<PAGE>
UNITED STATES
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 July 31, 1996
OR
( ) TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the transition period from to
Commission File Number: 1-7775
FLUOR CORPORATION
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(Exact name of registrant as specified in its charter)
Delaware 95-0740960
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(State or other jurisdiction of (I.R.S. Employer I.D. No.)
incorporation or organization)
3353 Michelson Drive, Irvine, CA 92698
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(Address of principal executive offices)
(714)975-2000
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(Registrant's telephone number, including area code)
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 past 90 days. Yes (X) No ( )
As of August 31, 1996 there were 83,617,164 shares of common
stock outstanding.
<PAGE>
FLUOR CORPORATION
FORM 10-Q
July 31, 1996
TABLE OF CONTENTS PAGE
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Part I: Financial Information
Condensed Consolidated Statement of Earnings for
the Three Months Ended July 31, 1996 and 1995...... 2
Condensed Consolidated Statement of Earnings for
the Nine Months Ended July 31, 1996 and 1995....... 3
Condensed Consolidated Balance Sheet at July 31,
1996 and October 31, 1995.......................... 4
Condensed Consolidated Statement of Cash Flows for
the Nine Months Ended July 31, 1996 and 1995....... 6
Notes to Condensed Consolidated Financial
Statements......................................... 7
Management's Discussion and Analysis of Financial
Condition and Results of Operations................ 9
Changes in Backlog.................................. 13
Part II: Other Information......................... 14
Signatures............................................ 15
<PAGE>
Part I: Financial Information
FLUOR CORPORATION
CONDENSED CONSOLIDATED STATEMENT OF EARNINGS
Three Months Ended July 31, 1996 and 1995
UNAUDITED
<TABLE>
<CAPTION>
In thousands, except per share amounts 1996 1995
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<S> <C> <C>
REVENUES.............................. $2,702,821 $2,436,831
COSTS AND EXPENSES
Cost of revenues.................... 2,589,959 2,335,885
Corporate administrative and
general expenses................... 9,956 12,793
Interest expense.................... 4,500 3,449
Interest income..................... (6,460) (9,875)
-------------------------
Total Costs and Expenses.............. 2,597,955 2,342,252
-------------------------
EARNINGS BEFORE INCOME TAXES.......... 104,866 94,579
INCOME TAX EXPENSE.................... 36,789 34,427
-------------------------
NET EARNINGS.......................... $ 68,077 $ 60,152
=========================
NET EARNINGS PER SHARE................ $ 0.81 $ 0.72
=========================
DIVIDENDS PER COMMON SHARE............ $ 0.17 $ 0.15
=========================
SHARES USED TO CALCULATE EARNINGS PER
SHARE............................... 84,558 83,542
=========================
</TABLE>
See Accompanying Notes.
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FLUOR CORPORATION
CONDENSED CONSOLIDATED STATEMENT OF EARNINGS
Nine Months Ended July 31, 1996 and 1995
UNAUDITED
<TABLE>
<CAPTION>
In thousands, except per share amounts 1996 1995
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<S> <C> <C>
REVENUES.............................. $7,687,464 $6,725,770
COSTS AND EXPENSES
Cost of revenues.................... 7,370,476 6,444,551
Corporate administrative and
general expenses................... 34,553 34,850
Interest expense.................... 11,416 10,010
Interest income..................... (20,692) (24,328)
-------------------------
Total Costs and Expenses.............. 7,395,753 6,465,083
-------------------------
EARNINGS BEFORE INCOME TAXES.......... 291,711 260,687
INCOME TAX EXPENSE.................... 102,486 94,890
-------------------------
NET EARNINGS.......................... $ 189,225 $ 165,797
=========================
NET EARNINGS PER SHARE................ $ 2.24 $ 1.99
=========================
DIVIDENDS PER COMMON SHARE............ $ 0.51 $ 0.45
=========================
SHARES USED TO CALCULATE EARNINGS PER
SHARE............................... 84,543 83,253
=========================
</TABLE>
See Accompanying Notes.
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<PAGE>
FLUOR CORPORATION
CONDENSED CONSOLIDATED BALANCE SHEET
July 31, 1996 and October 31, 1995
UNAUDITED
<TABLE>
<CAPTION>
July 31, October 31,
$ in thousands 1996 1995*
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<S> <C> <C>
ASSETS
Current Assets
Cash and cash equivalents........... $ 228,603 $ 292,934
Marketable securities............... 113,736 137,758
Accounts and notes receivable....... 572,016 470,104
Contract work in progress........... 465,736 362,910
Deferred taxes...................... 46,572 55,088
Inventories and other current assets 104,556 92,877
-------------------------
Total current assets............... 1,531,219 1,411,671
-------------------------
Property, Plant and Equipment, net
of accumulated depreciation,
depletion and amortization of
$787,462 and $630,573, respectively. 1,609,792 1,435,811
Goodwill, net of accumulated
amortization of $16,774 and $11,778,
respectively........................ 71,873 33,303
Investments........................... 101,364 88,488
Other................................. 284,170 259,633
-------------------------
$3,598,418 $3,228,906
=========================
</TABLE>
See Accompanying Notes.
* Amounts at October 31, 1995 have been derived from audited
financial statements.
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<PAGE>
FLUOR CORPORATION
CONDENSED CONSOLIDATED BALANCE SHEET
July 31, 1996 and October 31, 1995
UNAUDITED
<TABLE>
<CAPTION>
July 31, October 31,
$ in thousands 1996 1995*
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<S> <C> <C>
LIABILITIES AND SHAREHOLDERS' EQUITY
Current Liabilities
Accounts and notes payable.......... $ 386,666 $ 372,301
Commercial paper.................... 29,854 29,937
Advance billings on contracts....... 561,771 393,438
Accrued salaries, wages and
benefit plan liabilities........... 240,474 269,812
Other accrued liabilities........... 159,440 148,782
Current portion of long-term debt... 24,790 24,375
-------------------------
Total current liabilities.......... 1,402,995 1,238,645
-------------------------
Long-term debt due after one year..... 3,336 2,873
Deferred taxes........................ 38,875 44,211
Other noncurrent liabilities.......... 553,772 512,363
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 -
83,598,249 shares and 83,164,866
shares, respectively............. 52,249 51,978
Additional capital.................. 559,674 538,503
Retained earnings................... 1,012,940 866,305
Unamortized executive stock plan
expense............................ (24,787) (26,865)
Cumulative translation adjustments.. (636) 893
-------------------------
Total shareholders' equity......... 1,599,440 1,430,814
-------------------------
$3,598,418 $3,228,906
=========================
</TABLE>
See Accompanying Notes.
