Fluor 2014 Annual Report Download

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Annual Report
2014
Integrated
Solutions

Table of contents

  • Page 1
    Integrated Solutions Annual Report 2014

  • Page 2
    ...and ga gas, ch chemicals an and pe petrochemicals, tr transpor tation, mi mining an and me metals, po power, li l i fe sciences an and ma manufacturing. Fl Fluor is is al also a se ser vice pr provider to th the U. U.S. fe federal go gove ver rnment, an and th th e Company pe per forms op operations...

  • Page 3
    ... Letter Pages 4-9 New Awards and Backlog Data Page 24 Form 10-K Page 29 Oil & Gas Pages 10-13 Selected Financial Data Page 25 Shareholder Reference nside Back Cover Industrial & Infrastructure Pages 14-17 Board of Directors Page 26 Government Pages 18-19 Global Services Pages 20-21

  • Page 4
    ... transit, eavy civil, manufacturing nd life sciences industries worldwide orldwide by providing esign, engineering, procurement, construction, fabrication, abrication, operations and maintenance, and project management olutions. overnment The he Government group provides engineering, onstruction...

  • Page 5
    Government % 17 Industrial & Infrastructure 11% 5% Power Oil & Gas Backlog by Segment 67 % Latin America 34% Asia Pacific & Australia 9% United States 7% Canada Europe, Africa & Middle East Backlog by Region 21 % 29 % 2 014 A N N UA L R E P O R T 3

  • Page 6
    avid T. Seaton Chairman and Chief Executive Officer Integrated Solutions Creating A STABLE, DIVERSIFIED AND STRONG FUTURE. 4 F L U O R C O R P O R AT I O N

  • Page 7
    ... process yielded a highly motivated workforce that is focused on project execution and client service excellence. Clients across the globe rely on Fluor. They see the power and potential of our company through our people. In 2014, we were named to the North America list of Aon Hewitt Top Companies...

  • Page 8
    Our One Fluor business model brings the total power and innovation of Fluor to our clients. We understand and identify our clients' unique project challenges and create integrated solutions by leveraging Fluor's total capabilities 6 F L U O R C O R P O R AT I O N

  • Page 9
    to solve their problems. Executing our One Fluor business model has solidified our client relationships and positioned us well to win more work. - DAVID T. SEATON 2 014 A N N UA L R E P O R T 7

  • Page 10
    .... New project awards during the year continued to showcase Fluor's competitive strengths, global reach and resiliency. Fluor, in partnership with JGC, was selected by Chevron Canada Limited to provide engineering, procurement and construction for the Kitimat Liquified Natural Gas (LNG) project in...

  • Page 11
    ... our services to the U.S. Army in Africa under the company's existing Logistics Civil Augmentation Program (LOGCAP) Task Order. Fluor is improving airport runways and building housing camps and Ebola treatment centers. And finally, the United Kingdom Nuclear Decommissioning Authority selected...

  • Page 12
    ...to new mega-project awards in Asia, the Middle East and North America. We remain well positioned for further awards in 2015. In response to our clients' challenge to employ their capital spend with increasing efficiency, the Oil & Gas group has focused its efforts on developing innovative solutions...

  • Page 13
    ... Bayou Petrochemical project Baytown, Texas 2014 Oil & Gas milestones include: Upstream and LNG • Awarded the Fort Hills oil sands project in Canada. This large EPFC contract was transferred from a competitor to Fluor based on our unique design and execution solutions, which allowed the client to...

  • Page 14
    BASF Jade Tree project Shanghai, China

  • Page 15
    ... value that competitors can't. Fluor is better prepared than ever to meet our clients' challenges for capital-efficient projects. We will continue to leverage the One Fluor approach to win complete EPFC work. We also will utilize our 3rd Gen Modular ExecutionSM, our Global Engineering Centers, and...

  • Page 16
    ...steady pace. Meanwhile, developed countries need new investments to sustain their well-established way of life. The Industrial & Infrastructure group supports both, and in 2014 we continued to help our clients plan, engineer and build their large-scale projects. In mining, projects are continuing to...

  • Page 17
    ... the I-95 Express Lanes project in Northern Virginia ahead of schedule. This three-year project was executed with over 4 million safe work hours without a lost time incident. Combined with the recently completed I-495 project, Fluor has provided the connectivity solutions necessary for commuters...

  • Page 18
    I-95 HOT Lanes project Fairfax County, VA Photo courtesy of VDOT

  • Page 19
    ... to be in the best position to win additional work. Fluor is one of the few companies that have the scale and financial strength to build the world's largest and most challenging projects. North America continues to be our primary infrastructure market. We continue to look at opportunities...

