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, 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 May 31, 1995 there were 82,766,165 shares of common
stock outstanding.
FLUOR CORPORATION
FORM 10-Q
April 30, 1995
TABLE OF CONTENTS
PAGE
Part I: Financial Information
Condensed Consolidated Statement of Earnings for
the Three Months Ended April 30, 1995 and 1994.... 2
Condensed Consolidated Statement of Earnings for
the Six Months Ended April 30, 1995 and 1994...... 3
Condensed Consolidated Balance Sheet at April 30,
1995 and October 31, 1994......................... 4
Condensed Consolidated Statement of Cash Flows for
the Six Months Ended April 30, 1995 and 1994...... 6
Notes to Condensed Consolidated Financial
Statements........................................ 7
Management's Discussion and Analysis of Financial
Condition and Results of Operations............... 9
Condensed Consolidated Changes in Backlog.......... 12
Part II: Other Information........................ 13
Signatures........................................... 16
Part I: Financial Information
FLUOR CORPORATION
CONDENSED CONSOLIDATED STATEMENT OF EARNINGS
Three Months Ended April 30, 1995 and 1994
(In Thousands Except Per Share Amounts)
UNAUDITED
1995 1994
REVENUES.............................. $2,229,313 $2,079,593
COSTS AND EXPENSES
Cost of revenues.................... 2,133,971 1,991,323
Corporate administrative and
general expenses................... 12,451 13,332
Interest expense.................... 3,241 4,409
Interest income..................... (7,334) (4,610)
Total Costs and Expenses.............. 2,142,329 2,004,454
EARNINGS BEFORE INCOME TAXES.......... 86,984 75,139
INCOME TAX EXPENSE.................... 31,662 27,400
NET EARNINGS.......................... $ 55,322 $ 47,739
NET EARNINGS PER SHARE................ $ 0.66 $ 0.58
DIVIDENDS PER COMMON SHARE............ $ 0.15 $ 0.13
SHARES USED TO CALCULATE EARNINGS PER
SHARE............................... 83,251 82,815
See Accompanying Notes.
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FLUOR CORPORATION
CONDENSED CONSOLIDATED STATEMENT OF EARNINGS
Six Months Ended April 30, 1995 and 1994
(In Thousands Except Per Share Amounts)
UNAUDITED
1995 1994
REVENUES.............................. $4,288,939 $4,137,258
COSTS AND EXPENSES
Cost of revenues.................... 4,108,666 3,967,949
Corporate administrative and
general expenses................... 22,057 24,012
Interest expense.................... 6,561 8,639
Interest income..................... (14,453) (9,479)
Total Costs and Expenses.............. 4,122,831 3,991,121
EARNINGS BEFORE INCOME TAXES.......... 166,108 146,137
INCOME TAX EXPENSE.................... 60,463 54,400
NET EARNINGS.......................... $ 105,645 $ 91,737
NET EARNINGS PER SHARE................ $ 1.27 $ 1.11
DIVIDENDS PER COMMON SHARE............ $ 0.30 $ 0.26
SHARES USED TO CALCULATE EARNINGS PER
SHARE............................... 83,108 82,615
See Accompanying Notes.
-3-
FLUOR CORPORATION
CONDENSED CONSOLIDATED BALANCE SHEET
April 30, 1995 and October 31, 1994
(Dollars in Thousands)
ASSETS
April 30, October 31,
1995 1994 *
(Unaudited)
Current Assets
Cash and cash equivalents........... $ 312,487 $ 374,468
Marketable securities............... 98,677 117,618
Accounts and notes receivable....... 369,641 318,672
Contract work in progress........... 303,940 308,877
Deferred taxes...................... 46,251 56,967
Inventory and other current assets.. 105,376 81,861
Total Current Assets............... 1,236,372 1,258,463
Property, plant and equipment (net
of accumulated depreciation,
depletion and amortization of
$563,068 and $514,145, respectively) 1,360,071 1,274,437
Investments and goodwill, net......... 63,235 71,596
Other................................. 227,590 220,272
$2,887,268 $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
April 30, 1995 and October 31, 1994
(Dollars in Thousands)
LIABILITIES AND SHAREHOLDERS' EQUITY
April 30, October 31,
1995 1994 *
(Unaudited)
Current Liabilities
Accounts and notes payable.......... $ 309,762 $ 333,244
Commercial paper.................... 19,934 19,957
Advance billings on contracts....... 251,025 220,101
Accrued salaries, wages and
benefit plans...................... 212,645 199,506
Other accrued liabilities........... 210,149 210,511
Current portion of long-term debt... 3,143 38,001
Total Current Liabilities.......... 1,006,658 1,021,320
Long-term debt due after one year..... 23,902 24,366
Deferred taxes........................ 40,002 45,199
Other noncurrent liabilities.......... 511,793 513,427
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 -
82,747,938 shares and 82,507,568
shares, respectively............. 51,717 51,567
Additional capital.................. 508,479 498,804
Retained earnings................... 765,073 684,249
Unamortized executive stock plan
expense............................ (21,598) (14,472)
Cumulative translation adjustments.. 1,242 308
Total Shareholders' Equity......... 1,304,913 1,220,456
$2,887,268 $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
Six Months Ended April 30, 1995 and 1994
(Dollars in Thousands)
UNAUDITED
1995 1994
CASH FLOWS FROM OPERATING ACTIVITIES
Net earnings........................ $ 105,645 $ 91,737
Adjustments to reconcile net
