FORM 10-K
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
(Mark one)
[x] ANNUAL REPORT PURSUANT TO SECTION 13 or 15(d) OF THE SECURITIES EXCHANGE
ACT OF 1934
For the Fiscal Year Ended October 31, 1994
or
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 or 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the Transition Period from ___ to ___
Commission file number 1-7567
URS CORPORATION
(Exact name of registrant as specified in its charter)
Delaware 94-1381538
(State or other jurisdiction (I.R.S. Employer
of incorporation) Identification No.)
100 California Street, Suite 500,
San Francisco, California 94111-4529
(Address of principal executive offices) (Zip Code)
(415) 774-2700
(Registrant's telephone number, including area code)
Securities registered pursuant to Section 12(b) of the Act:
Title of each class: Name of each exchange on which registered:
Common Shares, par value $.01 per share New York Stock Exchange
Pacific Stock Exchange
8 5/8% Senior Subordinated Debentures New York Stock Exchange
due 2004 Pacific Stock Exchange
6 1/2% Convertible Subordinated Debentures New York Stock Exchange
due 2012 Pacific Stock Exchange
Securities registered pursuant to Section 12(g) of the Act:
None
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 filing requirements 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 registrant's knowledge, in definitive proxy or information
statements incorporated by reference in Part III of this Form 10-K, or any
amendment to this Form 10-K. [X]
On December 15, 1994, there were 6,995,732 Common Shares outstanding, and
the aggregate market value of the Common Shares of URS Corporation held by
nonaffiliates was approximately $18.8 million based on the closing sales
price as reported in the consolidated transaction reporting system.
Documents Incorporated by Reference
Items 10, 11, and 12 of Part III incorporate information by reference from
the Registrant's definitive Proxy Statement for the Annual Meeting of
Stockholders to be held on March 21, 1995.
Exhibit Index on Page 45
Page 1 of 90
PART I
ITEM 1. BUSINESS
URS Corporation (the "Company") offers a broad range of planning, design
and program and construction management services for engineering,
architectural and environmental projects. The Company serves public and
private sector clients throughout the United States in two principal
markets: infrastructure projects involving transportation systems;
institutional and commercial facilities and water resources; and
environmental projects involving hazardous waste management and pollution
control.
The Company conducts its business through 24 offices located throughout
the United States. The Company has approximately 1,100 full-time
employees, many of whom hold advanced or technical degrees and have
extensive experience in sophisticated disciplines applicable to the
Company's business. The Company believes that its geographic and technical
diversity allow it to compete for local, regional and national projects,
and enable it to apply to each project a variety of resources from its
national network.
Services
--------
The Company provides professional services in three major areas:
planning, design and program and construction management through the
Company's 24 offices. Each of these offices is responsible for obtaining
local or regional contracts. This approach allows regional government
agencies and private clients to view the Company's offices as local
businesses with superior service delivery capabilities. Because the
Company can draw from its large and diverse network of professional and
technical resources, the Company has the capability to market and perform
large multi-state projects.
Planning
- --------
Planning covers a broad range of assignments ranging from conceptual
design and technical and economic feasibility studies to community
involvement programs. Planning services also involve developing
alternative concepts for project implementation and analyzing the impacts
of each alternative.
In addition to traditional engineering and architectural planning
services, the Company has extensive expertise in a number of highly
specialized areas, including toll facilities, health care facility
renovation, environmental site analysis, water quality planning for urban
storm water management and site remediation assignments.
Design
- ------
The Company's professionals provide a broad range of design and
design-related services, including computerized mapping, architectural and
interior design, civil, sanitary and geotechnical engineering, process
design and seismic (earthquake) analysis and design. For each project, the
Company identifies the project requirements and then integrates and
Page 2 of 118
coordinates the various design elements. The result is a set of contract
documents that may include plans, specifications and cost estimates that
are used to build a project. These documents detail design characteristics
and set forth for the contractor the materials which should be used and the
schedule for construction. Other critical tasks in the design process may
include value analysis and the assessment of construction and maintenance
requirements.
Program and Construction Management
- -----------------------------------
The Company's program and construction management services include
master scheduling of both the design and construction phases, construction
and life-cycle cost estimating, cash flow analysis, value engineering,
constructability reviews and bid management. Once construction has begun,
the Company supervises and coordinates the activities of the construction
contractor. This frequently involves acting as the owner's representative
for on-site supervision and inspection of the contractor's work. In this
role, the Company's objective is to monitor a project's schedule, cost and
quality. The Company generally does not take contractual responsibility
for the contractor's risks and methods, nor for site safety conditions.
Markets
-------
The Company's strategy is to focus on two major markets: infrastructure
projects involving transportation systems; institutional and commercial
facilities and water resources; and environmental projects involving
hazardous waste management and pollution control. The Company has
developed a nationwide identity based on its successful completion of a
number of highly visible rehabilitation and expansion projects in these
markets. Although the Company views these markets as being distinct, the
Company provides its planning, design and program and construction
management services to both markets.
Infrastructure
- --------------
The Company has significant expertise in three areas relating to the
infrastructure market: transportation systems, institutional and commercial
facilities and water resources projects.
TRANSPORTATION SYSTEMS. The Company's engineers, designers, planners
and managers provide services for projects involving all types of
transportation networks, such as highways, roadways, streets, bridges,
rapid and mass transit systems, airports and marine facilities. These
services range from the design of interstate highways to harbor traffic
simulation studies and may extend from conceptual planning through
preliminary and final design to construction management. Historically, the
Company's emphasis in this market area has been on the design of new
transportation facilities, but in recent years the rehabilitation of
existing facilities has become a major focus.
INSTITUTIONAL AND COMMERCIAL FACILITIES. The Company provides
architectural, engineering design, space planning and construction
supervision services to this market area. Demand for low-maintenance,
energy efficient facilities drive today's market for commercial and
industrial buildings. In addition, there is increased pressure to renovate
facilities to meet changing needs and current building standards.
Page 3 of 118
WATER RESOURCES. The Company's capabilities in this market area include
the planning, design and program and construction management of water
supply, storage, distribution and treatment systems, as well as work in
basin plans, groundwater supply, customer rate studies, urban run-off, bond
issues, flood control, water quality analysis and beach erosion control.
Environmental
- -------------
The Company has developed expertise in two principal environmental
markets: hazardous waste management and pollution control.
HAZARDOUS WASTE MANAGEMENT. The Company conducts initial site
investigations, designs remedial actions for site clean-up and provides
construction management services during site clean-up. This market
involves identifying and developing measures to effectively dispose of
hazardous and toxic waste at contaminated sites. The Company also provides
air quality monitoring and designs individual facility modifications
required to meet local, state and Federal air quality standards. This work
requires specialized knowledge of and compliance with complex Federal and
state regulations, as well as the permitting and approval processes. Solid
waste management services provided by the Company include facility siting,
transfer station design and community-wide master planning.
The Company has been awarded several significant contracts with
government agencies, including a contract with the U.S. Department of
Defense for environmental engineering and remediation work in the Northwest
and Alaska under the Comprehensive Long-Term Environmental Action-Navy
("Navy CLEAN") program and two contracts with the U.S. Environmental
Protection Agency ("EPA") under its Alternative Remedial Contracting
Strategy ("EPA ARCS") program. Under the Navy CLEAN contract, the Company
provides site inspections, site characterizations, remediation designs and
action plans for contaminated Navy facilities. A portion of the Navy CLEAN
contract, which is expected to have a ten-year term, is awarded each year
over the life of the contract. In fiscal 1994 and 1993, the Company
generated revenues associated with the Navy CLEAN contract of $14.3 million
and $22.1 million, respectively. The Company's services under the ten-
year EPA ARCS contracts include investigating the nature and extent of
contamination by hazardous materials, performing risk assessments,
evaluating the feasibility of various options for remedial action and
providing management, technical, quality assurance and health and safety
reviews of potentially responsible party submittals. Work under the EPA
ARCS contracts is performed on a task order basis. In fiscal 1994 and
1993, the Company recognized revenues of $26.7 million and $16.5 million,
respectively, under the EPA ARCS contracts.
POLLUTION CONTROL. The Company's principal services in this market
include the planning and design of new wastewater facilities, such as sewer
systems and wastewater treatment plants, and the analysis and expansion of
existing systems. The types of work performed by the Company include
infiltration/inflow studies, combined sewer overflow studies, water quality
facilities planning projects and design and construction management
services for wastewater treatment plants.
Page 4 of 118
Clients
-------
General
- -------
The Company's clients include local, state and Federal government
agencies and private sector businesses. Since 1990, revenues from Federal
government projects have increased as a percentage of the Company's total
revenues. The Company's revenues from local, state and Federal government
agencies and private businesses for the last five fiscal years are as
follows:
1994 1993 1992 1991 1990
------ ------ ------ ------ ------
(In thousands)
Local and state
agencies $ 88,207 54% $ 80,350 55% $ 65,315 48% $ 68,720 56% $ 62,056 59%
Federal agencies 59,611 36 48,713 33 52,530 38 35,614 29 28,398 27
Private businesses 16,270 10 16,698 12 18,948 14 18,504 15 14,725 14
------- ---- ------- ---- ------- ---- ------- ---- ------- ----
Total $164,088 100% $145,761 100% $136,793 100% $122,838 100% $105,179 100%
======= ==== ======= ==== ======= ==== ======= ==== ======= ====
Page 5 of 118
Contract Pricing and Terms of Engagement
- ----------------------------------------
Under its cost-plus contracts, the Company charges clients negotiated
rates based on the Company's direct and indirect costs. Labor costs and
subcontractor services are the principal components of the Company's direct
costs. Federal Acquisition Regulations limit the recovery of certain
specified indirect costs on contracts subject to such regulations. In
negotiating a cost-plus contract, the Company estimates all recoverable
direct and indirect costs and then adds 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. The Company receives
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, the Company must obtain a
contract modification in order to receive payment for such overage. The
Company's profit margin will increase to the extent the Company is able to
reduce actual costs below the estimates used to produce the negotiated
fixed prices on contracts not covered by Federal Acquisition Regulations;
conversely, the Company's profit margin will decrease and the Company may
realize a loss on the project if the Company does not control costs and
exceeds the overall estimates used to produce the negotiated price.
Cost-plus contracts covered by Federal Acquisition Regulations require
an audit of actual costs and provide for upward or downward adjustments if
actual recoverable costs differ from billed recoverable costs. The Defense
Contract Audit Agency, auditors for the Department of Defense and other
Federal agencies, has completed incurred cost audits of the Company's
Federal contracts for fiscal years ended through October 31, 1986,
resulting in immaterial adjustments.
Under its fixed-price contracts, the Company receives an agreed sum
negotiated in advance for the specified scope of work. Under fixed-price
contracts, no payment adjustments are made if the Company over-estimates or
under-estimates the number of labor hours required to complete the project,
unless there is a change of scope in the work to be performed.
Accordingly, the Company's 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 the Company may realize a loss on the
project if the number of labor hours required and other costs exceed the
estimates.
Backlog, Project Designations and Indefinite Delivery Contracts
- ---------------------------------------------------------------
The Company's contract backlog was $159.1 million at October 31, 1994,
compared to $142.0 million at October 31, 1993. The Company's contract
backlog consists of the amount billable at a particular point in time for
future services under executed funded contracts. Indefinite delivery
contracts, which are executed contracts requiring the issuance of task
orders, are included in contract backlog only to the extent the task orders
are actually issued and funded. Of the contract backlog of $159.1 million
at October 31, 1994, approximately 30%, or $48.0 million, is not reasonably
expected to be filled within the next fiscal year ending October 31, 1995.
The Company has also been designated by customers as the recipient of
certain future contracts. These "designations" are projects that have been
Page 6 of 118
awarded to the Company but for which contracts have not yet been executed.
Task orders under executed indefinite delivery contracts which are expected
to be issued in the immediate future are included in designations. Total
contract designations were estimated to be $172.0 million at October 31,
1994, as compared to $213.6 million at October 31, 1993. Typically, a
significant portion of designations are converted into signed contracts.
However, there is no assurance this will continue to occur in the future.
Indefinite delivery contracts are signed contracts where work is
performed only when specific task orders are issued by the client.
Generally these contracts exceed one year and often indicate a maximum term
and potential value. Examples of such contracts are the Navy CLEAN and EPA
ARCS contracts. Certain indefinite delivery contracts are for a definite
time period with renewal option periods at the client's discretion. While
the Company believes that it will continue to get work under these
contracts over their entire term, because of renewals and the necessity for
issuance of individual task orders, continued work by the Company and the
realization of their potential maximum values under these contracts is not
assured.
However, because of the increasing frequency with which the Company's
government and private sector clients use this contracting method, the
Company believes their potential value should be disclosed along with
backlog and designations as an indicator of the Company's future business.
When the client notifies the Company of the scope and pricing of task
orders, the estimated value of such task orders is added to designations.
When such task orders are signed and funded, their value goes into backlog.
At October 31, 1994, the potential value of the Company's five largest
indefinite delivery contracts was as follows:
At October 31, 1994
------------------------------------------
Total Revenues Estimated
Potential Recognized thru Funded Estimated Remaining
Contract Term Values October 31, 1994 Backlog Designations Values
- -------- ---- ----------- ---------------- ------- ------------ ------------
(In millions)
EPA ARCS (9&10) 1989-1999 $182.5 $ 20.5 $10.8 $ 4.1 $147.1
Navy CLEAN 1989-1999 166.0 92.8 12.3 - 60.9
EPA ARCS (6,7&8) 1989-1999 119.7 49.7 6.0 3.7 60.3
Plattsburgh AFB 1992-1997 100.0 2.7 1.2 3.1 93.0
Brooks AFB System 1994-1999 50.0 - - - 50.0
------ ------ ----- ----- ------
Total $618.2 $165.7 $30.3 $10.9 $411.3
===== ===== ==== ==== =====
Page 7 of 118
Competition
-----------
The engineering and architectural services industry is highly fragmented
and very competitive. As a result, in each specific market area the
Company competes with many engineering and consulting firms, several of
which are substantially larger than the Company and which possess greater
financial resources. No firm currently dominates any significant portion
of the Company's market areas.
Competition is based on quality of service, expertise, price, reputation
and local presence. The Company believes that it competes favorably with
respect to each of these factors in the market areas it serves.
Employees
---------
The Company has approximately 1,100 full-time employees, many of whom
hold advanced or technical degrees and have extensive experience in a
variety of disciplines applicable to the Company's business. The Company
also employs, at various times on a temporary basis, up to several hundred
additional persons to meet contractual requirements. One of the Company's
employees is covered by a collective bargaining agreement. The Company has
never experienced a strike or work stoppage. The Company believes that
employee relations are good.
ITEM 2. PROPERTIES
The Company leases office space in 24 principal locations throughout the
United States. Most of the leases are written for a minimum term of three
years with options for renewal, sublease rights and allowances for
improvements. Significant lease agreements expire at various dates through
the year 2005. The Company believes that its current facilities are
sufficient for the operation of its business and that suitable additional
space in various local markets is available to accommodate any needs that
may arise.
ITEM 3. LEGAL PROCEEDINGS
Item 8, Financial Statements and Supplementary Data, Note 7 --
Commitments and Contingencies -- is hereby incorporated by reference.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
There were no matters submitted to a vote of the Company's security
holders during the fourth quarter of the fiscal year ended October 31,
1994.
Page 8 of 118
ITEM 4A. EXECUTIVE OFFICERS OF THE REGISTRANT
Name Position Held Age
- ---- ------------- ---
Martin M. Koffel.......Chief Executive Officer, President 55
and Director of the Company
from May 1989; Chairman of the
Board from June 1989; independent
executive management services
contractor, 1988 to 1989;
President, Optometric Group,
The Cooper Companies, Inc.
(formerly CooperVision, Inc.),
1987 to 1988; President,
CooperVision, Inc., 1987;
President, Cooper LaserSonics,
Inc., 1986; President,
Diasonics, Inc., 1985 to 1986;
President, Oral-B Laboratories,
Inc., 1981 to 1985; Director,
Regent Pacific Corporation since
1993.
Kent P. Ainsworth......Vice President and Chief 48
Financial Officer of the
Company from January 1991;
Secretary of the Company
from May, 1994; financial
consultant from March 1990
through December 1990; Vice
President and Chief Financial
Officer of DiGiorgio
Corporation from November
1987 through February 1990;
Vice President and Chief
Financial Officer of Hale
Technology Corporation and
various of its subsidiaries
from January 1982 through
October 1987.
Page 9 of 118
Name Position Held Age
- ---- ------------- ---
Marvin J. Bloom........Senior Vice President and Regional 53
Manager of URS Consultants, Inc.,
a wholly-owned subsidiary of
the Company, since January 1993;
Senior Vice President and Division
Manager of same from December 1992
through January 1993; Vice
President and Division Manager
of same from March 1991 through
December 1992; Vice President and
Branch Manager of same from August
1990 through February 1991; Deputy
Division Manager of Sverdrup
Corporation from June 1987 through
August 1990.
Joseph Masters.........Vice President, Legal 38
of the Company since July 1994;
Vice President, Director of
Legal Affairs of URS Consultants,
Inc., a wholly-owned subsidiary
of the Company, from April 1994
to July 1994; Vice President,
Associate General Counsel of
same from May 1992 to April 1994;
outside counsel to the Company
from January 1990 to May 1992;
Vice President of URS Consultants,
Inc., a wholly-owned subsidiary
of the Company, from December
1989 to January 1990; Secretary
and Senior Counsel to Company
from February 1989 to January 1990.
Page 10 of 118
Name Position Held Age
- ---- ------------- ---
Peter J. Pedalino......Vice President and Treasurer of 48
URS Consultants, Inc., a
wholly-owned subsidiary of the
Company, since July 1989.
Charles A. Rodenfels...Senior Vice President of 39
Architectural Services, URS
Consultants, Inc., a wholly-
owned subsidiary of the Company,
and National Director of
Architectural Services from
July 1993; Senior Vice President,
URS Consultants, Inc. - Ohio,
Ohio Division Manager from
November 1990 to July 1993;
Vice President, URS Consultants,
Inc. - Ohio, Ohio Branch Manager
from November 1989 to November
1990; Director of Business
Development, URS Consultants,
Inc. - Ohio Columbus office,
November 1981 to November 1989.
Irwin L. Rosenstein....President of URS Consultants, 58
Inc., a wholly-owned subsidiary
of the Company, and Director
since February 1989; Vice
President of the Company since
1987; President of Eastern Region
of URS Consultants, Inc. from
August 1986 to February 1989.
Martin S. Tanzer, Executive Vice President of 50
Ph.D. URS Consultants, Inc.,
a wholly-owned subsidiary of
the Company, since February 1989.
Vice President of same from
1984 through February 1989.
Page 11 of 118
PART II
ITEM 5. MARKET FOR THE REGISTRANT'S COMMON EQUITY AND RELATED
STOCKHOLDER MATTERS
The Company's Common Shares are listed on the New York and Pacific Stock
Exchanges (under the symbol "URS"). At December 16, 1994, the Company had
approximately 2,133 stockholders of record. The following table sets forth
the high and low closing sale prices of the URS Common Shares, as reported
by The Wall Street Journal for the periods indicated.
MARKET PRICE
---------------------
LOW HIGH
----- ------
Fiscal Period:
1993:
First Quarter $ 7.50 $10.00
Second Quarter $ 7.13 $ 9.63
Third Quarter $ 4.38 $ 7.50
Fourth Quarter $ 4.75 $ 5.50
1994:
First Quarter $ 4.75 $ 7.38
Second Quarter $ 6.75 $ 7.75
Third Quarter $ 4.88 $ 7.13
Fourth Quarter $ 5.13 $ 6.75
1995:
First Quarter $ 5.00 $ 5.88
(through December 16, 1994)
The Company has not paid cash dividends since 1986. (See Item 8,
Financial Statements and Supplementary Data, Note 6 -- Long-Term Debt).
Further, the declaration of dividends could be precluded by existing
Delaware law.
ITEM 6. SUMMARY OF SELECTED FINANCIAL INFORMATION
The following table sets forth selected financial data of the Company
for the years ended October 31, 1990 through 1994. The data presented
below should be read in conjunction with the Consolidated Financial
Statements of the Company, including the notes thereto.