  • Page 20
    ...-term projects, such as cleaning up legacy nuclear waste at Department of Energy sites around the country. We are equally strong at responding to natural disasters, humanitarian crises and national security challenges, with full mission life-cycle support. It is this unique combination of experience...

  • Page 21
    ... to continue deactivation and shutdown of the Paducah Gaseous Diffusion plant in Kentucky. • Assumed operations and management of the Strategic Petroleum Reserve facilities for the Department of Energy. Fluor unseated an 18-year incumbent to win this business. The Government group is making...

  • Page 22
    ... clients outside of the company. We currently provide equipment, maintenance, tool accounts and fabrication capability to most of Fluor's major projects. Although we concluded project support for Afghanistan in 2014, our experience with complex projects in remote locations positions us to capture...

  • Page 23
    ... s ) SEGMENT PROFIT (Dollars in Millions) 2014 Global Services milestones include: Equipment • Developed a high-end scaffolding solutions business by partnering with PERI Group. We are already providing scaffolding on two of Fluor's flagship petrochemical projects: Dow Gulfstream in Texas and CP...

  • Page 24
    ... from the Department of Energy to support development efforts for our NuScale business. We are seeing our greatest activity and largest opportunities in the North American gas market. The regulatory environment here is forcing the issue on coal plant retirements, giving rise to new investments in...

  • Page 25
    ... s ) SEGMENT PROFIT (Dol l ars i n M i l l i ons) 2014 Power milestones include: Gas • Awarded two major combined-cycle projects for a client in the United States. The bidding process was extremely competitive, and we set ourselves apart by offering a fully integrated solution. • Completed the...

  • Page 26
    ...12,602 10,420 3,223 884 $ 27,129 47% 38% 12% 3% 100% NEW AWARDS BY REGION Year Ended December 31 2014 2013 2012 ($ in millions) United States Europe, Africa and Middle East Americas (non-U.S.) Asia Pacific (includes Australia) Total New Awards $ 8,480 6,552 10,582 3,217 29% 23% 37% 11% 100...

  • Page 27
    ... December 31 2014 $ 21,531.6 1,204.9 $ $ 715.5 (204.6) 510.9 2013 2012 2011 2010 (in millions, except per share and employee information) Total revenue Earnings from continuing operations before taxes Amounts attributable to Fluor Corporation: Earnings from continuing operations Loss from...

  • Page 28
    ... Vice Chairman, UBS Wealth Management Americas; Chairman, UBS Bank USA (2010) Peter K. Barker Former California Chairman, JP Morgan Chase & Co.; Director of Avery Dennison Corporation and Franklin Resources, Inc. (2007) (2) (4) Deborah D. McWhinney Former Chief Executive Officer and Chief Operating...

  • Page 29
    ... Chief Financial Officer (2012) David T. Seaton Chairman and Chief Executive Officer (1985) Peter Oosterveer Chief Operating Officer (1989) Bruce A. Stanski Group President, Government (2009) Carlos M. Hernandez Executive Vice President, Chief Legal Officer and Secretary (2007) Glenn C. Gilkey...

  • Page 30

  • Page 31
    2014 Form 10K

  • Page 32
    ... or organization) 6700 Las Colinas Boulevard Irving, Texas (Address of principal executive offices) 469-398-7000 (Registrant's telephone number, including area code) Securities registered pursuant to Section 12(b) of the Act: Title of Each Class Name of Each Exchange on Which Registered 33-0927079...

  • Page 33
    ... on Accounting and Financial Disclosure ...Controls and Procedures ...Other Information ...PART III Item 10. Item 11. Item 12. Item 13. Item 14. Directors, Executive Officers and Corporate Governance ...Executive Compensation ...Security Ownership of Certain Beneficial Owners and Management and...

  • Page 34
    ... and maintenance as well as project management services on a global basis. We are an integrated solutions provider for our clients in a diverse set of industries worldwide including oil and gas, chemicals and petrochemicals, transportation, mining and metals, power, life sciences and manufacturing...

  • Page 35
    ... world class solutions provider of engineering, procurement, construction, maintenance and project management services, we believe that our business model allows us the opportunity to bring to our clients on a global basis compelling business offerings that combine excellence in execution, safety...

  • Page 36
    ... well as supply chain solutions aimed at improving product quality and performance while also reducing project cost and schedule. Our clients benefit from our global sourcing and supply expertise, global purchasing power, technical knowledge, processes, systems and experienced global resources. Our...

