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, 1998
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
------------------------------------------------------
(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)
Registrant's telephone number, including area code: 415-774-2700
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 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 27, 1998
- ---------------------------- --------------------------------
Common stock, $.01 par value 14,877,774
Page 1 of 12
Exhibit Index on Page 10
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URS CORPORATION AND SUBSIDIARIES
This Form 10-Q for the first quarter ended January 31, 1998 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, 1998 and
those incorporated by reference from the Company's Annual Report on Form 10-K
for the fiscal year ended October 31, 1997 and Form S-4 Registration Statement,
as amended (File No. 33- 37531), 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,
1997. The results of operations for the quarterly period ended January 31, 1998
are not necessarily indicative of the operating results for the full year.
Item 1. Financial Statements (unaudited)
Consolidated Balance Sheets
January 31, 1998 and October 31, 1997.....................3
Consolidated Statements of Operations
Three months ended January 31, 1998 and 1997..............4
Consolidated Statements of Cash Flows
Three months ended January 31, 1998 and 1997..............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
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PART I
FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
<TABLE>
URS CORPORATION AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(In thousands, except per share data)
<CAPTION>
January 31, October 31,
ASSETS 1998 1997
--------- ---------
(unaudited)
<S> <C> <C>
Current assets:
Cash $ 20,389 $ 22,134
Accounts receivable, less allowance for
doubtful accounts of $2,986 and $1,488 162,515 80,251
Costs and accrued earnings in excess of
billings on contracts in process, less
allowances for losses of $8,347 and $1,838 58,101 37,741
Deferred income taxes 1,314 3,843
Prepaid expenses and other 3,857 2,885
--------- ---------
Total current assets 246,176 146,854
Property and equipment at cost, net 30,508 17,848
Goodwill, net 118,570 42,485
Deferred income taxes 4,076 --
Other assets 7,092 2,904
--------- ---------
$ 406,422 $ 210,091
========= =========
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Long-term debt, current portion $ 18,565 $ 4,775
Accounts payable 37,748 20,198
Accrued salaries and wages 20,001 17,769
Accrued expenses and other 21,189 17,863
Billings in excess of costs and accrued earnings on
contracts in process 34,922 23,013
--------- ---------
132,425 83,618
Total current liabilities
Long-term debt 107,679 41,448
Deferred compensation and other 22,933 7,874
--------- ---------
Total liabilities 263,037 132,940
--------- ---------
Stockholders' equity:
Common shares, par value $.01; authorized 20,000 shares;
issued 14,877 and 10,741 shares 149 107
Treasury stock (287) (287)
Additional paid-in capital 113,107 51,085
Retained earnings since February 21, 1990, date of
quasi-reorganization 30,416 26,246
--------- ---------
Total stockholders' equity 143,385 77,151
--------- ---------
$ 406,422 $ 210,091
========= =========
</TABLE>
3
<PAGE>
<TABLE>
URS CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
(In thousands, except per share data)
<CAPTION>
Three months ended
January 31,
---------------------------
1998 1997
-------- --------
(unaudited)
<S> <C> <C>
Revenues $186,156 $ 95,541
-------- --------
Expenses:
Direct operating 115,231 57,003
Indirect, general and
administrative 61,347 33,457
Interest expense, net 2,009 1,435
-------- --------
178,587 91,895
-------- --------
Income before taxes 7,569 3,646
Income tax expense 3,400 1,450
-------- --------
Net income $ 4,169 $ 2,196
======== ========
Net income per share:
Basic $ .28 $ .25
======== ========
Diluted $ .27 $ .22
======== ========
</TABLE>
4
<PAGE>
URS CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(In thousands)
Three Months Ended
January 31,
----------------------
1998 1997
--------- ---------
(unaudited)
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income $ 4,169 $ 2,196
--------- ---------
Adjustment to reconcile net income to net
cash (used) provided by operating activities:
Depreciation and amortization 3,603 1,972
Allowance for doubtful accounts and losses 418 (2,933)
Deferred taxes (579) 2,452
Changes in current assets and liabilities:
Accounts receivable and costs and accrued earnings
in excess of billings on contracts in process 8,814 (4,335)
Prepaid expenses and other assets 608 (1,076)
Accounts payable, accrued salaries and wages
and accrued expenses (23,437) (9,428)
Billings in excess of costs and accrued earnings
on contracts in process (510) (630)
Other, net (221) 537
--------- ---------
Total adjustments (11,304) (13,441)
--------- ---------
Net cash (used) by operating activities (7,135) (11,245)
--------- ---------
CASH FLOWS FROM INVESTING ACTIVITIES:
Business acquisition, net of cash acquired (36,937) --
Capital expenditures (1,599) (394)
--------- ---------
Net cash (used) by investing activities (38,536) (344)
--------- ---------
CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from issuance of debt 110,000 --
Principal payments on long-term debt (66,197) (1,544)
Proceeds from exercise of stock options 123 47
Other, net -- (65)
--------- ---------
Net cash provided (used) by financing activities 43,926 (1,562)
--------- ---------
Net decrease in cash (1,745) (13,201)
Cash at beginning of period 22,134 22,370
--------- ---------
Cash at end of period $ 20,389 $ 9,169
========= =========
SUPPLEMENTAL INFORMATION:
Interest paid $ 2,069 $ 1,656
========= =========
Taxes paid $ 502 $ 71
========= =========
Equipment purchased through capital lease obligations $ 470 $ 1,867
========= =========
Noncash purchase allocation adjustment $ 10,800 $ 2,000
========= =========
Issuance of common stock in business acquisition $ 61,936 $ --
========= =========
5
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URS CORPORATION AND SUBSIDIARIES
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
The Company reports the results of its operations on a fiscal year which
ends on October 31. This Management Discussion and Analysis (MD&A) should be
read in conjunction with the MD&A and the footnotes to the Consolidated
Financial Statements included in the Annual Report on Form 10-K for the fiscal
year ended October 31, 1997 which was previously filed with the Securities and
Exchange Commission.
