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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
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FORM 10-K
(MARK ONE)
[X] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
FOR THE FISCAL YEAR ENDED OCTOBER 31, 1999
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 NO. 1-7775
FLUOR CORPORATION
(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
DELAWARE 95-0740960
(STATE OR OTHER JURISDICTION OF (I.R.S. EMPLOYER
INCORPORATION OR ORGANIZATION) IDENTIFICATION NUMBER)
ONE ENTERPRISE DRIVE, ALISO VIEJO, CALIFORNIA 92656
(ADDRESS OF PRINCIPAL EXECUTIVE OFFICES) (ZIP CODE)
REGISTRANT'S TELEPHONE NUMBER, INCLUDING AREA CODE: (949) 349-2000
SECURITIES REGISTERED PURSUANT TO SECTION 12(b) OF THE ACT:
TITLE OF EACH CLASS
COMMON STOCK, $0.625 PAR VALUE
NAME OF EACH EXCHANGE ON WHICH REGISTERED
NEW YORK STOCK EXCHANGE
CHICAGO STOCK EXCHANGE
PACIFIC STOCK EXCHANGE
SECURITIES REGISTERED PURSUANT TO SECTION 12(G) OF THE ACT:
NONE
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, and (2) has been subject to such filing
requirements for the past 90 days. Yes [X] No [ ]
Indicate by check mark if disclosure of delinquent filers pursuant to
Item 405 of Regulation S-K is not contained herein, and will not be contained,
to the best of registrant's knowledge, in definitive proxy or information
statements incorporated by reference in Part III of this Form 10-K or any
amendment to this Form 10-K. [ ]
The aggregate market value of the registrant's voting stock held by
non-affiliates was $3,451,394,240 on January 12, 2000 based upon the average
between the highest and lowest sales prices of the registrant's Common Stock as
reported in the consolidated transactions reporting system.
Common Stock, $0.625 par value, outstanding as of January 12, 2000 -
76,370,706 shares.
DOCUMENTS INCORPORATED BY REFERENCE
Parts I, II and IV incorporate certain information by reference from the
registrant's Annual Report to shareholders for the fiscal year ended October 31,
1999.
Part III incorporates certain information by reference from the
registrant's definitive proxy statement for the annual meeting of shareholders
to be held on March 8, 2000, which proxy statement will be filed no later than
120 days after the close of the registrant's fiscal year ended October 31, 1999.
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From time to time, Fluor(R) Corporation ("Fluor" or the "Company")
makes certain comments and disclosures in reports and statements, including this
report or statements made by its officers or directors which may be
forward-looking in nature. Examples include statements related to Company
growth, the ability to appropriately handle a slowdown in the demand for
metallurgical coal, the adequacy of funds to service debt and the Company's
opinions about trends and factors which may impact future operating results.
These forward-looking statements could also 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
consummation of acquisition, disposition or financing transactions and the
effect thereof on the Company's business, and (iii) the Company's plans and
objectives for future operations and expansion or consolidation.
Any forward-looking statements are subject to the risks and
uncertainties that could cause actual results of operations, financial
condition, cost reductions, acquisitions, dispositions, financing transactions,
operations, expansion, consolidation and other events to differ materially from
those expressed or implied in such forward-looking statements. Any
forward-looking statements are also subject to a number of assumptions
regarding, among other things, future economic, competitive and market
conditions generally. These 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. As a result,
the reader is cautioned not to rely on these forward-looking statements.
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 forward-looking statements should be
considered in context with the various disclosures made by the Company about its
businesses, including without limitation the risk factors more specifically
described below in Item 1. Business, under the heading "Company Business Risks."
PART I
ITEM 1. BUSINESS
Fluor Corporation was incorporated in Delaware in 1978 as a successor in
interest to a California corporation of the same name that was originally
incorporated in 1924. Its executive offices are located at One Enterprise Drive,
Aliso Viejo, California 92656, telephone number (949) 349-2000.
The Company is basically a holding company which owns the stock of numerous
subsidiary corporations. Except as the context otherwise requires, the terms
"Fluor" or the "Company" as used herein shall include Fluor Corporation and its
subsidiaries and divisions.
In March 1999, the Company announced a new strategic direction and the
Company was realigned into four principal business segments which the Company
refers to as Strategic Business Enterprises (each, an "SBE") each with clear
performance accountability: the Fluor Daniel(SM) segment which provides design,
engineering, procurement and construction services on a worldwide basis to an
extensive range of industrial, commercial, utility, natural resources and energy
clients; the Fluor Global Services(SM) segment which provides outsourcing and
asset management solutions to its customers; the Fluor Signature Services(SM)
segment which provides traditional business administration and support services
to the Company; and the Coal segment which produces, processes and sells
high-quality, low-sulfur steam coal for the utility industry as well as
industrial customers, and metallurgical coal for the steel industry. The Company
also operates through Fluor Constructors International, Inc. ("Fluor
Constructors") which is organized and operates separately from Fluor Daniel.
Fluor Constructors provides unionized management, construction and management
services in the United States and Canada, both independently and as a
subcontractor to Fluor Daniel, and global support to all Fluor Daniel business
units.
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As part of the new strategic direction, the Company has established a
Global Development, Sales and Marketing group and has implemented a
Knowledge@Work(SM) initiative. Global Development, Sales and Marketing is an
organization which is responsible for providing global account management for
the Company's key clients. The Knowledge@Work initiative is focused on revamping
the Company's work processes and management systems. Its primary goals include
improved access to and use of Company knowledge coupled with an improved ability
to obtain up-to-date and timely information across all aspects of the Company's
business operations.
A summary of the Company's operations and activities by business segment
and geographical area is set forth below.
FLUOR DANIEL
The Fluor Daniel SBE ("Fluor Daniel") provides a full range of design,
engineering, procurement, construction and other services to clients in a broad
range of industrial and geographic markets on a worldwide basis. Fluor Daniel's
operations are organized into five business units responsible for identifying
and capitalizing on opportunities in their market segments on a global basis.
The operations of Fluor Daniel are detailed below by business unit:
Chemicals and Life Sciences: The Chemicals and Life Sciences business
unit furnishes a full line of services to the following market segments:
specialty and fine chemicals, petrochemicals, bulk pharmaceuticals, secondary
pharmaceutical manufacturing and biotechnology. A representative sample of the
projects being performed in this business unit include film processing plants
throughout China, a major petrochemical complex in the western province of Saudi
Arabia and a pharmaceutical plant for a major client in Ireland. Life Sciences
clients continue to concentrate their manufacturing capabilities in certain
tax-advantaged locations including Puerto Rico, Ireland and Singapore where
Fluor Daniel has an existing and expanding presence. In addition, the Chemicals
and Life Sciences business unit is targeting development opportunities to
leverage key customer relationships by matching available technologies with
regional market needs and feedstock availability. For example, the Chemicals and
Life Sciences business unit has recently partnered with Du Pont to license,
design and construct industrial plants using Du Pont's PET technology.
Oil, Gas and Power: Fluor Daniel's Oil, Gas and Power business unit is
an integrated service supplier providing a full range of design, engineering,
procurement, construction and project management services in a broad spectrum of
energy industries ranging from upstream production to refining to power
generation. Typical oil and gas projects include new facilities, upgrades,
revamps and expansions for refineries, pipeline installations and oil sands
development projects. Current projects include development of an offshore oil
field in the Timor Sea, various pipeline projects in the Caspian Sea region and
a major oil sands project in Alberta, Canada. In power generation, this business
unit designs, engineers and constructs power generation facilities predominantly
in the fossil fuel power industry through Duke/Fluor Daniel, a partnership with
Duke Energy Corp. Duke/Fluor Daniel was awarded contracts for the development of
seven new power generation facilities in fiscal year 1999.
Mining: The Mining business unit operates internationally in a wide
range of mineral markets providing services ranging from mine planning and
development, project management, technical and engineering services, resource
evaluation, geologic modeling, equipment selection, permitting, construction and
remediation. Projects being performed include the design and installation of the
longest single strand underground conveyor in the world in Colorado,
engineering, procurement and construction services for a major copper and gold
project in Indonesia, design and construction management of the world's largest
"grass roots" copper concentrator on the island of Sumbawa and construction of
the world's largest vanadium production facility located in Western Australia.
Manufacturing: The Manufacturing business unit provides comprehensive
engineering, architectural, construction, design, programming and management
services to the general manufacturing, electronics, food, beverage and consumer
products industries along with specialized construction management expertise for
the pharmaceutical and biotechnology industries. This business unit strives to
build longstanding business relationships with clients as best evidenced by its
thirty year alliance with Procter & Gamble. Current projects of the
Manufacturing business unit include wafer fabrication and processing facilities
in Malaysia, a major
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electronics facility in the Philippines, a resort/hotel in Las Vegas, Nevada and
a research and development and headquarters facility for a major pharmaceutical
company in the northeastern United States.
Infrastructure: The Infrastructure business unit provides design,
engineering, procurement, construction and construction management services for
the transportation industry. In highway construction, this business unit has
completed numerous projects and the anticipated growth of public-private
ventures should serve as a platform to increase its role in this area. For
example, this business unit was recently selected by the South Carolina
Department of Transportation to provide construction and management support for
the statewide highway development program. Other localities are emulating this
innovative approach and, in concert with United States government funding of
over $200-plus billion from the TEA-21 transportation bill resulting in numerous
new transportation opportunities domestically, this business unit is
well-positioned to grow in this area. In the area of railroad construction,
numerous public/private venture projects are now under development in Europe.
The Infrastructure business unit has expanded into this area as exemplified by
its recent joint venture with Mott MacDonald in the United Kingdom to be one of
three primary suppliers of program management services to Britain's Railtrack
for a multi-billion dollar improvement project on one of England's most heavily
traveled rail lines. Finally, the need for improvement and expansion of major
airports is apparent due to global increases in air traffic. In this area, the
Infrastructure business unit has managed numerous projects including its present
involvement in a major expansion project at John F. Kennedy Airport in New York.
COMPETITION
Fluor Daniel is one of the world's larger providers of engineering,
procurement and construction services. The markets served by the business are
highly competitive and for the most part require substantial resources,
particularly highly skilled and experienced technical personnel. A large number
of companies are competing in the markets served by the business. Competition is
primarily centered on performance and the ability to provide the design,
engineering, planning, management and project execution skills required to
complete complex projects in a safe, timely and cost-efficient manner. The
Company's engineering, procurement and construction business derives its
competitive strength from its diversity, reputation for quality, technology,
cost-effectiveness, worldwide procurement capability, project management
expertise, geographic coverage, ability to meet client requirements by
performing construction on either a union or an open shop basis, ability to
execute projects of varying sizes, strong safety record and lengthy experience
with a wide range of services and technologies.
FLUOR GLOBAL SERVICES
The Fluor Global Services SBE ("Fluor Global Services") supplies a full
array of business asset and operation management services outside the
traditional engineering, procurement and construction value chain. Services
provided by Fluor Global Services include operations, maintenance and consulting
services; construction and rental equipment, contract and direct-hire staffing
services and training; and program and asset management services to industries
on a global basis. This separate enterprise was created in order to better serve
the Company's clients and to take advantage of a growing outsourcing market
across a broad range of industries. Fluor Global Services' operations are
organized into the following six business units:
American Equipment Company: American Equipment Company ("AMECO(R)")
sells, rents, services and outsources equipment for construction and industrial
needs on a global basis. In order to better serve clients, AMECO has reorganized
into three business lines: Fleet Services which provides outsourcing services to
targeted industrial markets; Site Services which provides complete rental
equipment and tool programs for capital construction projects; and Dealerships
which provide new and used equipment sales, parts and services in targeted
geographic regions.
TRS Staffing Solutions: TRS Staffing Solutions is a global enterprise
of staffing specialists that provides clients with assistance in temporary,
contract and direct hire positions specializing in information technology,
accounting and financing and engineering personnel. The temporary staffing
segment affords clients flexibility and economies in meeting client needs due to
factors which cannot be handled by a client's normal staffing by
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providing temporary workers on a cost-effective basis. The contract and direct
hire segment is focused on helping clients to effectively recruit and retain
staff.
Operations & Maintenance: Operations & Maintenance furnishes repair,
renovation, replacement, predictive and preventative services to commercial,
industrial, nuclear, fossil fuel, manufacturing and oil, gas and power
facilities worldwide. In addition, it is a leading supplier of integrated
facility management for commercial and government operations, providing
on-location maintenance and operations support coupled with workplace consulting
and facility management services. The services provided by this business unit
are those that are typically outsourced by a client in that they are ancillary
to the primary business of the client. By outsourcing these services, the client
is better able to focus on its primary business activities. Many of these
contracts are evergreen in nature and can be extended for many years.
Fluor Federal Services: Fluor Federal Services(SM) is a leading
provider of services to the United States government, especially with respect to
the operation and environmental remediation of government facilities for the
United States Department of Energy and Department of Defense. These projects
tend to be extremely large, complex in nature and take many years to complete.
Examples of activities being performed by Fluor Federal Services include
environmental restoration, engineering, construction, site operations and
maintenance at government sites located in Hanford, Washington and Fernald,
Ohio.
Telecommunications: The Telecommunications business unit is a leading
provider of systems integration and project management services for the global
telecommunications market. As an example, this business unit was recently named
project manager of a $320 million project to build out a network of fiber optic
cable and point of presence units for Level 3 Communications.
Consulting Services: Consulting Services provides clients with
professional advisory services and operational diagnostics to clients with a
goal that each client reaches optimum business performance.
COMPETITION
The markets served by each Fluor Global Services business unit, while
containing some similarities, tend also to have discrete issues particularly
impacting that unit. Each business unit has a large number of companies
competing in its markets. With respect to AMECO, which operates in numerous
markets, the equipment rental industry is highly fragmented and very
competitive, with most competitors operating in specific geographic areas. In
the sales and service area, the equipment distribution market consists primarily
of firms which operate dealerships representing equipment manufacturers.
Competition in the equipment arena is driven primarily by price, service and
locality to where the client's services are required. With respect to TRS
Staffing Solutions, this is a highly fragmented industry with over 100 companies
competing nationally. The key competitive factors in this segment are price,
service quality, breadth of service and geographical coverage. Key competitive
factors in both Fluor Federal Services and Telecommunications are primarily
centered on performance and the ability to provide the design, engineering,
planning, management and project execution skills required to complete complex
projects in a safe, timely and cost-efficient manner. In both Operations &
Maintenance and Consulting Services, the barrier to entry to these industries is
both financially and logistically low with the result that the industries are
highly fragmented with no single company being dominant. Competition is
generally driven by reputation, price and capacity to perform.
FLUOR SIGNATURE SERVICES
The Fluor Signature Services SBE ("Fluor Signature Services") commenced
operations effective November 1, 1999. This SBE was created primarily to provide
traditional business services and business infrastructure support to the Company
and its divisions and subsidiaries including human resource, finance,
accounting, safety, information technology, knowledge management and office
support services. Fluor Signature Services brings a new approach to doing
business. By assuming responsibility for the delivery of business administration
and support services, Fluor Signature Services will allow the Company's
operating units to focus on their core businesses. The individual operating
units will define and choose which services to purchase from Fluor
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Signature Services. Consolidation of these services into one organization should
reduce costs and improve quality standards. Ultimately, such services may be
marketed to external customers.
COAL
The Coal segment, which operates through A. T. Massey Coal Company,
Inc., is headquartered in Richmond, Virginia and, with its subsidiaries that
conduct Massey's coal-related businesses, are collectively referred to herein as
the "Massey Companies."
The Massey Companies produce, process and sell bituminous, low sulfur coal
of steam and metallurgical grades from 22 mining complexes (20 of which include
preparation plants) located in West Virginia, Kentucky, Virginia and Tennessee.
As of October 31, 1999, one of the mining complexes was still in development and
not yet producing coal. Steam coal is used primarily by utilities as fuel for
power plants. Metallurgical coal is used primarily to make coke for use in the
manufacture of steel.
For each of the three years in the period ended October 31, 1999, the
Massey Companies' production (expressed in thousands of short tons) of steam
coal and metallurgical coal, respectively, was 23,218 and 15,145 for fiscal year
1999, 19,611 and 18,410 for fiscal year 1998 and 19,798 and 16,757 for fiscal
year 1997. Sales (expressed in thousands of short tons) of coal produced by the
Massey Companies were 37,864 for fiscal year 1999, 37,608 for fiscal year 1998
and 35,643 for fiscal year 1997.
CONTRACTS
A large portion of the steam coal produced by the Massey Companies is sold
to domestic utilities. Metallurgical coal is sold to both foreign and domestic
steel producers. Approximately 66% of the Massey Companies' fiscal year 1999
coal production was sold under long-term contracts, 52% of which was steam coal
and 48% of which was metallurgical coal. Approximately 7% of the coal tonnage
sold by the Massey Companies in fiscal year 1999 was sold outside of North
America.
COMPETITION
Massey is among the five largest marketers of coal in the United States.
The coal market is a mature market with many strong competitors. Competition is
primarily dependent upon coal price, transportation cost, producer reliability
and characteristics of coal available for sale. The management of Massey
considers Massey to be generally well-positioned with respect to these factors
in comparison to its principal competitors.
OTHER MATTERS
The Coal Industry Retiree Health Benefits Act of 1992 (the "Act") provides
that certain retired coal miners who were members of the United Mine Workers of
America, along with their spouses, are guaranteed health care benefits. The
Massey Companies' obligation under the Act is currently estimated to aggregate
approximately $56.4 million which will be recognized as expensed as payments are
made. The amount expensed during fiscal year 1999 approximated $3.6 million.
RESERVES
The management of the Massey Companies estimates that, as of October 31,
1999, the Massey Companies had total recoverable reserves (expressed in millions
of short tons) of 2,087; 720 of which are assigned recoverable reserves and
1,367 of which are unassigned recoverable reserves; and 1,381 of which are
proven recoverable reserves and 706 of which are probable recoverable reserves.
The management of the Massey Companies estimates that approximately
one-third of the total reserves listed above consist of reserves that would be
considered primarily metallurgical grade coal. They also estimate that
approximately 67% of all reserves contain less than 1% sulfur. A portion of the
steam coal reserves could be beneficiated to metallurgical grade by coal
preparation plants and substantially all of the metallurgical coal reserves
could be sold as high quality steam coal, if market conditions warrant.
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"Reserves" means that part of a coal deposit which could be economically
and legally extracted or produced at the time of the reserve determination.
"Recoverable reserves" means coal which is recoverable by the use of existing
equipment and methods under federal and state laws now in effect. "Assigned
recoverable reserves" means reserves which can reasonably be expected to be
mined from existing or planned mines and processed in existing or planned
plants. "Unassigned recoverable reserves" means reserves for which there are no
specific plans for mining and which will require for their recovery substantial
capital expenditures for mining and processing facilities. "Proven recoverable
reserves" refers to deposits of coal which are substantiated by adequate
information, including that derived from exploration, current and previous
mining operations, outcrop data and knowledge of mining conditions. "Probable
recoverable reserves" refers to deposits of coal which are based on information
of a more preliminary or limited extent or character, but which are considered
likely.
OTHER MATTERS
DIVESTITURES AND ACQUISITIONS
During the fiscal year ending October 1999, the Company did not engage in
any acquisitions or divestitures which when considered either independently or
collectively were material to the Company's business, taken as a whole.
NEW SERVICES
There are no new industry segments or new service areas that the Company is
currently planning to enter or that will require a material investment of
Company assets, other than as discussed herein.
RAW MATERIALS
With the exception of Massey and its coal reserves previously discussed,
raw materials are not currently a material issue with respect to any of the
Company's business segments.
PATENTS AND LICENSES
Each of the Company's business segments relies on new and improved versions
of existing processes, materials or techniques, some of which are patented.
However, none of the existing or pending patents held or licensed by the Company
or any business segment are considered essential to operations. Generally, the
development and improvement of processes, materials and techniques are performed
as part of services in connection with the projects and contracts undertaken for
various clients.
SEASONAL BUSINESS IMPLICATIONS
The Company believes that the business of each of the Company's
industry segments is not seasonal in a material or significant manner.
WORKING CAPITAL
The Company believes that there are no material, special or unusual
working capital requirements in any of the Company's business segments.
CUSTOMERS
None of the business segments of the Company is dependent upon either a
single customer or a limited number of customers in any material manner.
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BACKLOG
The following table sets forth the consolidated backlog of Fluor Daniel
and Fluor Global Services segments at October 31, 1999 and 1998.
<TABLE>
<CAPTION>
1999 1998
---- ----
(IN MILLIONS OF DOLLARS)
<S> <C> <C>
Fluor Daniel.................................... $ 6,770 $ 10,403
Fluor Global Services........................... 2,372 2,242
--------- ---------
$ 9,142 $ 12,645
========= =========
</TABLE>
The following table sets forth the consolidated backlog of Fluor Daniel
and Fluor Global Services segments at October 31, 1999 and 1998 by region:
<TABLE>
<CAPTION>
1999 1998
---- ----
(IN MILLIONS OF DOLLARS)
<S> <C> <C>
United States................................... $ 5,008 $ 5,911
Asia Pacific (including Australia)............... 998 2,260
Europe, Africa and Middle East.................. 1,074 2,023
The Americas.................................... 2,062 2,451
--------- ---------
$ 9,142 $ 12,645
========= =========
</TABLE>
Estimated portion not to be performed during fiscal 2000: 21%
For purposes of the preceding tables, Fluor Global Services backlog
figures are not provided for AMECO and TRS Staffing Solutions since there is no
way to meaningfully measure backlog for these business units due to the
short-term nature of the services they provide. Similarly, backlog is not
reported for the Massey Companies because, in the Company's opinion, such
information is not necessarily meaningful because of the nature of the coal
mining business where repetitive services of a short-term nature is the norm.
The dollar amount of the backlog is not necessarily indicative of the
future earnings of Fluor related to the performance of such work. Although
backlog represents only business which is considered to be firm, there can be no
assurance that cancellations or scope adjustments will not occur. Due to
additional factors outside of Fluor's control, such as changes in project
schedules, Fluor cannot predict with certainty the portion of its October 31,
1999 backlog estimated to be performed subsequent to fiscal year 2000.
For additional information with respect to the Company's backlog,
please see Management's Discussion and Analysis contained in Fluor's 1999 Annual
Report to shareholders, which information is incorporated herein by this
reference (and except for this section and other sections specifically
incorporated herein by this reference in Items 1 through 8 of this report,
Fluor's 1999 Annual Report to shareholders is not deemed to be filed as part of
this report).
GOVERNMENT CONTRACTS
Fluor Global Services, predominantly through the Fluor Federal Services
business unit, is a prime contractor or a major subcontractor for a number of
United States government programs. Generally, the programs in question may take
many years to complete and may be implemented by the award of many different
contracts. Despite the fact that these programs are generally awarded on a
multi-year basis, the funding for the programs is generally approved on an
annual basis by Congress. The government is under no obligation to maintain
funding at any specific level, or funds for a program may even be eliminated
thereby significantly curtailing or stopping a program. The government also has
the right to terminate its contracts at any time for convenience. However, the
government is required to equitably adjust a contract for additions or reduction
in scope and, in the event of termination, a contractor may also receive some
allowance for profit on work performed.
Contracts and business with the government are also subject to a number
of socio-economic and other requirements as well as certain procurement
regulations. If a contractor fails to comply with the requirements and
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regulations, it could lead to suspension or even debarment from government
contracting. Finally, government contracting and the continued funding of
programs is also subject to a variety of factors beyond the Company's control
such as political developments both domestically and internationally, budget
considerations and changes in procurement policies.
RESEARCH AND DEVELOPMENT
While the Company engages in research and development efforts both on current
projects and in the development of new products and services, the Company
believes that during the past three fiscal years, it has not incurred costs for
Company-sponsored research and development activities which would be material,
special or unusual in any of the Company's business segments, other than
research and development activities associated with the Company's Knowledge@Work
initiative.
ENVIRONMENTAL, SAFETY AND HEALTH MATTERS
On October 20, 1999, the United States District Court for the Southern
District of West Virginia ("District Court") issued an injunction which
prohibits the construction of valley fills over both intermittent and perennial
stream segments as part of mining operations. While the Massey Companies are not
a party to this litigation, virtually all mining operations (including those of
the Massey Companies) utilize valley fills to dispose of excess materials mined
during coal production. This decision is now under appeal to the Fourth Circuit
Court of Appeals and the District Court has issued a stay of its decision
pending the outcome of the appeal. Based upon the current state of the appeal,
the Company does not believe that the Massey Companies mining operations will be
materially affected while the appeal is pending. If and to the extent that the
District Court's decision is upheld and legislation is not passed which limits
the impact of the decision, all or a portion of the Massey Companies' mining
operations could be affected. The potential impact to the Massey Companies
arising from this proceeding is currently not estimable.
The Massey Companies are affected by and comply with federal, state and
local laws and regulations relating to environmental protection and plant and
mine safety and health, including but not limited to the federal Surface Mining
Control and Reclamation Act of 1977; Occupational Safety and Health Act; Mine
Safety and Health Act of 1977; Water Pollution Control Act, as amended by the
Clean Water Act of 1977; Black Lung Benefits Revenue Act of 1977; and Black Lung
Benefits Reform Act of 1977. The Massey Companies are also affected by acid rain
legislation, which is generally believed to benefit prices for low sulfur coal.
The Massey Companies intend to continue to evaluate and pursue, in appropriate
circumstances, the acquisition of additional low sulfur coal reserves.
It is impossible to predict the full impact of future judicial,
legislative or regulatory developments on such 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.
In fiscal year 1999, the Massey Companies expended approximately $11.4
million to comply with environmental, health and safety laws and regulations,
none of which expenditures were capitalized. The Massey Companies anticipate
making $6.8 million and $8.9 million in such non-capital expenditures in fiscal
2000 and 2001, respectively. Of these expenditures, $10.3 million, $5.6 million
and $7.8 million for fiscal 1999, 2000 and 2001, respectively, were or are
anticipated to be for surface reclamation. Existing financial reserves are
believed to be adequate to cover actual and anticipated reclamation
expenditures.
The Company believes, based upon present information available to it,
that its accruals with respect to future environmental costs are adequate and
such future costs will not have a material effect on the Company's consolidated
financial position, results of operations or liquidity. However, the imposition
of more stringent requirements under environmental laws or regulations, new
developments or changes regarding site cleanup costs or the allocation of such
costs among potentially responsible parties, or a determination that the Company
is potentially responsible for the release of hazardous substances at sites
other than those currently identified, could result in additional expenditures
or the provision of additional accruals in expectation of such expenditures.
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NUMBER OF EMPLOYEES
The following table sets forth the number of salaried and craft/hourly
employees of Fluor and its subsidiaries engaged in Fluor's business segments as
of October 31, 1999:
<TABLE>
<CAPTION>
SALARIED CRAFT/HOURLY TOTAL
-------- ------------ -----
<S> <C> <C> <C>
Fluor Daniel ............. 18,147 13,547 31,694
Fluor Global Services .... 6,011 12,581 18,592
Massey Companies ......... 1,039 2,151 3,190
Corporate ................ 85 0 85
------ ------ ------
TOTAL .................... 25,282 28,279 53,561
====== ====== ======
</TABLE>
OPERATIONS BY BUSINESS SEGMENT AND GEOGRAPHICAL AREA
The financial information for business segments and geographic areas is
included in the Operations by Business Segment and Geographical Area section of
the Notes to Consolidated Financial Statements in Fluor's 1999 Annual Report to
shareholders, which section is incorporated herein by reference.
COMPANY BUSINESS RISKS
Cost Overrun Risks Associated with Fixed, Maximum or Unit Priced
Contracts. A substantial portion of the Company's business is conducted under
various types of contractual arrangements, including cost-reimbursable (plus
fixed or percentage fee), all-inclusive rate, unit price, fixed or maximum price
and incentive fee contracts. While, in terms of dollar amount, the majority of
contracts are of the cost-reimbursable type, there has been an increase in the
volume of fixed, maximum, unit-priced and incentive fee contracts. Under fixed,
maximum or unit priced contracts, the Company agrees to perform the contract for
a fixed price, and, as a result, benefit from potential cost savings. At the
same time, however, the Company bears the risk for most cost overruns. Under
fixed price incentive contracts, the Company bears some or all of the risk of
costs exceeding the negotiated ceiling price and shares with the customer any
cost savings up to a negotiated ceiling price. Contract prices are established
in part on cost estimates which are subject to a number of assumptions, such as
assumptions regarding future economic conditions, price and availability of
labor, equipment and materials, applicable law, weather delays or civil unrest
labor disruptions. If, in the future, these estimates prove inaccurate, or
circumstances change, cost overruns may occur. Significant cost overruns could
have a material adverse effect on the Company's results of operations and
financial condition.
Risk of Additional Costs Incurred by Project Performance Problems. In
certain instances, the Company guarantees to a customer that it will complete a
project by a scheduled date or that the facility will achieve certain
performance standards. If the project or facility subsequently fails to meet the
schedule or performance standards, the Company could incur additional costs.
Depending on the nature of the project performance problem, the additional costs
incurred may be non-recoverable which could exceed revenues realized from a
project. Therefore, if the Company experiences a project performance problem,
there could be a material adverse effect on the Company's results of operations
and financial condition.
Uncertainty of Future Contract Awards. Estimates of future performance
depend on, among other matters, the Company's estimates as to whether and when
it will receive certain new contract awards. While these estimates are based
upon good faith judgment, these estimates can be unreliable and may frequently
change based on new facts as they become available. In the case of large-scale
domestic and international projects where timing is often uncertain, it is
particularly difficult to predict whether and when the Company will receive a
contract award. The uncertainty of contract award timing can present
difficulties in matching workforce size with contract needs. In some cases, the
Company maintains and bears the cost of a ready workforce that is larger than
called for under existing contracts in anticipation of future workforce needs
under expected contract awards. If an expected contract award is delayed or not
received, the Company would incur costs that could have a material adverse
effect on the Company's results of operations and financial condition.
Uncertainty of When the Company Might Receive Project Revenues. The time at
which the Company receives revenue from engineering and construction projects
can be affected by a number of factors outside of the Company's control.
Depending upon external conditions, a client may either cancel a project, put it
on hold or extend the schedule. Also, the realization of revenues may be
impacted by future economic conditions, price and availability of labor,
equipment and materials, applicable law, weather delays, civil unrest or labor
disruptions. If revenue that the Company expects to receive from a project is
either delayed or not received, there could be a material adverse effect on the
Company's results of operations and financial condition.
9
<PAGE> 11
Uncertainties Associated with Government Contracts. A number of the
Company's contracts are government contracts. Typically, government contracts
are subject to various restrictions and uncertainties such as oversight audits
by government representatives and profit and cost controls. In some cases,
government contracts are exposed to the uncertainties associated with
Congressional funding. In addition, government contracts are subject to specific
procurement regulations and a variety of other socio-economic requirements. The
Company must comply with these government regulations and requirements, as well
as, various statutes related to employment practices, environmental protection,
recordkeeping and accounting. The Company's failure to comply with any of these
regulations, requirements and statutes could lead to suspension from government
contracting or subcontracting for a period of time. In the event one of the
Company's government contracts is terminated for any reason, or if the Company
is suspended from government contract work, there could be a material adverse
effect on the Company's results of operations and financial condition.
Backlog Not Indicative of Future Earnings. The dollar amount of the
Company's backlog, as stated at any given time, is not necessarily indicative of
future earnings. Cancellations or scope adjustments may occur with respect to
contracts reflected in the Company's backlog. In the event that the Company
experiences significant cancellations or scope adjustments in backlog contracts,
there could be a material adverse effect on the Company's results of operations
and financial condition.
Future Environmental, Safety and Health Requirements Could Affect
Financial Condition. It is impossible to reliably predict the full nature and
impact of future judicial, legislative or regulatory developments relating to
the environmental protection, safety and health requirements applicable to the
Company's operations (particularly with respect to coal operations). The
requirements to be met, as well as the technology and length of time available
to meet those requirements, continue to develop and change. To the extent that
the costs associated with meeting those requirements are substantial, there
could be a material adverse effect on the Company's results of operations and
financial condition.
Fluctuation in the Production and Sale of Coal. Coal production and
sales are subject to a variety of factors relating to operations, geology,
transportation, environmental laws and regulations, judicial decisions and
weather. These factors routinely cause the Massey Companies' coal production and
sales to fluctuate, sometimes negatively. For example, labor disruptions may
adversely affect coal production. Similarly, transportation delays may adversely
affect coal sales. Such disruptions and delays lead to increased production
costs and, therefore, could have a material adverse effect on the Company's
results of operations and financial condition.
Uncertainties Associated with Global Economic and Political Conditions.
The Company's businesses are subject to fluctuations in demand and to changing
economic and political conditions, not only domestically, but internationally,
which are beyond the Company's control. In particular, the Company's engineering
and construction and coal businesses are global and are affected by market
conditions outside of the United States. These businesses are often subject to,
among other matters, foreign government policies and regulations, embargoes,
United States government policies and international hostilities. Although the
Company tries to reduce exposure to uncertain international market conditions,
the Company is unable to completely predict or control the amount and mix of
business and sales. To the extent that international businesses are affected by
unexpected international market conditions, there could be a material adverse
effect on the Company's results of operations and financial condition.
Foreign Exchange Risks. Because the Company's functional currency is
the U.S. dollar, non-U.S. operations sometimes face the additional risk of
fluctuating currency values and exchange rates, hard currency shortages and
controls on currency exchange. The Company attempts to limit its exposure to
foreign currency fluctuations in
10
<PAGE> 12
contracts by requiring client payments in U.S. dollars or other currencies that
correspond to the currency in which project costs are incurred. Changes in the
value of foreign currencies could have a material adverse effect on the
Company's results of operations and financial condition.
Intense Competition Poses Challenges to Profitability. The Company serves
markets that are highly competitive and in which a large number of multinational
companies compete. In particular, the engineering and construction and coal
markets are highly competitive and require substantial resources and capital
investment in equipment, technology and skilled personnel. Competition also
impacts the Company's contract prices and profit margins. Intense competition is
expected to continue in these markets, presenting the Company with significant
challenges in its ability to maintain strong growth rates and acceptable profit
margins. In the event that the Company is unable to meet these competitive
challenges, there could be a material adverse effect on the Company's results of
operations and financial condition.
ITEM 2. PROPERTIES
Major Facilities
Operations of Fluor and its subsidiaries are conducted in both owned and
leased properties totaling approximately 7.0 million square feet. In addition,
certain owned or leased properties of Fluor and its subsidiaries are leased or
subleased to third party tenants. The following table describes the location and
general character of the major existing facilities, exclusive of mines, coal
preparation plants and their adjoining offices:
<TABLE>
<CAPTION>
LOCATION INTEREST PURPOSE
- -------- -------- -------
<S> <C> <C>
UNITED STATES AND CANADA:
Aliso Viejo, California Leased Fluor Corporate Headquarters and Fluor Daniel and Fluor
Global Services Operations
Calgary, Canada Leased Fluor Daniel Canada Operations
Charlotte, North Carolina Leased Duke/Fluor Daniel Operations
Cincinnati, Ohio Leased Fluor Daniel Operations and Procter & Gamble Alliance
Greenville, South Carolina Owned and Leased Fluor Daniel, Fluor Global Services and AMECO Operations
Houston (Sugar Land office), Texas Owned Fluor Daniel and Fluor Global Services Operations
Irvine, California Leased Fluor Signature Services Operations
Pasadena, Texas Owned AMECO Offices and Yard
Philadelphia, Pennsylvania Leased Fluor Daniel and Fluor Global Services Operations
(Marlton, New Jersey office)
Richland, Washington Leased Fluor Federal Services Operations
Riverside, California Owned AMECO Offices and Yard
Rumford, Rhode Island Leased Fluor Daniel Operations
San Juan, Puerto Rico Leased Fluor Daniel Operations
Tucson, Arizona Leased Fluor Daniel Operations
Vancouver, Canada Leased Fluor Daniel Wright Operations
Washington, D.C.
THE AMERICAS: Leased Fluor Daniel Operations
Caracas, Venezuela Leased Fluor Daniel (Tecnofluor) Operations
Mexico City, Mexico Leased ICA Fluor Daniel Operations
Monterey, Mexico Owned AMECO Offices and Yard
Santiago, Chile Owned and Leased Fluor Daniel Chile and AMECO Operations
EUROPE, AFRICA AND MIDDLE EAST:
Al Khobar, Saudi Arabia (Dhahran Owned Fluor Daniel Arabia Operations
area)
Asturias, Spain Owned Fluor Daniel Espana Operations
Camberley, England Leased Fluor Daniel Limited Operations
Haarlem, Netherlands Owned and Leased Fluor Daniel Operations
Sandton, South Africa Leased Fluor Daniel Southern Africa Operations
</TABLE>
11
<PAGE> 13
<TABLE>
<CAPTION>
LOCATION INTEREST PURPOSE
- -------- -------- -------
<S> <C> <C>
ASIA AND ASIA PACIFIC:
Jakarta, Indonesia Leased Fluor Daniel Eastern, Inc. Operations
Manila, Philippines Owned and Leased Fluor Daniel Inc. Philippines Operations
Melbourne, Australia Leased Fluor Daniel Pty Ltd. Operations
New Dehli, India Leased Fluor Daniel India Private Ltd. Operations
COAL OFFICES:
Richmond, Virginia Owned A. T. Massey Operations
Charleston, West Virginia Leased A. T. Massey Operations
</TABLE>
Coal Properties
See Item 1. Business, of this report for additional information
regarding the coal operations and properties of the Massey Companies.
ITEM 3. LEGAL PROCEEDINGS
Disputes have arisen between a subsidiary of Fluor Daniel and its
client, Anaconda Nickel, over the Murrin Murrin Nickel Cobalt project located in
Western Australia. Both parties have initiated the dispute resolution process
under the contract. Anaconda's primary contention is that the process design,
through which pressurized and super heated metal slurry flows through a series
of depressurization flash vessels, is defective and incapable of proper
operation. Anaconda further contends that the Company falsely represented that
the process technology employed in the flash vessel design was commercially
proven which Anaconda contends has caused it to lose the benefit of insurance
coverage underwritten by Lloyds of London. Anaconda also contends that it has
suffered other consequential losses, such as loss of profit, for which it seeks
payment from the Company. Anaconda contends that the Company is liable to
Anaconda in the total amount of A$300 million.
