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FLUOR_ARCVR09_UG-r1.indd 1 3/3/10 7:31:36 AM
Insight 2009
Annual Report

Table of contents

  • Page 1
    Insight 2009 Annual Report

  • Page 2
    ...engineering, procurement, construction, maintenance and project management companies. Over the past century, Fluor, through its operating subsidiaries, has become a trusted global leader in providing exceptional services and technical knowledge. Clients rely on Fluor to deliver world-class solutions...

  • Page 3
    ... individual markets and enhancing consistency in long-term performance. Having advanced global information systems, standardized processes and a dispersed project execution model also supports our ability to respond to changing market conditions and meet client needs. To help mitigate the effects of...

  • Page 4
    ... operating bases in northern Afghanistan. In addition to our long-term contract, we benefited from the U.S. Recovery Act program, with additional funding for our operations, management and remediation work under way at the Department of Energy's Savannah River Site in South Carolina. Fluor's Power...

  • Page 5
    Fluor Corporation 2009 Annual Report 3 25-year Fluor veteran, who was appointed Chief Operating Officer to manage day-today operations, while I concentrate on client relationships and growth strategies. We also bid farewell to two members of our Board of Directors. Vilma Martinez retired to become...

  • Page 6
    4 Fluor Corporation 2009 Annual Report 2009 At-A-Glance Fluor's expertise spans five business segments and six continents - a diversified model that addresses the dynamics of our end markets with the tremendous depth of our shared resources. Only a handful of companies in the world have the proven...

  • Page 7
    ... Fluor. 38% United States 20% Europe 16% Canada 9% Australia 7% Latin America 5% Middle East 3% Asia Pacific 2% Africa Global Services Global Services is a solutions-based business group that encompasses operations and maintenance, equipment services, supply chain solutions and temporary staffing...

  • Page 8
    ...Fluor Corporation 2009 Annual Report Fluor is renowned for its expertise in engineering, procurement, construction, maintenance and project management - reflecting the Company's broad, diversified service offering. Fluor brings to bear its collective insight and combined resources on every project...

  • Page 9
    Fluor Corporation 2009 Annual Report 7 Mike Steuert Senior Vice President & Chief Financial Officer Steve Dobbs Senior Group President, Industrial & Infrastructure and Global Services

  • Page 10
    Fluor Converts Global Demand Into Outstanding Performance.

  • Page 11
    ...year for our Government group. With the contributions from Savannah River and LOGCAP in Afghanistan, they more than doubled their profit on a 50 percent growth in revenue. Mike, can you comment on some of the Company's financial accomplishments, given the difficult credit markets? Mike Steuert: Well...

  • Page 12
    ... every day is about working on growing the business. For example, we are very engaged in leveraging our Fluor Offshore Solutions brand so that we can capture a greater share of this growing market. We've entered into formal alliances with Global Industries and China National Offshore Oil Engineering

  • Page 13
    ... a clean energy type of project. And then there's the work we're doing on carbon capture and sequestration, which is on the forefront of this emerging area. Fluor has a proprietary technology Since 2003, Fluor has continuously provided PMC services to Kuwait Oil Company on numerous upstream oil and...

  • Page 14
    12 Fluor Corporation 2009 Annual Report called Econamine FG PlusSM that has been proven at scale in many oil and gas applications. We are doing a pilot plant in Germany on the Power side, and are also evaluating CO2 capture solutions for a proposed coal-fired power plant for Tenaska in Texas. As a...

  • Page 15
    Fluor's Execution Excellence Keeps Progress Moving Forward.

  • Page 16
    14 Fluor Corporation 2009 Annual Report United States, it's good for the client. It provides a huge advantage in terms of getting the project done in a very costeffective and timely manner. Also, the depth of talent within this Company is amazing. We can quickly access the knowledge base across ...

  • Page 17
    ... active in 2009, with new awards ranging from diamond mine upgrades in Botswana to nickel processing operations in Canada. We also moved forward with work on roads, bridges, hospitals, wind farms and more. Highlights included the completion of both the SH 130 project in Texas and the London...

  • Page 18
    Fluor Brings Decades of Experience to Every Project.

