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Share Name | Share Symbol | Market | Type |
---|---|---|---|
Washington Grp Int# | NYSE:WNG | NYSE | Ordinary Share |
Price Change | % Change | Share Price | High Price | Low Price | Open Price | Shares Traded | Last Trade | |
---|---|---|---|---|---|---|---|---|
0.00 | 0.00% | 0.00 | - |
Delaware
(State
or other jurisdiction of incorporation or
organization)
|
33-0565601
(IRS
Employer Identification No.)
|
|
720
Park Boulevard, Boise, Idaho
(Address
of principal executive offices)
|
83712
(zip
code)
|
|
(208)
386-5000
(Registrant’s
telephone number, including area code)
|
·
|
Our
business strategy and competitive
advantages;
|
·
|
Our
expectations as to potential revenue from designated markets or
customers;
|
·
|
Our
expectations as to operating results, cash flows, return on invested
capital and net income;
|
·
|
Our
expectations as to new work and backlog;
|
·
|
The
markets for our services and products;
and
|
·
|
Our
anticipated contractual obligations, capital expenditures and funding
requirements.
|
·
|
Manage
and avoid delays or cost overruns on existing and future
contracts;
|
·
|
Maintain
relationships with key customers, partners and
suppliers;
|
·
|
Successfully
bid for, and enter into, new contracts on satisfactory
terms;
|
·
|
Successfully
manage and negotiate change orders and claims with respect to existing
and
future contracts;
|
·
|
Manage
and maintain our operations and financial performance and the operations
and financial performance of our current and future operating subsidiaries
and joint ventures;
|
·
|
Respond
effectively to regulatory, legislative and judicial developments,
including any legal or regulatory proceedings, affecting our existing
contracts, including contracts concerning environmental remediation
and
restoration;
|
·
|
Obtain
and maintain any required governmental authorizations, franchises
and
permits, all in a timely manner, at reasonable costs and on satisfactory
terms and conditions;
|
·
|
Satisfy
the restrictive covenants imposed by our revolving credit facility
and
surety arrangements;
|
·
|
Maintain
access to sufficient working capital through our existing revolving
credit
facility or otherwise; and
|
·
|
Maintain
access to sufficient bonding
capacity.
|
·
|
Accidents
and conditions, including industrial accidents, labor disputes,
geological
conditions, environmental hazards, weather and other natural
phenomena;
|
·
|
Special
risks of international operations, including uncertain political
and
economic environments, acts of terrorism or war, potential
incompatibilities with foreign joint venture partners, foreign
currency
fluctuations, civil disturbances and labor
issues;
|
·
|
Special
risks of contracts with the government, including the failure of
applicable governing authorities to take necessary actions to secure
or
maintain funding for particular projects with us, the unilateral
termination of contracts by the government and reimbursement obligations
to the government for funds previously
received;
|
·
|
The
outcome of legal proceedings;
|
·
|
Maintenance
of government-compliant cost systems; and
|
·
|
The
economic well-being of our private and public customer base and
its
ability and intentions to invest capital in engineering and construction
activities.
|
|
Three
Months Ended
|
Nine
Months Ended
|
||||||||||||||
(In
thousands,
except
per
share
data)
|
September
28,
2007
|
September
29,
2006
|
September
28,
2007
|
September
29,
2006
|
||||||||||||
Revenue
|
$ |
1,063,866
|
$ |
824,354
|
$ |
2,853,119
|
$ |
2,542,753
|
||||||||
Cost
of revenue
|
(1,003,467 | ) | (808,847 | ) | (2,714,686 | ) | (2,426,850 | ) | ||||||||
Gross
profit
|
60,399
|
15,507
|
138,433
|
115,903
|
||||||||||||
Equity
in income of unconsolidated affiliates
|
25,070
|
12,321
|
38,004
|
29,137
|
||||||||||||
General
and administrative expenses
|
(18,552 | ) | (20,619 | ) | (56,250 | ) | (55,626 | ) | ||||||||
Operating
income
|
66,917
|
7,209
|
120,187
|
89,414
|
||||||||||||
Interest
income
|
2,178
|
2,968
|
6,945
|
8,106
|
||||||||||||
Interest
expense
|
(1,427 | ) | (1,199 | ) | (4,408 | ) | (4,883 | ) | ||||||||
Write-off
of deferred financing fees
|
─
|
(5,063 | ) |
─
|
(5,063 | ) | ||||||||||
URS
Corporation merger related costs
|
(1,600 | ) |
─
|
(8,250 | ) |
─
|
||||||||||
Other
income (expense), net
|
23
|
(171 | ) | (388 | ) | (68 | ) | |||||||||
Income
before income taxes and minority interests
|
66,091
|
3,744
|
114,086
|
87,506
|
||||||||||||
Income
tax expense
|
(26,804 | ) | (1,606 | ) | (48,266 | ) | (35,302 | ) | ||||||||
Minority
interests in (income) loss of consolidated entities, net of
tax
|
(2,857 | ) |
2,175
|
(5,660 | ) | (231 | ) | |||||||||
|
||||||||||||||||
Net
income
|
$ |
36,430
|
$ |
4,313
|
$ |
60,160
|
$ |
51,973
|
||||||||
|
||||||||||||||||
Net
income per share:
|
||||||||||||||||
Basic
|
$ |
1.26
|
$ |
0.15
|
$ |
2.09
|
$ |
1.81
|
||||||||
Diluted
|
1.17
|
0.14
|
1.95
|
1.69
|
||||||||||||
|
||||||||||||||||
Shares
used to compute net income per share:
|
||||||||||||||||
Basic
|
28,929
|
28,765
|
28,804
|
28,638
|
||||||||||||
Diluted
|
31,152
|
30,706
|
30,877
|
30,680
|
(In
thousands)
|
September
28,
2007
|
December
29,
2006
|
||||||
ASSETS
|
|
|
||||||
Current
assets
|
|
|
||||||
Cash
and cash equivalents
