Fluor 2013 Annual Report Download - page 80

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Corporate, Tax and Other Matters
Corporate For the three years ended December 31, 2013, 2012, and 2011, corporate general and
administrative expenses were $175 million, $151 million and $163 million, respectively. The 16 percent
increase in 2013 corporate general and administrative expenses compared to 2012 was primarily the result
of higher stock price driven compensation expense. The eight percent reduction in 2012 corporate general
and administrative expenses compared to 2011 was primarily the result of lower executive bonuses and
reduced foreign currency losses.
Net interest expense was $12 million for the year ended December 31, 2013 compared to net interest
expense of $0.5 million for the year ended December 31, 2012 and net interest income of $16 million for
the year ended December 31, 2011. Net interest expense in both 2013 and 2012 included interest on
$500 million of 3.375% Senior Notes that were issued in September 2011. However, the company earned
more interest income during 2012 compared to 2013 primarily due to larger cash balances in certain
international locations that earn higher yields. Interest expense was considerably higher in 2012 compared
to 2011 as a result of the issuance of the 3.375% Senior Notes.
Ta x The effective tax rate was 30.1 percent, 22.1 percent and 30.3 percent for 2013, 2012 and 2011,
respectively. The 2013 rate was favorably impacted by research tax credits and the domestic production
activities deduction, partially offset by a foreign loss without a tax benefit. The 2012 rate was favorably
impacted by the release of previously unrecognized tax benefits of $13 million related to a settlement with
the IRS for tax years 2003 through 2005, as well as the net reduction of tax reserves totaling $30 million
attributable to a variety of domestic and international disputed items, including the resolution of an
uncertainty associated with a prior year tax restructuring. The 2011 rate was favorably impacted by the
release of previously unrecognized tax benefits related to the expiration of statutes of limitations and the
resolution of various disputed items.
Litigation and Matters in Dispute Resolution
See ‘‘13. Contingencies and Commitments’’ below in the Notes to Consolidated Financial Statements.
Liquidity and Financial Condition
Liquidity is provided by available cash and cash equivalents and marketable securities, cash generated
from operations, credit facilities and access to capital markets. The company has committed and
uncommitted lines of credit totaling $4.6 billion, which may be used for revolving loans, letters of credit
and/or general purposes. The company believes that for at least the next 12 months, cash generated from
operations, along with its unused credit capacity of $3.6 billion and substantial cash position, is sufficient to
support operating requirements. However, the company regularly reviews its sources and uses of liquidity
and may pursue opportunities to increase its liquidity position. The company’s conservative financial
strategy and consistent performance have earned it strong credit ratings, resulting in continued access to
the capital markets. As of December 31, 2013, the company was in compliance with all its covenants
related to its debt agreements. The company’s total debt to total capitalization (‘‘debt-to-capital’’) ratio as
of December 31, 2013 was 12.3 percent compared to 13.9 percent as of December 31, 2012.
Cash Flows
Cash and cash equivalents were $2.3 billion as of December 31, 2013 compared to $2.2 billion as of
December 31, 2012. Cash and cash equivalents combined with current and noncurrent marketable
securities were $2.7 billion as of December 31, 2013 and $2.6 billion as of December 31, 2012. Cash and
cash equivalents are held in numerous accounts throughout the world to fund the company’s global project
execution activities. As of December 31, 2013 and 2012, non-U.S. cash and cash equivalents amounted to
$1.1 billion and $1.3 billion, respectively. Non-U.S. cash and cash equivalents exclude deposits of U.S. legal
entities that are either swept into overnight, offshore accounts or invested in short-term, offshore time
deposits, for which there is unrestricted access. The company did not consider any cash to be permanently
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