<PAGE> 1
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 April 30, 1997
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
- --------------------------------------------------------------------------------
(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 May 31, 1997 there were 83,917,984 shares of common stock outstanding.
<PAGE> 2
FLUOR CORPORATION
FORM 10-Q
April 30, 1997
<TABLE>
<CAPTION>
TABLE OF CONTENTS PAGE
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<S> <C> <C>
PART I: FINANCIAL INFORMATION
Condensed Consolidated Statement of Operations for the Three Months
Ended April 30, 1997 and 1996.................................................... 2
Condensed Consolidated Statement of Operations for the Six Months
Ended April 30, 1997 and 1996.................................................... 3
Condensed Consolidated Balance Sheet at April 30, 1997 and
October 31, 1996................................................................. 4
Condensed Consolidated Statement of Cash Flows for the Six
Months Ended April 30, 1997 and 1996............................................. 6
Notes to Condensed Consolidated Financial Statements............................. 7
Management's Discussion and Analysis of Financial Condition and
Results of Operations............................................................ 9
Changes in Backlog............................................................... 15
PART II: OTHER INFORMATION................................................................ 16
SIGNATURES................................................................................... 18
</TABLE>
<PAGE> 3
Part I: Financial Information
FLUOR CORPORATION
CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS
Three Months Ended April 30, 1997 and 1996
UNAUDITED
<TABLE>
<CAPTION>
In thousands, except per share amounts 1997 1996
- --------------------------------------------------------------------------------------
<S> <C> <C>
REVENUES $ 3,185,833 $ 2,582,229
COSTS AND EXPENSES
Cost of revenues 3,259,669 2,477,175
Corporate administrative and general expenses 3,197 11,334
Interest expense 6,982 3,475
Interest income (5,608) (6,837)
-----------------------------
Total Costs and Expenses 3,264,240 2,485,147
-----------------------------
(LOSS) EARNINGS BEFORE INCOME TAXES (78,407) 97,082
INCOME TAX BENEFIT (EXPENSE) 8,273 (33,382)
-----------------------------
NET (LOSS) EARNINGS $ (70,134) $ 63,700
=============================
NET (LOSS) EARNINGS PER SHARE $ (.83) $ .75
=============================
DIVIDENDS PER COMMON SHARE $ .19 $ .17
=============================
SHARES USED TO CALCULATE (LOSS)
EARNINGS PER SHARE 84,038 84,664
=============================
</TABLE>
See Accompanying Notes.
2
<PAGE> 4
FLUOR CORPORATION
CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS
Six Months Ended April 30, 1997 and 1996
UNAUDITED
<TABLE>
<CAPTION>
In thousands, except per share amounts 1997 1996
- --------------------------------------------------------------------------------------
<S> <C> <C>
REVENUES $ 6,619,894 $ 4,984,643
COSTS AND EXPENSES
Cost of revenues 6,586,956 4,780,517
Corporate administrative and general expenses 14,067 24,597
Interest expense 12,524 6,916
Interest income (10,871) (14,232)
-----------------------------
Total Costs and Expenses 6,602,676 4,797,798
-----------------------------
EARNINGS BEFORE INCOME TAXES 17,218 186,845
INCOME TAX EXPENSE 25,317 65,697
-----------------------------
NET (LOSS) EARNINGS $ (8,099) $ 121,148
=============================
NET (LOSS) EARNINGS PER SHARE $ (.10) $ 1.43
=============================
DIVIDENDS PER COMMON SHARE $ .38 $ .34
=============================
SHARES USED TO CALCULATE (LOSS)
EARNINGS PER SHARE 83,962 84,536
=============================
</TABLE>
See Accompanying Notes.
3
<PAGE> 5
FLUOR CORPORATION
CONDENSED CONSOLIDATED BALANCE SHEET
April 30, 1997 and October 31, 1996
UNAUDITED
<TABLE>
<CAPTION>
April 30, October 31,
$ in thousands 1997 1996*
- ----------------------------------------------------------------------------------------
<S> <C> <C>
ASSETS
Current Assets
Cash and cash equivalents $ 233,996 $ 246,964
Marketable securities 39,059 69,378
Accounts and notes receivable 835,618 742,547
Contract work in progress 567,873 561,490
Deferred taxes 50,615 50,157
Inventory and other current assets 186,992 126,287
--------------------------
Total current assets 1,914,153 1,796,823
--------------------------
Property, Plant and Equipment (net of accumulated
depreciation, depletion and amortization of $903,610
and $821,212, respectively) 1,804,977 1,677,662
Investments and goodwill, net 206,358 192,879
Other 310,209 284,362
--------------------------
$4,235,697 $3,951,726
==========================
</TABLE>
(Continued On Next Page)
* Amounts at October 31, 1996 have been derived from audited financial
statements.
4
<PAGE> 6
FLUOR CORPORATION
CONDENSED CONSOLIDATED BALANCE SHEET
April 30, 1997 and October 31, 1996
UNAUDITED
<TABLE>
<CAPTION>
April 30, October 31,
$ in thousands 1997 1996*
- ---------------------------------------------------------------------------------------------------
<S> <C> <C>
LIABILITIES AND SHAREHOLDERS' EQUITY
Current Liabilities
Accounts and notes payable $ 613,672 $ 704,186
Commercial paper 899 29,916
Advance billings on contracts 538,741 445,807
Accrued salaries, wages and benefit plans 321,319 290,426
Other accrued liabilities 199,133 175,026
Current portion of long-term debt 2,691 207
-----------------------------
Total current liabilities 1,676,455 1,645,568
-----------------------------
Long-term debt 300,464 2,967
Deferred taxes 54,772 42,632
Other noncurrent liabilities 572,122 590,833
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 -
83,914,134 shares and 83,791,197
shares, respectively 52,446 52,369
Additional capital 578,288 573,037
Retained earnings 1,037,565 1,077,559
Unamortized executive stock plan expense (31,054) (32,538)
Cumulative translation adjustments (5,361) (701)
-----------------------------
Total shareholders' equity 1,631,884 1,669,726
-----------------------------
$ 4,235,697 $ 3,951,726
=============================
</TABLE>
See Accompanying Notes.
