-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, WA0OLnEjADMgIEQZ5YNqOH6cdZo1BOZj9hxjlLN+e2qo/vzls03ORNo9xKdZC/e3 Ch06a1NNZFPvSKGm9q28YQ== 0000037748-96-000005.txt : 19960916 0000037748-96-000005.hdr.sgml : 19960916 ACCESSION NUMBER: 0000037748-96-000005 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 4 CONFORMED PERIOD OF REPORT: 19960731 FILED AS OF DATE: 19960913 SROS: CSX SROS: NYSE SROS: PSE FILER: COMPANY DATA: COMPANY CONFORMED NAME: FLUOR CORP/DE/ CENTRAL INDEX KEY: 0000037748 STANDARD INDUSTRIAL CLASSIFICATION: HEAVY CONSTRUCTION OTHER THAN BUILDING CONST - CONTRACTORS [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: 96629860 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 UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 10-Q (Mark One) (X) QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended July 31, 1996 OR ( ) TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from to Commission File Number: 1-7775 FLUOR CORPORATION ----------------------------------------------------------------- (Exact name of registrant as specified in its charter) Delaware 95-0740960 ----------------------------------------------------------------- (State or other jurisdiction of (I.R.S. Employer I.D. No.) incorporation or organization) 3353 Michelson Drive, Irvine, CA 92698 ----------------------------------------------------------------- (Address of principal executive offices) (714)975-2000 ----------------------------------------------------------------- (Registrant's telephone number, including area code) Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes (X) No ( ) As of August 31, 1996 there were 83,617,164 shares of common stock outstanding. FLUOR CORPORATION FORM 10-Q July 31, 1996 TABLE OF CONTENTS PAGE ----------------------------------------------------------------- Part I: Financial Information Condensed Consolidated Statement of Earnings for the Three Months Ended July 31, 1996 and 1995...... 2 Condensed Consolidated Statement of Earnings for the Nine Months Ended July 31, 1996 and 1995....... 3 Condensed Consolidated Balance Sheet at July 31, 1996 and October 31, 1995.......................... 4 Condensed Consolidated Statement of Cash Flows for the Nine Months Ended July 31, 1996 and 1995....... 6 Notes to Condensed Consolidated Financial Statements......................................... 7 Management's Discussion and Analysis of Financial Condition and Results of Operations................ 9 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, 1996 and 1995 UNAUDITED
In thousands, except per share amounts 1996 1995 ----------------------------------------------------------------- REVENUES.............................. $2,702,821 $2,436,831 COSTS AND EXPENSES Cost of revenues.................... 2,589,959 2,335,885 Corporate administrative and general expenses................... 9,956 12,793 Interest expense.................... 4,500 3,449 Interest income..................... (6,460) (9,875) ------------------------- Total Costs and Expenses.............. 2,597,955 2,342,252 ------------------------- EARNINGS BEFORE INCOME TAXES.......... 104,866 94,579 INCOME TAX EXPENSE.................... 36,789 34,427 ------------------------- NET EARNINGS.......................... $ 68,077 $ 60,152 ========================= NET EARNINGS PER SHARE................ $ 0.81 $ 0.72 ========================= DIVIDENDS PER COMMON SHARE............ $ 0.17 $ 0.15 ========================= SHARES USED TO CALCULATE EARNINGS PER SHARE............................... 84,558 83,542 =========================
See Accompanying Notes. -2- FLUOR CORPORATION CONDENSED CONSOLIDATED STATEMENT OF EARNINGS Nine Months Ended July 31, 1996 and 1995 UNAUDITED
In thousands, except per share amounts 1996 1995 ----------------------------------------------------------------- REVENUES.............................. $7,687,464 $6,725,770 COSTS AND EXPENSES Cost of revenues.................... 7,370,476 6,444,551 Corporate administrative and general expenses................... 34,553 34,850 Interest expense.................... 11,416 10,010 Interest income..................... (20,692) (24,328) ------------------------- Total Costs and Expenses.............. 7,395,753 6,465,083 ------------------------- EARNINGS BEFORE INCOME TAXES.......... 291,711 260,687 INCOME TAX EXPENSE.................... 102,486 94,890 ------------------------- NET EARNINGS.......................... $ 189,225 $ 165,797 ========================= NET EARNINGS PER SHARE................ $ 2.24 $ 1.99 ========================= DIVIDENDS PER COMMON SHARE............ $ 0.51 $ 0.45 ========================= SHARES USED TO CALCULATE EARNINGS PER SHARE............................... 84,543 83,253 =========================
See Accompanying Notes. -3- FLUOR CORPORATION CONDENSED CONSOLIDATED BALANCE SHEET July 31, 1996 and October 31, 1995 UNAUDITED
July 31, October 31, $ in thousands 1996 1995* ----------------------------------------------------------------- ASSETS Current Assets Cash and cash equivalents........... $ 228,603 $ 292,934 Marketable securities............... 113,736 137,758 Accounts and notes receivable....... 572,016 470,104 Contract work in progress........... 465,736 362,910 Deferred taxes...................... 46,572 55,088 Inventories and other current assets 104,556 92,877 ------------------------- Total current assets............... 1,531,219 1,411,671 ------------------------- Property, Plant and Equipment, net of accumulated depreciation, depletion and amortization of $787,462 and $630,573, respectively. 1,609,792 1,435,811 Goodwill, net of accumulated amortization of $16,774 and $11,778, respectively........................ 71,873 33,303 Investments........................... 101,364 88,488 Other................................. 284,170 259,633 ------------------------- $3,598,418 $3,228,906 =========================
See Accompanying Notes. * Amounts at October 31, 1995 have been derived from audited financial statements. -4- FLUOR CORPORATION CONDENSED CONSOLIDATED BALANCE SHEET July 31, 1996 and October 31, 1995 UNAUDITED
July 31, October 31, $ in thousands 1996 1995* ----------------------------------------------------------------- LIABILITIES AND SHAREHOLDERS' EQUITY Current Liabilities Accounts and notes payable.......... $ 386,666 $ 372,301 Commercial paper.................... 29,854 29,937 Advance billings on contracts....... 561,771 393,438 Accrued salaries, wages and benefit plan liabilities........... 240,474 269,812 Other accrued liabilities........... 159,440 148,782 Current portion of long-term debt... 24,790 24,375 ------------------------- Total current liabilities.......... 1,402,995 1,238,645 ------------------------- Long-term debt due after one year..... 3,336 2,873 Deferred taxes........................ 38,875 44,211 Other noncurrent liabilities.......... 553,772 512,363 Commitments and Contingencies Shareholders' Equity Capital stock Preferred - authorized 20,000,000 shares without par value; none issued Common - authorized 150,000,000 shares of $0.625 par value; issued and outstanding - 83,598,249 shares and 83,164,866 shares, respectively............. 52,249 51,978 Additional capital.................. 559,674 538,503 Retained earnings................... 1,012,940 866,305 Unamortized executive stock plan expense............................ (24,787) (26,865) Cumulative translation adjustments.. (636) 893 ------------------------- Total shareholders' equity......... 1,599,440 1,430,814 ------------------------- $3,598,418 $3,228,906 =========================
