<PAGE>   1
================================================================================





                UNITED STATES SECURITIES AND EXCHANGE COMMISSION
                            WASHINGTON, D.C.  20549

                         ______________________________
                                   FORM 10-Q

(Mark One)
                [X]      QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
                         SECURITIES EXCHANGE ACT OF 1934

                 FOR THE QUARTERLY PERIOD ENDED APRIL 30, 1997

                                       OR

                [ ]      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 1-7427


                                VERITAS DGC INC.
             (Exact name of registrant as specified in its charter)


<TABLE>
                 <S>                                                                              <C>
                                   DELAWARE                                                           76-0343152
                       (State or other jurisdiction of                                             (I.R.S. Employer
                        incorporation or organization)                                            Identification No.)

                 3701 KIRBY DRIVE, SUITE #112, HOUSTON, TEXAS                                            77098
                   (Address of principal executive offices)                                           (Zip Code)
</TABLE>
                                 (713) 512-8300
              (Registrant's telephone number, including area code)

                                   NO CHANGES
  (Former name, former address and former fiscal year, if changed since last
                                    report)

         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 /X/  No  / /

                     APPLICABLE ONLY TO CORPORATE ISSUERS:

         Indicate the number of shares outstanding of each of the issuer's
classes of common stock, as of the latest practicable date.

         The number of shares of the Company's common stock (the "Common
Stock"), $.01 par value, outstanding at May 31, 1997 was 18,865,901 (including
2,378,551 Veritas Energy Services Inc. exchangeable shares which are identical
to the Common Stock in all material respects.)

================================================================================

<PAGE>   2





                       VERITAS DGC INC. AND SUBSIDIARIES

                                     INDEX

<TABLE>
<CAPTION>
                                                                                                       Page
                                                                                                      Number
                                                                                                      ------
<S>          <C>                                                                                       <C>
PART  I.     Financial Information

             Item 1.  Financial Statements

             Consolidated Balance Sheets -
               July 31, 1996 and  April 30, 1997                                                        1

             Consolidated Statements of Operations -
               For the Three and Nine Months Ended April 30, 1996 and 1997                              3

             Consolidated Statements of Cash Flows -
               For the Nine Months Ended April 30, 1996 and 1997                                        4

             Notes to Consolidated Financial Statements                                                 7

             Item 2.  Management's Discussion and Analysis
                            of Financial Condition and Results of Operations                           13

PART  II.    Other Information

             Item 1.  Legal Proceedings                                                                18

             Item 6.  Exhibits and Reports on Form 8-K                                                 18
</TABLE>
<PAGE>   3





                         PART I.  FINANCIAL INFORMATION

ITEM 1.      FINANCIAL STATEMENTS

                       VERITAS DGC INC. AND SUBSIDIARIES
                     UNAUDITED CONSOLIDATED BALANCE SHEETS
        (In thousands of dollars, except par value and number of shares)


<TABLE>
                 <S>                                                                            <C>
                                                                                                  July 31,          April 30,
                                                                                                    1996              1997
                                                                                                -----------       -------------
                 ASSETS                                                                           (AS COMBINED - SEE NOTE 2)
                 Current assets:
                    Cash and short-term investments                                             $    10,072       $      14,131
                    Restricted cash investments                                                         327                 542
                    Accounts and notes receivable (net of allowance for
                        doubtful accounts:  July, $740; April, $484)                                 65,447             100,789
                    Materials and supplies inventory                                                  1,659               2,541
                    Prepayments and other                                                             8,199               9,306
                                                                                                -----------       -------------
                           Total current assets                                                      85,704             127,309

                 Property and equipment                                                             165,104             234,584
                 Less accumulated depreciation                                                       86,094             112,286
                                                                                                -----------       -------------
                           Property and equipment - net                                              79,010             122,298

                 Multi-client data library                                                           25,628              27,250

                 Investments in and advances to joint venture                                         1,463                 770

                 Goodwill (net of accumulated amortization:
                     July, $2,214; April, $2,601)                                                     3,674               3,287

                 Other assets                                                                         3,113               7,120
                                                                                                -----------       -------------
                               Total                                                             $  198,592       $     288,034
                                                                                                ===========       =============
</TABLE>



See Notes to Unaudited Consolidated Financial Statements.
<PAGE>   4



                                                                                




<TABLE>
<CAPTION>
                                                                                                 July 31,           April 30,
                                                                                                   1996                1997
                                                                                             --------------      --------------
                                                                                                  (AS COMBINED - SEE NOTE 2)
                 <S>                                                                           <C>              <C>
                 LIABILITIES AND STOCKHOLDERS' EQUITY                                          
                 Current liabilities:
                   Current maturities of long-term debt                                        $     13,739      $          484
                   Accounts payable - trade                                                          27,454              44,462
                   Accrued interest                                                                     313                 381
                   Other accrued liabilities                                                         19,905              30,580
                   Income taxes payable                                                               1,814               2,375
                                                                                               ------------      --------------
                           Total current liabilities                                                 63,225              78,282

                 Non-current liabilities:
                   Long-term debt - less current maturities                                          27,351              79,001
                   Other non-current liabilities                                                      2,093               3,103
                                                                                               ------------      --------------
                           Total non-current liabilities                                             29,444              82,104

                 Commitments and contingencies

                 Stockholders' equity:
                   Preferred stock, $.01 par value; authorized:
                      400,000 shares; none issued 
                   Common stock, $.01 par value; authorized:
                      40,000,000 shares; issued: 11,334,352 shares and
                      16,482,016 shares (excluding 2,378,551   
                      Exchangeable Shares) at July and April, respectively                              113                 165

                   Additional paid-in capital                                                       104,469             108,108

                   Retained earnings (from August 1, 1991
                      with respect to Digicon Inc.)                                                   2,275              20,036

