FORM 10-K
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
(Mark one)
[x] ANNUAL REPORT PURSUANT TO SECTION 13 or 15(d) OF THE SECURITIES EXCHANGE
ACT OF 1934 For the Fiscal Year Ended October 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)
(415) 774-2700
(Registrant's telephone number, including area code)
Securities registered pursuant to Section 12(b) of the Act:
<TABLE>
<CAPTION>
Title of each class: Name of each exchange on which registered:
<S> <C>
Common Shares, par value $.01 per share New York Stock Exchange
Pacific Exchange
8 5/8% Senior Subordinated Debentures New York Stock Exchange
due 2004 Pacific Exchange
6 1/2% Convertible Subordinated Debentures New York Stock Exchange
due 2012 Pacific Exchange
</TABLE>
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]
On December 18, 1998, there were 15,279,048 Common Shares outstanding,
and the aggregate market value of the shares of Common Stock of URS Corporation
held by nonaffiliates was approximately $295.2 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 23, 1999.
<PAGE>
This Annual Report on Form 10-K 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 Annual Report on Form
10-K.
ITEM 1. BUSINESS
URS Corporation (the "Company") is a professional services firm
which provides a broad range of planning, design, applied science, and program
and construction management services. The Company provides these services in
seven markets: surface transportation, air transportation, railroads/transit,
commercial/industrial, facilities, water/wastewater and hazardous waste
management. The Company provides services to local, state, and federal
government agencies, as well as private clients in the chemical, pharmaceutical,
manufacturing, forest products, energy, oil, gas, mining, health care, water
supply, retail and commercial development, telecommunications, and utilities
industries.
The Company conducts business through 130 offices located
throughout the world, including the United States, Europe, and the Asia/Pacific
region. The Company has approximately 6,600 employees, many of whom hold
advanced degrees and have extensive experience in technical disciplines
applicable to the Company's business. The Company believes that it has the
technical resources and geographic presence to compete for local, regional,
national, and multinational projects worldwide.
Acquisitions
In March 1996, the Company acquired, for $78.8 million, publicly
held Greiner Engineering, Inc., an Irving, Texas engineering and architectural
design services firm ("Greiner"). For a complete discussion of the impact of the
Greiner acquisition upon the operations of the Company, see Item 7, Management's
Discussion and Analysis of Financial Condition and Results of Operations.
In November 1997, the Company acquired, for $132.4 million,
privately-held Woodward-Clyde Group, Inc. ("W-C") of Denver, Colorado, a firm
specializing in geotechnical and environmental engineering. For a complete
discussion of the impact of the W-C acquisition upon the operations of the
Company, see Item 7, Management's Discussion and Analysis of Financial Condition
and Results of Operations.
Services
The Company provides professional services through 130 principal
offices in four major areas: planning, design, applied sciences, and program and
construction management. Each of these offices is responsible for obtaining
local or regional contracts, and multiple offices often work together to pursue
large national or multinational contracts. 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 multidisciplinary projects
throughout the world.
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Planning. Planning covers a broad range of assignments ranging from
conceptual design and technical and economic feasibility studies to community
involvement programs and archaeological investigations. In many instances, the
planning process is used to develop the blueprint, or overall scheme, for the
project. Planning analyses and reports are used to identify and evaluate
alternatives, estimate usage levels, determine financial feasibility, assess
available technology, ascertain economic and environmental impacts, and
recommend optimal courses of action. Projects can include master planning, land
use planning, feasibility studies, transportation planning, zoning, permitting,
and compliance with applicable regulations.
Design. The Company's professionals provide a broad range of design
and design-related services. Representative services include: architectural and
interior design and civil, structural, mechanical, electrical, sanitary,
environmental, water resources, geotechnical/underground, dam, mining, and
seismic engineering 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
material 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.
Applied Sciences. Applied sciences encompass diverse services for the
natural and built environment. These services are typically provided to protect
or restore the environment or to plan and design underground or earth-based
structures. Services include waste management and remediation engineering to
characterize waste or contamination, develop alternative remedies, and design
and implement optimum solutions; environmental management including the
development of pollution prevention programs and environmental mitigation plans;
and civil and geo-engineering including foundation engineering for all types of
manmade, earth-based structures, underground construction; and engineering
geology applied to natural hazard assessment and mitigation such as landslides,
active faults, and earthquakes.
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 oversees and coordinates the activities of
construction contractors. 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.
2
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Markets
The Company's strategy is to focus on the infrastructure market
which includes surface, air and rail transportation systems,
commercial/industrial and facilities projects, and environmental programs
involving water/wastewater and hazardous waste management.
Surface Transportation. The Company provides a full range of
services for all types of surface transportation systems and networks, including
highways, interchanges, bridges, tunnels, toll facilities, intelligent
transportation systems, parking facilities, and ports and marine structures.
Historically, the Company's emphasis has been on the design of new
transportation systems, but in recent years the rehabilitation of existing
systems has become a major focus.
Air Transportation. The Company provides comprehensive services
for the development of new airports and the modernization and expansion of
existing facilities. Assignments have included terminals, hangars, air cargo
buildings, runways, taxiways, aprons, air traffic control towers, and baggage,
communications, security, and fueling systems, as well as supporting
infrastructure such as peoplemover systems, roadways, parking garages, and
utilities. Projects have been completed at both general aviation and large-hub
international airports, as well as for airlines, the military, and the Federal
Aviation Administration.
Rail. In this market, the Company serves freight and passenger
railroads and urban mass transit agencies. The Company has planned, designed,
and managed the construction of commuter rail systems, freight rail systems,
heavy and light rail transit systems, and high speed rail. These capabilities
are complemented by specialized expertise in transportation structures,
including terminals, stations, parking facilities, bridges, tunnels, and power,
signals, and communications systems.
Commercial/Industrial. For industrial and commercial clients,
the Company provides expertise in facility siting and permitting, environmental
management and pollution control, waste management and remediation engineering,
and property redevelopment. The Company has developed engineering and
environmental solutions for clients in such major industries as aerospace,
electronics, chemicals, forest products, manufacturing, mining, natural gas,
oil, petrochemical, pharmaceutical, and power.
Facilities. The Company's architects and engineers specialize
in the design of new buildings and the rehabilitation and expansion of existing
facilities. The facility design practice covers a broad range of building types,
including facilities for education, criminal justice, healthcare, commerce,
industry, government, the military, transportation, sports, and recreation. With
the increased interest in historic preservation, adaptive reuse, and seismic
safety, a significant portion of the Company's practice focuses on facility
assessments, code and structural evaluations, and renovation projects to
maintain aging building infrastructure.
Water/Wastewater. The Company provides services for the
planning, design, and construction of all types of water and wastewater
facilities to ensure that the quality and quantity of the world's water supply
is maintained. Services include water quality studies; new and expanded water
supply, storage, distribution, and treatment systems; municipal wastewater
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treatment plants and sewer systems; watershed and stormwater management; and
flood control. The Company also responds to this market with specialized
expertise in the design and seismic retrofit of earth, rockfill and
roller-compacted concrete dams, as well as the design of reservoirs,
impoundments (including mine tailings disposal), and large outfall structures.
Hazardous Waste Management. In this market segment, 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 dispose of hazardous
and toxic waste effectively at contaminated sites. The Company also provides air
quality monitoring and designs modifications required to meet national and local
air quality standards. This work requires specialized knowledge of, and
compliance with, complex applicable regulations, as well as the permitting and
approval processes.
4
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Clients
<TABLE>
General
The Company's clients include local, state and Federal government
agencies, as well as private sector and international businesses. The Company's
revenues from local, state and Federal government agencies and private and
international businesses for the last five fiscal years are as follows:
<CAPTION>
1998 1997 1996 1995 1994
------ ------ ------ ------ ------
(In thousands)
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Domestic:
Local and
state
agencies $346,072 43% $255,423 63% $198,472 65% $ 99,871 56% $ 88,207 54%
Federal
agencies 116,340 14 67,042 17 64,226 21 58,751 33 59,611 36
Private
businesses 288,067 36 83,986 20 42,772 14 21,147 11 16,270 10
International 55,467 7 - - - - - - - -
-------- --- -------- --- -------- --- -------- --- -------- ---
Total $805,946 100% $406,451 100% $305,470 100% $179,769 100% $164,088 100%
======== === ======== === ======== === ======== === ======== ===
</TABLE>
Contract Pricing and Terms of Engagement
The Company primarily conducts its business through cost-plus,
fixed-price, and time-and-materials contracts.
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, which are applicable to all Federal
government contracts and which are partially incorporated in many local and
state agency contracts, 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 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
5
<PAGE>
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. In
addition, local and state agencies perform cost audits which historically have
resulted 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.
Under its time-and-materials contracts, the Company negotiates hourly
billing rates and charges its clients based on actual time expended. In
addition, it is reimbursed for the actual out-of-pocket costs of materials and
other direct incidental expenditures incurred in connection with performing the
contract. The Company's profit margins on time-and-materials contracts fluctuate
based on actual labor and overhead costs directly charged or allocated to
contracts compared with negotiated billing rates.
The Company currently earns approximately 7% of its revenues from
international operations, substantially all of which derives from the former W-C
business. The focus of the Company's international business is in Australia, New
Zealand, and continental Europe.
Backlog, Project Designations and Indefinite Delivery Contracts
The Company's contract backlog was $675 million at October 31, 1998,
compared to $470.4 million at October 31, 1997. The Company's contract backlog
consists of the amount billable at a particular point in time for future
services under executed 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 $675 million at October 31, 1998,
approximately 30%, or $200 million, is not reasonably expected to be filled
within the next fiscal year ending October 31, 1999.
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 $504 million at October 31, 1998, as compared
to $446 million at October 31, 1997. Typically, a significant portion of
designations are converted into signed contracts. However, there is no assurance
this will continue to occur in the future.
6
<PAGE>
<TABLE>
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. 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 are 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, 1998, the potential value of the Company's five largest
indefinite delivery contracts was as follows:
<CAPTION>
At October 31, 1998
-------------------------------------
Total Revenues Estimated
Potential recognized thru Funded Estimated Remaining
Contract Term Values October 31, 1998 Backlog Designations Values
- -------- ---- ------------ ----------------- ------- ------------ ------------
(In millions)
<S> <C> <C> <C> <C> <C> <C>
"METRIC"(1) 1997-2004 $190.0 $ 1.6 $ 8.7 $ 3.1 $176.6
"Navy CLEAN"(2) 1989-1999 166.0 146.4 4.7 0.5 14.4
"MRS OAMS"(3) 1997-2003 150.0 0.6 5.1 0.5 143.8
"EPA RAC 9"(4) 1998-2008 140.0 - - - 140.0
"EPA RAC 10"(5) 1998-2008 100.0 - - - 100.0
------ ------- ----- ----- ------
Total $746.0 $148.6 $18.5 $4.1 $574.8
====== ======= ===== ===== ======
</TABLE>
Competition
The 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
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, or the ability to
provide services globally. The Company believes that it competes favorably with
respect to each of these factors in the market areas it serves.
- -----------------
The names of the clients and the complete titles of the contracts listed in the
table above are:
1. Department of the Air Force, McClellan Environmental Remediation
Implementation Contract.
2. Department of the Navy, Comprehensive Long-Term Environmental Action -
Navy.
3. Department of the Air Force, McClellan Remedial Systems Operations and
Maintenance Services.
4. United States Environmental Protection Agency, Response Action Contract,
Region 9.
5. United States Environmental Protection Agency, Response Action Contract,
Region 10.
7
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Employees
The Company has approximately 6,600 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. Nineteen 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.
ITEM 2. PROPERTIES
The Company leases office space in 130 principal locations throughout
the world. 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 2007. 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
Various legal proceedings are pending against the Company or its
subsidiaries alleging breaches of contract or negligence in connection with the
Company's performance of professional services. In some actions, damages
(including punitive or treble damages) are sought which substantially exceed the
Company's insurance coverage. Based upon management's experience that most legal
proceedings settle for less than any claimed damages, at this time management
does not believe that any of such proceedings are likely to result in a judgment
against, or settlement by, the Company materially exceeding the Company's
insurance coverage or have a material adverse effect on the consolidated
financial position and operations of the Company.
8
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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, 1998.
<TABLE>
ITEM 4A. EXECUTIVE OFFICERS OF THE REGISTRANT
<CAPTION>
Name Position Held Age
- ---- ------------- ---
<S> <C> <C>
Martin M. Koffel.............Chief Executive Officer, President 59
and Director of the Company
from May 1989; Chairman of the
Board from June 1989.
Kent P. Ainsworth............Executive Vice President from April 1996, 52
Vice President and Chief Financial Officer
of the Company from January 1991;
Secretary of the Company
from May, 1994.
Robert L. Costello . . . . Executive Vice President, URS Greiner 47
Woodward Clyde ("URSGWC"),
the Company's principal operating division,
since November 1998; Executive Vice
President, URS Greiner ("URSG"), the
Company's former principal operating division,
from November 1997 to October 1998;
President of Greiner Engineering, Inc., a
division of the Company from April 1996 to
to October 1997; Vice President and
Director of the Company since
April 1996; President and Chief Executive
Officer of Greiner Engineering, Inc., from
August 1995 to March 1996 and Director of same
August 1995 to March 1996; President and
Chief Operating Officer of same from
February 1994 to August 1995;
Executive Vice President and
Chief Financial Officer of same from
August 1988 to August 1994.
9
<PAGE>
Name Position Held Age
- ---- ------------- ---
Joseph Masters...............Vice President and General Counsel 42
of the Company since July 1997,
Vice President, Legal, from
April 1994 to June 1997; Vice President
and Associate General Counsel of
URS Consultants, Inc. from
May 1992 to April 1994;
outside counsel to the Company
from January 1990 to May 1992.
Irwin L. Rosenstein . . . President of URSGWC, the Company's 62
principal operating division, since November
1998; President of URSG from November
1997 to October 1998, President of
URS Consultants, Inc., the Company's
former principal operating division,
from February 1989 to November 1997;
Director of the Company since February
1989; Vice President of the Company
since 1987.
Jean-Yves Perez . . . . . . Director of the Company and Executive 53
Vice President of URSGWC, the
Company's principal operating division,
since November 1998; President of
Woodward-Clyde Group, Inc. ("W-C"),
a division of the Company from November 1997
to October 1998; Director of the
Company since November 1997; President
and Chief Executive Officer of W-C
from 1987 to October 1997.
</TABLE>
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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
Stock Exchange and the Pacific Exchange (under the symbol "URS"). At December
18, 1998, the Company had approximately 3,000 stockholders of record. The
following table sets forth the high and low closing sale prices of the Company's
common stock, as reported by The Wall Street Journal for the periods indicated.
MARKET PRICE
------------------------------
LOW HIGH
--- ----
Fiscal Period:
1997:
First Quarter $ 7.75 $ 10.38
Second Quarter $ 9.50 $ 10.88
Third Quarter $ 9.63 $ 15.06
Fourth Quarter $ 13.13 $ 18.81
1998:
First Quarter $ 12.13 $ 16.38
Second Quarter $ 13.00 $ 16.50
Third Quarter $ 16.00 $ 18.81
Fourth Quarter $ 14.06 $ 17.94
1999:
First Quarter $ 17.94 $ 23.25
(through December 18, 1998)
The Company has not paid cash dividends since 1986 and, at the present
time, management of the Company does not anticipate paying dividends in the near
future. Further, the Company is precluded from paying dividends on its
outstanding common stock pursuant to its senior secured revolving credit
facility with its lender and the Indenture governing the 85/8% Debentures. See
Item 8, Consolidated Financial Statements and Supplementary Data, Note 8, Notes
Payable and Long Term Debt and Note 11, Stockholders' Equity.
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, 1998. 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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<TABLE>
SUMMARY OF SELECTED FINANCIAL INFORMATION
(In thousands, except per share data)
<CAPTION>
Years Ended October 31,
-------------------------------------------------------------------------------------
1998 1997 1996 1995 1994
-------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Income Statement Data:
Revenues $805,946 $406,451 $305,470 $179,769 $164,088
-------- -------- -------- -------- --------
Operating expenses:
Direct operating 478,640 241,002 187,129 108,845 102,500
Indirect, general and
administrative 277,065 141,442 102,389 63,217 55,455
-------- -------- -------- -------- --------
Total operating expenses 755,705 382,444 289,518 172,062 157,955
-------- -------- -------- -------- --------
Operating income 50,241 24,007 15,952 7,707 6,133
Interest expense, net 8,774 4,802 3,897 1,351 1,244
-------- -------- -------- -------- --------
Income before income taxes 41,467 19,205 12,055 6,356 4,889
Income tax expense 18,800 7,700 4,700 1,300 450
-------- -------- -------- -------- --------
Net income $ 22,667 $ 11,505 $ 7,355 $ 5,056 $ 4,439
======== ======== ======== ======== ========
Net income per share:
Basic $ 1.51 $ 1.15 $ .92 $ .72 $ .63
======== ======== ======== ======== ========
Diluted $ 1.43 $ 1.08 $ . 81 $ .66 $ .57
======== ======== ======== ======== ========
Weighted average shares:
Basic 14,963 10,018 8,020 7,000 7,080
Diluted 15,808 10,665 9,067 7,618 7,746
As of October 31,
-------------------------------------------------------------------------------------
1998 1997 1996 1995 1994
-------------------------------------------------------------------------------------
Balance Sheet Data:
Working capital $130,969 $ 63,236 $ 57,570 $ 36,307 $ 33,674
Total assets 451,704 210,091 194,932 75,935 65,214
Total debt 116,016 48,049 61,263 9,999 9,270
Stockholders' equity $166,360 $ 77,151 $ 56,694 $ 39,478 $ 33,973
</TABLE>
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ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
Results of Operations
Fiscal 1998 Compared with Fiscal 1997
Revenues in fiscal 1998 were $805.9 million, or 98% over the amount
reported in fiscal 1997. The growth in revenues is primarily attributable to the
acquisition and integration of W-C, the results of which are included commencing
November 1, 1997. The integration of W-C's corporate management, administration,
human resources, accounting and finance, information systems and, to a lesser
extent, marketing and sales functions, immediately followed the acquisition.
Direct operating expenses, which consist of direct labor and direct
expenses including subcontractor costs, increased $237.6 million, or 99%, over
the amount reported in fiscal 1997. The increase is due to the addition of the
direct operating expenses of W-C and to increases in subcontractor costs and
direct labor costs as well. Indirect general and administrative expenses
("IG&A") increased to $277.1 million in fiscal 1998 from $141.4 million in
fiscal 1997 as a result of the addition of the W-C overhead as well as an
increase in business activity. Expressed as a percentage of revenues, IG&A
expenses decreased slightly from 35% in fiscal 1997 to 34% in fiscal 1998. The
Company attributes this stability to the cost controls exercised by the Company.
Net interest expense increased to $8.8 million in fiscal 1998 from $4.8 million
in fiscal 1997 as a result of increased borrowings incurred in connection with
the acquisition of W-C.
With an effective income tax rate of 45% in 1998, the Company earned
net income of $22.7 million while in 1997 net income was $11.5 million after an
effective income tax rate of 40%. The increase in the effective tax rate was
primarily due to the consolidation of W-C and to nondeductible goodwill, state
taxes, and operating in countries outside the United States with higher tax
rates. The Company earned $1.43 per share on a diluted basis in fiscal 1998
compared to $1.08 per share in fiscal 1997.
The Company's backlog of signed and funded contracts at October 31,
1998, was $675 million as compared to $470.4 million at October 31, 1997. The
value of the Company's designations was $504 million at October 31, 1998, as
compared to $446 million at October 31, 1997.
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<PAGE>
Fiscal 1997 Compared with Fiscal 1996
Revenues in fiscal 1997 were $406.5 million, or 33% over the amount
reported in fiscal 1996. The growth in revenues is primarily attributable to the
acquisition of Greiner, the results of which are included commencing April 1,
1996. Accordingly, in fiscal 1997 the results of operations of Greiner were
included for twelve months compared to only seven months in fiscal 1996.
Direct operating expenses, which consist of direct labor and direct
expenses including subcontractor costs, increased $53.9 million, or 29%, over
the amount reported in fiscal 1996. The 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. IG&A expenses increased to $141.4 million in fiscal
1997 from $102.4 million in fiscal 1996 as a result of the addition of the
Greiner overhead as well as an increase in business activity. Expressed as a
percentage of revenues, IG&A expenses increased slightly from 34% in fiscal 1996
to 35% in fiscal 1997. The Company attributes this stability to the cost
controls exercised by the Company. Net interest expense increased to $4.8
million in fiscal 1997 from $3.9 million in fiscal 1996 as a result of increased
borrowings incurred in connection with the acquisition of Greiner.
With an effective income tax rate of 40% in 1997, the Company earned
net income of $11.5 million while in 1996 net income was $7.4 million after an
effective income tax rate of 39%. The Company earned $1.08 per share on a
diluted basis in fiscal 1997 compared to $.81 per share in fiscal 1996.
