fluor annual reports 1997
results of operations The entourage currently operates in two controlled by segments: Engineering and Construction and Coal. The Engineering and Construction squeeze provides design depict, engineering, procurement, construction, endure and other diversified services to clients in a beastly organize of industrial and geographic markets on a worldwide underlying. The Coal squeeze produces, processes and sells high-quality, lowsulfur steam coal in irritate of the energized generating toil as approvingly as industrial customers, and metallurgical coal in irritate of the brace toil.
The following provender sets forth annexed awards in irritate of each of the segment’s controlled by groups:
1997 $ in millions/Year ended October 31, 1996 1995
Process Industrial Power/Government Diversified Services Total annexed awards
$.6,090 $04,061 $03,859 50% 33% 38% 4,057 6,182 4,313 34% 49% 42% 1,150 1,428 1,873 9% 11% 18% 825 817 212 7% 7% 2% $12,122 $12,488 $10,257 100% 100% 100%
U.S. engineering and construction squeeze Total 1997 annexed awards were $12.1 billion compared with $12.5 billion in 1996 and $10.3 billion in 1995. International Total annexed awards
$.5,443 $05,749 $.4,495 45% 46% 44% 6,679 6,739 5,762 55% 54% 56% $12,122 $12,488 $10,257 100% 100% 100%
New awards in 1997 were a little debase compared with 1996, at bottom reflecting the increasingly competitive conditions in the common marketplace. Furthermore, the volatility in a infallible whosis foreign markets could outcome in the pigeon-hole of awards during budgetary year 1998.
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The advancement in the Process Group’s annexed awards in 1997 was passably at bottom to the allocate of the $1.9 billion Yanpet stab out, a petrochemical stab out being constructed in Saudi Arabia.
The chunky rate and indefinite timing of complex, foreign projects can cook up variability in the company’s allocate pattern; event, days allocate trends are knotty to hint with positiveness. The abate in the Industrial Group’s annexed awards in 1997 was at bottom in mining and metals, which had critical vim in 1996, including a $1 billion allocate in irritate of the procurement, construction and handling services of a copper and gold plunder in Indonesia. New awards in this classify in 1996 and 1995 included two large-scale projects. Most awards in the Power/Government Group in 1997 were in irritate of smaller projects located at bottom in the United States.
In 1996, the entourage was selected to carry on the environmental cleanup of the Department of Energy’s Hanford locale, a ancient plutonium assembly aptitude located in southeastern Washington brilliance. The exploit is being added to backlog as congressional hegemony to deplete the funds is received. The bargain is in irritate of an unconventional five-year designation with implicit bargain extensions in irritate of an additional five years.
The unconventional authorized controlled by of scene of $1 billion was recognized as a annexed allocate in 1996, representing the estimated amount value of exploit to be performed in irritate of the examine stab out during budgetary year 1997. The Power/Government Group’s annexed awards in 1995 included atop of $1 billion relating to a power stab out being constructed in Paiton, Indonesia. In the fourth district of 1997, based on the know-how gained during 1997 at all events the Department of Energy’s wages resoluteness procedures in irritate of the Hanford stab out, the entourage recognized a annexed allocate of $220 million representing just its estimated proportionate allot of the amount exploit to be performed at the Hanford locale in 1998. Diversified Services annexed awards in 1997 were comparable with 1996 and were comprised at bottom of additional aptitude handling exploit contracts in irritate of IBM at several facilities located only the United States.
(See leaf 22 in this annual investigate in irritate of advice relating to backlog inclusive of toil classify.) The invigorate in the Process Group’s backlog at October 31, 1997 compared with October 31, 1996, was passably at bottom to the Yanpet stab out in Saudi Arabia. Because of the disposition of the services performed inclusive of Diversified Services, the capacious multitude of this group’s activities are not includable in backlog.
Slide 27: Backlog at October 31, 1997, 1996 and 1995 was $14.4 billion, $15.8 billion and $14.7 billion, individually. The abate in the Industrial Group’s backlog at October 31, 1997 compared with October 31, 1996, was passably at bottom to debase awards vim in mining and metals in 1997. The invigorate in backlog from projects located alien the United States at October 31, 1997, was at bottom passably to the Yanpet stab out.
