(URS LOGO)
FOR IMMEDIATE DISTRIBUTION
Contacts:
URS CORPORATION CITIGATE SARD VERBINNEN
Kent P. Ainsworth Hugh Burns/Jamie Tully
Executive Vice President (212) 687-8080
& Chief Financial Officer
OR
David C. Nelson
Vice President & Corporate Treasurer
(415) 774-2700
URS CORPORATION REPORTS THIRD QUARTER
RESULTS FOR FISCAL 2003
GENERATES $133 MILLION IN OPERATING CASH FLOW
AND REPAYS $110 MILLION IN DEBT YEAR TO DATE
PROVIDES GUIDANCE FOR REMAINDER OF FISCAL 2003 AND FISCAL 2004
- --------------------------------------------------------------------------------
SAN FRANCISCO, CA - SEPTEMBER 15, 2003 - URS Corporation (NYSE: URS) today
reported revenues of $778,045,000 for the fiscal 2003 third quarter ended July
31, compared to $583,937,000 reported for the third quarter of fiscal 2002. Net
income was $17,086,000, down from $18,362,000 for the corresponding third
quarter of fiscal 2002. Earnings per share ("EPS") of $0.52, fully diluted, was
in line with the Company's guidance. This compares with EPS of $0.70 per share,
fully diluted, for the fiscal 2002 third quarter. During the quarter, the
Company generated $61 million in operating cash flow and repaid $60 million in
debt.
For the nine months ended July 31, 2003, revenues increased 39% to
$2,348,633,000 from $1,691,345,000 for the corresponding nine months ended July
31, 2002. Net income for the nine months ended July 31, 2003 was $38,600,000, or
$1.18 per share, fully diluted, compared to $48,564,000 or $1.86 per share,
fully diluted, for the first nine months of fiscal 2002. As of July 31, 2003,
the Company's backlog was $2,639,400,000, compared to $2,565,000,000 as of
October 31, 2002.
1
Earnings before interest, taxes, depreciation and amortization ("EBITDA")
for the third quarter was $58,968,000, compared with EBITDA of $50,491,000 for
the third quarter of fiscal 2002. For the nine months ended July 31, 2003,
EBITDA was $159,053,000, compared with $141,023,000 for the nine months ended
July 31, 2002. A reconciliation of EBITDA to net income and to net cash provided
by operating activities is included in the EBITDA Reconciliation Schedule
provided at the end of this press release.
Commenting on the quarter, Martin M. Koffel, Chairman and Chief Executive
Officer, stated: "Our results for the third quarter were in line with previously
announced guidance and reflect the continued strength of our business with the
federal government, along with our well-established franchise with state and
local governments across the country and with the Fortune 500."
Mr. Koffel continued: "Our business with the federal government continued
to benefit from robust spending at the federal level - particularly on
defense-related activities. In the state and local government market, our
excellent competitive position and ability to shift resources towards pockets of
strength, such as educational facilities, has enabled us to mitigate the effects
of reduced spending. As a result, revenues from this market - while below 2002
levels - were higher than anticipated. In the private sector, although capital
investment remains weak in the areas that drive our business, we were successful
in winning several new master service agreements with large multinational
corporations."
"We have also been very successful generating cash and de-leveraging our
balance sheet. During the quarter, we generated $61 million in operating cash
flow, which allowed us to make $56 million in discretionary debt payments in
addition to $4 million in scheduled debt payments. During this fiscal year, we
have generated over $133 million of cash from operations, repaid $110 million in
debt, and reduced our debt to capitalization ratio from 58% to 53%."
For the quarter, revenues from URS' federal business were approximately
$340 million, up from approximately $110 million during the third quarter of
fiscal 2002, including approximately $220 million in revenues from the Company's
EG&G Division. Revenues from URS' state and local government business were
approximately $170 million, which was about the same as the third quarter of
fiscal 2002. Revenues from URS' private sector business were approximately $200
million, compared to approximately $250 million in the third quarter of fiscal
2002. Revenues from URS' international business were approximately $70 million,
up 22% from the third quarter of
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fiscal 2002. The increase in revenues from the Company's international business
is primarily due to the effect of currency translation.
OUTLOOK FOR FISCAL 2003 AND 2004
For fiscal 2003, which ends on October 31, 2003, URS expects that revenues
will be approximately $3.15 billion, EBITDA will be approximately $225 million
and net income will be approximately $58 million. The Company expects that
fiscal 2003 earnings per share will be approximately $1.75, fully diluted, in
line with previous guidance.
The Company anticipates that fiscal year 2004 revenues will be
approximately $3.3 billion. Assuming it meets this revenue expectation, the
Company expects that net income will be approximately $65 million, and earnings
per share will be approximately $1.90 for fiscal 2004.
