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, 1997
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 Exchange
8 5/8% Senior Subordinated Debentures New York Stock Exchange
due 2004 Pacific Exchange
6 1/2% Convertible Subordinated Debentures New York Stock Exchange
due 2012 Pacific 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 19, 1997, there were 14,799,274 Common Shares outstanding, and
the aggregate market value of the shares of Common Stock of URS Corporation held
by nonaffiliates was approximately $174.9 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 24, 1998.
This Annual Report on Form 10-K contains forward-looking statements that involve
risks and uncertainties. The Company's actual results could differ materially
from those discussed here. Factors that might cause such a difference include,
but are not limited to, those discussed elsewhere in this Annual Report on Form
10-K and those incorporated by reference from the Company's Form S-4/A
Registration Statement filed with the Securities and Exchange Commission on
October 10, 1997 (File No. 333-37531).
PART I
ITEM 1. BUSINESS
URS Corporation (the "Company") offers a broad range of planning, design
and program and construction management services. The Company serves public and
private sector clients on infrastructure projects involving transportation
systems, facilities and environmental programs.
The Company conducts its business through offices located throughout the
United States. The Company has approximately 3,300 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.
Acquisitions
In January 1995, the Company acquired, for $3.6 million, privately-held
E.C. Driver & Associates, Inc. ("ECD") of Tallahassee, Florida, an engineering
firm specializing in bridge and highway design.
In March 1996, the Company acquired, for $78.8 million, publicly-held
Greiner Engineering, Inc., an Irving, Texas engineering and architectural design
services firm ("Greiner"). For a complete discussion of the impact of the
acquisition of Greiner upon the operations of the Company, see Item 7,
Management's Discussion and Analysis of Financial Condition and Results of
Operations.
On November 14, 1997, the Company acquired, for approximately $100 million,
privately-held Woodward-Clyde Group, Inc. ("W-C") of Denver, Colorado, an
engineering firm. The description of the Company contained in this Part I does
not take into account the acquisition of W-C which was consummated after the
Company's fiscal year ended on October 31, 1997. See Item 8, Consolidated
Financial Statements and Supplementary Data, Note 16, Subsequent Event.
Services
The Company provides professional services in three major areas: planning,
design and program and construction management through the Company's 35
principal 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.
1
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 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.
2
Markets
The Company's strategy is to focus on the infrastructure market which
includes surface and air transportation systems, institutional and commercial
facilities, and environmental programs involving pollution control, water
resources and hazardous waste management.
Surface and Air Transportation Systems. The Company's engineers, designers,
planners and managers provide services for projects involving all types of
transportation systems and networks, such as highways, roadways, streets,
bridges, rapid and mass transit, 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 the preliminary and
final design to construction management. Historically, the Company's emphasis in
this market area has been on the design of new transportation systems, but in
recent years the rehabilitation of existing systems 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 drives 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.
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.
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.
Hazardous Waste Management. In this market segment, 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.
3
Clients
General
The Company's clients include local, state and Federal government agencies
and private sector businesses. The Company's revenues from local, state and
Federal government agencies and private businesses for the last five fiscal
years are as follows:
1997 1996 1995 1994 1993
-------- ------- -------- -------- --------
(In thousands)
Local and
state
agencies ...... $255,423 63% $198,472 65% $ 99,871 56% $ 88,207 54% $ 80,350 55%
Federal
agencies ...... 67,042 17 64,226 21 58,751 33 59,611 36 48,713 33
Private
businesses .... 83,986 20 42,772 14 21,147 11 16,270 10 16,698 12
-------- -------- -------- -------- -------- -------- -------- -------- -------- --------
Total ........... $406,451 100% $305,470 100% $179,769 100% $164,088 100% $145,761 100%
======== ======== ======== ======== ======== ======== ======== ======== ======== ========
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 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, 1988, 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
4
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. For the fiscal year ended October 31, 1997, the percentage
of revenues attributable to cost-plus contracts was 48.4% and the percentage of
revenues attributable to fixed-price contracts was 27.8%.
Backlog, Project Designations and Indefinite Delivery Contracts
The Company's contract backlog was $470.4 million at October 31, 1997,
compared to $399.2 million at October 31, 1996. 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 $470.4 million at October 31, 1997,
approximately 30%, or $141.1 million, is not reasonably expected to be filled
within the next fiscal year ending October 31, 1998.
The Company has also been designated by customers as the recipient of
certain future contracts. These "designations" are projects that have been
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 $446.0 million at October 31, 1997, as
compared to $295.9 million at October 31, 1996. 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 pursuant to which
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. 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 are 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, 1997, the potential value of the Company's five largest
indefinite delivery contracts was as follows:
5
At October 31, 1997
-----------------------------------
Total Revenues Estimated
Potential recognized thru Funded Estimated Remaining
Contract Term Values October 31, 1997 Backlog Designations Values
- -------- ---- ------ ------- -------- ------- ------------ ------
(In millions)
EPA ARCS (9&10) 1989-1999 $ 182.5 $ 45.1 $ 19.4 $ 3.5 $ 114.5
Navy CLEAN 1989-1999 166.0 136.7 7.8 3.3 18.2
EPA ARCS (6,7&8) 1989-1999 119.7 75.0 3.7 -- 41.0
Brooks AFB System 1994-1999 50.0 12.7 8.3 -- 29.0
NY State Environmental
Remediation 1990-2000 20.0 7.9 -- -- 12.1
-------- -------- ------- -------- --------
Total $ 538.2 $ 277.4 $ 39.2 $ 6.8 $ 214.8
======== ======== ======= ======== ========
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 3,300 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. Fourteen of the Company's employees are 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 35 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.
6
ITEM 3. LEGAL PROCEEDINGS
Various legal proceedings are pending against the Company or its
subsidiaries alleging breaches of contract or negligence in connection with the
Company's performance of professional services. In some actions, damages
(including punitive or treble damages) are sought which substantially exceed the
Company's insurance coverage. Based upon management's experience that most legal
proceedings settle for less than any claimed damages, at this time management
does not believe that any of such proceedings are likely to result in a judgment
against, or settlement by, the Company materially exceeding the Company's
insurance coverage or have a material adverse effect on the consolidated
financial position and operations of the Company.
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, 1997.
ITEM 4A. EXECUTIVE OFFICERS OF THE REGISTRANT
Name Position Held Age
- ---- ------------- ---
Martin M. Koffel.............Chief Executive Officer, President 58
and Director of the Company
from May 1989; Chairman of the
Board from June 1989; Director,
Regent Pacific Management Corporation
since 1993.
Kent P. Ainsworth............Executive Vice President and Chief 51
Financial Officer of the
Company from January 1991; Secretary
of the Company from May, 1994.
Robert L. Costello ..........Executive Vice President, URS Greiner, 46
a wholly-owned subsidiary of the Company,
since November 1996; Vice President
and Director of the Company since
April 1996; President of Greiner
Engineering, Inc., a wholly-owned
subsidiary of the Company, and Director
of same since April 1995; President and
Chief Operating Officer of same from
August 1994 to August 1995; Executive
Vice President and Chief Financial Officer
of same from August 1988 to August 1994.
7
Name Position Held Age
- ---- ------------- ---
Joseph Masters...............General Counsel of the Company 41
since July 1997, Vice
President 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.
Irwin L. Rosenstein..........President, URS Greiner, a wholly-owned 61
subsidiary of the Company,
since November 1996; President
of URS Consultants, Inc., a
wholly-owned subsidiary of the
Company and Director of the
Company since February 1989;
Vice President of the Company
since 1987.
