0010 - CONDENSED CONSOLIDATED S
0010 - CONDENSED CONSOLIDATED STATEMENT OF EARNINGS (USD $) | |||||||||||||||||||
In Thousands, except Per Share data | 3 Months Ended
Mar. 31, 2009 | 3 Months Ended
Mar. 31, 2008 | |||||||||||||||||
Condensed Consolidated Statement of Earnings | |||||||||||||||||||
TOTAL REVENUE | $5,797,889 | [2] | $4,806,981 | [2] | |||||||||||||||
TOTAL COST OF REVENUE | 5,448,616 | [2] | 4,549,700 | [2] | |||||||||||||||
OTHER (INCOME) AND EXPENSES | |||||||||||||||||||
Corporate administrative and general expense | 25,415 | [2] | 39,520 | [2] | |||||||||||||||
Interest expense | 2,583 | [2] | 5,196 | [2] | |||||||||||||||
Interest income | (7,225) | [2] | (15,211) | [2] | |||||||||||||||
Total cost and expenses | 5,469,389 | [2] | 4,579,205 | [2] | |||||||||||||||
EARNINGS BEFORE TAXES | 328,500 | [2] | 227,776 | [2] | |||||||||||||||
INCOME TAX EXPENSE | 107,213 | [2] | 83,437 | [2] | |||||||||||||||
NET EARNINGS | 221,287 | [2] | 144,339 | [2] | |||||||||||||||
NET EARNINGS ATTRIBUTABLE TO NONCONTROLLING INTERESTS | (16,488) | [2] | (7,633) | [2] | |||||||||||||||
NET EARNINGS ATTRIBUTABLE TO FLUOR CORPORATION | $204,799 | [2] | $136,706 | [2] | |||||||||||||||
EARNINGS PER SHARE | |||||||||||||||||||
BASIC | 1.13 | [1],[2] | 0.77 | [1],[2] | |||||||||||||||
DILUTED | 1.12 | [1],[2] | 0.74 | [1],[2] | |||||||||||||||
SHARES USED TO CALCULATE EARNINGS PER SHARE | |||||||||||||||||||
BASIC | 180,317 | [1],[2] | 175,698 | [1],[2] | |||||||||||||||
DILUTED | 181,204 | [1],[2] | 182,722 | [1],[2] | |||||||||||||||
DIVIDENDS DECLARED PER SHARE | 0.125 | [1],[2] | 0.125 | [1],[2] | |||||||||||||||
[1]All share and per share amounts were adjusted for the July 16, 2008 two-for-one stock split. | |||||||||||||||||||
[2]UNAUDITED |
0020 - CONDENSED CONSOLIDATED B
0020 - CONDENSED CONSOLIDATED BALANCE SHEET (USD $) | |||||||||||||||||||
In Thousands | Mar. 31, 2009
| Dec. 31, 2008
| |||||||||||||||||
Current assets | |||||||||||||||||||
Cash and cash equivalents | $1,470,326 | [1] | $1,834,324 | [1] | |||||||||||||||
Marketable securities | 577,057 | [1] | 273,570 | [1] | |||||||||||||||
Accounts and notes receivable, net | 1,452,748 | [1] | 1,227,224 | [1] | |||||||||||||||
Contract work in progress | 1,046,672 | [1] | 981,125 | [1] | |||||||||||||||
Deferred taxes | 149,076 | [1] | 148,132 | [1] | |||||||||||||||
Other current assets | 262,966 | [1] | 204,143 | [1] | |||||||||||||||
Total current assets | 4,958,845 | [1] | 4,668,518 | [1] | |||||||||||||||
Property, plant and equipment (net of accumulated depreciation of $730,097 and $696,306, respectively) | 801,885 | [1] | 799,836 | [1] | |||||||||||||||
Investments and goodwill | 291,024 | [1] | 279,134 | [1] | |||||||||||||||
Deferred taxes | 388,647 | [1] | 386,613 | [1] | |||||||||||||||
Deferred compensation trusts | 216,689 | [1] | 225,246 | [1] | |||||||||||||||
Other | 62,430 | [1] | 64,230 | [1] | |||||||||||||||
Total assets | 6,719,520 | [1] | 6,423,577 | [1] | |||||||||||||||
Current liabilities | |||||||||||||||||||
Trade accounts payable | 1,190,791 | [1] | 1,164,556 | [1] | |||||||||||||||
Convertible senior notes | 2,101 | [1] | 133,194 | [1] | |||||||||||||||
Advance billings on contracts | 1,078,090 | [1] | 999,107 | [1] | |||||||||||||||
Accrued salaries, wages and benefits | 568,983 | [1] | 607,702 | [1] | |||||||||||||||
Other accrued liabilities | 379,145 | [1] | 257,667 | [1] | |||||||||||||||
Total current liabilities | 3,219,110 | [1] | 3,162,226 | [1] | |||||||||||||||
Long-term debt due after one year | 139,440 | [1] | 17,722 | [1] | |||||||||||||||
Noncurrent liabilities | 503,023 | [1] | 520,445 | [1] | |||||||||||||||
Capital stock | |||||||||||||||||||
Preferred - authorized 20,000,000 shares ($0.01 par value); none issued | 0 | [1] | 0 | [1] | |||||||||||||||
Common - authorized 375,000,000 shares ($0.01 par value); issued and outstanding - 179,851,258 and 181,555,921 shares in 2009 and 2008, respectively | 1,799 | [1] | 1,816 | [1] | |||||||||||||||
Additional paid-in capital | 721,880 | [1] | 778,537 | [1] | |||||||||||||||
Accumulated other comprehensive loss | (358,413) | [1] | (356,969) | [1] | |||||||||||||||