                   Cumulative foreign currency translation adjustment                                  (934)               (661)
                                                                                               ------------      --------------
                            Total stockholders' equity                                              105,923             127,648
                                                                                               ------------      --------------
                                   Total                                                       $    198,592      $      288,034
                                                                                               ============      ==============
</TABLE>


See Notes to Unaudited Consolidated Financial Statements.
<PAGE>   5

<TABLE>
<CAPTION>
                                            VERITAS DGC INC. AND SUBSIDIARIES
                                     UNAUDITED CONSOLIDATED STATEMENTS OF OPERATIONS

                                         (In thousands, except per share amounts)

                                                                         Three Months Ended                 Nine Months Ended
                                                                              April 30,                         April 30,
                                                                   -------------------------------    -----------------------------
                                                                      1996              1997             1996             1997
                                                                   -------------    --------------    ------------    -------------
                                                                                      (As combined - See Note 2)
                 <S>                                              <C>                <C>                 <C>            <C>
                 Revenues                                          $      59,140      $    86,843        $ 181,683      $  253,939

                 Costs and expenses:
                     Cost of services                                     45,001           63,344          145,104         189,646
                     Depreciation and amortization                         6,953           10,142           20,000          28,662
                     Selling, general and administrative                   1,854            3,221            5,258           7,603
                     Other expense:
                        Interest                                           1,101            2,104            3,775           5,334
                        Merger related costs                                                                                   597
                        Other                                                226              535              270             811

                                                                  --------------     ------------         --------     -----------
                           Total costs and expenses                       55,135           79,346          174,407         232,653
                                                                  --------------     ------------         --------     -----------

                 Income before provision for income
                    taxes and equity in (earnings) loss
                    of 50% or less-owned companies
                    and joint ventures                                     4,005            7,497            7,276          21,286

                 Provision for income taxes                                1,159            1,341            2,287           4,260

                 Equity in (earnings) loss of 50% or less-
                    owned companies and joint ventures                        23               70             (793)           (735)
                                                                  --------------     ------------         --------     -----------
                 Net income                                       $        2,823     $      6,086         $  5,782     $    17,761
                                                                  --------------     ------------         --------     -----------

                 Per share of common stock:
                       Income per share of common stock           $          .16     $        .32         $    .33     $       .95
                                                                  ==============     ============         ========     ===========
                       Weighted average shares                            17,986           18,819           17,754          18,611
                                                                  ==============     ============         ========     ===========
                 Cash dividends                                        None              None                 None            None
                                                                  ==============     ============         ========     ===========
                                                                                                                               
</TABLE>
----------------------------
See Notes to  Unaudited Consolidated Financial Statements.





                                       3
<PAGE>   6
                                        
                       VERITAS DGC INC. AND SUBSIDIARIES
                UNAUDITED CONSOLIDATED STATEMENTS OF CASH FLOWS

                           (In thousands of dollars)
<TABLE>
<CAPTION>
                                                                                                       Nine Months Ended
                                                                                                           April 30,
                                                                                                   -------------------------
                                                                                                     1996             1997
                                                                                                   --------        ---------
                                                                                                   (As combined - See Note 2)

                 <S>                                                                             <C>               <C>
                 Operating activities:
                   Net income                                                                    5,782             17,761
                   Non-cash items included in net income:
                      Depreciation and amortization                                             20,000             28,662
                      Amortization of deferred gain on sale/leaseback                             (103)
                      Loss on disposition of property and equipment                                606                783
                      Equity in earnings of 50% or less-owned
                         companies and joint ventures                                             (793)              (735)
                      Write-down of multi-client data library to market                            297                989
                   Change in operating assets/liabilities:
                      Accounts and notes receivable                                              4,973            (35,342)
                      Materials and supplies inventory                                          (1,550)              (882)
                      Prepayments and other                                                     (1,401)            (1,107)
                      Multi-client data library                                                  2,422             (2,611)
                      Other                                                                     (2,749)            (1,588)
                      Accounts payable - trade                                                  (3,115)             9,303
                      Accrued interest                                                             (67)                68
                      Other accrued liabilities                                                   (568)            10,675
                      Income taxes payable                                                        (847)               561
                      Other non-current liabilities                                               (820)             1,010
                                                                                             ---------           -------- 
                           Total cash provided by operating activities                          22,067             27,547

                 Financing activities:
                   Borrowing of senior notes                                                                       75,000
                   Debt issue costs                                                                                (2,765)
                   Borrowings of long-term debt                                                  2,290                781
                   Payments of long-term debt                                                  (10,500)           (25,584)
                   Net payments under credit agreements                                         (3,467)            (8,118)
                   Payment of secured term loans                                                                  (10,072)
                   Net proceeds from sale of common stock                                          816              3,691
                   Net proceeds from sale of treasury stock                                      3,972
                                                                                             ---------           -------- 
                          Total cash provided (used) by financing activities                    (6,889)            32,933

</TABLE>
                 -------------------------
                 See Notes to Unaudited Consolidated Financial Statements.