The Company's backlog of signed and funded contracts at October 31,
1997, was $470.4 million as compared to $399.2 million at October 31, 1996. The
value of the Company's designations was $446 million at October 31, 1997, as
compared to $295.9 million at October 31, 1996.
Income Taxes
The Company currently has $4.6 million net operating loss ("NOL")
carryforwards which are limited to $750,000 per year, pursuant to Section 382 of
the Internal Revenue Code, related to its October 1989 quasi-reorganization. The
Company also has available $7.8 million of foreign NOLs. These NOLs are
available only to offset income earned in foreign jurisdictions.
The Company has recorded deferred tax liabilities. The deferred tax
liability increased primarily because of nondeductible goodwill and other
liabilities related to the acquisition of W-C. The valuation allowance was
increased by a net of a decrease of $260,000 due to the utilization of net
operating losses and an increase of $2.1 million resulting from the W-C
acquisition.
14
<PAGE>
<TABLE>
Liquidity and Capital Resources
The Company's liquidity and capital measurements are set forth below:
<CAPTION>
October 31,
---------------------------------------------
1998 1997 1996
---------------------------------------------
<S> <C> <C> <C>
Working capital $130,969,000 $63,236,000 $57,570,000
Working capital ratio 1.8 to 1 1.7 to 1 1.7 to 1
Average days to convert billed
accounts receivable to cash 72 71 85
Percentage of debt to equity 69.7% 62.2% 107.7%
</TABLE>
Cash and cash equivalents amounted to $36.5 million at October 31,
1998, an increase of $14.4 million from the prior fiscal year-end, principally
as a result of the increase in cash generated by domestic operations. During
fiscal year 1998, the Company repaid debt of $83.2 million, which included
scheduled principal payments on long-term debt of $12.3 million and loan payoffs
of $65.2 million. The Company also funded other operating requirements.
During fiscal 1998, cash flow provided by operating activities
totaled $32 million. This represented an increase of $20 million from 1997,
primarily due to the addition of W-C's contracts in process. The majority of the
operating cash flow was generated by domestic operations. The Company's working
capital has increased primarily due to the acquisitions of W-C and Greiner. The
Company intends to satisfy its working capital needs primarily through internal
cash generation.
During fiscal 1998, the Company paid $132 million for the purchase of
W-C, and incurred new borrowings of $110 million from establishing a long-term
Credit Agreement with a syndicate of banks led by Wells Fargo Bank, N.A. ("the
Bank"). The net proceeds of the debt were incurred to fund a portion of the W-C
acquisition and refinance bank debt previously incurred in the acquisition of
Greiner. The Company will be expected to pay scheduled principal installments of
$16.4 million on its term debt with the Bank annually through fiscal 2004. The
Company expects to make such payments from internally generated cash.
The Company is a professional services organization and, as such, is
not capital intensive. Capital expenditures during fiscal years 1998, 1997, and
1996 were $12.2 million, $5.1 million, and $3 million, respectively. The
expenditures were principally for computer-aided design and general purpose
computer equipment to accommodate the Company's growth.
On February 12, 1997, 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 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 million.
15
<PAGE>
At October 31, 1998, the Company's senior secured revolving credit
facility with the Bank provides for advances up to $40 million. Also at October
31, 1998, the Company had outstanding letters of credit totaling $3 million
which reduced the amount available to the Company under its revolving credit
facility to $37 million.
The Company believes that its existing financial resources, together
with its planned cash flow from operations and its existing credit facilities,
will provide sufficient capital to fund its combined operations and capital
expenditure needs for the foreseeable future.
Cash paid during the period for:
Years Ended October 31,
-----------------------
1998 1997 1996
---- ---- ----
(In thousands)
Interest $ 7,857 $5,181 $4,142
Income taxes $18,398 $8,780 $6,483
Acquisitions
In March 1996, the Company acquired all of the capital stock of
Greiner for $78.8 million, comprising cash and debt of $69.3 million and 1.4
million shares of the Company's common stock.
(In thousands)
Purchase price of Greiner
(net of prepaid loan fees of $1.6 million) $77,184
Fair value of assets acquired (39,510)
-------
Excess purchase price over net assets acquired $37,674
=======
In November 1997, the Company acquired W-C for common stock, cash,
and debt of $132.4 million.
(In thousands)
Purchase price of W-C
(net of prepaid loan fees of $4 million) $128,366
Fair value of assets acquired (36,194)
--------
Excess purchase price over net assets acquired $ 92,172
========
16
<PAGE>
Factors Affecting Operating Results
In addition to the other information included or incorporated by reference
in this Form 10-K, the following factors could affect the Company's actual
results:
Dependence Upon Government Programs and Contracts
The Company derives more than 50% of its revenue from local, state and
Federal government agencies. Therefore, the demand for the Company's services is
directly related to legislative decisions about funding. These decisions, in
turn, depend on public concern with rebuilding and expanding the nation's
infrastructure and addressing various environmental problems. The Company is
very dependent upon the existence of these government programs and upon its
ability to participate in such programs. There is no assurance that public
pressure for these programs will continue, that governments will have the
available resources to fund such programs (especially in light of budget
constraints), that such programs will continue to be funded even if governments
have available financial resources, or that the Company will continue to be
awarded contracts under such programs. More than 50% of the Company's current
and anticipated work is related to government contracts. Some of these contracts
are subject to renewal or extension annually, so continued work by the Company
under these contracts in future periods is not assured. Contracts with
government agencies are subject to termination for convenience by the agency.
Contracts with government agencies that have adopted Federal Acquisition
Regulations are subject to an audit of actual costs incurred and provide for
upward or downward adjustment of payments if audited costs differ from billed
costs.
Pricing Risks
The Company's services are billed on a "cost-plus," "fixed-price," or
"time-and-materials" basis. Under cost-plus contracts, the rates for the
Company's direct and indirect costs are negotiated and fixed before work
commences. Under fixed-price contracts, the entire contract price is fixed
before work commences. Frequently, the Company submits proposals on extremely
complex projects to be performed over several years, which makes the accurate
forecasting of costs very difficult. In the past, the Company experienced low
profit margins or losses on certain of both its cost-plus and fixed-price
contracts because overhead and general and administrative costs were excessive
and could not be factored into contract proposals. The Company subsequently
reduced its overhead and general and administrative costs. However, to the
extent the Company does not control overhead, general and administrative and
other costs, or underestimates such costs, the Company may have low profit
margins, or may incur losses.
Environmental and Professional Liability Exposure; Adequacy of Insurance
Coverage
The Company's business involves the planning, design and program and
construction management of a wide variety of complex projects. If problems
develop with these projects, either while under construction or after they have
been completed, claims may be made against the Company alleging breach of
contract or negligence in the performance of its professional services. In
addition, the Company's professional services involve the planning, design and
program and construction management of waste management and pollution control
facilities. Federal laws, such as the Resource Conservation and Recovery Act of
1976 ("RCRA") and the Comprehensive Environmental Response, Compensation and
Liability Act of 1980 ("CERCLA"), and various state and local laws, strictly
regulate the handling, removal, treatment and transportation of toxic and
hazardous substances and impose liability for environmental contamination caused
by such substances. Moreover, so-called "toxic tort" litigation has increased
markedly in recent years as those injured by hazardous substances seek recovery
for personal injuries or property damage under common law theories. While the
Company does not directly handle,
17
<PAGE>
remove, treat or transport toxic or hazardous substances, some of the Company's
contracts require the Company to design systems for those functions or to
subcontract for or supervise such work. The Company may therefore be exposed to
claims for damages caused by environmental contamination arising from projects
on which the Company has worked.
The Company currently maintains an insurance program which includes
insurance coverage for primary professional liability and errors and omissions
("E&O") claims and environmental impairment liability claims, excess E&O
coverage, and both primary and excess comprehensive general liability insurance
coverage, all up to specified coverage limits and with a variety of standard
exclusions. While the Company believes that its insurance program currently is
adequate, there can be no assurance that the Company can maintain its existing
insurance coverage, that insurance coverage will be available under the
Company's existing or previous insurance programs with respect to claims made
against the Company, or that claims will not exceed the amount of any insurance
coverage which is available.
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.
Attraction and Retention of Qualified Professionals
Whether the Company can retain and expand its staff of qualified
technical professionals will help determine the Company's future success. There
can be shortages of qualified technical professionals in various fields. The
market for engineering and environmental professionals is competitive and there
can be no assurance that the Company will be successful in attracting and
retaining such professionals. In addition, the Company relies heavily upon the
experience and ability of its senior executive staff and the loss of a
significant portion of such individuals could have a material adverse effect on
the Company.
Principal Stockholders; Concentration of Stock Ownership
A significant portion of the Company's common stock is held by a small
number of institutional investors. RCBA is the sole general partner of Richard
C. Blum & Associates, L.P. ("RCBA"), which, as the sole general partner or the
investment advisor to certain entities, has voting and dispositive control with
respect to an aggregate of 2,933,888 shares of common stock, or approximately
19% of the outstanding common stock. Richard C. Blum, Vice Chairman of the Board
of Directors of the Company, is the majority stockholder of RCBA and directly
owns 22,982 shares of common stock, is the beneficiary of a Keogh Plan which
holds 2,454 shares of common stock, and holds options to purchase 10,000 shares
of common stock, all of which are currently exercisable. In addition, Heartland
Advisors, Inc. and FMR Corp. hold an aggregate of 3,407,995 shares of common
stock, or approximately 22% of the outstanding common stock. A sale by one or
more institutional investors of their common stock could materially adversely
affect its market price. A significant decline in the price of the common stock
due to these or other factors might make it more difficult for the Company to
sell equity securities or equity-related securities in the future at a time and
price that the Company deems appropriate.
Volatility; Market for the Shares
The Company's common stock is listed for trading on the New York Stock
Exchange and the Pacific Exchange. The stock has been thinly traded, which may
have caused substantial fluctuations in its market price. Fluctuations in
quarterly financial results and general economic conditions such as recessions
or high interest rates may also cause the market price of the stock to fluctuate
substantially.
18
<PAGE>
Competition
The architectural and engineering 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. Competition is based upon reputation, quality of service, price,
expertise and local presence.
Year 2000 Compliance
Generally. Many currently installed computer systems and software
products are coded to accept only two digit entries in the date code field.
These date code fields will need to accept four digit entries to distinguish
21st century dates from 20th century dates. Any programs that have
time-sensitive software may recognize a date using "00" as the year 1900 rather
than the year 2000. This could result in the computer shutting down or
performing incorrect computations. As a result, before December 31, 1999,
computer systems and software used by many companies may need to be upgraded to
comply with such "Year 2000" requirements.
The Company's Year 2000 Issues; State of Readiness. Year 2000 issues
which may affect the Company fall into two basic categories:
1. Business Disruption Issues. In certain situations, a Year
2000 problem could interfere with the operation of the Company's business. For
example, a Year 2000 problem could adversely impact: (a) the Company's ability
to interface with third parties, such as receiving payments from clients or
supplies from vendors on a timely basis, (b) the reliability of the Company's
internal information management systems, such as accounting systems, or (c) the
physical operation of systems used by the Company which have embedded
technology, such as elevator and telephone systems, security systems and other
physical office infrastructure. Such business disruption issues could arise from
internal Year 2000 problems in software used by the Company or from external
Year 2000 problems encountered by third parties.
The Company has commenced a Year 2000 compliance program to address
such issues:
Third Party Interfaces: The Company is discussing with its clients and
vendors the potential impact the Year 2000 issue will have on
their systems, including possible delays in receiving payment from
clients resulting from Year 2000 problems affecting such clients'
accounting and payables systems. As the Company assesses these
issues, it expects to develop contingency plans against such
payment delays and other Year 2000 problems which may include, for
example, holding additional cash reserves.
Internal Information Systems: The Company has completed an inventory of
its internal hardware and software and is currently performing a
Year 2000 readiness assessment and impact analysis for these
systems. Year 2000 issues for many of the Company's critical
internal information systems have been or are being addressed as
part of the previously planned upgrade of such systems following
the Company's acquisition of W-C. For example, the Company
believes that its e-mail software is currently Year 2000 compliant
and anticipates that in the near future its upgraded company-wide
accounting and financial reporting system and its payroll and
human resources system will be Year 2000 compliant.
Embedded Technology Systems: The Company currently is examining
infrastructure issues on an office-by-office basis. As the Company
renegotiates its office leases or enters into new leases, it is
incorporating language designed to protect the Company against
potential business
19
<PAGE>
interruption stemming from Year 2000 problems. The Company expects
to develop contingency plans to address any such embedded
technology issues as they are identified.
2. Client Deliverables. A limited number of projects undertaken by the
Company include the specification of computer-based components as part of the
work delivered to clients, and an even fewer number of projects involve the
actual development of software and hardware. The Company is implementing a plan
of action related to such client deliverables, which includes developing an
inventory of affected projects and contacting affected clients and offering
assistance with their Year 2000 compliance issues. However, because the Company
generally has not manufactured or designed this hardware or software, it
anticipates that the responsibility for any Year 2000 problems associated with
these deliverables ultimately will rest with the hardware or software
manufacturer. The Company also has drafted contract clauses to address Year 2000
issues which have been distributed to all officers with contracting authority
for insertion in the Company's future client contracts.
Costs. The Company has not incurred substantial incremental costs in
connection with its Year 2000 compliance programs. For example, the Company has
been working on integrating its internal information management systems after
the acquisition of W-C regardless of the Year 2000 issue and did not accelerate
the replacement of such systems due to Year 2000 compliance issues. The Company
has, however, devoted internal resources and hired some external resources to
assist with the implementation and monitoring of its Year 2000 compliance
programs. Such costs are not significant.
Risks. At this time, the Company does not anticipate that costs of its
Year 2000 compliance program or the risks to the Company which might arise from
the Year 2000 problem are likely to be material. However, because the Company
has no control over third parties' products or services, the Company cannot
ensure Year 2000 compliance by third parties. Problems encountered by the
Company's clients and vendors arising from the Year 2000 issue could have a
material adverse effect on the Company's business, financial condition and
results of operations. In addition, if the Company's plans to address the Year
2000 issue are not successfully or timely implemented, the Company may need to
devote more resources to the process and additional costs may be incurred, which
could have a material adverse effect on the Company's business, financial
condition and results of operations.
The costs of the Company's Year 2000 compliance programs and the
timetable on which the Company plans to complete such programs are based on
management's best estimates, and reflect assumptions regarding the availability
and cost of personnel trained in this area, the compliance plans of third
parties and similar uncertainties. However, due to the complexity and
pervasiveness of the Year 2000 issue, and in particular the uncertainty
regarding the compliance programs of third parties, no assurance can be given
that these estimates will be achieved, and actual results could differ
materially from those anticipated.
20
<PAGE>
ITEM 8. CONSOLIDATED FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
REPORT OF INDEPENDENT ACCOUNTANTS
The Board of Directors and Stockholders of URS Corporation:
In our opinion, the accompanying consolidated balance sheets and the related
consolidated statements of operations, changes in stockholders' equity and of
cash flows present fairly, in all material respects, the financial position of
URS Corporation and its subsidiaries at October 31, 1998 and 1997, and the
results of their operations and their cash flows for each of the three years in
the period ended October 31, 1998 in conformity with generally accepted
accounting principles. 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 of these
statements in accordance with generally accepted auditing standards which
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, assessing the accounting principles
used and significant estimates made by management, and evaluating the overall
financial statement presentation. We believe that our audits provide a
reasonable basis for the opinion expressed above.
/s/ PricewaterhouseCoopers L.L.P.
--------------------------------------------
PRICEWATERHOUSECOOPERS L.L.P
San Francisco, California
December 18, 1998
21
<PAGE>
<TABLE>
URS CORPORATION AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(In thousands, except per share data)
<CAPTION>
October 31,
--------------------------
1998 1997
----- -----
<S> <C> <C>
ASSETS
Current assets:
Cash and cash equivalents $ 36,529 $ 22,134
Accounts receivable, including retainage amounts of $16,101 and $9,191, less
allowance for doubtful accounts of $7,206 and $1,488 161,742 80,251
Costs and accrued earnings in excess of billings on contracts in process, less
allowance for losses of $6,896 and $1,838 77,881 37,741
Deferred income taxes -- 3,843
Prepaid expenses and other assets 10,033 2,885
-------- --------
Total current assets 286,185 146,854
Property and equipment at cost, net 29,517 17,848
Goodwill, net 129,748 42,485
Other assets 6,254 2,904
-------- --------
$451,704 $210,091
======== ========
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Long-term debt, current portion $ 16,400 $ 4,775
Notes payable 1,943 --
Accounts payable 37,236 20,198
Accrued salaries and wages 34,797 17,769
Accrued expenses and other 29,385 17,863
Billings in excess of costs and accrued earnings on contracts in process 35,455 23,013
-------- --------
Total current liabilities 155,216 83,618
Long-term debt 94,957 41,448
Deferred income taxes 5,377 --
Deferred compensation and other 29,794 7,874
-------- --------
Total liabilities 285,344 132,940
-------- --------
Commitments and contingencies (Note 10)
Stockholders' equity:
Common shares, par value $.01; authorized 20,000 shares;
issued 15,206 and 10,741 shares, respectively 152 107
Treasury stock (287) (287)
Additional paid-in capital 117,842 51,085
Retained earnings since February 21, 1990, date of quasi-reorganization 48,653 26,246
-------- --------
Total stockholders' equity 166,360 77,151
-------- --------
$451,704 $210,091
======== ========
<FN>
See Notes to Consolidated Financial Statements
</FN>
</TABLE>
22
<PAGE>
URS CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
(In thousands, except per share data)
Years Ended October 31,
--------------------------------
1998 1997 1996
---- ---- ----
Revenues $805,946 $406,451 $305,470
-------- -------- --------
Expenses:
Direct operating 478,640 241,002 187,129
Indirect, general and administrative 277,065 141,442 102,389
Interest expense, net 8,774 4,802 3,897
-------- -------- --------
764,479 387,246 293,415
-------- -------- --------
Income before taxes 41,467 19,205 12,055
Income tax expense 18,800 7,700 4,700
-------- -------- --------
Net income $ 22,667 $ 11,505 $ 7,355
======== ======== ========
Net income per share:
Basic $ 1.51 $ 1.15 $ .92
======== ======== ========
Diluted $ 1.43 $ 1.08 $ .81
======== ======== ========
See Notes to Consolidated Financial Statements
23
<PAGE>
<TABLE>
URS CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY
(In thousands)
<CAPTION>
Common Shares Additional Total
---------------------- Treasury Paid-in Retained Stockholders'
Number Amount Stock Capital Earnings Equity
-------- -------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C> <C>
Balances, October 31, 1995 7,167 $ 71 $ (287) $ 31,791 $ 7,901 $ 39,476
Employee stock purchases 72 1 -- 399 -- 400
Issuance of 1,401,983
shares in connection with
the Greiner acquisition 1,401 14 -- 9,449 -- 9,463
Quasi-reorganization
NOL carryforward -- -- -- 255 (255) --
Net income -- -- -- -- 7,355 7,355
-------- -------- -------- -------- -------- --------
Balances, October 31, 1996 8,640 86 (287) 41,894 15,001 56,694
Employee stock purchases 282 3 -- 2,026 -- 2,029
Issuance of 1,819,148
shares in connection with the
exercise of warrants 1,819 18 -- 6,905 -- 6,923
Quasi-reorganization
NOL carryforward -- -- -- 260 (260) --
Net income -- -- -- -- 11,505 11,505
-------- -------- -------- -------- -------- --------
Balances, October 31, 1997 10,741 107 (287) 51,085 26,246 77,151
Employee stock purchases 420 4 -- 4,601 -- 4,605
Issuance of 4,044,804
shares in connection with
the Woodward-Clyde acquisition 4 ,045 41 -- 61,896 -- 61,937
Quasi-reorganization
NOL carryforward -- -- -- 260 (260) --
Net income -- -- -- -- 22,667 22,667
-------- -------- -------- -------- -------- --------
Balances, October 31, 1998 15,206 $ 152 $ (287) $117,842 $ 48,653 $166,360
======== ======== ======== ======== ======== ========
<FN>
See Notes to Consolidated Financial Statements
</FN>
</TABLE>
24
<PAGE>
<TABLE>
URS CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOW
(In thousands)
<CAPTION>
Years Ended October 31,
------------------------------------------
1998 1997 1996
---- ---- ----
<S> <C> <C> <C>
Cash flows from operating activities:
Net income $ 22,667 $ 11,505 $ 7,355
--------- --------- ---------
Adjustments to reconcile net income to net cash provided (used) by
operating activities:
Depreciation and amortization 14,556 7,927 5,295
Allowance for doubtful accounts and losses (2,351) 1,540 (3,596)
Changes in current assets and liabilities:
Accounts receivable and costs and accrued earnings in excess
of billings on contracts in process (12,961) (14,193) (14,539)
Prepaid expenses and other assets (4,730) 461 1,411
Accounts payable, accrued salaries and wages and accrued
expenses 2,186 3,426 6,777
Billings in excess of costs and accrued earnings on contracts in process 23 4,839 18,174
Deferred income taxes 12,695 322 (4,164)
Other, net -- (3,292) 7,801
--------- --------- ---------
Total adjustments 9,418 1,030 17,159
--------- --------- ---------
Net cash provided by operating activities 32,085 12,535 24,514
--------- --------- ---------
Cash flows from investing activities:
Payment for business acquisition, net of cash acquired (36,937) -- (56,354)
Capital expenditures (12,201) (5,127) (2,962)
--------- --------- ---------
Net cash (used) by investing activities (49,138) (5,127) (59,316)
--------- --------- ---------
Cash flows from financing activities:
Proceeds from issuance of debt 110,000 -- 50,000
Principal payments on long-term debt (83,157) (13,568) (2,056)
Proceeds from sale of common shares 2,622 1,028 389
Proceeds from exercise of stock options 1,983 1,001 11
Proceeds from exercise of warrants -- 3,895 --
Other, net -- -- (8)
--------- --------- ---------
Net cash provided (used) by financing activities 31,448 (7,644) 48,336
--------- --------- ---------
Net increase (decrease) in cash 14,395 (236) 13,534
Cash at beginning of year 22,134 22,370 8,836
--------- --------- ---------
Cash at end of year $ 36,529 $ 22,134 $ 22,370
========= ========= =========
<FN>
See Notes to Consolidated Financial Statements
</FN>
</TABLE>
25
<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 (the "Company"), all of which are wholly owned.
