Fluor (FLR) 10-Q 9 Nov 09 2009 Q3 Quarterly report Financial data

CONDENSED CONSOLIDATED STATEMEN

CONDENSED CONSOLIDATED STATEMENT OF EARNINGS (USD $)
In Thousands, except Per Share data	3 Months Ended Sep. 30, 2009	3 Months Ended Sep. 30, 2008	9 Months Ended Sep. 30, 2009	9 Months Ended Sep. 30, 2008
TOTAL REVENUE	$5,420,488	$5,673,818	$16,510,931	$16,254,369
TOTAL COST OF REVENUE
Cost of revenue	5,108,144	5,341,945	15,532,409	15,341,608
Gain on sale of joint venture interest				(79,209)
OTHER (INCOME) AND EXPENSES
Corporate administrative and general expense	49,622	45,089	117,040	146,320
Interest expense	2,585	4,457	7,656	15,142
Interest income	(5,725)	(19,170)	(18,786)	(52,101)
Total cost and expenses	5,154,626	5,372,321	15,638,319	15,371,760
EARNINGS BEFORE TAXES	265,862	301,497	872,612	882,609
INCOME TAX EXPENSE	91,858	112,166	300,982	331,062
NET EARNINGS	174,004	189,331	571,630	551,547
NET EARNINGS ATTRIBUTABLE TO NONCONTROLLING INTERESTS	(11,908)	(7,440)	(35,465)	(24,993)
NET EARNINGS ATTRIBUTABLE TO FLUOR CORPORATION	$162,096	$181,891	$536,165	$526,554
EARNINGS PER SHARE
BASIC (in dollars per share)	0.9	1.01	2.96	2.95
DILUTED (in dollars per share)	0.89	$1	2.93	2.86
SHARES USED TO CALCULATE EARNINGS PER SHARE
BASIC (in shares)	178,859	178,253	179,410	176,740
DILUTED (in shares)	181,124	181,110	181,175	182,724
DIVIDENDS DECLARED PER SHARE (in dollars per share)	0.125	0.125	0.375	0.375

CONDENSED CONSOLIDATED BALANCE

CONDENSED CONSOLIDATED BALANCE SHEET (USD $)
In Thousands	Sep. 30, 2009	Dec. 31, 2008
Current assets
Cash and cash equivalents	$1,328,017	$1,834,324
Marketable securities	691,748	273,570
Accounts and notes receivable, net	1,168,539	1,227,224
Contract work in progress	1,309,589	981,125
Deferred taxes	198,808	148,132
Other current assets	214,271	204,143
Total current assets	4,910,972	4,668,518
Marketable securities, noncurrent	340,099	22,884
Property, plant and equipment (net of accumulated depreciation of $796,181 and $696,306, respectively)	832,034	799,836
Investments and goodwill	318,314	279,134
Deferred taxes	345,913	386,613
Deferred compensation trusts	261,870	225,246
Other	56,115	41,346
Total assets	7,065,317	6,423,577
Current liabilities
Trade accounts payable	1,329,190	1,164,556
Convertible senior notes	118,577	133,194
Advance billings on contracts	908,744	999,107
Accrued salaries, wages and benefits	577,171	607,702
Other accrued liabilities	395,171	257,667
Total current liabilities	3,328,853	3,162,226
Long-term debt due after one year	17,736	17,722
Noncurrent liabilities	551,701	520,445
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 - 178,941,284 and 181,555,921 shares in 2009 and 2008, respectively	1,794	1,816
Additional paid-in capital	684,142	778,537
Accumulated other comprehensive loss	(282,942)	(356,969)
Retained earnings	2,716,168	2,247,938
Total shareholders' equity	3,119,162	2,671,322
Noncontrolling interests	47,865	51,862
Total equity	3,167,027	2,723,184
Total liabilities and equity	$7,065,317	$6,423,577

