Attached files
file | filename |
---|---|
8-K - 8-K - AECOM | a14-22456_18k.htm |
EX-99.1 - EX-99.1 - AECOM | a14-22456_1ex99d1.htm |
EX-23.1 - EX-23.1 - AECOM | a14-22456_1ex23d1.htm |
EX-99.2 - EX-99.2 - AECOM | a14-22456_1ex99d2.htm |
EX-10.1 - EX-10.1 - AECOM | a14-22456_1ex10d1.htm |
Exhibit 99.3
URS CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETSUNAUDITED
(In millions, except per share data)
|
|
July 4, 2014 |
|
January 3, 2014 |
| ||
ASSETS |
|
|
|
|
| ||
Current assets: |
|
|
|
|
| ||
Cash and cash equivalents |
|
$ |
283 |
|
$ |
284 |
|
Accounts receivable, including retentions of $139 and $117, respectively |
|
1,374 |
|
1,393 |
| ||
Costs and accrued earnings in excess of billings on contracts |
|
1,537 |
|
1,521 |
| ||
Less receivable allowances |
|
(59 |
) |
(65 |
) | ||
Net accounts receivable |
|
2,852 |
|
2,849 |
| ||
Other current assets |
|
231 |
|
258 |
| ||
Total current assets |
|
3,366 |
|
3,391 |
| ||
Investments in and advances to unconsolidated joint ventures |
|
244 |
|
245 |
| ||
Property and equipment, net of accumulated depreciation of $715 and $676, respectively |
|
592 |
|
608 |
| ||
Intangible assets, net |
|
523 |
|
570 |
| ||
Goodwill |
|
3,709 |
|
3,696 |
| ||
Other long-term assets |
|
221 |
|
208 |
| ||
Total assets |
|
$ |
8,655 |
|
$ |
8,718 |
|
LIABILITIES AND EQUITY |
|
|
|
|
| ||
Current liabilities: |
|
|
|
|
| ||
Current portion of long-term debt |
|
$ |
51 |
|
$ |
45 |
|
Accounts payable and subcontractors payable, including retentions of $29 and $29, respectively |
|
692 |
|
688 |
| ||
Accrued salaries and employee benefits |
|
523 |
|
507 |
| ||
Billings in excess of costs and accrued earnings on contracts |
|
222 |
|
233 |
| ||
Other current liabilities |
|
327 |
|
366 |
| ||
Total current liabilities |
|
1,815 |
|
1,839 |
| ||
Long-term debt |
|
1,779 |
|
1,667 |
| ||
Deferred tax liabilities |
|
428 |
|
444 |
| ||
Self-insurance reserves |
|
128 |
|
127 |
| ||
Pension and post-retirement benefit obligations |
|
281 |
|
286 |
| ||
Other long-term liabilities |
|
136 |
|
128 |
| ||
Total liabilities |
|
4,567 |
|
4,491 |
| ||
Commitments and contingencies (Note 13) |
|
|
|
|
| ||
URS stockholders equity: |
|
|
|
|
| ||
Preferred stock, authorized 3 shares; no shares outstanding |
|
|
|
|
| ||
Common stock, par value $.01; authorized 200 shares; 89 and 89 shares issued, respectively; and 69 and 75 shares outstanding, respectively |
|
1 |
|
1 |
| ||
Treasury stock, 20 and 14 shares at cost, respectively |
|
(854 |
) |
(588 |
) | ||
Additional paid-in capital |
|
3,059 |
|
3,038 |
| ||
Accumulated other comprehensive loss |
|
(178 |
) |
(201 |
) | ||
Retained earnings |
|
1,915 |
|
1,831 |
| ||
Total URS stockholders equity |
|
3,943 |
|
4,081 |
| ||
Noncontrolling interests |
|
145 |
|
146 |
| ||
Total stockholders equity |
|
4,088 |
|
4,227 |
| ||
Total liabilities and stockholders equity |
|
$ |
8,655 |
|
$ |
8,718 |
|
See Notes to Condensed Consolidated Financial Statements
URS CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONSUNAUDITED
(In millions, except per share data)
|
|
Three Months Ended |
|
Six Months Ended |
| ||||||||
|
|
July 4, |
|
June 28, |
|
July 4, |
|
June 28, |
| ||||
Revenues |
|
$ |
2,555 |
|
$ |
2,792 |
|
$ |
5,092 |
|
$ |
5,595 |
|
Cost of revenues |
|
(2,407 |
) |
(2,642 |
) |
(4,854 |
) |
(5,293 |
) | ||||
General and administrative expenses |
|
(27 |
) |
(23 |
) |
(49 |
) |
(46 |
) | ||||
Equity in income of unconsolidated joint ventures |
|
17 |
|
18 |
|
36 |
|
42 |
| ||||
Operating income |
|
138 |
|
145 |
|
225 |
|
298 |
| ||||
Interest expense |
|
(18 |
) |
(21 |
) |
(36 |
) |
(42 |
) | ||||
Other income (expenses) |
|
1 |
|
(3 |
) |
(3 |
) |
(6 |
) | ||||
Income before income taxes |
|
121 |
|
121 |
|
186 |
|
250 |
| ||||
Income tax expense |
|
(13 |
) |
(39 |
) |
(39 |
) |
(81 |
) | ||||
Net income including noncontrolling interests |
|
108 |
|
82 |
|
147 |
|
169 |
| ||||
Noncontrolling interests in income of consolidated subsidiaries |
|
(20 |
) |
(15 |
) |
(32 |
) |
(30 |
) | ||||
Net income attributable to URS |
|
$ |
88 |
|
$ |
67 |
|
$ |
115 |
|
$ |
139 |
|
Earnings per share (Note 3): |
|
|
|
|
|
|
|
|
| ||||
Basic |
|
$ |
1.28 |
|
$ |
0.91 |
|
$ |
1.64 |
|
$ |
1.88 |
|
Diluted |
|
$ |
1.27 |
|
$ |
0.91 |
|
$ |
1.63 |
|
$ |
1.87 |
|
Weighted-average shares outstanding (Note 3): |
|
|
|
|
|
|
|
|
| ||||
Basic |
|
68.3 |
|
73.8 |
|
69.9 |
|
74.1 |
| ||||
Diluted |
|
68.8 |
|
74.0 |
|
70.5 |
|
74.4 |
| ||||
Cash dividends declared per share (Note 11) |
|
$ |
0.22 |
|
$ |
0.21 |
|
$ |
0.44 |
|
$ |
0.42 |
|
See Notes to Condensed Consolidated Financial Statements
URS CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOMEUNAUDITED
(In millions)
|
|
Three Months |
|
Six Months |
| ||||||||
|
|
July 4, |
|
June 28, |
|
July 4, |
|
June 28, |
| ||||
Comprehensive income: |
|
|
|
|
|
|
|
|
| ||||
Net income including noncontrolling interests |
|
$ |
108 |
|
$ |
82 |
|
$ |
147 |
|
$ |
169 |
|
Pension and post-retirement related adjustments, net of tax |
|
(1 |
) |
2 |
|
|
|
6 |
| ||||
Foreign currency translation adjustments, net of tax |
|
39 |
|
(39 |
) |
22 |
|
(76 |
) | ||||
Comprehensive income |
|
146 |
|
45 |
|
169 |
|
99 |
| ||||
Noncontrolling interests in comprehensive income of consolidated subsidiaries |
|
(20 |
) |
(15 |
) |
(32 |
) |
(30 |
) | ||||
Comprehensive income attributable to URS |
|
$ |
126 |
|
$ |
30 |
|
$ |
137 |
|
$ |
69 |
|
See Notes to Condensed Consolidated Financial Statements
URS CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWSUNAUDITED
(In millions)
|
|
Six Months |
| ||||
|
|
July 4, |
|
June 28, |
| ||
Cash flows from operating activities: |
|
|
|
|
| ||
Net income including noncontrolling interests |
|
$ |
147 |
|
$ |
169 |
|
Adjustments to reconcile net income to net cash from operating activities: |
|
|
|
|
| ||
Depreciation and amortization |
|
71 |
|
79 |
| ||
Amortization of intangible assets |
|
49 |
|
55 |
| ||
Gain on disposal of property and equipment |
|
(14 |
) |
(10 |
) | ||
Deferred income taxes |
|
(10 |
) |
12 |
| ||
Stock-based compensation |
|
18 |
|
23 |
| ||
Equity in income of unconsolidated joint ventures |
|
(36 |
) |
(42 |
) | ||
Dividends received from unconsolidated joint ventures |
|
44 |
|
52 |
| ||
Changes in operating assets, liabilities and other: |
|
|
|
|
| ||
Accounts receivable and costs and accrued earnings in excess of billings on contracts |
|
6 |
|
129 |
| ||
Other current assets |
|
11 |
|
25 |
| ||
Other long-term assets |
|
(6 |
) |
(122 |
) | ||
Accounts payable, accrued salaries and employee benefits, and other current liabilities |
|
(2 |
) |
(281 |
) | ||
Billings in excess of costs and accrued earnings on contracts |
|
(14 |
) |
(25 |
) | ||
Other long-term liabilities |
|
(2 |
) |
26 |
| ||
Total adjustments and changes |
|
115 |
|
(79 |
) | ||
Net cash from operating activities |
|
262 |
|
90 |
| ||
Cash flows from investing activities: |
|
|
|
|
| ||
Proceeds from disposal of property and equipment |
|
33 |
|
26 |
| ||
Changes in restricted cash |
|
3 |
|
2 |
| ||
Capital expenditures, less equipment purchased through capital leases and equipment notes |
|
(42 |
) |
(46 |
) | ||
Net cash from investing activities |
|
(6 |
) |
(18 |
) | ||
Cash flows from financing activities: |
|
|
|
|
| ||
Payments on long-term debt |
|
(3 |
) |
(2 |
) | ||
Borrowings from revolving line of credit |
|
663 |
|
858 |
| ||
Payments on revolving line of credit |
|
(581 |
) |
(823 |
) | ||
Net payments on other indebtedness |
|
(11 |
) |
(24 |
) | ||
Net change in overdrafts |
|
1 |
|
(13 |
) | ||
Excess tax benefits from stock-based compensation |
|
|
|
2 |
| ||
Proceeds from employee stock purchases and exercises of stock options |
|
2 |
|
13 |
| ||
Distributions to noncontrolling interests |
|
(36 |
) |
(32 |
) | ||
Dividends paid |
|
(31 |
) |
(31 |
) | ||
Repurchases of common stock |
|
(266 |
) |
(93 |
) | ||
Net cash from financing activities |
|
(262 |
) |
(145 |
) | ||
Net change in cash and cash equivalents |
|
(6 |
) |
(73 |
) | ||
Effect of foreign exchange rate changes on cash and cash equivalents |
|
5 |
|
(8 |
) | ||
Cash and cash equivalents at beginning of period |
|
284 |
|
315 |
| ||
Cash and cash equivalents at end of period |
|
$ |
283 |
|
$ |
234 |
|
Supplemental information: |
|
|
|
|
| ||
Interest paid |
|
$ |
36 |
|
$ |
40 |
|
Taxes paid |
|
$ |
34 |
|
$ |
98 |
|
Supplemental schedule of non-cash investing and financing activities: |
|
|
|
|
| ||
Equipment acquired with capital lease obligations and equipment note obligations |
|
$ |
31 |
|
$ |
29 |
|
Cash dividends declared but not paid |
|
$ |
17 |
|
$ |
16 |
|
See Notes to Condensed Consolidated Financial Statements
URS CORPORATION AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTSUNAUDITED
NOTE 1. BUSINESS, BASIS OF PRESENTATION, AND ACCOUNTING POLICIES
Overview
The accompanying unaudited condensed consolidated financial statements and related notes have been prepared in accordance with generally accepted accounting principles (GAAP) in the U.S. for interim financial information and with the instructions to Form 10-Q and Rule 10-01 of Regulation S-X. Accordingly, they do not include all of the information and footnotes required by GAAP for complete financial statements.
You should read our unaudited condensed consolidated financial statements in conjunction with the audited consolidated financial statements and related notes contained in our Revised Form 10-K for our fiscal year ended January 3, 2014, which was attached as Exhibit 99.1 to our Current Report on Form 8-K (Current Report on Form 8-K) filed on August 1, 2014, as amended. The results of operations for the three and six months ended July 4, 2014 are not indicative of the operating results for the full year or for future years.
In our opinion, the accompanying unaudited condensed consolidated financial statements reflect all normal and recurring adjustments that are necessary for a fair statement of our financial position, results of operations and cash flows for the interim periods presented.
Pending Merger
On July 11, 2014, we entered into an Agreement and Plan of Merger (the Merger Agreement) with AECOM Technology Corporation (AECOM), ACM Mountain I, LLC, a direct wholly-owned subsidiary of AECOM (Merger Sub), and ACM Mountain II, LLC, a direct wholly-owned subsidiary of AECOM (Merger Sub I). The Merger Agreement provides for the merger of Merger Sub with and into our company, with our company continuing as the surviving company and a direct wholly-owned subsidiary of AECOM (the Merger). Immediately thereafter, as part of a single integrated transaction with the Merger, pursuant to the Merger Agreement, we will merge with and into Merger Sub I, with Merger Sub I continuing as the surviving company and a direct wholly-owned subsidiary of AECOM. Subject to the terms and conditions of the Merger Agreement, holders of URS common stock will receive consideration to be determined at closing based on the average closing price of AECOM common stock during the five business days prior to the closing date. Each outstanding share of URS common stock will be exchanged for per share consideration consisting of 0.734 shares of AECOM common stock and $33.00 in cash. URS stockholders may elect to receive cash or stock consideration, subject to proration in the event of oversubscription or undersubscription for cash consideration.
