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SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

FORM 10-K

ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d)

OF THE SECURITIES EXCHANGE ACT OF 1934

For the fiscal year ended September 30, 2003

Commission File Number 0-30911

THE PBSJ CORPORATION

(Exact name of Registrant as specified in its charter)

2001 N.W. 107th AVENUE

MIAMI, FLORIDA 33172-2507

(Address of principal executive offices)

(305) 592-7275

(Registrant’s telephone number, including area code)

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)

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 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.  ¨

The number of shares of Common Stock outstanding as of November 30, 2003 was 7,895,581. The aggregate market value of the voting stock held by non-affiliates of the registrant based on the $22.50 closing price for the registrant’s Common Stock on December 30, 2003 was approximately $58,459,275. 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.

DOCUMENTS INCORPORATED BY REFERENCE

Part III of this Report on Form 10-K incorporates information by reference from the registrant’s definitive Proxy Statement to be used in conjunction with its fiscal 2004 Annual Meeting of Shareholders.

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THE PBSJ CORPORATION

FORM 10-K

SEPTEMBER 30, 2003

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CAUTIONARY NOTE REGARDING FORWARD-LOOKING STATEMENTS

This report and the information incorporated by reference in it include “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 the forward-looking statements to be covered by the safe harbor provisions for forward-looking statements in these sections. 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 are forward-looking statements. These statements can sometimes be identified by our use of forward-looking words such as “may,” “will,” “anticipate,” “estimate,” “expect,” or “intend” and similar expressions. These 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 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, 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 as reported by the Company for tax purposes and the possible outcome of pending litigation and our actions in connection with such litigation. We undertake no obligation to update or revise publicly any forward-looking statements, whether as a result of new information, future events or otherwise.

PART I

General

The PBSJ Corporation and 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, environmental, civil engineering and construction management, representing 41%, 27%, 17%, and 15%, respectively, of our fiscal 2003 revenues. We utilize our expertise in engineering, planning, management, environmental, architectural and surveying disciplines to solve complex problems in each of these basic service areas. We provide these services through our staff of approximately 3,200 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, architectural and planning services throughout the United States. Evidencing this, in 2003, Engineering News-Record ranked Post, Buckley, Schuh & Jernigan, Inc. 5th 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 2003, we provided services to approximately 3,000 clients in the public and private sectors. Approximately 95% of our clients had previously used our services. In fiscal 2003, 79% of our net revenues were derived from the public sector and 21% 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. (through which we provide the majority of our construction management services). In addition, we have two other active subsidiaries: Seminole Development Corporation (through which we hold title to certain of our real property); and Post, Buckley International, Inc. (through which we provide services to our international clients). During the fiscal year ended September 30, 2003, Post Buckley International, Inc. did not generate any revenues from international clients. In this Form 10-K, all references to “PBSJ” 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 2001 N.W. 107th Avenue, Miami, Florida.

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Acquisitions

Throughout our history, PBSJ has made selected strategic acquisitions to increase the firm’s geographic presence in the West and Central regions, to enhance its technical capabilities firm-wide and to solidify our operations in the Eastern region. Once we acquire a firm it is integrated and consolidated into our existing operations and the subsidiary ceases to exist as a separate operating entity. The following acquisitions occurred in the last three years:

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Business Segments

The following table sets forth our revenues, in thousands, from each of our four basic business segments for each of the three years ended September 30, 2003, 2002, and 2001, and the approximate percentage of our total revenues attributable to each business segment:

Additional information concerning segment profit and loss and assets 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 12 of “Notes to Financial Statements” which are incorporated herein by reference.

Transportation

Industry Overview

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 (“ISTEA”) of 1991. ISTEA placed funding emphasis on intermodalism and transportation efficiency, and established comprehensive planning systems. In 1998, ISTEA was reauthorized as the Transportation Equity Act for the 21st Century (“TEA-21”). TEA-21 earmarks $218 billion for highway and transit projects through 2003. Although a United States federal program, TEA-21 provides state and local governments considerable flexibility in project selection. TEA-21 has been extended through February, 2004 and will likely be reauthorized through 2009 at similar funding levels. In 2000, the Federal Government established the Wendell H. Ford Aviation Act for the 21^st Century (“AIR-21”). This greatly increased aviation capital improvement funding nationwide.

Our Services

Our activities in this area 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, tollroads, arterials, bridges, transit systems, airports and port facilities. We currently serve 15 state departments of transportation throughout the United States and numerous tollroad, transit, and aviation authorities.

Our Program Management group provides many of our governmental clients the necessary resources to manage large infrastructure programs from concept through construction. Our services include planning, programming, and contract support. During production we develop design standards, manage projects, perform design reviews and develop cost estimates. Following production, we (1) facilitate environmental permitting, (2) coordinate right-of-way administration and (3) provide construction management oversight.

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During 2003, projects in our Transportation Division included:

Environmental

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 and their implementation through regulation affect numerous industrial and governmental actions and form a key market driver for the services of our Environmental business 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 Environmental Protection Agency (“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.

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:

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During 2003, projects in our Environmental business segment included:

Civil Engineering

Industry Overview

After several years of poor economic conditions, the economy began to show signs of slow recovery. Despite general economic conditions, spending and investment varied greatly between the markets we serve. 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. The private sector began to strengthen in the second half of the year, although corporate development markets remained weak the residential sector spurred by low interest rates improved.

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Near term expectations are for the Federal sector to remain strong. As the economy expands its recovery, the private sector will strengthen. State and local governments markets will remain weak but will improve as increased tax revenue from private sector recovery trickles into the government sector.

Our Civil business will continue to focus its portfolio strategy to balance the public and private sectors with emphasis on the specialized Federal National Defense market and the disaster mitigation, response and emergency management market for state and local governments. We will continue our commitment to the private sector corporate real estate development and residential housing markets. Advanced technology application will be our strategy for competitive advantage and distinctiveness. These technologies include Geodata/Geographic Information Systems, database design and development, Global Positioning Systems (GPS) and advanced data collection systems including Laser based imaging and measurement, and application of web collaboration tools.

