10.05.2005 22:39:00

URS Corporation Reports First Quarter Results for Fiscal 2005; EPS of

URS Corporation Reports First Quarter Results for Fiscal 2005; EPS of $0.45 In Line With Guidance; Outlook for Remainder of 2005 Reaffirmed; Net Income Rises 46% and Company Pays Down $17 Million in Debt, Reducing Debt to Total Capitalization Ratio to 33%


    Business Editors

    SAN FRANCISCO--(BUSINESS WIRE)--May 10, 2005--URS Corporation (NYSE: URS) today reported its financial results for the first quarter of fiscal 2005, which ended on April 1, 2005. Revenues for the quarter were $922.0 million, compared with revenues of $830.3 million during the comparable period in 2004,(1) an increase of 11%. Net income was $20.1 million, an increase of 46% from the $13.8 million reported for the corresponding period in 2004. Earnings per share ("EPS") of $0.45, fully diluted, was up 15% as compared with EPS of $0.39, fully diluted, for the same period last year.
    During the first quarter of fiscal 2005, the Company reduced debt by $16.8 million, lowering its debt to total capitalization ratio to 33%. As of April 1, 2005, the Company's backlog was $3.732 billion, compared to $3.633 billion as of December 31, 2004.
    Commenting on the Company's financial results, Martin M. Koffel, Chairman and Chief Executive Officer, stated: "Our results for the quarter were in line with our guidance and reflect the continued strength of our federal business, along with steady improvement in our state and local government and private sector markets, and growth in our international operations. We remain on track to reduce our debt by approximately $80 million in fiscal 2005."
    Mr. Koffel continued: "Federal spending on defense and homeland security continues to be strong and the trend toward increased outsourcing by the Department of Defense is emerging as anticipated. We expect that the passage of the new transportation bill will increase spending for infrastructure projects later in the year."
    Weighted-average shares outstanding for the first quarter of 2005 for the purposes of calculating diluted EPS were 44.8 million, compared to 35.1 million weighted-average shares outstanding for the corresponding period last year. The increase was primarily due to the Company's April 2004 public stock offering and to additional shares issued pursuant to the Company's stock option and stock purchase plans.

    Business Segments

    In addition to providing consolidated financial results, URS provides separate financial information for its two segments: the URS Division and the EG&G Division. The URS Division includes the Company's work in the state and local government market, the private sector and the international business. In addition, the URS Division includes the Company's federal business that existed prior to the acquisition of EG&G, which consists primarily of facilities and environmental work. The EG&G Division primarily serves the federal government market, providing a range of operations and maintenance and technical support services to the Departments of Defense, Homeland Security, Energy, Treasury and NASA, among others.

    URS Division. For the first quarter of fiscal 2005, the URS Division reported revenues of $608.0 million and operating income of $42.9 million, compared to revenues of $560.5 million and operating income of $39.2 million for the corresponding period in 2004.

    EG&G Division. For the first quarter of fiscal 2005, the EG&G Division reported revenues of $315.5 million and operating income of $12.7 million, compared to revenues of $270.1 million and operating income of $10.9 million for the corresponding period in 2004.

    Outlook for the Remainder of Fiscal 2005

    The Company reaffirmed its expectation that fiscal 2005 revenues will be approximately $3.6 billion. Assuming it meets this revenue expectation, the Company expects that net income will be approximately $96 million and earnings per share will be approximately $2.10 for fiscal 2005. In addition, the Company indicated that second quarter EPS will be between 25% and 29% of the Company's full year 2005 guidance of $2.10.
    URS Corporation offers a comprehensive range of professional planning and design, systems engineering and technical assistance, program and construction management, and operations and maintenance services for transportation, commercial/industrial, facilities, environmental, water/wastewater, homeland security, installations and logistics, and defense systems. Headquartered in San Francisco, the Company operates in more than 20 countries with approximately 27,800 employees providing engineering and technical services to federal, state and local governmental agencies as well as private clients in the chemical, pharmaceutical, oil and gas, power, manufacturing, mining and forest products industries (www.urscorp.com).