                                       4
<PAGE>   7
                                        
                       VERITAS DGC INC. AND SUBSIDIARIES
          UNAUDITED CONSOLIDATED STATEMENTS OF CASH FLOWS (CONTINUED)

                           (In thousands of dollars)
<TABLE>
<CAPTION>

                                                                                                       Nine Months Ended
                                                                                                           April 30,
                                                                                                   --------------------------
                                                                                                     1996             1997
                                                                                                   ---------       ----------
                                                                                                   (As combined - See Note 2)
                 <S>                                                                             <C>               <C>
                 Investing activities:
                   (Increase) decrease in restricted cash investments                                331               (215)
                   (Increase) decrease in investment in and advances to joint venture               (269)             1,428
                   Purchase of property and equipment                                            (12,070)           (59,063)
                   Sale of property and equipment                                                    650                812
                   Other                                                                             (22)
                                                                                                 -------            -------        
                       Total cash used by investing activities                                   (11,380)           (57,038)
                             
                 Currency (gain) loss on foreign cash                                                (77)               617
                                                                                                 -------            -------    
                 Change in cash and cash equivalents                                               3,721              4,059

                 Beginning cash and cash equivalents balance                                       6,691             10,072
                                                                                                 -------            -------       
                 Ending cash and cash equivalents balance                                         10,412             14,131

</TABLE>



--------------------
See Notes to Unaudited Consolidated Financial Statements.


                                       5
<PAGE>   8

                       VERITAS DGC INC. AND SUBSIDIARIES
   UNAUDITED SUPPLEMENTARY SCHEDULES TO CONSOLIDATED STATEMENTS OF CASH FLOWS

                           (In thousands of dollars)
<TABLE>
<CAPTION>

                                                                                                       Nine Months Ended
                                                                                                           April 30,
                                                                                                  ----------------------------
                                                                                                     1996             1997
                                                                                                   ---------        ----------
                                                                                                   (As combined - See Note 2)
                 <S>                                                                                   <C>               <C>
                 Schedule of non-cash investing and financing activities:

                 Increase in property and equipment for:
                   Equipment purchase obligations                                                     $5,529            $6,388
                   Accounts payable - trade                                                              232             7,705
                   Accounts and notes receivable - deferred credits utilized                             866

                 Supplemental disclosures of cash flow information:

                 Cash paid for:
                    Interest -
                      Senior notes                                                                                       3,494
                      Revolving credit agreements                                                      1,408               236
                      Secured term loans                                                                 363               274
                      Equipment purchase obligations                                                   1,428               755
                      Other                                                                              620               278
                    Income taxes                                                                       4,614             1,589
</TABLE>


                                       6
<PAGE>   9
                                        
                       VERITAS DGC INC. AND SUBSIDIARIES
              NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS




1.       SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

         Opinion of Management

         In the opinion of Management, the accompanying unaudited consolidated
         financial statements contain all adjustments of a normal and recurring
         nature necessary to present fairly the financial position of Veritas
         DGC Inc. and subsidiaries (the "Company") at April 30, 1997, and the
         results of its operations and its cash flows for the three and nine
         months ended April 30, 1996 and 1997.  The results of operations for
         any interim period are not necessarily indicative of the results to be
         expected for a full year as such results could be affected by changes
         in demand for geophysical services and products, which is directly
         related to the level of oil and gas exploration and development
         activity.  Governmental actions, foreign currency exchange rate
         fluctuations, seasonal factors, weather conditions and equipment
         problems also could impact future operating results.

         Earnings Per Share

         Weighted average shares and earnings per share for all periods
         presented have been restated to reflect the effect of shares issuable
         upon exchange of Veritas Energy Services Inc. exchangeable shares.

         Earnings per share are based on the weighted average number of
         shares of common stock and Exchangeable Shares.  Shares issuable upon
         the conversion of stock options and warrants, which are common stock
         equivalents, are disregarded since the treasury stock method of
         calculation resulted in dilution of less than 3%.

         Multi-Client Data Library

         The Company collects and processes certain seismic data for its own
         account to which it retains all ownership rights and which it resells
         to clients on a non-transferable, non-exclusive basis.  The Company
         may obtain precommitted sales contracts to help fund the cash
         requirements of these surveys  which generally last from 5 to 7
         months.  The Company capitalizes a portion of the survey costs using
         an estimated sales method.  Under that method the amount capitalized
         equals actual costs incurred less costs attributed to the precommitted
         sales contracts based on the percentage of total estimated costs to
         total estimated sales  multiplied by actual sales.  The capitalized
         cost of multi-client data library is likewise charged to  operations
         in the period subsequent sales occur based  on the percentage of total
         estimated costs to total  estimated sales multiplied by actual  sales.
         Beginning in fiscal 1997, the  Company  changed  the  estimated life
         of  its


                                       7
<PAGE>   10
         multi-client data library  so that any  costs remaining  24 months
         after completion of  a survey  are charged to operations over  a
         period not to  exceed 24 months.   The Company periodically  reviews
         the carrying  value  of the  multi-client  data library  to  assess
         whether there  has  been  a permanent impairment of  value and
         records losses when the  total estimated costs exceed  total estimated
         sales or  when it is determined that estimated sales would not be
         sufficient  to cover the carrying value of the asset.

         New Accounting Pronouncements

         In March 1995, the Financial Accounting Standards Board ("FASB")
         issued Statement of Financial Accounting Standards ("SFAS") No. 121
         "Accounting for Impairment of Long-Lived Assets and for Long-Lived
         Assets to Be Disposed Of."  This statement establishes accounting
         standards for the impairment of long-lived assets, certain
         identifiable intangibles and goodwill related to those assets to be
         held and used and for long-lived assets and certain identifiable
         intangibles to be disposed of.  This statement is effective for
         financial statements with fiscal years beginning after December 15,
         1995.  The Company implemented this statement at the beginning of the
         fiscal year 1997.  Implementation of this pronouncement did not have a
         material effect on the Company's consolidated financial statements.

         In October 1995, the FASB issued SFAS No. 123 "Accounting for Stock
         Based Compensation."  This statement establishes a fair value method
         of accounting for stock-based compensation plans either through
         recognition or disclosure.  This statement is effective for fiscal
         years beginning after December 15, 1995.  The Company will be required
         to implement this statement for the fiscal year 1997.  The Company
         intends to adopt this standard by disclosing the pro forma net income
         (loss) and net income (loss) per share amounts assuming the fair value
         method was adopted on August 1, 1995.  The adoption of this statement
         will have no material impact on the Company's consolidated financial
         statements.