The Company vigorously disputes and denies Anaconda's allegations.
Among other things, the Company contends that Anaconda has and continues to
improperly operate the facility causing the flash vessels to fail. When Anaconda
complied with the written operating procedures, the flash vessels operated
properly and continuously. Moreover, the Company contends that Anaconda has
failed to supply the contractually guaranteed feedstock, adversely affecting the
performance of the facility. With respect to the alleged loss of insurance
coverage, the Company contends that it made no representations whatsoever
regarding the flash tank process design, and that, in any event, Anaconda has
not, in fact, lost any insurance coverage, in as much as coverage is being
determined by arbitration currently underway in London between Anaconda and
Lloyds of London. The Company rejects Anaconda's claim of loss of profit, in as
much as the Company has complied with the applicable standards care in the
industry and otherwise, the contract between the Company and Anaconda contains a
waiver of consequential damages, such as loss of profit.
The Company has provided notice to all applicable insurance carriers of
the disputes between the parties. The Company's primary errors and omissions
insurer has provided a favorable coverage determination with respect to the
alleged design defects. If and to the extent that these problems are ultimately
determined to be the responsibility of the Company, the Company anticipates
recovering a substantial portion of this amount from available insurance. For
additional discussion, see Contingencies and Commitments in the Notes to
Consolidated Financial Statements in Fluor's 1999 Annual Report to shareholders,
which section is incorporated herein by this reference.
In addition, Fluor and its subsidiaries, incident to their normal
business activities, are parties to a number of other legal proceedings and
other matters in various stages of development. While the Company cannot predict
the outcome of these proceedings, in the opinion of the Company and based on
reports of counsel, any liability arising from these matters individually and in
the aggregate will not have a material adverse effect upon the consolidated
financial position or results of operations of Fluor after giving effect to
provisions already recorded.
12
<PAGE> 14
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS.
Not applicable.
EXECUTIVE OFFICERS OF THE REGISTRANT(1)
PHILIP J. CARROLL, JR., age 62
Director since July 1998; Chairman of the Board and Chief Executive
Officer since July 1998; formerly President and Chief Executive Officer of Shell
Oil Company from 1993.
DENNIS W. BENNER, age 58
Vice President and Chief Information Officer since November 1994;
formerly Vice President and General Manager, Information for TRW from 1992.
DON L. BLANKENSHIP, age 49
Director since 1996; Chairman of the Board and Chief Executive Officer
of A.T. Massey Coal Company, Inc.(2) since 1992; joined Rawls Sales & Processing
Co.(3) in 1982.
ALAN L. BOECKMANN, age 51
President and Chief Executive Officer, Fluor Daniel, since March 1999;
formerly Group President, Energy and Chemicals from January, 1996; formerly
President, Plastics and Fibers from 1994; joined the Company in 1979 with
previous service from 1974 to 1977.
JAKE EASTON III, age 52
Vice President, Strategic Planning since March 1999; formerly
President, Strategic Planning Group from 1998; formerly Group President, Fluor
Daniel, Inc.(4) from 1997; formerly President, Petroleum and Petrochemicals from
1994; joined the Company in 1975.
LAWRENCE N. FISHER, age 55
Senior Vice President, Law and Secretary, since 1996; formerly Vice
President, Corporate Law and Assistant Secretary from 1984; joined the Company
in 1974.
FREDERICK J. GRIGSBY, JR., age 52
Senior Vice President, Human Resources and Administration, since
January 1999; formerly Vice President of Human Resources, Thermo King
Corporation from 1995; formerly Director of HR WorkSource, Westinghouse Electric
Corporation from 1993; joined the Company in 1999.
RALPH F. HAKE, age 50
Executive Vice President and Chief Financial Officer, since June 1999;
formerly Senior Executive Vice President and Chief Financial Officer of
Whirlpool Corporation from 1997; formerly Senior Executive Vice President of
Global Operations from 1996; formerly Executive Vice President, North American
Appliance Group from 1992; joined the Company in 1999.
JOHN L. HOPKINS, age 46
President, Global Development, Sales and Marketing, since November
1999; formerly Senior Vice President, Sales and Marketing from 1999; formerly
Group President, Global Chemicals from 1998; formerly President, Chemicals,
Plastics and Fibers from 1995; joined the Company in 1984.
13
<PAGE> 15
JAMES O. ROLLANS, age 57
Director since 1997; President and Chief Executive Officer of Fluor
Signature Services since March 1999; formerly Chief Financial Officer from 1998;
formerly Chief Administrative Officer from 1994; formerly Senior Vice President
from 1992; joined the Company in 1982.
JAMES C. STEIN, age 56
Director since 1997; President and Chief Executive Officer of Fluor
Global Services since March 1999; formerly President and Chief Operating
Officer, Fluor Daniel, Inc.(4) from 1997; formerly Group President, Diversified
Services, of Fluor Daniel, Inc.(4) from 1994; joined the Company in 1964.
- ----------------
(1) Except where otherwise indicated, all references are to positions held with
Fluor.
(2) A. T. Massey Coal Company, Inc. ("A. T. Massey"), is an indirectly
wholly-owned subsidiary of Fluor which, along with A. T. Massey's
subsidiaries, conducts A. T. Massey's coal-related businesses.
(3) Rawl Sales & Processing Co. is a wholly-owned subsidiary of A. T. Massey.
(4) Fluor Daniel, Inc. by virtue of name change filed in October 1999 is now
known as Fluor Enterprises, Inc.
PART II
Information for Items 5, 6, 7 and 7a is contained in Fluor's 1999
Annual Report to shareholders, which information is incorporated herein by
reference:
<TABLE>
<CAPTION>
ITEM NO. TITLE ANNUAL REPORT TO SHAREHOLDERS SECTION
- -------- ----- -------------------------------------
<S> <C> <C>
ITEM 5. Market for Registrant's Common Equity and Related
Stockholder Matters......................................... Shareholders' Reference
ITEM 6. Selected Financial Data..................................... Selected Financial Data
ITEM 7. Management's Discussion and Analysis of Financial
Condition and Results of Operations......................... Management's Discussion and Analysis
ITEM 7A. Quantitative and Qualitative Discussions
about Market Risk........................................... Management's Discussion and Analysis
</TABLE>
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
Information for Item 8 is included in Fluor's consolidated financial
statements as of October 31, 1999 and 1998 and for each of the three years in
the period ended October 31, 1999 and Fluor's unaudited quarterly financial data
for the two year period ended October 31, 1999, in the Consolidated Financial
Statements (including the Consolidated Balance Sheet, Consolidated Statement of
Earnings, Consolidated Statement of Cash Flows, Consolidated Statement of
Shareholders' Equity and Notes to Consolidated Financial Statements) and
unaudited Quarterly Financial Data sections of Fluor's 1999 Annual Report to
shareholders, which are incorporated herein by reference. The report of
independent auditors on Fluor's consolidated financial statements is in the
Management's and Independent Auditors' Reports section of Fluor's 1999 Annual
Report to shareholders and is also incorporated herein by reference.
ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
FINANCIAL DISCLOSURE.
Not Applicable.
14
<PAGE> 16
PART III
ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT.
Information concerning Fluor's executive officers is included under the
caption "Executive Officers of the Registrant" in Part I, following Item 4.
Other information required by this item is included in the Biographical section
of the Election of Directors portion of the definitive proxy statement pursuant
to Regulation 14A, involving the election of directors, which is incorporated
herein by reference and will be filed with the Securities and Exchange
Commission (the "Commission") not later than 120 days after the close of Fluor's
fiscal year ended October 31, 1999.
ITEM 11. EXECUTIVE COMPENSATION.
Fluor maintains certain employee benefit plans and programs in which
its executive officers and directors are participants. Copies of these plans and
programs are set forth or incorporated by reference as Exhibits 10.1 through
10.22 inclusive to this report. Certain of these plans and programs provide for
payment of benefits or for acceleration of vesting of benefits upon the
occurrence of a change of control of Fluor as that term is defined in such plans
and programs. The amounts payable thereunder would represent an increased cost
to be paid by Fluor (and indirectly by its shareholders) in the event of a
change in control of Fluor. This increased cost would be a factor to be taken
into account by a prospective purchaser of the Company in determining whether
and at what price, it would seek control of the Company and whether it would
seek the removal of then existing management.
If a change of control were to have occurred on October 31, 1999, the
additional amounts payable by Fluor, either in cash or in stock, if each of the
five most highly compensated executive officers and all executive officers as a
group were thereupon involuntarily terminated without cause would be as follows:
<TABLE>
<CAPTION>
RESTRICTED SUPPLEMENTAL
INDIVIDUAL OR GROUP STOCK PLANS(1) BENEFIT PLAN(2)
------------------- -------------- ---------------
<S> <C> <C>
Philip J. Carroll, Jr.................................... $403,622 $1,512,827
Don L. Blankenship....................................... 1,413,510 454,982
James C. Stein........................................... 559,237 523,229
James O. Rollans......................................... 705,723 601,714
Alan L. Boeckmann........................................ 221,020 341,237
All Executive Officers (11) including the above.......... $4,337,249 $4,373,576
</TABLE>
- -----------------
(1) Value at October 31, 1999 of previously awarded restricted stock which
would vest upon change of control.
(2) Lump sum entitlement of previously awarded benefits which would vest upon
change of control.
Further disclosure required by this item is included in the
Organization and Compensation Committee Report on Executive Compensation and
Executive Compensation and Other Information sections of the definitive proxy
statement pursuant to Regulation 14A, involving the election of directors, which
is incorporated herein by reference and will be filed not later than 120 days
after the close of Fluor's fiscal year ended October 31, 1999.
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT.
Information required by this item is included in the Stock Ownership
section of the Election of Directors portion of the definitive proxy statement
pursuant to Regulation 14A, involving the election of directors, which is
incorporated herein by reference and will be filed not later than 120 days after
the close of Fluor's fiscal year ended October 31, 1999.
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS.
Information required by this item is included in the Other Matters
section of the Election of Directors portion of the definitive proxy statement
pursuant to Regulation 14A, involving the election of directors, which is
incorporated herein by reference and will be filed not later than 120 days after
the close of Fluor's fiscal year ended October 31, 1999.
15
<PAGE> 17
PART IV
ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES AND REPORTS ON FORM 8-K.
(a) Documents filed as part of this report:
1. Financial Statements: The following financial statements are contained
in Fluor's 1999 Annual Report to shareholders:
Consolidated Balance Sheet at October 31, 1999 and 1998
Consolidated Statement of Earnings for the years ended October 31,
1999, 1998 and 1997
Consolidated Statement of Cash Flows for the years ended October 31,
1999, 1998 and 1997
Consolidated Statement of Shareholders' Equity for the years ended
October 31, 1999, 1998 and 1997
Notes to Consolidated Financial Statements
See Part II, Item 8 of this report for information regarding the
incorporation by reference herein of such financial statements.
2. Financial Statement Schedules: All schedules have been omitted since
the required information is not present or not present in amounts
sufficient to require submission of the schedule, or because the
information required is included in the consolidated financial
statements and notes thereto.
3. Exhibits:
<TABLE>
<CAPTION>
EXHIBIT NO. DESCRIPTION
- ----------- -----------
<S> <C>
3.1 Restated Certificate of Incorporation of Fluor Corporation [filed as
Exhibit 3.1 to Fluor's annual report on Form 10-K for the fiscal year
ended October 31, 1987 and incorporated herein by reference]
3.2 Restated Bylaws (as amended effective October 10, 1999) of Fluor
Corporation
4.1 Fluor Corporation Dividend Reinvestment Plan (as amended and restated
June 30, 1995) [filed as Exhibit 4.2 to Fluor's annual report on Form
10-K for the fiscal year ended October 31, 1995 and incorporated herein
by reference]
4.2 Indenture dated as of February 18, 1997 between Fluor Corporation and
Banker's Trust Company, trustee [filed as Exhibit 4 to Form S-3,
Registration No. 333-18315 for the issuance of up to $350 million of
debt securities and incorporated herein by this reference].
10.1 Fluor Corporation and Subsidiaries Executive Incentive Compensation
Plan (as amended and restated through September 15, 1988) [filed as
Exhibit 10.2 to Fluor's quarterly report on Form 10-Q for the quarterly
period ended July 31, 1996 and incorporated herein by reference]
10.2 Fluor Executive Deferred Compensation Program (as amended and restated
effective May 1, 1997) [filed as Exhibit 10.2 to Fluor's annual report
on Form 10-K for the fiscal year ended October 31,1997 and incorporated
herein by this reference]
10.3 Fluor Executives' Health Plan Summary [filed as Exhibit 10.11 to
Fluor's annual report on Form 10-K for the fiscal year ended October
31, 1985 and incorporated herein by reference]
10.4 Directors' Life Insurance Summary [filed as Exhibit 10(i) to Fluor's
annual report on Form 10-K for the fiscal year ended October 31, 1980
and incorporated herein by reference]
</TABLE>
16
<PAGE> 18
<TABLE>
<CAPTION>
EXHIBIT NO. DESCRIPTION
- ----------- -----------
<S> <C>
10.5 Executive Tax Services Plan (as amended and restated effective
September 8, 1998)
10.6 Executive Personal Financial Counseling Plan (as amended effective
September 7, 1998)
10.7 Company Automobile Policy Summary (effective as of July 1, 1998)
10.8 Fluor Executives' Supplemental Benefit Plan (as amended by First
Amendment effective November 15, 1983 as further amended and restated
effective as of May 1, 1999)
10.9 1988 Fluor Executive Stock Plan (as amended and restated effective
December 6, 1994) [filed as Exhibit 10.13 to Fluor's annual report on
Form 10-K for the fiscal year ended October 31, 1995 and incorporated
herein by reference]
10.10 Fluor Corporation Change of Control Compensation Plan (as amended and
restated by Second Amendment effective October 1, 1989) [filed as
Exhibit 10.19 to Fluor's annual report on Form 10-K for the fiscal year
ended October 31, 1989 and incorporated herein by reference]
10.11 Fluor Special Executive Incentive Plan (as amended effective December
6, 1994) [filed as Exhibit 10.15 to Fluor's annual report on Form 10-K
for the fiscal year ended October 31, 1995 and incorporated herein by
reference]
10.12 Retirement Plan for Outside Directors (effective as of May 1, 1992)
[filed as Exhibit 10.18 to Fluor's annual report on Form 10-K for the
fiscal year ended October 31, 1992 and incorporated herein by
reference]
10.13 Executive Severance Plan (amended and restated effective as of July 21,
1999)
10.14 Fluor Corporation Stock Plan for Non-Employee Directors (adopted
effective March 14, 1995) [filed as Exhibit 10.21 to Fluor's quarterly
report on Form 10-Q for the quarterly period ended April 30, 1995 and
incorporated herein by reference]
10.15 1996 Fluor Executive Stock Plan (effective March 12, 1996 as amended
December 10, 1996) [filed as Exhibit 10.20 to Fluor's annual report on
Form 10-K for the fiscal year ended October 31, 1996 and incorporated
herein by this reference]
10.16 Fluor Corporation Restricted Stock Plan for Non-Employee Directors
[filed as Exhibit 10.1 to Fluor's quarterly report as Form 10-Q for the
quarterly period ended April 30, 1997 and incorporated herein by this
reference]
10.17 Employment Agreement between Fluor Corporation and Philip J. Carroll,
Jr. dated as of July 1, 1998 [filed as Exhibit 10.19 to Fluor's annual
report on Form 10-K for the fiscal year ended October 31, 1998 and
incorporated herein by this reference]
10.18 Employment Agreement between Fluor Corporation, A.T. Massey Coal
Company, Inc. and Don L. Blankenship dated as of October 1, 1998 [filed
as Exhibit 10.20 to Fluor's annual report on Form 10-K for the fiscal
year ended October 31, 1998 and incorporated herein by this reference]
10.19 Special Successor and Development Retention Program between Fluor
Corporation and Don L. Blankenship dated as of September 1998 [filed as
Exhibit 10.21 to Fluor's annual report on Form 10-K for the fiscal year
ended October 31, 1998 and incorporated herein by this reference]
10.20 Special Retention Program between Fluor Corporation and James O.
Rollans dated September 24, 1999
10.21 Fluor Corporation 1999 Executive Performance Incentive Plan (effective
March 1999) [filed as Exhibit 10.1 to Fluor's quarterly report on Form
10-Q for the quarterly period ending April 30, 1999 and incorporated
herein by this reference]
13 Certain provisions of 1999 Annual Report to shareholders (with the
exception of the information incorporated by reference into Items 1, 5,
6, 7, 7A and 8 of this report, Fluor's 1999 Annual Report to
shareholders is not deemed to be filed as part of this report)
21 Fluor Corporation Subsidiaries
23 Consent of Independent Auditors
24 Manually signed Powers of Attorney executed by certain Fluor directors
27 Financial Data Schedule
</TABLE>
(b) Reports on Form 8-K: None were filed during the last quarter of the
period covered by this report.
17
<PAGE> 19
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) 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
January 26, 2000
By: /s/ R. F. Hake
-------------------------------------
R. F. Hake, Executive Vice President
and Chief Financial Officer
Pursuant to the requirements of the Securities Exchange Act of 1934, this report
has been signed below by the following persons on behalf of the registrant and
in the capacities and on the dates indicated.
<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
--------- ----- ----
<S> <C> <C>
PRINCIPAL EXECUTIVE OFFICER AND DIRECTOR:
/s/ P. J. Carroll, Jr. Chief Executive Officer January 26, 2000
- --------------------------------------------------
P. J. Carroll, Jr.
PRINCIPAL FINANCIAL OFFICER:
Executive Vice President and Chief
/s/ R. F. Hake Financial Officer January 26, 2000
- --------------------------------------------------
R. F. Hake
PRINCIPAL ACCOUNTING OFFICER
/s/ V. L. Prechtl Vice President and Controller January 26, 2000
- --------------------------------------------------
V. L. Prechtl
</TABLE>
18
<PAGE> 20
<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
--------- ----- ----
<S> <C> <C>
OTHER DIRECTORS:
* Director January 26, 2000
- --------------------------------------------------
D. L. Blankenship
* Director January 26, 2000
- --------------------------------------------------
C. A. Campbell, Jr.
* Director January 26, 2000
- --------------------------------------------------
P. J. Fluor, Jr.
* Director January 26, 2000
- --------------------------------------------------
D. P. Gardner
* Director January 26, 2000
- --------------------------------------------------
T. L. Gossage
* Director January 26, 2000
- --------------------------------------------------
B. R. Inman
* Director January 26, 2000
- --------------------------------------------------
V. S. Martinez
* Director January 26, 2000
- --------------------------------------------------
D. R. O'Hare
* Director January 26, 2000
- --------------------------------------------------
Lord Renwick, K.C.M.G.
* Director January 26, 2000
- --------------------------------------------------
M. R. Seger
* Director January 26, 2000
- --------------------------------------------------
J. O. Rollans
* Director January 26, 2000
- --------------------------------------------------
J. C. Stein
By: /s/ L. N. Fisher January 26, 2000
------------------------------------------
L. N. Fisher
Attorney-in-fact
</TABLE>
Manually signed Powers of Attorney authorizing L. N. Fisher, D. E.
Miller and E. P. Helm and each of them, to sign the annual report on Form 10-K
for the fiscal year ended October 31, 1999 and any amendments thereto as
attorneys-in-fact for certain directors and officers of the registrant are
included herein as Exhibits 24.
19
<PAGE> 21
EXHIBIT INDEX
<TABLE>
<CAPTION>
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NUMBERED
EXHIBIT DESCRIPTION PAGE
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<S> <C> <C>
3.1 Restated Certificate of Incorporation of Fluor Corporation [filed as
Exhibit 3.1 to Fluor's annual report on Form 10-K for the fiscal year
ended October 31, 1987 and incorporated herein by reference]
3.2 Restated Bylaws (as amended effective October 10, 1999) of Fluor
Corporation
4.1 Fluor Corporation Dividend Reinvestment Plan (as amended and restated
June 30, 1995) [filed as Exhibit 4.2 to Fluor's annual report on Form
10-K for the fiscal year ended October 31, 1995 and incorporated herein
by reference]
4.2 Indenture dated as of February 18, 1997 between Fluor Corporation and
Banker's Trust Company, trustee [filed as Exhibit 4 to Form S-3,
Registration No. 333-18315 for the issuance of up to $350 million of
debt securities and incorporated herein by this reference].
10.1 Fluor Corporation and Subsidiaries Executive Incentive Compensation
Plan (as amended and restated through September 15, 1988) [filed as
Exhibit 10.2 to Fluor's quarterly report on Form 10-Q for the quarterly
period ended July 31, 1996 and incorporated herein by reference]
10.2 Fluor Executive Deferred Compensation Program (as amended and restated
effective May 1, 1997) [filed as Exhibit 10.2 to Fluor's annual report
on Form 10-K for the fiscal year ended October 31,1997 and incorporated
herein by this reference]
10.3 Fluor Executives' Health Plan Summary [filed as Exhibit 10.11 to
Fluor's annual report on Form 10-K for the fiscal year ended October
31, 1985 and incorporated herein by reference]
10.4 Directors' Life Insurance Summary [filed as Exhibit 10(i) to Fluor's
annual report on Form 10-K for the fiscal year ended October 31, 1980
and incorporated herein by reference]
10.5 Executive Tax Services Plan (as amended and restated effective
September 8, 1998)
10.6 Executive Personal Financial Counseling Plan (as amended effective
September 7, 1998)
10.7 Company Automobile Policy Summary (effective as of July 1, 1998)
10.8 Fluor Executives' Supplemental Benefit Plan (as amended by First
Amendment effective November 15, 1983 as further amended and restated
effective as of May 1, 1999)
10.9 1988 Fluor Executive Stock Plan (as amended and restated effective
December 6, 1994) [filed as Exhibit 10.13 to Fluor's annual report on
Form 10-K for the fiscal year ended October 31, 1995 and incorporated
herein by reference]
</TABLE>
<PAGE> 22
<TABLE>
<CAPTION>
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NUMBERED
EXHIBIT DESCRIPTION PAGE
- ------- ----------------------------------------------------------------------- ------------
<S> <C> <C>
10.10 Fluor Corporation Change of Control Compensation Plan (as amended and
restated by Second Amendment effective October 1, 1989) [filed as
Exhibit 10.19 to Fluor's annual report on Form 10-K for the fiscal year
ended October 31, 1989 and incorporated herein by reference]
10.11 Fluor Special Executive Incentive Plan (as amended effective December
6, 1994) [filed as Exhibit 10.15 to Fluor's annual report on Form 10-K
for the fiscal year ended October 31, 1995 and incorporated herein by
reference]
10.12 Retirement Plan for Outside Directors (effective as of May 1, 1992)
[filed as Exhibit 10.18 to Fluor's annual report on Form 10-K for the
fiscal year ended October 31, 1992 and incorporated herein by
reference]
10.13 Executive Severance Plan (amended and restated effective as of July 21,
1999)
10.14 Fluor Corporation Stock Plan for Non-Employee Directors (adopted
effective March 14, 1995) [filed as Exhibit 10.21 to Fluor's quarterly
report on Form 10-Q for the quarterly period ended April 30, 1995 and
incorporated herein by reference]
10.15 1996 Fluor Executive Stock Plan (effective March 12, 1996 as amended
December 10, 1996) [filed as Exhibit 10.20 to Fluor's annual report on
Form 10-K for the fiscal year ended October 31, 1996 and incorporated
herein by this reference]
10.16 Fluor Corporation Restricted Stock Plan for Non-Employee Directors
[filed as Exhibit 10.1 to Fluor's quarterly report as Form 10-Q for the
quarterly period ended April 30, 1997 and incorporated herein by this
reference]
10.17 Employment Agreement between Fluor Corporation and Philip J. Carroll,
Jr. dated as of July 1, 1998 [filed as Exhibit 10.19 to Fluor's annual
report on Form 10-K for the fiscal year ended October 31, 1998 and
incorporated herein by this reference]
10.18 Employment Agreement between Fluor Corporation, A.T. Massey Coal
Company, Inc. and Don L. Blankenship dated as of October 1, 1998 [filed
as Exhibit 10.20 to Fluor's annual report on Form 10-K for the fiscal
year ended October 31, 1998 and incorporated herein by this reference]
10.19 Special Successor and Development Retention Program between Fluor
Corporation and Don L. Blankenship dated as of September 1998 [filed as
Exhibit 10.21 to Fluor's annual report on Form 10-K for the fiscal year
ended October 31, 1998 and incorporated herein by this reference]
10.20 Special Retention Program between Fluor Corporation and James O.
Rollans dated September 24, 1999
10.21 Fluor Corporation 1999 Executive Performance Incentive Plan (effective
March 1999) [filed as Exhibit 10.1 to Fluor's quarterly report on Form
10-Q for the quarterly period ending April 30, 1999 and incorporated
herein by this reference]
</TABLE>
<PAGE> 23
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<S> <C> <C>
13 Certain provisions of 1999 Annual Report to shareholders (with the
exception of the information incorporated by reference into Items 1, 5,
6, 7, 7A and 8 of this report, Fluor's 1999 Annual Report to
shareholders is not deemed to be filed as part of this report)
21 Fluor Corporation Subsidiaries
23 Consent of Independent Auditors
24 Manually signed Powers of Attorney executed by certain Fluor directors
27 Financial Data Schedule
</TABLE>
<PAGE> 1
EXHIBIT 3.2
RESTATED BYLAWS
(as amended as of October 10, 1999)
OF
FLUOR CORPORATION
(a Delaware corporation)
ARTICLE I
OFFICES
Section 1.01 Registered Office. The registered office of FLUOR
CORPORATION (hereinafter called the "Corporation") in the State of Delaware
shall be at 9 East Loockerman Street, City of Dover, County of Kent, and the
name of the registered agent at that address shall be National Registered
Agents, Inc.
Section 1.02 Principal Office. The principal office for the
transaction of the business of the Corporation shall be at One Enterprise Drive,
Aliso Viejo, California 92656. The Board of Directors (hereinafter called the
"Board") is hereby granted full power and authority to change said principal
office from one location to another.
Section 1.03 Other Offices. The Corporation may also have an office
or offices at such other place or places, either within or without the State of
Delaware, as the Board may from time to time determine or as the business of the
Corporation may require.
ARTICLE II
MEETINGS OF STOCKHOLDERS
Section 2.01 Annual Meetings. Annual meetings of the stockholders
of the Corporation for the purpose of electing directors and for the transaction
of such other proper business as may come before such meetings may be held at
such time, date and place as the Board shall determine by resolution.
Section 2.02 Special Meetings. Special meetings of the stockholders
of the Corporation for any purpose or purposes may be called at any time by the
Board, or by a committee of the Board which has been duly designated by the
Board and whose powers and authority, as provided in a resolution of the Board
or in the Bylaws, include the power to call such meeting, but such special
meetings may not be called by any other person or persons; provided, however,
that if and to the extent that any special meetings of stockholders may be
called by any
1
<PAGE> 2
other person or persons specified in any provisions of the Certificate of
Incorporation or any amendment thereto or any certificate filed under Section
151(g) of the Delaware General Corporation Law (or its successor statute as in
effect from time to time hereafter), then such special meeting may also be
called by the person or persons, in the manner, at the times and for the
purposes so specified.
Section 2.03 Place of Meetings. All meetings of the stockholders
shall be held at such places, within or without the State of Delaware, as may
from time to time be designated by the person or persons calling the respective
meeting and specified in the respective notices or waivers of notice thereof.
Section 2.04 Notice of Stockholder Business. At an annual meeting
of the stockholders, only such business shall be conducted as shall have been
properly brought before the meeting (a) by or at the direction of the Board of
Directors or (b) by any stockholder of the Corporation who complies with the
notice procedures set forth in this Section 2.04. For business to be properly
brought before an annual meeting by a stockholder, the stockholder must have
given timely notice thereof in writing to the Secretary of the Corporation. To
be timely, a stockholder's notice must be delivered to or mailed and received at
the principal office of the Corporation, not less than 60 days nor more than 90
days prior to the meeting; provided, however, that in the event that less than
40 days' notice or prior public disclosure of the date of the meeting is given
or made to stockholders, notice by the stockholder to be timely must be received
not later than the close of business on the 10th day following the day on which
such notice of the date of the meeting was mailed or such public disclosure was
made. A stockholder's notice to the Secretary shall set forth as to each matter
the stockholder proposes to bring before the annual meeting (a) a brief
description of the business desired to be brought before the annual meeting and
the reasons for conducting such business at the annual meeting, (b) the name and
address, as they appear on the books of the Corporation, of the stockholder
proposing such business, (c) the class and number of shares of the Corporation
which are beneficially owned by the stockholder, and (d) any material interest
of the stockholder in such business. Notwithstanding anything in the Bylaws to
the contrary, no business shall be conducted at an annual meeting except in
accordance with the procedures set forth in this Section 2.04. The Chairman of
an annual meeting shall, if the facts warrant, determine and declare to the
meeting that business was not properly brought before the meeting in accordance
with the provisions of this Section 2.04, and if he or she should so determine,
he or she shall so declare to the meeting and any such business not properly
brought before the meeting shall not be transacted.
Section 2.05 Notice of Meetings. Except as otherwise required by
law, notice of each meeting of the stockholders, whether annual or special,
shall be given not less than 10 nor more than 60 days before the date of the
meeting to each stockholder of record entitled to vote at such meeting by
delivering a typewritten or printed notice thereof to him or her personally, or
by depositing such notice in the United States mail, in a postage prepaid
envelope, directed to him or
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<PAGE> 3
her at his or her post office address furnished by him or her to the Secretary
of the Corporation for such purpose or, if he or she shall not have furnished to
the Secretary his or her address for such purposes, then at his or her post
office address last known to the Secretary, or by transmitting a notice thereof
to him or her at such address by telegraph, cable or wireless. Except as
otherwise expressly required by law, no publication of any notice of a meeting
of the stockholders shall be required. Every notice of a meeting of the
stockholders shall state the place, date and hour of the meeting, and, in the
case of a special meeting, shall also state the purpose or purposes for which
the meeting is called. Notice of any meeting of stockholders shall not be
required to be given to any stockholder who shall have waived such notice and
such notice shall be deemed waived by any stockholder who shall attend such
meeting in person or by proxy, except a stockholder who shall attend such
meeting for the express purpose of objecting, at the beginning of the meeting,
to the transaction of any business because the meeting is not lawfully called or
convened. Except as otherwise expressly required by law, notice of any adjourned
meeting of the stockholders need not be given if the time and place thereof are
announced at the meeting at which the adjournment is taken.
Section 2.06 Quorum. Except in the case of any meeting for the
election of directors summarily ordered as provided by law, the holders of
record of a majority in voting interest of the shares of stock of the
Corporation entitled to be voted thereat, present in person or by proxy, shall
constitute a quorum for the transaction of business at any meeting of the
stockholders of the Corporation or any adjournment thereof. In the absence of a
quorum at any meeting or any adjournment thereof, a majority in voting interest
of the stockholders present in person or by proxy and entitled to vote thereat
or, in the absence therefrom of all the stockholders, any officer entitled to
preside at, or to act as secretary of, such meeting may adjourn such meeting
from time to time. At any such adjourned meeting at which a quorum is present
any business may be transacted which might have been transacted at the meeting
as originally called.
Section 2.07 Voting.
(a) Each stockholder shall, at each meeting of the stockholders, be
entitled to vote in person or by proxy each share or fractional share of the
stock of the Corporation having voting rights on the matter in question and
which shall have been held by him or her and registered in his or her name on
the books of the Corporation:
(i) on the date fixed pursuant to Section 6.05 of the Bylaws as
the record date for the determination of stockholders entitled to notice of and
to vote at such meeting, or
(ii) if no such record date shall have been so fixed, then (a)
at the close of business on the day next preceding the day on which notice of
the meeting shall be given or (b) if
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notice of the meeting shall be waived, at the close of business on the day next
preceding the day on which meeting shall be held.
(b) Shares of its own stock belonging to the Corporation or to
another corporation, if a majority of the shares entitled to vote in the
election of directors in such other corporation is held, directly or indirectly,
by the Corporation, shall neither be entitled to vote nor be counted for quorum
purposes. Persons holding stock of the Corporation in a fiduciary capacity shall
be entitled to vote such stock. Persons whose stock is pledged shall be entitled
to vote, unless in the transfer by the pledgor on the books of the Corporation
he or she shall have expressly empowered the pledgee to vote thereon, in which
case only the pledgee, or his or her proxy, may represent such stock and vote
thereon. Stock having voting power standing of record in the names of two or
more persons, whether fiduciaries, members of a partnership, joint tenants,
tenants in common, tenants by the entirety or otherwise, or with respect to
which two or more persons have the same fiduciary relationship, shall be voted
in accordance with the provisions of the General Corporation Law of the State of
Delaware.
(c) Any such voting rights may be exercised by the stockholder
entitled thereto in person or by his or her proxy appointed by an instrument in
writing, subscribed by such stockholder or by his or her attorney thereunto
authorized and delivered to the secretary of the meeting; provided, however,
that no proxy shall be voted or acted upon after three years from its date
unless said proxy shall provide for a longer period. The attendance at any
meeting of a stockholder who may theretofore have given a proxy shall not have
the effect of revoking the same unless he or she shall in writing so notify the
secretary of the meeting prior to the voting of the proxy. At any meeting of the
stockholders all matters, except as otherwise provided in the Certificate of
Incorporation, in the Bylaws or by law, shall be decided by the vote of a
majority in voting interest of the stockholders present in person or by proxy
and entitled to vote thereat and thereon, a quorum being present. The vote at
any meeting of the stockholders on any question need not be by ballot, unless so
directed by the chairman of the meeting. On a vote by ballot each ballot shall
be signed by the stockholder voting, or by his or her proxy, if there be such
proxy, and it shall state the number of shares voted.
Section 2.08 List of Stockholders. The Secretary of the Corporation
shall prepare and make, at least 10 days before every meeting of stockholders, a
complete list of the stockholders entitled to vote at the meeting, arranged in
alphabetical order, and showing the address of each stockholder and the number
of shares registered in the name of each stockholder. Such list shall be open to
the examination of any stockholder, for any purpose germane to the meeting,
during ordinary business hours, for a period of at least 10 days prior to the
meeting, either at a place within the city where the meeting is to be held,
which place shall be specified in the notice of the meeting, or, if not so
specified, at the place where the meeting is to be held. The list shall also be
produced and kept at the time and place of the meeting during the entire
duration thereof, and may be inspected by any stockholder who is present.
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<PAGE> 5
Section 2.09 Judges. If at any meeting of the stockholders a vote
by written ballot shall be taken on any question, the chairman of such meeting
may appoint a judge or judges to act with respect to such vote. Each judge so
appointed shall first subscribe an oath faithfully to execute the duties of a
judge at such meeting with strict impartiality and according to the best of his
or her ability. Such judges shall decide upon the qualification of the voters
and shall report the number of shares represented at the meeting and entitled to
vote on such question, shall conduct and accept the votes, and, when the voting
is completed shall ascertain and report the number of shares voted respectively
for and against the question. Reports of the judges shall be in writing and
subscribed and delivered by them to the Secretary of the Corporation. The judges
need not be stockholders of the Corporation, and any officer of the Corporation
may be a judge on any question other than a vote for or against a proposal in
which he or she shall have a material interest.
ARTICLE III
BOARD OF DIRECTORS
Section 3.01 General Powers. The property, business and affairs of
the Corporation shall be managed by the Board.
Section 3.02 Number. The authorized number of directors of the
Corporation shall be thirteen and such authorized number shall not be changed
except by a Bylaw or amendment thereof duly adopted by the stockholders in
accordance with the Certificate of Incorporation or by the Board amending this
Section 3.02.
Section 3.03 Election of Directors. The directors shall be elected
by the stockholders of the Corporation, and at each election the persons
receiving the greatest number of votes, up to the number of directors then to be
elected, shall be the persons then elected. The election of directors is subject
to any provisions contained in the Certificate of Incorporation relating
thereto, including any provisions for a classified board and for cumulative
voting.
Section 3.04 Notice of Stockholder Nominees. Only persons who are
nominated in accordance with the procedures set forth in the Bylaws shall be
eligible for election as directors. Nominations of persons for election to the
Board of Directors of the Corporation may be made at a meeting of stockholders
(a) by or at the direction of the Board of Directors or (b) by any stockholder
of the Corporation entitled to vote for the election of directors at the meeting
who complies with the notice procedures set forth in this Section 3.04. Such
nominations, other than those made by or at the direction of the Board of
Directors, shall be made pursuant to timely notice in writing to the Secretary
of the Corporation. To be timely, a stockholder's notice shall
5
<PAGE> 6
be delivered to or mailed and received at the principal office of the
Corporation not less than 60 days nor more than 90 days prior to the meeting;
provided, however, that in the event that less than 40 days' notice or prior
public disclosure of the date of the meeting is given or made to stockholders,
notice by the stockholder to be timely must be received not later than the close
of business on the 10th day following the day on which such notice of the date
of the meeting was mailed or such public disclosure was made. Such stockholder's
notice shall set forth (a) as to each person whom the stockholder proposes to
nominate for election or re-election as a director, all information relating to
such person that is required to be disclosed in solicitations of proxies for
election of directors, or is otherwise required, in each case pursuant to
Regulation 14A under the Securities Exchange Act of 1934, as amended (including
without limitation such person's written consent to be named in the proxy
statement as a nominee and to serve as a director if elected); and (b) as to the
stockholder proposing such nomination (i) the name and address, as they appear
on the books of the Corporation, of such stockholder, and (ii) the class and
number of shares of the Corporation which are beneficially owned by such
stockholder. At the request of the Board of Directors any person nominated by
the Board of Directors for election as a director shall furnish to the Secretary
of the Corporation that information required to be set forth in a stockholder's
notice of nomination which pertains to the nominee. No person shall be eligible
for election as a director of the Corporation unless nominated in accordance
with the procedures set forth in the Bylaws. The Chairman of the meeting shall,
if the facts warrant, determine and declare to the meeting that a nomination was
not made in accordance with the procedures prescribed by the Bylaws, and if he
or she should so determine, he or she shall so declare to the meeting and the
defective nomination shall be disregarded.
