-----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, IJstuqS598N8gzNbTS1zcufJBnv2FEBHZbQJ5CaScRWMCKBGtpjX2iSoRbby9S4a 7kFzZy3Oj3obdySlw59hDg== 0001017062-97-000099.txt : 19970129 0001017062-97-000099.hdr.sgml : 19970129 ACCESSION NUMBER: 0001017062-97-000099 CONFORMED SUBMISSION TYPE: 10-K PUBLIC DOCUMENT COUNT: 9 CONFORMED PERIOD OF REPORT: 19961031 FILED AS OF DATE: 19970128 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-K SEC ACT: 1934 Act SEC FILE NUMBER: 001-07775 FILM NUMBER: 97512455 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-K 1 FORM 10-K - FOR PERIOD ENDING 10/31/96 =============================================================================== SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 FORM 10-K (MARK ONE) [X]ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 [FEE REQUIRED] FOR THE FISCAL YEAR ENDED OCTOBER 31, 1996 OR [_]TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 [NO FEE REQUIRED] FOR THE TRANSITION PERIOD FROM TO ------ ------ COMMISSION FILE NO. 1-7775 FLUOR CORPORATION (EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER) DELAWARE 95-0740960 (STATE OR OTHER JURISDICTION OF (I.R.S. EMPLOYER INCORPORATION OR ORGANIZATION) IDENTIFICATION NUMBER) 3353 MICHELSON DRIVE, IRVINE, CALIFORNIA 92698 (ADDRESS OF PRINCIPAL EXECUTIVE OFFICES) (ZIP CODE) REGISTRANT'S TELEPHONE NUMBER, INCLUDING AREA CODE: (714) 975-2000 SECURITIES REGISTERED PURSUANT TO SECTION 12(b) OF THE ACT: TITLE OF EACH CLASS NAME OF EACH EXCHANGE ON WHICH REGISTERED ------------------- ----------------------------------------- Common Stock, $0.625 par value New York Stock Exchange Chicago Stock Exchange Pacific Stock Exchange SECURITIES REGISTERED PURSUANT TO SECTION 12(g) OF THE ACT: None Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months, and (2) has been subject to such filing requirements for the past 90 days. Yes X No --- --- Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K is not contained herein, and will not be contained, to the best of registrant's knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K. [_] The aggregate market value of the registrant's voting stock held by non- affiliates was $5,530,525,607 on January 14, 1997, based upon the average between the highest and lowest sales prices of the registrant's Common Stock as reported in the consolidated transactions reporting system. Common Stock, $0.625 par value, outstanding as of January 14, 1997 -- 83,921,807 shares. DOCUMENTS INCORPORATED BY REFERENCE Parts I, II and IV incorporate certain information by reference from the registrant's Annual Report to stockholders for the fiscal year ended October 31, 1996. Part III incorporates certain information by reference from the registrant's definitive proxy statement for the annual meeting of stockholders to be held on March 11, 1997, which proxy statement will be filed no later than 120 days after the close of the registrant's fiscal year ended October 31, 1996. =============================================================================== PART I ITEM 1. BUSINESS. Fluor Corporation ("Fluor" or the "Company") was incorporated in Delaware in 1978 as a successor in interest to a California corporation of the same name that was originally incorporated in 1924. Its executive offices are located at 3353 Michelson Drive, Irvine, California 92698, telephone number (714) 975- 2000. Through Fluor Daniel, Inc. and other domestic and foreign subsidiaries, the Company provides design, engineering, procurement, construction, maintenance and other diversified services on a worldwide basis to an extensive range of industrial, commercial, utility, natural resources, energy and governmental clients. The Company maintains investments in coal-related businesses through its ownership of A. T. Massey Coal Company, Inc. ("Massey"). A summary of the Company's operations and activities by business segment and geographic area is set forth below. ENGINEERING AND CONSTRUCTION The Fluor Daniel group of domestic and foreign companies ("Fluor Daniel") provides a full range of design, engineering, procurement, construction, maintenance and other diversified services to clients in a broad range of industrial and geographic markets on a worldwide basis. The types of services provided by Fluor Daniel, directly or through companies or partnerships jointly owned or affiliations with other companies, include: feasibility studies, conceptual design, detail engineering, procurement, project and construction management, construction, maintenance, plant operations, technical support, project finance, quality assurance/quality control, start- up assistance, site evaluation, licensing, consulting, construction equipment sales and leasing, temporary technical and non-technical staffing and environmental services. Fluor Constructors International, Inc. ("Fluor Constructors") is organized and operated separately from Fluor Daniel. Fluor Constructors provides construction management, construction and maintenance services in the United States and Canada. Fluor Constructors is the Company's union construction arm. The engineering and construction business is conducted under various types of contractual arrangements, including cost reimbursable (plus fixed or percentage fee), all-inclusive rate, unit price, fixed or maximum price and incentive fee contracts. Contracts are either competitively bid and awarded or individually negotiated. While, in terms of dollar amount, the majority of contracts are of the cost reimbursable type, there has been an increase in the volume of cost-reimbursable contracts with incentive-fee arrangements and in the volume of fixed or unit price contracts. In certain instances, the Company guarantees facility completion by a scheduled acceptance date and/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. The markets served by the business are highly competitive and for the most part require substantial resources, particularly highly skilled and experienced technical personnel. A large number of companies are competing in the markets served by the business. Competition is primarily centered on performance and the ability to provide the design, engineering, planning, management and project execution skills required to complete complex projects in a safe, timely and cost efficient manner. The engineering and construction business derives its competitive strength from its diversity, reputation for quality, cost-effectiveness, worldwide procurement capability, project management expertise, geographic coverage, ability to meet client requirements by performing construction on either a union or open shop basis, ability to execute projects of varying sizes, strong safety record and lengthy experience with a wide range of services and technologies. 1 Design and engineering services provided by the engineering and construction business involve the continual development of new and improved versions of existing processes, materials or techniques, some of which are patented. However, none of the existing or pending patents held or licensed by the business are considered essential to operations. Generally, the development and improvement of processes, materials and techniques are performed as part of design and engineering services in connection with the projects undertaken for various clients. FLUOR DANIEL Fluor Daniel's operations are organized into geographical, industry and specialized groups responsible for identifying and capitalizing on opportunities in their market segments. Geographical groups include Asia Pacific, the Americas, and Europe, Africa and the Middle East which provide geographic expertise and capability. Industry groups include Process, Industrial, and Power and Government. Specialized groups include Diversified Services and Sales and Marketing. The Sales and Marketing Group includes strategic planning and project finance and provides sales and marketing support and assistance to all of the other groups. The industry and Diversified Services groups are described in further detail below. Individual operating companies within the groups focus on specific clients, industries and markets. The operating companies rely on a network of globally located engineering offices to provide resources and expertise in support of project execution worldwide. While the United States will remain an important market for Fluor Daniel's services, increasingly the largest share of opportunities are located outside the United States. Demand for higher living standards is driving strong economic growth in developing economies, particularly in the Asia Pacific and Latin American regions. Expansion of basic industries is increasing fundamental energy requirements and infrastructure needs. Globalization of markets and geopolitical change is also stimulating strategic investments in new production facilities in these emerging markets. The operations of Fluor Daniel are detailed below by industry group: Process Services provided by the Process Group support clients through the following operating companies: Petroleum and Petrochemicals; Production and Pipelines; and Chemicals, Plastics and Fibers. During fiscal 1996, Process Group contract awards included: engineering, procurement and construction management for a hydrodesulfurization unit in Korea, a gas turbine generator in the Philippines, an ethylene plant expansion in Saudi Arabia, a fluid catalytic cracker unit in Texas, a L.S.D. hydrofiner in Canada, an export terminal expansion project in Scotland, a pipeline and export terminal in Azerbaijan, a 180 mile ethylene pipeline in Texas, a LNG upstream facility, offshore gas platform, subsea and onshore pipelines in Trinidad, a refrigerated storage tank in New Hampshire, a carbon graphite expansion in South Carolina, and a resin coating plant in Great Britain; engineering, procurement, and construction for debottlenecking of existing facilities and an expanded lube oil plant in Indonesia, an upgrade of a residue hydrocracker in the Slovak Republic, a polymer extrusion expansion in Louisiana, a PTA plant in the Netherlands, a new PET facility in Mississippi; engineering and procurement for a CDU unit revamp in Poland, a gas plant modification in England, a gas field development including low temperature separation unit compression and control facilities in the Netherlands, a 15 mile gas pipeline with terminal in Mexico, an acrylate facility expansion in Texas; construction management for a refinery modernization in Poland, a lube oil revamp in Germany, an ethylene unit revamp in Louisiana, a paraxylene decoupling and revamp in Alabama, a paraxylene unit in Korea, a sufactant plant in Asia, and expansion and renovation of a paint pigments plant in Delaware; engineering for numerous maintenance shutdowns at various locations in the USA, a propylene recovery project in Pennsylvania, an expansion of six existing crude oil pipeline pump stations in Colombia, an ethoxics and ethanol amines in Louisiana, an organic acids plant in Louisiana, a nylon facility in China, a polylactide facility in Nebraska, a filter products facility in Tennessee, a 2 carbon black expansion in China, and a latex relocation in Thailand; project management for an offshore gas compression platform and subsea pipeline in Vietnam; construction and maintenance for evergreen small capital construction services in Tennessee and South Carolina, and for various chemical and fiber plants throughout the USA. Ongoing Projects include: engineering, procurement and construction management for an increase in capacity of two hydrodesulfurization units and associated pipeline in Venezuela, a methanol plant in Norway, and a gas oil hydrotreater in California, a gas injection and underground storage facility in the Netherlands, crude oil import/export pipeline, tanks, oil pump stations and terminal in Lithuania, a hydrotreater in Canada, and a polystyrene plant expansion in Louisiana; engineering, procurement, and construction for a cat feed hydrotreater in Louisiana, a fluid catalytic cracker unit in Korea, a vinyl acetate monomer plant in Singapore, a refinery upgrade in the Netherlands, a new film machine in an existing plant in New York, a hydrochlorofluorocarbon plant in Kentucky, a polypropylene plant expansion in Pennsylvania, a polymer expansion facility in Virginia, and a hydrogen peroxide plant in Texas; engineering, procurement, construction, and program management for a petrochemical complex in Kuwait; engineering and procurement for a revamp of two paraxylene units in Alabama, a new propylene splitter unit in Pennsylvania, a 354 kilometer pipeline with laterals from Mariquita to Cali in Colombia, an oil production facility in Gabon, and four offshore platforms in Venezuela; procurement and construction management for general facilities and utilities of a petrochemical complex in Kuwait; engineering for three geothermal power generation facilities in Indonesia, a metaxylene unit in Texas, an early production system equipment and an oil field production facility in Colombia, a CAT feed hydrotreater in Louisiana, a petroleum refinery expansion in Abu Dhabi, a receiving terminal, pump stations, meter stations, pipelines and export terminal in Azerbaijan, a polyethylene plant in Texas, a debottlenecking project in Indonesia, evergreen support in Canada, and a filter products facility in Tennessee; project management for a 200,000 barrel a day production facility with infrastructure, power generation and an 800 mile pipeline and single point mooring loading terminal in Africa, and a nylon tire cord plant in India; construction management for an expansion and renovation of a paint pigments plant in Delaware; construction and maintenance for evergreen small capital construction services in Tennessee and South Carolina; construction for an oxo alcohol and a chemical plant both in Louisiana, and a chemical line conversion and waste water treatment plant both in South Carolina; evergreen capital construction and maintenance services for various chemical and fiber plants throughout the USA; services alliance in Texas, and numerous small capital projects at various locations in the USA. Projects completed in fiscal 1996 included: engineering, procurement and construction management for a refinery in Thailand, a fatty acids plant in the Philippines, modifications of a gasoline reformulation refinery in California, a silanes plant in Germany, a flue gas desulfurization and synthetic oil abatement project in Canada, a flue gas desulphurization, synthetic oil abatement project in Alberta, Canada, a single point mooring and submarine pipeline in Korea, a polymer plant in Mexico, a chemicals intermediates plant in Spain, a cogeneration project in Kansas, a reformulated gasoline project and a clean fuels program in California, and a polymer plant capacity increase in Mexico; engineering, procurement, and construction for a polymer plant in North Carolina, a chemical plant debottlenecking project in North Carolina, a polymer plant in England, and a hydrogen peroxide plant in Canada; engineering and procurement for modifications of a petroleum loading marine terminal in Alaska, a reformer unit revamp in Texas, an upgrade and expansion of a parex unit in Puerto Rico, a reformulated fuels project at a refinery in California, a chlor-alkali/ethylene expansion of a petrochemical plant in Saudi Arabia, expansion and renovation of a paint pigments plant in Delaware, and a polyethylene plant in Singapore; engineering for a polyethylene plant in Texas, a pipeline and pump systems in Alaska, refinery unit expansions and upgrades in Kansas, a revamp and modernization of a natural gas plant in Hungary, a phosphorus plant in Germany, gas pipeline and distribution systems in Chile and Argentina, an LPG facility in China, and an organic acid plant expansion in Texas; and inspection services for an existing pipeline from Midland to Houston, Texas and existing pipelines in Oklahoma, Kansas and Missouri. Industrial Services provided by the Industrial Group include a broad range of services provided to support clients through the following operating companies: Mining and Metals; Automotive and General Manufacturing; 3 PharmBio and Chemicals; Food, Beverage and Consumer Products; Commercial and Institutional Facilities; ADP Fluor Daniel which provides professional services in architecture, engineering and construction management specializing in the microelectronics market; Infrastructure; Telecommunications; Pulp and Paper; and PACE, the operating company dedicated to serving Fluor Daniel's alliance with Procter & Gamble. During fiscal 1996, Industrial Group acquisitions included: Allen & Philp Architects, Inc., a privately held United States company providing professional services in architecture to the hospitality market; and Marshall Contractors, Inc., a privately held United States company providing professional services in construction management to microelectronics, pharm/biotech, commercial & institutional, manufacturing, food & beverage, and chemicals, plastics and fibers markets. During fiscal 1996, Industrial Group contract awards included: engineering, procurement and construction for a copper and gold mine in Indonesia, a dyno/tank farm expansion in South Carolina, an ethanol facility in Canada, a wafer facility in the Philippines, a vaccine manufacturing facility in Maryland, and a food processing plant expansion in Tennessee; engineering, procurement and construction management for a gold heap leach expansion, a copper mine addition, a grass roots copper mine and a potassium chloride plant expansion in Chile, a battery acid plant in Saudi Arabia, an automotive transaxle facility expansion in Ohio, a wafer facility in Washington, a fine chemicals retrofit project in Tennessee, a bulk pharmaceuticals manufacturing facility in Ireland, a vitamin manufacturing facility in New Jersey, expansion and rebuild of various snack food plants, a multi-product personal care facility in China, an alliance with a client in the aluminum industry in the United States, and cellular site buildout for eight cities in the United States; engineering and procurement for a petro-sulphur forming plant in Canada, a food additive processing plant in Ohio; engineering and construction of pet foods facilities and a tile expansion facility in Greenville, Mississippi; engineering and construction management of a propylated starch facility in Indianapolis; construction management for a specialty steel mill in Pennsylvania, a parking and athletic facility in Florida, an HVAC upgrade to a distribution facility in Mississippi, the retail expansion for a petroleum company in Colorado, a convention center in Arkansas, a conferencing center in Florida, a hotel renovation in California, a commercial office building and resort complex in the Philippines, a hotel in Indonesia and the major infrastructure for a university in Saudi Arabia; engineering for a grassroots micro mill in Nevada, grassroots gold mine in Venezuela, melt shop facility in Indiana, general services steel mills in the United States, SX/EW copper mine in Chile, aluminum recycle mill in the United States, a grassroots copper mine in Canada, tool hook-up in a wafer facility in Thailand, a vitamin manufacturing facility in Texas, an engineering alliance for a multi-product facility in California, a potent compound bulk manufacturing facility in Georgia, a grass roots solid dosage pharmaceutical plant in Oklahoma; an engineering study for a tableting facility in the former Soviet Union, a high speed rail project in Florida; construction of a distribution warehouse in South Carolina, a camcorder/laptop battery facility in Florida and a project management recompetition for rail transit in Los Angeles, California. Ongoing projects include: engineering, procurement and construction for a gold mine in Chile, a gold mine in Papua New Guinea, a dry conversion process facility in North Carolina, rebuilding a carpet manufacturing facility in Georgia, a contract manufacturing facility and corporate headquarters in North Carolina, a packaging and distribution space in a brown sugar facility in Gainesville, Florida, a paper machine expansion in Georgia and an Emergency 911 response system for Chicago, Illinois; engineering, procurement and construction management for copper gold mine in Argentina, an iron ore pelletizing processing facility in Brazil, a copper mine expansion in Indonesia, an automotive assembly plant in Argentina, apparel distribution centers at various locations throughout the United States, a silicon wafer facility in Texas, production and packaging of an english muffin plant in Greenwich, Connecticut, a beltway around Denver, Colorado; engineering and construction of an engine plant expansion in Ohio; engineering and construction management for a hotel renovation in Indonesia, a sports facility in South Carolina and a court/detention center in Texas, a vaccine manufacturing plant in North Carolina; construction management for a nickel mine expansion in Indonesia, a prison project in California, the renovation of a turbine facility in South Carolina, a tobacco processing plant in North Carolina, a tobacco facility in the Netherlands, a train station terminal building in Kyoto, Japan and a multi-product personal care facility in the Philippines; construction for a personal care product plant in Puerto Rico; engineering for an iron mine in 4 Australia; maintenance services for an automotive facility in Tennessee; project management for rail stations for the Federal Transportation Administration in New York City, and for highway construction in Orange County, California. Projects completed in fiscal 1996 included: engineering, procurement and construction for a blast furnace coal injection in Indiana, a gelcaps facility in North Carolina; engineering, procurement and construction management of a copper concentrator expansion in Chile, copper expansion and pipeline in Chile, a metal aperture screen manufacturing facility in New York, a fine chemicals manufacturing plant in Arkansas, a sodium cromoglycate facility in the United Kingdom, a utilities upgrade and building expansion in California, plant construction and renovation of cola bottling plants, a dextrose expansion project in Illinois, expansion and rebuild of various snack food plants in locations throughout the United States, two de-inking facilities and a paper recycle facility, all in the United Kingdom and a paper products plant in Korea; engineering and construction management for an engine manufacturing line relocation in New Jersey and an expansion of a spice manufacturing facility in Australia; engineering and construction of a tile expansion facility in Greenville, Mississippi, corn processing plants and several consumer plants in Ohio; construction management of a prison project in Texas, an automotive assembly plant in Alabama, an HVAC upgrade to a distribution facility in Mississippi; engineering for a copper smelter and refinery in Indonesia, a washing machine plant in China, a wafer fabrication facility in Utah, a paper machine rebuild in Georgia, and a paper machine addition in Wisconsin, a shampoo facility in China; condition assessment for facilities at twelve military installations at various locations throughout the United States; engineering study for an automobile manufacturer to determine the feasibility of disassembling and relocation of two North American automobile manufacturing facilities to China; project management for rail transit for the Los Angeles County Metropolitan Transportation Authority in California. Power and Government The Power and Government Group provides services to public electric utilities, private power companies, and the United States government. The operating companies in the group are Power Generation, Duke/Fluor Daniel, Power Services, Government Services, Fluor Daniel Fernald and Fluor Daniel Hanford. During fiscal 1996, Power and Government Group contract awards included: engineering, procurement, and construction for a 300 megawatt combined cycle plant in Saudi Arabia; engineering, procurement, and construction management for a cogeneration plant in Great Britain; maintenance and support for a 2 x 825 megawatt nuclear station in Maryland; program maintenance and support for the fossil plants of a California utility; renewal of maintenance and support services for the fossil and gas plants of a utility in Texas, Arkansas, Louisiana, and Mississippi and a nuclear plant for a utility in Missouri; operations and maintenance for a 151 megawatt facility in Delaware; management and integration contractor for a major United States Department of Energy ("DOE") facility ("Hanford") in Washington; additional DOE funding for engineering and design for nuclear materials storage plant under a reconfiguration project in Nevada; and engineering for the waste vitrification program at Hanford. Ongoing projects include: procurement, engineering, construction management, and start up for a 2 x 600 megawatt coal fired power plant in Indonesia; operations and maintenance for a 175 megawatt diesel system in Indonesia; engineering for a 1,200 megawatt phased combined cycle gas facility in Saudi Arabia; engineering, procurement, and construction for a 160 megawatt cogeneration plant in Indiana, a 240 megawatt combined cycle cogeneration plant in Louisiana, rebuilding of a fire damaged 650 megawatt combined cycle facility in Virginia, and a 75 megawatt bottoming cycle and 69 kilovolt transmission line in Illinois; environmental remediation management for the DOE former uranium processing plant in Ohio (the "Fernald Project"); engineering and construction management for various radar and weather stations located throughout the United States for the National Oceanic and Atmospheric Administration; engineering for a laboratory facility upgrade in Illinois, a DOE waste vitrification plant at Hanford, the reconfiguration of the DOE weapons program, the DOE National Engineering Laboratories in Idaho, and a waste handling facility for the DOE at Hanford; operations and maintenance for a 130 megawatt cogeneration facility in Virginia; management and operation services for the Naval Petroleum and Oil Shale Reserves program for the DOE in Colorado, Utah, and Wyoming; maintenance 5 and support for a rebuild of a power plant in Texas; maintenance for a 3 x 1,270 megawatt nuclear plant in Arizona, fossil and gas generation plants in Texas, Georgia, Louisiana, Arkansas, Mississippi, Australia, South Africa, Florida, and Tennessee and for nuclear plants in South Carolina, Kansas, Missouri, Virginia, Texas and Arizona. Projects completed in fiscal 1996 included: engineering and construction for emission monitoring equipment for various power generation sites of utilities in Arkansas, Louisiana, Mississippi, and Texas; engineering, procurement, and construction for a fuel cell pilot plant and a 48 megawatt combined cycle plant in California; engineering, design, procurement and construction for a 385 megawatt pulverized coal plant in South Carolina; engineering, procurement, construction management and start up assistance for coal switching modifications to a coal fired facility in Indiana; engineering, procurement, construction, and construction management for a waste to energy facility in New York; engineering for a nuclear utility in Illinois; engineering and construction management at a significant number of locations throughout the United States for radar and weather stations for the National Oceanic and Atmosphere Administration; and for a waste handling facility for DOE in Washington. Diversified Services The Diversified Services Group was created in fiscal 1994 to expand certain services provided by Fluor Daniel beyond the boundaries of the traditional engineering and construction project cycle. These services have typically been provided to projects in support of Fluor Daniel and have developed into core skills. They are now offered on a stand alone basis to new clients and markets as well as traditional clients and markets external to Fluor Daniel. Established businesses in the group which have become more focused on external markets include the following operating companies: Facility & Plant Services, which provides plant maintenance, management and efficiency services as well as plant maintenance software; TRS Staffing Solutions, which provides technical, professional, and clerical temporary personnel as well as permanent placements; American Equipment Company, which sells, leases, and outsources equipment for construction and industrial needs; Environmental Services, which provides environmental engineering and construction services; and Fluor Daniel GTI, Inc., which provides environmental remediation services. Operating companies focused on creating new businesses by leveraging core skills include Fluor Daniel Technologies, which uses Fluor Daniel's extensive technical expertise to evaluate new technologies for investment and commercialization; and Acquion, a provider of procurement outsourcing services and electronic catalog and ordering services that focus on streamlining the procurement work process for clients. During fiscal 1996, Diversified Services Group acquisitions included: the previously reported acquisition of 55% of Groundwater Technology, Inc., an environmental remediation company which was merged with Fluor Daniel Environmental Services, Inc. to form Fluor Daniel GTI, Inc.; and the acquisition of 100% of S & R Equipment Co., Inc., an Ohio based equipment rental company; TA Group, a plant maintenance company based in the United Kingdom; Phoenix Contracting Pty. Limited, an Australian based permanent and temporary placement services company; and The Consol Group, Inc. and its affiliated companies, another permanent and temporary placement services company located in New Hampshire and doing business primarily in the New England states. During fiscal 1996, Diversified Services Group new awards included: maintenance for a vehicle manufacturing facility in Argentina, computer manufacturing plants in Arizona, Colorado, and California and computer manufacturing plants in Florida, Texas, North Carolina; computerized maintenance system for a steel maker in Utah and a glass products manufacturer at various locations in the U.S.; computerized maintenance system and training services for a refinery in Asia; engineering, procurement, and construction of hazardous waste recycling facilities for a waste management company at various locations in the U.S. Ongoing projects include: a large equipment outsourcing contract at a petrochemical plant in Texas; maintenance for a tire manufacturing facility in Tennessee, a petrochemical plant in Texas, and a refinery in Mississippi; environmental investigation, feasibility studies, and remediation for the United States Army 6 Environmental Center, the United States Army Corps of Engineers, and the United States Environmental Protection Agency; engineering, procurement, and construction management for an environmental remediation program for a toxic waste site in Indiana; environmental investigation and evaluation at U.S. military facilities in Hawaii, Guam and Puerto Rico; and site remediation at a plant in Illinois. Projects completed in fiscal 1996 included: environmental investigation and remediation plan services for a toxic waste site in New York; and environmental investigation, remediation design and implementation services for a chemical waste site in Ohio. FLUOR CONSTRUCTORS Fluor Constructors is organized and operated separately from Fluor Daniel. Fluor Constructors provides unionized construction management, construction and maintenance services in the United States and Canada, both independently and as a subcontractor to Fluor Daniel, and global support to all Fluor Daniel industry and regional groups. During fiscal 1996, Fluor Constructors contract awards included: construction and construction management services for a steam turbine project in Indiana and a wafer fabrication facility located in Camas, Washington; and maintenance and outage support for a nuclear power plant in Maryland. Ongoing projects include: maintenance and outage support at various plant sites for a nuclear power plant in Missouri and for fossil fuel power plants in Louisiana, Mississippi and Arkansas. Projects completed in fiscal 1996 included: construction and construction management for a reformulated gasoline project at a refinery in California, a blast furnace coal injection facility in Indiana, a hydrocracker revamp for a refinery in Delaware, a refrigerant production facility in Kentucky, a sulfur dioxide unit and hydrogen peroxide project in Canada, a steam turbine project in Indiana, and a polypropylene plant expansion in Pennsylvania, construction management of a potable water supply system in Nevada, an Emergency 911 response system in Illinois and a waste to energy boiler replacement in New York. BACKLOG Fluor Daniel's operating companies are organized into four major industry groups: Process, Industrial, Power and Government, and Diversified Services. The following table sets forth the consolidated backlog of Fluor's engineering and construction segment at October 31, 1996 and 1995 by industry group:
1996 1995 ------------ ------------ (IN MILLIONS OF DOLLARS) Industrial...................................... $ 6,496 $ 4,516 Process......................................... 4,903 6,671 Power and Government............................ 3,621 3,275 Diversified Services............................ 737 263 ------------ ------------ $ 15,757 $ 14,725 ============ ============
The following table sets forth the consolidated backlog of Fluor's engineering and construction segment at October 31, 1996 and 1995 by region:
1996 1995 ------------ ------------ (IN MILLIONS OF DOLLARS) United States.................................. $ 7,326 $ 6,666 Asia Pacific................................... 4,402 3,303 Europe, Africa and Middle East................. 2,677 3,088 The Americas................................... 1,352 1,668 ------------ ------------ $ 15,757 $ 14,725 ============ ============