* Amounts at October 31, 1995 have been derived from audited
financial statements.
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<PAGE>
FLUOR CORPORATION
CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS
Nine Months Ended July 31, 1996 and 1995
UNAUDITED
<TABLE>
<CAPTION>
$ in thousands 1996 1995
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<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES
Net earnings........................ $ 189,225 $ 165,797
Adjustments to reconcile net
earnings to cash provided by
operating activities:
Depreciation, depletion and
amortization................... 139,929 106,177
Deferred taxes................... 11,564 8,056
Change in operating assets and
liabilities.................... (21,288) (29,718)
Other, net....................... (15,005) (29,231)
-------------------------
Cash provided by operating activities. 304,425 221,081
-------------------------
CASH FLOWS FROM INVESTING ACTIVITIES
Capital expenditures................ (289,404) (225,588)
Acquisitions........................ (80,216) (5,342)
Investments......................... (6,580) (11,032)
Purchases of marketable securities.. (64,052) (84,919)
Proceeds from sales and maturities
of marketable securities........... 88,897 77,464
Proceeds from sale of property,
plant and equipment................ 20,317 11,462
Other, net.......................... (9,775) 2,655
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Cash utilized by investing activities. (340,813) (235,300)
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CASH FLOWS FROM FINANCING ACTIVITIES
Cash dividends paid................. (42,590) (37,238)
Payments on debt.................... (18,801) (35,604)
Stock options exercised............. 15,311 6,808
Increase in short-term borrowings... 17,373 12,677
Other, net.......................... 764 (1,162)
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Cash utilized by financing activities. (27,943) (54,519)
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Decrease in cash and cash equivalents. (64,331) (68,738)
Cash and cash equivalents at
beginning of period................. 292,934 374,468
-------------------------
Cash and cash equivalents at end of
period.............................. $ 228,603 $ 305,730
=========================
</TABLE>
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, 1995 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 and nine months ended July 31, 1996 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
July 31, 1996 and its consolidated results of
operations for the three and nine months ended July
31, 1996 and 1995 and cash flows for the nine months
ended July 31, 1996 and 1995. Certain 1995 amounts
have been reclassified to conform with the 1996
presentation.
(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:
<TABLE>
<CAPTION>
July 31, October 31,
$ in thousands 1996 1995
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<S> <C> <C>
Coal........................... $ 22,831 $ 28,874
Supplies and other............. 37,393 34,410
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$ 60,224 $ 63,284
=======================
</TABLE>
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<PAGE>
(4) Cash paid for interest was $6.9 million and $5.1 million
for the nine month periods ended July 31, 1996 and 1995,
respectively. Income tax payments, net of refunds, were
$82.2 million and $71.0 million during the nine month
periods ended July 31, 1996 and 1995, respectively.
(5) Effective November 1, 1995, the company adopted Statement
of Financial Accounting Standards No. 121, "Accounting for
the Impairment of Long-Lived Assets and for Long-Lived
Assets to be Disposed Of" (SFAS No. 121). The adoption of
SFAS No. 121 had no impact on the company's consolidated
results of operations or financial position.
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<PAGE>
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 and the company's October 31, 1995 annual report on Form
10-K.
RESULTS OF OPERATIONS
Revenues increased 11 percent and 14 percent, respectively, for
the three and nine month periods ended July 31, 1996 compared
with the same periods of 1995. Net earnings for the three and
nine months ended July 31, 1996 were $68.1 million and $189.2
million, respectively, compared with net earnings of $60.2
million and $165.8 million, respectively, for the same periods
of 1995. The increases in net earnings are due primarily to
higher earnings for both the Engineering and Construction and
Coal segments.
ENGINEERING AND CONSTRUCTION
Revenues for the Engineering and Construction segment increased
11 percent and 15 percent, respectively, for the three and nine
month periods ended July 31, 1996 compared with the same
periods of 1995, due primarily to an increase in work
performed. Engineering and Construction operating profits
increased 9 percent and 10 percent, respectively, for the three
and nine months ended July 31, 1996 compared with the same
periods of 1995 due primarily to the increase in the volume of
work performed which was partially offset by an increase in
investment spending for expansion and strategic business
development. These expenditures, which are expensed as they
are incurred, reflect the company's pursuit of business
opportunities across numerous global markets. Operating
margins, which may fluctuate from time to time as a result of
changes in the mix of engineering and design services and
construction related services, continue to be affected by the
increased investment spending. Although operating margins
improved from those reported in the second quarter of 1996,
they declined slightly for both the three and nine month
periods ended July 31, 1996 compared with the same periods of
1995.
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<PAGE>
New awards for the three and nine month periods ended July 31,
1996 were $3.1 billion and $9.1 billion, respectively, compared
with $2.6 billion and $7.6 billion for the same periods of
1995. Approximately 59 percent and 57 percent, respectively,
of new awards for the three and nine months ended July 31, 1996
were for projects located outside the United States. New
awards in the third quarter of 1996 were concentrated in the
Process and Industrial groups and consisted of a mix of smaller
to medium sized projects located primarily in the U.S., South
America and Asia Pacific regions. The large size and uncertain
timing of significant new awards can create variability in the
company's awards pattern, consequently, future award trends are
difficult to predict with certainty.
In August 1996, the company was selected to manage the
environmental cleanup of the Department of Energy's Hanford
site, a former plutonium production facility located in
southeastern Washington state. The initial five-year contract
is valued at $5 billion with potential contract extensions
totaling five years and $5 billion. This work is expected to
be added to backlog on an annual basis as congressional
authority to expend the funds is received. The initial
authorized phase will be recognized as a new award in the
fourth quarter of 1996.
The following table sets forth backlog for each of the company's
Engineering and Construction groups:
<TABLE>
<CAPTION>
July 31, October 31, July 31,
$ in millions 1996 1995 1995
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<S> <C> <C> <C>
Process $ 6,125 $ 6,671 $ 6,861
Industrial 5,974 4,516 4,090
Power/Government 2,852 3,275 3,282
Diversified Services 648 263 317
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Total $ 15,599 $ 14,725 $ 14,550
======================================
</TABLE>
Approximately 56 percent of backlog at July 31, 1996 relates to
projects located outside of the United States compared with 55
percent at October 31, 1995 and 56 percent at July 31, 1995,
consistent with the company's long-term goal of broad
geographic diversity. Backlog is adjusted both upwards and
downwards as required to reflect project cancellations,
deferrals and revised project scope and cost.
