Exhibit 99.1
URS CORPORATION REPORTS FOURTH-QUARTER
AND YEAR-END RESULTS FOR FISCAL 2002
UPDATES GUIDANCE FOR FISCAL 2003
SAN FRANCISCO, CA - DECEMBER 19, 2002 - URS Corporation (NYSE: URS) today
reported revenue of $736,482,000 for the fourth quarter of the fiscal year ended
October 31, 2002, up 10% from the $666,532,000 reported for the fourth quarter
of fiscal year 2001. EBITDA for the fourth quarter was $46,212,000, compared to
$60,714,000 in the fiscal 2001 fourth quarter. Net income decreased 67%, to
$6,607,000, from $19,842,000 in the year-ago period, and earnings per share for
the fourth quarter of 2002 was $0.21 fully diluted, compared to $0.80 in fiscal
2001. Net income and earnings per share in the fourth quarter of fiscal 2002
include a previously disclosed, one-time non-cash charge of $4,614,000, net of
tax ($7,620,000 pre-tax), or $0.15 per share, related to unamortized financing
costs on debt retired in connection with the Company's acquisition of EG&G
Technical Services, Inc. (EG&G). The Company is in the process of completing the
accounting for the acquisition and does not expect any material changes to the
accompanying consolidated financial statements.
For the fiscal year ended October 31, 2002, revenue was $2,427,827,000, an
increase of 5% from the $2,319,350,000 reported in fiscal 2001. EBITDA for
fiscal 2002 was $187,235,000, compared to $211,884,000 in fiscal 2001. Including
the one-time charge mentioned above, net income decreased 5% to $55,171,000 from
$57,852,000 in the year ago period, and earnings per share decreased 16% to
$2.03 per share fully diluted. For fiscal 2001, the Company reported earnings
per share of $2.41 fully diluted. At October 31, 2002, backlog totaled
$2,938,000,000 compared with $1,684,000,000 at October 31, 2001.
The Company defines EBITDA as net income before interest expense, income
tax expense, depreciation expense of property and equipment, amortization
expense of intangible assets, and certain other non-cash expenses. EBITDA is not
a measure of operating performance computed in accordance with generally
accepted accounting principles ("GAAP") and should not be considered as a
substitute for operating income, net income, cash flow from operations, or other
statement of operations or cash flow data prepared in conformity with GAAP or as
measures of profitability or liquidity. In addition, EBITDA may not be
comparable to similarly titled measures of other
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companies. EBITDA may not be indicative of historical operating results, and we
do not mean for either to be predictive of future results of operations or cash
flows.
As previously reported, in fiscal year 2002, the Company adopted the
provisions of Statement of Financial Accounting Standards (SFAS) 142, and
accordingly, no longer amortizes goodwill. As a result of this change, for
fiscal year 2001, net income for the fourth quarter would have increased by
$2,211,000, net of tax, or $0.09 per share on a fully diluted basis, and by
$8,667,000 or $0.37 per share on a fully diluted basis for the entire year.
Commenting on the quarter, Martin M. Koffel, Chairman and Chief Executive
Officer of URS stated: "With states across the country facing what the National
Governors Association recently called the most dire fiscal situation since World
War II, conditions in the state and local government market are extremely
volatile. The combined impact of budget shortfalls, balanced budget
requirements, and the election cycle has resulted in significant delays in
spending on transportation and infrastructure projects, and a substantial
weakening in our state and local business.
"In the private sector, while our scale and geographic reach have allowed
us to win important work with Fortune 500 companies, the overall economic
slowdown and concomitant decline in capital expenditures by petrochemical and
industrial companies have resulted in severe pricing pressures and tighter than
expected profit margins.
"We were also impacted by a $4 million cost overrun on one of our
public-sector transportation projects, our only significant cost overrun since
1993. The overrun will not affect our results in fiscal 2003, but did contribute
to our fourth quarter EPS shortfall relative to our expectations."
Mr. Koffel continued: "Our federal sector business continues to perform
well. With the acquisition of EG&G, which closed in the fourth quarter, the
federal sector will play an even more important role in our growth and earnings
profile over the next decade, particularly as it significantly increased our
exposure to the defense and homeland security markets, which are projected to
grow significantly over the next several years. With EG&G, our federal business
now directly accounts for 45% of revenues, and when federal funding for state
and local projects is included, the federal government directly or indirectly
accounts for more than 50% of our overall business."
