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UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549



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FORM 10-K



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ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF

THE SECURITIES EXCHANGE ACT OF 1934

For the fiscal year ended September 30, 2006

Commission File Number 0-30911



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THE PBSJ CORPORATION

(Exact name of Registrant as specified in its charter)



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|                                                               |  |                                     
|-------------------------------------------------------------- |  | ------------------------------------
|Florida                                                        |  | 59-1494168                          
|(State or other jurisdiction of Incorporation or organization) |  | (I.R.S. Employer Identification No.)

5300 West Cypress Street, Suite 200

Tampa, Florida 33607

(Address of principal executive offices)

(813) 282-7275

(Registrants
telephone number, including area code)



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Securities registered pursuant to Section 12(b) of the Act: None

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



Common Stock ($.00067
Par Value)

(Title of class)



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

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

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

Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K (§229.405 of this chapter) is not contained herein, and will not be contained, to the best of the
registrants knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment of this Form 10-K. ̈

Indicate by check mark whether the registrant is a large accelerated
filer, an accelerated filer, or a non-accelerated filer. See definition of accelerated filer and large accelerated filer in Rule 12b-2 of the Exchange Act. (Check one):



|                         |  |                    |  |                         
|------------------------ |  | ------------------ |  | ------------------------
| ̈Large accelerated filer |  |  ̈Accelerated filer |  | x  Non-accelerated filer

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

The number of shares of Common Stock outstanding as of April 30, 2007 was 6,668,606. The aggregate value of the voting stock held by non-affiliates
of the registrant based on the $28.00 price for the registrants Common Stock on March 31, 2006 was $74,494,924. Directors, executive officers and 10% or greater shareholders are considered affiliates for purposes of this calculation but
should not necessarily be deemed affiliates for any other purpose. There is no public trading market for the registrants common stock.



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##### Table of Contents

THE PBSJ CORPORATION

Form 10-K

For the Year Ended September 30, 2006

Table of Contents



|            |  |                                                                                                              |  |     
|----------- |  | ------------------------------------------------------------------------------------------------------------ |  | ----
|Item Number |  | CAPTION                                                                                                      |  | PAGE
|PART I:     |  |                                                                                                              |  |     
|            |  |                                                                                                             
|Item 1.     |  | Business                                                                                                     |  | 4   
|Item 1A.    |  | Risk Factors                                                                                                 |  | 19  
|Item 1B.    |  | Unresolved Staff Comments                                                                                    |  | 23  
|Item 2.     |  | Properties                                                                                                   |  | 23  
|Item 3.     |  | Legal Proceedings                                                                                            |  | 23  
|Item 4.     |  | Submission of Matters to a Vote of Security Holders                                                          |  | 26  
|            |  |                                                                                                             
|PART II:    |  |                                                                                                              |  |     
|            |  |                                                                                                             
|Item 5.     |  | Market for Registrants Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities |  | 27  
|Item 6.     |  | Selected Financial Data                                                                                      |  | 28  
|Item 7.     |  | Managements Discussion and Analysis of Financial Condition and Results of Operations                        |  | 29  
|Item 7A.    |  | Quantitative and Qualitative Disclosures About Market Risk                                                   |  | 55  
|Item 8.     |  | Financial Statements and Supplementary Data                                                                  |  | 56  
|Item 9.     |  | Changes in and Disagreements With Accountants on Accounting Financial Disclosure                             |  | 86  
|Item 9A.    |  | Controls and Procedures                                                                                      |  | 86  
|Item 9B.    |  | Other Information                                                                                            |  | 88  
|            |  |                                                                                                             
|PART III:   |  |                                                                                                              |  |     
|            |  |                                                                                                             
|Item 10.    |  | Directors and Executive Officers of the Registrant                                                           |  | 89  
|Item 11.    |  | Executive Compensation                                                                                       |  | 94  
|Item 12.    |  | Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters               |  | 102 
|Item 13.    |  | Certain Relationships and Related Transactions                                                               |  | 103 
|Item 14.    |  | Principal Accountant Fees and Services                                                                       |  | 104 
|            |  |                                                                                                             
|PART IV:    |  |                                                                                                              |  |     
|            |  |                                                                                                             
|Item 15.    |  | Exhibits and Financial Statement Schedules                                                                   |  | 106 
|            |  | Signatures                                                                                                   |  | 107 
|            |  | Exhibit Index                                                                                                |  | 108 



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CAUTIONARY NOTE REGARDING FORWARD-LOOKING STATEMENTS

This Annual Report and the information incorporated by reference in it include and are based on forward-looking statements within the meaning
of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934. We intend these forward-looking statements to be covered by the safe harbor provisions for forward-looking statements in these sections.
These statements can sometimes be identified by the fact that they do not relate strictly to historical or current facts and they frequently are accompanied by words such as may, will, anticipate,
estimate, expect, or intend and similar terms and expressions. All statements regarding our expected financial position and operating results, our business strategy, our financing plans and forecasted demographic
and economic trends relating to our industry, and statements relating to our ability to be awarded government contracts, the adoption of certain laws by Congress, our ability to compete effectively with other firms that provide similar services, our
ability to attract and retain clients, our ability to achieve future growth and success, our expectations for the public and private sector economic growth, the outcome of our internal investigation and the various on-going government
investigations, are forward-looking statements. These forward-looking statements involve known and unknown risks, uncertainties and other factors that may cause our actual results, performance or achievements to be materially different from the
results, performance or achievements expressed or implied by the forward-looking statements. We cannot promise you that our expectations in such forward-looking statements will turn out to be correct. Factors that may impact such forward-looking
statements include, among others, our ability to attract additional business, the timing of projects and the potential for contract cancellation by our customers, our ability to attract and retain skilled employees, our ability to comply with new
laws and regulations, our insurance coverage covering certain events, the timing and amount of the spending bills adopted by the federal government and the states, our ability to complete our internal investigation in a timely manner, the outcome of
the investigations by the Department of Justice, the United States Attorneys Office, the Securities and Exchange Commission, the Federal Bureau of Investigation, possible changes in collections of accounts receivable, risks of competition,
changes in general economic conditions and interest rates, the risk that the Internal Revenue Service or the courts may not accept the amount or nature of one or more items of deduction, loss, income or gain we report for tax purposes and the
possible outcome of pending litigation, legal proceedings and governmental investigations and our actions in connection with such litigation, proceedings and investigations, as well as certain other risks including those set forth under the heading
Risk Factors and elsewhere in this Annual Report and in other reports filed by the Company with the Securities and Exchange Commission. All forward-looking statements included herein are only made as of the date such statements are made,
and we do not undertake any obligation to update or revise publicly any forward-looking statements, whether as a result of new information, future events or otherwise. Subsequent written and oral forward-looking statements attributable to the
Company or to persons acting on its behalf are qualified in their entirety to the cautionary statements set forth above and elsewhere in this Annual Report and in other reports filed by the Company with the Securities and Exchange Commission.



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PART I



|ITEM 1. | Business
|------- | --------

General

The PBSJ Corporation (the Company), together with its subsidiaries, is an employee-owned professional services organization that provides a
broad range of planning, design and construction services to a variety of public and private sector clients. Our four major business segments are transportation services, environmental services, civil engineering and construction management,
representing 39%, 23%, 21%, and 17%, respectively, of our revenues for the fiscal year ended September 30, 2006. We utilize our expertise in engineering, planning, management, environmental, architectural and surveying disciplines to address
complex problems in each of these basic service areas. We provide these services through our staff of approximately 3,900 professional, technical and support personnel. We believe our multi-disciplinary approach to problems facilitates our ability
to effectively meet the needs of our clients.

Since our founding in 1960, we have grown from a small civil engineering practice with
operations only in South Florida to a national design firm offering a full range of engineering, construction management, architectural and planning services throughout the United States. In 2005, Engineering News-Record ranked Post, Buckley,
Schuh & Jernigan, Inc., a subsidiary of the Company, third on its list of the top 100 pure design firms (traditional design firms with no construction capability) in the United States, based on design revenue. During fiscal year 2006, we
provided services to approximately 3,000 clients in the public and private sectors. In fiscal year 2006, approximately 75.0% of our net earned revenues (NER) were derived from the public sector and about 25.0% from the private sector.

We have built an organization composed of highly skilled professionals and top-level technical and administrative personnel with a wide
variety of scientific, engineering, architectural and management resources. These resources enable us to develop and implement innovative long-term solutions to the complex problems of our clients, many of which are the subject of public concern and
extensive governmental regulation. We assist our clients in responding to these concerns, in obtaining governmental permits and approvals and in complying with applicable laws and regulations.

We began operations on February 29, 1960. Our holding company, The PBSJ Corporation, was incorporated in 1973. We engage in business primarily
through two wholly-owned subsidiaries: Post, Buckley, Schuh & Jernigan, Inc., a Florida corporation (through which we provide the majority of our engineering, architectural and planning services) and PBS&J Construction Services, Inc., a
Florida corporation (through which we have certain large contracts for our construction management services). In addition, we have three other active subsidiaries: Seminole Development Corporation and Seminole Development II, Inc. (through which we
hold title to certain of our real property); and PBS&J Caribe Engineering, C.S.P. (through which we perform certain work in Puerto Rico). In this Form 10-K, all references to PBSJ, the Company, us,
we or our operations refer to The PBSJ Corporation and its wholly-owned subsidiaries and the activities of these entities on a consolidated basis. Our executive offices are located at 5300 West Cypress Street, Suite 200,
Tampa, Florida.

Misappropriation Loss

In March 2005, subsequent to the issuance of the Companys 2004 financial statements, we discovered misappropriations of Company funds by our former Chief Financial Officer and two former employees who worked in our information systems
and treasury departments, collectively, (the participants). The participants colluded and circumvented controls to misappropriate funds and conceal the misappropriations possibly beginning as early as 1993 until the misappropriations
were discovered.

Shortly after this discovery, an investigation sub-committee was formed comprised of the three outside members of our
Corporate Audit Committee. These three outside members were subsequently appointed to the



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Board of Directors and became the three members of the Audit Committee of the Board of Directors. The Audit Committee retained independent counsel to conduct
an investigation and advise the Audit Committee in connection with the investigation. The independent counsel retained forensic accountants, including accountants experienced in conducting forensic audits for companies that perform contracts for
federal, state and local governments to assist with the investigation.

The investigation team discovered that at least $36.6 million was
misappropriated between January 1, 1998 and the discovery of the misappropriations in March 2005. The amount misappropriated prior to January 1, 1998 could not be determined because certain data for the period prior to January 1, 1998
was unavailable. The participants in the embezzlement scheme used several methods to misappropriate the funds while engaging in conduct to conceal the misappropriated amounts. This conduct included among other things, recording and changing normal
recurring journal entries and overstating accruals in prior periods to facilitate improper write-offs of misappropriated funds.

The
Company determined that the misappropriation scheme led to the overstatement of overhead rates that the Company used to determine billings in connection with certain of our government contracts. As a result, some of our government clients were
overcharged for the Companys services. During the review of the overhead rate calculations, the Company identified certain instances of costs erroneously included in our overhead cost pool which were unallowable under applicable regulations
and an error in our calculation of our overhead rate, which related to certain general and administrative costs. The Company determined that the unallowable costs and general and administrative errors also led to the overstatement of overhead rates
which the Company used in connection with certain government contracts.

The Audit Committee, at the direction of the Corporate Board,
disclosed the overstatement of our overhead rate to our clients and other appropriate government agencies, including the Department of Justice (DOJ). We have entered into settlement agreements with some of our clients and government
agencies. We are in discussions with our remaining government clients to enter into settlement agreements in order to satisfy any refund obligations, which are in various stages of settlement.

In July 2006, we entered into a settlement agreement with the State of Texas Department of Transportation which resolves all claims that the State of
Texas may have had against us for overpayments related to the restatement of overhead rates on billings on or before April 30, 2006 under contracts with that agency based on our payment of approximately $5.4 million and provides for the
determination of the appropriate overhead rate for billings after April 30, 2006. In November 2006, we entered into a settlement agreement with the Florida Department of Transportation which resolves all claims that agency may have had against
us for the overstatement of rates on billings through September 30, 2005 (and with respect to cost contracts through September 30, 2006) under our contracts with them based on our payment of approximately $12.5 million. This settlement
agreement also provided for the determination of the appropriate overhead rate refund for fiscal year 2006 billings under fixed price contracts. The refund amount was finalized in March 2007 and totaled $425,000.

In January 2007, we reached a settlement agreement with the Department of Justice, Civil Division on behalf of it and all other federal agencies with
which we have contracts to resolve all federal claims including claims under the Federal Civil False Claims Act, related to the overstatements of overhead rates on our contracts with federal agencies. The agreement requires approximately $6.5
million of reimbursement payments for all contract amounts through September 30, 2005.

The settlements described above, excluding
those settlements paid during the fiscal year 2006, are included in the accrued reimbursement liability in the Companys consolidated financial statements at September 30, 2006. We are in discussions with our remaining government clients
to enter into settlement agreements in order to satisfy any refund obligations, which are in various stages of settlement.



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The United States Securities & Exchange Commission is also conducting an investigation of the
accounting irregularities and misappropriations of funds. We are fully cooperating with the investigation and have produced documents and other information to the commission. At the present time, we are unable to predict the likely outcome of this
investigation.

As a result of the misappropriation, the Companys consolidated financial statements as of September 30, 2004
were restated and this report reflects the restatement.

Acquisitions

Throughout our history, we have made strategic acquisitions. Once we acquire a firm, it is integrated and consolidated into our existing operations and ceases to exist as a separate operating entity. We completed the
following acquisitions during the last three fiscal years. The results of operations are included in the consolidated financial statements from the date of acquisition.



| |  |  | On June 1, 2004, we acquired all of the outstanding stock of TriLine Associates, Inc. (TriLine) for $3.7 million in cash. The purchase price was
allocated to the respective assets and liabilities based upon their estimated fair values as of the acquisition date. The allocation of the purchase price resulted in assets of $4.3 million, including approximately $960,000 of intangible assets and
$2.1 million of goodwill and liabilities of $625,000. During 2005, we recorded $10,000 of additional goodwill in connection with a purchase accounting true-up payment. TriLines expertise includes transportation, geotechnical, and environmental
services. The TriLine acquisition enhances our presence in the transportation market in the greater Pittsburgh area and the State of Pennsylvania.
| | - |  | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | On July 1, 2004, we acquired 100% of the stock of W. Koo and Associates Structural Engineers, Inc. (WKA) for $2.5 million, net of cash acquired of
$678,000, comprised of $413,000 in cash, $250,000 in accrued earn-out provisions and 71,429 shares of the our common stock valued at approximately $1.9 million. The purchase agreement calls for an adjustment of the number of shares issued based on
the valuation of the stock price at September 30, 2004 so that the total number of shares issued is valued at approximately $1.9 million.
| | - |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

The purchase agreement also called for an additional purchase amount of $500,000, contingent upon the satisfaction of certain conditions, to be paid in two installments of $250,000 on July 1, 2005 and
July 1, 2006. The purchase price was allocated to the respective assets and liabilities based on their estimated fair values as of the acquisition date. The allocation of the purchase price resulted in assets of $3.3 million, including
approximately $850,000 of intangible assets and $913,000 of goodwill and liabilities of $795,000.

During 2005, we issued an additional
1,021 shares in connection with the purchase agreement adjustment and we recorded an additional $6,000 of goodwill in connection with the July 1, 2005 installment payment. In 2006, we recorded additional goodwill of $389,000 in connection with
the July 1, 2006 installment payment. WKAs expertise includes infrastructure improvements for public, municipal, transit, port authorities and private sector projects with a primary focus on transportation structures in California. The
WKA acquisition strengthens our technical capabilities in bridge design and structural project management, particularly in the West.

During
fiscal year 2006, we recorded approximately $272,000 of additional goodwill for performance earn-out payments and purchase price adjustments. The additional goodwill was comprised of earn-out payments of approximately $389,000, of which $250,000 was
previously accrued and purchase price adjustments of $133,000. The weighted average amortization period for the identifiable intangible assets is 2.8 years. WKA specializes in infrastructure improvements for public, municipal, transit, port
authorities and private sector projects with a primary focus on transportation structures in California.



| |  |  | On October 1, 2004, we acquired 100% of the stock of Croslin Associates, Inc. (Croslin) for a purchase price of $786,000, net of cash acquired of
$153,000, comprised of $456,000 in cash, $30,000
| | - |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



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| | held in escrow and 11,111 shares of our common stock valued at approximately $300,000. The purchase price was allocated to the respective assets and
liabilities based upon their estimated fair values as of the acquisition date. The allocation of the purchase price resulted in assets of $1.2 million, including approximately $40,000 of intangible assets and $454,000 of goodwill and liabilities of
$330,000. Croslin is an architectural services firm. The Croslin acquisition contributes to the Companys goal of developing technical and production resources to extend its successful architectural practice into additional markets in the
Central and Western U.S.
| | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | On February 1, 2005, we acquired 100% of the stock of Land and Water Consulting, Inc. (LWC) for a purchase price of $1.3 million, net of cash
acquired of $13,000, comprised of $323,000 in cash, $100,000 held in escrow and 33,862 shares of our common stock valued at approximately $914,000. The purchase price was allocated to the respective assets and liabilities based upon their estimated
fair values as of the acquisition date. The allocation of the purchase price resulted in assets of $2.5 million, including approximately $63,000 of intangible assets and $1.1 million of goodwill and liabilities of $1.2 million. LWC is an
environmental consulting firm in Montana. The LWC acquisition enhances our technical capabilities in the environmental services market in the Northwest and West.
| | - |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | On April 30, 2006, we acquired 100% of the stock of EIP Associates (EIP) for $6.0 million, net of cash acquired of $15,000, comprised of $5.5
million in cash, $334,000 accrued additional purchase price and $200,000 held in escrow. The purchase price was allocated to the respective assets and liabilities based on their estimated fair values as of the acquisition date. The allocation of the
purchase price resulted in assets of $9.0 million, including approximately $1.5 million of intangible assets and $3.7 million of goodwill and liabilities of $3.9 million. EIP specializes in environmental, urban planning, water resource planning and
natural resources in California. The EIP acquisition greatly enhances our technical strength in the California environmental, water and planning markets and enhances our general presence in California.
| | - |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

Business Segments

The following table sets forth our
revenues, in thousands, from each of our four business segments for each of the three years ended September 30, 2006, 2005, and 2004, and the approximate percentage of our total revenues attributable to each business segment:



|                        |  |          |         |      |    |          |   |         |  |          |  |   |         |  |   
|----------------------- |  | -------- | ------- | ---- | -- | -------- | - | ------- |  | -------- |  | - | ------- |  | --
|                        |  | 2006     |         | 2005 |    | 2004    
|(Dollars in thousands)  |  | Revenues |         | %    |    | Revenues |   | %       |  | Revenues |  | %
|Transportation Services |  | $        | 206,876 |      | 39 |          | $ | 199,490 |  | 39       |  | $ | 179,743 |  | 40
|Environmental Services  |  |          | 128,641 |      | 23 |          |   | 113,821 |  | 22       |  |   | 109,198 |  | 25
|Civil Engineering       |  |          | 112,526 |      | 21 |          |   | 111,312 |  | 22       |  |   | 81,841  |  | 18
|Construction Management |  |          | 89,199  |      | 17 |          |   | 87,314  |  | 17       |  |   | 77,465  |  | 17
|                        |  |          |         |      |    |          |   |         |  |          |  |   |         |  |   
|Totals                  |  | $        | 537,242 |      |    |          | $ | 511,937 |  |          |  | $ | 448,247 |  |   
|                        |  |          |         |      |    |          |   |         |  |          |  |   |         |  |   

Additional information concerning segment results of operations and financial information is set
forth in Item 7 under the caption entitled Managements Discussion and Analysis of Financial Condition and Results of Operations and in Item 8, Note 15 of Notes to Consolidated Financial Statements which are
included herein.

Transportation Services

Industry Overview

During fiscal year 2006, the transportation industry rebounded slightly from some of the sluggishness it
experienced in fiscal year 2005. Many state departments of transportation continued to experience funding shortfalls in conjunction with escalating prices in the construction arena. The industry experienced a slight upturn



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in aviation and transit funding while user-fee (toll road) projects continued its strong growth nationally. Privatization continued to gain national focus
with the news of several highly visible deals in Chicago and Texas

Our Services

Our consulting services in transportation include planning, traffic engineering, intelligent transportation systems (ITS), corridor planning,
highway design, structural design, alternate project delivery, program management, toll facility design, aviation services, multi-modal/transit systems and right-of-way.

We currently serve transportation departments in 18 states (Alabama, Arizona, Arkansas, Colorado, Florida, Georgia, Idaho, Kansas, Mississippi, Montana, North Carolina, Nevada, Pennsylvania, South Carolina, Tennessee,
Texas, Virginia, and Washington). In addition, we currently perform toll services in 9 states (Washington, California, Colorado, Texas, North Carolina, Georgia, Florida, Arkansas, and Pennsylvania) for both public and private toll clients.

During fiscal year 2006, projects in Transportation included:



| |  |  | A planning services contract for the Texas Department of Transportation (TxDOT), primarily to determine toll feasibility for potential roadway
improvements throughout the State. All disciplines (highway design, drainage, construction, environmental services, ITS, traffic engineering, and structure design) were necessary to perform the work.
| | - |  | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | The Florida Department of Transportations (FDOT) statewide intelligent transportation systems general consulting six-year contract, pursuant to
which we are providing services related to the planning, architecture, standards development, and integration of ITS.
| | - |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | The I-4/Crosstown Connector Interchange project is the construction of a new interchange between the I-4 freeway and the Lee Roy Selmon Crosstown Expressway. The
project will greatly improve truck access into the Port of Tampa and give commuter traffic an alternative means to access the downtown area. This design is extremely complex and represents one of the largest construction projects ever undertaken
in FDOTs District Seven.
| | - |  | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | The Virginia Department of Transportations (VDOT) statewide 511 traveler information contract, pursuant to which we are providing multi-year
services related to the planning, design, deployment, operations, and maintenance.
| | - |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | The North Carolina Department of Transportations (NCDOT) statewide 511 traveler information contract, pursuant to which we are providing services
related to the planning, design, deployment, operations, and maintenance.
| | - |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | Completed the design and construction of the 5thParallel Runway at the Hartsfield-Jackson International Airport, the worlds busiest airport.
| | - |  | ---------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | Selected to provide airside design for a new Air Carrier airport at St. George, Utah.
| | - |  | -------------------------------------------------------------------------------------



| |  |  | Continuing to provide design for Runway 9-27 reconstruction at George Bush Intercontinental Airport in Houston, Texas.
| | - |  | ----------------------------------------------------------------------------------------------------------------------



| |  |  | Continuing to provide airside design services at McCarran International Airport in Las Vegas, Nevada.
| | - |  | -----------------------------------------------------------------------------------------------------



| |  |  | Continuing to provide construction management for in-line baggage system at Los Angeles World Airport
| | - |  | -----------------------------------------------------------------------------------------------------



| |  |  | Draft environmental impact statements for highway improvements along the I-70 corridor and new commuter rail service from downtown Denver to the Denver
International Airport. The projects include alternatives analysis, environmental resource studies, preliminary engineering, traffic modeling and
| | - |  | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



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| | analysis, an FTA New Starts application, and a comprehensive public and agency involvement process. The successful public involvement process was recently
highlighted by the US Department of Transportation in their 2006 publication How to Engage Low-Literacy and Limited-English-Proficiency Populations in Transportation Decision making that documents best practices as identified
through a nationwide scan of national experts from Federal, state, county, and city governments.
| | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | Providing general engineering consulting services to a number of toll-road agencies including:
| | - |  | ----------------------------------------------------------------------------------------------



| |  |  | Floridas Turnpike Enterprise
| | - |  | -----------------------------



| |  |  | Orlando Orange County Expressway Authority
| | - |  | ------------------------------------------



| |  |  | Texas Turnpike Authority
| | - |  | ------------------------



| |  |  | Transportation Corridor Agencies
| | - |  | --------------------------------



| |  |  | Central Texas Regional Mobility Authority
| | - |  | -----------------------------------------



| |  |  | Northeast Texas Regional Mobility Authority
| | - |  | -------------------------------------------



| |  |  | As a significant sub-consultant to Parsons Brinckerhoff Quade and Douglas, a seven year program management contract with Miami-Dade Transit providing project
management services in support of the implementation of the Peoples Transportation Plan (PTP) for Miami-Dade County. Specific services include but are not limited to transit design, corridor planning, and project and cost control.
| | - |  | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | Multi-year full service Indefinite Deliver/Indefinite Quantity contracts for engineering services for the Federal Highway Administration Western and Central Federal
Lands. The contracts provide for the engineering, design, and development of roads and bridges located on federal or locally owned roads on or leading to federal lands in the western United States.
| | - |  | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | San Diego Association of Governments (SANDAG) On Call: TransNet program planning, management, and technical
support for SANDAG. We serve as an extension of SANDAG staff providing on-call engineering services as well as design for the next five years for the TransNet program in San Diego, California. This program is a large scale, long term transportation
improvement program funded by a1/2 cent county sales tax for a total of approximately $40 billion over 40 years.
SANDAG identified some early action highway and transit transportation improvement projects on Routes 5, 15, 52, 76, 805 including Mid-Coast Light Rail with a 10-year completion timeline.
| | - |  | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | SR 22 HOV project - Orange County Transportation Authority (OCTA) through special California State Legislatures awarded a $400 million contract to Granite,
Myers and Rados, JV (GMR) using an alternative delivery method. PBS&J was teamed with URS as design engineers for the State Route 22 project. PBS&J was tasked to manage the structural design and construction of nearly $200 million worth of
structure construction, consisting of bridge modifications, widening, replacement and over 120 retaining walls and sound walls along the 12 mile freeway corridor. California Department of Transportation (Caltrans) has the overall responsibility of
program oversight. To assist in the review, OCTA has retained the service of a program management consultant to oversee the overall design and construction programs. The total time line in the contractors bid was 800 days from the Notice
to Proceed. The completed project will provide numerous safety and operational improvements as well as adding one High Occupancy Vehicle (HOV) lane in each direction from I-405 to SR-55.
| | - |  | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | On-call Bridge Engineering Services: Caltrans Districts 11 and 12. We are providing bridge engineering on-call services for Caltrans Districts 11 (San Diego County)
and 12 (Orange County) as a sub-consultant.
| | - |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

Environmental Services

Industry Overview

Over the past thirty years,
significant environmental laws at the federal, state and local levels have been enacted in response to public concern over the health of the nations air, water, and natural resources. Those laws



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and their implementation through regulation affect numerous industrial and governmental actions and form a key market driver for the services of our
Environmental engineering and science business segment.

Two significant federal environmental laws, The Safe Drinking Water Act of 1974
and the Clean Water Act of 1972, continue to drive this segment of our business. Pursuant to these laws, Congress has allocated funds to assist state and local governments. According to the Environmental Protection Agency, as much as $23 billion a
year will be needed for construction and upgrade of water and wastewater treatment facilities over the next 20 years.

Our Services

Our Environmental business segment focuses on the delivery of planning, design and construction management services for private and public sector clients
related to:



|                                               |  |                                           
|---------------------------------------------- |  | ------------------------------------------
|Air Quality Management                         |  | Flood Insurance Studies                   
|Energy Planning                                |  | Hazardous and Solid Waste Management      
|Cultural Resources Assessments                 |  | Information Solutions                     
|Ecological Studies                             |  | Wastewater Treatment                      
|Environmental Toxicology Analysis              |  | Water Resources                           
|Aquatic Treatment Systems Biosolids Management |  | Water Supply Water Treatment:
Distribution

During fiscal year 2006, some significant projects in our Environmental business segment included:



| |  |  | In 2006, completed a two-year study for the Minerals Management Service of fourteen potential archaeological sites submerged on the Gulf of Mexico Outer Continental
Shelf. The study was designed to evaluate unidentified side-scan sonar targets that had been previously detected by industry surveys and subsequently recommended for avoidance by petroleum industry construction projects. Project objectives included:
assessing the adequacy of current MMS archaeological site-avoidance criteria; assessing industry compliance with government protective measures; and refining analytical methods used for selecting sites for avoidance. The project resulted in the
recommendation of refinements to MMSs site avoidance criteria and methodology requirements for industry surveys, and also the recommendation of National Register of Historic Places eligibility for three significant shipwrecks, including a U.S.
Navy gunboat and two World War II-era U.S. Merchant Marine tankers destroyed by German u-boats.
| | - |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | As part of a long-term comprehensive contract, conducted all required cultural resources investigations at each of the TXU surface mines located across north,
north-central and northeast Texas. This work has included Phase I archaeological surveys, Phase II National Register testing, and Phase III mitigation. The work has been conducted to satisfy the requirements of Section 106 of the
National Historic Preservation Act and the Coal Mining Regulations of the Railroad Commission of Texas.
| | - |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | A five-year assignment with the Washington Suburban Sanitary Commission to improve and expand the 288 million gallon per day Potomac Water Filtration Plant
that provides drinking water for more than 1 million people in Montgomery and Prince Georges Counties, Maryland. We have been retained to design the improvements necessary to enhance water quality, increase process reliability, and expand
plant capacity. Included in these improvements are: ultraviolet disinfection, pump stations, improved rapid mix and flow split facilities, flocculation equipment upgrades, hydraulic improvements and various electrical system enhancements. The
design was completed in 2006. Construction is expected to be completed in 2009.
| | - |  | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | A multi-year joint venture with the U.S. Army Corps of Engineers with respect to program management support activities on the federal portion of the Comprehensive
Everglades Restoration Project (CERP). The joint venture contract is budgeted for up to $6 million per year and the contract
| | - |  | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



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| | is for 3 years with provisions for up to 5 renewal periods. The CERP is budgeted to cost over $8 billion and the cost is to be shared equally between the
federal government and state and local agencies.
| | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | A significant project for the City of San Diego, California to provide policy and master planning services for recycled water. The City directed that the study
evaluate all aspects of a viable increased water reuse program, including but not limited to groundwater storage, expansion of the distribution system, reservoirs for reclaimed water, live stream discharge, wetlands development, and reservoir
augmentation.
| | - |  | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | Pinewood Mitigation Bank (PMB) is a $600,000 wetland mitigation bank project that will restore, enhance, and protect approximately 19,000 acres of wetlands, upland
long-leaf pine forests, and mixed pine-hardwood forests. Located in East Texas along the Neches River, the project spans Angelina, Polk, and Tyler counties and will create a protected corridor between the Davy Crockett National Forest and the
Angelina National Forest. Coordination with two USACE district Mitigation Banking Review Teams makes this project unique and one-of a kind. Another unique quality of the project is that the private sponsor will donate all the land to the Texas Parks
and Wildlife Department. To date, a wetlands mitigation project of this magnitude has not been completed in the United States.
| | - |  | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | A comprehensive contract with the San Antonio River Authority to provide system design, development and deployment for the creation of the Regional Watershed
Modeling System (RWMS). The RWMS development is the result of a historic agreement between three government entities, the San Antonio River Authority, the City of San Antonio and Bexar County to form the Bexar Regional Watershed
Management partnership. The inter-local agreement that formed this partnership has subsequently been expanded to include several of the suburban San Antonio municipalities and may eventually include many of the other cities and counties within the
river basin. The RWMS provides a comprehensive regional watershed management system that will act as a single repository of spatial and modeling data to be used by all partners.
| | - |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | A five-year contract with the Federal Emergency Management Agency Region V, to perform all aspects of the federal governments Map Modernization Program. This
assignment includes engineering modeling and floodplain mapping for the States of Michigan, Minnesota, Wisconsin, Illinois, Ohio, and Indiana, which represent some of the most active and sophisticated floodplain managers in the United States.
Efforts will also include assisting states in working with local floodplain administrators to understand the impacts of flood maps, and communicating these to residents impacted by the updated information.
| | - |  | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | A three year assignment with the California Department of Water Resources to provide floodplain mapping support services. Activities under this contract include a
host of actions designed to improve or create floodplain management throughout California. Specific task orders include:
| | - |  | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | Levee Database: location and ownership of more than 8,000 miles of levees within the State. This task includes GIS map development, database, and application
development, and extensive contact with levee districts to update information.
| | - |  | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | Statewide Mapping Plan: detailed and approximate floodplain mapping throughout the state. Stage one is to identify the costs and products necessary to map the
Central Valley in 2-5 years, followed, by a full statewide plan.
| | - |  | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | Post Disaster Mitigation Grant Application: preparing and submitting a Post Disaster Mitigation Grant request.
| | - |  | --------------------------------------------------------------------------------------------------------------



| |  |  | Awareness Mapping: reprioritizing the planned production of Awareness Mapping statewide and performing mapping for approximately 1,000 miles of stream.
| | - |  | -------------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | Executive Order: updating the Governors floodplain management task order.
| | - |  | --------------------------------------------------------------------------



| |  |  | Levee Certification (Procedure Memo #34) Outreach: aiding in the development of an outreach program to inform levee districts of the requirement relating to levee
certification.
| | - |  | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



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| |  |  | Design services for the expansion of the Cherokee County Water and Sewerage Authoritys Etowah River Water Treatment Facility to double the daily processing
capacity. The work involved in the Etowah River WTF Expansion includes new raw water intake screens, two new raw water pumps, a new rapid mix basin, eight new flocculation basins, eight new sedimentation basins, fourteen new filters, two new clear
wells, and a new high service pump station.
| | - |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

Civil Engineering

Industry Overview

During fiscal year 2006, the U.S.
Economy inflated residential housing market entered a period of decline. This decline was especially intensive in the third and fourth quarters. In addition during fiscal year 2006, there were no major hurricane events that resulted in land fall in
the United States. These two conditions lead to a significant decline in related project opportunities in these high impact markets. The commercial development market remains strong. Federal spending remained strong, especially in the area of
national defense, which increased the opportunity and fortified our strategy for greater balance between the public and private sectors. Military planning increased substantially due to requirements in anticipation of Base Realignment and Closure
(BRAC) and U.S. Army Transformation objectives. Also, new opportunities began to emerge in Design/Build alternative project delivery contracting at Department of Defense facilities and other public institutions. State and local
government markets remained stable.

Other primary market outlooks remain stable with the exception of private sector residential housing.
The Federal Department of Defense will continue to be fueled by BRAC implementation and the advancement of U.S. Army transformation. Also, facilities related asset management is emerging as an area of opportunity. Although the private sector
residential market can be expected to remain depressed through the remainder of fiscal year 2007, military housing renewal and privatization and expansion will create new opportunities.

Our Services

Our civil engineering business provides architectural engineering and general civil
engineering as well as specialized services to public and private clients. Included in these services are: site engineering and surveys, infrastructure engineering, master planning, disaster mitigation planning and response, infrastructure
protection, asset management, emergency management and architectural and landscape architecture design.

Our civil engineering business
will continue to focus its portfolio strategy to balance the public and private sectors with emphasis on specialized Federal National Defense markets and disaster mitigation, response and emergency management markets for federal, state and local
governments. We will continue our commitment to customers in the private sector corporate real estate development, leisure time and residential housing markets. We will rely on advanced technologies for competitive advantages and to distinguish us
from our competition. These technologies include Geodata/Geographic Information Systems, database design and development, Global Positioning Systems (GPS), High Definition Survey technology and advanced data collection systems including Laser based
imaging and measurement, 3D imaging, and application of web collaboration tools.

During fiscal year 2006 our projects included:



| |  |  | Administration and debris removal for major hurricanes for FDOT, several Florida counties and communities as well as significant storm related engineering
subcontract activities in Mississippi and Florida for the Federal Emergency Management Agency (FEMA). These projects continued from the fall of 2005 hurricane season.
| | - |  | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | Site/Civil engineering for Ft. Bliss Design/Build Temporary Facilities project as a member of the Design and Construction team. We also continued work on the First
Phase Land Development Engineering (LDE) Task Order for permanent facilities.
| | - |  | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



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| |  |  | Ft. Belvoir facilities planning services with program management responsibilities in partnership with a large Architectural/Engineering firm.
| | - |  | ---------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | Asset Management related Real Property Inventory (RPI) and Asset Verification/Asset Validation studies. Notable projects include the National Guard
installation at Camp Shelby and various Readiness Centers, located in the State of Mississippi.
| | - |  | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | Providing conceptual planning and urban design for the City of Clearwater, Florida for a six-block section of Gulfview Boulevard for Clearwater Beach, a world-class
beach destination, located in Pinellas County.
| | - |  | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | Designing a utility building in a campus setting for the Bridgeway Acres Redevelopment project in Pinellas County, Florida. The project transforms a waste to energy
facility into five state-of-the-art campus buildings around a central green space designed to be both energy efficient and environmentally sensitive.
| | - |  | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | On-site beach replenishment permitting staff support, survey staff support, storm impact assessment, annual aerial oblique photography, aerial photography and other
miscellaneous tasks as needed for Florida Bureau of Beaches and Coastal Systems GEC.
| | - |  | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | Architectural design services for various Publix Market locations. This is part of a multi-year contract for on-going services.
| | - |  | -------------------------------------------------------------------------------------------------------------------------------



| |  |  | Providing temporary housing as a result of disaster created events to meet public temporary housing needs for the Federal Emergency Management Agency.
| | - |  | ------------------------------------------------------------------------------------------------------------------------------------------------------

Construction Management

Industry Overview

The demand for our construction management services has also been fueled by the legislation and industry
trends that are driving the growth in our Transportation and Environmental business segments. These trends have created a large number of infrastructure projects throughout the United States, which are subject to increasingly complex governmental
regulations. The market should continue to grow as a result of the new Federal Transportation Act (TEA-Lu) that was passed in 2005. However due to the restraints placed on Federal consultants as a result of Hurricanes Katrina and Rita and the Iraq
conflict it remains unclear as to whether the Federal Government will fully fund its Program Commitments. Domestic military spending should also see a significant increase beginning in 2006 through 2008. This is a result of BRAC activity.

The role of the construction manager has become increasingly important to the success of these projects, requiring a new level of
versatility and a wide range of skills. Both public and private sector entities are under pressure to complete these projects at accelerated schedules, resulting in a myriad of project delivery systems. With limited in-house staff, these entities
must rely on experienced construction managers to complete projects on time and within budget.

Our Services

In the area of construction management, we provide a wide range of services as an agent for our clients, including contract administration, inspection,
field-testing, scheduling/estimating, instituting project controls and quality assessment. Although we do not construct or build any projects, we may act as the program director of a project whereby on behalf of the owner of the project, we provide
scheduling, cost estimating and construction observation services for the project, or our services may be limited to providing construction consulting.

During fiscal year 2006, projects in our Construction Management Division included:



| |  |  | Providing construction engineering and inspection services to the Departments of Transportation in Alabama, Arkansas, California, Colorado, Nevada, Texas, Florida,
Georgia, North Carolina and
| | - |  | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



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| | Mississippi, North Texas Turnpike Authority (NTTA), the Harris County Toll Road Authority (HCTRA) as well as to various municipalities such as Cobb County
Water & Sewer Department, Georgia; Collier County, Florida; Commerce City, Colorado; Douglas County, Colorado; and Fulton County, Georgia.
| | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | Providing construction management services to Phoenix Valley Metro Rail, light rail transit project in Phoenix, Arizona.
| | - |  | ------------------------------------------------------------------------------------------------------------------------



| |  |  | Providing construction administration to the Clark County, Nevada, Department of Public Works, as well as the City of Oceanside, California, and the City of Dana
Pointe, California.
| | - |  | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | Performing Construction Management Program Services to the U.S. Army Corp of Engineers in New Orleans.
| | - |  | ------------------------------------------------------------------------------------------------------



| |  |  | Performing Vertical Code Compliance for Miami-Dade College in Florida.
| | - |  | ----------------------------------------------------------------------



| |  |  | Providing comprehensive services, including cost estimating, scheduling and construction claim reviews, to the school boards of Miami-Dade County and Broward
County, Florida; Cobb County DOT in Georgia, Nevada DOT (NDOT), San Diego County Association of Governments (SANDAG) and the TxDOT.
| | - |  | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | Providing construction-related services to AT&T throughout Florida and Georgia, including quality assurance inspections, verification of contractors
invoices, damage inspections and responding to natural disasters.
| | - |  | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | Providing construction inspection services nationally to the National Park Service and Federal Highway Administrations Central Lands Division for the Hoover
Dam Bypass.
| | - |  | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------

Clients

Through our four national business segments, we provide our services to a broad range of clients, including state, local and municipal agencies, the federal government and private sector businesses. Our state and local government clients
include approximately 18 state departments of transportation, water utilities, local power generators, waste water treatment agencies, environmental protection agencies, schools and colleges, law enforcement agencies, judiciary, hospitals and other
healthcare providers. During fiscal year 2006, we provided services to federal agencies, including the Army Corps of Engineers, EPA, Navy, Air Force, Coast Guard, United States Postal Service, FEMA, National Parks Service, and Department of Energy,
and local entities. Our contracts with federal, state and local entities are subject to various methods of determining fees and costs. See Contract Pricing and Terms of Engagement for further discussion of our pricing arrangements with
governmental clients.

Our private sector clients include retail and commercial, entertainment, railroad, petro-chemical, food,
telecommunications, oil and gas, power, semi-conductor, transportation, technology, public utility, mining and forest products entities. The table below indicates the revenue generated, by client type, for each of the three years ended
September 30, 2006, 2005 and 2004.



|                         |  |             |         |             |    |             |   |         |  |          |  |   |         |  |   
|------------------------ |  | ----------- | ------- | ----------- | -- | ----------- | - | ------- |  | -------- |  | - | ------- |  | --
|                         |  | Fiscal 2006 |         | Fiscal 2005 |    | Fiscal 2004
|(Dollars in thousands)   |  | Revenues    |         | %           |    | Revenues    |   | %       |  | Revenues |  | %
|State and local agencies |  | $           | 376,069 |             | 70 |             | $ | 363,475 |  | 71       |  | $ | 318,255 |  | 71
|Federal agencies         |  |             | 26,862  |             | 5  |             |   | 30,716  |  | 6        |  |   | 35,860  |  | 8 
|Private businesses       |  |             | 134,311 |             | 25 |             |   | 117,746 |  | 23       |  |   | 94,132  |  | 21
|                         |  |             |         |             |    |             |   |         |  |          |  |   |         |  |   
|Total                    |  | $           | 537,242 |             |    |             | $ | 511,937 |  |          |  | $ | 448,247 |  |   
|                         |  |             |         |             |    |             |   |         |  |          |  |   |         |  |   

In fiscal year 2006, we derived approximately 25.0% of our engineering fees from various districts
and departments of the FDOT (approximately 17.3% of total engineering fees) and the TxDOT (approximately 7.7%



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of total engineering fees) under numerous contracts. While we believe the loss of any individual contract would not have a material adverse effect on our
results of operations and would not adversely impact our ability to continue work under our other contracts with these clients, the loss of all the FDOT or the TxDOT contracts would have a material adverse effect on our results of operations by
causing a material decrease in our revenues and profits. We do not believe that the impact of the misappropriations and the related accrued reimbursement liability will have a material adverse effect on our existing client relationships.

Marketing

Marketing activities are conducted by
key operating and executive personnel, including specifically assigned business development personnel, as well as through professional personnel who develop and maintain new and existing client relationships. Our continued ability to compete
successfully in the areas in which we do business is largely dependent upon aggressive marketing, the development of information regarding client requirements, the submission of responsive cost-effective proposals and the successful completion of
contracts. Information concerning private and governmental requirements is obtained, during the course of contract performance, from formal and informal briefings, from participation in activities of professional organizations, and from literature
published by the government and other organizations.

Contract Pricing and Terms of Engagement

We earn our revenues for the various types of services we provide through cost-plus, time-and-materials, fixed price contracts, and contracts which
combine any of these methods.

Cost-Plus Contracts. Under our cost-plus contracts, we charge clients negotiated indirect rates based on
direct and indirect costs in addition to a profit component. We recognize engineering fees at the time services are performed. The amount of revenue is based on our actual labor costs incurred plus a recovery of indirect costs and a profit
component. In negotiating cost-plus contracts, we estimate direct labor costs and indirect costs and then add a profit component, which is a percentage of total recoverable costs, to arrive at a total dollar value for the contract. Indirect expenses
are recorded as incurred and are allocated to contracts. If the actual labor costs incurred are less than estimated, the revenues from a project will be less than estimated. If the actual labor costs incurred plus a recovery of indirect costs and
profit exceed the initial negotiated total contract amount, we must obtain a contract modification to receive payment for such overage. If a contract modification or change order is not approved by our client, we may be able to pursue a claim to
receive payment. Engineering fees from claims are recognized when collected. For each of fiscal year 2006 and 2005, approximately 23% and 20%, respectively, of our contracts were cost-plus contracts, primarily with state and local government
agencies.

Our contracts with governmental entities, once executed, are not subject to renegotiation of profits at the election of the
government; however, the governmental entity may elect to discontinue funding. If a governmental client elects to discontinue funding a project, our fees for work completed are generally protected because our contracts often provide that we receive
periodic payments throughout the course of the project.

Time-and-Materials Contracts. Under our time-and-materials contracts, we negotiate
hourly billing rates and charge our clients based on actual time expended. In addition, clients reimburse us for our actual out-of-pocket costs of materials and other direct incidental expenditures incurred in connection with performing the
contract. Our profit margins on time-and-materials contracts fluctuate based on actual labor and overhead costs directly charged or allocated to contracts compared with negotiated billing rates. During each of fiscal year 2006 and 2005,
approximately 47% and 54%, respectively, of our contracts were time-and-materials contracts, primarily with federal, state and local agencies, as well as some private sector clients.

Fixed-Price Contracts. Under our fixed-price contracts, clients pay us an agreed sum negotiated in advance for the specified scope of work. Under
fixed-price contracts, there are no payment adjustments if we over-estimate or under-estimate the number of labor hours required to complete the project, unless there is a change of



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scope in the work to be performed. Accordingly, our profit margin will increase to the extent the labor hours and other costs are below the contracted
amounts. The profit margin will decrease and we may realize a loss on a project if the number of labor hours required or other costs exceed the estimate. During fiscal years 2006 and 2005, approximately 30% and 26%, respectively, of our contracts
were fixed-price contracts, primarily with private sector clients.