Completion of the Merger is subject to certain customary conditions, including approval by both the AECOM and URS stockholders, approval of the listing of the shares of AECOM common stock to be issued in the Merger on the New York Stock Exchange, receipt of required regulatory approvals and/or expiration or termination of applicable waiting periods, effectiveness of AECOMs registration statement on Form S-4 and receipt of customary opinions related to certain tax matters from the parties respective counsels. On August 4, 2014, the Federal Trade Commission granted URS and AECOM early termination of the waiting period under the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended. The financial statements included in this Quarterly Report on Form 10-Q do not reflect any adjustments or otherwise give effect to the proposed Merger.
URS CORPORATION AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTSUNAUDITED (Continued)
NOTE 1. BUSINESS, BASIS OF PRESENTATION, AND ACCOUNTING POLICIES (Continued)
Principles of Consolidation and Basis of Presentation
Our condensed consolidated financial statements include the financial position, results of operations and cash flows of URS Corporation and our majority-owned subsidiaries and joint ventures that are required to be consolidated.
Investments in unconsolidated joint ventures are accounted for using the equity method and are included as Investments in and advances to unconsolidated joint ventures on our Condensed Consolidated Balance Sheets. All significant intercompany transactions and accounts have been eliminated in consolidation.
Use of and Changes in Estimates
The preparation of our unaudited condensed consolidated financial statements in conformity with GAAP requires us to make estimates and assumptions that affect the reported amounts of assets and liabilities and related disclosures at the balance sheet dates, and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates. On an ongoing basis, we review our estimates based on information that is currently available. Changes in facts and circumstances may cause us to revise our estimates.
Our business activities involve making significant estimates and assumptions in the normal course of business relating to our contracts. We focus on evaluating the performance of contracts individually. These estimates and assumptions can vary in the normal course of business as contracts progress, when estimated productivity assumptions change based on experience to-date and as uncertainties are resolved. We use the cumulative catch-up method applicable to construction contract accounting to account for revisions in estimates.
There were no material changes in estimates for the three and six months ended July 4, 2014.
During the six months ended June 28, 2013, our results of operations included the recognition of $26 million of performance-based incentive fees from our work managing chemical demilitarization programs. These changes in estimates resulted in increases of $26 million in operating income, $16 million in net income and $0.21 in diluted earnings per common share (diluted EPS) for the six months ended June 28, 2013. There were no material changes in estimates for the three months ended June 28, 2013.
NOTE 2. ADOPTED AND OTHER RECENTLY ISSUED STATEMENTS OF FINANCIAL ACCOUNTING STANDARDS
From time to time, the Financial Accounting Standards Board (FASB) issues accounting standards updates (each being an ASU) to its Accounting Standards Codification (ASC), which constitutes the primary source of U.S. GAAP. We regularly monitor ASUs as they are issued and consider their applicability to our business. All applicable ASUs are adopted by the due date and in the manner prescribed by the FASB. ASUs adopted during the six months ended July 4, 2014 did not have a material impact on our condensed consolidated financial statements.
In April 2014, the FASB issued an ASU related to discontinued operations. This ASU more narrowly defines discontinued operations as disposals of components of an entity, or groups of components, that represent a strategic shift that has or will have a major effect on an entitys
URS CORPORATION AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTSUNAUDITED (Continued)
NOTE 2. ADOPTED AND OTHER RECENTLY ISSUED STATEMENTS OF FINANCIAL ACCOUNTING STANDARDS (Continued)
operations in the financial statements. It requires additional disclosures about discontinued operations, as well as disclosures about disposals of individual significant components of an entity that do not qualify as discontinued operations. This standard will be effective beginning with our first interim period in fiscal year 2015, with an option for early adoption. We are evaluating the potential effects of the adoption of this ASU on our future consolidated financial statements.
In May 2014, the FASB issued an ASU related to revenue recognition, which provides a new principle-based model of revenue recognition that will supersede nearly all existing revenue recognition guidance under U.S. GAAP. The core principle of this ASU is that an entity should recognize revenues when it transfers promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services. This ASU also requires additional disclosures about the nature, amount, timing, and uncertainty of revenues and cash flows arising from customer contracts. This ASU will be effective beginning with our first interim period in fiscal year 2017. Early adoption is not permitted. The ASU allows for either full retrospective or modified retrospective adoption. We are evaluating the transition method that will be elected and the potential effects of the adoption of this ASU on our consolidated financial statements.
NOTE 3. EARNINGS PER SHARE
In our computation of diluted EPS, we exclude the potential shares related to nonvested restricted stock awards and units that have an anti-dilutive effect on EPS or that currently have not met performance conditions. For the three and six months ended July 4, 2014, there were no potential shares related to nonvested restricted stock awards that would have an anti- dilutive effect. For the three and six months ended June 28, 2013, potential shares that had an anti-dilutive effect were 0.6 million and 0.3 million shares, respectively.
The following table summarizes the components of weighted-average common shares outstanding for both basic and diluted EPS:
|
|
Three Months |
|
Six Months |
| ||||
(In millions) |
|
July 4, |
|
June 28, |
|
July 4, |
|
June 28, |
|
Weighted-average shares of common stock outstanding(1) |
|
68.3 |
|
73.8 |
|
69.9 |
|
74.1 |
|
Effect of dilutive restricted stock awards and units and employee stock purchase plan shares |
|
0.5 |
|
0.2 |
|
0.6 |
|
0.3 |
|
Weighted-average shares of common stock outstandingDiluted |
|
68.8 |
|
74.0 |
|
70.5 |
|
74.4 |
|
(1) Weighted-average shares of common stock outstanding are net of treasury stock and exclude nonvested restricted stock awards.
URS CORPORATION AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTSUNAUDITED (Continued)
NOTE 4. ACCOUNTS RECEIVABLE AND COSTS AND ACCRUED EARNINGS IN EXCESS OF BILLINGS ON CONTRACTS
The following table summarizes the components of our accounts receivable and costs and accrued earnings in excess of billings on contracts (Unbilled Accounts Receivable) with the U.S. federal government and with other customers as of July 4, 2014 and January 3, 2014:
(In millions) |
|
July 4, |
|
January 3, |
| ||
Accounts receivable: |
|
|
|
|
| ||
U.S. federal government |
|
$ |
358 |
|
$ |
353 |
|
Others |
|
1,016 |
|
1,040 |
| ||
Total accounts receivable |
|
$ |
1,374 |
|
$ |
1,393 |
|
Unbilled Accounts Receivable: |
|
|
|
|
| ||
U.S. federal government |
|
$ |
817 |
|
$ |
856 |
|
Others |
|
866 |
|
796 |
| ||
Total |
|
1,683 |
|
1,652 |
| ||
Less: Amounts included in Other long-term assets |
|
(146 |
) |
(131 |
) | ||
Unbilled Accounts Receivable |
|
$ |
1,537 |
|
$ |
1,521 |
|
As of July 4, 2014 and January 3, 2014, we had one project with accounts receivable balances of $99 million and $82 million, respectively, relating to an outstanding claim. See Note 13, Commitments and Contingencies, for further discussion regarding the Department of Energy (DOE) Deactivation, Demolition, and Removal Project.
NOTE 5. JOINT VENTURES
We analyze all of our joint ventures and classify them into two groups:
· Joint ventures that must be consolidated either because they are not variable interest entities (VIEs) and we hold the majority voting interest, or because they are VIEs of which we are the primary beneficiary; and
· Joint ventures that do not need to be consolidated either because they are not VIEs and we do not hold a majority voting interest, or because they are VIEs of which we are not the primary beneficiary.
We perform a quarterly review of our joint ventures to determine whether there were any changes in the status of the VIEs or changes to the primary beneficiary designation of each VIE. We determined that no such changes occurred during the six months ended July 4, 2014.
In the table below, we have aggregated financial information relating to our VIEs because their nature and risk and reward characteristics are similar. None of our current joint ventures that meets the characteristics of a VIE is individually significant to our consolidated financial statements.
URS CORPORATION AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTSUNAUDITED (Continued)
NOTE 5. JOINT VENTURES (Continued)
Consolidated Joint Ventures
The following table presents the total assets and liabilities of our consolidated joint ventures:
(In millions) |
|
July 4, |
|
January 3, |
| ||
Cash and cash equivalents |
|
$ |
89 |
|
$ |
89 |
|
Net accounts receivable |
|
215 |
|
200 |
| ||
Other current assets |
|
2 |
|
3 |
| ||
Noncurrent assets |
|
148 |
|
143 |
| ||
Total assets |
|
$ |
454 |
|
$ |
435 |
|
Accounts and subcontractors payable |
|
$ |
108 |
|
$ |
94 |
|
Billings in excess of costs and accrued earnings on contracts |
|
5 |
|
15 |
| ||
Accrued expenses and other |
|
34 |
|
40 |
| ||
Noncurrent liabilities |
|
14 |
|
12 |
| ||
Total liabilities |
|
161 |
|
161 |
| ||
Total URS equity |
|
148 |
|
128 |
| ||
Noncontrolling interests |
|
145 |
|
146 |
| ||
Total owners equity |
|
293 |
|
274 |
| ||
Total liabilities and owners equity |
|
$ |
454 |
|
$ |
435 |
|
Total revenues of the consolidated joint ventures were $296 million and $275 million for the three months ended July 4, 2014 and June 28, 2013, respectively, and $517 million and $529 million for the six months ended July 4, 2014 and June 28, 2013, respectively.
The assets of our consolidated joint ventures are restricted for use only by the particular joint venture and are not available for our general operations.
Unconsolidated Joint Ventures
We use the equity method of accounting for our unconsolidated joint ventures. Under the equity method, we recognize our proportionate share of the net earnings of these joint ventures as a single line item under Equity in income of unconsolidated joint ventures in our Condensed Consolidated Statements of Operations.
URS CORPORATION AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTSUNAUDITED (Continued)
NOTE 5. JOINT VENTURES (Continued)
The table below presents financial information, derived from the most recent financial statements provided to us, in aggregate, for our unconsolidated joint ventures:
(In millions) |
|
Unconsolidated |
| |
July 4, 2014 |
|
|
| |
Current assets |
|
$ |
676 |
|
Noncurrent assets |
|
$ |
31 |
|
Current liabilities |
|
$ |
449 |
|
Noncurrent liabilities |
|
$ |
30 |
|
|
|
|
| |
January 3, 2014 |
|
|
| |
Current assets |
|
$ |
616 |
|
Noncurrent assets |
|
$ |
37 |
|
Current liabilities |
|
$ |
433 |
|
Noncurrent liabilities |
|
$ |
7 |
|
|
|
|
| |
Three months ended July 4, 2014(1) |
|
|
| |
Revenues |
|
$ |
522 |
|
Cost of revenues |
|
$ |
(469 |
) |
Income from continuing operations before tax |
|
$ |
53 |
|
Net income |
|
$ |
49 |
|
|
|
|
| |
Three months ended June 28, 2013(1) |
|
|
| |
Revenues |
|
$ |
566 |
|
Cost of revenues |
|
$ |
(507 |
) |
Income from continuing operations before tax |
|
$ |
59 |
|
Net income |
|
$ |
54 |
|
|
|
|
| |
Six months ended July 4, 2014(1) |
|
|
| |
Revenues |
|
$ |
1,046 |
|
Cost of revenues |
|
$ |
(941 |
) |
Income from continuing operations before tax |
|
$ |
105 |
|
Net income |
|
$ |
96 |
|
|
|
|
| |
Six months ended June 28, 2013(1) |
|
|
| |
Revenues |
|
$ |
1,112 |
|
Cost of revenues |
|
$ |
(994 |
) |
Income from continuing operations before tax |
|
$ |
118 |
|
Net income |
|
$ |
110 |
|
(1) Income from unconsolidated U.S. joint ventures is generally not taxable in most tax jurisdictions in the U.S. The tax expenses on our other unconsolidated joint ventures are primarily related to foreign taxes.
We received $25 million and $29 million, respectively, of distributions from unconsolidated joint ventures for the three months ended July 4, 2014 and June 28, 2013 and $44 million and $52 million, respectively, for the six months ended July 4, 2014 and June 28, 2013.
URS CORPORATION AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTSUNAUDITED (Continued)
NOTE 5. JOINT VENTURES (Continued)
Exposure to Loss
In addition to potential losses arising out of the carrying values of the assets and liabilities of our unconsolidated joint ventures, our maximum exposure to loss also includes performance assurances and guarantees we sometimes provide to clients on behalf of joint ventures that we do not directly control. We enter into these guarantees primarily to support the contractual obligations associated with the joint ventures projects. The potential payment amount of an outstanding performance guarantee is typically the remaining cost of work to be performed by or on behalf of third parties under engineering and construction contracts.