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GUIDANCE FOR FISCAL 2003
The Company now expects 2003 revenues from the federal sector to grow
approximately 5% to 10% from 2002 levels; private-sector revenues will range
from flat to a decline of 5%, and revenues from the state and local business
will decline by approximately 15% to 20%.
Given these expectations, the Company anticipates that fiscal year 2003
revenues will be approximately $3 billion; EBITDA will be approximately $230
million; and net income will be approximately $60 million. Based on these
expectations, the Company expects earnings per share of approximately $1.75 for
fiscal 2003. The Company expects that 9% to 11% of its earnings per share will
be achieved in the first quarter, which is traditionally the Company's weakest
quarter.
Commenting on the Company's outlook for 2003, Mr. Koffel stated: "While
possible fiscal relief initiatives for states - including tax increases,
potential federal stimulus spending or the monetizing of future tobacco payments
- - may bring stability to the state and local government market, we are unlikely
to see the impact of these measures on our business until fiscal 2004, which
begins on November 1, 2003. Accordingly, we are taking a very cautious outlook
for our state and local government business for next year. Over the longer term,
however, we are confident that this part of the business will return to its
historic role as a profitable and growing business for URS. The need for new and
upgraded schools, bridges and roadways has not diminished with the state budget
crisis, and thus spending in this area cannot be suspended indefinitely. When
these projects do move forward, URS will be well positioned to benefit."
Mr. Koffel continued: "In the private sector, the combination of lower
capital spending, continued pricing pressure and the relaxing of certain
environmental regulations has caused us to lower our outlook for this part of
the business as well. The outlook for the federal sector, and for EG&G's
business in particular, is strong. Spending on Department of Defense related
projects, and in particular operations and maintenance, is expected to grow
steadily over the next five years. In addition, we expect significant
opportunities to provide technical and administrative support for the
organization and establishment of the new Department of Homeland Security, which
represents the largest government reorganization in 50 years."
URS Corporation offers a broad range of planning, design, program and
construction management, system integration and operations and maintenance
services for transportation, hazardous waste, industrial processing and
petrochemical, general building, water/wastewater, military facilities and
equipment platforms and security projects. Headquartered in San Francisco,
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the Company operates in more than 20 countries with approximately 25,000
employees providing engineering services to federal, state and local
governmental agencies, as well as private clients in the chemical,
manufacturing, pharmaceutical, forest products, mining, oil and gas, and
utilities industries (www.urscorp.com).
WEBCAST INFORMATION
URS will host a dial-in conference call on Friday, December 20, 2002, at
11:00 a.m. (EST), to discuss its fiscal 2002 results and outlook for 2003. A
live webcast of this call will be available on URS' website at www.urscorp.com.
TABLES TO FOLLOW
# # #
Statements contained in this press release that are not historical facts may
constitute forward-looking statements, including statements about the Company's
expected financial results and its opportunities for future growth. The Company
believes that its expectations are reasonable and are based on reasonable
assumptions. However, such forward-looking statements by their nature involve
risks and uncertainties. The Company cautions that a variety of factors could
cause the Company's business and financial results to differ materially from
those expressed or implied in forward-looking statements. These factors include,
but are not limited to: the Company's ability to successfully integrate the EG&G
business just acquired; the Company's highly leveraged position; the ability of
the Company to service its debt; deterioration in current economic conditions,
particularly at the state and local level; the Company's ability to pursue
business strategies; the Company's continued dependence on federal, state and
local appropriations for infrastructure spending; pricing pressures; changes in
the regulatory environment; outcomes of pending and future litigation; the
Company's ability to attract and retain qualified professionals; industry
competition; changes in international trade, monetary and fiscal policies; the
ability of the Company to integrate future acquisitions successfully; the
Company's ability to successfully integrate its accounting and management
information systems; and other factors discussed more fully in the Company's
reports filed from time to time with the Securities and Exchange Commission. The
Company assumes no obligation to update any forward-looking statements.