Reclassifications
Certain reclassifications have been made to the 1997 financial statements
to conform to the 1998 presentation with no effect on net income as previously
reported.
Income Per Common Share
The Company has adopted the provisions of Statement of Financial
Accounting Standards No. 128 ("SFAS 128"), Earnings Per Share, effective January
31, 1998. SFAS 128 requires the presentation of basic and diluted income per
common share. Basic income per common share is computed by dividing net income
available to common stockholders by the weighted average number of common shares
outstanding for the period. Diluted income per common share is computed giving
effect to all dilutive potential common shares that were outstanding during the
period. Dilutive potential common shares consist of the incremental common
shares issuable upon the exercise of stock options and warrants for all periods.
All prior period income per common share amounts have been restated to comply
with SFAS 128.
In accordance with the disclosure requirements of SFAS 128, a
reconciliation of the numerator and denominator of basic and diluted income per
common share is provided as follows (in thousands, except per share amounts):
Three Months Ended January 31,
------------------------------
1998 1997
------- -------
Numerator - Basic
Net Income $ 4,169 $ 2,196
======= =======
Denominator - Basic
Weighted average common stock outstanding 14,834 8,643
------- -------
Basic income per share $ .28 $ .25
======= =======
Numerator - Diluted
Net Income $ 4,169 $ 2,196
======= =======
Denominator - Diluted
Weighted average common stock outstanding 14,834 8,643
------- -------
Effect of dilutive securities:
Stock options 798 429
Warrants -- 936
------- -------
15,632 10,008
======= =======
Diluted income per share $ .27 $ .22
======= =======
6
<PAGE>
Stock options to purchase 398,000 shares of common stock at prices ranging
from $9.13 to $31.25 per share were outstanding at January 31, 1997, but were
not included in the computation of diluted income per share because the exercise
price was greater than the average market value of the common shares.
Convertible subordinated debt was not included in the computation of diluted
income per share because it would be anti-dilutive.
Stock options to purchase 210,000 shares of common stock at prices ranging
from $15.06 to $31.25 per share were outstanding at January 31, 1998, but were
not included in the computation of diluted income per share because the exercise
price was greater than the average market value of the common shares.
Convertible subordinated debt was not included in the computation of diluted
income per share because it would be anti-dilutive.
Acquisition
On November 14, 1997, the Company acquired Woodward-Clyde Group, Inc., a
Denver, Colorado, engineering services firm (W-C), for
approximately $110,000,000.
The purchase was partially financed by a $110,000,000 term loan payable
over six years beginning April 1998. The loan bears 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,
1998, the interest rate on this loan was based on the London Interbank Offered
Rate (LIBOR) of 5.594%, plus a spread of 1.56%.
The acquisition has been accounted for by the purchase method of
accounting and the excess of the fair value of the net assets acquired over the
purchase price has been allocated to goodwill. The excess purchase price over
net assets acquired resulting from the acquisition will be amortized on a
straight-line basis over thirty years. The operating results of W-C are included
in the Company's results of operations from November 1, 1997.
The purchase price consisted of: (in thousands)
Cash paid $ 16,866
Term debt 31,198
Common Stock 61,936
--------
$110,000
========
Purchase price
(net of prepaid loan fees of $4.0 million) $106,000
Fair value of assets acquired (42,194)
--------
Excess purchase price over net assets acquired $ 63,806
========
The following unaudited pro forma summary presents the consolidated
results of operations as if the W-C acquisition had occurred at the beginning of
the periods presented and does not purport to indicate what would have occurred
had the acquisition been made as of those dates or of results which may occur in
the future.
