URS Corporation Reports Third Quarter Results for Fiscal 2005; Revenues Increased 12%; Net Income up 21% from the Comparable Period in 2004

Diluted earnings per share ("EPS") for the third quarter were$0.58, compared to diluted EPS of $0.55 for the comparable period in2004. Weighted-average shares outstanding for the third quarter of2005 for purposes of calculating diluted EPS were 50.1 million,compared to 43.6 million weighted-average shares outstanding for thecomparable period of 2004. The increase in weighted-average sharesoutstanding is the result of the Company's common stock offering inthe second quarter of fiscal 2005 and additional shares issuedpursuant to the Company's employee stock option and purchase plans.

During the quarter, the Company paid down $36 million of debt.URS' debt to total capitalization was 22% on September 30, 2005, downfrom 34% on December 31, 2004.

For the nine months ended September 30, 2005, revenues increasedby 11%, to $2.8 billion, from $2.6 billion for the comparable ninemonths of 2004. Net income for the nine months ended September 30,2005 was $56.5 million, including a pre-tax charge of $33.1 million,or $0.42 per share, net of tax, related to $127.2 million of noteredemptions, the retirement of $10.0 million of its 12 1/4% notes andthe restructuring of the Company's senior credit facility and theretirement of $1.8 million of its 6 1/2% debentures, all of which tookplace during the second and third quarters of fiscal 2005. Net incomefor the comparable period in 2004 was $44.5 million, including apre-tax charge of $27.4 million, or $0.41 per share net of tax,related to note redemptions of $260 million. (The note redemptions of$260 million and the $16.4 million after tax charge taken in thecomparable period of calendar 2004 were reported as part of theCompany's third quarter and fiscal year end results under its priorfiscal calendar.)

As of September 30, 2005, the Company's backlog was $3.7 billion,compared to $3.6 billion as of December 31, 2004.

Commenting on the Company's financial results, Martin M. Koffel,Chairman and Chief Executive Officer, stated: "Our results reflectrevenue growth across all four of our market sectors - federal, stateand local government, private and international - with particularlynoteworthy performance in our state and local government business,which is reflecting the recovery in the state budgets. In addition,our focus on cash management enabled us to make further progress withour debt reduction program, which has significantly reduced ourinterest expense and enhanced profitability."

Mr. Koffel added: "Fundamental conditions remain positive acrosseach of our market sectors, positioning us well for the balance of theyear and into 2006. Federal spending trends for defense and homelandsecurity continue to be strong, and tax revenues at the state andlocal levels have shown marked improvement. The recovery in state andlocal tax revenues, combined with the recently passed federal highwaybill, has cleared the way for additional infrastructure spending andis already resulting in new opportunities for URS. In addition, ourprivate sector and international businesses are continuing to benefitfrom our diversified business portfolio and strong relationships withkey private and public sector clients around the world."

Business Segments

In addition to providing consolidated financial results, theCompany provides separate financial information for its two segments:the URS Division and the EG&G Division. The URS Division includes theCompany's work in the state and local government market, the privatesector and the international business. In addition, the URS Divisionincludes a portion of the Company's federal business, consistingprimarily of facilities and environmental services. The EG&G Divisionprimarily serves the federal government market, providing a range ofoperations and maintenance and technical support services.

URS Division. For the third quarter of fiscal 2005, the URSDivision reported revenues of $625.0 million and operating income of$46.3 million, compared to revenues of $563.5 million and operatingincome of $44.3 million for the corresponding period in 2004.

For the nine months ended September 30, 2005, the URS Divisionreported revenues of $1.86 billion and operating income of $136.8million, compared to revenues of $1.71 billion and operating income of$129.4 million for the same period last year.

EG&G Division. For the third quarter of fiscal 2005, the EG&GDivision reported revenues of $339.8 million and operating income of$16.7 million, compared to revenues of $298.6 million and operatingincome of $15.7 million for the corresponding period in 2004.

For the nine months ended September 30, 2005, the EG&G Divisionreported revenues of $996.2 million and operating income of $47.4million, compared to revenues of $847.8 million and operating incomeof $41.4 million for the same period last year.

Outlook for the Remainder of Fiscal 2005

Based on revenue growth for the nine months of 2005 and thecontinued positive outlook for the Company's markets, URS isreaffirming its financial guidance for fiscal 2005. The Companycontinues to expect that consolidated revenues will be between $3.7billion and $3.8 billion for the year.

