EX-99.1 2 exhibit99-1.htm EXHIBIT 99.1 Sub Filer Id
                      Exhibit 99.1

 
 
 
 
Contacts:
URS Corporation                                Sard Verbinnen & Co
 
H. Thomas Hicks                           Hugh Burns/Jamie Tully
Vice President                                (212) 687-8080
& Chief Financial Officer
(415) 774-2700
                                                                            
 
URS CORPORATION REPORTS SECOND QUARTER
RESULTS FOR FISCAL 2007

Revenues Up 17 Percent, EPS Up 11 Percent
From Second Quarter 2006

Company Raises 2007 Revenue and EPS Guidance
 
 
SAN FRANCISCO, CA - August 8, 2007 - URS Corporation (NYSE: URS) today reported its financial results for the second quarter of fiscal 2007, which ended on June 29, 2007. Revenues for the quarter were $1.25 billion, compared with revenues of $1.07 billion during the second quarter of 2006, an increase of 17%. Net income was $36.8 million, an increase of 13% over the $32.6 million reported for the corresponding period in 2006. Earnings per share (“EPS”) of $0.70, fully diluted, increased 11%, compared with EPS of $0.63, fully diluted, for the same period last year.
 
As of June 29, 2007, the Company’s backlog was $5.75 billion, compared to $4.64 billion as of December 29, 2006, an increase of 24%.
 
Commenting on the Company’s financial results, Martin M. Koffel, Chairman and Chief Executive Officer, stated: “URS had another excellent quarter, highlighted by record revenues, net income and EPS. Our results were driven by strong growth in our private sector business, particularly emissions control work for utility companies. The increase in our state and local government revenues reflects the increased investment in, and funding for, infrastructure projects. Our success in these markets more than offset the temporary weakness in certain parts of our federal sector, and underscore the strength of the diverse, strategic portfolio of businesses we have assembled. We ended the quarter with the largest book of business in URS’ history.”
 
1
 
Mr. Koffel continued: “Given our record book of business, and positive trends across our domestic private sector, state and local government, and international businesses, we believe the Company is well positioned for continued growth over the remainder of 2007 and into 2008.”
 
For the purpose of calculating diluted EPS, weighted-average shares outstanding for the second quarter of 2007 were 52.8 million, compared to 51.5 million for the corresponding period last year.

Results for Six Months Ended June 29, 2007
 
For the six months ended June 29, 2007, revenues increased by 15% to $2.38 billion, from $2.07 billion for the first six months of 2006. Net income for the six months ended June 29, 2007 was $67.2 million, or $1.28 per diluted share. Net income for the comparable period in 2006 was $56.8 million, or $1.11 per diluted share.
 
Weighted-average shares outstanding for the first half of 2007 for purposes of calculating diluted EPS were 52.4 million compared to 51.4 million weighted-average shares outstanding for the comparable period of 2006.

Business Segments
 
In addition to providing consolidated financial results, URS reports separate financial information for its two segments: the URS Division and the EG&G Division. The URS Division’s revenues include the Company’s work in the state and local government market, the private sector and the international business. In addition, the URS Division provides engineering services to federal government agencies, primarily for contingency contracts and facilities and environmental projects. The EG&G Division primarily serves the federal government market, providing a range of operations and maintenance and technical support services to the Departments of Defense, Homeland Security, Energy, Treasury and NASA, among others.
 
    URS Division. For the second quarter of fiscal 2007, the URS Division reported revenues of $873.5 million and operating income of $60.9 million, compared to revenues of $689.5 million and operating income of $50.5 million for the corresponding period in 2006.
 
For the six months ended June 29, 2007, the URS Division reported revenues of $1.67 billion and operating income of $116.2 million, compared to revenues of $1.33 billion and operating income of $93.0 million for the same period last year.
 
2
EG&G Division. For the second quarter of fiscal 2007, the EG&G Division reported revenues of $377.8 million and operating income of $21.9 million, compared to revenues of $385.3 million and operating income of $22.8 million for the corresponding period in 2006.
 