7
<PAGE>
Three Months Ended January 31, 1997 (in thousands, except per share
amounts):
1997
--------
Revenues $166,451
========
Net income $ 2,320
========
Net income per share $ .23
========
Results of Operations
First quarter ended January 31, 1998 vs. January 31, 1997.
The Company's revenues were $186,156,000 for the first quarter ended
January 31, 1998, an increase of $90,615,000 or 95% over the amount reported for
the same period last year. The growth in revenue is primarily attributable to
the acquisition of W-C, the results of which are included commencing November 1,
1997, and to a minor extent due to an increase in demand for the Company's
on-going services on both infrastructure and environmental projects.
Direct operating expenses for the quarter ended January 31, 1998, which
consist of direct labor and other direct expenses, including subcontractor
costs, increased $58,228,000, an 102% increase over the amount reported for the
same period last year. This increase is primarily due to the addition of the
direct operating expenses of W-C.
Indirect, general and administrative expenses for the quarter ended
January 31, 1998 increased $27,890,000, or 83% over the amount reported for the
same period last year as a result of the W-C acquisition as well as an increase
in business activity.
The Company earned $7,569,000 before income taxes for the first quarter
ended January 31, 1998 compared to $3,646,000 for the same period last year. The
Company's effective income tax rate for the quarter ended January 31, 1998 was
approximately 45% compared to 40% in 1997. This increase is due to operating in
countries outside the United States with higher tax rates.
The Company reported net income of $4,169,000, or $.27 per share for the
first quarter ended January 31, 1998, compared with $2,196,000, or $.22 per
share for the same period last year.
The Company's backlog at January 31, 1998 was $669,132,000, as compared to
$470,400,000 at October 31, 1997. This increase is due to the W-C acquisition.
8
<PAGE>
Liquidity and Capital Resources
At January 31, 1998, the Company had working capital of $113,751,000, an
increase of $50,515,000 from October 31, 1997, due primarily to the W-C
acquisition.
The Company's current revolving line of credit is $40,000,000, of which,
after issuance of letters of credit aggregating $2,000,000, $38,000,000 was
available at January 31, 1998.
The Company's credit agreement requires compliance with certain financial
and other covenants. The Company was in compliance with such covenants at
January 31, 1998.
The Company believes that its existing financial resources, together with
its planned cash flow from operations and its unused bank line of credit, will
provide sufficient capital to fund its operations and capital expenditure needs
for the foreseeable future.
9
<PAGE>
PART II
OTHER INFORMATION
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
At a special meeting of the stockholders of the Company held on November
13, 1997, the Company's stockholders approved the Agreement and Plan of Merger
dated August 18, 1997 (the "Merger Agreement"), by and among the Company, W-C
and W-C Acquisition Corporation, a Delaware corporation ("Acquisition Corp."),
whereby W-C was merged with and into Acquisition Corp., with Acquisition Corp.
as the surviving corporation (the "Merger"). As a result of the Merger, W-C
became a wholly-owned subsidiary of the Company. The execution of the Merger
Agreement was previously reported in a Current Report on Form 8-K filed by the
Company on August 21, 1997. Stockholders holding 9,067,083 shares voted in favor
of, stockholders holding 59,777 shares voted against, and stockholders holding
14,292 shares abstained from voting on, this proposal. 1,605,092 shares were not
voted due to broker non-votes.
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) Exhibits
10.1 Non-Executive Directors Stock Grant Plan, as
amended December 18, 1997. FILED HEREWITH.
10.2 Employment Agreement dated February 3, 1998
between Woodward-Clyde Group, Inc and Frank
S. Waller. FILED HEREWITH.
27 Financial Data Schedule (electronic version
only).
(b) The Company filed a report on Form 8-K on November 26,1997 (the
"Form 8-K"), reporting under Item 2 the acquisition of W-C and the
financing thereof, and incorporating into Item 7 the following
audited consolidated financial statements of W-C and its
subsidiaries and the accompanying notes by reference from the
Joint Proxy Statement/Prospectus (the "Proxy Statement") filed as
Part I of the Company's Registration Statement on Form S-4
(Registration Statement 333-37531) filed on October 9, 1997, as
amended by that Pre-Effective Amendment No. 1 to Registration
Statement on Form S-4 filed on October 10, 1997 (the "Form S-4"):
10
<PAGE>
(1) Report of Independent Auditors.
(2) Audited Consolidated Statements of Financial Position as of
December 31, 1996 and 1995.
(3) Audited Consolidated Statements of Income for the years ended
December 31, 1996, 1995 and 1994.
