Fluor (FLR) 10-Q 10 May 10 2010 Q1 Quarterly report Financial data

CONDENSED CONSOLIDATED STATEMEN

CONDENSED CONSOLIDATED STATEMENT OF EARNINGS (USD $)
In Thousands, except Per Share data	3 Months Ended Mar. 31, 2010	3 Months Ended Mar. 31, 2009
TOTAL REVENUE	$4,918,855	$5,797,889
TOTAL COST OF REVENUE	4,658,297	5,448,616
OTHER (INCOME) AND EXPENSES
Corporate general and administrative expense	30,908	25,415
Interest expense	3,172	2,583
Interest income	(6,610)	(7,225)
Total cost and expenses	4,685,767	5,469,389
EARNINGS BEFORE TAXES	233,088	328,500
INCOME TAX EXPENSE	79,416	107,213
NET EARNINGS	153,672	221,287
NET EARNINGS ATTRIBUTABLE TO NONCONTROLLING INTERESTS	(17,037)	(16,488)
NET EARNINGS ATTRIBUTABLE TO FLUOR CORPORATION	$136,635	$204,799
EARNINGS PER SHARE
BASIC (in dollars per share)	0.77	1.13
DILUTED (in dollars per share)	0.76	1.12
SHARES USED TO CALCULATE EARNINGS PER SHARE
BASIC (in shares)	178,163	180,317
DILUTED (in shares)	180,769	181,204
DIVIDENDS DECLARED PER SHARE (in dollars per share)	0.125	0.125

CONDENSED CONSOLIDATED BALANCE

CONDENSED CONSOLIDATED BALANCE SHEET (USD $)
In Thousands	3 Months Ended Mar. 31, 2010	12 Months Ended Dec. 31, 2009
Current assets
Cash and cash equivalents ($171,220 and $172,991 related to variable interest entities ("VIEs"))	$1,608,989	$1,687,028
Marketable securities, current	359,245	603,594
Accounts and notes receivable, net ($103,393 and $99,609 related to VIEs)	1,138,132	988,991
Contract work in progress ($148,102 and $43,115 related to VIEs)	1,695,805	1,405,785
Deferred taxes	146,112	131,101
Other current assets	304,164	305,589
Total current assets	5,252,447	5,122,088
Marketable securities, noncurrent	292,027	335,216
Property, plant and equipment (net of accumulated depreciation of $847,258 and $817,976)	830,755	837,034
Investments and goodwill	268,307	273,285
Deferred taxes	229,036	247,517
Deferred compensation trusts	288,667	279,852
Other	92,587	83,491
TOTAL ASSETS	7,253,826	7,178,483
Current liabilities
Trade accounts payable ($112,901 and $69,955 related to VIEs)	1,311,823	1,334,301
Convertible senior notes	99,709	109,789
Advance billings on contracts ($191,878 and $142,119 related to VIEs)	958,699	980,437
Accrued salaries, wages and benefits ($53,802 and $43,247 related to VIEs)	562,412	581,193
Other accrued liabilities	323,993	295,678
Total current liabilities	3,256,636	3,301,398
Long-term debt due after one year	17,745	17,740
Noncurrent liabilities	536,190	525,452
Contingencies and commitments
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 - 178,729,811 and 178,824,617 shares in 2010 and 2009, respectively	1,787	1,788
Additional paid-in capital	668,746	682,304
Accumulated other comprehensive loss	(210,834)	(220,987)
Retained earnings	2,956,498	2,842,428
Total shareholders' equity	3,416,197	3,305,533
Noncontrolling interests	27,058	28,360
Total equity	3,443,255	3,333,893
TOTAL LIABILITIES AND EQUITY	$7,253,826	$7,178,483

1_CONDENSED CONSOLIDATED BALANC

CONDENSED CONSOLIDATED BALANCE SHEET (Parenthetical) (USD $)
In Thousands, except Share data	Mar. 31, 2010	Dec. 31, 2009
ASSETS
Cash and cash equivalents related to variable interest entities ("VIEs")	$171,220	$172,991
Accounts and notes receivable, net, related to VIEs	103,393	99,609
Contract work in progress related to VIEs	148,102	43,115
Property, plant and equipment, accumulated depreciation (in dollars)	847,258	817,976
Current liabilities
Trade accounts payable related to VIEs	112,901	69,955
Advance billings on contracts related to VIEs	191,878	142,119
Accrued salaries, wages and benefits related to VIEs	$53,802	$43,247
Equity
Preferred stock, authorized (in shares)	20,000,000	20,000,000
Preferred stock, par value (in dollars per share)	0.01	0.01
Preferred stock, issued (in shares)	0	0
Common stock, authorized (in shares)	375,000,000	375,000,000
Common stock, par value (in dollars per share)	0.01	0.01
Common stock, issued (in shares)	178,729,811	178,824,617
Common stock, outstanding (in shares)	178,729,811	178,824,617