However, the majority of the unconsolidated joint ventures in which we participate involve cost-reimbursable, level-of-effort projects that are accounted for as service-type projects, not engineering and construction projects that would follow the percentage-of-completion or completed- contract accounting method. Revenues for service-type contracts are recognized in proportion to the number of service activities performed, in proportion to the direct costs of performing the service activities, or evenly across the period of performance, depending upon the nature of the services provided. The services we provide on these cost-reimbursable contracts are management and operations services for government clients and operations and maintenance services for non-government clients. We believe that, due to the continual changes we experience in client funding and scope definitions, reliable estimates of performance guarantees cannot be calculated because they cannot be reliably predicted. In addition, we participate in joint ventures in which the level of our participation is so minimal that we do not have access to those joint ventures estimates to complete. The joint ventures where we perform engineering and construction contracts and where we have access to the estimates to complete, which are needed to calculate the performance guarantees, are immaterial.
NOTE 6. GOODWILL
Interim Goodwill Impairment Review
Based on the implied value of the potential Merger with AECOM to URS stockholders, we performed an interim goodwill impairment test as of July 4, 2014 for all of our seven reporting units. A goodwill impairment review involves a two-step process. The first step is a comparison of each reporting units fair value to its carrying value. If the carrying value of the reporting unit is higher than its fair value, there is an indication that an impairment may exist and the second step must be performed to measure the amount of the impairment.
In reaching our estimate of fair value, we considered the fair values derived from using both the income and market approaches. We gave primary weight to the income approach because it was deemed to be the most applicable. The fair value measurements from the income approach were calculated using unobservable inputs to our discounted cash flows, which inputs are classified as Level 3 within the fair value hierarchy. The income approach uses a reporting units projection of estimated cash flows and discounts those back to the present using a weighted-average cost of capital that reflects current market conditions. To arrive at the cash flow projections used in the calculation of fair values for our goodwill impairment review, we use market participant estimates of economic and market activity for the next ten years. The key assumptions we used to estimate the fair values of our reporting units are:
· Revenue growth rates;
URS CORPORATION AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTSUNAUDITED (Continued)
NOTE 6. GOODWILL (Continued)
· Operating margins;
· Capital expenditure needs;
· Working capital requirements;
· Discount rates; and
· Terminal value capitalization rate (Capitalization Rate)
Of the key assumptions, the discount rates and the Capitalization Rate are market-driven. These rates are derived from the use of market data and employment of the weighted-average cost of capital. The key assumptions that are company-driven include the revenue growth rates and the projected operating margins. They reflect the influence of other potential assumptions, since the assumptions we identified that affect the projected operating results would ultimately affect either the revenue growth or the profitability (operating margin) of the reporting unit. For example, any adjustment to contract volume and pricing would have a direct impact on revenue growth, and any adjustment to the reporting units cost structure or operating leverage would have a direct impact on the profitability of the reporting unit. Actual results may differ from those assumed in our forecasts and changes in assumptions or estimates could materially affect the determination of the fair value of a reporting unit, and therefore could affect the amount of potential impairment.
We also consider indications obtained from the market approach. We applied market multiples derived from stock market prices of companies that are engaged in the same or similar lines of business as our reporting units and that are actively traded on a free and open market, and applied market multiples derived from transactions of significant interests in companies engaged in the same or similar lines of business as our reporting units and a control premium to arrive at the fair values.
When performing our impairment analysis, we also reconcile the sum of the fair values of our reporting units with our market capitalization to determine if the sum reasonably reconciles with the external market indicators. If our reconciliation indicates a significant difference between our external market capitalization and the sum of the fair values of our reporting units, we review and adjust the assumptions employed in our analysis, and examine if the implied control premium is reasonable in light of current market conditions.
Goodwill is allocated to the reporting units based on the respective fair values of the reporting units at the time of the various acquisitions that gave rise to the recognition of goodwill or at the time of a reorganization that impacts the composition of the reporting units.
We performed the first step of the analysis to compare the fair value of each reporting unit to its carrying amount. Based on the analysis performed, the fair values of all of our reporting units exceeded their respective carrying values, indicating that no impairment exists, and therefore the second step of the analysis was not deemed necessary.
URS CORPORATION AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTSUNAUDITED (Continued)
NOTE 6. GOODWILL (Continued)
Below is a table showing, for each reporting unit, the percentage of its fair value that exceeded its carrying value:
(In millions) |
|
Goodwill |
|
Reporting Unit |
|
Reporting Unit |
|
Percent Above |
| |||
Infrastructure & Environment Operating Segment |
|
$ |
749 |
|
$ |
1,824 |
|
$ |
1,460 |
|
25 |
% |
Within the Federal Services Operating Segment: |
|
|
|
|
|
|
|
|
| |||
Federal Services Group |
|
708 |
|
1,001 |
|
877 |
|
14 |
% | |||
Global Management and Operations Services Group |
|
565 |
|
1,076 |
|
934 |
|
15 |
% | |||
Federal Services Operating Segment |
|
1,273 |
|
2,077 |
|
1,811 |
|
15 |
% | |||
Within the Energy & Construction Operating Segment: |
|
|
|
|
|
|
|
|
| |||
Civil Construction & Mining Group |
|
294 |
|
375 |
|
348 |
|
8 |
% | |||
Industrial/Process Group |
|
248 |
|
425 |
|
393 |
|
8 |
% | |||
Power Group |
|
735 |
|
888 |
|
840 |
|
6 |
% | |||
Total Energy & Construction Operating Segment |
|
1,277 |
|
1,688 |
|
1,581 |
|
7 |
% | |||
Oil & Gas Operating Segment |
|
410 |
|
1,293 |
|
1,235 |
|
5 |
% | |||
Total |
|
$ |
3,709 |
|
$ |
6,882 |
|
$ |
6,087 |
|
13 |
% |
NOTE 7. BILLINGS IN EXCESS OF COSTS AND ACCRUED EARNINGS ON CONTRACTS
Billings in excess of costs and accrued earnings on contracts consisted of the following:
(In millions) |
|
July 4, |
|
January 3, |
| ||
Billings in excess of costs and accrued earnings on contracts |
|
$ |
182 |
|
$ |
193 |
|
Project-related legal liabilities and other project-related reserves |
|
37 |
|
35 |
| ||
Estimated losses on uncompleted contracts |
|
3 |
|
5 |
| ||
Total |
|
$ |
222 |
|
$ |
233 |
|
URS CORPORATION AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTSUNAUDITED (Continued)
NOTE 8. INDEBTEDNESS
Indebtedness consisted of the following:
(In millions) |
|
July 4, |
|
January 3, |
| ||
Term loan, net of debt issuance costs |
|
$ |
602 |
|
$ |
602 |
|
3.85% Senior Notes (net of discount) |
|
400 |
|
400 |
| ||
5.00% Senior Notes (net of discount) |
|
599 |
|
599 |
| ||
Revolving line of credit |
|
84 |
|
|
| ||
Other indebtedness |
|
145 |
|
111 |
| ||
Total indebtedness |
|
1,830 |
|
1,712 |
| ||
Less: |
|
|
|
|
| ||
Current portion of long-term debt |
|
51 |
|
45 |
| ||
Long-term debt |
|
$ |
1,779 |
|
$ |
1,667 |
|
2011 Credit Facility
As of both July 4, 2014 and January 3, 2014, the outstanding balance of the term loan under our senior credit facility (2011 Credit Facility) was $605 million. As of July 4, 2014 and January 3, 2014, the interest rates applicable to the term loan were 1.68% and 1.67%, respectively. Loans outstanding under our 2011 Credit Facility bear interest, at our option, at the base rate or at LIBOR plus, in each case, an applicable per annum margin. The applicable margin is determined based on the better of our debt ratings or our leverage ratio in accordance with a pricing grid. The interest rate at which we normally borrow is LIBOR plus 150 basis points.
We were in compliance with the covenants of our 2011 Credit Facility as of July 4, 2014.
As of both July 4, 2014 and January 3, 2014, the estimated fair market value of the term loan under our 2011 Credit Facility was approximately $603 million. The carrying value of this term loan on our Condensed Consolidated Balance Sheets as of both July 4, 2014 and January 3, 2014 was $605 million, excluding unamortized issuance costs. The fair value of our term loan as of July 4, 2014 was derived by taking the mid-point of the trading prices from an observable market input (Level 2) in the secondary loan market and multiplying it by the outstanding balance of our term loan. The fair value of our term loan as of January 3, 2014 was determined to be at par less issuance fees as the agreement was amended on December 19, 2013 (Level 2).
Senior Notes
On March 15, 2012, URS Corporation, the parent company (Parent), and URS Fox US LP (Fox LP), a 100% owned subsidiary of Parent issued, in a private placement, $400 million aggregate principal amount of 3.85% Senior Notes due on April 1, 2017 and $600 million aggregate principal amount of 5.00% Senior Notes due on April 1, 2022. Substantially all of the Senior Notes were exchanged for new Senior Notes registered under the Securities Act of 1933, as amended, as of January 9, 2014 (collectively, the Senior Notes). As of July 4, 2014, the outstanding balance of the Senior Notes was $999 million, net of $1 million of discount.
The Senior Notes are our general unsecured senior obligations and rank equally with our other existing and future unsecured senior indebtedness. The Senior Notes are fully and unconditionally
URS CORPORATION AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTSUNAUDITED (Continued)
NOTE 8. INDEBTEDNESS (Continued)
guaranteed (each a Guarantee or, collectively, the Guarantees) on a joint-and-several basis by each of our current and future domestic subsidiaries that are guarantors under our 2011 Credit Facility or that are 100% owned domestic obligors or 100% owned domestic guarantors, individually or collectively, under any future indebtedness of our subsidiaries in excess of $100 million (the Guarantors). The Guarantees are the Guarantors unsecured senior obligations and rank equally with the Guarantors other existing and future unsecured senior indebtedness.
The Guarantee of a Guarantor will, so long as no event of default shall have occurred and be continuing with respect to the Senior Notes, be automatically and unconditionally released and discharged without any action on the part of the trustee or the holders of the Senior Notes:
(a) with respect to a Guarantor which, individually or together with the Parents other domestic subsidiaries, no longer has any indebtedness of borrowed money in excess of $100 million outstanding and no longer guarantees, individually or together with the Parents other domestic subsidiaries, any indebtedness in excess of $100 million incurred by the Parent or any of the Parents other 100% owned domestic subsidiaries;
(b) unless the Guarantor is the surviving entity (i) upon the sale, lease or exchange of all or substantially all of the Guarantors assets to any person or entity not an affiliate of the Parent or (ii) upon any sale, exchange or transfer, to any person or entity not an affiliate of the Parent, of all of the Parents direct and indirect interest in such Guarantor;
(c) upon the full and final payment and performance of all obligations under the indenture and the Senior Notes;
(d) upon liquidation and dissolution of a Guarantor in a transaction that is not prohibited by the indenture; or
(e) upon legal defeasance, covenant defeasance or satisfaction and discharge of the indenture.
In addition, the Guarantee of any domestic subsidiary that is a Guarantor will be automatically and unconditionally released and discharged, without any further action required by such Guarantor, the trustee, or the holders of the Senior Notes, if at any time such domestic subsidiary of the Parent that is a Guarantor is no longer a domestic subsidiary of the Parent.
We were in compliance with the covenants of our Senior Notes as of July 4, 2014.
As of July 4, 2014 and January 3, 2014, the estimated fair market values of the Senior Notes were approximately $1 billion and $983 million, respectively. The carrying value of the Senior Notes on our Condensed Consolidated Balance Sheets as of both July 4, 2014 and January 3, 2014 was $1 billion, excluding unamortized discount. The fair value of the Senior Notes was derived by taking quoted prices of comparable bonds and making an adjustment to reflect our credit to determine the price of the Senior Notes (Level 2) in the trading market and multiplying it by the outstanding balance of the notes.
Revolving line of credit
Our revolving line of credit is used to fund daily operating cash needs and to support our standby letters of credit. In the ordinary course of business, the use of our revolving line of credit is a function
URS CORPORATION AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTSUNAUDITED (Continued)
NOTE 8. INDEBTEDNESS (Continued)
of collection and disbursement activities. Our daily cash needs generally follow a predictable pattern that parallels our payroll cycles, which dictate, as necessary, our short-term borrowing requirements.
As of July 4, 2014, we had an outstanding balance of $84 million on our revolving line of credit. We had no outstanding debt balances on our revolving line of credit as of January 3, 2014. As of July 4, 2014, we had issued $98 million of letters of credit, leaving $818 million available under our revolving credit facility.
Other Indebtedness
Our other indebtedness included notes payable and capital leases for office equipment, computer equipment, furniture, vehicles and automotive equipment, and construction equipment, five-year loan notes, and foreign lines of credit. As of July 4, 2014 and January 3, 2014, we maintained several credit lines with an aggregate borrowing capacity of $47 million and $51 million, respectively, and had remaining borrowing capacity of $46 million and $49 million, respectively.
NOTE 9. INCOME TAXES
Our effective income tax rates for the three and six months ended July 4, 2014 decreased to 10.8% and 20.7%, from 32.3% and 32.5% for the three and six months ended June 28, 2013, respectively. The lower rates were primarily attributable to tax benefits, discrete to the quarter, of approximately $9 million recognized from the reorganization of Canadian affiliates and approximately $13 million recognized from entering into service agreements with foreign affiliates during the second quarter of 2014.
