<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 January 31, 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
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(Exact name of registrant as specified in its charter)
<TABLE>
<S> <C>
Delaware 95-0740960
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(State or other jurisdiction of (I.R.S. Employer I.D. No.)
incorporation or organization
</TABLE>
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 February 28, 1997 there were 84,131,278 shares of common stock
outstanding.
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FLUOR CORPORATION
FORM 10-Q
JANUARY 31, 1997
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<CAPTION>
TABLE OF CONTENTS PAGE
<S> <C>
Part I: Financial Information
Condensed Consolidated Statement of Earnings for the Three Months
Ended January 31, 1997 and 1996..................................................... 2
Condensed Consolidated Balance Sheet at January 31, 1997 and October 31,
1996................................................................. 3
Condensed Consolidated Statement of Cash Flows for the Three
Months Ended January 31, 1997 and 1996.............................................. 5
Notes to Condensed Consolidated Financial Statements................................ 6
Management's Discussion and Analysis of Financial Condition and Results of
Operations.......................................................................... 7
Changes in Backlog.................................................................. 10
Part II: Other Information.............................................................. 11
Signatures................................................................................. 12
.
</TABLE>
<PAGE> 3
PART I: FINANCIAL INFORMATION
FLUOR CORPORATION
CONDENSED CONSOLIDATED STATEMENT OF EARNINGS
Three Months Ended January 31, 1997 and 1996
UNAUDITED
<TABLE>
<CAPTION>
In thousands, except per share amounts 1997 1996
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<S> <C> <C>
REVENUES $3,434,061 $2,402,414
COSTS AND EXPENSES
Cost of revenues 3,327,287 2,303,342
Corporate administrative and general expenses 10,870 13,263
Interest expense 5,542 3,441
Interest income (5,263) (7,395)
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Total Costs and Expenses 3,338,436 2,312,651
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EARNINGS BEFORE INCOME TAXES 95,625 89,763
INCOME TAX EXPENSE 33,590 32,315
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NET EARNINGS $ 62,035 $ 57,448
========== ==========
NET EARNINGS PER SHARE $ .73 $ .68
========== ==========
DIVIDENDS PER COMMON SHARE $ .19 $ .17
========== ==========
SHARES USED TO CALCULATE EARNINGS PER SHARE 84,866 84,407
========== ==========
</TABLE>
See Accompanying Notes.
2
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FLUOR CORPORATION
CONDENSED CONSOLIDATED BALANCE SHEET
January 31, 1997 and October 31, 1996
UNAUDITED
<TABLE>
<CAPTION>
January 31, October 31,
$ in thousands 1997 1996*
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<S> <C> <C>
ASSETS
Current Assets
Cash and cash equivalents $ 124,574 $ 246,964
Marketable securities 44,121 69,378
Accounts and notes receivable 767,861 742,547
Contract work in progress 578,027 561,490
Deferred taxes 44,456 50,157
Inventory and other current assets 151,310 126,287
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Total current assets 1,710,349 1,796,823
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Property, Plant and Equipment (net of accumulated depreciation,
depletion and amortization of $862,902
and $821,212, respectively) 1,755,170 1,677,662
Investments and goodwill, net 217,362 192,879
Other 322,394 284,362
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$4,005,275 $3,951,726
========== ==========
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(Continued On Next Page)
* Amounts at October 31, 1996 have been derived from audited financial
statements.
3
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FLUOR CORPORATION
CONDENSED CONSOLIDATED BALANCE SHEET
January 31, 1997 and October 31, 1996
UNAUDITED
<TABLE>
<CAPTION>
January 31, October 31,
$ in thousands 1997 1996*
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<S> <C> <C>
LIABILITIES AND SHAREHOLDERS' EQUITY
Current Liabilities
Accounts and notes payable $ 648,442 $ 704,186
Commercial paper 159,526 29,916
Advance billings on contracts 434,617 445,807
Accrued salaries, wages and benefit plans 249,951 290,426
Other accrued liabilities 156,552 175,026
Current portion of long-term debt 2,739 207
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Total current liabilities 1,651,827 1,645,568
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Long-term debt due after one year 365 2,967
Deferred taxes 54,781 42,632
Other noncurrent liabilities 574,093 590,833
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 -
84,029,206 shares and 83,791,197
shares, respectively 52,518 52,369
Additional capital 582,478 573,037
Retained earnings 1,123,653 1,077,559
Unamortized executive stock plan expense (31,973) (32,538)
Cumulative translation adjustments (2,467) (701)
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Total shareholders' equity 1,724,209 1,669,726
---------- ----------
$4,005,275 $3,951,726
========== ==========
</TABLE>
See Accompanying Notes.