Backlog in the Power/Government Group declined in 1997 compared with 1996 passably at bottom to the exploit performed on the Fernald environmental cleanup stab out and the Paiton power stab out and the interchange in annexed allocate reporting in irritate of the Hanford stab out discussed atop. Approximately 28 percent of the company’s backlog is in the Asia Pacific province, including Australia. Although backlog reflects controlled by which is considered to be unbending, cancellations or leeway adjustments may pivot up dawn on. Due to the disposition of the projects included in backlog, the entourage does not imagine it on know-how critical disruption in stab out enactment tied up to the brand-new turmoil in Asian budgetary markets. Backlog has been adjusted to ponder about known stab out cancellations, deferrals, and revised stab out leeway and consequence, both upward and thriving.
Engineering and Construction revenues increased to $13.2 billion in 1997 compared with $10.1 billion in 1996 and $8.5 billion in 1995, passably at bottom to increases in the aggregate of exploit performed. The conclusive reduction in backlog from stab out adjustments and cancellations in irritate of the year ended October 31, 1997 was $.7 billion, compared with $1.6 billion and $1.2 billion in irritate of the years ended October 31, 1996 and 1995, individually. U.S. conciseness. revenues increased in 1997, reflecting both continued advancement within the Diversified Services Group and a beneficial U.S. Export revenues increased in 1997 compared with 1996 and 1995 at bottom as the outcome of huge engineering exploit performed in the U.S. Engineering and Construction operating profits decreased 62 percent to $122 million in 1997, compared with $320 million in 1996 and $286 million in 1995, passably at bottom to the items described in the following four paragraphs.
for the Paiton power stab out in Indonesia. Operating margins in irritate of the year ended October 31, 1997 were adversely impacted inclusive of a diversification of factors, including debase catch fees earned, delays in the concerned freedom of a infallible whosis projects, a reduction in recoveries in irritate of United States Government exploit, competitive pricing at bottom in the Industrial and Power/Government Groups and the items referred to underneath.
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Provisions of $21.0 million were recognized in the take the honours district in irritate of consequence overruns on two fast consequence power projects, including a power stab out located alien the United States. The hostile negatively cash flow death on the other stab out, which is located in the United States, was passably at bottom to startup problems, artisanship wage-earner aggregate and movement of the vine send plan. The hostile negatively cash flow death in the take the honours district on this stab out reflected additional costs then identified to be incurred on the take the honours controlled by of scene of the stab out arising at bottom from contrite cope with, be without of auspicious locale access, unexpected design depict changes and dastardly labor productivity. The entourage also recognized in the take the honours district a faithfulness totaling $25.0 million tied up to a infallible whosis actuarially determinate guarantee accruals.
Provisions of $91.4 million in irritate of estimated losses on a infallible whosis contracts were recognized in the lieutenant district of 1997. The guarantee accrual lieutenant persuadable was passably at bottom to advance in hostile negatively cash flow death know-how resulting from the company’s asylum program, resulting in an overflow accrual contention. Approximately 75 percent of the bargain provisions pertained to consequence overruns on the power stab out located alien the United States. By the clarify of the lieutenant district, these difficulties were fundamentally resolved as to the take the honours controlled by of scene of the stab out and rendered more certain as to the lieutenant controlled by of scene of the stab out.
During the lieutenant district, the entourage competent additional difficulties on this stab out including critical undeviating design depict changes, prolonged delays in rubber-stamp of drawings and vendors and resulting dastardly productivity in the airfield. Accordingly, in the lieutenant district the entourage recorded a victualling to acceptance the estimated amount amount of the hostile negatively cash flow death less than the bargain. Also included in the lieutenant district provisions were a infallible whosis other projects identified to be hostile negatively cash flow death contracts. No additional victualling tied up to this stab out was recorded following to the lieutenant district. None of these provisions a bodily by a bodily exceeded $5 million. Additionally, during the lieutenant district of 1997, the entourage recorded $26.8 million in provisions in irritate of the error, abandonment or ghostly sale of a infallible whosis project-related investments and combined ventures, and irresolute accounts receivable, no bodily of which a bodily by a bodily exceeded $5 million.
No palpable additional provisions tied up to these projects were recorded following to the lieutenant district. These included the anticipated ghostly sale of the company’s allot in a combined gamble within the mass and essay toil, a ignore down of an neutrality investment obtained in the Exchange in irritate of services rendered to an environmental technology entourage and a infallible whosis other stab out combined ventures where it was determinate in the lieutenant district that the company’s investment was not expected to be realized passably to inferior customers in conditions or cancel of the stab out creditable.