Retained earnings | 2,429,925 | [1] | 2,247,938 | [1] | |||||||||||||||
Total shareholders' equity | 2,795,191 | 2,671,322 | [1] | ||||||||||||||||
Noncontrolling interests | 62,756 | [1] | 51,862 | [1] | |||||||||||||||
Total equity | 2,857,947 | 2,723,184 | [1] | ||||||||||||||||
Total liabilities and equity | $6,719,520 | [1] | $6,423,577 | [1] | |||||||||||||||
[1]UNAUDITED |
0025 - CONDENSED CONSOLIDATED B
0025 - CONDENSED CONSOLIDATED BALANCE SHEET (Parenthetical) (USD $) | |||||||||||||||||||
In Thousands, except Share data | Mar. 31, 2009
| Dec. 31, 2008
| |||||||||||||||||
Condensed Consolidated Balance Sheet | |||||||||||||||||||
Accumulated depreciation, property, plant and equipment | $730,097 | [1] | $696,306 | [1] | |||||||||||||||
Preferred stock, par value | 0.01 | [1] | 0.01 | [1] | |||||||||||||||
Preferred stock, shares authorized | 20,000,000 | [1] | 20,000,000 | [1] | |||||||||||||||
Preferred stock, shares issued | 0 | [1] | 0 | [1] | |||||||||||||||
Common stock, par value | 0.01 | [1] | 0.01 | [1] | |||||||||||||||
Common stock, shares authorized | 375,000,000 | [1] | 375,000,000 | [1] | |||||||||||||||
Common stock, shares issued | 179,851,258 | [1] | 181,555,921 | [1] | |||||||||||||||
Common stock, shares outstanding | 179,851,258 | [1] | 181,555,921 | [1] | |||||||||||||||
[1]UNAUDITED |
0030 - CONDENSED CONSOLIDATED S
0030 - CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS (USD $) | |||||||||||||||||||
In Thousands | 3 Months Ended
Mar. 31, 2009 | 3 Months Ended
Mar. 31, 2008 | |||||||||||||||||
CASH FLOWS FROM OPERATING ACTIVITIES | |||||||||||||||||||
Net earnings | $221,287 | [1] | $144,339 | [1] | |||||||||||||||
Adjustments to reconcile net earnings to cash provided by operating activities | |||||||||||||||||||
Depreciation of fixed assets | 43,687 | [1] | 37,629 | [1] | |||||||||||||||
Amortization of intangibles | 340 | [1] | 464 | [1] | |||||||||||||||
Restricted stock and stock option amortization | 8,209 | [1] | 8,469 | [1] | |||||||||||||||
Deferred compensation trust | 8,557 | [1] | 17,924 | [1] | |||||||||||||||
Deferred compensation obligation | (11,235) | [1] | (17,535) | [1] | |||||||||||||||
Taxes paid on vested restricted stock | (4,694) | [1] | (13,290) | [1] | |||||||||||||||
Deferred taxes | (5,719) | [1] | 12,611 | [1] | |||||||||||||||
Stock option tax benefit | 637 | [1] | (10,105) | [1] | |||||||||||||||
Retirement plan accrual, net of contributions | 4,342 | [1] | (374) | [1] | |||||||||||||||
Changes in operating assets and liabilities | (178,388) | [1] | 38,239 | [1] | |||||||||||||||
Equity in earnings of investees | (10,778) | [1] | (7,410) | [1] | |||||||||||||||
Other items | (160) | [1] | 2,808 | [1] | |||||||||||||||
Cash provided by operating activities | 76,085 | [1] | 213,769 | [1] | |||||||||||||||
CASH FLOWS FROM INVESTING ACTIVITIES | |||||||||||||||||||
Capital expenditures | (53,149) | [1] | (58,803) | [1] | |||||||||||||||
Purchases of marketable securities | (558,112) | [1] | (579,010) | [1] | |||||||||||||||
Proceeds from maturities of marketable securities | 258,541 | [1] | 360,162 | [1] | |||||||||||||||
Investments | (454) | [1] | (721) | [1] | |||||||||||||||
Proceeds from disposal of property, plant and equipment | 10,167 | [1] | 10,634 | [1] | |||||||||||||||
Other items | 2,569 | [1] | (1,677) | [1] | |||||||||||||||
Cash utilized by investing activities | (340,438) | [1] | (269,415) | [1] | |||||||||||||||
CASH FLOWS FROM FINANCING ACTIVITIES | |||||||||||||||||||
Repurchase of common shares | (60,103) | [1] | |||||||||||||||||
Dividends paid | (22,772) | [1] | (22,204) | [1] | |||||||||||||||
Repayment of convertible debt | (9,764) | [1] | |||||||||||||||||
Distributions paid to noncontrolling interests | (6,637) | (906) | |||||||||||||||||
Capital contribution from noncontrolling interests | 3,872 | [1] | |||||||||||||||||
Stock option tax benefit | (637) | [1] | 10,105 | [1] | |||||||||||||||
Stock options exercised | 552 | 2,645 | |||||||||||||||||
Other items | 240 | [1] | (374) | [1] | |||||||||||||||