8
PART II
ITEM 5. MARKET FOR THE REGISTRANT'S COMMON EQUITY AND RELATED
STOCKHOLDER MATTERS
The shares of the Company's Common Stock are listed on the New York Stock
Exchange and the Pacific Exchange (under the symbol "URS"). At December 19,
1997, the Company had approximately 3,336 stockholders of record. The following
table sets forth the high and low closing sale prices of the Company's Common
Stock, as reported by The Wall Street Journal for the periods indicated.
MARKET PRICE
------------
LOW HIGH
--- ----
Fiscal Period:
1996:
First Quarter ............................. $ 6.38 $ 7.25
Second Quarter ............................ $ 6.25 $ 7.25
Third Quarter ............................. $ 6.88 $ 8.25
Fourth Quarter ............................ $ 7.00 $ 8.88
1997:
First Quarter ............................. $ 7.75 $ 10.38
Second Quarter ............................ $ 9.50 $ 10.88
Third Quarter ............................. $ 9.63 $ 15.06
Fourth Quarter ............................ $ 13.13 $ 18.81
1998:
First Quarter ............................. $ 12.75 $ 16.38
(through December 19, 1997)
The Company has not paid cash dividends since 1986 and at the present time,
management of the Company does not anticipate paying dividends in the near
future. Further, the Company is precluded from paying dividends on its
outstanding common stock pursuant to its senior secured revolving credit
facility with its lender and the Indenture governing the 85/8% Debentures. See
Item 8, Consolidated Financial Statements and Supplementary Data, Note 8, Long
Term Debt and Note 11, Stockholders' Equity.
ITEM 6. SUMMARY OF SELECTED FINANCIAL INFORMATION
The following table sets forth selected financial data of the Company for
the five years ended October 31, 1997. The data presented below should be read
in conjunction with the Consolidated Financial Statements of the Company
including the notes thereto.
9
SUMMARY OF SELECTED FINANCIAL INFORMATION
(In thousands, except per share data)
Years Ended October 31,
----------------------------------------------------------------------------
1997 1996 1995 1994 1993
----------------------------------------------------------------------------
Income Statement Data:
Revenues $406,451 $305,470 $179,769 $164,088 $145,761
-------- -------- -------- -------- --------
Operating expenses:
Direct operating 241,002 187,129 108,845 102,500 91,501
Indirect, general and
administrative 141,442 102,389 63,217 55,455 51,607
-------- -------- -------- -------- --------
Total operating expenses 382,444 289,518 172,062 157,955 143,108
-------- -------- -------- -------- --------
Operating income 24,007 15,952 7,707 6,133 2,653
Interest expense, net 4,802 3,897 1,351 1,244 1,220
-------- -------- -------- -------- --------
Income before income taxes 19,205 12,055 6,356 4,889 1,433
Income tax expense 7,700 4,700 1,300 450 140
-------- -------- -------- -------- --------
Net income $ 11,505 $ 7,355 $ 5,056 $ 4,439 $ 1,293
======== ======== ======== ======== ========
Net income per share:
Primary $ 1.06 $ .82 $ .68 $ .60 $ .18
======== ======== ======== ======== ========
Fully diluted $ 1.06 $ .80 $ .67 $ .60 $ .18
======== ======== ======== ======== ========
Weighted average shares:
Primary 10,883 9,498 8,632 8,556 6,971
Fully diluted 10,883 9,498 8,632 8,556 6,971
As of October 31,
--------------------------------------------------------------------------------
1997 1996 1995 1994 1993
--------------------------------------------------------------------------------
Balance Sheet Data:
Working capital $ 63,236 $ 57,570 $ 36,307 $ 33,674 $ 27,684
Total assets 212,654 194,932 75,935 65,214 58,074
Total debt 48,049 61,263 9,999 9,270 8,277
Stockholders' equity $ 77,151 $ 56,694 $ 39,478 $ 33,973 $ 29,389
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ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
Results of Operations
Fiscal 1997 Compared with Fiscal 1996
Revenues in fiscal 1997 were $406.5 million, or 33% over the amount
reported in fiscal 1996. The growth in revenues is primarily attributable to the
acquisition of Greiner, the results of which are included commencing April 1,
1996. Accordingly, in fiscal 1997 the results of operations of Greiner were
included for twelve months compared to only seven months in fiscal 1996.
Revenues generated from the Company's three largest contracts; Navy CLEAN, EPA
ARCS 9&10 and EPA ARCS 6, 7 & 8, decreased in fiscal 1997 to $26.5 million as
compared to $30.2 million in fiscal 1996. The decrease in revenues from these
contracts is primarily due to a decrease in the number of task orders for
hazardous waste services on all of the above EPA ARCS contracts.
Direct operating expenses, which consist of direct labor and direct
expenses including subcontractor costs, increased $53.9 million, or 29%, over
the amount reported in fiscal 1996. The increase is due to the addition of the
direct operating expenses of Greiner and to increases in subcontractor costs and
direct labor costs as well. Indirect general and administrative expenses
("IG&A") increased to $141.4 million in fiscal 1997 from $102.4 million in
fiscal 1996 which is the result of the addition of the Greiner overhead as well
as an increase in business activity. Expressed as a percentage of revenues, IG&A
expenses increased slightly from 34% in fiscal 1996 to 35% in fiscal 1997. The
Company attributes this stability to the cost controls exercised by the Company.
Net interest expense increased to $4.8 million in fiscal 1997 from $3.9 million
in fiscal 1996 as a result of increased borrowings incurred in connection with
the acquisition of Greiner.
With an effective income tax rate of 40% in 1997, the Company earned net
income of $11.5 million while in 1996 net income was $7.4 million after an
effective income tax rate of 39%. The Company earned $1.06 per share on a
fully-diluted basis in fiscal 1997 compared to $.80 per share in fiscal 1996.
The Company's backlog of signed and funded contracts at October 31, 1997
was $470.4 million as compared to $399.2 million at October 31, 1996. The value
of the Company's designations was $446.0 million at October 31, 1997, as
compared to $295.9 million at October 31, 1996.
11
Fiscal 1996 Compared with Fiscal 1995
Revenues in fiscal 1996 were $305.5 million, or 70% over the amount
reported in fiscal 1995. The growth in revenues is primarily attributable to the
acquisition of Greiner, the results of which are included commencing April 1,
1996, and to a lesser extent, an increase in revenues derived from existing
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,
decreased in fiscal 1996 to $30.2 million as compared to $37.1 million in fiscal
1995. The decrease in revenues from these contracts is primarily due to a
decrease in the number of task orders for hazardous waste services on all of the
above EPA ARCS contracts.
Direct operating expenses, which consist of direct labor and direct
expenses including subcontractor costs, increased $78.3 million, or 72%, over
the amount reported in fiscal 1995. The increase is due to the addition of the
direct operating expenses of Greiner and to increases in subcontractor costs and
direct labor costs as well. IG&A expenses increased to $102.4 million in fiscal
1996 from $63.2 million in fiscal 1995 which is the result of the addition of
the Greiner overhead as well as an increase in business activity. Expressed as a
percentage of revenues, IG&A expenses decreased from 35% in fiscal 1995 to 34%
in fiscal 1996. The Company attributes this decrease to the cost controls
exercised by the Company. Net interest expense increased to $3.9 million in
fiscal 1996 from $1.4 million in fiscal 1995 as a result of increased borrowings
incurred in connection with the acquisition of Greiner.
