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FLUOR CORPORATION 2001
ANNUAL REPORT

Table of contents

  • Page 1
    FLUOR CORPORATION 2 0 01 ANNUAL REPORT

  • Page 2
    ... approved a spin-off that separated the company into two publicly traded companies - a "new" Fluor and Massey Energy Company. In September 2001, the company adopted a plan to dispose of certain non-core construction equipment and temporary staffing businesses. The net assets and the results of...

  • Page 3
    ... Auditors' Report 50 Quarterly Financial Data 51 Board of Directors 52 Officers 2 0 0 1 ANNUAL REPORT Fluor Corporation is one of the world's largest, publicly owned engineering, procurement, construction and maintenance companies. Our exceptional record of dependability, expertise and safety...

  • Page 4
    ... REPORT ALAN L. BOECKMANN DEAR FELLOW SHAREHOLDERS OUTSTANDING PROGRESS HAS BEEN MADE OVER THE PAST TWO YEARS IN STRENGTHENING FLUOR'S BUSINESS OPERATIONS AND ESTABLISHING A SOLID FOUNDATION FOR EARNINGS GROWTH AND CREATION OF SHAREHOLDER VALUE. DURING 2001, WE INITIATED THE STRATEGIC ACTIONS...

  • Page 5
    ... growth opportunities within our core EPCM competencies. As a result of this decision, Fluor recognized an after-tax loss in 2001 from discontinued operations of $108.6 million, or $1.36 per share, for disposal of non-strategic businesses. Included in this provision, which reduces to current fair...

  • Page 6
    ... AND CHIEF EXECUTIVE OFFICER FLUOR CORPORATION CHAIRMAN AND CEO PHIL CARROLL RETIRES Congratulations are again in order to Fluor's employees for another outstanding year of safety performance. Safety remains a core value at Fluor and is a clear competitive differentiator. Fluor completed 2001 with...

  • Page 7
    FLUOR CORPORATION 2001 ANNUAL REPORT FLUOR AT-A-GLANCE 2001 Over the past century, Fluor has become a trusted global business leader by providing exceptional expertise and technical knowledge across every phase of a customer's project. Consistently rated as one of the world's safest contractors, ...

  • Page 8
    ... years in the global energy and chemical markets. Fluor's experience, expertise and global reach position the company extremely well for significant growth in this key market. During 2001, Fluor was engaged in front-end engineering for a number of major upstream programs for the production of new...

  • Page 9
    ... a five-year renewal. â-² â-² â-² Fluor recently completed Europe's first facility for the production of ultra-clean motor fuels for Ruhr Oel GmbH, Germany's largest refining company. Fluor provided EPC services for Auto Oil Program II, which utilizes Prime-G process technology at its new gasoline...

  • Page 10
    ... growth and development of its industrial infrastructure. Fluor's experience and strong technological expertise is also a key value differentiator in the active downstream refining market for clean fuels projects. Mandated by new environmental regulations, refiners in North America and Europe...

  • Page 11
    ...dominates. During the year, Fluor expanded its geographic scope in the global life sciences market and is now working on projects in the U.K., Ireland and Europe, in addition to its strong continuing presence in North America and Puerto Rico. Despite a significant decline in 2001 capital spending by...

  • Page 12
    ... also selectively pursuing large-scale commercial opportunities where its experience, relationships or execution capabilities provide a competitive advantage. For example, Fluor was awarded construction management services for the new Orange County Performing Arts Center in California, and has also...

  • Page 13
    ... time with Fluor providing total project services. Encompassing 250,000 square feet in Raleigh, North Carolina, the facility is setting new standards in the biotech industry for production cost efficiency, flexible multi-product operations, and modular design and construction. This project also...

  • Page 14
    ... the largest public-private partnership contract ever awarded by the Dutch government. When completed in 2006, the train will be a key development of the Trans-European Rail Network. â-¼ Fluor engaged in a public-private partnership (PPP) with the South Carolina Department of Transportation (SCDOT...