Cash utilized by financing activities | (99,121) | [1] | (6,862) | [1] | |||||||||||||||
Effect of exchange rate changes on cash | (524) | [1] | 16,637 | [1] | |||||||||||||||
Decrease in cash and cash equivalents | (363,998) | [1] | (45,871) | [1] | |||||||||||||||
Cash and cash equivalents at beginning of period | 1,834,324 | [1] | 1,175,144 | [1] | |||||||||||||||
Cash and cash equivalents at end of period | $1,470,326 | [1] | $1,129,273 | [1] | |||||||||||||||
[1]UNAUDITED |
0050 - NOTES TO CONDENSED CONSO
0050 - NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) | |
3 Months Ended
Mar. 31, 2009 USD / shares | |
Notes to Condensed Consolidated Financial Statements | |
Principles of Consolidation | (1) The Condensed Consolidated Financial Statements do not include footnotes and certain financial information normally presented annually under accounting principles generally accepted in the United States, and therefore should be read in conjunction with the companys December31, 2008 annual report on Form10-K. Accounting measurements at interim dates inherently involve greater reliance on estimates than at year-end. The results of operations for the three months ended March31, 2009 are not necessarily indicative of results that can be expected for the full year. The Condensed Consolidated Financial Statements included herein are unaudited; however, they contain all adjustments (consisting of normal recurring accruals) which, in the opinion of management, are necessary to present fairly its consolidated financial position at March31, 2009 and its consolidated results of operations and cash flows for the three months ended March31, 2009 and 2008. 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 $1 million 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. Certain 2008 amounts have been reclassified to conform with the 2009 presentation. |
Recent Accounting Pronouncements | (2) Recent Accounting Pronouncements In April2009, the Financial Accounting Standards Board (FASB) issued FASB Staff Position (FSP) SFASNo.107-1 and APB 28-1, Interim Disclosures about Fair Value of Financial Instruments (FSP SFAS107-1 and APB 28-1). FSP SFAS107-1 and APB 28-1 amends FASB Statement of Financial Accounting Standard (SFAS) No.107, Disclosures about Fair Value of Financial Instruments, to require disclosures about fair value of financial instruments for interim reporting periods of publicly traded companies as well as in annual financial statements. This FSP also amends Accounting Principles Board Opinion No.28, Interim Financial Reporting, to require those disclosures in summarized financial information at interim reporting periods. This FSP is effective for interim reporting periods ending after June15, 2009. We do not believe this FSP will have a material impact on the companys financial position, results of operations or cash flows. In April2009, the FASB issued FSP SFASNo.115-2 and SFAS No.124-2, Recognition and Presentation of Other-Than-Temporary Impairments (FSP SFAS115-2 and SFAS124-2). FSP SFAS115-2 and SFAS124-2 provides guidance to determine whether the holder of an investment in a debt security for which changes in fair value are not regularly recognized in earnings should recognize a loss in earnings when the investment is impaired. This FSP also improves the presentation and disclosure of other-than-temporary impairments on debt and equity securities in the consolidated financial statements. This FSP is effective for interim reporting periods ending after June15, 2009. We do not believe this FSP will have a material impact on the companys financial position, results of operations or cash flows. In April2009, the FASB issued FSP SFAS No.157-4, Determining Fair Value When the Volume and Level of Activity for the Asset or Liability Have Significantly Decreased and Identifying Transactions That Are Not Orderly (FSP SFAS157-4). FSP SFAS157-4 provides additional guidance for estimating fair value in accordance with FASB Statement No.157, Fair Value Measurements, and emphasizes that even if there has been a significant decrease in the volume and level of activity for the asset or liability and regardless