With an effective income tax rate of 39% in 1996, the Company earned net
income of $7.4 million while in 1995 net income was $5.1 million after an
effective income tax rate of 20% when the Company had available net operating
loss ("NOL") carryforwards which partially offset otherwise taxable income for
Federal income tax purposes. The Company earned $.80 per share on a
fully-diluted basis in fiscal 1996 compared to $.67 per share in fiscal 1995.
The Company's backlog of signed and funded contracts at October 31, 1996
was $399.2 million as compared to $196.4 million at October 31, 1995. The value
of the Company's designations was $295.9 million at October 31, 1996, as
compared to $194.1 million at October 31, 1995.
Income Taxes
The Company currently has a $5.3 million NOL carryforward which is limited
to $750,000 per year, pursuant to Section 382 of the Internal Revenue Code,
related to its October 1989 quasi-reorganization.
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Liquidity and Capital Resources
The Company's liquidity and capital measurements are set forth below:
October 31,
------------------------------------------
1997 1996 1995
------------------------------------------
Working capital $63,236,000 $57,570,000 $36,307,000
Working capital ratio 1.7 to 1 1.7 to 1 2.4 to 1
Average days to convert billed
accounts receivable to cash 71 85 62
Percentage of debt to equity 62.2% 107.7% 25.0%
The Company is a professional services organization and, as such, is not
capital intensive. Capital expenditures during fiscal years 1997, 1996 and 1995
were $5.1 million, $3.0 million, and $1.6 million, respectively. The
expenditures were principally for computer-aided design and general purpose
computer equipment to accommodate the Company's growth. The Company expects
fiscal 1998 capital expenditures to increase over fiscal 1997 as a result of the
W-C acquisition.
At October 31, 1997, the Company's senior secured revolving credit
facility, with Wells Fargo Bank, N.A. (the "Bank"), provides for advances up to
$20.0 million. Also at October 31, 1997, the Company had outstanding letters of
credit totaling $1.0 million which reduced the amount available to the Company
under its revolving credit facility to $19.0 million.
On February 12, 1997, the Bank exercised the 435,562 warrants held by the
Bank at $4.34 per share, resulting in the issuance of an additional 435,562
shares to the Bank and additional paid-in capital of approximately $1.9 million.
On February 14, 1997, various partnerships managed by Richard C. Blum &
Associates, Inc. ("RCBA") exercised the 1,383,586 warrants held by such entities
at $4.34 per share. The exercise price of these warrants was paid by a
combination of cash and the cancellation of the $3.0 million face amount of debt
drawn under the Company's line of credit with certain RCBA entities. The
exercise resulted in the issuance of an additional 1,383,586 shares to the RCBA
entities and additional paid-in capital of approximately $5.0 million.
On August 18, 1997, the Company executed an agreement to acquire W-C. W-C
is a professional services firm operating in the engineering services industry
and is headquartered in Denver, Colorado. The acquisition price consisted of
approximately $100 million and was approved by the Company's and W-C's
stockholders. The transaction closed November 14, 1997. To finance the cash
portion of the transaction, prior to October 31, 1997, the Company negotiated
with its lenders to obtain a $40,000,000 revolving credit facility with a term
of five years and a $110,000,000 term loan maturing six years from the closing
of the loan, which facilities are secured by guarantees from and pledges of the
stock of the Company's major subsidiaries. The new revolving credit facility and
term loan replaces the Company's current senior secured revolving credit
facility and term loan.
13
The Company believes that its existing financial resources, together with
its planned cash flow from operations and its existing credit facilities, will
provide sufficient capital to fund its combined operations and capital
expenditure needs for the foreseeable future.
Cash paid during the period for:
Years Ended October 31,
-----------------------
1997 1996 1995
------ ------ ------
(In thousands)
Interest $5,181 $4,142 $ 891
Income taxes $8,780 $6,483 $1,358
Acquisitions
On January 4, 1995, the Company acquired ECD for an aggregate purchase
price of $3.6 million, which was paid in cash. In conjunction with the
acquisition, liabilities were assumed as follows:
(In thousands)
Fair value of assets acquired $4,952
Cash paid for the capital stock (3,596)
-------
Liabilities assumed $ 1,356
=======
On March 29, 1996, the Company acquired all of the capital stock of Greiner
for $78.8 million, comprised of cash of $69.3 million, and 1.4 million shares of
the Company's Common Stock.
(In thousands)
Purchase price of Greiner
(net of prepaid loan fees of $1.6 million) $77,184
Fair value of assets acquired (39,510)
-------
Excess purchase price over net assets acquired $37,674
=======
On November 14, 1997, the Company acquired W-C for approximately $100
million. See Item 8, Consolidated Financial Statements and Supplementary Data,
Note 16, Subsequent Event.
14
ITEM 8. CONSOLIDATED FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
REPORT OF INDEPENDENT ACCOUNTANTS
The Board of Directors and Stockholders of URS Corporation:
We have audited the accompanying consolidated balance sheets of URS Corporation
and its subsidiaries as of October 31, 1997 and 1996, 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, 1997. 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, 1997 and 1996, and the consolidated
results of their operations and their cash flows for each of the three years in
the period ended October 31, 1997, in conformity with generally accepted
accounting principles.
/s/ Coopers & Lybrand L.L.P.
-------------------------------
COOPERS & LYBRAND L.L.P.