  • Page 19
    ...Page: The American Recovery and Reinvestment Act expanded Fluor 's scope of work at the U.S. Department of Energy 's Savannah River Site, which a Fluor-led team operates and maintains. In Iraq, Fluor provides the U.S. Army Corps of Engineers with mission-critical services such as power delivery and...

  • Page 20
    18 Fluor Corporation 2009 Annual Report Fluor's scope of work for the LOGCAP IV contract includes directly supporting the U.S. Army and its soldiers at more than 70 bases in Afghanistan, providing construction, operations, maintenance and life support services. Government Led by notable awards ...

  • Page 21
    ... factor in being able to make their growth plans, and they're buying properties in Africa, South America, Australia and elsewhere to develop for their own consumption. The Chinese are largely going to use their own companies to do that work, so the challenge for Fluor will be to leverage our decades...

  • Page 22
    ...until more clarity develops. However, we are winning more gas-fired power work and responding to significant interest in CO2 capture. Perhaps most exciting is the developing nuclear renaissance in the United States Fluor is working with Toshiba on NRG's proposed South Texas Units 3 and 4, which will...

  • Page 23
    ... projects including mining operations in South America, U.S. government field operations in the Middle East and Central Asia, and construction work in the United States, Canada and Africa. We added several new maintenance, facility management and small capital project sites to our sustaining project...

  • Page 24
    Fluor Safely Executes Complex Projects All Over the World.

  • Page 25
    Fluor Corporation 2009 Annual Report 23 China has not slacked off, so I can see us continuing to burn two or three billion dollars a year just in iron ore work. We're working on the Vale Long Harbour nickel project in Canada now, and we're working on a startup of a diamond mine in Botswana. And ...

  • Page 26
    24 Fluor Corporation 2009 Annual Report The Oak Grove Steam Electric Station near Franklin, Texas, is nearing completion. Fluor has commissioned Unit 1 and is in the process of finishing construction and commissioning on Unit 2. participate in the areas where we can play and avoid work we shouldn...

  • Page 27
    [email protected]. Power A dip in power demand and uncertainty surrounding U.S. clean-air policy posed notable challenges for the Power group in 2009. Yet a number of key contracts in gas-fired generation, plant betterment, nuclear and renewables contributed to $894 million in new awards for 2009...

  • Page 28
    ...38% Oil & Gas 37% Industrial & Infrastructure 7% Global Services 5% Power 13% Government New Awards By Region Year Ended December 31 ($ in millions) 2009 Percent 2008 Percent 2007 Percent United States Europe, Africa and Middle East Americas Asia Pacific (includes Australia) Total New Awards...

  • Page 29
    ...in the Global Services segment. Net earnings in 2008 includes a pre-tax gain of $79 million ($0.27 per share*) from the sale of a joint venture interest in a wind power project in the United Kingdom and tax benefits of $28 million ($0.15 per share*) from statute expirations and tax settlements that...

  • Page 30
    ...Fluor Corporation 2009 Annual Report Board of Directors From left to right Alan L. Boeckmann Chairman of the Board and Chief Executive Officer; Director of BHP Billiton Limited (2001) (1) Peter J. Fluor Fluor's lead independent director; Chairman and Chief Executive Officer of Texas Crude Energy...

  • Page 31
    ... Group President, Global Services (1980) Carlos M. Hernandez Senior Vice President, Chief Legal Officer and Secretary (2007) John L. Hopkins Group Executive, Business Development (1984) Peter Oosterveer Group President, Energy & Chemicals (1988) David T. Seaton Chief Operating Officer (1985...

  • Page 32
    ... solutions that support sustainable business practices. In addition, valuable Companywide initiatives such as our Health, Safety and Environmental manaCement system and our Code of Business Conduct and Ethics help ensure that each new Ceneration of Fluor employees is fully initiated into our culture...

  • Page 33
    2009 Form 10-K

  • Page 34

  • Page 35
    ...1-16129 FLUOR CORPORATION (Exact name of registrant as specified in its charter) Delaware (State or other jurisdiction of incorporation or organization) 6700 Las Colinas Boulevard Irving, Texas (Address of principal executive offices) 469-398-7000 (Registrant's telephone number, including area code...