Estimated portion not to be performed during fiscal 1997: 33% == 7 The dollar amount of the backlog is not necessarily indicative of the future earnings of Fluor related to the performance of such work. Although backlog represents only business which is considered to be firm, there can be no assurance that cancellations or scope adjustments will not occur. Due to additional factors outside of Fluor's control, such as changes in project schedules, Fluor cannot predict with certainty the portion of its October 31, 1996, backlog to be performed subsequent to fiscal 1997. Approximately $1.1 billion of the Power and Government backlog at October 31, 1996, is attributable to the DOE Fernald Project and subject to government funding on an annual basis. Additionally, approximately $1.0 billion of such backlog is attributable to the DOE Hanford Project, and certain governmental authorizations to expend this amount have been received. An additional $1.0 billion of the Power and Government backlog is attributable to the Paiton private power project. At October 31, 1996, approximately $1.0 billion of the Industrial Group backlog is attributable to the Batu Hijau copper and gold mine project for Newmont Gold in Indonesia. COAL INVESTMENT A. T. Massey Coal Company, Inc., which is headquartered in Richmond, Virginia, and its subsidiaries conduct Massey's coal-related businesses and are collectively referred to herein as the "Massey Companies." The Massey Companies produce, process and sell bituminous, low sulfur coal of steam and metallurgical grades from 18 mining complexes (16 of which include preparation plants) located in West Virginia, Kentucky and Tennessee. At October 31, 1996, one of the mining complexes was still in development and not yet producing coal. A second mining complex is idle. Operations at certain of the facilities are conducted in part through the use of independent contract miners. The Massey Companies also purchase and resell coal produced by unrelated companies. Steam coal is used primarily by utilities as fuel for power plants. Metallurgical coal is used primarily to make coke for use in the manufacture of steel. For each of the three years in the period ended October 31, 1996, the Massey Companies' production (expressed in thousands of short tons) of steam coal and metallurgical coal, respectively, was 17,578 and 13,616 for fiscal 1996, 15,790 and 11,634 for fiscal 1995, and 17,120 and 7,333 for fiscal 1994. Sales (expressed in thousands of short tons) of coal produced by the Massey Companies were 31,091 for fiscal year 1996, 27,410 for fiscal 1995 and 23,835 for fiscal 1994. A large portion of the steam coal produced by the Massey Companies is sold to domestic utilities under long-term contracts. Metallurgical coal is sold to both foreign and domestic steel producers. Approximately 64% of the Massey Companies' fiscal 1996 coal production was sold under long-term contracts, 60% of which was steam coal and 40% of which was metallurgical coal. Approximately 12% of the coal tonnage sold by the Massey Companies in fiscal 1996 was sold outside of North America. Massey is among the five largest marketers of coal in the United States. The coal market is a mature market with many strong competitors. Competition is primarily dependent upon coal price, transportation cost, producer reliability and characteristics of coal available for sale. The management of Massey considers Massey to be generally well-positioned with respect to these factors in comparison to its principal competitors. Recently passed acid rain legislation is generally anticipated to benefit prices for low sulfur coal. Massey intends to continue to evaluate and pursue, in appropriate circumstances, the acquisition of additional low sulfur coal reserves. The Coal Industry Retiree Health Benefits Act of 1992 (the "Act") provides that certain retired coal miners who were members of the United Mine Workers of America, along with their spouses, are guaranteed health care benefits. The Massey Companies' obligation under the Act is currently estimated to aggregate approximately 8 $49 million which will be recognized as expense as payments are assessed. The amount expensed during fiscal 1996 approximated $2.0 million. The management of the Massey Companies estimates that, as of October 31, 1996, the Massey Companies had total recoverable reserves (expressed in thousands of short tons) of 1,549,205; 620,254 of which are assigned recoverable reserves and 928,951 of which are unassigned recoverable reserves; and 1,128,418 of which are proven recoverable reserves and 420,787 of which are probable recoverable reserves. The management of the Massey Companies estimates that approximately 35% of the total reserves listed above consist of reserves that would be considered primarily metallurgical grade coal. They also estimate that approximately 65% of all reserves contain less than 1% sulfur. A portion of the steam coal reserves could be beneficiated to metallurgical grade by coal preparation plants, and substantially all of the metallurgical coal reserves could be sold as high quality steam coal, if market conditions warrant. "Reserves" means that part of a coal deposit which could be economically and legally extracted or produced at the time of the reserve determination. "Recoverable reserves" means coal which is recoverable by the use of existing equipment and methods under federal and state laws now in effect. "Assigned recoverable reserves" means reserves which can reasonably be expected to be mined from existing or planned mines and processed in existing or planned plants. "Unassigned recoverable reserves" means reserves for which there are no specific plans for mining and which will require for their recovery substantial capital expenditures for mining and processing facilities. "Proven recoverable reserves" refers to deposits of coal which are substantiated by adequate information, including that derived from exploration, current and previous mining operations, outcrop data and knowledge of mining conditions. "Probable recoverable reserves" refers to deposits of coal which are based on information of a more preliminary or limited extent or character, but which are considered likely. OTHER MATTERS ENVIRONMENTAL, SAFETY AND HEALTH MATTERS The Massey Companies are affected by and comply with federal, state and local laws and regulations relating to environmental protection and plant and mine safety and health, including but not limited to the federal Surface Mining Control and Reclamation Act of 1977; Occupational Safety and Health Act; Mine Safety and Health Act of 1977; Water Pollution Control Act, as amended by the Clean Water Act of 1977; Black Lung Benefits Revenue Act of 1977; and Black Lung Benefits Reform Act of 1977. It is impossible to predict the full impact of future legislative or regulatory developments on such operations, because the standards to be met, as well as the technology and length of time available to meet those standards, continue to develop and change. In fiscal 1996, Fluor expended approximately $4.9 million to comply with environmental, health and safety laws and regulations in connection with its coal investment, none of which were capitalized. Fluor anticipates making $8.0 million and $7.8 million in such non-capital expenditures in fiscal 1997 and 1998, respectively. Of these expenditures, $4.0 million, $5.6 million and $5.7 million for fiscal 1996, 1997 and 1998, respectively, were or are anticipated to be for surface reclamation. Existing financial reserves are believed to be adequate to cover actual and anticipated surface reclamation expenditures. Other expenditures will be expensed as incurred. Other In 1986, the California North Coast Regional Water Quality Control Board for the State of California requested that the Company perform a site investigation of a property in Northern California designated as a hazardous waste site under the California Hazardous Waste Control Act. The Company formerly owned the property. The California Environmental Protection Agency has assumed lead agency status for any required remedial action at the site. The Company signed a Consent Order to perform a remedial investigation/feasibility study that will determine the extent of contamination for purposes of determining the remedial action required to remedy and/or remove the contamination. 9 In 1994, Fluor completed the sale of its lead business. The sale by Fluor of its lead business included St. Joe Minerals Corporation ("St. Joe") and its environmental liabilities for several different lead mining, smelting and other lead related environmental sites. As a condition of the St. Joe sale, however, Fluor retained responsibility for certain non-lead related environmental liabilities arising out of St. Joe's former zinc mining and smelting division, but only to the extent that such liabilities are not covered by St. Joe's comprehensive general liability insurance. These liabilities arise out of three zinc facilities located in Bartlesville, Oklahoma, Monaca, Pennsylvania and Balmat, New York (the "Zinc Facilities"). In 1987, St. Joe sold its zinc mining and smelting division to Zinc Corporation of America ("ZCA"). As part of the sale agreement, St. Joe and Fluor agreed to indemnify ZCA for certain environmental liabilities arising from operations conducted at the Zinc Facilities prior to the sale. During fiscal year 1993, ZCA made claims under this indemnity as well as under the Comprehensive Environmental Response, Compensation and Liability Act ("CERCLA") against St. Joe for past and future environmental expenditures at the Zinc Facilities. In fiscal year 1994, ZCA filed suit against St. Joe and Fluor, among others, seeking compensation for environmental expenditures at the Zinc Facilities. In fiscal year 1994, Fluor and St. Joe, among others, executed a settlement agreement with ZCA which, among other things, cancels the indemnity previously provided to ZCA and limits environmental expenditures at the Zinc Facilities for which St. Joe would be responsible to no more than approximately $10 million. Expenses incurred and payments made under the settlement agreement are expected to be made over a period of at least five years from the date of settlement. In fiscal 1996, Fluor and St. Joe prosecuted cost recovery claims against another potentially responsible party for the Bartlesville facility. The Federal District Court for Oklahoma rendered Judgment in favor of Fluor and St. Joe, among others, which Judgment has become final and non-appealable. The District Court's Judgment further reduces Fluor and St. Joe's liability with respect to the Bartlesville facility. In addition, St. Joe has initiated legal proceedings against certain of its insurance carriers alleging that the investigative and remediation costs, for which St. Joe is or may be responsible, including costs incurred prior to the sale of St. Joe and costs related to the Zinc Facilities, are covered by insurance. A portion of any recoveries received from the insurance carriers would be, pursuant to the St. Joe sale agreement, for the benefit of Fluor. In January 1995, St. Joe executed a settlement agreement with one of its primary insurance carriers that provided coverage for a minor portion of the applicable coverage periods. In May 1995, St. Joe received a favorable ruling from the Orange County Superior Court which ordered St. Joe's other primary insurance carrier to provide a defense to St. Joe for certain environmental liabilities, including the Zinc Facilities. This insurer has appealed the Superior Court's order. St. Joe continues to pursue its other primary insurance carrier for additional payments. Inasmuch as the insurance proceedings remain in the early stages of litigation, no credit or offset (other than for amounts actually received in settlement or judgment), has been taken into account by Fluor in establishing its reserves for future environmental costs. The Company believes, based upon present information available to it, that its reserves with respect to future environmental costs are adequate and such future costs will not have a material effect on the Company's consolidated financial position, results of operations or liquidity. However, the imposition of more stringent requirements under environmental laws or regulations, new developments or changes regarding site cleanup costs or the allocation of such costs among potentially responsible parties, or a determination that the Company is potentially responsible for the release of hazardous substances at sites other than those currently identified, could result in additional expenditures or the provision of additional reserves in expectation of such expenditures. NUMBER OF EMPLOYEES The following table sets forth the number of salaried and craft/hourly employees of Fluor and its subsidiaries engaged in Fluor's business segments as of October 31, 1996:
SALARIED CRAFT/HOURLY TOTAL -------- ------------ ------ Engineering and Construction.................... 26,568 23,084 49,652 Coal............................................ 946 1,863 2,809 ------ ------ ------ 27,514 24,947 52,461 ====== ====== ======
10 OPERATIONS BY BUSINESS SEGMENT AND GEOGRAPHIC AREA The financial information for business segments and geographic areas is included in the Operations by Business Segment and Geographic Area section of the Notes to Consolidated Financial Statements in Fluor's 1996 Annual Report to stockholders, which section is incorporated herein by reference. ITEM 2. PROPERTIES. Major Facilities Operations of Fluor and its subsidiaries are conducted in both owned and leased properties. In addition, certain owned or leased properties of Fluor and its subsidiaries are leased or subleased to third party tenants. The following table describes the general character of the major existing facilities, exclusive of mines, coal preparation plants and their adjoining offices:
LOCATION INTEREST -------- -------- Corporate Headquarters: Irvine, California................................................. Leased Engineering and Construction Offices: Alberton, South Africa............................................. Leased Al Khobar, Saudi Arabia (Dhahran area)............................. Owned Amherst, New Hampshire............................................. Leased Anchorage, Alaska.................................................. Leased Appleton, Wisconsin................................................ Leased Arlington, Texas................................................... Leased Arlington, Virginia................................................ Leased Asturias, Spain.................................................... Leased Austin, Texas...................................................... Leased Bakersfield, California............................................ Leased Bangkok, Thailand.................................................. Leased Beijing, People's Republic of China................................ Leased Bergen op Zoom, Netherlands........................................ Leased Bogota, Columbia................................................... Leased Brisbane, Australia................................................ Leased Budapest, Hungary.................................................. Leased Caguas, Puerto Rico................................................ Owned Calgary, Canada.................................................... Leased Camberley, England................................................. Leased Caracas, Venezuela................................................. Leased Charlotte, North Carolina.......................................... Leased Charleston, West Virginia.......................................... Leased Chesapeake, Virginia............................................... Leased Chicago, Illinois.................................................. Leased Cincinnati, Ohio................................................... Leased Columbia, Maryland................................................. Leased Corpus Christi, Texas.............................................. Leased Dallas, Texas...................................................... Leased Deer Park, Texas................................................... Leased Dubai, United Arab Emirates........................................ Leased Dusseldorf, Germany................................................ Leased East Providence, Rhode Island...................................... Leased Elmhurst, Illinois................................................. Leased
11
LOCATION INTEREST -------- -------- Florham Park, New Jersey.................................. Leased Fort Lauderdale, Florida.................................. Leased Fort Wayne, Indiana....................................... Leased Golden, Colorado.......................................... Leased Grand Rapids, Michigan.................................... Owned Greenville, South Carolina................................ Owned and Leased Haarlem, Netherlands...................................... Owned and Leased Hanoi, Vietnam............................................ Leased Ho Chi Minh City, Vietnam................................. Leased Hoffman Estates, Illinois................................. Leased Holbrook, New York........................................ Leased Hong Kong................................................. Leased Houston (Sugar Land office), Texas........................ Owned Irvine, California........................................ Leased Jakarta, Indonesia........................................ Leased Kansas City, Missouri..................................... Leased Kent, Washington.......................................... Leased Kingsgrove, Australia..................................... Leased Kuala Lumpur, Malaysia.................................... Leased La Serena, Chile.......................................... Leased Leduc, Canada............................................. Leased Leipzig, Germany.......................................... Leased Lenexa, Kansas............................................ Leased Lexington, Kentucky....................................... Leased Lima, Peru................................................ Leased Little River, South Carolina.............................. Leased London (Uxbridge), England................................ Leased Manchester, England....................................... Leased Manila, Philippines....................................... Leased Marietta, Georgia......................................... Leased Martinez, California...................................... Leased Mauldin, South Carolina................................... Leased Melbourne, Australia...................................... Leased Memphis, Tennessee........................................ Leased Mexico City, Mexico....................................... Owned Montreal, Canada.......................................... Leased Morrisville, North Carolina............................... Leased Moscow, Russia............................................ Leased Nashville, Tennessee...................................... Leased New Delhi, India.......................................... Leased New York, New York........................................ Leased Norwood, Massachusetts.................................... Leased Oceanside, California..................................... Leased Pasadena, Texas........................................... Leased Pensacola, Florida........................................ Leased Perrysburg, Ohio.......................................... Owned Perth, Australia.......................................... Leased Phoenix, Arizona.......................................... Leased Philadelphia, Pennsylvania (Marlton, New Jersey office)... Leased Pittsburgh, Pennsylvania.................................. Leased Richardson, Texas......................................... Leased
12
LOCATION INTEREST -------- -------- Richland, Washington........................................... Leased Richmond, Virginia............................................. Leased Riverdale, Illinois............................................ Owned Rotterdam, Netherlands......................................... Leased Rotorua, New Zealand........................................... Leased Rumford, Rhode Island.......................................... Leased Sacramento, California......................................... Leased Salem, New Hampshire........................................... Leased San Juan, Puerto Rico.......................................... Leased Santa Clara, California........................................ Leased Santiago, Chile................................................ Owned Schenectady, New York.......................................... Leased Scott, Louisiana............................................... Leased Seoul, Korea................................................... Leased Shanghai, China................................................ Leased Singapore...................................................... Leased Solon, Ohio.................................................... Leased South San Francisco, California................................ Leased Stafford, Texas................................................ Leased Stockton, California........................................... Leased Stuttgart, Germany............................................. Leased Tampa, Florida................................................. Leased Tempe, Arizona................................................. Leased Tokyo, Japan................................................... Leased Torrance, California........................................... Leased Trenton, New Jersey............................................ Leased Tucuman, Argentina............................................. Leased Tulsa, Oklahoma................................................ Leased Urbandale, Iowa................................................ Leased Vancouver, Canada.............................................. Leased Ventura, California............................................ Leased Washington, D.C. .............................................. Leased Westchester, Pennsylvania...................................... Leased West Columbia, South Carolina.................................. Leased Wichita, Kansas................................................ Leased Wiesbaden, Germany............................................. Leased Windsor, Connecticut........................................... Leased Wixom, Michigan................................................ Owned Coal Offices: (Kentucky, Tennessee, Virginia, West Virginia)................. Owned
Coal Properties See Item 1, Business, of this report for additional information regarding the coal operations and properties of Fluor. ITEM 3. LEGAL PROCEEDINGS. Fluor and its subsidiaries, incident to their business activities, are parties to a number of legal proceedings in various stages of development, including but not limited to those described below. The majority of these proceedings, other than environmental proceedings, involve matters as to which liability, if any, of Fluor or its subsidiaries would be adequately covered by insurance. With respect to litigation outside the scope of applicable 13 insurance coverage and to the extent insured claims may exceed liability limits, it is the opinion of the management of Fluor, based on reports of counsel, that these matters individually and in the aggregate will not have a material adverse effect upon the consolidated financial position or results of operations of Fluor. In July 1987, four lawsuits were filed against R. T. Vanderbilt Company, Inc., Gouverneur Talc Company, Inc., St. Joe and Fluor for personal injury and wrongful death allegedly due to asbestos, talc and silicon exposure in certain New York mines. Subsequent to July 1987, 16 additional lawsuits have been filed. All of these suits (representing a total of 213 plaintiffs) have been filed with the New York Supreme Court, St. Lawrence County, New York. The total damages claimed in these cases, referred to as Bailey, Baker, Beane, et al. v. R. T. Vanderbilt Company, Inc., et al. (the claims have not been consolidated), are $287 million against all defendants. Plaintiffs also seek an unspecified amount of punitive damages against all defendants. In October 1996, Fluor's motion for summary judgment was granted and, therefore, Fluor is no longer a party to any of the pending lawsuits. Additionally, the Court dismissed the complaints of 24 former St. Joe employees. On May 3, 1994 William T. Watt instituted an action against Fluor Daniel, Inc. and Fernald Environmental Restoration Management Corporation ("FERMCO", now known as Fluor Daniel Fernald, Inc.), in the United States District Court, Southern District of Ohio, pursuant to 31 U.S.C. (S)(S) 3729-32, the False Claims Act (the "Act"). Watt is seeking to recover civil penalties and damages for alleged false claims submitted to the Department of Energy ("DOE") of the United States arising out of work performed at Fernald, Ohio pursuant to FERMCO's Environmental Restoration Management Contract with the DOE. After investigation pursuant to the Act, the United States government elected not to intervene. Motions for summary judgment are pending. Trial has been postponed, and no new date has been set. Watt has claimed damages of $92 million. If Watt were to prevail at trial, damages would be trebled, and other statutory penalties would attach. ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS. Not applicable. EXECUTIVE OFFICERS OF THE REGISTRANT(/1/) Leslie G. McCraw, age 62 Director since 1984; Chairman of Executive Committee and member of Governance Committee; Chairman of the Board since 1991; Chief Executive Officer since 1990; formerly Vice Chairman of the Board from 1990; formerly President from 1988; joined the Company in 1975. Dennis W. Benner, age 55 Vice President and Chief Information Officer since November 1994; formerly Vice President and General Manager, Information, and Vice President and General Manager, Target Marketing Services, for TRW from 1992 and 1986, respectively. Charles J. Bradley, Jr., age 61 Vice President, Human Resources and Administration since 1986; joined the Company in 1958. J. Michal Conaway, age 48 Senior Vice President and Chief Financial Officer since December 1996; formerly Vice President and Chief Financial Officer since May 1994; formerly Vice President, Finance, from 1993; formerly Vice President and Chief Financial Officer of National Gypsum Company and its parent, Aancor Holdings, Inc., from 1988. Lawrence N. Fisher, age 52 Senior Vice President, Law and Corporate Secretary, since March 1996; formerly Vice President, Corporate Law and Assistant Secretary from 1984; joined the Company in 1974. 14 James O. Rollans, age 54 Chief Administrative Officer since May 1994; Senior Vice President since 1992; formerly Chief Financial Officer from 1992; formerly Vice President, Corporate Communications from 1982; joined the Company in 1982. EXECUTIVE OPERATING OFFICERS(/1/) Hugh K. Coble, age 62 Director since 1984; Vice Chairman since April 1994; formerly Group President of Fluor Daniel, Inc.(/2/) from 1986; joined the Company in 1966. Dennis G. Bernhart, age 51 Group President, The Americas, of Fluor Daniel, Inc.(/2/) since May 1994; formerly President, Latin America, Middle East and Africa, of that company from 1993; formerly Vice President, Sales, from 1982; joined the Company in 1968. Don L. Blankenship, age 46 Director since September 1996; Chairman of the Board and Chief Executive Officer of A.T. Massey Coal Company, Inc.(/3/) since January 1992; formerly President and Chief Operating Officer of that subsidiary from 1990; formerly President of Massey Coal Services, Inc.(/4/) from 1989; joined Rawl Sales & Processing Co.(/5/) in 1982. Alan L. Boeckmann, age 48 Group President, Chemical Processes and Industrial, of Fluor Daniel, Inc.(/2/) since January 1996; formerly Vice President of Chemicals, Plastics & Fibers of that company from June 1994; formerly Vice President and General Manager of that company from 1992; formerly Vice President-Engineering Services, of that company from 1989; joined the Company in 1974. Richard D. Carano, age 57 Group President, Asia/Pacific, of Fluor Daniel, Inc.(/2/) since May 1994; formerly President, Asia/Pacific, of that company from 1993; formerly Vice President, Sales, of that company from 1987; joined the Company in 1970. E. David Cole, Jr., age 59 Group President, Process, of Fluor Daniel, Inc.(/2/) since May 1994; formerly Vice President, Petroleum and Petrochemicals, of that company from 1987; joined the Company in 1965. Charles R. Cox, age 54 Group President, Industrial, of Fluor Daniel, Inc.(/2/) since May 1994; formerly President, Operations Centers, of that company from 1989; joined the Company in 1969. Richard A. Flinton, age 66 Chairman of the Board of Fluor Constructors International, Inc.(/6/) since 1989; joined the Company in 1960. Thomas P. Merrick, age 59 Vice President, Strategic Planning, of Fluor Daniel, Inc.(/2/) since May 1994; formerly Vice President, Technology, of that company from 1993; formerly Vice President, Government Sales, of that company from 1989; joined the Company in 1984. 15 Charles R. Oliver, Jr., age 53 Group President, Sales, Marketing and Strategic Planning of Fluor Daniel, Inc.(/2/) since May 1994; formerly President, Business Units, of that company from 1993; formerly President, Hydrocarbon Sector, from 1986; joined the Company in 1970. Carel J.C. Smeets, age 57 Group President, Europe, Africa and Middle East, of Fluor Daniel, Inc.(/2/) since May 1994; formerly Vice President, European Operations, of that company from 1991; formerly Vice President and Managing Director, the Netherlands, from 1985; joined the Company in 1969. James C. Stein, age 53 Group President, Diversified Services, of Fluor Daniel, Inc.(/2/) since May 1994; formerly President, Business Units, of that company from 1993; formerly President, Industrial Sector, of that company from 1986; joined the Company in 1964. Richard M. Teater, age 48 Group President, Power and Government, of Fluor Daniel, Inc.(/2/) since May 1994; formerly President, Power, of that company from 1993; formerly Vice President, Power Marketing, of that company from 1990; formerly Vice President, Industrial Marketing, of that company from 1988; joined the Company in 1980. - -------- (/1/) Except where otherwise indicated, all references are to positions held with Fluor. (/2/) Fluor Daniel, Inc., which provides design, engineering, procurement, construction management, maintenance and other diversified services to a wide range of industrial, commercial, utility, natural resources, energy and governmental clients, is an indirectly wholly-owned subsidiary of Fluor. (/3/) A.T. Massey Coal Company, Inc. ("A. T. Massey"), is an indirectly wholly- owned subsidiary of Fluor which, along with A. T. Massey's subsidiaries, conducts A. T. Massey's coal-related businesses. (/4/) Massey Coal Services, Inc. is a wholly-owned subsidiary of A. T. Massey. (/5/) Rawl Sales & Processing Co. is a wholly-owned subsidiary of A. T. Massey. (/6/) Fluor Constructors International, Inc., a wholly-owned subsidiary of Fluor, provides construction and maintenance services to a variety of clients. 16 PART II Information for Items 5, 6 and 7 is contained in Fluor's 1996 Annual Report to stockholders, which information is incorporated herein by reference (and except for these sections, and sections incorporated herein by reference in Items 1 and 8 of this report, Fluor's 1996 Annual Report to stockholders is not to be deemed filed as part of this report):
ANNUAL REPORT TO STOCKHOLDERS ITEM NO. TITLE SECTION - -------- ----- ---------------- ITEM 5. Market for Registrant's Common Equity and Related Stockholder Matters................................. Stockholders' Reference ITEM 6. Selected Financial Data............................. Selected Financial Data ITEM 7. Management's Discussion and Analysis of Financial Condition and Results of Operations................. Management's Discussion and Analysis ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA.
Information for Item 8 is included in Fluor's consolidated financial statements as of October 31, 1996 and 1995, and for each of the three years in the period ended October 31, 1996, and Fluor's unaudited quarterly financial data for the two year period ended October 31, 1996, in the Consolidated Financial Statements (including the Consolidated Balance Sheet, Consolidated Statement of Earnings, Consolidated Statement of Cash Flows, Consolidated Statement of Shareholders' Equity and Notes to Consolidated Financial Statements) and Quarterly Financial Data sections of Fluor's 1996 Annual Report to stockholders, which are incorporated herein by reference. The report of independent auditors on Fluor's consolidated financial statements is in the Reports of Management and Independent Auditors section of Fluor's 1996 Annual Report to stockholders, and is also incorporated herein by reference. ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE. Not Applicable. PART III ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT. Information concerning Fluor's executive officers is included under the caption "Executive Officers of the Registrant" in Part I, following Item 4. Other information required by this item is included in the Biographical section of the Election of Directors portion of the definitive proxy statement pursuant to Regulation 14A, involving the election of directors, which is incorporated herein by reference and will be filed with the Securities and Exchange Commission (the "Commission") not later than 120 days after the close of Fluor's fiscal year ended October 31, 1996. ITEM 11. EXECUTIVE COMPENSATION. Fluor maintains certain employee benefit plans and programs in which its executive officers and directors are participants. Copies of these plans and programs are set forth or incorporated by reference as Exhibits 10.1 through 10.20 inclusive to this report. Certain of these plans and programs provide for payment of benefits or for acceleration of vesting of benefits upon the occurrence of a change of control of Fluor as that term is defined in such plans and programs. The amounts payable thereunder would represent an increased cost to be paid by Fluor (and indirectly by its stockholders) in the event of a change in control of Fluor. This increased cost would be a factor to be taken into account by a prospective purchaser of the Company in determining whether, and at what price, it would seek control of the Company and whether it would seek the removal of then existing management. 17 If a change of control were to have occurred on October 31, 1996, the additional amounts payable by Fluor, either in cash or in stock, if each of the five most highly compensated executive officers and all executive officers as a group were thereupon involuntarily terminated without cause would be as follows:
RESTRICTED SUPPLEMENTAL STOCK BENEFIT INDIVIDUAL OR GROUP PLANS(1) PLAN(2) ------------------- ----------- ------------ Leslie G. McCraw................................... $ 4,315,238 $1,210,261 Hugh K. Coble...................................... 3,211,296 756,414 Don L. Blankenship................................. 1,446,106 284,364 James O. Rollans................................... 1,642,304 170,618 James C. Stein..................................... 1,097,828 113,746 All Executive Officers (19) including the above.... $23,306,731 $4,034,293
- -------- (1) Value at October 31, 1996 of previously awarded restricted stock which would vest upon change of control. (2) Lump sum entitlement of previously awarded benefits which would vest upon change of control. Further disclosure required by this item is included in the Organization and Compensation Committee Report on Executive Compensation and Executive Compensation and Other Information sections of the definitive proxy statement pursuant to Regulation 14A, involving the election of directors, which is incorporated herein by reference and will be filed not later than 120 days after the close of Fluor's fiscal year ended October 31, 1996. ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT. Information required by this item is included in the Stock Ownership section of the Election of Directors portion of the definitive proxy statement pursuant to Regulation 14A, involving the election of directors, which is incorporated herein by reference and will be filed not later than 120 days after the close of Fluor's fiscal year ended October 31, 1996. ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS. Information required by this item is included in the Other Matters section of the Election of Directors portion of the definitive proxy statement pursuant to Regulation 14A, involving the election of directors, which is incorporated herein by reference and will be filed not later than 120 days after the close of Fluor's fiscal year ended October 31, 1996. PART IV ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES AND REPORTS ON FORM 8-K. (a) 1. Financial Statements: The financial statements required to be filed hereunder are listed on page 23 hereof. See Part II, Item 8 of this report for information regarding the incorporation by reference herein of such financial statements. 2. Financial Statement Schedules: All schedules have been omitted since the required information is not present or not present in amounts sufficient to require submission of the schedule, or because the information required is included in the consolidated financial statements and notes thereto. 3. Exhibits: 3.1 Restated Certificate of Incorporation of Fluor Corporation [filed as Exhibit 3.1 to Fluor's annual report on Form 10-K for the fiscal year ended October 31, 1987 and incorporated herein by reference] 3.2 Restated Bylaws (as amended effective January 28, 1997) of Fluor Corporation
18 4.1 Indenture dated July 1, 1986 between Fluor Corporation and Irving Trust Company, trustee [filed as Exhibit 4 to Registration No. 33- 6960 for the issuance of up to $250 million of debt securities and incorporated herein by reference] 4.2 Fluor Corporation Dividend Reinvestment Plan (as amended and restated June 30, 1995) [filed as Exhibit 4.2 to Fluor's annual report on Form 10-K for the fiscal year ended October 31, 1995 and incorporated herein by reference] EXECUTIVE COMPENSATION PLANS/PROGRAMS 10.1 Fluor Corporation and Subsidiaries Executive Incentive Compensation Plan (as amended and restated through September 15, 1988) [filed as Exhibit 10.2 to Fluor's quarterly report on Form 10-Q for the quarterly period ended July 31, 1996 and incorporated herein by reference] 10.2 Fluor Executive Deferred Compensation Program (as amended and restated effective May 1, 1995) [filed as Exhibit 10.2 to Fluor's annual report on Form 10-K for the fiscal year ended October 31, 1995 and incorporated herein by this reference] 10.3 Fluor Corporation Deferred Directors' Fees Program (as amended through November 15, 1983) [filed as Exhibit 10.4 to Fluor's quarterly report on Form 10-Q for the quarterly period ended April 30, 1995 and incorporated herein by reference] 10.4 1977 Fluor Executive Stock Plan (as amended by Amendment No. 4 effective December 9, 1986) [filed as Exhibit 10.6 to Fluor's annual report on Form 10-K for the fiscal year ended October 31, 1986 and incorporated herein by reference] 10.5 1981 Fluor Executive Stock Plan (as amended by Amendment No. 3 effective December 9, 1986) [filed as Exhibit 10.9 to Fluor's annual report on Form 10-K for the fiscal year ended October 31, 1986 and incorporated herein by reference] 10.6 1982 Fluor Executive Stock Option Plan (as amended by Amendment No. 2 effective December 9, 1986) [filed as Exhibit 10.10 to Fluor's annual report on Form 10-K for the fiscal year ended October 31, 1986 and incorporated herein by reference] 10.7 Fluor Executives' Health Plan Summary [filed as Exhibit 10.11 to Fluor's annual report on Form 10-K for the fiscal year ended October 31, 1985 and incorporated herein by reference] 10.8 Directors' Life Insurance Summary [filed as Exhibit 10(i) to Fluor's annual report on Form 10-K for the fiscal year ended October 31, 1980 and incorporated herein by reference] 10.9 Executive Tax Services Plan (as amended and effective as of November 1, 1993) [filed as Exhibit 10.10 to Fluor's annual report on Form 10-K for the fiscal year ended October 31, 1993 and incorporated herein by reference] 10.10 Executive Personal Financial Counseling Plan (as amended and effective as of November 1, 1993) [filed as Exhibit 10.11 to Fluor's annual report on Form 10-K for the fiscal year ended October 31, 1993 and incorporated herein by reference] 10.11 Company Automobile Policy Summary [filed as Exhibit 10.15 to Fluor's annual report on Form 10-K for the fiscal year ended October 31, 1989 and incorporated herein by reference] 10.12 Fluor Executives' Supplemental Benefit Plan (as amended by First Amendment effective November 15, 1983) [filed as Exhibit 10.16 to Fluor's annual report on Form 10-K for the fiscal year ended October 31, 1983 and incorporated herein by reference] 10.13 1988 Fluor Executive Stock Plan (as amended and restated effective December 6, 1994) [filed as Exhibit 10.13 to Fluor's annual report on Form 10-K for the fiscal year ended October 31, 1995 and incorporated herein by reference] 10.14 Fluor Corporation Change of Control Compensation Plan (as amended and restated by Second Amendment effective October 1, 1989) [filed as Exhibit 10.19 to Fluor's annual report on Form 10-K for the fiscal year ended October 31, 1989 and incorporated herein by reference]
19 10.15 Fluor Special Executive Incentive Plan (as amended effective December 6, 1994) [filed as Exhibit 10.15 to Fluor's annual report on Form 10-K for the fiscal year ended October 31, 1995 and incorporated herein by reference] 10.16 Retirement Plan for Outside Directors (effective as of May 1, 1992) [filed as Exhibit 10.18 to Fluor's annual report on Form 10-K for the fiscal year ended October 31, 1992 and incorporated herein by reference] 10.17 Officer Severance Plan (effective as of March 7, 1994) [filed as Exhibit 10.19 to Fluor's annual report on Form 10-K for the fiscal year ended October 31, 1994 and incorporated herein by reference] 10.18 Directors' Achievement Award Program (effective as of December 6, 1994) [filed as Exhibit 10.18 to Fluor's annual report on Form 10-K for the fiscal year ended October 31, 1995 and incorporated herein by reference] 10.19 Fluor Corporation Stock Plan for Non-Employee Directors (adopted effective March 14, 1995) [filed as Exhibit 10.21 to Fluor's quarterly report on Form 10-Q for the quarterly period ended April 30, 1995 and incorporated herein by reference] 10.20 1996 Fluor Executive Stock Plan (effective March 12, 1996 as amended December 10, 1996) OTHER CONTRACTS 10.21 Concourse Lease dated as of July 26, 1985 between Fluor Corporation and Fluor Engineers, Inc. (an entity now having the corporate name of Fluor Daniel, Inc.) with respect to a portion of the International Headquarters facility located in Irvine, California, formerly owned by Fluor (the "Irvine facility"); Schedule of substantially identical Building Pod Lease and Corporate Tower Lease; and Assignment of Master Leases dated July 26, 1985, assigning Fluor's lessor interest to Crow Winthrop Operating Partnership ("CWOP") [filed as Exhibit 10.21 to Fluor's annual report on Form 10-K for the fiscal year ended October 31, 1985 and incorporated herein by reference] 10.22 Amendment to Master Leases by and between CWOP, Fluor Daniel, Inc. and Fluor Corporation dated as of November 1, 1989 with respect to the Irvine facility [filed as Exhibit 10.19 to Fluor's annual report on Form 10-K for the fiscal year ended October 31, 1991 and incorporated herein by reference] 13 1996 Annual Report to stockholders (with the exception of the information incorporated by reference into Items 1, 5, 6, 7 and 8 of this report, Fluor's 1996 Annual Report to stockholders is not deemed to be filed as part of this report) 21 Fluor Corporation Subsidiaries 23 Consent of Independent Auditors--Ernst & Young LLP 24.1 Manually signed Power of Attorney executed by certain Fluor directors and officers 24.2 Manually signed Powers of Attorney executed by certain Fluor directors 27 Financial Data Schedule
(b) Reports on Form 8-K: None were filed during the last quarter of the period covered by this report. 20 SIGNATURES Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized. FLUOR CORPORATION J. M. CONAWAY January 28, 1997 By __________________________________ J. M. Conaway, Senior Vice President and Chief Financial Officer Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the registrant and in the capacities and on the dates indicated.
