-----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, L7gOCLokkkAWLx0dVsKJjMDqEhRZXHw9VIkbbhzGkbSPHaVNG6H2xrbePlW1wwQn J28gSN2S4Vq7aYM91/qAmg== 0000892569-97-001641.txt : 19970617 0000892569-97-001641.hdr.sgml : 19970617 ACCESSION NUMBER: 0000892569-97-001641 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 4 CONFORMED PERIOD OF REPORT: 19970430 FILED AS OF DATE: 19970616 SROS: NYSE 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: 97624818 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 FORM 10-Q FOR PERIOD ENDED APRIL 30, 1997 1 UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 10-Q (Mark One) [X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended April 30, 1997 OR [ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from ____________to______________ Commission File Number: 1-7775 FLUOR CORPORATION - -------------------------------------------------------------------------------- (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 May 31, 1997 there were 83,917,984 shares of common stock outstanding. 2 FLUOR CORPORATION FORM 10-Q April 30, 1997
TABLE OF CONTENTS PAGE - ------------------------------------------------------------------------------------------------------ PART I: FINANCIAL INFORMATION Condensed Consolidated Statement of Operations for the Three Months Ended April 30, 1997 and 1996.................................................... 2 Condensed Consolidated Statement of Operations for the Six Months Ended April 30, 1997 and 1996.................................................... 3 Condensed Consolidated Balance Sheet at April 30, 1997 and October 31, 1996................................................................. 4 Condensed Consolidated Statement of Cash Flows for the Six Months Ended April 30, 1997 and 1996............................................. 6 Notes to Condensed Consolidated Financial Statements............................. 7 Management's Discussion and Analysis of Financial Condition and Results of Operations............................................................ 9 Changes in Backlog............................................................... 15 PART II: OTHER INFORMATION................................................................ 16 SIGNATURES................................................................................... 18
3 Part I: Financial Information FLUOR CORPORATION CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS Three Months Ended April 30, 1997 and 1996 UNAUDITED
In thousands, except per share amounts 1997 1996 - -------------------------------------------------------------------------------------- REVENUES $ 3,185,833 $ 2,582,229 COSTS AND EXPENSES Cost of revenues 3,259,669 2,477,175 Corporate administrative and general expenses 3,197 11,334 Interest expense 6,982 3,475 Interest income (5,608) (6,837) ----------------------------- Total Costs and Expenses 3,264,240 2,485,147 ----------------------------- (LOSS) EARNINGS BEFORE INCOME TAXES (78,407) 97,082 INCOME TAX BENEFIT (EXPENSE) 8,273 (33,382) ----------------------------- NET (LOSS) EARNINGS $ (70,134) $ 63,700 ============================= NET (LOSS) EARNINGS PER SHARE $ (.83) $ .75 ============================= DIVIDENDS PER COMMON SHARE $ .19 $ .17 ============================= SHARES USED TO CALCULATE (LOSS) EARNINGS PER SHARE 84,038 84,664 =============================
See Accompanying Notes. 2 4 FLUOR CORPORATION CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS Six Months Ended April 30, 1997 and 1996 UNAUDITED
In thousands, except per share amounts 1997 1996 - -------------------------------------------------------------------------------------- REVENUES $ 6,619,894 $ 4,984,643 COSTS AND EXPENSES Cost of revenues 6,586,956 4,780,517 Corporate administrative and general expenses 14,067 24,597 Interest expense 12,524 6,916 Interest income (10,871) (14,232) ----------------------------- Total Costs and Expenses 6,602,676 4,797,798 ----------------------------- EARNINGS BEFORE INCOME TAXES 17,218 186,845 INCOME TAX EXPENSE 25,317 65,697 ----------------------------- NET (LOSS) EARNINGS $ (8,099) $ 121,148 ============================= NET (LOSS) EARNINGS PER SHARE $ (.10) $ 1.43 ============================= DIVIDENDS PER COMMON SHARE $ .38 $ .34 ============================= SHARES USED TO CALCULATE (LOSS) EARNINGS PER SHARE 83,962 84,536 =============================
See Accompanying Notes. 3 5 FLUOR CORPORATION CONDENSED CONSOLIDATED BALANCE SHEET April 30, 1997 and October 31, 1996 UNAUDITED
April 30, October 31, $ in thousands 1997 1996* - ---------------------------------------------------------------------------------------- ASSETS Current Assets Cash and cash equivalents $ 233,996 $ 246,964 Marketable securities 39,059 69,378 Accounts and notes receivable 835,618 742,547 Contract work in progress 567,873 561,490 Deferred taxes 50,615 50,157 Inventory and other current assets 186,992 126,287 -------------------------- Total current assets 1,914,153 1,796,823 -------------------------- Property, Plant and Equipment (net of accumulated depreciation, depletion and amortization of $903,610 and $821,212, respectively) 1,804,977 1,677,662 Investments and goodwill, net 206,358 192,879 Other 310,209 284,362 -------------------------- $4,235,697 $3,951,726 ==========================
(Continued On Next Page) * Amounts at October 31, 1996 have been derived from audited financial statements. 4 6 FLUOR CORPORATION CONDENSED CONSOLIDATED BALANCE SHEET April 30, 1997 and October 31, 1996 UNAUDITED
April 30, October 31, $ in thousands 1997 1996* - --------------------------------------------------------------------------------------------------- LIABILITIES AND SHAREHOLDERS' EQUITY Current Liabilities Accounts and notes payable $ 613,672 $ 704,186 Commercial paper 899 29,916 Advance billings on contracts 538,741 445,807 Accrued salaries, wages and benefit plans 321,319 290,426 Other accrued liabilities 199,133 175,026 Current portion of long-term debt 2,691 207 ----------------------------- Total current liabilities 1,676,455 1,645,568 ----------------------------- Long-term debt 300,464 2,967 Deferred taxes 54,772 42,632 Other noncurrent liabilities 572,122 590,833 Commitments and Contingencies Shareholders' Equity Capital stock Preferred - authorized 20,000,000 shares without par value; none issued Common - authorized 150,000,000 shares of $0.625 par value; issued and outstanding - 83,914,134 shares and 83,791,197 shares, respectively 52,446 52,369 Additional capital 578,288 573,037 Retained earnings 1,037,565 1,077,559 Unamortized executive stock plan expense (31,054) (32,538) Cumulative translation adjustments (5,361) (701) ----------------------------- Total shareholders' equity 1,631,884 1,669,726 ----------------------------- $ 4,235,697 $ 3,951,726 =============================
