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 AND EXCHANGE ACT OF 1934
For the Fiscal Year Ended October 31, 1995
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 or 15(d) OF THE
SECURITIES AND 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:
Name of each exchange
Title of each class: on which registered:
Common Shares, par value $.01 New York Stock Exchange
per share Pacific Stock Exchange
8-5/8% Senior Subordinated New York Stock Exchange
Debentures due 2004 Pacific Stock Exchange
6-1/2% Convertible Subordinated New York Stock Exchange
Debentures due 2012 Pacific Stock Exchange
Securities registered pursuant to Section 12(g) of the Act:
None
Indicate by check mark whether the registrant (1) has filed
all reports required to be filed by Section 13 or 15(d) of the
Securities Exchange Act of 1934 during the preceding 12 months
(or for such shorter period that the registrant was required to
file such reports), and (2) has been subject to such filing
requirements for the past 90 days. Yes..X.. No.....
Indicate by check mark if disclosure of delinquent filers
pursuant to Item 405 of Regulation S-K is not contained herein,
and will not be contained, to the best of registrant's knowledge,
in definitive proxy or information statements incorporated by
reference in Part III of this Form 10-K, or any amendment to this
Form 10-K. [X]
Page 1 of 106 <PAGE>
On December 15, 1995, there were 7,167,591 Common Shares
outstanding, and the aggregate market value of the shares of
Common Stock of URS Corporation held by nonaffiliates was
approximately $24.3 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 26, 1996.
Exhibit Index on Page 53
Page 2 of 106 <PAGE>
PART I
ITEM 1. BUSINESS
--------
URS Corporation (the "Company") offers a broad range of
planning, design and program and construction management services
for engineering, architectural and environmental projects. The
Company serves public and private sector clients throughout the
United States in two principal markets: infrastructure projects
involving transportation systems, institutional and commercial
facilities and water resources and environmental projects
involving hazardous waste management and pollution control.
The Company conducts its business through 24 offices located
throughout the United States. The Company has approximately
1,300 full-time employees, many of whom hold advanced or
technical degrees and have extensive experience in sophisticated
disciplines applicable to the Company's business. The Company
believes that its geographic and technical diversity allow it to
compete for local, regional and national projects, and enable it
to apply to each project a variety of resources from its national
network.
Acquisitions
------------
In January 1995, the Company acquired privately-held E.C.
Driver & Associates, Inc. ("ECD") of Tallahassee, Florida. ECD
is a leading Florida-based transportation engineering firm
specializing in bridge and highway design, including particular
expertise in moveable bridges. The 50-person firm has annualized
revenues of approximately $5.0 million.
On December 3, 1995, the Company and Greiner Engineering,
Inc. ("Greiner") executed a letter of intent for the Company to
acquire all the outstanding stock of Greiner pursuant to a merger
of Greiner with a wholly-owned subsidiary of the Company.
Greiner is a professional services firm operating in the
engineering and architectural design services industry and
headquartered in Irving, Texas. The acquisition price will
consist of $13.50 in cash plus 0.298 shares of the Company's
Common Stock for each of the 4,698,442 outstanding shares of
Greiner common stock, for an aggregate price of $63,429,000 and
1.4 million shares of the Company's Common Stock. Completion of
this transaction is subject to due diligence, mutual approval of
a formal purchase agreement and stockholder, regulatory and other
approvals. The transaction is expected to close by April 1996.
Services
--------
The Company provides professional services in three major
areas: planning, design and program and construction management
through the Company's 24 offices. Each of these offices is
responsible for obtaining local or regional contracts. This
approach allows regional government agencies and private clients
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to view the Company's offices as local businesses with superior
service delivery capabilities. Because the Company can draw from
its large and diverse network of professional and technical
resources, the Company has the capability to market and perform
large multi-state projects.
Planning
--------
Planning covers a broad range of assignments ranging from
conceptual design and technical and economic feasibility studies
to community involvement programs. Planning services also
involve developing alternative concepts for project
implementation and analyzing the impacts of each alternative.
In addition to traditional engineering and architectural
planning services, the Company has extensive expertise in a
number of highly specialized areas, including toll facilities,
health care facility renovation, environmental site analysis,
water quality planning for urban storm water management and site
remediation assignments.
Design
------
The Company's professionals provide a broad range of design
and design-related services, including computerized mapping,
architectural and interior design, civil, sanitary and
geotechnical engineering, process design and seismic (earthquake)
analysis and design. For each project, the Company identifies
the project requirements and then integrates and 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.
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Markets
-------
The Company's strategy is to focus on two major markets:
infrastructure projects involving transportation systems,
institutional and commercial facilities and water resources and
environmental projects involving hazardous waste management and
pollution control. The Company has developed a nationwide
identity based on its successful completion of a number of highly
visible rehabilitation and expansion projects in these markets.
Although the Company views these markets as being distinct, the
Company provides its planning, design and program and
construction management services to both markets.
Infrastructure
--------------
The Company has significant expertise in three areas
relating to the infrastructure market: transportation systems,
institutional and commercial facilities and water resources
projects.
TRANSPORTATION SYSTEMS. The Company's engineers, designers,
planners and managers provide services for projects involving all
types of transportation networks, such as highways, roadways,
streets, bridges, rapid and mass transit systems, airports and
marine facilities. These services range from the design of
interstate highways to harbor traffic simulation studies and may
extend from conceptual planning through preliminary and final
design to construction management. Historically, the Company's
emphasis in this market area has been on the design of new
transportation facilities, but in recent years the rehabilitation
of existing facilities has become a major focus.
INSTITUTIONAL AND COMMERCIAL FACILITIES. The Company
provides architectural, engineering design, space planning and
construction supervision services to this market area. Demand
for low-maintenance, energy efficient facilities 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.
WATER RESOURCES. The Company's capabilities in this market
area include the planning, design and program and construction
management of water supply, storage, distribution and treatment
systems, as well as work in basin plans, groundwater supply,
customer rate studies, urban run-off, bond issues, flood control,
water quality analysis and beach erosion control.
Environmental
-------------
The Company has developed expertise in two principal
environmental markets: hazardous waste management and pollution
control.
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Page 5 of 106 <PAGE>
HAZARDOUS WASTE MANAGEMENT. The Company conducts initial
site investigations, designs remedial actions for site clean-up
and provides construction management services during site
clean-up. This market involves identifying and developing
measures to effectively dispose of hazardous and toxic waste at
contaminated sites. The Company also provides air quality
monitoring and designs individual facility modifications required
to meet local, state and Federal air quality standards. This
work requires specialized knowledge of and compliance with
complex Federal and state regulations, as well as the permitting
and approval processes. Solid waste management services provided
by the Company include facility siting, transfer station design
and community-wide master planning.
The Company has been awarded several significant contracts
with government agencies, including a contract with the U.S.
Department of Defense for environmental engineering and
remediation work in the Northwest and Alaska under the
Comprehensive Long-Term Environmental Action-Navy ("Navy CLEAN")
program and two contracts with the U.S. Environmental Protection
Agency ("EPA") under its Alternative Remedial Contracting
Strategy ("EPA ARCS") program. Under the Navy CLEAN contract,
the Company provides site inspections, site characterizations,
remediation designs and action plans for contaminated Navy
facilities. A portion of the Navy CLEAN contract, which is
expected to have a ten-year term, is awarded each year over the
life of the contract. In fiscal 1995 and 1994, the Company
generated revenues associated with the Navy CLEAN contract of
$16.6 million and $14.3 million, respectively. The Company's
services under the ten-year EPA ARCS contracts include
investigating the nature and extent of contamination by hazardous
materials, performing risk assessments, evaluating the
feasibility of various options for remedial action and providing
management, technical, quality assurance and health and safety
reviews of potentially responsible party submittals. Work under
the EPA ARCS contracts is performed on a task order basis. In
fiscal 1995 and 1994, the Company recognized revenues of
$20.5 million and $26.7 million, respectively, under the EPA ARCS
contracts.
POLLUTION CONTROL. The Company's principal services in this
market include the planning and design of new wastewater
facilities, such as sewer systems and wastewater treatment
plants, and the analysis and expansion of existing systems. The
types of work performed by the Company include infiltration/
inflow studies, combined sewer overflow studies, water quality
facilities planning projects and design and construction
management services for wastewater treatment plants.
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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:
<TABLE>
<CAPTION>
1995 1994 1993 1992 1991
-------- -------- -------- -------- --------
(In thousands)
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Local and state
agencies $ 99,871 56% $ 88,207 54% $ 80,350 55% $ 65,315 48% $ 68,720 56%
Federal
agencies 58,751 33 59,611 36 48,713 33 52,530 38 35,614 29
Private
businesses 21,147 11 16,270 10 16,698 12 18,948 14 18,504 15
------- --- ------- --- ------- --- ------- --- ------- ---
Total $179,769 100% $164,088 100% $145,761 100% $136,793 100% $122,838 100%
======= === ======== === ======= === ========== ======= ===
</TABLE>
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Contract Pricing and Terms of Engagement
----------------------------------------
Under its cost-plus contracts, the Company charges clients
negotiated rates based on the Company's direct and indirect
costs. Labor costs and subcontractor services are the principal
components of the Company's direct costs. Federal Acquisition
Regulations limit the recovery of certain specified indirect
costs on contracts subject to such regulations. In negotiating a
cost-plus contract, the Company estimates all recoverable direct
and indirect costs and then adds a profit component, which is
either a percentage of total recoverable costs or a fixed
negotiated fee, to arrive at a total dollar estimate for the
project. The Company receives payment based on the total actual
number of labor hours expended. If the actual total number of
labor hours is lower than estimated, the revenues from that
project will be lower than estimated. If the actual labor hours
expended exceed the initial negotiated amount, the Company must
obtain a contract modification in order to receive payment for
such overage. The Company's profit margin will increase to the
extent the Company is able to reduce actual costs below the
estimates used to produce the negotiated fixed prices on
contracts not covered by Federal Acquisition Regulations;
conversely, the Company's profit margin will decrease and the
Company may realize a loss on the project if the Company does not
control costs and exceeds the overall estimates used to produce
the negotiated price.
Cost-plus contracts covered by Federal Acquisition
Regulations require an audit of actual costs and provide for
upward or downward adjustments if actual recoverable costs differ
from billed recoverable costs. The Defense Contract Audit
Agency, auditors for the Department of Defense and other Federal
agencies, has completed incurred cost audits of the Company's
Federal contracts for fiscal years ended through October 31,
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 adjustments are made if
the Company over-estimates or under-estimates the number of labor
hours required to complete the project, unless there is a change
of scope in the work to be performed. Accordingly, the Company's
profit margin will increase to the extent the number of labor
hours and other costs are below the contracted amounts. The
profit margin will decrease and the Company may realize a loss on
the project if the number of labor hours required and other costs
exceed the estimates.
Backlog, Project Designations and Indefinite Delivery Contracts
---------------------------------------------------------------
The Company's contract backlog was $196.4 million at
October 31, 1995, compared to $159.1 million at October 31, 1994.
The Company's contract backlog consists of the amount billable at
a particular point in time for future services under executed
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Page 8 of 106 <PAGE>
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
$196.4 million at October 31, 1995, approximately 30%, or
$59.0 million, is not reasonably expected to be filled within the
next fiscal year ending October 31, 1996.
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 $194.1 million at
October 31, 1995, as compared to $172.0 million at October 31,
1994. 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. Examples
of such contracts are the Navy CLEAN and EPA ARCS contracts.
Certain indefinite delivery contracts are for a definite time
period with renewal option periods at the client's discretion.
While the Company believes that it will continue to get work
under these contracts over their entire term, because of renewals
and the necessity for issuance of individual task orders,
continued work by the Company and the realization of their
potential maximum values under these contracts is not assured.
However, because of the increasing frequency with which the
Company's government and private sector clients use this
contracting method, the Company believes their potential value
should be disclosed along with backlog and designations as an
indicator of the Company's future business. When the client
notifies the Company of the scope and pricing of task orders, the
estimated value of such task orders is added to designations.
When such task orders are signed and funded, their value goes
into backlog. At October 31, 1995, the potential value of the
Company's five largest indefinite delivery contracts was as
follows:
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Page 9 of 106 <PAGE>
<TABLE>
<CAPTION>
Revenues At October 31, 1995
Recog- -----------------------------
Total nized thru Estimated Estimated
Potential October 31, Funded Desig- Remaining
Contract Term Values 1995 Backlog nations Values
-------- ---- --------- ---------- ------- --------- ---------
(In millions)
<S> <C> <C> <C> <C> <C> <C>
EPA ARCS (9&10) 1989-1999 $182.5 $ 29.7 $10.6 $6.8 $135.4
Navy CLEAN 1989-1999 166.0 109.4 6.4 3.2 47.0
EPA ARCS (6,7&8) 1989-1999 119.7 61.0 3.3 3.0 52.4
Brooks AFB System 1994-1999 50.0 1.7 5.0 - 43.3
NY State Environmental
Remediation 1990-1996 20.0 7.7 1.4 - 10.9
----- ----- ---- ---- -----
Total $538.2 $209.5 $26.7 $13.0 $289.0
===== ===== ==== ==== =====
</TABLE>
Competition
-----------
The engineering and architectural services industry is
highly fragmented and very competitive. As a result, in each
specific market area the Company competes with many engineering
and consulting firms, several of which are substantially larger
than the Company and which possess greater financial resources.
No firm currently dominates any significant portion of the
Company's market areas.
Competition is based on quality of service, expertise,
price, reputation and local presence. The Company believes that
it competes favorably with respect to each of these factors in
the market areas it serves.
Employees
The Company has approximately 1,300 full-time employees,
many of whom hold advanced or technical degrees and have
extensive experience in a variety of disciplines applicable to
the Company's business. The Company also employs, at various
times on a temporary basis, up to several hundred additional
persons to meet contractual requirements. Twenty-seven 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.
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Page 10 of 106 <PAGE>
ITEM 2. PROPERTIES
----------
The Company leases office space in 24 principal locations
throughout the United States. Most of the leases are written for
a minimum term of three years with options for renewal, sublease
rights and allowances for improvements. Significant lease
agreements expire at various dates through the year 2005. The
Company believes that its current facilities are sufficient for
the operation of its business and that suitable additional space
in various local markets is available to accommodate any needs
that may arise.
ITEM 3. LEGAL PROCEEDINGS
-----------------
Item 8, Financial Statements and Supplementary Data,
Note 8 -- Commitments and Contingencies -- is hereby
incorporated by reference.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
---------------------------------------------------
There were no matters submitted to a vote of the Company's
security holders during the fourth quarter of the fiscal year
ended October 31, 1995.
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Page 11 of 106 <PAGE>
ITEM 4A. EXECUTIVE OFFICERS OF THE REGISTRANT
------------------------------------
Name Position Held Age
---- ------------- ---
Martin M. Koffel . . . . Chief Executive Officer, 56
President and Director of
the Company from May 1989;
Chairman of the Board from
June 1989; Director,
Regent Pacific Corporation
since 1993.
Kent P. Ainsworth . . . . Vice President and Chief 49
Financial Officer of the
Company from January 1991;
Secretary of the Company
from May, 1994; financial
consultant from March 1990
through December 1990;
Vice President and Chief
Financial Officer of
DiGiorgio Corporation from
November 1987 through
February 1990.
Marvin J. Bloom . . . . . Senior Vice President and 54
Regional Manager of URS
Consultants, Inc., a
wholly-owned subsidiary of
the Company, since January
1993; Senior Vice
President and Division
Manager of same from
December 1992 through
January 1993; Vice
President and Division
Manager of same from March
1991 through December
1992; Vice President and
Branch Manager of same
from August 1990 through
February 1991; Deputy
Division Manager of
Sverdrup Corporation from
June 1987 through August
1990.
