CONSOLIDATED STATEMENT OF EARNI
CONSOLIDATED STATEMENT OF EARNINGS (USD $) | |||||||||||||||||||
In Thousands, except Per Share data | 12 Months Ended
Dec. 31, 2009 | 12 Months Ended
Dec. 31, 2008 | 12 Months Ended
Dec. 31, 2007 | ||||||||||||||||
TOTAL REVENUE | $21,990,297 | $22,325,894 | $16,691,033 | ||||||||||||||||
TOTAL COST OF REVENUE | |||||||||||||||||||
Cost of revenue | 20,689,161 | 21,081,870 | [1] | 15,869,204 | [1] | ||||||||||||||
Gain on sale of joint venture interest | (79,209) | ||||||||||||||||||
OTHER (INCOME) AND EXPENSES | |||||||||||||||||||
Corporate administrative and general expense | 178,520 | 229,692 | [1] | 193,743 | [1] | ||||||||||||||
Interest expense | 10,054 | 18,439 | [1] | 32,707 | [1] | ||||||||||||||
Interest income | (24,226) | (66,592) | (64,524) | ||||||||||||||||
Total cost and expenses | 20,853,509 | 21,184,200 | [1] | 16,031,130 | [1] | ||||||||||||||
EARNINGS BEFORE TAXES | 1,136,788 | 1,141,694 | [1] | 659,903 | [1] | ||||||||||||||
INCOME TAX EXPENSE | 403,913 | 392,791 | [1] | 113,375 | [1] | ||||||||||||||
NET EARNINGS | 732,875 | 748,903 | [1] | 546,528 | [1] | ||||||||||||||
NET EARNINGS ATTRIBUTABLE TO NONCONTROLLING INTERESTS | (47,986) | (32,842) | [1] | (18,567) | [1] | ||||||||||||||
NET EARNINGS ATTRIBUTABLE TO FLUOR CORPORATION | $684,889 | $716,061 | [1] | $527,961 | [1] | ||||||||||||||
BASIC EARNINGS PER SHARE (in dollars per share) | 3.79 | 3.99 | [1] | 2.99 | [1],[2] | ||||||||||||||
DILUTED EARNINGS PER SHARE (in dollars per share) | 3.75 | 3.89 | [1] | 2.88 | [1],[2] | ||||||||||||||
SHARES USED TO CALCULATE EARNINGS PER SHARE | |||||||||||||||||||
Basic (in shares) | 179,100 | 177,658 | [1] | 174,504 | [1],[2] | ||||||||||||||
Diluted (in shares) | 180,862 | 182,612 | [1] | 181,043 | [1],[2] | ||||||||||||||
[1]As Adjusted | |||||||||||||||||||
[2]The 2007 share and per share amounts were adjusted for the July 16, 2008 two-for-one stock split. As such, share and per share amounts for all three years presented are on a comparable basis. |
CONSOLIDATED BALANCE SHEET
CONSOLIDATED BALANCE SHEET (USD $) | |||||||||||||||||||
In Thousands | Dec. 31, 2009
| Dec. 31, 2008
| |||||||||||||||||
CURRENT ASSETS | |||||||||||||||||||
Cash and cash equivalents | $1,687,028 | $1,834,324 | |||||||||||||||||
Marketable securities, current | 603,594 | 273,570 | |||||||||||||||||
Accounts and notes receivable, net | 988,991 | 1,227,224 | |||||||||||||||||
Contract work in progress | 1,405,785 | 981,125 | |||||||||||||||||
Deferred taxes | 131,101 | 148,132 | [1] | ||||||||||||||||
Other current assets | 305,589 | 204,143 | |||||||||||||||||
Total current assets | 5,122,088 | 4,668,518 | [1] | ||||||||||||||||
PROPERTY, PLANT AND EQUIPMENT | |||||||||||||||||||
Land | 48,501 | 46,032 | |||||||||||||||||
Buildings and improvements | 368,236 | 345,135 | |||||||||||||||||
Machinery and equipment | 1,207,748 | 1,087,464 | |||||||||||||||||
Construction in progress | 30,525 | 17,511 | |||||||||||||||||
Property, plant and equipment, gross | 1,655,010 | 1,496,142 | |||||||||||||||||
Less accumulated depreciation | 817,976 | 696,306 | |||||||||||||||||
Net property, plant and equipment | 837,034 | 799,836 | |||||||||||||||||
OTHER ASSETS | |||||||||||||||||||
Marketable securities, noncurrent | 335,216 | 22,884 | |||||||||||||||||
Goodwill | 88,056 | 87,172 | |||||||||||||||||
Investments | 185,229 | 191,962 | |||||||||||||||||
Deferred taxes | 247,517 | 386,613 | |||||||||||||||||
Deferred compensation trusts | 279,852 | 225,246 | |||||||||||||||||
Other | 83,491 | 41,346 | |||||||||||||||||
Total other assets | 1,219,361 | 955,223 | |||||||||||||||||
Total assets | 7,178,483 | 6,423,577 | [1] | ||||||||||||||||
CURRENT LIABILITIES | |||||||||||||||||||
Trade accounts payable | 1,334,301 | 1,164,556 | |||||||||||||||||
Convertible senior notes | 109,789 | 133,194 | [1] | ||||||||||||||||
Advance billings on contracts | 980,437 | 999,107 | |||||||||||||||||
Accrued salaries, wages and benefits | 581,193 | 607,702 | |||||||||||||||||
Other accrued liabilities | 295,678 | 257,667 | |||||||||||||||||
Total current liabilities | 3,301,398 | 3,162,226 | [1] | ||||||||||||||||
LONG-TERM DEBT DUE AFTER ONE YEAR | 17,740 | 17,722 | |||||||||||||||||
NONCURRENT LIABILITIES | 525,452 | 520,445 | [1] | ||||||||||||||||
Capital stock | |||||||||||||||||||
Preferred - authorized 20,000,000 shares ($0.01 par value), none issued | 0 | 0 | |||||||||||||||||
Common - authorized 375,000,000 shares ($0.01 par value); issued and outstanding - 178,824,617 and 181,555,921 shares in 2009 and 2008, respectively | 1,788 | 1,816 | |||||||||||||||||
Additional paid-in capital | 682,304 | 778,537 | [1] | ||||||||||||||||
Accumulated other comprehensive loss | (220,987) | (356,969) | |||||||||||||||||
Retained earnings | 2,842,428 | 2,247,938 | [1] | ||||||||||||||||
Total shareholders' equity | 3,305,533 | 2,671,322 | [1] | ||||||||||||||||
Noncontrolling interests | 28,360 | 51,862 | [1] | ||||||||||||||||
Total equity | 3,333,893 | 2,723,184 | [1] | ||||||||||||||||
Total liabilities and equity | $7,178,483 | $6,423,577 | [1] | ||||||||||||||||
[1]As Adjusted |
CONSOLIDATED BALANCE SHEET (Par
CONSOLIDATED BALANCE SHEET (Parenthetical) (USD $) | ||
Dec. 31, 2009
| Dec. 31, 2008
| |
Consolidated Balance Sheet | ||
Preferred stock, par value (in dollars per share) | 0.01 | 0.01 |
Preferred stock, shares authorized (in shares) | 20,000,000 | 20,000,000 |
Preferred stock, shares issued (in shares) | 0 | 0 |
Common stock, par value (in dollars per share) | 0.01 | 0.01 |
Common stock, shares authorized (in shares) | 375,000,000 | 375,000,000 |
Common stock, shares issued (in shares) | 178,824,617 | 181,555,921 |
Common stock, shares outstanding (in shares) | 178,824,617 | 181,555,921 |
CONSOLIDATED STATEMENT OF CASH
CONSOLIDATED STATEMENT OF CASH FLOWS (USD $) | |||||||||||||||||||
In Thousands | 12 Months Ended
Dec. 31, 2009 | 12 Months Ended
Dec. 31, 2008 | 12 Months Ended
Dec. 31, 2007 | ||||||||||||||||
CASH FLOWS FROM OPERATING ACTIVITIES | |||||||||||||||||||
Net earnings | $732,875 | $748,903 | [1] | $546,528 | [1] | ||||||||||||||
Adjustments to reconcile net earnings to cash provided by operating activities: | |||||||||||||||||||
Depreciation of fixed assets | 180,849 | 161,562 | 144,862 | ||||||||||||||||
Amortization of intangibles | 1,162 | 1,743 | 1,947 | ||||||||||||||||
Convertible debt discount amortization | 384 | 6,512 | [1] | 8,692 | [1] | ||||||||||||||
Loss on sale of building | 16,370 | ||||||||||||||||||
Gain on sale of joint venture interest | (79,209) | ||||||||||||||||||
Restricted stock and stock option amortization | 33,624 | 35,755 | 32,318 | ||||||||||||||||
Deferred compensation trust | (44,606) | 84,071 | (17,352) | ||||||||||||||||
Deferred compensation obligation | 45,700 | (84,747) | 29,623 | ||||||||||||||||
Funding of deferred compensation trust | (10,000) | (34,000) | (11,000) | ||||||||||||||||
Taxes paid on vested restricted stock | (5,700) | (16,970) | (12,243) | ||||||||||||||||
Statute expirations and tax settlements | (5,568) | (27,755) | (130,594) | ||||||||||||||||
Deferred taxes | 74,662 | 62,945 | [1] | (47,980) | [1] | ||||||||||||||
Stock plans tax benefit | (1,294) | (17,104) | (20,257) | ||||||||||||||||
Retirement plan accrual, net of contributions | 44,798 | (154,531) | (26,763) | ||||||||||||||||
Decrease (increase) in unbilled fees receivable | 118,162 | ||||||||||||||||||
Changes in operating assets and liabilities | (143,932) | 273,392 | 317,364 | [1] | |||||||||||||||
Equity in earnings of investees, net of dividends | (3,699) | (12,014) | (16,104) | ||||||||||||||||
Other items | 57 | 9,701 | [1] | 4,389 | [1] | ||||||||||||||
Cash provided by operating activities | 899,312 | 974,624 | [1] | 921,592 | [1] | ||||||||||||||
CASH FLOWS FROM INVESTING ACTIVITIES | |||||||||||||||||||
Purchases of marketable securities | (1,663,013) | (1,346,335) | (995,002) | ||||||||||||||||
Proceeds from the sales and maturities of marketable securities | 1,039,684 | 1,557,590 | 455,760 | ||||||||||||||||
Capital expenditures | (233,113) | (299,611) | (284,240) | ||||||||||||||||
Proceeds from disposal of property, plant and equipment | 37,568 | 48,495 | 60,396 | ||||||||||||||||
Investments | (1,681) | (2,288) | (9,281) | ||||||||||||||||
Proceeds from sale of joint venture interest | 79,209 | ||||||||||||||||||
Acquisitions | (12,496) | ||||||||||||||||||
Deconsolidation of variable interest entity | (17,190) | ||||||||||||||||||
Other items | 2,496 | (2,031) | (3,875) | ||||||||||||||||
Cash provided (utilized) by investing activities | (818,059) | 22,533 | (793,432) | ||||||||||||||||
CASH FLOWS FROM FINANCING ACTIVITIES | |||||||||||||||||||
Repurchase of common stock | (125,419) | (374) | (287) | ||||||||||||||||
Repayment of convertible debt | (23,789) | (173,644) | (22,777) | ||||||||||||||||
Dividends paid | (90,692) | (89,928) | (70,399) | ||||||||||||||||
Distributions paid to noncontrolling interests | (75,727) | (23,515) | [1] | (16,550) | [1] | ||||||||||||||
Capital contribution from joint venture partners | 3,784 | [1] | 35,143 | [1] | |||||||||||||||
Stock options exercised | 2,671 | 13,377 | 12,537 | ||||||||||||||||
Stock plans tax benefit | 1,294 | 17,104 | 20,257 | ||||||||||||||||
Repayment of non-recourse project financing | (23,376) | ||||||||||||||||||
Repayment of equity bridge loan | (19,126) | ||||||||||||||||||
Proceeds from issuance of non-recourse project financing | 101,665 | ||||||||||||||||||
Other items | (5,635) | (2) | 86 | ||||||||||||||||
Cash provided (utilized) by financing activities | (317,297) | (253,198) | [1] | 17,173 | [1] | ||||||||||||||