Section 3.05 Mandatory Retirement. The Chairman of the Board and
the President and any former Chairman of the Board and any former President, if
serving as a director of the Corporation at age 72, shall retire from the Board
at the end of the calendar year in which his or her 72nd birthday occurs. Each
other employee or former employee of the Corporation or its subsidiaries serving
as a director of the Corporation at age 65 shall retire from the Board at the
end of the calendar year in which his or her 65th birthday occurs unless the
Chairman of the Board recommends and the Board approves his or her continued
service as a non-employee director. Each other employee of the Corporation or
its subsidiaries under age 65 serving as a director of the Corporation who
elects to take early retirement or who for any other reason is no longer an
officer of the Corporation or its subsidiaries shall retire from the Board as of
the date he or she ceases to be an officer unless the Chairman of the Board
recommends and the Board approves his or her continued directorship. Each
non-employee director of the Corporation serving at age 72 shall retire from the
Board at the end of the calendar year in which his or her 72nd birthday occurs.
For purposes of this Section, "end of the calendar year" shall include the
period ending with the seventh day of January next following.
Section 3.06 Resignations. Any director of the Corporation may
resign at any time by giving written notice to the Board or to the Secretary of
the Corporation. Any such
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<PAGE> 7
resignation shall take effect at the time specified therein, or, if the time be
not specified, it shall take effect immediately upon its receipt; and, unless
otherwise specified therein, the acceptance of such resignation shall not be
necessary to make it effective.
Section 3.07 Vacancies. Except as otherwise provided in the
Certificate of Incorporation, any vacancy in the Board, whether because of
death, resignation, disqualification, an increase in the number of directors, or
any other cause, may be filled by vote of the majority of the remaining
directors, although less than a quorum. Each director so chosen to fill a
vacancy shall hold office until his or her successor shall have been elected and
shall qualify or until he or she shall resign or shall have been removed.
Section 3.08 Place of Meeting, etc. The Board may hold any of its
meetings at such place or places within or without the State of Delaware as the
Board may from time to time by resolution designate or as shall be designated by
the person or persons calling the meeting or in the notice or a waiver of notice
of any such meeting. Directors may participate in any regular or special meeting
of the Board by means of conference telephone or similar communications
equipment pursuant to which all persons participating in the meeting of the
Board can hear each other, and such participation shall constitute presence in
person at such meeting.
Section 3.09 First Meeting. The Board shall meet as soon as
practicable after each annual election of directors and notice of such first
meeting shall not be required.
Section 3.10 Regular Meetings. Regular meetings of the Board may be
held at such times as the Board shall from time to time by resolution determine.
If any day fixed for a meeting shall be a legal holiday at the place where the
meeting is to be held, then the meeting shall be held at the same hour and place
on the next succeeding business day not a legal holiday. Except as provided by
law, notice of regular meetings need not be given.
Section 3.11 Special Meetings. Special meetings of the Board may be
called at any time by the Chairman of the Board or the President or by any two
directors, to be held at the principal office of the Corporation, or at such
other place or places, within or without the State of Delaware, as the person or
persons calling the meeting may designate.
Notice of all special meetings of the Board shall be given to each
director by two days' service of the same by telegram, by letter, or personally.
Such notice may be waived by any director and any meeting shall be a legal
meeting without notice having been given if all the directors shall be present
thereat or if those not present shall, either before or after the meeting, sign
a written waiver of notice of, or a consent to, such meeting or shall after the
meeting sign the approval of the minutes thereof. All such waivers, consents or
approvals shall be filed with the corporate records or be made a part of the
minutes of the meeting.
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<PAGE> 8
Section 3.12 Quorum and Manner of Acting. Except as otherwise
provided in the Bylaws or by law, the presence of a majority of the authorized
number of directors shall be required to constitute a quorum for the transaction
of business at any meeting of the Board, and all matters shall be decided at any
such meeting, a quorum being present, by the affirmative votes of a majority of
the directors present. In the absence of a quorum, a majority of directors
present at any meeting may adjourn the same from time to time until a quorum
shall be present. Notice of any adjourned meeting need not be given. The
directors shall act only as a Board, and the individual directors shall have no
power as such.
Section 3.13 Action by Consent. Any action required or permitted to
be taken at any meeting of the Board or of any committee thereof may be taken
without a meeting if a written consent thereto is signed by all members of the
Board or of such committee, as the case may be, and such written consent is
filed with the minutes of proceedings of the Board or such committee.
Section 3.14 Compensation. No stated salary need be paid directors,
as such, for their services, but, by resolution of the Board, a fixed sum and
expenses of attendance, if any, may be allowed for attendance at each regular or
special meeting of the Board or an annual directors' fee may be paid; provided
that nothing herein contained shall be construed to preclude any director from
serving the Corporation in any other capacity and receiving compensation
therefore. Members of special or standing committees may be allowed like
compensation for attending committee meetings.
Section 3.15 Committees. The Board may, by resolution passed by a
majority of the whole Board, designate one or more committees, each committee to
consist of one or more of the directors of the Corporation. Former employees of
the Corporation or its subsidiaries who are no longer officers of the
Corporation or its subsidiaries, if serving as a director of the Corporation,
shall not be eligible to serve as a member of any committee of the Board. Except
as otherwise provided in the Board resolution designating a committee, the
presence of a majority of the authorized number of members of such committee
shall be required to constitute a quorum for the transaction of business at any
meeting of such committee. Any such committee, to the extent provided in the
resolution of the Board, shall have and may exercise all the powers and
authority of the Board in the management of the business and affairs of the
Corporation, and may authorize the seal of the Corporation to be affixed to all
papers which may require it; but no such committee shall have any power or
authority in reference to amending the Certificate of Incorporation, adopting an
agreement of merger or consolidation, recommending to the stockholders the sale,
lease or exchange of all or substantially all of the Corporation's property and
assets, recommending to the stockholders a dissolution of the Corporation or a
revocation of the dissolution, or amending the Bylaws of the Corporation; and
unless the resolution of the Board expressly so provides, no such committee
shall have the power or authority to declare a dividend or to authorize the
issuance of stock. Any such committee shall keep written minutes of its meetings
and report the same to the Board at the next regular meeting of the Board.
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<PAGE> 9
Section 3.16 Officers of the Board. The Board shall have a Chairman
of the Board and may, at the discretion of the Board, have a Vice Chairman and
other officers. The Chairman of the Board and the Vice Chairman shall be
appointed from time to time by the Board, unless such positions are elected
offices of the Corporation, currently filled, and shall have such powers and
duties as shall be designated by the Board.
ARTICLE IV
OFFICERS
Section 4.01 Officers. The officers of the Corporation shall be a
Chairman of the Board, a Chief Executive Officer, a Secretary, a Treasurer and
such other officers as may be appointed by the Board as the business of the
Corporation may require. Officers shall have such powers and duties as are
permitted or required by law or as may be specified by or in accordance with
resolutions of the Board. Any number of offices may be held by the same person.
Unless the Board shall otherwise determine, the Chairman of the Board shall be
the Chief Executive Officer of the Corporation. In the absence of any contrary
determination by the Board, the Chief Executive Officer shall, subject to the
power and authority of the Board, have general supervision, direction and
control of the officers, employees, business and affairs of the Corporation.
Section 4.02 Election and Term. The officers of the Corporation
shall be elected annually by the Board. The Board may at any time and from time
to time elect such additional officers as the business of the Corporation may
require. Each officer shall hold his or her office until his or her successor is
elected and qualified or until his or her earlier resignation or removal.
Section 4.03 Removal and Resignation. Any officer may be removed,
either with or without cause, by a majority of the directors at the time in
office, at any regular or special meeting of the Board. Any officer may resign
at any time by giving notice to the Board. Such resignation shall take effect at
the time specified in such notice or, in the absence of such specification, at
the date of the receipt by the Board of such notice. Unless otherwise specified
in such notice, the acceptance of such resignation shall not be necessary to
make it effective.
Section 4.04 Vacancies. Any vacancy occurring in any office of the
Corporation by death, resignation, removal or otherwise, shall be filled in the
manner prescribed in these Bylaws for the regular appointment to such office.
9
<PAGE> 10
ARTICLE V
CONTRACTS, CHECKS, DRAFTS, BANK ACCOUNTS, ETC.
Section 5.01 Execution of Contracts. The Board, except as in the
Bylaws otherwise provided, may authorize any officer or officers, agent or
agents, to enter into any contract or execute any instrument in the name and on
behalf of the Corporation, and such authority may be general or confined to
specific instances; and unless so authorized by the Board or by the Bylaws, no
officer, agent or employee shall have any power or authority to bind the
Corporation by any contract or engagement or to pledge its credit or to render
it liable for any purpose or in any amount.
Section 5.02 Checks, Drafts, etc. All checks, drafts or other
orders for payment of money, notes or other evidence of indebtedness, issued in
the name of or payable to the Corporation, shall be signed or endorsed by such
person or persons and in such manner as, from time to time, shall be determined
by resolution of the Board. Each such person shall give such bond, if any, as
the Board may require.
Section 5.03 Deposit. All funds of the Corporation not otherwise
employed shall be deposited from time to time to the credit of the Corporation
in such banks, trust companies or other depositories as the Board may select, or
as may be selected by any officer or officers, assistant or assistants, agent or
agents, or attorney or attorneys of the Corporation to whom such power shall
have been delegated by the Board. For the purpose of deposit and for the purpose
of collection for the account of the Corporation, the Chief Executive Officer,
the President or the Treasurer (or any other officer or officers, assistant or
assistants, agent or agents, or attorney or attorneys of the Corporation who
shall from time to time be determined by the Board) may endorse, assign and
deliver checks, drafts and other orders for the payment of money which are
payable to the order of the Corporation.
Section 5.04 General and Special Bank Accounts. The Board may from
time to time authorize the opening and keeping of general and special bank
accounts with such banks, trust companies or other depositories as the Board may
select or as may be selected by any officer or officers, assistant or
assistants, agent or agents, or attorney or attorneys of the Corporation to whom
such power shall have been delegated by the Board. The Board may make such
special rules and regulations with respect to such bank accounts, not
inconsistent with the provisions of the Bylaws, as it may deem expedient.
10
<PAGE> 11
ARTICLE VI
SHARES AND THEIR TRANSFER
Section 6.01 Certificates for Stock. Every owner of stock of the
Corporation shall be entitled to have a certificate or certificates, to be in
such form as the Board shall prescribe, certifying the number and class of
shares of the stock of the Corporation owned by him or her. The certificates
representing shares of such stock shall be numbered in the order in which they
shall be issued and shall be signed in the name of the Corporation by the
President and by the Secretary. Any or all of the signatures on the certificates
may be a facsimile. In case any officer, transfer agent or registrar who has
signed or whose facsimile signature has been placed upon any such certificate
shall thereafter have ceased to be such officer, transfer agent or registrar
before such certificate is issued, such certificate may nevertheless be issued
by the Corporation with the same effect as though the person who signed such
certificate, or whose facsimile signature shall have been placed thereupon, were
such officer, transfer agent or registrar at the date of issue. A record shall
be kept of the respective names of the persons, firms or corporations owning the
stock represented by such certificates, the number and class of shares
represented by such certificates, respectively, and the respective dates
thereof, and in case of cancellation the respective dates of cancellation. Every
certificate surrendered to the Corporation for exchange or transfer shall be
cancelled, and no new certificate or certificates shall be issued in exchange
for any existing certificate until such existing certificate shall have been so
cancelled, except in cases provided for in Section 6.04 of the Bylaws.
Section 6.02 Transfers of Stock. Transfers of shares of stock of
the Corporation shall be made only on the books of the Corporation by the
registered holder thereof, or by his or her attorney thereunto authorized by
power of attorney duly executed and filed with the Secretary, or with a transfer
clerk or a transfer agent appointed as provided in Section 6.03 of the Bylaws,
and upon surrender of the certificate or certificates for such shares properly
endorsed and the payment of all taxes thereon. The person in whose name shares
of stock stand on the books of the Corporation shall be deemed the owner thereof
for all purposes as regards the Corporation. Whenever any transfer of shares
shall be made for collateral security, and not absolutely, such fact shall be
stated expressly in the entry of transfer if, when the certificate or
certificates shall be presented to the Corporation for transfer, both the
transferor and the transferee request the Corporation to do so.
Section 6.03 Regulations. The Board may make such rules and
regulations as it may deem expedient, not inconsistent with the Bylaws,
concerning the issue, transfer and registration of certificates for shares of
the stock of the Corporation. It may appoint, or authorize any officer or
officers to appoint, one or more transfer clerks or one or more transfer agents
and one or more
11
<PAGE> 12
registrars, and may require all certificates for stock to bear the signature or
signatures of any of them.
Section 6.04 Lost, Stolen, Destroyed, And Mutilated Certificates.
In any case of loss, theft, destruction, or mutilation of any certificate of
stock, another may be issued in its place upon proof of such loss, theft,
destruction, or mutilation and upon the giving of a bond of indemnity to the
Corporation in such form and in such sum as the Board may direct; provided,
however, that a new certificate may be issued without requiring any bond when,
in the judgment of the Board, it is proper so to do.
Section 6.05 Fixing Date for Determination of Stockholders of
Record. In order that the Corporation may determine the stockholders entitled to
notice of or to vote at any meeting of stockholders or any adjournment thereof,
or entitled to receive payment of any dividend or other distribution or
allotment of any rights, or entitled to exercise any rights in respect of any
other change, conversion or exchange of stock or for the purpose of any other
lawful action, the Board may fix, in advance, a record date, which shall not be
more than 60 nor less than 10 days before the date of such meeting, nor more
than 60 days prior to any other action. If, in any case involving the
determination of stockholders for any purpose other than notice of or voting at
a meeting of stockholders, the Board shall not fix such a record date, the
record date for determining stockholders for such purpose shall be the close of
business on the day on which the Board shall adopt the resolution relating
thereto. A determination of stockholders entitled to notice of or to vote at a
meeting of stockholders shall apply to any adjournment of such meeting;
provided, however, that the Board may fix a new record date for the adjourned
meeting.
ARTICLE VII
MISCELLANEOUS
Section 7.01 Seal. The Board shall provide a corporate seal, which
shall be in the form of a circle and shall bear the name of the Corporation and
words and figures showing that the Corporation was incorporated in the State of
Delaware and the year of incorporation.
Section 7.02 Waiver of Notices. Whenever notice is required to be
given by the Bylaws or the Certificate of Incorporation or by law, the person
entitled to said notice may waive such notice in writing, either before or after
the time stated therein, and such waiver shall be deemed equivalent to notice.
Section 7.03 Fiscal Year. The fiscal year of the Corporation shall
end on the 31st day of October of each year.
12
<PAGE> 13
Section 7.04 Amendments. The Bylaws, or any of them, may be
rescinded, altered, amended or repealed, and new Bylaws may be made, (i) by the
Board, by vote of a majority of the number of directors then in office as
directors, acting at any meeting of the Board, or (ii) by the vote of the
holders of not less than 80% of the total voting power of all outstanding shares
of voting stock of the Corporation, at any annual meeting of stockholders,
without previous notice, or at any special meeting of stockholders, provided
that notice of such proposed amendment, modification, repeal or adoption is
given in the notice of special meeting. Any Bylaws made or altered by the
stockholders may be altered or repealed by the Board or may be altered or
repealed by the stockholders.
13
<PAGE> 1
EXHIBIT 10.5
FLUOR CORPORATION AND SUBSIDIARIES
Management Manual
================================================================================
Section: Compensation Page: 125
Subject: TAX SERVICES PLAN Effective: 09-07-98
Applies To: Fluor Corporation and its Subsidiaries Supersedes: 11-01-93
================================================================================
PURPOSE
The purpose of this Plan is to provide eligible executives of Fluor Corporation
and its subsidiaries with assistance in personal tax compliance and planning.
ELIGIBILITY
Officers of Fluor Corporation and its designated subsidiaries in Salary Grade 32
or above are authorized to participate in this Plan. Officers in Salary Grades
29-31 may be approved for participation at the $5,000 level by the Executive
Committee or the Office of the President, Fluor Daniel, Inc.
PROCEDURES
Charges for services rendered under this Plan for executives of Fluor
Corporation, Fluor Daniel, Inc., Fluor Constructors International, Inc., and all
divisions of those companies, should be forwarded to the vice president, Human
Resources and Administration, Fluor Corporation, for approval and payment. All
other subsidiaries will be responsible for maintaining and administering this
Plan under the general provisions established herein.
Total costs incurred by each executive covered by this Plan may not exceed the
Maximum Assistance Amount for a calendar year as indicated below. These amounts
are calendar year limitations, which will be applied without regard to the
particular tax returns prepared or consulting services rendered. Costs in excess
of the maximum established for the executive will be charged to the individual's
personal account.
Charges, up to the Maximum Assistance Amount, paid by Fluor will be included in
each participant's total compensation as reported to federal and state taxing
authorities.
<PAGE> 2
FLUOR CORPORATION AND SUBSIDIARIES
Management Manual
================================================================================
Section: Compensation Page: 126
Subject: TAX SERVICES PLAN Effective: 09-07-98
(Continued)
Applies To: Fluor Corporation and its Subsidiaries Supersedes: 11-01-93
================================================================================
SCHEDULE OF MAXIMUM ASSISTANCE AMOUNTS
<TABLE>
<CAPTION>
Maximum
Assistance
Salary Grade Amount
------------ ----------
<S> <C>
41 - 43 $25,000
36 - 40 15,000
32 - 35 5,000
</TABLE>
In the event of the death of an eligible executive, this Plan will continue in
force for expenses resulting from the calendar year in which the death occurred.
Services provided by this Plan will be made available to the executive's
designated beneficiary up to the applicable Maximum Assistance Amount, less any
payments previously made during that year.
All benefits under this Plan will immediately cease for those executives who are
terminated from the company for any reason other than death, retirement or
permanent and total disability.
<PAGE> 1
EXHIBIT 10.6
FLUOR CORPORATION AND SUBSIDIARIES
Management Manual
================================================================================
Section: Compensation Page: 127
Subject: PERSONAL FINANCIAL COUNSELING PLAN Effective: 09-07-98
Applies To: Fluor Corporation and its Subsidiaries Supersedes: 11-01-93
================================================================================
PURPOSE
The purpose of this Plan is to encourage executives of Fluor Corporation and its
designated subsidiaries to meet their overall financial objectives through
personal financial counseling services.
ELIGIBILITY
Those officers of Fluor Corporation and its subsidiaries in Salary Grade 32 or
above are authorized to participate in this Plan. Officers in Salary Grades
29-31 may be approved for participation by the Executive Committee or Office of
the President, Fluor Daniel, Inc.
SCOPE OF SERVICES
Expenses incurred and fees charged by qualified financial consultants of the
executive's choice for personal financial profiles, forecasts, investment plan
development and estate planning are included.
REIMBURSEMENT
The cost of such services up to the Maximum Assistance Amount for each of the
first two years the executive is eligible to participate in the Plan, plus an
amount up to the Maximum Assistance Amount during the year of the executive's
retirement are eligible for reimbursement.
In the event of the death of an eligible executive prior to retirement, services
provided by this Plan will be made available to the executive's designated
beneficiary up to the Maximum Assistance Amount.
In the event of the death of an eligible executive during the year of
retirement, services provided by this Plan will be made available to the
executive's designated beneficiary up to the Maximum Assistance Amount less any
payments previously made during that year.
All benefits under this Plan will immediately cease for those executives who are
terminated from the company for any reason other than death, retirement or
permanent and total disability.
<PAGE> 2
FLUOR CORPORATION AND SUBSIDIARIES
Management Manual
================================================================================
Section: Compensation Page: 128
Subject: PERSONAL FINANCIAL COUNSELING PLAN Effective: 09-07-98
Applies To: Fluor Corporation and its Subsidiaries Supersedes: 11-01-93
================================================================================
SCHEDULE OF MAXIMUM ASSISTANCE AMOUNTS
<TABLE>
<CAPTION>
Maximum
Assistance
Salary Grade Amount
------------ ----------
<S> <C>
41 - 43 $6,000
36 - 40 4,000
32 - 35 3,000
</TABLE>
PROCEDURES
The Corporate Human Resources group is responsible for the administration of
this Plan for those executives of Fluor Corporation, Fluor Daniel, Inc., Fluor
Constructors International, Inc., and all divisions of those companies. Bills or
receipts should be submitted to the vice president, Human Resources and
Administration, in Irvine for approval and final forwarding to the appropriate
accounting department for payment. Total charges paid by Fluor will be included
in each participant's total compensation as reported to federal and state taxing
authorities.
All other subsidiaries will be responsible for maintaining and administering
this Plan under the general provisions established above for their eligible
executives.
<PAGE> 1
EXHIBIT 10.7
FLUOR CORPORATION AND SUBSIDIARIES
Management Manual
================================================================================
Section: Compensation Page: 136
Subject: OFFICER AUTOMOBILE OR AUTOMOBILE ALLOWANCE Effective: 07-01-98
Applies To: Fluor Corporation and Selected Subsidiaries Supersedes: NEW
================================================================================
GENERAL POLICY
The company may provide company automobiles or automobile allowances as
perquisites to attract, retain and reward officers of Fluor Corporation and
selected subsidiaries.
ELIGIBILITY
Executives who are officers of Fluor Corporation, Fluor Daniel, Inc. and Fluor
Constructors, Inc. and who are eligible to participate in the Fluor Corporation
and subsidiaries Executive Incentive Plan.
PROCEDURE
A. An automobile or automobile allowance may be provided to company officers
at the discretion of the company.
B. Whether to provide company owned automobiles or automobile allowances will
be based on applicable tax legislation, local competitive practices and at
the convenience of the company.
C. Officers provided an automobile or automobile allowance are expected to
have a clean, well maintained, four-door vehicle suitable for transporting
clients, business associates or company guest.
D. The Chief Executive Officer of Fluor Corporation will be provided an
automobile allowance of $1,900 per month. The President of Fluor
Corporation $1,600 per month. Inside Directors of Fluor Corporation $1,400
per month. The company will provide these officers with company provided
automobile insurance, and reimbursement for automobile maintenance and
business related gasoline expenditures.
E. Designated Senior Executive Officers will receive $800 per month and all
other eligible officers $600 per month. All automobile maintenance and
gasoline expenses will be at the employee's expense.
G. Officers, receiving an automobile allowance, will be provided automobile
insurance coverage by the company for one automobile of the employee's
choice.
H. Officers outside of the United States may be provided an automobile in
lieu of an automobile allowance when local customs and competitive
practices dictate.
<PAGE> 1
EXHIBIT 10.8
FLUOR CORPORATION
Amended and Restated Fluor Executives' Supplemental Benefit Plan
Plan Document
================================================================================
AMENDED AND RESTATED
FLUOR EXECUTIVES' SUPPLEMENTAL BENEFIT PLAN
The purpose of this Fluor Executives' Supplemental Benefit Plan, amended and
restated effective as of May 1, 1999, is to provide specified benefits to a
select group of management and highly paid executives of Fluor Corporation, a
Delaware corporation, and its subsidiaries, if any, that sponsor the Plan
(collectively with the Trust (as defined below), the "Company"), in accordance
with the following terms and conditions:
1. Definitions. For purposes of this Plan, unless otherwise clearly apparent
from the context, the following phrases or terms (and their related
meanings) shall have the following indicated meanings:
(a) "Administrative Committee" shall mean the Administrative Committee
appointed pursuant to Section 9 below.
(b) "Administrator" shall have the meaning set forth in Section 9 below.
(c) "Adverse Change in Employment Condition" shall mean, with respect to an
Executive, any of the following:
(i) The Executive experiences a Termination of Employment for any
reason other than a voluntary resignation.
(ii) The Executive experiences any material change of his or her duties
with a material reduction in his or her responsibilities or
compensation.
(iii) The Executive experiences any mandatory change in the geographic
location of his or her principal place of business with a
reduction in his or her compensation.
(iv) The Executive experiences any obvious bad faith by the Company in
dealing with his or her employment conditions.
(d) "Approved Early Retirement" shall mean, with respect to an Executive,
severance from employment with the Company for reasons other than death
prior to Normal Retirement that the board of directors of the Company
or, upon and after a Change in Control Event, the Administrator has
determined pursuant to this Plan is an Approved Early Retirement.
(e) "Beneficiary" shall mean the person or persons designated as such in
accordance with Section 7.
(f) "Beneficiary Designation Form" shall mean the form established from time
to time by the Committee that an Executive completes, signs and returns
to the Committee to designate one or more Beneficiaries.
- --------------------------------------------------------------------------------
1
<PAGE> 2
FLUOR CORPORATION
Amended and Restated Fluor Executives' Supplemental Benefit Plan
Plan Document
================================================================================
(g) "Benefit" shall mean, with respect to an Executive, the Executive's
Pre-Retirement Death Benefit, Retirement Benefit, Disability Benefit,
Joint and Survivor Insurance Coverage Benefit or Change in Control
Benefit, as determined in accordance with Section 6.
(h) A "Change in Control Event" shall occur if:
(i) any shareholder or "group" as defined in Section 13(d)(3) of the
Securities Exchange Act of 1934, directly or indirectly acquires
25% or more of the voting power of the then outstanding securities
of the Company that are entitled to vote generally for the
election on the Company's directors as appropriate (the "Voting
Securities"); or
(ii) as the direct or indirect result of, or in connection with, a
reorganization, merger, cash tender, share exchange or
consolidation (a "Business Combination"), a contested election of
directors, or any combination of these transactions, the persons
who were directors of the Company cease to constitute a majority
of the Company's board of directors, or any successor's board of
directors.
(i) "Company" shall mean Fluor Corporation, a Delaware corporation, and its
subsidiaries, if any, which sponsor the Plan. Notwithstanding the
foregoing, if the context so requires, "Company" shall also mean the
Trust.
(j) "Death Benefit" shall mean, with respect to an Executive, the
Executive's Pre-Retirement Death Benefit or Post-Retirement Death
Benefit, as the case may be.
(k) "Disability" or "Disabled" shall mean, with respect to an Executive, the
period of time during which the Executive qualifies for permanent
disability benefits under the Company's long-term disability plan or, if
the Executive does not participate in such a plan, a period of
disability during which the Executive would have qualified for permanent
disability benefits under such a plan had the Executive been a
participant, as determined in the sole discretion of the Administrator.
If the Company does not sponsor such a plan, or discontinues to sponsor
such a plan, Disability shall be determined by the Administrator in its
sole discretion.
(l) "Employment" shall mean full-time or substantially full-time employment
by the Company or any Subsidiary of the Company, including any approved
leave of absence.
(m) "Endorsement" shall mean, with respect to an Executive, the endorsement,
in favor of the Executive and contained in the Policy, in the amounts
set forth in Schedule A-1 and A-2 of Section 2 of the Executive's Plan
Agreement, and in a form acceptable to the Insurer, entitling the
Executive to designate a Beneficiary to receive the Executive's
Pre-Retirement Death Benefit, if any, from the Policy. Notwithstanding
any other provision of this Plan that may be construed to the contrary,
the Endorsement shall be null and void and of no further effect upon and
after the Endorsement Termination Date.
- --------------------------------------------------------------------------------
2
<PAGE> 3
FLUOR CORPORATION
Amended and Restated Fluor Executives' Supplemental Benefit Plan
Plan Document
================================================================================
(n) "Endorsement Termination Date" shall mean the date on which occurs the
first of the following events:
(i) The Executive Retires.
(ii) The Executive experiences a Termination of Employment.
(iii) The second anniversary of the date the Executive experiences a
Disability;
(iv) The Executive experiences an Adverse Change in Employment
Condition upon or after a Change in Control Event.
(v) The Plan is terminated by the Executive or the Company in
accordance with Section 12.
(vi) The Executive elects to receive the Joint and Survivor Insurance
Coverage Benefit in accordance with Section 6(d).
(o) "Executive" shall mean an employee of the Company, or any Subsidiary of
the Company, who is selected by the Administrator to participate in this
Plan, and who enters into a Plan Agreement and completes a Beneficiary
Designation Form accepted by the Administrator.
(p) "Fluor Joint and Survivor Split Dollar Insurance Plan" shall mean that
certain Fluor Corporation Joint and Survivor Split Dollar Life Insurance
Plan.
(q) "Form of Retirement Benefit" shall mean, with respect to an Executive,
the Post-Retirement Death Benefit, the Lump Sum Benefit or the Salary
Continuation Benefit as set forth in Section 6(c).
(r) "Insurer" shall mean, as to each Executive, the insurer(s) specified in
his or her Plan Agreement.
(s) "Lump Sum Benefit", with respect to an Executive at a particular age,
shall have the following meanings:
(i) For (a) a Normal Retirement, or (b) an Approved Early Retirement
or Change in Control Benefit at age fifty-five (55) or older, the
Executive's Lump Sum Benefit shall be the amount set forth as such
in Schedule B of Section 2 of the Executive's Plan Agreement.
(ii) For an Approved Early Retirement or Change in Control Benefit at
age fifty-four (54) or younger, the Executive's Lump Sum Benefit
shall be equal to the Lump Sum Benefit set forth as such in
Schedule B of Section 2 of the Executive's Plan Agreement for an
Approved Early Retirement at age fifty-five (55), discounted at a
rate equal to 7.5% per annum, compounded, for each year that the
Executive is younger than age fifty-five (55), including any
partial year.
- --------------------------------------------------------------------------------
3
<PAGE> 4
FLUOR CORPORATION
Amended and Restated Fluor Executives' Supplemental Benefit Plan
Plan Document
================================================================================
(t) "Normal Retirement" shall mean, with respect to an Executive, severance
from employment with the Company on or after the date upon which he or
she attains age sixty-five (65) for any reason, other than leave of
absence, death or Disability.
(u) "Plan" shall mean the Amended and Restated Fluor Executives'
Supplemental Benefit Plan, which shall be evidenced by this instrument
and by each Plan Agreement, as they may be amended from time to time.
(v) "Plan Agreement" shall mean, with respect to an Executive, a written
agreement, as may be amended from time to time, which is entered into by
and between the Company and an Executive. Each Plan Agreement shall
provide for the entire benefit to which such Executive is entitled under
the Plan; should there be more than one Plan Agreement, the Plan
Agreement bearing the latest date of execution by the Company shall
supersede all previous Plan Agreements in their entirety and shall
govern such entitlement. The terms of any Plan Agreement may be
different for any Executive, and any Plan Agreement may provide
additional benefits not set forth in the Plan or limit the benefits
otherwise provided under the Plan; provided, however, that any such
additional benefits or benefit limitations must be agreed to by both the
Company and the Executive.
(w) "Policy" shall mean that policy of life insurance as described in
Section 2 below.
(x) "Post-Retirement Death Benefit" shall mean, with respect to an
Executive, the death proceeds payable by the Company (rather than under
the Policy by the Insurer) to the Executive's Beneficiary, in the
amounts set forth in Schedule B of Section 2 of the Executive's Plan
Agreement. Neither the Company nor the Executive shall be responsible in
any way for the tax status of the Post-Retirement Death Benefit.
(y) "Premium" shall mean, as to any particular time, the premium as
determined under the terms of the Policy.
(z) "Pre-Retirement Death Benefit" shall mean, with respect to an Executive,
the death proceeds payable under the Policy by the Insurer to the
Executive's Beneficiary, in the amounts set forth in the Endorsement.
Neither the Company nor the Executive shall be responsible in any way
for the tax status of the Pre-Retirement Death Benefit.
(aa) "Retirement", "Retires", or "Retired" shall mean, with respect to an
Executive, severance from employment with the Company on account of his
or her Normal Retirement or Approved Early Retirement, as the case may
be.
- --------------------------------------------------------------------------------
4
<PAGE> 5
FLUOR CORPORATION
Amended and Restated Fluor Executives' Supplemental Benefit Plan
Plan Document
================================================================================
(bb) "Salary Continuation Benefit", with respect to an Executive at a
particular age, shall have the following meanings:
(i) For (a) a Normal Retirement or (b) an actual Approved Early
Retirement at age fifty-five (55) or older, the Executive's Salary
Continuation Benefit shall be the amount set forth as such in
Schedule B of Section 2 of such Executive's Plan Agreement.
(ii) For an actual Approved Early Retirement at age fifty-four (54) or
younger, an Executive's Salary Continuation shall be equal to the
Salary Continuation Benefit set forth as such in Schedule B of
Section 2 of such Executive's Plan Agreement for an Approved Early
Retirement at age fifty-five (55), discounted at a rate equal to
7.5% per annum, compounded, for each year that the Executive is
younger than age fifty-five (55), including any partial year.
(cc) "Subsidiary" shall mean any corporation, partnership, limited liability
company, venture or other entity in which the Company has at least a 50%
equity ownership interest.
(dd) "Termination of Employment" shall mean, with respect to an Executive,
the severing of employment with the Company, voluntarily or
involuntarily, for any reason other than Retirement, Disability, death
or an authorized leave of absence.
(ee) "Trust" shall mean the trust established pursuant to that certain Master
Trust Agreement, dated as of _______, 19__, between the Company and the
trustee named therein, as amended from time to time.
(ff) "Year" shall mean a period of twelve (12) consecutive calendar months.
2. Acquisition of Policy; Ownership of Insurance; Enrollment Requirements.
(a) Acquisition of Policy; Ownership of Insurance. The parties to this Plan
shall cooperate in applying for and obtaining the Policy. The Policy
shall be issued to the Company as its sole and exclusive owner, subject
to the Endorsement in favor of the Executive.
(b) Enrollment Requirements. As a condition of participation, each selected
Executive must complete, execute and return a Plan Agreement and a
Beneficiary Designation Form to the Administrator. In addition, the
Administrator (or the Administrator, upon and after a Change in Control
Event) shall establish from time to time such other enrollment
requirements as it determines, in its sole discretion, are necessary.
(c) Executive's and Beneficiary's Tax Liability. The Executive acknowledges
that, prior to the Endorsement Termination Date, under current law, he
or she shall have taxable income equal to the value of the "economic
benefit" derived by the Executive from the Policy's insurance
protection, as determined for Federal income tax purposes under Revenue
Rulings 64-238 and 66-110. The Executive further acknowledges that,
under current law, he or she and/or his or her Beneficiary shall have
taxable income equal to the economic value of any Benefits to which he
or she or his or her Beneficiary become entitled to receive under the
Plan after the Endorsement Termination Date.
- --------------------------------------------------------------------------------
5
<PAGE> 6
FLUOR CORPORATION
Amended and Restated Fluor Executives' Supplemental Benefit Plan
Plan Document
================================================================================
3. Premium Payments. Prior to the Endorsement Termination Date, the Company
shall pay to the Insurer each Premium on or before the date that it is due.
In the event that the Company fails to pay a Premium, or a portion thereof,
the Executive may pay, but is not required to pay, such Premium or portion
thereof, and the Company shall immediately reimburse the Executive for any
amount so paid. Upon and after the Endorsement Termination Date, the Company
shall be entitled to exercise all of the rights of the owner under the
Policy, including the right in its sole and absolute discretion to pay or
not to pay additional Premiums when due in order to keep the Policy in force
for the sole benefit of the Company. Therefore, upon and after the
Endorsement Termination Date, the Executive shall have no right to be
reimbursed by the Company for any subsequent payment of Premiums by the
Executive to the Insurer.
4. Rights and Interests in the Policy.
(a) Rights of Company. Except for those rights granted to the Executive in
the Endorsement pursuant to Section 4(b) below, the Company shall have
all of the rights of the owner under the Policy and shall be entitled to
exercise all of such rights, options and privileges without the consent
of the Executive; provided, however, the Company agrees not to exercise
any right to surrender the Policy before the Endorsement Termination
Date.
(b) Endorsement and Endorsement Termination Date. The Endorsement to the
Policy, as specified in Schedules A-1 and A-2 of Section 2 of the Plan
Agreement, shall be in full force and effect prior to the Endorsement
Termination Date. The Endorsement while in effect shall grant to the
Executive the right to designate a Beneficiary under the Policy to
receive the Executive's Pre-Retirement Death Benefit, and to change such
designation at any time. Upon and after the Endorsement Termination
Date: the Endorsement shall be immediately null, void and of no further
effect; the interest of the Executive in the Policy shall irrevocably
terminate; no further benefits shall be due the Executive or his or her
Beneficiary under the Policy; and the Executive shall have no further
right to designate a Beneficiary under the Policy.
(c) Conflict. As between the parties hereto, in the event of conflict
between the terms of the Endorsement and this Plan, the terms of this
Plan shall prevail. The Insurer shall be bound, however, only by the
terms of the Policy and any Endorsement thereto, and shall not be
required to pay any amounts to any person in excess of its obligations
under the terms of the Policy.
(d) Collection of Policy Proceeds and Source of Payment of Death Benefit.
(i) If the Executive dies while employed by the Company, and a
Pre-Retirement Death Benefit is due under Section 6(f), the
following steps shall occur promptly following the Executive's
death: (A) the Company and the Executive's Beneficiary shall take
all steps necessary to collect the gross proceeds under the
Policy; (B) the Insurer shall pay the Executive's Pre-Retirement
Death Benefit to his or her Beneficiary as specified in Schedule C
of the Plan Agreement; and (C) the Insurer shall pay to the
Company the amount, if any, by which the gross proceeds under the
Policy exceed the Pre-Retirement Death Benefit.
- --------------------------------------------------------------------------------
6
<PAGE> 7
FLUOR CORPORATION
Amended and Restated Fluor Executives' Supplemental Benefit Plan
Plan Document
================================================================================
(ii) If the Executive dies after Retirement, and a Post-Retirement
Death Benefit is due under Section 6(c)(i), the following steps
shall occur promptly following the Executive's death: (A) the
Company and the Executive's Beneficiary shall take all steps
necessary to collect the gross proceeds, if any, under the Policy;
(B) the Insurer shall pay the gross proceeds, if any, under the
Policy to the Company; and (C) the Company shall pay the
Executive's Post-Retirement Death Benefit to the Executive's
Beneficiary.