Our Services

Our Civil Engineering business 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.

Examples of our 2003 projects are as follows:

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on the former Orlando Naval Training Center.

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, including ISTEA and TEA-21. These trends have resulted in a large number of infrastructure projects throughout the United States, which are subject to increasingly complex governmental regulations. 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 the project 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 2003, projects in our Construction Management Division included:

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Other Services

Among our four national business segments, we have a National Information Solutions Division to address the digital infrastructure needs of our clients. These services include: needs analysis, training, database design and development, desktop and web-based application development, system integration, and geographic information systems. Recent projects, which have allowed our information solutions to address client needs include:

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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 15 state departments of transportation, water utilities, local power generators, waste water treatment agencies, environmental protection agencies, schools and colleges, law enforcement, judiciary, hospitals and healthcare providers. During 2003, 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, 2003, 2002 and 2001.

In 2003, we derived approximately 18% of our engineering fees from various districts and departments of the Florida Department of Transportation (“FDOT”) 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 the FDOT, the loss of all the

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FDOT contracts would have a material adverse effect on our results of operations by causing a material decrease in our revenues and profits.

International Business

During fiscal 2003, we did not have any revenues from international operations. Prior to fiscal 2003, these revenues had been declining since we were not entering into any new international contracts. We do not currently have any plans to expand or grow our international operations.

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 rates based on our direct and indirect costs. Labor costs and sub-contractor services are the principal components of our direct costs. Federal Acquisition Regulations, which are applicable to all Federal government contracts and which are partially incorporated in many local and state agency contracts, limit the recovery of certain specified indirect costs or contracts subject to such regulations. In negotiating a cost-plus contract, we estimate all recoverable direct and indirect costs and then add a profit component, which is either a percentage of total recoverable costs or a fixed negotiated fee, to arrive at a total dollar estimate for the project. We receive payment based on the total actual number of labor hours expended. If the actual total number of labor hours is lower than estimated, the revenues from that project will be lower than estimated. If the actual labor hours expended exceed the initial negotiated amount, we must obtain a contract modification to receive payment for such overage. During fiscal 2003, approximately 18% of our contracts were cost-plus contracts, primarily with state and local government agencies.

Cost-plus contracts covered by Federal Acquisition Regulations and certain state and local agencies require an audit of actual costs and provide for upward or downward adjustments if actual recoverable costs differ from billed recoverable costs. There are no open or pending audits by federal or state authorities as of September 30, 2003. The result of our last audit for the year ended September 30, 2002 resulted in no adjustments. Our contracts with governmental entities, once executed, are not subject to renegotiation of profits at the election of the government, however, they are subject to continued funding. Our contracts generally provide that we receive our profit on a periodic basis through the course of the project. Therefore, if a governmental agency fails to fund for a successive year, our profit will have been proportionally received as recognized.

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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 the 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 fiscal 2003, approximately 59% 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, we make 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 scope in the work to be performed. Accordingly, our profit margin will increase to the extent the number of labor hours and other costs are below the contracted amounts. The profit margin will decrease and we may realize a loss on the project if the number of labor hours required and other costs exceed the estimate. During fiscal 2003, approximately 23% 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 PBSJ 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, for example environmental firms such as 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 one firm currently dominates a significant portion of the sectors in which we compete. Given the expanding demand for some of the services provided by PBSJ, 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 brought to bear in the problem solving effort. We believe that our ability to offer our services

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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 $331.8 million and $339.0 million as of September 30, 2003 and 2002, 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.

The major components of our operating costs are payroll and payroll-related costs. Since 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.

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 the capital expenditures, earnings and competitive position of PBSJ.

Personnel

As of September 30, 2003, we employed approximately 3,200 persons, of which approximately 360 were part time employees. 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 material 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. We believe our employee relations to be good.

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 damages available to a client or third parties are potentially large and could include punitive and consequential

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damages. For example, our transportation projects involve services that affect not only our client, but also many end users of those services.

We seek to protect PBSJ 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 seek to protect PBSJ by maintaining a full range of insurance coverage, including worker’s 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 $30 million with an 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 there can be no assurances that such coverage will prove to be adequate in all cases. A successful claim or claims in an amount in excess of our insurance coverage for which there is not coverage could have a material adverse effect on our financial position and results of operation.

Available Information

Our annual report on Form 10-K, quarterly reports on Form 10-Q, current reports on Form 8-K and amendments to those reports are available without charge on our web site, www.pbsj.com, as soon as reasonably practicable after they are filed electronically with the SEC. We are providing the address to our internet site solely for the information of investors. We do not intend the address to be an active link or to otherwise incorporate the contents of the web site into this report.

We own our executive offices 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 held as collateral under the Company’s mortgage note. We own two additional office buildings in Homestead, Florida and Hollywood, Florida through our wholly-owned subsidiary, Seminole Development Corporation. The Homestead property is currently being leased to a third party. The Hollywood office is used for providing professional services to clients.

We lease an additional 71 offices in 19 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 2003 were approximately $11.4 million.

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 are of the opinion 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.

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We are party to various 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. Based upon our previous experience with claims and lawsuits, we believe our insurance coverage is adequate.

None.

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PART II

Market Information

There is no established public trading market for our common stock.

As of November 30, 2003 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 November 30, 2003, there were 7,895,581 shares of common stock outstanding and held of record by 763 shareholders.

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 in the past 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.

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The following table sets forth selected historical financial data as of and for the years ended September 30, 2003, 2002, 2001, 2000 and 1999. The financial data for each of the fiscal years has been derived from, and is qualified by reference to, our audited financial statements. 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 Form 10-K.