*Amounts at October 31, 1996 have been derived from audited financial
statements.
5
<PAGE> 7
FLUOR CORPORATION
CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS
Six Months Ended April 30, 1997 and 1996
UNAUDITED
<TABLE>
<CAPTION>
$ in thousands 1997 1996
- --------------------------------------------------------------------------------------------
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES
Net (loss) earnings $ (8,099) $ 121,148
Adjustments to reconcile net earnings to cash
provided by operating activities:
Depreciation, depletion and amortization 117,643 88,644
Deferred taxes 17,117 12,801
Change in operating assets and liabilities (63,206) 27,519
Other, net (15,879) (18,281)
-------------------------
Cash provided by operating activities 47,576 231,831
-------------------------
CASH FLOWS FROM INVESTING ACTIVITIES
Capital expenditures (257,656) (206,491)
E & C businesses acquired (32,989) (50,468)
Proceeds from sales/maturities of marketable securities 30,319 55,395
Purchase of marketable securities -- (55,541)
Proceeds from sale of property, plant and equipment 15,598 13,425
Investments, net (7,903) (13,313)
Trust fund contribution (22,593) --
Other, net 7,578 (2,595)
-------------------------
Cash utilized by investing activities (267,646) (259,588)
-------------------------
CASH FLOWS FROM FINANCING ACTIVITIES
Proceeds from issuance of long-term debt 300,098 --
(Decrease) increase in short-term borrowings (61,591) 9,613
Payments on long-term debt -- (16,543)
Cash dividends paid (31,895) (28,382)
Common stock repurchased (15,433) --
Stock options exercised 14,628 15,731
Other, net 1,295 (278)
-------------------------
Cash provided (utilized) by financing activities 207,102 (19,859)
-------------------------
Decrease in cash and cash equivalents (12,968) (47,616)
Cash and cash equivalents at beginning of period 246,964 292,934
-------------------------
Cash and cash equivalents at end of period $ 233,996 $ 245,318
=========================
</TABLE>
See Accompanying Notes.
6
<PAGE> 8
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, 1996 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 six months ended April 30, 1997 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 April 30, 1997
and its consolidated results of operations and cash flows for the three
and six months ended April 30, 1997 and 1996. As more fully described in
Management's Discussion and Analysis of Financial Condition and Results
of Operations ("MD&A"), the company recorded provisions totaling $118.2
million during the second quarter of 1997. These included provisions for
estimated losses on certain contracts and adjustments to project-related
investments and accounts receivable.
Certain 1996 amounts have been reclassified to conform with the 1997
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>
April 30, October 31,
$ in thousands 1997 1996
------------------------------------------------------------------------
<S> <C> <C>
Coal $40,237 $28,809
Supplies and other 54,448 45,118
--------------------
$94,685 $73,927
====================
</TABLE>
(4) Cash paid for interest was $2.8 million and $3.8 million for the six
month periods ended April 30, 1997 and 1996, respectively. Income tax
payments, net of refunds, were $54.3 million and $53.3 million during
the six month periods ended April 30, 1997 and 1996, respectively.
7
<PAGE> 9
(5) During the three month period ended April 30, 1997, the company recorded
a $19.9 million charge related to the implementation of certain cost
reduction initiatives. The charge provides for personnel and facility
related costs. See MD&A for further discussion.
8
<PAGE> 10
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, 1996 annual
report on Form 10-K.
FORWARD-LOOKING INFORMATION
Any of the comments in this Form 10-Q that refer to the company's estimated or
future results, including its estimates of the cost savings from its previously
announced cost reduction program and its statements concerning the adequacy of
its provisions for estimated future losses on projects or investments, are
forward-looking and reflect the company's current analysis of existing trends
and information. Actual results may differ materially from current expectations
or projections based on a number of factors affecting the company's businesses.
These factors include, in the case of the cost savings estimates, the ability to
achieve estimated staff reductions while maintaining workflow in the functional
areas affected and to sublease vacated facilities within anticipated time frames
at anticipated sublease rent levels. Other risk factors affecting the company's
estimated or future results include, but are not limited to, cost overruns on
fixed, maximum or unit-priced contracts, contract performance risk, the
uncertain timing of awards and contracts, credit risk, risks associated with
government funding of contracts, market conditions impacting realization of
investments, market conditions in the domestic and international coal market,
and the state of the economic and political conditions worldwide. These
forward-looking statements represent the company's judgment only as of the date
of this Form 10-Q. As a result, the reader is cautioned not to rely on these
forward-looking statements. The company disclaims any intent or obligation to
update these forward-looking statements.
Additional information concerning these and other factors can be found in press
releases as well as the Company's public periodic filings with the Securities
and Exchange Commission, including the discussion under the heading "Certain
Factors and Trends Affecting Fluor and Its Businesses--Forward-Looking
Statements" in the company's Form 8-K filed May 6, 1997, which is hereby
incorporated by reference and attached hereto as Exhibit 99.1.
RESULTS OF OPERATIONS
Revenues increased 23 percent and 33 percent, respectively, for the three and
six month periods ended April 30, 1997 compared with the same periods of 1996.
