Fluor 2011 Annual Report Download - page 56

and progress of work under awarded contracts. As a result, we are subject to the risk of losing new awards
to competitors or the risk that revenue may not be derived from awarded projects as quickly as anticipated.
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 have reduced and continue to negatively impact our client’s
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 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 continue to reduce 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 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.
If we experience delays and/or defaults in client payments, we could suffer liquidity problems or we could be unable
to recover all expenditures.
Because of the nature of our contracts, we sometimes commit resources to projects prior to receiving
payments from the client in amounts sufficient to cover expenditures as they are incurred. In difficult
economic times, some of our clients may find it increasingly difficult to pay invoices for our services timely,
increasing the risk that our accounts receivable could become uncollectible and ultimately be written off.
Delays in client payments may require us to make 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 liquidity.
We are vulnerable to the cyclical nature of the markets we serve.
The demand for our services and products is dependent upon the existence of projects with
engineering, procurement, construction and management needs. Although downturns can impact our
entire business, our oil and gas, petrochemicals, power, and mining and metals lines exemplify businesses
that are cyclical in nature and have historically been affected by a decrease in worldwide demand for these
projects or the underlying commodities. For example, in our Oil & Gas segment, capital expenditures by
our oil and gas clients may be influenced by factors such as prevailing prices and expectations about future
prices, technological advances, the costs of exploration, production and delivery of product, domestic and
international political, military, regulatory and economic conditions and other similar factors. In our Power
segment, new order activity has slowed due to low demand for power. Industries such as these and many of
the others we serve have historically been and will continue to be vulnerable to general downturns.
We have international operations that are subject to foreign economic and political uncertainties. 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 fluctuations in demand and to changing international economic and political
conditions which are beyond our control. As of December 31, 2011, approximately 78 percent of our
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