equity incentives to the achievement of measurable corporate and, in some cases, individual performance goals; and

· align the incentives of our executives with the creation of value for our shareholders.

We compete with many other companies for executive personnel.  Accordingly, our Board of Directors will generally target overall compensation for executives to be competitive with that of the Company’s peer group.  Variations to this targeted compensation may occur depending on the experience level of the individual and market factors, such as the demand for executives with similar skills and experience.

Our executive compensation program ties a substantial portion of each executive’s overall compensation to key strategic, financial, and operational goals such as our financial and operational performance, the growth of our customer base, new development initiatives, and the establishment and maintenance of key strategic relationships.

Components of Our Executive Compensation Program

The primary elements of our executive compensation program are:

· base salary;

· cash incentive bonuses;

· equity incentive awards;

· termination benefits upon termination without cause; and

· insurance and other employee benefits and compensation.

We do not have any formal or informal policy or target for allocating compensation between long-term and short-term compensation, between cash and non-cash compensation or among the different forms of non-cash compensation.  Instead, our Board of Directors establishes these allocations for each executive officer on an annual basis.  The Board of Directors establishes cash compensation targets based primarily upon informal benchmarking data, such as comparing the compensation of our executives to companies in our company’s peer group, as well as the performance of our company as a whole and of the individual executive and executive team as a whole.  Our Board establishes non-cash compensation based upon this informal benchmarking data, the performance of our company as a whole and of the individual executive and executive team as a whole, the executives’ equity ownership percentage and the amount of their equity ownership that is vested equity.

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The following table provides a summary of the annual and long-term compensation for services in all capacities to the Company for the fiscal years ended July 31, 2014, 2013 and 2012 of those persons who were at July 31, 2014: (i) the Company’s current Chief Executive Officer; (ii) the Company’s current President; (iii) the two other most highly compensated executive officers employed at July 31, 2014 with annual salary and bonus for the fiscal year ended July 31, 2014 in excess of $100,000; (iv) the Company’s previous Chief Executive Officer and President; and (v) the Company’s previous Chairman of the Board.  In this report, the six persons named in the table below are referred to as the "Named Executives."

SUMMARY COMPENSATON TABLE

Name and	Fiscal	Salary		Bonus	Stock Awards		Option		Non-Equity Incentive Plan		Nonqualified Deferred Compensation		All Other Compensation		Total
Principal Position	Year			(1)	(2)		Awards		Compensation		Earnings		(3)
Gerald A. Strobel (4)	2014	$	356,950	---		---		---		---		---	$	13,429	$	370,379
CEO, Executive Vice President	2013	$	350,988	---		---		---		---		---	$	13,179	$	364,167
and Director	2012	$	346,528	---		---		---		---		---	$	10,396	$	356,924
Gerard A. Gallagher III (4)	2014	$	200,325	---	$	15,995		---		---		---	$	10,515	$	226,835
President	2013	$	177,412	---	$	12,500		---		---		---	$	9,355	$	199,267
	2012	$	175,179	---	$	12,361		---		---		---	$	7,488	$	195,028
Frank B. Silvestro (5)	2014	$	356,950	---		---		---		---		---	$	13,165	$	370,115
Executive Vice President and	2013	$	350,988	---		---		---		---		---	$	12,915	$	363,903
Chairman of the Board	2012	$	346,528	---		---		---		---		---	$	10,132	$	356,660
Ronald L. Frank	2014	$	214,109	---		---		---		---		---	$	13,113	$	227,222
CEO, Executive Vice President	2013	$	210,732	---		---		---		---		---	$	13,179	$	223,911
and Director	2012	$	209,688	---		---		---		---		---	$	10,395	$	220,083
Kevin S. Neumaier (4)	2014	$	135,484	---		---		---		---		---	$	133	$	135,617
Former CEO and President	2013	$	240,334	---		---		---		---		---	$	12,566	$	252,900
	2012	$	237,338	---		---		---		---		---	$	10,130	$	247,468
Gerhard J. Neumaier (5)	2014	$	244,786	---		---		---		---		---	$	28	$	244,814
Former Executive Vice President	2013	$	382,737	---		---		---		---		---	$	13,179	$	395,916
and Chairman of the Board	2012	$	377,878	---		---		---		---		---	$	10,396	$	388,274

(1) Amounts earned for bonus compensation are determined by the Board of Directors.

(2) As of July 31, 2014, there were 1,765 outstanding shares of the Company's Class A Common Stock which was restricted stock issued pursuant to the Company's Stock Award Plan issued to Gerard A. Gallagher III.

(3) Represents group term life insurance premiums and contributions made by the Company to its Defined Contribution Plan on behalf of each of the Named Executives.

(4) As of August 31, 2013, the Board of Directors appointed Gerald A. Strobel as the Company’s CEO, replacing Kevin S. Neumaier.  Kevin S. Neumaier remained as the Company’s President until January 2014, when his employment with the company was terminated.  In January 2014, Gerard A. Gallagher III was appointed as the Company’s President.

(5) As of August 21, 2013, the Board of Directors appointed Frank B. Silvestro as Chairman of the Board of Directors, replacing Gerhard J. Neumaier.  On August 30, 2013, Gerhard J. Neumaier’s employment with the Company was terminated.  On September 6, 2013 Gerhard J. Neumaier resigned as a Director of the Company.  Mr. Neumaier passed away on October 23, 2013.

Compensation Pursuant to Plans

Defined Contribution Plan

The Company maintains a Defined Contribution Plan ("the DC Plan") which is qualified under the Internal Revenue Code of 1986, as amended (the "Internal Revenue Code") pursuant to which the Company contributes an amount not in excess of 15% of the aggregate compensation of all employees who participate in the DC Plan.  All employees, including the executive officers identified under "Executive Compensation", are eligible to participate in the plan, provided that they have attained age 21 and completed one year of employment with at least 1,000 hours of service.  The amounts contributed to the plan by the Company are allocated to participants based on a ratio of each participant's points to total points of all participants determined as follows: one point per $1,000 of compensation plus two points per year of service completed prior to August 1, 1979, and one point for each year of service completed after August 1, 1979.

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Stock Award Plans

EEI adopted the 1998 Stock Award Plan effective March 16, 1998 (the “1998 Award Plan”).  The following supplemental plans were adopted subsequent to adoption of the 1998 Award Plan:

· The 2003 Stock Award Plan (the “2003 Award Plan”), which was adopted by the Board of Directors in October 2004, approved by shareholders in January 2004, and terminated in October 2008;

· The 2007 Stock Award Plan (the “2007 Award Plan”), which was adopted by the Board of Directors in October 2007, approved by shareholders in January 2008, and terminated in October 2012; and

· The 2011 Stock Award Plan (the “2011 Award Plan”), which was adopted by the Board of Directors in October 2011, approved by shareholders in January 2012, and will terminate in October 2016.

The 1998 Award Plan and all supplemental plans are collectively referred to as the “Award Plan”.  The Award Plan permits grants of the award for a period of five (5) years from the date of adoption by the Board of Directors.  The Award Plan is not a qualified plan Section 401(a) of the Internal Revenue Code.   As of July 31, 2014, awards for a total of 16,105 shares of Class A Common Stock have been granted and remain subject to vesting under the 2011 Plan.

Under the Award Plan key employees (including officers) of the Company or any of its present or future subsidiaries may be designated to receive awards of Class A common stock of the Company as a bonus for services rendered to the Company or its subsidiaries, without payment therefore, based upon the fair market value of the common stock at the time of the award.  The Award Plan authorizes the Company’s Board of Directors to determine for what period of time and under what circumstances the awards can be forfeited.

Outstanding Equity Awards

Information regarding outstanding restricted stock awards granted to the Named Executives is summarized in the following table.

OUTSTANDING EQUITY AWARDS AT FISCAL YEAR END

Name and Principal Position	Number of securities underlying unexercised options (#) exercisable		Number of securities underlying unexercised options (#) unexercisable		Equity incentive plan awards: Number of securities underlying unexercised unearned options (#)		Option exercise price ($)		Option expiration date		Number of shares or units of stock that have not vested (#) (1)		Market value of shares or units of stock that have not vested ($) (2)		Equity incentive plan awards: Number of unearned shares, units or other rights that have not vested (#)		Equity incentive plan awards: Market or payout value of unearned shares, units or other rights that have not vested ($)
Gerard A. Gallagher III President		---		---		---		---		---		1,765	$	18,727		---		---

(1) The restricted stock awards have a three year vesting period.

(2) Market value is based on the market value of the Company’s stock on July 31, 2014.

Director Compensation

Compensation earned by each non-employee director for his services during fiscal year 2014 is summarized in the following table.

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DIRECTOR COMPENSATION

Name	Fees Earned or Paid in Cash		Stock Awards		Option Awards		Non-Equity Incentive Plan Compensation Earnings		Nonqualified Deferred Compensation Earnings		All Other Compensation (1)		Total
Michael C. Gross	$	36,611		---		---		---		---		---	$	36,611
Gerard A. Gallagher, Jr.	$	36,611		---		---		---		---	$	34,755	$	71,366
Ross M. Cellino	$	36,611		---		---		---		---		---	$	36,611
Michael S. Betrus (2)	$	4,576		---		---		---		---		---	$	4,576
Timothy Butler (2)	$	27,459		---		---		---		---		---	$	27,459

(1) Other is the value paid under a consulting fee arrangement.

(2) Mr. Butler passed away on April 22, 2014.  Mr. Betrus was appointed as Director in May 2014, filling the vacancy resulting from Mr. Butler’s passing.

During fiscal year 2014, each non-employee director was compensated with an annual director fee of $36,611, which was paid quarterly.  Other than these fees, there was no other compensation from the Company for serving as a director or for serving as a member or chairman of any other committee of the Board of Directors.

Item 12. Security Ownership of Certain Beneficial Owners and Management and Related Stockholders Matters

The number of outstanding shares of Class A Common Stock and Class B Common Stock of the Company beneficially owned by each person known by the Company to be the beneficial owner of more than 5 percent of the then outstanding shares of Common Stock as of September 30, 2014 are summarized in the following table.

	Class A Common Stock					Class B Common Stock
Name and Address (1)	Nature and Amount of Beneficial Ownership (2) (3)		Percent of Class as Adjusted (3)			Nature and Amount of Beneficial Ownership (2) (3)		Percent Of Class
Estate of Gerhard J. Neumaier (4)		404,437		13.3	%		375,518		23.0	%
Frank B. Silvestro*		297,052		10.1	%		292,052		17.9	%
Ronald L. Frank*		206,971		7.3	%		187,234		11.5	%
Gerald A. Strobel*		219,604		7.6	%		219,604		13.5	%
Kevin S. Neumaier*		119,750		4.3	%		100,302		6.2	%
Kirsten Shelly		121,878		4.4	%		115,558		7.1	%
Franklin Resources, Inc. (5)		576,000		21.7	%		---		---
Edward W. Wedbush (6)		363,673		13.7	%		---		---
Dimensional Fund Advisors LP (7)		138,394		5.2	%		---		---

*See Footnotes in the Security Ownership of Management table below.

(1) The address for the Estate of Gerhard J. Neumaier is 248 Mill Road, East Aurora, New York 14052.  The address for Kevin S. Neumaier is 340 Pleasant View Drive, Lancaster, New York 14086.  The address for Kirsten Shelly is 12 Running Brook Drive, Lancaster, New York 14086.  The address for Frank B. Silvestro, Ronald L. Frank and Gerald A. Strobel is c/o Ecology and Environment, Inc., 368 Pleasant View Drive, Lancaster, New York 14086, unless otherwise indicated.  The address for Edward W. Wedbush is P.O. Box 30014, Los Angeles, CA 90030-0014. The address for Franklin Resources, Inc. is One Franklin Parkway, San Mateo, CA 94403-1906.  The address for Dimensional Fund Advisors LP is Palisades West, Building One, 6300 Bee Cave Road, Austin, Texas 78746.

(2) Each named individual or corporation is deemed to be the beneficial owners of securities that may be acquired within 60 days through the exercise of exchange or conversion rights.  The shares of Class A Common Stock issuable upon conversion by any such shareholder are not included in calculating the number of shares or percentage of Class A Common Stock beneficially owned by any other shareholder.

(3) There are 2,659,174 shares of Class A Common Stock issued and outstanding and 1,629,197 shares of Class B Common Stock issued and outstanding as of September 30, 2014.For each named individual, the percentage in the “Class A Common Stock — Percent of Class as Adjusted” column is based upon the total shares of Class A Common Stock outstanding, plus shares of Class B Common Stock that may be converted at any time by that holder to Class A Common Stock on a per person basis. The shares of Class B Common Stock assumed to be converted to Class A Common Stock for any named individual are not included in the calculation of the percentage of Class A Common Stock beneficially owned by any other named individual.

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(4) Includes 8,556 shares of Class A Common Stock owned by the late Mr. Gerhard J. Neumaier's spouse, as to which his estate disclaimed beneficial ownership.  Includes 20,361 shares of Class A Common Stock owned by the late Mr. Gerhard J. Neumaier's Individual Retirement Account.  Does not include any shares of Class A Common Stock or Class B Common Stock held by the late Mr. Gerhard J. Neumaier's adult children.  Includes 2 shares of Class A Common Stock owned by a Partnership in which the Estate of Gerhard J. Neumaier is a general partner.

(5) Includes shares owned by subsidiaries and affiliates of Franklin Resources, Inc. based upon a Schedule 13-G filed on February 7, 2012.

(6) Includes shares owned by subsidiaries and affiliates of Edward W. Wedbush based upon a Schedule 13-G filed on February 15, 2013.

(7) Includes shares owned by subsidiaries and affiliates of Dimensional Fund Advisors LP based upon a Schedule 13-G filed on February 10, 2014.

Security Ownership of Management

Beneficial ownership of the Company's Class A Common Stock and Class B Common Stock as of September 30, 2014, by (i) each Director of the Company; and (ii) all Directors and officers of the Company as a group are summarized in the following table.

	Class A Common Stock					Class B Common Stock
Name (1)	Nature and Amount of Beneficial Ownership (2) (3)		Percent of Class as Adjusted (4)			Nature and Amount of Beneficial Ownership (2) (3)		Percent of Class
Frank B. Silvestro (9) (10)		297,052		10.1	%		292,052		17.9	%
Ronald L. Frank (5) (9) (10)		206,971		7.3	%		187,234		11.5	%
Gerald A. Strobel (6) (9) (10)		219,604		7.6	%		219,604		13.5	%
Gerard A. Gallagher, Jr.		59,606		2.2	%		59,265		3.6	%
Michael C. Gross (8)		23,849		*			23,449		1.4	%
Ross M. Cellino (7)		14,892		*			1,102		*
Michael S. Betrus		1,000		*			---		---
Directors and Officers Group (11 individuals)		886,093		25.7	%		794,179		48.7	%

* Less than 1.0%

(1) The address of each of the above shareholders is c/o Ecology and Environment, Inc., 368 Pleasant View Drive, Lancaster, New York 14086.

(2) Pursuant to Rule 13d-3 under the Securities Exchange Act of 1934, as amended, beneficial ownership of a security consists of sole or shared voting power (including the power to vote or direct the vote) or sole or shared investment power (including the power to dispose or direct the disposition) with respect to a security whether through any contract, arrangement, understanding, relationship or otherwise.  Unless otherwise indicated, the shareholders identified in this table have sole voting and investment power of the shares beneficially owned by them.

(3) Each named person and all Directors and officers as a group are deemed to be the beneficial owners of securities that may be acquired within 60 days through the exercise of exchange or conversion rights.  The shares of Class A Common Stock issuable upon conversion by any such shareholder are not included in calculating the number of shares or percentage of Class A Common Stock beneficially owned by any other shareholder.

(4) There are 2,659,174 shares of Class A Common Stock issued and outstanding and 1,629,197 shares of Class B Common Stock issued and outstanding as of September 30, 2014.  For each named individual, the percentage in the “Class A Common Stock — Percent of Class as Adjusted” column is based upon the total shares of Class A Common Stock outstanding, plus shares of Class B Common Stock that may be converted at any time by that holder to Class A Common Stock on a per person basis. The shares of Class B Common Stock assumed to be converted to Class A Common Stock for any named individual are not included in the calculation of the percentage of Class A Common Stock beneficially owned by any other named individual.

(5) Includes 7,640 shares of Class A Common Stock owned by Mr. Frank's individual retirement account and 6,265 shares of Class A Common Stock owned by Mr. Frank’s 401(k) plan account.

(6) Includes 704 shares of Class B Common Stock held in equal amounts by Mr. Strobel as custodian for two of his children, as to which he disclaims beneficial ownership. Does not include any shares of Class B Common Stock held by a trust which one of his children created and for which Mr. Strobel serves as Trustee.

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(7) Includes 10,915 shares of Class A Common Stock owned by Mr. Cellino's spouse, as to which shares he disclaims beneficial ownership; also includes 2,760 shares of Class A Common Stock owned by Mr. Cellino's Individual Retirement Account.  Includes 5 shares of Class A Common Stock owned by a limited partnership in which Mr. Cellino is a general partner.

(8) Mr. Gross is one of three co-trustees of two inter vivos trusts established by his parents for their benefit that own these shares of Class B Common Stock and is a one-third contingent remainder beneficiary of both trusts’ assets, which include an aggregate total of 70,348 such shares, of which he disclaims beneficial interest in 46,899 of those shares.

(9) Subject to the terms of the Restrictive Agreement.  See "Security Ownership of Certain Beneficial Owners-Restrictive Agreement."

Restrictive Agreement

Messrs. Gerald J. Neumaier (deceased), Frank B. Silvestro, Ronald L. Frank, and Gerald A. Strobel entered into a Stockholders’ Agreement dated May 12, 1970, as amended January 24, 2011, which governs the sale of certain shares of Ecology and Environment, Inc. common stock (now classified as Class B Common Sock) owned by them, certain children of those individuals and any such shares subsequently transferred to their spouses and/or children outright or in trust for their benefit upon the demise of a signatory to the Agreement (“Permitted Transferees”).  The Agreement provides that prior to accepting a bona fide offer to purchase some or all of their shares of Class B Common Stock governed by the Agreement, that the selling party must first allow the other signatories to the Agreement (not including any Permitted Transferee) the opportunity to acquire on a pro rata basis, with right of over-allotment, all of such shares covered by the offer on the same terms and conditions proposed by the offer.

Item 13. Certain Relationships and Related Transactions

Director Gerard A. Gallagher, Jr.'s son Gerard A. Gallagher, III, serves as President of the Company and received aggregate compensation of $226,835 for his services during fiscal year 2014.  The Company believes that his compensation was commensurate with his peers during fiscal year 2014 and that his relationships during the year were reasonable and in the best interest of the Company.

Ross M. Cellino, Michael C. Gross and Michael S. Betrus are independent, as that term is used in Item 407(a) of Regulation S-K and Rule 5605(a)(2) of the NASDAQ listing standards, as described in their relevant business experiences set forth in Item 10 hereof in that none of them is an employee of the Company, nor is there any family relationship of those three individuals to the Company’s other four Directors or any Executive Officer of the Company.

Item 14. Principal Accounting Fees and Services

During the fiscal years ended July 31, 2014, 2013 and 2012, Schneider Downs & Co., Inc., an independent registered accounting firm, provided audit and audit related services to the Company.  The Audit Committee meets with the Company’s independent registered accounting firm to approve the annual scope of accounting services to be performed, including all audit, audit-related, and non-audit services, and the related fee estimates.  The Audit Committee also meets with the Company’s independent registered accounting firm on a quarterly basis, following completion of their quarterly reviews and annual audit before our earnings announcements, to review the results of their work.  As appropriate, management and our independent registered accounting firm update the Audit Committee with material changes to any service engagement and related fee estimates as compared to amounts previously approved.  Under its charter, the Audit Committee has the authority and responsibility to review and approve, in advance, any audit and proposed permissible non-audit services to be provided to the Company by its independent registered public accounting firm.  The aggregate fees billed by Schneider Downs & Co. for these services for fiscal years 2014 and 2013 are summarized in the following table.

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	Fiscal Year Ended July 31,
	2014			2013
Audit fees		$	401,647		$	383,226
Audit-related fees			43,993			44,345
Total		$	445,640		$	427,571

Audit Fees

Audit fees include aggregate fees accrued for the following professional services rendered:

· audit of the annual financial statements included in this Annual Report;

· reviews of the financial statements included in the Company's quarterly reports on Form 10-Q; and

· expenses incurred related to accounting consultation services.

Audit-Related Fees

Audit related fees include aggregate fees accrued for services rendered for audits of the Company’s 401(k) and pension plans, and indirect rate audits.

Item 15. Exhibits, Financial Statements, Schedules

(a)	1.	Financial Statements
			Page
		Report of Independent Registered Public Accounting Firm	33
		Consolidated Balance Sheets at July 31, 2014 and 2013	34
		Consolidated Statements of Operations for the fiscal years ended July 31, 2014, 2013 and 2012	35
		Consolidated Statements of Comprehensive Income (Loss) for the fiscal years ended July 31, 2014, 2013 and 2012	36
		Consolidated Statements of Cash Flows for the Fiscal years ended July 31, 2014, 2013 and 2012	37
		Consolidated Statements of Changes in Shareholders Equity for the fiscal years ended July 31, 2014, 2013 and 2012	38
		Notes to Consolidated Financial Statements	39
	2.	Financial Statement Schedule
		All schedules are omitted because they are not applicable, or the required information is shown in the consolidated financial statements or notes thereto.

