Fluor 2013 Annual Report Download - page 87

that may be payable for up to five years in the future. In management’s judgment, minimum funding
estimates beyond a five-year time horizon cannot be reliably estimated. Where minimum funding as
determined for each individual plan would not achieve a funded status to the level of accumulated
benefit obligations, additional discretionary funding may be provided from available cash resources.
(5) Principally deferred executive compensation.
Item 7A. Quantitative and Qualitative Disclosures about Market Risk
Cash and marketable securities are deposited with major banks throughout the world. Such deposits
are placed with high quality institutions and the amounts invested in any single institution are limited to
the extent possible in order to minimize concentration of counterparty credit risk. Marketable securities
consist of time deposits, registered money market funds, U.S. agency securities, U.S. Treasury securities,
commercial paper, international government securities and corporate debt securities. The company has not
incurred any credit risk losses related to deposits in cash and marketable securities.
The company limits exposure to foreign currency fluctuations in most of its engineering and
construction contracts through provisions that require client payments in currencies corresponding to the
currency in which cost is incurred. As a result, the company generally does not need to hedge foreign
currency cash flows for contract work performed. However, in cases where revenue and expenses are not
denominated in the same currency, the company hedges its exposure, if material and if an efficient market
exists, as discussed below.
The company utilizes derivative instruments to mitigate certain financial exposures, including currency
and commodity price risk associated with engineering and construction contracts, currency risk associated
with monetary assets and liabilities denominated in nonfunctional currencies and risk associated with
interest rate volatility. As of December 31, 2013, the company had foreign exchange forward contracts of
less than one year duration and a total gross notional amount of $104 million. As of December 31, 2013,
the company had commodity swap contracts of less than four years duration and a total gross notional
amount of $12 million. The company’s historical gains and losses associated with derivative instruments
have typically been immaterial, and have largely mitigated the exposures being hedged. The company does
not enter into derivative transactions for speculative purposes.
The company’s long-term debt obligations carry a fixed-rate coupon and its exposure to interest rate
risk is not material due to the low interest rates on these obligations.
Item 8. Financial Statements and Supplementary Data
The information required by this Item is submitted as a separate section of this Form 10-K. See
‘‘Item 15. — Exhibits and Financial Statement Schedules’’ below.
Item 9. Changes in and Disagreements with Accountants on Accounting and Financial Disclosure
None.
Item 9A. Controls and Procedures
Evaluation of Disclosure Controls and Procedures
Based on their evaluation as of December 31, 2013, which is the end of the period covered by this
annual report on Form 10-K, our principal executive officer and principal financial officer have concluded
that our disclosure controls and procedures (as defined in Rules 13a-15(e) or 15d-15(e) of the Exchange
Act) are effective, based upon an evaluation of those controls and procedures required by paragraph (b) of
Rule 13a-15 or Rule 15d-15 of the Exchange Act.
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