Page 12 of 118
SUMMARY OF SELECTED FINANCIAL INFORMATION
(In thousands, except per share data)
Years Ended October 31,
--------------------------------------------------------
1994 1993 1992 1991 1990
--------------------------------------------------------
Income Statement Data:
Revenues $164,088 $145,761 $136,793 $122,838 $105,179
------- ------- ------- ------- -------
Operating expenses:
Direct operating 102,500 91,501 85,384 72,659 61,077
Indirect, general and
administrative 55,455 51,607 45,473 45,311 42,994
------- ------- ------- ------- -------
Total operating expenses 157,955 143,108 130,857 117,970 104,071
------- ------- ------- ------- -------
Operating income 6,133 2,653 5,936 4,868 1,108
Interest expense, net 1,244 1,220 1,208 2,326 4,817
------- ------- ------- ------- -------
Income (loss) from continuing operations 4,889 1,433 4,728 2,542 (3,709)
before income taxes 450 140 460 250 -
Income tax expense ------- ------- ------- ------- -------
4,439 1,293 4,268 2,292 (3,709)
Income (loss) from continuing operations - - - - (7,901)
Loss from discontinued operations ------- ------- ------- ------- -------
Net income (loss) $ 4,439 $ 1,293 $ 4,268 $ 2,292 $(11,610)
======= ======= ======= ======= =======
Net income (loss) per share:
Primary:
Continuing operations $ .60 $ .18 $ .55 $ .40 $ (1.57)
Discontinued operations - - - - (3.34)
------- ------- ------- ------- -------
Total $ .60 $ .18 $ .55 $ .40 $ (4.91)
======= ======= ======= ======= =======
Fully diluted:
Continuing operations $ .60 $ .18 $ .55 $ .38 $ (1.57)
Discontinued operations - - - - (3.34)
------- ------- ------- ------- -------
Total $ .60 $ .18 $ .55 $ .38 $ (4.91)
======= ======= ======= ======= =======
Weighted average shares:
Primary 8,556 6,971 8,221 6,742 2,369
Fully diluted 8,556 6,971 8,221 6,282 2,369
Page 13 of 118
As of October 31,
-----------------------------------------------
1994 1993 1992 1991 1990
-----------------------------------------------
(In thousands)
Balance Sheet Data:
Working capital $33,674 $27,684 $26,836 $21,891 $14,365
Total assets 65,214 58,074 54,892 49,831 51,374
Total debt 9,270 8,277 8,705 8,347 25,297
Shareholders' equity $33,973 $29,389 $27,878 $23,264 $ 1,217
ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
Results of Operations
---------------------
Fiscal 1994 Compared with Fiscal 1993
- -------------------------------------
Revenues in fiscal 1994 were $164.1 million, or 13%, over the amount
reported in fiscal 1993. The growth in revenues is primarily attributable
to increases in revenues derived from all areas of the Company's business,
particularly transportation and other infrastructure projects in the
Northeast. Revenues generated from the Company's three largest contracts;
Navy CLEAN; EPA ARCS 9&10; and EPA ARCS 6,7,&8, increased slightly in
fiscal 1994 to $41.0 million as compared to $38.5 million in fiscal 1993.
The increase in revenues from these contracts is primarily due to an
increase in the number of task orders for hazardous waste services on all
of the above EPA ARCS contracts. Revenues generated from private
commercial businesses decreased from $16.7 million in fiscal 1993 to
$16.3 million in fiscal 1994.
Direct operating expenses, which consist of direct labor and direct
expenses including subcontractor costs, increased $11.0 million, or 12%,
over the amount reported in fiscal 1993. The increase is due to an overall
increase in the Company's business in fiscal 1994 as compared to fiscal
1993. Conversely, while revenues increased 13%, indirect general and
administrative expenses ("IG&A") remained relatively constant at $55.5
million. Expressed as a percentage of revenues, IG&A expenses decreased
from 35% in fiscal 1993 to 34% in fiscal 1994. The Company attributes this
decrease to continued emphasis on cost controls. Net interest expense also
remained relatively constant at $1.2 million in fiscal 1994.
The Company earned $4.9 million before income taxes in fiscal 1994
compared to $1.4 million in fiscal 1993. While the Company has available
net operating loss ("NOL") carryforwards for Federal income tax purposes,
for state income tax purposes such amounts are not necessarily available to
offset income subject to tax. Accordingly, the Company's effective tax
rate for fiscal 1994 was approximately 9%.
Page 14 of 118
Net income increased to $4.4 million in fiscal 1994 as compared to
$1.3 million in fiscal 1993. The Company earned $.60 per share in fiscal
1994 compared to $.18 per share in fiscal 1993.
The Company's backlog of signed and funded contracts at October 31,
1994 was $159.1 million as compared to $142.0 million at October 31, 1993.
The value of the Company's designations, which are awarded projects for
which contracts have not been signed, was $172.0 million at October 31,
1994, as compared to $213.6 million at October 31, 1993.
Fiscal 1993 Compared with Fiscal 1992
- -------------------------------------
Revenues in fiscal 1993 grew to $145.8 million, or 7%, over the amount
reported in fiscal 1992. The growth in revenues is primarily attributable
to increases in revenues generated from all areas of the Company's
business, particularly transportation and other infrastructure projects in
the Northeast. Revenues derived from the Company's three largest
contracts; Navy CLEAN, EPA ARCS 9&10 and EPA ARCS 6,7&8, were $38.5 million
in fiscal 1993 compared to $41.7 million in fiscal 1992. The decrease in
revenues from these contracts is due to a decrease in the number of task
orders for hazardous waste clean-up services. Revenues generated from
private commercial businesses decreased to $16.7 million from $18.9 million
in fiscal 1992.
Direct operating expenses, which consist of direct labor and direct
expenses including subcontractor costs, increased $6.1 million, or 7%, over
the amount reported in fiscal 1992. The increase is due to an overall
increase in the Company's business in fiscal 1993 as compared to fiscal
1992. IG&A expenses increased to $51.6 million from $45.5 million in
fiscal 1992. Expressed as a percentage of revenues, IG&A expenses
increased from 33% in fiscal 1992 to 35% in fiscal 1993. The Company
attributes this increase to an overall increase in the Company's business
in fiscal 1993, as well as the one-time charge of $2.0 million taken in the
third quarter of fiscal 1993 in connection with the planned phase-out of
certain of the Company's architectural offices and for claims on certain of
the Company's architectural projects. Net interest expense remained
constant at $1.2 million in fiscal 1993 due to significantly lower debt
levels in fiscal 1992 and 1993 as the result of the secondary common stock
offering completed by the Company in June 1991.
The Company earned $1.4 million before income taxes in fiscal 1993
compared to $4.7 million in fiscal 1992. While the Company has available
NOL carryforwards for Federal income tax purposes, for state income tax
purposes such amounts are not necessarily available to offset income
subject to tax. Accordingly, the Company's effective tax rate for fiscal
1993 was approximately 10%.
Net income decreased 70% to $1.3 million compared to $4.3 million in
fiscal 1992. The Company earned $.18 per share in fiscal 1993 compared to
$.55 per share in fiscal 1992.
The Company's backlog of signed and funded contracts at October 31,
1993 was $142.0 million as compared to $123.5 million at October 31, 1992.
The value of the Company's designations, which are awarded projects for
which contracts have not been signed, was $213.6 million at October 31,
1993 as compared to $154.8 million at October 31, 1992.
Page 15 of 118
Income Taxes
- ------------
Prior to October 10, 1989, the Company had available NOL carryforwards
for Federal income tax purposes of approximately $51.0 million. As a
result of a change in ownership as defined by Section 382 of the Internal
Revenue Code of 1986, as amended, ("IRC") that occurred on October 10,
1989, the Company's NOL carryforwards for financial statement and Federal
income tax purposes became limited to approximately $750,000 per year for
the succeeding fifteen-year carryforward period, for an aggregate of $11.2
million, plus NOL attributable to recognized built-in gains, limited to
$14.0 million by IRC Section 382, for a total of $25.2 million. The
financial statement tax benefits arising from these NOL carryforwards will
be recognized as a reduction in financial statement tax expense and an
addition to paid-in capital in the years utilized. At October 31, 1994,
the Company had utilized $16.0 million of the total $25.2 million for
Federal income tax purposes.
Effective November 1, 1993, the Company adopted the provisions of
Statement of Financial Accounting Standards ("SFAS") Number 109,
"Accounting for Income Taxes." This standard requires companies to record
all deferred tax liabilities and assets for the future tax consequences
attributable to differences between the financial statement carrying
amounts of existing assets and liabilities and their respective tax basis,
including tax loss carryforwards. As permitted under SFAS Number 109,
prior years' financial statements have not been restated. The change in
policy does not materially affect the Company's consolidated financial
statements, including the financial statements of prior years.
Liquidity and Capital Resources
- -------------------------------
The Company's liquidity and capital measurements are set forth below:
October 31,
-----------------------------------------
1994 1993 1992
-----------------------------------------
Working capital $33,674,000 $27,684,000 $26,836,000
Working capital ratio 2.6 to 1 2.5 to 1 2.6 to 1
Average days to convert
billed accounts
receivable to cash 66 67 61
Percentage of debt to
equity 27.3% 28.2% 31.2%
In October 1992, the Company amended its existing line of credit
agreement with Wells Fargo Bank, N.A. (the "Bank"). The amended line of
credit, which is secured by all the assets of the Company, provides for
advances up to $10,000,000 and expires April 29, 1995. Borrowings on the
line of credit bear interest at the Bank's prime rate plus one-half percent
payable monthly in arrears. At October 31, 1994, the Company had
$9,834,000 available to it under the line of credit. At October 31, 1994,
the Company had outstanding letters of credit totalling $166,000 which
reduced the amount available to the Company under the line of credit.
Page 16 of 118
Under the amended line of credit agreement, the Company is required to
satisfy certain financial and non-financial covenants. The Company was in
compliance with all financial and non-financial covenants related to the
amended line of credit agreement at October 31, 1994 and at October 31,
1993.
The Company is a professional services organization and, as such, is
not capital intensive. Capital expenditures during fiscal years 1994, 1993
and 1992 were $2,149,000, $1,952,000 and $1,158,000, respectively. The
expenditures were principally for computer-aided design and drafting
equipment and facilities expansion to accommodate the Company's growth.
The Company expects fiscal 1995 capital expenditures to be comparable to
the expenditures in fiscal 1994.
The Company believes that its existing financial resources, together
with its planned cash flow from operations and its unused line of credit,
will provide sufficient capital to fund its operations and its capital
expenditure needs for the foreseeable future.
Page 17 of 118
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
REPORT OF INDEPENDENT ACCOUNTANTS
---------------------------------
The Board of Directors and Shareholders of URS Corporation:
We have audited the accompanying consolidated balance sheets of URS
Corporation and its subsidiaries as of October 31, 1994 and 1993, and the
related consolidated statements of operations, changes in shareholders'
equity and cash flows for each of the three years in the period ended
October 31, 1994. 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 in accordance with generally accepted auditing
standards. Those standards 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. An audit also includes assessing the accounting principles
used and significant estimates made by management, as well as evaluating
the overall financial statement presentation. We believe that our audits
provide a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present
fairly, in all material respects, the consolidated financial position of
URS Corporation and its subsidiaries as of October 31, 1994 and 1993, and
the consolidated results of their operations and their cash flows for each
of the three years in the period ended October 31, 1994, in conformity with
generally accepted accounting principles.
As discussed in the notes to the consolidated financial statements,
effective November 1, 1993, the Company adopted Statement of Financial
Accounting Standards No. 109, Accounting for Income Taxes.
COOPERS & LYBRAND, L.L.P.
San Francisco, California
December 15, 1994
Page 18 of 118
URS CORPORATION AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(In thousands, except per share data)
October 31,
-------------------
1994 1993
---- ----
ASSETS
Current assets:
Cash and cash equivalents $ 9,457 $ 6,628
Accounts receivable, including retainage
amounts of $2,925 and $3,087, less
allowance for doubtful accounts of
$495 and $665 30,132 27,157
Costs and accrued earnings in excess of
billings on contracts in process, less
allowances for losses of $646 and $416 13,747 11,783
Prepaid expenses 929 955
------- -------
Total current assets 54,265 46,523
Property and equipment at cost, net 5,469 4,596
Goodwill, net 4,787 5,260
Other assets 693 1,695
------- -------
$65,214 $58,074
====== ======
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
Accounts payable $ 9,440 $ 8,078
Accrued salaries and wages 5,700 3,574
Accrued expenses 5,451 7,187
------- -------
Total current liabilities 20,591 18,839
Long-term debt 6,638 5,790
Long-term debt to related parties 2,632 2,487
Deferred compensation and other 1,380 1,569
------- -------
Total liabilities 31,241 28,685
------- -------
Commitments and contingencies (Note 7) - -
Shareholders' equity:
Common Shares, par value $.01; authorized
20,000 shares; issued 7,019 and 6,989
shares, respectively 71 70
Treasury stock (59) -
Additional paid-in capital 30,261 28,365
Retained earnings since February 21,
1990, date of quasi-reorganization 3,700 954
------- -------
Total shareholders' equity 33,973 29,389
------- -------
$65,214 $58,074
====== ======
See Notes to Consolidated Financial Statements
Page 19 of 118
URS CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
(In thousands, except per share data)
Years Ended October 31,
------------------------------------
1994 1993 1992
---- ---- ----
Revenues $164,088 $145,761 $136,793
------- ------- -------
Expenses:
Direct operating 102,500 91,501 85,384
Indirect, general and
administrative 55,455 51,607 45,473
Interest expense, net 1,244 1,220 1,208
------- ------- -------
159,199 144,328 132,065
Income before taxes 4,889 1,433 4,728
Income tax expense 450 140 460
------- ------- -------
Net income $ 4,439 $ 1,293 $ 4,268
======= ======= =======
Net income per share:
Primary $ .60 $ .18 $ .55
======= ======= =======
Fully diluted $ .60 $ .18 $ .55
======= ======= =======
See Notes to Consolidated Financial Statements
Page 20 of 118
URS CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS' EQUITY
(In thousands)
Additional Retained Total
Common Shares Treasury Paid-in Earnings Shareholders'
Number Amount Stock Capital (Deficit) Equity
------ ------ -------- ------- --------- ----------
Balances, November 1, 1991 6,901 $ 70 $ 0 $26,101 $(2,907) $23,264
----- ----- ----- ------- ------- -------
Stock in lieu of interest 29 - - 241 - 241
Employee stock purchases 29 - - 105 - 105
Quasi-reorganization
NOL carryforward - - - 1,250 (1,250) -
Net income - - - - 4,268 4,268
----- ----- ----- ------- ------- -------
Balances, October 31, 1992 6,959 70 0 27,697 111 27,878
----- ----- ----- ------- ------- -------
Stock in lieu of interest 4 - - 31 - 31
Employee stock purchases 26 - - 187 - 187
Quasi-reorganization
NOL carryforward - - - 450 (450) -
Net income - - - - 1,293 1,293
----- ----- ----- ------- ------- -------
Balances, October 31, 1993 6,989 70 $ 0 28,365 954 29,389
===== ===== ===== ======= ======= =======
Employee stock purchases 40 1 - 203 - 204
Purchase of treasury shares (10) - (59) - - (59)
Quasi-reorganization
NOL carryforward - - - 1,693 (1,693) -
Net income - - - - 4,439 4,439
----- ----- ----- ------- ------- -------
Balances, October 31, 1994 7,019 $ 71 $ (59) $30,261 $ 3,700 $33,973
===== ===== ===== ====== ====== ======
<FN>
See Notes to Consolidated Financial Statements
Page 21 of 118
URS CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOW
(In thousands)
Years Ended October 31,
1994 1993 1992
CASH FLOWS FROM OPERATING ---- ---- ----
ACTIVITIES:
Net income $4,439 $1,293 $4,268
------ ------ ------
Adjustments to reconcile net
income to net cash provided
(used) by operating activities:
Depreciation and amortization 2,596 2,986 2,396
Unusual gain - - (743)
Changes in current assets and
liabilities:
Increase in accounts receivable
and costs and accrued earnings
in excess of billings on
contracts in process (4,938) (1,949) (5,000)
Decrease (increase) in prepaid
expenses and other 26 137 (459)
Increase in accounts payable,
accrued salaries and wages
and accrued expenses 1,682 1,455 1,442
Other, net 28 517 (292)
------ ------ ------
Total adjustments (606) 3,146 (2,656)
------ ------ ------
Net cash provided by operating
activities 3,833 4,439 1,612
------ ------ ------
CASH FLOWS FROM INVESTING
ACTIVITIES:
Capital expenditures (2,149) (1,952) (1,158)
Other - (400) -
------ ------ ------
Net cash used by investing
activities (2,149) (2,352) (1,158)
------ ------ ------
CASH FLOWS FROM FINANCING
ACTIVITIES:
Repayment of debt - (1,340) -
Repurchase of common shares (59) - -
Proceeds from sale of common 204 152 94
shares
Other 1,000 - -
------ ------ ------
Net cash provided (used) by
financing activities 1,145 (1,188) 94
------ ------ ------
Net increase in cash 2,829 899 548
Cash at beginning of year 6,628 5,729 5,181
------ ------ ------
Cash at end of year $9,457 $6,628 $5,729
===== ===== =====
See Notes to Consolidated Financial Statements
Page 22 of 118
URS CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
NOTE 1. ACCOUNTING POLICIES
Principles of Consolidation and Basis of Presentation
- -----------------------------------------------------
The consolidated financial statements include the accounts of URS
Corporation and its subsidiaries, all of which are wholly-owned. All
significant intercompany accounts and transactions have been eliminated in
consolidation.
Revenue Recognition
- -------------------
Revenue from contract services is recognized by the percentage-of-
completion method and includes a proportion of the earnings expected to be
realized on a contract in the ratio that costs incurred bear to estimated
total costs. Revenue on cost reimbursable contracts is recorded as related
contract costs are incurred and includes estimated earned fees in the
proportion that costs incurred to date bear to total estimated costs. The
fees under certain government contracts may be increased or decreased in
accordance with cost or performance incentive provisions which measure
actual performance against established targets or other criteria. Such
incentive fee awards or penalties are included in revenue at the time the
amounts can be reasonably determined. Revenue for additional contract
compensation related to unpriced change orders is recorded when realization
is probable. Revenue from claims by the Company for additional contract
compensation is recorded when agreed to by the customer. If estimated
total costs on any contract indicate a loss, the Company provides currently
for the total loss anticipated on the contract.
Costs under contracts with the U.S. Government are subject to
government audit upon contract completion. Therefore, all contract costs,
including direct and indirect, general and administrative expenses, are
potentially subject to adjustment prior to final reimbursement. Management
believes that adequate provision for such adjustments, if any, has been
made in the accompanying consolidated financial statements. All overhead
and general and administrative expense recovery rates for fiscal 1987
through fiscal 1994 are subject to review by the U.S. Government.
Cash and Cash Equivalents
- -------------------------
The Company considers all highly liquid investments with original
maturities of three months or less to be cash equivalents. Cash
equivalents are recorded at cost, which approximates fair value.
Income Taxes
- ------------
Effective November 1, 1993, the Company adopted the provisions of
Statement of Financial Accounting Standards ("SFAS") Number 109,
"Accounting for Income Taxes." This standard requires companies to record
all deferred tax liabilities and assets for the future tax consequences
attributable to differences between the financial statement carrying
amounts of existing assets and liabilities and their respective tax basis,
Page 23 of 118
including tax loss carryforwards. As permitted under SFAS Number 109,
prior years' financial statements have not been restated. The change in
policy does not materially affect the Company's consolidated financial
statements, including the financial statements of prior years.
Depreciation and Amortization
- -----------------------------
Depreciation is provided on the straight-line method over the useful
service lives of the assets. Goodwill is amortized on the straight-line
method ranging from 10 to 20 years.
Income Per Share
- ----------------
The computation of earnings per common and common equivalent shares is
based upon the weighted average number of common shares outstanding during
the period plus (in periods in which they have a dilutive effect) the
effect of common shares contingently issuable, primarily from stock
options, exercise of warrants and the potential conversion of convertible
debentures, less the number of shares assumed to be purchased from the
proceeds using the average market price of the Company's common stock.
The fully diluted per share computation reflects the effect of common
shares contingently issuable upon the exercise of warrants in periods in
which such exercise would cause dilution. Fully diluted earnings per share
also reflect additional dilution related to stock options due to the use of
the market price at the end of the period when higher than the average
price for the period.
Computation of Net Income Per Share
- -----------------------------------
(In thousands, except per share data)
Years Ended October 31,
----------------------------------
1994 1993 1992
------ ------ ------
Net income $4,439 $1,293 $4,268
Add:
Interest on debentures and notes,
net of applicable income taxes 715 - 245
------ ------ ------
Net income for primary income per
common share $5,154 $1,293 $4,513
===== ===== =====
Weighted average number of common
shares outstanding during the year 7,001 6,971 6,926
Add:
Common equivalent shares (determined
using the "treasury stock" method)
representing shares issuable upon
exercise of employee stock options
and warrants 2,959 - 2,686
Page 24 of 118
Less:
Twenty percent limit on repurchase (1,404) - (1,391)
------ ------ ------
Weighted average number of shares
used in calculation of primary
income per share 8,556 6,971 8,221
===== ===== =====
Primary income per common share $ .60 $ .18 $ .55
===== ===== =====
Industry Segment Information
- ----------------------------
The Company's single business segment, consulting, provides
engineering and architectural services to local and state governments, the
Federal government and the private sector. The Company's services are
primarily utilized for planning, design and program and construction
management of infrastructure and environmental projects.
The Company's revenues from local, state and Federal government
agencies and private businesses for the last three fiscal years are as
follows:
Years Ended October 31,
--------------------------------------------------
1994 1993 1992
------------- -------------- --------------
(In thousands)
Local and state
agencies $ 88,207 54% $ 80,350 55% $ 65,314 48%
Federal agencies 59,611 36 48,713 33 52,530 38
16,270 10 16,698 12 18,948 14
------- --- ------- --- ------- ---
Total $164,088 100% $145,761 100% $136,792 100%
======= === ======= === ======= ===
Reclassifications
- -----------------
Reclassifications of certain balances for the year ended October 31,
1992 have been made to conform to the October 31, 1993 financial statement
presentation and have not affected previously reported net income or
shareholders' equity.
NOTE 2. QUASI-REORGANIZATION
In conjunction with a restructuring completed in fiscal year 1990, the
Company, with the approval of its Board of Directors, implemented a quasi-
reorganization effective February 21, 1990 and revalued certain assets and
liabilities to fair value as of that date.
The fair values of the Company's assets and liabilities at the date of
the quasi-reorganization were determined by management to approximate their
carrying value and no further adjustment of historical bases was required.
