<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, 1998
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)
(949) 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, 1998 there were 77,796,756 shares of common stock outstanding.
<PAGE> 2
FLUOR CORPORATION
FORM 10-Q
APRIL 30, 1998
<TABLE>
<CAPTION>
TABLE OF CONTENTS PAGE
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<S> <C>
PART I: FINANCIAL INFORMATION
Condensed Consolidated Statement of Operations for the Three Months
Ended April 30, 1998 and 1997........................................... 2
Condensed Consolidated Statement of Operations for the Six Months
Ended April 30, 1998 and 1997........................................... 3
Condensed Consolidated Balance Sheet at April 30, 1998 and
October 31, 1997......................................................... 4
Condensed Consolidated Statement of Cash Flows for the Six
Months Ended April 30, 1998 and 1997.................................... 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>
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PART I: FINANCIAL INFORMATION
FLUOR CORPORATION
CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS
Three Months Ended April 30, 1998 and 1997
UNAUDITED
<TABLE>
<CAPTION>
In thousands, except per share amounts 1998 1997
- -----------------------------------------------------------------------------------------
<S> <C> <C>
REVENUES $ 3,282,079 $ 3,185,833
COSTS AND EXPENSES
Cost of revenues 3,184,891 3,259,669
Corporate administrative and general expense 10,115 3,197
Interest expense 9,327 6,982
Interest income (5,904) (5,608)
----------- -----------
Total Costs and Expenses 3,198,429 3,264,240
----------- -----------
EARNINGS (LOSS) BEFORE INCOME TAXES 83,650 (78,407)
INCOME TAX EXPENSE (BENEFIT) 29,361 (8,273)
----------- -----------
NET EARNINGS (LOSS) $ 54,289 $ (70,134)
=========== ===========
EARNINGS (LOSS) PER SHARE
BASIC $ .67 $ (.84)
=========== ===========
DILUTED $ .67 $ (.84)
=========== ===========
DIVIDENDS PER COMMON SHARE $ .20 $ .19
=========== ===========
SHARES USED TO CALCULATE
BASIC EARNINGS (LOSS) PER SHARE 80,506 83,197
=========== ===========
DILUTED EARNINGS (LOSS) PER SHARE 80,865 83,197
=========== ===========
</TABLE>
See Accompanying Notes.
2
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FLUOR CORPORATION
CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS
Six Months Ended April 30, 1998 and 1997
UNAUDITED
<TABLE>
<CAPTION>
In thousands, except per share amounts 1998 1997
- -----------------------------------------------------------------------------------------
<S> <C> <C>
REVENUES $ 6,681,098 $ 6,619,894
COSTS AND EXPENSES
Cost of revenues 6,494,170 6,586,956
Corporate administrative and general expense 10,563 14,067
Interest expense 18,749 12,524
Interest income (10,492) (10,871)
----------- -----------
Total Costs and Expenses 6,512,990 6,602,676
----------- -----------
EARNINGS BEFORE INCOME TAXES 168,108 17,218
INCOME TAX EXPENSE 59,006 25,317
----------- -----------
NET EARNINGS (LOSS) $ 109,102 $ (8,099)
=========== ===========
EARNINGS (LOSS) PER SHARE
BASIC $ 1.33 $ (.10)
=========== ===========
DILUTED $ 1.33 $ (.10)
=========== ===========
DIVIDENDS PER COMMON SHARE $ .40 $ .38
=========== ===========
SHARES USED TO CALCULATE
BASIC EARNINGS (LOSS) PER SHARE 81,541 83,126
=========== ===========
DILUTED EARNINGS (LOSS) PER SHARE 81,751 83,126
=========== ===========
</TABLE>
See Accompanying Notes.
3
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FLUOR CORPORATION
CONDENSED CONSOLIDATED BALANCE SHEET
April 30, 1998 and October 31, 1997
UNAUDITED
<TABLE>
<CAPTION>
April 30, October 31,
In thousands 1998 1997*
- -------------------------------------------------------------------------------------
<S> <C> <C>
ASSETS
Current Assets
Cash and cash equivalents $ 319,491 $ 299,324
Marketable securities -- 10,089
Accounts and notes receivable 956,139 930,104
Contract work in progress 564,819 691,395
Deferred taxes 90,297 58,039
Inventory and other current assets 252,041 236,935
---------- ----------
Total current assets 2,182,787 2,225,886
---------- ----------
Property, Plant and Equipment (net of accumulated
depreciation, depletion and amortization of
$1,088,916 and $1,001,315, respectively) 1,985,196 1,938,790
Investments and goodwill, net 280,241 254,948
Other 310,126 278,216
---------- ----------
$4,758,350 $4,697,840
========== ==========
</TABLE>
(continued on next page)
* Amounts at October 31, 1997 have been derived from audited financial
statements.