San Francisco, California
December 19, 1997
15
URS CORPORATION AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(In thousands, except per share data)
October 31,
--------------------------
1997 1996
-------- --------
ASSETS
Current assets:
Cash and cash equivalents $ 22,134 $ 22,370
Accounts receivable, including retainage amounts of $9,191 and $8,379, less
allowance for doubtful accounts of $1,488 and $2,447 80,251 72,417
Costs and accrued earnings in excess of billings on contracts in process, less
allowance for losses of $1,838 and $2,419 37,741 32,922
Deferred income taxes 6,406 7,077
Prepaid expenses and other assets 2,885 2,426
-------- --------
Total current assets 149,417 137,212
Property and equipment at cost, net 17,848 15,815
Goodwill, net 42,485 40,261
Other assets 2,904 1,644
-------- --------
$212,654 $194,932
======== ========
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable $ 20,198 $ 21,684
Accrued salaries and wages 17,769 12,131
Accrued expenses and other 17,863 20,064
Billings in excess of costs and accrued earnings on contracts in process 23,013 18,175
Deferred income taxes 2,563 2,913
Long-term debt, current portion 4,775 4,675
-------- -------
Total current liabilities 86,181 79,642
Long-term debt 41,448 52,390
Long-term debt to related parties - 2,979
Deferred compensation and other 7,874 3,227
-------- --------
Total liabilities 135,503 138,238
-------- --------
Commitments and contingencies (Note 10)
Stockholders' equity:
Common shares, par value $.01; authorized 20,000 shares;
issued 10,741 and 8,640 shares, respectively 107 86
Treasury stock (287) (287)
Additional paid-in capital 51,085 41,894
Retained earnings since February 21, 1990, date of quasi-reorganization 26,246 15,001
-------- --------
Total stockholders' equity 77,151 56,694
-------- --------
$212,654 $194,932
======== ========
<FN>
See Notes to Consolidated Financial Statements
</FN>
16
URS CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
(In thousands, except per share data)
Years Ended October 31,
--------------------------------------
1997 1996 1995
-------- -------- --------
Revenues $406,451 $305,470 $179,769
-------- -------- --------
Expenses:
Direct operating 241,002 187,129 108,845
Indirect, general and
administrative 141,442 102,389 63,217
Interest expense, net 4,802 3,897 1,351
-------- -------- --------
387,246 293,415 173,413
-------- -------- --------
Income before taxes 19,205 12,055 6,356
Income tax expense 7,700 4,700 1,300
-------- -------- --------
Net income $ 11,505 $ 7,355 $ 5,056
======== ======== ========
Net income per share:
Primary $ 1.06 $ .82 $ .68
======== ======== ========
Fully diluted $ 1.06 $ .80 $ .67
======== ======== ========
See Notes to Consolidated Financial Statements
17
URS CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY
(In thousands)
Additional Total
Common Shares Treasury Paid-in Retained Stockholders'
Number Amount Stock Capital Earnings Equity
-------- -------- -------- -------- -------- --------
Balances, October 31, 1994 7,019 $ 70 $ (59) $ 30,261 $ 3,700 $ 33,972
Employee stock purchases 190 1 -- 675 -- 676
Purchase of treasury shares (42) -- (228) -- -- (228)
Quasi-reorganization
NOL carryforward -- -- -- 855 (855) --
Net income -- -- -- -- 5,056 5,056
-------- -------- -------- -------- -------- --------
Balances, October 31, 1995 7,167 71 (287) 31,791 7,901 39,476
Employee stock purchases 72 1 -- 399 -- 400
Issuance of 1,401,983
shares in connection with
the Greiner acquisition 1,401 14 -- 9,449 -- 9,463
Quasi-reorganization
NOL carryforward -- -- -- 255 (255) --
Net income -- -- -- -- 7,355 7,355
-------- -------- -------- -------- -------- --------
Balances, October 31, 1996 8,640 86 (287) 41,894 15,001 56,694
Employee stock purchases 282 3 -- 2,026 -- 2,029
Issuance of 1,819,148
shares in connection with
the exercise of warrants 1,819 18 -- 6,905 -- 6,923
Quasi-reorganization
NOL carryforward -- -- -- 260 (260) --
Net income -- -- -- -- 11,505 11,505
-------- -------- -------- -------- -------- --------
Balances, October 31, 1997 10,741 $ 107 $ (287) $ 51,085 $ 26,246 $ 77,151
======== ======== ======== ======== ======== ========
<FN>
See Notes to Consolidated Financial Statements
</FN>
18
URS CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOW
(In thousands)
Years Ended October 31,
--------------------------------------
1997 1996 1995
-------- -------- --------
Cash flows from operating activities:
Net income $ 11,505 $ 7,355 $ 5,056
-------- -------- --------
Adjustments to reconcile net income to net cash provided (used) by
operating activities:
Deferred income taxes 322 (4,164) (615)
Depreciation and amortization 7,927 5,295 3,124
Changes in current assets and liabilities:
Accounts receivable and costs and accrued earnings in excess
of billings on contracts in process (12,653) (18,135) (4,067)
Prepaid expenses and other assets 461 1,411 (881)
Accounts payable, accrued salaries and wages and accrued
expenses 3,426 6,777 1,252
Billings in excess of costs and accrued earnings on contracts in process 4,839 18,174 --
Other, net (3,292) 7,801 224
-------- -------- --------
Total adjustments 1,030 17,159 (963)
-------- -------- --------
Net cash provided by operating activities 12,535 24,514 4,093
-------- -------- --------
Cash flows from investing activities:
Payment for business acquisition, net of cash acquired -- (56,354) (3,596)
Capital expenditures (5,127) (2,962) (1,610)
Other -- -- 43
-------- -------- --------
Net cash used by investing activities (5,127) (59,316) (5,163)
-------- -------- --------
Cash flows from financing activities:
Proceeds from issuance of debt -- 50,000 --
Repayment of debt (13,568) (2,056) --
Repurchase of common shares -- -- (228)
Proceeds from sale of common shares 1,028 389 247
Proceeds from exercise of stock options 1,001 11 430
Proceeds from exercise of warrants, net 3,895 -- --
Other -- ( 8 ) --
-------- -------- --------
Net cash (used) provided by financing activities (7,644) 48,336 449
-------- -------- --------
Net increase (decrease) in cash (236) 13,534 (621)
Cash at beginning of year 22,370 8,836 9,457
-------- -------- --------
Cash at end of year $ 22,134 $ 22,370 $ 8,836
======== ======== ========
<FN>
See Notes to Consolidated Financial Statements
</FN>
19
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 (the "Company"), all of which are wholly-owned.
All significant intercompany accounts and transactions have been eliminated in
consolidation. The consolidated financial statements account for the acquisition
of Greiner Engineering, Inc. ("Greiner") in March, 1996 as a purchase. See Note
3, Acquisitions.
Use of Estimates
The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates and
assumptions that effect the reported amount of assets and liabilities and
disclosures of contingent assets and liabilities at the date of the financial
statements and the reported amounts of revenues and expenses during the
reporting period. Actual results could differ from those estimates.
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 1989 through fiscal 1997 are
subject to review by the U.S.
Government.
20
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. Substantially all cash balances are held in one
financial institution and at times exceed federally insured limits.
Cash and Cash Equivalents
The Company considers all highly liquid investments with original
maturities of three months or less to be cash equivalents.
Fair Value of Financial Instruments
Carrying amounts of certain of the Company's financial instruments
including cash, accounts receivable, accounts payable and other liabilities
approximate fair value due to their short maturities. Based on borrowing rates
currently available to the Company for loans with similar terms, the carrying
values of long term debt approximate fair value.
Income Taxes
The Company uses an asset and liability approach for financial
accounting and reporting for income taxes. Deferred income tax assets and
liabilities are computed annually for differences between the financial
statement and tax bases of assets and liabilities that will result in taxable or
deductible amounts in the future based on enacted tax laws and rates applicable
to the periods in which the differences are expected to affect taxable income.
Valuation allowances are established when necessary to reduce deferred tax
assets to the amount expected to be realized. Income tax expense is the tax
payable for the period plus or minus the change in deferred tax assets and
liabilities during the period.
Property and Equipment
Property and equipment are stated at cost. In the year assets are
retired or otherwise disposed of, the costs and related accumulated depreciation
are removed from the accounts and any gain or loss on disposal is included in
income. Depreciation is provided on the straight-line method over the useful
service lives of the assets. Leasehold improvements are amortized over the
length of the lease or estimated useful life, whichever is less.
Income Per Share
The computation of earnings per common and common equivalent share 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, warrants and
the potential conversion of convertible debentures, less the number of shares
assumed to be purchased from the exercise proceeds using the average market
price of the Company's common stock.
The fully diluted per share computation reflects the effect of common
and common equivalent shares 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
21
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 exercise proceeds using the closing
market price of the Company's common stock, when higher than the average price
for the period.