Effect of exchange rate changes on cash | 88,748 | (84,779) | 53,761 | ||||||||||||||||
Increase (decrease) in cash and cash equivalents | (147,296) | 659,180 | 199,094 | ||||||||||||||||
Cash and cash equivalents at beginning of year | 1,834,324 | 1,175,144 | 976,050 | ||||||||||||||||
Cash and cash equivalents at end of year | $1,687,028 | $1,834,324 | $1,175,144 | ||||||||||||||||
[1]As Adjusted |
CONSOLIDATED STATEMENT OF SHARE
CONSOLIDATED STATEMENT OF SHAREHOLDERS' EQUITY (USD $) | |||||||||||||||||||
In Thousands | Total Shareholders' Equity
| Common Stock
| Additional Paid-In Capital
| Accumulated Other Comprehensive Income (Loss)
| Retained Earnings
| Noncontrolling Interests
| Total
| ||||||||||||
BALANCE (As Originally Stated) at Dec. 31, 2006 | $1,730,472 | $1,760 | $653,257 | ($148,332) | $1,223,787 | $17,631 | $1,748,103 | [2] | |||||||||||
BALANCE at Dec. 31, 2006 | 1,742,392 | 1,760 | 679,630 | (148,332) | 1,209,334 | 17,631 | 1,760,023 | [2] | |||||||||||
SHARES, BALANCE at Dec. 31, 2006 | 176,082 | [1] | |||||||||||||||||
Increase (Decrease) in Equity: | |||||||||||||||||||
Adjustment due to adoption of FSP APB 14-1 (ASC 470-20) | 11,920 | 26,373 | (14,453) | 11,920 | |||||||||||||||
Comprehensive income | |||||||||||||||||||
Net earnings | 527,961 | 527,961 | 18,567 | 546,528 | [2] | ||||||||||||||
Foreign currency translation adjustment of total shareholders' equity (net of deferred taxes of $49,656, $87,203 and $33,947, respectively) | 56,600 | 56,600 | 56,600 | ||||||||||||||||
Foreign currency translation adjustment of noncontrolling interests | (2,474) | (2,474) | [2] | ||||||||||||||||
Pension plan adjustment (net of deferred taxes of $29,425, $81,475 and $10,535, respectively) | 17,560 | 17,560 | 17,560 | ||||||||||||||||
Total comprehensive income | 602,121 | 74,160 | 527,961 | 16,093 | 618,214 | [2] | |||||||||||||
Cumulative impact of adopting FIN 48 (ASC 740) | (44,792) | (44,792) | (44,792) | ||||||||||||||||
Dividends ($0.50, $0.50 and $0.40 per share, respectively) | (70,698) | (70,698) | (70,698) | ||||||||||||||||
Distributions to noncontrolling interests | (16,550) | (16,550) | [2] | ||||||||||||||||
Partner contributions in noncontrolling interests | 35,143 | 35,143 | [2] | ||||||||||||||||
Deconsolidation of variable interest entity | (14,401) | (14,401) | [2] | ||||||||||||||||
Stock plan activity, value | 52,285 | 8 | 52,277 | 52,285 | |||||||||||||||
Stock plan activity, shares | 784 | [1] | |||||||||||||||||
Repurchase of common stock, value | (287) | (287) | (287) | ||||||||||||||||
Repurchase of common stock, shares | (6) | [1] | |||||||||||||||||
Debt conversions, value | (584) | 6 | (590) | (584) | |||||||||||||||
Debt conversions, shares | 504 | [1] | |||||||||||||||||
BALANCE at Dec. 31, 2007 | 2,280,437 | [2] | 1,774 | [2] | 731,030 | [2] | (74,172) | [2] | 1,621,805 | [2] | 37,916 | [2] | 2,318,353 | [2] | |||||
SHARES, BALANCE at Dec. 31, 2007 | 177,364 | [1] | |||||||||||||||||
Comprehensive income | |||||||||||||||||||
Net earnings | 716,061 | 716,061 | 32,842 | 748,903 | [2] | ||||||||||||||
Foreign currency translation adjustment of total shareholders' equity (net of deferred taxes of $49,656, $87,203 and $33,947, respectively) | (144,963) | (144,963) | (144,963) | ||||||||||||||||
Foreign currency translation adjustment of noncontrolling interests | 835 | 835 | [2] | ||||||||||||||||
Pension plan adjustment (net of deferred taxes of $29,425, $81,475 and $10,535, respectively) | (134,737) | (134,737) | (134,737) | ||||||||||||||||
Unrealized gain on debt securities (net of deferred taxes of $871 in 2009) | 331 | 331 | 331 | ||||||||||||||||
Unrealized gain (loss) on derivative contracts (net of deferred taxes of $1,856, $2,055 and $0, respectively) | (3,428) | (3,428) | (3,428) | ||||||||||||||||
Total comprehensive income | 433,264 | (282,797) | 716,061 | 33,677 | 466,941 | [2] | |||||||||||||
Dividends ($0.50, $0.50 and $0.40 per share, respectively) | (89,928) | (89,928) | (89,928) | ||||||||||||||||
Distributions to noncontrolling interests | (23,515) | (23,515) | [2] | ||||||||||||||||
Partner contributions in noncontrolling interests | 3,784 | 3,784 | [2] | ||||||||||||||||
Stock plan activity, value | 49,266 | 2 | 49,264 | 49,266 | |||||||||||||||
Stock plan activity, shares | 139 | ||||||||||||||||||
Repurchase of common stock, value | (376) | (376) | (376) | ||||||||||||||||
Repurchase of common stock, shares | (6) | ||||||||||||||||||
Debt conversions, value | (1,341) | 40 | (1,381) | (1,341) | |||||||||||||||
Debt conversions, shares | 4,059 | ||||||||||||||||||
BALANCE at Dec. 31, 2008 | 2,671,322 | [2] | 1,816 | [2] | 778,537 | [2] | (356,969) | [2] | 2,247,938 | [2] | 51,862 | [2] | 2,723,184 | [2] | |||||
SHARES, BALANCE at Dec. 31, 2008 | 181,556 | ||||||||||||||||||
Comprehensive income | |||||||||||||||||||
Net earnings | 684,889 | 684,889 | 47,986 | 732,875 | |||||||||||||||
Foreign currency translation adjustment of total shareholders' equity (net of deferred taxes of $49,656, $87,203 and $33,947, respectively) | 82,722 | 82,722 | 82,722 | ||||||||||||||||
Foreign currency translation adjustment of noncontrolling interests | 4,239 | 4,239 | |||||||||||||||||
Pension plan adjustment (net of deferred taxes of $29,425, $81,475 and $10,535, respectively) | 49,043 | 49,043 | 49,043 | ||||||||||||||||
Unrealized gain on debt securities (net of deferred taxes of $871 in 2009) | 1,120 | 1,120 | 1,120 | ||||||||||||||||
Unrealized gain (loss) on derivative contracts (net of deferred taxes of $1,856, $2,055 and $0, respectively) | 3,097 | 3,097 | 3,097 | ||||||||||||||||
Total comprehensive income | 820,871 | 135,982 | 684,889 | 52,225 | 873,096 | ||||||||||||||
Dividends ($0.50, $0.50 and $0.40 per share, respectively) | (90,399) | (90,399) | (90,399) | ||||||||||||||||
Distributions to noncontrolling interests | (75,727) | (75,727) | |||||||||||||||||
Stock plan activity, value | 31,886 | 31,886 | 31,886 | ||||||||||||||||
Stock plan activity, shares | 76 | ||||||||||||||||||
Repurchase of common stock, value | (125,419) | (29) | (125,390) | (125,419) | |||||||||||||||
Repurchase of common stock, shares | (3,060) | ||||||||||||||||||
Debt conversions, value | (2,728) | 1 | (2,729) | (2,728) | |||||||||||||||
Debt conversions, shares | 253 | ||||||||||||||||||
BALANCE at Dec. 31, 2009 | $3,305,533 | $1,788 | $682,304 | ($220,987) | $2,842,428 | $28,360 | $3,333,893 | ||||||||||||
SHARES, BALANCE at Dec. 31, 2009 | 178,825 | ||||||||||||||||||
[1]All share and per share amounts were adjusted for the July 16, 2008 two-for-one stock split. | |||||||||||||||||||
[2]As Adjusted |
1_CONSOLIDATED STATEMENT OF SHA
CONSOLIDATED STATEMENT OF SHAREHOLDERS' EQUITY (Parenthetical) (USD $) | |||||||||||||||||||
In Thousands, except Per Share data | 12 Months Ended
Dec. 31, 2009 | 12 Months Ended
Dec. 31, 2008 | 12 Months Ended
Dec. 31, 2007 | ||||||||||||||||
Foreign currency translation adjustment, deferred taxes | $49,656 | ($87,203) | $33,947 | ||||||||||||||||
Pension plan adjustment, deferred taxes | 29,425 | (81,475) | 10,535 | ||||||||||||||||
Unrealized gain on debt securities, deferred taxes | 871 | ||||||||||||||||||
Unrealized gain (loss) on derivative contracts, deferred taxes | $1,856 | ($2,055) | |||||||||||||||||
Dividends per share (in dollars per share) | 0.5 | 0.5 | 0.4 | [1] | |||||||||||||||
[1]All share and per share amounts were adjusted for the July 16, 2008 two-for-one stock split. |
Major Accounting Policies
Major Accounting Policies | |
12 Months Ended
Dec. 31, 2009 USD / shares | |
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS | |
Major Accounting Policies | 1.Major Accounting Policies |
Principles of Consolidation | Principles of Consolidation The financial statements include the accounts of the company and its subsidiaries. The equity method of accounting is generally used for investment ownership ranging from 20percent to 50percent. Investment ownership of less than 20percent is generally accounted for on the cost method. Joint ventures and partnerships in which the company has the ability to exert significant influence, but does not control, are accounted for using the equity method of accounting. Certain contracts are executed jointly through partnerships and joint ventures with unrelated third parties. The company evaluates the applicability of Financial Accounting Standards Board ("FASB") Interpretation No.46 (Revised) "Consolidation of Variable Interest Entities" ("FIN46(R)") (Accounting Standards Codification ("ASC") 810) to partnerships and joint ventures at the inception of its participation and at the time of reconsideration events to ensure its accounting is in accordance with the appropriate standards. Unless full consolidation is required, the company generally recognizes its proportionate share of joint venture revenue, cost and segment profit in its Consolidated Statement of Earnings and generally uses the one-line equity method of accounting in the Consolidated Balance Sheet. All significant intercompany transactions of consolidated subsidiaries are eliminated. Certain amounts in 2008 and 2007 have been reclassified to conform to the 2009 presentation. Management adopted Statement of Financial Accounting Standard ("SFAS") No.165, "Subsequent Events" (ASC 855-10) during the second quarter of 2009 and, accordingly, has evaluated all material events occurring subsequent to the date of the financial statements up to the date and time this annual report is filed on Form10-K. |