|
$ |
211,517
|
$ |
232,096
|
||||
Restricted
cash
|
85,278
|
65,475
|
||||||
Accounts
receivable, including retentions of $15,457 and $16,443,
respectively
|
300,552
|
358,957
|
||||||
Unbilled
receivables
|
416,765
|
268,829
|
||||||
Investments
in and advances to construction joint ventures
|
54,252
|
44,333
|
||||||
Deferred
income taxes
|
89,848
|
106,681
|
||||||
Other
|
43,760
|
48,789
|
||||||
Total
current
assets
|
1,201,972
|
1,125,160
|
||||||
Investments
and other assets
|
||||||||
Investments
in unconsolidated affiliates
|
125,861
|
113,953
|
||||||
Goodwill
|
97,076
|
97,076
|
||||||
Deferred
income taxes
|
217,443
|
227,901
|
||||||
Other
assets
|
38,244
|
38,005
|
||||||
Total
investments and other
assets
|
478,624
|
476,935
|
||||||
Property
and equipment
|
||||||||
Construction
and mining equipment
|
201,948
|
162,776
|
||||||
Other
equipment and fixtures
|
63,038
|
50,642
|
||||||
Buildings
and improvements
|
10,988
|
12,781
|
||||||
Land
and improvements
|
584
|
584
|
||||||
Total
property and
equipment
|
276,558
|
226,783
|
||||||
Less
accumulated depreciation
|
(106,634 | ) | (96,554 | ) | ||||
Property
and equipment,
net
|
169,924
|
130,229
|
||||||
Total
assets
|
$ |
1,850,520
|
$ |
1,732,324
|
(In
thousands, except per share data)
|
September
28,
2007
|
December
29,
2006
|
||||||
LIABILITIES
AND STOCKHOLDERS’ EQUITY
|
|
|
||||||
Current
liabilities
|
|
|
||||||
Accounts
payable and subcontracts payable, including retentions of
$34,399
and $26,423, respectively
|
$ |
381,776
|
$ |
335,045
|
||||
Billings
in excess of cost and estimated earnings on uncompleted
contracts
|
102,982
|
152,109
|
||||||
Accrued
salaries, wages and benefits, including compensated absences
of
$61,011 and $53,695, respectively
|
196,214
|
192,307
|
||||||
Other
accrued liabilities
|
37,587
|
38,563
|
||||||
Total
current liabilities
|
718,559
|
718,024
|
||||||
Non-current
liabilities
|
||||||||
Self-insurance
reserves
|
73,417
|
68,392
|
||||||
Pension
and post-retirement benefit obligations
|
84,653
|
87,449
|
||||||
Other
non-current liabilities
|
63,784
|
50,263
|
||||||
Total
non-current liabilities
|
221,854
|
206,104
|
||||||
Contingencies
and commitments (Note 8)
|
||||||||
Minority
interests
|
15,365
|
9,947
|
||||||
Stockholders’
equity
|
||||||||
Preferred
stock, par value $.01 per share, 10,000 shares authorized
|
─
|
─
|
||||||
Common
stock, par value $.01 per share, 100,000 shares authorized;
30,471
and 30,001 shares issued, respectively
|
305
|
300
|
||||||
Capital
in excess of par value
|
693,489
|
661,278
|
||||||
Retained
earnings
|
243,652
|
183,492
|
||||||
Treasury
stock, 1,163 and 1,159 shares, respectively, at cost
|
(67,489 | ) | (67,251 | ) | ||||
Accumulated
other comprehensive income
|
24,785
|
20,430
|
||||||
Total
stockholders’ equity
|
894,742
|
798,249
|
||||||
Total
liabilities and stockholders’ equity
|
$ |
1,850,520
|
$ |
1,732,324
|
Nine
Months Ended
|
||||||||
(In
thousands)
|
September
28,
2007
|
September
29,
2006
|
||||||
Operating
activities
|
|
|
||||||
Net
income
|
$ |
60,160
|
$ |
51,973
|
||||
Adjustments
to reconcile net income to net cash provided by operating
activities:
|
||||||||
Cash
paid for reorganization items
|
(1,418 | ) | (1,780 | ) | ||||
Depreciation
of property and equipment
|
27,890
|
22,002
|
||||||
Amortization
of intangible assets
|
3,278
|
11,346
|
||||||
Amortization
and write off of deferred financing fees
|
685
|
6,394
|
||||||
Non-cash
income tax expense
|
44,906
|
35,007
|
||||||
Minority
interests in income of consolidated subsidiaries, net of
tax
|
5,660
|
231
|
||||||
Equity
in income of unconsolidated affiliates, less dividends
received
|
(8,454 | ) | (15,892 | ) | ||||
Gain
on sale of interest in coal mine
|
(9,575 | ) |
─
|
|||||
Gain
on sale of assets, net
|
(5,962 | ) | (1,749 | ) | ||||
Stock-based
compensation expense
|
11,876
|
8,201
|
||||||
Excess
tax benefit from exercise of stock options
|
(3,325 | ) | (4,715 | ) | ||||
Changes
in operating assets, liabilities and other
|
(88,224 | ) | (107,902 | ) | ||||
Net
cash provided by operating
activities
|
37,497
|
3,116
|
||||||
|
||||||||
Investing
activities
|
||||||||
Property
and equipment additions
|
(124,833 | ) | (44,120 | ) | ||||
Proceeds
from sales of mining equipment leased back
|
45,239
|
─
|
||||||
Proceeds
from sales of property and equipment
|
17,472
|
3,749
|
||||||
Proceeds
from sale of interest in coal mine
|
13,500
|
─
|
||||||
Change
in restricted cash
|
(19,803 | ) | (226 | ) | ||||
Business
acquisition, net of cash acquired of $563
|
─
|
(6,103 | ) | |||||
Contributions
and advances to unconsolidated affiliates
|
32
|
(1,632 | ) | |||||
Net
cash used by investing
activities
|
(68,393 | ) | (48,332 | ) | ||||
|
||||||||
Financing
activities
|
||||||||
Proceeds
from exercise of stock options and warrants
|
10,858
|
84,297
|
||||||
Excess
tax benefit from exercise of stock options
|
3,325
|
4,715
|
||||||
Purchase
of warrants and treasury stock
|
─
|
(79,650 | ) | |||||
Distributions
to minority interests, net
|
(3,866 | ) | (1,089 | ) | ||||
Payoff
of loan assumed in business acquisition
|
─
|
(1,668 | ) | |||||
Net
cash provided by financing
activities
|
10,317
|
6,605
|
||||||
|
||||||||
Decrease
in cash and cash equivalents
|
(20,579 | ) | (38,611 | ) | ||||