(iii) If the Executive dies, and no Death Benefit is due under Section
6(f) or Section 6(c)(i), the following steps shall occur promptly
following the Executive's death: (A) the Company and the
Executive's Beneficiary shall take all steps necessary to collect
the gross proceeds, if any, under the Policy; (B) the Insurer
shall pay the gross proceeds, if any, under the Policy to the
Company; and (C) neither the Insurer or the Company shall pay any
death benefit to the Executive's Beneficiary.
5. Insurer. The Insurer is not a party to this Plan, shall in no way be bound
by or charged with notice of its terms, and is expressly authorized to act
only in accordance with the terms of the Policy. The Insurer shall be fully
discharged from any and all liability under the Policy upon payment or other
performance of its obligations in accordance with the terms of the Policy.
6. Benefits.
(a) One Benefit. Notwithstanding any other provision of this Plan that may
be construed to the contrary, in no event shall an Executive or his or
her Beneficiary or both receive more than one Benefit under this Plan.
(b) Retirement Benefit Elections. Subject to the Executive's continuous
employment from the effective date of his or her Plan Agreement until
his or her Retirement, the Executive shall have the right to elect one
Form of Retirement Benefit set forth in Section 6(c) below; provided,
however, that notwithstanding any other provision of this Plan that may
be construed to the contrary, in no event shall an Executive or his or
her Beneficiary or both receive more than one Form of Retirement Benefit
under this Plan. The Executive's elections shall be governed by the
provisions set forth in this Section 6(b).
(i) Elections In General; Default Election. An Executive, in
connection with his or her commencement of participation in the
Plan, shall do one of the following: (a) the Executive shall elect
on his or her Plan Agreement to receive one (1) Form of Retirement
Benefit set forth in Section 6(c) in the event of his or her
Retirement; or (b) the Executive may decline to make an election
under clause (a) until the last day of the Year preceding the Year
in which Retirement occurs. A Form of Retirement Benefit selected
in the event of Normal Retirement may be the same as or different
than the Form of Retirement Benefit selected in the event of an
Approved Early Retirement. If an Executive does not make any
election with respect to the Form of Retirement Benefit, or fails
to make a timely election after deferring an election according to
the clause (b) above, then the Executive shall be deemed to have
elected the Post-Retirement Death Benefit as his or her Form of
Retirement Benefit.
- --------------------------------------------------------------------------------
7
<PAGE> 8
FLUOR CORPORATION
Amended and Restated Fluor Executives' Supplemental Benefit Plan
Plan Document
================================================================================
(ii) Changing Elections; Time before Retirement. An Executive may
change and of his or her Form of Retirement Benefit to an
allowable alternative Form of Retirement Benefit by submitting a
new Plan Agreement to the Administrator, provided that any such
Plan Agreement is submitted at least one (1) Year prior to the
date of the Executive's Retirement. Subject to the preceding
sentence and Section 6(b)(iii) below, the Plan Agreement most
recently accepted by the Administrator shall determine which Form
of Retirement Benefit under Section 6(c) shall be received by the
Executive.
(iii) Special Rule for Approved Early Retirement. If the Executive
experiences an Approved Early Retirement, the Administrator may,
in its sole discretion, choose to override any election the
Executive has made to the contrary and provide the Executive the
Post-Retirement Death Benefit as his or her Form of Retirement
Benefit.
(c) Form of Retirement Benefit. The Form of Retirement Benefit and its
payment shall be as follows:
(i) Post-Retirement Death Benefit. If the Executive elects to receive
the Post-Retirement Death Benefit as the Form of Retirement
Benefit, the Executive shall receive continued coverage under the
Plan (but not the Policy) after his or her Retirement. The
Executive's Post-Retirement Death Benefit shall be paid to his or
her Beneficiary upon the Executive's death in a lump sum in
accordance with Section 4(d). The lump sum payment shall be made
no later than six (6) months after the date the Administrator is
provided with proof that is satisfactory to the Administrator of
the Executive's death. The Executive acknowledges that his or her
Beneficiary will be considered to have taxable compensation income
that is equal in amount to the Death Benefit. The Executive's Plan
Agreement shall terminate when the Post-Retirement Death Benefit
is paid to the Executive's Beneficiary.
(ii) Lump Sum Benefit. If the Executive elects to receive the Lump Sum
Benefit as the Form of Retirement Benefit, the Executive's Lump
Sum Benefit shall be paid to the Executive no later than six (6)
months after the date of the Executive's Retirement. The Executive
acknowledges that, under current tax law, he or she will be
considered to have taxable compensation income on such payment
date in an amount equal to the Lump Sum Benefit. The Executive's
Plan Agreement shall terminate when the Lump Sum Benefit is paid
to the Executive.
(iii) Salary Continuation Benefit. If the Executive elects to receive
the Salary Continuation Benefit as the Form of Retirement Benefit,
the Executive shall be paid his or her Salary Continuation Benefit
in 120 equal payments over a period of 120 months, which payments
shall commence no later than six (6) months after
- --------------------------------------------------------------------------------
8
<PAGE> 9
FLUOR CORPORATION
Amended and Restated Fluor Executives' Supplemental Benefit Plan
Plan Document
================================================================================
the date of the Executive's Retirement. Notwithstanding any
provision of this Plan that may be construed to the contrary, if
an Executive who elects the Salary Continuation Benefit provided
for by this Section 6(c)(iii) dies after his or her Retirement but
before his or her Salary Continuation Benefit is paid in full, the
Executive's unpaid Salary Continuation Benefit payments shall
continue and shall be paid to the Executive's Beneficiary over the
remaining number of months and in the same amounts as the Salary
Continuation Benefit payments would have been paid to the
Executive had the Executive survived. The Executive acknowledges
that he or she and/or his or her Beneficiary will be considered to
have taxable compensation income attributable to the Salary
Continuation Benefit payments under this Section 6(c)(iii). The
Executive's Plan Agreement shall terminate when the final Salary
Continuation Benefit payment is made to the Executive or the
Executive's Beneficiary.
(d) Joint and Survivor Insurance Coverage Benefit. Subject to Section 6(a)
above, the Executive may at any time up to the Endorsement Termination
Date, in a form and manner acceptable to the Administrator, elect to
receive the Joint and Survivor Insurance Coverage Benefit in lieu of any
other Benefit under this Plan. If the Executive elects to receive the
Benefit in the form of the Joint and Survivor Insurance Coverage
Benefit, the Executive shall receive joint and survivor insurance
coverage under the Fluor Joint and Survivor Split Dollar Insurance Plan
in lieu of any other Benefit under this Plan, in which event the
Endorsement Termination Date shall occur and the Executive's Plan
Agreement shall immediately terminate pursuant to Section 7(f).
(e) Disability Benefit. In the event that the Administrator determines that
the Executive has experienced a Disability, then, regardless of any
election by the Executive to the contrary and except as otherwise
provided in this Section 6(e), the only Benefit payable with respect to
such Executive shall the Pre-Retirement Death Benefit; provided,
however, that such Benefit shall be payable as a Disability Benefit
pursuant to this Section 6(e) only if the Executive dies on or before
the second anniversary of the date he or she becomes Disabled (the
"Second Anniversary Date"). After the Second Anniversary Date, the
obligation of the Company to provide any Benefit whatsoever with regard
to such Executive under this Plan shall terminate, unless the
Administrator determines that the Executive's Disability for purposes of
this Section 6(e) is an Approved Early Retirement. If the Administrator
so determines, the Executive shall be deemed to have experienced an
Approved Early Retirement on the Second Anniversary Date. In such case,
the Administrator may in its sole discretion elect to provide such an
Executive with the Post-Retirement Death Benefit as the Form of
Retirement Benefit, in accordance with Section 6(b)(iii). If applicable,
the Executive shall be deemed for purposes of the calculation of the
Lump Sum Benefit or Salary Continuation Benefit to be Retiring on the
Second Anniversary Date.
(f) Pre-Retirement Death Benefit. If the Executive dies prior to the
Endorsement Termination Date and prior to experiencing a Termination of
Employment, then his or her Pre-Retirement Death Benefit shall be paid
pursuant to Section 4(d). The Pre-Retirement
- --------------------------------------------------------------------------------
9
<PAGE> 10
FLUOR CORPORATION
Amended and Restated Fluor Executives' Supplemental Benefit Plan
Plan Document
================================================================================
Death Benefit shall be paid to his or her Beneficiary no later than six
(6) months after the date the Administrator is provided with proof, that
is satisfactory to the Insurer and the Administrator, of the Executive's
death.
(g) Change in Control Benefit. If the Executive experiences an Adverse
Change of Employment Condition within thirty six (36) months following a
Change in Control Event, as determined by the Administrator in its sole
discretion, the Executive shall be deemed to have experienced an
Approved Early Retirement as of the date of such Adverse Change of
Employment Condition; provided, however, that, notwithstanding the
Executive's election, the Form of Retirement Benefit for purposes of
this Section 6(g) shall be the Lump Sum Benefit.
7. Beneficiary Designation.
(a) Beneficiary. Each Executive shall have the right, at any time, to
designate his or her Beneficiary(ies) (both primary as well as
contingent) to receive any benefits payable under the Plan to a
beneficiary upon the death of an Executive. The Beneficiary designated
under this Plan may be the same as or different from the Beneficiary
designation under any other plan of the Company in which the Executive
participates.
(b) Beneficiary Designation; Change; Spousal Consent. An Executive shall
designate his or her Beneficiary by completing and signing the
Beneficiary Designation Form, and returning it to the Administrator or
its designated agent. An Executive shall have the right to change a
Beneficiary by completing, signing and otherwise complying with the
terms of the Beneficiary Designation Form and the Administrator's rules
and procedures, as in effect from time to time. If the Executive names
someone other than his or her spouse as a Beneficiary, a spousal
consent, in the form designated by the Administrator, must be signed by
that Executive's spouse and returned to the Administrator. Upon the
acceptance by the Administrator of a new Beneficiary Designation Form,
all Beneficiary designations previously filed shall be canceled. The
Administrator shall be entitled to rely on the last Beneficiary
Designation Form filed by the Executive and accepted by the
Administrator prior to his or her death.
(c) Acknowledgment. No designation or change in designation of a Beneficiary
shall be effective until received and acknowledged in writing by the
Administrator or its designated agent.
(d) No Beneficiary Designation. If an Executive fails to designate a
Beneficiary as provided in Sections 7(a), 7(b) and 7(c) above, or if all
designated Beneficiaries predecease the Executive or die prior to
complete distribution of the Executive's benefits, then the Executive's
designated Beneficiary shall be deemed to be his or her surviving
spouse. If the Executive has no surviving spouse, the benefits remaining
under the Plan to be paid to a Beneficiary shall be payable to the
executor or personal representative of the Executive's estate.
- --------------------------------------------------------------------------------
10
<PAGE> 11
FLUOR CORPORATION
Amended and Restated Fluor Executives' Supplemental Benefit Plan
Plan Document
================================================================================
(e) Doubt as to Beneficiary. If the Administrator has any doubt as to the
proper Beneficiary to receive payments pursuant to this Plan, the
Administrator shall have the right, exercisable in its discretion, to
withhold such payments until this matter is resolved to the
Administrator's satisfaction.
(f) Discharge of Obligations. The payment of benefits under the Plan to a
Beneficiary shall fully and completely discharge the Company from all
further obligations under this Plan with respect to the Executive, and
that Executive's Plan Agreement shall terminate upon such full payment
of benefits.
8. Administration of Plan.
(a) Prior to a Change in Control Event. Prior to a Change in Control Event,
this Plan shall be administered by an Administrative Committee comprised
of three (3) or more persons appointed by the Company's board of
directors. Members of the Administrative Committee may be Executives
under this Plan. The Administrative Committee shall also have the
discretion and authority to (i) make, amend, interpret, and enforce all
appropriate rules and regulations for the administration of this Plan
and (ii) decide or resolve any and all questions including
interpretations of this Plan, as may arise in connection with the Plan.
Any individual serving on the Administrative Committee who is an
Executive shall not vote or act on any matter relating solely to himself
or herself.
(b) Upon and After a Change in Control Event. For purposes of this Plan, the
Company shall be the "Administrator" at all times prior to the
occurrence of a Change in Control Event. Upon and after the occurrence
of a Change in Control Event, the "Administrator" shall be an
independent third party selected by the individual who, immediately
prior to such event, was the Company's Chief Executive Officer or, if
not so identified, the Company's highest ranking officer (the "Ex-CEO").
The Administrator shall have the discretionary power to determine all
questions arising in connection with the administration of the Plan and
the interpretation of the Plan including, but not limited to benefit
entitlement determinations. When making a determination or calculation,
the Administrator shall be entitled to rely on information furnished by
an Executive or the Company. Upon and after the occurrence of a Change
in Control Event the Company must: (i) pay all reasonable administrative
expenses and fees of the Administrator; (ii) indemnify the Administrator
against any costs, expenses and liabilities including, without
limitation, attorney's fees and expenses arising in connection with the
performance of the Administrator hereunder, except with respect to
matters resulting from the gross negligence or willful misconduct of the
Administrator or its employees or agents; and (iii) supply full and
timely information to the Administrator or all matters relating to the
Plan, the Executives and their Beneficiaries, the date of circumstances
of the Normal Retirement, Approved Early Retirement, Disability, death
or Termination of Employment of the Executives, and such other pertinent
information as the Administrator may reasonably require. Upon and after
a Change in Control Event, the Administrator may be terminated (and a
replacement appointed) only by the approval of the Ex-CEO. Upon and
after a Change in Control Event, the Administrator may not be terminated
by the Company.
- --------------------------------------------------------------------------------
11
<PAGE> 12
FLUOR CORPORATION
Amended and Restated Fluor Executives' Supplemental Benefit Plan
Plan Document
================================================================================
(c) Binding Effect of Decisions. The decision or action of the Administrator
with respect to any question arising out of or in connection with the
administration, interpretation and application of the Plan and the rules
and regulations promulgated hereunder shall be final and conclusive and
binding upon all persons having any interest in the Plan.
(d) Indemnity of Administrator. The Company shall indemnify and hold
harmless the members of the Administrator, and any person to whom duties
of the Committee may be delegated, against any and all claims, losses,
damages, expenses or liabilities arising from any action or failure to
act with respect to this Plan, except in the case of willful misconduct
by the Administrator, any of its members, or any such person.
(e) Information. To enable the Administrator to perform its functions, the
Company shall supply full and timely information to the Administrator on
all matters relating to the compensation of its Executives, the date and
circumstances of the Normal Retirement, Approved Early Retirement,
Disability, death or Termination of Employment of its Executives, and
such other pertinent information as the Administrator may reasonably
require.
9. Plan; Named Fiduciary; Claims Procedure.
(a) Plan. This Plan is part of the Fluor Corporation Amended and Restated
Executive's Supplemental Benefit Plan, and is comprised of the Plan
described in this instrument plus all Plan Agreements that so reference
their association with the Plan.
(b) Fiduciary. The Company is the named fiduciary of the Plan for purposes
of this Plan.
(c) Claims Procedure. The following claims procedure shall be followed in
handling any benefit claim under this Plan and the Plan Agreement:
(i) The Executive, or his or her Beneficiary, if he or she is dead
(the "Claimant"), shall file a claim for benefits by notifying the
Company in writing. If the claim is wholly or partially denied,
the Company shall provide a written notice within ninety (90) days
specifying the reasons for the denial, the provisions of this Plan
on which the denial is based, and additional material or
information, if any, that is necessary for the Claimant to receive
benefits. Such written notice shall also indicate the steps to be
taken by the Claimant if a review of the denial is desired.
(ii) If a claim is denied, and a review is desired, the Claimant shall
notify the Company in writing within sixty (60) days after receipt
of written notice of a denial of a claim. In requesting a review,
the Claimant may review Plan documents and submit any written
issues and comments the Claimant feels are appropriate. The
Company shall then review the claim and provide a written decision
within sixty (60) days of receipt of a request for a review. This
decision shall state the specific reasons for the decision and
shall include references to specific provisions of this Plan, if
any, upon which the decision is based.
- --------------------------------------------------------------------------------
12
<PAGE> 13
FLUOR CORPORATION
Amended and Restated Fluor Executives' Supplemental Benefit Plan
Plan Document
================================================================================
10. Withholding; Income and Employment Taxes.
(a) Prior to the Endorsement Termination Date, if the Executive has an
economic benefit under this Plan, the Company shall withhold from that
Executive's cash compensation, or the Beneficiary's payment, in a manner
determined by the Company, the Executive's or Beneficiary's share of all
federal, state and local income taxes, FICA and other employment taxes
on such economic benefit.
(b) The Company, or the trustee of the Trust, shall withhold from any
Benefit payments made to an Executive or his or her Beneficiary under
this Plan all federal, state and local income taxes, FICA and other
employment taxes required to be withheld by the Company, or the trustee
of the Trust, in connection with such Benefit payments, in amounts and
in a manner to be determined in the sole discretion of the Company and
the trustee of the Trust.
11. Protective Provisions. The Executive will cooperate with the Company by
furnishing any and all information requested b the Company in order to
facilitate the payments of benefits hereunder, taking such physical
examinations as the Company may deem necessary ad taking such other action
as may be required by the Company. If any Executive commits suicide during
the two-year period commencing upon the date of his or her Plan Agreement,
or if an Executive makes any material misstatements of information or
nondisclosure of medical history, then no benefits shall be payable
hereunder, or, in the sole discretion of the Company's board of directors,
benefits may be payable in a reduced amount.
12. Amendment of Plan; Termination. This Plan shall not be modified or amended
except by a writing signed by the Company and the Executive. Except as
otherwise provided in the next sentence, either party may terminate this
Plan, and Executive's participation in the Plan, at any time, provided that
the obligations of the party terminating the Plan and the Plan with respect
to the Executive are performed in full under the Plan as of the time of the
termination. Notwithstanding the foregoing and any other provision of this
Plan that may be construed to the contrary, upon and after a Change in
Control Event, neither this Plan, nor the Executive's participation in this
Plan, may be terminated by the Company without the express written consent
of the Executive, which consent may be unreasonably withheld.
13. Binding Plan. This Plan shall inure to the benefit of, be binding upon, and
be enforceable by the heirs, administrators, executors, successors and
assigns of each party to this Plan.
14. State Law. This Plan shall be subject to and be construed under the internal
laws of the State of California, without regard to its conflicts of laws
principles.
15. Validity. In case any provision of this Plan shall be illegal or invalid for
any reason, said illegality or invalidity shall not affect the remaining
parts of this Plan, but this Plan shall be construed and enforced as if such
illegal or invalid provision had never been inserted in this Plan.
16. Not a Contract of Employment. The terms and conditions of this Plan shall
not be deemed to constitute a contract of employment between the Company and
the Executive. Such employment
- --------------------------------------------------------------------------------
13
<PAGE> 14
FLUOR CORPORATION
Amended and Restated Fluor Executives' Supplemental Benefit Plan
Plan Document
================================================================================
is hereby acknowledged to be an "at will" employment relationship that can
be terminated at any time for any reason, with or without cause, unless
expressly provided in a separate written employment Plan. Nothing in this
Plan shall be deemed to give the Executive the right to be retained in the
service of the Company or to interfere with the right of the Company to
discipline or discharge the Executive at any time.
17. Notice. Any notice or filing required or permitted to be given under this
Plan to the Company or to the Insurer shall be sufficient if in writing and
hand-delivered, or sent by registered or certified mail, to the address
below:
If to the Company:
Fluor Corporation
3353 Michelson Drive
Irvine, California 92698
Attn: Senior Manager, Human Resources
If to the Insurer:
Security Life Insurance Company of Denver, Inc.
Security Life Center
1290 Broadway
Denver, Colorado 80203
Sun Life Assurance Company of Canada
Sun Life Executive Park, SC 2145
Wellesley Hills, MA 02181
18. Unsecured General Creditor. Executives and their Beneficiaries, heirs,
successors and assigns shall have no legal or equitable rights, interests or
claims in any property or assets of the Company. For purposes of the payment
of benefits under this Plan, any and all of the Company's assets shall be,
and remain, the general, unpledged unrestricted assets of the Company. The
Company's obligation under the Plan shall be merely that of an unfunded and
unsecured promise to pay money in the future.
19. Discharge of Obligations. The full payment of Benefits due under the Plan to
an Executive or his or her Beneficiary shall fully and completely discharge
the Company from all further obligations under the Plan with respect to the
Executive and his or her Beneficiary, and the Executive's Plan Agreement
shall terminate upon such full payment of Benefits.
20. Legal Fees To Enforce Rights After Change in Control Event. The Company is
aware that upon the occurrence of a Change in Control Event, the board of
directors of the Company (which might then be composed of new members) or a
shareholder of the Company or of any successor corporation might then cause
or attempt to cause the Company or such successor to refuse to comply with
its obligations under the Plan and might cause or attempt to cause the
Company to institute, or may institute, litigation seeking to deny the
Executive the benefits intended under the
- --------------------------------------------------------------------------------
14
<PAGE> 15
FLUOR CORPORATION
Amended and Restated Fluor Executives' Supplemental Benefit Plan
Plan Document
================================================================================
Plan. In these circumstances, the purpose of the Plan could be frustrated.
Accordingly, if, following a Change in Control Event, it should appear to
any Executive or the Administrator that the Company or any successor
corporation has failed to comply with any of its obligations under the Plan
or any agreement thereunder or, if the Company or any other person takes any
action to declare the Plan void or unenforceable or institutes any
litigation or other legal action designed to deny, diminish or to recover
from any Executive the benefits intended to be provided, then the Company
irrevocably authorizes such Executive or the Administrator or both to retain
counsel of his or her or their choice(s) at the expense of the Company to
represent such Executive or the Administrator or both, as the case may be,
in connection with the initiation or defense of any litigation or other
legal action, whether by or against the Company or any director, officer,
shareholder or other person affiliated with the Company, or any successor
thereto in any jurisdiction. The Executive or the Administrator or both, as
the case may be, shall be entitled to receive advances from the Company on
demand in the amount of the attorney's fees and expenses incurred in
accordance with this Section 20.
21. Entire Plan. This Plan constitutes the entire Plan between the parties
hereto with regard to the subject matter of this Plan and supersedes all
previous negotiations, Plans and commitments in respect thereto. No oral
explanation or oral information by either of the parties to this Plan shall
alter the meaning or interpretation of this Plan. This Plan may not be
amended or modified except by a written instrument executed by the Company
and the Executive.
IN WITNESS WHEREOF, the Company has executed this Plan as of the date first
written above.
"Company"
Fluor Corporation, a Delaware corporation
By: /s/ L. N. FISHER
----------------------------------------
Its: Senior Vice President Law and Secretary
---------------------------------------
- --------------------------------------------------------------------------------
15
<PAGE> 1
EXHIBIT 10.13
FLUOR CORPORATION AND SUBSIDIARIES
Management Manual
================================================================================
Section: Compensation Page: 129
Subject: EXECUTIVE SEVERANCE PLAN Effective: 07-21-99
Applies To: Fluor Corporation and Selected Subsidiaries Supersedes: 10-20-98
================================================================================
OBJECTIVE
To provide severance compensation to eligible executives of Fluor Corporation
and designated subsidiaries (the company) who leave the company, depending on
the circumstances and conditions leading to termination.
ELIGIBILITY
Executives of Fluor Corporation and designated subsidiaries actively at work who
are participants in the Fluor Corporation and Subsidiaries Executive Incentive
Compensation Plan.
DEFINITIONS
For the purpose of the Plan, the following definitions apply:
A. VOLUNTARY SEPARATION
Action taken by an executive for personal reasons, to seek other
employment, to accept another position, for failure to return at
conclusion of leave, or to voluntarily retire.
B. INVOLUNTARY SEPARATION
1. Action taken by the company due to reduction in force
resulting from reorganization or reduced workload or other
similar circumstances whereby the executive's services are
no longer required on the job. Executives involuntarily
separated who meet the retirement criteria may elect
retirement.
2. Action taken by the company when an executive is covered
by the Americans with Disabilities Act and is unable to
perform his/her essential job functions with reasonable
accommodation.
C. INVOLUNTARY DISCHARGE
Action taken by the company for reasons other than stated in
Paragraph B. above including but not limited to absenteeism,
misconduct, insubordination, appearing at work under the
influence of a controlled substance or alcohol, unethical
behavior, disclosure of confidential information, sexual
harassment, employment discrimination, or unsatisfactory
performance.
<PAGE> 2
FLUOR CORPORATION AND SUBSIDIARIES
Management Manual
================================================================================
Section: Compensation Page: 130
Subject: EXECUTIVE SEVERANCE PLAN Effective: 07-21-99
(Continued)
Applies To: Fluor Corporation and Selected Subsidiaries Supersedes: 10-20-98
================================================================================
D. OFFICER
An executive who is a vice president or above of Fluor
Corporation, Fluor Daniel, Inc., Fluor Signature Services, Fluor
Global Services, Inc., or Fluor Constructors, Inc., who
participates in the Fluor Corporation and subsidiaries Executive
Incentive Compensation Plan.
E. COMPLETED YEARS OF ACCUMULATED SERVICE
A period of accumulated service with the company, subject to the
limitation set forth under Procedure, A.4.c.
F. BENEFICIARY
The beneficiary designated by the executive under the Fluor
Corporation Employee's Retirement Plan, or, if no such
designation has been made, then as designated under the Group
Life/Health Insurance Plan unless the executive otherwise makes
a beneficiary designation on the form provided by the
executive's corporate employer, or, in the absence of any
designation, the administrator or executor of the executive's
estate.
PROCEDURE
A. SEVERANCE PAY
1. Voluntary Separation
The company will not provide severance pay nor prorated
Incentive Compensation (Paragraph A under "Definitions").
2. Involuntary Separation
Severance pay will be based on current base salary and
total completed years of accumulated service as follows:
a. Officers
1. Two weeks' severance pay for each completed year
of accumulated service up to 52 weeks.
2. Minimum eight weeks' severance.
<PAGE> 3
FLUOR CORPORATION AND SUBSIDIARIES
Management Manual
================================================================================
Section: Compensation Page: 131
Subject: EXECUTIVE SEVERANCE PLAN Effective: 07-21-99
(Continued)
Applies To: Fluor Corporation and Selected Subsidiaries Supersedes: 10-20-98
================================================================================
b. Non-Officer Executives
1. Two weeks' severance pay for each completed year
of accumulated service up to 26 weeks.
2. Minimum four weeks' severance
3. Involuntary Discharge
a. The company will not provide severance pay nor
consider proration of Incentive Compensation
(Paragraph C, Definitions).
4. Limitations
a. Maximum severance pay will be 52 weeks for officers,
26 weeks for non-officer executives.
b. Minimum severance pay will be eight weeks for
officers, four weeks for non-officer executives.
c. The total completed years of accumulated service
calculated for a severance payment may only be used
one time in severance calculations.
d. For executives involuntarily separated and placed on
Leave of Absence in Lieu of Layoff, severance pay
will be based on completed years of accumulated
service up to the effective date of the Leave of
Absence.
e. Officers in policy making positions who meet
retirement criteria will receive severance pay as
follows:
1. Officers who meet the minimum retirement income
requirement set forth by federal law, excluding
any amount payable under this Plan, will receive
severance pay for only the period from the date
of termination until January 2 following the
officer's 65th birthday subject to the
limitation set forth under Procedure, A.2.a.
2. Officers who do not meet the minimum retirement
income requirement set forth by federal law,
computed excluding any amount payable under this
Plan, will receive severance pay as determined
under Procedure, A.2.a.
<PAGE> 4
FLUOR CORPORATION AND SUBSIDIARIES
Management Manual
================================================================================
Section: Compensation Page: 132
Subject: EXECUTIVE SEVERANCE PLAN Effective: 07-21-99
(Continued)
Applies To: Fluor Corporation and Selected Subsidiaries Supersedes: 10-20-98
================================================================================
f. In the case of involuntary separation due to an
executive's inability to perform his/her essential
job functions with reasonable accommodation, the
executive's severance pay amount will be reduced by
the expected entitlements under Fluor's short-term
and long-term disability for the number of weeks
determined under Procedure A.2.a and b. If the actual
entitlements received by the employee are less than
that deducted from severance pay, the employee will
be paid the difference for the period of weeks for
which the employee received severance. This provision
is not intended to affect any state or federal
benefits to which the executive may be entitled.
g. In cases where the executive is entitled to
legislated severance pay in non-U.S. countries,
executive's severance pay amount will be reduced by
any legislated severance payments required of the
company that are calculated with reference to the
number of weeks determined under Procedure A.2.a and
b.
5. Severance pay will be paid in a lump sum, or at the
discretion of the company, annual installments over a
period not to exceed the total number of weeks determined
under Paragraph A.2.a. and b. above.
6. In event of an executive's death prior to payment of the
entire entitlement, payment may be made to the designated
beneficiary in one lump sum or by continuation of
installments at the discretion of the executive's
corporate employer.
B. INCENTIVE COMPENSATION
(As defined in the Executive Incentive Compensation Plan, Fluor
Corporation and Subsidiaries Management Manual)
1. Voluntary Separation
The company will not provide a prorated incentive award.
2. Involuntary Separation
Incentive Compensation may be considered based on the
number of completed months of service during the current
fiscal year prior to termination and consistent with the
administration of the Plan during the year of termination.
<PAGE> 5
FLUOR CORPORATION AND SUBSIDIARIES
Management Manual
================================================================================
Section: Compensation Page: 133
Subject: EXECUTIVE SEVERANCE PLAN Effective: 07-21-99
(Continued)
Applies To: Fluor Corporation and Selected Subsidiaries Supersedes: 10-20-98
================================================================================
3. Involuntary Discharge
The company will not provide a prorated incentive award.
C. COMPANY AUTOMOBILES
In company locations where officers/directors may be
assigned company-owned automobiles, the following will
apply:
a. Voluntary Separation
Officers/directors who voluntarily retire will be
presented with the automobile that is currently
assigned as a gift.
b. Involuntary Separation
Officers/directors who are requested to take early
retirement will be presented with the automobile
which is currently assigned as a gift.
c. Involuntary Discharge
Officers/directors will not be given an automobile,
and it will not be available for purchase.
D. CLUB MEMBERSHIP
Company memberships will not be awarded to an executive
regardless of reason for termination.
E. AUTOMOBILE ALLOWANCE
1. In locations where executives receive a car
allowance/insurance, the following will apply:
a. Voluntary Separation
The company will not provide a car
allowance/insurance.
<PAGE> 6
FLUOR CORPORATION AND SUBSIDIARIES
Management Manual
================================================================================
Section: Compensation Page: 134
Subject: EXECUTIVE SEVERANCE PLAN Effective: 07-21-99
(Continued)
Applies To: Fluor Corporation and Selected Subsidiaries Supersedes: 10-20-98
================================================================================
b. Involuntary Separation
The company will not provide a car
allowance/insurance.
c. Involuntary Discharge
The company will not provide a car
allowance/insurance.
F. INSURANCE COVERAGE
Applicable insurance coverage, i.e., group health, long-term
disability, executive health, etc., will cease on date of
termination. Where applicable, departing executive may elect
continued coverage through the Consolidated Omnibus Budget
Reconciliation Act (COBRA).
G. TIME OFF WITH PAY (TOWP) PROGRAM
Balance will be paid at time of termination.
H. STOCK BASED AWARDS
1. Voluntary Separation
Upon qualified retirement, awards become 100 percent
vested.
2. Involuntary Separation
Upon qualified retirement, awards become 100 percent
vested.
3. Involuntary Discharge
Vested portion may be exercised.
I. LONG TERM INCENTIVE (LTI) PROGRAM
Applicable cash awards under the long-term incentive program
will not be prorated for any reason, except death or total and
permanent disability.
<PAGE> 7
FLUOR CORPORATION AND SUBSIDIARIES
Management Manual
================================================================================
Section: Compensation Page: 135
Subject: EXECUTIVE SEVERANCE PLAN Effective: 07-21-99
(Continued)
Applies To: Fluor Corporation and Selected Subsidiaries Supersedes: 10-20-98
================================================================================
J. WAIVERS
A settlement agreement and release form must be obtained from
employees in exchange for severance benefits. No severance
benefit will be due employees unless a settlement and release
agreement provided by the company has been properly executed.
K. OUTPLACEMENT
In-house outplacement services are available.
L. PLAN TERMINATION
This Plan will expire December 31st., 2000. Any executive whose
employment terminates after the Plan expires, will not be
eligible for participation in the Plan. Further, no benefits
will accrue or be payable under the Plan after Plan Termination.
M. EXCEPTION
Approved by the Chief Executive Officer of Fluor Corporation.
<PAGE> 1
EXHIBIT 10.20
September 24, 1999
Mr. Jim Rollans
President and Chief Executive Officer
Fluor Signature Services
Dear Jim,
It is my pleasure to inform you that at the December 1998 Organization and
Compensation Committee meeting, the Board of Directors of Fluor Corporation (the
"Company") selected you to participate in a Retention Program. The amount of the
retention award was $2,750,000. At your request the award has been structured as
follows:
AWARD AMOUNT: $2,750,000
RETENTION PERIOD: October 1, 1998 through October 31, 2001
RETENTION AGREEMENT: The Award Amount is divided between the following
two components:
HOUSING
You have previously been provided with a personal
loan of $1,627,576 secured by a deed of trust on
your residence. The loan provides for an interest
rate of 4.52%, compounded annually with a balloon
payment of the entire amount due on termination
of employment. The loan presently states that it
is subject to acceleration in the event of your
termination of employment for any reason prior to
October 31, 2001. The Company will forgive the
loan including accrued interest in its entirety
(a) if you remain continuously employed by the
Company until October 31, 2001, or (b) if your
employment terminates prior to that date due to
(i) death, (ii) permanent and total disability,
(iii) a Company-initiated termination for any
reason other than for-cause or (iv) following a
Change of Control. If your employment with the
Company terminates for
<PAGE> 2
Jim Rollans
September 24, 1999
Page 2
any other reason prior to October 31, 2001
(including, without limitation, your voluntary
termination or a termination for cause) then this
loan shall remain in effect in accordance with
its terms.
For purposes hereof, the term "Change of Control"
shall be deemed to have occurred if, (a) 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 25% or more
of the votes that may be cast for the election of
directors of the Company or (b) as a result of
any cash tender or exchange offer, merger or
other business combination, or any combination of
the preceding (a "transaction"), the persons who
are the directors of the Company before the
transaction shall cease to constitute a majority
of the Board of Directors of the Company or any
successor thereto.
ACCRUAL TO EXECUTIVE DEFERRAL COMPENSATION
PROGRAM ("EDCP")
You may earn $1,122,424, said amount to be
adjusted as provided below, if you remain
continuously employed by the Company until on or
after October 31, 2001 (the "EDCP Accrual").
During the period from October 1, 1998 to the
date upon which the EDCP Accrual vests (if at
all), you will also be entitled to invest the
EDCP Accrual by selecting one or more of the
crediting options contained in the EDCP.
Thereafter, the amount of your EDCP Accrual, if
vested, shall be adjusted based upon the
investment return that you would have otherwise
received had the EDCP Accrual been actually
earned as of October 1, 1998 and credited in your
EDCP account based upon your chosen crediting
option through the date of vesting. If no
crediting option is indicated, the EDCP Accrual
will be automatically credited as if you chose
the Money Market crediting option under the EDCP.
The EDCP Accrual, as adjusted, will vest and be
credited to your existing Company EDCP account
(a) if you remain
<PAGE> 3
Jim Rollans
September 24, 1999
Page 3
continuously employed by the Company until
October 31, 2001 or (b) if your employment
terminates prior to that date due to (i) death,
(ii) permanent and total disability, (iii) a
Company-initiated termination other than on a
for-cause basis or (iv) following a Change of
Control. If in the event your employment
terminates for any reason prior to any such
vesting date for any other reason (including,
without limitation, your voluntary termination or
a termination for cause), then the EDCP Accrual,
as adjusted, will be forfeited.
Please indicate your acknowledgment of the terms of the letter by signing in the
space provided and returning the original to me for your employee records. You
should also retain a copy for your file.
If you should have any questions, please give me a call at (949) 349-5435.
Sincerely,
Philip J. Carroll
AGREED BY: AGREED BY:
/s/ P. J. CARROLL 9-24-99 /s/ J. O. ROLLANS 9-24-99
- ------------------------------------ ------------------------------------
PHILIP J. CARROLL DATE JAMES O. ROLLANS DATE
<PAGE> 1
EXHIBIT 13
Fluor Corporation 1999 Annual Report
OPERATING STATISTICS
<TABLE>
<CAPTION>
Year ended October 31, 1999 1998 1997
- ---------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
(in millions)
FLUOR DANIEL
Revenues $ 8,403 $ 9,736 $10,180
Customer-furnished material included in revenues 3,786 3,916 4,948
Work performed $ 8,403 $ 9,736 $10,180
Gross margin percent 5.7% 4.8% 3.5%
Operating profit $ 160 $ 161 $ 70
New awards $ 4,757 $ 8,173 $10,366
New awards gross margin percent 7.2% 6.0% 5.0%
Backlog $ 6,770 $10,403 $12,269
Backlog gross margin percent 4.6% 4.0% 3.2%
Salaried employees 18,147 24,060 24,942
FLUOR GLOBAL SERVICES
Revenues $ 2,931 $ 2,642 $ 3,038
Work performed $ 2,055 $ 1,857 $ 2,615
Gross margin percent 9.4% 11.2% 8.7%
Operating profit $ 92 $ 81 $ 52
New awards $ 2,032 $ 1,819 $ 1,756
New awards gross margin percent 7.8% 7.6% 9.6%
Backlog $ 2,372 $ 2,242 $ 2,101
Backlog gross margin percent 6.1% 6.4% 5.7%
Salaried employees 6,011 5,554 5,359
BACKLOG BY STRATEGIC BUSINESS ENTERPRISE
Fluor Daniel
Chemicals & Life Sciences $ 1,964 $ 4,130 $ 4,414
29% 40% 36%
Oil, Gas & Power 2,583 2,134 3,298
38% 20% 27%
Mining 657 1,890 2,931
10% 18% 24%
Manufacturing 1,170 1,749 1,420
17% 17% 12%
Infrastructure 396 500 206
6% 5% 1%
- ---------------------------------------------------------------------------------------------------------------------
Total backlog $ 6,770 $10,403 $12,269
100% 100% 100%
=====================================================================================================================
Fluor Global Services
Fluor Federal Services $ 710 $ 781 $ 1,000
30% 35% 48%
Telecommunications 525 135 179
22% 6% 9%
Operations & Maintenance 1,127 1,217 827
48% 54% 39%
Consulting Services and Other 10 109 95
-% 5% 4%
- ---------------------------------------------------------------------------------------------------------------------
Total backlog $ 2,372 $ 2,242 $ 2,101
100% 100% 100%
=====================================================================================================================
</TABLE>
TOTAL BACKLOG BY LOCATION
<TABLE>
<CAPTION>
Year ended October 31, 1999 1998 1997 1996 1995
- -----------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
(in millions)
United States $ 5,008 $ 5,911 $ 5,665 $ 7,326 $ 6,666
55% 47% 39% 46% 45%
Asia Pacific (includes Australia) 998 2,260 3,959 4,402 3,303
11% 18% 28% 28% 23%
EAME* 1,074 2,023 3,828 2,677 3,088
12% 16% 27% 17% 21%
Americas 2,062 2,451 918 1,352 1,668
22% 19% 6% 9% 11%
- -----------------------------------------------------------------------------------------------------------------------------
Total backlog $ 9,142 $12,645 $14,370 $15,757 $14,725
100% 100% 100% 100% 100%
================================================================================
</TABLE>
- ------------
* EAME represents Europe, Africa and the Middle East.
