OVERVIEW

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

We derive our revenue from fees for professional, technical, project management and construction services. As primarily a service-based company, we are labor-intensive rather than capital-intensive. Our revenue is driven by our ability to attract and retain qualified and productive employees, identify business opportunities, secure new and renew existing client contracts, provide outstanding services to our clients and execute projects successfully. We provide our services to a diverse base of federal and state and local government agencies, as well as commercial and international clients. The following table presents the percentage of our revenue, net of subcontractor costs, by client sector:

                                                     Fiscal Year
                Client Sector                 2008      2007      2006
                Federal government              43.3 %    43.9 %    46.7 %
                State and local government      17.8      20.2      17.5
                Commercial                      37.9      35.0      35.1
                International(1)                 1.0       0.9       0.7

                                               100.0 %   100.0 %   100.0 %

                --------------------------

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

Prior to fiscal 2009, we managed our business in three reportable segments:
resource management, infrastructure and communications. Management established these segments based upon the services provided, the different marketing strategies associated with these services and the specialized needs of their respective clients. Our resource management segment provides engineering, consulting and construction services primarily addressing water quality and availability, environmental restoration, productive reuse of defense facilities, strategic environmental resource planning, international development and alternative energy. Our infrastructure segment provides engineering, systems integration, program management and construction management services for the development, upgrading, replacement and maintenance of infrastructure. Our communications segment provides

engineering, permitting, site acquisition and construction management services. The following table presents the approximate percentage of our revenue, net of subcontractor costs, by reportable segment:

                                                 Fiscal Year
                   Reportable Segment     2008      2007      2006
                   Resource management      68.2 %    63.1 %    62.7 %
                   Infrastructure           27.3      32.6      32.7
                   Communications            4.5       4.3       4.6

                                           100.0 %   100.0 %   100.0 %

Beginning in fiscal 2009, we have re-aligned our business into four reportable segments. We believe the revised reportable segments to be disclosed will provide enhanced data and analysis for our shareholders. For more information, see Note 15 (Reportable Segments) of the "Notes to Consolidated Financial Statements" included in Item 8.

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

                                                 Fiscal Year
                    Contract Type         2008      2007      2006
                    Fixed-price             37.1 %    33.2 %    33.5 %
                    Time-and-materials      42.3      45.6      43.0
                    Cost-plus               20.6      21.2      23.5

                                           100.0 %   100.0 %   100.0 %

BUSINESS TREND ANALYSIS

Management review of fiscal 2008 and outlook for the future. Overall, we delivered strong financial results in fiscal 2008, which reflected a significant improvement compared to prior years. We continued to focus on long-term value creation through the execution of our growth strategy. We did so by investing in business development activities to grow our business organically and by making strategic acquisitions that have enhanced our service offerings and further expanded our geographical presence. In addition, we continued to implement and enforce project management policies and programs that focus on contract execution and risk management controls. Further, we focused on cost control and the strategic management of our portfolio of businesses. As a result, we achieved record highs on several key performance indicators in fiscal 2008:

º •
º We recorded the highest revenue in our history of $2.1 billion, up $591.4 million, or 38.1%, compared to the prior year. This growth was primarily driven by increased activity on our core water and environmental projects, international development projects associated with our ARD acquisition and Iraq-related and domestic work from the DoD, and alternative energy projects, predominantly wind energy.

º •
º We recorded the highest income from operations in our history of $106.4 million, up $20.1 million, or 23.3%, compared to the prior year. Our results for fiscal 2008 reflect higher profit margins and improved performance on large fixed-priced contracts.

º •
º We recorded the highest diluted earnings per share in our history of $1.02, up $0.23, or 29.1%, compared to the prior year, which primarily resulted from business growth, project management practices and overhead cost controls.

º •
º Our debt balance at the end of fiscal 2008 was the lowest amount in the last nine fiscal year-ends. The lower debt balance resulted from our generation of $68.4 million of cash flow from operations in fiscal 2008, one of the highest amounts in our history and up $21.7 million, or 46.5%, compared to the prior year.

We anticipate that our business will grow at a modest rate as we continue to focus on organic growth and pursue complementary acquisitions that expand our geographic reach and increase the breadth of our service offerings to address existing and emerging markets. Our forecast assumes the varied government stimulus packages aimed at jump-starting the economy and unfreezing the credit markets will be successful. Still, a period of considerable weakness in the economy should be expected even if government intervention succeeds. As such, we recognize that the current economic forces that have severely impacted both the domestic and international economies could affect our future work for the U.S. federal government, state and local governments, and commercial businesses, which constituted approximately 50%, 15% and 35% of our revenue in fiscal 2008, respectively.