  • Page 37
    ... clients need to develop additional and new sources of supply. Our typical projects in the upstream sector revolve around the production, processing and transporting of oil and gas resources, including the development of infrastructure associated with major new fields and pipelines, as well as LNG...

  • Page 38
    ... oil, gas, power, chemical and other markets. Industrial & Infrastructure The Industrial & Infrastructure segment provides design, engineering, procurement, construction, operations and maintenance and project management services to the mining and metals, transportation, life sciences, manufacturing...

  • Page 39
    ... and maintenance services with the Department of Energy at the Strategic Petroleum Reserve in New Orleans, Louisiana. We are also serving government customers outside of the United States. For example, Fluor is part of a joint venture that is providing nuclear decommissioning services at 12 sites...

  • Page 40
    ..., nuclear and power services markets. Our services include engineering, procurement, construction, program management, start-up and commissioning, operations and maintenance and technical services. Through the gas fueled market, we offer a full range of services for simple and combined cycle...

  • Page 41
    ... be performed on contracts awarded and in progress. The following table sets forth the consolidated backlog of the company's segments at December 31, 2014 and 2013: December 31, December 31, 2014 2013 (in millions) Oil & Gas ...Industrial & Infrastructure . Government(1) ...Global Services ...Power...

  • Page 42
    ... agreement with the client. Competition We are one of the world's largest providers of engineering, procurement, construction, operations and maintenance services. The markets served by our business are highly competitive and, for the most part, require substantial resources and highly skilled...

  • Page 43
    ...the design, engineering, planning, management and project execution skills required to complete complex projects in a safe, timely and cost-efficient manner. Significant Clients For 2014, revenue earned from Exxon Mobil Corporation and its affiliates and agencies of the U.S. government accounted for...

  • Page 44
    ... currently identified. Number of Employees The following table sets forth the number of employees of Fluor and its subsidiaries engaged in our business segments as of December 31, 2014: Number of Employees Salaried Employees: Oil & Gas ...Industrial & Infrastructure Government ...Global Services...

  • Page 45
    ... power plants and safety and environmental concerns in the nuclear sector. In our mining and metal business line of the Industrial & Infrastructure segment, new order activity has also shown continued slowing due in part to volatility in the commodities and capital markets, which have caused clients...

  • Page 46
    ...of time. Finally, poor project or contract performance could also impact our backlog and profits. Such developments could have a material adverse effect on our business and our profits. Intense competition in the global engineering, procurement and construction industry could reduce our market share...

  • Page 47
    ... and managing international operations; • U.S. government policy changes in relation to the foreign countries in which we or our clients operate; • international hostilities; and • unrest, civil strife, acts of war, terrorism and insurrection. Also, the lack of a well-developed legal system in...

  • Page 48
    ... which could adversely affect the business and operations of our ventures. At times, we also participate in ventures where we are not a controlling party. In such instances, we may have limited control over venture decisions and actions, including internal controls and financial reporting which may...

  • Page 49
    ... a working capital investment, which could impact our cash flows and liquidity. If a client fails to pay invoices on a timely basis or defaults in making its payments on a project in which we have devoted significant resources, there could be a material adverse effect on our results of operations or...

  • Page 50
    ... sites or completed projects resulting from the services we have performed could result in significant professional or product liability, warranty or other claims against us as well as reputational harm, especially if public safety is impacted. These liabilities could exceed our insurance limits...

  • Page 51
    ...such as the U.S. Defense Contract Audit Agency (the ''DCAA''). The DCAA reviews the adequacy of and our compliance with our internal control systems and policies (including our labor, billing, accounting, purchasing, estimating, compensation and management information systems). The DCAA also has the...

  • Page 52
    ... policies designed to protect small businesses and underrepresented minority contractors. Our inability to win or renew government contracts during the procurement processes could harm our operations and reduce our profits and revenues. Many of our U.S. government contracts require security...

  • Page 53
    ... or our operating results. While management has taken steps to address these concerns by implementing sophisticated network security and internal control measures, a systems failure or breach and/or the loss of data could materially adversely affect our financial condition and operating results. We...

  • Page 54
    ... our profitability on certain projects could be affected. Our monetary assets and liabilities denominated in nonfunctional currencies are subject to currency fluctuations when measured period to period for financial reporting purposes. In addition, the U.S. dollar value of our backlog may from time...

  • Page 55
    ..., our business and financial performance could be adversely affected. Our continued success requires us to hire and retain qualified personnel. The success of our business is dependent upon being able to attract and retain personnel, including engineers, project management and craft employees around...

  • Page 56
    ... 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. In addition, our project sites can place our employees and others near large equipment, dangerous processes or...