Stock Split | Stock Split On May7, 2008, the Board of Directors approved a two-for-one stock split that was paid in the form of a stock dividend on July16, 2008 to shareholders of record on June16, 2008. The stock split was accounted for by transferring approximately $1million from additional paid-in capital to common stock. All share and per share data (except par value) have been adjusted to reflect the effect of the stock split for all periods presented. The number of shares of common stock issuable upon exercise of outstanding stock options, vesting of other stock awards and the number of shares reserved for issuance under our convertible notes and various employee benefit plans were proportionately increased in accordance with the terms of the respective plans. |
Use of Estimates | Use of Estimates The preparation of financial statements in accordance with accounting principles generally accepted in the United States 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. |
Cash and Cash Equivalents | Cash and Cash Equivalents Cash and cash equivalents include securities with maturities of 90days or less at the date of purchase. Securities with maturities beyond 90days are classified as marketable securities within current and noncurrent assets. |
Marketable Securities | Marketable Securities Marketable securities consist primarily of time deposits placed with investment grade banks with original maturities greater than 90days, which by their nature are typically held to maturity, and are classified as such because the company has the intent and ability to hold them to maturity. Held-to-maturity securities are carried at amortized cost. The company also has investments in debt securities which are classified as available-for-sale because the investments may be sold prior to their maturity date. Available-for-sale securities are carried at fair value. The cost of securities sold is determined by using the specific identification method. |
Engineering and Construction Contracts | Engineering and Construction Contracts The company recognizes engineering and construction contract revenue using the percentage-of-completion method, based primarily on contract cost incurred to date compared to total estimated contract cost. Customer-furnished materials, labor and equipment and, in certain cases, subcontractor materials, labor and equipment, are included in revenue and cost of revenue when management believes that the company is responsible for the ultimate acceptability of the project. Contracts are generally 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 cost or losses, if any, are recognized in the period in which they are determined. Pre-contract costs are expensed as incurred. Revenue recognized in excess of amounts billed is classified as current assets under contract work in progress. Amounts billed to clients in excess of revenue recognized to date are classified as current liabilities under advance billings on contracts. The company anticipates that substantially all incurred cost associated with contract work in progress as of December31, 2009 will be billed and collected in 2010. The company recognizes, under ASC605-35-25, certain significant claims for recovery of incurred cost when it is probable that the claim will result in additional contract revenue and when the amount of the claim can be reliably estimated. Unapproved change orders are accounted for in revenue and cost when it is probable that the cost will be recovered through a change in the contract price. In circumstances where recovery is considered probable but the revenue cannot be reliably estimated, cost attributable to change orders is deferred pending determination of contract price. |
Depreciation and Amortization | Depreciation and Amortization Property, plant and equipment are recorded at cost. Leasehold improvements are amortized over the shorter of their economic lives or the lease terms. Depreciation is calculated using the straight-line method over the following ranges of estimated useful service lives, in years: December31, Estimated Useful Service Lives 2009 2008 (cost in thousands) Buildings $ 258,800 $ 245,667 2040 Building and leasehold improvements 109,436 99,468 620 Machinery and equipment* 1,073,522 953,770 210 Furniture and fixtures 134,226 133,694 210 * Approximately 50percent of the machinery and equipment is construction equipment that is depreciated over service lives ranging from 2 to 5years. Goodwill is not amortized but is subject to annual impairment tests. Interim testing of goodwill is performed if indicators of potential impairment exist. For purposes of impairment testing, goodwill is allocated to the applicable reporting units based on the current reporting structure. During 2009, the company completed its annual goodwill impairment tests in the first quarter and determined that none of the goodwill was impaired. Intangibles arising from business acquisitions are amortized over the useful lives of those assets, ranging from one to nine years. |
Income Taxes | 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. Judgment is required in determining the consolidated provision for income taxes as the company considers its worldwide taxable earnings and the impact of the continuing audit process conducted by various tax authorities. The final outcome of these audits by foreign jurisdictions, the Internal Revenue Service and various state governments could differ materially from that which is reflected in the Consolidated Financial Statements. In June 2006, the FASB issued FASB Interpretation No.48, "Accounting for Uncertainty in Income Taxes" (ASC 740), an interpretation of FASB Statement of Financial Accounting Standards, No.109 "Accounting for Income Taxes" (ASC 740). ASC 740 clarifies the accounting for uncertainty in income taxes recognized in enterprises' financial statements. The interpretation prescribes a recognition threshold and measurement attribute for the financial statement recognition and measurement of a tax position taken or expected to be taken in a tax return. Also, the interpretation provides guidance on derecognition, classification, interest and penalties, accounting in interim periods, disclosure and transition. This interpretation is effective for fiscal years beginning after December15, 2006, and the company adopted this interpretation in the first quarter of 2007. As a result of this adoption, the company recognized a cumulative-effect adjustment of $45million, increasing its liability for unrecognized tax benefits, interest and penalties and reducing the January1, 2007 balance of retained earnings. The company recognizes potential interest and penalties related to unrecognized tax benefits within its global operations in income tax expense. |
Earnings Per Share | Earnings Per Share Basic earnings per share ("EPS") is calculated by dividing net earnings allocable to common shareholders by the weighted average number of common shares outstanding during the period. Diluted EPS reflects the assumed exercise or conversion of all dilutive securities, using the treasury stock method. Potentially dilutive securities include employee stock options and the 1.5percent Convertible Senior Notes (see "7. Financing Arrangements" below for information about the Convertible Senior Notes). In June 2008, the FASB issued FASB Staff Position ("FSP") Emerging Issues Task Force ("EITF") 03-6-1, "Determining Whether Instruments Granted in Share-Based Payment Transactions Are Participating Securities" (ASC 260-10-45). ASC 260-10-45 clarified that all outstanding unvested share-based payment awards that contain rights to nonforfeitable dividends participate in undistributed earnings with common shareholders. The company's restricted stock units and restricted stock awards are considered participating securities since the share-based awards contain a nonforfeitable right to dividends irrespective of whether the awards ultimately vest. ASC 260-10-45 requires that the two-class method of computing basic EPS be applied. Under the two-class method, the company's stock options are not considered to be participating securities. ASC 260-10-45 is effective for fiscal years beginning after December15, 2008 and was adopted by the company during the first quarter of 2009. There was no impact of significance on basic or diluted EPS as a result of the adoption of ASC 260-10-45. As discussed above, the company effected a two-for-one stock split that was paid on July16, 2008 in the form of a stock dividend. Accordingly, the computations of basic and diluted earnings per share have been adjusted retroactively for all periods presented to reflect the July16, 2008 stock split. The calculation of the basic and diluted EPS for the years ended December31, 2009, 2008 and 2007 are presented below: Year Ended December31, (in thousands, except per share amounts) 2009 2008 2007 Basic EPS: Net earnings attributable to Fluor Corporation $ 684,889 $ 716,061 $ 527,961 Portion allocable to common shareholders 99.10 % 99.10 % 98.81 % Net earnings allocable to common shareholders $ 678,725 $ 709,616 $ 521,678 Weighted average common shares outstanding 179,100 177,658 174,504 Basic earnings per share $ 3.79 $ 3.99 $ 2.99 Diluted EPS: Net earnings allocable to common shareholders $ 678,725 $ 709,616 $ 521,678 Weighted average common shares outstanding 179,100 177,658 174,504 Diluted effect: Employee stock options 189 312 417 Conversion equivalent of dilutive convertible debt 1,573 4,642 6,122 Weighted average diluted shares outstanding 180,862 182,612 181,043 Diluted earnings per share $ 3.75 $ 3.89 $ 2.88 Anti-dilutive securities not included above 864 566 59 |
