URS Corporation Reports Second Quarter 2009 Results

URS Corporation (NYSE: URS) today reported its financial results for the second quarter of fiscal 2009, which ended on July 3, 2009. Revenues for the quarter were $2.30 billion, compared with revenues of $2.53 billion during the second quarter of 2008. URS net income was $95.1 million, compared with the $59.4 million reported in the year-ago period, and diluted earnings per share ("EPS”) were $1.16, compared with $0.70 reported for the second quarter of 2008. Revenues for the first six months of 2009 were $4.82 billion, compared with revenues of $4.79 billion for the first six months of 2008. URS net income was $170.6 million, compared with the $108.8 million reported in the year-ago period, and diluted EPS was $2.08, compared with $1.29 reported for the first six months of 2008.

Financial results for the second quarter and the first six months of 2009 include net after-tax gains of $35.5 million, or $0.43 per share, and $30.6 million, or $0.37 per share, respectively, from URS’ previously announced sale of its equity interest in MIBRAG mbH ("MIBRAG”), a German mining and power business. Excluding this net gain, net income for the second quarter and the first six months of 2009 was $59.6 million and $140.0 million on diluted earnings per share ("EPS”) of $0.73 and $1.71, respectively. A reconciliation of net income and EPS with and without the net gain from the MIBRAG sale is attached to this release and provided in our Reconciliation Schedule available on the investor relations section of the Company’s web site at http://investors.urscorp.com.

The Company’s backlog was $18.1 billion at the end of the quarter, compared to $17.2 billion as of January 2, 2009, the last day of the Company’s 2008 fiscal year. The Company ended the quarter with a book of business of $30.8 billion, compared with $29.1 billion at the end of fiscal 2008.

Commenting on the Company’s financial results, Martin M. Koffel, Chairman and Chief Executive Officer, stated: "URS performed well in the second quarter, reflecting the diversification of our business and our focus on successful execution for our clients. Our federal market remains robust and infrastructure work is steady. Although we are seeing a build up of demand in our power and industrial and commercial sectors, contract awards in these businesses have slowed due to the effect of the economy on our customers. However, the long-term outlook for all of our markets is strong and we are well-positioned to capture new work as the economy recovers.”

Business Segment Results

In addition to providing consolidated financial results, URS reports separate financial information for its three divisions: the URS Division, the EG&G Division and the Washington Division. The URS Division performs program management, planning, design and engineering, and construction management services in the federal, power, infrastructure, and industrial and commercial markets. The EG&G Division primarily serves the federal market, providing program management, systems engineering and technical assistance and operations and maintenance services to the U.S. Departments of Defense, State, Homeland Security and Treasury, NASA and other agencies. The Washington Division provides program management, planning, design and engineering, construction, operations and maintenance, and decommissioning and closure services to customers in the power, infrastructure, industrial and commercial and federal markets.

URS Division. For the second quarter of 2009, the URS Division reported revenues of $812.1 million and operating income of $70.2 million compared to revenues of $887.6 million and operating income of $67.0 million in the second quarter of 2008.

EG&G Division. For the second quarter of 2009, the EG&G Division reported revenues of $652.7 million and operating income of $38.1 million compared to revenues of $576.2 million and operating income of $32.7 million for the corresponding period in 2008.

Washington Division. For the second quarter of 2009, the Washington Division reported revenues of $850.7 million and operating income of $38.3 million compared to revenues of $1.08 billion and operating income of $55.2 million for the same period last year.

Outlook for the Remainder of Fiscal 2009

Based on the net gain on the MIBRAG sale and URS’ expectations for the remainder of the year, the Company has updated its full year guidance for fiscal 2009. URS now expects that fiscal 2009 revenues will be between $9.4 and $9.8 billion, and that GAAP earnings per share will be in the range of $3.20 and $3.35, on a diluted basis, compared to previous expectations of $2.80 and $2.95. The full-year 2009 impact from the MIBRAG sale is expected to be $0.37. The Company now expects that weighted-average shares outstanding for 2009 will be approximately 82 million.

Commenting on the Company’s guidance for 2009, Mr. Koffel said: "We recorded strong results in the first half of 2009, as we benefited from accelerated timing of revenues and profits on some projects, and effective cost-control management. We are making investments in the second half of the year to take advantage of the increasing business opportunities we are seeing in our public sector markets. We also are benefiting from a strong balance sheet and solid liquidity position, which gives us the flexibility to invest in the business.”

