PREM14A 1 f30792prem14a.htm PRELIMINARY PROXY STATEMENT - MERGER prem14a
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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
SCHEDULE 14A
Proxy Statement Pursuant to Section 14(a) of the Securities
Exchange Act of 1934
Filed by the Registrant þ
Filed by a Party other than the Registrant o
Check the appropriate box:
þ   Preliminary Proxy Statement
o   Confidential, for Use of the Commission Only (as permitted by Rule 14a-6(e)(2))
o   Definitive Proxy Statement
o   Definitive Additional Materials
o   Soliciting Material Pursuant to §240.14a-11(c) or §240.14a-12
URS CORPORATION
WASHINGTON GROUP INTERNATIONAL, INC.
 
(Name of Registrant as Specified In Its Charter)
 
 
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
o   No fee required.
þ   Fee computed on table below per Exchange Act Rules 14a-6(i)(1) and 0-11.
  (1)   Title of each class of securities to which transaction applies:
 
     
Common Stock, par value $0.01 per share, of URS Corporation
     
 
 
  (2)   Aggregate number of securities to which transaction applies:
 
      Approximately 24,900,000 shares of Common Stock of URS Corporation
     
 
 
  (3)   Per unit price or other underlying value of transaction computed pursuant to Exchange Act Rule 0-11 (set forth the amount on which the filing fee is calculated and state how it was determined):
 
      Pursuant to Section 14(g) of the Securities Exchange Act of 1934, as amended, the filing fee was determined on the basis of a maximum consideration of approximately $1,472,779,000 in cash consideration and approximately 24,900,000 shares of common stock of URS Corporation at $48.72 per share (the average of the high and low prices as reported on the New York Stock Exchange Composite Transaction Tape on July 11, 2007), multiplied by 0.0000307.
     
 
 
  (4)   Proposed maximum aggregate value of transaction:
 
      $2,685,907,000
     
 
 
  (5)   Total fee paid:
 
      $82,457.35
     
 
o   Fee paid previously with preliminary materials.
 
o   Check box if any part of the fee is offset as provided by Exchange Act Rule 0-11(a)(2) and identify the filing for which the offsetting fee was paid previously. Identify the previous filing by registration statement number, or the Form or Schedule and the date of its filing.
  (1)   Amount Previously Paid:
 
     
     
 
 
  (2)   Form, Schedule or Registration Statement No.:
 
     
     
 
 
  (3)   Filing Party:
 
     
     
 
 
  (4)   Date Filed:
 
     
     
 


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The information in this joint proxy statement/prospectus is not complete and may be changed. URS may not sell these securities until the registration statement filed with the Securities and Exchange Commission is effective. This joint proxy statement/prospectus is not an offer to sell securities and it is not soliciting an offer to buy nor shall there be any sale of these securities in any state where the offer, solicitation or sale is not permitted.
 
SUBJECT TO COMPLETION, DATED JULY 16, 2007
 
     
(COMPANY LOGO)
  (WASHINGTON GROUP LOGO)
 
MERGER PROPOSED — YOUR VOTE IS VERY IMPORTANT
 
The boards of directors of URS Corporation and Washington Group International, Inc. have each unanimously approved a merger that combines URS and Washington Group. We are proposing the merger because we believe it will benefit the stockholders of each of our respective companies by creating more stockholder value than either company could create individually, and allowing stockholders to participate in a larger, more diversified company.
 
If the proposed merger is completed, each outstanding share of Washington Group common stock will be converted into the right to receive 0.772 of a share of URS common stock and $43.80 in cash, without interest (other than those shares held by URS, any subsidiary of URS, Elk Merger Corporation or Bear Merger Sub and other than treasury shares and shares as to which a Washington Group stockholder has validly demanded and perfected appraisal rights under Delaware law). In the merger, URS expects to pay approximately $      billion in cash and issue approximately      million shares of URS common stock, based on Washington Group’s shares of common stock and equity awards outstanding as of          , 2007. Washington Group stockholders are expected to own approximately  % of the shares of URS common stock outstanding after the merger. The exchange ratio is fixed and will not be adjusted for changes in the stock prices of either company before the merger is consummated. URS stockholders will continue to own their existing shares of URS common stock, which generally should not be affected by the merger, other than by the dilution resulting from the issuance of URS common stock in the merger. URS common stock is traded on the New York Stock Exchange under the trading symbol “URS.” On          , 2007, URS common stock closed at $      per share as reported on the New York Stock Exchange Composite Transaction Tape.
 
The merger cannot be completed unless URS stockholders approve the issuance of shares of URS common stock in the merger and Washington Group stockholders adopt the merger agreement and approve the merger. The obligations of URS and Washington Group to complete the merger are also subject to the satisfaction or waiver of several other customary conditions. More information about URS, Washington Group and the proposed merger is contained in this joint proxy statement/prospectus. We encourage you to read carefully this joint proxy statement/prospectus before voting, including the section entitled “Risk Factors” beginning on page 20.
 
Based on its review, the board of directors of URS has determined that the merger agreement and the transactions contemplated by the merger agreement, including the merger, are advisable for, fair to and in the best interests of URS and its stockholders and has unanimously approved the merger agreement and the issuance of shares of URS common stock in the merger. Based on its review, the Washington Group board of directors has determined that the merger agreement and the transactions contemplated by the merger agreement, including the merger, are advisable for, fair to and in the best interests of Washington Group and its stockholders and has unanimously approved the merger agreement and the transactions contemplated by the merger agreement, including the merger.
 
The URS board of directors unanimously recommends that URS stockholders vote “FOR” the proposal to approve the issuance of shares of URS common stock pursuant to the merger agreement. The Washington Group board of directors unanimously recommends that Washington Group stockholders vote “FOR” the proposal to adopt the merger agreement and approve the merger.
 
The proposals are being presented to the respective stockholders of each company at their special meetings. The dates, times and places of the meetings are as follows:
 
     
For URS stockholders:
  For Washington Group stockholders:
          , 2007,   a.m., local time, at
            , 2007,     a.m., local time, at
     
     
     
     
     
     
Your vote is very important. Whether or not you plan to attend your company’s special meeting, please take the time to vote by completing and mailing to us the enclosed proxy card or, if the option is available to you, by granting your proxy electronically over the Internet or by telephone. If your shares are held in “street name,” you must instruct your broker, bank or nominee in order to vote.
 
Sincerely,
 
     
(-s- Martin M. Koffel)
  (-s- Stephen G. Hanks)
Martin M. Koffel
  Stephen G. Hanks
Chairman of the Board of Directors and
  President and Chief Executive Officer
Chief Executive Officer
  Washington Group International, Inc.
URS Corporation
   
 
Neither the Securities and Exchange Commission nor any state securities regulator has approved or disapproved of the transactions described in this joint proxy statement/prospectus or the securities to be issued pursuant to the merger or determined if the information contained in this joint proxy statement/prospectus is accurate or adequate. Any representation to the contrary is a criminal offense.
 
This joint proxy statement/prospectus is dated          , 2007, and is being mailed to stockholders of URS and Washington Group on or about          , 2007.


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(COMPANY LOGO)
 
URS CORPORATION
600 Montgomery Street, 26th Floor
San Francisco, California 94111-2728
 
NOTICE OF SPECIAL MEETING OF STOCKHOLDERS
TO BE HELD ON          , 2007
 
 
To the Stockholders of URS Corporation:
 
We will hold a special meeting of stockholders of URS at          , on          , 2007, at   a.m., local time, for the following purposes:
 
1. To consider and vote upon a proposal to approve the issuance of shares of URS common stock pursuant to the Agreement and Plan of Merger, dated as of May 27, 2007, by and among URS, Elk Merger Corporation, a wholly owned subsidiary of URS, Bear Merger Sub, Inc., a wholly owned subsidiary of URS, and Washington Group International, Inc., pursuant to which Elk Merger Corporation will merge with and into Washington Group, and each outstanding share of Washington Group common stock, other than those shares held by URS, any subsidiary of URS, Elk Merger Corporation or Bear Merger Sub and other than treasury shares and shares as to which a Washington Group stockholder has validly demanded and perfected appraisal rights under Delaware law, will be converted into the right to receive 0.772 of a share of URS common stock and $43.80 in cash, without interest.
 
2. To consider and vote upon a proposal to authorize the proxyholders to vote to adjourn or postpone the special meeting, in their sole discretion, to solicit additional proxies if there are not sufficient votes in favor of the foregoing.
 
3. To transact any other business as may properly come before the special meeting or any adjournments or postponements of the special meeting.
 
These items of business are described in the attached joint proxy statement/prospectus. Only URS stockholders of record at the close of business on          , 2007, the record date for the special meeting, are entitled to notice of and to vote at the special meeting and any adjournments or postponements of the special meeting.
 
The URS board of directors unanimously recommends that you vote “FOR” the proposal to approve the issuance of shares of URS common stock pursuant to the merger agreement and “FOR” the proposal to authorize the adjournment or postponement of the URS special meeting.
 
A list of stockholders eligible to vote at the URS special meeting will be available for inspection at the special meeting, and at the executive offices of URS during regular business hours for a period of no less than ten days prior to the special meeting.
 
Your vote is very important. It is important that your shares be represented and voted whether or not you plan to attend the special meeting in person. You may vote by completing and mailing the enclosed proxy card, or you may grant your proxy electronically via the Internet or by telephone. If your shares are held in “street name,” which means shares held of record by a broker, bank or other nominee, you should review the voting form used by that firm to determine whether you will be able to submit your proxy by telephone or over the Internet. Submitting a proxy over the Internet, by telephone or by mailing the enclosed proxy card will ensure your shares are represented at the special meeting. Please review the instructions in this joint proxy statement/prospectus and the enclosed proxy card or the information forwarded by your bank, broker or other holder of record regarding each of these options. For purposes of approving the issuance of shares of URS common stock, an abstention or your failure to vote or to instruct your broker, bank or nominee to vote if your shares are held in “street name” will have the same effect as


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voting against the proposal to approve the issuance of shares of URS common stock pursuant to the merger agreement.
 
By Order of the Board of Directors,
 
(-s- Martin M. Koffel)
Martin M. Koffel
Chairman of the Board of Directors and
Chief Executive Officer
URS Corporation
 
          , 2007


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(WASHINGTON GROUP LOGO)
 
WASHINGTON GROUP INTERNATIONAL, INC.
720 Park Boulevard, P.O. Box 73
Boise, Idaho 83729
 
NOTICE OF SPECIAL MEETING OF STOCKHOLDERS
TO BE HELD ON          , 2007
 
 
To the Stockholders of Washington Group International, Inc.:
 
We will hold a special meeting of stockholders of Washington Group at          , on          , 2007, at   a.m. local time, for the following purposes:
 
1. To consider and vote upon a proposal to adopt the Agreement and Plan of Merger, dated as of May 27, 2007, by and among URS, Elk Merger Corporation, a wholly owned subsidiary of URS, Bear Merger Sub, Inc., a wholly owned subsidiary of URS, and Washington Group, pursuant to which Elk Merger Corporation will merge with and into Washington Group, and each outstanding share of Washington Group common stock, other than those shares held by URS, any subsidiary of URS, Elk Merger Corporation or Bear Merger Sub and other than treasury shares and shares as to which a Washington Group stockholder has validly demanded and perfected appraisal rights under Delaware law, will be converted into the right to receive 0.772 of a share of URS common stock and $43.80 in cash, without interest, and approve such merger.
 
2. To consider and vote upon a proposal to authorize the proxyholders to vote to adjourn or postpone the special meeting, in their sole discretion, to solicit additional proxies if there are not sufficient votes in favor of the foregoing.
 
3. To transact any other business as may properly come before the special meeting or any adjournments or postponements of the special meeting.
 
These items of business are described in the attached joint proxy statement/prospectus. Only Washington Group stockholders of record at the close of business on          , 2007, the record date for the special meeting, are entitled to notice of and to vote at the special meeting and any adjournments or postponements of the special meeting.
 
The Washington Group board of directors has approved the merger agreement and the transactions contemplated by the merger agreement, including the merger, and unanimously recommends that you vote “FOR” the proposal to adopt the merger agreement and approve the merger and “FOR” the proposal to authorize the adjournment or postponement of the Washington Group special meeting.
 
A list of stockholders eligible to vote at the Washington Group special meeting will be available for inspection at the special meeting, and at the executive offices of Washington Group during regular business hours for a period of no less than ten days prior to the special meeting.
 
Your vote is very important. It is important that your shares be represented and voted whether or not you plan to attend the special meeting in person. You may vote by completing and mailing the enclosed proxy card, or you may grant your proxy electronically via the Internet or by telephone. If your shares are held in “street name,” which means shares held of record by a broker, bank or other nominee, you should review the voting form used by that firm to determine whether you will be able to submit your proxy by telephone or over the Internet. Submitting a proxy over the Internet, by telephone or by mailing the enclosed proxy card will ensure your shares are represented at the special meeting. Please review the instructions in this joint proxy statement/prospectus and the enclosed proxy card or the information forwarded by your bank, broker or other holder of record regarding each of these options. For purposes of adopting the merger agreement and approving the issuance of shares, an abstention or your failure to vote or to instruct your broker, bank or nominee to vote if your shares are held in “street name” will have the same effect as voting against the proposal to adopt the merger agreement and approve the merger.
 
By Order of the Board of Directors,
 
(-s- Stephen G. Hanks)
Stephen G. Hanks
President and Chief Executive Officer
Washington Group International, Inc.
 
          , 2007


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ADDITIONAL INFORMATION
 
This joint proxy statement/prospectus incorporates by reference important business and financial information about URS and Washington Group from documents that are not included in or delivered with this joint proxy statement/prospectus. For a more detailed description of the information incorporated by reference into this joint proxy statement/prospectus and how you may obtain it, see “Additional Information — Where You Can Find More Information” on page 144.
 
You can obtain any of the documents incorporated by reference into this joint proxy statement/prospectus from URS or Washington Group, as applicable, or from the Securities and Exchange Commission, which is referred to as the SEC, through the SEC’s website at http://www.sec.gov. Documents incorporated by reference are available from URS and Washington Group without charge, excluding any exhibits to those documents, unless the exhibit is specifically incorporated by reference as an exhibit in this joint proxy statement/prospectus. URS stockholders and Washington Group stockholders may request a copy of such documents in writing or by telephone by contacting the applicable department at:
 
     
URS Corporation
  Washington Group International, Inc.
600 Montgomery Street, 26th Floor
  720 Park Boulevard, P.O. Box 73
San Francisco, California 94111-2728
  Boise, Idaho 83729
Attn: Investor Relations
  Attn: Investor Relations
(877) 877-8970
  (866) 964-4636
 
In addition, you may obtain copies of the information relating to URS, without charge, by sending an e-mail to investor_relations@urscorp.com. You may obtain copies of some of this information by making a request through the URS investor relations website at http://www.urscorp.com/investor.
 
You may also obtain copies of the information relating to Washington Group, without charge, by sending an e-mail to investor.relations@wgint.com. You may obtain copies of some of this information by making a request through the Washington Group investor relations website at http://investor.wgint.com.
 
We are not incorporating the contents of the websites of the SEC, URS, Washington Group or any other person into this joint proxy statement/prospectus. We are providing the information about how you can obtain certain documents that are incorporated by reference into this joint proxy statement/prospectus at these websites only for your convenience.
 
In order for you to receive timely delivery of the documents in advance of the respective URS and Washington Group special meetings, URS or Washington Group, as applicable, must receive your request no later than          , 2007.
 
For information about where to obtain copies of documents, see “Additional Information — Where You Can Find More Information” on page 144.


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Annexes
   
       
  Agreement and Plan of Merger
  Opinion of Morgan Stanley & Co. Incorporated
  Opinion of Goldman Sachs & Co.
  Section 262 of the General Corporation Law of the State of Delaware


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QUESTIONS AND ANSWERS ABOUT THE MERGER
 
The following are some questions that you, as a stockholder of URS or Washington Group, may have regarding the merger and the other matters being considered at the respective special meetings of stockholders of URS and Washington Group and brief answers to those questions. URS and Washington Group urge you to read carefully the remainder of this joint proxy statement/prospectus because the information in this section does not provide all the information that might be important to you with respect to the merger and the other matters being considered at the respective special meetings of stockholders. Additional important information is also contained in the Annexes to and the documents incorporated by reference in this joint proxy statement/prospectus.
 
Q: Why are URS and Washington Group stockholders receiving this joint proxy statement/prospectus?
 
A: URS and Washington Group have agreed to the acquisition of Washington Group by URS under the terms of the merger agreement that is described in this joint proxy statement/prospectus. A copy of the merger agreement is attached to this joint proxy statement/prospectus as Annex A.
 
In order to complete the merger, URS stockholders must vote to approve the issuance of shares of URS common stock in the merger and Washington Group stockholders must adopt the merger agreement and approve the merger. URS and Washington Group will hold separate special meetings of their respective stockholders to obtain these approvals.
 
This joint proxy statement/prospectus contains important information about the merger, the merger agreement and the special meetings of the respective stockholders of URS and Washington Group, which you should read carefully. The enclosed voting materials allow you to vote your shares without attending your company’s special meeting.
 
Your vote is very important. We encourage you to vote as soon as possible.
 
Q: Why are URS and Washington Group proposing the merger?
 
A: The board of directors of each of URS and Washington Group believe that the merger will provide substantial benefits to their respective stockholders. Stockholders of both companies will have the opportunity to participate in a larger, more diversified company. The merger is expected to expand the capabilities of both URS and Washington Group, offer their customers a “single source” vendor that could offer a full lifecycle of planning, engineering, construction and operations and maintenance services and capitalize on their respective positions in important high growth sectors, including power, infrastructure, and environmental management. In addition, the combined company is expected to be a major contractor to the federal government, including a top five provider of technical services to the U.S. Department of Defense and a top provider of engineering, management and environmental services to the U.S. Department of Energy, in each case, based on anticipated project revenue. The board of directors of each of URS and Washington Group also believes that the combination will create a stronger and more competitive company that is capable of creating more stockholder value than either URS or Washington Group could on its own. To review in greater detail the reasons of the URS Board of Directors and the Washington Group Board of Directors for recommending the merger, see “The Merger — Recommendation of the URS Board of Directors and Its Reasons for the Merger” on page 64 and “The Merger — Recommendation of the Washington Group Board of Directors and Its Reasons for the Merger” on page 67.
 
Q: What will happen in the merger?
 
A: Pursuant to the terms of the merger agreement, a wholly owned subsidiary of URS will merge with and into Washington Group, with Washington Group continuing as the surviving corporation and a wholly owned subsidiary of URS. Immediately following this merger, URS will cause Washington Group to merge with and into another wholly owned subsidiary of URS, with this subsidiary continuing as the surviving corporation and a wholly owned subsidiary of URS, which subsidiary will be renamed “Washington Group International, Inc.” The first merger is referred to as the merger, the second merger is referred to as the second merger, and both mergers are collectively referred to as the transaction.


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Q: What consideration will Washington Group stockholders receive in the merger?
 
A: If the merger is completed, each outstanding share of Washington Group common stock, other than those shares held by URS, any subsidiary of URS, Elk Merger Corporation or Bear Merger Sub and other than treasury shares and shares as to which a Washington Group stockholder has validly demanded and perfected appraisal rights under Delaware law, will be converted into the right to receive 0.772 of a share of URS common stock and $43.80 in cash, without interest. Washington Group stockholders will also have the right to receive cash for any fractional share of URS common stock that they would be entitled to receive in the merger after aggregating all fractional shares to be received by them.
 
Q: Should Washington Group stockholders send in their Washington Group stock certificates now?
 
A: No. After the merger is completed, Washington Group stockholders will be sent written instructions for exchanging their stock certificates for the merger consideration.
 
Q: How will URS stockholders be affected by the transaction and issuance of URS common stock in the merger?
 
A: After the transaction, URS stockholders will continue to own their existing shares of URS common stock. Accordingly, URS stockholders will hold the same number of shares of URS common stock that they held immediately prior to the transaction. However, because URS will be issuing new shares of URS common stock to Washington Group stockholders in the merger, each outstanding share of URS common stock immediately prior to the merger will, after the merger, represent a smaller percentage ownership interest in URS.
 
Q: When do URS and Washington Group expect the merger to be completed?
 
A: URS and Washington Group are working to complete the merger as quickly as practicable and currently expect the merger to be completed in the second half of 2007. However, we cannot predict the exact timing of the completion of the merger because it is subject to customary conditions. See “Summary — Conditions to Completion of the Merger” on page 7. As a result, there may be a substantial period of time between the approval of the proposals by stockholders at the respective special meetings of URS and Washington Group stockholders and the effectiveness of the merger.
 
Q: What are the United States federal income tax consequences of the transaction?
 
A: It is generally expected that the merger and the second merger, taken together, will qualify as a reorganization within the meaning of Section 368(a) of the Internal Revenue Code of 1986, as amended, which is referred to as the Internal Revenue Code, and the consummation of the merger is conditioned on the receipt by each of URS and Washington Group of opinions from their respective counsel to the effect that the merger and the second merger, taken together, will so qualify. Assuming that the merger and the second merger, taken together, qualify as a reorganization under the Internal Revenue Code, then, in general, a Washington Group stockholder:
 
• will recognize gain (but not loss) with respect to its Washington Group common stock in an amount equal to the lesser of (i) any gain realized with respect to such stock or (ii) the amount of cash received with respect to such stock (other than any cash received instead of a fractional share of URS common stock); and
 
• will recognize gain (or loss) to the extent any cash received instead of a fractional share of URS common stock exceeds (or is less than) the basis of such fractional share.
 
Washington Group stockholders are also encouraged to consult their tax advisors for a full understanding of the tax consequences of the merger and the second merger. Tax matters are very complicated, and the tax consequences of the transaction to a Washington Group stockholder will depend on the facts of each stockholder’s own situation. For a description of the material federal income tax consequences of the merger and the second merger, taken together, to a Washington Group stockholder, please see the information set forth in “The Merger — Material United States Federal Income Tax Consequences” beginning on page 85.


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Q: Are URS and Washington Group stockholders entitled to appraisal rights?
 
A: Under Delaware law, holders of Washington Group common stock have the right to dissent from the merger and obtain payment in cash for the fair value of their shares of common stock, as determined by the Delaware Court of Chancery, rather than the merger consideration. To exercise their appraisal rights, Washington Group stockholders must strictly follow the procedures prescribed by Delaware law. These procedures are summarized under the section entitled “The Merger — Appraisal Rights” on page 88. In addition, the text of the applicable provision of Delaware law is included as Annex D to this joint proxy statement/prospectus.
 
Holders of URS common stock are not entitled to appraisal rights in connection with the issuance of URS common stock in the merger with respect to their URS shares.
 
Q: What are URS stockholders voting to approve?
 
A: URS stockholders are voting on a proposal to approve the issuance of shares of URS common stock pursuant to the merger agreement. The approval of this proposal by URS stockholders is required by the listing requirements of the NYSE and is a condition to the consummation of the merger. URS stockholders are also voting on a proposal to grant authority to the proxyholders to vote to adjourn or postpone the meeting, if necessary, to permit further solicitation of proxies if there are not sufficient votes at the time of the URS special meeting in favor of the share issuance proposal.
 
Q: What are Washington Group stockholders voting to approve?
 
A: Washington Group stockholders are voting on a proposal to adopt the merger agreement and approve the merger. The approval of this proposal by Washington Group stockholders is required by Delaware law and is a condition to the consummation of the merger. Washington Group stockholders are also voting on a proposal to grant authority to the proxyholders to vote to adjourn or postpone the meeting, if necessary, to permit further solicitation of proxies if there are not sufficient votes at the time of the Washington Group special meeting in favor of the merger proposal.
 
Q: What vote of URS stockholders is required to approve the issuance of shares of URS common stock in the merger?
 
A: In accordance with NYSE listing requirements and the merger agreement, the approval by URS stockholders of the issuance of shares of URS common stock pursuant to the merger agreement requires a majority of the votes cast on the proposal, provided that the total votes cast on such proposal represent over 50% of the outstanding shares of URS common stock entitled to vote on such proposal. The approval of the proposal to grant authority to the proxyholders to vote to adjourn the special meeting requires the affirmative vote of the holders of a majority of the shares of URS common stock present in person or represented by proxy at the special meeting and entitled to vote thereon, whether or not a quorum is present.
 
Q: What vote of Washington Group stockholders is required to adopt the merger agreement and approve the merger?
 
A: Under Delaware law and the merger agreement, approval of the proposal to adopt the merger agreement and approve the merger requires the affirmative vote of the holders of a majority of the outstanding shares of Washington Group common stock entitled to vote at the special meeting. The approval of the proposal to grant authority to the proxyholders to vote to adjourn the special meeting requires the affirmative vote of the holders of a majority of the shares of Washington Group common stock present in person or represented by proxy at the special meeting and entitled to vote thereon.
 
Q: How does the board of directors of URS recommend that URS stockholders vote?
 
A: The URS board of directors believes that the merger is advisable for, fair to and in the best interest of, URS and its stockholders and has declared the merger to be advisable to its stockholders, and unanimously recommends that URS stockholders vote “FOR” approval of the issuance of shares of URS common stock to Washington Group stockholders pursuant to the merger agreement. In addition, the URS board of directors unanimously


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recommends that URS stockholders vote “FOR’’ the proposal to authorize the adjournment or postponement of the URS special meeting, if necessary, to permit further solicitation of proxies if there are not sufficient votes at the time of the URS special meeting in favor of the foregoing.
 
Q: How does the board of directors of Washington Group recommend that Washington Group stockholders vote?
 
A: The Washington Group board of directors has determined that the merger agreement and the transactions contemplated by the merger agreement, including the merger, are advisable for, fair to and in the best interests of Washington Group and its stockholders. Accordingly, the Washington Group board of directors has approved the merger agreement and the transactions contemplated by the merger agreement, including the merger. The Washington Group board of directors unanimously recommends that Washington Group stockholders vote “FOR” the proposal to adopt the merger agreement and approve the merger and “FOR” the proposal to authorize the adjournment or postponement of the Washington Group special meeting, if necessary, to permit further solicitation of proxies if there are not sufficient votes at the time of the Washington Group special meeting in favor of the foregoing.
 
Q: When and where will the special meetings of stockholders be held?
 
A: The URS special meeting will take place at          , on          , 2007, at   a.m., local time. The Washington Group special meeting will take place at          , on          , 2007, at   a.m., local time.
 
Q: Who can attend and vote at the special meetings?
 
A: All URS stockholders of record as of the close of business on          , 2007, the record date for the URS special meeting, are entitled to receive notice of and to vote at the URS special meeting. All Washington Group stockholders of record as of the close of business on          , 2007, the record date for the Washington Group special meeting, are entitled to receive notice of and to vote at the Washington Group special meeting.
 
Q: What should URS and Washington Group stockholders do now in order to vote on the proposals being considered at their company’s special meeting?
 
A: Stockholders of record of URS as of the record date for the URS special meeting and stockholders of record of Washington Group as of the record date for the Washington Group special meeting may vote now by proxy by completing, signing, dating and returning the enclosed proxy card in the accompanying pre-addressed postage paid envelope or by submitting a proxy over the Internet or by telephone by following the instructions on the enclosed proxy card. If you hold URS shares or Washington Group shares in “street name,” which means your shares are held of record by a broker, bank or nominee, you must provide the record holder of your shares with instructions on how to vote your shares. Please refer to the voting instruction card used by your broker, bank or nominee to see if you may submit voting instructions using the Internet or telephone.
 
Additionally, you may also vote in person by attending your company’s special meeting of stockholders. If you plan to attend your company’s special meeting and wish to vote in person, you will be given a ballot at the special meeting. Please note, however, that if your shares are held in “street name,” and you wish to vote in person at your company’s special meeting, you must bring a proxy from the record holder of the shares authorizing you to vote at the special meeting. Whether or not you plan to attend your company’s special meeting, you are encouraged to grant your proxy as described in this joint proxy statement/prospectus.
 
Q: What will happen if I abstain from voting or fail to vote?
 
A: For purposes of approving the issuance of shares of URS common stock, an abstention, which occurs when a stockholder attends a meeting, either in person or by proxy, but abstains from voting, will have the same effect as voting against the issuance of shares of URS common stock under the merger agreement and the approval of the adjournment proposal. The failure of a URS stockholder to vote or to instruct his or her broker to vote if his or her shares are held in “street name” may have a negative effect on URS’ ability to obtain the number of votes cast necessary for approval of the issuance of shares of URS common stock under the merger agreement in accordance with the listing requirements of the New York Stock Exchange, which is referred to as the NYSE.


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For purposes of adopting the merger agreement and approving the merger, an abstention or the failure of a Washington Group stockholder to vote or to instruct your broker, bank or nominee to vote if your shares are held in “street name” will have the same effect as voting against the proposal to adopt the merger agreement and approve the merger.
 
Q: Can I change my vote after I have delivered my proxy?
 
A: Yes. If you are a holder of record, you can change your vote at any time before your proxy is voted at the special meeting by:
 
• delivering a signed written notice of revocation to the corporate secretary of your company at:
 
     
URS Corporation   Washington Group International, Inc.
600 Montgomery Street
  720 Park Boulevard
26th Floor
  P.O. Box 73
San Francisco, California 94111-2728
  Boise, Idaho 83729
Attn: Corporate Secretary
  Attn: Corporate Secretary
 
• signing and delivering a new, valid proxy bearing a later date, and if it is a written proxy, it must be signed and delivered to the attention of your company’s corporate secretary;
 
• submitting another proxy by telephone or on the Internet (your latest telephone or Internet voting instructions are followed); or
 
• attending the special meeting and voting in person, although your attendance alone will not revoke your proxy.
 
If your shares are held in a “street name” account, you must contact your broker, bank or other nominee to change your vote.
 
Q: What should URS stockholders or Washington Group stockholders do if they receive more than one set of voting materials?
 
A: You may receive more than one set of voting materials, including multiple copies of this joint proxy statement/prospectus and multiple proxy cards or voting instruction cards. For example, if you hold your shares in more than one brokerage account, you will receive a separate voting instruction card for each brokerage account in which you hold shares. If you are a holder of record and your shares are registered in more than one name, you will receive more than one proxy card. In addition, if you are a stockholder of both URS and Washington Group, you will receive one or more separate proxy cards or voting instruction cards for each company. Please complete, sign, date and return each proxy card and voting instruction card that you receive.
 
Q: Who can help answer my questions?
 
A: If you have any questions about the merger or how to submit your proxy, or if you need additional copies of this joint proxy statement/prospectus, the enclosed proxy card or voting instructions, you should contact:
 
if you are a URS stockholder:
 
     
                    or
URS Corporation   D.F. King & Co., Inc.
600 Montgomery Street
  48 Wall Street, 22nd Floor
26th Floor
  New York, New York 10005
San Francisco, California 94111-2728
  (800) 829-6551 (toll-free)
Attn: Investor Relations
  (212) 269-5550 (collect)
(877) 877-8970
  urs@dfking.com


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if you are a Washington Group stockholder:
 
     
or
Washington Group International, Inc.   MacKenzie Partners, Inc.
720 Park Boulevard, P.O. Box 73
  185 Madison Avenue
Boise, Idaho 83729
  New York, New York 10016
Attn: Investor Relations
  (800) 322-2895 (toll-free)
(866) 964-4636
  (212) 929-5500 (collect)
    proxy@mackenziepartners.com


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The following is a summary that highlights information contained in this joint proxy statement/prospectus. This summary may not contain all of the information that may be important to you. For a more complete description of the merger agreement and the transactions contemplated by the merger agreement, including the merger and the share issuance, we encourage you to read carefully this entire joint proxy statement/prospectus, including the attached Annexes. In addition, we encourage you to read the information incorporated by reference into this joint proxy statement/prospectus, which includes important business and financial information about URS and Washington Group that has been filed with the SEC. You may obtain the information incorporated by reference into this joint proxy statement/prospectus without charge by following the instructions in the section entitled “Additional Information — Where You Can Find More Information” beginning on page 144.
 
The Companies
 
URS Corporation
600 Montgomery Street, 26th Floor
San Francisco, California 94111-2728
(415) 774-2700
 
URS is one of the largest engineering design services firms worldwide and a major U.S. federal government contractor for systems engineering and technical assistance and operations and maintenance services. URS’ business focuses primarily on providing fee-based professional and technical services in the engineering and construction services and defense markets. URS operates through two divisions: the URS Division and the EG&G Division. The URS Division provides a comprehensive range of professional planning and design, program management, construction management, and operations and maintenance services to various government agencies and departments in the United States and internationally, as well as to private industry clients. URS’ EG&G Division provides planning, systems engineering and technical assistance, operations and maintenance, and program management services to various U.S. federal government agencies, primarily the Departments of Defense and Homeland Security.
 
URS was originally incorporated in California on May 1, 1957 under the former name of Broadview Research Corporation. On May 18, 1976, URS was re-incorporated in Delaware. On March 28, 1974, URS changed its name to URS Corporation. Since then, URS has implemented several name changes as a result of mergers and acquisitions. On February 21, 1990, URS changed its name back to URS Corporation. URS common stock is traded on the NYSE under the symbol “URS.”
 
Washington Group International, Inc.
720 Park Boulevard, P.O. Box 73
Boise, Idaho 83729
(208) 386-5000
 
Washington Group is an international provider of a broad range of design, engineering, construction, construction management, facilities and operations management, environmental remediation and mining services. Washington Group offers its various services separately or as part of an integrated package throughout the life cycle of a customer’s project.
 
  •  In providing design and engineering services, Washington Group participates in the conceptualization and planning stages of projects that are part of Washington Group’s customers’ overall capital programs. Washington Group develops the physical designs and determines the technical specifications. Washington Group also devises project configurations to maximize both construction and operating efficiency.
 
  •  As a contractor, Washington Group is responsible for the construction and completion of each contract in accordance with its specifications and contracting terms (primarily schedule and total cost). In this capacity, Washington Group often manages the procurement of materials, subcontractors and craft labor. Depending on the project, Washington Group may function as the primary contractor or as a subcontractor to another firm.


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  •  On some projects, Washington Group functions as a construction manager, engaged by the customer to oversee other contractors’ compliance with design specifications and contracting terms.
 
  •  Under operations and maintenance contracts, Washington Group provides staffing, technical support, repair, renovation, predictive and preventive services to customer facilities globally. Washington Group also offers other facility services, such as general building maintenance and asset management. In addition, Washington Group provides inventory and product logistics for manufacturing plants, information technology support, equipment servicing and tooling changeover.
 
Washington Group was originally incorporated in Delaware on April 28, 1993 under the name Kasler Holding Company. In April 1996, Washington Group changed its name to Washington Construction Group, Inc. On September 11, 1996, Washington Group purchased Morrison Knudsen Corporation and changed its name to Morrison Knudsen Corporation. On September 15, 2000, following several additional acquisitions, Washington Group changed its name to Washington Group International, Inc. Washington Group common stock is traded on the NYSE under the symbol “WNG.”
 
The Merger (see page 51)
 
URS and Washington Group have agreed to the acquisition of Washington Group by URS under the terms of the merger agreement that is described in this joint proxy statement/prospectus. Pursuant to the merger agreement, a wholly owned subsidiary of URS will merge with and into Washington Group, with Washington Group continuing as the surviving corporation and a wholly owned subsidiary of URS. Immediately following this merger, URS will cause Washington Group to merge with and into another wholly owned subsidiary of URS with this subsidiary continuing as the surviving corporation and a wholly owned subsidiary of URS. We have attached the merger agreement as Annex A to this joint proxy statement/prospectus. We encourage you to carefully read the merger agreement in its entirety.
 
Merger Consideration
 
If you are a Washington Group stockholder, other than a Washington Group stockholder that has validly demanded and perfected appraisal rights under Delaware law, upon completion of the merger, each of your shares of Washington Group common stock will be converted into the right to receive 0.772 of a share of URS common stock and $43.80 in cash, without interest. We refer to the share and cash consideration to be paid to the Washington Group stockholders by URS as the merger consideration. URS stockholders will continue to own their existing shares of URS common stock, which will not be affected by the merger, except that, because URS will be issuing new shares of URS common stock to Washington Group stockholders in the merger, each outstanding share of URS common stock immediately prior to the merger will, after the merger, represent a smaller percentage ownership interest in URS.
 
Fractional Shares
 
URS will not issue fractional shares of URS common stock in the merger. As a result, a Washington Group stockholder will receive cash for any fractional share of URS common stock that they would otherwise be entitled to receive in the merger. For a full description of the treatment of fractional shares, see “The Merger Agreement — Fractional Shares” on page 99.
 