Cash
and cash equivalents at beginning of period
|
232,096
|
237,706
|
||||||
|
||||||||
Cash
and cash equivalents at end of period
|
$ |
211,517
|
$ |
199,095
|
|
|
Three
Months Ended
|
|
|
Nine
Months Ended
|
|
||||||||||
(In
thousands)
|
|
September
28,
2007
|
|
|
September
29,
2006
|
|
|
September
28,
2007
|
|
|
September
29,
2006
|
|
||||
Net
income
|
|
$
|
36,430
|
|
$
|
4,313
|
|
|
$
|
60,160
|
|
$
|
51,973
|
|||
Other
comprehensive income (loss), net of tax:
|
|
|
|
|
|
|
|
|
|
|
||||||
Foreign
currency translation adjustments
|
|
|
2,948
|
|
|
(54
|
)
|
|
|
4,293
|
|
|
4,010
|
|||
Other
|
|
|
(14
|
)
|
|
|
207
|
|
|
62
|
|
|
266
|
|||
Other
comprehensive income, net
of tax
|
|
|
2,934
|
|
|
153
|
|
|
|
4,355
|
|
|
4,276
|
|||
Comprehensive
income
|
|
$
|
39,364
|
|
$
|
4,466
|
|
|
$
|
64,515
|
|
$
|
56,249
|
|
Three
Months Ended
|
Nine
Months Ended
|
||||||||||||||
(
In
thousands
)
|
September
28,
2007
|
September
29,
2006
|
September
28,
2007
|
September
29,
2006
|
||||||||||||
Basic
weighted average shares outstanding
|
28,929
|
28,765
|
28,804
|
28,638
|
||||||||||||
Effect of dilutive securities: | ||||||||||||||||
Stock options |
1,972
|
1,704
|
1,836
|
1,716
|
||||||||||||
Stock warrants |
─
|
─
|
─
|
161
|
||||||||||||
Restricted shares and other
|
251
|
237
|
237
|
165
|
||||||||||||
Diluted
weighted average shares outstanding
|
31,152
|
30,706
|
30,877
|
30,680
|
C
ombined
financial position of unconsolidated construction joint
ventures
(
In
thousands
)
|
September
28,
2007
|
December
29,
2006
|
||||||
Current
assets
|
$ |
245,329
|
$ |
299,722
|
||||
Property
and equipment, net
|
1,326
|
7,734
|
||||||
Current
liabilities
|
(250,923 | ) | (322,414 | ) | ||||
Net
liabilities
|
$ |
(4,268)
|
$ | (14,958 | ) |
|
Three
Months Ended
|
Nine
Months Ended
|
||||||||||||||
Combined
results of operations of
unconsolidated
construction joint ventures
(
In
thousands)
|
September
28,
2007
|
September
29,
2006
|
September
28,
2007
|
September
29,
2006
|
||||||||||||
Revenue
|
$ |
230,067
|
$ |
278,286
|
$ |
657,773
|
$ |
829,708
|
||||||||
Cost of revenue | (226,830 |
|
(278,500 | ) | (678,852 | ) | (814,578 | ) | ||||||||
Gross
profit (loss)
|
$ |
3,237
|
$ |
(214
|
) | $ |
(21,079
|
) | $ |
15,130
|
|
Three
Months Ended
|
Nine
Months Ended
|
||||||||||||||
September
28,
2007
|
September
29,
2006
|
September
28,
2007
|
September
29,
2006
|
|||||||||||||
Revenue
|
$ |
112,645
|
$ |
123,902
|
$ |
315,832
|
$ |
375,739
|
||||||||
Cost of revenue | (111,825 | ) | (130,727 | ) | (328,833 | ) | (377,303 | ) | ||||||||
Gross
profit (loss)
|
$ |
820
|
$ |
(6,825
|
) | $ |
(13,001
|
) | $ |
(1,564
|
) |
Combined
financial position of unconsolidated affiliates
(
In
thousands
)
|
September
28,
2007
|
December
29,
2006
|
||||||
Current
assets
|
$ |
151,681
|
$ |
153,581
|
||||
Property
and equipment, net
|
608,322
|
608,454
|
||||||
Other
non-current assets
|
431,757
|
433,418
|
||||||
Current
liabilities
|
(77,440 | ) | (92,507 | ) | ||||
Long-term
debt, non-recourse to parents
|
(188,095 | ) | (201,684 | ) | ||||
Other
non-current liabilities
|
(656,637 | ) | (653,750 | ) | ||||
Net
assets
|
$ |
269,588
|
$ |
247,512
|
|
Three
Months Ended
|
Nine
Months Ended
|
||||||||||||||
Combined
results of operations of
unconsolidated
affiliates
(In
thousands)
|
September
28,
2007
|
September
29,
2006
|
September
28,
2007
|
September
29,
2006
|
||||||||||||
Revenue
|
$ |
154,538
|
$ |
161,593
|
$ |
452,028
|
$ |
440,011
|
||||||||
Cost of revenue | (119,301 | ) | (124,662 | ) | (375,637 | ) | (363,503 | ) | ||||||||
Gross
profit (loss)
|
$ |
35,237
|
$ |
36,931
|
$ |
76,391
|
$ |
76,508
|
|
Three
Months Ended
|
Nine
Months Ended
|
||||||||||||||
(
In
thousands
)
|
September
28
, 200
7
|
September
29, 2006
|
September
28, 2007
|
September
29, 2006
|
||||||||||||
Revenue
|
|
|
|
|
||||||||||||
Power
|
$ |
275,946
|
$ |
170,686
|
$ |
766,918
|
$ |
580,604
|
||||||||
Infrastructure
|
165,635
|
142,650
|
423,590
|
436,893
|
||||||||||||
Mining
|
63,123
|
54,264
|
177,888
|
120,674
|
||||||||||||
Industrial/Process
|
200,026
|
121,205
|
512,318
|
371,429
|
||||||||||||
Defense
|
160,560
|
145,716
|
449,620
|
438,850
|
||||||||||||
Energy
& Environment
|
198,839
|
187,277
|
522,432
|
592,495
|
||||||||||||
Intersegment,
eliminations and other
|
(263 | ) |
2,556
|
353
|
1,808
|
|||||||||||
Total
revenue
|
$ |
1,063,866
|
$ |
824,354
|
$ |
2,853,119
|
$ |
2,542,753
|
||||||||
|
||||||||||||||||
Gross
profit (loss)
|
||||||||||||||||
Power
|
$ |
15,980
|
$ |
11,643
|
$ |
45,406
|
$ |
33,979
|
||||||||
Infrastructure
|
5,802
|
(18,154 | ) | (7,422 | ) | (19,131 | ) | |||||||||
Mining
|
2,568
|
174
|
8,535
|
(9,723 | ) | |||||||||||
Industrial/Process
|
3,786
|
(3,093 | ) |
9,937
|
3,221
|
|||||||||||
Defense
|
13,281
|
10,744
|
39,253
|
35,292
|
||||||||||||
Energy
& Environment
|
19,247
|
14,370
|
42,663
|
75,182
|
||||||||||||
Intersegment and other unallocated operating costs | (265 | ) | (177 | ) | 61 | (2,917 | ) | |||||||||
Total
gross profit
|
$ |
60,399
|
$ |
15,507
|
$ |
138,433
|
$ |
115,903
|
||||||||
|
||||||||||||||||
Equity
in income (loss) of unconsolidated affiliates
|
||||||||||||||||
Power
|
$ |
45
|
$ | (7 | ) | $ |
77
|
$ | (30 | ) | ||||||
Infrastructure
|
408
|
394
|
1,089
|
1,037
|
||||||||||||
Mining
|
23,712