See Accompanying Notes. * Amounts at October 31, 1995 have been derived from audited financial statements. -5- FLUOR CORPORATION CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS Nine Months Ended July 31, 1996 and 1995 UNAUDITED
$ in thousands 1996 1995 ----------------------------------------------------------------- CASH FLOWS FROM OPERATING ACTIVITIES Net earnings........................ $ 189,225 $ 165,797 Adjustments to reconcile net earnings to cash provided by operating activities: Depreciation, depletion and amortization................... 139,929 106,177 Deferred taxes................... 11,564 8,056 Change in operating assets and liabilities.................... (21,288) (29,718) Other, net....................... (15,005) (29,231) ------------------------- Cash provided by operating activities. 304,425 221,081 ------------------------- CASH FLOWS FROM INVESTING ACTIVITIES Capital expenditures................ (289,404) (225,588) Acquisitions........................ (80,216) (5,342) Investments......................... (6,580) (11,032) Purchases of marketable securities.. (64,052) (84,919) Proceeds from sales and maturities of marketable securities........... 88,897 77,464 Proceeds from sale of property, plant and equipment................ 20,317 11,462 Other, net.......................... (9,775) 2,655 ------------------------- Cash utilized by investing activities. (340,813) (235,300) ------------------------- CASH FLOWS FROM FINANCING ACTIVITIES Cash dividends paid................. (42,590) (37,238) Payments on debt.................... (18,801) (35,604) Stock options exercised............. 15,311 6,808 Increase in short-term borrowings... 17,373 12,677 Other, net.......................... 764 (1,162) ------------------------- Cash utilized by financing activities. (27,943) (54,519) ------------------------- Decrease in cash and cash equivalents. (64,331) (68,738) Cash and cash equivalents at beginning of period................. 292,934 374,468 ------------------------- Cash and cash equivalents at end of period.............................. $ 228,603 $ 305,730 =========================
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, 1995 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, 1996 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, 1996 and its consolidated results of operations for the three and nine months ended July 31, 1996 and 1995 and cash flows for the nine months ended July 31, 1996 and 1995. Certain 1995 amounts have been reclassified to conform with the 1996 presentation. (2) Earnings per share is based on the weighted average number of common and, when appropriate, common equivalent shares outstanding in each period. Common equivalent shares are included when the effect of the potential exercise of stock options is dilutive. (3) Inventories comprise the following:
July 31, October 31, $ in thousands 1996 1995 ------------------------------------------------------------ Coal........................... $ 22,831 $ 28,874 Supplies and other............. 37,393 34,410 ----------------------- $ 60,224 $ 63,284 =======================
-7- (4) Cash paid for interest was $6.9 million and $5.1 million for the nine month periods ended July 31, 1996 and 1995, respectively. Income tax payments, net of refunds, were $82.2 million and $71.0 million during the nine month periods ended July 31, 1996 and 1995, respectively. (5) Effective November 1, 1995, the company adopted Statement of Financial Accounting Standards No. 121, "Accounting for the Impairment of Long-Lived Assets and for Long-Lived Assets to be Disposed Of" (SFAS No. 121). The adoption of SFAS No. 121 had no impact on the company's consolidated results of operations or financial position. -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 and the company's October 31, 1995 annual report on Form 10-K. RESULTS OF OPERATIONS Revenues increased 11 percent and 14 percent, respectively, for the three and nine month periods ended July 31, 1996 compared with the same periods of 1995. Net earnings for the three and nine months ended July 31, 1996 were $68.1 million and $189.2 million, respectively, compared with net earnings of $60.2 million and $165.8 million, respectively, for the same periods of 1995. The increases in net earnings are due primarily to higher earnings for both the Engineering and Construction and Coal segments. ENGINEERING AND CONSTRUCTION Revenues for the Engineering and Construction segment increased 11 percent and 15 percent, respectively, for the three and nine month periods ended July 31, 1996 compared with the same periods of 1995, due primarily to an increase in work performed. Engineering and Construction operating profits increased 9 percent and 10 percent, respectively, for the three and nine months ended July 31, 1996 compared with the same periods of 1995 due primarily to the increase in the volume of work performed which was partially offset by an increase in investment spending for expansion and strategic business development. These expenditures, which are expensed as they are incurred, reflect the company's pursuit of business opportunities across numerous global markets. Operating margins, which may fluctuate from time to time as a result of changes in the mix of engineering and design services and construction related services, continue to be affected by the increased investment spending. Although operating margins improved from those reported in the second quarter of 1996, they declined slightly for both the three and nine month periods ended July 31, 1996 compared with the same periods of 1995. -9- New awards for the three and nine month periods ended July 31, 1996 were $3.1 billion and $9.1 billion, respectively, compared with $2.6 billion and $7.6 billion for the same periods of 1995. Approximately 59 percent and 57 percent, respectively, of new awards for the three and nine months ended July 31, 1996 were for projects located outside the United States. New awards in the third quarter of 1996 were concentrated in the Process and Industrial groups and consisted of a mix of smaller to medium sized projects located primarily in the U.S., South America and Asia Pacific regions. The large size and uncertain timing of significant new awards can create variability in the company's awards pattern, consequently, future award trends are difficult to predict with certainty. In August 1996, the company was selected to manage the environmental cleanup of the Department of Energy's Hanford site, a former plutonium production facility located in southeastern Washington state. The initial five-year contract is valued at $5 billion with potential contract extensions totaling five years and $5 billion. This work is expected to be added to backlog on an annual basis as congressional authority to expend the funds is received. The initial authorized phase will be recognized as a new award in the fourth quarter of 1996. The following table sets forth backlog for each of the company's Engineering and Construction groups:
July 31, October 31, July 31, $ in millions 1996 1995 1995 ----------------------------------------------------------------- Process $ 6,125 $ 6,671 $ 6,861 Industrial 5,974 4,516 4,090 Power/Government 2,852 3,275 3,282 Diversified Services 648 263 317 -------------------------------------- Total $ 15,599 $ 14,725 $ 14,550 ======================================
