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 January 31, 1995
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 February 28, 1995 there were 82,736,969 shares of common
stock outstanding.
FLUOR CORPORATION
FORM 10-Q
January 31, 1995
TABLE OF CONTENTS
PAGE
Part I: Financial Information
Condensed Consolidated Statement of Earnings for
the Three Months Ended January 31, 1995 and 1994.. 2
Condensed Consolidated Balance Sheet at January 31,
1995 and October 31, 1994......................... 3
Condensed Consolidated Statement of Cash Flows for
the Three Months Ended January 31, 1995 and 1994.. 5
Notes to Condensed Consolidated Financial
Statements........................................ 6
Management's Discussion and Analysis of Financial
Condition and Results of Operations............... 8
Condensed Consolidated Changes in Backlog.......... 11
Part II: Other Information........................ 12
Signatures........................................... 13
Part I: Financial Information
FLUOR CORPORATION
CONDENSED CONSOLIDATED STATEMENT OF EARNINGS
Three Months Ended January 31, 1995 and 1994
(In Thousands Except Per Share Amounts)
UNAUDITED
1995 1994
REVENUES.............................. $2,059,626 $2,057,665
COSTS AND EXPENSES
Cost of revenues.................... 1,974,695 1,976,626
Corporate administrative and
general expenses................... 9,606 10,680
Interest expense.................... 3,320 4,230
Interest income..................... (7,119) (4,869)
Total Costs and Expenses.............. 1,980,502 1,986,667
EARNINGS BEFORE INCOME TAXES.......... 79,124 70,998
INCOME TAX EXPENSE.................... 28,801 27,000
NET EARNINGS.......................... $ 50,323 $ 43,998
NET EARNINGS PER SHARE................ $ 0.61 $ 0.53
DIVIDENDS PER COMMON SHARE............ $ 0.15 $ 0.13
SHARES USED TO CALCULATE EARNINGS PER
SHARE............................... 82,966 82,415
See Accompanying Notes.
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FLUOR CORPORATION
CONDENSED CONSOLIDATED BALANCE SHEET
January 31, 1995 and October 31, 1994
(Dollars in Thousands)
ASSETS
January 31, October 31,
1995 1994 *
(Unaudited)
Current Assets
Cash and cash equivalents........... $ 313,840 $ 374,468
Marketable securities............... 111,893 117,618
Accounts and notes receivable....... 333,163 318,672
Contract work in progress........... 250,002 308,877
Deferred taxes...................... 52,851 56,967
Inventory and other current assets.. 96,138 81,861
Total Current Assets............... 1,157,887 1,258,463
Property, plant and equipment (net
of accumulated depreciation,
depletion and amortization of
$537,626 and $514,145, respectively) 1,319,383 1,274,437
Investments and goodwill, net......... 74,535 71,596
Other................................. 231,649 220,272
$2,783,454 $2,824,768
(Continued On Next Page)
* Amounts at October 31, 1994 have been derived from audited
financial statements.
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FLUOR CORPORATION
CONDENSED CONSOLIDATED BALANCE SHEET
January 31, 1995 and October 31, 1994
(Dollars in Thousands)
LIABILITIES AND SHAREHOLDERS' EQUITY
January 31, October 31,
1995 1994 *
(Unaudited)
Current Liabilities
Accounts and notes payable.......... $ 254,113 $ 333,244
Commercial paper.................... 19,901 19,957
Advance billings on contracts....... 260,031 220,101
Accrued salaries, wages and
benefit plans...................... 185,418 199,506
Other accrued liabilities........... 221,643 210,511
Current portion of long-term debt... 3,217 38,001
Total Current Liabilities.......... 944,323 1,021,320
Long-term debt due after one year..... 24,098 24,366
Deferred taxes........................ 40,099 45,199
Other noncurrent liabilities.......... 516,100 513,427
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 -
82,730,575 shares and 82,507,568
shares, respectively............. 51,707 51,567
Additional capital.................. 507,940 498,804
Retained earnings................... 722,163 684,249
Unamortized executive stock plan
expense............................ (22,562) (14,472)
Cumulative translation adjustments.. (414) 308
Total Shareholders' Equity......... 1,258,834 1,220,456
$2,783,454 $2,824,768
See Accompanying Notes.
* Amounts at October 31, 1994 have been derived from audited
financial statements.
