Fluor 2013 Annual Report Download - page 61

information (including proprietary intellectual property); and could adversely affect our operating results.
While management has taken steps to address these concerns by implementing sophisticated network
security and internal control measures, a system failure or loss or data security breach could materially
adversely affect our financial condition and operating results.
Our actual results could differ from the assumptions and estimates used to prepare our financial statements.
In preparing our financial statements, we are required under U.S. generally accepted accounting
principles to make estimates and assumptions as of the date of the financial statements. These estimates
and assumptions affect the reported values of assets, liabilities, revenue and expenses, and the disclosure of
contingent assets and liabilities. Areas requiring significant estimates by our management include:
• Recognition of contract revenue, costs, profits or losses in applying the principles of
percentage-of-completion accounting;
• Recognition of revenues related to project incentives or awards we expect to receive;
• Recognition of recoveries under contract change orders or claims;
• Estimated amounts for expected project losses, warranty costs, contract close-out or other costs;
• Collectability of billed and unbilled accounts receivable and the need and amount of any allowance
for doubtful accounts;
• Asset valuations;
• Income tax provisions and related valuation allowances;
• Determination of expense and potential liabilities under pension and other post-retirement benefit
programs; and
• Accruals for other estimated liabilities, including litigation and insurance revenues/reserves.
Our actual business and financial results could differ from our estimates of such results, which could
have a material negative impact on our financial condition and reported results of operations.
Foreign currency risks could have an adverse impact on company earnings and/or backlog.
Certain of our contracts subject us to foreign currency risk, particularly when project contract revenue
is denominated in a currency different than the contract costs. We may attempt to minimize our exposure
to foreign currency risk by obtaining contract provisions that protect us from foreign currency fluctuations
and/or by implementing hedging strategies utilizing derivatives as hedging instruments. However, these
actions may not always eliminate all foreign currency risk, and could affect our profitability on certain
projects. In addition, our operational cash flows and cash balances, though predominately held in U.S.
dollars, may consist of different currencies at various points in time in order to execute our project
contracts globally. Our monetary assets and liabilities denominated in nonfunctional currencies are subject
to currency fluctuations when measured period to period for financial reporting purposes. While hedging
may be used to minimize earnings volatility resulting from foreign currency fluctuations, hedging may not
always protect us fully, and thus foreign currency risks could adversely impact our earnings. Furthermore,
the U.S. dollar value of our backlog may from time to time increase or decrease significantly due to foreign
currency volatility
Our business may be negatively impacted if we are unable to adequately protect intellectual property rights.
Our success is dependent, in part, on our ability to defend our intellectual property rights as to our
technologies and know-how. This success includes the ability of companies in which we invest, such as
NuScale Power, LLC, to protect their intellectual property rights. We rely principally on a combination of
patents, trade secrets, confidentiality agreements and other contractual arrangements to protect our
interests. However, these methods only provide a limited amount of protection and may not adequately
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