  • Page 15
    ... as overall POWER Fluor's power business is primarily conducted through Duke/Fluor Daniel (D/FD), a 50/50 partnership, which capitalized on an extremely robust U.S. market in 2001. The company also executes power projects in Mexico and Central America through its jointventure ICA Fluor. New power...

  • Page 16
    Duke/Fluor Daniel (D/FD) met Texas Independent Energy's aggressive schedule and budget targets for the Guadalupe Power Project, one of the cleanest power plants in Texas, by working on a fast-track basis with commercial operation beginning in less than 18 months. D/FD provided complete turnkey EPC ...

  • Page 17
    ... marketing strategies and work processes during the year to enhance its focus and value proposition in its continuing business activities. By leveraging its extensive construction experience, AMECO Site Services is able to create added value GLOBAL SERVICES Fluor's Global Services business segment...

  • Page 18
    FLUOR CORPORATION 2001 ANNUAL REPORT Fluor continues to benefit from the market trend to outsource operations and maintenance services as companies focus on their core competencies. To capitalize on the market's outsourcing growth potential and increase market share, Fluor selecThis approach not ...

  • Page 19
    FLUOR CORPORATION 2001 ANNUAL REPORT action to exit non-strategic businesses, Fluor discontinued the non-EPCM portions of TRS Staffing Solutions and is pursuing the sale of these units. As a result, TRS is again concentrating its focus on the growing opportunities within the global EPCM market. ...

  • Page 20
    ...'s call for assistance on New York's World Trade Center, the largest emergency work disaster in FEMA history, with a team of professionals including public assistance coordinators, debris specialists, estimators, training specialists, and both technical and administrative resources. PAGE 18 â-²

  • Page 21
    .... While continuing to pursue new opportunities within the Department of Energy (DOE) where it is well established, the company is also executing a strategy to expand its penetration in the broader federal marketplace. Operating profit for Fluor's Government Services business increased 37 percent to...

  • Page 22
    FLUOR CORPORATION 2001 ANNUAL REPORT OPERATING STATISTICS NEW AWARDS BY SEGMENT Year ended (in millions) December 31, 2001 Dollars Percent October 31, 2000 Dollars Percent October 31, 1999 Dollars Percent Energy & Chemicals Industrial & Infrastructure Power Global Services Government Services ...

  • Page 23
    FLUOR CORPORATION 2001 ANNUAL REPORT OPERATING STATISTICS Year ended (in millions) December 31, 2001 October 31, 2000 October 31, 1999 Revenues Energy & Chemicals Industrial & Infrastructure Power Global Services Government Services Corporate and other Total revenues Operating profit Energy & ...

  • Page 24
    ... approved a spin-off that separated the company into two publicly traded companies - a "new" Fluor and Massey Energy Company. In September 2001, the company adopted a plan to dispose of certain non-core construction equipment and temporary staffing businesses. The assets and liabilities (including...

  • Page 25
    ... 30, 2001, the company adopted the provisions of SFAS 144 effective January 1, 2001. In September 2001, the Board of Directors approved a plan to dispose of certain non-core operations of the company's construction equipment and temporary staffing businesses. An active program to consummate...

  • Page 26
    FLUOR CORPORATION 2001 ANNUAL REPORT Management believes the following critical accounting policies affect its more significant judgments and estimates used in the preparation of the consolidated financial statements. ENGINEERING AND CONSTRUCTION CONTRACTS Engineering and construction contract ...

  • Page 27
    ... owned partnership with Duke Energy and ICA/Fluor, a 49 percent owned joint venture with Grupo ICA, a Mexican company. The Global Services segment includes operations and maintenance, equipment and temporary staffing services and the company's global sourcing and procurement services business. The...

  • Page 28
    FLUOR CORPORATION 2001 ANNUAL REPORT project located in Dearborn, Michigan. The provision represents the company's equal share of the cost overruns on the project that were incurred due to a number of adverse factors, including labor productivity and substantial owner delays and scope of work ...

  • Page 29
    ...285 30,306 96,979 30,967 66,012 - - - In September 2001, the Board of Directors approved a plan to dispose of certain non-core operations of the company's construction equipment and temporary staffing businesses. An active program has been initiated to consummate such disposal and is expected to be...