Page 25 of 118
No assets were written-up in conjunction with the revaluation. As part of
the quasi-reorganization, the deficit in retained earnings of $92,523,000
was eliminated against additional paid-in capital. The balance in retained
earnings at October 31, 1994 represents the accumulated net earnings
arising subsequent to the date of the quasi-reorganization.
NOTE 3. PROPERTY AND EQUIPMENT
Property and equipment consists of the following:
October 31,
--------------------
1994 1993
---- ----
(In thousands)
Furniture and fixtures $ 3,192 $ 2,894
Equipment 7,764 6,406
Leasehold improvements 866 1,011
------ ------
11,822 10,311
Less: Accumulated depreciation
and amortization (6,353) (5,715)
------ ------
Net property and equipment $ 5,469 $ 4,596
====== ======
NOTE 4. GOODWILL
Goodwill represents the excess of the purchase price over the fair
value of the net tangible assets of various operations acquired by the
Company. Accumulated amortization at October 31, 1994 and 1993 was
$2,507,000 and $2,035,000, respectively.
NOTE 5. INCOME TAXES
The components of income tax expense applicable to the operations each
year are as follows:
Years Ended October 31,
-------------------------
1994 1993 1992
---- ---- ----
(In thousands)
Current:
Federal $150 $ 70 $110
State and local 230 85 110
---- ---- ----
Subtotal $380 $155 $220
---- ---- ----
Deferred:
Federal - - -
State and local 70 (15) 240
---- ---- ----
Subtotal 70 (15) 240
---- ---- ----
Total tax provision $450 $140 $460
=== === ===
Page 26 of 118
As of October 31, 1994, the Company has available net operating loss
("NOL") carryforwards for Federal income tax purposes and financial
statement purposes of $9,200,000. The amount of NOL available to offset
future income without limitation is $1,700,000. The amount of NOL
carryforwards that is limited is $7,500,000, or $750,000 per year.
While the Company has available NOL carryforwards for Federal income
tax purposes, for state tax purposes such amounts are not necessarily
available to offset income subject to tax. Accordingly, state income taxes
have been provided.
The significant components of the Company's deferred tax assets and
liabilities as of October 31, 1994 are as follows:
Deferred tax assets/(liabilities) - due to:
(In thousands)
State taxes $ 78
Allowance for doubtful accounts 183
Other accruals and reserves 3,155
Net operating loss 3,135
Alternative minimum tax credit 360
Total 6,911
Valuation allowance (5,166)
------
Deferred tax asset 1,745
Other deferred gain and
unamortized bond premium (1,979)
Deferred tax liability (1,979)
------
Net deferred tax liability $ (234)
======
The net change in the total valuation allowance for the year ended
October 31, 1994 was a decrease of $2,014,000 due to the utilization of net
operating losses and other changes in deferred tax assets.
Page 27 of 118
The difference between total tax expense and the amount computed by
applying the statutory Federal income tax rate to income before taxes is as
follows:
Years Ended October 31,
1994 1993 1992
---- ---- ----
(In thousands)
Federal income tax expense based
upon Federal statutory tax rate
of 34% $1,665 $ 490 $1,600
Nondeductible goodwill amortization 160 185 185
Nondeductible expenses 120 60 50
Financial statement NOL
carryforwards utilized (1,693) (640) (1,605)
State taxes, net of Federal benefit 198 45 230
------ ------ ------
Total taxes provided $ 450 $ 140 $ 460
===== ===== =====
NOTE 6. LONG-TERM DEBT
Long-term debt consists of the following:
October 31,
1994 1993
---- ----
(In thousands)
THIRD PARTY:
6-1/2% Convertible Subordinated Debentures
due 2012 (net of bond issue costs of $44
and $46) $2,101 $2,099
8-5/8% Senior Subordinated Debentures due
2004 (net of discount and bond issue
costs of $3,969 and $4,081) (effective
interest rate on date of restructuring 2,486 2,374
was 25%)
Obligations under capital leases 2,721 1,916
------ ------
7,308 6,389
Less: Current maturities of capital leases 670 599
------ ------
$6,638 $5,790
===== =====
RELATED PARTIES:
January Notes (net of discount of $1,368 and
$1,513) (effective interest rate on date
of restructuring was 12%) $2,632 $2,487
===== =====
Page 28 of 118
Credit Agreement
- ----------------
At October 31, 1994, the Company's line of credit agreement with Wells
Fargo Bank, N.A. (the "Bank") provides for advances up to $10,000,000 and
expires April 29, 1995. The line of credit is collateralized by all the
assets of the Company, including the stock of its subsidiaries. Borrowings
on the line of credit bear interest at the Bank's prime rate plus one-half
percent. At October 31, 1994, the Company had $9,834,000 available to it
under the line of credit agreement. At October 31, 1994, the Company had
outstanding letters of credit totalling $166,000 which reduced the amount
available to the Company under its Bank line of credit.
Under the Bank line of credit agreement the Company is required to
satisfy certain financial and non-financial covenants. The declaration of
dividends, except stock dividends, is restricted by the terms of the
Company's credit agreement with the Bank and the indenture governing the
8-5/8% Senior Subordinated Debentures due 2004, described below. The
Company was in compliance with all financial and non-financial covenants
related to the line of credit agreement at October 31, 1994 and October 31,
1993.
Related Parties
- ---------------
At October 31, 1992, the Company had a $6,000,000 line of credit
represented by the January Notes, of which $4,000,000 is with Richard C.
Blum & Associates, L.P. ("RCBA") and $2,000,000 with Altus Finance
("Altus"). RCBA, through various partnerships, beneficially owns
approximately 25% of the Company's common shares (approximately 37%
assuming exercise of additional warrants) outstanding at October 31, 1994.
Richard C. Blum, a director of the Company, is also Chairman of RCBA.
The January Notes were fully drawn at October 31, 1992 and are due
November 1, 2000. In December 1992, the Company repurchased the $2,000,000
in January Notes held by Altus for $1,340,000 in cash. On the date of the
transaction, the $2,000,000 in January Notes had a net book value of
$1,190,000. The remaining $4,000,000 line of credit with RCBA was fully
drawn at October 31, 1994. It bears interest at 6-1/2% per annum and is
subordinate only to the Bank line of credit.
Debentures
- ----------
The Company's 6-1/2% Convertible Subordinated Debentures due 2012 are
convertible into the Company's common shares at the rate of $206.30 per
share. Sinking fund payments are calculated to retire 70% of the
debentures prior to maturity beginning in February 1998. Interest is
payable semi-annually in February and August. Interest is payable semi-
annually in January and July on the Company's 8-5/8% Subordinated
Debentures due 2004. Both the 6-1/2% Convertible Subordinated Debentures
and the 8-5/8% Senior Subordinated Debentures are subordinate to all debt
to RCBA and the Bank.
Page 29 of 118
The amounts of long-term debt outstanding at October 31, 1994 maturing
in the next five years are as follows:
(In thousands)
1995 $ -
1996 -
1997 -
1998 -
1999 -
Thereafter $12,600
Amounts payable under capitalized lease agreements are excluded from the
above table.
Obligations under Leases
- ------------------------
Total rental expense included in operations for operating leases for the
fiscal years ended October 31, 1994, 1993 and 1992 amounted to $5,275,000,
$4,938,000 and $5,306,000, respectively. Certain of the lease rentals are
subject to renewal options and escalation based upon property taxes and
operating expenses. These operating lease agreements expire at varying
dates through 2005.
In fiscal 1992, the Company terminated its lease at its Cleveland, Ohio
facility. As a result of this transaction, the Company recorded a net gain
of $743,000.
Obligations under non-cancelable lease agreements are as follows:
Capital Operating
Leases Leases
------ ------
(In thousands)
1995 $1,020 $ 4,588
1996 858 4,500
1997 712 3,776
1998 423 2,595
1999 225 1,843
Thereafter - 4,876
------ -------
Total minimum lease payments $3,238 $22,178
===== ======
Less amounts representing
interest 517
------
Present value of net minimum
lease payments $2,721
=====
Page 30 of 118
NOTE 7. COMMITMENTS AND CONTINGENCIES
Currently, the Company has $31,000,000 per occurrence and aggregate
commercial general liability insurance coverage. The Company is also
insured for professional errors and omissions ("E&O") and pollution
liability ("EIL") claims with an aggregate limit of $25,000,000 after a
self-insured deductible of $500,000. The E&O and EIL coverages are on a
"claims made" basis, covering only claims actually made during the policy
period currently in effect. Thus, if the Company does not continue to
maintain this policy, it will have no coverage under the policy for claims
made after its termination date even if the occurrence was during the term
of coverage. It is the Company's intent to maintain this type of coverage,
but there can be no assurance that the Company can maintain its existing
coverage, that claims will not exceed the amount of insurance coverage or
that there will not be claims relating to prior periods that were subject
only to "claims made" coverage.
Various legal proceedings are pending against the Company or its
subsidiaries alleging breaches of contract or negligence in connection with
the performance of professional services. In some actions punitive or
treble damages are sought which substantially exceed the Company's
insurance coverage. The Company's management does not believe that any of
such proceedings will have a material adverse effect on the consolidated
financial position and operations of the Company.
NOTE 8. CAPITAL STOCK
Declaration of dividends, except Common Stock dividends, is restricted
by the Bank line of credit agreement. Further, declaration of dividends
may be precluded by existing Delaware law.
During fiscal year 1994, the Company repurchased a total of 10,300
shares of its Common Stock at an average repurchase price of $5.75,
pursuant to a systematic repurchase plan approved by the Company's Board of
Directors.
The 1987 Restricted Stock Plan (the "Plan") provides for grants of up to
16,537 shares of Common Stock to key employees of the Company and its
subsidiaries. An employee selected to receive shares under the Plan will
not be required to pay any consideration for the shares. Shares issued to
an employee are subject to forfeiture in the event that the employment of
the employee terminates for any reason other than death. The forfeiture
restrictions lapse with respect to portions of the grant over a five-year
period subsequent to the grant date. As of October 31, 1994, 6,872
restricted shares have been granted.
The 1979 Stock Option Plan (the "1979 Plan") provided for grants of
options to purchase shares of Common Stock to directors, officers and key
employees of the Company and its subsidiaries at prices and for periods
(not to exceed ten years) as determined by the Board of Directors. The
1979 Plan also provided for the granting of Stock Appreciation Rights and
incentive stock options. The 1979 Plan expired in February 1989, and no
further options or rights may be granted under the 1979 Plan.
Page 31 of 118
On October 20, 1988, the stockholders approved a replacement option
program pursuant to which non-management members of the Board of Directors
granted replacement stock options to selected employees, exercisable at
then current market prices. The selected employees then exchanged their
outstanding options for new options covering two shares for each three
shares covered by the options being replaced. Options to purchase 16,561
shares were exchanged for pre-existing options.
On April 27, 1989, the stockholders approved the 1989 Stock Option and
Rights Plan (the "1989 Plan"). The 1989 Plan provides for the grant of
options to purchase 50,000 shares of Common Stock to directors, officers
and key employees of the Company and its subsidiaries at prices and for
periods (not to exceed ten years) as determined by the Board of Directors.
The 1989 Plan also provides for the granting of Stock Appreciation Rights.
No options have been granted under the 1989 Plan.
On March 26, 1991, the stockholders approved the 1991 Stock Incentive
Plan (the "1991 Plan"). The 1991 Plan provides for the grant not to exceed
1,500,000 Restricted Shares, Stock Units and Options, plus the number of
shares of Common Stock remaining available for awards under the 1987 Plan
(9,665) and the 1989 Plan (50,000) to key employees of the Company and its
subsidiaries at prices and for periods as determined by the Board of
Directors. The 1991 Plan prohibits granting new options under the 1987
Plan and the 1989 Plan. In October 1994, the Company issued 3,300 shares
of Restricted Stock under the 1991 Plan.
Under the Employee Stock Purchase Plan (the "ESP Plan") implemented in
September 1985, employees may purchase shares of Common Stock through
payroll deductions of up to 10% of the employee's base pay. Contributions
are credited to each participant's account on the last day of each six-
month participation period of the ESP Plan (which commences on January 1
and July 1 of each year). The purchase price for each share of Common
Stock shall be the lower of 85% of the fair market value of such share on
the last trading day before the participation period commences or 85% of
the fair market value of such share on the last trading day in the
participation period. The ESP Plan was suspended effective September 19,
1988. On March 24, 1992, the stockholders approved reinstating the ESP
Plan. Employees purchased 36,195 shares under the ESP Plan in fiscal 1994
and 26,246 shares in fiscal 1993.
On February 21, 1990, the Company issued warrants to purchase 1,819,148
shares of Common Stock at a purchase price of $4.34 per share which expire
on February 14, 1997.
Page 32 of 118
A summary of the number of stock options granted under the 1979, 1989
and 1991 Plans is as follows:
October 31, 1994
Shares Per Share <F1>
------ ---------
Number of options:
Outstanding at year end 1,139,964 $3.12 - 31.25
Exercisable at year end 790,967 $3.12 - 31.25
Exercised during the year - -
Available for grant at year end 413,765 -
October 31, 1993
Shares Per Share <F1>
------ ---------
Number of options:
Outstanding at year end 856,445 $3.12 - 31.25
Exercisable at year end 689,275 $3.12 - 31.25
Exercised during the year - -
Available for grant at year end 705,565 -
October 31, 1992
Shares Per Share <F1>
------ ---------
Number of options:
Outstanding at year end 854,452 $3.12 - 31.25
Exercisable at year end 421,915 $3.12 - 31.25
Exercised during the year - -
Available for grant at year end 205,565 -
[FN]
<F1> Reflects lowest and highest exercise price.
NOTE 9. SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION
Cash paid during the period for:
Years Ended October 31,
--------------------------------------
1994 1993 1992
---- ---- ----
(In thousands)
Interest $1,301 $1,170 $888
Income taxes $ 499 $ 518 $405
There were no significant non-cash investing or financing activities in
fiscal 1994 and 1993.
In fiscal 1992, the Company terminated its lease at its Cleveland, Ohio
facility. As a result of the transaction, the Company recorded a $743,000
gain.
Page 33 of 118
NOTE 10. DEFINED CONTRIBUTION PLAN
The Company has a defined contribution retirement plan under Internal
Revenue Code Section 401(k). The plan covers all full-time employees who
are at least 18 years of age. Contributions by the Company are made at the
discretion of the Board of Directors. Contributions in the amount of
$551,200, $486,100 and $439,000 were made to the plan in fiscal 1994, 1993
and 1992, respectively.
NOTE 11. VALUATION AND ALLOWANCE ACCOUNTS
Additions
Charged to Deductions
Beginning Costs and from Ending
Balance Expenses Reserves Balance
------- -------- -------- -------
(In thousands)
October 31, 1994
Allowances for losses and
doubtful collections $1,081 $322 $262 $1,141
October 31, 1993
Allowances for losses and
doubtful collections $ 768 $603 $290 $1,081
October 31, 1992
Allowances for losses and
doubtful collections $ 699 $310 $241 $ 768
NOTE 12. RELATED PARTY TRANSACTIONS
Interest paid to related parties in connection with the January Notes
was $362,644, $254,000 and $240,000 in fiscal 1994, 1993 and 1992,
respectively. (See Note 6 - Long-Term Debt).
The Company has agreements for business consulting services to be
provided by RCBA and Richard C. Blum, a Director of the Company. Under
these agreements, the Company paid $90,000 and $60,000 to RCBA and
Richard C. Blum, respectively, for fiscal 1994, 1993 and 1992. Richard C.
Blum also received an additional $23,500, $19,000 and $12,500 for his
services as a Director of the Company in fiscal 1994, 1993 and 1992,
respectively. In addition, during fiscal 1993, URS Consultants, Inc., a
wholly-owned subsidiary of the Company ("URSC"), performed an underground
storage tank remediation investigation on behalf of RCBA. Such
investigation was completed by October 28, 1993, and on November 19, 1993,
RCBA, Inc. paid URSC $70,000 in gross revenues.
NOTE 13. CONCENTRATION OF CREDIT RISK
The Company provides services primarily to local, state and Federal
government agencies. The Company believes the credit risk associated with
these types of revenues is minimal. However, the Company does perform
ongoing credit evaluations of its customers and, generally, requires no
collateral. The Company maintains reserves for potential credit losses and
such losses have been within management's expectations.
Page 34 of 118
NOTE 14. SELECTED QUARTERLY FINANCIAL DATA (UNAUDITED)
Selected quarterly financial data for fiscal 1994 and 1993 is summarized
as follows:
Fiscal 1994 Quarters Ended
Jan. 31 Apr. 30 July 31 Oct. 31
------- ------- ------- -------
(In thousands, except per share data)
Revenues $36,756 $40,520 $41,333 $45,479
Gross profit 13,928 15,769 15,878 16,013
Operating income 1,050 1,484 1,450 2,149
Net income $ 651 $ 1,016 $ 985 $ 1,787
Income per share:
Primary $ .10 $ .14 $ .14 $ .23
====== ====== ====== ======
Fully diluted $ .09 $ .14 $ .14 $ .23
Weighted average ====== ====== ====== ======
number of shares 8,280 8,568 8,571 8,567
====== ====== ====== ======
Fiscal 1993 Quarters Ended
Jan. 31 Apr. 30 July 31 Oct. 31
------- ------- ------- -------
(In thousands, except per share data)
Revenues $32,957 $36,585 $35,627 $40,592
Gross profit 12,944 13,894 13,111 14,311
Operating income (loss) 1,008 1,476 (1,545) 1,714
Net income (loss) $ 632 $ 1,076 $(1,681) $ 1,266
Income (loss) per
share:
Primary and fully
diluted $ .08 $ .14 $ (.24) $ .18
Weighted average ====== ====== ====== ======
number of shares 8,254 8,255 6,974 8,270
====== ====== ====== ======
Operating income represents continuing operations before interest income
and interest expense.
Page 35 of 118
ITEM 9. CHANGES AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
FINANCIAL DISCLOSURE
None.
Page 36 of 118
PART III
ITEM 10. EXECUTIVE OFFICERS AND DIRECTORS
Incorporated by reference from the information under the captions
"Election of Directors" and "Compliance with Section 16(a) of Securities
Exchange Act" in the Company's definitive proxy statement for the Annual
Meeting of Stockholders to be held on March 21, 1995, and from Item 4a --
"Executive Officers of the Registrant" in Part I.
ITEM 11. EXECUTIVE COMPENSATION
Incorporated by reference from the information under the caption
"Executive Compensation" in the Company's definitive proxy statement for
the Annual Meeting of Stockholders to be held on March 21, 1995.
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
Incorporated by reference from the information under the caption "Stock
Ownership" in the Company's definitive proxy statement for the Annual
Meeting of Stockholders to be held on March 21, 1995.
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
Incorporated by reference from Item 8, Financial Statement and
Supplementary Data, Note 6 -- Long-Term Debt and Note 12 -- Related Party
Transactions.
Page 37 of 118
PART IV
ITEM 14. EXHIBITS. FINANCIAL STATEMENT SCHEDULES AND REPORTS
ON FORM 8-K
(a)(1) Item 8. Consolidated Financial Statements and
Supplementary Data
Report of Independent Accountants
Consolidated Balance Sheets
October 31, 1994 and October 31, 1993
Consolidated Statements of Operations
For the years ended October 31, 1994, 1993 and 1992
Consolidated Statements of Changes in Shareholders' Equity
For the years ended October 31, 1994, 1993 and 1992
Consolidated Statements of Cash Flows
For the years ended October 31, 1994, 1993 and 1992
Notes to Consolidated Financial Statements
(a)(2) Financial Statement Schedules
Schedules are omitted because they are not applicable, not required or
because the required information is included in the Consolidated Financial
Statements or Notes thereto.
(a)(3) Exhibits
3.1 Certificate of Incorporation of the Company, filed as
Exhibit 3.1 to the Annual Report on Form 10-K for the fiscal
year ended October 31, 1991 ("1991 Form 10-K"), and
incorporated herein by reference.
3.2 By-laws of the Company as amended, filed as Exhibit 3.2 to the
Annual Report on Form 10-K for the fiscal year ended
October 31, 1992 ("1992 Form 10-K"), and incorporated herein
by reference.
4.1 Indenture, dated as of February 15, 1987, between the Company
and First Interstate Bank of California, Trustees, relating to
$57.5 million of the Company's 6-1/2% Convertible Subordinated
Debentures Due 2012, filed as Exhibit 4.10 to the Company's
Registration Statement on Form S-2 (Commission File
No. 33-11668) and incorporated herein by reference.
4.2 Amendment Number 1 to Indenture governing 6-1/2% Convertible
Subordinated Debentures due 2012, dated February 21, 1990,
between the Company and First Interstate Bank of California,
Trustee, filed as Exhibit 4.9 to the Company's Registration
Statement on Form S-1 (Commission File No. 33-56296) ("1990
Form S-1") and incorporated herein by reference.
Page 38 of 118
4.3 Indenture, dated as of March 16, 1989, between the Company and
MTrust Corp., National Association, Trustee relating to the
Company's 8-5/8% Senior Subordinated Debentures due 2004,
filed as Exhibit 13C to the Company's Form T-3 under the Trust
Indenture Act of 1939 (Commission File No. 22-19189) and
incorporated herein by reference.
4.4 Amendment Number 1 to Indenture governing 8-5/8% Senior
Subordinated Debentures due 2004, dated as of April 7, 1989,
filed as Exhibit 4.11 to the 1990 Form S-1 and incorporated
herein by reference.