NOTE 10. EMPLOYEE RETIREMENT PLANS
Defined Benefit Plans
We sponsor a number of pension and unfunded supplemental executive retirement plans. The components of our net periodic pension costs relating to our defined benefit plans for the three and six months ended July 4, 2014 and June 28, 2013 were as follows:
|
|
Three Months Ended |
| ||||||||||
|
|
Domestic Plans |
|
Foreign Plans |
| ||||||||
(In millions) |
|
July 4, |
|
June 28, |
|
July 4, |
|
June 28, |
| ||||
Service cost |
|
$ |
2 |
|
$ |
2 |
|
$ |
|
|
$ |
|
|
Interest cost |
|
5 |
|
5 |
|
7 |
|
6 |
| ||||
Expected return on plan assets |
|
(5 |
) |
(5 |
) |
(7 |
) |
(6 |
) | ||||
Amortization of: |
|
|
|
|
|
|
|
|
| ||||
Net loss |
|
2 |
|
4 |
|
|
|
|
| ||||
Net periodic pension costs |
|
$ |
4 |
|
$ |
6 |
|
$ |
|
|
$ |
|
|
URS CORPORATION AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTSUNAUDITED (Continued)
NOTE 10. EMPLOYEE RETIREMENT PLANS (Continued)
|
|
Six Months Ended |
| ||||||||||
|
|
Domestic Plans |
|
Foreign Plans |
| ||||||||
(In millions) |
|
July 4, |
|
June 28, |
|
July 4, |
|
June 28, |
| ||||
Service cost |
|
$ |
4 |
|
$ |
4 |
|
$ |
|
|
$ |
|
|
Interest cost |
|
10 |
|
9 |
|
13 |
|
11 |
| ||||
Expected return on plan assets |
|
(11 |
) |
(10 |
) |
(13 |
) |
(11 |
) | ||||
Amortization of: |
|
|
|
|
|
|
|
|
| ||||
Net loss |
|
4 |
|
8 |
|
|
|
|
| ||||
Net periodic pension costs |
|
$ |
7 |
|
$ |
11 |
|
$ |
|
|
$ |
|
|
During the three and six months ended July 4, 2014, we made cash contributions, including employer-directed benefit payments, of $7 million and $14 million, respectively, to the domestic and foreign defined benefit plans. We expect to make additional cash contributions, including estimated employer-directed benefit payments, of approximately $34 million for the remainder of our 2014 fiscal year.
NOTE 11. STOCKHOLDERS EQUITY
Dividend Program
Our Board of Directors declared the following dividends:
Declaration Date |
|
Dividend |
|
Record Date |
|
Total |
|
Payment Date |
| ||
February 28, 2014 |
|
$ |
0.22 |
|
March 21, 2014 |
|
$ |
16 |
|
April 11, 2014 |
|
May 9, 2014 |
|
$ |
0.22 |
|
June 20, 2014 |
|
$ |
16 |
|
July 11, 2014 |
|
August 8, 2014 |
|
$ |
0.22 |
|
September 19, 2014 |
|
NA |
|
October 10, 2014 |
|
NA = Not available
Equity Incentive Plans
On March 27, 2014, 1.4 million shares of restricted stock awards and units were granted under our 2008 Equity Incentive Plan (2008 Plan) to our executive officers and other employees. We recognize stock-based compensation expense for awards with performance conditions if and when it is probable that the performance condition will be achieved.
URS CORPORATION AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTSUNAUDITED (Continued)
NOTE 11. STOCKHOLDERS EQUITY (Continued)
A summary of the status of and changes in our nonvested restricted stock awards and units, according to their contractual terms, as of and for the six months ended July 4, 2014, is presented below:
|
|
Six Months Ended July 4, 2014 |
| |||
|
|
Shares |
|
Weighted- |
| |
Nonvested at January 3, 2014 |
|
2.8 |
|
$ |
43.66 |
|
Granted |
|
1.4 |
|
$ |
46.94 |
|
Vested |
|
(0.5 |
) |
$ |
45.81 |
|
Forfeited |
|
(0.7 |
) |
$ |
43.14 |
|
Nonvested at July 4, 2014 |
|
3.0 |
|
$ |
45.62 |
|
Stock Repurchase Program
For fiscal years 2012 and 2013, the number of shares authorized for repurchase under the repurchase program was 3.0 million shares, plus the number of shares equal to the difference between the number of shares authorized to be repurchased in the prior year and the actual number of shares repurchased during the prior year, not to exceed 6.0 million shares in aggregate. In February 2014, our Board of Directors approved a modification of our stock repurchase program to allow for the repurchase of up to 12.0 million shares of our common stock in fiscal year 2014. The Board of Directors may modify, suspend, extend or terminate the program at any time.
The following table summarizes our stock repurchase activities for the three and six months ended July 4, 2014 and June 28, 2013:
|
|
Three Months |
|
Six Months |
| ||||||||
(In millions, except average price paid per share) |
|
July 4, |
|
June 28, |
|
July 4, |
|
June 28, |
| ||||
Common stock repurchase shares |
|
|
|
1.0 |
|
5.7 |
|
2.0 |
| ||||
Average price paid per share |
|
$ |
|
|
$ |
48.26 |
|
$ |
46.45 |
|
$ |
45.55 |
|
Cost of common stock repurchased |
|
$ |
|
|
$ |
48 |
|
$ |
266 |
|
$ |
93 |
|
URS CORPORATION AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTSUNAUDITED (Continued)
NOTE 12. SEGMENT AND RELATED INFORMATION
We operate our business through the following four segments:
· Our Infrastructure & Environment Division provides program management, planning, design, engineering, construction and construction management, operations and maintenance, and decommissioning and closure services to the U.S. federal government, state and local government agencies, and private sector clients in the U.S. and internationally.
· Our Federal Services Division provides services to a wide variety of U.S. federal government agencies, as well as to national governments in other countries. This includes program management, planning, design, engineering, systems engineering and technical assistance, construction and construction management, operations and maintenance, management and operations, IT, and decommissioning and closure services.
· Our Energy & Construction Division provides program management, planning, design, engineering, construction and construction management, operations and maintenance, and decommissioning and closure services to private sector clients as well as federal, state, and local government agencies.
· Our Oil & Gas Division provides services to oil and gas industry clients throughout the U.S. and Canada. This includes oilfield services, such as rig transportation and fluid hauling; oil and gas production services, including mechanical, electrical and instrumentation services; pipeline and facility construction; engineering; and maintenance services.
These four segments operate under separate management groups and produce discrete financial information. Their operating results also are reviewed separately by management. The accounting policies of the reportable segments are the same as those described in the summary of significant accounting policies in our Current Report on Form 8-K. The information disclosed in our condensed consolidated financial statements is based on the four segments that compose our current organizational structure.
Effective with the beginning of our fiscal year 2014, we realigned our Global Management and Operations Services Group, which was previously a component of our Energy & Construction Division, under the operations and management of our Federal Services Division. The realignment of this group consolidated the majority of our business with U.S. federal government agencies and national governments outside the U.S. in our Federal Services Division. We also realigned a portion of our facility construction, process engineering, and operations and maintenance services to the oil and gas industry among our Oil & Gas, Infrastructure & Environment, and Energy & Construction Divisions. These changes, which restructured elements of our oil and gas business from an organization based on legacy acquisitions to one based on service, are designed to improve our ability to provide integrated services to our oil and gas clients. To reflect these realignments, we have revised the prior year amounts to conform to our current year presentation.
The following table presents summarized financial information for our reportable segments. Inter-segment, eliminations and other in the following table includes eliminations of inter-segment sales and investments in subsidiaries. The segment balance sheet information presented below is included for
URS CORPORATION AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTSUNAUDITED (Continued)
NOTE 12. SEGMENT AND RELATED INFORMATION (Continued)
informational purposes only. We do not allocate resources based upon the balance sheet amounts of individual segments. Our long-lived assets consist primarily of property and equipment.
|
|
Three Months |
|
Six Months Ended |
| ||||||||
(In millions) |
|
July 4, |
|
June 28, |
|
July 4, |
|
June 28, |
| ||||
Revenues |
|
|
|
|
|
|
|
|
| ||||
Infrastructure & Environment |
|
$ |
824 |
|
$ |
947 |
|
$ |
1,674 |
|
$ |
1,845 |
|
Federal Services |
|
728 |
|
790 |
|
1,377 |
|
1,697 |
| ||||
Energy & Construction |
|
562 |
|
641 |
|
1,106 |
|
1,179 |
| ||||
Oil & Gas |
|
463 |
|
459 |
|
977 |
|
967 |
| ||||
Inter-segment, eliminations and other |
|
(22 |
) |
(45 |
) |
(42 |
) |
(93 |
) | ||||
Total revenues |
|
$ |
2,555 |
|
$ |
2,792 |
|
$ |
5,092 |
|
$ |
5,595 |
|
Equity in income of unconsolidated joint ventures |
|
|
|
|
|
|
|
|
| ||||
Infrastructure & Environment |
|
$ |
|
|
$ |
|
|
$ |
1 |
|
$ |
1 |
|
Federal Services |
|
16 |
|
15 |
|
35 |
|
36 |
| ||||
Energy & Construction |
|
1 |
|
2 |
|
2 |
|
4 |
| ||||
Oil & Gas |
|
|
|
1 |
|
(2 |
) |
1 |
| ||||
Total equity in income of unconsolidated joint ventures |
|
$ |
17 |
|
$ |
18 |
|
$ |
36 |
|
$ |
42 |
|
URS operating income(1) |
|
|
|
|
|
|
|
|
| ||||
Infrastructure & Environment |
|
$ |
52 |
|
$ |
60 |
|
$ |
87 |
|
$ |
99 |
|
Federal Services |
|
79 |
|
76 |
|
126 |
|
180 |
| ||||
Energy & Construction |
|
12 |
|
19 |
|
16 |
|
27 |
| ||||
Oil & Gas |
|
2 |
|
(2 |
) |
13 |
|
8 |
| ||||
Corporate(2) |
|
(27 |
) |
(23 |
) |
(49 |
) |
(46 |
) | ||||
Total URS operating income |
|
$ |
118 |
|
$ |
130 |
|
$ |
193 |
|
$ |
268 |
|
Operating income |
|
|
|
|
|
|
|
|
| ||||
Infrastructure & Environment |
|
$ |
52 |
|
$ |
60 |
|
$ |
87 |
|
$ |
100 |
|
Federal Services |
|
95 |
|
89 |
|
152 |
|
204 |
| ||||
Energy & Construction |
|
16 |
|
21 |
|
22 |
|
33 |
| ||||
Oil & Gas |
|
2 |
|
(2 |
) |
13 |
|
7 |
| ||||
Corporate(2) |
|
(27 |
) |
(23 |
) |
(49 |
) |
(46 |
) | ||||
Total operating income |
|
$ |
138 |
|
$ |
145 |
|
$ |
225 |
|
$ |
298 |
|
Depreciation and amortization |
|
|
|
|
|
|
|
|
| ||||
Infrastructure & Environment |
|
$ |
13 |
|
$ |
12 |
|
$ |
25 |
|
$ |
25 |
|
Federal Services |
|
11 |
|
11 |
|
22 |
|
22 |
| ||||
Energy & Construction |
|
10 |
|
11 |
|
19 |
|
22 |
| ||||
Oil & Gas |
|
23 |
|
30 |
|
49 |
|
61 |
| ||||
Corporate |
|
3 |
|
2 |
|
5 |
|
4 |
| ||||
Total depreciation and amortization |
|
$ |
60 |
|
$ |
66 |
|
$ |
120 |
|
$ |
134 |
|
(1) We are providing information regarding URS operating income (loss) by segment because management uses this information to assess performance and make decisions about resource
URS CORPORATION AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTSUNAUDITED (Continued)
NOTE 12. SEGMENT AND RELATED INFORMATION (Continued)
allocation. URS operating income is defined as segment operating income after reductions for pre-tax noncontrolling interests.
(2) Corporate includes expenses related to corporate functions and acquisition-related expenses.