2_CONDENSED CONSOLIDATED STATEM

CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS (USD $)
In Thousands	3 Months Ended Mar. 31, 2010	3 Months Ended Mar. 31, 2009
CASH FLOWS FROM OPERATING ACTIVITIES
Net earnings	$153,672	$221,287
Adjustments to reconcile net earnings to cash provided by operating activities:
Depreciation of fixed assets	45,948	43,687
Amortization of intangibles	371	340
Restricted stock and stock option amortization	9,630	8,209
Deferred compensation trust	(8,815)	8,557
Deferred compensation obligation	8,509	(11,235)
Taxes paid on vested restricted stock	(6,495)	(4,694)
Deferred taxes	(404)	(5,719)
Stock plans tax benefit	(359)	637
Retirement plan accrual, net of contributions	7,716	4,342
Changes in operating assets and liabilities	(486,080)	(178,388)
Equity in earnings of investees, net of dividends	17,124	(10,778)
Other items	6,621	(160)
Cash (utilized) provided by operating activities	(252,562)	76,085
CASH FLOWS FROM INVESTING ACTIVITIES
Purchases of marketable securities	(197,681)	(558,112)
Proceeds from the sales and maturities of marketable securities	479,886	258,541
Capital expenditures	(47,998)	(53,149)
Proceeds from disposal of property, plant and equipment	9,578	10,167
Investments in partnerships and joint ventures	(2,783)	(454)
Other items	(4,957)	2,569
Cash provided (utilized) by investing activities	236,045	(340,438)
CASH FLOWS FROM FINANCING ACTIVITIES
Repurchase of common stock	(17,071)	(60,103)
Dividends paid	(22,555)	(22,772)
Repayment of convertible debt	(10,080)	(9,764)
Distributions paid to noncontrolling interests	(17,247)	(6,637)
Capital contribution by joint venture partner	1,000
Stock options exercised	527	552
Stock plans tax benefit	359	(637)
Other items	(1,310)	240
Cash utilized by financing activities	(66,377)	(99,121)
Effect of exchange rate changes on cash	4,855	(524)
Decrease in cash and cash equivalents	(78,039)	(363,998)
Cash and cash equivalents at beginning of period	1,687,028	1,834,324
Cash and cash equivalents at end of period	$1,608,989	$1,470,326

Principles of Consolidation

Principles of Consolidation
	3 Months Ended Mar. 31, 2010
Principles of Consolidation
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, 2009 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, 2010 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 as of March31, 2010 and its consolidated results of operations and cash flows for the three months ended March31, 2010 and 2009. Management 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 2009 amounts have been reclassified to conform with the 2010 presentation.

Recent Accounting Pronouncement

Recent Accounting Pronouncements
	3 Months Ended Mar. 31, 2010
Recent Accounting Pronouncements
Recent Accounting Pronouncements	(2) Recent Accounting Pronouncements In October2009, the Financial Accounting Standards Board (FASB) issued Accounting Standards Update (ASU) 2009-13, Multiple-Deliverable Revenue Arrangements, which amends certain guidance in Accounting Standards Codification (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. During the first quarter of 2010, the company implemented other new accounting pronouncements that are discussed in the notes where applicable.

Comprehensive Income

Comprehensive Income (Loss)
	3 Months Ended Mar. 31, 2010
Comprehensive Income (Loss)
Comprehensive Income (Loss)	(3) The components of comprehensive income, net of related tax, are as follows: ThreeMonthsEnded March31, (inthousands) 2010 2009 Net earnings $ 153,672 $ 221,287 Unrealized gain (loss) on debt securities(1) 317 (201 ) Unrealized gain (loss) on derivative contracts (2) 238 (3,825 ) Foreign currency translation adjustment (3) 937 (4,908 ) Ownership share of equity method investees other comprehensive loss(4) (2,509 ) Pension plan adjustment (5) 11,170 7,490 Comprehensive income 163,825 219,843 Comprehensive income attributable to noncontrolling interests (17,037 ) (16,488 ) Comprehensive income attributable to Fluor Corporation $ 146,788 $ 203,355 (1) Net of deferred tax expense of $0.2 million during the three months ended March31, 2010. Deferred tax benefit related to the three months ended March31, 2009 was immaterial. (2) Net of deferred tax expense of $0.1 million and deferred tax benefit of $2.3 million during the three months ended March31, 2010 and 2009, respectively. (3) Net of deferred tax expense of $0.5 million and deferred tax benefit of $1.6 million during the three months ended March31, 2010 and 2009, respectively. (4) Net of deferred tax benefit of $1.5 million during the three months ended March31, 2010. (5)Net of deferred tax expense of $6.7 million and $4.5 million during the three months ended March31, 2010 and 2009, respectively.

