<PAGE>

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

                       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, 2003

                                       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)

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

               10300 TOWN PARK
                HOUSTON, TEXAS                            77072
   (Address of principal executive offices)             (Zip Code)

                                 (832) 351-8300
              (Registrant's telephone number, including area code)

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

      TITLE OF EACH CLASS              NAME OF EACH EXCHANGE ON WHICH REGISTERED
      -------------------              -----------------------------------------
 Common Stock, $.01 par Value                    New York Stock Exchange
Preferred Stock Purchase Rights                  New York Stock Exchange

     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 [ ]

     Indicate by check mark whether the registrant is an accelerated filer (as
defined in Rule 12b-2 of the Exchange Act). 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, $.01 par value,
outstanding at May 30, 2003 was 33,503,081 (including 1,443,411 Veritas Energy
Services Inc. exchangeable shares which are identical to the Common Stock in all
material respects).

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

<PAGE>

                                TABLE OF CONTENTS

                                    FORM 10-Q

                                      INDEX

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

             Item 1.   Financial Statements

                Consolidated Statements of Operations and Comprehensive Income -
                  For the Three and Nine Months Ended April 30, 2003 and 2002                            1

                Consolidated Balance Sheets - April 30, 2003 and July 31, 2002                           2

                Consolidated Statements of Cash Flows -
                  For the Nine Months Ended April 30, 2003 and 2002                                      3

                Notes to Consolidated Financial Statements                                               4

             Item 2.   Management's Discussion and Analysis
                       of Financial Condition and Results of Operations                                 11

             Item 3.  Quantitative and Qualitative Disclosures Regarding Market Risk                    16

             Item 4.   Controls and Procedures                                                          17

PART II.     Other Information

             Item 1.   Legal Proceedings                                                                17

             Item 6.  Exhibits and Reports on Form 8-K                                                  17

             Signatures                                                                                 19

             Certification of Chief Executive Officer                                                   20

             Certification of Chief Financial Officer                                                   21
</TABLE>

<PAGE>

                        VERITAS DGC INC. AND SUBSIDIARIES

         CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME
                                   (UNAUDITED)

<TABLE>
<CAPTION>
                                                                          THREE MONTHS ENDED          NINE MONTHS ENDED
                                                                              APRIL 30,                   APRIL 30,
                                                                       -----------------------     -----------------------
                                                                         2003          2002          2003          2002
                                                                       ---------     ---------     ---------     ---------
                                                                             (In thousands, except per share amounts)
<S>                                                                    <C>           <C>           <C>           <C>
Revenues ..........................................................    $ 120,636     $ 109,267     $ 383,464     $ 350,268
Cost of services ..................................................       97,287        85,082       318,671       274,415
Research and development ..........................................        3,274         2,846         9,327         8,381
General and administrative ........................................        6,261         5,854        21,744        17,886
Merger costs ......................................................                      1,658                       4,416
                                                                       ---------     ---------     ---------     ---------
Operating income ..................................................       13,814        13,827        33,722        45,170
Interest expense ..................................................        5,992         2,771        14,359         9,850
Other expense (income), net .......................................           17        (1,427)        1,229        (2,219)
                                                                       ---------     ---------     ---------     ---------
Income before provision for income taxes ..........................        7,805        12,483        18,134        37,539
Provision for income taxes ........................................        3,077         4,438         7,353        14,172
                                                                       ---------     ---------     ---------     ---------
Net income ........................................................    $   4,728     $   8,045     $  10,781     $  23,367

Other comprehensive income (loss) (net of tax, $0 in all periods):
  Foreign currency translation adjustments ........................        5,651         2,557         7,250        (1,742)
  Unrealized gain (loss) on investments available for sale ........           61          (219)           77          (949)
  Unrealized (loss) on interest swap ..............................         (410)                       (410)
  Unrealized gain (loss) on foreign currency hedge.................         (235)          212           114           235
                                                                       ---------     ---------     ---------     ---------
Total other comprehensive income (loss)............................        5,067         2,550         7,031        (2,456)
                                                                       ---------     ---------     ---------     ---------
Comprehensive income ..............................................    $   9,795     $  10,595     $  17,812     $  20,911
                                                                       =========     =========     =========     =========

Weighted average common shares:
  Basic ...........................................................       33,348        32,446        33,243        32,381
  Diluted .........................................................       33,355        32,639        33,280        32,561
Earnings per share:
  Basic and diluted ...............................................    $     .14     $     .25     $     .32     $     .72
</TABLE>

                 See Notes to Consolidated Financial Statements

                                       1

<PAGE>

                        VERITAS DGC INC. AND SUBSIDIARIES

                           CONSOLIDATED BALANCE SHEETS
                    (Dollars in thousands, except par value)

<TABLE>
<CAPTION>
                                                                                                    APRIL 30,         JULY 31,
                                                                                                      2003             2002
                                                                                                   -----------      -----------
                                                                                                   (Unaudited)
<S>                                                                                                <C>              <C>
                                            ASSETS
Current assets:
  Cash and cash equivalents ..................................................................     $    73,315      $    10,586
  Restricted cash investments ................................................................             205              166
  Accounts and notes receivable (net of allowance:  $7,391 at April;  $4,143 at July) ........         124,241          128,045
  Materials and supplies inventory ...........................................................           3,202           16,096
  Prepayments and other ......................................................................          13,127           12,059
  Income taxes receivable ....................................................................          10,397           16,074
                                                                                                   -----------      -----------
      Total current assets ...................................................................         224,487          183,026
Property and equipment .......................................................................         492,083          515,823
Less accumulated depreciation ................................................................         336,280          324,742
                                                                                                   -----------      -----------
      Property and equipment, net ............................................................         155,803          191,081
Multi-client data library ....................................................................         376,318          336,475
Investment in and advances to joint ventures .................................................           5,011            7,433
Goodwill .....................................................................................          39,018           34,086
Deferred tax asset ...........................................................................          15,741           13,756
Other assets .................................................................................          31,685           14,924
                                                                                                   -----------      -----------
      Total ..................................................................................     $   848,063      $   780,781
                                                                                                   ===========      ===========

                              LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
  Trade accounts payable .....................................................................     $    39,867      $    46,471
  Accrued interest ...........................................................................             259            3,965
  Other accrued liabilities ..................................................................          47,522           54,169
                                                                                                   -----------      -----------
      Total current liabilities ..............................................................          87,648          104,605
Non-current liabilities:
  Long-term debt .............................................................................         194,613          140,000
  Deferred tax liability .....................................................................           7,409            7,310
  Other non-current liabilities ..............................................................           4,616            4,654
                                                                                                   -----------      -----------
      Total non-current liabilities ..........................................................         206,638          151,964
Stockholders' equity:
  Common stock, $.01 par value; authorized: 40,000,000 shares; issued: 32,062,631 shares at
  April and 31,171,988 shares at July (excluding Exchangeable Shares of 1,443,411 at April
  and 1,444,514 at July) .....................................................................             321              311
  Additional paid-in capital .................................................................         425,239          413,813
  Accumulated earnings (from August 1, 1991 with respect to Digicon Inc.) ....................         131,222          120,441
  Accumulated other comprehensive income:
   Cumulative foreign currency translation adjustment ........................................          (1,593)          (8,843)
   Other comprehensive income ................................................................             575              794
Unearned compensation ........................................................................            (483)            (872)
Treasury stock, at cost; 83,672 shares at April and 76,607 at July ...........................          (1,504)          (1,432)
                                                                                                   -----------      -----------
      Total stockholders' equity .............................................................         553,777          524,212
                                                                                                   -----------      -----------
      Total ..................................................................................     $   848,063      $   780,781
                                                                                                   ===========      ===========
</TABLE>

                 See Notes to Consolidated Financial Statements

                                       2

<PAGE>

                        VERITAS DGC INC. AND SUBSIDIARIES

                      CONSOLIDATED STATEMENTS OF CASH FLOWS
                                   (UNAUDITED)