Federal Government. In fiscal 2008, our U.S. federal government business experienced strong revenue growth of 34.6% compared to fiscal 2007. A majority of this growth was driven by acquisitive revenue, primarily from USAID projects associated with our ARD acquisition. The balance resulted primarily from the continuation of increased activity on our Iraq-related and domestic projects for the DoD. We anticipate that our U.S. federal government business will experience modest growth in fiscal 2009 compared to fiscal 2008 due primarily to our increased work with USAID, increased BRAC spending and water development projects related to Water Resources Development Act of 2007 and the USACE. However, due to the DoD's funding practices on projects in Iraq as well as the changing geopolitical landscape in Iraq and the United States, we believe our revenue from Iraq-related projects will decrease. While it has not occurred, some of our anticipated projects could be delayed or cancelled due to the diversion of U.S. federal government resources to the U.S. financial markets.

State and Local Government. In fiscal 2008, our state and local government business grew 10.0% compared to fiscal 2007, due primarily to CSO, geotechnical consulting and water infrastructure projects. This growth was primarily driven by acquisitions and was partially offset by the conclusion of a large fiber-to-the-premises project.

Many state and local government agencies are facing increasingly challenging economic conditions, including budget deficits, declining tax revenues and difficult cost-cutting decisions. Simultaneously, states are facing major long-term infrastructure needs, including the maintenance, repair and upgrading of existing critical infrastructure and the need to build new facilities. Since 2006, voters in several states have approved infrastructure bond measures, and many of those bonds have been sold or are in the process of being sold to provide the funding needed to advance critical projects. Additionally, new infrastructure bond measures and related tax proposals are being planned for ballots through 2010. The funding risks associated with our state and local government programs are partially mitigated by the regulatory requirements driving these programs, such as regulatory-mandated consent decrees, as well as demographic shifts and increasing demand for water and wastewater services. As a result, some programs will generally occur despite budget pressures, and we anticipate that infrastructure projects, especially those focused on the need for demand-driven water resource requirements, will be initiated and funded in fiscal 2009. However, we expect that our state and local government business will decline slightly in fiscal 2009. We will remain vigilant in monitoring and evaluating state and local government budgets and will continue to assess any potential impact on our state and local government business, including the potential uncertainty of our clients' ability to sell their infrastructure bonds and/or fund their ongoing operating requirements due to the erratic nature of the current credit markets.

ACQUISITIONS AND DIVESTITURES

Acquisitions. We continuously evaluate the marketplace for strategic acquisition opportunities. Due to our reputation, size, financial resources, geographic presence and range of services, we have numerous opportunities to acquire both privately held companies and subsidiaries of publicly held companies. Once an opportunity is identified, we examine the effect an acquisition may have on our long-range business strategy and our results of operations. Generally, we proceed with an acquisition if we believe that it would have a positive effect on future operations and could strategically expand our service offerings. As successful integration and implementation are essential to achieving favorable results, no assurance can be given that all acquisitions will provide accretive results. Our strategy is to position ourselves to address existing and emerging markets. We view acquisitions as a key component of our growth strategy, and we intend to use both cash and securities, as we deem appropriate, to fund acquisitions. We may acquire other businesses that we believe are synergistic and will ultimately increase our revenue and net income, strengthen our ability to achieve our strategic goals, provide critical mass with existing clients and further expand our lines of service. As a result, we typically consummate a deal to acquire another business with a purchase price that results in the recognition of goodwill and other identifiable intangible assets.

In the third quarter of fiscal 2007, we acquired (i) all of the outstanding shares of Delaney Construction Corporation, Delaney Crushed Stone Products, Inc. and Delaney Leasing Company, Inc., and (ii) all of the limited liability company interests of Delaney Properties, LLC (collectively, "DGI"), which provides planning, development and construction services for wind energy programs, BRAC projects, and water and wastewater treatment and conveyance facilities to its broad-based clients. This acquisition enables us to provide a wider range of service to our current and prospective wind energy clients, as DGI offers complementary capabilities and customer relationships. DGI is part of our resource management segment. In fiscal 2007, we also made other smaller acquisitions which were integrated into our infrastructure and resource management segments.