Derivatives and Hedging | Derivatives and Hedging The company limits exposure to foreign currency fluctuations in most of its engineering and construction contracts through provisions that require client payments in currencies corresponding to the currencies in which cost is incurred. Certain financial exposure, which includes currency and commodity price risk associated with engineering and construction contracts and currency risk associated with intercompany transactions, may subject the company to earnings volatility. In cases where financial exposure is identified, the company generally mitigates the risk by utilizing derivative instruments. These instruments are designated as either fair value or cash flow hedges in accordance with SFAS No.133, "Accounting for Derivative Instruments and Hedging Activities" (ASC 815). The company formally documents its hedge relationships at the inception of the agreements, including identification of the hedging instruments and the hedged items, as well as its risk management objectives and strategies for undertaking the hedge transaction. The company also formally assesses, both at inception and at least quarterly thereafter, whether the derivatives that are used in hedging transactions are highly effective in offsetting changes in the fair value of the hedged items. The fair value of all derivative instruments are recognized as assets or liabilities at the balance sheet date. For fair value hedges, the effective portion of the change in the fair value of the derivative instrument is offset against the change in the fair value of the underlying asset through earnings. The effective portion of the contracts' gains or losses due to changes in fair value, associated with the cash flow hedges, are initially recorded as a component of accumulated other comprehensive income (loss) ("OCI") and are subsequently reclassified into earnings when the hedged items settle. Any ineffective portion of a derivative's change in fair value is recognized in earnings immediately. The company does not enter into derivative instruments or hedging activities for speculative or trading purposes. Under ASC 815, in certain limited circumstances, foreign currency payment provisions could be deemed embedded derivatives. As of December31, 2009, 2008 and 2007, the company had no significant embedded derivatives in any of its contracts. On January1, 2008, the company adopted a policy to offset fair value amounts for multiple derivative instruments executed with the same counterparty under a master netting arrangement, as permitted by ASC 815. The adoption did not have a material impact on the company's financial statements. |
Concentrations of Credit Risk | Concentrations of Credit Risk Accounts receivable and all contract work in progress are from clients in various industries and locations throughout the world. Most contracts require payments as the projects progress or, in certain cases, advance payments. The company generally does not require collateral, but in most cases can place liens against the property, plant or equipment constructed or terminate the contract if a material default occurs. The company evaluates the counterparty credit risk of third parties as part of its project risk review process and in determining the appropriate level of reserves. The company maintains adequate reserves for potential credit losses and generally such losses have been minimal and within management's estimates. However, in the third quarter of 2009 the company became aware of the non-collectability of a client receivable for a paper mill in the Global Services segment related to work performed in 2009. Consequently, the company recognized a provision of $45million in the third quarter of 2009 to fully reserve the receivable. Cash and marketable securities are deposited with major banks throughout the world. Such deposits are placed with high quality institutions and the amounts invested in any single institution are limited to the extent possible in order to minimize concentration of counterparty credit risk. The company has not incurred any credit risk losses related to these deposits. The company's counterparties for derivative contracts are large financial institutions selected based on profitability, strength of balance sheet, credit ratings and capacity for timely payment of financial commitments, which are unlikely to be adversely affected by foreseeable events. There are no significant concentrations of credit risk with any individual counterparty related to our derivative contracts. The company monitors credit risk by continuously assessing the credit quality of its counterparties. |
Stock Plans | Stock Plans The company applies the provisions of SFAS No.123-R "Accounting for Share-Based Payment" (ASC 718) in its accounting and reporting for stock-based compensation. ASC 718 requires all share-based payments to employees, including grants of employee stock options, to be recognized in the income statement based on their fair values. Recorded compensation cost for new stock option grants is measured using the requirements of ASC 718 for 2009, 2008 and 2007. All unvested options outstanding under the company's option plans have grant prices equal to the market price of the company's stock on the dates of grant. Under ASC 718, stock-based compensation for new awards granted to retirement eligible employees is recognized over the period from the grant date to the retirement eligibility date. Compensation cost for restricted stock is determined based on the fair value of the stock at the date of grant. Compensation cost for stock appreciation rights and performance equity units is determined based on the change in the fair market value of the company's stock during the period. |
Comprehensive Income (Loss) | Comprehensive Income (Loss) SFAS No.130 "Reporting Comprehensive Income" (ASC 220) establishes standards for reporting and displaying comprehensive income and its components in the consolidated financial statements. The company reports the cumulative foreign currency translation adjustments, unrealized gains and losses on debt securities and derivative contracts, adjustments related to recognition of minimum pension liabilities and unrecognized net actuarial losses on such pension plans, as components of accumulated other comprehensive income (loss). The after-tax components of accumulated other comprehensive income (loss), net are as follows: Foreign Currency Translation Unrealized Gain on Debt Securities Unrealized Loss on Derivative Contracts Pension and Postretirement Benefit Obligation Accumulated Other Comprehensive Income (Loss), Net (in thousands) Balance as of December31, 2006 $ 31,828 $ $ $ (180,160 ) $ (148,332 ) Current period change 56,600 17,560 74,160 Balance as of December31, 2007 88,428 (162,600 ) (74,172 ) Current period change (144,963 ) 331 (3,428 ) (134,737 ) (282,797 ) Balance as of December31, 2008 (56,535 ) 331 (3,428 ) (297,337 ) (356,969 ) Current period change 82,722 1,120 3,097 49,043 135,982 Balance as of December31, 2009 $ 26,187 $ 1,451 $ (331 ) $ (248,294 ) $ (220,987 ) During 2009 and 2007, functional currency exchange rates for most of the company's international operations strengthened against the U.S. dollar, resulting in unrealized translation gains. During 2008, functional currency exchange rates for most of the company's international operations weakened against the U.S. dollar, resulting in unrealized translation losses. The unrealized translation gains and losses resulting from changes in functional currency exchange rates are reflected in the cumulative translation component of accumulated other comprehensive income (loss), net. Most of these unrealized gains or losses relate to cash balances and operating assets and liabilities held in currencies other than the U.S. dollar. |
Recent Accounting Pronouncements | Recent Accounting Pronouncements In January 2010, the FASB issued Accounting Standards Update ("ASU") 2010-06 "Improving Disclosure about Fair Value Measurements." ASU 2010-06 requires additional disclosures regarding fair value measurements, amends disclosures about postretirement benefit plan assets and provides clarification regarding the level of disaggregation of fair value disclosures by investment class. The ASU is effective for interim and annual reporting periods beginning after December15, 2009, except for certain Level3 activity disclosure requirements which will be effective for reporting periods beginning after December15, 2010. Management is currently evaluating the impact of the new disclosure requirements on the company. In October 2009, the FASB issued ASU 2009-13, "Multiple-Deliverable Revenue Arrangements," which amends certain guidance in ASC 605-25, "Revenue Recognition Multiple Element Arrangements." ASU 2009-13 requires entities to allocate revenue in an arrangement using estimated selling prices of the delivered goods and services based on a selling price hierarchy. The amendments eliminate the residual method of revenue allocation and require revenue to be allocated using the relative selling price method. ASU 2009-13 is effective for annual reporting periods beginning on or after June15, 2010 and should be applied on a prospective basis for revenue arrangements entered into or materially modified with early adoption permitted. Management is currently evaluating the impact on the company's financial position, results of operations and cash flows. In June 2009, the FASB issued SFAS No.168, "The FASB Accounting Standards Codification and the Hierarchy of Generally Accepted Accounting Principles" (ASC 105-10). ASC 105-10 establishes the "FASB Accounting Standards Codification" ("Codification"), which officially launched July1, 2009 to become the source of authoritative U.S. generally accepted accounting principles ("GAAP") recognized by the FASB to be applied by nongovernmental entities. ASC 105-10 is effective for financial statements issued for interim and annual periods ending after September15, 2009. The company adopted ASC 105-10 during the third quarter of 2009. The adoption of ASC 105-10 did not have an impact on the company's financial position, results of operations or cash flows. In June 2009, the FASB issued SFAS No.167, "Amendments to FASB Interpretation No.46(R)" (ASC 810-10). ASC 810-10 eliminates exceptions in FIN46(R) related to consolidating qualifying special-purpose entities, contains new criteria for determining the primary beneficiary and requires a continuous reassessment to determine whether a company is the primary beneficiary of a variable interest entity. ASC 810-10 is effective for interim and annual reporting periods beginning after November15, 2009. Management is currently evaluating the impact on the company's financial position, results of operations and cash flows. In December 2007, the FASB issued SFAS No.141(R), "Business Combinations" (ASC 805). ASC 805 replaces SFAS141 and establishes principles and requirements for how an acquirer recognizes and measures the identif |