         In February 1997, the FASB issued SFAS No. 128 "Earnings per Share."
         This statement requires the computation of basic earnings per share
         based upon weighted-average common shares outstanding and diluted
         earnings per share based upon weighted-average common shares
         outstanding and additional common shares that would have been
         outstanding if dilutive potential common shares had been issued under
         the treasury stock method using average market prices.  In addition,
         previously reported earnings per share must be restated.  This
         statement is effective for interim and annual periods ending after
         December 15, 1997.  Basic earnings per share will not differ from
         previously reported primary earnings per share amounts.  Diluted
         earnings per share will include the effect of using average market
         price for the period instead of the higher of average market price or
         end of period price under the treasury stock method.  In addition,
         diluted earnings per share will be presented for all prior periods
         where fully diluted earnings per share were not previously required
         because dilutive potential common shares did not result in more than
         3% dilution.  Diluted earnings per share are not expected to differ
         materially from basic earnings per share.


                                       8
<PAGE>   11
                                                                                
2.       BUSINESS COMBINATION

         Veritas DGC Inc. was formerly named Digicon Inc. ("Digicon").  On
         August 30, 1996, Digicon and Veritas Energy Services Inc. ("VES"), a
         Canadian company, consummated a business combination (the
         "Combination").

         Presented below is the effect of the pooling of interests on the
         Company's reported results of operations.  Amounts related to VES have
         been converted into the Company's reporting currency, U.S. dollars,
         using weighted average exchange rates prevailing during the period and
         reflect adjustments for differences between U.S. and Canadian
         generally accepted accounting principles ("GAAP") and
         reclassifications to conform financial statement presentation.
         Canadian to U.S. GAAP adjustments include adjustments to (i) write off
         foreign exchange losses on borrowings which are deferred and amortized
         over the period of the debt reducing net income by approximately
         $47,000 and $154,000 for the three and nine months ended April 30,
         1996, respectively, and (ii) reverse the effect of a prior period
         adjustment increasing net income by approximately $90,000 for the nine
         months ended April 30, 1996.  Reclassifications of $6,127,000 and
         $23,956,000 for the three and nine months ended April 30, 1996,
         respectively, have been made to net amounts billed to customers for
         reimbursable costs against VES' revenues.


<TABLE>
<CAPTION>
                                                                  Three Months              Nine Months
                                                                     Ended                     Ended
                                                                   April 30,                 April 30,
                                                                      1996                     1996
                                                             ----------------------    ----------------------
                                                                       (In thousands of dollars, except per
                                                                             share amounts)
         <S>                                                 <C>             <C>       <C>           <C>
         Revenues:
            Digicon                                           $              35,785     $            112,214
            VES                                                              29,482                   93,425
            Reclassifications                                                (6,127)                 (23,956)
                                                              ---------------------      -------------------
               Total                                          $              59,140      $           181,683
         
         Net income:
            Digicon                                           $               1,864      $             3,693
            VES                                                               1,006                    2,153
            Adjustments                                                         (47)                     (64)
                                                              ---------------------      -------------------
               Total                                          $               2,823      $             5,782
                                                              =====================      ===================
         
         
         Net income per share:
            As previously reported                            $                 .17      $               .34
                                                              =====================      ===================
            As restated                                       $                 .16      $               .33
                                                              =====================      ===================
</TABLE>

         There were no material adjustments to the net assets of VES as a
         result of adopting the same accounting principles as the Company.

                                      9

<PAGE>   12
                                                                                
         During the nine months ended April 30, 1997, the Company incurred
         $597,000 of costs associated with the Combination.  These costs consist
         primarily of professional fees and include $150,000 payable to a
         stockholder who was the former Chairman of the Board of Directors for
         consulting services rendered in conjunction with the Combination.

3.       INVESTMENT IN INDONESIAN JOINT VENTURE

         Summarized financial information for the Company's Indonesian joint
         venture which is accounted for under the equity method is as follows:

<TABLE>
<CAPTION>
                                                              Three Months Ended                 Nine Months Ended
                                                                  April 30,                          April 30,
                                                         ----------------------------      -----------------------------
                                                            1996              1997             1996              1997
                                                         ---------         ----------       ----------        ----------
                                                                           (In thousands of dollars)
         <S>                                               <C>              <C>              <C>               <C>
         Revenues                                          $     494        $     718       $    2,311         $   4,954
                                                                 
         Cost of services                                        424              717            1,213             3,761
         Depreciation and amortization                            87               79              300               469
         Other                                                   (40)              (8)               5               (11)
                                                            --------        ---------       ----------         ---------
                   Total                                         471              788            1,518             4,219
                                                            --------        ---------       ----------         ---------
         Net income                                         $     23       $      (70)      $      793         $     735
                                                            ========        =========       ==========         =========         
</TABLE>
4.       LONG-TERM DEBT

         The Company's long-term debt is as follows:
<TABLE>
<CAPTION>
                                                                              July 31,           April 30,
                                                                                1996                1997
                                                                          ---------------   ----------------
         
                                                                               (As combined - See Note 2)
                                                                                (In thousands of dollars)
         <S>                                                              <C>                <C>
         Senior notes due October 2003, at 9 3/4%                                            $       75,000
         Revolving credit agreement due July 1998, at
            LIBOR plus 2% or prime (8.5% at April 30, 1997)               $       11,458              3,340
         Secured term loan due July 1999, at prime plus  3/4%                      6,000
         Secured term loan due July 1999, at prime plus  1/2%                      1,240
         Secured term loan due July 1999, at prime plus  1/2%                      2,832
         Equipment purchase obligations maturing through,
            September 2000, at a weighted average rate of 9.1%
            at April 30, 1997                                                     19,319              1,145
         Mortgage note payable due October 2005, at 10%                              241
                                                                           -------------      -------------
                     Total                                                        41,090             79,485
         Less current maturities                                                  13,739                484
                                                                           -------------      -------------
                     Due after one year                                    $      27,351      $      79,001
                                                                           =============      =============
</TABLE>