  • Page 36
    ..., Executive Officers and Corporate Governance ...Executive Compensation ...Security Ownership of Certain Beneficial Owners and Management and Related Stockholders Matters ...Certain Relationships and Related Transactions, and Director Independence ...Principal Accountant Fees and Services ...PART IV...

  • Page 37
    ... in business for almost 100 years. Our principal executive offices are located at 6700 Las Colinas Boulevard, Irving, Texas 75039, telephone number (469) 398-7000. Our common stock currently trades on the New York Stock Exchange under the ticker symbol ''FLR''. Fluor Corporation is a holding company...

  • Page 38
    ... world class provider of engineering, procurement, construction, maintenance and project management services, we believe that our business model allows us the opportunity to bring to our clients compelling business offerings that combine excellence in execution, safety, cost containment and...

  • Page 39
    ... studies, project development planning, technology evaluation, risk management assessment, global siting, constructability reviews, asset optimization and front-end engineering. • Our procurement organization offers traditional procurement services as well as supply chain solutions aimed at...

  • Page 40
    ... overall project. Project management services include logistics, developing project execution plans, detailed schedules, cost forecasts, progress tracking and reporting, and the integration of the engineering, procurement and construction efforts. Project management is accountable to the client to...

  • Page 41
    ... be one of the largest offshore wind farm projects, located off the coast of the United Kingdom. Following development, we elected to sell our joint venture interest in the wind farm development and secured the engineering, procurement and construction contract. That contract has provided us with...

  • Page 42
    ...equipment, tool, and fleet service solutions on a global basis for construction projects and plant sites of both third party clients and clients of the company. AMECO supports large construction projects and plants at locations throughout North and South America, South Africa and the Middle East. 6

  • Page 43
    .... We also offer comprehensive solutions for carbon capture and sequestration for solid fueled, gas fueled, and IGCC projects, including our proprietary Econamine FG PlusSM CO2 capture technology. The re-emergence of new build nuclear power in the U.S. market would significantly assist in the...

  • Page 44
    ...temporary staffing operations of our Global Services segment generally do not report backlog due to the quick turnaround between the receipt of new awards and the recognition of revenue. With respect to backlog in our Government segment, if a contract covers multiple years, we generally only include...

  • Page 45
    ... by the client against competitors, agreeing to develop a project at a fixed price. Another type of fixedprice contract is a so-called unit price contract under which we are paid a set amount for every ''unit'' of work performed. If we perform well under these contracts, we can benefit from cost...

  • Page 46
    ... provide the design, engineering, planning, management and project execution skills required to complete complex projects in a safe, timely and cost-efficient manner. Significant Clients For 2009, 2008 and 2007, revenue earned directly or indirectly from agencies of the U.S. government accounted for...

  • Page 47
    ... craft and hourly employees, who provide support throughout the various business segments, varies in relation to the number and size of projects we have in process at any particular time. Available Information Our website address is www.fluor.com. You may obtain free electronic copies of our annual...

  • Page 48
    ... Engineering & Construction Company and Chiyoda Corporation. In particular, the engineering and construction markets are highly competitive and require substantial resources and investment in technology and skilled personnel. Competition also places downward pressure on our contract prices and...

  • Page 49
    ..., project delays, payment delays or defaults by our clients. In addition, in response to current market conditions, clients may choose to make fewer capital expenditures, to otherwise slow their spending on our services or to seek contract terms more favorable to them. Our government clients may...

  • Page 50
    ... generator of backlog, revenue and earnings. The decisions by our hydrocarbon clients to utilize our services are driven by a number of factors including the price of oil and gas, technological advances, the ability of our clients to generate capital to pay for the services we provide, political...

  • Page 51
    ..., significant losses for us with respect to the joint venture. We enter into various joint ventures as part of our engineering, procurement and construction businesses, including ICA Fluor and project-specific joint ventures, where control may be shared with unaffiliated third parties. Differences...

  • Page 52
    ... or the government under the Federal False Claims Act that, if an unfavorable result occurs, could impact our profits and financial condition, as well as our ability to obtain future government work. For example, government agencies such as the U.S. Defense Contract Audit Agency (the ''DCAA...

  • Page 53
    ... for operations. Our failure to recover adequately on claims against project owners for payment could have a material effect on us. We occasionally bring claims against project owners for additional cost exceeding the contract price or for amounts not included in the original contract price. These...