2_Consolidated Statement of Cas
Consolidated Statement of Cash Flows | |
12 Months Ended
Dec. 31, 2009 USD / shares | |
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS | |
Consolidated Statement of Cash Flows | 2.Consolidated Statement of Cash Flows The changes in operating assets and liabilities as shown in the Consolidated Statement of Cash Flows are comprised of: Year Ended December31, 2009 2008 2007 (in thousands) (Increase) decrease in: Accounts and notes receivable, net $ 281,805 $ (380,239 ) $ (73,368 ) Contract work in progress (359,991 ) 35,651 (56,883 ) Other current assets (25,156 ) 105,848 (49,258 ) Long-term receivables (77,899 ) Other assets 11,420 17,174 (4,142 ) Increase (decrease) in: Trade accounts payable 135,228 159,715 181,197 Advance billings on contracts (94,680 ) 182,545 264,240 Accrued liabilities (70,317 ) 150,262 117,357 Other liabilities (22,241 ) 2,436 16,120 (Increase) decrease in operating assets and liabilities $ (143,932 ) $ 273,392 $ 317,364 Cash paid during the year for: Interest $ 9,190 $ 12,213 $ 26,395 Income taxes 417,844 319,665 216,630 |
Income Taxes
Income Taxes | |
12 Months Ended
Dec. 31, 2009 USD / shares | |
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS | |
Income Taxes | 3.Income Taxes The income tax expense (benefit) included in the Consolidated Statement of Earnings is as follows: Year Ended December31, 2009 2008 2007 (in thousands) Current: Federal $ 289,302 $ 181,837 $ 52,193 Foreign 63,268 136,802 116,067 State and local 21,190 19,153 20,216 Total current 373,760 337,792 188,476 Deferred: Federal 10,293 41,020 (54,807 ) Foreign 12,509 5,496 (17,357 ) State and local 7,351 8,483 (2,937 ) Total deferred 30,153 54,999 (75,101 ) Total income tax expense $ 403,913 $ 392,791 $ 113,375 A reconciliation of U.S. statutory federal income tax expense to income tax expense is as follows: Year Ended December31, 2009 2008 2007 (in thousands) U.S. statutory federal tax expense $ 397,876 $ 399,593 $ 230,967 Increase (decrease) in taxes resulting from: State and local income taxes 21,125 22,503 14,845 Other permanent items, net (4,618 ) 1,729 2,217 Noncontrolling interests (15,504 ) (10,529 ) (5,968 ) Valuation allowance / (reversal), net 3,296 (18,999 ) 12,943 Statute expirations and tax authority settlements (5,568 ) (27,755 ) (130,594 ) Other changes to unrecognized tax positions 14,218 26,214 Other, net (6,912 ) 35 (11,035 ) Total income tax expense $ 403,913 $ 392,791 $ 113,375 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: December31, 2009 2008 (in thousands) Deferred tax assets: Accrued liabilities not currently deductible: Employee compensation and benefits $ 58,986 $ 30,211 Employee time-off accrual 68,636 64,603 Project and non-project reserves 119,932 125,841 Workers' compensation insurance accruals 7,647 9,306 Tax basis of investments in excess of book basis 20,752 50,783 Net operating loss carryforwards 36,931 34,564 Unrealized currency loss 12,816 10,011 Foreign tax credit carryforwards 9,413 Capital loss carryforwards 3,896 4,894 Other comprehensive loss 130,887 212,740 Other 22,164 49,382 Total deferred tax assets 482,647 601,748 Valuation allowance for deferred tax assets (43,354 ) (40,058 ) Deferred tax assets, net $ 439,293 $ 561,690 Deferred tax liabilities: Book basis of property, equipment and other capital costs in excess of tax basis (40 |
Retirement Benefits
Retirement Benefits | |
12 Months Ended
Dec. 31, 2009 USD / shares | |
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS | |
Retirement Benefits | 4.Retirement Benefits The company sponsors contributory and non-contributory defined contribution retirement and defined benefit pension plans for eligible employees worldwide. Contributions to defined contribution retirement plans are based on a percentage of the employee's compensation. Expense recognized for these plans of approximately $99million, $98million and $74million in the years ended December31, 2009, 2008 and 2007, respectively, is primarily related to domestic engineering and construction operations. The defined benefit pension plans are primarily related to domestic and international engineering and construction salaried employees and U.S. craft employees. Contributions to defined benefit pension plans are at least the minimum annual amount required by applicable regulations. Payments to retired employees under these plans are generally based upon length of service, age and/or a percentage of qualifying compensation. Net periodic pension expense for defined benefit pension plans includes the following components: Year Ended December31, 2009 2008 2007 (in thousands) Service cost $ 46,504 $ 37,921 $ 39,032 Interest cost 63,944 60,909 53,068 Expected return on assets (69,260 ) (76,912 ) (70,085 ) Amortization of prior service cost/(credits) 10 10 (96 ) Recognized net actuarial loss 37,300 14,084 16,870 Net periodic pension expense $ 78,498 $ 36,012 $ 38,789 The ranges of assumptions indicated below cover defined benefit pension plans in Australia, Germany, the United Kingdom, the Netherlands and the United States and are based on the economic environment in each host country at the end of each respective annual reporting period. The discount rate assumption for the U.S. defined benefit plan was determined by discounting the expected future benefit payments using yields based on a portfolio of high quality corporate bonds having maturities that are consistent with the expected timing of future payments to plan participants. The discount rates for the non-U.S. defined benefit plans were determined based on high quality bond yield curves with durations consistent with the pension obligations in that country. The expected long-term rate of return on asset assumptions utilizing historical returns, correlations and investment manager forecasts are established for each major asset category including public U.S. and international equities, U.S. private equities and fixed income securities. December31, 2009 2008 2007 For determining projected benefit obligation at year-end: Discount rates 5.75-6.50% 4.75-6.50% 5.50-6.50% Rates of increase in compensation levels 3.00-4.50% 3.00-4.50% 3.00-4.00% For determining net periodic cost for the year: Discount rates 4.75-6.50% 5.50-6.50% 4.50-6.00% Rates of increase in compensation levels 3.00-4.50% 3.00-4.00% 3.00-4.00% Expected long-term rates of return on assets 5.00-8.00% 5.00-8.0 |
Fair Value of Financial Instrum
Fair Value of Financial Instruments | |
12 Months Ended
Dec. 31, 2009 USD / shares | |
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS | |
Fair Value of Financial Instruments | 5.Fair Value of Financial Instruments The estimated fair values of the company's financial instruments that are not measured at fair value on a recurring basis are as follows: December31, 2009 December31, 2008 Carrying Value Fair Value Carrying Value Fair Value (in thousands) Assets: Cash and cash equivalents(1) $ 1,620,861 $ 1,620,861 $ 1,511,991 $ 1,511,991 Marketable securities, current(2) 499,535 499,535 255,061 255,061 Marketable securities, noncurrent(3) 664 664 Notes receivable, including noncurrent portion 38,430 38,430 17,052 17,052 Liabilities: 1.5% Convertible Senior Notes 109,789 177,858 133,194 208,382 5.625% Municipal Bonds 17,740 18,215 17,722 18,290 (1) Consists of bank deposits with original maturities of 90days or less. (2) Consists of held-to-maturity time deposits with original maturities greater than 90days. (3) Consists of a held-to-maturity time deposit which matures in 2013. Fair values were determined as follows: The carrying amounts of cash and cash equivalents, marketable securities, current and notes receivable that are current approximate fair value because of the short-term maturity of these instruments. The carrying amounts of marketable securities, noncurrent are carried at amortized cost which approximates fair value. Notes receivable classified as noncurrent are carried at net realizable value which approximates fair value. The fair value of the Convertible Senior Notes and Municipal Bonds are 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. |