1_CONDENSED CONSOLIDATED BALANC

CONDENSED CONSOLIDATED BALANCE SHEET (Parenthetical) (USD $)
In Thousands, except Share data	Sep. 30, 2009	Dec. 31, 2008
Condensed Consolidated Balance Sheet
Accumulated depreciation, property, plant and equipment (in dollars)	$796,181	$696,306
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)	178,941,284	181,555,921
Common stock, shares outstanding (in shares)	178,941,284	181,555,921

2_CONDENSED CONSOLIDATED STATEM

CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS (USD $)
In Thousands	9 Months Ended Sep. 30, 2009	9 Months Ended Sep. 30, 2008
CASH FLOWS FROM OPERATING ACTIVITIES
Net earnings	$571,630	$551,547
Adjustments to reconcile net earnings to cash provided by operating activities:
Depreciation of fixed assets	134,478	121,344
Amortization of intangibles	935	1,318
Gain on sale of joint venture interest		(79,209)
Restricted stock and stock option amortization	25,325	27,067
Deferred compensation trust	(36,624)	46,687
Deferred compensation obligation	38,440	(50,632)
Taxes paid on vested restricted stock	(5,614)	(16,666)
Deferred taxes	(54,445)	(7,059)
Stock option tax benefit	284	(16,030)
Retirement plan accrual, net of contributions	27,923	(10,150)
Change in operating assets and liabilities	(145,629)	308,026
Equity in earnings of investees, net of dividends	(13,513)	(10,715)
Other items	(3,257)	8,374
Cash provided by operating activities	539,933	873,902
CASH FLOWS FROM INVESTING ACTIVITIES
Capital expenditures	(174,873)	(211,782)
Purchases of marketable securities	(1,520,272)	(1,310,863)
Proceeds from sales and maturities of marketable securities	805,156	1,112,938
Investments	(1,590)	(2,210)
Proceeds from disposal of property, plant and equipment	24,745	38,043
Proceeds from sale of joint venture interest		79,209
Other items	2,861	(780)
Cash utilized by investing activities	(863,973)	(295,445)
CASH FLOWS FROM FINANCING ACTIVITIES
Repurchase of common shares	(113,912)
Dividends paid	(68,171)	(67,182)
Repayment of convertible debt	(15,001)	(167,093)
Distributions paid to noncontrolling interests	(42,714)	(18,704)
Capital contribution from noncontrolling interests		3,872
Stock option tax benefit	(284)	16,030
Stock options exercised	2,391	12,712
Other items	(4,225)	(350)
Cash utilized by financing activities	(241,916)	(220,715)
Effect of exchange rate changes on cash	59,649	(17,943)
(Decrease) increase in cash and cash equivalents	(506,307)	339,799
Cash and cash equivalents at beginning of period	1,834,324	1,175,144
Cash and cash equivalents at end of period	$1,328,017	$1,514,943

Principles of Consolidation

Principles of Consolidation
	9 Months Ended Sep. 30, 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 and nine months ended September30, 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 September30, 2009 and its consolidated results of operations and cash flows for the three and nine months ended September30, 2009 and 2008. Management adopted Statement of Financial Accounting Standard (SFAS) No.165, Subsequent Events (Financial Accounting Standards Board (FASB) Accounting Standards Codification (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 quarterly report is filed on Form10-Q. Certain 2008 amounts have been reclassified to conform with the 2009 presentation.