of the valuation technique(s)used, the objective of a fair value measurement remains the same. This FSP is effective for interim reporting periods ending after June15, 2009. We do not believe this FSP will have a material impact on the companys financial position, results of operations or cash flows. In December2008, the FASB issued FSP SFAS No.132(R)-1, Employers Disclosures about Postretirement Benefit Plan Assets (FSP SFAS 132(R)-1). This FSP amends SFAS No.132 (revised 2003), Employers Disclosures about Pensions and Other Postretirement Benefits (SFAS 132(R)) to provide guidance on an employers disclosures about plan assets of a defined benefit pension or other postretirement plan. The additional disclosure requirements under the FSP include expanded disclosure about an entitys investment policies and strategies, the categories of plan assets, concentrations of credit risk and fair value measurements |
Comprehensive Income (Loss) | (3) The components of comprehensive income, net of related tax, are as follows: ThreeMonthsEnded March31, (inthousands) 2009 2008 Net earnings $ 221,287 $ 144,339 Unrealized loss on debt securities (201 ) Unrealized loss on derivative contracts (net of deferred tax benefit of $2,297) (3,825 ) Foreign currency translation adjustment (net of deferred tax benefit of $1,552 and expense of $7,107, respectively) (4,908 ) 9,132 Pension plan adjustment (net of deferred tax expense of $4,493 and benefit of $1,061, respectively) 7,490 (1,768 ) Comprehensive income 219,843 151,703 Comprehensive income attributable to noncontrolling interests (16,488 ) (7,633 ) Comprehensive income attributable to Fluor Corporation $ 203,355 $ 144,070 |
Income taxes | (4) The effective tax rate, based on the companys actual operating results for the three months ended March31, 2009 and 2008, was 32.6 percent and 36.6 percent, respectively. The lower effective tax rate for the three month period ending March31, 2009 was due to the recognition of a deferred tax benefit associated with taxes on unremitted foreign earnings and increased earnings attributable to noncontrolling interests for which the taxes are not paid by the company. The company conducts business globally and, as a result, the company or one or more of its subsidiaries files income tax returns in the U.S. federal jurisdiction and various state and foreign jurisdictions. In the normal course of business the company is subject to examination by taxing authorities throughout the world, including such major jurisdictions as Australia, Canada, the Netherlands, South Africa, the United Kingdom and the United States. Although the company believes its reserves for its tax positions are reasonable, the final outcome of tax audits could be materially different, both favorably and unfavorably. With few exceptions, the company is no longer subject to U.S. federal, state and local, or non-U.S. income tax examinations for years before 2003. |
Consolidated Statement of Cash Flows | (5) Cash paid for interest was $4.3 million and $4.2 million for the three months ended March31, 2009 and 2008, respectively. Income tax payments, net of receipts, were $41.9 million and $30.3 million during the three-month periods ended March31, 2009 and 2008, respectively. |
Earnings Per Share, Basic and Diluted | (6) 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 (EPS) have been adjusted retroactively for all periods presented to reflect the July16, 2008 stock split. In June2008, the FASB issued FSP Emerging Issues Task Force (EITF) 03-6-1, Determining Whether Instruments Granted in Share-Based Payment Transactions Are Participating Securities (FSP EITF 03-6-1). FSP EITF 03-6-1 clarified that all outstanding unvested share-based payment awards that contain rights to nonforfeitable dividends participate in undistributed earnings with common shareholders. The companys 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. FSP EITF 03-6-1 requires that the two-class method of computing basic EPS be applied. Under the two-class method, the companys stock options are not considered to be participating securities. FSP EITF 03-6-1 