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Results of Operations

The following table sets forth the percentage of net earned revenue represented by the items in our consolidated statements of income:

A summary of operating results is as follows for each of the years ended September 30 (dollars in thousands):

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Segment Results of Operations

Our businesses are reported as four segments, reflecting our management methodology and structure. The accounting policies of the segments are the same as those described in the footnotes to the accompanying consolidated financial statements. We evaluate performance based on operating profit of the respective segments. The discussion that follows is a summary analysis of the primary changes in operating results by segment for 2003 as compared to 2002 and 2002 as compared to 2001.

Transportation

2003 Compared To 2002

Engineering fees of $158.7 million for 2003 increased 10.5% as compared to 2002. Higher volumes from continued strength in the transportation services market and engineering fees from new projects were the primary contributors to this increase during 2003.

Reported net earned revenue was $123.1 million during 2003 as compared to $108.3 million for the same period in 2002, representing an increase of 13.7%. Net earned revenue increased at a greater percentage than engineering fees due to a 0.6% increase in direct expenses, from $35.4 million in 2002 to $35.6 million in 2003. Direct expenses consist of out-of-pocket expenses related to the delivery of services such as blueprints, reproductions, CADD/computer charges, and travel and sub-contractor expenses. Direct expenses, as a percentage of net earned revenue, were 28.9% for 2003 as compared to 32.6% for 2002. The decrease in direct expenses, as a percentage of net earned revenue, is due to the decreased use of sub-consultants as a result of additional hiring and reduced employee turnover.

Reported operating income was $12.8 million for 2003 as compared to $11.6 million for 2002, representing an increase of 10.6%. Operating income, as a percentage of net earned revenue, was 10.4% for 2003 and 10.7% for 2002. The increase in operating income for 2003 is due to improved chargeability and improved general and administrative cost control. Costs and expenses consist of direct salaries that are chargeable to clients and general and administrative expenses. Direct salaries were $45.1 million for 2003 as compared to $39.0 million for 2002, representing an increase of 15.5%. The increase in direct salaries is directly related to the growth in net earned revenue, and results from the decreased use of sub-consultants, increased chargeability and a reduced employee turnover rate since 2002. General and administrative expenses increased 13.1%, from $57.7 million in 2002 to $65.2 million for the same period in 2003. The increase in general and administrative expenses is due to annual increases in pay rates and medical plan insurance accruals, as well as an increase in personnel. However, general and administrative expenses, as a percentage

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of net earned revenue, decreased compared to the same period in 2002. This decrease was primarily due to increased chargeability, allowing for slower growth in indirect labor, or non-chargeable time.

2002 Compared To 2001

Engineering fees of $143.7 million for 2002 increased 12.1% as compared to 2001. Higher volumes from continued strength in the transportation services market and engineering fees from new projects were the primary contributors to this increase during 2002.

Reported net earned revenue was $108.3 million during 2002 as compared to $91.6 million in 2001, representing an increase of 18.3%. Net earned revenue increased at a greater percentage than engineering fees due to a 3.2% decrease in direct expenses, from $36.5 million in 2001 to $35.4 million in 2002. Direct expenses consist of out-of-pocket expenses related to the delivery of services such as blueprints, reproductions, CADD/computer charges, and travel and subcontractor expenses. Direct expenses were $35.4 million during 2002 as compared to $36.5 during 2001, representing a decrease of 3.2%. Direct expenses, as a percentage of net earned revenue was 32.6% in 2002 as compared to 39.9% in 2001. The decrease in direct expenses and direct expenses as a percentage of net earned revenue, was due to the decreased use of sub-consultants as a result of additional hiring and reduced employee turnover.

Reported operating income was $11.6 million for 2002 as compared to $9.8 million for 2001, representing an increase of 18.9%. Operating income, as a percentage of net earned revenue, was 10.7% for 2002 and 2001. The increase in operating income for 2002 is due to the growth in engineering fees as a result of internal growth within this segment. The consistency in operating income, as a percentage of net earned revenue, is due to costs and expenses increasing at the same rate as net earned revenue in 2002. Costs and expenses consist of direct salaries that are chargeable to clients and general and administrative expenses. Direct salaries were $39.0 million for 2002 as compared to $33.0 million for 2001, representing an increase of 18.2%. Direct salaries increased at a greater rate than the increase in engineering fees due to additional staff hired in 2002 to support our internal growth. During 2001, the industry was experiencing an extremely competitive hiring atmosphere. Therefore, in 2001, additional labor required to support our internal growth was supplied through the use of sub-consultants, or direct expenses. In addition, the Company’s turnover rate has decreased since 2001. The increase in general and administrative expenses in 2002, as compared to 2001, was directly related to annual increases in pay rates, as well as an increase in personnel. As a percentage of net earned revenue, general and administrative expenses remained consistent during 2002 as compared to 2001.

Civil Engineering

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2003 Compared To 2002

Engineering fees were $65.1 million for 2003 and 2002. Although engineering fees remained consistent from 2002 to 2003, increases in chargeability and reductions in costs allowed this segment to improve its earnings in 2003, as compared to 2002. This improvement is attributed to several factors. One of these factors was the acquisition of Durham Technologies, Inc. (“DTI”) on December 1, 2002. DTI specializes in risk and emergency management services for public sector clients, primarily Federal. Another factor in the improvement of this segment is a profitable emergency response project involving ice storm clean up in the Eastern region of the United States. Lastly, this segment has increased its chargeability and made significant steps toward improving project and contract management.

Reported net earned revenue was $55.8 million for 2003 as compared to $52.6 million for 2002, representing an increase of 6.2%. Net earned revenue increased at a higher rate than engineering fees as a result of the reduction in direct expenses. Direct expenses consist of out-of-pocket expenses related to the delivery of services such as blueprints, reproductions, CADD/computer charges, and travel and sub-contractor expenses. Direct expenses were $9.3 million during 2003 as compared to $12.5 million for 2002, representing a decrease of 26.1%. Direct expenses, as a percentage of net earned revenue, were 16.6% for 2003 as compared to 23.9% for 2002. The decrease in direct expenses and direct expenses as a percentage of net earned revenue, is due to the decreased use of sub-consultants as a result of the slowdown in the economy and the increase in chargeability internally.