(4) Audited Consolidated Statements of Shareholders' Equity for the
years ended December 31, 1996, 1995 and 1994.
(5) Audited Consolidated Statements of Cash Flows for the years ended
December 31, 1996, 1995 and 1994.
(6) Notes to Consolidated Financial Statements.
The Form 8-K also included in Item 7 the following interim period financial
information and the accompanying explanatory information and notes:
(1) Unaudited Consolidated Statements of Financial Position as of
September 30, 1997.
(2) Unaudited Consolidated Statements of Operations for the nine
months ended September 30, 1997 and 1996.
(3) Unaudited Consolidated Statements of Cash Flows for the nine
months ended September 30, 1997 and 1996.
(4) Notes to Consolidated Unaudited Financial Statements.
The Form 8-K also incorporated into Item 7 from the Proxy Statement filed as
Part I of the Form S-4 the following pro forma financial information and the
accompanying explanatory information:
(1) Unaudited Pro Forma Combined Condensed Balance Sheet as of July
31, 1997.
(2) Unaudited Pro Forma Combined Condensed Statement of Operations for
the year ended October 31, 1996.
(3) Unaudited Pro Forma Combined Condensed Statement of Operations for
the nine months ended July 31, 1997.
11
<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, 1998
URS CORPORATION
/s/ Kent P. Ainsworth
- -----------------------------
Kent P. Ainsworth
Executive Vice President and
Chief Financial Officer
(Principal Accounting Officer)
12
URS Corporation
Non-Executive Directors Stock Grant Plan
Adopted December 17, 1996
Approved By Stockholders March 25, 1997
Amended December 18, 1997
1. Purposes.
The purpose of the Plan is to compensate Non-Executive Directors in the
form of grants of Common Stock.
2. Definitions.
(a) "Annual Meeting" means the annual meeting of the Company's
stockholders.
(b) "Board" means the Board of Directors of the Company.
(c) "Company" means URS Corporation, a Delaware corporation.
(d) "Common Stock" means the common stock of the Company.
(e) "Employee" means any person, including any officer or director, who
is a common law employee of the Company, but shall not mean a person who
performs services for the Company as a consultant.
(f) "Non-Executive Director" means a member of the Board who is not an
Employee.
(g) "Plan" means this URS Corporation Non-Executive Directors Stock
Grant Plan.
(h) "Stock Grant" means any grant of Common Stock under the Plan.
3. Administration.
The Plan shall be administered by the Board.
4. Shares Subject To The Plan.
(a) Subject to the provisions of Section 6 below relating to
adjustments upon changes in the Common Stock, the Common Stock that may be
issued pursuant to Stock Grants shall not exceed in the aggregate Fifty-Five
Thousand (55,000) shares of Common Stock.
1.
<PAGE>
(b) The Common Stock subject to the Plan may be unissued shares or
reacquired shares, bought on the market or otherwise.
5. Stock Grants.
(a) After each Annual Meeting, each Non-Executive Director who
continues to serve as a Director effective upon and following such Annual
Meeting shall receive a Stock Grant equal to that number of shares of Common
Stock determined by dividing Twenty-Five Thousand Dollars and No Cents
($25,000.00) by the closing price of the Common Stock on the date of such Annual
Meeting, rounded down to the nearest whole share.
(b) Common Stock awarded under any Stock Grant shall be fully vested as
of the date of such Stock Grant. The Company shall direct its transfer agent to
deliver a certificate representing such Common Stock (or electronically transfer
such Common Stock) to each Non-Executive Director promptly following such Annual
Meeting.
6. Adjustments Upon Changes In Stock.
If any change is made in the Common Stock subject to the Plan without
the receipt of consideration by the Company (through merger, consolidation,
reorganization, recapitalization, reincorporation, stock dividend, dividend in
property other than cash, stock split, liquidating dividend, combination of
shares, exchange of shares, change in corporate structure or other transaction
not involving the receipt of consideration by the Company), the Plan will be
appropriately adjusted as to the number of shares subject to the Plan and the
number of shares subject to each Stock Grant. Such adjustments shall be made by
the Board, the determination of which shall be final, binding and conclusive.
(The conversion of any convertible securities of the Company shall not be
treated as a "transaction not involving the receipt of consideration by the
Company".)
7. Amendment Of The Plan.
(a) The Board at any time, and from time to time, may amend the Plan.
However, except as provided in Section 6 above relating to adjustments upon
changes in stock, no amendment shall be effective unless approved by the
stockholders of the Company to the extent stockholder approval is necessary for
the Plan to satisfy the requirements of Rule 16b-3 under the Securities Exchange
Act of 1934, as amended, or any securities exchange listing requirements.