3.	Exhibits
	Exhibit No.	Description
	3.1	Certificate of Incorporation (1)
	3.2	Certificate of Amendment of Certificate of Incorporation filed on March 23, 1970 (1)
	3.3	Certificate of Amendment of Certificate of Incorporation filed on January 19, 1982 (1)
	3.4	Certificate of Amendment of Certificate of Incorporation filed on January 29, 1987 (1)
	3.5	Certificate of Amendment of Certificate of Incorporation filed on February 10, 1987 (1)
	3.6	Restated By-Laws adopted on July 30, 1986 by Board of Directors (1)
	3.7	Certificate of Change under Section 805-A of the Business Corporation Law filed August 18, 1988 (2)
	3.8	Amendment to the By-Laws dated August 21, 2013 (8)
	4.1	Specimen Class A Common Stock Certificate (1)
	4.2	Specimen Class B Common Stock Certificates (1)
	10.1	Stockholders' Agreement among Gerhard J. Neumaier, Ronald L. Frank, Frank B. Silvestro and Gerald A. Strobel dated May 12, 1970 (1)
	10.4	Ecology and Environment, Inc. Defined Contribution Plan Agreement dated July 25, 1980 as amended on April 28, 1981 and July 21, 1983 and restated effective August 1, 1984 (1)

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10.5	Summary of Ecology and Environment Discretionary Performance Plan (3)
10.6	1998 Ecology and Environment, Inc. Stock Award Plan and Amendments (2)
10.7	2003 Ecology and Environment, Inc. Stock Award Plan (4)
10.8	2007 Ecology and Environment, Inc. Stock Award Plan (5)
10.9	2011 Ecology and Environment, Inc. Stock Award Plan (7)
10.10	Amendment No. 1 dated January 24, 2011 to the Stockholders’ Agreement among Gerhard J. Neumaier, Ronald L. Frank, Frank B. Silvestro and Gerald A. Strobel dated May 12, 1970 (6)
14.1	Code of Ethics (4)
21.5	Schedule of Subsidiaries as of July 31, 2014 (9)
23.1	Consent of Independent Registered Public Accounting Firm - Schneider Downs & Co., Inc. (9)
31.1	Certification of Principal Executive Officer Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 (9)
31.2	Certification of Principal Financial Officer Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 (9)
32.1	Certification of Principal Executive Officer Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 (9)
32.2	Certification of Principal Financial Officer Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 (9)

Footnotes
(1)	Filed as exhibits to the Company's Registration Statement on Form S-1, as amended by Amendment Nos. 1 and 2, (Registration No. 33-11543), and incorporated herein by reference.
(2)	Filed as exhibits to the Company's Form 10-K for Fiscal Year Ending July 31, 2002, and incorporated herein by reference.
(3)	Filed as exhibits to the Company's 10-K for the Fiscal Year Ended July 31, 2003, and incorporated herein by reference.
(4)	Filed as exhibits to the Company's 10-K for the Fiscal Year Ending July 31, 2004, and incorporated herein by reference.
(5)	Filed as exhibits to the Company’s 10-K for the Fiscal Year Ending July 31, 2010, and incorporated herein by reference.
(6)	Filed as exhibits to the Company’s 10-K for the Fiscal Year Ending July 31, 2011, and incorporated herein by reference.
(7)	Filed as Appendix A to the Company’s Definitive Proxy Statement (Schedule 14A) dated December 13, 2011, and incorporated herein by reference.
(8)	Filed as an exhibit to Current Report on Form 8-K for August 21, 2013, and incorporated herein by reference.
(9)	Filed herewith.

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Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

	ECOLOGY AND ENVIRONMENT, INC.
Dated:     October 29, 2014	/s/ Gerald A. Strobel
	Gerald A. Strobel, Chief Executive Officer

Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the Registrant in the capacities and on the dates indicated:

Signature	Title	Date
/s/ Gerald A. Strobel
Gerald A. Strobel	Chief Executive Officer and Director	October 29, 2014
/s/ Frank B. Silvestro
Frank B. Silvestro	Chairman of the Board of Directors and Director	October 29, 2014
/s/ Ronald L. Frank
Ronald L. Frank	Executive Vice President, Secretary and Director	October 29, 2014
/s/ H. John Mye III
H. John Mye III	Vice President, Treasurer, Chief Financial Officer and Chief  Accounting Officer	October 29, 2014
/s/ Gerard A. Gallagher, Jr.
Gerard A. Gallagher, Jr.	Director	October 29, 2014
/s/ Ross M. Cellino
Ross M. Cellino	Director	October 29, 2014
/s/ Michael S. Betrus
Michael S. Betrus	Director	October 29, 2014
/s/ Michael C. Gross
Michael C. Gross	Director	October 29, 2014

70

EX-21.5

Exhibit 21.5

Schedule of Subsidiaries

As of July 31, 2014

Subsidiaries of Ecology and Environment, Inc. (the Company) as of July 31, 2014

		Percentage of Capital Stock of Subsidiary Owned by the Company
1.	Ecology & Environment Engineering, Inc. (a Colorado corporation)	100%
2.	E & E Unwelt-Beratung GmbH (a corporation formed under the laws of Germany)	100%
3	Ecology and Environment de Mexico, S.A. de C.V. (a corporation formed under the laws of Mexico)	99.998%
4.	Ecology and Environment, S.A. (a corporation formed under the laws of Venezuela)	100%
5.	ecology and environment do brasil Ltda. (a limited liability partnership formed under the laws of Brazil)	72%
6.	Ecology & Environment of Saudi Arabia Co. Ltd. (a limited liability company formed under the laws of Saudi Arabia)	66 2/3%
7.	Ecology and Environment International Services, Inc. (a Delaware corporation)	100%
8.	Gestión Ambiental Consultores S.A. (a corporation formed under the laws of Chile)	55.01%
9.	Walsh Environmental Scientist & Engineers, LLC (a limited liability company formed under the laws of Colorado)	100%
10.	Gustavson Associates, LLC (a limited liability company formed under the laws of Colorado, owned by Walsh)	77.52%	(*)
11.	Walsh Peru, S.A. Ingenieros y Cientificos Consultores (a corporation formed under the laws of Peru, owned by Walsh)	74.78	(*)
12.	Servicios Ambientales Walsh, S.A. (a corporation formed under the laws of Ecuador, owned by Walsh)	51%	(*)
13.	Tianjin Green Engineering Company (a limited liability company formed under the laws of the People's Republic of China)	50%
14.	Consortium of International Consultants, LLC (a limited liability company formed under the laws of Delaware)	98%
15.	YiYi Ecology and Environment Consulting (Wuxi) Co., Ltd. (formed under the laws of the People’s Republic of China)	100%
16.	Lowham-Walsh Engineering & Environment Services, LLC (formed under the laws of Wyoming)	80.56%	(*)
17.	ECSI, LLC (formed under the laws of Kentucky)	60%
18.	E & E Consulting, Inc. (formed under the laws of British Columbia, Canada)	100%
19.	E.E.I.S. (SARL) (formed under the laws of Morocco)	100%

* Listed percentage owned by Walsh Environmental Scientist & Engineers, LLC.

EX-23.1

Exhibit 23.1

CONSENT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

We hereby consent to the incorporation by reference in the Registration Statements on Form S-8 (Nos. 333‑158214, 333‑57028, 333-30085, 333-131658, 333-131341, and 333-190261) of Ecology and Environment, Inc. of our report dated October 29, 2014, relating to the consolidated financial statements as of July 31, 2014 and 2013 and for each of the years ended in the three-year period ended July 31, 2014.

/s/ Schneider Downs & Co., Inc.

Pittsburgh, Pennsylvania

October 29, 2014

EX-31.1

Exhibit 31.1

CERTIFICATION OF PRINCIPAL EXECUTIVE OFFICER

I, GERALD A. STROBEL, certify that:

1.I have reviewed this Annual Report for the fiscal year ended July 31, 2014 on Form 10-K of Ecology and Environment, Inc.;

2.Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3.Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operation and cash flows of the registrant as of, and for, the periods presented in this report;

4.The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

(a)Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

(b)Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

(c)Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

(d)Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting.

5.The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

(a)All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

(b)Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

		ECOLOGY AND ENVIRONMENT, INC.
Date:	October 29, 2014	/s/ Gerald A. Strobel
		Gerald A. Strobel
		Chief Executive Officer
		(Principal Executive Officer)

EX-31.2

Exhibit 31.2

CERTIFICATION OF PRINCIPAL FINANCIAL OFFICER

I, H. JOHN MYE III, certify that:

1.I have reviewed this Annual Report for the fiscal year ended July 31, 2014 on Form 10-K of Ecology and Environment, Inc.;

2.Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3.Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operation and cash flows of the registrant as of, and for, the periods presented in this report;

4.The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

(a)Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

(b)Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

(c)Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

(d)Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting.

5.The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

(a)All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

(b)Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

		ECOLOGY AND ENVIRONMENT, INC.
Date:	October 29, 2014	/s/  H. John Mye III
		H. John Mye III
		Vice President, Chief Financial Officer and Treasurer –
		Principal Financial Officer

EX-32.1

Exhibit 32.1

Certification of Principal Executive Officer

Pursuant to 18 U.S.C. Section 1350, As Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002

I, Gerald A. Strobel, the principal executive officer of Ecology and Environment, Inc. (the “Company”), hereby certify pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, to the best of my knowledge that the Form 10-K of the Company for the fiscal year ended July 31, 2014 accompanying this certification (the “Report”) fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934 and that the information contained in the Report fairly presents, in all material respects, the financial condition and the results of operations of the Company.  This Certification is made to comply with the provisions of Section 906 of the Sarbanes-Oxley Act and is not intended to be used for any other purpose.

		ECOLOGY AND ENVIRONMENT, INC.
Date:	October 29, 2014	/s/ Gerald A. Strobel
		Gerald A. Strobel
		Chief Executive Officer
		(Principal Executive Officer)

EX-32.2

Exhibit 32.2

Certification of Principal Financial Officer

Pursuant to 18 U.S.C. Section 1350, As Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002

I, H. John Mye, III, the principal financial officer of Ecology and Environment, Inc. (the “Company”), hereby certify pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, to the best of my knowledge that the Form 10-K of the Company for the fiscal year ended July 31, 2014 accompanying this certification (the “Report”) fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934 and that the information contained in the Report fairly presents, in all material respects, the financial condition and the results of operations of the Company.  This Certification is made to comply with the provisions of Section 906 of the Sarbanes-Oxley Act and is not intended to be used for any other purpose.

		ECOLOGY AND ENVIRONMENT, INC.
Date:	October 29, 2014	/s/  H. John Mye III
		H. John Mye III
		Vice President, Chief Financial Officer and Treasurer –
		Principal Financial Officer

XML

Segment Reporting (Tables)

12 Months Ended

Jul. 31, 2014

Segment Reporting [Abstract]

Segment Reporting

The Company reports segment information based on the geographic location of its customers (for revenues) and the location of its offices (for long-lived assets). Revenue and long-lived assets by business segment are summarized in the following tables.

	Fiscal Years Ended July 31,
	2014			2013			2012
Revenue by geographic location:
United States		$	82,370,480		$	91,451,247		$	98,558,099
Foreign countries (1)			46,056,396			43,485,644			56,852,000

(1) Significant foreign revenues included revenues in Peru ($19.5 million, $11.5 million and $17.2 million for fiscal years 2014, 2013 and 2012, respectively), Brazil ($13.8 million, $15.1 million and $15.7 million for fiscal years 2014, 2013 and 2012, respectively) and Chile ($8.8 million, $10.6 million and $11.3 million for fiscal years 2014, 2013 and 2012, respectively).

	Balance at July 31,
	2014			2013			2012
Long-lived assets by geographic location:
United States		$	31,170,634		$	29,508,055		$	29,506,036
Foreign countries			5,386,736			5,183,885			5,191,000

XML

Earnings Per Share (Details) (USD $)	12 Months Ended
	Jul. 31, 2014	Jul. 31, 2013	Jul. 31, 2012
Earnings Per Share [Abstract]
Net (loss) income attributable to Ecology and Environment, Inc.	$ (1,382,656)	$ (2,130,434)	$ 773,579
Dividend declared	2,066,622	2,038,496	2,036,559
Undistributed earnings	$ (3,449,278)	$ (4,168,930)	$ (1,262,980)
Weighted average common shares outstanding (basic and diluted) (in shares)	4,283,984	4,247,821	4,233,883
Distributed earnings per share (in dollars per share)	$ 0.48	$ 0.48	$ 0.48
Undistributed earnings per share (in dollars per share)	$ (0.80)	$ (0.98)	$ (0.30)
Total earnings per share (in dollars per share)	$ (0.32)	$ (0.50)	$ 0.18
Minimum percentage right of Class B common stock holders to elect Board of Directors (in hundredths)	75.00%

XML

Income Taxes (Details) (USD $)	12 Months Ended
	Jul. 31, 2014	Jul. 31, 2013	Jul. 31, 2012
Income (loss) from continuing operations before provision (benefit) for income taxes and noncontrolling interest [Abstract]
Domestic	$ (4,305,768)	$ (3,055,338)	$ (993,959)
Foreign	3,858,378	2,087,524	5,391,625
Total income (loss) from continuing operations before provision (benefit) for income taxes and noncontrolling interest	(447,390)	(967,814)	4,397,666
Current [Abstract]
Federal	86,062	(985,865)	(175,203)
State	62,761	181,434	(232,800)
Foreign	1,012,136	855,500	1,652,202
Total current	1,160,959	51,069	1,244,199
Deferred [Abstract]
Federal	(975,519)	200,197	509,161
State	24,138	(178,438)	(35,273)
Foreign	133,485	181,406	(360,171)
Total deferred	(817,896)	203,165	113,717
Total income tax provision	343,063	254,234	1,357,916
Reconciliation of income tax provision from statutory U.S. income tax rate to the effective income tax rate [Abstract]
Income tax (benefit) provision at the U.S. federal statutory income tax rate	(152,113)	(329,057)	1,495,206
Income from "pass-through" entities taxable to noncontrolling partners	35,309	(102,933)	(255,065)
International rate differences	(143,493)	(197,217)	(329,825)
Other foreign taxes, net of federal benefit	(34,419)	94,528	211,088
Foreign dividend income	596,631	481,287	329,825
State taxes, net of federal benefit	27,739	3,871	13,193
Re-evaluation and settlements of tax contingencies	(19,533)	(58,105)	(180,304)
Peru non-deductible expenses	44,077	173,707	211,000
Canada valuation allowance	(83,257)	130,950	0
Other permanent differences	72,122	57,203	(137,202)
Total income tax provision	343,063	254,234	1,357,916
Deferred tax assets: [Abstract]
Valuation Allowance	400,000	600,000
Deferred tax liabilities: [Abstract]
Amount of undistributed income indefinitely reinvested in foreign operations	5,400,000
Income Tax Examination [Line Items]
Domestic operating income (losses)	(1,700,000)	(3,800,000)
Gross unrecognized tax benefits that would impact effective tax rate in future periods	100,000	100,000	100,000
Reconciliation of unrecognized tax benefits [Roll Forward]
Balance at beginning of period	91,100	131,300	530,500
Additions for tax positions of prior years	0	0	23,100
Reductions for tax positions of prior years for [Abstract]
Changes in judgment	0	(23,100)	0
Settlements during the period	(17,700)	(29,000)	(422,300)
Changes in non-controlling interests	0	11,900	0
Balance at end of period	73,400	91,100	131,300
Unrecognized tax benefits, income tax penalties and interest expense [Abstract]
Unrecognized tax benefits, income tax penalties and interest expense	100,000	100,000	100,000
Unrecognized tax benefits, income tax penalties and interest accrued [Abstract]
Unrecognized tax benefits, income tax penalties and interest accrued	100,000	100,000	100,000
IRS [Member]
Income Tax Examination [Line Items]
Income tax examination, year subject to examination	2014	2013	2012
Current [Member]
Deferred tax assets: [Abstract]
Contract and other reserves	3,409,234	3,273,465
Accrued compensation and expenses	1,250,286	1,349,318
Net operating loss carryforwards	0	0
Foreign and state income taxes	0	0
Federal benefit on state deferred taxes	(184,523)	(183,987)
Foreign tax credit	0	0
Valuation Allowance	(192,213)	(343,245)
Other	0	0
Net deferred tax assets	4,282,784	4,095,551
Deferred tax liabilities: [Abstract]
Fixed assets and intangibles	0	0
Other	251,678	212,987
Net deferred tax liabilities	251,678	212,987
Noncurrent [Member]
Deferred tax assets: [Abstract]
Contract and other reserves	0	0
Accrued compensation and expenses	378,632	476,214
Net operating loss carryforwards	1,213,010	613,097
Foreign and state income taxes	54,398	52,375
Federal benefit on state deferred taxes	(103,098)	(110,520)
Foreign tax credit	296,326	461,154
Valuation Allowance	(206,070)	(287,751)
Other	74,370	89,208
Net deferred tax assets	1,707,568	1,293,777
Deferred tax liabilities: [Abstract]
Fixed assets and intangibles	58,934	(308,845)
Other	(531,812)	(358,659)
Net deferred tax liabilities	$ (472,878)	$ (667,504)

XML

Segment Reporting (Details) (USD $)	12 Months Ended
	Jul. 31, 2014		Jul. 31, 2013		Jul. 31, 2012
United States [Member] | Reportable Geographical Components [Member]
Revenue from External Customers and Long-Lived Assets, by Geographical Areas [Line Items]
Revenue	$ 82,370,480		$ 91,451,247		$ 98,558,099
Gross Long-Lived Assets	31,170,634		29,508,055		29,506,036
Foreign Countries [Member] | Reportable Geographical Components [Member]
Revenue from External Customers and Long-Lived Assets, by Geographical Areas [Line Items]
Revenue	46,056,396	[1]	43,485,644	[1]	56,852,000	[1]
Gross Long-Lived Assets	5,386,736		5,183,885		5,191,000
Peru [Member]
Revenue from External Customers and Long-Lived Assets, by Geographical Areas [Line Items]
Revenue	19,500,000		11,500,000		17,200,000
Brazil [Member]
Revenue from External Customers and Long-Lived Assets, by Geographical Areas [Line Items]
Revenue	13,800,000		15,100,000		15,700,000
Chile [Member]
Revenue from External Customers and Long-Lived Assets, by Geographical Areas [Line Items]
Revenue	$ 8,800,000		$ 10,600,000		$ 11,300,000

[1] Significant foreign revenues included revenues in Peru ($19.5 million, $11.5 million and $17.2 million for fiscal years 2014, 2013 and 2012, respectively), Brazil ($13.8 million, $15.1 million and $15.7 million for fiscal years 2014, 2013 and 2012, respectively) and Chile ($8.8 million, $10.6 million and $11.3 million for fiscal years 2014, 2013 and 2012, respectively).

XML

Lines of Credit (Details) (USD $)	12 Months Ended
	Jul. 31, 2014	Jul. 31, 2013
Line of Credit Facility [Line Items]
Outstanding cash draws, recorded as lines of credit on the accompanying consolidated balance sheets	$ 1,572,466	$ 6,528,691
Outstanding letters of credit to support operations	1,944,994	3,080,938
Total amounts used under lines of credit	3,517,460	9,609,629
Remaining amounts available under lines of credit	30,851,540	24,759,371
Total approved unsecured lines of credit	$ 34,369,000	$ 34,369,000
Interest rate, minimum (in hundredths)	2.50%
Interest rate, maximum (in hundredths)	3.00%

XML

Debt and Capital Lease Obligations (Tables)

12 Months Ended

Jul. 31, 2014

Debt and Capital Lease Obligations [Abstract]

Debt Inclusive of Capital Lease Obligations

Debt and capital lease obligations are summarized in the following table.

	Balance at July 31,
	2014				2013
Various loans and advances at interest rates ranging from 3.25% to 14%		$	676,874			$	276,934
Capital lease obligations at varying interest rates averaging 11%			165,632				174,338
			842,506				451,272
Current portion of long-term debt and capital lease obligations			(420,737	)			(199,658	)
Long-term debt and capital lease obligations		$	421,769			$	251,614

Aggregate Maturities of Long-term Debt and Capital Lease Obligations

The aggregate maturities of long-term debt and capital lease obligations as of July 31, 2014 are summarized in the following table.

August 2014 – July 2015	$	420,737
August 2015 – July 2016		375,724
August 2016 – July 2017		35,697
August 2017 – July 2018		10,348
Thereafter		---
Total	$	842,506

XML

Segment Reporting

12 Months Ended

Jul. 31, 2014

Segment Reporting [Abstract]

Segment Reporting

17. Segment Reporting

The Company reports segment information based on the geographic location of its customers (for revenues) and the location of its offices (for long-lived assets). Revenue and long-lived assets by business segment are summarized in the following tables.