  • Page 30
    ... conditions over the last two years. Cash flow from financing activities in 2001 includes significant cash generated from a sale-leaseback transaction and the exercise of stock options. The sale-leaseback of the company's Sugar Land, Texas engineering center generated $127 million in proceeds...

  • Page 31
    ...primarily for engineering and project execution office facilities in Sugar Land, Texas, Aliso Viejo, California and Calgary, Canada. The lease agreements in Aliso Viejo and Calgary contain residual value guarantees totaling $110 million. The company has a common stock buyback program, authorized by...

  • Page 32
    ... 2001, the Board of Directors approved a plan to dispose of certain non-core operations of the company's construction equipment and temporary staffing businesses. Results of operations for the discontinued businesses have been reclassified and are presented as discontinued operations. Revenues...

  • Page 33
    FLUOR CORPORATION 2001 ANNUAL REPORT CONSOLIDATED STATEMENT OF EARNINGS Year Ended December 31, 2001 (in thousands, except per share amounts) October 31, 2000 October 31, 1999 Two Months Ended December 31, 2000 December 31, 1999 (unaudited) TOTAL REVENUES TOTAL COST OF REVENUES OTHER (INCOME) AND ...

  • Page 34
    FLUOR CORPORATION 2001 ANNUAL REPORT CONSOLIDATED BALANCE SHEET December 31, 2001 (in thousands, except share amounts) December 31, 2000 ASSETS CURRENT ASSETS Cash and cash equivalents Accounts and notes receivable Contract work in progress Deferred taxes Other current assets Total current ...

  • Page 35
    FLUOR CORPORATION 2001 ANNUAL REPORT CONSOLIDATED STATEMENT OF CASH FLOWS Year Ended December 31, 2001 (in thousands) October 31, 2000 October 31, 1999 Two Months Ended December 31, 2000 December 31, 1999 (unaudited) CASH FLOWS FROM OPERATING ACTIVITIES Net earnings (loss) Adjustments to ...

  • Page 36
    FLUOR CORPORATION 2001 ANNUAL REPORT CONSOLIDATED STATEMENT OF SHAREHOLDERS' EQUITY Common Stock (in thousands, except per share amounts) Shares Amount Unamortized Executive Stock Plan Expense Accumulated Other Comprehensive Income (Loss) Additional Capital Retained Earnings Total B A L A N C E...

  • Page 37
    FLUOR CORPORATION 2001 ANNUAL REPORT NOTES TO CONSOLIDATED FINANCIAL STATEMENTS MAJOR ACCOUNTING POLICIES The financial statements include the accounts of the company and its subsidiaries. The equity method of accounting is used for investment ownership ranging from 20 percent to 50 percent. ...

  • Page 38
    ... minimal and within management's estimates. STOCK PLANS The company accounts for stock-based compensation using the intrinsic value method prescribed by Accounting Principles Board (APB) Opinion No.25, "Accounting for Stock Issued to Employees," and related Interpretations. Accordingly, compensation...

  • Page 39
    FLUOR CORPORATION 2001 ANNUAL REPORT In September 2001, the Board of Directors approved a plan to dispose of certain non-core elements of the company's construction equipment and temporary staffing operations. An active program to consummate such disposal has been initiated and is expected to be ...

  • Page 40
    ...the company enters into investment arrangements, including joint ventures, that are related to its engineering and construction business. During 1999 through 2001, the majority of these expenditures related to ongoing investments in an equity fund that focuses on energy related projects and a number...

  • Page 41
    FLUOR CORPORATION 2001 ANNUAL REPORT SPECIAL PROVISION AND COST REDUCTION INITIATIVES In March 1999, the company announced a new strategic direction, including a reorganization of the operating units and administrative functions of its engineering and construction segment. In connection with this ...

  • Page 42
    FLUOR CORPORATION 2001 ANNUAL REPORT INCOME TAXES The income tax expense (benefit) included in the Consolidated Statement of Earnings is as follows: Year Ended December 31, 2001 (in thousands) October 31, 2000 October 31, 1999 Two Months Ended December 31, 2000 December 31, 1999 (unaudited) ...