4
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FLUOR CORPORATION
CONDENSED CONSOLIDATED BALANCE SHEET
April 30, 1998 and October 31, 1997
UNAUDITED
<TABLE>
<CAPTION>
April 30, October 31,
$ in thousands 1998 1997*
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<S> <C> <C>
LIABILITIES AND SHAREHOLDERS' EQUITY
Current Liabilities
Accounts and notes payable $ 908,636 $ 858,187
Commercial paper and loan notes 149,763 81,886
Advance billings on contracts 537,561 525,518
Accrued salaries, wages and benefit plans 330,784 303,490
Other accrued liabilities 248,078 221,487
Current portion of long-term debt 181 116
----------- -----------
Total current liabilities 2,175,003 1,990,684
----------- -----------
Long term debt due after one year 300,565 300,508
Deferred taxes 74,712 66,739
Other noncurrent liabilities 612,804 598,859
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 $.625 par value; issued and
outstanding - 78,955,954 shares and
83,748,111 shares, respectively 49,347 52,343
Additional capital 351,277 569,356
Retained earnings 1,236,214 1,159,996
Unamortized executive stock plan expense (26,949) (33,441)
Cumulative translation adjustments (14,623) (7,204)
----------- -----------
Total shareholders' equity 1,595,266 1,741,050
----------- -----------
$ 4,758,350 $ 4,697,840
=========== ===========
</TABLE>
See Accompanying Notes.
* Amounts at October 31, 1997 have been derived from audited financial
statements.
5
<PAGE> 7
FLUOR CORPORATION
CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS
Six Months Ended April 30, 1998 and 1997
UNAUDITED
<TABLE>
<CAPTION>
$ in thousands 1998 1997
- --------------------------------------------------------------------------------------------------
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES
Net earnings (loss) $ 109,102 $ (8,099)
Adjustments to reconcile net earnings to cash
provided by operating activities:
Depreciation, depletion and amortization 139,179 117,643
Deferred taxes (19,044) 17,117
Provisions for impairment/abandonment of joint
ventures and investments -- 16,667
Change in operating assets and liabilities,
excluding effects of businesses acquired 199,330 (63,206)
Other, net (31,158) (32,546)
--------- ---------
Cash provided by operating activities 397,409 47,576
--------- ---------
CASH FLOWS FROM INVESTING ACTIVITIES
Capital expenditures (241,025) (257,656)
E & C businesses acquired -- (32,989)
Proceeds from sales/maturities of marketable securities 10,089 30,319
Proceeds from sale of property, plant and equipment 53,884 15,598
Investments, net (3,779) (7,903)
Contribution to deferred compensation trust -- (22,593)
Other, net (8,890) 7,578
--------- ---------
Cash utilized by investing activities (189,721) (267,646)
--------- ---------
CASH FLOWS FROM FINANCING ACTIVITIES
Proceeds from issuance of long-term debt -- 300,098
Increase (decrease) in short-term borrowings 67,030 (61,591)
Cash dividends paid (32,884) (31,895)
Stock options exercised 8,744 14,628
Purchases of common stock (227,941) (15,433)
Other, net (2,470) 1,295
--------- ---------
Cash (utilized by) provided by financing activities (187,521) 207,102
--------- ---------
Increase (decrease) in cash and cash equivalents 20,167 (12,968)
Cash and cash equivalents at beginning of period 299,324 246,964
--------- ---------
Cash and cash equivalents at end of period $ 319,491 $ 233,996
========= =========
</TABLE>
See Accompanying Notes.
6
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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, 1997 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, 1998 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, 1998
and its consolidated results of operations and cash flows for the three
and six months ended April 30, 1998 and 1997. 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 1997 amounts have been reclassified to conform with the 1998
presentation.
(2) Inventories comprise the following:
<TABLE>
<CAPTION>
April 30, October 31,
$ in thousands 1998 1997
-----------------------------------------------------------------------
<S> <C> <C>
Coal $ 41,811 $ 54,419
Equipment for sale/rental 93,627 74,574
Supplies and other 46,433 46,455
-------- --------
$181,871 $175,448
======== ========
</TABLE>
7
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FLUOR CORPORATION
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(CONTINUED)
UNAUDITED
(3) Effective November 1, 1997, the Company adopted Statement of
Financial Accounting Standards No. 128, "Earnings Per Share" which
specifies the method of computation, presentation and disclosure
for earnings per share ("EPS"). The new standard requires
presentation of two EPS amounts, basic and diluted. Basic EPS is
calculated by dividing net earnings by the weighted average number
of common shares outstanding for the period. Diluted EPS is
calculated by dividing net earnings by the weighted average number
of common shares and common share equivalents outstanding for the
period. Currently, the Company's common share equivalents consist
solely of stock options. EPS amounts for prior periods have been
adjusted to conform with the provisions of the new standard.
(4) Cash paid for interest was $19.4 million and $2.8 million for the
six month periods ended April 30, 1998 and 1997, respectively.
Income tax payments, net of receipts, were $33.5 million and $54.3
million during the six month periods ended April 30, 1998 and 1997,
respectively.
(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 provided for
personnel and facility related costs. See MD&A for further
discussion.
8
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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, 1997 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 statements concerning operating margins for the
third and fourth quarters of fiscal year 1998 and collectibility of a receivable
on a project in Indonesia, 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, but are not limited
to, cost overruns on fixed, maximum or unit-priced contracts, contract
performance risk, the uncertain timing of awards and revenues under contracts,
project financing risk, credit risk, risks associated with government funding,
permitting and approval of contracts, market conditions impacting realization of
investments, market conditions in the domestic and international coal market,
relatively mild weather conditions which may lower demand for steam coal 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 slightly for the three and six month periods ended April 30,
1998 compared with the same periods of 1997. For the three and six month periods
ended April 30, 1998, the Company reported net earnings of $54.3 million and
$109.1 million, respectively, compared with net losses of $70.1 million and $8.1
million, respectively, for the comparable periods in 1997. Results for the three
and six month periods in 1997 were adversely impacted by operating losses
reported by the Company's Engineering and Construction segment of $110.3 million
and $36.3 million, respectively.