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URS CORPORATION AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(IN THOUSANDS, EXCEPT PER SHARE DATA)
OCTOBER 31,
---------------------------
2002 2001
----------- -----------
ASSETS
Current assets:
Cash and cash equivalents ........................................................ $ 9,972 $ 23,398
Accounts receivable, including retainage amounts of $50,552 and $43,751,
respectively .................................................................... 596,275 484,107
Costs and accrued earnings in excess of billings on contracts in process ......... 374,651 289,644
Less receivable allowances ....................................................... (30,710) (28,572)
----------- -----------
Net accounts receivable ...................................................... 940,216 745,179
----------- -----------
Deferred income taxes ............................................................ 17,895 10,296
Prepaid expenses and other assets ................................................ 20,248 24,769
----------- -----------
Total current assets ......................................................... 988,331 803,642
Property and equipment at cost, net ................................................. 158,024 106,997
Goodwill, net ....................................................................... 994,114 500,286
Purchased intangible assets, net .................................................... 10,600 --
Other assets ........................................................................ 75,082 52,451
----------- -----------
$ 2,226,151 $ 1,463,376
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LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Current portion of long-term debt ............................................... $ 30,298 $ 54,425
Accounts payable ................................................................. 204,389 135,066
Accrued salaries and wages ....................................................... 101,287 69,982
Accrued expenses and other ....................................................... 112,604 21,232
Billings in excess of costs and accrued earnings on contracts in process ......... 92,235 95,520
----------- -----------
Total current liabilities .................................................... 540,813 376,225
Long-term debt ...................................................................... 923,863 576,704
Deferred income taxes ............................................................... 40,629 34,700
Deferred compensation and other ..................................................... 40,261 33,146
----------- -----------
Total liabilities ............................................................ 1,545,566 1,020,775
----------- -----------
Mandatorily redeemable Series B exchangeable convertible preferred stock,
par value $1.00; authorized 150 shares; issued and outstanding 0 and 55,
respectively; liquidation preference $0 and $120,099, respectively .............. -- 120,099
----------- -----------
Series D senior convertible participating preferred stock, par value $.01; authorized
100 shares; issued and outstanding 100 and 0, respectively; liquidation
preference $46,733 and $0, respectively ......................................... 46,733 --
----------- -----------
Stockholders' equity:
Common stock, par value $.01; authorized 50,000 shares; issued
and outstanding 30,084 and 18,198 shares, respectively ........................ 301 182
Treasury stock ................................................................... (287) (287)
Additional paid-in capital ....................................................... 418,705 155,273
Accumulated other comprehensive income (loss) .................................... (5,132) (3,962)
Retained earnings ................................................................ 220,265 171,296
----------- -----------
Total stockholders' equity ................................................... 633,852 322,502
----------- -----------
$ 2,226,151 $ 1,463,376
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URS CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
(IN THOUSANDS, EXCEPT PER SHARE DATA)
THREE MONTHS ENDED OCTOBER 31
-----------------------------
2002 2001
--------- ---------
(UNAUDITED)
Revenues ..................................... $ 736,482 $ 666,532
--------- ---------
Expenses:
Direct operating .......................... 472,341 406,823
Indirect, general and administrative ...... 235,267 209,814
Interest expense, net ..................... 18,697 14,853
--------- ---------
726,305 631,490
--------- ---------
Income before taxes .......................... 10,177 35,042
Income tax expense ........................... 3,570 15,200
--------- ---------
Net income ................................... 6,607 19,842
Preferred stock dividend ..................... -- 2,458
--------- ---------
Net income available for common stockholders . 6,607 17,384
Other comprehensive (loss) income, net of tax:
Foreign currency translation adjustments .. (1,291) (864)
--------- ---------
Comprehensive income ......................... $ 5,316 $ 16,520
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Net income per common share:
Basic ..................................... $ 0.22 $ 0.98
========= =========
Diluted ................................... $ 0.21 $ 0.80
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Weighted average shares outstanding:
Basic ..................................... 30,711 17,953
========= =========
Diluted ................................... 31,211 24,870
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URS CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
(IN THOUSANDS, EXCEPT PER SHARE DATA)
YEARS ENDED OCTOBER 31,
-----------------------------
2002 2001
----------- -----------
Revenues ..................................... $ 2,427,827 $ 2,319,350
----------- -----------
Expenses:
Direct operating .......................... 1,489,386 1,393,818
Indirect, general and administrative ...... 791,625 755,791