Income Taxes

Income Taxes
	3 Months Ended Mar. 31, 2010
Income Taxes
Income Taxes	(4) The effective tax rate, based on the companys actual operating results for the three months ended March31, 2010 and 2009, was 34.1 percent and 32.6 percent, respectively. The effective tax rate was higher for the three month period ending March31, 2010 due to recognition of a deferred tax benefit associated with taxes on unremitted foreign earnings in the same period in the prior year. 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. In March2010, President Obama signed into law the Patient Protection and Affordable Care Act and the Health Care and Education Reconciliation Act of 2010. Beginning January1, 2013, these laws change the tax treatment for retiree prescription drug expenses by eliminating the tax deduction available to the extent that those expenses are reimbursed under Medicare PartD. These laws did not have a material impact on the companys financial position, results of operations or cash flows.

Consolidated Statement of Cash

Consolidated Statement of Cash Flows
	3 Months Ended Mar. 31, 2010
Consolidated Statement of Cash Flows
Consolidated Statement of Cash Flows	(5) Cash paid for interest was $2.9 million and $4.3 million for the three months ended March31, 2010 and 2009, respectively. Income tax payments, net of receipts, were $26.3 million and $41.9 million during the three-month periods ended March31, 2010 and 2009, respectively.

Earnings Per Share

Earnings Per Share
	3 Months Ended Mar. 31, 2010
Earnings Per Share.
Earnings Per Share	(6) In 2009, the company applied the provisions of 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 unvested restricted stock units and unvested restricted stock awards were considered to be participating securities since the quarterly dividends paid were nonforfeitable. ASC 260-10-45 required that the two-class method of computing basic EPS be applied. Under the two-class method, the companys stock options were not considered to be participating securities. Starting in the first quarter of 2010, dividends on unvested restricted stock units and unvested restricted stock awards are accumulated and become payable only when the units and awards vest. As a result, the companys unvested restricted stock units and unvested restricted stock awards are no longer considered to be participating securities and the two-class method of computing EPS is not required. Diluted EPS reflects the assumed exercise or conversion of all dilutive securities using the treasury stock method. The calculations of the basic and diluted EPS for the three months ended March31, 2010 under the treasury stock method are presented below: ThreeMonths Ended March31, (inthousands,exceptpershareamounts) 2010 Net earnings attributable to Fluor Corporation $ 136,635 Basic EPS: Weighted average common shares outstanding 178,163 Basic earnings per share $ 0.77 Diluted EPS: Weighted average common shares outstanding 178,163 Diluted effect: Employee stock options and restricted stock units and shares 1,169 Conversion equivalent of dilutive convertible debt 1,437 Weighted average diluted shares outstanding 180,769 Diluted earnings per share $ 0.76 Anti-dilutive securities not included above 1,185 The calculations of the basic and diluted EPS for the three months ended March31, 2009 under the two-class method are presented below: ThreeMonths Ended March31, (inthousands,exceptpershareamounts) 2009 Basic EPS: Net earnings attributable to Fluor Corporation $ 204,799 Portion allocable to common shareholders 99.16 % Net earnings allocable to common shareholders $ 203,079 Weighted average common shares outstanding 180,317 Basic earnings per share $ 1.13 Diluted EPS: Net earnings allocable to common shareholders $ 203,079 Weighted average common shares outstanding 180,317 Diluted effect: Employee stock options 24 Conversion equivalent of dilutive convertible debt 863 Weighted average diluted shares outstanding 181,204 Diluted earnings per share $ 1.12 Anti-dilutive securities not included above 1,835 The table below sets forth the calculation of the percentage of net earnings allocable to common shareholders under the two-clas