Washington Group Equity Awards
 
Stock Options
 
Immediately following the completion of the merger, each outstanding option to acquire shares of Washington Group common stock, whether or not vested, that remains outstanding as of the closing of the merger will be cancelled and converted into the right to receive a combination of cash and URS common stock determined as follows: the “option consideration” will equal the product of (1) the number of shares of Washington Group common stock subject to the option and (2) the excess, if any, of $80.00 over the exercise price per share of Washington Group common stock subject to the option. Of the option consideration, 54.75% will be paid in cash


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and the remaining 45.25%, which is referred to as the share-settled amount, will be settled in a number of shares of URS common stock equal to the quotient of the share-settled amount divided by $46.89. The cash and shares payable pursuant to the preceding sentence will be subject to any applicable withholding taxes. Immediately after the merger is completed, any cancelled option will no longer be exercisable by its former holder, but will only entitle the holder to the payment of the option consideration.
 
Restricted Shares
 
Each award of restricted Washington Group common stock will vest in full immediately prior to the closing of the merger and will be converted into the right to receive the merger consideration.
 
Deferred Shares
 
Upon the completion of the merger, each deferred share of Washington Group will be converted into the right to receive $80.00 in cash, payable on a deferred basis at the time that the underlying deferred shares would have been settled under their terms as in effect immediately prior to the effective time of the merger, plus earnings thereon as described in the merger agreement.
 
Performance Units
 
Upon the completion of the merger, all performance units will be settled and paid in cash based on the greater of the par value of such performance unit and the value of such performance unit determined based upon Washington Group’s actual results during the applicable performance period through the effective time of the merger.
 
For a full description of the treatment of Washington Group equity-based incentive awards, see “The Merger Agreement — Washington Group Incentive-Based Equity Awards and Employee Benefit Plans — Washington Group Incentive-Based Equity Awards” beginning on page 110.
 
Recommendation of the Board of Directors (see pages 64 and 67)
 
URS
 
The URS board of directors believes that the merger is advisable for, fair to and in the best interest of, URS and its stockholders and has declared the merger to be advisable to its stockholders, and unanimously recommends that URS stockholders vote “FOR” approval of the issuance of shares of URS common stock to Washington Group stockholders pursuant to the merger agreement. In addition, the URS board of directors unanimously recommends that URS stockholders vote “FOR” approval of the proposal to authorize the adjournment or postponement of the URS special meeting, if necessary, to permit further solicitation of proxies if there are not sufficient votes at the time of the URS special meeting in favor of the foregoing.
 
Washington Group
 
The Washington Group board of directors believes that the merger agreement and the transactions contemplated by the merger agreement, including the merger, are advisable for, and fair to and in the best interests of, Washington Group and its stockholders and has unanimously approved the merger agreement and the transactions contemplated by the merger agreement, including the merger. In addition, the Washington Group board of directors unanimously recommends that Washington Group stockholders vote “FOR” adoption of the merger agreement and approval of the merger and “FOR” the proposal to authorize the adjournment or postponement of the Washington Group special meeting, if necessary, to permit further solicitation of proxies if there are not sufficient votes at the time of the Washington Group special meeting in favor of the foregoing.


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Record Date; Outstanding Shares; Shares Entitled to Vote; Vote Required (see pages 43 and 47)
 
URS
 
Only holders of record of URS common stock at the close of business on          , 2007, which is referred to as the URS record date, are entitled to notice of and to vote at the URS special meeting. As of the URS record date, there were           shares of URS common stock outstanding and entitled to vote at the special meeting, held by approximately           holders of record. Each holder of URS common stock is entitled to one vote for each share of URS common stock owned as of the URS record date. In accordance with NYSE listing requirements, the approval by URS stockholders of the issuance of shares of URS common stock pursuant to the merger agreement requires the approval of a majority of the votes cast on the proposal, provided that the total votes cast on such proposal represent over 50% of the outstanding shares of URS common stock entitled to vote on such proposal. In accordance with the General Corporation Law of the State of Delaware, which is referred to as the DGCL, and URS’ bylaws, approval of the proposal to authorize the adjournment or postponement of the URS special meeting, if necessary, to permit further solicitation of proxies requires the affirmative vote of the holders of a majority of the shares of URS common stock present in person or represented by proxy at the special meeting and entitled to vote thereon.
 
Washington Group
 
Only holders of record of Washington Group common stock at the close of business on          , 2007, which is referred to as the Washington Group record date, are entitled to notice of and to vote at the Washington Group special meeting. As of the Washington Group record date, there were           shares of Washington Group common stock outstanding and entitled to vote at the special meeting, held by approximately           holders of record. Each holder of Washington Group common stock is entitled to one vote for each share of Washington Group common stock owned as of the Washington Group record date. For the merger agreement to be adopted and the merger approved, the holders of at least a majority of the outstanding shares of Washington Group common stock entitled to vote on the proposal at the Washington Group special meeting must vote in favor of adoption of the merger agreement and approval of the merger. In accordance with the DGCL and Washington Group’s bylaws, approval of the proposal to authorize the adjournment or postponement of the Washington Group special meeting, if necessary, to permit further solicitation of proxies requires the affirmative vote of the holders of a majority of the shares of Washington Group common stock present in person or represented by proxy at the special meeting and entitled to vote thereon.
 
Share Ownership of Directors and Executive Officers
 
At the close of business on the URS record date, directors and executive officers of URS and their affiliates beneficially owned and were entitled to vote approximately           shares of URS common stock, collectively representing approximately     % of the shares of URS common stock outstanding on that date.
 
At the close of business on the Washington Group record date, directors and executive officers of Washington Group and their affiliates beneficially owned and were entitled to vote approximately           shares of Washington Group common stock, collectively representing     % of the shares of Washington Group common stock outstanding on that date.
 
Opinions of Financial Advisors (see pages 69 and 78)
 
URS
 
On May 27, 2007, Morgan Stanley & Co. Incorporated, which is referred to as Morgan Stanley, financial advisor to URS, delivered to the URS board of directors its oral opinion, which was subsequently confirmed in writing that, as of that date, and based upon and subject to the considerations described in its opinion and based upon such other matters as Morgan Stanley considered relevant, the merger consideration to be paid by URS pursuant to the merger agreement was fair from a financial point of view to URS.
 
The full text of Morgan Stanley’s written opinion is attached to this joint proxy statement/prospectus as Annex B. We encourage you to read this opinion carefully in its entirety for a description of the procedures followed, assumptions made, matters considered and limitations on the review undertaken. Morgan Stanley’s


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opinion is directed to the URS board of directors and does not constitute a recommendation to any stockholder as to how to vote or any other matters relating to the merger. Pursuant to an engagement letter between URS and Morgan Stanley, URS has agreed to pay Morgan Stanley a transaction fee based on the aggregate consideration for the transaction, a substantial portion of which fee is contingent upon consummation of the transaction. URS also has entered into a financing commitment letter with an affiliate of Morgan Stanley to provide 50% of a senior secured debt financing in connection with the merger, for which the affiliate will receive a substantial fee, which is also contingent upon the consummation of a transaction.
 
Washington Group
 
At the meeting of Washington Group’s board of directors on May 27, 2007, Goldman Sachs & Co., which is referred to as Goldman Sachs, financial advisor to Washington Group, delivered its oral opinion, which opinion was later confirmed in writing, that as of that date, and based upon and subject to the factors and assumptions set forth therein, the consideration to be received by holders of shares of Washington Group common stock, taken in the aggregate, pursuant to the merger agreement was fair from a financial point of view to such holders.
 
The full text of the written opinion of Goldman Sachs, dated May 27, 2007, which sets forth assumptions made, procedures followed, matters considered and limitations on the review undertaken in connection with the opinion, is attached as Annex C. Goldman Sachs provided its opinion for the information and assistance of the board of directors of Washington Group in connection with its consideration of the transaction. The Goldman Sachs opinion is not a recommendation as to how any holder of shares of Washington Group common stock should vote with respect to the transaction. Pursuant to an engagement letter between Washington Group and Goldman Sachs, Washington Group has agreed to pay Goldman Sachs a transaction fee based on the aggregate consideration for the transaction, a substantial portion of which is contingent upon consummation of the transaction.
 
Ownership of URS After the Merger
 
In the merger, URS expects to issue approximately                     shares of URS common stock, based on Washington Group’s shares of common stock and stock options outstanding as of          , 2007, and assuming that all of the stock options outstanding as of such date remain outstanding as of the effective time of the merger. Washington Group stockholders are expected to own approximately  % of the shares of URS common stock outstanding after the merger. URS stockholders will continue to own their existing shares of URS common stock, which will not be affected by the merger, other than by the dilution resulting from the issuance of URS common stock in the merger.
 
Interests of URS’ Directors and Executive Officers in the Merger (see page 92)
 
None of the executive officers and directors of URS has interests in the merger that differ from, or are in addition to, the interests of URS’ stockholders.
 
Interests of Washington Group’s Directors and Executive Officers in the Merger (see page 92)
 
In considering the recommendation of the Washington Group board of directors, Washington Group stockholders should be aware that Washington Group’s directors and executive officers have interests in the merger and have arrangements that are different from, or in addition to, those of Washington Group’s stockholders generally. These interests and arrangements may create potential conflicts of interest.
 
These interests and arrangements include:
 
  •  vesting of all unvested Washington Group equity awards, including those held by Washington Group’s executive officers;
 
  •  vesting and cash out of all unvested Washington Group performance units, including those performance units held by Washington Group’s current executive officers;
 
  •  change-in-control severance agreements with Washington Group’s current executive officers that provide for payment of incentive compensation accrued as of the change-in-control date, as well as severance benefits in the event of certain qualifying terminations of employment in connection with or following the merger; and


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  •  continued indemnification and insurance coverage as required under the merger agreement.
 
Management of URS and Washington Group After the Merger
 
It is currently expected that each of the current members of the URS board of directors will continue to serve on the URS board of directors following the closing of the merger. At the effective time of the merger, one director of Washington Group who was a director of Washington Group on May 27, 2007 will be chosen by URS to serve as a director of URS after the merger is consummated. Martin M. Koffel will continue to serve as Chairman of the URS board of directors.
 
It is currently expected that all of the executive officers of URS and Washington Group will remain with URS after the merger, including Mr. Koffel as Chief Executive Officer of URS and Mr. Hanks as the head of URS’ Washington Group division.
 
Listing of URS Common Stock and Delisting and Deregistration of Washington Group Common Stock (see page 88)
 
Application will be made to have the shares of URS common stock to be issued in the merger approved for listing on the NYSE, where URS common stock currently is traded under the symbol “URS.” If the merger is completed, Washington Group common stock will no longer be listed on the NYSE and will be deregistered under the Securities Exchange Act of 1934, as amended, which is referred to as the Exchange Act, and Washington Group will no longer file periodic reports with the SEC.
 
Appraisal Rights (see page 88)
 
URS
 
Under Delaware law, holders of URS common stock are not entitled to appraisal rights in connection with the issuance of URS common stock in the merger with respect to their URS shares.
 
Washington Group
 
Holders of Washington Group common stock who do not wish to accept the consideration payable pursuant to the merger may seek, under Section 262 of the DGCL judicial appraisal of the fair value of their shares by the Delaware Court of Chancery. This value could be more than, less than or the same as the merger consideration for the Washington Group common stock. Failure to strictly comply with all the procedures required by Section 262 of the DGCL, including, without limitation, with requirement that stockholders who wish to seek appraisal rights not vote for the proposal to adopt the merger agreement and approve the merger, will result in a loss of the right of appraisal.
 
Merely not voting for the merger will not preserve the right of Washington Group stockholders to appraisal of their shares of Washington Group common stock under Delaware law. Also, because a submitted proxy not marked “against” or “abstain” will be voted “FOR” the proposal to adopt the merger agreement and approve the merger and “FOR” the proposal to authorize the adjournment or postponement of the Washington Group special meeting, if necessary, the submission of a proxy not marked “against” or “abstain” will result in the waiver of appraisal rights. Washington Group stockholders who hold shares in the name of a broker or other nominee must instruct their nominees to take the steps necessary to enable them to demand appraisal for their shares.
 
Annex D to this joint proxy statement/prospectus contains the full text of Section 262 of the DGCL, which describes the rights of appraisal and related requirements. We encourage you to read these provisions carefully and in their entirety. Any holder of Washington Group common stock who wishes to exercise appraisal rights or who wishes to preserve such holder’s right to do so, should review the discussion under the caption “The Merger — Appraisal Rights” on page 88 and Annex D carefully because failure to timely and properly comply with the procedures specified will result in the loss of appraisal rights. Moreover, due to the complexity of the procedures for exercising the right to seek appraisal, Washington Group stockholders who are considering exercising such rights are encouraged to seek the advice of legal counsel.


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Conditions to Completion of the Merger (see page 100)
 
A number of conditions to each party’s obligation to close must be satisfied before the merger will be completed. These include among others:
 
  •  the approval of the merger and adoption of the merger agreement by Washington Group stockholders and the approval of the issuance of shares of URS common stock in the merger by URS stockholders;
 
  •  the expiration or termination of the applicable waiting period and any extension of the waiting period under the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended, which, together with the rules and regulations promulgated thereunder, is referred to as the HSR Act;
 
  •  the absence of any legal prohibition having the effect of preventing or prohibiting completion of the merger which prohibition continues to be in effect;
 
  •  the effectiveness, under the Securities Act of 1933, as amended, which is referred to as the Securities Act, of the registration statement of which this joint proxy statement/prospectus is a part and the absence of any pending or threatened proceeding related to the registration statement;
 
  •  the approval for listing on the NYSE of the shares of URS common stock to be issued in the merger, subject to official notice of issuance;
 
  •  the accuracy and correctness of representations and warranties of the other party, subject to certain qualifications described in the merger agreement;
 
  •  the other party’s having performed and complied with its covenants in the merger agreement in all material respects prior to the effective time of the merger, and the receipt of a certificate from the officers of the other party to that effect; and
 
  •  the receipt by each party of an opinion from the party’s counsel that the merger and the second merger, taken together, will qualify as a reorganization within the meaning of Section 368(a) of the Internal Revenue Code.
 
Each of URS, Elk Merger Corporation and Washington Group may waive the conditions to the performance of its obligations under the merger agreement and complete the merger even though one or more of these conditions has not been met. Neither URS nor Washington Group can give any assurance that all of the conditions to the merger will be either satisfied or waived or that the merger will occur.
 
Regulatory Approvals (see page 84)
 
The notifications required under the HSR Act to the United States Federal Trade Commission, which is referred to as the FTC, and the Antitrust Division of the United States Department of Justice, which is referred to as the DOJ, were filed on June 8, 2007 by both URS and Washington Group, and the statutory waiting period under the HSR Act expired on July 9, 2007. No further regulatory approvals are required for the completion of the merger.
 
Financing Commitments (see page 94)
 
URS has entered into a Senior Credit Facilities Commitment Letter, which is referred to as the financing commitment letter, with Morgan Stanley Senior Funding, Inc., which is referred to as MSSF, and Wells Fargo Bank, National Association, which is referred to as Wells Fargo. Subject to the terms and conditions of the letter, MSSF and Wells Fargo have each committed to provide 50% of a senior secured financing to URS up to an aggregate of $2.1 billion, consisting of $1.4 billion in term loans and a $700.0 million senior secured revolving credit facility. The term loans will refinance URS’ existing senior credit facilities, refinance any amounts outstanding under the credit facilities of Washington Group and fund the merger. Up to $50.0 million of the $700.0 million revolving credit facility may be used to consummate the merger on the closing date. After the closing, the full amount of the revolving credit facility may be used for working capital and other corporate purposes. The financing commitment letter also includes customary conditions to funding, including, without limitation, satisfaction of the conditions to closing of the merger as set forth in the merger agreement, the absence of any material adverse effect on Washington Group or its subsidiaries, taken as a whole, obtaining credit ratings, a maximum ratio of pro forma combined total


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debt to combined pro forma EBITDA of 3.50 to 1.00 on the closing date, the accuracy of certain representations and warranties of the parties, customary legal documentation, and repayment of Washington Group’s credit facilities.
 
No Solicitation by URS or Washington Group (see page 102)
 
Subject to exceptions, the merger agreement precludes URS and Washington Group from soliciting or engaging in discussions or negotiations with a third party with respect to a proposal to acquire a significant interest in URS’ or Washington Group’s equity or assets. Notwithstanding such restrictions, the merger agreement provides that, under specified circumstances and prior to the applicable approval by their respective stockholders, if URS or Washington Group receives an unsolicited proposal from a third party to acquire a significant interest in it that its board of directors determines in good faith is reasonably likely to lead to a proposal that is superior to the merger, URS or Washington Group, as applicable, may furnish nonpublic information to that third party and engage in negotiations regarding an acquisition proposal with that third party.
 
Termination of the Merger Agreement (see page 112)
 
URS and Washington Group may mutually agree in writing by action of their respective boards of directors, at any time before the effective time of the merger, to abandon the merger and terminate the merger agreement. Also, either URS or Washington Group may terminate the merger agreement in a number of circumstances, including if:
 
  •  the merger is not consummated by December 27, 2007, unless that date is extended to May 27, 2008 on the terms provided in the merger agreement, and we refer to the December 27, 2007 date, as it may be extended, as the outside date;
 
  •  Washington Group stockholders fail to adopt the merger agreement and approve the merger at the Washington Group special meeting;
 
  •  URS stockholders fail to approve the issuance of shares of URS common stock in the merger at the URS special meeting; or
 
  •  any governmental entity prohibits the merger and that prohibition has become final and nonappealable, except that the party seeking to terminate the merger agreement must have used its reasonable best efforts to remove the prohibition.
 
URS also may terminate the merger agreement if:
 
  •  Washington Group breaches any representation, warranty, covenant or agreement made by Washington Group in the merger agreement or any representation and warranty made by Washington Group has become untrue or incorrect after the execution of the merger agreement, in each case, such that the conditions to the completion of the merger would not be satisfied and such breach or failure to be true is not cured within 30 days of notice by URS;
 
  •  prior to the URS stockholder meeting, URS receives an unsolicited bona fide written acquisition proposal (other than the merger agreement and the transaction) in compliance with the applicable provisions of the merger agreement that is a superior proposal and URS has complied with its obligations set forth in the merger agreement with respect to acquisition proposals; or
 
  •  prior to the Washington Group stockholder meeting, the Washington Group board of directors withdraws, qualifies, modifies its approval of the merger agreement or its recommendation to the stockholders of Washington Group, in each case, in a manner adverse to URS, or approves or recommends any acquisition proposal (other than the merger agreement and the transaction).
 
Washington Group also may terminate the merger agreement if:
 
  •  URS breaches any representation, warranty, covenant or agreement made by URS in the merger agreement or any representation and warranty made by URS has become untrue or incorrect after the execution of the merger agreement, in each case, such that the conditions to the completion of the merger would not be satisfied and such breach or failure to be true is not cured within 30 days of notice by Washington Group;


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  •  prior to the Washington Group stockholder meeting, Washington Group receives an unsolicited bona fide written acquisition proposal (other than the merger agreement and the transaction) in compliance with the applicable provisions of the merger agreement that is a superior proposal and Washington Group has complied with its obligations set forth in the merger agreement with respect to acquisition proposals;
 
  •  prior to the URS stockholder meeting, the URS board of directors withdraws, qualifies, modifies its approval of the merger agreement or its recommendation to the stockholders of URS, in each case, in a manner adverse to Washington Group, or approves or recommends any acquisition proposal (other than the merger agreement and the transaction); or
 
  •  if URS does not effect the closing of the merger within five business days after notice by Washington Group to URS that the mutual conditions to each party’s obligation to consummate the merger and the conditions to Washington Group’s obligations to consummate the merger are satisfied (although the parties have agreed that URS’ and not Washington Group’s obligations will need to be satisfied) and all such conditions have in fact been satisfied (or, upon an immediate closing of the merger, would be satisfied as of such closing).
 
Termination Fee (see page 113)
 
If the merger agreement is terminated, Washington Group may be required in specified circumstances to pay a termination fee of $70.0 million to URS, and URS may be required in specified circumstances to pay a termination fee of $50.0 million or $70.0 million to Washington Group.
 
Material United States Federal Income Tax Consequences of the Merger (see page 85)
 
It is generally expected that the merger and the second merger, taken together, will qualify as a reorganization within the meaning of the Internal Revenue Code. The consummation of the merger is conditioned on the receipt by each of URS and Washington Group of opinions from their respective counsel to the effect that the merger and the second merger, taken together, will so qualify. Assuming that the merger and the second merger, taken together, qualify as a reorganization under the Internal Revenue Code, then, in general, a Washington Group stockholder:
 
  •  will recognize gain (but not loss) with respect to its Washington Group common stock in an amount equal to the lesser of (i) any gain realized with respect to that stock or (ii) the amount of cash received with respect to that stock (other than any cash received instead of a fractional share of URS common stock); and
 
  •  will recognize gain (or loss) to the extent any cash received instead of a fractional share of URS common stock exceeds (or is less than) the basis of the fractional share.
 
Accounting Treatment (see page 87)
 
URS will account for the merger using the purchase method of accounting for business combinations under United States generally accepted accounting principles, which is referred to as GAAP.
 
Risk Factors (see page 20)
 
In evaluating the merger, the merger agreement or the issuance of shares of URS common stock in the merger, you should carefully read this joint proxy statement/prospectus and especially consider the factors discussed in the section entitled “Risk Factors” on page 20, including the risk that URS may not realize all of the anticipated benefits of the merger, the risk that URS may not be able to retain and motivate key employees, and the risk that the increase in URS’ indebtedness resulting from the merger could adversely affect URS’ cash flows and business.
 
Dividend Policies
 
URS
 
The holders of URS common stock receive dividends if and when declared by the URS board of directors. URS has not paid cash dividends since 1986, and at the present time, URS does not anticipate paying dividends on its common stock in the near future. URS’ existing senior credit facilities have specified restrictions on dividend payments. URS has agreed that it will not make, declare or pay any dividend or distribution on any shares of URS’


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capital stock or that of its subsidiaries or any securities or obligations convertible into or exchangeable for any shares of URS’ capital stock or that of its subsidiaries prior to the closing of the merger. In addition, URS’ new senior secured credit facilities will also have specified restrictions on dividend payments similar to those provided for in URS’ existing senior credit facilities.
 
Washington Group
 
The holders of Washington Group common stock receive dividends if and when declared by the Washington Group board of directors. Washington Group has not paid a cash dividend since the first quarter of fiscal 1994 and does not intend to pay cash dividends in the near term. Washington Group’s existing credit facility has specified restrictions on dividend payments. Washington Group has agreed that it will not make, declare or pay any dividend or distribution on any shares of Washington Group’s capital stock or that of its subsidiaries or any securities or obligations convertible into or exchangeable for any shares of Washington Group’s capital stock or that of its subsidiaries prior to the closing of the merger.
 
Comparison of Stockholder Rights and Corporate Governance Matters (see page 133)
 
Washington Group stockholders receiving merger consideration will have different rights once they become URS stockholders due to differences between the governing documents of URS and Washington Group. These differences are described in detail under “Comparison of Stockholder Rights and Corporate Governance Matters” beginning on page 133.
 
Fees and Expenses (see page 114)
 
Generally, all fees and expenses incurred in connection with the merger agreement and the transactions contemplated by the merger agreement will be paid by the party incurring those expenses, subject to the specific exceptions discussed in this joint proxy statement/prospectus.
 
Recent Developments
 
On July 16, 2007,Washington Group announced that it expects to record a pre-tax accounting charge of approximately $25 million (approximately $15 million after tax, or $0.48 per diluted share) in its second quarter ended June 29, 2007. The accounting charge is related to a joint venture fixed-price highway construction project, in which Washington Group has a 50% interest, in Southern California and the joint venture client’s decision to assert and withhold liquidated damages from payments due to the joint venture. In connection with this potential accounting charge and certain capital expenditures, Washington Group has obtained waivers from its lenders relating to potential events of non-compliance with certain loan covenants in its senior secured credit facility.


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Summary Selected Historical Financial Data
 
URS Corporation
 
The following selected financial data as of and for the fiscal years ended December 29, 2006 and December 30, 2005, the two months ended December 31, 2004, the two months ended December 31, 2003 (unaudited), and the fiscal years ended October 31, 2004, 2003, and 2002 is derived from URS’ audited consolidated financial statements and reflects URS’ August 2002 acquisition of Carlyle-EG&G Services, Inc., which was accounted for under the purchase method of accounting. Effective January 1, 2005, URS adopted a 52/53-week fiscal year ending on the Friday closest to December 31st, with interim quarters ending on the Fridays closest to March 31st, June 30th, and September 30th. URS filed a transition report on Form 10-Q with the SEC for the two months ended December 31, 2004. URS’ 2005 fiscal year began on January 1, 2005 and ended on December 30, 2005. The financial data as of and for the three months ended March 30, 2007 and March 31, 2006 is derived from URS’ unaudited condensed consolidated financial statements. The unaudited results reflect all the adjustments (consisting only of normal recurring adjustments) that URS management considers necessary for a fair statement of operating results.
 
The information is only a summary and should be read in conjunction with URS’ consolidated financial statements, accompanying notes and management’s discussion and analysis of results of operations and financial condition, all of which can be found in publicly available documents, including those incorporated by reference into this joint proxy statement/prospectus. See “Additional Information — Where You Can Find More Information” on page  144.
 
                                                                         
    Three
    Three
                         
    Months
    Months
                         
    Ended
    Ended
    Year Ended
    Year Ended
             
    March 30,     March 31,     December 29,     December 30,     Two Months Ended December 31,     Years Ended October 31,  
    2007     2006     2006     2005(1)     2004(1)     2003(1)     2004     2003     2002  
                                  (Unaudited)                    
          (Unaudited)                                            
    (Unaudited)                                                  
    (In thousands, except per share data)        
 
Income Statement Data:
                                                                       
Revenues
  $ 1,135,595     $ 998,149     $ 4,240,150     $ 3,917,565     $ 566,997     $ 489,665     $ 3,381,963     $ 3,186,714     $ 2,427,827  
Direct operating expenses
    741,554       631,304       2,737,828       2,555,538       369,527       314,485       2,140,890       2,005,339       1,489,386  
                                                                         
Gross profit
    394,041       366,845       1,502,322       1,362,027       197,470       175,180       1,241,073       1,181,375       938,441  
Indirect, general and administrative expenses(2,4)
    336,355       319,171       1,283,533       1,187,605       188,400       153,609       1,079,088       999,977       790,099  
                                                                         
Operating income
    57,686       47,674       218,789       174,422       9,070       21,571       161,985       181,398       148,342  
Interest expense
    3,940       5,135       19,740       31,587       6,787       12,493       60,741       84,564       57,231  
                                                                         
Income before income taxes and minority interest
    53,746       42,539       199,049       142,835       2,283       9,078       101,244       96,834       91,111  
Income tax expense
    22,306       17,993       84,793       60,360       1,120       3,630       39,540       38,730       35,940  
Minority interest in income of consolidated subsidiaries, net of tax
    1,079       358       1,244                                      
                                                                         
Net income
    30,361       24,188       113,012       82,475       1,163       5,448       61,704       58,104       55,171  
Preferred stock dividend
                                                    5,939  
                                                                         
Net income after preferred stock dividend
    30,361       24,188       113,012       82,475       1,163       5,448       61,704       58,104       49,232  
Less: net income allocated to convertible participating preferred stockholders under the two-class method
                                              894       907  
                                                                         
Net income available for common stockholders
  $ 30,361     $ 24,188     $ 113,012     $ 82,475     $ 1,163     $ 5,448     $ 61,704     $ 57,210     $ 48,325  
                                                                         
Earnings per share:
                                                                       
Basic
  $ .59     $ .48     $ 2.23     $ 1.76     $ .03     $ .16     $ 1.58     $ 1.78     $ 2.18  
                                                                         
Diluted
  $ .58     $ .47     $ 2.19     $ 1.72     $ .03     $ .16     $ 1.53     $ 1.76     $ 2.03  
                                                                         
 


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    March 30,     March 31,     December 29,     December 30,     December 31,     October 31,  
    2007     2006     2006     2005(1)     2004(1)     2003(1)     2004     2003     2002  
                                  (Unaudited)                    
          (Unaudited)                                            
    (Unaudited)                                                  
    (In thousands)        
 
Balance Sheet Data:
                                                                       
Total assets
  $ 2,558,888     $ 2,448,189     $ 2,581,029     $ 2,469,448     $ 2,307,748     $ 2,219,319     $ 2,275,045     $ 2,193,723     $ 2,251,905  
Total long-term debt
  $ 151,214     $ 289,383     $ 149,494     $ 297,913     $ 508,584     $ 801,460     $ 502,118     $ 788,708     $ 925,265  
Preferred stock
  $     $     $     $     $     $     $     $     $ 46,733  
Stockholders’ equity(3)
  $ 1,549,191     $ 1,385,252     $ 1,506,687     $ 1,344,504     $ 1,082,121     $ 771,941     $ 1,067,224     $ 765,073     $ 633,852  
 
 
(1) Effective January 1, 2005, URS adopted a 52/53-week fiscal year ending on the Friday closest to December 31st, with interim quarters ending on the Fridays closest to March 31st, June 30th, and September 30th. URS filed a transition report on Form 10-Q with the SEC for the two months ended December 31, 2004. URS’ 2005 fiscal year began on January 1, 2005 and ended on December 30, 2005.
 
(2) Indirect, general and administrative expenses for the 2006 fiscal year included stock-based compensation expense of $6.6 million recorded in accordance with Statement of Financial Accounting Standards No. 123(R), “Share-Based Payment.” There was no stock-based compensation expense related to employee stock options and employee stock purchases under Statement of Financial Accounting Standards No. 123, “Accounting for Stock-Based Compensation” which is referred to as SFAS 123, prior to fiscal year 2006 because URS did not adopt the recognition provisions of SFAS 123.
 
(3) Stockholders’ equity for fiscal year 2006 included the incremental effect of applying and the effects of adopting Statement of Financial Accounting Standards No. 158, “Employers’ Accounting for Defined Benefit Pension and Other Postretirement Plans — an amendment of FASB Statements No. 87, 88, 106 and 132(R)” which is referred to as SFAS 158. During fiscal year 2006, URS adopted SFAS 158 and recognized additional pension liabilities of approximately $4.4 million. URS also reduced its stockholders’ equity by approximately $4.4 million on an after-tax basis.
 
(4) Indirect, general and administrative expenses included charges of $0.2 million, $33.1 million and $28.2 million for costs incurred to extinguish URS’ debt during the years ended December 29, 2006, December 30, 2005, and October 31, 2004, respectively.

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Washington Group International, Inc.
 
The following selected financial data as of and for the fiscal years ended December 29, 2006, December 30, 2005, December 31, 2004, and January 2, 2004 and the eleven months ended January 3, 2003 and the predecessor company month ended February 1, 2002 is derived from Washington Group’s audited consolidated financial statements. As of February 1, 2002, in connection with Washington Group’s emergence from bankruptcy protection, Washington Group adopted fresh-start reporting pursuant to the guidance provided by the American Institute of Certified Public Accountants Statement of Position 90-7, Financial Reporting by Entities in Reorganization Under the Bankruptcy Code. In connection with the adoption of fresh-start reporting, Washington Group created a new entity for financial reporting purposes. The effective date of Washington Group’s emergence from bankruptcy is considered to be the close of business on February 1, 2002 for financial reporting purposes. In the tables below, the month ended February 1, 2002 has been designated “Predecessor Company.”
 
On August 25, 2004, Washington Group agreed to acquire BNFL Nuclear Services, Inc.’s interest in the government and environmental services businesses of CBS Corporation (now Viacom, Inc.) and effective December 30, 2005, Washington Group settled all remaining acquisition payments resulting in the termination of BNFL Nuclear Services, Inc.’s interest in such businesses. The financial data as of and for the three months ended March 30, 2007 and March 31, 2006 is derived from Washington Group’s unaudited condensed consolidated financial statements. The unaudited results reflect all adjustments (consisting only of normal recurring adjustments) that Washington Group’s management considers necessary for a fair presentation of operating results.
 
There were no cash dividends declared during any period presented.
 
The information is only a summary and should be read in conjunction with Washington Group’s consolidated financial statements, accompanying notes and management’s discussion and analysis of results of operations and financial condition, all of which can be found in publicly available documents, including those incorporated by reference into this joint proxy statement/prospectus. See “Additional Information — Where You Can Find More Information” on page 144.
 
                                                                 
                                              Predecessor
 
    Three Months
    Three Months
                            Eleven Months
    Company Month
 
    Ended
    Ended
    Year Ended     Ended
    Ended
 
    March 30,
    March 31,
    December 29,
    December 30,
    December 31,
    January 2,
    January 3,
    February 1,
 
Income Statement Data:
  2007     2006     2006     2005     2004     2004     2003     2002  
    (Unaudited)     (Unaudited)     (In thousands, except per share data)              
 
Revenue
  $ 837,376     $ 828,342     $ 3,398,082     $ 3,188,454     $ 2,915,382     $ 2,501,151     $ 3,311,614     $ 349,912  
Gross profit
    32,706       35,043       155,792       126,354       147,155       173,703       144,251       11,120  
Equity in income of unconsolidated affiliates
    9,427       13,190       35,816       29,596       26,917       25,519       27,342       3,109  
Operating income
    22,740       33,473       115,896       92,127       112,141       137,620       105,772       9,424  
Extraordinary item — gain on debt discharge(1)
                                              567,193  
Net income
  $ 13,049     $ 18,960     $ 80,846     $ 53,860     $ 47,573     $ 34,157     $ 21,917     $ 522,150  
Income per share:
                                                               
Basic
  $ .46     $ .67     $ 2.83     $ 2.07     $ 1.88     $ 1.37     $ .88     $ (2)
Diluted
  $ .43     $ .62     $ 2.64     $ 1.77     $ 1.71     $ 1.35     $ .88     $ (2)
Shares used to compute income per share:
                                                               
Basic
    28,625       28,377       28,605       26,037       25,281       25,007       25,007       (2)
Diluted
    30,526       30,771       30,608       30,408       27,890       25,352       25,007       (2)
 


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    March 30,
    March 31,
    December 29,
    December 30,
    December 31,
    January 2,
    January 3,
    February 1,
 
Balance Sheet Data:   2007     2006     2006     2005     2004     2004     2003     2002  
    (Unaudited)     (Unaudited)     (In thousands)              
 
Cash and cash equivalents
  $ 185,153     $ 236,389     $ 232,096     $ 237,706     $ 224,529     $ 118,263     $ 80,401     $ 40,707  
Current assets
    966,506       1,012,301       1,125,160       1,027,620       949,272       789,011       731,094       1,072,410  
Total assets
    1,608,835       1,596,240       1,732,324       1,664,979       1,604,305       1,425,489       1,425,468       1,783,372  
Current liabilities
    568,210       623,365       718,024       704,366       620,253       540,095       605,356       972,588  
Long-term debt
                                              40,000  
Minority interests
    11,332       8,755       9,947       5,578       47,920       48,469       56,115       78,021  
Stockholders’ equity
    823,125       760,156       798,249       757,091       749,020       675,850       606,854       550,000  
 
 
(1) Extraordinary item consists of a gain on debt discharge of $1,460,732, less the value of common stock and warrants issued of $550,000, net of income tax of $343,539, upon emergence from bankruptcy.
 
(2) Income per share is not presented for this period, as it is not meaningful because of the revised capital structure of the successor company.

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Selected Unaudited Pro Forma Condensed Combined Financial Information
 
The merger will be accounted for by using the purchase method of accounting in accordance with GAAP. The tangible and intangible assets and liabilities of Washington Group will be recorded as of the closing date of the merger, at their respective fair values, and assumed by and added to those of URS. For a detailed description of the purchase accounting method, see “The Merger — Accounting Treatment” on page 87.
 
The following selected unaudited pro forma condensed combined balance sheet information as of March 30, 2007 and the selected unaudited pro forma condensed combined statements of operations information for the year ended December 29, 2006 and the three months ended March 30, 2007 are based on the separate historical consolidated financial statements of URS and Washington Group, and reflect the merger and related events and apply the assumptions and adjustments described in the notes to the unaudited pro forma condensed combined financial statements. The pro forma adjustments are more fully described in the notes to the unaudited pro forma condensed combined financial statements found on page 117 of this joint proxy statement/prospectus. The selected unaudited pro forma condensed combined balance sheet as of March 30, 2007 reflects the merger and related events as if they had been consummated on March 30, 2007. The selected unaudited pro forma condensed combined statements of operations for the year ended December 29, 2006 and the three months ended March 30, 2007 reflect the merger and related events as if they had been consummated on December 31, 2005, the beginning of URS’ 2006 fiscal year.
 
The pro forma adjustments are based upon available information and assumptions that the managements of URS and Washington Group believe reasonably reflect the merger. The selected unaudited pro forma condensed combined financial statements do not include the effects of the costs associated with any restructuring or integration activities resulting from the transaction. In addition, the selected unaudited pro forma condensed combined financial statements do not include the realization of any cost savings from operating efficiencies or synergies resulting from the transaction, nor do they include any potential incremental revenues and earnings that may be achieved with the combined capabilities of the companies. The final purchase price allocation, which will be determined subsequent to the closing of the merger, and its effect on results of operations, may differ significantly from the pro forma amounts included in the selected unaudited pro forma condensed combined financial statements. These amounts represent the managements’ best estimate as of the date of this joint proxy statement/prospectus.
 