Interest expense, net ..................... 55,705 65,589
----------- -----------
2,336,716 2,215,198
----------- -----------
Income before taxes .......................... 91,111 104,152
Income tax expense ........................... 35,940 46,300
----------- -----------
Net income ................................... 55,171 57,852
Preferred stock dividend ..................... 5,939 9,229
----------- -----------
Net income available for common stockholders . 49,232 48,623
Other comprehensive (loss) income, net of tax:
Foreign currency translation adjustments .. (1,170) (1,550)
----------- -----------
Comprehensive income ......................... $ 48,062 $ 47,073
=========== ===========
Net income per common share:
Basic ..................................... $ 2.18 $ 2.79
=========== ===========
Diluted ................................... $ 2.03 $ 2.41
=========== ===========
Weighted average shares outstanding:
Basic ..................................... 22,554 17,444
=========== ===========
Diluted ................................... 27,138 23,962
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URS CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(IN THOUSANDS)
YEARS ENDED OCTOBER 31,
-------------------------
2002 2001
--------- ---------
Cash flows from operating activities:
Net income .......................................................................... $ 55,171 $ 57,852
--------- ---------
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization ...................................................... 32,799 42,143
Amortization of financing fees ..................................................... 4,220 3,663
Loss on extinguishment of debt ..................................................... 7,620 --
Receivable allowances .............................................................. 1,694 (8,254)
Stock compensation ................................................................. 2,345 1,964
Tax benefit of stock options ....................................................... 3,745 3,899
Changes in current assets and liabilities, net of business acquired:
Accounts receivable and costs and accrued earnings in excess of billings on
contracts in process .............................................................. (59,658) (27,920)
Income taxes recoverable ........................................................... -- 4,997
Prepaid expenses and other assets .................................................. 8,738 (5,544)
Accounts payable, accrued salaries and wages and accrued expenses .................. 24,197 (8,484)
Billings in excess of costs and accrued earnings on contracts in process ........... (3,721) 5,045
Deferred income taxes .............................................................. 2,373 (3,894)
Deferred compensation and other .................................................... 4,893 (6,906)
Other, net ......................................................................... 5,840 (11,511)
--------- ---------
Total adjustments .................................................................. 35,085 (10,802)
--------- ---------
Net cash provided by operating activities ...................................... 90,256 47,050
--------- ---------
Cash flows from investing activities:
Payment for business acquisition, net of cash acquired .............................. (343,224) --
Proceeds from sale of subsidiaries .................................................. 5,840 3,530
Capital expenditures, less equipment purchased through capital leases of $23,419, and
$25,084, respectively ............................................................. (52,458) (19,778)
--------- ---------
Net cash used by investing activities .......................................... (389,842) (16,248)
--------- ---------
Cash flows from financing activities:
Proceeds from issuance of debt ...................................................... 195,280 --
Principal payments on long-term debt ................................................ (381,648) (33,522)
Borrowings of long term debt ........................................................ 476,101 --
Borrowings under the line of credit ................................................. 122,835 105,849
Repayments under the line of credit ................................................. (95,576) (105,849)
Repayments under capital lease obligations .......................................... (14,794) (7,530)
Borrowings under short-term notes ................................................... 278 5,830
Repayments under short-term notes ................................................... (3,680) (7,647)
Proceeds from sale of common shares and exercise of stock options ................... 17,003 11,772
Payments of financing fees .......................................................... (29,639) --
--------- ---------
Net cash provided (used) by financing activities ............................... 286,160 (31,097)
--------- ---------
Net decrease in cash ........................................................... (13,426) (295)
Cash and cash equivalents at beginning of year ........................................ 23,398 23,693
--------- ---------
Cash and cash equivalents at end of year .............................................. $ 9,972 $ 23,398
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Supplemental information:
Interest paid .................................................................. $ 50,084 $ 75,434
========= =========
Taxes paid ..................................................................... $ 30,513 $ 33,882
========= =========
Equipment acquired subject to capital lease obligations ........................ $ 23,419 $ 25,084
========= =========
Non-cash dividends paid in-kind ................................................ $ 6,740 $ 9,086
========= =========
Conversion of Series B preferred stock to common stock ......................... $ 126,839 $ --
========= =========
Net book value of business sold ................................................ $ 5,840 $ 3,530
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