**UNITED STATES**

**SECURITIES AND EXCHANGE COMMISSION**

**Washington, D.C. 20549**

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**Form 10-K/A**

**(Amendment No. 1)**

**(Mark One)**
| **x**                                                                                                                                 | **ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE  SECURITIES EXCHANGE ACT OF 1934**     |
|---------------------------------------------------------------------------------------------------------------------------------------|-----------------------------------------------------------------------------------------------|
|                                                                                                                                  |                                                                                          |   |
| **For the fiscal year ended July 31, 2006**                                                                                           |
| ** **                                                                                                                            |
| **OR**                                                                                                                                |
| ** **                                                                                                                            |
| **o**                                                                                                                                 | **TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES  EXCHANGE ACT OF 1934** |
|                                                                                                                                  |                                                                                          |   |
| **For the transition period  from                to** |

 

**Commission file number 1-7427**

**Veritas DGC Inc.**

(Exact name of registrant asspecified in its charter)

| **Delaware**                              |   | **76-0343152**       |
|-------------------------------------------|--------|----------------------|
| (State or other  jurisdiction of          |   | (I.R.S. Employer     |
| incorporation or  organization)           |   | Identification  No.) |
|                                      |   |                 |
| **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 pursuantto 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 checkmark if the registrant is a well-known seasoned issuer, as defined in Rule 405of the Securities Act. Yes x   No o

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

Indicate by checkmark whether the registrant (1) has filed all reports required to be filed bySection 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding12 months (or for such shorter period that the registrant was required to filesuch reports), and (2) has been subject to such filing requirements for thepast 90 days.  Yes x   No** **o

Indicate by checkmark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-Kis not contained herein, and will not be contained, to the best of registrant’sknowledge, in definitive proxy or information statements incorporated byreference in Part III of this Form 10-K or any amendment to this Form10-K.   o

Indicateby check mark whether the registrant is a large accelerated filer, anaccelerated filer, or a non-accelerated filer. See definition of “accelerated filer and large accelerated filer” inRule 12b-2 of the Exchange Act.

Large accelerated filer   x                          Acceleratedfiler   o                          Non-acceleratedfiler   o

Indicate by check markwhether the registrant is a shell company (as defined in Rule 12b-2 of theSecurities Exchange Act of 1934). Yes o   No x

The aggregatemarket value of the registrant’s voting stock held by non-affiliates of theregistrant was $1,589 million as of January 31, 2006.

The number ofshares of the Company’s common stock, $.01 par value, outstanding at October31, 2006 was 36,171,810.

 

 

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**EXPLANATORY NOTE**

ThisAmendment No. 1 to our Annual Report on Form 10-K for the year ended July 31,2006 is being filed to provide the information required by Part III of Form10-K.

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**ITEM 10.**               Directorsand Executive Officers of Registrant

Certaininformation concerning each of our eight directors as of October 31, 2006, isset forth below:
| Name                | ** ** | **Principal Position  with Veritas DGC** | ** ** | **Age** | ** ** | **Director  Since** | ** ** | **Member of**                                                                | ** ** |
|---------------------|------------|---------------------------------------------------------|------------|---------|------------|---------------------|------------|-----------------------------------------------------------------------------------|------------|
| Loren K. Carroll    |       | Director                                                |       | 63      |       | 2003                |       | Audit  committee; compensation committee                                          |       |
|                |       |                                                    |       |    |       |                |       |                                                                              |       |
| Clayton P.  Cormier |       | Director                                                |       | 74      |       | 1991                |       | Audit  committee (chairman)                                                       |       |
|                |       |                                                    |       |    |       |                |       |                                                                              |       |
| James R. Gibbs      |       | Director                                                |       | 62      |       | 1997                |       | Compensation  committee; nominating and corporate governance committee (chairman) |       |
|                |       |                                                    |       |    |       |                |       |                                                                              |       |
| Thierry Pilenko     |       | Director,  Chairman and Chief Executive Officer         |       | 49      |       | 2004                |       | Innovation  and technology committee (chairman)                                   |       |
|                |       |                                                    |       |    |       |                |       |                                                                              |       |
| Jan Rask            |       | Director                                                |       | 51      |       | 1998                |       | Audit  committee; nominating and corporate governance committee                   |       |
|                |       |                                                    |       |    |       |                |       |                                                                              |       |
| Yoram Shoham        |       | Director                                                |       | 63      |       | 2005                |       | Innovation  and technology committee                                              |       |
|                |       |                                                    |       |    |       |                |       |                                                                              |       |
| David F. Work       |       | Director                                                |       | 61      |       | 2004                |       | Compensation  committee (chairman)                                                |       |
|                |       |                                                    |       |    |       |                |       |                                                                              |       |
| Terence K. Young    |       | Director                                                |       | 60      |       | 2005                |       | Innovation and  technology committee                                              |       |

 

**Directors**

***Loren K. Carroll***is currently a financial and strategic business consultant.  Until his retirement in April 2006, Mr.Carroll was president and chief executive officer of M-I Swaco and was alsoexecutive vice president of Smith International, Inc. Mr. Carrollalso serves as a director of Smith International, Inc., FleetwoodEnterprises, Inc. and Forest Oil Corporation. Mr. Carroll joinedSmith International in December 1984 as vice president and chief financialofficer. In January 1988 he was appointed executive vice president andchief financial officer of Smith International and served in that capacityuntil March 1989. Mr. Carroll then rejoined Smith International in1992 as executive vice president and chief financial officer. SmithInternational holds a 60% interest in M-I Swaco.

***Clayton P. Cormier***is currently a financial and insurance consultant. Previously, Mr. Cormierwas a senior vice president in the oil and gas division of Johnson &Higgins, an insurance broker, from 1986 to 1991 and previously served aschairman of the board, president, and chief executive officer of AnconInsurance Company, S.A. and as an assistant treasurer of ExxonMobil Corp.

***James R. Gibbs***is chairman, president and chief executive officer of Frontier Oil Corporation,an oil refining and marketing company. He has been chairman sinceJanuary 1999, chief executive officer since 1992 and president since 1987.He has been employed there for twenty-four years. Mr. Gibbs is a directorof Frontier Oil Corporation and Smith International, Inc., an advisory directorof Frost Bank-Houston, and a member of the Board of Trustees of SouthernMethodist University.

***Thierry Pilenko***became chairman and chief executive officer and a director of Veritas DGC inMarch 2004. Prior to his appointment and since 2001, Mr. Pilenkoserved as managing director of SchlumbergerSema, a Schlumberger Ltd.company located in Paris. From 1998 to 2001, he was president of Geoquest,another Schlumberger Ltd. company located in Houston, Texas.Mr. Pilenko was employed by Schlumberger Ltd. and its affiliatedcompanies in various parts of the world beginning in 1984 in a variety ofprogressively more responsible operating positions.  Mr. Pilenko is also a director of HerculesOffshore, Inc.

***Jan Rask***is currently president and chief executive officer and a director of TODCO,formerly known as R & B Falcon, and has held that position sinceJuly 2002. From September 2001 to July 2002, he was the ManagingDirector-Acquisitions and Special Projects of PrideInternational, Inc. and from July 1996 to September 2001,Mr. Rask was president, chief executive officer and director of MarineDrilling Companies, Inc. Mr. Rask served as president and chiefexecutive officer of Arethusa (Off-

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Shore)Limited from May 1993 until the acquisition of Arethusa (Off-shore)Limited by Diamond Offshore Drilling, Inc. in May 1996. Mr. Raskjoined Arethusa (Off-shore) Limited’s principal operating subsidiary in 1990 asits president and chief executive officer.

***Yoram Shoham***is currently an oil and gas industry consultant.  From 1983 until 2004, Mr. Shoham was employedby Shell Oil Company and Royal Dutch Shell and their affiliated companies in avariety of progressively more responsible positions, the most recent of whichwas vice president – external technology relations and consultant to ShellInternational Exploration & Production, Inc.

***David F. Work***is currently an oil and gas industry consultant. From 2001 untilOctober 2003, he served as the chairman of Energy VirtualPartners, Inc., a privately-held company engaged in the business ofmanaging under-resourced oil and gas properties. For more than five yearsprior to his retirement from BP Amoco in October 2000, he served invarious management capacities with Amoco and BP Amoco, including group vicepresident of exploration and, finally, as regional president in the UnitedStates. Mr. Work currently also serves as a director of Edge PetroleumCorporation and CrystaTech, Inc.

***Terence K. Young***is currently a professor and head of the Department of Geophysics at the ColoradoSchool of Mines and has served as such since 2000.  From 1983 until 2000, Mr. Young was employedby Mobil Research and Development Corporation in a variety of roles, the lastof which was as a visiting scholar at the Institute for Statistics and Its Applications,Carnegie Mellon University.  From 1982 to1983, he served as a research geophysicist with Compagnie Générale deGéophysique, from 1979 to 1982, he served as assistant professor, ColoradoSchool of Mines, and from 1969 to 1974 was a pilot and flight instructor in theUnited States Navy.