PAGE 18
<PAGE> 2
OPERATING STATISTICS
<TABLE>
<CAPTION>
Year ended October 31, 1999 1998 1997 1996 1995
- --------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
(in thousands/in thousands of short tons)
COAL
Revenues $1,083,030 $1,127,297 $1,081,026 $ 960,827 $ 849,758
Operating profit $ 146,857 $ 172,762 $ 154,766 $ 134,526 $ 111,033
Produced coal sold
Steam coal 22,916 19,398 19,300 17,520 15,777
Metallurgical coal 14,948 18,210 16,343 13,571 11,633
- --------------------------------------------------------------------------------------------------------------------
Total produced coal sold 37,864 37,608 35,643 31,091 27,410
Total employees 3,190 3,094 2,968 2,809 2,479
- --------------------------------------------------------------------------------------------------------------------
</TABLE>
PAGE 23
<PAGE> 3
SELECTED FINANCIAL DATA
<TABLE>
<CAPTION>
(in millions, except
per share amounts) 1999 1998 1997 1996 1995 1994
- ----------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
CONSOLIDATED OPERATING RESULTS
Revenues $ 12,417.4 $ 13,504.8 $ 14,298.5 $ 11,015.2 $ 9,301.4 $ 8,485.3
Earnings from continuing
operations before taxes 185.7 362.6 255.3 413.2 362.2 303.3
Earnings from continuing
operations, net 104.2 235.3 146.2 268.1 231.8 192.4
Earnings (loss) from
discontinued operations, net -- -- -- -- -- --
Cumulative effect of change in
accounting principle, net -- -- -- -- -- --
Net earnings 104.2 235.3 146.2 268.1 231.8 192.4
Basic earnings per share
Continuing operations 1.38 2.99 1.76 3.24 2.82 2.35
Discontinued operations -- -- -- -- -- --
Cumulative effect of change
in accounting principle -- -- -- -- -- --
- ----------------------------------------------------------------------------------------------------------------------------
Basic earnings per share 1.38 2.99 1.76 3.24 2.82 2.35
Diluted earnings per share
Continuing operations 1.37 2.97 1.75 3.21 2.81 2.34
Discontinued operations -- -- -- -- -- --
Cumulative effect of change
in accounting principle -- -- -- -- -- --
- ----------------------------------------------------------------------------------------------------------------------------
Diluted earnings per share $ 1.37 $ 2.97 $ 1.75 $ 3.21 $ 2.81 $ 2.34
Return on average
shareholders' equity 6.8% 14.5% 8.7% 17.4% 17.6% 17.1%
Cash dividends per
common share $ .80 $ .80 $ .76 $ .68 $ .60 $ .52
CONSOLIDATED FINANCIAL POSITION
Current assets $ 1,910.2 $ 2,277.2 $ 2,213.4 $ 1,796.8 $ 1,411.6 $ 1,258.4
Current liabilities 2,204.3 2,495.6 1,978.2 1,645.5 1,238.6 1,021.3
- ----------------------------------------------------------------------------------------------------------------------------
Working capital (294.1) (218.4) 235.2 151.3 173.0 237.1
Property, plant and
equipment, net 2,223.0 2,147.3 1,938.8 1,677.7 1,435.8 1,274.4
Total assets 4,886.1 5,019.2 4,685.3 3,951.7 3,228.9 2,824.8
Capitalization
Short-term debt* 247.9 430.7 88.8 67.2 60.8 58.4
Long-term debt 317.5 300.4 300.5 3.0 2.9 24.4
Shareholders' equity 1,581.4 1,525.6 1,741.1 1,669.7 1,430.8 1,220.5
- ----------------------------------------------------------------------------------------------------------------------------
Total capitalization $ 2,146.8 $ 2,256.7 $ 2,130.4 $ 1,739.9 $ 1,494.5 $ 1,303.3
Total debt as a percent of
total capitalization 26.3% 32.4% 18.3% 4.0% 4.3% 6.4%
Shareholders' equity per
common share $ 20.80 $ 20.19 $ 20.79 $ 19.93 $ 17.20 $ 14.79
Common shares outstanding
at October 31 76.0 75.6 83.7 83.8 83.2 82.5
OTHER DATA
New awards $ 6,789.4 $ 9,991.9 $ 12,122.1 $ 12,487.8 $ 10,257.1 $ 8,071.5
Backlog at year end 9,142.0 12,645.3 14,370.0 15,757.4 14,724.9 14,021.9
Capital expenditures and
acquisitions** 504.3 612.9 647.4 484.5 335.1 274.8
Cash provided by operating
activities $ 464.9 $ 702.5 $ 328.6 $ 406.9 $ 366.4 $ 458.6
</TABLE>
<TABLE>
<CAPTION>
(in millions, except
per share amounts) 1993 1992 1991 1990 1989
- --------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
CONSOLIDATED OPERATING RESULTS
Revenues $ 7,850.2 $ 6,600.7 $ 6,572.0 $ 7,248.9 $ 6,127.2
Earnings from continuing
operations before taxes 242.2 215.4 228.4 153.6 135.6
Earnings from continuing
operations, net 166.8 135.3 153.1 119.4 84.1
Earnings (loss) from
discontinued operations, net -- (96.6) 11.0 35.2 28.6
Cumulative effect of change in
accounting principle, net -- (32.9) -- -- --
Net earnings 166.8 5.8 164.1 154.6 112.7
Basic earnings per share
Continuing operations 2.05 1.67 1.91 1.50 1.07
Discontinued operations -- (1.19) .14 .44 .36
Cumulative effect of change
in accounting principle -- (.41) -- -- --
- --------------------------------------------------------------------------------------------------------------
Basic earnings per share 2.05 .07 2.05 1.94 1.43
Diluted earnings per share
Continuing operations 2.04 1.66 1.89 1.48 1.05
Discontinued operations -- (1.19) .14 .44 .36
Cumulative effect of change
in accounting principle -- (.40) -- -- --
- --------------------------------------------------------------------------------------------------------------
Diluted earnings per share $ 2.04 $ .07 $ 2.03 $ 1.92 $ 1.41
Return on average
shareholders' equity 17.4% .6% 20.2% 23.3% 21.5%
Cash dividends per
common share $ .48 $ .40 $ .32 $ .24 $ .14
CONSOLIDATED FINANCIAL POSITION
Current assets $ 1,309.1 $ 1,138.6 $ 1,159.5 $ 1,222.8 $ 1,036.4
Current liabilities 930.9 845.4 848.2 984.0 797.7
- --------------------------------------------------------------------------------------------------------------
Working capital 378.2 293.2 311.3 238.8 238.7
Property, plant and
equipment, net 1,100.9 1,046.9 1,092.7 925.3 775.3
Total assets 2,588.9 2,365.5 2,421.4 2,475.8 2,154.3
Capitalization
Short-term debt* 61.8 75.6 52.3 2.1 36.8
Long-term debt 59.6 61.3 75.7 57.6 62.5
Shareholders' equity 1,044.1 880.8 900.6 741.3 589.9
- --------------------------------------------------------------------------------------------------------------
Total capitalization $ 1,165.5 $ 1,017.7 $ 1,028.6 $ 801.0 $ 689.2
Total debt as a percent of
total capitalization 10.4% 13.5% 12.4% 7.5% 14.4%
Shareholders' equity per
common share $ 12.72 $ 10.81 $ 11.10 $ 9.22 $ 7.39
Common shares outstanding
at October 31 82.1 81.5 81.1 80.4 79.8
OTHER DATA
New awards $ 8,000.9 $ 10,867.7 $ 8,531.6 $ 7,632.3 $ 7,135.3
Backlog at year end 14,753.5 14,706.0 11,181.3 9,557.8 8,360.9
Capital expenditures and
acquisitions** 171.5 272.7 106.5 126.4 130.4
Cash provided by operating
activities $ 188.7 $ 306.1 $ 219.0 $ 353.1 $ 265.1
</TABLE>
* Includes commercial paper, loan notes, a note payable to affiliate,
miscellaneous trade notes payable and the current portion of long-term
debt.
** Excludes discontinued operations.
See Management's Discussion and Analysis on pages 28 to 37 and Notes to
Consolidated Financial Statements on pages 42 to 53 for information relating to
significant items affecting the results of operations.
PAGE 27
<PAGE> 4
MANAGEMENT'S DISCUSSION AND ANALYSIS
The following discussion and analysis is provided to increase understanding of,
and should be read in conjunction with, the consolidated financial statements
and accompanying notes. For purposes of reviewing this document "operating
profit" is calculated as revenues less cost of revenues excluding: corporate
administrative and general expense; interest expense; interest income; domestic
and foreign income taxes; gain or loss on discontinued operations; the
cumulative effect of a change in accounting principles; and certain other
miscellaneous non-operating income and expense items which are immaterial.
RESULTS OF OPERATIONS
As a result of a strategic reorganization, during 1999 the company realigned its
operating units into four business segments (which the company refers to as
Strategic Business Enterprises): Fluor Daniel, Fluor Global Services, Coal and
Fluor Signature Services. The Fluor Daniel segment provides design, engineering,
procurement and construction services on a worldwide basis to an extensive range
of industrial, commercial, utility, natural resources and energy clients. The
Fluor Global Services segment, which includes American Equipment Company, TRS
Staffing Solutions, Fluor Federal Services, Telecommunications, Operations &
Maintenance and Consulting Services, provides outsourcing and asset management
solutions to its customers. The Coal segment produces, processes and sells
high-quality, low-sulfur steam coal for the utility industry as well as
industrial customers, and metallurgical coal for the steel industry. Fluor
Signature Services, which commenced operations on November 1, 1999, was created
to provide business administration and support services for the benefit of the
company and ultimately, to unaffiliated customers.
To implement the reorganization, the company recorded a special
provision of $117.2 million - see Strategic Reorganization Costs elsewhere in
Management's Discussion and Analysis. The provision was not allocated to the
business segments.
FLUOR DANIEL SEGMENT
Total 1999 new awards were $4.8 billion compared with $8.2 billion in 1998 and
$10.4 billion in 1997. The following table sets forth new awards for each of the
segment's business units:
<TABLE>
<CAPTION>
Year ended October 31, 1999 1998 1997
- ------------------------------------------------------------
<S> <C> <C> <C>
(in millions)
Chemicals & Life Sciences $ 1,211 $ 3,053 $ 4,166
25% 37% 40%
Oil, Gas & Power 2,599 2,302 2,814
55% 28% 27%
Mining 26 464 1,595
1% 6% 15%
Manufacturing 785 1,856 1,741
16% 23% 17%
Infrastructure 136 498 50
3% 6% 1%
- ------------------------------------------------------------
Total new awards $ 4,757 $ 8,173 $10,366
100% 100% 100%
================================
United States $ 2,267 $ 4,112 $ 3,885
47% 50% 37%
International 2,490 4,061 6,481
53% 50% 63%
- ------------------------------------------------------------
Total new awards $ 4,757 $ 8,173 $10,366
100% 100% 100%
================================
</TABLE>
New awards in 1999 were lower compared with 1998, reflecting both the
lingering impact of deferred capital spending by clients, primarily in the
petrochemical and mining industries, and the company's continuing emphasis on
greater project selectivity. The large size and uncertain timing of complex,
international projects can create variability in the company's award pattern;
consequently, future award trends are difficult to predict with certainty.
However, given the improving global economic conditions, including significantly
higher oil prices and the recent stabilizing of commodity prices, the company is
optimistic about the level of new awards in 2000.
Since 1997 the trend in new awards activity within each business unit
reflects the impact of the economic conditions and operating strategies noted
above. There were no individual new awards in excess of $550 million in either
1999 or 1998. New awards for the Chemicals & Life Sciences business unit in 1997
included the $1.9 billion Yanpet project, a petrochemical complex in Saudi
Arabia. The Mining business unit's new awards are down significantly from 1997
primarily due to depressed commodity prices, thereby limiting new projects, as
well as this unit's focus on project selectivity. The decrease in new awards in
1999 compared with 1998 and 1997 for the Manufacturing business unit is
primarily the result of an increased focus on project selectivity.
Backlog at October 31, 1999, 1998 and 1997 was $6.8 billion, $10.4 billion
and $12.3 billion, respectively.
PAGE 28
<PAGE> 5
(See page 18 in this annual report for information relating to backlog by
business unit.) The decrease in total backlog is consistent with the downward
trend in new awards. Work performed on existing projects has exceeded new awards
in both 1999 and 1998. The decrease in backlog from projects located outside the
United States at October 31, 1999, resulted from work performed on international
projects such as a copper and gold mine in Indonesia and the aforementioned
petrochemical project in Saudi Arabia, in addition to a 39 percent decrease in
international-related new awards. 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.
Fluor Daniel revenues decreased to $8.4 billion in 1999 compared with
$9.7 billion in 1998 and $10.2 billion in 1997, primarily due to a continuing
decline in the volume of work performed. The decline in revenues is consistent
with the downward trend in new awards, reflecting both deferred capital spending
by clients as well as the company's emphasis on project selectivity. Fluor
Daniel operating profit was $160 million in 1999, $161 million in 1998 and $70
million in 1997. Despite a 14 percent decline in revenues, operating margins for
the year ended October 31, 1999 improved over the same period in 1998, primarily
due to improved project execution. Operating results for the year ended October
31, 1997, reflect provisions totaling $118.2 million recorded for estimated
losses on certain contracts and adjustments to project-related investments and
accounts receivable. Results for 1997 also included charges totaling $25.4
million related to implementation of certain cost reduction initiatives.
Results for the year ended October 31, 1999 for Fluor Daniel include a
provision totaling $84 million for process design problems which arose on its
Murrin Murrin Nickel Cobalt project located in Western Australia. The company
anticipates recovering a portion of this amount and, accordingly, has recorded
$64 million in expected insurance recoveries. The result on operating profit was
a negative $20 million impact which reflects costs in excess of contract
maximums and which are not otherwise recoverable from any insurance coverage.
During the fourth quarter of 1999, Fluor Daniel completed a more definitive
estimate of costs required to address the design problems and potential
insurance recoveries. As a result of this effort, both the estimated cost and
expected insurance recovery amounts discussed above include an upward revision
of $20 million.
The majority of Fluor Daniel's engineering and construction contracts
provide for reimbursement of costs plus a fixed or percentage fee. In the highly
competitive markets served by this segment, there is an increasing trend for
cost-reimbursable contracts with incentive-fee arrangements and fixed or unit
price contracts. In certain instances, Fluor Daniel has provided guaranteed
completion dates and/or achievement of other performance criteria. Failure to
meet schedule or performance guarantees or increases in contract costs can
result in non-recoverable costs, which could exceed revenues realized from the
project. Fluor Daniel continues to focus on improving operating margins by
enhancing selectivity in the projects it pursues, lowering overhead costs and
improving project execution.
The Fluor Daniel segment made no significant business acquisitions
during 1999, 1998 or 1997.
FLUOR GLOBAL SERVICES SEGMENT
Total 1999 new awards were $2.0 billion compared with $1.8 billion in both 1998
and 1997. The following table sets forth new awards for each of the segment's
business units:
<TABLE>
<CAPTION>
Year ended October 31, 1999 1998 1997
- -------------------------------------------------------------
(in millions)
<S> <C> <C> <C>
Fluor Federal Services $ 582 $ 451 $ 497
29% 25% 28%
Telecommunications 646 30 277
32% 2% 16%
Operations & Maintenance 772 1,106 713
38% 61% 41%
Consulting Services and Other 32 232 269
1% 12% 15%
- -------------------------------------------------------------
Total new awards $2,032 $1,819 $1,756
100% 100% 100%
============================
United States $1,928 $1,524 $1,558
95% 84% 89%
International 104 295 198
5% 16% 11%
- -------------------------------------------------------------
Total new awards $2,032 $1,819 $1,756
100% 100% 100%
============================
</TABLE>
New awards in 1999 were higher compared with 1998, as a result of an
increase in telecommunications projects. New awards in 1998 were slightly higher
than 1997 primarily due to the renewal of facility management service contracts
for IBM at various facilities located throughout
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<PAGE> 6
the United States. Because of the nature of the services performed by Fluor
Global Services, primarily related to American Equipment Company (AMECO) and TRS
Staffing Solutions, a significant portion of this segment's activities are not
includable in backlog.
Backlog at October 31, 1999, 1998 and 1997 was $2.4 billion, $2.2
billion and $2.1 billion, respectively. (See page 18 in this annual report for
information relating to backlog by business unit.) The increase in total backlog
is consistent with the increasing trend in new awards. The backlog of Fluor
Global Services is concentrated in the United States, representing approximately
90 percent, 88 percent and 92 percent of the total backlog at the end of 1999,
1998 and 1997, respectively. Although backlog reflects business that 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.
Fluor Global Services revenues increased to $2.9 billion in 1999
compared with $2.6 billion in 1998, as the result of higher revenues in its
AMECO, Fluor Federal Services and Telecommunications business units. The decline
in Fluor Global Services revenues from $3.0 billion in 1997 to $2.6 billion in
1998 was primarily due to a reduction in revenues related to its environmental
strategies business which was phased out during 1998. Operating profit for the
segment was $92 million in 1999, $81 million in 1998 and $52 million in 1997.
Gross margin in 1999 declined to 9.4 percent from 11.2 percent in 1998 primarily
due to the AMECO business unit, which is being adversely impacted by the
increasingly competitive equipment sale and rental industry. Despite the lower
gross margin, operating profit increased in 1999 compared with 1998 primarily
due to the elimination of certain unprofitable operations which negatively
impacted 1998. The improvement in operating results in 1998 as compared with
1997 is due primarily to losses incurred during 1997 by various unprofitable
business units that were eliminated in 1998.
The majority of Fluor Global Services' contracts provide for
reimbursement of costs plus a fixed or percentage fee. Due to intense
competitive market conditions, there is an increasing trend for contracts with
incentive-fee arrangements or fixed or unit price contracts. In certain
instances, contracts provide guaranteed completion dates and/or achievement of
other performance criteria. Failure to meet schedule or performance guarantees
or increases in contract costs can result in non-recoverable costs, which could
exceed revenues realized from the project.
In December 1996, TRS Staffing Solutions, the segment's temporary
personnel services business unit, acquired the ConSol Group; in May 1997, AMECO
acquired the SMA Companies; and, in June 1997, AMECO acquired J.W. Burress, Inc.
These businesses, in addition to other smaller acquisitions, were purchased for
a total of $142 million.
All acquisitions have been accounted for under the purchase method of
accounting and their results of operations have been included in the company's
consolidated financial statements from the respective acquisition dates. If
these acquisitions had been made at the beginning of 1997, pro forma
consolidated results of operations would not have differed materially from
actual results.
In October 1998, the company entered into an agreement to sell its
ownership interest in Fluor Daniel GTI, Inc. ("FD/GTI"), an environmental
services company. Under terms of the agreement, the company sold its 4,400,000
shares in FD/GTI for $8.25 per share, or $36.3 million in cash, on December 3,
1998. This transaction did not have a material impact on the company's results
of operations or financial position. In August 1997, the company completed the
sale of ACQUION, a global provider of supply chain management services, for $12
million in cash, resulting in a pre-tax gain of $7 million.
COAL SEGMENT
Revenues and operating profit from Coal operations in 1999 were $1.08 billion
and $147 million, respectively, compared with $1.13 billion and $173 million in
1998. Revenues and operating profit in 1997 were $1.08 billion and $155 million,
respectively.
Revenues decreased $44 million in 1999 compared with 1998 primarily due
to the combination of a reduction in volume of the higher priced metallurgical
coal and a decline in prices. Metallurgical coal volume decreased nearly 18
percent during 1999 compared with 1998. This decrease was more than offset by an
increase in lower priced steam coal volume. Also contributing to the decline in
coal revenues were lower realized prices for both steam and metallurgical coal.
Steam coal prices declined 4 percent while metallurgical coal prices declined 2
percent. The metallurgical coal market continues to be adversely affected by
steel imports from outside the United States and a weak U.S. coal export market.
The imports have reduced demand for steel produced in the U.S. and thereby
PAGE 30
<PAGE> 7
reduced U.S. demand for metallurgical coal, which is used in steel production.
Demand is weak for U.S. coal exported to foreign markets as the U.S. Dollar
remains strong and the Asian economies slowly recover from their financial
crises. Additionally, the market for steam coal, which is used to fire
electric-generating plants, continues to be impacted by high customer inventory
levels resulting from last year's mild winter and competition from western
coals, which continue to penetrate the traditional eastern coal market areas.
Gross profit for the year ended October 31, 1999 is down slightly from the same
period in 1998 as a result of lower metallurgical coal sales volume and lower
prices for both metallurgical and steam coal. Operating profit for 1999 is lower
than 1998 due to higher fixed costs, primarily depreciation, depletion and
amortization, as volume levels have remained relatively flat.
The market conditions described above have placed pressure on both the
sales volume and pricing outlook for 2000. The company continues to focus on
reducing mining production costs through expansion of its surface mining
capabilities and utilization of longwall mining.
Revenues increased $46 million in 1998 compared with 1997 primarily due
to increased sales volume of metallurgical coal, partially offset by lower steam
coal prices. Metallurgical coal revenues increased 11 percent primarily due to
higher demand by steel producers. Steam coal revenues were flat on steady volume
in 1998 as compared with 1997, while steam coal prices declined approximately 3
percent as overall demand was down due to both a mild winter and summer in 1998.
Gross profit increased by 15 percent and operating profit increased by 12
percent in 1998 compared with 1997, primarily due to reduced production costs
and an increased proportion of higher margin metallurgical coal sales, partially
offset by lower steam coal prices.
Coal segment acquisitions during the three years ended October 31, 1999
were primarily focused on the purchase of additional low-sulfur coal reserves in
areas adjacent to existing mine and mill operations. All acquisitions have been
accounted for under the purchase method of accounting and their results of
operations have been included in the company's consolidated financial statements
from the respective acquisition dates. If these acquisitions had been made at
the beginning of the respective year acquired, pro forma consolidated results of
operations would not have differed materially from actual results.
STRATEGIC REORGANIZATION COSTS
As noted above, during 1999 the company reorganized its engineering and
construction operations. The company recorded a special provision of $117.2
million ($100.5 million after-tax) to cover direct and other reorganization
related costs, primarily for personnel, facilities and asset impairment
adjustments. The provision was initially recorded during the second quarter at
the then estimated amount of $136.5 million ($119.8 million after-tax). Total
estimated personnel costs associated with the reorganization were reduced during
the fourth quarter as both the actual number of employee terminations as well as
the cost per employee termination were lower than originally estimated.
Under the reorganization plan, approximately 5,000 jobs are expected to
be eliminated. The provision includes amounts for personnel costs for certain
affected employees that are entitled to receive severance benefits under
established severance policies or by government regulations. Additionally,
outplacement services may be provided on a limited basis to some affected
employees. The provision also reflects amounts for asset impairment, primarily
for property, plant and equipment; intangible assets (goodwill); and certain
investments. The asset impairments were recorded primarily because of the
company's decision to exit certain non-strategic geographic locations and
businesses. The carrying values of impaired assets were adjusted to their
current market values based on estimated sale proceeds, using either discounted
cash flows or contractual amounts. Lease termination costs were also included in
the special provision. The company anticipates closing 15 non-strategic offices
worldwide as well as consolidating and downsizing other office locations. The
closure or rationalization of these facilities is expected to be substantially
complete by the end of fiscal year 2000.
As of October 31, 1999, the company has reduced headcount by
approximately 5,000 employees and has closed 13 offices. The company anticipates
closing two additional offices within the next six months. The special provision
liability as of October 31, 1999 totaled $58.5 million. The remaining liability
for personnel costs ($25.2 million) and asset impairments ($23.3 million) will
be substantially utilized by April 30, 2000. The remaining liability associated
with abandoned lease space ($9.7 million) will be amortized as an offset to
lease expense over the remaining life of the respective leases starting on the
date of abandonment.
Overhead beginning in 2000 is expected to be reduced by approximately
$100 to $120 million annually as a result of the personnel reductions and office
closures.
PAGE 31
<PAGE> 8
OTHER
Net interest expense for 1999 increased by $8.4 million compared with 1998
primarily due to an increase in interest expense resulting from higher average
outstanding short-term borrowings used to fund the company's share repurchase
program, which was completed in 1998. In addition, interest income declined as a
result of lower average cash balances outstanding during the year. Net interest
expense for 1998 increased compared with 1997 primarily due to an increase in
short-term borrowings required to fund the company's share repurchase program
and a full year of interest related to the $300 million in long-term debt issued
in March 1997.
Corporate administrative and general expense for the year ended October
31, 1999 was $55.4 million compared with $22.6 million for the same period in
1998. The increase is due to higher stock-based compensation plan expense and an
increase in consulting costs related to the development and implementation of
the company's new strategic direction. Also included in corporate administrative
and general expense for 1999 is approximately $8 million for the development of
the company's Enterprise Resource Management system, Knowledge@Work. In
addition, the year ended October 31, 1998 included a credit of approximately $10
million related to a long-term incentive compensation plan. 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 target
expired, without amendment or extension by the Committee, on December 31, 1997.
Corporate administrative and general expense for the year ended October 31,
1998, increased as compared with 1997 due to costs associated with the company's
strategic business planning effort, executive severance and recruiting costs.
Also included was the $10 million credit noted above.
The effective tax rate for year ended October 31, 1999 is significantly
higher than the amount reported for the same period in 1998 primarily due to
certain non-U.S. items included in the special provision which did not receive
full tax benefit. The effective tax rate for the year ended October 31, 1998 was
essentially the same as the U.S. federal statutory rate. In 1997, the effective
tax rate was materially higher than the U.S. federal statutory tax rate
primarily due to foreign-based project losses, other project-related investment
losses and certain implementation costs for cost reduction initiatives incurred
during the year which did not receive full tax benefit.
DISCONTINUED OPERATIONS
In October 1997, the company received $60 million representing a negotiated
prepayment of the remaining amounts outstanding stemming from the 1994 sale of
its Lead business. The amount received slightly exceeded the recorded discounted
value of the receivable.
FINANCIAL POSITION AND LIQUIDITY
The decrease in cash provided by operating activities in 1999, compared with
1998, is primarily due to lower net earnings (adjusted for the non-cash and
unexpended amounts of the special provision in 1999) and an increase in
project-related operating assets and liabilities. Also contributing to the
decline was an increase in inventories, for both equipment for sale/rental and
coal. The increase in inventories is the result of slowing markets. The receipt
of a $30 million tax refund also positively impacted operating cash flow in
1998. The increase in cash provided by operating activities in 1998, compared
with 1997, is primarily due to a net decrease in operating assets and
liabilities (excluding the effects of business acquisitions and dispositions),
primarily related to a decrease in the volume of work performed on engineering
and construction contracts, and the aforementioned tax refund. Changes in
operating assets and liabilities vary from year to year and are affected by the
mix, stage of completion and commercial terms of engineering and construction
projects.
Cash utilized by investing activities totaled $375.2 million in 1999
compared with $563.3 million in 1998. The decrease resulted primarily from lower
capital expenditures and acquisitions, net of proceeds from the sale of
property, plant and equipment. Capital expenditures in 1999 were primarily for
the Fluor Global Services segment, specifically for AMECO and directed toward
acquiring machinery and equipment for its rental business, and for the Coal
segment, which were directed toward developing existing reserves. In addition,
capital expenditures in 1999 include approximately $26 million of costs
associated with Knowledge@Work. The company also completed the sale of its
ownership interest in FD/GTI during 1999 and received proceeds totaling $36.3
million. The increase in
PAGE 32
<PAGE> 9
cash utilized by investing activities in 1998 compared with 1997, is primarily
attributable to monies received in 1997 from notes receivable related to the
ongoing collection of deferred amounts associated with the company's 1994 sale
of its Lead business. Capital expenditures, net of proceeds from the sale of
property, plant and equipment, increased in 1998 compared with 1997, primarily
in the Fluor Global Services and Coal segments. Offsetting this increase was a
significant decline in acquisitions, again primarily in the Fluor Global
Services and Coal segments.
Cash utilized by financing activities totaled $220.6 million in 1999
compared with $98.0 million in 1998. During 1999 the company reduced commercial
paper and loan notes by $299.2 million partially offset by the issuance of a
$113.4 million note payable to an affiliate. In addition, the company became
obligated with respect to $17.6 million in long-term municipal bonds. Cash
utilized by financing activities totaled $98.0 million in 1998 compared with
1997 during which time the company provided cash from financing activities of
$235.7 million. In 1998, the company had short-term borrowings of $341.8 million
to fund its 1997/1998 share repurchase program. Under this program, the company
repurchased 8.3 million shares of its common stock for a total of $379.0
million. In 1997, the company issued $300 million of 6.95 percent senior notes
due March 1, 2007. Proceeds were used to fund operating working capital, capital
expenditures and the company's share repurchase program. During 1997, the
company purchased .6 million shares of its common stock for a total of $34
million.
Cash dividends decreased in 1999 to $60.7 million ($.80 per share) from
$63.5 million ($.80 per share) in 1998 and $63.8 million ($.76 per share) in
1997 as a consequence of the reduced number of shares outstanding that resulted
from the company's share repurchase program. In December 1999, the company
announced an increase in its quarterly cash dividend from $.20 per share to $.25
per share in 2000.
The total debt to capitalization ratio at October 31, 1999, was 26.3
percent compared with 32.4 percent at October 31, 1998.
The company has on hand and access to sufficient sources of funds to
meet its anticipated operating needs. Significant short- and long-term lines of
credit are maintained with banks which, along with cash on hand, provide
adequate operating liquidity. Liquidity is also provided by the company's
commercial paper program under which there was $113.7 million outstanding at
October 31, 1999, compared with $245.5 million at October 31, 1998. In December
1998, the company expanded both its revolving credit facility and its commercial
paper program from $400 million to $600 million. During January 1999, the
company filed a shelf registration statement with the Securities and Exchange
Commission for the sale of up to $500 million in debt securities.
Although the company is affected by inflation and the cyclical nature of
the industry, its engineering and construction operations are generally
protected by the ability to fix costs at the time of bidding or to recover cost
increases in most contracts. Coal operations produce a commodity that is
internationally traded at prices established by market factors outside the
control of the company. However, commodity prices generally tend over the long
term to correlate with inflationary trends, and the company's substantial coal
reserves provide a hedge against the long-term effects of inflation. 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.
FINANCIAL INSTRUMENTS
In connection with its 1997/1998 share repurchase program, the company entered
into a forward purchase contract for 1,850,000 shares of its common stock at a
price of $49 per share. The contract matures in October 2000 and gives the
company the ultimate choice of settlement option, either physical settlement or
net share settlement. As of October 31, 1999, the contract settlement cost per
share exceeded the current market price per share by $11.44.
Although the ultimate choice of settlement option resides with the
company, if the price of the company's common stock falls to certain levels, as
defined in the contract, the holder of the contract has the right to require the
company to settle the contract.
The company's investment securities and substantially all of its debt
instruments carry fixed rates of interest over their respective maturity terms.
The company does not currently use derivatives, such as swaps, to alter the
interest characteristics of its investment securities or its debt instruments.
The company's exposure to interest rate risk
PAGE 33
<PAGE> 10
on its $300 million senior notes, due in 2007, is not material given the
company's strong balance sheet and creditworthiness which provides the ability
to refinance.
The company utilizes forward exchange contracts to hedge foreign
currency transactions entered into in the ordinary course of business and not to
engage in currency speculation. At October 31, 1999 and 1998, the company had
forward foreign exchange contracts of less than eighteen months duration, to
exchange principally Australian Dollars, Canadian Dollars, Korean Won, Dutch
Guilders and German Marks for U.S. Dollars. In addition, the company has a
forward foreign currency contract to exchange U.S. Dollars for British Pounds
Sterling to hedge annual lease commitments which expired December 1999. The
total gross notional amount of these contracts at October 31, 1999 and 1998 was
$124 million and $106 million, respectively. Forward contracts to purchase
foreign currency represented $122 million and $102 million, and forward
contracts to sell foreign currency represented $2 million and $4 million, at
October 31, 1999 and 1998, respectively.
THE YEAR 2000 ISSUE -- READINESS DISCLOSURE
The Year 2000 issue is the result of computer systems and other equipment with
processors that use only two digits to identify a year rather than four. If not
corrected, many computer applications and date sensitive equipment could fail or
create erroneous results before, during and after the Year 2000. The company
utilizes information technology ("IT") systems, such as computer networking
systems and non-IT devices, which may contain embedded circuits, such as those
which may be found in building security equipment. Both IT systems and non-IT
devices are subject to potential failure due to the Year 2000 issue.
The company has developed and implemented a plan to achieve Year 2000
readiness (the "Y2K Program"). Progress reports on the Y2K Program are presented
regularly to the company's senior management and periodically to the Audit
Committee of the company's Board of Directors.
The company identified and assigned priority to certain mission critical
systems. The company defines mission critical systems as those that might have a
significant adverse effect in one or more of the following areas: safety,
environmental, legal or financial exposure and company credibility and image.
The company's Y2K Program has been implemented in the following three
phases: (1) Identification Phase - includes the identification and assessment of
Year 2000 problems requiring systems modifications or replacements; (2)
Remediation Phase - includes the remediation and testing of systems having Year
2000 problems and the identification of compliant systems' installation
scheduled during 1999; and (3) Contingency Planning Phase - includes the
development of contingency and business continuity plans to mitigate the effect
of any system or equipment failure. The timeframe for each phase of the Y2K
Program are represented in the following table:
<TABLE>
<CAPTION>
Start Date End Date
- --------------------------------------------------------------
<S> <C> <C>
Identification Phase Early 1996 December 31, 1998
Remediation Phase Late 1996 October 31, 1999
Contingency Planning Phase Late 1998 Ongoing into 2000
</TABLE>
As of October 31, 1999, the company's software applications are Year
2000 compliant, although a small number of systems have a November installation
date to accommodate user system schedules. As of October 31, 1999, the
company's hardware is Year 2000 compliant with the exception of the phone system
at one business unit where a compliant system is scheduled for installation in
early December. Transitioning into Year 2000, the company did not experience any
material issues and all of its computer systems are operating normally. The
company will continue to monitor its systems on an ongoing basis for the
immediate future. As of January 13, 2000, the company has not been made aware of
any Year 2000 disruptions for which it is responsible at any of its various
project sites throughout the world.
With respect to systems acquired by the company for its own account or
the account of customers, the company uses standard compliance processes to
certify Year 2000 compliance. The company requires that all suppliers certify
and, where appropriate, guarantee that the systems and equipment they provide to
the company for its own account and the account of its customers are Year 2000
compliant. In addition to requiring such certifications, the company also has
completed a process of reviewing the Year 2000 compliance of critical suppliers.
Actions included the review of remediation and testing of specific equipment,
review of suppliers' corporate Year 2000 progress and confirmation of electronic
exchange formats. Where appropriate, the company has followed up its review of
supplier information with telephone interviews
PAGE 34
<PAGE> 11
and on-site visits. Where a supplier has not, or cannot, satisfy the company's
Year 2000 requirements, the company has sought alternate suppliers, subject to
customer requirements and contract specifications. Although initial reviews and
the results following the company's transition into Year 2000 indicate that Year
2000 compliance by the company's suppliers should not have a material adverse
affect on the company's operations, there can be no assurance that all Year 2000
issues have been resolved in a timely manner.
With respect to Engineering Systems, the company has retired
approximately 38 percent of its engineering applications software to streamline
its operations, reduce support costs and avoid costs of Year 2000 remediation.
The cost of such software, to the extent originally capitalized, has been fully
amortized and the company does not expect any significant write off as the
result of such retirement. The implementation of compliant versions of all
remaining Engineering Systems is complete, with the remediation of those
remaining applications largely being addressed via upgrades.
All Project Site Specific Systems are Year 2000 ready, including the
Department of Energy's projects and the control systems in use at the company's
coal plants.
With respect to Customer Systems and current customer projects
generally, the company has evaluated those systems and projects to determine
whether or not any action is required to ensure Year 2000 readiness. The company
has reviewed projects where it has ongoing warranty or performance obligations
for Year 2000 issues. It targeted approximately 1,600 projects for additional
Year 2000 assessment, all of which have been reviewed. At those projects where
Year 2000 issues may exist, the company has evaluated what further action is
required and any required remediation and contingency planning is complete. The
company relies directly and indirectly on external systems utilized by its
suppliers and on equipment and materials provided by those suppliers and used
for the company's business. As discussed above, the company has implemented a
procedure for reviewing Year 2000 compliance by its suppliers, which will be
ongoing into year 2000.
With respect to systems and equipment provided to clients, the company
does not control the upgrades, additions and/or changes made by its clients, or
by others for its clients, to those systems and equipment. Accordingly, the
company does not provide any assurances, nor current information about Year 2000
capabilities, nor potential Year 2000 problems, with respect to past projects.