9
<PAGE> 11
ENGINEERING AND CONSTRUCTION
The Engineering and Construction segment revenues and operating profit for the
three and six month periods ended April 30, 1998 and 1997 are as follows:
<TABLE>
<CAPTION>
Three months ended Six months ended
April 30, April 30,
-------------------------- ---------------------------
1998 1997 1998 1997
-------------------------- ---------------------------
<S> <C> <C> <C> <C>
($ in thousands)
Revenues $3,014,378 $2,917,306 $6,120,853 $6,101,627
Operating profit $ 57,867 $ (110,278) $ 111,254 $ (36,307)
</TABLE>
The operating margin for the three month period ended April 30, 1998 improved
over that reported for the three month period ended January 31, 1998, reflecting
increased market selectivity, improved project execution and continued cost
management. Although the Company anticipates that operating margins for the
third and fourth quarters of 1998 will remain at second quarter levels or up
slightly, they are anticipated to be below those reported for the comparable
periods in 1997. The margins reflect a lower content of work performed on
larger, more complex projects which generally carry higher margins. As discussed
below, results for the three and six month periods ended April 30, 1997 were
significantly affected by several items.
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 pertained to cost overruns on one fixed price project for
the construction of a power plant located outside the United States. During the
second quarter of 1997, the Company experienced additional difficulties 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, in the second quarter the Company recorded a
provision to recognize the estimated total amount of the loss under the
contract. No additional provision related to this project has been recorded
subsequent to the second quarter of 1997. Also included in the second quarter
provisions were certain other projects identified to be loss contracts. None of
these provisions individually exceeded $5 million. No material additional
provisions related to these projects have been recorded subsequent to the second
quarter of 1997.
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 was not expected to be realized due to poor market
conditions or cancellation of the project concerned.
Results for the three months ended April 30, 1997 also included a charge of
$19.9 million related to implementation of certain cost reduction initiatives.
These charges consisted of personnel-
10
<PAGE> 12
related costs and lease costs for excess facilities. As of April 30, 1998, the
majority of these costs have been incurred.
Results for the six months ended April 30, 1997 include first quarter
contract-related provisions totaling $21.0 million for cost overruns on two
fixed price power projects, including the power project located outside the
United States. 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, was due primarily to start-up
problems, craft employee turnover and operation of the plant control system. The
Company also recognized in the first quarter a credit totaling $25.0 million
related 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.
New awards for the three and six months ended April 30, 1998 were $2.8 billion
and $5.4 billion, respectively, compared with $3.2 billion and $6.8 billion for
the same periods of 1997. Approximately one-half of the new awards for both the
three and six months ended April 30, 1998 were for projects located outside of
the United States. New awards in the second quarter of 1998 consisted of several
mid-sized projects primarily in the Industrial Group, none of which individually
exceeded $350 million in value. The uncertain timing of prospects for new
awards, some of which are large, can create variability in the Company's awards
pattern. Consequently, future award trends are difficult to predict with
certainty.
The following table sets forth backlog for each of the Company's Engineering and
Construction business groups:
<TABLE>
<CAPTION>
April 30, October 31, April 30,
$ in millions 1998 1997 1997
- ---------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Process $ 6,129 $ 6,384 $ 6,812
Industrial 5,174 5,178 5,706
Power/Government 1,757 2,092 2,949
Diversified Services 854 716 670
-------- -------- --------
Total backlog $ 13,914 $ 14,370 $ 16,137
======== ======== ========
U.S. $ 5,892 $ 5,665 $ 6,400
Outside U.S. 8,022 8,705 9,737
-------- -------- --------
Total backlog $ 13,914 $ 14,370 $ 16,137
======== ======== ========
</TABLE>
The composition of backlog by business group has remained relatively unchanged
since year end. Total backlog has decreased as work performed on existing
projects exceeded new awards, reflecting the Company's increased market
selectivity, the timing of release of work by clients, and
11
<PAGE> 13
global market conditions. Although backlog reflects business which is considered
to be firm, cancellations or scope adjustments may occur. Backlog is adjusted to
reflect any known project cancellations, deferrals, and revised project scope
and cost, both upward and downward.
At April 30, 1998, approximately 22 percent of the Company's backlog is in the
Asia Pacific region, including $1.1 billion in Australia. Due to the nature of
the projects the Company pursues and those included in backlog, the Company has
not experienced any significant disruption in ongoing project execution related
to the turmoil in the Asian financial markets. The recent turmoil in Indonesia
caused a temporary disruption in work progress at several project sites. These
projects are now essentially back to normal operations. Payments owed the
Company related to one project have been temporarily delayed. However, the
Company believes that all amounts due will ultimately be collected.