The Company continues to expect that net income for the year willbe approximately $102 million, excluding the charge of $20 million,net of tax, related to note redemptions during the year, or $82million including the charge. The Company continues to expect thatearnings per share for 2005 will be approximately $2.10 to $2.12,excluding the charge of $0.39 per share, net of tax, related to thenote redemptions, the resulting interest savings and the effect of thepublic stock offering we completed in the second quarter of fiscal2005.

The Company is raising its guidance regarding repayment of debtfor 2005. It now expects to repay approximately $100 million of debtduring fiscal 2005, excluding the debt redemption of $127 millionfunded by our stock offering completed during the second quarter.Previously, the Company had expected to repay approximately $80million of debt in fiscal 2005.

Web cast Information

URS will host a dial-in conference call on Wednesday, November 9,2005 at 11:00 a.m. (ET), to discuss its third quarter fiscal 2005results. A live web cast of this call will be available on theInvestor Relations portion of the URS website at www.urscorp.com.

URS Corporation offers a comprehensive range of professionalplanning and design, systems engineering and technical assistance,program and construction management, and operations and maintenanceservices for transportation, commercial/industrial, facilities,environmental, water/wastewater, homeland security, installations andlogistics, and defense systems. Headquartered in San Francisco, theCompany operates in more than 20 countries with approximately 28,000employees providing engineering and technical services to federal,state and local governmental agencies as well as private clients inthe chemical, pharmaceutical, oil and gas, power, manufacturing,mining and forest products industries (www.urscorp.com).

Statements contained in this earning release that are nothistorical facts may constitute forward-looking statements, includingstatements relating to the Company's future revenue, future earnings,future debt repayment and future business prospects. The Companybelieves that its expectations are reasonable and are based onreasonable assumptions. However, such forward-looking statements bytheir nature involve risks and uncertainties that could cause actualresults to differ materially from the results predicted. The potentialrisks and uncertainties include, but are not limited to: an economicdownturn; changes in the Company's book of business; the Company'scompliance with government contract procurement regulations; theCompany's dependence on government appropriations and procurements;the Company's ability to make accurate estimates; the Company'sability to bid on contracts and execute contracts and guarantees; theCompany's leveraged position; the Company's ability to service itsdebt; liability for pending and future litigation; the impact ofchanges in laws and regulations; the Company's ability to maintainadequate insurance coverage; a decline in defense spending; industrycompetition; the Company's ability to attract and retain keyindividuals; risks associated with SFAS 123(R); risks associated withinternational operations; project management and accounting softwarerisks; terrorist and natural disaster risks; the Company'srelationship with its labor unions; and other factors discussed morefully in the Company's Form 10-Q for the third quarter of fiscal 2005,as well as in other reports subsequently filed from time to time withthe Securities and Exchange Commission. The Company assumes noobligation to update any forward-looking statements.

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


URS CORPORATION AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS - UNAUDITED
(In thousands, except per share data)

September 30, December 31,
2005 2004
------------ ------------
ASSETS
Current assets:
Cash and cash equivalents, including
$27,213 and $59,175 of short-term money
market funds, respectively $ 86,823 $ 108,007
Accounts receivable, including retainage of
$41,064 and $43,844 respectively 592,666 579,953
Costs and accrued earnings in excess of
billings on contracts in process 470,561 400,418
Less receivable allowances (43,608) (38,719)
----------- -----------
Net accounts receivable 1,019,619 941,652
Deferred income taxes 21,945 20,614
Prepaid expenses and other assets 47,969 26,061
----------- -----------
Total current assets 1,176,356 1,096,334
Property and equipment at cost, net 144,797 142,907
Goodwill 1,006,253 1,004,680
Purchased intangible assets, net 5,831 7,749
Other assets 50,547 52,010
----------- -----------
$ 2,383,784 $ 2,303,680
=========== ===========
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Book overdraft $ 7,280 $ 70,871
Notes payable and current portion of long-
term debt 26,464 48,338
Accounts payable and subcontractors
payable, including retainage of $13,409
and $13,302, respectively 207,945 144,435
Accrued salaries and wages 175,974 171,004
Accrued expenses and other 62,595 59,914
Billings in excess of costs and accrued
earnings on contracts in process 109,470 84,393
----------- -----------
Total current liabilities 589,728 578,955
Long-term debt 335,069 508,584
Deferred income taxes 44,852 36,305
Other long-term liabilities 105,033 97,715
----------- -----------
Total liabilities 1,074,682 1,221,559
----------- -----------
Commitments and contingencies
Stockholders' equity:
Common shares, par value $.01; authorized
100,000 shares; 49,546 and 43,838 shares
issued, respectively; and 49,494 and
43,786 shares outstanding, respectively 495 438
Treasury stock, 52 shares at cost (287) (287)
Additional paid-in capital 909,506 734,843
Accumulated other comprehensive income 2,138 6,418
Retained earnings 397,250 340,709
----------- -----------
Total stockholders' equity 1,309,102 1,082,121
----------- -----------
$ 2,383,784 $ 2,303,680
=========== ===========