4.5 Amendment Number 2 to Indenture governing 8-5/8% Senior
Subordinated Debentures due 2004, dated February 21, 1990,
between the Company and MTrust Corp. National Association,
Trustee, filed as Exhibit 4.12 to the 1990 Form S-1 and
incorporated herein by reference.
10.1 1979 Stock Option Plan of the Company, filed as Exhibit 10.01
to the Company's Registration Statement on Form S-14
(Commission File No. 2-73909) and incorporated herein by
reference.
10.2 1987 Restricted Stock Plan of the Company, filed as Appendix I
to the Company's definitive proxy statement filed with the
Commission on March 2, 1987 and incorporated herein by
reference.
10.3 1985 Employee Stock Purchase Plan as amended and restated,
filed as Exhibit 10.3 to the 1991 Form 10-K and incorporated
herein by reference.
10.4 1991 Stock Incentive Plan of the Company as amended, filed as
Exhibit 10.4 to the 1992 Form 10-K and incorporated herein by
reference.
10.5 Selected Executive Deferred Compensation Plan of the Company,
filed as Exhibit 10.3 to the 1990 Form S-1 and incorporated
herein by reference.
10.6 1994 Incentive Compensation Plan of the Company. FILED
HEREWITH.
10.7 1994 Incentive Compensation Plan of URS Consultants, Inc.
FILED HEREWITH.
10.8 Stock Appreciation Rights Agreement, dated July 18, 1989,
between the Company and Irwin L. Rosenstein, filed as
Exhibit 10.13 to the 1990 Form S-1 and incorporated herein by
reference.
10.9 Stock Appreciation Rights Agreement, dated September 19, 1989,
between the Company and Michael B. Shane, filed as
Exhibit 10.14 to the 1990 Form S-1 and incorporated herein by
reference.
Page 39 of 118
10.10 Stock Appreciation Rights Agreement, dated October 9, 1989,
between the Company and Martin M. Koffel, filed as
Exhibit 10.15 to the 1990 Form S-1 and incorporated herein by
reference.
10.11 Stock Appreciation Rights Agreement, dated August 23, 1989,
between the Company and Martin S. Tanzer, filed as
Exhibit 10.11 to the 1991 Form 10-K and incorporated herein by
reference.
10.12 Employment Agreement, dated August 1, 1991, between URS
Consultants, Inc. and Irwin L. Rosenstein, filed as
Exhibit 10.12 to the 1991 Form 10-K and incorporated herein by
reference.
10.12(a) Amendment to Employment Agreement, dated October 11, 1994,
between URS Consultants, Inc., and Irwin L. Rosenstein. FILED
HEREWITH.
10.13 Employment Agreement, dated December 16, 1991, between the
Company and Martin Koffel, filed as Exhibit 10.13 to the 1991
Form 10-K and incorporated herein by reference.
10.14 Employment Agreement, dated January 24, 1992 between the
Company and Michael B. Shane, filed as Exhibit 10.14 to the
1991 Form 10-K and incorporated herein by reference.
10.15 Employment Agreement, dated August 1, 1991, between URS
Consultants, Inc. and Martin S. Tanzer, filed as Exhibit 10.15
to the 1991 Form 10-K and incorporated herein by reference.
10.15(a) Amendment to Employment Agreement, dated October 11, 1994,
between URS Consultants, Inc., and Martin S. Tanzer. FILED
HEREWITH.
10.16 Employment Agreement, dated May 7, 1991, between the Company
and Kent P. Ainsworth, filed as Exhibit 10.16 to the 1991
Form 10-K and incorporated herein by reference.
10.17 Second Restated Credit Agreement, dated as of October 19,
1992, between Wells Fargo Bank, N.A., the Company, URS
Consultants, Inc., Thortec Environmental Systems, Inc. and
Mitchell Management Systems, Inc., filed as Exhibit 10.17 to
the 1992 Form 10-K and incorporated herein by reference.
10.18 Letter Agreement, dated May 31, 1990, among the Company and
certain subsidiaries and certain affiliates of Richard C.
Blum & Associates, Inc., amending the Thortec Entities Credit
and Security Agreement, filed as Exhibit 10.21 to the 1990
Form S-1 and incorporated herein by reference.
Page 40 of 118
10.19 Thortec Entities Credit and Security Agreement, dated
January 30, 1989, between the Company and certain subsidiaries
and certain affiliates of Richard C. Blum & Associates, Inc.,
filed as Exhibit 10.54 to the 1988 Form 10-K, and incorporated
herein by reference.
10.20 First, Second, Third and Fourth Amendments to the Thortec
Entities Credit and Security Agreement, dated January 30,
1989, between the Company and certain entities managed or
advised by Richard C. Blum & Associates, Inc., filed as
Exhibit 10.23 to the 1990 Form S-1 and incorporated herein by
reference.
10.21 Fifth, Sixth and Seventh Amendments to the Thortec Entities
Credit and Security Agreement, dated January 30, 1989, between
the Company and certain entities managed or advised by
Richard C. Blum & Associates, Inc., filed as Exhibit 10.21 to
the 1992 Form 10-K and incorporated herein by reference.
10.22 Letter Agreement, dated February 14, 1990, between the Company
and Richard C. Blum, filed as Exhibit 10.31 to the 1990
Form S-1 and incorporated herein by reference.
10.23 Letter Agreement, dated February 14, 1990, between the Company
and Richard C. Blum & Associates, Inc., filed as Exhibit 10.32
to the 1990 Form S-1 and incorporated herein by reference.
10.24 Registration Rights Agreement, dated February 21, 1990, among
the Company, Wells Fargo Bank, N.A. and the Purchaser Holders
named therein, filed as Exhibit 10.33 to the 1990 Form S-1 and
incorporated herein by reference.
10.25 Warrant Agreement, dated February 21, 1990, between the
Company, Wells Fargo Bank, N.A. and the Purchasers named
therein, filed as Exhibit 10.24 to the 1990 Form S-1 and
incorporated herein by reference.
10.26 URS Corporation Warrant Agreement, dated February 21, 1990,
issued to BK Capital Partners I, filed as Exhibit 10.25 to the
1990 Form S-1 and incorporated herein by reference.
10.27 URS Corporation Warrant Agreement, dated February 21, 1990,
issued to BK Capital Partners II, filed as Exhibit 10.26 to
the 1990 Form S-1 and incorporated herein by reference.
10.28 URS Corporation Warrant Agreement, dated February 21, 1990,
issued to BK Capital Partners III, filed as Exhibit 10.27 to
the 1990 Form S-1 and incorporated herein by reference.
10.29 URS Corporation Warrant Agreement, dated February 21, 1990,
issued to Executive Life Insurance Company, filed as
Exhibit 10.28 to the 1990 Form S-1 and incorporated herein by
reference.
Page 41 of 118
10.30 URS Corporation Warrant Agreement, dated February 21, 1990,
issued to Wells Fargo Bank, N.A., filed as Exhibit 10.29 to
the 1990 Form S-1 and incorporated herein by reference.
10.31 URS Corporation Warrant Agreement, dated February 21, 1990,
issued to Wells Fargo Bank, N.A., filed as Exhibit 10.30 to
the 1990 Form S-1 and incorporated herein by reference.
10.32 Post-Affiliation Agreement, dated July 19, 1989, between the
Company and URS International, Inc., filed as Exhibit 10.42 to
the 1989 Form 10-K and incorporated herein by reference.
10.33 Contract between URS Consultants, Inc. and the U.S. Department
of the Navy (No. N62474-89-R-9295) dated June 6, 1989, filed
as Exhibit 10.34 to the 1991 Form 10-K and incorporated herein
by reference.*
10.34 Form of Indemnification Agreement dated as of May 1, 1992
between the Company and each of Messrs. Ainsworth, Blum,
Cashin, Koffel, Madden, Praeger, Rosenstein, Shane and Walsh,
and Dr. Tanzer, filed as Exhibit 10.34 to the 1992 Form 10-K
and incorporated herein by reference.
10.35 Form of Indemnification Agreement dated as of March 22, 1994
between the Company and Admiral Foley. FILED HEREWITH.
10.36 Form of Indemnification Agreement dated as of March 22, 1994
between the Company and Mr. Der Marderosian. FILED HEREWITH.
21.1 Subsidiaries of the Company, filed as Exhibit 22.1 to the 1992
Form 10-K and incorporated herein by reference.
23.1 Consent of Coopers & Lybrand, L.L.P. FILED HEREWITH.
24.1 Powers of Attorney of certain Directors and Officers. FILED
HEREWITH.
27 Financial Data Schedule. FILED HEREWITH.
(b)(1) Reports on Form 8-K
No reports were filed on Form 8-K during the fourth quarter of the fiscal
year ended October 31, 1994.
* Note: Certain material contained in this exhibit and indicated by an
asterisk has been omitted and filed separately with the
Commission pursuant to an application for confidential
treatment under Rule 24b-2 promulgated under the Securities
Exchange Act of 1934, as amended, which was granted by the
Commission effective April 30, 1992.
Page 42 of 118
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities
Exchange Act of 1934, URS Corporation, the Registrant, has duly caused this
report to be signed on its behalf by the undersigned, thereunto duly
authorized.
URS Corporation
(Registrant)
By /s/ Kent P. Ainsworth
----------------------
Kent P. Ainsworth
Vice President and
Chief Financial Officer
Dated: January 5, 1995
Pursuant to the requirements of the Securities Exchange Act of 1934,
this report has been signed below by the following persons on behalf of the
Registrant in the capacities and on the date indicated.
Signature Title Date
- --------- ----- ----
/s/ Martin M. Koffel Chairman of the Board January 5, 1995
- ---------------------- of Directors and Chief
(Martin M. Koffel) Executive Officer
/s/ Kent P. Ainsworth Vice President, Chief January 5, 1995
- ---------------------- Financial Officer
(Kent P. Ainsworth) Principal Accounting
Officer and Secretary
Irwin L. Rosenstein* Director January 5, 1995
- ----------------------
(Irwin L. Rosenstein)
Richard C. Blum* Director January 5, 1995
- ----------------------
(Richard C. Blum)
Emmet J. Cashin, Jr.* Director January 5, 1995
- ----------------------
(Emmet J. Cashin, Jr.)
Page 43 of 118
Richard Q. Praeger* Director January 5, 1995
- ----------------------
(Richard Q. Praeger)
William D. Walsh* Director January 5, 1995
- ----------------------
(William D. Walsh)
Richard B. Madden* Director January 5, 1995
- ----------------------
(Richard B. Madden)
Armen Der Marderosian* Director January 5, 1995
- ----------------------
(Armen Der Marderosian)
Adm. S. Robert Foley, Jr.,
USN(Ret.)* Director January 5, 1995
- ----------------------
(Adm. S. Robert Foley, Jr.,
USN (Ret.))
*By
/s/ Kent P. Ainsworth
- ----------------------
(Attorney-in-Fact)
Page 44 of 118
EXHIBIT INDEX
Exhibit Page
No. Description No.
- ---------------------------------------------------------------------------
3.1 Certificate of Incorporation of the Company, filed as
Exhibit 3.1 to the Annual Report on Form 10-K for the
fiscal year ended October 31, 1991 ("1991 Form 10-K"),
and incorporated herein by reference.
3.2 By-laws of the Company as amended, filed as Exhibit 3.2
to the Annual Report on Form 10-K for the fiscal year
ended October 31, 1992 ("1992 Form 10-K"), and
incorporated herein by reference.
4.1 Indenture, dated as of February 15, 1987, between the
Company and First Interstate Bank of California,
Trustees, relating to $57.5 million of the Company's
6-1/2% Convertible Subordinated Debentures Due 2012,
filed as Exhibit 4.10 to the Company's Registration
Statement on Form S-2 (Commission File No. 33-11668) and
incorporated herein by reference.
4.2 Amendment Number 1 to Indenture governing 6-1/2%
Convertible Subordinated Debentures due 2012, dated
February 21, 1990, between the Company and First
Interstate Bank of California, Trustee, filed as
Exhibit 4.9 to the Company's Registration Statement on
Form S-1 (Commission File No. 33-56296) ("1990
Form S-1") and incorporated herein by reference.
4.3 Indenture, dated as of March 16, 1989, between the
Company and MTrust Corp., National Association, Trustee
relating to the Company's 8-5/8% Senior Subordinated
Debentures due 2004, filed as Exhibit 13C to the
Company's Form T-3 under the Trust Indenture Act of 1939
(Commission File No. 22-19189) and incorporated herein
by reference.
4.4 Amendment Number 1 to Indenture governing 8-5/8% Senior
Subordinated Debentures due 2004, dated as of April 7,
1989, filed as Exhibit 4.11 to the 1990 Form S-1 and
incorporated herein by reference.
4.5 Amendment Number 2 to Indenture governing 8-5/8% Senior
Subordinated Debentures due 2004, dated February 21,
1990, between the Company and MTrust Corp. National
Association, Trustee, filed as Exhibit 4.12 to the 1990
Form S-1 and incorporated herein by reference.
10.1 1979 Stock Option Plan of the Company, filed as
Exhibit 10.01 to the Company's Registration Statement on
Form S-14 (Commission File No. 2-73909) and incorporated
herein by reference.
Page 45 of 118
Exhibit Page
No. Description No.
- ---------------------------------------------------------------------------
10.2 1987 Restricted Stock Plan of the Company, filed as
Appendix I to the Company's definitive proxy statement
filed with the Commission on March 2, 1987 and
incorporated herein by reference.
10.3 1985 Employee Stock Purchase Plan as amended and
restated, filed as Exhibit 10.3 to the 1991 Form 10-K
and incorporated herein by reference.
10.4 1991 Stock Incentive Plan of the Company as amended,
filed as Exhibit 10.4 to the 1992 Form 10-K and
incorporated herein by reference.
10.5 Selected Executive Deferred Compensation Plan of the
Company, filed as Exhibit 10.3 to the 1990 Form S-1 and
incorporated herein by reference.
10.6 1994 Incentive Compensation Plan of the Company. 50
FILED HEREWITH.
10.7 1994 Incentive Compensation Plan of URS Consultants, 69
Inc. FILED HEREWITH.
10.8 Stock Appreciation Rights Agreement, dated July 18,
1989, between the Company and Irwin L. Rosenstein, filed
as Exhibit 10.13 to the 1990 Form S-1 and incorporated
herein by reference.
10.9 Stock Appreciation Rights Agreement, dated September 19,
1989, between the Company and Michael B. Shane, filed as
Exhibit 10.14 to the 1990 Form S-1 and incorporated
herein by reference.
10.10 Stock Appreciation Rights Agreement, dated October 9,
1989, between the Company and Martin M. Koffel, filed as
Exhibit 10.15 to the 1990 Form S-1 and incorporated
herein by reference.
10.11 Stock Appreciation Rights Agreement, dated August 23,
1989, between the Company and Martin S. Tanzer, filed as
Exhibit 10.11 to the 1991 Form 10-K and incorporated
herein by reference.
10.12 Employment Agreement, dated August 1, 1991, between URS
Consultants, Inc. and Irwin L. Rosenstein, filed as
Exhibit 10.12 to the 1991 Form 10-K and incorporated
herein by reference.
10.12(a) Amendment to Employment Agreement, dated October 11, 94
1994, between URS Consultants, Inc., and Irwin L.
Rosenstein. FILED HEREWITH.
Page 46 of 118
Exhibit Page
No. Description No.
- ---------------------------------------------------------------------------
10.13 Employment Agreement, dated December 16, 1991, between
the Company and Martin Koffel, filed as Exhibit 10.13 to
the 1991 Form 10-K and incorporated herein by reference.
10.14 Employment Agreement, dated January 24, 1992 between the
Company and Michael B. Shane, filed as Exhibit 10.14 to
the 1991 Form 10-K and incorporated herein by reference.
10.15 Employment Agreement, dated August 1, 1991, between URS
Consultants, Inc. and Martin S. Tanzer, filed as
Exhibit 10.15 to the 1991 Form 10-K and incorporated
herein by reference.
10.15(a) Amendment to Employment Agreement, dated October 11, 95
1994, between URS Consultants, Inc., and Martin S.
Tanzer. FILED HEREWITH.
10.16 Employment Agreement, dated May 7, 1991, between the
Company and Kent P. Ainsworth, filed as Exhibit 10.16 to
the 1991 Form 10-K and incorporated herein by reference.
10.17 Second Restated Credit Agreement, dated as of
October 19, 1992, between Wells Fargo Bank, N.A., the
Company, URS Consultants, Inc., Thortec Environmental
Systems, Inc. and Mitchell Management Systems, Inc.,
filed as Exhibit 10.17 to the 1992 Form 10-K and
incorporated herein by reference.
10.18 Letter Agreement, dated May 31, 1990, among the Company
and certain subsidiaries and certain affiliates of
Richard C. Blum & Associates, Inc., amending the Thortec
Entities Credit and Security Agreement, filed as
Exhibit 10.21 to the 1990 Form S-1 and incorporated
herein by reference.
10.19 Thortec Entities Credit and Security Agreement, dated
January 30, 1989, between the Company and certain
subsidiaries and certain affiliates of Richard C. Blum &
Associates, Inc., filed as Exhibit 10.54 to the 1988
Form 10-K, and incorporated herein by reference.
10.20 First, Second, Third and Fourth Amendments to the
Thortec Entities Credit and Security Agreement, dated
January 30, 1989, between the Company and certain
entities managed or advised by Richard C. Blum &
Associates, Inc., filed as Exhibit 10.23 to the 1990
Form S-1 and incorporated herein by reference.
Page 47 of 118
Exhibit Page
No. Description No.
- ---------------------------------------------------------------------------
10.21 Fifth, Sixth and Seventh Amendments to the Thortec
Entities Credit and Security Agreement, dated
January 30, 1989, between the Company and certain
entities managed or advised by Richard C. Blum &
Associates, Inc., filed as Exhibit 10.21 to the 1992
Form 10-K and incorporated herein by reference.
10.22 Letter Agreement, dated February 14, 1990, between the
Company and Richard C. Blum, filed as Exhibit 10.31 to
the 1990 Form S-1 and incorporated herein by reference.
10.23 Letter Agreement, dated February 14, 1990, between the
Company and Richard C. Blum & Associates, Inc., filed as
Exhibit 10.32 to the 1990 Form S-1 and incorporated
herein by reference.
10.24 Registration Rights Agreement, dated February 21, 1990,
among the Company, Wells Fargo Bank, N.A. and the
Purchaser Holders named therein, filed as Exhibit 10.33
to the 1990 Form S-1 and incorporated herein by
reference.
10.25 Warrant Agreement, dated February 21, 1990, between the
Company, Wells Fargo Bank, N.A. and the Purchasers named
therein, filed as Exhibit 10.24 to the 1990 Form S-1 and
incorporated herein by reference.
10.26 URS Corporation Warrant Agreement, dated February 21,
1990, issued to BK Capital Partners I, filed as
Exhibit 10.25 to the 1990 Form S-1 and incorporated
herein by reference.
10.27 URS Corporation Warrant Agreement, dated February 21,
1990, issued to BK Capital Partners II, filed as
Exhibit 10.26 to the 1990 Form S-1 and incorporated
herein by reference.
10.28 URS Corporation Warrant Agreement, dated February 21,
1990, issued to BK Capital Partners III, filed as
Exhibit 10.27 to the 1990 Form S-1 and incorporated
herein by reference.
10.29 URS Corporation Warrant Agreement, dated February 21,
1990, issued to Executive Life Insurance Company, filed
as Exhibit 10.28 to the 1990 Form S-1 and incorporated
herein by reference.
10.30 URS Corporation Warrant Agreement, dated February 21,
1990, issued to Wells Fargo Bank, N.A., filed as
Exhibit 10.29 to the 1990 Form S-1 and incorporated
herein by reference.
Page 48 of 118
Exhibit Page
No. Description No.
- ---------------------------------------------------------------------------
10.31 URS Corporation Warrant Agreement, dated February 21,
1990, issued to Wells Fargo Bank, N.A., filed as
Exhibit 10.30 to the 1990 Form S-1 and incorporated
herein by reference.
10.32 Post-Affiliation Agreement, dated July 19, 1989, between
the Company and URS International, Inc., filed as
Exhibit 10.42 to the 1989 Form 10-K and incorporated
herein by reference.
10.33 Contract between URS Consultants, Inc. and the U.S.
Department of the Navy (No N62474-89-R-9295) dated
June 6, 1989, filed as Exhibit 10.34 to the 1991
Form 10-K and incorporated herein by reference.*
10.34 Form of Indemnification Agreement dated as of May 1,
1992 between the Company and each of Messrs. Ainsworth,
Blum, Cashin, Koffel, Madden, Praeger, Rosenstein, Shane
and Walsh, and Dr. Tanzer, filed as Exhibit 10.34 to the
1992 Form 10-K and incorporated herein by reference.
10.35 Form of Indemnification Agreement dated as of March 22, 96
1994 between the Company and Admiral Foley. FILED
HEREWITH.
10.36 Form of Indemnification Agreement dated as of March 22, 106
1994 between the Company and Mr. Der Marderosian. FILED
HEREWITH.
21.1 Subsidiaries of the Company, filed as Exhibit 22.1 to
the 1992 Form 10-K and incorporated herein by reference.
23.1 Consent of Coopers & Lybrand, L.L.P. FILED HEREWITH. 116
24.1 Powers of Attorney of certain Directors and Officers. 117
FILED HEREWITH.