All significant intercompany accounts and transactions have been eliminated in
consolidation. The consolidated financial statements account for the acquisition
of Greiner Engineering, Inc. ("Greiner") and Woodward-Clyde Group, Inc. ("W-C")
in March, 1996 and November, 1997, respectively, as purchases. See Note 3,
Acquisitions.
Use of Estimates
The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates and
assumptions that effect the reported amount of assets and liabilities and
disclosures of contingent assets and liabilities at the date of the financial
statements and the reported amounts of revenues and expenses during the
reporting period. Actual results could differ from those estimates.
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 United States 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 1998 are
subject to review by the United States Government.
26
<PAGE>
Concentration of Credit Risk
Financial instruments which potentially subject the Company to
concentrations of credit risk consist principally of trade receivables.
Concentrations of credit risk with respect to trade receivables are limited due
to the large numbers of customers comprising the Company's customer base and
their dispersion across different business and geographic areas. As of October
31, 1998 and 1997, the Company had no significant concentrations of credit risk.
The Company maintains reserves for potential credit losses and such losses have
been within management's expectations. Substantially all cash balances are held
in one financial institution and at times exceed federally insured limits.
Cash and Cash Equivalents
The Company considers all highly liquid investments with original
maturities of three months or less to be cash equivalents.
Fair Value of Financial Instruments
Carrying amounts of certain of the Company's financial instruments
including cash, accounts receivable, accounts payable and other liabilities
approximate fair value due to their short maturities. Based on borrowing rates
currently available to the Company for loans with similar terms, the carrying
values of long-term debt approximate fair value.
Income Taxes
The Company uses an asset and liability approach for financial
accounting and reporting for income taxes. Deferred income tax assets and
liabilities are computed annually for differences between the financial
statement and tax bases of assets and liabilities that will result in taxable or
deductible amounts in the future based on enacted tax laws and rates applicable
to the periods in which the differences are expected to affect taxable income.
Valuation allowances are established when necessary to reduce deferred tax
assets to the amount expected to be realized. Income tax expense is the tax
payable for the period plus or minus the change in deferred tax assets and
liabilities during the period.
Property and Equipment
Property and equipment are stated at cost. In the year assets are
retired or otherwise disposed of, the costs and related accumulated depreciation
are removed from the accounts and any gain or loss on disposal is included in
income. Depreciation is provided on the straight-line method using composite
estimated lives ranging from 5 to 10 years for property and equipment. Leasehold
improvements are amortized over the length of the lease or estimated useful
life, whichever is less.
27
<PAGE>
Income Per Common Share
The Company has adopted the provisions of Statement of Financial
Accounting Standards No. 128 ("SFAS 128"), Earnings Per Share, effective
November 1, 1997. 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 data):
Years Ended October 31,
---------------------------
1998 1997 1996
---- ---- ----
Numerator - Basic
Net income $22,667 $11,505 $ 7,355
======= ======= =======
Denominator - Basic
Weighted-average common stock outstanding 14,963 10,018 8,020
======= ======= =======
Basic income per share $ 1.51 $ 1.15 $ .92
======= ======= =======
Numerator - Diluted
Net income $22,667 $11,505 $ 7,355
======= ======= =======
Denominator - Diluted
Weighted-average common stock outstanding 14,963 10,018 8,020
Effect of dilutive securities:
Stock options 845 647 1,047
------- ------- -------
15,808 10,665 9,067
======= ======= =======
Diluted income per share $ 1.43 $ 1.08 $ .81
======= ======= =======
Stock options to purchase 199,535 shares of common stock at prices
ranging from $7.38 to $31.25 per share were outstanding at October 31, 1996, 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 13,525 shares of common stock at prices
ranging from $13.63 to $31.25 per share were outstanding at October 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 7,000 shares of common stock at prices
ranging from $16.13 to $31.25 per share were outstanding at October 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.
28
<PAGE>
Industry Segment Information
The Company's single business segment, consulting, provides engineering
and architectural services to local and state governments, the Federal
government, the private sector and international businesses. The Company's
services are primarily utilized for planning, design and program and
construction management of infrastructure projects.
<TABLE>
The Company's revenues from local, state and Federal government
agencies, private businesses and internationally for the last three fiscal years
are as follows:
<CAPTION>
Years Ended October 31,
-----------------------------------------------------------------------------
1998 1997 1996
-----------------------------------------------------------------------------
(In thousands)
<S> <C> <C> <C> <C> <C> <C>
Domestic:
Local and state agencies $346,072 43% $255,423 63% $198,472 56%
Federal agencies 116,340 14 67,042 17 64,226 33
Private businesses 288,067 36 83,986 20 42,772 11
International 55,467 7 - - - -
-------- --- -------- --- -------- ---
Total $805,946 100% $406,451 100% $305,470 100%
======== === ======== === ======== ===
</TABLE>
Adoption of Statements of Financial Accounting Standards
In June 1997, the Financial Accounting Standards Board ("FASB")
issued Statement of Financial Accounting Standards No. 131, "Disclosures about
Segments of an Enterprise and Related Information" ("SFAS 131"), which is
effective for fiscal years beginning after December 15, 1997. In the initial
year of application, comparative information for earlier years is to be
restated. SFAS 131 need not be applied to interim financial statements in the
initial year of its application, but comparative information for interim periods
in the initial year of application is to be reported in financial statements for
interim periods in the second year of application. The Company will adopt SFAS
131 effective for its fiscal year beginning November 1, 1998. SFAS 131 requires
that a public business enterprise report financial and descriptive information
about its reportable operating segments. Operating segments are components of an
enterprise about which separate financial information is available that is
evaluated regularly by the chief operating decision maker in deciding how to
allocate resources and in assessing performance. Generally, financial
information is required to be reported on the basis that it is used internally
for evaluating segment performance and deciding how to allocate resources to
segments. The Company does not expect that adoption of SFAS 131 will have a
material adverse effect on its financial position or results of operations.
In June 1998, the FASB issued Statement of Financial Accounting
Standards No. 133, "Accounting for Derivative Instruments and Hedging
Activities" ("SFAS 133"). SFAS 133 establishes accounting and reporting
standards for derivative instruments, including derivative instruments that are
embedded in other contracts, and for hedging activities. SFAS 133 is effective
for all fiscal quarters of all fiscal years beginning after June 15, 1999. The
Company will adopt SFAS 133 effective for its fiscal quarter and year ending
October 31, 1999. The Company does not believe that adoption of SFAS 133 will
have a material adverse effect on its financial position or results of
operations.
29
<PAGE>
Reclassifications
Certain reclassifications have been made to the 1996 and 1997 financial
statements to conform to the 1998 presentation with no effect on net income as
previously reported.
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 $92.5 million was
eliminated against additional paid-in capital. The balance in retained earnings
at October 31, 1998, represents the accumulated net earnings subsequent to the
date of the quasi- reorganization.
NOTE 3. ACQUISITIONS
During the year ended October 31, 1996, the Company acquired Greiner
for an aggregate purchase price of $78.8 million, comprising cash and debt of
$69.3 million and 1.4 million shares of the Company's common stock. 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 operating results of Greiner are included in the
Company's results of operations from the date of purchase.
<TABLE>
The purchase price consisted of:
<CAPTION>
(In thousands)
<S> <C>
Cash paid $19,321
Term debt 50,000
Common stock 9,463
-------
$78,784
=======
The purchase price of Greiner (net of prepaid loan fees of $1.6 million) $77,184
Fair value of assets acquired (39,510)
-------
Excess purchase price over net assets acquired (goodwill) $37,674
=======
</TABLE>
During the year ended October 31, 1998, the Company acquired W-C for
an aggregate purchase price of $132.4 million, comprising cash of $39.2 million,
assumption of debt, and 4 million shares of the Company's common stock.
30
<PAGE>
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 operating results of W-C are
included in the Company's results of operations from the date of purchase.
<TABLE>
The purchase price consisted of:
<CAPTION>
(In thousands)
<S> <C>
Cash paid $ 39,232
Term debt 31,198
Common stock 61,936
--------
$132,366
========
The purchase price of W-C (net of prepaid loan fees of $4 million) $128,366
Fair value of assets acquired (36,194)
--------
Excess purchase price over net assets acquired (goodwill) $ 92,172
========
</TABLE>
The following unaudited pro forma summary presents the consolidated
results of operations as if the W-C acquisition had occurred at the beginning of
fiscal year end October 31, 1997, and does not purport to indicate what would
have occurred had the acquisition been made as of that date or of results which
may occur in the future.
Fiscal Year Ended October 31:
1997
----
(In thousands, except per share data)
Revenues $753,430
Net income $ 16,211
Net income per share $ 1.09
31
<PAGE>
NOTE 4. PROPERTY AND EQUIPMENT
Property and equipment consists of the following:
October 31,
-----------
1998 1997
---- ----
(In thousands)
Equipment $ 55,628 $ 29,871
Furniture and fixtures 17,417 5,335
Leasehold improvements 7,773 2,249
-------- --------
80,818 37,455
Less: accumulated depreciation
and amortization (51,301) (19,607)
-------- --------
Net property and equipment $ 29,517 $ 17,848
======== ========
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, 1998 and 1997, was $14.8 million and
$9.7 million, respectively. Goodwill is amortized on the straight-line method
over 30 years.
32
<PAGE>
NOTE 6. INCOME TAXES
The components of income tax expense applicable to the operations each
year are as follows:
Years Ended October 31,
--------------------------------------
1998 1997 1996
---- ---- ----
(In thousands)
Current:
Federal $11,170 $ 7,580 $ 5,020
State and local 1,920 1,860 1,560
Foreign 220 -- --
------- ------- -------
Subtotal 13,310 9,440 6,580
------- ------- -------
Deferred:
Federal 5,320 (1,450) (1,320)
State and local 170 (290) (560)
------- ------- -------
Subtotal 5,490 (1,740) (1,880)
------- ------- -------
Total tax provision $18,800 $ 7,700 $ 4,700
======= ======= =======
As of October 31, 1998, the Company has available net operating loss
("NOL") carryforwards for Federal income tax and financial statement purposes of
$4.6 million. The Company's NOL utilization is limited to $750,000 per year
pursuant to section 382 of the Internal Revenue Code, related to the Company's
October 1989 quasi-reorganization. The Company also has available $7.8 million
of foreign NOLs. These NOLs are available only to offset income earned in
foreign jurisdictions.
While the Company had available NOL carryforwards which partially
offset otherwise taxable income for Federal income tax purposes, for state tax
purposes such amounts are not necessarily available to offset income subject to
tax.
33
<PAGE>
The significant components of the Company's deferred tax assets and
liabilities as of October 31 are as follows:
Deferred tax assets/(liabilities) - due to:
1998 1997
---- ----
(In thousands)
Allowance for doubtful accounts $ 861 $ 400
Other accruals and reserves 14,425 6,620
Net operating loss 4,330 1,840
-------- --------
Total 19,616 8,860
Valuation allowance (4,330) (2,460)
-------- --------
Deferred tax asset 15,286 6,400
-------- --------
Accrual to cash (4,384) --
Revenue retentions (3,614) --
Acquisition liabilities (3,097) --
Other (5,436) --
Deferred gain and unamortized bond premium (1,269) (1,447)
Mark to market (2,645) --
Depreciation and amortization (218) (1,110)
-------- --------
Deferred tax liability (20,663) (2,557)
-------- --------
Net deferred tax asset/(liability) $ (5,377) $ 3,843
======== ========
The net change in the total valuation allowance for the year ended
October 31, 1998 was a decrease of $260,000 due to the utilization of net
operating losses and an increase of $2.1 million resulting from the W-C
acquisition.
34
<PAGE>
<TABLE>
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:
<CAPTION>
Years Ended October 31,
----------------------------------------------
1998 1997 1996
---- ---- ----
(In thousands)
<S> <C> <C> <C> <C>
Federal income tax expense based upon
Federal statutory tax rate of 35% $ 14,520 $6,720 $4,100
Nondeductible goodwill amortization 1,460 620 400
Nondeductible expenses 830 480 240
NOL carryforwards utilized (260) (260) (250)
State taxes, net of Federal benefit 1,890 1,120 660
Adjustment due to change in Federal and state rates (420) (610) -
Utilization of deferred tax allowance and other
adjustments 780 (370) (450)
------- ------- -----
Total taxes provided $18,800 $7,700 $4,700
======= ====== ======
</TABLE>
NOTE 7. RELATED PARTY TRANSACTIONS
Interest paid to related parties was $131,068 and $260,712 in fiscal
1997 and 1996, respectively. See Note 8, Notes Payable and Long-Term Debt.
The Company has agreements for business consulting services to be
provided by Richard C. Blum & Associates, Inc. ("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, during each of fiscal 1998,
1997 and 1996. Richard C. Blum also received an additional cash amount of
$21,500, $15,000 and $23,000 for his services as a Director of the Company in
fiscal 1998, 1997 and 1996, respectively.
35
<PAGE>
NOTE 8. NOTES PAYABLE AND LONG-TERM DEBT
Notes payable to banks consist of the following:
October 31,
------------------
1998 1997
---- ----
(In thousands)
Foreign collateralized lines of credit $920 $ --
==== =====
The Company maintains two foreign lines of credit which are
collateralized by assets of foreign subsidiaries having a carrying value of
approximately $4.7 million at October 31, 1998. The interest rates for both of
the foreign lines of credit was the prime commercial rate plus .75% consistent
with market conditions in the respective countries at October 31, 1998. The
approximate weighted average interest rates on the foreign lines of credit
ranged from 7.38% to 9.75% at October 31, 1998.
<TABLE>
Long-term debt consists of the following:
<CAPTION>
October 31,
-----------------------------
1998 1997
---- ----
(In thousands)
<S> <C> <C>
Third party:
Bank term loan, payable in quarterly installments $97,778 $35,655
6 1/2% Convertible Subordinated Debentures due
2012 (net of bond issue costs of $34 and $36) 2,003 2,108
85/8% Senior Subordinated Debentures due 2004 (net of discount
and bond issue costs of $3,162 and $3,437)
(effective interest rate on date of
restructuring was 25%) 3,293 3,018
10.95% note payable, due in annual installments
through 2001 (net of issue costs of $52) 1,951 -
Obligations under capital leases 10,071 7,268
-------- -------
115,096 48,049
Less:
Current maturities of long-term debt 16,501 4,775
Current maturities of notes payable 599 -
Current maturities of capital leases 3,039 1,826
-------- -------
$ 94,957 $41,448
======== =======
</TABLE>
36
<PAGE>
At October 31, 1998, the Company's senior secured revolving credit
facility with Wells Fargo Bank, N.A. (the "Bank") provides for advances up to
$40 million and expires October 31, 2003. Borrowings on the revolving credit
facility bear interest at the option of the Company 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 October 31, 1998, the
interest rate was based on the London Interbank Offered Rate ("LIBOR") of 5.97%,
plus a spread of 1.395% . At October 31, 1998, the Company had outstanding
letters of credit totaling $3 million which reduced the amount available to the
Company under its revolving credit facility to $37 million.
Also at October 31, 1998, the Company had outstanding with the Bank
$97.8 million of senior secured term loans payable over seven years beginning
October 1997. 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 October 31, 1998, the interest rate
was based on the LIBOR of 5.97%, plus a spread of 1.375%.
Related Parties
On February 12, 1997, 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 an additional paid-in capital of approximately $1.9
million.
On February 14, 1997, various partnerships managed by RCBA exercised
1,383,586 warrants held by such entities at $4.34 per share. The exercise price
of these warrants was paid by a combination $2 million of cash and the
cancellation of the $3 million 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. These equity transactions are
reflected in the Company's financial statements.
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 calculated to retire 70% of the debentures prior to
maturity began in February 1998. Interest is payable semiannually in February
and August. Interest is payable semiannually in January and July on the
Company's 8-5/8% Senior Subordinated Debentures due 2004 ("8-5/8% Debentures").
Both the 6-1/2% Convertible Subordinated Debentures and the 8-5/8% Debentures
are subordinate to all debt to the Bank.
Maturities
The amounts of long-term debt outstanding at October 31, 1998, maturing
in the next five years are as follows:
(In thousands)
1999 $17,101
2000 17,114
2001 17,239
2002 16,501
2003 16,501
Thereafter 20,569
Amounts payable under capitalized lease agreements are excluded from the above
table.
37
<PAGE>
NOTE 9. OBLIGATIONS UNDER LEASES
Total rental expense included in operations for operating leases for
the fiscal years ended October 31, 1998, 1997 and 1996, amounted to $30.6
million, $14.9 million and $10.9 million, 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 2007.
Obligations under noncancelable lease agreements are as follows:
Capital Operating
Leases Leases
------- ---------
(In thousands)
1999 $ 3,239 $22,443
2000 2,561 19,455
2001 2,315 14,767
2002 1,445 10,341
2003 511 6,769
Thereafter - 10,718
------- -------
Total minimum lease payments $10,071 $84,493
=======
Less amounts representing
interest 1,978
-----
Present value of net minimum
lease payments $ 8,093
=======
NOTE 10. COMMITMENTS AND CONTINGENCIES
Currently, the Company has $51 million per occurrence and $52 million
aggregate commercial general liability insurance coverage. The Company is also
insured for professional errors and omissions ("E&O") and contractor pollution
liability ("CPL") claims with an aggregate limit of $50 million after a
self-insured retention of $.5 million. The E&O and CPL 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.
38
<PAGE>
NOTE 11. STOCKHOLDERS' EQUITY
Declaration of dividends, except common stock dividends, is restricted
by the senior secured credit facility with the Bank and the Indenture governing
the 8-5/8% Debentures. Further, declaration of dividends may be precluded by
existing Delaware law.
On March 26, 1991, the stockholders approved the 1991 Stock Incentive
Plan ("1991 Plan"). The 1991 Plan provides for the grant not to exceed 3,250,000
Restricted Shares, Stock Units and Options. As of October 31,1998, the Company
had issued 96,200 shares of Restricted Stock under the 1991 Plan.
Under the Employee Stock Purchase Plan ("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. Employees purchased 209,482
shares under the ESP Plan in fiscal 1998 and 140,469 shares in fiscal 1997.
The Company applies APB Opinion No. 25, "Accounting for Stock Issued to
Employees", and related interpretations in accounting for its 1991 Plan.