Computation of Fully-diluted Income Per Share
Years Ended October 31,
-------------------------------------
1997 1996 1995
---- ---- ----
(In thousands, except per share data)
Net income $11,505 $7,355 $5,056
Add:
Interest on debentures and notes, net of
applicable income taxes 78 209 696
------- ------- ------
Net income for fully-diluted income per common share $11,583 $7,564 $5,752
======= ======= ======
Weighted average number of common shares
outstanding during the year 10,018 8,020 7,080
Add:
Common equivalent shares (determined using the
"treasury stock" method) representing shares issuable
upon exercise of employee stock options and warrants 865 3,206 2,985
Less:
Twenty percent limit on repurchase - ( 1,728) (1,433)
------- ------ -----
Weighted average number of shares used in
calculation of fully-diluted income per share 10,883 9,498 8,632
======= ======= ======
Fully-diluted income per common share $ 1.06 $ .80 $ .67
======= ======= ======
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
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,
------------------------------------------------------------------------------
1997 1996 1995
---------------------- -------------------------- ----------------------
(In thousands)
Local and state agencies $255,423 63% $198,472 65% $ 99,871 56%
Federal agencies 67,042 17 64,226 21 58,751 33
Private businesses 83,986 20 42,772 14 21,147 11
-------- --- -------- --- -------- ---
Total $406,451 100% $305,470 100% $179,769 100%
======== === ======== === ======== ===
22
Adoption of Statements of Financial Accounting Standards
In February 1997, the Financial Accounting Standards Board ("FASB")
issued Statement of Financial Accounting Standards No. 128, "Earnings Per Share"
("SFAS 128") SFAS 128 establishes standards for computing and presenting
earnings per share ("EPS"). It amends the standards in Accounting Principles
Board Opinion ("APB")-15 (Earnings per Share) for computing EPS by replacing
primary earnings per share with basic earnings per share and by altering the
calculation of diluted EPS, which replaces fully diluted EPS. Basic EPS excludes
potential dilution and is calculated by dividing income available to common
stockholders by the weighted average number of outstanding common shares.
Basic and diluted EPS figures are required on the face of the income
statement for all entities with complex capital structures. In addition,
required disclosures include a reconciliation of the numerator and denominator
used to calculate basic EPS to the numerator and denominator used to calculate
diluted EPS.
SFAS 128 is effective for fiscal years beginning after December 15,
1997, with earlier adoption permitted. The Company will adopt SFAS 128 effective
for its fiscal year ending October 31, 1998. The Company does not believe that
adoption of SFAS 128 will have a material adverse effect on its financial
position or results of operations.
In June 1997, the FASB issued Statement of Financial Accounting
Standards No. 130, "Reporting Comprehensive Income" ("SFAS 130"), which is
effective for fiscal years beginning after December 15, 1997. SFAS 130 requires
that certain items that qualify as part of comprehensive income be presented in
the financial statements. The Company does not expect the impact on its
financial statements, if any, to be material.
Reclassifications
Certain reclassifications have been made to the 1996 and 1995 financial
statements to conform to the 1997 presentation with no effect on net income as
previously reported.
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. No
assets were written-up in conjunction with the revaluation. As part of the
quasi-reorganization, the deficit in retained earnings of $92.5 million was
eliminated against additional paid-in capital. The balance in retained earnings
at October 31, 1997 represents the accumulated net earnings arising subsequent
to the date of the quasi-reorganization.
NOTE 3. ACQUISITIONS
During the year ended October 31, 1995, the Company acquired E.C.
Driver & Associates, Inc. ("ECD") for an aggregate purchase price of $3.6
million, and the assumption of ECD's liabilities totaling $1.4 million. This
acquisition was accounted for by the purchase method of
23
accounting and the net assets of ECD are included in the Company's consolidated
balance sheet as of October 31, 1995 based upon their estimated fair value at
the transaction's effective date of January 4, 1995. Pro forma operating results
for the years ended October 31, 1994 and 1995, as if the acquisition had been
made on November 1, 1993, are not presented as they would not be materially
different from the Company's reported results. The excess of the purchase price
over the estimated fair value of the assets acquired has been allocated to
goodwill.
During the year ended October 31, 1996, the Company acquired Greiner
for an aggregate purchase price of $78.8 million, comprised of cash of $69.3
million, and 1.4 million shares of the Company's Common Stock. The acquisition
has been accounted for by the purchase method of accounting and the excess of
the fair value of the net assets acquired over the purchase price has been
allocated to goodwill. The operating results of Greiner are included in the
Company's results of operations from the date of purchase.
The purchase price consisted of:
(In thousands)
Cash paid $ 19,321
Term debt-current portion 4,675
Term debt-long-term portion 45,325
Common Stock 9,463
--------
$ 78,784
The purchase price of Greiner
(net of prepaid loan fees of $1.6 million) $ 77,184
Fair value of assets acquired (39,510)
--------
Excess purchase price over net assets acquired (Goodwill) $ 37,674
========
The following unaudited pro forma summary presents the consolidated
results of operations as if the Greiner acquisition had occurred at the
beginning of the periods presented and does not purport to indicate what would
have occurred had the acquisition been made as of those dates or of results
which may occur in the future.
Fiscal Years Ended October 31:
1996 1995
---- ----
(In thousands, except per share data)
Revenues $368,572 $334,904
Net income $ 4,691 $ 2,868
Net income per share $ .49 $ .33
On August 18, 1997, the Company and Woodward-Clyde Group, Inc. ("W-C")
executed an agreement to acquire W-C. The transaction closed on November 14,
1997. See Note 16, Subsequent Event.
24
NOTE 4. PROPERTY AND EQUIPMENT
Property and equipment consists of the following:
October 31,
-----------
1997 1996
-------- --------
(In thousands)
Equipment $ 29,871 $ 26,924
Furniture and fixtures 5,335 5,972
Leasehold improvements 2,249 2,767
-------- --------
37,455 35,663
Less: accumulated depreciation
and amortization (19,607) (19,848)
-------- --------
Net property and equipment $ 17,848 $ 15,815
======== ========
NOTE 5. 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, 1997 and 1996 was $9.7 million and $7.7
million, respectively. Goodwill is amortized on the straight-line method over 30
years.
NOTE 6. INCOME TAXES
The components of income tax expense applicable to the operations each year
are as follows:
Years Ended October 31,
----------------------------------------
1997 1996 1995
------- ------- -------
(In thousands)
Current:
Federal $ 7,580 $ 5,020 $ 1,330
State and local 1,860 1,560 590
------- ------- -------
Subtotal 9,440 6,580 1,920
------- ------- -------
Deferred:
Federal (1,450) (1,320) (390)
State and local (290) (560) (230)
------- ------- -------
Subtotal (1,740) (1,880) (620)
------- ------- -------
Total tax provision $ 7,700 $ 4,700 $ 1,300
======= ======= =======
As of October 31, 1997, the Company has available net operating loss
("NOL") carryforwards for Federal income tax and financial statement purposes of
$5.3 million. The NOL utilization is limited to $750,000 per year pursuant to
section 382 of the Internal Revenue Code, related to its October 1989
quasi-reorganization.
25
While the Company had available NOL carryforwards which partially
offset otherwise taxable income for Federal income tax purposes, for state tax
purposes such amounts are not necessarily available to offset income subject to
tax.
The significant components of the Company's deferred tax assets and
liabilities as of October 31 are as follows:
Deferred tax assets/(liabilities) - due to:
1997 1996
-------- --------
(In thousands)
Allowance for doubtful accounts $ 400 $ 1,520
Other accruals and reserves 6,620 6,630
Net operating loss 1,840 2,050
-------- --------
Total 8,860 10,200
Valuation allowance (2,460) (3,120)
-------- --------
Deferred tax asset 6,400 7,080
-------- --------
Other deferred gain and unamortized bond premium (1,450) (2,160)
Depreciation and amortization (1,110) (750)
-------- --------
Deferred tax liability (2,560) (2,910)
-------- --------
Net deferred tax asset $ 3,840 $ 4,170
======== ========
The net change in the total valuation allowance for the year ended
October 31, 1997 was a decrease of $660,000 due to the utilization of net
operating losses and other changes in deferred tax assets.