COAL
Coal segment revenues and operating profit for the three and six month periods
ended April 30, 1998 and 1997 are as follows:
<TABLE>
<CAPTION>
Three months ended Six months ended
April 30, April 30,
------------------------------- -------------------------------
1998 1997 1998 1997
--------------- --------------- --------------- ---------------
<S> <C> <C> <C> <C>
($ in thousands)
Revenues $267,701 $268,257 $560,245 $518,267
Operating profit $ 40,298 $ 36,575 $ 76,989 $ 69,144
</TABLE>
Although revenues were unchanged in comparing the second quarter 1998 versus the
second quarter 1997, a decrease in steam coal sales of $17 million was largely
offset by an increase in metallurgical coal sales. The increase in revenues for
the six month period ended April 30, 1998 as compared to the same period in 1997
reflects an increase in metallurgical coal sales of nearly $53 million offset by
reduced steam coal sales of $12 million. The increase in metallurgical coal
sales is due primarily to increased volume resulting from higher demand by steel
producers. Steam coal market prices continue to decline as overall demand is
down due to recent mild weather conditions which has also resulted in lower
steam coal sales volume. Gross profit and operating profit increased for the
three and six months ended April 30, 1998 compared with the same periods in 1997
due primarily to reduced production costs and an increased proportion of higher
margin metallurgical coal sales, offset somewhat by lower steam coal sales
volume and prices.
12
<PAGE> 14
OTHER
Interest expense for the three and six months ended April 30, 1998 increased
compared with the same periods of 1997 due primarily to $300 million in new
long-term debt issued in March 1997.
Corporate administrative and general expense during the three months ended April
30, 1998 was higher compared with the same period in 1997 due primarily to the
vesting of certain stock-based compensation awards. Corporate administrative and
general expense for the six month period ended April 30, 1998 was lower than the
comparable period in 1997 due primarily to a first quarter 1998 credit of
approximately $10 million related to a long-term incentive compensation plan,
partially offset by the increase in stock-based compensation expense noted
above. The Company accrues for certain long-term incentive awards whose ultimate
cost is dependent on attainment of various performance targets set by the
Organization and Compensation Committee (the "Committee") of the Board of
Directors. Under the long-term incentive compensation plan referred to above,
the performance targets expired, without amendment or extension by the
Committee, on December 31, 1997.
FINANCIAL POSITION AND LIQUIDITY
At April 30, 1998, the Company had cash and cash equivalents of $319.5 million
and a long-term debt to total capital ratio of 15.9 percent. At April 30, 1997,
the Company had cash and cash equivalents (including marketable securities) of
$273.1 million and a long-term debt to total capital ratio of 15.5 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. The Company recently expanded both its
revolving credit facility and its commercial paper program from $250 million to
$400 million.
Operating activities generated $397.4 million in cash during the six month
period ended April 30, 1998, compared with $47.6 million during the same period
in 1997. The increase in cash generated from operating activities is due
primarily to increased cash flow from projects which is affected from period to
period by the mix, stage of completion, and commercial terms of engineering and
construction projects. Cash was also positively impacted by the receipt of a $30
million tax refund on January 30, 1998.
On March 9, 1998, the Company announced that it intends to pursue options to
either divest or restructure its equipment sales and rental unit, American
Equipment Company. If market conditions warrant, the Company intends to use the
after-tax proceeds from any such transaction to fund its ongoing share
repurchase program. During the first six months of 1998, the Company purchased
4,995,400 shares of its common stock for a total of $228 million. Most of these
shares were purchased in anticipation of the receipt of proceeds from a sale.
Funding for the repurchases has come from strong operating cash flow and
short-term borrowings during the first six months of 1998.
13
<PAGE> 15
For the six months ended April 30, 1998, capital expenditures were $241 million,
including $108 million related to Massey Coal. Dividends paid in the six months
ended April 30, 1998 were $32.9 million ($.40 per share) compared with $31.9
million ($.38 per share) for the same period of 1997.
FINANCIAL INSTRUMENTS
The Company's utilization of derivative financial instruments is substantially
limited to the use of forward exchange contracts to hedge currency transactions
entered into in the ordinary course of business and not to engage in currency
speculation. At April 30, 1998 and October 31, 1997, the Company had forward
currency exchange contracts of less than eighteen months duration, to exchange
principally Japanese yen, Canadian dollars, Australian dollars, French francs,
Belgian francs and Dutch guilders for U.S. dollars. In addition, the Company has
a forward currency contract to exchange U.S. dollars for British pounds sterling
to hedge annual lease commitments which expire in 1999. The total gross notional
amount of these contracts at April 30, 1998 and October 31, 1997 was $175
million and $78 million, respectively. Forward contracts to purchase foreign
currency represented $164 million and $74 million and forward contracts to sell
foreign currency represented $11 million and $4 million, at April 30, 1998 and
October 31, 1997, respectively.
NEW ACCOUNTING PRONOUNCEMENTS
In June 1997, the Financial Accounting Standards Board issued Statement of
Financial Accounting Standards No. 131, "Disclosures about Segments of an
Enterprise and Related Information" (SFAS No. 131). SFAS No. 131 establishes new
standards for reporting information about operating segments in interim and
annual financial statements. This statement is effective for the Company's
fiscal year 1999.