<TABLE>
<CAPTION>
                                                                                                         NINE MONTHS ENDED
                                                                                                             APRIL 30,
                                                                                                   ----------------------------
                                                                                                      2003             2002
                                                                                                   -----------      -----------
                                                                                                          (IN THOUSANDS)
<S>                                                                                                <C>              <C>
Operating activities:
  Net income .................................................................................     $    10,781      $    23,367
  Non-cash items included in net income:
    Depreciation and amortization (other than multi-client) ..................................          55,808           51,499
    Depreciation and amortization capitalized to multi-client library and software ...........         (19,606)         (21,308)
    Amortization of multi-client library .....................................................         106,809           89,567
    Impairment of land acquisition equipment .................................................           1,780
    Gain on disposition of property and equipment ............................................            (225)          (1,655)
    Equity in loss (income) of joint venture .................................................           1,158             (267)
    Deferred taxes ...........................................................................                              170
    Amortization of unearned compensation ....................................................             520              517
  Change in operating assets/liabilities:
    Accounts and notes receivable ............................................................           5,359           20,541
    Materials and supplies inventory .........................................................          12,903              648
    Prepayments and other ....................................................................           1,161           (1,066)
    Income tax receivable ....................................................................           5,693            4,669
    Accounts payable and other accrued liabilities ...........................................         (19,365)         (21,238)
    Other non-current liabilities ............................................................              61              149
    Other ....................................................................................            (695)           2,795
                                                                                                   -----------      -----------
       Total cash provided by operating activities ...........................................         162,142          148,388
Investing activities:
  Increase in restricted cash investments ....................................................             (39)
  Investment in multi-client data library, net cash ..........................................        (122,652)        (127,054)
  Purchase of property and equipment .........................................................         (19,530)         (72,060)
  Sale of property and equipment .............................................................           2,475            4,489
  Acquisition of business ....................................................................          (9,547)
                                                                                                   -----------      -----------
       Total cash used by investing activities ...............................................        (149,293)        (194,625)
Financing activities:
  Borrowings of long-term debt, net of debt issuance costs ...................................         308,236
  Payments on long-term debt .................................................................        (260,887)
  Net proceeds from sale of common stock .....................................................           2,065            2,055
                                                                                                   -----------      -----------
       Total cash provided by financing activities ...........................................          49,414            2,055
  Currency loss on foreign cash ..............................................................             466             (184)
                                                                                                   -----------      -----------
  Change in cash and cash equivalents ........................................................          62,729          (44,366)
  Beginning cash and cash equivalents balance ................................................          10,586           69,218
                                                                                                   -----------      -----------
  Ending cash and cash equivalents balance ...................................................     $    73,315      $    24,852
                                                                                                   ===========      ===========

CASH PAID FOR:
Interest .....................................................................................     $    16,435      $    13,808
Taxes ........................................................................................     $     1,553      $     8,949
</TABLE>

                 See Notes to Consolidated Financial Statements

                                       3

<PAGE>

                        VERITAS DGC INC. AND SUBSIDIARIES

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                   (UNAUDITED)

1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

CONSOLIDATION

         The accompanying consolidated financial statements include our accounts
and the accounts of majority-owned domestic and foreign subsidiaries. Investment
in an 80% owned joint venture is accounted for on the equity method due to
provisions in the joint venture agreement that give minority shareholders the
right to exercise control. All material intercompany balances and transactions
have been eliminated. All material adjustments consisting only of normal
recurring adjustments that, in the opinion of management are necessary for a
fair statement of the results for the interim periods, have been reflected.
These interim financial statements should be read in conjunction with our annual
consolidated financial statements.

USE OF ESTIMATES

         The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates and
assumptions. These estimates and assumptions affect the reported amounts of
assets and liabilities and disclosure of contingent assets and liabilities at
the date of the financial statements and the reported amounts of revenues and
expenses during the reporting period. Actual results could differ from those
estimates.

RECLASSIFICATION OF PRIOR YEAR BALANCES

         Certain prior year balances have been reclassified for consistent
presentation. Depreciation and amortization is now included in cost of services
on the "Consolidated Statements of Operations and Comprehensive Income".

RECENT ACCOUNTING PRONOUNCEMENTS

         In August 2001, the Financial Accounting Standards Board issued SFAS
No.143 (Asset Retirement Obligations). This standard requires that obligations
associated with the retirement of a tangible long-lived asset be recorded as a
liability when those obligations are incurred with the liability being initially
measured at fair value. We adopted the use of this accounting statement in
August 2002. Adoption did not have a material effect on our financial position
or results of operations.

         In October 2001, the Financial Accounting Standards Board issued SFAS
No. 144 (Accounting for the Impairment or Disposal of Long Lived Assets). This
standard develops one accounting model for long-lived assets that are to be
disposed of by sale, requiring such assets to be measured at the lower of book
value or fair value less cost to sell. The standard also provides guidance on
the recognition of liabilities for the obligations arising from disposal
activities. We adopted the use of this accounting statement in August 2002.
Adoption did not have a material effect on our financial position or results of
operations.

         In April 2002, the Financial Accounting Standards Board issued SFAS No.
145 (Rescission of FASB Statement No. 4, 44, and 64, Amendment of FASB Statement
No. 13 and Technical Corrections as of April 2002). Among other things, this
statement addresses how to report gains or losses resulting from the early
extinguishment of debt. Previously, any gains or losses were reported as an
extraordinary item. Upon adoption of SFAS No. 145, an entity is required to
evaluate whether the debt extinguishment is truly extraordinary in nature, in
accordance with Accounting Principles Board Opinion No. 30. We adopted the use
of this accounting statement in August 2002. The adoption of this statement will
likely preclude extraordinary classification of costs related to early debt
extinguishment, and the effect of adoption was immaterial.

         In July 2002, the Financial Accounting Standards Board issued SFAS No.
146 (Accounting for Costs Associated with Exit or Disposal Activities). This
standard requires recognition of costs associated with exit or disposal
activities when they are incurred rather than when management commits to an exit
or disposal plan. Examples of costs covered by this guidance include lease
termination costs, employee severance costs that are associated with
restructuring, discontinued operations, plant closings, or other exit or
disposal activities. We adopted the use of this accounting statement for all
activities initiated after December 31, 2002. Adoption did not have a material
effect on our financial position or results of operations.

                                       4

<PAGE>

                        VERITAS DGC INC. AND SUBSIDIARIES

             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
                                   (UNAUDITED)

         In December 2002, the FASB issued Interpretation No. 45 (FIN 45),
Guarantor's Accounting and Disclosure Requirements. FIN 45 expands required
disclosures for certain types of guarantees and recognition of a liability at
fair value of such guarantees at the time of issuance. The disclosure
requirements are effective for our second fiscal quarter financial statements,
while the fair value accounting requirements apply prospectively to guarantees
issued or modified after December 31, 2002. Adoption of FIN 45 did not have a
material effect on our financial position or results of operations.

         In January 2003, the FASB issued Interpretation No. 46 (FIN 46),
Consolidation of Variable Interest Entities. FIN 46 amended ARB 51, Consolidated
Financial Statements, and established standards for determining under what
circumstances a variable interest entity (VIE) should be consolidated with its
primary beneficiary. FIN 46 also requires disclosures about VIEs that the
company is not required to consolidate, but in which it has a significant
variable interest. Adoption of FIN 46 did not have a material effect on our
financial position or results of operations.

         In January 2003, the FASB issued Statement No. 148, Accounting for
Stock-Based Compensation, to provide alternative methods of transition for a
voluntary change to the fair value based method of accounting for stock-based
employee compensation. In addition, this Statement amends the disclosure
requirements of Statement 123 to require prominent disclosures in both annual
and interim financial statements about the method of accounting for stock-based
employee compensation and the effect of the method used on reported results. We
adopted the use of this accounting statement in January 2003. Adoption did not
have a material effect on our financial position or results of operations. We
have no plans to voluntarily expense stock options or change our current
stock-based compensation program. We have included the required interim
disclosures in Note 12, Stock Based Compensation.

2.       BUSINESS COMBINATIONS

         On August 21, 2002, we acquired Hampson-Russell Software Services Ltd.
("Hampson-Russell"), a Canadian provider of software tools and consulting
services related to reservoir interpretation. Under the terms of the agreement,
we acquired substantially all of the assets of Hampson-Russell in exchange for a
cash payment of $9,250,000, transfer of 589,623 shares of Veritas common stock
($12.30 per share), and Hampson-Russell's right to receive a percentage of the
revenues generated by the purchased assets over the five years following the
closing of the transaction, provided that certain financial targets are
obtained. The common stock price of $12.30 was based on the average closing
price for Veritas common stock for a short period up to the transaction close
date. Our allocation of the $16.8 million purchase price was based on fair value
as follows: $0.3 million of fees and expenses, $13.2 million to software, $3.9
million to goodwill, of which none is expected to be tax deductible, $1.1
million to accrued liabilities, $0.3 million to fixed assets and $0.2 million to
other assets. The software will be amortized over no more than five years. David
B. Robson, Veritas DGC's Chairman and Chief Executive Officer, beneficially owns
a controlling interest in Vada Industries Ltd., which was a 25% shareholder of
Hampson-Russell at the time of the acquisition. The results of operations for
Hampson-Russell began to be included in our results of operations as of August
21, 2002.