*Amounts at October 31, 1996 have been derived from audited financial
statements.
4
<PAGE> 6
FLUOR CORPORATION
CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS
Three Months Ended January 31, 1997 and 1996
UNAUDITED
<TABLE>
<CAPTION>
$ in thousands 1997 1996
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<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES
Net earnings $ 62,035 $ 57,448
Adjustments to reconcile net earnings to cash (utilized by)
provided by operating activities:
Depreciation, depletion and amortization 56,987 42,412
Deferred taxes 18,394 9,818
Change in operating assets and liabilities (185,221) (57,957)
Other, net (18,931) (11,108)
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Cash (utilized by) provided by operating activities (66,736) 40,613
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CASH FLOWS FROM INVESTING ACTIVITIES
Capital expenditures (138,119) (107,910)
E & C businesses acquired (30,603) -
Proceeds from sales/maturities of marketable securities 25,257 21,521
Purchase of marketable securities - (33,636)
Proceeds from sale of property, plant and equipment 7,074 5,956
Investments, net (9,469) (27,168)
Trust fund contribution (22,593) -
Other, net (6,853) (6,579)
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Cash utilized by investing activities (175,306) (147,816)
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CASH FLOWS FROM FINANCING ACTIVITIES
Increase in short-term borrowings 128,544 11,970
Payments on long-term debt - (320)
Cash dividends paid (15,941) (14,176)
Stock options exercised 8,615 11,021
Other, net (1,566) (254)
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Cash provided by financing activities 119,652 8,241
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Decrease in cash and cash equivalents (122,390) (98,962)
Cash and cash equivalents at beginning of period 246,964 292,934
--------- ---------
Cash and cash equivalents at end of period $ 124,574 $ 193,972
========= =========
</TABLE>
See Accompanying Notes.
5
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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, 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 months ended
January 31, 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 January 31, 1997 and its
consolidated results of operations and cash flows for the three months
ended January 31, 1997 and 1996. 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>
January 31, October 31,
$ in thousands 1997 1996
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<S> <C> <C>
Coal $ 36,866 $ 28,809
Supplies and other 49,424 45,118
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$ 86,290 $ 73,927
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(4) Cash paid for interest was $4.6 million and $1.2 million for the three
month periods ended January 31, 1997 and 1996, respectively. Income
tax payments, net of refunds, were $19 million and $4 million during
the three month periods ended January 31, 1997 and 1996, respectively.
6
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FLUOR CORPORATION
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
The following discussion and analysis is provided to increase understanding of,
and should be read in conjunction with, the condensed consolidated financial
statements and accompanying notes and the company's October 31, 1996 annual
report on Form 10-K.
RESULTS OF OPERATIONS
Revenues for the three month period ended January 31, 1997 were $3.4 billion
compared with $2.4 billion for the same period of 1996. Net earnings for the
three month period ended January 31, 1997 were $62.0 million compared with
$57.4 million for the same period of 1996. The increase in net earnings is
primarily due to higher earnings from the Coal segment and lower corporate
administrative and general expenses, offset by lower net interest.
ENGINEERING AND CONSTRUCTION
Revenues for the Engineering and Construction segment increased 45 percent for
the three month period ended January 31, 1997 compared with the same period of
1996, due primarily to an increase in the volume of work performed. Despite the
growth in revenues, operating profit for the three months ended January 31, 1997
increased only slightly compared with the same period of 1996. First quarter
1997 results were impacted by two items. As part of its normal review process,
the company determined that certain of its actuarially determined insurance
accruals substantially exceeded anticipated liabilities. Accordingly, a credit
was recorded to adjust these accruals to appropriate levels. A majority of the
insurance related credit was offset by provisions on two fixed price power
projects identified as part of the company's recurring evaluation of projects in
progress. Evaluation of cost implications and recoupment opportunities will
continue in the second quarter, however, the company determined it was
appropriate to record provisions at this time. Margins, which may fluctuate
from time to time as a result of changes in both the timing and mix of
engineering and construction projects, declined in the first quarter of 1997
compared with the same period of 1996. Lower margins reflect the impact of the
stage of completion and mix of projects in progress, competitive market
conditions and slower than anticipated earnings growth on recent investments.
New awards for the three months ended January 31, 1997 were $3.6 billion
compared with $3.0 billion for the three months ended January 31, 1996.
Approximately 45 percent of first quarter 1997 new awards were for projects
located outside the United States. The uncertain timing and, in some cases,
large size of new awards can create variability in the company's award pattern,
consequently, future award trends are difficult to predict with certainty. There
were no significant large project awards in the first quarter of 1997.