(b) The Board may, in its sole discretion, submit any other amendment
to the Plan for stockholder approval.
8. Termination Or Suspension Of The Plan.
The Board may suspend or terminate the Plan at any time.
2.
<PAGE>
9. Effective Date Of Plan.
The Plan shall become effective on the date the Plan is adopted by the
Board and approved by the stockholders of the Company.
3.
[WOODWARD-CLYDE GROUP, INC. COMPANY LETTERHEAD]
February 3, 1998
Mr. Frank S. Waller, P.E.
Woodward-Clyde Group, Inc.
Stanford Place 3, Suite 600
4582 South Ulster Street
Denver, CO 80237
Dear Frank:
This letter (the "Agreement") sets forth the terms and conditions under
which Woodward-Clyde Group, Inc. (the "Company") agrees to employ you, and is
entered into as of November 17, 1997 (the "Effective Date").
1. Employment by the Company.
1.1 Subject to terms set forth in this Agreement, the Company
agrees to employ you in an executive position and you hereby accept such
employment effective as of the Effective Date. The term of your employment with
the Company will be from the Effective Date through December 31, 1999, subject
to earlier termination as provided herein. From the Effective Date through
December 31, 1998 during the term of your employment with the Company, you will
devote your best efforts and substantially all of your business time and
attention (except for vacation periods as set forth herein and reasonable
periods of illness or other incapacities permitted by the Company's general
employment policies) to the business of the Company. From January 1, 1999
through December 31, 1999 during the term of your employment with the Company,
you will devote your best efforts and substantially one half of your business
time and attention (except for reasonable periods of illness or other
incapacities permitted by the Company's general employment policies) to the
business of the Company. The Company may change your principal office of
employment from time to time, but only with your prior approval, and provided
that the Company will reimburse you for your reasonable relocation expenses in
accordance with generally applicable policies of the Company.
1.2 Your employment by the Company shall also be governed by
the general employment policies and practices of the Company, including those
relating to protection of confidential information and assignment of inventions,
except that when the terms of this Agreement differ from or are in conflict with
the Company's general employment policies or practices, this Agreement shall
control.
2. Compensation.
2.1 Salary. From the Effective Date through December 31, 1998,
you shall receive for services to be rendered under this Agreement an annualized
base salary of $200,000, and from January 1, 1999 through December 31, 1999, you
shall receive for services to be
1.
<PAGE>
rendered under this Agreement an annualized base salary of $100,000. Salary
shall be paid in accordance with Company's normal payroll practices for
executives.
2.2 Incentive Compensation. Subject to the provisions of
Section 2.3 below, you shall have a 30% Target Award Percentage under the
Company's Incentive Compensation Plan with respect to the period from November
1, 1997 through October 31, 1998. You shall have no Target Award Percentage for
the period November 1, 1998 through December 31, 1999.
2.3 Standard Company Benefits. During the term of your
employment, you shall be entitled to all rights and benefits for which you are
eligible under the terms and conditions of the standard Company benefits and
compensation practices which may be in effect from time to time and provided by
the Company to its executive employees generally; provided, however, that you
shall be entitled to 10 weeks' vacation time for the period from the Employment
Date through December 31, 1998 and no vacation time thereafter, and further
provided, however, that you and your dependents shall be entitled to coverage
under the Company's group health plan as if you had remained actively employed
by the Company through April 26, 2001, the date of your 65th birthday.
3. Nondisclosure. During the term of this Agreement and thereafter, you
agree that you will not, without the prior written consent of the Board of
Directors of the Company, disclose or use for any purpose (except in the course
of your employment under this Agreement and in furtherance of the business of
the Company) confidential information or proprietary data of the Company or URS
Corporation, or any parent, subsidiary or affiliated corporation or related
entity of either of them, except as required by applicable law or legal process,
in which case promptly and before disclosure you will give notice to the Company
of any such requirement or process; provided, however, that confidential
information shall not include any information available from another source on a
nonconfidential basis, known generally to the public, or ascertainable from
public or published information (other than as a result of unauthorized
disclosure by you). You agree to deliver to the Company at the termination of
your employment, or at any other time the Company may request, all memoranda,
notes, plans, records, reports and other documents (and copies thereof) relating
to the business of the Company and URS Corporation or any parent, subsidiary or
affiliated corporation or related entity of either of them, which you may then
possess or have under your control.
4. Termination of Employment.
4.1 Termination Without Cause or for Good Reason.
(a) The Company shall have the right to terminate
your employment with the Company at any time without Cause (as defined below),
and you shall have the right to terminate your employment with the Company for
Good Reason (as defined below).