earnings to cash provided by
operating activities:
Depreciation, depletion and
amortization................... 68,449 55,656
Deferred taxes................... 4,079 (5,393)
Equity earnings, net of
distributions................... 12,781 (3,751)
Change in operating assets and
liabilities.................... (48,495) 99,511
Other, net....................... (9,404) 24,502
Cash provided by operating activities. 133,055 262,262
CASH FLOWS FROM INVESTING ACTIVITIES
Capital expenditures................ (160,253) (108,072)
Sale (purchase) of marketable
securities, net.................... 18,941 (13,589)
Initial cash proceeds from sale of
discontinued operations, excluding
tax benefits....................... -- 51,869
Proceeds from sale of property,
plant and equipment................ 8,158 7,952
Investments......................... (5,435) 1,770
Other, net.......................... 4,226 1,402
Cash utilized by investing activities. (134,363) (58,668)
CASH FLOWS FROM FINANCING ACTIVITIES
Decrease in note payable to
affiliate.......................... -- (15,092)
Payments on long-term debt.......... (35,528) (490)
Cash dividends paid................. (24,821) (21,381)
Stock options exercised............. 955 10,653
Other, net.......................... (1,279) (1,076)
Cash utilized by financing activities. (60,673) (27,386)
Increase (decrease) in cash and cash
equivalents......................... (61,981) 176,208
Cash and cash equivalents at
beginning of period................. 374,468 214,844
Cash and cash equivalents at end of
period.............................. $ 312,487 $ 391,052
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 and six months ended April 30, 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
April 30, 1995 and its consolidated results of
operations for the three and six months ended April 30,
1995 and 1994 and cash flows for the six months ended
April 30, 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:
April 30, October 31,
1995 1994
($ in thousands)
Coal........................... $ 35,363 $ 24,289
Supplies and other............. 31,291 28,414
$ 66,654 $ 52,703
(4) Cash paid for interest was $3.8 million and $6.2 million
for the six month periods ended April 30, 1995 and
1994, respectively. Income tax payments, net of refunds,
were $60.4 million and $30.8 million during the six month
periods ended April 30, 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 April 30, 1995 and November
1, 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 and six months ended
April 30, 1995 were not material. The cost of
securities sold is based on the specific identification
method. As of April 30, 1995 approximately $54 million
of securities mature within the next year, approximately
$31 million mature in the next one to three years and
approximately $14 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 increased 7 percent and 4 percent, respectively, for the
three and six month periods ended April 30, 1995, compared with
the same periods of 1994. Net earnings for the three and six
months ended April 30, 1995 were $55.3 million and $105.6
million, respectively, compared with net earnings of $47.7
million and $91.7 million, respectively, for the same periods of
1994. The increases in net earnings are due primarily to higher
earnings for both the Engineering and Construction and Coal
segments, higher interest income and lower corporate general
and administrative expense.
ENGINEERING AND CONSTRUCTION
Revenues for the Engineering and Construction segment increased 8
percent and 4 percent, respectively, for the three and six month
periods ended April 30, 1995 compared with the same periods of
1994, primarily due to an increase in work performed. Engineering
and Construction operating profits increased 6 percent for both
the three and six month periods ended April 30, 1995 compared
with the same periods of 1994 primarily due to the increased
volume of work performed, partially offset by higher levels of
investment spending for strategic business development. 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 and six month periods
ended April 30, 1995 were $2.7 billion and $5.0 billion,
respectively, compared with $2.2 billion and $4.5 billion for the
same periods of 1994. Approximately 70 and 62 percent,
respectively, of new awards for the three and six months ended
April 30, 1995 were for projects located outside the United
States. New awards for the three months ended April 30, 1995
included over $1.0 billion relating to work to be performed on
a power project located in Paiton, Indonesia. The large size
and uncertain timing of new awards can create variability in
the company's award pattern, consequently, future award trends
are difficult to predict with certainty.
-9-
The following table sets forth backlog for each of the company's
business sectors:
April 30, October 31, April 30,
($ in millions) 1995 1994 1994
Process $ 7,175 $ 7,668 $ 7,926
Industrial 3,723 3,564 3,560
Power/Government 3,214 2,369 2,869
Diversified Services 292 421 495
Total $ 14,404 $ 14,022 $ 14,850
Approximately 56 percent of backlog at April 30, 1995 relates to
projects located outside of the United States compared with 51
percent at October 31, 1994 and 45 percent at April 30, 1994.
