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6 7 0 0 L A S C O L I N A S B O U L E V A R D , I R V I N G , T E X A S 7 5 0 3 9
F L U O R . C O M
B U I L D I N G A B E T T E R F U T U R E
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BUIL DING
A BE T TE R FUT URE
TABLE OF CONTENTS
A LETTER FROM THE EXECUTIVE CHAIRMAN
A LETTER FROM THE CHIEF EXECUTIVE OFFICER
HIGH PERFORMANCE CULTURE WITH PURPOSE
INNOVATION LEADERS
CORPORATE MANAGEMENT
BOARD OF DIRECTORS
STRATEGIC PRIORITIES
FORM 10-K
02
06
10
12
14
15
16
17
F L U O R C O R P O R A T I O N ( N Y S E : F L R ) is building a better future by applying world-class expertise to solve its clients’ greatest challenges. Fluor’s 44,000
employees provide professional and technical solutions that deliver safe, well-executed, capital-efficient projects to clients around the world. Fluor is ranked
181 among the Fortune 500 companies. With headquarters in Irving, Texas, Fluor has provided engineering, procurement and construction services for more
than 100 years.
F O R W A R D - L O O K I N G S T A T E M E N T S This annual report contains statements that may constitute forward-looking statements involving risks and
uncertainties, including statements about market outlook, new awards, backlog levels, competition, and the implementation of strategic initiatives. These
forward-looking statements reflect the Company’s current analysis of existing information as of the date of this annual report, and are subject to various risks and
uncertainties. As a result, caution must be exercised in relying on forward-looking statements. Due to known and unknown risks, the Company’s actual results
may differ materially from our expectations or projections. Additional information concerning factors that may influence Fluor’s results can be found in the Form
10-K that follows this annual report.
ON THE FRONT COVER:
BHP SPENCE COPPER CONCENTRATOR PROJECT, NORTHERN CHILE.
When complete, this project will deliver 95,000 tons per day of copper concentrate and associated works.
Copper production is an important part of the world’s transition to a lower carbon future, and Fluor views
projects like this one as an important part of our strategy to be a part of the world’s energy transition.
E N G I N E E R I N G T E C H N O L O G Y C O N S T R U C T I O N M A N A G E M E N T
F L U O R I S B U I L D I N G
A B E T T E R F U T U R E
B Y B E C O M I N G T H E P R E E M I N E N T
L E A D E R I N P R O F E S S I O N A L A N D
T E C H N I C A L S O L U T I O N S
2 0 2 0 A N N U A L R E P O R T
S U P P L Y C H A I N G L O B A L P L A T F O R M P R O G R A M M A N A G E M E N T
A L E T T E R F R O M T H E
EXECUTIVE CHAIRMAN
For over a century, Fluor has built a legacy of unsurpassed expertise and executional
excellence. We have learned much from our successes but, as every good engineer
understands, what you learn from your challenges can be even more important.
The challenges of 2020 were in many ways unprecedented—not only for Fluor and our
unique situation, but for all of us. The pandemic’s disruption of world economies in
general, and the oil and gas industry, in particular, along with unpredictable political and
social events, ever-changing technologies, and evolving approaches in the market made
uncertainty the only certain thing. This isn’t the first time that Fluor has survived tough
times and repositioned itself to thrive.
By virtue of my long career with this company, I can tell you that we have been challenged
before and prevailed each time—1982’s oil market crash being one of those times—and I
know that we will prevail again. Addressing adversity and emerging stronger and smarter
has defined our success as a company in the past, and I have no doubt it will do so again in
the future.
Last year, our board’s investigation and delay in the release of our financials was a
humbling but ultimately valuable experience. Carlos Hernandez and I, in partnership with
every member of our board of directors, spent much of 2019 and all of 2020 taking a hard
look at this company to improve our governance, our oversight, and our effectiveness.
Soon after taking our positions in May of 2019, Carlos and I initiated a strategic review and
quickly realized that we were facing significant project losses. We also experienced a credit
downgrade during that time. We knew that these challenges would put serious pressure
on the company’s liquidity. As a result, our work was focused mainly on two points: cash
generation and reducing risk in our portfolio.
Although we had the misfortune of working through this process with the added
uncertainties of COVID-19, we made significant progress, including reducing overhead
expenses and continuing the process of divesting the AMECO equipment business. During
2020, we added additional rigor to our contract pursuit criteria, focused on prospects
where we were better able to allocate risk, and accelerated the pace of change within the
organization to address the reality of the world today.