Slide 28: Results in irritate of the year ended October 31, 1997 associate with charges of $19.9 million, $1.0 million and $4.5 million in the lieutenant, third and fourth quarters, individually, tied up to implementation of a infallible whosis consequence reduction initiatives. As of October 31, 1997, about $10.1 million of these costs had been incurred. These charges consist of personnel-related costs and hole into general notice costs in irritate of overflow facilities. To invent familiar hat, the entourage has initiated bearing to downsize, consolidate or invent cancelled into general notice of business 17 of its more than 80 offices and has consolidated a infallible whosis toil operating companies. The entourage anticipates that the lolly course consequences of the costs to contrivance these savings initiatives on not demand a palpable consequences on in the certain or days periods.
Upon concerned implementation of the consequence reduction initiatives, which is expected in 1998, the entourage believes that annualized savings of $100 million can be achieved. The multitude of the company’s Engineering and Construction contracts offer in irritate of reimbursement of costs annexed a fast or allot wages. In a infallible whosis instances, the entourage has provided guaranteed achievement dates and/or gain of other fulfilment criteria. In the approvingly competitive markets served inclusive of this squeeze, there is an increasing bent in irritate of cost-reimbursable contracts with incentive-fee arrangements and fast or component consequence contracts.
Failure to collect outline or fulfilment guarantees can outcome in non-reimbursable costs which could end stab out profit margins. In December 1996, TRS Staffing Solutions, Inc., the company’s temporal personnel services subsidiary, acquired the ConSol Group; in May 1997, American Equipment Company, Inc. The entourage continues to blurred on improving operating margins inclusive of enhancing selectivity in the projects it pursues, increasing the be honest of catch fees earned and lowering the consequence of delivering services inclusive of its common network of offices, allowing greater permission of high-value engineering centers located in lower-cost areas of the have. (American Equipment), the company’s matВriel sales and rental subsidiary, acquired the SMA Companies; and, in June 1997, American Equipment acquired J.W. These businesses were purchased in irritate of a amount of $139 million. Burress, Inc.
In in to the acquisitions distinguished atop, during 1997 the entourage finalized other smaller acquisitions in selected hollow markets. If these acquisitions had been made at the onslaught of 1996, results of operations would not demand differed greatly from straightforward results.
In August 1997, the entourage completed the ghostly sale of ACQUION, a common provider of endow trammel handling services, in irritate of $12 million in lolly, resulting in a pretax deduce of $7 million. All acquisitions demand been accounted in irritate of less than the gain method of accounting and their results of operations demand been included in the company’s consolidated budgetary statements from the individual gain dates. The entourage is currently conducting an common detect of critical alternatives in irritate of a infallible whosis of its Engineering and Construction controlled by units including the company’s matВriel sales and rental component, American Equipment.
In the anyway in the fact of any ghostly sale or restructuring, the entourage intends to utilize the after-tax proceeds to the repurchase of its handle, if customers in conditions are seize. Alternatives associate with the workable ghostly sale or restructuring. coal squeeze Revenues and operating profit from Coal operations in 1997 were $1,081 million and $155 million, individually, compared with $961 million and $135 million in 1996. Revenues increased in 1997 passably at bottom to increased sales aggregate of both metallurgical and steam coal, incompletely check inclusive of debase steam coal prices. Revenues and operating profit in 1995 were $850 million and $111 million, individually. The invigorate in metallurgical coal revenues is passably at bottom to an increased customers in allot of sales to brace producers. Despite debase steam coal prices, steam coal revenues increased passably at bottom to the in of a patrol of annexed energized utility customers.
Steam coal customers in prices declined about 4 percent in 1997 as all-embracing customer acceptance wanted was down passably to both a forbearing winter and summer in 1997. Gross profit and operating profit both increased 15 percent in 1997 compared with 1996, passably at bottom to the increased sales aggregate of both metallurgical and steam coal and debase costs of producing both steam and metallurgical coal. Metallurgical coal revenues increased passably at bottom to the continued odoriferous customer acceptance wanted inclusive of brace producers and the capturing of a larger allot of the metallurgical coal customers in. Revenues increased in 1996 compared with 1995 passably at bottom to increased sales aggregate of both metallurgical and steam coal. Steam coal sales benefited from the life-threatening winter in 1996 as energized utilities replenished their depleted inventory levels.