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Page 12 of 106 <PAGE>
Name Position Held Age
---- ------------- ---
Joseph Masters . . . . . Vice President, Legal of the 39
Company since July 1994;
Vice President, Director
of Legal Affairs of URS
Consultants, Inc., a
wholly-owned subsidiary of
the Company, from April
1994 to July 1994; Vice
President, Associate
General Counsel of same
from May 1992 to April
1994; outside counsel to
the Company from January
1990 to May 1992; Vice
President of URS
Consultants, Inc., a
wholly-owned subsidiary of
the Company, from December
1989 to January 1990;
Secretary and Senior
Counsel to Company from
February 1989 to January
1990.
Peter J. Pedalino . . . . Vice President and Treasurer 48
of URS Consultants, Inc.,
a wholly-owned subsidiary
of the Company, since July
1989.
Charles A. Rodenfels . . Senior Vice President of 40
Architectural Services,
URS Consultants, Inc., a
wholly-owned subsidiary of
the Company, and National
Director of Architectural
Services from July 1993;
Senior Vice President, URS
Consultants, Inc. - Ohio,
Ohio Division Manager from
November 1990 to July
1993; Vice President, URS
Consultants, Inc. - Ohio,
Ohio Branch Manager from
November 1989 to November
1990; Director of Business
Development, URS
Consultants, Inc. - Ohio
Columbus office, November
1981 to November 1989.
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Page 13 of 106 <PAGE>
Name Position Held Age
---- ------------- ---
Irwin L. Rosenstein . . . President of URS 59
Consultants, Inc., a
wholly-owned subsidiary of
the Company, and Director
since February 1989; Vice
President of the Company
since 1987; President of
Eastern Region of URS
Consultants, Inc. from
August 1986 to February
1989.
Martin S. Tanzer, Ph.D. . Executive Vice President of 51
URS Consultants, Inc., a
wholly-owned subsidiary of
the Company, since
February 1989. Vice
President of same from
1984 through February
1989.
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Page 14 of 106 <PAGE>
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 and Pacific Stock Exchanges (under the symbol "URS").
At December 15, 1995, the Company had approximately 2,043
stockholders of record. The following table sets forth the high
and low closing sale prices of the URS Common Shares, as reported
by The Wall Street Journal for the periods indicated.
MARKET PRICE
----------------------
LOW HIGH
--- ----
Fiscal Period:
1994:
First Quarter $ 4.75 $ 7.38
Second Quarter $ 6.75 $ 7.75
Third Quarter $ 4.88 $ 7.13
Fourth Quarter $ 5.13 $ 6.75
1995:
First Quarter $ 5.00 $ 6.00
Second Quarter $ 5.38 $ 6.00
Third Quarter $ 5.25 $ 5.88
Fourth Quarter $ 5.50 $ 6.63
1996:
First Quarter $ 6.38 $ 7.13
(through December 15, 1995)
The Company has not paid cash dividends since 1986. (See
Item 8, Financial Statements and Supplementary Data, Note 7 --
Long-Term Debt). Further, the declaration of dividends could be
precluded by existing Delaware law.
ITEM 6. SUMMARY OF SELECTED FINANCIAL INFORMATION
-----------------------------------------
The following table sets forth selected financial data of
the Company for the five years ended October 31, 1995. The data
presented below should be read in conjunction with the
Consolidated Financial Statements of the Company including the
notes thereto.
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SUMMARY OF SELECTED FINANCIAL INFORMATION
(In thousands, except per share data)
Years Ended October 31,
--------------------------------------------
1995 1994 1993 1992 1991
---- ---- ---- ---- ----
Income Statement
Data:
Revenues $179,769 $164,088 $145,761 $136,793 $122,838
------- ------- ------- ------- -------
Operating expenses:
Direct operating 108,845 102,500 91,501 85,384 72,659
Indirect, general
and administrative 63,217 55,455 51,607 45,473 45,311
Total operating ------- ------- ------- ------- -------
expenses 172,062 157,955 143,108 130,857 117,970
------- ------- ------- ------- -------
Operating income 7,707 6,133 2,653 5,936 4,868
Interest expense,
net 1,351 1,244 1,220 1,208 2,326
Income before income ------- ------- ------- ------- -------
taxes 6,356 4,889 1,433 4,728 2,542
Income tax expense 1,300 450 140 460 250
------- ------- ------- ------- -------
Net income $ 5,056 $ 4,439 $ 1,293 $ 4,268 $ 2,292
======= ======= ======= ======= =======
Net income per
share:
Primary $ .68 $ .60 $ .18 $ .55 $ .40
======= ======= ======= ======= =======
Fully diluted $ .67 $ .60 $ .18 $ .55 $ .38
======= ======= ======= ======= =======
Weighted average
shares:
Primary 8,632 8,556 6,971 8,221 6,742
Fully diluted 8,632 8,556 6,971 8,221 6,282
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As of October 31,
--------------------------------------------
1995 1994 1993 1992 1991
---- ---- ---- ---- ----
(In thousands)
Balance Sheet Data:
Working capital $36,307 $33,674 $27,684 $26,836 $21,891
Total assets 74,075 65,214 58,074 54,892 49,831
Total debt 9,999 9,270 8,277 8,705 8,347
Shareholders' $39,478 $33,973 $29,389 $27,878 $23,264
equity
ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
-------------------------------------------------
Results of Operations
---------------------
Fiscal 1995 Compared with Fiscal 1994
-------------------------------------
Revenues in fiscal 1995 were $179.8 million, or 10% over the
amount reported in fiscal 1994. The growth in revenues is
primarily attributable to increases in revenues derived from all
areas of the Company's business, particularly transportation and
other infrastructure projects in the Northeast. Revenues
generated from the Company's three largest contracts; Navy CLEAN,
EPA ARCS 9&10 and EPA ARCS 6,7,&8, decreased in fiscal 1995 to
$37.1 million as compared to $41.0 million in fiscal 1994. 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. Revenues
generated from private commercial businesses increased from $16.3
million in fiscal 1994 to $21.1 million in fiscal 1995.
Direct operating expenses, which consist of direct labor and
direct expenses including subcontractor costs, increased
$6.3 million, or 6%, over the amount reported in fiscal 1994.
The increase is due to an overall increase in the Company's
business in fiscal 1995 as compared to fiscal 1994. Indirect
general and administrative expenses ("IG&A") increased to
$63.2 million in fiscal 1995 from $55.5 million in fiscal 1994.
Expressed as a percentage of revenues, IG&A expenses increased
from 34% in fiscal 1994 to 35% in fiscal 1995. The Company
attributes this increase to the overall increase in the Company's
business. Net interest expense remained relatively constant at
$1.4 million in fiscal 1995.
The Company earned $6.4 million before income taxes in
fiscal 1995 compared to $4.9 million in fiscal 1994. While the
Company has available net operating loss ("NOL") carryforwards
which partially off-set otherwise taxable income for Federal
income tax purposes, for state income tax purposes such amounts
are not necessarily available to offset income subject to tax.
Accordingly, the Company's effective tax rate for fiscal 1995 was
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approximately 20%. This effective income tax rate is based on
the Company using a significant portion of the unlimited NOL
available to it in fiscal year 1995. See Income Taxes below and
Note 6 - Income Taxes - to the Company's Consolidated Financial
Statements.
Net income increased to $5.1 million in fiscal 1995 as
compared to $4.4 million in fiscal 1994. The Company earned
$0.67 per share on a fully-diluted basis in fiscal 1995 compared
to $0.60 per share in fiscal 1994.
The Company's backlog of signed and funded contracts at
October 31, 1995 was $196.4 million as compared to $159.1 million
at October 31, 1994. The value of the Company's designations was
$194.1 million at October 31, 1995, as compared to $172.0 million
at October 31, 1994.
Fiscal 1994 Compared with Fiscal 1993
-------------------------------------
Revenues in fiscal 1994 grew to $164.1 million, or 13%, over
the amount reported in fiscal 1993. The growth in revenues was
primarily attributable to increases in revenues generated from
all areas of the Company's business, particularly transportation
and other infrastructure projects in the Northeast. Revenues
derived from the Company's three largest contracts: Navy CLEAN,
EPA ARCS 9&10 and EPA ARCS 6,7&8, were $41.0 million in fiscal
1994 compared to $38.5 million in fiscal 1993. The increase in
revenues from these contracts was due to an increase in the
number of task orders for hazardous waste clean-up services.
Revenues generated from private commercial businesses decreased
to $16.3 million in fiscal 1994 from $16.7 million in fiscal
1993.
Direct operating expenses, which consist of direct labor and
direct expenses including subcontractor costs, increased
$11.0 million, or 12%, over the amount reported in fiscal 1993.
The increase was due to an overall increase in the Company's
business in fiscal 1994 as compared to fiscal 1993. In fiscal
1994, IG&A expenses increased to $55.5 million from $51.6 million
in fiscal 1993. However, expressed as a percentage of revenues,
IG&A expenses decreased from 35% in fiscal 1993 to 34% in fiscal
1994. The Company attributes this decrease to continued emphasis
on cost controls, as well as the one-time charge of $2.0 million
taken in the third quarter of fiscal 1993 in connection with the
planned phase-out of certain of the Company's architectural
offices and for claims on certain of the Company's architectural
projects. Net interest expense remained constant at $1.2 million
in fiscal 1994 due to significantly lower debt levels in fiscal
1993 and 1994 as the result of the secondary common stock
offering completed by the Company in June 1991.
The Company earned $4.9 million before income taxes in
fiscal 1994 compared to $1.4 million in fiscal 1993. While the
Company had available NOL carryforwards which partially off-set
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Page 18 of 106 <PAGE>
otherwise taxable income for Federal income tax purposes, for
state income tax purposes such amounts were not necessarily
available to offset income subject to tax. Accordingly, the
Company's effective tax rate for fiscal 1994 was approximately
9%.
Net income increased 238% to $4.4 million compared to
$1.3 million in fiscal 1993. The Company earned $0.60 per share
in fiscal 1994 compared to $0.18 per share in fiscal 1993.
The Company's backlog of signed and funded contracts at
October 31, 1994 was $159.1 million as compared to $142.0 million
at October 31, 1993. The value of the Company's designations,
which are awarded projects for which contracts have not been
signed, was $172.0 million at October 31, 1994 as compared to
$213.6 million at October 31, 1993.
Income Taxes
------------
Prior to October 10, 1989, the Company had available NOL
carryforwards for Federal income tax purposes of approximately
$51.0 million. As a result of a change in ownership as defined
by Section 382 of the Internal Revenue Code of 1986, as amended,
("IRC") that occurred on October 10, 1989, the Company's NOL
carryforwards for financial statement and Federal income tax
purposes became limited to approximately $750,000 per year for
the succeeding fifteen-year carryforward period, for an aggregate
of $11.2 million, plus NOL attributable to recognized built-in
gains, limited to $14.0 million by IRC Section 382, for a total
of $25.2 million. The financial statement tax benefits arising
from these NOL carryforwards will be recognized as a reduction in
financial statement tax expense and an addition to paid-in
capital in the years utilized. At October 31, 1995, the Company
had utilized $18.4 million of the total $25.2 million for Federal
income tax purposes, including all of the $14.0 million NOL
attributable to recognized built-in gains. The remaining
available NOL is limited to $750,000 per year.
Effective November 1, 1993, the Company adopted the
provisions of Statement of Financial Accounting Standards
("SFAS") Number 109, "Accounting for Income Taxes." This
standard requires companies to record all deferred tax
liabilities and assets for the future tax consequences
attributable to differences between the financial statement
carrying amounts of existing assets and liabilities and their
respective tax basis, including tax loss carryforwards. As
permitted under SFAS Number 109, prior years' financial
statements were not restated. This change did not materially
affect the Company's Consolidated Financial Statements.
Liquidity and Capital Resources
-------------------------------
The Company's liquidity and capital measurements are set
forth below:
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Page 19 of 106 <PAGE>
October 31,
--------------------------------
1995 1994 1993
---- ---- ----
Working capital $36,307,000 $33,674,000 $27,684,000
Working capital ratio 2.6 to 1 2.6 to 1 2.5 to 1
Average days to convert
billed accounts
receivable to cash 62 66 67
Percentage of debt to
equity 25.0% 27.3% 28.2%
On January 4, 1995, the Company acquired ECD for an
aggregate purchase price of $3,596,000, which was paid in cash.
In April 1995, the Company amended its existing line of
credit with Wells Fargo Bank, National Association (the "Bank"),
to be an unsecured line of credit up to $15,000,000 and expiring
April 29, 1997. Borrowings on the unsecured line of credit bear
interest at the option of the Company at a per annum rate equal
to either the Bank's prime rate, or 1.5% over the interest rate
offered to the Bank in the interbank Eurodollar market, adjusted
for the Bank's Eurodollar reserve requirements. At October 31,
1995, the Company had outstanding letters of credit totalling
$386,000, which reduced the amount available to the Company under
the unsecured line of credit to $14,614,000. See Note 7 - Long-
Term Debt - Credit Agreement - to the Company's consolidated
financial statements. Under the unsecured credit agreement, the
Company is required to satisfy certain financial and nonfinancial
covenants. The Company was in compliance with all financial and
non-financial covenants contained in the unsecured credit
agreement at October 31, 1995 and the secured credit agreement at
October 31, 1994.
As discussed more fully in Item 1 - Business, on December 3,
1995, the Company and Greiner executed a letter of intent for the
Company to acquire all the outstanding stock of Greiner pursuant
to a merger of Greiner with a wholly-owned subsidiary of the
Company. To finance the cash portion of this proposed
acquisition, the Company is negotiating to obtain a $20,000,000
senior secured revolving credit facility expiring three years
from the closing of the loan (which would replace the unsecured
line of credit discussed above) and a $50,000,000 senior secured
term loan maturing six years from the closing of the loan. See
Note 7 - Long-Term Debt - Credit Agreement - to the Company's
consolidated financial statements.
The Company is a professional services organization and, as
such, is not capital intensive. Capital expenditures during
fiscal years 1995, 1994, and 1993 were $1,610,000, $2,149,000,
and $1,952,000, respectively. The expenditures were principally
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Page 20 of 106 <PAGE>
for computer-aided design and drafting equipment to
accommodate the Company's growth. The Company expects
fiscal 1996 capital expenditures to be comparable to the
expenditures in fiscal 1995.
The Company believes that its existing financial resources,
together with its planned cash flow from operations and its
unused line of credit, as well as the contemplated credit
facilities being negotiated in connection with the proposed
Greiner acquisition, will provide sufficient capital to fund its
operations and its capital expenditure needs for the foreseeable
future.
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Page 21 of 106 <PAGE>
ITEM 8. 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, 1995
and 1994, and the related consolidated statements of operations,
changes in stockholders' equity and cash flows for each of the
three years in the period ended October 31, 1995. 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, 1995 and 1994, and the consolidated results of their
operations and their cash flows for each of the three years in
the period ended October 31, 1995, in conformity with generally
accepted accounting principles.
As discussed in the notes to the consolidated financial
statements, effective November 1, 1993, the Company adopted
Statement of Financial Accounting Standards No. 109, Accounting
for Income Taxes.
/s/ COOPERS & LYBRAND L.L.P.
COOPERS & LYBRAND L.L.P.