Reported operating income was $1.6 million for 2003 as compared to operating loss of $1.4 million for 2002, representing an increase of 211.8%. Operating income (loss), as a percentage of net earned revenue, was 2.8% for 2003 as compared to (2.7%) for 2002. The increase in operating income and operating income as a percentage of net earned revenue, is due to improved chargeability and reduced general and administrative costs, allowing for a reduction in total costs and expenses as a percentage of net earned revenue. Total costs consist of direct labor charges, which are direct salaries that are chargeable to clients, and general and administrative expenses. Direct labor, which increased 4.8% from $19.3 million in 2002 to $20.2 million in 2003, is what drives the increase in chargeability. General and administrative expenses, which decreased 1.8% from $34.7 million in 2002 to $34.1 million in 2003, were 61.0% and 66.0% of net earned revenue for 2003 and 2002, respectively. The decrease in general and administrative expenses, as a percent of net earned revenue, is directly related to increased chargeability, allowing for slower growth in indirect labor, or non-chargeable time. In addition, cut-backs made in direct labor personnel allowed for additional savings in fringe benefit costs, such as medical costs, payroll taxes, vacation accruals and corporate allocations.

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2002 Compared To 2001

Engineering fees of $65.1 million for 2002 decreased 7.1% as compared to 2001. This decrease is directly related to reduced chargeability as a result of the slowdown in the economy since late 2000. Civil engineering clients are typically private sector clients. Therefore, they tend to be affected by fluctuations in the economy more than the public sector clients associated with our other segments.

Reported net earned revenue was $52.6 million during 2002 as compared to $56.1 million in 2001, representing a decrease of 6.3%. Net earned revenue increased at a greater rate than engineering fees as a result of the reduction in the use of sub-consultants due to the slowdown in the economy. Direct expenses consist of out-of-pocket expenses related to the delivery of services such as blueprints, reproductions, CADD/computer charges, and travel and sub-contractor expenses. Direct expenses were $12.5 million during 2002 as compared to $14.0 million in 2001, representing a decrease of 10.5%. Direct expenses, as a percentage of net earned revenue decreased to 23.9% in 2002 from 25.0% in 2001. The decrease in direct expenses and direct expenses as a percentage of net earned revenue was due to the decreased use of sub-consultants as a result of the slowdown in the economy.

Reported operating loss was $1.4 million for 2002 as compared to operating income of $95,000 for 2001, representing a decrease of 1,567.4%. Operating (loss) income, as a percentage of net earned revenue, was (2.7%) for 2002 as compared to 0.2% for 2001. The decrease in operating income and operating income, as a percentage of net earned revenue, is due to a decrease in chargeability and direct labor charges during 2002 as compared to 2001, as a result of the slowed economy during 2002. In an effort to address the decline in this segment, the Company’s management has switched the roles of two key managers. In addition, beginning with fiscal year 2003, many of the Federal program projects will be incorporated into the civil segment. Direct labor charges are direct salaries that are chargeable to clients. These costs, combined with general and administrative expenses, make up the total costs and expenses. General and administrative expenses, which also decreased for 2002 as compared to 2001, were 66.0% and 63.2% of net earned revenue for 2002 and 2001, respectively. Although general and administrative expenses decreased as a result of the reduced revenue activity within this segment, these costs increased as a percentage of net earned revenue.

Environmental

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2003 Compared To 2002

Engineering fees of $106.8 million for 2003 increased 17.2% as compared to $91.1 million for 2002. Higher volumes from renewed strength in the environmental services market and engineering fees from new projects were the primary contributors to this increase during 2003.

Reported net earned revenue was $84.0 million during 2003 as compared to $72.2 million for 2002, representing an increase of 16.4%. Net earned revenue increased at a slightly smaller percentage than engineering fees for 2003 due to larger increases in direct expenses, specifically sub-contractor expenses. Direct expenses consist of out-of-pocket expenses related to the delivery of services such as blueprints, reproductions, CADD/computer charges, and travel and sub-contractor expenses. Direct expenses were $22.8 million during 2003 as compared to $19.0 million for 2002, representing an increase of 20.1%. Direct expenses, as a percentage of net earned revenue, increased slightly from 26.3% in 2002 to 27.1% in 2003. The increase in direct expenses and direct expenses, as a percentage of net earned revenue, is primarily due to the hiring of a video inspection sub-consultant to assist with a large job in California, combined with the increased use of sub-consultants in other states to accommodate the internal growth in engineering fees nationwide.

Reported operating income was $6.4 million for 2003 as compared to $5.8 million for 2002, representing an increase of 9.6%. Operating income, as a percentage of net earned revenue, was 7.6% for 2003 as compared to 8.1% in 2002. Although operating income increased in 2003 as compared to the same period in 2002, as a percentage of net earned revenue, operating income decreased due to decreased chargeability during 2003 as compared to 2002. Although chargeability decreased in 2003, costs and expenses increased. Costs and expenses consist of direct salaries that are chargeable to clients and general and administrative expenses. Direct salaries increased 12.6%, from $24.8 million in 2002, to $27.9 million for the same period in 2003. The increase in direct salaries is directly related to the increase in net earned revenue. However, direct salaries, as a percentage of net earned revenue, decreased during 2003, as compared to the same periods in 2002, due to decreased chargeability during 2003. General and administrative expenses increased 19.7%, from $41.5 million in 2002 to $49.7 million for the same period in 2003. The increase in general and administrative expenses is primarily due to the increases in indirect labor, as a result of the reduction in chargeability. In addition, the increase in general and administrative expenses is due to annual increases in pay rates and medical plan insurance accruals.

