-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: keymaster@town.hall.org Originator-Key-Asymmetric: MFkwCgYEVQgBAQICAgADSwAwSAJBALeWW4xDV4i7+b6+UyPn5RtObb1cJ7VkACDq pKb9/DClgTKIm08lCfoilvi9Wl4SODbR1+1waHhiGmeZO8OdgLUCAwEAAQ== MIC-Info: RSA-MD5,RSA, JTcYyeOJPuc0drBZ96LGURtCXcEWumjlvI9ZzwD4jCTAl9Xgo1clUDNkfAPu3I3K Te/DBMNufiGOw1ejNYZJhg== 0000037748-94-000028.txt : 19940915 0000037748-94-000028.hdr.sgml : 19940915 ACCESSION NUMBER: 0000037748-94-000028 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 1 CONFORMED PERIOD OF REPORT: 19940731 FILED AS OF DATE: 19940914 FILER: COMPANY DATA: COMPANY CONFORMED NAME: FLUOR CORP/DE/ CENTRAL INDEX KEY: 0000037748 STANDARD INDUSTRIAL CLASSIFICATION: 1600 IRS NUMBER: 950740960 STATE OF INCORPORATION: DE FISCAL YEAR END: 1031 FILING VALUES: FORM TYPE: 10-Q SEC ACT: 1934 Act SEC FILE NUMBER: 001-07775 FILM NUMBER: 94548921 BUSINESS ADDRESS: STREET 1: 3333 MICHELSON DR CITY: IRVINE STATE: CA ZIP: 92730 BUSINESS PHONE: 7149752000 FORMER COMPANY: FORMER CONFORMED NAME: FLUOR CORP LTD DATE OF NAME CHANGE: 19710624 10-Q 1 SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 10-Q (Mark One) (X) QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended July 31, 1994 OR ( ) TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES 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 I.D. No.) incorporation or organization) 3333 Michelson Drive, Irvine, CA 92730 (Address of principal executive offices) Registrant's telephone number including area code: (714)975-2000 Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the last 90 days. Yes ( X ) No ( ) As of August 31, 1994 there were 82,491,963 shares of common stock outstanding. FLUOR CORPORATION FORM 10-Q July 31, 1994 TABLE OF CONTENTS PAGE Part I: Financial Information Condensed Consolidated Statement of Earnings for the Three Months Ended July 31, 1994 and 1993..... 2 Condensed Consolidated Statement of Earnings for the Nine Months Ended July 31, 1994 and 1993...... 3 Condensed Consolidated Balance Sheet at July 31, 1994 and October 31, 1993......................... 4 Condensed Consolidated Statement of Cash Flows for the Nine Months Ended July 31, 1994 and 1993...... 6 Notes to Condensed Consolidated Financial Statements........................................ 7 Management's Discussion and Analysis of Financial Condition and Results of Operations............... 9 Condensed Consolidated Changes in Backlog.......... 13 Part II: Other Information........................ 14 Signatures........................................... 15 Part I: Financial Information FLUOR CORPORATION CONDENSED CONSOLIDATED STATEMENT OF EARNINGS Three Months Ended July 31, 1994 and 1993 (In Thousands Except Per Share Amounts) UNAUDITED 1994 1993 REVENUES.............................. $1,963,052 $1,844,112 COSTS AND EXPENSES Cost of revenues.................... 1,873,675 1,770,077 Corporate administrative and general expenses................... 14,726 8,845 Interest expense.................... 4,340 5,132 Interest income..................... (5,697) (4,877) Total Costs and Expenses.............. 1,887,044 1,779,177 EARNINGS BEFORE INCOME TAXES.......... 76,008 64,935 INCOME TAX EXPENSE.................... 27,700 24,100 NET EARNINGS.......................... $ 48,308 $ 40,835 NET EARNINGS PER SHARE................ $ 0.58 $ 0.50 DIVIDENDS PER COMMON SHARE............ $ 0.13 $ 0.12 SHARES USED TO CALCULATE EARNINGS PER SHARE............................... 83,001 82,268 See Accompanying Notes. -2- FLUOR CORPORATION CONDENSED CONSOLIDATED STATEMENT OF EARNINGS Nine Months Ended July 31, 1994 and 1993 (In Thousands Except Per Share Amounts) UNAUDITED 1994 1993 REVENUES.............................. $6,100,310 $5,657,105 COSTS AND EXPENSES Cost of revenues.................... 5,841,624 5,458,592 Corporate administrative and general expenses................... 38,738 30,101 Interest expense.................... 12,979 14,914 Interest income..................... (15,176) (14,871) Total Costs and Expenses.............. 5,878,165 5,488,736 EARNINGS BEFORE INCOME TAXES.......... 222,145 168,369 INCOME TAX EXPENSE.................... 82,100 49,900 NET EARNINGS.......................... $ 140,045 $ 118,469 NET EARNINGS PER SHARE................ $ 1.69 $ 1.44 DIVIDENDS PER COMMON SHARE............ $ 0.39 $ 0.36 SHARES USED TO CALCULATE EARNINGS PER SHARE........................... 82,744 82,257 See Accompanying Notes. -3- FLUOR CORPORATION CONDENSED CONSOLIDATED BALANCE SHEET July 31, 1994 and October 31, 1993 (Dollars in Thousands) ASSETS July 31, October 31, 1994 1993 * (Unaudited) Current Assets Cash and cash equivalents........... $ 351,489 $ 214,844 Marketable securities............... 108,250 97,335 Accounts and notes receivable....... 328,174 392,577 Contract work in progress........... 289,184 306,251 Net assets of discontinued operations......................... -- 172,822 Deferred taxes...................... 49,852 76,364 Inventory and other current assets.. 63,509 48,831 Total Current Assets............... 