SIGNATURE TITLE DATE --------- ----- ---- PRINCIPAL EXECUTIVE OFFICER AND DIRECTOR: * Director, Chairman January 28, 1997 - ------------------------------------- of the Board and L. G. McCraw Chief Executive Officer PRINCIPAL FINANCIAL AND ACCOUNTING OFFICER: J. M. CONAWAY Senior Vice January 28, 1997 - ------------------------------------- President and Chief J. M. Conaway Financial Officer OTHER DIRECTORS: * Director January 28, 1997 - ------------------------------------- D. A. Blankenship * Director January 28, 1997 - ------------------------------------- C. A. Campbell, Jr. * Director January 28, 1997 - ------------------------------------- H. K. Coble * Director January 28, 1997 - ------------------------------------- P. J. Fluor * Director January 28, 1997 - ------------------------------------- D. P. Gardner Director January 28, 1997 - ------------------------------------- T. L. Gossage * Director January 28, 1997 - ------------------------------------- W. R. Grant * Director January 28, 1997 - ------------------------------------- B. R. Inman * Director January 28, 1997 - ------------------------------------- R. V. Lindsay
21
SIGNATURE TITLE DATE --------- ----- ---- * Director January 28, 1997 - ------------------------------------- V. S. Martinez * Director January 28, 1997 - ------------------------------------- B. Mickel * Director January 28, 1997 - ------------------------------------- M. R. Seger R. M. BUKATY *By__________________________________ R. M. Bukaty, Attorney-in-fact
Manually signed Powers of Attorney authorizing L. N. Fisher, R. M. Bukaty and R. R. Dryden and each of them, to sign the annual report on Form 10-K for the fiscal year ended October 31, 1996 and any amendments thereto as attorneys-in-fact for certain directors and officers of the registrant are included herein as Exhibits 24.1 and 24.2. 22 FLUOR CORPORATION INDEX TO FINANCIAL STATEMENTS AND FINANCIAL STATEMENT SCHEDULES ITEM 14(a) 1. FINANCIAL STATEMENTS The following financial statements are contained in Fluor's 1996 Annual Report to stockholders: Consolidated Balance Sheet at October 31, 1996 and 1995 Consolidated Statement of Earnings for the years ended October 31, 1996, 1995 and 1994 Consolidated Statement of Cash Flows for the years ended October 31, 1996, 1995 and 1994 Consolidated Statement of Shareholders' Equity for the years ended October 31, 1996, 1995 and 1994 Notes to Consolidated Financial Statements 2. FINANCIAL STATEMENT SCHEDULES All schedules have been omitted since the required information is not present or not present in amounts sufficient to require submission of the schedule, or because the information required is included in the consolidated financial statements and notes thereto. 23 EXHIBIT INDEX
SEQUENTIALLY EXHIBIT NUMBERED NO. DESCRIPTION PAGE ------- ----------- ------------ 3.1 Restated Certificate of Incorporation of Fluor Corporation [filed as Exhibit 3.1 to Fluor's annual report on Form 10-K for the fiscal year ended October 31, 1987 and incorporated herein by reference] 3.2 Restated Bylaws (as amended effective January 28, 1997) of Fluor Corporation 4.1 Indenture dated July 1, 1986 between Fluor Corporation and Irving Trust Company, trustee [filed as Exhibit 4 to Registration No. 33-6960 for the issuance of up to $250 million of debt securities and incorporated herein by reference] 4.2 Fluor Corporation Dividend Reinvestment Plan (as amended and restated June 30, 1995) [filed as Exhibit 4.2 to Fluor's annual report on Form 10-K for the fiscal year ended October 31, 1995 and incorporated herein by reference.] EXECUTIVE COMPENSATION PLANS/PROGRAMS 10.1 Fluor Corporation and Subsidiaries Executive Incentive Compensation Plan (as amended and restated through September 15, 1988) [filed as Exhibit 10.2 to Fluor's quarterly report on Form 10-Q for the quarterly period ended July 31, 1996 and incorporated herein by reference] 10.2 Fluor Executive Deferred Compensation Program (as amended and restated effective May 1, 1995) [filed as Exhibit 10.2 to Fluor's annual report on Form 10-K for the fiscal year ended October 31, 1995 and incorporated herein by this reference] 10.3 Fluor Corporation Deferred Directors' Fees Program (as amended through November 15, 1983) [filed as Exhibit 10.4 to Fluor's quarterly report on Form 10-Q for the quarterly period ended April 30, 1995 and incorporated herein by reference] 10.4 1977 Fluor Executive Stock Plan (as amended by Amendment No. 4 effective December 9, 1986) [filed as Exhibit 10.6 to Fluor's annual report on Form 10-K for the fiscal year ended October 31, 1986 and incorporated herein by reference] 10.5 1981 Fluor Executive Stock Plan (as amended by Amendment No. 3 effective December 9, 1986) [filed as Exhibit 10.9 to Fluor's annual report on Form 10-K for the fiscal year ended October 31, 1986 and incorporated herein by reference] 10.6 1982 Fluor Executive Stock Option Plan (as amended by Amendment No. 2 effective December 9, 1986) [filed as Exhibit 10.10 to Fluor's annual report on Form 10-K for the fiscal year ended October 31, 1986 and incorporated herein by reference] 10.7 Fluor Executives' Health Plan Summary [filed as Exhibit 10.11 to Fluor's annual report on Form 10-K for the fiscal year ended October 31, 1985 and incorporated herein by reference] 10.8 Directors' Life Insurance Summary [filed as Exhibit 10(i) to Fluor's annual report on Form 10-K for the fiscal year ended October 31, 1980 and incorporated herein by reference] 10.9 Executive Tax Services Plan (as amended and effective as of November 1, 1993) [filed as Exhibit 10.10 to Fluor's annual report on Form 10-K for the fiscal year ended October 31, 1993 and incorporated herein by reference] 10.10 Executive Personal Financial Counseling Plan (as amended and effective as of November 1, 1993) [filed as Exhibit 10.11 to Fluor's annual report on Form 10-K for the fiscal year ended October 31, 1993 and incorporated herein by reference]
SEQUENTIALLY EXHIBIT NUMBERED NO. DESCRIPTION PAGE ------- ----------- ------------ 10.11 Company Automobile Policy Summary [filed as Exhibit 10.15 to Fluor's annual report on Form 10-K for the fiscal year ended October 31, 1989 and incorporated herein by reference] 10.12 Fluor Executives' Supplemental Benefit Plan (as amended by First Amendment effective November 15, 1983) [filed as Exhibit 10.16 to Fluor's annual report on Form 10-K for the fiscal year ended October 31, 1983 and incorporated herein by reference] 10.13 1988 Fluor Executive Stock Plan (as amended and restated effective December 6, 1994) [filed as Exhibit 10.13 to Fluor's annual report on Form 10-K for the fiscal year ended October 31, 1995 and incorporated herein by reference] 10.14 Fluor Corporation Change of Control Compensation Plan (as amended and restated by Second Amendment effective October 1, 1989) [filed as Exhibit 10.19 to Fluor's annual report on Form 10-K for the fiscal year ended October 31, 1989 and incorporated herein by reference] 10.15 Fluor Special Executive Incentive Plan (as amended effective December 6, 1994) [filed as Exhibit 10.15 to Fluor's annual report on Form 10-K for the fiscal year ended October 31, 1995 and incorporated herein by reference] 10.16 Retirement Plan for Outside Directors (effective as of May 1, 1992) [filed as Exhibit 10.18 to Fluor's annual report on Form 10-K for the fiscal year ended October 31, 1992 and incorporated herein by reference] 10.17 Officer Severance Plan (effective as of March 7, 1994) [filed as Exhibit 10.19 to Fluor's annual report on Form 10-K for the fiscal year ended October 31, 1994 and incorporated herein by reference] 10.18 Directors' Achievement Award Program (effective as of December 6, 1994) [filed as Exhibit 10.18 to Fluor's annual report on Form 10-K for the fiscal year ended October 31, 1995 and incorporated herein by reference] 10.19 Fluor Corporation Stock Plan for Non-Employee Directors (adopted effective March 14, 1995) [filed as Exhibit 10.21 to Fluor's quarterly report on Form 10-Q for the quarterly period ended April 30, 1995 and incorporated herein by reference] 10.20 1996 Fluor Executive Stock Plan (effective March 12, 1996, as amended December 10, 1996) OTHER CONTRACTS 10.21 Concourse Lease dated as of July 26, 1985 between Fluor Corporation and Fluor Engineers, Inc. (an entity now having the corporate name of Fluor Daniel, Inc.) with respect to a portion of the International Headquarters facility located in Irvine, California, formerly owned by Fluor (the "Irvine facility"); Schedule of substantially identical Building Pod Lease and Corporate Tower Lease; and Assignment of Master Leases dated July 26, 1985, assigning Fluor's lessor interest to Crow Winthrop Operating Partnership ("CWOP") [filed as Exhibit 10.21 to Fluor's annual report on Form 10-K for the fiscal year ended October 31, 1985 and incorporated herein by reference] 10.22 Amendment to Master Leases by and between CWOP, Fluor Daniel, Inc. and Fluor Corporation dated as of November 1, 1989 with respect to the Irvine facility [filed as Exhibit 10.19 to Fluor's annual report on Form 10-K for the fiscal year ended October 31, 1991 and incorporated herein by reference]
SEQUENTIALLY EXHIBIT NUMBERED NO. DESCRIPTION PAGE ------- ----------- ------------ 13 1996 Annual Report to stockholders (with the exception of the information incorporated by reference into Items 1, 5, 6, 7 and 8 of this report, Fluor's 1996 Annual Report to stockholders is not deemed to be filed as part of this report) 21 Fluor Corporation Subsidiaries 23 Consent of Independent Auditors--Ernst & Young LLP 24.1 Manually signed Power of Attorney executed by certain Fluor directors and officers 24.2 Manually signed Powers of Attorney executed by certain Fluor directors 27 Financial Data Schedule
EX-3.2 2 RESTATED BY-LAWS OF FLUOR CORPORATION Exhibit 3.2 RESTATED BYLAWS (as amended January 28, 1997) OF FLUOR CORPORATION (a Delaware corporation) ARTICLE I OFFICES Section 1.01 Registered Office. The registered office of FLUOR ----------------- CORPORATION (hereinafter called the "Corporation") in the State of Delaware shall be at 32 Loockerman Square, Suite L-100, City of Dover, County of Kent, and the name of the registered agent at that address shall be The Prentice-Hall Corporation System, Inc. Section 1.02 Principal Office. The principal office for the transaction ---------------- of the business of the Corporation shall be at 3353 Michelson Drive, Irvine, California 92698. The Board of Directors (hereinafter called the "Board") is hereby granted full power and authority to change said principal office from one location to another. Section 1.03 Other Offices. The Corporation may also have an office or ------------- offices at such other place or places, either within or without the State of Delaware, as the Board may from time to time determine or as the business of the Corporation may require. ARTICLE II MEETINGS OF STOCKHOLDERS Section 2.01 Annual Meetings. Annual meetings of the stockholders of --------------- the Corporation for the purpose of electing directors and for the transaction of such other proper business as may come before such meetings may be held at such time, date and place as the Board shall determine by resolution. Section 2.02 Special Meetings. Special meetings of the stockholders of ---------------- the Corporation for any purpose or purposes may be called at any time by the Board, or by a committee of the Board which has been duly designated by the Board and whose powers and authority, as provided in a resolution of the Board or in the Bylaws, include the power to call such meeting, but such special meetings may not be called by any other person or persons; provided, however, that if and to the extent that any special meetings of stockholders may be called by any other person or persons specified in any provisions of the Certificate of Incorporation or any amendment thereto or any certificate filed under Section 151(g) of the Delaware General Corporation Law (or its successor statute as in effect from time to time hereafter), then such special meeting may also be called by the person or persons, in the manner, at the times and for the purposes so specified. Section 2.03 Place of Meetings. All meetings of the stockholders shall ----------------- be held at such places, within or without the State of Delaware, as may from time to time be designated by the person or persons calling the respective meeting and specified in the respective notices or waivers of notice thereof. Section 2.04 Notice of Stockholder Business. At an annual meeting of ------------------------------ the stockholders, only such business shall be conducted as shall have been properly brought before the meeting (a) by or at the direction of the Board of Directors or (b) by any stockholder of the Corporation who complies with the notice procedures set forth in this Section 2.04. For business to be properly brought before an annual meeting by a stockholder, the stockholder must have given timely notice thereof in writing to the Secretary of the Corporation. To be timely, a stockholder's notice must be delivered to or mailed and received at the principal office of the Corporation, not less than 30 days nor more than 60 days prior to the meeting; provided, however, that in the event that less than 40 days' notice or prior public disclosure of the date of the meeting is given or made to stockholders, notice by the stockholder to be timely must be received not later than the close of business on the 10th day following the day on which such notice of the date of the annual meeting was mailed or such public disclosure was made. A stockholder's notice to the Secretary shall set forth as to each matter the stockholder proposes to bring before the annual meeting (a) a brief description of the business desired to be brought before the annual meeting and the reasons for conducting such business at the annual meeting, (b) the name and address, as they appear on the books of the Corporation, of the stockholder proposing such business, (c) the class and number of shares of the Corporation which are beneficially owned by the stockholder, and (d) any material interest of the stockholder in such business. Notwithstanding anything in the Bylaws to the contrary, no business shall be conducted at an annual meeting except in accordance with the procedures set forth in this Section 2.04. The Chairman of an annual meeting shall, if the facts warrant, determine and declare to the meeting that business was not properly brought before the meeting in accordance with the provisions of this Section 2.04, and if he or she should so determine, he or she shall so declare to the meeting and any such business not properly brought before the meeting shall not be transacted. Section 2.05 Notice of Meetings. Except as otherwise required by law, ------------------ notice of each meeting of the stockholders, whether annual or special, shall be given not less than 10 nor more than 60 days before the date of the meeting to each stockholder of record entitled to vote at such meeting by delivering a typewritten or printed notice thereof to him or her personally, or by depositing such notice in the United States mail, in a postage prepaid envelope, directed to him or her at his or her post office address furnished by him or her to the Secretary of the Corporation for such purpose or, if he or she shall not have furnished to the Secretary his or her address for such purposes, then at his or her post office address last known to the Secretary, or by transmitting a notice thereof to him or her at such address by telegraph, cable or wireless. Except as otherwise expressly required by law, no publication of any notice of a meeting of the stockholders shall be required. Every notice of a meeting of the stockholders shall state the place, date and hour of the meeting, and, in the case of a special meeting, shall also state the 2 purpose or purposes for which the meeting is called. Notice of any meeting of stockholders shall not be required to be given to any stockholder who shall have waived such notice and such notice shall be deemed waived by any stockholder who shall attend such meeting in person or by proxy, except a stockholder who shall attend such meeting for the express purpose of objecting, at the beginning of the meeting, to the transaction of any business because the meeting is not lawfully called or convened. Except as otherwise expressly required by law, notice of any adjourned meeting of the stockholders need not be given if the time and place thereof are announced at the meeting at which the adjournment is taken. Section 2.06 Quorum. Except in the case of any meeting for the election ------ of directors summarily ordered as provided by law, the holders of record of a majority in voting interest of the shares of stock of the Corporation entitled to be voted thereat, present in person or by proxy, shall constitute a quorum for the transaction of business at any meeting of the stockholders of the Corporation or any adjournment thereof. In the absence of a quorum at any meeting or any adjournment thereof, a majority in voting interest of the stockholders present in person or by proxy and entitled to vote thereat or, in the absence therefrom of all the stockholders, any officer entitled to preside at, or to act as secretary of, such meeting may adjourn such meeting from time to time. At any such adjourned meeting at which a quorum is present any business may be transacted which might have been transacted at the meeting as originally called. Section 2.07 Voting. ------ (a) Each stockholder shall, at each meeting of the stockholders, be entitled to vote in person or by proxy each share or fractional share of the stock of the Corporation having voting rights on the matter in question and which shall have been held by him or her and registered in his or her name on the books of the Corporation: (i) on the date fixed pursuant to Section 6.05 of the Bylaws as the record date for the determination of stockholders entitled to notice of and to vote at such meeting, or (ii) if no such record date shall have been so fixed, then (a) at the close of business on the day next preceding the day on which notice of the meeting shall be given or (b) if notice of the meeting shall be waived, at the close of business on the day next preceding the day on which meeting shall be held. (b) Shares of its own stock belonging to the Corporation or to another corporation, if a majority of the shares entitled to vote in the election of directors in such other corporation is held, directly or indirectly, by the Corporation, shall neither be entitled to vote nor be counted for quorum purposes. Persons holding stock of the Corporation in a fiduciary capacity shall be entitled to vote such stock. Persons whose stock is pledged shall be entitled to vote, unless in the transfer by the pledgor on the books of the Corporation he or she shall have expressly empowered the pledgee to vote thereon, in which case only the pledgee, or his or her proxy, may represent such stock and vote thereon. Stock having voting power standing of record in the names of two or more persons, whether fiduciaries, members of a partnership, joint tenants, tenants in common, tenants by the entirety or otherwise, or with respect to which two or more 3 persons have the same fiduciary relationship, shall be voted in accordance with the provisions of the General Corporation Law of the State of Delaware. (c) Any such voting rights may be exercised by the stockholder entitled thereto in person or by his or her proxy appointed by an instrument in writing, subscribed by such stockholder or by his or her attorney thereunto authorized and delivered to the secretary of the meeting; provided, however, that no proxy shall be voted or acted upon after three years from its date unless said proxy shall provide for a longer period. The attendance at any meeting of a stockholder who may theretofore have given a proxy shall not have the effect of revoking the same unless he or she shall in writing so notify the secretary of the meeting prior to the voting of the proxy. At any meeting of the stockholders all matters, except as otherwise provided in the Certificate of Incorporation, in the Bylaws or by law, shall be decided by the vote of a majority in voting interest of the stockholders present in person or by proxy and entitled to vote thereat and thereon, a quorum being present. The vote at any meeting of the stockholders on any question need not be by ballot, unless so directed by the chairman of the meeting. On a vote by ballot each ballot shall be signed by the stockholder voting, or by his or her proxy, if there be such proxy, and it shall state the number of shares voted. Section 2.08 List of Stockholders. The Secretary of the Corporation -------------------- shall prepare and make, at least 10 days before every meeting of stockholders, a complete list of the stockholders entitled to vote at the meeting, arranged in alphabetical order, and showing the address of each stockholder and the number of shares registered in the name of each stockholder. Such list shall be open to the examination of any stockholder, for any purpose germane to the meeting, during ordinary business hours, for a period of at least 10 days prior to the meeting, either at a place within the city where the meeting is to be held, which place shall be specified in the notice of the meeting, or, if not so specified, at the place where the meeting is to be held. The list shall also be produced and kept at the time and place of the meeting during the entire duration thereof, and may be inspected by any stockholder who is present. Section 2.09 Judges. If at any meeting of the stockholders a vote by ------ written ballot shall be taken on any question, the chairman of such meeting may appoint a judge or judges to act with respect to such vote. Each judge so appointed shall first subscribe an oath faithfully to execute the duties of a judge at such meeting with strict impartiality and according to the best of his or her ability. Such judges shall decide upon the qualification of the voters and shall report the number of shares represented at the meeting and entitled to vote on such question, shall conduct and accept the votes, and, when the voting is completed shall ascertain and report the number of shares voted respectively for and against the question. Reports of the judges shall be in writing and subscribed and delivered by them to the Secretary of the Corporation. The judges need not be stockholders of the Corporation, and any officer of the Corporation may be a judge on any question other than a vote for or against a proposal in which he or she shall have a material interest. 4 ARTICLE III BOARD OF DIRECTORS Section 3.01 General Powers. The property, business and affairs of the -------------- Corporation shall be managed by the Board. Section 3.02 Number. The authorized number of directors of the ------ Corporation shall be thirteen and such authorized number shall not be changed except by a Bylaw or amendment thereof duly adopted by the stockholders in accordance with the Certificate of Incorporation or by the Board amending this Section 3.02. Section 3.03 Election of Directors. The directors shall be elected by --------------------- the stockholders of the Corporation, and at each election the persons receiving the greatest number of votes, up to the number of directors then to be elected, shall be the persons then elected. The election of directors is subject to any provisions contained in the Certificate of Incorporation relating thereto, including any provisions for a classified board and for cumulative voting. Section 3.04 Notice of Stockholder Nominees. Only persons who are ------------------------------ nominated in accordance with the procedures set forth in the Bylaws shall be eligible for election as directors. Nominations of persons for election to the Board of Directors of the Corporation may be made at a meeting of stockholders (a) by or at the direction of the Board of Directors or (b) by any stockholder of the Corporation entitled to vote for the election of directors at the meeting who complies with the notice procedures set forth in this Section 3.04. Such nominations, other than those made by or at the direction of the Board of Directors, shall be made pursuant to timely notice in writing to the Secretary of the Corporation. To be timely, a stockholder's notice shall be delivered to or mailed and received at the principal office of the Corporation not less than 30 days nor more than 60 days prior to the meeting; provided, however, that in the event that less than 40 days' notice or prior public disclosure of the date of the meeting is given or made to stockholders, notice by the stockholder to be timely must be received not later than the close of business on the 10th day following the day on which such notice of the date of the meeting was mailed or such public disclosure was made. Such stockholder's notice shall set forth (a) as to each person whom the stockholder proposes to nominate for election or re- election as a director, all information relating to such person that is required to be disclosed in solicitations of proxies for election of directors, or is otherwise required, in each case pursuant to Regulation 14A under the Securities Exchange Act of 1934, as amended (including without limitation such person's written consent to be named in the proxy statement as a nominee and to serve as a director if elected); and (b) as to the stockholder proposing such nomination (i) the name and address, as they appear on the books of the Corporation, of such stockholder, and (ii) the class and number of shares of the Corporation which are beneficially owned by such stockholder. At the request of the Board of Directors any person nominated by the Board of Directors for election as a director shall furnish to the Secretary of the Corporation that information required to be set forth in a stockholder's notice of nomination which pertains to the nominee. No person shall be eligible for election as a director of the Corporation unless nominated in accordance with the procedures set forth in the Bylaws. The Chairman of the meeting shall, if the facts warrant, determine and declare to the meeting that a nomination was not made in accordance with the procedures 5 prescribed by the Bylaws, and if he or she should so determine, he or she shall so declare to the meeting and the defective nomination shall be disregarded. Section 3.05 Mandatory Retirement. The Chairman of the Board and the -------------------- President and any former Chairman of the Board and any former President, if serving as a director of the Corporation at age 72, shall retire from the Board at the end of the calendar year in which his or her 72nd birthday occurs. Each other employee or former employee of the Corporation or its subsidiaries serving as a director of the Corporation at age 65 shall retire from the Board at the end of the calendar year in which his or her 65th birthday occurs unless the Chairman of the Board recommends and the Board approves his or her continued service as a non-employee director. Each other employee of the Corporation or its subsidiaries under age 65 serving as a director of the Corporation who elects to take early retirement or who for any other reason is no longer an officer of the Corporation or its subsidiaries shall retire from the Board as of the date he or she ceases to be an officer unless the Chairman of the Board recommends and the Board approves his or her continued directorship. Each non- employee director of the Corporation serving at age 72 shall retire from the Board at the end of the calendar year in which his or her 72nd birthday occurs. For purposes of this Section, "end of the calendar year" shall include the period ending with the seventh day of January next following. Section 3.06 Resignations. Any director of the Corporation may resign ------------ at any time by giving written notice to the Board or to the Secretary of the Corporation. Any such resignation shall take effect at the time specified therein, or, if the time be not specified, it shall take effect immediately upon its receipt; and, unless otherwise specified therein, the acceptance of such resignation shall not be necessary to make it effective. Section 3.07 Vacancies. Except as otherwise provided in the Certificate --------- of Incorporation, any vacancy in the Board, whether because of death, resignation, disqualification, an increase in the number of directors, or any other cause, may be filled by vote of the majority of the remaining directors, although less than a quorum. Each director so chosen to fill a vacancy shall hold office until his or her successor shall have been elected and shall qualify or until he or she shall resign or shall have been removed. Section 3.08 Place of Meeting, etc. The Board may hold any of its --------------------- meetings at such place or places within or without the State of Delaware as the Board may from time to time by resolution designate or as shall be designated by the person or persons calling the meeting or in the notice or a waiver of notice of any such meeting. Directors may participate in any regular or special meeting of the Board by means of conference telephone or similar communications equipment pursuant to which all persons participating in the meeting of the Board can hear each other, and such participation shall constitute presence in person at such meeting. Section 3.09 First Meeting. The Board shall meet as soon as practicable ------------- after each annual election of directors and notice of such first meeting shall not be required. Section 3.10 Regular Meetings. Regular meetings of the Board may be ---------------- held at such times as the Board shall from time to time by resolution determine. If any day fixed for a meeting shall be a legal holiday at the place where the meeting is to be held, then the meeting 6 shall be held at the same hour and place on the next succeeding business day not a legal holiday. Except as provided by law, notice of regular meetings need not be given. Section 3.11 Special Meetings. Special meetings of the Board may be ---------------- called at any time by the Chairman of the Board or the President or by any two directors, to be held at the principal office of the Corporation, or at such other place or places, within or without the State of Delaware, as the person or persons calling the meeting may designate. Notice of all special meetings of the Board shall be given to each director by two days' service of the same by telegram, by letter, or personally. Such notice may be waived by any director and any meeting shall be a legal meeting without notice having been given if all the directors shall be present thereat or if those not present shall, either before or after the meeting, sign a written waiver of notice of, or a consent to, such meeting or shall after the meeting sign the approval of the minutes thereof. All such waivers, consents or approvals shall be filed with the corporate records or be made a part of the minutes of the meeting. Section 3.12 Quorum and Manner of Acting. Except as otherwise provided --------------------------- in the Bylaws or by law, the presence of a majority of the authorized number of directors shall be required to constitute a quorum for the transaction of business at any meeting of the Board, and all matters shall be decided at any such meeting, a quorum being present, by the affirmative votes of a majority of the directors present. In the absence of a quorum, a majority of directors present at any meeting may adjourn the same from time to time until a quorum shall be present. Notice of any adjourned meeting need not be given. The directors shall act only as a Board, and the individual directors shall have no power as such. Section 3.13 Action by Consent. Any action required or permitted to be ----------------- taken at any meeting of the Board or of any committee thereof may be taken without a meeting if a written consent thereto is signed by all members of the Board or of such committee, as the case may be, and such written consent is filed with the minutes of proceedings of the Board or such committee. Section 3.14 Compensation. No stated salary need be paid directors, as ------------ such, for their services, but, by resolution of the Board, a fixed sum and expenses of attendance, if any, may be allowed for attendance at each regular or special meeting of the Board or an annual directors' fee may be paid; provided that nothing herein contained shall be construed to preclude any director from serving the Corporation in any other capacity and receiving compensation therefore. Members of special or standing committees may be allowed like compensation for attending committee meetings. Section 3.15 Committees. The Board may, by resolution passed by a ---------- majority of the whole Board, designate one or more committees, each committee to consist of one or more of the directors of the Corporation. Former employees of the Corporation or its subsidiaries who are no longer officers of the Corporation or its subsidiaries, if serving as a director of the Corporation, shall not be eligible to serve as a member of any committee of the Board. Except as otherwise provided in the Board resolution designating a committee, the presence of a majority of the authorized number of members of such committee shall be required to constitute a quorum for 7 the transaction of business at any meeting of such committee. Any such committee, to the extent provided in the resolution of the Board, shall have and may exercise all the powers and authority of the Board in the management of the business and affairs of the Corporation, and may authorize the seal of the Corporation to be affixed to all papers which may require it; but no such committee shall have any power or authority in reference to amending the Certificate of Incorporation, adopting an agreement of merger or consolidation, recommending to the stockholders the sale, lease or exchange of all or substantially all of the Corporation's property and assets, recommending to the stockholders a dissolution of the Corporation or a revocation of the dissolution, or amending the Bylaws of the Corporation; and unless the resolution of the Board expressly so provides, no such committee shall have the power or authority to declare a dividend or to authorize the issuance of stock. Any such committee shall keep written minutes of its meetings and report the same to the Board at the next regular meeting of the Board. Section 3.16 Officers of the Board. The Board shall have a Chairman of --------------------- the Board and may, at the discretion of the Board, have a Vice Chairman and other officers. The Chairman of the Board and the Vice Chairman shall be appointed from time to time by the Board, unless such positions are elected offices of the Corporation, currently filled, and shall have such powers and duties as shall be designated by the Board. ARTICLE IV OFFICERS Section 4.01 Officers. The officers of the Corporation shall be a -------- Chairman of the Board, a Chief Executive Officer, a Secretary, a Treasurer and such other officers as may be appointed by the Board as the business of the Corporation may require. Officers shall have such powers and duties as are permitted or required by law or as may be specified by or in accordance with resolutions of the Board. Any number of offices may be held by the same person. Unless the Board shall otherwise determine, the Chairman of the Board shall be the Chief Executive Officer of the Corporation. In the absence of any contrary determination by the Board, the Chief Executive Officer shall, subject to the power and authority of the Board, have general supervision, direction and control of the officers, employees, business and affairs of the Corporation. Section 4.02 Election and Term. The officers of the Corporation shall ----------------- be elected annually by the Board. The Board may at any time and from time to time elect such additional officers as the business of the Corporation may require. Each officer shall hold his or her office until his or her successor is elected and qualified or until his or her earlier resignation or removal. Section 4.03 Removal and Resignation. Any officer may be removed, ----------------------- either with or without cause, by a majority of the directors at the time in office, at any regular or special meeting of the Board. Any officer may resign at any time by giving notice to the Board. Such resignation shall take effect at the time specified in such notice or, in the absence of such specification, at the date of the receipt by the Board of such notice. Unless otherwise specified in such notice, the acceptance of such resignation shall not be necessary to make it effective. 8 Section 4.04 Vacancies. Any vacancy occurring in any office of the --------- Corporation by death, resignation, removal or otherwise, shall be filled in the manner prescribed in these Bylaws for the regular appointment to such office. ARTICLE V CONTRACTS, CHECKS, DRAFTS, BANK ACCOUNTS, ETC. Section 5.01 Execution of Contracts. The Board, except as in the Bylaws ---------------------- otherwise provided, may authorize any officer or officers, agent or agents, to enter into any contract or execute any instrument in the name and on behalf of the Corporation, and such authority may be general or confined to specific instances; and unless so authorized by the Board or by the Bylaws, no officer, agent or employee shall have any power or authority to bind the Corporation by any contract or engagement or to pledge its credit or to render it liable for any purpose or in any amount. Section 5.02 Checks, Drafts, etc. All checks, drafts or other orders ------------------- for payment of money, notes or other evidence of indebtedness, issued in the name of or payable to the Corporation, shall be signed or endorsed by such person or persons and in such manner as, from time to time, shall be determined by resolution of the Board. Each such person shall give such bond, if any, as the Board may require. Section 5.03 Deposit. All funds of the Corporation not otherwise ------- employed shall be deposited from time to time to the credit of the Corporation in such banks, trust companies or other depositories as the Board may select, or as may be selected by any officer or officers, assistant or assistants, agent or agents, or attorney or attorneys of the Corporation to whom such power shall have been delegated by the Board. For the purpose of deposit and for the purpose of collection for the account of the Corporation, the Chief Executive Officer, the President or the Treasurer (or any other officer or officers, assistant or assistants, agent or agents, or attorney or attorneys of the Corporation who shall from time to time be determined by the Board) may endorse, assign and deliver checks, drafts and other orders for the payment of money which are payable to the order of the Corporation. Section 5.04 General and Special Bank Accounts. The Board may from time --------------------------------- to time authorize the opening and keeping of general and special bank accounts with such banks, trust companies or other depositories as the Board may select or as may be selected by any officer or officers, assistant or assistants, agent or agents, or attorney or attorneys of the Corporation to whom such power shall have been delegated by the Board. The Board may make such special rules and regulations with respect to such bank accounts, not inconsistent with the provisions of the Bylaws, as it may deem expedient. 9 ARTICLE VI SHARES AND THEIR TRANSFER Section 6.01 Certificates for Stock. Every owner of stock of the ---------------------- Corporation shall be entitled to have a certificate or certificates, to be in such form as the Board shall prescribe, certifying the number and class of shares of the stock of the Corporation owned by him or her. The certificates representing shares of such stock shall be numbered in the order in which they shall be issued and shall be signed in the name of the Corporation by the President and by the Secretary. Any or all of the signatures on the certificates may be a facsimile. In case any officer, transfer agent or registrar who has signed or whose facsimile signature has been placed upon any such certificate shall thereafter have ceased to be such officer, transfer agent or registrar before such certificate is issued, such certificate may nevertheless be issued by the Corporation with the same effect as though the person who signed such certificate, or whose facsimile signature shall have been placed thereupon, were such officer, transfer agent or registrar at the date of issue. A record shall be kept of the respective names of the persons, firms or corporations owning the stock represented by such certificates, the number and class of shares represented by such certificates, respectively, and the respective dates thereof, and in case of cancellation the respective dates of cancellation. Every certificate surrendered to the Corporation for exchange or transfer shall be cancelled, and no new certificate or certificates shall be issued in exchange for any existing certificate until such existing certificate shall have been so cancelled, except in cases provided for in Section 6.04 of the Bylaws. Section 6.02 Transfers of Stock. Transfers of shares of stock of the ------------------ Corporation shall be made only on the books of the Corporation by the registered holder thereof, or by his or her attorney thereunto authorized by power of attorney duly executed and filed with the Secretary, or with a transfer clerk or a transfer agent appointed as provided in Section 6.03 of the Bylaws, and upon surrender of the certificate or certificates for such shares properly endorsed and the payment of all taxes thereon. The person in whose name shares of stock stand on the books of the Corporation shall be deemed the owner thereof for all purposes as regards the Corporation. Whenever any transfer of shares shall be made for collateral security, and not absolutely, such fact shall be stated expressly in the entry of transfer if, when the certificate or certificates shall be presented to the Corporation for transfer, both the transferor and the transferee request the Corporation to do so. Section 6.03 Regulations. The Board may make such rules and regulations ----------- as it may deem expedient, not inconsistent with the Bylaws, concerning the issue, transfer and registration of certificates for shares of the stock of the Corporation. It may appoint, or authorize any officer or officers to appoint, one or more transfer clerks or one or more transfer agents and one or more registrars, and may require all certificates for stock to bear the signature or signatures of any of them. Section 6.04 Lost, Stolen, Destroyed, And Mutilated Certificates. In --------------------------------------------------- any case of loss, theft, destruction, or mutilation of any certificate of stock, another may be issued in its place upon proof of such loss, theft, destruction, or mutilation and upon the giving of a bond of indemnity to the Corporation in such form and in such sum as the Board may direct; provided, 10 however, that a new certificate may be issued without requiring any bond when, in the judgment of the Board, it is proper so to do. Section 6.05 Fixing Date for Determination of Stockholders of Record. --------------------------------------------- --------- In order that the Corporation may determine the stockholders entitled to notice of or to vote at any meeting of stockholders or any adjournment thereof, or entitled to receive payment of any dividend or other distribution or allotment of any rights, or entitled to exercise any rights in respect of any other change, conversion or exchange of stock or for the purpose of any other lawful action, the Board may fix, in advance, a record date, which shall not be more than 60 nor less than 10 days before the date of such meeting, nor more than 60 days prior to any other action. If, in any case involving the determination of stockholders for any purpose other than notice of or voting at a meeting of stockholders, the Board shall not fix such a record date, the record date for determining stockholders for such purpose shall be the close of business on the day on which the Board shall adopt the resolution relating thereto. A determination of stockholders entitled to notice of or to vote at a meeting of stockholders shall apply to any adjournment of such meeting; provided, however, that the Board may fix a new record date for the adjourned meeting. ARTICLE VII MISCELLANEOUS Section 7.01 Seal. The Board shall provide a corporate seal, which ---- shall be in the form of a circle and shall bear the name of the Corporation and words and figures showing that the Corporation was incorporated in the State of Delaware and the year of incorporation. Section 7.02 Waiver of Notices. Whenever notice is required to be given ----------------- by the Bylaws or the Certificate of Incorporation or by law, the person entitled to said notice may waive such notice in writing, either before or after the time stated therein, and such waiver shall be deemed equivalent to notice. Section 7.03 Fiscal Year. The fiscal year of the Corporation shall end ----------- on the 31st day of October of each year. Section 7.04 Amendments. The Bylaws, or any of them, may be rescinded, ---------- altered, amended or repealed, and new Bylaws may be made, (i) by the Board, by vote of a majority of the number of directors then in office as directors, acting at any meeting of the Board, or (ii) by the vote of the holders of not less than 80% of the total voting power of all outstanding shares of voting stock of the Corporation, at any annual meeting of stockholders, without previous notice, or at any special meeting of stockholders, provided that notice of such proposed amendment, modification, repeal or adoption is given in the notice of special meeting. Any Bylaws made or altered by the stockholders may be altered or repealed by the Board or may be altered or repealed by the stockholders. 