Reconciliations of URS operating income (loss) by segment to segment operating income (loss) for the three and six months ended July 4, 2014 and June 28, 2013 are as follows:
|
|
Three Months Ended July 4, 2014 |
| ||||||||||||||||
(In millions) |
|
Infrastructure & |
|
Federal |
|
Energy & |
|
Oil & Gas |
|
Corporate |
|
Consolidated |
| ||||||
URS operating income (loss) |
|
$ |
52 |
|
$ |
79 |
|
$ |
12 |
|
$ |
2 |
|
$ |
(27 |
) |
$ |
118 |
|
Noncontrolling interests |
|
|
|
16 |
|
4 |
|
|
|
|
|
20 |
| ||||||
Operating income (loss) |
|
$ |
52 |
|
$ |
95 |
|
$ |
16 |
|
$ |
2 |
|
$ |
(27 |
) |
$ |
138 |
|
|
|
Three Months Ended June 28, 2013 |
| ||||||||||||||||
(In millions) |
|
Infrastructure & |
|
Federal |
|
Energy & |
|
Oil & Gas |
|
Corporate |
|
Consolidated |
| ||||||
URS operating income (loss) |
|
$ |
60 |
|
$ |
76 |
|
$ |
19 |
|
$ |
(2 |
) |
$ |
(23 |
) |
$ |
130 |
|
Noncontrolling interests |
|
|
|
13 |
|
2 |
|
|
|
|
|
15 |
| ||||||
Operating income (loss) |
|
$ |
60 |
|
$ |
89 |
|
$ |
21 |
|
$ |
(2 |
) |
$ |
(23 |
) |
$ |
145 |
|
|
|
Six Months Ended July 4, 2014 |
| ||||||||||||||||
(In millions) |
|
Infrastructure & |
|
Federal |
|
Energy & |
|
Oil & Gas |
|
Corporate |
|
Consolidated |
| ||||||
URS operating income (loss) |
|
$ |
87 |
|
$ |
126 |
|
$ |
16 |
|
$ |
13 |
|
$ |
(49 |
) |
$ |
193 |
|
Noncontrolling interests |
|
|
|
26 |
|
6 |
|
|
|
|
|
32 |
| ||||||
Operating income (loss) |
|
$ |
87 |
|
$ |
152 |
|
$ |
22 |
|
$ |
13 |
|
$ |
(49 |
) |
$ |
225 |
|
|
|
Six Months Ended June 28, 2013 |
| ||||||||||||||||
(In millions) |
|
Infrastructure & |
|
Federal |
|
Energy & |
|
Oil & Gas |
|
Corporate |
|
Consolidated |
| ||||||
URS operating income (loss) |
|
$ |
99 |
|
$ |
180 |
|
$ |
27 |
|
$ |
8 |
|
$ |
(46 |
) |
$ |
268 |
|
Noncontrolling interests |
|
1 |
|
24 |
|
6 |
|
(1 |
) |
|
|
30 |
| ||||||
Operating income (loss) |
|
$ |
100 |
|
$ |
204 |
|
$ |
33 |
|
$ |
7 |
|
$ |
(46 |
) |
$ |
298 |
|
URS CORPORATION AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTSUNAUDITED (Continued)
NOTE 12. SEGMENT AND RELATED INFORMATION (Continued)
Total investments in and advances to unconsolidated joint ventures and property and equipment, net of accumulated depreciation, were as follows:
(In millions) |
|
July 4, |
|
January 3, |
| ||
Infrastructure & Environment |
|
$ |
7 |
|
$ |
8 |
|
Federal Services |
|
98 |
|
95 |
| ||
Energy & Construction |
|
20 |
|
21 |
| ||
Oil & Gas |
|
119 |
|
121 |
| ||
Total investments in and advances to unconsolidated joint ventures |
|
$ |
244 |
|
$ |
245 |
|
Infrastructure & Environment |
|
$ |
149 |
|
$ |
136 |
|
Federal Services |
|
38 |
|
39 |
| ||
Energy & Construction |
|
48 |
|
53 |
| ||
Oil & Gas |
|
328 |
|
351 |
| ||
Corporate |
|
29 |
|
29 |
| ||
Total property and equipment, net of accumulated depreciation |
|
$ |
592 |
|
$ |
608 |
|
Total assets by segment were as follows:
(In millions) |
|
July 4, |
|
January 3, |
| ||
Infrastructure & Environment |
|
$ |
2,180 |
|
$ |
2,119 |
|
Federal Services |
|
2,684 |
|
2,728 |
| ||
Energy & Construction |
|
2,146 |
|
2,118 |
| ||
Oil & Gas |
|
1,479 |
|
1,496 |
| ||
Corporate |
|
166 |
|
257 |
| ||
Total assets |
|
$ |
8,655 |
|
$ |
8,718 |
|
Major Customers and Other
Our largest clients are from our federal market sector. Within this sector, we have multiple contracts with our two major customers: the U.S. Army and the DOE. For the purpose of analyzing revenues from major customers, we do not consider the combination of all federal departments and agencies as one customer. The different federal agencies manage separate budgets. As such, reductions in spending by one federal agency do not affect the revenues we could earn from another federal agency. In addition, the procurement processes for federal agencies are not centralized, and procurement decisions are made separately by each federal agency. The loss of the federal government, the U.S. Army, or DOE as clients would have a material adverse effect on our business.
URS CORPORATION AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTSUNAUDITED (Continued)
NOTE 12. SEGMENT AND RELATED INFORMATION (Continued)
Our revenues from the U.S. Army and DOE by division for the three and six months ended July 4, 2014 and June 28, 2013 are presented below:
|
|
Three Months |
|
Six Months |
| ||||||||
(In millions, except percentages) |
|
July 4, |
|
June 28, |
|
July 4, |
|
June 28, |
| ||||
The U.S. Army(1) |
|
|
|
|
|
|
|
|
| ||||
Infrastructure & Environment |
|
$ |
34 |
|
$ |
32 |
|
$ |
67 |
|
$ |
65 |
|
Federal Services |
|
203 |
|
254 |
|
378 |
|
643 |
| ||||
Energy & Construction |
|
58 |
|
28 |
|
96 |
|
52 |
| ||||
Total U.S. Army |
|
$ |
295 |
|
$ |
314 |
|
$ |
541 |
|
$ |
760 |
|
Revenues from the U.S. Army as a percentage of our consolidated revenues |
|
12 |
% |
11 |
% |
11 |
% |
14 |
% | ||||
DOE |
|
|
|
|
|
|
|
|
| ||||
Infrastructure & Environment |
|
$ |
|
|
$ |
1 |
|
$ |
1 |
|
$ |
2 |
|
Federal Services |
|
225 |
|
212 |
|
410 |
|
422 |
| ||||
Energy & Construction |
|
|
|
|
|
1 |
|
|
| ||||
Total DOE |
|
$ |
225 |
|
$ |
213 |
|
$ |
412 |
|
$ |
424 |
|
Revenues from DOE as a percentage of our consolidated revenues |
|
9 |
% |
8 |
% |
8 |
% |
8 |
% | ||||
Revenues from the federal market sector as a percentage of our consolidated revenues |
|
32 |
% |
34 |
% |
31 |
% |
36 |
% |
(1) The U.S. Army includes U.S. Army Corps of Engineers.
NOTE 13. COMMITMENTS AND CONTINGENCIES
In the ordinary course of business, we and our affiliates are subject to various disputes, audits, investigations and legal proceedings. Additionally, as a government contractor, we are subject to audits, investigations, and claims with respect to our contract performance, pricing, costs, cost allocations, and procurement practices. The final outcomes of these various matters cannot be predicted or estimated with certainty. We are including information regarding the following matters:
· USAID Egyptian Projects: In March 2003, Washington Group International, Inc., a Delaware company (WGI Delaware), our wholly owned subsidiary, was notified by the Department of Justice that the federal government was considering civil litigation against WGI Delaware for potential violations of the U.S. Agency for International Development (USAID) source, origin, and nationality regulations in connection with five of WGI Delawares USAID-financed host-country projects located in Egypt beginning in the early 1990s. In November 2004, the federal government filed an action in the United States District Court for the District of Idaho against WGI Delaware, Contrack International, Inc., and MISR Sons Development S.A.E., an Egyptian construction company, asserting violations under the Federal False Claims Act, the Federal Foreign Assistance Act of 1961, as well as common law theories of payment by mistake and unjust enrichment. The federal government seeks damages and civil penalties (including
URS CORPORATION AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTSUNAUDITED (Continued)
NOTE 13. COMMITMENTS AND CONTINGENCIES (Continued)
doubling and trebling of damages) for violations of the statutes as well as a refund of the approximately $373 million paid to WGI Delaware under the specified contracts. WGI Delaware has denied any liability in the action and contests the federal governments damage allegations and its entitlement to recovery. All USAID projects under the contracts have been completed and are fully operational.
In March 2005, WGI Delaware filed motions in Idaho District Court and the United States Bankruptcy Court in Nevada contending that the federal governments Idaho action is barred under the plan of reorganization approved by the Bankruptcy Court in 2002 when WGI Delaware emerged from bankruptcy protection. In 2006, the Idaho action was stayed pending the bankruptcy-related proceedings. On April 24, 2012, the Bankruptcy Court ruled that the bulk of the federal governments claims under the False Claims and the Federal Foreign Assistance Acts are not barred. On November 7, 2012, WGI Delaware appealed the Bankruptcy Courts decision to the Ninth Circuit Bankruptcy Appellate Panel. On August 2, 2013, the Appellate Panel affirmed the Bankruptcy Courts decision. On September 26, 2013, WGI Delaware appealed the Appellate Panels decision to the United States Ninth Circuit Court of Appeals.
WGI Delaware intends to continue to defend this matter vigorously; however, WGI Delaware cannot provide assurance that it will be successful in these efforts. The potential range of loss and the resolution of these matters cannot be determined at this time primarily due to the very limited factual record that exists in light of the limited discovery that has been conducted to-date in the Idaho litigation; the fact that the matter involves unique and complex bankruptcy, international, and federal regulatory legal issues; the uncertainty concerning legal theories and their potential resolution by the courts; and the overall age of this matter, as well as a number of additional factors. Accordingly, no amounts have been accrued for the federal government claims in the Idaho action.
· New Orleans Levee Failure Class Action Litigation: From July 1999 through May 2005, Washington Group International, Inc., an Ohio company (WGI Ohio), a wholly owned subsidiary acquired by us on November 15, 2007, performed demolition, site preparation, and environmental remediation services for the U.S. Army Corps of Engineers on the east bank of the Inner Harbor Navigation Canal (the Industrial Canal) in New Orleans, Louisiana. On August 29, 2005, Hurricane Katrina devastated New Orleans. The storm surge created by the hurricane overtopped the Industrial Canal levee and floodwall, flooding the Lower Ninth Ward and other parts of the city. Fifty-nine personal injury and property damage class action lawsuits were filed in Louisiana State and federal court against several defendants, including WGI Ohio, seeking $200 billion in damages plus attorneys fees and costs. Plaintiffs are residents and property owners who claim to have incurred damages from the breach and failure of the hurricane protection levees and floodwalls in the wake of Hurricane Katrina.
All 59 lawsuits were pleaded as class actions but none have yet been certified as class actions. Along with WGI Ohio, the U.S. Army Corps of Engineers, the Board for the Orleans Levee District, and its insurer, St. Paul Fire and Marine Insurance Company were also named as defendants. At this time WGI Ohio and the Army Corps of Engineers are the remaining defendants. These 59 lawsuits, along with other hurricane-related cases not involving WGI Ohio, were consolidated in the United States District Court for the Eastern District of Louisiana (District Court).
URS CORPORATION AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTSUNAUDITED (Continued)
NOTE 13. COMMITMENTS AND CONTINGENCIES (Continued)
Plaintiffs allege that defendants were negligent in their design, construction and/or maintenance of the New Orleans levees. Specifically, as to WGI Ohio, plaintiffs allege that work WGI Ohio performed adjacent to the Industrial Canal damaged the levee and floodwall, causing or contributing to breaches and flooding. WGI Ohio did not design, construct, repair or maintain any of the levees or the floodwalls that failed during or after Hurricane Katrina. Rather, WGI Ohio performed work adjacent to the Industrial Canal as a contractor for the federal government.
WGI Ohio filed a motion for summary judgment, seeking dismissal on grounds that government contractors are immune from liability. On December 15, 2008, the District Court granted WGI Ohios motion for summary judgment, but several plaintiffs appealed that decision to the United States Fifth Circuit Court of Appeals on April 27, 2009. On September 14, 2010, the Court of Appeals reversed the District Courts summary judgment decision and WGI Ohios dismissal, and remanded the case back to the District Court for further litigation. On August 1, 2011, the District Court decided that the government contractor immunity defense would not be available to WGI Ohio at trial, but would be an issue for appeal. Five of the cases were tried in District Court from September 12, 2012 through October 3, 2012. On April 12, 2013, the District Court ruled in favor of WGI Ohio and the Army Corps of Engineers, finding that the five plaintiffs failed to prove that WGI Ohios or the Army Corps of Engineers actions caused the failure of the Industrial Canal floodwall during Hurricane Katrina. On July 1, 2013, WGI Ohio filed a motion for summary judgment in District Court to dismiss all other related cases as a result of the District Courts April 2013 decision. On December 20, 2013, the District Court dismissed the majority of the lawsuits and the remainder of the outstanding claims is being transferred to the District Court for final judgment of dismissal.
WGI Ohio intends to continue to defend these matters vigorously until all claims are dismissed; however, WGI Ohio cannot provide assurance that it will be successful in these efforts. The potential range of loss and the resolution of these matters cannot be determined at this time primarily due to the likelihood of an appeal; uncertainty concerning legal theories and factual bases that plaintiffs may present and their resolution by courts or regulators; and uncertainty about the plaintiffs claims, if any, that might survive certain key motions of our affiliate, as well as a number of additional factors.
· DOE Deactivation, Demolition, and Removal Project: WGI Ohio executed a cost-reimbursable task order with the DOE in 2007 to provide deactivation, demolition and removal services at a New York State project site that, during 2010, experienced contamination and performance issues. In February 2011, WGI Ohio and the DOE executed a Task Order Modification that changed some cost-reimbursable contract provisions to at-risk. The Task Order Modification, including subsequent amendments, requires the DOE to pay all project costs up to $106 million, requires WGI Ohio and the DOE to equally share in all project costs incurred from $106 million to $146 million, and requires WGI Ohio to pay all project costs exceeding $146 million. In addition, in September 2011, WGI Ohio voluntarily paid a civil penalty related to the contamination incident. Through July 4, 2014, WGI Ohio has incurred total project costs of $280 million.