See Accompanying Notes. *Amounts at October 31, 1996 have been derived from audited financial statements. 5 7 FLUOR CORPORATION CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS Six Months Ended April 30, 1997 and 1996 UNAUDITED
$ in thousands 1997 1996 - -------------------------------------------------------------------------------------------- CASH FLOWS FROM OPERATING ACTIVITIES Net (loss) earnings $ (8,099) $ 121,148 Adjustments to reconcile net earnings to cash provided by operating activities: Depreciation, depletion and amortization 117,643 88,644 Deferred taxes 17,117 12,801 Change in operating assets and liabilities (63,206) 27,519 Other, net (15,879) (18,281) ------------------------- Cash provided by operating activities 47,576 231,831 ------------------------- CASH FLOWS FROM INVESTING ACTIVITIES Capital expenditures (257,656) (206,491) E & C businesses acquired (32,989) (50,468) Proceeds from sales/maturities of marketable securities 30,319 55,395 Purchase of marketable securities -- (55,541) Proceeds from sale of property, plant and equipment 15,598 13,425 Investments, net (7,903) (13,313) Trust fund contribution (22,593) -- Other, net 7,578 (2,595) ------------------------- Cash utilized by investing activities (267,646) (259,588) ------------------------- CASH FLOWS FROM FINANCING ACTIVITIES Proceeds from issuance of long-term debt 300,098 -- (Decrease) increase in short-term borrowings (61,591) 9,613 Payments on long-term debt -- (16,543) Cash dividends paid (31,895) (28,382) Common stock repurchased (15,433) -- Stock options exercised 14,628 15,731 Other, net 1,295 (278) ------------------------- Cash provided (utilized) by financing activities 207,102 (19,859) ------------------------- Decrease in cash and cash equivalents (12,968) (47,616) Cash and cash equivalents at beginning of period 246,964 292,934 ------------------------- Cash and cash equivalents at end of period $ 233,996 $ 245,318 =========================
See Accompanying Notes. 6 8 FLUOR CORPORATION NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS UNAUDITED (1) The condensed consolidated financial statements do not include footnotes and certain financial information normally presented annually under generally accepted accounting principles and, therefore, should be read in conjunction with the company's October 31, 1996 annual report on Form 10-K. Accounting measurements at interim dates inherently involve greater reliance on estimates than at year-end. The results of operations for the three and six months ended April 30, 1997 are not necessarily indicative of results that can be expected for the full year. The condensed consolidated financial statements included herein are unaudited; however, they contain all adjustments (consisting of normal recurring accruals) which, in the opinion of the company, are necessary to present fairly its consolidated financial position at April 30, 1997 and its consolidated results of operations and cash flows for the three and six months ended April 30, 1997 and 1996. As more fully described in Management's Discussion and Analysis of Financial Condition and Results of Operations ("MD&A"), the company recorded provisions totaling $118.2 million during the second quarter of 1997. These included provisions for estimated losses on certain contracts and adjustments to project-related investments and accounts receivable. Certain 1996 amounts have been reclassified to conform with the 1997 presentation. (2) Earnings per share is based on the weighted average number of common and, when appropriate, common equivalent, shares outstanding in each period. Common equivalent shares are included when the effect of the potential exercise of stock options is dilutive. (3) Inventories comprise the following:
April 30, October 31, $ in thousands 1997 1996 ------------------------------------------------------------------------ Coal $40,237 $28,809 Supplies and other 54,448 45,118 -------------------- $94,685 $73,927 ====================
(4) Cash paid for interest was $2.8 million and $3.8 million for the six month periods ended April 30, 1997 and 1996, respectively. Income tax payments, net of refunds, were $54.3 million and $53.3 million during the six month periods ended April 30, 1997 and 1996, respectively. 7 9 (5) During the three month period ended April 30, 1997, the company recorded a $19.9 million charge related to the implementation of certain cost reduction initiatives. The charge provides for personnel and facility related costs. See MD&A for further discussion. 8 10 FLUOR CORPORATION MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS The following discussion and analysis is provided to increase understanding of, and should be read in conjunction with, the condensed consolidated financial statements and accompanying notes and the company's October 31, 1996 annual report on Form 10-K. FORWARD-LOOKING INFORMATION Any of the comments in this Form 10-Q that refer to the company's estimated or future results, including its estimates of the cost savings from its previously announced cost reduction program and its statements concerning the adequacy of its provisions for estimated future losses on projects or investments, are forward-looking and reflect the company's current analysis of existing trends and information. Actual results may differ materially from current expectations or projections based on a number of factors affecting the company's businesses. These factors include, in the case of the cost savings estimates, the ability to achieve estimated staff reductions while maintaining workflow in the functional areas affected and to sublease vacated facilities within anticipated time frames at anticipated sublease rent levels. Other risk factors affecting the company's estimated or future results include, but are not limited to, cost overruns on fixed, maximum or unit-priced contracts, contract performance risk, the uncertain timing of awards and contracts, credit risk, risks associated with government funding of contracts, market conditions impacting realization of investments, market conditions in the domestic and international coal market, and the state of the economic and political conditions worldwide. These forward-looking statements represent the company's judgment only as of the date of this Form 10-Q. As a result, the reader is cautioned not to rely on these forward-looking statements. The company disclaims any intent or obligation to update these forward-looking statements. Additional information concerning these and other factors can be found in press releases