|
9,618
|
33,546
|
24,929
|
||||||||||||
Industrial/Process
|
(20 | ) |
237
|
497
|
556
|
|||||||||||
Defense
|
─
|
─
|
─
|
─
|
||||||||||||
Energy
& Environment
|
925
|
2,079
|
2,795
|
2,645
|
||||||||||||
Total
equity in income of unconsolidated affiliates
|
$ |
25,070
|
$ |
12,321
|
$ |
38,004
|
$ |
29,137
|
||||||||
|
||||||||||||||||
Operating
income (loss)
|
||||||||||||||||
Power
|
$ |
16,025
|
$ |
11,636
|
$ |
45,483
|
$ |
33,949
|
||||||||
Infrastructure
|
6,210
|
(17,761 | ) | (6,333 | ) | (18,094 | ) | |||||||||
Mining
|
26,280
|
9,792
|
42,081
|
15,205
|
||||||||||||
Industrial/Process
|
3,766
|
(2,855 | ) |
10,434
|
3,777
|
|||||||||||
Defense
|
13,281
|
10,744
|
39,253
|
35,292
|
||||||||||||
Energy
& Environment
|
20,172
|
16,449
|
45,458
|
77,828
|
||||||||||||
Intersegment and other unallocated operating costs | (265 | ) | (177 | ) | 61 | (2,917 | ) | |||||||||
Corporate
general and administrative expenses
|
(18,552 | ) | (20,619 | ) | (56,250 | ) | (55,626 | ) | ||||||||
Total
operating income
|
$ |
66,917
|
$ |
7,209
|
$ |
120,187
|
$ |
89,414
|
Assets
as of
(
In
thousands
)
|
September
28,
2007
|
December
29, 2006
|
||||||
Power
|
$ |
209,214
|
$ |
126,266
|
||||
Infrastructure
|
191,573
|
165,390
|
||||||
Mining
|
326,191
|
270,362
|
||||||
Industrial/Process
|
207,197
|
128,567
|
||||||
Defense
|
116,710
|
107,917
|
||||||
Energy
& Environment
|
252,006
|
347,875
|
||||||
Corporate
and other
|
547,629
|
585,947
|
||||||
Total
assets
|
$ |
1,850,520
|
$ |
1,732,324
|
|
Three
Months Ended
|
Nine
Months Ended
|
||||||||||||||
|
September
28,
2007
|
September
29,
2006
|
September
28,
2007
|
September
29,
2006
|
||||||||||||
Weighted
average fair value of:
|
|
|
|
|
||||||||||||
Stock options granted | $ |
─
|
$ | 21.40 | $ |
24.23
|
$ |
22.30
|
||||||||
Restricted stock awards | $ |
82.37
|
$ | 56.14 | $ |
60.13
|
$ |
58.22
|
||||||||
Average expected volatility |
─
|
34.1 | % | 32.9 | % | 34.6 | % | |||||||||
Expected term (years) |
─
|
5
|
6
|
5
|
||||||||||||
Average risk-free interest rate |
─
|
4.7 | % | 4.5 | % | 4.6 | % | |||||||||
Expected
dividend yield
|
─
|
─
|
─
|
─
|
Stock
Options
Three
Months Ended
(In
thousands, except per share data)
|
Number
of
Stock
Options
|
Weighted
Average Exercise Price
|
Weighted
Average
Remaining
Contractual
Life (Yrs)
|
Aggregate
Intrinsic
Value
|
||||||||||||
Outstanding
as of June 29, 2007
|
5,102
|
$ |
34.00
|
|
|
|||||||||||
Granted
|
─
|
─
|
|
|
||||||||||||
Exercised
|
(26 | ) |
34.25
|
|
|
|||||||||||
Forfeited
|
(3 | ) |
55.96
|
|
|
|||||||||||
Outstanding
as of September 28, 2007
|
5,073
|
$ |
33.99
|
5.38
|
$ |
273,036
|
Stock
Options
Nine
Months Ended
(
In
thousands, except per share data)
|
Number
of
Stock
Options
|
Weighted
Average Exercise Price
|
Weighted
Average
Remaining
Contractual
Life (Yrs)
|
Aggregate
Intrinsic
Value
|
||||||||||||
Outstanding
as of December 29, 2006
|
5,101
|
$ |
31.95
|
|
|
|||||||||||
Granted
|
354
|
59.62
|
|
|
||||||||||||
Exercised
|
(353 | ) |
28.77
|
|
|
|||||||||||
Forfeited
|
(29 | ) |
52.75
|
|
|
|||||||||||
Outstanding
as of September 28, 2007
|
5,073
|
$ |
33.99
|
5.38
|
$ |
273,036
|
||||||||||
Exercisable
as of September 28, 2007
|
4,355
|
$ |
30.29
|
4.83
|
$ |
250,528
|
Restricted
Stock Awards
Three
Months Ended
(
In
thousands, except per share data)
|
Number
of
Restricted
Shares
|
Remaining
Contractual
Life
(Yrs)
|
Weighted
Average
Aggregate
Intrinsic
Value
|
||||||||
Outstanding
as of June 29, 2007
|
370
|
|
|
||||||||
Granted
|
3
|
|
|
||||||||
Restrictions
lapsed
|
─
|
|
|
||||||||
Forfeited
|
(1
|
) |
|
|
|||||||
Outstanding
as of September 28, 2007
|
372
|
1.46
|
$ |
12,498
|
Restricted
Stock Awards
Nine Months
Ended
(
In
thousands, except per share data)
|
Number
of
Restricted
Shares
|
Remaining
Contractual
Life
(Yrs)
|
Weighted
Average
Aggregate
Intrinsic
Value
|
||||||||
Outstanding
as of December 29, 2006
|
259
|
|
|
||||||||
Granted
|
131
|
|
|
||||||||
Restrictions
lapsed
|
(5
|
) |
|
|
|||||||
Forfeited
|
(13
|
) |
|
|
|||||||
Outstanding
as of September 28, 2007
|
372
|
1.46
|
$ |
12,498
|
·
|
Government
contracts
- Most of our government contracts cover several
years. However, funding for the contracts is subject to annual
appropriations by Congress. To account for the risk that future
amounts
may not be appropriated, we only include the next two years of
forecast
revenue in our new work and backlog. Therefore, as time passes
and
appropriations occur, additional new work is recorded on existing
government contracts.
|
·
|
Mining
contracts
- Mining contracts span varying periods of time
up
to the life of the resource. For new work and backlog purposes,
we limit
the amount recorded to five years. Similar to our practices with
government contracts, as time passes, we recognize additional
new work as
commitments for that future work are firmed
up.
|
·
|
At-risk
and agency contracts
- The amount of new work and related
backlog recognized depends on whether the contract or project
is
determined to be an "at-risk" or "agency" relationship between
the
customer and us. For at-risk relationships, the expected gross
revenue is
included in new work and backlog. For relationships where we
act as an
agent for our customer, only the expected net fee revenue is
included in
new work and backlog.