**ExecutiveOfficers**

Except as described under the heading “EmploymentAgreements” below, our executive officers serve at the pleasure of our Board ofDirectors and are subject to annual appointment by our Board at its firstmeeting following each annual meeting of stockholders. In addition toMr. Pilenko, whose biographical information is listed above under “Directors,”our executive officers include the following individuals as of October 31,2006:

***Timothy L. Wells***,age 53, was appointed president and chief operating officer of Veritas DGC inJanuary 1999. He has been employed by Veritas DGC for twenty years, havingserved as president of Veritas DGC’s Asia Pacific division, regional manager ofNorth and South American processing, manager of research and programming and invarious other capacities in North and South America.

***Mark E. Baldwin***,age 53, was appointed executive vice president, chief financial officer andtreasurer of Veritas DGC in August 2004. Prior to his appointment andsince 2003, Mr. Baldwin was an operating partner in First ReserveCorporation, a privately-held oilfield services equity firm. From 2001 to 2002,he served as executive vice president and chief financial officer ofNexitraone, LLC, a privately-held telecommunications company. From 1997 to2001, Mr. Baldwin was chairman and chief executive officer ofPentacon, Inc., then a publicly traded distributor of aerospace andindustrial fasteners. For the seventeen years prior to 1997, Mr. Baldwin helda number of progressively more responsible financial and operating positionswith Keystone International, Inc., then a publicly traded manufacturer offlow control devices.

***Dennis S. Baldwin***,age 45, was appointed vice president, corporate controller of Veritas DGC inNovember 2005.   He first joined VeritasDGC in June 2005 as chief financial officer of the company’s NorthAmerica/South America Region.  From April2002 until joining Veritas DGC, Mr. Baldwin was employed by UniversalCompression Holdings Inc., most recently as corporate controller and principleaccounting officer.  From 1989 throughApril 2002, he was employed by CEMEX and its predecessor, Southdown, Inc. in avariety of financial and accounting roles.

***Larry L. Worden***,age 54, was appointed vice president, general counsel and secretary of VeritasDGC in December 1998. For ten years prior to that time, Mr. Wordenserved as vice president, general counsel and secretary of KingRanch, Inc., a privately-held Texas corporation. Prior to his employmentwith King Ranch, Inc. he served as division counsel at National GypsumCompany and practiced law at two private law firms.

**Audit Committee**

OurBoard has appointed a standing audit committee in accordance with therequirements of the Securities Exchange Act of 1934 and the New York StockExchange. The members of the audit committee are Messrs. Carroll, Cormier andRask. The audit committee assists the Board in ensuring that our accounting andreporting practices are in accordance with applicable

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requirements. Specifically, the audit committee annuallyreviews and selects the independent registered public accounting firm to beengaged to audit the consolidated financial statements of our company andmanagement’s report on internal control over financial reporting. Under ouraudit committee charter, the audit committee has the ultimate authority and responsibility to select, evaluate, and, whereappropriate, replace the independent registered public accountingfirm.  Additionally, the audit committeereviews with representatives of such firm the plan and results of the auditingengagement, makes inquiries as to the adequacy of internal accounting controls,and considers the independence of our independent registered public accountingfirm. The committee also reviews the scope and scheduling of our internalaudits and reviews the results of those audits with the company’s director ofinternal audit and management.

Ourboard of directors has determined that each member of the audit committee isfinancially literate and each has accounting or related financial managementexpertise, as our Board interprets those terms in its business judgment. Ourboard of directors has designated each of Messrs Carroll, Cormier, and Rask as “auditcommittee financial experts” following its determination that each meets thecriteria for such designation set forth in Item 401(h) of Regulation S-K.In addition, our board has affirmatively determined that Messrs Carroll,Cormier, and Rask (i) have no relationship to the company that mayinterfere with the exercise of their independence from management and thecompany; (ii) have no material relationship with the company (eitherdirectly as a partner, shareholder or officer of an organization that has arelationship with the company) and (iii) are otherwise “independent” asthat term is defined in Section 303A.02 of the New York Stock ExchangeListed Company Manual and Rule 10A-3(b)(1) and Item 7(d)(3)(iv) ofSchedule 14A under the Securities Exchange Act of 1934.

**StockholderRecommendations of Nominee(s) to Our Board**

InOctober 2004, we adopted a new policy governing the method by whichstockholders may recommend nominees to our board of directors. Under the termsof that policy, stockholders or a group of stockholders may recommend potentialcandidates for consideration by our nominating and corporate governancecommittee by sending a written request to the company’s corporate secretary notearlier than the 150th calendar day and not later than the 90th calendar day beforethe anniversary of the date our proxy statement was released to securityholders in connection with our preceding year’s annual meeting. Such writtenrequest shall be sent to our principal executive offices, 10300 Town ParkDrive, Houston, Texas 77072, Attn: Corporate Secretary. The written requestmust include the candidate’s name, contact information, biographicalinformation and qualifications. The request must also include the potentialcandidate’s written consent to being named in the proxy statement as a nomineeand to serving as a director if nominated and elected. The stockholder or groupof stockholders making the recommendation must also disclose, with the writtenrequest described above, the number of shares that the stockholder or group beneficiallyowns and the period of time the stockholder or group has beneficially owned theshares. The committee may request additional information from time to time fromthe nominee or the stockholder.

Inaccordance with SEC rules, if the committee receives not later than 120calendar days before the anniversary of the date we released our prior year’sproxy statement to stockholders, a recommended nominee from any stockholder orgroup beneficially owning more than 5% of our shares (and who has owned such amountfor at least one year), we will disclose the identity of the candidate and thestockholder or group that recommended the candidate as well as whether thecommittee chose to nominate the candidate, provided that disclosure of thenames will not be made without the written consent of both the candidate andthe stockholder or group that made the recommendation.

Pursuantto our bylaws, only persons who are nominated in accordance with the followingprocedures are eligible for election as directors. Nominations of persons forelection to our board of directors may be made at a meeting of stockholdersonly (a) by or at the direction of our board of directors or (b) byany stockholder of our company who is a stockholder of record at the time ofgiving of the required notice described below, who is entitled to vote for theelection of directors at the meeting, and who complies with the followingnotice procedures. All nominations, other than those made by or at thedirection of our board of directors, must be made pursuant to timely notice inwriting to the Secretary of the Company. To be timely, a stockholder’s noticemust be delivered to or mailed and received at our principal executive offices,10300 Town Park Drive, Houston, Texas 77072 Attention: Secretary, (i) withrespect to an election to be held at an annual meeting not less than90 days nor more than 120 days before that date which is the firstanniversary of the preceding year’s annual meeting and (ii) with respectto any election to be held at a special meeting of stockholders, no earlierthan the ninetieth day prior to such special meeting and not later than theclose of business on the later of the seventieth day prior to such specialmeeting or the tenth day following the day on which public announcement isfirst made of the date of the special meeting or of the nominees proposed byour board of directors to be elected at such meeting. If the annual meeting isadvanced by more than 30 days, or delayed by more than 90 days, fromthe anniversary date of the preceding year’s annual meeting, the nominationmust be delivered not earlier than the 120th day prior to the current year’sannual meeting and not later than the later of (1) the 90th day prior tothe annual meeting or (2) the 10th day following the announcement of thechange in the annual meeting date. A stockholder’s notice to the Secretary ofour company

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must set forth(a) as to each person whom the stockholder proposes to nominate forelection as a director, all information relating to the person that is requiredto be disclosed in solicitations for proxies for election of directors, or isotherwise required, pursuant to Regulation 14A under the SecuritiesExchange Act (including the written consent of such person to be named in theproxy statement as a nominee and to serve as a director if elected); and(b) as to the stockholder giving the notice and the beneficial owner, ifany, on whose behalf the nomination or proposal is made (i) the name andaddress, as they appear on our books, of such stockholder, and (ii) theclass and number of shares of capital stock of our company that arebeneficially owned by the stockholder.

**Section 16(a)Beneficial Ownership Reporting Compliance**

Section 16(a) of the Securities Exchange Act of1934 requires our directors, our executive officers and persons who own morethan 10% of a registered class of our equity securities to file reports ofownership and changes of ownership with the Securities and Exchange Commission.These persons are required to furnish us with copies of all Section 16(a) formsthey file.

Based solely upon a review of the Section 16(a) formsfurnished to us, we believe that, with respect to the fiscal year ended July31, 2006, each of our directors and officers and greater than 10% stockholdersmet all applicable filing requirements under Section 16(a) of the SecuritiesAct of 1934 with the exception of Mr. Dennis S. Baldwin, who filed a singlelate report on Form 4 which included a single transaction.  We are not aware of any instances of afailure to file a required Form 3 or Form 5.