Each project is performed under an agreement with the company's client. Those
agreements specifically outline the extent of the company's obligations and
warranties and the limitations that may apply.
The company has investments in various joint ventures and has monitored
the Year 2000 efforts of such joint ventures. Based on available information,
the company believes business systems used in such joint ventures are Year 2000
ready.
The company uses both internal and external resources in its Y2K
Program. The company estimates that, from 1996 to date, it has spent
approximately $25 million on the Year 2000 issue. It anticipates spending an
additional $.6 million during the first quarter of fiscal year 2000. The
estimate of additional spending was derived utilizing numerous assumptions,
including the assumption that the company has already identified and completed
its most significant Year 2000 issues and that plans of its third party
suppliers will be fulfilled in a timely manner without cost to the company.
The company estimates that 44 percent of the total costs incurred for
the Y2K Program have been incurred to remediate systems (including software
upgrades); the remaining 56 percent of the total costs incurred have been
incurred to replace systems and equipment. The company estimates its direct
costs for the Y2K Program (costs necessary to assess and remediate existing
systems) are approximately $14 million. In addition to the direct costs of the
Y2K Program, the company has accelerated its program of replacing out-of-date
personal computers and operating systems, regardless of whether or not such
computers and systems were Year 2000 compliant. All replacement equipment and
systems are Y2K compliant. The costs associated with those replacements are
estimated at $11 million. The company estimates it has spent $14 million to date
and will spend an additional $.3 million in connection with replacing equipment
and systems.
The Y2K Program has been funded under the company's general IT and operating
budgets. In 1999, Y2K Program costs were 11 percent of the IT budget. The Year
2000 expenditures have been and will continue to be expensed and deducted from
income when incurred, except for costs incurred to acquire new software
developed or obtained to replace old software which may be capitalized and
amortized under generally accepted accounting principles. No significant
internal systems projects were deferred due to the Y2K Program efforts. The
above amounts are the company's best estimate given other
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<PAGE> 12
systems initiatives that were ongoing irrespective of the Y2K Program (such as
the migration to Windows NT and related hardware upgrades). However, there can
be no guarantee that these assumptions are accurate, and actual results could
differ materially from those anticipated.
The company has developed contingency plans to address the Year 2000
issues that may pose a significant risk to its ongoing operations and existing
projects, including an early warning system developed for the millennium
transition. Such plans include the implementation of alternate procedures to
compensate for any system and equipment malfunctions or deficiencies with the
company's internal systems and equipment, with systems and equipment utilized at
the company's project sites, with systems and equipment provided to clients and
with systems and equipment supplied by third parties. Due to the large number of
variables involved with estimating resultant lost revenues should there be a
third party failure, the company cannot provide an estimate of damage if any of
the scenarios were to occur. There can be no assurance that any contingency
plans implemented by the company would be adequate to meet the company's needs
without materially impacting its operations, that any such plan would be
successful or that the company's results of operations would not be materially
and adversely affected by the delays and inefficiencies inherent in conducting
operations in an alternative manner.
The company's Y2K Program is subject to a variety of risks and
uncertainties, some of which are beyond the company's control. Those risks and
uncertainties include, but are not limited to, the Year 2000 readiness of third
parties and the Year 2000 compliance of systems and equipment provided by
suppliers.
The company believes that its most reasonably likely worst case Year
2000 scenarios would relate to problems with the systems of third parties,
rather than with the company's internal systems. At this time, the company
believes that risks are greatest in the area of third party system and equipment
suppliers. Each of the company's locations relies on suppliers for basic utility
service as well as the timely provision of project services and equipment. If
the supply of such necessary services and equipment were to fail at any
location, the company's operations at that location, whether consisting of
engineering, design or construction activities, maintenance services or coal
mining and processing, would essentially be shut down or disrupted until such
services and equipment deliveries were restored. Depending on the location, the
company could suffer delays in performing contracts and in otherwise fulfilling
its commitments. Such delays could materially adversely impact the company's
receipt of payments due from customers upon its tender of contract deliverables
or upon achievement of contract milestones. The company believes that the
geographical dispersion of the company's facilities mitigates the risk that such
failures in any locale or at any project site will result in the simultaneous
closure of, or sustained suspension of operations at, multiple company
facilities or at project sites. Consequently, to the extent practical, the
company expects to mitigate any interruption in its business operations in one
location by shifting the performance of the constrained activity to a
functioning office or facility. There may be instances, however, where the
activity cannot be performed elsewhere or on a timely basis given the disruption
caused by the Year 2000 problems in any location. In such instances, the company
will assess the relevant provisions of its contracts and, where it deems
appropriate, work with its customers to resolve performance and schedule delays
and any resulting financial consequences on a mutually satisfactory basis to the
extent possible under then prevailing circumstances.
No assurance can be given that the company will achieve all aspects of
Year 2000 readiness. Further, there is the possibility that significant
litigation may occur due to business and equipment failures caused by the Year
2000 issue. It is uncertain whether, or to what extent, the company may be
affected by such litigation. The failure of the company, its clients (including
governmental agencies), suppliers of computer systems and equipment, joint
venture partners and other third parties upon whom the company relies, to
achieve Year 2000 readiness could materially and adversely affect the company's
results from operations.
EURO CONVERSION
Given the nature and size of the company's European operations, the company does
not perceive the conversion to the Euro as a significant risk. The company's
businesses operate under long-term contracts, typically denominated in U.S.
Dollars, compared with more traditional retail or manufacturing environments. If
required, the company is currently able to bid, price and negotiate contracts
using the Euro. The company's treasury function is also capable of operating
with the Euro. Specifically, the company is able to: establish bank accounts;
obtain financing; obtain
PAGE 36
<PAGE> 13
bank guarantees or letters of credit; trade foreign currency; and hedge
transactions. The company's ongoing Euro conversion effort will be primarily
concentrated in the systems area.
Conversion to the Euro impacts the company's subsidiaries in The
Netherlands, Germany, Belgium and Spain. All subsidiaries use a standard
accounting system and all reside in the same database. The company's conversion
plan is to maintain the legacy database for historical reference and to create a
new database with the Euro as the base currency. The new database will permit
transactions to take place in both legacy currencies and the Euro as well as
perform prescribed rounding calculations. The new Euro-based database is
available and testing is in progress. Full conversion is anticipated to be
complete by the start of fiscal year 2001.
The company has not incurred and it does not expect to incur any
significant costs from the continued conversion to the Euro, including any
currency risk, which could significantly affect the company's business,
financial condition and results of operations.
The company has not experienced any significant operational disruptions
to date and does not currently expect the continued conversion to the Euro to
cause any significant operational disruptions, including the impact of systems
operated by others.
NEW ACCOUNTING PRONOUNCEMENTS
In June 1998, the Financial Accounting Standards Board issued Statement of
Financial Accounting Standards No. 133, "Accounting for Derivative Instruments
and Hedging Activities" (SFAS No. 133). SFAS No. 133 establishes new standards
for recording derivatives in interim and annual financial statements. This
statement, as amended, is effective for the company's fiscal year 2001.
Management does not anticipate that the adoption of the new statement will have
a significant impact on the results of operations or the financial position of
the company.
PAGE 37
<PAGE> 14
CONSOLIDATED BALANCE SHEET
<TABLE>
<CAPTION>
At October 31, 1999 1998
- ----------------------------------------------------------------------------------------------------
(in thousands)
<S> <C> <C>
ASSETS
Current Assets
Cash and cash equivalents $ 209,614 $ 340,544
Accounts and notes receivable 850,557 959,416
Contract work in progress 416,285 596,983
Inventories 248,118 198,645
Deferred taxes 105,502 81,155
Other current assets 80,095 64,108
Net assets held for sale -- 36,300
- ----------------------------------------------------------------------------------------------------
Total current assets 1,910,171 2,277,151
- ----------------------------------------------------------------------------------------------------
Property, Plant and Equipment
Land 71,664 69,779
Buildings and improvements 352,883 352,653
Machinery and equipment 2,103,663 2,012,539
Mining properties and mineral rights 858,965 788,978
Construction in progress 81,422 56,282
- ----------------------------------------------------------------------------------------------------
3,468,597 3,280,231
Less accumulated depreciation, depletion and amortization 1,245,644 1,132,923
- ----------------------------------------------------------------------------------------------------
Net property, plant and equipment 2,222,953 2,147,308
- ----------------------------------------------------------------------------------------------------
Other Assets
Goodwill, net of accumulated amortization of
$32,458 and $33,766, respectively 116,045 139,091
Investments 167,891 137,562
Other 469,057 318,096
- ----------------------------------------------------------------------------------------------------
Total other assets 752,993 594,749
- ----------------------------------------------------------------------------------------------------
$ 4,886,117 $ 5,019,208
=================================
LIABILITIES AND SHAREHOLDERS' EQUITY
Current Liabilities
Trade accounts and notes payable $ 798,751 $ 972,096
Commercial paper, loan notes and a note
payable to affiliate of $113,379 in 1999 242,625 428,458
Advance billings on contracts 565,373 546,816
Accrued salaries, wages and benefit plan liabilities 321,148 324,412
Other accrued liabilities 276,413 223,596
Current portion of long-term debt -- 176
- ----------------------------------------------------------------------------------------------------
Total current liabilities 2,204,310 2,495,554
- ----------------------------------------------------------------------------------------------------
Long-Term Debt Due After One Year 317,555 300,428
Noncurrent Liabilities
Deferred taxes 162,210 105,515
Other 620,670 592,102
- ----------------------------------------------------------------------------------------------------
Total noncurrent liabilities 782,880 697,617
- ----------------------------------------------------------------------------------------------------
Contingencies and Commitments
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 in
1999-- 76,034,296 shares and in
1998-- 75,572,537 shares 47,521 47,233
Additional capital 217,844 199,077
Retained earnings 1,375,338 1,331,843
Unamortized executive stock plan expense (21,579) (22,633)
Accumulated other comprehensive income (37,752) (29,911)
- ----------------------------------------------------------------------------------------------------
Total shareholders' equity 1,581,372 1,525,609
- ----------------------------------------------------------------------------------------------------
$ 4,886,117 $ 5,019,208
=================================
</TABLE>
See Notes to Consolidated Financial Statements.
PAGE 38
<PAGE> 15
CONSOLIDATED STATEMENT OF EARNINGS
<TABLE>
<CAPTION>
Year ended October 31, 1999 1998 1997
- -------------------------------------------------------------------------------------------------------
(in thousands, except per share amounts)
<S> <C> <C> <C>
REVENUES
Engineering and construction services $ 11,334,355 $ 12,377,476 $ 13,217,515
Coal 1,083,030 1,127,297 1,081,026
- -------------------------------------------------------------------------------------------------------
Total revenues 12,417,385 13,504,773 14,298,541
- -------------------------------------------------------------------------------------------------------
COST OF REVENUES
Engineering and construction services 11,090,520 12,140,901 13,096,310
Coal 936,173 954,535 926,260
- -------------------------------------------------------------------------------------------------------
Total cost of revenues 12,026,693 13,095,436 14,022,570
OTHER (INCOME) AND EXPENSES
Special provision 117,200 -- --
Corporate administrative and general expense 55,350 22,598 13,230
Interest expense 50,918 45,277 30,758
Interest income (18,429) (21,164) (23,286)
- -------------------------------------------------------------------------------------------------------
Total cost and expenses 12,231,732 13,142,147 14,043,272
- -------------------------------------------------------------------------------------------------------
EARNINGS BEFORE TAXES 185,653 362,626 255,269
INCOME TAX EXPENSE 81,466 127,282 109,082
- -------------------------------------------------------------------------------------------------------
NET EARNINGS $ 104,187 $ 235,344 $ 146,187
====================================================
EARNINGS PER SHARE
Basic $ 1.38 $ 2.99 $ 1.76
Diluted $ 1.37 $ 2.97 $ 1.75
====================================================
SHARES USED TO CALCULATE EARNINGS PER SHARE
Basic 75,228 78,801 83,091
Diluted 75,929 79,135 83,478
====================================================
</TABLE>
See Notes to Consolidated Financial Statements.
PAGE 39
<PAGE> 16
CONSOLIDATED STATEMENT OF CASH FLOWS
<TABLE>
<CAPTION>
Year ended October 31, 1999 1998 1997
- ---------------------------------------------------------------------------------------------------------------------
(in thousands)
<S> <C> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES
Net earnings $ 104,187 $ 235,344 $ 146,187
Adjustments to reconcile net earnings to cash provided by
operating activities:
Depreciation, depletion and amortization 318,204 288,870 248,353
Deferred taxes 29,268 28,780 25,428
Special provision, net of cash payments 85,410 -- --
Provisions for impairment/abandonment of joint ventures
and investments -- -- 22,962
Gain on sale of business -- -- (7,222)
Changes in operating assets and liabilities, excluding effects
of business acquisitions/dispositions (22,551) 168,576 (67,224)
Other, net (49,642) (19,051) (39,860)
- ---------------------------------------------------------------------------------------------------------------------
Cash provided by operating activities 464,876 702,519 328,624
- ---------------------------------------------------------------------------------------------------------------------
CASH FLOWS FROM INVESTING ACTIVITIES
Capital expenditures (504,334) (600,933) (466,202)
E&C businesses acquired -- -- (141,718)
Coal businesses and reserves acquired -- (12,004) (39,482)
Proceeds from sales and maturities of marketable securities -- 10,089 59,289
Investments, net (4,688) (20,745) (9,275)
Proceeds from sale of property, plant and equipment 105,154 125,493 50,996
Collection of notes receivable -- -- 77,496
Contributions to deferred compensation trusts (8,160) (21,365) (43,026)
Net assets held for sale, including cash 36,300 (26,375) --
Proceeds from sale of business -- -- 11,992
Other, net 549 (17,477) (12,041)
- ---------------------------------------------------------------------------------------------------------------------
Cash utilized by investing activities (375,179) (563,317) (511,971)
- ---------------------------------------------------------------------------------------------------------------------
CASH FLOWS FROM FINANCING ACTIVITIES
Cash dividends paid (60,692) (63,497) (63,750)
(Decrease) increase in short-term borrowings, net (299,212) 341,809 21,692
Proceeds from issuance of note payable to affiliate 113,379 -- --
Proceeds from (payments on) long-term debt, net 16,951 (285) 295,719
Stock options exercised 10,760 9,935 16,007
Purchases of common stock -- (378,979) (33,924)
Other, net (1,813) (6,965) (37)
- ---------------------------------------------------------------------------------------------------------------------
Cash (utilized) provided by financing activities (220,627) (97,982) 235,707
- ---------------------------------------------------------------------------------------------------------------------
(Decrease) increase in cash and cash equivalents (130,930) 41,220 52,360
Cash and cash equivalents at beginning of year 340,544 299,324 246,964
- ---------------------------------------------------------------------------------------------------------------------
Cash and cash equivalents at end of year $ 209,614 $ 340,544 $ 299,324
===========================================
</TABLE>
See Notes to Consolidated Financial Statements.
PAGE 40
<PAGE> 17
CONSOLIDATED STATEMENT OF SHAREHOLDERS' EQUITY
<TABLE>
<CAPTION>
Unamortized Accumulated
Executive Other
(in thousands, except Common Stock Additional Stock Plan Comprehensive Retained
per share amounts) Shares Amount Capital Expense Income Earnings Total
- ---------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
BALANCE AT OCTOBER 31, 1996 83,791 $52,369 $573,037 $(32,538) $ (701) $1,077,559 $1,669,726
=============================================================================================
Comprehensive income
Net earnings -- -- -- -- -- 146,187 146,187
Foreign currency translation
adjustment (net of
deferred taxes of $3,867) -- -- -- -- (6,503) -- (6,503)
------
Comprehensive income -- -- -- -- -- -- 139,684
Cash dividends ($.76 per share) -- -- -- -- -- (63,750) (63,750)
Exercise of stock options, net 415 260 15,747 -- -- -- 16,007
Stock option tax benefit -- -- 3,528 -- -- -- 3,528
Amortization of executive
stock plan expense -- -- -- 8,183 -- -- 8,183
Issuance of restricted stock, net 161 101 9,006 (9,086) -- -- 21
Purchases of common stock (619) (387) (33,537) -- -- -- (33,924)
Tax benefit from reduction of
valuation allowance for
deferred tax assets -- -- 1,575 -- -- -- 1,575
- ---------------------------------------------------------------------------------------------------------------------------------
BALANCE AT OCTOBER 31, 1997 83,748 52,343 569,356 (33,441) (7,204) 1,159,996 1,741,050
=============================================================================================
Comprehensive income
Net earnings -- -- -- -- -- 235,344 235,344
Foreign currency translation
adjustment (net of
deferred taxes of $14,439) -- -- -- -- (22,707) -- (22,707)
-------
Comprehensive income -- -- -- -- -- -- 212,637
Cash dividends ($.80 per share) -- -- -- -- -- (63,497) (63,497)
Exercise of stock options, net 268 167 9,768 -- -- -- 9,935
Stock option tax benefit -- -- 2,425 -- -- -- 2,425
Amortization of executive
stock plan expense -- -- -- 7,343 -- -- 7,343
Issuance of restricted stock, net (144) (90) (8,680) 3,465 -- -- (5,305)
Purchases of common stock (8,299) (5,187) (373,792) -- -- -- (378,979)
- ---------------------------------------------------------------------------------------------------------------------------------
BALANCE AT OCTOBER 31, 1998 75,573 47,233 199,077 (22,633) (29,911) 1,331,843 1,525,609
=============================================================================================
Comprehensive income
Net earnings -- -- -- -- -- 104,187 104,187
Foreign currency translation
adjustment (net of
deferred taxes of $4,910) -- -- -- -- (7,841) -- (7,841)
------
Comprehensive income -- -- -- -- -- -- 96,346
Cash dividends ($.80 per share) -- -- -- -- -- (60,692) (60,692)
Exercise of stock options, net 304 190 10,570 -- -- -- 10,760
Stock option tax benefit -- -- 1,989 -- -- -- 1,989
Amortization of executive
stock plan expense -- -- -- 7,517 -- -- 7,517
Issuance of restricted stock, net 157 98 6,208 (6,463) -- -- (157)
- ---------------------------------------------------------------------------------------------------------------------------------
BALANCE AT OCTOBER 31, 1999 76,034 $47,521 $ 217,844 $(21,579) $(37,752) $1,375,338 $1,581,372
=============================================================================================
</TABLE>
See Notes to Consolidated Financial Statements.
PAGE 41
<PAGE> 18
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
MAJOR ACCOUNTING POLICIES
Principles of Consolidation
The financial statements include the accounts of the company and its
subsidiaries. The equity method of accounting is used for investment ownership
ranging from 20 percent to 50 percent. Investment ownership of less than 20
percent is accounted for on the cost method. All significant intercompany
transactions of consolidated subsidiaries are eliminated. Certain 1998 and 1997
amounts have been reclassified to conform with the 1999 presentation.
Use of Estimates
The preparation of the financial statements of the company requires management
to make estimates and assumptions that affect reported amounts. These estimates
are based on information available as of the date of the financial statements.
Therefore, actual results could differ from those estimates.
Engineering and Construction Contracts
The company recognizes engineering and construction contract revenues using the
percentage-of-completion method, based primarily on contract costs incurred to
date compared with total estimated contract costs. Customer-furnished materials,
labor and equipment, and in certain cases subcontractor materials, labor and
equipment, are included in revenues and cost of revenues when management
believes that the company is responsible for the ultimate acceptability of the
project. Contracts are segmented between types of services, such as engineering
and construction, and accordingly, gross margin related to each activity is
recognized as those separate services are rendered. Changes to total estimated
contract costs or losses, if any, are recognized in the period in which they are
determined. Revenues recognized in excess of amounts billed are classified as
current assets under contract work in progress. Amounts billed to clients in
excess of revenues recognized to date are classified as current liabilities
under advance billings on contracts. The company anticipates that substantially
all incurred costs associated with contract work in progress at October 31, 1999
will be billed and collected in 2000.
Depreciation, Depletion and Amortization
Additions to property, plant and equipment are recorded at cost. Assets other
than mining properties and mineral rights are depreciated principally using the
straight-line method over the following estimated useful lives: buildings and
improvements -- three to 50 years and machinery and equipment -- two to 30
years. Mining properties and mineral rights are depleted on the
units-of-production method. Leasehold improvements are amortized over the lives
of the respective leases. Goodwill is amortized on the straight-line method over
periods not longer than 40 years.
Exploration, Development and Reclamation
Coal exploration costs are expensed as incurred. Development and acquisition
costs of coal properties, when significant, are capitalized in mining
properties and depleted. The company accrues for post-mining reclamation costs
as coal is mined. Reclamation of disturbed surface acreage is performed as a
normal part of the mining process.
Income Taxes
Deferred tax assets and liabilities are recognized for the expected future tax
consequences of events that have been recognized in the company's financial
statements or tax returns.
Earnings per Share
Basic earnings per share (EPS) is calculated by dividing net earnings by the
weighted average number of common shares outstanding for the period. Diluted EPS
reflects the assumed conversion of all dilutive securities, consisting of
employee stock options and restricted stock, and equity forward contracts.
The impact of dilutive securities on the company's EPS calculation is as
follows:
<TABLE>
<CAPTION>
Year ended October 31, 1999 1998 1997
- ---------------------------------------------------------
<S> <C> <C> <C>
Employee stock options/
restricted stock 107,000 231,000 387,000
Equity forward contracts 594,000 103,000 --
- ---------------------------------------------------------
701,000 334,000 387,000
=========================
</TABLE>
Inventories
Inventories are stated at the lower of cost or market using specific
identification or the average cost method. Inventories comprise:
<TABLE>
<CAPTION>
At October 31, 1999 1998
- ---------------------------------------------------
(in thousands)
<S> <C> <C>
Equipment for sale/rental $131,781 $ 94,179
Coal 72,070 52,628
Supplies and other 44,267 51,838
- ---------------------------------------------------
$248,118 $198,645
===================
</TABLE>
Internal Use Software
Effective for fiscal year 1999, the company adopted the American Institute of
Certified Public Accountants' Statement of Position (SOP) 98-1, "Accounting for
the Costs of Computer Software Developed or Obtained for Internal Use." The
statement requires capitalization of certain costs incurred in the development
of internal-use software, including external direct material and service costs,
PAGE 42
<PAGE> 19
employee payroll and payroll-related costs. Prior to the adoption of SOP 98-1,
the company capitalized only purchased software which was ready for service; all
other costs were expensed as incurred. The adoption of this statement did not
have a material effect on the company's financial statements.
Foreign Currency
The company uses forward exchange contracts to hedge certain foreign currency
transactions entered into in the ordinary course of business. The company does
not engage in currency speculation. The company's forward exchange contracts do
not subject the company to significant risk from exchange rate movements because
gains and losses on such contracts offset losses and gains, respectively, on the
assets, liabilities or transactions being hedged. Accordingly, the unrealized
gains and losses are deferred and included in the measurement of the related
foreign currency transaction. At October 31, 1999, the company had approximately
$124 million of foreign exchange contracts outstanding relating to lease
commitments and contract obligations. The forward exchange contracts generally
require the company to exchange U.S. Dollars for foreign currencies at maturity,
at rates agreed to at inception of the contracts. If the counterparties to the
exchange contracts (AA rated banks) do not fulfill their obligations to deliver
the contracted currencies, the company could be at risk for any currency related
fluctuations. The amount of any gain or loss on these contracts in 1999, 1998
and 1997 was immaterial. The contracts are of varying duration, none of which
extend beyond December 2000. The company limits exposure to foreign currency
fluctuations in most of its engineering and construction contracts through
provisions that require client payments in U.S. Dollars or other currencies
corresponding to the currency in which costs are incurred. As a result, the
company generally does not need to hedge foreign currency cash flows for
contract work performed. The functional currency of all significant foreign
operations is the local currency.
In June 1998, the Financial Accounting Standards Board issued Statement
of Financial Accounting Standards No. 133, "Accounting for Derivative
Instruments and Hedging Activities" (SFAS No. 133). SFAS No. 133 establishes new
standards for recording derivatives in interim and annual financial statements.
This statement, as amended, is effective for the company's fiscal year 2001.
Management does not anticipate that the adoption of the new statement will have
a significant impact on the results of operations or the financial position of
the company.
Concentrations of Credit Risk
The majority of accounts receivable and all contract work in progress are from
engineering and construction clients in various industries and locations
throughout the world. Most contracts require payments as the projects progress
or in certain cases advance payments. The company generally does not require
collateral, but in most cases can place liens against the property, plant or
equipment constructed or terminate the contract if a material default occurs.
Accounts receivable from customers of the company's coal operations are
primarily concentrated in the steel and utility industries. The company
maintains adequate reserves for potential credit losses and such losses have
been minimal and within management's estimates.
Stock Plans
The company accounts for stock-based compensation using the intrinsic value
method prescribed by Accounting Principles Board (APB) Opinion No. 25,
"Accounting for Stock Issued to Employees," and related Interpretations.
Accordingly, compensation cost for stock options is measured as the excess, if
any, of the quoted market price of the company's stock at the date of the grant
over the amount an employee must pay to acquire the stock. Compensation cost for
stock appreciation rights and performance equity units is recorded based on the
quoted market price of the company's stock at the end of the period.
Comprehensive Income
Effective November 1, 1998, the company adopted Statement of Financial
Accounting Standards No. 130, "Reporting Comprehensive Income," which
establishes standards for the reporting and display of total comprehensive
income and its components in financial statements. The adoption of this
statement had no effect on the company's net earnings or total shareholders'
equity.
Total comprehensive income represents the net change in shareholders'
equity during a period from sources other than transactions with shareholders
and as such, includes net earnings. For the company, the only other component of
total comprehensive income is the change in the cumulative foreign currency
translation adjustments recorded in shareholders' equity. Prior period financial
statements have been reclassified to conform with the provisions of the new
standard.
CONSOLIDATED STATEMENT OF CASH FLOWS
Securities with maturities of 90 days or less at the date of purchase are
classified as cash equivalents. Securities with maturities beyond 90 days, when
present, are classified as marketable securities and are carried at fair value.
The changes in operating assets and liabilities as shown in the
PAGE 43
<PAGE> 20
Consolidated Statement of Cash Flows comprise:
<TABLE>
<CAPTION>
Year ended October 31, 1999 1998 1997
- -----------------------------------------------------------------------------
(in thousands)
<S> <C> <C> <C>
Decrease (increase) in:
Accounts and notes receivable $ 25,972 $ (84,394) $(113,454)
Contract work in progress 180,698 73,575 (130,257)
Inventories (49,473) (23,197) (40,303)
Other current assets (16,054) (192) (17,028)
(Decrease) increase in:
Accounts payable (173,345) 127,229 130,992
Advance billings on contracts 18,557 21,298 79,510
Accrued liabilities (8,906) 54,257 23,316
- -----------------------------------------------------------------------------
(Increase) decrease in operating
assets and liabilities $ (22,551) $ 168,576 $ (67,224)
=======================================
Cash paid during the year for:
Interest expense $ 47,558 $ 44,057 $ 25,491
Income tax payments, net $ 52,025 $ 52,346 $ 75,967
</TABLE>
BUSINESS ACQUISITIONS
The following summarizes major engineering and construction related acquisitions
completed during 1997. All of these acquisitions were in the Fluor Global
Services segment. There were no major engineering and construction related
acquisitions in 1999 and 1998.
- - ConSol Group, a privately held U.S. company headquartered in New
Hampshire, that provides staffing personnel in the fields of information
technology and allied health.
- - J.W. Burress, Inc., a privately held U.S. company headquartered in
Virginia, that provides product support services and sells, rents and
services new and used construction and industrial machinery.
- - SMA Companies, privately held U.S. companies headquartered in California
and Georgia. These companies sell, rent and service heavy construction
and industrial equipment and provide proprietary software to other
equipment distributors throughout the U.S.
These businesses and other smaller acquisitions were purchased for a
total of $142 million. The fair value of assets acquired, including working
capital of $42 million and goodwill of $67 million, was $196 million, and
liabilities assumed totaled $54 million.
In 1998, the company's coal segment, through its Massey Coal Company
("Massey"), acquired coal reserves for an aggregate cost of $12 million. Massey
purchased two coal mining companies during 1997. The aggregate purchase price
was $39 million and included the fair value of assets acquired, consisting of
$55 million of property, plant and equipment, and mining rights, $13 million of
working capital and other assets, net of other liabilities assumed of $29
million. These acquisitions, along with capital expenditures, have been directed
primarily towards acquiring additional coal reserves. There were no coal related
acquisitions in 1999.
All of the above acquisitions have been accounted for under the purchase
method of accounting and their results of operations have been included in the
company's consolidated financial statements from the respective acquisition
dates. If these acquisitions had been made at the beginning of the respective
year acquired, pro forma results of operations would not have differed
materially from actual results.
From time to time, the company enters into investment arrangements,
including joint ventures, that are related to its engineering and construction
business. During 1997 through 1999, the majority of these expenditures related
to ongoing investments in an equity fund that focuses on energy related projects
and a number of smaller, diversified ventures.
BUSINESS DISPOSITIONS
On October 28, 1998, the company entered into an agreement to sell its ownership
interest in Fluor Daniel GTI, Inc. (FD/GTI). Under terms of the agreement, the
company sold its 4,400,000 shares in FD/GTI for $8.25 per share, or $36.3
million in cash, on December 3, 1998. The net assets of FD/GTI were reflected on
the 1998 consolidated balance sheet at net realizable value and included $26.4
million in cash and cash equivalents. This transaction did not have a material
impact on the company's results of operations or financial position.
During 1997, the company completed the sale of ACQUION, a global
provider of supply chain management services, for $12 million in cash, resulting
in a pre-tax gain of $7 million.
SPECIAL PROVISION AND COST REDUCTION INITIATIVES
In March 1999, the company announced a new strategic direction, including a
reorganization of the operating units and administrative functions of its
engineering and construction segment. In connection with this reorganization,
the company recorded in the second quarter a special provision of $136.5 million
pre-tax to cover direct and other reorganization related costs, primarily for
personnel, facilities and asset impairment adjustments.
Under the reorganization plan, approximately 5,000 jobs are expected to be
eliminated. The provision includes amounts for personnel costs for certain
affected employees that are entitled to receive severance benefits under
established severance policies or by government regulations. Additionally,
outplacement services may be provided on a limited basis to some affected
employees. The provision also reflects amounts for asset impairment, primarily
for
PAGE 44
<PAGE> 21
property, plant and equipment; intangible assets (goodwill); and certain
investments. The asset impairments were recorded primarily because of the
company's decision to exit certain non-strategic geographic locations and
businesses. The carrying values of impaired assets were adjusted to their
current market values based on estimated sale proceeds, using either discounted
cash flows or contractual amounts. Lease termination costs were also included in
the special provision. The company anticipates closing 15 non-strategic offices
worldwide as well as consolidating and downsizing other office locations. The
closure or rationalization of these facilities is expected to be substantially
completed by the end of fiscal year 2000.
As of October 31, 1999, the company has reduced headcount by
approximately 5,000 employees and has closed 13 offices. The company anticipates
closing two additional offices within the next six months. In October 1999,
$19.3 million of the special provision was reversed into earnings as a result of
lower than anticipated severance costs for personnel reductions in certain
overseas offices. Both the actual number of employee terminations as well as the
cost per employee termination were lower than originally estimated.
The following table summarizes the status of the company's
reorganization plan as of October 31, 1999:
<TABLE>
<CAPTION>
Lease
Personnel Asset Termination
Costs Impairments Costs Other Total
- ---------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
(in thousands)
Special provision $ 72,200 $ 48,800 $ 14,500 $ 1,000 $ 136,500
Cash expenditures (25,089) (1,094) (4,793) (814) (31,790)
Non-cash activities (2,576) (24,360) -- -- (26,936)
Provision reversal (19,300) -- -- -- (19,300)
- ---------------------------------------------------------------------------------------------
Balance at October
31, 1999 $ 25,235 $ 23,346 $ 9,707 $ 186 $ 58,474
=====================================================================
</TABLE>
The special provision liability as of October 31, 1999 is included in
other accrued liabilities. The liability for personnel costs and asset
impairments will be substantially utilized by April 30, 2000. The liability
associated with abandoned lease space will be amortized as an offset to lease
expense over the remaining life of the respective leases starting on the date of
abandonment.
During 1997, the company recorded $25.4 million in charges related to
the implementation of certain cost reduction initiatives. These charges provided
for personnel and facility related costs. As of October 31, 1999, substantially
all of these costs had been incurred.
INCOME TAXES
The income tax expense (benefit) included in the Consolidated Statement of
Earnings is as follows:
<TABLE>
<CAPTION>
Year ended October 31, 1999 1998 1997
- --------------------------------------------------------------------
<S> <C> <C> <C>
(in thousands)
Current:
Federal $ 5,931 $ 38,700 $ 50,906
Foreign 43,012 52,021 25,801
State and local 3,255 7,781 6,947
- --------------------------------------------------------------------
Total current 52,198 98,502 83,654
- --------------------------------------------------------------------
Deferred:
Federal 26,872 43,369 19,972
Foreign (2,641) (19,295) 3,908
State and local 5,037 4,706 1,548
- --------------------------------------------------------------------
Total deferred 29,268 28,780 25,428
- --------------------------------------------------------------------
Total income tax expense $ 81,466 $127,282 $109,082
=======================================
</TABLE>
A reconciliation of U.S. statutory federal income tax expense to the
company's income tax expense on earnings is as follows:
<TABLE>
<CAPTION>
Year ended October 31, 1999 1998 1997
- --------------------------------------------------------------------------
<S> <C> <C> <C>
(in thousands)
U.S. statutory federal tax expense $ 64,979 $126,919 $ 89,344
Increase (decrease) in taxes
resulting from:
Items without tax effect, net 26,158 888 13,307
State and local income taxes 5,048 7,868 5,337
Depletion (9,625) (12,273) (10,051)
Effect of non-U.S. tax rates (396) 3,433 10,620
Other, net (4,698) 447 525
- --------------------------------------------------------------------------
Total income tax expense $ 81,466 $127,282 $109,082
===================================
</TABLE>
Deferred taxes reflect the tax effects of differences between the amounts
recorded as assets and liabilities for financial reporting purposes and the
amounts recorded for income tax purposes. The tax effects of significant
temporary differences giving rise to deferred tax assets and liabilities are as
follows:
PAGE 45
<PAGE> 22
<TABLE>
<CAPTION>
At October 31, 1999 1998
- ------------------------------------------------------------------------------------
<S> <C> <C>
(in thousands)
Deferred tax assets:
Accrued liabilities not currently
deductible $ 249,987 $ 224,319
Alternative minimum tax
credit carryforwards 44,287 32,505
Net operating loss carryforwards of
non-U.S. companies 29,133 22,441
Translation adjustments 23,955 19,045
Tax basis of building in excess of
book basis 16,408 16,187
Net operating loss carryforwards of
acquired companies 6,503 7,177
Other 71,926 73,599
- ------------------------------------------------------------------------------------
Total deferred tax assets 442,199 395,273
Valuation allowance for deferred tax assets (127,085) (100,007)
- ------------------------------------------------------------------------------------
Deferred tax assets, net 315,114 295,266
- ------------------------------------------------------------------------------------
Deferred tax liabilities:
Book basis of property, equipment and
other capital costs in excess of tax basis (294,628) (254,008)
Tax on unremitted non-U.S. earnings (16,361) (15,806)
Other (60,833) (49,812)
- ------------------------------------------------------------------------------------
Total deferred tax liabilities (371,822) (319,626)
- ------------------------------------------------------------------------------------
Net deferred tax liabilities $ (56,708) $ (24,360)
=================================
</TABLE>
The company has net operating loss carryforwards from non-U.S.
operations of approximately $80 million which can be carried forward
indefinitely until fully utilized. These losses primarily relate to the
company's operations in Australia, Chile, Germany and the United Kingdom.
Deferred tax assets established for these losses aggregate $29 million and $22
million at October 31, 1999 and 1998, respectively.
In 1997, the company acquired the SMA Companies which had net operating
loss carryforwards of approximately $47 million. The company has utilized
approximately $5 million of the loss carryforwards, and made an election in its
1998 consolidated federal tax return to waive approximately $23 million of
losses which otherwise would have expired without future tax benefit. The
remaining loss carryforwards of approximately $19 million expire in the years
2004 through 2008. The utilization of such loss carryforwards is subject to
stringent limitations under the Internal Revenue Code. Deferred tax assets
established for these losses aggregate $7 million for both 1999 and 1998.
Substantially all of the company's alternative minimum tax credits are
associated with the coal business operated by Massey. These credits can be
carried forward indefinitely until fully utilized.
The company maintains a valuation allowance to reduce certain deferred
tax assets to amounts that are more likely than not to be realized. This
allowance primarily relates to the deferred tax assets established for the
special provision, net operating loss carryforwards and alternative minimum tax
credits. In 1999, increases in the valuation allowance are principally the
result of the company's special provision which did not receive full tax
benefit. Any reductions in the allowance resulting from realization of the loss
carryforwards of acquired companies will result in a reduction of goodwill.
Residual income taxes of approximately $8 million have not been provided
on approximately $20 million of undistributed earnings of certain foreign
subsidiaries at October 31, 1999, because the company intends to keep those
earnings reinvested indefinitely.
United States and foreign earnings before taxes are as follows:
<TABLE>
<CAPTION>
Year ended October 31, 1999 1998 1997
- ---------------------------------------------------------
<S> <C> <C> <C>
(in thousands)
United States $168,698 $240,645 $231,921
Foreign 16,955 121,981 23,348
- ---------------------------------------------------------
Total $185,653 $362,626 $255,269
==================================
</TABLE>
RETIREMENT BENEFITS
The company sponsors contributory and non-contributory defined contribution
retirement and defined benefit pension plans for eligible employees.
Contributions to defined contribution retirement plans are based on a percentage
of the employee's compensation. Expense recognized for these plans of
approximately $56 million in 1999, $79 million in 1998, and $84 million in 1997,
is primarily related to domestic engineering and construction operations.
Effective January 1, 1999, the company replaced its domestic defined
contribution retirement plan with a defined benefit cash balance plan.