Recent Accounting Pronouncement

Recent Accounting Pronouncements
	9 Months Ended Sep. 30, 2009 USD / shares
Notes to Condensed Consolidated Financial Statements
Recent Accounting Pronouncements	(2) Recent Accounting Pronouncements In October2009, the FASB issued Accounting Standards Update (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 companys financial position, results of operations and cash flows. In June2009, 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 a material impact on the companys financial position, results of operations or cash flows. In June2009, the FASB issued SFAS No.167, Amendments to FASB Interpretation No.46(R) (SFAS 167), which has not yet been codified in the ASC. SFAS 167 eliminates exceptions in FASB Interpretation No.46 (Revised) Consolidation of Variable Interest Entities (FIN46(R)) related to consolidating qualifying special-purpose entities, contains new criteria for determining the primary beneficiary and increases the frequency of required reassessments to determine whether a company is the primary beneficiary of a variable interest entity. SFAS 167 is effective for interim and annual reporting periods beginning after November15, 2009. Management is currently evaluating the impact on the companys financial position, results of operations and cash flows. In December2008, the FASB issued FASB Staff Position (FSP) SFAS No.132(R)-1, Employers Disclosures about Postretirement Benefit Plan Assets (ASC 715-20). ASC 715-20 amends SFAS No.132 (revised 2003), Employers Disclosures about Pensions and Other Postretirement Benefits to provide guidance on an employers disclosures about plan assets of a defined benefit pension or other postretirement plan. The additional disclosure requirements under ASC 715-20 include expanded disclosure about an entitys investment policies and strategies, the categories of plan assets, concentrations of credit risk and fair value measurements of plan assets. This standard is effective for fiscal years ending after December15, 2009. Management is currently evaluating the impact on th

Comprehensive Income

Comprehensive Income
	9 Months Ended Sep. 30, 2009 USD / shares
Notes to Condensed Consolidated Financial Statements
Comprehensive Income	(3) The components of comprehensive income, net of related tax, are as follows: ThreeMonthsEnded September30, NineMonthsEnded September30, (inthousands) 2009 2008 2009 2008 Net earnings $ 174,004 $ 189,331 $ 571,630 $ 551,547 Unrealized gain (loss) on debt securities(1) 1,318 (96 ) 1,347 (96 ) Unrealized loss on derivative contracts(2) (997 ) (770 ) (1,320 ) (770 ) Foreign currency translation adjustment(3) 22,960 (55,436 ) 66,056 (44,109 ) Pension plan adjustment(4) 3,703 9,219 7,944 9,685 Comprehensive income 200,988 142,248 645,657 516,257 Comprehensive income attributable to noncontrolling interests (11,908 ) (7,440 ) (35,465 ) (24,993 ) Comprehensive income attributable to Fluor Corporation $ 189,080 $ 134,808 $ 610,192 $ 491,264 (1) Net of deferred tax expense of $0.8 million and $1.0 million during the three and nine months ended September30, 2009, respectively. Deferred tax benefit related to the three and nine months ended September30, 2008 was immaterial. (2) Net of deferred tax benefit of $0.6 million and $0.8 million during the three and nine months ended September30, 2009, respectively, and deferred tax benefit of $0.5 million during the three and nine months ended September30, 2008. (3) Net of deferred tax expense of $13.7 million and $39.6 million during the three and nine months ended September30, 2009, respectively, and deferred tax benefit of $33.2 million and $24.8 million during the three and nine months ended September30, 2008, respectively. (4) Net of deferred tax expense of $2.3 million and $4.8 million during the three and nine months ended September30, 2009, respectively, and deferred tax expense of $5.5 million and $5.8 million during the three and nine months ended September30, 2008, respectively.

Income taxes

Income taxes
	9 Months Ended Sep. 30, 2009 USD / shares
Notes to Condensed Consolidated Financial Statements
Income taxes	(4) The effective tax rate, based on the companys operating results for the three and nine months ended September30, 2009 was 34.6 percent and 34.5 percent, respectively, compared to 37.2 percent and 37.5 percent for the corresponding periods of 2008. The lower effective tax rate for the three and nine month periods ending September30, 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

Consolidated Statement of Cash Flows
	9 Months Ended Sep. 30, 2009 USD / shares
Notes to Condensed Consolidated Financial Statements
Consolidated Statement of Cash Flows	(5) Cash paid for interest was $7.9 million and $10.5 million for the nine months ended September30, 2009 and 2008, respectively. Income tax payments, net of receipts, were $319.2 million and $268.0 million during the nine month periods ended September30, 2009 and 2008, respectively.