Competition

We face active competition in all areas of our business. As we provide a wide array of engineering, architectural, planning and construction management
services to companies in various industries throughout the United States, we encounter a different group of competitors in each of our markets. Our competitors include (1) national and regional design firms like us that provide a wide range of
design services to clients in all industries, including CH2M Hill and Parsons Brickerhoff (2) industry specific firms that provide design as well as other services to customers in a specific industry or disciplines, including Montgomery Watson,
Camp Dresser and McKee, Inc., and (3) local firms that provide some or all of our services in one of our markets. Some of our competitors are larger, more diversified firms having substantially greater financial resources and larger
professional and technical staffs than ours. Competition for major contracts is frequently intense and may entail public submittals and multiple presentations by numerous firms seeking to be awarded the contract. The extent of competition we will
encounter in the future will vary depending on changing customer requirements in terms of types of projects and technological developments. It has been our experience that the principal competitive factors for the type of service business in which
we engage are a firms demonstrated ability to perform certain types of projects, the clients own previous experience with competing firms, the firms size and financial condition and the cost of the particular proposal.

No firm dominates a significant portion of the sectors in which we compete. Given the expanding demand for some of the services we provide, it is
likely that additional competitors will emerge. At the same time, consolidation continues to occur in certain of the sub-segments of the industry in the United States, including the environmental-focused firms.

We believe that we will retain the ability to compete effectively with other firms that provide similar services by continuing to offer a broad range of
high-quality consulting and environmental, transportation, and engineering and construction management services through our network of offices. Among other things, the wide range of expertise, which we possess, permits us to remain competitive in
obtaining government contracts despite shifts in governmental spending emphasis. Our multi-disciplinary capabilities enable us to compete more effectively for clients whose projects require that the expertise of professionals in a number of
different disciplines be utilized in the problem solving effort. We believe that our ability to offer our services over a large part of the United States is a positive factor in enabling us to attract and retain clients who have a need for our
services in different parts of the country.

Backlog

Our backlog for services was estimated to be approximately $487.0 million and $466.4 million as of September 30, 2006 and 2005, respectively. We define backlog as contracted task orders less previously recognized
revenue on such task orders. U.S. government agencies, and many state and local governmental agencies, operate under annual fiscal appropriations and fund various contracts only on an incremental basis. Our ability to realize revenues from our
backlog depends on the availability of funding for various federal, state and local government agencies.

A majority of our customer orders
or contract awards and additions to contracts previously awarded are received or occur at random during the year and may have varying periods of performance. The comparison of backlog amounts on the same date in successive years is not necessarily
indicative of trends in our business or future revenues.



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The major components of our operating costs are payroll and payroll-related costs. Because our business
is dependent upon the reputation and experience of our personnel and adequate staffing, a reasonable backlog is important for the scheduling of operations and for the maintenance of a fully-staffed level of operations.

The following table presents the total backlog for services by reporting segment:



|                        |  |               |         |      |   |        
|----------------------- |  | ------------- | ------- | ---- | - | -------
|                        |  | September 30,
|(Dollars in thousands)  |  | 2006          |         | 2005
|Transportation Services |  | $             | 241,740 |      | $ | 196,025
|Environmental Services  |  |               | 114,002 |      |   | 93,004 
|Civil Engineering       |  |               | 59,517  |      |   | 65,237 
|Construction Management |  |               | 71,738  |      |   | 112,152
|                        |  |               |         |      |   |        
|Totals                  |  | $             | 486,997 |      | $ | 466,418
|                        |  |               |         |      |   |        

Regulation

Compliance with federal, state and local regulations, which have been enacted or adopted, relating to the protection of the environment, is not expected to have any material effect upon our capital expenditures,
earnings and competitive position.

Personnel

We employed approximately 3,900 and 3,800 employees as of September 30, 2006 and 2005, respectively. Most of our employees are professional or technical personnel having specialized training and skills, including engineers, architects,
analysts, scientists, management specialists, technical writers and skilled technicians. Although many of our personnel are highly specialized in certain areas and while there is a nationwide shortage of certain qualified technical personnel, we are
not currently experiencing any significant difficulty in obtaining the personnel we require to perform under our contracts. We believe that our future growth and success will depend, in large part, upon our continued ability to attract and retain
highly qualified personnel.

Liabilities and Insurance

When we perform services for our clients, we can become liable for breach of contract, personal injury, property damage and negligence. Such claims could include improper or negligent performance or design, failure to
meet specifications and breaches of express or implied warranties. Our clients often require us to contractually assume liabilities for damage or personal injury to the client, third parties and their property and for fines and penalties. Because
our projects are typically large enough to affect the lives of many people, the potential damages to a client or third parties are potentially large and could include punitive and consequential damages. For example, our transportation projects
involve services that affect not only our client, but also many end users of those services.

We seek protection from potential liabilities
by obtaining indemnification, where possible, from our public and private sector clients. However, even when we obtain such indemnification, it is generally not available if we fail to satisfy specified standards of care in performing our services
or if the indemnifying person has insufficient assets to cover the liability. Therefore, we also maintain a full range of insurance coverage, including workers compensation, general and professional liability (including pollution liability)
and property coverage. Our professional liability coverage is on a claims made basis (which means that the policy provides liability coverage for all claims made during the policy period, regardless of when the action occurred), while the rest of
our insurance coverage is on an occurrence basis (which means that the policy provides liability coverage only for injury or damage arising from an action that occurs during the policy period, regardless of when the claim is actually made). Our
professional liability insurance provides for annual coverage of up to $45.0 million with a



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per claim deductible of $125,000 and annual deductible of $3.0 million. Based upon our previous experience with such claims and lawsuits, we believe our
insurance coverage is adequate for all of our present operational activities, although such coverage may not prove to be adequate in all cases. A successful claim or claims in excess of our insurance coverage could have a material adverse effect on
our financial position and results of operation.

Available Information

This Annual Report, quarterly reports on Form 10-Q , current reports on Form 8-K and amendments to those reports are available without charge on the
Security and Exchange Commissions (SEC) web site, www.sec.gov, as soon as reasonably practicable after they are filed electronically. We are providing the address to the SECs website solely for the information of investors.



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|ITEM 1A. | Risk Factors
|-------- | ------------

In addition to the factors discussed elsewhere in Item 1, Item 7 and Item 7A, and the notes to the consolidated financial statements, the following risks and uncertainties could materially adversely affect our business,
financial condition, and results of operations. Additional risks and uncertainties not presently known to us or that we currently deemed immaterial also may impair our business operations and financial condition.

Certain Risks Related to Our Marketplace and Our Operations

We
are involved in litigation, legal proceedings and governmental investigations, which could have a material adverse effect on our profitability and financial position.

We are involved in litigation, legal proceedings and governmental investigations that are significant and described in more detail in Item 3
Legal Proceedings. Such litigation, proceedings and investigations could have a material adverse effect on our profitability and financial position if decided adversely.

Unpredictable downturns in the financial markets, and reduced federal, state and local government budget spending could cause our revenues to fluctuate and adversely affect our revenue and operating results.

Downturns in the financial markets can impact the capital expenditures of our clients. In particular, our private sector clients,
and the markets in which we provide services, may from time to time experience periods of economic decline. Any prolonged downturn in the financial markets could negatively impact our ability to determine demand for our services. We cannot be
certain that economic or political conditions will be generally favorable or that there will not be significant fluctuations adversely affecting our industry as a whole or key markets we target.

The demand for our government related services is contingent upon the level of government funding for new and existing infrastructure projects. As such,
government funding is dependent upon policy objectives being in line with infrastructure needs. Any shift in policy away from these initiatives can impact our ability to secure current funding for projects and obtain new projects.

We operate in a highly competitive market. If we are unable to offer competitive services, our business may be adversely affected.

We have numerous competitors in the various marketplaces in which we operate. Our competitors range from large diversified firms having substantially
greater financial resources and a larger technical staff than us, to smaller more specialized, low cost structure niche firms. It is not possible to estimate the extent of competition which our present or future activities will encounter because of
changing competitive conditions, customer requirements, technological developments, political environments and other factors.

We continue
to see significant price competition and customer demand for higher service completion levels. There is also significant price competition in the marketplace for federal, state and local government contracts as a result of budget issues, political
pressure and other factors beyond our control. Our operating results could be negatively impacted should we be unable to achieve the necessary revenue growth to sustain profitable operating margins within our service lines.

Pending or future governmental audits could result in findings which require downward adjustments of our revenue; and, under certain circumstances, could cause us
to incur significant liabilities or restrict our business activities.

We are party to numerous contracts with federal, state and
other government agencies, which require strict compliance with applicable laws, regulations, standards and contractual requirements. Federal and many state agencies routinely conduct various types of audits of their contracts. In some cases, the
agencies conducting these



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audits review and report instances of fraud, internal control deficiencies, and violations of regulations or provisions of the contract.

If these audits identify costs which have been incorrectly charged or billed, either directly or indirectly, to government contracts, the government
agencies may not reimburse us for these costs, or if we have already been reimbursed, we may be required to refund these reimbursements.

Our internal controls may not prevent or detect specific isolated or deceitful violations of applicable laws, regulations, standards or contractual requirements. If these agencies determine that we or one of our subcontractors has engaged
in illegal conduct, we may be subject to civil or criminal penalties, and this may impair our ability to obtain new work.

We derive a significant
portion of our engineering fees from a few clients, and the loss of these clients could have a material adverse impact on our financial performance.

In fiscal 2006, we derived approximately 25.0% of our engineering fees from various districts and departments of the FDOT and the TxDOT under numerous contracts. While we believe the loss of any individual contract
would not have a material adverse effect on our results of operations and would not adversely impact our ability to continue work under our other contracts with these clients, the loss of all the FDOT or the TxDOT contracts would have a material
adverse effect on our results of operations by causing a material decrease in our engineering fees and profits.

Our backlog is subject to
cancellation and unexpected adjustments, which could have a negative impact on future earnings.

Backlog represents the revenues
associated with contracted task orders which are scheduled to commence in future periods, less previously recognized revenue on such task orders. Projects may remain in our backlog for prolonged periods of time prior to commencement, and our ability
to realize revenues from our backlog is contingent on the availability of funding from federal, state and local government agencies. Most government agency contracts contain cancellation clauses, which if exercised, would cause a reduction in our
backlog, and adversely affect future revenues. Future project cancellations and scope adjustments could further reduce the dollar amount of our backlog and the revenues and profits that we actually earn.

If we are unable to accurately estimate the revenues, costs, time and resources on our contractual commitments, we may incur a lower profit or loss on the
contract.

We generally earn revenue for the services we provide through three principal types of contracts; cost-plus,
time-and-materials, and fixed price contracts. Cost-plus contracts are usually subject to negotiated ceiling amounts, and limit the recovery of certain specified indirect costs. If we underestimate our costs, and our costs exceed the contract
ceiling amount, we may not be reimbursed for such costs. Under time-and-materials contracts, we negotiate hourly billing rates and charge our clients based on actual time expended. If we underestimate our total contract costs, we may not recover
these costs from our client, and the project may not be profitable for us. Under fixed price contracts, we receive a fixed sum negotiated in advance, regardless of actual costs incurred. If we underestimate our revenue and costs for the specified
scope of work, we may experience significant over-runs and negatively impact profit margin or realize a loss on the contract. Under these types of contracts, we bear the inherent risk that actual performance cost may exceed the contract price.

If we are unable to retain and recruit highly qualified personnel to fulfill our contractual obligations, our business may be adversely affected.

Our employees are our most valuable resource. Many of our technical personnel are highly specialized in their respective
disciplines. Since we derive substantially all of our engineering fees from services performed by



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our professional staff, our failure to retain and attract professional staff could negatively impact our ability complete our projects and secure new
contracts.

Failure to meet the covenants of our existing revolving credit facility could result in the loss of use of our available line of credit.

Failure to meet any of the covenant terms of our existing revolving credit facility could result in an event of default. If an
event of default occurs, and we are unable to receive a waiver of default, our lender may increase our borrowing costs, restrict our ability to obtain additional borrowings, accelerate all amounts outstanding or enforce their interest against all
collateral pledged. In the past, we have obtained written waivers of default from our lender, but we may not be able to obtain any necessary waivers in the future. In addition, we can not declare dividends or incur additional debt without written
approval from our lender, which could significantly restrict our ability to raise additional capital. Our inability to raise additional capital could lead to working capital deficits that could have a materially adverse effect on our operations in
future periods.

Certain Risks Related to Owning Our Stock

Because no public market exists for our stock, the ability of our shareholders to sell their common stock is limited.

There is no public market for our common stock. In order to provide some liquidity to our shareholders, we have historically maintained a limited annual stock offering period, which we call the stock window. The stock window has permitted
existing shareholders to offer their shares for sale back to us during a predetermined period at a price determined by an appraisal. Although the stock window is intended to provide some liquidity to shareholders, the aggregate number of shares
offered for sale during the stock window may be greater than the aggregate number of shares sought to be purchased by authorized buyers. As a result, sell orders may be prorated, and shareholders may not be able to sell all of the shares they desire
to sell during the stock window. We did not open the stock window in fiscal year 2006, and there is no guarantee the stock window will be open or will not be delayed in future periods. Shareholders who desire to sell their shares in the future will
only be able to do so if there are authorized buyers willing to purchase such shares during an open stock window.

The ability of shareholders to
sell or transfer their common stock is restricted.

Only our employees, directors, and The PBSJ Employee Profit Sharing and Stock
Ownership Plan and Trust (ESOP) may own our common stock. We have incorporated significant restrictions on the transfer of our common stock which limit our shareholders ability to sell their stock. All shares must be initially
offered for sale back to us at the price determined by an appraisal. If we decline to purchase the shares, the ESOP Plan may purchase such shares. Should the ESOP Plan decline to purchase the shares, the shareholders may offer their shares for sale
to other shareholders who are employees. The other shareholders have the right to purchase such shares based on each shareholders proportionate ownership of all issued shares. Because our shares are subject to transfer restrictions,
shareholders who desire to sell all their shares may not be able to do so.

Pursuant to the Companys by-laws, the Company is
permitted to repurchase stock by delivery of a promissory note to the employee. Because the principal payable pursuant to any such promissory note may be paid at any time prior to the five year anniversary of the date of issuance, a shareholder may
not receive a cash payment for his shares until such five year anniversary.

Because we do not intend to pay dividends, our shareholders will benefit
from an investment in our common stock only if our stock price appreciates.

We have never declared or paid dividends to holders of
our common stock. We expect to retain all future earnings for investment in our business, and do not expect to pay any cash dividends in the near future. As a



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result, the positive return of an investment in our common stock is solely dependable on future appreciation in value of our common stock and future
earnings. There is no guarantee that our stock will appreciate in value or even maintain the original price at which it was purchased.

The value of
our stock may be negatively impacted by current and future governmental agency investigations.

An unfavorable resolution or outcome
resulting from working with various government agencies to resolve the amount of reimbursement obligations may result in a material adverse impact to our enterprise value, and may adversely impact the future value of our share price. In addition, we
are currently under investigation by the United States Attorneys office for the Southern District of Florida and the Federal Bureau of Investigation for possible irregularities relating to past political contributions made by us and certain of
our employees. In the event that criminal charges are filed against the Company, the future value of our share price may be impacted.



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|ITEM 1B. | Unresolved Staff Comments
|-------- | -------------------------

None.



|ITEM 2. | Properties
|------- | ----------

We lease and
maintain our executive offices located at 5300 W. Cypress Street, Suite 200 Tampa, FL 33607. We own our Miami office located at 2001 N.W. 107th Avenue, Miami, Florida 33172, which consists of approximately 100,000 square feet of office space.
We own our Orlando office located at 482 South Keller Road, Orlando, Florida 32810, which consists of approximately 90,000 square feet of office space. The Orlando office building is pledged as collateral under a mortgage note.

We lease an additional 77 offices in 23 states in the United States and Puerto Rico, all of which are used for our four major business segments.
Aggregate lease payments during fiscal year 2006 were approximately $16.1 million.

We also had title to certain properties recovered
during the investigation in fiscal year 2005 and 2006 which we have classified as held for sale in the accompanying consolidated balance sheets at September 30, 2006 and 2005 (see Note 4 for further discussion) These properties include:



| |  |  | a 5,400 square foot residence located in Key Largo, Florida, which was pledged as collateral under a mortgage note. The property was sold in December 2006.
| | - |  | -----------------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | a 2,000 square foot condominium located in Hollywood, Florida,
| | - |  | --------------------------------------------------------------

We believe that substantially all of our property and equipment are, in general, well maintained and in good operating condition. They are considered adequate for present needs, and as supplemented by planned
construction, are expected to remain adequate for the near future.

We believe that we, or our subsidiaries, have clear title to the
properties owned and used in our business, subject to liens for current taxes and easements, restrictions and other liens, which do not materially detract from the value of the properties or our interest in the properties or the use of those
properties in our business.



|ITEM 3. | Legal Proceedings
|------- | -----------------

We are
party to several pending legal proceedings arising from our operations. We believe that we have sufficient professional liability insurance such that the outcome of any of these proceedings, individually and in the aggregate, will not have a
material adverse effect on our financial position or results of operations. However, if our insurance company were to deny coverage for a significant judgment or if a judgment were entered against us in an amount greater than our coverage, it could
adversely affect our results of operations and financial position.

We maintain a full range of insurance coverages, including
workers compensation, commercial general liability (which includes property coverage), commercial automobile, and professional liability (which includes pollution coverage). Our professional liability coverage is on a claims-made
basis meaning the coverage applies to claims made during a policy year regardless of when the causative action took place. All other coverages are occurrence-basis meaning that the policy in place when the injury or damage occurred
is the policy that responds regardless of when the claim is made. Our professional liability limits per policy year are $45 million with a per claim deductible of $125,000 plus an annual aggregate of $3 million. Based on our experience with claims
and lawsuits we believe that the current levels of coverage are adequate for all of our present operational activities although such coverages may not prove to be adequate in all cases. A successful catastrophic claim or aggregate of several large
claims in amounts in excess of our insurance coverages in any policy year could have a material adverse effect on our financial position and results of operation.



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In July 1998, we entered into an agreement with West Frisco Development Corporation (WFDC) to
provide various services, among which was a flood plain study to be used by WFDC, the City of Frisco and FEMA. In 2003, the City of Frisco retained the services of a third-party architecture and engineering firm in connection with the extension and
widening of Teel Road which lies within the greater drainage basin included in the Companys original flood plain study. This architecture and engineering firms assessment of the flood plain study determined that the Company used
incorrect assumptions when calculating the size of the drainage culverts required for the increased development of the areas transportation infrastructure. Based on this assessment, the Company has entered into negotiations with the City of
Frisco to correct the drainage needs to support the Teel Road expansion project. As a result, the Company had recorded an estimated liability of $3.1 million to cover the costs associated with correcting the drainage needs of the Teel Road expansion
project. Included in this estimate is the purchase of a parcel of land for $1.5 million, the remaining balance of $1.6 million is reflected in other liabilities in the accompanying consolidated balance sheets as of September 30, 2006 and 2005.

Misappropriation Loss

In March 2005,
subsequent to the issuance of the Companys 2004 financial statements, we discovered misappropriations of Company funds by our former Chief Financial Officer and two former employees who worked in our information systems and treasury
departments, collectively, (the participants). The participants colluded and circumvented controls to misappropriate funds and conceal the misappropriations possibly beginning as early as 1993 until the misappropriations were discovered.

Shortly after this discovery, an investigation sub-committee was formed comprised of the three outside members of our Corporate Audit
Committee. These three outside members were subsequently appointed to the Board of Directors and became the three members of the Audit Committee of the Board of Directors. The Audit Committee retained independent counsel to conduct an investigation
and advise the Audit Committee in connection with the investigation. The independent counsel retained forensic accountants, including accountants experienced in conducting forensic audits for companies that perform contracts for federal, state and
local governments to assist with the investigation.

The investigation team discovered that at least $36.6 million was misappropriated
between January 1, 1998 and the discovery of the misappropriations in March 2005. The amount misappropriated prior to January 1, 1998 could not be determined because certain data for the period prior to January 1, 1998 was
unavailable. The participants in the embezzlement scheme used several methods to misappropriate the funds while engaging in conduct to conceal the misappropriated amounts. This conduct included among other things, recording and changing normal
recurring journal entries and overstating accruals in prior periods to facilitate improper write-offs of misappropriated funds.

The Audit
Committee, at the direction of the Corporate Board, disclosed the overstatement of our overhead rate to our clients and other appropriate government agencies, including the Department of Justice (DOJ). We have been cooperating with our
clients and such agencies to determine the amount of our reimbursement obligations and any other amounts we may be obligated to pay in order to resolve these issues. The DOJ and certain other governmental entities have been investigating the
misappropriations and the overstatement of overhead rates.

In July 2006, we entered into a settlement agreement with the State of Texas
Department of Transportation which resolves all claims that the State of Texas may have had against us for overpayments related to the restatement of overhead rates on billings on or before April 30, 2006 under contracts with that agency based
on our payment of approximately $5.4 million and provides for the determination of the appropriate overhead rate for billings after April 30, 2006. In November 2006, we entered into a settlement agreement with the Florida Department of
Transportation which resolves all claims that agency may have had against us for the overstatement of rates on billings through September 30, 2005 (and with respect to cost contracts through September 30, 2006) under our contracts with
them based on our payment of approximately $12.5 million. This



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settlement agreement also provided for the determination of the appropriate overhead rate refund for fiscal year 2006 billings under fixed price contracts.
The refund amount was finalized in March 2007 and totaled $400,000.

In January 2007, we reached a settlement agreement with the Department
of Justice, Civil Division on behalf of it and all other federal agencies with which we have contracts to resolve all federal claims including claims under the Federal Civil False Claims Act, related to the overstatements of overhead rates on our
contracts with federal agencies. The agreement requires approximately $6.5 million of reimbursement payments for all contract amounts through September 30, 2005.

The settlements described, excluding those settlements paid in fiscal year 2006, above are included in the accrued reimbursement liability in the Companys consolidated financial statements at September 30,
2006. Those settlements which were settled subsequent to September 30, 2006 are included in the accrued reimbursement liability at September 30, 2006. We are in discussions with our remaining government clients to enter into settlement
agreements in order to satisfy any refund obligations, which are in various stages of settlement.

Our Board of Directors, with the
assistance of the CAC and the Audit Committee, instituted immediate corrective actions and began implementing long-term measures to implement new financial controls and establish procedures to safeguard assets and to establish more accurate
accounting and financial reporting practices. These long-term measures are included within our new Ethics and Compliance Program.

In an
effort to recover assets that were misappropriated, the Company has instituted lawsuits against certain persons who received money from one or more of the participants in the embezzlement scheme. The Company continues to incur costs associated with
such lawsuits, and the Company may not prevail in these lawsuits. In the event that the Company does prevail, the Company may not actually recover assets from the persons who were sued by the Company.

In the course of our investigation of the accounting irregularities and misappropriations, it was determined that there were possible violations relating
to past political contributions by us and certain of our employees. The United States Attorneys Office for the Southern District of Florida (Miami) and the Federal Bureau of Investigation have conducted an investigation relating to
improper campaign contributions including improper use of political action committees. We produced documents and other information to the government and fully cooperated with the authorities. Criminal charges have been filed against two of the
Companys former chairmen. Authorities have verbally informed the Companys external legal counsel that unless adverse additional information is discovered they do not intend to charge the Company. Therefore, we believe it unlikely that
criminal charges will be filed against us in this matter, but the authorities are not precluded from bringing charges, and circumstances may change.

The United States Securities & Exchange Commission is also conducting an investigation of the accounting irregularities and misappropriations of funds. We are fully cooperating with the investigation and have
produced documents and other information to the commission. At the present time, we are unable to predict the likely outcome of this investigation.

Pursuant to the Companys by-laws, the Company is permitted to repurchase stock by delivery
of a promissory note to the employee. On February 23, 2006 the Company repurchased 46,000 shares and 3,400 shares, respectively, of the Companys stock from Richard Wickett, our former Chairman of the Board from 2002 to February 2005 and
former Chief Financial Officer from 1993 to 2004, and Kathryn Wilson in the original principal amounts of $1.2 million and $92,000, respectively. The shares were repurchased for $27.00 per share which represents the September 30, 2004 share
price. At September 30, 2006, the Company had an accrual of $49,400 for the difference between the purchase price and the September 30, 2005 share value of $28.00. The notes currently bear interest at the rate of 7.5% per annum and
such rate is adjusted to the then current prime rate of Bank of America on December 31stof each year. Accrued
interest and $1 of principal is due monthly on the notes with all remaining principal and accrued interest due and payable on the five year anniversary of the date of



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issuance. The balances of the notes and the accrual for the stock price differential were approximately $1.4 million at September 30, 2006 and were
included in other liabilities in the accompanying balance sheet.

On
February 13, 2007, the Company repurchased an additional 46,607 shares of the Companys stock from Richard Wickett in the original principal amount of $1.0 million. The additional shares were purchased for $22.40 per share which represents
80% of the September 30, 2005 share price, pending completion of the valuation of the Companys stock as of September 30, 2006. In fiscal year 2007, the Company accrued for the difference between the purchase price and the
September 30, 2006 share value. The 2007 note currently bears interest at the rate of 8.25% per annum and such rate is adjusted to the then current prime rate of Bank of America on December 31stof each year. Accrued interest and $1 of principal is due monthly on the notes with all remaining principal and accrued interest due and payable on
the five year anniversary of the date of issuance. The notes are subject to the Companys right of set off, which permits the Company to set off all claims it may have against the payee against amounts due and owing under the notes.



|ITEM 4. | Submission of Matters to a Vote of Security Holders
|------- | ---------------------------------------------------

No items were submitted to a vote to security holders during the fiscal year ended September 30, 2006.



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PART II



|ITEM 5. | Market for Registrants Common Equity, Related Shareholder Matters and Issuer Purchases of Equity Securities
|------- | ------------------------------------------------------------------------------------------------------------

There is no established public trading market for our common stock. As of September 30, 2006 there were no shares of common stock that were subject
to outstanding warrants or options to purchase, or securities convertible into, our common stock, and no shares of our common stock could be sold pursuant to Rule 144 under the Securities Act. No shares of our common stock are being, or have been,
publicly offered.

As of April 30, 2007, there were 6,668,606 shares of common stock outstanding and held of record by 2,438
shareholders.

Our by-laws require that common stock held by shareholders who terminate employment with us be offered for sale at fair
market value to us pursuant to a right of first refusal. Should we decline to purchase the shares, the shares must next be offered to our ESOP plan at fair market value, and then ultimately to our shareholders who are employees. Our by-laws provide
that the fair market value be determined by an appraisal. Other than agreements with certain retired Directors, as of September 30, 2006 and 2005, there was no outstanding common stock held by individuals no longer employed by us.

Dividends

Each share of our common stock is
entitled to share equally in any dividends declared by our Board of Directors. Pursuant to the terms of our credit agreement, we cannot declare or pay dividends in excess of 50% of our net income. We have not paid cash dividends on our common stock
in the past and have no present intention of paying cash dividends on our common stock in the foreseeable future. All earnings are retained for investment in our business.

Issuer Purchases of Equity Securities by Issuer and Affiliated Purchasers

The following table
provides information about repurchases of common stock during the year ended September 30, 2006:



|                            |  |                                       |  |                             |       |                                                                              |   |                                                                        |  
|--------------------------- |  | ------------------------------------- |  | --------------------------- | ----- | ---------------------------------------------------------------------------- | - | ---------------------------------------------------------------------- | -
|                            |  | Total Number ofShares Repurchased (1) |  | Average PricePaid Per Share |       | Total Number ofShares Purchased asPart of
PubliclyAnnounced Plans orPrograms |   | Maximum Numberof Shares That MayBe PurchasedUnder the Plans orPrograms
|October 1 to June 30        |  | 761,447                               |  | $                           | 28.00 |                                                                              |  |                                                                        | 
|July 1 to July 31           |  | 23,651                                |  |                             | 28.00 |                                                                              |  |                                                                        | 
|August 1 to 31              |  | 44,965                                |  |                             | 28.00 |                                                                              |  |                                                                        | 
|September 1 to September 30 |  | 46,740                                |  |                             | 28.00 |                                                                              |  |                                                                        | 
|                            |  |                                       |  |                             |       |                                                                              |   |                                                                        |  
|Total                       |  | 876,803                               |  | $                           | 28.00 |                                                                              |  |                                                                        | 
|                            |  |                                       |  |                             |       |                                                                              |   |                                                                        |  

---

|(1) | During fiscal 2006, stock repurchases totaling more than $300,000 were paid to employees at 90% of the total value in cash, and 10% of total value by delivery of a promissory note.
|--- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



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|ITEM 6. | Selected Financial Data
|------- | -----------------------

The
financial data for the years ended September 30, 2006, 2005, 2004, and 2003 have been derived from our audited financial statements. However, because the financial statements for the year ended September 30, 2002 and related restatement
adjustments have not been reissued, the selected financial data is presented as unaudited. You should read the information set forth below in conjunction with our consolidated financial statements, including the notes thereto, and Managements
Discussion and Analysis of Financial Condition and Results of Operations included elsewhere in this Annual Report.



|                                                 |  |                           |         |   |      |   |         |  |      |         |      |   |         |  |   |        
|------------------------------------------------ |  | ------------------------- | ------- | - | ---- | - | ------- |  | ---- | ------- | ---- | - | ------- |  | - | -------
|                                                 |  | Years Ended September 30,
|(Dollars in thousands, except per share amounts) |  | 2006                      |         |   | 2005 |   | 2004    |  | 2003 |         | 2002
|Operating Data:                                  |  |                           |         |   |      |   |         |  |      |         |      |   |         |  |   |        
|Engineering fees                                 |  | $                         | 537,242 |   |      | $ | 511,937 |  | $    | 448,247 |      | $ | 383,709 |  | $ | 338,236
|Net earned revenues                              |  |                           | 431,607 |   |      |   | 389,951 |  |      | 351,875 |      |   | 302,016 |  |   | 262,668
|Net income                                       |  |                           | 5,405   |   |      |   | 21,075  |  |      | 14,690  |      |   | 12,721  |  |   | 6,703  
|                                                 |  |                           |         |   |     
|Balance Sheet Data (at end of period):           |  |                           |         |   |      |   |         |  |      |         |      |   |         |  |   |        
|Working capital (deficit)                        |  |                           | (1,285  | ) |      |   | 30,506  |  |      | 20,293  |      |   | 19,800  |  |   | 15,795 
|Total assets                                     |  |                           | 244,949 |   |      |   | 251,647 |  |      | 204,365 |      |   | 168,501 |  |   | 149,010
|Accrued reimbursement liability (1)              |  |                           | 28,183  |   |      |   | 34,772  |  |      | 24,119  |      |   | 16,248  |  |   | 10,425 
|Long-term debt, less current portion             |  |                           | 6,909   |   |      |   | 7,425   |  |      | 7,828   |      |   | 17,350  |  |   | 20,997 
|Capital leases obligations                       |  |                           | 1,050   |   |      |   | 853     |  |      | 684     |      |   | 505     |  |   | 206    
|Total stockholders equity                       |  |                           | 58,911  |   |      |   | 77,832  |  |      | 62,703  |      |   | 50,061  |  |   | 43,658 
|                                                 |  |                           |         |   |     
|Net income per share:                            |  |                           |         |   |      |   |         |  |      |         |      |   |         |  |   |        
|Basic                                            |  | $                         | 0.81    |   |      | $ | 2.92    |  | $    | 2.03    |      | $ | 1.71    |  | $ | 0.83   
|Diluted                                          |  | $                         | 0.76    |   |      | $ | 2.74    |  | $    | 1.91    |      | $ | 1.61    |  | $ | 0.79   

---

|(1) | Over-billings to our government clients resulting from the overstatement of our overhead rates resulting from the misappropriation loss and concealment entries and certain
additional errors identified.
|--- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

We have not paid dividends for the five years ended September 30, 2006.



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|ITEM 7. | Managements Discussion and Analysis of Financial Condition and Results of Operations
|------- | -------------------------------------------------------------------------------------

Misappropriation Loss

In March 2005,
subsequent to the issuance of the Companys 2004 financial statements, we discovered misappropriations of Company funds by our former Chief Financial Officer and two former employees who worked in our information systems and treasury
departments, collectively, (the participants). The participants colluded and circumvented controls to misappropriate funds and conceal the misappropriations possibly beginning as early as 1993 until the misappropriations were discovered.
The investigation discovered that at least $36.6 million was misappropriated between January 1, 1998 and the discovery of the misappropriations in March 2005. The amount misappropriated prior to January 1, 1998 could not be determined
because certain data for the period prior to January 1, 1998 was unavailable.

The Company determined that the misappropriation scheme
led to the overstatement of overhead rates that the Company used to determine billings in connection with certain of our government contracts. As a result, some of our government clients were overcharged for the Companys services. During the
review of the overhead rate calculations, the Company identified certain instances of costs erroneously included in our overhead cost pool which were unallowable under applicable regulations and an error in our calculation of our overhead rate,
which related to certain general and administrative costs. The Company determined that the unallowable costs and general and administrative errors also led to the overstatement of overhead rates which the Company used in connection with certain
government contracts.

Overview

Business
Overview

We provide services to both private and public sector clients, with the public sector comprising approximately 75.0% of our
revenues. Our business has four segments: Transportation Services, Construction Management, Civil Engineering, and Environmental Services. During fiscal year 2006, all segments experienced growth in engineering fees. The Civil Engineering segment
benefited from the addition of several large contracts with the Department of Defense, partly offset by a decrease in engineering fees from the hurricanes disaster projects. The growth in the Construction Management segment was due primarily to a
large contract with the Army Corps of Engineers and several large projects with existing clients, including several state DOTs. Our Environmental Services segment experienced a 13.0% increase in engineering fees primarily as a result of the EIP
acquisition and the full year impact of the LWC acquisition. The Environmental Services segment also benefited from two new significant contracts with FEMA and the State of Georgia. The increase in engineering fees for the Transportation Services
segment was due to new projects and additional assignments from two states DOTs and the City of Atlanta. Two segments of our business, Transportation Services and Environmental Services, experienced increased volumes in backlog at September 30,
2006, as compared to September 30, 2005.

We earn revenue for time spent on projects, in addition to certain direct reimbursable
expenses of our projects, such as travel and lodging, blueprints and sub-contractor expenses. The fluctuation in direct reimbursable expenses, specifically sub-contractor costs, including travel and lodging, will influence the fluctuation of our net
earned revenue (NER). For instance, our Civil Engineering segment experienced a significant decrease in direct reimbursable expenses in fiscal year 2006, as compared to 2005, resulting from a reduction in subcontractors costs,
including travel and lodging, related to the debris removal from the Florida hurricanes in calendar 2004 and 2005. As a result, our Civil Engineering segments NER grew at a greater rate than its engineering fees, because more work was being
performed by our in-house technical professionals. During fiscal year 2006, there was a decrease in the percentage of available chargeable salaries of our employees who are primarily technical professionals, whose billable labor gets charged back to
our clients, thereby negatively impacting the amount of fees we earned. This decrease was primarily due to the temporary work stoppage for new jobs with the TxDOT, the transition of new acquisitions and additional time spent on business development.
As chargeability of our technical professionals time decreases, direct salary costs decrease



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proportionately along with it, while indirect salary costs increase, as less of the technical staffs time worked is being charged back to our clients.

Business Environment

The need to
modernize and upgrade the transportation infrastructure in the United States has been a source of continued business for us through the last ten years. Fueling the initial growth in this market was the Intermodal Surface Transportation Efficiency
Act of 1991 (ISTEA). In 1998, ISTEA was reauthorized as the Transportation Equity Act for the 21st Century (TEA-21), earmarking $218 billion for highway and transit projects through 2003. Prior to the expiration of TEA-21 on
September 30, 2003, the U.S. Congress and President Bush signed a five-month extension of the program. Since then, a series of additional extensions have been granted, the most recent of which occurred on July 30, 2005 and was set to
expire on August 14, 2005, however, on August 10, 2005, the President signed into law the Safe, Accountable, Flexible, Efficient Transportation Act: A Legacy for Users (SAFETEA-LU). The SAFETEA-LU guarantees funding for
highways, highway safety, and public transportation totaling $244.1 billion. SAFETEA-LU ensures that state agencies that depend largely on federal transportation funding, will continue to make investments needed to maintain and grow the vital
transportation infrastructure.

The demand for our construction management services has also been fueled by the legislation and industry
trends that are driving the growth in our Transportation and Environmental business segments, including ISTEA and TEA-21. These trends have created a large number of infrastructure projects throughout the United States, which are subject to
increasingly complex governmental regulations. The market could level out or shrink slightly until a new Federal transportation funding bill is passed. The potential impact is currently minimal, but increases as time passes until the bill is passed.
Projects/programs that depend on the Federal gas tax funding are being delayed, which may eventually lead to a temporary reduction in demand for the services we provide.

During the first quarter of fiscal year 2005, the economy continued in a period of slow recovery with improving private sector corporate profitability. Federal spending remained strong especially in the area of
national defense, which increased opportunity and fortified our strategy for greater balance between the public and private sectors. The state and local government markets remained weak but the market for our specialized services in the area of risk
and emergency management strengthened due in part to hurricanes and wild fires. Near term expectations are for the Federal Department of Defense and Homeland Security sectors to remain strong. As the economy expands its recovery, we expect the
private sector to strengthen. We expect that state and local government markets will remain weak but will improve as increased tax revenue from private sector recovery trickles into the government sector.

In recent years, significant environmental laws at the federal, state and local levels have been enacted in response to public concern over the health of
the nations air, water, and natural resources. Those laws and their implementation through regulation affect numerous industrial and governmental actions and form a key market driver for the services of our Environmental Services segment. Two
federal environmental laws, The Safe Drinking Water Act of 1974 and the Clean Water Act of 1972, continue to drive this segment of our business. Pursuant to these laws, Congress has authorized significant monies to assist state and local
governments. According to the EPA, as much as $23 billion a year will be needed for construction and upgrade of water and wastewater treatment facilities over the next 20 years.

Segment Results of Operations

Our businesses are reported as four segments,
reflecting our management methodology and structure:

Activities in the Transportation Services business segment generally involve planning,
design, right of way acquisition, development and design of intelligent transportation services and program construction management services for multiple transportation modes, including interstate and primary highways, toll roads, arterials,



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bridges, transit systems, airports and port facilities. The Program Management group of our Transportation segment provides many of its governmental clients
the necessary resources to manage large infrastructure programs from concept through construction. Services include planning, programming, and contract support.

The Construction Management segment provides a wide range of services including planning, traffic engineering, intelligent transportation systems (ITS), corridor planning, highway design, structural
design, alternate project delivery, program management, toll facility design, aviation services, multi-modal/transit systems and right-of-way. In fiscal year 2006, this segment added at-risk construction management projects to its services. We also
may act as the program director of a project whereby on behalf of the owner of the project, we provide scheduling, cost estimating and construction observation services for the project, or our services may be limited to providing construction
consulting. We currently serve transportation departments in 19 states and perform toll services in 9 states for both public and private toll clients.

The Civil Engineering segment provides architectural engineering and general civil engineering as well as specialized services to public and private clients. Included in these services are: site engineering and
surveys, infrastructure engineering, master planning, disaster mitigation planning and response, infrastructure protection, asset management, emergency management, and architectural and landscape architecture design.

The Environmental Services business segment focuses on the delivery of planning, design and construction management services for private and public
sector clients related to air quality management, flood insurance studies, energy planning, hazardous and solid waste management, ecological studies, wastewater treatment, water resources, environmental toxicology analysis, aquatic treatment systems
and water supply and treatment.

The accounting policies of the segments are the same as those described in the notes to the accompanying
consolidated financial statements. We evaluate performance based on operating income (loss) of the respective segments. The discussion that follows is a summary analysis of the primary changes in operating results by segment for fiscal year 2006 as
compared to fiscal year 2005 and fiscal year 2005 as compared to fiscal year 2004.

NER represents the net effect of gross revenues less
direct reimbursable expenses. Direct reimbursable expenses is primarily comprised of subcontractor costs and other direct non-payroll reimbursable charges including travel and travel related costs, blueprints and equipment where the Company is
responsible for procurement and management of such cost components on behalf of the Companys clients. These direct reimbursable expenses are principally passed through to our clients with minimal or no mark-up. Indirect salaries represent
wages earned by technical personnel not assigned to client billable projects and salary from administrative and support personnel as well.