Fair Value of Financial Instrum

Fair Value of Financial Instruments
	3 Months Ended Mar. 31, 2010
Fair Value of Financial Instruments
Fair Value Measurement Inputs	(7) The following table presents, for each of the fair value hierarchy levels required under Financial Accounting Standard (SFAS) No.157, Fair Value Measurements (ASC 820-10), the companys assets and liabilities that are measured at fair value on a recurring basis as of March31, 2010 and December31, 2009: March31, 2010 December31, 2009 FairValueMeasurementsUsing FairValueMeasurementsUsing (in thousands) Total QuotedPrices inActive Marketsfor IdenticalAssets (Level1) Significant Other Observable Inputs (Level2) Significant Unobservable Inputs (Level3) Total QuotedPrices inActive Marketsfor IdenticalAssets (Level1) Significant Other Observable Inputs (Level2) Significant Unobservable Inputs (Level3) Assets: Cash and cash equivalents $ 39,389 $ 32,389 (1) $ 7,000 (2) $ $ 66,167 $ 66,167 (1) $ $ Marketable securities, current 127,351 127,351 (2) 104,059 104,059 (2) Deferred compensation trusts 65,665 65,665 (1) 65,664 65,664 (1) Marketable securities, noncurrent 291,361 291,361 (3) 334,552 334,552 (3) Derivative assets(4) Commodity swap forward contracts 2,986 2,986 3,159 3,159 Foreign currency contracts 1,833 1,833 Liabilities: Derivative liabilities(4) Commodity swap forward contracts $ 3,015 $ $ 3,015 $ $ 3,091 $ $ 3,091 $ Foreign currency contracts 615 615 2,434 2,434 (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 Note 8 for the classification of commodity swap forward contracts and foreign currency contracts on the Condensed Consolidated Balance Sheet. 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. Foreign currency contracts are estimated by obtaining quotes from brokers. All of the companys money market funds and inv
Fair Value of Financial Instruments	The estimated fair values of the companys financial instruments that are not measured at fair value on a recurring basis are as follows: March31, 2010 December31, 2009 (in thousands) Carrying Value Fair Value Carrying Value Fair Value Assets: Cash and cash equivalents(1) $ 1,569,600 $ 1,569,600 $ 1,620,861 $ 1,620,861 Marketable securities, current(2) 231,894 231,894 499,535 499,535 Marketable securities, noncurrent(3) 666 666 664 664 Notes receivable, including noncurrent portion 24,785 24,785 38,430 38,430 Liabilities: 1.5% Convertible Senior Notes 99,709 169,354 109,789 177,858 5.625% Municipal Bonds 17,745 18,040 17,740 18,215 (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 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. In the first quarter of 2010, the company adopted FASB ASU 2010-06 Improving Disclosure about Fair Value Measurements (ASC 820). ASU 2010-06 requires, on a prospective basis, additional disclosures regarding significant transfers in and out of Level 1 and Level 2 fair value measurements, of which the company had none for the three months ended March31, 2010. ASU 2010-06 also clarifies existing disclosure requirements related to the level of disaggregation of fair value measurements for each class of assets and liabilities and disclosures about inputs and valuation techniques used to measure fair value. The adoption of ASU 2010-06 did not have a material impact on the companys disclosures in its Condensed Consolidated Financial Statements.

Derivatives and Hedging

Derivatives and Hedging
	3 Months Ended Mar. 31, 2010
Derivatives and Hedging
Derivatives and Hedging	(8) 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 values 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 derivative instruments gains or losses due to changes in fair value, associated with the cash flow hedges, are recorded as a component of accumulated other comprehensive income (loss) (OCI) and are reclassified into earnings when the hedged items settle. Any ineffective portion of a derivative instruments 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. As of March31, 2010, the company had total gross notional amounts of $95 million of foreign exchange forward contracts and $59 million of commodity swap forward contracts outstanding relating to engineering and construction contract obligations and intercompany transactions. 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. The impact to earnings due to hedge ineffectiveness was immaterial for the three months ended March31, 2010 and 2009, respectively. The fair values of derivatives designated as hedging instruments under ASC 815 as of March31, 2010 and December31, 2009 were as follows: Asset Derivatives Liability Derivatives (in thousands) Balance Sheet Location March31, 2010 December31, 2009 Balance Sheet Location March31, 2010 December31, 2009 Commodity swaps Other current assets $ 1,697 $ 1,677 Other accrued liabilities $ 2,923 $ 3,037 Foreign c

Retirement Benefits

Retirement Benefits
	3 Months Ended Mar. 31, 2010
Retirement Benefits
Retirement Benefits	(9) Net periodic pension expense for defined benefit pension plans includes the following components: ThreeMonthsEnded March31, (inthousands) 2010 2009 Service cost $ 11,849 $ 11,444 Interest cost 17,641 15,431 Expected return on assets (19,988 ) (16,741 ) Amortization of prior service cost 2 Recognized net actuarial loss 6,787 8,997 Net periodic pension expense $ 16,289 $ 19,133 The company currently expects to fund approximately $50 million to $90 million into its defined benefit pension plans during 2010, which is expected to be in excess of the minimum funding required. During the three months ended March31, 2010, contributions of approximately $9 million were made by the company. 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. The net periodic postretirement benefit cost was immaterial for the three months ended March31, 2010 and 2009.