Commenting on the Company's outlook, Mr. Koffel stated: "Looking ahead to
the remainder of 2003 and into 2004, we expect to continue to benefit from
favorable trends in the federal market, including increased spending on defense,
additional opportunities to provide outsourced solutions to federal government
agencies and a growing homeland security market."
Mr. Koffel continued: "We believe the state and local government market
has stabilized, and with the approval of all state budgets for 2004,
infrastructure projects should begin to move forward and drive modest revenue
growth in this part of our business. In the private sector, we have seen
preliminary indications that the economy may be improving, including recently
reported growth in the manufacturing sector and in construction spending.
However, we do not expect these trends to have a significant impact on our
business in the near term, as growth in our business tends to lag economic
indicators by several months."
URS Corporation offers a broad range of planning and design, program and
construction management, systems engineering and technical assistance, 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, the Company operates in more than 20 countries
with more than 25,500 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).
3
URS will host a dial-in conference call on Tuesday, September 16, 2003 at
11:00 a.m. (EDT), to discuss its fiscal 2003 third quarter results. A live web
cast of this call will be available on URS' website at
http://www.urscorp.com/investor/index.html.
TABLES TO FOLLOW
# # #
Statements contained in this press release that are not historical facts may
constitute forward-looking statements, including statements relating to the
Company's operating performance, capital resources and future growth
opportunities. 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 continuation of the current
economic downturn; the Company's continued dependence on federal, state and
local appropriations for multi-year government contracts; changes in regulations
applicable to the Company; the Company's ability to manage its contracts; the
Company's highly leveraged position; the Company's ability to service its debt;
outcomes of pending and future litigation; industry competition; the Company's
ability to attract and retain qualified professionals; risks associated with
international operations; the Company's ability to successfully integrate its
accounting and management information systems; the Company's ability to
integrate future acquisitions successfully; 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.
4
URS CORPORATION AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(IN THOUSANDS, EXCEPT PER SHARE DATA)
JULY 31, 2003 OCTOBER 31, 2002
------------- ----------------
ASSETS (UNAUDITED)
Current assets:
Cash and cash equivalents .............................................. $ 15,547 $ 9,972
Accounts receivable, including retainage of $45,201 and
$50,552, respectively ................................................ 536,843 596,275
Costs and accrued earnings in excess of billings on contracts in process 363,528 374,651
Less receivable allowances ............................................. (31,547) (30,710)
----------- -----------
Net accounts receivable ......................................... 868,824 940,216
----------- -----------
Deferred income taxes .................................................. 20,795 17,895
Prepaid expenses and other assets ...................................... 25,051 20,248
----------- -----------
Total current assets ............................................ 930,217 988,331
Property and equipment at cost, net ........................................ 154,508 156,524
Goodwill ................................................................... 1,004,680 1,001,629
Purchased intangible assets, net ........................................... 12,245 14,500
Other assets ............................................................... 61,755 68,108
----------- -----------
$ 2,163,405 $ 2,229,092
=========== ===========
LIABILITIES, MANDATORILY REDEEMABLE SECURITIES, AND STOCKHOLDERS' EQUITY
Current liabilities:
Current portion of long-term debt ...................................... $ 33,540 $ 30,298
Accounts payable and subcontractor payable, including
retainage of $5,785 and $5,190, respectively ......................... 158,937 204,389
Accrued salaries and wages ............................................. 127,499 101,287
Accrued expenses and other ............................................. 84,214 115,545
Billings in excess of costs and accrued earnings on contracts in process 98,196 92,235
----------- -----------
Total current liabilities ....................................... 502,386 543,754
Long-term debt ............................................................. 811,548 923,863
Deferred income taxes ...................................................... 42,529 40,629
Deferred compensation and other ............................................ 71,627 40,261
----------- -----------
Total liabilities ............................................... 1,428,090 1,548,507
----------- -----------
Mandatorily redeemable Series D senior convertible participating preferred
stock, par value $.01; authorized 100 shares; issued and outstanding 0
and 100 shares, respectively; liquidation preference $0 and $46,733,