2002 Compared To 2001

Engineering fees of $91.1 million for 2002 increased 20.4% as compared to $75.7 million for 2001. Higher volumes from renewed strength in the environmental services market and engineering fees from new projects were the primary contributors to this increase during 2002. The two biggest contributors to this segment’s higher volumes and new projects were the acquisition of J. Powell & Associates, Inc. on January 1, 2001 and the Company’s work with FEMA.

Reported net earned revenue was $72.2 million during 2002 as compared to $59.7 million for 2001, representing an increase of 21.0%. Net earned revenue increased at a slightly higher percentage than engineering fees for 2002 as a result of the percentage increase in direct expenses being less than the percentage increase in engineering fees. Direct expenses consist of out-of-pocket expenses related to the delivery of services such as blueprints, reproductions, CADD/computer charges, and travel and sub-contractor expenses. Direct expenses were $19.0 million during 2002 as compared to $16.0 million for 2001,

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representing an increase of 18.3%. The increase in direct expenses consists of higher sub-consultant fees as a result of the significant growth in this segment. However, as a result of additional hiring and reduced employee turnover, direct expenses, as a percentage of net earned revenue, decreased slightly from 26.9% in 2001 to 26.3% for 2002.

Reported operating income was $5.8 million for 2002 as compared to $4.7 million for 2001, representing an increase of 24.7%. Operating income, as a percentage of net earned revenue, was 8.1% for 2002 as compared to 7.8% in 2001. The increase in operating income and operating income, as a percentage of net earned revenue, is due to the increase in engineering fees, as a result of internal growth within this segment, combined with improved cost control. Costs and expenses consist of direct salaries that are chargeable to clients and general and administrative expenses. For 2002, direct salaries increased at a greater percentage than engineering fees as a result of increased hiring of technical staff to support the work related to FEMA. In addition, the Company’s turnover rate has decreased since 2001. The 16.9% increase in general and administrative expenses in 2002, as compared to 2001, was directly related to annual increases in pay rates, as well as an increase in personnel. However, as a percentage of net earned revenue, general and administrative expenses fell to 57.6% for 2002 as compared to 57.9% for 2001.

Construction Management

2003 Compared to 2002

Engineering fees of $58.6 million for 2003 increased 31.5% as compared to $44.6 million for 2002. The increase in fees is partly attributable to a profitable emergency response project involving ice storm clean up in the Eastern region of the United States. Higher volumes from renewed strength in the construction services market and engineering fees from new projects were the primary contributors to this increase during 2003.

Reported net earned revenue was $43.5 million for 2003 as compared to $33.3 million for 2002, representing an increase of 30.7%. In 2003, net earned revenue increased at a slightly lesser percentage than engineering fees due to a 33.6% increase in direct expenses. Direct expenses consist of out-of-pocket expenses related to the delivery of services such as blueprints, reproductions, CADD/computer charges, and travel and sub-contractor expenses. Direct expenses, as a percentage of net earned revenue, were 34.7% for 2003 as compared to 33.9% for 2002. The increase in direct expenses and direct expenses, as a percentage of net earned revenue, is due to the increased use of sub-consultants.

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Reported operating income was $5.5 million for 2003 as compared to $3.6 million for 2002, representing an increase of 52.6%. Operating income, as a percentage of net earned revenue, was 12.5% for 2003 as compared to 10.7% for 2002. The increase in operating income and operating income as a percentage of net earned revenue, is due to improved chargeability and a reduction in costs and expenses. Costs and expenses consist of direct salaries that are chargeable to clients and general and administrative expenses. Direct salaries increased 28.7%, from $13.6 million in 2002 to $17.4 million for the same period in 2003. The increase in direct salaries is directly related to the growth in net earned revenue, increased chargeability and a reduced employee turnover rate since 2002. General and administrative expenses increased 27.6%, from $16.2 million in 2002 to $20.6 million for the same period in 2003. The increase in general and administrative expenses is due to annual increases in pay rates and medical plan insurance accruals, as well as an increase in personnel. However, in 2003, general and administrative expenses, as a percentage of net earned revenue, decreased compared to 2002. This decrease was primarily due to increased chargeability, allowing for slower growth in indirect labor, or non-chargeable time.

2002 Compared to 2001

Engineering fees of $44.6 million for 2002 increased 10.8% as compared to 2001. Higher volume from renewed strength in the construction services market and engineering fees from new projects were the primary contributors to this increase during 2002.

Reported net earned revenue was $33.3 million for 2002 as compared to $28.9 million for 2001, representing an increase of 15.1%. In 2002, net earned revenue increased at a greater percentage than engineering fees due to a 0.2% decrease in direct expenses. Direct expenses consist of out-of-pocket expenses related to the delivery of services such as blueprints, reproductions, CADD/computer charges, and travel and sub-contractor expenses. Direct expenses, as a percentage of net earned revenue, were 33.9% for 2002 as compared to 39.1% for 2001. The decrease in direct expenses and direct expenses, as a percentage of net earned revenue, is due to the decreased use of sub-consultants as a result of increased hiring of technical staff and a significant reduction in employee turnover.