**Independence of Directors**

Our Board has affirmatively determined that Messrs. Carroll,Cormier, Gibbs, Rask, Shoham, Work and Young (i) have no relationship tothe company that may interfere with the exercise of their independence frommanagement and the company; (ii) have no material relationship with thecompany (either directly or as a partner, shareholder or officer of anorganization that has a relationship with the company) and (iii) areotherwise “independent” as that term is defined in Section 303A.02 of theNew York Stock Exchange Listed Company Manual and Rule 10A-3(b)(1) andItem 7(d)(3)(iv) of Schedule 14A under the Securities Exchange Act of1934.  The Board has not adoptedcategorical standards for the determination of independence but instead makessuch determinations by reference to definitions provided in applicable law andNew York Stock Exchange requirements.

Inmaking its determination as to Mr. Young, the Board considered therelationships between the company and the Colorado School of Mines, whichemploys Mr. Young as a professor and head of the Geophysics Department, andbetween the company and the Society of Exploration Geophysicists, which Mr.Young served as president from October 2005 to October 2006.  The company annually funds certain researchprojects with and provides certain services and equipment free of charge to theColorado School of Mines, a non-profit educational institution.  The company paid or contributed to theColorado School of Mines $389,660, $140,800, and $139,400 in fiscal years 2006,2005, and 2004, respectively.  Thecompany paid the Society of Exploration Geophysicists, a non-profitprofessional society, $276,886, $116,400, and $89,200 in fiscal years 2006,2005, and 2004, respectively.  Thesepayments consisted of fees for booth rental at the Society’s annual trade show,membership dues paid on behalf of company employees, and admission fees paid onbehalf of company employees for programs sponsored by the organization.  The Board deemed the payments and benefitsthe company paid to and received from each of the two entities not to bematerial either to the company or the other entities involved and, that,therefore, Mr. Young’s relationship to each entity is not material and does notaffect his independence as a director of the company.

**ExecutiveSessions of Independent Directors**

Ournon-employee directors, all of whom are independent directors, meet inexecutive sessions held immediately following our regularly scheduled boardmeetings.  In fiscal year 2006,non-employee directors met in executive session 4 times.  The non-employee directors chose Mr. Gibbs topreside at their meetings, and he presided at all such meetings during fiscalyear 2006.

**Communicatingwith our Board or Directors**

OurBoard has adopted a procedure by which interested parties may communicatedirectly with the Board, individual directors, committees of the Board,non-employee directors as a group or the director who presides over meeting ofnon-employee directors. Interested parties may communicate in writing with ourBoard, individual directors, committees of the Board, non-employee directors asa group or the director who presides over meeting of non-employee directors atany time by mail addressed to the company’s corporate secretary at the company’sprincipal executive offices, 10300 Town Park Drive, Houston, Texas 77072.  Interested parties should clearly indicate onthe envelope the intended recipient of the communication and that thecommunication is an “Interested Party Communication.”  All such communications received by thecorporate secretary will be

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forwarded to therecipient designated on the envelope. The corporate secretary will not review or pre-screen any interestedparty communications.  All communicationsdesignated for our non-employee directors as a group or to our Board will beforwarded to the presiding director, currently Mr. Gibbs, or if no presidingdirector has been designated, a non-employee director designated by thechairman of the Board.  Allcommunications designated to a particular committee of the Board will beforwarded to the chairman of that committee. All communications designated to a particular director will be forwardedto that director.  To report any issuesrelating to the company’s accounting, accounting controls, financial reportingor other practices, interested parties may also call the company’s confidentialhotline at 800-736-0460 in the U.S. or in Canada.  All calls are answered by a third-partyservice and will remain anonymous.

**Codeof Ethics**

Ourboard has adopted a code of ethics (we call it our “code of conduct”) thatgoverns the business conduct and ethics of our directors, all of our employeesand our executive officers, including our chief executive officer, our chieffinancial officer and our chief accounting officer. Our code of conduct hasbeen posted on our company’s internet website at www.veritasdgc.com. Inaddition, we will provide a printed copy of our code of conduct without chargeto any stockholder making written request to Larry L. Worden, Vice President,General Counsel and Secretary, 10300 Town Park Drive, Houston, Texas 77072. Itis our intention to disclose on our internet website within four business daysof any amendment or waiver.

·              thedate and nature of any amendment we make to any provision of our code ofconduct that applies to our chief executive officer, our chief financialofficer and our chief accounting officer and that relates to any element of thecode of ethics definition enumerated in Item 406(b) of Regulation S-K; and

·              informationrelated to any waiver, including any implicit waiver, we grant to our chiefexecutive officer, our chief financial officer and our chief accounting officerthat relates to any element of the code of ethics definition enumerated in Item406(b) of Regulation S-K.

**CorporateGovernance Guidelines / Committee Charters**

Our board ofdirectors has adopted written corporate governance guidelines that address suchmatters as board and committee functions and board and committee memberqualifications and responsibilities. In addition, our board has adopted writtencharters for its audit committee, compensation committee, and nominating andcorporate governance committee. Each of these charters was most recentlyamended in June 2006. Copies of our corporate governance guidelines and each ofour committee charters are available on our website at www.veritasdgc.com. Wewill provide a written copy of any of these documents without charge to anystockholder making written request to Larry L. Worden, Vice President, GeneralCounsel and Secretary, 10300 Town Park Drive, Houston, Texas 77072.

**ITEM 11.****      *Executive Compensation***

Thefollowing table reflects all forms of compensation for services to us for thethree years ended July 31, 2006, 2005 and 2004 of those individuals who(i) served as our chief executive officer during the fiscal year endedJuly 31, 2006, or (ii) were among our four most highly compensatedexecutive officers at July 31, 2006, other than the chief executiveofficer.

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**Summary Compensation Table**
| ** **                                                                            | ** ** | ** **       | ** ** | **Annual Compensation**  | ** ** | **Long-Term Compensation  Awards** | ** ** | ** **                          | ** **    |
|---------------------------------------------------------------------------------------|------------|------------------|------------|--------------------------|------------|------------------------------------|------------|-------------------------------------|---------------|
| **Name and Principal  Position**                                                      | ** ** | **Fiscal  Year** | ** ** | **Salary ($)**           | ** ** | **Bonus (1) ($)**                  | ** ** | **Other Annual  Compensation  ($)** | ** **    | **Restricted Stock  Awards ($)** | ** ** | **Securities  Underlying  Options (#)** | ** ** | **All Other  Compensation ($)** | ** ** |
| Thierry Pilenko (2)*Chairman and Chief Executive Officer*                             |       | 2006

2005

2004 |       | 487,308 457,692 181,731  |       | 732,500 572,917 232,359            | (6)        | 24,427  31,282  96,669              | (3)  (5)  (7) | 1,101,945

—

— | (4) | 37,500

—

120,000 |   | —

—

— |   |
|                                                                                  |       |             |       |                     |       |                               |       |                                |          |   |   |   |   |   |   |
| Timothy L. Wells*President and Chief Operating Officer*                               |       | 2006

2005

2004 |       | 356,154 336,154 315,000  |       | 428,000 336,667 194,706            |       | 65

195

—                     | (9)  (9)      | 587,66

—

77,460 | (4)  (10) | 20,000

—

24,700 |   | 11,000  10,750  11,759 | (8)

(8)

(8) |
|                                                                                  |       |             |       |                     |       |                               |       |                                |          |   |   |   |   |   |   |
| Mark E. Baldwin (11)*Executive Vice President, Chief Financial Officer and Treasurer* |       | 2006  2005  2004 |       | 309,231  276,923  — |       | 372,000 400,000

—            | (13)       | 7,456

12,612

—               | (12)  (14)    | 440,765

265,375

— | (4)  (15) | 15,000

—

— |   | 11,500  11,154  — | (8)

(8) |
|                                                                                  |       |             |       |                     |       |                               |       |                                |          |   |   |   |   |   |   |
| Dennis S. Baldwin (16)*Vice President, Corporate Controller*                          |       | 2006

2005

2004 |       | 174,615 20,269

—   |       | 162,250 19,833

—             |       | —

—

—              |          | 146,900 116,500

— | (4)  (17) | 5,000

— 

— |   | 5,807  —  — | (8) |
|                                                                                  |       |             |       |                     |       |                               |       |                                |          |   |   |   |   |   |   |
| Larry L. Worden*Vice President, General Counsel and Secretary*                        |       | 2006

2005

2004 |       | 244,615 229,615 210,923  |       | 245,000 201,250 105,955            |       | 195  195  —                    | (9)  (9)      | 242,320

—

— | (4) | 7,250

—

12,400 |   | 9,907  12,094  9,350 | (8)

(8)

(8) |

 

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(1)   Bonuses are reported for the year in whichthey were earned. A portion of the bonus payments reported for fiscal year 2006was paid in October 2006, a portion of the bonus payments for fiscal year 2005was paid in October 2005, and a portion of the bonus payments reported forfiscal year 2004 was paid in March and April 2005.