Approximately 56 percent of backlog at July 31, 1996 relates to projects located outside of the United States compared with 55 percent at October 31, 1995 and 56 percent at July 31, 1995, consistent with the company's long-term goal of broad geographic diversity. Backlog is adjusted both upwards and downwards as required to reflect project cancellations, deferrals and revised project scope and cost. -10- COAL Revenues increased 13 percent and 12 percent, respectively, for the three and nine month periods ended July 31, 1996 compared with the same periods of 1995. These increases were due primarily to increased sales of both metallurgical and steam coal. Metallurgical coal revenues increased due primarily to the continued strong demand by steel producers and to Massey's increased market share. Steam coal sales continued to benefit from the severe winter in 1996 as electric utilities replenished their depleted inventory levels. Gross income increased for the three months ended July 31, 1996 compared with the same period of 1995 due primarily to the increased sales volume of both metallurgical and steam coal. Gross income increased for the nine months ended July 31, 1996 compared with the same period of 1995 due primarily to the increased sales volume of both metallurgical and steam coal combined with improved pricing and lower costs of metallurgical coal. Operating profit increased 14 percent and 18 percent, respectively, for the three and nine months ended July 31, 1996 compared with the same periods of 1995 due primarily to increased gross income. OTHER Corporate administrative and general expenses decreased $2.8 million for the three months ended July 31, 1996 and were level for the nine months ended July 31, 1996 compared with the same periods of 1995. The decrease for the three months ended July 31, 1996 compared with the same period of 1995 is due primarily to lower expenses for stock price driven compensation plans and lower corporate overhead, partially offset by higher expenses for performance driven compensation plans. Net interest income for the three and nine months ended July 31, 1996 decreased $4.5 million and $5.0 million, respectively, compared with the same periods of 1995 due primarily to lower interest earning assets in addition to higher short-term interest bearing liabilities. In October 1995, the Financial Accounting Standards Board issued Statement of Financial Accounting Standards No. 123, "Accounting for Stock-Based Compensation" (SFAS No. 123). SFAS No. 123 establishes financial accounting and reporting standards for stock-based compensation plans. Adoption of the new accounting standards prescribed by SFAS No. 123 is optional. The company does not expect to apply the new accounting standards in its consolidated financial statements and will continue to account for its plans under previous accounting standards, consequently, SFAS No. 123 will not affect the company's consolidated results of operations or financial position. However, in accordance with -11- the reporting provisions of SFAS No. 123, beginning in 1997 pro forma disclosures of net earnings per share will be made in the footnotes to the company's financial statements as if the SFAS No. 123 accounting standards had been adopted. In May 1996, the company consummated a merger between one of its subsidiaries, Fluor Daniel Environmental Services, Inc. (FDESI), and Groundwater Technology, Inc. (GTI) wherein the company acquired an approximate 55 percent interest in the newly named company, Fluor Daniel GTI. The company contributed $33.4 million in cash and ownership of FDESI to Fluor Daniel GTI. GTI shareholders received $60 million in cash and an approximate 45 percent ownership of Fluor Daniel GTI. In March 1996, American Equipment, Inc., the company's equipment rental and sales subsidiary acquired S&R Equipment Company, Inc. (S&R), a high-lift equipment dealer. S&R was acquired for a cash purchase price of $44.4 million, for which the company received $29.1 million of property, plant and equipment, $4.4 million of working capital and other assets. In addition, the company assumed $17.4 million of debt which was repaid by the company subsequent to the purchase. Goodwill of $28.3 million will be amortized over 15 years. These acquisitions have been accounted for under the purchase method of accounting and their results of operations have been included in the company's condensed consolidated financial statements from the respective acquisition dates. 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, a commercial paper program and banking arrangements to provide for its financing needs for the foreseeable future. Changes in operating assets and liabilities are affected by the mix, stage of completion and commercial terms of engineering and construction projects. The decrease in operating assets and liabilities in the first nine months of 1996 is due primarily to increased project receivables and contract work in progress resulting from increased project volume partially offset by increases in advanced billings on contracts. For the nine months ended July 31, 1996, capital expenditures were $289.4 million including $171.6 million related primarily to mine development for the Coal segment. Dividends paid in the nine months ended July 31, 1996 were $42.6 million ($.51 per share) compared with $37.2 million ($.45 per share) for the same period of 1995. -12- FLUOR CORPORATION CHANGES IN BACKLOG ($ in Millions) UNAUDITED
For the Three Months Ended July 31, 1996 1995 ----------------------------------------------------------------- Backlog - beginning of period....... $ 15,362.0 $ 14,404.2 New awards.......................... 3,107.5 2,611.9 Adjustments and cancellations, net.. (476.1) (266.5) Work performed...................... (2,394.2) (2,200.0) ------------------------- Backlog - end of period............. $ 15,599.2 $ 14,549.6 =========================
For the Nine Months Ended July 31, 1996 1995 ----------------------------------------------------------------- Backlog - beginning of period....... $ 14,724.9 $ 14,021.9 New awards.......................... 9,063.4 7,583.1 Adjustments and cancellations, net.. (1,314.5) (1,007.2) Work performed...................... (6,874.6) (6,048.2) ------------------------- Backlog - end of period............. $ 15,599.2 $ 14,549.6 =========================
-13- FLUOR CORPORATION PART II - Other Information Item 6. Exhibits and Reports on Form 8-K. (a) Exhibits. 10.1 1996 Executive Stock Plan. 10.2 Fluor Corporation Executive Incentive Compensation Plan (Amended and Restated Effective November 1, 1995). (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 thereunto duly authorized. FLUOR CORPORATION (Registrant) Date: September 13, 1996 /s/ J. Michal Conaway J. Michal Conaway, Vice President and Chief Financial Officer /s/ V.L. Prechtl V.L. Prechtl, Vice President and Controller -15- EX-10 2 1996 FLUOR EXECUTIVE STOCK PLAN ARTICLE I DEFINITIONS Sec. 1.1 DEFINITIONS As used herein, the following terms shall have the meanings hereinafter set forth unless the context clearly indicates to the contrary: (a) ''Award'' shall mean an award of Restricted Stock pursuant to the provisions of Article VI hereof. (b) ''Awardee'' shall mean an Eligible Employee to whom Restricted Stock has been awarded hereunder. (c) ''Board'' shall mean the Board of Directors of the Company. (d) ''Change of Control'' of the Company shall be deemed to have occurred if, (i) a third person, including a ''group'' as defined in Section 13(d)(3) of the Securities Exchange Act of 1934, acquires shares of the Company having twenty-five percent or more of the total number of votes