3.       ASSET IMPAIRMENT

         During the first quarter of fiscal year 2003, we incurred a $1.8
million loss for the impairment of land equipment. It was determined the fair
value of the equipment was zero. The impairment loss is included in cost of
services in the "Consolidated Statements of Operations and Comprehensive
Income".

                                       5

<PAGE>

                        VERITAS DGC INC. AND SUBSIDIARIES

             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
                                   (UNAUDITED)

4.       OTHER EXPENSE (INCOME), NET

         Other expense (income), net consists of the following:

<TABLE>
<CAPTION>
                                                                    THREE MONTHS ENDED                NINE MONTHS ENDED
                                                                         APRIL 30,                         APRIL 30,
                                                                 ----------------------------------------------------------
                                                                   2003             2002             2003             2002
                                                                 -------          -------          -------          -------
                                                                                       (IN THOUSANDS)
<S>                                                              <C>              <C>              <C>              <C>
Interest income ..........................................       $  (453)         $  (169)         $  (681)         $(1,289)
Net (gain) loss on disposition of property and equipment..           210               38             (225)            (354)
Net gain on sale of Air-Jac subsidiary ...................                                                             (658)
Net foreign currency exchange loss (gain) ................             8             (957)             705              402
Loss (income) from unconsolidated joint venture ..........           210             (321)           1,158             (267)
Other ....................................................            42              (18)             272              (53)
                                                                 -------          -------          -------          -------
         Total .........................................         $    17          $(1,427)         $ 1,229          $(2,219)
                                                                 =======          =======          =======          =======
</TABLE>

5.    EARNINGS PER COMMON SHARE

     Basic and diluted earnings per common share are computed as follows:

<TABLE>
<CAPTION>
                                                                      THREE MONTHS ENDED       NINE MONTHS ENDED
                                                                           APRIL 30,               APRIL 30,
                                                                      -------------------     -------------------
                                                                        2003        2002        2003        2002
                                                                      -------     -------     -------     -------
                                                                        (IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
<S>                                                                   <C>         <C>         <C>         <C>
Net income .......................................................    $ 4,728     $ 8,045     $10,781     $23,367
Basic:
  Weighted average common shares (including exchangeable shares)..     33,348      32,446      33,243      32,381
                                                                      -------     -------     -------     -------
  Net income per share ...........................................    $   .14     $   .25     $   .32     $   .72
                                                                      =======     =======     =======     =======
Diluted:
  Weighted average common shares (including exchangeable shares)..     33,348      32,446      33,243      32,381
  Shares issuable from assumed exercise of options ...............          7         193          37         180
                                                                      -------     -------     -------     -------
          Total ..................................................     33,355      32,639      33,280      32,561
                                                                      -------     -------     -------     -------
  Net income per share ...........................................    $   .14     $   .25     $   .32     $   .72
                                                                      =======     =======     =======     =======
</TABLE>

         The following options to purchase common shares have been excluded from
the computation assuming dilution because the options' exercise prices exceed
the average market price of the underlying common shares.

<TABLE>
<CAPTION>
                                THREE MONTHS ENDED                    NINE MONTHS ENDED
                                     APRIL 30,                             APRIL 30,
                       ------------------------------------   ------------------------------------
                             2003                2002               2003              2002
                       ---------------   ------------------   ----------------   -----------------
<S>                    <C>               <C>                  <C>                <C>
Number of options            3,854,346            1,338,676          3,221,589           1,341,626
Exercise price range   $7.30 - $55.125   $16.3125 - $55.125   $10.71 - $55.125   $15.625 - $55.125
Expiring through            March 2012           March 2011         March 2012          March 2011
</TABLE>

                                       6

<PAGE>

                        VERITAS DGC INC. AND SUBSIDIARIES

             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
                                   (UNAUDITED)

6.       OTHER ASSETS - SOFTWARE

         Software available for sale is included in other assets. A portion of
the software was developed internally, and the remaining portion was obtained
through the acquisition of Reservoir Characterization Research and Consulting,
Inc. (RC(2)) and Hampson-Russell. The current book value of the acquired RC(2)
software is $0.9 million, the book value of the internally developed software,
originated in RC(2) and called Antero, is $7.3 million and the book value of
the acquired Hampson-Russell software is $12.3 million. For internally
developed software, we capitalize costs associated with the development of the
product from the time the product reaches technological feasibility until it is
ready for commercial release. The capitalized cost of the software, whether
developed or purchased, is charged to cost of services in the period sales
occur based on the percentage of total cost to total estimated sales multiplied
by actual sales during the period. The period of amortization begins when the
software is released to the market. The Antero software has not been released.
In no case is the cumulative amortization for a product allowed to fall below
the amount that would be recorded using straight-line amortization for that
product's estimated useful life. Estimated useful lives of our software
products range from three to five years.

         Amortization expense for the software is as follows:

<TABLE>
<CAPTION>
                                                     THREE MONTHS ENDED   NINE MONTHS ENDED
                                                          APRIL 30,           APRIL 30,
                                                     ------------------   -----------------
                                                                  (IN THOUSANDS)
                                                        2003     2002          2003       2002
                                                       -----    ------       --------   --------
<S>                                                    <C>      <C>          <C>        <C>
Amortization expense ........................          $  960   $  644       $  3,623   $  1,932
</TABLE>

     The carrying value of our software is as follows:

<TABLE>
<CAPTION>
                                            APRIL 30, 2003                                          JULY 31, 2002
                        ------------------------------------------------------       ------------------------------------------
                          GROSS                                                           GROSS
                        CARRYING           ACCUMULATED                                  CARRYING      ACCUMULATED
                         AMOUNT            AMORTIZATION             NET                  AMOUNT       AMORTIZATION       NET
                        --------           ------------             ---                 --------      ------------       ---
                                                                          (IN THOUSANDS)
<S>                     <C>                <C>                   <C>                    <C>           <C>              <C>
Software ..........     $ 27,995             $ 7,474             $ 20,521               $ 13,631        $ 3,851        $ 9,780
</TABLE>

7.       LONG-TERM DEBT

         Long-term debt is as follows:

<TABLE>
<CAPTION>
                                                                              APRIL 30, 2003                 JULY 31, 2002
                                                                              --------------                 -------------
                                                                                              (IN THOUSANDS)
<S>                                                                           <C>                            <C>
Term A loan due February 2006 ..............................                     $  29,925
Term B loan due February 2007 ..............................                       124,688
Term C loan due February 2008 ..............................                        40,000
Senior Notes due October 2003, at 9 3/4% ...................                                                   $ 135,000
Revolving credit agreement, balance due August 2003 ........                                                       5,000
                                                                                 ---------                     ---------
     Total .................................................                     $ 194,613                     $ 140,000
                                                                                 =========                     =========
</TABLE>

                                       7

<PAGE>

                        VERITAS DGC INC. AND SUBSIDIARIES

             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
                                   (UNAUDITED)

         On February 14, 2003, we entered into a new Credit Agreement (the
"Credit Agreement") with Deutsche Bank AG, New York Branch, as Administrative
Agent, Deutsche Bank AG, Canada Branch, as Canadian Administrative Agent, and
certain other lending institutions. The new facility provides term financing of
$195 million under term A, term B and term C tranches (the "Term Loans"), a
revolving loan facility aggregating $55 million, including a facility for swing
line loans of up to $10 million and the issuance of letters of credit in an
aggregate amount of up to $40 million. The term A loan is in the original
principal amount of $30 million and matures in three years, or February 2006,
and requires quarterly interest payments at a rate, at our election, of Libor
plus a margin ranging from 3.5% to 4.0% or a base rate plus a margin ranging
from 2.25% to 2.75%. These margins are based on certain of our financial ratios.
The term B loan is in the original principal amount of $125 million, matures in
four years, or February 2007, and requires quarterly interest payments at a
rate, at our election, of Libor plus 5.0%, subject to a 2% Libor floor or a base
rate plus 3.75%. The term C loan is in the original principal amount of $40
million, matures in five years, or February 2008, and requires quarterly
interest payments at a rate, at our election, of Libor plus 7.5%, subject to a
3% Libor floor or a base rate plus 6.25%. The term A and term B loans require
quarterly principal payments of 0.25% of the outstanding principal balance.
Loans made under the revolving loan facilities, including swing line loans, bear
interest at a variable rate, determined on the date of borrowing, that is
related to various base rates and margins depending upon our leverage ratio and
the location of the borrowing. The revolver expires in February 2006. The
financing is secured by assets, including equipment, vehicles, multi-client data
library, intellectual property, and stock of certain material subsidiaries,
owned by us and certain of our subsidiaries. The Credit Agreement and related
documents contain a number of covenants, including financial covenants relating
to interest coverage, leverage and net worth. On February 14, 2003, the Term
Loans totaling $194.6 million were funded and letters of credit in the amount of
approximately $5.7 million then outstanding from the previous credit agreement
were transferred to the Credit Agreement. Proceeds from the Term Loans were used
to satisfy the obligations under the previous credit agreement and the Senior
Notes.