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<PAGE>
COAL
Revenues increased 13 percent and 12 percent, respectively, for
the three and nine month periods ended July 31, 1996
compared with the same periods of 1995. These increases were
due primarily to increased sales of both metallurgical and
steam coal. Metallurgical coal revenues increased due
primarily to the continued strong demand by steel producers and
to Massey's increased market share. Steam coal sales continued
to benefit from the severe winter in 1996 as electric utilities
replenished their depleted inventory levels. Gross income
increased for the three months ended July 31, 1996 compared
with the same period of 1995 due primarily to the increased
sales volume of both metallurgical and steam coal. Gross
income increased for the nine months ended July 31, 1996
compared with the same period of 1995 due primarily to the
increased sales volume of both metallurgical and steam coal
combined with improved pricing and lower costs of metallurgical
coal. Operating profit increased 14 percent and 18 percent,
respectively, for the three and nine months ended July 31, 1996
compared with the same periods of 1995 due primarily to
increased gross income.
OTHER
Corporate administrative and general expenses decreased $2.8
million for the three months ended July 31, 1996 and were level
for the nine months ended July 31, 1996 compared with the same
periods of 1995. The decrease for the three months ended July
31, 1996 compared with the same period of 1995 is due primarily
to lower expenses for stock price driven compensation plans and
lower corporate overhead, partially offset by higher expenses
for performance driven compensation plans.
Net interest income for the three and nine months ended July 31,
1996 decreased $4.5 million and $5.0 million, respectively,
compared with the same periods of 1995 due primarily to lower
interest earning assets in addition to higher short-term interest
bearing liabilities.
In October 1995, the Financial Accounting Standards Board issued
Statement of Financial Accounting Standards No. 123, "Accounting
for Stock-Based Compensation" (SFAS No. 123). SFAS No. 123
establishes financial accounting and reporting standards for
stock-based compensation plans. Adoption of the new accounting
standards prescribed by SFAS No. 123 is optional. The company
does not expect to apply the new accounting standards in its
consolidated financial statements and will continue to account
for its plans under previous accounting standards, consequently,
SFAS No. 123 will not affect the company's consolidated results
of operations or financial position. However, in accordance with
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<PAGE>
the reporting provisions of SFAS No. 123, beginning in 1997 pro
forma disclosures of net earnings per share will be made in the
footnotes to the company's financial statements as if the SFAS
No. 123 accounting standards had been adopted.
In May 1996, the company consummated a merger between one of its
subsidiaries, Fluor Daniel Environmental Services, Inc. (FDESI),
and Groundwater Technology, Inc. (GTI) wherein the company
acquired an approximate 55 percent interest in the newly named
company, Fluor Daniel GTI. The company contributed $33.4 million
in cash and ownership of FDESI to Fluor Daniel GTI. GTI
shareholders received $60 million in cash and an approximate 45
percent ownership of Fluor Daniel GTI.
In March 1996, American Equipment, Inc., the company's equipment
rental and sales subsidiary acquired S&R Equipment Company,
Inc. (S&R), a high-lift equipment dealer. S&R was acquired for a
cash purchase price of $44.4 million, for which the company
received $29.1 million of property, plant and equipment, $4.4
million of working capital and other assets. In addition, the
company assumed $17.4 million of debt which was repaid by the
company subsequent to the purchase. Goodwill of $28.3 million
will be amortized over 15 years.
These acquisitions have been accounted for under the purchase
method of accounting and their results of operations have been
included in the company's condensed consolidated financial
statements from the respective acquisition dates.
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, a
commercial paper program and banking arrangements to provide for
its financing needs for the foreseeable future.
Changes in operating assets and liabilities are affected by the
mix, stage of completion and commercial terms of engineering and
construction projects. The decrease in operating assets and
liabilities in the first nine months of 1996 is due primarily to
increased project receivables and contract work in progress
resulting from increased project volume partially offset by
increases in advanced billings on contracts.
For the nine months ended July 31, 1996, capital expenditures
were $289.4 million including $171.6 million related primarily
to mine development for the Coal segment. Dividends paid in
the nine months ended July 31, 1996 were $42.6 million ($.51
per share) compared with $37.2 million ($.45 per share) for the
same period of 1995.
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<PAGE>
FLUOR CORPORATION
CHANGES IN BACKLOG
($ in Millions)
UNAUDITED
<TABLE>
<CAPTION>
For the Three Months Ended July 31, 1996 1995
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<S> <C> <C>
Backlog - beginning of period....... $ 15,362.0 $ 14,404.2
New awards.......................... 3,107.5 2,611.9
Adjustments and cancellations, net.. (476.1) (266.5)
Work performed...................... (2,394.2) (2,200.0)
-------------------------
Backlog - end of period............. $ 15,599.2 $ 14,549.6
=========================
</TABLE>
<TABLE>
<CAPTION>
For the Nine Months Ended July 31, 1996 1995
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<S> <C> <C>
Backlog - beginning of period....... $ 14,724.9 $ 14,021.9
New awards.......................... 9,063.4 7,583.1
Adjustments and cancellations, net.. (1,314.5) (1,007.2)
Work performed...................... (6,874.6) (6,048.2)
-------------------------
Backlog - end of period............. $ 15,599.2 $ 14,549.6
=========================
</TABLE>
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<PAGE>
FLUOR CORPORATION
PART II - Other Information
Item 6. Exhibits and Reports on Form 8-K.
(a) Exhibits.
10.1 1996 Executive Stock Plan.
10.2 Fluor Corporation Executive Incentive
Compensation Plan (Amended and Restated
Effective November 1, 1995).
(b) Reports on Form 8-K. None.
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<PAGE>
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: September 13, 1996 /s/ J. Michal Conaway
J. Michal Conaway, Vice President
and Chief Financial Officer
/s/ V.L. Prechtl
V.L. Prechtl, Vice President and
Controller
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<PAGE>
1996 FLUOR EXECUTIVE STOCK PLAN
ARTICLE I
DEFINITIONS
Sec. 1.1 DEFINITIONS
As used herein, the following terms shall have the meanings
hereinafter set forth unless the context clearly indicates to the
contrary:
(a) ''Award'' shall mean an award of Restricted Stock pursuant to the
provisions of Article VI hereof.
(b) ''Awardee'' shall mean an Eligible Employee to whom Restricted
Stock has been awarded hereunder.
(c) ''Board'' shall mean the Board of Directors of the Company.
(d) ''Change of Control'' of the Company shall be deemed to have
occurred if, (i) a third person, including a ''group'' as defined in
Section 13(d)(3) of the Securities Exchange Act of 1934, acquires shares
of the Company having twenty-five percent or more of the total number of
votes that may be cast for the election of directors of the Company, or
(ii) as the result of any cash tender or exchange offer, merger or other
business combination, or any combination of the foregoing transactions (a
''Transaction''), the persons who were directors of the Company before
the Transaction shall cease to constitute a majority of the Board of the
Company or any successor to the Company.