San Francisco, California
December 15, 1995
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Page 22 of 106 <PAGE>
URS CORPORATION AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(In thousands, except per share data)
October 31,
1995 1994
ASSETS ---- ----
Current assets:
Cash and cash equivalents $ 8,836 $ 9,457
Accounts receivable, including retainage
amounts of $3,895 and $2,925, less allowance
for doubtful accounts of $664 and $495 35,822 30,132
Costs and accrued earnings in excess of
billings on contracts in process, less
allowances for losses of $606 and $646 13,200 13,747
Prepaid expenses 1,849 929
------ ------
Total current assets 59,707 54,265
Property and equipment at cost, net 5,835 5,469
Goodwill, net 7,765 4,787
Other assets 768 693
------ ------
$74,075 $65,214
====== ======
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
Accounts payable $ 7,724 $ 9,440
Accrued salaries and wages 6,588 5,700
Accrued expenses and other 9,088 5,451
------ ------
Total current liabilities 23,400 20,591
Long-term debt 7,204 6,638
Long-term debt to related parties 2,795 2,632
Deferred compensation and other 1,198 1,380
------ ------
Total liabilities 34,597 31,241
------ ------
Commitments and contingencies (Note 8)
Stockholders' equity:
Common Shares, par value $.01; authorized
20,000 shares; issued 7,167 and 7,019 shares,
respectively 73 71
Treasury stock (287) (59)
Additional paid-in capital 31,791 30,261
Retained earnings since February 21, 1990, date
of quasi-reorganization 7,901 3,700
------ ------
Total stockholders' equity 39,478 33,973
------ ------
$74,075 $65,214
====== ======
See Notes to Consolidated Financial Statements
-21-
Page 23 of 106 <PAGE>
URS CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
(In thousands, except per share data)
Years Ended October 31,
----------------------------
1995 1994 1993
---- ---- ----
Revenues $179,769 $164,088 $145,761
------- ------- -------
Expenses:
Direct operating 108,845 102,500 91,501
Indirect, general and
administrative 63,217 55,455 51,607
Interest expense, net 1,351 1,244 1,220
------- ------- -------
173,413 159,199 144,328
------- ------- -------
Income before taxes 6,356 4,889 1,433
Income tax expense 1,300 450 140
------- ------- -------
Net income $ 5,056 $ 4,439 $ 1,293
======= ======= =======
Net income per share:
Primary $ .68 $ .60 $ .18
======= ======= =======
Fully diluted $ .67 $ .60 $ .18
======= ======= =======
See Notes to Consolidated Financial Statements
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Page 24 of 106 <PAGE>
URS CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY
(In thousands)
Addi- Total
Common Shares tional Share-
--------------- Treasury Paid-in Retained holders'
Number Amount Stock Capital Earnings Equity
------ ------ ----- ------- -------- ------
Balances November 1,
1992 6,959 $ 70 $ 0 $27,697 $ 111 $27,878
----- --- ---- ------ ----- ------
Stock in lieu of
interest 4 - - 31 - 31
Employee stock
purchases 26 - - 187 - 187
Quasi-reorganization
NOL carryforward - - - 450 (450) -
Net income - - - - 1,293 1,293
----- --- ---- ------ ----- ------
Balances, October 31,
1993 6,989 70 0 28,365 954 29,389
----- --- ---- ------ ----- ------
Employee stock
purchases 40 1 - 203 - 204
Purchase of treasury
shares (10) - (59) - - (59)
Quasi-reorganization
NOL carryforward - - - 1,693 (1,693) -
Net income - - - - 4,439 4,439
----- --- ---- ------ ----- ------
Balances October 31,
1994 7,019 71 (59) 30,261 3,700 33,973
----- --- ---- ------ ----- ------
Employee stock
purchases 190 2 - 675 - 677
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 $ 73 $(287) $31,791 $7,901 $39,478
===== === ==== ====== ===== ======
See Notes to Consolidated Financial Statements
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Page 25 of 106 <PAGE>
URS CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOW
(In thousands)
Years Ended October 31,
----------------------------
1995 1994 1993
---- ---- ----
Cash flows from operating activities:
Net income $5,056 $4,439 $1,293
----- ----- -----
Adjustments to reconcile net income to
net cash provided (used) by operating
activities:
Depreciation and amortization 3,124 2,596 2,986
Changes in current assets and
liabilities:
Increase in accounts receivable and
costs and accrued earnings in excess
of billings on contracts in process (4,067) (4,938) (1,949)
Decrease (increase) in prepaid
expenses and other (881) 26 137
Increase in accounts payable, accrued
salaries and wages and accrued
expenses 1,252 1,682 1,455
Other, net (391) 28 517
----- ----- -----
Total adjustments (963) (606) 3,146
----- ----- -----
Net cash provided by operating
activities 4,093 3,833 4,439
----- ----- -----
Cash flows from investing activities:
Payment for business acquisition (3,596) - -
Capital expenditures (1,610) (2,149) (1,952)
Other 43 - (400)
----- ----- -----
Net cash used by investing activities (5,163) (2,149) (2,352)
----- ----- -----
Cash flows from financing activities:
Repayment of debt - - (1,340)
Repurchase of common shares (228) (59) -
Proceeds from sale of common shares 247 204 152
Proceeds from exercise of stock options 430 - -
Other - 1,000 -
----- ----- -----
Net cash provided (used) by financing
activities 449 1,145 (1,188)
----- ----- -----
Net increase (decrease) in cash (621) 2,829 899
Cash at beginning of year 9,457 6,628 5,729
----- ----- -----
Cash at end of year $8,836 $9,457 $6,628
===== ===== =====
See Notes to Consolidated Financial Statements
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Page 26 of 106 <PAGE>
URS CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
NOTE 1. ACCOUNTING POLICIES
-------------------
Principles of Consolidation and Basis of Presentation
-----------------------------------------------------
The consolidated financial statements include the accounts
of URS Corporation and its subsidiaries, all of which are wholly-
owned. All significant intercompany accounts and transactions
have been eliminated in consolidation.
Revenue Recognition
-------------------
Revenue from contract services is recognized by the
percentage-of-completion method and includes a proportion of the
earnings expected to be realized on a contract in the ratio that
costs incurred bear to estimated total costs. Revenue on cost
reimbursable contracts is recorded as related contract costs are
incurred and includes estimated earned fees in the proportion
that costs incurred to date bear to total estimated costs. The
fees under certain government contracts may be increased or
decreased in accordance with cost or performance incentive
provisions which measure actual performance against established
targets or other criteria. Such incentive fee awards or
penalties are included in revenue at the time the amounts can be
reasonably determined. Revenue for additional contract
compensation related to unpriced change orders is recorded when
realization is probable. Revenue from claims by the Company for
additional contract compensation is recorded when agreed to by
the customer. If estimated total costs on any contract indicate
a loss, the Company provides currently for the total loss
anticipated on the contract.
Costs under contracts with the U.S. Government are subject
to government audit upon contract completion. Therefore, all
contract costs, including direct and indirect, general and
administrative expenses, are potentially subject to adjustment
prior to final reimbursement. Management believes that adequate
provision for such adjustments, if any, has been made in the
accompanying consolidated financial statements. All overhead and
general and administrative expense recovery rates for fiscal 1989
through fiscal 1995 are subject to review by the U.S. Government.
Cash and Cash Equivalents
-------------------------
The Company considers all highly liquid investments with
original maturities of three months or less to be cash
equivalents. Cash equivalents are recorded at cost, which
approximates fair value.
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Page 27 of 106 <PAGE>
Income Taxes
------------
Effective November 1, 1993, the Company adopted the
provisions of Statement of Financial Accounting Standards
("SFAS") Number 109, "Accounting for Income Taxes." This
standard requires companies to record all deferred tax
liabilities and assets for the future tax consequences
attributable to differences between the financial statement
carrying amounts of existing assets and liabilities and their
respective tax basis, including tax loss carryforwards. As
permitted under SFAS Number 109, prior years' financial
statements were not restated. This did not materially affect the
Company's consolidated financial statements.
Depreciation and Amortization
-----------------------------
Depreciation is provided on the straight-line method over
the useful service lives of the assets. Goodwill is amortized on
the straight-line method ranging from 10 to 20 years.
Income Per Share
----------------
The computation of earnings per common and common equivalent
shares is based upon the weighted average number of common shares
outstanding during the period plus (in periods in which they have
a dilutive effect) the effect of common shares contingently
issuable, primarily from stock options, exercise of warrants and
the potential conversion of convertible debentures, less the
number of shares assumed to be purchased from the proceeds using
the average market price of the Company's common stock.
The fully diluted per share computation reflects the effect
of common shares contingently issuable upon the exercise of
warrants in periods in which such exercise would cause dilution.
Fully diluted earnings per share may also reflect additional
dilution related to stock options due to the use of the market
price at the end of the period when higher than the average price
for the period.
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Page 28 of 106 <PAGE>
Computation of Net Income Per Share
(In thousands, except per share data)
Years Ended October 31,
-----------------------
1995 1994 1993
---- ---- ----
Net income $5,056 $4,439 $1,293
Add:
Interest on debentures and notes, net
of applicable income taxes 696 715 -
----- ----- -----
Net income for fully-diluted income per
common share $5,752 $5,154 $1,293
===== ===== =====
Weighted average number of common shares
outstanding during the year 7,080 7,001 6,971
Add:
Common equivalent shares (determined
using the "treasury stock" method)
representing shares issuable upon
exercise of employee stock options and 2,985 2,959 -
warrants
Less:
Twenty percent limit on repurchase (1,433) (1,404) -
----- ----- -----
Weighted average number of shares used
in calculation of fully-diluted income
per share 8,632 8,556 6,971
===== ===== =====
Fully-diluted income per common share $ .67 $ .60 $ .18
===== ===== =====
Industry Segment Information
----------------------------
The Company's single business segment, consulting, provides
engineering and architectural services to local and state
governments, the Federal government and the private sector. The
Company's services are primarily utilized for planning, design
and program and construction management of infrastructure and
environmental projects.
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Page 29 of 106 <PAGE>
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,
--------------------------------------------
1995 1994 1993
------------ ------------ ------------
(In thousands)
Local and state
agencies $ 99,871 56% $ 88,207 54% $ 80,350 55%
Federal agencies 58,751 33 59,611 36 48,713 33
Private business 21,147 11 16,270 10 16,698 12
------- --- ------- --- ------- ---
Total $179,769 100% $164,088 100% $145,761 100%
======= === ======= === ======= ===
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
$92,523,000 was eliminated against additional paid-in capital.
The balance in retained earnings at October 31, 1995 represents
the accumulated net earnings arising subsequent to the date of
the quasi-reorganization.
NOTE 3. ACQUISITION
-----------
During the year ended October 31, 1995, the Company acquired
E.C. Driver & Associates, Inc. ("ECD") for an aggregate purchase
price of $3,596,000, and the assumption of ECD's liabilities
totaling $1,356,000. This acquisition was accounted for by the
purchase method of accounting and the net assets of ECD are
included in the Company's consolidated balance sheet as of
October 31, 1995 based upon its 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
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Page 30 of 106 <PAGE>
over the estimated fair value of the assets acquired (goodwill)
of $3,596,000 will be amortized on a straight line basis over
twenty years.
NOTE 4. PROPERTY AND EQUIPMENT
----------------------
Property and equipment consists of the following:
October 31,
-------------------
1995 1994
---- ----
(In thousands)
Furniture and fixtures $ 2,713 $ 3,192
Equipment 9,074 7,764
Leasehold improvements 887 866
------- -------
12,674 11,822
Less: Accumulated
depreciation and
amortization (6,839) (6,353)
------- -------
Net property and
equipment $ 5,835 $ 5,469
======= =======
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,
1995 and 1994 was $3,129,000 and $2,507,000, respectively.
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Page 31 of 106 <PAGE>
NOTE 6. INCOME TAXES
------------
The components of income tax expense applicable to the
operations each year are as follows:
Years Ended October 31,
--------------------------
1995 1994 1993
---- ---- ----
(In thousands)
Current:
Federal $1,325 $ 150 $ 70
State and local 590 230 85
----- ----- -----
Subtotal 1,915 380 155
----- ----- -----
Deferred:
Federal (385) - -
State and local (230) 70 (15)
----- ----- -----
Subtotal (615) 70 (15)
----- ----- -----
Total tax provision $1,300 $ 450 $ 140
===== ===== =====
As of October 31, 1995, the Company has available net
operating loss ("NOL") carryforwards for Federal income tax
purposes and financial statement purposes of $6,750,000. The NOL
utilization is limited to $750,000 per year.
While the Company has available NOL carryforwards which
partially off-set otherwise taxable income 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.
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Page 32 of 106 <PAGE>
The significant components of the Company's deferred tax
assets and liabilities as of October 31, 1995 are as follows:
Deferred tax assets/(liabilities) - due to:
(In thousands)
1995 1994
---- ----
State taxes $ 201 $ 78
Allowance for doubtful accounts 202 183
Other accruals and reserves 3,073 3,155
Net operating loss 2,302 3,135
Alternative minimum tax credit - 360
----- -----
Total 5,778 6,911
Valuation allowance (3,907) (5,166)
----- -----
Deferred tax asset 1,871 1,745
----- -----
Other deferred gain and unamortized
bond premium (1,826) (1,979)
Depreciation & amortization (45) -
----- -----
Deferred tax liability (1,871) (1,979)
----- -----
Net deferred tax liability $ -0- $ (234)
===== =====
The net change in the total valuation allowance for the
year ended October 31, 1995 was a decrease of $1,259,000 due to
the utilization of net operating losses, AMT credits 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:
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Page 33 of 106 <PAGE>
Years Ended October 31,
--------------------------
1995 1994 1993
---- ---- ----
(In thousands)
Federal income tax expense based
upon Federal statutory tax rate
of 34% $2,160 $1,665 $ 490
Nondeductible goodwill
amortization 160 160 185
Nondeductible expenses 217 120 60
NOL carryforwards utilized (1,142) (1,693) (640)
AMT credit utilized (333) - -
State taxes, net of Federal
benefit 238 198 45
----- ----- -----
Total taxes provided $1,300 $ 450 $ 140
===== ===== =====
NOTE 7. LONG-TERM DEBT
--------------
Long-term debt consists of the following:
October 31,
1995 1994
---- ----
(In thousands)
Third party:
6-1/2% Convertible Subordinated Debentures
due 2012 (net of bond issue costs of $41
and $44) $2,104 $2,101
8-5/8% Senior Subordinated Debentures due
2004 (net of discount and bond issue costs
of $3,830 and $3,969) (effective interest
rate on date of restructuring was 25%) 2,625 2,486
Obligations under capital leases 3,406 2,721
----- -----
8,135 7,308
Less: Current maturities of capital leases 931 670
----- -----
$7,204 $6,638
===== =====
Related parties:
January Notes (net of discount of $1,205
and $1,368) (effective interest rate on
date of restructuring was 12%) $2,795 $2,632
===== =====
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Page 34 of 106 <PAGE>
Credit Agreement
----------------
At October 31, 1995, the Company's unsecured line of credit
agreement with Wells Fargo Bank, N.A. (the "Bank") provides for
advances up to $15,000,000 and expires April 30, 1997.
Borrowings on the line of credit bear interest at the option of
the Company at a per annum rate equal to either the Bank's prime
rate, or 1.5% over the interest rate offered to the Bank in the
interbank Eurodollar market, adjusted for the Bank's Eurodollar
reserve requirements. At October 31, 1995, the Company had
outstanding letters of credit totalling $386,000 which reduced
the amount available to the Company under its unsecured line of
credit to $14,614,000.
To finance the cash portion of the proposed Greiner
acquisition (discussed more fully in Item 1 - Business and Note
16 - Subsequent Event), the Company is negotiating to obtain a
$20,000,000 senior secured revolving credit facility expiring
three years from the closing of the loan and a $50,000,000 senior
secured term loan maturing six years from the closing of the
loan. The senior secured revolving credit facility would replace
the current unsecured line of credit.
Under the unsecured line of credit agreement the Company is
required to satisfy certain financial and non-financial
covenants. The declaration of dividends, except stock dividends,
is restricted by the terms of the Company's credit agreement with
the Wells Fargo Bank, National Association (the "Bank") and the
indenture governing the 8-5/8% Senior Subordinated Debentures due
2004 (the "8-5/8 Indenture"), described below. The Company was in
compliance with all financial and non-financial covenants related
to the unsecured line of credit agreement at October 31, 1995 and
to the secured line of credit agreement October 31, 1994.