  • Page 57
    ... material negative impact on our financial condition and reported results of operations. It can be very difficult or expensive to obtain the insurance we need for our business operations. As part of business operations we maintain insurance both as a corporate risk management strategy and to satisfy...

  • Page 58
    ... increase the pace of development of carbon capture and storage projects, alternative transportation, alternative energy facilities, such as wind farms, or incentivize increased implementation of clean fuel projects which could positively impact the demand for our services. We cannot predict when...

  • Page 59
    ..., South Carolina ...Houston (Sugar Land), Texas ...Irving, Texas (Corporate Headquarters) ...Southern California (Aliso Viejo, Irvine and Long Beach) Canada: Calgary, Alberta ...Vancouver, British Columbia ...Latin America: Mexico City, Mexico ...Santiago, Chile ...Europe, Africa and Middle East: Al...

  • Page 60
    ... provides information as of the three months ended December 31, 2014 about purchases by the company of equity securities that are registered by the company pursuant to Section 12 of the Exchange Act. Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs Maximum Number of...

  • Page 61
    ... shares and 10,000,000 shares, respectively. The company continues to repurchase shares from time to time in open market transactions or privately negotiated transactions, including through pre-arranged trading programs, at its discretion, subject to market conditions and other factors and at such...

  • Page 62
    ...Financial Statement Schedules.'' Amounts are expressed in millions, except for per share and employee information: 2014 Year Ended December 31, 2013 2012 2011 2010 CONSOLIDATED OPERATING RESULTS Total revenue Earnings from continuing operations before taxes Amounts attributable to Fluor Corporation...

  • Page 63
    ....4 billion was essentially level with 2012. Revenue growth in the Oil & Gas and Power segments in 2013 was offset by revenue decline in the Industrial & Infrastructure, Government and Global Services segments. Earnings from continuing operations before taxes for 2014 of $1.2 billion were up modestly...

  • Page 64
    ... mining customers have been deferred. Revenue in the Government segment declined in 2014 and 2013 as the federal government has continued to close bases in the execution of LOGCAP IV, though the current level of activity is expected to be relatively steady for the near term. The company's results...

  • Page 65
    .... The company's significant accounting policies are described in the Notes to Consolidated Financial Statements. The preparation of the Consolidated Financial Statements requires management to make estimates and judgments that affect the reported amounts of assets, liabilities, revenue and expenses...

  • Page 66
    ... only a small initial investment. The arrangements are often formed for the single business purpose of executing a specific project and allow the company to share risks and secure specialty skills required for project execution. The company evaluates each partnership and joint venture at inception...

  • Page 67
    ...in the company's financial statements. Assumptions concerning discount rates, long-term rates of return on plan assets and rates of increase in compensation levels are determined based on the current economic environment in each host country at the end of each respective annual reporting period. The...

  • Page 68
    ..., Government, Global Services and Power. For more information on the business segments see ''Item 1. - Business'' above. Oil & Gas Revenue and segment profit for the Oil & Gas segment are summarized as follows: (in millions) Year Ended December 31, 2014 2013 2012 Revenue Segment profit...

  • Page 69
    ... for the continued expansion of a large copper project in Peru. New awards in 2012 included additional scope for an iron ore joint venture project in Western Australia, copper mining projects in Peru and the United States, and a managed toll lane project in Virginia. The year-to-year decrease in...

  • Page 70
    ...Project'') and the Strategic Petroleum Reserve Project. The current year also benefited from increased volume for the Savannah River Site Management and Operating Project in South Carolina (the ''Savannah River Project''), which contributed lower revenue in 2013 as a result of the federal government...

  • Page 71
    ...of 2012 as new awards for the project outpaced the level of project execution activities for the year. Total assets in the Government segment were $540 million as of December 31, 2014 compared to $581 million as of December 31, 2013. Global Services Revenue and segment profit for the Global Services...

  • Page 72
    ... Iraq in 2012. The equipment, temporary staffing and supply chain solutions business lines do not report backlog or new awards. Total assets in the Global Services segment were $795 million as of December 31, 2014 and $759 million as of December 31, 2013. Power Revenue and segment profit (loss) for...

  • Page 73
    ... in 2014 included a nuclear power plant maintenance project in California and a gas-fired power plant project in South Carolina. New awards of $1.5 billion in 2013 included a natural gas-fired power plant project in Virginia. New awards of $884 million in 2012 included a solar power project in...

  • Page 74
    ... cash equivalents combined with current and noncurrent marketable securities were $2.4 billion and $2.7 billion as of December 31, 2014 and 2013, respectively. Cash and cash equivalents are held in numerous accounts throughout the world to fund the company's global project execution activities. As...

