Fluor 2013 Annual Report Download - page 58

or services in a timely basis or at the costs we had anticipated. A failure by a third-party subcontractor or
supplier to comply with applicable laws, rules or regulations could negatively impact our business and
could result in fines, penalties, suspension or in the case of government contracts even debarment.
We work in international locations where there are high security risks, which could result in harm to our employees
or unanticipated cost.
Some of our services are performed in high risk locations, such as Afghanistan and Iraq, where the
country or location is subject to political, social or economic risks, or war or civil unrest. In those locations
where we have employees or operations, we may expend significant efforts and incur substantial security
costs to maintain the safety of our personnel and incur costs to repair or replace damaged or lost work,
equipment or supplies. Despite these activities, in these locations, we cannot guarantee the safety of our
personnel and we may suffer future losses of our employees and those of our subcontractors, and damage
to or loss of work, equipment or supplies.
Our businesses could be materially and adversely affected by events outside of our control.
Extraordinary or force majeure events beyond our control, such as natural or man-made disasters,
could negatively impact our ability to operate or increase our costs to operate. As an example, from time to
time we face unexpected severe weather conditions which may result in delays in our operations;
evacuation of personnel and curtailment of services; increased labor and material costs or shortages;
inability to deliver materials, equipment and personnel to jobsites in accordance with contract schedules;
and loss of productivity. We may remain obligated to perform our services after any such natural or
man-made disasters, unless a contract provision provides us with relief from our obligations. The extra
costs incurred as a result of these events may not be reimbursed by our clients. If we are not able to react
quickly to such events, or if a high concentration of our projects are in a specific geographic region that
suffers from a natural or man-made disaster, our operations may be significantly affected, which could
have a negative impact on our operations. In addition, if we cannot complete our contracts on time, we
may be subject to potential liability claims by our clients which may reduce our profits and result in losses.
Changes in our effective tax rate and tax positions may vary.
We are subject to income taxes in the United States and numerous foreign jurisdictions. A change in
tax laws, treaties or regulations, or their interpretation, in any country in which we operate could result in a
higher tax rate on our earnings, which could have a material impact on our earnings and cash flows from
operations. In addition, significant judgment is required in determining our worldwide provision for
income taxes. In the ordinary course of our business, there are many transactions and calculations where
the ultimate tax determination is uncertain. We are regularly under audit by tax authorities, and our tax
estimates and tax positions could be materially affected by many factors including the final outcome of tax
audits and related litigation, the introduction of new tax accounting standards, legislation, regulations and
related interpretations, our global mix of earnings, the realizability of deferred tax assets and changes in
uncertain tax positions. A significant increase in our tax rate could have a material adverse effect on our
profitability and liquidity.
Our government contracts and contracting rights may be terminated or otherwise adversely impacted at any time.
We enter into significant government contracts, from time to time, such as those that we have with the
U.S. Department of Energy as part of teaming arrangements at the Savannah River Site and at the
Department of Energy site in Portsmouth, Ohio, or with the Department of Defense for the LOGCAP IV
contract. Government contracts are subject to various uncertainties, restrictions and regulations, including
oversight audits by government representatives and profit and cost controls, which could result in
withholding or delay of payments to us. Government contracts are also subject to uncertainties associated
with Congressional funding, including the potential impacts of budget deficits and federal sequestration. A
significant portion of our business is derived as a result of U.S. government regulatory, military and
infrastructure priorities. Changes in these priorities, which can occur due to policy changes or changes in
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