  • Page 43
    ...to retired employees under these plans are generally based upon length of service, age and/or a percentage of qualifying compensation. The defined benefit pension plans are primarily related to domestic and international engineering and construction salaried employees and U.S. craft employees. PAGE...

  • Page 44
    ... health care and life insurance benefits for certain retired employees. The health care and life insurance plans are generally contributory, with retiree contributions adjusted annually. Service costs are accrued currently. The accumulated postretirement benefit obligation at December 31, 2001...

  • Page 45
    .... 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. Fair values were determined as...

  • Page 46
    ... Committee of the Board of Directors ("Committee") comprised of outside directors, none of whom are eligible to participate in the plans. Option grant prices are determined by the Committee and are established at the fair value of the company's common stock at the date of grant. Options and SARS...

  • Page 47
    ...respectively. The company's lease obligations relate primarily to office facilities, equipment used in connection with long-term construction contracts and other personal property. During 2001, the company entered into a sale/leaseback arrangement for its engineering center in Sugar Land, Texas. The...

  • Page 48
    ... engineering, procurement and construction for the manufacturing and life sciences, commercial and institutional, telecommunications, mining and transportation markets. The Power segment includes the company's 50 percent proportional interest in Duke/Fluor Daniel and its 49 percent in the ICA/Fluor...

  • Page 49
    ... was performed. OPERATING INFORMATION BY SEGMENT Year Ended December 31, 2001 (in millions) October 31, 2000 October 31, 1999 Two Months Ended December 31, 2000 External revenues Energy & Chemicals Industrial and Infrastructure Power Global Services Government Services Corporate and other Total...

  • Page 50
    ... $2,701 ENTERPRISE-WIDE DISCLOSURES Revenues from Continuing Operations December 31, 2001 (in millions) October 31, 2000 October 31, 1999 December 31, 2001 Total Assets December 31, 2000 United States* Canada Asia Pacific (includes Australia) Europe Central and South America Middle East and Africa...

  • Page 51
    ... two years in the period ended October 31, 2000, in conformity with accounting principles generally accepted in the United States. ALAN L. BOECKMANN D. MICHAEL STEUERT Chairman of the Board and Chief Executive Officer Senior Vice President and Chief Financial Officer Orange County, California...

  • Page 52
    FLUOR CORPORATION 2001 ANNUAL REPORT Q U A R T E R LY F I N A N C I A L D A T A The following is a summary of the quarterly results of operations: First Quarter (In thousands, except per share amounts) (1) Second Quarter(2) Third Quarter Fourth Quarter Year ended December 31, 2001 Revenues ...

  • Page 53
    FLUOR CORPORATION 2001 ANNUAL REPORT BOARD OF DIRECTORS Pictured from Left to Right: Alan L. Boeckmann, James C. Stein, Thomas L. Gossage, Vilma S. Martinez, Admiral Bobby R. Inman, Governor Carroll Campbell, Jr., Dr. Martha R. Seger, Philip J. Carroll, Jr., James O. Rollans, James T. Hackett, Dr....

  • Page 54
    FLUOR CORPORATION 2001 ANNUAL REPORT OFFICERS ALAN L. BOECKMANN Chairman of the Board and Chief Executive Officer (1979) SENIOR OFFICERS D. MICHAEL STEUERT Senior Vice President and Chief Financial Officer (2001) MARK A. STEVENS Group Executive, Global Services (1975) OTHER CORPORATE OFFICERS ...

  • Page 55
    ... share of common stock and the high and low sales prices of such common stock as reported in the Consolidated Transactions Reporting System. Dividends Per Share Price Range High Low Registrar and Transfer Agent Mellon Investor Services LLC 400 South Hope Street Fourth Floor Los Angeles, California...

  • Page 56
    ... you on www.fluor.com Investor Relations Review the latest news releases for Fluor as well as a six-year archive â- Find Fluor's latest stock price â- Compare Fluor's stock performance versus the S&P 500 â- Find several years of financial publications available for downloading or online viewing...