FORM 10-Q
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
( X ) QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended January 31, 1997
OR
( ) TRANSITION REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the transition period from ____________ to ____________
Commission file number 1-7567
URS CORPORATION
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(Exact name of registrant as specified in its charter)
Delaware 94-1381538
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(State or other jurisdiction (I.R.S. Employer
of incorporation) Identification No.)
100 California Street, Suite 500
San Francisco, California 94111-4529
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(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: 415-774-2700
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Indicate by check mark whether the registrant (1) has filed all
reports required to be filed by Section 13 or 15(d) of the Securities Exchange
Act of 1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days. Yes X No
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Indicate the number of shares outstanding of each of the issuer's
classes of common stock, as of the latest practicable date.
Class Outstanding at February 28, 1997
- ------------------------------- ---------------------------------
Common stock, $.01 par value 10,472,335
Page 1 of 9
Exhibit Index on Page 8
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URS CORPORATION AND SUBSIDIARIES
This Form 10-Q for the first quarter ended January 31, 1997 contains
forward-looking statements that involve risks and uncertainties. The Company's
actual results could differ materially from those discussed here. Factors that
might cause such a difference include, but are not limited to, those discussed
elsewhere in this Form 10-Q for the first quarter ended January 31, 1997 and
those incorporated by reference from the Company's Form 10-K for the fiscal year
ended October 31, 1996 and Form S-8 Registration Statement, as amended (File No.
33-61230), filed with the Securities and Exchange Commission.
PART I. FINANCIAL INFORMATION:
In the opinion of management, the information furnished reflects all
adjustments, consisting only of normal recurring adjustments, which are
necessary for a fair statement of the interim financial information. Net
earnings per share computations are based upon the weighted average number of
common shares outstanding during the period plus shares issuable under warrants
and stock options that have a dilutive effect.
Certain information and footnote disclosures normally included in
financial statements prepared in accordance with generally accepted accounting
principles have been omitted. These condensed financial statements should be
read in conjunction with the financial statements and notes thereto included in
the Company's Annual Report on Form 10-K for the fiscal year ended October 31,
1996. The results of operations for the quarterly period ended January 31, 1997
are not necessarily indicative of the operating results for the full year.
<TABLE>
Item 1. Financial Statements (unaudited)
<S> <C> <C>
Consolidated Balance Sheets
January 31, 1997 and October 31, 1996............................................3
Consolidated Statements of Operations
Three months ended January 31, 1997 and 1996.....................................4
Consolidated Statements of Cash Flows
Three months ended January 31, 1997 and 1996.....................................5
Item 2. Management's Discussion and Analysis of
Financial Condition and Results of
Operations......................................................................6
PART II. OTHER INFORMATION:
Item 6. Exhibits and Reports on Form 8-K..................................................9
2
</TABLE>
<PAGE>
<TABLE>
PART I
FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
<CAPTION>
URS CORPORATION AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(In thousands, except per share data)
January 31, October 31,
ASSETS 1997 1996
---- ----
(unaudited)
<S> <C> <C>
Current assets:
Cash $ 9,169 $ 22,370
Accounts receivable, less allowance for
doubtful accounts of $2,752 and $5,189 82,242 72,417
Costs and accrued earnings in excess of
billings on contracts in process, less
allowances for losses of $1,923 and $2,419 21,040 23,597
Deferred income taxes 4,625 7,077
Prepaid expenses and other 3,308 2,426
--------- ---------
Total current assets 120,384 127,887
Property and equipment at cost, net 15,825 15,815
Goodwill, net 41,799 40,261
Other assets 1,839 1,644
--------- ---------
$ 179,847 $ 185,607
========= =========
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable $ 19,638 $ 21,684
Accrued salaries and wages 8,764 12,131
Accrued expenses and other 18,134 20,063
Billings in excess of costs and accrued earnings on
contracts in process 8,219 8,849
Deferred income taxes 2,913 2,913
Long-term debt, current portion 4,675 4,675
--------- ---------