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FLUOR CORPORATION
CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS
Three Months Ended January 31, 1995 and 1994
(Dollars in Thousands)
UNAUDITED
1995 1994
CASH FLOWS FROM OPERATING ACTIVITIES
Net earnings........................ $ 50,323 $ 43,998
Adjustments to reconcile net
earnings to cash provided by
operating activities:
Depreciation, depletion and
amortization................... 32,929 27,134
Discontinued operations.......... -- (3,138)
Deferred taxes................... 627 906
Change in operating assets and
liabilities.................... (11,936) 50,353
Other, net....................... (11,452) 3,351
Cash provided by operating activities. 60,491 122,604
CASH FLOWS FROM INVESTING ACTIVITIES
Capital expenditures................ (81,644) (64,644)
Sale of marketable securities, net.. 5,725 9,700
Proceeds from sale of property,
plant and equipment................ 3,706 2,766
Investments......................... (1,377) (264)
Other, net.......................... (136) (204)
Cash utilized by investing activities. (73,726) (52,646)
CASH FLOWS FROM FINANCING ACTIVITIES
Decrease in note payable to
affiliate.......................... -- (16,350)
Payments on long-term debt.......... (35,052) (72)
Cash dividends paid................. (12,409) (10,672)
Stock options exercised............ 439 1,852
Other, net.......................... (371) (566)
Cash utilized by financing activities. (47,393) (25,808)
Increase (decrease) in cash and cash
equivalents......................... (60,628) 44,150
Cash and cash equivalents at
beginning of period................. 374,468 214,844
Cash and cash equivalents at end of
period.............................. $ 313,840 $ 258,994
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, 1994 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 months ended January 31, 1995 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
January 31, 1995 and its consolidated results of
operations for the three months ended January 31,
1995 and 1994 and cash flows for the three months ended
January 31, 1995 and 1994.
(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:
January 31, October 31,
1995 1994
($ in thousands)
Coal........................... $ 26,394 $ 24,289
Supplies and other............. 33,466 28,414
$ 59,860 $ 52,703
(4) Cash paid for interest was $1.8 million and $3.0 million
for the three month periods ended January 31, 1995 and
1994, respectively. Income tax payments, net of refunds,
were $15 million and $7 million during the three month
periods ended January 31, 1995 and 1994, respectively.
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(5) Effective November 1, 1994, the company adopted Statement
of Financial Accounting Standards No. 115, "Accounting for
Certain Investments in Debt and Equity Securities" (SFAS
No. 115), which requires that the carrying value of debt
and equity securities be adjusted according to guidelines
based on their classification as held-to-maturity,
available-for-sale or trading. Management determines
classification at the time of purchase and reevaluates
its appropriateness at each balance sheet date. The
company's investments primarily include short-term, highly
liquid investment grade securities which are usually sold
before their maturity. Accordingly, all investment
securities are considered to be available-for-sale and
carried at fair value. As of January 31, 1995 and October
31, 1994 there were no material gross unrealized gains or
losses as the carrying value of the security portfolio
approximated fair value. Gross realized gains and losses
on sales of securities for the three months ended January
31, 1995 and 1994 were not material. The cost of
securities sold is based on the specific identification
method. As of January 31, 1995 approximately $75 million
of securities mature within the next year, approximately
$20 million mature in the next one to three years and
approximately $17 million mature after three years.
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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 for the three month period ended January 31, 1995 were
$2.1 billion, level with the same period in 1994. Net earnings
for the three month period ended January 31, 1995 were $50.3
million compared with $44.0 million for the same period in
1994. The increase in net earnings is due primarily to higher
earnings for the Engineering and Construction segment, higher
interest income and lower corporate general and administrative
expense.
ENGINEERING AND CONSTRUCTION
Revenues for the Engineering and Construction segment for the
three month period ended January 31, 1995 were level with the
same period in 1994. Engineering and Construction operating
profit increased 6 percent in the first quarter of 1995
compared with the first quarter of 1994 due primarily to
improved margins. Reported margins may fluctuate from time to
time as a result of changes in the mix of engineering and
design services and construction related services. New awards
for the three months ended January 31, 1995 and 1994 were both
$2.3 billion. New awards within the Process sector represented
approximately 57 percent of total new awards for the first
quarter. In addition, approximately 51 percent of total new
awards was for projects located outside the United States. The
large size and uncertain timing of new awards can create
variability in the company's award pattern, consequently,
future award trends are difficult to predict with certainty.
