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Ecology & Environment has cut about 20 jobs at its Lancaster testing laboratory as the environmental services company grapples with a drop in the level of work and stiff price competition, the company said Monday.

The job cuts, which have trimmed the lab's work force to between 30 and 40 people, come as the lab's continued struggles -- and its 47 percent plunge in revenues during the quarter -- led to a $69,000 loss during the three-month period.

"There's less lab work being done," said Ronald L. Frank, E&E's executive vice president and chief financial officer.

The lab, which E&E has restructured in recent years in an effort to improve its profitability, was stung by a sharp drop in work from the U.S. Defense Department that the company blamed on funding cutbacks for environmental projects as resources are diverted to the Iraq war.

E&E officials are looking at a variety of alternatives to shore up the lab, including the hope of lining up additional work for the facility, Frank said. The company also is trying to reduce costs at the lab by lining up less expensive suppliers.

E&E's quarterly loss, which equaled 2 cents per share, compared with a loss of $2.2 million a year ago, when the company had a $3.6 million write-off stemming from its decision to close its money-losing shrimp farm in Costa Rica. Excluding the shrimp farm, E&E had a $1.4 million profit from its continuing operations during the fourth quarter of last year.

E&E's net revenues dropped by 12 percent to $21.6 million during the quarter that ended on July 31, down from $24.5 million a year ago. Revenues from commercial clients fell by 26 percent to $2.3 million, while Defense Department work dropped by 28 percent to $2.8 million and sales to state clients slid by 12 percent to $3.7 million.

Revenues at E&E's testing lab plunged by 47 percent to $1 million, primarily because of the decline in defense work. The lab's operating loss swelled to $609,000, compared with an operating profit of $32,000 a year ago.

The company also wrote down the value of its fish farm in Jordan by $442,000, reducing E&E's earnings from continuing operations by 3 cents per share. The fish farm, which raises tilapia that mainly is sold in Jordan and Israel, has never been profitable and was extensively damaged during a severe flood about 1 1/2 years ago.

The flooding in the Jordan River pushed water above the top of the tanks holding the farm's fish, allowing them to escape. "We lost pretty much a year of production," Frank said.

E&E, which owns a 51 percent stake in the farm, said the facility needs about $300,000 in additional working capital to fund its future operations, but that its partners in the fish venture have yet to agree to back the infusion.

In a separate filing with the Securities and Exchange Commission, First Carolina Investors, an investment firm that is part of a group controlled by Buffalo investor Brent D. Baird, said Monday it had sold 60,300 shares of E&E's Class A stock at an average price of $9.03 per share from Oct. 12-29. The Baird group, which has been steadily selling off a stake in E&E that once approached 35 percent, now controls 20.6 percent of the firm's Class A shares.


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