Total current liabilities 62,343 70,315
Long-term debt 52,679 52,390
Long-term debt, involving related parties 3,028 2,979
Deferred compensation and other 2,790 3,227
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Total liabilities 120,840 128,911
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Stockholders' equity:
Common shares, par value $.01; authorized 20,000 shares;
issued 8,647 and 8,640 shares 88 88
Treasury stock (287) (287)
Additional paid-in capital 42,008 41,894
Retained earnings since February 21, 1990, date of
quasi-reorganization 17,198 15,001
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Total stockholders' equity 59,007 56,696
--------- ---------
$ 179,847 $ 185,607
========= =========
3
</TABLE>
<PAGE>
URS CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
(In thousands, except per share data)
Three months ended
January 31,
----------------------
1997 1996
---- ----
(unaudited)
Revenues $95,541 $48,503
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Expenses:
Direct operating 57,003 30,398
Indirect, general and
administrative 33,457 16,468
Interest expense, net 1,435 305
------- -------
91,895 47,171
------- -------
Income before taxes 3,646 1,332
Income tax expense 1,450 520
------- -------
Net income $ 2,196 $ 812
======= =======
Net income per share:
Primary and fully diluted $ .22 $ .11
======= =======
4
<PAGE>
<TABLE>
URS CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(In thousands)
<CAPTION>
Three Months Ended
January 31,
--------------------------
1997 1996
-------- --------
(unaudited)
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income $ 2,196 $ 812
-------- --------
Adjustment to reconcile net income to net cash (used) provided by operating
activities:
Depreciation and amortization 1,972 767
Allowance for doubtful accounts and losses (2,933) (184)
Changes in current assets and liabilities:
Accounts receivable and costs and accrued earnings
in excess of billings on contracts in process (4,335) (2,285)
Prepaid expenses and other assets (1,076) (978)
Accounts payable, accrued salaries and wages
and accrued expenses (9,428) 3,945
Billings in excess of costs and accrued earnings
on contracts in process (630) --
Deferred taxes 2,452 --
Other, net 537 (135)
-------- --------
Total adjustments (13,441) 1,130
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Net cash (used) provided by operating activities (11,245) 1,942
-------- --------
CASH FLOWS FROM INVESTING ACTIVITIES:
Capital expenditures (394) (816)
-------- --------
Net cash (used) by investing activities (394) (816)
-------- --------
CASH FLOWS FROM FINANCING ACTIVITIES:
Principal payments on long-term debt (1,544) --
Proceeds from exercise of stock options 47 6
Other, net (65) --
-------- --------
Net cash (used) provided by financing activities (1,562) 6
-------- --------
Net decrease in cash (13,201) 1,132
Cash at beginning of period 22,370 8,836
-------- --------
Cash at end of period $ 9,169 $ 9,968
======== ========
SUPPLEMENTAL INFORMATION:
Interest paid $ 1,656 $ 361
======== ========
Taxes paid $ 71 $ 427
======== ========
Equipment purchased through capital lease obligations $ 1,867 $ --
======== ========
Noncash purchase allocation adjustment $ 2,000 $ --
======== ========
</TABLE>
5
<PAGE>
URS CORPORATION AND SUBSIDIARIES
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
The Company reports the results of its operations on a fiscal year which
ends on October 31. This Management Discussion and Analysis (MD&A) should be
read in conjunction with the MD&A and the footnotes to the Consolidated
Financial Statements included in the Annual Report on Form 10-K for the fiscal
year ended October 31, 1996 which was previously filed with the Securities and
Exchange Commission.
Results of Operations
First quarter ended January 31, 1997 vs. January 31, 1996.
The Company's revenues were $95,541,000 for the first quarter ended
January 31, 1997, an increase of $47,038,000 or 97% over the amount reported for
the same period last year. The growth in revenue is attributable to the
acquisition of Greiner Engineering, Inc. ("Greiner"), the results of which are
included commencing April 1, 1996, and to some extent an increase in demand for
the Company's on-going services on both infrastructure and environmental
projects. The revenues generated from the Company's three largest indefinite
delivery contracts, the Navy CLEAN, EPA ARCS 9 & 10, and EPA ARCS 6,7 & 8
contracts, were $7,781,000 for the quarter ended January 31, 1997, compared to
$7,444,000 for the same period last year.
Direct operating expenses for the quarter ended January 31, 1997, which
consist of direct labor and other direct expenses, including subcontractor
costs, increased $26,605,000, an 88% increase over the amount reported for the
same period last year. This increase is due to the addition of the direct
operating expenses of Greiner and to increases in subcontractor costs and direct
labor costs as well.