We present the unaudited pro forma condensed combined financial statements for informational purposes only. The selected pro forma condensed combined financial statements are not necessarily indicative of what our financial position or results of operations actually would have been had we completed the merger as of the dates indicated. In addition, the selected unaudited pro forma condensed combined financial statements do not purport to project the future financial position or operating results of the combined company.


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The following selected unaudited pro forma condensed combined financial information (a) has been derived from, and should be read in conjunction with, the unaudited pro forma condensed combined financial statements and the accompanying notes included in this joint proxy statement/prospectus beginning on page 117 and (b) should be read in conjunction with the consolidated financial statements of URS and Washington Group and other information filed by URS and Washington Group with the SEC and incorporated by reference into this joint proxy statement/prospectus. See “Additional Information — Where You Can Find More Information” on page 144.
 
                 
    Three Months
       
    Ended
    Year Ended
 
    March 30,
    December 29,
 
    2007     2006  
    (In thousands, except
 
    per share amounts)  
 
Statements of Income Data:
               
Revenue
  $ 1,981,505     $ 7,629,723  
Operating income
    87,638       313,280  
Net income
    31,361       123,753  
Net income per share of common stock:
               
Basic
  $ .41     $ 1.64  
Diluted
  $ .41     $ 1.62  
 
         
    March 30,
 
    2007  
    (In thousands)  
 
Balance Sheet Data:
       
Cash, cash equivalents and short-term investments
  $ 64,854  
Total assets
    5,931,306  
Long-term debt
    1,393,370  
Stockholders’ equity
    2,758,360  


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Unaudited Comparative Per Share Information
 
The following table summarizes unaudited per share information for URS and Washington Group on a historical basis, on an unaudited pro forma combined basis for URS, taking into account the pro forma effects of the merger, and an equivalent pro forma combined basis for Washington Group. It has been assumed for purposes of the pro forma financial information provided below that the merger and related events had been consummated on December 31, 2005 for income statement purposes, and on March 30, 2007 for balance sheet purposes.
 
The following information should be read together with the audited consolidated financial statements of URS and Washington Group as of and for the fiscal year ended December 29, 2006, which are incorporated by reference into this joint proxy statement/prospectus, and the unaudited consolidated financial statements of URS and Washington Group as of and for the three-month period ended March 30, 2007, which are also incorporated by reference into this joint proxy statement/prospectus, and the unaudited pro forma condensed combined financial information as of and for the fiscal year ended December 29, 2006 and as of and for the three-month period ended March 30, 2007 set forth in the section entitled “Unaudited Pro Forma Condensed Combined Financial Statements” beginning on page 117. The pro forma information below is presented for illustrative purposes only and is not necessarily indicative of the operating results or financial position that would have occurred if the acquisition had been completed on December 31, 2005 for statement of operations purposes and on March 30, 2007 for balance sheet purposes, nor is it necessarily indicative of the future operating results or financial position of the combined company.
 
The historical book value per share is computed by dividing total stockholders’ equity by the number of shares of common stock outstanding at the end of the period. The pro forma per share income of the combined company is computed by dividing the pro forma total income of the combined company by the pro forma weighted-average number of shares of common stock of the combined company outstanding over the period. The pro forma combined book value per share is computed by dividing total pro forma stockholders’ equity of the combined company by the pro forma number of shares of common stock of the combined company outstanding at the end of the period. Washington Group equivalent pro forma combined per share amounts are calculated by multiplying the pro forma combined per share amounts by 0.772, the fraction of a share of URS common stock that would be exchanged for each share of Washington Group common stock in the acquisition. The Washington Group equivalent per share amounts do not include the benefits of the cash portion of the acquisition consideration. There were no cash dividends declared on URS common stock or Washington Group common stock during any period presented.
 
                                 
                      Pro Forma
 
    URS
    Washington Group
          Washington Group
 
    Historical     Historical     Pro Forma Combined     Equivalents(1)  
 
Year Ended December 29, 2006
                               
Net income per share:
                               
Basic
  $ 2.23     $ 2.83     $ 1.64     $ 1.26  
Diluted
  $ 2.19     $ 2.64     $ 1.62     $ 1.25  
Three Months Ended March 30, 2007
                               
Net income per share:
                               
Basic
  $ .59     $ .46     $ .41     $ .32  
Diluted
  $ .58     $ .43     $ .41     $ .31  
As of March 30, 2007:
                               
Book value per share
  $ 29.26     $ 28.22     $ 36.12     $ 27.88  
 
(1) Washington Group equivalent per share amounts are calculated by multiplying pro forma per share amounts by the exchange ratio of 0.772, the portion of the acquisition consideration to be paid in shares of URS common stock.


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Comparative Per Share Market Price Data
 
URS common stock trades on the NYSE under the symbol “URS.” From March 6, 2003 to March 27, 2007, Washington Group common stock traded on the NASDAQ Global Select Market® (or its predecessor) under the ticker symbol “WGII.” Since March 27, 2007, Washington Group common stock has traded on the NYSE under the symbol “WNG.” The table below sets forth, for the periods indicated, dividends and the range of high and low per share closing sales prices for URS common stock as reported on the NYSE and Washington Group common stock as reported on the NASDAQ Global Select Market® (or its predecessor) and the NYSE. For current price information, you should consult publicly available sources. For more information on URS and Washington Group payment of dividends, see “— Dividend Policies” on page 9.
 
                         
    URS Common Stock  
    High     Low     Dividends Paid  
 
Fiscal Year 2005
                       
First quarter
  $ 31.53     $ 27.21        
Second quarter
  $ 37.73     $ 28.15        
Third quarter
  $ 40.39     $ 36.45        
Fourth quarter
  $ 43.29     $ 37.06        
Fiscal Year 2006
                       
First quarter
  $ 44.75     $ 38.26        
Second quarter
  $ 48.87     $ 37.78        
Third quarter
  $ 41.99     $ 36.79        
Fourth quarter
  $ 44.25     $ 38.14        
Fiscal Year 2007
                       
First quarter
  $ 45.98     $ 40.83        
Second quarter
  $ 50.50     $ 42.15        
Third quarter (through          , 2007)
                     
 
                         
    Washington Group Common Stock  
    High     Low     Dividends Paid  
 
Fiscal Year 2005
                       
First quarter
  $ 46.70     $ 38.21        
Second quarter
  $ 52.14     $ 41.23        
Third quarter
  $ 54.16     $ 49.28        
Fourth quarter
  $ 53.99     $ 48.04        
Fiscal Year 2006
                       
First quarter
  $ 59.35     $ 53.13        
Second quarter
  $ 61.21     $ 48.02        
Third quarter
  $ 59.80     $ 50.93        
Fourth quarter
  $ 61.79     $ 54.47        
Fiscal Year 2007
                       
First quarter
  $ 66.42     $ 56.40        
Second quarter
  $ 85.04     $ 64.74        
Third quarter (through          , 2007)
  $       $          
 
The following table presents:
 
  •  the last reported sale price of a share of URS common stock, as reported on the NYSE; and
 
  •  the last reported sale price of a share of Washington Group common stock, as reported on the NYSE;


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in each case, on May 25, 2007, the last full trading day prior to the public announcement of the proposed merger, and on          , 2007, the last practicable trading day prior to the date of this joint proxy statement/prospectus.
 
                 
    URS
    Washington Group
 
Date
  Common Stock     Common Stock  
 
May 25, 2007
  $ 46.89     $ 69.97  
          , 2007
  $       $  
 
The market value of the shares of URS common stock to be issued in exchange for shares of Washington Group common stock upon the completion of the merger will not be known at the time Washington Group stockholders vote on the proposal to adopt the merger agreement and approve the merger or at the time URS stockholders vote on the proposal to approve the issuance of shares of URS common stock in the merger because the merger will not be completed by the time of the respective stockholder votes. The exchange ratio is fixed and will not be adjusted for changes in the stock prices of either company before the merger is consummated.
 
The above tables show only historical comparisons. Because the market prices of URS common stock and Washington Group common stock will likely fluctuate prior to the merger, these comparisons may not provide meaningful information to URS stockholders in determining whether to approve the issuance of shares of URS common stock in the merger or to Washington Group stockholders in determining whether to adopt the merger agreement and approve the merger. URS and Washington Group stockholders are encouraged to obtain current market quotations for URS and Washington Group common stock and to review carefully the other information contained in this joint proxy statement/prospectus or incorporated by reference into this joint proxy statement/prospectus in considering whether to approve the respective proposals before them. See the section entitled “Additional Information — Where You Can Find More Information” on page 144.


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RISK FACTORS
 
The merger involves risks for URS and Washington Group stockholders. Washington Group stockholders will be choosing to invest in URS common stock by voting in favor of the merger and URS stockholders will be choosing to permit significant dilution of their percentage ownership in URS by voting in favor of the issuance of stock in the merger. In addition to the other information included in this joint proxy statement/prospectus, including the matters addressed in “Cautionary Statement Concerning Forward-Looking Statements” on page 41, you should carefully consider the following risks before deciding whether to vote for adoption of the merger agreement and approval of the merger in the case of Washington Group stockholders, or for approval of the issuance of shares of URS common stock pursuant to the merger agreement, in the case of URS stockholders. In addition, you should read and consider the risks associated with each of the businesses of URS and Washington Group because these risks will also affect the combined company. These risks can be found below under “Risk Factors — Risks Related to URS” and “Risk Factors — Risks Related to Washington Group” beginning on pages 26 and 34, respectively, as well as in the URS Annual Report on Form 10-K for the fiscal year ended December 29, 2006, the URS Quarterly Report on Form 10-Q for the quarter ended March 30, 2007, the Washington Group Annual Report on Form 10-K, as amended on February 27, 2007, for the fiscal year ended December 29, 2006 and the Washington Group Quarterly Report on Form 10-Q for the quarter ended March 30, 2007, which are filed with the SEC and incorporated by reference into this joint proxy statement/prospectus. You should also read and consider the other information in this joint proxy statement/prospectus and the other documents incorporated by reference in this joint proxy statement/prospectus. See “Additional Information — Where You Can Find More Information” beginning on page 144. Additional risks and uncertainties not presently known to URS or Washington Group or that are not currently believed to be important also may adversely affect the transaction and the combined company after the transaction.
 
Risks Relating to the Merger
 
URS may not realize all of the anticipated benefits of the transaction.
 
The combined company’s ability to realize the anticipated benefits of the merger will depend, in part, on the ability of URS to integrate the businesses of Washington Group with URS. The combination of two independent companies is a complex, costly and time-consuming process. As a result, the combined company will be required to devote significant management attention and resources to integrating the diverse business practices and operations of URS and Washington Group. The integration process may disrupt the business of either or both of the companies and, if implemented ineffectively, preclude realization of the full benefits expected by URS and Washington Group. URS has not previously completed a merger or acquisition comparable in size or scope to the transaction. The failure of the combined company to meet the challenges involved in integrating successfully the operations of URS and Washington Group or otherwise to realize any of the anticipated benefits of the transaction could cause an interruption of, or a loss of momentum in, the activities of the combined company and could seriously harm its results of operations. In addition, the overall integration of the two companies may result in unanticipated problems, expenses, liabilities, competitive responses, loss of customer relationships, and diversion of management’s attention, and may cause the combined company’s stock price to decline. The difficulties of combining the operations of the companies include, among others:
 
  •  coordinating bid and marketing functions;
 
  •  unanticipated issues in integrating information, communications and other systems;
 
  •  unanticipated incompatibility of logistics, marketing and administration methods;
 
  •  maintaining employee morale and retaining key employees;
 
  •  integrating the business cultures of both companies;
 
  •  preserving important strategic and customer relationships;
 
  •  consolidating corporate and administrative infrastructures and eliminating duplicative operations;
 
  •  the diversion of management’s attention from ongoing business concerns; and
 
  •  coordinating geographically separate organizations.


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In addition, even if the operations of URS and Washington Group are integrated successfully, the combined company may not realize the full benefits of the transaction, including the synergies, cost savings, or sales or growth opportunities that we expect. These benefits may not be achieved within the anticipated time frame, or at all. Further, because the businesses of URS and Washington Group differ, the results of operations of the combined company and the market price of URS common stock may be affected after the transaction by factors different from those affecting the shares of URS and Washington Group currently, and may suffer as a result of the transaction. As a result, URS and Washington Group cannot assure you that the combination of Washington Group with URS will result in the realization of the full benefits anticipated from the transaction.
 
To be successful, the combined company must retain and motivate key employees, and failure to do so could seriously harm the combined company.
 
To be successful, the combined company must retain and motivate executives and other key employees. As a professional and technical services company, the combined company will be labor intensive and, therefore, its ability to retain qualified senior management and professional, business development and technical staff will be particularly important to its future success. Employees of URS and Washington Group may experience uncertainty about their future roles with the combined company until or after strategies for the combined company are announced or executed. These circumstances may adversely affect the combined company’s ability to retain key personnel. The combined company also must continue to motivate employees and keep them focused on the strategies and goals of the combined company, which effort may be adversely affected as a result of the uncertainty and difficulties with integrating URS and Washington Group. If the combined company is unable to retain executives and other key employees, the roles and responsibilities of such executive officers and employees will need to be filled either by existing or new URS officers and employees, which may require the combined company to devote time and resources to identifying, hiring and integrating replacements for the departed executives of URS that could otherwise be used to integrate the businesses of URS and Washington Group or otherwise pursue business opportunities.
 
URS will have more indebtedness after the merger, which could adversely affect its cash flows and business.
 
In order to complete the merger, URS has obtained a commitment for the funding of approximately $2.1 billion of new term and revolving debt financing, with the option of adding up to $500.0 million in synthetic letter of credit financing and up to $300.0 million in additional term loans. Proceeds from the initial financing will be used, in part, to fund the cash portion of the consideration paid to Washington Group stockholders. URS’ debt outstanding as of March 30, 2007 was approximately $167.7 million, but after the merger, the combined company’s debt is anticipated to be approximately $1.4 billion. As of March 30, 2007, URS’ debt service obligations, comprised of principal and interest (excluding capital leases), during the next twelve months would, in the absence of the merger, have been approximately $5.4 million. On a pro forma basis and based on assumed interest rates and credit ratings, after incurring the debt financing to effect the merger, URS’ debt service obligations, comprised of principal and interest (excluding capital leases), during the twelve months following the merger will be approximately $125.2 million. If our credit ratings are lower than assumed, our interest expenses, unused revolving line of credit fees and up-front fees will be greater. Based on then anticipated outstanding indebtedness of approximately $1.4 billion under the arranged credit facility, if market rates were to average 1% higher during that same twelve-month period, URS’ net-of-tax interest expense would increase by approximately $8.3 million. As a result of this increase in debt, demands on URS’ cash resources will increase after the completion of the merger. The increased levels of debt could, among other things:
 
  •  require URS to dedicate a substantial portion of its cash flow from operations to the servicing and repayment of its debt, thereby reducing funds available for working capital, capital expenditures, dividends, acquisitions and other purposes;
 
  •  increase URS’ vulnerability to, and limit flexibility in planning for, adverse economic and industry conditions;
 
  •  adversely affect URS’ credit rating, with the result that the cost of servicing URS’ indebtedness will increase and its ability to obtain surety bonds could be impaired;


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  •  limit URS’ ability to obtain additional financing to fund future working capital, capital expenditures, additional acquisitions and other general corporate requirements;
 
  •  create competitive disadvantages compared to other companies with less indebtedness;
 
  •  adversely affect URS’ stock price; and
 
  •  limit URS’ ability to apply proceeds from an offering or asset sale to purposes other than the servicing and repayment of debt.
 
If URS is unable to finance the merger through existing cash balances and debt financings, the completion of the merger will be jeopardized.
 
URS intends to finance the merger primarily with debt financing, existing cash balances and cash flow from operations. Although URS has entered into a financing commitment letter with MSSF and Wells Fargo, the financing commitment letter includes customary conditions to funding, including, without limitation, satisfaction of the conditions to closing of the merger as set forth in the merger agreement, the absence of any material adverse effect on Washington Group or its subsidiaries, taken as a whole, obtaining credit ratings, a maximum ratio of pro forma combined total debt to combined pro forma EBITDA of 3.50 to 1.00 on the closing date, the accuracy of certain representations and warranties of the parties, customary legal documentation, and repayment of Washington Group’s credit facilities. In the event that these conditions are not satisfied and URS is unable to finance the merger, but is still obligated to complete the merger, URS will have to adopt one or more alternatives, such as selling assets or restructuring debt, which may adversely affect URS’ business, financial condition and results of operations. Additionally, other financing may not be available on acceptable terms, in a timely manner or at all. If other financing becomes necessary and URS is unable to secure such additional financing, the completion of the merger will be jeopardized and URS could be in breach of the merger agreement.
 
If the combined company is unable to manage its growth, its business and financial results could suffer.
 
The combined company’s future financial results will depend in part on its ability to profitably manage its core businesses, including any growth that the combined company may be able to achieve. Over the past several years, each of URS and Washington Group has engaged in the identification of, and competition for, growth and expansion opportunities. In order to achieve those initiatives, the combined company will need to maintain existing customers and attract new customers, recruit, train, retain and effectively manage employees, as well as expand operations, customer support and financial control systems. If the combined company is unable to manage its businesses effectively and profitably, any growth that the combined company may be able to achieve, its business and financial results could suffer.
 
The issuance of shares of URS common stock to Washington Group stockholders in the merger will substantially reduce the percentage ownership interests of URS stockholders.
 
If the transaction is completed, URS and Washington Group expect that, based on Washington Group’s shares of common stock and equity awards outstanding as of          , 2007, URS will pay approximately $          billion in cash and issue approximately   million shares of URS common stock in the merger. Washington Group stockholders are expected to own approximately          % of the shares of URS common stock outstanding after the merger. URS stockholders will continue to own their existing shares of URS common stock, which will not be affected by the merger, other than by the dilution resulting from the issuance of URS common stock in the merger. The issuance of approximately           million shares of URS common stock to Washington Group stockholders and holders of equity-based incentive awards will cause a significant reduction in the relative percentage interests of current URS stockholders in earnings, voting, liquidation value and book and market value.


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The price of URS common stock might decline prior to the completion of the merger, which would decrease the value of the stock portion of the merger consideration to be received by Washington Group stockholders in the merger. Further, at the Washington Group special meeting, Washington Group stockholders will not know the exact value of URS common stock that will be issued in the merger.
 
The market price of URS common stock at the time of completion of the merger may vary significantly from the price on the date of the merger agreement or from the price on the dates of the URS and Washington Group stockholder meetings. URS common stock has historically experienced volatility. On May 25, 2007, the last full trading day prior to the public announcement of the proposed merger, URS common stock closed at $46.89 per share as reported on the New York Stock Exchange Composite Transaction Tape. From May 29, 2007, through          , 2007, the trading price of URS common stock ranged from a closing high of $      per share to a closing low of $      per share.
 
Under the merger agreement, each outstanding share of Washington Group common stock will be converted into the right to receive, upon completion of the merger and in addition to the cash consideration, stock consideration equal to 0.772 of a share of URS common stock (other than those shares held by URS, any subsidiary of URS, Elk Merger Corporation or Bear Merger Sub, Inc. and other than shares as to which a Washington Group stockholder has validly demanded and perfected appraisal rights under Delaware law). The exchange ratio is fixed and will not be adjusted for changes in the stock prices of either company before the merger is consummated. As a result, any changes in the market price of URS common stock will have a corresponding effect on the value of the consideration that URS pays to Washington Group stockholders in the merger. Neither party, however, has a right to terminate the merger agreement based solely upon changes in the market price of URS or Washington Group common stock.
 
URS and Washington Group are working to complete the transaction as quickly as possible. However, the time period between the stockholder votes taken at the special meetings and the completion of the transaction will depend upon, among other things, the timing of receipt of financing proceeds, which must be obtained prior to the completion of the transaction. There is no way to predict how long it will take to obtain the required financing. Because the date when the transaction is completed may be later than the date of the special meetings, URS and Washington Group stockholders may not know the exact value of the URS common stock that will be issued in the merger at the time they vote on the merger proposals. As a result, if the market price of URS common stock at the completion of the merger is lower than the market price on the date of the Washington Group special meeting, the value of the merger consideration received by Washington Group stockholders in the merger will be lower than the value of the merger consideration at the time of vote by the Washington Group stockholders. Moreover, during this interim period, events, conditions or circumstances could arise that could have a material impact or effect on URS, Washington Group or their respective industries.
 
The pro forma financial statements are presented for illustrative purposes only and may not be an indication of the combined company’s financial condition or results of operations following the transaction.
 
The pro forma financial statements contained in this joint proxy statement/prospectus are presented for illustrative purposes only and may not be an indication of the combined company’s financial condition or results of operations following the merger for several reasons. The pro forma financial statements have been derived from the historical financial statements of URS and Washington Group and adjustments and assumptions have been made regarding the combined company after giving effect to the transaction. The information upon which these adjustments and assumptions have been made is preliminary, and these kinds of adjustments and assumptions are difficult to make with accuracy. Moreover, the pro forma financial statements do not reflect all costs that are expected to be incurred by the combined company in connection with the transaction. For example, the impact of any incremental costs incurred in integrating the two companies is not reflected in the pro forma financial statements. As a result, the actual financial condition and results of operations of the combined company following the merger may not be consistent with, or evident from, these pro forma financial statements.
 
The assumptions used in preparing the pro forma financial information may not prove to be accurate, and other factors may affect the combined company’s financial condition or results of operations following the transaction.


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Any decline or potential decline in the combined company’s financial condition or results of operations may cause significant variations in the stock price of the combined company. See “Unaudited Pro Forma Condensed Combined Financial Statements” beginning on page 117.
 
The financial forecasts involve risks, uncertainties and assumptions, many of which are beyond the control of URS and Washington Group. As a result, they may not prove to be accurate and are not necessarily indicative of current values or future performance.
 
The financial forecasts of URS and Washington Group contained in this joint proxy statement/prospectus involve risks, uncertainties and assumptions and are not a guarantee of performance. The future financial results of URS, Washington Group and, if the merger is completed, the combined company, may materially differ from those expressed in the financial forecasts due to factors that are beyond URS’ and/or Washington Group’s ability to control or predict. Neither URS nor Washington Group can provide any assurance that their respective financial forecasts will be realized or that their respective future financial results will not materially vary from the financial forecasts. Since the financial forecasts cover multiple years, the information by its nature becomes less reliable with each successive year. The financial forecasts do not take into account any circumstances or events occurring after the date they were prepared.
 
More specifically, the financial forecasts:
 
  •  necessarily make numerous assumptions, many of which are beyond the control of URS and Washington Group and may not prove to have been, or may no longer be, accurate;
 
  •  do not necessarily reflect revised prospects for URS’ and Washington Group’s businesses, changes in general business or economic conditions, or any other transaction or event that has occurred or that may occur and that was not anticipated at the time the forecasts were prepared;
 
  •  are not necessarily indicative of current values or future performance, which may be significantly more favorable or less favorable than is reflected in the forecasts; and
 
  •  should not be regarded as a representation that the financial forecasts will be achieved.
 
The financial forecasts were not prepared with a view toward public disclosure or compliance with published guidelines of the SEC or the American Institute of Certified Public Accountants for preparation and presentation of prospective financial information or GAAP and do not reflect the effect of any proposed or other changes in GAAP that may be made in the future. In addition, the financial forecasts were developed from historical financial statements, do not give effect to any changes or expenses as a result of the merger or any other effects of the merger.
 
Some of the conditions to the merger may be waived by URS or Washington Group without resoliciting stockholder approval of the merger agreement.
 
Some of the conditions set forth in the merger agreement may be waived by URS or Washington Group, subject to the agreement of the other party in specific cases. See “The Merger Agreement — Conditions to Completion of the Merger” on page 100. If any conditions are waived, URS and Washington Group will evaluate whether amendment of this joint proxy statement/prospectus and resolicitation of proxies is warranted. In the event that the board of directors of URS or Washington Group determines that resolicitation of stockholders is not warranted, the applicable company will have the discretion to complete the transaction without seeking further stockholder approval.
 
Provisions of the merger agreement may deter alternative business combinations and could negatively impact the stock prices of URS and Washington Group if the merger agreement is terminated in certain circumstances.
 
Restrictions in the merger agreement on solicitation generally prohibit URS and Washington Group from soliciting any acquisition proposal or offer for a merger or business combination with any other party, including a proposal that might be advantageous to the stockholders of URS or Washington Group when compared to the terms and conditions of the merger described in this joint proxy statement/prospectus. In addition, if the merger agreement


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is terminated, Washington Group may be required in specified circumstances to pay a termination fee of $70.0 million to URS, and URS may be required in specified circumstances to pay a termination fee of $50.0 million or $70.0 million to Washington Group. These provisions may deter third parties from proposing or pursuing alternative business combinations that might result in greater value to URS or Washington Group stockholders than the transaction. In the event the merger is terminated by URS or Washington Group in circumstances that obligate either party to pay the termination fee to the other party, including where either party terminates the merger agreement because the other party’s board of directors withdraws its support of the merger, the trading price of URS’ and/or Washington Group’s stock may decline.
 
Directors and executive officers of Washington Group have interests in the transaction that may be different from, or in addition to, the interests of Washington Group stockholders.
 
In considering the recommendation of the Washington Group board of directors, Washington Group stockholders should be aware that Washington Group’s directors and executive officers have interests in the merger and have arrangements that are different from, or in addition to, those of Washington Group’s stockholders generally. These interests and arrangements may create potential conflicts of interest.
 
These interests and arrangements include:
 
  •  vesting of all unvested Washington Group equity awards, including those held by Washington Group’s executive officers;
 
  •  vesting and cash out of all unvested Washington Group performance units, including those performance units held by Washington Group’s current executive officers;
 
  •  change-in-control severance agreements with Washington Group’s current executive officers that provide for payment of incentive compensation accrued as of the change-in-control date, as well as severance benefits in the event of qualifying terminations of employment in connection with or following the merger; and
 
  •  continued indemnification and insurance coverage as required under the merger agreement.
 
As a result of these interests, directors and officers of Washington Group could be more likely to vote, and, in the case of directors, recommend to stockholders that they vote, to adopt the merger agreement and approve the merger than if they did not hold these interests, and may have reasons for doing so that are not the same as the interests of other Washington Group stockholders. For a full description of the interests of directors and executive officers of Washington Group in the merger, see “The Merger — Interests of Washington Group’s Directors and Executive Officers in the Merger” on page 92.
 
The merger will result in substantial goodwill for the combined company. If the combined company’s goodwill or intangible assets become impaired, then the profits of the combined company may be significantly reduced or eliminated.
 
Because URS has grown through acquisitions, goodwill and other intangible assets represent a substantial portion of its assets. URS’ goodwill and net purchased intangible assets were $994.5 million as of March 30, 2007 and the amount of the combined company’s goodwill and other net purchased intangible assets are expected to increase substantially as a result of the merger. On a pro forma basis, after giving effect to the merger and related events and applying the assumptions set forth in the unaudited pro forma condensed combined financial statements, the combined company’s pro forma goodwill as of March 30, 2007 is estimated to be approximately $2.6 billion, and the net purchased intangible assets, which will be amortized over a period ranging from approximately three months to fifteen years, is estimated to be approximately $508.7 million. If any of the combined company’s goodwill or intangible assets were to become impaired, the combined company would be required to write off the impaired amount, which may significantly reduce or eliminate its profits.


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Risks Relating to URS
 
Demand for URS’ services is cyclical and vulnerable to economic downturns. If the economy weakens, then URS’ revenues, profits and financial condition may deteriorate.
 
Demand for URS’ services in its infrastructure and defense markets is cyclical and vulnerable to sudden economic downturns, which may result in clients delaying, curtailing or canceling proposed and existing projects. For example, there was a decrease in the URS Division revenues of $77.9 million, or 3.4%, in fiscal year 2002 compared to fiscal year 2001 as a result of the general economic decline. URS’ clients may demand better pricing terms and their ability to pay URS’ invoices may be affected by a weakening economy. URS’ government clients may face budget deficits that prohibit them from funding proposed and existing projects. URS’ business traditionally lags the overall recovery in the economy; therefore, its business may not recover immediately when the economy improves. If the economy weakens, then URS’ revenues, net income and overall financial condition may deteriorate.
 
URS may not realize the full amount of revenues reflected in its book of business, which could harm its operations and significantly reduce its future revenues.
 
URS accounts for all contract awards that may eventually be recognized as revenues as its “book of business,” which includes backlog, designations, option years and indefinite delivery contracts, which are referred to as IDCs. URS’ backlog consists of the amount billable at a particular point in time, including task orders issued under IDCs. As of March 30, 2007, its backlog was approximately $5.0 billion. Its designations consist of projects that clients have awarded URS, but for which URS does not yet have signed contracts. URS’ option year contracts are multi-year contracts with base periods, plus option years that are exercisable by its clients without the need for URS to go through another competitive bidding process. URS’ IDCs are signed contracts under which it performs work only when its clients issue specific task orders. URS’ book of business estimates may not result in actual revenues in any particular period because clients may modify or terminate projects and contracts and may decide not to exercise contract options or issue task orders. If URS does not realize a substantial amount of its book of business, its operations could be harmed and its future revenues could be significantly reduced.
 
As a government contractor, URS is subject to a number of procurement laws, regulations and government audits; a violation of any such laws and regulations could result in sanctions, contract termination, forfeiture of profit, harm to URS’ reputation or loss of URS’ status as an eligible government contractor.
 
URS must comply with and is affected by federal, state, local and foreign laws and regulations relating to the formation, administration and performance of government contracts. For example, URS must comply with the Federal Acquisition Regulation, which is referred to as the FAR, the Truth in Negotiations Act, the Cost Accounting Standards, which are referred to as the CAS, the Services Contract Act and the U.S. Department of Defense security regulations, as well as many other laws and regulations. These laws and regulations affect how URS transacts business with its clients and in some instances, impose additional costs on URS’ business operations. Even though URS takes precautions to prevent and deter fraud, misconduct and non-compliance, URS faces the risk that its employees or outside partners may engage in misconduct, fraud or other improper activities. Government agencies, such as the U.S. Defense Contract Audit Agency, which is referred to as the DCAA, routinely audit and investigate government contractors. These government agencies review and audit a government contractor’s performance under its contracts and cost structure, and compliance with applicable laws, regulations and standards. In addition, during the course of its audits, the DCAA may question URS’ incurred project costs, and if the DCAA believes URS has accounted for such costs in a manner inconsistent with the requirements for the FAR or CAS, the DCAA auditor may recommend to URS’ U.S. government corporate administrative contracting officer to disallow such costs. Historically, URS has not experienced significant disallowed costs as a result of government audits. However, URS can provide no assurance that the DCAA or other government audits will not result in material disallowances for incurred costs in the future. Government contract violations could result in the imposition of civil and criminal penalties or sanctions, contract termination, forfeiture of profit, and/or suspension of payment, any of which could make URS lose its status as an eligible government contractor. URS could also suffer serious harm to its reputation.


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Because URS depends on federal, state and local governments for a significant portion of its revenue, URS’ inability to win or renew government contracts during regulated procurement processes could harm its operations and significantly reduce or eliminate its profits.
 
Revenues from federal government contracts and state and local government contracts represented approximately 41% and 22%, respectively, of URS’ total revenues for the three months ended March 30, 2007. Government contracts are awarded through a regulated procurement process. The federal government has increasingly relied upon multi-year contracts with pre-established terms and conditions, such as IDCs, that generally require those contractors who have previously been awarded the IDC to engage in an additional competitive bidding process before a task order is issued. The increased competition, in turn, may require URS to make sustained efforts to reduce costs in order to realize revenues and profits under government contracts. If URS is not successful in reducing the amount of costs URS incurs, its profitability on government contracts will be negatively impacted. Moreover, even if URS is qualified to work on a government contract, URS may not be awarded the contract because of existing government policies designed to protect small businesses and underrepresented minority contractors. URS’ inability to win or renew government contracts during regulated procurement processes could harm its operations and significantly reduce or eliminate its profits.
 
Each year some government contracts may be dependent on the legislative appropriations process. If legislative appropriations are not made in subsequent years of a multiple-year government contract, then URS may not realize all of its potential revenues and profits from that contract.
 
Each year the funding for some of URS’ government contracts may be dependent on the legislative appropriations process. For example, the passage of the SAFETEA-LU highway and transit bill in August of 2005 has provided additional funding for state transportation projects in which URS provides services. Legislatures may appropriate funds for a given project on a year-by-year basis, even though the project may take more than one year to perform. As a result, at the beginning of a project, the related contract may only be partially funded, and additional funding is committed only as appropriations are made in each subsequent year. These appropriations, and the timing of payment of appropriated amounts, may be influenced by, among other things, the state of the economy, competing political priorities, curtailments in the U.S. of government contracting firms, rise in raw material costs, delays associated with a lack of a sufficient number of government staff to oversee contracts, budget constraints, the timing and amount of tax receipts and the overall level of government expenditures. If appropriations are not made in subsequent years of a multiple-year contract, URS may not realize all of its potential revenues and profits from that contract.
 
URS’ government contracts may give the government the right to modify, delay, curtail or terminate URS’ contracts at their convenience at any time prior to their completion and, if URS does not replace these contracts, then URS may suffer a decline in revenues.
 
Government projects in which URS participates as a contractor or subcontractor may extend for several years. Generally, government contracts include the right for the government to modify, delay, curtail or terminate contracts and subcontracts at their convenience any time prior to their completion. Any decision by a government client to modify, delay, curtail or terminate URS’ contracts at their convenience may result in a decline in revenues.
 
If URS is unable to accurately estimate and control its contract costs, then URS may incur losses on its contracts, which could decrease its operating margins and significantly reduce or eliminate its profits.
 
It is important for URS to control its contract costs so that it can maintain positive operating margins. URS generally enters into three principal types of contracts with its clients: cost-plus, fixed-price and time-and-materials. Under cost-plus contracts, which may be subject to contract ceiling amounts, URS is reimbursed for allowable costs and fees, which may be fixed or performance-based. If its costs exceed the contract ceiling or are not allowable under the provisions of the contract or any applicable regulations, URS may not be reimbursed for all of the costs it incurs. Under fixed-price contracts, URS receives a fixed price regardless of what its actual costs will be. Consequently, URS realizes a profit on fixed-price contracts only if it controls its costs and prevents cost over-runs on the contracts. Under time-and-materials contracts, URS is paid for labor at negotiated hourly billing rates and for other expenses. Profitability on URS’ contracts is driven by billable headcount and its ability to manage costs.


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Under each type of contract, if URS is unable to control costs, URS may incur losses on its contracts, which could decrease its operating margins and significantly reduce or eliminate its profits.
 
URS’ actual results could differ from the estimates and assumptions that it uses to prepare its financial statements, which may significantly reduce or eliminate its profits.
 
To prepare financial statements in conformity with GAAP, management is required to make estimates and assumptions as of the date of the financial statements, which affect the reported values of assets and liabilities and revenues and expenses and disclosures of contingent assets and liabilities. Areas requiring significant estimates by URS’ management include:
 
  •  the application of the “percentage-of-completion” method of accounting, and revenue recognition on contracts, change orders, and contract claims;
 
  •  provisions for uncollectible receivables and customer claims and recoveries of costs from subcontractors, vendors and others;
 
  •  provisions for income taxes and related valuation allowances;
 
  •  value of goodwill and recoverability of other intangible assets;
 
  •  valuation of assets acquired and liabilities assumed in connection with purchase business combinations;
 
  •  valuation of defined benefit pension plans and other employee benefit plans;
 
  •  valuation of stock-based compensation expense; and
 
  •  accruals for estimated liabilities, including litigation and insurance reserves.
 
URS’ actual results could differ from those estimates, which may significantly reduce or eliminate its profits.
 
URS’ use of the “percentage-of-completion” method of accounting could result in reduction or reversal of previously recorded revenues and profits.
 
A substantial portion of URS’ revenues and profits are measured and recognized using the “percentage-of-completion” method of accounting. URS’ use of this accounting method results in recognition of revenues and profits ratably over the life of a contract, based generally on the proportion of costs incurred to date to total costs expected to be incurred for the entire project. The effects of revisions to revenues and estimated costs are recorded when the amounts are known or can be reasonably estimated. Such revisions could occur in any period and their effects could be material. URS estimates the extent of progress towards completion of long-term engineering, program management, construction management or construction contracts in process, but due to uncertainties inherent in the estimating process, it is possible for actual costs to vary materially from estimates, including reductions or reversals of previously recorded revenues and profits.
 
URS’ failure to successfully bid on new contracts and renew existing contracts with private and public sector clients could adversely reduce or eliminate its profitability.
 