(2)   Joined the company in March 2004.

(3)   Includes reimbursement of $7,196 for U.S.income taxes due on the payment of legal expenses by the company in fiscal year2004 (see Note 5 below), reimbursement of $6,000 for club membership dues, andreimbursement of expenses of $11,231 for the lease of an automobile.

(4)   Restricted stock grants under our long-termequity-based incentive plan shown in this column were actually made on October6, 2006 but were earned in fiscal year 2006. On the date of grant, the restricted shares were valued at $65 pershare, the closing price of our Common Stock on the New York Stock Exchange onthe day before the grant.  All of therestricted shares granted will vest on July 31, 2008, assuming that the granteeof the shares is still then employed by us. The following number of restricted shares were granted to our namedexecutive officers:  Mr. Pilenko – 16,953shares; Mr. Wells – 9,041 shares; Mr. M. Baldwin – 6,781 shares; Mr. D. Baldwin– 2,260 shares and Mr. Worden – 3,278 shares. Based on the closing price of our Common Stock of $57.27 on the New YorkStock Exchange on July 31, 2006, the unvested restricted shares held by eachsuch officer would have had the following value as of July 31, 2006: Mr.Pilenko — $970,898; Mr. Wells — $517,778; Mr. M. Baldwin — $388,348; Mr. D.Baldwin — $129,430; and Mr. Worden — $213,503.  We do not currently pay dividends on our Common Stock; however, we wouldpay dividends on the restricted stock should our dividend policy change.

(5)   Includes payment of $5,643 for tax preparationassistance for calendar year 2004; reimbursement of expenses of $12,769 for thelease of an automobile; reimbursement of expenses of $323 incurred inconnection with the purchase of a home in Houston, Texas, and payment of legalexpenses of $12,547.

(6)   Includes a $75,000 lump-sum payment made toMr. Pilenko upon his initial employment and an incentive bonus for fiscal year2004 of $157,359 actually paid in April 2005.

(7)   Reimbursement of legal expenses of $7,021 andpayment of the following re-location expenses: cash moving allowance—$37,500;freight for personal effects—$23,177, temporary housing expenses—$10,620,airfare to Houston for Mr. Pilenko and his family — $18,351.

(8)   Company matching contributions pursuant to our401(k) plan.

(9)   Incentive payments made under our health andwellness program.

(10)6,000 shares of restricted stock valued at$12.91 per share, the closing price of our Common Stock on the New York StockExchange on February 1, 2004, the day before the date of the grant. Of therestricted shares issued to Mr. Wells, 2,000 vested on February 2,2005, 2,000 vested on February 2, 2006, and, assuming that Mr. Wells isstill then employed by us and, absent a change in control of the company (asdefined in the restricted stock agreement), the remaining 2,000 shares willvest on February 2, 2007. In the event of a change in control, theremaining unvested shares will immediately vest.  On July 31, 2006, the remaining 2,000unvested restricted shares granted to Mr. Wells had a value of $114,540 basedon the closing price of our Common Stock of $57.27 per share on the New YorkStock Exchange. We do not currently pay dividends on our Common Stock; however,we would pay dividends on the restricted stock should our dividend policychange.

(11)Joined the company in August 2004.

(12)Includes reimbursement of $7,196 for U.S.income taxes due on the payment of legal expenses by the company in fiscal year2004 (see Note 14 below) and an incentive payment of $260 under our health andwellness program.

(13)Includes a $100,000 lump-sum payment made toMr. M. Baldwin upon his initial employment and an incentive bonus for fiscalyear 2005 of $300,000.

(14)Includes $12,547 in legal fees paid on behalfof Mr. M. Baldwin in April 2005 and a $65 incentive payment made under ourhealth and wellness program.

(15)12,500 shares of restricted stock valued at$21.23 per share, the closing price of our Common Stock on the New York StockExchange on August 23, 2004, the day before the date of the grant. Of therestricted shares issued to Mr. M. Baldwin, 4,167 vested on August 23, 2006,4,167 vested on August 

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23,2005, and, assuming that Mr. M. Baldwin is still then employed by us and,absent a change in control of the company (as defined in the restricted stockagreement), the remaining shares will vest 4,166 shares will vest on August 23,2007.  In the event of a change incontrol, the remaining unvested shares will immediately vest.  On July 31, 2006, the remaining unvested4,166 restricted shares had a value of $238,586 based on the closing price ofour Common Stock of $57.27 per share on the New York Stock Exchange. We do notcurrently pay dividends on our Common Stock; however, we would pay dividends onthe restricted stock should our dividend policy change.

(16)Joined the company in June 2005.

(17)2,500 shares of restricted stock valued at$46.60 per share, the closing price of our Common Stock on the New York StockExchange on June 19, 2005, the day before the date of the grant. Of therestricted shares issued to Mr. D. Baldwin, 833 vested on June 20, 2006, and,assuming that Mr. D. Baldwin is still then employed by us and, absent a changein control of the company (as defined in the restricted stock agreement), theremaining shares will vest as follows: 833 shares on June 20, 2007, and 834 onJune 20, 2008.  In the event of a changein control, the remaining unvested shares will immediately vest.  On July 31, 2006, the remaining unvested1,667 restricted shares had a value of $95,469 based on the closing price ofour Common Stock of $57.27 per share on the New York Stock Exchange. We do notcurrently pay dividends on our Common Stock; however, we would pay dividends onthe restricted stock should our dividend policy change.

The following table sets forth options we grantedduring the fiscal year ended July 31, 2006 to our named executiveofficers:

**OPTION GRANTS IN FISCAL YEAR ENDEDJULY 31, 2006**
|                               | ** ** | **Individual Grants**                                           | ** ** | ** **                                                                                        | ** ** |
|-------------------------------|------------|----------------------------------------------------------------------|------------|---------------------------------------------------------------------------------------------------|------------|
| **Name of Officer** | ** ** | **Number of securities  underlying options  granted** | ** ** | **Percent of total  options granted to  employees in fiscal  year** | ** ** | **Exercise  price  ($/share)** | ** ** | **Expiration  date** | ** ** | **Grant Date  Present Value(1) $** | ** ** |
| Thierry Pilenko               |       | 37,500                                                               | (2)        | 17.9                                                                                              |       | 31.94 |   | 10/14/2010 |   | 518,250 |   |
| Timothy L. Wells              |       | 20,000                                                               | (2)        | 9.5                                                                                               |       | 31.94 |   | 10/14/2010 |   | 276,400 |   |
| Mark E. Baldwin               |       | 15,000                                                               | (2)        | 7.2                                                                                               |       | 31.94 |   | 10/14/2010 |   | 207,300 |   |
| Dennis S.  Baldwin            |       | 5,000                                                                | (2)        | 2.4                                                                                               |       | 31.94 |   | 10/14/2010 |   | 69,100 |   |
| Larry L. Worden               |       | 7,250                                                                | (2)        | 3.5                                                                                               |       | 31.94 |   | 10/14/2010 |   | 100,195 |   |

 

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(1)   Grant Date Present Value of options granted was determined using thelattice-based option valuation method assuming no expected dividends over theircontractual life, a risk-free interest rate of 4.0%, expected volatility of50.8%, and an expected life of 4 years.

(2)   One-third of the options granted became exercisable on October 17, 2006,an additional one-third becomes exercisable on October 17, 2007, and the finalone-third becomes exercisable on October 17, 2008.

The following table setsforth information with respect to options to purchase our shares held by ournamed executive officers that were exercised during the fiscal year ended July31, 2006:

**AGGREGATED OPTION EXERCISES IN FISCALYEAR**

**ENDED JULY 31, 2006 AND FISCAL YEAREND OPTION VALUES**
|                    | ** ** | **Options Exercised During  Fiscal Year** | ** ** | **Number of Unexercised  Options  Held at Fiscal Year End  (#)** | ** ** | **Value of In-the-Money  Unexercised Options  Held at Fiscal Year End  ($)(1)** | ** ** |
|--------------------|------------|----------------------------------------------------------|------------|------------------------------------------------------------------------------------------------|------------|--------------------------------------------------------------------------------------------------------------------|------------|
| **Name**           | ** ** | **Shares  Acquired  on Exercise (#)**          | ** ** | **Value  Realized ($)**                                                                   | ** ** | **Exercisable**                                                                                                    | ** ** | **Unexercisable** | ** ** | **Exercisable** | ** ** | **Unexercisable** | ** ** |
| Thierry Pilenko    |       | —                                                   |       | —                                                                                         |       | 80,000                                                                                                             |       | 77,500 |   | 3,311,200 |   | 2,605,475 |   |
| Timothy L. Wells   |       | —                                                   |       | —                                                                                         |       | 46,330                                                                                                             |       | 26,175 |   | 1,687,637 |   | 791,144 |   |
| Mark E. Baldwin    |       | —                                                   |       | —                                                                                         |       | —                                                                                                             |       | 15,000 |   | — |   | 379,950 |   |
| Dennis S.  Baldwin |       | —                                                   |       | —                                                                                         |       | —                                                                                                             |       | 5,000 |   | — |   | 126,650 |   |
| Larry L. Worden    |       | —                                                   |       | —                                                                                         |       | 22,932                                                                                                             |       | 10,350 |   | 843,974 |   | 326,491 |   |

 

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(1)        Based on the difference between theJuly 31, 2006 closing price of our Common Stock of $57.27 per share onthe New York Stock Exchange and the exercise price.