(b) If your employment is terminated by the Company
without Cause (as defined below) or by you for Good Reason (as defined below)
and not on account of Disability (as defined below) or death before December 31,
1999, the Company shall pay you in a lump sum an amount equivalent to your base
salary otherwise payable under this Agreement from the date of termination until
December 31, 1999, and shall continue to provide you and
2.
<PAGE>
your dependents with coverage under the Company's group health plan as if you
had remained actively employed by the Company through April 26, 2001; provided,
however, that in no event shall the Company be required to make or provide any
such payment or benefit unless and until you have executed and delivered to the
Company a release in the form of Exhibit A to this Agreement and seven (7) days
have elapsed following such execution and delivery without your revocation of
such release.
(c) "Good Reason" shall mean that either (i) you have
incurred a reduction in your base salary or (ii) the Company has breached its
obligations under Section 1.1, and, at the time of such breach, you are in
compliance with your obligations under Section 1.1 and under the other
provisions of this Agreement.
4.2 Termination for Cause.
(a) The Company shall have the right to terminate
your employment with the Company at any time for Cause (as defined below).
(b) "Cause" for termination shall mean: (i) your
substantial failure or omission to perform your duties hereunder, other than as
a result of your death or Disability (as defined below); (ii) your act involving
material injury to the Company or to URS Corporation (or any parent, subsidiary
or affiliated corporation or related entity of either of them), willful or gross
misconduct, fraud or dishonesty; (iii) your conviction of, or plea of "guilty"
or "no contest" to, a felony; or (iv) your disobedience of orders and directives
of the Chief Executive Officer of URS Corporation or his designee.
(c) If your employment is terminated at any time for
Cause, you will be entitled only to compensation and benefits for the period
preceding the effective date of the termination.
4.3 Termination an Account of Death or Disability.
(a) Your employment will terminate automatically in
the event of your death, and in such event you will be entitled only to
compensation and benefits for the period preceding the date of your death;
provided, however, that death benefits under Company plans or programs in which
you participated prior to your death will be provided in accordance with their
terms, and further provided, however, that coverage under the Company's group
health plan for your dependents shall continue as if you had remained actively
employed by the Company through April 26, 2001.
(b) The Company may terminate your employment due to
Disability. For purposes of this Agreement, Disability shall mean either: (i)
you have qualified for long-term disability benefits under a plan, program or
arrangement maintained by the Company or a parent, subsidiary or affiliated
corporation or related entity of the Company; or (ii) you are unable to perform
the normal duties assigned to you under this Agreement for a continuous period
of 60 calendar days or any incapacity, however caused, that, in the good faith
opinion of the Chief Executive Officer of URS Corporation or his designee, is
likely to prevent you from performing the normal duties assigned to you under
this Agreement for more than 90 calendar days in any twelve consecutive month
period (taking into account, in the case of such an inability or
3.
<PAGE>
incapacity which is a physical or mental impairment that substantially limits
one or more of your major life activities, reasonable accommodation that would
not impose an undue hardship on the Company, as the terms "reasonable
accommodation" and "undue hardship" are defined in the Americans With
Disabilities Act of 1990, as amended). In the event of such a termination on
account of Disability, you will be entitled only to compensation and benefits
for the period preceding the effective date of termination; provided, however,
that disability benefits under Company plans or programs in which you
participated prior to termination will be provided in accordance with their
terms, and further provided, however, that coverage under the Company's group
health plan for you and your dependents shall continue as though you had
remained actively employed by the Company through April 26, 2001.
4.4 Voluntary or Mutual Termination.
(a) You may voluntarily terminate your employment
with the Company at any time without Good Reason, and in such event you will be
entitled only to compensation and benefits for the period preceding the date of
such termination.
(b) You and the Company may mutually agree in writing
to the termination of your employment at any time, and in such event you will be
entitled to such compensation and benefits as may be mutually agreed with the
Company at that time.
5. General Provisions.
5.1 Notices. Any notices provided hereunder must be in writing
and shall be deemed effective upon the earlier of personal delivery (including
personal delivery by telecopy) or the third day after mailing by first class
mail, to the Company at its primary office location and to you at your address
as listed on the Company payroll.
5.2 Severability. The invalidity or unenforceability of any
provision or provisions of this Agreement shall not affect the validity or
enforceability of any other provision, which shall remain fully effective.
5.3 Waiver. If either party should waive any breach of any
provisions of this Agreement, such party shall not thereby be deemed to have
waived any preceding or succeeding breach of the same or any other provision of
this Agreement.
5.4 Complete 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
you or the Company with respect to the subject matter hereof. As of the
Effective Date, this Agreement supersedes all prior employment agreements and
severance agreements between the parties, their parents, subsidiaries and
affiliates and their respective predecessors.