Due to unanticipated requirements and permitting delays by federal and state agencies, as well as delays and related ground stabilization activities caused by Hurricane Irene, WGI Ohio has
URS CORPORATION AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTSUNAUDITED (Continued)
NOTE 13. COMMITMENTS AND CONTINGENCIES (Continued)
been required to perform work outside the scope of the Task Order Modification. In April 2013, WGI Ohio submitted claims against the DOE pursuant to the Contracts Disputes Acts seeking recovery of $118 million in unfunded requests for equitable adjustments (REAs), including additional fees on expanded work scope. Through July 4, 2014, the DOE has approved one of the REAs for $1 million and has authorized $34 million of additional funding primarily related to the hurricane-caused impacts. As of July 4, 2014, WGI Ohio has recorded $99 million in accounts receivable for project costs incurred to date in excess of the DOE contracted amount that may not be collected unless and until the claims are favorably resolved. In addition, due to continuing delays and disagreements about the responsibilities for the scope of the remaining project completion costs, WGI Ohio is unable to determine its portion of the remaining project completion costs, which may exceed $300 million.
WGI Ohio can provide no certainty that it will recover the $118 million in submitted DOE claims and fees incurred through April 2013 related to REAs, hurricane-caused work or other directed changes, as well as any other project costs after April 2013 that WGI Ohio is obligated to incur including the remaining project completion costs, which could negatively impact our future results of operations.
· Bolivian Mine Services Agreement: In 2009, a mine service agreement performed by our wholly owned subsidiary, Washington Group Bolivia, was unilaterally terminated for convenience by the mine owner. The mine owner disputed the fair market value of mining equipment it was required to repurchase under the terms of the mine services agreement. Subsequently, on November 16, 2010, Washington Group Bolivia received a formal claim asserting breaches of contractual obligations and warranties, including the failure to adhere to the requisite professional standard of care while performing the mine services agreement. On June 17, 2011, Washington Group Bolivia received a formal demand for arbitration pursuant to the Rules of Arbitration of the International Chamber of Commerce (ICC) asserting claims up to $53 million. Washington Group Bolivia brought a $50 million counterclaim on August 3, 2012 against the mine owner asserting claims of wrongful termination and lost productivity. Arbitration on the mine owners claims and Washington Group Bolivias counterclaims commenced before the ICC. In the course of the arbitration proceedings, the mine owner reduced its claims to approximately $32 million, while Washington Group Bolivia refined its counterclaim amount to not more than $63 million. On August 9, 2013, an $11 million ICC arbitration tribunal award was issued against Washington Group Bolivia and, on September 5, 2013, the mine owner petitioned the United States District Court of Colorado to confirm the ICC arbitration award. On October 1, 2013, Washington Group Bolivia filed a cross motion to partially vacate the ICC arbitration award in the District Court of Colorado. On February 3, 2014, the District Court of Colorado entered judgment confirming the ICC arbitration award and denied Washington Group Bolivias motion to partially vacate the award. Washington Group Bolivia has paid the award, and a satisfaction of judgment was filed by the mine owner with the Court on February 25, 2014.
We have accrued an estimated probable loss of $11 million related to this matter; however, we expect the loss to be recoverable under our insurance program.
· Canadian Pipeline Contract: In January 2010, a pipeline owner filed an action in the Court of Queens Bench of Alberta, Canada against Flint Energy Services Ltd. (Flint), a company we
URS CORPORATION AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTSUNAUDITED (Continued)
NOTE 13. COMMITMENTS AND CONTINGENCIES (Continued)
acquired in May 2012, as well as against a number of other defendants, alleging that the defendants negligently provided pipe coating and insulation system services, engineering, design services, construction services, and other work, causing damage to and abandonment of the line. The pipeline owner alleges it has suffered approximately C$85 million in damages in connection with the abandonment and replacement of the pipeline. Flint was the construction contractor on the pipeline project. Other defendants were responsible for engineering and design- services and for specifying and providing the actual pipe, insulation and coating materials used in the line. In January 2011, the pipeline owner served a Statement of Claim on Flint and, in September 2011, Flint filed a Statement of Defense denying that the damages to the coating system of the pipeline were caused by any negligence or breach of contract of Flint. Flint believes the damages were caused or contributed to by the negligence of one or more of the co-defendants and/or by the negligent operation of the pipeline owner.
Flint intends to continue to defend this matter vigorously; however, it cannot provide assurance that it will be successful, in whole or in part, in these efforts. The potential range of loss and the resolution of this matter cannot be determined at this time primarily due to the early stage of the discovery; the substantial uncertainty regarding the actual cause of the damage to or loss of the line; the nature and amount of each individual damage claim against the various defendants; and the uncertainty concerning legal theories and factual bases that the customer may present against all or some of the defendants.
· AECOM Merger Class-action Lawsuits: In connection with the AECOM Merger, beginning on July 21, 2014, multiple putative class action lawsuits were filed in the Court of Chancery of the State of Delaware by purported URS stockholders against URS Corporation: Falato v. URS Corp., et al., City of Atlanta Firefighters Pension Fund v. Creel, et al., Petroutson v. URS Corp., et al., Miller v. URS Corp., et al., Oklahoma Police Pension & Retirement System v. Creel, et al., Cambridge Retirement System v. Creel, et al. and Sheet Metal Workers Local No. 33 Cleveland District Pension Plan v. URS Corp., et al. The actions named as defendants URS Corporation, the members of the URS Board of Directors, AECOM Technology and its affiliates. A number of the actions also named as a defendant JANA Partners LLC. The complaints allege, among other things, that some or all members of the URS Board of Directors breached their fiduciary duties by approving the Merger, and that the other defendants aided and abetted those alleged breaches. The complaints seek, among other relief, class certification, preliminary and permanent injunctive relief, and damages.
URS Corporation intends to defend these matters vigorously; however, URS Corporation cannot provide assurance that it will be successful in these efforts. The potential range of loss and the resolution of these matter cannot be determined at this time primarily due to the early stage of the proceedings; the nature and amount of each individual damage claim against the various defendants; the uncertainty concerning legal theories and factual bases that the plaintiffs may present against all or some of the defendants; and uncertainty about the plaintiffs claims, if any, that might survive certain key motions, as well as a number of additional factors.
The resolution of outstanding claims and legal proceedings is subject to inherent uncertainty, and it is reasonably possible that any resolution of these claims and legal proceedings could have a material adverse effect on us, including a substantial charge to our earnings and operating results for that period; however, an estimate of all the reasonably possible losses cannot be determined at this time.
URS CORPORATION AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTSUNAUDITED (Continued)
NOTE 13. COMMITMENTS AND CONTINGENCIES (Continued)
Insurance
Generally, our insurance program covers workers compensation and employers liability, general liability, automobile liability, professional errors and omissions liability, property, marine property and liability, aviation liability, management liability, and contractors pollution liability (in addition to other policies for specific projects). We have also elected to retain a portion of the losses that occur through the use of various deductibles, limits, and self-insured retentions under our insurance programs. In addition, our insurance policies contain exclusions and sublimits that insurance providers may use to deny or restrict coverage. Excess liability, contractors pollution liability, and professional liability insurance policies provide coverages on a claims-made basis, covering only claims actually made and reported during the policy period currently in effect. Thus, if we do not continue to maintain these policies, we will have no coverage for claims made after the termination date even for claims based on events that occurred during the term of coverage. While we intend to maintain these policies, we may be unable to maintain existing coverage levels.
Guarantee Obligations and Commitments
As of July 4, 2014, we had the following guarantee obligations and commitments:
We have agreed to indemnify one of our joint venture partners up to $25 million for any potential losses, damages, and liabilities associated with lawsuits in relation to general and administrative services we provide to the joint venture.
As of July 4, 2014, we had $46 million in bank guarantees outstanding under foreign credit facilities and other banking arrangements.
We also maintain a variety of commercial commitments that are generally made to support provisions of our contracts. In addition, in the ordinary course of business, we provide letters of credit to clients and others against advance payments and to support other business arrangements. We are required to reimburse the issuers of letters of credit for any payments they make under the letters of credit.
In the ordinary course of business, we may provide performance assurances and guarantees related to our services. For example, these guarantees may include surety bonds, arrangements among our client, a surety, and us to ensure we perform our contractual obligations pursuant to our client agreement. If our services under a guaranteed project are later determined to have resulted in a material defect or other material deficiency, then we may be responsible for monetary damages or other legal remedies. When sufficient information about claims on guaranteed projects is available and monetary damages or other costs or losses are determined to be probable, we recognize such guarantee losses.