Koffel continued, "Our revenues and profits are increasingly based on project milestones and incentives, resulting in more variability from quarter to quarter. We, therefore, continue to focus on annual results as the appropriate way to evaluate our performance.”

Webcast Information

URS will host a dial-in conference call on Thursday, August 13, 2009 at 11:00 a.m. (EDT) to discuss its second quarter fiscal 2009 results. A live webcast of this call will be available on the investor relations portion of URS’ website at http://investors.urscorp.com.

URS Corporation (NYSE: URS) is a leading provider of engineering, construction and technical services for public agencies and private sector companies around the world. The Company offers a full range of program management; planning, design and engineering; systems engineering and technical assistance; construction and construction management; operations and maintenance; and decommissioning and closure services. URS provides services for power, infrastructure, industrial and commercial, and federal projects and programs. Headquartered in San Francisco, the Company operates through three divisions: the URS Division, the EG&G Division and the Washington Division. URS Corporation has more than 47,000 employees in a network of offices in more than 30 countries (www.urscorp.com).

TABLES TO FOLLOW

Statements contained in this earnings release that are not historical facts may constitute forward-looking statements, including statements relating to future revenues, future net income and earnings per share, future liquidity and capital position, future outstanding shares and other future business, economic and industry conditions. 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, including but not limited to the following, could cause our business and financial results to differ materially from those expressed or implied in our forward-looking statements: economic weakness and declines in client spending; changes in our book of business; our compliance with government contract procurement regulations; impairment of our goodwill; impact of recent liquidity constraints upon us or upon our clients; our leveraged position and our ability to service our debt; restrictive covenants in our 2007 Credit Facility; our ability to procure government contracts; our reliance on government appropriations; unilateral termination provisions in government contracts; our ability to make accurate estimates and assumptions; our accounting policies; workforce utilization; our and our partners’ ability to bid on, win, perform and renew contracts and projects; our dependence on partners, subcontractors and suppliers; customer payment defaults; our ability to recover on claims; availability of bonding and insurance; integration of acquisitions; environmental liabilities; liabilities for pending and future litigation; the impact of changes in laws and regulations; nuclear energy indemnification; a decline in defense spending; industry competition; our ability to attract and retain key individuals; employee, agent or partner misconduct; retirement plan obligations; risks associated with international operations; business activities in high security risk countries; third-party software risks; terrorist and natural disaster risks; our relationships with our labor unions; our ability to protect our intellectual property rights; anti-takeover risks and other factors discussed more fully in our Form 10-Q for the period ended July 3, 2009 as well as in other reports subsequently filed from time to time with the United States Securities and Exchange Commission. The forward-looking statements represent the Company’s current intentions as of the date on which it was made and we assume no obligation to revise or update any forward-looking statements.

URS CORPORATION AND SUBSIDIARIES
RECONCILIATION SCHEDULE OF THE IMPACT OF THE SALE OF EQUITY INVESTMENT IN MIBRAG

Net income and diluted EPS excluding the impact of the sale of equity investment in MIBRAG are not computed in accordance with generally accepted accounting principles ("GAAP”). We presented these amounts to demonstrate the impact of the sale. These non-GAAP measures may be useful to investors seeking to compare the actual or expected performance of our ongoing business with the actual performance of our business in prior periods. Net income and diluted EPS excluding the impact of the sale of equity investment in MIBRAG should not be used as a substitute for net income and diluted EPS prepared in conformity with GAAP, or as a GAAP measure of profitability or cash flow.

Below is the reconciliation of net income and diluted EPS, before the impact of the sale of equity investment in MIBRAG, to GAAP net income and diluted EPS for the three and six months ended July 3, 2009. The impact of the sale of equity investment in MIBRAG includes the loss on settlement of our foreign currency forward contract of $21.5 million and $27.7 million for the three and six months ended July 3, 2009, respectively. This foreign currency forward contract was used primarily as a hedge against our net investment in MIBRAG.

⁽¹⁾We adjusted our book of business as of January 2, 2009 to exclude designations as we ceased reporting them within our book of business starting in the first quarter of 2009.