5.5 Arbitration. Except for any action by the Company seeking
injunctive relief against you, any controversy or claim arising out of or
relating to this Agreement, or the breach thereof, or your employment with the
Company or the terms and conditions or termination thereof, or any action or
omission of any kind whatsoever in the course of or connected in any way with
any relations between the Company and you, shall be finally settled
4.
<PAGE>
by binding 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, California regional
office of such Association and shall be conducted at the San Francisco,
California offices of such Association or at such other location in San
Francisco, California as such Association may designate. All fees and expenses
of the arbitrator and such Association shall be borne as designated by the
arbitrator.
5.6 Successors and Assigns. This Agreement is intended to bind
and inure to the benefit of and be enforceable by you and the Company, and our
respective successors, assigns, heirs, executors and administrators, except that
you may not assign any of your duties hereunder and may not assign any of your
rights hereunder without the written consent of the Company, which shall not be
withheld unreasonably.
5.7 Choice of Law. All questions concerning the construction,
validity and interpretation of this Agreement will be governed by the law of the
State of California.
5.8 Withholding. All payments pursuant to this Agreement shall
be subject to all applicable tax withholding.
If you are in agreement with the foregoing, please so indicate in the
space provided below. Please execute both of the copies of this Agreement that
have been provided and return one of them to me; the other is for your records.
Woodward-Clyde Group, Inc.
By: /s/ Kent P. Ainsworth
------------------------------
Kent P. Ainsworth
Vice President
/s/ Frank S. Waller
- ---------------------------------
Frank S. Waller
Date: February 3, 1998
---------------------------
5.
<PAGE>
EXHIBIT A
GENERAL RELEASE
This General Release ("Release") is executed and delivered by Frank S.
Waller ("Employee") to and for the benefit of URS Corporation, a Delaware
corporation, and any parent, subsidiary or affiliated corporation or related
entity of URS Corporation, including without limitation Woodward-Clyde Group,
Inc. and any parent, subsidiary or affiliated corporation or related entity of
Woodward-Clyde Group, Inc. (collectively, the "Company").
In consideration of certain benefits which Employee will receive
following termination of employment pursuant to the terms of the Agreement
entered into as of November 1, 1997 between the Employee and the Company (the
"Agreement"), the sufficiency of which Employee hereby acknowledges, Employee
hereby agrees not to sue and fully, finally, completely and generally releases,
absolves and discharges Company, its predecessors, successors, subsidiaries,
parents, related companies and business concerns, affiliates, partners,
trustees, directors, officers, agents, attorneys, servants, representatives and
employees, past and present, and each of them (hereinafter collectively referred
to as "Releasees") from any and all claims, demands, liens, agreements,
contracts, covenants, actions, suits, causes of action, grievances,
arbitrations, unfair labor practice charges, wages, vacation payments, severance
payments, obligations, commissions, overtime payments, workers compensation
claims, debts, profit sharing or bonus claims, expenses, damages, judgments,
orders and/or liabilities of whatever kind or nature in law, equity or
otherwise, whether known or unknown to Employee which Employee now owns or holds
or has at any time owned or held as against Releasees, or any of them through
the date Employee executes this Release ("Claims"), including specifically but
not exclusively and without limiting the generality of the foregoing, any and
all Claims arising out of or in any way connected to Employee's employment with
or separation of employment from Company including any Claims based on contract,
tort, wrongful discharge, fraud, breach of fiduciary duty, attorneys' fees and
costs, discrimination in employment, any and all acts or omissions in
contravention of any federal or state laws or statutes (including, but not
limited to, federal or state securities laws, any deceptive trades practices act
or any similar act in any other state and the Racketeer Influenced and Corrupt
Organizations Act), and any right to recovery based on state or federal age,
sex, pregnancy, race, color, national origin, marital status, religion, veteran
status, disability, sexual orientation, medical condition, union affiliation or
other anti-discrimination laws, including, without limitation, Title VII, the
Age Discrimination in Employment Act, the Americans with Disabilities Act, the
National Labor Relations Act, the California Fair Employment and Housing Act,
and any similar act in effect in any jurisdiction applicable to Employee or the
Company, all as amended, whether such claim be based upon an action filed by
Employee or by a governmental agency.
From the date of Employee's termination of employment through October
31, 1999, Employee agrees (i) to assist, as reasonably requested by Company, in
the transition of Employee's responsibilities and (ii) not to solicit any
employee of Company to terminate or cease employment with Company. Without
superseding any other agreements, including the Agreement, and obligations
Employee has with respect thereto, (i) Employee agrees not to divulge any
information that might be of a confidential or proprietary nature relative to
1.
<PAGE>
Company, and (ii) Employee agrees to keep confidential all information contained
in this Release (except to the extent (A) Company consents in writing to
disclosure, (B) Employee is required by process of law to make such disclosure
and Employee promptly notifies Company of receipt by Employee of such process,
or (C) such information previously shall have become publicly available other
than by breach hereof on the part of Employee).