	Fiscal Years Ended July 31,
	2014			2013			2012
Revenue by geographic location:
United States		$	82,370,480		$	91,451,247		$	98,558,099
Foreign countries (1)			46,056,396			43,485,644			56,852,000

(1) Significant foreign revenues included revenues in Peru ($19.5 million, $11.5 million and $17.2 million for fiscal years 2014, 2013 and 2012, respectively), Brazil ($13.8 million, $15.1 million and $15.7 million for fiscal years 2014, 2013 and 2012, respectively) and Chile ($8.8 million, $10.6 million and $11.3 million for fiscal years 2014, 2013 and 2012, respectively).

	Balance at July 31,
	2014			2013			2012
Long-lived assets by geographic location:
United States		$	31,170,634		$	29,508,055		$	29,506,036
Foreign countries			5,386,736			5,183,885			5,191,000

XML

Stock Award Plan (Details) (USD $) In Millions, except Share data, unless otherwise specified	12 Months Ended			0 Months Ended	12 Months Ended
	Jul. 31, 2014	Jul. 31, 2013	Jul. 31, 2012	Oct. 11, 2011 Class A [Member]	Jul. 31, 2013 Class A [Member]
Class of Stock [Line Items]
Shares awarded (in shares)				62,099	16,387
Shares awarded, value				$ 0.9	$ 0.2
Term of the award plan	5 years
Share-based award, vesting period	3 years
Compensation expense	0.4	0.5	0.7
Unrecognized compensation expense	0.1
Excess tax benefits accumulated in Capital in Excess of Par Value	$ 0.1	$ 0.2

XML

Cash and Cash Equivalents (Details) (USD $) In Millions, unless otherwise specified	12 Months Ended
	Jul. 31, 2014	Jul. 31, 2013
Cash and Cash Equivalents [Abstract]
Maturity period considered for highly liquid instruments to be cash equivalents	3 months
Short-term Investments	$ 0.3	$ 1.5
Bank over drafts classified as accounts payable		$ 0.7

XML

Lease Commitments (Tables)

12 Months Ended

Jul. 31, 2014

Lease Commitments [Abstract]

Future Minimum Rental Commitments

The Company rents certain office facilities and equipment under non-cancelable operating leases and certain other facilities for servicing project sites over the term of the related long-term government contracts.  Future minimum rental commitments under these leases as of July 31, 2014 are summarized in the following table.

Fiscal Year Ended July 31,	Amount
2015	$	2,546,713
2016		1,916,230
2017		1,680,192
2018		1,642,781
2019		1,283,343
Thereafter		2,426,378

XML

Lease Commitments (Details) (USD $)	12 Months Ended
	Jul. 31, 2014	Jul. 31, 2013	Jul. 31, 2012
Future minimum rental commitments [Abstract]
2015	$ 2,546,713
2016	1,916,230
2017	1,680,192
2018	1,642,781
2019	1,283,343
Thereafter	2,426,378
Gross rental expense	$ 3,900,000	$ 4,200,000	$ 3,600,000

XML

Debt and Capital Lease Obligations (Details) (USD $)	12 Months Ended
	Jul. 31, 2014	Jul. 31, 2013
Debt Instrument [Line Items]
Long-term Debt, Current and Noncurrent	$ 842,506	$ 451,272
Current portion of long-term debt and capital lease obligations	(420,737)	(199,658)
Long-term debt and capital lease obligations	421,769	251,614
Interest rate, minimum (in hundredths)	2.50%
Interest rate, maximum (in hundredths)	3.00%
Long-term Debt, by Maturity [Abstract]
August 2014 - July 2015	420,737
August 2015 - July 2016	375,724
August 2016 - July 2017	35,697
August 2017 - July 2018	10,348
Thereafter	0
Total	842,506	451,272
Various Bank Loans and Advances [Member]
Debt Instrument [Line Items]
Long-term Debt, Current and Noncurrent	676,874	276,934
Interest rate, minimum (in hundredths)	3.25%	3.25%
Interest rate, maximum (in hundredths)	14.00%	14.00%
Long-term Debt, by Maturity [Abstract]
Total	676,874	276,934
Capital Lease Obligations [Member]
Debt Instrument [Line Items]
Long-term Debt, Current and Noncurrent	165,632	174,338
Average interest rate (in hundredths)	11.00%	11.00%
Long-term Debt, by Maturity [Abstract]
Total	$ 165,632	$ 174,338

XML

Organization and Basis of Presentation

12 Months Ended

Jul. 31, 2014

Organization and Basis of Presentation [Abstract]

Organization and Basis of Presentation

1. Organization and Basis of Presentation

Ecology and Environment, Inc., (“EEI” or the “Parent Company”) was incorporated in 1970 as a global broad-based environmental consulting firm whose underlying philosophy is to provide professional services worldwide so that sustainable economic and human development may proceed with acceptable impact on the environment.  Together with its subsidiaries (collectively, the “Company”), EEI has direct or indirect ownership in 19 wholly owned and majority owned operating subsidiaries in 12 countries.  The Company’s staff is comprised of individuals representing more than 80 scientific, engineering, health, and social disciplines working together in multidisciplinary teams to provide innovative environmental solutions.  The Company has completed more than 50,000 projects for a wide variety of clients in more than 120 countries, providing environmental solutions in nearly every ecosystem on the planet.

The consolidated financial statements included herein have been prepared by the Company pursuant to the rules and regulations of the Securities and Exchange Commission and in accordance with accounting principles generally accepted in the United States of America.  The financial statements reflect all adjustments that are, in the opinion of management, necessary for a fair presentation of such information.  All such adjustments are of a normal recurring nature.  Certain prior year amounts were reclassified to conform to the consolidated financial statement presentation for the fiscal year ended July 31, 2014.

XML

Fair Value of Financial Instruments (Details) (USD $)	12 Months Ended
	Jul. 31, 2014	Jul. 31, 2013
Assets [Abstract]
Gross unrealized gains	$ 100,000	$ 100,000
Recurring [Member]
Assets [Abstract]
Investment securities available for sale	1,407,277	1,463,864
Recurring [Member] | Level 1 [Member]
Assets [Abstract]
Investment securities available for sale	1,407,277	1,463,864
Recurring [Member] | Level 2 [Member]
Assets [Abstract]
Investment securities available for sale	0	0
Recurring [Member] | Level 3 [Member]
Assets [Abstract]
Investment securities available for sale	$ 0	$ 0

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Fair Value of Financial Instruments (Tables)

12 Months Ended

Jul. 31, 2014

Fair Value of Financial Instruments [Abstract]

Assets Measured at Fair Value on a Recurring Basis

The fair value of the Company’s assets and liabilities that are measured at fair value on a recurring basis is summarized by level within the fair value hierarchy in the following table.

	Balance at July 31, 2014
	Level 1			Level 2			Level 3			Total
Assets
Investment securities available for sale		$	1,407,277		$	---		$	---		$	1,407,277

	Balance at July 31, 2013
	Level 1			Level 2			Level 3			Total
Assets
Investment securities available for sale		$	1,463,864		$	---		$	---		$	1,463,864

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Summary of Significant Accounting Policies (Tables)

12 Months Ended

Jul. 31, 2014

Summary of Significant Accounting Policies [Abstract]

Revenue Recognition Policy

Substantially all of the Company's revenue is derived from environmental consulting work.  The consulting revenue is principally derived from the sale of labor hours.  The consulting work is performed under a mix of fixed price, cost-type, and time and material contracts.  Contracts are required from all customers.  Revenue is recognized as follows:

Contract Type	Work Type	Revenue Recognition Policy
Time and materials	Consulting	As incurred at contract rates.
Fixed price	Consulting	Percentage of completion, approximating the ratio of either total costs or Level of Effort (LOE) hours incurred to date to total estimated costs or LOE hours.
Cost-plus	Consulting	Costs as incurred plus fees.  Fees are recognized as revenue using percentage of completion determined by the percentage of LOE hours incurred to total LOE hours in the respective contracts.

Summary of Methods of Depreciation or Amortization and Useful Lives for All Other Long-Lived Assets

Property, building and equipment are stated at the lower of depreciated or amortized cost or fair value.  Land and land improvements are not depreciated or amortized.  Methods of depreciation or amortization and useful lives for all other long-lived assets are summarized in the following table.

	Depreciation / Amortization Method	Useful Lives
Buildings	Straight-line	32-40 Years
Building Improvements	Straight-line	7-15 Years
Field Equipment	Straight-line	3-7 Years
Computer equipment	Straight-line and Accelerated	3-7 Years
Computer software	Straight-line	10 Years
Office furniture and equipment	Straight-line	3-7 Years
Vehicles	Straight-line	3-5 Years
Leasehold improvements	Straight-line	(1)

(1) Leasehold improvements are amortized for book purposes over the terms of the leases or the estimated useful lives of the assets, whichever is shorter.

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Commitments and Contingencies (Details)	12 Months Ended
	Jul. 31, 2014 City of Denver [Member] USD ($)	Jul. 31, 2014 Walsh Environmental Scientists and Engineers [Member] USD ($)	Jul. 31, 2014 Pending Litigation [Member] Ecology and Environment do Brasil LTDA [Member] USD ($) Employee	Jul. 31, 2014 Pending Litigation [Member] Ecology and Environment do Brasil LTDA [Member] BRL Employee
Loss Contingencies [Line Items]
Penalty	$ 200,000	$ 100,000
Supplemental Environmental Project		100,000
Final Compliance Order and Assessment of Administrative Penalty against Denver			$ 200,000	520,000
Number of employees individually served with Notices of Infraction			4	4

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Contract Receivables, net (Details) (USD $)	12 Months Ended
	Jul. 31, 2014		Jul. 31, 2013		Jul. 31, 2012
Contracts Receivable [Line Items]
Billed Contracts Receivable	$ 26,863,708		$ 36,284,950
Unbilled Contracts Receivable	23,694,451		16,441,857
Contracts Receivable, Gross	50,558,159		52,726,807
Allowance for doubtful accounts and contract adjustments	(6,126,854)		(5,592,800)		(10,238,391)
Contract receivables, net	44,431,305		47,134,007
Contract receivables (in hundredths)	14.00%		22.00%
Allowance for doubtful accounts receivables (in hundredths)	74.00%		72.00%
Contractual retainage balance included under billed contract receivable	0		0
Management anticipation for receivables collection	1 year
Allowance for Doubtful Accounts Receivable [Roll Forward]
Balance at beginning of period	5,592,800		10,238,391		6,755,087
Net increase (decrease) due to adjustments in the allowance for contract adjustments (1)	473,967	[1]	6,319,650	[1]	1,635,311	[1]
Net increase (decrease) due to adjustments in the allowance for doubtful accounts (2)	90,087	[2]	(287,426)	[2]	689,657	[2]
Transfer of reserves (to) from allowance for project disallowances (3)	(30,000)	[3]	61,123	[3]	1,158,336	[3]
Specific write-off of contract receivables and reserves during the period (4)	0	[4]	(10,738,938)	[4]	0	[4]
Balance at end of period	6,126,854		5,592,800		10,238,391
United States, Canada and South America [Member]
Contracts Receivable [Line Items]
Contracts Receivable, Gross	43,394,442		41,302,180
Allowance for doubtful accounts and contract adjustments	1,611,068		1,576,746
Allowance for Doubtful Accounts Receivable [Roll Forward]
Balance at end of period	(1,611,068)		(1,576,746)
Middle East and Africa [Member]
Contracts Receivable [Line Items]
Contracts Receivable, Gross	7,010,225		10,876,151
Allowance for doubtful accounts and contract adjustments	4,386,240		3,886,508
Allowance for Doubtful Accounts Receivable [Roll Forward]
Balance at end of period	(4,386,240)		(3,886,508)
Middle East, Africa Projects [Member]
Contracts Receivable [Line Items]
Contracts Receivable, Gross			3,400,000
Cash received related to a project	4,100,000
Increase in contract receivables	500,000
Asia [Member]
Contracts Receivable [Line Items]
Contracts Receivable, Gross	153,492		548,476
Allowance for doubtful accounts and contract adjustments	129,546		129,546
Allowance for Doubtful Accounts Receivable [Roll Forward]
Balance at end of period	(129,546)		(129,546)
China [Member]
Contracts Receivable [Line Items]
Contracts Receivable, Gross			$ 7,300,000

[1] Increases (decreases) to the allowance for contract adjustments on the consolidated balance sheets are also recorded as (decreases) increases to revenue on the consolidated statements of operations.

[2] Increases (decreases) to the allowance for doubtful accounts on the consolidated balance sheets are also recorded as increases (decreases) to administrative and other indirect operating expenses on the consolidated statements of operations.

[3] The allowance for project disallowances is included in other accrued liabilities on the consolidated balance sheets. Refer to Note 11 of these consolidated financial statements.

[4] Approximately $7.3 million of contract receivables related to projects in China and $3.4 million of contract receivables from projects in the Middle East and Africa were fully reserved and written off during the last quarter of fiscal year 2013, resulting in corresponding decreases in contract receivables and the allowance for contract adjustments during fiscal year 2013.

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Contract Receivables, net (Tables)

12 Months Ended

Jul. 31, 2014

Contract Receivables, net [Abstract]

Contract Receivables, Net

Contract receivables, net are summarized in the following table.

	Balance at July 31,
	2014				2013
Contract Receivables:
Billed		$	26,863,708			$	36,284,950
Unbilled			23,694,451				16,441,857
			50,558,159				52,726,807
Allowance for doubtful accounts and contract adjustments			(6,126,854	)			(5,592,800	)
Contract receivables, net		$	44,431,305			$	47,134,007

Contract Receivables and Allowance for Doubtful Accounts and Contract Adjustments by Geographical Areas

Significant concentrations of contract receivables and the allowance for doubtful accounts and contract adjustments are summarized in the following table.

	Balance at July 31, 2014						Balance at July 31, 2013
Region	Contract Receivables			Allowance for Doubtful Accounts and Contract Adjustments			Contract Receivables			Allowance for Doubtful Accounts and Contract Adjustments
United States, Canada and South America		$	43,394,442		$	1,611,068		$	41,302,180		$	1,576,746
Middle East and Africa			7,010,225			4,386,240			10,876,151			3,886,508
Asia			153,492			129,546			548,476			129,546
Totals		$	50,558,159		$	6,126,068		$	52,726,807		$	5,592,800

Allowance for Doubtful Accounts and Contract Adjustments

Activity within the allowance for doubtful accounts and contract adjustments is summarized in the following table.

	Fiscal Year Ended July 31,
	2014			2013			2012
Balance at beginning of period	$	5,592,800		$	10,238,391		$	6,755,087
Net increase (decrease) due to adjustments in the allowance for:
Contract adjustments (1)		473,967			6,319,650			1,635,311
Doubtful accounts (2)		90,087			(287,426	)		689,657
Transfer of reserves (to) from allowance for project disallowances (3)		(30,000	)		61,123			1,158,336
Specific write-off of contract receivables and reserves during the period (4)		---			(10,738,938	)		---
Balance at end of period	$	6,126,854		$	5,592,800		$	10,238,391

(1) Increases (decreases) to the allowance for contract adjustments on the consolidated balance sheets are also recorded as (decreases) increases to revenue on the consolidated statements of operations.

(2) Increases (decreases) to the allowance for doubtful accounts on the consolidated balance sheets are also recorded as increases (decreases) to administrative and other indirect operating expenses on the consolidated statements of operations.

(3) The allowance for project disallowances is included in other accrued liabilities on the consolidated balance sheets.  Refer to Note 11 of these consolidated financial statements.

(4) Approximately $7.3 million of contract receivables related to projects in China and $3.4 million of contract receivables from projects in the Middle East and Africa were fully reserved and written off during the last quarter of fiscal year 2013, resulting in corresponding decreases in contract receivables and the allowance for contract adjustments during fiscal year 2013.

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Property, Building and Equipment, net (Tables)

12 Months Ended

Jul. 31, 2014

Property, Building and Equipment, net [Abstract]

Property, Building and Equipment, net

Property, plant and equipment is summarized in the following table.

	Balance at July 31,
	2014			2013
Land and land improvements	$	393,051		$	393,051
Buildings and building improvements		12,231,788			12,231,788
Field equipment		3,273,725			3,128,859
Computer equipment		9,128,027			8,931,030
Computer software		5,030,472			3,617,527
Office furniture and equipment		4,095,659			4,023,004
Vehicles		1,658,273			1,548,901
Other		746,375			817,780
		36,557,370			34,691,940
Accumulated depreciation and amortization		(28,615,915	)		(24,569,139	)
Property, building and equipment, net	$	7,941,455		$	10,122,801

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Consolidated Statements of Changes in Shareholders' Equity (Parenthetical) (USD $)	12 Months Ended
	Jul. 31, 2014	Jul. 31, 2013	Jul. 31, 2012
Consolidated Statements of Changes in Shareholders' Equity [Abstract]
Cash dividends declared (in dollars per share)	$ 0.48	$ 0.48	$ 0.48

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Lines of Credit (Tables)

12 Months Ended

Jul. 31, 2014

Lines of Credit [Abstract]

Unsecured Lines of Credit

Unsecured lines of credit are summarized in the following table.

	Balance at July 31,
	2014			2013
Outstanding cash draws, recorded as lines of credit on the accompanying consolidated balance sheets		$	1,572,466		$	6,528,691
Outstanding letters of credit to support operations			1,944,994			3,080,938
Total amounts used under lines of credit			3,517,460			9,609,629
Remaining amounts available under lines of credit			30,851,540			24,759,371
Total approved unsecured lines of credit		$	34,369,000		$	34,369,000

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Organization and Basis of Presentation (Details)	12 Months Ended
	Jul. 31, 2014 Project Discipline Subsidiary Country
Organization and Basis of Presentation [Abstract]
Number of wholly owned and majority owned operating subsidiaries	19
Number of countries in which the company operates	12
Number of disciplines	80
Number of projects for clients	50,000
Minimum number of countries in which the company completed projects	120

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Defined Contribution Plans (Details) (USD $) In Millions, unless otherwise specified	12 Months Ended
	Jul. 31, 2014	Jul. 31, 2013	Jul. 31, 2012
Defined Contribution Plans [Abstract]
Employer matching contribution percentage (in hundredths)	100.00%
Employee contribution (in hundredths)	4.00%
Total plan expense	$ 1.7	$ 2.2	$ 1.8

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Consolidated Balance Sheets (USD $)	Jul. 31, 2014	Jul. 31, 2013
Current assets:
Cash and cash equivalents	$ 6,889,243	$ 9,444,660
Investment securities available for sale	1,407,277	1,463,864
Contract receivables, net of allowance for doubtful accounts and contract adjustments of $6,126,854 and $5,592,800, respectively	44,431,305	47,134,007
Deferred income taxes	4,534,437	4,308,538
Income tax receivable	1,107,983	4,355,260
Other current assets	1,589,646	1,784,826
Total current assets	59,959,891	68,491,155
Property, building and equipment, net of accumulated depreciation of $28,615,915 and $24,569,139, respectively	7,941,455	10,122,801
Deferred income taxes	1,865,798	1,089,060
Other assets	1,941,178	1,978,668
Total assets	71,708,322	81,681,684
Current liabilities:
Accounts payable	9,874,649	9,864,138
Lines of credit	1,572,466	6,528,691
Accrued payroll costs	7,650,077	7,102,910
Current portion of long-term debt and capital lease obligations	420,737	199,658
Billings in excess of revenue	5,003,413	6,437,730
Other accrued liabilities	4,235,262	4,070,073
Total current liabilities	28,756,604	34,203,200
Income taxes payable	107,035	124,793
Deferred income taxes	631,083	462,787
Long-term debt and capital lease obligations	421,769	251,614
Commitments and contingencies (Note 18)
Shareholders' equity:
Preferred stock, par value $.01 per share (2,000,000 shares authorized; no shares issued)	0	0
Capital in excess of par value	17,124,339	20,016,873
Retained earnings	21,916,575	25,365,853
Accumulated other comprehensive loss	(182,735)	(84,527)
Treasury stock, at cost (Class A common: 40,553 and 79,110 shares, respectively; Class B common: 64,801 shares)	(1,223,899)	(1,798,233)
Total Ecology and Environment, Inc. shareholders' equity	37,678,218	43,543,904
Noncontrolling interests	4,113,613	3,095,386
Total shareholders' equity	41,791,831	46,639,290
Total liabilities and shareholders' equity	71,708,322	81,681,684
Class A [Member]
Shareholders' equity:
Common stock	26,851	26,851
Class B [Member]
Shareholders' equity:
Common stock	$ 17,087	$ 17,087