that may be cast for the election of directors of the Company, or (ii) as the result of any cash tender or exchange offer, merger or other business combination, or any combination of the foregoing transactions (a ''Transaction''), the persons who were directors of the Company before the Transaction shall cease to constitute a majority of the Board of the Company or any successor to the Company. (e) ''Code'' shall mean the Internal Revenue Code of 1986, as amended. (f) ''Committee'' shall mean the Organization and Compensation Committee of the Board. (g) ''Company'' shall mean Fluor Corporation. (h) ''Eligible Employee'' shall mean an employee who is an officer of the Company or any Subsidiary or who is a member of the Executive Management Team of the Company and its Subsidiaries. (i) ''ERISA'' shall mean the Employee Retirement Income Security Act of 1974, as amended. (j) ''Executive Management Team'' shall mean those employees who have been determined to be eligible to participate in the Fluor Corporation and Subsidiaries Executive Incentive Compensation Program or in other similar management incentive compensation programs of any Subsidiary. (k) ''Fair Market Value'' shall mean the average of the highest price -1- and the lowest price per share at which the Stock is sold in the regular way on the New York Stock Exchange on the day an Option is granted hereunder or, in the absence of any reported sales on such day, the first preceding day on which there were such sales. (l) ''Incentive Stock Option'' shall mean an incentive stock option, as defined under Section 422 of the Code and the regulations thereunder, to purchase Stock. (m) ''Nonqualified Stock Option'' shall mean a stock option other than an Incentive Stock Option to purchase Stock. (n) ''Option'' shall mean an option to purchase Stock granted pursuant to the provisions of Article V hereof and refers to both Incentive Stock Options and Nonqualified Stock Options. (o) ''Optionee'' shall mean an Eligible Employee to whom an Option has been granted hereunder. (p) ''Plan'' shall mean the 1996 Fluor Executive Stock Plan, the current terms of which are set forth herein. (q) ''Prior Plans'' shall mean the 1971 Fluor Stock Option Plan, the 1977 Fluor Executive Stock Plan, the 1981 Fluor Executive Stock Plan, the 1982 Fluor Executive Stock Option Plan and the 1988 Fluor Executive Stock Plan. (r) ''Restricted Stock'' shall mean Stock that may be awarded to an Eligible Employee by the Committee pursuant to Article VI hereof, which is nontransferable and subject to a substantial risk of forfeiture until specific conditions are met. Conditions may be based on continuing employment or achievement of preestablished performance objectives. (s) ''Return on Average Shareholders' Equity'' shall mean, for any fiscal year, the percentage amount reported as ''Return on Average Shareholders Equity'' in the ''Highlights'' section of the Company's Annual Report to Stockholders for such fiscal year. (t) ''Restricted Stock Agreement'' shall mean the agreement between the Company and the Awardee with respect to Restricted Stock awarded hereunder. (u) ''Stock'' shall mean the Common Stock of the Company or, in the event that the outstanding shares of Stock are hereafter changed into or exchanged for shares of a different stock or securities of the Company or some other corporation, such other stock or securities. (v) ''Stock Option Agreement'' shall mean the agreement between the Company and the Optionee under which the Optionee may purchase Stock hereunder. (w) ''Stock Payment'' shall mean a payment in shares of Stock to replace all or any portion of the compensation (other than base salary) that would -2- otherwise become payable to any Eligible Employee of the Company. (x) ''Subsidiary'' shall mean any corporation, the majority of the outstanding capital stock of which is owned, directly or indirectly, by the Company or any partnership or joint venture in which either the Company or such a corporation is at least a twenty percent (20%) equity participant. (y) ''Ten Year Treasury Yield'' shall mean, for any fiscal period, the daily average percent per annum yield for U.S. Government Securities-10 year Treasury constant maturities, as published in the Federal Reserve statistical release or any successor publication. ARTICLE II GENERAL Sec. 2.1 NAME This Plan shall be known as the ''1996 Fluor Executive Stock Plan''. Sec. 2.2 PURPOSE The purpose of the Plan is to advance the interests of the Company and its stockholders by affording to Eligible Employees of the Company and its Subsidiaries an opportunity to acquire or increase their proprietary interest in the Company by the grant to such employees of Options or Awards under the terms set forth herein. By thus encouraging such employees to become owners of Company shares, the Company seeks to motivate, retain and attract those highly competent individuals upon whose judgment, initiative, leadership and continued efforts the success of the Company in large measure depends. Sec. 2.3 EFFECTIVE DATE The Plan shall become effective upon its approval by the holders of a majority of the shares of Stock of the Company represented at an annual or special meeting of the stockholders of the Company. Sec. 2.4. LIMITATIONS Subject to adjustment pursuant to the provisions of Section 10.1 hereof, the aggregate number of shares of Stock which may either be issued as Awards, subject to Options or issued pursuant to the exercise of Options shall not exceed the sum of (a) 4,000,000 plus (b) that number of shares represented by options, awards or rights under Prior Plans which expire or are otherwise terminated at any time after the original effective date of this Plan. Any such shares may be either authorized and unissued shares or shares issued and thereafter acquired by the Company. Sec. 2.5 OPTIONS AND AWARDS GRANTED UNDER PLAN Shares of Stock with respect to which an Option granted hereunder shall have been exercised, and shares of Stock received pursuant to a Restricted -3- Stock Agreement executed hereunder with respect to which the restrictions provided for in Section 6.3 hereof shall have lapsed, shall not again be available for Option or Award grant hereunder. If Options granted hereunder shall expire or terminate for any reason without being wholly exercised, or if Restricted Stock is acquired by the Company pursuant to the provisions of paragraph (c) of Section 6.3 hereof, new Options or Awards may be granted hereunder covering the number of shares to which such Option expiration or termination or Restricted Stock acquisition relates. ARTICLE III PARTICIPANTS Sec. 3.1 ELIGIBILITY Any Eligible Employee shall be eligible to participate in the Plan; provided, however, that no member of the Committee shall be eligible to participate while a member of the Committee. The Committee may grant Options or Awards to any Eligible Employee in accordance with such determinations as the Committee from time to time in its sole discretion shall make. ARTICLE IV ADMINISTRATION Sec. 4.1 DUTIES AND POWERS OF COMMITTEE The Plan shall be administered by the Committee. Subject to the express provisions of the Plan, the Committee shall have sole discretion and authority to determine from among Eligible Employees those to whom and the time or times at which Options or Awards may be granted, the number of shares of Stock to be subject to each Option or Award and the period for the exercise of such Option which need not be the same for each grant hereunder. Subject to the express provisions