SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
(Mark One)
(X) QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended April 30, 1994
OR
( ) TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES ACT OF 1934
For the transition period from to
Commission File No. 1-7775
FLUOR CORPORATION
(Exact name of registrant as specified in its charter)
Delaware 95-0740960
(State or other jurisdiction of (I.R.S Employer I.D. No.)
incorporation or organization)
3333 Michelson Drive, Irvine, CA 92730
(Address of principal executive offices)
Registrant's telephone number including area code: (714)975-2000
Indicate by check mark whether the registrant (1) has filed all
reports required to be filed by Section 13 or 15(d) of the
Securities Exchange Act of 1934 during the preceding 12 months
(or for such shorter period that the registrant was required to
file such reports), and (2) has been subject to such filing
requirements for the last 90 days.
Yes ( X ) No ( )
As of May 31, 1994 there were 82,468,524 shares of common
stock outstanding.
FLUOR CORPORATION
FORM 10-Q
April 30, 1994
TABLE OF CONTENTS
PAGE
Part I: Financial Information
Condensed Consolidated Statement of Earnings for
the Three Months Ended April 30, 1994 and 1993.... 2
Condensed Consolidated Statement of Earnings for
the Six Months Ended April 30, 1994 and 1993...... 3
Condensed Consolidated Balance Sheet at April 30,
1994 and October 31, 1993......................... 4
Condensed Consolidated Statement of Cash Flows for
the Six Months Ended April 30, 1994 and 1993...... 6
Notes to Condensed Consolidated Financial
Statements........................................ 7
Management's Discussion and Analysis of Financial
Condition and Results of Operations............... 10
Condensed Consolidated Changes in Backlog.......... 14
Part II: Other Information........................ 15
Signatures........................................... 16
Part I: Financial Information
FLUOR CORPORATION
CONDENSED CONSOLIDATED STATEMENT OF EARNINGS
Three Months Ended April 30, 1994 and 1993
(In Thousands Except Per Share Amounts)
UNAUDITED
1994 1993
REVENUES.............................. $2,079,593 $2,006,054
COSTS AND EXPENSES
Cost of revenues.................... 1,991,323 1,947,647
Corporate administrative and
general expenses................... 13,332 11,576
Interest expense.................... 4,409 5,179
Interest income..................... (4,610) (4,901)
Total Costs and Expenses.............. 2,004,454 1,959,501
EARNINGS BEFORE INCOME TAXES.......... 75,139 46,553
INCOME TAX EXPENSE.................... 27,400 4,600
NET EARNINGS.......................... $ 47,739 $ 41,953
NET EARNINGS PER SHARE................ $ 0.58 $ 0.51
DIVIDENDS PER COMMON SHARE............ $ 0.13 $ 0.12
SHARES USED TO CALCULATE EARNINGS PER
SHARE............................... 82,815 82,292
See Accompanying Notes.
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FLUOR CORPORATION
CONDENSED CONSOLIDATED STATEMENT OF EARNINGS
Six Months Ended April 30, 1994 and 1993
(In Thousands Except Per Share Amounts)
UNAUDITED
1994 1993
REVENUES.............................. $4,137,258 $3,812,993
COSTS AND EXPENSES
Cost of revenues.................... 3,967,949 3,688,515
Corporate administrative and
general expenses................... 24,012 21,256
Interest expense.................... 8,639 9,782
Interest income..................... (9,479) (9,994)
Total Costs and Expenses.............. 3,991,121 3,709,559
EARNINGS BEFORE INCOME TAXES.......... 146,137 103,434
INCOME TAX EXPENSE.................... 54,400 25,800
NET EARNINGS.......................... $ 91,737 $ 77,634
NET EARNINGS PER SHARE................ $ 1.11 $ 0.94
DIVIDENDS PER COMMON SHARE............ $ 0.26 $ 0.24
SHARES USED TO CALCULATE EARNINGS
PER SHARE........................... 82,615 82,251
See Accompanying Notes.
