FORM 10-Q
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
( X ) QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended January 31, 1994
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OR
( ) TRANSITION REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the transition period from to
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Commission file number 1-7567
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URS CORPORATION
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(Exact name of registrant as specified in its charter)
Delaware 94-1381538
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(State or other jurisdiction (I.R.S. Employer
of incorporation) Identification No.)
100 California Street, Suite 500
San Francisco, California 94111-4529
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(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: 415-774-2700
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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 ---
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Indicate the number of shares outstanding of each of the
issuer's classes of common stock, as of the latest practicable date.
Class Outstanding at February 14, 1994
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Common stock, $.01 par value 6,989,400
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URS CORPORATION AND SUBSIDIARIES
PART I. FINANCIAL INFORMATION:
In the opinion of management, the information furnished reflects
all adjustments, consisting only of normal recurring adjustments, which are
necessary for a fair statement of the interim financial information. Net
earnings per share computations are based upon the weighted average number
of common shares outstanding during the period plus shares issuable under
warrants and stock options that have a dilutive affect.
Certain information and footnote disclosures normally included in
financial statements prepared in accordance with generally accepted
accounting principles have been omitted. These condensed financial
statements should be read in conjunction with the financial statements and
notes thereto included in the Company's Annual Report on Form 10-K for the
fiscal year ended October 31, 1993. The results of operations for the
quarterly period ended January 31, 1994 are not necessarily indicative of
the operating results for the full year.
Item 1. Financial Statements (unaudited)
Consolidated Balance Sheets
January 31, 1994 and October 31, 1993 . . . . . . 3
Consolidated Statements of Operations
Three months and ended January 31, 1994 and 1993 . 4
Consolidated Statements of Cash Flows
Three months ended January 31, 1994 and 1993 . . . 5
Notes to Consolidated Financial Statements . . . . . 6
Item 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations . . . . . . . 9
PART II. OTHER INFORMATION:
Item 6. Exhibits and Reports on Form 8-K . . . . . . . . . . . . 11
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PART I
FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
URS CORPORATION AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(in thousands, except per share data)
January 31, October 31,
ASSETS 1994 1993
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(unaudited)
Current assets:
Cash $ 3,915 $ 6,628
Accounts receivable, less allowance for
doubtful accounts of $741 and $665 30,523 27,157
Costs and accrued earnings in excess of
billings on contracts in process, less
allowances for losses of $383 and $416 10,643 11,783
Prepaid expenses and other 917 955
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Total current assets 45,998 46,523
Property and equipment at cost, net 4,320 4,596
Goodwill, net 5,141 5,260
Other assets 788 1,695
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$56,247 $58,074
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LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
Accounts payable $ 6,598 $ 8,078
Accrued salaries and wages 4,757 3,574
Accrued expenses 5,044 7,187
Total current liabilities ------- -------
16,399 18,839
Long-term debt, including related parties 8,191 8,277
Deferred compensation and other 1,608 1,569
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Total liabilities 26,198 28,685
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Shareholders' equity:
Common shares, par value $.01;
authorized 20,000 shares;
issued 6,989 and 6,989 shares 70 70
Additional paid-in capital 28,624 28,365
Retained earnings since February 21,
1990, date of quasi-reorganization 1,355 954
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Total shareholders' equity 30,049 29,389
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$56,247 $58,047
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URS CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
(in thousands, except per share data)
Three months ended
January 31,
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1994 1993
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(unaudited)
Revenues $36,756 $32,957
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Expenses:
Direct operating 22,828 20,013
Indirect, general and
administrative 12,878 11,936
Interest expense, net 329 306
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36,035 32,255
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Income before taxes 721 702
Income tax expense 70 70
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Net income $ 651 $ 632
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Net income per share:
$ .10 $ .08
Primary ======= =======
Fully diluted $ .09 $ .08
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URS CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(in thousands)
Three Months Ended
January 31,
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1994 1993
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(unaudited)
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income $ 651 $ 632
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Adjustments to reconcile net income
to net cash provided (used) by
operating activities:
Depreciation and amortization 547 670
Changes in current assets and
liabilities:
(Increase) decrease in accounts
receivable and costs and accrued
earnings in excess of billings on
contracts in process (2,226) 160
(Increase) decrease in prepaid expenses 38 (112)
Decrease in accounts payable, accrued
salaries and wages and accrued
expenses (2,418) (1,872)
Other, net (44) 589
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Total adjustments (4,103) (565)
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Net cash provided (used) by
operating activities (3,452) 67
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CASH FLOWS FROM INVESTING ACTIVITIES:
Capital expenditures (261) (656)
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Net cash (used) by investing activities (261) (656)
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CASH FLOWS FROM FINANCING ACTIVITIES:
Repurchase of January Notes - (1,340)
Other 1,000 -
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Net cash provided (used) by
financing activities 1,000 (1,340)
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Net decrease in cash (2,713) (1,929)
Cash at beginning of period 6,628 5,729
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Cash at end of period $ 3,915 $ 3,800
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Supplemental information:
Interest paid $ 404 $ 381
Taxes paid 19 83
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$ 423 $ 464
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URS CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
NOTE 1. Income Taxes
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Effective November 1, 1993 the Company adopted the provisions
of Statement of Financial Accounting Standards (SFAS) Number 109,
"Accounting for Income Taxes." The adoption of SFAS 109 changes the
Company's method of accounting for income taxes from the deferred method
under SFAS 96 to an asset and liability method. This standard requires
companies to record all deferred tax liabilities and assets for the future
tax consequences attributable to differences between the financial
statement carrying amounts of existing assets and liabilities and their
respective tax basis, including tax loss carryforwards. As permitted under
SFAS 109, prior years' financial statements have not been restated. The
change in policy does not materially affect the Company's consolidated
financial statements, including the financial statements of prior years.
The components of income tax expense applicable to the
continuing operations each year are as follows:
Three Months Year Ended
Ended January 31 October 31
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1994 1993 1992
(In thousands)
Current:
Federal $ 15 $ 70 $110
State and local income taxes 55 85 110
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Total Current 70 155 220
Deferred:
Federal - - -
State and local income taxes - (15) 240
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Total deferred - (15) 240
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Total income taxes $ 70 $140 $460
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Prior to October 10, 1989, the Company had available net operating
loss (NOL) carryforwards for federal income tax purposes of approximately
$51,000,000. As a result of a change in ownership, as defined by Section
382 of the Internal Revenue Code (IRC) that occurred on October 10, 1989,
the Company's NOL carryforwards for financial statement and Federal income
tax purposes became limited to approximately $750,000 per year for the
succeeding fifteen-year carryforward period, and to the aggregate amount of
$11,250,000, and NOLs attributable to recognized built-in gains became
limited to $14,000,000 by IRC Section 382, for a total of $25,250,000. The
financial statement tax benefits arising from utilization of NOL
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carryforwards will be recognized as a reduction in financial statement tax
expense and an addition to paid-in capital in the year utilized. At
October 31, 1993, the Company had utilized $8,000,000 of the total
$25,250,000 NOL for federal income tax purposes and $8,100,000 for
financial statement purposes.
Subsequent to October 10, 1989, the date of the change in
ownership, the Company incurred and has available additional NOL
carryforwards of approximately $3,000,000 for federal income tax and
financial statement purposes. Generally, these NOL carryforwards are
available to offset future income without limitation over a fifteen-year
carryforward period and will be recognized as a reduction in financial
statement tax expense in the year utilized.
While the Company has available NOL carryforwards for Federal
income tax purposes, for state tax purposes such amounts are not
necessarily available to offset income subject to tax. Accordingly, state
income taxes have been provided.