NOTE 14. CONDENSED CONSOLIDATING FINANCIAL INFORMATION
On March 15, 2012, the Parent and Fox LP issued the Senior Notes. See Note 8, Indebtedness, for more information.
Consistent with the arrangement between Parent and Fox LP, $399 million and $600 million of the Senior Notes are included in the liabilities of Parent and Fox LP, respectively, as of July 4, 2014. As of January 3, 2014, $299 million and $700 million of the Senior Notes are included in the liabilities of Parent and Fox LP, respectively.
URS CORPORATION AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTSUNAUDITED (Continued)
NOTE 14. CONDENSED CONSOLIDATING FINANCIAL INFORMATION (Continued)
The following is our condensed consolidating financial information, segregating the issuers, guarantor subsidiaries and non-guarantor subsidiaries, as of July 4, 2014 and January 3, 2014, and for the three and six months ended July 4, 2014 and June 28, 2013.
CONDENSED CONSOLIDATING BALANCE SHEETUNAUDITED
|
|
As of July 4, 2014 | |||||||||||||||||
(in millions) |
|
Issuer |
|
Issuer |
|
Guarantors |
|
Non- |
|
Eliminations |
|
Consolidated |
| ||||||
ASSETS |
|
|
|
|
|
|
|
|
|
|
|
|
| ||||||
Current assets: |
|
|
|
|
|
|
|
|
|
|
|
|
| ||||||
Cash and cash equivalents |
|
$ |
54 |
|
$ |
|
|
$ |
25 |
|
$ |
247 |
|
$ |
(43 |
) |
$ |
283 |
|
Accounts receivable, including retentions |
|
|
|
|
|
761 |
|
624 |
|
(11 |
) |
1,374 |
| ||||||
Costs and accrued earnings in excess of billings on contracts |
|
|
|
|
|
966 |
|
575 |
|
(4 |
) |
1,537 |
| ||||||
Less receivable allowances |
|
|
|
|
|
(23 |
) |
(36 |
) |
|
|
(59 |
) | ||||||
Net accounts receivable |
|
|
|
|
|
1,704 |
|
1,163 |
|
(15 |
) |
2,852 |
| ||||||
Intercompany accounts receivable |
|
489 |
|
25 |
|
2,235 |
|
430 |
|
(3,179 |
) |
|
| ||||||
Other current assets |
|
14 |
|
|
|
122 |
|
117 |
|
(22 |
) |
231 |
| ||||||
Total current assets |
|
557 |
|
25 |
|
4,086 |
|
1,957 |
|
(3,259 |
) |
3,366 |
| ||||||
Investments in and advances to subsidiaries and unconsolidated joint ventures |
|
5,454 |
|
67 |
|
1,520 |
|
178 |
|
(6,975 |
) |
244 |
| ||||||
Property and equipment, net |
|
28 |
|
|
|
179 |
|
385 |
|
|
|
592 |
| ||||||
Intangible assets, net |
|
|
|
|
|
207 |
|
316 |
|
|
|
523 |
| ||||||
Goodwill |
|
|
|
|
|
2,230 |
|
1,479 |
|
|
|
3,709 |
| ||||||
Other long-term assets |
|
18 |
|
|
|
109 |
|
97 |
|
(3 |
) |
221 |
| ||||||
Total assets |
|
$ |
6,057 |
|
$ |
92 |
|
$ |
8,331 |
|
$ |
4,412 |
|
$ |
(10,237 |
) |
$ |
8,655 |
|
LIABILITIES AND EQUITY |
|
|
|
|
|
|
|
|
|
|
|
|
| ||||||
Current liabilities: |
|
|
|
|
|
|
|
|
|
|
|
|
| ||||||
Current portion of long-term debt |
|
$ |
2 |
|
$ |
|
|
$ |
23 |
|
$ |
26 |
|
$ |
|
|
$ |
51 |
|
Accounts payable and subcontractors payable, including retentions |
|
11 |
|
|
|
410 |
|
332 |
|
(61 |
) |
692 |
| ||||||
Accrued salaries and employee benefits |
|
38 |
|
|
|
350 |
|
135 |
|
|
|
523 |
| ||||||
Billings in excess of costs and accrued earnings on contracts |
|
|
|
|
|
120 |
|
102 |
|
|
|
222 |
| ||||||
Intercompany accounts payable |
|
1,726 |
|
|
|
1,125 |
|
328 |
|
(3,179 |
) |
|
| ||||||
Short-term intercompany notes payable |
|
66 |
|
|
|
21 |
|
230 |
|
(317 |
) |
|
| ||||||
Other current liabilities |
|
32 |
|
9 |
|
276 |
|
29 |
|
(19 |
) |
327 |
| ||||||
Total current liabilities |
|
1,875 |
|
9 |
|
2,325 |
|
1,182 |
|
(3,576 |
) |
1,815 |
| ||||||
Long-term debt |
|
1,007 |
|
600 |
|
47 |
|
125 |
|
|
|
1,779 |
| ||||||
Deferred tax liabilities |
|
|
|
|
|
357 |
|
74 |
|
(3 |
) |
428 |
| ||||||
Self-insurance reserves |
|
|
|
|
|
11 |
|
117 |
|
|
|
128 |
| ||||||
Pension and post-retirement benefit obligations |
|
|
|
|
|
117 |
|
164 |
|
|
|
281 |
| ||||||
Long-term intercompany notes payable |
|
|
|
|
|
568 |
|
1,166 |
|
(1,734 |
) |
|
| ||||||
Other long-term liabilities |
|
4 |
|
|
|
102 |
|
30 |
|
|
|
136 |
| ||||||
Total liabilities |
|
2,886 |
|
609 |
|
3,527 |
|
2,858 |
|
(5,313 |
) |
4,567 |
| ||||||
URS stockholders equity |
|
3,943 |
|
24 |
|
5,454 |
|
1,497 |
|
(6,975 |
) |
3,943 |
| ||||||
Intercompany notes receivable |
|
(772 |
) |
(541 |
) |
(650 |
) |
(88 |
) |
2,051 |
|
|
| ||||||
Total URS stockholders equity |
|
3,171 |
|
(517 |
) |
4,804 |
|
1,409 |
|
(4,924 |
) |
3,943 |
| ||||||
Noncontrolling interests |
|
|
|
|
|
|
|
145 |
|
|
|
145 |
| ||||||
Total stockholders equity |
|
3,171 |
|
(517 |
) |
4,804 |
|
1,554 |
|
(4,924 |
) |
4,088 |
| ||||||
Total liabilities and stockholders equity |
|
$ |
6,057 |
|
$ |
92 |
|
$ |
8,331 |
|
$ |
4,412 |
|
$ |
(10,237 |
) |
$ |
8,655 |
|
URS CORPORATION AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTSUNAUDITED (Continued)
NOTE 14. CONDENSED CONSOLIDATING FINANCIAL INFORMATION (Continued)
CONDENSED CONSOLIDATING BALANCE SHEETUNAUDITED
|
|
As of January 3, 2014 |
| ||||||||||||||||
(in millions) |
|
Issuer |
|
Issuer |
|
Guarantors |
|
Non- |
|
Eliminations |
|
Consolidated |
| ||||||
ASSETS |
|
|
|
|
|
|
|
|
|
|
|
|
| ||||||
Current assets: |
|
|
|
|
|
|
|
|
|
|
|
|
| ||||||
Cash and cash equivalents |
|
$ |
107 |
|
$ |
|
|
$ |
20 |
|
$ |
205 |
|
$ |
(48 |
) |
$ |
284 |
|
Accounts receivable, including retentions |
|
|
|
|
|
815 |
|
590 |
|
(12 |
) |
1,393 |
| ||||||
Costs and accrued earnings in excess of billings on contracts |
|
|
|
|
|
980 |
|
547 |
|
(6 |
) |
1,521 |
| ||||||
Less receivable allowances |
|
|
|
|
|
(30 |
) |
(35 |
) |
|
|
(65 |
) | ||||||
Net accounts receivable |
|
|
|
|
|
1,765 |
|
1,102 |
|
(18 |
) |
2,849 |
| ||||||
Intercompany accounts receivable |
|
440 |
|
19 |
|
2,439 |
|
422 |
|
(3,320 |
) |
|
| ||||||
Other current assets |
|
42 |
|
|
|
108 |
|
118 |
|
(10 |
) |
258 |
| ||||||
Total current assets |
|
589 |
|
19 |
|
4,332 |
|
1,847 |
|
(3,396 |
) |
3,391 |
| ||||||
Investments in and advances to subsidiaries and unconsolidated joint ventures |
|
5,731 |
|
52 |
|
1,488 |
|
192 |
|
(7,218 |
) |
245 |
| ||||||
Property and equipment at cost, net |
|
29 |
|
|
|
166 |
|
413 |
|
|
|
608 |
| ||||||
Intangible assets, net |
|
|
|
|
|
229 |
|
341 |
|
|
|
570 |
| ||||||
Goodwill |
|
|
|
|
|
2,230 |
|
1,466 |
|
|
|
3,696 |
| ||||||
Other long-term assets |
|
19 |
|
|
|
106 |
|
87 |
|
(4 |
) |
208 |
| ||||||
Total assets |
|
$ |
6,368 |
|
$ |
71 |
|
$ |
8,551 |
|
$ |
4,346 |
|
$ |
(10,618 |
) |
$ |
8,718 |
|
LIABILITIES AND EQUITY |
|
|
|
|
|
|
|
|
|
|
|
|
| ||||||
Current liabilities: |
|
|
|
|
|
|
|
|
|
|
|
|
| ||||||
Current portion of long-term debt |
|
$ |
2 |
|
$ |
|
|
$ |
16 |
|
$ |
27 |
|
$ |
|
|
$ |
45 |
|
Accounts payable and subcontractors payable, including retentions |
|
3 |
|
|
|
421 |
|
331 |
|
(67 |
) |
688 |
| ||||||
Accrued salaries and employee benefits |
|
34 |
|
|
|
345 |
|
128 |
|
|
|
507 |
| ||||||
Billings in excess of costs and accrued earnings on contracts |
|
|
|
|
|
126 |
|
107 |
|
|
|
233 |
| ||||||
Intercompany accounts payable |
|
1,952 |
|
|
|
1,052 |
|
316 |
|
(3,320 |
) |
|
| ||||||
Short-term intercompany notes payable |
|
66 |
|
|
|
21 |
|
189 |
|
(276 |
) |
|
| ||||||
Other current liabilities |
|
50 |
|
9 |
|
277 |
|
40 |
|
(10 |
) |
366 |
| ||||||
Total current liabilities |
|
2,107 |
|
9 |
|
2,258 |
|
1,138 |
|
(3,673 |
) |
1,839 |
| ||||||
Long-term debt |
|
907 |
|
700 |
|
28 |
|
32 |
|
|
|
1,667 |
| ||||||
Deferred tax liabilities |
|
|
|
|
|
371 |
|
76 |
|
(3 |
) |
444 |
| ||||||
Self-insurance reserves |
|
|
|
|
|
11 |
|
116 |
|
|
|
127 |
| ||||||
Pension and post-retirement benefit obligations |
|
|
|
|
|
124 |
|
162 |
|
|
|
286 |
| ||||||
Long-term intercompany notes payable |
|
|
|
|
|
564 |
|
1,263 |
|
(1,827 |
) |
|
| ||||||
Other long-term liabilities |
|
3 |
|
|
|
94 |
|
31 |
|
|
|
128 |
| ||||||
Total liabilities |
|
3,017 |
|
709 |
|
3,450 |
|
2,818 |
|
(5,503 |
) |
4,491 |
| ||||||
URS stockholders equity |
|
4,081 |
|
19 |
|
5,731 |
|
1,468 |
|
(7,218 |
) |
4,081 |
| ||||||
Intercompany notes receivable |
|
(730 |
) |
(657 |
) |
(630 |
) |
(86 |
) |
2,103 |
|
|
| ||||||
Total URS stockholders equity |
|
3,351 |
|
(638 |
) |
5,101 |
|
1,382 |
|
(5,115 |
) |
4,081 |
| ||||||
Noncontrolling interests |
|
|
|
|
|
|
|
146 |
|
|
|
146 |
| ||||||
Total stockholders equity |
|
3,351 |
|
(638 |
) |
5,101 |
|
1,528 |
|
(5,115 |
) |
4,227 |
| ||||||
Total liabilities and stockholders equity |
|
$ |
6,368 |
|
$ |
71 |
|
$ |
8,551 |
|
$ |
4,346 |
|
$ |
(10,618 |
) |
$ |
8,718 |
|
URS CORPORATION AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTSUNAUDITED (Continued)
NOTE 14. CONDENSED CONSOLIDATING FINANCIAL INFORMATION (Continued)
CONDENSED CONSOLIDATING STATEMENT OF OPERATIONSUNAUDITED
|
|
For the Three Months Ended July 4, 2014 |
| ||||||||||||||||
(in millions) |
|
Issuer |
|
Issuer |
|
Guarantors |
|
Non- |
|
Eliminations |
|
Consolidated |
| ||||||
Revenues |
|
$ |
|
|
$ |
|
|
$ |
1,525 |
|
$ |
1,115 |
|
$ |
(85 |
) |
$ |
2,555 |
|
Cost of revenues |
|
|
|
|
|
(1,431 |
) |
(1,061 |
) |
85 |
|
(2,407 |
) | ||||||
General and administrative expenses |
|
(26 |
) |
|
|
|
|
(1 |
) |
|
|
(27 |
) | ||||||
Equity in income (loss) in subsidiaries |
|
95 |
|
7 |
|
48 |
|
(4 |
) |
(146 |
) |
|
| ||||||
Equity in income of unconsolidated joint ventures |
|
|
|
|
|
2 |
|
15 |
|
|
|
17 |
| ||||||
Intercompany royalty and general and administrative charges |
|
22 |
|
|
|
(23 |
) |
1 |
|
|
|
|
| ||||||
Operating income (loss) |
|
91 |
|
7 |
|
121 |
|
65 |
|
(146 |
) |
138 |
| ||||||
Interest expense |
|
(9 |
) |
(7 |
) |
|
|
(2 |
) |
|
|
(18 |
) | ||||||
Intercompany interest income |
|
3 |
|
1 |
|
9 |
|
|
|
(13 |
) |
|
| ||||||
Intercompany interest expense |
|
|
|
|
|
(3 |
) |
(10 |
) |
13 |
|
|
| ||||||
Other income |
|
|
|
|
|
|
|
1 |
|
|
|
1 |
| ||||||
Income (loss) before income taxes |
|
85 |
|
1 |
|
127 |
|
54 |
|
(146 |
) |
121 |
| ||||||
Income tax benefit (expense) |
|
3 |
|
2 |
|
(32 |
) |
14 |
|
|
|
(13 |
) | ||||||
Net income (loss) including noncontrolling interests |
|
88 |
|
3 |
|
95 |
|
68 |
|
(146 |
) |
108 |
| ||||||
Noncontrolling interests in income of consolidated subsidiaries |
|
|
|
|
|
|
|
(20 |
) |
|
|
(20 |
) | ||||||
Net income (loss) attributable to URS |
|
$ |
88 |
|
$ |
3 |
|
$ |
95 |
|
$ |
48 |
|
$ |
(146 |
) |
$ |
88 |
|
Comprehensive income (loss) attributable to URS |
|
$ |
126 |
|
$ |
3 |
|
$ |
133 |
|
$ |
73 |
|
$ |
(209 |
) |
$ |
126 |
|
URS CORPORATION AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTSUNAUDITED (Continued)
NOTE 14. CONDENSED CONSOLIDATING FINANCIAL INFORMATION (Continued)
CONDENSED CONSOLIDATING STATEMENT OF OPERATIONSUNAUDITED
|
|
For the Three Months Ended June 28, 2013 |