For the three and six month periods ended April 30, 1997, the company reported
net losses of $70.1 million and $8.1 million, respectively, compared with net
earnings of $63.7 million and $121.1 million, respectively, for the comparable
periods in 1996. Results for the three and six month periods ended April 30,
1997 were favorably impacted by lower corporate administrative and general
expenses. The company's Engineering and Construction segment reported
operating losses of $110.3 million and $36.3 million, respectively, for the
three and six months periods ended April 30, 1997.
9
<PAGE> 11
ENGINEERING AND CONSTRUCTION
Revenues for the Engineering and Construction segment increased 25 percent and
35 percent, respectively, for the three and six month periods ended April 30,
1997 compared with the same periods of 1996, due primarily to an increase in
the volume of work performed. The increase in work performed is primarily a
result of the increase in new awards in recent periods.
Despite the growth in revenues, the segment reported operating losses of $110.3
million and $36.3 million, respectively, for the three and six month periods
ended April 30, 1997. The comparable periods in 1996 had operating profits of
$74.0 million and $147.0 million, respectively. Operating margins for the
three and six month periods ended April 30, 1997 were adversely impacted by a
variety of factors, including lower incentive fees earned during the quarter,
delays in the full release of certain projects, a reduction in the rates billed
for United States Government work and competitive pricing within certain
operating companies.
In addition, provisions of $91.4 million for estimated losses on certain
contracts were recognized in the second quarter of 1997. Approximately 75
percent of the contract provisions pertain to cost overruns on one fixed price
project for the construction of a power plant located outside the United States.
As discussed below, a provision on this project had been established in the
first quarter of 1997. In Management's Discussion and Analysis of Financial
Condition and Results of Operations in the Form 10-Q for the first quarter, the
company indicated that there were ongoing uncertainties associated with this
project and stated that evaluation of cost implications and recoupment
opportunities would continue in the second quarter. There were substantial
unexpected difficulties encountered on this project including significant
ongoing design changes, long delays in approval of drawings and vendors and
resulting low productivity in the field. By the end of the second quarter,
these difficulties were substantially resolved as to the first phase of the
project and rendered more predictable as to the second phase of the project.
Accordingly, the company recorded an additional provision to recognize the
estimated total amount of the loss under the contract. In addition, other
projects were identified to be loss contracts in the second quarter and,
accordingly, loss provisions were recorded. None of these provisions for
additional projects individually exceeded $5 million.
10
<PAGE> 12
Additionally, during the second quarter of 1997, the company recorded $26.8
million in provisions for the impairment, abandonment or sale of certain project
related investments and joint ventures, and doubtful accounts receivable, none
of which individually exceeded $5 million. These included the anticipated sale
of the company's interest in a joint venture within the pulp and paper industry,
a write down of an equity investment obtained in exchange for services rendered
to an environmental technology company and certain other project joint ventures
where it was determined in the second quarter that the Company's investment is
not expected to be realized due to poor market conditions or cancellation of the
project concerned.
Second quarter 1997 results also include a $19.9 million charge related to
implementation of certain cost reduction initiatives. This charge consists of
personnel related and lease costs for excess facilities. To date, the company
has initiated action to downsize, consolidate or close 17 of its more than 80
offices and has consolidated industry operating companies from 24 to 17.
Additional charges may be taken later in the year as additional actions are
initiated. Upon full implementation of the cost reduction initiatives, the
company believes that annualized savings of $100 million can be achieved. The
company anticipates that the cash flow impact of the costs to implement these
savings initiatives will not have a material impact on current or future
periods.
The six months ended April 30, 1997 includes first quarter contract related
provisions totaling $21.0 million for previously reported cost overruns on two
fixed price power projects. As discussed above, an additional provision on one
of the fixed price power projects located outside the United States was
recognized in the second quarter of 1997. The loss in the first quarter on this
project reflected additional costs then identified to be incurred on the first
phase of the project arising primarily from bad weather, lack of timely site
access, unexpected design changes and low labor productivity. The loss on the
other project, which is located in the United States and was due primarily to
startup problems, craft employee turnover and operation of the plant control
system, is not expected to exceed the provision recorded in the first quarter.
The company also recognized in the first quarter a credit totaling $25.0 million
related to a previously reported adjustment to certain actuarially determined
insurance accruals. The insurance accrual adjustment was due primarily to
improvement in loss experience resulting from the company's safety program,
resulting in an excess accrual position. The company believes that the accrued
liability at both January 31, 1997 and April 30, 1997 represents the best
estimate of its insurance liability.
New awards for the three and six months ended April 30, 1997 were $3.2 billion
and $6.8 billion, respectively, compared with $3.0 billion and $6.0 billion for
the same periods of 1996. Approximately 75 percent and 59 percent, respectively,
of new awards for the three and six months ended April 30, 1997 were for
projects located outside the United States. New awards in the Process Group for
the second quarter of 1997 were $2.6 billion and included a $1.9 billion award
for the engineering, procurement and construction management of the Yanpet
project, a petrochemical complex to be constructed in Saudi Arabia. The
remainder of other new awards in the second quarter of 1997 consisted of smaller
sized projects located primarily in the United States. New awards in the
Industrial Group for the second quarter of 1996 were $1.8 billion and included a
$558 million mining project located in Indonesia. 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.