(e) ''Code'' shall mean the Internal Revenue Code of 1986, as amended.
(f) ''Committee'' shall mean the Organization and Compensation
Committee of the Board.
(g) ''Company'' shall mean Fluor Corporation.
(h) ''Eligible Employee'' shall mean an employee who is an officer of
the Company or any Subsidiary or who is a member of the Executive
Management Team of the Company and its Subsidiaries.
(i) ''ERISA'' shall mean the Employee Retirement Income Security Act of
1974, as amended.
(j) ''Executive Management Team'' shall mean those employees who have
been determined to be eligible to participate in the Fluor Corporation and
Subsidiaries Executive Incentive Compensation Program or in other similar
management incentive compensation programs of any Subsidiary.
(k) ''Fair Market Value'' shall mean the average of the highest price
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<PAGE>
and the lowest price per share at which the Stock is sold in the regular
way on the New York Stock Exchange on the day an Option is granted
hereunder or, in the absence of any reported sales on such day, the first
preceding day on which there were such sales.
(l) ''Incentive Stock Option'' shall mean an incentive stock option, as
defined under Section 422 of the Code and the regulations thereunder, to
purchase Stock.
(m) ''Nonqualified Stock Option'' shall mean a stock option other than
an Incentive Stock Option to purchase Stock.
(n) ''Option'' shall mean an option to purchase Stock granted pursuant
to the provisions of Article V hereof and refers to both Incentive Stock
Options and Nonqualified Stock Options.
(o) ''Optionee'' shall mean an Eligible Employee to whom an Option has
been granted hereunder.
(p) ''Plan'' shall mean the 1996 Fluor Executive Stock Plan, the
current terms of which are set forth herein.
(q) ''Prior Plans'' shall mean the 1971 Fluor Stock Option Plan, the
1977 Fluor Executive Stock Plan, the 1981 Fluor Executive Stock Plan, the
1982 Fluor Executive Stock Option Plan and the 1988 Fluor Executive Stock
Plan.
(r) ''Restricted Stock'' shall mean Stock that may be awarded to an
Eligible Employee by the Committee pursuant to Article VI hereof, which is
nontransferable and subject to a substantial risk of forfeiture until
specific conditions are met. Conditions may be based on continuing
employment or achievement of preestablished performance objectives.
(s) ''Return on Average Shareholders' Equity'' shall mean, for any
fiscal year, the percentage amount reported as ''Return on Average
Shareholders Equity'' in the ''Highlights'' section of the Company's
Annual Report to Stockholders for such fiscal year.
(t) ''Restricted Stock Agreement'' shall mean the agreement between the
Company and the Awardee with respect to Restricted Stock awarded
hereunder.
(u) ''Stock'' shall mean the Common Stock of the Company or, in the
event that the outstanding shares of Stock are hereafter changed into or
exchanged for shares of a different stock or securities of the Company or
some other corporation, such other stock or securities.
(v) ''Stock Option Agreement'' shall mean the agreement between the
Company and the Optionee under which the Optionee may purchase Stock
hereunder.
(w) ''Stock Payment'' shall mean a payment in shares of Stock to
replace all or any portion of the compensation (other than base
salary) that would
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<PAGE>
otherwise become payable to any Eligible Employee of the Company.
(x) ''Subsidiary'' shall mean any corporation, the majority of the
outstanding capital stock of which is owned, directly or indirectly, by
the Company or any partnership or joint venture in which either the
Company or such a corporation is at least a twenty percent (20%) equity
participant.
(y) ''Ten Year Treasury Yield'' shall mean, for any fiscal period, the
daily average percent per annum yield for U.S. Government Securities-10
year Treasury constant maturities, as published in the Federal Reserve
statistical release or any successor publication.
ARTICLE II
GENERAL
Sec. 2.1 NAME
This Plan shall be known as the ''1996 Fluor Executive Stock Plan''.
Sec. 2.2 PURPOSE
The purpose of the Plan is to advance the interests of the Company and
its stockholders by affording to Eligible Employees of the Company and its
Subsidiaries an opportunity to acquire or increase their proprietary
interest in the Company by the grant to such employees of Options or
Awards under the terms set forth herein. By thus encouraging such
employees to become owners of Company shares, the Company seeks to
motivate, retain and attract those highly competent individuals upon whose
judgment, initiative, leadership and continued efforts the success of the
Company in large measure depends.
Sec. 2.3 EFFECTIVE DATE
The Plan shall become effective upon its approval by the holders of a
majority of the shares of Stock of the Company represented at an annual or
special meeting of the stockholders of the Company.
Sec. 2.4. LIMITATIONS
Subject to adjustment pursuant to the provisions of Section 10.1
hereof, the aggregate number of shares of Stock which may either be issued
as Awards, subject to Options or issued pursuant to the exercise of
Options shall not exceed the sum of (a) 4,000,000 plus (b) that number of
shares represented by options, awards or rights under Prior Plans which
expire or are otherwise terminated at any time after the original
effective date of this Plan. Any such shares may be either authorized and
unissued shares or shares issued and thereafter acquired by the Company.
Sec. 2.5 OPTIONS AND AWARDS GRANTED UNDER PLAN
Shares of Stock with respect to which an Option granted hereunder shall
have been exercised, and shares of Stock received pursuant to a Restricted
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<PAGE>
Stock Agreement executed hereunder with respect to which the restrictions
provided for in Section 6.3 hereof shall have lapsed, shall not again be
available for Option or Award grant hereunder. If Options granted
hereunder shall expire or terminate for any reason without being wholly
exercised, or if Restricted Stock is acquired by the Company pursuant to
the provisions of paragraph (c) of Section 6.3 hereof, new Options or
Awards may be granted hereunder covering the number of shares to which
such Option expiration or termination or Restricted Stock acquisition
relates.
ARTICLE III
PARTICIPANTS
Sec. 3.1 ELIGIBILITY
Any Eligible Employee shall be eligible to participate in the Plan;
provided, however, that no member of the Committee shall be eligible to
participate while a member of the Committee. The Committee may grant
Options or Awards to any Eligible Employee in accordance with such
determinations as the Committee from time to time in its sole discretion
shall make.