27 Financial Data Schedule. FILED HEREWITH. 118
Page 49 of 118
Exhibit 10.6
URS CORPORATION
1994 INCENTIVE
COMPENSATION PLAN
Page 50 of 118
TABLE OF CONTENTS
I. PURPOSE OF THE PLAN
II. HOW AWARDS ARE EARNED UNDER THE PLAN
III. OTHER PLAN PROVISIONS
IV. DEFINITIONS
V. EXAMPLES OF PLAN OPERATION
Page 51 of 118
I. PURPOSE OF THE PLAN
Page 52 of 118
I.1 PURPOSE
The URS Corporation ("URS") 1994 Incentive Compensation Plan (the
"Plan") is intended to provide incentive compensation to
individuals who make an important contribution to URS' financial
performance. Specific Plan objectives are to:
- Focus key Employees on achieving specific financial
targets;
- Reinforce a team orientation;
- Provide significant award potential for achieving
outstanding performance; and
- Enhance the ability of URS Corporation to attract and
retain highly talented and competent individuals.
I-1
Page 53 of 118
II. HOW AWARDS ARE EARNED UNDER THE PLAN
Page 54 of 118
II.1 GENERAL PLAN DESCRIPTION
The 1994 Incentive Compensation Plan provides the opportunity for
key Employees of URS Corporation (the "Company") to receive cash
Awards based on a combination of Company and individual
performance.
Here is an overview of how the Plan works. In general, certain
Employees will be selected to participate in the Plan at the
beginning of or during the Plan Year. These individuals are
referred to in the Plan as "Designated Participants." Upon
selection to participate in the Plan, each Designated Participant
will be assigned a Target Award Percentage. This Target Award
Percentage, multiplied by the Participant's Base Salary earned
during the Plan Year, will equal the Participant's Target Award.
This Target Award represents the amount that is expected to be
paid to a Designated Participant if certain financial Performance
Objectives for URS have been fully met.
In addition, funds will be set aside for discretionary Awards to
selected other Employees (referred to in the Plan as "Non-
designated Participants"), who have demonstrated outstanding
individual performance during the Plan Year. It is expected that
the amount available to Non-designated Participants for the 1994
Plan Year will be $25,000, assuming that URS meets its financial
objectives.
The sum of all Target Awards for Designated Participants and
expected payouts to Non-designated Participants will equal the
Target Bonus Pool. The Actual Bonus Pool will vary from the
Target Pool upward or downward based on URS' actual performance
in relationship to its Performance Objectives.
Actual Awards to Designated Participants and actual funds
available for distribution to Non-designated Participants will
vary from target amounts based on the relationship between the
Actual Bonus Pool and the Target Bonus Pool.
A detailed description of how the Plan works is presented in the
following sections of this document.
II.2 DESIGNATED AND NON-DESIGNATED PARTICIPANTS
Plan participation is extended to selected Employees who, in the
opinion of the Chief Executive Officer ("CEO") of URS, have the
opportunity to significantly impact the annual operating success
of the Company. These Employees, referred to as "Designated
Participants," will be notified in writing of their selection to
participate in the Plan. This notification letter, for all
Participants except the CEO of URS, will be signed by the CEO of
URS. The letter of participation for the CEO will be signed by
the chairman of the Compensation Committee.
II-1
Page 55 of 118
In addition to the Designated Participants, there may be a group
of other Employees who are selected to receive Awards based on
their outstanding individual performance during the Plan Year.
These other Employees, referred to as "Non-designated
Participants," will not be selected until the completion of the
Plan Year. The selection of Non-designated Participants will be
determined by the CEO of URS.
II.3 TARGET AWARD PERCENTAGES FOR DESIGNATED PARTICIPANTS
Each Designated Participant will be assigned a Target Award
Percentage. This Target Award Percentage, when multiplied by the
individual's Base Salary earned during the Plan Year, represents
the anticipated payout to a Designated Participant if URS'
Performance Objectives are met.
Each Designated Participant's Target Award Percentage will be
included in the letter of notification mentioned in Section II.2.
II.4 TARGET BONUS POOL
The Target Bonus Pool (Target Pool) will equal the sum of all
Target Awards for Designated Participants PLUS an amount of set
aside for distribution to Non-designated Participants. For 1994,
the Target Bonus Pool equals $450,000.
II.5 URS PERFORMANCE OBJECTIVES
For 1994, URS' Performance Objectives are focused on the need to
reach the Company's Targets for Net Income. The Performance
Objectives and weightings for the 1994 Plan Year are as follows:
URS Corporation Performance Objectives and Weightings
Performance Measure Weighting Performance Objective
------------------- --------- ---------------------
Net Income ($000s) 100% $4,200
Net Income will be calculated AFTER all URS Corporation
(Corporate) AND URS Consultants (URSC) bonuses are accrued and
assumed to have been paid.
It is possible that in the course of the Plan Year, unforeseen
events could have a material effect upon URS Corporation's
performance relative to the Net Income Target. Such events might
include, but are not limited to, acquisitions and public
offerings. The effect of such events will be treated on a case
by case basis. In general, acquisitions and public offerings
will be treated as follows:
II-2
Page 56 of 118
Acquisitions
------------
In the event that the Company completes an acquisition during the
Plan Year, the Performance Objectives will be adjusted for the
projected financial impact of the acquisition for the balance of
the Year and potential Awards under the Plan will be calculated
accordingly.
Equity Transactions
-------------------
In the event that URS issues or buys back Company stock during
the Plan Year, the financial impact of such a transaction will
not be included in calculating potential Awards under the Plan.
II.6 RELATIONSHIP BETWEEN PERFORMANCE AND THE ACTUAL BONUS POOL
The Actual Bonus Pool (Actual Pool) will vary from the Target
Pool based on the relationship between the actual performance of
URS and the Performance Objectives. The Actual Pool will vary in
relationship to the Target Pool based on the following table:
Relationship Between URS Performance and the
Actual Bonus Pool as a % of the Target Bonus Pool <F1>
Actual
Performance as a Net Income Actual Pool
% of Performance Actual as a % of
Objective Performance Target Pool
--------- ----------- -----------
(%) ($000's) (%)
>= 125% >= $ 5,250 200%
100% $ 4,200 100%
75% $ 3,150 30%
< 75% < $ 3,150 0%
[FN]
<F1> The calculation of the Actual Award as a % of Target will be
interpolated for performance between discrete points on a
straight-line basis.
Based on the table above, the Actual Award will vary depending
upon actual performance in relation to Target Net Income.
II.7 ACTUAL AWARDS TO DESIGNATED AND NON-DESIGNATED PARTICIPANTS
Actual Awards to Designated Participants will vary from Target
levels based on the relationship between the Actual Bonus Pool
and the Target Pool.
II-3
Page 57 of 118
After allocating Actual Awards to Designated Participants, the
remaining funds in the Actual Pool will be available for
allocation to Non-designated Participants.
Actual Awards distributed to Non-designated Participants will be
determined on a discretionary basis by the CEO. The Company is
under no obligation to distribute the entire Actual Pool. The
sum of all Awards to Non-designated Participants may not exceed
the amount available in the Actual Pool.
EXAMPLE OF INTERPOLATION CALCULATION
To interpolate the Actual Award based on performance, apply the
appropriate formula for actual performance above or below the
Performance Objective. In all cases, solve for "X".
- For performance above Objective:
(Act. Perf. - Perf. Obj.) X
------------------------- = -------------------------------
(Max. Perf. - Perf. Obj.) (Max. Award % - Target Award %)
- For performance below Objective:
(Act. Perf. - Perf. Obj.) X
------------------------- = -------------------------------
(Min. Perf. - Perf. Obj.) (Min. Award % - Target Award %)
- Once you have solved for "X", add X to 100%.
Below is a hypothetical example:
EXAMPLE OF ACTUAL BONUS POOL CALCULATION
The following example illustrates the weighting of the
Performance Objectives, and calculates the Actual Bonus Pool:
Hypothetical Assumptions:
- Target Bonus Pool = $ 450,000
- Net Income Objective (after bonus accrual) = $4,200,000
- Actual Net Income (after bonus accrual) = $4,000,000
Interpolation:
- Net Income Performance = 86.7%
Actual Bonus Pool = $ 390,000
II-4
Page 58 of 118
III. OTHER PLAN PROVISIONS
Page 59 of 118
III.1 AWARD PAYMENT
Assessment of actual performance and payout of Awards will be
subject to the completion of the 1994 Year-end independent audit.
The Actual Award earned, up to the Target Award level, will be
paid to the Participant (or the Participant's heirs in the case
of death) in cash within 30 days of the completion of the
independent audit. Any Actual Award earned in excess of the
Target Award will be automatically deferred until the end of
fiscal 1995. This deferred portion of the Award will be paid to
the Participant within 30 days of the end of fiscal 1995,
provided that the Participant is still an Employee of URS or one
of its Affiliates at Year-end 1995 except for death, permanent
disability, or retirement. A Participant whose employment with
the Company or an Affiliate is terminated prior to the end of
fiscal 1995 for any other reason forfeits the deferred portion of
the Award.
The Company is under no obligation to pay interest on the
deferred portion of the Award and will not do so.
III.2 EMPLOYMENT
In order to receive an Award under the Plan, a Participant must
be employed by URS or an Affiliate at the end of the Plan Year,
except as otherwise noted below. Selection for participation in
the Plan does not convey any employment rights. Terms and
conditions of participants' employment agreements with the
Company, if any, supersede the terms and conditions of the Plan.
III.3 TERMINATION
If Termination of a Designated Participant's employment occurs
during the Plan Year by reason of death, permanent disability, or
retirement, the Designated Participant (or the Participant's
heirs in the case of death) will be eligible to receive a pro-
rata Award based on the time employed as a Participant and the
Objectives achieved for the Plan Year. Participants who have
earned an Award on this basis will receive payment on the same
schedule as other Plan Participants, except that there will be no
deferral of Awards in excess of Target. In the event that a
Participant terminates for the above mentioned reasons during
Fiscal Year 1994, any deferred Award will be paid within 30 days
of termination.
A Participant whose employment with the Company or its Affiliates
is terminated prior to the end of the Plan Year for any other
reason (whether voluntarily or involuntarily) will forfeit the
opportunity to earn an Award under the Plan, except as otherwise
provided for.
III-1
Page 60 of 118
III.4 OTHER PRO-RATA AWARDS
Individuals who have been selected during the Year for Plan
participation and who have a minimum of three months as a
Designated Participant will be eligible to receive a pro-rata
Award based on the time employed as a Participant and the
Objectives achieved for the Plan Year, provided that the
Participant is employed by URS or an Affiliate at Year-end.
III.5 PLAN FUNDING
Estimated payouts for the Plan will be accrued monthly and
charged as an expense against the income statement of the
Company. At the end of each fiscal quarter, the estimated Actual
Awards under the Plan will be evaluated based on actual
performance to date. The monthly accrual rate will then be
adjusted so that the cost of the Plan is fully accrued at Year-
end.
Accrual of Awards will not imply vesting of any individual Awards
to Participants.
III.6 PLAN ADMINISTRATION
Responsibility for decisions and/or recommendations regarding
Plan administration are divided among the URS CEO and the
Compensation Committee of the URS Board of Directors. Section
III.7 outlines the levels of responsibility and authority
assigned to each.
Notwithstanding the above, the Committee retains final authority
regarding all aspects of Plan administration, and the resolution
of any disputes. The Committee may, without notice, amend,
suspend or revoke the Plan.
III-2
Page 61 of 118
III.7 INCENTIVE PLAN GOVERNANCE
Area of Administration URS Compensation
CEO Committee
Overall Plan Design R A
Determination of Performance
Objectives R A
Designated Participants R A
Individual Target Awards R A
Target funding for Non-
Designated Participants R A
Target Award for CEO R/A
Certification of actual
performance against Objectives R A
Awards to Designated
Participants R A
Award to CEO R/A
Amendment, suspension, or
termination of the Plan R A
Adjustments due to extraordinary
events R A
KEY: R = Authority A = Authority
to Recommend to Approve
III-3
Page 62 of 118
III.8 ASSIGNMENT OF EMPLOYEE RIGHTS
No employee has a claim or right to be a Participant in the Plan,
to continue as a Participant, or to be granted an Award under the
Plan. URS is not obligated to give uniform treatment (e.g.,
Target Award Percentages, discretionary Awards, etc.) to
Employees or Participants under the Plan. Participation in the
Plan does not give an Employee the right to be retained in the
employment of URS, nor does it imply or confer any other
employment rights.
Nothing contained in the Plan will be construed to create a
contract of employment with any Participant. URS reserves the
right to elect any person to its offices and to remove Employees
in any manner and upon any basis permitted by law.
Nothing contained in the Plan will be deemed to require URS to
deposit, invest or set aside amounts for the payment of any
Awards. Participation in the Plan does not give a Participant
any ownership, security, or other rights in any assets of URS or
any of its Affiliates.
III.9 WITHHOLDING TAX
URS will deduct from all Awards paid under the Plan any taxes
required by law to be withheld.
III.10 EFFECTIVE DATE
The Plan is effective as of November 1, 1993, and will remain in
effect for the Fiscal Year ending October 31, 1994 unless
otherwise terminated or extended by the Committee.
III.11 VALIDITY
In the event any provision of the Plan is held invalid, void, or
unenforceable, the same will not affect, in any respect
whatsoever, the validity of any other provision of the Plan.
III.12 APPLICABLE LAW
The Plan will be governed by and construed in accordance with the
laws of the State of California.
III-4
Page 63 of 118
IV. DEFINITIONS
Page 64 of 118
IV.1 DEFINITIONS
"Affiliates" refers to any entity owned partially or totally by
URS Corporation including URS Corporation.
"Actual Award" or "Award" refers to the incentive amount earned
under the Plan by a Designated or Non-designated Participant.
"Actual Bonus Pool" or "Actual Pool" refers to the calculated
amount available for distribution to all Designated and Non-
designated Participants under the terms and provisions of the
Plan.
"Base Salary" refers to the actual base earnings of a Designated
Participant for the Plan Year exclusive of any bonus payments
under this Plan or any other prior or present commitment,
including contractual arrangements, any salary advance, any
allowance or reimbursement, and the value of any basic or
supplemental Employee benefits or perquisites. Base Salary
refers only to amounts earned while a Designated Participant
during the Plan Year.
"Company" refers to URS Corporation.
"Compensation Committee" or "Committee" refers to the
Compensation Committee of the Board of Directors of URS
Corporation.
"Designated Participant" refers to an Employee of URS Corporation
designated by the CEO of URS to participate in the Plan.
Designation will be established only in writing.
"Employee" refers to an Employee of URS Corporation.
"Fiscal Year" refers to the twelve months beginning November 1,
1993 and ending October 31, 1994.
"Net Income" refers to the consolidated revenue less all expenses
(including tax and interest charges) of the Company.
"Non-designated Participant" refers to an Employee of URS
Corporation selected to receive an Award under the Plan on the
basis of outstanding individual performance. Employee selection
will be made at the end of the Plan Year, at the recommendation
of the CEO of URS, within the guidelines agreed with and subject
to the approval of the Compensation Committee. Unlike Designated
Participants, Non-designated Participants will not be assigned
Target Award Percentages or individual Performance Objectives.
"Performance Objectives" or "Objectives" refers to the pre-
established financial goals upon which URS Corporation
performance will be assessed.
IV-1
Page 65 of 118
"Plan" refers to the URS Corporation 1994 Incentive Compensation
Plan, as described in this document. Any incentives for future
years will be covered by subsequent plan documents.
"Plan Year" or "Year" refers to the twelve months beginning
November 1, 1993, and ending October 31, 1994, over which
performance is measured under this Plan.
"Target Award" refers to a Designated Participant's Target Award
Percentage, multiplied by the Participant's Base Salary earned
during the Plan Year. This amount represents the anticipated
payout to the Designated Participant if all URS Performance
Objectives are met.
"Target Award Percentage" refers to a percentage of Base Salary
assigned to a Designated Participant in accordance with the terms
and provisions of the Plan.
"Target Bonus Pool" or "Target Pool" refers to the amount
anticipated to be distributed to all Designated and Non-
designated Participants if all URS Performance Objectives are
met.
"Termination" means the Participant's ceasing his service with
the Company or any of its Affiliates for any reason whatsoever,
whether voluntarily or involuntarily, including by reason of
death or permanent disability.
"URS" refers to URS Corporation.
"Year-end" refers to the end of the Fiscal Year, October 31,
1994.
IV-2
Page 66 of 118
V. EXAMPLES OF PLAN OPERATION
Page 67 of 118
URS CORPORATION PERFORMANCE TABLE
Actual
Net Income Actual vs.
(100% weighting) Target Pool
>= = $5,250 MM 200%
$4,200 MM 100%
$3,150 MM 30%
< = $3,150 MM 0%
Scenario 1 - URS net income performance exceeds objectives
Net income Objective ($MMs) $4.2 ($5.0 - $4.2)/($5.2 - $4.2) = 80.0%
URS Actual Net Income ($MMs) $5.0 + 100% = 180.0%
TARGET BONUS POOL ($000s) $450.0
ACTUAL BONUS POOL ($000s) $810.0 ($450.0 * 180%)= $810.0
Scenario 2 - URS net income performance less than objectives
Net income Objective ($MMs) $4.2 ($4.0 - $4.2)/($3.2 - $4.2) * (.7) =
URS Actual Net Income ($MMs) $4.0 -13.3% + 100% = 86.7%
TARGET BONUS POOL ($000s) $450.0
ACTUAL BONUS POOL ($000s) $390.0 ($450.0 * 86.7%) = $390.0
V-1
Page 68 of 118
Exhibit 10.7
URS CONSULTANTS INC.
1994 INCENTIVE COMPENSATION PLAN
Page 69 of 118
TABLE OF CONTENTS
I. PURPOSE OF THE PLAN
II. HOW AWARDS ARE EARNED UNDER THE PLAN
III. OTHER PLAN PROVISIONS
IV. DEFINITIONS
V. EXAMPLES OF PLAN OPERATION
Page 70 of 118
I. PURPOSE OF THE PLAN
Page 71 of 118
I.1 PURPOSE
The URS Consultants Inc. 1994 Incentive Compensation Plan (the
"Plan") is intended to provide incentive compensation to
individuals who make an important contribution to URS Consultants
financial performance. Specific Plan objectives are to:
- Focus key Employees on achieving specific financial
targets;
- Reinforce a team orientation;
- Provide significant award potential for achieving
outstanding performance; and
- Enhance the ability of URS Consultants to attract and
retain highly talented and competent individuals.
I-1
Page 72 of 118
II. HOW AWARDS ARE EARNED UNDER THE PLAN
Page 73 of 118
II.1 GENERAL PLAN DESCRIPTION
The 1994 Incentive Compensation Plan provides the opportunity for
key Employees of URS Consultants Inc. ("the Company") to receive
cash Awards based on a combination of Company and individual
performance.
In general, a Target Bonus Pool is established. This amount
represents the total Awards that are expected to be paid to
selected URS Consultants Employees if certain financial
Performance Objectives for URS Consultants have been fully met.
The Actual Bonus Pool will vary from the Target Bonus Pool upward
or downward based on URS Consultants' actual performance in
relationship to its Performance Objectives. This adjusted bonus
pool is the Actual Bonus Pool, from which Actual Award payouts
will be made.
At the beginning of or during the Plan Year, certain Employees
will be selected to participate in the Plan. These individuals
are referred to in the Plan as "Designated Participants." Upon
selection to participate in the Plan, each Designated Participant
will be assigned a Target Award Percentage. This Target Award
Percentage, multiplied by the Participant's Base Salary earned
during the Plan Year, will equal the Participant's Target Award.
This Target Award will be earned for meeting both pre-determined
URS Consultants and individual Performance Objectives.
Individual Performance Objectives will vary based on the
Participant's role within the organization. Each Designated
Participant's Actual Award could vary from the Target Award,
based on the individual's actual performance measured against
his/her Performance Objectives, subject to the amount available
for distribution from the Actual Bonus Pool.
Another key feature of the Plan is that a portion of the Actual
Bonus Pool will be set aside for discretionary Awards to selected
other Employees (referred to in the Plan as "Non-Designated
Participants"), who have demonstrated outstanding individual
performance during the Plan Year.
A detailed description of how the Plan works is presented in the
following sections of this document.
II-1
Page 74 of 118
II.2 DESIGNATED AND NON-DESIGNATED PARTICIPANTS
Plan participation is extended to selected Employees who, in the
opinion of the President of URS Consultants and the Chief
Executive Officer ("CEO") of URS Corporation (the "Parent
Company"), have the opportunity to significantly impact the
annual operating success of URS Consultants. These Employees,
referred to as "Designated Participants," will be notified in
writing of their selection to participate in the Plan. This
notification letter will be signed by both the President of URS
Consultants and the CEO of the Parent Company.
In addition to the Designated Participants, there may be a group
of other Employees who are selected to receive Awards based on
their outstanding individual performance during the Plan Year.
These other Employees, referred to as "Non-designated
Participants," will not be selected until the completion of the
Plan Year. The selection of Non-designated Participants will be
determined by the President of URS Consultants, subject to the
approval of the CEO of the Parent Company.
II.3 TARGET BONUS POOL
A Target Bonus Pool is established, representing an amount which
is expected to be sufficient to pay each Designated Participant
100% of his/her Target Award, with a remaining amount available
for distribution to Non-designated Participants. (The Awards to
Non-designated Participants are estimated at approximately 25% of
the total Designated Participants' Bonus Pool.)