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

Three Months Ended Nine Months Ended
-------------------- -----------------------
September September September September
30, 2005 30, 2004 30, 2005 30, 2004
---------- --------- ----------- -----------

Revenues $962,940 $861,681 $2,846,556 $2,554,307
Direct operating expenses 627,199 548,589 1,836,655 1,617,948
-------- -------- ---------- ----------
Gross profit 335,741 313,092 1,009,901 936,359
Indirect, general and
administrative expenses 282,771 263,112 889,949 818,627
-------- -------- ---------- ----------
Operating income 52,970 49,980 119,952 117,732
Interest expense, net 4,513 10,326 24,771 43,597
-------- -------- ---------- ----------
Income before income taxes 48,457 39,654 95,181 74,135
Income tax expense 19,620 15,860 38,640 29,650
-------- -------- ---------- ----------
Net income 28,837 23,794 56,541 44,485
Other comprehensive income
(loss):
Minimum pension liability
adjustment -- -- (270) --
Foreign currency translation
adjustments (229) 600 (4,010) 1,596
-------- -------- ---------- ----------
Comprehensive income $ 28,608 $ 24,394 $ 52,261 $ 46,081
======== ======== ========== ==========
Net income per common
share:
Basic $ .59 $ .55 $ 1.23 $ 1.12
======== ======== ========== ==========
Diluted $ .58 $ .55 $ 1.20 $ 1.11
======== ======== ========== ==========
Weighted-average shares
outstanding:
Basic 48,934 43,388 45,836 39,661
======== ======== ========== ==========
Diluted 50,116 43,604 46,946 40,044
======== ======== ========== ==========


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

Three Months Ended Nine Months Ended
----------------------- ----------------------
September September September September
30, 2005 30, 2004 30, 2005 30, 2004
----------- ----------- ----------- ----------