as well as the Company's public periodic filings with the Securities and Exchange Commission, including the discussion under the heading "Certain Factors and Trends Affecting Fluor and Its Businesses--Forward-Looking Statements" in the company's Form 8-K filed May 6, 1997, which is hereby incorporated by reference and attached hereto as Exhibit 99.1. RESULTS OF OPERATIONS Revenues increased 23 percent and 33 percent, respectively, for the three and six month periods ended April 30, 1997 compared with the same periods of 1996. For the three and six month periods ended April 30, 1997, the company reported net losses of $70.1 million and $8.1 million, respectively, compared with net earnings of $63.7 million and $121.1 million, respectively, for the comparable periods in 1996. Results for the three and six month periods ended April 30, 1997 were favorably impacted by lower corporate administrative and general expenses. The company's Engineering and Construction segment reported operating losses of $110.3 million and $36.3 million, respectively, for the three and six months periods ended April 30, 1997. 9 11 ENGINEERING AND CONSTRUCTION Revenues for the Engineering and Construction segment increased 25 percent and 35 percent, respectively, for the three and six month periods ended April 30, 1997 compared with the same periods of 1996, due primarily to an increase in the volume of work performed. The increase in work performed is primarily a result of the increase in new awards in recent periods. Despite the growth in revenues, the segment reported operating losses of $110.3 million and $36.3 million, respectively, for the three and six month periods ended April 30, 1997. The comparable periods in 1996 had operating profits of $74.0 million and $147.0 million, respectively. Operating margins for the three and six month periods ended April 30, 1997 were adversely impacted by a variety of factors, including lower incentive fees earned during the quarter, delays in the full release of certain projects, a reduction in the rates billed for United States Government work and competitive pricing within certain operating companies. In addition, provisions of $91.4 million for estimated losses on certain contracts were recognized in the second quarter of 1997. Approximately 75 percent of the contract provisions pertain to cost overruns on one fixed price project for the construction of a power plant located outside the United States. As discussed below, a provision on this project had been established in the first quarter of 1997. In Management's Discussion and Analysis of Financial Condition and Results of Operations in the Form 10-Q for the first quarter, the company indicated that there were ongoing uncertainties associated with this project and stated that evaluation of cost implications and recoupment opportunities would continue in the second quarter. There were substantial unexpected difficulties encountered on this project including significant ongoing design changes, long delays in approval of drawings and vendors and resulting low productivity in the field. By the end of the second quarter, these difficulties were substantially resolved as to the first phase of the project and rendered more predictable as to the second phase of the project. Accordingly, the company recorded an additional provision to recognize the estimated total amount of the loss under the contract. In addition, other projects were identified to be loss contracts in the second quarter and, accordingly, loss provisions were recorded. None of these provisions for additional projects individually exceeded $5 million. 10 12 Additionally, during the second quarter of 1997, the company recorded $26.8 million in provisions for the impairment, abandonment or sale of certain project related investments and joint ventures, and doubtful accounts receivable, none of which individually exceeded $5 million. These included the anticipated sale of the company's interest in a joint venture within the pulp and paper industry, a write down of an equity investment obtained in exchange for services rendered to an environmental technology company and certain other project joint ventures where it was determined in the second quarter that the Company's investment is not expected to be realized due to poor market conditions or cancellation of the project concerned. Second quarter 1997 results also include a $19.9 million charge related to implementation of certain cost reduction initiatives. This charge consists of personnel related and lease costs for excess facilities. To date, the company has initiated action to downsize, consolidate or close 17 of its more than 80 offices and has consolidated industry operating companies from 24 to 17. Additional charges may be taken later in the year as additional actions are initiated. Upon full implementation of the cost reduction initiatives, the company believes that annualized savings of $100 million can be achieved. The company anticipates that the cash flow impact of the costs to implement these savings initiatives will not have a material impact on current or future periods. The six months ended April 30, 1997 includes first quarter contract related provisions totaling $21.0 million for previously reported cost overruns on two fixed price power projects. As discussed above, an additional provision on one of the fixed price power projects located outside the United States was recognized in the second quarter of 1997. The loss in the first quarter on this project reflected additional costs then identified to be incurred on the first phase of the project arising primarily from bad weather, lack of timely site access, unexpected design changes and low labor productivity. The loss on the other project, which is located in the United States and was due primarily to startup problems, craft employee turnover and operation of the plant control system, is not expected to exceed the provision recorded in the first quarter. The company also recognized in the first quarter a credit totaling $25.0 million related to a previously reported adjustment to certain actuarially determined insurance accruals. The insurance accrual adjustment was due primarily to improvement in loss experience resulting from the company's safety program, resulting in an excess accrual position. The company believes that the accrued liability at both January 31, 1997 and April 30, 1997 represents the best estimate of its insurance liability. New awards for the three and six months ended April 30, 1997 were $3.2 billion and $6.8 billion, respectively, compared with $3.0 billion and $6.0 billion for the same periods of 1996. Approximately 75 percent and 59 percent, respectively, of new awards for the three and six months ended April 30, 1997 were for projects located outside the United States. New awards in the Process Group for the second quarter of 1997 were $2.6 billion and included a $1.9 billion award for the engineering, procurement and construction management of the Yanpet project, a petrochemical complex to be constructed in Saudi Arabia. The remainder of other new awards in the second quarter of 1997 consisted of smaller sized projects located primarily in the United States. New awards in the Industrial Group for the second quarter of 1996 were $1.8 billion and included a $558 million mining project located in Indonesia. 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. 11 13 The following table sets forth backlog for each of the company's Engineering and Construction groups:
April 30, October 31, April 30, $ in millions 1997 1996 1996 - ----------------------------------------------------------- Process $ 6,812 $ 4,903 $ 6,296 Industrial 5,706 6,496 5,318 Power/Government 2,949 3,621 3,054 Diversified Services 670 737 694 --------------------------------- Total backlog $16,137 $15,757 $15,362 ================================= U.S $ 6,400 $ 7,326 $ 6,576 Outside U.S. 9,737 8,431 8,786 --------------------------------- Total backlog $16,137 $15,757 $15,362 =================================
The increase in the Process Group's backlog at April 30, 1997 compared with October 31, 1996 was due primarily to the Yanpet Project. The reduction in backlog since October 31, 1996 in the Industrial Group reflects lower new awards in the first six months of 1997 compared with the last six months of 1996, which included the $1 billion Batu Hijau Project. Backlog in the Power/Government Group declined from October 31, 1996 compared with April 30, 1997 due primarily to the work performed on the Hanford environmental cleanup project and the Paiton power project. Backlog is adjusted both upward and downward as required to reflect project cancellations, deferrals and revised project scope and cost. These adjustments were not significant for the three and six months ended April 30, 1997 and 1996, respectively. COAL Revenues increased 9 percent and 13 percent, respectively, for the three and six month periods ended April 30, 1997 compared with the same periods of 1996. These increases were due primarily to increased sales volume of both metallurgical and steam coal, partially offset by lower steam coal prices. The increase in metallurgical coal revenues reflects an increased market share of sales to steel producers. Steam coal revenues increased due primarily to higher demand from electric utility customers. Gross profit and operating profit increased for the three and six months ended April 30, 1997 compared with the same periods of 1996 due primarily to the increased sales volume of both steam and metallurgical coal and lower costs of both steam and metallurgical coal. 12 14 OTHER Net interest for the three and six months ended April 30, 1997 decreased compared with the same periods of 1996 due primarily to lower interest earning assets in addition to higher interest bearing liabilities outstanding during the periods. Corporate administrative and general expenses decreased $8.1 million and $10.5 million, respectively, for the three and six month periods ended April 30, 1997 compared with the same periods of 1996. The reduction in expense is due primarily to adjustments made to stock-related and performance-based compensation plans. The effective tax rates for the three and six month periods ended April 30, 1997 were materially impacted by foreign based project and restructuring losses which are not expected to receive tax benefit. If these losses are excluded for tax rate determination purposes, there is no significant difference between the effective tax rate and the statutory rate for the three and six month periods ended April 30, 1997. In February 1997, the Financial Accounting Standards Board issued Statement of Financial Accounting Standards No. 128, "Earnings Per Share" (SFAS No. 128). SFAS No. 128 redefines the standards for computing earnings per share and is effective for the company's fiscal year 1998. The company believes adoption of the new standards will not have a material impact on future earnings per share calculations. FINANCIAL POSITION AND LIQUIDITY The company's financial position remains strong with cash, cash equivalents and marketable securities of $273.1 million at April 30, 1997 and a long-term debt to total capital ratio of 16 percent. The company expects to have adequate resources available from operating cash flows, cash and short-term investments, revolving credit and other banking facilities, capital market sources and commercial paper to provide for its capital needs for the foreseeable future. Operating activities generated $47.6 million in cash during the six month period ended April 30, 1997, compared with $231.8 million during the same period in 1996. The decrease in cash generated from operating activities is due primarily to a decrease in operating assets and liabilities as well as the company's lower operating results. Operating working capital during 1996 was favorably impacted by a large customer advance. The change in operating assets and liabilities from period to period is affected by the mix, stage of completion, and commercial terms of engineering and construction projects. During December 1996, the company filed a shelf registration statement with the Securities and Exchange Commission for the sale of up to $400 million of debt securities. In March 1997, $300 million of 6.95 percent notes due March 1, 2007 were issued under this filing. Proceeds were used primarily to reduce outstanding commercial paper issued to fund operating working capital, capital 13 15 expenditures and the repurchase of company shares. For the six months ended April 30, 1997, capital expenditures were $257.7 million, including $156.9 million related to Massey Coal. Dividends paid in the six months ended April 30, 1997 were $31.9 million ($.38 per share) compared with $28.4 million ($.34 per share) for the same period of 1996. 14 16 FLUOR CORPORATION CHANGES IN BACKLOG Three and Six Months Ended April 30, 1997 and 1996 ($ in millions) UNAUDITED
For the Three Months Ended April 30, 1997 1996 - ------------------------------------------------------------------- Backlog - beginning of period $ 15,976.5 $ 15,108.2 New awards 3,183.8 2,967.5 Adjustments and cancellations, net (295.7) (403.9) Work performed (2,728.1) (2,309.8) --------------------------- Backlog - end of period $ 16,136.5 $ 15,362.0 ===========================