Reported operating income was $3.6 million for 2002 as compared to $3.4 million for 2001, representing an increase of 6.3%. Operating income, as a percentage of net earned revenue, was 10.7% for 2002 as compared to 11.6% for 2001. The increase in operating income is directly related to the increase in engineering fees as a result of the internal growth within this segment. However, the decrease in operating income, as a percentage of net earned revenue, is a result of (1) a decrease in chargeability during 2002 as compared to 2001 and (2) a higher increase in general and administrative costs than in net earned revenue during 2002 as compared to 2001. Costs and expenses consist of direct salaries that are chargeable to clients and general and administrative expenses. Although direct salaries increased for 2002, they decreased as a percentage of net earned revenue compared to 2001 due to reduced chargeability among the technical staff. This contributed to increased indirect labor costs during 2002 for this segment. As a result, general and administrative expenses, which include indirect labor, increased at a greater rate than net earned revenue for 2002. The increase in general and administrative expenses was also due in part to an increase in the percentage of the corporate allocation applied to this segment. Prior to October 1, 2000, the construction management business segment never received a corporate allocation of administrative services because all of its’ administrative work was handled by its own administrative personnel. Since the beginning of fiscal year 2001, the corporate administrative services function began performing administrative services for the construction

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management business segment, and therefore, began charging construction management with a corporate allocation charge, just as the other three services received. However, the transition was gradual and, as a result, the allocation was minimal during fiscal 2001. In fiscal 2002, since all transitions were complete, the allocation percentage was increased to reflect a full allocation percentage, based on the size of this segment and the administrative support it requires. Annual increases in pay rates were also contributors to increased general and administrative costs.

Consolidated Results

Other income (expenses):

Other income and expenses primarily consists of interest and dividend income and interest expense. Total other income (expenses) were $567,000, ($469,000) and ($556,000) for fiscal years 2003, 2002 and 2001, respectively. Increases in 2003 in other income are due to gains on the sale of property. The decrease in total other expense during 2002 is due to decreased interest expense as a result of interest rates dropping during 2002.

Net Income

Net income was $17.2 million, $13.4 million and $12.5 million for fiscal years 2003, 2002 and 2001, respectively. The percentage of net income to net earned revenue was 5.6%, 5.0% and 5.3% for fiscal years 2003, 2002 and 2001. The 28.2% increase in net income in 2003, as compared to 2002, was a result of increased chargeability and improved cost control, offset by an increased effective tax rate in 2003 as compared to 2002. The effective tax rate was 35.9% in fiscal 2003, as compared to 30.0% in fiscal 2002 as a result of an increase in the valuation allowance during 2003 for research and development tax credits. As a result of improved cost control and improved profitability, direct expenses, direct salaries and general and administrative expenses increased at a smaller percentage than net earned revenue. Although general and administrative costs increased 13.0%, as a percentage of net earned revenue, they were 55.3% in 2003 as compared to 56.3% in 2002 and 55.9% in 2001. General and administrative costs increased due to annual increases in pay rates and increases in accrual of insurance expenses related to our medical plan. In addition, the Company’s employment turnover rate has been decreasing, allowing for additional general and administrative costs savings.

Liquidity and Capital Resources

Cash Flows From Operating Activities

Net cash provided by operating activities totaled $24.4 million for 2003 as compared to $15.0 million for 2002. The increase is primarily a result of the increase in accounts payable, and net income, as well as an increase in the deferred tax provision, offset by the increase in unbilled fees and accounts receivable. During 2003, unbilled fees increased $9.9 million from $30.1 million at September 30, 2002 to $40.0 million at September 30, 2003. Unbilled obtained through acquisitions amounted to $0.9 million and $9.0 million of the increase was from internal operations. The increase in unbilled fees is attributable, in part, to a new electronic billing system labeled Consultant Invoice Transmittal System (“CITS”), implemented by FDOT on new contracts. The new electronic billing procedures have temporarily delayed some of our FDOT billings by several months as a result of set-up procedures FDOT must under-go with each new contract, and each contract amendment thereafter. Once the contract set-up is complete, billing will resume on a monthly basis, with payments

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expected within one month’s time. Thereafter, billing and payment can be delayed for the set-up of contract amendments and contract changes. Fluctuations in accounts payable are related to direct expenses, where the timing of payment to subcontractors is directly related to the collection of related receivables.

In fiscal year 2002, net cash provided by operating activities totaled $15.0 million as compared to $19.6 million in 2001. The decrease is primarily a result of the increase in unbilled fees and the decrease in the provision for deferred income taxes. Fluctuations in accounts payable are related to direct expenses, where the timing of payment to sub-contractors is directly related to the collection of related receivables.

Net income of $13.4 million for fiscal year 2002 was 7.0% greater than net income of $12.5 million for fiscal year 2001 due to the growth in engineering fees. The increase in engineering fees resulted from internal direct labor growth and the acquisition of J. Powell & Associates, Inc. in California. General and administrative expenses, as a percentage of net earned revenue, increased from 55.9% in 2001 to 56.3% in 2002. General and administrative expenses increased in part due to annual increases in pay rates and increases in healthcare costs.

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.

Approximately 90% 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. As mentioned previously, during 2003, unbilled fees increased 32.4% from $30.1 million at September 30, 2002 to $40.0 million at September 30, 2003. The increase in unbilled fees during 2002 is related to the increase in engineering fees. In addition, new electronic billing procedures implemented by FDOT on new contracts has temporarily delayed some of our FDOT billings by one to two months. During 2002, the unbilled fees account increased $4.3 million, from $25.8 million at September 30, 2001 to $30.1 million at September 30, 2002. The increase in 2002 resulted from the increase in engineering fees, combined with the decrease in accounts receivable. The number of days outstanding for unbilled fees was 37 days, 32 days and 30 days at September 30, 2003, 2002 and 2001, respectively. By comparison, according to PSMJ Resources, Inc., the average days outstanding for unbilled fees for design firms of comparable size was 27.9 days in 2003 and 29.7 days in 2002.

Accounts receivable increased 16.0%, from $45.3 million at September 30, 2002, to $52.5 million at September 30, 2003, primarily due to the growth in engineering fees. The allowance for doubtful accounts decreased from $1.4 million at September 30, 2002 to $1.1 million at September 30, 2003. The allowance for doubtful accounts also decreased during 2002, from $2.2 million at September 30, 2001 to $1.4 million at September 30, 2002. The decrease in the allowance during 2003 was due to improved collections of our accounts receivable. The number of days sales outstanding for accounts receivable was approximately 46 days, 49 days and 49 days at September 30, 2003, 2002 and 2001, respectively. By comparison, according to PSMJ Resources, Inc. the average days sales accounts receivables for design firms of comparable size to us was 75.1 days in 2003 and 66.5 days in 2002.