Cash flows from
operating activities:
Net income $ 28,837 $ 23,794 $ 56,541 $ 44,485
---------- ---------- ---------- ---------
Adjustments to reconcile
net income to net cash
provided by operating
activities:
Depreciation and
amortization 9,356 10,044 29,225 31,003
Amortization of
financing fees 442 1,475 3,315 4,943
Gain on disposal of
property and
equipment (9) -- (319) --
Costs incurred for
extinguishment of
debt 18 1,562 33,125 27,393
Provision for doubtful
accounts 2,808 (891) 7,865 9,658
Deferred income taxes 4,080 710 7,216 (3,458)
Stock compensation 1,016 1,699 4,508 3,020
Tax benefit of stock
compensation 4,667 (81) 9,269 3,832
Changes in assets and
liabilities:
Accounts receivable
and costs and accrued
earnings in excess of
billings on contracts
in process (31,713) (53,164) (85,829) (37,137)
Prepaid expenses and
other assets (7,902) 5,209 (25,532) (5,886)
Accounts payable,
accrued salaries and
wages and accrued
expenses 20,393 35,380 70,779 26,073
Billings in excess of
costs and accrued
earnings on contracts
in process 10,317 10,736 25,077 (7,074)
Other long-term
liabilities 3,394 (2,379) 7,317 (80)
Other liabilities, net 245 (460) (8,603) 591
---------- ---------- ---------- ---------
Total adjustments
and changes 17,112 9,840 77,413 52,878
---------- ---------- ---------- ---------
Net cash from
operating activities 45,949 33,634 133,954 97,363
---------- ---------- ---------- ---------
Cash flows from
investing activities:
Payment of business
acquisition (1,353) -- (1,353) --
Proceeds from disposal
of property and
equipment 282 -- 2,182 --
Capital expenditures,
less equipment
purchased through
capital leases (7,802) (2,949) (16,897) (14,695)
---------- ---------- ---------- ---------
Net cash from
investing
activities (8,873) (2,949) (16,068) (14,695)
---------- ---------- ---------- ---------
Cash flows from
financing activities:
Long-term debt
principal payments (32,393) (20,976) (535,919) (288,633)
Long-term debt
borrowings 105 32 351,376 26,496
Net borrowings
(payments) under the
line of credit (3,039) 3,417 (16,750) 19,961
Net change in book
overdraft 6,251 (4,579) (63,591) (13,438)
Capital lease
obligations payments (4,313) (3,823) (11,184) (10,866)
Short-term note
borrowings 1,839 -- 3,714 1,540
Short-term note
payments (270) (1,447) (3,610) (1,557)
Proceeds from common
stock offering, net
of related expenses (3) -- 130,257 204,287
Proceeds from sale of
common stock from
employee stock
purchase plan and
exercise of stock
options 5,061 6,708 30,687 23,970
Tender and call
premiums paid for
debt extinguishment (2) (1,225) (19,421) (19,075)
Payments of financing
fees (213) (87) (4,629) (1,280)
---------- ---------- ---------- ---------
Net cash from
financing
activities (26,977) (21,980) (139,070) (58,595)
---------- ---------- ---------- ---------
Net increase
(decrease) in
cash and cash
equivalents 10,099 8,705 (21,184) 24,073
Cash and cash equivalents
at beginning of period 76,724 50,112 108,007 34,744
---------- ---------- ---------- ---------
Cash and cash equivalents
at end of period $ 86,823 $ 58,817 $ 86,823 $ 58,817
========== ========== ========== =========


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

Three Months Ended Nine Months Ended
----------------------- ----------------------
September September September September
30, 2005 30, 2004 30, 2005 30, 2004
----------- ----------- ----------- ----------
Supplemental information:
Interest paid $ 4,732 $ 13,406 $ 25,611 $ 48,336
========== ========== ========== =========
Taxes paid $ 6,925 $ 7,540 $ 28,285 $ 32,582
========== ========== ========== =========
Equipment acquired
through capital
lease obligations $ 2,328 $ 1,871 $ 14,891 $ 10,754
========== ========== ========== =========


URS CORPORATION AND SUBSIDIARIES
RECONCILIATION OF NET INCOME AND EARNINGS PER SHARE BEFORE LOSSES
FROM DEBT TRANSACTIONS

Our earnings release discusses net income and earnings per share
("EPS") for the three and nine months ended September 30, 2005 and
September 30, 2004, excluding the effect of the charges for the
redemptions and refinancing of debt. Excluding the effects of these
charges from net income and EPS is not in accordance with generally
accepted accounting principles ("GAAP"). We are providing these
non-GAAP measures to demonstrate the effect of the debt refinancing
charges on net income and EPS amounts for the three and nine months
ended September 30, 2005 and September 30, 2004. The debt refinancing
charges were not part of our normal, recurring business operations and
therefore, we believe these non-GAAP measures help investors gain a
more complete understanding of our business since they provide for a
more comprehensive comparison with our historical results. Net income
and EPS excluding the effects of these debt charges should not be used
as a substitute for net income and EPS prepared in conformity with
GAAP, or as a GAAP measure of profitability.

Net income and EPS, excluding the effects of debt redemptions and
refinancing charges for the three and nine months ended September 30,
2005 and September 30, 2004, are calculated as follows:

Three Months Ended September 30, 2005
-----------------------------------------------
Income Weighted-
before Income Average Earnings
Income Tax Net Shares per
Taxes Expense Income Outstanding Share
-------- -------- -------- ----------- --------
(In thousands, except per share data)
Amounts excluding the
effect below $48,475 $19,630 $28,845 50,116 $ 0.58
Effect of a charge
related to note
redemption and
refinancing of the Old
Credit Facility (18) (10) (8) 50,116 (0.00)
------- ------- ------- ------

Amounts reported under
GAAP $48,457 $19,620 $28,837 50,116 $ 0.58
======= ======= ======= ======