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Property, Building and Equipment, net (Details) (USD $)											12 Months Ended									3 Months Ended	12 Months Ended
	Jul. 31, 2014	Jul. 31, 2013	Jul. 31, 2014 Land and Land Improvements [Member]	Jul. 31, 2013 Land and Land Improvements [Member]	Jul. 31, 2014 Building and Building Improvements [Member]	Jul. 31, 2013 Building and Building Improvements [Member]	Jul. 31, 2014 Field Equipment [Member]	Jul. 31, 2013 Field Equipment [Member]	Jul. 31, 2014 Computer Equipment [Member]	Jul. 31, 2013 Computer Equipment [Member]	Jul. 31, 2014 Computer Software [Member]	Jul. 31, 2013 Computer Software [Member]	Jul. 31, 2012 Computer Software [Member]	Jul. 31, 2014 Office Furniture and Equipment [Member]	Jul. 31, 2013 Office Furniture and Equipment [Member]	Jul. 31, 2014 Vehicles [Member]	Jul. 31, 2013 Vehicles [Member]	Jul. 31, 2014 Other [Member]	Jul. 31, 2013 Other [Member]	Jul. 31, 2013 Capitalized Software Costs [Member]	Jul. 31, 2014 Capitalized Software Costs [Member]	Jul. 31, 2013 Capitalized Software Costs [Member]
Property, Plant and Equipment [Line Items]
Property, plant and equipment, gross	$ 36,557,370	$ 34,691,940	$ 393,051	$ 393,051	$ 12,231,788	$ 12,231,788	$ 3,273,725	$ 3,128,859	$ 9,128,027	$ 8,931,030	$ 5,030,472	$ 3,617,527		$ 4,095,659	$ 4,023,004	$ 1,658,273	$ 1,548,901	$ 746,375	$ 817,780
Accumulated depreciation and amortization	(28,615,915)	(24,569,139)
Property, building and equipment, net	7,941,455	10,122,801
Operating and financial software system capitalized expenditures																						4,100,000
Useful life																					10 years
Software impairment charge																				800,000
Unamortized software development costs																					1,400,000
Amortization expense											$ 2,600,000	$ 400,000	$ 200,000

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Consolidated Statements of Cash Flows (USD $)	12 Months Ended
	Jul. 31, 2014	Jul. 31, 2013	Jul. 31, 2012
Cash flows from operating activities:
Net (loss) income	$ (790,453)	$ (1,222,048)	$ 3,039,750
Adjustments to reconcile net (loss) income to net cash provided by (used in) operating activities:
Impairment of long-lived assets	0	846,000	0
Depreciation and amortization	4,175,801	2,428,844	2,160,062
(Provision) benefit for deferred income taxes	(817,896)	203,165	113,717
Share based compensation expense	353,295	507,796	731,583
Tax impact of share-based compensation	(31,695)	(74,429)	105,988
Gain on sale of assets and investment securities	(13,045)	(80,415)	0
Provision for contract adjustments and doubtful accounts	173,967	6,319,650	1,635,311
Bad debt expense	90,087	(287,426)	689,657
Decrease (increase) in:
- contract receivables	1,855,027	7,228,782	(2,287,607)
- other current assets	192,013	(97,563)	314,587
- income tax receivable	3,247,277	(1,832,096)	(2,502,431)
- other non-current assets	29,656	6,951	31,973
(Decrease) increase in:
- accounts payable	23,739	(628,189)	(1,859,530)
- accrued payroll costs	630,156	(172,087)	(1,458,928)
- income taxes payable	(41,155)	(69,230)	(1,375,614)
- billings in excess of revenue	(1,419,481)	(1,430,143)	1,237,329
- other accrued liabilities	445,505	295,562	(936,135)
Net cash provided by (used in) operating activities	8,102,798	11,943,124	(360,288)
Cash flows from investing activities:
Acquistion of noncontrolling interest of subsidiaries	(689,361)	(595,556)	(908,892)
Purchase of property, building and equipment	(1,964,663)	(1,845,241)	(4,727,033)
Proceeds from sale of investments	0	1,554,425	138,141
Sale (purchase) of investment securities	52,675	(1,671,284)	(35,614)
Net cash used in investing activities	(2,601,349)	(2,557,656)	(5,533,398)
Cash flows from financing activities:
Dividends paid	(2,053,506)	(2,037,323)	(2,046,657)
Proceeds from debt	544,027	255,487	145,401
Repayment of debt and capital lease obligations	(710,009)	(853,127)	(974,644)
Net (repayments of) borrowings under of lines of credit	(4,956,225)	(5,782,992)	12,309,335
Distributions to noncontrolling interests	(664,703)	(1,532,912)	(1,123,896)
Proceeds from sale of subsidiary shares to noncontrolling interests	0	0	41,634
Purchase of treasury stock	(173,278)	0	(363,050)
Net cash (used in) provided by financing activities	(8,013,694)	(9,950,867)	7,988,123
Effect of exchange rate changes on cash and cash equivalents	(43,172)	(457,711)	(156,509)
Net (decrease) increase in cash and cash equivalents	(2,555,417)	(1,023,110)	1,937,928
Cash and cash equivalents at beginning of period	9,444,660	10,467,770	8,529,842
Cash and cash equivalents at end of period	6,889,243	9,444,660	10,467,770
Cash paid during the period for:
Interest	145,880	301,154	395,146
Income taxes	(2,303,231)	1,596,760	6,510,514
Supplemental disclosure of non-cash items:
Dividends declared and not paid	1,033,071	1,018,783	1,028,881
Acquistion of noncontrolling interest of subsidiaries (loans and stock)	1,072,944	212,401	795,856
Change in accounts payable due to equipment purchases	$ 0	$ 670,678	$ (283,071)

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Other Accrued Liabilities (Tables)

12 Months Ended

Jul. 31, 2014

Other Accrued Liabilities [Abstract]

Other Accrued Liabilities

Other accrued liabilities are summarized in the following table.

	Balance at July 31,
	2014			2013
Allowance for project disallowances		$	2,393,351		$	2,663,351
Other			1,841,911			1,406,722
Total other accrued liabilities		$	4,235,262		$	4,070,073

Allowance for Project Disallowances

The allowance for project disallowances represents potential disallowances of amounts billed and collected resulting from contract close-outs and government audits.  Allowances for project disallowances are recorded when the amounts are estimable.  Activity within the allowance for project disallowances is summarized in the following table.

	Fiscal Year Ended July 31,
	2014			2013			2012
Balance at beginning of period	$	2,663,351		$	2,724,474		$	3,882,810
Reduction of reserves recorded in prior fiscal years		(300,000	)		---			---
Net change during the period, recorded as a transfer of reserves from allowance for doubtful accounts and contract adjustments		30,000			(61,123	)		(1,158,336
Balance at end of period	$	2,393,351		$	2,663,351		$	2,724,474

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Lease Commitments

12 Months Ended

Jul. 31, 2014

Lease Commitments [Abstract]

Lease Commitments

14. Lease Commitments

The Company rents certain office facilities and equipment under non-cancelable operating leases and certain other facilities for servicing project sites over the term of the related long-term government contracts.  Future minimum rental commitments under these leases as of July 31, 2014 are summarized in the following table.

Fiscal Year Ended July 31,	Amount
2015	$	2,546,713
2016		1,916,230
2017		1,680,192
2018		1,642,781
2019		1,283,343
Thereafter		2,426,378

Lease agreements may contain step rent provisions and/or free rent concessions.   Lease payments based on a price index have rent expense recognized on a straight line or substantially equivalent basis, and are included in the calculation of minimum lease payments.  Gross rental expense associated with lease commitments was $3.9 million, $4.2 million and $3.6 million for the fiscal years ended July 31, 2014, 2013 and 2012, respectively.

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Shareholders' Equity (Tables)

12 Months Ended

Jul. 31, 2014

Shareholders' Equity [Abstract]

Effects of Changes in Ownership Interest in Subsidiaries

Transactions with noncontrolling shareholders for the fiscal years ended July 31, 2014, 2013 and 2012 were recorded at amounts that approximated fair value.  Effects on shareholders’ equity resulting from changes in EEI’s ownership interest in its subsidiaries are summarized in the following table.

	Fiscal Years Ended July 31,
	2014			2013			2012
Sales of noncontrolling interest:
Sale of 600 Gustavson common shares	$	---		$	---		$	41,634
Total sales of noncontrolling interests (10)		---			---			41,634
Purchases of noncontrolling interests:
Purchase of 344 Walsh common shares (1)	$	(5,653	)		---			---
Purchase of 3,705 Walsh common shares (2)		(1,120,749	)		---			---
Purchase of 100 Walsh common shares (3)		(30,250	)		---			---
Purchase of 50 Walsh common shares (4)		---			(18,316	)		---
Purchase of 25 Lowham common shares (5)		---			(8,737	)		---
Purchase of 495 Walsh common shares (6)		---			(243,653	)		---
Purchase of 2,800 Gustavson common shares (7)		---			(293,102	)		---
Purchase of 370 Walsh common shares (8)		---			(182,125	)		---
Purchase of 75 Lowham common shares (9)		---			(30,002	)		---
Purchase of 25 Gestion Ambiental Consultores common shares		---			---			(7,452	)
Purchase of 166 Walsh common shares		---			---			(97,634	)
Purchase of  496 Walsh common shares		---			---			(277,514	)
Purchase of  5,389 Brazil common shares		---			---			77,539
Purchase of 26,482 Walsh Peru common shares		---			---			(238,677	)
Purchase of 152 Walsh common shares		---			---			(76,037	)
Total purchases of noncontrolling interests (10)		(1,156,652	)		(775,935	)		(619,775	)
Net transfers from noncontrolling interests	$	(1,156,652	)	$	(775,935	)	$	(578,141	)

(1) In January 2014, EEI purchased an additional 0.9% of Walsh Environmental Scientists and Engineers, LLC (“Walsh”) from noncontrolling shareholders for $0.1 million in cash.  Walsh became a wholly-owned subsidiary of EEI as a result of these transactions.

(2) In October 2013, EEI purchased an additional 9.4% of Walsh for $1.6 million.  The purchase price was paid as follows: (i) one third in cash payable on the transaction consummation date; (ii) one third payable with EEI Common Stock on the transaction consummation date; and (iii) one third with a promissory note payable in two annual installments of one half the principal plus interest accrued at 3.25% per annum.

(3) In October 2013, EEI purchased an additional 0.2% of Walsh for less than $0.1 million in cash.

(4) In April 2013, EEI purchased an additional 0.1% of Walsh from noncontrolling shareholders for less than $0.1 million in cash.

(5) In March 2013, Lowham-Walsh Engineering & Environment Services LLC (“Lowham”), a subsidiary of Walsh, purchased shares from noncontrolling shareholders for less than $0.1 million in cash.

(6) In January 2013, EEI purchased an additional 1.3% of Walsh from noncontrolling shareholders for $0.2 million.  Two thirds of the purchase price was paid in cash while the remaining one third was paid for with EEI stock.

(7) In December 2012, Gustavson Associates, LLC (“Gustavson”) purchased an additional 6.7% of its shares from noncontrolling shareholders for $0.4 million.  Half of the purchase price was paid in cash and Gustavson issued a three year note for the other half.

(8) In December 2012, EEI purchased an additional 0.9% of Walsh from noncontrolling shareholders for $0.2 million in cash.

(9) During the three months ending October 31, 2012, Lowham purchased shares from noncontrolling shareholders for less than $0.1 million in cash.

(10) Sales (purchases) of additional noncontrolling interests are recorded as additions (reductions) of shareholders’ equity on the consolidated statements of changes in shareholders’ equity.

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Earnings Per Share

12 Months Ended

Jul. 31, 2014

Earnings Per Share [Abstract]

Earnings Per Share

16. Earnings Per Share

Basic and diluted EPS is computed by dividing the net (loss) income attributable to Ecology and Environment, Inc. common shareholders by the weighted average number of common shares outstanding for the period.  After consideration of all the rights and privileges of the Class A and Class B stockholders summarized in Note 13, in particular the right of the holders of the Class B common stock to elect no less than 75% of the Board of Directors making it highly unlikely that the Company will pay a dividend on Class A common stock in excess of Class B common stock, the Company allocates undistributed earnings between the classes on a one-to-one basis when computing earnings per share.  As a result, basic and fully diluted earnings per Class A and Class B share are equal amounts.

The Company has determined that its unvested share-based payment awards that contain non-forfeitable rights to dividends or dividend equivalents (whether paid or unpaid) are participating securities.  These securities are included in the weighted average shares outstanding calculation.

The computation of basic earnings per share is included in the following table.

	Fiscal Year Ended July 31,
	2014			2013			2012
Net (loss) income attributable to Ecology and Environment, Inc.	$	(1,382,656	)	$	(2,130,434	)	$	773,579
Dividend declared		2,066,622			2,038,496			2,036,559
Undistributed earnings	$	(3,449,278	)	$	(4,168,930	)	$	(1,262,980	)
Weighted-average common shares outstanding (basic and diluted)		4,283,984			4,247,821			4,233,883
Distributed earnings per share	$	0.48		$	0.48		$	0.48
Undistributed earnings per share		(0.80	)		(0.98	)		(0.30	)
Total earnings per share	$	(0.32	)	$	(0.50	)	$	0.18

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Consolidated Statements of Changes in Shareholders' Equity (USD $)	Common Stock [Member] Class A [Member]	Common Stock [Member] Class B [Member]	Capital in Excess of Par Value [Member]	Retained Earnings [Member]	Accumulated Other Comprehensive Income (Loss) [Member]	Treasury Stock [Member]	Noncontrolling Interest [Member]		Total
Balance at Jul. 31, 2011	$ 26,851	$ 17,087	$ 19,983,029	$ 30,797,763	$ 1,527,189	$ (2,317,515)	$ 3,923,429
Balance (in shares) at Jul. 31, 2011	2,685,151	1,708,574				190,724
Increase (Decrease) in Stockholders' Equity [Roll Forward]
Net (loss) income	0	0	0	773,579	0	0	2,266,171		3,039,750
Foreign currency translation adjustments	0	0	0	0	(871,476)	0	124,455		(708,489)
Cash dividends declared	0	0	0	(2,036,559)	0	0	0		(2,036,559)
Unrealized investment gain (loss), net	0	0	0	0	17,597	0	0		17,597
Repurchase of Class A common stock	0	0	0	0	0	(363,050)	0
Repurchase of Class A common stock (in shares)	0	0				22,825
Issuance of stock under stock award plan	0	0	(716,662)	0	0	716,662	0
Issuance of stock under stock award plan (in shares)	0	0				(62,099)
Share-based compensation expense	0	0	731,583	0	0	0	0
Tax impact of share based compensation	0	0	105,988	0	0	0	0
Sale of subsidiary shares to noncontrolling interests	0	0	0	0	0	0	41,634
Distributions to noncontrolling interests	0	0	0	0	0	0	(1,123,896)
Purchase of additional noncontrolling interests	0	0	(351,946)	0	38,532	66,871	(619,775)	[1]
Purchase of additional noncontrolling interests (in shares)	0	0				(5,208)
Stock award plan forfeitures	0	0	0	0	0	0	0
Stock award plan forfeitures (in shares)	0	0				3,289
Balance at Jul. 31, 2012	26,851	17,087	19,751,992	29,534,783	711,842	(1,897,032)	4,612,018
Balance (in shares) at Jul. 31, 2012	2,685,151	1,708,574				149,531
Increase (Decrease) in Stockholders' Equity [Roll Forward]
Net (loss) income	0	0	0	(2,130,434)	0	0	908,386		(1,222,048)
Foreign currency translation adjustments	0	0	0	0	(790,464)	0	(116,171)		(883,865)
Cash dividends declared	0	0	0	(2,038,496)	0	0	0		(2,038,496)
Unrealized investment gain (loss), net	0	0	0	0	(28,675)	0	0		(28,675)
Share-based compensation expense	0	0	507,796	0	0	0	0
Tax impact of share based compensation	0	0	(74,429)	0	0	0	0
Distributions to noncontrolling interests	0	0	0	0	0	0	(1,532,912)
Purchase of additional noncontrolling interests	0	0	(168,486)	0	22,770	98,799	(775,935)	[1]
Purchase of additional noncontrolling interests (in shares)	0	0				(7,804)
Stock award plan forfeitures	0	0	0	0	0	0	0
Stock award plan forfeitures (in shares)	0	0				2,184
Balance at Jul. 31, 2013	26,851	17,087	20,016,873	25,365,853	(84,527)	(1,798,233)	3,095,386		46,639,290
Balance (in shares) at Jul. 31, 2013	2,685,151	1,708,574				143,911
Increase (Decrease) in Stockholders' Equity [Roll Forward]
Net (loss) income	0	0	0	(1,382,656)	0	0	592,203		(790,453)
Foreign currency translation adjustments	0	0	0	0	(163,913)	0	(134,287)		(298,200)
Cash dividends declared	0	0	0	(2,066,622)	0	0	0		(2,066,622)
Unrealized investment gain (loss), net	0	0	0	0	1,412	0	0		1,412
Repurchase of Class A common stock	0	0	0	0	0	(173,278)	0
Repurchase of Class A common stock (in shares)	0	0				16,091
Issuance of stock under stock award plan	0	0	(194,454)	0	0	194,454	0
Issuance of stock under stock award plan (in shares)	0	0				(16,387)
Share-based compensation expense	0	0	353,295	0	0	0	0
Tax impact of share based compensation	0	0	(31,695)	0	0	0	0
Distributions to noncontrolling interests	0	0	0	0	0	0	(664,703)
Reclassification adjustment for prior period acquisitions of noncontrolling interests	0	0	(2,414,027)	0	0	0	2,381,666
Purchase of additional noncontrolling interests	0	0	(605,653)	0	64,293	553,158	(1,156,652)	[1]
Purchase of additional noncontrolling interests (in shares)	0	0				(44,260)
Stock award plan forfeitures	0	0	0	0	0	0	0
Stock award plan forfeitures (in shares)	0	0				5,999
Balance at Jul. 31, 2014	$ 26,851	$ 17,087	$ 17,124,339	$ 21,916,575	$ (182,735)	$ (1,223,899)	$ 4,113,613		$ 41,791,831
Balance (in shares) at Jul. 31, 2014	2,685,151	1,708,574				105,354

[1] Sales (purchases) of additional noncontrolling interests are recorded as additions (reductions) of shareholders' equity on the consolidated statements of changes in shareholders' equity.

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Consolidated Balance Sheets (Parenthetical) (USD $)	Jul. 31, 2014	Jul. 31, 2013
Assets
Contract receivables, allowance for doubtful accounts and contract adjustments	$ 6,126,854	$ 5,592,800
Property, building and equipment, accumulated depreciation	$ 28,615,915	$ 24,569,139
Shareholders' equity:
Preferred stock, par value (in dollars per share)	$ 0.01	$ 0.01
Preferred stock, authorized (in shares)	2,000,000	2,000,000
Preferred stock, issued (in shares)	0	0
Class A [Member]
Shareholders' equity:
Common stock, par value (in dollars per share)	$ 0.01	$ 0.01
Common stock, authorized (in shares)	6,000,000	6,000,000
Common stock, issued (in shares)	2,685,151	2,685,151
Treasury stock (in shares)	40,553	79,110
Class B [Member]
Shareholders' equity:
Common stock, par value (in dollars per share)	$ 0.01	$ 0.01
Common stock, authorized (in shares)	10,000,000	10,000,000
Common stock, issued (in shares)	1,708,574	1,708,574
Treasury stock (in shares)	64,801	64,801

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Debt and Capital Lease Obligations

12 Months Ended

Jul. 31, 2014

Debt and Capital Lease Obligations [Abstract]

Debt and Capital Lease Obligations

9. Debt and Capital Lease Obligations

Debt and capital lease obligations are summarized in the following table.

	Balance at July 31,
	2014				2013
Various loans and advances at interest rates ranging from 3.25% to 14%		$	676,874			$	276,934
Capital lease obligations at varying interest rates averaging 11%			165,632				174,338
			842,506				451,272
Current portion of long-term debt and capital lease obligations			(420,737	)			(199,658	)
Long-term debt and capital lease obligations		$	421,769			$	251,614

The aggregate maturities of long-term debt and capital lease obligations as of July 31, 2014 are summarized in the following table.

August 2014 – July 2015	$	420,737
August 2015 – July 2016		375,724
August 2016 – July 2017		35,697
August 2017 – July 2018		10,348
Thereafter		---
Total	$	842,506

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Document and Entity Information (USD $)	12 Months Ended
	Jul. 31, 2014	Jan. 31, 2014	Sep. 30, 2014 Common Class A [Member]	Sep. 30, 2014 Common Class B [Member]
Document Information [Line Items]
Entity Registrant Name	ECOLOGY & ENVIRONMENT INC
Entity Central Index Key	0000809933
Current Fiscal Year End Date	--07-31
Entity Well-known Seasoned Issuer	No
Entity Voluntary Filers	No
Entity Current Reporting Status	Yes
Entity Filer Category	Smaller Reporting Company
Entity Public Float		$ 29,159,296
Entity Common Stock, Shares Outstanding			2,659,174	1,643,773
Document Fiscal Year Focus	2014
Document Fiscal Period Focus	FY
Document Type	10-K
Amendment Flag	false
Document Period End Date	Jul. 31, 2014

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Income Taxes

12 Months Ended

Jul. 31, 2014

Income Taxes [Abstract]

Income Taxes

10. Income Taxes

Income (loss) from continuing operations before provision (benefit) for income taxes and noncontrolling interest is summarized in the following table.

	Fiscal Year Ended July 31,
	2014				2013				2012
Domestic		$	(4,305,768	)		$	(3,055,338	)		$	(993,959	)
Foreign			3,858,378				2,087,524				5,391,625
		$	(447,390	)		$	(967,814	)		$	4,397,666

The income tax provision is summarized in the following table.

	Fiscal Year Ended July 31,
	2014			2013			2012
Current:
Federal	$	86,062		$	(985,865	)	$	(175,203	)
State		62,761			181,434			(232,800	)
Foreign		1,012,136			855,500			1,652,202
Total current		1,160,959			51,069			1,244,199
Deferred:
Federal		(975,519	)		200,197			509,161
State		24,138			(178,438	)		(35,273	)
Foreign		133,485			181,406			(360,171	)
Total deferred		(817,896	)		203,165			113,717
Total income tax provision	$	343,063		$	254,234		$	1,357,916

A reconciliation of the income tax provision using the statutory U.S. income tax rate compared with the actual income tax provision reported on the consolidated statements of operations is summarized in the following table.