For the Six Months Ended April 30, 1997 1996 - ------------------------------------------------------------------- Backlog - beginning of period $ 15,757.4 $ 14,724.9 New awards 6,774.4 5,956.0 Adjustments and cancellations, net (538.9) (838.5) Work performed (5,856.4) (4,480.4) --------------------------- Backlog - end of period $ 16,136.5 $ 15,362.0 ===========================
15 17 PART II : Other Information Item 4. Submission of Matters to a Vote of Security Holders. (a) Date of Meeting. The annual meeting of stockholders of Fluor Corporation was held on March 11, 1997 at the Fluor Daniel offices, Sugar Land, Texas. (b) Election of Directors - Voting Results Directors elected - David P. Gardner 65,499,214 FOR 1,081,493 VOTED TO WITHHOLD AUTHORITY Thomas L. Gossage 64,923,844 FOR 1,656,863 VOTED TO WITHHOLD AUTHORITY William R. Grant 65,432,597 FOR 1,148,110 VOTED TO WITHHOLD AUTHORITY Vilma S. Martinez 65,445,982 FOR 1,134,725 VOTED TO WITHHOLD AUTHORITY Other directors continuing in office - Don L. Blankenship Carroll A. Campbell, Jr. Peter J. Fluor Bobby R. Inman Robert V. Lindsay Leslie G. McCraw Buck Mickel Martha R. Seger 16 18 (c) Matters Voted Upon. Ratification of the appointment of Ernst & Young LLP as auditors for the fiscal year ending October 31, 1997: 66,252,974 FOR 150,616 AGAINST 177,117 ABSTAIN -0- BROKER NON-VOTE Approval of the 1997 Fluor Restricted Stock Plan for non-employee directors: 62,076,541 FOR 3,848,754 AGAINST 655,412 ABSTAIN -0- BROKER NON-VOTE Approval of stockholder proposal relating to Shareholder Rights Plan: 34,520,176 FOR 22,238,448 AGAINST 1,331,932 ABSTAIN 8,490,151 BROKER NON-VOTE (d) Terms of settlement between registrant and any other participant. None. Item 6. Exhibits and Reports on Form 8-K. (a) Exhibits. 10.1 Fluor Corporation Restricted Stock Plan for Non-Employee Directors. 27 Financial Data Schedule. 99.1 Current Report on Form 8-K filed May 6, 1997. (b) Reports on Form 8-K. None. 17 19 SIGNATURES Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized. FLUOR CORPORATION ----------------------------------------- (Registrant) Date: June 16, 1997 /s/ J. Michal Conaway ------------- ----------------------------------------- J. Michal Conaway, Senior Vice President and Chief Financial Officer /s/ V.L. Prechtl ----------------------------------------- V. L. Prechtl, Vice President and Controller 18 EX-10.1 2 RESTRICTED STOCK PLAN FOR NON-EMPLOYEE DIRECTORS 1 EXHIBIT 10.1 1997 FLUOR RESTRICTED STOCK PLAN FOR NON-EMPLOYEE DIRECTORS ARTICLE I DEFINITIONS Section 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) "Accrued Retirement Benefit" shall mean, in relation to any Eligible Director that is a member of the Board on the Plan Effective Date, the amount set forth opposite such Eligible Director's name on Schedule A annexed hereto, which amount corresponds to the present value of the annual retirement benefits that would be payable to such Eligible Director under the Fluor Corporation Retirement Plan for Outside Directors following his or her mandatory retirement based on years of service prior to the Plan Effective Date and life expectancy after retirement, assuming a discount rate approximating the interest rate on 30-year treasury obligations of the United States government. (b) "Age for Board Retirement" shall mean the age for mandatory retirement of members of the Board as specified in the Bylaws of the Company, as applied to Eligible Directors on the date of such Eligible Directors' retirement from the Board. (c) "Award" shall mean an award of Restricted Stock pursuant to the provisions of Article V hereof. (d) "Awardee" shall mean an Eligible Director to whom Restricted Stock has been awarded hereunder. (e) "Board" shall mean the Board of Directors of the Company. (f) "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. (g) "Committee" shall mean members of the Board who are not eligible to participate in the Plan. 2 (h) "Company" shall mean Fluor Corporation. (i) "Eligible Director" shall mean a director of the Company who is not and never has been an employee of the Company or any of its Subsidiaries. (j) "Fluor Stock Price" shall mean, as of any date, the closing sale price for shares of Stock quoted for such date on The New York Stock Exchange. (k) "Plan" shall mean the 1997 Fluor Restricted Stock Plan for Non-Employee Directors, the current terms of which are set forth herein. (l) "Plan Effective Date" shall mean the date upon which the Plan becomes effective in accordance with the provisions of Section 2.3. (m) "Restricted Stock" shall mean Stock that may be awarded to an Eligible Director by the Committee pursuant to Article V hereof, which is nontransferable and subject to a substantial risk of forfeiture until specific conditions are met. (n) "Restricted Stock Agreement" shall mean the agreement between the Company and the Awardee with respect to Restricted Stock awarded hereunder. (o) "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. (p) "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. ARTICLE II GENERAL Section 2.1 NAME This Plan shall be known as the "1997 Fluor Restricted Stock Plan for Non-Employee Directors". Section 2.2 PURPOSE The purpose of the Plan is to advance the interests of the Company and its stockholders by affording to Eligible Directors of the Company an opportunity to acquire or increase their proprietary interest in the Company by the grant to such directors of Awards under the terms set forth herein. By encouraging non-employee directors to become owners of Company shares, the Company seeks to increase their incentive for enhancing stockholder value and to motivate, retain and attract those highly 2 3 competent individuals upon whose judgment, initiative, leadership and continued efforts the success of the Company in large measure depends. Section 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. Section 2.4 LIMITATIONS Subject to adjustment pursuant to the provisions of Section 8.1 hereof, the aggregate number of shares of Stock which may be issued as Awards shall not exceed 60,000. Any such shares may be either authorized and unissued shares or shares issued and thereafter acquired by the Company. Section 2.5 AWARDS GRANTED UNDER PLAN Shares of Stock received pursuant to a Restricted Stock Agreement executed hereunder with respect to which the restrictions provided for in Section 5.3 hereof have lapsed shall not again be available for Award grant hereunder. If Restricted Stock is acquired by the Company pursuant to the provisions of paragraph (c) of Section 5.3 hereof, new Awards may be granted hereunder covering the number of shares to which such Restricted Stock acquisition relates. ARTICLE III PARTICIPANTS Section 3.1 ELIGIBILITY Any Eligible Director shall be eligible to participate