Fair Value, Measurement Inputs | The following table presents, for each of the fair value hierarchy levels required under SFAS No.157, "Fair Value Measurements" (ASC 820-10), the company's assets and liabilities that are measured at fair value on a recurring basis as of December31, 2009 and 2008: December31, 2009 December31, 2008 Fair Value Measurements Using Fair Value Measurements Using Total Quoted Prices in Active Markets for Identical Assets (Level1) Significant Other Observable Inputs (Level2) Significant Unobservable Inputs (Level3) Total Quoted Prices in Active Markets for Identical Assets (Level1) Significant Other Observable Inputs (Level2) Significant Unobservable Inputs (Level3) (in thousands) Assets: Cash and cash equivalents $ 66,167 $ 66,167 (1) $ $ $ 322,333 $ 322,333 (1) $ $ Marketable securities, current 104,059 104,059 (2) 18,509 18,509 (2) Deferred compensation trusts 65,664 65,664 (1) 53,283 53,283 (1) Marketable securities, noncurrent 334,552 334,552 (3) 22,884 22,884 (3) Derivative assets(4) Commodity swap forward contracts 3,159 3,159 Foreign currency contracts 5,436 5,436 Liabilities: Derivative liabilities(4) Commodity swap forward contracts $ 3,091 $ $ 3,091 $ $ 8,247 $ $ 8,247 $ Foreign currency contracts 2,434 2,434 18 18 (1) Consists of registered money market funds valued at fair value, which represents the net asset value of the shares of such funds as of the close of business at the end of the period. The fair value is not materially different from the cost basis. (2) Consists of investments in U.S. agency securities, U.S. Treasury securities, corporate debt securities and other debt securities which are valued at the last reported sale price on the last business day at the end of the period. Securities not traded on the last business day are valued at the last reported bid price. The fair value is not materially different from the cost basis. (3) Consists of investments in U.S. agency securities, U.S. Treasury securities, international government and government-related securities, corporate debt securities and other debt securities with maturities ranging from one to five years which are valued at the last reported sale price on the last business day at the end of the period. Securities not traded on the last business day are valued at the last reported bid price. The fair value is not materially different from the cost basis. (4) See "6. Derivatives and Hedging" for the classification of commodity swap forward contracts and foreign currency contracts on the Consolidated Balance Sheet. Commodity swap forward contracts are estimated using standard pricing models with |
Derivatives and Hedging
Derivatives and Hedging | |
12 Months Ended
Dec. 31, 2009 USD / shares | |
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS | |
Derivatives and Hedging | 6.Derivatives and Hedging In March 2008, the FASB issued SFAS No.161, "Disclosures about Derivative Instruments and Hedging Activities" (ASC 815-10). ASC 815-10 is intended to improve financial reporting about derivative instruments and hedging activities by requiring enhanced disclosures to enable investors to better understand their effects on an entity's financial position, financial performance and cash flows. This standard is effective for fiscal years beginning after December15, 2008. The company adopted this standard during the first quarter of 2009. As of December31, 2009, the company had total gross notional amounts of $109million of foreign exchange forward contracts and $63million of commodity swap forward contracts outstanding relating to engineering and construction contract obligations. The foreign exchange forward contracts are of varying duration, none of which extend beyond April 2011. The commodity swap forward contracts are of varying duration, none of which extend beyond four years. All existing hedges were determined to be highly effective. As a result, the impact to earnings due to hedge ineffectiveness was immaterial for the years ended December31, 2009, 2008 and 2007. The fair values of derivatives designated as hedging instruments under ASC 815 as of December31, 2009 were as follows: Asset Derivatives Liability Derivatives Balance Sheet Location Fair Value Balance Sheet Location Fair Value (in thousands) Commodity swap forward contracts Other current assets $ 1,677 Other accrued liabilities $ 3,037 Foreign currency contracts Other current assets Other accrued liabilities 2,416 Commodity swap forward contracts Other assets 1,482 Noncurrent liabilities 54 Foreign currency contracts Other assets Noncurrent liabilities 18 Total derivatives $ 3,159 $ 5,525 The effect of derivative instruments on the Consolidated Statement of Earnings for the year ended December31, 2009 was as follows: Fair Value Hedges (in thousands) Location of Gain (Loss) Recognized in Earnings Amount of Gain (Loss) Recognized in Earnings Foreign currency contracts Total cost of revenue $ (6,075 ) Foreign currency contracts Corporate administrative and general expense 16,483 Total $ 10,408 Cash Flow Hedges (in thousands) Amount of Gain (Loss) Recognized in OCI Location of Loss Reclassified from Accumulated OCI into Earnings Amount of Loss Reclassified from Accumulated OCI into Earnings Commodity swap forward contracts $ 7 Total cost of revenue $ (5,191 ) Foreign currency contracts (2,578 ) Total cost of revenue (477 ) Total $ (2,571 ) $ (5,668 ) |
Financing Arrangements
Financing Arrangements | |
12 Months Ended
Dec. 31, 2009 USD / shares | |
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS | |
Financing Arrangements | 7.Financing Arrangements The company has a combination of committed and uncommitted lines of credit that total $3.0billion. These lines may be used for revolving loans, letters of credit and general purposes. The committed lines of credit consist of a $1.5billion Senior Credit Facility that matures in 2011 and a $500million letter of credit facility that was executed in the third quarter of 2009 and matures in 2014. Borrowings on the $1.5billion Senior Credit Facility are to bear interest at rates based on the London Interbank Offered Rate ("LIBOR"), plus an applicable borrowing margin. Letters of credit are provided to clients and other third parties in the ordinary course of business to meet bonding requirements. As of December31, 2009, $1.1billion in letters of credit were outstanding under these lines of credit. The company also posts surety bonds as generally required by commercial terms of the contracts, primarily to guarantee its performance on state and local government contracts. Consolidated debt consisted of the following: December31, 2009 2008 (in thousands) Current: 1.5% Convertible Senior Notes $ 109,789 $ 133,194 Long-Term: 5.625% Municipal Bonds 17,740 17,722 In February 2004, the company issued $330million of 1.5percent Convertible Senior Notes (the "Notes") due February15, 2024 and received proceeds of $323million, net of underwriting discounts. In December 2004, the company irrevocably elected to pay the principal amount of the Notes in cash. Interest on the Notes is payable semi-annually on February15 and August15 of each year. The Notes are convertible into shares of the company's common stock par value $0.01 per share, at a conversion rate of 35.9104 shares per each $1,000 principal amount of notes, subject to adjustment as described in the indenture. Notes are convertible during any fiscal quarter if the closing price of the company's common stock for at least 20 trading days in the 30 consecutive trading day-period ending on the last trading day of the previous fiscal quarter is greater than or equal to 130percent of the conversion price in effect on that 30thtrading day (the "trigger price"). The trigger price is currently $36.20, but is subject to adjustment as outlined in the indenture. The trigger price condition was satisfied during the fourth quarter of 2009 and 2008 and the Notes were therefore classified as short-term debt as of December31, 2009 and December31, 2008. Holders of Notes were entitled to require the company to purchase all or a portion of their Notes on February17, 2009 at 100percent of the principal amount plus accrued and unpaid interest; a de minimis amount of Notes were tendered for purchase. Holders of Notes will again be entitled to have the company purchase their Notes at the same price on February15, 2014 and February15, 2019. The Notes are currently redeemable at the option of the company, in whole or in part, at 100percent of the principal amount plus accrued and unpaid interest. In the event of a change of control of the company, each holder may require the company to repurchase the |
Other Noncurrent Liabilities
Other Noncurrent Liabilities | |
12 Months Ended
Dec. 31, 2009 USD / shares | |
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS | |
Other Noncurrent Liabilities | 8.Other Noncurrent Liabilities The company maintains appropriate levels of insurance for business risks. Insurance coverages contain various retention 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 $12million and $25million as of December31, 2009 and 2008, respectively, relating to these liabilities. For certain professional liability risks the company's retention amount under its claims-made insurance policies does not include an accrual for claims incurred but not reported because there is insufficient claims history or other reliable basis to support an estimated liability. The company believes that retained professional liability amounts are manageable risks and are not expected to have a material adverse impact on results of operations or financial position. The company has deferred compensation and retirement arrangements for certain key executives which generally provide for payments upon retirement, death or termination of employment. The deferrals can earn either market-based fixed or variable rates of return, at the option of the participants. As of December31, 2009 and 2008, $318million and $275million, respectively, of obligations related to these plans were included in noncurrent liabilities. To fund these obligations, the company has established non-qualified trusts, which are classified as noncurrent assets. These trusts held primarily marketable equity securities valued at $280million and $225million as of December31, 2009 and 2008, respectively. Periodic changes in fair value of these trust investments, most of which are unrealized, are recognized in earnings, and serve to mitigate participants' investment results which are also reflected in earnings. |