Related Parties
---------------
At October 31, 1995, the Company had fully drawn $4,000,000
under its line of credit with Richard C. Blum & Associates, L.P.
("RCBA"). This indebtedness is represented by the January Notes,
which bear interest at 6-1/2% per annum, are subordinate only to
the Bank line of credit and are due November 1, 2000. RCBA,
through various partnerships, beneficially owns approximately 22%
of the Company's common shares (approximately 34% assuming
exercise of additional warrants) outstanding at October 31, 1995.
Richard C. Blum, a director of the Company, is also Chairman of
RCBA.
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Page 35 of 106 <PAGE>
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. Both
the 6-1/2% Convertible Subordinated Debentures and the 8-5/8%
Senior Subordinated Debentures are subordinate to all debt to
RCBA and the Bank.
The amounts of long-term debt outstanding at October 31,
1995 maturing in the next five years are as follows:
(In thousands)
1996 $ -
1997 -
1998 -
1999 -
2000 -
Thereafter $12,600
Amounts payable under capitalized lease agreements are
excluded from the above table.
Obligations under Leases
------------------------
Total rental expense included in operations for operating
leases for the fiscal years ended October 31, 1995, 1994 and 1993
amounted to $5,717,000, $5,275,000 and $4,938,000, respectively.
Certain of the lease rentals are subject to renewal options and
escalation based upon property taxes and operating expenses.
These operating lease agreements expire at varying dates through
2005.
Obligations under non-cancelable lease agreements are as
follows:
-34-
Page 36 of 106 <PAGE>
Capital Operating
Leases Leases
------- ---------
(In thousands)
1996 $ 1,253 $ 5,384
1997 1,137 4,346
1998 833 3,355
1999 643 2,584
2000 440 1,994
Thereafter 63 3,311
------ ------
Total minimum lease payments 4,369 $20,974
======
Less amounts representing
interest 963
------
Present value of net minimum
lease payments $ 3,406
======
NOTE 8. COMMITMENTS AND CONTINGENCIES
-----------------------------
Currently, the Company has $31,000,000 per occurrence and
aggregate commercial general liability insurance coverage. The
Company is also insured for professional errors and omissions
("E&O") and pollution liability ("EIL") claims with an aggregate
limit of $25,000,000 after a self-insured deductible of $500,000.
The E&O and EIL coverages are on a "claims made" basis, covering
only claims actually made during the policy period currently in
effect. Thus, if the Company does not continue to maintain this
policy, it will have no coverage under the policy for claims made
after its termination date even if the occurrence was during the
term of coverage. It is the Company's intent to maintain this
type of coverage, but there can be no assurance that the Company
can maintain its existing coverage, that claims will not exceed
the amount of insurance coverage or that there will not be claims
relating to prior periods that were subject only to "claims made"
coverage.
Various legal proceedings are pending against the Company or
its subsidiaries alleging breaches of contract or negligence in
connection with the performance of professional services. In
some actions punitive or treble damages are sought which
substantially exceed the Company's insurance coverage. The
Company's management does not believe that any of such
proceedings will have a material adverse effect on the
consolidated financial position and operations of the Company.
NOTE 9. CAPITAL STOCK
-------------
Declaration of dividends, except Common Stock dividends, is
restricted by the unsecured line of credit agreement and the
8-5/8 Indenture. Further, declaration of dividends may be
precluded by existing Delaware law.
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Page 37 of 106 <PAGE>
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 1987 Restricted Stock Plan (the "Plan") provides for
grants of up to 16,537 shares of Common Stock to key employees of
the Company and its subsidiaries. An employee selected to
receive shares under the Plan will not be required to pay any
consideration for the shares. Shares issued to an employee are
subject to forfeiture in the event that the employment of the
employee terminates for any reason other than death. The
forfeiture restrictions lapse with respect to portions of the
grant over a five-year period subsequent to the grant date. As
of October 31, 1995, 6,872 restricted shares have been granted.
The 1979 Stock Option Plan (the "1979 Plan") provided for
grants of options to purchase shares of Common Stock to
directors, officers and key employees of the Company and its
subsidiaries at prices and for periods (not to exceed ten years)
as determined by the Board of Directors. The 1979 Plan also
provided for the granting of Stock Appreciation Rights and
incentive stock options. The 1979 Plan expired in February 1989,
and no further options or rights may be granted under the 1979
Plan.
On October 20, 1988, the stockholders approved a replacement
option program pursuant to which non-management members of the
Board of Directors granted replacement stock options to selected
employees, exercisable at then current market prices. The
selected employees then exchanged their outstanding options for
new options covering two shares for each three shares covered by
the options being replaced. Options to purchase 16,561 shares
were exchanged for pre-existing options.
On April 27, 1989, the stockholders approved the 1989 Stock
Option and Rights Plan (the "1989 Plan"). The 1989 Plan provides
for the grant of options to purchase 50,000 shares of Common
Stock to directors, officers and key employees of the Company and
its subsidiaries at prices and for periods (not to exceed ten
years) as determined by the Board of Directors. The 1989 Plan
also provides for the granting of Stock Appreciation Rights. No
options have been granted under the 1989 Plan.
On March 26, 1991, the stockholders approved the 1991 Stock
Incentive Plan (the "1991 Plan"). The 1991 Plan provides for the
grant not to exceed 1,500,000 Restricted Shares, Stock Units and
Options, plus the number of shares of Common Stock remaining
available for awards under the 1987 Plan (9,665) and the 1989
Plan (50,000) to key employees of the Company and its subsidi-
aries at prices and for periods as determined by the Board of
Directors. The 1991 Plan prohibits granting new options under
-36-
Page 38 of 106 <PAGE>
the 1987 Plan and the 1989 Plan. As of October 1995, 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. The ESP Plan
was suspended effective September 19, 1988. On March 24, 1992,
the stockholders approved reinstating the ESP Plan. Employees
purchased 46,610 shares under the ESP Plan in fiscal 1995 and
36,195 shares in fiscal 1994.
On February 21, 1990, the Company issued warrants to
purchase 1,819,148 shares of Common Stock at a purchase price of
$4.34 per share which expire on February 14, 1997.
A summary of the number of stock options granted under the
1979, 1989 and 1991 Plans is as follows:
October 31, 1995
------------------------
Shares Per Share<F1>
Number of options: ------ -------------
Outstanding at year end 1,166,324 $3.12 - 31.25
Exercisable at year end 768,166 $3.12 - 31.25
Exercised during the year 137,600 $3.12 - $3.12
Available for grant at year end 239,665 -
October 31, 1994
------------------------
Shares Per Share<F1>
Number of options: ------ -------------
Outstanding at year end 1,139,964 $3.12 - 31.25
Exercisable at year end 790,967 $3.12 - 31.25
Exercised during the year - -
Available for grant at year end 413,765 -
October 31, 1993
------------------------
Shares Per Share<F1>
Number of options: ------ -------------
Outstanding at year end 856,445 $3.12 - 31.25
Exercisable at year end 689,275 $3.12 - 31.25
Exercised during the year - -
Available for grant at year end 705,565 -
[FN]
<F1> Reflects lowest and highest exercise price.
-37-
Page 39 of 106 <PAGE>
NOTE 10. SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION
-------------------------------------------------
Cash paid during the period for:
Years Ended October 31,
----------------------
1995 1994 1993
---- ---- ----
(In thousands)
Interest $ 891 $1,301 $1,170
Income taxes $1,358 $ 499 $ 518
The Company purchased all of the capital stock of ECD for
$3,596,000. 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 $ - $ -
===== ===== =====
There were no significant non-cash investing or financing
activities in fiscal 1994 and 1993.
NOTE 11. 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 $643,000, $551,000 and
$486,000 were made to the plan in fiscal 1995, 1994 and 1993,
respectively.
-38-
Page 40 of 106 <PAGE>
NOTE 12. VALUATION AND ALLOWANCE ACCOUNTS
--------------------------------
Additions Deduc-
Charged to tions
Beginning Costs and from Ending
Balance Expenses Reserves Balance
------- -------- -------- -------
(In thousands)
October 31, 1995
Allowances for losses
and doubtful
collections $1,141 $ 442 $ 313 $1,270
October 31, 1994
Allowances for losses
and doubtful
collections $1,081 $ 322 $ 262 $1,141
October 31, 1993
Allowances for losses
and doubtful
collections $ 768 $ 603 $ 290 $1,081
NOTE 13. RELATED PARTY TRANSACTIONS
--------------------------
Interest paid to related parties in connection with the
January Notes was $194,000, $363,000 and $254,000 in fiscal 1995,
1994 and 1993, respectively. (See Note 7 - Long-Term Debt).
The Company has agreements for business consulting services
to be provided by RCBA and Richard C. Blum, a Director of the
Company. Under these agreements, the Company paid $90,000 and
$60,000 to RCBA and Richard C. Blum, respectively, for fiscal
1995, 1994 and 1993. Richard C. Blum also received an additional
$25,000, $24,000 and $19,000 for his services as a Director of
the Company in fiscal 1995, 1994 and 1993, respectively. In
addition, during fiscal 1993, URS Consultants, Inc., a wholly-
owned subsidiary of the Company ("URSC"), performed an
underground storage tank remediation investigation on behalf of
RCBA. Such investigation was completed by October 28, 1993, and
on November 19, 1993, RCBA, Inc. paid URSC $70,000 in gross
revenues.
NOTE 14. 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.
-39-
Page 41 of 106 <PAGE>
NOTE 15. SELECTED QUARTERLY FINANCIAL DATA (UNAUDITED)
---------------------------------------------
Selected quarterly financial data for fiscal 1995 and 1994
is summarized as follows:
Fiscal 1995 Quarters Ended
-------------------------------------
Jan. 31 Apr. 30 July 31 Oct. 31
------- ------- ------- -------
(In thousands, except per share data)
Revenues $40,307 $44,810 $44,456 $50,196
Gross profit 15,878 17,688 18,052 19,306
Operating income 1,356 1,625 2,060 2,666
Net income $ 800 $ 1,051 $ 1,336 $ 1,869
Income per share:
Primary $ .11 $ .15 $ .18 $ .24
====== ====== ====== ======
Fully diluted $ .11 $ .15 $ .18 $ .23
====== ====== ====== ======
Weighted average number
of shares 8,528 8,725 8,731 8,696
====== ====== ====== ======
Fiscal 1994 Quarters Ended
-------------------------------------
Jan. 31 Apr. 30 July 31 Oct. 31
------- ------- ------- -------
(In thousands, except per share data)
Revenues $36,756 $40,520 $41,333 $45,479
Gross profit 13,928 15,769 15,878 16,013
Operating income 1,050 1,484 1,450 2,149
Net income $ 651 $ 1,016 $ 985 $ 1,787
Income per share:
Primary $ .10 $ .14 $ .14 $ .23
====== ====== ====== ======
Fully diluted $ .09 $ .14 $ .14 $ .23
====== ====== ====== ======
Weighted average number
of shares 8,280 8,568 8,571 8,567
====== ====== ====== ======
Operating income represents continuing operations before
interest income and interest expense.
-40-
Page 42 of 106 <PAGE>
NOTE 16. SUBSEQUENT EVENT
----------------
Subsequent to the Company's year-end, a letter of intent was
signed to acquire Greiner Engineering, Inc. for a combination
cash and stock transaction aggregating $63.4 million in cash, and
1.4 million shares of the Company's Common Stock. Completion of
this transaction is subject to a number of conditions including a
satisfactory due diligence review, mutual approval of a formal
purchase agreement, and shareholder, regulatory and other
approvals. The completion of this transaction is anticipated by
April, 1996. The completion of the cash portion of this
acquisition will necessitate financing via a revolving credit
facility and senior secured term loan, increasing the Company's
debt and interest expense. The Company is negotiating a banking
agreement which secures adequate and appropriate financing for
this acquisition as well as other future growth opportunities.
ITEM 9. CHANGES AND DISAGREEMENTS WITH ACCOUNTANTS ON
ACCOUNTING AND FINANCIAL DISCLOSURE
---------------------------------------------
None.
-41-
Page 43 of 106 <PAGE>
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 26, 1996, 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 26, 1996.
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 26, 1996.
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
----------------------------------------------
Incorporated by reference from Item 8, Financial Statement
and Supplementary Data, Note 7 -- Long-Term Debt and Note 13 --
Related Party Transactions.
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Page 44 of 106 <PAGE>
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, 1995 and October 31, 1994
Consolidated Statements of Operations
For the years ended October 31, 1995, 1994 and 1993
Consolidated Statements of Changes in Stockholders'
Equity
For the years ended October 31, 1995, 1994 and 1993
Consolidated Statements of Cash Flows
For the years ended October 31, 1995, 1994 and 1993
Notes to Consolidated Financial Statements
(a)(2) Financial Statement Schedules
Schedules are omitted because they are not applicable, not
required or because the required information is included in the
Consolidated Financial Statements or Notes thereto.
(a)(3) Exhibits
3.1 Certificate of Incorporation of the Company, filed as
Exhibit 3.1 to the Annual Report on Form 10-K for the
fiscal year ended October 31, 1991 ("1991 Form 10-K"),
and incorporated herein by reference.
3.2 By-laws of the Company as amended, filed as Exhibit 3.2
to the Annual Report on Form 10-K for the fiscal year
ended October 31, 1992 ("1992 Form 10-K"), and
incorporated herein by reference.
4.1 Indenture, dated as of February 15, 1987, between the
Company and First Interstate Bank of California,
Trustees, relating to $57.5 million of the Company's
6-1/2% Convertible Subordinated Debentures Due 2012,
filed as Exhibit 4.10 to the Company's Registration
Statement on Form S-2 (Commission File No. 33-11668)
and incorporated herein by reference.
4.2 Amendment Number 1 to Indenture governing 6-1/2%
Convertible Subordinated Debentures due 2012, dated
-43-
Page 45 of 106 <PAGE>
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 as amended and
restated, filed as Exhibit 10.3 to the 1991 Form 10-K
and incorporated herein by reference.
10.4 1991 Stock Incentive Plan of the Company as amended,
filed as Exhibit 10.4 to the 1992 Form 10-K and
incorporated herein by reference.
10.5 Selected Executive Deferred Compensation Plan of the
Company, filed as Exhibit 10.3 to the 1990 Form S-1 and
incorporated herein by reference.
10.6 1995 Incentive Compensation Plan of the Company. FILED
HEREWITH.
10.7 1995 Incentive Compensation Plan of URS Consultants,
Inc. FILED HEREWITH.
-44-
Page 46 of 106 <PAGE>
10.8 Stock Appreciation Rights Agreement, dated July 18,
1989, between the Company and Irwin L. Rosenstein,
filed as Exhibit 10.13 to the 1990 Form S-1 and
incorporated herein by reference.
10.9 Stock Appreciation Rights Agreement, dated 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.
10.10 Stock Appreciation Rights Agreement, dated August 23,
1989, between the Company and Martin S. Tanzer, filed
as Exhibit 10.11 to the 1991 Form 10-K and incorporated
herein by reference.
10.11 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.
10.11a Amendment to Employment Agreement, dated October 11,
1994, between URS Consultants, Inc., and Irwin L.
Rosenstein, filed as Exhibit 10.12(a) to the 1994
Form 10-K 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 August 1, 1991, between URS
Consultants, Inc. and Martin S. Tanzer, filed as
Exhibit 10.15 to the 1991 Form 10-K and incorporated
herein by reference.
10.13a Amendment to Employment Agreement, dated October 11,
1994, between URS Consultants, Inc., and Martin S.