11 EX-10.20 3 1996 FLUOR EXECUTIVE STOCK PLAN EXHIBIT 10.20 FLUOR CORPORATION 1996 FLUOR EXECUTIVE STOCK PLAN (As amended December 10, 1996) 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 1 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 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. 2 (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 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 -------------- 3 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 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 4 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, 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 ------------------------ 5 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 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 6 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 in accordance with such rules as may be established by the Committee from time to time. During the lifetime of an Optionee, the Option shall be exercisable only in accordance with such rules as may be established by the Committee from time to time. 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 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 7 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 estate 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 Op tion. (f) The foregoing notwithstanding, the Committee may elect, in its sole discretion, to make grants of Options which have provisions regarding the effect of death or other termination of employment which are different than those set forth in paragraphs (a) through (d) of this Section 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. 8 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 otherwise transferred except pursuant to the following provisions: 9 (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. 10 ARTICLE VII STOCK CERTIFICATES Sec. 7.1 STOCK CERTIFICATES ------------------ 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 and from time to time and in any respect amend or modify, the Plan, provided, 11 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; (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 -------------------------- 12 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 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. 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 ------------------ 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, except in accordance with such rules as may be established by the Committee from time to time. 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. 13 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. 14 EX-13 4 1996 ANNUAL REPORT TO STOCKHOLDERS Fluor Corporation ================================================================================ Mission Statement As Fluor Daniel employees, our mission is to assist clients in attaining a competitive advantage by delivering quality services of unmatched value. Company Description Fluor Corporation is one of the world's largest international engineering, construction, maintenance and diversified services companies, with an important investment in low-sulfur coal. Fluor Daniel, the company's principal operating business, provides a broader range of technical services to more clients in more industries and geographic locations than any global competitor. Fluor Daniel provides global capability from more than 80 offices worldwide. A. T. Massey, Fluor's coal operation, ranks among the top five U.S. coal companies, producing high-quality, low-sulfur steam coal for the electric generating industry, as well as industrial customers, and metallurgical coal for the steel industry. On the Cover Fluor Corporation is dedicated to accelerated, consistent, long-term growth. We hope you enjoy this year's annual report, which has taken a lighthearted approach to conveying some serious messages about the company's strategy and growth potential. Table of Contents 1 Key Highlights 2 1996 Key Achievements 3 Letter to Stockholders 4 Accelerating Growth - No Borders, No Limits 7 Operations Report 21 Financials 22 Operating Statistics 23 Selected Financial Data 24 Management's Discussion and Analysis 28 Consolidated Financial Statements 44 Reports of Management and Independent Auditors 45 Quarterly Financial Data 45 Worldwide Offices 46 Directors 48 Officers 49 Stockholders' Reference 1996 Annual Report ================================================================================ Key Highlights Net earnings increased 16 percent to $268 million or $3.17 per share, a new record. Earnings from continuing operations have grown on average more than 15 percent annually for the past nine years. New awards increased 22 percent to a record $12.5 billion; backlog grew 7 percent to $15.8 billion. Fluor Daniel reported operating profits up 12 percent to $320 million, the highest in its history. Diversified Services, the extension of core competencies, was a major contributor to Fluor Daniel's growth and is enhancing future earnings potential. A.T. Massey posted record operating profits of $135 million, up 21 percent. Fluor Daniel and Massey further improved their excellent safety records. Fluor Daniel remains the world's safest contractor. Acquisition activity and capital spending to enhance the company's growth potential increased significantly in 1996. Quarterly cash dividends for 1997 were raised 12 percent to 19 cents per share, representing a payout of approximately 24 percent of 1996 earnings. Fluor stock increased 16 percent in fiscal 1996 from $56.50 to $65.50. [GRAPH APPEARS HERE] 89 90 91 92 93 94 95 96 - ------------------------------------- 84 119 153 135 167 192 232 268 - ------------------------------------- Earnings from Continuing Operations dollars in millions [GRAPH APPEARS HERE] 89 90 91 92 93 94 95 96 - ------------------------------------- .14 .24 .32 .40 .48 .52 .60 .68 - ------------------------------------- Dividends dollars [GRAPH APPEARS HERE] 89 90 91 92 93 94 95 96 - ------------------------------------- .28 .23 .21 .18 .15 .11 .10 .07* - ------------------------------------- Safety Performance Lost Workday Incidence Rates for Fluor Daniel *70 times better than the National Industry Average [GRAPH APPEARS HERE] 89 90 91 92 93 94 95 96 - --------------------------------------------------------------- 28 3/4 32 3/8 45 5/8 44 5/8 40 3/4 49 1/2 56 1/2 65 1/2 - --------------------------------------------------------------- Stock Price dollars Fluor Corporation 2 ==============================================================================
1996 Key Achievements Percent $ in thousands, except per share amounts 1996 1995 Change - -------------------------------------------------------------------------------------------------------- Fiscal Year Revenues $ 11,015,192 $ 9,301,384 18 Net earnings 268,084 231,768 16 Earnings per share $ 3.17 $ 2.78 14 Return on average shareholders' equity 17.4% 17.6% -- Capital expenditures $ 392,436 $ 318,942 23 New awards $ 12,487,800 $ 10,257,100 22 Produced coal sold (thousands of short tons) 31,091 27,410 13 Cash dividends per common share $ .68 $ .60 13 ------------------------------------------- At Fiscal Year End Working capital $ 151,255 $ 173,026 -13 Total assets 3,951,726 3,228,906 22 Backlog* 15,757,400 14,724,900 7 Capitalization Long-term debt 2,967 2,873 3 Shareholders' equity 1,669,726 1,430,814 17 ------------------------------------------- Total capitalization $ 1,672,693 $ 1,433,687 17 Long-term debt as a percent of total capitalization .2% .2% -- Shareholders' equity per common share $ 19.93 $ 17.20 16 Closing stock price $ 65.50 $ 56.50 16 ------------------------------------------- Salaried employees 27,514 18,880 46 Craft/hourly employees 24,947 22,798 9 ------------------------------------------- Total employees 52,461 41,678 26 -------------------------------------------
The quarterly dividend was increased from $.15 per share to $.17 per share in the first quarter of 1996 and to $.19 per share in the first quarter of 1997. *Backlog does not reflect A.T. Massey Coal operations or certain Diversified Services activities. [GRAPH APPEARS HERE] - --------------------------------- Operating Profit by Segment 1996 - --------------------------------- . E&C 70% . Coal 30% [GRAPH APPEARS HERE] 89 90 91 92 93 94 95 96 - ------------------------------------- 6.1 7.2 6.6 6.6 7.9 8.5 9.3 11.0 - ------------------------------------- Revenues from Continuing Operations dollars in billions [GRAPH APPEARS HERE] 89 90 91 92 93 94 95 96 - ------------------------------------- 130 126 107 273 172 237 319 392 - ------------------------------------- Capital Expenditures Excludes discontinued operations dollars in millions - ------------------------------------- . E&C . Coal 1996 Annual Report 3 ================================================================================ Dear Fellow Stockholder In reflecting on the past year, I'm struck by a number of strong beliefs. First, there is a feeling of just how fortunate I am to be part of the Fluor Daniel and Massey teams, both clear leaders in their respective industries. Second, there is the constant reinforcement that those teams are made up of such outstanding and dedicated members who are constantly challenging the status quo as they seek to improve in all aspects. Third, there is the realization that we are exceptionally well positioned to benefit from explosive global expansion of so many industries. Each day we see the importance and power of liberalized trade and investment policies. Your company just completed the best year in its history. Records were set in four key areas: earnings up 16 percent; revenues up 18 percent; new awards up a strong 22 percent; and a safety performance which surpassed last year's impressive results and reconfirms that Fluor Daniel is indeed the safest contractor worldwide. Most of our markets were highly active. In our Fluor Daniel operations, demand for petroleum/petrochemical and chemical facilities; a number of mining, electronics, telecommunication, consumer product projects and power opportunities; along with important new projects from the U.S. Department of Energy, all helped to improve performance. Our Diversified Services Group recorded a particularly strong year, including positive results from recent acquisitions. As reported to you in previous annual reports, we are providing certain of our core competencies to clients outside the typical project cycle, thereby increasing our growth and profit potential. In A.T. Massey's operations, demand for low-sulfur steam and metallurgical coal also remained strong. This, together with our new longwall mining installation, which dramatically reduces cost and increases output, and our unique ability to rapidly shift production to meet customer needs, combined to help give Massey its best year ever. Results from continuing operations have now grown on average 15 percent for the past nine years, ranking us among the best performing of all U.S. industry. Yet we believe we can do better in both growth rate and return on shareholders' equity. As we continually remind employees worldwide, this company has only scratched the surface of its potential. As we look ahead, we are very encouraged about our prospects. Global economic expansion and capital spending appear to be on a sustainable, upward trend, with Latin America, Asia Pacific, the Middle East, and Central and Eastern Europe heading the list. But just as significant, the strategy we have embraced--to provide more services to more clients in more locations than any global competitor and to do so in a way which is BETTER, FASTER, CHEAPER and SAFER--is facilitating accomplishment of the many stretch goals we have set for ourselves. In building upon last year's success, you should know that we contemplate further actions designed to increase shareholder value. For the past three years, we have made a number of strategic investments, both in acquisitions and internal expansion with such moves as the opening of new offices, the relocation of key executives to be closer to markets and clients, and development of important new technologies and services. While many of these investments are beginning to show results, we are mindful that initiatives of this kind tend to bring along corresponding increases in operating expenses, causing pressure on margins. Throughout 1997, we will take steps to strengthen our margins through achievement of greater cost efficiencies in our operations and projects, and continue to be highly selective in those projects we choose to pursue. In the pages which follow, we discuss the vital importance that culture continues to play in our ongoing success. We truly see no borders nor limits to our market potential and what we can achieve when we fully focus our global resources. Our core strengths are the envy of our industry, and the culture we are creating assures their long-term viability. In referencing our many successes, I would be remiss if I did not acknowledge the contributions of our Board. You should know that your Board is actively involved in overseeing company initiatives and last fall spent several days with our Leadership Team reviewing overall company direction and strategy. Through their knowledge of our businesses and [PICTURE APPEARS HERE] perspectives on our industry, many thoughtful observations were put forth which have been key to firming up our plans for the future. It was with a great deal of pleasure that we welcomed two new directors to our Board. Don L. Blankenship, chairman and chief executive officer of A.T. Massey, was elected in September. Thomas L. Gossage, retired chairman and former president and chief executive officer of Hercules, Inc., was elected in January. Both bring very valuable business perspectives and will be a strength for us in the future. This is truly an exciting time for Fluor. On behalf of our employees worldwide, I want to thank our many clients for their trust and confidence in our work, and you-our owners-for your support in the past, and confidence in our future. If you have questions or comments, don't hesitate to contact us. /s/ Les McCraw Les McCraw Chairman and Chief Executive Officer January 16, 1997 Fluor Corporation 4 ================================================================================ Accelerating Growth [ART APPEARS HERE] No Borders, No Limits In today's business climate, most companies are devising strategies for growth or scenarios to accelerate it. Many of these strategies are designed around an organization's core strengths. Fortunately for us, we believe we have core strengths which clearly separate us from our principal competitors--a strong global presence, the most diverse array of services in the industry, a healthy diversity of markets served, the flexibility to rapidly shift resources to meet any client need, use of the most advanced technology, a low-sulfur coal business positioned for growth, financial strength and a safety record second to none. But if our many years of success have taught us a single, fundamental lesson, it's that the core strengths of any company have a way of being transitory, sustained for periods of time but then gone for reasons which are often difficult to grasp. Sustaining and building upon core strengths as a strategy to achieve and accelerate growth is, therefore, a challenging goal to attain. We believe the answer, however, lies in something basic to every business enterprise--culture. For the most part, a company either has a culture which is designed to consistently achieve excellence, or one which allows mediocrity or even under- performance to routinely occur. The culture we're creating throughout our company is, in many ways, our distinguishing characteristic and one of continuous performance improvement. It gives us self-confidence and enables us to set aggressive goals, guides our behavior and establishes how we act--how we anticipate our clients' 1996 Annual Report 5 ================================================================================ needs, how we devise solutions, how we apply and focus our resources--in effect, how we think about and approach our work. The genesis of our new culture change began in 1994 when seven company leaders carved out a plan designed to keep us competitive amid a quickly changing world marketplace. Known as "Task Force A," the members of this group knew the company possessed tremendous potential and was capable of creating a far more powerful future! The key? Find a way to unleash this potential from within. The task required more than the traditional reengineering--it required that we reinvent ourselves and embrace a full-scale cultural transformation. This ongoing transformation is based upon the six characteristics below. These words exemplify the workplace we're striving to create. Client Focused Growth Oriented Empowering (Enabling) Entrepreneurial Cost Effective Accountability Driven By embracing these culture traits, the rewards for our clients, shareholders and employees will be significant. The phrase most often used by employees today to describe how we want to be perceived is BETTER, FASTER, CHEAPER and SAFER than any global competitor. We intend to become the unquestioned leading diversified services company in the world. As we assess our efforts to date, we are encouraged by the progress we have made. Earlier this year, we established the Chairman's Award to recognize operations within the company whose performance in cultural transformation is particularly noteworthy. We wanted to honor those organizations which demonstrated and modeled superior levels of leadership. Three of our operations were singled out among a number of candidates and received the first-ever Chairman's Award for truly exemplifying our new culture: The PACE operating company epitomizes client focus as it assists its sole client, Procter & Gamble (P&G), in achieving its goals to meet worldwide market demand. PACE, which is working in 11 countries for P&G, provided cost-effective, value-added services and has been a critical element in reducing client capital expenditures. American Equipment Company's (AMEC) vision is to become one of the largest and most profitable equipment services companies in the world. It is accomplishing this through an entrepreneurial, empowered and quality-driven culture. AMEC has demonstrated dramatic global growth as it has aggressively marketed its services to new clients and expanded its distribution network in the Latin America and Asia Pacific regions. As one of Fluor Daniel's 80 offices worldwide, the Camberley operation in the U.K. has transformed itself by dramatically expanding its business to a much more diverse group of clients. It has broadened its geographic reach. By both creating an empowered team and striking an optimum balance between risk-taking and accountability, Camberley is succeeding in accelerating its growth potential. We are proud of these achievements and see these as role models for the entire company. We are strongly bound to the belief that cultural transformation will enable us to accelerate the impressive success we have enjoyed in recent years. Evidence in this regard is apparent--our clients are consistently rewarding us with record numbers of new projects; our shareholders recognize our potential for accelerated growth, and our employees are fully committed to achieving our vision for the future. Our success is dependent upon the outstanding achievements of our thousands of employees working together around the world. We thank them for their efforts and dedication in making the company the best it can be. We are fortunate to have added a great deal of new talent this past year. Most have joined us through significant new projects and acquisitions. We welcome them to our company, and look forward to the benefits that their diversity of experience and capabilities will contribute. As we see it, there are no boundaries, no barriers, no borders, no limits. Our thinking, our strategies, our approach to the marketplace have no constraints. This reflects our culture, our operating philosophy--a culture, we believe, that will serve us well for many years to come! Fluor Corporation 6 ================================================================================ Markets Served Industrial Automotive and General Manufacturing, Consumer Products, Commercial and Institutional Facilities, Electronics, Food and Beverage, Infrastructure, Mining and Metals, Pharmaceuticals and Biotechnology, Pulp and Paper, Telecommunications Power/Government Power Generation, Power Services, Government Services Process Chemicals, Plastics and Fibers; Petroleum and Petrochemicals; Production and Pipelines Diversified Services Construction Equipment Sales and Services, Environmental, Facility and Plant Services, Procurement, Technology, TRS Staffing Solutions A.T. Massey Coal Electric Power Generation, General Industrial, Steel Production [GRAPH APPEARS HERE] 89 90 91 92* 93 94 95 96 - --------------------------------------- 7.1 7.6 8.5 10.9 8.0 8.1 10.3 12.5 - --------------------------------------- New Awards dollars in billions *Included $2.2 billion for a five-year contract with the U.S. Dept. of Energy [GRAPH APPEARS HERE] - ------------------------------------- Backlog by Industry 1996 - ------------------------------------- . Industrial 41% . Power 10% . Government 13% . Process 31% . Diversified Services 5% [GRAPH APPEARS HERE] 89 90 91 92 93 94 95 96 - ---------------------------------------------- 8.4 9.6 11.2 14.7 14.8 14.0 14.7 15.8 - ---------------------------------------------- Backlog - International vs. U.S. dollars in billions - ------------------------------------- . International . U.S. [GRAPH APPEARS HERE] - ------------------------------------- Backlog by Region 1996 - ------------------------------------- . Asia Pacific 22% . Australia 6% . Canada 1% . Europe 9% . Latin America 8% . Middle East 8% . United States 46% [GRAPH APPEARS HERE] 89 90 91 92 93 94 95 96 - ---------------------------------------- 117 135 166 191 221 259 286 320 - ---------------------------------------- E&C Operating Profit dollars in millions 1996 Annual Report 7 ================================================================================ Operations [ART APPEARS HERE] Engineering and Construction In 1996, Fluor Daniel's operating profit was $320 million, up 12 percent--the highest in the company's history. Backlog at year end was $15.8 billion, representing a broad diversity of markets, geographic locations and services. New awards in 1996 were a record $12.5 billion, up 22 percent from 1995, and the prospects for new business in an expanding international economy remain strong. Fluor Daniel's commitment to continued growth is being achieved by expanding our services, and broadening the markets and geographic locations we serve. Our diversity provides a wide range of opportunities and allows us to be selective in pursuing projects where we have a competitive advantage and which offer the best return on our resources. Our offices and capabilities are linked electronically, which provides flexibility to rapidly respond to client needs anywhere in the world and allows for greater use of our high-value engineering centers. The alignment of our organization along both industry and regional lines gives us the ability to grow as the market demands. To enhance future growth, strategic investments are being made to strengthen and expand our capabilities in existing markets, as well as extend our core competencies into new growth sectors and regions. The company's ability to capitalize on opportunities is supported by our entrepreneurial culture, in which accountability and client focus are key attributes. Fluor Corporation 8 ================================================================================ Asia Pacific From the infrastructure markets of emerging countries to the high-technology industries of developed nations, the Asia Pacific region holds the most diverse and rapidly expanding market opportunities. Activity is strong in the hydrocarbon, chemical and mining industries, and needs in the region include power, energy, industrial facilities, infrastructure, consumer products and telecommunications. Our 26-year presence in Indonesia positions us to capitalize on growth opportunities, which are being enhanced by changes in investment and tax laws to attract foreign investment. The Mining operating company is providing full-scope services on the $1 billion Batu Hijau copper and gold project. We also have a continuous presence on P.T. Freeport Indonesia's mine expansion in Irian Jaya and are providing construction management services for Inco's smelter expansion project in South Sulawesi. Increased power needs and emphasis on deregulation and private enterprise are presenting several opportunities. Duke/Fluor Daniel is providing engineering and construction services for the $2.5 billion Paiton power plant and P.T. Freeport Indonesia's 3x65-megawatt coal-fired power plant, and is operating its power generation assets in Irian Jaya. Requirements to upgrade refineries to comply with the phase-out of lead in gasoline means a continued strong market for our Petroleum & Petrochemicals operating company. It is providing services for the debottlenecking of an existing refinery and the addition of a new lube oil complex in Cilacap for Pertamina--Indonesia's national oil company. Additionally, our Commercial & Institutional operating company is working for Jakarta International Hotel Development on two projects: renovating the Hotel Borobudur Inter-Continental--Jakarta's landmark five-star hotel--and building the Conrad complex, a mixed-use hotel, office and retail center. Significant investment in Malaysia is creating opportunities, particularly in electronics, chemicals and refining. Our Petroleum & Petrochemicals operating company and Mitsubishi Heavy Industries agreed to jointly pursue projects in the liquefied natural gas (LNG) market and won its first engineering award for the Malaysia LNG TIGA project. Singapore's open, entrepreneurial economy and excellent international trading links are creating multiple opportunities in the electronics, chemical and petrochemical industries. Our Chemicals, Plastics & Fibers operating company is working on a vinyl acetate monomer plant for Hoechst Celanese. The Philippines has an expanding economy, and growth can be seen in the electronics, infrastructure, telecommunication and energy-related industries. Commercial & Institutional is providing design and construction services for Asian Appraisal Holdings' 21-story office building in Alabang, which will house Fluor Daniel's high-value engineering center. Our electronics operating company, ADP Fluor Daniel, is working on a wafer-testing facility for Analog Devices. PACE--our operating company dedicated to Procter & Gamble--is working in 11 countries, including the Philippines, where it is building a grass-roots consumer products plant. [PICTURE APPEARS HERE] Capitalizing on increased demand for electrical power throughout the Asia Pacific region, Fluor Daniel is providing project management, engineering, procurement, construction and start-up services for a 112-megawatt combined-cycle cogeneration power plant in Thailand for Air Products and Chemicals, Inc. as owner's engineer, on behalf of Bangkok Cogeneration Co., Ltd., a Thailand-based joint venture. Clockwise from top: Benito Lariosa, piping engineer; John Antonovich, lead piping engineer; Somkiat Lertvittayatan, mechanical/piping engineer; David Hunt, Air Products and Chemicals project engineer; and Lou Chow, process engineer. 1996 Annual Report 9 ================================================================================ In Taiwan, Fluor Daniel reestablished its office in Taipei to take advantage of increased opportunities in the electronics, power generation, telecommunication, and petroleum and petrochemical industries. ADP Fluor Daniel is providing architectural and engineering services for Mosel Vitelic's semiconductor wafer fabrication facilities complex in Hsinchu. Thailand's stability and pro-business policies are fostering strong activity in the petrochemical, chemical, power, automotive, telecommunication, electronics and maintenance industries. Duke/Fluor Daniel is providing full-scope services for Air Products and Chemicals' 112-megawatt combined-cycle cogeneration power plant. In 1996, we completed the $1.3 billion Rayong refinery three months ahead of schedule, and we now are working on Chevron Far East's benzene and paraxylene project. Our Telecommunications operating company has growing wireline business activity in both Thailand and the Philippines. Production, trade and investment reforms are creating opportunities in India's power, hydrocarbon, petrochemical, steel and light industry markets, and our high-value engineering center in New Delhi is well positioned to capitalize on these prospects. Chemicals, Plastics & Fibers is working on a project for DuPont, with which it has a strategic alliance, and Petroleum & Petrochemicals is executing a detailed feasibility report for the Indian Oil Corporation's planned refinery in Paradeep. In November 1996, Fluor Daniel signed a memorandum of understanding with Tata Technodyne Ltd to jointly undertake engineering, procurement and construction work in the country's core industrial sectors, including steel, power, hydrocarbons, ports and cement. China's long-term reforms continue to expand the market-oriented areas of the economy, and there is award potential in the automotive, consumer product, chemical, petrochemical, power and telecommunication industries. Our Beijing and Shanghai offices are well positioned to capitalize on the many opportunities. PACE is executing phase one of Procter & Gamble's Tidalwave multiproducts plant in Tianjin, which will be its largest facility in the Asia Pacific region. Petroleum & Petrochemicals is working on Shell's lube oil blending facility and providing front-end engineering for Chevron's polystyrene plant. Full-scope services are being provided by Chemicals, Plastics & Fibers for two expansion projects: the DuPont nylon plant in Qingdao and the Cabot Carbon Black Facility production unit in Shanghai. Korea has embarked on a massive infrastructure program, and Fluor Daniel's high-technology capabilities give us a competitive edge. Our Infrastructure operating company and its consortium members were selected to build a passenger terminal at Inchon International Airport in Seoul--Fluor Daniel's first infrastructure project in Korea. Petroleum & Petrochemicals is working on the billion-dollar Yukong refinery modernization and expansion project. Fluor Daniel continues to pursue public works projects in Japan, leveraging our relationships with Japanese contractors. Teamed with Obayashi Corporation, we're designing and constructing the Kyoto train station terminal. [PHOTOGRAPH APPEARS HERE] PACE, Fluor Daniel's operating company dedicated to serving Procter & Gamble, supports that client's global expansion, which includes a new consumer products plant in the Philippines. Fluor Daniel's high-value engineering center in Manila is providing engineering, procurement, construction management and start-up services. From left: Bernadette Tuazon, PDS coordinator; Anthony Gonzales, piping application specialist; Neil Abraham, country manager; and Delfin Bumanglag, structural application specialist. Fluor Corporation 10 ================================================================================ In Australia, Fluor Daniel's volume of work has grown significantly, with an emphasis on mining, as well as power plant operations and maintenance. The acquisition of Signet Engineering Group--an Australian-based company with expertise in gold, diamond and mineral processing--has strengthened our capabilities to serve these active markets. We completed a feasibility study for Mt. Isa Mines' Enterprise Mine, are providing services for its new copper mine--which will be one of the world's largest mines--and are managing its copper smelter upgrade. We also are providing full-scope services for Ernest Henry Mining Pty Ltd's gold and copper mine in Cloncurry. In mining as well as other industries, many Australian companies are outsourcing maintenance services. Fluor Daniel has been awarded maintenance contracts by Argyle Diamond Mine and for Westrail's standard gauge railway system. For nearly 30 years, we also have been providing restoration and maintenance services for Hamersley Iron Pty Ltd's railway in Western Australia. Latin America Improved political stability and growing, market-focused economies are fostering a more favorable environment for capital investment in Latin America. While a decline in copper pricing has dampened mining expenditures, significant activity continues. Across a variety of industries, the greatest opportunities for Fluor Daniel are expected in Venezuela, Chile, Brazil, Mexico, Argentina and Peru. [PHOTOGRAPH APPEARS HERE] Increased investment in Argentina's emerging mining industry has expanded Fluor Daniel's opportunities in Latin America. Through strategic partnering with SADE, one of Argentina's leading engineering and construction firms, Fluor Daniel is providing engineering, procurement and construction services for an 80,000 tons-per-day copper concentrator and associated facilities for Minera Alumbrera Limited. From left: Chief Field Engineer David Stayshich, Superintendents Joe Wells and Mickey Misetich, and Field Engineers Jose Luis Papis and Jim Breuer. Having the strongest free-market economy in the region, Chile's participation in Mercosur--the trading block which includes Argentina, Brazil, Paraguay and Uruguay--will help it and the southern region diversify its markets. In the mining industry, Fluor Daniel continues to work for Escondida on an oxide leach project and has been awarded a $350 million, three-year services partnership contract to operate and maintain its camp facility in Antofagasta. With rich natural resources, a diversified industrial base and a strong privatization campaign, Argentina's expanding economy offers opportunities in mining, hydrocarbons, power generation, automotive and other consumer products. Partnered with SADE, one of Argentina's leading engineering and construction firms, the Mining operating company is designing and building a copper concentrator for Minera Alumbrera Limited--our first major project in Argentina. We are providing a full complement of services to the Cerro Vanguardia gold mine project. The increasingly market-oriented Peruvian economy is creating opportunities, predominantly in natural resources. Production & Pipelines is leading one of the two consortium teams vying in a design competition for an alliance contract for Shell and Mobil's $2 billion Camisea gas development program in the Peruvian jungle. When complete, it will transport natural gas across the Andes mountains to Lima. Brazil's natural resources remain a major, long-term economic strength, and its large population provides a strong consumer market. Power Services is providing management and outage services on boilers in the Bahia state 1996 Annual Report 11 ================================================================================ for Copene. In the mining industry, we are providing services to the Samarco Iron Pelletizing project. In Venezuela, oil and energy-related investments continue to dominate. Fluor Daniel's 25-year presence and its five-year equity investment in Tecnofluor give us a strong position. Petroleum & Petrochemicals and Tecnofluor are providing services to revamp a desulfurization complex at Lagoven's Amuay refinery. In Trinidad and Tobago, Production & Pipelines is part of an alliance which is providing full-scope services for Amoco's LNG Upstream development project. Mexico is gaining investors' confidence as the chemical, refining, power, telecommunication, petrochemical, pharmaceutical and automotive markets expand. ICA Fluor Daniel, jointly owned by Fluor Daniel and Grupo ICA, recently installed a 5,300-kilometer fiber-optic network for Avantel, a joint venture between MCI and Banamex. In the power industry, ICA Fluor Daniel successfully completed construction of the 700-megawatt Tuxpan oil-fired plant and 200-megawatt Temescal hydro facility. Additionally, it began engineering and construction on the 600-megawatt Samalayuca combined-cycle facility and 100-megawatt cogeneration facility at Altamira. ICA Fluor Daniel also is working with Automotive & Manufacturing on Navistar's new truck assembly plant, and with Chemicals, Plastics & Fibers on a silica plant. In Puerto Rico, our primary opportunities are in the electronics, power, petrochemical and pharmaceutical industries. [PHOTOGRAPH APPEARS HERE] Positioned to capitalize on renewed growth in the pharmaceutical and biotechnology industries, the PharmBio & Chemicals operating company formed a strategic alliance with Genentech, a leading biotechnology company, to provide project-related engineering services for its manufacturing and research and development facilities in South San Francisco. Front row, from left: Ron Keich, senior piping designer; K.K. Wong, senior electrical engineer; Nancy Wong, process engineer; Annette Baird, senior process engineer; James Panek, Genentech vice president, Engineering and Facilities; Fred Nowbakh, senior HVAC engineer. Back row, from left: Ramesh Kamath, Genentech director, Project Engineering; Karen Brockwell, Genentech director, Process & Automation Engineering; and Allan Wenzel, regional manager. Middle East and Africa As a leader in the refining and production industry, we are diversifying our market participation across the Middle East, particularly in Saudi Arabia, Kuwait, the United Arab Emirates, Qatar, Oman, as well as other countries on the Mediterranean. Opportunities are arising in the petrochemical, chemical and power markets, primarily in Saudi Arabia, Kuwait and Abu Dhabi. Gas-to-power projects are developing throughout the region. With more than 25 percent of the world's petroleum reserves, Saudi Arabia offers significant opportunities. Petroleum & Petrochemicals is providing initial engineering services for a proposed $2.1 billion petrochemical facility in Yanbu. Additionally, we are providing full-scope services, including program management, for Saudi Chevron Petrochemical's Aromax(R) project in Jubail. In Kuwait, Chemicals, Plastics & Fibers is working on the $1.4 billion Equate petrochemical plant. Front-end engineering and design work for Abu Dhabi National Oil Company's planned $1.8 billion Ruwais oil refinery expansion continues for Petroleum & Petrochemicals. Reflecting the positive new democracies of the South African region, Fluor Daniel re-acquired Fluor S.A. (Pty) Limited, a South African-based engineering and construction company which was divested by Fluor 10 years ago. The 35-year old company's strong reputation and experience provide it the entry to serve a multitude of diverse markets. The Food & Beverage operating company is providing diverse services to a variety of clients, such as Fluor Corporation 12 ================================================================================ African Products and Pillsbury Brands Africa, as well as being part of an alliance to investigate the feasibility of a grass-roots facility for South African Breweries. Our Metals company has teamed with a local consulting firm to expand Hulett's aluminum rolling mill. Power Services is performing maintenance services at seven power plants for Eskom, which supplies more than half the electrical power for the African continent and 97 percent of the power for the Republic of South Africa. Carlton Paper selected our Pulp & Paper operating company to provide services for its recycled paper deinking plant. Work in the refining and synfuels sector continues, particularly with Sasol, Caltex, Shell and British Petroleum. In Chad and Cameroon, Production & Pipelines is providing preliminary project management services for a planned oil field development and transportation project for an Exxon-led group. Mining studies are being performed in Zambia, Zaire and Zimbabwe, and future work is anticipated. North America The U.S. market has opportunities across the infrastructure, government, electronics, power, food, chemical, pharmaceutical and automotive industries. In February, a consortium led by Fluor Daniel was chosen to begin development of the first high-speed passenger rail system in the U.S. Subject to obtaining financing, the Florida Overland EXpress--or FOX--rail system will cost approximately $5 billion. Additionally, our work on Denver's E-470 toll road has strengthened our reputation and experience to serve this market. [PHOTOGRAPH APPEARS HERE] Fluor Daniel is using its global resources and diverse strengths to provide program management services to the U.S. Department of Energy's Hanford project, one of the largest and most complex environmental cleanup efforts in the country. From left: Jennifer Curtis, general counsel; Larry Olguin, project director, Facility Stabilization; Gus Mattsson, project director, Waste Management; Mike Skriba, project director, Engineering & Technology; Nancy Williams, project director, Spent Nuclear Fuel; and Sal Marchetti, project director, Tank Waste Remediation System. Government Services is focusing on capturing a larger share of work from the U.S. Department of Energy (DOE), Department of Defense and other government agencies. In August, we won a $5 billion, five-year contract to lead a team providing cleanup, management and integration services at the DOE's Hanford site in Washington. At the DOE's Ohio site, Fluor Daniel Fernald developed an innovative plan to accelerate cleanup of the site, which will result in project completion more than a decade ahead of the original schedule. This approach is being applied by the DOE at numerous sites. Additionally, Government Services won the right to exclusively negotiate for a seven-year contract to design and manage construction at the Los Alamos National Laboratory in New Mexico. We also have been selected by the Federal Emergency Management Agency to negotiate on a five-year Infrastructure Support Services contract. In October, Fluor Daniel acquired Marshall Contractors and integrated its microelectronics business with ADP Fluor Daniel. This unit is providing services for a wafer fabrication facility in Washington for WaferTech. Our PharmBio & Chemicals operating company also will work closely with Marshall to leverage its expertise and client relations in the pharmaceutical industry. As U.S. utilities transition to a deregulated environment, they are reducing expenditures and improving efficiency by outsourcing maintenance and capital projects. Power Services has established a strategic alliance with Southern California Edison to provide maintenance and technical services at all of its fossil-fuel plants. In the nuclear power sector, we are supplying ongoing support at Union 1996 Annual Report 13 ================================================================================ Electric sites, and are providing maintenance services to Baltimore Gas & Electric in Maryland, as well as to 14 other nuclear units across the U.S. In an alliance with Primary Energy, a subsidiary of NIPSCO Industries, we continue to successfully build modern, environmentally sensitive, low-cost energy facilities at major industrial sites. Increased sales volume in the pharmaceutical industry is creating opportunities for PharmBio & Chemicals. We are providing a variety of services for MedImmune's vaccine facility. Strategic alliances were formed this year with Eli Lilly to provide services for its biotechnology facilities worldwide, and with Genentech to assist with its capital projects. In the rapidly expanding wireless telecommunication market, we're working with AT&T Wireless Services and Aerial Communication in the U.S., and are supporting AT&T in Taiwan and other international locations. Additional telecommunication, radio frequency and network engineering work has come from the formation of a Fluor Daniel and Mobile Systems International joint-venture company, Wireless Engineering Services Group. In the emergency communications market, we have ongoing contracts with the cities of Chicago, San Francisco, San Diego and Phoenix. The automotive industry is expanding globally, and consumer demand is fueling the manufacturing segment. Automotive & Manufacturing continues to work with global automotive industry leaders on projects, such as the Mercedes Benz assembly plant in Alabama and ongoing work with Honda in Ohio. On the manufacturing side, we are building state-of-the-art, automated distribution centers for Levi Strauss & Co. in the U.S. and the U.K. [PHOTOGRAPH APPEARS HERE] The growing demand for telecommunication services worldwide is creating new growth opportunities for Fluor Daniel. The Telecommunications operating company assisted AT&T in the build-out of its state-of-the-art wireless communications system in Chicago by providing engineering, procurement and construction management services. Jim McLean, project director, left, and Judith Hiatt-Rabb, project procurement manager. Marathon Architects/Engineers/Planners, a division of our Pulp & Paper operating company, and Commercial & Institutional are working together on Rayonier's new research and development facility in Georgia. Pulp & Paper has a long-term presence doing both large- and small-scale projects for Mead Corporation at its Ohio facility. Our offices in Canada continue to serve a growing domestic market in mining and hydrocarbons, while leveraging their presence to serve Canadian clients in pursuit of export business worldwide. PharmBio & Chemicals is performing design and construction services of an ethanol production plant for Commercial Alcohols. Europe The drive for greater efficiency and cost competitiveness on a global scale is causing Western European clients to consolidate and restructure. The chemical industry continues to invest. Central and Eastern Europe are focused on upgrading industrial facilities and infrastructure. Political and economic uncertainty in Russia continues to slow near-term development, but Russia holds significant market potential for the long-term. In Western Europe, our Chemicals, Plastics & Fibers operating company is working for Eastman Chemicals in Rotterdam, Imperial Chemical Industries in the U.K. and DuPont in several locations. In March, Fluor Daniel and Bertrams formed Chemgineering Holding Ltd, which strengthens our pharmaceutical, Fluor Corporation 14 ================================================================================ biotechnology and fine chemical capabilities in this region. We were awarded pharmaceutical projects in Ireland, Belgium and Germany, and continue to support Procter & Gamble's European operations. In The Netherlands, Petroleum & Petrochemicals is completing the multibillion-dollar Per+ refinery project for Shell, and Production & Pipelines is designing and building a major underground gas storage facility for NAM, a company jointly owned by Shell and Exxon. In the Central European market, investment is being made in the Polish refining industry to prepare it for market deregulation in 1998. Our ownership of Prosynchem has opened doors for us in the hydrocarbon market, including the revamp of a refinery's crude distillation plant in Plock. Fluor Daniel, Prosynchem and Prochem--a Polish industrial engineering company in which we have a 35 percent ownership interest--are serving as managing contractor for a refinery modernization for Rafineria Gdanska S.A. In Slovakia, Fluor Daniel and Mitsubishi Heavy Industries are working on Slovnaft A.S.' hydrocracking plant. Prochem is working on a variety of projects in the chemical and consumer product markets as well. The Former Soviet Union, particularly the Caspian Sea area, holds increasing opportunities, primarily in the upstream oil and gas market. Production & Pipelines is providing full-scope services for the northern route of Azerbaijan International Operating Company's Early Oil Transportation System pipeline, and is working with several organizations on potential oil and gas projects which may result from new emphasis in the Caspian and surrounding fields. [PHOTOGRAPH APPEARS HERE] Fluor Daniel's strong client focus emphasizes building long-term relationships to sustain continuing business opportunities. Based on significant past project experience worldwide with both Imperial Chemical Industries (ICI) and Union Carbide, the Chemicals, Plastics & Fibers operating company is the managing contractor for a joint project to expand an existing ethylene oxide plant and build a new ethylene glycol facility in the U.K. From left: Brian Dovner, safety officer; John Bartlett, construction manager; John Norman, project manager; John Wilkinson, ICI construction engineer; John Arrowsmith, piping superintendent; Dave Proctor, civil superintendent; and Keith Largue, instrument superintendent. Diversified Services The Diversified Services Group is furthering our diversification strategy to capitalize on service industry opportunities by expanding existing businesses and leveraging the market potential of our core competencies. This strategy offers significant growth potential and minimizes the cyclical-nature effects of the engineering and construction business. In most cases, Diversified Services' operating companies carry profit margins higher than our traditional engineering and construction business, and because of their service nature, they generally do not generate significant backlog. As one of the fastest growing parts of our company, Diversified Services has been achieving rapid growth for the past several years, and the prospects for future growth remain strong. ACQUION ACQUION, a global provider of supply chain management and related services, brings companies together to buy, sell, trade and barter, emphasizing the use of information technology. It has developed several proprietary electronic commerce systems. Global Electronic Trading Services (GETS) offers immediate access to electronic catalogs and bid boards, on-line procurement applications, electronic data interchange, and procurement card capabilities. BASE (Buyer and Seller Exchange) serves as a central site for industrial electronic catalogs, helping buyers seek out a special category of industrial commodity suppliers. 