In the first quarter of fiscal 2008, we acquired ARD, which provides applied research, planning, design and implementation services focused on a range of water, energy, environmental and governance challenges. ARD manages large, complex international development projects for its clients, predominantly USAID. This acquisition continues our international expansion as it increases our professional workforce by approximately 730 employees in new geographic areas and technical specialties around the world. ARD is part of our resource management segment. In fiscal 2008, we also made other smaller acquisitions that were integrated into our infrastructure and resource management segments. These acquisitions enhance our service offerings and expand our geographic reach.

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

In fiscal 2006, we sold one operating unit in our resource management segment and one in our communications segment. Further, we ceased all revenue producing activities for an operating unit in our communications segment. Accordingly, these three operating units have been reported as discontinued operations for all reporting periods. In fiscal 2006, the discontinued operations generated $9.7 million of revenue. In fiscal 2007 and 2008, we did not have any discontinued operations. The following discussions generally reflect summary results from our continuing operations unless otherwise noted. However, the net income and net income per share discussions include the impact of discontinued operations.

RESULTS OF OPERATIONS

Overall, our results for fiscal 2008 reflect a significant improvement as compared to fiscal 2007 due to our focus on organic growth and the strategic pursuit of acquisitions that enhance our service offerings and expand our geographic presence. We continued to experience business growth from all client sectors and all reportable segments, particularly from international development projects associated with our ARD acquisition and Iraq-related and domestic work from the DoD, as well as wind and other alternative energy, wastewater treatment, landfill development, environmental engineering, geotechnical consulting and telecommunications infrastructure projects. Approximately half of our revenue growth was driven by acquisitive revenue from our ARD acquisition and, to a lesser extent, small strategic acquisitions.

Fiscal 2008 Compared to Fiscal 2007

Consolidated Results

                                                    Fiscal Year Ended

                                 September 28,     September 30,           Change
                                     2008              2007             $           %
                                                    ($ in thousands)

  Revenue                        $    2,145,254    $    1,553,888   $  591,366       38.1 %
  Subcontractor costs                  (899,709 )        (540,973 )   (358,736 )    (66.3 )

  Revenue, net of
  subcontractor costs                 1,245,545         1,012,915      232,630       23.0
  Other contract costs                 (991,358 )        (812,270 )   (179,088 )    (22.0 )

  Gross profit                          254,187           200,645       53,542       26.7
  Selling, general and
  administrative expenses              (147,787 )        (114,348 )    (33,439 )    (29.2 )

  Income from operations                106,400            86,297       20,103       23.3
  Interest expense-net                   (2,987 )          (2,290 )       (697 )    (30.4 )
  Loss on retirement of debt                  -            (4,226 )      4,226      100.0

  Income from continuing
  operations before income
  tax expense                           103,413            79,781       23,632       29.6
  Income tax expense                    (42,507 )         (33,437 )     (9,070 )    (27.1 )

  Income from continuing
  operations                             60,906            46,344       14,562       31.4
  Income from discontinued
  operation, net of tax                       -                 9           (9 )   (100.0 )

  Net income                     $       60,906    $       46,353   $   14,553       31.4 %

                                              Fiscal Year Ended
                                       September 28,      September 30,
                                           2008               2007
             Revenue, net of
             subcontractor costs                100.0 %            100.0 %
             Other contract costs               (79.6 )            (80.2 )

             Gross profit                        20.4               19.8
             Selling, general and
             administrative
             expenses                           (11.9 )            (11.3 )

             Income from operations               8.5                8.5
             Interest expense-net                (0.2 )             (0.2 )
             Loss on retirement of
             debt                                   -               (0.4 )

             Income from continuing
             operations before
             income tax expense                   8.3                7.9
             Income tax expense                  (3.4 )             (3.3 )

             Income from continuing
             operations                           4.9                4.6
             Income from
             discontinued
             operation, net of tax                  -                  -

             Net income                           4.9 %              4.6 %

Revenue increased $591.4 million, or 38.1%, compared to fiscal 2007. We experienced broad-based growth in all client sectors and all reportable segments from organic and acquisitive revenue. Our U.S. federal government business continued to grow primarily as a result of the international development projects for USAID associated with our ARD acquisition, and increased workload on our Iraq-related and domestic projects for the DoD. This growth was partially offset by the completion of several large contracts in late fiscal 2007 with the DOE and NASA. Our state and local government business grew due to increased workload on our CSO projects and additional revenue from our strategic acquisitions. This growth was slightly offset by the conclusion of a large fiber-to-the-premises project. Our commercial business experienced strong growth due to increased demand for our wind and other alternative energy services, and to a lesser extent, wastewater treatment, landfill development, environmental engineering and telecommunications infrastructure projects.