This Target Bonus Pool is determined based on the current group
of Designated Participants and the anticipated group of Non-
designated Participants. The Target Pool is subject to change if
the group of Designated Participants, the group of Non-Designated
Participants, or the Base Salaries of Designated
Participants change.
Subject to these potential changes, the Target Bonus Pool for the
1994 Plan Year is established at $1,383,000.
II.4 URS CONSULTANTS PERFORMANCE OBJECTIVES
URS Consultants Performance Objectives are focused on the need to
achieve strong operating results (i.e., contribution) and
generate cash through the management of accounts receivables
(DSOs) throughout the Year. Performance will be evaluated based
on a combination of URS Consultants Contribution, Average
Receivables Days Sales Outstanding (DSO) and New Sales.
II-2
Page 75 of 118
The URS Consultants Performance Objectives for the 1994 Plan Year
are as follows:
URS Consultants Performance Objectives
Performance Measures Performance Objectives
-------------------- ----------------------
Contribution ($000s) $11,000
Average DSO (Days) 94
New Sales ($000s) $179,400
URS Consultants Contribution is defined as total 1994 Fiscal Year
URS Consultants revenues less:
- Direct cost of sales;
- Indirect expenses; and
- Accrual of expected Awards for both Designated and Non-
designated Participants under the Plan (i.e., the Plan
must pay for itself)
The subtraction of expected Awards from revenues in calculating
contribution under the Plan means that the Contribution
Objective, for purposes of the Plan, is calculated AFTER all
bonuses have been accrued, or assumed to have been paid.
URS Consultants Days Sales Outstanding (DSO) is defined by the
following formula:
BAR + UAR - BEC
--------------- X 90
REVENUES
where BAR is billed accounts receivable, UAR is unbilled accounts
receivable, BEC is billings in excess of cost, and REVENUES is
the sum of the last three months revenues. DSOs will be
calculated monthly, and the average of the twelve months DSOs
will equal Average DSOs.
URS Consultants New Sales is defined as gross additions to
backlog.
II-3
Page 76 of 118
II.5 WEIGHTING OF URS CONSULTANTS PERFORMANCE OBJECTIVES
The Target Bonus Pool will be weighted based on the aggregate
weightings of the individual Participants' Performance Objectives
in the Plan. Contribution will be the most heavily weighted
component followed by DSO performance and New Sales. An example
of the weighting calculation is shown below.
EXAMPLE OF WEIGHTING CALCULATION <F1>
The Target Bonus Pool will be weighted based on the aggregate
weightings of the individual Performance Objectives for the
Designated Participants in the Plan. The following example
illustrates the weighting calculation:
Target Bonus Pool = $1,383,000
Portion of Target Pool
determined by:
Contribution (71%) $981,000
DSO Performance (17%) $236,000
New Sales (12%) $166,000
[FN]
<F1> Weightings may be subject to change based on the Plan
measures of the Designated Participants at the end of the
Plan Year.
II-4
Page 77 of 118
II.6 RELATIONSHIP BETWEEN PERFORMANCE AND THE ACTUAL BONUS
POOL
The Actual Bonus Pool will vary from the Target Bonus Pool based
on the relationship between the actual performance of URS
Consultants and the Performance Objectives. The Actual Bonus
Pool will vary in relationship to the Target Bonus Pool based on
the following table:
Relationship Between URS Consultants Performance And
The Actual Bonus Pool As A % Of The Target Bonus Pool
URS Consultants Contribution URS Consultants DSO
---------------------------------- ---------------------------
Actual
Performance Actual
As A % Of Bonus Pool Bonus Pool
Performance Actual As A % Of Actual As A % Of
Objective Performance Target Pool Performance Target Pool
----------- ----------- ----------- ----------- -----------
(%) ($000s) (%) (Days) (%)
>= 125% >= $13,750 200%<F1> < 89 200%<F1>
100% $11,000 100% 94 100%
75% $ 8,250 30% 99 30%
< 75% < $ 8,250 0% > 99 0%
URS Consultants
New Sales
-------------------------------------
Actual
Performance Actual
As A % Of Bonus Pool
Performance Actual As A % Of
Objective Performance Target Pool
----------- ----------- -----------
(%) ($000s) (%)
>= 125% >= $224,250 200%
100% $179,400 100%
75% $134,550 30%
< 75% < $134,550 0%
[FN]
<F1> Maximum upside opportunity of 200% of the Target Bonus Pool
may be raised at the discretion of the Compensation Committee.
The calculation of the Actual Bonus Pool As A % Of Target will be
interpolated for performance between discrete points shown in the
table above.
Based on the table above, the Actual Bonus Pool could vary
between 0% and 200% of the Target Bonus Pool, depending upon
actual performance in relation to Performance Objectives and the
weighting of the Performance Objectives.
II-5
Page 78 of 118
Accrual of any Actual Pool tied to DSO and New Sales is
contingent upon Contribution performance being at or above 75% of
the Performance Objective. An example follows.
EXAMPLE OF INTERPOLATION CALCULATION
To interpolate the Actual Award based on performance, apply the
appropriate formula for actual performance above or below the
Performance Objective. In all cases, solve for "X".
- For performance above objective:
(Act. Perf. - Perf. Obj.) X
--------------------------- = ----------------------------
(Max. Perf. - Perf. Obj.) (Max. Award% - Target Award%)
- For performance below objective:
(Act. Perf. - Perf. Obj.) X
--------------------------- = ----------------------------
(Min. Perf. - Perf. Obj.) (Min. Award% - Target Award%)
- Once you have solved for "X", add X to 100%.
Below is a hypothetical example:
EXAMPLE OF ACTUAL BONUS POOL CALCULATION
The following example illustrates the weighting of the
Performance Objectives and calculates the Actual Bonus Pool:
Hypothetical assumptions:
- Target Bonus Pool = $1,383,000
URSC 1994 Performance Objective Actual
--------------------- --------- -------
- Contribution $11,000 $13,200
- DSO Performance 94 Days 93 Days
- New Sales $179,400 $170,000
Weighting:
- Contribution portion of Target Pool = $981,000
- DSO portion of Target Pool = $236,000
- New Sales portion of Target Pool = $166,000
Interpolation:
- Contribution Performance = 180.0%
- DSO Performance = 120.0%
- New Sales Performance = 85.0%
Actual Bonus Pool = $2,190,000
($981,000 * 180.0%) + ($236,000 * 120.0%) +
($166,000 * 85.0%)
II-6
Page 79 of 118
II.7 DISCRETIONARY BONUS POOL
It is the intent of the Plan that if the Actual Bonus Pool, as
calculated in Section II.6, should fall below 30% of the Target
Bonus Pool, then a Discretionary Bonus Pool will be created
instead.
Awards from the Discretionary Pool may be made to selected
Employees (both Designated and Non-designated Participants).
Awards to Designated Participants will be calculated based on
actual performance, reduced pro rata based on the amount of the
Discretionary Pool. Awards to Non-designated Participants will
be made on a totally discretionary basis by the President of URS
Consultants, subject to the approval of the CEO of the Parent
Company. The formation of the Discretionary Pool will not
guarantee any Award payments. Rather, the Discretionary Pool
will be used to recognize selected outstanding Employees in the
event that URS Consultants does not meet or exceed 75% of its
Contribution Performance Objective. The total sum of Awards made
from the Discretionary Pool may not exceed 30% of the total
Target Bonus Pool.
II.8 ACTUAL BONUS POOL ALLOCATION
Awards will be paid from the funds available in the Actual Bonus
Pool. The portion of the pool actually allocated to Non-
Designated Participants will be determined after the end of the
Plan Year at the discretion of the CEO of the Parent Company,
subject to the approval of the Compensation Committee, and may
vary from the estimated 20% of the total Actual Bonus Pool. The
sum of the Actual Awards paid, including Awards made to Non-
designated Participants, may not exceed the available Actual
Bonus Pool.
II.9 TARGET AWARD PERCENTAGES
Each Designated Participant will be assigned a Target Award
Percentage. This Target Award Percentage, when multiplied by the
individual's Base Salary earned during the Plan Year, represents
the anticipated payout to a Designated Participant if all URS
Consultants and the individual's Performance Objectives are met.
Each Designated Participant's Target Award Percentage and
individual Performance Objectives will be included in the letter
of notification mentioned in Section II.2.
II-7
Page 80 of 118
II.10 ACTUAL AWARDS FOR DESIGNATED PARTICIPANTS
Individual Performance Objectives will be assigned based on the
economic unit (i.e., URS Consultants, a region of URS
Consultants, or an office of URS Consultants) on which the
Participant's performance has the greatest financial impact.
Each Designated Participant will be notified of his/her economic
unit, the individual Performance Objectives associated with that
unit, the weighting of those Performance Objectives, and the
relationship between individual unit performance and Award levels
in the letter of notification mentioned in Section II.2.
II.11 ADJUSTMENT TO ACTUAL AWARDS
It is possible that the sum of the Actual Awards for Designated
Participants could exceed the Actual Bonus Pool available for
Designated Participants. This result could happen for either one
of two reasons. First, the CEO of URS Corporation could allocate
more for Awards to Non-designated Participants than was accrued.
Second, larger economic units could perform worse relative to the
smaller economic units, creating an insufficient Actual Bonus
Pool. In these cases, all Actual Awards will be reduced pro-
rata by a factor determined by dividing the Actual Bonus Pool for
Designated Participants by the sum of the individual Actual
Awards for Designated Participants.
If the sum of Actual Awards is less than the Actual Bonus Pool
available for Designated Participants, there will be no upward
pro-ration of Awards paid.
II-8
Page 81 of 118
III. OTHER PLAN PROVISIONS
Page 82 of 118
III.1 AWARD PAYMENT
Assessment of actual performance and payout of Awards will be
subject to the completion of the 1994 Year-end independent audit.
The Actual Award earned, up to the Target Award level, will be
paid to the Participant (or the Participant's heirs in the case
of death) in cash within 30 days of the completion of the
independent audit. Any Actual Award earned in excess of the
Target Award will be automatically deferred until the end of
fiscal 1995. This deferred portion of the Award will be paid to
the Participant within 30 days of the end of fiscal 1995,
provided that the Participant is still an Employee of URS
Consultants or one of its Affiliates at Year-end 1995, except for
death, permanent disability, or retirement. A Participant whose
employment with the Company or an Affiliate is terminated prior
to the end of fiscal 1994 for any other reason forfeits the
deferred portion of the Award.
The Company is under no obligation to pay interest on the
deferred portion of the Award and will not do so.
III.2 EMPLOYMENT
In order to receive an Award under the Plan, a Participant must
be employed by URS Consultants or an Affiliate at the end of the
Plan Year, except as otherwise noted below. A Participant must
also have performed his/her duties satisfactorily during the
Year, as determined by the URS Consultants President. The Parent
Company CEO will assess the performance of the President and
Executive Vice President.
III.3 TERMINATION
If Termination of a Designated Participant's employment occurs
during the Plan Year by reason of death, permanent disability, or
retirement, the Designated Participant (or the Participant's
heirs in the case of death) will be eligible to receive a pro-
rata Award based on the time employed as a Participant and the
Objectives achieved for the Plan Year. Participants who have
earned an Award on this basis will receive payment on the same
schedule as other Plan Participants, except that there will be no
deferral of Awards in excess of Target. In the event that a
Participant terminates for reasons above during Fiscal Year 1994,
any deferred Award will be paid within 30 days of Termination.
III-1
Page 83 of 118
A Participant whose employment with the Company or its Affiliates
is terminated prior to the end of the Plan Year for any other
reason (whether voluntarily or involuntarily) will forfeit the
opportunity to earn an Award under the Plan.
III.4 OTHER PRO-RATA AWARDS
Individuals who have been selected during the Year for Plan
participation and who have a minimum of three months as a
Designated Participant will be eligible to receive a pro-rata
Award based on the time employed as a Participant and the
Objectives achieved for the Plan Year, provided that the
Participant is employed by URS Consultants or an Affiliate at
Year-end.
III.5 PLAN FUNDING
Estimated payouts for the Plan will be accrued monthly and
charged as an expense against the income statement of URS
Consultants and its economic units. At the end of each fiscal
quarter, the estimated Actual Bonus Pool under the Plan will be
evaluated based on actual performance to date. The monthly
accrual rate will then be adjusted so that the cost of the Plan
is fully accrued at Year-end.
Accrual of Awards will not imply vesting of any individual Awards
to Participants.
III.6 PLAN ADMINISTRATION
Responsibility for decisions and/or recommendations regarding
Plan administration are divided among the URS Consultants
President, the URS Corporation CEO, and the Compensation
Committee of the URS Corporation Board of Directors.
Section III.7 outlines the levels of responsibility and
authority assigned to each.
Notwithstanding the above, the Committee retains final authority
regarding all aspects of Plan administration, and the resolution
of any disputes. The Committee may, without notice, amend,
suspend or revoke the Plan.
III-2
Page 84 of 118
III.7 INCENTIVE PLAN GOVERNANCE
URS Compensation
Area of Administration CEO Committee
---------------------- ------- -------------
Overall Plan Design R A
Determination of Performance
Objectives R A
Designated Participants R A
----------------------------------------------------------------
Individual Target Awards R A
Target funding for Non-
Designated Participants R A
----------------------------------------------------------------
Certification of actual
performance against Objectives R A
Awards to Designated
Participants R A
Awards to Non-designated
Participants R A
----------------------------------------------------------------
Amendment, suspension, or
termination of the Plan R A
Adjustments due to extraordinary
events R A
KEY: R = Authority A = Authority
to Recommend to Approve
III-3
Page 85 of 118
III.8 ASSIGNMENT OF EMPLOYEE RIGHTS
No employee has a claim or right to be a Participant in the Plan,
to continue as a Participant, or to be granted an Award under the
Plan. URS Consultants is not obligated to give uniform treatment
(e.g., Target Award Percentages, discretionary Awards, etc.) to
Employees or Participants under the Plan. Participation in the
Plan does not give an Employee the right to be retained in the
employment of URS Consultants, nor does it imply or confer any
other employment rights.
Nothing contained in the Plan will be construed to create a
contract of employment with any Participant. URS Consultants
reserves the right to elect any person to its offices and to
remove Employees in any manner and upon any basis permitted by
law.
Nothing contained in the Plan will be deemed to require URS
Consultants to deposit, invest or set aside amounts for the
payment of any Awards. Participation in the Plan does not give a
Participant any ownership, security, or other rights in any
assets of URS Consultants or any of its Affiliates.
III.9 WITHHOLDING TAX
URS Consultants will deduct from all Awards paid under the Plan
any taxes required by law to be withheld.
III.10 EFFECTIVE DATE
The Plan is effective as of November 1, 1993, and shall remain in
effect for the Fiscal Year ending October 31, 1994 unless
otherwise terminated or extended by the Committee.
III.11 VALIDITY
In the event any provision of the Plan is held invalid, void, or
unenforceable, the same shall not affect, in any respect
whatsoever, the validity of any other provision of the Plan.
III.12 APPLICABLE LAW
The Plan shall be governed by and construed in accordance with
the laws of the State of California.
III-4
Page 86 of 118
IV. DEFINITIONS
Page 87 of 118
IV.1 DEFINITIONS
"Actual Bonus Pool" or "Actual Pool" refers to the calculated
amount available to be distributed to all Participants under the
terms and provisions of the Plan.
"Affiliate" refers to any entity owned partially or totally by
URS Corporation including URS Corporation.
"Award" refers to any incentive amount earned under the Plan by a
Designated or Non-designated Participant.
"Actual Award" refers to the calculated incentive amount earned
by a Participant under the terms and provisions of the Plan,
before any adjustments caused by the size of the Actual Bonus
Pool.
"Base Salary" refers to the actual base earnings of a Designated
Participant for the Plan Year exclusive of any bonus payments
under this Plan or any other prior or present commitment,
including contractual arrangements, any salary advance, any
allowance or reimbursement, and the value of any basic or
supplemental Employee benefits or perquisites. Base Salary
refers only to amounts earned while a Designated Participant
during the Plan Year.
"Company" refers to URS Consultants, Inc.
"Compensation Committee" or "Committee" refers to the
Compensation Committee of the Board of Directors of the Parent
Company.
"Designated Participant" refers to an Employee of URS Consultants
designated by the CEO of URS Corporation to participate in the
Plan. Designation will be established only in writing.
"Discretionary Bonus Pool" or "Discretionary Pool" is the total
amount available to be distributed if URS Consultants
contribution does not reach or exceed $8,250,000 (75% of the
Performance Objective). ----------
"Employee" refers to an Employee of URS Consultants, Inc.
"Fiscal Year" refers to the twelve months beginning November 1,
and ending October 31.
IV-1
Page 88 of 118
"Non-designated Participant" refers to an Employee of URS
Consultants selected to receive an Award under the Plan on the
basis of outstanding individual performance. Employee selection
will be made at the end of the Plan Year, at the recommendation
of the President of URS Consultants, within guidelines agreed
with and subject to the approval of the CEO of URS Corporation.
Unlike Designated Participants, Non-designated Participants will
not be assigned Target Award Percentages or individual
Performance Objectives.
"Parent Company" refers to URS Corporation.
"Performance Objectives" or "Objectives" refers to the pre-
established financial goals upon which overall URS Consultants
and economic unit (i.e., URS Consultants, a region of URS
Consultants, or an office of URS Consultants) performance will be
assessed.
"Plan" refers to the URS Consultants Inc. 1994 Incentive
Compensation Plan, as described in this document. Any incentives
for future years will be covered by subsequent plan documents.
"Plan Year" or "Year" refers to the twelve months beginning
November 1, 1993, and ending October 31, 1994, over which
performance is measured under this Plan.
"Target Award" refers to a Designated Participant's Target Award
Percentage, multiplied by the Participant's Base Salary earned
during the Plan Year. This amount represents the anticipated
payout to the Designated Participant if all URS Consultants and
the individual's Performance Objectives are met.
"Target Award Percentage" refers to a percentage of Base Salary
assigned to a Designated Participant in accordance with the terms
and provisions of the Plan. Non-designated Participants are not
assigned Target Award Percentages.
"Target Bonus Pool" or "Target Pool" refers to the sum of the
Target Awards for Designated Participants plus an estimated
amount for Awards to Non-designated Participants.
"Termination" means the Participant's ceasing his service with
the Company or any of its Affiliates for any reason whatsoever,
whether voluntarily or involuntarily, including by reason of
death or permanent disability.
"Year-end" refers to the end of a Fiscal Year, October 31.
IV-2
Page 89 of 118
V. EXAMPLES OF PLAN OPERATION
Page 90 of 118
EXAMPLE OF WEIGHTING CALCULATION <F1>
The Target Bonus Pool will be weighted based on the aggregate
weightings of the individual Performance Objectives for the
Designated Participants in the Plan. The following example
illustrates the weighting calculation:
Target Bonus Pool = $1,383,000
Portion of Target Pool
determined by:
Contribution (71%) $981,000
DSO Performance (17%) $236,000
New Sales (12%) $166,000
[FN]
<F1> Weightings may be subject to change based on the Plan
measures of the Designated Participants at the end of the Plan
Year.
V-1
Page 91 of 118
EXAMPLE OF ACTUAL BONUS POOL CALCULATION
The following example illustrates the weighting of the
Performance Objectives and calculates the Actual Bonus Pool:
Hypothetical assumptions:
- Target Bonus Pool = $1,383,000
URSC 1994 Performance Objective Actual
---------------------- --------- ------
- Contribution $11,000 $13,200
- DSO Performance 94 Days 93 Days
- New Sales $179,400 $170,000
Weighting:
- Contribution portion of Target Pool = $981,000
- DSO portion of Target Pool = $236,000
- New Sales portion of Target Pool = $166,000
Interpolation:
- Contribution Performance = 180.0%
- DSO Performance = 120.0%
- New Sales Performance = 85.0%
Actual Bonus Pool = $2,190,000
($981,000 * 180.0%) + ($236,000 * 120.0%) +
($166,000 * 85.0%)
V-2
Page 92 of 118
EXAMPLE OF ACTUAL AWARD ADJUSTMENT
The following example illustrates the Actual Award adjustment
that occurs if the sum of the individual Actual Awards is greater
than the Actual Bonus Pool:
Hypothetical assumptions:
- Target Bonus Pool = $1,383,000
- Actual Bonus Pool = $2,190,000
- Sum of individual Actual Awards
(as calculated) = $2,400,000
- Actual Awards (as calculated)
- Participant A = $15,750
- Participant B = $30,000
Pro-rata reduction factor =
($2,190,000 / $2,400,000) = .912
Individual Awards (after reduction)
- Participant A =
($15,750 * .912) = $14,364
- Participant B =
($30,000 * .912) = $27,360
V-3
Page 93 of 118
EXHIBIT 10.12(a)
AMENDMENT TO EMPLOYMENT AGREEMENT
THIS AMENDMENT TO EMPLOYMENT AGREEMENT entered into as
of October 11, 1994, by and between IRWIN L. ROSENSTEIN (the
"Employee") and URS CONSULTANTS, INC., a Delaware corporation
(the "Company"):
W I T N E S S E T H:
Whereas, the Employee and the Company entered into an
Employment Agreement as of August 1, 1991 (the "Employment
Agreement"); and
Whereas, the Employee and the Company wish to amend the
Employment Agreement at this time;
N O W, T H E R E F O R E, the parties agree that
Section 8(d) of the Employment Agreement shall be amended in its
entirety to read as follows:
(d) AMOUNT. The amount of the Severance Payment
shall be equal to 200 percent of the Employee's
annual rate of Base Compensation, as in effect on
the date of employment termination.