1,190,458 1,309,024 Property, plant and equipment (net of accumulated depreciation, depletion and amortization of $496,142 and $441,676, respectively) 1,178,141 1,100,909 Investments and goodwill, net......... 63,090 52,383 Other................................. 208,068 126,568 $2,639,757 $2,588,884 (Continued On Next Page) * Amounts at October 31, 1993 have been derived from audited financial statements. -4- FLUOR CORPORATION CONDENSED CONSOLIDATED BALANCE SHEET July 31, 1994 and October 31, 1993 (Dollars in Thousands) LIABILITIES AND SHAREHOLDERS' EQUITY July 31, October 31, 1994 1993 * (Unaudited) Current Liabilities Accounts and notes payable.......... $ 277,406 $ 289,721 Note payable to affiliate........... -- 30,000 Commercial paper.................... 14,983 30,053 Advance billings on contracts....... 212,755 194,695 Accrued salaries, wages and benefit plans...................... 174,158 194,270 Other accrued liabilities........... 206,084 190,447 Current portion of long-term debt... 2,404 1,687 Total Current Liabilities.......... 887,790 930,873 Long-term debt due after one year..... 58,513 59,637 Deferred taxes........................ 50,382 51,642 Other noncurrent liabilities.......... 476,882 502,610 Commitments and contingencies Shareholders' Equity Capital stock Preferred - authorized 20,000,000 shares without par value; none issued Common - authorized 150,000,000 shares of $0.625 par value; issued and outstanding - 82,485,470 shares and 82,093,207 shares, respectively............. 51,553 51,308 Additional capital.................. 489,636 478,204 Retained earnings (since October 31, 1987).............................. 642,620 534,678 Unamortized executive stock plan expense............................ (15,573) (16,828) Cumulative translation adjustments.. (2,046) (3,240) Total Shareholders' Equity......... 1,166,190 1,044,122 $2,639,757 $2,588,884 See Accompanying Notes. * Amounts at October 31, 1993 have been derived from audited financial statements. -5- FLUOR CORPORATION CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS Nine Months Ended July 31, 1994 and 1993 (Dollars in Thousands) UNAUDITED 1994 1993 CASH FLOWS FROM OPERATING ACTIVITIES Net earnings........................ $ 140,045 $ 118,469 Adjustments to reconcile net earnings to cash provided by operating activities: Depreciation, depletion and amortization................... 84,678 82,902 Discontinued operations.......... -- (30,412) Deferred taxes................... (4,958) (34,311) Change in operating assets and liabilities.................... 99,123 (108,838) Other, net....................... 3,679 34,621 Cash provided by operating activities. 322,567 62,431 CASH FLOWS FROM INVESTING ACTIVITIES Capital expenditures................ (171,829) (126,514) Sale (purchase) of marketable securities......................... (10,915) 51,009 Initial cash proceeds from sale of discontinued operations, excluding tax benefits....................... 51,869 -- Proceeds from sale of property, plant and equipment................ 11,443 8,304 Other, net.......................... 2,430 (11,299) Cash utilized by investing activities. (117,002) (78,500) CASH FLOWS FROM FINANCING ACTIVITIES Increase (decrease) in note payable to affiliate....................... (30,000) 30,000 Stock options exercised............. 11,658 7,531 Cash dividends paid................. (32,103) (29,489) Increase (decrease) in short-term borrowings......................... (15,070) 5,583 Payments on long-term debt.......... (594) (16,539) Other, net.......................... (2,811) (7,330) Cash utilized by financing activities. (68,920) (10,244) Increase (decrease) in cash and cash equivalents......................... 136,645 (26,313) Cash and cash equivalents at beginning of period................. 214,844 195,346 Cash and cash equivalents at end of period.............................. $ 351,489 $ 169,033 See Accompanying Notes. -6- FLUOR CORPORATION NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS UNAUDITED (1) The condensed consolidated financial statements do not include footnotes and certain financial information normally presented annually under generally accepted accounting principles and, therefore, should be read in conjunction with the company's October 31, 1993 annual report on Form 10-K. Accounting measurements at interim dates inherently involve greater reliance on estimates than at year-end. The results of operations for the three and nine months ended July 31, 1994 are not necessarily indicative of results that can be expected for the full year. The condensed consolidated financial statements included herein are unaudited; however, they contain all adjustments (consisting of normal recurring accruals) which, in the opinion of the company, are necessary to present fairly its consolidated financial position at July 31, 1994 and the consolidated results of operations for the three and nine months ended July 31, 1994 and 1993 and cash flows for the nine months ended July 31, 1994 and 1993. (2) Earnings per share is based on the weighted average number of common and, when appropriate, common equivalent shares outstanding in each period. Common equivalent shares are included when the effect of the potential exercise of stock options is dilutive. (3) Inventories comprise the following: July 31, October 31, 1994 1993 ($ in thousands) Coal........................... $ 12,552 $ 15,375 Supplies and other............. 