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Cash Flows from Investing Activities

Net cash used in investing activities was $12.7 million, $5.8 million and $15.7 million in fiscal years 2003, 2002 and 2001, respectively. Investing activity typically consists of fixed asset purchases, such as survey equipment, computer equipment, furniture and leasehold improvements. However, on December 1, 2002, the Company acquired 100% of the stock of Durham Technologies, Inc. (“DTI”) for $1.5 million, net of cash acquired. The acquisition of DTI contributes to the Company’s goal of enhancing its presence in the growing Emergency Management Services market. DTI’s area of specialty includes risk management and risk assessment for public sector clients, primarily Federal. The acquisition is accounted for using the purchase method of accounting, and the results of operations are included from the respective date of acquisition. On March 19, 2003, the Company signed a purchase agreement to acquired 100% of the stock of Welker & Associates, Inc. (“Welker”) for $4.0 million in cash and $400,000 in restricted stock, totaling a purchase price of $4.4 million. Welker contributes to the Company’s goal of enhancing its presence in the growing Atlanta market. Welker’s areas of specialty include water, wastewater and storm-water management for Georgia’s local governments.

Cash Flows from Financing Activities

Net cash used in financing activities for fiscal year 2003 was $11.4 million, as compared to $6.2 million for fiscal year 2002. The increase in net cash used is primarily attributable to the decrease in net borrowings under the company’s line of credit, offset by the decreased amount of common stock repurchased from retired directors. Net cash used in financing activities for fiscal year 2002 was $6.8 million, as compared to net cash used in financing activities of $4.1million in fiscal year 2001. The increase in net cash used in 2002 is primarily attributable to the re-purchase of common stock from retired directors, offset by an increase in the net borrowings under the company’s line of credit.

Capital Resources

As of September 30, 2003, the Company had a $58 million revolving line of credit agreement, inclusive of $3 million in letters of credit, with a bank. On May 6, 2003, this agreement was amended to increase the maximum aggregate principal amount from $37 million to $55 million. All other terms of the agreement remain the same. The revolving line of credit expires June 30, 2005. The interest rate (1.62% and 2.31% at September 30, 2003 and September 30, 2002, respectively) on the revolving line of credit ranges from LIBOR plus 50 basis points to prime minus 125 basis points if our funded debt average 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 and 3.0. As of September 30, 2003, the fair value of the debt is consistent with the outstanding principal balance. The line of credit contains clauses requiring the maintenance of various covenants and financial ratios. The line of credit is collateralized by substantially all of our assets.

As of September 30, 2003, we had $9.2 million outstanding under the line of credit, which accrued interest at an effective rate of 1.62% at September 30, 2003. By comparison, on September 30, 2002, we had $12.1 million outstanding under the line of credit, which accrued interest at an effective rate of 2.31%. The decrease in the line of credit during 2003 was directly related to the increase in accounts payable.

On March 19, 2001, we entered into a mortgage note 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 1.77% and 2.46% for the fiscal years

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ended September 30, 2003 and 2002, respectively. The mortgage note is collateralized by our office building located in Maitland, Florida.

Our capital expenditures are generally for purchases of property and equipment. We spent $7.6 million, $6.3 million and $14.8 million on such expenditures in fiscal years 2003, 2002 and 2001, respectively. The capital expenditures in fiscal year 2003 and 2002 consisted of equipment, furniture and leasehold improvement purchases, while the capital expenditures in fiscal year 2001 were a result of all of these plus construction costs for the new Orlando office building.

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 2004.

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.

Recent Accounting Pronouncements

In May 2003, the Financial Accounting Standards Board (FASB) issued Statement of Financial Accounting Standards No. 150 (SFAS 150), Accounting for Certain Financial Instruments with Characteristics of both Liabilities and Equity. SFAS 150 establishes standards for how companies classify and measure certain financial instruments with characteristics of both liabilities and equity. It requires companies to classify a financial instrument that is within its scope as a liability (or an asset in some circumstances). SFAS No. 150 is effective immediately for financial instruments entered into or modified after May 15, 2003 and in the first interim period after June 15, 2003 for all other financial instruments. The adoption of SFAS 150 in fiscal 2003 did not have a material impact on the Company’s results of operation or financial position.

In April 2003, the FASB issued Statement of Financial Accounting Standards No. 149 (SFAS 149), Amendment of Statement 133 on Derivative Instruments and Hedging Activities. SFAS 149 amends and clarifies financial accounting and reporting for derivative instruments and for hedging activities under Statement of Financial Accounting Standards No. 133 (SFAS 133), Accounting for Derivative Instruments and Hedging Activities. The adoption of SFAS 149 in fiscal 2003 did not have a material impact on the Company’s results of operation or financial position.

Effective October 1, 2002, the Company adopted Statement of Financial Accounting Standards No. 142 (SFAS 142), Goodwill and Other Intangible Assets. SFAS 142 addresses the financial accounting and reporting for acquired goodwill and other intangible assets. As a result of adopting SFAS 142, goodwill is no longer amortized. Pursuant to SFAS 142, goodwill and other intangible assets must be tested for impairment on an annual basis. See Note 1 to our consolidated financial statements.

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In January 2003, the FASB issued FASB interpretation No. 46, Consolidation of Variable Interest Entities (FIN 46) and amended it in October 2003, such that it is now effective for the Company in the first quarter of fiscal 2004. Variable interest entities (VIE’s) are entities that lack sufficient equity to finance their activities without additional financial support from another parties or whose equity holders lack adequate decision making ability based on criteria set forth in the interpretation. The Company is not involved with any VIE’s, and as a result, the Company do not expect FIN 46 to have a material impact on it’s results of operations or financial position.