1996 Annual Report 15 =============================================================================== In June, ACQUION and Duke Power Company teamed to deliver all aspects of supply chain management to the utility industry. American Equipment Company American Equipment Company (AMEC) sells, rents and maintains construction tools and equipment worldwide. It is operating in 10 countries and is working to: expand operations in existing territories; partner with companies to expand its markets and customer base; target strategic acquisitions to improve its distribution network; and use innovative marketing methods to market used equipment via the Internet. AMEC was ranked by Rental Equipment Register as the fifth largest equipment rental company in the U.S. It is expanding in Latin America with the establishment of new operations in Mexico and Chile. In the Asia Pacific region, AMEC has offices in Jakarta, Singapore and Manila, where it has a joint venture with a Philippine company to lease and supply construction equipment in the Philippines and China. AMEC has a joint venture in Shanghai, China, to rent large cranes on a fully operated basis. This year's acquisition of S&R Equipment, with six locations in the Midwest U.S., allows AMEC to serve the region's automotive and manufacturing industries. [PICTURE APPEARS HERE] American Equipment Company's equipment yard in Santiago, Chile, serves Fluor Daniel projects and the broader equipment market in South America. The company has demonstrated dramatic global growth as it has aggressively marketed its services to new clients and expanded in Latin America and the Asia Pacific region. From left: Victor Olivero, shop foreman; Guisella Echeverria, rental coordinator; and Hector Duran, procurement specialist. Environmental In May, Fluor Daniel acquired 55 percent of Groundwater Technology, Inc., (GTI), through a merger with Environmental Services to form Fluor Daniel GTI. GTI's environmental technologies, and its remediation and site closure implementation capabilities, combined with Fluor Daniel's project management expertise and resources, create a uniquely competitive company in the commercial and government arenas. By combining environmental expertise with industry-specific process knowledge, Fluor Daniel GTI and Pulp & Paper are providing broad-based environmental services to one of the largest U.S. paper, paperboard and packaging companies at its 150 North American facilities. Fluor Daniel retained certain environmental capabilities in the Environmental Strategies operating company, which consists primarily of an investment in Molten Metal Technology (MMT); engineering, procurement and construction of water and wastewater treatment facilities; and Total Business Solutions (TBS). TBS develops and implements integrated solutions for clients' environmental challenges, including efficient downsizing, maximizing financial returns from divestiture or redeployment of fixed assets. TBS reduces environmental liabilities and optimizes financial returns for the divestiture of environmentally impaired surplus properties. Environmental Strategies is providing services to MMT on a catalytic extraction process (CEP) project for a recycling plant in Texas, and also to M4 Environmental L.P., which utilizes MMT's Fluor Corporation 16 ================================================================================ proprietary CEP technology to process hazardous and radioactive waste for the U.S. Departments of Energy and Defense and the U.S. Enrichment Corporation, and mixed waste for commercial clients. Facility & Plant Services Facility & Plant Services (F&PS) sells optimized work process solutions for clients' facilities and operating business problems. With projects underway around the world, F&PS serves a range of process and manufacturing clients with a client-focused, results-oriented strategy. Expanding through acquisitions and partnerships, F&PS purchased the U.K.'s T.A. Group Limited--a maintenance, consultancy and manpower services company--and is integrating its operations to provide pan-European capabilities. Partnerships in Asia are focused on serving Singapore, Indonesia, Malaysia and Thailand. F&PS' presence in Latin America and Mexico continues to expand with additional projects. To provide total solutions to clients, the Consulting operating company was integrated into several operating divisions of F&PS. Global Location Strategies offers location analysis, and incentive and acquisition negotiations on behalf of owners, as well as other services, such as systems integration, material distribution and logistics, computer simulation, and alignment and process consulting. [PICTURE APPEARS HERE] The growing trend toward outsourcing of services is creating a strong market for the Facility & Plant Services (F&PS) operating company. F&PS is providing operations, maintenance and facility engineering services to six of IBM's North American facilities. At the Tucson, Arizona, facility are, from left: Pete Garcia, Sr., operations technician; Jim Price, industrial hygienist; Heather Keiser, security officer; David Dryburgh, engineering coordinator; Ruben Palma, maintenance technician; Star McNally, security officer; Rodney Jeter, tool and model maker; Pete Garcia, Jr., maintenance technican; and Don Garcia, tool and model maker. F&PS captured a significant share of operations and maintenance services for Imperial Chemical Industries, working closely with the Chemicals, Plastics & Fibers operating company. It teamed with Automotive & Manufacturing to provide maintenance services to Volkswagen's production facility in Argentina. The Operations and Maintenance Services division is working at six of IBM's North American facilities--one of the largest total facilities management contracts to be awarded in the private sector. Technologies Fluor Daniel Technologies (FDT) identifies profitable business opportunities in technology-based ventures. It participates with partners to commercialize ventures by supplying people and resources, and helping with marketing and distribution. During the past year, FDT has launched new businesses in the areas of materials transfer, metals purification, accelerated battery recharging, alternative explosive methods, process optimization solutions, close-range photogrammetry and information management. One example is Soli-Flo, a joint venture company of FDT and Xetex Corporation, which offers the dredging and environmental remediation industries' first low-turbidity sediment removal technology. FDT has launched the Prometheus Alliance, linking together a number of Fortune 500 companies to develop and leverage a portion of their intellectual property and other resources. A member's unused technology could be commercialized through the alliance, providing revenue from previously idle assets. 1996 Annual Report 17 =============================================================================== TRS Staffing Solutions TRS Staffing Solutions (TRS) is a global supplier of technical, professional--and in certain markets--office and administrative support staffing solutions. It provides premium engineering and design, information technology, accounting, finance and administrative support personnel in temporary, contract and direct-hire positions. In 1996, TRS opened 13 offices in the U.S., Canada, Singapore, South Africa, Australia and the U.K. TRS has become a significant force in the Australian and European staffing markets. Acquisitions have provided entry into certain market niches and provided management expertise in the specialist staffing sectors of information technology and services, and accounting and finance. The 1995 acquisition of Management Resources Group in the U.K., the 1996 acquisitions of Phoenix Contracting Pty Ltd in Australia and T.A. Group Limited in the U.K., along with TRS' January 1997 acquisition of the ConSol group in the U.S., are broadening its global presence, expanding its information systems and technology staffing capabilities and heightening its reputation in a fast-growing industry. [PHOTOGRAPH APPEARS HERE] ADP Fluor Daniel is teamed with Fluor Constructors, Duke/Fluor Daniel, Fluor Daniel GTI and American Equipment Company to provide engineering services and manage construction of WaferTech's wafer fabrication facility in Camas, Washington. The acquisition of Marshall Contractors further expands Fluor Daniel's strong capabilities to serve the global electronics market. From left: Ruben Sermeno, FCII general superintendent; Chris Brown, AMEC project manager; Steve Martin, ADP Fluor Daniel program manager; Arthur Chuang, WaferTech facilities manager; and Frank Chen, ADP Fluor Daniel civil engineer. Fluor Constructors International Fluor Constructors International, Inc. (FCII) is the union arm of Fluor Corporation. The company provides construction management and direct-hire construction expertise to Fluor Daniel and others in North America. On WaferTech's wafer fabrication facility project in Washington, FCII conducted the largest concrete slab pour in U.S. history--a two-day, continuous pour of 16,000 cubic yards of concrete to form a vibration-free slab. Additionally, FCII staffs international projects and has employees working at numerous projects around the world. FCII has executed projects in virtually every business sector, performing stand-alone construction and providing maintenance services to clients in the U.S. and Canada. The company has served a diverse range of government agencies as well. FCII is one of only a few construction and maintenance contractors to be ISO-9002 certified. Fluor Corporation 18 =============================================================================== C o a l [CARTOON APPEARS HERE] Coal A.T. Massey, through its operating subsidiaries, produces high-quality, low-sulfur steam coal for the electric generating industry and industrial customers, and metallurgical coal for the steel industry. Massey delivered strong operating profit growth in 1996, up 21 percent to $135 million. Total volume of coal sold increased 13 percent to 31 million tons. Growth in operating profit was due to increased sales volume and lower costs. Massey's strategy is to ensure that its production facilities, reserve base and transportation options meet client needs, while providing maximum flexibility to quickly shift production to the best market opportunities within the steam, industrial and metallurgical coal markets, including increased sales to export markets. This strategy has been enhanced by the success in further reducing costs through productivity improvements and reserve selection, and it allows Massey to focus on opportunities which provide the highest possible profit margin. Massey is now the fastest-growing coal company in the Eastern U.S. and the leading coal producer in Central Appalachia. Massey has been investing in its future, adding high-quality, low-sulfur coal reserves, and increasing its production capacity and flexibility in order to deliver sustained growth. Since 1991, Massey has doubled its reserve base of high-quality, low-sulfur coal. These new reserves are located near existing Massey operations and provide increased production on a highly cost-effective basis. Focusing operations in a concentrated 1996 Annual Report 19 =============================================================================== [GRAPH OF COAL OPERATING PROFIT APPEARS HERE] YEAR 89 90 91 92 93 94 95 96 - -------------------------------------------------------------------------------- DOLLARS IN MILLIONS 51 60 61 80 81/*/ 95 111 135 ================================================================================ /*/ Excludes nonrecurring charge of $10 million [GRAPH OF COAL SOLD MILLIONS OF SHORT TONS APPEARS HERE] YEAR 89 90 91 92 93 94 95 96 - -------------------------------------------------------------------------------- PRODUCED/PURCHASED 17/9 19/8 17/7 18/4 21/2 24/1 27 31 ================================================================================ [GRAPH OF COAL RESERVES APPEARS HERE] YEAR 89 90 91 92 93 94 95 96 - -------------------------------------------------------------------------------- MILLIONS OF SHORT TONS 737 784 761 972 1,089 1,411 1,499 1,549 ================================================================================ [PHOTOGRAPH APPEARS HERE] Massey Coal's new longwall at the Upper Big Branch mine in West Virginia is significantly improving both productivity and safety. In April, crews started mining the longwall's first panel, a block of coal 1,000 feet wide and three miles long. In the foreground: Kevin Lovely, mechanic/computer specialist; and Eugene Williams and J.D. Pettry, general laborers. geographical area provides cost advantages which accrue from greater utilization of production capacity and favorable distribution logistics. These investments have positioned the company to capitalize on growth opportunities in metallurgical and steam coal markets, as well as the export market. In 1996, metallurgical coal sales volume increased 17 percent, while steam coal sales volume increased 11 percent. Export coal sales volume increased 47 percent from 3.8 million tons in 1995 to 5.6 million tons in 1996. Massey is now the largest coal shipper on both the Norfolk Southern and the CSX railroads. Massey's diversity of transportation options--three rail lines, the Ohio river barge system and truck delivery--adds to Massey's overall cost competitiveness and market flexibility. During 1996, two new mining operations --Eagle Energy and Green Valley--were acquired. Utilizing Massey's exceptional capability to improve productivity and reduce costs, Eagle Energy substantially improved its performance and profitability. The Green Valley acquisition added to Massey's high-quality reserves. At existing operations, Massey installed a longwall, developed five new mines, expanded a coal preparation plant and constructed a new railroad loadout. Massey's productivity, already near the highest in the industry, is improving further now that its first longwall is running at the Upper Big Branch mine in Raleigh County, West Virginia. A longwall mining system greatly increases productivity and reserve recovery in large coal seams. A second longwall was acquired with the purchase of Eagle Energy. Fluor Corporation 20 ================================================================================ Increased production from the new longwall is being processed at Massey's state-of-the-art preparation plant at Marfork. The Marfork plant has been expanded three times in the past two years to handle increasing shipments of metallurgical coal and is a key element in Massey's strategy to expand market share. Capacity at Marfork has increased 85 percent, and the plant now is handling more than 7 million tons annually. Massey's high-quality, low-sulfur reserve base and its ability to increase production cost-effectively position it to capitalize on either volume or price increases which may result from increased demand for low-sulfur coal by electric utilities to meet clean air requirements, while fully capitalizing on existing strength in the metallurgical coal market. Overall growth in U.S. demand for electricity increased approximately 2.5 percent in 1996. A decline in the contribution from nuclear-generated power for certain Massey customers further enhanced demand for coal-fired power. Opportunities in the export market are expanding as a result of privatization and reduction or elimination of government subsidies for European mines. To capitalize on this opportunity, Massey has expanded its sales coverage of Western and Central Europe. Massey is well positioned to take advantage of future opportunities which may be created by deregulation of the utility industry. As deregulation forces utilities to become more cost competitive, they will seek energy providers, such as Massey, which can help them improve performance through superior product quality, better service and lower cost. In a deregulated environment, coal ranks among the lowest-cost energy sources, and may gain an increasing advantage as nuclear plants age and face recommissioning and waste disposal problems. [PICTURE APPEARS HERE] Expansion of Massey's state-of-the-art Marfork Preparation Plant in West Virginia was completed this year, increasing processing capacity by 85 percent to 2,400 tons per hour. From left: Macey Biggers, manager, Quality Control; Lance Compton, plant superintendent; and Randy Shrewsberry, plant maintenance superintendent. Worker safety is of paramount importance at Massey and is ensured by a Safety First program, exceeding federal and state requirements. Safety performance has been improved by more than 40 percent since 1989 with the non-fatal days lost incidence rate dropping from 6.4 to 3.6 in 1996. Safety is engineered into every phase of coal production and monitored by a safety audit program, which reviews all aspects of the mining operation and weighs each operation against the toughest safety standards in the coal industry. Massey's strategy is to ensure that it meets client needs with its modern production facilities, adequate reserve base and flexible transportation options. Profitability growth is maintained by a combination of strategies, productivity improvements, reserve selection, and focusing on markets providing the highest profit margin. Massey is positioned to quickly shift production to the best market opportunities within the steam, industrial and metallurgical coal markets. 1996 Annual Report 21 =============================================================================== Financials [CARTOON APPEARS HERE] Financial Table of Contents 24 Management's Discussion and Analysis 28 Consolidated Balance Sheet 30 Consolidated Statement of Earnings 31 Consolidated Statement of Cash Flows 32 Consolidated Statement of Shareholders' Equity 33 Notes to Consolidated Financial Statements 42 Segment Information 44 Reports of Management and Independent Auditors 45 Quarterly Financial Data Fluor Corporation 22 ================================================================================ Operating Statistics
$ in millions / Year ended October 31, 1996 1995 1994 1993 1992 1991 - ------------------------------------------------------------------------------------------------------------------------------------ Engineering and Construction Work performed $ 9,870 $ 8,379 $ 7,673 $ 7,110 $ 5,889 $ 5,792 Revenues 10,054 8,452 7,718 7,134 5,904 5,813 Operating profit 320 286 259 221 191 166 New awards 12,488 10,257 8,072 8,001 10,868 8,532 Backlog $ 15,757 $ 14,725 $ 14,022 $ 14,754 $ 14,706 $ 11,181 Salaried employees 26,568 18,090 16,433 17,215 17,443 17,602 ---------------------------------------------------------------------------------------- $ in millions / Year ended October 31, 1990 1989 1988 - ----------------------------------------------------------------------------------- Engineering and Construction Work performed $ 6,353 $ 5,241 $ 4,268 Revenues 6,383 5,312 4,225 Operating profit 135 117 51 New awards 7,632 7,135 5,955 Backlog $ 9,558 $ 8,361 $ 6,659 Salaried employees 19,829 17,519 15,576 ---------------------------------------
$ in millions / At October 31, 1996 1995 1994 1993 1992 1991 - ------------------------------------------------------------------------------------------------------------------------------------ Backlog by Group and Location Industrial $ 6,496 41% $ 4,516 31% $ 3,564 25% $ 3,449 23% $ 3,737 25% $ 4,127 37% Process 4,903 31 6,671 45 7,668 55 7,430 50 6,305 43 5,043 45 Power/Government 3,621 23 3,275 22 2,369 17 3,212 22 3,804 26 1,445 13 Diversified Services 737 5 263 2 421 3 663 5 860 6 566 5 --------------------------------------------------------------------------------------------------------------- Total backlog $15,757 100% $14,725 100% $14,022 100% $14,754 100% $14,706 100% $11,181 100% =============================================================================================================== United States $ 7,326 46% $ 6,666 45% $ 6,802 49% $ 9,045 61% $10,649 72% $ 7,915 71% Asia Pacific 4,402 28 3,303 23 1,662 12 1,679 11 608 4 377 3 EAME* 2,677 17 3,088 21 4,387 31 3,178 22 2,389 17 2,174 20 Americas 1,352 9 1,668 11 1,171 8 852 6 1,060 7 715 6 --------------------------------------------------------------------------------------------------------------- Total backlog $15,757 100% $14,725 100% $14,022 100% $14,754 100% $14,706 100% $11,181 100% =============================================================================================================== $ in millions / At October 31, 1990 1989 1988 - --------------------------------------------------------------------------- Backlog by Group and Location Industrial $3,592 38% $ 4,136 49% $ 3,100 47 Process 4,434 46 3,144 38 2,612 39 Power/Government 1,058 11 777 9 847 13 Diversified Services 474 5 304 4 100 1 ----------------------------------------------------- Total backlog $9,558 100% $ 8,361 100% $6,659 100% ===================================================== United States $6,724 70% $ 6,404 77% $5,298 80 Asia Pacific 812 9 287 3 251 4 EAME* 1,345 14 634 8 494 7 Americas 677 7 1,036 12 616 9 ----------------------------------------------------- Total backlog $9,558 100% $ 8,361 100% $6,659 100% =====================================================
* EAME represents Europe, Africa and the Middle East.
$ in thousands / in thousands of short tons Year ended October 31, 1996 1995 1994 1993 1992 1991 1990 1989 1988 - ------------------------------------------------------------------------------------------------------------------------------------ Coal Revenues $960,827 $849,758 $767,725 $716,591 $696,721 $758,481 $865,809 $815,558 $783,719 Operating profit $134,526 $111,033 $ 95,198 $ 70,680 $ 80,281 $ 60,709 $ 60,241 $ 51,007 $ 50,375 Produced coal sold Steam coal 17,520 15,777 16,702 16,036 13,711 13,536 13,058 11,942 11,057 Metallurgical coal 13,571 11,633 7,133 5,156 3,827 3,446 5,538 4,640 3,968 ------------------------------------------------------------------------------------------------------ Total produced coal sold 31,091 27,410 23,835 21,192 17,538 16,982 18,596 16,582 15,025 Purchased coal sold* -- -- 1,284 2,302 4,402 6,578 7,989 9,300 10,038 Total employees 2,809 2,479 1,954 1,431 1,252 1,133 1,214 1,435 1,232 ------------------------------------------------------------------------------------------------------
* Purchased coal sales were immaterial in 1996 and 1995. 1996 Annual Report 23 ================================================================================ Selected Financial Data
In millions, except per share amounts 1996 1995 1994 1993 1992 - ----------------------------------------------------------------------------------------------------------------------------------- Consolidated Operating Results Revenues $ 11,015.2 $ 9,301.4 $ 8,485.3 $ 7,850.2 $ 6,600.7 Earnings from continuing operations before taxes 413.2 362.2 303.3 242.2 215.4 Earnings from continuing operations, net 268.1 231.8 192.4 166.8 135.3 Earnings (loss) from discontinued operations, net -- -- -- -- (96.6) Cumulative effect of change in accounting principle, net -- -- -- -- (32.9) Net earnings 268.1 231.8 192.4 166.8 5.8 Earnings per share Continuing operations 3.17 2.78 2.32 2.03 1.65 Discontinued operations -- -- -- -- (1.18) Cumulative effect of change in accounting principle -- -- -- -- (.40) - ----------------------------------------------------------------------------------------------------------------------------------- Net earnings per share $ 3.17 $ 2.78 $ 2.32 $ 2.03 $ .07 Return on average shareholders' equity 17.4% 17.6% 17.1% 17.4% .6% Cash dividends per common share .68 $ .60 $ .52 $ .48 $ .40 Consolidated Financial Position Current assets $ 1,796.8 $ 1,411.6 $ 1,258.4 $ 1,309.1 $ 1,138.6 Current liabilities 1,645.5 1,238.6 1,021.3 930.9 845.4 ---------------------------------------------------------------------- Working capital 151.3 173.0 237.1 378.2 293.2 Property, plant and equipment, net 1,677.7 1,435.8 1,274.4 1,100.9 1,046.9 Total assets 3,951.7 3,228.9 2,824.8 2,588.9 2,365.5 Capitalization Long-term debt 3.0 2.9 24.4 59.6 61.3 Shareholders' equity 1,669.7 1,430.8 1,220.5 1,044.1 880.8 ---------------------------------------------------------------------- Total capitalization $ 1,672.7 $ 1,433.7 $ 1,244.9 $ 1,103.7 $ 942.1 Percent of total capitalization Long-term debt .2% .2% 2.0% 5.4% 6.5% Shareholders' equity 99.8% 99.8% 98.0% 94.6% 93.5% Shareholders' equity per common share $ 19.93 $ 17.20 $ 14.79 $ 12.72 $ 10.81 Common shares outstanding at October 31 83.8 83.2 82.5 82.1 81.5 Other Data New awards $ 12,487.8 $10,257.1 $ 8,071.5 $ 8,000.9 $10,867.7 Backlog at year end 15,757.4 14,724.9 14,021.9 14,753.5 14,706.0 Capital expenditures 392.4 318.9 236.6 171.5 287.0 Cash provided by operating activities $ 406.9 $ 366.4 $ 458.6 $ 188.7 $ 306.1 In millions, except per share amounts 1991 1990 1989 1988 - ----------------------------------------------------------------------------------------------------------------------------------- Consolidated Operating Results Revenues $ 6,572.0 $7,248.9 $ 6,127.2 $5,008.9 Earnings from continuing operations before taxes 228.4 153.6 135.6 62.0 Earnings from continuing operations, net 153.1 119.4 84.1 38.6 Earnings (loss) from discontinued operations, net 11.0 35.2 28.6 21.6 Cumulative effect of change in accounting principle, net -- -- -- -- Net earnings 164.1 154.6 112.7 60.2 Earnings per share Continuing operations 1.87 1.47 1.04 .48 Discontinued operations .14 .43 .36 .27 Cumulative effect of change in accounting principle -- -- -- -- -------------------------------------------------------- Net earnings per share $ 2.01 $ 1.90 $ 1.40 $ .75 Return on average shareholders' equity 20.2% 23.3% 21.5% 14.2% Cash dividends per common share .32 $ .24 $ .14 $ .02 Consolidated Financial Position Current assets $ 1,159.5 $1,222.8 $ 1,036.4 $1,001.0 Current liabilities 848.2 984.0 797.7 786.1 ------------------------------------------------------- Working capital 311.3 238.8 238.7 214.9 Property, plant and equipment, net 1,092.7 925.3 775.3 729.8 Total assets 2,421.4 2,475.8 2,154.3 2,075.7 Capitalization Long-term debt 75.7 57.6 62.5 95.0 Shareholders' equity 900.6 741.3 589.9 467.1 ------------------------------------------------------- Total capitalization $ 976.3 $ 798.9 $ 652.4 $ 562.1 Percent of total capitalization Long-term debt 7.8% 7.2% 9.6% 16.9% Shareholders' equity 92.2% 92.8% 90.4% 83.1% Shareholders' equity per common share 11.10 $ 9.22 $ 7.39 $ 5.91 Common shares outstanding at October 31 81.1 80.4 79.8 79.1 Other Data New awards $ 8,531.6 $7,632.3 $ 7,135.3 $ 5,955.2 Backlog at year end 11,181.3 9,557.8 8,360.9 6,658.6 Capital expenditures 159.7 155.7 139.2 86.3 Cash provided by operating activities $ 219.0 $ 353.1 $ 265.1 $ 17.7
See Management's Discussion and Analysis on pages 24 to 27 and Notes to Consolidated Financial Statements on pages 33 to 43 for information relating to significant items affecting the results of operations. The quarterly dividend was increased from $.02 per share to $.04 per share in the second quarter of 1989, to $.06 per share in the first quarter of 1990, to $.08 per share in the first quarter of 1991, to $.10 per share in the first quarter of 1992, to $.12 per share in the first quarter of 1993, to $.13 per share in the first quarter of 1994, to $.15 per share in the first quarter of 1995, to $.17 per share in the first quarter of 1996 and to $.19 per share in the first quarter of 1997. Fluor Corporation 24 ============================================================================== Management's Discussion and Analysis The following discussion and analysis is provided to increase understanding of, and should be read in conjunction with, the consolidated financial statements and accompanying notes. Results of Operations The company currently operates in two business segments: Engineering and Construction and Coal. The Engineering and Construction segment provides design, engineering, procurement, construction, maintenance and other diversified services to clients in a broad range of industrial and geographic markets on a worldwide basis. The Coal segment produces, processes and sells high-quality, low-sulfur steam coal for the electric generating industry as well as industrial customers, and metallurgical coal for the steel industry. Engineering and Construction Segment Total 1996 new awards were $12.5 billion compared with $10.3 billion in 1995 and $8.1 billion in 1994. The following table sets forth new awards for each of the segment's business groups:
$ in millions / Year ended October 31, 1996 1995 1994 - ---------------------------------------------------------------------------------------------------------------- Process $ 4,061 33% $ 3,859 38% $ 4,432 55% Industrial 6,182 49 4,313 42 2,948 37 Power/Government 1,428 11 1,873 18 516 6 Diversified Services 817 7 212 2 176 2 - ---------------------------------------------------------------------------------------------------------------- Total new awards $ 12,488 100% $ 10,257 100% $ 8,072 100% ================================================================================================================ U.S. $5,749 46% $ 4,495 44% $ 3,165 39% Outside U.S. 6,739 54 5,762 56 4,907 61 - ---------------------------------------------------------------------------------------------------------------- Total new awards $ 12,488 100% $ 10,257 100% $ 8,072 100% ================================================================================================================
During 1996, 54 percent of new awards came from projects located outside of the United States, compared with 56 percent and 61 percent in 1995 and 1994, respectively. The company's future award prospects include several large-scale 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. Process Group new awards reflect this variability, as fewer large-scale project awards were received in 1996 compared with 1995 and 1994. In 1996, this was partially offset by smaller to medium sized awards. Growth in the Industrial Group's new awards in 1996 is due primarily to significant activity in the mining and metals sector, including a $1 billion award for the procurement, construction and management services of a copper and gold mine in Indonesia, in addition to increases in the telecommunications and pharmaceuticals sectors. The growth in the Industrial Group's new awards in 1995 compared with 1994 is due primarily to significant new awards activity in the automotive and mining and metals operating sectors, along with continued growth in demand for consumer products, particularly in developing countries. The Power/Government Group's new awards in 1996 reflect the company being 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 for an additional 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 of $1 billion was recognized as a new award in the fourth quarter of 1996. The growth in the Power/Government Group's new awards in 1995 compared with 1994 is due primarily to an award totaling over $1 billion relating to a power plant to be constructed in Paiton, Indonesia. The increase in the Diversified Services Group's new awards in 1996 was due primarily to the award of facility management service contracts for IBM at various facilities located throughout the United States. Backlog at October 31, 1996, 1995 and 1994 was $15.8 billion, $14.7 billion and $14.0 billion, respectively. The Process Group's backlog continued to decline in 1996, reflecting the work off of certain large-scale projects. Backlog for the other engineering and construction business groups increased, reflecting the higher new award 24 1996 Annual Report 25 ================================================================================ activity as well as the impact of acquisitions. Although backlog reflects business which is considered to be firm, cancellations or scope adjustments do occur. Backlog has been adjusted to reflect project cancellations, deferrals, and revised project scope and cost, both upwards and downwards. The net reduction in backlog from project adjustments and cancellations during the year ended October 31, 1996 was $1.6 billion, compared with $1.2 billion and $1.1 billion for the years ended October 31, 1995 and 1994, respectively. Engineering and Construction revenues increased to $10.1 billion in 1996 compared with $8.5 billion in 1995 and $7.7 billion in 1994 due primarily to increases in the volume of work performed. U.S. revenues increased in 1996, reflecting both growth within the Diversified Services Group and an overall improving U.S. economy. Export revenues increased in 1996 compared with 1995 and 1994 as the result of substantial engineering work performed in the U.S. for a petrochemical complex in Kuwait. Excluding the Kuwait project, export revenues continued to decline in 1996, reflecting the company's efforts to provide a higher percentage of engineering services through its international offices. Engineering and Construction operating profits increased 12 percent to $320 million in 1996, compared with $286 million in 1995 and $259 million in 1994 due primarily to an increase in the volume of work performed, partially offset by continued high levels of investment spending for strategic business development. These expenditures are expensed as incurred and reflect the company's pursuit of business opportunities across numerous global markets. Margins declined slightly in 1996 from 1995 and 1994 levels due to the increased investment spending, competitive market conditions and the mix of engineering and construction projects. Margins were also adversely impacted by losses incurred in connection with a mining project in South America. The majority of the company's Engineering and Construction contracts provide for reimbursement of costs plus a fixed or percentage fee. In the highly competitive markets served by this segment, there is an increasing trend for cost-reimbursable contracts with incentive-fee arrangements and fixed or unit price contracts. In certain instances, the company has provided guaranteed completion dates and/or achievement of other performance criteria. Failure to meet schedule or performance guarantees can result in non-reimbursable costs which could exceed project profit margins. The company continues to focus on improving operating margins by lowering the cost of delivering services through its global network of offices, allowing greater use of high-value engineering centers located in lower cost areas of the world. During 1996, the company continued to enhance its growth potential by expanding existing businesses through both internal expansion and strategic acquisitions, particularly within the Diversified Services Group. Diversified Services continues to expand by marketing services directly to clients that previously have been provided as support for engineering and construction projects, while also capitalizing on emerging international markets. In most cases, Diversified Services' operating companies typically carry profit margins higher than traditional engineering and construction projects, and because of their more purely service nature, they generally do not generate significant backlog as a measure of their activity. Supplementing internal growth were the following acquisitions: In May 1996, the company consummated a merger between one of its subsidiaries, Fluor Daniel Environmental Services, Inc., and Groundwater Technology, Inc., wherein the company acquired an approximate 55 percent interest in the newly named company, Fluor Daniel GTI, Inc.; in March 1996, American Equipment Company, Inc., the company's equipment rental and sales subsidiary, acquired S&R Equipment Company, Inc.; and, in October 1996, the company acquired Marshall Contractors, Inc. In addition to the acquisitions noted above, during 1996 the company finalized a number of smaller acquisitions, primarily in selected niche markets. All acquisitions have been accounted for under the purchase method of accounting and their results of operations have been included in the company's consolidated financial statements from the respective acquisition dates. If these acquisitions had been made at the beginning of 1996, results of operations would not have differed materially from actual results. Coal Segment Revenues and operating profit from Coal operations in 1996 were $961 million and $135 million, respectively, compared with $850 million and $111 million in 1995. Revenues and operating profit in 1994 were $768 million and $95 million. 25 Fluor Corporation 26 ============================================================================== Revenues increased in 1996 due primarily to increased sales volume of both metallurgical and steam coal. Metallurgical coal revenues increased due primarily to the continued strong demand by steel producers and the capturing of a larger share of the metallurgical coal market. Steam coal sales benefited from the severe winter in 1996 as electric utilities replenished their depleted inventory levels. Gross profit and operating profit increased in 1996 compared with 1995 due primarily to the increased sales volume and lower costs of both metallurgical and steam coal combined with improved pricing of metallurgical coal. Revenues increased in 1995 compared with 1994 due primarily to increased sales volume of metallurgical coal, which more than offset lower demand for steam coal due to the prior year's mild winter weather conditions. Metallurgical coal sales increased in 1995 due to the strong demand by steel producers. Operating profit increased 17 percent in 1995 due primarily to the increased sales volume of metallurgical coal which has a higher margin than steam coal. Other Net interest income for the year ended October 31, 1996 decreased $7.9 million compared with the same period of 1995 due primarily to both lower interest earning assets and higher interest bearing liabilities. Net interest income increased in 1995 compared with 1994 due largely to higher rates of return on short-term investments and the prepayment of a 13.5 percent note in the first quarter of 1995. Corporate administrative and general expense in 1996 was level with 1995 as lower corporate overhead was offset by higher performance-driven compensation plan expense. Corporate administrative and general expense increased slightly in 1995 compared with 1994 due primarily to higher performance-driven compensation plan expense partially offset by lower corporate overhead. 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. In October 1995, the Financial Accounting Standards Board issued Statement of Financial Accounting Standards No. 123, "Accounting for Stock-Based Compensation" (SFAS No. 123). Adoption of the new accounting standards prescribed by SFAS No. 123 is optional. The company intends to continue accounting for its plans under previous accounting standards and beginning in 1997 will adopt the "disclosure only" alternative available under SFAS No. 123. Discontinued Operations On April 7, 1994, the company completed the sale of its Lead business for initial cash proceeds of approximately $52 million plus deferred amounts to be paid in installments over periods ranging from five to eight years. The sale by the company of its Lead business included St. Joe Minerals Corporation ("St. Joe") and its environmental liabilities for several different lead mining, smelting and other lead related environmental sites. As a condition of the St. Joe sale, however, the company retained responsibility for certain non-lead related environmental liabilities, arising out of St. Joe's former zinc mining and smelting division, but only to the extent that such liabilities are not covered by St. Joe's comprehensive general liability insurance. The zinc mining and smelting division of St. Joe was sold to Zinc Corporation of America ("ZCA") in 1987. As part of the sale agreement, St. Joe and the company agreed to indemnify ZCA in the event that certain environmental liabilities arise from three Zinc facilities (the "Zinc Facilities"). During 1993, ZCA made claims under this indemnity as well as under the Comprehensive Environmental Response, Compensation and Liability Act ("CERCLA") against St. Joe. In 1994, ZCA filed suit against St. Joe and the company, among others, seeking compensation. In 1994, the company and St. Joe, among others, executed a settlement agreement with ZCA, which among other things, cancels the indemnity previously provided to ZCA and limits environmental expenditures at the Zinc Facilities for which St. Joe 26 1996 Annual Report 27 =============================================================================== would be responsible to no more than approximately $10 million. This amount had been previously reserved by the company. Expenses incurred and payments made under the settlement agreement are expected to be made over a period of at least five years from the date of settlement. Financial Position and Liquidity The increase in cash flows from operating activities in 1996 is due primarily to higher earnings, partially offset by increases in operating assets and liabilities. During 1996, increases in receivables and contract work in progress were only partially offset by increases in certain project related short-term liabilities. These increases were primarily the result of acquisitions and the volume of work in progress. These changes in operating assets and liabilities from year to year are affected by the mix, stage of completion and commercial terms of engineering and construction projects. The increase in cash utilized by investing activities in 1996 compared with 1995 and 1994 is primarily attributable to increased capital expenditures and acquisitions by both the Engineering and Construction and Coal operations, partially offset by increased proceeds from the sales and maturities of marketable securities. Capital expenditures and acquisitions by the Coal operations have been directed primarily towards acquiring additional coal reserves. Engineering and Construction capital expenditures and acquisitions were primarily for American Equipment and directed towards expanding the machinery and equipment rental business. Investing activity in 1994 included the initial pretax proceeds from the sale of the Lead business. Cash utilized by financing activities consisted primarily of dividend payments and the payment of certain long-term debt, partially offset by an increase in short-term borrowings. The long-term debt to capitalization ratio at October 31, 1996 and 1995 was less than 1.0 percent. The company has on hand and access to sufficient sources of funds to meet its anticipated operating, expansion and capital needs. Significant short- and long-term lines of credit are maintained with banks which, along with cash on hand and marketable securities, provide adequate operating liquidity. Liquidity is also provided by the company's commercial paper program under which there was $30 million outstanding at both October 31, 1996 and 1995. Additionally, 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. The filing will enable the company to issue debt from time to time during the next two years. Proceeds from any offering will be used for general corporate purposes, which may include working capital requirements, capital expenditures and possible acquisitions. Cash dividends increased to $56.8 million ($.68 per share) in 1996 from $49.7 million ($.60 per share) in 1995 and $42.8 million ($.52 per share) in 1994. Quarterly dividends have been increased in each of the past three years to the current level of $.19 per share. Although the company is affected by inflation and the cyclical nature of the industry, its Engineering and Construction operations are generally protected by the ability to recover cost increases in most contracts. Coal operations produce a commodity which is internationally traded at prices established by market factors outside the control of the company. However, commodity prices generally tend over the long-term to correlate with inflationary trends, and the company's substantial coal reserves provide a hedge against the long-term effects of inflation. Although the company has taken actions to reduce its dependence on external economic conditions, management is unable to predict with certainty the amount and mix of future business. 27 Fluor Corporation 28 ==============================================================================