**DirectorCompensation**

Eachof our directors who is not also an employee is paid an annual fee of $35,000plus travel expenses, a fee of $1,500 for attendance at each regular or specialboard and committee meeting (other than telephonic meetings) and a fee of $750for attendance at each telephonic board or committee meeting. Effective July 1,2006, the chairman of the audit committee is paid an

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additional annualfee of $15,000 and the chairmen of the compensation committee and thenominating and corporate governance committee are each paid an additional feeof $10,000 annually.  Prior to July 1,2006, the chairman of the audit committee was paid an additional annual fee of$10,000 and the chairmen of the compensation committee and the nominating andcorporate governance committee were each paid an additional fee of $5,000annually.

Underour Share Incentive Plan, non-employee directors are eligible to receive(1) nonqualified options, (2) share appreciation rights,(3) deferred share units, (4) restricted shares and(5) performance shares. The compensation committee determines the type ofawards granted and the terms of each grant. Each non-employee director isgranted options each year to purchase 6,000 shares of our common stock at fairmarket value on the date of grant. The options so granted vest immediately andhave a five-year term. Newly elected or appointed non-employee directors willbe granted options to purchase 10,000 shares of our common stock at fair marketvalue on the date of grant. The options granted to newly elected or appointednon-employee directors will have a five-year term and become exercisable asfollows: 2,500 options immediately upon the date of grant and an additional2,500 options on each subsequent year on the anniversary of the date of grant.Non-employee directors are allowed to elect to receive deferred share unitsissued under our Share Incentive Plan in lieu of either 100 percent or50 percent of their annual grant of options to purchase 6,000 shares ofour common stock. In the event of such an election, the electing director willreceive one deferred share unit in lieu of each three options: 2,000 deferredshare units in the event of a 100 percent election or 1,000 deferred shareunits in the event of 50 percent election. The deferred share units will bevested immediately upon grant. Each deferred share unit automatically convertsto one share of our common stock upon the director’s retirement or othertermination.  Only Mr. Gibbs made such anelection and in October 2005, we issued 2,000 deferred share units to him inlieu of 100 percent of his annual option grant.

Eachof our non-employee directors may elect to receive deferred share units issuedunder our Share Incentive Plan in lieu of either 25, 50, 75 or 100 percentof his or her annual director’s fee. Once vested, each deferred share unit isconvertible into one share of our common stock upon the director’s retirementor other termination. A director who elects to receive deferred share unitsprior to the end of any calendar year is entitled to receive on January 1of the following year that number of deferred share units with a fair marketvalue, as defined in the plan, equal to the amount deferred. The deferred shareunits then vest on the following dates: 25 percent on January 1 (thedate of grant); and 25 percent on each of the following dates:April 1, July 1, and October 1. Vested deferred share unitsautomatically convert to shares of our common stock upon the director’sretirement or other termination. None of our directors elected to receivedeferred share units in lieu of his annual director’s fees for calendar year2006.

**EmploymentAgreements**

Wehave entered into employment agreements with each of Messrs. Pilenko,Wells, M. Baldwin, D. Baldwin and Worden. Our agreement with Mr. Pilenkocontinues until terminated by prior written notice of either party. Ouragreements with Messrs. Wells, M. Baldwin, D. Baldwin and Worden continueuntil the employee reaches age 65 unless the agreement is earlier terminated byprior written notice of either party. As of July 31, 2006, the executiveofficers are entitled to minimum annual salaries under their employmentagreements as follows: Mr. Pilenko—$515,000; Mr. Wells—$370,000;Mr. M. Baldwin—$330,000; Mr. D. Baldwin—$185,000 and Mr. Worden—$255,000.  In the event of a termination without cause(other than in connection with a change of control of Veritas DGC), eachexecutive officer is entitled to payment under his employment agreement equalto one or more years of annual base salary as follows: Mr. Pilenko—threeyears; Messrs. Wells and M. Baldwin—two years; and Messrs. D. Baldwinand Worden—one year. Payment of these amounts will be made over the specifiedperiod unless we exercise our option to pay them in a lump sum. In the event ofa termination without cause within two years after a change of control ofVeritas DGC, each executive officer is entitled to a lump sum payment under hisemployment agreement equal to the following number times the sum of his annualbase salary and annual bonus: Messrs. Pilenko, Wells and M. Baldwin—three;and Messrs. D. Baldwin and Worden—two.

**CompensationCommittee Interlocks and Insider Participation**

Noneof the three members of our compensation committee—Messrs. Carroll, Gibbs,or Work—is or has been at any time an officer or employee of Veritas DGC or anyof its subsidiaries nor has any of them had any relationship with Veritas DGCthat would otherwise require disclosure under Items 402 or 404 ofRegulation S-K.

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**ITEM 12.      *Security Ownership of Certain Beneficial Owners andManagement and Related Stockholder Matters***

### **Securities Authorized for Issuance Under EquityCompensation Plans**

Thefollowing table presents data related to all of our equity compensation plansfor both non-employee directors and employees as of July 31, 2006, and providesinformation related to potential ownership dilution as of such date:

**EQUITY COMPENSATION PLAN INFORMATION**

**AS OF JULY31, 2006**
| Equity Compensation Plan   Category      | ** ** | **Number of securities to  be issued upon exercise  of outstanding options** | ** ** | **Weighted-average  exercise price of  outstanding options** | ** ** | **Number of securities remaining  available for future issuance under  equity compensation plans  (excluding securities to be issued  upon exercise of  outstanding options)** | ** ** |
|---------------------------------------------------------|------------|----------------------------------------------------------------------------------------------------------------------|------------|-----------------------------------------------------------------------------|------------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|------------|
|                                                    |       |                                                                                                                 |       |                                                                        |       |                                                                                                                                                                                                                                                           |       |
| Equity  compensation plans approved by stockholders     |       | 744,524                                                                                                              | (1)        | $                                                                           | 18.23      |                                                                                                                                                                                                                                                           | 2,123,559  | (2) |
|                                                    |       |                                                                                                                 |       |                                                                        |       |                                                                                                                                                                                                                                                           |       |
| Equity compensation  plans not approved by stockholders |       | 433,949                                                                                                              | (3)        | 22.22                                                                       |       | 0                                                                                                                                                                                                                                                              | (4)        |
|                                                         |            |                                                                                                                      |            |                                                                             |            |                                                                                                                                                                                                                                                                |            |  |

 

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(1)          Includes 683,779 options issued under our Share IncentivePlan approved by stockholders in December 2002. Includes 60,745 options issued before December 9, 1998 under our1992 Employee Non-qualified Stock Option Plan. Stockholders approved the 1992plan initially and in December 1997 approved amendments increasing the numberof shares, which could be issued pursuant to options under the 1992 EmployeeNon-qualified Stock Option Plan. On December 9, 1998, our board of directorsincreased the number of options available under the 1992 Employee Non-qualifiedStock Option Plan without obtaining stockholder approval. We have assumed thatoptions issued before those dates were issued under plans approved bystockholders and that options issued on or after those dates were issuedpursuant to plans not approved by stockholders.

(2)          Includes 759,529 shares available for issuance under ouremployee stock purchase plan and 1,364,030 shares available for issuance underour Share Incentive Plan. Under our Share Incentive Plan, our compensationcommittee is authorized to make awards to participants in the form of stockoptions, restricted stock, deferred share units, share appreciation rights orperformance shares. The aggregate number of shares available for award underthe plan is currently 1,364,030, of which no more than 334,895 shares may beawarded in any form other than stock options.

(3)          Includes 164,900 optionsissued on or after December 9, 1998 under our 1992 Employee Non-qualified StockOption Plan and 72,750 options issued on or after December 9, 1997 under our1992 Non-employee Director Non-qualified Stock Option Plan. See note 1 above.Also includes options we assumed in connection with our acquisitions of EnertecResource Services Inc. in August 1999 and Reservoir Characterization ResourceConsulting Inc. in February 2001. The remaining 196,299 options were issuedunder our 2001 Key Employee Non-qualified Stock Option Plan that was notapproved by stockholders.