Revenue, net of subcontractor costs, increased $232.6 million, or 23.0%, compared to fiscal 2007 for the reasons described above. The growth rate for revenue, net of subcontractor costs, was lower than that for revenue due to our increased use of subcontractors, and in some cases, higher subcontracting requirements for certain U.S. federal government work, particularly our reconstruction and UXO projects in Iraq and our USAID projects. Further, our program management activities on U.S. federal government contracts typically result in higher levels of subcontracting activities that are partially driven by government-mandated small business set-aside requirements.

Other contract costs increased $179.1 million, or 22.0%, compared to fiscal 2007. On a percentage change basis, the increase substantially corresponded to the increase in revenue, net of subcontractor costs. Additionally, our direct non-labor costs, as a percentage of revenue, net of subcontractor costs, increased primarily due to construction and international development projects. The increase was partially mitigated by favorable contract adjustments due to effective contract execution and risk management as well as claim settlements.

Gross profit increased $53.5 million, or 26.7%, compared to fiscal year 2007 for the reasons described above. As a percentage of revenue, net of subcontractor costs, gross profit was 20.4% and

19.8% in fiscal 2008 and 2007, respectively. The percentage increase resulted from higher-margin wind projects and improved performance on large fixed-priced contracts. This was partially offset by lower profit margins on the procurement of materials and supplies for construction and international development projects.

Selling, general and administrative ("SG&A") expenses increased $33.4 million, or 29.2%, compared to fiscal 2007. The increase resulted from supporting the growth of our business, our investment in marketing and business development efforts and an increase in employee profit-sharing compensation. To a lesser extent, we recognized additional SG&A expenses related to our new acquisitions and resolution of certain litigation claims. For fiscal 2007, our SG&A expenses were reduced by $5.7 million as a result of a favorable reversal on an outstanding litigation liability.

Net interest expense increased $0.7 million, or 30.4%, compared to fiscal 2007. The increase resulted from lower interest income from short-term cash investments, partially offset by lower interest expense on our debt due to lower interest rates.

In the first quarter of fiscal 2007, we elected to retire our senior secured notes and paid off the remaining principal balance of $72.9 million. In connection with this debt retirement, we incurred pre-payment premiums of $3.1 million and expensed the remaining unamortized deferred financing costs of $1.1 million. We reported an aggregate charge of $4.2 million related to early retirement of debt as part of our income from continuing operations.

Income tax expense increased $9.1 million, or 27.1%, compared to fiscal 2007, primarily due to an increase in pre-tax income. Our effective tax rate was 41.1% and 41.9% for fiscal 2008 and 2007, respectively.

Results of Operations by Reportable Segment

Resource Management

                                                Fiscal Year Ended

                              September 28,     September 30,           Change
                                  2008              2007             $           %
                                                 ($ in thousands)

      Revenue, net of
      subcontractor costs     $      849,039    $      638,890   $  210,149      32.9 %
      Other contract costs          (673,399 )        (510,941 )   (162,458 )   (31.8 )

      Gross profit            $      175,640    $      127,949   $   47,691      37.3 %

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

                                                    Fiscal Year Ended
                                             September 28,      September 30,
                                                 2008               2007
      Revenue, net of subcontractor costs             100.0 %            100.0 %
      Other contract costs                            (79.3 )            (80.0 )

      Gross profit                                     20.7 %             20.0 %

Revenue, net of subcontractor costs, increased $210.1 million, or 32.9%, compared to fiscal 2007. Our resource management segment experienced strong growth across all of its client sectors from organic and acquisitive revenue. In our U.S. federal government business, the growth was driven by

international development projects for USAID associated with our ARD acquisition and, to a lesser extent, increased activity on Iraq-related and domestic projects for the DoD. Our state and local government business grew as a result of our strategic acquisitions. Our commercial business experienced strong growth due to increased demand for our alternative energy services, including wind farm projects, as well as wastewater treatment, landfill development, environmental engineering and geotechnical services.

Other contract costs increased $162.5 million, or 31.8%, compared to fiscal . . .