For the six months ended June 29, 2007, the EG&G Division reported revenues of $722.9 million and operating income of $38.2 million, compared to revenues of $745.6 million and operating income of $38.1 million for the same period last year.

Update on Washington Group International Acquisition
 
    As announced on July 10, URS received Hart-Scott-Rodino antitrust clearance for its proposed acquisition of Washington Group International. The two companies subsequently filed a preliminary joint proxy statement with the U.S. Securities and Exchange Commission on July 19, which is currently being reviewed by the Commission. Once cleared by the Commission, URS will schedule its stockholder meeting and mail its definitive proxy statement to stockholders. The acquisition is expected to close in the early part of the fourth quarter.

Outlook for the Remainder of Fiscal 2007
 
Based on revenue growth for the first half of 2007 and the Company’s continued positive outlook for its markets, the Company now expects that 2007 revenues will be approximately $4.8 billion, compared to its prior estimate of $4.65 billion. Assuming this revenue expectation is met, the Company now expects that 2007 net income will be approximately $132 million, compared to its prior estimate of $128 million, and now expects that earnings per share will be between $2.45 and $2.50. Previously, the Company had expected that EPS would be at the high end of a $2.40 to $2.45 range.
 
In addition, the Company continues to expect its effective tax rate for 2007 to be approximately 42.0%, compared to 42.6% in 2006. Finally, the Company’s weighted-average shares outstanding for 2007 is expected to be 53.2 million, compared with 51.7 million in 2006.
 
The Company noted that the guidance provided above does not include the impact of its pending acquisition of Washington Group International.


3

 
Web Cast Information
URS will host a dial-in conference call on Thursday, August 9 at 11:00 a.m. (EDT) to discuss its second quarter fiscal 2007 results. A live web cast of this call will be available on the investor relations portion of URS’ website at www.urscorp.com.
 
URS Corporation offers a comprehensive range of professional planning and design, systems engineering and technical assistance, program and construction management, and operations and maintenance services for transportation, facilities, environmental, water/wastewater, industrial infrastructure and process, homeland security, installations and logistics, and defense systems. Headquartered in San Francisco, the Company operates in more than 20 countries with approximately 30,400 employees providing engineering and technical services to federal, state and local governmental agencies as well as private clients in the chemical, pharmaceutical, oil and gas, power, manufacturing, mining and forest products industries (www.urscorp.com).
 

 
 
TABLES TO FOLLOW
 
# # #
Statements contained in this earnings release that are not historical facts may constitute forward-looking statements, including statements relating to future revenues and business trends, future earnings, future tax rates, future timing of and the satisfaction of conditions to the Company’s merger with Washington Group International, future outstanding shares and future economic and industry conditions. The Company believes that its expectations are reasonable and are based on reasonable assumptions. However, such forward-looking statements by their nature involve risks and uncertainties. We caution that a variety of factors could cause the Company’s business and financial results to differ materially from those expressed or implied in the Company’s forward-looking statements. These factors include, but are not limited to: an economic downturn; changes in the Company’s book of business; the Company’s compliance with government contract procurement regulations; the Company’s ability to procure government contracts; the Company’s reliance on government appropriations; the ability of the government to unilaterally terminate the Company’s contracts; the Company’s ability to make accurate estimates and control costs; the Company’s and our partners’ ability to bid on, win, perform and renew contracts and projects; environmental issues and liabilities; liabilities for pending and future litigation; the impact of changes in laws and regulations; the Company’s ability to maintain adequate insurance coverage; a decline in defense spending; industry competition; the Company’s ability to attract and retain key individuals; employee, agent or partner misconduct; risks associated with changes in equity-based compensation requirements; the Company’s leveraged position and ability to service the Company’s debt; the Company’s future indebtedness upon the completion or termination of the Company’s proposed merger with Washington Group International; risks associated with international operations; business activities in high security risk countries; project management and accounting software risks; terrorist and natural disaster risks; the Company’s relationships with its labor unions; the Company’s ability to protect its intellectual property rights; anti-takeover risks and other factors discussed more fully in the Company's Form 10-Q for the quarter ended June 29, 2007, and in the Company’s preliminary joint proxy statement/prospectus, as amended, filed on July 19, 2007 with the Securities and Exchange Commission (the "SEC") as well as in other reports filed from time to time with the SEC . These forward-looking statements represent only the Company’s current intentions, beliefs or expectations, and any forward-looking statement speaks only as of the date on which it was made. The Company assumes no obligation to revise or update any forward-looking statements.