Stock Plans
Stock Plans | |
12 Months Ended
Dec. 31, 2009 USD / shares | |
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS | |
Stock Plans | 9.Stock Plans The company's executive stock plans provide for grants of nonqualified or incentive stock options, restricted stock awards or units and stock appreciation rights ("SARS"). All executive stock plans are administered by the Organization and Compensation Committee of the Board of Directors ("Committee") comprised of outside directors, none of whom are eligible to participate in the plans. Option grant amounts and award dates are established by the Committee. Option grant prices are the fair value of the company's common stock at such date of grant. Options normally extend for 10years and become exercisable over a vesting period determined by the Committee, which can include accelerated vesting for achievement of performance or stock price objectives. Recorded compensation cost for share-based payment arrangements totaled $21million for both of the years ended December31, 2009 and 2008, respectively, and $22million for the year ended December31, 2007, net of recognized tax benefits of $13million for each of the years ended 2009, 2008 and 2007, respectively. As discussed above, the company effected a two-for-one stock split that was paid on July16, 2008 in the form of a stock dividend. Accordingly, restricted stock and stock option activity has been adjusted retroactively for all periods presented to reflect the July16, 2008 stock split. The following table summarizes restricted stock, restricted stock unit and stock option activity: Restricted Stock or Restricted Stock Units Stock Options Number Weighted Average Grant Date Fair Value Per Share Number Weighted Average Exercise Price Per Share Outstanding as of December31, 2006 2,454,168 $ 25.11 1,380,914 $ 25.45 Granted 393,662 44.99 843,640 44.71 Expired or canceled (11,746 ) 43.24 (14,768 ) 36.27 Vested/exercised (858,910 ) 22.88 (665,720 ) 18.83 Outstanding as of December31, 2007 1,977,174 $ 29.93 1,544,066 $ 38.72 Granted 437,908 66.13 548,538 68.41 Expired or canceled (31,072 ) 46.63 (36,052 ) 58.98 Vested/exercised (860,704 ) 26.72 (431,310 ) 31.01 Outstanding as of December31, 2008 1,523,306 $ 41.81 1,625,242 $ 50.34 Granted 622,509 30.87 884,808 30.65 Expired or canceled (21,531 ) 33.63 (34,266 ) 31.55 Vested/exercised (491,226 ) 40.03 (115,302 ) 23.17 Outstanding as of December31, 2009 1,633,058 $ 38.28 2,360,482 $ 44.56 Options exercisable as of December31, 2009 575,048 $ 51.24 Remaining unvested options outstanding and expected to vest 1,731,871 $ 42.41 As of December31, 2009, there were a maximum of 9,676,353 shares available for future grant under the company's various stock plans. Shares available for future grant include shares which may be granted by the Committee as either stock options, on a share-for-share basis, or restricted stock, on the basis of one share for each 1.75 available shares. Restricted stock awa |
Lease Obligations
Lease Obligations | |
12 Months Ended
Dec. 31, 2009 USD / shares | |
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS | |
Lease Obligations | 10.Lease Obligations Net rental expense amounted to approximately $220million, $213million and $169million in the years ended December31, 2009, 2008 and 2007, 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 non-cancelable operating leases are as follows: Year Ended December31, (in thousands) 2010 $ 49,200 2011 56,100 2012 46,300 2013 30,500 2014 23,600 Thereafter 138,900 |
Noncontrolling Interests
Noncontrolling Interests | |
12 Months Ended
Dec. 31, 2009 USD / shares | |
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS | |
Noncontrolling Interests | 11.Noncontrolling Interests In December 2007, the FASB issued SFAS No.160, "Noncontrolling Interests in Consolidated Financial Statements" (ASC 810-10-45). ASC 810-10-45 establishes accounting and reporting standards for ownership interests in subsidiaries held by parties other than the parent, the amount of consolidated net income attributable to the parent and to the noncontrolling interest, changes in a parent's ownership interest and the valuation of retained noncontrolling equity investments when a subsidiary is deconsolidated. This standard is effective for fiscal years beginning after December15, 2008. The company adopted this standard during the first quarter of 2009. As a result of the adoption of ASC 810-10-45, the company has separately disclosed on the face of the Consolidated Statement of Earnings for all periods presented the amount of net earnings attributable to the company and the amount of net earnings attributable to noncontrolling interests. For the year ended December31, 2009, earnings attributable to noncontrolling interests were $50million, and the related tax effect was $2million. For the years ended December31, 2008 and 2007, earnings attributable to noncontrolling interests of $34million and $20million, respectively, and the related tax effects of $1million for each year, were reclassified from total cost of revenue and income tax expense, respectively, to net earnings attributable to noncontrolling interests. Distributions paid to noncontrolling interests were $76million, $24million and $17million for the years ended December31, 2009, 2008 and 2007, respectively. Capital contributions from noncontrolling interests were $4million and $35million for the years ended December31, 2008 and 2007, respectively. |
Contingencies and Commitments
Contingencies and Commitments | |
12 Months Ended
Dec. 31, 2009 USD / shares | |
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS | |
Contingencies and Commitments | 12.Contingencies and Commitments The company and certain of its subsidiaries are involved in litigation in the ordinary course of business. Additionally, the company and certain of its subsidiaries are contingently liable for commitments and performance guarantees arising in the ordinary course of business. The company and certain of its clients have made claims arising from the performance under its contracts. The company recognizes, under ASC605-35-25, certain significant claims for recovery of incurred costs when it is probable that the claim will result in additional contract revenue and when the amount of the claim can be reliably estimated. Recognized claims against clients amounted to $247million and $202million as of December31, 2009 and 2008, respectively, and are primarily included in contract work in progress in the accompanying Consolidated Balance Sheet. Amounts ultimately realized from claims could differ materially from the balances included in the financial statements. The company does not expect that claim recoveries will have a material adverse effect on its consolidated financial position or results of operations. As of December31, 2009, several matters were in the litigation and dispute resolution process. The following discussion provides a background and current status of these matters: Infrastructure Joint Venture Project The company participated in a 50/50 joint venture for a fixed-price transportation infrastructure project in California. This joint venture project was adversely impacted by higher costs due to owner-directed scope changes leading to quantity growth, cost escalation, additional labor and schedule delays. The project opened to traffic in November 2007 and reached construction completion in the second quarter of 2009. As of December31, 2009, the company had recognized in cost and revenue its $52million proportionate share of $104million of costs relating to claims recognized by the joint venture. Total claims-related costs incurred, as well as claims submitted to the client by the joint venture, are in excess of the $104million of recognized costs. As of December31, 2009, the client had withheld liquidated damages totaling $51million from amounts otherwise due the joint venture and had asserted additional claims against the joint venture. The company believes that the claims against the joint venture are without merit and that amounts withheld will ultimately be recovered by the joint venture and has therefore not recognized any reduction in project revenue for its $25.5million proportionate share of the withheld liquidated damages. In addition, the client had drawn down $14.8million against letters of credit provided by the company and its joint venture partner. The company believes that the amounts drawn down against the letters of credit will ultimately be recovered by the joint venture and, as such, has not reserved for the possible non-recovery of the company's $7.4million proportionate share. The company continues to evaluate claims for recoveries and other contingencies on the project. The company continues to incur legal expenses associated with the claims and dispute resolutio |
Variable Interest Entities
Variable Interest Entities | |
12 Months Ended
Dec. 31, 2009 USD / shares | |
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS | |
Variable Interest Entities | 13.Variable Interest Entities In the normal course of business, the company forms partnerships or joint ventures primarily for the execution of single contracts or projects. Applying the guidance of FIN46(R) (ASC 810), the company evaluates qualitative and quantitative information for each partnership or joint venture at inception to determine, first, whether the entity formed is a variable interest entity ("VIE") and, second, if the company is the primary beneficiary and needs to consolidate the entity. Upon the occurrence of certain events outlined in ASC 810, the company reassesses its initial determination of whether the entity is a VIE and whether consolidation is still required. A partnership or joint venture is considered a VIE if either (a)the total equity investment is not sufficient to permit the entity to finance its activities without additional subordinated financial support, (b)characteristics of a controlling financial interest are missing (either the ability to make decisions through voting or other rights, the obligation to absorb the expected losses of the entity or the right to receive the expected residual returns of the entity), or (c)the voting rights of the equity holders are not proportional to their obligations to absorb the expected losses of the entity and/or their rights to receive the expected residual returns of the entity, and substantially all of the entity's activities either involve or are conducted on behalf of an investor that has disproportionately few voting rights. The company is deemed to be the primary beneficiary of the VIE and consolidates the entity if the company will absorb a majority of the entity's expected losses, receive a majority of the entity's expected residual returns or both. The company considers all parties that have direct or implicit variable interests when determining if it is the primary beneficiary. The majority of the partnerships and joint ventures that are formed for the execution of the company's projects are VIEs because the total equity investment is typically nominal and not sufficient to permit the entity to finance its activities without additional subordinated financial support. However, often the VIE does not meet the consolidation requirements of ASC 810. The contractual agreements that define the ownership structure and equity investment at risk, distribution of profits and losses, risks, responsibilities, indebtedness, voting rights and board representation of the respective parties are used to determine if the entity is a VIE and if the company is the primary beneficiary and must consolidate the entity. The partnerships or joint ventures of the company are typically characterized by a 50percent or less, non-controlling, ownership or participation interest, with decision making and distribution of expected gains and losses typically being proportionate to the ownership or participation interest. As such and as noted above, even when the partnership or joint venture is determined to be a VIE, the company is frequently not the primary beneficiary. Should losses occur in the execution of the project for which the VIE was established, the losses would be |
Operations by Business Segment
Operations by Business Segment and Geographical Area | |
12 Months Ended
Dec. 31, 2009 USD / shares | |
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS | |
Operations by Business Segment and Geographical Area | 14.Operations by Business Segment and Geographical Area The company provides professional services in the fields of engineering, procurement, construction and maintenance as well as project management on a global basis and serves a diverse set of industries worldwide including oil and gas, chemical and petrochemicals, transportation, mining and metals, power, life sciences and manufacturing. The company also performs operations and maintenance activities for major industrial clients and, in some cases, operates and maintains their equipment fleet. The five principal operating segments are: Oil Gas, Industrial Infrastructure, Government, Global Services and Power. The Oil Gas segment provides design, engineering, procurement, construction and project management professional services for upstream oil and gas production, downstream refining, chemicals and petrochemicals markets. The Industrial Infrastructure segment provides design, engineering, procurement and construction services to the transportation, wind power, mining and metals, life sciences, telecommunications, manufacturing, commercial and institutional development, microelectronics and healthcare sectors. The Government segment provides engineering, construction, logistics support, contingency response and management and operations services to the U.S. government. The percentage of the company's consolidated revenue from the U.S. government was 9percent, 6percent and 8percent, respectively, during the years ended December31, 2009, 2008 and 2007. The Global Services segment includes operations and maintenance activities, small capital project engineering and execution, site equipment and tool services, industrial fleet services, plant turnaround services and supply chain solutions. In addition, Global Services provides temporary staffing of technical, professional and administrative personnel for projects in all segments. The Power segment provides engineering, procurement, construction, program management, start-up and commissioning and maintenance services to the gas fueled, solid fueled, renewables, nuclear and plant betterment markets. The reportable segments follow the same accounting policies as those described in Major Accounting Policies. Management evaluates a segment's performance based upon segment profit. Intersegment revenue is insignificant. The company incurs cost and expenses and holds certain assets at the corporate level which relate to its business as a whole. Certain of these amounts have been charged to the company's business segments by various methods, largely on the basis of usage. Engineering services for international projects are often performed within the United States or a country other than where the project is located. Revenue associated with these services has been classified within the geographic area where the work was performed. Operating Information by Segment Year Ended December31, 2009 2008 2007 (in millions) External revenue Oil Gas $ 11,826.9 $ 12,946.3 $ 8,369.9 Industrial Infrastructure 4,820.6 3,470.3 3,385.0 Govern |
Quarterly Financial Data
Quarterly Financial Data (Unaudited) | |
12 Months Ended
Dec. 31, 2009 USD / shares | |
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS | |
Quarterly Financial Data (Unaudited) | 15.Quarterly Financial Data (Unaudited) The following is a summary of the quarterly results of operations: First Quarter Second Quarter Third Quarter Fourth Quarter (in thousands, except per share amounts) Year ended December31, 2009 Revenue $ 5,797,889 $ 5,292,554 $ 5,420,488 $ 5,479,366 Cost of revenue 5,448,616 4,975,649 5,108,144 5,156,752 Earnings before taxes(1)(2) 328,500 278,250 265,862 264,176 Net earnings(1)(2) 221,287 176,339 174,004 161,245 Net earnings attributable to Fluor Corporation(1) 204,799 169,270 162,096 148,724 Earnings per share(1)(3) Basic $ 1.13 $ 0.94 $ 0.90 $ 0.83 Diluted 1.12 0.93 0.89 0.82 Year ended December31, 2008 Revenue $ 4,806,981 $ 5,773,570 $ 5,673,818 $ 6,071,525 Cost of revenue 4,549,700 5,370,754 5,341,945 5,740,262 Earnings before taxes(1)(2) 227,776 353,336 301,497 259,085 Net earnings(1)(2) 144,339 217,877 189,331 197,356 Net earnings attributable to Fluor Corporation(1) 136,706 207,957 181,891 189,507 Earnings per share(1)(3)(4) Basic $ 0.77 $ 1.17 $ 1.01 $ 1.04 Diluted 0.74 1.12 1.00 1.03 (1) Includes the impact of adopting Financial Accounting Standards Board Staff Position ("FSP") APB14-1, "Accounting for Convertible Debt Instruments That May Be Settled in Cash upon Conversion (Including Partial Cash Settlement)" (ASC 470-20). (2) Includes the impact of adopting Statement of Financial Accounting Standards No.160, "Noncontrolling Interests in Consolidated Financial Statements" (ASC 810-10-45). (3) Includes the impact of adopting FSP Emerging Issues Task Force 03-6-1, "Determining Whether Instruments Granted in Share-Based Payment Transactions Are Participating Securities" (ASC260-10-45). (4) All share and per share amounts prior to the July16, 2008 two-for-one stock split were adjusted. As such, share and per share amounts for all quarters for the two years presented are on a comparable basis. Net earnings in the third quarter of 2009 included a pre-tax charge of $45million ($0.15 per share) for the non-collectability of a client receivable for a paper mill in the Global Services segment. Cost of revenue in the second quarter of 2008 is reduced by a pre-tax gain of $79million ($0.27 per share) from the sale of the joint venture interest in the Greater Gabbard Project. Earnings before taxes in the fourth quarter of 2008 included a $16million loss related to the sale of a building in the United Kingdom. Net earnings in the fourth quarter of 2008 included $28million of tax benefits resulting from statute expirations and tax settlements that favorably impacted the effective tax rate. |
DOCUMENT AND ENTITY INFORMATION
DOCUMENT AND ENTITY INFORMATION (USD $) | |||
In Billions, except Share data | 12 Months Ended
Dec. 31, 2009 | Feb. 19, 2010
| Jun. 30, 2009
|
Document and Entity Information | |||
Entity Registrant Name | FLUOR CORP | ||
Entity Central Index Key | 0001124198 | ||
Document Type | 10-K | ||
Document Period End Date | 2009-12-31 | ||
Amendment Flag | false | ||
Current Fiscal Year End Date | --12-31 | ||
Entity Well-known Seasoned Issuer | Yes | ||
Entity Voluntary Filers | No | ||
Entity Current Reporting Status | Yes | ||
Entity Filer Category | Large Accelerated Filer | ||
Entity Public Float | 9.2 | ||
Entity Common Stock, Shares Outstanding | 178,799,261 |