Moody's ups URS' outlook

Moody's Investors Service changed URS Corp.'s outlook to positive from stable, reflecting the company's reduced debt balances, rebounding revenue growth and expectations that revenues and margins will continue to strengthen from current levels.

Moody's also affirmed URS's $200 million senior secured revolving credit facility due 2007 at Ba3, its $82 million senior secured term loan A due 2007 at Ba3, its $261 million senior secured term loan B due 2008 at Ba3, its $130 million 11.5% senior unsecured notes due 2009 at B1, its $40 million 12.25% senior subordinated notes due 2009 at B2, its senior implied rating at Ba3, its senior unsecured issuer rating at B1 and its speculative grade liquidity rating at SGL-2.

Moody's said the change in the company's outlook reflects the company's improved balance sheet strength and improving business fundamentals.

Moody's said the ratings are constrained by the company's high receivables balance, recent volatility in funding of state infrastructure projects and concerns related to future acquisitions and how these will be funded.

The debt/EBITDA leverage covenant is 3.75x and steps down to 3.5x for the first and second quarter of 2005 and steps down to 3.25x in the third quarter of 2005. The fixed charge coverage covenant for 2004 is 1.2x.

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