Tanzer, filed as Exhibit 10.15(a) to the 1994 Form 10-K
and incorporated herein by reference.
10.14 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.
10.15 Third Restated Credit Agreement, dated as of May 12,
1995, between Wells Fargo Bank, N.A., the Company, and
URS Consultants, Inc., filed as Exhibit 10.11 to the
1995 second quarter Form 10-Q and incorporated herein
by reference.
-45-
Page 47 of 106 <PAGE>
10.16 Letter Agreement, dated May 31, 1990, among the Company
and certain subsidiaries and certain affiliates of
Richard C. Blum & Associates, Inc., amending the
Thortec Entities Credit and Security Agreement, filed
as Exhibit 10.21 to the 1990 Form S-1 and incorporated
herein by reference.
10.17 Thortec Entities Credit and Security Agreement, dated
January 30, 1989, between the Company and certain
subsidiaries and certain affiliates of Richard C. Blum
& Associates, Inc., filed as Exhibit 10.54 to the 1988
Form 10-K, and incorporated herein by reference.
10.18 First, Second, Third and Fourth Amendments to the
Thortec Entities Credit and Security Agreement, dated
January 30, 1989, between the Company and certain
entities managed or advised by Richard C. Blum &
Associates, Inc., filed as Exhibit 10.23 to the 1990
Form S-1 and incorporated herein by reference.
10.19 Fifth, Sixth and Seventh Amendments to the Thortec
Entities Credit and Security Agreement, dated
January 30, 1989, between the Company and certain
entities managed or advised by Richard C. Blum &
Associates, Inc., filed as Exhibit 10.21 to the 1992
Form 10-K and incorporated herein by reference.
10.20 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.
10.21 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.
10.22 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.
10.23 Warrant Agreement, dated February 21, 1990, between the
Company, Wells Fargo Bank, N.A. and the Purchasers
named therein, filed as Exhibit 10.24 to the 1990
Form S-1 and incorporated herein by reference.
10.24 URS Corporation Warrant Agreement, dated February 21,
1990, issued to BK Capital Partners I, filed as
Exhibit 10.25 to the 1990 Form S-1 and incorporated
herein by reference.
-46-
Page 48 of 106 <PAGE>
10.25 URS Corporation Warrant Agreement, dated February 21,
1990, issued to BK Capital Partners II, filed as
Exhibit 10.26 to the 1990 Form S-1 and incorporated
herein by reference.
10.26 URS Corporation Warrant Agreement, dated February 21,
1990, issued to BK Capital Partners III, filed as
Exhibit 10.27 to the 1990 Form S-1 and incorporated
herein by reference.
10.27 URS Corporation Warrant Agreement, dated February 21,
1990, issued to Executive Life Insurance Company, filed
as Exhibit 10.28 to the 1990 Form S-1 and incorporated
herein by reference.
10.28 URS Corporation Warrant Agreement, dated February 21,
1990, issued to Wells Fargo Bank, N.A., filed as
Exhibit 10.29 to the 1990 Form S-1 and incorporated
herein by reference.
10.29 URS Corporation Warrant Agreement, dated February 21,
1990, issued to Wells Fargo Bank, N.A., filed as
Exhibit 10.30 to the 1990 Form S-1 and incorporated
herein by reference.
10.30 Post-Affiliation Agreement, dated July 19, 1989,
between the Company and URS International, Inc., filed
as Exhibit 10.42 to the 1989 Form 10-K and incorporated
herein by reference.
10.31 Contract between URS Consultants, Inc. and the U.S.
Department of the Navy (No N62474-89-R-9295) dated
June 6, 1989, filed as Exhibit 10.34 to the 1991
Form 10-K and incorporated herein by reference.<F*>
10.32 Form of Indemnification Agreement dated as of May 1,
1992 between the Company and each of Messrs. Ainsworth,
Blum, Cashin, Koffel, Madden, Praeger, Rosenstein and
Walsh, and Dr. Tanzer, filed as Exhibit 10.34 to the
1992 Form 10-K and incorporated herein by reference.
10.33 Form of Indemnification Agreement dated as of March 22,
1994 between the Company and Admiral Foley and
Mr. Der Marderosian, filed as Exhibits 10.35 and 10.36
to the 1994 Form 10-K and incorporated herein by
reference.
10.34 Letter of Intent and Transaction Term Sheet dated
December 3, 1995, filed as Exhibit 2(a) to the Form 8-K
filed on December 5, 1995.
10.35 Severance Agreement, dated as of November 22, 1993,
between the Company and Joseph Masters. FILED HEREWITH.
-47-
Page 49 of 106 <PAGE>
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 certain Directors and Officers.
FILED HEREWITH.
27 Financial Data Schedule. FILED HEREWITH.
(b)(1) Reports on Form 8-K
No reports were filed on Form 8-K during the fourth quarter
of the fiscal year ended October 31, 1995.
[FN]
<F*> Note: Certain material contained in this exhibit and
indicated by an asterisk has been omitted and
filed separately with the Commission pursuant to
an application for confidential treatment under
Rule 24b-2 promulgated under the Securities
Exchange Act of 1934, as amended, which was
granted by the Commission effective April 30,
1992.
-48-
Page 50 of 106 <PAGE>
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the
Securities Exchange Act of 1934, URS Corporation, the Registrant,
has duly caused this report to be signed on its behalf by the
undersigned, thereunto duly authorized.
URS Corporation
(Registrant)
By /s/ Kent P. Ainsworth
-----------------------------------
Kent P. Ainsworth
Vice President and
Chief Financial Officer
Dated: January 3, 1996
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 3, 1996
-------------------------- of Directors and
(Martin M. Koffel) Chief Executive
Officer
/s/ Kent P. Ainsworth President, Chief January 3, 1996
-------------------------- Financial Officer
(Kent P. Ainsworth) Principal Accounting
Officer and Secretary
IRWIN L. ROSENSTEIN* Director January 3, 1996
--------------------------
(Irwin L. Rosenstein)
RICHARD C. BLUM* Director January 3, 1996
--------------------------
(Richard C. Blum)
EMMET J. CASHIN, JR.* Director January 3, 1996
--------------------------
(Emmet J. Cashin, Jr.)
-49-
Page 51 of 106 <PAGE>
RICHARD Q. PRAEGER* Director January 3, 1996
--------------------------
(Richard Q. Praeger)
WILLIAM D. WALSH* Director January 3, 1996
--------------------------
(William D. Walsh)
RICHARD B. MADDEN* Director January 3, 1996
--------------------------
(Richard B. Madden)
ARMEN DER MARDEROSIAN* Director January 3, 1996
--------------------------
(Armen Der Marderosian)
ADM. S. ROBERT FOLEY, JR., Director January 3, 1996
USN (RET.)*
--------------------------
(Adm. S. Robert Foley, Jr.,
USN (Ret.))
*By
/s/ Kent P. Ainsworth
------------------------------------
(Kent P. Ainsworth, Attorney-in-fact)
-50-
Page 52 of 106 <PAGE>
EXHIBIT INDEX
No. Description Page
---------------------------------------------------------------
10.6 1995 Incentive Compensation Plan of 54
the Company
10.7 1995 Incentive Compensation Plan of 72
URS Consultants, Inc.
10.35 Severance Agreement, dated as of 97
November 22, 1993, between the Company
and Joseph Masters
21.1 Subsidiaries of the Company 102
23.1 Consent of Coopers & Lybrand L.L.P. 104
24.1 Powers of Attorney of certain Directors 105
and Officers
27 Financial Data Schedule 106
Page 53 of 106 <PAGE>
EXHIBIT 10.6
URS CORPORATION
1995 INCENTIVE
COMPENSATION PLAN
Page 54 of 106 <PAGE>
TABLE OF CONTENTS
-----------------
I. PURPOSE OF THE PLAN
II. HOW AWARDS ARE EARNED UNDER THE PLAN
III. OTHER PLAN PROVISIONS
IV. DEFINITIONS
V. EXAMPLES OF PLAN OPERATION
Page 55 of 106 <PAGE>
I. PURPOSE OF THE PLAN
Page 56 of 106 <PAGE>
I.1 PURPOSE
-------
The URS Corporation ("URS") 1995 Incentive Compensation Plan (the
"Plan") is intended to provide incentive compensation to
individuals who make an important contribution to URS's financial
performance. Specific Plan objectives are to:
- Focus key Employees on achieving specific financial
targets;
- Reinforce a team orientation;
- Provide significant award potential for achieving
outstanding performance; and
- Enhance the ability of URS to attract and retain highly
talented and competent individuals.
I-1
Page 57 of 106 <PAGE>
II. HOW AWARDS ARE EARNED UNDER THE PLAN
Page 58 of 106 <PAGE>
II.1 GENERAL PLAN DESCRIPTION
------------------------
The Plan provides the opportunity for key Employees of URS to
receive cash Awards based on a combination of URS's and
individual performance.
Here is an overview of how the Plan works. In general, certain
Employees will be selected to participate in the Plan at the
beginning of or during the Plan Year. These individuals are
referred to as "Designated Participants." Upon selection to
participate in the Plan, each Designated Participant will be
assigned a Target Award Percentage. This Target Award
Percentage, multiplied by the Participant's Base Salary earned
during the Plan Year, will equal the Participant's Target Award.
This Target Award represents the amount that is expected to be
paid to a Designated Participant if certain financial Performance
Objectives for URS have been fully met.
In addition, funds will be set aside for discretionary Awards to
selected other Employees (referred to as "Non-designated
Participants"), who have demonstrated outstanding individual
performance during the Plan Year. It is expected that the amount
available to Non-designated Participants for the 1995 Plan Year
will be $25,000, assuming that URS meets its financial
objectives.
The sum of all Target Awards for Designated Participants and
expected payouts to Non-designated Participants will equal the
Target Bonus Pool. The Actual Bonus Pool will vary from the
Target Pool upward or downward based on URS's actual performance
in relationship to its Performance Objectives.
Actual Awards to Designated Participants and actual funds
available for distribution to Non-designated Participants will
vary from target amounts based on the relationship between the
Actual Bonus Pool and the Target Bonus Pool.
A detailed description of how the Plan works is presented in the
following sections of this document.
II.2 DESIGNATED AND NON-DESIGNATED PARTICIPANTS
------------------------------------------
Plan participation is extended to selected Employees who, in the
opinion of the Chief Executive Officer ("CEO") of URS, have the
opportunity to significantly impact the annual operating success
of the Company. These Employees are the Designated Participants
and will be notified in writing of their selection to participate
in the Plan. This notification letter, for all Participants
except the CEO of URS, will be signed by the CEO of URS. The
letter of participation for the CEO will be signed by the
Chairman of the Compensation/Option Committee ("Committee") of
URS's Board of Directors.
II-1
Page 59 of 106 <PAGE>
In addition to the Designated Participants, there may be a group
of other Employees who are selected to receive Awards based on
their outstanding individual performance during the Plan Year.
These other Employees are the Non-designated Participants and
will not be selected until the completion of the Plan Year. The
selection of Non-designated Participants will be determined by
the CEO of URS at his sole discretion.
II.3 TARGET AWARD PERCENTAGES FOR DESIGNATED PARTICIPANTS
----------------------------------------------------
Each Designated Participant will be assigned a Target Award
Percentage. This Target Award Percentage, when multiplied by the
individual's Base Salary earned during the Plan Year, represents
the anticipated payout to a Designated Participant if URS's
Performance Objectives are met.
Each Designated Participant's Target Award Percentage will be
included in the letter of notification mentioned in Section II.2.
II.4 TARGET BONUS POOL
-----------------
The Target Bonus Pool ("Target Pool") will equal the sum of all
Target Awards for Designated Participants plus an amount set
----
aside for possible distribution to Non-designated Participants.
For 1995, the Target Bonus Pool equals $355,000.
II.5 URS PERFORMANCE OBJECTIVES
--------------------------
For 1995, URS's Performance Objectives are focused on the need to
reach the Company's Target for Net Income. The Performance
Objectives and weightings for the 1995 Plan Year are as follows:
URS Corporation Performance Objectives and Weightings
Performance Measure Weighting Performance Objective
------------------- --------- ---------------------
Net Income ($000s) 100% $4,800
Net Income will be calculated after all URS and URS Consultants
----- ---
("URSC") bonuses are accrued and assumed to have been paid.
II.6 RELATIONSHIP BETWEEN PERFORMANCE AND THE ACTUAL BONUS POOL
----------------------------------------------------------
The Actual Bonus Pool ("Actual Pool") will vary from the Target
Pool based on the relationship between the actual performance of
URS and the Performance Objectives. The Actual Pool will vary in
relationship to the Target Pool based on the following table:
II-2
Page 60 of 106 <PAGE>
Relationship Between URS Performance and the
Actual Bonus Pool as a % of the Target Bonus Pool <F1>
Actual
Performance as a Net Income Actual Pool
% of Performance Actual as a % of
Objective Performance Target Pool
--------- ----------- -----------
(%) ($000's) (%)
>= 125% >= $ 6,000 200%
100% $ 4,800 100%
75% $ 3,600 30%
< 75% < $ 3,600 0%
[FN]
<F1> The calculation of the Actual Award as a percent of Target
will be interpolated for performance between discrete points
on a straight-line basis.
Based on the table above, the Actual Award will vary depending
upon actual performance in relation to Target Net Income.
II.7 ACTUAL AWARDS TO DESIGNATED AND NON-DESIGNATED PARTICIPANTS
-----------------------------------------------------------
Actual Awards to Designated Participants will vary from Target
levels based on the relationship between the Actual Bonus Pool
and the Target Pool.
After allocating Actual Awards to Designated Participants, the
remaining funds in the Actual Pool will be available for
allocation to Non-designated Participants.
Actual Awards distributed to Non-designated Participants will be
determined on a discretionary basis by the CEO. URS is under no
obligation to distribute any or all of the Actual Pool. The sum
of all Awards to Non-designated Participants may not exceed the
amount available in the Actual Pool after Actual Awards have been
allocated to Designated Participants.
II-3
Page 61 of 106 <PAGE>
EXAMPLE OF INTERPOLATION CALCULATION
------------------------------------
To interpolate the Actual Award based on performance, apply the
appropriate formula for actual performance above or below the
Performance Objective. In all cases, solve for "X".
- For performance above Objective:
(Act. Perf. - Perf. Obj.) X
------------------------- = -------------------------------
(Max. Perf. - Perf. Obj.) (Max. Award % - Target Award %)
- For performance below Objective:
(Act. Perf. - Perf. Obj.) X
------------------------- = -------------------------------
(Min. Perf. - Perf. Obj.) (Min. Award % - Target Award %)
- Once you have solved for "X", add X to 100%.
Below is a hypothetical example:
EXAMPLE OF ACTUAL BONUS POOL CALCULATION
The following example illustrates the weighting of the
Performance Objectives, and calculates the Actual Bonus Pool:
Hypothetical Assumptions:
- Target Bonus Pool = $ 355,000
- Net Income Objective (after bonus accrual) = $4,800,000
- Actual Net Income (after bonus accrual) = $4,600,000
Interpolation:
- Net Income Performance = 88.3%
Actual Bonus Pool = $ 313,000
II-4
Page 62 of 106 <PAGE>
III. OTHER PLAN PROVISIONS
Page 63 of 106 <PAGE>
III.1 AWARD PAYMENT
-------------
Assessment of actual performance and payout of Awards will be
subject to the completion of the 1995 Year-end independent audit.
The Actual Award earned, up to and in excess of the Target Award
level, will be paid to the Participant (or the Participant's
heirs in the case of death) in cash within 30 days of the
completion of the independent audit. Payroll and other taxes
will be withheld as required by law.
III.2 EMPLOYMENT
----------
In order to receive an Award under the Plan, a Participant must
be employed by URS or an Affiliate at the end of the Plan Year,
except as otherwise noted below. Selection for participation in
the Plan does not convey any employment rights. Terms and
conditions of Participants' employment agreements with URS, if
any, supersede the terms and conditions of the Plan.