  • Page 54
    ...is to implement effective health, safety and environmental procedures throughout our company, the failure to comply with such procedures, client contracts or applicable regulations could subject us to losses and liability. We work in international locations where there are high security risks, which...

  • Page 55
    ... adverse effect on our business. We could be adversely impacted if we fail to comply with domestic and international export laws. Fluor's global operations require importing and exporting goods and technology across international borders on a regular basis. Fluor's policy mandates strict compliance...

  • Page 56
    ... also increase the pace of development of carbon capture and storage projects, alternative transportation, alternative energy facilities, such as wind farms, or incentivize increased implementation of clean fuel projects which could positively impact the company. The company cannot predict when or...

  • Page 57
    ...by a variety of factors including our ability to manage attrition, our ability to forecast our need for services which allows us to maintain an appropriately sized workforce, our ability to transition employees from completed projects to new projects or between internal business groups, and our need...

  • Page 58
    ... shareholders' percentage ownership. It can be very difficult or expensive to obtain the insurance we need for our business operations. As part of business operations, we maintain insurance both as a corporate risk management strategy and in order to satisfy the requirements of many of our contracts...

  • Page 59
    ... the location and general character of our more significant existing facilities: Location Interest United States: Aliso Viejo, California ...Greenville, South Carolina . . Houston (Sugar Land), Texas Irving, Texas ...Canada: Calgary, Alberta ...Europe: Camberley, England ...Haarlem, Netherlands...

  • Page 60
    ... 3. Legal Proceedings Fluor and its subsidiaries, as part of their normal business activities, are parties to a number of legal proceedings and other matters in various stages of development. While we cannot predict the outcome of these proceedings, in our opinion and based on reports of counsel...

  • Page 61
    ...210,800 Includes 1,862 shares cancelled as payment for statutory withholding taxes upon the vesting of restricted stock issued pursuant to equity based employee benefit plans and 260,000 shares of company stock repurchased and cancelled by the company during November 2009 under its stock repurchase...

  • Page 62
    ...the Global Services segment. Net earnings in 2008 included a pre-tax gain of $79 million ($0.27 per share(4)) from the sale of a joint venture interest in a wind power project in the United Kingdom and tax benefits of $28 million ($0.15 per share(4)) from statute expirations and tax settlements that...

  • Page 63
    ... increase in global demand for oil and gas. However, the global credit crisis and falling oil prices resulted in some project delays and cancellations in 2009 as some clients reassessed their capital spending plans. In addition, the capacity expansion in the North American refining market is nearing...

  • Page 64
    ... ''-Power'' below. The improved operating performance of the business segments in 2008 was offset somewhat by higher corporate general and administrative expense, including higher compensation-related costs and a loss on the sale of a building and the associated legal entity in the United Kingdom...

  • Page 65
    ... of lump-sum projects executed by the company because of the highly competitive market conditions and global recession. Claims arising from engineering and construction contracts have been made against the company by clients, and the company has made claims against clients for cost incurred...

  • Page 66
    ... project is generally the single business purpose of these joint venture arrangements. When the company is the primary contractor responsible for execution, the project is accounted for as part of normal operations and included in consolidated revenue using appropriate contract accounting principles...

  • Page 67
    ... Operations The company provides professional services on a global basis in the fields of engineering, procurement, construction, maintenance and project management. The company is organized into five business segments: Oil & Gas, Industrial & Infrastructure, Government, Global Services and Power...

  • Page 68
    ... market that included very large project awards in diverse geographical locations, which were well suited to the company's global execution and project management capabilities and strong financial position. However, the global credit crisis and falling oil prices resulted in some clients reassessing...

  • Page 69
    ... lump-sum project to provide engineering, procurement and construction services for the client's offshore wind farm project in the United Kingdom. The dispute relates to specifications for monopiles and transition pieces required under the contract. By the end of 2009, the company had recorded...

  • Page 70
    ...Civil Augmentation Program (''LOGCAP IV'') task orders for the U.S. Army in Afghanistan, the Savannah River Site Management and Operating (''Savannah River'') Project in South Carolina and American Recovery and Reinvestment Act (''ARRA'') funded work at Savannah River. The higher revenue in the 2009...