                                      10

<PAGE>   13
                                                                                
         The senior notes are due in October 2003 with interest payable
         semi-annually at 9 3/4%.  The senior notes are unsecured and are
         effectively subordinated to secured debt of the Company with respect
         to the assets securing such debt and to all debt of its subsidiaries
         whether secured or unsecured.  The indenture relating to the senior
         notes contains certain covenants which limit the Company's ability to,
         among other things, incur additional debt, pay dividends and complete
         mergers, acquisitions and sales of assets.  Upon a change in control
         of the Company, as defined in the indenture, the holders of the senior
         notes have the right to require the Company to purchase all or a
         portion of such holder's senior note at a price equal to 101% of the
         aggregate principal amount.  The Company has the right to redeem the
         senior notes, in whole or in part, on or after October 15, 2000.
         Under certain conditions, the Company may redeem up to $20.0 million
         in aggregate principal amount of the senior notes prior to October 15,
         1999.

         The revolving credit agreement due July 1998 is with a commercial bank
         and, as of April 30, 1997, provides a facility of up to $15.0 million.
         In June 1997, the revolving credit agreement was amended to provide
         advances up to $25.0 million of which $20.0 million are secured as
         discussed below.  Advances are secured by substantially all of the
         receivables of the Company, bear interest, at the Company's election,
         at LIBOR plus two percent or prime rate and are limited by a borrowing
         formula.  Covenants in the agreement limit, among other things, the
         Company's right, without consent of the lender, to take certain
         actions, including creating indebtedness and paying dividends, and
         limit the Company's capital expenditures in any fiscal year.  In
         addition, the agreement requires minimum  cash flow coverage and the
         maintenance of minimum tangible net worth, limits the ratio of funded
         debt to total capitalization, and requires the Company to maintain a
         minimum current ratio.

         The secured term loan due July 1999 was with a commercial bank, was
         due in 36 monthly installments of $166,667 plus interest at prime plus
         3/4% and was secured by a majority of the assets of the Company
         (except those assets directly or indirectly owned by VES).  The
         secured term loan was paid with proceeds from the senior notes.

         The secured term loans due July 1999 provided for advances for
         equipment purchases up to Canadian $4.0 million and Canadian $5.5
         million, respectively, and advances were payable in 36 equal monthly
         installments.  Advances bore interest at the prime rates (as defined)
         plus 1/2% and were secured by the equipment purchased.  The
         agreements required VES to maintain certain financial ratios.
         Advances under the secured term loans were paid with proceeds from the
         senior notes.

         The Company's equipment purchase obligations represent installment
         loans and capitalized lease obligations primarily related to computer
         and seismic equipment.  Substantially all the equipment purchase
         obligations were paid with proceeds from the senior notes.

         The mortgage note was payable in monthly installments of Canadian
         $4,800 including interest at 10% and was secured by a building.  The
         mortgage note was paid with proceeds from the senior notes.



                                      11
<PAGE>   14
                                                                                
5.       COMMITMENTS AND CONTINGENCIES

         On May 16, 1997, the Company entered into a 96 month charter agreement
         for a vessel which is being constructed by a shipbuilder for the
         owner.  The charter is noncancellable unless the owner exercises its
         right to cancel the shipbuilding contract due to late delivery (in
         excess of 180 days of the scheduled delivery time of May 31, 1998).

6.       SHAREHOLDER RIGHTS AGREEMENT

         On May 27, 1997, the board of directors of the Company declared a
         distribution of one right for each outstanding share of common stock
         or exchangeable share to shareholders of record at the close of
         business on June 12, 1997 and authorized 400,000 shares of a class of
         preferred stock to be distributed under a shareholder rights
         agreement.  Upon the occurrence of certain events enumerated by the
         shareholder rights agreement, each right entitles the registered
         holder to purchase a fraction of a share of the Company's authorized
         preferred stock or the common stock of an acquiring company.  The
         rights, among other things, will cause substantial dilution to a
         person or group that attempts to acquire the Company.  The rights
         expire on May 15, 2007 but may be redeemed earlier.

7.       OTHER EXPENSE
         Other expense consists of the following:

<TABLE>
<CAPTION>
                                                                      Three Months Ended                 Nine Months Ended
                                                                          April 30,                          April 30,
                                                                ------------------------------     -----------------------------
                                                                   1996               1997             1996              1997
                                                                ----------         ----------      -----------       -----------
                                                                                   (As combined - See Note 2)
                                                                                   (In thousands of dollars)
                 <S>                                            <C>               <C>              <C>              <C>

                 Net foreign currency exchange (gain) loss      $        (53)     $       253      $       (24)     $       477
                 Net loss on disposition of
                    property and equipment                               246              344              606              783
                 Interest income                                        (104)             (47)            (399)            (425)
                 Other                                                   137              (15)              87              (24)
                                                                ------------      -----------      -----------      -----------
                           Total                                $        226      $       535      $       270      $       811
                                                                ============      ===========      ===========      ===========
</TABLE>



                                      12

<PAGE>   15
Item 2.      MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
             CONDITION AND RESULTS OF OPERATIONS

Liquidity and Capital Resources

The Company's internal sources of liquidity are cash, short-term investments
and cash flow from operations.  External sources include the unutilized portion
of a revolving credit facility, equipment financing and trade credit.