|
|
Three
Months Ended
|
Nine
Months Ended
|
||||||||||||||
NEW
WORK
(In
millions)
|
September
28,
2007
|
September
29,
2006
|
September
28,
2007
|
September
29,
2006
|
||||||||||||
Power
|
$ |
277.6
|
$ |
661.3
|
$ |
911.5
|
$ |
933.6
|
||||||||
Infrastructure |
79.5
|
189.5
|
356.4
|
351.0
|
||||||||||||
Mining
|
105.3
|
38.6
|
525.4
|
301.9
|
||||||||||||
Industrial/Process |
118.3
|
74.8
|
531.7
|
487.9
|
||||||||||||
Defense |
178.6
|
112.1
|
481.8
|
340.1
|
||||||||||||
Energy & Environment |
325.0
|
157.3
|
824.2
|
452.8
|
||||||||||||
Other |
(0.2
|
) |
2.5
|
0.3
|
1.7
|
|||||||||||
Total new work | $ |
1,084.1
|
$ |
1,236.1
|
$ |
3,631.3
|
$ |
2,869.0
|
|
Three
Months Ended
|
Nine
Months Ended
|
||||||
(In
millions)
|
September
28, 2007
|
September
28, 2007
|
||||||
Power
|
|
|
||||||
Clean
air modification
projects
|
$ |
95.5
|
$ |
341.4
|
||||
New
generation
projects
|
84.3
|
324.6
|
||||||
New
nuclear
programs
|
73.7
|
129.0
|
||||||
Infrastructure
|
||||||||
Engineering
services
|
24.0
|
73.3
|
||||||
Light
rail preliminary
engineering services project
|
─
|
65.2
|
||||||
Mining
|
||||||||
New contract mining services projects |
─
|
359.3 | ||||||
Contract mining services project continuations
|
64.7
|
120.9
|
||||||
Industrial/Process
|
||||||||
Construction
of a cement plant
in Missouri
|
─
|
139.3
|
||||||
Facilities
management
outsourcing contracts
|
─
|
85.1
|
||||||
Oil
and gas
projects
|
85.4
|
182.1
|
||||||
Defense
|
||||||||
Chemical
demilitarization
contract continuations
|
131.0
|
418.9
|
||||||
Energy
& Environment
|
||||||||
Department
of Energy contract
extensions and continuations
|
116.4
|
422.5
|
||||||
Recompete
award of Department
of Energy project in New York
|
119.1
|
119.1
|
||||||
Consulting
services
|
40.1
|
88.3
|
|
Three
Months Ended
|
Nine
Months Ended
|
||||||||||||||
CHANGES
IN BACKLOG
(In
millions)
|
September
28,
2007
|
September
29,
2006
|
September
28,
2007
|
September
29,
2006
|
||||||||||||
Beginning
backlog
|
$ |
6,170.6
|
$ |
4,711.4
|
$ |
5,604.8
|
$ |
4,880.3
|
||||||||
New
work
|
1,084.1
|
1,236.1
|
3,631.3
|
2,869.0
|
||||||||||||
Adjustments
to backlog
|
(20.0
|
) |
─
|
(199.3
|
) |
(66.6
|
) | |||||||||
Revenue
and equity income recognized
|
(1,079.4
|
) |
(836.7
|
) |
(2,881.5
|
) |
(2,571.9
|
) | ||||||||
Ending backlog | $ |
6,155.3
|
$ |
5,110.8
|
$ |
6,155.3
|
$ |
5,110.8
|
BACKLOG
(In
millions)
|
|
September
28,
2007
|
|
|
June
29,
2007
|
|
|
December
29,
2006
|
|
|||
Power
|
|
$
|
1,406.6
|
|
|
$
|
1,404.9
|
|
|
$
|
1,262.0
|
|
Infrastructure
|
|
|
665.3
|
|
|
|
765.2
|
|
|
|
799.6
|
|
Mining
|
|
|
935.5
|
|
|
|
907.5
|
|
|
|
733.3
|
|
Industrial/Process
|
|
|
1,246.5
|
|
|
|
1,328.1
|
|
|
|
1,227.6
|
|
Defense
|
|
|
976.4
|
|
|
|
964.7
|
|
|
|
953.6
|
|
Energy
& Environment
|
|
|
925.0
|
|
|
|
800.2
|
|
|
|
628.7
|
|
Total
backlog
|
|
$
|
6,155.3
|
|
|
$
|
6,170.6
|
|
|
$
|
5,604.8
|
|
|
Three
Months Ended
|
Nine
Months Ended
|
||||||||||||||
(In
millions)
|
September
28,
2007
|
September
29,
2006
|
September
28,
2007
|
September
29,
2006
|
||||||||||||
Revenue
|
$ |
1,063.9
|
$ |
824.4
|
$ |
2,853.1
|
$ |
2,542.8
|
||||||||
Gross
profit
|
60.4
|
15.5
|
138.4
|
115.9
|
||||||||||||
Equity
in income of unconsolidated affiliates
|
25.1
|
12.3
|
38.0
|
29.1
|
||||||||||||
General and administrative expenses |
(18.6
|
) |
(20.6
|
) |
(56.2
|
) |
(55.6
|
) | ||||||||
Operating income |
66.9
|
7.2
|
120.2
|
89.4
|
||||||||||||
Interest income |
2.2
|
3.0
|
6.9
|
8.1
|
||||||||||||
Interest expense | (1.4 | ) | (1.2 | ) | (4.4 | ) | (4.8 | ) | ||||||||
Write-off of deferred financing fees |
─
|
(5.1 | ) |
─
|
(5.1 | ) | ||||||||||
URS Corporation merger related costs | (1.6 | ) |
─
|
(8.3 | ) |
─
|
||||||||||
Other income (expense), net |
─
|
(0.2 | ) | (0.3 | ) | (0.1 | ) | |||||||||
Income
before income taxes and minority interests
|
66.1
|
3.7
|
114.1
|
87.5
|
||||||||||||
Income tax expense |
(26.8
|
) |
(1.6
|
) |
(48.3
|
) |
(35.3
|
) | ||||||||
Minority
interests in (income) loss of consolidated subsidiaries,
net of
tax
|
(2.9
|
) |
2.2
|
(5.6
|
) |
(0.2
|
) | |||||||||
Net income | $ |
36.4
|
$ |
4.3
|
$ | 60.2 | $ |
52.0
|
(In
millions)
|
Three
Months
|
Nine
Months
|
||||||
Operating
income for the periods ended September 29, 2006
|
$ |
7.2
|
$ |
89.4
|
||||
Increase
in earnings from continuing contracts
|
21.1
|
41.5
|
||||||
Increase
in earnings from new contracts, primarily Power and
Industrial/Process
|
20.9
|
40.5
|
||||||
Decrease
in earnings from completion of contracts
|
(6.2 | ) | (8.0 | ) | ||||
Improved
performance on contract mining projects
|
2.9
|
13.1
|
||||||
Gain
on sale of interest in coal mine
|
9.6
|
9.6
|
||||||
Fee
recognized on Department of Energy construction project related
to
work
performed
in prior
periods
|
9.0
|
9.0
|
||||||
Increase
due to claim settlement
|
─
|
5.4
|
||||||
Decrease
in earnings on Department of Energy management services
contract
|
─
|
(35.9 | ) | |||||
Decrease
in earnings from task order work in the Middle East
|
(5.8 | ) | (26.2 | ) | ||||
Significant