11
<PAGE> 13
The following table sets forth backlog for each of the company's Engineering and
Construction groups:
<TABLE>
<CAPTION>
April 30, October 31, April 30,
$ in millions 1997 1996 1996
- -----------------------------------------------------------
<S> <C> <C> <C>
Process $ 6,812 $ 4,903 $ 6,296
Industrial 5,706 6,496 5,318
Power/Government 2,949 3,621 3,054
Diversified Services 670 737 694
---------------------------------
Total backlog $16,137 $15,757 $15,362
=================================
U.S $ 6,400 $ 7,326 $ 6,576
Outside U.S. 9,737 8,431 8,786
---------------------------------
Total backlog $16,137 $15,757 $15,362
=================================
</TABLE>
The increase in the Process Group's backlog at April 30, 1997 compared with
October 31, 1996 was due primarily to the Yanpet Project. The reduction in
backlog since October 31, 1996 in the Industrial Group reflects lower new awards
in the first six months of 1997 compared with the last six months of 1996, which
included the $1 billion Batu Hijau Project. Backlog in the Power/Government
Group declined from October 31, 1996 compared with April 30, 1997 due primarily
to the work performed on the Hanford environmental cleanup project and the
Paiton power project. Backlog is adjusted both upward and downward as required
to reflect project cancellations, deferrals and revised project scope and cost.
These adjustments were not significant for the three and six months ended April
30, 1997 and 1996, respectively.
COAL
Revenues increased 9 percent and 13 percent, respectively, for the three and six
month periods ended April 30, 1997 compared with the same periods of 1996. These
increases were due primarily to increased sales volume of both metallurgical and
steam coal, partially offset by lower steam coal prices. The increase in
metallurgical coal revenues reflects an increased market share of sales to steel
producers. Steam coal revenues increased due primarily to higher demand from
electric utility customers. Gross profit and operating profit increased for the
three and six months ended April 30, 1997 compared with the same periods of 1996
due primarily to the increased sales volume of both steam and metallurgical coal
and lower costs of both steam and metallurgical coal.
12
<PAGE> 14
OTHER
Net interest for the three and six months ended April 30, 1997 decreased
compared with the same periods of 1996 due primarily to lower interest earning
assets in addition to higher interest bearing liabilities outstanding during
the periods.
Corporate administrative and general expenses decreased $8.1 million and $10.5
million, respectively, for the three and six month periods ended April 30, 1997
compared with the same periods of 1996. The reduction in expense is due
primarily to adjustments made to stock-related and performance-based
compensation plans.
The effective tax rates for the three and six month periods ended April 30, 1997
were materially impacted by foreign based project and restructuring losses which
are not expected to receive tax benefit. If these losses are excluded for tax
rate determination purposes, there is no significant difference between the
effective tax rate and the statutory rate for the three and six month periods
ended April 30, 1997.
In February 1997, the Financial Accounting Standards Board issued Statement of
Financial Accounting Standards No. 128, "Earnings Per Share" (SFAS No. 128).
SFAS No. 128 redefines the standards for computing earnings per share and is
effective for the company's fiscal year 1998. The company believes adoption of
the new standards will not have a material impact on future earnings per share
calculations.
FINANCIAL POSITION AND LIQUIDITY
The company's financial position remains strong with cash, cash equivalents and
marketable securities of $273.1 million at April 30, 1997 and a long-term debt
to total capital ratio of 16 percent.
The company expects to have adequate resources available from operating cash
flows, cash and short-term investments, revolving credit and other banking
facilities, capital market sources and commercial paper to provide for its
capital needs for the foreseeable future. Operating activities generated $47.6
million in cash during the six month period ended April 30, 1997, compared with
$231.8 million during the same period in 1996. The decrease in cash generated
from operating activities is due primarily to a decrease in operating assets and
liabilities as well as the company's lower operating results. Operating working
capital during 1996 was favorably impacted by a large customer advance. The
change in operating assets and liabilities from period to period is affected by
the mix, stage of completion, and commercial terms of engineering and
construction projects.
During December 1996, the company filed a shelf registration statement with the
Securities and Exchange Commission for the sale of up to $400 million of debt
securities. In March 1997, $300 million of 6.95 percent notes due March 1, 2007
were issued under this filing. Proceeds were used primarily to reduce
outstanding commercial paper issued to fund operating working capital, capital
13
<PAGE> 15
expenditures and the repurchase of company shares.
For the six months ended April 30, 1997, capital expenditures were $257.7
million, including $156.9 million related to Massey Coal. Dividends paid in the
six months ended April 30, 1997 were $31.9 million ($.38 per share) compared
with $28.4 million ($.34 per share) for the same period of 1996.
14
<PAGE> 16
FLUOR CORPORATION
CHANGES IN BACKLOG
Three and Six Months Ended April 30, 1997 and 1996
($ in millions)
UNAUDITED
<TABLE>
<CAPTION>
For the Three Months Ended April 30, 1997 1996
- -------------------------------------------------------------------
<S> <C> <C>
Backlog - beginning of period $ 15,976.5 $ 15,108.2
New awards 3,183.8 2,967.5
Adjustments and cancellations, net (295.7) (403.9)
Work performed (2,728.1) (2,309.8)
---------------------------
Backlog - end of period $ 16,136.5 $ 15,362.0
===========================
</TABLE>
<TABLE>
<CAPTION>
For the Six Months Ended April 30, 1997 1996
- -------------------------------------------------------------------
<S> <C> <C>
Backlog - beginning of period $ 15,757.4 $ 14,724.9
New awards 6,774.4 5,956.0
Adjustments and cancellations, net (538.9) (838.5)
Work performed (5,856.4) (4,480.4)
---------------------------
Backlog - end of period $ 16,136.5 $ 15,362.0
===========================
</TABLE>
15
<PAGE> 17
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 11, 1997 at the Fluor Daniel
offices, Sugar Land, Texas.