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|                                        |  |                           |         |   |          |       |   |      |   |         |          |  |       |      |  |          |         |  |       |  
|--------------------------------------- |  | ------------------------- | ------- | - | -------- | ----- | - | ---- | - | ------- | -------- |  | ----- | ---- |  | -------- | ------- |  | ----- | -
|                                        |  | Years Ended September 30, |        
|(Dollars in thousands)                  |  | 2006                      |         |   | % of NER |       |   | 2005 |   |         | % of NER |  |       | 2004 |  | % of NER |        
|Transportation Services                 |  |                           |         |   |          |       |   |      |   |         |          |  |       |      |  |          |         |  |       |  
|Engineering fees                        |  | $                         | 206,876 |   |          | 130.4 | % |      | $ | 199,490 |          |  | 133.0 | %    |  | $        | 179,743 |  | 133.0 | %
|Direct reimbursable expenses            |  |                           | 48,210  |   |          | 30.4  |   |      |   | 49,469  |          |  | 33.0  |      |  |          | 44,632  |  | 33.0  |  
|                                        |  |                           |         |   |          |       |   |      |   |         |          |  |       |      |  |          |         |  |       |  
|Net earned revenues (NER)               |  |                           | 158,666 |   |          | 100.0 |   |      |   | 150,021 |          |  | 100.0 |      |  |          | 135,111 |  | 100.0 |  
|                                        |  |                           |         |   |          |       |   |      |   |         |          |  |       |      |  |          |         |  |       |  
|Direct salaries and direct costs        |  |                           | 58,283  |   |          | 36.7  |   |      |   | 56,420  |          |  | 37.6  |      |  |          | 50,714  |  | 37.6  |  
|Indirect salaries                       |  |                           | 32,739  |   |          | 20.6  |   |      |   | 28,924  |          |  | 19.3  |      |  |          | 26,706  |  | 19.8  |  
|General and administrative costs        |  |                           | 56,106  |   |          | 35.4  |   |      |   | 48,974  |          |  | 32.6  |      |  |          | 45,051  |  | 33.3  |  
|Misappropriation loss (recoveries), net |  |                           | (569    | ) |          | (0.4  | ) |      |   | (3,932  | )        |  | -2.6  |      |  |          | 1,819   |  | 1.3   |  
|Investigation and related costs         |  |                           | 5,031   |   |          | 3.2   |   |      |   | 1,997   |          |  | 1.3   |      |  |          |        |  | 0.0   |  
|                                        |  |                           |         |   |          |       |   |      |   |         |          |  |       |      |  |          |         |  |       |  
|Total costs and expenses                |  |                           | 151,590 |   |          | 95.5  |   |      |   | 132,383 |          |  | 88.2  |      |  |          | 124,290 |  | 92.0  |  
|                                        |  |                           |         |   |          |       |   |      |   |         |          |  |       |      |  |          |         |  |       |  
|Operating income                        |  | $                         | 7,076   |   |          | 4.5   | % |      | $ | 17,638  |          |  | 11.8  | %    |  | $        | 10,821  |  | 8.0   | %
|                                        |  |                           |         |   |          |       |   |      |   |         |          |  |       |      |  |          |         |  |       |  
|Construction Management                 |  |                           |         |   |          |       |   |      |   |         |          |  |       |      |  |          |         |  |       |  
|Engineering fees                        |  | $                         | 89,199  |   |          | 121.1 | % |      | $ | 87,314  |          |  | 129.0 | %    |  | $        | 77,465  |  | 132.9 | %
|Direct reimbursable expenses            |  |                           | 15,540  |   |          | 21.1  |   |      |   | 19,635  |          |  | 29.0  |      |  |          | 19,187  |  | 32.9  |  
|                                        |  |                           |         |   |          |       |   |      |   |         |          |  |       |      |  |          |         |  |       |  
|Net earned revenues (NER)               |  |                           | 73,659  |   |          | 100.0 |   |      |   | 67,679  |          |  | 100.0 |      |  |          | 58,278  |  | 100.0 |  
|                                        |  |                           |         |   |          |       |   |      |   |         |          |  |       |      |  |          |         |  |       |  
|Direct salaries and direct costs        |  |                           | 29,127  |   |          | 39.5  |   |      |   | 28,032  |          |  | 41.4  |      |  |          | 24,518  |  | 42.1  |  
|Indirect salaries                       |  |                           | 13,294  |   |          | 18.0  |   |      |   | 11,193  |          |  | 16.6  |      |  |          | 8,084   |  | 13.9  |  
|General and administrative costs        |  |                           | 26,048  |   |          | 35.4  |   |      |   | 22,078  |          |  | 32.6  |      |  |          | 18,755  |  | 32.2  |  
|Misappropriation loss (recoveries), net |  |                           | (265    | ) |          | (0.4  | ) |      |   | (1,774  | )        |  | (2.6  | )    |  |          | 757     |  | 1.3   |  
|Investigation and related costs         |  |                           | 2,336   |   |          | 3.2   |   |      |   | 900     |          |  | 1.3   |      |  |          |        |  | 0.0   |  
|                                        |  |                           |         |   |          |       |   |      |   |         |          |  |       |      |  |          |         |  |       |  
|Total costs and expenses                |  |                           | 70,540  |   |          | 95.8  |   |      |   | 60,429  |          |  | 89.3  |      |  |          | 52,114  |  | 89.5  |  
|                                        |  |                           |         |   |          |       |   |      |   |         |          |  |       |      |  |          |         |  |       |  
|Operating income                        |  | $                         | 3,119   |   |          | 4.2   | % |      | $ | 7,250   |          |  | 10.7  | %    |  | $        | 6,164   |  | 10.5  | %
|                                        |  |                           |         |   |          |       |   |      |   |         |          |  |       |      |  |          |         |  |       |  
|Civil Engineering                       |  |                           |         |   |          |       |   |      |   |         |          |  |       |      |  |          |         |  |       |  
|Engineering fees                        |  | $                         | 112,526 |   |          | 118.1 | % |      | $ | 111,312 |          |  | 139.4 | %    |  | $        | 81,841  |  | 117.1 | %
|Direct reimbursable expenses            |  |                           | 17,223  |   |          | 18.1  |   |      |   | 31,446  |          |  | 39.4  |      |  |          | 11,924  |  | 17.1  |  
|                                        |  |                           |         |   |          |       |   |      |   |         |          |  |       |      |  |          |         |  |       |  
|Net earned revenues (NER)               |  |                           | 95,303  |   |          | 100.0 |   |      |   | 79,866  |          |  | 100.0 |      |  |          | 69,917  |  | 100.0 |  
|                                        |  |                           |         |   |          |       |   |      |   |         |          |  |       |      |  |          |         |  |       |  
|Direct salaries and direct costs        |  |                           | 35,233  |   |          | 37.0  |   |      |   | 29,725  |          |  | 37.2  |      |  |          | 25,850  |  | 37.0  |  
|Indirect salaries                       |  |                           | 20,313  |   |          | 21.3  |   |      |   | 16,107  |          |  | 20.2  |      |  |          | 12,086  |  | 17.3  |  
|General and administrative costs        |  |                           | 36,883  |   |          | 38.7  |   |      |   | 29,509  |          |  | 37.0  |      |  |          | 25,423  |  | 36.4  |  
|Misappropriation loss (recoveries), net |  |                           | (375    | ) |          | (0.4  | ) |      |   | (2,369  | )        |  | -3.0  |      |  |          | 1,027   |  | 1.5   |  
|Investigation and related costs         |  |                           | 3,307   |   |          | 3.5   |   |      |   | 1,203   |          |  | 1.5   |      |  |          |        |  | 0.0   |  
|                                        |  |                           |         |   |          |       |   |      |   |         |          |  |       |      |  |          |         |  |       |  
|Total costs and expenses                |  |                           | 95,361  |   |          | 100.1 |   |      |   | 74,175  |          |  | 92.9  |      |  |          | 64,386  |  | 92.2  |  
|                                        |  |                           |         |   |          |       |   |      |   |         |          |  |       |      |  |          |         |  |       |  
|Operating income (loss)                 |  | $                         | (58     | ) |          | -0.1  | % |      | $ | 5,691   |          |  | 7.1   | %    |  | $        | 5,531   |  | 7.8   | %
|                                        |  |                           |         |   |          |       |   |      |   |         |          |  |       |      |  |          |         |  |       |  
|Environmental Services                  |  |                           |         |   |          |       |   |      |   |         |          |  |       |      |  |          |         |  |       |  
|Engineering fees                        |  | $                         | 128,641 |   |          | 123.7 | % |      | $ | 113,821 |          |  | 123.2 | %    |  | $        | 109,198 |  | 123.3 | %
|Direct reimbursable expenses            |  |                           | 24,662  |   |          | 23.7  |   |      |   | 21,436  |          |  | 23.2  |      |  |          | 20,629  |  | 23.3  |  
|                                        |  |                           |         |   |          |       |   |      |   |         |          |  |       |      |  |          |         |  |       |  
|Net earned revenues (NER)               |  |                           | 103,979 |   |          | 100.0 |   |      |   | 92,385  |          |  | 100.0 |      |  |          | 88,569  |  | 100.0 |  
|                                        |  |                           |         |   |          |       |   |      |   |         |          |  |       |      |  |          |         |  |       |  
|Direct salaries and direct costs        |  |                           | 35,738  |   |          | 34.4  |   |      |   | 32,122  |          |  | 34.8  |      |  |          | 30,439  |  | 34.4  |  
|Indirect salaries                       |  |                           | 25,006  |   |          | 24.0  |   |      |   | 20,763  |          |  | 22.5  |      |  |          | 18,998  |  | 21.4  |  
|General and administrative costs        |  |                           | 39,756  |   |          | 38.2  |   |      |   | 33,003  |          |  | 35.7  |      |  |          | 30,965  |  | 35.0  |  
|Misappropriation loss (recoveries), net |  |                           | (404    | ) |          | (0.4  | ) |      |   | (2,650  | )        |  | -2.9  |      |  |          | 1,251   |  | 1.4   |  
|Investigation and related costs         |  |                           | 3,565   |   |          | 3.4   |   |      |   | 1,346   |          |  | 1.5   |      |  |          |        |  | 0.0   |  
|                                        |  |                           |         |   |          |       |   |      |   |         |          |  |       |      |  |          |         |  |       |  
|Total costs and expenses                |  |                           | 103,661 |   |          | 99.7  |   |      |   | 84,584  |          |  | 91.6  |      |  |          | 81,653  |  | 92.2  |  
|                                        |  |                           |         |   |          |       |   |      |   |         |          |  |       |      |  |          |         |  |       |  
|Operating income                        |  | $                         | 318     |   |          | 0.3   | % |      | $ | 7,801   |          |  | 8.4   | %    |  | $        | 6,916   |  | 7.8   | %
|                                        |  |                           |         |   |          |       |   |      |   |         |          |  |       |      |  |          |         |  |       |  



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Year Ended September 30, 2006 Compared to Year Ended September 30, 2005

Engineering Fees



|                        |  |                           |         |      |   |          |  |          |        |  |      |  
|----------------------- |  | ------------------------- | ------- | ---- | - | -------- |  | -------- | ------ |  | ---- | -
|                        |  | Years Ended September 30, |        
|(Dollars in thousands)  |  | 2006                      |         | 2005 |   | $ Change |  | % Change |       
|Transportation Services |  | $                         | 206,876 |      | $ | 199,490  |  | $        | 7,386  |  | 3.7  | %
|Construction Management |  |                           | 89,199  |      |   | 87,314   |  |          | 1,885  |  | 2.2  | %
|Civil Engineering       |  |                           | 112,526 |      |   | 111,312  |  |          | 1,214  |  | 1.1  | %
|Environmental Services  |  |                           | 128,641 |      |   | 113,821  |  |          | 14,820 |  | 13.0 | %
|                        |  |                           |         |      |   |          |  |          |        |  |      |  
|Total Engineering Fees  |  | $                         | 537,242 |      | $ | 511,937  |  | $        | 25,305 |  | 4.9  | %
|                        |  |                           |         |      |   |          |  |          |        |  |      |  

Engineering fees for the year ended September 30, 2006, were $537.2 million compared to
$511.9 million in 2005, representing a 4.9% increase. Substantially all of the increase was in the Environmental Services and Transportation Services segments.

Engineering fees from the Transportation Services segment increased 3.7% to $206.9 million in fiscal year 2006 from $199.5 million in fiscal year 2005. The increase included new projects and additional assignments on
existing contracts awarded by the Texas DOT (TxDOT), Nevada DOT and City of Atlanta.

Our Construction Management engineering
fees increased 2.2% to $89.2 million in fiscal year 2006, from $87.3 million in fiscal year 2005. The increase is due in part to a large contract with the Army Corps of Engineers in New Orleans. In addition, the Construction Management segment
experienced significant growth, with existing clients, in their Construction Consulting practice in the Southeast Region, including Georgia and Florida DOTs.

In the Civil Engineering segment, engineering fees increased 1.1% to $112.5 million in fiscal year 2006 from $111.3 million in fiscal year 2005. In fiscal year 2006, the Civil Engineering segment benefited from the
addition of several large lump sum contracts with the Department of Defense. This increase in engineering fees was mostly offset by a decrease in the administration and management of debris removal of the calendar years 2004 and 2005 hurricanes in
Florida and a slow down in the private sector residential market in the second half of fiscal year 2006.

Engineering fees in our
Environmental Services segment increased 13.0% to $128.6 million in fiscal year 2006 from $113.8 million in fiscal year 2005. The increase is primarily attributable to organic growth, including two significant new contracts with FEMA and the State
of Georgia and a new contract with the California Department of Water Resources. To a lesser extent, engineering fees increased as a result of the April 30, 2006 acquisition of EIP. Engineering fees from EIP, following the acquisition, were
approximately $5.3 million in fiscal year 2006. Additionally, the Environmental Services segment benefited from the full year impact of the LWC acquisition, which was acquired on February 1, 2005. The full year impact in engineering fees from
the LWC acquisition was approximately $ 1.9 million.

Net Earned Revenues



|                          |  |                           |         |      |   |          |  |          |        |  |      |  
|------------------------- |  | ------------------------- | ------- | ---- | - | -------- |  | -------- | ------ |  | ---- | -
|                          |  | Years Ended September 30, |        
|(Dollars in thousands)    |  | 2006                      |         | 2005 |   | $ Change |  | % Change |       
|Transportation Services   |  | $                         | 158,666 |      | $ | 150,021  |  | $        | 8,645  |  | 5.8  | %
|Construction Management   |  |                           | 73,659  |      |   | 67,679   |  |          | 5,980  |  | 8.8  | %
|Civil Engineering         |  |                           | 95,303  |      |   | 79,866   |  |          | 15,437 |  | 19.3 | %
|Environmental Services    |  |                           | 103,979 |      |   | 92,385   |  |          | 11,594 |  | 12.5 | %
|                          |  |                           |         |      |   |          |  |          |        |  |      |  
|Total Net Earned Revenues |  | $                         | 431,607 |      | $ | 389,951  |  | $        | 41,656 |  | 10.7 | %
|                          |  |                           |         |      |   |          |  |          |        |  |      |  



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Net earned revenues (NER) was $431.6 million during the year ended September 30, 2006 as
compared to $390.0 million in the same period in 2005, representing an increase of 10.7%. This increase was directly related to the increase in engineering fees, as previously explained, and a reduction in direct reimbursable expenses, which is
explained below.



|                                   |  |                           |         |          |      |   |      |   |          |  |      |  
|---------------------------------- |  | ------------------------- | ------- | -------- | ---- | - | ---- | - | -------- |  | ---- | -
|                                   |  | Years Ended September 30, |        
|(Dollars in thousands)             |  | 2006                      |         | % of NER |      |   | 2005 |   | % of NER | 
|Transportation Services            |  | $                         | 48,210  |          | 30.4 | % |      | $ | 49,469   |  | 33.0 | %
|Construction Management            |  |                           | 15,540  |          | 21.1 | % |      |   | 19,635   |  | 29.0 | %
|Civil Engineering                  |  |                           | 17,223  |          | 18.1 | % |      |   | 31,446   |  | 39.4 | %
|Environmental Services             |  |                           | 24,662  |          | 23.7 | % |      |   | 21,436   |  | 23.2 | %
|                                   |  |                           |         |          |      |   |      |   |          |  |      |  
|Total Direct Reimbursable Expenses |  | $                         | 105,635 |          | 24.5 | % |      | $ | 121,986  |  | 31.3 | %
|                                   |  |                           |         |          |      |   |      |   |          |  |      |  

Direct reimbursable expenses consist of out-of-pocket expenses related to the delivery of services
such as blueprints, reproductions, CADD/computer charges, travel and sub-consultant expenses. As a percentage of NER, direct reimbursable expenses decreased 6.8% to 24.5% in fiscal year 2006 from 31.3% in fiscal year 2005. The decrease was driven by
the Civil Engineering, Construction Management and Transportation Services segments. This decrease was partially offset by an increase experienced by the Environmental Services segment.

Direct reimbursable expenses in the Transportation Services segment experienced a decrease of 2.5 % in fiscal year 2006 when compared to fiscal year
2005. As a percentage of NER, direct reimbursable expenses decreased by 2.6% to 30.4% in fiscal year 2006 from 33.0% in fiscal year 2005. The decrease primarily resulted from decreased use of sub consultants in fiscal year 2006.

In our Construction Management segment, direct reimbursable expenses as a percentage of NER decreased by 7.9% to 21.1% in fiscal year 2006 from 29.0% in
fiscal year 2005. This decrease was primarily due to a market shift from direct reimbursable projects to more lump sum and all-inclusive billing rates contracts in the Central and Southeast regions. The shift started in fiscal year 2005 and has
continued into fiscal year 2006.

Direct reimbursable expenses in the Civil Engineering segment decreased as a percentage of NER by 21.3%
to 18.1% in fiscal year 2006 from 39.4% in fiscal year 2005. The decrease was primarily due to a reduction in subcontractors costs related to debris removal from the Florida hurricanes in calendar years 2004 and 2005. In fiscal year 2005, the Civil
Engineering segment incurred significant subcontractors costs and travel and lodging costs for the hundreds of employees overseeing debris removal in the areas affected by the disasters.

Our Environmental Services segment experienced an increase of 15.0% in direct reimbursable expenses in fiscal year 2006 when compared to fiscal year
2005. As a percentage of NER, direct reimbursable expenses increased slightly by 0.5% to 23.7% in fiscal year 2006 from 23.2% in fiscal year 2005. This increase was due primarily to the use of subcontractors, included with some contracts acquired
with the EIP and LWC acquisitions.



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Operating Income



|                                                                                             |  |                           |        |   |          |      |   |      |   |        |          |  |      |  
|-------------------------------------------------------------------------------------------- |  | ------------------------- | ------ | - | -------- | ---- | - | ---- | - | ------ | -------- |  | ---- | -
|                                                                                             |  | Years Ended September 30, |       
|(Dollars in thousands)                                                                       |  | 2006                      |        |   | % of NER |      |   | 2005 |   |        | % of NER | 
|Transportation Services                                                                      |  | $                         | 7,076  |   |          | 4.5  | % |      | $ | 17,638 |          |  | 11.8 | %
|Construction Management                                                                      |  |                           | 3,119  |   |          | 4.2  | % |      |   | 7,250  |          |  | 10.7 | %
|Civil Engineering                                                                            |  |                           | (58    | ) |          | -0.1 | % |      |   | 5,691  |          |  | 7.1  | %
|Environmental Services                                                                       |  |                           | 318    |   |          | 0.3  | % |      |   | 7,801  |          |  | 8.4  | %
|                                                                                             |  |                           |        |   |          |      |   |      |   |        |          |  |      |  
|Total Operating Income                                                                       |  |                           | 10,455 |   |          | 2.4  | % |      |   | 38,380 |          |  | 9.8  | %
|Misappropriation Loss (Recoveries) and Investigation and Related Costs, net                  |  |                           | 12,626 |   |          | 2.9  | % |      |   | (5,279 | )        |  | -1.4 | %
|                                                                                             |  |                           |        |   |          |      |   |      |   |        |          |  |      |  
|Total Operating Income before Misappropriation Loss and Investigation and Related Costs, net |  | $                         | 23,081 |   |          | 5.3  | % |      | $ | 33,101 |          |  | 8.5  | %
|                                                                                             |  |                           |        |   |          |      |   |      |   |        |          |  |      |  

Operating income was $10.5 million in fiscal year 2006 as compared to $38.4 million in fiscal year
2005, representing a decrease of 72.8%. The decrease in total operating income is primarily the result of an increase in investigation and related costs of $8.8 million, and a reduction in gain from recovered assets of $12.7 million, offset by a
reduction in misappropriation loss of $3.6 million. Also contributing to the decrease in operating income is an increase in indirect salaries resulting from the temporary work stoppage in bidding for new jobs with the TxDOT, the transition of new
acquisitions and additional time spent on business development. The Company also experienced increases in general and administrative (G&A) costs, which grew at a higher rate than NER. The major increases in G&A are explained
below. All segments had decreases in fiscal year 2006 operating income from the prior fiscal year. Operating income, as a percentage of NER, decreased by 7.4% to 2.4% in fiscal year 2006 from 9.8% in fiscal year 2005. All segments experienced
decreases in fiscal year 2006 operating income as a percentage of NER as compared to fiscal year 2005.

We believe that operating income
before misappropriation loss and investigation and related costs is a useful measure in evaluating our results of operations because the misappropriation loss, recoveries and investigation and related costs are unusual items which do not reflect the
costs or revenues of our provision of services in the given year. While the misappropriations occurred over a long period, the recoveries and investigation costs are realized when recovered or incurred and not in relation to the period when the
misappropriations occurred. We believe this measure is helpful for us and for our investors to evaluate the results of our operations and make comparisons between periods.

Operating income before misappropriation loss and investigation and related costs, net was $23.1 million for fiscal year 2006 as compared to $33.1
million for fiscal year 2005, representing a decrease of 30.3%. Operating income before misappropriation loss and related costs, net, as a percentage of NER, decreased by 3.2% to 5.3% in fiscal year 2006 from 8.5% in fiscal year 2005. The decrease
in operating income before misappropriation loss and investigation and related costs is primarily due to the increase in indirect salaries caused by the temporary stoppage in bidding for new jobs with the TxDOT, the transition of acquisitions and
additional time spent on business development. The Company also experienced increases in G&A costs, which grew at a higher rate than NER. The major increases are explained below. Misappropriation loss and investigation and related costs, net are
treated as corporate overhead costs, and as such, are allocated to each respective segment. The allocation is based on the segments proportionate share of G&A costs to total Company G&A costs.

As a percentage of NER, the Transportation Services segments operating income decreased by 7.3% to 4.5% in fiscal year 2006 from 11.8% in fiscal
year 2005. This decrease is primarily due to the increase in misappropriation loss (recoveries) and investigation related costs, net. As a percentage of NER, the Transportation Services segments operating income before misappropriation loss
and investigation and related costs, net decreased by 3.2% to 7.3% in fiscal year 2006 from 10.5% in fiscal year 2005. This decrease experienced by the Transportation Services segment was driven by lower multipliers on some contracts and a



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decrease in chargeability resulting from the temporary stoppage on bidding for new jobs with the TxDOT during the latter part of fiscal year 2006.

The Construction Management segment experienced a decrease in operating income of 57%% in fiscal year 2006 when compared to the same
fiscal year in 2005. This decrease is primarily due to the increase in misappropriation loss (recoveries) and investigation related costs, net. The Construction Management segment experienced a decrease in operating income before misappropriation
loss and investigation and related costs, net, of 18.6% in fiscal year 2006 when compared to the same fiscal year in 2005. Factors contributing to the decrease included the start-up costs associated with the new at-risk construction management
services initiated in fiscal year 2006 and the additional expenditures incurred in marketing and business development in the West and Southeast regions. Additional costs were also incurred in promoting safety initiatives throughout this segment.

As a percentage of NER, the Civil Engineering segment operating income decreased by 7.2% to (0.1%) in fiscal year 2006 from 7.1% in fiscal year 2005. This
decrease is primarily due to the increase in misappropriation loss (recoveries) and investigation related costs, net. As a percentage of NER, the Civil Engineering segment operating income before misappropriation loss and investigation and related
costs, net decreased by 2.7 % to 3.0% in fiscal year 2006 from 5.7% in fiscal year 2005. The Civil Engineering segment was impacted in fiscal year 2006 by the decline in engineering fees from the disaster response projects related to the
Florida hurricanes and the slow down in the private sector residential market, as previously explained, and additional expenditures in marketing and business development.

The Environmental Services segment experienced a decrease in operating income of 95.9% in fiscal year 2006 when compared to the same fiscal year in 2005. This decrease is primarily due to the increase in
misappropriation loss (recoveries) and investigation related costs, net. The Environmental Services segment experienced a decrease in operating income before misappropriation loss and investigation and related costs, net of 46.5% in fiscal year 2006
when compared to the same fiscal year in 2005. However, as a percentage of NER, the Environmental Services segment had a decrease of 3.7% to 3.3% in fiscal year 2006 compared to 7.0% in fiscal year 2005. This decrease was primarily due to decreased
chargeability, partially due to the transition of the EIP acquisition and expenditures for marketing and business development.

Costs

Costs consist principally of direct salaries and direct costs that are chargeable to clients and overhead and general and
administrative expenses.

Direct Salaries and Direct Costs



|                                 |  |                           |         |          |      |   |      |   |          |  |      |  
|-------------------------------- |  | ------------------------- | ------- | -------- | ---- | - | ---- | - | -------- |  | ---- | -
|                                 |  | Years Ended September 30, |        
|(Dollars in thousands)           |  | 2006                      |         | % of NER |      |   | 2005 |   | % of NER | 
|Transportation Services          |  | $                         | 58,283  |          | 36.7 | % |      | $ | 56,420   |  | 37.6 | %
|Construction Management          |  |                           | 29,127  |          | 39.5 | % |      |   | 28,032   |  | 41.4 | %
|Civil Engineering                |  |                           | 35,233  |          | 37.0 | % |      |   | 29,725   |  | 37.2 | %
|Environmental Services           |  |                           | 35,738  |          | 34.4 | % |      |   | 32,122   |  | 34.8 | %
|                                 |  |                           |         |          |      |   |      |   |          |  |      |  
|Direct Salaries and Direct Costs |  | $                         | 158,381 |          | 36.7 | % |      | $ | 146,299  |  | 37.5 | %
|                                 |  |                           |         |          |      |   |      |   |          |  |      |  

Direct salaries and direct costs primarily includes direct salaries and to a lesser extent
unreimburseable direct costs. Direct costs totaled $1.7 million and $881,000 in fiscal year 2006 and 2005, respectively. Direct salaries and direct costs were $158.4 million in fiscal year 2006, as compared to $146.3 million in fiscal year 2005,
representing an increase of 8.3%. This increase is directly related to the increase in engineering fees. As a percentage of NER, all segments experienced a decrease from a year ago. On a Company basis, direct salaries and direct costs as a
percentage of NER decreased by 0.8% to 36.7% in fiscal year 2006 from 37.5% in fiscal year 2005.



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The Transportation Services segment experienced an increase in direct salaries and direct costs of 3.3%
to $58.3 million in fiscal year 2006 compared to $56.4 million in fiscal year 2005. However, as a percentage of NER, direct salaries and direct costs decreased by 0.9% to 36.7% in fiscal year 2006 from 37.6% in fiscal year 2005, reflecting
improvements in capturing labor billable costs to clients.

Direct salaries and direct costs in the Construction Management segment
increased to $29.1 million in fiscal year 2006, or a 3.9% increase from $28.0 million in fiscal year 2005. As a percentage of NER, direct salaries and direct costs decreased 1.9% to 39.5% in fiscal year 2006 from 41.4% in fiscal year 2005. This
decrease is due to increased chargeability and higher profitability resulting from the shifting of direct reimbursable projects to lump sum and all-inclusive billing rates contracts in the Central and Southeast regions, as previously explained.

For the Civil Engineering segment, direct salaries and direct costs increased by 18.5% to $35.2 million in fiscal year 2006 versus $29.7
million in fiscal year 2005. This increase was directly related to the addition of several large lump sum contracts with the Department of Defense, which required the use of our professional staff. As a percentage of NER, direct salaries and direct
costs decreased by 0.2% to 37.0% in fiscal year 2006 from 37.2% in fiscal year 2005. This decrease was primarily due to the increase in NER for this segment resulting from the significant decrease in direct reimbursable expenses, as previously
explained. For fiscal 2006, NER for the Civil Engineering segment grew at a higher rate (19.3%) than the increase in direct salaries and direct costs.

For our Environmental Services segment, direct salaries and direct costs increased to $35.7 million in fiscal year 2006 from $32.1 million in fiscal year 2005, representing an increase of 11.3%. This increase was due
primarily to the professional staff added with the acquisitions of EIP and LWC, as previously explained. As a percentage of NER, direct salaries and direct costs stayed proportionately in line with NER in fiscal year 2006 as compared to fiscal year
2005.

General and Administrative Costs, including Indirect Salaries

The other component of costs is indirect costs, which include indirect salaries, and general and administrative costs.



|                        |  |                           |        |          |      |   |      |   |          |  |      |  
|----------------------- |  | ------------------------- | ------ | -------- | ---- | - | ---- | - | -------- |  | ---- | -
|                        |  | Years Ended September 30, |       
|(Dollars in thousands)  |  | 2006                      |        | % of NER |      |   | 2005 |   | % of NER | 
|Transportation Services |  | $                         | 32,739 |          | 20.6 | % |      | $ | 28,924   |  | 19.3 | %
|Construction Management |  |                           | 13,294 |          | 18.0 | % |      |   | 11,193   |  | 16.5 | %
|Civil Engineering       |  |                           | 20,313 |          | 21.3 | % |      |   | 16,107   |  | 20.2 | %
|Environmental Services  |  |                           | 25,006 |          | 24.0 | % |      |   | 20,763   |  | 22.5 | %
|                        |  |                           |        |          |      |   |      |   |          |  |      |  
|Total Indirect Salaries |  | $                         | 91,352 |          | 21.2 | % |      | $ | 76,987   |  | 19.7 | %
|                        |  |                           |        |          |      |   |      |   |          |  |      |  

Indirect salaries increased 18.7%, to $91.4 million in fiscal year 2006 from $77.0 million in
fiscal year 2005. Indirect salaries as a percentage of NER increased 1.5% to 21.2% in fiscal year 2006 compared to 19.7% in fiscal year 2005.

Transportation Services experienced an increase in indirect salaries as a percentage of NER of 1.3% from 19.3% in fiscal year 2005 to 20.6% in fiscal year 2006 resulting from decreased chargeability. The Transportation Services segment was
impacted by the temporary stoppage on bidding for new jobs with the TxDOT during the latter part of fiscal year 2006, as previously explained.

Indirect salaries in our Construction Management segment increased 18.8% to $13.3 million in fiscal year 2006 from $11.2 million in fiscal year 2005. As a percentage of NER, indirect salaries increased by 1.5% to 18.0% in fiscal year 2006
from 16.5% in fiscal year 2005. The increase in indirect salaries was due primarily to



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the start-up costs incurred with the new at-risk construction management services and the additional expenditure incurred in marketing and business
development in the West and Southeast regions, as previously explained.

Civil Engineering experienced an increase in indirect salaries as
a percentage of NER of 1.1% to 21.3% in fiscal year 2006 from 20.2% in fiscal year 2005. This increase resulted from the winding down of work related to the hurricanes response projects and adjusting to the slow down in the private sector
residential market and additional time spent on business development.

Environmental Services segment experienced an increase in indirect
salaries of 20.4% in fiscal year 2006 when compared to the same fiscal year in 2005. As a percentage of NER, indirect salaries increased by 1.5% to 24.0% in fiscal year 2006 from 22.5% in fiscal year 2005. The increase in indirect salaries was
primarily due to decreased chargeability partially due to the transition of the EIP acquisition and additional focus on marketing and business development.



|                                     |  |                           |         |          |      |   |      |   |          |  |      |  
|------------------------------------ |  | ------------------------- | ------- | -------- | ---- | - | ---- | - | -------- |  | ---- | -
|                                     |  | Years Ended September 30, |        
|(Dollars in thousands)               |  | 2006                      |         | % of NER |      |   | 2005 |   | % of NER | 
|Transportation Services              |  | $                         | 56,106  |          | 35.4 | % |      | $ | 48,974   |  | 32.6 | %
|Construction Management              |  |                           | 26,048  |          | 35.4 | % |      |   | 22,078   |  | 32.6 | %
|Civil Engineering                    |  |                           | 36,883  |          | 38.7 | % |      |   | 29,509   |  | 37.0 | %
|Environmental Services               |  |                           | 39,756  |          | 38.2 | % |      |   | 33,003   |  | 35.7 | %
|                                     |  |                           |         |          |      |   |      |   |          |  |      |  
|Total General & Administrative Costs |  | $                         | 158,793 |          | 36.8 | % |      | $ | 133,564  |  | 34.3 | %
|                                     |  |                           |         |          |      |   |      |   |          |  |      |  

General and administrative (G&A) costs increased 18.9%, to $158.8 million in
fiscal year 2006 from $133.6 million in fiscal year 2005. The majority of the increase is primarily related to increased medical insurance premiums and flex benefits resulting from rising costs of $6.4 million, professional fees of
$1.2 million, legal settlements and fees of $4.9 million, travel and related expenses of $2.4 million, rent expense for real estate of $2.2 million, payroll taxes of $2.3 million, insurance of $1.2 million, deferred compensation of $1.3 million
and vehicle and equipment leases and related expenses of $1.2 million. We also incurred additional expenses for depreciation and amortization, business development, communication and computer software and supplies. The increase in G&A in fiscal
year 2006 over fiscal year 2005 was partly offset by a decrease in incentive compensation of $2.5 million. These costs are generally considered corporate costs which benefit all segments and are allocated to the respective segments based on the
individual segments proportionate share of G&A costs as compared to total Company G&A costs.

Misappropriation loss
(recoveries) and Investigation and Related Costs

As described elsewhere in this Annual Report, we have recorded a $3.6 million
misappropriation loss for the year ended September 30, 2005. During fiscal year 2005, we also recorded a gain from recovered assets totaling $14.3 million, resulting in a net misappropriation gain of $10.7 million for fiscal year 2005. During
fiscal year 2006, we recorded a gain from recovered assets totaling $1.6 million. Additionally, in fiscal year 2006 and 2005, we incurred $14.2 million and $5.4 million, respectively, in costs to investigate and quantify the impact of the
embezzlement, and in costs related to the recovery and maintenance of certain assets. The recorded gain from recovered assets and the investigation and related costs have been allocated to our segments based on the individual segments
proportionate share of G&A costs to total Company G&A costs.



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The following table sets forth the components of the misappropriation loss for the years ended
September 30, 2006, 2005, 2004 and prior and related investigation expenses:



|                                           |  |                           |         |   |      |   |        |      |  |   |         |   |               |   |       |  |   |       
|------------------------------------------ |  | ------------------------- | ------- | - | ---- | - | ------ | ---- |  | - | ------- | - | ------------- | - | ----- |  | - | ------
|                                           |  | Years Ended September 30,
|(Dollars in thousands)                     |  | CumulativeTotal           |         |   | 2006 |   |        | 2005 |  |   | 2004    |   | 2003 andPrior
|Misappropriation loss                      |  | $                         | 36,600  |   |      | $ |       |      |  | $ | 3,636   |   |               | $ | 4,854 |  | $ | 28,110
|Less: gain from recovered assets           |  |                           | (15,974 | ) |      |   | (1,613 | )    |  |   | (14,361 | ) |               |   |      |  |   |      
|                                           |  |                           |         |   |      |   |        |      |  |   |         |   |               |   |       |  |   |       
|Misappropriation loss (recoveries), net    |  |                           | 20,626  |   |      |   | (1,613 | )    |  |   | (10,725 | ) |               |   | 4,854 |  |   | 28,110
|                                           |  |                           |         |   |      |   |        |      |  |   |         |   |               |   |       |  |   |       
|Legal fees                                 |  |                           | 7,614   |   |      |   | 5,270  |      |  |   | 2,344   |   |               |   |      |  |   |      
|Forensic accounting fees and related costs |  |                           | 10,734  |   |      |   | 7,885  |      |  |   | 2,849   |   |               |   |      |  |   |      
|Other                                      |  |                           | 1,337   |   |      |   | 1,084  |      |  |   | 253     |   |               |   |      |  |   |      
|                                           |  |                           |         |   |      |   |        |      |  |   |         |   |               |   |       |  |   |       
|Investigation and related costs            |  |                           | 19,685  |   |      |   | 14,239 |      |  |   | 5,446   |   |               |   |      |  |   |      
|                                           |  |                           |         |   |      |   |        |      |  |   |         |   |               |   |       |  |   |       
|Total                                      |  | $                         | 40,311  |   |      | $ | 12,626 |      |  | $ | (5,279  | ) |               | $ | 4,854 |  | $ | 28,110
|                                           |  |                           |         |   |      |   |        |      |  |   |         |   |               |   |       |  |   |       

During fiscal year 2007, we incurred additional costs in connection with the investigation and
with the restatement of our previously issued consolidated financial statements. We have incurred an additional $3.7 million in investigation related legal expenses and approximately $800,000 in overhead rate and financial statement audit related
expenses during fiscal year 2007.

Year Ended September 30, 2005 Compared to Year Ended September 30, 2004

Engineering Fees



|                        |  |                           |         |      |   |          |  |          |        |  |      |  
|----------------------- |  | ------------------------- | ------- | ---- | - | -------- |  | -------- | ------ |  | ---- | -
|                        |  | Years Ended September 30, |        
|(Dollars in thousands)  |  | 2005                      |         | 2004 |   | $ Change |  | % Change |       
|Transportation Services |  | $                         | 199,490 |      | $ | 179,743  |  | $        | 19,747 |  | 11.0 | %
|Construction Management |  |                           | 87,314  |      |   | 77,465   |  |          | 9,849  |  | 12.7 | %
|Civil Engineering       |  |                           | 111,312 |      |   | 81,841   |  |          | 29,471 |  | 36.0 | %
|Environmental Services  |  |                           | 113,821 |      |   | 109,198  |  |          | 4,623  |  | 4.2  | %
|                        |  |                           |         |      |   |          |  |          |        |  |      |  
|Total Engineering Fees  |  | $                         | 511,937 |      | $ | 448,247  |  | $        | 63,690 |  | 14.2 | %
|                        |  |                           |         |      |   |          |  |          |        |  |      |  

Engineering fees for the year ended September 30, 2005, were $511.9 million compared to
$448.2 million in 2004, representing a 14.2% increase. Substantially all of the increase was in the Civil Engineering, Construction Management and Transportation Services segments.

Engineering fees from Civil Engineering services increased 36.0% to $111.3 million in fiscal year 2005 from $81.8 million in fiscal year 2004. This
segment greatly benefited from large response projects related to the calendar year 2004 hurricanes in Florida, and to a lesser extent, from hurricane Katrina in late August of 2005. Engineering fees in the Civil Engineering segment also increased
due to the Croslin acquisition on October 1, 2004. Engineering fees from Croslin, following the acquisition were approximately $2.7 million for the fiscal year ended September 30, 2005. This segment also experienced modest growth from our
homeland security program and Southern California economic growth.

Our Construction Management engineering fees increased 12.7% to $87.3
million in fiscal year 2005, from $77.5 million in fiscal year 2004. The increase relates primarily to several large projects with existing clients including several state departments of transportation. The biggest growth arose out of an
acceleration of Texas Turnpike Authority (TTA) projects and projects with Arkansas Department of Transportation (DOT). The later stages of construction management work typically require a full technical staff, plus temporary
technical help, as well as a significant amount of overtime. This resulted in a continued growth in the year over year



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engineering fees for this segments operations in Arkansas and Texas. Lastly, our construction management segment benefited from the disaster response
projects that resulted from the hurricanes that hit Florida in the third quarter of 2004 and to a lesser extent to hurricane Katrina which hit the Gulf States in late August 2005.

In the Transportation Services segment, engineering fees increased 11.0% to $199.5 million in fiscal year 2005 from $179.7 million in fiscal year 2004.
The increase was primarily due to increase in new projects awarded by the Texas DOT (TxDOT) and to the TriLine and WKA acquisitions. Engineering fees from TriLine and WKA, following the acquisitions, were $5.2 million and $6.7 million,
respectively, for the fiscal year ended September 30, 2005.

Engineering fees have remained relatively stable in our Environmental
Services segment with engineering fees increasing 4.2% to $113.8 million in fiscal year 2005 from $109.2 million in fiscal year 2004. The increase is primarily attributable to the acquisition of LWC, acquired in March 2005. Engineering fees from the
LWC acquisition were approximately $3.5 million in fiscal year 2005. In addition, our Environmental Services engineering fees were negatively impacted by the winding down of a large FEMA project, offset by increased organic growth to replace
these engineering fees. This organic growth was primarily driven by the segments increased focus on marketing and business development.

Net Earned Revenues



|                          |  |                           |         |      |   |          |  |          |        |  |      |  
|------------------------- |  | ------------------------- | ------- | ---- | - | -------- |  | -------- | ------ |  | ---- | -
|                          |  | Years Ended September 30, |        
|(Dollars in thousands)    |  | 2005                      |         | 2004 |   | $ Change |  | % Change |       
|Transportation Services   |  | $                         | 150,021 |      | $ | 135,111  |  | $        | 14,910 |  | 11.0 | %
|Construction Management   |  |                           | 67,679  |      |   | 58,278   |  |          | 9,401  |  | 16.1 | %
|Civil Engineering         |  |                           | 79,866  |      |   | 69,917   |  |          | 9,949  |  | 14.2 | %
|Environmental Services    |  |                           | 92,385  |      |   | 88,569   |  |          | 3,816  |  | 4.3  | %
|                          |  |                           |         |      |   |          |  |          |        |  |      |  
|Total Net Earned Revenues |  | $                         | 389,951 |      | $ | 351,875  |  | $        | 38,076 |  | 10.8 | %
|                          |  |                           |         |      |   |          |  |          |        |  |      |  

Net earned revenues (NER) was $390.0 million during the year ended September 30,
2005 as compared to $351.9 million in the same period in 2004, representing an increase of 10.8%. This increase was directly related to the increase in engineering fees, as previously explained.



|                                   |  |                           |         |           |      |   |            |   |           |  |      |  
|---------------------------------- |  | ------------------------- | ------- | --------- | ---- | - | ---------- | - | --------- |  | ---- | -
|                                   |  | Years Ended September 30, |        
|(Dollars in thousands)             |  | 2005                      |         | % of  NER |      |   | 2004       |   | % of  NER | 
|                                   |  |                           |         |           |      |   | (Restated) |   |           | 
|Transportation Services            |  | $                         | 49,469  |           | 33.0 | % |            | $ | 44,632    |  | 33.0 | %
|Construction Management            |  |                           | 19,635  |           | 29.0 | % |            |   | 19,187    |  | 32.9 | %
|Civil Engineering                  |  |                           | 31,446  |           | 39.4 | % |            |   | 11,924    |  | 17.1 | %
|Environmental Services             |  |                           | 21,436  |           | 23.2 | % |            |   | 20,629    |  | 23.3 | %
|                                   |  |                           |         |           |      |   |            |   |           |  |      |  
|Total Direct Reimbursable Expenses |  | $                         | 121,986 |           | 31.3 | % |            | $ | 96,372    |  | 27.4 | %
|                                   |  |                           |         |           |      |   |            |   |           |  |      |  

In addition, the change in our NER is affected by the fluctuation in our direct reimbursable
expenses. Direct reimbursable expenses consist of out-of-pocket expenses related to the delivery of services such as blueprints, reproductions, CADD/computer charges, travel and sub-consultant expenses. As a percentage of NER, direct reimbursable
expenses increased 3.9% to 31.3% in fiscal year 2005 from 27.4% in fiscal year 2004. The increase was driven by the Civil Engineering segment.

Direct reimbursable expenses in the Civil Engineering segment increased as a percentage of NER by 22.3% to 39.4% in fiscal year 2005 from 17.1% in fiscal year 2004. The increase was due to the disaster response projects related to the
Florida hurricanes in the third quarter of 2004 and the Southern California fires and to a



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lesser extent, to hurricane Katrina which hit the Gulf States in late August of 2005. These disasters required significant travel and lodging costs for the
hundreds of employees overseeing debris removal in the areas affected by the disasters. In addition, sub-consultants were hired to perform some of the work, adding to the direct reimbursable expenses.

In our Construction Management segment, direct reimbursable expenses as a percentage of NER decreased by 3.9% to 29.0% in fiscal year 2005 from 32.9% in
fiscal year 2004. This decrease was primarily due to several projects shifting from direct reimbursable projects to cost plus projects, reducing the total direct reimbursable expenses. Also, an increase in lump sum contracts in the Southeast region
has reduced direct reimbursable expenses.

Our Environmental Services segment showed a slight decrease of 0.1% in direct reimbursable
expenses as a percentage of NER to 23.2% in fiscal year 2005 from 23.3% in fiscal year 2004. The decrease was due primarily to a return to normal direct reimbursable expense spending in fiscal year 2005, as compared to 2004. In 2004, direct
reimbursable expenses were larger than normal due to a video inspection sub-consultant that we utilized to assist us with the beginning stages of a job in California. Since then, the volume of video work has decreased, thereby reducing our direct
reimbursable expenses in this segment.

Direct reimbursable expenses for the Transportation Services segment as a percentage of NER
remained constant at 33.0% in fiscal year 2005 and fiscal year 2004.

Operating Income



|                                                    |  |                           |        |   |          |      |   |      |   |          |  |      |  
|--------------------------------------------------- |  | ------------------------- | ------ | - | -------- | ---- | - | ---- | - | -------- |  | ---- | -
|                                                    |  | Years Ended September 30, |       
|(Dollars in thousands)                              |  | 2005                      |        |   | % of NER |      |   | 2004 |   | % of NER | 
|Transportation Services                             |  | $                         | 17,638 |   |          | 11.8 | % |      | $ | 10,821   |  | 8.0  | %
|Construction Management                             |  |                           | 7,250  |   |          | 10.7 | % |      |   | 6,164    |  | 10.6 | %
|Civil Engineering                                   |  |                           | 5,691  |   |          | 7.1  | % |      |   | 5,531    |  | 7.9  | %
|Environmental Services                              |  |                           | 7,801  |   |          | 8.4  | % |      |   | 6,916    |  | 7.8  | %
|                                                    |  |                           |        |   |          |      |   |      |   |          |  |      |  
|Total Operating Income                              |  |                           | 38,380 |   |          | 9.8  | % |      |   | 29,432   |  | 8.4  | %
|Misappropriation Loss                               |  |                           | (5,279 | ) |          | -1.4 | % |      |   | 4,854    |  | 1.4  | %
|                                                    |  |                           |        |   |          |      |   |      |   |          |  |      |  
|Total Operating Income before Misappropriation Loss |  | $                         | 33,101 |   |          | 8.5  | % |      | $ | 34,286   |  | 9.7  | %
|                                                    |  |                           |        |   |          |      |   |      |   |          |  |      |  

Operating income was $38.4 million in fiscal year 2005 as compared to $29.4 million in fiscal year
2004, representing an increase of 30.4%. The increase in total operating income is primarily the result of a $14.3 million gain from recovered assets, offset by $3.6 million misappropriation loss and $5.4 million in investigation related costs. All
segments had increases in fiscal year 2005 operating income from the prior fiscal year. Operating income, as a percentage of NER, increased by 1.4% to 9.8% in fiscal year 2005 from 8.4% in fiscal year 2004. All the segments, except Civil
Engineering, experienced increases in fiscal year 2005 operating income as a percentage of NER as compared to fiscal year 2004.

We believe
that operating income before misappropriation loss and investigation and related costs is a useful measure in evaluating our results of operations because the misappropriation loss, recoveries and investigation and related costs are unusual items
which do not reflect the costs or revenues of our provision of services in the given year. While the misappropriations occurred over a long period, the recoveries and investigation costs are realized when recovered or incurred and not in relation to
the period when the misappropriations occurred. We believe this measure is helpful for us and for our investors to evaluate the results of our operations and make comparisons between periods.



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Operating income before misappropriation loss and investigation and related costs, net was $33.1 million
for fiscal year 2005 as compared to $34.3 million for fiscal year 2004, representing a decrease of 3.5%. Operating income before misappropriation loss and related costs, net, as a percentage of NER, decreased by 1.2% to 8.5% in fiscal year 2005 from
9.7% in fiscal year 2004. Misappropriation loss and investigation and related costs, net are treated as corporate overhead costs, and as such, are allocated to each respective segment. The allocation is based on the segments proportionate
share of general and administrative (G&A) costs to total Company G&A costs.

As a percentage of NER, the Transportation
Services segments operating income increased by 3.8% to 11.8% in fiscal year 2005 from 8.0% in fiscal year 2004. This increase is primarily driven by the decrease in misappropriation loss in fiscal 2005 compared to fiscal 2004. As a percentage
of NER, the Transportation Services segments operating income before misappropriation loss and investigation and related costs, net, increased by 1.1% to 10.5% in fiscal year 2005 from 9.4% in fiscal year 2004. This increase experienced by the
Transportation Services segment was driven by improvements in engineering fees and chargeability, due largely to the large disaster response projects and significant increases in work volume with DOTs as a result of increased funding sources
available to the states. As explained previously, as chargeability improves or increases, we are able to bill more of our labor costs to clients, thereby improving our profit margin. The other three segments experienced decreases in operating income
before misappropriation loss and related costs, net, as a percentage of NER. These decreases were primarily due to decreased chargeability. When we experience a decrease in chargeability, we are billing less to our customers, thereby reducing our
profit.

Costs

Costs consist principally of direct salaries and direct costs that are chargeable to clients and overhead and general and administrative expenses.

Direct Salaries and Direct Costs



|                                 |  |                           |         |          |      |   |      |   |          |  |      |  
|-------------------------------- |  | ------------------------- | ------- | -------- | ---- | - | ---- | - | -------- |  | ---- | -
|                                 |  | Years Ended September 30, |        
|(Dollars in thousands)           |  | 2005                      |         | % of NER |      |   | 2004 |   | % of NER | 
|Transportation Services          |  | $                         | 56,420  |          | 37.6 | % |      | $ | 50,714   |  | 37.5 | %
|Construction Management          |  |                           | 28,032  |          | 41.4 | % |      |   | 24,518   |  | 42.1 | %
|Civil Engineering                |  |                           | 29,725  |          | 37.2 | % |      |   | 25,850   |  | 37.0 | %
|Environmental Services           |  |                           | 32,122  |          | 34.8 | % |      |   | 30,439   |  | 34.4 | %
|                                 |  |                           |         |          |      |   |      |   |          |  |      |  
|Direct Salaries and Direct Costs |  | $                         | 146,299 |          | 37.5 | % |      | $ | 131,521  |  | 37.4 | %
|                                 |  |                           |         |          |      |   |      |   |          |  |      |  

Direct salaries and direct costs primarily includes direct salaries and to a lesser extent
unreimburseable direct costs. Direct costs totaled $881,000 and $1.6 million in fiscal year 2005 and 2004, respectively.

Direct salaries
and direct costs were $146.3 million in fiscal year 2005, as compared to $131.5 million in fiscal year 2004, representing an increase of 11.2%. This increase is directly related to the increase in engineering fees and chargeability. As a percentage
of NER, all segments except Construction Management experienced an increase from a year ago. On a Company basis, direct salaries and direct costs as a percentage of NER increased slightly to 37.5% in fiscal year 2005 from 37.4% in fiscal year 2004.

For the Civil Engineering segment, direct salaries and direct costs increased by 15.0% to $29.7 million in fiscal year 2005 versus $25.9
million in fiscal year 2004. Direct salaries and direct costs as a percentage of NER increased slightly to 37.2% in fiscal year 2005 from 37.0% in fiscal year 2004.

