SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
(Mark One)
(X) QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended January 31, 1994
OR
( ) TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES ACT OF 1934
For the transition period from to
Commission File No. 1-7775
FLUOR CORPORATION
(Exact name of registrant as specified in its charter)
Delaware 95-0740960
(State or other jurisdiction of (I.R.S Employer I.D. No.)
incorporation or organization)
3333 Michelson Drive, Irvine, CA 92730
(Address of principal executive offices)
Registrant's telephone number including area code: (714)975-2000
Indicate by check mark whether the registrant (1) has filed all
reports required to be filed by Section 13 or 15(d) of the
Securities Exchange Act of 1934 during the preceding 12 months
(or for such shorter period that the registrant was required to
file such reports), and (2) has been subject to such filing
requirements for the last 90 days.
Yes ( X ) No ( )
As of February 28, 1994 there were 82,186,958 shares of common
stock outstanding.
FLUOR CORPORATION
FORM 10-Q
January 31, 1994
TABLE OF CONTENTS
PAGE
Part I: Financial Information
Condensed Consolidated Statement of Earnings for
the Three Months Ended January 31, 1994 and 1993.. 2
Condensed Consolidated Balance Sheet at January 31,
1994 and October 31, 1993......................... 3
Condensed Consolidated Statement of Cash Flows for
the Three Months Ended January 31, 1994 and 1993.. 5
Notes to Condensed Consolidated Financial
Statements........................................ 6
Management's Discussion and Analysis of Financial
Condition and Results of Operations............... 8
Condensed Consolidated Changes in Backlog.......... 11
Part II: Other Information........................ 12
Signatures........................................... 14
Part I: Financial Information
FLUOR CORPORATION
CONDENSED CONSOLIDATED STATEMENT OF EARNINGS
Three Months Ended January 31, 1994 and 1993
(In Thousands Except Per Share Amounts)
UNAUDITED
1994 1993
REVENUES.............................. $2,057,665 $1,806,939
COSTS AND EXPENSES
Cost of revenues.................... 1,976,626 1,740,868
Corporate administrative and
general expenses................... 10,680 9,680
Interest expense.................... 4,230 4,603
Interest income..................... (4,869) (5,093)
Total Costs and Expenses.............. 1,986,667 1,750,058
EARNINGS FROM CONTINUING OPERATIONS
BEFORE INCOME TAXES................. 70,998 56,881
INCOME TAX EXPENSE.................... 27,000 21,200
NET EARNINGS.......................... $ 43,998 $ 35,681
NET EARNINGS PER SHARE................ $ 0.53 $ 0.43
DIVIDENDS PER COMMON SHARE............ $ 0.13 $ 0.12
SHARES USED TO CALCULATE EARNINGS PER
SHARE............................... 82,415 82,210
See Accompanying Notes.
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FLUOR CORPORATION
CONDENSED CONSOLIDATED BALANCE SHEET
January 31, 1994 and October 31, 1993
(Dollars in Thousands)
ASSETS
January 31, October 31,
1994 1993 *
(Unaudited)
Current Assets
Cash and cash equivalents........... $ 258,994 $ 214,844
Marketable securities............... 87,635 97,335
Accounts and notes receivable....... 346,164 392,577
Contract work in progress........... 308,350 306,251
Net assets of discontinued
operations......................... 175,960 172,822
Deferred taxes...................... 74,331 76,364
Inventories and other current assets 61,563 48,831
Total Current Assets............... 1,312,997 1,309,024
Property, plant and equipment (net
of accumulated depreciation,
depletion and amortization of
$466,389 and $441,676, respectively) 1,135,065 1,100,909
Investments and goodwill, net......... 61,110 52,383
Other................................. 130,648 126,568
$2,639,820 $2,588,884
(Continued On Next Page)
* Amounts at October 31, 1993 have been derived from audited
financial statements.