(b) Election of Directors - Voting Results
Directors elected -
David P. Gardner
65,499,214 FOR
1,081,493 VOTED TO WITHHOLD AUTHORITY
Thomas L. Gossage
64,923,844 FOR
1,656,863 VOTED TO WITHHOLD AUTHORITY
William R. Grant
65,432,597 FOR
1,148,110 VOTED TO WITHHOLD AUTHORITY
Vilma S. Martinez
65,445,982 FOR
1,134,725 VOTED TO WITHHOLD AUTHORITY
Other directors continuing in office -
Don L. Blankenship
Carroll A. Campbell, Jr.
Peter J. Fluor
Bobby R. Inman
Robert V. Lindsay
Leslie G. McCraw
Buck Mickel
Martha R. Seger
16
<PAGE> 18
(c) Matters Voted Upon. Ratification of the appointment of Ernst &
Young LLP as auditors for the fiscal year ending October 31,
1997:
66,252,974 FOR
150,616 AGAINST
177,117 ABSTAIN
-0- BROKER NON-VOTE
Approval of the 1997 Fluor Restricted Stock Plan for non-employee
directors:
62,076,541 FOR
3,848,754 AGAINST
655,412 ABSTAIN
-0- BROKER NON-VOTE
Approval of stockholder proposal relating to Shareholder Rights
Plan:
34,520,176 FOR
22,238,448 AGAINST
1,331,932 ABSTAIN
8,490,151 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.
10.1 Fluor Corporation Restricted Stock Plan for Non-Employee
Directors.
27 Financial Data Schedule.
99.1 Current Report on Form 8-K filed May 6, 1997.
(b) Reports on Form 8-K.
None.
17
<PAGE> 19
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: June 16, 1997 /s/ J. Michal Conaway
------------- -----------------------------------------
J. Michal Conaway, Senior Vice President
and Chief Financial Officer
/s/ V.L. Prechtl
-----------------------------------------
V. L. Prechtl, Vice President and Controller
18
<PAGE> 1
EXHIBIT 10.1
1997 FLUOR RESTRICTED STOCK PLAN FOR
NON-EMPLOYEE DIRECTORS
ARTICLE I
DEFINITIONS
Section 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) "Accrued Retirement Benefit" shall mean, in relation to any
Eligible Director that is a member of the Board on the Plan Effective
Date, the amount set forth opposite such Eligible Director's name on
Schedule A annexed hereto, which amount corresponds to the present
value of the annual retirement benefits that would be payable to such
Eligible Director under the Fluor Corporation Retirement Plan for
Outside Directors following his or her mandatory retirement based on
years of service prior to the Plan Effective Date and life expectancy
after retirement, assuming a discount rate approximating the interest
rate on 30-year treasury obligations of the United States government.
(b) "Age for Board Retirement" shall mean the age for mandatory
retirement of members of the Board as specified in the Bylaws of the
Company, as applied to Eligible Directors on the date of such Eligible
Directors' retirement from the Board.
(c) "Award" shall mean an award of Restricted Stock pursuant to the
provisions of Article V hereof.
(d) "Awardee" shall mean an Eligible Director to whom Restricted Stock
has been awarded hereunder.
(e) "Board" shall mean the Board of Directors of the Company.
(f) "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.
(g) "Committee" shall mean members of the Board who are not eligible to
participate in the Plan.
<PAGE> 2
(h) "Company" shall mean Fluor Corporation.
(i) "Eligible Director" shall mean a director of the Company who is not
and never has been an employee of the Company or any of its
Subsidiaries.
(j) "Fluor Stock Price" shall mean, as of any date, the closing sale
price for shares of Stock quoted for such date on The New York Stock
Exchange.
(k) "Plan" shall mean the 1997 Fluor Restricted Stock Plan for
Non-Employee Directors, the current terms of which are set forth
herein.
(l) "Plan Effective Date" shall mean the date upon which the Plan
becomes effective in accordance with the provisions of Section 2.3.
(m) "Restricted Stock" shall mean Stock that may be awarded to an
Eligible Director by the Committee pursuant to Article V hereof, which
is nontransferable and subject to a substantial risk of forfeiture until
specific conditions are met.
(n) "Restricted Stock Agreement" shall mean the agreement between the
Company and the Awardee with respect to Restricted Stock awarded
hereunder.
(o) "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.
(p) "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.
ARTICLE II
GENERAL
Section 2.1 NAME
This Plan shall be known as the "1997 Fluor Restricted Stock Plan for
Non-Employee Directors".
Section 2.2 PURPOSE
The purpose of the Plan is to advance the interests of the Company and
its stockholders by affording to Eligible Directors of the Company an
opportunity to acquire or increase their proprietary interest in the Company by
the grant to such directors of Awards under the terms set forth herein. By
encouraging non-employee directors to become owners of Company shares, the
Company seeks to increase their incentive for enhancing stockholder value and to
motivate, retain and attract those highly
2
<PAGE> 3
competent individuals upon whose judgment, initiative, leadership and continued
efforts the success of the Company in large measure depends.
Section 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.
Section 2.4 LIMITATIONS
Subject to adjustment pursuant to the provisions of Section 8.1 hereof,
the aggregate number of shares of Stock which may be issued as Awards shall not
exceed 60,000. Any such shares may be either authorized and unissued shares or
shares issued and thereafter acquired by the Company.
Section 2.5 AWARDS GRANTED UNDER PLAN
Shares of Stock received pursuant to a Restricted Stock Agreement
executed hereunder with respect to which the restrictions provided for in
Section 5.3 hereof have lapsed shall not again be available for Award grant
hereunder. If Restricted Stock is acquired by the Company pursuant to the
provisions of paragraph (c) of Section 5.3 hereof, new Awards may be granted
hereunder covering the number of shares to which such Restricted Stock
acquisition relates.