Direct salaries and direct costs in the Construction Management segment increased to $28.0 million in fiscal year 2005, or a 14.3% increase from $24.5 million in fiscal year 2004. As a percentage of NER, direct
salaries



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and direct costs decreased 0.7% to 41.4% in fiscal year 2005 from 42.1% in fiscal year 2004. This decrease is due to increased chargeability and increased
profitability from an acceleration of TxDOT projects and various transportation projects in Florida. The latter stages of these projects required full technical staff, plus temporary technical help as well as significant amounts of overtime.

The Transportation Services segment experienced an increase in direct salaries and direct costs of 11.3% to $56.4 million in fiscal year
2005 compared to $50.7 million in fiscal year 2004. As a percentage of NER, direct salaries and direct costs increased slightly to 37.6% in fiscal year 2005 from 37.5% in fiscal year 2004.

For our Environmental Services segment, direct salaries and direct costs increased to $32.1 million in fiscal year 2005 from $30.4 million in fiscal year
2004, a 5.5% increase. As a percentage of NER, direct salaries and direct costs increased by 0.4% from 34.4% in fiscal year 2004 to 34.8% in fiscal year 2005. The slight increase in direct salaries and direct costs as a percentage of NER is due
primarily to a larger proportional increase in direct salaries and direct costs of 5.5% in relation to the increase in NER of 4.2%.

General and Administrative Costs, including Indirect Salaries

The other component of costs is indirect costs, which
include indirect salaries, and general and administrative costs.



|                        |  |                           |        |          |      |   |      |   |          |  |      |  
|----------------------- |  | ------------------------- | ------ | -------- | ---- | - | ---- | - | -------- |  | ---- | -
|                        |  | Years Ended September 30, |       
|(Dollars in thousands)  |  | 2005                      |        | % of NER |      |   | 2004 |   | % of NER | 
|Transportation Services |  | $                         | 28,924 |          | 19.3 | % |      | $ | 26,706   |  | 19.8 | %
|Construction Management |  |                           | 11,193 |          | 16.5 | % |      |   | 8,084    |  | 13.9 | %
|Civil Engineering       |  |                           | 16,107 |          | 20.2 | % |      |   | 12,086   |  | 17.3 | %
|Environmental Services  |  |                           | 20,763 |          | 22.5 | % |      |   | 18,998   |  | 21.4 | %
|                        |  |                           |        |          |      |   |      |   |          |  |      |  
|Total Indirect Salaries |  | $                         | 76,987 |          | 19.7 | % |      | $ | 65,874   |  | 18.7 | %
|                        |  |                           |        |          |      |   |      |   |          |  |      |  

Indirect salaries increased 16.9%, to $77.0 million in fiscal year 2005 from $65.9 million in
fiscal year 2004. Indirect salaries as a percentage of NER increased 1.0% to 19.7% in fiscal year 2005 compared to 18.7% in fiscal year 2004.

Transportation Services experienced a decrease in indirect salaries as a percentage of NER of 0.5% from 19.8% in fiscal year 2004 to 19.3% in fiscal year 2005 resulting from an increase in chargeability from new projects with the TxDOT and
acquisitions, as previously explained. As chargeability increases, and as more of the technical staffs time worked is being charged back to clients, direct salaries increases and indirect salaries decreases.

Civil Engineering and Environmental Services experienced an increase in indirect salaries as a percentage of NER of 2.9% and 1.1%, respectively, as a
result of the focus on marketing and business development and an increased use of sub-consultants on certain projects.



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Indirect salaries in our Construction Management segment increased 38.5% to $11.2 million in fiscal year
2005 from $8.1 million in fiscal year 2004. As a percentage of NER, indirect salaries increased by 2.6% to 16.5% in fiscal year 2005 from 13.9% in fiscal year 2004. The primary result of this increase is attributable to delays in the commencement of
certain projects and the opening of new offices to support new business initiatives in the East region.



|                                     |  |                           |         |          |      |   |            |   |          |  |      |  
|------------------------------------ |  | ------------------------- | ------- | -------- | ---- | - | ---------- | - | -------- |  | ---- | -
|                                     |  | Years Ended September 30, |        
|(Dollars in thousands)               |  | 2005                      |         | % of NER |      |   | 2004       |   | % of NER | 
|                                     |  |                           |         |          |      |   | (Restated) |   |          | 
|Transportation Services              |  | $                         | 48,974  |          | 32.6 | % |            | $ | 45,051   |  | 33.3 | %
|Construction Management              |  |                           | 22,078  |          | 32.6 | % |            |   | 18,755   |  | 32.2 | %
|Civil Engineering                    |  |                           | 29,509  |          | 36.9 | % |            |   | 25,423   |  | 36.4 | %
|Environmental Services               |  |                           | 33,003  |          | 35.7 | % |            |   | 30,965   |  | 35.0 | %
|                                     |  |                           |         |          |      |   |            |   |          |  |      |  
|Total General & Administrative Costs |  | $                         | 133,564 |          | 34.3 | % |            | $ | 120,194  |  | 34.2 | %
|                                     |  |                           |         |          |      |   |            |   |          |  |      |  

General and administrative (G&A) costs increased 11.1%, to $133.6 million in
fiscal year 2005 from $120.2 million in fiscal year 2004. The majority of the increase is primarily related to increased medical insurance premiums of $3.8 million, payroll taxes of $2.1 million, professional fees of $1.7 million, incentive
compensation of $1.0 million and rent expense of $1.6 million. We also incurred additional fees for information technology system upgrades and Sarbanes-Oxley readiness and documentation. These costs are generally considered corporate costs which
benefit all segments and are allocated to the respective segments based on the individual segments proportionate share of G&A costs as compared to total Company G&A costs.

Misappropriation loss (recoveries) and Investigation and Related Costs

As described elsewhere
in this Annual Report, we have recorded $3.6 million and $4.9 million of misappropriation losses during 2005 and 2004, respectively. During fiscal year 2005, we also recorded a gain from recovered assets totaling $14.3 million, resulting in a net
misappropriation gain of $10.7 million for fiscal year 2005.

Additionally, in fiscal year 2005, we incurred $5.4 million in costs to
investigate and quantify the impact of the embezzlement, and in costs related to the recovery and maintenance of certain assets. The recorded gain from recovered assets and the investigation and related costs have been allocated to our segments
based on the individual segments proportionate share of G&A costs to total Company G&A costs.

Consolidated Results

Net Income:

Net income was
$5.4 million, $21.1 million and $14.7 million for fiscal years 2006, 2005 and 2004, respectively. The percentage of net income to NER was 1.3%, 5.4% and 4.2% for fiscal years 2006, 2005 and 2004. The 74.4% decrease in net income in fiscal year 2006,
as compared to 2005, was primarily the result of an increase in investigation and related costs of $8.8 million, and a reduction in gain from recovered assets of $12.7 million in fiscal year 2006, offset by a decrease in misappropriation loss
of $3.6 million. Net income in fiscal year 2006 was also negatively impacted by an increase in indirect salaries resulting from the temporary stoppage on bidding for new jobs with the TxDOT and lower chargeability resulting from the transition of
acquisitions and time spent on business development. Additionally, the increase in engineering fees was offset by an increase in G&A expenses, which increased at a greater percentage than NER. The decrease in net income was partially offset by a
decrease in our effective tax rate. The decrease in the effective tax rate was due to reversal of tax reserves, partially offset by a decrease in the use of research and development tax credits generated and an increase in non-deductible expenses.
The effective tax rate decreased to 37.8% in fiscal year 2006 from 42.8% in fiscal year 2005.



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The majority of the increase in G&A in fiscal year 2006 over fiscal year 2005 is primarily related to
increased medical insurance premiums and flex benefits ($6.4 million), professional fees ($1.2 million), legal settlements and fees ($4.9 million), travel and related expenses ($2.4 million), rent expense for real estate ($2.2 million), payroll
taxes ($2.3 million), insurance ($1.2 million), deferred compensation ($1.2 million) and vehicle and equipment leases ($1.3 million). We also incurred additional expenses for depreciation and amortization, business development communication and
software and computer supplies. The increase in G&A in fiscal year 2006 over fiscal year 2005 was partly offset by a decrease in incentive compensation of $2.5 million.

Income Taxes:

The income tax
provision was $3.3 million and $15.7 million, or an effective tax rate of 37.8% and 42.8%, for the years ended September 30, 2006 and 2005, respectively. The reduction in the effective tax rate in fiscal year 2006 was primarily due to a
reduction in tax reserves related to research and development credits taken on the Companys tax returns, offset by a reduction in the amount of research and development tax credits generated and an increase in non-deductible expenses.

Our effective tax rate is based on income, statutory tax rates and tax planning opportunities available in the various jurisdictions in
which we operate. Significant judgment is required in determining the effective tax rate and in evaluating our tax positions. The Company establishes reserves when, despite its belief that the tax return positions are fully supportable, it believes
that certain positions, if challenged, will likely be resolved unfavorably to us. These reserves are adjusted in light of changing facts and circumstances, such as the progress of a tax audit or current developments in tax law. Our annual tax rate
includes the impact of reserve provisions and changes to reserves. While it is often difficult to predict the final outcome or the timing of resolution of any particular matter, we believe that our reserves reflect the probable outcome of known tax
contingencies. Resolution of the tax contingencies would be recognized as an increase or decrease to our tax rate in the period of resolution. We have recorded a tax contingency accrual of approximately $12.5 million and $13.5 million as of
September 30, 2006 and 2005, respectively related to research and development tax credits taken on the Companys tax returns. The tax accruals are presented in the accompanying consolidated balance sheets within accounts payable and
accrued expenses.

For the past several years, we have generated research and development tax credits related to certain qualifying costs.
The qualifying costs relate primarily to our project costs which we believe involve technical uncertainty. These research and development costs were incurred in the course of providing services generally under long-term client projects. Because we
have been unable to utilize the entire amount of research and development tax credits we have generated each year, the balance sheets reflect a deferred tax asset of $5.7 million and $5.5 million at September 30, 2006 and 2005,
respectively, for the unused credit carry forwards. These research and development tax credit carry-forwards will expire beginning 2017 through 2022.

Liquidity and Capital Resources

During the fiscal years ended September 30, 2006 and 2005, our primary sources
of liquidity were cash flows from operations, borrowings under our credit lines, and proceeds from the sale of common stock to our employees. The proceeds from the sale of stock, received in fiscal year 2006, relate to stock sold in fiscal year
2005. In fiscal year 2006, the Company did not offer any common stock for sale to its employees. Our primary uses of cash have been to fund our working capital and capital expenditure needs, service our debt obligations, and the redemption of shares
of our common stock during the year. We also anticipate additional cash flows to be generated from the sale of recovered assets classified as held for sale as of September 30, 2006. We believe, based on our past experience, that we can generate
sufficient cash flows from operations and cash flows available under our credit facility to fund our operating and capital expenditure requirements, as well as to service our debt obligations, including our accrued client reimbursement liability,
for fiscal year 2007 and beyond. In the event we experience a significant adverse change in our business operations or higher than expected stock redemptions,



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we would likely need to secure additional sources of financing, and we may not be able to obtain additional sources of funding at reasonable rates and terms.

Cash Flows from Operating Activities

Net cash provided by operating activities totaled $10.9 million for fiscal year 2006 as compared to $37.5 million for fiscal year 2005. The reduction in net cash provided by operating activities in fiscal year
2006 from fiscal year 2005 was primarily the result of a significant increase in investigation and related costs, net of gains of assets recovered in connection with the misappropriation loss, as more fully explained in note 2 of our consolidated
financial statements. The Companys cash flows from projects were negatively impacted by the temporary stoppage on bidding for new jobs with the Tx DOT and lower chargeability resulting from the transition of acquisitions and time spent on
business development during fiscal year 2006. Also impacting cash flows from income generated by projects were an increase in accounts receivable, offset by a decrease in unbilled fees. The Company also experienced a reduction in accounts payable
and accrued expenses and accrued reimbursement liability. The reduction in accounts payable and accrued expenses reflects payments made to vendors and consultants, and the reduction in accrued reimbursement liability reflects payments made to
clients in fiscal year 2006 for the overstatement of overhead rates. The decrease in net cash provided by operating activities was partly offset by the proceeds from the disposal of assets held for sale, offset by a reduction of liabilities related
to assets held for sale and the change in the provision for deferred taxes in fiscal year 2006 over fiscal year 2005.

Net cash provided by
operating activities totaled $37.5 million for fiscal year 2005 as compared to $32.2 million for fiscal year 2004. The net cash provided by operating activities was primarily from income generated from projects and slower payments of our
accounts payable and accrued expense and other current liabilities. Cash flows from income generated by projects were partially offset by increases in accounts receivable and unbilled fees. The increases in unbilled fees and accounts receivable are
attributable primarily to the increase in revenue during fiscal year 2005 compared to fiscal year 2004 due to the hurricane debris removal projects.

Approximately 80% of our revenues are billed on a monthly basis. The remaining amounts are billed when we reach certain stages of completion as specified in the contract. Payment terms for accounts receivable and
unbilled fees, when billed, are net 30 days. During fiscal year 2006, unbilled fees decreased 9.9% to $62.8 million at September 30, 2006 from $69.7 million at September 30, 2005. The decrease in unbilled fees during fiscal year 2006
is principally related to the improvements in permitted billing for the work performed and earned as of the end of fiscal year 2006.

Accounts receivable, net increased 26.3%, to $85.2 million at September 30, 2006, from $67.5 million at September 30, 2005. The increase in accounts receivable is primarily related to the decrease in unbilled fees, as previously
explained and growth in engineering fees. The allowance for doubtful accounts increased approximately $600,000 during fiscal year 2006. The allowance for doubtful accounts increased $102,000 during fiscal year 2005. The balance in the allowance for
doubtful accounts was $1.8 million and $1.2 million at September 30, 2006 and 2005, respectively.

During fiscal year 2007, we
incurred additional costs in connection with the Companys investigations and with the restatement of our previously issued consolidated financial statements, which were completed in fiscal 2007. We have incurred, during fiscal year 2007, an
additional $3.7 million in investigation related legal expenses and approximately $800,000 in overhead rate and financial statement audit related expenses. Additionally, we expect to spend approximately $22.5 million in client reimbursements during
fiscal year 2007, and an additional $5.6 million thereafter. We may also incur additional fees and penalties from various government regulatory agencies as a result of the final outcome of the ongoing investigations.



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Cash Flows from Investing Activities

Net cash used in investing activities was $16.5 million, $12.3 million, and $16.0 million in fiscal years 2006, 2005 and 2004, respectively. Investing
activity principally consists of purchases of property and equipment, such as survey equipment, computer system and equipment, furniture and leasehold improvements. Additionally, during fiscal years 2006, 2005 and 2004 approximately $5.9 million,
$2.0 million and $5.9 million, respectively, were used in acquisitions and earn-out payments on a previous acquisition.

In fiscal year
2006, we completed one acquisition. On April 30, 2006, we acquired 100% of the stock of EIP Associates (EIP) for $6.0 million, net of cash acquired of $15,000, comprised of $5.5 million in cash, $334,000 accrued additional purchase
price and $200,000 held in escrow.

In fiscal year 2005, we completed two acquisitions. On October 1, 2004 we acquired 100% of the
stock of Croslin Associates, Inc. for $456,000 in cash and 11,111 shares of our common stock valued at approximately $300,000. On February 1, 2005 we acquired 100% of the stock of Land and Water Consulting, Inc. for $323,000 in cash and 33,862
shares of our common stock valued at approximately $914,000.

In fiscal year 2004, we also completed two acquisitions. On June 1, 2004
we acquired 100% of the stock of TriLine Associates, Inc. for $3.7 million in cash. On July 1, 2004 we acquired 100% of the stock of W. Koo and Associates for $413,000 in cash, $250,000 in accrued earn-out provisions and 71,429 shares of our
common stock, for a total purchase price of $2.5 million. Additionally in fiscal year 2004, we paid an earn-out payment related to the Welker acquisition in the amount of $1.2 million.

During fiscal year 2007, we anticipate our capital expenditures to be approximately $9.0 million, including approximately $3.3 million relating to the
implementation of our new Oracle enterprise resource planning system. While the Company will continue to pursue a long-term growth strategy in making strategic acquisitions, we are not expecting any acquisitions to materialize in fiscal year 2007.

Cash Flows from Financing Activities

Net cash used in financing activities for fiscal 2006 was $16.9 million, as compared to $4.5 million for fiscal year 2005. The increase in net cash used in financing activities in fiscal year 2006 from fiscal year
2005 is primarily attributable to an increase in the payments for the repurchase of common stock from employees of $6.6 million and a decrease in the proceeds from the sale of common stock to employees of $6.5 million. As explained below, the
Company did not offer any common stock to its employees in fiscal year 2006, but received payment in fiscal year 2006 related to the 2005 sale of common stock to employees. The increase in net cash used in financing activities was partly offset by
an increase in net borrowings under our line of credit of $762,000. Net cash used in financing activities for fiscal year 2005 was $4.5 million, as compared to net cash used in financing activities of $14.5 million in fiscal year 2004. The change in
net cash used is primarily attributable to a decrease in net borrowings from our line of credit of $9.2 million and a decrease in the net purchases of common stock of $558,000.

Pursuant to the terms of our credit agreement, we cannot declare or pay dividends in excess of 50% of our net income. We have not previously paid cash
dividends on our common stock and have no present intention of paying cash dividends on our common stock in the foreseeable future. All earnings are retained for investment in our business.

Capital Resources

The Company has a
$58 million line of credit agreement, inclusive of $10 million in letters of credit, with Bank of America, N.A. (the Bank). The expiration date on the line of credit is June 30, 2008. The letters of credit reduce the maximum amount
available for borrowing. As of September 30, 2006 and 2005, we had letters



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of credit totaling $4.3 million and $3.4 million, respectively. At September 30, 2006, the Company had letters of credit, which expire in fiscal year
2007, for $2.2 million to guarantee insurance payments. In addition, in the second quarter of 2006, we issued a letter of credit which expired in November 2006, for $ 2.0 million to cover risk of insolvency for the FDOT. No amounts have been
drawn on any of these letters of credit. As a result of the issuance of these letters of credit, the maximum amount available for borrowing under the line of credit was $52.6 million and $54.6 million as of September 30, 2006 and 2005,
respectively. Although our most significant source of cash has historically been generated from operations, in the event that cash flows from operations are insufficient to cover our working capital needs, we would access our revolving line of
credit facility.

The Bank has provided us a waiver of default caused by our failure to deliver to the Bank audited financial statements
for fiscal year 2006 and unaudited financial statements for the quarters ended December 31, 2006 and March 31, 2007, so long as the fiscal year 2006 financial statements are delivered to the Bank no later than May 31, 2007 and the
quarterly statements are delivered no later than September 30, 2007. The bank has also provided us a waiver of the minimum net worth covenant for fiscal year 2006 and all periods in fiscal year 2007. The line of credit is collateralized by
substantially all of our assets.

As of September 30, 2006 and 2005, we had $1.1 million and $0 outstanding under the line of credit,
respectively. The maximum amount borrowed under our line of credit was $11.3 million and $13.8 million during fiscal 2006 and 2005, respectively. We used cash flow from operating activities to repay amounts outstanding under our line of credit.

On March 19, 2001, the Company entered into a mortgage note with an original principal amount of $9.0 million due in monthly
installments starting on April 16, 2001, with interest. Interest on the mortgage is LIBOR plus the floating rate margin of not less than 65 basis points and not greater than 90 basis points. A balloon payment is due on the mortgage on
March 16, 2011. The effective interest rate on the mortgage note was 5.98% and 4.51% for the fiscal years ended September 30, 2006 and 2005, respectively. The mortgage note is collateralized by our office building located in Orlando,
Florida. We used an interest rate swap (the Swap) agreement in order to minimize the adverse impact of the floating interest rate characteristics of our long term debt obligations. The swap effectively converted the floating interest
rate on the note payable to a fixed rate of 6.28%. On March 16, 2006, our swap expired and was not renewed. Our adjustable rate mortgage calls for an interest rate based on the 30-day LIBOR plus a margin of .065%. We do not anticipate entering
into any additional swap agreements.

Our capital expenditures are generally for purchases of property and equipment. We spent $11.4
million, $10.3 million and $9.6 million on such expenditures in fiscal years 2006, 2005 and 2004, respectively. Our capital expenditures primarily consist of computer systems and equipment, furniture and leasehold improvement purchases.

A stock offering usually takes place on an annual basis for a one week period during the month of March. The Company suspended the stock offering
window for March 2006 until the final impact of the restatement of the Companys consolidated financial statements was determined. The Company is planning to open the stock window for fiscal year 2007 in June 2007. During this
offering, shares of the Companys common stock will be available for sale to employees of the Company, pursuant to The PBSJ Corporation Stock Ownership Plan.

The stock window will also allow existing shareholders to offer shares of common stock for sale to the Company. Under the corporate by-laws, the Company has the first right of refusal to purchase these shares. If
the Company declines to purchase the offered shares, they are offered to the Employee Profit Sharing and Stock Ownership Plan and Trust (ESOP) and then to all shareholders. The Company believes it will be able to fund purchases it chooses to
execute using cash from operations and accessing the revolving credit line facility, if necessary. Should the number of shares offered for sale potentially cause the Company to violate its debt covenants, the Company would restrict the purchase
of shares until compliance is achieved. As of April 30, 2007 there were 6,668,606 shares held by employees with a total value of approximately $162.3 million.



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We believe that our existing financial resources, together with our cash flow from operations and
availability under our line of credit, will provide sufficient capital to fund our operations for fiscal year 2007 and beyond.

Inflation

The rate of inflation has not had a material impact on our operations. Moreover, if inflation remains at its recent levels, it is
not expected to have a material impact on our operations for the foreseeable future.

Off-Balance Sheet Arrangements

We do not have any off-balance sheet arrangements other than operating leases for most of our office facilities and certain equipment. Minimum operating
lease obligations payable in future years are presented below in Contractual Obligations.

Related Party Transactions

We lease office space in a building which houses our Marietta, Georgia operations from BCE Properties, which is owned and controlled by James Belk.
Mr. Belk is a former owner of Welker and a Vice-President and Project Director of ours. The lease was assumed in connection with our acquisition of Welker in March 2003. The rental cost of the space is $17,600 per month. On May 31, 2006,
the lease expired and was not renewed. In June 2006, we moved our Marietta, Georgia operations to a new location.

We lease office space in
a building which houses our Missoula, Montana operations from Cedar Enterprises, which is owned and controlled by Charlie K. Vandam. Mr. Vandam is a former owner of LWC and a Senior Program Manager of ours. The lease was assumed in connection
with our acquisition of LWC in February 2005. The rental cost of the space is $9,500 per month.

We lease office space in a building which
houses our Helena, Montana operations from Prickly Pear Enterprises, which is owned and controlled by Paul Callahan. Mr. Callahan is a former owner of LWC and a Vice-President and Senior Division Manager of ours. The lease was assumed in
connection with our acquisition of LWC in February 2005. The rental cost of the space is $1,800 per month.

Pursuant to the Companys by-laws, the Company is permitted to repurchase stock by delivery of a promissory note to the employee. On February 23, 2006 the Company repurchased 46,000 shares and 3,400 shares,
respectively, of the Companys stock from Richard Wickett, our former Chairman of the Board from 2002 to February 2005 and former Chief Financial Officer from 1993 to 2004, and Kathryn Wilson in the original principal amounts of $1.2 million
and $92,000, respectively. The shares were repurchased for $27.00 per share which represents the September 30, 2004 share price. At September 30, 2006, the Company had an accrual of $49,400 for the difference between the purchase price and
the September 30, 2005 share value of $28.00. The notes currently bear interest at the rate of 7.5% per annum and such rate is adjusted to the then current prime rate of Bank of America on December 31stof each year. Accrued interest and $1 of principal is due monthly on the notes with all remaining principal and accrued
interest due and payable on the five year anniversary of the date of issuance. The balances of the notes and the accrual for the stock price differential were approximately $1.4 million at September 30, 2006 and were included in other
liabilities in the accompanying balance sheet.

On February 13, 2007, the Company repurchased an additional 46,607 shares of the
Companys stock from Richard Wickett in the original principal amount of $1.0 million. The additional shares were purchased for $22.40 per share which represents 80% of the September 30, 2005 share price, pending completion of the
valuation of the Companys stock as of September 30, 2006. In fiscal year 2007, the Company accrued for the difference between the purchase price and the September 30, 2006 share value. The 2007 note currently bears



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interest at the rate of 8.25% per annum and such rate is adjusted to the then current prime rate of Bank of America on December 31stof each year. Accrued interest and $1 of principal is due monthly on the notes with all remaining principal and accrued
interest due and payable on the five year anniversary of the date of issuance. The notes are subject to the Companys right of set off, which permits the Company to set off all claims it may have against the payee against amounts due and owing
under the notes.

Recent Accounting Pronouncements

On February 15, 2007, the Financial Accounting Standards Board (FASB) issued SFAS No. 159 (SFAS 159), The Fair Value Option for Financial Assets and Financial
Liabilities, which allows an entity the irrevocable option to elect fair value for the initial and subsequent measurement for certain financial assets and liabilities on a contract-by-contract basis. Subsequent changes in fair value of
these financial assets and liabilities would be recognized in earnings when they occur. SFAS 159 further establishes certain additional disclosure requirements. SFAS 159 is effective for the Companys financial statements for the fiscal year
ending September 30, 2009, with earlier adoption permitted. Management is currently evaluating the impact and timing of the adoption of SFAS 159 on the Companys consolidated financial statements.

In September 2006, FASB issued SFAS No. 158 (SFAS 158), Employers Accounting for Defined Benefit Pension and Other
Postretirement Plans. This standard requires an employer to recognize the overfunded or underfunded status of a defined benefit postretirement plan (other than a multiemployer plan) as an asset or liability in its statement of financial
position and to recognize changes in that funded status in the year in which the changes occur through comprehensive income. The Company is required to adopt the recognition and related disclosure provisions of SFAS 158 for the fiscal year ending
September 30, 2007. The Company is also required to adopt the measurement provisions of SFAS 158 for the fiscal year ending September 30, 2009. The Company is still evaluating the impact of this standard on its consolidated financial
statements.

In September 2006, the FASB issued SFAS No. 157 (SFAS 157), Fair Value Measurements.
SFAS 157 prescribes a single definition of fair value as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. The accounting provisions
of SFAS 157 will be effective for the Company for the fiscal year ending September 30, 2009. The Company does not believe the adoption of SFAS 157 will have a material impact on its consolidated financial statements.

In September 2006, the SEC issued Staff Accounting Bulletin No. 108 (SAB 108). SAB 108 addresses how the effects of prior year
uncorrected misstatements should be considered when quantifying misstatements in current year financial statements. SAB 108 requires companies to quantify misstatements using a balance sheet and income statement approach and to evaluate whether
either approach results in quantifying an error that is material in light of relevant quantitative and qualitative factors. When the effect of initial adoption is material, companies will record the effect as a cumulative effect adjustment to
beginning of year retained earnings. SAB 108 will be effective for the Company for the fiscal year ending September 30, 2008. The Company does not believe the adoption of SAB 108 will have a material impact on its consolidated financial
statements.

In July 2006, the FASB issued Interpretation (FIN) No. 48 Accounting for Uncertainty in Income
Taxesan interpretation of FASB No. 109 (FIN 48). This interpretation establishes guidelines and thresholds that must be met for the recognition and measurement of a tax position taken or expected to be taken in a tax
return. The provisions of FIN 48 are effective for fiscal years beginning after December 31, 2006. The Company is currently evaluating the impact of adopting FIN 48 on its consolidated financial statements.

In November 2005, the FASB issued FASB Staff Position (FSP) FAS 115-1 and FAS 124-1, The Meaning of Other-Than-Temporary Impairment
and Its Application to Certain Investments, ( FSP 115-1 and 124-1) which address the determination as to when an investment is impaired, whether that impairment is other than temporary, and the measurement of an impairment
loss. FSP 115-1 and 124-1 also includes accounting



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considerations subsequent to the recognition of an other-than-temporary impairment and requires certain disclosures about unrealized losses that have not
been recognized as other-than-temporary impairments. The guidance in FSP 115-1 and 124-1 amends FASB Statement No. 115, Accounting for Certain Investments in Debt and Equity Securities, and Accounting Principles Board
(APB) Opinion No. 18, The Equity Method of Accounting for Investments in Common Stock. FSP 115-1 and 124-1 is effective for reporting periods beginning after December 15, 2005. The adoption of FSP
115-1 and 124-1 did not have a material impact on our consolidated financial statements.

In May 2005, the FASB issued SFAS No. 154
(SFAS 154), Accounting Changes and Error Corrections (SFAS 154), which replaces APB Opinion No. 20 Accounting Changes and SFAS No. 3 Reporting Accounting Changes in
Interim Financial Statements. SFAS 154 requires that a voluntary change in accounting principle be applied retrospectively with all prior period financial statements presented on the new accounting principle. SFAS 154 also requires that a
change in method of depreciating or amortizing a long-lived non-financial asset be accounted for prospectively as a change in estimate, and correction of errors in previously issued financial statements should be termed a restatement. SFAS 154 is
effective for accounting changes and correction of errors made in the first annual reporting period beginning after December 15, 2005. We early adopted SFAS 154 and have reported and disclosed the correction of errors in our previously reported
consolidated financial statements in accordance with SFAS 154. The other reporting and disclosure requirements of SFAS 154 did not have a material impact on our consolidated financial statements.

In December 2004, the FASB issued SFAS No. 123 (revised 2004), Share-Based Payment (SFAS 123(R)), which is
a revision of SFAS 123, Accounting for Stock-Based Compensation. SFAS 123(R) supersedes APB Opinion No. 25, Accounting for Stock Issued to Employees. SFAS No. 123(R) requires all share-based payments to employees,
including grants of employee stock options, to be recognized in the financial statements based on their fair values, beginning with the first annual period beginning after December 2005, with early adoption encouraged. We are required to adopt SFAS
123(R) in our first quarter of fiscal year 2007, beginning October 1, 2006. The Company is currently evaluating the impact of adopting SFAS 123(R) on our consolidated financial statements.

In December 2003, the FASB issued Interpretation No. 46 (revised December 2003), Consolidation of Variable Interest Entities
(FIN 46R), which replaced FIN 46. FIN 46R addresses how a business enterprise should evaluate whether it has a controlling interest in an entity through means other than voting rights. This interpretation requires a variable interest
entity to be consolidated by a company if that company is subject to a majority of the risk of loss from the variable interest entitys activities or is entitled to receive a majority of the entitys residual returns or both. The
interpretation also requires disclosures about variable interest entities that the company is not required to consolidate but in which it has a significant variable interest. We are required to adopt FIN 46R immediately for entities created after
December 31, 2003 and at the beginning of fiscal year 2006 for all other entities. The adoption of FIN 46R did not have a material impact on our consolidated financial statements.

Critical Accounting Policies

In the ordinary course of business, we make a number of
estimates and assumptions relating to the reporting of results of operations and financial position in the preparation of financial statements in conformity with accounting principles generally accepted in the United States of America. Actual
results could differ significantly from those estimates under different assumptions and conditions. We believe the following discussion addresses our most critical accounting policies. These policies require management to exercise judgments that are
often difficult, subjective and complex due to the necessity of estimating the effect of matters that are inherently uncertain.



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Revenue Recognition

We recognize engineering fees from different types of services under a variety of different types of contracts. In recognizing engineering fees, we evaluate each contractual arrangement to determine the applicable
authoritative accounting methodology to apply to each contract.

In the course of providing services, we principally use three types of
contracts: Cost-plus contracts, Time and Materials contracts and Fixed Price contracts.

Cost-plus Contracts. We recognize engineering fees
from cost-plus contracts at the time services are performed. The amount of revenue recognized is based on our actual labor costs incurred, plus non-labor costs and the portion of the fixed negotiated fee earned to date. Included in non-labor costs
are pass-through costs for client-reimbursable materials, equipment and subcontractor costs where we are responsible for engineering specifications, procurement and management of such cost components on behalf of our clients. These direct
reimbursable expenses are principally passed through to our clients with minimal or no mark-up and are included in our engineering fees. Indirect expenses are recorded as incurred and are allocated to contracts.

Time and Materials Contracts. We recognize engineering fees from Time and Materials contracts at the time services are performed. The amount of revenue
recognized is based on the actual number of hours we spend on the projects, multiplied by contractual rates or multipliers. In addition, our clients reimburse us for our actual out-of-pocket costs of materials and other direct reimbursable expenses
that we incur in connection with our performance under these contracts. The amount of NER on a time and materials contract fluctuates based on the proportion of the actual labor spent and reimbursable costs that are incurred for each contract.

Fixed Price Contracts. We recognize engineering fees from fixed price contracts based on the percentage of completion method where fees
are recognized based on the ratio of estimated costs incurred to total estimated contract costs. At the time a loss on a contract becomes known, we record the entire amount of the estimated loss.

Change orders that result from modification of an original contract are taken into consideration for revenue recognition when they result in a change of
total contract value and are approved by our clients. Engineering fees relating to unapproved change orders are recognized when collected.

The Companys federal government contracts are subject to the Federal Acquisition Regulations (FAR). These regulations are partially incorporated into many local and state agency contracts. The FAR limits the recovery of
certain specified indirect costs on contracts subject to such regulations. In accordance with industry practice, most of the Companys federal government contracts are subject to termination at the discretion of the client. Contracts typically
provide for reimbursement of costs incurred and payment of fees earned through the termination date.

Contracts that fall under the FAR are
subject to audit by the government, primarily the Defense Contract Audit Agency (DCAA), which reviews our overhead rates, operating systems and costs proposals. As a result of its audits, the DCAA may disallow costs if it determines that
we have incorrectly or improperly accounted for such costs in a manner inconsistent with generally accepted government accounting standards.

Accrued Reimbursement Liability

The accrued reimbursement liability is an estimate related to the total impact of the
overstated overhead rates billed under certain government contracts, primarily as a result of an error with respect to general and administrative expenses and the misappropriations previously described. This liability represents estimates of
our future payment obligations associated with reimbursing clients for such overstated overhead rates. The estimate was developed through a detailed analysis, reimbursement settlements and discussions with various government



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client representatives and is dependent on assumptions made by management, which include the impact of the misappropriations and other items on the overhead
rates, the government clients subject to reimbursement, the percentage of contracts with these identified government clients subject to reimbursement, the extent to which overhead rates used to bill these identified government contracts varied from
the overhead rates, the profit earned on these identified government contracts and the assumed interest rate on the reimbursement amounts. A significant change in one or more of these assumptions could potentially have a material effect on the
financial statements. Although false claims actions by certain state government agencies are possible under various State False Claims Acts (State FCA), the Company currently believes these actions are unlikely and has not accrued a
liability for these actions. The State FCA allow for state and certain local government entities to recover damages from the presentation of certain false or fraudulent claims by entities in which they contract with. If false claims actions are
initiated in the future by one or more of these state governmental agencies, such actions could have a material affect on the Companys financial statements.

The Company has entered into reimbursement settlement agreements with the Florida Department of Transportation and the Texas Department of Transportation, its two largest clients, for $12.9 million and
$5.4 million, respectively for all contract amounts through September 30, 2006. Such amounts were paid in fiscal year 2006 and 2007. In addition, it has reached a reimbursement settlement agreement with the Department of Justice on behalf
of all of the Companys federal clients for $6.5 million for all contract amounts through September 30, 2006.

The Company has
started discussions with several of its other government clients, which are in various stages of settlement. As of April 30, 2007, the Company has settled $25.8 million of the liability with clients, which represents approximately 61% of the
estimated total refund amount.

Deferred Compensation

Estimated liabilities related to defined benefit pension and postretirement programs are included in deferred compensation. These liabilities represent actuarially determined estimates of our future obligations
associated with providing these benefit programs to some of our employees. The actuarial studies and estimates are dependent on assumptions made by management, which include discount rates, life expectancy of participants and rates of increase in
compensation levels. These assumptions are determined based on the current economic environment at year-end.

Income Taxes

In determining net income for financial statement purposes, we must make estimates and judgments in the calculation of tax assets and
liabilities and in the determination of the recoverability of deferred tax assets. Tax assets and liabilities arise from temporary differences between the tax return and the financial statement recognition of revenues and expenses.

For the past several years, we have generated research and development tax credits related to certain qualifying costs. The qualifying costs relate
primarily to the Companys project costs which management believes involved technical uncertainty. These research and development costs were incurred by the Company in the course of providing services generally under long-term client projects.
Because the Company has been unable to utilize the entire amount of research and development tax credits it has generated each year, the balance sheets reflect a deferred tax asset of $5.7 million and $5.5 million at September 30, 2006 and
2005, respectively, primarily, for the unused research and development tax credit carry forwards. The credits will expire beginning 2017 through 2022.

The Companys effective tax rate is based on income, statutory tax rates and tax planning opportunities available in the various jurisdictions in which the Company operates. Significant judgment is required in
determining the effective tax rate and in evaluating the Companys tax positions. The Company establishes reserves when, despite its belief that the tax return positions are fully supportable, it believes that certain



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positions, if challenged, will likely be resolved unfavorably to us. These reserves are adjusted in light of changing facts and circumstances, such as the
progress of a tax audit or current developments in tax law. The Companys annual tax rate includes the impact of reserve provisions and changes to reserves. While it is often difficult to predict the final outcome or the timing of resolution of
any particular matter, the Company believes that its reserves reflect the probable outcome of known tax contingencies. Resolution of the tax contingencies would be recognized as an increase or decrease to the Companys tax rate in the period of
resolution. The Company has recorded a tax contingency accrual of approximately $12.5 million and $13.5 million as of September 30, 2006 and 2005, respectively, related to research and development tax credits taken on the Companys tax
return. The tax accruals are presented in the consolidated balance sheets within accounts payable and accrued expenses.

Contingencies

Management estimates are inherent in the assessment of our exposure to litigation and other legal claims and contingencies. Significant
management judgment is utilized in determining probable and or reasonably estimable amounts to be recorded or disclosed in our financial statements (see Accrued Reimbursement Liability above). The results of any changes in accounting
estimates are reflected in the financial statements of the period in which the changes are determined.

Contractual Obligations

A summary of our contractual obligations as of September 30, 2006 is as follows:



|                                      |  |                        |         |                 |   |           |  |           |        |                  |   |        |  |   |       
|------------------------------------- |  | ---------------------- | ------- | --------------- | - | --------- |  | --------- | ------ | ---------------- | - | ------ |  | - | ------
|(Dollars in thousands)                |  | Payments due by period
|Contractual Obligations               |  | Total                  |         | Less than 1year |   | 2-3 years |  | 4-5 years |        | More than 5years
|Long-term debt obligations (1)        |  | $                      | 8,553   |                 | $ | 1,644     |  | $         | 1,024  |                  | $ | 1,024  |  | $ | 4,861 
|Operating lease obligations           |  |                        | 55,826  |                 |   | 19,829    |  |           | 26,290 |                  |   | 9,085  |  |   | 622   
|Capital lease obligations             |  |                        | 1,505   |                 |   | 575       |  |           | 840    |                  |   | 90     |  |   |      
|Purchase obligations                  |  |                        | 2,149   |                 |   | 1,678     |  |           | 471    |                  |   |       |  |   |      
|Expected retirement benefit payments  |  |                        | 13,926  |                 |   | 933       |  |           | 1,936  |                  |   | 2,397  |  |   | 8,660 
|Accrued client reimbursement payments |  |                        | 28,183  |                 |   | 22,546    |  |           | 5,637  |                  |   |       |  |   |      
|                                      |  |                        |         |                 |   |           |  |           |        |                  |   |        |  |   |       
|Total                                 |  | $                      | 110,107 |                 | $ | 46,486    |  | $         | 36,420 |                  | $ | 13,058 |  | $ | 14,143
|                                      |  |                        |         |                 |   |           |  |           |        |                  |   |        |  |   |       

---

|(1) | Excludes interest which is based on a variable rate.
|--- | ----------------------------------------------------

We
are obligated under various non-cancelable leases for office facilities, furniture and equipment. Certain leases contain renewal options, escalation clauses and certain other operating expenses of the properties. In the normal course of business,
leases that expire are expected to be renewed or replaced by leases for other properties.

In July 2004, the Company entered into a two
year Microsoft Enterprise Agreement with Microsoft Licensing, GP covering all of the Companys Microsoft based application licenses. At September 30, 2006, we had outstanding under this agreement the remaining payment of approximately
$728,000, all of which is included in contractual purchase obligations above. In fiscal year 2007, we entered into a new three year agreement for a total of $1.8 million.

In February 2006, the Company entered into a one year Oracle License and Services Agreement with Oracle relating to the implementation of our new Oracle enterprise resource planning system. At September 30, 2006,
we have outstanding under this agreement a purchase commitment of approximately $1.4 million, all of which is included in contractual purchase obligations above.



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|ITEM 7A. | Quantitative and Qualitative Disclosures about Market Risk
|-------- | ----------------------------------------------------------

We are subject to interest rate risk through outstanding balances on our variable rate debt. We may mitigate this risk by paying down additional
outstanding balances on our variable rate loans, refinancing with fixed rate permanent debt or obtaining cash flow hedges. We do not hold market-risk sensitive instruments for trading purposes. We entered into one derivative financial instrument, a
swap agreement, to hedge cash flows related to the LIBOR interest rate risk. On March 10, 2006, our swap expired. We hold no other financial instruments or derivative instruments to hedge any market risk, nor do we currently plan to employ them
in the near future. Our adjustable rate mortgage calls for an interest rate based on the 30-day LIBOR plus a margin of .065%. We do not anticipate entering into any additional swap agreements.

The interest rate (5.82% and 5.98% at September 30, 2006, respectively) on our revolving line of credit and mortgage note ranges from LIBOR plus 50
basis points to prime minus 125 basis points if our funded debt coverage ratio is less than 2.5. The range increases to LIBOR plus 75 basis points to prime minus 100 basis points if our funded debt coverage ratio is between 2.5 to 3.0. We mitigate
interest rate risk by continually monitoring interest rates and electing the lower of the LIBOR or prime rate option available under the line of credit or mortgage note. As of September 30, 2006, the fair value of the debt approximates the
outstanding principal balance due to the variable rate nature of such instruments.

The interest rates under our revolving line of credit
and mortgage note are variable and accordingly we have exposure to market risk. To the extent that we have borrowings outstanding, there is market risk relating to the amount of such borrowings. We estimate that a one-percentage point increase in
interest rates for debt outstanding of $8.6 million as of September 30, 2006 would have resulted in additional annualized interest costs of approximately $86,000. This analysis did not consider the impact of the swap since it expired in March
2006. As of April 30, 2007, debt outstanding has increased to $28.2 million primarily due to payments made for client reimbursements under our line of credit. We estimate that a one-percentage point increase in interest rates for this debt
would result in additional annualized interest costs of approximately $282,000.

The sensitivity analysis, described above, contains
certain simplifying assumptions (for example, it does not consider the impact of changes in prepayment risk or credit spread risk). Therefore, although it gives an indication of our exposure to changes in interest rates, it is not intended to
predict future results and our actual results will likely vary.



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|ITEM 8. | Financial Statements and Supplementary Data
|------- | -------------------------------------------

Report of Independent Registered Public Accounting Firm

To the Board of Directors and Stockholders of The PBSJ Corporation:

We have audited the accompanying consolidated balance sheets of The PBSJ Corporation and subsidiaries (the Company) as of
September 30, 2006 and 2005, and the related consolidated statements of operations, of stockholders equity and comprehensive income, and of cash flows for each of the three years in the period ended September 30, 2006. These
consolidated financial statements are the responsibility of the Companys management. Our responsibility is to express an opinion on these consolidated financial statements based on our audits.

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

In our opinion, such consolidated financial statements present fairly, in all material respects, the financial position of The PBSJ Corporation and
subsidiaries as of September 30, 2006 and 2005, and the results of their operations and their cash flows for each of the three years in the period ended September 30, 2006, in conformity with accounting principles generally accepted in the
United States of America.