    Web Cast Information

    URS will host a dial-in conference call on Wednesday, May 11 at 11:00 a.m. (EDT) to discuss its first quarter fiscal 2005 results. A live web cast of this call will be available on the investor relations portion of URS' website at www.urscorp.com.

    TABLES TO FOLLOW

    Statements contained in this earning release that are not historical facts may constitute forward-looking statements, including statements relating to the Company's future revenue and business prospects, future debt repayment and future earning projections. 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 that could cause actual results to differ materially from the results predicted. The potential risks and uncertainties include, but are not limited to: an economic downturn; changes in the Company's book of business; the Company's ability to comply with government contract procurement regulations; the Company's dependence on government appropriations and procurements; the Company's ability to profitably execute its contracts and guarantees; the Company's leveraged position; the Company's ability to service its debt; liability for pending and future litigation; the impact of changes in laws and regulations; the Company's ability to maintain adequate insurance coverage; a decline in defense spending; industry competition; the Company's ability to attract and retain key individuals; risks associated with SFAS 123(R); risks associated with international operations; risks associated with the Company's accounting and project management software; the Company's relationship with its labor unions; and other factors discussed more fully in the Company's Form 10-Q for the first quarter of fiscal 2005, as well as in other reports subsequently 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 - UNAUDITED (In thousands, except per share data)

April December 1, 2005 31, 2004 ---------- ----------- ASSETS Current assets: Cash and cash equivalents, including $0 and $58,000 of short-term money market funds, respectively $67,132 $108,007 Accounts receivable, including retainage of $45,672 and $43,844, respectively 561,990 579,953 Costs and accrued earnings in excess of billings on contracts in process 451,588 400,418 Less receivable allowances (43,317) (38,719) ----------- ---------- Net accounts receivable 970,261 941,652 Deferred income taxes 22,725 20,614 Prepaid expenses and other assets 22,328 18,863 ----------- ---------- Total current assets 1,082,446 1,089,136 Property and equipment at cost, net 142,894 142,907 Goodwill 1,004,680 1,004,680 Purchased intangible assets, net 7,006 7,749 Other assets 51,199 52,010 ----------- ---------- $2,288,225 $2,296,482 =========== ========== LIABILITIES AND STOCKHOLDERS' EQUITY Current liabilities: Book overdraft $34,122 $70,871 Note payables and current portion of long-term debt 46,232 48,338 Accounts payable and subcontractors payable, including retainage of $14,161 and $13,302, respectively 164,020 138,250 Accrued salaries and wages 150,657 171,004 Accrued expenses and other 56,818 58,901 Billings in excess of costs and accrued earnings on contracts in process 90,502 84,393 ----------- ---------- Total current liabilities 542,351 571,757 Long-term debt 493,885 508,584 Deferred income taxes 39,758 36,305 Other long-term liabilities 97,933 97,715 ----------- ---------- Total liabilities 1,173,927 1,214,361 ----------- ---------- Commitments and contingencies Stockholders' equity: Common shares, par value $.01; authorized 100,000 shares; 43,884 and 43,838 shares issued, respectively; and 43,832 and 43,786 shares outstanding, respectively 443 438 Treasury stock, 52 shares at cost (287) (287) Additional paid-in capital 747,592 734,843 Accumulated other comprehensive income 5,752 6,418 Retained earnings 360,798 340,709 ----------- ---------- Total stockholders' equity 1,114,298 1,082,121 ----------- ---------- $2,288,225 $2,296,482 =========== ==========


URS CORPORATION AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME - UNAUDITED (In thousands, except per share data)

Three Months Ended ------------------------- April 1, March 31, 2005 2004 ---------- ----------