ARTICLE III
PARTICIPANTS
Section 3.1 ELIGIBILITY
Any Eligible Director shall be eligible to participate in the Plan.
ARTICLE IV
ADMINISTRATION
Section 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 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 Restricted Stock
Agreement, and to make all other determinations necessary or advisable in the
administration of the Plan.
Section 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
3
<PAGE> 4
evidenced by a writing executed by a majority of the whole Committee shall
constitute the action of the Committee.
Section 4.3 COMPANY ASSISTANCE
The Company shall supply full and timely information to the Committee
on all matters relating to Eligible Directors, their death, retirement,
disability or removal or resignation from the Board 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
AWARDS
Section 5.1 AWARD GRANT AND RESTRICTED STOCK AGREEMENT
The Committee shall, on the Plan Effective Date, grant a one-time Award
to each Eligible Director then serving on the Board. The number of shares of
Restricted Stock constituting any such Award to any such Eligible Director shall
be determined by dividing the Accrued Retirement Benefit owed to such Eligible
Director by the Fluor Stock Price on the Plan Effective Date. The Committee
shall also grant to each Eligible Director that is a member of the Board during
all or any portion of each calendar year during the term of the Plan (including
the calendar year in which the Plan Effective Date occurs) an Award of 500
shares of Restricted Stock, which grant shall be made in respect of any calendar
year on the date of the first regularly scheduled meeting of the Board during
such calendar year occurring concurrently with or after such Eligible Director's
appointment to the Board.
Each Award granted hereunder must be granted within ten years from the
effective date of the Plan. 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.
Section 5.2 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.
Section 5.3 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 otherwise transferred except pursuant to the following provisions:
4
<PAGE> 5
(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 5.4 hereof, or until the shares of
stock are forfeited pursuant to paragraph (c) of this Section 5.3.
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 5.3.
(c) All of the Awardee's Restricted Stock remaining subject to any
restriction hereunder shall be forfeited to, and be acquired at no cost
by, the Company in the event that the Committee determines that any of
the following circumstances has occurred:
(i) the Awardee has engaged in knowing and willful misconduct in
connection with his or her service as a member of the Board;
(ii) the Awardee, without the consent of the Committee, at any
time during his or her period of service as a member of the
Board, becomes a principal of, serves as a director of, or owns a
material interest in, any business that directly or through a
controlled subsidiary competes with the Company or any
Subsidiary; or
(iii) the Awardee does not stand for reelection to, or
voluntarily quits or resigns from, the Board for any reason,
except under circumstances that would cause such restrictions to
lapse under Section 5.4.
Section 5.4 LAPSE OF RESTRICTIONS
The restrictions imposed under Section 5.3 above upon Restricted Stock
held by any Awardee will, as to any such Restricted Stock held by the Awardee
for at least six months, lapse once the Awardee has completed six years of
service on the Board and any of the following occurs:
(a) the Awardee attains the Age for Board Retirement or obtains Board
approval of early retirement in accordance with Section 5.5;
(b) the Awardee dies or becomes permanently and totally disabled; or
(c) any Change of Control occurs.
5
<PAGE> 6
In no event will the restrictions imposed under Section 5.3 lapse as to any
shares of Restricted Stock awarded to any Awardee until the Awardee has held
such shares for six months.
Section 5.5 EARLY RETIREMENT
An Awardee who leaves the Board prior to the Age for Board Retirement
may, upon application to and in the sole discretion of the Committee, be granted
early retirement status.
Section 5.6 RIGHTS AS STOCKHOLDER
Subject to the provisions of Section 5.3 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 VI
STOCK CERTIFICATES
Section 6.1 STOCK CERTIFICATES
The Company shall not be required to issue or deliver any certificate
for shares of Stock 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 execution
of the Restricted Stock Agreement as the Committee from time to time
may establish for reasons of administrative convenience.
6
<PAGE> 7
ARTICLE VII
TERMINATION, AMENDMENT AND MODIFICATION OF PLAN
Section 7.1 TERMINATION, AMENDMENT AND MODIFICATION OF PLAN
The Committee may at any time terminate, and may at any time and from
time to time and in any respect amend or modify, the Plan provided that, if
under applicable laws or the rules of any securities exchange upon which the
Company's common stock is listed, the consent of the Company's stockholders is
required for such amendment or modification, such amendment or modification
shall not be effective until the Company obtains such consent, and provided,
further, that no termination, amendment or modification of the Plan shall in any
manner affect any Restricted Stock Agreement theretofore executed pursuant to
the Plan without the consent of the Awardee.
ARTICLE VIII
MISCELLANEOUS
Section 8.1 ADJUSTMENT PROVISIONS
(a) Subject to Section 8.1(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 and (ii) the number and kind of
shares or other securities subject to the outstanding Awards.
(b) Adjustments under Section 8.1(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.
Section 8.2 CONTINUATION OF BOARD SERVICE
Nothing in the Plan or in any instrument executed pursuant to the Plan
will confer upon any Eligible Director any right to continue to serve on the
Board.
Section 8.3 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 having 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
such requirements.
7
<PAGE> 8
Section 8.4 PRIVILEGES OF STOCK OWNERSHIP
No director 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 Award
except as to such shares of Stock, if any, that have been issued to such
director.
Section 8.5 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 Award. The Company may require the director to satisfy any
relevant tax requirements before authorizing any issuance of Stock to the
director. Such settlement may be made in cash or Stock.
Section 8.6 NONTRANSFERABILITY
An Award may be exercised during the life of the director solely by the
director or the director's duly appointed guardian or personal representative.