The Company requires significant amounts of working capital to support its
operations and to fund capital spending and research and development programs.
The Company's foreign operations require greater amounts of working capital
than similar domestic activities, as the average collection period for foreign
receivables is generally longer than for comparable domestic accounts.
Approximately 55% of revenues for the nine months ended April 30, 1997 were
attributable to the Company's export sales and foreign operations.  In
addition, the Company has increased its participation in multi-client data
surveys and has significantly expanded its library of multi-client data.
Because of the lead time between survey execution and sale, multi-client data
surveys generally require greater amounts of working capital than contract
work.  Depending on timing of future sales of the data and the collection of
the proceeds from such sales, the Company's liquidity will continue to be
affected; however, the Company believes that these non-exclusive surveys have
good long-term sales, earnings and cash flow potential.

The Company maintains a $25.0 million revolving credit facility, as amended
(the "Credit Facility"), with a commercial bank which will mature in July 1998.
Advances up to $20.0 million under the Credit Facility are secured by
substantially all of the Company's receivables.  All advances bear interest, at
the Company's election, at LIBOR plus two percent or prime rate and are limited
by a borrowing formula which, based on current levels of receivables, results
in a borrowing base well in excess of the maximum commitment. Covenants in the
Credit Facility prohibit the payment of cash dividends and limit, among other
things, the Company's right to create indebtedness  and make capital
expenditures over a certain amount in any fiscal year.  In addition, the Credit
Facility requires minimum cash flow coverage and the maintenance of minimum
tangible net worth, limits the ratio  of funded debt to total capitalization,
and requires the Company to maintain a minimum current ratio.

In October 1996, the Company completed a $75.0 million public offering of
Senior Notes, which generated approximately $72.2 million of net proceeds.  The
indenture relating to the Senior Notes (the "Indenture") contains certain
covenants, including covenants that limit the Company's ability to, among other
things, incur additional debt, pay dividends and complete mergers, acquisitions
and sales of assets.  Upon a change of control of the Company (as defined in
the Indenture)  holders of the Senior Notes have the right to require the
Company to purchase all or a portion of such holder's Senior Note at a price
equal to 101% of the aggregate principal amount.  Interest is payable
semi-annually beginning April 1997.  Approximately $49.8 million of the net
proceeds from the Senior Notes was used to retire outstanding  indebtedness of
the Company.  The  remaining net proceeds were used to fund a portion of the
Company's $80.0 million capital  expenditure budget for fiscal 1997.  Of the
Company's $80.0 million capital  expenditure  budget for  fiscal  1997,
approximately $10.3



                                      13
<PAGE>   16

million represents  capital spending necessary to maintain the Company's
operating equipment and the remainder is for discretionary capital spending,
including approximately $22.0 million for the replacement of older operating
equipment with a view of substantially enhancing operating efficiency and $47.7
million for expansion of its equipment to meet increased demand for seismic
services.  It is anticipated that the balance of the 1997 capital expenditure
budget will be financed from internally generated funds, and, if necessary,
from the Credit Facility or other borrowings permitted by the Indenture and
Credit Facility.

In June 1997, the Company has proposed an Offering (the "Offering") of 
3,000,000 shares of common stock.  Net proceeds from the proposed Offering,
estimated at $62.9 million ($72.4 million if the underwriters' over-allotment
option is exercised in full) would be used to fund a portion of the Company's
1998 capital expenditure program of $75.0 million and other general corporate
purposes, including working capital, possible repurchases of outstanding Senior
Notes and possible acquisitions. No repurchases will be made of outstanding
Senior Notes, except at prices which are, at the time of any such repurchase,
regarded by the Company to be attractive. Accordingly there can be no assurance
that any such repurchases will be made. While the Company regularly evaluates
opportunities to acquire complementary businesses, it has made no present
agreements or commitments, except as described below, with respect to possible
acquisitions and no estimate can be made as to the amount of net proceeds which
ultimately may be used for acquisitions. The Company has recently entered into a
letter of intent to purchase a land acquisition company in the Middle East for
approximately $10.0 million. The acquisition is subject to due diligence and
definitive documentation and there is no assurance that the acquisition will be
consummated. 

The Company will require substantial cash flow to continue operations on a
satisfactory basis, complete its capital expenditure and research and
development programs, and meet its principal and interest obligations with
respect to the outstanding indebtedness.  The Company anticipates that cash and
short-term investments, cash flow generated from operations, borrowings
permitted under the Indenture and Credit Facility and net proceeds from the
proposed Offering will provide sufficient liquidity to fund these requirements
through fiscal 1998.  However, the Company's ability to meet its debt service
and other obligations depends on its future performance, which, in turn, is
subject to general economic conditions, business and other factors beyond the
Company's control.  If the Company is unable to generate sufficient cash flow
from operations or otherwise to comply with the terms of the Credit Facility or
the Indenture, it may be required to refinance all or a portion of its existing
debt or obtain additional financing.  There can be no assurance that
the Company would be able to obtain such refinancing or financing, or that any
refinancing or financing would result in a level of net proceeds required.




                                      14
<PAGE>   17
Results of Operations

Three Months Ended April 30, 1997 compared with Three Months Ended April 30,
1996.

Revenues.  Land and transition zone revenues in the third quarter increased
$12.8 million or 43% over the same period last year. The Company increased the
number of channels used from 15,000 to 22,700 primarily as a result of larger
channel requirements for the U.S. highlands and transition zone markets. The
U.S. and South American land markets continue to experience high activity levels
resulting in contracts with longer terms, improved prices and more weather
protection clauses.  An unseasonably high market demand for crews in Canada also
contributed to the increase in revenues in the current quarter. Marine revenues
were $1.5 million or 12% higher than the same quarter of the prior year
primarily due to improved production.  The marine vessels Polar Search, Polar
Princess and two of the three vessels in a multi-boat operation have been
upgraded to Syntron equipment and are acquiring multi-client data in the Gulf of
Mexico.  Demand remains high in Southeast Asia for the marine vessels Ross Seal
and the Acadian Searcher.