	Fiscal Year Ended July 31,
	2014			2013			2012
Income tax (benefit) provision at the U.S. federal statutory income tax rate	$	(152,113	)	$	(329,057	)	$	1,495,206
Income from "pass-through" entities taxable to noncontrolling partners		35,309			(102,933	)		(255,065	)
International rate differences		(143,493	)		(197,217	)		(329,825	)
Other foreign taxes, net of federal benefit		(34,419	)		94,528			211,088
Foreign dividend income		596,631			481,287			329,825
State taxes, net of federal benefit		27,739			3,871			13,193
Re-evaluation and settlements of tax contingencies		(19,533	)		(58,105	)		(180,304	)
Peru non-deductible expenses		44,077			173,707			211,000
Canada valuation allowance		(83,257	)		130,950			---
Other permanent differences		72,122			57,203			(137,202	)
Income tax provision, as reported on the consolidated statements of operations	$	343,063		$	254,234		$	1,357,916

The significant components of deferred tax assets and liabilities are summarized in the following table.

	Balance at July 31, 2014						Balance at July 31, 2013
	Current			Noncurrent			Current			Noncurrent
Deferred tax assets:
Contract and other reserves	$	3,409,234		$	---		$	3,273,465		$	---
Accrued compensation and expenses		1,250,286			378,632			1,349,318			476,214
Net operating loss carryforwards		---			1,213,010			---			613,097
Foreign and state income taxes		---			54,398			---			52,375
Federal benefit on state deferred taxes		(184,523	)		(103,098	)		(183,987	)		(110,520	)
Foreign tax credit		---			296,326			---			461,154
Valuation Allowance		(192,213	)		(206,070	)		(343,245	)		(287,751	)
Other		---			74,370			---			89,208
Net deferred tax assets	$	4,282,784		$	1,707,568		$	4,095,551		$	1,293,777
Deferred tax liabilities:
Fixed assets and intangibles	$	---		$	58,934		$	---		$	(308,845	)
Other		251,678			(531,812	)		212,987			(358,659	)
Net deferred tax liabilities	$	251,678		$	(472,878	)	$	212,987		$	(667,504	)

For fiscal years 2014 and 2013, there was no one item that significantly impacted the change in the deferred tax assets and liabilities.  The Company recorded a valuation allowance of $0.4 million and $0.6 million at July 31, 2014 and 2013, respectively, which was primarily related to excess foreign tax credit carryforwards, the utilization of which is dependent on future foreign source income, and to operating losses in Asia and Canada.

The Company has not recorded income taxes applicable to undistributed earnings of all foreign subsidiaries that are indefinitely reinvested in those operations.  At July 31, 2014, the Company’s operations in Chile, Peru and Ecuador had $5.4 million of undistributed earnings that were indefinitely reinvested in those operations.

The Company files numerous consolidated and separate income tax returns in the U.S. federal jurisdiction and in many state and foreign jurisdictions.  During fiscal year 2013, the IRS completed the examination of fiscal year 2010 and 2011 income tax returns, which were settled without material adjustment.  The Company’s tax matters for the fiscal years 2012, 2013 and 2014 remain subject to examination by the IRS.  During fiscal year 2012, the Company was audited by New York State for fiscal years 2008 through 2010, which resulted in no adjustments.  The Company’s tax matters in other material jurisdictions remain subject to examination by the respective state, local, and foreign tax jurisdiction authorities.  No waivers have been executed that would extend the period subject to examination beyond the period prescribed by statute.

During the fiscal year ended July 31, 2014 and 2013, the Company generated operating losses in the U.S. of $1.7 million and $3.8 million, respectively.  The net operating loss from fiscal year 2014 will be carried forward to future fiscal years.  The net operating loss from fiscal year 2013 was carried back to an earlier year and was fully utilized.  As of July 31, 2014, net operating losses attributable to operations in Brazil, Canada and China and net operating losses for state income tax purposes still exist.

At July 31, 2014, 2013 and 2012, the Company had $0.1 million of gross unrecognized tax benefits (“UTPs”) that if realized, would favorably affect the effective income tax rate in future periods.  It is reasonably possible that the liability associated with UTPs will increase or decrease within the next twelve months.  At this time, an estimate of the range of the reasonably possible outcomes cannot be made.  The Company’s UTPs are summarized in the following table.

	Fiscal Year Ended July 31,
	2014			2013			2012
Balance at beginning of period	$	91,100		$	131,300		$	530,500
Additions for tax positions of prior years		---			---			23,100
Reductions for tax positions of prior years for:
Changes in judgment		---			(23,100	)		---
Settlements during the period		(17,700	)		(29,000	)		(422,300	)
Changes in non-controlling interests		---			11,900			---
Balance at end of period	$	73,400		$	91,100		$	131,300

The net liability for UTPs and associated interest and penalties are included in noncurrent income taxes payable on the accompanying consolidated balance sheets.  The Company recognized interest and penalties expense of approximately $0.1million related to liabilities for UTPs during fiscal years 2014, 2013 and 2012.  The Company had approximately $0.1 million of accrued interest and penalties at July 31, 2014 and 2013.

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Consolidated Statements of Operations (USD $)	12 Months Ended
	Jul. 31, 2014	Jul. 31, 2013	Jul. 31, 2012
Consolidated Statements of Operations [Abstract]
Revenue, net	$ 128,426,876	$ 134,936,891	$ 155,410,099
Cost of professional services and other direct operating expenses	45,165,033	49,754,617	55,632,281
Subcontract costs	25,113,063	25,041,431	32,315,179
Administrative and indirect operating expenses	41,464,204	44,563,873	44,917,631
Marketing and related costs	13,016,134	14,046,177	15,601,112
Depreciation and amortization	4,175,801	2,428,844	2,160,062
(Loss) income from operations	(507,359)	(898,051)	4,783,834
Interest income	154,441	244,191	174,743
Interest expense	(150,315)	(303,403)	(364,305)
Other income (expense)	67,587	(40,127)	206,813
Gain on sale of assets and investment securities	13,045	80,415	0
Net foreign exchange loss	(24,789)	(50,839)	(403,419)
(Loss) income before income tax provision	(447,390)	(967,814)	4,397,666
Income tax provision	343,063	254,234	1,357,916
Net (loss) income	(790,453)	(1,222,048)	3,039,750
Net income attributable to the noncontrolling interest	(592,203)	(908,386)	(2,266,171)
Net (loss) income attributable to Ecology and Environment, Inc.	$ (1,382,656)	$ (2,130,434)	$ 773,579
Net (loss) income per common share: basic and diluted (in dollars per share)	$ (0.32)	$ (0.50)	$ 0.18
Weighted average common shares outstanding: basic and diluted (in shares)	4,283,984	4,247,821	4,233,883

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Cash and Cash Equivalents

12 Months Ended

Jul. 31, 2014

Cash and Cash Equivalents [Abstract]

Cash and Cash Equivalents

4. Cash and Cash Equivalents

The Company considers all highly liquid instruments purchased with a maturity of three months or less to be cash equivalents.  The Company invests cash in excess of operating requirements in income-producing short-term investments.  Money market funds of $0.3 million and $1.5 million were included in cash and cash equivalents in the accompanying consolidated balance sheets and consolidated statements of cash flows at July 31, 2014 and 2013, respectively.  Bank overdrafts of $0.7 million were classified as accounts payable at July 31, 2013.

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Summary of Significant Accounting Policies

12 Months Ended

Jul. 31, 2014

Summary of Significant Accounting Policies [Abstract]

Summary of Significant Accounting Policies

3. Summary of Significant Accounting Policies

Consolidation

The consolidated financial statements include the accounts of the EEI and its wholly owned and majority owned subsidiaries.  All intercompany transactions and balances have been eliminated.

Use of Estimates

The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions as of the date of the financial statements, which affect the reported values of assets and liabilities and revenues and expenses and disclosures of contingent assets and liabilities.  Actual results may differ from those estimates.

Revenue Recognition and Contract Receivables, Net

Substantially all of the Company's revenue is derived from environmental consulting work.  The consulting revenue is principally derived from the sale of labor hours.  The consulting work is performed under a mix of fixed price, cost-type, and time and material contracts.  Contracts are required from all customers.  Revenue is recognized as follows:

Contract Type	Work Type	Revenue Recognition Policy
Time and materials	Consulting	As incurred at contract rates.
Fixed price	Consulting	Percentage of completion, approximating the ratio of either total costs or Level of Effort (LOE) hours incurred to date to total estimated costs or LOE hours.
Cost-plus	Consulting	Costs as incurred plus fees.  Fees are recognized as revenue using percentage of completion determined by the percentage of LOE hours incurred to total LOE hours in the respective contracts.

Revenues reflected in the Company's consolidated statements of operations represent services rendered for which the Company maintains a primary contractual relationship with its customers.  Included in revenues are certain services outside the Company's normal operations which the Company has elected to subcontract to other contractors.

Time and material contracts are accounted for over the period of performance, in proportion to the costs of performance, predominately based on labor hours incurred.  Revenue earned from fixed price and cost-plus contracts is recognized using the “percentage-of-completion” method, wherein revenue is recognized as project progress occurs.  If an estimate of costs at completion on any contract indicates that a loss will be incurred, the entire estimated loss is charged to operations in the period the loss becomes evident.

Substantially all of the Company's cost-type work is with federal governmental agencies and, as such, is subject to audits after contract completion.  Under these cost-type contracts, provisions for adjustments to accrued revenue are recognized on a quarterly basis and based on past audit settlement history.  Government audits have been completed and final rates have been negotiated through fiscal year 2007.  The Company records an allowance for project disallowances in other accrued liabilities for potential disallowances resulting from government audits (refer to Note 11 of these consolidated financial statements).

Change orders can occur when changes in scope are made after project work has begun, and can be initiated by either the Company or its clients.  Claims are amounts in excess of the agreed contract price which the Company seeks to recover from a client for customer delays and /or errors or unapproved change orders that are in dispute.  Costs related to change orders and claims are recognized as incurred.  Revenues and profit are recognized on change orders when it is probable that the change order will be approved and the amount can be reasonably estimated.  Revenues are recognized only up to the amount of costs incurred on contract claims when realization is probable, estimable and reasonable support from the customer exists.

All bid and proposal and other pre-contract costs are expensed as incurred.  Out of pocket expenses such as travel, meals, field supplies, and other costs billed direct to contracts are included in both revenues and cost of professional services.  Sales and cost of sales at the Company’s South American subsidiaries exclude tax assessments by governmental authorities, which are collected by the Company from its customers and then remitted to governmental authorities.

Billed contract receivables represent amounts billed to clients in accordance with contracted terms, which have not been collected from clients as of the end of the reporting period.  Billed contract receivables may include: (1) amounts billed for revenues from incurred costs and fees that have been earned in accordance with contractual terms; and (2) progress billings in accordance with contractual terms that include revenue not yet earned as of the end of the reporting period.

Unbilled contract receivables result from: (i) revenues from incurred costs and fees which have been earned, but are not billed as of period-end; and (ii) differences between year-to-date provisional billings and year-to-date actual contract costs incurred.

The Company reduces contract receivables by recording an allowance for doubtful accounts to account for the estimated impact of collection issues resulting from a client’s inability or unwillingness to pay valid obligations to the Company.  The resulting provision for bad debts is recorded within administrative and indirect operating expenses on the consolidated statements of operations.

The Company also reduces contract receivables by establishing an allowance for contract adjustments related to revenues that are deemed to be unrealizable, or that may become unrealizable in the future.  Management reviews contract receivables and determines allowance amounts based on the adequacy of the Company’s performance under the contract, the status of change orders and claims, historical experience with the client for settling change orders and claims, and economic, geopolitical and cultural considerations for the home country of the client.  Such contract adjustments are recorded as direct adjustments to revenue in the consolidated statements of operations.

Investment Securities Available for Sale

Investment securities have been classified as available for sale and are stated at fair value.  Unrealized gains or losses related to investment securities available for sale are recorded in accumulated other comprehensive income, net of applicable income taxes in the accompanying consolidated balance sheets and consolidated statements of changes in shareholders' equity.  The cost basis of securities sold is based on the specific identification method.

Property, Building and Equipment, Depreciation and Amortization

Property, building and equipment are stated at the lower of depreciated or amortized cost or fair value.  Land and land improvements are not depreciated or amortized.  Methods of depreciation or amortization and useful lives for all other long-lived assets are summarized in the following table.

	Depreciation / Amortization Method	Useful Lives
Buildings	Straight-line	32-40 Years
Building Improvements	Straight-line	7-15 Years
Field Equipment	Straight-line	3-7 Years
Computer equipment	Straight-line and Accelerated	3-7 Years
Computer software	Straight-line	10 Years
Office furniture and equipment	Straight-line	3-7 Years
Vehicles	Straight-line	3-5 Years
Leasehold improvements	Straight-line	(1)

(1) Leasehold improvements are amortized for book purposes over the terms of the leases or the estimated useful lives of the assets, whichever is shorter.

Expenditures for maintenance and repairs are charged to expense as incurred.  Expenditures for improvements are capitalized when either the value or useful life of the related asset have been increased.  When property or equipment is retired or sold, any gain or loss on the transaction is reflected in the current year's earnings.

The Company capitalizes costs of software acquisition and development projects, including costs related to software design, configuration, coding, installation, testing and parallel processing. Capitalized software costs are recorded in fixed assets, net of accumulated amortization, on the consolidated balance sheets. Capitalized software development costs generally include:

· external direct costs of materials and services consumed to obtain or develop software for internal use;

· payroll and payroll-related costs for employees who are directly associated with and who devote time to the project, to the extent of time spent directly on the project;

· costs to obtain or develop software that allows for access or conversion of old data by new systems;

· costs of upgrades and/or enhancements that result in additional functionality for existing software; and

· interest costs incurred while developing internal-use software that could have been avoided if the expenditures had not been made.

The costs of computer software obtained or developed for internal use is amortized on a straight-line basis over the estimated useful life of the software.  Amortization begins when the software and all related software modules on which it is functionally dependent are ready for their intended use.  Amortization expense is recorded in depreciation and amortization in the consolidated statements of operations.  The Company’s amortization period does not exceed ten years for any capitalized software project.

The following software-related costs are generally expensed as incurred and recorded in general and administrative expenses on the consolidated statements of operations:

· research costs, such as costs related to the determination of needed technology and the formulation, evaluation and selection of alternatives;

· costs to determine system performance requirements for a proposed software project;

· costs of selecting a vendor for acquired software;

· costs of selecting a consultant to assist in the development or installation of new software;

· internal or external training costs related to software;

· internal or external maintenance costs related to software;

· costs associated with the process of converting data from old to new systems, including purging or cleansing existing data, reconciling or balancing of data in the old and new systems and creation of new data;

· updates and minor modifications; and

· fees paid for general systems consulting and overall control reviews that are not directly associated with the development of software.

Capitalized software costs are evaluated for recoverability/impairment whenever events or changes in circumstances indicate that its carrying amount may not be recoverable, including when:

· existing software is not expected to provide future service potential;

· it is no longer probable that software under development will be completed and placed in service; and

· costs of developing or modifying internal-use software significantly exceed expected development costs or costs of comparable third-party software.

Refer to Note 7 of these consolidated financial statements for additional disclosures regarding the Company’s property, building and equipment.

Fair Value of Financial Instruments

The Company’s financial assets or liabilities are measured using inputs from the three levels of the fair value hierarchy.  The asset’s or liability’s classification within the fair value hierarchy is based on the lowest level of any input that is significant to the fair value measurement.  Valuation techniques used need to maximize the use of observable inputs and minimize the use of unobservable inputs.  The Company has not elected a fair value option on any assets or liabilities. The three levels of the hierarchy are as follows:

Level 1 Inputs – Unadjusted quoted prices in active markets that are accessible at the measurement date for identical, unrestricted assets or liabilities. Generally this includes debt and equity securities and derivative contracts that are traded on an active exchange market (e.g., New York Stock Exchange) as well as certain U.S. Treasury and U.S. Government and agency mortgage-backed securities that are highly liquid and are actively traded in over-the-counter markets.

Level 2 Inputs – Quoted prices for similar assets or liabilities in active markets; quoted prices for identical or similar assets or liabilities in inactive markets; or valuations based on models where the significant inputs are observable (e.g., interest rates, yield curves, credit risks, etc.) or can be corroborated by observable market data.  The Company’s investment securities classified as Level 2 are comprised of international and domestic corporate and municipal bonds.

Level 3 Inputs – Valuations based on models where significant inputs are not observable.  The unobservable inputs reflect the Company’s own assumptions about the assumptions that market participants would use.

The availability of observable market data is monitored to assess the appropriate classification of financial instruments within the fair value hierarchy.  Changes in economic conditions or model-based valuation techniques may require the transfer of financial instruments from one fair value level to another.  In such instances, the transfer is reported at the beginning of the reporting period.

Refer to Note 5 of these consolidated financial statements for additional disclosures regarding the fair value of the Company’s financial instruments.

Goodwill

Goodwill of $1.2 million is included in other assets on the accompanying consolidated balance sheets.  Goodwill is subject to an annual assessment for impairment by comparing the estimated fair values of reporting units to which Goodwill has been assigned, as calculated using a discounted cash flow method, to the recorded book value of the respective reporting units.  The Company’s most recent annual impairment assessment for goodwill was completed during the fourth quarter of fiscal year 2014.  The results of this assessment showed that the fair values of the reporting units to which goodwill is assigned was in excess of the book values of the respective reporting units, resulting in the identification of no goodwill impairment.

Goodwill is also assessed for impairment between annual assessments whenever events or circumstances make it more likely than not that an impairment may have occurred.  The Company identified no events or changes in circumstances during the fiscal year ended July 31, 2014 that necessitated an evaluation for impairment of goodwill.

Impairment of Long-Lived Assets

The Company assesses recoverability of the carrying value of long-lived assets by estimating the future net cash flows (undiscounted) expected to result from the asset, including eventual disposition.  If the future net cash flows are less than the carrying value of the asset, an impairment loss is recorded equal to the difference between the asset's carrying value and fair value.

Foreign Currencies

The financial statements of foreign subsidiaries where the local currency is the functional currency are translated into U.S. dollars using exchange rates in effect at period end for assets and liabilities and average exchange rates during each reporting period for results of operations.  Translation adjustments are deferred in accumulated other comprehensive income.  Transaction gains and losses that arise from exchange rate fluctuations on transactions denominated in a currency other than the functional currency are included in the results of operations as incurred.  The Company recorded foreign currency transaction (losses) gains of less than $(0.1) million, $(0.1) million and $(0.4) million for the fiscal years ended July 31, 2014, 2013 and 2012, respectively.

The financial statements of foreign subsidiaries located in highly inflationary economies are remeasured as if the functional currency were the U.S. dollar.  The remeasurement of local currencies into U.S. dollars creates transaction adjustments which are included in net income.  The Company did not record any highly inflationary economy translation adjustments for the fiscal years ended July 31, 2014, 2013 or 2012.

Income Taxes

The Company follows the asset and liability approach to account for income taxes.  This approach requires the recognition of deferred tax liabilities and assets for the expected future tax consequences of temporary differences between the carrying amounts and the tax bases of assets and liabilities.  Although realization is not assured, management believes it is more likely than not that the recorded net deferred tax assets will be realized.  Since in some cases management has utilized estimates, the amount of the net deferred tax asset considered realizable could be reduced in the near term.  No provision has been made for United States income taxes applicable to undistributed earnings of foreign subsidiaries as it is the intention of the Company to indefinitely reinvest those earnings in the operations of those entities.

Income tax expense includes U.S. and international income taxes, determined using the applicable statutory rates.  A deferred tax liability is recognized for all taxable temporary differences, and a deferred tax asset is recognized for all deductible temporary differences and net operating loss carryforwards.

The Company has significant deferred tax assets, resulting principally from contract reserves and accrued expenses.  The Company periodically evaluates the likelihood of realization of deferred tax assets, and provides for a valuation allowance when necessary.

Additionally, the Financial Accounting Standards Board (“FASB”) Accounting Standard Codification (“ASC”) Topic Income Taxes, prescribes a recognition threshold and measurement principles for financial statement disclosure of tax positions taken or expected to be taken on a tax return.   A tax position is a position in a previously filed tax return or a position expected to be taken in a future tax filing that is reflected in measuring current or deferred income tax assets and liabilities.  Tax positions shall be recognized only when it is more likely than not (likelihood of greater than 50%), based on technical merits, that the position will be sustained. Tax positions that meet the more likely than not threshold should be measured using a probability weighted approach as the largest amount of tax benefit that is greater than 50% likely of being realized upon settlement. Whether the more-likely-than-not recognition threshold is met for a tax position, is a matter of judgment based on the individual facts and circumstances of that position evaluated in light of all available evidence.  The Company recognizes interest accrued related to unrecognized tax benefits in interest expense and penalties in administrative and indirect operating expenses.

Refer to Note 10 of these consolidated financial statements for additional disclosures regarding income taxes.