Accordingly, no compensation cost has been recognized for its 1991 Plan. Had
compensation cost for the Company's 1991 Plan been determined consistent with
SFAS Statement No. 123, "Accounting for Stock-Based Compensation", the Company's
net income and earnings per share would have been reduced to the pro forma
amounts indicated below:
Years Ended October 31,
-----------------------
1998 1997 1996
---- ---- ----
(In thousands, except per share data)
Net income: As reported $22,667 $11,505 $7,355
Pro forma $22,343 $11,237 $7,223
Basic earnings As reported $ 1.51 $ 1.15 $ .92
per share: Pro forma $ 1.49 $ 1.04 $ .81
Diluted earnings As reported $ 1.43 $ 1.08 $ .81
per share: Pro forma $ 1.41 $ 1.04 $ .78
39
<PAGE>
<TABLE>
A summary of the status of the stock options granted under the
Company's 1991 Plan for the years ended October 31, 1998, 1997 and 1996, is
presented below:
<CAPTION>
1998 1997 1996
-------------------------- -------------------------- ------------------------------
Weighted- Weighted- Weighted-
Average Average Average
Exercise Exercise Exercise
Shares Price Shares Price Shares Price
------ ----- ------ ----- ------ -----
<S> <C> <C> <C> <C> <C> <C>
Outstanding at beginning of
year 1,508,280 $ 7.70 1,382,434 $ 6.64 1,160,900 $6.61
Granted 644,500 $ 14.63 280,000 $ 10.63 242,900 $6.76
Exercised (98,356) $ 7.07 (138,287) $ 7.52 (2,000) $5.63
Forfeited ( 23,330) $ 14.40 (15,867) $ 7.68 (19,366) $6.89
--------- ---------- ---------
Outstanding at end of year 2,031,094 $ 11.12 1,508,280 $ 7.70 1,382,434 $6.64
========= ========= =========
Options exercisable at year- 1,154,388 $ 6.96 1,064,683 $ 6.50 1,029,733 $6.66
end
Weighted-average fair value
of options granted during
the year $3.55 $3.30 $2.02
</TABLE>
<TABLE>
The following table summarizes information about stock options outstanding at October
31, 1998:
<CAPTION>
Outstanding Exercisable
- ------------------------------------------------------------------------------------------ -------------------------------------
Weighted-Average
Range of Number Remaining Weighted-Average Number Weighted-Average
Exercise Prices Outstanding Contractual Life Exercise Price Exercisable Exercise Price
--------------- ----------- ---------------- -------------- ----------- --------------
<S> <C> <C> <C> <C> <C>
$3.00 - $8.00 1,017,650 5.5 years $ 6.00 955,111 $5.94
$8.01 - $17.06 1,013,444 8.7 years $ 13.11 199,277 $9.71
---------- ----------
2,031,094 1,154,388
========== ==========
</TABLE>
<TABLE>
The fair value of each option grant was estimated on the date of grant
using the Black-Scholes option-pricing model with the following assumptions:
<CAPTION>
1998 1997 1996
---- ---- ----
<S> <C> <C> <C>
Risk-free interest rates 4.43 % - 5.79% 5.81% - 6.53% 5.46% - 6.53%
Expected life 4 years 4 years 4 years
Volatility 28.30% 24.73% 24.73%
Expected dividends None None None
</TABLE>
40
<PAGE>
NOTE 12. SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION
Cash paid during the period for:
Years Ended October 31,
----------------------------------
1998 1997 1996
---- ---- ----
(In thousands)
Interest $ 7,857 $5,181 $4,142
Income taxes $18,398 $8,780 $6,483
In February 1997, RCBA exercised certain warrants. The exercise price
of these warrants was paid by a combination of $2 million of cash and the
cancellation of $3 million of debt drawn under the Company's line of credit with
certain RCBA entities.
Equipment purchased through capital lease obligations was $12.2
million, $4.3 million and $1.5 million for the years ended October 31, 1998,
1997 and 1996.
In March 1996, the Company acquired all of the capital stock of Greiner
for $78.8 million.
(In thousands)
Purchase price of Greiner
(net of prepaid loan fees of $1.6 million) $77,184
Fair value of assets acquired (39,510)
-------
Excess purchase price over net assets acquired $37,674
=======
In November 1997, the Company acquired all of the capital stock of
W-C for $132.4 million.
(In thousands)
Purchase price of W-C
(net of prepaid loan fees of $4 million) $128,366
Fair value of assets acquired (36,194)
--------
Excess purchase price over net assets acquired (goodwill) $ 92,172
========
NOTE 13. 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 $4.9 million, $2
million and $1.6 million were made to the plan in fiscal 1998, 1997 and 1996,
respectively.
41
<PAGE>
<TABLE>
NOTE 14. VALUATION AND ALLOWANCE ACCOUNTS
<CAPTION>
Additions
Charged to Deductions
Beginning Costs and from Ending
Balance Expenses Reserves Balance
------- -------- -------- -------
(In thousands)
<S> <C> <C> <C> <C>
October 31, 1998
Allowances for losses and doubtful accounts $3,326 $11,721 $ 945 $14,102
October 31, 1997
Allowances for losses and doubtful accounts $4,866 $ 995 $2,535 $ 3,326
October 31, 1996
Allowances for losses and doubtful accounts $1,270 $ 4,679 $1,083 $ 4,866
</TABLE>
The allowance for losses and doubtful accounts increased significantly
in fiscal 1998 due to the acquisition of W-C.
NOTE 15. SELECTED QUARTERLY FINANCIAL DATA (UNAUDITED)
Selected quarterly financial data for fiscal 1998 and 1997 is summarized as
follows:
Fiscal 1998 Quarters Ended
-----------------------------------------------
Jan. 31 Apr. 30 July 31 Oct. 31
-------- -------- -------- --------
(In thousands, except per share data)
Revenues $186,156 $195,182 $207,484 $217,124
Operating income 9,578 11,416 14,271 14,976
Net income $ 4,169 $ 4,943 $ 6,389 $ 7,166
Income per share:
Basic $ .28 $ .33 $ .43 $ .47
======== ======== ======== ========
Diluted $ .27 $ .31 $ .40 $ .45
======== ======== ======== ========
Weighted-average
number of shares 15,632 15,723 15,970 15,961
======== ======== ======== ========
Fiscal 1997 Quarters Ended
-----------------------------------------------
Jan. 31 Apr. 30 July 31 Oct. 31
-------- -------- -------- --------
(In thousands, except per share data)
Revenues $ 95,541 $ 99,759 $100,196 $110,955
Operating income 5,081 5,458 6,280 7,188
Net income $ 2,196 $ 2,457 $ 3,181 $ 3,671
Income per share:
Basic $ .26 $ .24 $ .30 $ .35
======== ======== ======== ========
Diluted $ .25 $ .22 $ .28 $ .33
======== ======== ======== ========
Weighted-average
number of shares 8,784 11,171 11,294 11,126
======== ======== ======== ========
Operating income represents continuing operations before interest
income and interest expense.
42
<PAGE>
ITEM 9. CHANGES AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING
AND FINANCIAL DISCLOSURE
None.
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 23, 1999 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 23, 1999.
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 23, 1999.
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
Incorporated by reference from Item 8, Financial Statement and
Supplementary Data, Note 8, Notes Payable and Long-Term Debt and Note 7, Related
Party Transactions.
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, 1998 and October 31, 1997
Consolidated Statements of Operations
For the years ended October 31, 1998, 1997 and 1996
Consolidated Statements of Changes in Stockholders' Equity For the years
ended October 31, 1998, 1997 and 1996
Consolidated Statements of Cash Flows For the years ended October 31,
1998, 1997 and 1996
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.
43
<PAGE>
(a)(3) Exhibits
3.1 Certificate of Incorporation of the Company, filed as Exhibit
3.1 to the Company's Annual Report on Form 10-K for the fiscal
year ended October 31, 1991 (the "1991 Form 10-K"), and
incorporated herein by reference.
3.2 Bylaws of the Company, filed as Exhibit 3.2 to the Company's
Annual Report on Form 10-K for the fiscal year ended October
31, 1996 (the "1996 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 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) (the
"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 Incentive Compensation Plan of the Company, approved by the
Board of Directors on December 17, 1998, subject to the
approval of the Company's stockholders. FILED HEREWITH.
10.2 1991 Stock Incentive Plan of the Company, as amended effective
December 18, 1997, filed as Appendix A to the Company's
definitive proxy statement for its 1998 Annual Meeting of
Stockholders, filed with the SEC on February 17, 1998 (the
"1998 Proxy Statement"), and incorporated herein by reference.
10.3 Employee Stock Purchase Plan of the Company, as amended
effective December 18, 1997, filed as Appendix B to the 1998
Proxy Statement, and incorporated herein by reference.
10.4 Non-Executive Directors Stock Grant Plan of the Company,
adopted December 17, 1996, filed as Exhibit 10.5 to the 1996
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 1998 Incentive Compensation Plan of the Company. FILED
HEREWITH.
10.7 1998 Incentive Compensation Plan of URS Greiner. FILED
HEREWITH.
44
<PAGE>
10.8 1998 Incentive Compensation Plan of Woodward-Clyde. FILED
HEREWITH.
10.9 Non-Executive Directors Stock Grant Plan, as amended, filed as
Exhibit 10.1 to the Form 10-Q for the quarter ended January
31, 1998, and incorporated herein by reference.
10.10 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.
10.11 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.
10.12 Contingent Restricted Stock Award Agreement dated as of
December 16, 1997 between the Company and Martin M. Koffel.
FILED HEREWITH.
10.13 Contingent Restricted Stock Award Agreement dated as of
December 16, 1997 between the Company and Kent P. Ainsworth.
FILED HEREWITH.
10.14 Employment Agreement, dated December 16, 1991, between the
Company and Martin M. Koffel, filed as Exhibit 10.13 to the
1991 Form 10-K and incorporated herein by reference.
10.15 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.
10.16 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.
10.17 Employment Agreement, dated March 29, 1996, between Greiner,
Inc. and Robert L. Costello, filed as Exhibit 10.1 to the Form
10-Q for the quarter ended April 30, 1996 and incorporated
herein by reference.
10.18 Employment Agreement, dated November 1, 1997, between
Woodward-Clyde Group, Inc. and Jean-Yves Perez, filed as
Exhibit 10.1 to the Form 10-Q for the quarter ended April 30,
1998, and incorporated herein by reference.
10.19 Employment Agreement, dated as of March 20, 1998, between the
Company and Joseph Masters. FILED HEREWITH.
10.20 Amendment to Employment Agreement, dated October 11, 1994,
between URS Consultants, Inc., and Irwin L. Rosenstein, filed
as Exhibit 10.12(a) to the Company's Annual Report on Form
10-K for the fiscal year ended October 31, 1994, and
incorporated herein by reference.
10.21 Amendment to Employment Agreement dated as of October 13, 1998
between the Company and Martin M. Koffel. FILED HEREWITH.
10.22 Form of Amendment to Employment Agreement dated as of October
13, 1998 between the Company, URS Greiner Woodward-Clyde
Consultants, Inc., or URS Greiner Woodward-Clyde, Inc. and
each of Kent P. Ainsworth, Joseph Masters, Martin Tanzer,
Irwin L. Rosenstein, Robert Costello and Jean-Yves Perez.
FILED HEREWITH.
10.23 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.
10.24 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.
45
<PAGE>
10.25 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.
10.26 Post-Affiliation Agreement, dated July 19, 1989, between the
Company and URS International, Inc., filed as Exhibit 10.42 to
the Company's Annual Report on Form 10-K for the fiscal year
ended October 31, 1989 and incorporated herein by reference.
10.27 Form of Indemnification Agreement filed as Exhibit 10.34 to
the Company's Annual Report on Form 10-K for the fiscal year
ended October 31, 1992 and incorporated herein by reference;
dated as of May 1, 1992 between the Company and each of
Messrs. Ainsworth, Blum, Koffel, Madden, Praeger, Rosenstein
and Walsh; dated as of March 22, 1994 between the Company and
each of Admiral Foley and Mr. Der Marderosian; dated as of
March 29, 1996 between the Company and Mr. Costello; dated as
of November 6, 1996 between the Company and Mr. Glynn; dated
as of January 20, 1997 between the Company and Mr. Masters;
and dated as of November 17, 1997 between the Company and Mr.
Perez.
10.28 Agreement and Plan of Merger dated August 18, 1997, by and
among URS Corporation, Woodward-Clyde Group, Inc. and W-C
Acquisition Corporation, filed as Exhibit 2.1 to the Company's
Current Report on Form 8-K filed on August 21, 1997 and
incorporated herein by reference.
10.29 Credit Agreement, dated as of November 14, 1997, between URS
Corporation, the Financial Institutions listed therein as
Lenders and Wells Fargo Bank, National Association, as
Administrative Agent for the Lenders, filed as Exhibit 2.2 to
the Company's Current Report on Form 8-K filed on November 26,
1997, and incorporated herein by reference.
21.1 Subsidiaries of the Company. FILED HEREWITH.
23.1 Consent of PricewaterhouseCoopers L.L.P. FILED HEREWITH.
24.1 Powers of Attorney of the Company's directors and officers.
FILED HEREWITH.
27 Financial Data Schedule (filed with electronic version only).
(b)(1) Reports on Form 8-K.
None.
46
<PAGE>
SIGNATURES
Pursuant to the requirements of Section 13 or 29(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
Executive Vice President and
Chief Financial Officer
Dated: January 29, 1999
<TABLE>
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.
<CAPTION>
Signature Title Date
- --------- ----- ----
<S> <C> <C>
/s/ MARTIN M. KOFFEL Chairman of the Board January 29, 1999
- ----------------------------------------------------- of Directors and Chief
(Martin M. Koffel) Executive Officer
/s/ KENT P. AINSWORTH Executive Vice President, January 29, 1999
- ----------------------------------------------------- Chief Financial Officer
(Kent P. Ainsworth) Principal Accounting
Officer and Secretary
IRWIN L. ROSENSTEIN* Director January 29, 1999
- -----------------------------------------------------
(Irwin L. Rosenstein)
RICHARD C. BLUM* Director January 29, 1999
- -----------------------------------------------------
(Richard C. Blum)
RICHARD Q. PRAEGER* Director January 29, 1999
- -----------------------------------------------------
(Richard Q. Praeger)
47
<PAGE>
WILLIAM D. WALSH * Director January 29, 1999
- -----------------------------------------------------
(William D. Walsh)
RICHARD B. MADDEN* Director January 29, 1999
- -----------------------------------------------------
(Richard B. Madden)
ARMEN DER MARDEROSIAN* Director January 29, 1999
- -----------------------------------------------------
(Armen Der Marderosian)
ADM. S. ROBERT FOLEY, JR., USN (RET.)* Director January 29, 1999
- -----------------------------------------------------
(Adm. S. Robert Foley, Jr., USN (Ret.))
ROBERT D. GLYNN, JR.* Director January 29, 1999
- -----------------------------------------------------
(Robert D. Glynn Jr.)
ROBERT L. COSTELLO* Director January 29, 1999
- -----------------------------------------------------
(Robert Costello)
JEAN-YVES PEREZ* Director January 29, 1999
- -----------------------------------------------------
(Jean-Yves Perez)
*By
/s/ Kent P. Ainsworth
- -----------------------------------------------------
(Kent P. Ainsworth, Attorney-in-fact)
</TABLE>
48
Exhibit 10.1
URS CORPORATION
INCENTIVE COMPENSATION PLAN
Adopted by Compensation/Option Committee December 15, 1998
Effective November 1, 1998
1. Purpose. The URS Corporation ("URS") Incentive Equity Plan (the "Plan")
is intended to provide incentive compensation to individuals who make an
important contribution to the financial performance of URS and its Affiliates.
Specific Plan objectives are to: (i) focus key Employees on achieving specific
financial targets; (ii) reinforce a team orientation; (iii) provide significant
award potential for achieving outstanding performance; and (iv) enhance the
ability of URS and its Affiliates to attract and retain highly talented and
competent individuals.
2. Definitions.
(a) "Affiliate" shall mean any entity owned partially or totally by
URS.
(b) "Actual Awards" or "Award" shall mean the incentive amount earned
under the Plan by a Designated or Non-Designated Participant.
(c) "Actual Bonus Pool" or "Actual Pool" shall mean the calculated
amount available for distribution to all Designated and Non-Designated
Participants under the terms and provisions of the Plan.
(d) "Average Day Sales Outstanding" shall mean the average of the
twelve (12) months' Day Sales Outstanding.
(e) "Base Salary" shall mean 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.
(f) "Board" shall mean the Board of Directors of URS.
(g) "CEO" shall mean the Chief Executive Officer of URS.
(h) "Code" shall mean the Internal Revenue Code of 1986, as amended.
(i) "Compensation/Option Committee" or "Committee" shall mean the
Compensation/Option Committee of the Board. The Committee shall consist solely
of outside directors, as defined in Section 162(m) of the Code.
(j) "Contribution" shall mean Net Income before interest, taxes and
corporate general and administrative expenses with respect to the business
unit(s) for which a Designated Participant has accountability.
1.
<PAGE>
(k) "Covered Employees" shall mean the CEO and the four (4) highest
compensated officers, as defined in Section 162(m) of the Code, of URS and its
Affiliates.
(l) "Day Sales Outstanding" or "DSOs" shall mean ninety (90)
multiplied by a fraction the numerator of which is the sum of billed accounts
receivable plus unbilled accounts receivable minus billings in excess of cost,
and the denominator of which is the sum of the last three (3) months revenues,
with respect to the business unit(s) for which a Designated Participant has
accountability. DSOs shall be calculated monthly.
(m) "Designated Participant" shall mean an Employee of URS or an
Affiliate designated by the CEO or the Committee to participate in the Plan.
Designation will be made only in writing.
(n) "Employee" shall mean an employee of URS or an Affiliate.
(o) "Fiscal Year" shall mean the twelve (12) consecutive months
beginning November 1 and ending October 31.
(p) "Maximum Award" shall mean the maximum amount to be paid to a
Covered Employee for each Plan Year, which amount shall be three (3) times base
salary as in effect on the first day of the Plan Year.
(q) "Net Income" shall mean the consolidated revenue less all expenses
(including tax and interest charges) of URS. Net Income will be calculated after
all URS and URS Consultants bonuses are accrued and assumed to have been paid in
full.
(r) "New Sales" shall mean gross additions to backlog with respect to
the business unit(s) for which a Designated Participant has accountability.
(s) "Non-Designated Participant" shall mean an Employee who is not a
Covered Employee and who is 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. Unlike Designated
Participants, Non-Designated Participants will not be assigned Target Award
Percentages.
(t) "Performance Objectives" or "Objectives" shall mean the
pre-established financial goals based upon which performance will be assessed.
(u) "Plan" shall mean this URS Corporation Incentive Compensation
Plan, as amended from time to time.
(v) "Plan Year" shall mean the twelve (12) consecutive months
beginning November 1 and ending October 31 over which performance is measured
under this Plan.
(w) "Target Award" shall mean a Designated Participant's Target Award
Percentage multiplied by the Designated Participant's Base Salary earned during
the Plan Year. This amount represents the anticipated payout to the Designated
Participant if all applicable Performance Objectives are met.
2.
<PAGE>
(x) "Target Award Percentage" shall mean a percentage of Base Salary
assigned to a Designated Participant in accordance with the terms and provisions
of the Plan.
(y) "Target Bonus Pool" or "Target Pool" shall mean the amount
anticipated to be distributed to all Designated and Non-Designated Participants
if all applicable Performance Objectives are met. Separate Target Bonus Pools
may be established for URS and for one or more of its Affiliates and business
units, as determined by the Committee.
(z) "Termination" shall mean the Designated Participant's ceasing his
or her service with URS or any of its Affiliates for any reason whatsoever,
whether voluntarily or involuntarily, including by reason of death or permanent
disability.
(aa) "URS" shall mean URS Corporation, a Delaware corporation.
(bb) "Year-end" shall mean the end of the Fiscal Year.
3. How Awards Are Earned Under the Plan.
(a) General Plan Description. The Plan provides the opportunity for
key Employees to receive cash Awards based on the performance of URS, one or
more of its Affiliates and/or one or more of its business units and on
individual performance.
Here is an overview of how the Plan works. In general, certain
Designated Participants will be selected to participate in the Plan at the
beginning of or during the Plan Year. Upon selection to participate in the Plan,
each Designated Participant will be assigned a Target Award Percentage. This
Target Award Percentage, multiplied by the Designated Participant's Base Salary
earned during the Plan Year, will equal the Designated 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 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.
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 Bonus Pool upward or downward based
on actual performance in relationship to its Performance Objectives. Separate
Target Bonus Pools may be established for URS and each of its Affiliates.
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.
(b) Designated and Non-Designated Participants. Plan participation is
extended to selected Employees who, in the opinion of the CEO and/or the
Committee, have the opportunity to significantly impact the annual operating
success of URS and/or its Affiliates. These Employees are the Designated
Participants and will be notified in writing of their selection
3.
<PAGE>
to participate in the Plan. This notification letter for all Designated
Participants except Covered Employees will be signed by the CEO. The Committee
will determine the Plan participation of all Covered Employees, and the letter
of notification to a Covered Employee will be signed by the Chairman of the
Committee.
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, in his sole discretion.
(c) Target Award Percentages for Designated Participants. Each
Designated Participant will be assigned a Target Award Percentage by the
Committee. The Committee, in its sole discretion, may consider recommendations
made by the CEO as to individual Target Award Percentages for Designated
Participants (other than the CEO). The individual's Target Award Percentage,
when multiplied by the individual's Base Salary earned during the Plan Year,
represents the individual's Target Award, which is the anticipated payout to a
Designated Participant if the applicable Performance Objectives are met. Each
Designated Participant's Target Award Percentage will be included in the letter
of notification described in Section 3(b) above.
(d) Target Bonus Pool. The Target Bonus Pool will equal the sum of all
Target Awards for Designated Participants plus an amount set aside for possible
distribution to Non-Designated Participants.
(e) Performance Objectives. The Performance Objectives for the Plan
Year will be determined by the Committee. Performance Objectives will be based
on any one, all or a combination of the following: Net Income, Contribution,
Average Day Sales Outstanding, and New Sales. The weight to be given to each of
the financial measures listed in the preceding sentence shall be determined by
the Committee. Weighting may be subject to change based on the Plan measures of
Designated Participants, other than Covered Employees, at the end of the Plan
Year. The Committee may establish different Performance Objectives for URS, for
one or more Affiliates and for one or more business units and may establish
different Performance Objectives for each Designated Participant or for groups
of Designated Participants.