III.3 TERMINATION
-----------
If Termination of a Designated Participant's employment occurs
during the Plan Year by reason of death, permanent disability, or
retirement, the Designated Participant (or the Participant's
heirs in the case of death) will be eligible to receive a pro-
rata Award based on the time employed as a Participant and the
Objectives achieved for the Plan Year. Participants who have
earned an Award on this basis will receive payment on the same
schedule as other Plan Participants.
A Participant whose employment with URS or its Affiliates is
terminated prior to the end of the Plan Year for any other reason
(whether voluntarily or involuntarily) will forfeit the
opportunity to earn an Award under the Plan, except as otherwise
provided for.
III.4 OTHER PRO-RATA AWARDS
---------------------
Individuals who have been selected during the Year for Plan
participation and who have a minimum of three months as a
Designated Participant will be eligible to receive a pro-rata
Award based on the time employed as a Participant and the
Objectives achieved for the Plan Year, provided that the
Participant is employed by URS or an Affiliate at Year-end.
III.5 PLAN FUNDING
------------
Estimated payouts for the Plan will be accrued monthly and
charged as an expense against the income statement of URS. At
the end of each fiscal quarter, the estimated Actual Awards under
III-1
Page 64 of 106 <PAGE>
the Plan will be evaluated based on actual performance to date.
The monthly accrual rate will then be adjusted so that the cost
of the Plan is fully accrued at Year-end.
Accrual of Awards will not imply vesting of any individual Awards
to Participants.
III.6 PLAN ADMINISTRATION
-------------------
Responsibility for decisions and/or recommendations regarding
Plan administration are divided among the URS CEO and the
Committee. Section III.7 outlines the levels of responsibility
and authority assigned to each.
Notwithstanding the above, the Committee retains final authority
regarding all aspects of Plan administration, and the resolution
of any disputes. The Committee may, without notice, amend,
suspend or revoke the Plan.
III.7 INCENTIVE PLAN GOVERNANCE
-------------------------
URS
Area of Administration CEO Committee
---------------------- --- ---------
Overall Plan Design R A
Determination of Performance
Objectives R A
Designated Participants R A
-----------------------------------------------------------------
Individual Target Awards R A
Target funding for Non-
Designated Participants R A
Target Award for CEO R/A
-----------------------------------------------------------------
Certification of actual
performance against Objectives R A
Awards to Designated
Participants R A
Award to CEO R/A
-----------------------------------------------------------------
Amendment, suspension, or
termination of the Plan R A
Adjustments due to extraordinary
events R A
KEY: R = Authority A = Authority
to Recommend to Approve
III-2
Page 65 of 106 <PAGE>
III.8 ASSIGNMENT OF EMPLOYEE RIGHTS
-----------------------------
No employee has a claim or right to be a Participant in the Plan,
to continue as a Participant, or to be granted an Award under the
Plan. URS is not obligated to give uniform treatment (e.g.,
Target Award Percentages, discretionary Awards, etc.) to
Employees or Participants under the Plan. Participation in the
Plan does not give an Employee the right to be retained in the
employment of URS, nor does it imply or confer any other
employment rights.
Nothing contained in the Plan will be construed to create a
contract of employment with any Participant. URS reserves the
right to elect any person to its offices and to remove Employees
in any manner and upon any basis permitted by law.
Nothing contained in the Plan will be deemed to require URS to
deposit, invest or set aside amounts for the payment of any
Awards. Participation in the Plan does not give a Participant
any ownership, security, or other rights in any assets of URS or
any of its Affiliates.
III.9 WITHHOLDING TAX
---------------
URS will deduct from all Awards paid under the Plan any taxes
required by law to be withheld.
III.10 EFFECTIVE DATE
--------------
The Plan is effective as of November 1, 1994, and will remain in
effect for the Fiscal Year ending October 31, 1995 unless
otherwise terminated or extended by the Committee.
III.11 VALIDITY
--------
In the event any provision of the Plan is held invalid, void, or
unenforceable, the same will not affect, in any respect
whatsoever, the validity of any other provision of the Plan.
III.12 APPLICABLE LAW
--------------
The Plan will be governed by and construed in accordance with the
laws of the State of California.
III-3
Page 66 of 106 <PAGE>
IV. DEFINITIONS
Page 67 of 106 <PAGE>
IV.1 DEFINITIONS
-----------
"Affiliates" refers to any entity owned partially or totally by
URS Corporation including URS Corporation.
"Actual Award" or "Award" refers to the incentive amount earned
under the Plan by a Designated or Non-designated Participant.
"Actual Bonus Pool" or "Actual Pool" refers to the calculated
amount available for distribution to all Designated and Non-
designated Participants under the terms and provisions of the
Plan.
"Base Salary" refers to the actual base earnings of a Designated
Participant for the Plan Year exclusive of any bonus payments
under this Plan or any other prior or present commitment,
including contractual arrangements, any salary advance, any
allowance or reimbursement, and the value of any basic or
supplemental Employee benefits or perquisites. Base Salary
refers only to amounts earned while a Designated Participant
during the Plan Year.
"Compensation/Option Committee" or "Committee" refers to the
Compensation/Option Committee of the Board of Directors of URS
Corporation.
"Designated Participant" refers to an Employee of URS Corporation
designated by the CEO of URS to participate in the Plan.
Designation will be established only in writing.
"Employee" refers to an Employee of URS Corporation.
"Fiscal Year" refers to the twelve months beginning November 1,
1994 and ending October 31, 1995.
"Net Income" refers to the consolidated revenue less all expenses
(including tax and interest charges) of URS Corporation.
"Non-designated Participant" refers to an Employee of URS
Corporation selected to receive an Award under the Plan on the
basis of outstanding individual performance. Employee selection
will be made at the end of the Plan Year, at the recommendation
of the CEO of URS, within the guidelines agreed with and subject
to the approval of the Committee. Unlike Designated Participants,
Non-designated Participants will not be assigned Target Award
Percentages or individual Performance Objectives.
"Performance Objectives" or "Objectives" refers to the pre-
established financial goals upon which URS Corporation
performance will be assessed.
"Plan" refers to the URS Corporation 1995 Incentive Compensation
IV-1
Page 68 of 106 <PAGE>
Plan, as described in this document. Any incentives for future
years will be covered by subsequent plan documents.
"Plan Year" or "Year" refers to the twelve months beginning
November 1, 1994, and ending October 31, 1995, over which
performance is measured under this Plan.
"Target Award" refers to a Designated Participant's Target Award
Percentage, multiplied by the Participant's Base Salary earned
during the Plan Year. This amount represents the anticipated
payout to the Designated Participant if all URS Corporation's
Performance Objectives are met.
"Target Award Percentage" refers to a percentage of Base Salary
assigned to a Designated Participant in accordance with the terms
and provisions of the Plan.
"Target Bonus Pool" or "Target Pool" refers to the amount
anticipated to be distributed to all Designated and Non-
designated Participants if all URS Corporation's Performance
Objectives are met.
"Termination" means the Participant's ceasing his/her service
with the Company or any of its Affiliates for any reason
whatsoever, whether voluntarily or involuntarily, including by
reason of death or permanent disability.
"URS" refers to URS Corporation.
"Year-end" refers to the end of the Fiscal Year, October 31,
1995.
IV-2
Page 69 of 106 <PAGE>
V. EXAMPLES OF PLAN OPERATION
Page 70 of 106 <PAGE>
URS CORPORATION PERFORMANCE TABLE
Actual
Net Income Actual vs.
(100% weighting) Target Pool
---------------- -----------
> = $6,000 MM 200%
$4,800 MM 100%
$3,600 MM 30%
< = $3,600 MM 0%
Scenario 1 - URS net income performance exceeds objectives
Net income Objective ($MMs) $4.8 ($5.75 - $4.8)/($6.0 -
$4.8) = 79.0%
URS Actual Net Income ($MMs) $5.75
+ 100% = 179.0%
TARGET BONUS POOL ($000s) $355.0
ACTUAL BONUS POOL ($000s) $635.0 ($355.0 * 179%)=
$635.0
Scenario 2 - URS net income performance less than objectives
Net income Objective ($MMs) $4.8 ($4.6 - $4.8)/($3.6 -
$4.8) * (.7) =
URS Actual Net Income ($MMs) $4.6
-11.7% + 100% = 88.3%
TARGET BONUS POOL ($000s) $355.0
ACTUAL BONUS POOL ($000s) $313.0 ($355.0 * 88.3%) =
$313.0
V-1
Page 71 of 106 <PAGE>
EXHIBIT 10.7
URS CONSULTANTS, INC.
1995 INCENTIVE COMPENSATION PLAN
Page 72 of 106 <PAGE>
TABLE OF CONTENTS
-----------------
I. PURPOSE OF THE PLAN
II. HOW AWARDS ARE EARNED UNDER THE PLAN
III. OTHER PLAN PROVISIONS
IV. DEFINITIONS
V. EXAMPLES OF PLAN OPERATION
Page 73 of 106 <PAGE>
I. PURPOSE OF THE PLAN
Page 74 of 106 <PAGE>
I.1 PURPOSE
-------
The URS Consultants, Inc. 1995 Incentive Compensation Plan (the
"Plan") is intended to provide incentive compensation to
individuals who make an important contribution to URS
Consultants, Inc.'s financial performance. Specific Plan
objectives are to:
- Focus key Employees on achieving specific financial
targets;
- Reinforce a team orientation;
- Provide significant award potential for achieving
outstanding performance; and
- Enhance the ability of URS Consultants, Inc. to attract
and retain highly talented and competent individuals.
I-1
Page 75 of 106 <PAGE>
II. HOW AWARDS ARE EARNED UNDER THE PLAN
Page 76 of 106 <PAGE>
II.1 GENERAL PLAN DESCRIPTION
------------------------
The Plan provides the opportunity for key Employees of URS
Consultants, Inc. ("URSC") to receive cash Awards based on a
combination of URSC and individual performance.
Here is an overview of how the Plan works. In general, a Target
Bonus Pool is established. This amount represents the total
Awards that are expected to be paid to selected URSC Employees if
certain financial Performance Objectives for URSC have been fully
met. The Actual Bonus Pool will vary from the Target Bonus Pool
upward or downward based on URSC actual performance in
relationship to its Performance Objectives. This adjusted bonus
pool is the Actual Bonus Pool, from which Actual Award payouts
will be made.
At the beginning of or during the Plan Year, certain Employees
will be selected to participate in the Plan. These individuals
are referred to as "Designated Participants." Upon selection to
participate in the Plan, each Designated Participant will be
assigned a Target Award Percentage. This Target Award
Percentage, multiplied by the Participant's Base Salary earned
during the Plan Year, will equal the Participant's Target Award.
This Target Award will be earned for meeting both pre-determined
URSC and individual Performance Objectives. Individual
Performance Objectives will vary based on the Participant's role
within the organization. Each Designated Participant's Actual
Award could vary from the Target Award, based on the individual's
actual performance measured against his/her Performance
Objectives, subject to the amount available for distribution from
the Actual Bonus Pool.
Another key feature of the Plan is that a portion of the Actual
Bonus Pool will be set aside for discretionary Awards to selected
other Employees (referred to in the Plan as "Non-Designated
Participants"), who have demonstrated outstanding individual
performance during the Plan Year.
A detailed description of how the Plan works is presented in the
following sections of this document.
II.2 DESIGNATED AND NON-DESIGNATED PARTICIPANTS
------------------------------------------
Plan participation is extended to selected Employees who, in the
opinion of the President of URSC and the Chief Executive Officer
("CEO") of URS Corporation (the "Parent Company"), have the
opportunity to significantly impact the annual operating success
of URSC. These Employees are the Designated Participants and
will be notified in writing of their selection to participate in
the Plan. This notification letter will be signed by both the
President of URSC and the CEO of the Parent Company.
II-1
Page 77 of 106 <PAGE>
In addition to the Designated Participants, there may be a group
of other Employees who are selected to receive Awards based on
their outstanding individual performance during the Plan Year.
These other Employees are the Non-designated Participants and
will not be selected until the completion of the Plan Year. The
selection of Non-designated Participants will be determined by
the President of URSC, subject to the approval of the CEO of the
Parent Company, at their sole discretion.
II.3 TARGET BONUS POOL
-----------------
A Target Bonus Pool is established, equal to the sum of all
target awards for Designated Participants plus an amount set
aside for possible distribution to Non-designated Participants.
(The Awards to Non-designated Participants are estimated at
approximately 25% of the total Designated Participants' Bonus
Pool.)
This Target Bonus Pool is determined based on the current group
of Designated Participants and the anticipated group of Non-
designated Participants. The Target Pool is subject to change if
the group of Designated Participants, the group of Non-
Designated Participants, or the Base Salaries of Designated
Participants change.
Subject to these potential changes, the Target Bonus Pool for the
1995 Plan Year is established at $1,425,000.
II.4 URSC PERFORMANCE OBJECTIVES
---------------------------
URSC Performance Objectives are focused on the need to achieve
strong operating results (i.e., contribution), generate cash
through the management of accounts receivables (DSOs) throughout
the Year and develop new business opportunities. Accordingly,
performance will be evaluated based on a combination of URSC
Contribution, Average Receivables Days Sales Outstanding (DSO)
and New Sales.
II-2
Page 78 of 106 <PAGE>
The URSC Performance Objectives for the 1995 Plan Year are as
follows:
URSC Performance Objectives
---------------------------
Performance Measures Performance Objectives
-------------------- ----------------------
Contribution ($000s) $12,603
Average DSO (Days) 94
New Sales ($000s) $187,055
URSC Contribution is defined as total 1995 Fiscal Year URSC
revenues less:
- Direct cost of sales;
- Indirect expenses; and
- Accrual of expected Awards for both Designated and
Non-designated Participants under the Plan (i.e., the
Plan must pay for itself)
The subtraction of expected Awards from revenues in calculating
contribution under the Plan means that the Contribution
Objective, for purposes of the Plan, is calculated after all
-----
bonuses have been accrued, or assumed to have been paid.
URSC Days Sales Outstanding (DSO) is defined by the following
formula:
BAR + UAR - BEC
--------------- X 90
REVENUES
where BAR is billed accounts receivable, UAR is unbilled accounts
receivable, BEC is billings in excess of cost, and REVENUES is
the sum of the last three months revenues. DSOs will be
calculated monthly, and the average of the twelve months' DSOs
will equal Average DSOs.
URSC New Sales is defined as gross additions to backlog.
II.5 WEIGHTING OF URSC PERFORMANCE OBJECTIVES
----------------------------------------
The Target Bonus Pool will be weighted based on the aggregate
weightings of the individual Participants' Performance Objectives
in the Plan. Contribution will be the most heavily weighted
component followed by DSO performance and New Sales. An example
of the weighting calculation is shown below.
II-3
Page 79 of 106 <PAGE>
EXAMPLE OF WEIGHTING CALCULATION <F1>
-------------------------------------
The Target Bonus Pool will be weighted based on the aggregate
weightings of the individual Performance Objectives for the
Designated Participants in the Plan. The following example
illustrates the weighting calculation:
Target Bonus Pool = $1,425,000
Portion of Target Pool
determined by:
Contribution (69%) $988,000
DSO Performance (17%) $238,000
New Sales (14%) $199,000
[FN]
<F1> Weightings may be subject to change based on the Plan
measures of the Designated Participants at the end of
the Plan Year.