ARTICLE IV
ADMINISTRATION
Sec. 4.1 DUTIES AND POWERS OF COMMITTEE
The Plan shall be administered by the Committee. Subject to the express
provisions of the Plan, the Committee shall have sole discretion and
authority to determine from among Eligible Employees those to whom and the
time or times at which Options or Awards may be granted, the number of
shares of Stock to be subject to each Option or Award and the period for
the exercise of such Option which need not be the same for each grant
hereunder. Subject to the express provisions of the Plan, the Committee
shall also have complete authority to interpret the Plan, to prescribe,
amend and rescind rules and regulations relating to it, to determine the
details and provisions of each Stock Option Agreement and Restricted Stock
Agreement, and to make all other determinations necessary or advisable in
the administration of the Plan.
Sec. 4.2 MAJORITY RULE
A majority of the members of the Committee shall constitute a quorum,
and any action taken by a majority present at a meeting at which a quorum
is present or any action taken without a meeting evidenced by a writing
executed by a majority of the whole Committee shall constitute the action
of the Committee.
Sec. 4.3 COMPANY ASSISTANCE
The Company shall supply full and timely information to the Committee
on all matters relating to eligible employees, their employment, death,
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<PAGE>
retirement, disability or other termination of employment, and such other
pertinent facts as the Committee may require. The Company shall furnish
the Committee with such clerical and other assistance as is necessary in
the performance of its duties.
ARTICLE V
OPTIONS
Sec. 5.1 OPTION GRANT AND AGREEMENT
Each Option granted hereunder shall be evidenced by minutes of a
meeting or the written consent of the Committee and by a written Stock
Option Agreement dated as of the date of grant and executed by the Company
and the Optionee, which Agreement shall set forth such terms and
conditions as may be determined by the Committee consistent with the Plan.
In no event shall the total number of shares of Stock subject to Options
granted hereunder to any Eligible Employee in any fiscal year exceed five
percent (5%) of the total number of shares authorized to be issued under
the Plan on the effective date of the Plan.
Sec. 5.2 PARTICIPATION LIMITATION
The Committee shall not grant an Incentive Stock Option to any employee
for such number of shares of Stock that, immediately after the grant,
the total number of shares of Stock owned or subject to Options
exercisable by and/or Awards outstanding in the hands of such employee
(or by such persons whose shares such employee is considered as owning
pursuant to the provisions of the second succeeding sentence) exceed ten
percent of the total combined voting power of all classes of stock of
the Company. This restriction does not apply if, at the time such
Incentive Stock Option is granted, the Incentive Stock Option purchase
price is at least 110% of the Fair Market Value on the date of grant and
the Incentive Stock Option by its terms is not exercisable after the
expiration of five (5) years from the date of grant. For purposes of this
Section 5.2, an employee shall be considered as owning the stock owned,
directly or indirectly, by or for his brothers and sisters (whether by the
whole or half blood), spouse, ancestors and lineal descendants; and the
stock owned, directly or indirectly, by or for a corporation, partnership,
estate or trust shall be considered as being owned proportionately by or
for its shareholders, partners or beneficiaries.
Sec. 5.3 OPTION PRICE
The purchase price of Stock under each Option will be determined by the
Committee but may not be less than the Fair Market Value on the date of
grant.
Sec. 5.4 OPTION PERIOD
Each Option granted hereunder must be granted within ten years from the
effective date of the Plan. The period for the exercise of each Option
shall be determined by the Committee, but in no instance shall such period
exceed
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ten years from the date of grant of the Option.
Sec. 5.5 OPTION EXERCISE
(a) Options granted hereunder may not be exercised unless and until the
Optionee shall have been or remained in the employ of the Company or its
Subsidiaries for one year from and after the date such Option was granted,
except as otherwise provided in Section 5.7 hereof.
(b) Options may be exercised with respect to whole shares only, for
such shares of Stock and within the period permitted for the exercise
thereof as determined by the Committee, and shall be exercised by written
notice of intent to exercise the Option with respect to a specified number
of shares delivered to the Company at its principal office in the State of
California, and payment in full to the Company at said office of the
amount of the Option price for the number of shares of Stock with respect
to which the Option is then being exercised. The purchase price may be
paid by the assignment and delivery to the Company of shares of Stock or a
combination of cash and shares of Stock equal in value to the exercise
price. Any shares assigned and delivered to the Company in payment or
partial payment of the purchase price will be valued at their Fair Market
Value on the exercise date.
(c) The Fair Market Value of the Stock at the date of grant for which
any employee may exercise Incentive Stock Options in any calendar year
under the Plan (or any other stock option plan of the Company adopted
after December 31, 1986) may not exceed $100,000.
Sec. 5.6 NONTRANSFERABILITY OF OPTION
No Option shall be transferred by an Optionee otherwise than by a will
or the laws of descent and distribution or pursuant to a qualified
domestic relations order as defined in the Code or Title I of ERISA.
During the lifetime of an Optionee, the Option shall be exercisable only
by him.
Sec. 5.7 EFFECT OF DEATH OR OTHER TERMINATION OF EMPLOYMENT
(a) If, prior to a date one year from the date on which an Option
shall have been granted, the Optionee's employment with the Company or its
Subsidiaries shall be terminated by the Company or Subsidiary with or
without cause, or by the act of the Optionee, the Optionee's right to
exercise such Option shall terminate and all rights thereunder shall
cease; provided, however, that if the Optionee shall die, retire or become
permanently and totally disabled, as determined in accordance with
applicable Company personnel policies, or if the Optionee's employment
with the Company or its Subsidiaries shall be terminated within two years
after a Change of Control of the Company and such termination occurs prior
to a date one year from the date on which an Option shall have been
granted, such Option shall become exercisable in full on the date of such
death, retirement, disability or termination of employment.
(b) If, on or after one year from the date on which an Option shall
have been granted, an Optionee's employment with the Company or its
Subsidiaries
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shall be terminated for any reason other than death, retirement or
permanent total disability, or within two years following a Change of
Control of the Company, the Optionee shall have the right, during the
period ending three months after such termination, to exercise such Option
to the extent that it was exercisable at the date of such termination and
shall not have been exercised, subject, however, to the provisions of
Section 5.4 hereof.
(c) Upon termination of an Optionee's employment with the Company or its
Subsidiaries by reason of retirement or permanent total disability, as
determined in accordance with applicable Company personnel policies, or
within two years following a Change of Control of the Company, such
Optionee shall have the right, during the period ending three years after
such termination, to exercise his Option in full, without regard to any
installment exercise provisions, to the extent that it shall not have been
exercised, subject, however, to the provisions of Section 5.4 hereof.