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 for the three months ended March31, 2009 and 2008 as a result of the adoption of FSP EITF 03-6-1. The calculation of the basic and diluted EPS for the three months ended March31, 2009 and 2008 are presented below: ThreeMonthsEnded March31, (inthousands,exceptpershareamounts) 2009 2008 Basic EPS: Net earnings attributable to Fluor Corporation $ 204,799 $ 136,706 Amount allocable to common shareholders 99.16 % 99.00 % Net earnings allocable to common shareholders $ 203,079 $ 135,339 Weighted average common shares outstanding 180,317 175,698 Basic earnings per share $ 1.13 $ 0.77 Diluted EPS: Net earnings allocable to common shareholders $ 203,079 $ 135,339 Weighted average common shares outstanding 180,317 175,698 Diluted effect: Employee stock options 24 394 Conversion equivalent of dilutive convertible debt 863 6,630 Weighted average diluted shares outstanding 181,204 182,722 Diluted earnings per share $ 1.12 $ 0.74 Anti-dilutive securities not included above 1,973 336 The table below sets forth the calculation of the percentage of net earnings allocable to common shareholders under the two-class method: ThreeMonthsEnded March31, (sharesinthousands) 2009 2008 Numerator: Weighted average participating common shares 180,317 175,698 Denominator: Weighted average participating common shares 180,317 175,698 Add: Weighted average restricted shares 1,520 1,773 Weighted average participating shares 181,837 177,471 Portion allocable to common shareholders 99.16 % 99.00 % |
Fair Value, Measurement Inputs | (7) The following table presents, for each of the fair value hierarchy levels required under SFAS No.157, Fair Value Measurements, the companys assets and liabilities that are measured at fair value on a recurring basis at March31, 2009: FairValueMeasurementsUsing (inthousands) Total QuotedPrices inActive Marketsfor IdenticalAssets (Level1) Significant Other Observable Inputs (Level2) Significant Unobservable Inputs (Level3) Assets Investments in debt securities(1) $ 36,984 $ 36,984 $ $ Commodity swap forward contracts(2) 744 744 Foreign currency contracts(2) 3,700 3,700 Liabilities Commodity swap forward contracts(2) $ 13,003 $ $ 13,003 $ Foreign currency contracts(2) 607 607 (1) Investments in debt securities of $16 million are classified as current assets in marketable securities on the Condensed Consolidated Balance Sheet. The remaining $21 million is non-current and is therefore included in other assets on the Condensed Consolidated Balance Sheet. (2) See Note 8 for the classification of commodity swap forward contracts and foreign currency contracts on the Condensed Consolidated Balance Sheet. |
Derivative Instruments and Hedging Activities | (8) In March2008, the FASB issued SFASNo.161, Disclosures about Derivative Instruments and Hedging Activities (SFAS 161). SFAS 161 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 entitys 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. The company mitigates certain financial exposures, including currency and commodity price risk associated with engineering and construction contracts 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 (SFAS 133). 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 derivatives change in fair value is recognized in earnings immediately. The company does not enter into derivative transactions for speculative or trading purposes. At March31, 2009, the company had total gross notional amounts of $124 million of foreign exchange forward contracts and $84 million 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 November2010. The commodity swap forward contracts are of varying duration, none of which extend beyond 5 years. All existing hedges are determined to be highly effective. As a result, the impact to earnings due to hedge ineffectiveness is immaterial for the three months ended March31, 2009 and 2008, respectively. The fair values of derivatives designated as hedging instruments under SFAS 133 as of March31, 2009 were as follows: AssetDerivatives LiabilityDerivatives (inthousands) BalanceSheet Location FairValue BalanceSheet Location FairValue Commodity swap forward contracts Other current assets $ 118 Other a |