4
 
Additional Information and Where to Find It 
 
In connection with the proposed transaction, URS Corporation (“URS”) and Washington Group International (“Washington Group”) filed a preliminary joint proxy statement/prospectus, as amended, with the SEC on July 19, 2007 and URS intends to file a registration statement on Form S-4. Investors and security holders are urged to read the registration statement on Form S-4 and the related preliminary and definitive joint proxy statement/prospectus when they become available because they will contain important information about the proposed transaction. Investors and security holders may obtain free copies of these documents (when they are available) and other documents filed with the SEC at the SEC’s website at www.sec.gov. In addition, investors and security holders may obtain free copies of the documents which URS filed with the SEC by contacting URS Investor Relations at 877-877-8970. Investors and security holders may obtain free copies of the documents which Washington Group filed with the SEC by contacting Washington Group Investor Relations at 866-964-4636. 

URS, Washington Group and their directors and executive officers may be deemed participants in the solicitation of proxies from the stockholders of URS and Washington Group in connection with the proposed transaction. Information regarding the special interests of these directors and executive officers in the proposed transaction will be included in the joint proxy statement/prospectus of URS and Washington Group described above. Additional information regarding the directors and executive officers of URS is also included in URS’ proxy statement for its 2007 Annual Meeting of Stockholders, which was filed with the SEC on April 18, 2007. Additional information regarding the directors and executive officers of Washington Group is also included in Washington Group’s proxy statement for its 2007 Annual Meeting of Stockholders, which was filed with the SEC on April 17, 2007, as amended. These documents are available free of charge at the SEC’s website at www.sec.gov and from Investor Relations at URS and Washington Group as described above.









 
5

URS CORPORATION AND SUBSIDIARIES
(In thousands, except per share data)


   
June 29, 2007
  
December 29, 2006
  
ASSETS
          
Current assets:
              
Cash and cash equivalents, including $35,770 and $44,557 of short-term money market funds, respectively
  
$
63,511
  
$
89,502
  
Accounts receivable, including retainage of $39,391 and $37,368, respectively
    
684,585
    
680,631
  
Costs and accrued earnings in excess of billings on contracts in process
    
585,134
    
552,526
  
Less receivable allowances
    
(38,313
)
  
(50,458
)
Net accounts receivable
    
1,231,406
    
1,182,699
  
Deferred tax assets
    
40,725
   
36,547
  
Prepaid expenses and other assets
    
86,243
    
65,405
  
Total current assets
    
1,421,885
    
1,374,153
  
Property and equipment at cost, net
    
170,011
    
163,142
  
Goodwill
    
1,006,832
    
989,111
  
Purchased intangible assets, net
    
3,339
    
3,839
  
Other assets
    
32,862
    
50,784
  
   
$
2,634,929
  
$
2,581,029
  
LIABILITIES, MINORITY INTEREST, AND STOCKHOLDERS’ EQUITY
              
Current liabilities:
              
Book overdrafts
  
$
819
  
$
3,334
  
Current portion of long-term debt
    
16,487
    
19,120
  
Accounts payable and subcontractors payable, including retainage of $24,205 and $19,515, respectively 
    
307,463
    
290,651
  
Accrued salaries and wages
    
234,371
    
230,905
  
Accrued expenses and other
    
79,157
    
73,704
  
Billings in excess of costs and accrued earnings on contracts in process
    
128,956
    
168,271
  
Total current liabilities
    
767,253
    
785,985
  
Long-term debt
    
116,004
    
149,494
  
Deferred tax liabilities
    
17,453
    
17,808
  
Other long-term liabilities
    
128,887
    
117,586
  
Total liabilities
    
1,029,597
    
1,070,873
  
Commitments and contingencies
              
Minority interest
    
6,768
    
3,469
  
Stockholders’ equity:
              