Consolidated Balance Sheet $ in thousands / At October 31, 1996 1995 - --------------------------------------------------------------------------------------------------------------------------------- Assets Current Assets Cash and cash equivalents $ 246,964 $ 292,934 Marketable securities 69,378 137,758 Accounts and notes receivable 742,547 470,104 Contract work in progress 561,490 362,910 Inventories 73,927 63,284 Deferred taxes 50,157 55,088 Other current assets 52,360 29,593 ----------------------------------- Total current assets 1,796,823 1,411,671 ----------------------------------- Property, Plant and Equipment Land 63,969 62,309 Buildings and improvements 329,358 312,981 Machinery and equipment 1,424,999 1,063,547 Mining properties and mineral rights 644,415 590,145 Construction in progress 36,133 37,402 ----------------------------------- 2,498,874 2,066,384 Less accumulated depreciation, depletion and amortization 821,212 630,573 ----------------------------------- Net property, plant and equipment 1,677,662 1,435,811 ----------------------------------- Other Assets Goodwill, net of accumulated amortization of $18,589 and $11,778, respectively 84,772 33,303 Investments 108,107 88,488 Other 284,362 259,633 ----------------------------------- Total other assets 477,241 381,424 ----------------------------------- $ 3,951,726 $ 3,228,906 ===================================
1996 Annual Report 29 ================================================================================
$ in thousands / At October 31, 1996 1995 - ---------------------------------------------------------------------------------------------------------------- Liabilities and Shareholders' Equity Current Liabilities Accounts and notes payable $ 704,186 $ 372,301 Commercial paper 29,916 29,937 Advance billings on contracts 445,807 393,438 Accrued salaries, wages and benefit plan liabilities 290,426 269,812 Other accrued liabilities 175,026 148,782 Current portion of long-term debt 207 24,375 ------------------------------- Total current liabilities 1,645,568 1,238,645 ------------------------------- Long-Term Debt Due After One Year 2,967 2,873 Noncurrent Liabilities Deferred taxes 42,632 44,211 Other 590,833 512,363 ------------------------------- Total noncurrent liabilities 633,465 556,574 ------------------------------- Contingencies and Commitments Shareholders' Equity Capital stock Preferred--authorized 20,000,000 shares without par value, none issued Common--authorized 150,000,000 shares of $.625 par value; issued and outstanding in 1996--83,791,197 shares and in 1995--83,164,866 shares 52,369 51,978 Additional capital 573,037 538,503 Retained earnings 1,077,559 866,305 Unamortized executive stock plan expense (32,538) (26,865) Cumulative translation adjustment (701) 893 ------------------------------- Total shareholders' equity 1,669,726 1,430,814 ------------------------------- $3,951,726 $3,228,906 ===============================
See Notes to Consolidated Financial Statements. Fluor Corporation 30 ================================================================================ Consolidated Statement of Earnings
In thousands, except per share amounts / Year ended October 31, 1996 1995 1994 - ------------------------------------------------------------------------------------------------------------------------------------ Revenues Engineering and construction services $10,054,365 $8,451,626 $7,717,542 Coal 960,827 849,758 767,725 ----------------------------------------------------- Total revenues 11,015,192 9,301,384 8,485,267 ----------------------------------------------------- Cost of Revenues Engineering and construction services 9,739,148 8,171,351 7,466,274 Coal 826,301 738,725 672,527 ----------------------------------------------------- Total cost of revenues 10,565,449 8,910,076 8,138,801 Other (Income) and Expenses Corporate administrative and general expense 48,120 48,636 47,855 Interest expense 16,051 13,385 16,861 Interest income (27,646) (32,927) (21,549) ----------------------------------------------------- Total cost and expenses 10,601,974 8,939,170 8,181,968 ----------------------------------------------------- Earnings Before Taxes 413,218 362,214 303,299 Income Tax Expense 145,134 130,446 110,900 ----------------------------------------------------- Net Earnings $ 268,084 $ 231,768 $ 192,399 ===================================================== Earnings Per Share $ 3.17 $ 2.78 $ 2.32 ==================================================== Shares Used to Calculate Earnings Per Share 84,566 83,428 82,796 =====================================================
See Notes to Consolidated Financial Statements. 1996 Annual Report 31 =============================================================================== Consolidated Statement of Cash Flows
In thousands / Year ended October 31, 1996 1995 - ------------------------------------------------------------------------------------------------------------------------------ Cash Flows From Operating Activities Net earnings $ 268,084 $ 231,768 Adjustments to reconcile net earnings to cash provided by operating activities: Depreciation, depletion and amortization 194,129 146,957 Deferred taxes 12,631 1,709 Changes in operating assets and liabilities (60,353) 9,408 Other, net (7,632) (23,491) ------------------------------------- Cash provided by operating activities 406,859 366,351 ------------------------------------- Cash Flows From Investing Activities Capital expenditures (392,436) (318,942) E&C businesses acquired (87,085) (16,230) Coal companies acquired (5,010) -- Purchase of marketable securities (67,069) (132,934) Proceeds from sales and maturities of marketable securities 134,496 115,553 Investments, net 3,991 (16,667) Proceeds from sale of property, plant and equipment 29,486 17,406 Initial pretax cash proceeds from sale of discontinued operations -- -- Other, net (12,699) (29,221) ------------------------------------- Cash utilized by investing activities (396,326) (381,035) ------------------------------------- Cash Flows From Financing Activities Cash dividends paid (56,830) (49,712) Payments on debt (42,456) (35,604) Increase (decrease) in short-term borrowings 26,109 9,980 Stock options exercised 17,351 9,757 Decrease in note payable to affiliate -- -- Other, net (677) (1,271) ------------------------------------- Cash utilized by financing activities (56,503) (66,850) ------------------------------------- (Decrease) increase in cash and cash equivalents (45,970) (81,534) Cash and cash equivalents at beginning of year 292,934 374,468 ------------------------------------- Cash and cash equivalents at end of year $ 246,964 $ 292,934 ===================================== In thousands / Year ended October 31, 1994 - ---------------------------------------------------------------------------------------------------------- Cash Flows From Operating Activities Net earnings $ 192,399 Adjustments to reconcile net earnings to cash provided by operating activities: Depreciation, depletion and amortization 114,258 Deferred taxes 2,801 Changes in operating assets and liabilities 141,723 Other, net 7,428 --------- Cash provided by operating activities 458,609 --------- Cash Flows From Investing Activities Capital expenditures (236,623) E&C businesses acquired -- Coal companies acquired (38,164) Purchase of marketable securities (60,213) Proceeds from sales and maturities of marketable securities 39,930 Investments, net 214 Proceeds from sale of property, plant and equipment 18,271 Initial pretax cash proceeds from sale of discontinued operations 51,869 Other, net (1,172) --------- Cash utilized by investing activities (225,888) --------- Cash Flows From Financing Activities Cash dividends paid (42,828) Payments on debt (1,994) Increase (decrease) in short-term borrowings (10,096) Stock options exercised 11,946 Decrease in note payable to affiliate (30,000) Other, net (125) --------- Cash utilized by financing activities (73,097) --------- (Decrease) increase in cash and cash equivalents 159,624 Cash and cash equivalents at beginning of year 214,844 --------- Cash and cash equivalents at end of year $ 374,468 =========
See Notes to Consolidated Financial Statements. Fluor Corporation 32 ================================================================================ Consolidated Statement of Shareholders' Equity
Unamortized Common Stock Executive Cumulative In thousands, except per share amounts ------------------- Additional Retained Stock Plan Translation Year ended October 31, 1994, 1995 and 1996 Shares Amount Capital Earnings Expense Adjustment Total - ---------------------------------------------------------------------------------------------------------------------------------- Balance at October 31, 1993 82,093 $51,308 $478,204 $ 534,678 $(16,828) $(3,240) $ 1,044,122 ---------------------------------------------------------------------------------- Net earnings 192,399 192,399 Cash dividends ($.52 per share) (42,828) (42,828) Exercise of stock options, net 396 248 11,698 11,946 Stock option tax benefit 4,046 4,046 Amortization of executive stock plan expense 3,837 3,837 Issuance of restricted stock, net 19 11 1,128 (1,481) (342) Tax benefit from reduction of valuation allowance for deferred tax assets 3,728 3,728 Translation adjustment (net of deferred taxes of $2,268) 3,548 3,548 ---------------------------------------------------------------------------------- Balance at October 31, 1994 82,508 51,567 498,804 684,249 (14,472) 308 1,220,456 ---------------------------------------------------------------------------------- Net earnings 231,768 231,768 Cash dividends ($.60 per share) (49,712) (49,712) Exercise of stock options, net 264 165 9,592 9,757 Stock option tax benefit 2,460 2,460 Amortization of executive stock plan expense 3,684 3,684 Issuance of restricted stock, net 393 246 20,320 (16,077) 4,489 Tax benefit from reduction of valuation allowance for deferred tax assets 7,327 7,327 Translation adjustment (net of deferred taxes of $374) 585 585 ---------------------------------------------------------------------------------- Balance at October 31, 1995 83,165 51,978 538,503 866,305 (26,865) 893 1,430,814 ---------------------------------------------------------------------------------- Net earnings 268,084 268,084 Cash dividends ($.68 per share) (56,830) (56,830) Exercise of stock options, net 466 291 17,060 17,351 Stock option tax benefit 3,977 3,977 Amortization of executive stock plan expense 5,723 5,723 Issuance of restricted stock, net 160 100 11,084 (11,396) (212) Tax benefit from reduction of valuation allowance for deferred tax assets 2,413 2,413 Translation adjustment (net of deferred taxes of $1,019) (1,594) (1,594) ---------------------------------------------------------------------------------- Balance at October 31, 1996 83,791 $52,369 $573,037 $1,077,559 $(32,538) $ (701) $1,669,726 ==================================================================================
See Notes to Consolidated Financial Statements. 1996 Annual Report 33 ================================================================================ Notes to Consolidated Financial Statements Major Accounting Policies Principles of Consolidation The financial statements include the accounts of the company and its subsidiaries. The equity method of accounting is used for investment ownership ranging from 20 percent to 50 percent. Investment ownership of less than 20 percent is accounted for on the cost method. All significant intercompany transactions of consolidated subsidiaries are eliminated. Certain 1995 and 1994 amounts have been reclassified to conform with the 1996 presentation. Use of Estimates The preparation of the financial statements of the company requires management to make estimates and assumptions that affect reported amounts. These estimates are based on information available as of the date of the financial statements. Therefore, actual results could differ from those estimates. Engineering and Construction Contracts The company recognizes engineering and construction contract revenues using the percentage-of-completion method, based primarily on contract costs incurred to date compared with total estimated contract costs. Customer-furnished materials, labor and equipment, and in certain cases subcontractor materials, labor and equipment, are included in revenues and cost of revenues when management believes that the company is responsible for the ultimate acceptability of the project. Contracts are segmented between types of services, such as engineering and construction, and accordingly, gross margin related to each activity is recognized as those separate services are rendered. Changes to total estimated contract costs or losses, if any, are recognized in the period in which they are determined. Revenues recognized in excess of amounts billed are classified as current assets under contract work in progress. Amounts received from clients in excess of revenues recognized to date are classified as current liabilities under advance billings on contracts. The company anticipates that substantially all incurred costs associated with contract work in progress at October 31, 1996 will be billed and collected in 1997. Depreciation, Depletion and Amortization Additions to property, plant and equipment are recorded at cost. Assets other than mining properties and mineral rights are depreciated principally using the straight-line method over the following estimated useful lives: buildings and improvements--3 to 50 years and machinery and equipment--2 to 30 years. Mining properties and mineral rights are depleted on the units-of-production method. Leasehold improvements are amortized over the lives of the respective leases. Goodwill is amortized on the straight-line method over periods not longer than 40 years. Exploration, Development and Reclamation Coal exploration costs are expensed as incurred. Development and acquisition costs of coal properties, when expected to be significant, are capitalized in mining properties and depleted. The company accrues for post-mining reclamation costs as coal is mined. Reclamation of disturbed acreage is performed as a normal part of the mining process. Income Taxes Deferred tax assets and liabilities are recognized for the expected future tax consequences of events that have been recognized in the company's financial statements or tax returns. Earnings Per Share Earnings per share is based on the weighted average number of common shares and, when appropriate, common equivalent shares outstanding in each period. Common equivalent shares, primarily stock options, are included when the effect of exercise would be dilutive. Fluor Corporation 34 ================================================================================ Marketable Securities All investment securities are considered to be available-for-sale and carried at fair value. Management determines classification at the time of purchase and reevaluates its appropriateness at each balance sheet date. The company's investments primarily include short-term, highly liquid investment grade debt securities. As of October 31, 1996 and 1995 there were no material gross unrealized gains or losses as the carrying value of the security portfolio approximated fair value. Gross realized gains and losses on sales of securities for the years ended October 31, 1996 and 1995 were also not material. The cost of securities sold is based on the specific identification method. As of October 31, 1996 approximately $21 million of securities mature within one year, $44 million mature in the next two to three years and approximately $4 million mature after three years. Inventories Inventories are stated at the lower of cost or market using the average cost method. Inventories comprise:
$ in thousands / At October 31, 1996 1995 - ------------------------------------------------------------------------------- Coal $28,809 $28,874 Supplies and other 45,118 34,410 -------------------- $73,927 $63,284 ====================
Long-Lived Assets 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. Foreign Currency The company's utilization of derivative financial instruments is substantially limited to the use of forward exchange contracts to hedge foreign currency transactions entered into in the ordinary course of business and not to engage in currency speculation. The company's forward exchange contracts do not subject the company to risk from exchange rate movements because gains and losses on such contracts offset losses and gains, respectively, on the assets, liabilities or transactions being hedged. Accordingly, the unrealized gains and losses are deferred and included in the measurement of the related foreign currency transaction. At October 31, 1996, the company had approximately $68 million of foreign exchange contracts outstanding relating to lease commitments and contract obligations. The forward exchange contracts generally require the company to exchange U.S. dollars for foreign currencies at maturity, at rates agreed to at inception of the contracts. If the counterparties to the exchange contracts (primarily AA rated international banks) do not fulfill their obligations to deliver the contracted currencies, the company could be at risk for any currency related fluctuations. The company limits exposure to foreign currency fluctuations in most of its engineering and construction contracts through provisions that require client payments in U.S. dollars or other currencies corresponding to the currency in which costs are incurred. As a result, the company generally does not need to hedge foreign currency cash flows for contract work performed. The amount of any gain or loss on these contracts in 1996 and 1995 was immaterial. The contracts are of varying duration, none of which extend beyond December 1, 1999. The functional currency of all significant foreign operations is the local currency. Concentrations of Credit Risk The company provides a variety of financing arrangements for its engineering and construction clients. The majority of accounts receivable and all contract work in progress are from engineering and construction clients in various industries and locations throughout the world. Most contracts require payments as the projects progress or in 1996 Annual Report 35 ================================================================================ certain cases advance payments. The company generally does not require collateral, but in most cases can place liens against the property, plant or equipment constructed if a default occurs. Accounts receivable from customers of the company's Coal operations are primarily concentrated in the steel and utility industries. The company maintains adequate reserves for potential credit losses and such losses have been minimal and within management's estimates. Consolidated Statement of Cash Flows Securities with maturities of 90 days or less at the date of purchase are classified as cash equivalents. Securities with maturities beyond 90 days are classified as marketable securities and are carried at fair market value. The changes in operating assets and liabilities as shown in the Consolidated Statement of Cash Flows comprise:
$ in thousands / Year ended October 31, 1996 1995 1994 - ------------------------------------------------------------------------------------------ Decrease (increase) in: Accounts and notes receivable $ (78,632) $(141,505) $ 73,905 Contract work in progress (176,137) (52,488) (2,626) Inventories (8,743) (10,581) (18,042) Other current assets (18,465) 6,292 (8,493) Increase in: Accounts payable 167,350 35,334 43,523 Advance billings on contracts 43,382 172,062 25,406 Accrued liabilities 10,892 294 28,050 -------------------------------------- Changes in operating assets and liabilities $ (60,353) $ 9,408 $141,723 ====================================== Cash paid during the year for: Interest expense $ 11,832 $ 7,672 $ 12,830 Income tax payments, net 120,570 121,508 81,306
Acquisitions and Disposition During the last three years, the company completed certain business acquisitions in connection with its strategic long-term growth goals. These acquisitions were in both the Engineering and Construction and Coal segments. The Engineering and Construction acquisitions were concentrated primarily within the Diversified Services Group, consistent with the company's strategy of diversification to strengthen its growth potential while mitigating the down cycles of individual markets, segments or geographic regions. The following summarizes major Engineering and Construction acquisitions: 1996: Groundwater Technology, Inc. ("GTI"), a publicly traded company headquartered in Massachusetts, that provides detailed, scientific environmental assessment and remediation programs, as well as other environmental support services. Under the terms of the transaction, the company consummated a merger between one of its subsidiaries, Fluor Daniel Environmental Services, Inc., and GTI wherein the company acquired an approximate 55 percent interest in the newly named company, Fluor Daniel GTI, Inc. S&R Equipment Company, Inc., a privately held U.S. company based in Ohio, that specializes in high-lift equipment rentals. Marshall Contractors, Inc., a privately held U.S. company based in Rhode Island, that provides specialized construction services to the microelectronics, pharmaceuticals, biotechnology, foods and related industries. These businesses and other smaller acquisitions were purchased for $87 million. The fair value of assets acquired, including goodwill of $50 million, was $329 million, and liabilities assumed totaled $242 million. 1995: Management Resources Group, plc, a privately held company headquartered in London, England, that provides permanent and temporary placement services for accounting, information technology and office personnel. Anderson DeBartolo Pan, Inc., a privately held U.S. company based in Arizona, that provides professional services in engineering, architectural and construction management to the microelectronics market and the health care, hospitality and sports facilities industries. Fluor Corporation 36 ================================================================================ A majority interest in Prosynchem S.A., a privately held company headquartered in Gliwice, Poland, that provides engineering and construction services to clients in the petroleum, petrochemicals, chemicals and environmental industries in Poland and other Eastern European countries. These businesses and other smaller acquisitions were purchased for $16 million. The fair value of assets acquired, including goodwill of $16 million, was $30 million, and liabilities assumed totaled $14 million. There were no significant Engineering and Construction acquisitions in 1994. Massey Coal Company ("Massey") purchased five coal mining companies during 1994 through 1996. The aggregate purchase price was $43 million and included the fair value of assets acquired, consisting of $89 million of property, plant and equipment, and mining rights, $5 million of working capital and other assets, net of other liabilities assumed of $51 million. These acquisitions, along with capital expenditures, have been directed primarily towards acquiring additional coal reserves. All of the above acquisitions have been accounted for under the purchase method of accounting and their results of operations have been included in the company's consolidated financial statements from the respective acquisition dates. If these acquisitions had been made at the beginning of 1996, 1995 or 1994, pro forma results of operations would not have differed materially from actual results. From time to time, the company enters into investment arrangements, including joint ventures, that are related to its Engineering and Construction business. During 1996 and 1995, the majority of these expenditures related to ongoing investments in an equity fund that focuses on energy related projects and a number of smaller, diversified ventures. In 1994, the majority of joint venture investment activity related to the acquisition of a minority interest in Prochem S.A., one of Poland's largest engineering and construction companies. On April 7, 1994, the company completed the sale of its Lead business for initial cash proceeds of approximately $52 million plus deferred amounts to be paid in installments over periods ranging from five to eight years. The closing of the sale had no impact on the company's earnings beyond what was originally recognized when the Lead business was discontinued in 1992. Revenues from the Lead business were approximately $71 million for the five month period through the date of sale in 1994. Income Taxes The income tax expense (benefit) included in the Consolidated Statement of Earnings is as follows:
$ in thousands / Year ended October 31, 1996 1995 1994 - ----------------------------------------------------------------------------------------- Current: Federal $ 94,864 $ 88,762 $ 58,420 Foreign 25,872 26,803 37,151 State and local 11,767 13,172 12,528 ---------------------------------- Total current 132,503 128,737 108,099 ---------------------------------- Deferred: Federal 13,081 (10,776) (2,145) Foreign 1,974 11,953 4,673 State and local (2,424) 532 273 ---------------------------------- Total deferred 12,631 1,709 2,801 ---------------------------------- Total income tax expense $145,134 $130,446 $110,900 ==================================
A reconciliation of U.S. statutory federal income tax expense to the company's income tax expense on earnings is as follows:
$ in thousands / Year ended October 31, 1996 1995 1994 - ------------------------------------------------------------------------------------------ U.S. statutory federal income tax expense $144,626 $126,775 $106,155 Increases (decreases) in taxes resulting from: State and local income taxes 9,542 9,288 8,498 Effect of non-U.S. tax rates 6,057 5,682 7,412 Depletion (11,054) (10,497) (9,560) Other, net (4,037) (802) (1,605) ------------------------------------ Total income tax expense $145,134 $130,446 $110,900 ====================================
1996 Annual Report 37 ================================================================================ Deferred taxes reflect the tax effects of differences between the amounts recorded as assets and liabilities for financial reporting purposes and the amounts recorded for income tax purposes. The tax effects of significant temporary differences giving rise to deferred tax assets and liabilities are as follows:
$ in thousands / At October 31, 1996 1995 - ------------------------------------------------------------------------------------------ Deferred tax assets: Accrued liabilities not currently deductible $ 174,772 $ 156,925 Tax basis of building in excess of book basis 22,999 23,149 Other 69,375 79,120 ------------------------- Total deferred tax assets 267,146 259,194 Valuation allowance for deferred tax assets (38,655) (44,397) ------------------------- Deferred tax assets, net 228,491 214,797 ------------------------- Deferred tax liabilities: Coal mining property and equipment book basis in excess of tax basis (147,550) (128,238) Tax on unremitted non-U.S. earnings (27,715) (34,688) Other (45,701) (40,994) ------------------------- Total deferred tax liabilities (220,966) (203,920) ------------------------- Net deferred tax assets $ 7,525 $ 10,877 =========================
The company established a valuation allowance to reduce certain deferred tax assets to amounts that are more likely than not to be realized. Some of this allowance relates to deferred tax assets existing at the date of the company's 1987 quasi-reorganization. Reductions in the valuation allowance relating to these 1987 deferred tax assets are credited to additional capital. Residual income taxes of approximately $12 million have not been provided on approximately $30 million of undistributed earnings of certain foreign subsidiaries at October 31, 1996, because the company intends to keep those earnings reinvested indefinitely. United States and foreign earnings before taxes are as follows:
$ in thousands / Year ended October 31, 1996 1995 1994 - ------------------------------------------------------------------------------------------ United States $ 363,687 $ 249,776 $ 196,397 Foreign 49,531 112,438 106,902 --------------------------------------- Total $ 413,218 $ 362,214 $ 303,299 =======================================
Retirement Benefits The company sponsors contributory and non-contributory defined contribution retirement and defined benefit pension plans for eligible employees. Contributions to defined contribution retirement plans are based on a percentage of the employee's compensation. Expense recognized for these plans of approximately $75 million in 1996, $69 million in 1995 and $67 million in 1994, is primarily related to domestic engineering and construction operations. Contributions to defined benefit pension plans are generally at the minimum annual amount required by applicable regulations. Payments to retired employees under these plans are generally based upon length of service and/or a percentage of qualifying compensation. The defined benefit pension plans are primarily related to international engineering and construction operations, U.S. craft employees and coal operations. Net periodic pension income for defined benefit pension plans includes the following components:
$ in thousands / Year ended October 31, 1996 1995 1994 - ------------------------------------------------------------------------------------------ Service cost incurred during the period $ 14,284 $ 12,385 $ 14,310 Interest cost on projected benefit obligation 22,248 21,578 20,275 Income and gains on assets invested (75,861) (50,776) (7,907) Net amortization and deferral 33,868 11,198 (34,255) ----------------------------------- Net periodic pension income $ (5,461) $ (5,615) $ (7,577) ===================================
The following assumptions were used in the determination of net periodic cost:
Year ended October 31, 1996 1995 1994 - ------------------------------------------------------------------------------------------------ Discount rates 6.75-8.5% 7.75-9.25% 7.0-8.0% Rates of increase in compensation levels 3.25-5.5% 4.0-6.25% 3.5-5.0% Expected long-term rates of return on assets 5.75-9.5% 6.75-10.25% 6.0-10.0%
Fluor Corporation 38 ================================================================================ The following table sets forth the plans' funded status and the pension assets which have been recognized in the company's Consolidated Balance Sheet:
$ in thousands / At October 31, 1996 1995 - ----------------------------------------------------------------------------------------------- Actuarial present value of benefit obligations: Vested benefit obligation $274,872 $253,444 Nonvested benefit obligation 9,590 9,708 ------------------- Accumulated benefit obligation $284,462 $263,152 =================== Plan assets at fair value (primarily listed stocks and bonds) $488,458 $427,145 Projected benefit obligation (319,066) (307,759) ------------------- Plan assets in excess of projected benefit obligation 169,392 119,386 Unrecognized net loss (gain) (42,411) 1,962 Unrecognized net assets at implementation (15,191) (18,590) ------------------- Pension assets $111,790 $102,758 ===================
Amounts shown above at October 31, 1996 and 1995 exclude the projected benefit obligation of approximately $114 million and $117 million, respectively, and an equal amount of associated plan assets relating to discontinued operations. In recognition of the current economic environment in each plan's respective host country, as of November 1, 1996 the company will adjust the discount rates used in the determination of its benefit obligations to 6.5--8.25 percent and the rates of salary increases to 3.0--5.25 percent. Massey participates in multiemployer defined benefit pension plans for its union employees. Pension expense was less than $1 million in each of the years ended October 31, 1996, 1995 and 1994. Under the Coal Industry Retiree Health Benefits Act of 1992, Massey is required to fund medical and death benefits of certain beneficiaries. Massey's obligation under the Act is estimated to aggregate approximately $49 million at October 31, 1996, which will be recognized as expense as payments are assessed. The expense recorded for such benefits was $2 million for each of the years ended October 31, 1996 and 1995 and $4 million for the year ended October 31, 1994. In addition to the company's defined benefit pension plans, the company and certain of its subsidiaries provide health care and life insurance benefits for certain retired employees. The health care and life insurance plans are generally contributory, with retiree contributions adjusted annually. Service costs are accrued currently. The accumulated postretirement benefit obligation at October 31, 1996 and 1995 was determined in accordance with the current terms of the company's health care plans, together with relevant actuarial assumptions and health care cost trend rates projected at annual rates ranging from 10.6 percent in 1997 down to 5 percent in 2005 and beyond. The effect of a one-percent annual increase in these assumed cost trend rates would increase the accumulated postretirement benefit obligation and the aggregate of the annual service and interest costs by approximately 14 percent. Net periodic postretirement benefit cost includes the following components:
$ in thousands / Year ended October 31, 1996 1995 1994 - ----------------------------------------------------------------------------------------------- Service cost incurred during the period $1,672 $1,172 $1,352 Interest cost on accumulated postretirement benefit obligation 5,755 4,899 4,153 ------------------------------- Net periodic postretirement benefit cost $7,427 $6,071 $5,505 ===============================
The following table sets forth the plans' funded status and accumulated postretirement benefit obligation which has been fully accrued in the company's Consolidated Balance Sheet:
$ in thousands / At October 31, 1996 1995 - ----------------------------------------------------------------------------------------------- Accumulated postretirement benefit obligation: Retirees $49,912 $51,787 Fully eligible active participants 16,462 4,821 Other active plan participants 17,944 14,705 Unrecognized loss (8,545) (6,426) ------------------ Accrued postretirement benefit obligation $75,773 $64,887 ==================
The discount rate used in determining the accumulated postretirement benefit obligation was 7.75 percent and 7.5 percent at October 31, 1996 and 1995, respectively. 1996 Annual Report 39 ================================================================================ The preceding information does not include amounts related to benefit plans applicable to employees associated with certain contracts with the U.S. Department of Energy because the company is not responsible for the current or future funded status of these plans. Fair Value of Financial Instruments The estimated fair value of the company's financial instruments are as follows:
1996 1995 ------------------------------------------------------ Carrying Carrying $ in thousands / At October 31, Amount Fair Value Amount Fair Value - ------------------------------------------------------------------------------------------------ Assets: Cash and cash equivalents $246,964 $246,964 $292,934 $292,934 Marketable securities 69,378 69,378 137,758 137,758 Notes receivable including noncurrent portion 116,809 120,463 83,515 86,769 Long-term investments 48,920 47,948 30,990 32,127 Liabilities: Commercial paper and notes payable 67,007 67,007 36,409 36,409 Long-term debt including current portion 3,174 3,174 27,248 28,420 Other noncurrent financial liabilities 2,556 2,556 2,572 2,572 Off-balance sheet financial instruments: Foreign currency contract obligations -- (1,726) -- (2,146) Letters of credit -- 700 -- 572 Lines of credit -- 747 -- 997
Fair values were determined as follows: The carrying amounts of cash and cash equivalents, short-term notes receivable, commercial paper and notes payable approximates fair value because of the short-term maturity of these instruments. Marketable securities and long-term investments are based on quoted market prices for these or similar instruments. Long-term notes receivable are estimated by discounting future cash flows using the current rates at which similar loans would be made to borrowers with similar credit ratings. The fair value of long-term debt, including current portion, is estimated based on quoted market prices for the same or similar issues or on the current rates offered to the company for debt of the same maturities. Other noncurrent financial liabilities consist primarily of deferred payments, for which cost approximates fair value. Foreign currency contract obligations are estimated by obtaining quotes from brokers. Letters of credit and lines of credit amounts are based on fees currently charged for similar agreements or on the estimated cost to terminate or settle the obligations. Long-Term Debt Long-term debt comprises:
$ in thousands / At October 31, 1996 1995 - ------------------------------------------------------------------------------------------ Deutsche mark financing, with a currency exchange agreement fixing the repayments in U.S. dollars at an effective interest rate of 9.5%, paid in 1996 $ -- $23,644 Other notes 3,174 3,604 -------------------- 3,174 27,248 Less: Current portion 207 24,375 -------------------- Long-term debt due after one year $ 2,967 $ 2,873 ====================
Long-term debt due after one year matures in 1998. The company has unsecured committed revolving long-term lines of credit with banks from which it may borrow for general corporate purposes up to a maximum of $250 million. Commitment and facility fees are paid on these lines. In addition, the company has $973 million in short-term uncommitted lines of credit. Borrowings under lines of credit and revolving credit agreements bear interest at prime or rates based on the London Interbank Offered Rate ("LIBOR"), domestic certificates of deposit or other rates which are mutually acceptable to the banks and the company. At October 31, 1996, no amounts were outstanding under the committed lines of credit. As of that date, $268 million of the short- term uncommitted lines of credit were used to support undrawn letters of credit issued in the ordinary course of business. The company had $30 million in unsecured commercial paper outstanding at both October 31, 1996 and 1995. The commercial paper was issued at a discount with an effective interest rate of 5.3 percent and 5.8 percent in 1996 and 1995, respectively. Maturities of commercial paper ranged from 28 to 91 days in 1996 and 14 to 90 days in 1995. Fluor Corporation 40 ================================================================================ The weighted average maturities were 21 and 14 days at October 31, 1996 and 1995, respectively. The maximum and average balances outstanding for the years ended October 31, 1996 and 1995 were $75 million and $38 million, respectively, and $75 million and $21 million, respectively, with weighted average interest rates of 5.5 percent and 5.9 percent, respectively. Other Noncurrent Liabilities The company maintains appropriate levels of insurance for business risks. Insurance coverages contain various deductible amounts for which the company provides accruals based on the aggregate of the liability for reported claims and an actuarially determined estimated liability for claims incurred but not reported. Other noncurrent liabilities include $92 million and $108 million at October 31, 1996 and 1995, respectively, relating to these liabilities. Stock Plans The company's executive stock plans, approved by the shareholders, provide for grants of nonqualified or incentive stock options, restricted stock awards and stock appreciation rights ("SARS"). All executive stock plans are administered by the Organization and Compensation Committee of the Board of Directors ("Committee") comprised of outside directors, none of whom are eligible to participate in the plans. Stock options may be granted with or without SARS. Grant prices are determined by the Committee and are established at the fair market value of the company's common stock at the date of grant. Options and SARS normally extend for 10 years and become exercisable over a vesting period determined by the Committee, which is presently in installments of 25 percent per year commencing one year from the date of grant. The company issued 66,860 options and 561,000 options in 1996 and 1995, respectively, that will vest only if certain performance related conditions are met. Restricted stock awards issued under the plans provide that shares awarded may not be sold or otherwise transferred until restrictions as established by the Committee have lapsed. Upon termination of employment, shares upon which restrictions have not lapsed must be returned to the company. Restricted stock issued under the plans totaled 172,770 and 405,089 shares in 1996 and 1995, respectively. The following table summarizes stock option activity:
Price Per Stock Options Share - ------------------------------------------------------------------------------------------- Outstanding at October 31, 1993 2,490,444 $ 12-44 Granted 59,480 51 Expired or canceled (82,374) 36-44 Exercised (396,044) 12-44 -------------------------- Outstanding at October 31, 1994 2,071,506 12-51 -------------------------- Granted 2,034,270 43-59 Expired or canceled (23,834) 35-51 Exercised (266,336) 12-51 -------------------------- Outstanding at October 31, 1995 3,815,606 12-59 -------------------------- Granted 1,046,700 56-68 Expired or canceled (56,010) 43-64 Exercised (466,918) 12-59 -------------------------- Outstanding at October 31, 1996 4,339,378 $ 12-68 ========================== Exercisable at: October 31, 1995 1,406,583 $ 12-51 October 31, 1996 1,536,063 $ 12-59 -------------------------- Available for grant at: October 31, 1995 230,992 October 31, 1996 3,130,927 ----------
Available for grant includes shares which may be granted as either stock options or restricted stock, as determined by the Committee under the 1996 and 1988 Fluor Executive Stock Plans. In October 1995, the Financial Accounting Standards Board issued Statement of Financial Accounting Standards No. 123, "Accounting for Stock-Based Compensation" (SFAS No. 123). Adoption of the new accounting standards prescribed by SFAS No. 123 is optional. The company intends to continue accounting for its plans under previous accounting standards and beginning in 1997 will adopt the "disclosure only" alternative available under SFAS N0. 123. 1996 Annual Report 41 ================================================================================ Lease Obligations Net rental expense amounted to approximately $77 million, $67 million, and $60 million in 1996, 1995, and 1994, respectively. The company's lease obligations relate primarily to office facilities, equipment used in connection with long-term construction contracts and other personal property. The company's obligations for minimum rentals under noncancelable leases are as follows:
$ in thousands /At October 31, 1996 - ------------------------------------------------------------------------ 1997 $37,644 1998 34,432 1999 22,135 2000 10,273 2001 7,327 Thereafter $36,958
At October 31, 1996 and 1995, obligations under capital leases of approximately $4 million and $5 million, respectively, are included in other noncurrent liabilities. Contingencies and Commitments The company and certain of its subsidiaries are involved in litigation in the ordinary course of business. The company and certain of its engineering and construction subsidiaries are contingently liable for commitments and performance guarantees arising in the ordinary course of business. Claims arising from engineering and construction contracts have been made against the company by clients, and the company has made certain claims against clients for costs incurred in excess of the current contract provisions. The company does not expect that the foregoing matters will have a material adverse effect on its consolidated financial position or results of operations. Financial guarantees, made in the ordinary course of business on behalf of clients and others in certain limited circumstances, are entered into with financial institutions and other credit grantors and generally obligate the company to make payment in the event of a default by the borrower. Most arrangements require the borrower to pledge collateral in the form of property, plant and equipment which is deemed adequate to recover amounts the company might be required to pay. As of October 31, 1996, the company had extended financial guarantees on behalf of certain clients and other unrelated third parties totaling approximately $42 million. The company's operations are subject to and affected by federal, state and local laws and regulations regarding the protection of the environment. The company maintains reserves for potential future environmental costs where such obligations are either known or considered probable, and can be reasonably estimated. The sale by the company of its Lead business included St. Joe Minerals Corporation ("St. Joe") and its environmental liabilities for several different lead mining, smelting and other lead-related environmental sites. As a condition of the St. Joe sale, however, the company retained responsibility for certain non-lead-related environmental liabilities arising out of St. Joe's former zinc mining and smelting division, but only to the extent that such liabilities are not covered by St. Joe's comprehensive general liability insurance. These liabilities arise out of three zinc facilities located in Bartlesville, Oklahoma; Monaca, Pennsylvania; and Balmat, New York (the "Zinc Facilities"). In 1987 St. Joe sold its zinc mining and smelting division to Zinc Corporation of America ("ZCA"). As part of the sale agreement, St. Joe and the company agreed to indemnify ZCA for certain environmental liabilities arising from operations conducted at the Zinc Facilities prior to the sale. During 1993 ZCA made claims under this indemnity as well as under the Comprehensive Environmental Response, Compensation and Liability Act ("CERCLA") against St. Joe for past and future environmental expenditures at the Zinc Facilities. In 1994 ZCA filed suit against St. Joe and the company, among others, seeking compensation for environmental expenditures at the Zinc Facilities. In 1994 the company and St. Joe, among others, executed a settlement agreement with ZCA which, among other things, cancels the indemnity previously provided to ZCA and limits environmental expenditures at the Zinc Facilities for which St. Joe would be responsible to no more than approximately $10 million, which was previously fully reserved by the company. Expenses incurred and payments made under the settlement agreement would be made over a period of at least five years from the date of settlement. Fluor Corporation 42 ================================================================================ In fiscal 1996, the company and St. Joe prosecuted cost recovery claims against another potentially responsible party for the Bartlesville facility. The Federal District Court for Oklahoma rendered Judgment in favor of the company and St. Joe, among others, which Judgment has become final and non-appealable. The District Court's Judgment further reduces the company's and St. Joe's liability with respect to the Bartlesville facility. In addition, St. Joe has initiated legal proceedings against certain of its insurance carriers alleging that the investigative and remediation costs for which St. Joe is or may be responsible, including costs incurred prior to the sale of St. Joe and costs related to the Zinc Facilities, are covered by insurance. A portion of any recoveries received from the insurance carriers would be, pursuant to the St. Joe sale agreement, for the benefit of the company. In January 1995, St. Joe executed a settlement agreement with one of its primary insurance carriers that provided coverage for a minor portion of the applicable coverage periods. In May 1995, St. Joe received a favorable ruling from the Orange County Superior Court which ordered St. Joe's other primary insurance carrier to provide a defense to St. Joe for certain environmental liabilities, including the Zinc Facilities. This insurer has appealed the Superior Court's order. St. Joe continues to pursue its other primary insurance carrier for additional payments. Inasmuch as the insurance proceedings remain in the early stages of litigation, no credit or offset (other than for amounts actually received in settlement or judgment) has been taken into account by the company in establishing its reserves for future environmental costs. The company believes, based upon present information available to it, that its reserves with respect to future environmental costs are adequate and such future costs will not have a material effect on the company's consolidated financial position, results of operations or liquidity. However, the imposition of more stringent requirements under environmental laws or regulations, new developments or changes regarding site cleanup costs or the allocation of such costs among potentially responsible parties, or a determination that the company is potentially responsible for the release of hazardous substances at sites other than those currently identified, could result in additional expenditures, or the provision of additional reserves in expectation of such expenditures. Operations by Business Segment and Geographic Area The Engineering and Construction segment, the company's principal operating business, includes subsidiaries engaged in the design, engineering, procurement, construction, technical services and maintenance of facilities for process, industrial, power/government and diversified services clients. Coal segment amounts include the operations of Massey. In 1995, revenue included approximately $2 billion from subsidiaries of Shell Oil Company related primarily to two projects that were awarded in 1993. Identifiable assets are those tangible and intangible assets used in the operation of each of the business segments and geographic areas. Corporate assets are principally cash and cash equivalents, marketable securities and nontrade receivables. Engineering services for international projects are often performed within the United States or a country other than where the project is located. Revenues associated with these services have been classified within the geographic area where the work was performed. 1996 Annual Report 43 ===============================================================================
Operations by Business Segment Revenues ----------------------------------------------------- $ in millions 1996 1995 1994 - ---------------------------------------------------------------------------------------------------------------------------------- Engineering and Construction $10,054.4 $8,451.6 $ 7,717.6 Coal 960.8 849.8 767.7 ----------------------------------------------------- $11,015.2 $9,301.4 $8,485.3 ===================================================== Identifiable Assets Capital Expenditures ----------------------------------------- ---------------------------------------------------- $ in millions 1996 1995 1994 1996 1995 1994 - ---------------------------------------------------------------------------- ---------------------------------------------------- Engineering and Construction $2,213.4 $ 1,572.6 $ 1,288.5 $ 171.6 $ 137.1 $ 72.5 Coal 1,384.0 1,191.2 1,076.5 220.8 181.8 164.1 Corporate 354.3 465.1 459.8 -- -- -- ----------------------------------------- ---------------------------------------------------- $3,951.7 $3,228.9 $2,824.8 $392.4 $318.9 $236.6 ========================================= ==================================================== Operations by Geographic Area Revenues Operating Profit ----------------------------------------- ---------------------------------------------------- $ in millions 1996 1995 1994 1996 1995 1994 - ---------------------------------------------------------------------------- ---------------------------------------------------- United States $ 6,783.5 $5,814.5 $ 6,100.3 $396.5 $297.4 $284.9 Europe 1,426.6 1,637.2 1,166.4 23.6 27.7 23.5 Central and South America 1,210.0 801.2 197.8 (13.9) 9.6 14.9 Asia Pacific 1,042.8 780.0 673.2 36.5 49.4 12.8 Middle East and Africa 287.6 30.5 89.6 4.7 7.2 6.1 Canada 264.7 238.0 258.0 7.1 5.7 12.1 ----------------------------------------- ---------------------------------------------------- $11,015.2 $9,301.4 $ 8,485.3 $454.5 $397.0 $354.3 ========================================= ==================================================== Operations by Business Segment Operating Profit ----------------------------------------- $ in millions 1996 1995 1994 - ----------------------------------------------------------------------------- Engineering and Construction $320.0 $286.0 $259.1 Coal 134.5 111.0 95.2 ----------------------------------------- $454.5 $397.0 $354.3 ========================================= Depreciation, Depletion and Amortization ----------------------------------------- $ in millions 1996 1995 1994 - ----------------------------------------------------------------------------- Engineering and Construction $ 88.7 $ 62.9 $ 47.1 Coal 105.4 83.7 66.8 Corporate -- .4 .4 ----------------------------------------- $194.1 $147.0 $114.3 ========================================= Operations by Geographic Area Identifiable Assets ---------------------------------------- $ in millions 1996 1995 1994 - ---------------------------------------------------------------------------- United States $3,392.3 $2,764.2 $ 2,463.1 Europe 158.4 204.3 147.5 Central and South America 145.6 92.3 41.9 Asia Pacific 165.0 84.2 107.5 Middle East and Africa 30.8 21.4 20.2 Canada 59.6 62.5 44.6 ---------------------------------------- $3,951.7 $3,228.9 $2,824.8 ========================================
Included in United States revenues are export sales to unaffiliated customers of approximately $1 billion in 1996, $680 million in 1995 and $857 million in 1994. The following table reconciles business segment operating profit with the earnings before taxes:
$ in millions 1996 1995 1994 - ------------------------------------------------------------------------------------------------------------------------------ Operating profit $454.5 $397.0 $354.3 Interest income, net 11.6 19.5 4.7 Corporate administrative and general expense (48.1) (48.6) (47.9) Other items, net (4.8) (5.7) (7.8) ------------------------------------------------- Earnings before taxes $ 413.2 $362.2 $303.3 =================================================
Fluor Corporation 44 ================================================================================ Reports of Management and Independent Auditors Management The company is responsible for preparation of the accompanying consolidated balance sheet and the related consolidated statements of earnings, cash flows and shareholders' equity. These statements have been prepared in conformity with generally accepted accounting principles and management believes that they present fairly the company's consolidated financial position and results of operations. The integrity of the information presented in the financial statements, including estimates and judgments relating to matters not concluded by fiscal year end, is the responsibility of management. To fulfill this responsibility, an internal control structure designed to protect the company's assets and properly record transactions and events as they occur has been developed, placed in operation and maintained. The internal control structure is supported by an extensive program of internal audits and is tested and evaluated by the independent auditors in connection with their annual audit. The Board of Directors pursues its responsibility for financial information through an Audit Committee of Directors who are not employees. The internal auditors and the independent auditors have full and free access to the Committee. Periodically, the Committee meets with the independent auditors without management present to discuss the results of their audits, the adequacy of the internal control structure and the quality of financial reporting. /s/ Les McCraw /s/ J. Michal Conaway Les McCraw J. Michal Conaway Chairman of the Board and Senior Vice President and Chief Executive Officer Chief Financial Officer Independent Auditors Board of Directors and Shareholders Fluor Corporation We have audited the accompanying consolidated balance sheet of Fluor Corporation as of October 31, 1996 and 1995, and the related consolidated statements of earnings, cash flows, and shareholders' equity for each of the three years in the period ended October 31, 1996. These financial statements are the responsibility of the company's management. Our responsibility is to express an opinion on these financial statements based on our audits. We conducted our audits in accordance with generally accepted auditing standards. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion. In our opinion, the financial statements referred to above present fairly, in all material respects, the consolidated financial position of Fluor Corporation at October 31, 1996 and 1995, and the consolidated results of its operations and its cash flows for each of the three years in the period ended October 31, 1996, in conformity with generally accepted accounting principles. /s/ Ernst & Young LLP Orange County, California November 19, 1996 1996 Annual Report 45 =============================================================================== Quarterly Financial Data (Unaudited) The following is a summary of the quarterly results of operations:
First Second Third Fourth $ in thousands, except per share amounts Quarter Quarter Quarter Quarter - -------------------------------------------------------------------------------------------------------- 1996 Revenues $ 2,402,414 $ 2,582,229 $ 2,702,821 $ 3,327,728 Gross margin 99,072 105,054 112,862 132,755 Earnings before taxes 89,763 97,082 104,866 121,507 Net earnings 57,448 63,700 68,077 78,859 Earnings per share $ .68 $ .75 $ .81 $ .93 1995 Revenues $ 2,059,626 $ 2,229,313 $ 2,436,831 $ 2,575,614 Gross margin 84,931 95,342 100,946 110,089 Earnings before taxes 79,124 86,984 94,579 101,527 Net earnings 50,323 55,322 60,152 65,971 Earnings per share $ .61 $ .66 $ .72 $ .79
Worldwide Offices Abu Dhabi, United Arab Emirates Kuala Lumpur, Malaysia Albuquerque, New Mexico Kuwait City, Kuwait Anchorage, Alaska Leipzig, Germany Appleton, Wisconsin Lima, Peru Arlington, Virginia London, England Asturias, Spain Manchester, England Bakersfield, California Manila, Philippines Baku, Azerbaijan Melbourne, Australia Bangkok, Thailand Mexico City, Mexico Basel, Switzerland Miami, Florida Beijing, People's Republic of China Moscow, Russia Bergen op Zoom, Netherlands Nashville, Tennessee Bogota, Colombia New Delhi, India Brisbane, Australia New York, New York Buenos Aires, Argentina Norwood, Massachusetts Calgary, Alberta, Canada Perth, Australia Camberley, England Philadelphia, Pennsylvania Caracas, Venezuela Phoenix, Arizona Charlotte, North Carolina Richland, Washington Chicago, Illinois Richmond, Virginia Cincinnati, Ohio Rumford, Rhode Island Corpus Christi, Texas Sacramento, California Dallas, Texas San Francisco, California Denver, Colorado San Juan, Puerto Rico Detroit, Michigan Santa Clara, California Dhahran, Saudi Arabia Santiago, Chile Dubai, United Arab Emirates Sao Paulo, Brazil Dusseldorf, Germany Seoul, Korea Gliwice, Poland Shanghai, People's Republic of China Greenville, South Carolina Singapore Haarlem, Netherlands Sudbury, Ontario, Canada Hanoi, Vietnam Taipei, Taiwan Ho Chi Minh City, Vietnam Tokyo, Japan Hong Kong Tucson, Arizona Houston, Texas Tulsa, Oklahoma Idaho Falls, Idaho Vancouver, British Columbia, Canada Irvine, California Warsaw, Poland Jakarta, Indonesia Washington, D.C. Johannesburg, South Africa Wiesbaden, Germany Kingston, Ontario, Canada Fluor Corporation 46 ================================================================================ Directors [PHOTO OF LES MCCRAW APPEARS HERE] Les McCraw, 62, is Chairman of the Board and Chief Executive Officer. Joining the company in 1975, he led the formation of Fluor Daniel in 1986. He was elected President of Fluor Corporation in 1988, and Chief Executive Officer in 1990. Mr. McCraw also is a director of Allergan and New York Life, and is active in a number of business and civic organizations at the local, state and national levels. (1984) /(1)(3)/ [PHOTO OF DON L. BLANKENSHIP APPEARS HERE] Don L. Blankenship, 46, is President, Chief Executive Officer and Chairman of the Board of A.T. Massey. He brings important diversified business perspective to the Board's deliberations, as well as valuable expertise in the coal industry. Mr. Blankenship serves on the Board of Advisors of the Mary Babb Randolph Cancer Center of West Virginia at West Virginia University, and is a director of the World Coal Institute, and the West Virginia Mining and Reclamation Association. (1996) [PHOTO OF HUGH K. COBLE APPEARS HERE] Hugh K. Coble, 62, is Vice Chairman of Fluor Corporation. He joined Fluor in 1966 and has served in numerous positions throughout his career, including several posts overseas with responsibilities for both international marketing and operations. As a recognized global executive, Mr. Coble was part of the team that led the formation of Fluor Daniel. Mr. Coble is a director of The Duriron Company and Beckman Instruments, Inc. (1984) [PHOTO OF GOVERNOR CARROLL CAMPBELL, JR. APPEARS HERE] Governor Carroll Campbell, Jr., 56, is President and Chief Executive Officer of the American Council of Life Insurance. He is a former two-term Governor of South Carolina and has demonstrated leadership in public policy pertaining to job and business creation, and social and fiscal matters. From 1978 to 1986, he served in the U.S. House of Representatives and was a member of the Appropriations and Ways and Means committees. He was chairman of the National Governor's Association 1993-94. Governor Campbell is a director of AVX Corporation and Norfolk Southern Corporation. (1995) /(2)(3)/ [PHOTO OF PETER J. FLUOR APPEARS HERE] Peter J. Fluor, 49, is President and Chief Executive Officer of Texas Crude Energy, Inc. Mr. Fluor brings extensive knowledge of the oil and gas industry, a key market for Fluor Daniel. He also serves as a director of Seagull Energy Corporation and Texas Commerce Bank. (1984) /(2)(4)/ [PHOTO OF DAVID P. GARDNER APPEARS HERE] Dr. David P. Gardner, 63, is President of the William and Flora Hewlett Foundation and former President of both the University of California and the University of Utah. His extensive career in education provides valuable perspective on a topic of key importance to a professional services company like Fluor. Dr. Gardner is also a director of John Alden Financial Corporation and First Security Corporation. (1988) /(3)(4)/ [PHOTO OF WILLIAM R. GRANT APPEARS HERE] William R. Grant, 72, is Chairman of the Board of Galen Associates, a healthcare venture capital group, former Chairman of MacKay-Shield Financial Corporation and President of Smith Barney. Mr. Grant adds extensive financial community perspective to the Board. Additionally, he has taken a leading role in providing counsel on current issues in corporate governance. He is also a director of Allergan, New York Life, Seagull Energy, SmithKline Beecham, Witco Corporation and several small, private companies in the Galen portfolio. (1982) /(1)(2)(4)/ [PHOTO OF THOMAS L. GOSSAGE APPEARS HERE] Thomas L. Gossage, 62, is the retired Chairman and former President and Chief Executive Officer of Hercules Incorporated. He brings global business operations perspective, as well as valuable expertise in the chemical industry. Mr. Gossage also serves as a director of The Dial Corporation and Alliant Techsystems Inc., and is Vice Chairman of the Georgia Tech Advisory Board and a member of the Board of Trustees of the Georgia Tech Foundation, Inc. (1997) /(4)/ [PHOTO OF ADMIRAL BOBBY R. INMAN APPEARS HERE] Admiral Bobby R. Inman, 65, retired U.S. Navy, served as Director of the National Security Agency and Deputy Director of Central Intelligence. Admiral Inman's depth of political insight, awareness of global changes and understanding of technology serves Fluor Corporation well. He is also a director of Science Applications International, SBC Communications, Temple-Inland and Xerox. (1985) /(1)(3)(4)/ [PHOTO OF ROBERT V. LINDSAY APPEARS HERE] Robert V. Lindsay, 71, is the retired former President of J.P. Morgan & Co., Incorporated. Mr. Lindsay's 38-year career at J.P. Morgan encompassed a broad range of responsibilities which have provided extensive experience in international banking and finance. He also serves as a director of Chubb, First Hudson Valley Bank, Russell Reynolds Associates, Inc. and United Meridian, and is senior advisor to Unibank Denmark A/S. (1982) /(1)(2)(4)/ [PHOTO OF VILMA S. MARTINEZ APPEARS HERE] Vilma S. Martinez, 53, is a Partner at the law firm of Munger, Tolles & Olson, and the former President and General Counsel for the Mexican-American Legal Defense and Educational Fund (MALDEF). Her position of national prominence in both the business and legal communities gives her key insights on workforce issues. Ms. Martinez is also a director of Anheuser-Busch Companies, Inc. and Sanwa Bank California, and serves on a variety of advisory boards and community organizations. (1993) /(2)(3)/ [PHOTO OF BUCK MICKEL APPEARS HERE] Buck Mickel, 71, is Fluor's retired Vice Chairman of the Board. Mr. Mickel has served the company since 1948. Beginning his career at Daniel Construction Company, which was acquired by Fluor in 1977, he later served in senior officer positions for Fluor. His broad business connections and strong regional associations continually contribute ideas and opportunities for the company. Mr. Mickel also serves as a director of Delta Woodside Industries, Duke Power, Emergent Group, Insignia Financial, Liberty Corporation and RSI Holdings. (1977) /(3)/ [PHOTO OF DR. MARTHA R. SEGER APPEARS HERE] Dr. Martha R. Seger, 64, is a Distinguished Visiting Professor of Finance at Hillsdale College and former member of the Board of Governors of the Federal Reserve System. Dr. Seger's career included numerous positions which have yielded significant experience in the fields of finance, economics and international banking. She is also a director of Amoco, Providian Corp., Johnson Controls, Kroger, Tucson Electric and Xerox. (1991) /(2)(3)/ Years in parentheses indicate the year each director was elected to the Board. Except as indicated, all positions are with the company. 1996 Annual Report 47 =============================================================================== Board Committees Fluor Corporation's Board of Directors reflects many of the characteristics which are key to a strong, thoughtful approach to corporate governance and oversight. With 13 members comprised of three inside and 10 outside directors, the Board possesses a good balance of both engineering and construction expertise and overall business know-how. There are four formal meetings a year with numerous telephone discussions as necessary to handle matters requiring Board approval. Altogether there are four standing committees--the Executive Committee, Audit Committee, Corporate Governance Committee, and the Organization and Compensation Committee. Through work on its committees and ongoing interactions with members of executive management, the Board is involved in practically every activity critical to the company's operating success, with a particular emphasis on corporate direction and strategy. Executive Committee/(1)/ Chairman: Les McCraw The Executive Committee acts on behalf of the Board with its full authority on matters which require resolution between regular Board meetings. The committee is comprised of the Chairman of the Board and the chairmen of the Board's three standing committees. This approach is in contrast to the committee's previous mission and structure when it met monthly and was composed solely of inside management. The committee changed to its current approach two years ago when the company transitioned to a Board comprised primarily of outside directors. Audit Committee/(2)/ Chairman: Robert V. Lindsay The Audit Committee represents the Board in oversight of the company's financial condition, its reporting procedures and financial controls. Among the committee's many responsibilities are review of the company's annual report, Form 10-K and Proxy statement. It also meets regularly with the company's internal auditors and financial management team to review accounting controls and practices. In addition, it meets both annually and quarterly with Ernst & Young, the company's independent auditors, to review the scope of its work and to assure that appropriate policies and procedures are in order. Finally, the committee nominates the firm of independent auditors for appointment by the Board and ratification by shareholders. Governance Committee/(3)/ Chairman: Admiral Bobby R. Inman The Governance Committee focuses on the membership, roles and responsibilities, and performance of the Board of Directors. The committee recommends the organizational structure of the Board and the assignment of members to committees where much of the Board's work is conducted. All outside directors serve on at least two committees. In its search for new members, the committee looks for diversity of gender and race, as well diversity in experience to help ensure the strongest capability possible in providing oversight and perspective. In addition, the committee facilitates participation by all directors in the affairs of the corporation. The accessibility between the Board and company management not only provides better insight to the directors on company activities but also facilitates the experience of the Board being readily available to company management whenever and wherever it can be most useful. Organization and Compensation Committee/(4)/ Chairman: William R. Grant The Organization and Compensation Committee provides guidance and oversight regarding the company's organizational structure; the quality, diversity and depth of the executive management team; and the effectiveness of the company's compensation programs for senior employees. The primary focus and philosophy of all company compensation programs is to ensure that they are linked directly to initiatives which will yield increasing levels of shareholder value. Currently, for example, 76 percent of Chairman Les McCraw's annual compensation is at risk and dependent upon the achievement of specified objectives, financial results and the Board's evaluation of his total performance. For other members of senior management, approximately 68 percent of the total compensation is at risk. As the company heads into 1997, the committee believes that management compensation is properly aligned and incentivised for further enhancement of shareholder value. Senior International Advisors Chester A. Crocker, 55, is the Landegger Distinguished Research Professor of Diplomacy at the School of Foreign Service of Georgetown University. Mr. Crocker also serves as Chairman of the Board of the United States Institute of Peace. Sir Robin Renwick, 58, is a Director of the merchant bank, Robert Fleming, and British Airways. During his distinguished 30-year career in the British Foreign Service, he served in senior posts in New Delhi, Paris and London, including advising Prime Minister Margaret Thatcher in the negotiations to end the Rhodesian War and negotiations with the European Community. Sir Robin was British Ambassador to South Africa (1987-91) and British Ambassador to the United States of America (1991-95). Fluor Corporation 48 =============================================================================== Executive Leadership Team Les McCraw Chairman and Chief Executive Officer (1975) Hugh K. Coble Vice Chairman (1966) Dennis W. Benner Vice President and Chief Information Officer (1994) Dennis G. Bernhart Group President--Americas (1968) Fluor Daniel Don L. Blankenship Chairman, President and Chief Executive Officer A. T. Massey Coal Company, Inc. (1982) Alan L. Boeckmann Group President--Chemical Processes and Industrial (1979) Fluor Daniel Chuck Bradley Vice President--Human Resources and Administration (1958) Richard D. Carano Group President--Asia Pacific (1970) Fluor Daniel E. David Cole, Jr. Group President--Petroleum/Petrochemical Processes and Project Services (1965) Fluor Daniel J. Michal Conaway Senior Vice President and Chief Financial Officer (1993) Charles R. Cox Group President--Industrial (1969) Fluor Daniel ================================================================================ Lawrence N. Fisher Senior Vice President--Law and Secretary (1974) Richard A. Flinton Chairman Fluor Constructors International, Inc. (1960) Thomas P. Merrick Vice President--Strategic Planning (1984) Fluor Daniel Charles R. Oliver, Jr. Group President--Global Sales, Project Finance, and Middle East and India (1970) Fluor Daniel James O. Rollans Senior Vice President and Chief Administrative Officer (1982) Carel J. C. Smeets Group President--Europe, Former Soviet Union and Africa (1969) Fluor Daniel Jim Stein Group President--Diversified Services (1964) Fluor Daniel R. M. (Dick) Teater Group President--Power and Government (1980) Fluor Daniel Other Senior Executives Betty H. Bowers Vice President--Government Relations (1974) Lila J. Churney Vice President--Investor Relations (1980) Jan L. Donovan Assistant Secretary (1983) J. Robert Fluor II Vice President--Community Relations (1967) Stephen F. Hull Vice President and Treasurer (1996) ================================================================================ Thomas H. Morrow Vice President--Tax (1984) Victor L. Prechtl Vice President and Controller (1981) Lee C. Tashjian, Jr. Vice President--Corporate Relations (1995) W. Mack Torrence Vice President--Project Finance (1989) A. T. Massey Coal Company, Inc. Don L. Blankenship Chairman, President and Chief Executive Officer (1982) Madeleine M. Curle Vice President--Benefits (1993) Jerry M. Eyster Vice President--Corporate Development (1987) James L. Gardner Senior Vice President and General Counsel (1993) Bennett K. Hatfield Vice President--Planning (1983) Richard M. Hendrick Senior Vice President--Mining and Preparation (1992) Wynston D. Holbrook Executive Vice President--Sales (1972) Baxter F. Phillips, Jr. Vice President--Administration (1981) H. Drexel Short Senior Vice President--Group Operations (1981) Stanley C. Suboleski Vice President of Operations--Strategy (1993) James S. Twigg Vice President and Chief Financial Officer and Treasurer (1981) ================================================================================ Fluor Constructors International, Inc. Richard A. Flinton Chairman (1960) Lawrence R. Copeland President (1969) Years in parentheses indicate the year each officer or executive joined the company. Company Contacts Shareholders may call (800) 854-0141 Stockholder Services Lawrence N. Fisher (714) 975-6961 Investor Relations [PICTURE APPEARS HERE] Lila J. Churney (714) 975-3909 Fluor's investor relations activities are dedicated to providing investors with complete and timely information. All investor questions are welcome. 1996 Annual Report ================================================================================ Stockholders' Reference Common Stock Information At December 31, 1996, there were 83,904,038 shares outstanding and approximately 13,400 stockholders of record of Fluor's common stock. The following table sets forth for the periods indicated the cash dividends paid per share of common stock and the high and low sales prices of such common stock as reported in the Consolidated Transactions Reporting System. Common Stock and Dividend Information Price Range Dividends ------------------------ Per Share High Low Fiscal 1996 First Quarter $.17 $ 68 $ 54 3/4 Second Quarter .17 71 7/8 61 7/8 Third Quarter .17 67 3/8 57 3/4 Fourth Quarter .17 67 3/8 59 1/2 ----- $.68 Fiscal 1995 First Quarter $.15 $ 50 3/4 $ 41 1/4 Second Quarter .15 52 45 1/2 Third Quarter .15 59 1/2 49 1/8 Fourth Quarter .15 59 3/8 54 ----- $.60 Form 10-K A copy of the Form 10-K, which is filed with the Securities and Exchange Commission, is available upon request. Write to: Senior Vice President-Law Fluor Corporation 3353 Michelson Drive Irvine, California 92698 (714) 975-2000 Registrar and Transfer Agent ChaseMellon Shareholder Services, L.L.C. 400 South Hope Street Fourth Floor Los Angeles, California 90071 and ChaseMellon Shareholder Services, L.L.C. 85 Challenger Road Overpeck Centre Ridgefield Park, NJ 07660 For change of address, lost dividends, or lost stock certificates, write or telephone: ChaseMellon Shareholder Services, L.L.C. 469 Washington Bridge Station New York, NY 10033 Attn: Securityholder Relations (800) 813-2847 Independent Auditors Ernst & Young LLP 18400 Von Karman Avenue Irvine, California 92612 Annual Stockholders' Meeting Annual report and proxy statement are mailed about February 1. Fluor's annual meeting of stockholders will be held at 9:00 a.m. on March 11, 1997, at the Fluor Daniel Houston Complex One Fluor Daniel Drive Sugar Land, Texas Stock Trading Fluor's stock is traded on the New York, Midwest, Pacific, Amsterdam, London and Swiss Stock Exchanges. Common stock domestic trading symbol: FLR. Dividend Reinvestment Plan Fluor's Dividend Reinvestment Plan provides stockholders of record with the opportunity to conveniently and economically increase their ownership in Fluor. Through the Plan, stockholders can automatically reinvest their cash dividends in shares of Fluor common stock. Optional cash investments may also be made in additional Fluor shares ranging from a minimum of $100 per month to a maximum of $10,000 per quarter. For details on the Plan, contact Fluor's agent, ChaseMellon Shareholder Services (800) 813-2847. Duplicate Mailings Shares owned by one person but held in different forms of the same name result in duplicate mailing of stockholder information at added expense to the company. Such duplication can be eliminated only at the direction of the stockholder. Please notify ChaseMellon Shareholder Services in order to eliminate duplication. History of Stock Dividends and Splits Since Going Public in 1950 08/23/57 20% Stock Dividend 12/15/61 5% Stock Dividend 03/11/63 5% Stock Dividend 03/09/64 5% Stock Dividend 03/08/65 5% Stock Dividend 02/14/66 5% Stock Dividend 03/24/66 2 for 1 Stock Split 03/27/67 5% Stock Dividend 02/09/68 5% Stock Dividend 03/22/68 2 for 1 Stock Split 05/16/69 5% Stock Dividend 03/06/70 5% Stock Dividend 03/05/71 5% Stock Dividend 03/10/72 5% Stock Dividend 03/12/73 5% Stock Dividend 03/11/74 3 for 2 Stock Split 08/13/79 3 for 2 Stock Split 07/18/80 2 for 1 Stock Split Web page address: www.fluor.com Design: Baker Design Associates Photography: Jim Sims, Various Illustration: Danny Shanahan, Kevin Sprouls Printing: George Rice & Sons. EX-21 5 FLUOR CORPORATION SUBSIDIARIES EXHIBIT 21 ========== FLUOR CORPORATION SUBSIDIARIES
Organized Name of Company Under Laws of =============== ============= FLUOR CORPORATION (Subsidiaries 1) Delaware American Construction Equipment Company, Inc. California American Equipment Company, Inc. S. Carolina AMECO Services Inc. Delaware AMEC Equipment Licensing France S & R Equipment Co., Inc. Ohio Apex Coal Company Virginia Claiborne Fuels, Inc. California Coral Drilling, C.A. Venezuela Daniel International Corporation S. Carolina Daniel Navarra, S.A. Spain Fluor Daniel Engineering, Inc. Ohio Materiales y Equipos Auxiliares para la Construccion, S.A. Spain FD Services, Inc. California Norfolk Maintenance Corporation California Fluor Abadan Limited Bermuda Fluor Atlantic Limited Bermuda Fluor Continental Limited Bermuda FD Engineers & Constructors, Inc. California Acquion, Inc. California Fluor Constructors International, Inc. California Fluor Constructors Canada Ltd. Canada Fluor Constructors Indonesia, Inc. California Fluor Management and Technical Services, Inc. California Fluor Daniel America, Ltda. California Fluor Daniel Engineers & Consultants Ltd. Mauritius Fluor Daniel, Inc. California ADP Fluor Daniel, Inc. Arizona ADP/FD of Nevada, Inc. Nevada ADP/Fluor Daniel International, Inc. Delaware ADP/Marshall, LLC (2) Delaware Applied Recruiting Company Texas Efdee Connecticut Architects, Inc. Connecticut Efdee Engineering Corporation N. Carolina Efdee Mississippi Architects, A Professional Association Mississippi Efdee New York Engineers & Architects P.C. New York Encee Architecture Services, P.C. N. Carolina FD Mexico, Inc. Delaware FDAE Corporation New Jersey FDEE Consulting, Inc. California FDHM, Inc. California FD/MK Limited Liability Company (3) Delaware Fluor Daniel, Inc. - Philippines Philippines Fluor Daniel Fernald, Inc. California Fluor Environmental Resources Management Services, Inc. Delaware
Organized Name of Company Under Laws of =============== ============= Fluor Corporation FD Engineers & Constructors, Inc. Fluor Daniel, Inc. (continued) Fluor Chile, Inc. California Fluor Daniel Chile Ingenieria y Con- struccion S.A. Chile Ingenieria y Construcciones Fluor Daniel Chile Limitada Chile Fluor Colombia Limited Delaware Fluor Cyprus Limited Cyprus Fluor Daniel, a Professional Architectural Corporation Louisiana Fluor Daniel A&E Services, Inc. California Fluor Daniel Alaska, Inc. Alaska Fluor Daniel Alumatech, Inc. Delaware Fluor Daniel Asia, Inc. California P.T. Nusantara Power Services (2) Indonesia Fluor Daniel Brasil Engenharia e Servicos Ltda. Brazil Fluor Daniel B.V. Netherlands Acquion B.V. Netherlands Fluor Daniel Consultants B.V. Netherlands Fluor Daniel Engineering and Construction Services Limited Turkey International Refinery Contractors C.V.(4) Netherlands International Refinery Contractors B.V.(5) Netherlands Prochem S.A.(6) Poland Prosynchem Sp.z o.o. Poland Surplus International Management Services (SIMS) B.V. Netherlands Technical Resource Services B.V. Netherlands Fluor Daniel Belgium, N.V. Belgium Fluor Daniel Canada, Inc. Canada Soana Holdings Ltd. Canada Fluor Daniel Wright Ltd. Canada Compania Minera Explowel Ecuador Lynx Geosystems Inc. Canada Saskwright Engineers Limited Canada Wright Engineers (Chile) Limitada Chile Wright Engineers Limitada Peru Peru Wright Engineers Pty. Limited Australia TRS Recruiting Services Canada, Inc. Canada Wright Engineers (International) Limited Bermuda Fluor Daniel Caribbean, Inc. Delaware Daniel Construction Company, Inc. Tennessee Daniel/McCarthy Limited Ireland Daniel/McCarthy International Limited Ireland DMIS, Inc. S. Carolina Facility & Plant Services, Inc. S. Carolina
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Organized Name of Company Under Laws of =============== ============= Fluor Corporation FD Engineers & Constructors, Inc. Fluor Daniel, Inc. (continued) Fluor Daniel Export Services, Inc. Delaware Fluor Daniel International (Malaysia) Sdn. Bhd. Malaysia Fluor Daniel Maintenance Services, Inc. Delaware Fluor Daniel Services Corporation Delaware Fluor Daniel China, Inc. California Fluor Daniel China Services, Inc. California Fluor Daniel China Technology, Inc. California Fluor Daniel Coal Services International, Inc. Delaware Fluor Daniel Construction Company California Fluor Daniel Development Corporation California Crown Energy Company New Jersey Fluor Daniel Modesto, Inc. California Fluor Daniel Temecula, Inc. California Fluor Daniel Tempe, Inc. California Fluor Daniel Ada, Inc.(5) Idaho Gloucester Limited, Inc. California Gloucester Limited II, Inc. California Tarrant Energy, Inc. California Fluor Daniel Eastern, Inc. California P.T. Fluor Daniel Indonesia Indonesia Fluor Daniel Energy Investments, Inc. Delaware Fluor Daniel Engineers & Constructors, Inc. Delaware Fluor Daniel Project Consultants (Shenzhen) Co., Ltd. P.R.C. Fluor Daniel Engineers & Constructors, Ltd. California AEC International, Ltd. (3) Korea Project Administrative Services, Limited(5) Hong Kong Fluor Daniel Environmental Strategies, Inc. Delaware Fluor Daniel Espana, S.A. California Daniel International (Saudi Arabia) Ltd. Saudi Arabia Fluor Arabia Limited (5) Saudi Arabia Fluor Daniel Eurasia, Inc. California Fluor Daniel Florida Rail, Inc. Delaware Fluor Daniel GmbH West Germany Fluor Daniel Group, Inc. Delaware Chemgineering Holding Company GmbH (7) Switzerland Fluor Daniel Chemgineering (8) Switzerland Fluor Daniel GTI, Inc. (9) Delaware Fluor Daniel Hanford, Inc. Washington Fluor Daniel India, Inc. California Fluor Daniel International Limited U.K. Fluor Daniel Limited U.K. Fluor Norge A/S Norway Fluor Ocean Services Limited U.K. Management Resource Group PLC (The) U.K. TRS Staffing Solutions (U.K.) Ltd. U.K.