Retirement Benefits | (9) Net periodic pension expense for defined benefit pension plans includes the following components: ThreeMonthsEnded March31, (inthousands) 2009 2008 Service cost $ 11,444 $ 9,631 Interest cost 15,431 15,621 Expected return on assets (16,741 ) (19,741 ) Amortization of prior service cost 2 2 Recognized net actuarial loss 8,997 3,285 Net periodic pension expense $ 19,133 $ 8,798 The company currently expects to fund approximately $70 million to $90 million into its defined benefit pension plans during 2009, which is expected to be in excess of the minimum funding required. During the three months ended March31, 2009, contributions of approximately $15 million were made by the company. Net periodic postretirement benefit cost includes the following components: ThreeMonthsEnded March31, (inthousands) 2009 2008 Service cost $ $ Interest cost 348 350 Expected return on assets Amortization of prior service cost Recognized net actuarial loss 197 352 Net periodic postretirement benefit cost $ 545 $ 702 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. |
Financing Arrangements | (10) In February2004, the company issued $330 million of 1.5 percent Convertible Senior Notes (the Notes) due February15, 2024 and received proceeds of $323 million, net of underwriting discounts. In December2004, the company irrevocably elected to pay the principal amount of the Notes in cash. Notes are convertible if a specified trading price of the companys common stock (the trigger price) is achieved and maintained for a specified period. The trigger price condition was satisfied during the fourth quarter of 2008 and the Notes were therefore classified as short-term debt as of December31, 2008. During the first quarter of 2009, the trigger price condition was not satisfied and the Notes have therefore been classified as long-term debt as of March31, 2009, except for $2.1 million of Notes which were in the process of being converted. During the three months ended March31, 2009, holders converted $10 million of the Notes in exchange for the principal balance owed in cash plus 56,934 shares of the companys common stock. In May2008, the FASB issued FSP APB 14-1, Accounting for Convertible Debt Instruments That MayBe Settled in Cash upon Conversion (Including Partial Cash Settlement) (FSP APB 14-1). FSP APB 14-1 requires the issuer of a convertible debt instrument to separately account for the liability and equity components in a manner that reflects the entitys nonconvertible debt borrowing rate when interest expense is recognized in subsequent periods. FSP APB 14-1 is effective for financial statements issued for fiscal years beginning after December15, 2008 and is required to be applied retrospectively to all periods presented. The company adopted FSP APB 14-1 during the first quarter of 2009. As a result of the adoption of FSP APB 14-1, the company recognized a cumulative-effect adjustment consisting of an increase to additional paid-in capital of $24.4 million, net of deferred taxes of $0.2 million, and a reduction of debt of $0.4 million for the equity component of the Notes. The December31, 2008 balance of retained earnings was reduced by $24.2 million. Additionally, interest expense increased by $0.4 million and $2.1 million for the three months ended March31, 2009 and 2008, respectively. The increase to interest expense resulted in a tax benefit of $0.2 million and $0.8 million for the three months ended March31, 2009 and 2008, respectively. Net earnings attributable to Fluor Corporation for three months ended March31, 2009 and 2008 were reduced by $0.2 million (less than $0.01 per share) and $1.3 million ($0.01 per share), respectively. The following table presents information related to the liability and equity components of the Notes: (inthousands) March31, 2009 December31, 2008 Carrying value of the equity component $ 24,448 $ 24,448 Principal amount of the liability component $ 123,814 $ 133,578 Less: Unamortized discount of the liability component 384 Carrying value of the liability component $ 123,814 $ 133,194 The Notes are convertible into shares of the companys common stock (par value $0.01 per share) at a conversion rate of 35.9104 s |