/s/ DELOITTE & TOUCHE LLP

Certified Public Accountants

Miami, Florida

May 25, 2007



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THE PBSJ CORPORATION

Consolidated Balance Sheets



|                                                                                                                                                                   |  |               |         |   |      |   |         |  
|------------------------------------------------------------------------------------------------------------------------------------------------------------------ |  | ------------- | ------- | - | ---- | - | ------- | -
|                                                                                                                                                                   |  | September 30, |        
|(Amounts in thousands, except shares and per share amounts)                                                                                                        |  | 2006          |         |   | 2005 |  
|Assets                                                                                                                                                             |  |               |         |   |      |   |         |  
|Current Assets:                                                                                                                                                    |  |               |         |   |      |   |         |  
|Cash and cash equivalents                                                                                                                                          |  | $             | 10      |   |      | $ | 22,556  |  
|Marketable securities at fair value                                                                                                                                |  |               |        |   |      |   | 636     |  
|Accounts receivable, net                                                                                                                                           |  |               | 85,210  |   |      |   | 67,493  |  
|Unbilled fees                                                                                                                                                      |  |               | 62,770  |   |      |   | 69,658  |  
|Assets held for sale                                                                                                                                               |  |               | 4,235   |   |      |   | 9,289   |  
|Shareholder subscription receivable                                                                                                                                |  |               |        |   |      |   | 4,276   |  
|Other current assets                                                                                                                                               |  |               | 3,609   |   |      |   | 2,039   |  
|                                                                                                                                                                   |  |               |         |   |      |   |         |  
|Total current assets                                                                                                                                               |  |               | 155,834 |   |      |   | 175,947 |  
|Property and equipment, net                                                                                                                                        |  |               | 40,238  |   |      |   | 36,741  |  
|Cash surrender value of life insurance                                                                                                                             |  |               | 10,055  |   |      |   | 9,602   |  
|Deferred income taxes                                                                                                                                              |  |               | 10,022  |   |      |   | 4,817   |  
|Goodwill                                                                                                                                                           |  |               | 21,692  |   |      |   | 17,736  |  
|Intangible assets, net                                                                                                                                             |  |               | 1,678   |   |      |   | 1,820   |  
|Other assets                                                                                                                                                       |  |               | 5,430   |   |      |   | 4,984   |  
|                                                                                                                                                                   |  |               |         |   |      |   |         |  
|Total assets                                                                                                                                                       |  | $             | 244,949 |   |      | $ | 251,647 |  
|                                                                                                                                                                   |  |               |         |   |      |   |         |  
|Liabilities and Stockholders Equity                                                                                                                               |  |               |         |   |      |   |         |  
|Current Liabilities:                                                                                                                                               |  |               |         |   |      |   |         |  
|Accounts payable and accrued expenses                                                                                                                              |  | $             | 88,352  |   |      | $ | 84,223  |  
|Liabilities related to assets held for sale                                                                                                                        |  |               | 2,099   |   |      |   | 4,627   |  
|Accrued reimbursement liability                                                                                                                                    |  |               | 28,183  |   |      |   | 34,772  |  
|Current portion of long-term debt                                                                                                                                  |  |               | 1,644   |   |      |   | 408     |  
|Current portion of capital leases                                                                                                                                  |  |               | 274     |   |      |   | 341     |  
|Accrued vacation                                                                                                                                                   |  |               | 12,173  |   |      |   | 10,163  |  
|Billings in excess of costs                                                                                                                                        |  |               | 4,654   |   |      |   | 3,339   |  
|Deferred income taxes                                                                                                                                              |  |               | 19,740  |   |      |   | 7,568   |  
|                                                                                                                                                                   |  |               |         |   |      |   |         |  
|Total current liabilities                                                                                                                                          |  |               | 157,119 |   |      |   | 145,441 |  
|Long-term debt, less current portion                                                                                                                               |  |               | 6,909   |   |      |   | 7,425   |  
|Capital leases, less current portion                                                                                                                               |  |               | 776     |   |      |   | 512     |  
|Deferred compensation                                                                                                                                              |  |               | 12,780  |   |      |   | 11,994  |  
|Other liabilities                                                                                                                                                  |  |               | 8,454   |   |      |   | 8,443   |  
|                                                                                                                                                                   |  |               |         |   |      |   |         |  
|Total liabilities                                                                                                                                                  |  |               | 186,038 |   |      |   | 173,815 |  
|                                                                                                                                                                   |  |               |         |   |      |   |         |  
|Stockholders Equity:                                                                                                                                              |  |               |         |   |      |   |         |  
|Common stock, par value $0.00067, 15,000,000 shares authorized, 6,849,214 and 7,720,527 shares issued and outstanding at September 30,
2006 and 2005, respectively |  |               | 5       |   |      |   | 5       |  
|Retained earnings                                                                                                                                                  |  |               | 64,052  |   |      |   | 82,991  |  
|Accumulated other comprehensive loss                                                                                                                               |  |               | (1,914  | ) |      |   | (1,957  | )
|Unearned compensation and other                                                                                                                                    |  |               | (3,232  | ) |      |   | (3,207  | )
|                                                                                                                                                                   |  |               |         |   |      |   |         |  
|Total stockholders equity                                                                                                                                         |  |               | 58,911  |   |      |   | 77,832  |  
|                                                                                                                                                                   |  |               |         |   |      |   |         |  
|Total liabilities and stockholders equity                                                                                                                         |  | $             | 244,949 |   |      | $ | 251,647 |  
|                                                                                                                                                                   |  |               |         |   |      |   |         |  



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



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THE PBSJ CORPORATION

Consolidated Statements of Operations



|                                                                 |  |                           |         |   |      |   |         |      |  |   |         |  
|---------------------------------------------------------------- |  | ------------------------- | ------- | - | ---- | - | ------- | ---- |  | - | ------- | -
|                                                                 |  | Years Ended September 30, |        
|(Amounts in thousands, except per share amounts)                 |  | 2006                      |         |   | 2005 |   |         | 2004 | 
|Earned revenues:                                                 |  |                           |         |   |      |   |         |      |  |   |         |  
|Engineering fees                                                 |  | $                         | 537,242 |   |      | $ | 511,937 |      |  | $ | 448,247 |  
|Direct reimbursable expenses                                     |  |                           | 105,635 |   |      |   | 121,986 |      |  |   | 96,372  |  
|                                                                 |  |                           |         |   |      |   |         |      |  |   |         |  
|Net earned revenues                                              |  |                           | 431,607 |   |      |   | 389,951 |      |  |   | 351,875 |  
|                                                                 |  |                           |         |   |      |   |         |      |  |   |         |  
|Costs and expenses:                                              |  |                           |         |   |      |   |         |      |  |   |         |  
|Direct salaries and direct costs                                 |  |                           | 158,381 |   |      |   | 146,299 |      |  |   | 131,521 |  
|General and administrative expenses, including indirect salaries |  |                           | 250,145 |   |      |   | 210,551 |      |  |   | 186,068 |  
|Misappropriation loss (recoveries), net                          |  |                           | (1,613  | ) |      |   | (10,725 | )    |  |   | 4,854   |  
|Investigation and related costs                                  |  |                           | 14,239  |   |      |   | 5,446   |      |  |   |        |  
|                                                                 |  |                           |         |   |      |   |         |      |  |   |         |  
|Total costs and expenses                                         |  |                           | 421,152 |   |      |   | 351,571 |      |  |   | 322,443 |  
|                                                                 |  |                           |         |   |      |   |         |      |  |   |         |  
|Operating income                                                 |  |                           | 10,455  |   |      |   | 38,380  |      |  |   | 29,432  |  
|                                                                 |  |                           |         |   |      |   |         |      |  |   |         |  
|Other income (expenses):                                         |  |                           |         |   |      |   |         |      |  |   |         |  
|Interest expense                                                 |  |                           | (2,066  | ) |      |   | (1,824  | )    |  |   | (1,625  | )
|Other, net                                                       |  |                           | 302     |   |      |   | 260     |      |  |   | 617     |  
|                                                                 |  |                           |         |   |      |   |         |      |  |   |         |  
|Total other expenses:                                            |  |                           | (1,764  | ) |      |   | (1,564  | )    |  |   | (1,008  | )
|                                                                 |  |                           |         |   |      |   |         |      |  |   |         |  
|Income before income taxes                                       |  |                           | 8,691   |   |      |   | 36,816  |      |  |   | 28,424  |  
|Provision for income taxes                                       |  |                           | 3,286   |   |      |   | 15,741  |      |  |   | 13,734  |  
|                                                                 |  |                           |         |   |      |   |         |      |  |   |         |  
|Net income                                                       |  | $                         | 5,405   |   |      | $ | 21,075  |      |  | $ | 14,690  |  
|                                                                 |  |                           |         |   |      |   |         |      |  |   |         |  
|Net income per share:                                            |  |                           |         |   |      |   |         |      |  |   |         |  
|Basic                                                            |  | $                         | 0.81    |   |      | $ | 2.92    |      |  | $ | 2.03    |  
|                                                                 |  |                           |         |   |      |   |         |      |  |   |         |  
|Diluted                                                          |  | $                         | 0.76    |   |      | $ | 2.74    |      |  | $ | 1.91    |  
|                                                                 |  |                           |         |   |      |   |         |      |  |   |         |  
|Weighted average shares outstanding:                             |  |                           |         |   |      |   |         |      |  |   |         |  
|Basic                                                            |  |                           | 6,651   |   |      |   | 7,208   |      |  |   | 7,249   |  
|                                                                 |  |                           |         |   |      |   |         |      |  |   |         |  
|Diluted                                                          |  |                           | 7,118   |   |      |   | 7,685   |      |  |   | 7,692   |  
|                                                                 |  |                           |         |   |      |   |         |      |  |   |         |  



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



58



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##### Table of Contents

THE PBSJ CORPORATION

Consolidated Statements of Stockholders Equity and Comprehensive Income

For the years ended September 30, 2006, 2005 and 2004



|                                                                  |  |              |   |  |        |   |                            |   |         |                   |  |   |                                     |   |  |                                 |        |   |                            |   |        |   |  |   |         |  
|----------------------------------------------------------------- |  | ------------ | - |  | ------ | - | -------------------------- | - | ------- | ----------------- |  | - | ----------------------------------- | - |  | ------------------------------- | ------ | - | -------------------------- | - | ------ | - |  | - | ------- | -
|                                                                  |  |              |   |  |        |   | Additional Paid-in Capital |   |         | Retained Earnings |  |   | AccumulatedOther Comprehensive Loss |   |  | Unearned Compensation and
Other |        |   | Total Stockholders Equity |  
|                                                                  |  | Common Stock |   |  |        |   |                           
|(Amounts in thousands, except share data)                         |  | Shares       |   |  | Amount |   |                            |   |         |                  
|Balance at September 30, 2003                                     |  | 7,969,780    |   |  | $      | 5 |                            | $ |        |                   |  | $ | 53,471                              |   |  | $                               | (1,223 | ) |                            | $ | (2,192 | ) |  | $ | 50,061  |  
|                                                                  |  |              |   |  |        |   |                            |   |         |                   |  |   |                                     |   |  |                                 |        |   |                            |   |        |   |  |   |         |  
|Comprehensive income:                                             |  |              |   |  |        |   |                            |   |         |                   |  |   |                                     |   |  |                                 |        |   |                            |   |        |   |  |   |         |  
|Net income (As Restated See Note 2)                               |  |             |   |  |        |  |                            |   |        |                   |  |   | 14,690                              |   |  |                                 |       |   |                            |   |       |   |  |   | 14,690  |  
|Unrealized gain on marketable securities, net of tax of $ 52      |  |             |   |  |        |  |                            |   |        |                   |  |   |                                    |   |  |                                 | 62     |   |                            |   |       |   |  |   | 62      |  
|Unrealized loss on derivative, net of tax of $ 31                 |  |             |   |  |        |  |                            |   |        |                   |  |   |                                    |   |  |                                 | 233    |   |                            |   |       |   |  |   | 233     |  
|Minimum pension liability adjustment, net of tax of $ 96          |  |             |   |  |        |  |                            |   |        |                   |  |   |                                    |   |  |                                 | (1,125 | ) |                            |   |       |   |  |   | (1,125  | )
|                                                                  |  |              |   |  |        |   |                            |   |         |                   |  |   |                                     |   |  |                                 |        |   |                            |   |        |   |  |   |         |  
|Total comprehensive income (As Restated See Note 2)               |  |              |   |  |        |   |                            |   |         |                   |  |   |                                     |   |  |                                 |        |   |                            |   |        |   |  |   | 13,860  |  
|Sale of stock                                                     |  | 442,848      |   |  |        |  |                            |   | 9,964   |                   |  |   |                                    |   |  |                                 |       |   |                            |   |       |   |  |   | 9,964   |  
|Stock issued in acquisitions                                      |  | 71,429       |   |  |        |  |                            |   | 1,875   |                   |  |   |                                    |   |  |                                 |       |   |                            |   |       |   |  |   | 1,875   |  
|Shares purchased and retired                                      |  | (597,086     | ) |  |        |  |                            |   | (12,510 | )                 |  |   | (1,095                              | ) |  |                                 |       |   |                            |   |       |   |  |   | (13,605 | )
|Issuance of restricted stock, net of cancellations                |  | 26,709       |   |  |        |  |                            |   | 671     |                   |  |   |                                    |   |  |                                 |       |   |                            |   | (672   | ) |  |   | (1      | )
|Amortization of deferred compensation                             |  |             |   |  |        |  |                            |   |        |                   |  |   |                                    |   |  |                                 |       |   |                            |   | 549    |   |  |   | 549     |  
|                                                                  |  |              |   |  |        |   |                            |   |         |                   |  |   |                                     |   |  |                                 |        |   |                            |   |        |   |  |   |         |  
|Balance at September 30, 2004                                     |  | 7,913,680    |   |  |        | 5 |                            |   |        |                   |  |   | 67,066                              |   |  |                                 | (2,053 | ) |                            |   | (2,315 | ) |  |   | 62,703  |  
|                                                                  |  |              |   |  |        |   |                            |   |         |                   |  |   |                                     |   |  |                                 |        |   |                            |   |        |   |  |   |         |  
|Comprehensive income:                                             |  |              |   |  |        |   |                            |   |         |                   |  |   |                                     |   |  |                                 |        |   |                            |   |        |   |  |   |         |  
|Net income                                                        |  |             |   |  |        |  |                            |   |        |                   |  |   | 21,075                              |   |  |                                 |       |   |                            |   |       |   |  |   | 21,075  |  
|Unrealized gain on marketable securities, net of tax of $ 39      |  |             |   |  |        |  |                            |   |        |                   |  |   |                                    |   |  |                                 | 38     |   |                            |   |       |   |  |   | 38      |  
|Unrealized loss on derivative, net of tax of $146                 |  |             |   |  |        |  |                            |   |        |                   |  |   |                                    |   |  |                                 | 226    |   |                            |   |       |   |  |   | 226     |  
|Minimum pension liability adjustment, net of tax benefit of $ 696 |  |             |   |  |        |  |                            |   |        |                   |  |   |                                    |   |  |                                 | (168   | ) |                            |   |       |   |  |   | (168    | )
|                                                                  |  |              |   |  |        |   |                            |   |         |                   |  |   |                                     |   |  |                                 |        |   |                            |   |        |   |  |   |         |  
|Total comprehensive income                                        |  |              |   |  |        |   |                            |   |         |                   |  |   |                                     |   |  |                                 |        |   |                            |   |        |   |  |   | 21,171  |  
|Sale of stock                                                     |  | 413,641      |   |  |        |  |                            |   | 11,168  |                   |  |   |                                    |   |  |                                 |       |   |                            |   |       |   |  |   | 11,168  |  
|Stock issued in acquisitions                                      |  | 45,995       |   |  |        |  |                            |   | 1,214   |                   |  |   |                                    |   |  |                                 |       |   |                            |   |       |   |  |   | 1,214   |  
|Shares purchased and retired                                      |  | (538,565     | ) |  |        |  |                            |   | (13,543 | )                 |  |   | (998                                | ) |  |                                 |       |   |                            |   |       |   |  |   | (14,541 | )
|Shares recovered from investigation                               |  | (174,261     | ) |  |        |  |                            |   | (554    | )                 |  |   | (4,152                              | ) |  |                                 |       |   |                            |   |       |   |  |   | (4,706  | )
|Issuance of restricted stock, net of cancellations                |  | 60,037       |   |  |        |  |                            |   | 1,715   |                   |  |   |                                    |   |  |                                 |       |   |                            |   | (1,715 | ) |  |   |        |  
|Amortization of deferred compensation                             |  |             |   |  |        |  |                            |   |        |                   |  |   |                                    |   |  |                                 |       |   |                            |   | 806    |   |  |   | 806     |  
|Other                                                             |  |             |   |  |        |  |                            |   |        |                   |  |   |                                    |   |  |                                 |       |   |                            |   | 17     |   |  |   | 17      |  
|                                                                  |  |              |   |  |        |   |                            |   |         |                   |  |   |                                     |   |  |                                 |        |   |                            |   |        |   |  |   |         |  
|Balance at September 30, 2005                                     |  | 7,720,527    |   |  |        | 5 |                            |   |        |                   |  |   | 82,991                              |   |  |                                 | (1,957 | ) |                            |   | (3,207 | ) |  |   | 77,832  |  
|                                                                  |  |              |   |  |        |   |                            |   |         |                   |  |   |                                     |   |  |                                 |        |   |                            |   |        |   |  |   |         |  
|Comprehensive income:                                             |  |              |   |  |        |   |                            |   |         |                   |  |   |                                     |   |  |                                 |        |   |                            |   |        |   |  |   |         |  
|Net income                                                        |  |             |   |  |        |  |                            |   |        |                   |  |   | 5,405                               |   |  |                                 |       |   |                            |   |       |   |  |   | 5,405   |  
|Unrealized gain on marketable securities, net of tax of $ 9       |  |             |   |  |        |  |                            |   |        |                   |  |   |                                    |   |  |                                 | 14     |   |                            |   |       |   |  |   | 14      |  
|Realized gain on marketable securities, net of tax of $ 28        |  |             |   |  |        |  |                            |   |        |                   |  |   |                                    |   |  |                                 | (242   | ) |                            |   |       |   |  |   | (242    | )
|Unrealized loss on derivative, net of tax of $ 22                 |  |             |   |  |        |  |                            |   |        |                   |  |   |                                    |   |  |                                 | 35     |   |                            |   |       |   |  |   | 35      |  
|Minimum pension liability adjustment, net of tax of $ 158         |  |             |   |  |        |  |                            |   |        |                   |  |   |                                    |   |  |                                 | 236    |   |                            |   |       |   |  |   | 236     |  
|                                                                  |  |              |   |  |        |   |                            |   |         |                   |  |   |                                     |   |  |                                 |        |   |                            |   |        |   |  |   |         |  
|Total comprehensive income                                        |  |              |   |  |        |   |                            |   |         |                   |  |   |                                     |   |  |                                 |        |   |                            |   |        |   |  |   | 5,448   |  
|Shares recovered from investigation                               |  | (19,180      | ) |  |        |  |                            |   | (11     | )                 |  |   | (526                                | ) |  |                                 |       |   |                            |   |       |   |  |   | (537    | )
|Shares purchased and retired                                      |  | (876,803     | ) |  |        |  |                            |   | (804    | )                 |  |   | (23,818                             | ) |  |                                 |       |   |                            |   |       |   |  |   | (24,622 | )
|Issuance of restricted stock, net of cancellations                |  | 24,670       |   |  |        |  |                            |   | 815     |                   |  |   |                                    |   |  |                                 |       |   |                            |   | (815   | ) |  |   |        |  
|Amortization of deferred compensation                             |  |             |   |  |        |  |                            |   |        |                   |  |   |                                    |   |  |                                 |       |   |                            |   | 790    |   |  |   | 790     |  
|                                                                  |  |              |   |  |        |   |                            |   |         |                   |  |   |                                     |   |  |                                 |        |   |                            |   |        |   |  |   |         |  
|Balance at September 30, 2006                                     |  | 6,849,214    |   |  | $      | 5 |                            | $ |        |                   |  | $ | 64,052                              |   |  | $                               | (1,914 | ) |                            | $ | (3,232 | ) |  | $ | 58,911  |  
|                                                                  |  |              |   |  |        |   |                            |   |         |                   |  |   |                                     |   |  |                                 |        |   |                            |   |        |   |  |   |         |  

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



59



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##### Table of Contents

THE PBSJ CORPORATION

Consolidated Statements of Cash Flows



|                                                                                  |  |                           |         |   |      |   |         |      |  |   |          |  
|--------------------------------------------------------------------------------- |  | ------------------------- | ------- | - | ---- | - | ------- | ---- |  | - | -------- | -
|                                                                                  |  | Years Ended September 30, |        
|(Dollars in thousands)                                                            |  | 2006                      |         |   | 2005 |   |         | 2004 | 
|Cash flows from operating activities:                                             |  |                           |         |   |      |   |         |      |  |   |          |  
|Net income                                                                        |  | $                         | 5,405   |   |      | $ | 21,075  |      |  | $ | 14,690   |  
|Adjustments to reconcile net income to net cash provided by operating activities: |  |                           |         |   |      |   |         |      |  |   |          |  
|(Increase) decrease in cash surrender value of life insurance                     |  |                           | 88      |   |      |   | (835    | )    |  |   | (220     | )
|Depreciation and amortization                                                     |  |                           | 11,013  |   |      |   | 9,980   |      |  |   | 9,261    |  
|Gain on sale of property                                                          |  |                           | (517    | ) |      |   | (426    | )    |  |   | (85      | )
|Gain from shares recovered                                                        |  |                           | (537    | ) |      |   | (4,706  | )    |  |   |         |  
|Gain from sale of marketable securities                                           |  |                           | (271    | ) |      |   |        |      |  |   |         |  
|Provision for bad debt and unbillable amounts                                     |  |                           | 617     |   |      |   | 486     |      |  |   | 217      |  
|Provision (benefit) for deferred income taxes                                     |  |                           | 5,302   |   |      |   | (2,912  | )    |  |   | 7,180    |  
|Provision for and amortization of deferred compensation and other                 |  |                           | 1,971   |   |      |   | 1,834   |      |  |   | 998      |  
|Change in operating assets and liabilities, net of acquisitions:                  |  |                           |         |   |      |   |         |      |  |   |          |  
|Increase in accounts receivable                                                   |  |                           | (14,614 | ) |      |   | (6,691  | )    |  |   | (7,801   | )
|(Increase) decrease in unbilled fees and billings in excess of cost               |  |                           | 8,424   |   |      |   | (2,227  | )    |  |   | (15,228  | )
|(Increase) decrease in assets held for sale                                       |  |                           | 8,612   |   |      |   | (6,526  | )    |  |   |         |  
|(Increase) decrease in other current assets                                       |  |                           | (1,003  | ) |      |   | (423    | )    |  |   | 2,470    |  
|(Increase) decrease in other assets                                               |  |                           | (3,984  | ) |      |   | (211    | )    |  |   | 82       |  
|(Decrease) increase in accounts payable and accrued expenses                      |  |                           | (1,172  | ) |      |   | 17,274  |      |  |   | 10,176   |  
|Decrease in liabilities of assets held for sale                                   |  |                           | (4,627  | ) |      |   |        |      |  |   |         |  
|(Decrease) increase in accrued reimbursement liability                            |  |                           | (6,589  | ) |      |   | 10,653  |      |  |   | 7,871    |  
|Increase in accrued vacation                                                      |  |                           | 2,010   |   |      |   | 1,499   |      |  |   | 871      |  
|(Decrease) increase in other liabilities                                          |  |                           | 784     |   |      |   | (371    | )    |  |   | 1,760    |  
|                                                                                  |  |                           |         |   |      |   |         |      |  |   |          |  
|Net cash provided by operating activities                                         |  |                           | 10,912  |   |      |   | 37,473  |      |  |   | 32,242   |  
|                                                                                  |  |                           |         |   |      |   |         |      |  |   |          |  
|Cash flows from investing activities:                                             |  |                           |         |   |      |   |         |      |  |   |          |  
|Investment in life insurance policies                                             |  |                           | (541    | ) |      |   | (539    | )    |  |   | (524     | )
|Acquisitions and purchase price adjustments, net of cash acquired                 |  |                           | (5,876  | ) |      |   | (1,984  | )    |  |   | (5,921   | )
|Dividends reinvested in marketable securities                                     |  |                           | (21     | ) |      |   | (15     | )    |  |   |         |  
|Proceeds from the sale of property and equipment                                  |  |                           | 656     |   |      |   | 510     |      |  |   | 102      |  
|Proceeds from the sale of marketable securities                                   |  |                           | 680     |   |      |   |        |      |  |   |         |  
|Purchases of property and equipment                                               |  |                           | (11,416 | ) |      |   | (10,269 | )    |  |   | (9,636   | )
|                                                                                  |  |                           |         |   |      |   |         |      |  |   |          |  
|Net cash used in investing activities                                             |  |                           | (16,518 | ) |      |   | (12,297 | )    |  |   | (15,979  | )
|                                                                                  |  |                           |         |   |      |   |         |      |  |   |          |  
|Cash flows from financing activities:                                             |  |                           |         |   |      |   |         |      |  |   |          |  
|Borrowings under line of credit                                                   |  |                           | 100,662 |   |      |   | 75,352  |      |  |   | 150,014  |  
|Payments under line of credit                                                     |  |                           | (99,900 | ) |      |   | (75,352 | )    |  |   | (159,248 | )
|Principal payments under notes and mortgage payable                               |  |                           | (412    | ) |      |   | (506    | )    |  |   | (818     | )
|Principal payments under capital lease obligations                                |  |                           | (412    | ) |      |   | (304    | )    |  |   | (189     | )
|Common stock:                                                                     |  |                           |         |   |      |   |         |      |  |   |          |  
|Proceeds from sale                                                                |  |                           | 4,276   |   |      |   | 10,821  |      |  |   | 9,327    |  
|Payments for repurchase                                                           |  |                           | (21,154 | ) |      |   | (14,541 | )    |  |   | (13,605  | )
|                                                                                  |  |                           |         |   |      |   |         |      |  |   |          |  
|Net cash used in financing activities                                             |  |                           | (16,940 | ) |      |   | (4,530  | )    |  |   | (14,519  | )
|                                                                                  |  |                           |         |   |      |   |         |      |  |   |          |  
|Net increase (decrease) in cash and cash equivalents                              |  |                           | (22,546 | ) |      |   | 20,646  |      |  |   | 1,744    |  
|Cash and cash equivalents at beginning of period                                  |  |                           | 22,556  |   |      |   | 1,910   |      |  |   | 166      |  
|                                                                                  |  |                           |         |   |      |   |         |      |  |   |          |  
|Cash and cash equivalents at end of period                                        |  | $                         | 10      |   |      | $ | 22,556  |      |  | $ | 1,910    |  
|                                                                                  |  |                           |         |   |      |   |         |      |  |   |          |  



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



60



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##### Table of Contents

The PBSJ Corporation

Notes to the Consolidated Financial Statements

1.Organization and Summary of Significant Accounting Policies

Organization and Principles of Consolidation

The consolidated financial statements include the
accounts of The PBSJ Corporation and its wholly-owned subsidiaries, Post, Buckley, Schuh & Jernigan, Inc., a Florida corporation (PBS&J), PBS&J Construction Services, Inc., PBS&J Constructors, Inc., Post, Buckley
International, Inc., Post Buckley de Mexico, S.A. de C.V., PBS&J Caribe Engineering, C.S.P., Seminole Development Corporation and Seminole Development II, Inc. (collectively, the Company). All material inter-company transactions and
accounts have been eliminated in the accompanying consolidated financial statements. In these notes to our consolidated financial statements, the words Company, we, our and us refer to The PBSJ
Corporation and its subsidiaries.

Use of Estimates

The preparation of consolidated financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect the
reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the consolidated financial statements and the reported amounts of revenues and expenses during the reporting period. Such estimates in
these consolidated financial statements include estimated cost to complete long-term fixed price contracts, allowance for doubtful accounts and unbilled fees, accruals for litigation, estimated liabilities for self-insurance, accrued reimbursement
liability, valuation allowance on deferred income tax assets and tax contingencies, estimates of useful lives of intangible assets and the allocation of purchase price paid for acquired companies. Actual results could differ from those estimates.

Revenue Recognition

The Company
recognizes engineering fees from different types of services under a variety of different types of contracts. In recognizing engineering fees, the Company evaluates each contractual arrangement to determine the applicable authoritative accounting
methodology to apply to each contract. Net earned revenue represents engineering fees less direct reimbursable expenses.

In the course of
providing its services, the Company principally has three types of contracts from which it earns revenue: cost-plus contract, time and materials contract and fixed price contract.

Cost-plus Contracts. Under Cost-plus contracts, the Company charges clients negotiated indirect rates based on direct and indirect costs in addition to a
profit component. The Company generally recognizes engineering fees at the time services are performed. The amount of revenue is based on its actual labor costs incurred plus a recovery of indirect costs and a profit component. In negotiating
cost-plus contracts, the Company estimates direct labor costs and indirect costs and then adds a profit component, which is a percentage of total recoverable costs, to arrive at a total dollar value for the contract. Indirect expenses are recorded
as incurred and are allocated to contracts. If the actual labor costs incurred are less than estimated, the revenues from a project will be less than estimated. If the actual labor costs incurred plus a recovery of indirect costs and profit exceed
the initial negotiated total contract amount, the Company must obtain a contract modification to receive payment for such overage. If a contract modification or change order is not approved by our client, the Company may be able to pursue a claim to
receive payment. Engineering fees, from claims are recognized when collected.

Time and Materials Contracts. The Company recognizes
engineering fees for Time and Materials contracts at the time services are performed. The amount of revenue is based on the actual number of hours it spends on the projects, multiplied by contractual rates or multipliers. In addition, the
Companys clients reimburse it for its



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actual out-of-pocket costs of materials and other direct reimbursable expenses that it incurs in connection with its performance under these contracts.

Fixed Price Contracts. For Fixed Price Contracts, the Company recognizes engineering fees based on the percentage-of-completion method
whereby fees are recognized based on the ratio of actual cost of work performed to date to the current total estimated contract costs (generally using the cost-to-cost method). In making such estimates, judgments are required to determine potential
delays or changes in schedules, the costs of materials and labor, liability claims, contract disputes, or achievement of specified performance goals. At the time a loss on a contract becomes evident and estimable, the Company records the entire
amount of the estimated loss.

Change orders that result from modification of an original contract are taken into consideration for revenue
recognition when it results in a change of total contract value and is approved by our clients. Engineering fees relating to unapproved change orders are recognized when collected.

The Companys federal government contracts are subject to the Federal Acquisition Regulations (FAR). These regulations are partially
incorporated into many local and state agency contracts. The FAR limits the recovery of certain specified indirect costs on contracts subject to such regulations. In accordance with industry practice, most of the Companys federal government
contracts are subject to termination at the discretion of the client. Contracts typically provide for reimbursement of costs incurred and payment of fees earned through the termination date.

Contracts that fall under FAR are generally cost-plus contracts, and are subject to audit by the government, primarily the Defense Contract Audit Agency
(DCAA), which reviews the Companys overhead rates, operating systems and costs proposals. As a result of its audits, the DCAA may disallow costs if it determines that the Company has accounted for such costs in a manner
inconsistent with generally accepted cost accounting standards.

Direct Reimbursable Expenses

Direct reimbursable expenses are primarily comprised of subcontractor costs and other direct non-payroll reimbursable charges including travel and travel
related costs, blueprints and equipment where the Company is responsible for procurement and management of such cost components on behalf of the Companys clients. These direct reimbursable expenses are principally passed through to our clients
with minimal or no mark-up.

Capital Structure

The by-laws of the Company require that common stock held by employee shareholders who terminate employment with the Company be offered for sale at fair market value to the Company, which has right of first refusal. Should the Company
decline to purchase the shares, the shares must next be offered to the Companys profit sharing and employee stock ownership plans at fair market value, and then ultimately to other shareholders who are employees of the Company. The by-laws of
the Company provide that the fair market value be determined by an appraisal. During fiscal year 2006, the Company repurchased stock held by employee shareholders who terminated employment with the Company at a price ranging from $24.00 to $27.00,
pending completion of the September 30, 2005 valuation. The September 30, 2005 valuation established the price per share at $28.00. At September 30, 2006, the Company had an accrual of approximately $2.1 million for the stock price
differential, included in accounts payable and accrued expenses in the accompanying balance sheet. Other than agreements with certain retired Directors, as of September 30, 2006 and 2005, there was no outstanding common stock held by
individuals no longer employed by the Company.

Pursuant to the terms of our credit agreement, we cannot declare or pay dividends in excess
of 50% of our net income. We have not previously paid cash dividends on our common stock and have no present intention of



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paying cash dividends on our common stock in the foreseeable future. All earnings are retained for investment in our business.

Cash and Cash Equivalents

Cash equivalents consist
of all highly liquid investments with an original maturity of three months or less from their dates of purchase. Cash equivalents consist primarily of money market accounts.

Income Taxes

The Company uses the asset and liability method in accounting for income taxes. Under
this method the Company recognizes deferred tax assets and liabilities for the expected future tax consequences of temporary differences between tax bases and financial reporting carrying values of assets and liabilities based on enacted tax laws
and rates applicable to the periods in which the differences are expected to affect taxable income. A valuation allowance is established when it is more likely than not that any of the deferred tax assets will not be realized.

Basic and Diluted Earnings Per Share

Basic net
income per share has been computed by dividing net income by the weighted average number of common shares outstanding. Diluted net income per share reflects the potential dilution that could occur assuming the inclusion of dilutive potential common
shares and has been computed by dividing net income by the weighted average number of common shares and dilutive potential common shares outstanding. Dilutive potential common shares include all outstanding restricted stock awards.

A reconciliation of the number of shares used in computing basic and diluted earnings per share follows:



|                                             |      |                           |      |       |      |      
|-------------------------------------------- | ---- | ------------------------- | ---- | ----- | ---- | -----
|(Shares in thousands)                        |      | Years Ended September 30,
|                                             | 2006 |                           | 2005 |       | 2004
|Weighted average shares outstandingBasic    |      | 6,651                     |      | 7,208 |      | 7,249
|Effect of dilutive unvested restricted stock |      | 467                       |      | 477   |      | 443  
|                                             |      |                           |      |       |      |      
|Weighted average shares outstandingDiluted  |      | 7,118                     |      | 7,685 |      | 7,692
|                                             |      |                           |      |       |      |      

Marketable Securities

Marketable securities consist of mutual funds that are considered available-for-sale and are recorded at fair value. Changes in unrealized gains and losses for available-for-sale securities are charged or credited as
a component of accumulated other comprehensive income (loss), net of tax. A decline in the fair value of an available-for-sale security below cost that is deemed other than temporary is charged to earnings. Investment security transactions are
recorded on a trade date basis. The cost basis of investments sold is determined by the specific identification method.

Accounts Receivable

Accounts receivable is presented net of allowance for doubtful accounts of $1.8 million and $1.2 million at September 30, 2006 and
2005, respectively. The Company estimates the allowance for doubtful accounts based on managements evaluation of the contracts involved and the financial condition of its clients. The Company regularly evaluates the adequacy of the allowance
for doubtful accounts by taking into consideration such factors as the type of clientgovernmental agencies or private sector, trends in actual and forecasted credit quality of the client, including delinquency and payment history, general
economic and particular industry conditions that



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may affect a clients ability to pay, and contract performance and the change order and claim analysis. Retainer amounts were not significant as of
September 30, 2006 and 2005.

Unbilled Fees and Billings in Excess of Cost

Unbilled fees represent the excess of contract revenue recognized over billings to date on contracts in process. These amounts become billable according
to the contract terms, which usually consider the passage of time, achievement of certain milestones or completion of the project. Management expects that substantially all unbilled amounts will be billed and collected within one year.

Billings in excess of cost represent the excess of billings to date, per the contract terms, over revenue recognized on contracts in process.

Fair Value of Financial Instruments

The fair value of the Companys cash equivalents, accounts receivables, unbilled fees and trade accounts payable approximates book value due to the short-term maturities of these instruments. The carrying amounts of the Companys
marketable securities, cash surrender value of life insurance plans and interest rate swap are based on quoted market values or cash surrender value at the reporting date. The fair value of the Companys debt approximates the carrying value, as
such instruments are based on variable rates of interest.

Goodwill and Other Intangible Assets

Goodwill represents the excess of the purchase price over the estimated fair value of the net tangible and identifiable intangible assets of businesses
acquired and accounted for under the purchase method. The Company accounts for its goodwill in accordance with Statement of Financial Accounting Standards (SFAS) No. 142, Goodwill and Other Intangible Assets, which requires
the Company to test for goodwill impairment annually (or more frequently under certain conditions). The Company performed its annual impairment test as of September 30, 2006 and 2005 and determined that goodwill was not impaired.

We amortize the cost of other intangible assets over their estimated useful lives unless such lives are deemed indefinite. Amortizable intangible assets
are reviewed for impairment whenever events or changes in business circumstances indicate the carrying value of the assets may not be recoverable. If assets are determined to be impaired, they are written down to the estimated fair value as
required. No impairment was recorded during the years ended September 30, 2006, 2005, or 2004.

Stock Based Compensation and Stock Sales to
Employees

Unvested restricted stock awarded to certain employees is measured at the estimated fair value of the stock at the grant
date. The restricted stock award is recorded as compensation expense in general and administrative expenses, and reported as a separate line item in stockholders equity. The issuance of unvested restricted stock gives rise to unearned
compensation that is amortized on a straight-line basis over the vesting period.

Eligible employees are allowed to purchase Company stock
once a year, during a specified timeframe. With the exception of those considered to be insiders, as defined, employees who receive bonuses each year are allowed to use their bonus payments received in December following the Companys
fiscal year end to make their final payment for their stock purchase. The annual stock offering is usually for a one week period during the month of March. The Company suspended the stock offering window for March 2006 until the final
impact of the restatement of the Companys consolidated financial statements was determined. The Company is planning to open the stock window in June 2007. During this offering period, shares of the Companys common stock will be
available for sale to all full time employees of the Company, pursuant to The PBSJ Corporation Stock Ownership Plan. At September 30, 2005, the Company had a receivable from certain of its employees, for the March 2005



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annual stock offering, in the amount of approximately $4.3 million; the receivable was paid in the subsequent quarter. There was no stock sold to employees
for fiscal year 2006.

Property and Equipment

Property and equipment are stated at cost less accumulated depreciation. Certain equipment held under capital leases are classified as furniture and equipment and the related obligations are recorded as liabilities. Major renewals and
improvements are capitalized, while repairs and maintenance are expensed as incurred. Depreciation is computed using the straight-line method over the estimated useful lives of the related assets. Capital leases are amortized under the straight-line
method over the lesser of the estimated useful life of the asset or the duration of the lease agreement. Capital lease amortization is included in depreciation.

Leasehold improvements are amortized over the shorter of the terms of the leases or their estimated useful lives. Cost and accumulated depreciation of property and equipment retired or sold are eliminated from the
accounts at the time of retirement or sale and the resulting gain or loss is recorded in income.

Long-Lived Assets

In accordance with SFAS No. 144, long-lived assets are reviewed for impairment whenever events or changes in circumstances indicate that the carrying
amount of an asset may not be recoverable. Long-lived assets are reviewed whenever events or changes in business circumstances indicate the carrying value of the assets may not be recoverable. If assets are determined to be impaired, they are
written down to estimated fair value as required. No impairment was recorded during the years ended September 30, 2006, 2005, or 2004.

Concentrations of Credit Risk

Financial instruments, which potentially subject the Company to concentrations of credit
risk, consist principally of cash, accounts receivable and unbilled fees. The Company deposits its cash with high credit quality financial institutions. At times, such deposits may be in excess of the Federal Deposit Insurance Corporation insurance
limits.

Work performed for governmental entities accounted for approximately 75%, 77%, and 79% of engineering fees for the years ended
September 30, 2006, 2005 and 2004, respectively. Accounts receivable and unbilled fees from governmental entities were $57.5 million and $34.9 million, respectively, at September 30, 2006, and $48.2 million and $38.1 million, respectively,
at September 30, 2005. For the years ended September 30, 2006, 2005 and 2004, engineering fees of $93.1 million, $101.3 million and $79.4 million, respectively, were derived from various districts of the Florida Department of
Transportation (FDOT) under numerous contracts. These revenues are primarily in the transportation segment. While the loss of any individual contract would not have a material adverse effect on the Companys results of operations
and would not adversely impact the Companys ability to continue work under other contracts with the FDOT, the loss of all, or a significant number of the FDOT contracts could have a material adverse effect on the Companys results of
operations.

Ongoing credit evaluations of customers are performed and generally no collateral is required. The Company provides an
allowance for doubtful accounts based upon factors surrounding the credit risk of specific customers, historical trends and other information.

Derivative Instruments and Hedging Activities

In March 2001, the Company entered into an interest rate swap to convert the
floating interest rate on the mortgage note payable to a fixed rate of 6.28%. On March 16, 2006, the swap expired. The Company accounted for the interest rate swap as a cash flow hedge in accordance with SFAS No. 133, Accounting
for Derivative Financial Instruments and Hedging Activities. The underlying terms of the interest rate swap, including the



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notional amount and interest rate index, were identical to those of the associated debt and therefore the hedging relationship resulted in no
ineffectiveness. Changes in fair value were included as a component of other comprehensive loss in stockholders equity in our consolidated balance sheets. The net amounts paid or received were included in interest expense. We do not anticipate
entering into any additional swap agreements.

Estimated Liability for Self-Insurance

The Company is self-insured up to certain limits for costs associated with general liability, workers compensation and employee health coverage. The
Company also maintains a stop loss insurance policy with a third party insurer to limit the Companys exposure to individual and aggregate claims made. Insurance claims and reserves include accruals of estimated settlements for known claims, as
well as accruals of estimates of incurred but not reported claims, net of payments made. At September 30, 2006 and 2005, we had total self-insurance accruals reflected in accounts payable and accrued expenses in our consolidated balance sheets
of $8.9 million and $7.7 million, respectively. These estimates are subject to variability due to changes in trends of losses for outstanding claims and incurred but not recorded claims, including external factors such as future inflation
rates, benefit level changes and claim settlement patterns.

Comprehensive Income

Comprehensive income consists of net income and other gains and losses affecting shareholders investment and minimum pension liability that, under
generally accepted accounting principles, are excluded from net income.

The components of other comprehensive income are as follows for
the years ended September 30, 2006, 2005 and 2004:



|                                                                        |      |                           |       |      |                                      |   |        |   |  |   |        |   |  |   |        |  
|----------------------------------------------------------------------- | ---- | ------------------------- | ----- | ---- | ------------------------------------ | - | ------ | - |  | - | ------ | - |  | - | ------ | -
|(Dollars in thousands)                                                  |      | Years Ended September 30, |       |      | Accumulated Other Comprehensive Loss |  
|                                                                        | 2006 |                           |       | 2005 |                                      |   | 2004   |   | 
|Net income                                                              |      | $                         | 5,405 |      |                                      | $ | 21,075 |   |  | $ | 14,690 |   |  |   |        |  
|Other comprehensive income (loss):                                      |      |                           |       |      |                                      |   |        |   |  |   |        |   |  |   |        |  
|Unrealized gain on available for sale marketable securities, net of tax |      |                           | 14    |      |                                      |   | 38     |   |  |   | 62     |   |  | $ | 242    |  
|Realized gain on available for sale marketable securities, net of tax   |      |                           | (242  | )    |                                      |   |       |   |  |   |       |   |  |   | (242   | )
|Unrealized gain on derivative, net of tax                               |      |                           | 35    |      |                                      |   | 226    |   |  |   | 233    |   |  |   |       |  
|Minimum pension liability adjustment, net of tax                        |      |                           | 236   |      |                                      |   | (168   | ) |  |   | (1,125 | ) |  |   | (1,914 | )
|                                                                        |      |                           |       |      |                                      |   |        |   |  |   |        |   |  |   |        |  
|Total comprehensive income                                              |      | $                         | 5,448 |      |                                      | $ | 21,171 |   |  | $ | 13,860 |   |  | $ | (1,914 | )
|                                                                        |      |                           |       |      |                                      |   |        |   |  |   |        |   |  |   |        |  

Recent Accounting Pronouncements

On February 15, 2007, the Financial Accounting Standards Board (FASB) issued SFAS No. 159 (SFAS 159), The
Fair Value Option for Financial Assets and Financial Liabilities, which allows an entity the irrevocable option to elect fair value for the initial and subsequent measurement for certain financial assets and liabilities on a
contract-by-contract basis. Subsequent changes in fair value of these financial assets and liabilities would be recognized in earnings when they occur. SFAS 159 further establishes certain additional disclosure requirements. SFAS 159 is effective
for the Companys financial statements for the fiscal year ending September 30, 2009, with earlier adoption permitted. Management is currently evaluating the impact and timing of the adoption of SFAS 159 on the Companys consolidated
financial statements.

In September 2006, FASB issued SFAS No. 158 (SFAS 158), Employers Accounting for
Defined Benefit Pension and Other Postretirement Plans. This standard requires an employer to recognize the



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overfunded or underfunded status of a defined benefit postretirement plan (other than a multiemployer plan) as an asset or liability in its statement of
financial position and to recognize changes in that funded status in the year in which the changes occur through comprehensive income. The Company is required to adopt the recognition and related disclosure provisions of SFAS 158 for the fiscal year
ending September 30, 2007. The Company is also required to adopt the measurement provisions of SFAS 158 for the fiscal year ending September 30, 2009. The Company is still evaluating the impact of this standard on its consolidated
financial statements.

In September 2006, the FASB issued SFAS No. 157 (SFAS 157), Fair Value
Measurements. SFAS 157 prescribes a single definition of fair value as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. The
accounting provisions of SFAS 157 will be effective for the Company for the fiscal year ending September 30, 2009. The Company does not believe the adoption of SFAS 157 will have a material impact on its consolidated financial statements.

In September 2006, the SEC issued Staff Accounting Bulletin No. 108 (SAB 108). SAB 108 addresses how the effects of prior
year uncorrected misstatements should be considered when quantifying misstatements in current year financial statements. SAB 108 requires companies to quantify misstatements using a balance sheet and income statement approach and to evaluate whether
either approach results in quantifying an error that is material in light of relevant quantitative and qualitative factors. When the effect of initial adoption is material, companies will record the effect as a cumulative effect adjustment to
beginning of year retained earnings. SAB 108 will be effective for the Company for the fiscal year ending September 30, 2008. The Company does not believe the adoption of SAB 108 will have a material impact on its consolidated financial
statements.

In July 2006, the FASB issued Interpretation (FIN) No. 48 Accounting for Uncertainty in Income
Taxesan interpretation of FASB No. 109 (FIN 48). This interpretation establishes guidelines and thresholds that must be met for the recognition and measurement of a tax position taken or expected to be taken in a tax
return. The provisions of FIN 48 are effective for fiscal years beginning after December 31, 2006. The Company is currently evaluating the impact of adopting FIN 48 on its consolidated financial statements.

In November 2005, the FASB issued FASB Staff Position (FSP) FAS 115-1 and FAS 124-1, The Meaning of Other-Than-Temporary Impairment
and Its Application to Certain Investments, ( FSP 115-1 and 124-1) which address the determination as to when an investment is impaired, whether that impairment is other than temporary, and the measurement of an impairment
loss. FSP 115-1 and 124-1 also includes accounting considerations subsequent to the recognition of an other-than-temporary impairment and requires certain disclosures about unrealized losses that have not been recognized as other-than-temporary
impairments. The guidance in FSP 115-1 and 124-1 amends FASB Statement No. 115, Accounting for Certain Investments in Debt and Equity Securities, and Accounting Principles Board (APB) Opinion No. 18,
The Equity Method of Accounting for Investments in Common Stock. FSP 115-1 and 124-1 is effective for reporting periods beginning after December 15, 2005. The adoption of FSP 115-1 and 124-1 did not have a material
impact on our consolidated financial statements.