14
<PAGE> 16
FLUOR CORPORATION
CHANGES IN BACKLOG
Three and Six Months Ended April 30, 1998 and 1997
UNAUDITED
<TABLE>
<CAPTION>
For the Three Months Ended April 30, 1998 1997
- -----------------------------------------------------------------------
<S> <C> <C>
Backlog - beginning of period $ 14,018.1 $ 15,976.5
New awards 2,776.6 3,183.8
Adjustments and cancellations, net (73.3) (295.7)
Work Performed (2,807.4) (2,728.1)
----------- -----------
Backlog - end of period $ 13,914.0 $ 16,136.5
=========== ===========
</TABLE>
<TABLE>
<CAPTION>
For the Six Months Ended April 30, 1998 1997
- -----------------------------------------------------------------------
<S> <C> <C>
Backlog - beginning of period $ 14,370.0 $ 15,757.4
New awards 5,378.7 6,774.4
Adjustments and cancellations, net (70.8) (538.9)
Work Performed (5,763.9) (5,856.4)
----------- -----------
Backlog - end of period $ 13,914.0 $ 16,136.5
=========== ===========
</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 10, 1998 at the Sutton Place
Hotel, Newport Beach, California.
(b) Election of Directors - Voting Results
Directors elected -
Carroll A. Campbell, Jr.
68,583,639 FOR
896,725 VOTED TO WITHHOLD AUTHORITY
Robin Renwick
68,614,232 FOR
866,132 VOTED TO WITHHOLD AUTHORITY
Martha R. Seger
68,615,949 FOR
864,415 VOTED TO WITHHOLD AUTHORITY
James C. Stein
68,487,249 FOR
993,115 VOTED TO WITHHOLD AUTHORITY
Other directors continuing in office -
Don L. Blankenship
Peter J. Fluor
David P. Gardner
Thomas L. Gossage
Bobby R. Inman
Vilma S. Martinez
Dean R. O'Hare
James O. Rollans
(c) Matters Voted Upon. Ratification of the appointment of Ernst &
Young LLP as independent auditors for 1998:
68,923,853 FOR
359,244 AGAINST
197,267 ABSTAIN
-0- BROKER NON-VOTE
16
<PAGE> 18
Approval of Shareholder Proposal Relating to Tabulation of
Votes:
11,684,937 FOR
44,150,806 AGAINST
1,755,955 ABSTAIN
11,888,666 BROKER NON-VOTE
(d) Terms of settlement between registrant and any other
participant. None
Item 5. Other Information. None
Item 6. Exhibits and Reports on Form 8-K.
(a) Exhibits.
<TABLE>
<S> <C>
10.1 1997 Fluor Stock Appreciation Rights Plan.
27.1 Financial Data Schedule as of and for the six months ended April 30, 1998.
27.2 Restated Financial Data Schedule for the interim periods and year
ended October 31, 1997.
27.3 Restated Financial Data Schedule for the interim periods and year
ended October 31, 1996.
27.4 Restated Financial Data Schedule for the year ended October 31, 1995.
99.1 Current Report on Form 8-K filed May 6, 1997.
</TABLE>
(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 15, 1998 /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> 20
EXHIBIT INDEX
<TABLE>
<S> <C>
10.1 1997 Fluor Stock Appreciation Rights Plan.
27.1 Financial Data Schedule as of and for the six months ended April 30, 1998.
27.2 Restated Financial Data Schedule for the interim periods and year
ended October 31, 1997.
27.3 Restated Financial Data Schedule for the interim periods and year
ended October 31, 1996.
27.4 Restated Financial Data Schedule for the year ended October 31, 1995.
99.1 Current Report on Form 8-K filed May 6, 1997.
</TABLE>
<PAGE> 1
EXHIBIT 10.1
FLUOR CORPORATION
1997 FLUOR STOCK APPRECIATION RIGHTS PLAN
1
<PAGE> 2
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) "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.
(b) "Board" shall mean the Board of Directors of the Company.
(c) "Committee" shall mean the Organization and Compensation Committee
of the Board.
(d) "Company" shall mean Fluor Corporation.
(e) "Fair Market Value" shall mean the average of the highest price
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 such value is to
be determined hereunder or, in the absence of any reported sales on
such day, the first preceding day on which there were such sales.
(f) "Grantee" shall mean an employee to whom Rights have been granted
hereunder.
(g) "Plan" shall mean the 1997 Fluor Stock Appreciation Rights Plan,
the terms of which are set forth herein.
(h) "Rights" shall mean Stock Appreciation Rights granted as provided
herein.
(i) "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.
(j) "Stock Appreciation Rights Agreement" shall mean the agreement
between the Company and the Grantee evidencing the grant of Rights as
provided herein.
2
<PAGE> 3
(k) "Subsidiary" shall mean any corporation, the majority of the
outstanding capital stock of which is owned, directly or indirectly,
by the Company.
ARTICLE II
THE PLAN
Sec. 2.1 NAME
This plan shall be known as the "1997 Fluor Stock Appreciation Rights Plan".
Sec. 2.2 PURPOSE
The purpose of the Plan is to advance the interests of the Company and its
shareholders by providing eligible key management employees who can directly and
significantly influence the profits of the Company and therefore the market
value of its Stock a form of cash incentive compensation which is measured by
the desired increase in the market value of the Stock.