After the losses of 2019, we spent much of 2020 retooling the transactional mindset that
put us in that tough position in the first place. With this new conviction, we negotiated and
successfully won reimbursable cost contracts that allow us to add value and get paid for it.
The clients who know us best understand that no other company can do what we do at our
level of scale and complexity. These clients trust us to get the job done right, and they know
that when we deliver a well-executed project for a fair price, everyone succeeds. Honest and
open communication and collaboration have been paramount throughout 2020, and we will
Alan Boeckmann
Executive Chairman
2 FLUOR 2020 ANNUAL REPORT
2
Clients trust us to get the job done right, and
they know that when we deliver a well-executed
project for a fair price, everyone succeeds.
- Alan Boeckmann -
Executive Chairman
BHP SOUTH FLANK IRON ORE PROJECT
PILBARA REGION, WA, AUSTRALIA
go forward with a dedication to transparency and accountability
across the organization. Our biggest single change is the shift
back to an executional mindset rooted in our engineering DNA.
More than any one factor, that shift soundly positions Fluor as an
indispensable player in our industry.
Every job starts with people who want to create something—
usually something ambitious, complex, and innovative. We are
the builders who give clients what they need to achieve their
goals. At our core, that’s what we are—builders—not only of the
world’s toughest projects but also of careers, lifestyles, client
relationships, and economic value.
Perhaps the most important thing Fluor has ever built is
its culture. Over the past two years that culture was tested
dramatically, and I’m proud to report that it withstood that
test. Our culture is strong, and I would argue that it’s our most
valuable asset.
LNG CANADA EXPORT FACILITY
KITIMAT, BRITISH COLUMBIA, CANADA
6%
Asia Pacific
& Australia
37%
United
States
9%
Diversified
Services
21%
Infrastructure
& Power
11%
Government
43%
Energy
& Chemicals
41%
Americas
(excluding U.S.)
16%
Europe, Africa
& Middle East
CONSOLIDATED
BACKLOG BY REGION
16%
Mining
& Industrial
BACKLOG BY SEGMENT
BUILDING A BET TER FUTURE 33
NOVO NORDISK API MANUFACTURING FACILITY
CLAYTON, NC, U.S.
FLUOR’S
CULTURE
Fluor’s culture is based on a deep sense of ethics and holding one
another to the highest standards. It’s grounded in a desire to get
things done right and in a safe way. It’s also about developing
people. That’s why we have thought leaders throughout the
company and around the world who have spent their careers at
Fluor doing incredible things credibly. You will read about some of
those renowned innovators later in this report.
I believe our culture and the resilience of our employees enabled
us to adapt in 2020 to the unanticipated impact of COVID-19
and move forward. Beginning in mid-March, the majority of
our office employees abruptly transitioned to a remote working
environment through the tireless efforts of our information
technology professionals. In the latter half of 2020, we began to
open our offices on a limited basis, adhering to social distancing
guidelines and safety measures. For our projects and staff in the
field, we implemented safety and work protocols to help prevent
the spread of the virus. While we did have a few clients initially
request reductions in field staff, many of those adjustments were
4 FLUOR 2020 ANNUAL REPORT
4
Our culture is strong, and I would argue
that it’s our most valuable asset.
- Alan Boeckmann -
Executive Chairman
temporary, and most of our projects continued through the end
of the year fully staffed. I’d like to thank our board of directors for
asking the hard questions, and Carlos Hernandez and his team
for finding the honest answers, creating the framework to build a
better Fluor, and establishing a solid foundation for future success.
Now, with David Constable at the helm, we have the perfect
combination of a seasoned insider with an outsider’s perspective.
David spent the past 10 years away from our company, serving as
CEO of one of our major clients, Sasol Ltd., and as a member of
the boards of ABB Ltd., Rio Tinto Ltd., and Anadarko Petroleum
Corp. He has gained valuable experience and insight that will
guide and drive Fluor’s future. When I was CEO, David was
without a doubt the best in the business at risk assessment and
risk management. He comes back to us with that expertise honed
and with valuable insight gained from his more recent experiences.
In closing, I believe we’ve done the work to support the future
growth of the company. We are determined to get our capital
structure back in line, deleveraging and freeing up operating cash
flow to fuel our strategy. We have turned the page on 2020 and are
ready to capitalize on the opportunities ahead.
On behalf of our board of directors, thank you for your
confidence and support.
QUELLAVECO OPEN PIT COPPER MINE
NEAR MOQUEGUA, PERU
Alan Boeckmann
Executive Chairman
March 8, 2021
BUILDING A BET TER FUTURE 55
A L E T T E R F R O M T H E
CHIEF EXECUTIVE OFFICER
B U I L D I N G A B E T T E R F U T U R E
It’s a time of new beginnings for Fluor, and I hope that all of our stakeholders
will share our excitement and continue to afford us their support.