  • Page 75
    ... work in progress for LOGCAP IV in the Government segment during 2013. The improvement in cash flows from operating activities in 2013 was primarily attributable to an overall increase in earnings sources. The company had a net cash outlay of $175 million during 2012 to fund the project execution...

  • Page 76
    ... Mozambique. The company continues to make investments in partnerships or joint ventures primarily for the execution of single contracts or projects. Investments in unconsolidated partnerships and joint ventures were $39 million, $27 million and $31 million in 2014, 2013 and 2012, respectively. 43

  • Page 77
    ... unpaid interest, if any, to the date of purchase. The company is generally not limited under the indentures governing the 2014 Notes and the 2011 Notes in its ability to incur additional indebtedness provided the company is in compliance with certain restrictive covenants, including restrictions on...

  • Page 78
    ... a mining joint venture project in Argentina. Distributions in 2013 and 2012 primarily related to an iron ore joint venture project in Australia. Capital contributions by joint venture partners were $3 million, $2 million and $3 million in 2014, 2013 and 2012, respectively. Effect of Exchange Rate...

  • Page 79
    ... 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...

  • Page 80
    ...that are presently outstanding and the timing of payments indicated in the above table. 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...

  • Page 81
    ...and maintaining effective internal control over financial reporting and for the assessment of the effectiveness of internal control over financial reporting. The company's internal control over financial reporting is a process designed, as defined in Rule 13a-15(f) under the Exchange Act, to provide...

  • Page 82
    .... In our opinion, Fluor Corporation maintained, in all material respects, effective internal control over financial reporting as of December 31, 2014, based on the COSO criteria. We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States...

  • Page 83
    ...54 Executive Vice President, Systems and Supply Chain Executive Vice President, Business Development & Strategy Executive Vice President, Project Support Services Executive Vice President, Human Resources and Administration Executive Vice President, Chief Legal Officer and Secretary Chief Operating...

  • Page 84
    ... of the company since March 2008 and Chief Financial Officer of Project Support Services since October 2014. He was Vice President of Internal Audit from September 2002 to March 2008 and prior to that served in a number of financial management roles, including Controller of South Latin America and...

  • Page 85
    ... and employees, including our chief executive officer, chief financial officer, and principal accounting officer and controller. A copy of our Code of Business Conduct and Ethics, as amended, has been posted on the ''Sustainability'' - ''Ethics and Compliance'' portion of our website, www.fluor.com...

  • Page 86
    ... Owners and Management and Related Stockholder Matters Equity Compensation Plan Information The following table provides information as of December 31, 2014 with respect to the shares of common stock that may be issued under the company's equity compensation plans: (a) (b) (c) Number of securities...

  • Page 87
    ... Wells Fargo Bank, National Association, as trustee, dated as of November 25, 2014 (incorporated by reference to Exhibit 4.1 to the registrant's Current Report on Form 8-K filed on November 25, 2014). Fluor Corporation 2014 Restricted Stock Plan for Non-Employee Directors (incorporated by reference...

  • Page 88
    ... 409A Executive Deferred Compensation Program, as amended and restated effective January 1, 2014 (incorporated by reference to Exhibit 10.13 to the registrant's Annual Report on Form 10-K filed on February 18, 2014). Fluor Corporation Amended and Restated 2008 Executive Performance Incentive Plan...

  • Page 89
    ... the Fluor Corporation 2014 Restricted Stock Plan for Non-Employee Directors.* Form of Change in Control Agreement entered into between the registrant and each of its executive officers (incorporated by reference to Exhibit 10.1 to the registrant's Current Report on Form 8-K filed on June 29, 2010...

  • Page 90
    ...Independent Registered Public Accounting Firm.* Certification of Chief Executive Officer of Fluor Corporation.* Certification of Chief Financial Officer of Fluor Corporation.* Certification of Chief Executive Officer pursuant to Rule 13a-14(b) or Rule 15d-14(b) of the Securities Exchange Act of 1934...

  • Page 91
    ... 2014, 2013 and 2012, (ii) the Consolidated Balance Sheet at December 31, 2014 and December 31, 2013, (iii) the Consolidated Statement of Cash Flows for the years ended December 31, 2014, 2013 and 2012 and (iv) the Consolidated Statement of Equity for the years ended December 31, 2014, 2013 and 2012...