Employee acknowledges and agrees that neither anything in this Release
nor the offer, execution, delivery, or acceptance thereof shall be construed as
an admission by Company of any kind, and this Release shall not be admissible as
evidence in any proceeding except to enforce this Release.
It is the intention of Employee in executing this instrument that it
shall be effective as a bar to each and every claim, demand, grievance and cause
of action hereinabove specified. In furtherance of this intention, Employee
hereby expressly consents that this Release shall be given full force and effect
according to each and all of its express terms and provisions, including those
relating to unknown and unsuspected claims, demands and causes of action, if
any, as well as those relating to any other claims, demands and causes of action
hereinabove specified, and elects to assume all risks for claims that now exist
in Employee's favor, known or unknown, that are released under this Release.
Employee acknowledges Employee may hereafter discover facts different from, or
in addition to, those Employee now knows or believes to be true with respect to
the claims, demands, liens, agreements, contracts, covenants, actions, suits,
causes of action, wages, obligations, debts, expenses, damages, judgments,
orders and liabilities herein released, and agrees the release herein shall be
and remain in effect in all respects as a complete and general release as to all
matters released herein, notwithstanding any such different or additional facts.
If any provision of this Release or application thereof is held
invalid, the invalidity shall not affect other provisions or applications of the
Release which can be given effect without the invalid provision or application.
To this end, the provisions of this Release are severable.
Employee represents and warrants that Employee has not heretofore
assigned or transferred or purported to assign or transfer to any person, firm
or corporation any claim, demand, right, damage, liability, debt, account,
action, cause of action, or any other matter herein released.
NOTICE TO EMPLOYEE
The law requires that Employee be advised and Company hereby advises
Employee in writing to consult with an attorney and discuss this Release before
executing it. Employee acknowledges Company has provided to Employee at least 21
calendar days within which to review and consider this Release before signing
it.
Should Employee decide not to use the full 21 days, then Employee
knowingly and voluntarily waives any claims that Employee was not in fact given
that period of time or did not use the entire 21 days to consult an attorney
and/or consider this Release. Employee acknowledges that Employee may revoke
this Release for up to seven calendar days following Employee's execution of
this Release and that it shall not become effective or enforceable until
2.
<PAGE>
the revocation period has expired. Employee further acknowledges and agrees that
such revocation must be in writing addressed to Company as follows:
_____________________, and received by Company as so addressed not later than
midnight on the seventh day following execution of this Release by Employee. If
Employee so revokes this Release, the Release shall not be effective or
enforceable and Employee will not receive the monies and benefits described
above. If Employee does not revoke this Release in the time frame specified
above, the Release shall become effective at 12:00:01 A.M. on the eighth day
after it is signed by Employee.
PLEASE READ CAREFULLY. THIS AGREEMENT CONTAINS A
GENERAL RELEASE OF ALL KNOWN AND UNKNOWN CLAIMS.
I have read and understood the foregoing General Release, have been
advised to and have had the opportunity to discuss it with anyone I desire,
including an attorney of my own choice, and I accept and agree to its terms,
acknowledge receipt of a copy of the same and the sufficiency of the monies and
benefits described above, and hereby execute this Release voluntarily and with
full understanding of its consequences.
Dated: ______________ _______________________________________
Employee
3.
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
This schedule contains summary financial
Information extracted from the Form 10-Q for the
quarter ended January 31, 1998 and is qualified in
its entirety by reference to such financial
statements.
</LEGEND>
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> OCT-31-1997
<PERIOD-END> JAN-31-1998
<CASH> 20,389
<SECURITIES> 0
<RECEIVABLES> 231,949
<ALLOWANCES> (11,333)
<INVENTORY> 0
<CURRENT-ASSETS> 246,176
<PP&E> 30,508
<DEPRECIATION> (19,607)
<TOTAL-ASSETS> 406,422
<CURRENT-LIABILITIES> 132,425
<BONDS> 107,679
0
0
<COMMON> 148
<OTHER-SE> 143,236
<TOTAL-LIABILITY-AND-EQUITY> 406,422
<SALES> 0
<TOTAL-REVENUES> 186,156
<CGS> 0
<TOTAL-COSTS> 115,231
<OTHER-EXPENSES> 61,373
<LOSS-PROVISION> (26)
<INTEREST-EXPENSE> 2,009
<INCOME-PRETAX> 7,569
<INCOME-TAX> 3,400
<INCOME-CONTINUING> 4,169
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 4,169
<EPS-PRIMARY> 0.28
<EPS-DILUTED> 0.27
</TABLE>