The significant components of the Company's deferred tax assets and
liabilities as of January 31, 1994 are as follows:
Deferred tax assets / (liabilities) - due to (In thousands):
Vacation accrual $925
Deferred compensation and bonus accrual 275
Bad debt reserve 255
Reserve for losses 115
Net operating loss 6,670
Alternate Minimum Tax Credits 170
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Total $8,410
Valuation allowance (6,406)
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Deferred tax asset $ 2,004
Depreciation and amortization $ (325)
Deferred gain on bond swap (1,575)
Unamortized bond premium (104)
State taxes reserve (241)
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Deferred tax liability (2,245)
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Net deferred tax liability $ (241)
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A valuation allowance relating to NOL carryforwards has been provided due
to the uncertainty as to their utilization.
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The reasons for differences between the Company's effective income
tax rate and the nominal rate resulting from applying the statutory federal
income tax rate to income from continuing operations before income taxes
are provided in the following reconciliation:
Statutory federal income tax rate $ 252
Increase (decrease) in taxes
resulting from:
Nondeductible goodwill amortization 46
Other nondeductible expenses 15
Net operating loss utilized (298)
State income taxes - net of federal
income tax benefit 55
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Total taxes provided $ 70
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URS CORPORATION AND SUBSIDIARIES
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
The Company reports the results of its operations on a fiscal year
which ends on October 31. This Management Discussion and Analysis (MD&A)
should be read in conjunction with the MD&A and the footnotes to the
Consolidated Financial Statements included in the Annual Report on Form
10-K for the fiscal year ended October 31, 1993 which was previously filed
with the Securities and Exchange Commission.
Results of Operations
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The Company's revenues were $36,756,000 for the first quarter ended
January 31, 1994, an increase of $3,799,000 or 12% over the amount reported
for the same period last year. The growth in revenue is generally
attributable to an increase in demand for the Company's services. However,
revenues generated from the Company's three largest indefinite delivery
contracts, the Navy CLEAN, EPA ARCS 9 & 10, and EPA ARCS 6,7 & 8 contracts,
declined in 1994 to $8,055,000 from $9,678,000 in the first quarter of
1993. The decrease in revenues from these contracts is due to a reduction
in the level of work assignments currently being executed.
Direct operating expenses for the quarter ended January 31, 1994,
which consist of direct labor and other direct expenses, including
subcontractor costs, increased $2,815,000, a 14% increase over the amount
reported for the same period last year. This increase is due to increases
in subcontractor costs and direct labor costs.
Indirect general and administrative expenses for the quarter ended
January 31, 1994 increased $942,000, or 8% over the amount reported for the
same period last year as a result of an increase in business volume.
The Company earned $721,000 before income taxes for the first
quarter ended January 31, 1994 compared to $702,000 for the same period
last year. For Federal income tax purposes, the Company has available net
operating loss carryforwards which off-set otherwise taxable income. For
state income tax purposes, net operating loss carryforwards are not
necessarily available to offset income subject to tax. Accordingly, the
Company's effective income tax rate for the quarter ended January 31, 1994
was approximately 10%.
The Company reported net income of $651,000, or $.09 per share for
the first quarter ended January 31, 1994, compared with $632,000, or $.08
per share for the same period last year.
The Company's backlog at January 31, 1994 was $167,000,000, as
compared to $142,000,000 at October 31, 1993.
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Liquidity and Capital Resources
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At January 31, 1994, the Company had working capital of
$29,599,000, an increase of $1,915,000 from October 31, 1993. The Company
also has $9,800,000 in available borrowing capacity under its bank line of
credit. It did not borrow on this line during the first quarter ended
January 31, 1994.
The Company believes that its existing financial resources,
together with its planned cash flow from operations and its unused bank
line of credit, will provide sufficient capital to fund its operations and
its capital needs for fiscal 1994.
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PART II
OTHER INFORMATION
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) Exhibits
None
(b) No reports on Form 8-K were filed during the
quarter ended January 31, 1994.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of
1934, the Registrant has duly caused this report to be signed on its behalf
by the undersigned thereunto duly authorized.
Dated March 11, 1994
URS CORPORATION
/s/ Kent P. Ainsworth
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Kent P. Ainsworth
Vice President and
Chief Financial Officer
(Principal Accounting Officer)
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