| ||||||||||||||||
(in millions) |
|
Issuer |
|
Issuer |
|
Guarantors |
|
Non- |
|
Eliminations |
|
Consolidated |
| ||||||
Revenues |
|
$ |
|
|
$ |
|
|
$ |
1,708 |
|
$ |
1,172 |
|
$ |
(88 |
) |
$ |
2,792 |
|
Cost of revenues |
|
|
|
|
|
(1,585 |
) |
(1,145 |
) |
88 |
|
(2,642 |
) | ||||||
General and administrative expenses |
|
(24 |
) |
|
|
|
|
1 |
|
|
|
(23 |
) | ||||||
Equity in income (loss) in subsidiaries |
|
66 |
|
7 |
|
2 |
|
(4 |
) |
(71 |
) |
|
| ||||||
Equity in income of unconsolidated joint ventures |
|
|
|
|
|
2 |
|
16 |
|
|
|
18 |
| ||||||
Intercompany royalty and general and administrative charges |
|
32 |
|
|
|
(28 |
) |
(4 |
) |
|
|
|
| ||||||
Operating income (loss) |
|
74 |
|
7 |
|
99 |
|
36 |
|
(71 |
) |
145 |
| ||||||
Interest expense |
|
(8 |
) |
(9 |
) |
|
|
(4 |
) |
|
|
(21 |
) | ||||||
Intercompany interest income |
|
2 |
|
1 |
|
9 |
|
|
|
(12 |
) |
|
| ||||||
Intercompany interest expense |
|
(1 |
) |
|
|
(2 |
) |
(9 |
) |
12 |
|
|
| ||||||
Other expenses |
|
|
|
|
|
|
|
(3 |
) |
|
|
(3 |
) | ||||||
Income (loss) before income taxes |
|
67 |
|
(1 |
) |
106 |
|
20 |
|
(71 |
) |
121 |
| ||||||
Income tax benefit (expense) |
|
|
|
4 |
|
(39 |
) |
(4 |
) |
|
|
(39 |
) | ||||||
Net income (loss) including noncontrolling interests |
|
67 |
|
3 |
|
67 |
|
16 |
|
(71 |
) |
82 |
| ||||||
Noncontrolling interests in income of consolidated subsidiaries |
|
|
|
|
|
|
|
(15 |
) |
|
|
(15 |
) | ||||||
Net income (loss) attributable to URS |
|
$ |
67 |
|
$ |
3 |
|
$ |
67 |
|
$ |
1 |
|
$ |
(71 |
) |
$ |
67 |
|
Comprehensive income (loss) attributable to URS |
|
$ |
30 |
|
$ |
3 |
|
$ |
31 |
|
$ |
(37 |
) |
$ |
3 |
|
$ |
30 |
|
URS CORPORATION AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTSUNAUDITED (Continued)
NOTE 14. CONDENSED CONSOLIDATING FINANCIAL INFORMATION (Continued)
CONDENSED CONSOLIDATING STATEMENT OF OPERATIONSUNAUDITED
|
|
For the Six Months Ended July 4, 2014 |
| ||||||||||||||||
(in millions) |
|
Issuer |
|
Issuer |
|
Guarantors |
|
Non- |
|
Eliminations |
|
Consolidated |
| ||||||
Revenues |
|
$ |
|
|
$ |
|
|
$ |
2,988 |
|
$ |
2,251 |
|
$ |
(147 |
) |
$ |
5,092 |
|
Cost of revenues |
|
|
|
|
|
(2,828 |
) |
(2,173 |
) |
147 |
|
(4,854 |
) | ||||||
General and administrative expenses |
|
(49 |
) |
|
|
|
|
|
|
|
|
(49 |
) | ||||||
Equity in income (loss) in subsidiaries |
|
118 |
|
15 |
|
37 |
|
(9 |
) |
(161 |
) |
|
| ||||||
Equity in income of unconsolidated joint ventures |
|
|
|
|
|
4 |
|
32 |
|
|
|
36 |
| ||||||
Intercompany royalty and general and administrative charges |
|
56 |
|
|
|
(48 |
) |
(8 |
) |
|
|
|
| ||||||
Operating income (loss) |
|
125 |
|
15 |
|
153 |
|
93 |
|
(161 |
) |
225 |
| ||||||
Interest expense |
|
(16 |
) |
(16 |
) |
|
|
(4 |
) |
|
|
(36 |
) | ||||||
Intercompany interest income |
|
5 |
|
2 |
|
18 |
|
1 |
|
(26 |
) |
|
| ||||||
Intercompany interest expense |
|
(1 |
) |
|
|
(5 |
) |
(20 |
) |
26 |
|
|
| ||||||
Other expenses |
|
|
|
|
|
|
|
(3 |
) |
|
|
(3 |
) | ||||||
Income (loss) before income taxes |
|
113 |
|
1 |
|
166 |
|
67 |
|
(161 |
) |
186 |
| ||||||
Income tax benefit (expense) |
|
2 |
|
5 |
|
(48 |
) |
2 |
|
|
|
(39 |
) | ||||||
Net income (loss) including noncontrolling interests |
|
115 |
|
6 |
|
118 |
|
69 |
|
(161 |
) |
147 |
| ||||||
Noncontrolling interests in income of consolidated subsidiaries |
|
|
|
|
|
|
|
(32 |
) |
|
|
(32 |
) | ||||||
Net income (loss) attributable to URS |
|
$ |
115 |
|
$ |
6 |
|
$ |
118 |
|
$ |
37 |
|
$ |
(161 |
) |
$ |
115 |
|
Comprehensive income (loss) attributable to URS |
|
$ |
137 |
|
$ |
6 |
|
$ |
142 |
|
$ |
45 |
|
$ |
(193 |
) |
$ |
137 |
|
URS CORPORATION AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTSUNAUDITED (Continued)
NOTE 14. CONDENSED CONSOLIDATING FINANCIAL INFORMATION (Continued)
CONDENSED CONSOLIDATING STATEMENT OF OPERATIONSUNAUDITED
|
|
For the Six Months Ended June 28, 2013 |
| ||||||||||||||||
(in millions) |
|
Issuer |
|
Issuer |
|
Guarantors |
|
Non- |
|
Eliminations |
|
Consolidated |
| ||||||
Revenues |
|
$ |
|
|
$ |
|
|
$ |
3,431 |
|
$ |
2,332 |
|
$ |
(168 |
) |
$ |
5,595 |
|
Cost of revenues |
|
|
|
|
|
(3,183 |
) |
(2,278 |
) |
168 |
|
(5,293 |
) | ||||||
General and administrative expenses |
|
(46 |
) |
|
|
|
|
|
|
|
|
(46 |
) | ||||||
Equity in income (loss) in subsidiaries |
|
132 |
|
15 |
|
6 |
|
(9 |
) |
(144 |
) |
|
| ||||||
Equity in income of unconsolidated joint ventures |
|
|
|
|
|
5 |
|
37 |
|
|
|
42 |
| ||||||
Intercompany royalty and general and administrative charges |
|
69 |
|
|
|
(61 |
) |
(8 |
) |
|
|
|
| ||||||
Operating income (loss) |
|
155 |
|
15 |
|
198 |
|
74 |
|
(144 |
) |
298 |
| ||||||
Interest expense |
|
(16 |
) |
(17 |
) |
|
|
(9 |
) |
|
|
(42 |
) | ||||||
Intercompany interest income |
|
5 |
|
2 |
|
18 |
|
|
|
(25 |
) |
|
| ||||||
Intercompany interest expense |
|
(1 |
) |
|
|
(5 |
) |
(19 |
) |
25 |
|
|
| ||||||
Other expenses |
|
|
|
|
|
|
|
(6 |
) |
|
|
(6 |
) | ||||||
Income (loss) before income taxes |
|
143 |
|
|
|
211 |
|
40 |
|
(144 |
) |
250 |
| ||||||
Income tax benefit (expense) |
|
(4 |
) |
6 |
|
(78 |
) |
(5 |
) |
|
|
(81 |
) | ||||||
Net income (loss) including noncontrolling interests |
|
139 |
|
6 |
|
133 |
|
35 |
|
(144 |
) |
169 |
| ||||||
Noncontrolling interests in income of consolidated subsidiaries |
|
|
|
|
|
|
|
(30 |
) |
|
|
(30 |
) | ||||||
Net income (loss) attributable to URS |
|
$ |
139 |
|
$ |
6 |
|
$ |
133 |
|
$ |
5 |
|
$ |
(144 |
) |
$ |
139 |
|
Comprehensive income (loss) attributable to URS |
|
$ |
69 |
|
$ |
6 |
|
$ |
67 |
|
$ |
(70 |
) |
$ |
(3 |
) |
$ |
69 |
|
URS CORPORATION AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTSUNAUDITED (Continued)
NOTE 14. CONDENSED CONSOLIDATING FINANCIAL INFORMATION (Continued)
CONDENSED CONSOLIDATING STATEMENT OF CASH FLOWSUNAUDITED
|
|
For the Six Months Ended July 4, 2014 |
| ||||||||||||||||
(in millions) |
|
Issuer |
|
Issuer |
|
Guarantors |
|
Non- |
|
Eliminations |
|
Consolidated |
| ||||||
Net cash from operating activities |
|
$ |
(14 |
) |
$ |
(12 |
) |
$ |
229 |
|
$ |
54 |
|
$ |
5 |
|
$ |
262 |
|
Cash flows from investing activities: |
|
|
|
|
|
|
|
|
|
|
|
|
| ||||||
Proceeds from disposal of property and equipment |
|
|
|
|
|
1 |
|
32 |
|
|
|
33 |
| ||||||
Changes in restricted cash |
|
|
|
|
|
|
|
3 |
|
|
|
3 |
| ||||||
Capital expenditures, less equipment purchased through capital leases and equipment notes |
|
(5 |
) |
|
|
(27 |
) |
(10 |
) |
|
|
(42 |
) | ||||||
Other intercompany investing activities |
|
36 |
|
112 |
|
(156 |
) |
823 |
|
(815 |
) |
|
| ||||||
Net cash from investing activities |
|
31 |
|
112 |
|
(182 |
) |
848 |
|
(815 |
) |
(6 |
) | ||||||
Cash flows from financing activities: |
|
|
|
|
|
|
|
|
|
|
|
|
| ||||||
Borrowings from long-term debt |
|
100 |
|
|
|
|
|
|
|
(100 |
) |
|
| ||||||
Payments on long-term debt |
|
|
|
(100 |
) |
(3 |
) |
|
|
100 |
|
(3 |
) | ||||||
Borrowings from revolving line of credit |
|
485 |
|
|
|
|
|
178 |
|
|
|
663 |
| ||||||
Payments on revolving line of credit |
|
(485 |
) |
|
|
|
|
(96 |
) |
|
|
(581 |
) | ||||||
Net payments on other indebtedness |
|
(1 |
) |
|
|
(3 |
) |
(7 |
) |
|
|
(11 |
) | ||||||
Net change in overdrafts |
|
|
|
|
|
|
|
1 |
|
|
|
1 |
| ||||||
Proceeds from employee stock purchases and exercises of stock options |
|
2 |
|
|
|
|
|
|
|
|
|
2 |
| ||||||
Distributions to noncontrolling interests |
|
|
|
|
|
|
|
(36 |
) |
|
|
(36 |
) | ||||||
Dividends paid |
|
(31 |
) |
|
|
|
|
|
|
|
|
(31 |
) | ||||||
Repurchases of common stock |
|
(266 |
) |
|
|
|
|
|
|
|
|
(266 |
) | ||||||
Other intercompany financing activities |
|
126 |
|
|
|
(36 |
) |
(905 |
) |
815 |
|
|
| ||||||
Net cash from financing activities |
|
(70 |
) |
(100 |
) |
(42 |
) |
(865 |
) |
815 |
|
(262 |
) | ||||||
Net change in cash and cash equivalents |
|
(53 |
) |
|
|
5 |
|
37 |
|
5 |
|
(6 |
) | ||||||
Effect of foreign exchange rate changes on cash and cash equivalents |
|
|
|
|
|
|
|
5 |
|
|
|
5 |
| ||||||
Cash and cash equivalents at beginning of period |
|
107 |
|
|
|
20 |
|
205 |
|
(48 |
) |
284 |
| ||||||
Cash and cash equivalents at end of period |
|
$ |
54 |
|
$ |
|
|
$ |
25 |
|
$ |
247 |
|
$ |
(43 |
) |
$ |
283 |
|
URS CORPORATION AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTSUNAUDITED (Continued)
NOTE 14. CONDENSED CONSOLIDATING FINANCIAL INFORMATION (Continued)
CONDENSED CONSOLIDATING STATEMENT OF CASH FLOWSUNAUDITED
|
|
For the Six Months Ended June 28, 2013 |
| ||||||||||||||||
(in millions) |
|
Issuer |
|
Issuer |
|
Guarantors |
|
Non- |
|
Eliminations |
|
Consolidated |
| ||||||
Net cash from operating activities |
|
$ |
(90 |
) |
$ |
2 |
|
$ |
189 |
|
$ |
(10 |
) |
$ |
(1 |
) |
$ |
90 |
|
Cash flows from investing activities: |
|
|
|
|
|
|
|
|
|
|
|
|
| ||||||
Proceeds from disposal of property and equipment |
|
|
|
|
|
|
|
26 |
|
|
|
26 |
| ||||||
Changes in restricted cash |
|
|
|
|
|
|
|
2 |
|
|
|
2 |
| ||||||
Capital expenditures, less equipment purchased through capital leases and equipment notes |
|
(3 |
) |
|
|
(15 |
) |
(28 |
) |
|
|
(46 |
) | ||||||
Other intercompany investing activities |
|
394 |
|
(2 |
) |
307 |
|
9 |
|
(708 |
) |
|
| ||||||
Net cash from investing activities |
|
391 |
|
(2 |
) |
292 |
|
9 |
|
(708 |
) |
(18 |
) | ||||||
Cash flows from financing activities: |
|
|
|
|
|
|
|
|
|
|
|
|
| ||||||
Payments on long-term debt |
|
|
|
|
|
(2 |
) |
|
|
|
|
(2 |
) | ||||||
Borrowings from revolving line of credit |
|
815 |
|
|
|
|
|
43 |
|
|
|
858 |
| ||||||
Payments on revolving line of credit |
|
(755 |
) |
|
|
|
|
(68 |
) |
|
|
(823 |
) | ||||||
Net payments on other indebtedness |
|
(16 |
) |
|
|
(2 |
) |
(6 |
) |
|
|
(24 |
) | ||||||
Net change in overdrafts |
|
|
|
|
|
5 |
|
1 |
|
(19 |
) |
(13 |
) | ||||||
Excess tax benefits from stock-based compensation |
|
2 |
|
|
|
|
|
|
|
|
|
2 |
| ||||||
Proceeds from employee stock purchases and exercises of stock options |
|
13 |
|
|
|
|
|
|
|
|
|
13 |
| ||||||
Distributions to noncontrolling interests |
|
|
|
|
|
|
|
(32 |
) |
|
|
(32 |
) | ||||||
Dividends paid |
|
(31 |
) |
|
|
|
|
|
|
|
|
(31 |
) | ||||||
Repurchases of common stock |
|
(93 |
) |
|
|
|
|
|
|
|
|
(93 |
) | ||||||
Other intercompany financing activities |
|
(212 |
) |
|
|
(488 |
) |
(8 |
) |
708 |
|
|
| ||||||
Net cash from financing activities |
|
(277 |
) |
|
|
(487 |
) |
(70 |
) |
689 |
|
(145 |
) | ||||||
Net change in cash and cash equivalents |
|
24 |
|
|
|
(6 |
) |
(71 |
) |
(20 |
) |
(73 |
) | ||||||
Effect of foreign exchange rate changes on cash and cash equivalents |
|
|
|
|
|
|
|
(8 |
) |
|
|
(8 |
) | ||||||
Cash and cash equivalents at beginning of period |
|
14 |
|
|
|
17 |
|
286 |
|
(2 |
) |
315 |
| ||||||
Cash and cash equivalents at end of period |
|
$ |
38 |
|
$ |
|
|
$ |
11 |
|
$ |
207 |
|
$ |
(22 |
) |
$ |
234 |
|