(d) If an Optionee shall die (i) while in the employ of the Company or
its Subsidiaries, or (ii) within three months after termination of
employment where such termination did not occur either by reason of
retirement or permanent total disability or within two years following a
Change of Control of the Company, or (iii) within three years after
termination of employment where such termination occurred either by reason
of retirement or permanent total disability or within two years following
a Change of Control of the Company, the executor or administrator of the
state of the decedent or the person or persons to whom an Option granted
hereunder shall have been validly transferred by the executor or the
administrator pursuant to a will or the laws of descent and distribution
shall have the right, during the period ending three years after the date
of the Optionee's death, to exercise the Optionee's Option (A) in full,
without regard to any installment exercise provisions, to the extent that
it shall not have been exercised, if the Optionee shall have died while in
the employ of the Company or its Subsidiaries or within three years after
termination of employment where such termination occurred either by reason
of retirement or permanent total disability or within two years following
a Change of Control of the Company, or (B), to the extent that it was
exercisable at the date of the Optionee's death and shall not have been
exercised, if the Optionee shall have died within three months after
termination of employment where such termination did not occur by reason
of either retirement or permanent total disability or within two years
following a Change of Control of the Company, subject, however, to the
provisions of Section 5.4 hereof.
(e) No transfer of an Option by the Optionee by a will or by the laws
of descent and distribution shall be effective to bind the Company unless
the Company shall have been furnished with written notice thereof and an
authenticated copy of the will and/or such other evidence as the Committee
may deem necessary to establish the validity of the transfer and the
acceptance by the transferee or transferees of the terms and conditions of
such Option.
(f) The foregoing notwithstanding, the Committee may elect, in its sole
discretion, to make grants of Options which have provisions regarding the
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<PAGE>
effect of death or other termination of employment which are different
than those set forth in paragraphs (a) through (d) of this Section 5.7,
provided that such provisions do not materially increase the benefits that
would otherwise accrue to an Optionee under paragraphs (a) through (d) of
this Section 5.7.
Sec. 5.8 RIGHTS AS STOCKHOLDER
An Optionee or a transferee of an Option shall have no rights as a
stockholder with respect to any shares subject to such Option prior to the
purchase of such shares by exercise of such Option as provided herein.
ARTICLE VI
AWARDS
Sec. 6.1 AWARD GRANT AND RESTRICTED STOCK AGREEMENT
The Committee may grant Awards of Restricted Stock to Awardees. No
Awards may be made during any fiscal year unless, for the preceding fiscal
year, Return on Average Shareholders' Equity exceeded the Ten Year
Treasury Yield by more than three percentage points. Each Award granted
hereunder must be granted within ten years from the effective date of the
Plan and shall be evidenced by minutes of a meeting or the written consent
of the Committee. The Committee shall from time to time establish various
Award grade levels which shall set forth the maximum number of shares
which may be awarded annually to each Eligible Employee in each grade
level. The Committee shall have the sole discretion and authority to make
an Award to an Eligible Employee of less than the maximum number of shares
applicable to his assigned grade level or to make no Award at all to any
such Eligible Employee. In no event shall the total number of shares of
Restricted Stock awarded to an Eligible Employee in any fiscal year exceed
15,000. The Awardee shall be entitled to receive the Stock subject to such
Award only if the Company and the Awardee, within 30 days after the date
of the Award, enter into a written Restricted Stock Agreement dated as of
the date of the Award, which Agreement shall set forth such terms and
conditions as may be determined by the Committee consistent with the Plan.
Sec. 6.2 CONSIDERATION FOR ISSUANCE
No shares of Restricted Stock shall be issued to an Awardee hereunder
unless and until the Committee shall have determined that consideration
has been received by the Company, in the form of labor performed for or
services actually rendered to the Company by the Awardee, having a fair
value of not less than the then fair market value of a like number of
shares of Stock subject to all of the herein provided conditions and
restrictions applicable to Restricted Stock, but in no event less than the
par value of such shares.
Sec. 6.3 RESTRICTIONS ON SALE OR OTHER TRANSFER
Each share of Stock received pursuant to each Restricted Stock
Agreement shall be subject to acquisition by Fluor Corporation, and may
not be sold or
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<PAGE>
otherwise transferred except pursuant to the following provisions:
(a) The shares of Stock represented by the Restricted Stock Agreement
shall be held in book entry form with the Company's transfer agent until
the restrictions lapse in accordance with the conditions established by
the Committee pursuant to Section 6.4 hereof, or until the shares of
stock are forfeited pursuant to paragraph (c) of this Section 6.3.
Notwithstanding the foregoing, the Awardee may request that, prior to the
lapse of the restrictions or forfeiture of the shares, certificates
evidencing such shares be issued in his name and delivered to him, and
each such certificate shall bear the following legend:
''The shares of Fluor Corporation common stock evidenced by this
certificate are subject to acquisition by Fluor Corporation, and such
shares may not be sold or otherwise transferred except pursuant to the
provisions of the Restricted Stock Agreement by and between Fluor
Corporation and the registered owner of such shares.''
(b) No such shares may be sold, transferred or otherwise alienated or
hypothecated so long as such shares are subject to the restriction
provided for in this Section 6.3.
(c) Unless the Committee in its discretion determines otherwise, upon
an Awardee's termination of employment for any reason, all of the
Awardee's Restricted Stock remaining subject to restriction shall be
acquired by the Company effective as of the date of such termination of
employment. Upon the occurrence or non-occurrence of such other events as
shall be determined by the Committee and specified in the Awardee's
Restricted Stock Agreement relating to any such Restricted Stock, all of
such Restricted Stock remaining subject to restriction shall be acquired
by the Company upon the occurrence or non-occurrence of such event.
Sec. 6.4 LAPSE OF RESTRICTIONS
The restrictions imposed upon Restricted Stock under Section 6.3 above
will lapse in accordance with such conditions as are determined by the
Committee and set forth in the Restricted Stock Agreement.
Sec. 6.5 RIGHTS AS STOCKHOLDER
Subject to the provisions of Section 6.3 hereof, upon the issuance to
the Awardee of Restricted Stock hereunder, the Awardee shall have all the
rights of a stockholder with respect to such Stock, including the right to
vote the shares and receive all dividends and other distributions paid or
made with respect thereto.
ARTICLE VII
STOCK CERTIFICATES
Sec. 7.1 STOCK CERTIFICATES
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<PAGE>
The Company shall not be required to issue or deliver any certificate
for shares of Stock purchased upon the exercise of any Option granted
hereunder or any portion thereof, or received as Restricted Stock
pursuant to a Restricted Stock Agreement executed hereunder, prior to
fulfillment of all of the following conditions:
(a) the admission of such shares to listing on all stock exchanges on
which the Stock is then listed;
(b) the completion of any registration or other qualification of such
shares under any federal or state law or under the rulings or regulations
of the Securities and Exchange Commission or any other governmental
regulatory body, which the Committee shall in its sole discretion deem
necessary or advisable;
(c) the obtaining of any approval or other clearance from any federal
or state governmental agency which the Committee shall in its sole
discretion determine to be necessary or advisable; and
(d) the lapse of such reasonable period of time following the exercise
of the Option or the execution of the Restricted Stock Agreement as the
Committee from time to time may establish for reasons of administrative
convenience.