Defined Contribution Plans

EEI has a non-contributory defined contribution plan providing deferred benefits for substantially all of its employees.  The annual expense of the defined contribution plan is based on a percentage of eligible wages as authorized by EEI’s Board of Directors.

Walsh Environmental Scientists & Engineers, LLC (“Walsh”), a wholly-owned subsidiary of EEI, has a defined contribution plan providing deferred benefits for substantially all of its employees.  Walsh contributes a percentage of eligible wages up to a maximum of 4%.

Refer to Note 15 of these consolidated financial statements for additional disclosures regarding the Company’s defined contribution plans.

Stock-Based Compensation

The company expenses the value of employee stock awards over the vesting period of the respective award.  Share-based awards are measured at fair value on the respective grant date, based on the estimated number of awards that are expected to vest.  Compensation cost for awards that vest is not reversed if the awards expire without being exercised.

Refer to Note 12 of these consolidated financial statements for additional disclosures regarding the Company’s stock-based compensation plans.

Earnings per Share

Basic and diluted earnings per share (“EPS”) is computed by dividing income available to common shareholders by the weighted average number of common shares outstanding for the reporting period.  The Company allocates undistributed earnings between the classes on a one-to-one basis when computing EPS.  As a result, basic and fully diluted earnings per Class A and Class B shares are equal amounts.  Refer to Note 16 of these consolidated financial statements for additional disclosures regarding EPS.

Comprehensive (Loss) Income

Comprehensive (loss) income is defined as "the change in equity of a business enterprise during a period from transactions and other events and circumstances from non-owner sources."  Comprehensive (loss) income includes total net earnings plus other comprehensive (loss) income during a reporting period.  Other comprehensive (loss) income includes currency translation adjustments on foreign subsidiaries and unrealized gains or losses on available-for-sale securities.

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Defined Contribution Plans

12 Months Ended

Jul. 31, 2014

Defined Contribution Plans [Abstract]

Defined Contribution Plans

15. Defined Contribution Plans

Contributions to EEI’s defined contribution plan and supplemental retirement plan are discretionary and determined annually by its Board of Directors.  Walsh’s defined contribution plan provides for mandatory employer contributions to match 100% of employee contributions up to 4% of each participant’s compensation.  The total expense under the plans was $1.7 million, $2.2 million, and $1.8 million for the fiscal years ended July 31, 2014, 2013 and 2012, respectively.

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Other Accrued Liabilities

12 Months Ended

Jul. 31, 2014

Other Accrued Liabilities [Abstract]

Other Accrued Liabilities

11. Other Accrued Liabilities

Other accrued liabilities are summarized in the following table.

	Balance at July 31,
	2014			2013
Allowance for project disallowances		$	2,393,351		$	2,663,351
Other			1,841,911			1,406,722
Total other accrued liabilities		$	4,235,262		$	4,070,073

The allowance for project disallowances represents potential disallowances of amounts billed and collected resulting from contract close-outs and government audits.  Allowances for project disallowances are recorded when the amounts are estimable.  Activity within the allowance for project disallowances is summarized in the following table.

	Fiscal Year Ended July 31,
	2014			2013			2012
Balance at beginning of period	$	2,663,351		$	2,724,474		$	3,882,810
Reduction of reserves recorded in prior fiscal years		(300,000	)		---			---
Net change during the period, recorded as a transfer of reserves from allowance for doubtful accounts and contract adjustments		30,000			(61,123	)		(1,158,336
Balance at end of period	$	2,393,351		$	2,663,351		$	2,724,474

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Property, Building and Equipment, net

12 Months Ended

Jul. 31, 2014

Property, Building and Equipment, net [Abstract]

Property, Building and Equipment, net

7. Property, Building and Equipment, net

Property, plant and equipment is summarized in the following table.

	Balance at July 31,
	2014			2013
Land and land improvements	$	393,051		$	393,051
Buildings and building improvements		12,231,788			12,231,788
Field equipment		3,273,725			3,128,859
Computer equipment		9,128,027			8,931,030
Computer software		5,030,472			3,617,527
Office furniture and equipment		4,095,659			4,023,004
Vehicles		1,658,273			1,548,901
Other		746,375			817,780
		36,557,370			34,691,940
Accumulated depreciation and amortization		(28,615,915	)		(24,569,139	)
Property, building and equipment, net	$	7,941,455		$	10,122,801

During fiscal years 2012 and 2013, the Company acquired and developed a new operating and financial software system for use by EEI and its U.S. and foreign subsidiaries.  Through July 31, 2013, the Company capitalized $4.1 million of expenditures for the acquisition and development of this system, which was being amortized over a 10 year useful life.  During the quarter ended July 31, 2013, management assessed the utility and effectiveness of various modules included in the software package, and determined that certain software modules do not meet the needs of users that rely on the system and will not provide any future service potential.  As a result, the Company recorded a software impairment charge of $0.8 million during the three months ended July 31, 2013, which was included in administrative and indirect operating expenses on the accompanying consolidated statements of operations.

In November 2013, after an extensive assessment process, management decided to abandon the Company’s existing operating and financial software system and migrate to new system software.  The Company acquired and developed the new software during fiscal year 2014, and began utilizing the new software effective August 1, 2014 for the Company’s U.S. operations.  The process to evaluate, select and develop new operating and financial software systems for the Company’s significant foreign operations is expected to be completed in January 2015.  The Company recorded software development costs of $1.4 million in property, plant and equipment during the fiscal year ended July 31, 2014.

The Company continued to utilize the previous software system through July 31, 2014, at which time the previous system was abandoned.  As a result, amortization of software development costs capitalized for the previous system was accelerated so that the system was completely amortized by July 31, 2014.  Total software amortization expense was $2.6 million, $0.4 million, and $0.2 million for the fiscal years ended July 31, 2014, 2013 and 2012, respectively.

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Fair Value of Financial Instruments

12 Months Ended

Jul. 31, 2014

Fair Value of Financial Instruments [Abstract]

Fair Value of Financial Instruments

5. Fair Value of Financial Instruments

The fair value of the Company’s assets and liabilities that are measured at fair value on a recurring basis is summarized by level within the fair value hierarchy in the following table.

	Balance at July 31, 2014
	Level 1			Level 2			Level 3			Total
Assets
Investment securities available for sale		$	1,407,277		$	---		$	---		$	1,407,277

	Balance at July 31, 2013
	Level 1			Level 2			Level 3			Total
Assets
Investment securities available for sale		$	1,463,864		$	---		$	---		$	1,463,864

Investment securities available for sale includes mutual funds are valued at the net asset value of shares (“NAV”) held by the Company at period end.  Mutual funds held by the Company are open-end mutual funds that are registered with the Securities and Exchange Commission.  These funds are required to publish their daily NAV and to transact at that price, and are deemed to be actively traded.  Reclassification adjustments out of accumulated other comprehensive (loss) income resulting from realized gains or losses from the sale of investment securities available for sale are included in gain on sale of assets and investment securities on the accompanying consolidated statements of operations.  The Company recorded gross unrealized gains of less than $0.1 million related to these funds in accumulated other comprehensive (loss) income at July 31, 2014 and 2013.

The carrying amount of cash and cash equivalents approximated fair value at July 31, 2014 and 2013.  These assets were classified as level 1 instruments at both dates.

Long-term debt consists of bank loans and capitalized equipment leases.  Lines of credit consist of borrowings for working capital requirements.  Based on the Company's assessment of the current financial market and corresponding risks associated with the debt and line of credit borrowings, management believes that the carrying amount of these liabilities approximated fair value at July 31, 2014 and 2013.  These liabilities were classified as level 2 instruments at both dates.

There were no financial instruments classified as level 3 at July 31, 2014 or 2013.

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Contract Receivables, net

12 Months Ended

Jul. 31, 2014

Contract Receivables, net [Abstract]

Contract Receivables, net

6. Contract Receivables, net

Contract receivables, net are summarized in the following table.

	Balance at July 31,
	2014				2013
Contract Receivables:
Billed		$	26,863,708			$	36,284,950
Unbilled			23,694,451				16,441,857
			50,558,159				52,726,807
Allowance for doubtful accounts and contract adjustments			(6,126,854	)			(5,592,800	)
Contract receivables, net		$	44,431,305			$	47,134,007

Billed contract receivables did not include any contractual retainage balances at July 31, 2014 or 2013.  Management anticipates that the July 31, 2014 unbilled receivables will be substantially billed and collected within one year.

Contract Receivable Concentrations

Significant concentrations of contract receivables and the allowance for doubtful accounts and contract adjustments are summarized in the following table.

	Balance at July 31, 2014						Balance at July 31, 2013
Region	Contract Receivables			Allowance for Doubtful Accounts and Contract Adjustments			Contract Receivables			Allowance for Doubtful Accounts and Contract Adjustments
United States, Canada and South America		$	43,394,442		$	1,611,068		$	41,302,180		$	1,576,746
Middle East and Africa			7,010,225			4,386,240			10,876,151			3,886,508
Asia			153,492			129,546			548,476			129,546
Totals		$	50,558,159		$	6,126,068		$	52,726,807		$	5,592,800

Combined contract receivables related to projects in the Middle East, Africa and Asia represented 14% and 22% of total contract receivables at July 31, 2014 and 2013, respectively, while the combined allowance for doubtful accounts and contract adjustments related to these projects represented 74% and 72%, respectively, of the total allowance for doubtful accounts and contract adjustments at those same period end dates.  These allowance percentages highlight the Company’s experience of heightened operating risks (i.e., political, regulatory and cultural risks) within these foreign regions in comparison with similar risks in the United States, Canada and South America.  These heightened operating risks have resulted in increased collection risks and the Company expending resources that it may not recover for several months, or at all.

Middle East and Africa

During fiscal year 2014, the Company collected $4.1 million of cash related to aged receivables in the Middle East and Africa.  However, the Company also recorded net increases of $0.5 million to the allowance for contract adjustments due mainly to continued issues with a specific problem project in the Middle East.

Allowance for Doubtful Accounts and Contract Adjustments

Activity within the allowance for doubtful accounts and contract adjustments is summarized in the following table.

	Fiscal Year Ended July 31,
	2014			2013			2012
Balance at beginning of period	$	5,592,800		$	10,238,391		$	6,755,087
Net increase (decrease) due to adjustments in the allowance for:
Contract adjustments (1)		473,967			6,319,650			1,635,311
Doubtful accounts (2)		90,087			(287,426	)		689,657
Transfer of reserves (to) from allowance for project disallowances (3)		(30,000	)		61,123			1,158,336
Specific write-off of contract receivables and reserves during the period (4)		---			(10,738,938	)		---
Balance at end of period	$	6,126,854		$	5,592,800		$	10,238,391

(1) Increases (decreases) to the allowance for contract adjustments on the consolidated balance sheets are also recorded as (decreases) increases to revenue on the consolidated statements of operations.

(2) Increases (decreases) to the allowance for doubtful accounts on the consolidated balance sheets are also recorded as increases (decreases) to administrative and other indirect operating expenses on the consolidated statements of operations.

(3) The allowance for project disallowances is included in other accrued liabilities on the consolidated balance sheets.  Refer to Note 11 of these consolidated financial statements.

(4) Approximately $7.3 million of contract receivables related to projects in China and $3.4 million of contract receivables from projects in the Middle East and Africa were fully reserved and written off during the last quarter of fiscal year 2013, resulting in corresponding decreases in contract receivables and the allowance for contract adjustments during fiscal year 2013.

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Lines of Credit

12 Months Ended

Jul. 31, 2014

Lines of Credit [Abstract]

Lines of Credit

8. Lines of Credit

Unsecured lines of credit are summarized in the following table.

	Balance at July 31,
	2014			2013
Outstanding cash draws, recorded as lines of credit on the accompanying consolidated balance sheets		$	1,572,466		$	6,528,691
Outstanding letters of credit to support operations			1,944,994			3,080,938
Total amounts used under lines of credit			3,517,460			9,609,629
Remaining amounts available under lines of credit			30,851,540			24,759,371
Total approved unsecured lines of credit		$	34,369,000		$	34,369,000

Contractual interest rates ranged from 2.50% to 3.00% at July 31, 2014.  The Company’s lenders have reaffirmed the lines of credit within the past twelve months.

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Income Taxes (Tables)

12 Months Ended

Jul. 31, 2014

Income Taxes [Abstract]

Income (Loss) From Continuing Operation Before Provision (Benefit) For Income Taxes and Noncontrolling Interest

Income (loss) from continuing operations before provision (benefit) for income taxes and noncontrolling interest is summarized in the following table.

	Fiscal Year Ended July 31,
	2014				2013				2012
Domestic		$	(4,305,768	)		$	(3,055,338	)		$	(993,959	)
Foreign			3,858,378				2,087,524				5,391,625
		$	(447,390	)		$	(967,814	)		$	4,397,666

Components of Income Tax Provision

The income tax provision is summarized in the following table.

	Fiscal Year Ended July 31,
	2014			2013			2012
Current:
Federal	$	86,062		$	(985,865	)	$	(175,203	)
State		62,761			181,434			(232,800	)
Foreign		1,012,136			855,500			1,652,202
Total current		1,160,959			51,069			1,244,199
Deferred:
Federal		(975,519	)		200,197			509,161
State		24,138			(178,438	)		(35,273	)
Foreign		133,485			181,406			(360,171	)
Total deferred		(817,896	)		203,165			113,717
Total income tax provision	$	343,063		$	254,234		$	1,357,916

Reconciliation of Income Tax Provision to Effective Tax Rate

A reconciliation of the income tax provision using the statutory U.S. income tax rate compared with the actual income tax provision reported on the consolidated statements of operations is summarized in the following table.

	Fiscal Year Ended July 31,
	2014			2013			2012
Income tax (benefit) provision at the U.S. federal statutory income tax rate	$	(152,113	)	$	(329,057	)	$	1,495,206
Income from "pass-through" entities taxable to noncontrolling partners		35,309			(102,933	)		(255,065	)
International rate differences		(143,493	)		(197,217	)		(329,825	)
Other foreign taxes, net of federal benefit		(34,419	)		94,528			211,088
Foreign dividend income		596,631			481,287			329,825
State taxes, net of federal benefit		27,739			3,871			13,193
Re-evaluation and settlements of tax contingencies		(19,533	)		(58,105	)		(180,304	)
Peru non-deductible expenses		44,077			173,707			211,000
Canada valuation allowance		(83,257	)		130,950			---
Other permanent differences		72,122			57,203			(137,202	)
Income tax provision, as reported on the consolidated statements of operations	$	343,063		$	254,234		$	1,357,916

Significant Components of Deferred Tax Assets and Liabilities

The significant components of deferred tax assets and liabilities are summarized in the following table.

	Balance at July 31, 2014						Balance at July 31, 2013
	Current			Noncurrent			Current			Noncurrent
Deferred tax assets:
Contract and other reserves	$	3,409,234		$	---		$	3,273,465		$	---
Accrued compensation and expenses		1,250,286			378,632			1,349,318			476,214
Net operating loss carryforwards		---			1,213,010			---			613,097
Foreign and state income taxes		---			54,398			---			52,375
Federal benefit on state deferred taxes		(184,523	)		(103,098	)		(183,987	)		(110,520	)
Foreign tax credit		---			296,326			---			461,154
Valuation Allowance		(192,213	)		(206,070	)		(343,245	)		(287,751	)
Other		---			74,370			---			89,208
Net deferred tax assets	$	4,282,784		$	1,707,568		$	4,095,551		$	1,293,777
Deferred tax liabilities:
Fixed assets and intangibles	$	---		$	58,934		$	---		$	(308,845	)
Other		251,678			(531,812	)		212,987			(358,659	)
Net deferred tax liabilities	$	251,678		$	(472,878	)	$	212,987		$	(667,504	)

Unrecognized Tax Benefits Roll Forward

The Company’s UTPs are summarized in the following table.

	Fiscal Year Ended July 31,
	2014			2013			2012
Balance at beginning of period	$	91,100		$	131,300		$	530,500
Additions for tax positions of prior years		---			---			23,100
Reductions for tax positions of prior years for:
Changes in judgment		---			(23,100	)		---
Settlements during the period		(17,700	)		(29,000	)		(422,300	)
Changes in non-controlling interests		---			11,900			---
Balance at end of period	$	73,400		$	91,100		$	131,300

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Shareholders' Equity (Details) (USD $)	1 Months Ended	12 Months Ended												1 Months Ended	12 Months Ended						3 Months Ended	12 Months Ended						3 Months Ended	12 Months Ended						1 Months Ended	12 Months Ended						1 Months Ended	12 Months Ended						1 Months Ended	12 Months Ended						1 Months Ended	12 Months Ended						1 Months Ended	12 Months Ended						3 Months Ended	12 Months Ended																								1 Months Ended	12 Months Ended
	Aug. 31, 2013	Jul. 31, 2014	Jul. 31, 2013	Jul. 31, 2012	Jul. 31, 2014 Noncontrolling Interest [Member]		Jul. 31, 2013 Noncontrolling Interest [Member]		Jul. 31, 2012 Noncontrolling Interest [Member]		Jul. 31, 2014 Noncontrolling Interest [Member] 600 Gustavson [Member]	Jul. 31, 2013 Noncontrolling Interest [Member] 600 Gustavson [Member]	Jul. 31, 2012 Noncontrolling Interest [Member] 600 Gustavson [Member]	Jan. 31, 2014 Noncontrolling Interest [Member] 344 Walsh [Member]	Jul. 31, 2014 Noncontrolling Interest [Member] 344 Walsh [Member]		Jul. 31, 2013 Noncontrolling Interest [Member] 344 Walsh [Member]		Jul. 31, 2012 Noncontrolling Interest [Member] 344 Walsh [Member]		Oct. 31, 2013 Noncontrolling Interest [Member] 3,705 Walsh [Member] Installments	Jul. 31, 2014 Noncontrolling Interest [Member] 3,705 Walsh [Member]		Jul. 31, 2013 Noncontrolling Interest [Member] 3,705 Walsh [Member]		Jul. 31, 2012 Noncontrolling Interest [Member] 3,705 Walsh [Member]		Oct. 31, 2013 Noncontrolling Interest [Member] 100 Walsh [Member]	Jul. 31, 2014 Noncontrolling Interest [Member] 100 Walsh [Member]		Jul. 31, 2013 Noncontrolling Interest [Member] 100 Walsh [Member]		Jul. 31, 2012 Noncontrolling Interest [Member] 100 Walsh [Member]		Apr. 30, 2013 Noncontrolling Interest [Member] 50 Walsh [Member]	Jul. 31, 2014 Noncontrolling Interest [Member] 50 Walsh [Member]		Jul. 31, 2013 Noncontrolling Interest [Member] 50 Walsh [Member]		Jul. 31, 2012 Noncontrolling Interest [Member] 50 Walsh [Member]		Mar. 31, 2013 Noncontrolling Interest [Member] 25 Lowham [Member]	Jul. 31, 2014 Noncontrolling Interest [Member] 25 Lowham [Member]		Jul. 31, 2013 Noncontrolling Interest [Member] 25 Lowham [Member]		Jul. 31, 2012 Noncontrolling Interest [Member] 25 Lowham [Member]		Jan. 31, 2013 Noncontrolling Interest [Member] 495 Walsh [Member]	Jul. 31, 2014 Noncontrolling Interest [Member] 495 Walsh [Member]		Jul. 31, 2013 Noncontrolling Interest [Member] 495 Walsh [Member]		Jul. 31, 2012 Noncontrolling Interest [Member] 495 Walsh [Member]		Dec. 31, 2012 Noncontrolling Interest [Member] 2800 Gustavson [Member]	Jul. 31, 2014 Noncontrolling Interest [Member] 2800 Gustavson [Member]		Jul. 31, 2013 Noncontrolling Interest [Member] 2800 Gustavson [Member]		Jul. 31, 2012 Noncontrolling Interest [Member] 2800 Gustavson [Member]		Dec. 31, 2012 Noncontrolling Interest [Member] 370 Walsh [Member]	Jul. 31, 2014 Noncontrolling Interest [Member] 370 Walsh [Member]		Jul. 31, 2013 Noncontrolling Interest [Member] 370 Walsh [Member]		Jul. 31, 2012 Noncontrolling Interest [Member] 370 Walsh [Member]		Oct. 31, 2012 Noncontrolling Interest [Member] 75 Lowham [Member]	Jul. 31, 2014 Noncontrolling Interest [Member] 75 Lowham [Member]		Jul. 31, 2013 Noncontrolling Interest [Member] 75 Lowham [Member]		Jul. 31, 2012 Noncontrolling Interest [Member] 75 Lowham [Member]		Jul. 31, 2014 Noncontrolling Interest [Member] 25 Gestion Ambiental Consultores [Member]	Jul. 31, 2013 Noncontrolling Interest [Member] 25 Gestion Ambiental Consultores [Member]	Jul. 31, 2012 Noncontrolling Interest [Member] 25 Gestion Ambiental Consultores [Member]	Jul. 31, 2014 Noncontrolling Interest [Member] 166 Walsh [Member]	Jul. 31, 2013 Noncontrolling Interest [Member] 166 Walsh [Member]	Jul. 31, 2012 Noncontrolling Interest [Member] 166 Walsh [Member]	Jul. 31, 2014 Noncontrolling Interest [Member] 496 Walsh [Member]	Jul. 31, 2013 Noncontrolling Interest [Member] 496 Walsh [Member]	Jul. 31, 2012 Noncontrolling Interest [Member] 496 Walsh [Member]	Jul. 31, 2014 Noncontrolling Interest [Member] 5389 Brazil [Member]	Jul. 31, 2013 Noncontrolling Interest [Member] 5389 Brazil [Member]	Jul. 31, 2012 Noncontrolling Interest [Member] 5389 Brazil [Member]	Jul. 31, 2014 Noncontrolling Interest [Member] 26482 Walsh Peru [Member]	Jul. 31, 2013 Noncontrolling Interest [Member] 26482 Walsh Peru [Member]	Jul. 31, 2012 Noncontrolling Interest [Member] 26482 Walsh Peru [Member]	Jul. 31, 2014 Noncontrolling Interest [Member] 152 Walsh [Member]	Jul. 31, 2013 Noncontrolling Interest [Member] 152 Walsh [Member]	Jul. 31, 2012 Noncontrolling Interest [Member] 152 Walsh [Member]	Aug. 31, 2014 Subsequent Event [Member]	Jul. 31, 2014 Class A [Member]	Aug. 31, 2010 Class A [Member]
Class A and Class B common stock [Abstract]
Percentage equity holders entitled to elect Board of Directors (in hundredths)																																																																																																25.00%
Minimum percentage of the number of outstanding Class A shares to combined classes of shares (in hundredths)																																																																																																10.00%
Voting power of Class A common share holders to the Class B common share holders (in hundredths)																																																																																																10.00%
Dividends, Cash [Abstract]
Cash dividends declared		$ 2,066,622	$ 2,038,496	$ 2,036,559	$ 0		$ 0		$ 0
Accrued dividends payable		1,033,071	1,018,783	1,028,881
Dividends paid	1,000,000																																																																																														1,000,000
Stock Repurchase [Abstract]
Number of Class A shares authorized to be repurchased (in shares)																																																																																																122,918	200,000
Number of Class A share acquired (in shares)																																																																																																16,091
Acquisition cost																																																																																																200,000
Remaining number of shares authorized to be repurchased (in shares)																																																																																																77,082
Schedule of Equity Method Investments [Line Items]
Total sales of noncontrolling interests					0	[1]	0	[1]	41,634	[1]	0	0	41,634
Total purchases of noncontrolling interests					(1,156,652)	[1]	(775,935)	[1]	(619,775)	[1]					(5,653)	[2]	0	[2]	0	[2]		(1,120,749)	[3]	0	[3]	0	[3]		(30,250)	[4]	0	[4]	0	[4]		0	[5]	(18,316)	[5]	0	[5]		0	[6]	(8,737)	[6]	0	[6]		0	[7]	(243,653)	[7]	0	[7]		0	[8]	(293,102)	[8]	0	[8]		0	[9]	(182,125)	[9]	0	[9]		0	[10]	(30,002)	[10]	0	[10]	0	0	(7,452)	0	0	(97,634)	0	0	(277,514)	0	0	77,539	0	0	(238,677)	0	0	(76,037)
Net transfers from noncontrolling interests					(1,156,652)		(775,935)		(578,141)
Shares issued (in shares)											600
Noncontrolling interests shares purchased (in shares)															344							3,705							100							50							25							495							2,800							370							75						25			166			496			5,389			26,482			152
Interest purchased (in hundredths)														0.90%							9.40%							0.20%							0.10%														1.30%							6.70%							0.90%
Purchase of noncontrolling interest		$ 689,361	$ 595,556	$ 908,892										$ 100,000							$ 1,600,000							$ 100,000							$ 100,000							$ 100,000							$ 200,000							$ 400,000							$ 200,000							$ 100,000
Percentage of acquisition paid in cash (in hundredths)																					33.33%																												66.67%							50.00%
Percentage of acquisition paid with stock (in hundredths)																					33.33%																												33.33%
Percentage of acquisition paid with promissory note (in hundredths)																					33.33%																																			50.00%
Number of annual installments																					2
Portion of principal of acquisition paid on promissory note (in hundredths)																					50.00%
Interest on promissory notes (in hundredths)																					3.25%
Term of note issued																																																								3 years