Financing Arrangements

Financing Arrangements
	3 Months Ended Mar. 31, 2010
Financing Arrangements
Financing Arrangements	(10) In February2004, the company issued $330 million of 1.5% 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 2009 and first quarter of 2010 and the Notes were therefore classified as short-term debt. During the three months ended March31, 2010, holders converted $10 million of the Notes in exchange for the principal balance owed in cash plus 133,982 shares of the companys common stock. 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. The company applies the provisions of 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. The following table presents information related to the liability and equity components of the Notes: (inthousands) March31, 2010 December31, 2009 Carrying value of the equity component $ 21,211 $ 21,720 Principal amount and carrying value of the liability component $ 99,709 $ 109,789 The Notes are convertible into shares of the companys 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. Interest expense for the first quarter of 2010 and 2009 includes original coupon interest of $0.4 million and $0.6 million, respectively. The effective interest rate on the liability component was 4.375 percent through February15, 2009 at which time the discount on the liability was fully amortized. Interest expense as a result of debt discount amortization amounted to $0.4 million for the three months ended March31, 2009. The if-converted value of $167 million is in excess of the principal value as of March31, 2010. As of March31, 2010, the company was in compliance with all of the financial covenants related to its debt agreements.

Stock Plans

Stock Plans
	3 Months Ended Mar. 31, 2010
Stock Plans
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, 2009. Restricted stock units of 819,186 and 602,535 were granted in the first quarter of 2010 and 2009, respectively, at weighted-average per share prices of $42.75 and $30.46, respectively. The awards for 2010 and 2009 vest ratably over three years. During the first quarter of 2010 and 2009, options for the purchase of 1,135,362 shares at a weighted-average exercise price of $42.75 per share and 872,112 shares at a weighted-average exercise price of $30.46 per share, respectively, were awarded. The option awards for 2010 and 2009 vest ratably over three years. The option awards expire ten years after the grant date.

Noncontrolling Interests

Noncontrolling Interests
	3 Months Ended Mar. 31, 2010
Noncontrolling Interests.
Noncontrolling Interests	(12) The company applies the provisions of 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. As required with 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 months ended March31, 2010, earnings attributable to noncontrolling interests were $17.4 million and the related tax effect was $0.4 million. For the three months ended March31, 2009, earnings attributable to noncontrolling interests were $17.0 million and the related tax effect was $0.5 million. Distributions paid to noncontrolling interests were $17.2 million and $6.6 million for the three months ended March31, 2010 and 2009, respectively. Capital contributions by noncontrolling interests were $1.0 million for the three months ended March31, 2010. There were no capital contributions by noncontrolling interests for the three months ended March31, 2009.

Contingencies and Commitments

Contingencies and Commitments
	3 Months Ended Mar. 31, 2010
Contingencies and Commitments
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, under ASC 605-35-25, 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 $253 million and $247 million as of March31, 2010 and December31, 2009, 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, 2010, 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 November2007 and reached construction completion in the second quarter of 2009. As of March31, 2010, the company had 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 March31, 2010, 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 $25.5 million proportionate share of the withheld liquidated damages. In addition, the client had 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. On March22, 2010, the client filed for protection under Chapter 11 of the U.S. Bankruptcy Code in the Southern District of California. As a result, all actions against the client are subject to an autom

Guarantees

Guarantees
	3 Months Ended Mar. 31, 2010
Guarantees
Guarantees	(14) In the ordinary course of business, the company enters into various agreements providing performance assurances and guarantees to clients on behalf of certain unconsolidated and consolidated partnerships, joint ventures and other jointly executed contracts. These agreements are entered into primarily to support the project execution commitments of these entities. The performance 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, the performance guarantee 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. Performance guarantees outstanding as of March31, 2010 are estimated to be $3.7 billion. The company assessed its performance guarantee obligation as of March31, 2010 and December31, 2009 in accordance with FASB Interpretation No.45, Guarantors Accounting and Disclosure Requirements for Guarantees, Including Indirect Guarantees of Indebtedness of Others (ASC 460) and the carrying value of its liability was not material. 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. Long-term debt on the Condensed Consolidated Balance Sheet included a financial guarantee on behalf of an unrelated third party that totaled approximately $18 million as of March31, 2010 and December31, 2009.