Revenues from the Company's data processing operations increased $6.1 million or
43% over the same period last year.  The increased capacity due to the
installation of new KittyHawk, Sun and NEC hardware is being utilized by
expanding workloads from both contract and multi-client data library projects
and introduction of new technology has improved productivity.  The Company has
opened two new centers in Australia and Abu Dhabi and will install an NEC
supercomputer in the London center to meet this increasing demand.

Multi-client data sales increased by $7.0 million or 191% over the same period
last year.  The higher data sales reflect increased activity levels in the North
Sea and Gulf of Mexico markets.  Surveys in the Shetland-Faroes area and the
Gulf of Mexico deepwater basin are planned over the coming months and are in
various stages of prefunding.  The Company completed its first land data library
project in the U.S. during the quarter and is preparing additional projects
beginning in the fourth quarter of the current fiscal year.

Operating Expenses.  Costs of services increased $18.3 million or 41% over the
same period last year but as a percent of revenues decreased from 76% to 73%.
The improvement in operating margins is attributable to higher prices and
better equipment utilization and production for all service groups as discussed
above.

Depreciation and Amortization.  Depreciation and amortization expense increased
46% from $7.0 million to $10.1 million due to the significant 1997 capital
expenditure program which included the upgrade of equipment and increase in
capacity discussed above.




                                      15
<PAGE>   18

Selling, General and Administrative.  Selling, general and administrative
expenses increased 74% from $1.9 million to $3.2 million, resulting primarily
from costs incurred in a more aggressive marketing strategy and in implementing
new administrative and accounting data processing systems.

Interest.  Interest expense increased $1.0 million due to increased debt levels
to finance the Company's 1997 capital expenditure program.

Other.  Other expense increased $309,000 resulting primarily from net foreign
currency losses.

Income Taxes.  Provision for income taxes increased $182,000 relating to the
increased profitability of the Company, however, the effective tax rate was
reduced in the current year by restructuring the operations of certain of the
Company's subsidiaries.

Nine Months Ended April 30, 1997 compared with Nine Months Ended April 30,
1996.

Revenues.  Land and transition zone data acquisition revenues for the year
increased $39.1 million or 45% over the same period last year.  The increase is
attributable to an increase in demand and capacity and improving contract terms
as previously discussed.

Marine acquisition revenues were $10.7 million or 33% higher than the same
period of the prior year primarily due to increased utilization of the
Company's vessels, higher productivity due to upgrading existing vessels with
Syntron equipment and the addition of the Polar Princess in the first quarter
of fiscal 1997.

Data processing operations increased $11.8 million or 28% over the same period
last year due to increased capacity and increased volumes of marine data
available for processing.  The Company has substantially upgraded its
processing centers and will be adding a NEC supercomputer in London.  The 
Company also added new centers in Abu Dhabi, Australia, Ecuador and Oklahoma.

Multi-client data sales rose by $10.7 million or 52% over the same period last
year due to increasing customer interest in the North Sea and Gulf of Mexico
multi-client data surveys, especially in the deepwater and subsalt areas of the
Gulf.  The Company also plans to add additional land data library surveys.

Operating Expenses.  Costs of services increased $44.5 million or 31%, but as a
percent of revenues decreased from 80% to 75%.  The improvement in operating
margins is attributable to higher prices and better equipment utilization and
production for all service groups as discussed above.

Selling, General and Administrative.  Selling, general and administrative
expenses increased 45% from $5.3 million to $7.6 million, resulting primarily
from costs incurred in a more aggressive marketing strategy and in implementing
new administrative and accounting data processing systems.



                                      16
<PAGE>   19

Depreciation and Amortization.  Depreciation and amortization expense increased
43% from $20.0 million to $28.7 million due to the significant 1997 capital
expenditure program.

Interest.  Interest expense increased $1.5 million due to increased debt levels
to finance the Company's 1997 capital expenditure program.  The company issued
$75 million of senior notes during the current year.

Merger Related Costs.  Merger related costs are a result of the Combination
discussed in Note 2 of Notes to the Unaudited Consolidated Financial
Statements. These costs include $150,000 payable to a stockholder who was the
former chairman of the board of directors for consulting services in connection
with the Combination.

Other.  Other expense increased $541,000 primarily due to net foreign currency
exchange losses.

Income Taxes.  Provision for income taxes increased from $2.3 million to $4.3
million as a result of increased profitability of the Company, however, the
effective tax rate was reduced in the current year by restructuring the
operations of certain of the Company's subsidiaries.









                                      17

<PAGE>   20

                                                                                
                          PART II.  OTHER INFORMATION

Item 1.  Legal Proceedings

The Company is not a party to, nor is its property the subject of, any material
pending legal proceedings, as defined by relevant rules and regulations of the
Securities and Exchange Commission.

Item 6.  Exhibits and Reports on Form 8-K

a)     Exhibits filed with this report:

     2)    Combination Agreement dated as of May 10, 1996, between Digicon Inc.
           and Veritas Energy Services Inc. (Incorporated herein by reference to
           Exhibit 2.1 of Digicon Inc.'s Current Report on Form 8-K dated May
           10, 1996)

     3-A)  Restated Certificate of Incorporation of Veritas DGC Inc. dated
           August 30, 1996.  (Exhibit 3.1 to Veritas DGC Inc.'s Current Report
           on Form 8-K dated September 16, 1996 is incorporated herein by
           reference.)