         We incurred $7.3 million of debt issuance costs related to the new
Credit Agreement. These costs are capitalized to prepayments and other assets
and are being amortized to interest expense over the maturity of the debt.

8.       HEDGE TRANSACTIONS

         In March 2001, we entered into a contract requiring payments in
Norwegian kroner to charter the seismic vessel M/V Seisquest. The contract
requires 36 monthly payments commencing on June 1, 2001. To protect our exposure
to exchange rate risk, we entered into multiple forward contracts as cash flow
hedges effectively locking our exchange rate for Norwegian kroner to the U.S.
dollar.

         On February 25, 2003, we entered into interest rate swaps in order to
reduce our exposure to the variable interest rates of the Credit Facility
described above. These swaps, with notional amounts totaling $80 million,
effectively hedge 41% of our exposure to interest rate changes for the two-year
terms of the swaps and had no value at inception.

         Details of the swaps are summarized in the following table:

<TABLE>
<CAPTION>
Tranche Hedged                      Amount           Term            Pay %         Receive     Libor Floor
--------------                  --------------    ---------          ----          -------     -----------
                                (in thousands)
<S>                             <C>               <C>                <C>            <C>        <C>
    Term A                         $ 25,000       24 months          1.86           Libor          None
    Term B                         $ 55,000       24 months          2.49           Libor           2%
</TABLE>

         This is considered a cash flow hedge under FAS 133 for accounting and
financial reporting purposes. The two swaps are marked to market with the gain
or loss recorded in Other Comprehensive Income offset by an asset or liability.
The differences in the amount paid versus amount received each month flows
through the income statement as interest expense. The fair value of the swaps on
April 30, 2003 was $410,000 and is included in other accrued liabilities on the
"Consolidated Balance Sheets".

                                       8

<PAGE>

                        VERITAS DGC INC. AND SUBSIDIARIES

             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
                                   (UNAUDITED)

The values of the kroner contracts and the interest rate swaps are as follows:

<TABLE>
<CAPTION>
                                                      APRIL 30, 2003                                    JULY 31, 2002
                                        -----------------------------------------           -----------------------------------
                                        FORWARD     UNREALIZED                              FORWARD     UNREALIZED
                                         VALUE      GAIN/(LOSS)        FAIR VALUE            VALUE         GAIN      FAIR VALUE
                                        -------     -----------        ----------           -------     ----------   ----------
                                                                             (IN THOUSANDS)
<S>                                     <C>         <C>                <C>                  <C>         <C>          <C>
Forward kroner contracts .......        $ 3,600       $  908             $ 4,508            $ 6,032       $  794      $  6,826
Interest rate swaps ............                        (410)               (410)
</TABLE>

9.       SEGMENT INFORMATION

         We have two segments, land and marine operations, both of which provide
geophysical products and services to the petroleum industry. The two segments
have been aggregated as they are similar in their economic characteristics and
the nature of their products, production processes and customers. A
reconciliation of the reportable segments' results to those of the total
enterprise is given below:

<TABLE>
<CAPTION>
                                                         THREE MONTHS ENDED                          THREE MONTHS ENDED
                                                           APRIL 30, 2003                               APRIL 30, 2002
                                                  -------------------------------------     -------------------------------------
                                                   SEGMENTS     CORPORATE       TOTAL       SEGMENTS      CORPORATE       TOTAL
                                                  ---------     ---------     ---------     ---------     ---------     ---------
                                                                                (IN THOUSANDS)
<S>                                               <C>           <C>           <C>           <C>           <C>           <C>
Revenues ....................................     $ 120,636                   $ 120,636     $ 109,267                   $ 109,267
Operating income ............................        22,094     $  (8,280)       13,814        23,339     $  (9,512)       13,827
Income (loss) before provision for income
taxes .......................................        21,558       (13,753)        7,805        24,686       (12,203)       12,483
</TABLE>

<TABLE>
<CAPTION>
                                                                NINE MONTHS ENDED                         NINE MONTHS ENDED
                                                                  APRIL 30, 2003                            APRIL 30, 2002
                                                     -------------------------------------     -------------------------------------
                                                      SEGMENTS     CORPORATE       TOTAL        SEGMENTS     CORPORATE       TOTAL
                                                    ----------     ---------     ---------     ---------     ---------     ---------
                                                                               (IN THOUSANDS)
<S>                                                  <C>           <C>           <C>           <C>           <C>           <C>
Revenues .........................................   $ 383,464                   $ 383,464     $ 350,268                   $ 350,268
Operating income .................................      59,440     $ (25,718)       33,722        72,857     $ (27,687)       45,170
Income (loss) before provision for income taxes ..      57,746       (39,612)       18,134        74,582       (37,043)       37,539
</TABLE>

10.      SEVERANCE

         In the first quarter of fiscal year 2003, we began to reduce overhead
in all divisions and at all levels of employment. As a result, we incurred $2.8
million of severance cost during the nine months ended April 30, 2003 of which
$2.1 million was paid and $0.7 million remains accrued at April 30, 2003. The
total expense is included in general and administrative in the "Consolidated
Statements of Operations and Comprehensive Income". The total number of
employees terminated during the nine months ended April 30, 2003 was 119. The
severance liabilities accrued as of April 30, 2003 are expected to be paid over
the next nine months.

11.      CONTINGENCIES

         On September 28, 2002, we filed suit in Federal Court against one of
our customers in the amount of $6.8 million for failure to pay past due invoices
and for other damages. The customer has, in turn, filed a counterclaim against
us alleging that the services were not properly performed but did not specify
the amount of damages claimed. We believe the facts in the matter are in our
favor, however, during our third quarter we reserved $2.9 million of the related
receivable in response to a going concern qualification to the audit opinion in
the customer's recent Form 10-K filing. We will continue to monitor the
financial condition of the customer and, if necessary, adjust the allowance for
doubtful accounts to reflect current circumstances. We expect the matter to go
to trial in 2004. Our remaining income statement exposure to this issue ranges
from $0 to $2.9 million.

                                       9

<PAGE>

                        VERITAS DGC INC. AND SUBSIDIARIES

             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
                                   (UNAUDITED)

12.      STOCK BASED COMPENSATION

         The effect on net income and earnings per share that would have been
recorded using the fair value based method for stock options as required by SFAS
148 is as follows:

<TABLE>
<CAPTION>
                                                              THREE MONTHS ENDED                      NINE MONTHS ENDED
                                                                     APRIL 30,                            APRIL 30,
                                                        -------------------------------        ------------------------------
                                                           2003                2002                2003              2002
                                                        ----------         ------------        -----------       ------------
                                                                                    (IN THOUSANDS)
<S>                                                     <C>                <C>                 <C>               <C>
Net income, as reported ........................        $    4,728         $      8,045        $    10,781       $     23,367

Deduct: Total stock-based employee
compensation expense determined under fair
value based method for all awards, net of
related tax effects ............................            (1,783)              (1,021)            (6,096)            (3,429)
                                                        ----------         ------------        -----------       ------------
Pro forma net income ...........................        $    2,945         $      7,024        $     4,685       $     19,938
                                                        ==========         ============        ===========       ============

Earnings per share:
Basic - as reported ............................        $      .14         $        .25        $       .32       $        .72
Basic - pro forma ..............................               .09                  .22                .14                .61

Diluted - as reported ..........................               .14                  .25                .32                .72
Diluted - pro forma ............................               .09                  .22                .14                .61


Pro forma net income ...........................