In May 2005, the FASB issued SFAS No. 154 (SFAS 154),
Accounting Changes and Error Corrections (SFAS 154), which replaces APB Opinion No. 20 Accounting Changes and SFAS No. 3 Reporting Accounting Changes in Interim Financial
Statements. SFAS 154 requires that a voluntary change in accounting principle be applied retrospectively with all prior period financial statements presented on the new accounting principle. SFAS 154 also requires that a change in method
of depreciating or amortizing a long-lived non-financial asset be accounted for prospectively as a change in estimate, and correction of errors in previously issued financial statements should be termed a restatement. SFAS 154 is effective for
accounting changes and correction of errors made in the first annual reporting period beginning after December 15, 2005. We early adopted SFAS 154 and have reported and disclosed the correction of errors in our previously reported consolidated
financial statements in accordance with SFAS 154. The other reporting and disclosure requirements of SFAS 154 did not have a material impact on our consolidated financial statements.



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In December 2004, the FASB issued SFAS No. 123 (revised 2004), Share-Based
Payment (SFAS 123(R)), which is a revision of SFAS 123, Accounting for Stock-Based Compensation. SFAS 123(R) supersedes APB Opinion No. 25, Accounting for Stock Issued to Employees. SFAS No.
123(R) requires all share-based payments to employees, including grants of employee stock options, to be recognized in the financial statements based on their fair values, beginning with the first annual period beginning after December 2005, with
early adoption encouraged. We are required to adopt SFAS 123(R) in our first quarter of fiscal year 2007, beginning October 1, 2006. The Company is currently evaluating the impact of adopting SFAS 123(R) on our consolidated financial
statements.

In December 2003, the FASB issued Interpretation No. 46 (revised December 2003), Consolidation of Variable
Interest Entities (FIN 46R), which replaced FIN 46. FIN 46R addresses how a business enterprise should evaluate whether it has a controlling interest in an entity through means other than voting rights. This interpretation
requires a variable interest entity to be consolidated by a company if that company is subject to a majority of the risk of loss from the variable interest entitys activities or is entitled to receive a majority of the entitys residual
returns or both. The interpretation also requires disclosures about variable interest entities that the company is not required to consolidate but in which it has a significant variable interest. We are required to adopt FIN 46R immediately for
entities created after December 31, 2003 and at the beginning of fiscal year 2006 for all other entities. The adoption of FIN 46R did not have a material impact on our consolidated financial statements.

2. Misappropriations Loss

In March 2005,
subsequent to the issuance of the Companys 2004 financial statements, we discovered misappropriations of Company funds by our former Chief Financial Officer and two former employees who worked in our information systems and treasury
departments, collectively, (the participants). The participants colluded and circumvented controls to misappropriate funds and conceal the misappropriations possibly beginning as early as 1993 until the misappropriations were discovered
in March 2005.

Shortly after this discovery, an investigation sub-committee was formed comprised of the three outside members of our
Corporate Audit Committee. These three outside members were subsequently appointed to the Board of Directors and became the three members of the Audit Committee of the Board of Directors. The Audit Committee retained independent counsel to conduct
an investigation and advise the Audit Committee in connection with the investigation. The independent counsel retained forensic accountants, including accountants experienced in conducting forensic audits for companies that perform contracts for
federal, state and local governments to assist with the investigation.

The investigation team discovered that at least $36.6 million was
misappropriated between January 1, 1998 and the discovery of the misappropriations in March 2005. The amount misappropriated prior to January 1, 1998 could not be determined because certain data for the period prior to January 1, 1998
was unavailable. The participants in the embezzlement scheme used several methods to misappropriate the funds while engaging in conduct to conceal the misappropriated amounts. This conduct included among other things, recording and changing normal
recurring journal entries and overstating accruals in prior periods to facilitate improper write-offs of misappropriated funds.

The
misappropriation loss and concealment also resulted in the overstatement of overhead rates which the Company used in connection with certain government contracts. As a result, in these instances, some of our billings to our government clients relied
on or incorporated the overstated overhead rates, and as a result revenues were overstated and we incurred refund obligations to these clients. We have also recorded an accrual for the estimated reimbursement to our clients.



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Overstatement of Amounts Billed for Overhead

The Company determined that the misappropriation scheme led to the overstatement of overhead rates that the Company used to determine billings in
connection with certain of our government contracts. As a result, some of our government clients were overcharged for the Companys services. During the review of the overhead expenses, the Company identified certain instances of costs
erroneously included in our overhead cost pool which were unallowable under applicable regulations and an error in our calculation of our overhead rate, which related to certain general and administrative costs. The Company determined that the
unallowable costs and general and administrative expense errors also led to the overstatement of overhead rates which the Company used in connection with certain of its government contracts. As a result, in these instances, some of our billings to
our government clients relied on or incorporated the overstated overhead rates.

The Company determined corrected overhead rates
considering the impact of the misappropriations and considering the impact of additional errors identified. The Company and its advisors have been working with its government clients to finalize the refund amount (See Note 13 for further
discussion). The Company estimates that the cumulative refund amount, before any payments, resulting from the overstated overhead rates is approximately $42.0 million through fiscal year 2006 ($37.1 million as of fiscal year 2005), including
interest that the Company will generally be required to reimburse its government clients. At September 30, 2006 and 2005, the accrued reimbursement liability was $28.2 million and $34.8 million, respectively, in the accompanying consolidated
balance sheets.

Misappropriation Loss, Investigation Related Expenses and Recovery of Assets

The misappropriation loss for fiscal year 2005 is presented net of the gain from recovered assets. All assets recovered during the investigation and not
yet liquidated, are classified as assets held for sale in the accompanying consolidated balance sheets and are recorded at estimated fair value, less estimated costs to sell as of the date recovered. The recovered assets consist of personal homes,
condominiums and other real estate, automobiles, funds from bank accounts, jewelry, fine-arts and cash proceeds from the liquidation of personal retirement accounts. Some of the real estate recovered was acquired subject to existing debt, liens or
mortgage notes. Such debt is reported as liabilities related to assets held for sale in the accompanying consolidated balance sheets. The Company does not own any other assets held for sale other than those recovered during the investigation. Gain
from recovered assets has been recognized at the estimated fair value of the assets recovered, less related debt and estimated costs to sell the assets.

Approximately 19,000 and 174,000 shares of the Companys common stock were surrendered in fiscal years 2006 and 2005, respectively. These shares were recorded at their estimated fair values, and gains on recovery
of misappropriated assets of approximately $537,000 and $4.7 million, respectively, were recognized for the years ended September 30, 2006 and 2005, respectively. The gains from recovered assets were included in misappropriation loss, net of
recoveries in the accompanying consolidated statements of operations for the years ended September 30, 2006 and 2005. These shares were not included in assets held for sale, as the estimated fair value of such shares were recorded as a
reduction of stockholders equity.

In addition to the misappropriation loss, the Company has incurred certain professional fees and
other costs that relate to the investigation of the embezzlement and the recovery of assets. These expenses include legal fees, forensic audit fees and related costs, and other costs associated with the recovery of misappropriated assets.
Collectively, these costs are stated as investigation and related costs in the accompanying consolidated statements of operations and are recorded in the period the costs are incurred.



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The following table sets forth the components of the misappropriation loss for the years ended
September 30, 2006, 2005, and 2004 and related investigation expenses:



|                                           |      |                           |        |      |  |   |         |   |  |   |      
|------------------------------------------ | ---- | ------------------------- | ------ | ---- |  | - | ------- | - |  | - | -----
|(Dollars in thousands)                     |      | Years Ended September 30,
|                                           | 2006 |                           |        | 2005 |  |   | 2004   
|Misappropriation loss                      |      | $                         |       |      |  | $ | 3,636   |   |  | $ | 4,854
|                                           |      |                           |       
|Less: gain from recovered assets           |      |                           | (1,613 | )    |  |   | (14,361 | ) |  |   |     
|                                           |      |                           |        |      |  |   |         |   |  |   |      
|Misappropriation loss (recoveries), net    |      |                           | (1,613 | )    |  |   | (10,725 | ) |  |   | 4,854
|                                           |      |                           |        |      |  |   |         |   |  |   |      
|Legal fees                                 |      |                           | 5,270  |      |  |   | 2,344   |   |  |   |     
|Forensic accounting fees and related costs |      |                           | 7,885  |      |  |   | 2,849   |   |  |   |     
|Other                                      |      |                           | 1,084  |      |  |   | 253     |   |  |   |     
|                                           |      |                           |        |      |  |   |         |   |  |   |      
|Investigation and related costs            |      |                           | 14,239 |      |  |   | 5,446   |   |  |   |     
|                                           |      |                           |        |      |  |   |         |   |  |   |      
|Total                                      |      | $                         | 12,626 |      |  | $ | (5,279  | ) |  | $ | 4,854
|                                           |      |                           |        |      |  |   |         |   |  |   |      

3. Marketable Securities

At September 30, 2005, the Company held investments in marketable securities classified as available-for-sale, which primarily consisted of growth
funds, growth and income funds and bond funds. There were no unrealized losses as of September 30, 2005. In April 2006, the Company liquidated its investment in marketable securities and realized a gain of approximately $270,000.



|                       |      |                    |            |  |                 |     |  |   |    
|---------------------- | ---- | ------------------ | ---------- |  | --------------- | --- |  | - | ---
|(Dollars in thousands) |      | September 30, 2005
|                       | Cost |                    | Fair Value |  | Unrealized Gain
|Mutual Funds           |      | $                  | 374        |  | $               | 636 |  | $ | 262
|                       |      |                    |            |  |                 |     |  |   |    

4. Assets Held for Sale

During the course of the investigation into the misappropriations (See Note 2 for further discussion), the Company identified and recovered certain assets
acquired by the participants using misappropriated Company funds. Assets recovered during the investigation and not yet liquidated, are classified as assets held for sale in the accompanying consolidated balance sheets and are recorded at estimated
fair value less estimated costs to sell. The recovered assets consisted of personal homes, condominiums and other real estate, automobiles, funds from bank accounts, jewelry, fine-arts and cash proceeds from the liquidation of personal retirement
accounts. Some of the real estate recovered was acquired subject to existing debt, liens or mortgage notes. Such debt is reported as liabilities of assets held for sale in the accompanying consolidated balance sheets at September 30, 2006.

During fiscal year 2006, the Company recovered additional assets from the investigation with a total estimated fair value of approximately
$1.4 million, excluding the gains on shares recovered, which was not subject to debt, liens or mortgage notes.

During fiscal year of 2006,
the Company sold assets for a total of $10.5 million which were subject to related liabilities of $4.6 million. The Company did not recognize any additional gains or losses related to the sales of these assets since they were recorded at their
fair value less estimated costs to sell.



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Assets and liabilities related to assets held for sale consisted of the following:



|                                             |      |               |        |      |  |   |        |  
|-------------------------------------------- | ---- | ------------- | ------ | ---- |  | - | ------ | -
|(Dollars in thousands)                       |      | September 30, |       
|                                             | 2006 |               |        | 2005 | 
|Assets held for sale at estimated fair value |      | $             | 4,545  |      |  | $ | 10,180 |  
|Less: estimated costs to sell                |      |               | (310   | )    |  |   | (891   | )
|                                             |      |               |        |      |  |   |        |  
|Adjusted fair value of assets held for sale  |      |               | 4,235  |      |  |   | 9,289  |  
|Outstanding mortgage liabilities assumed     |      |               | (2,099 | )    |  |   | (4,627 | )
|                                             |      |               |        |      |  |   |        |  
|Net fair value of assets held for sale       |      | $             | 2,136  |      |  | $ | 4,662  |  
|                                             |      |               |        |      |  |   |        |  

Additionally, at September 30, 2005, the Company classified two recovered real estate
properties for a total of $4.1 million in other assets and $2.3 million of related liabilities in other liabilities in its consolidated balance sheet. These properties were not available for sale because they required renovations. In fiscal year
2006, once the renovations were completed, the Company classified these two real estate properties as assets held for sale in its consolidated balance sheet. The Company does not have any other assets held for sale other than those recovered.

During the first fiscal quarter of 2007, the Company sold assets for a total of $3.7 million which were subject to related liabilities of
$2.1 million. The Company did not recognize any additional gains or losses related to the sales of these assets since they were recorded at their fair value less estimated costs to sell. The Company intends to sell the remaining assets as
soon as practicable.

5.Property and Equipment

Property and equipment consisted of the following:



|                                               |  |                        |      |               |         |      |  |   |         |  
|---------------------------------------------- |  | ---------------------- | ---- | ------------- | ------- | ---- |  | - | ------- | -
|                                               |  | Estimated Useful Lives |      | September 30, |        
|(Dollars in thousands)                         |  |                        | 2006 |               |         | 2005 | 
|Land                                           |  |                       |      | $             | 2,056   |      |  | $ | 2,097   |  
|Building and building improvements             |  | 10  40 years          |      |               | 14,062  |      |  |   | 14,204  |  
|Furniture and equipment                        |  | 3  7 years            |      |               | 43,735  |      |  |   | 40,201  |  
|Computer equipment                             |  | 3 years                |      |               | 21,951  |      |  |   | 17,192  |  
|Vehicles                                       |  | 3 years                |      |               | 2,232   |      |  |   | 2,259   |  
|Leasehold improvements                         |  | 10 years               |      |               | 12,105  |      |  |   | 10,366  |  
|Construction in process                        |  |                       |      |               | 2,353   |      |  |   | 465     |  
|                                               |  |                        |      |               |         |      |  |   |         |  
|                                               |  |                        |      |               | 98,494  |      |  |   | 86,784  |  
|Less accumulated amortization and depreciation |  |                        |      |               | (58,256 | )    |  |   | (50,043 | )
|                                               |  |                        |      |               |         |      |  |   |         |  
|Property and equipment at cost, net            |  |                        |      | $             | 40,238  |      |  | $ | 36,741  |  
|                                               |  |                        |      |               |         |      |  |   |         |  

The net book value of equipment recorded under capital leases was approximately $1.0 million and
$833,000 at September 30, 2006 and 2005, respectively.

Depreciation and amortization expense relating to property and equipment
amounted to $9.4 million, $8.4 million, and $8.4 million for the years ended September 30, 2006, 2005 and 2004, respectively. The Companys purchases of property and equipment amounted to $11.4 million $10.3 million, and $9.6 million
during fiscal years 2006, 2005 and 2004, respectively. Capital expenditures during fiscal 2006 and 2005 consisted of fixed asset purchases, such as survey equipment, computer equipment, furniture and leasehold improvements.



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6. Acquisitions

On June 1, 2004, the Company acquired 100% of the stock of TriLine Associates, Inc. (TriLine) for $3.7 million in cash. The purchase price has been allocated to the respective assets and
liabilities based upon their estimated fair values as of the acquisition date. The allocation of the purchase price resulted in assets of $4.3 million, including approximately $960,000 of intangible assets and $2.1 million of goodwill, none of which
is deductible for tax purposes and liabilities of $625,000. During 2005, the Company recorded $10,000 of goodwill in connection with a purchase price adjustment. The weighted average amortization period for the identifiable intangible assets is 5.8
years. TriLine specializes in transportation, geotechnical, and environmental services.

On July 1, 2004, the Company acquired 100% of
the stock of W. Koo and Associates Structural Engineers, Inc. (WKA) for $2.5 million, net of cash acquired of $678,000, comprised of $413,000 in cash, $250,000 in accrued earn-out provisions and 71,429 shares of the Companys common
stock valued at approximately $1.9 million. The value of the common stock issued was determined based on the estimated fair value of the common stock as of the date of the acquisition. The purchase agreement calls for an adjustment of the
number of shares issued based on the valuation of the Companys stock price at September 30, 2004 so that the total number of shares issued is valued at $1.9 million based on the September 30, 2004 stock value. The purchase agreement
called for an additional purchase amount of $500,000, contingent upon the satisfaction of certain conditions, to be paid in two installments of $250,000 on July 1, 2005 and July 1, 2006. The purchase price has been allocated to the
respective assets and liabilities based on their estimated fair values as of the acquisition date. The allocation of the purchase price resulted in assets of $3.3 million, including approximately $850,000 of intangible assets and $913,000 of
goodwill, none of which is deductible for tax purposes, and liabilities of $795,000. During 2005, we issued an additional 1,021 shares in connection with the purchase agreement adjustment and the Company recorded an additional $6,000 of goodwill in
connection with the July 1, 2005 installment payment. During fiscal year 2006, the Company recorded approximately $272,000 of additional goodwill for performance earn-out payments and purchase price adjustments. The additional goodwill was
comprised of earn-out payments of approximately $389,000, of which $250,000 was previously accrued and purchase price adjustments of $133,000. The weighted average amortization period for the identifiable intangible assets is 2.8 years. WKA
specializes in infrastructure improvements for public, municipal, transit, port authorities and private sector projects with a primary focus on transportation structures in California.

On October 1, 2004, the Company acquired 100% of the stock of Croslin Associates, Inc. (Croslin) for a purchase price of $786,000, net
of cash acquired of $153,000, comprised of $456,000 in cash, $30,000 cash held in escrow and 11,111 shares of the Companys common stock valued at approximately $300,000. The value of the common stock was based on the estimated fair value of
the stock as of the date of acquisition. The purchase price has been allocated to the respective assets and liabilities based upon their estimated fair values as of the acquisition date. The allocation of the purchase price resulted in assets of
$1.2 million, including approximately $40,000 of intangible assets and $454,000 of goodwill, none of which is deductible for tax purposes, and liabilities of $330,000. The weighted average amortization period for the identifiable intangible assets
is 2.0 years. Croslin specializes in architectural services.

On February 1, 2005, the Company acquired 100% of the stock of Land
and Water Consulting, Inc. (LWC) for a purchase price of $1.3 million, net of cash acquired of $13,000, comprised of $323,000 in cash, $100,000 cash held in escrow and 33,862 shares of the Companys common stock valued at
approximately $914,000. The value of the common stock was based on the estimated fair value of the stock as of the date of acquisition. The purchase price has been allocated to the respective assets and liabilities based upon their estimated fair
values as of the acquisition date. The allocation of the purchase price resulted in assets of $2.5 million, including approximately $63,000 of intangible assets and $1.1 million of goodwill, none of which is deductible for tax purposes, and
liabilities of $1.2 million. The weighted average amortization period for the identifiable intangible assets is 2.4 years. LWC is an environmental consulting firm in Montana.

On April 30, 2006, we acquired 100% of the stock of EIP Associates (EIP) for $6.0 million, net of cash acquired of $15,000, comprised of
$5.5 million in cash, $334,000 accrued additional purchase price and



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$200,000 held in escrow. The purchase price was allocated to the respective assets and liabilities based on their estimated fair values as of the acquisition
date. The allocation of the purchase price resulted in assets of $9.0 million, including approximately $1.5 million of intangible assets and $3.7 million of goodwill, none of which is deductible for tax purposes, and liabilities of $3.9
million. The weighted average amortization period for the identifiable intangible assets is 2.8 years. EIP specializes in environmental, urban planning, water resource planning and natural resources in California.

The primary factor that contributed to a purchase price that resulted in the recognition of goodwill in our acquisitions is the intellectual capital of
the skilled professionals and senior technical personnel associated with the acquired entities which does not meet the criteria for recognition as an asset apart from goodwill. The results of operations of the above acquisitions are included from
the date of each acquisition. The pro forma impact of these acquisitions is not material to reported historical operations.

7. Goodwill and Other
Intangible Assets

The changes in the net carrying amounts of goodwill by segment are as follows:



|                                                |  |                               |       |                        |   |                  |  |                       |       |       |   |        |  |   |       
|----------------------------------------------- |  | ----------------------------- | ----- | ---------------------- | - | ---------------- |  | --------------------- | ----- | ----- | - | ------ |  | - | ------
|                                                |  | Year Ended September 30, 2006
|                                                |  | TransportationServices        |       | ConstructionManagement |   | CivilEngineering |  | EnvironmentalServices |       | Total
|Goodwill, beginning of year                     |  | $                             | 3,650 |                        | $ |                 |  | $                     | 2,641 |       | $ | 11,445 |  | $ | 17,736
|Current year acquisitions:                      |  |                               |       |                        |   |                  |  |                       |       |       |   |        |  |   |       
|EIP                                             |  |                               |      |                        |   |                 |  |                       |      |       |   | 3,684  |  |   | 3,684 
|Purchase price paymentsprior year acquisitions |  |                               | 272   |                        |   |                 |  |                       |      |       |   |       |  |   | 272   
|                                                |  |                               |       |                        |   |                  |  |                       |       |       |   |        |  |   |       
|Goodwill, end of year                           |  | $                             | 3,922 |                        | $ |                 |  | $                     | 2,641 |       | $ | 15,129 |  | $ | 21,692
|                                                |  |                               |       |                        |   |                  |  |                       |       |       |   |        |  |   |       
|                                                | 
|                                                |  | Year Ended September 30, 2005
|                                                |  | TransportationServices        |       | ConstructionManagement |   | CivilEngineering |  | EnvironmentalServices |       | Total
|Goodwill, beginning of year                     |  | $                             | 3,634 |                        | $ |                 |  | $                     | 2,187 |       | $ | 8,569  |  | $ | 14,390
|Current year acquisitions:                      |  |                               |       |                        |   |                  |  |                       |       |       |   |        |  |   |       
|Croslin                                         |  |                               |      |                        |   |                 |  |                       | 454   |       |   |       |  |   | 454   
|LWC                                             |  |                               |      |                        |   |                 |  |                       |      |       |   | 1,136  |  |   | 1,136 
|Purchase price paymentsprior year acquisitions |  |                               | 16    |                        |   |                 |  |                       |      |       |   | 1,740  |  |   | 1,756 
|                                                |  |                               |       |                        |   |                  |  |                       |       |       |   |        |  |   |       
|Goodwill, end of year                           |  | $                             | 3,650 |                        | $ |                 |  | $                     | 2,641 |       | $ | 11,445 |  | $ | 17,736
|                                                |  |                               |       |                        |   |                  |  |                       |       |       |   |        |  |   |       



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The Companys intangible assets consisted of the following:



|                         |  |                        |  |                       |       |                          |   |      
|------------------------ |  | ---------------------- |  | --------------------- | ----- | ------------------------ | - | -----
|                         |  |                        |  | September 30, 2006   
|(Dollars in thousands)   |  | Estimated Useful Lives |  | Gross Carrying Amount |       | Accumulated Amortization
|                         |  |                       
|Client list              |  | 10 years               |  | $                     | 1,963 |                          | $ | 877  
|Backlog                  |  | 3 years                |  |                       | 2,679 |                          |   | 2,232
|Website                  |  | 7 years                |  |                       | 200   |                          |   | 110  
|Pension intangible asset |  | 6 years                |  |                       | 1,946 |                          |   | 1,946
|Employee agreements      |  | 3 years                |  |                       | 67    |                          |   | 12   
|                         |  |                        |  |                       |       |                          |   |      
|                         |  |                        |  | $                     | 6,855 |                          | $ | 5,177
|                         |  |                        |  |                       |       |                          |   |      
|                         |  |                       
|                         |  |                        |  | September 30, 2005   
|(Dollars in thousands)   |  | Estimated Useful Lives |  | Gross Carrying Amount |       | Accumulated Amortization
|                         |  |                       
|Client list              |  | 10 years               |  | $                     | 1,453 |                          | $ | 607  
|Client name recognition  |  | 2 years                |  |                       | 100   |                          |   | 100  
|Backlog                  |  | 3 years                |  |                       | 1,799 |                          |   | 1,269
|Website                  |  | 7 years                |  |                       | 200   |                          |   | 81   
|Pension intangible asset |  | 6 years                |  |                       | 1,946 |                          |   | 1,621
|                         |  |                        |  |                       |       |                          |   |      
|                         |  |                        |  | $                     | 5,498 |                          | $ | 3,678
|                         |  |                        |  |                       |       |                          |   |      

Amortization expense for intangible assets amounted to $1.6 million, $1.6 million, and $947,000
for the years ended September 30, 2006, 2005 and 2004, respectively. Estimated amortization expense is $794,000 for fiscal year 2007, $325,000 for fiscal year 2008, $221,000 for fiscal year 2009, and less than $ 150,000 for each of the four
succeeding fiscal years.

8. Income Taxes

The provision for income taxes consisted of the following:



|                            |  |                           |        |   |      |   |        |      |  |   |       
|--------------------------- |  | ------------------------- | ------ | - | ---- | - | ------ | ---- |  | - | ------
|                            |  | Years Ended September 30,
|(Dollars in thousands)      |  | 2006                      |        |   | 2005 |   |        | 2004
|Current                     |  |                           |        |   |      |   |        |      |  |   |       
|Federal provision (benefit) |  | $                         | (1,824 | ) |      | $ | 16,845 |      |  | $ | 6,107 
|State provision (benefit)   |  |                           | (192   | ) |      |   | 1,808  |      |  |   | 447   
|Deferred                    |  |                           |        |   |      |   |        |      |  |   |       
|Federal provision (benefit) |  |                           | 4,797  |   |      |   | (2,623 | )    |  |   | 6,691 
|State provision (benefit)   |  |                           | 505    |   |      |   | (289   | )    |  |   | 489   
|                            |  |                           |        |   |      |   |        |      |  |   |       
|Total provision             |  | $                         | 3,286  |   |      | $ | 15,741 |      |  | $ | 13,734
|                            |  |                           |        |   |      |   |        |      |  |   |       



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The tax effects of temporary differences that give rise to significant portions of the deferred tax
assets and deferred tax liabilities consisted of the following:



|                                      |  |               |         |   |      |   |         |  
|------------------------------------- |  | ------------- | ------- | - | ---- | - | ------- | -
|                                      |  | September 30, |        
|(Dollars in thousands)                |  | 2006          |         |   | 2005 |  
|Deferred tax liabilities:             |  |               |         |   |      |   |         |  
|Accounts receivable                   |  | $             | (32,963 | ) |      | $ | (26,110 | )
|Unbilled fees                         |  |               | (22,482 | ) |      |   | (25,655 | )
|Fixed and intangible assets           |  |               | (4,898  | ) |      |   | (3,419  | )
|Other                                 |  |               | (1,025  | ) |      |   | (690    | )
|                                      |  |               |         |   |      |   |         |  
|Gross deferred tax liabilities        |  |               | (61,368 | ) |      |   | (55,874 | )
|                                      |  |               |         |   |      |   |         |  
|Deferred tax assets:                  |  |               |         |   |      |   |         |  
|Accounts payable and accrued expenses |  |               | 24,088  |   |      |   | 24,404  |  
|Accrued vacation                      |  |               | 4,709   |   |      |   | 3,932   |  
|Federal tax credit carry forwards     |  |               | 5,651   |   |      |   | 5,471   |  
|Deferred compensation                 |  |               | 4,944   |   |      |   | 4,640   |  
|Other assets                          |  |               | 5,532   |   |      |   | 5,494   |  
|Accrued reimbursement liability       |  |               | 10,903  |   |      |   | 13,451  |  
|                                      |  |               |         |   |      |   |         |  
|Gross deferred tax asset              |  |               | 55,827  |   |      |   | 57,392  |  
|Valuation allowance                   |  |               | (4,177  | ) |      |   | (4,269  | )
|                                      |  |               |         |   |      |   |         |  
|Net deferred tax asset                |  |               | 51,650  |   |      |   | 53,123  |  
|                                      |  |               |         |   |      |   |         |  
|Net deferred tax liability            |  | $             | (9,718  | ) |      | $ | (2,751  | )
|                                      |  |               |         |   |      |   |         |  

SFAS No. 109, Accounting for Income Taxes, requires a valuation allowance
to reduce the deferred tax assets reported if it is more likely than not that some portion or all of the deferred tax assets will not be realized. At September 30, 2006 and 2005, the Company has recorded a valuation allowance against its
deferred tax assets in the amount of $4.2 and $4.3 million, respectively.

For the past several years, the Company has generated research
and development tax credits related to certain qualifying costs. The qualifying costs relate primarily to the Companys project costs which management believes involved technical uncertainty. These research and development costs were incurred
by the Company in the course of providing services generally under long-term client projects. Because the Company has been unable to utilize the entire amount of research and development tax credits it has generated each year, the consolidated
balance sheets reflect a deferred tax asset of $5.7 million and $5.5 million as of September 30, 2006 and 2005, respectively, primarily, for the unused research and development tax credit carry forwards. The credits will expire beginning 2017
through 2022.

The deferred tax balances have been classified in the consolidated balance sheets as follows:



|                             |  |               |         |   |      |   |         |  
|---------------------------- |  | ------------- | ------- | - | ---- | - | ------- | -
|                             |  | September 30, |        
|(Dollars in thousands)       |  | 2006          |         |   | 2005 |  
|Current assets               |  | $             | 39,700  |   |      | $ | 50,663  |  
|Current liabilities          |  |               | (56,470 | ) |      |   | (54,463 | )
|Valuation allowance          |  |               | (2,970  | ) |      |   | (3,768  | )
|                             |  |               |         |   |      |   |         |  
|Net current tax liabilities  |  |               | (19,740 | ) |      |   | (7,568  | )
|                             |  |               |         |   |      |   |         |  
|Non-current assets           |  |               | 16,127  |   |      |   | 6,729   |  
|Non-current liabilities      |  |               | (4,898  | ) |      |   | (1,411  | )
|Valuation allowance          |  |               | (1,207  | ) |      |   | (501    | )
|                             |  |               |         |   |      |   |         |  
|Net non-current assets       |  |               | 10,022  |   |      |   | 4,817   |  
|                             |  |               |         |   |      |   |         |  
|Net deferred tax liabilities |  | $             | (9,718  | ) |      | $ | (2,751  | )
|                             |  |               |         |   |      |   |         |  



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The Companys effective tax rate is based on income, statutory tax rates and tax planning
opportunities available in the various jurisdictions in which the Company operates. Significant judgment is required in determining the effective tax rate and in evaluating the Companys tax positions. The Company establishes reserves when,
despite its belief that the tax return positions are fully supportable, it believes that certain positions, if challenged, will likely be resolved unfavorably to us. These reserves are adjusted in light of changing facts and circumstances, such as
the progress of a tax audit or current developments in tax law. The Companys annual tax rate includes the impact of reserve provisions and changes to reserves. While it is often difficult to predict the final outcome or the timing of
resolution of any particular matter, the Company believes that its reserves reflect the probable outcome of known tax contingencies. Resolution of the tax contingencies would be recognized as an increase or decrease to the Companys tax rate in
the period of resolution. The Company has recorded a tax contingency accrual of approximately $12.5 million and $13.5 million as of September 30, 2006 and 2005, respectively, related to research and development tax credits taken on the
Companys tax return. The tax accruals are presented in the consolidated balance sheets within accounts payable and accrued expenses.

A reconciliation of the income tax provision to taxes computed at the U.S. federal statutory rate is as follows:



|                                   |  |                           |   |  |       |   |  |      |  
|---------------------------------- |  | ------------------------- | - |  | ----- | - |  | ---- | -
|                                   |  | Years Ended September 30, |  
|                                   |  | 2006                      |   |  | 2005  |   |  | 2004 |  
|U.S. Statutory Rate                |  | 35.0                      | % |  | 35.0  | % |  | 35.0 | %
|Federal tax credits                |  | (3.4                      | ) |  | (19.0 | ) |  | (7.1 | )
|State taxes net of federal benefit |  | 5.2                       |   |  | 3.9   |   |  | 2.8  |  
|Non-deductible expenses            |  | 14.5                      |   |  | 2.0   |   |  | 2.5  |  
|Change in tax reserve              |  | (11.9                     | ) |  | 18.2  |   |  | 11.2 |  
|Change in valuation allowance      |  | (1.0                      | ) |  | 1.6   |   |  | 3.9  |  
|Change in statutory rate           |  |                          |   |  | 0.8   |   |  |     |  
|Other                              |  | (.6                       | ) |  | 0.3   |   |  | 0.5  |  
|                                   |  |                           |   |  |       |   |  |      |  
|Effective tax rate                 |  | 37.8                      | % |  | 42.8  | % |  | 48.8 | %
|                                   |  |                           |   |  |       |   |  |      |  

9. Retirement Plans

The Company maintains a two tiered noncontributory, unfunded, nonqualified defined benefit pension plan.

The Key Employee Supplemental Option Plan (KESOP) is a two tiered plan that provides key officers and employees postretirement benefits. Tier one of the KESOP, known as the Key Employee Retention Program (KERP),
provides an annual restricted stock award equal to five percent of the participants annual gross salary for a period of up to ten years (see Note 10). Benefits under the KERP vest at age 56 and after ten years of continuous service with the
Company. Tier two of the KESOP, known as the Supplemental Income Program (SIP), is an unfunded plan that provides participants with retirement income for a specified period of between 5 and 15 years upon retirement, death, or disability.
The plan fixes a minimum level for retirement benefits to be paid to participants based on the participants position at the Company and their age and service at retirement. Certain key employee agreements include an annual retainer for
consulting services for a period of up to five years.

The following are the assumptions used in the measurement of the projected benefit
obligation (PBO) and net periodic pension expense for the SIP:



|              |  |                           |   |  |      |   |  |      |  
|------------- |  | ------------------------- | - |  | ---- | - |  | ---- | -
|              |  | Years Ended September 30, |  
|              |  | 2006                      |   |  | 2005 |   |  | 2004 |  
|Discount rate |  | 5.75                      | % |  | 5.50 | % |  | 5.75 | %



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The discount rate is used to calculate the PBO. The rate used reflects a rate of return on high-quality
fixed income investments that matches the duration of expected benefit payments. The Company has typically used the Moodys Aa Corporate Bond rate as of September 30th of each year as a benchmark for this assumption.

The Company uses a September 30 measurement date for its plans. The following table provides a summary of the Companys annual costs.



|                                              |  |                           |       |      |   |       |  |   |      
|--------------------------------------------- |  | ------------------------- | ----- | ---- | - | ----- |  | - | -----
|                                              |  | Years Ended September 30,
|(Dollars in thousands)                        |  | 2006                      |       | 2005 |   | 2004 
|Service benefits earned during period         |  | $                         | 740   |      | $ | 648   |  | $ | 432  
|Interest cost on projected benefit obligation |  |                           | 691   |      |   | 642   |  |   | 506  
|Amortization:                                 |  |                           |       |      |   |       |  |   |      
|Prior service cost                            |  |                           | 325   |      |   | 325   |  |   | 325  
|Net loss from past experience                 |  |                           | 394   |      |   | 363   |  |   | 107  
|                                              |  |                           |       |      |   |       |  |   |      
|Net periodic pension cost                     |  | $                         | 2,150 |      | $ | 1,978 |  | $ | 1,370
|                                              |  |                           |       |      |   |       |  |   |      

In 2006, 2005 and 2004, the Company recognized amortization associated with the net cumulative
unrecognized losses of the plan. The loss is amortized over the average remaining service period for active plan participants and is subject to the applicable corridor that is based on 10% of the PBO.

The reconciliations of the benefit obligation based on a September 30thmeasurement date are as follows:



|                                                                  |  |      |         |   |      |   |         |  
|----------------------------------------------------------------- |  | ---- | ------- | - | ---- | - | ------- | -
|(Dollars in thousands)                                            |  | 2006 |         |   | 2005 |  
|Change in benefit obligation:                                     |  |      |         |   |      |   |         |  
|Projected benefit obligation at beginning of year                 |  | $    | 12,873  |   |      | $ | 11,497  |  
|Service cost earned during the year                               |  |      | 740     |   |      |   | 648     |  
|Interest cost on projected benefit obligation                     |  |      | 691     |   |      |   | 642     |  
|Loss from past experience                                         |  |      | 494     |   |      |   | 755     |  
|Benefits paid                                                     |  |      | (795    | ) |      |   | (669    | )
|                                                                  |  |      |         |   |      |   |         |  
|Projected benefit obligation at end of year                       |  | $    | 14,003  |   |      | $ | 12,873  |  
|                                                                  |  |      |         |   |      |   |         |  
|Reconciliation of funded status:                                  |  |      |         |   |      |   |         |  
|Funded status                                                     |  | $    | (14,003 | ) |      | $ | (12,873 | )
|Unrecognized net actuarial loss                                   |  |      | 4,461   |   |      |   | 4,449   |  
|Unrecognized prior service cost                                   |  |      |        |   |      |   | 325     |  
|                                                                  |  |      |         |   |      |   |         |  
|Net amount recognized                                             |  | $    | (9,542  | ) |      | $ | (8,099  | )
|                                                                  |  |      |         |   |      |   |         |  
|Amounts recognized in the consolidated balance sheet consists of: |  |      |         |   |      |   |         |  
|Accrued benefit liability                                         |  | $    | (13,127 | ) |      | $ | (11,994 | )
|Intangible asset                                                  |  |      |        |   |      |   | 325     |  
|Accumulated other comprehensive income                            |  |      | 3,585   |   |      |   | 3,570   |  
|                                                                  |  |      |         |   |      |   |         |  
|Net amount recognized                                             |  | $    | (9,542  | ) |      | $ | (8,099  | )
|                                                                  |  |      |         |   |      |   |         |  



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The Company expects plan contributions to fund benefits paid. The following table summarizes the
Companys expected benefit payments to be paid for each of the following fiscal years:



|                         |  |                            |      
|------------------------ |  | -------------------------- | -----
|Year Ended September 30, |  | Scheduled Benefit Payments
|(Dollars in thousands)   |  |                           
|2007                     |  | $                          | 933  
|2008                     |  |                            | 963  
|2009                     |  |                            | 973  
|2010                     |  |                            | 1,128
|2011                     |  |                            | 1,269
|2012 through 2016        |  |                            | 8,660

10. Employee Benefit Plan and Special Programs

The Company maintains The PBSJ Employee Profit Sharing and Stock Ownership Plan and Trust, which is a qualified contributory 401(k) plan, a
profit-sharing plan and an unleveraged employee stock ownership plan (ESOP), collectively the Plans. The Plans qualify as a deferred salary arrangement under Sections 401(a) and 401(k) of the Internal Revenue Code. Under the
401(k) plan, participating employees may elect to defer a portion of their pretax earnings, up to the maximum allowed by the Internal Revenue Service. The Company offers a discretionary matching contribution of up to 100% of the employees
first 3% pre-tax contribution. Employees are eligible to participate in the 401(k) plan on the first date of hire. Participants in the 401(k) plan are at all times 100% vested in the employees contribution amounts. All matching contributions
made by the Company generally vest ratably over five years of continued service. Under the profit-sharing plan, the Company may make a discretionary contribution to eligible employees, which is included in the participants retirement account,
and is allocated using a ratio of the individual participants compensation for the year to the total compensation of all eligible participants for the year. All discretionary contributions may be made in the form of cash, stock or a
combination of both.

The Companys matching contribution to the 401(k) plan was $3.6 million, $4.0 million, and $3.5 million for
the years ended September 30, 2006, 2005 and 2004, respectively. In addition, the Company recorded an additional benefit expense of $2.7 million at each of the years ending September 30, 2005 and 2004, as discretionary contributions
to the profit-sharing plan. There was no discretionary contribution to the profit sharing plan for the year ended September 30, 2006. The Companys accrued matching and discretionary contributions are included in accounts payable and
accrued expenses in the accompanying consolidated balance sheets at September 30, 2006 and 2005.

The Company also maintains an
additional incentive plan (Incentive Plan) for select employees. On an annual basis, the Company makes a discretionary cash award to fund the Incentive Plan within the Companys limits of profitability and operating guidelines.
Participation in the Incentive Plan is re-confirmed on an annual basis for all participants. The related Incentive Plan expenses for the years ended September 30, 2006, 2005 and 2004 of $10.4 million, $10.7 million, and $10.8 million,
respectively, were included in general and administrative expenses in the accompanying consolidated statements of operations.

11. Restricted Stock

Restricted stock awards are offered throughout the year, including the KERP restricted stock, and are intended to provide long-term
incentives to key employees. Awards of restricted stock are subject to transfer restrictions and risk of forfeiture until they are earned. Restricted stock shares become fully vested usually over a period of five years of continued employment and
are subject to total forfeiture if the employee ceases to be employed prior to the restricted stock maturity date, except in certain limited circumstances described in the individual restricted stock award agreement. During the restriction period,
holders have the rights of shareholders, including the right to vote, but cannot transfer ownership of their shares. Restricted stock is



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recorded at fair value on the date of issuance. Pursuant to Company guidelines, the Company may not issue restricted stock if, after issuing the shares, the
total number of restricted shares outstanding would exceed ten percent of the total shares outstanding. There were 514,663 and 543,853 shares of restricted stock outstanding at September 30, 2006 and 2005. Unearned compensation is reflected as
a component of stockholders equity and amounted to $3.2 million as of September 30 2006 and 2005.

The issuance of restricted
stock gives rise to unearned compensation that is amortized over the vesting period. The total amount of compensation expense recognized under these agreements during fiscal 2006, 2005 and 2004 was $790,000 $806,000, and $549,000 respectively.

12. Long-Term Debt

The
following table lists long-term debt including the respective current portions.



|                                                                                                                                                                                                                                                                                                                                                         |      |               |       |  |   |      
|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- | ---- | ------------- | ----- |  | - | -----
|(Dollars in thousands)                                                                                                                                                                                                                                                                                                                                   |      | September 30,
|                                                                                                                                                                                                                                                                                                                                                         | 2006 |               | 2005 
|Line of credit                                                                                                                                                                                                                                                                                                                                           |      | $             | 1,132 |  | $ |     
|Mortgage note payable due in monthly installments starting on April 16, 2001, with interest, collateralized by real property; unpaid
principal due March 16, 2011. Interest at LIBOR plus the floating rate margin of not less than 65 basis points and not greater than 90 basis points (5.98% and 4.51% at September 30, 2006 and 2005, respectively). |      |               | 7,421 |  |   | 7,833
|Capital lease obligations                                                                                                                                                                                                                                                                                                                                |      |               | 1,050 |  |   | 853  
|                                                                                                                                                                                                                                                                                                                                                         |      |               |       |  |   |      
|                                                                                                                                                                                                                                                                                                                                                         |      |               | 9,603 |  |   | 8,686
|Less current portion of long-term debt                                                                                                                                                                                                                                                                                                                   |      |               | 1,644 |  |   | 408  
|Less current portion of capital lease obligations                                                                                                                                                                                                                                                                                                        |      |               | 274   |  |   | 341  
|                                                                                                                                                                                                                                                                                                                                                         |      |               |       |  |   |      
|Long-term debt and capital lease obligations                                                                                                                                                                                                                                                                                                             |      | $             | 7,685 |  | $ | 7,937
|                                                                                                                                                                                                                                                                                                                                                         |      |               |       |  |   |      

Scheduled maturities exclusive of capital leases are as follows:



|                          |  |                      |      
|------------------------- |  | -------------------- | -----
|Year Ending September 30, |  | Scheduled Maturities
|(Dollars in thousands)    |  |                     
|2007                      |  | $                    | 512  
|2008                      |  |                      | 512  
|2009                      |  |                      | 512  
|2010                      |  |                      | 512  
|2011                      |  |                      | 5,373
|                          |  |                      |      
|                          |  | $                    | 7,421
|                          |  |                      |      

The Company has a $58 million line of credit agreement, inclusive of $10 million in letters of
credit, with Bank of America, N.A. (the Bank). The expiration date on the line of credit is June 30, 2008. The letters of credit reduce the maximum amount available for borrowing. As of September 30, 2006 and 2005, we had
letters of credit totaling $4.3 million (including $2.2 million to guarantee insurance payments) and $3.4 million, respectively. In addition, in the second quarter of 2006, we issued a letter of credit which expired in November 2006, for $2.0
million to cover risk of insolvency for the FDOT. No amounts have been drawn on any of these letters of credit. As a result of the issuance of these letters of credit, the maximum amount available for borrowing under the line of credit was $52.6
million and $54.6 million as of September 30, 2006 and 2005, respectively.

The interest rate (5.82% and 4.36% at September 30,
2006 and 2005, respectively) ranges from LIBOR plus 50 basis points to Prime minus 125 basis points if the Companys funded debt coverage ratio is less than 2.5. The



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range increases to LIBOR plus 75 basis points to Prime minus 100 basis points if the Companys funded debt coverage ratio is between 2.5 to 3.0. The
line of credit contains clauses requiring the maintenance of various covenants and financial ratios including minimum levels of net worth, a minimum coverage ratio of certain fixed charges and a minimum leverage ratio of earnings before interest,
taxes, depreciation and amortization to funded debt. The Company was in compliance with or obtained a waiver of default of the line of credit financial covenants as of September 30, 2006. The line of credit is collateralized by substantially
all of the Companys assets. We used cash flow from operating activities to repay amounts outstanding under our line of credit.

On
March 19, 2001, the Company entered into a mortgage note with an original principal amount of $9.0 million due in monthly installments starting on April 16, 2001, with interest. Interest on the mortgage is LIBOR plus the floating rate
margin of not less than 65 basis points and not greater than 90 basis points. A balloon payment is due on the mortgage on March 16, 2011. The effective interest rate on the mortgage note was 5.98% and 4.51% for the fiscal years ended
September 30, 2006 and 2005, respectively. The mortgage agreement contains clauses requiring the maintenance of various covenants and financial ratios. The Bank has provided us a waiver of default caused by our failure to deliver to the Bank
audited financial statements for fiscal year 2006 and unaudited financial statements for the quarters ended December 31, 2006 and March 31, 2007, so long as the fiscal year 2006 financial statements are delivered to the Bank no later than
May 31, 2007 and the quarterly statements are delivered no later than September 30, 2007. The bank has also provided us a waiver of the minimum net worth covenant for fiscal year 2006 and all periods in fiscal year 2007. The mortgage note
is collateralized by the office building located in Maitland, Florida.

The Companys capital leases consisted primarily of equipment.
The interest rates used in computing the minimum lease payments range from 2.23% to 5.23%. The leases were capitalized using the lower of the present value of the minimum lease payments or the fair market value of the equipment at the inception of
the lease.