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FLUOR CORPORATION
CONDENSED CONSOLIDATED BALANCE SHEET
April 30, 1994 and October 31, 1993
(Dollars in Thousands)
ASSETS
April 30, October 31,
1994 1993 *
(Unaudited)
Current Assets
Cash and cash equivalents........... $ 391,052 $ 214,844
Marketable securities............... 110,924 97,335
Accounts and notes receivable....... 380,913 392,577
Contract work in progress........... 291,903 306,251
Net assets of discontinued
operations......................... -- 172,822
Deferred taxes...................... 52,110 76,364
Inventory and other current assets.. 63,371 48,831
Total Current Assets............... 1,290,273 1,309,024
Property, plant and equipment (net
of accumulated depreciation,
depletion and amortization of
$474,186 and $441,676, respectively) 1,145,699 1,100,909
Investments and goodwill, net......... 53,674 52,383
Other................................. 200,717 126,568
$2,690,363 $2,588,884
(Continued On Next Page)
* Amounts at October 31, 1993 have been derived from audited
financial statements.
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FLUOR CORPORATION
CONDENSED CONSOLIDATED BALANCE SHEET
April 30, 1994 and October 31, 1993
(Dollars in Thousands)
LIABILITIES AND SHAREHOLDERS' EQUITY
April 30, October 31,
1994 1993 *
(Unaudited)
Current Liabilities
Accounts and notes payable.......... $ 292,346 $ 289,721
Note payable to affiliate........... 30,650 30,000
Commercial paper.................... 14,961 30,053
Advance billings on contracts....... 236,467 194,695
Accrued salaries, wages and
benefit plans...................... 205,117 194,270
Other accrued liabilities........... 192,691 190,447
Current portion of long-term debt... 2,335 1,687
Total Current Liabilities.......... 974,567 930,873
Long-term debt due after one year..... 58,673 59,637
Deferred taxes........................ 48,893 51,642
Other noncurrent liabilities.......... 482,612 502,610
Commitments and contingencies
Shareholders' Equity
Capital stock
Preferred - authorized 20,000,000
shares without par value; none
issued
Common - authorized 150,000,000
shares of $0.625 par value;
issued and outstanding -
82,413,758 shares and 82,093,207
shares, respectively............. 51,509 51,308
Additional capital.................. 487,125 478,204
Retained earnings (since October 31,
1987).............................. 605,034 534,678
Unamortized executive stock plan
expense............................ (13,976) (16,828)
Cumulative translation adjustments.. (4,074) (3,240)
Total Shareholders' Equity......... 1,125,618 1,044,122
$2,690,363 $2,588,884
See Accompanying Notes.
* Amounts at October 31, 1993 have been derived from audited
financial statements.
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FLUOR CORPORATION
CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS
Six Months Ended April 30, 1994 and 1993
(Dollars in Thousands)
UNAUDITED
1994 1993
CASH FLOWS FROM OPERATING ACTIVITIES
Net earnings........................ $ 91,737 $ 77,634
Adjustments to reconcile net
earnings to cash provided by
operating activities:
Depreciation, depletion and
amortization................... 55,656 57,481
Discontinued operations.......... -- (27,410)
Deferred taxes................... (5,393) (31,501)
Change in operating assets and
liabilities.................... 99,511 (97,179)
Other, net....................... 20,639 35,303
Cash provided by operating activities. 262,150 14,328
CASH FLOWS FROM INVESTING ACTIVITIES
Capital expenditures................ (108,072) (93,759)
Sale (purchase) of marketable
securities......................... (13,589) 42,358
Initial cash proceeds from sale of
discontinued operations, excluding
tax benefits....................... 51,869 --
Proceeds from sale of property,
plant and equipment................ 7,952 6,805
Other, net.......................... 3,284 (3,066)
Cash utilized by investing activities. (58,556) (47,662)
CASH FLOWS FROM FINANCING ACTIVITIES
Stock options exercised............. 10,653 6,884
Cash dividends paid................. (21,381) (19,656)
Payments on short-term borrowings... (15,092) --
Payments on long-term debt.......... (490) (16,132)
Other, net.......................... (1,076) (363)
Cash utilized by financing activities. (27,386) (29,267)
Increase (decrease) in cash and cash
equivalents......................... 176,208 (62,601)
Cash and cash equivalents at
beginning of period................. 214,844 195,346
Cash and cash equivalents at end of
period.............................. $ 391,052 $ 132,745
See Accompanying Notes.