in the Plan. ARTICLE IV ADMINISTRATION Section 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 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 Restricted Stock Agreement, and to make all other determinations necessary or advisable in the administration of the Plan. Section 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 3 4 evidenced by a writing executed by a majority of the whole Committee shall constitute the action of the Committee. Section 4.3 COMPANY ASSISTANCE The Company shall supply full and timely information to the Committee on all matters relating to Eligible Directors, their death, retirement, disability or removal or resignation from the Board 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 AWARDS Section 5.1 AWARD GRANT AND RESTRICTED STOCK AGREEMENT The Committee shall, on the Plan Effective Date, grant a one-time Award to each Eligible Director then serving on the Board. The number of shares of Restricted Stock constituting any such Award to any such Eligible Director shall be determined by dividing the Accrued Retirement Benefit owed to such Eligible Director by the Fluor Stock Price on the Plan Effective Date. The Committee shall also grant to each Eligible Director that is a member of the Board during all or any portion of each calendar year during the term of the Plan (including the calendar year in which the Plan Effective Date occurs) an Award of 500 shares of Restricted Stock, which grant shall be made in respect of any calendar year on the date of the first regularly scheduled meeting of the Board during such calendar year occurring concurrently with or after such Eligible Director's appointment to the Board. Each Award granted hereunder must be granted within ten years from the effective date of the Plan. 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. Section 5.2 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. Section 5.3 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 otherwise transferred except pursuant to the following provisions: 4 5 (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 5.4 hereof, or until the shares of stock are forfeited pursuant to paragraph (c) of this Section 5.3. 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 5.3. (c) All of the Awardee's Restricted Stock remaining subject to any restriction hereunder shall be forfeited to, and be acquired at no cost by, the Company in the event that the Committee determines that any of the following circumstances has occurred: (i) the Awardee has engaged in knowing and willful misconduct in connection with his or her service as a member of the Board; (ii) the Awardee, without the consent of the Committee, at any time during his or her period of service as a member of the Board, becomes a principal of, serves as a director of, or owns a material interest in, any business that directly or through a controlled subsidiary competes with the Company or any Subsidiary; or (iii) the Awardee does not stand for reelection to, or voluntarily quits or resigns from, the Board for any reason, except under circumstances that would cause such restrictions to lapse under Section 5.4. Section 5.4 LAPSE OF RESTRICTIONS The restrictions imposed under Section 5.3 above upon Restricted Stock held by any Awardee will, as to any such Restricted Stock held by the Awardee for at least six months, lapse once the Awardee has completed six years of service on the Board and any of the following occurs: (a) the Awardee attains the Age for Board Retirement or obtains Board approval of early retirement in accordance with Section 5.5; (b) the Awardee dies or becomes permanently and totally disabled; or (c) any Change of Control occurs. 5 6 In no event will the restrictions imposed under Section 5.3 lapse as to any shares of Restricted Stock awarded to any Awardee until the Awardee has held such shares for six months. Section 5.5 EARLY RETIREMENT An Awardee who leaves the Board prior to the Age for Board Retirement may, upon application to and in the sole discretion of the Committee, be granted early retirement status. Section 5.6 RIGHTS AS STOCKHOLDER Subject to the provisions of Section 5.3 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 VI STOCK CERTIFICATES Section 6.1 STOCK CERTIFICATES The Company shall not be required to issue or deliver any certificate for shares of Stock 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 execution of the Restricted Stock Agreement as the Committee from time to time may establish for reasons of administrative convenience. 6 7 ARTICLE VII TERMINATION, AMENDMENT AND MODIFICATION OF PLAN Section 7.1 TERMINATION, AMENDMENT AND MODIFICATION OF PLAN The Committee may at any time terminate, and may at any time and from time to time and in any respect amend or modify, the Plan provided that, if under applicable laws or the rules of any securities exchange upon which the Company's common stock is listed, the consent of the Company's stockholders is required for such amendment or modification, such amendment or modification shall not be effective until the Company obtains such consent, and provided, further, that no termination, amendment or modification of the Plan shall in any manner affect any Restricted Stock Agreement theretofore executed pursuant to the Plan without the consent of the Awardee. ARTICLE VIII MISCELLANEOUS Section 8.1 ADJUSTMENT PROVISIONS (a) Subject to Section 8.1(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 and (ii) the number and kind of shares or other securities subject to the outstanding Awards. (b) Adjustments under Section 8.1(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. Section 8.2 CONTINUATION OF BOARD SERVICE Nothing in the Plan or in any instrument executed pursuant to the Plan will confer upon any Eligible Director any right to continue to serve on the Board. Section 8.3 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 having 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 such requirements. 7 8 Section 8.4 PRIVILEGES OF STOCK OWNERSHIP No director 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 Award except as to such shares of Stock, if any, that have been issued to such director. Section 8.5 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 Award. The Company may require the director to satisfy any relevant tax requirements before authorizing any issuance of Stock to the director. Such settlement may be made in cash or Stock. Section 8.6 NONTRANSFERABILITY An Award may be exercised during the life of the director solely by the director or the director's duly appointed guardian or personal representative. No 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. Section 8.7 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 or directors of the Company or any Subsidiary. Section 8.8 PLAN BINDING ON SUCCESSORS The Plan shall be binding upon the successors and assigns of the Company. Section 8.9 SINGULAR, PLURAL; GENDER Whenever used herein, nouns in the singular shall include the plural, and the masculine pronoun shall include the feminine gender. Section 8.10 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. 8 9 SCHEDULE A TO 1997 FLUOR RESTRICTED STOCK PLAN FOR NON-EMPLOYEE DIRECTORS ACCRUED RETIREMENT BENEFITS Eligible Director Accrued Benefit Obligation C. A. Campbell, Jr. $ 20,118 P. J. Fluor 48,995 D. P. Gardner 104,503 T. L. Gossage 0 W. R. Grant 225,095 B. R. Inman 138,430 R. V. Lindsay 205,727 V. S. Martinez 22,042 M. R. Seger 85,713 9 EX-27 3 FINANCIAL DATA SCHEDULE