URS’ business depends on its ability to successfully bid on new contracts and renew existing contracts with private and public sector clients. Contract proposals and negotiations are complex and frequently involve a lengthy bidding and selection process, which are affected by a number of factors, such as market conditions, financing arrangements and required governmental approvals. For example, a client may require URS to provide a bond or letter of credit to protect the client should URS fail to perform under the terms of the contract. If negative market conditions arise, or if URS fails to secure adequate financial arrangements or the required governmental approval, it may not be able to pursue particular projects, which could adversely reduce or eliminate its profitability.


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If URS fails to timely complete, miss a required performance standard or otherwise fail to adequately perform on a project, then URS may incur a loss on that project, which may reduce or eliminate its overall profitability.
 
URS may commit to a client that it will complete a project by a scheduled date. URS may also commit that a project, when completed, will achieve specified performance standards. If the project is not completed by the scheduled date or fails to meet required performance standards, URS may either incur significant additional costs or be held responsible for the costs incurred by the client to rectify damages due to late completion or failure to achieve the required performance standards. The uncertainty of the timing of a project can present difficulties in planning the amount of personnel needed for the project. If the project is delayed or canceled, URS may bear the cost of an underutilized workforce that was dedicated to fulfilling the project. In addition, performance of projects can be affected by a number of factors beyond URS’ control, including unavoidable delays from weather conditions, unavailability of vendor materials, changes in the project scope of services requested by clients or labor disruptions. In some cases, should URS fail to meet required performance standards, it may also be subject to agreed-upon financial damages, which are determined by the contract. To the extent that these events occur, the total costs of the project could exceed URS’ estimates and URS could experience reduced profits or, in some cases, incur a loss on a project, which may reduce or eliminate its overall profitability.
 
If URS’ partners fail to perform their contractual obligations on a project, URS could be exposed to liability, loss of reputation or reduced or eliminated profits.
 
URS sometimes enters into subcontracts, joint ventures and other contractual arrangements with outside partners to jointly bid on and execute a particular project. The success of these joint projects depends upon, among other things, the satisfactory performance of the contractual obligations of URS’ partners. If any of URS’ partners fails to satisfactorily perform its contractual obligations, URS may be required to make additional expenditures and provide additional services to complete the project. If URS is unable to adequately address its partner’s performance issues, then its client could terminate the joint project, exposing URS to liability, loss of reputation or reduced or eliminated profits.
 
URS may be subject to substantial liabilities under environmental laws and regulations.
 
A portion of URS’ environmental business involves the planning, design, program management, construction management and operation and maintenance of pollution control facilities, hazardous waste or Superfund sites and military bases. In addition, URS has contracts with U.S. governmental entities to destroy hazardous materials, including chemical agents and weapons stockpiles. These activities may require URS to manage, handle, remove, treat, transport and dispose of toxic or hazardous substances. URS must comply with a number of governmental laws that strictly regulate the handling, removal, treatment, transportation and disposal of toxic and hazardous substances. Under the Comprehensive Environmental Response, Compensation, and Liability Act, which is referred to as CERCLA, and comparable state laws, URS may be required to investigate and remediate regulated hazardous materials. CERCLA and comparable state laws typically impose strict, joint and several liabilities without regard to whether a company knew of or caused the release of hazardous substances. The liability for the entire cost of clean up can be imposed upon any responsible party. Other principal federal environmental, health and safety laws affecting URS include, but are not limited to, the Resource Conservation and Recovery Act, the National Environmental Policy Act, the Clean Air Act, the Clean Air Interstate Rule, the Clean Air Mercury Rule, the Occupational Safety and Health Act, the Toxic Substances Control Act and the Superfund Amendments and Reauthorization Act. URS’ business operations may also be subject to similar state and international laws relating to environmental protection. Liabilities related to environmental contamination or human exposure to hazardous substances, or a failure to comply with applicable regulations could result in substantial costs to URS, including clean-up costs, fines and civil or criminal sanctions, third party claims for property damage or personal injury or cessation of remediation activities. URS’ continuing work in the areas governed by these laws and regulations exposes URS to the risk of substantial liability; however, URS is currently not subject to any material claims under environmental laws and regulations.


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URS’ liability for damages due to legal proceedings may adversely affect URS and result in a significant loss.
 
In performing its services, URS may be exposed to legal proceedings in connection with cost overruns, personal injury claims, property damage, labor shortages or disputes, weather problems and unforeseen engineering, architectural, environmental and geological problems. In some actions, parties may seek damages that exceed URS’ insurance coverage. Currently, URS has limits of $125.0 million per loss and $125.0 million in the aggregate for general liability, professional errors and omissions liability and contractor’s pollution liability insurance (in addition to other policies for some specific projects). The general liability policy includes a self-insured claim retention of $4.0 million (or $10.0 million in some circumstances). The professional errors and omissions liability and contractor’s pollution liability insurance policies include a self-insured claim retention amount of $10.0 million each. URS’ services may require URS to make judgments and recommendations about environmental, structural, geotechnical and other physical conditions at project sites. If URS’ performance, judgments and recommendations are later found to be incomplete or incorrect, then URS may be liable for the resulting damages. Various legal proceedings are pending against URS in connection with the performance of its professional services and other actions by URS. The resolution of outstanding claims is subject to inherent uncertainty and it is reasonably possible that any resolution could have an adverse effect on URS. If URS sustains damages that exceed its insurance coverage or for which it is not insured, URS’ results of operations and financial condition could be harmed.
 
Changes in environmental laws, regulations and programs could reduce demand for URS’ environmental services, which could in turn negatively impact its revenues.
 
URS’ environmental services business is driven by federal, state, local and foreign laws, regulations and programs related to pollution and environmental protection. On the other hand, a relaxation or repeal of these laws and regulations, or changes in governmental policies regarding the funding, implementation or enforcement of these programs, could result in a decline in demand for environmental services, which could in turn negatively impact URS’ revenues.
 
A decline in U.S. defense spending or a change in budgetary priorities could harm URS’ operations and significantly reduce its future revenues.
 
Revenues under contracts with the U.S. Department of Defense and other defense-related clients represented approximately 36% and 33% of URS’ total revenues for the fiscal year ended December 29, 2006 and three months ended March 30, 2007, respectively. While spending authorization for defense-related programs has increased significantly in recent years due to greater homeland security and foreign military commitments, as well as the trend to outsource federal government jobs to the private sector, these spending levels may not be sustainable. For example, the U.S. Department of Defense budget declined in the late 1980s and the early 1990s, resulting in U.S. Department of Defense program delays and cancellations. Future levels of expenditures and authorizations for these programs may decrease, remain constant or shift to programs in areas where URS does not currently provide services. As a result, a general decline in U.S. defense spending or a change in budgetary priorities could harm URS’ operations and significantly reduce URS’ future revenues.
 
URS’ overall revenues will decline if it is unable to compete successfully in its industry.
 
URS’ industry is highly fragmented and intensely competitive. According to the publication Engineering News-Record, based on information voluntarily reported by 500 design firms, the top ten engineering design firms only accounted for approximately 32% of the total design firm revenues in 2005. URS’ competitors are numerous, ranging from small private firms to multi-billion dollar companies. In addition, the technical and professional aspects of URS’ services generally do not require large upfront capital expenditures and provide limited barriers against new competitors.
 
Some of URS’ competitors have achieved greater penetration in some of the markets in which URS competes and have substantially more financial resources and/or financial flexibility than URS does. As a result of the number of competitors in the industry, URS’ clients may select one of its competitors on a project due to competitive pricing or a specific skill set. If URS is unable to maintain its competitiveness, its revenues will decline. These competitive


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forces could have a material adverse effect on its business, financial condition and results of operations by reducing URS’ relative share in the markets it serves.
 
URS’ failure to attract and retain key employees could impair its ability to provide services to its clients and otherwise conduct its business effectively.
 
As a professional and technical services company, URS is labor intensive, and therefore its ability to attract, retain and expand its senior management and its professional and technical staff is an important factor in determining its future success. From time to time, it may be difficult to attract and retain qualified individuals with the expertise and in the timeframe demanded by URS’ clients. For example, some of URS’ government contracts may require URS to employ only individuals who have particular government security clearance levels. In addition, URS relies heavily upon the expertise and leadership of its senior management. The failure to attract and retain key individuals could impair URS’ ability to provide services to its clients and conduct its business effectively.
 
Employee, agent, or partner misconduct or URS’ failure to comply with laws or regulations could weaken URS’ ability to win contracts with government clients, which could result in decreasing revenues.
 
As a federal, state and local government contractor, misconduct, fraud, non-compliance with applicable laws and regulations, or other improper activities by one of URS’ employees, agents, or partners could have a significant negative impact on URS’ business and reputation. Such misconduct could include the failure to comply with government procurement regulations, regulations regarding the protection of classified information, laws regarding the pricing of labor and other costs in government contracts, regulations on lobbying or similar activities, environmental laws and any other applicable laws or regulations. For example, URS regularly provides services that may be highly sensitive or that relate to critical national security matters; if a security breach were to occur, URS’ ability to procure future government contracts could be severely limited. Other examples of potential misconduct include time card fraud and violations of the Anti-Kickback Act. The precautions URS takes to prevent and detect these activities may not be effective, and URS could face unknown risks or losses. URS’ failure to comply with applicable laws or regulations or acts of misconduct could subject URS to fines and penalties, loss of security clearance and suspension or debarment from contracting, which could weaken URS’ ability to win future contract with government clients.
 
Recent changes in accounting for equity-related compensation have impacted URS’ financial statements and could negatively impact its ability to attract and retain key employees.
 
URS adopted Statement of Financial Accounting Standards No. 123 (revised 2004), “Share-Based Payment” on December 31, 2005. At that time, URS evaluated its current stock-based compensation plans and employee stock purchase plans. In order to minimize the volatility of its stock-based compensation expense, URS is currently issuing restricted stock awards and units to selected employees rather than granting stock options. URS also revised its employee stock purchase plan from a 15% discount on its stock price at the beginning or the end of the six-month offering period, whichever is lower, to a 5% discount on its stock price at the end of the six-month offering period. These changes to URS’ equity-related compensation may negatively impact its ability to attract and retain key employees.
 
Because URS is a holding company, URS may not be able to service its debt if URS’ subsidiaries do not make sufficient distributions to URS.
 
URS has no direct operations and no significant assets other than investments in the stock of its subsidiaries. Because URS conducts its business operations through its operating subsidiaries, URS depends on those entities for payments and dividends to generate the funds necessary to meet its financial obligations. Legal restrictions, including local regulations and contractual obligations associated with secured loans, such as equipment financings, could restrict its subsidiaries’ ability to pay dividends or make loans or other distributions to URS. The earnings from, or other available assets of, these operating subsidiaries may not be sufficient to make distributions to enable URS to pay interest on its debt obligations when due or to pay the principal of such debt at maturity. As of March 30, 2007, URS’ debt service obligations, comprised of principal and interest (excluding capital leases), during the next


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twelve months would, in the absence of the merger, have been approximately $5.4 million. On a pro forma basis and based on assumed interest rates and credit ratings, after incurring the debt financing to effect the merger, URS’ debt service obligations, comprised of principal and interest (excluding capital leases), during the twelve months following the merger will be approximately $125.2 million. If our credit ratings are lower than assumed, our interest expenses, unused revolving line of credit fees and up-front fees will be greater. Based on then anticipated outstanding indebtedness of approximately $1.4 billion under the arranged credit facility, if market rates were to average 1% higher during that same twelve-month period, URS’ net of tax interest expense would increase by approximately $8.3 million.
 
URS’ international operations are subject to a number of risks that could harm its operations and significantly reduce its future revenues.
 
As a multinational company, URS has operations in over 20 countries and it derived 10% and 9% of its revenues from international operations for the three months ended March 30, 2007 and March 31, 2006, respectively. International business is subject to a variety of risks, including:
 
  •  lack of developed legal systems to enforce contractual rights;
 
  •  greater risk of uncollectible accounts and longer collection cycles;
 
  •  currency fluctuations;
 
  •  logistical and communication challenges;
 
  •  potentially adverse changes in laws and regulatory practices, including export license requirements, trade barriers, tariffs and tax laws;
 
  •  changes in labor conditions;
 
  •  exposure to liability under the Foreign Corrupt Practices Act and export control and anti-boycott laws; and
 
  •  general economic and political conditions in foreign markets.
 
These and other risks associated with international operations could harm URS’ overall operations and significantly reduce its future revenues. In addition, services billed through foreign subsidiaries are attributed to the international category of URS’ business, regardless of where the services are performed and conversely, services billed through domestic operating subsidiaries are attributed to a domestic category of clients, regardless of where the services are performed. As a result, URS’ international risk exposure may be more or less than the percentage of revenues attributed to its international operations.
 
URS’ business activities may require its employees to travel to and work in high security risk countries, which may result in employee death or injury, repatriation costs or other unforeseen costs.
 
As a multinational company, URS’ employees often travel to and work in high security risk countries around the world that are undergoing political, social and economic upheavals resulting in war, civil unrest, criminal activity or acts of terrorism. For example, URS has employees working in high security risk countries located in the Middle East and Southwest Asia. As a result, URS may be subject to costs related to employee death or injury, repatriation or other unforeseen circumstances.
 
URS relies on third-party software to run its critical accounting, project management, and financial information systems, and as a result, any sudden loss, disruption or unexpected costs to maintain such systems could significantly increase URS’ operational expense as well as disrupt the management of its business operations.
 
URS relies on third-party software to run its critical accounting, project management and financial information systems. For example, URS relied on one software vendor’s products to process approximately 68% of its total revenues as of March 30, 2007. URS also depends on its third party software vendors to provide long-term software maintenance support for its information systems. Software vendors may decide to discontinue further development, integration or long-term software maintenance support for its information systems, in which case URS may need to abandon one or more of its current information systems and migrate some or all of its accounting, project


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management and financial information to other systems, thus increasing its operational expense as well as disrupting the management of URS’ business operations.
 
Force majeure events, including natural disasters and terrorists’ actions have negatively impacted and could further negatively impact the economies in which URS operates, which may affect its financial condition, results of operations or cash flows.
 
Force majeure events, including natural disasters, such as Hurricane Katrina that affected the Gulf Coast in August 2005 and terrorist attacks, such as those that occurred in New York and Washington, D.C. on September 11, 2001, could negatively impact the economies in which URS operates. For example, Hurricane Katrina caused several of URS’ Gulf Coast offices to close, interrupted a number of active client projects and forced the relocation of URS’ employees in that region from their homes. In addition, during the September 11, 2001 terrorist attacks, several of URS’ offices were shut down due to terrorist attack warnings.
 
URS typically remains obligated to perform its services after a terrorist action or natural disaster unless the contract contains a force majeure clause relieving URS of its contractual obligations in such an extraordinary event. If URS is not able to react quickly to force majeure, URS’ operations may be affected significantly, which would have a negative impact on its financial condition, results of operations or cash flows.
 
Negotiations with labor unions and possible work actions could divert management attention and disrupt operations. In addition, new collective bargaining agreements or amendments to agreements could increase URS’ labor costs and operating expenses.
 
As of March 30, 2007, approximately 7% of URS’ employees were covered by collective bargaining agreements. The outcome of any future negotiations relating to union representation or collective bargaining agreements may not be favorable to URS. URS may reach agreements in collective bargaining that increase its operating expenses and lower its net income as a result of higher wages or benefits expenses. In addition, negotiations with unions could divert management attention and disrupt operations, which may adversely affect URS’ results of operations. If URS is unable to negotiate acceptable collective bargaining agreements, URS may have to address the threat of union-initiated work actions, including strikes. Depending on the nature of the threat or the type and duration of any work action, these actions could disrupt URS’ operations and adversely affect its operating results.
 
URS has only a limited ability to protect its intellectual property rights, which are important to its success. URS’ failure to protect its intellectual property rights could adversely affect its competitive position.
 
URS’ success depends, in part, upon URS’ ability to protect its proprietary information and other intellectual property. URS relies principally on trade secrets to protect much of its intellectual property where URS does not believe that patent or copyright protection is appropriate or obtainable. However, trade secrets are difficult to protect. Although URS’ employees are subject to confidentiality obligations, this protection may be inadequate to deter or prevent misappropriation of its confidential information. In addition, URS may be unable to detect unauthorized use of its intellectual property or otherwise take appropriate steps to enforce its rights. Failure to obtain or maintain trade secret protection would adversely affect URS’ competitive business position. In addition, if URS is unable to prevent third parties from infringing or misappropriating URS’ trademarks or other proprietary information, URS’ competitive position could be adversely affected.
 
Delaware law and URS’ charter documents may impede or discourage a merger, takeover or other business combination even if the business combination would have been in the best interests of URS’ current stockholders
 
URS is a Delaware corporation and the anti-takeover provisions of Delaware law impose various impediments to the ability of a third party to acquire control of URS, even if a change-in-control would be beneficial to its existing stockholders. In addition, URS’ board of directors has the power, without stockholder approval, to designate the terms of one or more series of preferred stock and issue shares of preferred stock, which could be used defensively if


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a takeover is threatened. URS’ incorporation under Delaware law, the ability of URS’ board of directors to create and issue a new series of preferred stock and provisions in URS’ certificate of incorporation and bylaws could impede a merger, takeover or other business combination involving URS or discourage a potential acquirer from making a tender offer for shares of URS common stock, even if the business combination would have been in the best interests of URS’ current stockholders.
 
Risks Relating to Washington Group
 
Economic downturns and reductions in government funding could have a negative impact on Washington Group’s businesses.
 
Demand for the services offered by Washington Group has been, and is expected to continue to be, subject to significant fluctuations due to a variety of factors beyond Washington Group’s control, including economic conditions. During economic downturns, the ability of both private and governmental entities to make expenditures may decline significantly. Washington Group cannot be certain that economic or political conditions will be generally favorable or that there will not be significant fluctuations adversely affecting Washington Group’s industry as a whole or key markets targeted by Washington Group. In addition, Washington Group’s operations are, in part, dependent upon government funding. Significant changes in the level of government funding could have an unfavorable impact on Washington Group’s business, financial position, results of operations and cash flows.
 
Washington Group’s success depends on attracting and retaining qualified personnel in a competitive environment.
 
Washington Group is dependent upon its ability to attract and retain highly qualified managerial, technical and business development personnel. Competition for key personnel is intense. Washington Group cannot be certain that it will retain its key managerial, technical and business development personnel or that Washington Group will attract or assimilate key personnel in the future. Failure to retain or attract such personnel could adversely affect Washington Group’s businesses, financial position, results of operations and cash flows.
 
Washington Group is engaged in highly competitive businesses and must bid against competitors to obtain engineering, construction and service contracts.
 
Washington Group is engaged in highly competitive businesses in which customer contracts are awarded through competitive bidding processes. Washington Group competes with other general and specialty contractors, both foreign and domestic, including large international contractors and small local contractors. Some competitors have greater financial and other resources than Washington Group does, which, in some instances, could give them a competitive advantage over Washington Group.
 
Washington Group’s fixed-price contracts subject it to the risk of increased project costs.
 
Washington Group’s fixed-price contracts involve risks relating to its inability to receive additional compensation in the event the costs of performing those contracts prove to be greater than anticipated. Washington Group’s cost of performing the contracts may be greater than anticipated due to uncertainties inherent in estimating contract completion costs, contract modifications by customers resulting in claims, failure of subcontractors and joint venture partners to perform and other unforeseen events and conditions. As of March 30, 2007, approximately 18%, or $1.1 billion, of Washington Group’s backlog represented fixed-price and fixed-unit-price contracts. Any one or more of these risks could result in reduced profits or increased losses on a particular contract or contracts.
 
Washington Group has seen an increase in its claims against project owners for payment and Washington Group’s failure to recover adequately on these and future claims could have a material effect on it.
 
Washington Group has over the past few years seen an increase in the volume and the amount of claims brought by Washington Group against project owners for additional costs exceeding the contract price or for amounts not included in the original contract price. These types of claims occur due to matters such as owner-caused delays or changes from the initial project scope, both of which may result in additional costs, both direct and indirect. Often, these claims can be the subject of lengthy arbitration or litigation proceedings, and it is difficult to accurately predict


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when these claims will be fully resolved. When these types of events occur and unresolved claims are pending, Washington Group has used significant working capital in projects to cover cost overruns pending the resolution of the relevant claims. A failure to promptly recover on these types of claims could have a negative impact on Washington Group’s liquidity and financial condition.
 
The U.S. government can audit and disallow costs reimbursed under Washington Group’s government contracts and can terminate those contracts without cause.
 
Government contracts, primarily with the U.S. Departments of Energy and Defense, are, and are expected to continue to be, a significant part of Washington Group’s business. Washington Group derived approximately 51% of its consolidated revenue in 2006 from contracts funded by the U.S. government. Allowable costs under government contracts are subject to audit by the U.S. government. To the extent that these audits result in determinations that costs claimed as reimbursable are not allowable costs or were not allocated in accordance with federal government regulations, Washington Group could be required to reimburse the U.S. government for amounts previously received. In addition, if Washington Group were to lose and not replace its revenue generated by one or more of the U.S. government contracts, Washington Group’s businesses, financial condition, results of operations and cash flows could be adversely affected.
 
Washington Group has a number of contracts and subcontracts with agencies of the U.S. government, principally for environmental remediation, threat reduction, restoration and operations work, which extend beyond one year and for which government funding has not yet been approved. Washington Group cannot be certain that funding will be approved. All contracts with agencies of the U.S. government and some commercial and foreign contracts are subject to unilateral termination at the convenience of the customer. In the event of a termination, Washington Group would not receive projected revenue or profits associated with the terminated portion of those contracts.
 
In addition, government contracts are subject to specific procurement regulations, contract provisions and a variety of other socioeconomic requirements relating to the formation, administration, performance and accounting for these contracts. Many of these contracts include express or implied certifications of compliance with applicable laws and contract provisions. As a result of Washington Group’s government contracting, claims for civil or criminal fraud may be brought by the government for violations of these regulations, requirements or statutes. Washington Group may also be subject to qui tam litigation brought by private individuals on behalf of the government under the Federal Civil False Claims Act, which could include claims for up to treble damages. Further, if Washington Group fails to comply with any of these regulations, requirements or statutes, its existing government contracts could be terminated, Washington Group could be suspended from government contracting or subcontracting, including federally funded projects at the state level, and Washington Group’s ability to participate in foreign projects funded by the U.S. government could be adversely affected. If one or more of Washington Group’s government contracts are terminated for any reason, or if Washington Group is suspended from government work, Washington Group could suffer a significant reduction in expected revenue and earnings.
 
Washington Group’s dependence on one or a few customers could adversely affect it.
 
One or a few clients have in the past and may in the future contribute a significant portion of Washington Group’s consolidated revenue in any one year or over a period of several consecutive years. In 2006, approximately 27% of Washington Group’s revenue was from the U.S. Department of Defense and approximately 23% of Washington Group’s revenue was from the U.S. Department of Energy. As Washington Group’s backlog frequently reflects multiple projects for individual clients, one major customer may comprise a significant percentage of Washington Group’s backlog at any point in time. For example, the U.S. Department of Defense, with which Washington Group has 77 contracts, represented an aggregate of 20% of Washington Group’s backlog at March 30, 2007, and the U.S. Department of Energy, with which Washington Group has 188 contracts, represented an aggregate of 15% of Washington Group’s backlog at March 30, 2007.
 
Because these significant customers generally contract with Washington Group for specific projects, Washington Group may lose these customers from year to year as their projects with it are completed. If


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Washington Group does not replace them with other customers or other projects, Washington Group’s business could be materially adversely affected.
 
Additionally, Washington Group has long-standing relationships with many of its significant customers. Washington Group’s contracts with these customers, however, are on a project-by-project basis, and the customers may unilaterally reduce or discontinue their purchases at any time. The loss of business from any one of such customers could have a material adverse effect on Washington Group’s business or results of operations.
 
Changes in environmental laws, regulations and programs, could reduce demand for Washington Group’s environmental services, which could negatively impact its revenue.
 
Washington Group’s environmental business is driven by federal, state, local and foreign laws, regulations and programs related to pollution and environmental protection. Accordingly, a relaxation or repeal of these laws and regulations, or changes in governmental policies regarding the funding, implementation or enforcement of these programs, could result in a decline in demand for environmental services that could negatively impact Washington Group’s revenue.
 
Washington Group’s backlog is subject to unexpected adjustments and cancellations and is, therefore, an uncertain indicator of its future earnings.
 
As of March 30, 2007, Washington Group’s backlog was approximately $5.9 billion. Washington Group cannot assure that the revenue projected in its backlog will be realized or, if realized, will result in profits. Projects may remain in Washington Group’s backlog for an extended period of time prior to project execution and, once project execution begins, Washington Group may occur unevenly over the current and multiple future periods. Although Washington Group has not experienced any significant cancellations, project terminations, suspensions or reductions in scope, these could occur from time to time with respect to contracts reflected in Washington Group’s backlog. Such backlog reductions would adversely affect the revenue and profit Washington Group actually receives from contracts reflected in its backlog.
 
Washington Group’s businesses involve many project-related and contract-related risks.
 
Washington Group’s businesses are subject to a variety of project-related risks, including changes in political and other circumstances, particularly since contracts for major projects are performed over extended periods of time. These risks include the failure of applicable governing authorities to take necessary actions, opposition by third parties to particular projects and the failure by customers to obtain adequate financing for particular projects. Due to these factors, losses on a particular contract or contracts could occur, and Washington Group could experience significant changes in operating results on a quarterly or annual basis.
 
Washington Group may also be adversely affected by various risks and hazards, including industrial accidents, labor disputes, geological conditions, environmental hazards, acts of terrorism or war, weather and other natural phenomena such as earthquakes and floods.
 
Washington Group could be subject to liabilities as a result of its performance.
 
The nature of Washington Group’s engineering and construction businesses exposes it to potential liability claims and contract disputes that may reduce its profits.
 
Washington Group engages in engineering and construction activities for large industrial facilities where design, construction or systems failures can result in substantial injury or damage to third parties. Any liability in excess of Washington Group’s insurance limits at locations designed or constructed by it, where Washington Group’s products are installed or where its services are performed, could result in significant liability claims against Washington Group, which claims may reduce its earnings. In addition, if a customer disputes its performance of project services, the customer may decide to delay or withhold payment to Washington Group. If Washington Group were ultimately unable to collect on these payments, its profits would be reduced.


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Washington Group’s dependence on subcontractors and equipment manufacturers could adversely affect it.
 
Washington Group relies on third-party subcontractors as well as third-party equipment manufacturers to complete its projects. To the extent that Washington Group cannot engage subcontractors or acquire equipment or materials, its ability to complete a project in a timely fashion or at a profit may be impaired. If the amount Washington Group is required to pay for these goods and services exceeds the amount it has estimated in bidding for fixed-price, fixed-unit-price or target-price contracts, Washington Group could experience reduced profit or losses in the performance of these contracts. In addition, if a subcontractor or a manufacturer is unable to deliver its services, equipment or materials according to the negotiated terms for any reason, including the deterioration of its financial condition, Washington Group may be required to purchase the services, equipment or materials from another source at a higher price. This may reduce the profit to be realized or result in a loss on a project for which the services, equipment or materials were needed.
 
Strikes, work stoppages and other similar events, as well as resulting increases in operating costs, would have a negative impact on Washington Group’s operations and financial results.
 
Washington Group is a party to several regional labor agreements that expire between June 2007 and June 2010, as well as project-specific labor agreements that commit Washington Group to use union building trades on certain projects. If Washington Group were unable to negotiate with any of the unions, it could result in strikes, work stoppages or increased operating costs as a result of higher than anticipated wages or benefits. If the unionized workers engage in a strike or other work stoppage, or other employees become unionized, Washington Group could experience a disruption of its operations and higher ongoing labor costs, which could adversely affect portions of its business, and its financial position, results of operations and cash flows.
 
If Washington Group guarantees to a customer the timely completion or performance standards of a project, Washington Group could incur additional costs to meet its guarantee obligations.
 
In certain instances, including in some of Washington Group’s fixed-price contracts, Washington Group guarantees a customer that it will complete a project by a scheduled date. Washington Group sometimes also provides that the project, when completed, will achieve certain performance standards. If Washington Group subsequently fails to complete the project as scheduled, or if the project subsequently fails to meet the guaranteed performance standards, Washington Group may be held responsible for cost impacts to the client resulting from any delay or the costs incurred by the project to achieve the performance standards. In most cases where Washington Group fails to meet contract-defined performance standards, Washington Group may be subject to agreed-upon liquidated damages. To the extent that these events occur, the total costs for the project would exceed Washington Group’s original estimates and it could experience reduced profits or in some cases a loss for that project.
 
The success of Washington Group’s joint ventures is dependent on the performance of its joint venture partners of their contractual obligations.
 
Washington Group enters into various joint ventures as part of its engineering and construction business and project-specific joint ventures. Success of these joint ventures depends largely on the satisfactory performance by Washington Group’s partners of their contractual obligations. If Washington Group’s joint venture partners fail to perform their contractual obligations as a result of financial or other difficulties, Washington Group may be required to make additional investments and provide additional services to ensure the adequate performance and delivery of the contracted services. These additional obligations could result in reduced profits or in losses for Washington Group.
 
Washington Group’s international operations involve special risks.
 
Washington Group pursues project opportunities internationally through foreign and domestic subsidiaries as well as through agreements with domestic and foreign joint venture partners. Washington Group’s international


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operations accounted for approximately 21% of its revenue in 2006, including 10% from work performed in Iraq. Washington Group’s foreign operations are subject to special risks, including:
 
  •  unstable political, economic, financial and market conditions;
 
  •  potential incompatibility with foreign joint venture partners;
 
  •  foreign currency fluctuations;
 
  •  trade restrictions and governmental regulations;
 
  •  restrictions on repatriating foreign profits back to the U.S.;
 
  •  increases in taxes;
 
  •  civil disturbances and acts of terrorism, violence or war in the U.S. or elsewhere; and
 
  •  changes in labor conditions, labor strikes and difficulties in staffing and managing international operations.
 
Events outside of Washington Group’s control may limit or disrupt operations, restrict the movement of funds, result in the deprivation of contract rights, increase foreign taxes or limit repatriation of earnings. In addition, in some cases, applicable law and joint venture or other agreements may provide that each joint venture partner is jointly and severally liable for all liabilities of the venture.
 
Washington Group’s international operations may require its employees or subcontractors to travel to high security risk countries, which may result in employee injury, repatriation costs or other unforeseen costs.
 
As a global provider of engineering, construction and management services, Washington Group dispatches employees and subcontractors to various countries around the world. A country may represent a high security risk because of its political, social or economic upheaval such as war, civil unrest or ongoing acts of terrorism. Senior level employees and other key employees and subcontractors have been, and may continue to be, deployed to provide services in high security risk countries. As a result, it is possible that Washington Group’s employees or subcontractors may suffer injury or death, repatriation problems or other unforeseen costs and risks in the course of their international responsibilities, which could negatively impact its operations.
 
Actual results could differ from the estimates and assumptions used to prepare Washington Group’s financial statements.
 
In order to prepare financial statements in conformity with GAAP, Washington Group’s management is required to make estimates and assumptions as of the date of the financial statements. These estimates and assumptions affect the reported values of assets, liabilities, revenue and expenses and disclosure of contingent assets and liabilities. Areas requiring significant estimates by Washington Group’s management include:
 
  •  determination of new work awards and backlog;
 
  •  recognition of contract revenue, costs, profit or losses in applying the principles of percentage-of-completion accounting;
 
  •  recognition of recoveries under contract change orders or claims;
 
  •  collectibility of billed and unbilled accounts receivable and the need and amount of any allowance for doubtful accounts;
 
  •  the amount of reserves necessary for self-insured risks;
 
  •  the determination of liabilities under pension and other post-retirement benefit programs;
 
  •  estimated amounts for expected project losses, reclamation costs, warranty costs or other contract close-out costs;
 
  •  recoverability of goodwill and other intangible assets;


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  •  provisions for income taxes and realizability of deferred tax assets; and
 
  •  accruals for other estimated liabilities, including litigation reserves.
 
Washington Group’s use of percentage-of-completion accounting could result in a reduction or elimination of previously reported profits.
 
As more fully discussed in Washington Group’s Annual Report on Form 10-K, as amended on February 27, 2007, for the fiscal year ended December 29, 2006 and Quarterly Report on Form 10-Q for the three-month period ended March 30, 2007, a substantial portion of Washington Group’s revenue is recognized using the percentage-of-completion method of accounting. Generally, the percentage-of-completion accounting practices Washington Group utilizes result in Washington Group recognizing contract revenues and earnings ratably, based on the proportion of costs incurred to total estimated contract costs or on the proportion of labor hours or labor costs incurred to total estimated labor hours or labor costs. For some long-term contracts, completion is measured on estimated physical completion or units of production.
 
The cumulative effect of revisions to contract revenue and estimated completion costs, including incentive awards, penalties, change orders, claims and anticipated losses, is recorded in the accounting period in which the amounts become known and can be reasonably estimated. Such revisions could occur at any time and the effects could be material. A change order is included in total estimated contract revenue when it is probable that the change order will result in a bona fide addition to contract value and can be reliably estimated. Estimated contract revenue associated with change orders may include amounts in excess of costs (profit) when appropriate. Claims are included in total estimated contract revenue, only to the extent that contract costs related to the claim have been incurred, when it is probable that the claim will result in a bona fide addition to contract value and can be reliably estimated, which generally occurs when amounts have been received or awarded.
 
Washington Group estimates the extent of progress towards completion of contract revenue and of contract completion costs on Washington Group’s long-term engineering and construction contracts, but due to uncertainties inherent in the estimation process it is possible that actual completion costs may vary from estimates, and it is possible that such variances could be material to Washington Group’s operating results.
 
If Washington Group has to write off a significant amount of intangible assets, its earnings will be negatively impacted.
 
Goodwill and other intangible assets totaling $119.5 million are included in Washington Group’s consolidated balance sheet as of March 30, 2007. Washington Group must evaluate its goodwill and other intangible assets for impairment at least annually. If Washington Group’s goodwill and other intangible assets were to become impaired, Washington Group would be required to write-off the impaired amount. The write-off would negatively impact Washington Group’s earnings; however, it would not impact its cash flows. As of March 30, 2007, all of Washington Group’s goodwill and other intangible assets relate to its Defense and Energy & Environment business units, which are almost entirely dependent on continued spending by the U.S. government.
 
The significant demands on Washington Group’s cash resources could affect its ability to achieve its business plan.
 
Washington Group has substantial demands on its cash resources in addition to operating expenses, principally capital expenditures. Washington Group’s ability to fund working capital requirements will depend upon its future operating performance, which, in turn, will be affected by prevailing economic conditions and financial, business and other factors, many of which are beyond its control. If Washington Group is unable to fund its businesses, Washington Group will be forced to adopt an alternative strategy that may include:
 
  •  reducing or delaying capital expenditures;
 
  •  limiting its growth;
 
  •  seeking additional debt financing or equity capital; or
 
  •  selling assets.


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Washington Group cannot provide assurances that any of these strategies could be affected on favorable terms or at all.
 
If Washington Group experiences delays and/or defaults in customer payments, Washington Group could suffer liquidity problems or it could be unable to recover all expenditures.
 
Because of the nature of its contracts, at times Washington Group commits resources to projects prior to receiving payments from the customer in amounts sufficient to cover expenditures on client projects as they are incurred. Delays in customer payments may require Washington Group to make a working capital investment. If a customer defaults in making its payments on a project in which Washington Group has devoted significant resources, it could have an adverse effect on its financial position, results of operations and cash flows.
 
Washington Group could be subject to liability under environmental laws and regulations.
 
Washington Group is subject to a variety of environmental, health and safety laws and regulations governing, among other things, discharges to air and water, the handling, storage and disposal of hazardous or solid waste materials and the remediation of contamination associated with releases of hazardous substances. These laws and regulations and the risk of attendant litigation can cause significant delays to a project and add significantly to its cost. Violations of these environmental, health and safety laws and regulations could subject Washington Group and its management to civil and criminal penalties and other liabilities. These laws and regulations may become more stringent, or be more stringently enforced, in the future.
 
Various federal, state and local environmental laws and regulations, as well as common law, may impose liability for property damage and costs of investigation and cleanup of hazardous or toxic substances on property currently or previously owned by Washington Group or arising out of its waste management or environmental remediation activities. These laws may impose responsibility and liability without regard to knowledge of or causation of the presence of contaminants. The liability under these laws is joint and several. Washington Group has potential liabilities associated with its past waste management and contract mining activities and with its current and prior ownership of various properties.
 
Adequate bonding is necessary for Washington Group to successfully win new work awards on some types of contracts.
 
In line with industry practice, Washington Group is often required, primarily in its Infrastructure business unit, to provide performance and surety bonds to customers under fixed-price contracts. These bonds indemnify the customer should Washington Group fail to perform its obligations under the contract. If a bond is required for a particular project and Washington Group is unable to obtain an appropriate bond, Washington Group cannot pursue that project. Washington Group has bonding capacity but, as is typically the case, the issuance of a bond is at the surety’s sole discretion. Moreover, due to events that affect the insurance and bonding markets generally, bonding may be more difficult to obtain in the future or may only be available at significant additional cost. There can be no assurance that bonds will continue to be available to Washington Group on reasonable terms. Washington Group’s inability to obtain adequate bonding and, as a result, to bid on new work could have a material adverse effect on Washington Group’s businesses, financial condition, results of operations and cash flows. Of $4.2 billion of new work awarded during 2006, 2% required bonding.
 