     3-B)  Certificate of Ownership and Merger of New Digicon Inc. and Digicon
           Inc. (Exhibit 3-B to Digicon Inc.'s Registration Statement No.
           33-43873 dated November 12, 1991 is incorporated herein by
           reference.)

     3-C)  By-laws of New Digicon Inc. dated June 24, 1991 (Exhibit 3-I to
           Digicon Inc.'s Form 10-K for the year ended July 31, 1991, is
           incorporated herein by reference.)

     4-A)  Specimen certificate for Senior Notes.  (Included as part of Section
           2.2 of Exhibit 4-B to Veritas DGC Inc.'s Registration Statement No.
           333-12481 dated September 20, 1996 is incorporated herein by
           reference.)

     4-B)  Form of Trust Indenture relating to the 9 3/4% Senior Notes due 2003
           of Veritas DGC Inc. between Veritas DGC Inc. and Fleet National
           Bank, as trustee. (Exhibit 4-B to Veritas DGC Inc.'s Registration
           Statement No. 333- 12481 dated September 20, 1996 is incorporated
           herein by reference.)

     4-C)  Specimen Veritas DGC Inc. common stock certificate.  (Exhibit 4-C to
           Veritas DGC Inc.'s Form 10-K for the year ended July 31, 1996, is
           incorporated herein by reference.)

     4-D)  Rights Agreement between Veritas DGC Inc. and ChaseMellon
           Shareholder Services, L.L.C. dated as of May 15, 1997. (Incorporated
           by reference to Exhibit 4.1 of Veritas DGC Inc.'s Current Report on
           Form 8-K filed May 27, 1997)

    10-A)  Salary Continuation Agreement executed by Nicholas A. C. Bright.
           (Incorporated herein by reference to Exhibit 10-E of Digicon Inc.'s
           Annual Report on Form 10-K for the year ended July 31, 1994.)

   *10-B)  Employment Agreement executed by Stephen J. Ludlow.


                                      18

<PAGE>   21
                                                                                
   10-C)   Asset Purchase Agreement dated August 31, 1994, between Syntron,
           Inc. and Digicon Geophysical Corp., Euroseis, Inc., Digicon/GFS Inc.
           and Digicon Inc. (Incorporated herein by reference to Exhibit 10-M
           of Digicon Inc.'s Annual Report on Form 10-K for the year ended July
           31, 1994.)

   10-D)   1992 Non-Employee Director Stock Option Plan.  (Incorporated herein
           by reference to Exhibit 10-T of Digicon Inc.'s Amendment No. 3 to
           Registration Statement No. 33-54384, dated December 17, 1992.)

   10-E)   Amended and Restated 1992 Employee Nonqualified Stock Option Plan.
           (Incorporated herein by reference to Exhibit 10-E of Veritas DGC
           Inc.'s Amendment No. 1 to Registration Statement No. 333-12481,
           dated October 2, 1996.)

   10-F)   Support Agreement dated August 30, 1996, between Digicon Inc. and
           Veritas Energy Services Inc. (Incorporated herein by reference to
           Exhibit 10.1 of Veritas DGC Inc.'s Current Report on Form 8-K, dated
           August 30, 1996.)

   10-G)   Credit Agreement dated July 18, 1996, among Digicon Inc. and Digicon
           Geophysical Corp., Digicon/GFS Inc., Digicon Geophysical Limited and
           Digicon Exploration, Ltd., as Borrowers, each of the banks named
           therein, and Wells Fargo Bank (Texas), National Association, as
           issuing bank, as a bank and as agent for the banks (the "Credit
           Agreement") (Incorporated herein by reference to Exhibit 10-G of
           Veritas DGC Inc.'s Amendment No. 1 to Registration Statement No.
           333-12481, dated October 2, 1996.)

   10-H)   Letter dated September 27, 1996, from Wells Fargo Bank (Texas),
           National Association, agreeing to amend the Credit Agreement
           (Incorporated herein by reference to Exhibit 10-H of Veritas DGC
           Inc.'s Amendment No. 1 to Registration Statement No. 333-12481,
           dated October 2, 1996.)

  *10-I)   Employment Agreement executed by Anthony Tripodo.

  *10-J)   Letter dated May 28, 1997, from Wells Fargo Bank (Texas) National
           Association, agreeing to amend the Credit Agreement.

  *11)     Computation of income per common and common equivalent share for the
           three and nine months ended April 30, 1996 and 1997.

  *27)     Financial Data Schedule.


* Filed herewith

b)     Reports on Form 8-K
      1)        A Form 8-K dated May 27, 1997 reported a shareholder rights
                agreement approved by the board of directors on May 27, 1997.




                                      19
<PAGE>   22
                                                                                
                                   SIGNATURES


Pursuant to the requirements 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.



                                   
                                                      VERITAS DGC INC.
                                         ---------------------------------------
                                                        (Registrant)
                                   
                                   
                                   
                                   
Date:     June 9, 1997               By:           /s/ David B. Robson
      ------------------------           ---------------------------------------
                                                       David B. Robson
                                                   (Chairman of the Board
                                                and Chief Executive Officer)
                                   
                                   
                                   
Date:     June 9, 1997               By:            /s/ Anthony Tripodo
      ------------------------           ---------------------------------------
                                                        Anthony Tripodo
                                             (Chief Accounting and Financial Off





                                       20
<PAGE>   23

                                EXHIBIT INDEX


  *10-B)   Employment Agreement executed by Stephen J. Ludlow.

  *10-I)   Employment Agreement executed by Anthony Tripodo.

  *10-J)   Letter dated May 28, 1997, from Wells Fargo Bank (Texas), National
           Association, agreeing to amend the Credit Agreement.

  *11)     Computation of income per common and common equivalent share for the
           three and nine months ended April 30, 1996 and 1997.

  *27)     Financial Data Schedule.

* Filed herewith