ARTICLE VIII
STOCK PAYMENT
Sec. 8.1 STOCK PAYMENT
The Committee may approve payments of Stock to any Eligible Employee
for all or any portion of the compensation (other than base salary) that
would otherwise become payable to such Eligible Employee in cash.
ARTICLE IX
TERMINATION, AMENDMENT AND MODIFICATION OF PLAN
Sec. 9.1 TERMINATION, AMENDMENT AND MODIFICATION OF PLAN
The Board may at any time, upon recommendation of the Committee,
terminate, and may at any time from time to time and in any respect amend
or modify, the Plan, provided, however, that no such action of the
Board without approval of the stockholders of the Company may:
(a) increase the total number of shares of Stock subject to the Plan by
more than 10%, except as contemplated in Section 10.1 hereof;
(b) materially increase the benefits accruing to participants under the
Plan;
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<PAGE>
(c) withdraw the administration of the Plan from the Committee; or
(d) permit any person while a member of the Committee to receive an
Option or Restricted Stock under the Plan; and provided further, that no
termination, amendment or modification of the Plan shall in any manner
affect any Stock Option Agreement or Restricted Stock Agreement
theretofore executed pursuant to the Plan without the consent of such
Optionee or Awardee.
ARTICLE X
MISCELLANEOUS
Sec. 10.1 ADJUSTMENT PROVISIONS
(a) Subject to Section 10.1(b) below, if the outstanding shares of
Stock of the Company are increased, decreased, or exchanged for a
different number or kind of shares or other securities, or if additional
shares or new or different shares or other securities are distributed with
respect to such shares of Stock or other securities, through merger,
consolidation, sale of all or substantially all of the property of the
Company, reorganization, recapitalization, reclassification, stock
dividend, stock split, reverse stock split or other distribution with
respect to such shares of Stock or other securities, an appropriate and
proportionate adjustment may be made in (i) the maximum number and kind of
shares provided in Section 2.4, (ii) the number and kind of shares or
other securities subject to the outstanding Options and Awards, and (iii)
the price for each share or other unit of any other securities subject to
outstanding Options without change in the aggregate purchase price or
value as to which such Options remain exercisable.
(b) Adjustments under Section 10.1(a) will be made by the Committee,
whose determination as to what adjustments will be made and the extent
thereof will be final, binding, and conclusive. No fractional interests
will be issued under the Plan resulting from any such adjustments.
Sec. 10.2 CONTINUATION OF EMPLOYMENT
Nothing in the Plan or in any instrument executed pursuant to the Plan
will confer upon any Eligible Employee any right to continue in the employ
of the Company or any Subsidiary or affect the right of the Company or any
Subsidiary to terminate the employment of any Eligible Employee at any
time with or without cause.
Sec. 10.3 COMPLIANCE WITH GOVERNMENT REGULATIONS
No shares of Stock will be issued hereunder unless and until all
applicable requirements imposed by federal and state securities and other
laws, rules, and regulations and by any regulatory agencies have
jurisdiction and by any stock exchanges upon which the Stock may be listed
have been fully met. As a condition precedent to the issuance of shares of
Stock pursuant hereto, the Company may require the employee to take any
reasonable action to comply with
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<PAGE>
such requirements.
Sec. 10.4 PRIVILEGES OF STOCK OWNERSHIP
No employee and no beneficiary or other person claiming under or
through such employee will have any right, title, or interest in or to any
shares of Stock allocated or reserved under the Plan or subject to any
Option or Award except as to such shares of Stock, if any, that have been
issued to such employee.
Sec. 10.5 WITHHOLDING
The Company may make such provisions as it deems appropriate to
withhold any taxes the Company determines it is required to withhold in
connection with any Option or Award. The Company may require the employee
to satisfy any relevant tax requirements before authorizing any issuance
of Stock to the employee. Such settlement may be made in cash or Stock.
Sec. 10.6 NONTRANSFERABILITY
An Option or Award may be exercised during the life of the employee
solely by the employee or the employee's duly appointed guardian or
personal representative. No Option or Award and no other right under the
Plan, contingent or otherwise, will be assignable or subject to any
encumbrance, pledge, or charge of any nature.
Sec. 10.7 OTHER COMPENSATION PLANS
The adoption of the Plan shall not affect any other stock option or
incentive or other compensation plans in effect for the Company or any
Subsidiary, nor shall the Plan preclude the Company from establishing any
other forms of incentive or other compensation for employees of the
Company or any Subsidiary.
Sec. 10.8 PLAN BINDING ON SUCCESSORS
The Plan shall be binding upon the successors and assigns of the
Company.
Sec. 10.9 SINGULAR, PLURAL; GENDER
Whenever used herein, nouns in the singular shall include the plural,
and the masculine pronoun shall include the feminine gender.
Sec. 10.10 HEADINGS, ETC., NO PART OF PLAN
Headings of Articles and Sections hereof are inserted for convenience
and reference; they constitute no part of the Plan.
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<PAGE>
FLUOR CORPORATION
EXECUTIVE INCENTIVE COMPENSATION PLAN
AMENDED AND RESTATED
EFFECTIVE NOVEMBER 1, 1995
I. OBJECTIVE
It is the policy of Fluor Corporation (''Fluor'') and its subsidiaries
(collectively the ''Company'') to provide its officers and key employees
with salary and incentive bonus award opportunities equal to or greater
than the average cash payments established with respect to comparable
positions within its industry. Management salaries are established and
maintained under a formal Company program of salary administration. This
plan is intended to provide true performance based incentive bonus awards
for those officers and key employees of the Company who can directly and
significantly influence its profits.
II. ELIGIBILITY
Those officers and key employees of the Company approved in writing by
the Executive Compensation Committee of Fluor shall be participants in
this Plan.
III. INCENTIVE COMPENSATION FUND (the ''FUND'')
The fund shall be established as provided herein with reference to the
consolidated net earnings of the Company for a fiscal year period.
However, the period of service of each participant for which individual
Incentive Compensation awards are payable shall be the calendar year
within which the applicable fiscal year ends.