respectively ............................................................. -- 46,733
----------- -----------
Stockholders' equity:
Common shares, par value $.01; authorized 50,000 shares; issued and
outstanding 33,011 and 30,084 shares, respectively ................... 330 301
Treasury stock, 52 shares at cost ...................................... (287) (287)
Additional paid-in capital ............................................. 478,290 418,705
Accumulated other comprehensive loss ................................... (1,954) (5,132)
Retained earnings ...................................................... 258,936 220,265
----------- -----------
Total stockholders' equity ...................................... 735,315 633,852
----------- -----------
$ 2,163,405 $ 2,229,092
=========== ===========
5
URS CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME
(IN THOUSANDS, EXCEPT PER SHARE DATA)
THREE MONTHS ENDED NINE MONTHS ENDED
JULY 31, JULY 31,
-------------------------- --------------------------
2003 2002 2003 2002
---------- ---------- ---------- ----------
(UNAUDITED) (UNAUDITED)
Revenues ................................... $ 778,045 $ 583,937 $2,348,633 $1,691,345
Direct operating expenses .................. 485,177 353,537 1,481,340 1,017,045
---------- ---------- ---------- ----------
Gross profit ............................. 292,868 230,400 867,293 674,300
---------- ---------- ---------- ----------
Indirect expenses:
Indirect, general and administrative ..... 244,060 187,738 740,050 556,358
Interest expense, net .................... 20,332 12,070 62,913 37,008
---------- ---------- ---------- ----------
264,392 199,808 802,963 593,366
---------- ---------- ---------- ----------
Income before taxes ........................ 28,476 30,592 64,330 80,934
Income tax expense ......................... 11,390 12,230 25,730 32,370
---------- ---------- ---------- ----------
Net income ................................. 17,086 18,362 38,600 48,564
Preferred stock dividend ................... -- 1,055 -- 5,939
---------- ---------- ---------- ----------
Net income available for common stockholders 17,086 17,307 38,600 42,625
Other comprehensive income:
Foreign currency translation adjustments . 272 2,550 3,178 121
---------- ---------- ---------- ----------
Comprehensive income ....................... $ 17,358 $ 19,857 $ 41,778 $ 42,746
========== ========== ========== ==========
Net income per common share:
Basic .................................... $ .52 $ .78 $ 1.19 $ 2.15
========== ========== ========== ==========
Diluted .................................. $ .52 $ .70 $ 1.18 $ 1.86
========== ========== ========== ==========
Weighted-average shares outstanding:
Basic .................................... 32,704 22,587 32,509 19,851
========== ========== ========== ==========
Diluted .................................. 33,207 26,121 32,730 26,227
========== ========== ========== ==========
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URS CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(IN THOUSANDS)
THREE MONTHS ENDED NINE MONTHS ENDED
JULY 31, JULY 31,
------------------------- -------------------------
2003 2002 2003 2002
--------- --------- --------- ---------
(UNAUDITED) (UNAUDITED)
Cash flows from operating activities:
Net income ....................................... $ 17,086 $ 18,362 $ 38,600 $ 48,564
--------- --------- --------- ---------
Adjustments to reconcile net income to net cash
provided by operating activities:
Depreciation and amortization ................ 10,160 7,829 31,810 23,081
Amortization of financing fees ............... 1,915 942 5,553 2,801
Receivable allowances ........................ (208) 437 837 1,956
Deferred income taxes ........................ 1,000 (3,718) (1,000) 4,096
Stock compensation ........................... 264 501 3,665 1,707
Tax benefit of stock options ............... 161 3,800 161 3,800
Changes in current assets and liabilities:
Accounts receivable and costs and accrued
earnings in excess of billings on
contracts in process ....................... 20,313 (21,229) 70,555 25,915
Prepaid expenses and other assets ............ (3,038) (778) (4,803) (1,945)
Accounts payable, accrued salaries and wages
and accrued expenses ........................ (24,566) 47,837 (54,590) (2,841)
Billings in excess of costs and accrued
earnings on contracts in process ............ 4,300 (3,697) 5,961 (12,649)
Deferred compensation and other .............. 31,214 768 31,366 1,298
Other, net ................................... 2,660 2,460 5,180 9,564
--------- --------- --------- ---------
Total adjustments .......................... 44,175 35,152 94,695 56,783
--------- --------- --------- ---------
Net cash provided by operating activities
61,261 53,514 133,295 105,347
--------- --------- --------- ---------
Cash flows from investing activities:
Capital expenditures, less equipment
purchased through capital leases ........... (4,360) (11,399) (13,107) (46,255)
--------- --------- --------- ---------
Net cash used by investing activities ... (4,360) (11,399) (13,107) (46,255)
--------- --------- --------- ---------
Cash flows from financing activities:
Long-term debt principal payments ............ (59,854) (24,427) (82,971) (42,959)
Long-term debt borrowings .................... -- 840 104 1,115
Net payments under the line of credit ........ -- -- (27,259) --