  • Page 71
    ...' markets at that time. Operations and maintenance activities that have yet to be performed comprise Global Services backlog. Short-duration operations and maintenance activities may not contribute to ending backlog. In addition, the equipment, temporary staffing and supply chain solutions business...

  • Page 72
    ..., including the Oak Grove project. Segment profit in 2009 increased compared to 2008 primarily due to increased activity on several gas turbine projects, increased pre-construction services on a nuclear new build project in Texas and project completion adjustments for two emissions control programs...

  • Page 73
    ... of a building and the associated legal entity in the United Kingdom. These increases in 2008 corporate administrative and general expenses were offset somewhat by foreign currency gains. Corporate administrative and general expense included $2 million of non-operating expense in 2009 compared to...

  • Page 74
    ... on the Greater Gabbard Project and higher cash payments related to income taxes, somewhat offset by lower contributions into the company's defined benefit pension plans. Cash provided by operating activities during 2008 and 2007 resulted primarily from earning sources and increases in customer...

  • Page 75
    ... equipment. Investing activities in 2008 also included the sale of the joint venture interest the Greater Gabbard Project. The company holds excess cash in bank deposits and marketable securities which are governed by the company's investment policy. This policy focuses on, in order of priority, the...

  • Page 76
    ... in support of the company's continuing investment in information technology. Cash flows provided by investing activities during 2009 included $38 million primarily related to the disposal of construction equipment associated with the equipment operations in the Global Services segment compared to...

  • Page 77
    ...required by commercial terms of the contracts, primarily to guarantee its performance on state and local government projects. As of December 31, 2009, the performance of the financial markets has not disrupted the company's surety programs or limited its ability to access needed surety capacity. 41

  • Page 78
    ... external economic conditions; however, management is unable to predict with certainty the amount and mix of future business. Variable Interest Entities In the normal course of business, the company forms partnerships or joint ventures primarily for the execution of single contracts or projects. The...

  • Page 79
    ... be reasonably predicted. Operating leases are primarily for engineering and project execution office facilities in Sugar Land, Texas, the United Kingdom and various other U.S and international locations, equipment used in connection with long-term construction contracts and other personal property...

  • Page 80
    ... assessment included an evaluation of the design of the company's internal control over financial reporting and testing of the operational effectiveness of the company's internal control over financial reporting. Based on this assessment, management has concluded that the company's internal control...

  • Page 81
    ... respects, effective internal control over financial reporting as of December 31, 2009, based on the COSO criteria. We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States), the consolidated balance sheets of Fluor Corporation as of...

  • Page 82
    ... Group President, Global Services Senior Vice President, Chief Legal Officer and Secretary Group Executive, Corporate Development Group President, Energy & Chemicals Chief Operating Officer Vice President and Controller Group President, Government Senior Vice President and Chief Financial Officer...

  • Page 83
    ... to June 2008 and Vice President, Engineering from January 2001 to June 2006. Mr. Gilkey joined the company in 1988 with previous service from 1981 to 1984. Kirk D. Grimes Mr. Grimes has been Group President, Global Services since October 2003. Prior to that, he was Group Executive, Oil & Gas from...

  • Page 84
    ... to all Fluor officers and employees, including our chief executive officer, chief financial officer, and principal accounting officer and controller. A copy of our Code of Business Conduct and Ethics, as amended, has been posted on the ''Sustainability'' - ''Compliance and Ethics'' portion of...

  • Page 85
    ...'' sections of the ''Corporate Governance'' portion of our Proxy Statement for our 2010 annual meeting of shareholders, which information is incorporated herein by reference. Item 14. Principal Accountant Fees and Services Information required by this item is included in the ''Ratification of...

  • Page 86
    ... Stock Plan for Non-Employee Directors, as amended and restated on November 1, 2007 (incorporated by reference to Exhibit 10.4 to the registrant's Annual Report on Form 10-K filed on February 29, 2008). Fluor Corporation Executive Deferred Compensation Plan, as amended and restated effective...