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FLUOR CORPORATION
CONDENSED CONSOLIDATED BALANCE SHEET
January 31, 1994 and October 31, 1993
(Dollars in Thousands)
LIABILITIES AND SHAREHOLDERS' EQUITY
January 31, October 31,
1994 1993 *
(Unaudited)
Current Liabilities
Accounts and notes payable.......... $ 271,424 $ 289,721
Note payable to affiliate........... 13,650 30,000
Commercial paper.................... 29,983 30,053
Advance billings on contracts....... 230,351 194,695
Accrued salaries, wages and
benefit plans...................... 164,261 194,270
Other accrued liabilities........... 221,017 190,447
Current portion of long-term debt... 2,099 1,687
Total Current Liabilities.......... 932,785 930,873
Long-term debt due after one year..... 59,226 59,637
Deferred taxes........................ 51,514 51,642
Other noncurrent liabilities.......... 517,382 502,610
Commitments and contingencies
Shareholders' Equity
Capital stock
Preferred - authorized 20,000,000
shares without par value, none
issued
Common - authorized 150,000,000
shares of $0.625 par value;
issued and outstanding -
82,144,429 shares and 82,093,207
shares, respectively............. 51,340 51,308
Additional capital.................. 479,636 478,204
Retained earnings (since October 31,
1987).............................. 568,004 534,678
Unamortized executive stock plan
expense............................ (15,941) (16,828)
Cumulative translation adjustments.. (4,126) (3,240)
Total Shareholders' Equity......... 1,078,913 1,044,122
$2,639,820 $2,588,884
See Accompanying Notes.
* Amounts at October 31, 1993 have been derived from audited
financial statements.
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FLUOR CORPORATION
CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS
Three Months Ended January 31, 1994 and 1993
(Dollars in Thousands)
UNAUDITED
1994 1993
CASH FLOWS FROM OPERATING ACTIVITIES
Net earnings.......................... $ 43,998 $ 35,681
Adjustments to reconcile net earnings
to cash provided (utilized) by
operating activities:
Depreciation, depletion and
amortization..................... 27,134 28,501
Increase in net assets of
discontinued operations.......... (3,138) (17,132)
Deferred taxes..................... 906 (8,746)
Change in operating assets and
liabilities...................... 50,353 (62,999)
Other, net......................... 2,236 8,473
Cash provided (utilized) by operating
activities.......................... 121,489 (16,222)
CASH FLOWS FROM INVESTING ACTIVITIES
Capital expenditures................ (64,644) (35,212)
Proceeds from sale of property,
plant and equipment................ 2,766 5,318
Sale of marketable securities....... 9,700 18,039
Other, net.......................... 647 2,642
Cash utilized by investing activities. (51,531) (9,213)
CASH FLOWS FROM FINANCING ACTIVITIES
Payments on note payable to
affiliate.......................... (16,350) --
Cash dividends paid................. (10,672) (9,825)
Payments on long-term debt.......... (72) (16,121)
Stock options exercised............ 1,852 6,063
Other, net.......................... (566) (8,459)
Cash utilized by financing activities. (25,808) (28,342)
Increase (decrease) in cash and
cash equivalents.................... 44,150 (53,777)
Cash and cash equivalents at
beginning of period................. 214,844 195,346
Cash and cash equivalents at end of
period.............................. $ 258,994 $ 141,569
See Accompanying Notes.
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FLUOR CORPORATION
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
UNAUDITED
(1) The condensed consolidated financial statements do not
include footnotes and certain financial information
normally presented annually under generally accepted
accounting principles and, therefore, should be read in
conjunction with the company's October 31, 1993 annual
report on Form 10-K. Accounting measurements at interim
dates inherently involve greater reliance on estimates
than at year-end. The results of operations for the three
months ended January 31, 1994 are not necessarily
indicative of results that can be expected for the full
year.
The condensed consolidated financial statements included
herein are unaudited; however, they contain all
adjustments (consisting of normal recurring accruals)
which, in the opinion of the company, are necessary to
present fairly its consolidated financial position at
January 31, 1994 and the consolidated results of
operations and cash flows for the three months ended
January 31, 1994 and 1993.
(2) Earnings per share is based on the weighted average number
of common and, when appropriate, common equivalent shares
outstanding in each period. Common equivalent shares are
included when the effect of the potential exercise of
stock options is dilutive.
(3) Inventories comprise the following:
January 31, October 31,
1994 1993
(Dollars in Thousands)
Coal........................... $ 16,008 $ 15,375
Supplies and other............. 18,698 17,459
$ 34,706 $ 32,834
(4) Cash paid for interest was $3.0 million and $5.3 million
for the three month periods ended January 31, 1994 and
1993, respectively. Income tax payments, net of refunds,
were $7.0 million and $17.3 million in the three month
periods ended January 31, 1994 and 1993, respectively.
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(5) The Internal Revenue Service is currently examining the
company's income tax returns for years 1987 through
1989. Management does not expect the resolution of any tax
issues raised by the IRS for these years to have a material
adverse effect on the company's consolidated financial
position or results of operations.