Earnings Per Share, Basic and D

Earnings Per Share, Basic and Diluted
	9 Months Ended Sep. 30, 2009 USD / shares
Notes to Condensed Consolidated Financial Statements
Earnings Per Share, Basic and Diluted	(6) 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 (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 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. ASC 260-10-45 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. 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. The calculation of the basic and diluted EPS for the three and nine months ended September30, 2009 and 2008 are presented below: ThreeMonths Ended September30, NineMonths Ended September30, (inthousands,exceptpershareamounts) 2009 2008 2009 2008 Basic EPS: Net earnings attributable to Fluor Corporation $ 162,096 $ 181,891 $ 536,165 $ 526,554 Amount allocable to common shareholders 99.07 % 99.13 % 99.10 % 99.08 % Net earnings allocable to common shareholders $ 160,589 $ 180,309 $ 531,340 $ 521,710 Weighted average common shares outstanding 178,859 178,253 179,410 176,740 Basic earnings per share $ 0.90 $ 1.01 $ 2.96 $ 2.95 Diluted EPS: Net earnings allocable to common shareholders $ 160,589 $ 180,309 $ 531,340 $ 521,710 Weighted average common shares outstanding 178,859 178,253 179,410 176,740 Diluted effect: Employee stock options 339 341 170 401 Conversion equivalent of dilutive convertible debt 1,926 2,516 1,595 5,583 Weighted average diluted shares outstanding 181,124 181,110 181,175 182,724 Diluted earnings per share $ 0.89 $ 1.00 $ 2.93 $ 2.86 Anti-dilutive securities not included above 541 543 971 235 The table below sets forth the calculation of the percentage of net earnings allocable to common shareholders under the two-class method: ThreeMonths Ended September30, NineMonths Ended September30, (sharesinthousands) 2009 2008 2009 2008 Numerator: Weighted average participating common shares 178,859 178,253 179,410 176,740 Denominator: Weighted average participating common shares 178,859 178,253 179,410 176,740 Add: Weighted average restricted shares

Fair Value Disclosure

Fair Value Disclosure
	9 Months Ended Sep. 30, 2009 USD / shares
Notes to Condensed Consolidated Financial Statements
Fair Value of Financial Instruments	(7) In April2009, the FASB issued FSP SFASNo.107-1 and APB 28-1, Interim Disclosures about Fair Value of Financial Instruments (ASC 825-10-50). ASC 825-10-50 amends SFAS No.107, Disclosures about Fair Value of Financial Instruments, (ASC 825-10) to require disclosures about fair value of financial instruments for interim reporting periods of publicly traded companies as well as in annual financial statements. ASC 825-10-50 also amends Accounting Principles Board Opinion No.28, Interim Financial Reporting, (ASC 270-10) to require those disclosures in summarized financial information at interim reporting periods. ASC 825-10-50 was effective for interim reporting periods ending after June15, 2009. The company adopted this standard during the second quarter of 2009. The adoption of the provisions of ASC 825-10-50 did not have a material impact on the companys financial position, results of operations or cash flows. The estimated fair values of the companys financial instruments that are not measured at fair value on a recurring basis are as follows as of September30, 2009: (in thousands) Carrying Value Fair Value Assets: Cash and cash equivalents(1) $ 1,236,392 $ 1,236,392 Marketable securities(2) 597,288 597,288 Marketable securities, noncurrent(3) 659 659 Notes receivable, including noncurrent portion 28,938 28,938 Liabilities: 1.5% Convertible Senior Notes $ 118,577 $ 221,739 5.625% Municipal Bonds 17,736 18,212 (1) Consists of bank deposits with original maturities of 90 days or less. (2) Consists of held-to-maturity time deposits with original maturities greater than 90 days. (3) Consists of held-to-maturity time deposits with remaining maturities greater than 365 days as of September30, 2009. Fair values were determined as follows: The carrying amounts of cash and cash equivalents, marketable securities and short-term notes receivable approximate fair value because of the short-term maturity of these instruments. 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 companys assets and liabilities that are measured at fair value on a recurring basis at September30, 2009: FairValueMeasurementsUsing (in thousands) Total QuotedPrices inActive Marketsfor IdenticalAssets (Level1) Significant Other Observable Inputs (Level2) Significant Unobservable Inputs (Level3) Assets: Cash and cash equivalents $ 91,625 $ 85,626 (1) $ 5,999 (2) $ Marketable securities 94,460 94,460 (2) Deferred compensation trusts 55,511 55,511 (1) Marketable securities, noncurrent 339,440 339,440 (3) Derivative assets(4) Commodity swap forward contracts 893 893 Liabilities: Derivative liabilities(4) Commodity swap forward contracts $ 6,655 $ $ 6,655 $ Foreign currency contracts 6,614 6,614 (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 and corporate 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 securities and corporate debt securities with maturities ranging from one to five years. The fair value is not materially different from the cost basis. (4) See Note 8 for the classification of commodity swap forward contracts and foreign currency contracts on the Condensed Consolidated Balance Sheet. Foreign currency contracts are estimated by obtaining quotes from brokers. Commodity swap forward contracts are estimated using standard pricing models with market-based inputs, which take into account the present value of estimated future cash flows. All of the companys money market funds and investments carried at fair value are included in the table above and are available-for-sale securities. These available-for-sale securities are made up of the following security types as of September30, 2009: money market funds of $141 million, U.S. agency securities of $207 million, U.S. Treasury securities of $65 million, corporate debt securities of $167 million and other securities of $1 million. As of December31, 2008, available-for-sale securities consisted of $376 million in money market funds and $41 million in debt securities, of which no individual debt security type was material. 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 Identify