  • Page 92
    ... by the undersigned, thereunto duly authorized. FLUOR CORPORATION By: /s/ BIGGS C. PORTER Biggs C. Porter, Executive Vice President and Chief Financial Officer February 18, 2015 Pursuant to the requirements of the Securities Exchange Act of 1934, this annual report on Form 10-K has been signed below...

  • Page 93
    Signature Title Date /s/ JAMES T. HACKETT James T. Hackett /s/ DEBORAH D. MCWHINNEY Deborah D. McWhinney /s/ DEAN R. O'...2015 Director February 18, 2015 Director February 18, 2015 Director February 18, 2015 Director February 18, 2015 Director February 18, 2015 Director February 18, 2015...

  • Page 94
    FLUOR CORPORATION INDEX TO CONSOLIDATED FINANCIAL STATEMENTS TABLE OF CONTENTS PAGE Report of Independent Registered Public Accounting Firm ...Consolidated Statement of Earnings ...Consolidated Statement of Comprehensive Income ...Consolidated Balance Sheet ...Consolidated Statement of Cash Flows ...

  • Page 95
    ...), Fluor Corporation's internal control over financial reporting as of December 31, 2014, based on criteria established in Internal Control-Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (2013 framework) and our report dated February 18, 2015...

  • Page 96
    FLUOR CORPORATION CONSOLIDATED STATEMENT OF EARNINGS Year Ended December 31, 2013 (in thousands, except per share amounts) 2014 2012 TOTAL REVENUE TOTAL COST OF REVENUE OTHER (INCOME) AND EXPENSES Corporate general and administrative expense Interest expense Interest income Total cost and ...

  • Page 97
    FLUOR CORPORATION CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME Year Ended December 31, 2014 2013 2012 (in thousands) NET EARNINGS OTHER COMPREHENSIVE INCOME (LOSS), NET OF TAX: Foreign currency translation adjustment Ownership share of equity method investees' other comprehensive income Defined ...

  • Page 98
    FLUOR CORPORATION CONSOLIDATED BALANCE SHEET December 31, 2014 December 31, 2013 (in thousands, except share and per share amounts) ASSETS CURRENT ASSETS Cash and cash equivalents ($352,996 and $488,426 related to variable interest entities (''VIEs'')) Marketable securities, current ($14,082 and ...

  • Page 99
    FLUOR CORPORATION CONSOLIDATED STATEMENT OF CASH FLOWS (in thousands) Year Ended December 31, 2014 2013 2012 CASH FLOWS FROM OPERATING ACTIVITIES Net earnings Adjustments to reconcile net earnings to cash provided (utilized) by operating activities: Loss from discontinued operations, net of taxes ...

  • Page 100
    ...-based plan activity Repurchase of common stock Debt conversions BALANCE AS OF DECEMBER 31, 2014 Retained Earnings $3,590,553 456,330 - (107,522) - - - - (341,840) - $3,597,521 667,711 - (104,488) - - - - (120,080) - $4,040,664 510,909 - (132,608) - - - - (825,369) 1 $3,593,597 Total Shareholders...

  • Page 101
    ... Major Accounting Policies Principles of Consolidation The financial statements include the accounts of Fluor Corporation and its subsidiaries (''the company''). The company frequently forms joint ventures or partnerships with unrelated third parties for the execution of single contracts or projects...

  • Page 102
    FLUOR CORPORATION NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued) and equipment, are included in revenue and cost of revenue when management believes that the company is responsible for the ultimate acceptability of the project. Contracts are generally segmented between types of services, ...

  • Page 103
    ... taxes as the company considers its worldwide taxable earnings and the impact of the continuing audit process conducted by various tax authorities. The final outcome of these audits by foreign jurisdictions, the Internal Revenue Service and various state governments could differ materially from...

  • Page 104
    ...to employees, including grants of employee stock options, to be recognized in the income statement based on their fair values. All unvested options outstanding under the company's option plans have grant prices equal to the market price of the company's stock on the dates of grant. Compensation cost...

  • Page 105
    FLUOR CORPORATION NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued) recognized over the required service period, or over a shorter period when employee retirement eligibility is a factor. Certain awards that may be settled in cash or company stock are classified as liabilities and remeasured at...

  • Page 106
    FLUOR CORPORATION NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued) The changes in AOCI balances by component (after-tax) for the year ended December 31, 2014 are as follows: Ownership Share of Equity Method Investees' Other Comprehensive Income (Loss) $(32,274) (7,958) 9,796 1,838 $(30,436) ...

  • Page 107
    ...31, 2011 Current-period other comprehensive income (loss) Balance as of December 31, 2012 During 2014 and 2013, functional currency exchange rates for most of the company's international operations weakened against the U.S. dollar, resulting in unrealized translation losses. During 2012, functional...