Preferred stock, authorized 3,000 shares; no shares outstanding
    
—
    
—
  
Common shares, par value $.01; authorized 100,000 shares; 53,107 and 52,309 shares issued, respectively; and 53,055 and 52,257 shares outstanding, respectively
    
531
    
523
  
Treasury stock, 52 shares at cost
    
(287
)
  
(287
)
Additional paid-in capital
    
999,711
    
973,892
  
Accumulated other comprehensive loss
    
(462
)
  
(3,638
)
Retained earnings
    
599,071
    
536,197
  
Total stockholders’ equity
    
1,598,564
    
1,506,687
  
   
$
2,634,929
  
$
2,581,029
  
               




6




URS CORPORATION AND SUBSIDIARIES
(In thousands, except per share data)


   
Three Months Ended
  
Six Months Ended
  
   
June 29,
2007
  
June 30,
2006
  
June 29,
2007
  
June 30,
2006
  
                   
Revenues
  
$
1,246,798
  
$
1,069,991
  
$
2,382,393
  
$
2,068,140
  
Direct operating expenses
    
835,277
    
690,931
    
1,576,831
    
1,322,235
  
Gross profit
    
411,521
    
379,060
    
805,562
    
745,905
  
Indirect, general and administrative expenses
   
343,059
    
316,874
    
679,414
    
636,045
  
Operating income
    
68,462
    
62,186
    
126,148
    
109,860
  
Interest expense
    
4,051
    
5,850
    
7,991
    
10,985
  
    Income before income taxes and minority interest
    
64,411
    
56,336
    
118,157
    
98,875
  
Income tax expense
    
26,726
    
23,599
    
49,032
    
41,592
  
Minority interest in income of consolidated subsidiaries, net of tax
    
883
    
99
    
1,962
    
457
  
Net income
    
36,802
    
32,638
    
67,163
    
56,826
  
Other comprehensive income (loss):
                          
Minimum pension liability adjustments, net of tax benefit
    
—
    
—
   
—
   
(2,366
)
Foreign currency translation adjustments 
    
2,206
    
2,538
    
3,176
    
2,582
  
Comprehensive income
  
$
39,008
  
$
35,176
  
$
70,339
  
$
57,042
  
Earnings per share:
                          
Basic
  
$
.71
  
$
.64
  
$
1.31
  
$
1.13
  
Diluted
  
$
.70
  
$
.63
  
$
1.28
  
$
1.11
  
Weighted-average shares outstanding:
                          
Basic
    
51,484
    
50,635
    
51,367
    
50,469
  
Diluted
    
52,782
    
51,519
    
52,444
    
51,425
  





7

 


URS CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS - UNAUDITED
(In thousands)

   
Three Months Ended
  
Six Months Ended
  
   
June 29,
2007
  
June 30,
2006
  
June 29,
2007
  
June 30,
2006
  
           
Cash flows from operating activities:
                          
Net income
  
$
36,802
  
$
32,638
  
$
67,163
  
$
56,826
  
Adjustments to reconcile net income to net cash from operating activities:
                          
Depreciation and amortization
    
10,032
    
10,092
    
19,716
    
19,279
  
Amortization of debt issuance costs
    
428
    
468
    
857
    
929
  
Provision for doubtful accounts
    
1,197
    
(1,065
)
  
1,727
    
2,948
  
Deferred income taxes
    
(385
)
  
3,787
    
(634
)
  
1,075
  
Stock-based compensation
    
7,288
    
4,132
    
13,924
    
7,909
  
Excess tax benefits from stock-based compensation
    
(2,522
)
  
(1,422
)
  
(4,022
)
  
(2,609
)
Minority interest in net income of consolidated subsidiaries
    
883
    
99
    
1,962
    
457
  
Changes in assets and liabilities:
                          
Accounts receivable and costs and accrued earnings in excess of billings on contracts in process
    
(58,573
)
  
(14,304
)
  
(58,139
)
  
(38,923
)
Prepaid expenses and other assets
    
(7,699
)
  
(19,216
)
  
(15,282
)
  