[1] Sales (purchases) of additional noncontrolling interests are recorded as additions (reductions) of shareholders' equity on the consolidated statements of changes in shareholders' equity.

[2] In January 2014, EEI purchased an additional 0.9% of Walsh Environmental Scientists and Engineers, LLC ("Walsh") from noncontrolling shareholders for $0.1 million in cash. Walsh became a wholly-owned subsidiary of EEI as a result of these transactions.

[3] In October 2013, EEI purchased an additional 9.4% of Walsh for $1.6 million. The purchase price was paid as follows: (i) one third in cash payable on the transaction consummation date; (ii) one third payable with EEI Common Stock on the transaction consummation date; and (iii) one third with a promissory note payable in two annual installments of one half the principal plus interest accrued at 3.25% per annum.

[4] In October 2013, EEI purchased an additional 0.2% of Walsh for less than $0.1 million in cash.

[5] In April 2013, EEI purchased an additional 0.1% of Walsh from noncontrolling shareholders for less than $0.1 million in cash.

[6] In March 2013, Lowham-Walsh Engineering & Environment Services LLC ("Lowham"), a subsidiary of Walsh, purchased shares from noncontrolling shareholders for less than $0.1 million in cash.

[7] In January 2013, EEI purchased an additional 1.3% of Walsh from noncontrolling shareholders for $0.2 million. Two thirds of the purchase price was paid in cash while the remaining one third was paid for with EEI stock.

[8] In December 2012, Gustavson Associates, LLC ("Gustavson") purchased an additional 6.7% of its shares from noncontrolling shareholders for $0.4 million. Half of the purchase price was paid in cash and Gustavson issued a three year note for the other half.

[9] In December 2012, EEI purchased an additional 0.9% of Walsh from noncontrolling shareholders for $0.2 million in cash.

[10] During the three months ending October 31, 2012, Lowham purchased shares from noncontrolling shareholders for less than $0.1 million in cash.

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Shareholders' Equity

12 Months Ended

Jul. 31, 2014

Shareholders' Equity [Abstract]

Shareholders' Equity

13. Shareholders' Equity

Class A and Class B Common Stock

The relative rights, preferences and limitations of the Company's Class A and Class B common stock are summarized as follows: Holders of Class A shares are entitled to elect 25% of the Board of Directors so long as the number of outstanding Class A shares is at least 10% of the combined total number of outstanding Class A and Class B common shares. Holders of Class A common shares have one-tenth the voting power of Class B common shares with respect to most other matters.

In addition, Class A shares are eligible to receive dividends in excess of (and not less than) those paid to holders of Class B shares. Holders of Class B shares have the option to convert at any time, each share of Class B common stock into one share of Class A common stock. Upon sale or transfer, shares of Class B common stock will automatically convert into an equal number of shares of Class A common stock, except that sales or transfers of Class B common stock to an existing holder of Class B common stock or to an immediate family member will not cause such shares to automatically convert into Class A common stock.

Restrictive Shareholder Agreement

Messrs. Gerhard J. Neumaier (deceased), Frank B. Silvestro, Ronald L. Frank, and Gerald A. Strobel entered into a Stockholders’ Agreement dated May 12, 1970, as amended January 24, 2011, which governs the sale of certain shares of Ecology and Environment, Inc. common stock (now classified as Class B Common Stock) owned by them, certain children of those individuals and any such shares subsequently transferred to their spouses and/or children outright or in trust for their benefit upon the demise of a signatory to the Agreement (“Permitted Transferees”).  The Agreement provides that prior to accepting a bona fide offer to purchase some or all of their shares of Class B Common Stock governed by the Agreement, that the selling party must first allow the other signatories to the Agreement (not including any Permitted Transferee) the opportunity to acquire on a pro rata basis, with right of over-allotment, all of such shares covered by the offer on the same terms and conditions proposed by the offer.

Cash Dividends

The Company declared and paid cash dividends of $2.0 million during the fiscal years ended July 31, 2014, 2013 and 2012.  The Company paid dividends of $1.0 million in August 2014 and 2013 that were declared and accrued in prior periods.

Stock Repurchase

In August 2010, the Company’s Board of Directors approved a program for repurchase of 200,000 shares of Class A common stock.  During the fiscal year ended July 31, 2014, the Company acquired 16,091 shares of Class A stock under this program for a total acquisition cost of approximately $0.2 million.  As of July 31, 2014, 122,918 Class A shares were repurchased and 77,082 shares had yet to be repurchased under this program.

Noncontrolling Interests

Noncontrolling interests are disclosed as a separate component of consolidated shareholders’ equity on the accompanying consolidated balance sheets.  Earnings and other comprehensive (loss) income are separately attributed to both the controlling and noncontrolling interests.  Earnings per share is calculated based on net (loss) income attributable to the Company’s controlling interests.

Transactions with noncontrolling shareholders for the fiscal years ended July 31, 2014, 2013 and 2012 were recorded at amounts that approximated fair value.  Effects on shareholders’ equity resulting from changes in EEI’s ownership interest in its subsidiaries are summarized in the following table.

	Fiscal Years Ended July 31,
	2014			2013			2012
Sales of noncontrolling interest:
Sale of 600 Gustavson common shares	$	---		$	---		$	41,634
Total sales of noncontrolling interests (10)		---			---			41,634
Purchases of noncontrolling interests:
Purchase of 344 Walsh common shares (1)	$	(5,653	)		---			---
Purchase of 3,705 Walsh common shares (2)		(1,120,749	)		---			---
Purchase of 100 Walsh common shares (3)		(30,250	)		---			---
Purchase of 50 Walsh common shares (4)		---			(18,316	)		---
Purchase of 25 Lowham common shares (5)		---			(8,737	)		---
Purchase of 495 Walsh common shares (6)		---			(243,653	)		---
Purchase of 2,800 Gustavson common shares (7)		---			(293,102	)		---
Purchase of 370 Walsh common shares (8)		---			(182,125	)		---
Purchase of 75 Lowham common shares (9)		---			(30,002	)		---
Purchase of 25 Gestion Ambiental Consultores common shares		---			---			(7,452	)
Purchase of 166 Walsh common shares		---			---			(97,634	)
Purchase of  496 Walsh common shares		---			---			(277,514	)
Purchase of  5,389 Brazil common shares		---			---			77,539
Purchase of 26,482 Walsh Peru common shares		---			---			(238,677	)
Purchase of 152 Walsh common shares		---			---			(76,037	)
Total purchases of noncontrolling interests (10)		(1,156,652	)		(775,935	)		(619,775	)
Net transfers from noncontrolling interests	$	(1,156,652	)	$	(775,935	)	$	(578,141	)

(1) In January 2014, EEI purchased an additional 0.9% of Walsh Environmental Scientists and Engineers, LLC (“Walsh”) from noncontrolling shareholders for $0.1 million in cash.  Walsh became a wholly-owned subsidiary of EEI as a result of these transactions.

(2) In October 2013, EEI purchased an additional 9.4% of Walsh for $1.6 million.  The purchase price was paid as follows: (i) one third in cash payable on the transaction consummation date; (ii) one third payable with EEI Common Stock on the transaction consummation date; and (iii) one third with a promissory note payable in two annual installments of one half the principal plus interest accrued at 3.25% per annum.

(3) In October 2013, EEI purchased an additional 0.2% of Walsh for less than $0.1 million in cash.

(4) In April 2013, EEI purchased an additional 0.1% of Walsh from noncontrolling shareholders for less than $0.1 million in cash.

(5) In March 2013, Lowham-Walsh Engineering & Environment Services LLC (“Lowham”), a subsidiary of Walsh, purchased shares from noncontrolling shareholders for less than $0.1 million in cash.

(6) In January 2013, EEI purchased an additional 1.3% of Walsh from noncontrolling shareholders for $0.2 million.  Two thirds of the purchase price was paid in cash while the remaining one third was paid for with EEI stock.

(7) In December 2012, Gustavson Associates, LLC (“Gustavson”) purchased an additional 6.7% of its shares from noncontrolling shareholders for $0.4 million.  Half of the purchase price was paid in cash and Gustavson issued a three year note for the other half.

(8) In December 2012, EEI purchased an additional 0.9% of Walsh from noncontrolling shareholders for $0.2 million in cash.

(9) During the three months ending October 31, 2012, Lowham purchased shares from noncontrolling shareholders for less than $0.1 million in cash.

(10) Sales (purchases) of additional noncontrolling interests are recorded as additions (reductions) of shareholders’ equity on the consolidated statements of changes in shareholders’ equity.

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Commitments and Contingencies

12 Months Ended

Jul. 31, 2014

Commitments and Contingencies [Abstract]

Commitments and Contingencies

18. Commitments and Contingencies

From time to time, the Company is a named defendant in legal actions arising out of the normal course of business.  The Company is not a party to any pending legal proceeding, the resolution of which the management believes will have a material adverse effect on the Company’s results of operations, financial condition or cash flows, or to any other pending legal proceedings other than ordinary, routine litigation incidental to its business.  The Company maintains liability insurance against risks arising out of the normal course of business.

Certain contracts contain termination provisions under which the customer may, without penalty, terminate the contracts upon written notice to the Company.  In the event of termination, the Company would be paid only termination costs in accordance with the particular contract.  Generally, termination costs include unpaid costs incurred to date, earned fees and any additional costs directly allocable to the termination.

On September 21, 2012, the Colorado Department of Public Health and Environment (the "Department") issued a proposed Compliance Order on Consent (the " Proposed Consent Order") to the City and County of Denver ("Denver") and to Walsh Environmental Scientists and Engineers, LLC (“Walsh”).  Walsh is a majority-owned subsidiary of Ecology and Environment, Inc.  The Proposed Consent Order concerns construction improvement activities of certain property owned by Denver which was the subject of asbestos remediation.  Denver had entered into a contract with Walsh for Walsh to provide certain environmental consulting services (asbestos monitoring services) in connection with the asbestos containment and/or removal performed by other contractors at Denver's real property.  Without admitting liability or the Department’s version of the underlying facts, Walsh on February 13, 2013 entered into a Compliance Order on Consent with the Department and paid a penalty of less than $0.1 million and paid for a Supplemental Environmental Project to benefit the public at large in an amount less than $0.1 million.  Denver was served with a final Compliance Order and Assessment of Administrative Penalty against Denver alone for approximately $0.2 million.  Under Walsh's environmental consulting contract with Denver, Walsh has agreed to indemnify Denver for certain liabilities where Walsh could potentially be held responsible for a portion of the penalty imposed upon Denver.  Walsh has put its professional liability and general liability carriers on notice of this indemnification claim by Denver.  The Company believes that this administrative proceeding involving Walsh will not have an adverse material effect upon the operations of the Company.

On February 4, 2011, the Chico Mendes Institute of Biodiversity Conservation of Brazil (the “Institute”) issued a Notice of Infraction to E&E Brasil.  E&E Brasil is a majority-owned subsidiary of Ecology and Environment, Inc.  The Notice of Infraction concerns the taking and collecting species of wild animal specimens without authorization by the competent authority and imposes a fine of 520,000 Reais, which had a value of approximately $0.2 million at July 31, 2014.  No claim has been made against Ecology and Environment, Inc.  The Institute has also filed Notices of Infraction against four employees of E&E Brasil alleging the same claims and has imposed fines against those individuals that, in the aggregate, are equal to the fine imposed against E&E Brasil.  E&E Brasil has filed administrative responses with the Institute for itself and its employees that: (a) denies the jurisdiction of the Institute, (b) states that the Notice of Infraction is constitutionally vague and (c) affirmatively stated that E&E Brasil had obtained the necessary permits for the surveys and collections of specimens under applicable Brazilian regulations and that the protected conservation area is not clearly marked to show its boundaries.  At this time, E&E Brasil has attended one meeting where depositions were taken. The Company believes that these administrative proceedings in Brazil will not have an adverse material effect upon the operations of the Company.

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Other Accrued Liabilities (Details) (USD $)	12 Months Ended
	Jul. 31, 2014	Jul. 31, 2013	Jul. 31, 2012
Other Accrued Liabilities [Abstract]
Allowance for project disallowances	$ 2,393,351	$ 2,663,351	$ 2,724,474
Other	1,841,911	1,406,722
Total other accrued liabilities	4,235,262	4,070,073
Allowance for Project Disallowances [Roll Forward]
Balance at beginning of period	2,663,351	2,724,474	3,882,810
Reduction of reserves recorded in prior fiscal years	(300,000)	0	0
Net change during the period, recorded as a transfer of reserves from allowance for doubtful accounts and contract adjustments	30,000	(61,123)	(1,158,336)
Balance at end of period	$ 2,393,351	$ 2,663,351	$ 2,724,474

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Summary of Significant Accounting Policies (Details) (USD $)	12 Months Ended
	Jul. 31, 2014		Jul. 31, 2013	Jul. 31, 2012
Property, Plant and Equipment [Line Items]
Goodwill	$ 1,200,000
Foreign currency transaction (losses) gains	$ (24,789)		$ (50,839)	$ (403,419)
Employee contribution (in hundredths)	4.00%
Buildings [Member]
Property, Plant and Equipment [Line Items]
Depreciation/ amortization method	Straight-line
Buildings [Member] | Minimum [Member]
Property, Plant and Equipment [Line Items]
Useful lives	32 years
Buildings [Member] | Maximum [Member]
Property, Plant and Equipment [Line Items]
Useful lives	40 years
Building Improvements [Member]
Property, Plant and Equipment [Line Items]
Depreciation/ amortization method	Straight-line
Building Improvements [Member] | Minimum [Member]
Property, Plant and Equipment [Line Items]
Useful lives	7 years
Building Improvements [Member] | Maximum [Member]
Property, Plant and Equipment [Line Items]
Useful lives	15 years
Field Equipment [Member]
Property, Plant and Equipment [Line Items]
Depreciation/ amortization method	Straight-line
Field Equipment [Member] | Minimum [Member]
Property, Plant and Equipment [Line Items]
Useful lives	3 years
Field Equipment [Member] | Maximum [Member]
Property, Plant and Equipment [Line Items]
Useful lives	7 years
Computer Equipment [Member]
Property, Plant and Equipment [Line Items]
Depreciation/ amortization method	Straight-line and Accelerated
Computer Equipment [Member] | Minimum [Member]
Property, Plant and Equipment [Line Items]
Useful lives	3 years
Computer Equipment [Member] | Maximum [Member]
Property, Plant and Equipment [Line Items]
Useful lives	7 years
Computer Software [Member]
Property, Plant and Equipment [Line Items]
Depreciation/ amortization method	Straight-line
Computer Software [Member] | Maximum [Member]
Property, Plant and Equipment [Line Items]
Useful lives	10 years
Office Furniture and Equipment [Member]
Property, Plant and Equipment [Line Items]
Depreciation/ amortization method	Straight-line
Office Furniture and Equipment [Member] | Minimum [Member]
Property, Plant and Equipment [Line Items]
Useful lives	3 years
Office Furniture and Equipment [Member] | Maximum [Member]
Property, Plant and Equipment [Line Items]
Useful lives	7 years
Vehicles [Member]
Property, Plant and Equipment [Line Items]
Depreciation/ amortization method	Straight-line
Vehicles [Member] | Minimum [Member]
Property, Plant and Equipment [Line Items]
Useful lives	3 years
Vehicles [Member] | Maximum [Member]
Property, Plant and Equipment [Line Items]
Useful lives	5 years
Leasehold Improvements [Member]
Property, Plant and Equipment [Line Items]
Depreciation/ amortization method	Straight-line
Useful lives		[1]
Capitalized Software Costs [Member]
Property, Plant and Equipment [Line Items]
Depreciation/ amortization method	Straight-line
Useful lives	10 years
Capitalized Software Costs [Member] | Maximum [Member]
Property, Plant and Equipment [Line Items]
Useful lives	10 years
Time and Material [Member] | Consulting [Member]
Revenue Recognition Policy [Line Items]
Revenue recognition policy	As incurred at contract rates.
Fixed Price [Member] | Consulting [Member]
Revenue Recognition Policy [Line Items]
Revenue recognition policy	Percentage of completion, approximating the ratio of either total costs or Level of Effort (LOE) hours incurred to date to total estimated costs or LOE hours.
Cost Type [Member] | Consulting [Member]
Revenue Recognition Policy [Line Items]
Revenue recognition policy	Costs as incurred plus fees. Fees are recognized as revenue using percentage of completion determined by the percentage of LOE hours incurred to total LOE hours in the respective contracts.

[1] Leasehold improvements are amortized for book purposes over the terms of the leases or the estimated useful lives of the assets, whichever is shorter.