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,
-----------------------------
1997 1996 1995
------- ------- -------
(In thousands)
Federal income tax expense based upon
federal statutory tax rate of 35% $ 6,720 $ 4,100 $ 2,160
Nondeductible goodwill amortization 620 400 160
Nondeductible expenses 480 240 210
NOL carryforwards utilized (260) (250) (1,140)
AMT credit utilized -- -- (330)
State taxes, net of Federal benefit 1,120 660 240
Adjustment due to change in Federal and state (610) -- --
rates
Utilization of deferred tax allowance and other (370) (450) --
adjustments ------- ------- -------
Total taxes provided $ 7,700 $ 4,700 $ 1,300
======= ======= =======
26
NOTE 7. RELATED PARTY TRANSACTIONS
Interest paid to related parties in connection with the January Notes was
$131,068, $260,712 and $194,000 in fiscal 1997, 1996 and 1995, respectively. See
Note 8, Long-Term Debt.
The Company has agreements for business consulting services to be provided
by Richard C. Blum & Associates, Inc. ("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, during each of fiscal 1997, 1996 and
1995. Richard C. Blum also received an additional cash amount of $15,000,
$23,000 and $25,000 for his services as a Director of the Company in fiscal
1997, 1996 and 1995, respectively.
NOTE 8. LONG-TERM DEBT
Long-term debt consists of the following:
October 31,
-----------------
1997 1996
------- -------
(In thousands)
Third party:
Bank term loan, payable in quarterly installments $35,655 $49,207
6 1/2% Convertible Subordinated Debentures due
2012 (net of bond issue costs of $36 and $39) 2,108 2,106
85/8% Senior Subordinated Debentures due 2004 (net of
discount and bond issue costs of $3,437 and $3,657)
(effective interest rate on date of restructuring
was 25%) 3,018 2,798
Obligations under capital leases 7,268 4,173
------- -------
48,049 58,284
Less: Current maturities of long-term debt 4,775 4,675
Current maturities of capital leases 1,826 1,219
------- -------
$41,448 $52,390
======= =======
Related parties:
January Notes (net of discount of $-0- and $1,021) $ -- $ 2,979
======= =======
At October 31, 1997, the Company's senior secured revolving credit
facility with Wells Fargo Bank, N.A. (the "Bank") provides for advances up to
$20.0 million and expires March 29, 1999. Borrowings on the revolving credit
facility bear interest at the option of the Company based on rate indexes
selected by the Company, with variable spreads over the selected index based on
loan maturity and the Company's financial performance. At October 31, 1997, the
interest rate was based on the London Interbank Offered Rate ("LIBOR") of 5.66%,
plus spreads of 1.38% to 3.0%. At October 31, 1997, the Company had outstanding
letters of credit totaling $1.0 million which reduced the amount available to
the Company under its revolving credit facility to $19.0 million.
27
Also at October 31, 1997, the Company had outstanding with the Bank
$35.7 million of senior secured term loans payable over seven years beginning
October 1996. The loans bear interest based on rate indexes selected by the
Company, with variable spreads over the selected index based on loan maturity
and the Company's financial performance. At October 31, 1997, the interest rate
was based on the LIBOR of 5.66%, plus spreads of 1.38% to 3.0%.
On August 18, 1997, the Company and W-C executed an agreement to
acquire W-C. The transaction closed on November 14, 1997 and involved the
revision of the Company credit facility with the Bank and an increase in term
debt. See Note 16, Subsequent Event.
Related Parties
On February 12, 1997, the Bank exercised the 435,562 warrants held by
the Bank at $4.34 per share, resulting in the issuance of an additional 435,562
shares to the Bank and an additional paid-in capital of approximately $1.9
million.
On February 14, 1997, various partnerships managed by RCBA exercised
1,383,586 warrants held by such entities at $4.34 per share. The exercise price
of these warrants was paid by a combination $2.0 million of cash and the
cancellation of the $3.0 million amount of debt drawn under the Company's line
of credit with certain RCBA entities. The exercise resulted in the issuance of
an additional 1,383,586 shares to the RCBA entities. These equity transactions
are reflected in the Company's financial statements.
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% Senior Subordinated Debentures due 2004 ("8 5/8%
Debentures"). Both the 6 1/2% Convertible Subordinated Debentures and the 8 5/8%
Debentures are subordinate to all debt to the Bank.
Maturities
The amounts of long-term debt outstanding at October 31, 1997 maturing
in the next five years are as follows:
(In thousands)
1998 $ 4,775
1999 5,175
2000 5,575
2001 6,175
2002 7,175
Thereafter 11,906
Amounts payable under capitalized lease agreements are excluded from the above
table.
28
NOTE 9. OBLIGATIONS UNDER LEASES
Total rental expense included in operations for operating leases for
the fiscal years ended October 31, 1997, 1996 and 1995 amounted to $14.9
million, $10.9 million and $5.7 million, 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.
Obligations under non-cancelable lease agreements are as follows:
Capital Operating
Leases Leases
------- ---------
(In thousands)
1998 $ 2,130 $12,800
1999 1,761 10,404
2000 1,494 8,314
2001 1,274 6,889
2002 609 4,577
Thereafter -- 10,968
------- -------
Total minimum lease payments $ 7,268 $53,952
=======
Less amounts representing
interest 1,428
-------
Present value of net minimum
lease payments $ 5,840
=======
NOTE 10. COMMITMENTS AND CONTINGENCIES
Currently, the Company has $51.0 million per occurrence and $52.0
million aggregate commercial general liability insurance coverage. The Company
is also insured for professional errors and omissions ("E&O") and contractor
pollution liability ("CPL") claims with an aggregate limit of $30.0 million
after a self-insured retention of $.5 million. The E&O and CPL 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.
29
NOTE 11. STOCKHOLDERS' EQUITY
Declaration of dividends, except Common Stock dividends, is restricted
by the senior secured credit facility with the Bank and the Indenture governing
the 8 5/8% Debentures. Further, declaration of dividends may be precluded by
existing Delaware law.
During fiscal year 1995, the Company repurchased a total of 42,000
shares of its Common Stock at an average repurchase price of $5.43, pursuant to
a systematic repurchase plan approved by the Company's Board of Directors on
September 13, 1994. The systematic repurchase plan expired on September 13,
1995. The Company, as of that date, had repurchased a total of 52,000 shares of
its Common Stock at an average repurchase price of $5.49.
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
2,250,000 Restricted Shares, Stock Units and Options. As of October 1997, the
Company had issued 21,200 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. Employees purchased 140,469
shares under the ESP Plan in fiscal 1997 and 69,692 shares in fiscal 1996.
The Company applies APB Opinion No. 25, "Accounting for Stock Issued to
Employees", and related interpretations in accounting for its 1991 Plan.
