Fluor 2007 Annual Report Download - page 104

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FLUOR CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
Fair Value of Financial Instruments
The estimated fair values of the company’s financial instruments are as follows:
December 31, 2007 December 31, 2006
Carrying Value Fair Value Carrying Value Fair Value
(in thousands)
Assets:
Cash and cash equivalents
Marketable securities
Notes receivable, including noncurrent portion
$1,175,144
539,242
17,782
$1,175,144
539,242
17,782
$976,050
—
26,716
$976,050
—
26,716
Liabilities:
1.5% Convertible Senior Notes
Non-recourse project finance debt
Other debt obligations
307,222
—
17,704
785,106
—
18,355
329,999
192,819
36,812
504,075
192,819
37,556
Other financial instruments:
Foreign currency contracts 1,555 1,555 12,336 12,336
Fair values were determined as follows:
• The carrying amounts of cash and cash equivalents, marketable securities, short-term notes
receivable, commercial paper, loan notes and notes payable approximate fair value because of the
short-term maturity of these instruments.
• Long-term notes receivable are estimated by discounting future cash flows using the current rates at
which similar loans would be made to borrowers with similar credit ratings.
• The fair value of debt obligations is estimated based on quoted market prices for the same or
similar issues or on the current rates offered to the company for debt of the same maturities.
• Foreign currency contracts are estimated by obtaining quotes from brokers.
Financing Arrangements
During the third quarter of 2006 the company amended and restated its Senior Credit Facility,
increasing the size from $800 million to $1.5 billion and extending the maturity to 2011, which provides for
revolving loans and letters of credit. Borrowings on committed lines bear interest at rates based on the
London Interbank Offered Rate (‘‘LIBOR’’) plus an applicable borrowing margin. At December 31, 2007,
no amounts were outstanding for commercial paper or funded loans. The company has $2.2 billion in
committed and uncommitted lines of credit to support letters of credit. Letters of credit are provided to
clients in the ordinary course of business in lieu of retention or for performance and completion
guarantees on engineering and construction contracts. At December 31, 2007, the company had utilized
$994 million of its credit capacity. In addition, the company has $113 million in credit lines for general
purposes in addition to the amount above. The company also posts surety bonds as generally required by
commercial terms, primarily on state and local government projects to guarantee its performance on
contracts.
F-21