Derivative Instruments and Hedg

Derivative Instruments and Hedging Activities
	9 Months Ended Sep. 30, 2009 USD / shares
Notes to Condensed Consolidated Financial Statements
Derivative Instruments and Hedging Activities	(8) In March2008, the FASB issued SFASNo.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 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 (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 derivatives change in fair value is recognized in earnings immediately. The company does not enter into derivative transactions for speculative or trading purposes. At September30, 2009, the company had total gross notional amounts of $156 million of foreign exchange forward contracts and $70 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 April2011. The commodity swap forward contracts are of varying duration, none of which extend beyond four years. All existing hedges are determined to be highly effective. As a result, the impact to earnings due to hedge ineffectiveness was immaterial for the three and nine months ended September30, 2009 and 2008, respectively. The fair values of derivatives designated as hedging instruments under ASC 815 as of September30, 2009 were as follows: Asset Derivatives Liability Derivatives (in thousands) Balance Sheet Location Fair Value Balance SheetLocation Fair Value Commodity swap forward contracts Oth

Retirement Benefits

Retirement Benefits
	9 Months Ended Sep. 30, 2009 USD / shares
Notes to Condensed Consolidated Financial Statements
Retirement Benefits	(9) Net periodic pension expense for defined benefit pension plans includes the following components: ThreeMonthsEnded September30, NineMonthsEnded September30, (inthousands) 2009 2008 2009 2008 Service cost $ 11,712 $ 9,563 $ 34,744 $ 28,863 Interest cost 16,257 15,472 47,557 46,884 Expected return on assets (17,594 ) (19,530 ) (51,532 ) (59,194 ) Amortization of prior service cost 3 2 8 7 Recognized net actuarial loss 9,308 3,258 27,467 9,862 Net periodic pension expense $ 19,686 $ 8,765 $ 58,244 $ 26,422 The company currently expects to fund approximately $50 million to $70 million into its defined benefit pension plans during 2009, which is expected to be in excess of the minimum funding required. During the nine months ended September30, 2009, contributions of approximately $30 million were made by the company. Net periodic postretirement benefit cost includes the following components: ThreeMonths Ended September30, NineMonths Ended September30, (inthousands) 2009 2008 2009 2008 Service cost $ $ $ $ Interest cost 349 350 1,045 1,051 Expected return on assets Amortization of prior service cost Recognized net actuarial loss 196 352 590 1,055 Net periodic postretirement benefit cost $ 545 $ 702 $ 1,635 $ 2,106 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