Accordingly, no compensation cost has been recognized for its 1991 Plan. Had
compensation cost for the Company's 1991 Plan been determined consistent with
SFAS Statement No. 123, "Accounting for Stock-Based Compensation", the Company's
net income and earnings per share would have been reduced to the pro forma
amounts indicated below:
1997 1996 1995
-------- ------- -------
(In thousands, except per share data)
Net income As Reported $ 11,505 $ 7,355 $ 5,056
Pro forma $ 11,237 $ 7,223 $ 4,994
Primary earnings As Reported $ 1.06 $ .82 $ .68
per share Pro forma $ 1.04 $ .81 $ .67
Fully diluted As Reported $ 1.06 $ .80 $ .67
earnings per share Pro forma $ 1.04 $ .78 $ .66
30
A summary of the status of the stock options granted under the
Company's 1991 Plan for the years ended October 31, 1997, 1996 and 1995, is
presented below:
1997 1996 1995
------------------------- ---------------------------- -------------------------
Weighted- Weighted- Weighted-
Average Average Average
Exercise Exercise Exercise
Shares Price Shares Price Shares Price
------ ----- ------ ----- ------ -----
Outstanding at beginning of
year 1,382,434 $ 6.64 1,160,900 $6.61 1,130,100 $6.79
Granted 280,000 $10.63 242,900 $6.76 210,700 $5.74
Exercised (138,287) $ 7.52 (2,000) $5.63 (137,600) $3.64
Forfeited (15,867) $ 7.68 (19,366) $6.89 (42,300) $6.56
----------- --------- ----------
Outstanding at end of year 1,508,280 $ 7.70 1,382,434 $6.64 1,160,900 $6.61
=========== ========= ==========
Options exercisable at year- 1,064,683 $ 6.50 1,029,733 $6.66 775,500 $6.81
end
Weighted-average fair value
of options granted during
the year $3.30 $2.02 $1.83
The following table summarizes information about stock options
outstanding at October 31, 1997:
Weighted-Average
Range of Number Remaining Weighted-Average Number Weighted-Average
Exercise Prices outstanding Contractual Life Exercise Price Exercisable Exercise Price
--------------- ----------- ---------------- -------------- ------------ --------------
$3 -$8 1,105,280 6.4 years $ 6.03 936,683 $5.91
$8.01 - $14 403,000 8.5 years $ 10.19 128,000 $9.04
--------- ---------
1,508,280 1,064,683
========= =========
The fair value of each option grant was estimated on the date of grant
using the Black-Scholes option-pricing model with the following assumptions:
1997 1996 1995
---- ---- ----
Risk-free interest rates 5.81%-6.35% 5.46%-6.53% 6.09%-7.79%
Expected life 4 Years 4 Years 4 Years
Volatility 24.73% 24.73% 24.73%
Expected dividends None None None
31
NOTE 12. SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION
Cash paid during the period for:
Years Ended October 31,
--------------------------------------
1997 1996 1995
------ ------ ------
(In thousands)
Interest $5,181 $4,142 $ 891
Income taxes $8,780 $6,483 $1,358
In connection with the exercise of certain warrants, outstanding debt owed to
a related party aggregating approximately $3.0 million was canceled.
Equipment purchased through capital lease obligations was $4.3 million, $1.5
million and $1.4 million for the years ended October 31, 1997, 1996 and 1995.
On January 4, 1995, the Company purchased all of the capital stock of ECD for
$3.6 million. In conjunction with the acquisition, liabilities were assumed as
follows:
Fair value of assets acquired $ 4,952
Cash paid for the capital stock (3,596)
-------
Liabilities assumed $ 1,356
=======
On March 29,1996, the Company acquired all of the capital stock of Greiner
for $78.8 million.
Purchase price of Greiner
(net of prepaid loan fees of $1.6 million) $ 77,184
Fair value of assets acquired (39,510)
--------
Excess purchase price over net assets acquired $ 37,674
========
NOTE 13. 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 $2.0 million, $1.6 million
and $.8 million were made to the plan in fiscal 1997, 1996 and 1995,
respectively.
32
NOTE 14. VALUATION AND ALLOWANCE ACCOUNTS
Additions
Charged to Deductions
Beginning Costs and from Ending
Balance Expenses Reserves Balance
------- -------- -------- -------
(In thousands)
October 31, 1997
Allowances for losses and doubtful
accounts $4,866 $ 995 $2,535 $3,326
October 31, 1996
Allowances for losses and doubtful
accounts $1,270 $4,679 $1,083 $4,866
October 31, 1995
Allowances for losses and doubtful
accounts $1,141 $ 442 $ 313 $1,270
NOTE 15. SELECTED QUARTERLY FINANCIAL DATA (UNAUDITED)
Selected quarterly financial data for fiscal 1997 and 1996 is
summarized as follows:
Fiscal 1997 Quarters Ended
-----------------------------------------------
Jan. 31 Apr. 30 July 31 Oct. 31
-------- -------- -------- --------
(In thousands, except per share data)
Revenues $ 95,541 $ 99,759 $100,196 $110,955
Operating income 5,081 5,458 6,280 7,188
Net income $ 2,196 $ 2,457 $ 3,181 $ 3,671
Income per share:
Primary $ .22 $ .24 $ .28 $ .32
======== ======== -------- ========
Fully diluted $ .22 $ .24 $ .28 $ .32
======== ======== ======== ========
Weighted average
number of shares 10,102 10,226 11,318 11,518
======== ======== ======== ========
Fiscal 1996 Quarters Ended
-----------------------------------------------
Jan. 31 Apr. 30 July 31 Oct. 31
-------- -------- -------- --------
(In thousands, except per share data)
Revenues $ 48,503 $ 64,864 $ 89,734 $102,369
Operating income 1,637 3,270 4,863 6,182
Net income $ 812 $ 1,522 $ 2,072 $ 2,949
Income per share:
Primary $ .11 $ .18 $ .22 $ .31
======== ======== ======== ========
Fully diluted $ .11 $ .18 $ .22 $ .29
======== ======== ======== ========
Weighted average
number of shares 8,713 9,188 10,096 10,093
======== ======== ======== ========
Operating income represents continuing operations before interest income
and interest expense.
33
NOTE 16. SUBSEQUENT EVENT (UNAUDITED)
During the year ended October 31, 1997 the Company and W-C executed an
agreement to acquire W-C for an aggregate purchase price of $100 million. The
acquisition was completed on November 14, 1997.
The purchase price consisted of:
(In thousands)
Cash paid $ 6,866
Term debt 31,198
Common stock 61,936
---------
$ 100,000
=========
The purchase price of W-C
(net of prepaid loan fees of $4 million) $ 96,000
Fair value of assets acquired (43,949)
---------
Excess purchase price over net assets acquired
(Goodwill) $ 52,051
=========
The following unaudited pro forma summary presents the consolidated results
of operations as if the W-C acquisition had occurred at the beginning of the
periods presented and does not purport to indicate what would have occurred had
the acquisition been made as of those dates or of results which may occur in the
future.
Fiscal Years Ended October 31:
1997 1996
-------- --------
(In thousands, except per share data)
Revenues $753,430 $625,698
Net income $ 16,211 $ 6,029
Net income per share $ 1.09 $ .43
To finance the cash portion of the transaction, prior to October 31, 1997,
the Company negotiated with its lenders to obtain a $40,000,000 revolving credit
facility with a term of five years and a $110,000,000 term loan maturing six
years from the closing of the loan, which facilities are secured by guarantees
from and pledges of the stock of the Company's major subsidiaries. The new
revolving credit facility and term loan replaces the Company's current senior
secured revolving credit facility and term loan.
ITEM 9. CHANGES AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING
AND FINANCIAL DISCLOSURE
None.
34
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 24, 1998 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 24, 1998.
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 24, 1998.
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
Incorporated by reference from Item 8, Financial Statement and
Supplementary Data, Note 8, Long-Term Debt and Note 7, Related Party
Transactions.