Variable Interest Entities

Variable Interest Entities
	3 Months Ended Mar. 31, 2010
Variable Interest Entities
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. The company evaluates each partnership and joint venture to determine whether the entity is a variable interest entity (VIE). If the entity is determined to be a VIE, the company assesses whether it is the primary beneficiary and needs to consolidate the entity. Upon the occurrence of certain events outlined in ASC 810-10, the company reassesses its initial determination of whether the entity is a VIE and whether consolidation is still required. During the first quarter of 2010, the company prospectively adopted SFAS No.167, Amendments to FASB Interpretation No.46(R), which amends consolidation guidance for variable interest entities under ASC 810-10 for interim and annual reporting periods beginning after November15, 2009. The prospective adoption of this amendment did not have an impact on the companys financial position, results of operations or cash flows. Under ASC 810-10, 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. ASC 810-10, as amended, now requires companies to utilize a qualitative approach to determine if it is the primary beneficiary of a VIE. A company is deemed to be the primary beneficiary and must consolidate its partnerships and joint ventures if the company has both (1)the power to direct the economically significant activities of the entity and (2)the obligation to absorb losses of, or the right to receive benefits from, the entity that could potentially be significant to the variable interest entity. Prior to the effective date of the amendment, companies were required to utilize both qualitative and quantitative information to determine if it was the primary beneficiary of a VIE. 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. Many of the partnership and joint venture agreements provide for capital calls to fund operations, as necessary. Such funding is infrequent and is not anticipated to be material. The majority of the companys partnerships and joint ventures are VIEs because the total equity investment is typically nominal and not suffi

Operations by Business Segment

Operations by Business Segment and Geographical Area
	3 Months Ended Mar. 31, 2010
Operations by Business Segment and Geographical Area
Operations by Business Segment and Geographical Area	(16) Operating information by segment is as follows: ThreeMonthsEnded March31, ExternalRevenue(inmillions) 2010 2009 Oil Gas $ 2,139.4 $ 3,369.6 Industrial Infrastructure 1,243.4 1,176.5 Government 662.8 370.8 Global Services 339.1 421.7 Power 534.2 459.3 Total external revenue $ 4,918.9 $ 5,797.9 ThreeMonthsEnded March31, SegmentProfit(inmillions) 2010 2009 Oil Gas $ 92.3 $ 200.8 Industrial Infrastructure 31.7 28.1 Government 35.3 27.7 Global Services 27.4 47.4 Power 56.5 28.3 Total segment profit $ 243.2 $ 332.3 A reconciliation of the segment information to consolidated amounts is as follows: ThreeMonthsEnded March31, Reconciliation of Segment Profit to Earnings Before Taxes (inmillions) 2010 2009 Total segment profit $ 243.2 $ 332.3 Corporate general and administrative expense (30.9 ) (25.4 ) Interest income, net 3.4 4.6 Earnings attributable to noncontrolling interests 17.4 17.0 Earnings before taxes $ 233.1 $ 328.5 Total assets by segment are as follows: Total assets(inmillions) March31, 2010 December31, 2009 Oil Gas $ 1,076.6 $ 972.3 Industrial Infrastructure 788.6 675.9 Government 896.1 660.3 Global Services 751.9 744.5 Power 215.0 171.0 The increase in total assets for the Oil Gas, Industrial Infrastructure, Government and Power segments was due to an increase in working capital to support project execution activities. Effective January1, 2010, the company moved its power services business to the Power segment from the Global Services segment. The operating results and total assets presented above have been recast to reflect this change.

Document and Entity Information

Document and Entity Information
	3 Months Ended Mar. 31, 2010	Apr. 30, 2010
Document and Entity Information
Entity Registrant Name	FLUOR CORP
Entity Central Index Key	0001124198
Document Type	10-Q
Document Period End Date	2010-03-31
Amendment Flag	false
Current Fiscal Year End Date	--12-31
Entity Current Reporting Status	Yes
Entity Filer Category	Large Accelerated Filer
Entity Common Stock, Shares Outstanding		178,736,123
Document Fiscal Year Focus	2,010
Document Fiscal Period Focus	Q1