13. Commitments and Contingencies

The Company is obligated under various non-cancelable leases for office facilities, furniture and equipment. Certain leases contain renewal options, escalation clauses and payment of certain other operating expenses
of the properties. In the normal course of business, leases that expire are expected to be renewed or replaced by leases for other properties. As of September 30, 2006, the future minimum annual lease commitments are as follows:



|                                            |  |                  |        |                |   |      
|------------------------------------------- |  | ---------------- | ------ | -------------- | - | -----
|Years Ending September 30,                  |  | Operating Leases |        | Capital Leases
|(Dollars in thousands)                      |  |                  |        |               
|2007                                        |  | $                | 19,829 |                | $ | 575  
|2008                                        |  |                  | 14,547 |                |   | 495  
|2009                                        |  |                  | 11,743 |                |   | 345  
|2010                                        |  |                  | 5,898  |                |   | 82   
|2011                                        |  |                  | 3,187  |                |   | 8    
|Thereafter                                  |  |                  | 622    |                |   |     
|                                            |  |                  |        |                |   |      
|                                            |  |                  | 55,826 |                |   | 1,505
|Less executory and other costs              |  |                  | 369    |                |   | 198  
|Less amount representing interest           |  |                  |       |                |   | 257  
|                                            |  |                  |        |                |   |      
|Present value of net minimum lease payments |  | $                | 55,457 |                | $ | 1,050
|                                            |  |                  |        |                |   |      

Total rent expense included in general and administrative expenses was approximately $20.0
million, $16.6 million, and $14.6 million for fiscal years ended 2006, 2005 and 2004, respectively.

As of September 30, 2006,
there were various legal proceedings pending against the Company, where plaintiffs allege damages resulting from the Companys engineering services. The plaintiffs allegations of liability in those cases seek recovery for damages caused
by the Company based on various theories of



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negligence, contributory negligence or breach of contract. The Company accrues for contingencies when a loss is probable and the amounts can be reasonably
estimated. As of September 30, 2006, the Company had an accrual of approximately $5.9 million for all potential and existing claims, lawsuits and pending proceedings that, in managements opinion, are probable and can be reasonably
estimated.

In July 1998, we entered into an agreement with West Frisco Development Corporation (WFDC) to provide various
services, among which was a flood plain study to be used by WFDC, the City of Frisco and FEMA. In 2003, the City of Frisco retained the services of a third-party architecture and engineering firm in connection with the extension and widening of Teel
Road which lies within the greater drainage basin included in the Companys original flood plain study. This architecture and engineering firms assessment of the flood plain study determined that the Company used incorrect assumptions
when calculating the size of the drainage culverts required for the increased development of the areas transportation infrastructure. Based on this assessment, the Company has entered into negotiations with the City of Frisco to correct the
drainage needs to support the Teel Road expansion project. As a result, the Company had recorded an estimated liability of $3.1 million to cover the costs associated with correcting the drainage needs of the Teel Road expansion project. Included in
this estimate is the purchase of a parcel of land for $1.5 million, the remaining balance of $1.6 million is reflected in other liabilities in the accompanying consolidated balance sheets as of September 30, 2006.

The Company expects to pay these liabilities over the next one to three years. Management is of the opinion that the liabilities ultimately resulting
from such existing and other pending proceedings, lawsuits and claims should not materially affect the Companys financial position, results of operations or cash flows.

The Company maintains a full range of insurance coverage, including workers compensation, general and professional liability (including pollution
liability) and property coverage. The Companys insurance policies may offset the amount of loss exposure from legal actions.

In July
2006, we entered into a settlement agreement with the State of Texas Department of Transportation which resolves all claims that the State of Texas may have had against us for overpayments related to the restatement of overhead rates on billings on
or before April 30, 2006 under contracts with that agency based on our payment of approximately $5.4 million and provides for the determination of the appropriate overhead rate for billings after April 30, 2006. In November 2006, we
entered into a settlement agreement with the Florida Department of Transportation which resolves all claims that agency may have had against us for the overstatement of rates on billings through September 30, 2005 (and with respect to cost
contracts through September 30, 2006) under our contracts with them based on our payment of approximately $12.5 million. This settlement agreement also provided for the determination of the appropriate overhead rate refund for fiscal year 2006
billings under fixed price contracts. The refund amount was finalized in March 2007 and totaled $425,000.

In January 2007, we reached a
settlement agreement with the Department of Justice, Civil Division on behalf of it and all other federal agencies with which we have contracts to resolve all federal claims including claims under the Federal Civil False Claims Act, related to the
overstatements of overhead rates on our contracts with federal agencies. The agreement requires approximately $6.5 million of reimbursement payments for all contract amounts through September 30, 2005, which was paid in January 2007.

The settlements described above, except for those settlements paid during fiscal year 2006, are included in the accrued reimbursement
liability in the Companys consolidated financial statements at September 30, 2006. We are in discussions with our remaining government clients to enter into settlement agreements in order to satisfy any refund obligations, which are in various
stages of settlement.

In the course of our investigation of the accounting irregularities and misappropriations, it was determined that
there were possible violations relating to past political contributions by us and certain of our employees. The United States Attorneys Office for the Southern District of Florida (Miami) and the Federal Bureau of Investigation have
conducted an investigation relating to improper campaign contributions including improper



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use of political action committees. We produced documents and other information to the government and fully cooperated with the authorities. Criminal charges
have been filed against two of the Companys former chairmen. At the present time, we believe it unlikely that criminal charges will be filed against us in this matter, but the authorities are not precluded from bringing charges, and
circumstances may change.

The United States Securities & Exchange Commission is also conducting an investigation of the
accounting irregularities and misappropriations of funds. We are fully cooperating with the investigation and have produced documents and other information to the commission. At the present time, we are unable to predict the likely outcome of this
investigation.

14. Supplemental Cash Flow Information



|                                                                 |      |                           |        |      |  |   |        |   |  |   |        |  
|---------------------------------------------------------------- | ---- | ------------------------- | ------ | ---- |  | - | ------ | - |  | - | ------ | -
|(Dollars in thousands)                                           |      | Years Ended September 30, |       
|                                                                 | 2006 |                           |        | 2005 |  |   | 2004   |  
|Supplemental disclosures of cash flow information:               |      |                           |        |      |  |   |        |   |  |   |        |  
|Cash paid for interest                                           |      | $                         | 2,106  |      |  | $ | 689    |   |  | $ | 861    |  
|                                                                 |      |                           |        |      |  |   |        |   |  |   |        |  
|Cash paid for income taxes                                       |      | $                         | 6,582  |      |  | $ | 4,697  |   |  | $ | 5,202  |  
|                                                                 |      |                           |        |      |  |   |        |   |  |   |        |  
|Acquisitions:                                                    |      |                           |        |      |  |   |        |   |  |   |        |  
|Fair market value of assets acquired                             |      | $                         | 4,731  |      |  | $ | 1,904  |   |  | $ | 2,846  |  
|Goodwill and intangibles recorded                                |      |                           | 5,141  |      |  |   | 1,693  |   |  |   | 4,834  |  
|Fair market value of liabilities assumed                         |      |                           | (3,851 | )    |  |   | (1,475 | ) |  |   | (1,421 | )
|                                                                 |      |                           |        |      |  |   |        |   |  |   |        |  
|Purchase Price                                                   |      |                           | 6,021  |      |  |   | 2,122  |   |  |   | 6,259  |  
|Less: stock issued                                               |      |                           |       |      |  |   | (1,214 | ) |  |   | (1,875 | )
|Less: escrow withheld                                            |      |                           | (200   | )    |  |   | (130   | ) |  |   |       |  
|Less: accrued additional purchase price                          |      |                           | (334   | )    |  |   |       |   |  |   | (250   | )
|Prior year purchase price adjustments                            |      |                           | 389    |      |  |   | 1,756  |   |  |   | 1,237  |  
|Deposits paid                                                    |      |                           |       |      |  |   | (550   | ) |  |   | 550    |  
|                                                                 |      |                           |        |      |  |   |        |   |  |   |        |  
|Cash paid                                                        |      | $                         | 5,876  |      |  | $ | 1,984  |   |  | $ | 5,921  |  
|                                                                 |      |                           |        |      |  |   |        |   |  |   |        |  
|Non-cash investing and financing activities:                     |      |                           |        |      |  |   |        |   |  |   |        |  
|Prior year purchase price adjustments to goodwill                |      | $                         | 468    |      |  | $ |       |   |  | $ | 678    |  
|Property and equipment financed under software agreement         |      | $                         | 731    |      |  | $ |       |   |  | $ |       |  
|Property and equipment financed under capital leases             |      | $                         | 662    |      |  | $ | 473    |   |  | $ | 368    |  
|Change in fair value of marketable securities available for sale |      | $                         | 23     |      |  | $ | 35     |   |  | $ | 62     |  
|Net change in subscription receivable for shares issued          |      | $                         |       |      |  | $ | 347    |   |  | $ | 622    |  
|Payable to former shareholders for repurchase of stock           |      | $                         | 2,133  |      |  | $ |       |   |  | $ |       |  
|Notes payable issued in exchange for shares                      |      | $                         | 1,335  |      |  | $ |       |   |  | $ |       |  

15. Segment Reporting

The Company is organized by the services provided to its customers. Under this organizational structure, the Company has four segments: Transportation Services, Construction Management, Civil Engineering and
Environmental Services.

Activities in the Transportation Services business segment generally involve planning, design, right of way
acquisition, development and design of intelligent transportation services and program construction management services for multiple transportation modes, including interstate and primary highways, toll roads, arterials, bridges, transit systems,
airports and port facilities. The Program Management group of our Transportation segment provides many of its governmental clients the necessary resources to manage large infrastructure programs from concept through construction. Services include
planning, programming, and contract support.



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The Construction Management segment provides a wide range of services as an agent for the Companys
clients, including contract administration, inspection, field-testing, scheduling/estimating, instituting project controls and quality assessment. The Company provides scheduling, cost estimating and construction observation services for the
project, or its services may be limited to providing construction consulting.

The Civil Engineering segment provides general civil
engineering as well as specialized services to public and private clients. Included in these services are: site engineering and surveys, infrastructure engineering, master planning, disaster mitigation planning and response, asset assessment and
management, emergency management and architectural and landscape design.

The Environmental Services business segment focuses on the
delivery of planning, design and construction management services for private and public sector clients related to air quality management, flood insurance studies, energy planning, hazardous and solid waste management, ecological studies, wastewater
treatment, water resources, environmental toxicology analysis, aquatic treatment systems and water supply and treatment.

In fiscal 2006,
we derived approximately 25.0% of our engineering fees from various districts and departments of the FDOT (approximately 17.3% of total engineering fees) and the Texas Department of Transportation (TxDOT) (approximately 7.7% of total
engineering fees) under numerous contracts. The majority of these revenues were earned by our Transportation Services segment.

Segment
operating income includes corporate related costs which are not generally specific to the individual segments operations. Such costs primarily consist of indirect salaries and general and administrative costs. The amounts are allocated to the
segments based on the individual segments proportionate share of indirect salaries and general and administrative costs compared to total Company indirect salaries and general and administrative costs, excluding any allocable costs.

Financial information relating to the Companys operations by segment is as follows:



|                                    |  |                        |         |                        |   |                  |  |   |                       |   |       |   |         |  |   |        
|----------------------------------- |  | ---------------------- | ------- | ---------------------- | - | ---------------- |  | - | --------------------- | - | ----- | - | ------- |  | - | -------
|(Dollars in thousands)              |  | TransportationServices |         | ConstructionManagement |   | CivilEngineering |  |   | EnvironmentalServices |   | Total
|Year Ended September 30, 2006       |  |                        |         |                        |   |                  |  |   |                       |   |       |   |         |  |   |        
|Engineering fees                    |  | $                      | 206,876 |                        | $ | 89,199           |  | $ | 112,526               |   |       | $ | 128,641 |  | $ | 537,242
|Net earned revenues                 |  |                        | 158,666 |                        |   | 73,660           |  |   | 95,302                |   |       |   | 103,979 |  |   | 431,607
|Operating income                    |  |                        | 7,078   |                        |   | 3,119            |  |   | (60                   | ) |       |   | 318     |  |   | 10,455 
|Total assets (as of 9/30/06)        |  |                        | 94,321  |                        |   | 40,670           |  |   | 51,305                |   |       |   | 58,653  |  |   | 244,949
|Depreciation and amortization       |  |                        | 3,781   |                        |   | 1,314            |  |   | 2,922                 |   |       |   | 2,996   |  |   | 11,013 
|Purchases of property and equipment |  |                        | 4,033   |                        |   | 1,873            |  |   | 2,652                 |   |       |   | 2,858   |  |   | 11,416 
|                                    |  |                        |         |                        |  
|Year Ended September 30, 2005       |  |                        |         |                        |   |                  |  |   |                       |   |       |   |         |  |   |        
|Engineering fees                    |  | $                      | 199,490 |                        | $ | 87,314           |  | $ | 111,312               |   |       | $ | 113,821 |  |   | 511,937
|Net earned revenues                 |  |                        | 150,021 |                        |   | 67,679           |  |   | 79,866                |   |       |   | 92,385  |  |   | 389,951
|Operating income                    |  |                        | 17,638  |                        |   | 7,250            |  |   | 5,691                 |   |       |   | 7,801   |  |   | 38,380 
|Total assets (as of 9/30/05)        |  |                        | 98,061  |                        |   | 42,920           |  |   | 54,716                |   |       |   | 55,950  |  |   | 251,647
|Depreciation and amortization       |  |                        | 3,630   |                        |   | 1,191            |  |   | 2,454                 |   |       |   | 2,705   |  |   | 9,980  
|Purchases of property and equipment |  |                        | 3,766   |                        |   | 1,697            |  |   | 2,269                 |   |       |   | 2,537   |  |   | 10,269 
|                                    |  |                        |         |                        |  
|Year Ended September 30, 2004       |  |                        |         |                        |   |                  |  |   |                       |   |       |   |         |  |   |        
|Engineering fees                    |  | $                      | 179,743 |                        | $ | 77,465           |  | $ | 81,841                |   |       | $ | 109,198 |  | $ | 448,247
|Net earned revenues                 |  |                        | 135,111 |                        |   | 58,278           |  |   | 69,917                |   |       |   | 88,569  |  |   | 351,875
|Operating income                    |  |                        | 10,821  |                        |   | 6,164            |  |   | 5,531                 |   |       |   | 6,916   |  |   | 29,432 
|Depreciation and amortization       |  |                        | 3,401   |                        |   | 994              |  |   | 2,216                 |   |       |   | 2,650   |  |   | 9,261  
|Purchases of property and equipment |  |                        | 3,612   |                        |   | 1,504            |  |   | 2,038                 |   |       |   | 2,482   |  |   | 9,636  



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16. Related Party Transactions

We lease office space in a building which houses our Marietta, Georgia operations from BCE Properties, which is owned and controlled by James Belk.
Mr. Belk is a former owner of Welker & Associates, Inc., which was acquired in March 2003, and a Vice-President and Project Director of the Company. The lease was assumed in connection with our acquisition of Welker in March 2003. The
rental cost of the space is $17,600 per month. On May 31, 2006, the lease expired and was not renewed. In June 2006, we moved our Marietta, Georgia operations to a new location.

We lease office space in a building which houses our Missoula, Montana operations from Cedar Enterprises, which is owned and controlled by Charlie K.
Vandam. Mr. Vandam is a former owner of LWC and a Senior Program Manager of ours. The lease was assumed in connection with our acquisition of LWC in February 2005. The rental cost of the space is $9,500 per month.

We lease office space in a building which houses our Helena, Montana operations from Prickly Pear Enterprises, which is owned and controlled by Paul
Callahan. Mr. Callahan is a former owner of LWC and a Vice-President and Senior Division Manager of the Company. The lease was assumed in connection with our acquisition of LWC in February 2005. The rental cost of the space is $1,800 per month.

At the annual meeting of the shareholders held on January 28, 2005, the shareholders approved a proposal to authorize the Company to
execute an agreement with Richard Wickett, our former Chairman of the Board from 2002 to February 2005 and former Chief Financial Officer from 1993 to 2004, to allow him to retain his 138,607 shares of the Companys stock, exclusive of his
shares owned through the Companys Employee Profit Sharing and Stock Ownership Plan and Trust (ESOP), upon retirement and offer for sale the shares, in blocks of 46,000, 46,000 and 46,607 shares in February 2005, 2006 and 2007,
respectively, at a price determined at the valuation at the fiscal year end immediately preceding the redemption period.

Pursuant to the Companys by-laws, the Company is permitted to repurchase stock by delivery
of a promissory note to the employee. On February 23, 2006 the Company repurchased 46,000 shares and 3,400 shares, respectively, of the Companys stock from Richard Wickett and Kathryn Wilson in the original principal amounts of $1.2
million and $92,000, respectively. The shares were repurchased for $27.00 per share which represents the September 30, 2004 share price. At September 30, 2006, the Company had an accrual of $49,400 for the difference between the purchase
price and the September 30, 2005 share value of $28.00. The notes currently bear interest at the rate of 7.5% per annum and such rate is adjusted to the then current prime rate of Bank of America on December 31stof each year. Accrued interest and $1 of principal is due monthly on the notes with all remaining principal and accrued
interest due and payable on the five year anniversary of the date of issuance. The balances of the notes and the accrual for the stock price differential were approximately $1.4 million at September 30, 2006 and were included in other
liabilities in the accompanying balance sheet.

On February 13, 2007, the
Company repurchased an additional 46,607 shares of the Companys stock from Richard Wickett in the original principal amount of $1.0 million. The additional shares were purchased for $22.40 per share which represents 80% of the
September 30, 2005 share price, pending completion of the valuation of the Companys stock as of September 30, 2006. In fiscal year 2007, the Company accrued for the difference between the purchase price and the September 30,
2006 share value. The 2007 note currently bears interest at the rate of 8.25% per annum and such rate is adjusted to the then current prime rate of Bank of America on December 31stof each year. Accrued interest and $1 of principal is due monthly on the notes with all remaining principal and accrued interest due and payable on the five
year anniversary of the date of issuance. The notes are subject to the Companys right of set off, which permits the Company to set off all claims it may have against the payee against amounts due and owing under the notes.



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17. Allowance for Doubtful Accounts

The activity in the allowance for doubtful accounts was as follows:



|                                        |      |                           |       |      |  |   |       |   |  |   |       |  
|--------------------------------------- | ---- | ------------------------- | ----- | ---- |  | - | ----- | - |  | - | ----- | -
|(Dollars in thousands)                  |      | Years Ended September 30, |      
|                                        | 2006 |                           |       | 2005 |  |   | 2004  |  
|Balance at beginning of year            |      | $                         | 1,182 |      |  | $ | 1,080 |   |  | $ | 1,119 |  
|Additions charged to costs and expenses |      |                           | 633   |      |  |   | 486   |   |  |   | 217   |  
|Deductions                              |      |                           | (16   | )    |  |   | (384  | ) |  |   | (256  | )
|                                        |      |                           |       |      |  |   |       |   |  |   |       |  
|Balance at end of year                  |      | $                         | 1,799 |      |  | $ | 1,182 |   |  | $ | 1,080 |  
|                                        |      |                           |       |      |  |   |       |   |  |   |       |  

18. Quarterly Financial Data (Unaudited)



|                                                 |    |             |         |             |  |    |         |    |   |         |  |    |         |    |   |         |  |   |         |  |   |         |  |   |        
|------------------------------------------------ | -- | ----------- | ------- | ----------- |  | -- | ------- | -- | - | ------- |  | -- | ------- | -- | - | ------- |  | - | ------- |  | - | ------- |  | - | -------
|(Dollars in thousands, except
per share amounts) |    | Fiscal 2006 |         | Fiscal 2005
|                                                 | Q4 |             |         | Q3          |  | Q2 |         | Q1 |   | Q4      |  | Q3 |         | Q2 |   | Q1     
|                                                 |    |             |         |             |  |    |         |    |   |         |  |    |         |    |   |        
|Operating Data:                                  |    |             |         |             |  |    |         |    |   |         |  |    |         |    |   |         |  |   |         |  |   |         |  |   |        
|Engineering fees                                 |    | $           | 136,098 |             |  | $  | 138,927 |    | $ | 133,751 |  | $  | 128,466 |    | $ | 136,601 |  | $ | 124,726 |  | $ | 122,993 |  | $ | 127,617
|Net earned revenues                              |    |             | 109,180 |             |  |    | 110,534 |    |   | 107,201 |  |    | 104,692 |    |   | 103,219 |  |   | 98,003  |  |   | 96,238  |  |   | 92,491 
|Operating income (loss)                          |    |             | (6,351  | )           |  |    | 6,906   |    |   | 2,401   |  |    | 7,499   |    |   | 6,788   |  |   | 17,309  |  |   | 6,581   |  |   | 7,702  
|Net income (loss)                                |    |             | (3,265  | )           |  |    | 4,136   |    |   | 1,006   |  |    | 3,528   |    |   | 4,218   |  |   | 9,223   |  |   | 3,489   |  |   | 4,145  
|Net income per common                            |    |             |         |             |  |    |         |    |   |         |  |    |         |    |   |         |  |   |         |  |   |         |  |   |        
|Basic                                            |    | $           | (0.51   | )           |  | $  | 0.64    |    | $ | 0.15    |  | $  | 0.50    |    | $ | 0.60    |  | $ | 1.30    |  | $ | 0.48    |  | $ | 0.56   
|Diluted                                          |    | $           | (0.51   | )           |  | $  | 0.60    |    | $ | 0.14    |  | $  | 0.47    |    | $ | 0.56    |  | $ | 1.22    |  | $ | 0.45    |  | $ | 0.53   

Note: Quarterly and year-to-date computations of per share amounts are made independently;
therefore, the sum of per share amounts for the quarters may not equal per share amounts for the year.

The Company experienced a net loss
in the fourth quarter of fiscal year 2006 primarily due to the temporary stoppage in work and bidding for new jobs with the TxDOT during the latter half of the third quarter and beginning of the fourth quarter which resulted in an increase in
indirect salaries, increases in investigation and related costs, and an increase in legal settlements and fees.



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|ITEM 9. | Changes in and Disagreements With Accountants on Accounting and Financial Disclosure
|------- | ------------------------------------------------------------------------------------

Not applicable.



|ITEM 9A.Controls | and Procedures
|---------------- | --------------

Attached as exhibits
to this Form 10-K are certifications of our Chief Executive Officer (CEO) and Chief Financial Officer (CFO), which are required in accordance with Rule 13a-14 of the Securities Exchange Act of 1934, as amended (the
Exchange Act).

Evaluation of disclosure controls and procedures

We maintain disclosure controls and procedures that are designed to ensure that information required to be disclosed in the reports that the Company files
or submits under the Securities and Exchange Act is recorded, processed, summarized and reported within the time periods specified in the SECs rules and forms, and that such information is accumulated and communicated to the Companys
management, including its Chief Executive Officer and Chief Financial Officer, as appropriate, to allow timely decisions regarding required financial disclosure.

As of the end of the period covered by this report, the Company carried out an evaluation, under the supervision and with the participation of the Audit Committee and management, including the Chief Executive Officer
and Chief Financial Officer, of the effectiveness of the design and operation of the Companys disclosure controls and procedures pursuant to Exchange Act Rule 13a-15(e). Based upon, and as of the date of, this evaluation, the Chief Executive
Officer and Chief Financial Officer concluded that the Companys disclosure controls and procedures were not effective, because of the material weaknesses discussed below. In light of the material weaknesses described below, the Company
performed additional procedures to ensure that the consolidated financial statements are prepared in accordance with generally accepted accounting principles. Accordingly, management believes that the financial statements included in this Annual
Report fairly present in all material respects the Companys financial condition, results of operations and cash flows for the periods presented.

Material Weakness in Internal Control Over Financial Reporting

A material weakness (within the meaning of the Public
Company Accounting Oversight Board (PCAOB) Auditing Standard No. 2) is a control deficiency, or combinations of control deficiencies, that results in more than a remote risk that a material misstatement in our annual or interim
financial statements will not be prevented or detected. The Company identified the following material weaknesses:

1) Entity-Level Controls

The Company did not design and maintain effective entity-level controls as defined in Internal ControlIntegrated Framework
published by the Committee of Sponsoring Organizations of the Treadway Commission(COSO). This deficiency relates to the risk assessment component of internal control as defined by COSO. Specifically:

The Company did not conduct a formal fraud risk assessment to consider the risk of material misstatements due to fraud, giving consideration to potential
fraud schemes, or other internal or external factors such as pressures or incentives affecting the Company. A fraud risk assessment is designed to identify and evaluate fraud risk factors that could enable fraud to occur within the organization. The
fraud risk assessment involves an expanded focus on considerations of where fraud risk factors may exist within the entity and the potential fraud schemes that could be perpetrated.



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This condition constitutes deficiencies in both the design and operation of entity-level controls.

2) Inadequate Controls Related to the Closing and Financial Reporting Cycles

Several significant deficiencies in the design and operating effectiveness of internal controls over the monthly close, quarterly, and year-end reporting
cycles were identified which were considered material weaknesses when aggregated. Specifically, the significant deficiencies include inaccurate and untimely bank reconciliations, reconciliations of year-end journal entries to the general ledger and
identification and accounting for loss contracts in progress on a timely basis. The affected accounts include cash, fixed assets, unbilled fees, accounts payable, engineering fees and direct reimbursable expenses.

Status of Remediation of Prior Year Material Weaknesses

We have implemented several changes to our internal control over financial reporting in response to the material weaknesses identified in our 2005 Form 10-K and those described above. To address the material weaknesses, we have implemented
the following procedures:



| |  |  | We have emphasized certain controls and improved the controls designed to safeguard our cash assets and have implemented additional segregation of duties.
| | - |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | We have enhanced our expertise by hiring new accounting and finance personnel with substantial knowledge of financial accounting principles and procedures.
| | - |  | -----------------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | We have engaged consultants with significant expertise in the areas of income tax and governmental accounting to advise and provide support in these areas.
| | - |  | -----------------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | Controls have been enhanced to restrict access to software, operating systems and Company data along with a review of access privileges.
| | - |  | ----------------------------------------------------------------------------------------------------------------------------------------



| |  |  | We have begun hiring additional internal audit professionals who will be responsible for performing the fraud risk assessment and monitoring the Companys
internal controls.
| | - |  | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------

Changes in Internal Control Over Financial Reporting

Except as described above, there have been no changes to the Companys internal control over financial reporting that occurred during the
Companys fiscal quarter ended September 30, 2006, that have materially affected, or are reasonably likely to affect, the Companys internal control over financial reporting.

Inherent Limitations on Effectiveness of Controls

The Companys management, including the CEO and CFO, does not expect that our disclosure controls or our internal control over financial reporting will prevent or detect all error and all fraud. A control system, no matter how well
designed and operated, can provide only reasonable, not absolute, assurance that the control systems objectives will be met. The design of a control system must reflect the fact that there are resource constraints, and the benefits of controls
must be considered relative to their costs. Further, because of the inherent limitations in all control systems, no evaluation of controls can provide absolute assurance that misstatements due to error or fraud will not occur or that all control
issues and instances of fraud, if any, within the Company have been detected. These inherent limitations include the realities that judgments in decision-making can be faulty and that breakdowns can occur because of simple error or mistake. Controls
can also be circumvented by



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the individual acts of some persons, by collusion of two or more people, or by management override of the controls. The design of any system of controls is
based in part on certain assumptions about the likelihood of future events, and there can be no assurance that any systems design will succeed in achieving its stated goals under all potential future conditions. Projections of any evaluation
of a systems control effectiveness into future periods are subject to risks. Over time, controls may become inadequate because of changes in conditions or deterioration in the degree of compliance with policies or procedures.



|ITEM 9B.    Other | Information
|----------------- | -----------

None.



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PART III



|ITEM 10.Directors | and Executive Officers of the Registrant
|----------------- | ----------------------------------------

The following table sets forth certain information regarding the Companys directors, executive officers, and certain key employees:



|                     |  |     |  |                                                                             
|-------------------- |  | --- |  | ----------------------------------------------------------------------------
|NAME                 |  | AGE |  | POSITION                                                                    
|John B. Zumwalt, III |  | 56  |  | Director, CEO and Chairman of the Board                                     
|Robert J. Paulsen    |  | 54  |  | Director, Executive Vice President, Secretary and Vice Chairman of the Board
|Todd J. Kenner       |  | 45  |  | Director and President                                                      
|John S. Shearer      |  | 55  |  | Director and Senior Vice President                                          
|William D. Pruitt    |  | 66  |  | Director, non-employee                                                      
|Phillip E. Searcy    |  | 73  |  | Director, non-employee                                                      
|Frank A. Stasiowski  |  | 57  |  | Director, non-employee                                                      
|Donald J. Vrana      |  | 45  |  | Senior Vice President, CFO and Treasurer                                    
|Clarence E. Anthony  |  | 47  |  | Chief Marketing Officer                                                     
|Max D. Crumit        |  | 46  |  | National Service Director of Transportation                                 
|L. Dean Fox          |  | 56  |  | National Business Sector Manager of Federal Strategic Programs              
|Cecilia R. Green     |  | 50  |  | National Service Director  Environmental Sciences                          
|Becky S. Schaffer    |  | 62  |  | Corporate Counsel, Vice President and Assistant Secretary                   

John B. Zumwalt, III, 56, is a Director and the Chairman of the Board of
Directors. He has been an officer and director of The PBSJ Corporation since 1995. He was Chief Operating Officer from 1998 to 2002, President and Chief Executive Officer from 2002 to 2005 and Chairman and Chief Executive Officer since
January 2005.

Robert J. Paulsen, 54, is Vice-Chairman and Secretary of the Board of Directors, and serves as Chairman of
the Board of Directors of the subsidiary company Post, Buckley, Schuh and Jernigan, Inc. (PBS&J) Prior to his appointment as Chairman, Mr. Paulsen served Chief Operating Officer of PBS&J and as PBS&Js National Director
of Transportation Services. He has been an officer of the Company since 1993 and a Director of the Corporation since 2000.

Todd
J. Kenner, 45, was appointed President of the Company in January 2005 and Chief Operating Officer and President of PBS&J in January 2007. From October 1992 through January 1998, Mr. Kenner directed the firms subsidiary
activities in the western region of the United States. From January 1998 through January 2005, he served as a Regional Director over the Companys West Region business interests. Mr. Kenner served as the Chief Marketing Officer
from January 2002 through October 2006.

John S. Shearer, 55, was elected Director of the Company in January 2001. He
has also served as the National Director of Environmental Services since 1991 for PBS&J. Mr. Shearer worked for the Company from 1983 to 1987 returning in 1991.

William D. Pruitt, 66, has been a Board Member of the Company since July 2005, and has been the Chairman of the Companys Audit
Committee since 2003. Mr. Pruitt served as Chairman of the audit committee of KOS Pharmaceuticals, Inc., a fully integrated specialty pharmaceutical company, until it was acquired in 2006. He was also Chairman of the Audit Committee for
Adjoined Consulting, Inc., which was a full-service management consulting firm, until it was merged into Kanbay International, a global consulting firm, in February 2006.

Phillip E. Searcy, 73, was appointed Director of the Company in July 2005, after previously serving on the Companys Corporate Audit Committee. Mr. Searcy had previously been employed by
the Company in



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November 1972 until his retirement in 1996. He now serves as Chairman of the Companys Compensation Committee and the Governance Committee.

Frank A. Stasiowski, FAIA, 57, has been a Director of the Company since July 2005. Mr. Stasiowski is also President,
Chief Executive Officer and a founding owner of PSMJ Resources, Inc., a global publishing, education, consulting and trade show company. Mr. Stasiowski is a licensed architect with degrees from the Rhode Island School of Design and a
Masters degree in Business Administration from Bryant University.

Donald J. Vrana, 45, is the Companys Chief
Financial Officer and Treasurer. He has been an officer and director of PBS&J since his hire on October 31, 2005. From 1996 to 2005, he was employed at SITEL Corporation in various positions, most recently as Chief Accounting
Officer, Controller and Treasurer.

Clarence E. Anthony, 47, joined PBS&J as Director of Government Relations and Board
member in August 2004. From August 2004 through September 2006, Mr. Anthony directed the firms national business development organization. He was appointed Chief Marketing Officer in October 2006. Prior to joining PBS&J,
Mr. Anthony was president of his own firm and provided consulting services to PBS&J involving intergovernmental coordination, community outreach, and environmental justice.

Max D. Crumit, 46, has been a PBS&J Director since 2003 and was named Executive Vice President and National Service Director for the
Transportation Service in 2002. Mr. Crumit joined the company in 1990 as a senior project manager in the firms general consulting contract with Floridas Turnpike and served as Program Director for this program from 1997 to 2002.

L. Dean Fox, 56 joined PBS&J in October 2006 as a Senior Vice President, a Director of PBS&J Constructors and the
National Business Sector Manager of Federal Strategic Programs. He became a Director of PBS&J in January 2007. Mr. Fox joined the company following his retirement from the US Air Force after 34 years of military service to our
country. He served at numerous levels in the Air Force and in a number of headquarters and command assignments.

Cecilia R.
Green, 50, joined the Board of Directors of PBS&J in 2006. She has been an officer of PBS&J since 1997, when she joined the Company through the acquisition of Espey, Huston & Associates, Inc. From October 1997 through
September 2006, Ms. Green directed the firms Central Sciences division. In October 2006, she became the National Business Sector Manager for the National Sciences and became National Service DirectorEnvironmental Sciences in January
2007.

Becky S. Schaffer, 62, has served as Corporate Counsel, handling all legal matters for the Company and serving as
Senior Vice President for PBS&J since 1994. Mrs. Schaffer also serves as Assistant Secretary for the Company.

Committees of the Board of
Directors

The Board has standing Audit, Governance and Compensation Committees and a Nominating Sub-Committee of the Governance
Committee.

The Audit Committeecurrently is comprised of three non-management directors, Mr. William Pruitt (Chairman),
Mr. Phillip Searcy, and Mr. Frank Stasiowski. The primary responsibilities of the Audit Committee include the following:



| |  |  | Monitoring the overall corporate tone for quality financial reporting, sound business risk practices and ethical behavior;
| | - |  | ----------------------------------------------------------------------------------------------------------------------------



| |  |  | The appointment, compensation, retention and oversight of the work of the independent registered public accountants;
| | - |  | --------------------------------------------------------------------------------------------------------------------



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| |  |  | Pre-approving all audit and non-audit services provided by the independent registered public accountants;
| | - |  | ---------------------------------------------------------------------------------------------------------



| |  |  | Reviewing and discussing the annual audited financial statements and quarterly unaudited financial statements, including Managements Discussion and Analysis
of Financial Condition and Results of Operations, with management and the independent registered public accounts prior to filing of the Companys Annual Report on Form 10-K or Quarterly Report on Form 10-Q;
| | - |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | Reviewing with senior management the Companys overall anti-fraud programs and controls;
| | - |  | ----------------------------------------------------------------------------------------



| |  |  | Reviewing the Companys compliance and ethics programs, including consideration of legal and regulatory requirements, including receiving reports from the
Chief Ethics and Compliance Officer, and review with management its periodic evaluation of the effectiveness of such programs;
| | - |  | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | Discussing the Companys policies with respect to risk assessment and risk management, including the risk of fraud and discuss the Companys major
financial risk exposures and the steps management has taken to monitor and control such exposure; and
| | - |  | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | Serving as a direct line of reporting for the Companys Internal Audit function.
| | - |  | --------------------------------------------------------------------------------

The Governance Committeecurrently is comprised of two directors, Mr. Phillip Searcy (Chairman) and Mr. Todd Kenner, along with five
senior employee members. The committee did not meet during fiscal year 2006. The primary responsibilities of the Governance Committee include the following:



| |  |  | Recommending to the Board all manner of governance principles, policies and practices required to effectively govern the Company;
| | - |  | ---------------------------------------------------------------------------------------------------------------------------------



| |  |  | Reviewing established principles, policies and practices on an annual basis and make recommendations to the Board of Directors for appropriate governance changes to
keep pace with the Companys strategic plan(s) and mission;
| | - |  | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | Monitoring compliance with established tenets and guidelines, and periodically review and recommend appropriate revisions;
| | - |  | --------------------------------------------------------------------------------------------------------------------------



| |  |  | Establishing and recommending qualifications, skills, and other desired background and selection criteria for members of the Board of Directors; and
| | - |  | ----------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | Identifying, reviewing, and recommending candidates for the Board.
| | - |  | ------------------------------------------------------------------

The Compensation Committeecurrently is comprised of three non-management directors, Mr. Searcy (Chairman), Mr. Pruitt and Mr. Stasiowski. The committee met once during fiscal 2006. The primary
responsibilities of the Compensation Committee include the following:



| |  |  | Discharging the Boards fiduciary responsibilities relating to compensation of the Companys executives and overseeing and advising the Board on the
adoption of policies that govern the Companys executive compensation and benefit programs;
| | - |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | Reviewing and assessing the reasonableness, appropriateness and competitive position of the Companys executive compensation;
| | - |  | -----------------------------------------------------------------------------------------------------------------------------



| |  |  | Annually issuing a report on executive compensation for inclusion in the Companys proxy statement; and
| | - |  | -------------------------------------------------------------------------------------------------------



| |  |  | Commencing in fiscal year 2007, the Compensation Committee also began to review with management our Compensation Discussion and Analysis and to consider whether to
recommend that it be included in our proxy statements and other filings.
| | - |  | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



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Nominating Sub-Committee of the Governance Committeecurrently is comprised of three Board
members, Mr. Stasiowski, Mr. Zumwalt and Mr. Paulsen, along with three shareholders. The committee did not meet in fiscal year 2006. The primary responsibilities of the Nominating Sub-Committee include the following:



| |  |  | Develop a list of not more than three suggested names of potential new executive directors for any open position assigned by the Governance Committee to be filled;
| | - |  | -------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | Compare the qualifications of each candidate against approved qualifications for an internal executive director for the particular board for which the nomination is
being made to assure that each candidate meets all qualifications;
| | - |  | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | Substantiate with written documentation the qualifications and background of each candidate put forth; and
| | - |  | ----------------------------------------------------------------------------------------------------------



| |  |  | Develop and periodically review and recommend to the Governance Committee appropriate revisions to the nominating process.
| | - |  | --------------------------------------------------------------------------------------------------------------------------

Compensation Committee Interlocks and Insider Participation

During fiscal 2006, Messrs. Searcy, Pruitt and Stasiowski served on our Compensation Committee. Mr. Searcy was appointed Director of the Company in July 2005, and had previously been employed by the Company in November
1972 until his retirement in 1996. Throughout his career with the Company, Mr. Searcy served in several key positions including Director of Environmental Services, Chief Operating Officer, Corporate Secretary, and Chairman of the Board.
During fiscal 2006, none of our executive officers served on the compensation committee of any other entity, any of whose respective directors or executive officers served either on our Board of Directors or on our Compensation Committee.

Performance Graph

The following graph
shows a comparison of the five-year cumulative total shareholder return for our common stock with the S&P 500 Index and a weighted peer group index. The peer group index consists of other engineering firms the Company uses to benchmark its
performance, specifically, CH2M Hill Companies LTD, URS Corporation, Michael Baker Corporation, Tetra Tech Inc., Jacobs Engineering Group, Inc., and TRC Companies, Inc. The graph assumes a $100 investment on September 30, 2002 in our
common stock, the S&P 500 Index and the peer group index.

LOGO



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Section 16(A) Beneficial Ownership Reporting Compliance

Section 16(a) of the Securities Exchange Act of 1934, as amended, requires the Companys directors and executive officers, and persons who own
more than 10% of the Companys Common Stock, to file with the Securities and Exchange Commission reports of ownership and changes in ownership of Common Stock. Officers, directors and greater than 10% beneficial owners are required by
Securities and Exchange Commission regulations to furnish the Company with copies of all Section 16(a) forms they file for review. Based on this review, we believe that during the 2006 fiscal year, there was no failure by any such person to
timely file a report under Section 16(a) of the Exchange Act.

Code of Conduct

On August 14, 2006, the Board of Directors approved and adopted The PBSJ Corporation Code of Conduct, Building for the Future: Our Values,
Principles, and Standards, as a statement of the Companys core business ethics and compliance standards and values. These standards contain the Companys core expectations as to the manner in which employees will conduct business on
behalf of The PBSJ Corporation and its subsidiaries. All of our employees are required to abide by our standards of business ethics and conduct to ensure that the Company operates in a consistent legal and ethical manner. The full text of our Code
of Conduct is available on our internal website. If we amend or seek a waiver of our Code of Conduct, then we would post such amendment or waiver on our internal website, as required by applicable rules.

Our employees are required to report any conduct that they believe in good faith to be an actual or apparent violation of the Code of Conduct. The Audit
Committee has established procedures to receive, retain and address complaints regarding accounting, internal accounting controls or auditing matters and to allow for the confidential and anonymous submission by employees of related concerns.



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|ITEM 11. | Executive Compensation
|-------- | ----------------------

REPORT OF THE COMPENSATION COMMITTEE ON EXECUTIVE COMPENSATIONFOR FISCAL
YEAR 2006

The Compensation Committee has reviewed and discussed with management the Compensation Discussion and
Analysis contained in this Annual Report on Form 10-K and, based on such review and discussion, the Compensation Committee recommended to the Board that the Compensation Discussion and Analysis be included in this Annual Report on Form 10-K for
the fiscal year ended September 30, 2006.

Respectfully Submitted,

THE COMPENSATION COMMITTEE

Phillip E. Searcy, Chairman

William D. Pruitt

Frank A. Stasiowski



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EXECUTIVE COMPENSATION

COMPENSATION DISCLOSURE AND ANALYSIS

General Statement of Compensation Philosophy

The PBSJ Corporation adheres to a compensation philosophy wherein compensation is contingent upon an individuals successful performance of primary
duties and responsibilities within the context of his/her job; employees are expected to demonstrate the highest degree of personal integrity and ethics, and to exhibit the highest levels of professional competence in the execution of those duties
and responsibilities.

With respect to executive compensation, the Company has adopted a philosophy whereby an individuals annual
salary is competitive but on the conservative side as compared to industry peers, with performance-based incentives of as much as 100% of an executives annual salary.

Components of Executive Compensation

Compensation of the Companys Named Executives can
include the following:

Base Salary: Salary is typically the largest component of executive compensation.
Efforts are made to ensure that our executives are paid competitively based on industry benchmarks by way of our executive compensation process. Annually, salaries for the named executive officers are reviewed and may be adjusted by the Compensation
Committee, a three-member committee composed of non-management Directors of the firm.

Annual Bonus Plan:
Executive Bonuses are determined by the Compensation Committee in November and December of each year. Bonuses are based on a review of executive and firm performance over the fiscal year ended the preceding September 30.

Key Employee Supplemental Option Plan (KESOP): The KESOP is a non-qualified deferred compensation program for the benefit of
executives and key management positions and is divided into two levels:

1. Tier 1 (KERP), wherein the Company
awards restricted stock in the amount of 5% of an executives or senior managers salary annually.

2. Tier
2 (KESIP), wherein the Company funds a 10-year to 15-year annuity at an annual rate between $15,000 and $100,000 as defined by the employees position in the Company. Most of our named executive officers participate in this Tier 2.

PBSJ Employee Profit Sharing and Stock Ownership Plan and Trust: This Plan is an Employee Stock Ownership
Plan with a 401(k) feature. The company funds the 401(k) at its discretion, typically matching 50% of employee contributions up to a maximum of 3% of an employees salary. The employer contributions are vested on a five-year vesting schedule in
which an employee vests 20% of employer contributions for each year of service up until full vesting at five years of service. In addition, the Company may make additional annual contributions contingent upon the financial performance of the
Company. Executives receive no additional benefits above and beyond other fulltime employees.

Restricted
Stock: In some instances, the Company may award an individual employee with a defined amount of restricted stock, typically as a retention tool or as a signing bonus upon employment. The Companys board has reserved shares of common
stock for this purpose and as of September 30, 2006, 122,450 shares of common stock were reserved for issuance as restricted stock. This stock is awarded at the current stock value but does not vest until the defined terms of the restriction
are met.

Benefits:PBSJ Corporation provides all of its fulltime employees with health benefits. Executives
benefit at the same levels and rates as all fulltime employees; the amount of company benefit is defined annually.



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PTO Cash-in:The Company administers a PTO Cash-In Program,
wherein employees have the opportunity to sell unused PTO (Paid Time Off) back to the company at their current hourly rate (as defined by annual salary/2080 for exempt employees). This benefit is available for a two-week period in
November of each year and is subject to a maximum number of hours to be cashed in and a minimum number of hours to be carried over to the following year.

Car Allowance:Executives and key management are typically provided a car allowance, which may be used toward the cost of car ownership, including leases/loans, insurance, and maintenance. In some
instances, certain executives are allowed usage of a company leased vehicle in lieu of receiving a car allowance.

Club Fees and Dues: In some instances, the Company may fund club fees or membership dues for clubs for the personal, business and/or private use of an executive.

Frequency of Compensation Review

Executive compensation is reviewed annually in the months of
November and December by the Compensation Committee. The review includes a thorough analysis of total compensation and all of its individual components, as well as a comparative analysis of executive compensation compared to industry peers and
executives from comparable industries. During this review, the Committee also reviews performance evaluations for the executives and take individual contributions into account in the determination of bonus and salary.

Any recommended or proposed off-calendar adjustments to an executives compensation by the Board must be reviewed and approved in advance by the
Compensation Committee.

Delegation of Limited Authority to the CEO and President for Equity Awards under the Restricted Stock Guidelines

The Board has delegated to the Compensation Committee the authority and responsibility for approving all awards of equity to our
executives and other participants under the Restricted Stock Guidelines. The Compensation Committee in turn has chosen to delegate limited authority to our CEO and President to grant equity awards under the Restricted Stock Guidelines to eligible
participants other than Named Executives. The purpose of this delegation is to facilitate the timely grant of restricted stock awards to non-Named Executives, particularly new employees and promoted employees, in interim periods between scheduled
meetings of the Compensation Committee.

Total Compensation Review for 2006

The Committee reviewed a thorough analysis of industry benchmarks for executive compensation in peer firms within the industry and comparable companies
outside industry. Specifically, this analysis utilized information from the following sources: PSMJ Executive Management Survey; Dietrich Consulting Executive Survey; Comp Analyst (a product of ancestry.com), and Salaryexpert.com. This analysis
focused primarily on total cash compensation (salary and bonus) due to the limited availability of information, but the review of the Named Executives extended to a review of total compensation, including total cash compensation, as well as all
other forms of short-term and long-term compensation including restricted stock grants, health benefits, auto-allowance, PTO Cash-in, and club dues.