of the Plan, the Committee shall also have complete authority to interpret the Plan, to prescribe, amend and rescind rules and regulations relating to it, to determine the details and provisions of each Stock Option Agreement and Restricted Stock Agreement, and to make all other determinations necessary or advisable in the administration of the Plan. Sec. 4.2 MAJORITY RULE A majority of the members of the Committee shall constitute a quorum, and any action taken by a majority present at a meeting at which a quorum is present or any action taken without a meeting evidenced by a writing executed by a majority of the whole Committee shall constitute the action of the Committee. Sec. 4.3 COMPANY ASSISTANCE The Company shall supply full and timely information to the Committee on all matters relating to eligible employees, their employment, death, -4- retirement, disability or other termination of employment, and such other pertinent facts as the Committee may require. The Company shall furnish the Committee with such clerical and other assistance as is necessary in the performance of its duties. ARTICLE V OPTIONS Sec. 5.1 OPTION GRANT AND AGREEMENT Each Option granted hereunder shall be evidenced by minutes of a meeting or the written consent of the Committee and by a written Stock Option Agreement dated as of the date of grant and executed by the Company and the Optionee, which Agreement shall set forth such terms and conditions as may be determined by the Committee consistent with the Plan. In no event shall the total number of shares of Stock subject to Options granted hereunder to any Eligible Employee in any fiscal year exceed five percent (5%) of the total number of shares authorized to be issued under the Plan on the effective date of the Plan. Sec. 5.2 PARTICIPATION LIMITATION The Committee shall not grant an Incentive Stock Option to any employee for such number of shares of Stock that, immediately after the grant, the total number of shares of Stock owned or subject to Options exercisable by and/or Awards outstanding in the hands of such employee (or by such persons whose shares such employee is considered as owning pursuant to the provisions of the second succeeding sentence) exceed ten percent of the total combined voting power of all classes of stock of the Company. This restriction does not apply if, at the time such Incentive Stock Option is granted, the Incentive Stock Option purchase price is at least 110% of the Fair Market Value on the date of grant and the Incentive Stock Option by its terms is not exercisable after the expiration of five (5) years from the date of grant. For purposes of this Section 5.2, an employee shall be considered as owning the stock owned, directly or indirectly, by or for his brothers and sisters (whether by the whole or half blood), spouse, ancestors and lineal descendants; and the stock owned, directly or indirectly, by or for a corporation, partnership, estate or trust shall be considered as being owned proportionately by or for its shareholders, partners or beneficiaries. Sec. 5.3 OPTION PRICE The purchase price of Stock under each Option will be determined by the Committee but may not be less than the Fair Market Value on the date of grant. Sec. 5.4 OPTION PERIOD Each Option granted hereunder must be granted within ten years from the effective date of the Plan. The period for the exercise of each Option shall be determined by the Committee, but in no instance shall such period exceed -5- ten years from the date of grant of the Option. Sec. 5.5 OPTION EXERCISE (a) Options granted hereunder may not be exercised unless and until the Optionee shall have been or remained in the employ of the Company or its Subsidiaries for one year from and after the date such Option was granted, except as otherwise provided in Section 5.7 hereof. (b) Options may be exercised with respect to whole shares only, for such shares of Stock and within the period permitted for the exercise thereof as determined by the Committee, and shall be exercised by written notice of intent to exercise the Option with respect to a specified number of shares delivered to the Company at its principal office in the State of California, and payment in full to the Company at said office of the amount of the Option price for the number of shares of Stock with respect to which the Option is then being exercised. The purchase price may be paid by the assignment and delivery to the Company of shares of Stock or a combination of cash and shares of Stock equal in value to the exercise price. Any shares assigned and delivered to the Company in payment or partial payment of the purchase price will be valued at their Fair Market Value on the exercise date. (c) The Fair Market Value of the Stock at the date of grant for which any employee may exercise Incentive Stock Options in any calendar year under the Plan (or any other stock option plan of the Company adopted after December 31, 1986) may not exceed $100,000. Sec. 5.6 NONTRANSFERABILITY OF OPTION No Option shall be transferred by an Optionee otherwise than by a will or the laws of descent and distribution or pursuant to a qualified domestic relations order as defined in the Code or Title I of ERISA. During the lifetime of an Optionee, the Option shall be exercisable only by him. Sec. 5.7 EFFECT OF DEATH OR OTHER TERMINATION OF EMPLOYMENT (a) If, prior to a date one year from the date on which an Option shall have been granted, the Optionee's employment with the Company or its Subsidiaries shall be terminated by the Company or Subsidiary with or without cause, or by the act of the Optionee, the Optionee's right to exercise such Option shall terminate and all rights thereunder shall cease; provided, however, that if the Optionee shall die, retire or become permanently and totally disabled, as determined in accordance with applicable Company personnel policies, or if the Optionee's employment with the Company or its Subsidiaries shall be terminated within two years after a Change of Control of the Company and such termination occurs prior to a date one year from the date on which an Option shall have been granted, such Option shall become exercisable in full on the date of such death, retirement, disability or termination of employment. (b) If, on or after one year from the date on which an Option shall have been granted, an Optionee's employment with the Company or its Subsidiaries -6- shall be terminated for any reason other than death, retirement or permanent total disability, or within two years following a Change of Control of the Company, the Optionee shall have the right, during the period ending three months after such termination, to exercise such Option to the extent that it was exercisable at the date of such termination and shall not have been exercised, subject, however, to the provisions of Section 5.4 hereof. (c) Upon termination of an Optionee's employment with the Company or its Subsidiaries by reason of retirement or permanent total disability, as determined in accordance with applicable Company personnel policies, or within two years following a Change of Control of the Company, such Optionee shall have the right, during the period ending three years after such termination, to exercise his Option in full, without regard to any installment exercise provisions, to the extent that it shall not have been exercised, subject, however, to the provisions of Section 5.4 hereof. (d) If an Optionee shall die (i) while in the employ of the Company or its Subsidiaries, or (ii) within three