II-4
Page 80 of 106 <PAGE>
II.6 RELATIONSHIP BETWEEN PERFORMANCE AND THE ACTUAL BONUS
POOL
-----------------------------------------------------
The Actual Bonus Pool will vary from the Target Bonus Pool based
on the relationship between the actual performance of URSC and
the Performance Objectives. The Actual Bonus Pool will vary in
relationship to the Target Bonus Pool based on the following
table:
Relationship Between URSC Performance And
The Actual Bonus Pool As A % Of The Target Bonus Pool
-----------------------------------------------------
URSC Contribution URSC DSO
------------------------ ---------------
Actual
Performance Actual
As A % Of Bonus Pool Bonus Pool
Performance Actual As A % Of Actual As A % Of
Objective Performance Target Pool Performance Target Pool
----------- ----------- ----------- ----------- -----------
(%) ($000s) (%) (Days) (%)
>= 125% >= $15,754 200%<F1> < 89 200%<F1>
100% $12,603 100% 94 100%
75% $ 9,452 30% 99 30%
< 75% < $ 9,452 0% > 99 0%
URSC New Sales
--------------------
Actual
Performance Actual
As A % Of Bonus Pool
Performance Actual As A % Of
Objective Performance Target Pool
----------- ----------- -----------
(%) ($000s) (%)
>= 125% >= $233,819 200%
100% $187,055 100%
75% $140,291 30%
< 75% < $140,291 0%
[FN]
<F1> Maximum upside opportunity of 200% of the Target Bonus Pool
may be raised at the discretion of the Compensation/Option
Committee ("Committee") of the Parent Company Board of Directors.
The calculation of the Actual Bonus Pool As A % Of Target will be
interpolated for performance between discrete points shown in the
table above.
Based on the table above, the Actual Bonus Pool could vary
between 0% and 200% of the Target Bonus Pool, depending upon
actual performance in relation to Performance Objectives and the
weighting of the Performance Objectives. Accrual of any Actual
II-5
Page 81 of 106 <PAGE>
Pool tied to DSO and New Sales is contingent upon Contribution
performance being at or above 75% of the Performance Objective.
Here is an example of the calculation of an Actual Bonus pool:
EXAMPLE OF INTERPOLATION CALCULATION
------------------------------------
To interpolate the Actual Award based on performance, apply the
appropriate formula for actual performance above or below the
Performance Objective. In all cases, solve for "X".
- For performance above objective:
(Act. Perf. - Perf. Obj.) X
------------------------- = -----------------------------
(Max. Perf. - Perf. Obj.) (Max. Award% - Target Award%)
- For performance below objective:
(Act. Perf. - Perf. Obj.) X
------------------------- = -----------------------------
(Min. Perf. - Perf. Obj.) (Min. Award% - Target Award%)
- Once you have solved for "X", add X to 100%.
Below is a hypothetical example:
EXAMPLE OF ACTUAL BONUS POOL CALCULATION
----------------------------------------
The following example illustrates the weighting of the
Performance Objectives and calculates the Actual Bonus Pool:
Hypothetical assumptions:
- Target Bonus Pool = $1,425,000
URSC 1995 Performance Objective Actual
--------------------- --------- ------
- Contribution $12,603 $13,200
- DSO Performance 94 Days 93 Days
- New Sales $187,055 $170,000
Weighting:
- Contribution portion of Target Pool = $988,000
- DSO portion of Target Pool = $238,000
- New Sales portion of Target Pool = $199,000
Interpolation:
- Contribution Performance = 119.0%
- DSO Performance = 120.0%
- New Sales Performance = 64.0%
Actual Bonus Pool = $1,588,680
($988,000 * 119.0%) + ($238,000 * 120.0%) +
($199,000 * 64.0%)
II-6
Page 82 of 106 <PAGE>
II.7 DISCRETIONARY BONUS POOL
------------------------
It is the intent of the Plan that if the Actual Bonus Pool, as
calculated in Section II.6, should fall below 30% of the Target
Bonus Pool, then a Discretionary Bonus Pool will be created
instead.
Awards from the Discretionary Pool may be made to selected
Employees (both Designated and Non-designated Participants).
Awards to Designated Participants will be calculated based on
actual performance, reduced pro rata based on the amount of the
Discretionary Pool. Awards to Non-designated Participants will
be made on a totally discretionary basis by the President of
URSC, subject to the approval of the CEO of the Parent Company.
The formation of the Discretionary Pool will not guarantee any
Award payments. Rather, the Discretionary Pool will be used to
recognize selected outstanding Employees in the event that URSC
does not meet or exceed 75% of its Contribution Performance
Objective. The total sum of Awards made from the Discretionary
Pool may not exceed 30% of the total Target Bonus Pool.
II.8 ACTUAL BONUS POOL ALLOCATION
----------------------------
Awards will be paid from the funds available in the Actual Bonus
Pool. The portion of the pool actually allocated to Non-
Designated Participants will be determined after the end of the
Plan Year at the discretion of the CEO of the Parent Company,
subject to the approval of the Committee, and may vary from the
estimated 20% of the total Actual Bonus Pool. The sum of the
Actual Awards paid, including Awards made to Non-designated
Participants, may not exceed the available Actual Bonus Pool.
II.9 TARGET AWARD PERCENTAGES
------------------------
Each Designated Participant will be assigned a Target Award
Percentage. This Target Award Percentage, when multiplied by the
individual's Base Salary earned during the Plan Year, represents
the anticipated payout to a Designated Participant if all of the
URSC and the individual's Performance Objectives are met. Each
Designated Participant's Target Award Percentage and individual
Performance Objectives will be included in the letter of
notification mentioned in Section II.2.
II.10 ACTUAL AWARDS FOR DESIGNATED PARTICIPANTS
-----------------------------------------
Individual Performance Objectives will be assigned based on the
economic unit (i.e., URSC, a region of URSC, or an office of
URSC) on which the Participant's performance has the greatest
financial impact. Each Designated Participant will be notified
of his/her economic unit, the individual Performance Objectives
associated with that unit, the weighting of those Performance
Objectives, and the relationship between individual unit
II-7
Page 83 of 106 <PAGE>
performance and Award levels in the letter of notification
mentioned in Section II.2.
II.11 ADJUSTMENT TO ACTUAL AWARDS
---------------------------
It is possible that the sum of the Actual Awards for Designated
Participants could exceed the Actual Bonus Pool available for
Designated Participants. This result could happen for either one
of two reasons. First, the CEO of the Parent Company could
allocate more for Awards to Non-designated Participants than was
accrued. Second, larger economic units could perform worse
relative to the smaller economic units, creating an insufficient
Actual Bonus Pool. In these cases, all Actual Awards will be
reduced pro-rata by a factor determined by dividing the Actual
Bonus Pool for Designated Participants by the sum of the
individual Actual Awards for Designated Participants.
If the sum of Actual Awards is less than the Actual Bonus Pool
available for Designated Participants, there will be no upward
pro-ration of Awards paid.
II-8
Page 84 of 106 <PAGE>
III. OTHER PLAN PROVISIONS
Page 85 of 106 <PAGE>
III.1 AWARD PAYMENT
-------------
Assessment of actual performance and payout of Awards will be
subject to the completion of the 1995 Year-end independent audit.
The Actual Award earned, up to and in excess of the Target Award
level, will be paid to the Participant (or the Participant's
heirs in the case of death) in cash within 30 days of the
completion of the independent audit. Payroll and other taxes
will be withheld as required by law.
III.2 EMPLOYMENT
----------
To receive an Award under the Plan, a Participant must be
employed by URSC or an Affiliate at the end of the Plan Year,
except as otherwise noted below. A Participant must also have
performed his/her duties satisfactorily during the Year, as
determined by the URSC President. The Parent Company CEO will
assess the performance of the President and Executive Vice
President.
III.3 TERMINATION
-----------
If Termination of a Designated Participant's employment occurs
during the Plan Year by reason of death, permanent disability, or
retirement, the Designated Participant (or the Participant's
heirs in the case of death) will be eligible to receive a pro-
rata Award based on the time employed as a Participant and the
Objectives achieved for the Plan Year. Participants who have
earned an Award on this basis will receive payment on the same
schedule as other Plan Participants.
A Participant whose employment with URSC or its Affiliates is
terminated prior to the end of the Plan Year for any other reason
(whether voluntarily or involuntarily) will forfeit the
opportunity to earn an Award under the Plan.
III.4 OTHER PRO-RATA AWARDS
---------------------
Individuals who have been selected during the Year for Plan
participation and who have a minimum of three months as a
Designated Participant will be eligible to receive a pro-rata
Award based on the time employed as a Participant and the
Objectives achieved for the Plan Year, provided that the
Participant is employed by URSC or an Affiliate at Year-end.
III.5 PLAN FUNDING
------------
Estimated payouts for the Plan will be accrued monthly and
charged as an expense against the income statement of URSC and
its economic units. At the end of each fiscal quarter, the
estimated Actual Bonus Pool under the Plan will be evaluated
III-1
Page 86 of 106 <PAGE>
based on actual performance to date. The monthly accrual rate
will then be adjusted so that the cost of the Plan is fully
accrued at Year-end.
Accrual of Awards will not imply vesting of any individual Awards
to Participants.
III.6 PLAN ADMINISTRATION
-------------------
Responsibility for decisions and/or recommendations regarding
Plan administration are divided among the URSC President, the
Parent Company CEO, and the Committee. Section III.7 outlines
the levels of responsibility and authority assigned to each.
Notwithstanding the above, the Committee retains final authority
regarding all aspects of Plan administration, and the resolution
of any disputes. The Committee may, without notice, amend,
suspend or revoke the Plan.
III-2
Page 87 of 106 <PAGE>
III.7 INCENTIVE PLAN GOVERNANCE
-------------------------
Parent
Company
Area of Administration CEO Committee
---------------------- ------- ---------
Overall Plan Design R A
Determination of Performance
Objectives R A
Designated Participants R A
-----------------------------------------------------------------
Individual Target Awards R A
Target funding for Non-
Designated Participants R A
-----------------------------------------------------------------
Certification of actual
performance against Objectives R A
Awards to Designated
Participants R A
Awards to Non-designated
Participants R A
-----------------------------------------------------------------
Amendment, suspension, or
termination of the Plan R A
Adjustments due to extraordinary
events R A
-----------------------------------------------------------------
KEY: R = Authority A = Authority
to Recommend to Approve
III-3
Page 88 of 106 <PAGE>
III.8 ASSIGNMENT OF EMPLOYEE RIGHTS
-----------------------------
No employee has a claim or right to be a Participant in the Plan,
to continue as a Participant, or to be granted an Award under the
Plan. URSC is not obligated to give uniform treatment (e.g.,
Target Award Percentages, discretionary Awards, etc.) to
Employees or Participants under the Plan. Participation in the
Plan does not give an Employee the right to be retained in the
employment of URSC, nor does it imply or confer any other
employment rights.
Nothing contained in the Plan will be construed to create a
contract of employment with any Participant. URSC reserves the
right to elect any person to its offices and to remove Employees
in any manner and upon any basis permitted by law.
Nothing contained in the Plan will be deemed to require URSC to
deposit, invest or set aside amounts for the payment of any
Awards. Participation in the Plan does not give a Participant
any ownership, security, or other rights in any assets of URSC or
any of its Affiliates.
III.9 WITHHOLDING TAX
---------------
URSC will deduct from all Awards paid under the Plan any taxes
required by law to be withheld.
III.10 EFFECTIVE DATE
--------------
The Plan is effective as of November 1, 1994, and shall remain in
effect for the Fiscal Year ending October 31, 1995 unless
otherwise terminated or extended by the Committee.
III.11 VALIDITY
--------
In the event any provision of the Plan is held invalid, void, or
unenforceable, the same shall not affect, in any respect
whatsoever, the validity of any other provision of the Plan.
III.12 APPLICABLE LAW
--------------
The Plan shall be governed by and construed in accordance with
the laws of the State of California.
III-4
Page 89 of 106 <PAGE>
IV. DEFINITIONS
Page 90 of 106 <PAGE>
IV.1 DEFINITIONS
-----------
"Actual Bonus Pool" or "Actual Pool" refers to the calculated
amount available to be distributed to all Participants under the
terms and provisions of the Plan.
"Affiliate" refers to any entity owned partially or totally by
URS Corporation including URS Corporation.
"Award" refers to any incentive amount earned under the Plan by a
Designated or Non-designated Participant.
"Actual Award" refers to the calculated incentive amount earned
by a Participant under the terms and provisions of the Plan,
before any adjustments caused by the size of the Actual Bonus
Pool.
"Base Salary" refers to the actual base earnings of a Designated
Participant for the Plan Year exclusive of any bonus payments
under this Plan or any other prior or present commitment,
including contractual arrangements, any salary advance, any
allowance or reimbursement, and the value of any basic or
supplemental Employee benefits or perquisites. Base Salary
refers only to amounts earned while a Designated Participant
during the Plan Year.
"Compensation/Option Committee" or "Committee" refers to the
Compensation/Option Committee of the Board of Directors of the
Parent Company.
"Designated Participant" refers to an Employee of URS Consultants
designated by the CEO of URS Corporation to participate in the
Plan. Designation will be established only in writing.
"Discretionary Bonus Pool" or "Discretionary Pool" is the total
amount available to be distributed if URS Consultants
contribution does not reach or exceed $9,452,000 (75% of the
---------
Performance Objective).
"Employee" refers to an Employee of URS Consultants, Inc.
"Fiscal Year" refers to the twelve months beginning November 1,
1994 and ending October 31, 1995.
"Non-designated Participant" refers to an Employee of URS
Consultants selected to receive an Award under the Plan on the
basis of outstanding individual performance. Employee selection
will be made at the end of the Plan Year, at the recommendation
of the President of URS Consultants, Inc. within guidelines
agreed with and subject to the approval of the CEO of URS
Corporation. Unlike Designated Participants, Non-designated
IV-1
Page 91 of 106 <PAGE>
Participants will not be assigned Target Award Percentages or
individual Performance Objectives.
"Parent Company" refers to URS Corporation.
"Performance Objectives" or "Objectives" refers to the pre-
established financial goals upon which overall URS Consultants
and economic unit (i.e., URS Consultants, a region of URS
Consultants, or an office of URS Consultants) performance will be
assessed.
"Plan" refers to the URS Consultants, Inc. 1995 Incentive
Compensation Plan, as described in this document. Any incentives
for future years will be covered by subsequent plan documents.
"Plan Year" or "Year" refers to the twelve months beginning
November 1, 1994, and ending October 31, 1995, over which
performance is measured under this Plan.
"Target Award" refers to a Designated Participant's Target Award
Percentage, multiplied by the Participant's Base Salary earned
during the Plan Year. This amount represents the anticipated
payout to the Designated Participant if all URS Consultants and
the individual's Performance Objectives are met.
"Target Award Percentage" refers to a percentage of Base Salary
assigned to a Designated Participant in accordance with the terms
and provisions of the Plan. Non-designated Participants are not
assigned Target Award Percentages.
"Target Bonus Pool" or "Target Pool" refers to the sum of the
Target Awards for Designated Participants plus an estimated
amount for Awards to Non-designated Participants.
"Termination" means the Participant's ceasing his/her service
with the Company or any of its Affiliates for any reason
whatsoever, whether voluntarily or involuntarily, including by
reason of death or permanent disability.
"URSC" refers to URS Consultants, Inc.
"Year-end" refers to the end of the Fiscal Year, October 31,
1995.
IV-2
Page 92 of 106 <PAGE>
V. EXAMPLES OF PLAN OPERATION
Page 93 of 106 <PAGE>
EXAMPLE OF WEIGHTING CALCULATION <F1>
-------------------------------------
The Target Bonus Pool will be weighted based on the aggregate
weightings of the individual Performance Objectives for the
Designated Participants in the Plan. The following example
illustrates the weighting calculation:
Target Bonus Pool = $1,425,000
Portion of Target Pool
determined by:
Contribution (69%) $988,000
DSO Performance (17%) $238,000
New Sales (14%) $199,000
[FN]
<F1> Weightings may be subject to change based on the Plan
measures of the Designated Participants at the end of the
Plan Year.