(f) Relationship Between Performance and the Actual Bonus Pool. The
Actual Bonus Pool will vary from the Target Pool based on the relationship
between the actual performance of URS or the relevant Affiliate or business
unit(s) and the Performance Objectives. The Actual Pool will vary in
relationship to the Target Pool based on a written schedule of possible outcomes
prepared by the Committee for each Plan Year, and such schedule shall include a
limit on the Actual Bonus Pool, which limit may be later raised at the
discretion of the Committee but without any effect on the Actual Award paid to a
Designated Participant who is a Covered Employee (who shall be subject to a
Maximum Award). The Committee may establish a separate schedule for URS, one or
more Affiliate or one or more business units.
4.
<PAGE>
(g) Actual Awards to Designated and Non-Designated Participants.
Actual Awards to Designated Participants will vary from the Target Award 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 and its Affiliates are under
no obligation to distribute any of the Actual Pool to Non-Designated
Participants. 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.
Notwithstanding any provision of the Plan to the contrary, the maximum
payment under the Plan for any Plan Year to any Designated Participant or
Non-Designated Participant shall not exceed three million dollars ($3,000,000).
(h) Special Rules for Covered Employees. Notwithstanding any provision
to the contrary in Sections 3(c), (e), and (f) above, the Committee shall
establish Target Award Percentages, Performance Objectives, the relationship
between actual performance and the Actual Bonus Pool, and any other term
necessary under the Plan to determine the Actual Awards for Covered Employees
not later than ninety (90) days after the beginning of each Fiscal Year;
provided, however, that such ninety (90) day requirement shall not apply in the
case of a Covered Employee whose remuneration, within the meaning of Section
162(m) of the Code, for the Fiscal Year, in the determination of the Committee,
is not expected to exceed one million dollars ($1,000,000).
4. Other Plan Provisions.
(a) Award Payment. Assessment of actual performance and payout of
Awards will be subject to completion of the Year-end independent audit and
certification by the Committee that the applicable Performance Objectives and
other material terms of the Plan have been met.
The Actual Award earned will be paid to the Designated Participant (or
the Designated Participant's heirs in the case of death) in cash within thirty
(30) days following the completion of both the independent audit and the
above-referenced certification by the Committee. Payroll and other taxes will be
withheld as required by law.
Notwithstanding the foregoing, no Award will be paid to any Covered
Employee under the Plan until the stockholders of URS have approved the material
terms of the Plan in accordance with Section 162(m) of the Code. In addition,
the material terms of the Plan must again be approved by the stockholders of URS
no later than the first stockholders' meeting in the fifth year following the
year in which the stockholders previously approved the material terms of the
Plan.
5.
<PAGE>
(b) Employment. In order to receive an Award under the Plan, a
Designated Participant must be employed by URS or an Affiliate on the last day
of the Plan Year, except as otherwise provided herein. Selection for
participation in the Plan does not convey any employment rights. Terms and
conditions of Designated Participants' employment agreements with URS or its
Affiliates addressing issues other than payment of bonus or incentive
compensation, if any, supersede the terms and conditions of the Plan.
(c) Termination. If Termination of a Designated Participant occurs
prior to the end of the Plan Year by reason of death, permanent disability or
retirement (excluding the retirement of a Covered Employee), the Designated
Participant (or the Designated Participant's heirs in the case of death) will be
eligible to receive a pro-rata Award based on the time employed as a Designated
Participant and the Performance Objectives achieved for the Plan Year.
Designated Participants who have earned an Award on this basis will receive
payment on the same schedule as other Designated Participants. The formula used
to pro-rate the Awards shall be to adjust an otherwise full award by a fraction,
the numerator of which is the number of days (or whole months) for the which the
Designated Participant was employed as a Designated Participant during the Plan
Year and the denominator of which is 365 (or 12).
If Termination of a Designated Participant occurs prior to the end of
the Plan Year for any other reason (whether voluntarily or involuntarily), the
Designated Participant will forfeit the opportunity to earn an Award under the
Plan, except as otherwise provided for by the Committee; provided, however, that
if Termination of a Covered Employee occurs prior to the end of the Plan Year,
such Covered Employee shall not receive an Award at the discretion of the
Committee or otherwise except as provided in the preceding paragraph.
(d) Other Pro-Rata Awards. Individuals who have been hired and
selected during the Plan Year for Plan participation and who have served a
minimum of three (3) months as a Designated Participant will be eligible to
receive a pro-rata Award based on the time employed as a Designated Participant
and the Objectives achieved for the Plan Year, provided that the Designated
Participant is employed by URS or an Affiliate on the last day of the Plan Year
and, in the case of a Covered Employee, is selected for Plan participation on
his or her date of hire. The Committee will establish the Target Award
Percentage for individuals selected for Plan participation during the Plan Year
as soon as practicable after the individuals are selected, but not later than
fifteen (15) days after the selection date. The formula used to pro-rate the
Awards shall be to adjust an otherwise full award by a fraction, the numerator
of which is the number of days (or whole months) for which the individual was a
Designated Participant during the Plan Year and the denominator of which is 365
(or 12).
(e) Plan Funding. Estimated payouts for the Plan will be accrued
monthly and charged as an expense against the income statements of URS and its
Affiliates, as applicable. At the end of each fiscal quarter, the estimated
Actual Awards under 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 Designated Participants.
(f) Plan Administration. Responsibility for decisions and/or
recommendations regarding Plan administration are divided between the CEO and
the
6.
<PAGE>
Committee. Notwithstanding the foregoing, the Committee retains final authority
regarding all aspects of Plan administration, the resolution of any disputes,
and application of the Plan in any respect to a Covered Employee. The Committee
may, without notice, amend, suspend or terminate the Plan.
(g) Assignment of Employee Rights. No Employee has a claim or right to
be a Designated Participant or a Non-Designated Participant (collectively, a
"Participant") in the Plan, to continue as a Participant, or to be granted an
Award under the Plan. URS and its Affiliates are 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 or its
Affiliates, 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 and its Affiliates reserve the right to
elect any person to its offices and remove Employees in any manner and upon any
basis permitted by law.
Nothing contained in the Plan will be deemed to require URS or its
Affiliates 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.
(h) Withholding Tax. URS or an Affiliate will deduct from all Awards
paid under the Plan any taxes required by law to be withheld.
(i) Effective Date. The Plan is effective as of November 1, 1998, and
will remain in effect until suspended or terminated by the Committee.
(j) 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.
(k) Applicable Law. The Plan will be governed by and construed in
accordance with the laws of the State of California.
7.
URS CORPORATION
1998 INCENTIVE
COMPENSATION PLAN
<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>
I. PURPOSE OF THE PLAN
<PAGE>
I.1 PURPOSE
The URS Corporation ("URS") 1998 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:
o Focus key Employees on achieving specific financial
targets;
o Reinforce a team orientation;
o Provide significant award potential for achieving
outstanding performance; and
o Enhance the ability of URS to attract and retain highly
talented and competent individuals.
I-1
<PAGE>
II. HOW AWARDS ARE EARNED UNDER THE PLAN
<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 1998 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-1
<PAGE>
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.
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 1998, the Target Bonus Pool equals $482,200.
II-2
<PAGE>
II.5 URS PERFORMANCE OBJECTIVES
For 1998, 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 1998 Plan Year are as follows:
URS Corporation Performance Objectives and Weightings
Performance Measure Weighting Performance Objective
------------------- --------- ---------------------
Net Income ($000s) 100% $19,000
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
<TABLE>
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:
Relationship Between URS Performance and the
Actual Bonus Pool as a % of the Target Bonus Pool(1)
<CAPTION>
Actual
Performance as a Net Income Actual Pool
% of Performance Actual as a % of
Objective Performance Target Pool
--------- ----------- -----------
(%) ($000's) (%)
<S> <C> <C>
greater or equal to 125% greater or equal to $23,750 200%
100% $19,000 100%
75% $14,250 30%
less than 75% less than $14,250 0%
<FN>
- ------------------------------------
(1) The calculation of the Actual Award as a percent of Target will be
interpolated for performance between discrete points on a straight-line
basis.
</FN>
</TABLE>
Based on the table above, the Actual Award will vary depending upon actual
performance in relation to Target Net Income.
II-3
<PAGE>
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.
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".
o For performance above Objective:
(Act. Perf. - Perf. Obj.) = X
------------------------- -------------------------------
(Max. Perf. - Perf. Obj.) (Max. Award % - Target Award %)
o For performance below Objective:
(Act. Perf. - Perf. Obj.) = X
------------------------- -------------------------------
(Min. Perf. - Perf. Obj.) (Min. Award % - Target Award %)
o Once you have solved for "X", add X to 100%.
II-4
<PAGE>
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:
o Target Bonus Pool = $ 482,200
o Net Income Objective (after bonus accrual) = $19,000,000
o Actual Net Income (after bonus accrual) = $21,800,000
Interpolation:
o Net Income Performance = 159%
Actual Bonus Pool = $ 751,700
II-5
<PAGE>
III. OTHER PLAN PROVISIONS
<PAGE>
III.1 AWARD PAYMENT
Assessment of actual performance and payout of Awards will be subject to the
completion of the 1998 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-1
<PAGE>
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 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-2
<PAGE>
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.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.
III-3
<PAGE>
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, 1997, and will remain in effect for the
Fiscal Year ending October 31, 1998 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-4
<PAGE>
IV. DEFINITIONS
<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, 1997 and ending
October 31, 1998.
"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. Unlike Designated Participants, Non-designated
Participants will not be assigned Target Award Percentages or individual
Performance Objectives.
IV-1
<PAGE>
"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 1998 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, 1997,
and ending October 31, 1998, 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, 1998.
IV-2
<PAGE>
V. EXAMPLES OF PLAN OPERATION
<PAGE>
URS CORPORATION PERFORMANCE TABLE
Actual
Net Income Actual vs.
(100% weighting) Target Pool
- --------------------------------------------------------------------
greater than or equal to = $23,750 MM 200%
$19,000 MM 100%
$14,250 MM 30%
less than = $14,250 MM 0%
- --------------------------------------------------------------------
<TABLE>
<CAPTION>
<S> <C> <C>
Scenario 1 - URS net income performance exceeds objectives
Net income Objective ($MMs) $19.0 ($21.8 - 19.0)/($23.750 - $19.0) = 59.0%
URS Actual Net Income ($Mms) $21.8
+ 100% = 159%
TARGET BONUS POOL ($000s) $482.200
ACTUAL BONUS POOL ($000s) $751.704 ($482.200 * 159%)= $751.704
Scenario 2 - URS net income performance less than objectives
Net income Objective ($MMs) $19.0 ($17.6 - $19.0)/($14.250 - $19.0)*(.7) =
URS Actual Net Income ($MMs) $17.6
- 29% + 100% = 71%
TARGET BONUS POOL ($000s) $482.200
ACTUAL BONUS POOL ($000s) $347.445 ($482.200 * 71%) = $347.445
</TABLE>
URS GREINER
1998 INCENTIVE COMPENSATION PLAN
<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>
I. PURPOSE OF THE PLAN
<PAGE>
I.1 PURPOSE
The URS Greiner 1998 Incentive Compensation Plan (the "Plan") is intended to
provide incentive compensation to individuals who make an important contribution
to URS Greiner's financial performance. Specific Plan objectives are to:
o Focus key Employees on achieving specific financial
targets;
o Reinforce a team orientation;
o Provide significant award potential for achieving
outstanding performance; and
o Enhance the ability of URS Greiner to attract and
retain highly talented and competent individuals.
I-1
<PAGE>
II. HOW AWARDS ARE EARNED UNDER THE PLAN
<PAGE>
II.1 GENERAL PLAN DESCRIPTION
The Plan provides the opportunity for key Employees of URS Greiner ("URSG") 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 URSG Employees if certain financial Performance Objectives for
URSG have been fully met. The Actual Bonus Pool will vary from the Target Bonus
Pool upward or downward based on URSG 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 URSG 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-1
<PAGE>
II.2 DESIGNATED AND NON-DESIGNATED PARTICIPANTS
Plan participation is extended to selected Employees who, in the opinion of the
President of URSG and the Chief Executive Officer ("CEO") of URS Corporation
(the "Parent Company"), have the opportunity to significantly impact the annual
operating success of URSG. 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 the CEO of the Parent Company and the
President of URSG.
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 URSG, 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 1998 Plan Year
is established at $3,204,000.
II-2
<PAGE>
II.4 URSG PERFORMANCE OBJECTIVES
URSG 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 URSG
Contribution, Average Receivables Days Sales Outstanding (DSO) and New Sales.
The URSG Performance Objectives for the 1998 Plan Year are as follows:
URSG Performance Objectives
---------------------------
Performance Measures Performance Objectives
-------------------- ----------------------
Contribution ($000s) $ 34,000
Average DSO (Days) 90
New Sales ($000s) $500,000
URSG Contribution is defined as total 1998 Fiscal Year URSG revenues less:
o Direct cost of sales;
o Indirect expenses; and
o 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.
URSG 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.
II-3
<PAGE>
URSG New Sales is defined as gross additions to backlog.
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.
II.5 WEIGHTING OF URSG 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 on the following page.
II-4
<PAGE>
EXAMPLE OF WEIGHTING CALCULATION (1)
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 = $3,204,000
Portion of Target Pool determined by:
Contribution (71%) $2,262,000
DSO Performance (18%) $ 565,000
New Sales (11%) $ 377,000
(1) Weightings may be subject to change based on the Plan measures of the
Designated Participants at the end of the Plan Year.
II-5
<PAGE>
II.6 RELATIONSHIP BETWEEN PERFORMANCE AND THE ACTUAL BONUS POOL
<TABLE>
The Actual Bonus Pool will vary from the Target Bonus Pool based on the
relationship between the actual performance of URSG and the Performance
Objectives. The Actual Bonus Pool will vary in relationship to the Target Bonus
Pool based on the following table:
<CAPTION>
Relationship Between URSG Performance And
The Actual Bonus Pool As A % Of The Target Bonus Pool
URSG Contribution URSG DSO
- ---------------------------------------------------------------------------------- ------------------------------
Actual
Performance Actual 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) (%)
<CAPTION>
<S> <C> <C> <C> <C>
greater than or equal to 125% greater than or equal to $42,500 200%(1) less than 85 200%(1)
100% $34,000 100% 90 100%
75% $25,500 30% 95 30%
less than 75% less than $25,500 0% greater than 95 0%
</TABLE>
URSG New Sales
- --------------------------------------------------------------------------------
Actual
Performance Actual
As A % Of Bonus Pool
Performance Actual As A % Of
Objective Performance Target Pool
--------- ----------- -----------
(%) ($000s) (%)
greater than 125% greater than or equal to $625,000 200%
100% $500,000 100%
75% $375,000 30%
less than 75% less than $375,000 0%
- ----------------------
(1) 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.
II-6
<PAGE>
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 Pool tied to DSO and New Sales, and 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:
<TABLE>
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".
<CAPTION>
<S> <C>
o For performance above objective:
(Act. Perf. - Perf. Obj.) X
---------------------------------------- = --------------------------------------------------------
(Max. Perf. - Perf. Obj.) (Max. Award% - Target Award%)
o For performance below objective:
(Act. Perf. - Perf. Obj.) X
---------------------------------------- = --------------------------------------------------------
(Min. Perf. - Perf. Obj.) (Min. Award% - Target Award%)
o Once you have solved for "X", add X to 100%.
</TABLE>
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:
o Target Bonus Pool = $3,204,000
URSG 1998 Performance Objective Actual
--------------------- --------- ------
o Contribution $ 34,000 $ 38,000
o DSO Performance 90 Days 89 Days
o New Sales $500,000 $418,000
II-7
<PAGE>
Weighting:
o Contribution portion of Target Pool = $2,262,000
o DSO portion of Target Pool = $ 565,000
o New Sales portion of Target Pool = $ 377,000
Interpolation:
o Contribution Performance = 147%
o DSO Performance = 120%
o New Sales Performance = 34%
Actual Bonus Pool = $4,131,000
($2,262,000 * 147%) + ($565,000 * 120%) +
($377,000 * 34%)
II-8
<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 URSG, 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 URSG 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 URSG 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-9
<PAGE>
II.10 ACTUAL AWARDS FOR DESIGNATED PARTICIPANTS
Individual Performance Objectives will be assigned based on the economic unit
(i.e., URSG, a region of URSG, or an office of URSG) 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 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-10
<PAGE>
III. OTHER PLAN PROVISIONS
<PAGE>
III.1 AWARD PAYMENT
Assessment of actual performance and payout of Awards will be subject to the
completion of the 1998 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 URSG or an
Affiliate at the end of the Plan Year, except as otherwise noted below.
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 URSG 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 URSG or an Affiliate at Year-end.
III-1
<PAGE>
III.5 PLAN FUNDING
Estimated payouts for the Plan will be accrued monthly and charged as an expense
against the income statement of URSG and its economic units. At the end of each
fiscal quarter, the estimated Actual Bonus Pool under 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 URSG President, the Parent Company CEO, and
the Committee.
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 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. URSG 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 URSG,
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. URSG 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 URSG to deposit, invest
or set aside amounts for the payment of any Awards. Participation in the Plan
does not give a Participant
III-2
<PAGE>
any ownership, security, or other rights in any assets of URSG or any of its
Affiliates.
III.8 WITHHOLDING TAX
URSG will deduct from all Awards paid under the Plan any taxes required by law
to be withheld.
III.9 EFFECTIVE DATE
The Plan is effective as of November 1, 1997, and shall remain in effect for the
Fiscal Year ending October 31, 1998 unless otherwise terminated or extended by
the Committee.
III.10 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.11 APPLICABLE LAW
The Plan shall be governed by and construed in accordance with the laws of the
State of California.
III-3
<PAGE>
IV. DEFINITIONS
<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 Greiner 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 Greiner contribution does not reach or exceed
$25,500,000 (75% of the Performance Objective).
"Employee" refers to an Employee of URS Greiner
"Fiscal Year" refers to the twelve months beginning November 1, 1997 and ending
October 31, 1998.
IV-1
<PAGE>
"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 Greiner within guidelines agreed with and
subject to the approval of the CEO of URS Corporation. Unlike Designated
Participants, Non-designated 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 Greiner, a
region of URS Greiner, or an office of URS Greiner) performance will be
assessed.
"Plan" refers to the URS Greiner 1998 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, 1997,
and ending October 31, 1998, 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.
IV-2
<PAGE>
"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.
"URSG" refers to URS Greiner.
"Year-end" refers to the end of the Fiscal Year, October 31, 1998.
IV-3
<PAGE>
V. EXAMPLES OF PLAN OPERATION
<PAGE>
EXAMPLE OF WEIGHTING CALCULATION (1)
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 = $3,204,000
Portion of Target Pool determined by:
Contribution (71%) $2,262,000
DSO Performance (18%) $ 565,000
New Sales (11%) $ 377,000
(1) Weightings may be subject to change based on the Plan measures of the
Designated Participants at the end of the Plan Year.
<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:
o Target Bonus Pool = $3,204,000
URSG 1998 Performance Objective Actual
- --------------------- --------- ------
o Contribution $ 34,000 $ 38,000
o DSO Performance 90 Days 89 Days
o New Sales $500,000 $418,000
Weighting:
o Contribution portion of Target Pool = $2,262,000
o DSO portion of Target Pool = $ 565,000
o New Sales portion of Target Pool = $ 377,000
Interpolation:
o Contribution Performance = 147%
o DSO Performance = 120%
o New Sales Performance = 34%
Actual Bonus Pool = $4,131,000
($2,262,000 * 147%) + ($565,000 * 120%) +
($377,000 * 34%)
<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:
o Target Bonus Pool = $3,204,000
o Actual Bonus Pool = $4,131,000
o Sum of individual Actual Awards
(as calculated) = $4,400,000
o Actual Awards (as calculated)
- Participant A = $ 15,750
- Participant B = $ 30,000
Pro-rata reduction factor =
($4,131,000 / $4,400,000) = .94
Individual Awards (after reduction)
o Participant A =
($15,750 * .94) = $ 14,805
o Participant B =
($30,000 * .94) = $ 28,200
WOODWARD-CLYDE
1998 INCENTIVE COMPENSATION PLAN
<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>
I. PURPOSE OF THE PLAN
<PAGE>
I.1 PURPOSE
The Woodward-Clyde 1998 Incentive Compensation Plan (the "Plan") is intended
to provide incentive compensation to individuals who make an important
contribution to Woodward-Clyde's financial performance. Specific Plan
objectives are to:
o Focus key Employees on achieving specific financial
targets;
o Reinforce a team orientation;
o Provide significant award potential for achieving
outstanding performance; and
o Enhance the ability of Woodward-Clyde to attract and
retain highly talented and competent individuals.