  • Page 87
    ...21, 2007). Fluor 409A Executive Deferred Compensation Program, effective as of January 1, 2005 (incorporated by reference to Exhibit 10.2 to the registrant's Current Report on Form 8-K filed on December 21, 2007). Fluor Corporation 2008 Executive Performance Incentive Plan (incorporated by reference...

  • Page 88
    ... Stock Unit Agreement under the Fluor Corporation 2008 Executive Performance Incentive Plan (incorporated by reference to Exhibit 10.26 to the registrant's Quarterly Report on Form 10-Q filed on May 11, 2009). Form of Non-U.S. Stock Growth Incentive Award Agreement under the Fluor Corporation 2008...

  • Page 89
    ... by the undersigned, thereunto duly authorized. FLUOR CORPORATION By: /s/ D. MICHAEL STEUERT D. Michael Steuert, Senior Vice President and Chief Financial Officer February 25, 2010 Pursuant to the requirements of the Securities Exchange Act of 1934, this annual report on Form 10-K has been signed...

  • Page 90
    Signature Title Date /s/ DEAN R. O'HARE Dean R. O'Hare /s/ JOSEPH W. PRUEHER Joseph W. Prueher /s/ NADER H. SULTAN Nader H. Sultan /s/ SUZANNE H. WOOLSEY Suzanne H. Woolsey Director February 25, 2010 Director February 25, 2010 Director February 25, 2010 Director February 25, 2010 54

  • Page 91
    FLUOR CORPORATION INDEX TO CONSOLIDATED FINANCIAL STATEMENTS TABLE OF CONTENTS PAGE Report of Independent Registered Public Accounting Firm ...Consolidated Statement of Earnings ...Consolidated Balance Sheet ...Consolidated Statement of Cash Flows ...Consolidated Statement of Equity ...Notes to ...

  • Page 92
    Report of Independent Registered Public Accounting Firm The Board of Directors and Shareholders of Fluor Corporation We have audited the accompanying consolidated balance sheets of Fluor Corporation as of December 31, 2009 and 2008, and the related consolidated statements of earnings, cash flows and...

  • Page 93
    ...2008 2007 (in thousands, except per share amounts) 2009 TOTAL REVENUE TOTAL COST OF REVENUE Cost of revenue Gain on sale of joint venture interest OTHER (INCOME) AND EXPENSES Corporate administrative and general...were adjusted for the July 16, 2008 two-for-one stock split. As such, share and per ...

  • Page 94
    FLUOR CORPORATION CONSOLIDATED BALANCE SHEET As Adjusted December 31, 2008 (in thousands, except share amounts) ASSETS CURRENT ASSETS Cash and cash equivalents Marketable securities, current Accounts and notes receivable, net Contract work in progress Deferred taxes Other current assets Total ...

  • Page 95
    ...of joint venture interest Restricted stock and stock option amortization Deferred compensation trust Deferred compensation obligation Funding of deferred compensation trust Taxes paid on vested restricted stock Statute expirations and tax settlements Deferred taxes Stock plans tax benefit Retirement...

  • Page 96
    ...Stock plan activity Repurchase of common stock Debt conversions BALANCE AS OF DECEMBER 31, 2008 (As Adjusted) Comprehensive income Net earnings Foreign currency translation adjustment of total shareholders...Stock plan activity Repurchase of common stock Debt conversions BALANCE AS OF DECEMBER 31, 2009...

  • Page 97
    ... the terms of the respective plans. Use of Estimates The preparation of financial statements in accordance with accounting principles generally accepted in the United States requires management to make estimates and assumptions that affect reported amounts. These estimates are based on information...

  • Page 98
    ..., are included in revenue and cost of revenue when management believes that the company is responsible for the ultimate acceptability of the project. Contracts are generally segmented between types of services, such as engineering and construction, and accordingly, gross margin related to each...

  • Page 99
    ... taxes as the company considers its worldwide taxable earnings and the impact of the continuing audit process conducted by various tax authorities. The final outcome of these audits by foreign jurisdictions, the Internal Revenue Service and various state governments could differ materially from...

  • Page 100
    ... which cost is incurred. Certain financial exposure, which includes currency and commodity price risk associated with engineering and construction contracts and currency risk associated with intercompany transactions, may subject the company to earnings volatility. In cases where financial exposure...