  • Page 108
    ... service period, be treated as a performance condition. ASU 2014-12 is effective for interim and annual reporting periods beginning after December 15, 2015. Management does not expect the adoption of ASU 2014-12 to have a material impact on the company's financial position, results of operations...

  • Page 109
    FLUOR CORPORATION NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued) cumulative-effect adjustment as of the date of adoption. Management is currently evaluating the impact of adopting ASU 2014-09 on the company's financial position, results of operations and cash flows. In April 2014, the FASB ...

  • Page 110
    ... business of St. Joe Minerals Corporation and The Doe Run Company in Herculaneum, Missouri. The tax effect associated with this loss was $112 million. See ''14. Contingencies and Commitments'' for further discussion of this matter. 3. Consolidated Statement of Cash Flows The changes in operating...

  • Page 111
    FLUOR CORPORATION NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued) 4. Income Taxes The income tax expense (benefit) included in the Consolidated Statement of Earnings from continuing operations is as follows: (in thousands) Year Ended December 31, 2014 2013 2012 Current: Federal Foreign ...

  • Page 112
    ...in thousands) December 31, 2014 2013 Deferred tax assets: Accrued liabilities not currently deductible: Employee compensation and benefits Employee time-off accrual Project and non-project reserves Accrual for discontinued operations Workers' compensation insurance accruals Tax basis of investments...

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    ... Project. 5. Retirement Benefits The company sponsors contributory and non-contributory defined contribution retirement and defined benefit pension plans for eligible employees worldwide. Domestic and international defined contribution retirement plans are available to eligible salaried and craft...

  • Page 114
    ... future service-related benefits for salaried participants of the U.S. plan as of December 31, 2011 and craft participants of the U.S. plan as of December 31, 2013. During the fourth quarter of 2014, the company's Board of Directors approved an amendment to terminate the U.S. plan effective December...

  • Page 115
    ... including public U.S. and international equities, U.S. private equities and debt securities. U.S. Pension Plan December 31, 2014 2013 2012 Non-U.S. Pension Plans December 31, 2014 2013 2012 For determining projected benefit obligation at year-end: Discount rates Rates of increase in compensation...

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    ... preferred stocks and limited partnerships. Publicly traded corporate equity securities are valued based on the last trade or official close of an active market or exchange on the last business day of the plan's year. Securities not traded on the last business day are valued at the last reported bid...

  • Page 117
    ... 2013: U.S. Pension Plan December 31, 2014 Fair Value Hierarchy (in thousands) Assets: Equity securities: Common stock Common or collective trusts Limited Partnerships Debt securities: Common or collective trusts Corporate bonds Government securities Other: Common or collective trusts - money market...

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    FLUOR CORPORATION NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued) Non-U.S. Pension Plans December 31, 2014 Fair Value Hierarchy Total Level 1 Level 2 December 31, 2013 Fair Value Hierarchy Total Level 1 Level 2 (in thousands) Level 3 Level 3 Assets: Equity securities: Common and preferred...

  • Page 119
    ... occur at settlement and to be funded from plan assets, which totaled $751 million as of December 31, 2014. Measurement dates for the company's U.S. and non-U.S. defined benefit pension plans are December 31. The following table sets forth the change in projected benefit obligation, plan assets and...

  • Page 120
    ...U.S. employees. The health care and life insurance plans are generally contributory, with retiree contributions adjusted annually. The accumulated postretirement benefit obligation as of December 31, 2014 and 2013 was determined in accordance with the current terms of the company's health care plans...

  • Page 121
    ...the current or future funded status of these plans. In addition to the company's defined benefit pension plans discussed above, the company participates in multiemployer pension plans for its union construction and maintenance craft employees. Contributions are based on the hours worked by employees...

  • Page 122
    FLUOR CORPORATION NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued) The company measures and reports assets and liabilities at fair value utilizing pricing information received from third parties. The company performs procedures to verify the reasonableness of pricing information received for ...

  • Page 123
    FLUOR CORPORATION NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued) $26 million, corporate debt securities of $235 million and commercial paper of $7 million. The amortized cost of these available-for-sale securities is not materially different from the fair value. During 2014, 2013 and 2012, ...

  • Page 124
    FLUOR CORPORATION NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued) 2017. The impact to earnings due to hedge ineffectiveness was immaterial for the years ended December 31, 2014, 2013 and 2012. The fair values of derivatives designated as hedging instruments under ASC 815 as of December 31, ...