21,588 17,459 $ 34,140 $ 32,834 (4) Cash paid for interest was $9.2 million and $13.6 million for the nine month periods ended July 31, 1994 and 1993, respectively. Income tax payments, net of refunds, were $49.2 million and $69.4 million during the nine month periods ended July 31, 1994 and 1993, respectively. -7- (5) Net earnings for the nine months ended July 31, 1993 included $12.6 million related to the favorable completion of a federal income tax audit for the tax years 1984 through 1986. As a result of the conclusion of that audit in the second quarter of 1993, $12.6 million in income tax liabilities were no longer deemed necessary and were reversed. During the second quarter of 1993, A.T. Massey, the company's coal investment, recorded an after-tax charge to earnings of $9.2 million to provide for the settlement of disputed obligations with the pension funds of the United Mine Workers of America/Bituminous Coal Operators of America. (6) In November 1992, the company announced its decision to exit its Lead business. As a consequence, the company's Lead business segment was classified as a discontinued operation as of October 31, 1992 and adjusted to net realizable value. On April 7, 1994 the company completed the sale of its Lead business to an affiliate of a private investment company for consideration consisting of both cash and deferred payments. The aggregate of the amounts realized from the sale and operating results from November 1992 until the date of the sale were within previously established estimates used to determine net realizable value. As a consequence, the closing of the sale had no impact on the company's earnings beyond what was originally recognized in fiscal 1992. -8- FLUOR CORPORATION MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS The following discussion and analysis is provided to increase understanding of, and should be read in conjunction with, the condensed consolidated financial statements and accompanying notes. RESULTS OF OPERATIONS Revenues increased 6 percent and 8 percent for the three and nine month periods ended July 31, 1994, compared with the same periods of 1993. Net earnings for the three and nine months ended July 31, 1994 were $48.3 million and $140.0 million, respectively, compared with net earnings of $40.8 million and $118.5 million for the same periods of 1993. Net earnings for the nine months ended July 31, 1993 included an after-tax charge of $9.2 million established by A.T. Massey, the company's coal investment, related to settlement of disputed obligations with the pension funds of the United Mine Workers of America/Bituminous Coal Operators of America. Also included in 1993 net earnings was $12.6 million related to the favorable conclusion in the second quarter of 1993 of a federal income tax audit for the tax years 1984 through 1986. Excluding these two nonrecurring items, net earnings increased 22 percent for the nine months ended July 31, 1994, compared with the same period of 1993. ENGINEERING AND CONSTRUCTION Revenues for the Engineering and Construction segment increased 7 percent for both the three and nine month periods ended July 31, 1994 compared with the same periods of 1993, due primarily to an increase in work performed. Engineering and Construction operating profits increased 17 percent and 19 percent, for the three and nine month periods ended July 31, 1994, respectively, compared with the same periods of 1993 due primarily to increased margins, and the increased volume of work performed. Reported margins may fluctuate from time to time as a result of changes in the mix of engineering and design services and construction related services. New awards for the three and nine months ended July 31, 1994 increased 14 percent and 7 percent, respectively, compared with the same periods of 1993. Approximately 69 percent and 54 percent of new awards for the first nine months of 1994 and 1993, respectively, were from projects located outside the United States. -9- The following table sets forth backlog for each of the company's business sectors: July 31, October 31, July 31, ($ in millions) 1994 1993 1993 Hydrocarbon $ 6,283 $ 6,198 $ 5,712 Government 2,000 2,520 2,626 Process 3,225 2,441 2,978 Industrial 2,576 2,706 3,128 Power 823 889 963 Total $ 14,907 $ 14,754 $ 15,407 The ratio of international to total backlog was 50 percent, 39 percent and 39 percent at July 31, 1994, October 31, 1993 and July 31, 1993, respectively. COAL Revenues for the Coal segment increased 5 percent and 12 percent, respectively, for the three and nine month periods ended July 31, 1994 compared with the same periods of 1993, due primarily to increased sales volume of produced coal. Gross margins also increased in the three and nine month periods of 1994 compared with 1993 due primarily to increased sales volume of