Sec. 2.3 EFFECTIVE DATE AND DURATION
The Plan shall become effective upon its adoption by the Board. The Rights
granted hereunder must be granted within ten years from the effective date of
the Plan.
ARTICLE III
PARTICIPANTS
Sec. 3.1 ELIGIBILITY
Any officer or other key management employee of the Company or its Subsidiaries
shall be eligible to participate in the Plan; provided, however, that no member
of the Committee shall be eligible to participate. The Committee may grant
Rights 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 Rights may be granted, the number of Rights to be granted and the
period for the exercise of such Rights 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
3
<PAGE> 4
provisions of each Stock Appreciation Rights 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, 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
RIGHTS SUBJECT TO PLAN
Sec. 5.1 LIMITATIONS
Subject to adjustment pursuant to the provisions of Section 5.2 hereof, the
number of Rights which may be granted hereunder shall not exceed 2,000,000.
Rights granted hereunder which have been exercised as provided in Section 6.4
hereof shall not again be available for grant hereunder. If Rights granted
hereunder shall expire, terminate or be canceled for any reason prior to being
wholly exercised, new grants may be made hereunder with respect to the number of
Rights to which such expiration, termination or cancellation relates.
Sec. 5.2 ANTIDILUTION
In the event that the outstanding shares of Stock hereafter are changed into or
exchanged for a different number or kind of shares or other securities of the
Company or of another corporation by reason of merger, consolidation, other
reorganization, recapitalization, reclassification, combination of shares, stock
splitup or stock dividend,
(a) the aggregate number of Rights which may be granted hereunder
shall be adjusted appropriately;
(b) outstanding Rights granted hereunder, both as to number and value,
shall be adjusted appropriately; and
(c) where dissolution or liquidation of the Company or any merger or
combination in which the Company is not a surviving corporation is
involved, each outstanding Right granted hereunder shall terminate,
but the Grantee shall have the right, immediately prior to such
dissolution, liquidation, merger or combination, to exercise his
Rights in full,
4
<PAGE> 5
without regard to any installment exercise provisions, to the extent
that such Rights shall not have been exercised.
The foregoing adjustments and the manner of application of the foregoing
provisions shall be determined solely by the Committee, and any such adjustment
may provide for the elimination of fractional Rights.
5
<PAGE> 6
ARTICLE VI
GRANT AND EXERCISE OF RIGHTS
Sec. 6.1 RIGHTS GRANTS AND AGREEMENTS
Rights shall be granted by the Committee and the date of the grant shall be the
date of such Committee action. Each grant shall be evidenced by minutes of a
meeting or the written consent of the Committee and by a written Stock
Appreciation Rights Agreement dated as of the date of the grant and executed by
the Grantee and the Company, which Agreement shall set forth such terms and
conditions as may be determined by the Committee consistent with the Plan.
Sec. 6.2 RIGHTS VALUE
The value of each Right granted hereunder shall be determined by the Committee,
but said value shall not be less than the Fair Market Value of the Stock on the
date said Right is granted.
Sec. 6.3 RIGHTS PERIOD
The period for the exercise of each Right granted hereunder shall be determined
by the Committee, but in no instance shall such period exceed ten years from the
date of grant.
Sec. 6.4 RIGHTS EXERCISE
(a) Rights granted hereunder may not be exercised unless and until the
Grantee shall have been or remained in the employ of the Company or
its Subsidiaries for one year from and after the date of grant of such
Rights, except as otherwise provided in Section 6.7 hereof.
(b) Rights granted hereunder may be exercised with respect to whole
Rights only, in such number and within the periods permitted for the
exercise thereof as determined by the Committee, and shall be
exercised by written notice of intent to exercise with respect to a
specified number of Rights delivered to the Company at its principal
office in the State of California.
Sec. 6.5 PAYMENT FOR RIGHTS EXERCISED
Within 30 days after Rights have been exercised in accordance with Section 6.4
hereof, the Company shall pay to the Grantee in cash an amount equal to (i) the
amount, if any, by which the Fair Market Value of the Stock on the date such
Rights are exercised exceeds the value of each such Right established in
accordance with Section 6.2 hereof multiplied by (ii) the number of Rights
exercised, less all applicable federal and state withholding or other employment
taxes applicable to the taxable income of such Grantee resulting from such
exercise. In the event of the death of such Grantee before payment is made
hereunder, such payment shall be made to the executor or administrator of such
Grantee's estate.
6
<PAGE> 7
Sec. 6.6 NONTRANSFERABILITY OF RIGHTS
No Rights granted hereunder shall be transferred by a Grantee otherwise than by
will or the laws of descent and distribution. During the lifetime of a Grantee,
such Rights shall be exercisable only by him.
Sec. 6.7 EFFECT OF DEATH OR OTHER TERMINATION OF EMPLOYMENT
(a) If, prior to a date one year from the date on which Rights shall
have been granted, the Grantee'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 Grantee, the Grantee's right to
exercise such Rights shall terminate and all rights thereunder shall
cease; provided, however, that if the Grantee shall die, retire or
become permanently and totally disabled, as determined in accordance
with applicable Company personnel policies, or if the Grantee'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
Rights shall have been granted, such Rights 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 Rights shall have
been granted, a Grantee's employment with the Company or its
Subsidiaries 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 Grantee shall have
the right, during the period ending three months after such
termination, to exercise such Rights to the extent that they were
exercisable at the date of such termination and shall not have been
exercised, subject, however, to the provisions of Section 6.3 hereof.