I-1
<PAGE>
II. HOW AWARDS ARE EARNED UNDER THE PLAN
<PAGE>
II.1 GENERAL PLAN DESCRIPTION
The Plan provides the opportunity for key Employees of Woodward-Clyde to receive
cash Awards based on a combination of Woodward-Clyde 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 Woodward-Clyde Employees if certain financial Performance
Objectives for Woodward-Clyde have been fully met. The Actual Bonus Pool will
vary from the Target Bonus Pool upward or downward based on Woodward-Clyde
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 Woodward-Clyde 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-1
<PAGE>
II.2 DESIGNATED AND NON-DESIGNATED PARTICIPANTS
Plan participation is extended to selected Employees who, in the opinion of the
President of Woodward-Clyde and the Chief Executive Officer ("CEO") of URS
Corporation (the "Parent Company"), have the opportunity to significantly impact
the annual operating success of Woodward-Clyde. 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 the CEO of
the Parent Company and the President of Woodward-Clyde.
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 Woodward-Clyde, 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 1998 Plan Year
is established at $2,432,000.
II-2
<PAGE>
II.4 WOODWARD-CLYDE PERFORMANCE OBJECTIVES
Woodward-Clyde Performance Objectives are focused on the need to achieve strong
operating results (i.e., contribution), and generate cash through the management
of accounts receivables (DSOs) throughout the Year. Accordingly, performance
will be evaluated based on a combination of Woodward-Clyde Contribution and
Average Receivables Days Sales Outstanding (DSO).
The Woodward-Clyde Performance Objectives for the 1998 Plan Year are as follows:
Woodward-Clyde Performance Objectives
Performance Measures Performance Objectives
-------------------- ----------------------
Contribution ($000s) $ 23,000
Average DSO (Days) 90
Woodward-Clyde Contribution is defined as total 1998 Fiscal Year Woodward-Clyde
revenues less:
o Direct cost of sales;
o Indirect expenses; and
o 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.
Woodward-Clyde Days Sales Outstanding (DSO) is defined by the following formula:
BAR + UAR - BEC
--------------- X 90
REVENUES
where BAR is net billed accounts receivable, UAR is net unbilled accounts
receivable, BEC is net 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.
II-3
<PAGE>
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.
II.5 WEIGHTING OF WOODWARD-CLYDE 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. An example
of the weighting calculation is shown on the following page.
II-4
<PAGE>
EXAMPLE OF WEIGHTING CALCULATION (1)
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 = $2,432,000
Portion of Target Pool determined by:
Contribution (75%) $1,824,000
DSO Performance (25%) $ 608,000
(1) Weightings may be subject to change based on the Plan measures of the
Designated Participants at the end of the Plan Year.
II-5
<PAGE>
II.6 RELATIONSHIP BETWEEN PERFORMANCE AND THE ACTUAL BONUS POOL
<TABLE>
The Actual Bonus Pool will vary from the Target Bonus Pool based on the
relationship between the actual performance of Woodward- Clyde and the
Performance Objectives. The Actual Bonus Pool will vary in relationship to the
Target Bonus Pool based on the following table:
<CAPTION>
Relationship Between Woodward-Clyde Performance And
The Actual Bonus Pool As A % Of The Target Bonus Pool
Woodward-Clyde Contribution Woodward-Clyde DSO
- ---------------------------------------------------------------------------------- --------------------------------
Actual
Performance Actual 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) (%)
<S> <C> <C> <C> <C>
greater than or equal to 125% greater than or equal to $28,750 200%(1) less than 85 200%(1)
100% $23,000 100% 90 100%
75% $17,250 30% 95 30%
less than 75% less than $17,250 0% greater than 95 0%
<FN>
- ------------------------
(1) 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.
</FN>
</TABLE>
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 Pool tied to DSO is contingent upon Contribution performance being
at or above 75% of the Performance Objective.
II-6
<PAGE>
Here is an example of the calculation of an Actual Bonus pool:
<TABLE>
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".
<CAPTION>
<S> <C>
o For performance above objective:
(Act. Perf. - Perf. Obj.) X
---------------------------------------- = -------------------------------
(Max. Perf. - Perf. Obj.) (Max. Award% - Target Award%)
o For performance below objective:
(Act. Perf. - Perf. Obj.) X
---------------------------------------- = --------------------------------
(Min. Perf. - Perf. Obj.) (Min. Award% - Target Award%)
o Once you have solved for "X", add X to 100%.
</TABLE>
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:
o Target Bonus Pool = $2,432,000
Woodward-Clyde 1998 Performance Objective Actual
------------------------------- --------- ------
o Contribution $ 23,000 $ 25,000
o DSO Performance 90 Days 89 Days
II-7
<PAGE>
Weighting:
o Contribution portion of Target Pool = $1,824,000
o DSO portion of Target Pool = $ 608,000
Interpolation:
o Contribution Performance = 135%
o DSO Performance = 120%
Actual Bonus Pool = $3,192,000
($1,824,000 * 135%) + ($608,000 * 120%)
II-8
<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 Woodward-Clyde,
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 Woodward-Clyde 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 Woodward-Clyde 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-9
<PAGE>
II.10 ACTUAL AWARDS FOR DESIGNATED PARTICIPANTS
Individual Performance Objectives will be assigned based on the economic unit
(i.e., Woodward-Clyde, a subsidiary of Woodward-Clyde, an operating group of
Woodward-Clyde, or an office of Woodward-Clyde) 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 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-10
<PAGE>
III. OTHER PLAN PROVISIONS
<PAGE>
III.1 AWARD PAYMENT
Assessment of actual performance and payout of Awards will be subject to the
completion of the 1998 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
Woodward-Clyde or an Affiliate at the end of the Plan Year, except as otherwise
noted below.
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 Woodward-Clyde 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 Woodward-Clyde or an Affiliate at Year-end.
III-1
<PAGE>
III.5 PLAN FUNDING
Estimated payouts for the Plan will be accrued monthly and charged as an expense
against the income statement of Woodward-Clyde and its economic units. At the
end of each fiscal quarter, the estimated Actual Bonus Pool under 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 Woodward-Clyde President, the Parent
Company CEO, and the Committee.
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 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. Woodward-Clyde 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 Woodward-Clyde, 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. Woodward-Clyde 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 Woodward-Clyde to
deposit, invest or set aside amounts for the payment of any Awards.
Participation in the Plan does not give a
III-2
<PAGE>
Participant any ownership, security, or other rights in any assets of
Woodward-Clyde or any of its Affiliates.
III.8 WITHHOLDING TAX
Woodward-Clyde will deduct from all Awards paid under the Plan any taxes
required by law to be withheld.
III.9 EFFECTIVE DATE
The Plan is effective as of November 1, 1997, and shall remain in effect for the
Fiscal Year ending October 31, 1998 unless otherwise terminated or extended by
the Committee.
III.10 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.11 APPLICABLE LAW
The Plan shall be governed by and construed in accordance with the laws of the
State of California.
III-3
<PAGE>
IV. DEFINITIONS
<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 Woodward-Clyde 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 Woodward-Clyde contribution does not reach or exceed
$17,250,000 (75% of the Performance Objective).
"Employee" refers to an Employee of Woodward-Clyde.
"Fiscal Year" refers to the twelve months beginning November 1, 1997 and ending
October 31, 1998.
IV-1
<PAGE>
"Non-designated Participant" refers to an Employee of Woodward-Clyde 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 Woodward-Clyde within guidelines agreed with
and subject to the approval of the CEO of URS Corporation. Unlike Designated
Participants, Non-designated 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 Woodward-Clyde and economic unit (i.e., Woodward-Clyde,
a subsidiary of Woodward-Clyde, an operating group of Woodward-Clyde, or an
office of Woodward-Clyde) performance will be assessed.
"Plan" refers to the Woodward-Clyde 1998 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, 1997,
and ending October 31, 1998, 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
Woodward-Clyde 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.
IV-2
<PAGE>
"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.
"Woodward-Clyde" refers to Woodward-Clyde.
"Year-end" refers to the end of the Fiscal Year, October 31, 1998.
IV-3
<PAGE>
V. EXAMPLES OF PLAN OPERATION
<PAGE>
EXAMPLE OF WEIGHTING CALCULATION (1)
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 = $2,432,000
Portion of Target Pool determined by:
Contribution (75%) $1,824,000
DSO Performance (25%) $ 608,000
(1) Weightings may be subject to change based on the Plan measures of the
Designated Participants at the end of the Plan Year.
<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:
o Target Bonus Pool = $2,432,000
Woodward-Clyde 1998 Performance Objective Actual
------------------------------- --------- ------
o Contribution $23,000 $25,000
o DSO Performance 90 Days 89 Days
Weighting:
o Contribution portion of Target Pool = $1,824,000
o DSO portion of Target Pool = $ 608,000
Interpolation:
o Contribution Performance = 135%
o DSO Performance = 120%
Actual Bonus Pool = $3,192,000
($1,824,000 * 135%) + ($608,000 * 120%)
<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:
o Target Bonus Pool = $2,432,000
o Actual Bonus Pool = $3,192,000
o Sum of individual Actual Awards
(as calculated) = $3,500,000
o Actual Awards (as calculated)
- Participant A = $ 15,750
- Participant B = $ 30,000
Pro-rata reduction factor =
($3,192,000 / $3,500,000) = .91
Individual Awards (after reduction)
o Participant A =
($15,750 * .91) = $ 14,365
o Participant B =
($30,000 * .91) = $ 27,360
Exhibit 10.12
URS CORPORATION 1991 STOCK INCENTIVE PLAN:
CONTINGENT RESTRICTED STOCK AWARD AGREEMENT
URS Corporation, a Delaware corporation ("URS"), hereby promises to award
Restricted Shares of its common stock to the recipient named below. The terms
and conditions of such contingent award are set forth in this cover sheet, in
the attachment and in the URS Corporation 1991 Stock Incentive Plan, as amended
(the "Plan").
Date of Contingent Award: December 16, 1997
Name of Recipient: Martin M. Koffel
Recipient's Social Security Number:
Number of Shares of URS Common Stock
Covered by Contingent Award: 50,000
Performance Period Commencement Date: December 16, 1997
By signing this cover sheet, you agree to all the terms
and conditions described in the attachment and in the Plan.
Recipient: /s/Martin M. Koffel
--------------------------------------------
MARTIN M. KOFFEL
URS Corporation: By: /s/Joseph Masters
--------------------------------------------
JOSEPH MASTERS
Vice President and General Counsel
Attachment
1.
<PAGE>
URS CORPORATION 1991 STOCK INCENTIVE PLAN:
CONTINGENT RESTRICTED STOCK AWARD AGREEMENT
Payment for Shares
Due to legal requirements, you must pay to URS the par value of any shares you
receive pursuant to this contingent award. The amount is $0.01 per share,
payable by check.
Contingent Award of Shares
You are hereby contingently granted up to 50,000 Restricted Shares under the
Plan (the "Maximum Number of Shares"), the exact number to be granted to be
determined based on the cumulative annualized total returns to URS stockholders
("Total Returns") over the five-year period beginning on December 16, 1997 (the
"Commencement Date") and ending on December 16, 2002 (such five-year period
being hereafter referred to as the "Performance Period"). No shares shall be
granted if Total Returns are 8.0% or less, and 100% of such shares shall be
granted if Total Returns are 12.0% or more. If Total Returns are more than 8.0%
but less than 12.0%, the number of shares granted shall be that percentage of
the Maximum Number of Shares determined on a straight-line prorated basis
between 8.0% and 12.0%.
Up to one-third of the Maximum Number of Shares shall be granted effective
December 16, 2000 based on Total Returns from the Commencement Date to such
date; up to two-thirds of the Maximum Number of Shares shall be granted
effective December 16, 2001 based on Total Returns from the Commencement Date to
such date, and up to the Maximum Number of Shares shall be granted effective
December 16, 2002 based on Total Returns for the entire Performance Period. Once
granted, the shares will be fully vested and will not be subject to retroactive
adjustment even if Total Returns calculated as of a subsequent date are less.
Calculation of Total Returns
Total Returns shall be calculated on the basis of the difference between the
closing price of a share of URS Common Stock on the New York Stock Exchange on
the Commencement Date, which is agreed to be $14.0625 per share, and the Fair
Market Value (as defined below) of a share of URS Common Stock (as adjusted on
December 16, 2000, 2001 and 2002, respectively, or the next business day on
which such exchange is opened for trading if such day is not a trading day (each
a "Calculation Date"). Such difference shall be converted into an annual return
on an annualized compound basis, with the resulting number being "Total Returns"
for purposes of this Agreement.
"Fair Market Value" shall be equal to the closing price of a share of URS Common
Stock (as adjusted below) on the New York Stock Exchange on a Calculation Date.
If for any reason URS Common Stock is not traded on the New York Stock Exchange
on any such date, then Fair Market Value shall be the closing price on the
principal exchange on which the URS Common Stock is then traded, or as reported
through the principal automated quotation system if URS Common Stock is not then
traded on an exchange, or as determined in good faith by the
1.
<PAGE>
Compensation/Option Committee of the URS Board of Directors (the "Committee") in
the event that URS Common Stock is not then either traded on an exchange or
reported through an automated quotation system.
In the event that at any time between the Commencement Date and a Calculation
Date a dividend or other distribution is declared on shares of URS Common Stock,
then such dividend or other distribution shall immediately be deemed to have
been reinvested in additional shares of URS Common Stock at its then Fair Market
Value, and the number of shares of URS Common Stock for purposes of determining
Total Returns as of a Calculation Date shall be adjusted accordingly. If such
dividend or other distribution is in a form other than cash, then its cash
equivalent for purposes of determining the amount of such deemed reinvestment
shall be determined in good faith by the Committee.
In the event that shares of URS Common Stock are converted into or exchanged for
different securities through a merger, reorganization, recapitalization or other
similar transaction, then Total Returns shall be calculated on the basis of the
difference between the closing price of a share of URS Common Stock on the New
York Stock Exchange on the Commencement Date and the Fair Market Value of the
securities into which a share of URS Common Stock has been converted or
exchanged following the above principles, as applied to the particular
circumstances in good faith by the Committee.
<TABLE>
The following table summarizes the possible grants of Shares, assuming various
Total Returns over the Performance Period:
<CAPTION>
Total Returns Restricted Shares Awarded Projected Stock Price
<S> <C> <C>
12.0% 50,000 $24.7829
11.0% 37,500 $23.6961
10.0% 25,000 $22.6478
9.0% 12,500 $21.6369
8.0% 0 $20.6624
</TABLE>
For purposes of calculating Total Returns, all numbers shall be rounded down to
the nearest one tenth of one percent (e.g., 11.94% is rounded down to 11.9%).
Granted Shares Not Restricted
Shares granted under the foregoing provisions will be considered "Restricted
Shares" under the Plan that have vested in full on the date of grant. You may
sell, transfer, pledge or otherwise dispose of any such Restricted Shares.
However, see "Restrictions on Resale" below.
2.
<PAGE>
Accelerated Grant and Forfeiture
If at any time during the Performance Period URS terminates your service as an
employee for any reason other then Cause (as defined below) or you terminate
your service as an employee of URS for Good Reason (as defined below), then any
shares not previously granted to you under the terms of this Agreement as of the
date of termination, up to the Maximum Number of Shares, shall be immediately
granted.
If at any time during the Performance Period URS terminates your service as an
employee for "Cause", then any shares not previously granted to you under the
terms of this Agreement as of the date of termination shall immediately be
forfeited.
For purposes of this Agreement, "Cause" shall have the same meaning assigned to
such term in your Employment Agreement with URS dated as of December 16, 1991,
as the same may be amended from time-to-time. "Good Reason" shall mean either
(A) that you (i) have been demoted, (ii) have incurred a reduction in your
authority or responsibility, or (iii) have incurred a reduction in your Base
Compensation (as such term is defined in your Employment Agreement), or (B) that
a "Change in Control" (as such term is defined in your Employment Agreement")
has occurred within 12 months prior to the date of termination (whether or not
any of the events itemized in clause A also has occurred).
Leaves of Absence
For purposes of this contingent award, your service does not terminate when you
go on a military leave, a sick leave or another bona fide leave of absence, if
the leave was approved by URS in writing. But your service terminates when the
approved leave ends, unless you immediately return to active work.
Stock Certificates
After a grant of Restricted Shares based on this contingent award has been made,
a stock certificate for those shares will be issued to you (or to you and your
spouse).
Voting Rights
You may vote only those shares that have been granted to you.
Withholding Taxes
No stock certificates will be issued to you unless you have made acceptable
arrangements to pay any withholding taxes that may be due as a result of grants
of shares pursuant to this contingent award.
Restrictions on Resale
By signing this Agreement, you agree not to sell any shares at a time when
applicable securities or other laws or US policies prohibit a sale. This
restriction will apply as long as you are an employee, director, consultant or
advisor of URS (or any subsidiary).
3.
<PAGE>
Retention Rights
Neither your award nor this Agreement gives you the right to be retained by URS
(or any subsidiaries) in any capacity. URS (and any subsidiaries) reserve the
right to terminate your service at any time, with or without cause.
Adjustments
In the event of a stock split, a stock dividend or a similar change in URS
stock, the number of Restricted Shares that are subject to this contingent award
will be adjusted accordingly.
Applicable Law
This Agreement will be interpreted and enforced under the laws of the State of
California.
The Plan and Other Agreements
The text of the 1991 Stock Incentive Plan is incorporated in this Agreement by
reference.
This Agreement and the Plan constitute the entire understanding between you and
URS regarding this award. Any prior agreements, commitments or negotiations
concerning this award are superseded.
By signing the cover sheet of this Agreement,
you agree to all the terms and conditions
described above and in the Plan.
4.
Exhibit 10.13
URS CORPORATION 1991 STOCK INCENTIVE PLAN:
CONTINGENT RESTRICTED STOCK AWARD AGREEMENT
URS Corporation, a Delaware corporation ("URS"), hereby promises to award
Restricted Shares of its common stock to the recipient named below. The terms
and conditions of such contingent award are set forth in this cover sheet, in
the attachment and in the URS Corporation 1991 Stock Incentive Plan, as amended
(the "Plan").
Date of Contingent Award: December 16, 1997
Name of Recipient: Kent P. Ainsworth
Recipient's Social Security Number:
Number of Shares of URS Common Stock
Covered by Contingent Award: 25,000
Performance Period Commencement Date: December 16, 1997
By signing this cover sheet, you agree to all the terms
and conditions described in the attachment and in the Plan.
Recipient: /s/ Kent P. Ainsworth
--------------------------------------------
KENT P. AINSWORTH
URS Corporation: By: /s/Joseph Masters
--------------------------------------------
JOSEPH MASTERS
Vice President and General Counsel
Attachment
1.
<PAGE>
URS CORPORATION 1991 STOCK INCENTIVE PLAN:
CONTINGENT RESTRICTED STOCK AWARD AGREEMENT
Payment for Shares
Due to legal requirements, you must pay to URS the par value of any shares you
receive pursuant to this contingent award. The amount is $0.01 per share,
payable by check.
Contingent Award of Shares
You are hereby contingently granted up to 25,000 Restricted Shares under the
Plan (the "Maximum Number of Shares"), the exact number to be granted to be
determined based on the cumulative annualized total returns to URS stockholders
("Total Returns") over the five-year period beginning on December 16, 1997 (the
"Commencement Date") and ending on December 16, 2002 (such five-year period
being hereafter referred to as the "Performance Period"). No shares shall be
granted if Total Returns are 8.0% or less, and 100% of such shares shall be
granted if Total Returns are 12.0% or more. If Total Returns are more than 8.0%
but less than 12.0%, the number of shares granted shall be that percentage of
the Maximum Number of Shares determined on a straight-line prorated basis
between 8.0% and 12.0%.
Up to one-third of the Maximum Number of Shares shall be granted effective
December 16, 2000 based on Total Returns from the Commencement Date to such
date; up to two-thirds of the Maximum Number of Shares shall be granted
effective December 16, 2001 based on Total Returns from the Commencement Date to
such date, and up to the Maximum Number of Shares shall be granted effective
December 16, 2002 based on Total Returns for the entire Performance Period. Once
granted, the shares will be fully vested and will not be subject to retroactive
adjustment even if Total Returns calculated as of a subsequent date are less.
Calculation of Total Returns
Total Returns shall be calculated on the basis of the difference between the
closing price of a share of URS Common Stock on the New York Stock Exchange on
the Commencement Date, which is agreed to be $14.0625 per share, and the Fair
Market Value (as defined below) of a share of URS Common Stock (as adjusted on
December 16, 2000, 2001 and 2002, respectively, or the next business day on
which such exchange is opened for trading if such day is not a trading day (each
a "Calculation Date"). Such difference shall be converted into an annual return
on an annualized compound basis, with the resulting number being "Total Returns"
for purposes of this Agreement.
"Fair Market Value" shall be equal to the closing price of a share of URS Common
Stock (as adjusted below) on the New York Stock Exchange on a Calculation Date.
If for any reason URS Common Stock is not traded on the New York Stock Exchange
on any such date, then Fair Market Value shall be the closing price on the
principal exchange on which the URS Common Stock is then traded, or as reported
through the principal automated quotation system if URS Common Stock is not then
traded on an exchange, or as determined in good faith by the
1.