  • Page 125
    ... unpaid interest, if any, to the date of purchase. The company is generally not limited under the indentures governing the 2014 Notes and the 2011 Notes in its ability to incur additional indebtedness provided the company is in compliance with certain restrictive covenants, including restrictions on...

  • Page 126
    ... equipment associated with the equipment operations in the Global Services segment. Outstanding borrowings under the facility were $10 million and $11 million as of December 31, 2014 and 2013, respectively. As of December 31, 2014, the company was in compliance with all of the financial covenants...

  • Page 127
    ... in the executive plans. Recorded compensation cost for stock-based payment arrangements, which is generally recognized on a straight-line basis, totaled $45 million, $54 million and $40 million for the years ended December 31, 2014, 2013 and 2012, respectively, net of recognized tax benefits of $27...

  • Page 128
    ...to certain service and performance conditions as established by the Committee. Generally, upon termination of employment, restricted stock units and restricted shares which have not vested are forfeited. For the company's executives, the restricted units granted in 2014, 2013 and 2012 generally vest...

  • Page 129
    FLUOR CORPORATION NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued) and 2012 vest ratably over three years. The aggregate intrinsic value, representing the difference between market value on the date of exercise and the option price, of stock options exercised during 2014, 2013 and 2012 was $8 ...

  • Page 130
    ... ended December 31, 2014, 2013 and 2012 under the treasury stock method are presented below: (in thousands, except per share amounts) Year Ended December 31, 2014 2013 2012 Amounts attributable to Fluor Corporation: Earnings from continuing operations Loss from discontinued operations, net of taxes...

  • Page 131
    FLUOR CORPORATION NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued) expense in 2013 was higher compared to 2012, primarily due to an increase in rental equipment required to support project execution activities in the Industrial & Infrastructure segment. The company's obligations for minimum ...

  • Page 132
    ... and outstanding claims. Guarantees In the ordinary course of business, the company enters into various agreements providing performance assurances and guarantees to clients on behalf of certain unconsolidated and consolidated partnerships, joint ventures and other jointly executed contracts. These...

  • Page 133
    ... have a material effect on the company's consolidated financial position, results of operations or liquidity. 15. 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 majority of...

  • Page 134
    ... 2012, the company was awarded the $925 million Interstate 95 HOT Lanes Project in Virginia through a public-private partnership between the Virginia Department of Transportation (''VDOT'') and 95 Express Lanes, LLC, a joint venture in which the company had a 10 percent interest and Transurban (USA...

  • Page 135
    ... on behalf of DTS. Fluor SKM Joint Venture In 2008, the Fluor SKM joint venture was awarded the initial program management, engineering and construction management contract for the expansion of port, rail and mine facilities for BHP Billiton Limited's iron ore mining project in the Pilbara region of...

  • Page 136
    ... operations and maintenance and technical services to the gas fueled, solid fueled, environmental compliance, renewables, nuclear and power services markets. The Power segment includes the operations of NuScale Power, LLC, the Oregon-based designer of small modular nuclear reactors, which is managed...

  • Page 137
    FLUOR CORPORATION NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued) Operating Information by Segment (in millions) Year Ended December 31, 2014 2013 2012 External revenue Oil & Gas Industrial & Infrastructure Government Global Services Power Total external revenue Segment profit (loss) Oil & ...

  • Page 138
    ... million, respectively. • Power. Segment profit for 2014, 2013 and 2012 included the operations of NuScale, which are primarily for research and development activities associated with the licensing and commercialization of small modular nuclear reactor technology. In May 2014, NuScale entered into...

  • Page 139
    FLUOR CORPORATION NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued) Operating Information by Geographic Area Engineering services for international projects are often performed within the United States or a country other than where the project is located. Revenue associated with these services ...

  • Page 140
    ... earnings Year ended December 31, 2013 Revenue Cost of revenue Earnings from continuing operations before taxes Earnings from continuing operations Loss from discontinued operations, net of taxes Net earnings Net earnings attributable to Fluor Corporation Basic earnings (loss) per share attributable...

  • Page 141
    FLUOR CORPORATION NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued) divested lead business of St. Joe Minerals Corporation and The Doe Run Company in Herculaneum, Missouri. Net earnings in the fourth quarter of 2013 included pre-tax income of $57 million (or $0.22 per diluted share) resulting ...

  • Page 142
    ...Fluor is a registered service service mark of Fluor Corporation. TRS is a registered service service mark of TRS Staffing Solutions, Inc. AMECO AMECO is a registered service service mark of American Equipment Company, Company, Inc. 3rd Gen Modular Execution is a service service mark of Fluor. Fluor...

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