(4)          Effective in December 2002, we areauthorized to award equity compensation only in accordance with our stockholderapproved Share Incentive Plan.

On December 11, 2002, ourstockholders approved the adoption of our current Share Incentive Plan thatprovides for the issuance to directors, officers and select employees: (1)nonqualified options to purchase our common stock, (2) incentive options topurchase our common stock, (3) share appreciation rights, (4) deferred shareunits, (5) restricted shares and (6) performance shares. Effective upon theadoption of Share Incentive Plan, we may not award options, restricted stock orother equity compensation to any director, officer or employee under any otherplan, including those previously approved by stockholders.

Prior to December 11,2002, we had two employee nonqualified stock option plans – our 1992 EmployeeNon-qualified Stock Option Plan (the “1992 Plan”) and our 2001 Key EmployeeNon-qualified Stock Option Plan (the “2001 Plan”). Prior to December 11, 2002,we granted options to select employees, including our officers, under the 1992Plan and to select employees, excluding our officers, under the 2001 Plan.Stockholders approved the adoption of the 1992 Plan in December 1992 and alsoapproved all amendments to the plan through December 1997. In December 1998 andMarch 1999, our board adopted amendments to the 1992 Plan that increased thenumber of options available for grant by 1,204,550 and 550,000, respectively.We did not seek stockholder approval of these amendments as such approval wasnot then required by the terms of the plan, applicable law or stock exchangerequirements. In January 2001, we adopted our 2001 Plan, which allowed theissuance of up to 2 million options. We did not seek stockholder approval ofthe 2001 Plan as such approval was not then required by applicable law or stockexchange requirements.

Options granted under the1992 Plan and 2001 Plan generally vested over three years and were exercisableover a five to ten-year period from the date of grant. The exercise price foreach option is the closing price on the New York Stock Exchange on the lasttrading day prior to the grant date. As of July 31, 2006, a total of 301,395options were outstanding under the 1992 Plan and

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196,299 wereoutstanding under our 2001 Plan. No further options may be issued under eitherplan after December 11, 2002.

Prior to December 11,2002, we also maintained a stock option plan for non-employee directors (the “DirectorPlan”) under which options were granted to our non-employee directors.Stockholders approved the adoption of the Director Plan in December 1992 andalso approved all amendments to the plan through December 1994. In December1997, our board adopted amendments to the Director Plan that increased thenumber of options available for grant by 400,000. We did not seek stockholderapproval of these amendments as such approval was not then required by theterms of the plan, applicable law or stock exchange requirements.

The Director Planprovided that every year each eligible director was granted options to purchase5,000 shares of our common stock which vest over a period of three years fromthe date of grant and are exercisable over five to ten years from the date ofgrant. The exercise price for each option is the closing price on the New YorkStock Exchange on the last trading day prior to the grant date. As of July 31,2006, a total of 72,750 options were outstanding under the Director Plan. Nofurther options may be issued under the Director Plan after December 11, 2002.

Our current Share Incentive Plan is described further in theNote 7 to Notes to Consolidated Financial Statements contained in our Form 10-Kfor the year ended July 31, 2006.

**SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT**

The following table sets forth certain informationregarding the beneficial ownership of shares at October 31, 2006, by(i) each person we know to own beneficially more than 5% of theoutstanding shares, (ii) all directors, (iii) each executive officernamed in the Summary Compensation Table, and (iv) all directors and namedexecutive officers as a group.
| Name and Address                                                                       | ** ** | **Amount and Nature of  Beneficial  Ownership(1)(2)** | ** ** | **Percent of  Class(3)** | ** ** |
|--------------------------------------------------------------------------------------------------|------------|----------------------------------------------------------------------|------------|-------------------------------|------------|
| Beneficial  Owners of 5% or more:                                                                |       |                                                                 |       |                          |       |
|                                                                                             |       |                                                                 |       |                          |       |
| Barclays Global Investors UK Holdings Limited (4)   1 Churchill Place   London, E14 5HP, England |       | 1,875,730                                                            |       | 5.19                          |       |
|                                                                                             |       |                                                                 |       |                          |       |
| Named Executive  Officers and Directors:                                                         |       |                                                                 |       |                          |       |
|                                                                                             |       |                                                                 |       |                          |       |
| Thierry Pilenko                                                                                  |       | 111,346                                                              |       | *                             |       |
| Timothy L. Wells                                                                                 |       | 66,780                                                               |       | *                             |       |
| Mark E. Baldwin                                                                                  |       | 22,077                                                               |       | *                             |       |
| Dennis S. Baldwin                                                                                |       | 6,582                                                                |       | *                             |       |
| Larry L. Worden                                                                                  |       | 32,975                                                               |       | *                             |       |
| Loren K. Carroll                                                                                 |       | 21,000                                                               |       | *                             |       |
| Clayton P. Cormier                                                                               |       | 18,004                                                               |       | *                             |       |
| James R. Gibbs                                                                                   |       | 38,250                                                               |       | *                             |       |
| Jan Rask                                                                                         |       | 37,500                                                               |       | *                             |       |
| Yoram Shoham                                                                                     |       | 11,000                                                               |       | *                             |       |
| David F. Work                                                                                    |       | 13,500                                                               |       | *                             |       |
| Terence K. Young                                                                                 |       | 11,000                                                               |       | *                             |       |
| All directors and  executive officers as a group (12 persons)                                    |       | 390,014                                                              |       | 1.07                          |       |

 

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*                 Does not exceed one percent

(1)          Except as otherwise noted, each person has sole voting and investmentpower with respect to the shares listed.

(2)          Includes the following shares subject to options granted pursuant toVeritas DGC option plans, including options exercisable within 60 days:Mr. Pilenko—92,500 shares; Mr. Wells—52,996 shares; Mr. M.Baldwin—5,000 shares; Mr. D. Baldwin—1,666 shares; Mr. Worden—26,660shares; Mr. Carroll—21,000 shares; Mr. Cormier—16,000 shares;Mr. Gibbs—36,250 shares; Mr. Rask—37,500 shares;Mr. Shoham—11,000 shares; Mr. Work—13,500 shares; and Mr.Young—11,000 shares and all directors and executive officers as a group—323,761shares. Includes 2,000 shares of restricted stock issued to Mr. Wells thatbecome vested on February 2, 2007; 4,166 shares of restricted stock issued toMr. M. Baldwin that become vested 4,166 on August 23, 2007; and 833 and 834shares of restricted stock issued to Mr. D. Baldwin that become vested on June20, 2007 and June 20, 2008, respectively. Includes the following restricted shares that become vested on July 31,2008 issued to the following executive officers: Mr. Pilenko – 16,953 shares;Mr. Wells – 9,041 shares; Mr. M. Baldwin – 6,781 shares; Mr. D. Baldwin – 2,260shares and Mr. Worden – 3,278 shares. Includes 2,000 deferred share units issued to Mr. Gibbs that convert to2,000 shares of our Common Stock when Mr. Gibbs ceases to be a director.

(3)          Percentages are calculated based on a total of 36,171,810 shares outstandingas of October 31, 2006 plus, in calculating the percentage for each person orgroup, the number of any options and deferred share units exercisable within60 days of October 31, 2006 owned by such person or group, in accordancewith Rule 13d-3(d)(1).

(4)          Based solely on information furnished in Schedule 13F filed withthe Securities and Exchange Commission by such person for the calendar quarterended September 30, 2006.  Such personhas sole investment discretion over all shares, sole voting authority for1,748,875 shares, no shared voting

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authority, and no voting authority for 126,855 shares.

**ITEM13.  *Certain Relationships andRelated Transactions***

**Transactions with Management and Others**

One ofour directors, Terence K. Young, is a professor and head of the GeophysicsDepartment of the Colorado School of Mines and, from October 2005 to October2006, served as president of the Society of Exploration Geophysicists.  The company annually funds certain researchprojects with and provides certain services and equipment free of charge to theColorado School of Mines, a non-profit educational institution.  During fiscal year 2006, the company made aseries of payments or contributions to the Colorado School of Mines totaling$389,660.  Also during fiscal year 2006,the company made a series of payments to the Society of ExplorationGeophysicists, a non-profit professional society, totaling $276,886.  These payments consisted of fees for boothrental at the Society’s annual trade show, membership dues paid on behalf ofcompany employees, and admission fees paid on behalf of company employees forprograms sponsored by the organization. Mr. Young had no direct interest in any of these transactions and wasneither involved in nor influenced the company’s decisions to make the paymentsor contributions it made.

**ITEM14.  *Principal Accountant andServices***

PricewaterhouseCoopers LLP, an independent registeredpublic accounting firm, has served as the independent registered publicaccounting firm of the company since November 1996.