months after termination of employment where such termination did not occur either by reason of retirement or permanent total disability or within two years following a Change of Control of the Company, or (iii) within three years after termination of employment where such termination occurred either by reason of retirement or permanent total disability or within two years following a Change of Control of the Company, the executor or administrator of the state of the decedent or the person or persons to whom an Option granted hereunder shall have been validly transferred by the executor or the administrator pursuant to a will or the laws of descent and distribution shall have the right, during the period ending three years after the date of the Optionee's death, to exercise the Optionee's Option (A) in full, without regard to any installment exercise provisions, to the extent that it shall not have been exercised, if the Optionee shall have died while in the employ of the Company or its Subsidiaries or within three years after termination of employment where such termination occurred either by reason of retirement or permanent total disability or within two years following a Change of Control of the Company, or (B), to the extent that it was exercisable at the date of the Optionee's death and shall not have been exercised, if the Optionee shall have died within three months after termination of employment where such termination did not occur by reason of either retirement or permanent total disability or within two years following a Change of Control of the Company, subject, however, to the provisions of Section 5.4 hereof. (e) No transfer of an Option by the Optionee by a will or by the laws of descent and distribution shall be effective to bind the Company unless the Company shall have been furnished with written notice thereof and an authenticated copy of the will and/or such other evidence as the Committee may deem necessary to establish the validity of the transfer and the acceptance by the transferee or transferees of the terms and conditions of such Option. (f) The foregoing notwithstanding, the Committee may elect, in its sole discretion, to make grants of Options which have provisions regarding the -7- effect of death or other termination of employment which are different than those set forth in paragraphs (a) through (d) of this Section 5.7, provided that such provisions do not materially increase the benefits that would otherwise accrue to an Optionee under paragraphs (a) through (d) of this Section 5.7. Sec. 5.8 RIGHTS AS STOCKHOLDER An Optionee or a transferee of an Option shall have no rights as a stockholder with respect to any shares subject to such Option prior to the purchase of such shares by exercise of such Option as provided herein. ARTICLE VI AWARDS Sec. 6.1 AWARD GRANT AND RESTRICTED STOCK AGREEMENT The Committee may grant Awards of Restricted Stock to Awardees. No Awards may be made during any fiscal year unless, for the preceding fiscal year, Return on Average Shareholders' Equity exceeded the Ten Year Treasury Yield by more than three percentage points. Each Award granted hereunder must be granted within ten years from the effective date of the Plan and shall be evidenced by minutes of a meeting or the written consent of the Committee. The Committee shall from time to time establish various Award grade levels which shall set forth the maximum number of shares which may be awarded annually to each Eligible Employee in each grade level. The Committee shall have the sole discretion and authority to make an Award to an Eligible Employee of less than the maximum number of shares applicable to his assigned grade level or to make no Award at all to any such Eligible Employee. In no event shall the total number of shares of Restricted Stock awarded to an Eligible Employee in any fiscal year exceed 15,000. The Awardee shall be entitled to receive the Stock subject to such Award only if the Company and the Awardee, within 30 days after the date of the Award, enter into a written Restricted Stock Agreement dated as of the date of the Award, which Agreement shall set forth such terms and conditions as may be determined by the Committee consistent with the Plan. Sec. 6.2 CONSIDERATION FOR ISSUANCE No shares of Restricted Stock shall be issued to an Awardee hereunder unless and until the Committee shall have determined that consideration has been received by the Company, in the form of labor performed for or services actually rendered to the Company by the Awardee, having a fair value of not less than the then fair market value of a like number of shares of Stock subject to all of the herein provided conditions and restrictions applicable to Restricted Stock, but in no event less than the par value of such shares. Sec. 6.3 RESTRICTIONS ON SALE OR OTHER TRANSFER Each share of Stock received pursuant to each Restricted Stock Agreement shall be subject to acquisition by Fluor Corporation, and may not be sold or -8- otherwise transferred except pursuant to the following provisions: (a) The shares of Stock represented by the Restricted Stock Agreement shall be held in book entry form with the Company's transfer agent until the restrictions lapse in accordance with the conditions established by the Committee pursuant to Section 6.4 hereof, or until the shares of stock are forfeited pursuant to paragraph (c) of this Section 6.3. Notwithstanding the foregoing, the Awardee may request that, prior to the lapse of the restrictions or forfeiture of the shares, certificates evidencing such shares be issued in his name and delivered to him, and each such certificate shall bear the following legend: ''The shares of Fluor Corporation common stock evidenced by this certificate are subject to acquisition by Fluor Corporation, and such shares may not be sold or otherwise transferred except pursuant to the provisions of the Restricted Stock Agreement by and between Fluor Corporation and the registered owner of such shares.'' (b) No such shares may be sold, transferred or otherwise alienated or hypothecated so long as such shares are subject to the restriction provided for in this Section 6.3. (c) Unless the Committee in its discretion determines otherwise, upon an Awardee's termination of employment for any reason, all of the Awardee's Restricted Stock remaining subject to restriction shall be acquired by the Company effective as of the date of such termination of employment. Upon the occurrence or non-occurrence of such other events as shall be determined by the Committee and specified in the Awardee's Restricted Stock Agreement relating to any such Restricted Stock, all of such Restricted Stock remaining subject to restriction shall be acquired by the Company upon the occurrence or non-occurrence of such event. Sec. 6.4 LAPSE OF RESTRICTIONS The restrictions imposed upon Restricted Stock under Section 6.3 above will lapse in accordance with such conditions as are determined by the Committee and set forth in the Restricted Stock Agreement. Sec. 6.5 RIGHTS AS STOCKHOLDER Subject to the provisions of Section 6.3 hereof, upon the issuance to the Awardee of Restricted Stock hereunder, the Awardee shall have all the rights of a stockholder with respect to such Stock, including the right to vote the shares and receive all dividends and other distributions paid or made with respect thereto. ARTICLE VII STOCK CERTIFICATES Sec. 7.1 STOCK CERTIFICATES -9- The Company shall not be required to issue or deliver any certificate for shares of Stock purchased