No 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.
Section 8.7 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 or directors of the
Company or any Subsidiary.
Section 8.8 PLAN BINDING ON SUCCESSORS
The Plan shall be binding upon the successors and assigns of the
Company.
Section 8.9 SINGULAR, PLURAL; GENDER
Whenever used herein, nouns in the singular shall include the plural,
and the masculine pronoun shall include the feminine gender.
Section 8.10 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.
8
<PAGE> 9
SCHEDULE A
TO
1997 FLUOR RESTRICTED STOCK PLAN FOR
NON-EMPLOYEE DIRECTORS
ACCRUED RETIREMENT BENEFITS
Eligible Director Accrued Benefit Obligation
C. A. Campbell, Jr. $ 20,118
P. J. Fluor 48,995
D. P. Gardner 104,503
T. L. Gossage 0
W. R. Grant 225,095
B. R. Inman 138,430
R. V. Lindsay 205,727
V. S. Martinez 22,042
M. R. Seger 85,713
9
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE
CONDENSED CONSOLIDATED BALANCE SHEET AT APRIL 30, 1997 AND THE CONDENSED
CONSOLIDATED STATEMENT OF OPERATIONS FOR THE SIX MONTHS ENDED APRIL 30, 1997
AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> OCT-31-1997
<PERIOD-END> APR-30-1997
<CASH> 233,996
<SECURITIES> 39,059
<RECEIVABLES> 835,618
<ALLOWANCES> 0
<INVENTORY> 94,685
<CURRENT-ASSETS> 1,914,153
<PP&E> 2,708,587
<DEPRECIATION> 903,610
<TOTAL-ASSETS> 4,235,697
<CURRENT-LIABILITIES> 1,676,455
<BONDS> 300,464
0
0
<COMMON> 52,446
<OTHER-SE> 1,579,438
<TOTAL-LIABILITY-AND-EQUITY> 4,235,697
<SALES> 0
<TOTAL-REVENUES> 6,619,894
<CGS> 6,586,956
<TOTAL-COSTS> 6,602,676
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 12,524
<INCOME-PRETAX> 17,218
<INCOME-TAX> 25,317
<INCOME-CONTINUING> (8,009)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (8,009)
<EPS-PRIMARY> (.10)
<EPS-DILUTED> (.10)
</TABLE>
<PAGE> 1
EXHIBIT 99.1
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
--------------------
FORM 8-K
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
Date of Report (Date of earliest event reported) May 6, 1997
------------------
FLUOR CORPORATION
- --------------------------------------------------------------------------------
(Exact Name of Registrant as Specified in Charter)
Delaware 1-7775 95-0740960
- -------------------------------------------------------------------------------
(State or Other Jurisdiction (Commission (IRS Employer
of Incorporation) File Number) Identification No.)
3353 Michelson Drive, Irvine, California 92698
- -------------------------------------------------------------------------------
(Address of Principal Executive Offices) (Zip Code)
Registrant's telephone number, including area code (714) 975-2000
------------------
N/A
- --------------------------------------------------------------------------------
(Former Name or Former Address, if Changed Since Last Report)
<PAGE> 2
ITEM 5. OTHER EVENTS.
Certain Factors and Trends Affecting Fluor and its Businesses--Forward-Looking
Statements.
From time to time, certain disclosures in reports and statements released
by Fluor Corporation (the "Company"), or statements made by its officers or
directors, will be forward-looking in nature, such as statements related to the
Company's opinions about trends and factors which may impact future operating
results. The Company is filing this Current Report on Form 8-K to avail itself
of the safe harbor provided in the Securities Act of 1933 and the Securities
Exchange Act of 1934 with respect to any such forward-looking statements that
may be contained in the Company's reports and other documents filed with the
Securities and Exchange Commission under Sections 13 or 15(d) of the Securities
Exchange Act of 1934 and written or oral forward-looking statements made by
the Company's officers and directors on behalf of the Company to the press,
potential investors, securities analysts and others.
Such forward-looking statements could involve, among other things,
statements regarding the Company's intent, belief or expectation with respect to
(i) the Company's results of operations and financial condition, (ii) the
Company's implementation of cost reductions, (iii) the consummation of
acquisition and financing transactions and the effect thereof on the Company's
business, and (iv) the Company's plans and objectives for future operations and
expansion or consolidation. Any such forward-looking statements would be
subject to the risks and uncertainties that could cause actual results of
operations, financial condition, cost reductions, acquisitions, financing
transactions, operations, expansion, consolidation and other events to differ
materially from those expressed or implied in such forward-looking statements.
Any such forward-looking statements would be subject to a number of assumptions
regarding, among other things, future economic, competitive and market
conditions generally. Such assumptions would be based on facts and conditions
as they exist at the time such statements are made as well as predictions as to
future facts and conditions, the accurate prediction of which may be difficult
and involve the assessment of events beyond the Company's control.
The Company wishes to caution readers that forward-looking statements,
including disclosures which use words such as the Company "believes,"
"anticipates," "expects," "estimates" and similar statements, are subject to
certain risks and uncertainties which could cause actual results of operations
to differ materially from expectations. Any such forward-looking statements
should be considered in context with the various disclosures made by the Company
about its businesses, including the risk factors discussed below. Important risk
factors which could cause actual results of operations to differ materially from
those expressed in any forward-looking statements include, but are not limited
to, the following:
Fixed, Maximum or Unit Priced Contracts. An increasing number of the
Company's contracts for the provision of engineering and construction services
are fixed, maximum or unit price contracts and fixed price incentive contracts.