(6) In November 1992, the company announced its decision to
exit its Lead business. As of October 31, 1992, the Lead
business was classified as a discontinued operation and
adjusted to estimated net realizable value. The
company believes that its reserves for loss on
disposal are adequate at January 31, 1994 in relation to
its consolidated financial statements taken as a
whole. During 1993 and the first quarter of 1994, the
company made substantial progress toward the disposition
of its Lead business. While the outcome of such
disposition cannot be determined with certainty at this
time, management's intent to dispose of the Lead business
remains unaltered and management believes that a disposal
will be accomplished during fiscal 1994.
(7) In November 1992, the Financial Accounting Standards Board
issued Statement of Financial Accounting Standards No.
112, "Employers' Accounting for Postemployment Benefits"
(SFAS No. 112). The statement requires accrual of the
estimated cost of benefits provided by the employer to
former or inactive employees after employment but before
retirement. Adoption of SFAS No. 112 is not required by
the company until fiscal year 1995. Although the precise
method and impact of implementation is not known at this
time, management believes the effect, based on the
company's current benefit programs, will not be material.
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FLUOR CORPORATION
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
The following discussion and analysis is provided to increase
understanding of, and should be read in conjunction with, the
condensed consolidated financial statements and accompanying
notes.
RESULTS OF OPERATIONS
Revenues for the three month period ended January 31, 1994,
increased to $2.1 billion from $1.8 billion for the same period
in 1993. Net earnings for the three month period ended January
31, 1994 were $44.0 million compared with $35.7 million for the
same period of 1993.
ENGINEERING AND CONSTRUCTION
Revenues for the Engineering and Construction segment increased
14 percent for the three month period ended January 31, 1994
compared with the same period in 1993, primarily due to an
increase in the level of work performed. Engineering and
Construction operating profit increased in the first quarter of
1994 compared with the first quarter of 1993 due to the
increased volume of work performed, as well as a slight
improvement in margins. The company experienced an increase in
new awards of 13 percent to $2.3 billion for the three months
ended January 31, 1994 compared with $2.1 billion for the three
months ended January 31, 1993. New awards within the
Hydrocarbon sector represented approximately 65 percent of
total new awards for the first quarter of 1994. Over 70
percent of first quarter 1994 new awards consisted of
international work, with the majority located in the European
and Asia Pacific regions. This reflects new work within certain
international markets, particularly within the Hydrocarbon
sector, together with relatively modest domestic business
opportunities. Backlog at both January 31, 1994 and October
31, 1993 was $14.8 billion, down slightly from $14.9 billion at
January 31, 1993.
The following table sets forth backlog for each of the company's
business sectors:
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January 31, October 31, January 31,
($ in millions) 1994 1993 1993
Hydrocarbon $ 6,861 $ 6,198 $ 4,666
Government 2,364 2,520 2,859
Process 2,333 2,441 3,294
Industrial 2,479 2,706 3,041
Power 778 889 1,076
Total $ 14,815 $ 14,754 $ 14,936
The ratio of international to total backlog was 43 percent at
January 31, 1994.
COAL
Revenues for the Coal segment increased 9 percent for the three
month period ended January 31, 1994 compared with the same
period in 1993. This increase is due to a 20 percent increase
in the sales volume of produced coal more than offsetting a
decline in the sales volume of brokered coal. The sales price
and cost per ton for both produced and brokered coal in the
first quarter of 1994 was essentially unchanged compared with
the same period of 1993. Gross margin increased due to a
higher percentage of produced coal, which has a higher margin
than brokered coal. Operating profit for the three months
ended January 31, 1994 increased 23 percent compared with the
three months ended January 31, 1993 primarily due to increased
gross margin.
OTHER
Corporate administrative and general expenses increased $1.0
million for the three months ended January 31, 1994, compared
with the same period of 1993 due primarily to higher stock
price driven compensation plan expense.
Net interest income for the three months ended January 31, 1994
was essentially level with the same period of 1993 due to the
decline in interest expense offsetting a similar decline in
interest income.
The effective income tax rate for the three month period ended
January 31, 1994 was essentially unchanged compared with the
same period of 1993.
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In November 1992, the Financial Accounting Standards board
issued Statement of Financial Accounting Standards No. 112,
"Employers' Accounting for Postemployment Benefits" (SFAS No.
