Fluor 2001 Annual Report Download - page 39

FLUOR CORPORATION 2001 ANNUAL REPORT
NON-CORE OPERA TIONS In September 2001, the Board of Directors
approved a plan to dispose of certain non-core elements of the com-
pany’s construction equipment and temporary staffing operations.
An active program to consummate such disposal has been initiated
and is expected to be completed by the end of 2002. Management’s
plans call for these operations to be disposed of by sale of the oper-
ating unit or of the related assets. The operations to be disposed of
include the following:
• Dealership operations of AMECO
• AMECO subsidiaries in Peru and Argentina
• GlobEquip, LLC
• TRS, except for the onsite recruiting services operations that
support operations in the U.S. and U.K.
Results of operations for the non-core businesses for all peri-
ods presented have been reclassified and are presented as dis-
continued operations. Interest expense was not reclassified to
discontinued operations in connection with the non-core businesses
because it is not expected that disposal of those operations will
include any debt to be assumed by the buyers.
In December 2001, the company sold Stith Equipment, one of
the AMECO dealership entities, for cash equal to its carrying value as
adjusted at the time the non-core operations were declared for sale.
MASSEY ENERGY COMPANY On November 30, 2000, a spin-off
distribution to shareholders was effected which separated Fluor
Corporation (Fluor) into two publicly traded companies — a “new”
Fluor (“new Fluor” or the “company”) and Massey Energy Company
(“Massey”). The spin-off was accomplished through the distribution
of 100% of the common stock of new Fluor to shareholders of exist-
ing Fluor. As a result, each existing Fluor shareholder received one share
of new Fluor common stock for each share of existing Fluor common
stock and retained their shares in existing Fluor, whose name was
changed to Massey Energy Company. The company received a ruling
from the Internal Revenue Service that the spin-off would be tax-
free to its shareholders. Commencing December 1, 2000 the financial
statements of the company no longer include Massey. Because of the
relative significance of the company’s operations to Fluor, the com-
pany was treated as the “accounting successor” for financial report-
ing purposes. Accordingly, Massey’s results of operations for all
periods presented have been reclassified and are presented as dis-
continued operations.
In connection with the spin-off, the 6.95% Senior Notes due
March 1, 2007 remained an obligation of Massey. In addition, Massey
issued $278 million of commercial paper, the proceeds of which were
transferred to the company. Interest expense on the 6.95% Senior
Notes and up to $230 million of commercial paper has been reclas-
sified to discontinued operations to recognize the impact that the debt
would have on Massey’s results of operations.
Net earnings for the year ended October 31, 2000 includes a
$24.2 million loss on disposal associated with the spin-off. The
The revenues and earnings (loss) from discontinued operations related to non-core operations and Massey are as follows:
Year Ended Two Months Ended
December 31, October 31, October 31, December 31, December 31,
2001 2000 1999 2000 1999
(in thousands) (unaudited)
Revenue
Dealership operations $ 279,099 $ 321,979 $ 338,734 $49,826 $ 48,709
Other equipment operations 10,153 23,571 22,036 2,472 3,134
Temporary staffing operations 138,102 201,725 221,300 32,235 43,388
Massey — 1,085,833 1,083,030 — 176,566
Total Revenue $ 427,354 $1,633,108 $1,665,100 $84,533 $271,797
Earnings (Loss) from Discontinued Operations:
Dealership operations $ 13,569 $ (19,087) $ 11,241 $ 1,607 $ 2,589
Other equipment operations (1,787) (3,165) (3,086) 275 316
Temporary staffing operations (9,898) 186 (20,248) (1,752) 2,050
Massey — 96,115 139,378 — 17,804
Operating profit 1,884 74,049 127,285 130 22,759
Interest expense, net — 27,857 30,306 — 5,545
Earnings from discontinued operations before tax 1,884 46,192 96,979 130 17,214
Provision for taxes 1,632 14,301 30,967 76 4,850
Earnings from discontinued operations $ 252 $ 31,891 $ 66,012 $ 54 $ 12,364
Loss on disposal before tax $(139,423) $ (24,215) $ — $ — $ —
Tax benefit (30,815) — — — —
Loss on disposal $(108,608) $ (24,215) $ — $ — $ —
PAGE 37