highway project losses in 2006
|
30.3
|
39.2
|
||||||
Significant
highway project loss in 2007
|
(4.2
|
) | (29.7 | ) | ||||
Increase
(decrease) in earnings from MIBRAG mining venture
|
5.0
|
(0.3 | ) | |||||
Increase
in incentive compensation expense based on earnings
|
(13.4 | ) | (2.2 | ) | ||||
Higher
business development costs related to various Department of Energy
procurements and UK nuclear cleanup
|
(9.5 | ) | (20.0 | ) | ||||
Decrease
(increase) in overhead and general and administrative
expenses
|
2.0
|
(6.2 | ) | |||||
Other
|
(2.0 | ) | 1.0 | |||||
Net
increase
|
59.7
|
30.8
|
||||||
Operating
income for the periods ended September 28, 2007
|
$ |
66.9
|
$ |
120.2
|
|
Three
Months Ended
|
Nine
Months Ended
|
||||||||||||||
(In
millions)
|
September
28,
2007
|
September
29,
2006
|
September
28,
2007
|
September
29,
2006
|
||||||||||||
Revenue | ||||||||||||||||
Power
|
$
|
275.9
|
$
|
170.7
|
$
|
766.9
|
$ |
580.6
|
||||||||
Infrastructure
|
165.6
|
142.7
|
423.6
|
436.9
|
||||||||||||
Mining
|
63.1
|
54.3
|
177.9
|
120.7
|
||||||||||||
Industrial/Process |
200.0
|
121.2
|
512.3
|
371.4
|
||||||||||||
Defense |
160.6
|
145.7
|
449.6
|
438.9
|
||||||||||||
Energy & Environment |
198.8
|
187.3
|
522.4
|
592.5
|
||||||||||||
Intersegment and other | (0.1 | ) | 2.5 | 0.4 | 1.8 | |||||||||||
Total revenue |
$
|
1,063.9
|
$ | 824.4 | $ |
2,853.1
|
$ | 2,542.8 | ||||||||
|
|
|||||||||||||||
Operating income (loss) |
|
|||||||||||||||
Power
|
$ |
16.0
|
$ |
11.6
|
45.5
|
33.9
|
||||||||||
Infrastructure |
6.2
|
(17.8
|
) |
(6.3
|
) |
(18.1
|
) | |||||||||
Mining |
26.3
|
9.8 | 42.1 | 15.2 | ||||||||||||
Industrial/Process |
3.8
|
(2.9 | ) | 10.4 | 3.8 | |||||||||||
Defense |
13.3
|
10.7 | 39.3 | 35.3 | ||||||||||||
Energy & Environment |
20.2
|
16.4 | 45.5 | 77.8 | ||||||||||||
Intersegment and other unallocated operating costs | (0.3 | ) |
─
|
(0.1 | ) | (2.9 | ) | |||||||||
Total segment operating income |
85.5
|
27.8 | 176.4 | 145.0 | ||||||||||||
General
and administrative
expenses,corporate
|
(18.6
|
) |
(20.6
|
) |
(56.2
|
) |
(55.6
|
) | ||||||||
Total operating income | $ |
66.9
|
$ |
7.2
|
$ | 120.2 | $ |
89.4
|
·
|
Business
unit mix.
Our working capital requirements are unique
by
business unit, and changes in the type, size and stage of
completion of
contracts performed by our business units can impact our
working capital
requirements. Also, growth in the business requires working
capital
investment and the purchase of construction and mining
equipment.
|
·
|
Commercial
terms.
The commercial terms of our contracts with
customers
and subcontractors may vary by business unit, contract type
and customer
type and utilize a variety of billing and payment terms.
These could
include customer advances, milestone payment schedules, monthly
or
bi-monthly billing cycles, and performance based incentives.
Additionally,
some customers have requirements on billing documentation
including
documentation from subcontractors, which may increase the
level of billing
complexity and cause delays in the billing cycle and collection
cycle from
period to period.
|
·
|
Contract
life cycle.
Our contracts typically involve initial cash
for
working capital during the start-up phase, reach a cash neutral
position
and eventually experience a reduction of working capital
during the
wind-down and completion of the
project.
|
·
|
Delays
in execution.
At times, we may experience delays in
scheduling and performance of our contracts and encounter
unforeseen
events or issues that may negatively affect our cash
flow.
|
Liquidity
(
In millions
)
|
September
28,
2007
|
December
29,
2006
|
||||||
Cash
and cash equivalents
|
$ |
211.5
|
$ |
232.1
|
||||
Restricted
cash
|
85.3
|
65.5
|
||||||
Total
|
$ |
296.8
|
$ |
297.6
|
Nine
Months Ended
|
||||||||
Cash
flow activities
(
In millions
)
|
September
28,
2007
|
September
29,
2006
|
||||||
Net
cash provided (used) by:
|
|
|
||||||
Operating
activities
|
$ |
37.5
|
$ |
3.1
|
||||
Investing
activities
|
(68.4 | ) | (48.3 | ) | ||||
Financing
activities
|
10.3
|
6.6
|
||||||
Decrease
in cash and cash equivalents
|
$ | (20.6 | ) | $ | (38.6 | ) |
·
|
Operating
activities:
For the nine months ended September
28, 2007, operating activities provided $37.5 million of cash.
During the
period, operating activities included net income of $60.2 million
and
several significant non-cash expenses including non-cash income
taxes of
$44.9 million, depreciation and amortization of $31.2 million
and
stock-based compensation of $11.9 million. Cash flow was impacted
by an
increase in working capital of $88.2 million principally due
to working
capital requirements for new and expanding projects; and includes
$53.1
million of cash to fund losses on a highway project, partially
offset by
the collection of a significant performance based incentive fee
on a
Department of Energy management services contract. Working capital
requirements for the US Army Corps of Engineers task orders in
the Middle
East increased $1.1 million to $21.6 million at September 28,
2007 from
$20.5 million at December 29, 2006.