upon the exercise of any Option granted hereunder or any portion thereof, or received as Restricted Stock pursuant to a Restricted Stock Agreement executed hereunder, prior to fulfillment of all of the following conditions: (a) the admission of such shares to listing on all stock exchanges on which the Stock is then listed; (b) the completion of any registration or other qualification of such shares under any federal or state law or under the rulings or regulations of the Securities and Exchange Commission or any other governmental regulatory body, which the Committee shall in its sole discretion deem necessary or advisable; (c) the obtaining of any approval or other clearance from any federal or state governmental agency which the Committee shall in its sole discretion determine to be necessary or advisable; and (d) the lapse of such reasonable period of time following the exercise of the Option or the execution of the Restricted Stock Agreement as the Committee from time to time may establish for reasons of administrative convenience. ARTICLE VIII STOCK PAYMENT Sec. 8.1 STOCK PAYMENT The Committee may approve payments of Stock to any Eligible Employee for all or any portion of the compensation (other than base salary) that would otherwise become payable to such Eligible Employee in cash. ARTICLE IX TERMINATION, AMENDMENT AND MODIFICATION OF PLAN Sec. 9.1 TERMINATION, AMENDMENT AND MODIFICATION OF PLAN The Board may at any time, upon recommendation of the Committee, terminate, and may at any time from time to time and in any respect amend or modify, the Plan, provided, however, that no such action of the Board without approval of the stockholders of the Company may: (a) increase the total number of shares of Stock subject to the Plan by more than 10%, except as contemplated in Section 10.1 hereof; (b) materially increase the benefits accruing to participants under the Plan; -10- (c) withdraw the administration of the Plan from the Committee; or (d) permit any person while a member of the Committee to receive an Option or Restricted Stock under the Plan; and provided further, that no termination, amendment or modification of the Plan shall in any manner affect any Stock Option Agreement or Restricted Stock Agreement theretofore executed pursuant to the Plan without the consent of such Optionee or Awardee. ARTICLE X MISCELLANEOUS Sec. 10.1 ADJUSTMENT PROVISIONS (a) Subject to Section 10.1(b) below, if the outstanding shares of Stock of the Company are increased, decreased, or exchanged for a different number or kind of shares or other securities, or if additional shares or new or different shares or other securities are distributed with respect to such shares of Stock or other securities, through merger, consolidation, sale of all or substantially all of the property of the Company, reorganization, recapitalization, reclassification, stock dividend, stock split, reverse stock split or other distribution with respect to such shares of Stock or other securities, an appropriate and proportionate adjustment may be made in (i) the maximum number and kind of shares provided in Section 2.4, (ii) the number and kind of shares or other securities subject to the outstanding Options and Awards, and (iii) the price for each share or other unit of any other securities subject to outstanding Options without change in the aggregate purchase price or value as to which such Options remain exercisable. (b) Adjustments under Section 10.1(a) will be made by the Committee, whose determination as to what adjustments will be made and the extent thereof will be final, binding, and conclusive. No fractional interests will be issued under the Plan resulting from any such adjustments. Sec. 10.2 CONTINUATION OF EMPLOYMENT Nothing in the Plan or in any instrument executed pursuant to the Plan will confer upon any Eligible Employee any right to continue in the employ of the Company or any Subsidiary or affect the right of the Company or any Subsidiary to terminate the employment of any Eligible Employee at any time with or without cause. Sec. 10.3 COMPLIANCE WITH GOVERNMENT REGULATIONS No shares of Stock will be issued hereunder unless and until all applicable requirements imposed by federal and state securities and other laws, rules, and regulations and by any regulatory agencies have jurisdiction and by any stock exchanges upon which the Stock may be listed have been fully met. As a condition precedent to the issuance of shares of Stock pursuant hereto, the Company may require the employee to take any reasonable action to comply with -11- such requirements. Sec. 10.4 PRIVILEGES OF STOCK OWNERSHIP No employee and no beneficiary or other person claiming under or through such employee will have any right, title, or interest in or to any shares of Stock allocated or reserved under the Plan or subject to any Option or Award except as to such shares of Stock, if any, that have been issued to such employee. Sec. 10.5 WITHHOLDING The Company may make such provisions as it deems appropriate to withhold any taxes the Company determines it is required to withhold in connection with any Option or Award. The Company may require the employee to satisfy any relevant tax requirements before authorizing any issuance of Stock to the employee. Such settlement may be made in cash or Stock. Sec. 10.6 NONTRANSFERABILITY An Option or Award may be exercised during the life of the employee solely by the employee or the employee's duly appointed guardian or personal representative. No Option or Award and no other right under the Plan, contingent or otherwise, will be assignable or subject to any encumbrance, pledge, or charge of any nature. Sec. 10.7 OTHER COMPENSATION PLANS The adoption of the Plan shall not affect any other stock option or incentive or other compensation plans in effect for the Company or any Subsidiary, nor shall the Plan preclude the Company from establishing any other forms of incentive or other compensation for employees of the Company or any Subsidiary. Sec. 10.8 PLAN BINDING ON SUCCESSORS The Plan shall be binding upon the successors and assigns of the Company. Sec. 10.9 SINGULAR, PLURAL; GENDER Whenever used herein, nouns in the singular shall include the plural, and the masculine pronoun shall include the feminine gender. Sec. 10.10 HEADINGS, ETC., NO PART OF PLAN Headings of Articles and Sections hereof are inserted for convenience and reference; they constitute no part of the Plan. -12- EX-10 3 FLUOR CORPORATION EXECUTIVE INCENTIVE COMPENSATION PLAN AMENDED AND RESTATED EFFECTIVE NOVEMBER 1, 1995 I. OBJECTIVE It is the policy of Fluor Corporation (''Fluor'') and its subsidiaries (collectively the ''Company'') to provide its officers and key employees with salary and incentive bonus award opportunities equal to or greater than the average cash payments established with respect to comparable positions within its industry. Management salaries are established and maintained under a formal Company program of salary administration. This plan is intended to provide true performance based incentive bonus awards for those officers and key employees of the Company who can directly and significantly influence its profits. II. ELIGIBILITY Those officers and key employees of the Company approved in writing by the Executive Compensation Committee of Fluor shall be participants in this Plan. III. INCENTIVE COMPENSATION FUND (the ''FUND'') The fund shall be established as provided herein with reference to the consolidated net earnings of the Company for a fiscal year period. However, the