David Constable
Chief Executive Officer
Our high performing people, trusted business partners, loyal customers, and
suppliers—together with our strong project pipeline and long-term strategic
vision—will ensure that we deliver sustainable value in the years ahead. In
all that we do, we remain committed to act responsibly and to continuously
improve as we take great strides forward.
Over the past 18 months, an incredible amount of work has been done to restore
transparency, trust, and teamwork at Fluor. As a result, we are well-positioned
to enter our next chapter with the goal of becoming the preeminent leader
of professional and technical solutions while further solidifying our global
leadership brand in the engineering and construction industry.
I’m thrilled to be back at the company that largely shaped my career, and I’m 100
percent committed to our new strategy—Building a Better Future. As a newly
graduated engineer joining the company back in 1982, I quickly found that Fluor
had the most talented people in the industry. The execution excellence mindset
and can-do-attitude that I learned at Fluor permeated my career as I progressed
from engineering to project controls, construction, sales and business line
leadership, and a group presidency role. I am returning to Fluor after serving as
CEO for one of our major clients, Sasol Ltd., from 2011 to 2016. In that role,
I gained a deeper understanding of how our clients think about capital
allocation programs for growing and maintaining their complex businesses.
Subsequently, as a member of the boards of ABB Ltd., Rio Tinto Plc/Ltd., and
Anadarko Petroleum Corp., I was fortunate to gain additional knowledge and
insights about our clients and key suppliers. I learned a lot during my time away,
and I’m keen to bring that knowledge and many key relationships back to Fluor.
We remain committed to act responsibly
and to continuously improve
as we take great strides forward.
- David Constable -
Chief Executive Officer
6 FLUOR 2020 ANNUAL REPORT
FINANCIAL RESULTS
CASH & MARKETABLE SECURITIES
(DOLLARS IN BILLIONS)
1.98
2.00
Before talking about some of the changes we have already made
to address a shifting marketplace, I’d like to share our 2020
financial results. We closed 2020 with a cash and marketable
securities balance of $2.2 billion, reflecting Fluor’s commitment
to balance sheet strength and resilience in spite of headwinds
from certain challenged projects and a global pandemic. Due to
2.22
the uncertainty of COVID-19, the board made the determination
to suspend our dividend, allowing Fluor to focus on cash
preservation in light of reduced client spending.
2018
2019
2020
CONSOLIDATED NEW AWARDS & BACKLOG*
For 2020, new awards of $9 billion reflected our clients’
capital spending delays due to the COVID-19 pandemic.
NEW AWARDS
BACKLOG
Our results for the year were a net loss from continuing
2018
2019
2020
27.7
operations attributable to Fluor of $294 million, or $2.09 per
share. Consolidated segment profit for the year was $317
million, compared to a loss of $186 million in 2019. Consolidated
40.1
continuing operations for the year included noncash
12.6
9.0
31.9
25.6
*Dollars in billions, from continuing operations.
impairments and charges of approximately $358 million to
reflect the impact of weak commodity prices and COVID-19.
Operating cash flow in 2020 was $186 million, compared to $219
million in 2019.
Fluor is committed to growing its bottom line over the coming
years, both through operating margin improvement and
continued overhead reductions.
GLOBAL MEGATRENDS
Since returning to Fluor, my priority has been to actively listen
to our stakeholders. I have listened to our team members
across our global footprint in order to learn more about
how we can be successful, to our clients so we can better
understand why they choose Fluor over the competition, and
to our shareholders for their perspective on the steps we can
take to better drive value.
Based on those learnings, I’ve worked closely with the
management team and the board to develop our strategic path
forward. There are four global megatrends enabling positive
growth potential for Fluor.
BUILDING A BET TER FUTURE 77
LNG CANADA EXPORT FACILITY
KITIMAT, BRITISH COLUMBIA, CANADA
W E ’ V E I D E N T I F I E D
FOUR TRANSFORMATIVE GLOBAL FORCES
T H A T W I L L S H A P E A N D D E F I N E T H E F U T U R E :
1
INDUSTRY 4.0
2
ENERGY TRANSITION AND
URBANIZATION
Industry 4.0 refers to technological innovation connecting the
Energy Transition and Urbanization includes resource
physical, digital, and biological worlds in ways that create new
scarcity and climate change, requiring sustainable building
opportunities requiring companies to rethink how to organize
infrastructure; new innovative, resilient, and efficient
and create value. This will drive the need for more data centers,
transportation; and low carbon energy sources to support
improve project delivery by applying data collection and
growing urban population centers. This requires growth
analysis techniques, create digital twins for clients, apply
in renewable biofuels and other low carbon clean fuels;
predictive maintenance to existing facilities, and propel new
carbon capture and conversion to value; hydrogen; nuclear;
discoveries in vaccines and gene therapy.