</TABLE>

                                       10

<PAGE>

ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS

     This report contains forward-looking statements that involve risks and
uncertainties. Our actual results could differ materially from those anticipated
in the forward-looking statements as a result of certain factors. These factors
are more fully described in other reports filed with the Securities and Exchange
Commission, including our fiscal year 2002 Form 10-K, and include changes in
market conditions in the oil and gas industry as well as declines in prices of
oil and gas.

GENERAL

         For the last few years, Veritas has been engaged in a program designed
to expand and upgrade the capabilities of the company. Key elements of this
program were the outfitting of the three Viking-class vessels, installation of
large computer clusters, and the addition of Arctic-capable land acquisition
equipment. These investments are now paying off in terms of increased acceptance
in the market. Veritas will continue to invest in its core businesses,
especially in assets that advance our technological position. However, in the
current market we do not expect to invest significant amounts to expand our
overall capacity.

         We are continuing to selectively invest in our multi-client library
where we can reasonably assume adequate returns. However, we balance our
investment in multi-client libraries with our participation in the contract, or
proprietary, market. In 2003, we are increasing our participation in the
contract marine acquisition market, with a commensurate reduction in marine
multi-client investment. We anticipate this will result in increased cash flow,
although potentially at the expense of a lower gross margin.

         Based on this environment, for fiscal year 2003, we expect capital
expenditures will be approximately $30 to $35 million, less than half of the
expected depreciation level, and cash investment in our multi-client library
will be approximately $160 million, significantly less than projected
multi-client revenue. These factors, along with expense reductions and expected
revenues, are projected to result in positive free cash flow for the year. (See
Liquidity and Capital Resources on page 13 for our definition of free cash flow
and further explanation.)

RESULTS OF OPERATIONS

THREE MONTHS ENDED APRIL 30, 2003 COMPARED WITH THREE MONTHS ENDED APRIL 30,
2002

         Revenues. Revenues increased by 10% overall. Multi-client revenue
decreased 3% primarily due to lower sales of completed surveys in West Africa
and offshore Canada. Additionally, in the prior year we had two vessels working
on a highly funded survey in Brazil. These decreases were partially offset by
increased activity in Canada where a large sale of Rocky Mountain foothills data
contributed significantly to the quarter. Contract revenue increased by 23%.
Land acquisition revenue increased due to activity in the U.S., a new contract
in Bolivia and re-entry into the Argentine market. Marine acquisition revenue
increased due to a project in Trinidad.

         Operating income. Operating income as a percentage of revenue decreased
to 11.5% from 12.7% mainly as a result of a $2.9 million provision related to a
disputed receivable from a customer. Contract margins increased but were
partially offset by lower multi-client margins as a result of an unfavorable mix
of survey licenses.

         On September 28, 2002, we filed suit in Federal Court against one of
our customers in the amount of $6.8 million for failure to pay past due invoices
and for other damages. The customer has, in turn, filed a counterclaim against
us alleging that the services were not properly performed but did not specify
the amount of damages claimed. We believe the facts in the matter are in our
favor, however, during our third quarter we reserved $2.9 million of the related
receivable in response to a going concern qualification to the audit opinion in
the customer's recent Form 10-K filing. We will continue to monitor the
financial condition of the customer and, if necessary, adjust the allowance for
doubtful accounts to reflect current circumstances. We expect the matter to go
to trial in 2004.

                                       11

<PAGE>

         Other expense (income), net. Other expense (income), net decreased from
income of $1.4 million to an expense of $17,000. This was mainly due to the
prior year recovery of a $1.3 million currency loss in Argentina. In addition,
our unconsolidated Indonesian joint venture incurred a loss of $210,000 as
opposed to income in the prior year of $0.3 million, and net losses from the
sale of fixed assets increased from $38,000 to $0.2 million. These were offset
by an increase in interest income from $0.2 million to $0.5 million due to
increased borrowings and increased cash from operations in the current quarter
as compared to the prior year's quarter.

         Interest expense. Interest expense increased from $2.8 million to $6.0
million. Our previous outstanding debt, Senior Notes and the revolving credit
facility, and the new bank debt were concurrently outstanding for one month,
resulting in additional interest costs of $1.2 million, In addition, we expensed
$0.7 million of unamortized debt issuance costs related to the refinanced
facilities. Outstanding borrowings were $194.6 million under the new facility
compared with $135.0 million outstanding in prior year's third quarter. These
factors were partially offset by the new Credit Agreement's weighted-average
borrowing cost of approximately 8%, compared with 9.75% under the Senior Notes.
Management expects interest expense to be in the $4.0 to $4.5 million range in
each of the next few quarters.

         Provision for income taxes. The provision for income taxes decreased
from $4.4 million to $3.1 million as a result of a decrease in earnings in the
current year. The effective income tax rate increased from 36% to 39% as a
result of unbenefited losses and foreign tax credits generated in certain
jurisdictions.

NINE MONTHS ENDED APRIL 30, 2003 COMPARED WITH NINE MONTHS ENDED APRIL 30, 2002

         Revenues. Revenues increased by 9% overall. Multi-client revenue was
comparable to the previous year's nine month period. Marine multi-client revenue
decreased by 4% due to lower sales of completed surveys, while land multi-client
revenue increased due to higher sales of Canadian foothills data. Contract
revenue increased by 18% due to a large land acquisition project in Peru,
increased land activity in the U.S., re-entry into the Argentina land market and
an increase in marine acquisition projects. This was partially offset by
decreased activity in Canada land acquisition due to warmer than normal weather,
that delayed equipment movement during the winter season.

         Operating income. Operating income as a percentage of revenue decreased
to 8.8% from 12.9%. Although contract margins increased due to higher pricing
and project mix, overall margins declined due to several operational disruptions
in land acquisition in the first quarter of the current year, lower margins from
multi-client revenue caused by a greater mix of lower margin surveys and a $2.9
million provision for doubtful accounts. The operational disruptions included
two lightning strikes, two hurricanes, and civil unrest, all of which resulted
in declarations of contractual force majeur provisions. Reduced revenue and
increased expense associated with these projects reduced operating income by
approximately $2.1 million. Additionally, we recognized an impairment of $1.8
million of assets in the land acquisition business.

         On September 28, 2002, we filed suit in Federal Court against one of
our customers in the amount of $6.8 million for failure to pay past due invoices
and for other damages. The customer has, in turn, filed a counterclaim against
us alleging that the services were not properly performed but did not specify
the amount of damages claimed. We believe the facts in the matter are in our
favor, however, during our third quarter we reserved $2.9 million of the related
receivable in response to a going concern qualification to the audit opinion in
the customer's recent Form 10-K filing. We will continue to monitor the
financial condition of the customer and, if necessary, adjust the allowance for
doubtful accounts to reflect current circumstances. We expect the matter to go
to trial in 2004.

         General and administrative expense increased by $3.9 million from the
prior year due to severance and other items.

         Other expense (income), net. Other expense (income), net decreased from
income of $2.2 million to a loss of $1.2 million due to several factors. The
prior year's results included a $0.7 million gain from the sale of a seismic
drilling operation. Net loss from foreign currency increased from $0.3 million
to $0.7 million. Interest income decreased from $1.3 million to $0.3 million due
to lower cash in the first half of the current year as compared to the prior
year. Our unconsolidated joint venture in Indonesia incurred a loss of $1.2
million compared to income of $0.3 million in the prior year.

                                       12

<PAGE>

         Interest expense. Interest expense increased from $9.9 million to $14.4
million. During the first half of the current fiscal year, interest expense
increased due to additional borrowing on our revolving credit facility. In the
third quarter of the current year, our previous outstanding debt, Senior Notes
and the revolving credit facility, and the new bank debt were concurrently
outstanding for one month, resulting in additional interest costs of $1.2
million, In addition, we expensed $0.7 million of unamortized debt issuance
costs related to the refinanced facilities. Outstanding borrowings were $194.6
million under the new facility compared with $135.0 million outstanding in prior
year's third quarter. These factors were partially offset by the new credit
facility's weighted-average borrowing cost of approximately 8%, compared with
9.75% under the Senior Notes.

         Provision for income taxes. The provision for income taxes decreased
from $14.2 million to $7.4 million as a result of a decrease in earnings in the
current year. The effective income tax rate increased from 38% to 41% as a
result of unbenefited losses in certain foreign jurisdictions.