5 THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE CONDENSED CONSOLIDATED BALANCE SHEET AT APRIL 30, 1997 AND THE CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS FOR THE SIX MONTHS ENDED APRIL 30, 1997 AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS. 1,000 6-MOS OCT-31-1997 APR-30-1997 233,996 39,059 835,618 0 94,685 1,914,153 2,708,587 903,610 4,235,697 1,676,455 300,464 0 0 52,446 1,579,438 4,235,697 0 6,619,894 6,586,956 6,602,676 0 0 12,524 17,218 25,317 (8,009) 0 0 0 (8,009) (.10) (.10)
EX-99.1 4 REPORT ON FORM 8-K FILED MAY 6, 1997 1 EXHIBIT 99.1 SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 -------------------- FORM 8-K CURRENT REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 Date of Report (Date of earliest event reported) May 6, 1997 ------------------ FLUOR CORPORATION - -------------------------------------------------------------------------------- (Exact Name of Registrant as Specified in Charter) Delaware 1-7775 95-0740960 - ------------------------------------------------------------------------------- (State or Other Jurisdiction (Commission (IRS Employer of Incorporation) File Number) Identification No.) 3353 Michelson Drive, Irvine, California 92698 - ------------------------------------------------------------------------------- (Address of Principal Executive Offices) (Zip Code) Registrant's telephone number, including area code (714) 975-2000 ------------------ N/A - -------------------------------------------------------------------------------- (Former Name or Former Address, if Changed Since Last Report) 2 ITEM 5. OTHER EVENTS. Certain Factors and Trends Affecting Fluor and its Businesses--Forward-Looking Statements. From time to time, certain disclosures in reports and statements released by Fluor Corporation (the "Company"), or statements made by its officers or directors, will be forward-looking in nature, such as statements related to the Company's opinions about trends and factors which may impact future operating results. The Company is filing this Current Report on Form 8-K to avail itself of the safe harbor provided in the Securities Act of 1933 and the Securities Exchange Act of 1934 with respect to any such forward-looking statements that may be contained in the Company's reports and other documents filed with the Securities and Exchange Commission under Sections 13 or 15(d) of the Securities Exchange Act of 1934 and written or oral forward-looking statements made by the Company's officers and directors on behalf of the Company to the press, potential investors, securities analysts and others. Such forward-looking statements could involve, among other things, statements regarding the Company's intent, belief or expectation with respect to (i) the Company's results of operations and financial condition, (ii) the Company's implementation of cost reductions, (iii) the consummation of acquisition and financing transactions and the effect thereof on the Company's business, and (iv) the Company's plans and objectives for future operations and expansion or consolidation. Any such forward-looking statements would be subject to the risks and uncertainties that could cause actual results of operations, financial condition, cost reductions, acquisitions, financing transactions, operations, expansion, consolidation and other events to differ materially from those expressed or implied in such forward-looking statements. Any such forward-looking statements would be subject to a number of assumptions regarding, among other things, future economic, competitive and market conditions generally. Such assumptions would be based on facts and conditions as they exist at the time such statements are made as well as predictions as to future facts and conditions, the accurate prediction of which may be difficult and involve the assessment of events beyond the Company's control. The Company wishes to caution readers that forward-looking statements, including disclosures which use words such as the Company "believes," "anticipates," "expects," "estimates" and similar statements, are subject to certain risks and uncertainties which could cause actual results of operations to differ materially from expectations. Any such forward-looking statements should be considered in context with the various disclosures made by the Company about its businesses, including the risk factors discussed below. Important risk factors which could cause actual results of operations to differ materially from those expressed in any forward-looking statements include, but are not limited to, the following: Fixed, Maximum or Unit Priced Contracts. An increasing number of the Company's contracts for the provision of engineering and construction services are fixed, maximum or unit price contracts and fixed price incentive contracts. Under fixed, maximum or unit price contracts, the Company agrees to perform the contract for a fixed price and as a result, benefits from costs savings, but is unable to recover for any cost overruns. Under fixed price incentive contracts, the Company shares with the customer any savings up to a negotiated ceiling price 2 3 and carries some or all of the burden of costs exceeding the negotiated ceiling price. Contract prices are established based in part on cost estimates which are subject to a number of assumptions, such as assumptions regarding future economic conditions. If in the future these estimates prove inaccurate, or circumstances change, cost overruns can occur. Contract Performance Risk. In certain instances, the Company guarantees facility completion by a scheduled acceptance date or achievement of certain acceptance and performance testing levels. Failure to meet any such schedule or performance requirements could result in additional costs and the amount of such additional costs could exceed project profit margins. Performance problems for existing and future contracts, whether