Unavailability of insurance coverage could have a negative impact on Washington Group’s operations and results.
 
Washington Group maintains insurance coverage as part of its overall risk management strategy and due to requirements to maintain specific coverage in its financing agreements and in most of its construction contracts. Although Washington Group has been able to obtain insurance coverage to meet its requirements in the past, there is no assurance that such insurance coverage will be available in the future.


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CAUTIONARY STATEMENT CONCERNING FORWARD-LOOKING STATEMENTS
 
Statements contained in this joint proxy statement/prospectus that are not historical facts may constitute forward-looking statements, including statements relating to timing of and satisfaction of conditions to the merger, whether any of the anticipated benefits of the merger will be realized, future revenues, future net income, future cash flows, financial forecasts, future competitive positioning and business synergies, future acquisition cost savings, future expectations that the merger will be accretive to GAAP and cash earnings per share, future market demand, future benefits to stockholders, future debt payments and future economic and industry conditions. Words such as “expect,” “estimate,” “project,” “budget,” “forecast,” “anticipate,” “intend,” “expect,” “plan,” “may,” “will,” “could,” “should,” “believe,” “predict,” “potential,” “continue” and similar expressions are also intended to identify forward-looking statements. URS and Washington Group believe that their expectations are reasonable and are based on reasonable assumptions. However, such forward-looking statements by their nature involve risks and uncertainties that could cause actual results to differ materially from the results predicted or implied by the forward-looking statement. The potential risks and uncertainties include, but are not limited to:
 
  •  potential difficulties that may be encountered in integrating the merged businesses;
 
  •  potential uncertainties regarding market acceptance of the combined company;
 
  •  uncertainties as to the timing of the merger;
 
  •  approval of the transaction by the stockholders of the companies and the satisfaction of other closing conditions to the transaction;
 
  •  competitive responses to the merger;
 
  •  an economic downturn;
 
  •  changes in URS’ and Washington Group’s book of business;
 
  •  URS’ and Washington Group’s compliance with government contract procurement regulations;
 
  •  URS’ and Washington Group’s ability to procure government contracts;
 
  •  URS’ and Washington Group’s reliance on government appropriations;
 
  •  the ability of the government to unilaterally terminate URS’ and Washington Group’s contracts;
 
  •  URS’ and Washington Group’s ability to make accurate estimates and control costs;
 
  •  URS’ and Washington Group’s ability to win or renew contracts;
 
  •  URS’ and Washington Group’s and their respective partners’ ability to bid on, win, perform and renew contracts and projects;
 
  •  environmental issues and liabilities;
 
  •  liabilities for pending and future litigation;
 
  •  the impact of changes in laws and regulations;
 
  •  a decline in defense spending;
 
  •  industry competition;
 
  •  URS’ and Washington Group’s ability to attract and retain key individuals;
 
  •  employee, agent or partner misconduct;
 
  •  risks associated with changes in equity-based compensation requirements;
 
  •  URS’ and Washington Group’s leveraged position and ability to service its debt;
 
  •  risks associated with international operations;
 
  •  business activities in high security risk countries;


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  •  third-party software risks;
 
  •  terrorist and natural disaster risks;
 
  •  URS’ and Washington Group’s relationships with its labor unions;
 
  •  URS’ and Washington Group’s ability to protect its intellectual property rights; and
 
  •  anti-takeover risks and other factors.
 
You are cautioned not to place undue reliance on these forward-looking statements, which speak only as of the date of this joint proxy statement/prospectus or, in the case of documents incorporated by reference, as of the date of those documents. URS and Washington Group disclaim any intent or obligation to update any forward-looking statements contained herein.


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THE URS SPECIAL MEETING
 
General
 
This joint proxy statement/prospectus is being provided to URS stockholders as part of a solicitation of proxies by the URS board of directors for use at a special meeting of URS stockholders. This joint proxy statement/prospectus provides URS stockholders with the information they need to know to be able to vote, or instruct their brokers or other nominees to vote, at the special meeting of URS stockholders.
 
Date, Time, Place and Purpose of the URS Special Meeting
 
The special meeting of URS stockholders will be held on          , 2007, at   a.m., local time, at          .
 
The URS special meeting is being held for the following purposes:
 
  •  to consider and vote upon a proposal to approve the issuance of shares of URS common stock pursuant to the Agreement and Plan of Merger, dated as of May 27, 2007, by and among URS, Elk Merger Corporation, a wholly owned subsidiary of URS, Bear Merger Sub, Inc., a wholly owned subsidiary of URS, and Washington Group;
 
  •  to consider and vote upon a proposal to authorize the proxyholders to vote to adjourn or postpone the special meeting, in their sole discretion, to solicit additional proxies if there are not sufficient votes in favor of the foregoing; and
 
  •  to transact any other business as may properly come before the special meeting or any adjournments or postponements of the special meeting.
 
Recommendation of the URS Board of Directors
 
The URS board of directors unanimously recommends that you vote “FOR” the proposal to approve the issuance of shares of URS common stock pursuant to the merger agreement and “FOR” the proposal to authorize the adjournment or postponement of the URS special meeting, if necessary, to permit further solicitation of proxies if there are not sufficient votes at the time of the URS special meeting in favor of the foregoing. See “The Merger — Recommendation of the URS Board of Directors and Its Reasons for the Merger” on page 64.
 
Record Date; Outstanding Shares; Shares Entitled to Vote
 
Only holders of record of URS common stock at the close of business on the record date,          , 2007, are entitled to notice of and to vote at the URS special meeting. As of the URS record date, there were           shares of URS common stock outstanding and entitled to vote at the special meeting, held by approximately           holders of record. Each holder of URS common stock is entitled to one vote for each share of URS common stock owned as of the URS record date.
 
A complete list of URS stockholders will be available for review at the special meeting and at the executive offices of URS during regular business hours for a period of ten days before the special meeting.
 
Quorum and Vote Required
 
A majority of the shares of URS common stock issued and outstanding and entitled to vote as of the record date must be present in person or represented by proxy at the URS special meeting to constitute a quorum. A quorum must be present before a vote can be taken on the proposal to approve the issuance of shares of URS common stock pursuant to the merger agreement or any other matter except adjournment or postponement of the meeting due to the absence of a quorum. Abstentions and broker non-votes, if any, which are described below, will be counted for purposes of determining the presence of a quorum at the URS special meeting. If a quorum is not present, URS expects that the special meeting will be adjourned or postponed to solicit additional proxies. At any subsequent reconvening of the special meeting, all proxies will be voted in the same manner as the proxies would have been voted at the original convening of the special meeting, except for any proxies that have been effectively revoked or withdrawn prior to the subsequent meeting.


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In accordance with NYSE listing requirements, the approval by URS stockholders of the issuance of shares of URS common stock pursuant to the merger agreement requires the approval of a majority of the votes cast on the proposal, provided that the total votes cast on such proposal represent over 50% of the outstanding shares of URS common stock entitled to vote on such proposal. Votes “for,” votes “against” and abstentions count as votes cast, while broker non-votes do not count as votes cast for this purpose. All outstanding shares of URS common stock, including broker non-votes, count as shares entitled to vote. Thus the total sum of votes “for,” plus votes “against,” plus abstentions, which is referred to as the “NYSE Votes Cast,” must be greater than 50% of the total outstanding shares of URS common stock. Once that threshold has been achieved, the number of votes “for” the proposal must be greater than 50% of the NYSE Votes Cast.
 
In accordance with the DGCL and URS’ bylaws, approval of the proposal to authorize the adjournment or postponement of the URS special meeting, if necessary, to permit further solicitation of proxies requires the affirmative vote of the holders of a majority of the shares of URS common stock present in person or represented by proxy at the special meeting and entitled to vote thereon.
 
Voting by URS’ Directors and Executive Officers
 
As of the URS record date for the special meeting, the directors and executive officers of URS as a group beneficially owned and were entitled to vote approximately           shares of URS common stock, or approximately     % of the outstanding shares of URS on that date.
 
Voting; Proxies; Revocation
 
You may vote by proxy or in person at the URS special meeting. Votes cast by proxy or in person at the URS special meeting will be tabulated and certified by URS’ transfer agent.
 
Voting in Person
 
If you plan to attend the URS special meeting and wish to vote in person, you will be given a ballot at the special meeting. Please note, however, that if your shares are held in “street name,” which means your shares are held of record by a broker, bank or other nominee, and you wish to vote in person at the URS special meeting, you must bring to the special meeting a proxy from the record holder of the shares authorizing you to vote at the URS special meeting.
 
Voting by Proxy
 
Your vote is very important. Accordingly, please complete, sign and return the enclosed proxy card whether or not you plan to attend the URS special meeting in person. You should vote your proxy even if you plan to attend the URS special meeting. You can always change your vote at the special meeting. Voting instructions are included on your proxy card. If you properly give your proxy and submit it to URS in time to vote, one of the individuals named as your proxy will vote your shares as you have directed. A proxy card is enclosed for your use.
 
The method of voting by proxy differs for shares held as a record holder and shares held in “street name.” If you hold your shares of URS common stock as a record holder, you may vote by completing, dating and signing the enclosed proxy card and promptly returning it in the enclosed, pre-addressed, postage-paid envelope or otherwise mailing it to URS, or by submitting a proxy over the Internet or by telephone by following the instructions on the enclosed proxy card. If you hold your shares of URS common stock in street name, which means your shares are held of record by a broker, bank or nominee, you will receive instructions from your broker, bank or other nominee that you must follow in order to vote your shares. Your broker, bank or nominee may allow you to deliver your voting instructions over the Internet or by telephone. Please see the voting instructions from your broker, bank or nominee that accompany this joint proxy statement/prospectus.
 
All properly signed proxies that are received prior to the special meeting and that are not revoked will be voted at the special meeting according to the instructions indicated on the proxies or, if no direction is indicated, they will be voted “FOR” approval of the issuance of shares of URS common stock pursuant to the merger agreement and “FOR” the proposal to authorize the adjournment or postponement of the URS special meeting, if necessary, to


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permit further solicitation of proxies if there are not sufficient votes at the time of the URS special meeting in favor of the foregoing.
 
Revocation of Proxy
 
You may revoke your proxy at any time before your proxy is voted at the URS special meeting by taking any of the following actions:
 
  •  delivering to the corporate secretary of URS a signed written notice of revocation, bearing a date later than the date of the proxy, stating that the proxy is revoked;
 
  •  signing and delivering a new proxy, relating to the same shares and bearing a later date;
 
  •  submitting another proxy by telephone or on the Internet (your latest telephone or Internet voting instructions are followed); or
 
  •  attending the URS special meeting and voting in person, although attendance at the special meeting will not, by itself, revoke a proxy.
 
If your shares are held in “street name,” you may change your vote by submitting new voting instructions to your broker, bank or other nominee. You must contact your broker, bank or other nominee to find out how to do so.
 
Written notices of revocation and other communications with respect to the revocation of URS proxies should be addressed to:
 
URS Corporation
600 Montgomery Street, 26th Floor
San Francisco, California 94111-2728
Attn: Corporate Secretary
 
Abstentions and Broker Non-Votes
 
For purposes of both of the proposals, abstentions will have the same effect as voting against the proposals.
 
Under the listing requirements of the NYSE, brokers who hold shares of URS common stock in “street name” for a beneficial owner of those shares typically have the authority to vote in their discretion on “routine” proposals when they have not received instructions from beneficial owners. However, brokers are not allowed to exercise their voting discretion with respect to the approval of matters that the NYSE determines to be “non-routine,” such as approval of the issuance of shares of URS common stock pursuant to the merger agreement, without specific instructions from the beneficial owner. Broker non-votes are shares held by a broker or other nominee that are represented at the meeting, but with respect to which the broker or nominee is not instructed by the beneficial owner of such shares to vote on the particular proposal and the broker does not have discretionary voting power on such proposal. If your broker holds your URS common stock in “street name,” your broker will vote your shares only if you provide instructions on how to vote by filling out the voter instruction form sent to you by your broker with this joint proxy statement/prospectus. Because it is expected that brokers and other nominees will not have discretionary authority to vote on either proposal, URS anticipates that there will not be any broker non-votes cast in connection with either proposal.
 
Proxy Solicitation
 
URS is soliciting proxies for the URS special meeting from URS stockholders. URS will bear the entire cost of soliciting proxies from URS stockholders, except that URS and Washington Group have each agreed to share equally all expenses incurred in connection with the printing of this joint proxy statement/prospectus and related proxy materials. In addition to the solicitation of proxies by mail, URS will request that brokers, banks and other nominees send proxies and proxy materials to the beneficial owners of URS common stock held by them and secure their voting instructions, if necessary. URS will reimburse those record holders for their reasonable expenses. URS has also made arrangements with D.F. King & Co., Inc. to assist it in soliciting proxies, and has agreed to pay a fee of approximately $      plus expenses for those services. URS also may use several of its regular employees, who will


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not be specially compensated, to solicit proxies from URS stockholders, either personally or by telephone, Internet, telegram, facsimile or special delivery letter.
 
Other Business; Adjournments
 
URS does not expect that any matter other than the proposals presented in this joint proxy statement/prospectus will be brought before the URS special meeting. However, if other matters incident to the conduct of the special meeting are properly presented at the special meeting or any adjournment or postponement of the special meeting, the persons named as proxies will vote in accordance with their best judgment with respect to those matters.
 
An adjournment may be made from time to time by approval of the holders of shares representing a majority of the votes present in person or by proxy at the special meeting, whether or not a quorum exists, without further notice other than by an announcement made at the special meeting.
 
Assistance
 
If you need assistance in completing your proxy card or have questions regarding the URS special meeting, please contact D.F. King & Co., Inc., which is assisting URS with the solicitation of proxies, at (800) 829-6551 (toll-free) or (212) 269-5550 (collect) or via e-mail to urs@dfking.com. Alternatively, you may contact URS Investor Relations at (877) 877-8790 or investor_relations@urscorp.com or write to URS Corporation, 600 Montgomery Street, 26th Floor, San Francisco, California 94111-2728, Attn: Investor Relations.


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THE WASHINGTON GROUP SPECIAL MEETING
 
General
 
This joint proxy statement/prospectus is being provided to Washington Group stockholders as part of a solicitation of proxies by the Washington Group board of directors for use at a special meeting of Washington Group stockholders. This joint proxy statement/prospectus provides Washington Group stockholders with the information they need to know to be able to vote, or instruct their brokers or other nominees to vote, at the special meeting of Washington Group stockholders.
 
Date, Time, Place and Purpose of the Washington Group Special Meeting
 
The special meeting of Washington Group stockholders will be held on          , 2007, at   a.m., local time, at          .
 
The Washington Group special meeting is being held for the following purposes:
 
  •  to consider and vote upon a proposal to adopt the Agreement and Plan of Merger, dated as of May 27, 2007, by and among URS, Elk Merger Corporation, a wholly owned subsidiary of URS, Bear Merger Sub, Inc., a wholly owned subsidiary of URS, and Washington Group, pursuant to which Elk Merger Corporation will merge with and into Washington Group, and each outstanding share of Washington Group common stock, other than those shares held by URS, any subsidiary of URS, Elk Merger Corporation or Bear Merger Sub and other than shares as to which a Washington Group stockholder has validly demanded and perfected appraisal rights under Delaware law, will be converted into the right to receive 0.772 of a share of URS common stock and $43.80 in cash, without interest, and approve the merger;
 
  •  to consider and vote upon a proposal to authorize the proxyholders to vote to adjourn or postpone the special meeting, in their sole discretion, to solicit additional proxies if there are not sufficient votes in favor of the foregoing; and
 
  •  to transact any other business as may properly come before the special meeting or any adjournments or postponements of the special meeting.
 
Recommendation of the Washington Group Board of Directors
 
The Washington Group board of directors has approved the merger agreement and the transactions contemplated by the merger agreement, including the merger, and unanimously recommends that you vote “FOR” the proposal to adopt the merger agreement and approve the merger and “FOR” the proposal to authorize the adjournment or postponement of the Washington Group special meeting, if necessary, to permit further solicitation of proxies if there are not sufficient votes at the time of the Washington Group special meeting in favor of the foregoing. See “The Merger — Recommendation of the Washington Group Board of Directors and Its Reasons for the Merger” on page 67.
 
Record Date; Outstanding Shares; Shares Entitled to Vote
 
Only holders of record of Washington Group common stock at the close of business on the record date,          , 2007, are entitled to notice of and to vote at the Washington Group special meeting. As of the Washington Group record date, there were           shares of Washington Group common stock outstanding and entitled to vote at the special meeting, held by approximately           holders of record. Each holder of Washington Group common stock is entitled to one vote for each share of Washington Group common stock owned as of the Washington Group record date.
 
A complete list of Washington Group stockholders will be available for review at the special meeting and at the executive offices of Washington Group during regular business hours for a period of ten days before the special meeting.


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Quorum and Vote Required
 
A majority of the shares of Washington Group common stock issued and outstanding and entitled to vote as of the record date must be present in person or represented by proxy, at the Washington Group special meeting to constitute a quorum. A quorum must be present before a vote can be taken on the adoption of the merger agreement and the approval of the merger or any other matter except adjournment or postponement of the meeting due to the absence of a quorum. Abstentions and broker non-votes, if any, which are described below, will be counted for purposes of determining the presence of a quorum at the Washington Group special meeting. If a quorum is not present, Washington Group expects that the special meeting will be adjourned or postponed to solicit additional proxies. At any subsequent reconvening of the special meeting, all proxies will be voted in the same manner as the proxies would have been voted at the original convening of the special meeting, except for any proxies that have been effectively revoked or withdrawn prior to the subsequent meeting.
 
For the merger agreement to be adopted and the merger approved the holders of at least a majority of the outstanding shares of Washington Group common stock entitled to vote on the proposal at the Washington Group special meeting must vote in favor of adoption of the merger agreement and approval of the merger.
 
In accordance with the DGCL and Washington Group’s bylaws, approval of the proposal to authorize the adjournment or postponement of the Washington Group special meeting, if necessary, to permit further solicitation of proxies requires the affirmative vote of the holders of a majority of the shares of Washington Group common stock present in person or represented by proxy at the special meeting and entitled to vote thereon.
 
Voting by Washington Group Directors and Executive Officers
 
As of the Washington Group record date for the special meeting, the directors and executive officers of Washington Group as a group beneficially owned and were entitled to vote approximately           shares of Washington Group common stock, or approximately     % of the outstanding shares of Washington Group on that date.
 
Voting; Proxies; Revocation
 
You may vote by proxy or in person at the Washington Group special meeting. Votes cast by proxy or in person at the Washington Group special meeting will be tabulated and certified by Washington Group’ transfer agent.
 
Voting in Person
 
If you plan to attend the Washington Group special meeting and wish to vote in person, you will be given a ballot at the special meeting. Please note, however, that if your shares are held in “street name,” which means your shares are held of record by a broker, bank or other nominee, and you wish to vote in person at the Washington Group special meeting, you must bring to the special meeting a proxy from the record holder of the shares authorizing you to vote at the Washington Group special meeting.
 
Voting by Proxy
 
Your vote is very important. Accordingly, please complete, sign and return the enclosed proxy card whether or not you plan to attend the Washington Group special meeting in person. You should vote your proxy even if you plan to attend the Washington Group special meeting. You can always change your vote at the special meeting. Voting instructions are included on your proxy card. If you properly give your proxy and submit it to Washington Group in time to vote, one of the individuals named as your proxy will vote your shares as you have directed. A proxy card is enclosed for your use.
 
The method of voting by proxy differs for shares held as a record holder and shares held in “street name.” If you hold your shares of Washington Group common stock as a record holder, you may vote by completing, dating and signing the enclosed proxy card and promptly returning it in the enclosed, pre-addressed, postage-paid envelope or otherwise mailing it to Washington Group, or by submitting a proxy over the Internet or by telephone by following the instructions on the enclosed proxy card. If you hold your shares of Washington Group common stock in street name, which means your shares are held of record by a broker, bank or nominee, you will receive instructions from


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your broker, bank or other nominee that you must follow in order to vote your shares. Your broker, bank or nominee may allow you to deliver your voting instructions over the Internet or by telephone. Please see the voting instructions from your broker, bank or nominee that accompany this joint proxy statement/prospectus.
 
All properly signed proxies that are received prior to the special meeting and that are not revoked will be voted at the special meeting according to the instructions indicated on the proxies or, if no direction is indicated, they will be voted “FOR” the proposal to adopt the merger agreement and approve the merger and “FOR” the proposal to authorize the adjournment or postponement of the Washington Group special meeting, if necessary, to permit further solicitation of proxies if there are not sufficient votes at the time of the Washington Group special meeting in favor of the foregoing.
 
Revocation of Proxy
 
You may revoke your proxy at any time before your proxy is voted at the Washington Group special meeting by taking any of the following actions:
 
  •  delivering to the corporate secretary of Washington Group a signed written notice of revocation, bearing a date later than the date of the proxy, stating that the proxy is revoked;
 
  •  signing and delivering a new proxy, relating to the same shares and bearing a later date;
 
  •  submitting another proxy by telephone or on the Internet (your latest telephone or Internet voting instructions are followed); or
 
  •  attending the Washington Group special meeting and voting in person, although attendance at the special meeting will not, by itself, revoke a proxy.
 
If your shares are held in “street name,” you may change your vote by submitting new voting instructions to your broker, bank or other nominee. You must contact your broker, bank or other nominee to find out how to do so.
 
Written notices of revocation and other communications with respect to the revocation of Washington Group proxies should be addressed to:
 
Washington Group International, Inc.
720 Park Boulevard, P.O. Box 73
Boise, Idaho 83729
Attn: Corporate Secretary
 
Abstentions and Broker Non-Votes
 
For purposes of both of the proposals to adopt the merger agreement and approve the merger, abstentions will have the same effect as voting against the proposals.
 
Under the listing requirements of the NYSE, brokers who hold shares of Washington Group common stock in “street name” for a beneficial owner of those shares typically have the authority to vote in their discretion on “routine” proposals when they have not received instructions from beneficial owners. However, brokers are not allowed to exercise their voting discretion with respect to the approval of matters that the NYSE determines to be “non-routine,” such as adoption of the merger agreement and approval of the merger, without specific instructions from the beneficial owner. Broker non-votes are shares held by a broker or other nominee that are represented at the meeting, but with respect to which the broker or nominee is not instructed by the beneficial owner of such shares to vote on the particular proposal and the broker does not have discretionary voting power on such proposal. If your broker holds your Washington Group common stock in “street name,” your broker will vote your shares only if you provide instructions on how to vote by filling out the voter instruction form sent to you by your broker with this joint proxy statement/prospectus. Because it is expected that brokers and other nominees will not have discretionary authority to vote on either proposal, Washington Group anticipates that there will not be any broker non-votes cast in connection with either proposal.


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For purposes of the proposal to authorize the adjournment or postponement of the special meeting, abstentions will have the same effect as voting against the proposal. It is expected that brokers and other nominees will not have discretionary voting authority on this proposal. Thus, broker non-votes should not result from this proposal.
 
Proxy Solicitation
 
Washington Group is soliciting proxies for the Washington Group special meeting from Washington Group stockholders. Washington Group will bear the entire cost of soliciting proxies from Washington Group stockholders, except that URS and Washington Group have each agreed to share equally all expenses incurred in connection with the printing of this joint proxy statement/prospectus and related proxy materials. In addition to the solicitation of proxies by mail, Washington Group will request that brokers, banks and other nominees send proxies and proxy materials to the beneficial owners of Washington Group common stock held by them and secure their voting instructions, if necessary. Washington Group will reimburse those record holders for their reasonable expenses. Washington Group has also made arrangements with Mackenzie Partners, Inc. to assist it in soliciting proxies, and has agreed to pay a fee of approximately $      plus expenses for those services. Washington Group also may use several of its regular employees, who will not be specially compensated, to solicit proxies from Washington Group stockholders, either personally or by telephone, Internet, telegram, facsimile or special delivery letter.
 
Other Business; Adjournments
 
Washington Group does not expect that any matter other than the proposals presented in this joint proxy statement/prospectus will be brought before the Washington Group special meeting. However, if other matters incident to the conduct of the special meeting are properly presented at the special meeting or any adjournment or postponement of the special meeting, the persons named as proxies will vote in accordance with their best judgment with respect to those matters.
 
An adjournment may be made from time to time by approval of the holders of shares representing a majority of the votes present in person or by proxy at the special meeting, whether or not a quorum exists, without further notice other than by an announcement made at the special meeting.
 
Assistance
 
If you need assistance in completing your proxy card or have questions regarding the URS special meeting, please contact MacKenzie Partners, Inc., which is assisting Washington Group with the solicitation of proxies, at (800) 322-2895 (toll-free) or (212) 929-5500 (collect) or via e-mail to proxy@mackenziepartners.com. Alternatively, you may contact Washington Group Investor Relations at (866) 964-4636 or investor.relations@wgint.com or write to Washington Group International, Inc., 720 Park Boulevard, P.O. Box 73, Boise, Idaho 83729, Attn: Investor Relations.


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THE MERGER
 
The following is a description of the material aspects of the merger. While we believe that the following description covers the material terms of the merger, the description may not contain all of the information that is important to you. We encourage you to read carefully this entire joint proxy statement/prospectus, including the merger agreement attached to this joint proxy statement/prospectus as Annex A, for a more complete understanding of the merger.
 
General
 
Each of the URS and Washington Group board of directors has unanimously approved the merger agreement and the transactions contemplated by the merger agreement, including the merger. At the effective time of the merger, a wholly owned subsidiary of URS will merge with and into Washington Group, with Washington Group continuing as the surviving corporation and a wholly owned subsidiary of URS. Immediately following the merger, URS will cause Washington Group to merge with and into another wholly owned subsidiary of URS, with this subsidiary continuing as the surviving corporation and a wholly owned subsidiary of URS, which subsidiary will be renamed “Washington Group International, Inc.” Each share of Washington Group common stock, other than those shares held by URS, any subsidiary of URS, Elk Merger Corporation or Bear Merger Sub and other than shares as to which a Washington Group stockholder has validly demanded and perfected appraisal rights under Delaware law, will be converted into the right to receive 0.772 of a share of URS common stock and $43.80 in cash, without interest, upon the terms and subject to adjustment as provided in the merger agreement and as further described below under “The Merger Agreement — Merger Consideration” on page 97.
 
Background of the Merger
 
The management of Washington Group has from time to time explored and evaluated, and has discussed with the Washington Group board of directors, various strategic options potentially available to Washington Group, including potential strategic business combination transactions. These strategic discussions have focused on, among other things, the business conditions facing engineering and construction firms generally and Washington Group in particular and the potential for further consolidation within the engineering and construction industry. From time to time, the Washington Group board of directors has evaluated a number of these opportunities and through Mr. Stephen G. Hanks, its President and Chief Executive Officer, Mr. Dennis Washington, its Chairman and/or Mr. William H. Mallender, its lead independent director, participated in strategic discussions with certain third parties.
 
URS’ management and board of directors also regularly review the engineering and construction industry environment, and discuss ways in which to enhance URS’ competitive position and diversification strategy. In recent years, URS’ senior management began to recognize that URS’ existing and prospective customers were increasingly demanding a “single source” vendor that could offer a full lifecycle of planning, engineering, construction and operations and maintenance services, and that URS lacked substantial procurement and construction capabilities as part of the range of services it offered. URS began periodically to analyze whether partnering relationships with, or acquisitions of, other companies in the engineering and construction industry would enhance URS’ scale and service offerings and thereby position URS to offer the integrated services necessary to meet the requirements of its customers. URS was aware of Washington Group’s reputation as a leading integrated engineering, construction and management services company and recognized that a combination of the two companies would enhance URS’ ability to compete for larger and more complex contracts. URS’ management first began considering the possibility of acquiring Washington Group in late 2006 and sought the assistance of Morgan Stanley, which had provided strategic advice as a financial advisor to URS from time to time, to analyze the merits of a possible combination of the two companies. This possibility also was discussed on a preliminary basis with individual URS directors and was included among the range of alternatives considered as part of URS’ strategic reviews.
 
On May 8, 2006, the chief executive officer of a leading engineering and construction firm, which is referred to as Company A, contacted Mr. Hanks by telephone to discuss the merits of a possible strategic transaction between their companies. Later the same day, Company A’s chief executive officer sent a letter to Mr. Hanks confirming


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Company A’s views of the benefits that would result from a combination of the two companies. Shortly thereafter, Mr. Hanks convened a telephonic meeting of the Washington Group board of directors to report on his discussions with the chief executive officer of Company A. After consideration and deliberation in which representatives of Jones Day, Washington Group’s legal advisor, participated, the Washington Group board of directors reached a consensus that it would not be in the best interests of Washington Group or its stockholders to pursue discussion of a possible strategic transaction with Company A at that time. Mr. Hanks then sent a letter to Company A explaining the board’s determination. On May 16, 2006, Company A delivered an indication of interest to the Washington Group board of directors proposing a merger transaction in which each outstanding share of Washington Group common stock would be exchanged for a number of shares of Company A common stock, or a potential combination of cash and Company A common stock, having an aggregate value of $71.25, subject to confirmatory due diligence by Company A and the negotiation of definitive documentation.
 
On May 18 and 19, 2006, Washington Group’s board of directors convened in person for a regularly scheduled quarterly meeting, which was attended by representatives of Jones Day and Washington Group’s management. Among the other matters discussed, the Washington Group board considered Company A’s May 16 proposal. Washington Group’s management updated the board of directors on its discussions with Company A, and the directors further discussed the potential strategic fit and benefits of potentially pursuing a business combination with Company A as well as the risks of failure to obtain the regulatory approvals necessary to consummate the transaction. After consideration and deliberation in which representatives of Jones Day participated, the Washington Group board of directors determined that it should engage Goldman Sachs to serve as Washington Group’s financial advisor in connection with management’s and the board’s consideration of a potential transaction with Company A as well as consideration of alternatives to such a transaction. Goldman Sachs was engaged by Washington Group later that day.
 
On May 30, 2006, Washington Group’s board of directors met in person, together with representatives of Jones Day, Goldman Sachs and Washington Group’s management, to consider Company A’s May 16 proposal. Washington Group’s management updated the board of directors on its discussions with Company A, and representatives of Goldman Sachs reviewed with the board of directors their preliminary financial analysis of the transaction proposed by Company A. After consideration and deliberation in which Jones Day and Goldman Sachs participated, the Washington Group board of directors authorized Washington Group management to request further information from Company A in response to its May 16 letter, and requested that Goldman Sachs continue its financial analysis of the transaction proposed by Company A.
 
On June 20, 2006, Company A delivered a letter to the Washington Group board of directors reiterating its belief in the strategic merits of a transaction with Washington Group. The letter also contained a proposal in which each outstanding share of Washington Group common stock would be exchanged for a number of shares of Company A common stock, or a potential combination of cash and Company A common stock, having an aggregate value of $71.50.
 
Discussions between Washington Group and Company A continued from late June through early August 2006. During this period, Washington Group’s board of directors met telephonically several times, together with representatives of Jones Day, Goldman Sachs and Washington Group’s management, to discuss, among other matters, the status of Washington Group’s discussions with Company A. At a meeting on July 26, Washington Group’s board of directors authorized the execution of a mutual confidentiality agreement with Company A (which included a standstill that has since expired) in order to facilitate due diligence between the two companies, and such an agreement was executed on August 4, 2006. Among other matters of concern to the Washington Group board of directors regarding a potential transaction with Company A was the potential for regulatory delays or other potential regulatory issues that could delay or prevent a transaction. In order to better understand this concern, the Washington Group board of directors directed the Washington Group management and legal and financial advisors to further explore this issue.
 
In early August 2006, the chief executive officer of an environmental remediation firm, which is referred to as Company B, contacted Mr. Hanks to discuss the merits of a possible strategic transaction between their companies. On August 9, 2006, Mr. Hanks convened a telephonic meeting of the Washington Group board of directors to report on the contact with Company B and to update the board on the status of Washington Group’s discussions with


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Company A as well as the status of Washington Group’s and Company A’s mutual due diligence investigations. The directors requested that Goldman Sachs analyze a potential transaction with Company B. The directors also considered and deliberated, with the assistance of Jones Day and Goldman Sachs, among other matters, the scope of information that should be provided to Company A.
 
On August 17 and 18, 2006, Washington Group’s board of directors convened in person for a regularly scheduled quarterly meeting, which was attended by representatives of Jones Day, Goldman Sachs and Washington Group’s management. At the meeting, Washington Group management updated the directors on the status of their discussions with, and due diligence investigation of, Company A. Representatives of Goldman Sachs updated their financial analysis of Company A and a possible transaction with Company A. In addition, representatives of Goldman Sachs analyzed Company B on a financial basis and also analyzed the potential business combination with Company B. Previously, Washington Group management had reported to the board of directors that, on July 13, 2006, a representative of an asset management fund that had a significant investment in Washington Group, which is referred to as Investment Fund A, had contacted management to express their view that Washington Group should consider undertaking a leveraged stock repurchase program. At the board of directors’ request, representatives of Goldman Sachs presented an analysis of Investment Fund A’s suggestions from a financial and strategic perspective. Representatives of Goldman Sachs also analyzed other financial alternatives available to Washington Group, including a share repurchase, a sponsored recapitalization and alternative strategic combinations with engineering and construction companies. After consideration and deliberation in which representatives of Jones Day and Goldman Sachs participated, the Washington Group board of directors reached a consensus that the financial measures suggested by Investment Fund A did not have the potential to provide Washington Group or its stockholders the advantages of the transactions being considered at that time and were not consistent with the execution of Washington Group’s existing business model, and therefore should not be further pursued at that time. The directors also reached a consensus that, since it was not certain that a transaction with Company A on acceptable terms would materialize, Washington Group management, with the assistance of Goldman Sachs, should continue to evaluate other potential transactions, including a potential transaction with Company B.
 
Discussions between Washington Group and Company A continued throughout August and early September 2006. Washington Group management also continued to evaluate the strategic merits of a combination with Company B. During this period, Washington Group’s board of directors had several telephonic meetings, together with representatives of Jones Day, Goldman Sachs and Washington Group’s management, to discuss, among other matters, the status of Washington Group’s discussions with Company A and Company B as well as other potential strategic transactions and alternatives to enhance stockholder value.
 
On September 11 and 12, 2006, Washington Group convened in person for a regularly scheduled strategic planning meeting of its board of directors that was attended by representatives of Jones Day (who attended by telephone for a portion of the meeting), Goldman Sachs and Washington Group’s management. At that meeting, there was extensive discussion of the various strategic opportunities potentially available to Washington Group at that time. Washington Group’s management presented to the board various possible strategic opportunities that might be considered by Washington Group, including possible acquisitions of, or business combinations with, certain firms in the engineering and construction industry, including Company A and Company B. Washington Group management then updated the board on the status of Washington Group’s discussions with Company A. The board then discussed various aspects of a potential transaction with Company A, including, with the assistance of representatives of Jones Day, the likelihood that the process for receiving regulatory approvals for a transaction with Company A would be protracted and might not be successful. After consideration and deliberation in which representatives of Jones Day, Goldman Sachs and Washington Group’s management participated, the directors authorized Washington Group’s management to continue discussions with Company A, but only if Company A agreed to conditions to the transaction related to assumption of regulatory approval risk. The directors also reached a consensus that a transaction with Company B did not have the potential to provide Washington Group or its stockholders the advantages of either the transaction being considered with Company A at that time or continuation of Washington Group’s existing business on a standalone basis, and therefore should not be further pursued. Company B was orally informed of this conclusion by Mr. Hanks in mid-September 2006, and no further discussions between Washington Group and Company B were held.


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Between September 12 and September 19, 2006, Washington Group and its advisors continued due diligence and discussions with Company A, including discussions of the conditions to the transaction related to assumption by Company A of the regulatory approval risk requested by the Washington Group board of directors. Specifically, Washington Group requested that Company A agree to assume the regulatory approval risk as well as agree to pay Washington Group a reverse break-up fee if Company A were unable to obtain the necessary regulatory approvals within a reasonable period of time. On September 19, 2006, discussions between Company A and Washington Group were terminated. At that time, Company A had indicated its unwillingness to agree to the conditions to the transaction related to regulatory approval risk required by Washington Group’s board of directors, specifically rejecting the concept of paying any reverse break-up fee. In addition, Company A’s stock price had significantly declined.
 