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FLUOR CORPORATION
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
UNAUDITED
(1) The condensed consolidated financial statements do not
include footnotes and certain financial information
normally presented annually under generally accepted
accounting principles and, therefore, should be read in
conjunction with the company's October 31, 1993 annual
report on Form 10-K. Accounting measurements at interim
dates inherently involve greater reliance on estimates
than at year-end. The results of operations for the
three and six months ended April 30, 1994 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 the company, are necessary to
present fairly its consolidated financial position at April
30, 1994 and the consolidated results of operations for
the three and six months ended April 30, 1994 and 1993
and cash flows for the six months ended April 30, 1994 and
1993.
(2) Earnings per share is based on the weighted average number
of common and, when appropriate, common equivalent shares
outstanding in each period. Common equivalent shares are
included when the effect of the potential exercise of
stock options is dilutive.
(3) Inventories comprise the following:
April 30, October 31,
1994 1993
($ in thousands)
Coal........................... $ 13,285 $ 15,375
Supplies and other............. 22,005 17,459
$ 35,290 $ 32,834
(4) Cash paid for interest was $6.2 million and $10.3 million
for the six month periods ended April 30, 1994 and 1993,
respectively. Income tax payments, net of refunds, were
$30.8 million and $52.3 million in the six month periods
ended April 30, 1994 and 1993, respectively.
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(5) Net earnings for the three and six months ended April 30,
1993 included $12.6 million related to the favorable
completion of a federal income tax audit for the tax
years 1984 through 1986. As a result of the conclusion
of that audit, $12.6 million in income tax liabilities
were no longer deemed necessary and were reversed.
(6) In November 1992, the company announced its decision to
exit its Lead business. As a consequence, the company's
Lead business segment was classified as a discontinued
operation as of October 31, 1992 and adjusted to net
realizable value. On April 7, 1994 the company completed
the sale of its Lead business to an affiliate of a private
investment company based in New York for consideration
consisting of both cash and deferred payments. The
aggregate of the amounts realized from the sale and
operating results from November 1992 until the date of
the sale were within previously established estimates used
to determine discontinued operations reserves. As a
consequence, the closing of the sale had no impact on the
company's earnings beyond what was originally recognized
in fiscal 1992.
(7) During the second quarter of 1993, A.T. Massey, the
company's coal investment, recorded an after-tax charge
to earnings of $9.2 million to provide for the
settlement of disputed obligations with the pension funds
of the United Mine Workers of America/Bituminous Coal
Operators of America.
(8) In November 1992, the Financial Accounting Standards Board
issued Statement of Financial Accounting Standards No.
112, "Employers' Accounting for Postemployment Benefits"
(SFAS No. 112). The statement requires accrual of the
estimated cost of benefits provided by the employer to
former or inactive employees after employment but before
retirement. Adoption of SFAS No. 112 is not required by
the company until fiscal 1995. Although the precise
method and impact of implementation is not known at this
time, management believes the effect, based on the
company's current benefit programs, will not be material.
In May 1993, the Financial Accounting Standards Board
issued Statement of Financial Accounting Standards No.
115, "Accounting for Certain Investments in Debt and
Equity Securities" (SFAS No. 115). The statement
addresses the accounting and reporting for investments in
equity securities that have readily determinable fair
values and for all investments in debt securities.
Adoption of SFAS No. 115 is not required by the company
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until fiscal 1995. Based on the nature and composition of
the company's current investment portfolios, management
believes the impact of implementation will not be
material.