Financing Arrangements
	9 Months Ended Sep. 30, 2009 USD / shares
Notes to Condensed Consolidated Financial Statements
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 third quarter of 2009 and the Notes were therefore classified as short-term debt. During the nine months ended September30, 2009, holders converted $15 million of the Notes in exchange for the principal balance owed in cash plus 130,186 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) (ASC 470-20). ASC 470-20 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. ASC 470-20 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 ASC 470-20 during the first quarter of 2009. As a result of the adoption of ASC 470-20, 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 as a result of debt discount amortization increased by $0.4 million for the nine months ended September30, 2009, and $1.4 million and $5.6 million for the three and nine months ended September30, 2008, respectively. There was no debt discount amortization for the three months ended September30, 2009. The increase to interest expense resulted in a tax benefit of $0.2 million for the nine months ended September30, 2009, and $0.7 million and $2.3 million for the three and nine months ended September30, 2008, respectively. Net earnings attributable to Fluor Corporation for the three and nine months ended September30, 2009 were increased by $0.7 million (less than $0.01 per share) and $2.1 million ($0.01 per share). Net earnings attributable to Fluor Corporation for three and nine months ended September30, 2008 were reduced by $1.2 million (less than $0.01 per share) and $3.8 million ($0.02 per share), respectively. The following table presents information related to the liability and equity components of the Notes: (inthousands) September30, 2009 December31, 2008 Carrying value of the equity component $ 22,127 $ 24,448 Principal amount of the liability component $ 118,577 $ 133,578 Less: Unamortized discount of the

Stock Plans

Stock Plans
	9 Months Ended Sep. 30, 2009 USD / shares
Notes to Condensed Consolidated Financial Statements
Stock Plans	(11) The companys director and executive stock plans are described, and informational disclosures are provided, in the notes to the Consolidated Financial Statements included in the Form10-K for the year ended December31, 2008. Restricted stock units and restricted stock awards of 622,653 and 434,201 were granted in the nine months ended September30, 2009 and 2008, respectively, at weighted-average per share prices of $30.81 and $66.01, respectively. The awards for 2009 and 2008 vest ratably over three years. During the nine months ended September30, 2009 and 2008, options for the purchase of 888,567 shares at a weighted average price of $30.65 per share and 548,538 shares at a weighted average price of $68.41 per share, respectively, were awarded. The option awards for 2009 and 2008 vest ratably over three years. The option awards expire ten years after the grant date.

Adoption of SFAS 160

Adoption of SFAS 160
	9 Months Ended Sep. 30, 2009 USD / shares
Notes to Condensed Consolidated Financial Statements
Adoption of SFAS 160	(12) In December2007, 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 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 ASC 810-10-45, 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 and nine months ended September30, 2009, earnings attributable to noncontrolling interests were $12.6 million and $37.2 million, respectively, and the related tax effect was $0.7 million and $1.7 million, respectively. For the three and nine months ended September30, 2008, earnings attributable to noncontrolling interests of $7.6 million and $26.1 million, respectively, and the related tax effects of $0.2 million and $1.1 million, respectively, 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 $28.5 million and $42.7 million for the three and nine months ended September30, 2009, respectively, and $10.0 million and $18.7 million for the three and nine months ended September30, 2008, respectively. Capital contributions from noncontrolling interests were $3.9 million for the nine months ended September30, 2008.