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, 1997 and October 31, 1996
Consolidated Statements of Operations
For the years ended October 31, 1997, 1996 and 1995
Consolidated Statements of Changes in Stockholders' Equity For the years
ended October 31, 1997, 1996 and 1995
Consolidated Statements of Cash Flows For the years ended October 31,
1997, 1996 and 1995
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.
35
(a)(3) Exhibits
3.1 Certificate of Incorporation of the Company, filed as Exhibit 3.1 to
the Company's Annual Report on Form 10-K for the fiscal year ended
October 31, 1991 (the "1991 Form 10-K"), and incorporated herein by
reference.
3.2 Bylaws of the Company, filed as Exhibit 3.2 to the Company's Annual
Report on Form 10-K for the fiscal year ended October 31, 1996 (the
"1996 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.
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 of the Company, adopted effective
July 1, 1997, filed as Exhibit 10.3 to the 1996 Form 10-K and
incorporated herein by reference.
10.4 1991 Stock Incentive Plan of the Company, amended and restated
effective December 17, 1996, filed as Exhibit 10.4 to the 1996 Form
10-K and incorporated herein by reference.
10.5 Non-Executive Directors Stock Grant Plan of the Company, adopted
December 17, 1996, filed as Exhibit 10.5 to the 1996 Form 10-K and
incorporated herein by
36
reference.
10.6 Selected Executive Deferred Compensation Plan of the Company, filed as
Exhibit 10.3 to the 1990 Form S-1 and incorporated herein by reference.
10.7 1997 Incentive Compensation Plan of the Company. FILED HEREWITH.
10.8 1997 Incentive Compensation Plan of URS Greiner. FILED HEREWITH.
10.9 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.
10.10 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 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.
10.11(a) Amendment to Employment Agreement, dated October 11, 1994, between URS
Consultants, Inc., and Irwin L. Rosenstein, filed as Exhibit 10.12(a)
to the Company's Annual Report on Form 10-K for the fiscal year ended
October 31, 1994, and incorporated herein by reference.
10.12 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.
10.13 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.
10.14 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.
10.15 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.
10.16 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.
10.17 Post-Affiliation Agreement, dated July 19, 1989, between the Company
and URS International, Inc., filed as Exhibit 10.42 to the Company's
Annual Report on Form 10-K for the fiscal year ended October 31, 1989
and incorporated herein by reference.
10.18 Form of Indemnification Agreement filed as Exhibit 10.34 to the
Company's Annual Report on Form 10-K for the fiscal year ended October
31, 1992 and incorporated herein by reference; dated as of May 1, 1992
between the Company and each of Messrs. Ainsworth, Blum, Koffel,
Madden, Praeger, Rosenstein and Walsh; dated as
37
of March 22, 1994 between the Company and each of Admiral Foley and Mr.
Der Marderosian; dated as of March 29, 1996 between the Company and Mr.
Costello; dated as of November 6, 1996 between the Company and Mr.
Glynn; dated as of January 27, 1997 between the Company and Mr.
Johnston; and dated as of November 17, 1997 between the Company and
each of Messrs. Waller, Perez and Wilson.
10.19 Severance Agreement, dated as of November 22, 1993, between the Company
and Joseph Masters, filed as Exhibit 10.35 to the Company's Annual
Report on Form 10-K for the fiscal year ended October 31, 1995 and
incorporated herein by reference.
10.20 Employment Agreement, dated March 29, 1996, between Greiner, Inc. and
Robert L. Costello, filed as Exhibit 10.1 to the 1996 second quarter
Form 10-Q and incorporated herein by reference.
10.21 Form of Change-In-Control Agreement dated as of April 17, 1997 between
Woodward-Clyde Group, Inc. and each of Frank S. Waller and Robert K.
Wilson.
10.22 Agreement and Plan of Merger, dated as of January 10, 1996, between URS
Corporation, URS Acquisition Corporation and Greiner Engineering, Inc.,
filed as Exhibit 2(a) to the Form 8-K filed on January 12, 1996, and
incorporated herein by reference.
10.23 Agreement and Plan of Merger dated August 18, 1997, by and among URS
Corporation, Woodward-Clyde Group, Inc. and W-C Acquisition
Corporation, filed as Exhibit 2.1 to the Company's Current Report on
Form 8-K filed on August 21, 1997 and incorporated herein by reference.
10.24 Credit Agreement, dated as of November 14, 1997, between URS
Corporation, the Financial Institutions listed therein as Lenders and
Wells Fargo Bank, National Association, as Administrative Agent for the
Lenders, filed as Exhibit 2.2 to the Company's Current Report on Form
8-K filed on November 26, 1997, and incorporated herein by reference.
21.1 Subsidiaries of the Company. FILED HEREWITH.
23.1 Consent of Coopers & Lybrand L.L.P. FILED HEREWITH.
24.1 Powers of Attorney of the Company's directors and officers. FILED
HEREWITH.
27 Financial Data Schedule. FILED HEREWITH.
(b)(1) Reports on Form 8-K.
The Company filed a Current Report on Form 8-K on August 21, 1997
disclosing under Item 5 thereof that on August 18, 1997, the Company
executed an Agreement and Plan of Merger, by and among the Company,
Woodward-Clyde Group, Inc. ("Woodward-Clyde"), and W-C Acquisition
Corporation ("Acquisition Corp."), pursuant to which Woodward-Clyde
would be merged with and into Acquisition Corp., with Acquisition Corp.
as the surviving corporation.
38
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
Executive Vice President and
Chief Financial Officer
Dated: January 19, 1998
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 19, 1998
- --------------------------------------- of Directors and Chief
(Martin M. Koffel) Executive Officer
/s/Kent P. Ainsworth Executive Vice President, January 19, 1998
- --------------------------------------- Chief Financial Officer
(Kent P. Ainsworth) Principal Accounting
Officer and Secretary
IRWIN L. ROSENSTEIN* Director January 19, 1998
- ---------------------------------------
(Irwin L. Rosenstein)
RICHARD C. BLUM* Director January 19, 1998
- ---------------------------------------
(Richard C. Blum)
SENATOR J. BENNETT JOHNSTON* Director January 19, 1998
- ---------------------------------------
(Senator J. Bennett Johnston)
RICHARD Q. PRAEGER* Director January 19, 1998
- ---------------------------------------
(Richard Q. Praeger)
WILLIAM D. WALSH * Director January 19, 1998
- ---------------------------------------
(William D. Walsh)
RICHARD B. MADDEN* Director January 19, 1998
- ---------------------------------------
(Richard B. Madden)
ARMEN DER MARDEROSIAN* Director January 19, 1998
- ---------------------------------------
(Armen Der Marderosian)
ADM. S. ROBERT FOLEY, JR., USN (RET.)* Director January 19, 1998
- ---------------------------------------
(Adm. S. Robert Foley, Jr., USN (Ret.))
ROBERT D. GLYNN, JR.* Director January 19, 1998
- ---------------------------------------
(Robert D. Glynn Jr.)
ROBERT L. COSTELLO* Director January 19, 1998
- ---------------------------------------
(Robert Costello)
JEAN-YVES PEREZ* Director January 19, 1998
- ---------------------------------------
(Jean-Yves Perez)
FRANK S. WALLER* Director January 19, 1998
- ---------------------------------------
(Frank S. Waller)
<FN>
*By
/s/ Kent P. Ainsworth
- ---------------------------------------
(Kent P. Ainsworth, Attorney-in-fact)
</FN>