Contributions to defined benefit pension plans are generally at the minimum
annual amount required by applicable regulations. Payments to retired employees
under these plans are generally based upon length of service, age and/or a
percentage of qualifying compensation. The defined benefit pension plans are
primarily related to international engineering and construction operations,
U.S. craft employees and coal operations.
Net periodic pension expense (income) for defined benefit pension plans
includes the following components:
<TABLE>
<CAPTION>
Year ended October 31, 1999 1998 1997
- -----------------------------------------------------------------------------
<S> <C> <C> <C>
(in thousands)
Service cost $ 35,370 $ 15,792 $ 15,301
Interest cost 25,088 24,220 23,743
Expected return on assets (49,032) (48,236) (44,334)
Amortization of transition asset (2,132) (2,196) (2,296)
Amortization of prior service cost 337 355 347
Recognized net actuarial loss (gain) 58 (1,444) (1,288)
- -----------------------------------------------------------------------------
Net periodic pension expense (income) $ 9,689 $(11,509) $ (8,527)
====================================
</TABLE>
PAGE 46
<PAGE> 23
The ranges of assumptions indicated below cover defined benefit pension
plans in Australia, Germany, the United Kingdom, The Netherlands and the United
States. These assumptions are as of each respective fiscal year-end based on the
then current economic environment in each host country.
<TABLE>
<CAPTION>
At October 31, 1999 1998
- ----------------------------------------------------------------------
<S> <C> <C>
Discount rates 6.0-7.75% 5.0-6.75%
Rates of increase in compensation levels 3.5-4.00% 2.5-4.00%
Expected long-term rates of return on assets 5.0-9.50% 5.0-9.50%
</TABLE>
The following table sets forth the change in benefit obligation, plan
assets and funded status of the company's defined benefit pension plans:
<TABLE>
<CAPTION>
At October 31, 1999 1998
- ------------------------------------------------------------------------------
<S> <C> <C>
(in thousands)
Change in pension benefit obligation
Benefit obligation at beginning of year $ 438,866 $ 358,539
Service cost 35,370 15,792
Interest cost 25,088 24,220
Employee contributions 1,626 1,775
Currency translation (19,068) 12,454
Actuarial (gain) loss (22,808) 52,498
Benefits paid (27,319) (26,412)
- ------------------------------------------------------------------------------
Benefit obligation at end of year $ 431,755 $ 438,866
================================
Change in plan assets
Fair value at beginning of year $ 576,019 $ 539,814
Actual return on plan assets 103,938 42,324
Company contributions 5,646 4,711
Employee contributions 1,626 1,775
Currency translation (17,154) 13,999
Benefits paid (27,319) (26,412)
Plan amendments (3,945) (192)
- ------------------------------------------------------------------------------
Fair value at end of year $ 638,811 $ 576,019
================================
Funded status $ 207,056 $ 137,153
Unrecognized net actuarial (gain) loss (61,372) 16,579
Unrecognized prior service cost 170 601
Unrecognized net asset (8,002) (11,737)
- ------------------------------------------------------------------------------
Pension assets $ 137,852 $ 142,596
================================
</TABLE>
Amounts shown above at October 31, 1999 and 1998 exclude the projected
benefit obligation of approximately $101 million and $113 million, respectively,
and an equal amount of associated plan assets relating to discontinued
operations.
Massey participates in multiemployer defined benefit pension plans for
its union employees. Pension expense was less than $1 million in each of the
years ended October 31, 1999, 1998 and 1997. Under the Coal Industry Retiree
Health Benefits Act of 1992, Massey is required to fund medical and death
benefits of certain beneficiaries. Massey's obligation under the Act is
estimated to aggregate approximately $56 million at October 31, 1999, which will
be recognized as expense as payments are assessed. The expense recorded for such
benefits was $4 million in 1999 and 1998 and $7 million in 1997.
In addition to the company's defined benefit pension plans, the company
and certain of its subsidiaries provide health care and life insurance benefits
for certain retired employees. The health care and life insurance plans are
generally contributory, with retiree contributions adjusted annually. Service
costs are accrued currently. The accumulated postretirement benefit obligation
at October 31, 1999 and 1998 was determined in accordance with the current terms
of the company's health care plans, together with relevant actuarial assumptions
and health care cost trend rates projected at annual rates ranging from 7.8
percent in 2000 down to 5 percent in 2004 and beyond. The effect of a one
percent annual increase in these assumed cost trend rates would increase the
accumulated postretirement benefit obligation and the aggregate of the annual
service and interest costs by approximately $11.8 million and $1.7 million,
respectively. The effect of a one percent annual decrease in these assumed cost
trend rates would decrease the accumulated postretirement benefit obligation and
the aggregate of the annual service and interest costs by approximately $8.9
million and $2.5 million, respectively.
Net periodic postretirement benefit cost includes the following
components:
<TABLE>
<CAPTION>
Year ended October 31, 1999 1998 1997
- ---------------------------------------------------------------------------
<S> <C> <C> <C>
(in thousands)
Service cost $ 3,850 $ 3,506 $ 3,107
Interest cost 5,724 5,820 6,338
Expected return on assets -- -- --
Amortization of prior service cost 140 124 --
Recognized net actuarial (gain) loss (458) (595) 142
- ---------------------------------------------------------------------------
Net periodic postretirement
benefit cost $ 9,256 $ 8,855 $ 9,587
=================================
</TABLE>
The following table sets forth the change in benefit obligation of the
company's postretirement benefit plans:
<TABLE>
<CAPTION>
At October 31, 1999 1998
- ----------------------------------------------------------------------
<S> <C> <C>
(in thousands)
Change in postretirement benefit obligation
Benefit obligation at beginning of year $ 93,975 $ 86,187
Service cost 3,850 3,506
Interest cost 5,724 5,820
Employee contributions 270 269
Actuarial (gain) loss (15,303) 2,473
Benefits paid (4,655) (4,280)
- ----------------------------------------------------------------------
Benefit obligation at end of year $ 83,861 $ 93,975
======================
Funded status $(83,861) $(93,975)
Unrecognized net actuarial (gain) loss (11,650) 3,195
Unrecognized prior service cost 1,776 1,916
- ----------------------------------------------------------------------
Accrued postretirement benefit obligation $(93,735) $(88,864)
======================
</TABLE>
PAGE 47
<PAGE> 24
The discount rate used in determining the postretirement benefit
obligation was 7.75 percent and 6.75 percent at October 31, 1999 and 1998,
respectively.
The preceding information does not include amounts related to benefit
plans applicable to employees associated with certain contracts with the U.S.
Department of Energy because the company is not responsible for the current or
future funded status of these plans.
FAIR VALUE OF FINANCIAL INSTRUMENTS
The estimated fair value of the company's financial instruments are as follows:
<TABLE>
<CAPTION>
1999 1998
Carrying Fair Carrying Fair
Year ended October 31, Amount Value Amount Value
- -------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
(in thousands)
Assets:
Cash and cash
equivalents $ 209,614 $ 209,614 $ 340,544 $ 340,544
Notes receivable
including noncurrent
portion 47,444 54,387 41,854 48,953
Long-term investments 60,609 72,667 59,734 76,064
Liabilities:
Commercial paper,
loan notes and
notes payable 247,911 247,911 430,508 430,508
Long-term debt
including current
portion 317,555 312,580 300,604 319,654
Other noncurrent
financial liabilities 9,789 9,789 8,486 8,486
Off-balance sheet financial instruments:
Forward contracts to
purchase common stock -- (21,170) -- (18,793)
Foreign currency
contract obligations -- (1,311) -- 1,964
Letters of credit -- 546 -- 720
Lines of credit -- 965 -- 1,077
</TABLE>
Fair values were determined as follows:
The carrying amounts of cash and cash equivalents, short-term notes
receivable, commercial paper, loan notes and notes payable approximate fair
value because of the short-term maturity of these instruments.
Long-term investments are based on quoted market prices for these or
similar instruments. Long-term notes receivable are estimated by discounting
future cash flows using the current rates at which similar loans would be made
to borrowers with similar credit ratings.
The fair value of long-term debt, including current portion, is
estimated based on quoted market prices for the same or similar issues or on the
current rates offered to the company for debt of the same maturities.
Other noncurrent financial liabilities consist primarily of deferred
payments, for which cost approximates fair value.
Forward contracts to purchase common stock are based on the estimated
cost to terminate or settle the obligation.
Foreign currency contract obligations are estimated by obtaining quotes
from brokers.
Letters of credit and lines of credit amounts are based on fees
currently charged for similar agreements or on the estimated cost to terminate
or settle the obligations.
FINANCING ARRANGEMENTS
The company has unsecured committed revolving short- and long-term lines of
credit with banks from which it may borrow for general corporate purposes up to
a maximum of $600 million. Commitment and facility fees are paid on these lines.
In addition, the company has $1.0 billion in short-term uncommitted lines of
credit to support letters of credit, foreign currency contracts and loan notes.
Borrowings under both committed and uncommitted lines of credit bear interest at
prime or rates based on the London Interbank Offered Rate ("LIBOR"), domestic
certificates of deposit or other rates which are mutually acceptable to the
banks and the company. At October 31, 1999, no amounts were outstanding under
the committed lines of credit. As of that date, $235 million of the short-term
uncommitted lines of credit were used to support undrawn letters of credit and
foreign currency contracts issued in the ordinary course of business and $16
million were used for outstanding loan notes.
The company had $114 million and $245 million in unsecured commercial
paper outstanding at October 31, 1999 and 1998, respectively. The commercial
paper was issued at a discount with a weighted-average effective interest rate
of 5.9 percent at October 31, 1999 and 5.3 percent at October 31, 1998.
At October 31, 1999 the company had a $113 million note payable to an
affiliated entity. The note is due on demand and bears interest at the rate of
5.41 percent as of October 31, 1999.
Long-term debt comprises:
<TABLE>
<CAPTION>
At October 31, 1999 1998
- --------------------------------------------------------------
(in thousands)
<S> <C> <C>
6.95% Senior Notes due March 1, 2007 $300,000 $300,000
Other bonds and notes 17,555 604
- --------------------------------------------------------------
317,555 300,604
Less: Current portion -- 176
- --------------------------------------------------------------
Long-term debt due after one year $317,555 $300,428
=====================
</TABLE>
PAGE 48
<PAGE> 25
In March 1997, the company issued $300 million of 6.95% Senior Notes
(the Notes) due March 1, 2007 with interest payable semiannually on March 1 and
September 1 of each year, commencing September 1, 1997. The Notes were sold at a
discount for an aggregate price of $296.7 million. The Notes are redeemable, in
whole or in part, at the option of the company at any time at a redemption price
equal to the greater of (i) 100 percent of the principal amount of the Notes or
(ii) as determined by a Quotation Agent as defined in the offering prospectus.
Included in other bonds and notes are $18 million of 5.625% municipal
bonds issued in July 1999. The bonds are due June 1, 2019 with interest payable
semiannually on June 1 and December 1 of each year, commencing December 1, 1999.
The bonds are redeemable, in whole or in part, at the option of the company at a
redemption price ranging from 100 percent to 102 percent of the principal amount
of the bonds on or after June 1, 2009. In addition, the bonds are subject to
other redemption clauses, at the option of the holder, should certain events
occur, as defined in the offering prospectus.
OTHER NONCURRENT LIABILITIES
The company maintains appropriate levels of insurance for business risks.
Insurance coverages contain various deductible amounts for which the company
provides accruals based on the aggregate of the liability for reported claims
and an actuarially determined estimated liability for claims incurred but not
reported. Other noncurrent liabilities include $61 million and $64 million at
October 31, 1999 and 1998, respectively, relating to these liabilities.
STOCK PLANS
The company's executive stock plans, approved by the shareholders, provide for
grants of nonqualified or incentive stock options, restricted stock awards and
stock appreciation rights ("SARS"). All executive stock plans are administered
by the Organization and Compensation Committee of the Board of Directors
("Committee") comprised of outside directors, none of whom are eligible to
participate in the plans. Option grant prices are determined by the Committee
and are established at the fair value of the company's common stock at the date
of grant. Options and SARS normally extend for 10 years and become exercisable
over a vesting period determined by the Committee, which can include accelerated
vesting for achievement of performance or stock price objectives. During 1998,
the company issued 1,696,420 options and 1,502,910 SARS that vest over three to
four year periods and expire in five years. The majority of these awards have
accelerated vesting provisions based on the price of the company's stock.
Additionally, 58,000 and 189,075 nonqualified stock options were issued during
1999 and 1998, respectively, and 10,925 incentive stock options were issued
during 1998, with 20 percent to 25 percent vesting upon issuance and the
remaining awards vesting in installments of 20 percent to 25 percent per year
commencing one year from the date of grant.
Restricted stock awards issued under the plans provide that shares
awarded may not be sold or otherwise transferred until restrictions have lapsed
or performance objectives have been attained as established by the Committee.
Upon termination of employment, shares upon which restrictions have not lapsed
must be returned to the company. Restricted stock issued under the plans totaled
197,257 shares, 4,500 shares and 186,390 shares in 1999, 1998 and 1997,
respectively.
As permitted by Statement of Financial Accounting Standards No. 123,
"Accounting for Stock-Based Compensation" (SFAS No. 123), the company has
elected to continue following the guidance of APB Opinion No. 25, "Accounting
for Stock Issued to Employees," for measurement and recognition of stock-based
transactions with employees. Recorded compensation cost for these plans totaled
$8 million in 1999. During 1998, the company recognized a net credit of $9
million for performance-based stock plans. This amount includes $10 million of
expenses accrued in prior years which were reversed in 1998 as a result of not
achieving prescribed performance targets. Compensation cost recognized for such
plans totaled less than $1 million in 1997. Under APB Opinion No. 25, no
compensation cost is recognized for the option plans where vesting provisions
are based only on the passage of time. Had the company recorded compensation
expense using the accounting method recommended by SFAS No. 123, net earnings
and diluted earnings per share would have been reduced to the pro forma amounts
as follows:
<TABLE>
<CAPTION>
Year ended October 31, 1999 1998 1997
- --------------------------------------------------------------------
(in thousands, except per share amounts)
<S> <C> <C> <C>
Net earnings
As Reported $104,187 $ 235,344 $146,187
Pro Forma 95,297 218,958 143,663
Diluted earnings per share
As Reported $ 1.37 $ 2.97 $ 1.75
Pro Forma 1.26 2.77 1.72
</TABLE>
The fair value of each option grant is estimated on the date of grant by
using the Black-Scholes option-pricing model. The following weighted-average
assumptions were used for new grants:
<TABLE>
<CAPTION>
1999 1998 1997
- ------------------------------------------------------------------
<S> <C> <C> <C>
Expected option lives (years) 6 5 6
Risk-free interest rates 4.51% 5.83% 6.30%
Expected dividend yield 1.38% 1.19% 1.15%
Expected volatility 33.76% 29.85% 24.58%
</TABLE>
PAGE 49
<PAGE> 26
The weighted-average fair value of options granted during 1999, 1998 and
1997 was $15, $12 and $17, respectively.
The following table summarizes stock option activity:
<TABLE>
<CAPTION>
Weighted Average
Stock Exercise Price
Options Per Share
- -----------------------------------------------------------------
<S> <C> <C>
Outstanding at October 31, 1996 4,339,378 $ 50
- -----------------------------------------------------------------
Granted 114,060 61
Expired or canceled (117,404) 53
Exercised (414,731) 39
- -----------------------------------------------------------------
Outstanding at October 31, 1997 3,921,303 51
- -----------------------------------------------------------------
Granted 1,898,420 36
Expired or canceled (844,664) 47
Exercised (267,602) 37
- -----------------------------------------------------------------
Outstanding at October 31, 1998 4,707,457 47
- -----------------------------------------------------------------
Granted 1,079,810 43
Expired or canceled (256,145) 47
Exercised (303,736) 35
- -----------------------------------------------------------------
Outstanding at October 31, 1999 5,227,386 $ 47
============================
</TABLE>
Exercisable at:
<TABLE>
<S> <C>
October 31, 1999 3,407,398
October 31, 1998 3,210,580
October 31, 1997 1,964,137
</TABLE>
At October 31, 1999, there are 1,089,902 shares available for future
grant. Available for grant includes shares which may be granted as either stock
options or restricted stock, as determined by the Committee under the 1996 and
1988 Fluor Executive Stock Plans.
At October 31, 1999, there are 5,227,386 options outstanding with
exercise prices between $35 and $68, with a weighted-average exercise price of
$47 and a weighted-average remaining contractual life of 5.7 years; 3,407,398 of
these options are exercisable with a weighted-average exercise price of $49.
At October 31, 1999, 3,674,875 of the 5,227,386 options outstanding have
exercise prices between $35 and $49, with a weighted-average exercise price of
$40 and a weighted-average remaining contractual life of 5.3 years; 2,010,480 of
these options are exercisable with a weighted-average exercise price of $41. The
remaining 1,552,511 outstanding options have exercise prices between $50 and
$68, with a weighted-average exercise price of $61 and a weighted-average
remaining contractual life of 6.4 years; 1,396,918 of these options are
exercisable with a weighted-average exercise price of $61.
LEASE OBLIGATIONS
Net rental expense amounted to approximately $98 million, $92 million and $93
million in 1999, 1998 and 1997, respectively. The company's lease obligations
relate primarily to office facilities, equipment used in connection with
long-term construction contracts and other personal property.
During 1998, the company entered into a $100 million operating lease
facility to fund the construction cost of its corporate headquarters and
engineering center. The facility expires in 2004. Lease payments are calculated
based on LIBOR plus approximately .35 percent. The lease contains an option to
purchase these properties during the term of the lease and contains a residual
value guarantee of $82 million. In addition, during 1999 the company entered
into a similar transaction to fund construction of its Calgary office. The total
commitment under this transaction is approximately $25 million.
The company's obligations for minimum rentals under noncancelable leases
are as follows:
<TABLE>
<CAPTION>
At October 31,
- ----------------------
(in thousands)
<S> <C>
2000 $46,358
2001 43,531
2002 38,140
2003 34,595
2004 22,264
Thereafter 62,067
</TABLE>
CONTINGENCIES AND COMMITMENTS
The company and certain of its subsidiaries are involved in litigation in the
ordinary course of business. The company and certain of its engineering and
construction subsidiaries are contingently liable for commitments and
performance guarantees arising in the ordinary course of business. Claims
arising from engineering and construction contracts have been made against the
company by clients, and the company has made certain claims against clients for
costs incurred in excess of the current contract provisions. The company does
not expect that the foregoing matters will have a material adverse effect on its
consolidated financial position or results of operations.
Disputes have arisen between a Fluor Daniel subsidiary and its client,
Anaconda Nickel, which primarily relate to the process design of the Murrin
Murrin Nickel Cobalt project located in Western Australia. Both parties have
initiated the dispute resolution process under the contract. Results for the
year ended October 31, 1999 for the Fluor Daniel segment include a provision
totaling $84 million for the alleged process design problems. If and to the
extent that these problems are ultimately determined to be the responsibility of
the company, the company anticipates recovering a substantial portion of this
amount from available insurance and, accordingly, has also recorded $64 million
in expected insurance recoveries. The company vigorously disputes and denies
Anaconda's allegations of inadequate process design.
PAGE 50
<PAGE> 27
Financial guarantees, made in the ordinary course of business on behalf
of clients and others in certain limited circumstances, are entered into with
financial institutions and other credit grantors and generally obligate the
company to make payment in the event of a default by the borrower. Most
arrangements require the borrower to pledge collateral in the form of property,
plant and equipment which is deemed adequate to recover amounts the company
might be required to pay. As of October 31, 1999, the company had extended
financial guarantees on behalf of certain clients and other unrelated third
parties totaling approximately $29 million.
In connection with its 1997/1998 share repurchase program, the company
entered into a forward purchase contract for 1,850,000 shares of its common
stock at a price of $49 per share. The contract matures in October 2000 and
gives the company the ultimate choice of settlement option, either physical
settlement or net share settlement. As of October 31, 1999, the contract
settlement cost per share exceeded the current market price per share by $11.44.
Although the ultimate choice of settlement option resides with the
company, if the price of the company's common stock falls to certain levels, as
defined in the contract, the holder of the contract has the right to require the
company to settle the contract.
The company's operations are subject to and affected by federal, state
and local laws and regulations regarding the protection of the environment. The
company maintains reserves for potential future environmental costs where such
obligations are either known or considered probable, and can be reasonably
estimated.
On October 20, 1999, the U.S. District Court for the Southern District
of West Virginia issued an injunction which prohibits the construction of valley
fills over both intermittent and perennial stream segments as a part of mining
operations. While Massey is not a party to this litigation, virtually all mining
operations, including Massey, utilize valley fills to dispose of excess
materials. This decision is now under appeal to the Fourth Circuit Court of
Appeals and the District Court has issued a stay of its decision pending the
outcome of the appeal. Based upon the current state of the appeal, the company
does not believe that Massey mining operations will be materially affected
during the pendency of the appeal. If and to the extent that the District
Court's decision is upheld and legislation is not passed which limits the impact
of the decision, then all or a portion of Massey's mining operations could be
affected. The potential impact to Massey arising from this proceeding is not
currently estimable.
The company believes, based upon present information available to it,
that its reserves with respect to future environmental costs are adequate and
such future costs will not have a material effect on the company's consolidated
financial position, results of operations or liquidity. However, the imposition
of more stringent requirements under environmental laws or regulations, new
developments or changes regarding site cleanup costs or the allocation of such
costs among potentially responsible parties, or a determination that the company
is potentially responsible for the release of hazardous substances at sites
other than those currently identified, could result in additional expenditures,
or the provision of additional reserves in expectation of such expenditures.
OPERATIONS BY BUSINESS SEGMENT AND GEOGRAPHICAL AREA
In the fourth quarter of 1999, the company adopted Statement of Financial
Accounting Standards No. 131, "Disclosures about Segments of an Enterprise and
Related Information" (SFAS No. 131). The statement establishes new standards for
the way that business enterprises report information about operating segments as
well as the related disclosures about products and services, geographical areas
and major customers. The adoption of SFAS No. 131 did not affect the
consolidated results of operations or financial position of the company, but did
affect the business segments that are disclosed. Prior year disclosures have
been restated to conform to the new basis of reporting.
Fluor Daniel consists of five business units: Chemicals & Life Sciences;
Oil, Gas and Power; Mining; Manufacturing; and Infrastructure. These units
provide design, engineering, procurement and construction services on a
worldwide basis to an extensive range of industrial, commercial, utility,
natural resources and energy clients. The types of services provided by Fluor
Daniel include: feasibility studies, conceptual design, detail engineering,
procurement, project and construction management and construction.
Fluor Global Services consists of six business units: American Equipment
Company; TRS Staffing Solutions; Fluor Federal Services; Telecommunications;
Operations & Maintenance; and Consulting Services. These units provide a variety
of services to clients in a wide range of industries. The types of services
provided by Fluor Global Services include: equipment sales, leasing, services
and outsourcing for construction and industrial needs; temporary technical and
non-technical staffing specializing in technical, professional and
administrative personnel; services to the United States government; repair,
renovation, replacement, predictive and preventative services to commercial and
industrial facilities; and productivity consulting services and maintenance
management to the manufacturing and process industries.
PAGE 51
<PAGE> 28
Massey Coal is a single business unit which produces, processes and
sells high-quality, low-sulfur steam coal to the utility industry as well as
industrial customers, and metallurgical coal for the steel industry.
Fluor Signature Services is a single business unit established primarily
to provide traditional business services and business infrastructure support to
the company. Ultimately, such services may be marketed to external customers.
Although operations for this segment did not start until November 1, 1999,
historical total asset data has been presented for information purposes only.
The reportable segments follow the same accounting policies as those
described in the summary of major accounting policies. Management evaluates a
segment's performance based upon operating profit and operating return on
assets. Intersegment revenues are insignificant. The company incurs costs and
expenses and holds certain assets at the corporate level which relate to its
business as a whole. Certain of these amounts have been charged to the company's
business segments by various methods, largely on the basis of usage.
Engineering services for international projects are often performed
within the United States or a country other than where the project is located.
Revenues associated with these services have been classified within the
geographic area where the work was performed.
OPERATING INFORMATION BY SEGMENT
<TABLE>
<CAPTION>
Fluor Fluor
Fluor Global Massey Signature
(in millions) Daniel Services Coal Services Total
- -----------------------------------------------------------------------------------------------------
1999
<S> <C> <C> <C> <C> <C>
External revenues $ 8,403 $ 2,931 $ 1,083 -- $12,417
Depreciation, depletion and amortization 61 90 167 -- 318
Operating profit before special provision 160 92 147 -- 399
Total assets 1,017 1,041 1,956 $ 454 4,468
Capital expenditures $ 51 $ 226 $ 227 -- $ 504
1998
External revenues $ 9,736 $ 2,642 $ 1,127 -- $13,505
Depreciation, depletion and amortization 67 72 150 -- 289
Operating profit 161 81 173 -- 415
Total assets 1,270 968 1,801 $ 465 4,504
Capital expenditures $ 91 $ 214 $ 296 -- $ 601
1997
External revenues $10,180 $ 3,038 $ 1,081 -- $14,299
Depreciation, depletion and amortization 68 49 131 -- 248
Operating profit 70 52 155 -- 277
Total assets 1,259 894 1,619 $ 509 4,281
Capital expenditures $ 83 $ 116 $ 267 -- $ 466
</TABLE>
PAGE 52
<PAGE> 29
RECONCILIATION OF SEGMENT INFORMATION TO CONSOLIDATED AMOUNTS
<TABLE>
<CAPTION>
(in millions) 1999 1998 1997
- ---------------------------------------------------------------------------------------------
<S> <C> <C> <C>
OPERATING PROFIT
Total segment operating profit before special provision $ 399 $ 415 $ 277
Special provision (117) -- --
Corporate administrative and general expense (55) (23) (13)
Interest (expense) income, net (33) (24) (8)
Other items, net (8) (5) (1)
- ---------------------------------------------------------------------------------------------
Earnings before taxes $ 186 $ 363 $ 255
=================================
</TABLE>
<TABLE>
<CAPTION>
(in millions) 1999 1998 1997
- ---------------------------------------------------------------------------------------------
<S> <C> <C> <C>
TOTAL ASSETS
Total assets for reportable segments $ 4,468 $ 4,504 $ 4,281
Cash, cash equivalents and marketable securities 210 341 309
Other items, net 208 174 95
- ---------------------------------------------------------------------------------------------
Total assets $ 4,886 $ 5,019 $ 4,685
=================================
</TABLE>
ENTERPRISE-WIDE DISCLOSURES
<TABLE>
<CAPTION>
Revenues Total Assets
(in millions) 1999 1998 1997 1999 1998 1997
- ----------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
United States* $ 7,139 $ 8,324 $ 9,347 $3,995 $4,082 $3,789
Europe 1,228 1,196 1,420 196 255 225
Central and South America 825 1,242 1,110 221 256 210
Asia Pacific (includes Australia) 1,575 1,435 1,545 265 252 315
Middle East and Africa 795 993 549 68 77 78
Canada 855 315 328 141 97 68
- ----------------------------------------------------------------------------------------------
$12,417 $13,505 $14,299 $4,886 $5,019 $4,685
========================================================
</TABLE>
*Includes export revenues to unaffiliated customers of $1.6 billion in 1999,
$1.5 billion in 1998 and $1.8 billion in 1997.
PAGE 53
<PAGE> 30
MANAGEMENT'S AND INDEPENDENT AUDITORS' REPORTS
MANAGEMENT
The company is responsible for preparation of the accompanying consolidated
balance sheet and the related consolidated statements of earnings, cash flows
and shareholders' equity. These statements have been prepared in conformity with
generally accepted accounting principles and management believes that they
present fairly the company's consolidated financial position and results of
operations. The integrity of the information presented in the financial
statements, including estimates and judgments relating to matters not concluded
by fiscal year end, is the responsibility of management. To fulfill this
responsibility, an internal control structure designed to protect the company's
assets and properly record transactions and events as they occur has been
developed, placed in operation and maintained. The internal control structure is
supported by an extensive program of internal audits and is tested and
evaluated by the independent auditors in connection with their annual audit. The
Board of Directors pursues its responsibility for financial information through
an Audit Committee of Directors who are not employees. The internal auditors
and the independent auditors have full and free access to the Committee.
Periodically, the Committee meets with the independent auditors without
management present to discuss the results of their audits, the adequacy of the
internal control structure and the quality of financial reporting.
/s/ Philip J. Carroll, Jr /s/ Ralph F. Hake
- ------------------------------ ----------------------------------------
Philip J. Carroll, Jr. Ralph F. Hake
Chairman of the Board and Executive Vice President and
Chief Executive Officer Chief Financial Officer
INDEPENDENT AUDITORS
Board of Directors and Shareholders
Fluor Corporation
We have audited the accompanying consolidated balance sheet of Fluor Corporation
as of October 31, 1999 and 1998, and the related consolidated statements of
earnings, cash flows, and shareholders' equity for each of the three years in
the period ended October 31, 1999. These financial statements are the
responsibility of the company's management. Our responsibility is to express an
opinion on these financial statements based on our audits.
We conducted our audits in accordance with auditing standards generally
accepted in the United States. Those standards require that we plan and perform
the audit to obtain reasonable assurance about whether the financial statements
are free of material misstatement. An audit includes examining, on a test basis,
evidence supporting the amounts and disclosures in the financial statements. An
audit also includes assessing the accounting principles used and significant
estimates made by management, as well as evaluating the overall financial
statement presentation. We believe that our audits provide a reasonable basis
for our opinion.
In our opinion, the financial statements referred to above present
fairly, in all material respects, the consolidated financial position of Fluor
Corporation at October 31, 1999 and 1998, and the consolidated results of its
operations and its cash flows for each of the three years in the period ended
October 31, 1999, in conformity with accounting principles generally accepted in
the United States.
/s/ ERNST & YOUNG LLP
Orange County, California
November 19, 1999
page 54
<PAGE> 31
QUARTERLY FINANCIAL DATA
The following is a summary of the quarterly results of operations:
<TABLE>
<CAPTION>
First Quarter Second Quarter Third Quarter Fourth Quarter
- ----------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
(in thousands, except per share amounts)
1999
Revenues $ 3,384,065 $ 3,091,307 $ 3,069,444 $ 2,872,569
Cost of revenues 3,291,204 3,001,212 2,967,562 2,766,715
Special provision -- 136,500 -- (19,300)
Earnings (loss) before taxes 74,899 (64,523) 73,537 101,740
Net earnings (loss) 51,081 (72,895) 50,152 75,849
Earnings (loss) per share
Basic .68 (.97) .67 1.01
Diluted $ .68 $ (.97) $ .66 $ 1.00
============================================================
1998
Revenues $ 3,399,019 $ 3,282,079 $ 3,528,852 $ 3,294,823
Cost of revenues 3,309,279 3,184,891 3,421,976 3,179,290
Earnings before taxes 84,458 83,650 96,232 98,286
Net earnings 54,813 54,289 62,437 63,805
Earnings per share
Basic .66 .67 .81 .85
Diluted $ .66 $ .67 $ .81 $ .84
============================================================
</TABLE>
PAGE 55
<PAGE> 32
SHAREHOLDERS' REFERENCE
COMMON STOCK INFORMATION
At December 31, 1999, there were 76,246,247 shares outstanding and approximately
12,099 shareholders of record of Fluor's common stock.
The following table sets forth for the periods indicated the cash
dividends paid per share of common stock and the high and low sales prices of
such common stock as reported in the Consolidated Transactions Reporting System.
COMMON STOCK AND DIVIDEND INFORMATION
<TABLE>
<CAPTION>
Dividends Price Range
Per Share High Low
- ------------------------------------------------
<S> <C> <C> <C>
Fiscal 1999
First Quarter $0.20 45 1/16 37 11/16
Second Quarter 0.20 37 7/16 26 1/4
Third Quarter 0.20 42 7/8 35 1/4
Fourth Quarter 0.20 42 5/16 37 1/2
=====
$0.80
Fiscal 1998
First Quarter $0.20 39 3/4 33 15/16
Second Quarter 0.20 52 1/4 37 13/16
Third Quarter 0.20 51 1/2 40 11/16
Fourth Quarter 0.20 46 7/8 34 5/8
=====
$0.80
</TABLE>
FORM 10-K
A copy of the Form 10-K, which is filed with the Securities and Exchange
Commission, is available upon request. Write to:
Senior Vice President-Law & Secretary
Fluor Corporation
One Enterprise Drive
Aliso Viejo, California 92656
(949) 349-2000
REGISTRAR AND TRANSFER AGENT
ChaseMellon Shareholder Services, L.L.C.
400 South Hope Street, Fourth Floor
Los Angeles, California 90071
and
ChaseMellon Shareholder Services, L.L.C.
85 Challenger Road
Ridgefield Park, NJ 07660
For change of address, lost dividends, or lost stock certificates, write or
telephone:
ChaseMellon Shareholder Services, L.L.C.
P. O. Box 3315
South Hackensack, NJ 07606-1915
Attn: Securityholder Relations
(800) 813-2847
Requests may also be submitted via e-mail by visiting their web site at
www.chasemellon.com
INDEPENDENT AUDITORS
Ernst & Young LLP
18400 Von Karman Avenue
Irvine, California 92612
ANNUAL SHAREHOLDERS' MEETING
Annual report and proxy statement are mailed on or about February 1. Fluor's
annual meeting of shareholders will be held at 9:00 a.m. on March 8, 2000 at:
The Hyatt Regency Greenville
220 North Main Street
Greenville, South Carolina
STOCK TRADING
Fluor's stock is traded on the New York, Chicago, Pacific, Amsterdam, London and
Swiss Stock Exchanges. Common stock domestic trading symbol: FLR.
DIVIDEND REINVESTMENT PLAN
Fluor's Dividend Reinvestment Plan provides shareholders of record with the
opportunity to conveniently and economically increase their ownership in Fluor.
Through the Plan, shareholders can automatically reinvest their cash dividends
in shares of Fluor common stock. A minimum balance of 50 shares is required for
enrollment. Optional cash investments may also be made in additional Fluor
shares ranging from a minimum of $100 per month to a maximum of $10,000 per
quarter. For details on the Plan, contact Fluor's agent, ChaseMellon Shareholder
Services (800) 813-2847.
DUPLICATE MAILINGS
Shares owned by one person but held in different forms of the same name result
in duplicate mailing of shareholder information at added expense to the company.
Such duplication can be eliminated only at the direction of the shareholder.
Please notify ChaseMellon Shareholder Services in order to eliminate
duplication.
Fluor is a registered service mark of Fluor Corporation. Fluor Daniel, Fluor
Global Services, Fluor Signature Services, Knowledge@Work and Fluor Federal
Services are service marks of Fluor Corporation. AMECO is a registered service
mark of American Equipment Company.
HISTORY OF STOCK DIVIDENDS AND SPLITS SINCE GOING PUBLIC IN 1950
<TABLE>
<S> <C>
08/23/57 20% Stock Dividend
12/15/61 5% Stock Dividend
03/11/63 5% Stock Dividend
03/09/64 5% Stock Dividend
03/08/65 5% Stock Dividend
02/14/66 5% Stock Dividend
03/24/66 2 for 1 Stock Split
03/27/67 5% Stock Dividend
02/09/68 5% Stock Dividend
03/22/68 2 for 1 Stock Split
05/16/69 5% Stock Dividend
03/06/70 5% Stock Dividend
03/05/71 5% Stock Dividend
03/10/72 5% Stock Dividend
03/12/73 5% Stock Dividend
03/11/74 3 for 2 Stock Split
08/13/79 3 for 2 Stock Split
07/18/80 2 for 1 Stock Split
</TABLE>
COMPANY CONTACTS
Shareholders may call
(888) 432-1745
SHAREHOLDER SERVICES:
Lawrence N. Fisher
(949) 349-6961
INVESTOR RELATIONS:
Lila J. Churney
(949) 349-3909
[PHOTOGRAPH]
Fluor's investor relations activities are dedicated to providing investors with
complete and timely information. All investor questions are welcome.
WEB SITE ADDRESS
www.fluor.com
INVESTOR E-MAIL
[email protected]
[RECYCLE LOGO] Printed entirely on recycled paper
<PAGE> 1
EXHIBIT 21
FLUOR CORPORATION SUBSIDIARIES
Organized Under
Laws of
Name of Company Fluor Corporation
- --------------- -----------------
Subsidiaries (1) Delaware
American Construction Equipment Company, Inc. California
American Equipamentos do Brasil Ltda. (20) Brazil
AMECO Contractors Rentals, Inc. (16) Philippines
AMECO Holdings, Inc. California
AMECO Caribbean, Inc. California
Ameco Mining Services S.R.L. (20) Argentina
Ameco Peru S.A.C. (20) Peru
AMECO Project Services, Inc. Philippines
Ameco Pty Ltd. Australia
Ameco Services S.R.L. (20) Argentina
Ameco Services, S. de R.L. de C.V. (21) Mexico
American Equipamentos do Brasil Ltda. (21) Brazil
Grand Greenville Land, Inc. (2) Philippines
Maquinaria Panamericana, S.A. de C.V. (21) Mexico
Ameco Mining Services S.R.L. (21) Argentina
Ameco Services S.R.L. (21) Argentina
Maquinaria Panamericana, S.A. de C.V. (20) Mexico
Ameco Peru S.A.C. (21) Peru
Shanghai GE Construction Equipment
Engineering Co. Ltd.(18) China
American Equipment Company, Inc. South Carolina
Ameco Services, S. de R.L. de C.V.(20) Mexico
AMECO Services Inc. Delaware
AMEC Equipment Leasing SARL France
J. W. Burress, Incorporated Virginia
S & R Equipment Co., Inc. Ohio
SMA Equipment Co., Inc. Delaware
Stith Equipment Co., Inc. Delaware
SMA Information Systems Inc. Delaware
Apex Coal Company Virginia
Claiborne Fuels, Inc. California
Daniel International Corporation South Carolina
Fluor Daniel Engineering, Inc. Ohio
Fluor Atlantic Limited Bermuda
Fluor Constructors International, Inc. California
Fluor Constructors Canada Ltd. New Brunswick
Fluor Management and Technical Services, Inc. California
Fluor Continental Limited Bermuda
Fluor Daniel Engineers & Consultants Ltd. Mauritius
Fluor Daniel India Private Limited (17) India
Fluor Daniel Illinois, Inc. Delaware
Duke/Fluor Daniel (22) North Carolina
Fluor Daniel Intercontinental, Inc. California
Fluor Daniel Venture Group, Inc. California
Fluor Daniel Asia, Inc. California
Duke/Fluor Daniel International Services(22) Nevada
D/FD Foreign Sales Corporation (12) Barbados
Duke/Fluor Daniel International
Services (Trinidad) Limited Trinidad
PT Duke/Fluor Daniel (22) Indonesia
P.T. Fluor Daniel Indonesia (18) Indonesia
PT. AMECO Servicindo (18) Indonesia
P.T. Nusantara Power Services (2) Indonesia
Micogen Inc. California
Micogen Limited I, Inc. California
Micogen Limited II, Inc. California
SolioFlo LLC (12) Delaware
Springfield Resource Recovery, Inc. Mass.