Contingencies and Commitments

Contingencies and Commitments
	9 Months Ended Sep. 30, 2009 USD / shares
Notes to Condensed Consolidated Financial Statements
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 $199 million and $202 million at September30, 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 September30, 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 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 November2007 and reached construction completion in the second quarter of 2009. As of September30, 2009, the company has recognized in cost and revenue its $52million proportionate share of $104 million 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 $104 million of recognized costs. As of September30, 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 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 resolution process. L

Guarantees

Guarantees
	9 Months Ended Sep. 30, 2009 USD / shares
Notes to Condensed Consolidated Financial Statements
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. Performance guarantees outstanding as of September30, 2009 amounted to $3.3 billion. 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. Financial guarantees, provided in the ordinary course of business to 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 September30, 2009, there were no material guarantees outstanding.

Variable Interest Entities

Variable Interest Entities
	9 Months Ended Sep. 30, 2009 USD / shares
Notes to Condensed Consolidated Financial Statements
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 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 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 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 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 the VIE was established, the losses would be absorbed by the partners of th

Operations by Business Segment

Operations by Business Segment and Geographical Area
	9 Months Ended Sep. 30, 2009 USD / shares
Notes to Condensed Consolidated Financial Statements
Operations by Business Segment and Geographical Area	(16) Operating information by segment is as follows: ThreeMonthsEnded September30, NineMonthsEnded September30, ExternalRevenue(inmillions) 2009 2008 2009 2008 Oil Gas $ 2,925.0 $ 3,302.9 $ 9,322.9 $ 9,248.4 Industrial Infrastructure 1,105.5 878.5 3,280.1 2,587.2 Government 543.8 368.7 1,393.6 948.8 Global Services 529.0 592.9 1,523.3 1,995.2 Power 317.2 530.8 991.0 1,474.8 Total external revenue $ 5,420.5 $ 5,673.8 $ 16,510.9 $ 16,254.4 ThreeMonthsEnded September30, NineMonthsEnded September30, Segment Profit(inmillions) 2009 2008 2009 2008 Oil Gas $ 189.2 $ 205.6 $ 570.8 $ 512.1 Industrial Infrastructure 41.6 27.9 103.8 178.7 Government 23.6 17.7 84.8 36.5 Global Services 0.5 49.0 90.0 168.6 Power 44.9 24.1 91.9 69.9 Total segment profit $ 299.8 $ 324.3 $ 941.3 $ 965.8 Segment profit for Industrial Infrastructure for the nine months ended September30, 2008 included a pre-tax gain of $79.2 million from the sale of a joint venture interest in the Greater Gabbard Project. External revenue and segment profit for Global Services for both the three months and nine months ended September30, 2009 included the impact of a $45 million provision for the potential lack of collectability of a client receivable for a paper mill where the companys scope of work was to recommission, start up and operate the facility. A reconciliation of the segment information to consolidated amounts is as follows: Reconciliation of Segment Profit to Earnings Before ThreeMonthsEnded September30, NineMonthsEnded September30, Taxes (inmillions) 2009 2008 2009 2008 Total segment profit $ 299.8 $ 324.3 $ 941.3 $ 965.8 Corporate administrative and general expense (49.6 ) (45.1 ) (117.0 ) (146.3 ) Interest income, net 3.1 14.7 11.1 37.0 Earnings attributable to noncontrolling interests 12.6 7.6 37.2 26.1 Earnings before taxes $ 265.9 $ 301.5 $ 872.6 $ 882.6 Total assets in the Industrial Infrastructure segment increased to $712 million at September30, 2009 from $536 million at December31, 2008 due to the Greater Gabbard Project and increased volume across all business lines. Total assets in the Government segment were $506 million at September30, 2009 compared to $326 million at December31, 2008. The increase in total assets corresponded to an increase in working capital to support project execution activities.

DOCUMENT AND ENTITY INFORMATION

DOCUMENT AND ENTITY INFORMATION (USD $)
In Billions, except Share data	9 Months Ended Sep. 30, 2009	Oct. 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	2009-09-30
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			8.2
Entity Common Stock, Shares Outstanding		178,989,282