(c) Upon termination of a Grantee'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
Grantee shall have the right, during the period ending three years
after such termination, to exercise his Rights in full, without regard
to any installment exercise provisions, to the extent that they shall
not have been exercised, subject, however, to the provisions of
Section 6.3 hereof.
(d) If a Grantee 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 estate of the decedent or the person or persons
to whom Rights granted 'hereunder shall have been validly transferred
by the executor or the administrator pursuant to will or the laws of
descent and distribution shall have the right, during the period
ending three years after the date of the Grantee's death, to exercise
the Grantee's Rights (A) in full, without regard to any installment
exercise provisions, to the extent that they shall not have been
exercised, if the Grantee 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
7
<PAGE> 8
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 they were exercisable at the date of the Grantee's death
and shall not have been exercised, if the Grantee 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 6.3
hereof.
(e) No transfer of Rights by a Grantee by 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 Rights.
(f) The foregoing notwithstanding, the Committee may elect, in its
sole discretion, to make grants of Rights which have provisions
regarding the effect of death or other termination of employment which
are different than those set forth in paragraphs (a) through (d) of
this Section 6.7, provided that such provisions do not materially
increase the benefits that would otherwise accrue to a Grantee under
paragraphs (a) through (d) of this Section 6.7.
Sec. 6.8 NO RIGHTS AS SHAREHOLDER
Nothing herein contained shall be deemed to give any Grantee any rights as a
shareholder of the Company.
ARTICLE VII
TERMINATION, AMENDMENT AND MODIFICATION OF PLAN
Sec. 7.1 TERMINATION, AMENDMENT AND MODIFICATION OF PLAN
The Board may at any time, upon recommendation of the Committee, terminate, and
may at any time and from time to time and in any respect amend or modify, the
Plan; provided, however, that no termination, amendment or modification of the
Plan shall in any manner affect any Rights theretofore granted under the Plan
without the consent of the Grantee.
ARTICLE VIII
MISCELLANEOUS
Sec. 8.1 EMPLOYMENT
Nothing in the Plan or in any Rights granted hereunder or in any Stock
Appreciation Rights Agreement relating thereto shall confer upon any employee
the right to continue in the employ of the Company or any Subsidiary.
8
<PAGE> 9
Sec. 8.2 OTHER COMPENSATION PLANS
The adoption of the Plan shall not affect any 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. 8.3 PLAN BINDING ON SUCCESSORS
The Plan shall be binding upon the successors and assigns of the Company.
Sec. 8.4 SINGULAR, PLURAL; GENDER
Whenever used herein, nouns in the singular shall include the plural, and the
masculine pronoun shall include the feminine gender.
Sec. 8.5 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.
9
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE
CONDENSED CONSOLIDATED BALANCE SHEET AT APRIL 30, 1998 AND THE CONDENSED
CONSOLIDATED STATEMENT OF EARNINGS FOR THE SIX MONTHS ENDED APRIL 30, 1998 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-31-1998
<PERIOD-END> APR-30-1998
<CASH> 319,491
<SECURITIES> 0
<RECEIVABLES> 956,139
<ALLOWANCES> 0
<INVENTORY> 181,871
<CURRENT-ASSETS> 2,182,787
<PP&E> 3,074,112
<DEPRECIATION> 1,088,916
<TOTAL-ASSETS> 4,758,350
<CURRENT-LIABILITIES> 2,175,003
<BONDS> 0
0
0
<COMMON> 49,347
<OTHER-SE> 1,545,919
<TOTAL-LIABILITY-AND-EQUITY> 4,758,350
<SALES> 0
<TOTAL-REVENUES> 6,681,098
<CGS> 0
<TOTAL-COSTS> 6,494,170
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 18,749
<INCOME-PRETAX> 168,108
<INCOME-TAX> 59,006
<INCOME-CONTINUING> 109,102
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 109,102
<EPS-PRIMARY> 1.33
<EPS-DILUTED> 1.33
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 5
<MULTIPLIER> 1,000
<S> <C> <C> <C> <C>
<PERIOD-TYPE> 3-MOS 6-MOS 9-MOS 12-MOS