Nine Months Ended September 30, 2005
--------------------------------------------------
Income Weighted-
before Income Average Earnings
Income Tax Net Shares per
Taxes Expense Income Outstanding Share
-------- -------- -------- ----------- --------
(In thousands, except per share data)
Amounts excluding
the effect below $128,306 $52,090 $76,216 46,946 $ 1.62
Effect of a charge
related to note
redemptions and
refinancing of the
Old Credit Facility (33,125) (13,450) (19,675) 46,946 (0.42)
-------- -------- -------- ------
Amounts reported
under GAAP $ 95,181 $38,640 $56,541 46,946 $ 1.20
======== ======= ======= ======


URS CORPORATION AND SUBSIDIARIES
RECONCILIATION OF NET INCOME AND EARNINGS PER SHARE BEFORE LOSSES
FROM DEBT TRANSACTIONS

Three Months Ended September 30, 2004
-----------------------------------------------
Income Weighted-
before Income Average Earnings
Income Tax Net Shares per
Taxes Expense Income Outstanding Share
-------- -------- -------- ----------- --------
(In thousands, except per share data)
Amounts excluding the
effect below $41,216 $16,480 $24,736 43,604 $ 0.57
Effect of a charge
related to note
redemptions (1,562) (620) (942) 43,604 (0.02)
------- ------- ------- ------

Amounts reported under
GAAP $39,654 $15,860 $23,794 43,604 $ 0.55
======= ======= ======= ======

Nine Months Ended September 30, 2004
--------------------------------------------------
Income Weighted-
before Income Average Earnings
Income Tax Net Shares per
Taxes Expense Income Outstanding Share
-------- -------- -------- ----------- --------
(In thousands, except per share data)
Amounts excluding
the effect below $101,528 $ 40,610 $ 60,918 40,044 $ 1.52
Effect of a charge
related to note
redemptions (27,393) (10,960) (16,433) 40,044 (0.41)
-------- -------- -------- ------

Amounts reported
under GAAP $ 74,135 $ 29,650 $ 44,485 40,044 $ 1.11
======== ======== ======== ======


URS CORPORATION AND SUBSIDIARIES
RECONCILIATION OF PROJECTED NET INCOME AND EARNINGS PER SHARE
BEFORE ACCOUNTING FOR CERTAIN TRANSACTIONS

Our earnings release discusses projected net income and earnings
per share ("EPS") for fiscal year 2005, excluding the effect of the
charges for the redemptions and refinancing of debt. The table below
presents our EPS excluding the effects of (1) the additional four
million shares resulting from the Company's stock offering; (2) the
$33 million charge related to the charges for the Company's note
redemptions and refinancing of debt; and (3) the $10 million in
interest savings the Company expects to realize during fiscal year
2005 as a result of the note redemptions and the refinancing of debt.
Excluding the effects of these charges from net income and EPS is not
in accordance with generally accepted accounting principles ("GAAP").
We are providing these non-GAAP measures to demonstrate the projected
effects of our common stock offering and the related changes in our
capital structure for our total fiscal year 2005. The debt refinancing
charges were not part of our normal, recurring business operations and
therefore we believe these non-GAAP measures help investors gain a
more complete understanding of our business since they provide for a
more comprehensive comparison with our historical results. Net income
and EPS excluding the effects of these items should not be used as a
substitute for net income and EPS prepared in conformity with GAAP, or
as a GAAP measure of profitability.

Projected net income and EPS excluding the effects of the items
mentioned above for fiscal year are calculated as follows:

Fiscal Year 2005
---------------------------------------------------
Income Weighted-
before Income Average Earnings
Income Tax Net Shares per
Taxes Expense Income Outstanding Share
-------- -------- -------- ----------- --------
(In thousands, except per share data)
Projected amounts
excluding the
effects below $ 161,900 $ 66,400 $ 95,500 45,500 $ 2.10
Effect of public
stock offering -- -- -- 50,400 (0.08)
Effect of a charge
related to note
redemptions and
refinancing of the
Old Credit
Facility (33,100) (13,600) (19,500) 45,500 (0.43)
Effect of interest
savings due to
note redemptions
and refinancing of
the Old Credit
Facility 10,200 4,200 6,000 50,400 0.12
--------- -------- -------- -------

Amounts projected
under GAAP $ 139,000 $ 57,000 $ 82,000 48,000 $ 1.71
========= ======== ======== =======