LIQUIDITY AND CAPITAL RESOURCES

SOURCES AND USES

         Our internal sources of liquidity are cash, cash equivalents and cash
flow from operations. External sources include public financing, equity sales,
equipment financing, our revolving loan facility, and trade credit. We believe
these sources of funds are adequate to meet our liquidity needs for fiscal 2003
and 2004.

         Net cash provided by operating activities increased from $148.4 million
in the first nine months of 2002 to $162.1 million in 2003. Major components of
this change were a $17.2 million increase in amortization on multi-client
library due to higher cost of sales from new survey sales and increased
amortization on remaining costs for surveys reaching their three-year completion
period. In addition, depreciation and amortization, net increased by $6.0
million as a result of amortization on Hampson-Russell software and decreased
depreciation capitalized to multi-client library. These increases were offset by
a $12.6 million decrease in net income and an unfavorable change in operating
assets and liabilities of $1.4 million.

         Net cash used by investing activities decreased from $194.6 million in
the first nine months of 2002 to $149.3 million in 2003 due to lower capital
spending and investments in multi-client library, partially offset by the
acquisition of Hampson-Russell. Our capital expenditure estimate for fiscal 2003
is approximately $30 to $35 million, which is mostly allocated to the
replacement and upgrading of existing equipment. For fiscal year 2003, we are
forecasting $150 to $160 million of cash investment in our data library. We
expect to fund these investments from internally generated cash flows.

         Net cash provided by financing activities increased from $2.1 million
in the first nine months of 2002 to $49.4 million in 2003. This increase was
driven by a new financing package that provides us with greater liquidity at a
lower interest rate than we previously had and gives us a pre-payment option in
the future. On February 14, 2003, we entered into a new Credit Agreement (the
"Credit Agreement") with Deutsche Bank AG, New York Branch, as Administrative
Agent, Deutsche Bank AG, Canada Branch, as Canadian Administrative Agent, and
certain other lending institutions. The new facility provides term financing of
$195 million under term A, term B and term C tranches (the "Term Loans"), a
revolving loan facility aggregating $55 million, including a facility for swing
line loans of up to $10 million and the issuance of letters of credit in an
aggregate amount of up to $40 million. Proceeds from the Term Loans were used to
satisfy the obligations under the previous credit agreement and the Senior
Notes. In addition, the current year includes net payments on the revolving
credit facility of $5.0 million, redemption of the Senior Notes of $135.0
million, and payments under the new Credit Agreement of $0.4 million.

         We use free cash flow as an important metric within the company as it
measures the combined effects of our operational performance and our investing
discipline on the liquidity of the company. For the nine months of the current
fiscal year to date we have generated $20.0 million of free cash flow versus a
negative $50.7 million of free cash flow for the same period of the prior fiscal
year. The large positive change in free cash flow is primarily due to decreased
capital spending in the current year and, to a lesser extent, lower spending on
multi-client surveys. We expect to maintain the reduced capital spending levels
through the end of the fiscal year and, in total, plan to spend $56 million less
than in the prior year.

                                       13

<PAGE>

         We define free cash flow as cash from operating activities less cash
multi-client spending and capital expenditures. This non-GAAP liquidity measure
is useful as an addition to the most directly comparable GAAP measure of "cash
provided by operating activities" because free cash flow includes investments in
operational assets and therefore presents a fuller picture of net cash flow from
ongoing operations. This measure excludes items such as proceeds from the
disposal of assets, cash paid for acquisitions and all financing activities.

         A reconciliation of free cash flow to cash provided by operating
activities is presented in the following table.

<TABLE>
<CAPTION>
                                                           THREE MONTHS ENDED                    NINE MONTHS ENDED
                                                               APRIL 30,                              APRIL 30,
                                                      ----------------------------          ----------------------------
                                                        2003               2002               2003               2002
                                                      ---------          ---------          ---------          ---------
                                                                                (IN THOUSANDS)
<S>                                                   <C>                <C>                <C>                <C>
Free cash flow ..............................         $  15,775          $  (3,356)         $  19,960          $ (50,726)
Add back:
Multi-client expenditures, net cash .........            47,065             38,674            122,652            127,054
Capital expenditures ........................             6,563             20,455             19,530             72,060
                                                      ---------          ---------          ---------          ---------
Total cash provided by operating activities..         $  69,403          $  55,773          $ 162,142          $ 148,388
</TABLE>

         While we believe that we have adequate sources of funds to meet our
liquidity needs, our ability to meet our obligations depends on our future
performance, which, in turn, is subject to many factors beyond our control. Key
internal factors affecting future results include utilization levels of
acquisition and processing assets and the level of multi-client data library
licensing, all of which are driven by the external factors of exploration
spending and, ultimately, underlying commodity prices.

         The following represents our financial contractual obligations and
commitments for the fiscal period ending July 31, 2003 through 2007 and
thereafter.

<TABLE>
<CAPTION>
                                                                                                                        2007 AND
        CONTRACTUAL CASH OBLIGATIONS                TOTAL          2003          2004          2005          2006      THEREAFTER
        ----------------------------                -----          ----          ----          ----          ----      ----------
<S>                                               <C>           <C>           <C>           <C>           <C>          <C>
Lease obligations ..........................      $ 160,329     $  41,710     $  30,738     $  23,963     $  19,932     $  43,986
Long-term debt .............................        194,613           387         1,537         1,521        30,473       160,695
Forward exchange contracts .................          6,832           800         3,253         2,779
Standby letters of credit ..................          5,733           365         5,275            93
</TABLE>

CRITICAL ACCOUNTING POLICIES

         While all of our accounting policies are important in assuring that
Veritas adheres to current accounting standards, certain policies are
particularly important due to their impact on our financial statements. These
are described in detail below.

MULTI-CLIENT DATA LIBRARY

         In the portion of our business known as multi-client data library, we
collect and process geophysical data for our own account and retain all
ownership rights. We license the data to multiple clients on a non-transferable
basis. We capitalize the costs associated with acquiring and processing the
multi-client data on a survey-by-survey basis (versus a pooled basis). The
capitalized cost of multi-client data is charged to cost of services in the
period revenue is recognized in an amount equal to the period revenue multiplied
by the percentage of total estimated costs to total estimated revenue.
Therefore, multi-client margins recognized in any given period are the product
of estimated costs and estimated sales and may not reflect the ultimate cash
margins recognized from a survey. Any costs remaining 36 months after completion
of a survey are charged to cost of services over a period not to exceed 24
months. The maximum amortization period of sixty months represents the period
over which the majority of revenues from these surveys are expected to be
derived. We periodically review the carrying value of the multi-client data
library to assess whether there has been a permanent impairment of value and
then record losses when it is determined that estimated sales will not be
sufficient to cover the carrying value of the asset.

                                       14

<PAGE>

DEFERRED TAX ASSET

         Deferred taxes result from the effect of transactions that are
recognized in different periods for financial and tax reporting purposes. A
valuation allowance is established when it is more likely than not that some
portion or all of the deferred tax assets will not be realized. The valuation
allowance is then adjusted when the realization of deferred tax assets becomes
more likely than not. Adjustments are also made to recognize the expiration of
net operating loss and investment tax credit carry-forwards, with equal and
offsetting adjustments to the related deferred tax asset. Should the income
projections result in the conclusion that realization of additional deferred tax
assets is more likely than not, further adjustments to the valuation allowance
are made.

SOFTWARE CAPITALIZATION AND AMORTIZATION

         Software available for sale is included in other assets. Software
acquired through the purchase of software companies is capitalized at estimated
fair market value through allocation of the purchase price. For internally
developed software, we capitalize costs associated with the development of the
product from the time the product reaches technological feasibility until it is
ready for commercial release. The capitalized cost of the software, whether
developed or purchased, is charged to cost of services in the period sales occur
based on the percentage of total cost to total estimated sales multiplied by
actual sales during the period. The period of amortization begins when the
software is released to the market. In no case is the cumulative amortization
for a product allowed to fall below the amount that would be recorded using
straight-line amortization for that product's estimated useful life. Estimated
useful lives of our software products range from three to five years.

OTHER ACCOUNTING POLICIES

         Since our quasi-reorganization on July 31, 1991 with respect to Digicon
Inc., the tax benefits of net operating loss carryforwards existing at the date
of the quasi-reorganization have been recognized through a direct addition to
additional paid-in capital, when realization is more likely than not.
Additionally, the utilization of the net operating loss carry-forwards existing
at the date of the quasi-reorganization is subject to certain limitations. For
the nine months ended April 30, 2003, we recognized $1.8 million related to
these benefits.