of the fixed-price or other type, could cause actual results of operations to differ materially from those contained in forward-looking statements. Size and Uncertainty of Timing of Contracts. The Company's future award prospects include several large-scale domestic and international projects. The large size and uncertain timing of these projects can create variability in the Company's award pattern. Consequently, future award trends are difficult to predict with certainty. The Company's estimates of future performance depend on, among other things, the likelihood of receiving certain new awards. While these estimates are based on the good faith judgment of management, these estimates frequently change based on new facts which become available. In addition, the timing of receipt of revenue by the Company from engineering and construction projects can be affected by a number of factors outside the control of the Company. Frequently, the Company's services on a project take place over an extended period of time, and are subject to unavoidable delays from weather conditions, unavailability of equipment from vendors, changes in the scope of service requested by clients or labor disruptions affecting client job sites. Uncertainty of contract or award timing can also present difficulties in matching workforce size with contract needs. In some cases, the Company must maintain and bear the cost of a ready workforce larger than called for under existing contracts in anticipation of future workforce needs under expected awards, which can be delayed or not received. Government Contracts. Several of the Company's significant contracts are Government contracts. Generally, Government contracts are subject to oversight audits by Government representatives, to profit and cost controls and limitations, and to provisions permitting termination, in whole or in part, without prior notice at the Government's convenience upon payment of compensation only for work done and commitments made at the time of termination. In the event of termination, the Company generally will receive some allowance for profit on the work performed. In some cases, Government contracts are subject to the uncertainties surrounding Congressional appropriations or agency funding. Government business is subject to specific procurement regulations and a variety of socio-economic and other requirements. Failure to comply with such regulations and requirements could lead to suspension or debarment, for cause, from Government contracting or subcontracting for a period of time. Among the causes for debarment are violations of various statutes, including those related to employment practices, the protection of the environment, the accuracy of records and the recording of costs. Backlog. The dollar amount of the Company's backlog as stated at any given time is not necessarily indicative of the future earnings of the Company related to the performance of such 3 4 work. Cancellations or scope adjustments related to contracts reflected in the Company's backlog can occur. Environmental, Safety and Health. It is impossible to predict the full impact of future legislative or regulatory developments relating to environmental protection and coal mine and preparation plant safety and health on the Company's coal operations, because the standards to be met, as well as the technology and length of time available to meet those standards, continue to develop and change. Fluctuation in the Production of Coal. The Company's coal production and sales are subject to a variety of operational, geological, transportation and weather-related factors that routinely cause production to fluctuate. For example, sales may be adversely affected by fluctuations in production and by transportation delays arising from equipment unavailability and weather-related events, such as flooding. Labor disruptions also may occur at times or in a manner that causes current and projected results of operations to deviate from projections and expectations. Decreases in production from anticipated levels usually lead to increased mining costs and decreases in results of operations. Effects of Global Economic and Political Conditions. The Company's businesses are subject to fluctuations in demand and to changing economic and political conditions which are beyond the control of the Company and may cause actual results to differ from forward-looking statements. Coal operations produce a commodity which is internationally traded and the price of which is established by market factors outside the control of the Company. Although the Company has taken actions to reduce its dependence on external economic conditions, management is unable to predict with certainty the amount and mix of future business. Revenues and earnings from international operations are subject to domestic and foreign government policies and regulations, embargoes and international hostilities. Competition. The markets served by the engineering and construction businesses of the Company are highly competitive and for the most part require substantial resources and particularly highly skilled and experienced technical personnel. The markets served by the coal business of the Company are also highly competitive and require substantial capital investment as well as the ability to produce coal of consistent quality and meet demanding customer specifications. A large number of well financed, multi-national companies are competing in the markets served by the Company's businesses. Intense competition in the engineering and construction business is expected to continue, presenting the Company with significant challenges in its ability to maintain strong growth rates while maintaining acceptable profit margins. 4 5 Cost Reduction Program. In March of 1997, the Company announced a cost reduction program for its Fluor Daniel operations. The Company's estimates of the future cost savings from the cost reduction program are forward-looking statements. The Company may from time to time provide similar estimates with respect to this or other cost reduction efforts. The actual cost savings may differ materially from estimates based on a number of factors affecting the Company's business, including the ability to achieve estimated staff reductions while maintaining workflow in the functional areas affected and to sublease vacated facilities within anticipated time frames at anticipated sublease rent levels. SIGNATURES Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized. Date: May 6, 1997 FLUOR CORPORATION By: /s/ J. MICHAL CONAWAY --------------------------------- J. Michal Conaway, Senior Vice President and Chief Financial Officer 5 -----END PRIVACY-ENHANCED MESSAGE-----