period of service of each participant for which individual Incentive Compensation awards are payable shall be the calendar year within which the applicable fiscal year ends. A. Prior to the end of each fiscal year: 1. The Chairman of the Board of Fluor (the ''Chairman'') shall establish an interim provisional Fund for such fiscal year in an amount not to exceed twenty percent of the amount by which (a) estimated consolidated net earnings of the Company for such fiscal year before deducting taxes and the fund, and excluding amounts connected with extraordinary, unusual or infrequently occurring events and transactions for such fiscal year, exceed (b) ten percent of the average estimated consolidated shareholders' equity of the Company and the Chairman shall notify the Senior Vice President and Chief Financial Officer of Fluor (the ''Chief Financial Officer'') of the amount of said interim provisional Fund. 2. The Chief Financial Officer shall make a test calculation to determine whether the estimated consolidated net earnings of the Company for such fiscal year after taxes and said interim provisional Fund are not less than a return on average estimated consolidated shareholders' equity of the Company for such fiscal year calculated on the basis of the average yield for such fiscal year of one-year United States Treasury Bills. 3. The Chief Financial Officer shall confirm to the Chairman that the interim provisional Fund will result in at least the aforesaid return on consolidated shareholders' equity or inform the Chairman of the least amount (the ''adjusted interim provisional Fund'') which will result in -1- the aforesaid return on consolidated shareholders' equity. Once the interim provisional fund or the adjusted interim provisional fund, as applicable, has been determined, then the final provisional Fund or the final adjusted Provisional Fund as applicable, shall be determined by subtracting from the interim amount, the amount of all expense accruals to be made during such year by the Company for cash-based incentive awards under the Company's Special Executive Incentive Plan, the 1988 Executive Stock Plan or any successor stock appreciation rights plans, and the Directors' Achievement Award Program. 4. The Chief Financial Officer shall cause the consolidated financial statement provision for the Fund for such fiscal year to be adjusted to an amount equal to the final provisional Fund, or adjusted final provisional Fund, as appropriate. B. After the close of each fiscal year: 1. The Chairman shall establish a preliminary final Fund for such fiscal year under the principles set forth above but on the basis of audited consolidated financial statement information for such fiscal year, and the Chairman shall notify the Chief Financial Officer of the amount of the preliminary final Fund. 2. The Chief Financial Officer shall make a test calculation under the principles set forth above but on the basis of audited consolidated financial statement information for such fiscal year. 3. The Chief Financial Officer shall notify the Chairman of the amount of the preliminary final Fund, adjusted as required by the test calculation. Upon approval of the Board of Directors of Fluor (the ''Board''), the preliminary final Fund as so determined shall become the final Fund for such fiscal year. IV. DETERMINATION OF AWARD AMOUNTS For Designated Executives (as defined below) the amount of each such executive's Incentive Compensation Award to be payable out of the Fund for each fiscal year, shall not exceed an amount determined by reference to objective tests based on (a) one or more of the following financial objectives: growth in earnings per share of the Company, growth in stockholder value relative to the two year moving average of the S&P 500 Index, growth in stockholder value relative to the two year moving average of the Dow Jones Heavy Construction Index, revenue growth, growth in earnings (before interest and taxes), improvement in the Company's credit rating and growth in contract backlog; and (b) one or more of the following non-financial objectives: strategic plan development and implementation, succession plan development and implementation, retention of executive talent, improvement in workforce diversity and improvement in safety records. Any of the foregoing may be measured either in absolute terms, as compared to another company or companies or as compared to a prior period or periods. Use of any other criterion will -2- require ratification by the shareholders of the Company if failure to obtain approval for the fiscal year would jeopardize the tax deductibility of future Incentive Compensation Awards. The performance objectives for the fiscal year and directly related payment schedules for each Designated Executive shall be established not later than 90 days after the beginning of such fiscal year by the Organization and Compensation Committee of Fluor (the ''Committee''). The Committee may, in its discretion, elect to award a Designated Executive less than the amount determined in accordance with the payment schedule. The maximum amount of Incentive Compensation Award to any Designated Executive for any fiscal year shall not exceed $2,000,000. This maximum amount may not be increased without stockholder approval if failure to obtain such approval could result in future Incentive Compensation Awards not being tax deductible to the Company. ''Designated Executives'' shall mean the Chairman and Chief Executive Officer of the Company and such other executive officers of the Company as may from time to time be so designated by the Committee. The determination of the portion of the Fund for each fiscal year applicable to Fluor and to each of its subsidiaries and the amount of Incentive Compensation award to each participant for the calendar year within which such fiscal year ends shall be reviewed and recommended by the Executive Compensation Committee of Fluor to: 1. The Organization and Compensation Committee of Fluor's Board with respect to executive officers of Fluor (other than the Designated Executives). 2. Fluor's Board with respect to all other participants in the Plan who are not executive officers of Fluor. Awards with respect to the executive officers of Fluor (other than the Designated Executives) are recommended to Fluor's Board by the Organization and Compensation Committee. Final approval of the amount of the Fund for each fiscal year and the amount of the award to each participant (other than the Designated Executives) shall be by Fluor's Board. V. DISTRIBUTION Subject to the deferral provisions of the Fluor Corporation and Subsidiaries Executive Deferred Compensation Program, the Incentive Compensation awards for each calendar year shall be paid either in cash to participants on or before the 31st day of January of the following calendar year or in stock units granted under the terms of the 1982 Fluor Shadow Stock Plan, all as determined by resolution of the Board. -3- EX-27 4
5 THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE Condensed Consolidated Balance Sheet at July 31, 1996 and the Condensed Consolidated Statement of Earnings for the nine months ended July 31, 1996 AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS. 1000 9-MOS OCT-31-1996 JUL-31-1996 228,603 113,736 572,016 0 60,224 1,531,219 2,397,254 787,462 3,598,418 1,402,995 3,336 0 0 52,249 1,547,191 3,598,418 0 7,687,464 0 7,370,476 0 0 11,416 291,711 102,486 189,225 0 0 0 189,225 2.24 2.24
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