A. Prior to the end of each fiscal year:
1. The Chairman of the Board of Fluor (the ''Chairman'') shall
establish an interim provisional Fund for such fiscal year in an amount
not to exceed twenty percent of the amount by which (a) estimated
consolidated net earnings of the Company for such fiscal year before
deducting taxes and the fund, and excluding amounts connected with
extraordinary, unusual or infrequently occurring events and transactions
for such fiscal year, exceed (b) ten percent of the average estimated
consolidated shareholders' equity of the Company and the Chairman shall
notify the Senior Vice President and Chief Financial Officer of Fluor (the
''Chief Financial Officer'') of the amount of said interim provisional
Fund.
2. The Chief Financial Officer shall make a test calculation to
determine whether the estimated consolidated net earnings of the Company
for such fiscal year after taxes and said interim provisional Fund are not
less than a return on average estimated consolidated shareholders' equity
of the Company for such fiscal year calculated on the basis of the average
yield for such fiscal year of one-year United States Treasury Bills.
3. The Chief Financial Officer shall confirm to the Chairman that the
interim provisional Fund will result in at least the aforesaid return on
consolidated shareholders' equity or inform the Chairman of the least
amount (the ''adjusted interim provisional Fund'') which will result in
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<PAGE>
the aforesaid return on consolidated shareholders' equity. Once the
interim provisional fund or the adjusted interim provisional fund, as
applicable, has been determined, then the final provisional Fund or the
final adjusted Provisional Fund as applicable, shall be determined by
subtracting from the interim amount, the amount of all expense accruals
to be made during such year by the Company for cash-based incentive
awards under the Company's Special Executive Incentive Plan, the 1988
Executive Stock Plan or any successor stock appreciation rights plans,
and the Directors' Achievement Award Program.
4. The Chief Financial Officer shall cause the consolidated financial
statement provision for the Fund for such fiscal year to be adjusted to
an amount equal to the final provisional Fund, or adjusted final
provisional Fund, as appropriate.
B. After the close of each fiscal year:
1. The Chairman shall establish a preliminary final Fund for such
fiscal year under the principles set forth above but on the basis of
audited consolidated financial statement information for such fiscal year,
and the Chairman shall notify the Chief Financial Officer of the amount of
the preliminary final Fund.
2. The Chief Financial Officer shall make a test calculation under
the principles set forth above but on the basis of audited consolidated
financial statement information for such fiscal year.
3. The Chief Financial Officer shall notify the Chairman of the
amount of the preliminary final Fund, adjusted as required by the test
calculation.
Upon approval of the Board of Directors of Fluor (the ''Board''), the
preliminary final Fund as so determined shall become the final Fund for
such fiscal year.
IV. DETERMINATION OF AWARD AMOUNTS
For Designated Executives (as defined below) the amount of each such
executive's Incentive Compensation Award to be payable out of the Fund for
each fiscal year, shall not exceed an amount determined by reference to
objective tests based on (a) one or more of the following financial
objectives: growth in earnings per share of the Company, growth in
stockholder value relative to the two year moving average of the S&P 500
Index, growth in stockholder value relative to the two year moving average
of the Dow Jones Heavy Construction Index, revenue growth, growth in
earnings (before interest and taxes), improvement in the Company's credit
rating and growth in contract backlog; and (b) one or more of the
following non-financial objectives: strategic plan development and
implementation, succession plan development and implementation, retention
of executive talent, improvement in workforce diversity and improvement in
safety records. Any of the foregoing may be measured either in absolute
terms, as compared to another company or companies or as compared to a
prior period or periods. Use of any other criterion will
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<PAGE>
require ratification by the shareholders of the Company if failure to
obtain approval for the fiscal year would jeopardize the tax deductibility
of future Incentive Compensation Awards. The performance objectives for
the fiscal year and directly related payment schedules for each Designated
Executive shall be established not later than 90 days after the beginning
of such fiscal year by the Organization and Compensation Committee of
Fluor (the ''Committee''). The Committee may, in its discretion, elect to
award a Designated Executive less than the amount determined in accordance
with the payment schedule.
The maximum amount of Incentive Compensation Award to any Designated
Executive for any fiscal year shall not exceed $2,000,000. This maximum
amount may not be increased without stockholder approval if failure to
obtain such approval could result in future Incentive Compensation Awards
not being tax deductible to the Company.
''Designated Executives'' shall mean the Chairman and Chief Executive
Officer of the Company and such other executive officers of the Company as
may from time to time be so designated by the Committee.
The determination of the portion of the Fund for each fiscal year
applicable to Fluor and to each of its subsidiaries and the amount of
Incentive Compensation award to each participant for the calendar year
within which such fiscal year ends shall be reviewed and recommended by
the Executive Compensation Committee of Fluor to:
1. The Organization and Compensation Committee of Fluor's Board with
respect to executive officers of Fluor (other than the Designated
Executives).
2. Fluor's Board with respect to all other participants in the Plan
who are not executive officers of Fluor.
Awards with respect to the executive officers of Fluor (other than the
Designated Executives) are recommended to Fluor's Board by the
Organization and Compensation Committee. Final approval of the amount of
the Fund for each fiscal year and the amount of the award to each
participant (other than the Designated Executives) shall be by Fluor's
Board.
V. DISTRIBUTION
Subject to the deferral provisions of the Fluor Corporation and
Subsidiaries Executive Deferred Compensation Program, the Incentive
Compensation awards for each calendar year shall be paid either in cash to
participants on or before the 31st day of January of the following
calendar year or in stock units granted under the terms of the 1982 Fluor
Shadow Stock Plan, all as determined by resolution of the Board.
-3-
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE
Condensed Consolidated Balance Sheet at July 31, 1996 and the Condensed
Consolidated Statement of Earnings for the nine months ended July 31,
1996 AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL
STATEMENTS.
</LEGEND>
<MULTIPLIER> 1000
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> OCT-31-1996
<PERIOD-END> JUL-31-1996
<CASH> 228,603
<SECURITIES> 113,736
<RECEIVABLES> 572,016
<ALLOWANCES> 0
<INVENTORY> 60,224
<CURRENT-ASSETS> 1,531,219
<PP&E> 2,397,254
<DEPRECIATION> 787,462
<TOTAL-ASSETS> 3,598,418
<CURRENT-LIABILITIES> 1,402,995
<BONDS> 3,336
0
0
<COMMON> 52,249
<OTHER-SE> 1,547,191
<TOTAL-LIABILITY-AND-EQUITY> 3,598,418
<SALES> 0
<TOTAL-REVENUES> 7,687,464
<CGS> 0
<TOTAL-COSTS> 7,370,476
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 11,416
<INCOME-PRETAX> 291,711
<INCOME-TAX> 102,486
<INCOME-CONTINUING> 189,225
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 189,225
<EPS-PRIMARY> 2.24
<EPS-DILUTED> 2.24
</TABLE>