<PAGE>
Compensation/Option Committee of the URS Board of Directors (the "Committee") in
the event that URS Common Stock is not then either traded on an exchange or
reported through an automated quotation system.
In the event that at any time between the Commencement Date and a Calculation
Date a dividend or other distribution is declared on shares of URS Common Stock,
then such dividend or other distribution shall immediately be deemed to have
been reinvested in additional shares of URS Common Stock at its then Fair Market
Value, and the number of shares of URS Common Stock for purposes of determining
Total Returns as of a Calculation Date shall be adjusted accordingly. If such
dividend or other distribution is in a form other than cash, then its cash
equivalent for purposes of determining the amount of such deemed reinvestment
shall be determined in good faith by the Committee.
In the event that shares of URS Common Stock are converted into or exchanged for
different securities through a merger, reorganization, recapitalization or other
similar transaction, then Total Returns shall be calculated on the basis of the
difference between the closing price of a share of URS Common Stock on the New
York Stock Exchange on the Commencement Date and the Fair Market Value of the
securities into which a share of URS Common Stock has been converted or
exchanged following the above principles, as applied to the particular
circumstances in good faith by the Committee.
<TABLE>
The following table summarizes the possible grants of Shares, assuming various
Total Returns over the Performance Period:
<CAPTION>
Total Returns Restricted Shares Awarded Projected Stock Price
<S> <C> <C>
12.0% 25,000 $24.7829
11.0% 18,750 $23.6961
10.0% 12,500 $22.6478
9.0% 6,250 $21.6369
8.0% 0 $20.6624
</TABLE>
For purposes of calculating Total Returns, all numbers shall be rounded down to
the nearest one tenth of one percent (e.g., 11.94% is rounded down to 11.9%).
Granted Shares Not Restricted
Shares granted under the foregoing provisions will be considered "Restricted
Shares" under the Plan that have vested in full on the date of grant. You may
sell, transfer, pledge or otherwise dispose of any such Restricted Shares.
However, see "Restrictions on Resale" below.
Accelerated Grant and Forfeiture
2.
<PAGE>
If at any time during the Performance Period URS terminates your service as an
employee for any reason other then Cause (as defined below) or you terminate
your service as an employee of URS for Good Reason (as defined below), then any
shares not previously granted to you under the terms of this Agreement as of the
date of termination, up to the Maximum Number of Shares, shall be immediately
granted.
If at any time during the Performance Period URS terminates your service as an
employee for "Cause", then any shares not previously granted to you under the
terms of this Agreement as of the date of termination shall immediately be
forfeited.
For purposes of this Agreement, "Cause" and "Good Reason" shall have the same
meanings assigned to such terms in your Employment Agreement with URS dated as
of May 7, 1991, as the same may be amended from time-to-time.
Leaves of Absence
For purposes of this contingent award, your service does not terminate when you
go on a military leave, a sick leave or another bona fide leave of absence, if
the leave was approved by URS in writing. But your service terminates when the
approved leave ends, unless you immediately return to active work.
Stock Certificates
After a grant of Restricted Shares based on this contingent award has been made,
a stock certificate for those shares will be issued to you (or to you and your
spouse).
Voting Rights
You may vote only those shares that have been granted to you.
Withholding Taxes
No stock certificates will be issued to you unless you have made acceptable
arrangements to pay any withholding taxes that may be due as a result of grants
of shares pursuant to this contingent award.
Restrictions on Resale
By signing this Agreement, you agree not to sell any shares at a time when
applicable securities or other laws or US policies prohibit a sale. This
restriction will apply as long as you are an employee, director, consultant or
advisor of URS (or any subsidiary).
Retention Rights
Neither your award nor this Agreement gives you the right to be retained by URS
(or any subsidiaries) in any capacity. URS (and any subsidiaries) reserve the
right to terminate your service at any time, with or without cause.
3.
<PAGE>
Adjustments
In the event of a stock split, a stock dividend or a similar change in URS
stock, the number of Restricted Shares that are subject to this contingent award
will be adjusted accordingly.
Applicable Law
This Agreement will be interpreted and enforced under the laws of the State of
California.
The Plan and Other Agreements
The text of the 1991 Stock Incentive Plan is incorporated in this Agreement by
reference.
This Agreement and the Plan constitute the entire understanding between you and
URS regarding this award. Any prior agreements, commitments or negotiations
concerning this award are superseded.
By signing the cover sheet of this Agreement,
you agree to all the terms and conditions
described above and in the Plan.
4.
Exhibit 10.19
EMPLOYMENT AGREEMENT
THIS EMPLOYMENT AGREEMENT ("Agreement") is entered into as of March 20,
1998 by and between JOSEPH MASTERS (the "Employee") and URS CORPORATION, a
Delaware corporation (the "Company").
1. TERM OF EMPLOYMENT.
(a) Basic Rule. The Company agrees to employ the Employee, and the
Employee agrees to remain in employment with the Company, from the date hereof
until the date when the Employee's employment terminates pursuant to Subsection
(b), (c), (d), (e) or (f) below.
(b) Termination by Company Not for Cause. The Company may terminate
the Employee's employment at any time without Cause (as defined below) and for
any reason or no reason whatsoever by giving the Employee 30 days' advance
notice in writing.
(c) Termination by Company for Cause. The Company may terminate the
Employee's employment for Cause by giving the Employee notice in writing. For
all purposes under this Agreement, "Cause" shall mean:
(i) A willful failure or omission of the Employee to perform his
duties hereunder, other than as a result of the death or Disability of Employee
(as defined below).
(ii) A willful act or omission by the Employee involving material
injury to the Company (or to any parent, subsidiary or affiliated corporation or
related entity of the Company), gross misconduct, fraud or dishonesty;
(iii) The Employee's conviction of, or plea of "guilty" or "no
contest" to, a felony; or
(iv) The Employee's willful disobedience of orders and directives
of the Chief Executive Officer of URS Corporation or his designee (as determined
under Section 2(a)).
No act, omission or failure to act by the Employee shall be considered "willful"
unless committed without good faith and without reasonable belief that the act,
omission or failure to act was in the Company's best interests.
(d) Resignation by Employee. The Employee may terminate his employment
by giving the Company 30 days' advance notice in writing.
(e) Death of Employee. The Employee's employment shall terminate
automatically in the event of his death.
(f) Disability. The Company may terminate the Employee's employment
due to Disability by giving the Employee notice in writing. For all purposes
under this Agreement,
1.
<PAGE>
"Disability" shall mean that at the time the notice is given the Employee has
been unable to perform the essential duties of his position under this
Agreement, with or without reasonable accommodation, for a continuous period of
at least six months because of a mental or physical impairment that
substantially affects one or more major life activities.
(g) Rights Upon Termination. Except as expressly provided in Sections
6 and 7, upon the termination of the Employee's employment pursuant to this
Section 1, the Employee shall only be entitled to the compensation, benefits and
reimbursements described in Sections 3, 4 and 5 for the period preceding the
effective date of the termination. Neither the preceding sentence nor any other
provisions of this Agreement shall be construed to give rise to any right,
entitlement or vesting as to any compensation or benefit under any employee
benefit plan or program referred to in Section 4 that has not been paid as of
the time of employment termination. By way of example and not by way of
limitation, except as may be specifically required by the written terms and
conditions thereof without regard to this Agreement, Employee shall not have any
right to, shall not be vested in, and shall not be entitled to any full or
partial incentive or bonus compensation or any other amount whatsoever under any
nonqualified management incentive or bonus compensation plan or arrangement if
Employee's employment shall have terminated before amounts are actually paid
thereunder, whether for the period under such plan or arrangement during which
Employee's employment ceases or any other period. The payments under this
Agreement shall fully discharge all responsibilities of the Company to the
Employee.
(h) Employment by Affiliate. The employment of the Employee shall not
be considered to have terminated for purposes of this Agreement if the Employee
is employed by a parent, subsidiary or affiliated corporation or related entity
of the Company.
(i) Termination of Agreement. This Agreement shall terminate when all
obligations of the parties hereunder have been satisfied.
2. DUTIES AND SCOPE OF EMPLOYMENT.
(a) Position. The Company agrees to employ the Employee in an
executive position as the senior legal officer of the Company for the term of
his employment under this Agreement. The Employee shall report to the Chief
Executive Officer of the Company or, if so directed by such Chief Executive
Officer, to the President or Chief Financial Officer of the Company, and shall
serve in such positions on behalf of the Company and its parent, subsidiary and
affiliated corporations and related entities and perform such duties consistent
with an executive and senior legal officer position for such corporations and
entities as may be required by such Chief Executive officer or designee. It is
anticipated that the Employee's duties will require him to travel frequently and
extensively. The Employee's principal office may be changed from time to time
with the approval of the Employee, provided the Company reimburses reasonable
relocation expenses of the Employee in accordance with generally applicable
policies of the Company.
(b) Obligations. During the term of his employment under this
Agreement, the Employee shall devote his full business efforts and time to the
Company and its parent, subsidiary and affiliated corporations and related
entities and shall not render services to any
2.
<PAGE>
other person or entity without the prior written consent of the Chief Executive
Officer of the Company. The foregoing, however, shall not preclude the Employee
from engaging in appropriate civic, charitable or religious activities.
(c) Other Agreements. The Employee shall from time to time execute and
deliver to Company and its parent, subsidiary and affiliated corporations and
related entities such agreements, documents and instruments as the Company may
reasonably require, including, without limitation, confidentiality, trade
secret, invention assignment and other agreements.
(d) Resignation from Other Positions. Immediately upon request by the
Company, before or after the termination of the employment of the Employee, he
shall resign from any position he holds as director, officer, trustee, nominee,
agent for service of process, attorney-in-fact or similar position with respect
to the Company or a parent, subsidiary or affiliated corporation or related
entity of the Company, and shall execute, verify, acknowledge, swear to and
deliver any documents and instruments reasonably requested by the Company or
required to reflect such resignation.
3. BASE COMPENSATION.
During the term of his employment under this Agreement, the Company
agrees to pay the Employee as compensation for his services a base salary at an
annual rate of no less than $165,000. Such salary shall be payable in accordance
with the Company's standard payroll procedures. (The annual compensation
specified in this Section 3, together with any increases in such compensation
that the Company may grant from time to time, is referred to in this Agreement
as "Base Compensation.")
4. EMPLOYMENT BENEFITS, STOCK OPTIONS, AND INCENTIVE COMPENSATION, AND
OTHER COMPENSATION PLANS AND PROGRAMS.
During the term of his employment under this Agreement, the Employee
shall be eligible to participate in the employee benefit plans, stock option and
other equity-based incentive and compensation plans, and other executive
incentive and compensation programs maintained with respect to employees of the
Company, subject in each case to (i) the generally applicable terms and
conditions of the plan or program in question and to the determinations of the
Board of Directors of the Company or any committee or other person administering
such plan or program, (ii) determinations by the Company, any such corporation
or entity, or any such board, committee or person as to whether and to what
extent Employee shall so participate or cease to participate, and (iii)
amendment, modification or termination of any such plan or program in the sole
and absolute discretion of the Company or its parent, subsidiary or affiliated
corporation or related entity maintaining such plan.
5. BUSINESS EXPENSES.
In accordance with the Company's generally applicable policies, (i)
during the term of his employment under this Agreement, the Employee shall be
authorized to incur necessary and reasonable travel, entertainment and other
business expenses in connection with his duties hereunder, and (ii) the Company
shall reimburse the Employee for such expenses upon presentation of an itemized
account and appropriate supporting documentation.
3.
<PAGE>
6. CHANGE IN CONTROL.
(a) Definition. For all purposes under this Agreement, "Change in
Control" shall mean the occurrence, after the date of this Agreement, of any of
the following events:
(i) A change in control of the Company 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 Company's Board of
Directors (the "Board") as a result of which fewer than two-thirds of the
incumbent directors are directors who either (i) had been directors of the
Company 24 months prior to such change or (ii) were elected, or nominated for
election, to the Board with the affirmative vote of at least a majority of the
directors who had been directors of the Company 24 months prior to such change
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), other than a person that immediately before the
acquisition or aggregation of securities referred to immediately hereinafter,
directly or indirectly controls, is controlled by, or is under common control
with the Company, through the acquisition or aggregation of securities, becomes
the beneficial owner, directly or indirectly, of securities of the Company
representing 20 percent or more of the combined voting power of the Company's
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 any change in the relative beneficial
ownership of the Company's securities 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 the Company.
(b) Good Reason. For all purposes under this Agreement, "Good Reason"
shall mean that either (i) the Employee has incurred a reduction in his Base
Compensation or (ii) the Company has materially breached its obligations under
Section 2(a) and, at the time of such breach, the Employee is in compliance with
his obligations thereunder and under the other provisions of this Agreement.
(c) Change in Control Payment. If, during the term of this Agreement
and within one year after the occurrence of a Change in Control, the Employee
voluntarily resigns his employment for Good Reason or the Company terminates the
Employee's employment for any reason other than Cause or Disability, then the
Employee shall be entitled to receive a severance payment from the Company (the
"Change in Control Payment") and in addition shall be entitled to Severance
Benefits in accordance with Subdivision (ii) of Section 7(a). No Change in
Control Payment shall be made in case of termination of employment of the
Employee by reason of resignation of the Employee other than for Good Reason,
death of the Employee, or any other circumstance not specifically and expressly
described in the immediately preceding sentence. The Change in Control Payment
shall be made in a lump sum not more than five business days following the date
of the employment termination and shall be in an amount determined under
4.
<PAGE>
Subsection (d) below; provided, however, in no event shall the Company be
required to make the Change in Control Payment unless and until Employee
executes and delivers to the Company a release in the form of Exhibit A and
seven (7) days have elapsed following such execution and delivery without
revocation of such release by Employee. The Change in Control Payment shall be
in lieu of (i) any further payments to the Employee under Section 3, (ii) any
further accrual of benefits under Sections 4 with respect to periods subsequent
to the date of the employment termination and (iii) any entitlement to a
Severance Payment (as defined in Subdivision (i) of Section 7(a) below).
(d) Amount. Subject to the provisions of Sections 8(a) and 8(b), the
amount of the Change in Control Payment shall be equal to two hundred (200)
percent of the Employee's annual rate of Base Compensation, as in effect on the
date of the employment termination.
7. INVOLUNTARY TERMINATION WITHOUT CAUSE.
(a) Severance. In the event that, during the term of this Agreement,
the Company terminates the Employee's employment for any reason other than Cause
or Disability or the Employee voluntarily resigns his employment for Good Reason
within one month of the effective date of a reduction of his Base Compensation
or the Company's material breach of its obligations under Section 2(a), as the
case may be, and Section 6 does not apply, then:
(i) The Company shall pay an amount ("Severance Payment") in
installments (or a lump sum if the Company so elects), as provided below, equal
in the aggregate to one hundred percent (100%) of the Employee's annual rate of
Base Compensation as in effect on the date of employment termination, less Base
Compensation paid to the Employee for any period up to one (1) month between the
date of termination and the date that notice thereof was given, plus any accrued
and unpaid vacation at the time of such termination. The Severance Payment shall
be made in installments at the same rate and in accordance with the same
schedule as Base Compensation would have been paid had employment continued
until the Severance Payment has been made in full; provided, however, at its
election the Company may at any time pay any remainder of the Severance Payment
in a lump sum.
(ii) For the period of one (1) year following such termination
(reduced by any period up to one (1) month between the date of termination and
the date that notice thereof was given), the Company shall (i) reimburse the
Employee for dental and health insurance premiums required to be paid by the
Employee for such one (1) year (or reduced) period to obtain COBRA continuation
coverage within the meaning of Section 4980B(f) (2) of the Internal Revenue Code
of 1986, as amended (the "Code"), provided the Employee elects such continuation
coverage, and (ii) cause group long-term disability insurance coverage and basic
term life insurance coverage with a death benefit of up to $100,000 then
provided to the Employee by the Company, if any, to be continued for such one
(1) year (or reduced) period (or, if such coverage cannot be continued or can
only be continued at a cost to the Company greater than the Company would have
incurred absent such termination, then, at the Company's election, the Company
may either provide such long-term disability or term life insurance as may be
available at no greater cost than one hundred fifty percent (150%) of what the
Company would have incurred absent such termination or pay to the Employee one
hundred fifty percent (150%) of the amount of premiums the Company would have
incurred to continue such coverage absent
5.
<PAGE>
such termination) (payments and benefits under this Subdivision (ii),
collectively "Severance Benefits").
(iii) There shall be credited toward payment and provision of the
Severance Payment and Severance Benefits any other payments or benefits paid or
provided to the Employee by or on behalf of the Company or its parent or
subsidiaries as a result of any such termination of employment (other than
payment of vacation accrued as of such termination, and provided that mere
acceleration of exercisability of stock options or of the time of payment or
provision of other payments or benefits that are payable or required to be
provided to the Employee without regard to termination of employment shall not
be considered to result from such termination). The first installment of the
Severance Payment shall be made not later than thirty (30) days after such
termination, and Severance Benefits shall be provided monthly commencing after
the expiration of one (1) month following such termination; provided, however,
in no event shall the Company be required to make or provide any Severance
Payment or Severance Benefit unless and until the Employee executes and delivers
to the Company a release in the form of Exhibit A and seven (7) days have
elapsed following such execution and delivery without revocation of such release
by the Employee (except that pending either such execution and delivery of such
a release by the Employee or failure of the Employee to do so within such thirty
(30) period, the Company will advance for the account of the Employee premiums
required to be paid during such thirty (30) day period if necessary to avoid
lapse with respect to the Employee within such period of a group dental, health
or disability policy to which Severance Benefits relate, which advance shall be
repaid by the Employee on expiration of such thirty (30) day period in case the
Employee fails to so execute and deliver such a release).
(b) Termination of Severance Benefits. All Severance Benefits shall be
discontinued 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
the Severance Benefits.
8. LIMITATION ON PAYMENTS.
(a) Basic Rule. Any other provision of this Agreement notwithstanding,
the Company shall not be required to make any payment to, or for the benefit of,
the Employee (under this Agreement or otherwise) that would be nondeductible by
the Company by reason of section 280G of the Code or that would subject the
Employee to the excise tax described in section 4999 of the Code, and any
payment or benefit that would be nondeductible by reason of section 162(m) of
the Code shall to the extent be deferred and paid or provided in the next
taxable year when it can be paid or provided without limitation by section
162(m) of the Code. All calculations required by this Section 8 shall be
performed by the independent auditors retained by URS Corporation most recently
prior to the Change in Control (the "Auditors"), based on information supplied
by the Company and the Employee, and shall be binding on the Company and the
Employee. All fees and expenses of the Auditors shall be paid by the Company.
(b) Reductions. If the amount of the aggregate payments to the
Employee must be reduced under this Section 8, then the Employee shall direct in
which order the
6.
<PAGE>
payments are to be reduced, but no change in the timing of any payment shall be
made without the Company's consent except as provided above with respect to the
limitation of section 162(m) of the Code. As a result of uncertainty in the
application of sections 162(m), 280G and 4999 of the Code at the time of an
initial determination by the Auditors hereunder, it is possible that a payment
will have been made by the Company that should not have been made (an
"Overpayment") or that an additional payment that will not have been made by the
Company could have been made (an "Underpayment"). In the event that the
Auditors, based upon the assertion of a deficiency by the Internal Revenue
Service against the Company or the Employee that the Auditors believe has a high
probability of success, determine that an Overpayment has been made, such
Overpayment shall be treated for all purposes as a loan to the Employee that he
shall repay to the Company, together with interest at the applicable federal
rate specified in section 7872(f) (2) of the Code; provided, however, that no
amount shall be payable by the Employee to the Company if and to the extent that
such payment would not reduce the amount that is nondeductible under section
162(m) or 280G of the Code or is subject to an excise tax under section 4999 of
the Code. In the event that the Auditors determine that an Underpayment has
occurred, such Underpayment shall promptly be paid or transferred by the Company
to, or for the benefit of, the Employee, together with interest at the
applicable federal rate specified in section 7872(f)(2) of the Code.
9. NONDISCLOSURE.
During the term of this Agreement and thereafter, the Employee shall
not, without the prior written consent of the Board, disclose or use for any
purpose (except in the course of his employment under this Agreement and in
furtherance of the business of the Company) confidential information or
proprietary data of the Company or any parent, subsidiary or affiliated
corporation or related entity of the Company, except as required by applicable
law or legal process, in which case promptly and before disclosure the Employee
shall 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 the Employee). The Employee agrees to
deliver to the Company at the termination of his employment, or at any other
time the Company may request, all memoranda, notes, plans, records, reports and
other documents or electronic information (and copies thereof) relating to the
business of the Company or any parent, subsidiary or affiliated corporation or
related entity of the Company, which he may then possess or have under his
control. Nothing in this Section 9 or elsewhere in this Agreement shall be
deemed to waive, or to permit or authorize the Employee to take any action which
waives or could have the consequence of waiving, the attorney-client privilege,
the work product doctrine or any other privilege or doctrine with respect to any
information in the possession of the Employee or any communication between the
Employee and the Company, its parent, subsidiary and affiliated corporations,
any related entities or any of their respective directors, officers, employees,
agents or other representatives.