Stock Plans | (11) The companys director and executive stock plans are described, and informational disclosures provided, in the notes to the Consolidated Financial Statements included in the Form10-K for the year ended December31, 2008. Restricted stock units representing 602,535 and 429,678 were granted in the first quarter of 2009 and 2008, respectively, at weighted-average per share prices of $30.46 and $65.86, respectively. The awards for 2009 and 2008 vest ratably over three and five years, respectively. During the first quarter of 2009 and 2008, options for the purchase of 872,112 shares at a weighted average price of $30.46 per share and 546,018 shares at a weighted average price of $68.36 per share, respectively, were awarded. The option awards for 2009 and 2008 vest ratably over three and five years, respectively. The option awards expire ten years after the grant date. |
Adoption of SFAS 160 | (12) In December2007, the FASB issued SFAS No.160, Noncontrolling Interests in Consolidated Financial Statements (SFAS 160). SFAS 160 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 parents 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 SFAS 160, the company has separately disclosed on the face of the Condensed 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 three months ended March31, 2009, earnings attributable to noncontrolling interests was $17.0 million and the related tax effect was $0.5 million. For the three months ended March31, 2008, earnings attributable to noncontrolling interests of $8.2 million and the related tax effect of $0.6 million were reclassified from total cost of revenue and income tax expense, respectively, to net earnings attributable to noncontrolling interest. Distributions paid to noncontrolling interests were $6.6 million and $0.9 million for the three months ended March31, 2009 and 2008, respectively. Capital contributions from noncontrolling interests were $3.9 million for the three months ended March31, 2008. |
Contingencies and Commitments | (13) 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 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 $206 million and $202 million at March31, 2009 and December31, 2008, respectively, and are primarily included in contract work in progress in the accompanying Condensed 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 March31, 2009, several matters are 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 participates in a 50/50 joint venture that is completing a fixed-price transportation infrastructure project in California. The project continues to be subject to circumstances resulting in additional cost including owner-directed scope changes leading to quantity growth, cost escalation, additional labor and schedule delays. The company continues to evaluate the impact of these circumstances on estimated total project cost, as well as claims for recoveries and other contingencies on the project. The company continues to incur legal expenses associated with the claims and dispute resolution process. As of March31, 2009, the company has recognized in cost and revenue its $52million proportionate share of $104 million of cost 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 $104 million of recognized cost. As of March31, 2009, the client had withheld liquidated damages totaling $51million from amounts otherwise due the joint venture and has 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 $25.5 million proportionate share of the withheld liquidated damages. In addition, the client has drawn down $14.8 million 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 companys $7.4 million proportionate share. The project opened to traffic |