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Organized Name of Company Under Laws of =============== ============= Fluor Corporation FD Engineers & Constructors, Inc. Fluor Daniel, Inc. (continued) Fluor Daniel (Japan) Inc. Japan Fluor Daniel Kft. Hungary Fluor Daniel Latin America, Inc. California Fluor-Daniel (Malaysia) Sdn. Bhd. Malaysia Fluor Daniel Mexico S.A. California ICA-Fluor Daniel, S. de R.L. de C.V. (10) Mexico Fluor Daniel Northwest, Inc. Washington Fluor Daniel Northwest Services, Inc. Washington Ameco Services, S. de R.L. de C.V. Mexico TRS International Group, S. de R.L. de C.V. Mexico Fluor Daniel Mining & Metals, Ltd. California Fluor Daniel Pty. Ltd. Australia Civil and Mechanical Maintenance Pty. Ltd. Australia Fluor Daniel Constructors Pty. Ltd. Australia Fluor Daniel Power & Maintenance Services Pty. Ltd. Australia Fluor Daniel Gas Services Pty. Ltd. Australia Fluor Daniel (Qld) Pty. Ltd. Australia TRS International Group Pty. Ltd. Australia Fluor Daniel New Zealand Limited California Fluor Daniel (NPOSR), Inc. Delaware Fluor Daniel Overland Express, Inc. Delaware Fluor Daniel Overseas, Inc. California Fluor Daniel P.R.C., Ltd. California Fluor Daniel Pacific, Inc. California Fluor Daniel Properties Limited U.K. Fluor Daniel Pulp & Paper, Inc. California Fluor Daniel S.A. France Fluor Daniel, S.A. Spain Fluor Daniel Sales Corporation West Indies Fluor Daniel South America Limited California Fluor Daniel South East Asia, Ltd. California Fluor Daniel Southeast, Inc. California Fluor Daniel Technical Services, Inc. Texas Fluor Daniel Thailand, Ltd. California Fluor-Doris, Inc. Texas Fluor Engineers, Inc. Delaware Tecnofluor, C.A. (11) Venezuela Tecnoconsult Ingenieros Consultores, S.A.(11) Venezuela Fluor Egypt Egypt Fluor Engineering Corporation Michigan Fluor Hong Kong Limited Hong Kong Fluor Indonesia, Inc. California P.T. Panca Perintis Indonesia Indonesia Fluor International, Inc. California
4
Organized Name of Company Under Laws of =============== ============= Fluor Corporation FD Engineers & Constructors, Inc. Fluor Daniel, Inc. (continued) Fluor International Limited Bermuda Fluor Iran Iran Fluor Italia S.r.l. Italy Fluor-Korea Corporation, Ltd. (The) Korea Fluor Mideast Limited Bermuda Fluor Ocean Services International, Inc. California Fluor Plant Services International, Inc. California Fluor Plant Services International Ltd. Bermuda Fluor International Nigeria Limited Nigeria Fluor Technical Services Limited California Fluor Texas, Inc. Texas Fluor Venezuela, S.A. Venezuela Fluorven Limited California Knightsford Limited Guernsey Marshall Contractors, Inc. Rhode Island Nutmeg Valley Resources, Inc. California Ranhill-Fluor Daniel Sdn. Bhd. Malaysia Rienzi Limited Guernsey Red Tower Limited Guernsey Rippleshell Limited Guernsey Soli.Flo, LLC (12) Delaware Soli.Flo, Inc. California Soli.Flo Partners, L.P. California Stanhope Management Services Limited U.K. TDF, Inc. California Venezco, Inc. California Whidbey Services Co. Nevada Williams Brothers Engineering Company Delaware Fluor Daniel Argentina, Inc. Delaware Williams Brothers Engineering Limited U.K. Williams Brothers Engineering Pty. Ltd. Australia Williams Brothers International Limited Guernsey Williams Brothers Petroleum Services, Inc. Delaware Williams Brothers Process Services, Inc. Delaware Wilmore/Fluor Modesto LLC (5) California Wireless Engineering Services Group, LLC (5) Delaware Wright Engineers, Inc. Nevada Fluor Daniel India Private Limited India Fluor Daniel Offshore Ltd. Mauritius Fluor Daniel Telecommunications Corporation California Indo-Mauritian Affiliates Limited Mauritius Power Maintenance Services, Inc. Delaware Strategic Organizational Systems Enterprises, Inc. California
5
Organized Name of Company Under Laws of =============== ============= Fluor Corporation FD Engineers & Constructors, Inc. Strategic Organizational Systems Enterprises, Inc. (cont'd.) Strategic Organizational Systems Construction Division, Inc. California Strategic Organizational Systems Environ- mental Division, Inc. Oklahoma Strategic Organizational Systems Environ- mental Division, Inc. Louisiana Strategic Organizational Systems Environ- mental Engineering Division, Inc. Texas SOS International, Inc. Alabama Strategic Organizational Systems Environmental Engineering California Division, Inc. California Strategic Organizational Systems Southern California Division Inc. California TRS International Payroll Co. Texas TRS Staffing Solutions, Inc. S. Carolina Corico Corporation N. Hampshire The Consol Group, Inc. (14) N. Hampshire Contract Solutions - Boston LLC (14) Massachusetts Contract Solutions, Inc. N. Hampshire The Consol Group, Inc. (14) N. Hampshire Contract Solutions - Boston LLC (15) Massachusetts Corico Office Professionals, Inc. N. Hampshire The Consol Group, Inc. (14) N. Hampshire TRS International Group, Inc. Delaware TRS International Group Asia Pacific, Inc. California TRS Management Resources, Inc. S. Carolina Fluor Daniel Illinois, Inc. Delaware Fluor Daniel Intercontinental, Inc. California Fluor Daniel Nigeria Limited (13) Nigeria Fluor Daniel Venture Group, Inc. California Fluor Gulf Communications, Inc. California Micogen Inc. California Micogen Limited I, Inc. California Micogen Limited II, Inc. California United Nuclear Services, Inc. Ohio Soli.Flo LLC (12) Delaware Springfield Resource Recovery, Inc. Mass. Fluor Distribution Companies, Inc. California Fluor Mideast Limited California Fluor (Nigeria) Limited Nigeria Fluor Oil and Gas Corporation California Fluor Real Estate Services, Inc. Delaware Fluor Reinsurance Investments, Inc. Delaware FRES, Inc. Delaware Micogen Limited III, Inc. California Middle East Fluor California Pinnacle Insurance Co., Inc. Hawaii St. Joe Carbon Fuels Corporation Delaware
6
Organized Name of Company Under Laws of =============== ============= Fluor Corporation (continued) SJM Holding Corporation Allegheny Coal Corporation Massey Coal Company (partnership) A. T. Massey Coal Company, Inc. (continued) Aracoma Coal Company, Inc. W. Virginia Barnabus Land Company W. Virginia Ben Creek Coal Company W. Virginia Big Bear Mining Company W. Virginia Black Knight Mine Development Co. W. Virginia Boone East Development Co. W. Virginia Boone West Development Co. W. Virginia Cabinawa Mining Company W. Virginia Central Penn Energy Company, Inc. Pennsylvania Central West Virginia Energy Company W. Virginia Ceres Land Company W. Virginia Cline & Chambers Coal Company, Inc. Kentucky Dehue Coal Company W. Virginia Douglas Pocahontas Coal Corporation W. Virginia DRIH Corporation Delaware Duchess Coal Company W. Virginia Elk Run Coal Company, Inc. W. Virginia Appalachian Capital Management Corp. W. Virginia Bishop Mine Development Co. W. Virginia Black Castle Mine Development Co. W. Virginia Black King Mine Development Co. W. Virginia Chess Processing Company W. Virginia Marfork Coal Company, Inc. W. Virginia Continuity Venture Capital Corp. W. Virginia Progressive Venture Capital Corp. W. Virginia Massey Capital Management Corp. W. Virginia Massey New Era Capital Corp. W. Virginia New Massey Capital Corp. W. Virginia Preferred Management Capital Corp. W. Virginia Rawl Sales Venture Capital Corp. W. Virginia Sprouse Creek Venture Capital Corp. W. Virginia Support Mining Company W. Virginia Federal Development Corporation W. Virginia Goals Coal Company W. Virginia Green Valley Coal Company W. Virginia Haden Farms, Inc. Virginia Hazy Ridge Coal Company W. Virginia Hillsboro Coal Company Pennsylvania Hopkins Creek Coal Company Kentucky Imec, Inc. Kentucky Independence Coal Company, Inc. W. Virginia Jacks Branch Coal Company W. Virginia Joboner Coal Company Kentucky Lauren Land Company Kentucky Lewco Development Company W. Virginia Lick Branch Coal Company W. Virginia Long Fork Coal Company Kentucky
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Organized Name of Company Under Laws of =============== ============= Fluor Corporation SJM Holding Corporation Allegheny Coal Corporation Massey Coal Company (partnership) A. T. Massey Coal Company, Inc. Long Fork Coal Company (continued) Bandytown Coal Company W. Virginia Eagle Energy, Inc. W. Virginia Martin County Coal Corporation Kentucky Pilgrim Mining Company, Inc. Kentucky Massey Coal Sales Company, Inc. Virginia Massey Coal Services, Inc. W. Virginia Massey Consulting Services, Inc. Virgina Massey Fuels Corporation Virginia Menefee Land Company, Inc. Colorado New Ridge Mining Company Kentucky Nicco Corporation W. Virginia Majestic Mining, Inc. Texas Omar Mining Company W. Virginia Peerless Eagle Coal Co. W. Virginia Pennsylvania Mine Services, Inc. Pennsylvania Mine Maintenance, Inc. Pennsylvania Performance Coal Company W. Virginia Continuity Venture Capital Corp. W. Virginia SPM Capital Management Corp. W. Virginia Rawl Sales & Processing Co. W. Virginia Capstan Mining Company Colorado Feats Venture Capital Corp. W. Virginia Lynn Branch Coal Company, Inc. W. Virginia Massey Coal Capital Corp. W. Virginia Massey New Era Capital Corp. W. Virginia New Massey Capital Corp. W. Virginia Preferred Management Capital Corp. W. Virginia Rawl Sales Venture Capital Corp. W. Virginia Sprouse Creek Venture Capital Corp. W. Virginia Sun Coal Company, Inc. Colorado Sycamore Fuels, Inc. W. Virginia Crystal Fuels Company W. Virginia Road Fork Development Company, Inc. Kentucky Robinson-Phillips Coal Company W. Virginia Rockridge Coal Company W. Virginia Rum Creek Coal Sales, Inc. W. Virginia Vantage Mining Company Kentucky Russell Fork Coal Company W. Virginia SC Coal Corporation Delaware Shannon-Pocahontas Coal Corporation W. Virginia Sidney Coal Company, Inc. Kentucky Stirrat Coal Company W. Virginia Stone Mining Company Kentucky T.C.H. Coal Co. Kentucky Tennessee Consolidated Coal Company Tennessee
8
Organized Name of Company Under Laws of =============== ============= Fluor Corporation SJM Holding Corporation Allegheny Coal Corporation Massey Coal Company (partnership) A. T. Massey Coal Company, Inc. Tennessee Consolidated Coal Company (continued) Chestnut Coal Company, Inc. Tennessee Tennessee Energy Corp. Tennessee Town Creek Coal Company W. Virginia Tug Valley Land Company, Inc. W. Virginia Vesta Mining Company Pennsylvania White Buck Coal Company W. Virginia Williams Mountain Coal Company W. Virginia Wyomac Coal Company, Inc. W. Virginia Compania Minera San Jose del Peru S.A. Peru Mineral Resource Development Corporation Delaware Robil International Corporation Delaware St. Joe Erzbergbaugesellschaft m.b.H. Austria St. Joe Exploracion Minera Inc. Delaware St. Joe Exploracion Minera Inc.y Cia., S.R.C. Spain St. Joe Luisito de Oro Inc. Delaware St. Joe Luisito de Oro Inc. y Cia. S.R.C. Spain St. Joe Minera de Espana, S.A. Spain St. Joe South Pacific Pty. Limited Australia St. Joe Bonaparte Pty. Limited Australia St. Joe International Petroleum Corporation Delaware St. Joe Egypt Exploration Corporation Delaware St. Joe Minerals Corporation & Cia. Brazil Coral Empreendimentos e Participacoes Ltda. Brazil Comercial de Minerios do Sul do Para Ltda. - COMIPA Brazil Mineracao Alabastro Ltda. Brazil Mineracao Sao Felix Ltda. Brazil United Plant Services, Inc. Delaware WODECO Nigeria Limited Nigeria Zenith Coal Company, Inc. S. Carolina ---------------------------- ------------
(1) Does not include certain subsidiaries which if considered in the aggregate as a single subsidiary, would not constitute a significant subsidiary (2) 40% ownership (3) 51% ownership (4) 49.50% ownership (5) 50% ownership (6) 35% ownership (7) 45% ownership (8) 19.99% ownership (9) 25% ownership (10) 49% ownership (11) 19.99% ownership (12) 25% ownership (13) 60% ownership (14) 33 1/3% ownership (15) 66 2/3% ownership 9 EX-23 6 CONSENT OF INDEPENDENT AUDITORS EXHIBIT 23 CONSENT OF INDEPENDENT AUDITORS We consent to the incorporation by reference in this Annual Report on Form 10-K of Fluor Corporation of our report dated November 19, 1996, included in the 1996 Annual Report to stockholders of Fluor Corporation. We also consent to the incorporation by reference of our report dated November 19, 1996, with respect to the consolidated financial statements of Fluor Corporation incorporated by reference in the Annual Report on Form 10-K for the year ended October 31, 1996, in the Registration Statements and related Prospectuses pertaining to: Form S-3 No. 333-18315 for the issuance of senior debt securities; Form S-8 No. 333-18151 for the 1996 Fluor Executive Stock Plan; Form S-8 No. 33-58557 for the Fluor Corporation Stock Plan for Non-Employee Directors; Form S-8 No. 33-31440 for the 1988 Fluor Executive Stock Plan; Form S-8 No. 2-77532 for the 1982 Fluor Incentive Stock Option Plan, 1981 Fluor Executive Stock Plan, 1977 Fluor Executive Stock Plan and 1971 Fluor Stock Option Plan; and Form S-8 No. 2-72712 for the Fluor Corporation Salaried Employees' Savings Investment Plan. ERNST & YOUNG LLP Orange County, California January 24, 1997 EX-24.1 7 POWER OF ATTORNEY EXHIBIT 24.1 POWER OF ATTORNEY KNOW ALL MEN BY THESE PRESENTS, that the undersigned director and officer of FLUOR CORPORATION, a Delaware corporation ("Fluor"), does hereby constitute and appoint L. N. FISHER, R. M. BUKATY, and R. R. DRYDEN and each of them, with full power to act without the other, as his true and lawful attorneys-in- fact and agents, for him and in his name, place and stead, in any and all capacities, to sign the annual report on Form 10-K for the fiscal year ended October 31, 1996, and any and all amendments thereto, to be filed by Fluor with the Securities and Exchange Commission and to file such annual report and any amendments, with any and all exhibits thereto, and any and all other information and documents in connection therewith, with the Securities and Exchange Commission; and the undersigned does hereby ratify and confirm as his own act and deed all that such attorneys-in-fact and agents, and each of them shall do or cause to be done by virtue hereof. IN WITNESS WHEREOF, the undersigned has hereunto subscribed his signature as of the 28th day of January, 1997. PRINCIPAL EXECUTIVE OFFICER AND DIRECTOR: L. G. McCRAW Director, Chairman - ------------------------------------- of the Board and L. G. McCraw Chief Executive Officer EX-24.2 8 POWER OF ATTORNEY EXHIBIT 24.2 POWER OF ATTORNEY KNOW ALL MEN BY THESE PRESENTS, that each of the undersigned directors and/or officers of FLUOR CORPORATION, a Delaware corporation ("Fluor"), does hereby constitute and appoint L. N. FISHER, R. M. BUKATY, and R. R. DRYDEN and each of them, with full power to act without the other, as his true and lawful attorneys-in-fact and agents, for him and in his name, place and stead, in any and all capacities, to sign the annual report on Form 10-K for the fiscal year ended October 31, 1996, and any and all amendments thereto, to be filed by Fluor with the Securities and Exchange Commission and to file such annual report and any amendments, with any and all exhibits thereto, and any and all other information and documents in connection therewith, with the Securities and Exchange Commission; and each of the undersigned does hereby ratify and confirm as his own act and deed all that such attorneys-in-fact and agents, and each of them shall do or cause to be done by virtue hereof. IN WITNESS WHEREOF, the undersigned have hereunto subscribed their signatures as of the 14th day of January, 1997. D. L. BLANKENSHIP --------------------------------------- D. L. Blankenship POWER OF ATTORNEY KNOW ALL MEN BY THESE PRESENTS, that each of the undersigned directors and/or officers of FLUOR CORPORATION, a Delaware corporation ("Fluor"), does hereby constitute and appoint L. N. FISHER, R. M. BUKATY, and R. R. DRYDEN and each of them, with full power to act without the other, as his true and lawful attorneys-in-fact and agents, for him and in his name, place and stead, in any and all capacities, to sign the annual report on Form 10-K for the fiscal year ended October 31, 1996, and any and all amendments thereto, to be filed by Fluor with the Securities and Exchange Commission and to file such annual report and any amendments, with any and all exhibits thereto, and any and all other information and documents in connection therewith, with the Securities and Exchange Commission; and each of the undersigned does hereby ratify and confirm as his own act and deed all that such attorneys-in-fact and agents, and each of them shall do or cause to be done by virtue hereof. IN WITNESS WHEREOF, the undersigned have hereunto subscribed their signatures as of the 14th day of January, 1997. C. A. CAMPBELL, JR. --------------------------------------- C. A. Campbell, Jr. POWER OF ATTORNEY KNOW ALL MEN BY THESE PRESENTS, that each of the undersigned directors and/or officers of FLUOR CORPORATION, a Delaware corporation ("Fluor"), does hereby constitute and appoint L. N. FISHER, R. M. BUKATY, and R. R. DRYDEN and each of them, with full power to act without the other, as his true and lawful attorneys-in-fact and agents, for him and in his name, place and stead, in any and all capacities, to sign the annual report on Form 10-K for the fiscal year ended October 31, 1996, and any and all amendments thereto, to be filed by Fluor with the Securities and Exchange Commission and to file such annual report and any amendments, with any and all exhibits thereto, and any and all other information and documents in connection therewith, with the Securities and Exchange Commission; and each of the undersigned does hereby ratify and confirm as his own act and deed all that such attorneys-in-fact and agents, and each of them shall do or cause to be done by virtue hereof. IN WITNESS WHEREOF, the undersigned have hereunto subscribed their signatures as of the 14th day of January, 1997. H. K. COBLE --------------------------------------- H. K. Coble POWER OF ATTORNEY KNOW ALL MEN BY THESE PRESENTS, that each of the undersigned directors and/or officers of FLUOR CORPORATION, a Delaware corporation ("Fluor"), does hereby constitute and appoint L. N. FISHER, R. M. BUKATY, and R. R. DRYDEN and each of them, with full power to act without the other, as his true and lawful attorneys-in-fact and agents, for him and in his name, place and stead, in any and all capacities, to sign the annual report on Form 10-K for the fiscal year ended October 31, 1996, and any and all amendments thereto, to be filed by Fluor with the Securities and Exchange Commission and to file such annual report and any amendments, with any and all exhibits thereto, and any and all other information and documents in connection therewith, with the Securities and Exchange Commission; and each of the undersigned does hereby ratify and confirm as his own act and deed all that such attorneys-in-fact and agents, and each of them shall do or cause to be done by virtue hereof. IN WITNESS WHEREOF, the undersigned have hereunto subscribed their signatures as of the 14th day of January, 1997. P. J. FLUOR --------------------------------------- P. J. Fluor POWER OF ATTORNEY KNOW ALL MEN BY THESE PRESENTS, that each of the undersigned directors and/or officers of FLUOR CORPORATION, a Delaware corporation ("Fluor"), does hereby constitute and appoint L. N. FISHER, R. M. BUKATY, and R. R. DRYDEN and each of them, with full power to act without the other, as his true and lawful attorneys-in-fact and agents, for him and in his name, place and stead, in any and all capacities, to sign the annual report on Form 10-K for the fiscal year ended October 31, 1996, and any and all amendments thereto, to be filed by Fluor with the Securities and Exchange Commission and to file such annual report and any amendments, with any and all exhibits thereto, and any and all other information and documents in connection therewith, with the Securities and Exchange Commission; and each of the undersigned does hereby ratify and confirm as his own act and deed all that such attorneys-in-fact and agents, and each of them shall do or cause to be done by virtue hereof. IN WITNESS WHEREOF, the undersigned have hereunto subscribed their signatures as of the 14th day of January, 1997. D. P. GARDNER --------------------------------------- D. P. Gardner POWER OF ATTORNEY KNOW ALL MEN BY THESE PRESENTS, that each of the undersigned directors and/or officers of FLUOR CORPORATION, a Delaware corporation ("Fluor"), does hereby constitute and appoint L. N. FISHER, R. M. BUKATY, and R. R. DRYDEN and each of them, with full power to act without the other, as his true and lawful attorneys-in-fact and agents, for him and in his name, place and stead, in any and all capacities, to sign the annual report on Form 10-K for the fiscal year ended October 31, 1996, and any and all amendments thereto, to be filed by Fluor with the Securities and Exchange Commission and to file such annual report and any amendments, with any and all exhibits thereto, and any and all other information and documents in connection therewith, with the Securities and Exchange Commission; and each of the undersigned does hereby ratify and confirm as his own act and deed all that such attorneys-in-fact and agents, and each of them shall do or cause to be done by virtue hereof. IN WITNESS WHEREOF, the undersigned have hereunto subscribed their signatures as of the 14th day of January, 1997. W. R. GRANT _____________________________________ W. R. Grant POWER OF ATTORNEY KNOW ALL MEN BY THESE PRESENTS, that each of the undersigned directors and/or officers of FLUOR CORPORATION, a Delaware corporation ("Fluor"), does hereby constitute and appoint L. N. FISHER, R. M. BUKATY, and R. R. DRYDEN and each of them, with full power to act without the other, as his true and lawful attorneys-in-fact and agents, for him and in his name, place and stead, in any and all capacities, to sign the annual report on Form 10-K for the fiscal year ended October 31, 1996, and any and all amendments thereto, to be filed by Fluor with the Securities and Exchange Commission and to file such annual report and any amendments, with any and all exhibits thereto, and any and all other information and documents in connection therewith, with the Securities and Exchange Commission; and each of the undersigned does hereby ratify and confirm as his own act and deed all that such attorneys-in-fact and agents, and each of them shall do or cause to be done by virtue hereof. IN WITNESS WHEREOF, the undersigned have hereunto subscribed their signatures as of the 14th day of January, 1997. B. R. INMAN _____________________________________ B. R. Inman POWER OF ATTORNEY KNOW ALL MEN BY THESE PRESENTS, that each of the undersigned directors and/or officers of FLUOR CORPORATION, a Delaware corporation ("Fluor"), does hereby constitute and appoint L. N. FISHER, R. M. BUKATY, and R. R. DRYDEN and each of them, with full power to act without the other, as his true and lawful attorneys-in-fact and agents, for him and in his name, place and stead, in any and all capacities, to sign the annual report on Form 10-K for the fiscal year ended October 31, 1996, and any and all amendments thereto, to be filed by Fluor with the Securities and Exchange Commission and to file such annual report and any amendments, with any and all exhibits thereto, and any and all other information and documents in connection therewith, with the Securities and Exchange Commission; and each of the undersigned does hereby ratify and confirm as his own act and deed all that such attorneys-in-fact and agents, and each of them shall do or cause to be done by virtue hereof. IN WITNESS WHEREOF, the undersigned have hereunto subscribed their signatures as of the 14th day of January, 1997. R. V. LINDSAY _____________________________________ R. V. Lindsay POWER OF ATTORNEY KNOW ALL MEN BY THESE PRESENTS, that each of the undersigned directors and/or officers of FLUOR CORPORATION, a Delaware corporation ("Fluor"), does hereby constitute and appoint L. N. FISHER, R. M. BUKATY, and R. R. DRYDEN and each of them, with full power to act without the other, as her true and lawful attorneys-in-fact and agents, for her and in her name, place and stead, in any and all capacities, to sign the annual report on Form 10-K for the fiscal year ended October 31, 1996, and any and all amendments thereto, to be filed by Fluor with the Securities and Exchange Commission and to file such annual report and any amendments, with any and all exhibits thereto, and any and all other information and documents in connection therewith, with the Securities and Exchange Commission; and each of the undersigned does hereby ratify and confirm as his own act and deed all that such attorneys-in-fact and agents, and each of them shall do or cause to be done by virtue hereof. IN WITNESS WHEREOF, the undersigned have hereunto subscribed their signatures as of the 14th day of January, 1997. V. S. MARTINEZ _____________________________________ V. S. Martinez POWER OF ATTORNEY KNOW ALL MEN BY THESE PRESENTS, that each of the undersigned directors and/or officers of FLUOR CORPORATION, a Delaware corporation ("Fluor"), does hereby constitute and appoint L. N. FISHER, R. M. BUKATY, and R. R. DRYDEN and each of them, with full power to act without the other, as his true and lawful attorneys-in-fact and agents, for him and in his name, place and stead, in any and all capacities, to sign the annual report on Form 10-K for the fiscal year ended October 31, 1996, and any and all amendments thereto, to be filed by Fluor with the Securities and Exchange Commission and to file such annual report and any amendments, with any and all exhibits thereto, and any and all other information and documents in connection therewith, with the Securities and Exchange Commission; and each of the undersigned does hereby ratify and confirm as his own act and deed all that such attorneys-in-fact and agents, and each of them shall do or cause to be done by virtue hereof. IN WITNESS WHEREOF, the undersigned have hereunto subscribed their signatures as of the 14th day of January, 1997. B. MICKEL _____________________________________ B. Mickel POWER OF ATTORNEY KNOW ALL MEN BY THESE PRESENTS, that each of the undersigned directors and/or officers of FLUOR CORPORATION, a Delaware corporation ("Fluor"), does hereby constitute and appoint L. N. FISHER, R. M. BUKATY, and R. R. DRYDEN and each of them, with full power to act without the other, as her true and lawful attorneys-in-fact and agents, for her and in her name, place and stead, in any and all capacities, to sign the annual report on Form 10-K for the fiscal year ended October 31, 1996, and any and all amendments thereto, to be filed by Fluor with the Securities and Exchange Commission and to file such annual report and any amendments, with any and all exhibits thereto, and any and all other information and documents in connection therewith, with the Securities and Exchange Commission; and each of the undersigned does hereby ratify and confirm as his own act and deed all that such attorneys-in-fact and agents, and each of them shall do or cause to be done by virtue hereof. IN WITNESS WHEREOF, the undersigned have hereunto subscribed their signatures as of the 14th day of January, 1997. M. R. SEGER _____________________________________ M. R. Seger EX-27 9 FINANCIAL DATA SCHEDULE
5 THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE CONSOLIDATED BALANCE SHEET AT OCTOBER 31, 1996 AND THE CONSOLIDATED STATEMENT OF EARNINGS FOR THE TWELVE MONTHS ENDED OCTOBER 31, 1996 AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS. 1,000 12-MOS OCT-31-1996 OCT-31-1996 246,964 69,378 742,547 0 73,927 1,796,823 2,498,874 821,212 3,951,726 1,645,568 2,967 0 0 52,369 1,617,357 3,951,726 0 11,015,192 0 10,565,449 0 0 16,051 413,218 145,134 268,084 0 0 0 268,084 3.17 3.17
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