         We receive some account receivable payments in foreign currency. We
currently do not conduct a hedging program for these receivables because we do
not consider our current exposure to foreign currency fluctuations to be
significant, although we have hedged certain future charter payments to be made
in a foreign currency.

         In August 2001, the Financial Accounting Standards Board issued SFAS
No. 143 (Asset Retirement Obligations). This standard requires that obligations
associated with the retirement of a tangible long-lived asset be recorded as a
liability when those obligations are incurred with the liability being initially
measured at fair value. We adopted the use of this accounting statement in
August 2002. Adoption did not have a material effect on our financial position
or results of operations.

         In October 2001, the Financial Accounting Standards Board issued SFAS
No. 144 (Accounting for the Impairment or Disposal of Long Lived Assets). This
standard develops one accounting model for long-lived assets that are to be
disposed of by sale, requiring such assets to be measured at the lower of book
value or fair value less cost to sell. The standard also provides guidance on
the recognition of liabilities for the obligations arising from disposal
activities. We adopted the use of this accounting statement in August 2002.
Adoption did not have a material effect on our financial position or results of
operations.

         In April 2002, the Financial Accounting Standards Board issued SFAS No.
145 (Rescission of FASB Statement No. 4, 44, and 64, Amendment of FASB Statement
No. 13 and Technical Corrections as of April 2002). Among other things, this
statement addresses how to report gains or losses resulting from the early
extinguishment of debt. Previously, any gains or losses were reported as an
extraordinary item. Upon adoption of SFAS No. 145, an entity is required to
evaluate whether the debt extinguishment is truly extraordinary in nature, in
accordance with Accounting Principles Board Opinion No. 30. We adopted the use
of this accounting statement in August 2002. The adoption of this statement will
likely preclude extraordinary classification of costs related to early debt
extinguishment, and the effect of adoption was immaterial.

                                       15

<PAGE>

         In July 2002, the Financial Accounting Standards Board issued SFAS No.
146 (Accounting for Costs Associated with Exit or Disposal Activities). This
standard requires recognition of costs associated with exit or disposal
activities when they are incurred rather than when management commits to an exit
or disposal plan. Examples of costs covered by this guidance include lease
termination costs, employee severance costs that are associated with
restructuring, discontinued operations, plant closings, or other exit or
disposal activities. We adopted the use of this accounting statement for all
activities initiated after December 31, 2002. Adoption did not have a material
effect on our financial position or results of operations.

         In December 2002, the FASB issued Interpretation No. 45 (FIN 45),
Guarantor's Accounting and Disclosure Requirements. FIN 45 expands required
disclosures for certain types of guarantees and recognition of a liability at
fair value of such guarantees at the time of issuance. The disclosure
requirements are effective for our second fiscal quarter financial statements,
while the fair value accounting requirements apply prospectively to guarantees
issued or modified after December 31, 2002. Adoption of FIN 45 did not have a
material effect on our financial position or results of operations.

         In January 2003, the FASB issued Interpretation No. 46 (FIN 46),
Consolidation of Variable Interest Entities. FIN 46 amended ARB 51, Consolidated
Financial Statements, and established standards for determining under what
circumstances a variable interest entity (VIE) should be consolidated with its
primary beneficiary. FIN 46 also requires disclosures about VIEs that the
company is not required to consolidate, but in which it has a significant
variable interest. Adoption of FIN 46 did not have a material effect on our
financial position or results of operations.

         In January 2003, the FASB issued Statement No. 148, Accounting for
Stock-Based Compensation, to provide alternative methods of transition for a
voluntary change to the fair value based method of accounting for stock-based
employee compensation. In addition, this Statement amends the disclosure
requirements of Statement 123 to require prominent disclosures in both annual
and interim financial statements about the method of accounting for stock-based
employee compensation and the effect of the method used on reported results. We
adopted the use of this accounting statement in January 2003. Adoption did not
have a material effect on our financial position or results of operations. We
have no plans to voluntarily expense stock options or change our current
stock-based compensation program. We have included the required interim
disclosures in Note 12, Stock Based Compensation.

ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES REGARDING MARKET RISK

         At April 30, 2003, we had limited market risk related to foreign
currencies. In March 2001, we entered into a contract requiring payments in
Norwegian kroner to charter the seismic vessel M/V Seisquest. The contract
requires 36 monthly payments commencing on June 1, 2001. To protect our exposure
to exchange rate risk, we entered into multiple forward contracts as cash flow
hedges fixing our exchange rates for Norwegian kroner to the U.S. dollar. The
total fair value of the open forward contracts at April 30, 2003 in U.S. dollars
was $4.5 million.

         As of February 14, 2003, with the signing of the new Credit Agreement,
we are exposed to interest rate risk based upon fluctuations in the Libor rate.
To partially mitigate this risk, on February 25, 2003 we entered into interest
rate swaps in the notional amount of $80 million, effectively hedging 41% of our
exposure to interest rate fluctuations for the two-year terms of the swaps. The
swaps had no value at inception.

         Details of the swaps are summarized in the following table:

<TABLE>
<CAPTION>
Tranche Hedged                      Amount          Term             Pay %         Receive     Libor Floor
--------------                  --------------    ---------          ----          -------     -----------
                                (in thousands)
<S>                             <C>               <C>                <C>           <C>         <C>
    Term A                         $ 25,000       24 months          1.86           Libor          None
    Term B                         $ 55,000       24 months          2.49           Libor           2%
</TABLE>

         The fair value of the swaps on April 30, 2003 was $410,000 and is
included in other accrued liabilities on the "Consolidated Balance Sheets".

                                       16

<PAGE>

ITEM 4. CONTROLS AND PROCEDURES

         Our management, including the Chief Executive Officer and Chief
Financial Officer, has conducted an evaluation of the effectiveness of
disclosure controls and procedures within ninety days of the filing of this
report pursuant to Exchange Act Rule 13a-14. Based on that evaluation, the Chief
Executive Officer and Chief Financial Officer concluded that the disclosure
controls and procedures are effective in ensuring that information required to
be disclosed in the reports we file or submit under the Exchange Act is
recorded, processed, summarized, and reported within the time periods specified
in Securities and Exchange Commission (SEC) rules and forms. There have been no
significant changes in internal controls, or in factors that could significantly
affect internal controls, subsequent to the date our management, including its
Chief Executive Officer and Chief Financial Officer, completed its evaluation.

                           PART II. OTHER INFORMATION

ITEM 1. LEGAL PROCEEDINGS

         On September 28, 2002, we filed suit in Federal Court against one of
our customers in the amount of $6.8 million for failure to pay past due invoices
and for other damages. The customer has, in turn, filed a counterclaim against
us alleging that the services were not properly performed but did not specify
the amount of damages claimed. We believe the facts in the matter are in our
favor, however, during our third quarter we reserved $2.9 million of the related
receivable in response to a going concern qualification to the audit opinion in
the customer's recent Form 10-K filing. We will continue to monitor the
financial condition of the customer and, if necessary, adjust the allowance for
doubtful accounts to reflect current circumstances. We expect the matter to go
to trial in 2004. Our remaining income statement exposure to this issue ranges
from $0 to $2.9 million.

ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K

         a)       EXHIBITS FILED WITH THIS REPORT:

<TABLE>
<CAPTION>
EXHIBIT
  NO.                              DESCRIPTION
-------                            ------------
<S>       <C>
 10.1     --    Credit Agreement among Veritas DGC Inc., as borrower,
                and Wells Fargo, Inc., as a bank and agent for the banks
                named therein, dated July 19, 2001.  (Exhibit 10-W to
                Veritas DGC Inc.'s Form 10-K for the year ended July 31,
                2001 is incorporated herein by reference.)

 10.2     --    Second Amendment to Credit Agreement, effective as of
                July 1, 2002, by and among Veritas DGC Inc., Veritas DGC
                Limited, Veritas Energy Services Inc., Veritas Energy
                Services Partnership, certain Banks party thereto, Wells
                Fargo Bank Texas, N.A., as agent, and HSBC Bank Canada, as
                agent. (Exhibit 10.1 to Veritas DGC Inc.'s Current Report on
                Form 8-K dated September 27, 2002 is incorporated herein by
                reference.)