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FLUOR CORPORATION
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
The following discussion and analysis is provided to increase
understanding of, and should be read in conjunction with, the
condensed consolidated financial statements and accompanying
notes.
RESULTS OF OPERATIONS
Revenues increased 4 percent and 9 percent, respectively, for
the three and six month periods ended April 30, 1994, compared
with the same periods of 1993. Net earnings for the three and
six months ended April 30, 1994 were $47.7 million and $91.7
million, respectively, compared with net earnings of $42.0
million and $77.6 million, respectively, for the same periods
of 1993. Net earnings for the three and six months ended April
30, 1993 included an after-tax charge of $9.2 million
established by A.T. Massey, the company's coal investment,
related to settlement of disputed obligations with the
pension funds of the United Mine Workers of America/Bituminous
Coal Operators of America. Also included in 1993 net earnings
was $12.6 million related to the favorable conclusion in the
second quarter of 1993 of a federal income tax audit for the
tax years 1984 through 1986. Excluding these two nonrecurring
items, net earnings for both the three and six months ended
April 30, 1994 increased 24 percent compared with the same
periods of 1993.
ENGINEERING AND CONSTRUCTION
Revenues for the Engineering and Construction segment
increased 2 percent and 8 percent, respectively, for the
three and six month periods ended April 30, 1994 compared with
the same periods of 1993, primarily due to an increase in work
performed. Engineering and Construction operating profits
increased 20 percent and 19 percent, for the three and six
month periods ended April 30, 1994, respectively, compared with
the same periods of 1993 due primarily to increased margins, as
well as the increased volume of work performed. New awards
for the three and six months ended April 30, 1994 were
essentially level with new awards for the same periods of
1993. New awards within the Hydrocarbon sector represented
approximately 48 percent and 59 percent of total new awards for
the first six months of 1994 and 1993, respectively. Over 60
percent of new awards for the first six months of 1994
were from the European, Asia Pacific and Latin America regions.
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The following table sets forth backlog for each of the
company's business sectors:
April 30, October 31, April 30,
($ in millions) 1994 1993 1993
Hydrocarbon $ 7,088 $ 6,198 $ 5,475
Government 2,117 2,520 2,715
Process 1,847 2,441 3,247
Industrial 2,870 2,706 2,898
Power 928 889 1,006
Total $ 14,850 $ 14,754 $ 15,341
The ratio of international to total backlog was 45 percent, 39
percent, and 37 percent at April 30, 1994, October 31, 1993,
and April 30, 1993, respectively.
COAL
Revenues for the Coal segment increased 24 percent and 16
percent, respectively, for the three and six month periods
ended April 30, 1994 compared with the same periods of 1993,
primarily due to increased sales volume of produced coal. Gross
margin also increased in the three and six month periods of
1994 compared with 1993 primarily due to increased sales volume
of produced coal primarily offset by increased costs including
start-up at certain new mines. During the second quarter
of 1993, a nonrecurring charge was recorded to provide for
settlement of disputed obligations with the pension funds of
the United Mine Workers of America/Bituminous Coal Operators of
America. Excluding the nonrecurring charge, operating profit
increased 13 percent and 18 percent, respectively, for the
three and six month periods of 1994 compared with the same
periods of 1993.
OTHER
Corporate administrative and general expenses increased
approximately $1.8 million and $2.8 million, respectively,
for the three and six months ended April 30, 1994 compared with
the same periods in 1993 primarily due to higher stock price
driven compensation plan expense partially offset by lower
corporate overhead costs.
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Net interest income for the three and six month periods ended
April 30, 1994 increased compared with the same periods of 1993
due to a decrease in total interest expense more than
offsetting a decrease in total interest income. This was due
primarily to the pay down of certain interest bearing debt
together with a decline in the effective interest rates on
interest bearing liabilities.