<FISCAL-YEAR-END> OCT-31-1997 OCT-31-1997 OCT-31-1997 OCT-31-1997
<PERIOD-END> JAN-31-1997 APR-30-1997 JUL-31-1997 OCT-31-1997
<CASH> 124,574 233,996 198,319 299,324
<SECURITIES> 44,121 39,059 33,960 10,089
<RECEIVABLES> 767,861 835,618 847,235 930,104
<ALLOWANCES> 0 0 0 0
<INVENTORY> 151,310 186,992 216,342 58,039
<CURRENT-ASSETS> 1,710,349 1,914,153 2,006,878 2,225,886
<PP&E> 2,618,072 2,708,587 2,815,859 2,940,105
<DEPRECIATION> 862,902 903,610 954,552 1,001,315
<TOTAL-ASSETS> 4,005,275 4,235,697 4,417,127 4,697,840
<CURRENT-LIABILITIES> 1,651,827 1,676,455 1,806,290 1,990,684
<BONDS> 0 0 0 0
0 0 0 0
0 0 0 0
<COMMON> 52,518 52,446 52,406 52,343
<OTHER-SE> 1,671,691 1,579,438 1,627,474 1,688,707
<TOTAL-LIABILITY-AND-EQUITY> 4,005,275 4,235,697 4,417,127 4,697,840
<SALES> 0 0 0 0
<TOTAL-REVENUES> 3,434,061 6,619,894 10,295,799 14,298,541
<CGS> 0 0 0 0
<TOTAL-COSTS> 3,327,287 6,586,956 10,154,270 14,022,570
<OTHER-EXPENSES> 0 0 0 0
<LOSS-PROVISION> 0 0 0 0
<INTEREST-EXPENSE> 5,542 12,524 20,044 30,758
<INCOME-PRETAX> 95,625 17,218 119,262 255,269
<INCOME-TAX> 33,590 25,317 61,119 109,082
<INCOME-CONTINUING> 62,035 (8,099) 58,143 146,187
<DISCONTINUED> 0 0 0 0
<EXTRAORDINARY> 0 0 0 0
<CHANGES> 0 0 0 0
<NET-INCOME> 62,035 (8,099) 58,143 146,187
<EPS-PRIMARY> 0.75 (0.10) 0.70 1.76
<EPS-DILUTED> 0.74 (0.10) 0.70 1.75
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 5
<MULTIPLIER> 1,000
<S> <C> <C> <C> <C>
<PERIOD-TYPE> 3-MOS 6-MOS 9-MOS 12-MOS
<FISCAL-YEAR-END> OCT-31-1996 OCT-31-1996 OCT-31-1996 OCT-31-1996
<PERIOD-END> JAN-31-1996 APR-30-1996 JUL-31-1996 OCT-31-1996
<CASH> 193,972 245,318 228,603 246,964
<SECURITIES> 149,873 137,710 113,736 69,378
<RECEIVABLES> 596,569 590,279 572,016 742,547
<ALLOWANCES> 0 0 0 0
<INVENTORY> 110,654 117,377 60,224 73,927
<CURRENT-ASSETS> 1,473,132 1,508,536 1,531,219 1,796,823
<PP&E> 2,158,580 2,288,739 2,397,254 2,498,874
<DEPRECIATION> 663,829 717,391 787,462 821,212
<TOTAL-ASSETS> 3,397,761 3,520,600 3,598,418 3,951,726
<CURRENT-LIABILITIES> 1,351,773 1,425,344 1,402,995 1,645,568
<BONDS> 0 0 0 0
0 0 0 0
0 0 0 0
<COMMON> 52,171 52,231 52,249 52,369
<OTHER-SE> 1,431,739 1,487,179 1,547,191 1,617,357
<TOTAL-LIABILITY-AND-EQUITY> 3,397,761 3,520,600 3,598,418 3,951,726
<SALES> 0 0 0 0
<TOTAL-REVENUES> 2,402,414 4,984,643 7,687,464 11,015,192
<CGS> 0 0 0 0
<TOTAL-COSTS> 2,303,342 4,780,517 6,982,851 10,565,449
<OTHER-EXPENSES> 0 0 0 0
<LOSS-PROVISION> 0 0 0 0
<INTEREST-EXPENSE> 3,441 6,916 11,416 16,051
<INCOME-PRETAX> 89,763 186,845 291,711 413,218
<INCOME-TAX> 32,315 65,697 102,486 145,134
<INCOME-CONTINUING> 57,448 121,148 189,225 268,084
<DISCONTINUED> 0 0 0 0
<EXTRAORDINARY> 0 0 0 0
<CHANGES> 0 0 0 0
<NET-INCOME> 57,448 121,148 189,225 268,084
<EPS-PRIMARY> 0.70 1.47 2.29 3.24
<EPS-DILUTED> 0.69 1.45 2.27 3.21
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM CONSOLIDATED
BALANCE SHEET AT OCTOBER 31, 1995 AND THE CONSOLIDATED STATEMENT OF EARNINGS FOR
THE TWELVE MONTHS ENDED OCTOBER 31, 1995 AND IS QUALIFIED IN ITS ENTIRETY BY
REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> OCT-31-1995
<PERIOD-END> OCT-31-1995
<CASH> 292,934
<SECURITIES> 137,758
<RECEIVABLES> 470,104
<ALLOWANCES> 0
<INVENTORY> 63,284
<CURRENT-ASSETS> 1,411,671
<PP&E> 2,066,384
<DEPRECIATION> 630,573
<TOTAL-ASSETS> 3,228,906
<CURRENT-LIABILITIES> 1,238,645
<BONDS> 0
0
0
<COMMON> 51,978
<OTHER-SE> 1,378,836
<TOTAL-LIABILITY-AND-EQUITY> 3,228,906
<SALES> 0
<TOTAL-REVENUES> 9,301,384
<CGS> 0
<TOTAL-COSTS> 8,910,076
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 13,385
<INCOME-PRETAX> 362,214
<INCOME-TAX> 130,446
<INCOME-CONTINUING> 231,768
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 231,768
<EPS-PRIMARY> 2.82
<EPS-DILUTED> 2.81
</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
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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
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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.
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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
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