URS Corporation Reports First Quarter Results for Fiscal 2003; Provides Guidance for Second Quarter of Fiscal 2003
SAN FRANCISCO--March 13, 2003--URS Corporation today reported revenues of $758,033,000 for the first quarter of fiscal 2003, ended January 31, up 40% over the $542,998,000 reported for the first quarter of fiscal 2002. Net income was $5,950,000, compared to the $13,290,000 reported in the year-ago period. Earnings per share in the first quarter of fiscal 2003 were $0.18 fully diluted, compared to $0.52 in the first quarter of fiscal 2002. The Company's first quarter results include a non-cash charge of $2,500,000 before tax, or $0.05 per share, related to the vesting of restricted stock, which was accelerated by conversion of preferred stock into common stock following the acquisition of EG&G Technical Services.As of January 31, 2003, the Company's backlog was $2,639,800,000 compared with $2,565,000,000 as of October 31, 2002.
Martin M. Koffel, Chairman and Chief Executive Officer of URS stated: "Our results this quarter, the first full quarter with our EG&G division, were in line with the guidance we provided last December. Our federal government business, which now accounts for almost half of our revenues, has continued to benefit from increased spending on defense and environmental programs. As expected, projected state budget deficits have affected expenditures on infrastructure programs, resulting in project delays and, in some cases, cancellations. While revenue has remained steady in the private sector, we continue to face pricing pressures due to reduced capital spending and cost cutting initiatives by large multinational corporations."
Mr. Koffel continued: "The conditions now facing our state and local government market, and our private sector business, were anticipated in our planning and forecasting for fiscal 2003. As previously indicated, we have adjusted our cost structure to match current and expected economic conditions. These initiatives are expected to result in cost reductions of approximately $30 million in fiscal 2003."
As previously announced, URS has reached an agreement with its bank lenders to amend certain covenants on the Company's senior secured credit facility for the period from the first quarter of fiscal 2003 through the first quarter of fiscal 2004. While the Company has remained in compliance with the original covenants, the amendment will provide additional flexibility that the Company believes is prudent given continued uncertainties about the overall economy.
Fiscal 2003 and Second Quarter Outlook
The Company reaffirmed its earnings per share guidance of approximately $1.75 for the 2003 fiscal year. URS currently expects to achieve 26% to 29% of its full year earnings per share during the second quarter of fiscal 2003.
Commenting on the Company's outlook, Mr. Koffel stated: "URS remains in a strong competitive position. We continue to win important new projects, and our backlog has increased. In addition, the recent passage of the 2003 Omnibus Spending Bill and the 2004 Department of Defense budget request has reinforced our expectations for continued growth in the federal market. However, given the continued economic uncertainties, and particularly the state revenue shortfalls, we are being conservative about the rate at which we expect backlog to convert into revenue during the remainder of fiscal 2003."
URS Corporation offers a broad range of planning, design, program and construction management, systems integration, and operations and maintenance services for transportation, hazardous waste, industrial processing and petrochemical, general building, water/wastewater, military facilities and equipment platforms, and security projects. Headquartered in San Francisco, the Company operates in more than 20 countries with approximately 25,000 employees providing engineering services to federal, state and local governmental agencies as well as private clients in the chemical, manufacturing, pharmaceutical, forest products, mining, oil and gas, and utilities industries (www.urscorp.com).
URS will host a dial-in conference call on Friday, March 14, 2003 at 11:00 a.m. (EST), to discuss its fiscal 2003 first quarter results. A live web cast of this call will be available on URS' website at www.urscorp.com.
Statements contained in this press release that are not historical facts may constitute forward-looking statements, including statements about the Company's expected financial results and its opportunities for future growth. The Company believes that its expectations are reasonable and are based on reasonable assumptions. However, such forward-looking statements by their nature involve risks and uncertainties. The Company cautions that a variety of factors could cause the Company's business and financial results to differ materially from those expressed or implied in forward-looking statements. These factors include, but are not limited to: the Company's ability to successfully integrate the EG&G business just acquired; the Company's leveraged position; the ability of the Company to service its debt; deterioration in current economic conditions, particularly at the state and local level; the Company's ability to pursue business strategies; the Company's continued dependence on federal, state and local appropriations for infrastructure spending; pricing pressures; changes in the regulatory environment; outcomes of pending and future litigation; the Company's ability to attract and retain qualified professionals; industry competition; changes in international trade, monetary and fiscal policies; the ability of the Company to integrate future acquisitions successfully; the Company's ability to successfully integrate its accounting and management information systems; and other factors discussed more fully in the Company's reports filed from time to time with the Securities and Exchange Commission. The Company assumes no obligation to update any forward-looking statements.