The Committee also reviewed the FY2006 Performance Reviews for the Named Executives. Each of them were reviewed against a series of set goals within the firms proprietary Integrated Performance
Management application. The Committee was furnished the Performance Appraisals conducted by the executives and relied on them heavily when making their recommendations, recognizing that financial metrics alone were insufficient measures of
performance based on the increased demands on the leadership from the prior year.



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Base Salary

The salary review process for executives mirrors that of the company staff as a whole. Generally, executive salaries rise modestly and typically within the benchmarked range prescribed by the salary increase budget.
With regard to executive compensation, The PBSJ Corporation has established a tradition of pay-for-performance, where executive salaries remain relatively conservative (when compared with industry peers) with a large portion of total compensation
based on an annual bonus that is directly tied to the financial performance of the firm and the service-organization unit(s).

Based on the
review of performance and the analyses of industry benchmarks for executive compensation, the Committee increased the base salaries of the Named Executives effective as of January 1, 2007 as shown in the following table. The Committee observed
that the Chairman and President were compensated below industry peers, while the COO and National Service Director were both compensated above the industry benchmarks. However, these Named Executives salaries were reduced, primarily, as a
result of changes in their responsibilities. The Committees decision was aimed at better aligning executive salaries with performance and industry norms for comparable positions.



|                    |  |                                                   |  |                  |         |                                           |   |        
|------------------- |  | ------------------------------------------------- |  | ---------------- | ------- | ----------------------------------------- | - | -------
|Name                |  | Title                                             |  | Prior BaseSalary |         | Revised Base Salary as of January 1, 2007
|John B. Zumwalt III |  | Chairman of the Board and Chief Executive Officer |  | $                | 300,000 |                                           | $ | 325,000
|Donald J. Vrana     |  | Chief Financial Officer                           |  | $                | 250,000 |                                           | $ | 265,000
|Todd J. Kenner      |  | President and Chief Marketing Officer             |  | $                | 280,000 |                                           | $ | 300,000
|Robert J. Paulsen   |  | Chief Operating Officer                           |  | $                | 270,000 |                                           | $ | 250,000
|John S. Shearer     |  | National Service Director                         |  | $                | 225,000 |                                           | $ | 200,000

Annual Bonus Plan

Acknowledging the companys failure to meet budgeted targets, the Committee chose to consider the extraordinary efforts put forth by the Board and Chief Financial Officer in confronting the continued challenges
of the embezzlement investigation which included critical negotiations with key clients to reach favorable resolution with respect to the repayment of overcharges that resulted from the inflated overhead multiplier. To this end, the Committee chose
to awarded bonuses to recognize their efforts in moving the investigation toward completion.

Severance and Change in Control Provisions

We have entered into an agreement with one of our Named Executives that contains severance and change-in-control provisions, the
terms of which are described below in the section entitled Potential Payment Upon Termination or Change-in-Control. In this instance, we believe severance is appropriate in order to allow us to attract and retain the services of this
executive.

Perquisites and Other Employee Benefits

We generally provide few and modest perquisites to our Named Executives, all of which are intended to minimize distractions, improve job efficiency and allow the Named Executives to concentrate on our business. An
item is not a perk if it is integrally and directly related to the performance of the executives duties. The perquisites awarded to Named Executives have been quantified in the Summary Compensation table and are identified in the
footnotes to the table.

All of our Named Executives are eligible to receive standard benefits such as medical, dental, vision, disability
and life insurance and participation in our 401(k) plan and employee stock ownership plan. These benefits are available to all of our salaried employees and do not discriminate in favor of Named Executives.



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SUMMARY OF COMPENSATION

The following table sets forth information regarding salary, bonus, equity awards and other benefits paid for services rendered to The
PBSJ Corporation by our Chief Executive Officer, our Chief Financial Officer and our three other most highly compensated executive officers (collectively the Named Executives) for the fiscal year ended September 30, 2006.

SUMMARY COMPENSATION



|                                                                              |  |      |  |           |         |           |    |               |                    |  |                 |        |                                         |   |                                                                            |  |                              |   |  |           |        |  |   |         |      |  |   |        
|----------------------------------------------------------------------------- |  | ---- |  | --------- | ------- | --------- | -- | ------------- | ------------------ |  | --------------- | ------ | --------------------------------------- | - | -------------------------------------------------------------------------- |  | ---------------------------- | - |  | --------- | ------ |  | - | ------- | ---- |  | - | -------
|Name and Principal Position                                                   |  | Year |  | Salary($) |         | Bonus ($) |    |               | StockAwards($) (2) |  | OptionAwards($) |        | Non-EquityIncentive PlanCompensation($) |   | Change inPension Value andNonqualifiedDeferredCompensationEarnings ($) (3) |  | All OtherCompensation($) (4) |   |  | Total ($)
|John B. Zumwalt III Chairman of the Board; Chief Executive Officer            |  | 2006 |  | $         | 295,000 |           | $  | 200,000       | (1)                |  | $               | 25,200 |                                         | $ | 0                                                                          |  | $                            | 0 |  | $         | 32,785 |  | $ | 35,145  | (6)  |  | $ | 588,130
|Donald J. Vrana Senior Vice President and Chief Financial Officer             |  | 2006 |  | $         | 229,167 |           | $$ | 150,00050,000 | (1)(5)             |  | $               | 56,513 |                                         | $ | 0                                                                          |  | $                            | 0 |  | $         | 0      |  | $ | 53,616  | (7)  |  | $ | 539,296
|Todd J. Kenner President and Chief Marketing Officer                          |  | 2006 |  | $         | 272,500 |           | $  | 175,000       | (1)                |  | $               | 10,051 |                                         | $ | 0                                                                          |  | $                            | 0 |  | $         | 41,835 |  | $ | 175,142 | (8)  |  | $ | 674,528
|Robert J. Paulsen Senior Executive Vice President and Chief Operating Officer |  | 2006 |  | $         | 270,000 |           | $  | 120,000       | (1)                |  | $               | 3,559  |                                         | $ | 0                                                                          |  | $                            | 0 |  | $         | 30,662 |  | $ | 29,989  | (9)  |  | $ | 454,210
|John S. Shearer Executive Vice President; and National Service Director       |  | 2006 |  | $         | 225,000 |           | $  | 95,000        | (1)                |  | $               | 61,983 |                                         | $ | 0                                                                          |  | $                            | 0 |  | $         | 0      |  | $ | 29,039  | (10) |  | $ | 411,022

---

|(1) | Reflects cash awards to the Named Executives under our 2006 Bonus Plan, which is discussed in further detail under the heading, Executive CompensationCompensation
Discussion and AnalysisAnnual Bonus Plan.
|--- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|(2) | Represents the dollar amount recognized for financial reporting purposes with respect to our 2006 fiscal year for the fair value of restricted stocks awarded in 2006 as well as
prior fiscal years, in accordance with SFAS 123(R). Pursuant to SEC rules, the amounts shown exclude the impact of estimated forfeitures related to service-based vesting conditions. For additional information, refer to our note entitled
Stockholders Equity in our Form 10-K for the respective fiscal years. See the Grants of Plan-Based Awards In Fiscal Year 2006 table for further information on all restricted stock awards issued in 2006. These
amounts reflect our accounting expense for restricted stock awards, and do not correspond to the actual values that may be realized by the Named Executives.
|--- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|(3) | Represents the annual change in the pension value in 2006. For additional information on the valuation assumptions used to calculate the pension value, refer to the table entitled
Pension Benefits as well as our note entitled Retirement Plans in our Form 10-K for our fiscal year ended September 30, 2006.
|--- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|(4) | Calculated based on the aggregate incremental cost to PBSJ to provide these benefits.
|--- | -------------------------------------------------------------------------------------

|(5) | Hiring bonus paid pursuant to the Offer of Employment made to Mr. Vrana by the Company dated October 3, 2005.
|--- | -------------------------------------------------------------------------------------------------------------

|(6) | Consists of $8,835 for leased automobile expense, paid time-off cash-in $11,538, membership dues $6,677, health and welfare benefits expense $5,095, and a 401(k) defined
contribution plan match of $3,000.
|--- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|(7) | Consists of $5,459 for leased automobile expense, paid time-off cash-in $9,615, health and welfare benefits expense $4,674, a 401(k) defined contribution match of $6,600, temporary
living expenses of $17,329 and related income tax gross-up of $9,939.
|--- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|(8) | Consists of $8,157 for leased automobile expense, paid time-off cash-in $10,769, health and welfare benefits expense $5,311, a 401(k) defined contribution plan match of $6,600,
relocation expenses of $98,830 and related income tax gross-up of $45,475.
|--- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|(9) | Consists of $7,910 for leased automobile expense, paid time-off cash-in $10,384, health and welfare benefits expense $5,095, and a 401(k) defined contribution plan match of $6,600.
|--- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|(10) | Consists of $7,033 for leased automobile expense, paid time-off cash-in $8,654, membership dues $1,657, health and welfare benefits expense $5,095, and a 401(k) defined contribution
plan match of $6,600.
|---- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



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The following table sets forth information regarding non-equity and equity awards granted to the Named
Executives in fiscal year 2006.

GRANTS OF PLAN-BASED AWARDS IN FISCAL YEAR 2006



|                    |  |              |  |                                                                   |   |                                                             |   |                                                        |  |                                        |   |            |   |  |   |  |   |  |       |  |   |        
|------------------- |  | ------------ |  | ----------------------------------------------------------------- | - | ----------------------------------------------------------- | - | ------------------------------------------------------ |  | -------------------------------------- | - | ---------- | - |  | - |  | - |  | ----- |  | - | -------
|Name                |  | Grant Date   |  | Estimated Possible Payouts Under Non-Equity Incentive Plan Awards |   | Estimated Future Payouts Under Equity Incentive Plan
Awards |   | All Other Stock Awards:Number ofShares ofStock (#) (1) |  | Grant DateFair Valueof
StockAwards (2)
|                    |  | Threshold($) |  | Target($)                                                         |   | Maximum($)                                                  |   | Threshold(#)                                           |  | Target(#)                              |   | Maximum(#) |   | 
|John B. Zumwalt III |  |              |  | $                                                                 | 0 |                                                             | $ | 0                                                      |  | $                                      | 0 |            |  |  |  |  |  |  |       |  |   |        
|                    |  |              |  |                                                                   |   |                                                             |   |                                                        |  |                                        |   |            |   |  |   |  |   |  |      |  |   |       
|Donald J. Vrana     |  |              |  | $                                                                 | 0 |                                                             | $ | 0                                                      |  | $                                      | 0 |            |  |  |  |  |  |  |       |  |   |        
|                    |  | 10/31/05     |  |                                                                   |   |                                                             |   |                                                        |  |                                        |   |            |   |  |   |  |   |  | 5,000 |  | $ | 135,000
|Todd J. Kenner      |  |              |  | $                                                                 | 0 |                                                             |   |                                                        |  |                                        |   |            |  |  |  |  |  |  |       |  |   |        
|                    |  |              |  |                                                                   |   |                                                             |   |                                                        |  |                                        |   |            |   |  |   |  |   |  |      |  |   |       
|Robert J. Paulsen   |  |              |  | $                                                                 | 0 |                                                             | $ | 0                                                      |  | $                                      | 0 |            |  |  |  |  |  |  |       |  |   |        
|                    |  |              |  |                                                                   |   |                                                             |   |                                                        |  |                                        |   |            |   |  |   |  |   |  |      |  |   |       
|John S. Shearer     |  |              |  | $                                                                 | 0 |                                                             | $ | 0                                                      |  | $                                      | 0 |            |  |  |  |  |  |  |      |  |   |       

---

|(1) | The restricted stock award granted on October 31, 2005 will vest over the following periods: 2,000 shares on October 31, 2007 and 1,000 shares on each of
October 31, 2008, October 31, 2009, and October 31, 2010.
|--- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|(2) | Represents the full grant date fair value based on the 9/30/04 stock valuation, which was the current valuation at the time of employment.
|--- | ------------------------------------------------------------------------------------------------------------------------------------------



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The following table sets forth information regarding the outstanding equity awards held by our Named
Executives in fiscal year 2006.

OUTSTANDING EQUITY AWARDS AS OF THE END OF FISCAL YEAR 2006



|                    |  |                                                                |  |                                                                  |  |                        |  |                      |  |                                                       |     |  |                                                                 |           |                                                                                                |   |                                                                                                                      |  
|------------------- |  | -------------------------------------------------------------- |  | ---------------------------------------------------------------- |  | ---------------------- |  | -------------------- |  | ----------------------------------------------------- | --- |  | --------------------------------------------------------------- | --------- | ---------------------------------------------------------------------------------------------- | - | -------------------------------------------------------------------------------------------------------------------- | -
|                    |  | Option Awards                                                  |  | Stock Awards                                                    
|Named               |  | Number ofSecuritiesUnderlyingUnexercisedOptions (#)Exercisable |  | Number ofSecuritiesUnderlyingUnexercisedOptions (#)Unexercisable |  | OptionExercisePrice($) |  | OptionExpirationDate |  | Number ofShares orUnits
ofStockThatHave NotVested (#) |     |  | MarketValue ofShares orUnits ofStock
ThatHave NotVested ($) (1) |           | EquityIncentivePlan Awards:Number
ofUnearnedShares, Unitsor OtherRights ThatHave NotVested (#) |   | Equity
IncentivePlan Awards:Market or PayoutValue ofUnearned Shares,Units or OtherRights That HaveNot Vested ($) (1)
|John B. Zumwalt III |  |                                                               |  |                                                                 |  |                       |  |                     |  | 30,000                                                | (2) |  | $                                                               | 730,200   |                                                                                                |  |                                                                                                                      | 
|Donald J. Vrana     |  |                                                               |  |                                                                 |  |                       |  |                     |  | 5,000                                                 | (3) |  | $                                                               | 121,700   |                                                                                                |  |                                                                                                                      | 
|Todd J. Kenner      |  |                                                               |  |                                                                 |  |                       |  |                     |  | 19,080                                                | (4) |  | $                                                               | 464,407   |                                                                                                |  |                                                                                                                      | 
|Robert J. Paulsen   |  |                                                               |  |                                                                 |  |                       |  |                     |  | 13,080                                                | (5) |  | $                                                               | 318,367   |                                                                                                |  |                                                                                                                      | 
|John S. Shearer     |  |                                                               |  |                                                                 |  |                       |  |                     |  | 92,130                                                | (6) |  | $                                                               | 2,242,444 |                                                                                                |  |                                                                                                                      | 

---

|(1) | The market value of the stock awards is based on the independently appraised value of our common stock as of September 30, 2006, which was $24.34
|--- | -------------------------------------------------------------------------------------------------------------------------------------------------

|(2) | Mr. Zumwalts restricted stock awards will vest on the later of March 1, 2008 or the start date of the 2008 stock window.
|--- | -------------------------------------------------------------------------------------------------------------------------

|(3) | Mr. Vranas restricted stock awards will vest as follows: 2,000 shares on October 31, 2007 and 1,000 shares on October 31, 2008, 2009 and 2010.
|--- | -----------------------------------------------------------------------------------------------------------------------------------------------

|(4) | Mr. Kenners restricted stock awards will vest as follows: 12,500 shares on October 31, 2015 and 6,580 shares on August 15, 2017.
|--- | ---------------------------------------------------------------------------------------------------------------------------------

|(5) | Mr. Paulsens restricted stock awards will vest on July 26, 2008.
|--- | -----------------------------------------------------------------

|(6) | Mr. Shearers restricted stock awards will vest on July 8, 2007.
|--- | ----------------------------------------------------------------

None of our Named Executives exercised stock options or had restricted stock awards vest during fiscal year 2006.

The following table sets forth information regarding the non-qualified defined benefit pension plan for our Named Executives in fiscal year 2006.

Pension Benefits



|                    |  |                             |  |                                        |  |                                            |         |     |                                   |   |  
|------------------- |  | --------------------------- |  | -------------------------------------- |  | ------------------------------------------ | ------- | --- | --------------------------------- | - | -
|Name                |  | Plan Name                   |  | Number of YearsCredited Service(#) (1) |  | Present Valueof AccumulatedBenefit ($) (2) |         |     | PaymentsDuring LastFiscal Year($)
|John B. Zumwalt III |  | Supplemental Income Program |  | > 10 years                             |  | $                                          | 656,431 | (3) |                                   | $ | 0
|Donald J. Vrana     |  |                            |  |                                       |  |                                            |        |     |                                   |   | 
|Todd J. Kenner      |  | Supplemental Income Program |  | > 10 years                             |  | $                                          | 271,158 | (4) |                                   | $ | 0
|Robert J. Paulsen   |  | Supplemental Income Program |  | > 10 years                             |  | $                                          | 612,123 | (5) |                                   | $ | 0
|John S. Shearer     |  |                            |  |                                       |  |                                            |        |     |                                   |   | 

---

|(1) | The Supplemental Income Program is equal to a fixed benefit amount, for a specific number of years, with eligibility based on the number of years of service in the plan and the
attainment of age 56 and is not totally based on years of credited services.
|--- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|(2) | The present value of the accumulated benefit is based on the following assumptions: (i) a benefit commencement date equal to the later of age 60 or 10 years of service in the
plan; (ii) 3% per year cost of living increases; (iii) a discount rate of 5.75%; and monthly installments for the duration of the benefit. Additional SIP information is disclosed in Note 9. Retirement Plans.
|--- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|(3) | Mr. Zumwalt is fully vested in the SIP and upon retirement will receive an annual benefit of $75,000, adjusted for an annual 3% cost of living increase after benefits commence,
for 15 years.
|--- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



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|(4) | Upon retirement, Mr. Kenner will receive an annual benefit of $40,000, adjusted for an annual 3% cost of living increase until benefits commence, for 10 years.
|--- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------

|(5) | Upon retirement, Mr. Paulsen will receive an annual benefit of $75,000 increased by $2,788 annually after age 56, until retirement or age 65, whichever comes first, increased
by 3% cost of living increase after benefits commence, for 15 years.
|--- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

Non-qualified Defined Benefit Pension Plan

The Company maintains a two tiered noncontributory, unfunded, nonqualified defined benefit pension plan. The Key Employee Supplemental Option Plan
(KESOP) is a two tiered plan that provides key officers and employees postretirement benefits. Tier one of the KESOP, known as the Key Employee Retention Program (KERP), provides an annual restricted stock award equal to five
percent of the participants annual gross salary for a period of up to ten years. Benefits under the KERP vest at age 56 and after ten years of participation in the Plan and continuous service with the Company. Tier two of the KESOP, known as
the Supplemental Income Program (SIP), is an unfunded plan that provides participants with retirement income for a specified period of between 10 and 15 years upon retirement, death, or disability. Participants in the SIP must also reach
age 56, have ten years of participation in the Plan and had been continuously employed by the Company. The plan fixes a minimum level for retirement benefits to be paid to participants based on the participants position at the Company and
their age and service at retirement. Mr. Zumwalts agreement includes an annual retainer for consulting services for a period of up to five years after retirement.

POTENTIAL PAYMENTS UPON TERMINATION OR CHANGE IN CONTROL

We have an agreement
with Donald J. Vrana, our Senior Vice President and Chief Financial Officer that will require us to provide a payment to him in the event of his termination of employment by the Company without cause or a change in control of the Company. In order
to illustrate the amount of this potential payment, the below table assumes that a triggering event with respect to the Named Executives occurred on September 30, 2006.

Donald J. Vrana, Senior Vice-President and Chief Financial Officer



|                            |  |                      |   |                                      |   |                                      |  |   |        
|--------------------------- |  | -------------------- | - | ------------------------------------ | - | ------------------------------------ |  | - | -------
|                            |  | VoluntaryTermination |   | Involuntary Not ForCause Termination |   | Termination After aChange-in-Control
|Payment Upon Termination(1) |  |                      |   |                                      |   |                                      |  |   |        
|Cash Severance              |  | $                    | 0 |                                      | $ | 135,416                              |  | $ | 135,416
|Total:                      |  | $                    | 0 |                                      | $ | 135,416                              |  | $ | 135,416

---

|(1) | For purposes of this analysis, we assumed a base salary equal to $250,000. We are obligated to make a payment to Mr. Vrana in connection with the termination of his employment
pursuant to the Offer of Employment, dated October 3, 2005. Mr. Vranas Offer of Employment provides for a lump sum severance payment equal to base salary if his employment is terminated without cause or if a change of control occurs
within the first 24 months. However, if there is less than 6 months remaining in the two year period, the severance amount would be six months base salary. After the two year period, we are obligated to pay a lump sum payment equal to six months of
Mr. Vranas current base salary if we terminate his employment without cause or for reasons related to a change in control.
|--- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



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COMPENSATION OF NON-MANAGEMENT DIRECTORS

The following table sets forth information regarding non-management directors compensation in fiscal year 2006.

NON-MANAGEMENT DIRECTOR COMPENSATION FOR FISCAL YEAR 2006



|                        |  |                                  |         |                |   |                 |  |                          |   |           |   |   |  |   |        
|----------------------- |  | -------------------------------- | ------- | -------------- | - | --------------- |  | ------------------------ | - | --------- | - | - |  | - | -------
|Non-Management Director |  | Fees Earned orPaid in Cash($)(1) |         | StockAwards($) |   | OptionAwards($) |  | All OtherCompensation($) |   | Total ($)
|William D. Pruitt       |  | $                                | 115,250 |                | $ | 0               |  | $                        | 0 |           | $ | 0 |  | $ | 115,250
|Phillip E. Searcy       |  | $                                | 115,000 |                | $ | 0               |  | $                        | 0 |           | $ | 0 |  | $ | 115,000
|Frank A. Stasiowski     |  | $                                | 111,750 |                | $ | 0               |  | $                        | 0 |           | $ | 0 |  | $ | 111,750

---

|(1) | This column reports the amount of cash compensation earned in fiscal year 2006 for Board and Committee services.
|--- | ----------------------------------------------------------------------------------------------------------------



|ITEM 12. | Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters
|-------- | ----------------------------------------------------------------------------------------------

The following table sets forth certain information regarding the ownership of our common stock as of April 30,2007 by: (1) each
director; (2) each of the executive officers listed on the Summary Compensation table (the Named Executives); (3) all of our executive officers and directors as a group; and (4) all those known by us to be
beneficial owners of more than five percent of our common stock. The applicable address for each of our directors and executive officers is c/o The PBSJ Corporation, 5300 West Cypress Street, Suite 200, Tampa, FL 33607.



|                                                                    |        |                                    |            |       |  
|------------------------------------------------------------------- | ------ | ---------------------------------- | ---------- | ----- | -
|Beneficial Owner                                                    |        | Common StockBeneficially Owned (1) |           
|                                                                    | Number |                                    | Percentage |      
|The PBSJ Employee Profit Sharing and Stock Ownership Plan and Trust |        | 3,101,092                          |            | 46.52 | %
|Todd J. Kenner (2)                                                  |        | 109,683                            |            | 1.65  | %
|Robert J. Paulsen (3)                                               |        | 136,407                            |            | 2.05  | %
|William D. Pruitt (4)                                               |        |                                   |            |      |  
|Phillip E. Searcy (4)                                               |        |                                   |            |      |  
|John S. Shearer (5)                                                 |        | 187,222                            |            | 2.81  | %
|Frank A. Stasiowski (4)                                             |        |                                   |            |      |  
|John B. Zumwalt III (6)                                             |        | 185,301                            |            | 2.78  | %
|Donald J. Vrana (7)                                                 |        | 5,000                              |            | *     |  
|All executive officers and directors as a group (13 persons) (8)    |        | 707,917                            |            | 10.62 | %

---

|* | Less than one percent.
|- | ----------------------

|(1) | As of May 11, 2007, there were 6,666,161 shares of our common stock outstanding.
|--- | --------------------------------------------------------------------------------

|(2) | Includes 13,808 shares owned via The PBSJ Employee Profit Sharing and Stock Ownership Plan and Trust and 19,080 shares of non-vested restricted stock.
|--- | ------------------------------------------------------------------------------------------------------------------------------------------------------

|(3) | Includes 26,707 shares owned via The PBSJ Employee Profit Sharing and Stock Ownership Plan and Trust and 13,080 shares of non-vested restricted stock.
|--- | ------------------------------------------------------------------------------------------------------------------------------------------------------

|(4) | Messrs. Pruitt, Searcy and Stasiowski are non-management members of The PBSJ Corporation Board and in accordance with our bylaws are not eligible to own stock.
|--- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------

|(5) | Includes 21,932 shares owned via The PBSJ Employee Profit Sharing and Stock Ownership Plan and Trust and 92,130 shares of non-vested restricted stock.
|--- | ------------------------------------------------------------------------------------------------------------------------------------------------------



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|(6) | Includes 95,068 shares owned via The PBSJ Employee Profit Sharing and Stock Ownership Plan and Trust and 30,000 shares of non-vested restricted stock.
|--- | ------------------------------------------------------------------------------------------------------------------------------------------------------

|(7) | Includes 5,000 shares non-vested restricted stock.
|--- | --------------------------------------------------

|(8) | Includes 174,121 shares owned via The PBSJ Employee Profit Sharing and Stock Ownership Plan and Trust and 176,422 shares of non-vested restricted stock.
|--- | --------------------------------------------------------------------------------------------------------------------------------------------------------

The following table contains certain information about our equity compensation plans, which consist of a Restricted Stock Award Plan approved by the
Board of Directors as of December 8, 2005. The number of shares of restricted stock available to be issued equals 2% of our common stock outstanding as of September 30, 2005.



|                                                           |  |                                                                                                           |  |                                                                            |   |                                                                                                                                                  |        
|---------------------------------------------------------- |  | --------------------------------------------------------------------------------------------------------- |  | -------------------------------------------------------------------------- | - | ------------------------------------------------------------------------------------------------------------------------------------------------ | -------
|Plan Category                                              |  | Number of Securitiesto be IssuedUpon Exercise
ofOutstandingOptions, Warrantsand Rights (in thousands) (a) |  | Weighted-AverageExercise Price
ofOutstandingOptions,Warrants andRights (b) |   | Number of SecuritiesRemaining Available forIssuance Under EquityCompensation Plans(excluding securitiesreflected in column(a))(in thousands) (c)
|Equity compensation plans approved by security holders     |  | 0                                                                                                         |  | $                                                                          | 0 |                                                                                                                                                  | 0      
|Equity compensation plans not approved by security holders |  | 0                                                                                                         |  |                                                                            | 0 |                                                                                                                                                  | 122,450
|Total                                                      |  | 0                                                                                                         |  | $                                                                          | 0 |                                                                                                                                                  | 122,450



|ITEM 13. | Certain Relationships and Related Transactions
|-------- | ----------------------------------------------

We lease office space in a building which houses our Marietta, Georgia operations from BCE Properties, which is owned and controlled by James Belk. Mr. Belk is a former owner of Welker and a Vice-President and
Project Director of ours. The lease was assumed in connection with our acquisition of Welker in March 2003. The rental cost of the space is $17,600 per month. On May 31, 2006, the lease expired and was not renewed. In June 2006, we moved our
Marietta, Georgia operations to a new location.

We lease office space in a building which houses our Missoula, Montana operations from
Cedar Enterprises, which is owned and controlled by Charlie K. Vandam. Mr. Vandam is a former owner of LWC and a Senior Program Manager of ours. The lease was assumed in connection with our acquisition of LWC in February 2005. The rental cost
of the space is $9,500 per month.

We lease office space in a building which houses our Helena, Montana operations from Prickly Pear
Enterprises, which is owned and controlled by Paul Callahan. Mr. Callahan is a former owner of LWC and a Vice-President and Senior Division Manager of ours. The lease was assumed in connection with our acquisition of LWC in February 2005. The
rental cost of the space is $1,800 per month.

Throughout fiscal year 2006, we purchased $21,652 of products and services from PSMJ
Resources, Inc. Frank A. Stasiowski, PSMJ Resources Inc.s President and Chief Executive Officer joined our Board of Directors in July 2005. Our Audit Committee did not review the PSMJ Resources, Inc. purchases since the overall amount was
deemed immaterial.

Throughout fiscal year 2006, Mr. Phillip Searcy received payments from the Company totaling $120,907 in accordance
with his Supplemental Income Plan which originated when Mr. Searcy was employed with the Company. Mr. Searcy left full-time employment with the Company in 1992 and joined our Board of Directors in July 2005.

On August 14, 2006, the Board of Directors approved and adopted The PBSJ Corporation Code of Conduct, Building for the Future: Our Values,
Principles, and Standards, as a statement of the Companys core business ethics and compliance standards and values. These standards contain the Companys core expectations as to the



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manner in which directors, officers, and employees will conduct business on behalf of PBSJ and its subsidiaries. All of our directors, officers, and
employees are required to abide by our standards of business ethics and conduct to ensure that the Company operates in a consistent legal and ethical manner. The full text of our Code of Conduct is available on our internal website. If we amend
our Code of Conduct, then we would post such amendment on our internal website, as required by applicable rules. If the board grants any waiver of any ethics policy for any director or executive officer, such waiver shall be promptly posted on
our internal website.

Our employees are required to report any conduct that they believe in good faith to be an actual or apparent
violation of the Code of Conduct. The Audit Committee has established procedures to receive, retain and address complaints regarding accounting, internal accounting controls or auditing matters and to allow for the confidential and anonymous
submission by employees of related concerns.

Our bylaws require us to have at least five Board Members, the majority of which are
shareholders of the Company and full time employees of the Company or its affiliates (as defined in the bylaws). The Board has developed a policy requiring at least seven Board Members, three of which are non-management directors. Messrs. Pruitt,
Searcy and Stasiowski are the non-management directors and the Board has determined that each is independent as such term is defined in the corporate governance guidelines of the NYSE. In making this determination, the Board considered
the transactions between the Company and PSMJ, of which Mr. Stasiowski is a principal and the fact that Mr. Searcy is a former executive with the Company and continues to receive supplemental income payments from the Company. The Board
determined that neither of these relationships impaired their independence.



|ITEM 14.Principal | Accountant Fees and Services
|----------------- | ----------------------------

The
following table presents fees for professional audit services rendered by Deloitte & Touche LLP for the audit of our financial statements for the fiscal years ended September 30, 2005 and September 30, 2004, and fees for other
services rendered by Deloitte & Touche LLP during these periods.



|                   |  |                  |           |                  |   |        
|------------------ |  | ---------------- | --------- | ---------------- | - | -------
|                   |  | Fiscal Year 2006 |           | Fiscal Year 2005
|Audit Fees         |  | $                | 2,980,246 |                  | $ | 213,650
|Audit-Related Fees |  |                  | 1,269,666 |                  |   | 4,500  
|Tax Fees           |  |                  |          |                  |   |       
|All Other Fees     |  |                  | 178,305   |                  |   | 284,161
|                   |  |                  |           |                  |   |        
|Totals             |  | $                | 4,428,217 |                  | $ | 502,311
|                   |  |                  |           |                  |   |        

Audit Fees. Audit services fees include fees for services rendered in connection with
the annual audit of our consolidated financial statements. This category also includes fees during fiscal year 2006 for audits provided in connection with the audit for the year ended September 30, 2005 and the restatement of our fiscal year
2004 financial statements.

Audit-Related Fees. Audit-related fees primarily include fees associated with forensic services
related to the investigation of the misappropriation required in connection with the fiscal 2005 audit and fiscal 2004 restatement of our financial statement.

Tax Fees. The Company did not incur fees with the principal accountant for tax or tax consultation services.

All Other Fees. All other fees primarily include fees to Deloitte Consulting LLP associated with performing benefits consulting for the Companys health and welfare plans. Deloitte Consulting LLP does
not set rates or provide actuarial calculations to the Company.



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Audit Committee Policies and Procedures for Pre-approval of Audit and Non-Audit Services

The Audit Committee is responsible for appointing, setting compensation and overseeing the work of the independent registered public accounting firm. The
Audit Committee has established a policy regarding pre-approval of all audit and non-audit services provided by the independent registered public accounting firm.

On an on-going basis, management communicates specific projects and categories of service for which the advance approval of the Audit Committee is requested. The Audit Committee reviews these requests and
advises management if the Audit Committee approves the engagement of the independent registered public accounting firm. On a periodic basis, management reports to the Audit Committee regarding the actual spending for such projects and services
compared to the approved amounts. The Audit Committee also has delegated the ability to pre-approve audit and permitted non-audit services to the Chairman of the Audit Committee, Mr. Pruitt, provided that any pre-approvals by the Chairman are
reported to the Audit Committee at a subsequent Audit Committee meeting.



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PART IV



|ITEM 15.    Exhibits | and Financial Statement Schedules
|-------------------- | ---------------------------------

The following is
a list of financial information filed as a part of this Annual Report:



|                                                                                                                                                                                                |  |   
|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- |  | --
|1.      Consolidated Financial StatementsThe following financial statements of The PBSJ Corporation and
its subsidiaries are contained in Item 8 of this Form 10-K:                            |  |   
|                                                                                                                                                                                                | 
|a)      
Report of Deloitte & Touche LLP, Independent Registered Public Accounting Firm.                                                                                                        |  | 56
|                                                                                                                                                                                                | 
|b)      
Consolidated Balance Sheets at September 30, 2006 and 2005.                                                                                                                            |  | 57
|                                                                                                                                                                                                | 
|c)      
Consolidated Statements of Operations for each of the three years in the period ended September 30, 2006.                                                                              |  | 58
|                                                                                                                                                                                                | 
|d)      
Consolidated Statements of Stockholders Equity and comprehensive income at September 30, 2006, 2005 and 2004.                                                                         |  | 59
|                                                                                                                                                                                                | 
|e)      
Consolidated Statements of Cash Flows for each of the three years in the period ended September 30, 2006.                                                                              |  | 60
|                                                                                                                                                                                                | 
|f)      
Notes to the Consolidated Financial Statements.                                                                                                                                        |  | 61
|                                                                                                                                                                                                | 
|2.      Financial Statement SchedulesThe financial statement schedule information is included as part of
the Notes to Consolidated Financial Statements contained in Item 8 of this Form 10-K. |  |   
|                                                                                                                                                                                                | 
|3.      A list of exhibits to this Annual Report is set forth in the Exhibit Index appearing elsewhere in this
Annual Report and is incorporated herein by reference.                           |  |   



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SIGNATURES

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



|                   |  |                          
|------------------ |  | -------------------------
|                   |  | The PBSJ Corporation     
|                   | 
|Date: May 25, 2007 |  | /S/    DONALD J.
VRANA   
|                   |  | Donald J. Vrana          
|                   |  | Senior Vice President and
|                   |  | Chief Financial Officer  

Pursuant to the requirements of the Securities Exchange Act of 1934, this Annual Report has been
signed below by the following persons on behalf of The PBSJ Corporation.



|                   |  |                                                                             
|------------------ |  | ----------------------------------------------------------------------------
|Date: May 25, 2007 |  | /S/    JOHN B. ZUMWALT
III                                                  
|                   |  | John B. Zumwalt III                                                         
|                   |  | Chairman of the Board and Chief Executive Officer                           
|                   | 
|Date: May 25, 2007 |  | /S/    DONALD J.
VRANA                                                      
|                   |  | Donald J. Vrana                                                             
|                   |  | Senior Vice President and Chief Financial Officer                           
|                   | 
|Date: May 25, 2007 |  | /S/    ROBERT J.
PAULSEN                                                    
|                   |  | Robert J. Paulsen                                                           
|                   |  | Director, Executive Vice President, Secretary and Vice Chairman of the Board
|                   | 
|Date: May 25, 2007 |  | /S/    TODD J.
KENNER                                                       
|                   |  | Todd J. Kenner                                                              
|                   |  | Director and President                                                      
|                   | 
|Date: May 25, 2007 |  | /S/    JOHN S.
SHEARER                                                      
|                   |  | John S. Shearer                                                             
|                   |  | Director and Senior Vice President                                          
|                   | 
|Date: May 25, 2007 |  | /S/    WILLIAM D.
PRUITT                                                    
|                   |  | William D. Pruitt                                                           
|                   |  | Director                                                                    
|                   | 
|Date: May 25, 2007 |  | /S/    PHILLIP E.
SEARCY                                                    
|                   |  | Phillip E. Searcy                                                           
|                   |  | Director                                                                    
|                   | 
|Date: May 25, 2007 |  | /S/    FRANK A.
STASIOWSKI                                                  
|                   |  | Frank A. Stasiowski                                                         
|                   |  | Director                                                                    



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Exhibit Index



|               |  |                                                                                                                                                                                                                                                                                         
|-------------- |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|Exhibit Number |  | Description                                                                                                                                                                                                                                                                             
|              
|3.1            |  | Articles of Incorporation, as amended. (1)                                                                                                                                                                                                                                              
|               | 
|3.2            |  | Amended and Restated Bylaws. (1)(4)                                                                                                                                                                                                                                                     
|               | 
|4.1            |  | Form of Specimen Stock Certificate. (1)                                                                                                                                                                                                                                                 
|               | 
|10.1           |  | The PBSJ Employee Profit Sharing and Stock Ownership Plan and Trust, amended and restated, dated February 22, 2002. (2)(3)                                                                                                                                                              
|               | 
|10.1(a)        |  | Promissory Note previously filed as Exhibit 10.1 in Form 10-Q dated May 15, 2001; Promissory note, dated March 19, 2001, between Suntrust Bank, a Georgia corporation, and Post, Buckley, Schuh
& Jernigan, Inc., the Registrants subsidiary.                                          
|               | 
|10.2           |  | Supplemental Income Plan effective as of January 12, 1988, as amended September 27, 1995. (1)                                                                                                                                                                                           
|               | 
|10.2(a)        |  | Mortgage Security Agreement previously filed as Exhibit 10.2 in Form 10-Q dated May 15, 2001; Agreement, dated March 19, 2001, between Suntrust Bank, a Georgia corporation, and Post Buckley,
Schuh & Jernigan, Inc., the Registrants subsidiary, as amended on December 10, 2003. (4)
|               | 
|10.3           |  | Consulting/Supplemental Retirement/Death Benefits Agreement, dated November 6, 1987, between the Registrant and H. Michael Dye, as amended on October 16, 1989, August 21, 1991, March 1, 1993,
February 6, 1995, May 19, 1998, November 22, 1999 and January 2, 2002. (1)              
|               | 
|10.3(a)        |  | ISDA Master Agreement previously filed as Exhibit 10.3 in Form 10-Q dated May 15, 2001; Agreement, dated March 8, 2001, between Suntrust Bank and Post Buckley, Schuh & Jernigan, Inc., the
Registrants subsidiary. (4)                                                                
|               | 
|10.4           |  | Supplemental Retirement/Death Benefits Agreement, dated December 17, 1987, between the Registrant and Robert J. Paulsen, as amended January 1, 2002 and January 1, 2004. (1)                                                                                                            
|               | 
|10.4(a)        |  | Schedule to the ISDA Master Agreement previously filed as Exhibit 10.4 in Form 10-Q dated May 15, 2001; Agreement, dated March 8, 2001, between Suntrust Bank and Post Buckley, Schuh &
Jernigan, Inc., the Registrants subsidiary.                                                    
|               | 
|10.5           |  | Supplemental Income Agreement, dated as of July 29, 1996, between the Registrant and Robert J. Paulsen (1)                                                                                                                                                                              
|               | 
|10.5(a)        |  | Confirmation of Interest Rate Transaction previously filed as Exhibit 10.5 in Form 10-Q dated May 15, 2001; Confirmation, dated March 9, 2001, between Suntrust Bank and Post Buckley, Schuh
& Jernigan, Inc., the Registrants subsidiary. (4)                                         
|               | 
|10.6           |  | Employment/Retirement Benefits Agreement, dated February 15, 1999, between the Registrant and William W. Randolph. (1)                                                                                                                                                                  
|               | 
|10.7           |  | Supplemental Retirement/Death Benefits Agreement, dated December 17, 1987, between the Registrant and Richard A. Wickett, as amended on April 27, 1989, May 19, 1998, November 22, 1999 and
January 2, 2002. (1)                                                                        
|               | 
|10.8           |  | Supplemental Retirement/Death Benefits Agreement dated December 17, 1987, between the Registrant and John B. Zumwalt, III, as amended on May 19, 1998, November 22, 1999, January 2, 2002 and
January 1, 2004. (1)                                                                      
|               | 
|10.9           |  | Agreement, dated as of April 1, 1993, between the Registrant and John B. Zumwalt, III (1)                                                                                                                                                                                               
|               | 
|10.10          |  | Split-Dollar Life Insurance Agreement dated February 1, 1999, by and between The Randolph Insurance Trust and the Registrant. (1)                                                                                                                                                       



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|               |  |                                                                                                                                                                                                                                                                                                  
|-------------- |  | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|Exhibit Number |  | Description                                                                                                                                                                                                                                                                                      
|              
|10.11          |  | Credit Agreement, dated as of June 28, 1996, by and among Nationsbank, N.A., Suntrust Bank, Miami, N.A., Post, Buckley, Schuh and Jernigan, Inc., The PBSJ Corporation, and the subsidiaries named
therein, as amended on July 3, 1997, June 30, 1999, June 30, 2002 and May 6, 2003. (1)(4)     
|               | 
|10.12          |  | Lease Agreement, dated as of March 25, 1998, by and between Post, Buckley, Schuh & Jernigan, Inc. and Highwoods/Florida Holdings L.P. as successor in interest to Cypress-Tampa II L.P., as
amended on May 26, 1998, December 26, 1998, November 29, 1999, March 1, 2000 and July 1, 2003. (1)(4)
|               | 
|10.13          |  | Employment Offer Letter dated October 7, 2005, between the Registrant and Donald J. Vrana. (5)                                                                                                                                                                                                   
|               | 
|10.14          |  | The PBSJ Corporation Stock Ownership Plan. (2)                                                                                                                                                                                                                                                   
|               | 
|10.15          |  | Lease agreement, dated as of May 30, 2000, by and between Post, Buckley, Schuh & Jernigan, Inc. and RREEF American Reit Corp. G as amended on August 12, 2002 and February 19,
2003. (4)                                                                                                         
|               | 
|10.16          |  | Amendment No. 2 to Amended and Restated Credit Agreement, dated June 27, 2005, by and among Bank of America, N.A., The PBSJ Corporation, and the subsidiaries named therein, as amended
May 5, 2003 and June 30, 2002. (5)                                                                       
|               | 
|10.17          |  | Key Employee Supplemental Option Plan effective as of July 23, 2002, as amended August 1, 2003. (4)                                                                                                                                                                                              
|               | 
|10.18          |  | Agreement, dated as of April 1, 1993, between the Registrant and John S. Shearer. (4)                                                                                                                                                                                                            
|               | 
|10.19          |  | Amendment to Supplemental Income Retirement Agreement, dated January 1, 2000, between the Registrant and Todd J. Kenner. (4)                                                                                                                                                                     
|               | 
|10.20          |  | Key Employee Supplemental Income Program Agreement, dated January 1, 2004, between the Registrant and Todd J. Kenner. (4)                                                                                                                                                                        
|               | 
|10.21          |  | Supplemental Retirement/Death Benefits Agreement, dated September 24, 1986, between the Registrant and Phillip E. Searcy, as amended on April 17, 1989, October 18, 1993, February 6, 1995 and May
8, 2000. (4)                                                                                  
|               | 
|10.22          |  | Agreement, dated April 1, 2005, between the Registrant and Rosario Licata. (4)                                                                                                                                                                                                                   
|               | 
|10.23          |  | Agreement, dated April 22, 2005, between the Registrant and William Scott DeLoach. (4)                                                                                                                                                                                                           
|               | 
|10.24          |  | Agreement, dated November 23, 2005, between the Registrant and Maria Marietta Garcia. (4)                                                                                                                                                                                                        
|               | 
|10.25          |  | Non-Negotiable Promissory Note, dated February 23, 2006, between the Registrant and Kathryn J. Wilson. (4)                                                                                                                                                                                       
|               | 
|10.26          |  | Non-Negotiable Promissory Note, dated February 23, 2006, between the Registrant and Richard A. Wickett. (4)                                                                                                                                                                                      
|               | 
|10.27          |  | Tolling Agreement, dated March 16, 2006, between the Registrant and Kathryn J. Wilson. (4)                                                                                                                                                                                                       
|               | 
|10.28          |  | Tolling Agreement, dated March 16, 2006, between the Registrant and Richard A. Wickett. (4)                                                                                                                                                                                                      
|               | 
|10.29          |  | Non-Negotiable Promissory Note, dated February 13, 2007, between the Registrant and Richard J. Wickett. (6)                                                                                                                                                                                      
|               | 
|10.30          |  | The PBSJ Employee Profit Sharing and Stock Ownership Plan and Trust, amended and restated, dated January 1, 2007. (6)                                                                                                                                                                            
|               | 
|10.31          |  | The First Amendment to the PBSJ Employee Profit Sharing and Stock Ownership Plan and Trust, amended and restated, dated January 1, 2007. (6)                                                                                                                                                     
|               | 
|14.1           |  | PBSJ Code of Conduct. (6)                                                                                                                                                                                                                                                                        



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|               |  |                                                                                                                                                                                              
|-------------- |  | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|Exhibit Number |  | Description                                                                                                                                                                                  
|              
|21.1           |  | Subsidiaries of the Registrant. (6)                                                                                                                                                          
|               | 
|31.1           |  | Chief Executive Officer Certification Pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002. (6)                                          
|               | 
|31.2           |  | Chief Financial Officer Certification Pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002. (6)                                          
|               | 
|32.1           |  | Chief Executive Officer Certification and Chief Financial Officer Certification Pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
(6)

---

|(1) | Previously filed with the Registration Statement on Form 10 filed with the Commission on June 27, 2000.
|--- | -------------------------------------------------------------------------------------------------------

|(2) | Previously filed with the Amended Registration Statement on Form 10A filed with the Commission on September 26, 2000.
|--- | ---------------------------------------------------------------------------------------------------------------------

|(3) | Previously filed with the Form 10-Q in a prior period.
|--- | ------------------------------------------------------

|(4) | Previously filed with the Form 10-K in a prior period.
|--- | ------------------------------------------------------

|(5) | Previously filed with the Form 8-K in a prior period.
|--- | -----------------------------------------------------

|(6) | Filed herewith.
|--- | ---------------



110