  • Page 101
    ... Global Services segment related to work performed in 2009. Consequently, the company recognized a provision of $45 million in the third quarter of 2009 to fully reserve the receivable. Cash and marketable securities are deposited with major banks throughout the world. Such deposits are placed with...

  • Page 102
    ... ASC 718 for 2009, 2008 and 2007. All unvested options outstanding under the company's option plans have grant prices equal to the market price of the company's stock on the dates of grant. Under ASC 718, stock-based compensation for new awards granted to retirement eligible employees is recognized...

  • Page 103
    ... December 15, 2008. The company adopted this standard during the first quarter of 2009. The adoption of ASC 805 did not have a material impact on the company's financial position, results of operations or cash flows. During 2009, the company implemented several new accounting pronouncements that are...

  • Page 104
    ... changes in operating assets and liabilities as shown in the Consolidated Statement of Cash Flows are comprised of: Year Ended December 31, 2009 2008 2007 (in thousands) (Increase) decrease in: Accounts and notes receivable, net Contract work in progress Other current assets Long-term receivables...

  • Page 105
    ... 31, 2009 2008 (in thousands) Deferred tax assets: Accrued liabilities not currently deductible: Employee compensation and benefits Employee time-off accrual Project and non-project reserves Workers' compensation insurance accruals Tax basis of investments in excess of book basis Net operating loss...

  • Page 106
    ...the U.S. federal jurisdiction and various state and foreign jurisdictions. In the normal course of business the company is subject to examination by taxing authorities throughout the world, including such major jurisdictions as Australia, Canada, the Netherlands, South Africa, the United Kingdom and...

  • Page 107
    ... related to domestic and international engineering and construction salaried employees and U.S. craft employees. Contributions to defined benefit pension plans are at least the minimum annual amount required by applicable regulations. Payments to retired employees under these plans are generally...

  • Page 108
    ...manager forecasts are established for each major asset category including public U.S. and international equities, U.S. private equities and fixed income securities. 2009 December 31, 2008 2007 For determining projected benefit obligation at year-end: Discount rates Rates of increase in compensation...

  • Page 109
    ... U.S. and international companies, common or collective trusts with underlying investments in common and preferred stocks and limited partnerships. Publicly traded corporate equity securities are valued at the last reported sale price on the last business day of the year of the plans. Securities not...

  • Page 110
    ... ASC 820-10, the plan assets and liabilities of the company's defined benefit pension plans that are measured at fair value on a recurring basis as of December 31, 2009: December 31, 2009 Fair Value Measurements Using Quoted Prices Significant in Active Other Markets for Observable Identical Assets...

  • Page 111
    ... status of all of the plans: December 31, 2009 2008 (in thousands) Change in projected benefit obligation Benefit obligation at beginning of year Service cost Interest cost Employee contributions Currency translation Actuarial (gain) loss Benefits paid Projected benefit obligation at end of year...

  • Page 112
    ... retired employees. The health care and life insurance plans are generally contributory, with retiree contributions adjusted annually. The accumulated postretirement benefit obligation as of December 31, 2009, 2008 and 2007 was determined in accordance with the current terms of the company's health...

  • Page 113
    ... not expected to change significantly in the future. 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...

  • Page 114
    ...the last business day are valued at the last reported bid price. The fair value is not materially different from the cost basis. Consists of investments in U.S. agency securities, U.S. Treasury securities, international government and governmentrelated securities, corporate debt securities and other...

  • Page 115
    ..., 2009, 2008 and 2007. The fair values of derivatives designated as hedging instruments under ASC 815 as of December 31, 2009 were as follows: (in thousands) Asset Derivatives Balance Sheet Location Fair Value Liability Derivatives Balance Sheet Location Fair Value Commodity swap forward contracts...

  • Page 116
    ... under these lines of credit. The company also posts surety bonds as generally required by commercial terms of the contracts, primarily to guarantee its performance on state and local government contracts. Consolidated debt consisted of the following: December 31, 2009 2008 (in thousands) Current...

  • Page 117
    ... in exchange for the principal balance owed in cash plus 4,058,792 shares of the company's common stock. In May 2008, the FASB issued FSP APB 14-1, ''Accounting for Convertible Debt Instruments That May Be Settled in Cash upon Conversion (Including Partial Cash Settlement)'' (ASC 470-20). ASC 470...