<PAGE> 2
Organized Under
Laws of
Name of Company Fluor Corporation
- --------------- -----------------
Fluor Enterprises, Inc. California
ADP Marshall, Inc. Arizona
ADP Marshall Contractors, Inc. Delaware
ADP Marshall Limited Ireland
ADPM, L.L.C. (2) Delaware
Appalachian Synfuel, LLC West Virginia
DAX Industries, Inc. (8) Texas
Duke/Fluor Daniel (22) North Carolina
Efdee Engineering Corporation North Carolina
Efdee New York Engineers & Architects P.C. New York
Evergreen Equipment and Personnel Leasing, Inc. Rhode Island
FDCM of Mississippi, Inc. Mississippi
FDEE Consulting, Inc. California
FDHM, Inc. California
FD/MK Limited Liability Company (3) Delaware
Fluor Australia Pty Ltd Australia
Civil and Mechanical Maintenance Pty. Ltd. Australia
Fluor Daniel Constructors Pty. Ltd. Australia
Fluor Daniel Diversified Plant Services Pty Ltd Australia
Fluor Daniel Gas Services Pty Ltd Australia
Fluor Daniel Process Plant Services Pty Ltd Australia
Maritime Maintenance Services Pty Ltd Australia
Fluor Daniel (Qld) Pty. Ltd. Australia
Karratha Engineering Services Pty Ltd Australia
Signet Holdings Pty Ltd Australia
PT Signet Indonesia (15) Indonesia
Signet Engineering Pty Ltd Australia
Signet Ingenieria S.A. Chile
Constructora Lequena S.A. Chile
Signet International Holdings Pty. Ltd. Australia
Tengis Design Services Pty Ltd Australia
Westquip Australia Pty Ltd Australia
TRS Staffing Solutions (Australia) Pty Ltd Australia
AmBit Technology Pty Ltd. Australia
Fluor Chile, Inc. California
Ameco Chile S.A. (20) Chile
Fluor Daniel Chile Ingenieria y Construccion
S.A. (20) Chile
Ingenieria y Construcciones Fluor Daniel
Chile Limitada Chile
Fluor Colombia Limited Delaware
Fluor Daniel Alaska, Inc. Alaska
Fluor Daniel Brasil Engenharia e Servicos Ltda. Brazil
Fluor Daniel Canada, Inc. New Brunswick
Fluor Daniel International Services Inc.(14) Barbados
Fluor Daniel Wright Ltd. New Brunswick
Wright Engineers (Chile) Limitada Chile
Wright Engineers Limitada Peru Peru
TRS Staffing Solutions (Canada) Inc. Canada
Fluor Daniel Caribbean, Inc. Delaware
DMIS, Inc. South Carolina
Facility & Plant Services, Inc. South Carolina
Fluor Daniel Export Services, Inc. Delaware
Fluor Daniel International (Malaysia) Sdn. Bhd. Malaysia
Fluor Daniel Maintenance Services, Inc. Delaware
Fluor Daniel Services Corporation Delaware
Fluor Daniel China, Inc. California
Fluor Daniel China Services, Inc. California
Fluor Daniel China Technology, Inc. California
2
<PAGE> 3
Organized Under
Laws of
Name of Company Fluor Corporation
- --------------- -----------------
Fluor Enterprises, Inc. (continued)
Fluor Daniel Coal Services International, Inc. Delaware
Duke/Fluor Daniel International (22) Nevada
D/FD Foreign Sales Corporation (23) Barbados
Duke/Fluor Daniel LLC (22) Nevada
Duke/Fluor Daniel Pty Ltd. (22) Australia
Fluor Daniel Construction Company California
Fluor Daniel Development Corporation California
Crown Energy Company New Jersey
Fluor Daniel Modesto, Inc. California
Wilmore/Fluor Modesto LLC (5) California
Fluor Daniel Tempe, Inc. California
Gloucester Limited, Inc. California
Fluor Daniel Eastern, Inc. California
P.T. Fluor Daniel Indonesia (17) Indonesia
PT. AMECO Servicindo (17) Indonesia
Fluor Daniel Energy Investments, Inc. Delaware
Fluor Daniel Engineers & Constructors, Inc. Delaware
Fluor Daniel Project Consultants
(Shenzhen) Co., Ltd. P.R.C.
Davy Kinhill Fluor Daniel (PNG) Pty Ltd.(25) Papua New Guinea
Fluor Daniel Engineers & Constructors, Ltd. California
Fluor Daniel Korea Ltd. Korea
Fluor Daniel Environmental Strategies, Inc. Delaware
Fluor Daniel Espana, S.A. California
Daniel International (Saudi Arabia) Ltd. Saudi Arabia
Fluor Arabia Limited (5) Saudi Arabia
Fluor Daniel Eurasia, Inc. California
Fluor Daniel Europe B.V. Netherlands
ASI Advanced Solutions International BV (14) Netherlands
ASI Consulting Europe Limited U.K.
ASI Consulting UK Limited U.K.
ASI Consulting Italy Sprl Italy
ASI Polska Spzoo Poland
Atem Polska Poland
RTG Poland
ASI Scandinavia Avant (5) Sweden
Chemgineering Holding Company GmbH (7) Switzerland
ASI GmbH Germany
ASI Technologies Ltd. Ireland
Chemgineering AG Switzerland
Chemgineering GmbH Germany
SCInformatik AG
Group G(5) France
ODI Inc. (5) Delaware
Prochem S.A.(24) Poland
TA Group Limited U.K.
Business Systems Mapping Limited U.K.
RTP Software Ltd. U.K.
TA Consultancy Services Ltd. U.K.
TA Group Trustees Ltd. U.K.
Team-Sel International Ltd. U.K.
Spel Manpower Services Ltd. U.K.
TA Engineering Services Ltd. U.K.
TA Engineering Services (Tunisia) Ltd. U.K.
Team-Sel Engineering Ltd. U.K.
Team-Sel Technology Ltd. U.K.
Technical Audit Ltd. U.K.
3
<PAGE> 4
Organized Under
Laws of
Name of Company Fluor Corporation
- --------------- -----------------
Fluor Enterprises, Inc. (continued)
Fluor Daniel Europe B.V. (continued)
Fluor Daniel Belgium, N.V. Belgium
Fluor Daniel B.V. Netherlands
Acquion B.V. Netherlands
Fluor Daniel Consultants B.V. Netherlands
Fluor Daniel Engineering and Construction
Services Limited Turkey
International Refinery Contractors C.V.(4) Netherlands
International Refinery Contractors B.V.(5) Netherlands
Prochem S.A.(6) Poland
TRS Staffing Solutions B.V. Netherlands
Fluor Daniel E&C LLC(20) Russia
Fluor Daniel Eastern Services B.V. Netherlands
Fluor Daniel, S.A.(28) Spain
Prosynchem Sp.z o.o. (26) Poland
Fluor Daniel Florida Rail, Inc. Delaware
Fluor Daniel Global Contracting Limited Guernsey
Fluor Daniel Global Limited Guernsey
Fluor Daniel Global Placement Limited Guernsey
Fluor Daniel Global Placement Services Limited Guernsey
Fluor Daniel Global Services Limited Guernsey
Fluor Daniel Global Support Services Limited Guernsey
Fluor Daniel Global TRS Limited Guernsey
Fluor Daniel Global TRS Services Limited Guernsey
Fluor Daniel GmbH Germany
Fluor Daniel Kft. (14) Hungary
Fluor Daniel Group, Inc. Delaware
Fluor Daniel, Inc. - Philippines Philippines
Fluor Daniel India, Inc. California
Fluor Daniel International Services Inc. (15) Barbados
Fluor Daniel Ireland Limited Ireland
Fluor Daniel - E-E-L Limited (5) Ireland
Fluor Daniel (Japan) Inc. Japan
Fluor Daniel Kft. (15) Hungary
Fluor Daniel Latin America, Inc. California
Fluor-Daniel (Malaysia) Sdn. Bhd. Malaysia
Fluor Daniel Mexico S.A. California
ICA-Fluor Daniel, S. de R.L. de C.V. (10) Mexico
Fluor Daniel Mining & Metals, Ltd. California
Ameco Chile S.A. (21) Chile
Fluor Daniel Chile Ingenieria y Construccion S.A. (21) Chile
Fluor Daniel (NPOSR), Inc. Delaware
Fluor Daniel Overland Express, Inc. Delaware
Fluor Daniel Overseas, Inc. California
Fluor Daniel Pacific, Inc. California
Fluor Daniel Power B.V. Netherlands
Duke/Fluor Daniel B.V. (5) Netherlands
Fluor Daniel P.R.C., Ltd. California
Fluor Daniel Properties Limited U.K.
Fluor Daniel Pulp & Paper, Inc. California
Fluor Daniel Real Estate Services, Inc. South Carolina
Fluor Daniel, S.A.(27) Spain
Fluor Daniel Sales Corporation West Indies
Fluor Daniel South America Limited California
Fluor Daniel Holdings, Inc. California
Fluor Daniel Global Services Private Limited India
Fluor Daniel Technical Services, Inc. Texas
4
<PAGE> 5
Organized Under
Laws of
Name of Company Fluor Corporation
- --------------- -----------------
Fluor Enterprises, Inc. (continued)
Fluor Daniel Thailand Holdings Corporation California
Fluor Daniel Telecom (Thailand) Co., Ltd. Thailand
Fluor Daniel Thailand, Ltd. California
Fluor Egypt Egypt
Fluor Engineers, Inc. Delaware
Tecnofluor, C.A. (11) Venezuela
Tecnoconsult Ingenieros Consultores, S.A.(11) Venezuela
Fluor Federal Services, Inc. Washington
Fluor Federal Services NWS, Inc. Washington
Fluor Fernald, Inc. California
Fluor Environmental Resources Management
Services, Inc. Delaware
Fluor Hanford, Inc. Washington
Fluor Indonesia, Inc. California
P.T. Panca Perintis Indonesia (6) Indonesia
Fluor International, Inc. California
Fluor International Limited U.K.
ASI Advanced Solutions International BV (15) Netherlands
ASI Consulting Europe Limited U.K.
ASI Consulting UK Limited U.K.
ASI Consulting Italy Sprl Italy
ASI Polska Spzoo Poland
Atem Polska Poland
RTG Poland
ASI Scandinavia Avant (5) Sweden
Chemgineering Holding Company GmbH (7) Switzerland
ASI GmbH Germany
ASI Technologies Ltd. Ireland
Chemgineering AG Switzerland
Chemgineering GmbH Germany
SCInformatik AG
Group G(5) France
ODI Inc. (5) Delaware
Prochem S.A.(24) Poland
TA Group Limited U.K.
Business Systems Mapping Limited U.K.
RTP Software Ltd. U.K.
TA Consultancy Services Ltd. U.K.
TA Group Trustees Ltd. U.K.
Team-Sel International Ltd. U.K.
Spel Manpower Services Ltd. U.K.
TA Engineering Services Ltd. U.K.
TA Engineering Services (Tunisia) Ltd. U.K.
Team-Sel Engineering Ltd. U.K.
Team-Sel Technology Ltd. U.K.
Technical Audit Ltd. U.K.
First Legal Recruitment Limited U.K.
First Accountancy Limited U.K.
First Recruitment Limited U.K.
Fluor Daniel Caspian Services Limited U.K.
Fluor Enterprises Limited U.K.
Fluor Ocean Services Limited U.K.
K Home Engineering Limited (19) U.K.
Mathos Services Limited U.K.
TRS Management Resources PLC U.K.
Ambit Technology Limited U.K.
Antony Dunlop Associates Limited U.K.
5
<PAGE> 6
Organized Under
Laws of
Name of Company Fluor Corporation
- --------------- -----------------
Fluor Enterprises, Inc. (continued)
Fluor International Limited (continued)
TRS Management Resources PLC (continued)
Antony Dunlop Associates Limited (continued)
David Chorley Associates Limited U.K.
Hotel Accounts Resources Limited U.K.
Times Group Limited U.K.
MRG Human Resources Limited U.K.
SAP Services Limited U.K.
Times Computer Services Limited U.K.
TRS Management Resources (Services) Ltd. U.K.
TRS Staffing Solutions (U.K.) Limited U.K.
Fluor International Limited Bermuda
Fluor Iran Iran
Fluor Italia S.r.l. Italy
Fluor Mideast Limited Bermuda
Fluor Plant Services International, Inc. California
Fluor Texas, Inc. Texas
Marshall Development Corporation Rhode Island
Platte River Constructors, Ltd. (10) Ohio
Signet Technology Inc. Colorado
SolioFlo, LLC (12) Delaware
Soli-Flo, Inc. California
Soli-Flo Partners, L.P. California
Soli-Flo Material Transfer, L.P. California
Stanhope Management Services Limited U.K.
TDF, Inc. California
Barringford Ltd. B. Virgin Isles
Bishopsford Engineering AG Switzerland
Buckleford Corp. N.V. Antilles
Buckleshell Engineering Services Ltd. Jersey
Fluor Daniel SA (PTY) Ltd. Liechtenstein
Rhus Investments (PTY) Ltd. R. South Africa
Fluor Daniel Engineers SA (PTY) Ltd. Liechtenstein
Trans-Africa Projects Ltd. (5) Mauritius
Trans-Africa Projects (Pty) Ltd. (5) R. South Africa
Northern Project Services Ltd. B. Virgin Isles
Rama Engineering Services B.V. Netherlands
Ramasa (PTY) Ltd. R. South Africa
TRS Staffing Solutions SA Ltd. B. Virgin Isles
Fluor Properties (PTY) Ltd. R. South Africa
TRS Contract Solutions, Inc. Delaware
Venezco, Inc. California
Williams Brothers Engineering Company Delaware
Fluor Daniel Argentina, Inc. Delaware
Williams Brothers Engineering Limited U.K.
Williams Brothers Engineering Pty Ltd Australia
Wireless Engineering Services Group, LLC (5) Delaware
Fluor Gulf Communications, Inc. California
Fluor Maintenance Services, Inc. California
Fluor Mideast Limited California
Fluor Nuclear Services, Inc. Ohio
Fluor Reinsurance Investments, Inc. Delaware
Indo-Mauritian Affiliates Limited Mauritius
Fluor Daniel India Private Limited (18) India
Maintenance and Industrial Services, Inc. Delaware
Micogen Limited III, Inc. California
6
<PAGE> 7
Organized Under
Laws of
Name of Company Fluor Corporation
- --------------- -----------------
Pinnacle Insurance Co., Inc. Hawaii
Power Maintenance Services, Inc. Delaware
D/FD Bridgeport Operations, LLC (22) Delaware
D/FD Cokenergy Operations, LLC (22) Delaware
D/FD Operating Services, LLC (22) Delaware
St. Joe Carbon Fuels Corporation Delaware
SJM Holding Corporation Delaware
Allegheny Coal Corporation Delaware
Massey Coal Company (partnership) Delaware
A. T. Massey Coal Company, Inc. Virginia
Aracoma Coal Company, Inc. West Virginia
Bandmill Coal Corporation West Virginia
Barnabus Land Company West Virginia
Ben Creek Coal Company West Virginia
Big Bear Mining Company West Virginia
Boone East Development Co. West Virginia
Raven Resources, Inc. Florida
Boone West Development Co. West Virginia
Cabinawa Mining Company West Virginia
Central Penn Energy Company, Inc. Pennsylvania
Central West Virginia Energy Company West Virginia
Ceres Land Company West Virginia
Clear Fork Coal Company West Virginia
Cline & Chambers Coal Company, Inc. Kentucky
Dehue Coal Company West Virginia
Delbarton Mining Company West Virginia
Demeter Land Company West Virginia
Douglas Pocahontas Coal Corporation West Virginia
DRIH Corporation Delaware
Duchess Coal Company West Virginia
Duncan Fork Coal Company Pennsylvania
Mine Maintenance, Inc. Pennsylvania
Elk Run Coal Company, Inc. West Virginia
Appalachian Capital Management Corp. West Virginia
Marfork Coal Company, Inc. West Virginia
Continuity Venture Capital Corp. West Virginia
Progressive Venture Capital Corp. West Virginia
Monongahela Venture Capital Corp. West Virginia
Marshall Venture Capital Corp. West Virginia
Massey Capital Management Corp. West Virginia
Massey New Era Capital Corp. West Virginia
New Massey Capital Corp. West Virginia
Preferred Management Capital Corp. West Virginia
Rawl Sales Venture Capital Corp. West Virginia
Sprouse Creek Venture Capital Corp. West Virginia
Support Mining Company West Virginia
Federal Development Corporation West Virginia
Foothills Coal Company West Virginia
Goals Coal Company West Virginia
Green Valley Coal Company West Virginia
Big Sandy Venture Capital Corp. West Virginia
Haden Farms, Inc. Virginia
7
<PAGE> 8
Organized Under
Laws of
Name of Company Fluor Corporation
- --------------- -----------------
SJM Holding Corporation (continued)
Allegheny Coal Corporation (continued)
Massey Coal Company (partnership) (continued)
A. T. Massey Coal Company, Inc. (continued)
Hazy Ridge Coal Company West Virginia
Highland Mining Company West Virginia
Hopkins Creek Coal Company Kentucky
Imec, Inc. Kentucky
Independence Coal Company, Inc. West Virginia
Shenandoah Capital Management Corp. West Virginia
Jacks Branch Coal Company West Virginia
Joboner Coal Company Kentucky
Knox Creek Coal Corporation Virginia
Belfry Coal Corporation West Virginia
Lauren Land Company Kentucky
Lewco Development Company West Virginia
Lick Branch Coal Company West Virginia
Logan Mining Company Pennsylvania
Long Fork Coal Company Kentucky
Bandytown Coal Company West Virginia
Eagle Energy, Inc. West Virginia
Blue Ridge Venture Capital Corp. West Virginia
Bluestone Venture Capital Corp. West Virginia
Martin County Coal Corporation Kentucky
Pilgrim Mining Company, Inc. Kentucky
Massey Coal Sales Company, Inc. Virginia
Massey Coal Services, Inc. West Virginia
Massey Consulting Services, Inc. Virginia
Massey Fuels Corporation Virginia
Menefee Land Company, Inc. Colorado
New Market Land Company West Virginia
New Ridge Mining Company Kentucky
Nicco Corporation West Virginia
Majestic Mining, Inc. Texas
Nicholas Energy Company West Virginia
Alex Energy, Inc. West Virginia
Power Mountain Coal Company West Virginia
Omar Mining Company West Virginia
Peerless Eagle Coal Co. West Virginia
Performance Coal Company West Virginia
Continuity Venture Capital Corp. West Virginia
New River Capital Corp. West Virginia
SPM Capital Management Corp. West Virginia
Rawl Sales & Processing Co. West Virginia
Capstan Mining Company Colorado
Feats Venture Capital Corp. West Virginia
Lynn Branch Coal Company, Inc. West Virginia
Massey Coal Capital Corp. West Virginia
Massey New Era Capital Corp. West Virginia
New Massey Capital Corp. West Virginia
Preferred Management Capital Corp. West Virginia
Rawl Sales Venture Capital Corp. West Virginia
Sprouse Creek Venture Capital Corp. West Virginia
St. Alban's Capital Management Corp. West Virginia
Sun Coal Company, Inc. Colorado
Sycamore Fuels, Inc. West Virginia
Crystal Fuels Company West Virginia
8
<PAGE> 9
Organized Under
Laws of
Name of Company Fluor Corporation
- --------------- -----------------
SJM Holding Corporation (continued)
Allegheny Coal Corporation (continued)
Massey Coal Company (partnership) (continued)
A. T. Massey Coal Company, Inc. (continued)
Road Fork Development Company, Inc. Kentucky
Robinson-Phillips Coal Company West Virginia
Rockridge Coal Company West Virginia
Rum Creek Coal Sales, Inc. West Virginia
Vantage Mining Company Kentucky
Russell Fork Coal Company West Virginia
SC Coal Corporation Delaware
Scarlet Land Company Pennsylvania
Shannon-Pocahontas Coal Corporation West Virginia
Sidney Coal Company, Inc. Kentucky
Spartan Mining Company West Virginia
Stirrat Coal Company West Virginia
Stone Mining Company Kentucky
T.C.H. Coal Co. Kentucky
Tennessee Consolidated Coal Company Tennessee
Chestnut Coal Company, Inc. Tennessee
Tennessee Energy Corp. Tennessee
Thunder Mining Company West Virginia
Town Creek Coal Company West Virginia
White Buck Coal Company West Virginia
Williams Mountain Coal Company West Virginia
Wyomac Coal Company, Inc. West Virginia
Mineral Resource Development Corporation Delaware
St. Joe International Petroleum Corporation Delaware
St. Joe Minerals Corporation & Cia. Brazil
Coral Empreendimentos e Participacoes Ltda. Brazil
Comercial de Minerios do Sul do Para
Ltda. - COMIPA Brazil
Strategic Organizational Systems Enterprises, Inc. California
Strategic Organizational Systems Environmental
Engineering Division, Inc. Texas
TRS International Payroll Co. Texas
TRS Staffing Solutions, Inc. South Carolina
Ambit Technology, Inc. N. Hampshire
Corico Office Professionals, Inc. N. Hampshire
TRS International Group, Inc. Delaware
TRS International Group Asia Pacific, Inc. California
TRS Management Resources Pte Ltd. Singapore
TRS Management Resources, Inc. South Carolina
Zenith Coal Company, Inc. South Carolina
- -------------------
(1) Does not include certain subsidiaries which if considered in the aggregate
as a single subsidiary, would not constitute a significant subsidiary
(2) 40% ownership
(3) 51% ownership
(4) 49.5% ownership
(5) 50% ownership
(6) 35% ownership
(7) 45% ownership
(8) 27.8% ownership
(9) 55% ownership
(10) 49% ownership
(11) 19.99% ownership
(12) 25% ownership
(13) 60% ownership
(14)10% ownership
(15) 90% ownership
(16) 70% ownership
(17) 80% ownership
(18) 20% ownership
(19) 30% ownership
(20) 99% ownership
(21) 1% ownership
(22) 49.9999% ownership
(23) 75% ownership
(24) 15% ownership
(25) 38% ownership
(26) 98.66% ownership
(27) 96% ownership
(28) 3.92% ownership
9
<PAGE> 1
EXHIBIT 23
CONSENT OF INDEPENDENT AUDITORS
We consent to the incorporation by reference in this Annual Report on Form
10-K of Fluor Corporation of our report dated November 19, 1999, included in the
1999 Annual Report to shareholders of Fluor Corporation.
We also consent to the incorporation by reference of our report dated
November 19, 1999, with respect to the consolidated financial statements of
Fluor Corporation incorporated by reference in the Annual Report on Form 10-K
for the year ended October 31, 1999, in the Registration Statements and related
Prospectuses pertaining to: Form S-3 No. 333-71047 for the issuance of senior
debt securities; Form S-8 No. 333-22157 for the 1998 Fluor Executive Stock Plan;
Form S-8 No. 333-31293 for the DMIS, Inc. Nissan Maintenance Project Retirement
& Savings Plan; Form S-8 No. 333-30979 for the TRS 401(k) Retirement Plan; Form
S-8 No. 333-30987 for the Fluor Daniel Craft Employees 401(k) Retirement Plan;
Form S-8 No. 333-30983 for the TRS Salaried Employees' 401(k) Retirement Plan;
Form S-8 No. 333-23809 for the 1997 Fluor Restricted Stock Plan for Non-Employee
Directors; Form S-8 No. 333-37153 for the Fluor Executive Deferred Compensation
Program; Form S-8 No. 333-18151 for the 1996 Fluor Executive Stock Plan; Form
S-8 No. 33-58557 for the Fluor Corporation Stock Plan for Non-Employee
Directors; Form S-8 No. 33-31440 for the 1988 Fluor Executive Stock Plan; Form
S-8 No. 2-77532 for the 1982 Fluor Incentive Stock Option Plan, 1981 Fluor
Executive Stock Plan, 1977 Fluor Executive Stock Plan and 1971 Fluor Stock
Option Plan; and Form S-8 No. 2-72712 for the Fluor Corporation Salaried
Employees' Savings Investment Plan.
/s/ ERNST & YOUNG LLP
Orange County, California
January 25, 2000
<PAGE> 1
EXHIBIT 24
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, that each of the undersigned directors
and/or officers of FLUOR CORPORATION, a Delaware corporation ("Fluor"), does
hereby constitute and appoint L. N. FISHER, D. E. MILLER and E. P. HELM and each
of them, with full power to act without the other, as his true and lawful
attorneys-in-fact and agents, for him and in his name, place and stead, in any
and all capacities, to sign the annual report on Form 10-K for the fiscal year
ended October 31, 1999, and any and all amendments thereto, to be filed by Fluor
with the Securities and Exchange Commission and to file such annual report and
any amendments, with any and all exhibits thereto, and any and all other
information and documents in connection therewith, with the Securities and
Exchange Commission; and each of the undersigned does hereby ratify and confirm
as his own act and deed all that such attorneys-in-fact and agents, and each of
them shall do or cause to be done by virtue hereof.
IN WITNESS WHEREOF, the undersigned has hereunto subscribed his
signature as of the 5th day of January, 2000.
/s/ Don L. Blankenship
----------------------------------------
Don L. Blankenship
<PAGE> 2
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, that each of the undersigned directors
and/or officers of FLUOR CORPORATION, a Delaware corporation ("Fluor"), does
hereby constitute and appoint L. N. FISHER, D. E. MILLER and E. P. HELM and each
of them, with full power to act without the other, as his true and lawful
attorneys-in-fact and agents, for him and in his name, place and stead, in any
and all capacities, to sign the annual report on Form 10-K for the fiscal year
ended October 31, 1999, and any and all amendments thereto, to be filed by Fluor
with the Securities and Exchange Commission and to file such annual report and
any amendments, with any and all exhibits thereto, and any and all other
information and documents in connection therewith, with the Securities and
Exchange Commission; and each of the undersigned does hereby ratify and confirm
as his own act and deed all that such attorneys-in-fact and agents, and each of
them shall do or cause to be done by virtue hereof.
IN WITNESS WHEREOF, the undersigned has hereunto subscribed his
signature as of the 17th day of January, 2000.
/s/ Carroll A. Campbell, Jr.
----------------------------------------
Carroll A. Campbell, Jr.
<PAGE> 3
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, that each of the undersigned directors
and/or officers of FLUOR CORPORATION, a Delaware corporation ("Fluor"), does
hereby constitute and appoint L. N. FISHER, D. E. MILLER and E. P. HELM and each
of them, with full power to act without the other, as his true and lawful
attorneys-in-fact and agents, for him and in his name, place and stead, in any
and all capacities, to sign the annual report on Form 10-K for the fiscal year
ended October 31, 1999, and any and all amendments thereto, to be filed by Fluor
with the Securities and Exchange Commission and to file such annual report and
any amendments, with any and all exhibits thereto, and any and all other
information and documents in connection therewith, with the Securities and
Exchange Commission; and each of the undersigned does hereby ratify and confirm
as his own act and deed all that such attorneys-in-fact and agents, and each of
them shall do or cause to be done by virtue hereof.
IN WITNESS WHEREOF, the undersigned has hereunto subscribed his
signature as of the 17th day of January, 2000.
/s/ Philip J. Carroll
----------------------------------------
Philip J. Carroll
<PAGE> 4
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, that each of the undersigned directors
and/or officers of FLUOR CORPORATION, a Delaware corporation ("Fluor"), does
hereby constitute and appoint L. N. FISHER, D. E. MILLER and E. P. HELM and each
of them, with full power to act without the other, as his true and lawful
attorneys-in-fact and agents, for him and in his name, place and stead, in any
and all capacities, to sign the annual report on Form 10-K for the fiscal year
ended October 31, 1999, and any and all amendments thereto, to be filed by Fluor
with the Securities and Exchange Commission and to file such annual report and
any amendments, with any and all exhibits thereto, and any and all other
information and documents in connection therewith, with the Securities and
Exchange Commission; and each of the undersigned does hereby ratify and confirm
as his own act and deed all that such attorneys-in-fact and agents, and each of
them shall do or cause to be done by virtue hereof.
IN WITNESS WHEREOF, the undersigned has hereunto subscribed his
signature as of the 17th day of January, 2000.
/s/ Peter James Fluor
----------------------------------------
Peter James Fluor
<PAGE> 5
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, that each of the undersigned directors
and/or officers of FLUOR CORPORATION, a Delaware corporation ("Fluor"), does
hereby constitute and appoint L. N. FISHER, D. E. MILLER and E. P. HELM and each
of them, with full power to act without the other, as his true and lawful
attorneys-in-fact and agents, for him and in his name, place and stead, in any
and all capacities, to sign the annual report on Form 10-K for the fiscal year
ended October 31, 1999, and any and all amendments thereto, to be filed by Fluor
with the Securities and Exchange Commission and to file such annual report and
any amendments, with any and all exhibits thereto, and any and all other
information and documents in connection therewith, with the Securities and
Exchange Commission; and each of the undersigned does hereby ratify and confirm
as his own act and deed all that such attorneys-in-fact and agents, and each of
them shall do or cause to be done by virtue hereof.
IN WITNESS WHEREOF, the undersigned has hereunto subscribed his
signature as of the 4th day of January, 2000.
/s/ David P. Gardner
----------------------------------------
David P. Gardner
<PAGE> 6
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, that each of the undersigned directors
and/or officers of FLUOR CORPORATION, a Delaware corporation ("Fluor"), does
hereby constitute and appoint L. N. FISHER, D. E. MILLER and E. P. HELM and each
of them, with full power to act without the other, as his true and lawful
attorneys-in-fact and agents, for him and in his name, place and stead, in any
and all capacities, to sign the annual report on Form 10-K for the fiscal year
ended October 31, 1999, and any and all amendments thereto, to be filed by Fluor
with the Securities and Exchange Commission and to file such annual report and
any amendments, with any and all exhibits thereto, and any and all other
information and documents in connection therewith, with the Securities and
Exchange Commission; and each of the undersigned does hereby ratify and confirm
as his own act and deed all that such attorneys-in-fact and agents, and each of
them shall do or cause to be done by virtue hereof.
IN WITNESS WHEREOF, the undersigned has hereunto subscribed his
signature as of the 4th day of January, 2000.
/s/ Thomas L. Gossage
----------------------------------------
Thomas L. Gossage
<PAGE> 7
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, that each of the undersigned directors
and/or officers of FLUOR CORPORATION, a Delaware corporation ("Fluor"), does
hereby constitute and appoint L. N. FISHER, D. E. MILLER and E. P. HELM and each
of them, with full power to act without the other, as his true and lawful
attorneys-in-fact and agents, for him and in his name, place and stead, in any
and all capacities, to sign the annual report on Form 10-K for the fiscal year
ended October 31, 1999, and any and all amendments thereto, to be filed by Fluor
with the Securities and Exchange Commission and to file such annual report and
any amendments, with any and all exhibits thereto, and any and all other
information and documents in connection therewith, with the Securities and
Exchange Commission; and each of the undersigned does hereby ratify and confirm
as his own act and deed all that such attorneys-in-fact and agents, and each of
them shall do or cause to be done by virtue hereof.
IN WITNESS WHEREOF, the undersigned has hereunto subscribed his
signature as of the 17th day of January, 2000.
/s/ Bobby R. Inman
----------------------------------------
Bobby R. Inman
<PAGE> 8
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, that each of the undersigned directors
and/or officers of FLUOR CORPORATION, a Delaware corporation ("Fluor"), does
hereby constitute and appoint L. N. FISHER, D. E. MILLER and E. P. HELM and each
of them, with full power to act without the other, as his true and lawful
attorneys-in-fact and agents, for him and in his name, place and stead, in any
and all capacities, to sign the annual report on Form 10-K for the fiscal year
ended October 31, 1999, and any and all amendments thereto, to be filed by Fluor
with the Securities and Exchange Commission and to file such annual report and
any amendments, with any and all exhibits thereto, and any and all other
information and documents in connection therewith, with the Securities and
Exchange Commission; and each of the undersigned does hereby ratify and confirm
as his own act and deed all that such attorneys-in-fact and agents, and each of
them shall do or cause to be done by virtue hereof.
IN WITNESS WHEREOF, the undersigned has hereunto subscribed his
signature as of the 4th day of January, 2000.
/s/ Vilma S. Martinez
----------------------------------------
Vilma S. Martinez
<PAGE> 9
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, that each of the undersigned directors
and/or officers of FLUOR CORPORATION, a Delaware corporation ("Fluor"), does
hereby constitute and appoint L. N. FISHER, D. E. MILLER and E. P. HELM and each
of them, with full power to act without the other, as his true and lawful
attorneys-in-fact and agents, for him and in his name, place and stead, in any
and all capacities, to sign the annual report on Form 10-K for the fiscal year
ended October 31, 1999, and any and all amendments thereto, to be filed by Fluor
with the Securities and Exchange Commission and to file such annual report and
any amendments, with any and all exhibits thereto, and any and all other
information and documents in connection therewith, with the Securities and
Exchange Commission; and each of the undersigned does hereby ratify and confirm
as his own act and deed all that such attorneys-in-fact and agents, and each of
them shall do or cause to be done by virtue hereof.
IN WITNESS WHEREOF, the undersigned has hereunto subscribed his
signature as of the 17th day of January, 2000.
/s/ Dean R. O'Hare
----------------------------------------
Dean R. O'Hare
<PAGE> 10
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, that each of the undersigned directors
and/or officers of FLUOR CORPORATION, a Delaware corporation ("Fluor"), does
hereby constitute and appoint L. N. FISHER, D. E. MILLER and E. P. HELM and each
of them, with full power to act without the other, as his true and lawful
attorneys-in-fact and agents, for him and in his name, place and stead, in any
and all capacities, to sign the annual report on Form 10-K for the fiscal year
ended October 31, 1999, and any and all amendments thereto, to be filed by Fluor
with the Securities and Exchange Commission and to file such annual report and
any amendments, with any and all exhibits thereto, and any and all other
information and documents in connection therewith, with the Securities and
Exchange Commission; and each of the undersigned does hereby ratify and confirm
as his own act and deed all that such attorneys-in-fact and agents, and each of
them shall do or cause to be done by virtue hereof.
IN WITNESS WHEREOF, the undersigned has hereunto subscribed his
signature as of the 5th day of January, 2000.
/s/ Robin W. Renwick, KCMG
----------------------------------------
Robin W. Renwick, KCMG
<PAGE> 11
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, that each of the undersigned directors
and/or officers of FLUOR CORPORATION, a Delaware corporation ("Fluor"), does
hereby constitute and appoint L. N. FISHER, D. E. MILLER and E. P. HELM and each
of them, with full power to act without the other, as his true and lawful
attorneys-in-fact and agents, for him and in his name, place and stead, in any
and all capacities, to sign the annual report on Form 10-K for the fiscal year
ended October 31, 1999, and any and all amendments thereto, to be filed by Fluor
with the Securities and Exchange Commission and to file such annual report and
any amendments, with any and all exhibits thereto, and any and all other
information and documents in connection therewith, with the Securities and
Exchange Commission; and each of the undersigned does hereby ratify and confirm
as his own act and deed all that such attorneys-in-fact and agents, and each of
them shall do or cause to be done by virtue hereof.
IN WITNESS WHEREOF, the undersigned has hereunto subscribed his signature
as of the 17th day of January, 2000.
/s/ James O. Rollans
----------------------------------------
James O. Rollans
<PAGE> 12
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, that each of the undersigned directors
and/or officers of FLUOR CORPORATION, a Delaware corporation ("Fluor"), does
hereby constitute and appoint L. N. FISHER, D. E. MILLER and E. P. HELM and each
of them, with full power to act without the other, as his true and lawful
attorneys-in-fact and agents, for him and in his name, place and stead, in any
and all capacities, to sign the annual report on Form 10-K for the fiscal year
ended October 31, 1999, and any and all amendments thereto, to be filed by Fluor
with the Securities and Exchange Commission and to file such annual report and
any amendments, with any and all exhibits thereto, and any and all other
information and documents in connection therewith, with the Securities and
Exchange Commission; and each of the undersigned does hereby ratify and confirm
as his own act and deed all that such attorneys-in-fact and agents, and each of
them shall do or cause to be done by virtue hereof.
IN WITNESS WHEREOF, the undersigned has hereunto subscribed his signature
as of the 4th day of January, 2000.
/s/ Martha Romayne Seger
----------------------------------------
Martha Romayne Seger
<PAGE> 13
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, that each of the undersigned directors
and/or officers of FLUOR CORPORATION, a Delaware corporation ("Fluor"), does
hereby constitute and appoint L. N. FISHER, D. E. MILLER and E. P. HELM and each
of them, with full power to act without the other, as his true and lawful
attorneys-in-fact and agents, for him and in his name, place and stead, in any
and all capacities, to sign the annual report on Form 10-K for the fiscal year
ended October 31, 1999, and any and all amendments thereto, to be filed by Fluor
with the Securities and Exchange Commission and to file such annual report and
any amendments, with any and all exhibits thereto, and any and all other
information and documents in connection therewith, with the Securities and
Exchange Commission; and each of the undersigned does hereby ratify and confirm
as his own act and deed all that such attorneys-in-fact and agents, and each of
them shall do or cause to be done by virtue hereof.
IN WITNESS WHEREOF, the undersigned has hereunto subscribed his
signature as of the 17th day of January, 2000.
/s/ James C. Stein
----------------------------------------
James C. Stein
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