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Consolidated Statements of Comprehensive Income (Loss) (USD $)	12 Months Ended
	Jul. 31, 2014	Jul. 31, 2013	Jul. 31, 2012
Comprehensive Income (Loss) [Abstract]
Net (loss) income including noncontrolling interests	$ (790,453)	$ (1,222,048)	$ 3,039,750
Foreign currency translation adjustments	(298,200)	(883,865)	(708,489)
Unrealized investment gains, net	1,412	(28,675)	17,597
Comprehensive (loss) income	(1,087,241)	(2,134,588)	2,348,858
Comprehensive income attributable to noncontrolling interests	(457,916)	(792,215)	(2,390,626)
Comprehensive loss attributable to Ecology and Environment, Inc.	$ (1,545,157)	$ (2,926,803)	$ (41,768)

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Recent Accounting Pronouncements

12 Months Ended

Jul. 31, 2014

Recent Accounting Pronouncements [Abstract]

Recent Accounting Pronouncements

2. Recent Accounting Pronouncements

Accounting Pronouncements Not Yet Adopted as of July 31, 2014

In July 2013, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) No. 2013-11 Income Taxes (Topic 740): Presentation of an Unrecognized Tax Benefit When a Net Operating Loss Carryforward, a Similar Tax Loss, or a Tax Credit Carryforward Exists (“ASU 2013-11”).  ASU 2013-11 requires that an unrecognized tax benefit, or a portion of an unrecognized tax benefit, should be presented in the financial statements as a reduction to a deferred tax asset for a net operating loss carryforward, a similar tax loss, or a tax credit carryforward, except as follows.  To the extent a net operating loss carryforward, a similar tax loss, or a tax credit carryforward is not available at the reporting date under the tax law of the applicable jurisdiction to settle any additional income taxes that would result from the disallowance of a tax position or the tax law of the applicable jurisdiction does not require the entity to use, and the entity does not intend to use, the deferred tax asset for such purpose, the unrecognized tax benefit should be presented in the financial statements as a liability and should not be combined with deferred tax assets. The Company adopted the provisions of ASU 2013-11 effective August 1, 2014 and applied its provisions retrospectively.  The adoption of this standard did not have a material impact on the Company’s consolidated financial statements.

In May 2014, FASB issued ASU No. 2014-09 Revenue from Contracts with Customers (Topic 606) (“ASU 2014-09”).  ASU 2014-09 is the result of a joint project of FASB and the International Accounting Standards Board to clarify the principles for recognizing revenue and to develop a common revenue standard for use in the U.S and internationally.  ASU 2014-09 supersedes the revenue recognition requirements in Topic 605 of FASB’s Accounting Standards Codification (the “Codification”) and most industry-specific guidance throughout the Industry Topics of the Codification.  ASU 2014-09 enhances comparability of revenue recognition practices across entities, industries, jurisdictions and capital markets, reduces the number of requirements an entity must consider for recognizing revenue, and requires improved disclosures to help users of financial statements better understand the nature, amount, timing, and uncertainty of revenue that is recognized.  ASU 2014-09 is effective for annual reporting periods beginning after December 15, 2016, including interim periods within the annual reporting period.  The Company intends to implement the provisions of ASU 2014-09 effective August 1, 2017.  ASU 2014-09 requires either retrospective application by restating each prior period presented in the financial statements, or retrospective application by recording the cumulative effect on prior reporting periods to beginning retained earnings in the year that the standard becomes effective.  Management is currently assessing the provisions of ASU 2014-09 and has not yet estimated the impact of this ASU.

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Summary of Significant Accounting Policies (Policies)

12 Months Ended

Jul. 31, 2014

Summary of Significant Accounting Policies [Abstract]

Consolidation

Consolidation

The consolidated financial statements include the accounts of the EEI and its wholly owned and majority owned subsidiaries.  All intercompany transactions and balances have been eliminated.

Use of Estimates

Use of Estimates

The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions as of the date of the financial statements, which affect the reported values of assets and liabilities and revenues and expenses and disclosures of contingent assets and liabilities.  Actual results may differ from those estimates.

Revenue Recognition and Contract Receivables, Net

Revenue Recognition and Contract Receivables, Net

Substantially all of the Company's revenue is derived from environmental consulting work.  The consulting revenue is principally derived from the sale of labor hours.  The consulting work is performed under a mix of fixed price, cost-type, and time and material contracts.  Contracts are required from all customers.  Revenue is recognized as follows:

Contract Type	Work Type	Revenue Recognition Policy
Time and materials	Consulting	As incurred at contract rates.
Fixed price	Consulting	Percentage of completion, approximating the ratio of either total costs or Level of Effort (LOE) hours incurred to date to total estimated costs or LOE hours.
Cost-plus	Consulting	Costs as incurred plus fees.  Fees are recognized as revenue using percentage of completion determined by the percentage of LOE hours incurred to total LOE hours in the respective contracts.

Revenues reflected in the Company's consolidated statements of operations represent services rendered for which the Company maintains a primary contractual relationship with its customers.  Included in revenues are certain services outside the Company's normal operations which the Company has elected to subcontract to other contractors.

Time and material contracts are accounted for over the period of performance, in proportion to the costs of performance, predominately based on labor hours incurred.  Revenue earned from fixed price and cost-plus contracts is recognized using the “percentage-of-completion” method, wherein revenue is recognized as project progress occurs.  If an estimate of costs at completion on any contract indicates that a loss will be incurred, the entire estimated loss is charged to operations in the period the loss becomes evident.

Substantially all of the Company's cost-type work is with federal governmental agencies and, as such, is subject to audits after contract completion.  Under these cost-type contracts, provisions for adjustments to accrued revenue are recognized on a quarterly basis and based on past audit settlement history.  Government audits have been completed and final rates have been negotiated through fiscal year 2007.  The Company records an allowance for project disallowances in other accrued liabilities for potential disallowances resulting from government audits (refer to Note 11 of these consolidated financial statements).

Change orders can occur when changes in scope are made after project work has begun, and can be initiated by either the Company or its clients.  Claims are amounts in excess of the agreed contract price which the Company seeks to recover from a client for customer delays and /or errors or unapproved change orders that are in dispute.  Costs related to change orders and claims are recognized as incurred.  Revenues and profit are recognized on change orders when it is probable that the change order will be approved and the amount can be reasonably estimated.  Revenues are recognized only up to the amount of costs incurred on contract claims when realization is probable, estimable and reasonable support from the customer exists.

All bid and proposal and other pre-contract costs are expensed as incurred.  Out of pocket expenses such as travel, meals, field supplies, and other costs billed direct to contracts are included in both revenues and cost of professional services.  Sales and cost of sales at the Company’s South American subsidiaries exclude tax assessments by governmental authorities, which are collected by the Company from its customers and then remitted to governmental authorities.

Billed contract receivables represent amounts billed to clients in accordance with contracted terms, which have not been collected from clients as of the end of the reporting period.  Billed contract receivables may include: (1) amounts billed for revenues from incurred costs and fees that have been earned in accordance with contractual terms; and (2) progress billings in accordance with contractual terms that include revenue not yet earned as of the end of the reporting period.

Unbilled contract receivables result from: (i) revenues from incurred costs and fees which have been earned, but are not billed as of period-end; and (ii) differences between year-to-date provisional billings and year-to-date actual contract costs incurred.

The Company reduces contract receivables by recording an allowance for doubtful accounts to account for the estimated impact of collection issues resulting from a client’s inability or unwillingness to pay valid obligations to the Company.  The resulting provision for bad debts is recorded within administrative and indirect operating expenses on the consolidated statements of operations.

The Company also reduces contract receivables by establishing an allowance for contract adjustments related to revenues that are deemed to be unrealizable, or that may become unrealizable in the future.  Management reviews contract receivables and determines allowance amounts based on the adequacy of the Company’s performance under the contract, the status of change orders and claims, historical experience with the client for settling change orders and claims, and economic, geopolitical and cultural considerations for the home country of the client.  Such contract adjustments are recorded as direct adjustments to revenue in the consolidated statements of operations.

Investment Securities, Available for Sale

Investment Securities Available for Sale

Investment securities have been classified as available for sale and are stated at fair value.  Unrealized gains or losses related to investment securities available for sale are recorded in accumulated other comprehensive income, net of applicable income taxes in the accompanying consolidated balance sheets and consolidated statements of changes in shareholders' equity.  The cost basis of securities sold is based on the specific identification method.

Property, Building and Equipment, Depreciation and Amortization

Property, Building and Equipment, Depreciation and Amortization

Property, building and equipment are stated at the lower of depreciated or amortized cost or fair value.  Land and land improvements are not depreciated or amortized.  Methods of depreciation or amortization and useful lives for all other long-lived assets are summarized in the following table.

	Depreciation / Amortization Method	Useful Lives
Buildings	Straight-line	32-40 Years
Building Improvements	Straight-line	7-15 Years
Field Equipment	Straight-line	3-7 Years
Computer equipment	Straight-line and Accelerated	3-7 Years
Computer software	Straight-line	10 Years
Office furniture and equipment	Straight-line	3-7 Years
Vehicles	Straight-line	3-5 Years
Leasehold improvements	Straight-line	(1)

(1) Leasehold improvements are amortized for book purposes over the terms of the leases or the estimated useful lives of the assets, whichever is shorter.

Expenditures for maintenance and repairs are charged to expense as incurred.  Expenditures for improvements are capitalized when either the value or useful life of the related asset have been increased.  When property or equipment is retired or sold, any gain or loss on the transaction is reflected in the current year's earnings.

The Company capitalizes costs of software acquisition and development projects, including costs related to software design, configuration, coding, installation, testing and parallel processing. Capitalized software costs are recorded in fixed assets, net of accumulated amortization, on the consolidated balance sheets. Capitalized software development costs generally include:

· external direct costs of materials and services consumed to obtain or develop software for internal use;

· payroll and payroll-related costs for employees who are directly associated with and who devote time to the project, to the extent of time spent directly on the project;

· costs to obtain or develop software that allows for access or conversion of old data by new systems;

· costs of upgrades and/or enhancements that result in additional functionality for existing software; and

· interest costs incurred while developing internal-use software that could have been avoided if the expenditures had not been made.

The costs of computer software obtained or developed for internal use is amortized on a straight-line basis over the estimated useful life of the software.  Amortization begins when the software and all related software modules on which it is functionally dependent are ready for their intended use.  Amortization expense is recorded in depreciation and amortization in the consolidated statements of operations.  The Company’s amortization period does not exceed ten years for any capitalized software project.

The following software-related costs are generally expensed as incurred and recorded in general and administrative expenses on the consolidated statements of operations:

· research costs, such as costs related to the determination of needed technology and the formulation, evaluation and selection of alternatives;

· costs to determine system performance requirements for a proposed software project;

· costs of selecting a vendor for acquired software;

· costs of selecting a consultant to assist in the development or installation of new software;

· internal or external training costs related to software;

· internal or external maintenance costs related to software;

· costs associated with the process of converting data from old to new systems, including purging or cleansing existing data, reconciling or balancing of data in the old and new systems and creation of new data;

· updates and minor modifications; and

· fees paid for general systems consulting and overall control reviews that are not directly associated with the development of software.

Capitalized software costs are evaluated for recoverability/impairment whenever events or changes in circumstances indicate that its carrying amount may not be recoverable, including when:

· existing software is not expected to provide future service potential;

· it is no longer probable that software under development will be completed and placed in service; and

· costs of developing or modifying internal-use software significantly exceed expected development costs or costs of comparable third-party software.

Refer to Note 7 of these consolidated financial statements for additional disclosures regarding the Company’s property, building and equipment.

Fair Value of Financial Instruments

Fair Value of Financial Instruments

The Company’s financial assets or liabilities are measured using inputs from the three levels of the fair value hierarchy.  The asset’s or liability’s classification within the fair value hierarchy is based on the lowest level of any input that is significant to the fair value measurement.  Valuation techniques used need to maximize the use of observable inputs and minimize the use of unobservable inputs.  The Company has not elected a fair value option on any assets or liabilities. The three levels of the hierarchy are as follows:

Level 1 Inputs – Unadjusted quoted prices in active markets that are accessible at the measurement date for identical, unrestricted assets or liabilities. Generally this includes debt and equity securities and derivative contracts that are traded on an active exchange market (e.g., New York Stock Exchange) as well as certain U.S. Treasury and U.S. Government and agency mortgage-backed securities that are highly liquid and are actively traded in over-the-counter markets.

Level 2 Inputs – Quoted prices for similar assets or liabilities in active markets; quoted prices for identical or similar assets or liabilities in inactive markets; or valuations based on models where the significant inputs are observable (e.g., interest rates, yield curves, credit risks, etc.) or can be corroborated by observable market data.  The Company’s investment securities classified as Level 2 are comprised of international and domestic corporate and municipal bonds.

Level 3 Inputs – Valuations based on models where significant inputs are not observable.  The unobservable inputs reflect the Company’s own assumptions about the assumptions that market participants would use.

The availability of observable market data is monitored to assess the appropriate classification of financial instruments within the fair value hierarchy.  Changes in economic conditions or model-based valuation techniques may require the transfer of financial instruments from one fair value level to another.  In such instances, the transfer is reported at the beginning of the reporting period.

Refer to Note 5 of these consolidated financial statements for additional disclosures regarding the fair value of the Company’s financial instruments.

Goodwill

Goodwill

Goodwill of $1.2 million is included in other assets on the accompanying consolidated balance sheets.  Goodwill is subject to an annual assessment for impairment by comparing the estimated fair values of reporting units to which Goodwill has been assigned, as calculated using a discounted cash flow method, to the recorded book value of the respective reporting units.  The Company’s most recent annual impairment assessment for goodwill was completed during the fourth quarter of fiscal year 2014.  The results of this assessment showed that the fair values of the reporting units to which goodwill is assigned was in excess of the book values of the respective reporting units, resulting in the identification of no goodwill impairment.

Goodwill is also assessed for impairment between annual assessments whenever events or circumstances make it more likely than not that an impairment may have occurred.  The Company identified no events or changes in circumstances during the fiscal year ended July 31, 2014 that necessitated an evaluation for impairment of goodwill.

Impairment of Long-Lived Assets

Impairment of Long-Lived Assets

The Company assesses recoverability of the carrying value of long-lived assets by estimating the future net cash flows (undiscounted) expected to result from the asset, including eventual disposition.  If the future net cash flows are less than the carrying value of the asset, an impairment loss is recorded equal to the difference between the asset's carrying value and fair value.

Foreign Currencies

Foreign Currencies

The financial statements of foreign subsidiaries where the local currency is the functional currency are translated into U.S. dollars using exchange rates in effect at period end for assets and liabilities and average exchange rates during each reporting period for results of operations.  Translation adjustments are deferred in accumulated other comprehensive income.  Transaction gains and losses that arise from exchange rate fluctuations on transactions denominated in a currency other than the functional currency are included in the results of operations as incurred.  The Company recorded foreign currency transaction (losses) gains of less than $(0.1) million, $(0.1) million and $(0.4) million for the fiscal years ended July 31, 2014, 2013 and 2012, respectively.

The financial statements of foreign subsidiaries located in highly inflationary economies are remeasured as if the functional currency were the U.S. dollar.  The remeasurement of local currencies into U.S. dollars creates transaction adjustments which are included in net income.  The Company did not record any highly inflationary economy translation adjustments for the fiscal years ended July 31, 2014, 2013 or 2012.

Income Taxes

Income Taxes

The Company follows the asset and liability approach to account for income taxes.  This approach requires the recognition of deferred tax liabilities and assets for the expected future tax consequences of temporary differences between the carrying amounts and the tax bases of assets and liabilities.  Although realization is not assured, management believes it is more likely than not that the recorded net deferred tax assets will be realized.  Since in some cases management has utilized estimates, the amount of the net deferred tax asset considered realizable could be reduced in the near term.  No provision has been made for United States income taxes applicable to undistributed earnings of foreign subsidiaries as it is the intention of the Company to indefinitely reinvest those earnings in the operations of those entities.

Income tax expense includes U.S. and international income taxes, determined using the applicable statutory rates.  A deferred tax liability is recognized for all taxable temporary differences, and a deferred tax asset is recognized for all deductible temporary differences and net operating loss carryforwards.

The Company has significant deferred tax assets, resulting principally from contract reserves and accrued expenses.  The Company periodically evaluates the likelihood of realization of deferred tax assets, and provides for a valuation allowance when necessary.

Additionally, the Financial Accounting Standards Board (“FASB”) Accounting Standard Codification (“ASC”) Topic Income Taxes, prescribes a recognition threshold and measurement principles for financial statement disclosure of tax positions taken or expected to be taken on a tax return.   A tax position is a position in a previously filed tax return or a position expected to be taken in a future tax filing that is reflected in measuring current or deferred income tax assets and liabilities.  Tax positions shall be recognized only when it is more likely than not (likelihood of greater than 50%), based on technical merits, that the position will be sustained. Tax positions that meet the more likely than not threshold should be measured using a probability weighted approach as the largest amount of tax benefit that is greater than 50% likely of being realized upon settlement. Whether the more-likely-than-not recognition threshold is met for a tax position, is a matter of judgment based on the individual facts and circumstances of that position evaluated in light of all available evidence.  The Company recognizes interest accrued related to unrecognized tax benefits in interest expense and penalties in administrative and indirect operating expenses.

Refer to Note 10 of these consolidated financial statements for additional disclosures regarding income taxes.

Defined Contribution Plans

Defined Contribution Plans

EEI has a non-contributory defined contribution plan providing deferred benefits for substantially all of its employees.  The annual expense of the defined contribution plan is based on a percentage of eligible wages as authorized by EEI’s Board of Directors.

Walsh Environmental Scientists & Engineers, LLC (“Walsh”), a wholly-owned subsidiary of EEI, has a defined contribution plan providing deferred benefits for substantially all of its employees.  Walsh contributes a percentage of eligible wages up to a maximum of 4%.

Refer to Note 15 of these consolidated financial statements for additional disclosures regarding the Company’s defined contribution plans.

Stock-Based Compensation

Stock-Based Compensation

The company expenses the value of employee stock awards over the vesting period of the respective award.  Share-based awards are measured at fair value on the respective grant date, based on the estimated number of awards that are expected to vest.  Compensation cost for awards that vest is not reversed if the awards expire without being exercised.

Refer to Note 12 of these consolidated financial statements for additional disclosures regarding the Company’s stock-based compensation plans.

Earnings per Share

Earnings per Share

Basic and diluted earnings per share (“EPS”) is computed by dividing income available to common shareholders by the weighted average number of common shares outstanding for the reporting period.  The Company allocates undistributed earnings between the classes on a one-to-one basis when computing EPS.  As a result, basic and fully diluted earnings per Class A and Class B shares are equal amounts.  Refer to Note 16 of these consolidated financial statements for additional disclosures regarding EPS.

Comprehensive (Loss) Income

Comprehensive (Loss) Income

Comprehensive (loss) income is defined as "the change in equity of a business enterprise during a period from transactions and other events and circumstances from non-owner sources."  Comprehensive (loss) income includes total net earnings plus other comprehensive (loss) income during a reporting period.  Other comprehensive (loss) income includes currency translation adjustments on foreign subsidiaries and unrealized gains or losses on available-for-sale securities.

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Earnings Per Share (Tables)

12 Months Ended

Jul. 31, 2014

Earnings Per Share [Abstract]

Computation of Basic Earnings Per Share

The computation of basic earnings per share is included in the following table.

	Fiscal Year Ended July 31,
	2014			2013			2012
Net (loss) income attributable to Ecology and Environment, Inc.	$	(1,382,656	)	$	(2,130,434	)	$	773,579
Dividend declared		2,066,622			2,038,496			2,036,559
Undistributed earnings	$	(3,449,278	)	$	(4,168,930	)	$	(1,262,980	)
Weighted-average common shares outstanding (basic and diluted)		4,283,984			4,247,821			4,233,883
Distributed earnings per share	$	0.48		$	0.48		$	0.48
Undistributed earnings per share		(0.80	)		(0.98	)		(0.30	)
Total earnings per share	$	(0.32	)	$	(0.50	)	$	0.18

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Stock Award Plan

12 Months Ended

Jul. 31, 2014

Stock Award Plan [Abstract]

Stock Award Plan

12. Stock Award Plan

EEI adopted the 1998 Stock Award Plan effective March 16, 1998 (the “1998 Award Plan”).  The following supplemental plans were adopted subsequent to adoption of the 1998 Award Plan:

· The 2003 Stock Award Plan (the “2003 Award Plan”), which was adopted by the Board of Directors in October 2004, approved by shareholders in January 2004, and terminated in October 2008;

· The 2007 Stock Award Plan (the “2007 Award Plan”), which was adopted by the Board of Directors in October 2007, approved by shareholders in January 2008, and terminated in October 2012; and

· The 2011 Stock Award Plan (the “2011 Award Plan”), which was adopted by the Board of Directors in October 2011, approved by shareholders in January 2012, and will terminate in October 2016.

The 1998 Award Plan and all supplemental plans are collectively referred to as the “Award Plan”.  The Award Plan permits grants of the award for a period of five (5) years from the date of adoption by the Board of Directors.  The Award Plan is not a qualified plan Section 401(a) of the Internal Revenue Code.

The Company awarded 62,099 Class A shares valued at $0.9 million in October 2011 and 16,387 Class A shares valued at $0.2 million in July 2013 pursuant to the Award Plan.  These awards have a three year vesting period.  Total gross compensation expense is recognized over the vesting period.  The Company recorded non-cash compensation expense of $0.4 million, $0.5 million and $0.7 million during the fiscal years ended July 31, 2014, 2013 and 2012, respectively, in connection with outstanding stock compensation awards.  The Company expects to record less than $0.1 million of non-cash compensation expense during the fiscal year ended July 31, 2015.  The "pool" of excess tax benefits accumulated in Capital in Excess of Par Value was $0.1 million and $0.2 million at July 31, 2014 and 2013, respectively.