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The following table sets forth backlog for each of the
company's business sectors:
January 31, October 31, January 31,
($ in millions) 1995 1994 1994
Process 7,568 7,668 7,981
Industrial 3,969 3,564 3,330
Power/Government 2,253 2,369 2,960
Diversified Services 326 421 544
Total 14,116 14,022 14,815
The ratio of international to total backlog was 51 percent at
January 31, 1995.
COAL
Revenues for the Coal segment increased 11 percent for the three
month period ended January 31, 1995 compared with the same
period in 1994 due primarily to a 20 percent increase in the
sales volume of produced coal. Increased sales volume resulted
from strong sales of metallurgical coal, which more than offset
softer market conditions for steam coal stemming from relatively
mild weather during the quarter. Gross margin increased due to
the higher sales volume partially offset by higher production
costs per ton. Increased production costs resulted from fixed
cost incurred during the temporary shut-down of certain steam
coal mines due to the softer steam coal market. Operating
profit for the three months ended January 31, 1995 increased 2
percent compared with the three months ended January 31, 1994
due primarily to increased gross margin. Brokered coal sales
revenues and related cost of sales are netted and classified as
other operating profit in 1995. Margins contributed from
brokered coal sales have been immaterial as brokered coal
volume has been replaced with produced coal from reserves
acquired in recent years.
OTHER
Corporate administrative and general expenses decreased $1.1
million for the three months ended January 31, 1995, compared
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with the same period of 1994 due primarily to lower corporate
overhead and stock price driven compensation plan expense, partially
offset by higher performance driven compensation plans expense.
Net interest income for the three months ended January 31, 1995
increased $3.2 million compared with 1994 due to higher interest
earning assets, higher interest rates and the prepayment of a
13.5 percent $34.7 million note in the first quarter of 1995.
The effective income tax rate for the three month period ended
January 31, 1995 decreased compared with the same period for
1994 as a result of reductions in foreign taxes within
jurisdictions where the rate exceeds the U.S. statutory rate,
and a decrease in items without tax effect.
The company does not have substantial net assets or liabilities
denominated in foreign currencies and, therefore, does not have
significant risk to currency fluctuations. Although there has
been a continued market devaluation in the Mexican peso since
the official government devaluation on December 20, 1994, the
company believes that its investment in ICA Fluor Daniel has
not been permanently impaired as prospects remain for long-term
engineering and construction work in Mexico.
Effective November 1, 1994, the company adopted Statement of
Financial Accounting Standards No. 115, "Accounting for Certain
Investments in Debt and Equity Securities" (SFAS No. 115). The
adoption of SFAS No. 115 had no material impact on results of
operations or financial position.
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 for the foreseeable future.
For the three months ended January 31, 1995, capital
expenditures were $81.6 million including $47.4 million related
to coal mine development. Dividends paid in the three months
ended January 31, 1995 were $12.4 million ($.15 per share)
compared with $10.7 million ($.13 per share) for the same
period of 1994.
The long-term debt to total capital ratio decreased to 1.9
percent at January 31, 1995, compared with 2.0 percent at
October 31, 1994, due to the increase in shareholders' equity
primarily from earnings net of dividends.
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FLUOR CORPORATION
CONDENSED CONSOLIDATED CHANGES IN BACKLOG
(Dollars in Millions)
UNAUDITED
For the Three Months Ended January 31, 1995 1994
Backlog - beginning of period....... 14,021.9 14,753.5
New awards.......................... 2,251.9 2,334.2
Adjustments and cancellations, net.. (317.8) (407.3)
Work performed...................... (1,840.3) (1,865.5)
Backlog - end of period............. 14,115.7 14,814.9
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FLUOR CORPORATION
PART II - Other Information
Item 6. Exhibits and Reports on Form 8-K.
(a) Exhibits.
10.13 Third Amendment to and Restatement of
the Fluor Excess Benefit Plan (adopted
as of December 6, 1994)
10.15 1988 Fluor Executive Stock Plan (as
amended and restated effective
December 6, 1994)
10.17 Fluor Special Executive Incentive Plan
(as amended and restated effective
December 6, 1994)
10.20 Directors' Achievement Award Program
(adopted as of December 6, 1994)
(b) Reports on Form 8-K. None.
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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: March 16, 1995 /s/ J. Michal Conaway
J. Michal Conaway, Vice President
and Chief Financial Officer
(Principal Accounting Officer)
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