COAL
Revenues from produced coal increased 6 percent and 13 percent,
respectively, for the three and six month periods ended
April 30, 1995 compared with the same periods of 1994. These
increases were primarily due to increased sales volume of
metallurgical coal, which more than offset lower demand
for steam coal stemming from relatively mild winter
weather. Brokered coal sales and margins in the three and six
months ended April 30, 1995 and 1994 were immaterial as
brokered coal volume has been replaced with produced coal from
reserves acquired in recent years. Accordingly, brokered coal
sales are excluded from revenue in 1995 and related gross
margin is classified as other operating profit. Prior periods
have not been restated. Operating profit increased 20 percent
and 11 percent, respectively, for the three and six months
ended April 30, 1995 compared with the same periods of 1994,
due primarily to increased sales volume of metallurgical coal
which has a higher gross margin than steam coal. This was
partially offset by the continuation of fixed costs related to
certain steam coal mines that were temporarily shutdown due to
the soft steam coal market.
OTHER
Corporate administrative and general expenses decreased
approximately $.9 million and $2.0 million, respectively, for the
three and six months ended April 30, 1995 compared with the same
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periods in 1994, primarily due to lower corporate overhead
partially offset by higher stock price and performance driven
compensation plans expense. Net interest income for the three
and six months ended April 30, 1995 increased $3.9 million and
$7.1 million, respectively, due to 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 six month period ended
April 30, 1995 was essentially unchanged from the same period
of 1994.
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 additional 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.
The change in operating assets and liabilities for the six
months ended April 30, 1995 resulted primarily from higher coal
inventory due to lower demand for steam coal stemming from
relatively mild winter weather, and higher coal receivables
from increased metallurgical coal sales.
For the six months ended April 30, 1995, capital expenditures
were $160.3 million including $85.6 million related primarily to
mine development at Massey. Dividends paid in the six months
ended April 30, 1995 were $24.8 million (.30 per share)
compared with $21.4 million ($.26 per share) for the same
period of 1994.
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FLUOR CORPORATION
CONDENSED CONSOLIDATED CHANGES IN BACKLOG
(Dollars in Millions)
UNAUDITED
For the Three Months Ended April 30, 1995 1994
Backlog - beginning of period....... $ 14,115.7 $ 14,814.9
New awards.......................... 2,719.3 2,172.3
Adjustments and cancellations, net.. (422.9) (277.6)
Work performed...................... (2,007.9) (1,859.5)
Backlog - end of period............. $ 14,404.2 $ 14,850.1
For the Six Months Ended April 30, 1995 1994
Backlog - beginning of period....... $ 14,021.9 $ 14,753.5
New awards.......................... 4,971.2 4,506.5
Adjustments and cancellations, net.. (740.7) (684.9)
Work performed...................... (3,848.2) (3,725.0)
Backlog - end of period............. $ 14,404.2 $ 14,850.1
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FLUOR CORPORATION
PART II - Other Information
Item 4. Submission of Matters to a Vote of Security Holders.
(a) Date of meeting. The annual meeting of
stockholders of Fluor Corporation was held on
March 14, 1995 at the Hyatt Regency Hotel
Irvine in Irvine, California.
(b) Election of Directors.
Directors elected -
Carroll A. Campbell
66,599,780 FOR
425,567 VOTED TO WITHHOLD AUTHORITY
Robert V. Lindsay
66,705,529 FOR
319,818 VOTED TO WITHHOLD AUTHORITY
Leslie G. McCraw
66,765,711 FOR
259,636 VOTED TO WITHHOLD AUTHORITY
Dr. Martha R. Seger
66,521,445 FOR
503,902 VOTED TO WITHHOLD AUTHORITY
Other directors continuing in office -
Hugh K. Coble
Peter J. Fluor
Dr. David P. Gardner
William R. Grant
Bobby R. Inman
Vilma S. Martinez
Buck Mickel
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(c) Matters voted upon.
Ratification of the appointment of Ernst &
Young LLP as auditors for the fiscal year
ending October 31, 1995:
66,562,984 FOR
104,801 AGAINST
-0- BROKER NON-VOTE
|Approval of the Stock Plan for Non-Employee
|Directors:
57,496,336 FOR
7,075,819 AGAINST
2,453,192 ABSTAIN
-0- BROKER NON-VOTE
(d) Terms of settlement between registrant and
any other participant. None.
-14-
FLUOR CORPORATION
PART II - Other Information
Item 6. Exhibits and Reports on Form 8-K.
(a) Exhibits.
10.4 Fluor Corporation Deferred Directors'
Fees Program (as amended through
July 31, 1992)
10.21 Fluor Corporation Stock Plan For
Non-Employee Directors (adopted
effective March 14, 1995)
(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 thereunto duly authorized.
FLUOR CORPORATION
(Registrant)
Date: June 14, 1995 /s/ J. Michal Conaway
J. Michal Conaway, Vice President
and Chief Financial Officer
Date: June 14, 1995 /s/ V.L. Prechtl
V.L. Prechtl, Vice President and
Controller
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