On November 16 and 17, 2006, Washington Group’s board of directors convened in person for a regularly scheduled quarterly meeting, which was attended by representatives of Goldman Sachs and Washington Group’s management. Among other matters, the Washington Group board of directors discussed Washington Group’s strategic plan, including its acquisition strategy, and reviewed Washington Group’s 2007 business plan. At the meeting, a representative of Goldman Sachs analyzed the impact of an increased stock repurchase program that was under consideration by the Washington Group board of directors. After consideration and deliberation in which representatives of Goldman Sachs participated, the directors authorized Washington Group to repurchase an additional $100.0 million of Washington Group stock, bringing Washington Group’s total buyback authorization to $275.0 million. Thereafter, representatives of Goldman Sachs evaluated the engineering and construction industry for the board of directors and discussed potential strategic transactions for the board’s consideration.
 
In late November 2006, in a discussion with the Chairman of Washington Group’s board of directors, the chief executive officer of Company A conveyed his interest in resuming discussions regarding a potential transaction between Company A and Washington Group. Thereafter, there were a series of discussions between Mr. Mallender and the chief executive officer of Company A. On December 11, 2006, Washington Group’s board of directors held a telephonic meeting, together with representatives of Washington Group’s management, to discuss Company A’s renewed interest in pursuing a business combination with Washington Group. After consideration and deliberation in which representatives of Goldman Sachs and Washington Group’s management participated, the directors reached a consensus that Washington Group should resume discussions with Company A. Thereafter, the board determined to retain Wachtell, Lipton, Rosen & Katz, which is referred to as Wachtell Lipton, to serve as the board of directors’ legal advisor.
 
Discussions with Company A continued through December 2006 as Washington Group provided Company A with additional information responsive to Company A’s due diligence requests. In addition, the chief executive officer of Company A requested a meeting with the board of directors of Washington Group. Mr. Mallender responded that the Washington Group board of directors was not willing to meet with the chief executive officer of Company A unless Company A indicated its willingness to assume the regulatory approval risk of any transaction and agree to pay Washington Group a reverse break-up fee if Company A were unable to obtain the necessary regulatory approvals within a reasonable period of time. During this period, Washington Group’s board of directors met several times telephonically, together with representatives of Wachtell Lipton, Goldman Sachs and Washington Group’s management, to discuss, among other matters, the status of Washington Group’s discussions with Company A. In early January 2007, however, discussions were again terminated, as Company A remained unwilling to agree to the conditions to a transaction required by the Washington Group board of directors, including refusing to agree to pay Washington Group a reverse break-up fee if Company A were unable to obtain the necessary regulatory approvals within a reasonable period of time.
 
On January 12, 2007, Mr. Martin Koffel, Chairman and Chief Executive Officer of URS, and Mr. Hanks met informally at Washington Group’s offices and discussed, among other matters, industry trends and the strategic challenges and opportunities facing engineering and construction firms generally and their two companies in particular. During this meeting, Mr. Koffel expressed interest in a possible strategic combination of URS and Washington Group, discussed his views concerning the potential strategic benefits of combining, and indicated that URS would be willing to pursue such a combination only if it were the acquiror. No specific terms of a potential combination were discussed during that meeting. Nevertheless, Mr. Koffel told Mr. Hanks that URS had already received informal indications of interest from potential financing sources in financing an acquisition of Washington


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Group, which would enable URS to move quickly toward a transaction if Washington Group desired. Following this initial meeting, Mr. Hanks alerted the members of the Washington Group board of directors of his discussion with Mr. Koffel and reported that he was scheduled to meet with Mr. Koffel again on January 29, 2007. At the request of Washington Group’s management, public information regarding URS was circulated to the Washington Group board of directors, and Goldman Sachs undertook an analysis of a potential transaction involving Washington Group and URS.
 
The following chart sets forth the closing share prices of URS and Washington Group common stock relevant to key dates during the time of the URS and Washington Group discussions.
 
                 
    Per Share Closing Prices  
Date
  URS     Washington Group  
January 12, 2007
  $ 41.50     $ 58.60  
January 29, 2007
  $ 42.96     $ 57.65  
March 21, 2007
  $ 43.15     $ 63.01  
March 27, 2007
  $ 43.14     $ 65.00  
May 15, 2007
  $ 46.43     $ 67.76  
May 18, 2007
  $ 47.18     $ 70.17  
May 25, 2007
  $ 46.89     $ 69.97  
 
Following his initial meeting with Mr. Hanks, Mr. Koffel also had telephonic discussions with several members of the URS board of directors during which he again raised the possibility of combining URS and Washington Group and discussed his preliminary views with respect to the strategic benefits that such a combination would offer, the value that could be generated for the stockholders of both companies, and the ability of URS to obtain and support the financing for such a transaction.
 
A second in-person meeting between Mr. Koffel and Mr. Hanks was held on January 29, 2007. At that meeting, Mr. Koffel and Mr. Hanks further discussed a potential business combination of their respective companies and the benefits for each company that could result from such a transaction. Mr. Koffel then presented to Mr. Hanks a letter proposing a merger transaction in which URS would acquire Washington Group and the holders of each outstanding share of Washington Group common stock would receive cash and URS common stock, in approximately equal amounts, with an aggregate value of $68.00 per share. The letter emphasized the perceived strategic benefits of such a combination for both companies, the benefits to the Washington Group stockholders of the cash and equity consideration being proposed, and the growth opportunities that the combination would present to the employees of both companies. Mr. Koffel reiterated that, given URS’ track record of repaying acquisition-related debt after making strategic acquisitions and its current balance sheet, URS should have no difficulty in obtaining sufficient financing commitments to complete the transaction. Mr. Koffel further requested that Washington Group and URS enter into a confidentiality and standstill agreement, a form of which Mr. Koffel presented to Mr. Hanks, that provided for a three-month exclusivity period during which neither Washington Group nor URS would solicit or encourage any alternative transaction proposals, or enter into any discussions, negotiations, or agreements relating to an alternative transaction.
 
On January 31, 2007, Washington Group’s board of directors met telephonically, together with representatives of Wachtell Lipton, Goldman Sachs and Washington Group’s management, to consider URS’ January 29 proposal. At the meeting, Mr. Hanks reviewed his discussions with Mr. Koffel, and representatives of Goldman Sachs provided their preliminary financial analysis of URS, the proposed transaction and alternative strategic combinations. The board of directors then considered and discussed the potential strategic fit and benefits of a business combination with URS, as well as alternatives to such a transaction, including either continuing to pursue Washington Group’s existing business on a standalone basis or pursuing other strategic transactions. The Washington Group board of directors also considered the views and opinions of Washington Group’s management regarding the potential advantages and disadvantages of Washington Group’s continuing its current strategy, the expected pace of consolidation within the engineering and construction industry, as well as their views and opinions on a transaction with URS. After consideration and deliberation in which representatives of Wachtell Lipton and Goldman Sachs participated, the directors reached a consensus that representatives of Wachtell Lipton and


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Goldman Sachs should discuss URS’ January 29 proposal with URS’ financial and legal advisors in order to gain more information about, and a better understanding of, the proposal, and that it was premature at that time to execute a confidentiality agreement or grant URS an exclusivity period.
 
On February 1, 2007, representatives of Morgan Stanley and Goldman Sachs met in New York, New York to discuss URS’ January 29 proposal, and the potential process and timeline of a transaction with URS.
 
On February 5, 2007, Mr. Koffel and Mr. Hanks further discussed a possible combination of their companies. Mr. Koffel reiterated his view of the potential strategic fit of the two companies and the benefits of a business combination to both companies and their respective stockholders and employees. Mr. Koffel also emphasized the strength of URS’ balance sheet and resulting ability to borrow substantial amounts needed to fund the cash portion of the purchase price. Mr. Hanks indicated that if Washington Group were seriously to consider a combination with URS, URS would need to offer the Washington Group stockholders compelling value and would need to provide appropriate assurances regarding certainty of consummation of the combination, including agreeing to pay a reverse break-up fee if regulatory approvals were not received within a reasonable period of time.
 
On February 6, 2007, Washington Group’s board of directors met telephonically, together with representatives of Wachtell Lipton, Goldman Sachs and Washington Group’s management, to further consider URS’ January 29 proposal. Representatives of Goldman Sachs reviewed the details of the January 29 proposal and provided an updated financial analysis of the proposed transaction and alternative strategic combinations. Representatives of Wachtell Lipton and Goldman Sachs then discussed possible terms for the transaction, including possible break-up fees, reverse break-up fees, exclusivity agreements and fiduciary-based termination rights. After consideration and deliberation in which representatives of Wachtell Lipton, Goldman Sachs and Washington Group’s management participated, the directors authorized Washington Group’s management to continue discussions with URS and further authorized Washington Group to execute a confidentiality agreement with URS to facilitate due diligence between the two companies. The Washington Group board, however, concluded that it was not willing at that time to grant URS an exclusivity period.
 
On February 8, 2007, URS management met with representatives of, and decided to retain, Latham & Watkins LLP, which is referred to as Latham & Watkins, to serve as special counsel to URS and its board of directors in connection with its consideration of a possible acquisition of Washington Group.
 
Wachtell Lipton, on behalf of Washington Group, and Latham & Watkins, on behalf of URS, then negotiated the terms of the confidentiality agreement between the two companies. Representatives of Morgan Stanley and Goldman Sachs continued discussions and negotiations concerning the manner in which URS and Washington Group would coordinate and conduct preliminary business due diligence regarding each other and whether Washington Group would agree to continue discussions on an exclusive basis.
 
On February 14, 2007, Washington Group and URS executed a mutual confidentiality and standstill agreement which, despite URS’ repeated requests, did not include an exclusivity agreement. Thereafter, representatives of URS and Washington Group began conducting mutual due diligence involving senior executives from both companies, as well as their outside legal and financial advisors. This due diligence included a two-day in-person meeting on February 16 and 17, 2007 attended by senior management of URS and Washington Group, Mr. Mallender, and representatives of Morgan Stanley and Goldman Sachs. Portions of this meeting also were attended by William D. Walsh, URS’ lead independent director. During the diligence meeting, members of the senior management of each of URS and Washington Group made presentations about their respective businesses and discussed how the companies might operate together. In connection with these discussions, Washington Group’s management provided URS with financial forecasts of Washington Group’s future operating performance for 2007 and 2008 and, sometime thereafter, URS’ management provided financial forecasts of URS’ future operating performance for 2007, 2008 and 2009 to Washington Group. See “Financial Forecasts” elsewhere in this proxy statement/prospectus beginning on page 131.
 
Following the initial in-person due diligence meeting, URS’ management and its outside advisors commenced more in-depth business and legal due diligence, with particular focus on accounting and tax issues, contractual change-of-control analyses and assessments of contractual and environmental liabilities that could impact Washington Group’s business. URS’ management also sought assistance from Cooley Godward Kronish LLP, which is


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referred to as Cooley Godward, to evaluate antitrust regulatory risks associated with the proposed combination, and to initiate legal work in connection with the debt financing for the acquisition and the combined enterprise.
 
On February 22, 2007, Washington Group’s board of directors met telephonically, together with representatives of Wachtell Lipton, Goldman Sachs and Washington Group’s management, to further consider, among other matters, URS’ January 29 proposal. At the meeting, Washington Group management updated the Washington Group board of directors on the status of their discussions with URS and reported on the due diligence being conducted by both companies, including the recent in-person due diligence meeting. After consideration and deliberation in which representatives of Wachtell Lipton, Goldman Sachs and Washington Group’s management participated, the directors indicated that Washington Group’s management and legal and financial advisors should proceed further with their discussions with URS, although the directors took notice of the effect of the recent increase in Washington Group’s stock price relative to the value of the merger consideration being offered by URS at that time.
 
On February 27, 2007, following a series of telephone calls during which Mr. Koffel briefed the URS directors individually regarding the status of the discussions and due diligence efforts between the parties, Mr. Koffel left a voicemail message for Mr. Mallender requesting him to convey to Washington Group’s board of directors that the URS board of directors was fully supportive of URS management’s desire to move forward with the process leading to a possible transaction between the companies.
 
The Washington Group board of directors convened in person for a regularly scheduled quarterly meeting on March 1 and 2, 2007, which was attended by representatives of Wachtell Lipton, Goldman Sachs and Washington Group’s management. In addition to conducting general business, Washington Group’s board further considered URS’ January 29 proposal. At the meeting, management updated the Washington Group board of directors on its discussions with URS and reported on the due diligence being conducted by both companies. Representatives of Goldman Sachs also presented Goldman Sachs’s updated financial analysis of URS and the proposed transaction to the board of directors. The presentation also included an updated analysis of potential strategic combinations with companies other than URS. In addition, the representatives of Goldman Sachs discussed with the directors the possibility of further increasing Washington Group’s share repurchase program, which had been suspended since mid-2006, as an alternative to a transaction with either URS or another party. After consideration and deliberation in which representatives of Wachtell Lipton, Goldman Sachs and Washington Group’s management participated, the directors reached a consensus that, although the strategic rationale of a transaction with URS appeared to have merit, the merger consideration and other terms proposed by URS’ January 29 proposal were insufficient. The directors therefore instructed Goldman Sachs to convey to Morgan Stanley the board’s conclusions, and Mr. Mallender contacted Mr. Koffel on March 2, 2007 to reiterate the board’s conclusions. Mr. Mallender specifically communicated that Washington Group’s board would require a purchase price that was meaningfully more than $68.00 per share and would prefer the merger consideration to be comprised of a greater proportion of cash relative to stock, with a collar on the exchange ratio applicable to the stock portion of the consideration.
 
Throughout early March 2007, representatives of Goldman Sachs and Morgan Stanley and representatives of Wachtell Lipton, Latham & Watkins and Cooley Godward discussed the merger consideration and other terms proposed by URS and Washington Group, including the desire of Washington Group that the stock portion of the merger consideration be received by Washington Group stockholders on a tax-free basis and Washington Group’s insistence that URS agree to pay a reverse break-up fee if the merger were not consummated due to failure to obtain necessary antitrust regulatory approvals. With the benefit of these conversations, on March 21, 2007, URS sent a letter to Mr. Hanks, Mr. Mallender and Washington Group proposing a revised merger transaction in which each outstanding share of Washington Group common stock would receive per share consideration of either $71.00 in cash or 1.645 shares of URS common stock, at the election of the holder, subject to proration and election procedures that would ensure that 58% of the Washington Group shares outstanding would be exchanged for cash and 42% of the Washington Group shares outstanding would be exchanged for shares of URS common stock. The transaction structure proposed by URS contemplated that Washington Group stockholders would receive the stock portion of the consideration on a tax-free basis. Assuming that all Washington Group stockholders made the same election for either cash or URS shares, each Washington Group share would be exchanged, on average, for $41.18 in cash and 0.691 of a share of URS common stock, representing an aggregate value of $71.00 per share based on the closing price of URS common stock on March 21, 2007. This revised merger consideration was approximately 4%


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higher than URS’ initial proposal of $68.00 per share. URS’ letter also proposed that URS would add to its board of directors one person who then served as a director or officer of Washington Group. Finally, URS again requested that Washington Group agree to a thirty-day exclusivity period during which neither Washington Group nor URS would solicit any alternative transaction with any third party.
 
On March 23, 2007, URS’ board of directors convened in person for a regularly scheduled meeting, together with representatives of Latham & Watkins, Cooley Godward, Morgan Stanley and URS’ management. At the meeting, Mr. H. Thomas Hicks, URS’ Chief Financial Officer, provided a report to the board on the progress to date of management’s discussions with representatives of Washington Group concerning a possible transaction. Mr. Hicks reviewed the terms of the March 21 revised proposal that management had made to Washington Group. Mr. Hicks also discussed Washington Group’s continued insistence that any proposal include a reverse break-up fee payable in the event of failure to obtain antitrust regulatory approvals. A representative of Morgan Stanley then presented to the board a preliminary financial analysis of Washington Group and the proposed transaction. Mr. Koffel discussed with the board the approach he proposed URS take in evaluating the proposed combination and conducting extensive diligence on Washington Group before submitting any transaction to the board for approval. The directors then met in an executive session without URS management present to discuss the procedures the board would follow if the overture to Washington Group received a sufficiently positive response to warrant further consideration of a possible transaction. The directors also discussed their initial views regarding the strategic rationale for the proposed combination, and identified a series of questions for management to address regarding the financial impact of the acquisition and its financing, the risk profile of the combined enterprise, the challenges of integrating the businesses and management teams of the two companies, the new business lines that the combination would bring to URS, and integration of the accounting and control systems of the two companies.
 
On March 26, 2007, Washington Group’s board of directors met in person, with some directors participating by telephone, together with representatives of Wachtell Lipton, Goldman Sachs and Washington Group’s management, to consider URS’ March 21 revised proposal. At the meeting, representatives of Goldman Sachs described the transaction terms set forth in URS’ March 21 revised proposal and updated the board on the status of Washington Group’s discussions with URS, including the preliminary results of URS’ and Washington Group’s due diligence efforts. The representatives of Goldman Sachs then updated their financial analysis of the proposed transaction and alternative strategic combinations. After consideration and deliberation in which representatives of Wachtell Lipton, Goldman Sachs and Washington Group’s management participated, the directors reached a consensus that the merger consideration and other terms proposed by URS were still insufficient and instructed Goldman Sachs to convey to Morgan Stanley the board’s conclusions. Specifically, Goldman Sachs was instructed to convey that Washington Group’s board would not accept a purchase price below $73.00, that the merger consideration should be comprised of 60% cash and 40% stock, and that Washington Group should have the right to terminate an acquisition agreement if the value of URS stock fell more than 12% prior to closing. Washington Group’s board of directors also directed Goldman Sachs to convey to Morgan Stanley its view that Washington Group’s representation on the combined company’s board of directors should be proportional to the percentage of the outstanding stock of the combined company that would be held by Washington Group stockholders following completion of the proposed transaction, rather than a single board seat as URS had proposed. In discussions between Mr. Koffel and Mr. Hanks during the pendency of the negotiations, Mr. Koffel reiterated that URS would not agree to add more than one board seat to be filled by a director or executive officer of Washington Group. Messrs. Koffel and Hanks discussed which of the current members of the Washington Group’s board might be suitable to join the URS board at the closing of the merger. Mr. Koffel indicated that he regarded all current Washington Group directors, including Mr. Hanks as possible candidates; in this connection, Mr. Koffel indicated that he personally would be most comfortable with Mr. Hanks joining the combined company’s board. However, it was recognized that any invitation to join the URS board of directors could be extended only by the Board Affairs Committee of the URS board, of which Mr. Koffel was not a member, and that any election to the URS board of directors could be made only by the URS board. Mr. Hanks responded that it would be an honor to serve on the URS board of directors if ultimately offered the opportunity at an appropriate time. No commitment regarding these matters was made by either Mr. Koffel or Mr. Hanks during these discussions.
 
On March 26, 2007, the Washington Group board also indicated willingness to consider agreeing to a three-week exclusivity period with URS if Washington Group had the right to terminate such exclusivity if it received an


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unsolicited superior offer from a third party during the exclusivity period. On March 27, 2007, a representative of Goldman Sachs conveyed to a representative of Morgan Stanley the terms on which the Washington Group board of directors would be willing to support a combination with URS and the possibility of Washington Group’s entering into an exclusivity agreement.
 
On March 27, 2007, following deliberation among URS’ senior management and representatives of Morgan Stanley and Latham & Watkins, URS directed a representative of Morgan Stanley to convey to a representative of Goldman Sachs that URS was now willing to offer Washington Group’s stockholders aggregate consideration of $73.00 per share, comprised of 60% cash consideration and 40% stock consideration, equivalent to $43.80 in cash and $29.20 in URS common stock. This revised merger consideration was approximately 7% higher than URS’ initial proposal of $68.00 per share. The terms proposed by URS contemplated a fixed exchange ratio for the stock portion of the proposed consideration and no right for Washington Group to terminate an acquisition agreement based on subsequent changes in the value of URS common stock. Representatives of Morgan Stanley and Goldman Sachs discussed granting a termination right to Washington Group if the value of URS stock fell more than 12% prior to closing, but in such event, URS would have the right to preclude termination by increasing the exchange ratio to maintain the value of the stock portion of the consideration to at least equal the value at signing, less 12%. This approach ultimately was rejected by the parties as being incompatible with ensuring that Washington Group stockholders could receive the stock portion of the purchase price on a tax-free basis, and Washington Group ultimately dropped its insistence on a termination right tied to a decrease in the value of URS common stock.
 
On April 1, 2007, URS’ board of directors convened by telephone, together with representatives of Latham & Watkins, Cooley Godward, Morgan Stanley and URS’ management, to further consider the proposed acquisition of Washington Group. Messrs. Koffel and Hicks presented an overview of the proposed transaction and its strategic benefits to URS. Representatives of Morgan Stanley presented an overview of discussions between URS and Washington Group concerning the proposed acquisition (including the arguments made for and against various proposed deal terms), various financial analyses of the price and other terms proposed by URS on March 27 and a possible timetable for completing the acquisition. Mr. Hicks led the URS board of directors through a discussion of the strategic rationale and benefits of the proposed transaction, noting in particular the opportunity provided by the transaction to substantially strengthen URS’ competitive position by significantly expanding its service offering, as well as the opportunities to achieve operating efficiencies and synergies. Mr. Hicks also presented to the board an overview of Washington Group’s business and key areas of risk affecting its business and an analysis of the likely financing structure for the cash portion of the proposed purchase price. The board also discussed the risks and opportunities regarding the new lines of business that Washington Group would bring to the combined enterprise, the ability of URS management to effectively integrate the operations of Washington Group in light of URS’ history of effectively integrating business organizations and systems following prior acquisitions, and the ability of URS to manage the debt that would be incurred in the acquisition given URS’ record of rapidly deleveraging its balance sheet following prior acquisitions. After consideration and deliberation in which representatives of Latham & Watkins, Cooley Godward and Morgan Stanley participated, the directors reached a consensus that URS management should continue negotiations with Washington Group and the development of the possible transaction.
 
On April 5, 2007, Washington Group’s board of directors convened by telephone, together with representatives of Wachtell Lipton, Goldman Sachs and Washington Group’s management, to consider URS’ March 27 proposal. After consideration and deliberation in which Wachtell Lipton and Goldman Sachs participated, the directors reached a consensus that, although there were significant open issues in respect of URS’ proposal, entering into a limited exclusivity agreement with URS might help facilitate URS’ agreeing to terms more favorable to Washington Group and its stockholders. As a result, the directors instructed Goldman Sachs to report to URS that, although there were significant open issues in respect of URS’ proposal, Washington Group was now willing to enter into a limited exclusivity agreement with URS and to continue with due diligence and negotiation of more definitive terms for a possible combination. A representative of Goldman Sachs conveyed this message by telephone to a representative of Morgan Stanley on April 6, 2007, and shortly thereafter, Latham & Watkins and Wachtell Lipton commenced negotiations of the terms of an exclusivity agreement.
 
On April 13, 2007, Washington Group and URS executed an exclusivity agreement providing that, for a period of 21 days commencing on the achievement of diligence benchmarks, and subject to applicable law, neither party would, so long as the other party was diligently pursuing the potential transaction, initiate, solicit or knowingly


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encourage (including by way of furnishing information or assistance) an alternative transaction proposal from a third party, or enter into any negotiations, discussions, agreements or arrangements with a third party providing for the acquisition of all or any significant portion of such party by a third party.
 
Beginning in mid-April 2007, representatives of Wachtell Lipton and Latham & Watkins began to negotiate a draft merger agreement, and representatives of Washington Group, URS, Wachtell Lipton, Jones Day, Latham & Watkins and Cooley Godward prepared disclosure schedules and continued their due diligence. The financial and legal advisors continued to have regular discussions during this period concerning various significant open issues in the merger agreement, including a reverse break-up fee tied to antitrust regulatory approvals, the size of that fee and of a more traditional break-up fee to be paid in certain circumstances if a third party were to make a superior offer to acquire Washington Group, whether and under what circumstances Washington Group would have the right to terminate an acquisition agreement if the value of URS common stock declined after signing, and the number of URS directors that might be filled by Washington Group representatives.
 
On April 20, 2007, Latham & Watkins delivered an initial draft merger agreement to Wachtell Lipton and, on April 27, 2007, Wachtell Lipton delivered suggested revisions. During this time, discussions between the managements of URS and Washington Group continued, and both companies continued their due diligence efforts. During his discussions with URS, Mr. Hanks reiterated that, although they were supportive of the strategic rationale of a combination of Washington Group and URS, Washington Group’s board of directors believed that the merger consideration and other terms proposed by URS were insufficient. Through their respective financial advisors, Washington Group conveyed to URS that Washington Group’s board of directors now would not accept a purchase price less than $76.00 per share, which news followed shortly after URS learned from Washington Group that it soon would publicly announce quarterly financial results for its first quarter that were below publicly available estimates. URS was not prepared to offer additional merger consideration at that time, which it communicated to Washington Group through their respective financial advisors on April 30, 2007.
 
On May 2, 2007, Mr. Koffel sent a letter to Mr. Mallender and Mr. Hanks explaining that, although discussions between URS and Washington Group had terminated, URS continued to believe that a combination of the two companies was strategically desirable for both companies and would create considerable value for each company’s stockholders. Mr. Koffel explained that URS remained prepared to pay $73.00 per share for each outstanding share of Washington Group common stock, had substantially completed its due diligence review, and was prepared to move forward and pursue a transaction if Washington Group was willing to do so. No further discussions took place, as Washington Group was not then prepared to reengage.
 
On May 15, 2007, Mr. Koffel contacted Mr. Hanks by telephone and indicated that, in light of recent increases in the URS stock price, URS might be willing to offer as much as $75.50 per share in merger consideration. The following day, a representative from Morgan Stanley, in a telephone conversation with a representative of Goldman Sachs, formalized Mr. Koffel’s proposal, explaining that URS would be willing to offer Washington Group stockholders per share consideration of $43.80 in cash and 0.687 of a share of URS common stock, representing an aggregate value of $75.50 per share based on the closing price of URS common stock on May 15, 2007. This revised merger consideration was approximately 11% higher than URS’ initial proposal of $68.00 per share, but represented the same amount of cash consideration and approximately the same stock exchange ratio as had been offered by URS on March 27, 2007. The Morgan Stanley representative also conveyed to his counterpart at Goldman Sachs that URS was prepared to accept inclusion of a reverse break-up fee tied to failure to receive antitrust regulatory approvals, and would accept structuring the transaction either to be fully taxable to Washington Group stockholders with Washington Group having the right to terminate if the value of URS stock declined by more than 12% prior to closing and with URS having the right to increase the stock exchange ratio to prevent such termination, or to be tax-free (as to the stock portion of the purchase price) with no similar termination or top-up rights.
 
The Washington Group board of directors convened in person a regularly scheduled quarterly meeting on May 17 and 18, 2007, which was attended by representatives of Wachtell Lipton, Goldman Sachs and Washington Group’s management. In addition to conducting general business, the board discussed URS’ May 15 proposal. At the meeting, Goldman Sachs presented to the board of directors a financial analysis of the May 15 proposal as well as alternative strategic combinations. During an adjournment of the Washington Group board meeting on May 17,


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Mr. Hanks contacted Mr. Koffel to ask him to increase the exchange ratio for the stock portion of the proposed merger consideration from 0.687 of a share of URS common stock to 0.700 of a share of URS common stock, which Mr. Koffel agreed to present to the URS board. As part of this discussion, Mr. Hanks invited Mr. Koffel to address the Washington Group board of directors the following morning to present his view of the proposed transaction and to answer questions that the Washington Group directors had with respect to the proposed transaction.
 
At the invitation of the Washington Group board of directors, Mr. Koffel (together with Mr. Hicks) addressed the board of directors on May 18, explaining Mr. Koffel’s views on the strategic benefits of combining URS and Washington Group and answering questions regarding the proposed transaction. Representatives of URS and Washington Group’s legal advisors were also present in person or by telephone for Mr. Koffel’s presentation.
 
On May 18, 2007, Washington Group held its annual meeting of stockholders. At the meeting, all of Washington Group’s directors were reelected for additional one-year terms.
 
On May 23, 2007, URS’ board of directors convened in person (with one director participating by telephone) to further consider the proposed acquisition of Washington Group. Portions of the meeting were also attended by representatives of Latham & Watkins, Morgan Stanley, URS’ management, Cooley Godward and Ernst & Young’s Transactional Advisory Services, as well as other professional advisors who assisted management in evaluating Washington Group and various aspects of the proposed transaction. At the meeting, URS’ management provided an extensive review of the terms and diligence work performed in contemplation of the proposed acquisition, the strategic rationale for the transaction, risks associated with Washington Group, regulatory risks that could arise from the transaction, anticipated market reaction and intended financing structures. Mr. Koffel also discussed with the board the possibility that Washington Group might again ask to raise the purchase price above the price then currently contemplated and obtained feedback from board members concerning whether further increases could be justified. Representatives of Latham & Watkins reviewed the material terms of the transaction and discussed other legal matters pertaining to the proposed transaction and the board’s role in approving such a transaction. Representatives of Morgan Stanley then presented its preliminary financial analysis regarding the merger consideration to be paid to Washington Group’s stockholders as then proposed. The board and the advisors also discussed again the risks and opportunities regarding the new lines of business that Washington Group would bring to the combined enterprise, the challenges of integrating the two companies post-closing, the ability of URS management to effectively integrate the operations of Washington Group in light of URS’ history of effectively integrating business organizations and systems following prior acquisitions, the potential impact of the additional levels of debt that the company would incur to complete the acquisition, the ability of URS to manage the debt that would be incurred given URS’ record of rapidly deleveraging its balance sheet following prior acquisitions. At the conclusion of this meeting, URS board members expressed unanimous support for URS management’s continuing to pursue the proposed transaction.
 
On May 24, 2007, all of the members of Washington Group’s board of directors met by telephone, together with representatives of Wachtell Lipton, Goldman Sachs and Washington Group’s management, to further consider the proposed transaction. At the meeting, representatives of Wachtell Lipton summarized the terms of the proposed merger agreement, and representatives of Goldman Sachs presented an updated financial analysis of the proposed transaction and alternative strategic combinations. After consideration and deliberation in which representatives of Wachtell Lipton, Goldman Sachs and Washington Group’s management participated, the directors continued their consideration of the proposed transaction, reaching a consensus that the revised consideration and other terms proposed by URS on May 15 remained insufficient, in part due to the then-current market price of Washington Group’s common stock, and the directors instructed Mr. Hanks to convey this conclusion to Mr. Koffel.
 
On May 24, 2007, Latham & Watkins, on behalf of URS, delivered a revised draft merger agreement to Wachtell Lipton. This draft contemplated a deal structure in which Washington Group stockholders would receive a fixed amount of cash and, on a tax-free basis, a fixed number of shares of URS common stock and did not provide to Washington Group a termination right tied to a decrease in value of URS stock or a corresponding top-up right to URS. In addition, on May 24, 2007, on behalf of Washington Group, Wachtell Lipton and Jones Day furnished initial drafts of Washington Group’s disclosure schedules to Latham & Watkins. Initial drafts of URS’ disclosure schedules were furnished to Wachtell Lipton and Jones Day on May 25, 2007.


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On May 24, 2007, URS held its annual meeting of stockholders. At the meeting, all of URS’ directors nominated were reelected for additional one-year terms.
 
Following the close of the financial markets on May 25, 2007, Mr. Hanks spoke with Mr. Koffel by telephone to convey the Washington Group board’s conclusion that it would not support a transaction with URS on the terms and conditions proposed by URS, including its proposed merger consideration, in part due to recent increases in the market price of Washington Group’s common stock. Representatives of Wachtell Lipton, Goldman Sachs and Washington Group’s management and Mr. Mallender, as well as representatives of Latham & Watkins, Morgan Stanley and URS’ management were also present on the call. At the request of Mr. Hanks, a representative of Wachtell Lipton explained the Washington Group board’s important remaining issues with the terms of the merger agreement proposed by URS, including the proposed termination fees, fiduciary-based termination rights, interim operating covenants and provisions related to regulatory approvals and treatment of stock options. In addition, a representative of Goldman Sachs explained that the board was unlikely to approve a transaction that did not offer Washington Group’s stockholders at least $80.00 per share in total consideration, which represented an approximately 14% premium based on that day’s closing price. Mr. Koffel and the representatives of Latham & Watkins, Morgan Stanley and URS’ management then asked questions regarding the proposed terms and conditions outlined by Mr. Hanks, Wachtell Lipton and Goldman Sachs. Following the conclusion of the call, Wachtell Lipton sent a revised version of the merger agreement to Latham & Watkins reflecting Washington Group’s proposed resolution of the terms and conditions discussed on the call.
 
Mr. Koffel and Mr. Hanks spoke again by telephone later that evening and again during the early afternoon of May 26, 2007. During these discussions, Mr. Koffel questioned the inflexibility, from URS’ perspective, of Washington Group’s proposed terms and conditions, and Mr. Hanks reiterated the firmness of Washington Group’s position.
 
Following Mr. Koffel’s and Mr. Hanks’ discussions on May 26, 2007, a representative of Morgan Stanley, on behalf of URS, contacted a representative of Goldman Sachs. The representative of Morgan Stanley requested that Washington Group’s Chairman of the Board, Dennis Washington, agree to exercise his options prior to the record date for the stockholder vote on the merger and agree to vote his shares in favor of the proposed transaction with URS. The representative of Morgan Stanley also suggested that URS would not be willing to propose $80.00 per share in total consideration. The representative of Goldman Sachs responded that Washington Group could not cause Mr. Washington to exercise his options and that it was unlikely that Washington Group’s board would agree to condition the transaction on Mr. Washington’s willingness to do so. The representative of Goldman Sachs also reiterated that the Washington Group board was unlikely to approve a transaction that did not offer Washington Group’s stockholders at least $80.00 per share in total consideration. The representative of Morgan Stanley confirmed that URS would be willing to assume the level of regulatory approval risk requested by Washington Group and would agree to pay a reverse break-up fee if the required regulatory approvals were not received in a reasonable time period following announcement of the proposed transaction.
 
On the evening of May 26, 2007, a call was held between Mr. Koffel and Mr. Hanks. Representatives of Wachtell Lipton and Goldman Sachs as well as representatives of Latham & Watkins, Morgan Stanley and URS’ management were also present on the call. On the call, Mr. Koffel explained that URS was not willing to offer Washington Group’s stockholders $80.00 per share in total consideration, but would be willing to offer, for each outstanding share of Washington Group stock, $43.80 in cash and 0.74 of a share of URS common stock, or approximately $78.50 per share in total consideration. In response, Mr. Hanks indicated that he would be willing to present the proposed merger consideration to Washington Group’s board, although he believed that the board was unlikely to approve a transaction on such terms.
 
Later that evening, Mr. Koffel called Mr. Hanks and explained that URS would be willing to offer Washington Group’s stockholders $80.00 per share in total consideration, comprised of $43.80 in cash and 0.772 of a share of URS common stock. This revised merger consideration was approximately 18% higher than URS’ initial proposal of $68.00 per share (but included the same amount of cash as had been offered by URS on March 27, 2007 with much of the increase in value attributable to recent increases in the market price of URS stock).
 
On May 26 and 27, 2007, representatives of Washington Group management, Wachtell Lipton, Jones Day, URS management, Latham & Watkins and Cooley Godward worked together to finalize the terms of the merger


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agreement and the schedules and exhibits, including URS’ debt financing commitment papers. On May 26, Latham & Watkins also provided Wachtell Lipton a proposed form of agreement whereby Mr. Washington would agree to exercise his options prior to the record date for the stockholder vote on the merger, agree to hold the shares issued upon exercise of the options through the completion of the transaction and agree to vote his shares in favor of the proposed transaction with URS. Latham & Watkins asked Wachtell Lipton to share the draft with Mr. Washington and his counsel, but confirmed that execution of such an agreement would not be a condition to the transaction. Although Mr. Washington did not agree to execute the agreement, he confirmed prior to the execution of the merger agreement that he strongly supported the proposed transaction as being beneficial to Washington Group’s stockholders, employees, customers and other constituencies, and that under appropriate circumstances he would be willing to exercise his options and vote in favor of the transaction with URS to support approval of the transaction by Washington Group’s stockholders.
 
In the evening of May 27, 2007, Washington Group’s board of directors met by telephone, together with representatives of Wachtell Lipton, Goldman Sachs and Washington Group’s management, to further consider the proposed transaction. At the meeting, Wachtell Lipton described the terms of the proposed merger agreement, discussed considerations relating to URS’ proposed financing commitments for the transaction and discussed various other issues related to the proposed transaction. Representatives of Goldman Sachs also presented an updated financial analysis of the proposed transaction, and delivered Goldman Sachs’s oral opinion, which was subsequently confirmed in writing, to the effect that, as of such date and based upon and subject to the factors and assumptions explained in their presentation and set forth in their written opinion, the $43.80 in cash and 0.772 of a share of URS common stock to be issued in exchange for each share of Washington Group common stock, taken in the aggregate, pursuant to the merger agreement was fair from a financial point of view to Washington Group’s stockholders. During the meeting of the Washington Group board of directors, a representative of Wachtell Lipton contacted a representative of Latham & Watkins and resolved certain outstanding matters with respect to the draft merger agreement, which were then reported to the Washington Group directors during the meeting.
 