IN WITNESS WHEREOF, this Amendment has been executed by
the Employee and on behalf of the Company by its duly authorized
officer, as of the day and year first above written.
/s/Irwin L. Rosenstein
------------------------------------
Employee
URS CONSULTANTS, INC., a Delaware
corporation
By /s/Kent P. Ainsworth
--------------------------------
Kent P. Ainsworth
Title: Chief Financial Officer and
Secretary
Page 94 of 118
EXHIBIT 10.15(a)
AMENDMENT TO EMPLOYMENT AGREEMENT
THIS AMENDMENT TO EMPLOYMENT AGREEMENT entered into as
of October 11, 1994, by and between MARTIN S. TANZER (the
"Employee") and URS CONSULTANTS, INC., a Delaware corporation
(the "Company"):
W I T N E S S E T H:
Whereas, the Employee and the Company entered into an
Employment Agreement as of August 1, 1991 (the "Employment
Agreement"); and
Whereas, the Employee and the Company wish to amend the
Employment Agreement at this time;
N O W, T H E R E F O R E, the parties agree that
Section 8(d) of the Employment Agreement shall be amended in
its entirety to read as follows:
(d) AMOUNT. The amount of the Severance Payment
shall be equal to 200 percent of the Employee's
annual rate of Base Compensation, as in effect on
the date of employment termination.
IN WITNESS WHEREOF, this Amendment has been executed by
the Employee and on behalf of the Company by its duly
authorized officer, as of the day and year first above written.
/s/Martin S. Tanzer
------------------------------------
Employee
URS CONSULTANTS, INC., a Delaware
corporation
By /s/Kent P. Ainsworth
--------------------------------
Kent P. Ainsworth
Title: Chief Financial Officer and
Secretary
Page 95 of 118
EXHIBIT 10.35
INDEMNIFICATION AGREEMENT
This INDEMNIFICATION AGREEMENT (the "Agreement") is
made and entered into as of March 22, 1994, between URS
Corporation, a Delaware corporation (the "Company"), and
Admiral S. Robert Foley, Jr., U.S.N. (ret.) (the "Indemnitee").
WHEREAS, it is essential that the Company retain and
attract as directors and executive officers the most capable
persons available;
WHEREAS, Indemnitee is a director of the Company;
WHEREAS, both the Company and Indemnitee recognize the
significant risk of litigation and other claims being asserted
against directors and executive officers of public companies in
today's environment;
WHEREAS, basic protection against undue risk of
personal liability of directors and executive officers
heretofore has been provided through insurance coverage
providing reasonable protection at reasonable costs, and
Indemnitee has relied on the availability of such coverage; but
there are no assurances that the Company will be able to
continue to obtain such insurance on terms providing reasonable
protection at reasonable cost;
WHEREAS, the By-Laws of the Company (the "By-Laws")
require the Company to indemnify directors, officers and
certain other persons to the full extent permitted by law and
the Indemnitee has been serving and continues to serve as a
director and executive officer of the Company in part in
reliance on the By-Laws; and
WHEREAS, in recognition of Indemnitee's need for
substantial protection against personal liability in order to
enhance Indemnitee's continued service to the Company in an
effective manner, the uncertainty of maintaining satisfactory
director and officer liability insurance coverage, and
Indemnitee's reliance on the By-Laws, and in part to provide
Indemnitee with specific contractual assurance that the
protection promised by the By-Laws will be available to
Indemnitee (regardless of, among other things, any amendment to
or revocation of the By-Laws or any change in the composition
of the Company's Board of Directors or acquisition transaction
relating to the Company), the Company wishes to provide in this
Agreement for the indemnification of and the advancing of
-1-
Page 96 of 118
expenses to Indemnitee to the fullest extent (whether partial
or complete) permitted by law and as set forth in this
Agreement, and, to the extent insurance is maintained, for the
continued coverage of Indemnitee under the Company's directors'
and officers' liability insurance policies;
NOW, THEREFORE, in consideration of the premises and of
Indemnitee continuing to serve the Company directly or, at its
request, another enterprise, and intending to be legally bound
hereby, the parties hereto agree as follows:
1. Certain Definitions.
-------------------
(a) Change in Control: shall be deemed to have
occurred if (i) any "person" (as such term is used in
Sections 13(d) and 14(d) of the Securities Exchange Act of
1934, as amended (the "Act")), other than a trustee or other
fiduciary holding securities under an employee benefit plan of
the Company or a corporation owned directly or indirectly by
the stockholders of the Company in substantially the same
proportions as their ownership of stock of the Company, becomes
the "beneficial owner" (as defined in Rule 13d-3 under the
Act), directly or indirectly, of securities of the Company
representing 20% or more of the total voting power represented
by the Company's then outstanding Voting Securities; or (ii)
during any period of two consecutive years, individuals who at
the beginning of such period constitute the Board of Directors
of the Company and any new director whose election by the Board
of Directors or nomination for election by the Company's
stockholders was approved by a vote of at least two-thirds
(2/3) of the directors then still in office who either were
directors at the beginning of the period or whose election or
nomination for election was previously so approved, cease for
any reason to constitute a majority thereof; or (iii) the
stockholders of the Company approve a merger or consolidation
of the Company with any other corporation, other than a merger
or consolidation which would result in the Voting Securities of
the Company outstanding immediately prior thereto continuing to
represent (either by remaining outstanding or by being
converted into Voting Securities of the surviving entity) at
least 80% of the total voting power represented by the Voting
Securities of the Company or such surviving entity outstanding
immediately after such merger or consolidation, or the
stockholders of the Company approve a plan of complete
liquidation of the Company or an agreement for the sale or
disposition by the Company of (in one transaction or a series
of transactions) all or substantially all of the Company's
assets.
-2-
Page 97 of 118
(b) Claim: any threatened, pending or completed
action, suit or proceeding, or any inquiry or investigation,
whether instituted by the Company or any other party, that
Indemnitee in good faith believes might lead to the institution
of any such action, suit or proceeding, whether civil,
criminal, administrative, investigative or other.
(c) Expenses: include attorneys' fees and all
other costs, expenses and obligations paid or incurred in
connection with investigating, defending, being a witness in or
participating in (including on appeal), or preparing to defend,
be a witness in or participate in any Claim relating to any
Indemnifiable Event.
(d) Indemnifiable Event: any event or occurrence
related to the fact that Indemnitee is or was a director,
officer, employee, agent or fiduciary of the Company, or is or
was serving at the request of the Company as a director,
officer, employee, trustee, agent, partnership committee member
or fiduciary of another corporation, partnership, joint
venture, employee benefit plan, trust or other enterprise, or
by reason of anything done or not done by Indemnitee in any
such capacity.
(e) Independent Legal Counsel: an attorney or
firm of attorneys, selected in accordance with the provisions
of Section 3 hereof, who shall not have otherwise performed
services for the Company or Indemnitee within the last five
years (other than with respect to matters concerning the rights
of Indemnitee under this Agreement, or of other indemnitees
under similar indemnity agreements).
(f) Potential Change in Control: shall be deemed
to have occurred if (i) the Company enters into an agreement,
the consummation of which would result in the occurrence of a
Change in Control; (ii) any person (including the Company)
publicly announces an intention to take or to consider taking
actions which if consummated would constitute a Change in
Control; (iii) any person, other than a trustee or other
fiduciary holding securities under an employee benefit plan of
the Company or a corporation owned, directly or indirectly, by
the stockholders of the Company in substantially the same
proportions as their ownership of stock of the Company, who is
or becomes the beneficial owner, directly or indirectly, of
securities of the Company representing 9.5% or more of the
combined voting power of the Company's then outstanding Voting
Securities, increases his beneficial ownership of such
-3-
Page 98 of 118
securities by five percentage points (5%) or more over the
percentage so owned by such person; or (iv) the Board adopts a
resolution to the effect that, for purposes of this Agreement,
a Potential Change in Control has occurred.
(g) Reviewing Party: any appropriate person or
body consisting of a member or members of the Company's Board
of Directors or any other person or body appointed by the Board
who is not a party to the particular Claim for which Indemnitee
is seeking indemnification, or Independent Legal Counsel.
(h) Voting Securities: any securities of the
Company which vote generally in the election of directors.
2. Basic Indemnification Arrangement.
---------------------------------
(a) In the event Indemnitee was, is or becomes a
party to or witness or other participant in, or is threatened
to be made a party to or witness or other participant in, a
Claim by reason of (or arising in part out of) an Indemnifiable
Event, the Company shall indemnify Indemnitee to the fullest
extent permitted by law as soon as practicable but in any event
no later than thirty (30) days after written demand is
presented to the Company, against any and all Expenses,
judgments, fines, penalties and amounts paid in settlement
(including all interest, assessments and other charges paid or
payable in connection with or in respect of such Expenses,
judgments, fines, penalties or amounts paid in settlement) of
such Claim. If so requested by Indemnitee, the Company shall
advance (within ten (10) business days of such request) any and
all Expenses to Indemnitee (an "Expense Advance").
Notwithstanding anything in this Agreement to the contrary,
Indemnitee shall not be entitled to indemnification pursuant to
this Agreement in connection with (i) liability under
Section 16(b) of the Act or under federal or state securities
laws for "insider trading", (ii) conduct finally adjudged as
constituting active or deliberate dishonesty or willful fraud
or illegality, or (iii) conduct finally adjudged as producing
an unlawful personal benefit. Notwithstanding anything in this
Agreement to the contrary, prior to a Change in Control,
Indemnitee shall not be entitled to indemnification pursuant to
this Agreement in connection with any Claim initiated by
Indemnitee unless the Board of Directors has authorized or
consented to the initiation of such Claim.
(b) Notwithstanding the foregoing, (i) the
obligations of the Company under Section 2(a) hereof shall be
subject to the condition that the Reviewing Party shall not
have determined (in a written opinion, in any case in which the
-4-
Page 99 of 118
Independent Legal Counsel referred to in Section 3 hereof is
involved) that Indemnitee would not be permitted to be
indemnified under applicable law, and (ii) the obligation of
the Company to make an Expense Advance pursuant to Section 2(a)
hereof shall be subject to the condition that, if, when and to
the extent that the Reviewing Party determines that Indemnitee
would not be permitted to be so indemnified under applicable
law, the Company shall be entitled to be reimbursed by
Indemnitee (who hereby agrees to reimburse the Company) for all
such amounts theretofore paid; PROVIDED, HOWEVER, that if
Indemnitee has commenced or thereafter commences legal
proceedings in a court of competent jurisdiction to secure a
determination that Indemnitee should be indemnified under
applicable law, any determination made by the Reviewing Party
that Indemnitee would not be permitted to be indemnified under
applicable law shall not be binding and Indemnitee shall not be
required to reimburse the Company for any Expense Advance until
a final judicial determination is made with respect thereto (as
to which all rights of appeal therefrom have been exhausted or
lapsed). If there has not been a Change in Control, the
Reviewing Party shall be selected by the Board of Directors,
and if there has been such a Change in Control (other than a
Change in Control which has been approved by a majority of the
Company's Board of Directors who were directors immediately
prior to such Change in Control), the Reviewing Party shall be
the Independent Legal Counsel referred to in Section 3 hereof.
If there has been no determination by the Reviewing Party
within thirty days (30) after written demand for
indemnification has been made under Section 2(a) hereof or if
the Reviewing Party determines that Indemnitee substantively
would not be permitted to be indemnified in whole or in part
under applicable law, Indemnitee shall have the right to
commence litigation in any court in the State of California or
the State of Delaware having subject matter jurisdiction
thereof and in which venue is proper seeking an initial
determination by the court or challenging any such
determination by the Reviewing Party or any aspect thereof,
including the legal or factual bases therefor, and the Company
hereby consents to service of process and to appear in any such
proceeding. Any determination by the Reviewing Party otherwise
shall be conclusive and binding on the Company and Indemnitee.
3. Change in Control.
-----------------
If there is a Change in Control of the Company (other
than a Change in Control which has been approved by a majority
of the Company's Board of Directors who were directors
immediately prior to such Change in Control) then with respect
to all matters thereafter arising concerning the rights of
-5-
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Indemnitee to indemnity payments and Expense Advances under the
By-Laws, this Agreement or any other agreement or Company By-
Law now or hereafter in effect relating to Claims for
Indemnifiable Events, the Company shall seek legal advice only
from Independent Legal Counsel selected by Indemnitee and
approved by the Company (which approval shall not be
unreasonably withheld). Such counsel, among other things,
shall render its written opinion to the Company and Indemnitee
as to whether and to what extent the Indemnitee would be
permitted to be indemnified under applicable law. The Company
shall pay the reasonable fees of the Independent Legal Counsel
referred to above and fully indemnify such counsel against any
and all expenses (including attorneys' fees), claims,
liabilities and damages arising out of or relating to this
Agreement or its engagement pursuant hereto.
4. Establishment of Trust.
----------------------
In the event of a Potential Change in Control, the
Company shall, upon written request by Indemnitee, create a
trust for the benefit of Indemnitee and from time to time upon
written request of Indemnitee shall fund such trust in an
amount sufficient to satisfy any and all Expenses reasonably
anticipated at the time of each such request to be incurred in
connection with investigating, preparing for and defending any
Claim relating to an Indemnifiable Event, and any and all
judgments, fines, penalties and settlement amounts of any and
all Claims relating to an Indemnifiable Event from time to time
actually paid or claimed, reasonably anticipated or proposed to
be paid; PROVIDED that in no event shall more than $100,000 be
required to be deposited in any trust created hereunder in
excess of amounts deposited in respect of reasonably
anticipated Expenses. The amount or amounts to be deposited in
the trust pursuant to the foregoing funding obligation shall be
determined by the Reviewing Party. The terms of the trust
shall provide that (i) the trust shall be irrevocable, (ii) the
trustee shall advance, within two (2) business days of a
request by the Indemnitee, any and all Expenses to the
Indemnitee (and the Indemnitee hereby agrees to reimburse the
trust under the circumstances under which the Indemnitee would
be required to reimburse the Company under Section 2(b) hereof,
(iii) the trust shall continue to be funded by the Company in
accordance with the funding obligation set forth above,
(iv) the trustee shall promptly pay to Indemnitee all amounts
for which Indemnitee shall be entitled to indemnification
pursuant to this Agreement or otherwise, and (v) upon a final
determination by the Reviewing Party or a court of competent
jurisdiction, as the case may be, that Indemnitee has been
fully indemnified under the terms of this Agreement, all
-6-
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unexpended funds in such trust shall be returned to the
Company. The trustee shall be chosen by Indemnitee.
Notwithstanding anything in this Agreement to the contrary,
other than to the extent of the amount of funds in the trust
corpus, the Company shall have no obligation to indemnify
Indemnitee under this Agreement.
5. Indemnification for Additional Expenses.
---------------------------------------
The Company shall indemnify Indemnitee against any and
all expenses (including attorneys' fees) and, if requested by
Indemnitee, shall (within five (5) business days of such
request) advance such expenses to Indemnitee which are incurred
by Indemnitee in connection with any action brought by
Indemnitee for (i) indemnification or advance payment of
Expenses by the Company under this Agreement, the By-Laws or
any other agreement or Company By-Law now or hereafter in
effect relating to Claims for Indemnifiable Events and/or
(ii) recovery under any directors' and officers' liability
insurance policies maintained by the Company, regardless of
whether Indemnitee ultimately is determined to be entitled to
such indemnification, advance expense payment or insurance
recovery, as the case may be.
6. Partial Indemnity, Etc.
-----------------------
If Indemnitee is entitled under any provision of this
Agreement to indemnification by the Company for some or a
portion of the Expenses, judgments, fines, penalties and
amounts paid in settlement of a Claim but not, however, for all
of the total amount thereof, the Company shall nevertheless
indemnify Indemnitee for the portion thereof to which
Indemnitee is entitled. Moreover, notwithstanding any other
provision of this Agreement, to the extent that Indemnitee has
been successful on the merits or otherwise in defense of any or
all Claims relating in whole or in part to an Indemnifiable
Event or in defense of any issue or matter therein, including
dismissal without prejudice, Indemnitee shall be indemnified
against all Expenses incurred in connection therewith.
7. Burden of Proof.
---------------
In connection with any determination by the Reviewing
Party or otherwise as to whether Indemnitee is entitled to be
indemnified hereunder, the burden of proof shall be on the
Company to establish that Indemnitee is not so entitled.
-7-
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8. No Presumptions.
---------------
For purposes of this Agreement, the termination of any
claim, action, suit or proceeding by judgment, order,
settlement (whether with or without court approval) or
conviction, or upon a plea of nolo contendere, or its
equivalent, shall not create a presumption that Indemnitee did
not meet any particular standard of conduct or have any
particular belief or that a court has determined that
indemnification is not permitted by applicable law. In
addition, neither the failure of the Reviewing Party to have
made a determination as to whether Indemnitee has met any
particular standard of conduct or had any particular belief,
nor an actual determination by the Reviewing Party that
Indemnitee has not met such standard of conduct or did not have
such belief, prior to the commencement of legal proceedings by
Indemnitee to secure a judicial determination that Indemnitee
should be indemnified under applicable law shall be a defense
to Indemnitee's claim or create a presumption that Indemnitee
has not met any particular standard of conduct or did not have
any particular belief.
9. Nonexclusivity, Etc.
--------------------
The rights of the Indemnitee hereunder shall be in
addition to any other rights Indemnitee may have under the
By-Laws or the Delaware General Corporation Law (the "Law") or
otherwise. To the extent that a change in the Law (whether by
statute or judicial decision) permits greater indemnification
by agreement than would be afforded currently under the By-
Laws and this Agreement, it is the intent of the parties hereto
that Indemnitee shall enjoy by this Agreement the greater
benefits so afforded by such change.
10. Liability Insurance.
-------------------
To the extent the Company maintains an insurance policy
or policies providing directors' and officers' liability
insurance, Indemnitee shall be covered by such policy or
policies, in accordance with its or their terms, to the maximum
extent of the coverage available for any Company director or
officer.
11. Period of Limitations.
---------------------
No legal action shall be brought and no cause of action
shall be asserted by or in the right of the Company against
Indemnitee, Indemnitee's spouse, heirs, executors or personal
or legal representatives after the expiration of two (2) years
-8-
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from the date of accrual of such cause of action, and any claim
or cause of action of the Company shall be extinguished and
deemed released unless asserted by the timely filing of a legal
action within such two-year period; PROVIDED, HOWEVER, that if
any shorter period of limitations is otherwise applicable to
any such cause of action such shorter period shall govern.
12. Amendments, Etc.
---------------
No supplement, modification or amendment of this
Agreement shall be binding unless executed in writing by both
of the parties hereto. No waiver of any of the provisions of
this Agreement shall be deemed or shall constitute a waiver of
any other provisions hereof (whether or not similar) nor shall
such waiver constitute a continuing waiver.
13. Subrogation.
-----------
In the event of payment under this Agreement, the
Company shall be subrogated to the extent of such payment to
all of the rights of recovery of Indemnitee, who shall execute
all papers required and shall do everything that may be
necessary to secure such rights including the execution of such
documents necessary to enable the Company effectively to bring
suit to enforce such rights.
14. No Duplication of Payments.
--------------------------
The Company shall not be liable under this Agreement to
make any payment in connection with any Claim made against
Indemnitee to the extent Indemnitee has otherwise actually
received payment (under any insurance policy, the Company
By-Laws or otherwise) of the amounts otherwise indemnifiable
hereunder.
15. Binding Effect, Etc.
--------------------
This Agreement shall be binding upon and inure to the
benefit of and be enforceable by the parties hereto and their
respective successors, assigns, including any direct or
indirect successor by purchase, merger, consolidation or
otherwise to all or substantially all of the business and/or
assets of the Company, spouses, heirs, executors and personal
and legal representatives. This Agreement shall continue in
effect regardless of whether Indemnitee continues to serve as
an executive officer or director of the Company or of any other
enterprise at the Company's request.
-9-
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16. Severability.
------------
The provisions of this Agreement shall be severable in
the event that any of the provisions hereof (including any
provision within a single section, paragraph or sentence) is
held by a court of competent jurisdiction to be invalid, void
or otherwise unenforceable in any respect, and the validity and
enforceability of any such provision in every other respect and
of the remaining provisions hereof shall not be in any way
impaired and shall remain enforceable to the fullest extent
permitted by law.
17. Governing Law.
-------------
This Agreement shall be governed by and construed and
enforced in accordance with the laws of the State of Delaware
applicable to contracts made and to be performed in such state
without giving effect to the principles of conflicts of laws.
IN WITNESS WHEREOF, the parties hereto have executed
this Agreement as of the day and year first above written.
URS CORPORATION
By: /s/ Martin M. Koffel
------------------------------------
Martin M. Koffel
Chairman and Chief Executive Officer
INDEMNITEE
/s/ Admiral S. Robert Foley, Jr.,
U.S.N. (ret.)
----------------------------------------
Admiral S. Robert Foley, Jr., U.S.N.
(ret.)
-10-
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EXHIBIT 10.36
INDEMNIFICATION AGREEMENT
This INDEMNIFICATION AGREEMENT (the "Agreement") is
made and entered into as of March 22, 1994, between URS
Corporation, a Delaware corporation (the "Company"), and Armen
Der Marderosian (the "Indemnitee").