112). The statement requires accrual of the estimated cost of
benefits provided by the employer to former or inactive
employees after employment but before retirement. Adoption of
SFAS No. 112 is not required by the company until fiscal year
1995. Although the precise method and impact of implementation
is not known at this time, management believes the effect,
based on the company's current benefit programs, will not be
material.
DISCONTINUED OPERATIONS
In November 1992, the company announced its decision to exit
its Lead business. As of October 31, 1992 the Lead business
was classified as a discontinued operation and adjusted to
estimated net realizable value. The company believes that its
reserves for loss on disposal are adequate at January 31, 1994
in relation to its consolidated financial statements taken as a
whole. During 1993 and the first quarter of 1994, the company
made substantial progress toward the disposition of its Lead
business. While the outcome of such disposition cannot be
determined with certainty at this time, management's intent to
dispose of the Lead business remains unaltered and management
believes that a disposal will be accomplished during fiscal
1994.
FINANCIAL POSITION AND LIQUIDITY
The company expects to have adequate resources available from
cash and short-term investments currently on hand, plus
available revolving credit facilities, capital market sources,
and its commercial paper program to provide for its financing
needs for the foreseeable future.
For the three months ended January 31, 1994, capital
expenditures were $64.6 million including $53.3 million related
to on-going coal mine development. Dividends paid in the three
months ended January 31, 1994 were $10.7 million ($.13 per
share) compared with $9.8 million ($.12 per share) for the same
period of 1993.
The long-term debt to total capital ratio decreased slightly to
5.2 percent at January 31, 1994, compared with 5.4 percent at
October 31, 1993, due to the increase in shareholders' equity
from earnings net of dividends.
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FLUOR CORPORATION
CONDENSED CONSOLIDATED CHANGES IN BACKLOG
(Dollars in Millions)
UNAUDITED
For the Three Months Ended January 31, 1994 1993
Backlog - beginning of period....... $ 14,753.5 $ 14,706.0
New awards.......................... 2,334.2 2,056.6
Adjustments and cancellations, net.. (407.3) (194.8)
Work performed...................... (1,865.5) (1,632.3)
Backlog - end of period............. $ 14,814.9 $ 14,935.5
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FLUOR CORPORATION
PART II - Other Information
Item 4. Submission of Matters to a Vote of Security Holders.
(a) Date of meeting. The annual meeting of stockholders
of Fluor Corporation was held on March 8, 1994
at the Hyatt Hotel, 17900 Jamboree Boulevard,
Irvine, California.
(b) Election of Directors.
Directors elected -
David P. Gardner
65,064,590 FOR
665,914 VOTED TO WITHHOLD AUTHORITY
Gerald M. Glenn
65,099,700 FOR
630,804 VOTED TO WITHHOLD AUTHORITY
William R. Grant
65,030,974 FOR
699,530 VOTED TO WITHHOLD AUTHORITY
Vincent L. Kontny
65,107,330 FOR
623,174 VOTED TO WITHHOLD AUTHORITY
Vilma S. Martinez
65,043,353 FOR
687,151 VOTED TO WITHHOLD AUTHORITY
Other directors continuing in office -
Hugh K. Coble
Peter J. Fluor
Bobby R. Inman
Robert V. Lindsay
Leslie G. McCraw
Buck Mickel
Dr. Martha R. Seger
David S. Tappan, Jr.
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(c) Matters voted upon
Ratification of the appointment of Ernst & Young
as auditors for 1994:
65,107,330 FOR
101,602 AGAINST
521,572 ABSTAIN
-0- BROKER NON-VOTE
Approval of amendments to 1988 Executive Stock Plan
and executive compensation performance goals:
57,071,151 FOR
7,173,322 AGAINST
1,385,475 ABSTAIN
100,556 BROKER NON-VOTE
Stockholder proposal regarding a senior executive
and director compensation ceiling:
4,218,092 FOR
44,358,447 AGAINST
3,926,305 ABSTAIN
13,227,660 BROKER NON-VOTE
(d) Terms of settlement between registrant and any other
participant. None.
Item 6. Exhibits and Reports on Form 8-K.
(a) Exhibits. None.
(b) Reports on Form 8-K. None.
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of
1934, the registrant has duly caused this report to be signed
on its behalf by the undersigned thereunto duly authorized.
FLUOR CORPORATION
(Registrant)
Date: March 16, 1994 /s/ P.J. Trimble
P.J. Trimble, Senior Vice President -
Law and Secretary
/s/ J. Michal Conaway
J. Michal Conaway, Vice President -
Finance
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