After consideration and deliberation in which representatives of Wachtell Lipton and Goldman Sachs participated, and taking into consideration the factors described under “— Recommendation of the Washington Group Board of Directors and Its Reasons for the Merger,” the Washington Group board of directors voted unanimously to declare it advisable for, fair to and in the best interests of Washington Group and its stockholders for Washington Group to enter into the proposed merger agreement, approved and adopted the proposed merger agreement and determined to recommend the approval of the merger and adoption of the proposed merger agreement by Washington Group’s stockholders. Mr. Hanks then contacted Mr. Koffel to inform him of the outcome of the Washington Group board meeting, and a representative of Wachtell Lipton contacted a representative of Latham & Watkins to confirm the actions that the Washington Group board of directors had taken.
 
Near the end of the Washington Group’s board meeting, URS’ board convened to consider the proposed transaction. At the meeting, Latham & Watkins summarized changes to the terms of the proposed merger agreement since the board’s last review of the terms at its May 23 meeting and answered questions about various other issues related to the proposed transaction. Representatives of Morgan Stanley also presented an updated financial analysis of the proposed transaction and delivered Morgan Stanley’s oral opinion, subsequently confirmed in writing, to the effect that, as of such date and based on and subject to the factors and assumptions explained in their presentation and set forth in their written opinion, the $43.80 in cash and 0.772 of a share of URS common stock to be issued in exchange for each share of Washington Group common stock pursuant to the merger agreement was fair from a financial point of view to URS. After consideration and deliberation in which Latham & Watkins, Cooley Godward and Morgan Stanley participated, and taking into consideration the factors described under “— Recommendation of the URS Board of Directors and Its Reasons for the Merger” on page 64, the URS board voted unanimously to declare it advisable and in the best interests of URS and its stockholders for URS to enter into the proposed merger agreement, approved and adopted the proposed merger agreement and the financing commitments with MSSF and Wells Fargo, and determined to recommend to URS’ stockholders that they vote to approve the issuance of shares of URS common stock in the proposed merger.
 
Following the completion of the two board meetings, representatives of Wachtell Lipton and Latham & Watkins negotiated the final terms of the definitive merger agreement, and members of the management of URS and Washington Group met to complete final due diligence matters.


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On the evening of May 27, 2007, URS and Washington Group each executed the definitive merger agreement. They issued a joint press release announcing the proposed transaction on May 28, 2007.
 
Recommendation of the URS Board of Directors and Its Reasons for the Merger
 
The URS board of directors believes that the acquisition of Washington Group will expand the capabilities of both URS and Washington Group, offer their customers a “single source” vendor that could offer a full lifecycle of planning, engineering, construction and operations and maintenance services and capitalize on their positions in important high growth sectors, including power, infrastructure and environmental management. The URS board of directors has unanimously:
 
  •  determined that the merger is advisable for, fair to and in the best interests of URS and its stockholders;
 
  •  approved the merger agreement and the transactions contemplated by the merger agreement, including the merger;
 
  •  directed that approval of the issuance of URS common stock pursuant to the merger agreement be submitted for consideration by URS stockholders at a URS special meeting; and
 
  •  resolved to recommend that the URS stockholders vote “FOR” the proposal to approve the issuance of shares of URS common stock pursuant to the merger agreement.
 
In reaching its decision to approve the merger agreement, the URS board of directors consulted with senior members of URS’ management team and consultants regarding the strategic and operational aspects of combining URS and Washington Group and the results of the due diligence efforts undertaken by management and URS’ advisors. In addition, the URS board of directors held discussions with representatives of Morgan Stanley and URS’ other advisors regarding the past and current business operations, financial condition and future prospects of Washington Group. The URS board of directors also consulted with Morgan Stanley as to the fairness, from a financial point of view, to URS of the merger consideration to be paid by URS. The URS board of directors also consulted with representatives of Latham & Watkins and Cooley Godward regarding legal due diligence matters and the terms of the merger agreement and related agreements. URS management and the URS board of directors also retained other firms to provide consulting services to URS in connection with the merger. In reaching its decision to approve the merger agreement, the URS board of directors considered a variety of factors, a number of which are summarized below:
 
  •  Strengthened Strategic Position.  The URS board of directors considered that the merger would expand the capabilities of both URS and Washington Group, offer their customers a “single source” vendor that could offer a full lifecycle of planning, engineering, construction and operations and maintenance services and allow the companies to capitalize on their positions in important high growth sectors, including power, infrastructure and environmental management. Further, the URS board of directors considered that, through the merger, URS and Washington Group would be in a better position to capture growth from favorable trends across the engineering and construction sectors, including the increased investment in infrastructure projects, the focus on emissions reduction and energy independence in the power sector, and the increased use of outsourced construction services by federal agencies, such as the U.S. Departments of Defense and Energy. The URS board of directors noted that the combined company would be expected to be a major contractor to the federal government, including a top five provider of technical services to the U.S. Department of Defense and a top provider of engineering, management and environmental services to the U.S. Department of Energy (though no assurances can be given that such relationship with such agencies will continue at the same level enjoyed historically). As a combined entity, URS and Washington Group would have more substantial resources to meet increasing client demand for a single firm that can provide the full range of engineering and construction services required for large, complex projects in high-growth markets in the United States and abroad.
 
  •  Operating Efficiencies and Synergies.  The URS board of directors reviewed the potential strategic and other benefits of the merger, including the complementary nature of the businesses of Washington Group and URS and the opportunity for cost savings. The URS board of directors noted that, although no assurances can be given that any particular level of synergies will be achieved, URS’ management anticipated cost synergies


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  of approximately $52.5 million in 2008. URS’ ability to achieve these goals is subject to various factors, a number of which will be beyond its control, including economic conditions and unanticipated changes in business conditions, and, therefore, there can be no assurance that these results will be achieved. See “Cautionary Statement Concerning Forward-Looking Statements” on page 41.
 
  •  Positioned for Long-Term Growth.  The URS board of directors considered that the acquisition of Washington Group had the potential to accelerate URS’ future revenue and earnings growth, which would add stockholder value. In addition, the URS board of directors considered that the acquisition of Washington Group would enhance the valuation of URS and provide URS with access to additional capital and management depth, along with the ability to pursue additional strategic combinations. The URS board of directors concluded that the acquisition of Washington Group would create a larger company with improved prospects for long-term growth.
 
  •  Strategic Alternatives.  The URS board of directors considered that URS management had reviewed other possible acquisition candidates and determined that the acquisition of Washington Group was a better strategic fit than the other alternatives considered and presented a unique opportunity to enhance and expand URS’ business, service offerings and position for future growth.
 
  •  Integration of Washington Group.  The URS board of directors considered the fact that the combination of the businesses of URS and Washington Group would be challenging. However, after consultation with URS management and its advisors and taking into account URS’ past experience in integrating acquired companies, the URS board of directors determined that, if URS effectively implemented its integration processes, the operations of Washington Group could be integrated with those of URS in an efficient manner.
 
  •  Opinion of Financial Advisor.  The URS board of directors considered the opinion of Morgan Stanley that, as of the date of the opinion, and based upon and subject to the considerations described in the opinion and based on such other matters as Morgan Stanley considered relevant, the merger consideration to be paid by URS pursuant to the merger agreement was fair from a financial point of view to URS. See “— Opinion of URS’ Financial Advisor” on page 69.
 
  •  Terms of the Merger Agreement.  The URS board of directors, with the assistance of counsel, considered the general terms of the merger agreement, including:
 
  •  Fixed Exchange Ratio.  The URS board of directors considered the fact that the fixed exchange ratio provides certainty as to the amount of cash and number of shares of URS common stock to be delivered to Washington Group stockholders and the percentage of the total shares of URS common stock that current Washington Group stockholders will own after the merger. The URS board of directors also considered the premium over the historical trading prices of Washington Group common stock implied by the value of the merger consideration.
 
  •  No Solicitation; Termination Fee.  The URS board of directors reviewed the provisions of the merger agreement that limit the ability of URS and Washington Group to solicit other acquisition offers and require each party to pay a termination fee to the other party under specified circumstances. The URS board of directors believed that these provisions were reasonable under the circumstances.
 
  •  Conditions to Consummation.  The URS board of directors reviewed with counsel the conditions to consummation of the merger, in particular the likelihood of obtaining the necessary regulatory approvals and stockholder approvals, and the likelihood that the merger would be completed. While the URS board of directors believes that these approvals will be obtained in a timely fashion, the URS board of directors also noted that URS may be required, under certain circumstances, to agree to divestitures or other restrictions on the operation of the business of the combined company.
 
  •  Tax Treatment.  The URS board of directors also considered the expected qualification of the merger and the second merger, taken together, as a reorganization within the meaning of Section 368(a) of the Internal Revenue Code, resulting in the common stock portion of the merger consideration being received by Washington Group stockholders free of federal income tax.


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  •  Financing.  The URS board of directors reviewed with management and its advisors the ability of URS to obtain, and the expected terms of, the financing necessary to pay the cash portion of the merger consideration and refinance the balance sheet of the combined company.
 
In addition, the URS board of directors also identified and considered a variety of potentially negative factors in its deliberations concerning the merger, including:
 
  •  the possibility that the incremental debt associated with the merger could cause URS to have reduced financial flexibility and adversely affect its competitive position, ability to secure surety bonds and stock price;
 
  •  the ability of URS to obtain the necessary financing to pay the cash portion of the merger consideration, and the potential terms of such financing;
 
  •  the risk that the potential benefits sought in the merger might not be fully realized;
 
  •  the possibility that the merger might not be completed, or that completion might be unduly delayed;
 
  •  the effect of public announcement of the merger on URS’ stock price;
 
  •  the projected dilution of URS’ earnings per share as a result of the issuance of the shares in the merger, and the estimated time period before the merger was expected to be accretive to URS’ earnings per share;
 
  •  the fact that the merger agreement did not contain a financing condition;
 
  •  the risk that management’s efforts to integrate Washington Group would disrupt URS’ operations and distract management’s attention;
 
  •  the risk that governmental entities may require that URS and/or Washington Group divest certain assets in order to obtain approval for the merger;
 
  •  the substantial charges to be incurred in connection with the merger, including costs of integrating the businesses of URS and Washington Group and transaction expenses arising from the merger;
 
  •  the risks associated with Washington Group’s status as a defendant in lawsuits relating to the levee failures in New Orleans, Louisiana on August 29, 2005;
 
  •  the risks related to potential exposure to losses arising out of Washington Group’s fixed price contracts if project costs increased;
 
  •  potential loss of customer relationships and uncertainties regarding market acceptance of the combined company;
 
  •  the risk that, despite the efforts of the combined company, key management and other key personnel might not remain employed by URS;
 
  •  the restrictions on the conduct of URS’ business during the period between the signing of the merger agreement and the completion of the merger; and
 
  •  various other risks associated with the merger and the businesses of URS, Washington Group and the combined company described in the sections entitled “Risk Factors — Risks Relating to the Merger” on page 20, “Risk Factors — Risks Relating to URS” on page 26 and “Risk Factors — Risks Relating to Washington Group” on page 34, and in the documents incorporated by reference into this joint proxy statement/prospectus.
 
The URS board of directors concluded, however, that these factors could be managed or mitigated by URS or were unlikely to have a material impact on the merger or URS, and that, overall, the potentially negative factors associated with the merger were outweighed by the potential benefits of the merger.
 
It was not practical to, and thus the URS board of directors did not, quantify, rank or otherwise assign relative weights to the wide variety of factors it considered in evaluating the merger and the merger agreement, nor did the board determine that any one factor was of particular importance in deciding that the merger agreement and


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associated transactions were in the best interests of URS and its stockholders. This discussion of information and material factors considered by the URS board of directors is intended to be a summary rather than an exhaustive list. In considering these factors, individual members of the board may have given different weight to different factors. The board conducted an overall analysis of the factors described above, and considered as a whole the factors to support its decision in favor of the merger and the merger agreement. The decision of each member of the URS board of directors was based upon his own judgment, in light of all of the information presented, regarding the overall effect of the merger agreement and associated transactions on URS’ stockholders as compared to any potential alternative courses of action. After considering this information, all members of the URS board of directors unanimously approved the merger agreement and the transactions contemplated by the merger agreement, including the merger, and recommended that URS’ stockholders approve the issuance of shares of URS common stock pursuant to the merger agreement.
 
Recommendation of the Washington Group Board of Directors and Its Reasons for the Merger
 
By unanimous vote, the Washington Group board of directors, at a meeting held on May 27, 2007, determined that the merger agreement and the transactions contemplated by the merger agreement were advisable for, fair to and in the best interests of Washington Group and its stockholders, and approved and adopted the merger agreement and the transactions contemplated by the merger agreement. The Washington Group board of directors unanimously recommends that Washington Group’s stockholders vote FOR adoption of the merger agreement and approval of the merger at the Washington Group special meeting.
 
In reaching this decision, the Washington Group board of directors consulted with Washington Group’s management and its legal and financial advisors and considered a variety of factors, including the following material factors, among others:
 
  •  its belief that the merger would further enhance Washington Group’s role as an engineering and construction leader, with the benefits of the increased scale, diversity and resources of the combined company, including URS’ significant design resources, and would further support Washington Group’s ability to compete for new opportunities in high growth sectors, including power, infrastructure and environmental management;
 
  •  the potential strategic and other benefits of the merger identified by Washington Group’s management and URS’ management, including the highly complementary nature of the businesses of Washington Group and URS and the opportunity for cost savings as a combined company;
 
  •  the expectation that Washington Group’s existing management team would continue with the combined company after the merger and manage Washington Group as a separate business segment of URS headquartered in Boise, and that the impact on customers and employees would therefore be minimized;
 
  •  the presentations by Washington Group’s management concerning the operations, financial condition and prospects of Washington Group and the presentations by Goldman Sachs, its financial advisor, concerning URS, and the expected financial impact of the merger, and the Washington Group board of directors’ belief, based in part on such presentations, that a merger with URS would likely accelerate Washington Group’s future revenue and earnings growth, which would create additional stockholder value, and improve Washington Group’s prospects for long-term growth;
 
  •  the potential for further consolidation in the engineering and construction industry, and its belief that a combination with URS would likely improve Washington Group’s ability to perform in an increasingly competitive industry;
 
  •  its review of other potential strategic transactions, including its discussions with Company A and Company B, and its belief as a result of such review that URS was a strategic fit and that the transaction presented a unique opportunity to combine with URS’ highly complementary business, which was expected to enhance and expand Washington Group’s present business and future growth;
 
  •  the agreement that one current member of the Washington Group board of directors would join the board of directors of URS;


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  •  its assessment of the likelihood that the merger would be completed in a timely manner and that the management team of the combined company would be able to successfully integrate and operate the businesses of the combined company after the merger; the financial analyses presented by Goldman Sachs to the Washington Group board of directors, and the opinion of Goldman Sachs dated as of May 27, 2007 to the effect that, as of that date, and subject to and based upon the factors and assumptions set forth in such opinion, the consideration to be received by holders of shares Washington Group common stock, taken in the aggregate, pursuant to the merger agreement was fair from a financial point of view to such holders;
 
  •  the financial terms of the merger, including that the right of Washington Group stockholders to receive, for each share of Washington Group common stock held by them, $43.80 in cash and 0.772 of a share of URS common stock, which represented $80.00 per share in total consideration and a premium of approximately 14% based on the closing prices on the NYSE of Washington Group and URS common stock on May 25, 2007 (the last trading day prior to the execution and announcement of the merger agreement);
 
  •  the belief that the fixed exchange ratio provides certainty as to the number of shares of URS common stock to be issued to Washington Group stockholders and the percentage of the total shares of URS common stock that current Washington Group stockholders will own after the merger;
 
  •  the expectation that Washington Group stockholders will own approximately 31% of the outstanding common stock of the combined company immediately after closing and will have the opportunity to share in the future growth and expected synergies of the combined company, while retaining the flexibility of selling all or a portion of those shares for cash into a very liquid market at any time;
 
  •  the fact that Washington Group and their legal and financial representatives had extensive, arm’s-length negotiations with URS over several months, which, among other things, resulted in an increase in the merger consideration from the initial offer price of $68.00 to $80.00 per share, an approximately 18% increase, and that the per share cash portion of the merger consideration of $43.80 is approximately 29% higher than the initially offered cash consideration of $34.00 per share;
 
  •  its view, based in part on the advice of Wachtell Lipton and Goldman Sachs, that the terms of the merger agreement, including the low termination fee (equivalent to approximately $2.19 per share of Washington Group), would not preclude a proposal for an alternative transaction involving Washington Group (see “The Merger Agreement — Termination Fee” on page 113);
 
  •  the requirement that URS pay a termination fee of $50.0 million to $70.0 million to Washington Group under certain circumstances (see “The Merger Agreement — Termination Fee” on page 113);
 
  •  the agreement by URS to assume certain regulatory approval risks for the proposed merger;
 
  •  the delivery by URS of financing commitments from reputable and financially sound lenders that, together with the equity commitments received, are sufficient to pay the merger consideration, and that such financing commitments were subject to acceptable conditions to the obligations of such institutions to fund such commitments, each as described under the caption “The Merger — Financing Commitments” on page 94;
 
  •  the fact that the stock portion of the merger consideration is intended to be tax free to Washington Group’s stockholders;
 
  •  the regulatory and other approvals required in connection with the merger and the likelihood such approvals would be received in a timely manner and without unacceptable conditions;
 
  •  the fact that holders of Washington Group common stock that do not vote in favor of the adoption of the merger agreement and approval of the merger or otherwise waive their appraisal rights will have the opportunity to demand appraisal of the fair value of their shares under Delaware law; and
 
  •  the fact that the transaction will be subject to the approval of Washington Group’s stockholders.


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The Washington Group board of directors was also aware of and considered the following adverse factors associated with the proposed merger, among others:
 
  •  the fact that Washington Group did not undertake an affirmative auction prior to entering into the merger agreement, although Washington Group had conducted discussions with Company A and Company B, and the Washington Group board of directors was satisfied that the merger agreement provides the board with an adequate opportunity to consider unsolicited proposals and to terminate the merger agreement and accept a superior proposal prior to Washington Group stockholder adoption of the merger agreement and approval of the merger, subject to payment of a lower than customary break-up fee;
 
  •  the risk that the expected synergies and other benefits of the merger might not be fully achieved or may not be achieved within the time frames expected;
 
  •  the risks of the type and nature described under “Risk Factors” on page 20;
 
  •  the possibility that regulatory or governmental authorities might seek to impose conditions on or otherwise prevent or delay the merger (and that the merger may not be completed as a result of conditions imposed by regulatory authorities or otherwise) balanced by the fact that URS had agreed to assume certain regulatory approval risks for the proposed transaction, including payment of a reverse break-up fee if the required regulatory approvals were not received in a reasonable period of time;
 
  •  the requirement that Washington Group pay a termination fee of $70.0 million to URS under certain circumstances (see “The Merger Agreement — Termination Fee” on page 113);
 
  •  the fact that some of Washington Group’s directors and executive officers may have interests in the merger and arrangements that are different from, or in addition to, those of Washington Group stockholders generally, including as a result of employment and compensation arrangements with Washington Group and the manner in which they would be affected by the merger (see “—  Interests of Washington Group’s Executive Officers and Directors in the Merger” on page 92); and
 
  •  the risk and costs that the merger might not be completed, the potential impact of the restrictions under the merger agreement on Washington Group’s ability to take certain actions during the period prior to the consummation of the merger (which may delay or prevent Washington Group from undertaking business opportunities that may arise pending completion of the merger), the potential for diversion of management and employee attention and for increased employee attrition during that period and the potential effect of these on Washington Group’s business and relations with customers and service providers.
 
The foregoing discussion of the factors considered by the Washington Group board of directors is not intended to be exhaustive, but, rather, includes the material factors considered by the Washington Group board of directors. In reaching its decision to approve the merger agreement, the merger and the other transactions contemplated by the merger agreement, the Washington Group board of directors did not quantify or assign any relative weights to the factors considered, and individual directors may have given different weights to different factors. The Washington Group board of directors considered all these factors as a whole, including discussions with, and questioning of, Washington Group management and Washington Group’s financial and legal advisors, and overall considered the factors to be favorable to, and to support, its determination. The Washington Group board of directors also considered the experience of Goldman Sachs, its financial advisor, for analyses of the financial terms of the merger and for their opinion as to the fairness of the consideration in the merger to Washington Group’s stockholders.
 
For the reasons set forth above, the Washington Group board of directors unanimously determined that the merger, the merger agreement and the transactions contemplated by the merger agreement are advisable for, fair to and in the best interests of Washington Group and its stockholders, and approved and adopted the merger agreement and the transactions contemplated by the merger agreement. The Washington Group board of directors unanimously recommends that Washington Group’s stockholders vote FOR adoption of the merger agreement and approval of the merger at the Washington Group special meeting.


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Opinion of URS’ Financial Advisor
 
Morgan Stanley & Co. Incorporated.
 
On March 23, 2007, the URS board of directors retained Morgan Stanley to act as its exclusive financial advisor and provide a financial opinion letter in connection with a possible acquisition of or business combination with Washington Group. The URS board of directors selected Morgan Stanley to provide financial advice and assistance in connection with the merger based on Morgan Stanley’s qualifications, expertise, reputation, and experience in transactions similar to the merger. At a telephonic meeting of the URS board of directors held on May 27, 2007, Morgan Stanley delivered its oral opinion, subsequently confirmed in writing that, as of that date and based upon and subject to the various assumptions, qualifications and limitations set forth in the opinion, the merger consideration to be paid by URS pursuant to the merger agreement was fair from a financial point of view to URS.
 
The full text of Morgan Stanley’s opinion, dated May 28, 2007, which sets forth, among other things, the assumptions made, procedures followed, matters considered and qualifications and limitations on the scope of the review undertaken by Morgan Stanley in rendering its opinion, is included as Annex B to this joint proxy statement/prospectus. The summary of Morgan Stanley’s fairness opinion set forth in this joint proxy statement/prospectus is qualified in its entirety by reference to the full text of the opinion. URS stockholders should read this opinion carefully and in its entirety. Morgan Stanley’s opinion is directed to the Board and only addresses the fairness from a financial point of view of the merger consideration to URS. Morgan Stanley’s opinion did not address any other aspect of the merger. Morgan Stanley expressed no opinion or recommendation as to how the URS stockholders or Washington Group stockholders should vote at the stockholder meetings to be held in connection with the merger.
 
In connection with rendering its opinion, Morgan Stanley, among other things:
 
  •  reviewed certain publicly available financial statements and other business and financial information of Washington Group and URS, respectively;
 
  •  reviewed certain internal financial statements and other financial and operating data, including certain financial forecasts, concerning Washington Group prepared by the management of Washington Group;
 
  •  reviewed certain financial forecasts concerning Washington Group prepared by the management of Washington Group and reviewed by the management of URS;
 
  •  reviewed certain internal financial statements and other financial and operating data, including certain financial forecasts, concerning URS prepared by the management of URS;
 
  •  reviewed information relating to certain strategic, financial and operational benefits anticipated from the merger, prepared by the management of URS;
 
  •  discussed the past and current operations and financial condition and the prospects of URS and Washington Group, including information relating to certain strategic, financial and operational benefits anticipated from the merger, with senior executives of URS;
 
  •  reviewed the pro forma impact of the merger on URS’ earnings per share, cash flow, capitalization and financial ratios;
 
  •  reviewed the reported prices and trading activity for the Washington Group common stock and the URS common stock, respectively;
 
  •  compared the financial performance of Washington Group and URS and the prices and trading activity of Washington Group common stock and URS common stock with that of other publicly-traded companies that are comparable with Washington Group and URS, respectively, and their respective securities;
 
  •  reviewed the financial terms, to the extent publicly available, of certain comparable acquisition transactions;
 
  •  participated in discussions and negotiations among representatives of Washington Group and URS and their financial and legal advisors;


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  •  reviewed the merger agreement, draft debt commitment letters of URS substantially in the form of the drafts dated May 27, 2007, which are referred to as the Commitment Letters, and certain related documents; and
 
  •  performed such other analyses and considered such other factors as Morgan Stanley deemed appropriate.
 
In arriving at its opinion, Morgan Stanley assumed and relied upon without independent verification the accuracy and completeness of the information supplied or otherwise made available to it by Washington Group and URS for the purposes of its opinion. With respect to the financial forecasts prepared by the management of URS, including information relating to certain strategic, financial and operational benefits anticipated from the merger, Morgan Stanley assumed that they had been reasonably prepared on bases reflecting the best currently available estimates and judgments of the future financial performance of Washington Group and URS.
 
In addition, Morgan Stanley assumed that the merger will be consummated in accordance with the terms set forth in the merger agreement without any material waiver, amendment or delay of any terms or conditions, including, among other things, that the second merger will be consummated promptly following the merger, that the merger and the second merger will be treated as a single integrated transaction and that the merger will be treated as a tax-free “reorganization” within the meaning of Section 368(a) of the Internal Revenue Code. Morgan Stanley did not make any independent valuation or appraisal of the assets or liabilities of URS or Washington Group nor was it furnished with any such appraisals. In addition, Morgan Stanley assumed that URS will obtain financing in connection with the merger on terms consistent with the Commitment Letters and as discussed with the senior management of URS. Morgan Stanley assumed that, in connection with the receipt of all the necessary governmental, regulatory or other approvals and consents required for the merger, no delays, limitations, conditions or restrictions will be imposed that would have a material adverse effect on the contemplated benefits expected to be derived in the merger. Morgan Stanley relied upon, without independent verification, the assessment by the management of URS of: (i) the strategic, financial and other benefits expected to result from the merger; (ii) the timing and risks associated with the integration of Washington Group and URS; (iii) the strategic rationale for the merger and (iv) the validity of, and risks associated with, Washington Group’s and URS’ existing and future services, technologies, intellectual property, products and business models. Morgan Stanley is not a legal, tax or regulatory advisor and has relied upon, without independent verification, the assessment of URS and its legal, tax or regulatory advisors with respect to legal, tax and regulatory matters. Morgan Stanley’s opinion was necessarily based on financial, economic, market and other conditions as in effect on, and the information made available to it as of, May 28, 2007. Events occurring after the date of the opinion may affect the opinion and the assumptions used in preparing it, and Morgan Stanley did not assume any obligations to update, revise, or reaffirm this opinion.
 
The opinion was for the information of the URS board of directors in connection with the merger. In addition, Morgan Stanley’s opinion did not in any manner address the prices at which the URS common stock will trade following consummation of the merger and expressed no opinion or recommendation as to how the URS stockholders and the Washington Group stockholders should vote at the stockholder meetings to be held in connection with the merger.
 
Valuation Methods and Analyses
 
The following is a summary of the material financial analyses performed by Morgan Stanley in connection with its oral opinion and the preparation of its written opinion letter dated May 28, 2007. The various analyses summarized below were based on closing prices for the common stock of URS and Washington Group as of May 25, 2007, the last full trading day preceding the day of the special meeting of the URS board of directors to consider and approve, adopt and authorize the merger agreement. As of that date, the value of the merger consideration was $80.00. Although each analysis was provided to the URS board of directors, in connection with arriving at its opinion, Morgan Stanley considered all of its analyses as a whole and did not attribute any particular weight to any analysis described below. Some of these summaries of financial analyses include information presented in tabular format. In order to fully understand the financial analyses used by Morgan Stanley, the tables must be read together with the text of each summary. The tables alone do not constitute a complete description of the financial analyses used by Morgan Stanley.


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Washington Group
 
Trading History
 
Morgan Stanley reviewed the historical trading prices for Washington Group common stock for the four-month period from January 26, 2007 (the last trading day prior to the delivery of the initial offer) to May 25, 2007 (one trading day prior to the announcement of the merger agreement) and for the twelve-month period prior to the announcement of the merger agreement. Morgan Stanley observed that the twelve-month range of trading prices was $47-$74 and the range of trading prices since January 26, 2007 was $56-$74. Morgan Stanley noted that as of May 25, 2007, the closing price of Washington Group common stock was $69.97 per share. Morgan Stanley also noted that based on closing prices for the common stock of URS and Washington Group as of May 25, 2007, the implied transaction value per share of Washington Group common stock was $80.00.
 
Comparable Company Analysis
 
Using publicly available information, Morgan Stanley reviewed the market values and trading multiples of Washington Group and the following seven publicly held companies in the engineering and construction industry that Morgan Stanley deemed comparable to Washington Group:
 
     
Engineering and Construction Comparables
   
 
Fluor Corporation
       
Foster Wheeler Ltd.
   
Jacobs Engineering Group Inc.
   
The Shaw Group Inc.
   
EMCOR Group, Inc.
   
VT Group plc
   
Tetra Tech, Inc.
   
 
All multiples were based on closing stock prices on May 25, 2007. Estimated financial data for the selected companies were based on public filings and publicly available equity research analysts’ estimates, as aggregated by the Institutional Brokers’ Estimate System, which is referred to as the IBES. Estimated financial data for Washington Group were based on public filings, publicly announced earnings guidance, URS management’s estimates, D.A. Davidson research estimates (5/11/07) and publicly available equity research analysts’ estimates as aggregated by IBES.
 
For each of the comparable companies, Morgan Stanley calculated the following:
 
  •  Aggregate Value, which is defined as market value of common equity plus debt and preferred stock, less cash.
 
  •  Aggregate Value/2007E EBITDA, which is defined as Aggregate Value as a multiple of calendar year 2007 estimated earnings before interest, taxes, depreciation and amortization, or EBITDA, based upon publicly available information, including reports of equity research analysts and using the mean of the analysts’ calendar year 2007 estimates.
 
  •  Aggregate Value/2008E EBITDA, which is defined as Aggregate Value as a multiple of calendar year 2008 EBITDA, based upon publicly available information, including reports of equity research analysts and using the mean of the analysts’ calendar year 2008 estimates.
 
  •  Price/2007E Earnings, which is defined as stock price as a multiple of estimated earnings per share, based upon publicly available information, including reports of equity research analysts and using the mean of the analysts’ calendar year 2007 estimates.
 
  •  Price/2008E Earnings, which is defined as stock price as a multiple of estimated earnings per share, based upon publicly available information, including reports of equity research analysts and using the mean of the analysts’ calendar year 2008 estimates.


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A summary of the reference range of market trading multiples is set forth below:
 
                                 
Engineering and Construction Comparables
  Mean     Median     High     Low  
 
Aggregate Value/2007E EBITDA
    12.7 x     12.5 x     18.5 x     10.5 x
Aggregate Value/2008E EBITDA
    10.5 x     10.2 x     13.6 x     8.8 x
Price/2007E Earnings
    23.6 x     23.8 x     30.2 x     18.0 x
Price/2008E Earnings
    18.7 x     19.0 x     20.8 x     16.1 x
 
Morgan Stanley calculated an implied valuation range by applying multiple ranges to the applicable operating statistics based on publicly available equity research analyst estimates, and other publicly available data. Based upon and subject to the foregoing, Morgan Stanley calculated implied valuation ranges for the Washington Group common stock of $68 to $78 per share based on Aggregate Value/2007E EBITDA and $67 to $75 based on Price/2007E Earnings. Morgan Stanley noted that based on closing prices for the common stock of URS and Washington Group as of May 25, 2007, the implied transaction value per share of Washington Group common stock was $80.00.
 
Although the foregoing companies were compared to Washington Group for purposes of this analysis, Morgan Stanley noted that no company used in the comparable company analysis is identical to Washington Group because of differences between the business mix, markets served, operations, and other characteristics of Washington Group and the comparable companies. In evaluating the comparable companies, Morgan Stanley relied on publicly available equity research analyst estimates, which estimates are based in part on judgments and assumptions with regard to industry performance, general business, economic, market and financial conditions, and other matters, many of which are beyond the control of Washington Group, such as the impact of competition on the business of Washington Group, as well as on the industry generally, industry growth, and the absence of any adverse material change in the financial condition and prospects of Washington Group or the industry or in the markets generally. Mathematical analysis, such as determining the mean or median, is not in itself a meaningful method of using comparable company data.
 
Securities Research Analysts’ Price Targets
 
Morgan Stanley reviewed and analyzed future public market trading price targets for Washington Group common stock prepared and published by equity research analysts. These targets reflect each analyst’s estimate of the future public market trading price of Washington Group common stock. Morgan Stanley discounted the price targets at Washington Group’s estimated average cost of equity capital of 9.6%. The range of discounted analyst price targets for Washington Group was $64 to $66. Morgan Stanley noted that based on closing prices for the common stock of URS and Washington Group as of May 25, 2007, the implied transaction value per share of Washington Group common stock was $80.00.
 
The public market trading price targets published by the securities research analysts do not necessarily reflect current market trading prices for Washington Group common stock and these estimates are subject to uncertainties, including the future financial performance of Washington Group and future financial market conditions.
 
Discounted Equity Value Analysis
 
Morgan Stanley performed an analysis of the implied present value per share of the Washington Group common stock on a standalone basis based on Washington Group’s projected future equity value using calendar year 2009 estimates based on URS management forecasts.
 
To calculate the discounted equity value, Morgan Stanley multiplied the applicable earnings estimate by the current calendar year multiple range used in the comparable company analysis described above, and discounted the implied nominal equity values of Washington Group to a present value at an illustrative discount rate of 9.6%, which reflected Washington Group’s estimated average cost of equity capital. Based on these forecasts and assumptions, Morgan Stanley derived an implied valuation range for the Washington Group common stock of $82 to $93. Morgan Stanley noted that based on closing prices for the common stock of URS and Washington Group as of May 25, 2007, the implied transaction value per share of Washington Group common stock was $80.00.


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Precedent Transactions Analysis
 
Morgan Stanley also performed a precedent transaction analysis, which is designed to imply a value of a company based on publicly available premiums of selected transactions that share some characteristics with the merger. The precedent transactions analysis was presented to the URS board of directors to provide the URS board of directors with background information and perspective in connection with its consideration of the merger agreement. In connection with its analysis, Morgan Stanley analyzed the consideration to be received by holders of Washington Group common stock in the merger in relation to the historical market price of the Washington Group common stock. The following table lists the percentage premium of the implied transaction value per share for a share of Washington Group common stock of $80.00 as compared to the Washington Group common stock closing prices one day, one week and four weeks prior to the initial announcement of the transaction.
 
                         
    Premium to Price Prior to Announcement
 
    (March 17, 2006)  
Implied Transaction Value
  1 Day     1 Week     4 Weeks  
 
$80.00
    14 %     14 %     17 %
 
Morgan Stanley reviewed publicly available information with respect to acquisitions of United States based publicly-traded target companies with transaction values in excess of $1 billion announced between January 1, 2007 and May 14, 2007. For each transaction, Morgan Stanley analyzed, based on the final offer, the premium offered by the acquiror to the price of the target’s shares one day, one week and four weeks prior to the initial announcement of the transaction.
 
A summary of the reference range of precedent premiums in these transactions is set forth below:
 
                         
    Premium Prior to Announcement  
    1 Day     1 Week     4 Weeks  
 
25th Percentile
    9 %     10 %     12 %
75th Percentile
    28 %     31 %     37 %
Implied Transaction Value
    14 %     14 %     17 %
 
Based upon and subject to the foregoing, Morgan Stanley calculated implied valuation ranges for the Washington Group common stock of $76 to $90 per share based on 1-day prior premium, $77 to $92 per share based on 1-week prior premium and $77 to $94 per share based on 4-weeks prior premium. Morgan Stanley noted that based on closing prices for the common stock of URS and Washington Group as of May 25, 2007, the implied transaction value per share of Washington Group common stock was $80.00.
 
No company or transaction utilized in the analysis of selected precedent premiums or precedent transactions is identical to Washington Group or this transaction. Accordingly, an analysis of the results of such a comparison is not purely mathematical but instead involves complex considerations and judgments concerning differences in historical and projected financial and operating characteristics of the companies involved and other factors that could affect the merger or the selected transactions to which it is being compared.
 
Discounted Cash Flow Analysis
 
Morgan Stanley performed a discounted cash flow analysis of the projected unlevered free cash flows of Washington Group for calendar years 2007 through 2011, based on the forecasts prepared by the management of URS. Morgan Stanley calculated implied equity values per share of Washington Group common stock by using estimated discount rates ranging from 8.5% to 9.5% and multiples of estimated 2012 EBITDA ranging from 8.5x to 10.5x. Based on selected ranges of multiples and discount rates, this analysis indicated a range of equity values per share of $71 to $86. Morgan Stanley noted that based on closing prices for the common stock of URS and Washington Group as of May 25, 2007, the implied transaction value per share of Washington Group common stock was $80.00.
 
Morgan Stanley performed a discounted cash flow analysis of the projected unlevered free cash flows for calendar years 2007 through 2011, based on an extrapolation from the operating forecasts for 2007 and 2008 in D.A.