Indirect, general and administrative expenses for the quarter ended
January 31, 1997 increased $16,989,000, or 103% over the amount reported for the
same period last year as a result of the Greiner acquisition as well as an
increase in business activity.
The Company earned $3,646,000 before income taxes for the first quarter
ended January 31, 1997 compared to $1,332,000 for the same period last year. The
Company's effective income tax rate for the quarter ended January 31, 1997 was
approximately 40% compared to 39% in 1996.
The Company reported net income of $2,196,000, or $.22 per share for the
first quarter ended January 31, 1997, compared with $812,000, or $.11 per share
for the same period last year.
The Company's backlog at January 31, 1997 was $428,118,000, as compared to
$399,200,000 at October 31, 1996. This increase is due to an overall increase in
contracts signed by the Company.
6
<PAGE>
Liquidity and Capital Resources
At January 31, 1997, the Company had working capital of $58,041,000, an
increase of $469,000 from October 31, 1996.
The Company's current revolving line of credit is $20,000,000 of which
$19,400,000, after issuance of $600,000 for letters of credit, was available at
January 31, 1997.
The purchase of Greiner was partially financed by $50.0 million of
collateralized term loans payable over seven years beginning October 1996. The
loans bear interest based on rate indexes selected by the Company, with variable
spreads over the selected index based on loan maturity and the Company's
financial performance. At January 31, 1997, the interest rate was based on the
London Interbank Offered Rate (LIBOR) of 5.50%, plus spreads of 2.625% or 3.00%.
The Company's credit agreement requires compliance with certain financial
and other covenants. The Company was in compliance with such covenants at
January 31, 1997.
On February 12, 1997, after the end of the first quarter ended January 31,
1997, Wells Fargo Bank, N.A. (the "Bank"), exercised the 435,562 warrants held
by the Bank at $4.34 per share, resulting in the issuance of an additional
435,562 shares to the Bank and additional paid-in capital of approximately $1.9
million. On February 14, 1997, various partnerships managed by Richard C. Blum &
Associates, Inc. ("RCBA") exercised the 1,383,586 warrants held by such entities
at $4.34 per share. The exercise price of these warrants was paid by a
combination of cash and the cancellation of the $3.0 million face amount of debt
drawn under the Company's line of credit with certain RCBA entities. The
exercise resulted in the issuance of an additional 1,383,586 shares to the RCBA
entities and additional paid-in capital of approximately $5.0 million. These
equity transactions will be reflected in the Company's second quarter financial
statements.
The Company believes that its existing financial resources, together with
its planned cash flow from operations and its unused bank line of credit, will
provide sufficient capital to fund its combined operations and capital
expenditure needs for the foreseeable future.
7
<PAGE>
PART II
OTHER INFORMATION
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) Exhibits
27 Financial Data Schedule
8
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
Dated March 17, 1997
URS CORPORATION
/s/ Kent Ainsworth
- --------------------------------------
Kent P. Ainsworth
Executive Vice President and
Chief Financial Officer
(Principal Accounting Officer)
9
<TABLE> <S> <C>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> 4-MOS
<FISCAL-YEAR-END> OCT-31-1996
<PERIOD-END> JAN-31-1997
<CASH> 9,169
<SECURITIES> 0
<RECEIVABLES> 103,282
<ALLOWANCES> (4,675)
<INVENTORY> 0
<CURRENT-ASSETS> 120,384
<PP&E> 32,376
<DEPRECIATION> (16,551)
<TOTAL-ASSETS> 179,847
<CURRENT-LIABILITIES> 62,343
<BONDS> 55,707
<COMMON> 88
0
0
<OTHER-SE> 58,919
<TOTAL-LIABILITY-AND-EQUITY> 179,847
<SALES> 0
<TOTAL-REVENUES> 95,541
<CGS> 0
<TOTAL-COSTS> 57,003
<OTHER-EXPENSES> 33,418
<LOSS-PROVISION> 39
<INTEREST-EXPENSE> 1,435
<INCOME-PRETAX> 3,646
<INCOME-TAX> 1,450
<INCOME-CONTINUING> 2,196
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 2,196
<EPS-PRIMARY> 0.22
<EPS-DILUTED> 0.22
</TABLE>