7
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The following table sets forth backlog for each of the company's Engineering
and Construction business groups:
<TABLE>
<CAPTION>
January 31, October 31, January 31,
$ in millions 1997 1996 1996
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<S> <C> <C> <C>
Process $ 5,236 $ 4,903 $ 7,316
Industrial 6,374 6,496 4,061
Power/Government 3,430 3,621 3,157
Diversified Services 937 737 574
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Total backlog $15,977 $15,757 $15,108
======= ======= =======
U.S. $ 7,486 $ 7,326 $ 6,642
Outside U.S. 8,491 8,431 8,466
------- ------- -------
Total backlog $15,977 $15,757 $15,108
======= ======= =======
</TABLE>
The composition of backlog by business group has remained relatively unchanged
since year end. Although backlog reflects business which is considered to be
firm, cancellations or scope adjustments do occur. Backlog has been adjusted to
reflect project cancellations, deferrals, and revised project scope and cost,
both upwards and downwards.
COAL
Revenues increased 18 percent for the three month period ended January 31, 1997
compared with the same period in 1996. The increase was due primarily to
increased sales of both metallurgical and steam coal, offset slightly 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 months ended January 31,
1997 compared with the same period in 1996 due primarily to the increased sales
volume of both metallurgical and steam coal and lower costs of metallurgical
coal.
OTHER
Net interest for the three months ended January 31, 1997 decreased compared
with the same period of 1996 due primarily to lower interest earning assets in
addition to higher short-term interest bearing liabilities.
8
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In October 1995, the Financial Accounting Standards Board issued Statement of
Financial Accounting Standards No. 123, "Accounting for Stock-Based
Compensation" (SFAS No. 123). Adoption of the new accounting standards
prescribed by SFAS No. 123 is optional. The company will adopt the "disclosure
only" alternative under SFAS No. 123 and continue accounting for its plans
under previous accounting standards.
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 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. In 1996, operating working capital was favorably
impacted by the receipt of a large customer advance.
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. 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 on March 1, 2007 were issued under this filing. The
company anticipates using the proceeds for general corporate purposes, which may
include working capital, capital expenditures, the reduction of commercial
paper balances, a previously announced share repurchase program and possible
acquisitions.
In December 1996, TRS Staffing Solutions, the company's provider of temporary
staffing personnel, acquired the ConSol group, which specializes in staffing
personnel in the fields of information technology and allied health.
For the three months ended January 31, 1997, capital expenditures were $138.1
million, including $88 million related to Massey Coal. Dividends paid in the
three months ended January 31, 1997 were $15.9 million ($.19 per share) compared
with $14.2 million ($.17 per share) for the same period of 1996.
9
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FLUOR CORPORATION
CHANGES IN BACKLOG
Three Months Ended January 31, 1997 and 1996
UNAUDITED
<TABLE>
<CAPTION>
$ in millions 1997 1996
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<S> <C> <C>
Backlog - beginning of period $15,757.4 $14,724.9
New awards 3,590.6 2,988.5
Adjustments and cancellations, net (243.2) (434.6)
Work performed (3,128.3) (2,170.6)
--------- ---------
Backlog - end of period $15,976.5 $15,108.2
========= =========
</TABLE>
10
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PART II : OTHER INFORMATION
Item 6. Exhibits and Reports on Form 8-K.
(a) Exhibits.
None.
(b) Reports on Form 8-K.
None.
11
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
FLUOR CORPORATION
----------------------------------------
(Registrant)
Date: March 17, 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
12
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE
CONDENSED CONSOLIDATED BALANCE SHEET AT JANUARY 31, 1997 AND THE CONDENSED
CONSOLIDATED STATEMENT OF EARNINGS FOR THE THREE MONTHS ENDED JANUARY 31, 1997
AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> OCT-31-1997
<PERIOD-END> JAN-31-1997
<CASH> 124,574
<SECURITIES> 44,121
<RECEIVABLES> 767,861
<ALLOWANCES> 0
<INVENTORY> 86,290
<CURRENT-ASSETS> 1,710,349
<PP&E> 2,618,072
<DEPRECIATION> 862,902
<TOTAL-ASSETS> 4,005,275
<CURRENT-LIABILITIES> 1,651,827
<BONDS> 365
0
0
<COMMON> 52,518
<OTHER-SE> 1,671,691
<TOTAL-LIABILITY-AND-EQUITY> 4,005,275
<SALES> 0
<TOTAL-REVENUES> 3,434,061
<CGS> 0
<TOTAL-COSTS> 3,327,287
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 5,542
<INCOME-PRETAX> 95,625
<INCOME-TAX> 33,590
<INCOME-CONTINUING> 62,035
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 62,035
<EPS-PRIMARY> .73
<EPS-DILUTED> .73
</TABLE>