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Davidson’s research dated May 11, 2007. Morgan Stanley calculated implied equity values per share of Washington Group common stock by using estimated discount rates ranging from 8.5% to 9.5% and multiples of estimated 2012 EBITDA ranging from 8.5x to 10.5x. Based on selected ranges of multiples and discount rates, this analysis indicated a range of equity values per share of $73 to $87. Morgan Stanley noted that based on closing prices for the common stock of URS and Washington Group as of May 25, 2007, the implied transaction value per share of Washington Group common stock was $80.00.
 
The valuation stated above is not necessarily indicative of Washington Group’s respective actual, present or future value or results, which may be more or less favorable than suggested by this type of analysis.
 
URS
 
Trading History
 
Morgan Stanley reviewed the historical trading prices for URS common stock for the twelve-month period prior to the announcement of the merger agreement. Morgan Stanley observed that the twelve-month range of trading prices was $36 - $49. Morgan Stanley noted that as of May 25, 2007, the closing price of URS common stock was $46.89 per share.
 
Comparable Company Analysis
 
Using publicly available information, Morgan Stanley reviewed the market values and trading multiples of URS and the following twelve publicly held companies in the engineering and construction and government services industries that Morgan Stanley deemed comparable to URS:
 
     
Engineering and Construction Comparables
 
Government Services
 
Fluor Corporation
  SAIC, Inc.
Foster Wheeler Ltd. 
  CACI International Inc
Jacobs Engineering Group Inc. 
  SRA International, Inc.
The Shaw Group Inc. 
  ManTech International Corporation
EMCOR Group, Inc. 
  DynCorp International Inc.
VT Group plc
   
Tetra Tech, Inc.
   
 
All multiples were based on closing stock prices on May 25, 2007. Estimated financial data for the selected companies were based on public filings and publicly available equity research analysts’ estimates as aggregated by IBES. Estimated financial data for URS were based on public filings, publicly announced earnings guidance, URS management’s estimates, and publicly available equity research analysts’ estimates as aggregated by IBES.
 
For each of the comparable companies, Morgan Stanley calculated the following, each as previously defined:
 
  •  Aggregate Value
 
  •  Aggregate Value/2007E EBITDA
 
  •  Aggregate Value/2008E EBITDA
 
  •  Price/2007E Earnings
 
  •  Price/2008E Earnings
 
A summary of the reference range of market trading multiples is set forth below:
 
                                 
Engineering and Construction Comparables
  Mean     Median     High     Low  
 
Aggregate Value/2007E EBITDA
    12.7 x     12.5 x     18.5 x     10.5 x
Aggregate Value/2008E EBITDA
    10.5 x     10.2 x     13.6 x     8.8 x
Price/2007E Earnings
    23.6 x     23.8 x     30.2 x     18.0 x
Price/2008E Earnings
    18.7 x     19.0 x     20.8 x     16.1 x


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Government Services Comparables
  Mean     Median     High     Low  
 
Aggregate Value/2007E EBITDA
    9.6 x     9.7 x     11.3 x     8.4 x
Aggregate Value/2008E EBITDA
    8.5 x     8.4 x     10.3 x     7.3 x
Price/2007E Earnings
    20.2 x     19.4 x     22.5 x     17.8 x
Price/2008E Earnings
    17.5 x     17.4 x     20.2 x     14.0 x
 
Morgan Stanley calculated an implied valuation range by applying multiple ranges to the applicable operating statistics based on publicly available equity research analyst estimates, and other publicly available data. Based upon and subject to the foregoing, Morgan Stanley calculated implied valuation ranges for the URS common stock of $45 to $55 per share based on Aggregate Value/2007E EBITDA and $47 to $57 based on Price/2007E Earnings.
 
Although the foregoing companies were compared to URS for purposes of this analysis, Morgan Stanley noted that no company used in the comparable company analysis is identical to URS because of differences between the business mix, markets served, operations, and other characteristics of URS and the comparable companies. In evaluating the comparable companies, Morgan Stanley relied on publicly available equity research analyst estimates, which estimates are based in part on judgments and assumptions with regard to industry performance, general business, economic, market and financial conditions, and other matters, many of which are beyond the control of URS, such as the impact of competition on the business of URS, as well as on the industry generally, industry growth, and the absence of any adverse material change in the financial condition and prospects of URS or the industry or in the markets generally. Mathematical analysis, such as determining the mean or median, is not in itself a meaningful method of using comparable company data.
 
Securities Research Analysts’ Price Targets
 
Morgan Stanley reviewed and analyzed future public market trading price targets for URS common stock prepared and published by equity research analysts. These targets reflect each analyst’s estimate of the future public market trading price of URS common stock. Morgan Stanley discounted the price targets at URS’ estimated average cost of equity capital of 9.8%. The range of discounted analyst price targets for URS was $43 to $49.
 
The public market trading price targets published by the securities research analysts do not necessarily reflect current market trading prices for URS common stock and these estimates are subject to uncertainties, including the future financial performance of URS and future financial market conditions.
 
Discounted Equity Value Analysis
 
Morgan Stanley performed an analysis of the implied present value per share of the URS common stock on a standalone basis based on URS’ projected future equity value using calendar year 2009 estimates based on URS management forecasts.
 
To calculate the discounted equity value, Morgan Stanley multiplied the applicable earnings estimate by the current calendar year multiple range used in the comparable company analysis described above, and discounted the implied nominal equity values of URS to a present value at an illustrative discount rate of 9.8%, which reflected URS’ estimated average cost of equity capital. Based on the aforementioned forecasts and assumptions, Morgan Stanley derived an implied valuation range for the URS common stock of $51 to $62.
 
Discounted Cash Flow Analysis
 
Morgan Stanley performed a discounted cash flow analysis of the projected unlevered free cash flows of URS for calendar years 2007 through 2011, based on the forecasts prepared by the management of URS. Morgan Stanley calculated implied equity values per share of URS common stock by using estimated discount rates ranging from 8.5% to 9.5% and multiples of estimated 2012 EBITDA ranging from 7.5x to 9.5x. Based on selected ranges of multiples and discount rates, this analysis indicated a range of equity values per share of $48 to $61.
 
The valuation stated above is not necessarily indicative of URS’ respective actual, present or future value or results, which may be more or less favorable than suggested by this type of analysis.


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Pro Forma Merger Analysis
 
Morgan Stanley analyzed the potential pro forma impact of the transaction on URS’ earnings per share and cash earnings per share for calendar years 2008 through and 2011. Morgan Stanley calculated such pro forma earnings per share and cash earnings per share on the basis of the transaction exchange ratio provided for by the merger agreement, URS’ estimates of earnings per share for URS and synergies resulting from the merger estimated by URS management. Morgan Stanley noted that the transaction is expected to be accretive to cash earnings per share in 2008 and beyond, neutral to accretive to GAAP earnings per share in 2008, and accretive to GAAP earnings per share in 2009 and beyond, not including the impact of revenue synergies expected to be achieved through the combination.
 
General
 
The summary set forth above does not purport to be a complete description of all the analyses performed by Morgan Stanley. The preparation of a fairness opinion is a complex process that involves various determinations as to the most appropriate and relevant methods of financial analyses and the application of these methods to the particular circumstances and is not necessarily susceptible to a partial analysis or summary description. In arriving at its opinion, Morgan Stanley considered the results of all of the analyses as a whole and did not attribute any particular weight to any particular analysis or factor considered by it. The summary provided and the analyses described above must be considered as a whole, and selecting any portion of Morgan Stanley’s analyses, without considering all analyses, would create an incomplete view of the process underlying Morgan Stanley’s opinion. In addition, Morgan Stanley may have given various factors more or less weight than other factors and may have deemed various assumptions more or less probable than other assumptions, so that the ranges of valuations resulting from any particular analysis described above should not be taken to be Morgan Stanley’s view of the actual value of Washington Group or URS.
 
In performing its analysis, Morgan Stanley made numerous assumptions with respect to industry performance, general business and economic conditions and other matters, many of which are beyond the control of Washington Group or URS. Any estimates contained in the analyses performed by Morgan Stanley are not necessarily indicative of actual values, which may be significantly more or less favorable than suggested by such estimates. The analyses performed were prepared solely as part of Morgan Stanley’s analysis of the fairness from a financial point of view to URS of the merger consideration to be paid by URS pursuant to the merger agreement and were conducted in connection with the delivery by Morgan Stanley of its opinion, dated May 28, 2007, to the URS board of directors. These analyses do not purport to be appraisals or to reflect the prices at which shares of common shares of URS or Washington Group might naturally trade.
 
The merger consideration pursuant to the merger agreement was determined through arm’s-length negotiations between URS and Washington Group and was approved by the URS board of directors. Morgan Stanley provided advice to URS during these negotiations. Morgan Stanley did not, however, recommend any specific merger consideration to URS or the URS board of directors or that any specific merger consideration constituted the only appropriate consideration for the transaction. Morgan Stanley’s opinion to the URS board of directors was one of many factors taken into consideration by the URS board of directors in deciding to approve the transaction. Morgan Stanley did not advise the URS board of directors that any specific consideration constituted the only appropriate consideration for the transaction.
 
Consequently, the analyses as described above should not be viewed as determinative of the opinion of the URS board of directors with respect to the merger consideration or of whether the URS board of directors would have been willing to agree to different consideration. The foregoing summary describes the material analyses performed by Morgan Stanley but does not purport to be a complete description of the analyses performed by Morgan Stanley.
 
Morgan Stanley is an internationally recognized investment banking and advisory firm. Morgan Stanley, as part of its investment banking business, is continuously engaged in the valuation of businesses and their securities in connection with mergers and acquisitions, negotiated underwritings, competitive biddings, secondary distributions of listed and unlisted securities, private placements and valuations for corporate, estate and other purposes. In the ordinary course of its business, Morgan Stanley and its affiliates may from time to time trade in the securities or the


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indebtedness of URS and its affiliates for its own account, the accounts of investment funds and other clients under the management of Morgan Stanley and for the accounts of its customers and accordingly, may at any time hold a long or short position in such securities or indebtedness for any such account.
 
Under the terms of its engagement letter, Morgan Stanley provided URS financial advisory services and a financial opinion in connection with the merger. Pursuant to the terms of this engagement letter, URS has agreed to pay Morgan Stanley and its affiliates advisory and financing fees currently estimated at $30 million, of which $2 million was paid upon the announcement of the transaction, and the remainder of which is contingent upon closing of the transaction. URS has also entered into a financing commitment letter with an affiliate of Morgan Stanley to provide 50% of a senior secured debt financing in connection with the transaction, for which the affiliate will receive the financing portion of the aforementioned fees upon the closing of the transaction. URS has also agreed to reimburse Morgan Stanley for its fees and expenses incurred in performing its services. In addition, URS has agreed to indemnify Morgan Stanley and any of its affiliates, their respective directors, officers, agents and employees and each person, if any, controlling Morgan Stanley or any of its affiliates against certain liabilities and expenses, including certain liabilities under the federal securities laws relating to or arising out of its engagement and any related transactions. In the past, Morgan Stanley and its affiliates have provided financial advisory and financing services for URS and have received fees for the rendering of these services.
 
Opinion of Washington Group’s Financial Advisor
 
Goldman Sachs & Co., Inc.
 
At the meeting of Washington Group’s board of directors on May 27, 2007, Goldman Sachs delivered its oral opinion, which opinion was later confirmed in writing, that, as of May 27, 2007 and based upon and subject to the factors and assumptions set forth in such opinion, the consideration to be received by holders of Washington Group common stock, taken in the aggregate, pursuant to the merger agreement is fair from a financial point of view to such holders.
 
The full text of the written opinion of Goldman Sachs, dated May 27, 2007, which sets forth assumptions made, procedures followed, matters considered and limitations on the review undertaken in connection with the opinion, is attached as Annex C. Goldman Sachs provided its opinion for the information and assistance of Washington Group’s board of directors in connection with its consideration of the transaction. The Goldman Sachs opinion is not a recommendation as to how any holder of Washington Group common stock should vote with respect to the transaction.
 
In connection with rendering the opinion described above and performing its related financial analyses, Goldman Sachs reviewed, among other things:
 
  •  the merger agreement;
 
  •  the annual reports to stockholders and Annual Reports on Form 10-K of Washington Group and URS for the five fiscal years ended December 29, 2006;
 
  •  certain interim reports to stockholders and Quarterly Reports on Form 10-Q of Washington Group and URS;
 
  •  certain other communications from Washington Group and URS to their respective stockholders; and
 
  •  certain internal financial analyses and forecasts for Washington Group and URS prepared by their respective managements, including certain cost savings and operating synergies projected by the managements of Washington Group and URS.
 
Goldman Sachs also held discussions with members of the senior managements of Washington Group and URS regarding their assessment of the strategic rationale for, and the potential benefits of, the transaction and the past and current business operations, financial condition, and future prospects of their respective companies. In addition, Goldman Sachs reviewed the reported price and trading activity for shares of Washington Group common stock and URS common stock, compared certain financial and stock market information for Washington Group and URS with similar financial and stock market information for certain other companies the securities of which are


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publicly traded, and reviewed the financial terms of certain recent business combinations in the engineering and construction industry specifically and in other industries generally and performed such other studies and analyses, and considered such other factors, as it considered appropriate.
 
Goldman Sachs relied upon the accuracy and completeness of all of the financial, legal, accounting, tax and other information discussed with or reviewed by it and assumed such accuracy and completeness for purposes of rendering the opinion described above. In that regard, Goldman Sachs assumed that the internal financial analyses and forecasts, including certain cost savings and operating synergies, were reasonably prepared on a basis reflecting the best then available estimates and judgments of the managements of Washington Group and URS, as the case may be. In addition, Goldman Sachs did not make an independent evaluation or appraisal of the assets and liabilities (including any contingent, derivative or off-balance-sheet assets and liabilities) of Washington Group and URS or any of their respective subsidiaries, nor was any evaluation or appraisal of the assets or liabilities of Washington Group and URS or any of their respective subsidiaries furnished to Goldman Sachs. Goldman Sachs’ opinion does not address the underlying business decision of Washington Group to engage in the transaction or the relative merits of the transaction as compared to any alternative business strategies or transactions that might be available to Washington Group. In addition, Goldman Sachs’ opinion does not express any opinion as to the prices at which the common stock of URS will trade at any time.
 
The following is a summary of the material financial analyses delivered by Goldman Sachs to the board of directors of Washington Group in connection with rendering the opinion described above. The following summary, however, does not purport to be a complete description of the financial analyses performed by Goldman Sachs, nor does the order of analyses described represent relative importance or weight given to those analyses by Goldman Sachs. Some of the summaries of the financial analyses include information presented in tabular format. The tables must be read together with the full text of each summary and are alone not a complete description of Goldman Sachs’ financial analyses. Except as otherwise noted, the following quantitative information, to the extent that it is based on market data, is based on market data as it existed on or before May 27, 2007 and is not necessarily indicative of current market conditions.
 
Illustrative Analysis at Various Prices.  Goldman Sachs performed certain analyses, based on historical information, SEC filings, estimates supplied by the IBES and forecasts provided by management of Washington Group, at the most recent market price of $69.97 per share and at the implied transaction price of $80.00 per share, consisting of $43.80 in cash and 0.772 shares of URS common stock for each share of Washington Group common stock. Using these share prices, Goldman Sachs calculated an implied equity value for Washington Group. Goldman Sachs added to this implied equity value the net debt to be incurred as part of the transaction to derive an implied enterprise value of Washington Group. Based on these calculations, Goldman Sachs calculated the multiples described below:
 
  •  Washington Group’s implied enterprise value as a multiple of its earnings before interest, taxes, depreciation and amortization, or EBITDA, for the latest twelve months, as a multiple of Washington Group’s management’s estimates of its EBITDA for the 2007 fiscal year and as a multiple of the estimates of Washington Group’s EBITDA for the 2007 fiscal year based on estimates supplied by IBES; and
 
  •  Washington Group’s implied price as a multiple of Washington Group’s management’s estimates of its earnings per share, which is referred to as EPS, for the 2007 and 2008 fiscal years and as a multiple of the estimates of Washington Group’s EPS for the 2007 and 2008 fiscal years based on estimates supplied by IBES.


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The following table presents the results of Goldman Sachs’ analysis (dollar amounts in millions, except for purchase price per share):
 
                 
    Based on
       
    Washington
    Based on an
 
    Group Closing
    Implied Total
 
    Stock Price of
    per Share
 
    $69.97 on May 25,
    Consideration
 
    2007     of $80  
 
Price (as a % of 52-Week High)
    96%       110%  
Implied Equity Value
  $ 2,232     $ 2,577  
Implied Enterprise Value
  $ 2,058     $ 2,403  
Implied Enterprise Value/EBITDA
               
LTM (as of March 30, 2007)
    13.6x       15.9x  
FY 2007E — IBES
    11.9x       13.9x  
FY 2007E — Management
    10.8x       12.6x  
Price/EPS
               
FY 2007E — IBES
    24.4x       27.9x  
FY 2007E — Management
    23.8x       27.2x  
FY 2008E — IBES
    20.2x       23.1x  
FY 2008E — Management
    19.4x       22.1x  
 
Comparison of Selected Companies.  Goldman Sachs reviewed and compared certain financial information for Washington Group and URS to corresponding financial information, ratios and public market multiples for the following publicly traded corporations in the engineering and construction industry:
 
  •  Fluor Corporation;
 
  •  Jacobs Engineering Group Inc.;
 
  •  The Shaw Group Inc.;
 
  •  Chicago Bridge & Iron Company, N.V.;
 
  •  EMCOR Group, Inc.;
 
  •  Granite Construction Inc.;
 
  •  McDermott International, Inc.; and
 
  •  Foster Wheeler Ltd.
 
Although none of the selected companies is directly comparable to Washington Group or URS, the companies included were chosen because they are publicly traded companies with operations that for purposes of analysis may be considered similar to certain operations of Washington Group and URS.
 
Goldman Sachs also calculated and compared various financial multiples and ratios based on financial data as of May 25, 2007, information it obtained from SEC filings and IBES estimates. The multiples and ratios of Washington Group were calculated using Washington Group’s closing price on May 25, 2007 and the multiples and ratios of URS were calculated using the URS closing price on May 25, 2007. The multiples and ratios of Washington Group, URS and each of the selected companies were based on company reports, public filings and IBES estimates as of May 25, 2007. With respect to the selected companies, Goldman Sachs calculated, on a fully diluted basis:
 
  •  Enterprise value as a multiple of estimated calendar year 2007 earnings before interest, taxes, depreciation and amortization, or EBITDA; and
 
  •  Price per share of Washington Group common stock as a multiple of estimated 2008 EPS.


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The results of these analyses are summarized as follows:
 
                                         
                Washington
    Washington
       
                Group, as of
    Group, at
       
    Selected Companies     May 25,
    $80.00 per
       
Trading Multiple
  Range     Median     2007     Share     URS  
 
Enterprise Value/2007E EBITDA
    10.1x – 13.3x       11.7x       11.9x       13.9 x     9.4x  
Price/2008E EPS
    15.7x – 21.0x       19.0x       20.2x       23.1 x     16.7x  
 
Illustrative Analysis of Future Stock Price.  Goldman Sachs analyzed the standalone present value of potential future trading prices of Washington Group common stock by applying selected ranges of multiples to estimates of EPS of Washington Group based on management forecasts of Washington Group provided by the management of Washington Group and estimates provided by IBES. Goldman Sachs applied multiples ranging from 18x to 21x to Washington Group’s estimated EPS for fiscal years 2008 and 2009. Based on the implied future share prices derived from the range of multiples noted above as well as the EPS estimates for Washington Group, Goldman Sachs calculated the present values of the resulting implied per share equity values using a discount rate of 9.5%. The results of this analysis are summarized below:
 
         
    Implied Present
 
    Value to Washington
 
    Group Stockholders  
 
Implied Present Value to Washington Group Stockholders
       
Based on 2008E EPS
  $ 62.46 - $75.86  
Based on 2009E EPS at a 9.5% Discount Rate
  $ 61.64 - $81.07  
 
Discounted Cash Flow Analysis.  Goldman Sachs performed a discounted cash flow analysis on Washington Group using Washington Group’s management forecasts to determine indications of implied total equity values per share of Washington Group common stock based on the present value as of June 30, 2007 of the stand-alone, unlevered, after-tax estimated future free cash flows of Washington Group and net operating losses for United States federal income tax purposes, which are referred to as NOLs, available to Washington Group. In performing the discounted cash flow analysis, Goldman Sachs calculated illustrative terminal values based upon free cash flow perpetuity growth rates ranging from 2.5% to 4.0%, and discounted all free cash flows to June 30, 2007 using discount rates ranging from 9.0% to 10.0%, reflecting estimates of the weighted average cost of capital for Washington Group. This analysis resulted in a range of implied present values of the total equity value per share of Washington Group common stock of $65.10 to $87.41.
 
Premium Analysis at Implied Offer Price.  Goldman Sachs calculated the implied premium for Washington Group common stock represented by the implied consideration of $80.00 per share of Washington Group common stock, consisting of $43.80 cash and 0.772 shares of URS common stock for each share of Washington Group common stock, and based on the volume-weighted average closing prices of Washington Group common stock and URS common stock on May 25, 2007 and during the one-month, three-month, six-month, twelve-month and three-year periods ended May 25, 2007.
 
The results of Goldman Sachs’ calculations are reflected below:
 
                 
    Volume-
       
    Weighted
       
    Average
    Implied
 
Day/Period:
  Price     Premium  
 
May 25, 2007
  $ 69.97       14.3 %
One-Month Average
  $ 69.42       15.2 %
Three-Month Average
  $ 65.57       22.0 %
Six-Month Average
  $ 62.80       27.4 %
Twelve-Month Average
  $ 59.64       34.1 %
Three-Year Average
  $ 51.50       55.3 %
 
Precedent Premiums Analysis.  Goldman Sachs also analyzed the premiums for selected precedent transactions involving U.S. targets acquired for between $1 billion and $5 billion in transaction value over the last two


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years in which the consideration included a cash component. Goldman Sachs analyzed such premiums as of one day, one week and four weeks prior to the announcement of the transaction. The results of Goldman Sachs’ analysis are reflected below:
 
                         
    Percent of U.S. Targets from $1 Billion to $5 billion in Transaction Value for the Past Two Years, based on Premium to Price Prior to announcement:  
% Premium
  One Day     One Week     Four Weeks  
 
0%
    2 %     2 %     3 %
0-10%
    24 %     19 %     12 %
10-25%
    37 %     36 %     37 %
25-50%
    31 %     35 %     40 %
> 50%
    7 %     8 %     9 %
 
Selected Precedent Transactions Analysis.  Goldman Sachs analyzed certain information relating to the following selected transactions in the engineering and construction industry since May 1999:
 
  •  Acquisition of Infrasource Services, Inc. by Quanta Services, Inc., announced on March 19, 2007;
 
  •  Acquisition of Colt Engineering Corporation by WorleyParsons Limited, announced on February 8, 2007;
 
  •  Acquisition of AMEC SPIE, SA by PAI Partners, announced on May 22, 2006;
 
  •  Acquisition of DynCorp by The Veritas Capital Fund II, L.P., announced on December 12, 2004;
 
  •  Acquisition of Parsons E&C Corporation by Worley Group Limited, announced on October 7, 2004;
 
  •  Acquisition of Corsan-Corviam, SA by Isolux-Wat, SA, announced on May 1, 2004;
 
  •  Acquisition of Consolidated Engineering Services, Inc. by EMCOR Group, Inc., announced on December 19, 2002;
 
  •  Acquisition of SPIE, SA (Remaining 54%) by AMEC, plc, announced on December 5, 2002;
 
  •  Acquisition of Carlyle-EG&G Services, Inc. by URS Corp., announced on July 17, 2002;
 
  •  Acquisition of Bouygues Offshore, SA by Saipem S.p.A, announced on May 8, 2002;
 
  •  Acquisition of Coflexip, SA by Technip, SA, announced on July 3, 2001;
 
  •  Acquisition of Howe-Baker International, Inc. by Chicago Bridge & Iron NV, announced on July 31, 2000;
 
  •  Acquisition of Stone & Webster, Inc. by Shaw Group, Inc., announced on July 14, 2000;
 
  •  Acquisition of GTM Group, SA by Vinci, SA, announced on July 13, 2000;
 
  •  Acquisition of Raytheon Engineers & Constructors International, Inc. by Morrison Knudsen Corp., announced on April 17, 2000;
 
  •  Acquisition of AGRA, Inc. by AMEC, plc, announced on February 16, 2000;
 
  •  Acquisition of MYR Group, Inc. by GPU, Inc., announced on December 22, 1999;
 
  •  Acquisition of Nichols Research Corp. by Computer Sciences Corp., announced on September 20, 1999; and
 
  •  Acquisition of Dames & Moore Group by URS Corp., announced on May 5, 1999.
 
For each of the selected transactions, Goldman Sachs calculated and compared, based on company reports, public filings, press releases, Wall Street research estimates and other public sources, the transaction value as a multiple of EBITDA for the latest twelve months and compared it against the multiples implied for the proposed transaction.


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The following table presents the results of this analysis:
 
                                         
    Proposed
    Selected Transactions  
    Transaction     Mean     Median     High     Low  
 
Implied Transaction Value as a Multiple of LTM EBITDA
    15.9x       8.6x       8.7x       17.1x       4.0x  
 
Illustrative Pro Forma Merger Analysis.  Goldman Sachs analyzed the potential pro forma impact of the transaction on URS’ GAAP earnings per share and cash earnings per share for the calendar years 2007 through 2009 based on management forecasts of URS Corporation provided by the management of URS Corporation, management forecasts of Washington Group provided by the management of Washington Group and estimates of synergies resulting from the merger provided by the managements of URS and Washington Group.
 
Based on the closing prices per share of URS Corporation and Washington Group common stock as of May 25, 2007, the 0.772 shares of URS common stock and $43.80 in cash to be received for each share of Washington Group common stock pursuant to the merger agreement, the number of shares and options to purchase shares of URS common stock outstanding as of May 27, 2007 and the number of shares and options to purchase shares of Washington Group common stock as of May 27, 2007, this analysis indicated that in 2007, the transaction would be dilutive to URS’ GAAP EPS and cash EPS, in 2008, would be modestly dilutive to neutral to URS’ GAAP EPS and accretive to URS’ cash EPS and in 2009, would be accretive to URS’ GAAP EPS and cash EPS.
 
Illustrative Pro Forma Future Stock Price.  Goldman Sachs compared the illustrative standalone future stock price analysis to the present value of the implied consideration to Washington Group stockholders based on potential future trading prices of URS common stock, incorporating the potential pro forma impact of the transaction, by applying selected ranges of multiples to pro forma estimates of EPS of URS based on management forecasts of Washington Group provided by the management of Washington Group and management forecasts of URS provided by the management of URS. Goldman Sachs applied multiples ranging from 18x to 21x to the pro forma estimates of URS EPS for fiscal years 2008 and 2009. Based on the implied future share prices derived from the range of multiples noted above as well as the pro forma EPS estimates for URS, Goldman Sachs calculated the present values of the resulting implied per share consideration to Washington Group stockholders using discount rates of 9.0% and 9.5%. The results of this analysis are summarized below:
 
         
    Implied Present
 
    Value to Washington
 
    Group Stockholders  
 
Implied Present Value to Washington Group Stockholders
       
Based on 2008E EPS
  $ 84.13 - $90.86  
Based on 2009E EPS at a 9.0% - 9.5% Discount Rate
  $ 87.29 - $94.77  
 
The preparation of a fairness opinion is a complex process and is not necessarily susceptible to partial analysis or summary description. Selecting portions of the analyses or of the summary set forth above, without considering the analyses as a whole, could create an incomplete view of the processes underlying Goldman Sachs’ opinion. In arriving at its fairness determination, Goldman Sachs considered the results of all of its analyses and did not attribute any particular weight to any factor or analysis considered by it. Rather, Goldman Sachs made its determination as to fairness on the basis of its experience and professional judgment after considering the results of all of its analyses. No company or transaction used in the above analyses as a comparison is directly comparable to Washington Group or URS or the contemplated transaction.
 
Goldman Sachs prepared these analyses for purposes of Goldman Sachs’ providing its opinion to Washington Group’s board of directors as to the fairness from a financial point of view of the consideration to be received by holders of shares of Washington Group common stock, taken in the aggregate, pursuant to the merger agreement. These analyses do not purport to be appraisals nor do they necessarily reflect the prices at which businesses or securities actually may be sold. Analyses based upon forecasts of future results are not necessarily indicative of actual future results, which may be significantly more or less favorable than suggested by these analyses. Because these analyses are inherently subject to uncertainty, being based upon numerous factors or events beyond the control of the parties or their respective advisors, none of Washington Group, URS, Goldman Sachs or any other person assumes responsibility if future results are materially different from those forecast.


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The consideration to be received by holders of shares of Washington Group common stock pursuant to the merger agreement was determined through arms’-length negotiations between Washington Group and URS and was approved by Washington Group’s board of directors. Goldman Sachs provided advice to Washington Group during these negotiations. Goldman Sachs did not, however, recommend any specific exchange ratio or amount of consideration to Washington Group or its board of directors or that any specific exchange ratio or amount of consideration constituted the only appropriate exchange ratio or consideration for the transaction.
 
As described above, Goldman Sachs’ opinion to Washington Group’s board of directors was one of many factors taken into consideration by Washington Group’s board of directors in making its determination to approve the merger agreement. The foregoing summary does not purport to be a complete description of the analyses performed by Goldman Sachs in connection with the fairness opinion and is qualified in its entirety by reference to the written opinion of Goldman Sachs attached as Annex C.
 
Goldman Sachs and its affiliates, as part of their investment banking business, are continually engaged in performing financial analyses with respect to businesses and their securities in connection with mergers and acquisitions, negotiated underwritings, competitive biddings, secondary distributions of listed and unlisted securities, private placements and other transactions as well as for estate, corporate and other purposes. Goldman Sachs has acted as financial advisor to Washington Group in connection with, and has participated in certain of the negotiations leading to, the transaction contemplated by the merger agreement. In addition, Goldman Sachs has provided certain investment banking services to Washington Group from time to time. Goldman Sachs also may provide investment banking services to Washington Group and URS in the future. In connection with the above-described investment banking services Goldman Sachs has received, and may receive in the future, compensation.
 
Goldman Sachs is a full service securities firm engaged, either directly or through its affiliates, in securities trading, investment management, financial planning and benefits counseling, risk management, hedging, financing and brokerage activities for both companies and individuals. In the ordinary course of these activities, Goldman Sachs and its affiliates may provide such service to Washington Group, URS and their respective affiliates, may actively trade the debt and equity securities of Washington Group and URS (or related derivative securities) for their own account and for the accounts of their customers and may at any time hold long and short positions of such securities.
 
The board of directors of Washington Group selected Goldman Sachs as its financial advisor because it is an internationally recognized investment banking firm that has substantial experience in transactions similar to the transaction. Pursuant to a letter agreement dated May 18, 2006, Washington Group engaged Goldman Sachs to act as its financial advisor in connection with the evaluation of potential strategic transactions. Pursuant to the terms of this engagement letter, Washington Group has agreed to pay Goldman Sachs a financial advisory fee of $1.0 million that has become due and payable (but will be credited against the payment of any transaction fee), and a transaction fee, calculated based on the aggregate consideration for the transaction, of approximately $19.1 million, $5.4 million of which became payable upon the public announcement of the transaction and the balance of which is contingent upon consummation of the transaction. If Goldman Sachs failed to deliver to Washington Group’s board of directors an opinion stating that the consideration to be received by Washington Group’s stockholders in the merger was fair from a financial point of view to such stockholders, it is unlikely that the board would have approved the merger, preventing Goldman Sachs’s transaction fee from becoming payable. In addition, Washington Group has agreed to reimburse Goldman Sachs for its expenses, including attorneys’ fees and disbursements, and to indemnify Goldman Sachs and related persons against various liabilities, including certain liabilities under the federal securities laws.
 
Regulatory Approvals
 
The merger was subject to review by the DOJ and the FTC under the HSR Act. Under the HSR Act, URS and Washington Group were required to make pre-merger notification filings and to await the expiration or early termination of the statutory waiting period prior to completing the merger. The notifications required under the HSR Act to the FTC and the DOJ were filed on June 8, 2007 by both URS and Washington Group, and the statutory waiting period under the HSR Act expired on July 9, 2007. No further regulatory approvals are required for the completion of the merger.


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At any time before or after completion of the merger, either the DOJ, the FTC or any state attorneys general could challenge, seek to block or block the merger under the antitrust laws, as it deems necessary or desirable in the public interest. Other competition agencies (including foreign governmental authorities) could also initiate action to challenge or block the merger. In addition, in some jurisdictions, a private party could initiate legal action under the antitrust laws challenging or seeking to enjoin the merger, before or after it is completed. URS and Washington Group cannot be sure that a challenge to the merger will not be made or that, if a challenge is made, URS and Washington Group will prevail.
 
Material United States Federal Income Tax Consequences
 
The following discussion summarizes the material United States federal income tax consequences of the merger and the second merger, taken together, to holders of Washington Group common stock. For purposes of this discussion, the term “merger transaction” means the merger and the second merger, taken together. This summary is based on the Internal Revenue Code, its legislative history, applicable United States Treasury regulations, judicial authority and administrative rulings and practice, all as of the date of this proxy statement/prospectus, all of which are subject to change, possibly with retroactive effect. This summary does not purport to be a complete discussion of all United States federal income tax consequences of the merger transaction. The discussion below does not address any state, local or foreign tax consequences of the merger, the second merger or the merger transaction and does not address the tax consequences of the merger, the second merger or the merger transaction under United States federal tax law other than income tax law. In addition, this discussion does not address the tax consequences to holders of Washington Group common stock who exercise appraisal rights under Delaware law. This discussion may not apply, in whole or in part, to particular stockholders in light of their individual circumstances or to stockholders who are subject to special rules, such as:
 
  •  individuals who hold options in respect of Washington Group common stock or who have acquired Washington Group common stock under a compensatory or other employment-related arrangement;
 
  •  banks, insurance companies or other financial institutions;
 
  •  broker-dealers;
 
  •  tax-exempt organizations;
 
  •  expatriates;
 
  •  persons that have a functional currency other than the United States dollar;
 
  •  non-United States holders (as defined below);
 
  •  traders in securities that elect to mark-to-market;
 
  •  holders who own 5% or more of the total outstanding vote or value of Washington Group capital stock;
 
  •  holders of Washington Group common stock who also own, directly or constructively for United States federal income tax purposes, any stock of URS (apart from any URS common stock that such holders receive in the merger in exchange for Washington Group common stock);
 
  •  S-corporations, partnerships or other pass-through entities or persons who hold Washington Group common stock through such entities;
 
  •  persons who are subject to the alternative minimum tax provisions of the Internal Revenue Code; and
 
  •  persons who hold Washington Group common stock as part of a hedge, straddle or conversion transaction.
 
The following discussion assumes that Washington Group common stock is held as a capital asset at the effective time of the merger and the second merger. For purposes of this discussion, the term “United States holder” means:
 
  •  a citizen or resident of the United States;


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  •  a corporation or other entity treated as a corporation created or organized under the laws of the United States or any of its political subdivisions;
 
  •  a trust that (i) is subject to the supervision of a court within the United States and the control of one or more United States persons or (ii) has validly elected under United States Treasury regulations to be treated as a United States person; or
 
  •  an estate that is subject to United States federal income tax on its income regardless of its source.
 
The term “non-United States holder” means a holder other than a United States holder.
 
Washington Group stockholders are encouraged to consult their tax advisors as to the particular tax consequences of the merger, the second merger and the merger transaction to them, including the applicability and effect of any United States federal, state, local or foreign laws, and the effect of possible changes in applicable tax laws.
 
General
 
It is a condition to closing of the merger that URS receive an opinion of its counsel, Latham & Watkins LLP, and that Washington Group receive an opinion of its counsel, Wachtell, Lipton, Rosen & Katz, in each case, dated as of the date of the merger, to the effect that for federal income tax purposes the merger transaction will constitute a “reorganization” within the meaning of Section 368(a) of the Internal Revenue Code. The opinions of counsel will rely upon assumptions, representations, warranties and covenants, including those contained in representation letters provided by URS and Washington Group, dated as of the date of the merger. In addition, the tax opinions will be based on the law in effect on the date of the opinions. If any of these assumptions, representations, warranties or covenants is inaccurate, the tax consequences of the merger transaction could differ from those described here. The opinions of counsel to be delivered in connection with the merger transaction represent the best legal judgment of counsel to URS and counsel to Washington Group and are not binding on the Internal Revenue Service or the courts. Neither URS nor Washington Group has requested nor will request a ruling from the Internal Revenue Service as to the tax consequences of the merger, the second merger or the merger transaction and there can be no assurance that the Internal Revenue Service will agree with the conclusions in the above-described opinions or in the discussion below.
 
Tax Consequences of the Merger Transaction
 
Assuming the merger transaction qualifies as a reorganization within the meaning of section 368(a) of the Internal Revenue Code and subject to the qualifications and assumptions described