For
the nine months ended September 29,
2006, operating activities provided $3.1 million of cash. During
the
period, operating activities included net income of $52.0 million
and
several significant non-cash expenses including non-cash income
taxes of
$35.0 million, depreciation and amortization of $33.3 million,
amortization and write-off of financing fees of $6.4 million
and
stock-based compensation of $8.2 million. Cash flow was impacted
by an
increase in working capital requirements of $107.9 million principally
due
to the recognition of significant performance based incentive
fees on a
Department of Energy management services contract, payment of
which was
received in the first quarter of 2007, funding the losses on
highway
projects, other project working capital requirements and payments
made for
incentive compensation. At September 29, 2006, working capital
requirements related to work in the Middle East declined to $38.2
million
from $58.0 million at December 30,
2005.
|
·
|
Investing
activities:
During the nine months ended
September 28, 2007, investing activities used $68.4 million of
cash,
primarily to acquire mining equipment. During the nine months
ended September 28, 2007, new contracts to perform mining services
for
major international natural-resource companies have required
$110.9
million of capital expenditures for mining equipment. We have
sold and are leasing back under operating leases $45.2 million
of mining
equipment acquired through September 28, 2007. Also during the
nine months
ended September 28, 2007, we sold our interest in a coal mine
for $13.5
million.
During
the nine months ended September 29,
2006, investing activities used $48.3 million of cash, primarily
for
property and equipment acquisitions for our Infrastructure and
Mining
business units. In connection with new contract mining projects in
Jamaica, we acquired an existing operating company for cash consideration
of $6.1 million and the assumption of a $1.7 million note payable.
The
assets acquired consisted primarily of trade receivables, spare
parts
inventory and mining equipment.
|
·
|
Financing
activities:
During the nine months ended
September 28, 2007, financing activities generated $10.3 million
of cash.
Options to purchase 353,000 shares of common stock were exercised
generating $10.2 million of cash. An additional $0.7 million
of cash was
received in January 2007 for options exercised at the end of
December
2006.
During
the nine months ended September 29,
2006, financing activities generated $6.6 million of cash. During
the
period, we purchased and cancelled 2.0 million warrants at a
cost of $35.6
million; 2.3 million warrants were exercised providing proceeds
of $71.2
million and the remaining 192,000 warrants expired. Options to
purchase
549,000 shares of common stock were exercised generating $13.4
million in
cash and we purchased 761,000 shares of our common stock for
$44.0
million. In addition, as described above under Investing activities,
during the nine months ended September 29, 2006 we assumed a
$1.7 million
note payable which was immediately paid in
full.
|
·
|
Operating
Activities:
During the nine months ended
September 28, 2007, we have used $53.1 million of cash to fund
a highway
project loss and expect to fund an additional $20 million to
$30 million
during the remainder of 2007. Other than the highway loss, other
working
capital requirements have used $35.1 million of cash year to
date through
September 28, 2007. We do not expect working capital to continue
to
increase in the last quarter of
2007.
|
·
|
Property
and equipment:
Capital expenditures, net of proceeds from
sales of property and equipment and sales of mining equipment
leased back,
along with normal capital expenditures to upgrade our information
systems
hardware and software, have amounted to $62.1 million through
September
28, 2007. We have sold and are leasing back under operating lease
arrangements $45.2 million of mining equipment acquired through
September
28, 2007. We expect to acquire approximately $9 million of additional
mining equipment during the remainder of 2007, of which approximately
$5
million will also be sold and leased back under operating lease
arrangements. We do not expect significant additional capital
expenditures
through the remainder of 2007. We expect depreciation expense
to amount to
approximately $37 million in 2007.
|
·
|
Income
taxes:
Because of anticipated utilization of tax goodwill
amortization of $62.1 million, and the availability of approximately
$76.4
million of NOL carryovers and foreign tax credits, we will likely
not pay
federal taxes, other than a minimal amount for alternative minimum
tax. We
will pay state and foreign income
taxes.
|
·
|
Pension
and post-retirement benefit obligations:
We expect to fund
$9.1 million of our pension and post-retirement benefit obligations
during
2007 as compared to $14.0 million in 2006. We estimate financial
statement
expense under these plans to be approximately $4.8 million in
2007 as
compared to $6.7 million in 2006. As of September 28, 2007, $6.7
million
of contributions have been made to the pension and post-retirement
plans.
|
|
Three
Months Ended
|
Nine
Months Ended
|
||||||||||||||
(In
millions)
|
September
28,
2007
|
September
29,
2006
|
September
28,
2007
|
September
29,
2006
|
||||||||||||
Net
income
|
$ |
36.4
|
$ |
4.3
|
$ |
60.2
|
$ |
52.0
|
||||||||
Interest
expense
(a)
|
1.4
|
6.3
|
4.4
|
9.9
|
||||||||||||
Income
tax expense
|
26.8
|
1.6
|
48.3
|
35.3
|
||||||||||||
Depreciation and amortization |
10.1
|
10.3
|
31.2
|
33.3
|
||||||||||||
EBITDA | $ |
74.7
|
$ |
22.5
|
$ |
144.1
|
$ |
130.5
|
|
Three
Months Ended
|
Nine
Months Ended
|
||||||||||||||
(In
millions)
|
September
28,
2007
|
September
29,
2006
|
September
28,
2007
|
September
29,
2006
|
||||||||||||
EBITDA
|
$ |
74.7
|
$ |
22.5
|
$ |
144.1
|
$ |
130.5
|
||||||||
Interest
expense
|
(1.4
|
) |
(6.3
|
) |
(4.4
|
) |
(9.9
|
) | ||||||||
Income
tax expense
|
(26.8
|
) |
(1.6
|
) |
(48.3
|
) |
(35.3
|
) | ||||||||
Cash paid for reorganization items | (0.2 | ) | (0.8 | ) | (1.4 | ) | (1.8 | ) | ||||||||
Amortization of deferred financing fees | 0.2 | 5.3 | 0.7 | 6.4 | ||||||||||||
Non-cash income tax expense | 25.7 | 4.9 | 44.9 | 35.0 | ||||||||||||
Minority interests in income (loss) of consolidated subsidiaries, net of tax | 2.9 | (2.2 | ) | 5.6 | 0.2 | |||||||||||
Equity in income of unconsolidated affiliates, less dividends received | (7.9 | ) | (7.2 | ) | (8.5 | ) | (15.9 | ) | ||||||||
Gain on sale of interest in coal mine | (9.6 | ) |
─
|
(9.6 | ) |
─
|
||||||||||
Gain on sale of assets, net | (0.6 | ) | (0.9 | ) | (6.0 | ) | (1.7 | ) | ||||||||
Stock-based compensation expense | 3.7 | 2.2 | 11.9 | 8.2 | ||||||||||||
Excess tax benefits from exercise of stock options | (0.4 | ) | (0.6 | ) | (3.3 | ) | (4.7 | ) | ||||||||
Changes in operating assets, liabilities and other | (3.5 | ) | (37.2 | ) | (88.2 | ) | (107.9 | ) | ||||||||
Net cash provided (used) by operating activities | $ | 56.8 | $ | (21.9 | ) | $ | 37.5 | $ | 3.1 | |||||||
Net cash provided by operating activities for the nine months ended September 28, 2007 | $ | 37.5 | ||||||||||||||
Less: Net cash used by operating activities for the six months ended June 29, 2007 | (19.3 | ) | ||||||||||||||
Net cash provided by operating activities for the three months ended September 28, 2007 | $ | 56.8 | ||||||||||||||
Net cash provided by operating activities for the nine months ended September 29, 2006 | $ | 3.1 | ||||||||||||||
Less: Net cash provided by operating activities for the six months ended June 30, 2006 |
|
25.0
|
|
|
||||||||||||
Net cash used by operating activities for the three months ended September 29, 2006 |
|
$ |
(21.9
|
) |
|
|
·
|
CEO
and CFO certificates
Attached
as
Exhibits 31.1 and 31.2 to this report on Form 10-Q are two
certifications,
one each by the CEO and the CFO. They are required in accordance
with Rule
13a-14 of the Exchange Act. This Item 4, Controls and Procedures,
includes
the information concerning the controls evaluation referred
to in the
certifications and should be read in conjunction with the
certifications.