**Audit Fees**

The aggregate fees for professional services for theaudit of our consolidated financial statements, statutory audits in foreignjurisdictions, issuance of consents and the reviews of financial statementsincluded in the company’s Forms 10-Q for the fiscal years ended July 31,2006 and 2005 were $2,873,915 and $1,967,925, respectively. Our audit committeepre-approved all fees for professional services for the audit of ourconsolidated financial statements for the fiscal year ended July 31, 2006.

**Audit-Related Fees**

The aggregate fees for audit related services (auditsof our employee benefit plans, accounting consultations, due diligence relatedto mergers and acquisitions and certain services related to compliance with theSarbanes-Oxley Act of 2002) for the fiscal years ended July 31, 2006and 2005 were $0 and $20,750, respectively. No fees for audit related serviceswere incurred during the fiscal year ended July 31, 2006 and, therefore,no pre-approval by our audit committee was required.

**Tax Fees**

The aggregate fees for income tax and tax relatedservices for the fiscal years ended July 31, 2006 and 2005 were $54,152and $46,362, respectively. Our audit committee pre-approved all fees for taxand tax related services incurred during the fiscal year ended July 31,2006.

**All Other Fees**

The aggregate fees of PricewaterhouseCoopers LLPduring the fiscal years ended July 31, 2006 and 2005 for other servicestotaled $3,347 and $3,599, respectively. Our audit committee pre-approved allfees for such other services incurred during the fiscal year endedJuly 31, 2006. For fiscal year 2006, these services were only forsubscriptions to PricewaterhouseCoopers’ on-line research tools.

In conjunction with our annual plan, we prepare abudget for non-audit services we intend to obtain from PricewaterhouseCoopersLLP. This budget includes a description of the specific projects and servicesand an estimated cost. We submit this budget to our audit committee for reviewand approval. We conduct our business with PricewaterhouseCoopers LLP accordingto this approved budget and, if circumstances require alteration of the budget,we request approval from the audit committee before deviating from the budgetin any manner. We periodically submit an update of our spending withPricewaterhouseCoopers LLP to the audit committee.

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**SIGNATURES**

Pursuantto the requirements of Sections 13 or 15(d) of the Securities Exchange Act of1934, the Registrant has duly caused this report to be signed on its behalf bythe undersigned; thereunto duly authorized, on the 28th day of November, 2006.
|          | VERITAS DGC INC. |
|----------|------------------|
|     |             |   |
|     |             |   |
|     | By:              | /s/  THIERRY  PILENKO |
|     |             | Thierry Pilenko |
| * * | * *         | *(Chairman  of the Board and Chief Executive Officer)* |

 

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**EXHIBIT INDEX**
| Exhibit No. | ** ** | **Description** |
|-------------|------------|-----------------|
| 2.1         |       | —          |   | Agreement and Plan of Merger, dated as of September  4, 2006, between and among Veritas DGC Inc., Compagnie Générale de  Géophysique, Volnay Acquisition Co. I and Volnay Acquisition Co. II. (Exhibit 2.1 to Veritas DGC Inc.’s Form 8-K  dated September 4, 2006 is incorporated herein by reference.) |
| 3.1         |       | —          |   | Restated Certificate of  Incorporation with amendments of Veritas DGC Inc. dated August 30, 1996.  (Exhibit 3.1 to Veritas DGC Inc.’s Current Report on Form 8-K dated September  16, 1996 is incorporated herein by reference.) |
| 3.2         |       | —          |   | Certificate of Ownership and  Merger of New Digicon Inc. And Digicon Inc. (Exhibit 3-B to Digicon Inc.’s  Registration Statement No. 33-43873 dated November 12, 1991 is incorporated  herein by reference.) |
| 3.3         |       | —          |   | Certificate of Amendment to  Restated Certificate of Incorporation of Veritas DGC Inc. dated September 30,  1999 (Exhibit 3-D to Veritas DGC Inc.’s For 10-K for the year ended July 31,  1999 is incorporated herein by reference.) |
| 3.4         |       | —          |   | Certificate of Amendment to  Restated Certificate of Incorporation of Veritas DGC Inc. dated September 30,  1999 (Exhibit 4.4 to Veritas DGC Inc.’s Registration Statement No. 333-111997  dated January 20, 2004 is incorporated herein by reference.) |
| 3.5         |       | —          |   | Bylaws of Veritas DGC Inc. (including all amendments  through June 16, 2006) (Exhibit 3.1 to  Veritas DGC Inc.’s Current Report on Form 8-K filed June 19, 2006 is  incorporated herein by reference.) |
| 4.1         |       | —          |   | Specimen Veritas DGC Inc.  Common Stock certificate (Exhibit 4-C to Veritas DGC Inc.’s Form 10-K for the  year ended July 31, 1996 is incorporated herein by reference.) |
| 4.2         |       | —          |   | Rights Agreement between  Veritas DGC Inc. and ChaseMellon Shareholder Services, L.L.C. dated as of May  15, 1997. (Exhibit 4.1 to Veritas DGC Inc.’s Current Report on Form 8-K filed  May 27, 1997 is incorporated herein by reference.) |
| 4.3         |       | —          |   | Indenture dated March 3, 2004  between Veritas DGC Inc. and U.S. Bank National Association, as trustee.  (Exhibit 4.2 to Veritas DGC Inc.’s Current Report on Form 8-K dated March 3,  2004 is incorporated herein by reference.) |
| 4.4         |       | —          |   | Global note representing  $125,000,000 aggregate principal amount of Floating Rate Convertible Senior  Notes Due 2024 (Exhibit 4.3 to Veritas DGC Inc.’s Current Report on Form 8-K  dated March 3, 2004 is incorporated herein by reference.) |
| 4.5         |       | —          |   | Registration Rights Agreement  dated as of March 3, 2004 by and between Veritas DGC Inc. and Deutsche Bank  Securities Inc. (Exhibit 4.1 to Veritas DGC Inc.’s Current Report on Form 8-K  dated March 3, 2004 is incorporated herein by reference.) |
| 4.6         |       | —          |   | Form of Notice to Holders of Exchangeable Shares (Exhibit 99.2 to Veritas DGC Inc.’s Current  Report on Form 8-K filed January 18, 2006 is incorporated herein by  reference.) |
| 4.7         |       | —          |   | Amendment No. 1 to Rights Agreement between Veritas  DGC Inc. and Mellon Shareholder Services, L.L.C. dated as of May 31, 2005  (Exhibit 4.2 to Veritas DGC Inc.’s Amendment No. 2 to Registration Statement  on Form 8-A filed May 31, 2005 is incorporated herein by reference.) |
| +4.8        |       | —          |   | Amendment No. 2 to Rights Agreement between Veritas  DGC Inc. and Mellon Shareholder Services, L.L.C. dated as of September 4,  2006 (Exhibit 4.8 to Veritas DGC Inc.’s Annual Report of Form 10-K for the  year ended July 31, 2006 is incorporated herein by reference.) |

 