V-1
Page 94 of 106 <PAGE>
EXAMPLE OF ACTUAL BONUS POOL CALCULATION
----------------------------------------
The following example illustrates the weighting of the
Performance Objectives and calculates the Actual Bonus Pool:
Hypothetical assumptions:
- Target Bonus Pool = $1,425,000
URSC 1995 Performance Objective Actual
--------------------- --------- ------
- Contribution $12,603 $13,200
- DSO Performance 94 Days 93 Days
- New Sales $187,055 $170,000
Weighting:
- Contribution portion of Target Pool = $988,000
- DSO portion of Target Pool = $238,000
- New Sales portion of Target Pool = $199,000
Interpolation:
- Contribution Performance = 119.0%
- DSO Performance = 120.0%
- New Sales Performance = 64.0%
Actual Bonus Pool = $1,588,680
($988,000 * 119.0%) + ($238,000 * 120.0%) +
($199,000 * 64.0%)
V-2
Page 95 of 106 <PAGE>
EXAMPLE OF ACTUAL AWARD ADJUSTMENT
----------------------------------
The following example illustrates the Actual Award adjustment
that occurs if the sum of the individual Actual Awards is greater
than the Actual Bonus Pool:
Hypothetical assumptions:
- Target Bonus Pool = $1,425,000
- Actual Bonus Pool = $1,588,680
- Sum of individual Actual Awards
(as calculated) = $2,400,000
- Actual Awards (as calculated)
- Participant A = $15,750
- Participant B = $30,000
Pro-rata reduction factor =
($1,588,680 / $2,400,000) = .662
Individual Awards (after reduction)
- Participant A =
($15,750 * .662) = $10,427
- Participant B =
($30,000 * .662) = $19,860
V-3
Page 96 of 106 <PAGE>
EXHIBIT 10.35
SEVERANCE AGREEMENT
-------------------
THIS AGREEMENT is entered into as of November 22, 1993, by
and between JOSEPH MASTERS (the "Employee") and URS CORPORATION,
-------------- ---------------
a Delaware corporation (the "Company").
1. Term.
----
This Agreement shall be in effect as long as the
Employee is continuously employed by the Company.
2. Severance Pay.
-------------
(a) CONTINUATION PERIOD. If the Company terminates
the Employee's employment for any reason other than Cause or if,
within one year after a Change in Control, the Employee
voluntarily resigns his employment with the Company for Good
Reason, then the Employee shall be entitled to receive all of the
payments and benefit coverage described in this Section 2.
Except as otherwise provided in Subsection (d) below, such
payments and benefit coverage shall continue for the period
commencing on the date when the employment termination is
effective and ending on the earlier of (i) the date six months
after the date when the employment termination is effective or
(ii) the date of the Employee's death (the "Continuation
Period").
(b) BASE SALARY. During the Continuation Period, the
Company shall pay the Employee, in accordance with its standard
payroll procedures, his base salary at the rate in effect on the
date of the employment termination.
(c) INSURANCE COVERAGE. During the Continuation
Period, the Employee (and, where applicable, his dependents)
shall be entitled to continue participation in all insurance or
similar plans maintained by the Company, including (without
limitation) life, disability, health and accident insurance
programs, on the terms that would apply if he were still an
employee of the Company. Where applicable, the Employee's salary
for purposes of such plans shall be deemed to be equal to his
base salary. To the extent that the Company finds that it is not
reasonably practicable to cover the Employee under its group
insurance policies during the Continuation Period, the Company
shall provide the Employee with an equivalent level of coverage
under individual policies. The Company shall contribute to the
cost of such individual policies the amount it would have
-1-
Page 97 of 106 <PAGE>
contributed under its group insurance policies, and the Employee
shall pay the balance of the cost (if any).
(d) MITIGATION REQUIRED. The payments contemplated by
Subsection (b) above shall be reduced by any compensation that
the Employee earns during the same period from any other source
in connection with his personal services. All of the insurance
coverage contemplated by Subsection (c) above shall be dis-
continued completely as of the date when the Employee returns to
employment or self-employment, whether full- or part-time, with
an entity that offers any group insurance coverage to its
employees or independent contractors, regardless of whether such
coverage is equivalent to the insurance coverage contemplated by
Subsection (c) above.
(e) CAUSE. For all purposes under this Agreement,
"Cause" shall mean:
(i) A willful failure by the Employee to perform
his duties, other than a failure resulting from the
Employee's complete or partial incapacity due to physical or
mental illness or impairment;
(ii) A willful act by the Employee which consti-
tutes misconduct or fraud and which is injurious to the
Company or to URS Corporation;
(iii) The Employee's conviction of, or plea of
"guilty" or "no contest" to, a felony; or
(iv) The Employee's willful disobedience of
lawful orders and directives.
(f) CHANGE IN CONTROL. For all purposes under this
Agreement, "Change in Control" shall mean the occurrence of any
of the following events after the date of this Agreement:
(i) A change in control required to be reported
pursuant to Item 6(e) of Schedule 14A of Regulation 14A
under the Securities Exchange Act of 1934, as amended (the
"Exchange Act");
(ii) A change in the composition of the Board of
Directors of URS Corporation (the "Board"), as a result of
which fewer than two-thirds of the incumbent directors are
directors who either (i) had been directors of URS Corpora-
tion 24 months prior to such change or (ii) were elected, or
nominated for election, to the Board with the affirmative
votes of at least a majority of the directors who had been
directors of URS Corporation 24 months prior to such change
-2-
Page 98 of 106 <PAGE>
and who were still in office at the time of the election or
nomination; or
(iii) Any "person" (as such term is used in
sections 13(d) and 14(d) of the Exchange Act) through the
acquisition or aggregation of securities is or becomes the
beneficial owner, directly or indirectly, of securities of
URS Corporation representing 20 percent or more of the
combined voting power of the then outstanding securities
ordinarily (and apart from rights accruing under special
circumstances) having the right to vote at elections of
directors (the "Base Capital Stock"); except that:
(A) Any change in the relative beneficial
ownership of the securities of URS Corporation by any
person resulting solely from a reduction in the
aggregate number of outstanding shares of Base Capital
Stock, and any decrease thereafter in such person's
ownership of securities, shall be disregarded until
such person increases in any manner, directly or
indirectly, such person's beneficial ownership of any
securities of URS Corporation; and
(B) Any increase in the aggregate beneficial
ownership of the securities of URS Corporation by
entities whose investments are managed on a
discretionary basis by Richard C. Blum & Associates,
Inc., resulting from a payment in securities of
interest in lieu of cash on debt obligations of URS
Corporation outstanding as of the date of this
Agreement, shall be disregarded.
(g) GOOD REASON. For all purposes under this
Agreement, "Good Reason" shall mean that the Employee (i) has
incurred a reduction in his base salary or (ii) has been demoted.
3. Miscellaneous Provisions.
------------------------
(a) SUCCESSORS. This Agreement and all rights
hereunder shall inure to the benefit of, and be enforceable by,
the parties, successors, assigns, personal or legal
representatives, executors, administrators, heirs, distributees,
devisees and legatees.
(b) WAIVER. No provision of this Agreement shall be
modified, waived or discharged unless the modification, waiver or
discharge is agreed to in writing and signed by the Employee and
by an authorized officer of the Company (other than the
Employee). No waiver by either party of any breach of, or of
compliance with, any condition or provision of this Agreement by
the other party shall be considered a waiver of any other
-3-
Page 99 of 106 <PAGE>
condition or provision or of the same condition or provision at
another time.
(c) WHOLE AGREEMENT. No agreements, representations
or understandings (whether oral or written and whether express or
implied) which are not expressly set forth in this Agreement have
been made or entered into by either party with respect to the
subject matter hereof. Effective as of the date hereof, this
Agreement supersedes any prior employment or severance agreements
between the parties.
(d) WITHHOLDING TAXES. All payments made under this
Agreement shall be subject to reduction to reflect taxes required
to be withheld by law.
(e) CHOICE OF LAW. The validity, interpretation,
construction and performance of this Agreement shall be governed
by the laws of the State of California (except their choice-of-
law provisions).
(f) SEVERABILITY. The invalidity or unenforceability
of any provision or provisions of this Agreement shall not affect
the validity or enforceability of any other provision hereof,
which shall remain in full force and effect.
(g) ARBITRATION. Any controversy or claim arising out
of or relating to this Agreement, or the breach thereof, shall be
settled by arbitration in accordance with the Commercial
Arbitration Rules of the American Arbitration Association, and
judgment on the award rendered by the arbitrator may be entered
in any court having jurisdiction thereof. The arbitration shall
be administered by the San Francisco regional office of such
Association and shall be conducted at the San Francisco offices
of such Association or at such other location in San Francisco as
such Association may designate. All fees and expenses of the
arbitrator and such Association shall be borne by the prevailing
party.
(h) NO ASSIGNMENT. The rights of any person to
payments or benefits under this Agreement shall not be made
subject to option or assignment, either by voluntary or invol-
untary assignment or by operation of law, including (without
limitation) bankruptcy, garnishment, attachment or other
creditor's process, and any action in violation of this
Subsection (h) shall be void.
-4-
Page 100 of 106 <PAGE>
IN WITNESS WHEREOF, each of the parties has executed
this Agreement, in the case of the Company by its duly authorized
officer, as of the day and year first above written.
/s/ Joseph Masters
---------------------------------
Employee
URS CORPORATION
/s/ Michael B. Shane
---------------------------------
By Michael B. Shane
Title: Executive Vice
President
-5-
Page 101 of 106 <PAGE>
EXHIBIT 21.1
URS CORPORATION AND SUBSIDIARY COMPANIES
----------------------------------------
The Company and its subsidiaries, excluding spun-off companies,
as of October 31, 1995, are:
Percent of
State of Stock
Parent and Subsidiaries Incorporation Owned by URS
----------------------- ------------- ------------
URS Corporation (Parent) Delaware ----
URS Operating Services, Inc. Delaware 100
URS Consultants, Inc. Delaware 100
URS Consultants, Inc. - Florida Florida 100 <F6>
URS Consultants, Inc. - California 100 <F1>
California
URS Consultants, Inc. New York 100 <F1>
URS Consultants, Inc. - Washington 100 <F1>
Washington
URS Consultants, Inc. - Colorado 100 <F1>
Colorado
URS Consultants, Inc. - Ohio Ohio 100 <F1>
Coverdale & Colpitts, Inc. New York 100 <F4><F6>
Thortec Environmental Systems, Inc. California 100 <F6>
URS Consultants, Inc. - Texas Texas 100 <F1><F6>
URS Consultants, Inc. - Ingenieria Delaware 100 <F6>
Forrest & Cotton International Texas 100 <F6>
URS Company - Kansas City Missouri 100 <F6>
Hospital Development Corp. Missouri 100 <F3><F6>
Thortec Environmental Systems, Inc. Delaware 100 <F6>
Mitchell Management Systems, Inc. Delaware 100 <F6>
URS de Mexico Mexico 100 <F2><F6>
E.C. Driver & Associates, Inc. Florida 100 <F5>
-1-
Page 102 of 106 <PAGE>
[FN]
<F1> Owned by URS Consultants, Inc. (Delaware)
<F2> Owned by equally by URS Consultants, Inc. - California and URS
Consultants, Inc. - Ingenieria
<F3> Owned by URS Company - Kansas City
<F4> Owned by URS Consultants, Inc. (New York)
<F5> Owned by URS Consultants, Inc. - Florida
<F6> Inactive
-2-
Page 103 of 106 <PAGE>
EXHIBIT 23.1
------------
CONSENT OF INDEPENDENT ACCOUNTANTS
We consent to the incorporation by reference in the
following registration statements of URS Corporation on:
Form S-8 (File No. 2-63576) for 41,825 common shares related
to the 1979 Stock Option Plan filed February 8, 1980
Form S-8 (File No. 2-99410) for 50,000 common shares related
to the 1985 Employee Stock Purchase Plan filed August 1,
1985
Form S-8 (File No. 33-42192) for 261,177 common shares
related to the 1985 Employee Stock Purchase Plan filed
August 31, 1991
Form S-8 (File No. 33-41047) for 1,000,000 common shares
related to the 1979 Stock Incentive Plan filed June 7, 1991
Form S-8 (File No. 33-61230) for 500,000 common shares
related to the 1991 Stock Incentive Plan filed April 1, 1993
of our report dated December 15, 1995, on our audits of the
consolidated financial statements of URS Corporation and its
subsidiaries as of October 31, 1995 and 1994, and for the years
ended October 31, 1995, 1994 and 1993, which report is included
in this Annual Report on Form 10-K.
/s/ Coopers & Lybrand L.L.P.
Coopers & Lybrand L.L.P.
San Francisco, California
January 3, 1996
Page 104 of 106 <PAGE>
EXHIBIT 24.1
------------
POWER OF ATTORNEY
Each person whose signature appears below hereby
constitutes and appoints any one of MARTIN M. KOFFEL and KENT P.
AINSWORTH, each with full power to act without the other, as his
true and lawful attorney-in-fact and agent, with full power of
substitution and resubstitution, for him and in his name, place
and stead, in any and all capacities, to sign the Annual Report
on SEC Form 10-K for fiscal year 1995 of URS Corporation, and any
or all amendments thereto, and to file the same with all the
exhibits thereto, and other documents in connection therewith,
with the Securities and Exchange Commission, granting unto said
attorney-in-fact and agent full power and authority to do and
perform each and every act and thing requisite and necessary to
be done in and about the premises, as fully to all extents and
purposes as he might or could do in person, thereby ratifying and
confirming all that such attorney-in-fact and agent, or his
substitute or substitutes, may lawfully do or cause to be done by
virtue thereof.
This Power of Attorney may be executed in separate
counterparts.
Dated: December 21, 1995.
/s/ Richard C. Blum /s/ William D. Walsh
------------------------------ ------------------------------
Richard C. Blum, Director William D. Walsh, Director
/s/ Emmet J. Cashin /s/ Irwin L. Rosenstein
------------------------------ -------------------------------
Emmet J. Cashin, Jr., Director Irwin L. Rosenstein, Director
/s/ Richard Q. Praeger /s/ Armen Der Marderosian
------------------------------ -------------------------------
Richard Q. Praeger, Director Armen Der Marderosian, Director
/s/ Martin M. Koffel /s/ Richard B. Madden
------------------------------ -------------------------------
Martin M. Koffel, Director Richard B. Madden, Director
/s/ S. Robert Foley, Jr.
------------------------------
S. Robert Foley, Jr., Director
Page 105 of 106 <PAGE>
<TABLE> <S> <C>
<ARTICLE> 5
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> OCT-31-1995
<PERIOD-END> OCT-31-1995
<CASH> 8,836
<SECURITIES> 0
<RECEIVABLES> 36,486
<ALLOWANCES> (664)
<INVENTORY> 0
<CURRENT-ASSETS> 59,707
<PP&E> 12,674
<DEPRECIATION> (6,839)
<TOTAL-ASSETS> 74,075
<CURRENT-LIABILITIES> 23,400
<BONDS> 9,999
<COMMON> 73
0
0
<OTHER-SE> 39,405
<TOTAL-LIABILITY-AND-EQUITY> 74,075
<SALES> 0
<TOTAL-REVENUES> 179,769
<CGS> 0
<TOTAL-COSTS> 108,403
<OTHER-EXPENSES> 63,217
<LOSS-PROVISION> 442
<INTEREST-EXPENSE> 1,351
<INCOME-PRETAX> 6,356
<INCOME-TAX> 1,300
<INCOME-CONTINUING> 5,056
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 5,056
<EPS-PRIMARY> 0.68
<EPS-DILUTED> 0.67
</TABLE>