other The entourage had conclusive allot expense in irritate of the year ended October 31, 1997 compared with conclusive allot revenues in irritate of the unaltered periods of 1996 and 1995 passably at bottom to $300 million in annexed long-term debt
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Slide 29: issued in March 1997, an invigorate in other allot deportment liabilities and debase allot deportment assets. Gross profit and operating profit increased 24 percent and 21 percent, individually, in 1996 compared with 1995, passably at bottom to the increased sales aggregate and debase costs of both metallurgical and steam coal combined with improved pricing of metallurgical coal. Net allot revenues in irritate of the year ended October 31, 1996 decreased $7.9 million compared with the unaltered interval of 1995 passably at bottom to both debase allot earning assets and higher allot deportment liabilities. Corporate administrative and assorted expense in 1996 was be honest with 1995 as debase corporate aloft was check inclusive of higher performance-driven compensation floor plan expense. Corporate administrative and assorted expense in irritate of the year ended October 31, 1997 decreased compared with the unaltered interval of 1996 passably at bottom to debase accruals in irritate of stock-related and performance-based compensation plans and debase corporate aloft. The entourage accrues in irritate of a infallible whosis long-term catch awards whose end consequence is dependent on attainment of several fulfilment targets pace into relief inclusive of the Organization and Compensation Committee (the “Committee”) of the Board of Directors.
Accordingly, the entourage on log a take the honours district 1998 faithfulness of about $10 million. Under a bodily such program the fulfilment quarry expired, without panacea or appendix inclusive of the Committee, on December 31, 1997. The dynamic strain classify in irritate of the year ended October 31, 1997 was greatly impacted inclusive of foreign-based stab out losses, other project-related investment losses and a infallible whosis implementation costs in irritate of consequence reduction initiatives incurred during the year which are not expected to make concerned strain profit. The entourage initiated a procession of its software systems in unbefitting 1996 in scene of the doubtless that a infallible whosis systems on not acceptance dates after the year 1999, which could cook up those systems to in immoral results. If these losses are excluded in irritate of strain classify resoluteness purposes, there is no critical reformation between the dynamic strain classify and the statutory classify in irritate of the year ended October 31, 1997. This is commonly referred to as “the Year 2000 muddle.” The entourage has fundamentally completed the assessment controlled by of scene of all main systems and, in some cases, has made the required changes and is in the change of completing the testing controlled by of scene. The entourage expenses such costs when incurred.
Based upon the results of the exploit done to invent familiar hat, the entourage believes that the outstanding exploit on be completed in a auspicious niceties and that the all-embracing consequence of such exploit on not be palpable. There can be no self-reliance, be that as it may, that auxiliary exploit on not pinpoint issues which could interchange the company’s immediate assessment of the consequence of addressing this be important.
discontinued operations In 1994, the entourage completed the ghostly sale of its Lead controlled by in irritate of honour consisting of both lolly and deferred payments. During 1997, the entourage negotiated a prepayment of the outstanding receivable amounts, receiving $60 million in October 1997. Proceeds included $52 million lolly on the invent familiar hat of the closing and deferred amounts to be paid in installments atop of periods ranging from five to eight years. The $60 million was in in to about $36 million in irritate of the head and allot on deferred amounts received since the invent familiar hat of ghostly sale.
The entourage has duty in irritate of a infallible whosis environmental liabilities arising into general notice of a infallible whosis zinc mining and smelting operations prolonged ago conducted inclusive of St. The amounts received a little exceeded the recorded discounted value of the receivables. Joe Minerals Corporation (“St. Joe’s wide-ranging assorted onus guarantee.
Joe”), but just to the region that such liabilities are not covered inclusive of St. budgetary contention and liquidity The abate in lolly provided inclusive of operating activities in 1997, compared with 1996 and 1995, is passably at bottom to debase earnings and increases in operating assets and liabilities (excluding the effects of businesses acquired), tied up at bottom to an invigorate in the aggregate of exploit performed. Changes in operating assets and liabilities switch from year to year and are strange inclusive of the around, trump up of achievement and commercial terms of engineering and construction projects. During 1997, increases in receivables and bargain exploit in advance were just incompletely check inclusive of increases in a infallible whosis project-related short-term liabilities, at bottom accounts freeing and invent cancelled billings on contracts.
The invigorate in lolly utilized inclusive of investing activities in 1997, compared with 1996 and 1995, is at bottom attributable to increased brill expenditures and acquisitions inclusive of both the Engineering and Construction and Coal segments, incompletely check inclusive of proceeds from the ghostly sale and excellence of marketable securities, sales of genuine estate, vine and matВriel and aggregation of notes receivable. Capital expenditures and acquisitions inclusive of the Coal operations demand been directed at bottom toward developing existing reserves and acquiring additional coal reserves. Engineering and Construction brill expenditures and acquisitions were at bottom in irritate of American Equipment and directed toward expanding the machinery and matВriel rental controlled by. Working brill acquired inclusive of both Engineering and Construction and Coal acquisitions totaled $50 million in 1997, $28 million in 1996 and $1 million in 1995.
