Fluor 2013 Annual Report Download - page 86

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Inflation
Although inflation and cost trends affect the company, its engineering and construction operations are
generally protected by the ability to fix the company’s cost at the time of bidding or to recover cost
increases in cost reimbursable contracts. The company has taken actions to reduce its dependence on
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 company evaluates each partnership and joint venture to
determine whether the entity is a VIE. If the entity is determined to be a VIE, the company assesses
whether it is the primary beneficiary and needs to consolidate the entity.
For further discussion of the company’s VIEs, see ‘‘Discussion of Critical Accounting Policies’’ above
and ‘‘14. Variable Interest Entities’’ below in the Notes to Consolidated Financial Statements.
Contractual Obligations
Contractual Obligations as of December 31, 2013 are summarized as follows:
Payments Due by Period
Contractual Obligations Total 1 year or less 2–3 years 4–5 years Over 5 years
(in millions)
Debt:
3.375% Senior Notes $ 497 $ — $ — $ — $497
1.5% Convertible Senior Notes 18 18 — — —
Other borrowings 11 11 — — —
Interest on debt obligations(1) 131 18 34 34 45
Operating leases(2) 274 54 94 58 68
Capital leases 19 6 9 4 —
Uncertain tax positions(3) 40 — — — 40
Joint venture contributions 36 16 20 — —
Pension minimum funding(4) 55 11 22 22 —
Other post-employment benefits 27 5 8 6 8
Other compensation-related obligations(5) 460 41 73 30 316
Total $1,568 $180 $260 $154 $974
(1) Interest is based on the borrowings that are presently outstanding and the timing of payments
indicated in the above table.
(2) 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.
(3) Uncertain tax positions taken or expected to be taken on an income tax return may result in additional
payments to tax authorities. The total amount of the accrual for uncertain tax positions related to the
company’s effective tax rate is included in the ‘‘Over 5 years’’ column as the company is not able to
reasonably estimate the timing of potential future payments. If a tax authority agrees with the tax
position taken or expected to be taken or the applicable statute of limitations expires, then additional
payments will not be necessary.
(4) The company generally provides funding to its U.S. and non-U.S. pension plans to at least the
minimum required by applicable regulations. In determining the minimum required funding, the
company utilizes current actuarial assumptions and exchange rates to forecast estimates of amounts
46