Revenues $922,000 $830,328 Direct operating expenses 588,839 521,075 ---------- ---------- Gross profit 333,161 309,253 Indirect, general and administrative expenses 288,785 267,697 ---------- ---------- Operating income 44,376 41,556 Interest expense, net 10,329 18,621 ---------- ---------- Income before income taxes 34,047 22,935 Income tax expense 13,960 9,170 ---------- ---------- Net income 20,087 13,765 Other comprehensive income (loss): Foreign currency translation adjustments (666) 1,016 ---------- ---------- Comprehensive income $19,421 $14,781 ========== ========== Net income per common share: Basic $.46 $.40 ========== ========== Diluted $.45 $.39 ========== ========== Weighted-average shares outstanding: Basic 43,731 34,392 ========== ========== Diluted 44,823 35,125 ========== ==========




URS CORPORATION AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF CASH FLOWS-UNAUDITED (In thousands)

Three Months Ended ----------------- April March 1, 31, 2005 2004 -------- --------

Cash flows from operating activities: Net income $20,087 $13,765 -------- -------- Adjustments to reconcile net income to net cash provided by operating activities: Depreciation and amortization 9,787 11,047 Amortization of financing fees 1,482 1,830 Costs incurred for extinguishment of debt 762 -- Provision for doubtful accounts 3,376 3,899 Deferred income taxes 1,342 (2,226) Stock compensation 1,725 660 Tax benefit of stock compensation 1,522 3,570 Changes in assets and liabilities: Accounts receivable and costs and accrued earnings in excess of billings on contracts in process (31,985) 9,384 Prepaid expenses and other assets (3,500) (2,680) Accounts payable, accrued salaries and wages and accrued expenses 3,338 (1,041) Billings in excess of costs and accrued earnings on contracts in process 6,109 (6,676) Other long-term liabilities 251 1,063 Other liabilities, net (756) 2,801 -------- -------- Total adjustments and changes (6,547) 21,631 -------- -------- Net cash from operating activities 13,540 35,396 -------- -------- Cash flows from investing activities: Capital expenditures, less equipment purchased through capital leases (3,962) (5,474) -------- -------- Net cash from investing activities (3,962) (5,474) -------- -------- Cash flows from financing activities: Long-term debt principal payments (11,067) (21,858) Long-term debt borrowings -- 346 Net borrowings/(payments) under the line of credit (6,000) 17,297 Net change in book overdraft (36,749) (21,736) Capital lease obligation payments (3,511) (3,372) Short-term note borrowings -- 1,540 Short-term note payments (1,614) (46) Proceeds from sale of common stock from employee stock purchase plan and exercise of stock options 9,508 16,609 Call premiums paid for debt extinguishment (613) -- Payments for financing fees (407) (3) -------- -------- Net cash from financing activities (50,453) (11,223) -------- -------- Net increase (decrease) in cash and cash equivalents (40,875) 18,699 Cash and cash equivalents at beginning of period 108,007 34,744 -------- -------- Cash and cash equivalents at end of period $67,132 $53,443 ======== ======== Supplemental information: Interest paid $9,715 $16,472 ======== ======== Taxes paid $8,782 $18,235 ======== ======== Equipment acquired through capital lease obligations $5,257 $4,966 ======== ========

    (1)As previously announced, the Company changed to a calendar fiscal year, effective January 1, 2005. URS now reports its financial results on a 52/53-week fiscal year ending on the Friday closest to December 31, with interim quarters ending on the Fridays closest to March 31, June 30 and September 30.

--30--NM/ny*

CONTACT: URS Corporation Kent P. Ainsworth, 415-774-2700 or Citigate Sard Verbinnen Hugh Burns/Jamie Tully, 212-687-8080

KEYWORD: CALIFORNIA INDUSTRY KEYWORD: MANUFACTURING EARNINGS CONFERENCE CALLS SOURCE: URS Corporation

Copyright Business Wire 2005

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