Fluor 2014 Annual Report Download - page 47

Current global economic conditions will likely affect a portion of our client base, partners, subcontractors and
suppliers and could materially affect our backlog and profits.
Current global economic conditions, including a decline in oil and gas prices, have reduced and
continue to negatively impact our clients’ willingness and ability to fund their projects. These conditions
make it difficult for our clients to accurately forecast and plan future business trends and activities, thereby
causing our clients to slow or even curb spending on our services, or seek contract terms more favorable to
them. Our government clients may face budget deficits or financial sequestration that prohibit them from
funding proposed and existing projects or that cause them to exercise their right to terminate our contracts
with little or no prior notice. Furthermore, any financial difficulties suffered by our partners,
subcontractors or suppliers could increase our cost or adversely impact project schedules. These economic
conditions have reduced to some extent the availability of liquidity and credit to fund or support the
continuation and expansion of industrial business operations worldwide. Current financial market
conditions and adverse credit market conditions could adversely affect our clients’, our partners’ or our
own borrowing capacity, which support the continuation and expansion of projects worldwide, and could
result in contract cancellations or suspensions, project award and execution delays, payment delays or
defaults by our clients. Our ability to expand our business would be limited if, in the future, we are unable
to access sufficient credit capacity, including capital market funding, bank credit, such as letters of credit,
and surety bonding on favorable terms or at all. These disruptions could materially impact our backlog and
profits. Finally, our business has traditionally lagged recoveries in the general economy, and therefore may
not recover as quickly as the economy as a whole.
We have international operations that are subject to foreign economic and political uncertainties and risks.
Unexpected and adverse changes in the foreign countries in which we operate could result in project disruptions,
increased cost and potential losses.
Our business is subject to international economic and political conditions that change (sometimes
frequently) for reasons which are beyond our control. As of December 31, 2014, approximately 66 percent
of our backlog consisted of revenue to be derived from projects and services to be completed outside the
United States. We expect that a significant portion of our revenue and profits will continue to come from
international projects for the foreseeable future.
Operating in the international marketplace exposes us to a number of risks including:
• abrupt changes in foreign government policies, laws, treaties, regulations or leadership;
• embargoes or other trade restrictions, including sanctions;
• restrictions on currency movement;
• tax increases;
• currency exchange rate fluctuations;
• changes in labor conditions and difficulties in staffing 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 some of the countries where we operate may make it
difficult to enforce our contractual rights or to defend ourself against claims made by others. We operate in
countries where there is a significant amount of political risk including Afghanistan, Iraq, Kazakhstan,
Russia, China, Guinea, Argentina and Mozambique. In addition, military action or continued unrest,
especially in the Middle East and in Africa, could impact the supply or pricing of oil, disrupt our
operations in the region and elsewhere, and increase our security costs. Our level of exposure to these risks
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