WHEREAS, it is essential that the Company retain and
attract as directors and executive officers the most capable
persons available;
WHEREAS, Indemnitee is a director of the Company;
WHEREAS, both the Company and Indemnitee recognize
the significant risk of litigation and other claims being
asserted against directors and executive officers of public
companies in today's environment;
WHEREAS, basic protection against undue risk of
personal liability of directors and executive officers
heretofore has been provided through insurance coverage
providing reasonable protection at reasonable costs, and
Indemnitee has relied on the availability of such coverage; but
there are no assurances that the Company will be able to
continue to obtain such insurance on terms providing reasonable
protection at reasonable cost;
WHEREAS, the By-Laws of the Company (the "By-Laws")
require the Company to indemnify directors, officers and
certain other persons to the full extent permitted by law and
the Indemnitee has been serving and continues to serve as a
director and executive officer of the Company in part in
reliance on the By-Laws; and
WHEREAS, in recognition of Indemnitee's need for
substantial protection against personal liability in order to
enhance Indemnitee's continued service to the Company in an
effective manner, the uncertainty of maintaining satisfactory
director and officer liability insurance coverage, and
Indemnitee's reliance on the By-Laws, and in part to provide
Indemnitee with specific contractual assurance that the
protection promised by the By-Laws will be available to
Indemnitee (regardless of, among other things, any amendment to
or revocation of the By-Laws or any change in the composition
of the Company's Board of Directors or acquisition transaction
relating to the Company), the Company wishes to provide in this
-1-
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Agreement for the indemnification of and the advancing of
expenses to Indemnitee to the fullest extent (whether partial
or complete) permitted by law and as set forth in this
Agreement, and, to the extent insurance is maintained, for the
continued coverage of Indemnitee under the Company's directors'
and officers' liability insurance policies;
NOW, THEREFORE, in consideration of the premises and
of Indemnitee continuing to serve the Company directly or, at
its request, another enterprise, and intending to be legally
bound hereby, the parties hereto agree as follows:
1. Certain Definitions.
-------------------
(a) Change in Control: shall be deemed to have
occurred if (i) any "person" (as such term is used in
Sections 13(d) and 14(d) of the Securities Exchange Act of
1934, as amended (the "Act")), other than a trustee or other
fiduciary holding securities under an employee benefit plan of
the Company or a corporation owned directly or indirectly by
the stockholders of the Company in substantially the same
proportions as their ownership of stock of the Company, becomes
the "beneficial owner" (as defined in Rule 13d-3 under the
Act), directly or indirectly, of securities of the Company
representing 20% or more of the total voting power represented
by the Company's then outstanding Voting Securities; or (ii)
during any period of two consecutive years, individuals who at
the beginning of such period constitute the Board of Directors
of the Company and any new director whose election by the Board
of Directors or nomination for election by the Company's
stockholders was approved by a vote of at least two-thirds
(2/3) of the directors then still in office who either were
directors at the beginning of the period or whose election or
nomination for election was previously so approved, cease for
any reason to constitute a majority thereof; or (iii) the
stockholders of the Company approve a merger or consolidation
of the Company with any other corporation, other than a merger
or consolidation which would result in the Voting Securities of
the Company outstanding immediately prior thereto continuing to
represent (either by remaining outstanding or by being
converted into Voting Securities of the surviving entity) at
least 80% of the total voting power represented by the Voting
Securities of the Company or such surviving entity outstanding
immediately after such merger or consolidation, or the
stockholders of the Company approve a plan of complete
liquidation of the Company or an agreement for the sale or
disposition by the Company of (in one transaction or a series
of transactions) all or substantially all of the Company's
assets.
-2-
Page 107 of 118
(b) Claim: any threatened, pending or
completed action, suit or proceeding, or any inquiry or
investigation, whether instituted by the Company or any other
party, that Indemnitee in good faith believes might lead to the
institution of any such action, suit or proceeding, whether
civil, criminal, administrative, investigative or other.
(c) Expenses: include attorneys' fees and all
other costs, expenses and obligations paid or incurred in
connection with investigating, defending, being a witness in or
participating in (including on appeal), or preparing to defend,
be a witness in or participate in any Claim relating to any
Indemnifiable Event.
(d) Indemnifiable Event: any event or
occurrence related to the fact that Indemnitee is or was a
director, officer, employee, agent or fiduciary of the Company,
or is or was serving at the request of the Company as a
director, officer, employee, trustee, agent, partnership
committee member or fiduciary of another corporation,
partnership, joint venture, employee benefit plan, trust or
other enterprise, or by reason of anything done or not done by
Indemnitee in any such capacity.
(e) Independent Legal Counsel: an attorney or
firm of attorneys, selected in accordance with the provisions
of Section 3 hereof, who shall not have otherwise performed
services for the Company or Indemnitee within the last five
years (other than with respect to matters concerning the rights
of Indemnitee under this Agreement, or of other indemnitees
under similar indemnity agreements).
(f) Potential Change in Control: shall be
deemed to have occurred if (i) the Company enters into an
agreement, the consummation of which would result in the
occurrence of a Change in Control; (ii) any person (including
the Company) publicly announces an intention to take or to
consider taking actions which if consummated would constitute a
Change in Control; (iii) any person, other than a trustee or
other fiduciary holding securities under an employee benefit
plan of the Company or a corporation owned, directly or
indirectly, by the stockholders of the Company in substantially
the same proportions as their ownership of stock of the
Company, who is or becomes the beneficial owner, directly or
indirectly, of securities of the Company representing 9.5% or
more of the combined voting power of the Company's then
outstanding Voting Securities, increases his beneficial
ownership of such securities by five percentage points (5%) or
more over the percentage so owned by such person; or (iv) the
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Board adopts a resolution to the effect that, for purposes of
this Agreement, a Potential Change in Control has occurred.
(g) Reviewing Party: any appropriate person or
body consisting of a member or members of the Company's Board
of Directors or any other person or body appointed by the Board
who is not a party to the particular Claim for which Indemnitee
is seeking indemnification, or Independent Legal Counsel.
(h) Voting Securities: any securities of the
Company which vote generally in the election of directors.
2. Basic Indemnification Arrangement.
---------------------------------
(a) In the event Indemnitee was, is or becomes
a party to or witness or other participant in, or is threatened
to be made a party to or witness or other participant in, a
Claim by reason of (or arising in part out of) an Indemnifiable
Event, the Company shall indemnify Indemnitee to the fullest
extent permitted by law as soon as practicable but in any event
no later than thirty (30) days after written demand is
presented to the Company, against any and all Expenses,
judgments, fines, penalties and amounts paid in settlement
(including all interest, assessments and other charges paid or
payable in connection with or in respect of such Expenses,
judgments, fines, penalties or amounts paid in settlement) of
such Claim. If so requested by Indemnitee, the Company shall
advance (within ten (10) business days of such request) any and
all Expenses to Indemnitee (an "Expense Advance").
Notwithstanding anything in this Agreement to the contrary,
Indemnitee shall not be entitled to indemnification pursuant to
this Agreement in connection with (i) liability under
Section 16(b) of the Act or under federal or state securities
laws for "insider trading", (ii) conduct finally adjudged as
constituting active or deliberate dishonesty or willful fraud
or illegality, or (iii) conduct finally adjudged as producing
an unlawful personal benefit. Notwithstanding anything in this
Agreement to the contrary, prior to a Change in Control,
Indemnitee shall not be entitled to indemnification pursuant to
this Agreement in connection with any Claim initiated by
Indemnitee unless the Board of Directors has authorized or
consented to the initiation of such Claim.
(b) Notwithstanding the foregoing, (i) the
obligations of the Company under Section 2(a) hereof shall be
subject to the condition that the Reviewing Party shall not
have determined (in a written opinion, in any case in which the
Independent Legal Counsel referred to in Section 3 hereof is
involved) that Indemnitee would not be permitted to be
-4-
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indemnified under applicable law, and (ii) the obligation of
the Company to make an Expense Advance pursuant to Section 2(a)
hereof shall be subject to the condition that, if, when and to
the extent that the Reviewing Party determines that Indemnitee
would not be permitted to be so indemnified under applicable
law, the Company shall be entitled to be reimbursed by
Indemnitee (who hereby agrees to reimburse the Company) for all
such amounts theretofore paid; PROVIDED, HOWEVER, that if
Indemnitee has commenced or thereafter commences legal
proceedings in a court of competent jurisdiction to secure a
determination that Indemnitee should be indemnified under
applicable law, any determination made by the Reviewing Party
that Indemnitee would not be permitted to be indemnified under
applicable law shall not be binding and Indemnitee shall not be
required to reimburse the Company for any Expense Advance until
a final judicial determination is made with respect thereto (as
to which all rights of appeal therefrom have been exhausted or
lapsed). If there has not been a Change in Control, the
Reviewing Party shall be selected by the Board of Directors,
and if there has been such a Change in Control (other than a
Change in Control which has been approved by a majority of the
Company's Board of Directors who were directors immediately
prior to such Change in Control), the Reviewing Party shall be
the Independent Legal Counsel referred to in Section 3 hereof.
If there has been no determination by the Reviewing Party
within thirty days (30) after written demand for
indemnification has been made under Section 2(a) hereof or if
the Reviewing Party determines that Indemnitee substantively
would not be permitted to be indemnified in whole or in part
under applicable law, Indemnitee shall have the right to
commence litigation in any court in the State of California or
the State of Delaware having subject matter jurisdiction
thereof and in which venue is proper seeking an initial
determination by the court or challenging any such
determination by the Reviewing Party or any aspect thereof,
including the legal or factual bases therefor, and the Company
hereby consents to service of process and to appear in any such
proceeding. Any determination by the Reviewing Party otherwise
shall be conclusive and binding on the Company and Indemnitee.
3. Change in Control.
-----------------
If there is a Change in Control of the Company (other
than a Change in Control which has been approved by a majority
of the Company's Board of Directors who were directors
immediately prior to such Change in Control) then with respect
to all matters thereafter arising concerning the rights of
Indemnitee to indemnity payments and Expense Advances under the
By-Laws, this Agreement or any other agreement or Company
-5-
Page 110 of 118
By-Law now or hereafter in effect relating to Claims for
Indemnifiable Events, the Company shall seek legal advice only
from Independent Legal Counsel selected by Indemnitee and
approved by the Company (which approval shall not be
unreasonably withheld). Such counsel, among other things,
shall render its written opinion to the Company and Indemnitee
as to whether and to what extent the Indemnitee would be
permitted to be indemnified under applicable law. The Company
shall pay the reasonable fees of the Independent Legal Counsel
referred to above and fully indemnify such counsel against any
and all expenses (including attorneys' fees), claims,
liabilities and damages arising out of or relating to this
Agreement or its engagement pursuant hereto.
4. Establishment of Trust.
----------------------
In the event of a Potential Change in Control, the
Company shall, upon written request by Indemnitee, create a
trust for the benefit of Indemnitee and from time to time upon
written request of Indemnitee shall fund such trust in an
amount sufficient to satisfy any and all Expenses reasonably
anticipated at the time of each such request to be incurred in
connection with investigating, preparing for and defending any
Claim relating to an Indemnifiable Event, and any and all
judgments, fines, penalties and settlement amounts of any and
all Claims relating to an Indemnifiable Event from time to time
actually paid or claimed, reasonably anticipated or proposed to
be paid; PROVIDED that in no event shall more than $100,000 be
required to be deposited in any trust created hereunder in
excess of amounts deposited in respect of reasonably
anticipated Expenses. The amount or amounts to be deposited in
the trust pursuant to the foregoing funding obligation shall be
determined by the Reviewing Party. The terms of the trust
shall provide that (i) the trust shall be irrevocable, (ii) the
trustee shall advance, within two (2) business days of a
request by the Indemnitee, any and all Expenses to the
Indemnitee (and the Indemnitee hereby agrees to reimburse the
trust under the circumstances under which the Indemnitee would
be required to reimburse the Company under Section 2(b) hereof,
(iii) the trust shall continue to be funded by the Company in
accordance with the funding obligation set forth above,
(iv) the trustee shall promptly pay to Indemnitee all amounts
for which Indemnitee shall be entitled to indemnification
pursuant to this Agreement or otherwise, and (v) upon a final
determination by the Reviewing Party or a court of competent
jurisdiction, as the case may be, that Indemnitee has been
fully indemnified under the terms of this Agreement, all
unexpended funds in such trust shall be returned to the
Company. The trustee shall be chosen by Indemnitee.
-6-
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Notwithstanding anything in this Agreement to the contrary,
other than to the extent of the amount of funds in the trust
corpus, the Company shall have no obligation to indemnify
Indemnitee under this Agreement.
5. Indemnification for Additional Expenses.
---------------------------------------
The Company shall indemnify Indemnitee against any
and all expenses (including attorneys' fees) and, if requested
by Indemnitee, shall (within five (5) business days of such
request) advance such expenses to Indemnitee which are incurred
by Indemnitee in connection with any action brought by
Indemnitee for (i) indemnification or advance payment of
Expenses by the Company under this Agreement, the By-Laws or
any other agreement or Company By-Law now or hereafter in
effect relating to Claims for Indemnifiable Events and/or
(ii) recovery under any directors' and officers' liability
insurance policies maintained by the Company, regardless of
whether Indemnitee ultimately is determined to be entitled to
such indemnification, advance expense payment or insurance
recovery, as the case may be.
6. Partial Indemnity, Etc.
-----------------------
If Indemnitee is entitled under any provision of this
Agreement to indemnification by the Company for some or a
portion of the Expenses, judgments, fines, penalties and
amounts paid in settlement of a Claim but not, however, for all
of the total amount thereof, the Company shall nevertheless
indemnify Indemnitee for the portion thereof to which
Indemnitee is entitled. Moreover, notwithstanding any other
provision of this Agreement, to the extent that Indemnitee has
been successful on the merits or otherwise in defense of any or
all Claims relating in whole or in part to an Indemnifiable
Event or in defense of any issue or matter therein, including
dismissal without prejudice, Indemnitee shall be indemnified
against all Expenses incurred in connection therewith.
7. Burden of Proof.
---------------
In connection with any determination by the Reviewing
Party or otherwise as to whether Indemnitee is entitled to be
indemnified hereunder, the burden of proof shall be on the
Company to establish that Indemnitee is not so entitled.
8. No Presumptions.
---------------
For purposes of this Agreement, the termination of
any claim, action, suit or proceeding by judgment, order,
settlement (whether with or without court approval) or
-7-
Page 112 of 118
conviction, or upon a plea of nolo contendere, or its
equivalent, shall not create a presumption that Indemnitee did
not meet any particular standard of conduct or have any
particular belief or that a court has determined that
indemnification is not permitted by applicable law. In
addition, neither the failure of the Reviewing Party to have
made a determination as to whether Indemnitee has met any
particular standard of conduct or had any particular belief,
nor an actual determination by the Reviewing Party that
Indemnitee has not met such standard of conduct or did not have
such belief, prior to the commencement of legal proceedings by
Indemnitee to secure a judicial determination that Indemnitee
should be indemnified under applicable law shall be a defense
to Indemnitee's claim or create a presumption that Indemnitee
has not met any particular standard of conduct or did not have
any particular belief.
9. Nonexclusivity, Etc.
--------------------
The rights of the Indemnitee hereunder shall be in
addition to any other rights Indemnitee may have under the
By-Laws or the Delaware General Corporation Law (the "Law") or
otherwise. To the extent that a change in the Law (whether by
statute or judicial decision) permits greater indemnification
by agreement than would be afforded currently under the By-
Laws and this Agreement, it is the intent of the parties hereto
that Indemnitee shall enjoy by this Agreement the greater
benefits so afforded by such change.
10. Liability Insurance.
-------------------
To the extent the Company maintains an insurance
policy or policies providing directors' and officers' liability
insurance, Indemnitee shall be covered by such policy or
policies, in accordance with its or their terms, to the maximum
extent of the coverage available for any Company director or
officer.
11. Period of Limitations.
---------------------
No legal action shall be brought and no cause of
action shall be asserted by or in the right of the Company
against Indemnitee, Indemnitee's spouse, heirs, executors or
personal or legal representatives after the expiration of two
(2) years from the date of accrual of such cause of action, and
any claim or cause of action of the Company shall be
extinguished and deemed released unless asserted by the timely
filing of a legal action within such two-year period; PROVIDED,
HOWEVER, that if any shorter period of limitations is otherwise
applicable to any such cause of action such shorter period
shall govern.
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12. Amendments, Etc.
----------------
No supplement, modification or amendment of this
Agreement shall be binding unless executed in writing by both
of the parties hereto. No waiver of any of the provisions of
this Agreement shall be deemed or shall constitute a waiver of
any other provisions hereof (whether or not similar) nor shall
such waiver constitute a continuing waiver.
13. Subrogation.
-----------
In the event of payment under this Agreement, the
Company shall be subrogated to the extent of such payment to
all of the rights of recovery of Indemnitee, who shall execute
all papers required and shall do everything that may be
necessary to secure such rights including the execution of such
documents necessary to enable the Company effectively to bring
suit to enforce such rights.
14. No Duplication of Payments.
--------------------------
The Company shall not be liable under this Agreement
to make any payment in connection with any Claim made against
Indemnitee to the extent Indemnitee has otherwise actually
received payment (under any insurance policy, the Company
By-Laws or otherwise) of the amounts otherwise indemnifiable
hereunder.
15. Binding Effect, Etc.
--------------------
This Agreement shall be binding upon and inure to the
benefit of and be enforceable by the parties hereto and their
respective successors, assigns, including any direct or
indirect successor by purchase, merger, consolidation or
otherwise to all or substantially all of the business and/or
assets of the Company, spouses, heirs, executors and personal
and legal representatives. This Agreement shall continue in
effect regardless of whether Indemnitee continues to serve as
an executive officer or director of the Company or of any other
enterprise at the Company's request.
16. Severability.
------------
The provisions of this Agreement shall be severable
in the event that any of the provisions hereof (including any
provision within a single section, paragraph or sentence) is
held by a court of competent jurisdiction to be invalid, void
or otherwise unenforceable in any respect, and the validity and
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Page 114 of 118
enforceability of any such provision in every other respect and
of the remaining provisions hereof shall not be in any way
impaired and shall remain enforceable to the fullest extent
permitted by law.
17. Governing Law.
-------------
This Agreement shall be governed by and construed and
enforced in accordance with the laws of the State of Delaware
applicable to contracts made and to be performed in such state
without giving effect to the principles of conflicts of laws.
IN WITNESS WHEREOF, the parties hereto have executed
this Agreement as of the day and year first above written.
URS CORPORATION
By: /s/ Martin M. Koffel
------------------------------------
Martin M. Koffel
Chairman and Chief Executive Officer
INDEMNITEE
/s/ Armen Der Marderosian
----------------------------------------
Armen Der Marderosian
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Page 115 of 118
EXHIBIT 23.1
CONSENT OF INDEPENDENT ACCOUNTANTS
We consent to the incorporation by reference in the following
registration statements of URS Corporation on:
Form S-8 (File No. 2-63576) for 41,825 common shares
related to the 1979 Stock Option Plan filed February 8,
1980
Form S-8 (File No. 2-99410) for 50,000 common shares
related to the 1985 Employee Stock Purchase Plan filed
August 1, 1985
Form S-8 (File No. 33-42192) for 261,177 common shares
related to the 1985 Employee Stock Purchase Plan filed
August 31, 1991
Form S-8 (File No. 33-41047) for 1,000,000 common shares
related to the 1979 Stock Incentive Plan filed June 7,
1991
Form S-8 (File No. 33-61230) for 500,000 common shares
related to the 1991 Stock Incentive Plan filed April 1,
1993
of our report dated December 15, 1994, on our audits of the
consolidated financial statements of URS Corporation and its
subsidiaries as of October 31, 1994 and 1993, and for the years
ended October 31, 1994, 1993 and 1992, which report is included
in this Annual Report on Form 10-K.
COOPERS & LYBRAND L.L.P.
San Francisco, California
January 5, 1995
Page 116 of 118
EXHIBIT 24.1
POWER OF ATTORNEY
Each person whose signature appears below hereby
constitutes and appoints any one of MARTIN M. KOFFEL and
KENT P. AINSWORTH, each with full power to act without the
other, as his true and lawful attorney-in-fact and agent, with
full power of substitution and resubstitution, for him and in
his name, place and stead, in any and all capacities, to sign
the Annual Report on SEC Form 10-K for fiscal year 1994 of URS
Corporation, and any or all amendments thereto, and to file the
same with all the exhibits thereto, and other documents in
connection therewith,, with the Securities and Exchange
Commission, granting unto said attorney-in-fact and agent full
power and authority to do and perform each and every act and
thing requisite and necessary to be done in and about the
premises, as fully to all extents and purposes as he might or
could do in person, thereby ratifying and confirming all that
such attorney-in-fact and agent, or his substitute or
substitutes, may lawfully do or cause to be done by virtue
thereof.
This Power of Attorney may be executed in separate
counterparts.
Date: December 21, 1994.
/s/ Richard C. Blum /s/ William D. Walsh
------------------------------ -------------------------------
Richard C. Blum, Director William D. Walsh, Director
/s/ Emmet J. Cashin, Jr. /s/ Irwin L. Rosenstein
------------------------------ -------------------------------
Emmet J. Cashin, Jr., Director Irwin L. Rosenstein, Director
/s/ Richard Q. Praeger /s/ Armen Der Marderosian
------------------------------ -------------------------------
Richard Q. Praeger, Director Armen Der Marderosian, Director
/s/ Martin M. Koffel /s/ Richard B. Madden
------------------------------ -------------------------------
Martin M. Koffel, Director Richard B. Madden, Director
/s/ S. Robert Foley, Jr.
------------------------------
S. Robert Foley, Jr., Director
Page 117 of 118