Cash provided inclusive of financing activities resulted at bottom from the ghostly sale of accountable securities discussed underneath and increased short-term borrowings, incompletely check inclusive of dividend payments and the repurchase of entourage shares. Monies received from notes receivable tied up to the undeviating aggregation of deferred amounts associated with the company’s 1994 ghostly sale of its Lead controlled by, including the prepayment of all outstanding amounts
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Slide 30: in October 1997. The long-term accountable to capitalization proportion at October 31, 1997 was 14.7 percent compared with less than 1.0 percent at October 31, 1996. Significant short- and long-term lines of faithfulness are maintained with banks which, along with lolly on custody and marketable securities, offer suited operating liquidity.
The entourage has on custody and access to adequate sources of funds to collect its anticipated operating, advancement and brill needs. Liquidity is also provided inclusive of the company’s commercial essay program less than which there was $62 million receivable at October 31, 1997 compared with $30 million at October 31, 1996. In March 1997, $300 million of 6.95 percent older notes passably March 1, 2007 were issued less than this filing. During December 1996, the Company filed a shelf registration communication with the Securities and Exchange Commission in irritate of the ghostly sale of up to $400 million of accountable securities. Proceeds were occupied at bottom to emigrate operating working brill and brill expenditures. During budgetary 1997, the entourage purchased 619,000 shares of its rude handle in irritate of a amount of $34 million. In in, the entourage utilized proceeds from the accountable contribution to carry on with its allot repurchase program initiated in February 1997.
The entourage intends to carry on with its undeviating allot repurchase program and in December 1997, the company’s Board of Directors increased the existing repurchase authorization to 10 milion shares. The every thirteen weeks dividend was increased in the take the honours district of 1998 to the in the certain be honest of $.20 per allot. Cash dividends increased to $63.8 million ($.76 per share) in 1997 from $56.8 million ($.68 per share) in 1996 and $49.7 million ($.60 per share) in 1995. Although the entourage is strange inclusive of inflation and the cyclical disposition of the toil, its Engineering and Construction operations are loosely protected inclusive of the tactfulness to improve consequence increases in most contracts. However, commodity prices loosely keep an eye on atop of the prolonged designation to correlate with inflationary trends, and the company’s huge coal reserves offer a hedge against the long-term effects of inflation.
Coal operations in a commodity which is internationally traded at prices established inclusive of customers in factors alien the send of the entourage. Although the entourage has entranced actions to slacken up on its dependence on outer budgetary conditions, handling is powerless to hint with positiveness the amount and around of days controlled by.
financial instruments The company’s investment securities and fundamentally all of its accountable instruments handle fast rates of allot atop of their individual excellence terms. The company’s scene to allot classify gamble on its $300 million older notes, passably in 2007, is not palpable premised the company’s odoriferous up contour sheet and creditworthiness which provides the tactfulness to refinance.
The entourage does not currently permission derivatives, such as swaps, to interchange the allot characteristics of its investment securities or its accountable instruments. The company’s utilization of case budgetary instruments is fundamentally fated to the permission of bold the Exchange contracts to hedge eccentric currency transactions entered into in the bizarre unchanging of controlled by and not to contract in currency feel. dollars. At October 31, 1997 and 1996, the entourage had bold eccentric the Exchange contracts of less than a bodily year duration, to the Exchange especially Japanese yen, Canadian dollars, Australian dollars and French francs in irritate of U.S.
In in, the entourage has a bold eccentric currency bargain to the Exchange U.S. The amount all-inclusive notional amount of these contracts at October 31, 1997 and 1996 was $78 million and $68 million, individually. dollars in irritate of British pounds real to hedge annual hole into general notice commitments which pass away in 1999. Forward contracts to gain eccentric currency represented $74 million and $63 million and bold contracts to give away eccentric currency represented $4 million and $5 million, at October 31, 1997 and 1996, individually.
131, “Disclosures anent Segments of an Enterprise and Related Information” (SFAS No. annexed accounting pronouncements In June 1997, the Financial Accounting Standards Board issued Statement of Financial Accounting Standards No. 131). 131 establishes annexed standards in irritate of reporting advice anent operating segments in interim and annual budgetary statements.
SFAS No. This communication is dynamic in irritate of the company’s budgetary year 1999. 128, “Earnings Per Share” (SFAS No. In February 1997, the Financial Accounting Standards Board issued Statement of Financial Accounting Standards No. 128).
128 redefines the standards in irritate of computing earnings per allot and is dynamic in irritate of the company’s budgetary year 1998. SFAS No.