Fluor 2007 Annual Report Download - page 49

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example, when we sold our mining business formerly conducted through St. Joe Minerals Corporation, we
retained responsibility for certain non-lead related environmental liabilities, but only to the extent that
such liabilities were not covered by St. Joe’s comprehensive general liability insurance. While we are not
currently aware of any material exposure arising from our former St. Joe’s business or otherwise, the cost
of complying with rulings and regulations or satisfying any environmental remediation requirements for
which we are found responsible could be substantial and could reduce our profits.
A substantial portion of our business is generated either directly or indirectly as a result of federal,
state, local and foreign laws and regulations related to environmental matters. A reduction in the number
or scope of these laws or regulations, or changes in government policies regarding the funding,
implementation or enforcement of such laws and regulations, could significantly reduce the size of one of
our markets and limit our opportunities for growth or reduce our revenue below current levels.
If we experience delays and/or defaults in customer payments, we could suffer liquidity problems or we could
be unable to recover all expenditures.
Because of the nature of our contracts, we sometimes commit resources to projects prior to receiving
payments from the customer in amounts sufficient to cover expenditures as they are incurred. Delays in
customer payments may require us to make a working capital investment. If a customer defaults in making
its payments on a project in which we have devoted significant resources, it could have a material negative
effect on our results of operations or liquidity.
Our use of the percentage-of-completion method of accounting could result in a reduction or reversal of
previously recorded revenue or profits.
Under our accounting procedures, we measure and recognize a large portion of our profits and
revenue under the percentage-of-completion accounting methodology. This methodology allows us to
recognize revenue and profits ratably over the life of a contract by comparing the amount of the cost
incurred to date against the total amount of cost expected to be incurred. The effect of revisions to revenue
and estimated cost is recorded when the amounts are known and can be reasonably estimated, and these
revisions can occur at any time and could be material. On a historical basis, we believe that we have made
reasonably reliable estimates of the progress towards completion on our long term contracts. However,
given the uncertainties associated with these types of contracts, it is possible for actual cost to vary from
estimates previously made, which may result in reductions or reversals of previously recorded revenue and
profits.
We could be adversely affected by violations of the U.S. Foreign Corrupt Practices Act and similar worldwide
anti-bribery laws.
The U.S. Foreign Corrupt Practices Act (‘‘FCPA’’) and similar anti-bribery laws in other jurisdictions
generally prohibit companies and their intermediaries from making improper payments to non-U.S.
officials for the purpose of obtaining or retaining business. Our policies mandate compliance with these
anti-bribery laws. We operate in many parts of the world that have experienced governmental corruption to
some degree and, in certain circumstances, strict compliance with anti-bribery laws may conflict with local
customs and practices. We train our staff concerning FCPA issues, and we also inform our partners,
subcontractors, agents and others who work for us or on our behalf that they must comply with FCPA
requirements. We also have procedures and controls in place to monitor internal and external compliance.
We cannot assure you that our internal controls and procedures always will protect us from the reckless or
criminal acts committed by our employees or agents. If we are found to be liable for FCPA violations
(either due to our own acts or our inadvertence, or due to the acts or inadvertence of others), we could
suffer from criminal or civil penalties or other sanctions which could have a material adverse effect on our
business.
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