(25,045
)
Accounts payable, accrued salaries and wages and accrued expenses
    
87,382
    
31,013
    
38,708
    
(33,757
)
Billings in excess of costs and accrued earnings on contracts in process
    
2,847
    
8,205
    
(39,315
)
  
12,132
  
Distributions from unconsolidated affiliates, net
   
3,400
    
2,137
    
8,424
    
17,640
  
Other, net
    
(8,142
)
  
(5,893
)
  
(10,377
)
  
(7,729
)
Total adjustments and changes
    
36,136
    
18,033
    
(42,451
)
  
(45,694
)
Net cash from operating activities
    
72,938
    
50,671
    
24,712
    
11,132
  
 
Cash flows from investing activities:
                          
Capital expenditures, less equipment purchased through capital leases and equipment notes
    
(8,431
)
  
(4,648
)
  
(13,202
)
  
(9,794
)
Net cash from investing activities
    
(8,431
)
  
(4,648
)
  
(13,202
)
  
(9,794
)
 
Cash flows from financing activities:
                          
Long-term debt principal payments
    
(35,390
)
  
(56,737
)
  
(35,769
)
  
(68,481
)
Long-term debt borrowings
    
—
    
552
    
—
    
552
  
Net borrowings (payments) under the lines of credit and short-term notes
    
(83
)
  
1,236
    
(4,788
)
  
5,018
  
Net change in book overdrafts
    
(30,317
)
  
21,431
    
(2,515
)
  
21,420
  
Capital lease and equipment note obligation payments
    
(3,593
)
  
(5,776
)
  
(6,889
)
  
(8,834
)
Excess tax benefits from stock-based compensation
    
2,522
    
1,422
    
4,022
    
2,609
  
Proceeds from employee stock purchase plan and exercise of stock options
    
1,011
    
9,439
    
8,438
    
22,089
  
Net cash from financing activities
    
(65,850
)
  
(28,433
)
  
(37,501
)
  
(25,627
)
Net decrease in cash and cash equivalents
    
(1,343
)
  
17,590
    
(25,991
)
  
(24,289
)
Cash and cash equivalents at beginning of period
    
64,854
    
59,666
    
89,502
    
101,545
  
Cash and cash equivalents at end of period
  
$
63,511
  
$
77,256
  
$
63,511
  
$
77,256
  
                           
Supplemental information:
                          
     Interest paid
  
$
3,198
  
$
4,787
  
$
8,282
  
$
9,408
  
Taxes paid
  
$
20,516
  
$
26,914
  
$
46,894
  
$
33,043
  
                           
 
8

URS CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS - UNAUDITED
(In thousands)

 

   
Three Months Ended
  
Six Months Ended
  
   
June 29,
2007
  
June 30,
2006
  
June 29,
2007
  
June 30,
2006
  
Supplemental schedule of noncash investing and financing activities:
                          
Fair value of assets acquired (net of cash acquired)
  
$
16,888
  
$
—
  
$
16,888
  
$
—
  
Liabilities assumed
    
127
    
—
    
127
    
—
  
Non cash business acquisition
  
$
16,761
  
$
—
  
$
16,761
  
$
—
  
Equipment acquired through capital lease and equipment note obligations
  
$
3,779
  
$
13,597
  
$
11,249
  
$
18,651
  
                           

 
 






9

 

URS CORPORATION AND SUBSIDIARIES
REVENUES BY CLIENT TYPE - UNAUDITED
(In millions)


   
Three Months Ended
  
Six Months Ended
  
   
June 29,
2007
  
June 30,
2006
  
June 29,
2007
  
June 30,
2006
  
                   
Federal Government Clients:
                          
URS Division
  
$
132
  
$
131
  
$
249
  
$
255
  
EG&G Division
    
378
    
385
    
723
    
745
  
     
510
    
516
    
972
    
1,000
  
State and local government clients
    
278
    
217
    
532
    
429
  
Domestic private industry clients
    
334
    
239
    
638
    
447
  
International clients
    
125
    
98
    
240
    
192
  
Total revenues
  
$
1,247
  
$
1,070
  
$
2,382
  
$
2,068
  
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
10