Under fixed, maximum or unit price contracts, the Company agrees to perform the
contract for a fixed price and as a result, benefits from costs savings, but is
unable to recover for any cost overruns. Under fixed price incentive contracts,
the Company shares with the customer any savings up to a negotiated ceiling
price
2
<PAGE> 3
and carries some or all of the burden of costs exceeding the negotiated ceiling
price. Contract prices are established based in part on cost estimates which
are subject to a number of assumptions, such as assumptions regarding future
economic conditions. If in the future these estimates prove inaccurate, or
circumstances change, cost overruns can occur.
Contract Performance Risk. In certain instances, the Company guarantees
facility completion by a scheduled acceptance date or achievement of certain
acceptance and performance testing levels. Failure to meet any such schedule or
performance requirements could result in additional costs and the amount of such
additional costs could exceed project profit margins. Performance problems for
existing and future contracts, whether of the fixed-price or other type, could
cause actual results of operations to differ materially from those contained in
forward-looking statements.
Size and Uncertainty of Timing of Contracts. The Company's future award
prospects include several large-scale domestic and international projects. The
large size and uncertain timing of these projects can create variability in the
Company's award pattern. Consequently, future award trends are difficult to
predict with certainty. The Company's estimates of future performance depend
on, among other things, the likelihood of receiving certain new awards. While
these estimates are based on the good faith judgment of management, these
estimates frequently change based on new facts which become available. In
addition, the timing of receipt of revenue by the Company from engineering and
construction projects can be affected by a number of factors outside the control
of the Company. Frequently, the Company's services on a project take place
over an extended period of time, and are subject to unavoidable delays from
weather conditions, unavailability of equipment from vendors, changes in the
scope of service requested by clients or labor disruptions affecting client job
sites. Uncertainty of contract or award timing can also present difficulties in
matching workforce size with contract needs. In some cases, the Company must
maintain and bear the cost of a ready workforce larger than called for under
existing contracts in anticipation of future workforce needs under expected
awards, which can be delayed or not received.
Government Contracts. Several of the Company's significant contracts are
Government contracts. Generally, Government contracts are subject to oversight
audits by Government representatives, to profit and cost controls and
limitations, and to provisions permitting termination, in whole or in part,
without prior notice at the Government's convenience upon payment of
compensation only for work done and commitments made at the time of termination.
In the event of termination, the Company generally will receive some allowance
for profit on the work performed. In some cases, Government contracts are
subject to the uncertainties surrounding Congressional appropriations or agency
funding. Government business is subject to specific procurement regulations and
a variety of socio-economic and other requirements. Failure to comply with such
regulations and requirements could lead to suspension or debarment, for cause,
from Government contracting or subcontracting for a period of time. Among the
causes for debarment are violations of various statutes, including those related
to employment practices, the protection of the environment, the accuracy of
records and the recording of costs.
Backlog. The dollar amount of the Company's backlog as stated at any given
time is not necessarily indicative of the future earnings of the Company related
to the performance of such
3
<PAGE> 4
work. Cancellations or scope adjustments related to contracts reflected in the
Company's backlog can occur.
Environmental, Safety and Health. It is impossible to predict the full
impact of future legislative or regulatory developments relating to
environmental protection and coal mine and preparation plant safety and health
on the Company's coal operations, because the standards to be met, as well as
the technology and length of time available to meet those standards, continue to
develop and change.
Fluctuation in the Production of Coal. The Company's coal production and
sales are subject to a variety of operational, geological, transportation and
weather-related factors that routinely cause production to fluctuate. For
example, sales may be adversely affected by fluctuations in production and by
transportation delays arising from equipment unavailability and weather-related
events, such as flooding. Labor disruptions also may occur at times or in a
manner that causes current and projected results of operations to deviate from
projections and expectations. Decreases in production from anticipated levels
usually lead to increased mining costs and decreases in results of operations.
Effects of Global Economic and Political Conditions. The Company's
businesses are subject to fluctuations in demand and to changing economic and
political conditions which are beyond the control of the Company and may cause
actual results to differ from forward-looking statements. Coal operations
produce a commodity which is internationally traded and the price of which is
established by market factors outside the control of the Company. Although the
Company has taken actions to reduce its dependence on external economic
conditions, management is unable to predict with certainty the amount and mix of
future business. Revenues and earnings from international operations are
subject to domestic and foreign government policies and regulations, embargoes
and international hostilities.
Competition. The markets served by the engineering and construction
businesses of the Company are highly competitive and for the most part require
substantial resources and particularly highly skilled and experienced technical
personnel. The markets served by the coal business of the Company are also
highly competitive and require substantial capital investment as well as the
ability to produce coal of consistent quality and meet demanding customer
specifications. A large number of well financed, multi-national companies are
competing in the markets served by the Company's businesses. Intense
competition in the engineering and construction business is expected to
continue, presenting the Company with significant challenges in its ability to
maintain strong growth rates while maintaining acceptable profit margins.
4
<PAGE> 5
Cost Reduction Program. In March of 1997, the Company announced a cost
reduction program for its Fluor Daniel operations. The Company's estimates of
the future cost savings from the cost reduction program are forward-looking
statements. The Company may from time to time provide similar estimates with
respect to this or other cost reduction efforts. The actual cost savings may
differ materially from estimates based on a number of factors affecting the
Company's business, including the ability to achieve estimated staff reductions
while maintaining workflow in the functional areas affected and to sublease
vacated facilities within anticipated time frames at anticipated sublease rent
levels.
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 hereunto duly authorized.
Date: May 6, 1997 FLUOR CORPORATION
By: /s/ J. MICHAL CONAWAY
---------------------------------
J. Michal Conaway,
Senior Vice President and
Chief Financial Officer
5