In November 2002, the FASB issued FASB Interpretation No. 45, Guarantors Accounting and Disclosure Requirements for Guarantees including Indirect Guarantees of Indebtedness of Others (FIN 45). FIN 45 requires a guarantor to recognize a liability, at the inception of the guarantee, for the fair value of obligations it has undertaken in issuing the guarantee and also requires more detail disclosures with respect to guarantees. FIN 45 is effective for guarantees issued or modified after December 31, 2002, and requires additional disclosures for existing guarantees. The adoption of FIN 45 did not have a material impact on the Company’s results of operations or financial position.

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 generally accepted accounting principles. 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.

Revenue Recognition

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. In the course of providing its services, the Company routinely incurs direct expenses such as sub-contracts for services. In addition, the Company also includes pass-through costs on cost-plus contracts, which are customer-reimbursable materials, equipment and sub-contractor costs when the Company determines that it is responsible for engineering specification, procurement and management of such cost components on behalf of the customer. These direct expenses are principally passed through to the Company’s clients with minimal or no mark-up and, in accordance with industry practice, are included in the Company’s gross revenues. Accordingly, the Company also reports net earned revenue, which is gross revenue less direct expenses. For cost-plus and time and material contracts, the Company reports fees earned based on actual labor multiplied by contractual rates or multipliers. For fixed-price contracts, the Company reports fees earned on the percentage of completion basis, which includes revenue on the basis of costs incurred to date as a percentage of the total estimated costs.

If we do not accurately estimate the resources required or the scope of the work to be performed, or we do not manage our projects properly within the planned periods of time or we do not meet our clients’ expectations under the contracts, then future consulting margins may be significantly and negatively affected or losses on existing contracts may need to be recognized. Any such resulting reductions in margins or contract losses could be material to our results of operations.

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 the deferred tax assets. The tax assets and liabilities arise from temporary differences between the tax return and the financial statement recognition of revenues and expenses.

We must assess the likelihood that we will be able to recover our deferred tax assets. If recovery is not likely, we must increase our tax provision by recording a valuation allowance for the deferred tax assets that we estimate will not ultimately be recoverable. As of September 30, 2003 and 2002, we reported a valuation allowance of $2.6 million and $2.1 million, respectively.

In addition, the calculation of our tax assets and liabilities involves dealing with uncertainties in the application of complex tax regulations. We may recognize a tax asset or reduce taxes payable for anticipated state or federal tax credits, such as those relating to the research and development tax credit.

Contingencies

Management estimates are inherent in the assessment of the Company’s exposure to litigation and other legal claims and contingencies. Significant management judgment and reliance on third party experts are utilized in determining probable and or reasonably estimable amounts to be recorded or disclosed in the Company’s financial statements. The results of any changes in accounting estimates are reflected in the financial statements of the period in which the changes are determined.

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Contractual Obligations

The Company is 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. As of September 30, 2003, the future minimum annual rental commitments under operating and capital leases are as follows (dollars in thousands):

Total rent expense included in general and administrative expenses was $14.0 million, $11.9 million and $10.8 million for fiscal years ended 2003, 2002 and 2001, respectively.

Quantitative and Qualitative Disclosures

about Market Risk

We believe that our exposure to market risks is minimal. 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. Both at inception of the hedge and on an ongoing basis, we assume there is no ineffectiveness in the hedging relationship of interest rate risk involving interest-bearing debt and the interest-rate swap. The effectiveness of the hedge is evaluated on a quarterly basis. Based on a hypothetical 1% point increase in the period ending market interest rate as of September 30, 2003, the change in the fair value of this liability would be approximately $200,000. We believe this instrument will be highly effective in the hedging of cash flows. We hold no other financial instruments or derivative commodity instruments to hedge any market risk, nor do we currently plan to employ them in the near future.

The interest rate (1.62% and 2.31% at September 30, 2003 and September 30, 2002, respectively) on our revolving line of credit and term loan 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. The Company mitigates 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 term loan. As of September 30, 2003, the fair value of the debt is consistent with the outstanding principal balance.

The interest rates under our revolving line of credit and term loan are variable. To the extent that we have borrowings outstanding, there may be market risk relating to the amount of such borrowings, however, our exposure is minimal due to the short-term nature of these borrowings.

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Report of Independent Certified Public Accountants

To the Board of Directors and

Stockholders of The PBSJ Corporation

In our opinion, the accompanying consolidated financial statements, listed in the index appearing under Item 15 (a)(1), present fairly, in all material respects, the financial position of The PBSJ Corporation and its subsidiaries (the “Company”) at September 30, 2003 and 2002, and the results of their operations and their cash flows for each of the three years in the period ended September 30, 2003, in conformity with accounting principles generally accepted in the United States of America. These financial statements are the responsibility of the Company’s management; our responsibility is to express an opinion on these financial statements based on our audits. We conducted our audits of these statements in accordance with auditing standards generally accepted in the United States of America, which require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements, assessing the accounting principles used and significant estimates made by management, and evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion.

As discussed in Note 1 to the consolidated financial statements, pursuant to the adoption of Statement of Financial Accounting Standards No. 142, Goodwill and Other Intangible Assets, the Company changed its method of accounting for goodwill.

/s/    PricewaterhouseCoopers LLP

December 12, 2003

Miami, Florida

33

Table of Contents

THE PBSJ CORPORATION

CONSOLIDATED

BALANCE SHEETS

(in thousands, except share data)

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

34

Table of Contents

THE PBSJ CORPORATION

CONSOLIDATED STATEMENTS OF OPERATIONS

(in thousands)

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

35

Table of Contents

THE PBSJ CORPORATION

CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY

FOR THE YEARS ENDED SEPTEMBER 30, 2003, 2002 AND 2001

(in thousands, except share data)