Capital lease obligations payments ........... (5,739) (4,138) (13,366) (10,905)
Short-term note borrowings ................... -- 4 1,211 96
Short-term note payments ..................... (1,329) (1,127) (1,385) (3,492)
Proceeds from sale of common shares from
employee stock purchase plan and exercise
of stock options ........................... 5,373 5,117 9,053 17,116
--------- --------- --------- ---------
Net cash used by financing activities ... (61,549) (23,731) (114,613) (39,029)
--------- --------- --------- ---------
Net increase in cash ................ (4,648) 18,384 5,575 20,063
Cash and cash equivalents at beginning of period .. 20,195 25,077 9,972 23,398
--------- --------- --------- ---------
Cash and cash equivalents at end of period ........ $ 15,547 $ 43,461 $ 15,547 $ 43,461
========= ========= ========= =========
Supplemental information:
Interest paid ................................ $ 10,601 $ 4,689 $ 48,209 $ 30,270
========= ========= ========= =========
Taxes paid ................................... $ 10,853 $ 10,516 $ 14,181 $ 27,274
========= ========= ========= =========
Equipment acquired through capital lease
obligations ................................ $ 4,881 $ 2,649 $ 13,486 $ 19,345
========= ========= ========= =========
Non-cash dividends paid in-kind .............. $ -- $ 1,888 $ -- $ 6,740
========= ========= ========= =========
Conversion of Series B preferred stock to
common stock ............................... $ -- $ -- $ -- $ 126,838
========= ========= ========= =========
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URS CORPORATION AND SUBSIDIARIES
EBITDA RECONCILIATION SCHEDULE
We present Earnings Before Interest, Taxes, Depreciation and Amortization
("EBITDA"), Forecasted EBITDA and EBITDA margin, financial measures that are not
computed in accordance with generally accepted accounting principles ("GAAP"),
which is used by our management for planning and forecasting purposes and by
lenders and investors to measure operating performance and liquidity. We use
these non-GAAP financial measures in making decisions regarding our operational
performance, our ability to service our debt and to facilitate internal
comparisons of our operating results. EBITDA, Forecasted EBITDA and EBITDA
margin are not measures of operating performance computed in accordance with
GAAP and should not be used as a substitute for earnings from operations, net
income or loss, cash flows from operating activities or other measures of
operations or cash flow data prepared in conformity with GAAP, or as a GAAP
measure of profitability or liquidity. In addition, EBITDA, Forecasted EBITDA
and EBITDA margin may not be comparable to similarly titled measures of other
companies. In addition, EBITDA as used herein is not calculated in the same
manner as consolidated EBITDA for purposes of compliance with the financial
ratios in our senior secured credit facility.
Our EBITDA (as reconciled against GAAP net income) and EBITDA margin are
calculated as follows:
ACTUAL
------------------------------------------------------------- FORECAST
THREE MONTHS ENDED NINE MONTHS ENDED --------
JULY 31, JULY 31, FISCAL
--------------------------- --------------------------- YEAR
2003 2002 2003 2002 2003
---------- ---------- ---------- ---------- ----------
(IN THOUSANDS)
(UNAUDITED)
Net income ............................... $ 17,086 $ 18,362 $ 38,600 $ 48,564 $ 58,000
Interest expense, net .................... 20,332 12,070 62,913 37,008 83,000
Income tax expense ....................... 11,390 12,230 25,730 32,370 40,000
Depreciation and amortization ............ 10,160 7,829 31,810 23,081 44,000
---------- ---------- ---------- ---------- ----------
EBITDA ................................... $ 58,968 $ 50,491 $ 159,053 $ 141,023 $ 225,000
========== ========== ========== ========== ==========
Revenues ................................. $ 778,045 $ 583,937 $2,348,633 $1,691,345 $3,150,000
========== ========== ========== ========== ==========
EBITDA margin (EBITDA divided by revenues) 7.6% 8.6% 6.8% 8.3% 7.1%
========== ========== ========== ========== ==========
The following is a reconciliation of EBITDA to GAAP operating cash flows:
ACTUAL
--------------------------------------------------------- FORECAST
THREE MONTHS ENDED NINE MONTHS ENDED ---------
JULY 31, JULY 31, FISCAL
------------------------- ------------------------- YEAR
2003 2002 2003 2002 2003
--------- --------- --------- --------- ---------
(IN THOUSANDS)
(UNAUDITED)
EBITDA .................................. $ 58,968 $ 50,491 $ 159,053 $ 141,023 $ 225,000
Interest expense, net ................... (20,332) (12,070) (62,913) (37,008) (83,000)
Income tax expense ...................... (11,390) (12,230) (25,730) (32,370) (40,000)
Amortization of financing fees .......... 1,915 942 5,553 2,801 5,000
Receivable allowances ................... (208) 437 837 1,956 --
Deferred income taxes ................... 1,000 (3,718) (1,000) 4,096 (5,000)
Stock compensation ...................... 264 501 3,665 1,707 4,000
Tax benefit of stock options ............ 161 3,800 161 3,800 1,000
Changes in current assets and liabilities 30,883 25,361 53,669 19,342 38,000
--------- --------- --------- --------- ---------
Net cash provided by operating activities $ 61,261 $ 53,514 $ 133,295 $ 105,347 $ 145,000
========= ========= ========= ========= =========
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