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| 9.1     |   | — |   | Voting and Exchange Trust  Agreement dated August 30, 1996 among Digicon Inc., Veritas Energy Services  Inc. and The R-M Trust Company. (Exhibit 9.1 of Veritas DGC Inc.’s Current  Report on Form 8-K dated September 16, 1996 is incorporated herein by  reference.)   |
|---------|--------|--------|--------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| 9.2     |   | — |   | Voting and Exchange Trust  Agreement dated September 30, 1999 among Veritas DGC Inc., Veritas Energy  Services Inc. and CIBC Mellon Trust Company. (Exhibit 9-B to Veritas DGC Inc.’s  Form 10-K for the year ended July 31, 1999 is incorporated herein by  reference.) |
| 10.1    |   | — |   | Support Agreement dated August  30, 1996 between Digicon Inc. and Veritas Energy Services Inc. (Exhibit 10.1  of Veritas DGC Inc.’s Current Report on Form 8-K dated August 30, 1996 is  incorporated herein by reference.)                                              |
| **10.2  |   | — |   | Form of Restricted Stock Grant  Agreement (Exhibit 10.2 to Veritas DGC Inc.’s Form 10-K for the year ended  July 31, 2004 is incorporated herein by reference.).                                                                                                         |
| **10.3  |   | — |   | Key Contributor Incentive Plan  as amended and restated March 3, 2003. (Exhibit 10.1 to Veritas DGC Inc.’s  Form 8-K dated March 3, 2005 is incorporated herein by reference.)                                                                                 |
| **10.4  |   | — |   | 1992 Non-Employee Director  Stock Option Plan as amended and restated March 7, 2000. (Exhibit 10-B to  Veritas DGC Inc.’s Form 10-Q for the quarter ended April 30, 2000 is  incorporated herein by reference.)                                                          |
| **10.5  |   | — |   | 1992 Employee Nonqualified  Stock Option Plan as amended and restated March 7, 2000. (Exhibit 10-C to  Veritas DGC Inc.’s Form 10-Q for the quarter ended April 30, 2000 is  incorporated herein by reference.)                                                          |
| **10.8  |   | — |   | Amended and Restated  Employment Agreement between Veritas DGC Inc. and Stephen J. Ludlow. (Exhibit  10-C to Veritas DGC Inc.’s Form 10-Q for the quarter ended October 31, 2001  is incorporated herein by reference.)                                                  |
| **10.9  |   | — |   | Amendment No. 1 to Amended and  Restated Employment Agreement between Veritas DGC Inc. and Stephen J. Ludlow.  (Exhibit 10-D to Veritas DGC Inc.’s Form 10-Q for the quarter ended October  31, 2001 is incorporated herein by reference.)                     |
| **10.12 |   | — |   | Amended and Restated  Employment Agreement between Veritas DGC Inc. and Timothy L. Wells. (Exhibit  10-K to Veritas DGC Inc.’s Form 10-Q for the quarter ended October 31, 2001  is incorporated herein by reference.)                                                   |
| **10.13 |   | — |   | Amendment No. 1 to Amended and  Restated EmploymentAgreement between Veritas DGC Inc. and Timothy L. Wells.  (Exhibit 10-L to Veritas DGC Inc.’s Form 10-Q for the quarter ended October  31, 2001 is incorporated herein by reference.)                       |
| **10.14 |   | — |   | Employment Agreement between  Veritas DGC Inc. and Larry L. Worden. (Exhibit 10-M to Veritas DGC Inc.’s Form 10-Q  for the quarter ended October 31, 2001 is incorporated herein by reference.)                                                                |
| **10.15 |   | — |   | Amendment No. 1 to Employment  Agreement between Veritas DGC Inc. and Larry L. Worden. (Exhibit 10-N to  Veritas DGC Inc.’s Form 10-Q for the quarter ended October 31, 2001 is  incorporated herein by reference.)                                                      |
| **10.16 |   | — |   | Deferred Compensation Plan  effective January 1, 2001. (Exhibit 10-Q to Veritas DGC Inc.’s Form 10-Q for  the quarter ended October 31, 2000 is incorporated by reference.)                                                                                              |
| **10.17 |   | — |   | Rabbi Trust Agreement between  Veritas DGC Inc. and Austin Trust Company relating to the Deferred  Compensation Plan. (Exhibit 10-R to Veritas DGC Inc.’s Form 10-Q for the  quarter ended October 31, 2000 is incorporated herein by reference.)                        |

 

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| **10.18 |   | — |   | 2001 Key Employee Nonqualified  Stock Option Plan effective February 1, 2001. (Exhibit 10-S to Veritas DGC  Inc.’s Form 10-Q for the quarter ended January 31, 2001 is incorporated by  reference.)                                                                                                                                                                                                                                                                                                    |
|---------|--------|--------|--------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| **10.19 |   | — |   | Key Employee Restricted Stock  Plan effective February 1, 2001. (Exhibit 10-T to Veritas DGC Inc.’s Form  10-Q for the quarter ended January 31, 2001 is incorporated herein by reference.)                                                                                                                                                                                                                                                                                                            |
| 10.20   |   | — |   | 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.)                                                                                                                                                                                                                            |
| 10.21   |   | — |   | 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.)                 |
| **10.22 |   | — |   | Veritas DGC Inc. Employee  Share Purchase Plan. (Exhibit 4.8 to Veritas DGC Inc.’s Registration  Statement No. 333-111997 dated January 20, 2004 is incorporated herein  by reference.)                                                                                                                                                                                                                                                                                                           |
| 10.23   |   | — |   | Third Amendment to Credit  Agreement dated February 20, 2004 by and 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 10.2 to Veritas DGC Inc.’s Form 10-Q for  the quarter ended January 31, 2004 is incorporated herein by reference.) |
| **10.25 |   | — |   | Employment Agreement between  Veritas DGC Inc. and Thierry Pilenko dated January 26, 2004. (Exhibit 10.3 to  Veritas DGC Inc.’s Form 10-Q for the quarter ended January 31, 2004 is  incorporated herein by reference.)                                                                                                                                                                                                                                                                                |
| **10.26 |   | — |   | Employment Agreement between  Veritas DGC Inc. and Mark E. Baldwin dated August 24, 2004. (Exhibit 10.27 to  Veritas DGC Inc.’s Form 10-K for the year ended July 31, 2004 is incorporated  herein by reference.)                                                                                                                                                                                                                                                                                      |
| **10.28 |   | — |   | Veritas DGC Inc. Global  Management Incentive Plan (including all amendments through October 4, 2004)  (Exhibit 10.1 to Veritas DGC Inc.’s Form 8-K dated March 3, 2005 is  incorporated herein by reference.)                                                                                                                                                                                                                                                                                         |
| **10.29 |   | — |   | Veritas DGC Inc. Key  Contributor Plan (including all amendments through October 4, 2004) (Exhibit  10.1 to Veritas DGC Inc.’s Form 8-K dated March 3, 2005 is incorporated  herein by reference.)                                                                                                                                                                                                                                                                                                     |
| **10.30 |   | — |   | Description of director  compensation. (Exhibit 10.31 to Veritas DGC Inc.’s Form 10-K for the year  ended July 31, 2004 is incorporated herein by reference.)                                                                                                                                                                                                                                                                                                                                          |
| **10.31 |   | — |   | Form of Indemnity Agreement  for directors and officers. (Exhibit 10.32 to Veritas DGC Inc.’s Form 10-K  for the year ended July 31, 2004 is incorporated herein by reference.)                                                                                                                                                                                                                                                                                                                        |
| **10.32 |   | — |   | Form of Stock Option Grant  Agreement. (Exhibit 10.33 to Veritas DGC Inc.’s Form 10-K for the year ended  July 31, 2004 is incorporated herein by reference.)                                                                                                                                                                                                                                                                                                                                          |

 

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| **10.33 |   | — |   | Form of Deferred Share Unit  Award and Deferral Agreement. (Exhibit 10.34 to Veritas DGC Inc.’s Form 10-K  for the year ended July 31, 2004 is incorporated herein by reference.)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           |
|---------|--------|--------|--------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| **10.34 |   | — |   | Letter Agreement dated October  24, 2005 between Veritas DGC Inc. and Stephen J. Ludlow (Exhibit 10.3 to  Veritas DGC Inc.’s Form 8-K dated October 28, 2005 is incorporated herein by  reference.)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         |
| **10.35 |   | — |   | Employment agreement between  Veritas DGC Inc. and Dennis S. Baldwin dated November 7, 2005. (Exhibit 10.1  to Veritas DGC Inc.’s Form 8-K dated November 7, 2005 is incorporated herein  by reference.)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    |
| 10.36   |   | — |   | Loan Agreement ($45,000,000  U.S. Revolving Loan Facility, $15,000,000 Canadian Revolving Loan Facility,  $15,000,000 Singapore Revolving Loan Facility, and $10,000,000 U.K. Revolving  Loan Facility) dated as of February 6, 2006, among Veritas DGC Inc., as  U.S. Borrower, Veritas Energy Services Inc. and Veritas Energy Services  Partnership, as Canadian Borrowers, Veritas Geophysical (Asia Pacific) Pte.  Ltd., as Singapore Borrower, Veritas DGC Limited, as U.K. Borrower, Wells  Fargo Bank, National Association, as U.S. Agent and Lead Arranger, HSBC  Canada, as Canadian Agent, The Hongkong and Shanghai Banking Corporation  Limited, Singapore Branch, as Singapore Agent, HSBC Bank plc, as U.K. Agent,  and the other lenders now or hereafter parties thereto (Exhibit 10.1 to  Veritas DGC Inc.’s Form 8-K dated February 6, 2006 is incorporated herein by  reference.) |
| **10.37 |   | — |   |  Section 4.3(b), as amended June  16, 2006, of the Veritas DGC Inc. Global Management Incentive Plan. (Exhibit 10.1 to Veritas DGC Inc.’s Form 8-K  dated June 19, 2006 is incorporated herein by reference.)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     |
| 4.8     |   | — |   | Amendment No. 2 to Rights Agreement between Veritas  DGC Inc. and Mellon Shareholder Services, L.L.C. dated as of September 4,  2006. (Exhibit 4.8 to Veritas DGC Inc.’s  Form 10-K for the year ended July 31, 2006 is incorporated herein by  reference.)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 |
| 21      |   | — |   | Subsidiaries of the  Registrant. (Exhibit 21 to Veritas DGC Inc.’s Form 10-K for the year ended  July 31, 2006 is incorporated herein by reference).                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        |
| +31.1   |   | — |   | Rule 13a-14(a) certification  by CEO.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            |
| +31.2   |   | — |   | Rule 13a-14(a) certification  by CFO.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            |
| +32.1   |   | — |   | Section 1350 certification by  CEO.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              |
| +32.2   |   | — |   | Section 1350 certification by  CFO.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              |

 

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+  Filed herewith

** Management contract or compensatory plan orarrangement

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