 10.3     --    Credit Agreement, dated as of February 14, 2003, among
                Veritas DGC Inc., Veritas DGC Limited, Veritas Energy
                Services Inc., Veritas Energy Services Partnership, Deutsche
                Bank AG, New York Branch, as Administrative Agent, Deutsche
                Bank AG, Canada Branch, as Canadian Administrative Agent,
                and the various lending institutions named therein. (Exhibit
                10.1 to Veritas DGC Inc.'s Current Report on Form 8-K dated
                February 19, 2003 is incorporated herein by reference.)
</TABLE>

                                       17

<PAGE>

<TABLE>
<S>       <C>
 10.4     --    Letter of Agreement between Veritas DGC Inc. and Anthony
                Tripodo dated November 8, 2002 (Exhibit 10.4 to Veritas DGC
                Inc.'s Form 10-Q for the quarter ended January 31, 2003
                is incorporated herein by reference.)

*10.5     --    Agreement and Release of All Claims dated April 23, 2003,
                between Veritas DGC Inc. and Anthony Tripodo.

*10.6     --    Consulting Services Agreement dated effective May 1, 2003
                by and between Veritas DGC Inc. and Arch Creek
                Advisors LLC. (Arch Creek Advisors LLC is owned and
                controlled by Anthony Tripodo, who, until April 30, 2003, was
                Executive Vice President, Special Projects of Veritas DGC
                Inc. and prior to that, was Executive Vice President, Chief
                Financial Officer & Treasurer of the Veritas DGC Inc.)

*99.1     --    Certification pursuant to Section 906 of the Sarbanes-Oxley
                Act of 2002 by David B. Robson.

*99.2     --    Certification pursuant to Section 906 of the Sarbanes-Oxley
                Act of 2002 by Matthew D. Fitzgerald.
</TABLE>

* filed herewith

         b)       REPORTS ON FORM 8-K

         On February 5, 2003, we filed a report under Item 5 on Form 8-K
regarding the anticipated redemption of our 9 3/4 Senior Notes.

         On February 19, 2003, we filed a report under Item 5 on Form 8-K
regarding our credit agreement with Deutsche Bank AG.

         On May 30, 2003, we filed a Form 8-K regarding our earnings release
conference call for our 3rd Quarter, 2003.

                                       18

<PAGE>

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, on the 13th day of June 2003.

                           VERITAS DGC INC.

                           By: /s/ David B. Robson
                               -------------------------------------------------
                               DAVID B. ROBSON
                               Chairman of the Board and Chief Executive Officer

                               /s/ Matthew D. Fitzgerald
                               -------------------------------------------------
                               MATTHEW D. FITZGERALD
                               Executive Vice President, Chief Financial Officer
                               and Treasurer

                                       19

<PAGE>

                                 CERTIFICATIONS

I, David B. Robson, certify that:

1. I have reviewed this quarterly report on Form 10-Q of Veritas DGC Inc.;

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

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

4. The registrant's other certifying officers and I are responsible for
establishing and maintaining disclosure controls and procedures (as defined in
Exchange Act Rules 13a-14 and 15d-14) for the registrant and we have:

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

(b) evaluated the effectiveness of the registrant's disclosure controls and
procedures as of a date within 90 days prior to the filing date of this
quarterly report (the "Evaluation Date"); and

(c) presented in this quarterly report our conclusions about the effectiveness
of the disclosure controls and procedures based on our evaluation as of the
Evaluation Date;

5. The registrant's other certifying officers and I have disclosed, based on our
most recent evaluation, to the registrant's auditors and the audit committee of
registrant's board of directors (or persons performing the equivalent function):

(a) all significant deficiencies in the design or operation of internal controls
which could adversely affect the registrant's ability to record, process,
summarize and report financial data and have identified for the registrant's
auditors any material weaknesses in internal controls; and

(b) any fraud, whether or not material, that involves management or other
employees who have a significant role in the registrant's internal controls; and

6. The registrant's other certifying officers and I have indicated in this
quarterly report whether or not there were significant changes in internal
controls or in other factors that could significantly affect internal controls
subsequent to the date of our most recent evaluation, including any corrective
actions with regard to significant deficiencies and material weaknesses.

Date: June 13, 2003
                               /s/ David B. Robson
                               -------------------
                               David B. Robson
                               Chief Executive Officer

                                       20

<PAGE>

                                 CERTIFICATIONS

I, Matthew D. Fitzgerald, certify that:

1. I have reviewed this quarterly report on Form 10-Q of Veritas DGC Inc.;

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

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

4. The registrant's other certifying officers and I are responsible for
establishing and maintaining disclosure controls and procedures (as defined in
Exchange Act Rules 13a-14 and 15d-14) for the registrant and we have:

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

(b) evaluated the effectiveness of the registrant's disclosure controls and
procedures as of a date within 90 days prior to the filing date of this
quarterly report (the "Evaluation Date"); and

(c) presented in this quarterly report our conclusions about the effectiveness
of the disclosure controls and procedures based on our evaluation as of the
Evaluation Date;

5. The registrant's other certifying officers and I have disclosed, based on our
most recent evaluation, to the registrant's auditors and the audit committee of
registrant's board of directors (or persons performing the equivalent function):

(a) all significant deficiencies in the design or operation of internal controls
which could adversely affect the registrant's ability to record, process,
summarize and report financial data and have identified for the registrant's
auditors any material weaknesses in internal controls; and

(b) any fraud, whether or not material, that involves management or other
employees who have a significant role in the registrant's internal controls; and

6. The registrant's other certifying officers and I have indicated in this
quarterly report whether or not there were significant changes in internal
controls or in other factors that could significantly affect internal controls
subsequent to the date of our most recent evaluation, including any corrective
actions with regard to significant deficiencies and material weaknesses.

Date: June 13, 2003
                               /s/ Matthew D. Fitzgerald
                               -------------------------
                               Matthew D. Fitzgerald
                               Chief Financial Officer

                                       21

<PAGE>

                                 EXHIBIT INDEX

<TABLE>
<CAPTION>
EXHIBIT
  NO.                              DESCRIPTION
-------                            ------------
<S>             <C>
 10.1     --    Credit Agreement among Veritas DGC Inc., as borrower,
                and Wells Fargo, Inc., as a bank and agent for the banks
                named therein, dated July 19, 2001.  (Exhibit 10-W to
                Veritas DGC Inc.'s Form 10-K for the year ended July 31,
                2001 is incorporated herein by reference.)

 10.2     --    Second Amendment to Credit Agreement, effective as of
                July 1, 2002, by and among Veritas DGC Inc., Veritas DGC
                Limited, Veritas Energy Services Inc., Veritas Energy
                Services Partnership, certain Banks party thereto, Wells
                Fargo Bank Texas, N.A., as agent, and HSBC Bank Canada, as
                agent. (Exhibit 10.1 to Veritas DGC Inc.'s Current Report on
                Form 8-K dated September 27, 2002 is incorporated herein by
                reference.)

 10.3     --    Credit Agreement, dated as of February 14, 2003, among
                Veritas DGC Inc., Veritas DGC Limited, Veritas Energy
                Services Inc., Veritas Energy Services Partnership, Deutsche
                Bank AG, New York Branch, as Administrative Agent, Deutsche
                Bank AG, Canada Branch, as Canadian Administrative Agent,
                and the various lending institutions named therein. (Exhibit
                10.1 to Veritas DGC Inc.'s Current Report on Form 8-K dated
                February 19, 2003 is incorporated herein by reference.)
</TABLE>

<PAGE>

<TABLE>
<S>             <C>
 10.4     --    Letter of Agreement between Veritas DGC Inc. and Anthony
                Tripodo dated November 8, 2002 (Exhibit 10.4 to Veritas DGC
                Inc.'s Form 10-Q for the quarter ended January 31, 2003
                is incorporated herein by reference.)

*10.5     --    Agreement and Release of All Claims dated April 23, 2003,
                between Veritas DGC Inc. and Anthony Tripodo.

*10.6     --    Consulting Services Agreement dated effective May 1, 2003
                by and between Veritas DGC Inc. and Arch Creek
                Advisors LLC. (Arch Creek Advisors LLC is owned and
                controlled by Anthony Tripodo, who, until April 30, 2003, was
                Executive Vice President, Special Projects of Veritas DGC
                Inc. and prior to that, was Executive Vice President, Chief
                Financial Officer & Treasurer of the Veritas DGC Inc.)

*99.1     --    Certification pursuant to Section 906 of the Sarbanes-Oxley
                Act of 2002 by David B. Robson.

*99.2     --    Certification pursuant to Section 906 of the Sarbanes-Oxley
                Act of 2002 by Matthew D. Fitzgerald.
</TABLE>

* filed herewith