  • Page 118
    ... December 31, 2009 and 2008, respectively, relating to these liabilities. For certain professional liability risks the company's retention amount under its claims-made insurance policies does not include an accrual for claims incurred but not reported because there is insufficient claims history or...

  • Page 119
    ... net of recognized tax benefits of $13 million for each of the years ended 2009, 2008 and 2007, respectively. As discussed above, the company effected a two-for-one stock split that was paid on July 16, 2008 in the form of a stock dividend. Accordingly, restricted stock and stock option activity has...

  • Page 120
    ...million, respectively, is included in corporate administrative and general expense related to restricted stock awards and units. The fair value of restricted stock that vested during 2009, 2008 and 2007 was $19 million, $52 million and $40 million, respectively. The balance of unamortized restricted...

  • Page 121
    ... the amount of the claim can be reliably estimated. Recognized claims against clients amounted to $247 million and $202 million as of December 31, 2009 and 2008, respectively, and are primarily included in contract work in progress in the accompanying Consolidated Balance Sheet. Amounts ultimately...

  • Page 122
    ... lump-sum project to provide engineering, procurement and construction services for the client's offshore wind farm project in the United Kingdom. The dispute relates to specifications for monopiles and transition pieces required under the contract. By the end of 2009, the company had recorded...

  • Page 123
    FLUOR CORPORATION NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued) Embassy Projects The company has performed work on 11 embassy projects over the last five years for the U.S. Department of State under fixed-price contracts. These projects were adversely impacted by higher costs due to ...

  • Page 124
    ... business, the company enters into various agreements providing performance assurances and guarantees to clients on behalf of certain unconsolidated and consolidated partnerships, joint ventures and other jointly executed contracts. These agreements are entered into primarily to support the project...

  • Page 125
    ... normal course of business, the company forms partnerships or joint ventures primarily for the execution of single contracts or projects. Applying the guidance of FIN 46(R) (ASC 810), the company evaluates qualitative and quantitative information for each partnership or joint venture at inception to...

  • Page 126
    ...VIEs and related accounting considerations. Rapid Growth Project In 2008, the Fluor SKM joint venture was awarded the initial program management, engineering and construction management contract for the expansion of port, rail and mine facilities for BHP Billiton Limited's iron ore mining project in...

  • Page 127
    ... venture members. The construction of the improvements and HOT lanes are being performed by a construction joint venture in which the company has a 65 percent interest and Lane Construction has a 35 percent interest (''Fluor-Lane''). Transurban (USA) Inc. will perform the operations and maintenance...

  • Page 128
    ... The Global Services segment includes operations and maintenance activities, small capital project engineering and execution, site equipment and tool services, industrial fleet services, plant turnaround services and supply chain solutions. In addition, Global Services provides temporary staffing of...

  • Page 129
    FLUOR CORPORATION NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued) Operating Information by Segment Year Ended December 31, 2009 2008 2007 (in millions) External revenue Oil & Gas Industrial & Infrastructure Government Global Services Power Total external revenue Segment profit (loss) Oil & ...

  • Page 130
    ...-Wide Disclosures External Revenue Year Ended December 31, 2009 2008 2007 (in millions) Total Assets As of December 31, 2009 2008 United States Canada Asia Pacific (includes Australia) Europe Central and South America Middle East and Africa Total $10,792.6 709.0 2,898.4 3,910.5 1,379.5 2,300...

  • Page 131
    ... sale of the joint venture interest in the Greater Gabbard Project. Earnings before taxes in the fourth quarter of 2008 included a $16 million loss related to the sale of a building in the United Kingdom. Net earnings in the fourth quarter of 2008 included $28 million of tax benefits resulting from...

  • Page 132

  • Page 133
    ... visit investor.ï¬,uor.com for information regarding the time and location of our shareholders' meeting. Fluor is a registered trademark of Fluor Corporation. TRS is a registered trademark of TRS Staffing Solutions, Inc. AMECO® is a registered trademark of American Equipment Company. Site Services...

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    Fluor Corporation 6700 Las Colinas Boulevard Irving, Texas 75039 fluor.com