Guarantees | (14) In the ordinary course of business, the company enters into various agreements providing financial or performance assurances to clients on behalf of certain unconsolidated partnerships, joint ventures and other jointly executed contracts. These agreements are entered into primarily to support the project execution commitments of these entities. The guarantees have various expiration dates ranging from mechanical completion of the facilities being constructed to a period extending beyond contract completion in certain circumstances. The maximum potential payment amount of an outstanding performance guarantee is the remaining cost of work to be performed by or on behalf of third parties under engineering and construction contracts. Amounts that may be required to be paid in excess of estimated costs to complete contracts in progress are not estimable. For cost reimbursable contracts, amounts that may become payable pursuant to guarantee provisions are normally recoverable from the client for work performed under the contract. For lump-sum or fixed-price contracts, this amount is the cost to complete the contracted work less amounts remaining to be billed to the client under the contract. Remaining billable amounts could be greater or less than the cost to complete. In those cases where costs exceed the remaining amounts payable under the contract the company may have recourse to third parties, such as owners, co-venturers, subcontractors or vendors for claims. As of March31, 2009, no material changes to the amount of financial or performance guarantees outstanding have occurred since the filing of the companys December31, 2008 annual report on Form10-K. 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 March31, 2009, there are no material guarantees outstanding. |
Variable Interest Entities | (15) 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 FASB Interpretation No.46 (Revised) Consolidation of Variable Interest Entities (FIN46(R)), 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 FIN 46(R), 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 entitys 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 entitys expected losses, receive a majority of the entitys 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 companys 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 FIN 46(R). 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 50 percent 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 t |
Operations by Business Segment and Geographical Area | (16) Operating information by segment is as follows: ThreeMonthsEnded March31, ExternalRevenue(inmillions) 2009 2008 Oil Gas $ 3,369.6 $ 2,603.3 Industrial Infrastructure 1,176.5 796.2 Government 370.8 279.7 Global Services 542.1 706.2 Power 338.9 421.6 Total external revenue $ 5,797.9 $ 4,807.0 ThreeMonthsEnded March31, SegmentProfit(inmillions) 2009 2008 Oil Gas $ 200.8 $ 137.5 Industrial Infrastructure 28.1 29.4 Government 27.7 7.7 Global Services 55.5 53.5 Power 20.2 21.0 Total segment profit $ 332.3 $ 249.1 A reconciliation of the segment information to consolidated amounts is as follows: ThreeMonthsEnded March31, ReconciliationofSegmentProfittoEarningsBeforeTaxes(inmillions) 2009 2008 Total segment profit $ 332.3 $ 249.1 Corporate administrative and general expense (25.4 ) (39.5 ) Interest income, net 4.6 10.0 Earnings attributable to noncontrolling interests 17.0 8.2 Earnings before taxes $ 328.5 $ 227.8 Total assets in the Global Services segment were $847 million at March31, 2009 compared to $763 million at December31, 2008. This increase in total assets corresponded to an increase in working capital to support the equipment and operations and maintenance business lines. Total assets in the Power segment increased to $174 million at March31, 2009 from $130 million at December31, 2008 due to additional working capital associated with project execution activities. |
9999 - DOCUMENT AND ENTITY INFO
9999 - DOCUMENT AND ENTITY INFORMATION (USD $) | |||
3 Months Ended
Mar. 31, 2009 | Apr. 30, 2009
| Jun. 30, 2008
| |
Document and Entity Information | |||
Entity Registrant Name | FLUOR CORP | ||
Entity Central Index Key | 0001124198 | ||
Document Type | 10-Q | ||
Document Period End Date | 2009-03-31 | ||
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 | $8,200,000,000 | ||
Entity Common Stock, Shares Outstanding | 179,839,330 |