Net earnings for the three and six months ended April 30, 1993
benefited from the reversal of $12.6 million of income tax
liabilities. That reversal was made in connection with the
completion of a Federal income tax audit in the second quarter
of 1993 for the years 1984 through 1986. The reduction in
liabilities did not affect the company's cash flow. The
effective tax rate for the six month period ended April 30,
1994 was essentially unchanged compared with the same period of
1993, after excluding the favorable tax adjustment.
In November 1992, the Financial Accounting Standards Board
issued Statement of Accounting Standards No. 112, "Employers'
Accounting for Postemployment Benefits" (SFAS No. 112). The
statement requires accrual of the estimated cost of benefits
provided by the employer to former or inactive employees after
employment but before retirement. Adoption of SFAS No. 112 is
not required by the company until fiscal 1995. Although the
precise method and impact of implementation is not known at
this time, management believes the effect, based on the
company's current benefit programs, will not be material.
In May 1993, the Financial Accounting Standards Board issued
Statement of Financial Accounting Standards No. 115,
"Accounting for Certain Investments in Debt and Equity
Securities" (SFAS No. 115). The statement addresses the
accounting and reporting for investments in equity securities
that have readily determinable fair values and for all
investments in debt securities. Adoption of SFAS No. 115 is
not required by the company until fiscal 1995. Based on the
nature and composition of the company's current investment
portfolios, management believes the impact of implementation
will not be material.
FINANCIAL POSITION AND LIQUIDITY
The company expects to have adequate resources available from
cash and short-term investments currently on hand, plus
available revolving credit facilities, capital market sources,
and its commercial paper program to provide for its financing
needs in the foreseeable future.
-12-
On April 7, 1994 the company completed the sale of its Lead
business to an affiliate of a private investment company based
in New York for consideration consisting of both cash and
deferred payments.
For the six months ended April 30, 1994, capital expenditures
were $108.1 million including $77.1 million related primarily to
mine development. Dividends paid in the six months ended April
30, 1994 were $21.4 million ($.26 per share) compared with
$19.7 million ($.24 per share) for the same period of 1993.
The long-term debt to total capital ratio decreased to 5.0
percent at April 30, 1994 compared with 5.4 percent at October
31, 1993, due primarily to the increase in shareholders' equity
from net earnings, net of dividends.
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FLUOR CORPORATION
CONDENSED CONSOLIDATED CHANGES IN BACKLOG
(Dollars in Millions)
UNAUDITED
For the Three Months Ended April 30, 1994 1993
Backlog - beginning of period....... $ 14,814.9 $ 14,935.5
New awards.......................... 2,172.3 2,296.7
Adjustments and cancellations, net.. (277.6) (60.3)
Work performed...................... (1,859.5) (1,831.3)
Backlog - end of period............. $ 14,850.1 $ 15,340.6
For the Six Months Ended April 30, 1994 1993
Backlog - beginning of period....... $ 14,753.5 $ 14,706.0
New awards.......................... 4,506.5 4,353.3
Adjustments and cancellations, net.. (684.9) (255.2)
Work performed...................... (3,725.0) (3,463.5)
Backlog - end of period............. $ 14,850.1 $ 15,340.6
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FLUOR CORPORATION
PART II - Other Information
Item 6. Exhibits and Reports on Form 8-K.
(a) Exhibits.
10.15 1988 Fluor Executive Stock Plan (as
amended and restated effective
October 1, 1993)
10.17 Fluor Special Executive Incentive
Plan (as amended and restated
effective October 1, 1993)
(b) Reports on Form 8-K.
The company filed a Form 8-K to report
the April 7, 1994 sale of its wholly-owned
subsidiary St. Joe Minerals Corporation
("St. Joe") which conducted lead mining,
smelting and recycling operations.
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of
1934, the registrant has duly caused this report to be signed
on its behalf by the undersigned there unto duly authorized.
FLUOR CORPORATION
(Registrant)
Date: June 14, 1994 /s/ J. Michal Conaway
J. Michal Conaway, Vice President
and Chief Financial Officer
(Principal Accounting Officer)