URS CORPORATION AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(In thousands, except per share data)
January 31, October 31,
2003 2002
---------- ------------
(unaudited)
ASSETS
Current assets:
Cash and cash equivalents $9,844 $9,972
Accounts receivable 569,130 596,275
Costs and accrued earnings in excess of
billings on contracts in process 386,827 374,651
Less receivable allowances (30,646) (30,710)
----------- -----------
Net accounts receivable 925,311 940,216
----------- -----------
Deferred income taxes 20,195 17,895
Prepaid expenses and other assets 22,962 20,248
----------- -----------
Total current assets 978,312 988,331
Property and equipment at cost, net 155,897 156,524
Goodwill, net 1,000,680 1,001,629
Purchased intangible assets, net 13,953 14,500
Other assets 65,954 68,108
----------- -----------
$2,214,796 $2,229,092
=========== ===========
LIABILITIES, MANDATORILY REDEEMABLE SECURITIES,
AND STOCKHOLDERS' EQUITY
Current liabilities:
Current portion of long-term debt $32,683 $30,298
Accounts payable 166,223 204,389
Accrued salaries and wages 106,285 101,287
Accrued expenses and other 123,479 115,545
Billings in excess of costs and accrued
earnings on contracts in process 95,007 92,235
----------- -----------
Total current liabilities 523,677 543,754
Long-term debt 916,946 923,863
Deferred income taxes 41,229 40,629
Deferred compensation and other 37,456 40,261
----------- -----------
Total liabilities 1,519,308 1,548,507
----------- -----------
Commitments and contingencies
Mandatorily redeemable Series D senior
convertible participating preferred stock, par
value $.01; authorized 100 shares; issued and
outstanding 0 and 100 shares, respectively;
liquidation preference $0 and $46,733,
respectively -- 46,733
----------- -----------
Mandatorily redeemable Series E senior
cumulative convertible participating preferred
stock, par value $.01; authorized 100 shares;
issued and outstanding 0 and 0 shares,
respectively; liquidation preference $0 and $0,
respectively -- --
----------- -----------
Stockholders' equity:
Common shares, par value $.01; authorized
50,000 shares; issued and outstanding 32,490
and 30,084 shares, respectively 325 301
Treasury stock, 52 shares at cost (287) (287)
Additional paid-in capital 472,043 418,705
Accumulated other comprehensive loss (2,807) (5,132)
Retained earnings 226,214 220,265
----------- -----------
Total stockholders' equity 695,488 633,852
----------- -----------
$2,214,796 $2,229,092
=========== ===========
URS CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME
(In thousands, except per share data)
Three Months Ended
January 31,
-------------------
2003 2002
--------- ---------
(unaudited)
Revenues $758,033 $542,998
Direct operating expenses 483,597 330,816
--------- ---------
Gross profit 274,436 212,182
--------- ---------
Indirect expenses:
Indirect, general and administrative 243,246 176,846
Interest expense, net 21,280 12,616
--------- ---------
264,526 189,462
--------- ---------
Income before taxes 9,910 22,720
Income tax expense 3,960 9,430
--------- ---------
Net income 5,950 13,290
Preferred stock dividend -- 2,418
--------- ---------
Net income available for common stockholders 5,950 10,872
Other comprehensive income (loss):
Foreign currency translation adjustments 2,325 (2,978)
--------- ---------
Comprehensive income $8,275 $7,894
========= =========
Net income per common share:
Basic $.18 $.60
========= =========
Diluted $.18 $.52
========= =========
Weighted-average shares outstanding:
Basic 32,324 18,264
========= =========
Diluted 32,574 25,570
========= =========
URS CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(In thousands)
Three Months
Ended
January 31,
-----------------
2003 2002
-------- --------
(unaudited)
Cash flows from operating activities:
Net income $5,950 $13,290
-------- --------
Adjustments to reconcile net income to net cash
provided by operating activities:
Depreciation and amortization 11,497 7,403
Amortization of financing fees 1,751 921
Receivable allowances (64) 1,298
Stock compensation 2,956 518
Changes in current assets and liabilities, net of
business acquired:
Accounts receivable and costs and accrued earnings
in excess of billings on contracts in process 14,969 24,404
Prepaid expenses and other assets (2,714) 793
Accounts payable, accrued salaries and wages and
accrued expenses (25,234) (31,343)
Billings in excess of costs and accrued earnings
on contracts in process 2,772 (1,696)
Deferred income taxes (1,700) 1,176
Deferred compensation and other (2,805) (145)
Other, net 3,095 6,148
-------- --------
Total adjustments 4,523 9,477
-------- --------
Net cash provided by operating activities 10,473 22,767
-------- --------
Cash flows from investing activities:
Capital expenditures, less equipment purchased
through capital leases of $6,204 and $11,542,
respectively (3,169) (17,669)
-------- --------
Net cash used by investing activities (3,169) (17,669)
-------- --------
Cash flows from financing activities:
Long-term debt principal payments (4,290) (9,209)
Long-term debt borrowings 300 --
Line of credit borrowings 34,741 9,880
Line of credit principal payments (37,644) (9,880)
Capital lease obligations payments (4,180) (3,384)
Short-term note borrowings 87 --
Short-term note payments (118) (1,069)
Proceeds from sale of common shares and exercise
of stock options 3,672 6,733
-------- --------
Net cash used by financing activities (7,432) (6,929)
-------- --------
Net decrease in cash (128) (1,831)
Cash and cash equivalents at beginning of period 9,972 23,398
-------- --------
Cash and cash equivalents at end of period $9,844 $21,567
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Supplemental Information:
Interest paid $8,102 $6,124
======== ========
Taxes paid $1,784 $8,405
======== ========
Equipment acquired with capital lease obligations $6,204 $11,542
======== ========
Non-cash dividends paid in-kind $-- $2,402
======== ========
Conversion of Series D preferred stock to common
stock $46,733 $--
======== ========