Fluor 2011 Annual Report Download - page 64

derivative (hedging) instruments, when there is currency risk exposure that is not naturally mitigated via
our contracts. However, these actions may not always eliminate all currency risk exposure. Based on
fluctuations in currency, the U.S. dollar value of our backlog may from time to time increase or decrease
significantly. The company does not enter into derivative instruments or hedging activities for speculative
purposes. Our operational cash flows and cash balances, though predominately held in U.S. dollars, may
consist of different currencies at various points in time in order to execute our project contracts globally.
Non-U.S. asset and liability balances are subject to currency fluctuations when measured period to period
for financial reporting purposes in U.S. dollars. Financial hedging may be used to minimize currency
volatility for financial reporting purposes.
Our employees work on projects that are inherently dangerous and a failure to maintain a safe work site could result
in significant losses.
We often work on large-scale and complex projects, frequently in geographically remote locations.
Our project sites can place our employees and others near large equipment, dangerous processes or highly
regulated materials, and in challenging environments. Safety is a primary focus of our business and is
critical to our reputation. Often, we are responsible for safety on the project sites where we work. Many of
our clients require that we meet certain safety criteria to be eligible to bid on contracts, and some of our
contract fees or profits are subject to satisfying safety criteria. Unsafe work conditions also have the
potential of increasing employee turnover, increasing project costs and raising our operating costs. If we
fail to implement appropriate safety procedures and/or if our procedures fail, our employees or others may
suffer injuries or even loss of life. Although we maintain functional groups whose primary purpose is to
implement effective health, safety and environmental procedures throughout our company, the failure to
comply with such procedures, client contracts or applicable regulations could subject us to losses and
liability.
We work in international locations where there are high security risks, which could result in harm to our employees
or unanticipated cost.
Some of our services are performed in high risk locations, such as Afghanistan and Iraq, where the
country or location is subject to political, social or economic risks, or war or civil unrest. In those locations
where we have employees or operations, we may incur substantial security costs to maintain the safety of
our personnel. Despite these activities, in these locations, we cannot guarantee the safety of our personnel
and we may suffer future losses of employees and subcontractors.
We could be adversely impacted if we fail to comply with domestic and international export laws.
Our global operations require importing and exporting goods and technology across international
borders on a regular basis. Our policy mandates strict compliance with U.S. and foreign international trade
laws. To the extent we export technical services, data and products outside of the United States, we are
subject to U.S. and international laws and regulations governing international trade and exports including
but not limited to the International Traffic in Arms Regulations, the Export Administration Regulations
and trade sanctions against embargoed countries, which are administered by the Office of Foreign Assets
Control with the Department of Treasury. From time to time, we identify certain inadvertent or potential
export or related violations. These violations may include, for example, transfers without required
governmental authorization. A failure to comply with these laws and regulations could result in civil or
criminal sanctions, including the imposition of fines, the denial of export privileges and suspension or
debarment from participation in U.S. government contracts.
Past and future environmental, safety and health regulations could impose significant additional cost on us that
reduce our profits.
We are subject to numerous environmental laws and health and safety regulations. Our projects can
involve the handling of hazardous and other highly regulated materials which, if improperly handled or
disposed of, could subject us to civil and criminal liabilities. It is impossible to reliably predict the full
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