produced coal partially offset by increased costs including start-up at certain new mines. During the second quarter of 1993, a nonrecurring charge was recorded to provide for settlement of disputed obligations with the pension funds of the United Mine Workers of America/Bituminous Coal Operators of America. Excluding the nonrecurring charge, operating profit increased 33 percent for the nine months of 1994 compared with the same period of 1993. OTHER Corporate administrative and general expenses increased approximately $5.9 million and $8.6 million, respectively, for the three and nine months ended July 31, 1994 compared with the same periods in 1993 due primarily to higher stock price and performance driven compensation plans expense. -10- Net interest income for the three and nine month periods ended July 31, 1994 increased compared with the same periods of 1993 due to both an increase in interest income and a decrease in interest expense. Interest income increased due to higher average cash balances and interest rates whereas the lower interest expense was attributable to the pay down of short-term and long-term debt. Net earnings for the nine months ended July 31, 1993 benefited from the reversal of $12.6 million of income tax liabilities. That reversal was made in connection with the completion of a Federal income tax audit in the second quarter of 1993 for the years 1984 through 1986. The reduction in liabilities did not affect the company's cash flow. The effective tax rate for the nine month period ended July 31, 1994 was essentially unchanged compared with the same period of 1993, after excluding the 1993 favorable tax adjustment. In November 1992, the Financial Accounting Standards Board issued Statement of Financial Accounting Standards No. 112, "Employers' Accounting for Postemployment Benefits" (SFAS No. 112). The statement requires accrual of the estimated cost of benefits provided by the employer to former or inactive employees after employment but before retirement. Adoption of SFAS No. 112 is not required by the company until fiscal 1995. Although the precise method and impact of implementation is not known at this time, management believes the effect, based on the company's current benefit programs, will not be material. In May 1993, the Financial Accounting Standards Board issued Statement of Financial Accounting Standards No. 115, "Accounting for Certain Investments in Debt and Equity Securities" (SFAS No. 115). The statement addresses the accounting and reporting for investments in equity securities that have readily determinable fair values and for all investments in debt securities. Adoption of SFAS No. 115 is not required by the company until fiscal 1995. Based on the nature and composition of the company's current investment portfolios, management believes the impact of implementation will not be material. FINANCIAL POSITION AND LIQUIDITY The company expects to have adequate resources available from cash and short-term investments currently on hand, plus available revolving credit facilities, capital market sources, and its commercial paper program to provide for its financing needs in the foreseeable future. -11- On April 7, 1994 the company completed the sale of its Lead business to an affiliate of a private investment company for consideration consisting of both cash and deferred payments. For the nine months ended July 31, 1994, capital expenditures were $171.8 million including $122.8 million related primarily to mine development at A.T. Massey. Dividends paid in the nine months ended July 31, 1994 were $32.1 million ($.39 per share) compared with $29.5 million ($.36 per share) for the same period of 1993. The long-term debt to total capital ratio decreased to 4.8 percent at July 31, 1994 compared with 5.4 percent at October 31, 1993, due primarily to the increase in shareholders' equity from earnings, net of dividends. -12- FLUOR CORPORATION CONDENSED CONSOLIDATED CHANGES IN BACKLOG (Dollars in Millions) UNAUDITED For the Three Months Ended July 31, 1994 1993 Backlog - beginning of period....... $ 14,850.1 $ 15,340.6 New awards.......................... 2,287.4 1,999.1 Adjustments and cancellations, net.. (433.4) (269.4) Work performed...................... (1,796.8) (1,663.2) Backlog - end of period............. $ 14,907.3 $ 15,407.1 For the Nine Months Ended July 31, 1994 1993 Backlog - beginning of period....... $ 14,753.5 $ 14,706.0 New awards.......................... 6,793.9 6,352.4 Adjustments and cancellations, net.. (1,118.3) (524.6) Work performed...................... (5,521.8) (5,126.7) Backlog - end of period............. $ 14,907.3 $ 15,407.1 -13- FLUOR CORPORATION PART II - Other Information Item 6. Exhibits and Reports on Form 8-K. (a) Exhibits. None. (b) Reports on Form 8-K. None. -14- SIGNATURES Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned there unto duly authorized. FLUOR CORPORATION (Registrant) Date: September 13, 1994 /s/ J. Michal Conaway J. Michal Conaway, Vice President and Chief Financial Officer (Principal Accounting Officer) -15- -----END PRIVACY-ENHANCED MESSAGE-----