|
·
|
Disclosure
controls
“Disclosure
Controls” are controls and procedures that are designed to reasonably
ensure that information required to be disclosed in our reports
filed
under the Securities Exchange Act of 1934, such as this report
on Form
10-Q, is recorded, processed, summarized and reported within
the time
periods specified in the Securities and Exchange Commission
rules and
forms. Disclosure Controls are also designed to ensure that
information
required to be disclosed is accumulated and communicated to
our
management, including our CEO and CFO, as appropriate to allow
timely
decisions regarding required
disclosures.
|
·
|
Internal
control over financial reporting
Our
Disclosure Controls include components of our “Internal Control over
Financial Reporting.” Internal Control over Financial Reporting is a
process designed by, or under the supervision of our principal
executive
and principal financial officers, and effected by our Board
of Directors,
management and other personnel, to provide reasonable assurance
regarding
the reliability of financial reporting and the preparation
of financial
statements for external purposes in accordance with generally
accepted
accounting principles and includes those policies and procedures
that:
|
§
|
Pertain
to the maintenance of records that in reasonable detail accurately
and
fairly reflect the transactions and dispositions of our
assets;
|
§
|
Provide
reasonable assurance that transactions are recorded as necessary
to permit
preparation of financial statements in accordance with generally
accepted
accounting principles, and that our receipts and expenditures
are being
made only in accordance with authorizations of our management
and
directors; and
|
§
|
Provide
reasonable assurance regarding prevention or timely detection
of
unauthorized acquisition, use or disposition of our assets that
could have
a material effect on the financial
statements.
|
·
|
Limitations
on the effectiveness of controls
Our
management,
including the CEO and CFO, does not expect that our Disclosure
Controls
and/or our Internal Control over Financial Reporting will prevent
or
detect all error or fraud. A system of controls is able to provide
only
reasonable, not complete, assurance that the control objectives
are being
met, no matter how extensive those control systems may be. Also,
control
systems must be established considering the benefits of a control
system
relative to its costs. Because of these inherent limitations
that exist in
all control systems, no evaluation of controls can provide absolute
assurance that all errors or fraud, if any, have been detected.
The
inherent limitations in control systems include various human
and system
factors that may include errors in judgment or interpretation
regarding
events or circumstances or inadvertent error. Additionally, controls
can
be circumvented by the acts of a single person, by collusion
on the part
of two or more people or by management override of the control.
Over time,
controls can also become ineffective as conditions, circumstances,
policies, technologies, level of compliance and people change.
Because of
such inherent limitations, in any cost-effective control system
over
financial information, misstatements may occur due to error or
fraud and
may not be detected.
|
·
|
Scope
of evaluation of Disclosure Controls
The
evaluation of our Disclosure Controls performed by our CEO
and CFO
included obtaining an understanding of the design and objectives
of the
controls, the implementation of those controls and the results
of the
controls on this report on Form 10-Q. We have established a
Disclosure
Committee whose duty is to perform procedures to evaluate the
Disclosure
Controls and provide the CEO and CFO with the results of their
evaluation
as part of the information considered by the CEO and CFO in
their
evaluation of Disclosure Controls. In the course of the evaluation
of
Disclosure Controls, we reviewed the controls that are in place
to record,
process, summarize and report, on a timely basis, matters that
require
disclosure in our reports filed under the Securities Exchange
Act of 1934.
We also considered the adequacy of the items disclosed in this
report on
Form 10-Q.
|
·
|
Conclusions
Based
upon the evaluation of our Disclosure Controls described above,
our CEO
and CFO have concluded that, subject to the limitations described
above,
our Disclosure Controls are effective to provide reasonable
assurance that
material information relating to Washington Group International
and its
consolidated subsidiaries is made known to management, including
the CEO
and CFO, so that required disclosures have been included in
this report on
Form 10-Q.
We
have
also reviewed our Internal Control Over Financial Reporting
during the
most recent fiscal quarter, and our CEO and CFO have concluded
that there
have been no changes that have materially affected, or are
reasonably
likely to materially affect, our internal control over financial
reporting.
|
·
|
We
may not realize any or all of the potential benefits of the merger,
including any synergies that could result from combining the
financial and
proprietary resources of Washington Group International and
URS;
|
·
|
We
will remain liable for significant transaction costs, including
legal,
accounting, financial advisory and other costs relating to the
merger;
|
·
|
Under
some circumstances, we may have to pay a termination fee to URS
in the
amount of $70 million;
|
·
|
The
attention of our management and our employees may be diverted
from
day-to-day operations;
|
·
|
Our
customers may seek to modify or terminate existing agreements,
or
prospective customers may delay entering into new agreements
or purchasing
our products as a result of the announcement of the merger;
and
|
·
|
Our
ability to attract new employees and retain our existing employees
may be
harmed by uncertainties associated with the
merger.
|
WASHINGTON
GROUP INTERNATIONAL, INC.
|
|||
October
31,
2007
|
By:
|
/s/ George H. Juetten | |
George
H. Juetten
|
|||
Executive
Vice President and Chief Financial Officer, in his respective
capacities
as such
|
10.1
|
Waiver
and Agreement dated as of July 13, 2007, among the Company, Credit
Suisse
(individually and as administrative agent), and certain lenders
under that
certain Second Amended and Restated Credit Agreement dated as
of June 14,
2005 (as amended) (filed as Exhibit 10.1 to Washington Group
International’s Form 8-K Current Report filed on July 16, 2007, and
incorporated herein by
reference).
|
31.1*
|
Certification
of the Principal Executive Officer of Washington Group International,
pursuant to Section 302 of the Sarbanes-Oxley Act of
2002.
|
31.2*
|
Certification
of the Principal Financial Officer of Washington Group
International,
pursuant to Section 302 of the Sarbanes-Oxley Act of
2002.
|
32.1†
|
Certification
pursuant to 18 U.S.C. Section 1350, as adopted pursuant
to Section 906 of
the Sarbanes-Oxley Act of
2002.
|
1 Year Washington Grp Int# Chart |
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