10. MISCELLANEOUS PROVISIONS.
(a) Successors. Subject to Subsection (i) below and provided that the
Employee may not delegate his duties hereunder without the consent of the Board
of Directors of
7.
<PAGE>
the Company, 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) Notice. Notices and all other communications contemplated by this
Agreement shall be in writing and shall be deemed to have been duly given when
personally delivered or when mailed by U.S. registered mail, return receipt
requested and postage prepaid. In the case of the Employee, mailed notices shall
be addressed to him at the home address which he most recently communicated to
the Company in writing for income tax withholding purposes or by notice given
pursuant to this Subsection (a). In the case of the Company, mailed notices
shall be addressed to its corporate as reflected in its most recent Report on
Form 10-Q or Form 10-K filed with the U.S. Securities and Exchange Commission,
directed to the attention of its Secretary.
(c) 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 condition or provision or of the same
condition or provision at another time.
(d) 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 all prior employment agreements and severance agreements
between the parties, their parents, subsidiaries and affiliates, and their
respective predecessors (but not that certain Indemnification Agreement dated as
of January 20, 1997, between the Company and the Employee, which remains in full
force and effect).
(e) Withholding. All payments made under this Agreement shall be
subject to reduction to reflect taxes required to be withheld by law. The
Employee hereby declares under penalty of perjury that his Social Security
Number is ###-##-####. To the extent permitted by applicable law, the Company
shall also be entitled to withhold from or offset against any payments under
this Agreement any amounts owed by the Employee (whether or not liquidated) to
the Company or any parent, subsidiary or affiliated corporation or related
entity or either of them.
(f) Choice of Law. The validity, interpretation, construction and
performance of this Agreement shall be governed by the internal laws of the
State of California, without regard to where the Employee has his residence or
principal office or where he performs his duties hereunder.
(g) 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.
8.
<PAGE>
(h) Arbitration. Except as otherwise provided in Section 8, and except
for any action by the Company seeking injunctive relief against the Employee,
any controversy or claim arising out of or relating to this Agreement, or the
breach thereof, or the Employee's 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 the Employee, including without limitation all claims
encompassed within the scope of the form of General Release attached to this
Agreement as Exhibit A, shall be finally settled 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. The Company and the Employee acknowledge
and agree that any and all rights they may have to resolve their claims by a
jury trial are hereby expressly waived.
(i) 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 involuntary 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 (i) shall be void.
9.
<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
------------------------------------------
JOSEPH MASTERS
Date: March 20, 1998
-------------------------------------
URS CORPORATION
By: /s/Kent P. Ainsworth
-------------------------------------
KENT P. AINSWORTH
Title: Executive Vice President
Date: March 20, 1998
-------------------------------------
10.
<PAGE>
EXHIBIT A
GENERAL RELEASE
This General Release ("Release") is executed and delivered by Joseph
Masters ("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 (collectively, the "Company").
In consideration of certain benefits which Employee will receive
following termination of employment pursuant to the terms of the Employment
Agreement entered into as of March __, 1998 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;
provided that, expressly excluded from this Release are any and all Claims
Employee may have for indemnification under the Bylaws of the Company and any
Claims arising under the terms of the Indemnification Agreement between URS
Corporation and Employee dated as of January 20, 1997 and any amendment,
supplement or replacement thereof.
During the time Employee is entitled to any Severance Payment or
Severance Benefits, as defined and provided in Sections 6 and 7 of the
Agreement, 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
1.
<PAGE>
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
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
2.
<PAGE>
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 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.
AMENDMENT TO EMPLOYMENT AGREEMENT
THIS AMENDMENT TO EMPLOYMENT AGREEMENT (the "Amendment") is entered
into effective as of October 13, 1998, by and between MARTIN M. KOFFEL (the
"Employee") and URS CORPORATION, a Delaware corporation (the "Company").
RECITALS
A. The Company and the Employee have executed that certain Employment
Agreement dated as of December 16, 1991 (the "Original Agreement").
B. In consideration of the premises, and other good and valuable
consideration, receipt of which is hereby acknowledged by the parties, the
Company and the Employee desire to amend the Original Agreement as specified
herein.
AGREEMENT
The Company and the Employee, intending to be legally bound, agree as
follows:
1. AMENDMENT.
(a) Amendment of Section 4(d). Section 4(d) of the Original Agreement
is hereby amended to read in its entirety as follows:
"(d) Life Insurance. During the term of the
Employee's employment under this Agreement, the Company shall
pay to the Employee an amount (the "Life Insurance
Reimbursement Payment") sufficient to reimburse the Employee
for the cost as incurred of one or more policies of term life
insurance on the life of the Employee with face amount death
benefits in an aggregate amount up to four times his Base
Compensation, together with an additional amount (the "Life
Insurance Gross-Up Payment") such that after payment by the
Employee of all income and employment taxes on the Life
Insurance Reimbursement Payment and the Life Insurance
Gross-Up Payment, the Employee retains an amount equal to the
Life Insurance Reimbursement Payment."
(b) Amendment of Section 8. Section 8 of the Original Agreement is
hereby amended to read in its entirety as follows:
"8. Certain Additional Payments. If any payments,
distributions or other benefits by or from the Company to or
for the benefit of the Employee (whether paid or payable or
distributed or distributable pursuant to the terms of this
Agreement or otherwise, but determined without regard to any
additional payment required under this Section 8)
(collectively, the "Payment") would be subject to the excise
tax imposed by Section 4999 of the Internal Revenue Code or
any interest or penalties are incurred by the Employee with
respect to such excise tax (such excise tax, together with any
such interest and penalties, are hereinafter collectively
referred to as the "Excise Tax"), then the Employee shall be
entitled
<PAGE>
to receive from the Company an additional payment (a "Gross-Up
Payment") in an amount such that after payment by the Employee
of all taxes (including, without limitation, any income and
employment taxes and any interest and penalties imposed with
respect thereto) and the Excise Tax imposed upon the Gross-Up
Payment, the Employee retains an amount of the Gross-Up
Payment equal to the Excise Tax imposed upon the Payment. All
calculations required by this Section 8 shall be performed by
the independent auditors retained by the Company most recently
prior to the Change in Control (the "Auditors"), based on
information supplied by the Company and the Employee. All fees
and expenses of the Auditors shall be paid by the Company."
2. MISCELLANEOUS PROVISIONS.
(a) Original Agreement. The Original Agreement, as amended by this
Amendment, shall continue in full force and effect after the date hereof.
(b) Whole Agreement. No agreements, representations or understandings
(whether oral or written and whether express or implied) which are not expressly
set forth in the Original Agreement, as amended by this Amendment, have been
made or entered into by either party with respect to the subject matter of this
Amendment.
IN WITNESS WHEREOF, each of the parties has executed this Amendment, in
the case of the Company by its duly authorized officer, effective as of the day
and year first above written.
"Company"
URS CORPORATION
By: /s/ Kent P. Ainsworth
----------------------------------------------------
KENT P. AINSWORTH
Title: Executive Vice President and Chief
Financial Officer
"Employee"
/s/Martin M. Koffel
--------------------------------------------------------
MARTIN M. KOFFEL
AMENDMENT TO EMPLOYMENT AGREEMENT
THIS AMENDMENT TO EMPLOYMENT AGREEMENT (the "Amendment") is entered
into effective as of October 13, 1998, by and between ____________ (the
"Employee") and ________________, a Delaware corporation (the "Company").
RECITALS
A. The Company and the Employee have executed that certain Employment
Agreement dated as of ____________, 199__ (the "Original Agreement").
B. In consideration of the premises, and other good and valuable
consideration, receipt of which is hereby acknowledged by the parties, the
Company and the Employee desire to amend the Original Agreement as specified
herein.
AGREEMENT
The Company and the Employee, intending to be legally bound, agree as
follows:
1. AMENDMENT.
(a) Amendment of Section 8. Section 8 of the Original Agreement is
hereby amended to read in its entirety as follows:
"8. Certain Additional Payments. If any payments,
distributions or other benefits by or from the Company to or
for the benefit of the Employee (whether paid or payable or
distributed or distributable pursuant to the terms of this
Agreement or otherwise, but determined without regard to any
additional payment required under this Section 8)
(collectively, the "Payment") would be subject to the excise
tax imposed by Section 4999 of the Internal Revenue Code or
any interest or penalties are incurred by the Employee with
respect to such excise tax (such excise tax, together with any
such interest and penalties, are hereinafter collectively
referred to as the "Excise Tax"), then the Employee shall be
entitled to receive from the Company an additional payment (a
"Gross-Up Payment") in an amount such that after payment by
the Employee of all taxes (including, without limitation, any
income and employment taxes and any interest and penalties
imposed with respect thereto) and the Excise Tax imposed upon
the Gross-Up Payment, the Employee retains an amount of the
Gross-Up Payment equal to the Excise Tax imposed upon the
Payment. All calculations required by this Section 8 shall be
performed by the independent auditors retained by the Company
most recently prior to the Change in Control (the "Auditors"),
based on information supplied by the Company and the Employee.
All fees and expenses of the Auditors shall be paid by the
Company."
<PAGE>
2. MISCELLANEOUS PROVISIONS.
(a) Original Agreement. The Original Agreement, as amended by this
Amendment, shall continue in full force and effect after the date hereof.
(b) Whole Agreement. No agreements, representations or understandings
(whether oral or written and whether express or implied) which are not expressly
set forth in the Original Agreement, as amended by this Amendment, have been
made or entered into by either party with respect to the subject matter of this
Amendment.
IN WITNESS WHEREOF, each of the parties has executed this Amendment, in the
case of the Company by its duly authorized officer, effective as of the day and
year first above written.
"Company"
[NAME OF COMPANY]
By:
--------------------------------------------------
Name:
Title: Executive Vice President and Chief
Financial Officer
"Employee"
------------------------------------------------------
<TABLE>
Exhibit 21.1
URS CORPORATION AND SUBSIDIARY COMPANIES
The Company and its subsidiaries, excluding spun-off companies are as follows:
<CAPTION>
State of Percent of Stock
Parent and Subsidiaries Incorporation Owned by URS
<S> <C> <C>
URS Corporation (Parent) Delaware ---
URS Greiner Woodward-Clyde Consultants, Inc. Delaware 100
URS Greiner Woodward-Clyde Operating Services, Inc. Delaware 100
URS Greiner Woodward-Clyde Engineering, Inc. Nevada 100
URS Consultants, Inc. - Florida Florida 100(2)(10)
URS Greiner Woodward-Clyde, Inc. - California California 100(1)
URS Greiner Woodward-Clyde Group Consultants, Inc. New York 100(1)
URS Greiner Woodward-Clyde, Inc. - Washington Washington 100(1)
URS Greiner Woodward-Clyde Consultants, Inc. - Colorado Colorado 100(1)
URS Greiner Woodward-Clyde, Inc. - Ohio Ohio 100(1)
Coverdale & Colpitts, Inc. New York 100(2)(10)
URS Consultants, Inc. - Ingenieria Delaware 100(10)
E.C. Driver & Associates, Inc. Florida 100(3)
GEL, Inc. Nevada 100(4)
GIC Services, Inc. Nevada 100(4)
GIE, Inc. Nevada 100(4)
GM Services LLC Nevada 100(5)
GPL, Inc. Nevada 100(5)
URS Greiner Woodward-Clyde, Inc. Delaware 100(4)
Greiner Limited Hong Kong 100(6)
Greiner Engineering Limited Hong Kong 100(6)
Greiner FSC, Inc. Barbados 100(4)
URS Greiner Woodward-Clyde Licensing Corp. Delaware 100(4)
Greiner (Malaysia) Sdn Bhd Malaysia 100(8)
URS Greiner Woodward-Clyde, Inc. Colorado 100(4)
URS Greiner Woodward-Clyde, Inc. Connecticut 100(4)
URS Greiner Woodward-Clyde, Inc. Maryland 100(4)
URS Greiner Woodward-Clyde, Inc. New York 100(8)
URS Greiner Woodward-Clyde, Inc. Great Lakes Michigan 100(4)
URS Greiner Woodward-Clyde, Inc. Pacific Nevada 100(4)
URS Greiner Woodward-Clyde, Inc. Puerto Rico Puerto Rico 100(9)
URS Greiner Woodward-Clyde, Inc. Southern California 100(4)
URS Greiner Woodward-Clyde, Inc. Southwest Arizona 100(4)
URS Greiner Woodward-Clyde, Inc. West Coast California 100(4)
WVP Corporation Missouri 100(1)
URS Greiner Woodward-Clyde Group, Inc. Delaware 100%
URS Greiner Woodward-Clyde Federal Services, Inc. Delaware 100%(11)
Partnership for Response and Recovery Virginia 50%(12)
EWI Engineering & Associates Inc. Delaware 100%(11)
Clay Street Properties California 100%(11)
Woodward Investments, Inc. Delaware 100%(11)
GCH Acquisition Corp. Pennsylvania 100%(11)
<PAGE>
Geo-Systems, Inc. Georgia 100%(13)
Geo-Con, Inc. Pennsylvania 100%(13)
Environmental Landfill Mgmt., Inc. Delaware 100%(13)
URS Greiner Woodward-Clyde/Tatman & Lee, Inc. Delaware 100%(11)
Woodward-Clyde International, Inc. Delaware 100%(11)
Woodward-Clyde International-Americas, Inc. Nevada 100%(14)
Geotesting Services, Inc. California 100%(15)
URS Greiner Woodward-Clyde Consultants of Michigan, Inc. Michigan 100%(15)
URS Greiner Woodward-Clyde Consultants, Inc. New York 100%(15)
Woodward-Clyde Consultants of Canada, Ltd. Canada 100%(15)
Cole, Sherman & Associates Ltd. Canada 100%(16)
Cole, Sherman, Transmark Canada 100%(17)
Cole, Sherman Industrial Consultants Inc. Canada 100%(17)
Transport Technologies International, Inc. Canada 100%(17)
Cole, Sherman Inc. Delaware 100%(17)
Roscandor Consultants Ltd. Turks & Caicos 100%(17)
Envirorail Partnership California 75%(15)
Woodward-Clyde Consultants Ohio General Partnership Ohio 100%(15)
URS Greiner Woodward-Clyde International Holdings Inc. Delaware 100%(14)
AGC Woodward-Clyde Pty. Ltd. Australia 100%(18)
Woodward-Clyde (NZ) Limited New Zealand 100%(18)
Murray North Consultants Ltd. New Zealand 100%(19)
Murray North International Ltd. New Zealand 100%(19)
Murray North Solomon Islands Ltd. Solomon Islands 100%(20)
Woodward Clyde International, Ltd. Hong Kong 100%(18)
PT Geobis Woodward-Clyde Indonesia Indonesia 60%(18)
Woodward-Clyde Malaysia SDNBHD Malaysia 100%(18)
Woodward-Clyde Geoservices SDNBHD Malaysia 50%(21)
Woodward-Clyde Philippines, Inc. Philippines 100%(18)
Woodward-Clyde Japan, K.K. Japan 100%(18)
WCI Umwelttechnik, GmbH Germany 100%(18)
Woodward-Clyde International GmbH Germany 100%(22)
Limnos, SA Spain 100%(18)
Sert Ingenicurs-Conscils, SA Switzerland 94%(18)
WCI Ecoconcept, S.A. France 100%(18)
Woodward-Clyde Ltd. United Kingdom 100%(18)
Woodward-Clyde de Mexico, S.A. de C.V. Mexico 100%(18)
Venezuelan Joint Venture Venezuela 50%(18)
Montgomery Group, Ltd. Bermuda 100%(11)
<FN>
(1) Owned by URS Greiner Woodward-Clyde Consultants, Inc. (Delaware)
(2) Owned by URS Greiner Woodward-Clyde Group Consultants, Inc. (New York)
(3) Owned by URS Consultants, Inc. - Florida
(4) Owned by URS Greiner Woodward-Clyde Engineering, Inc.
(5) Owned equally by GIC Services, Inc. and Greiner (Malaysia) Sdn Bhd
(6) Owned equally by URS Greiner Woodward-Clyde Engineering, Inc. and Greiner International Limited
(7) Owned by GIE, Inc.
(8) Owned by URS Greiner Woodward-Clyde, Inc. (Connecticut)
2
<PAGE>
(9) Owned by URS Greiner Woodward-Clyde, Inc. (Delaware)
(10) Inactive
(11) Owned by URS Greiner Woodward-Clyde Group, Inc.
(12) Owned by URS Greiner Woodward-Clyde Federal Services, Inc.
(13) Owned by GCH Acquisition Corp.
(14) Owned by URS Greiner Woodward-Clyde International, Inc.
(15) Owned by URS Greiner Woodward-Clyde International-Americas, Inc.
(16) Owned by Woodward-Clyde Consultants of Canada, Ltd.
(17) Owned by Cole, Sherman & Associates Ltd.
(18) Owned by URS Greiner Woodward-Clyde International Holdings Inc.
(19) Owned by Woodward-Clyde (NZ) Limited
(20) Owned by Murray North International Ltd.
(21) Owned by Woodward-Clyde Malaysia SDNBHD
(22) Owned by WCI Umwelttechnik, GmbH
</FN>
</TABLE>
3
EXHIBIT 23.1
PricewaterhouseCoopers L.L.P.
a professional services firm
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. 2-99410) 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. 33-61230) for 500,000 common shares related to the
1991 Stock Incentive Plan filed April 1, 1993,
Form S-8 (File No. 333-24063) for 750,000 common shares related to the
1991 Stock Incentive Plan, filed March 27, 1997,
Form S-8 (File No. 333-24067) for 250,000 common shares related to the
Employee Stock Purchase Plan, filed March 27, 1997,
Form S-8 (File No. 333-24069) for 55,000 common shares related to the
Non-Executive Directors Stock Grant Plan, filed March 27, 1997,
Form S-4/A (File No. 333-37531) for up to 5,200,000 common shares
related to the acquisition of Woodward-Clyde Group, Inc., filed October
10, 1997, as amended by that Post-Effective Amendment No. 1 filed
November 25, 1997,
Form S-8 (File No. 333-48793) for 300,000 common shares related to the
Employee Stock Purchase Plan, filed March 27, 1998,
Form S-8 (File No. 333-48791) for 1,000,000 common shares related to
the 1991 Stock Incentive Plan, filed March 27, 1998,
Form S-3 (File No. 333-59203) for the resale of certain common shares,
filed July 15, 1998,
<PAGE>
of our report dated December 18, 1998, on our audits of the consolidated
financial statements of URS Corporation and its subsidiaries as of October 31,
1998 and 1997, and for the years ended October 31, 1998, 1997 and 1996, which
report is included in this Annual Report on Form 10-K.
/s/ PricewaterhouseCoopers L.L.P.
---------------------------------------
PRICEWATERHOUSECOOPERS L.L.P.
San Francisco, California
January 26, 1999
2
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,
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 1998 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 17, 1998
/s/RICHARD C. BLUM /s/ROBERT D. GLYNN, JR.
- -------------------------------- -------------------------------
Richard C. Blum Robert D. Glynn, Jr.
Director Director
/s/ROBERT L. COSTELLO /s/MARTIN M. KOFFEL
- -------------------------------- -------------------------------
Robert L. Costello Martin M. Koffel
Director Director
/s/ARMEN DER MARDEROSIAN /s/RICHARD B. MADDEN
- -------------------------------- -------------------------------
Armen Der Marderosian Richard B. Madden
Director Director
/s/S. ROBERT FOLEY, JR. /s/WILLIAM D. WALSH
- -------------------------------- -------------------------------
S. Robert Foley, Jr. William D. Walsh
Director Director
/s/JEAN-YVES PEREZ
- --------------------------------
Jean-Yves Perez
Director
/s/RICHARD Q. PRAEGER
- --------------------------------
Richard Q. Praeger
Director
/s/IRWIN L. ROSENSTEIN
- --------------------------------
Irwin L. Rosenstein
Director
<TABLE> <S> <C>
<ARTICLE> 5
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> OCT-31-1998
<PERIOD-START> NOV-01-1997
<PERIOD-END> OCT-31-1998
<CASH> 36,529
<SECURITIES> 0
<RECEIVABLES> 253,725
<ALLOWANCES> (14,102)
<INVENTORY> 0
<CURRENT-ASSETS> 286,185
<PP&E> 80,818
<DEPRECIATION> (51,301)
<TOTAL-ASSETS> 451,704
<CURRENT-LIABILITIES> 155,216
<BONDS> 115,096
0
0
<COMMON> 152
<OTHER-SE> 166,208
<TOTAL-LIABILITY-AND-EQUITY> 451,704
<SALES> 0
<TOTAL-REVENUES> 805,946
<CGS> 0
<TOTAL-COSTS> 478,640
<OTHER-EXPENSES> 276,743
<LOSS-PROVISION> 322
<INTEREST-EXPENSE> 8,774
<INCOME-PRETAX> 41,467
<INCOME-TAX> 18,800
<INCOME-CONTINUING> 22,667
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 22,667
<EPS-PRIMARY> 1.51
<EPS-DILUTED> 1.43
</TABLE>