electrification; increasing consumption of copper, iron ore,
BEYOND GLOBALIZATION
application of energy storage solutions.
nickel, cobalt, and lithium; and improving energy efficiency, as
well as new transportation approaches such as Hyperloop and
3
Beyond Globalization recognizes that the 2008 global financial
crisis exposed other systemic challenges plaguing the broader
macroeconomic landscape. This trend will drive the need for
4
STAKEHOLDER ENGAGEMENT
companies to localize their critical supply chains and onshore
Stakeholder Engagement represents the growing expectations
manufacturing facilities. We have the ability to support our
society places on companies, including the need to engage with
clients as they reshape their global supply chains to fit into
multiple stakeholders and the consideration of environmental,
this new global order. We also expect to see a growing focus
social, and governance (ESG) factors in their strategies and
on national security and governments taking steps to protect
decision making. This creates the right opportunity for
their citizens. This will lead to increasing opportunities for our
Fluor to lead on sustainability issues, offer energy transition
government business to provide mission critical support to the
solutions, provide new ways of working, and foster a diverse
U.S. Department of Defense and to the intelligence community.
and inclusive culture.
NEW BUSINESS SEGMENTS
We believe these four megatrends will drive significant demand
for our services in 2021 and for decades to come. Fluor is already
a recognized industry leader with a global execution platform,
world-class expertise, and the technical innovation to serve our
diverse client base and deliver on its needs. We have one of the
most robust engineering corps in the industry that can tackle
the world’s problems, one client at a time. To align our businesses
with these megatrends, we are organizing our operations into
three business segments: Urban Solutions, Mission Solutions,
and Energy Solutions.
CTA RED AND PURPLE LINE
MODERNIZATION PROGRAM
CHICAGO, IL, U.S.
STRATEGIC PRIORITIES
Drive growth across
the portfolio
Pursue contracts
with fair and
balanced terms
Foster a high
performance culture
with purpose
Reinforce financial
discipline
By 2023, our goal is to grow our nontraditional oil and gas segments
and ethical conduct, teamwork and inclusivity, and an ongoing
to 70 percent of our overall revenue. This includes energy transition,
drive for excellence. This high performance culture with
life sciences, high-demand metals, and infrastructure. Accelerated
purpose embraces a focus on ESG factors, as well as diversity,
growth will also be achieved through targeted investments in
equity, and inclusion (DE&I). Fluor has a good story to tell
our advanced technology and government businesses. Fluor’s
here, which you will read more about on pages 10 through 11.
traditional energy clients will continue to invest in oil and gas
During my five years in South Africa, I was very fortunate
assets as they ramp up their focus on energy transition projects.
to have supported and sponsored Sasol’s Broad-Based Black
We are well prepared to lead in this space via our new Energy
Economic Empowerment (B-BBEE) programs for historically
Solutions business segment that will service traditional energy
disadvantaged South Africans. The experience gained and
projects and bring the value of strong technical solutions to the
progress achieved during my time there are directly applicable
early development phases of the energy transition.
to Fluor’s strong focus on DE&I.
Our commercial strategy confirms our intent to pursue contracts
Finally, our fourth strategic priority reinforces financial
with more favorable risk-adjusted terms that reward Fluor for
discipline across the company through rebuilding and
value. Our pursuit criteria will focus on reimbursable commercial
maintaining a solid balance sheet with a strong cash position.
terms that balance risk fairly and equitably. We will only consider
We will achieve this by generating predictable cash flow
fixed-price construction contracts for segments and scopes where
and earnings. Our capital will be allocated to stabilize our
we have a strong history of delivering expected returns. By 2024,
financial position, invest in our growth markets, and return
our goal is to grow our backlog mix to more than 75 percent
excess capital to our shareholders. By 2024, we plan to lower
reimbursable, which would be similar to our historical norms.
and maintain a debt to capitalization ratio corridor between
20 and 40 percent, generate an ROIC in excess of 20 percent,
Alan’s letter touched on the strong culture at Fluor, driven by our
secure investment-grade credit ratings, and deliver top-quartile
people. And I concur that they are our greatest strength. Their
shareholder returns.
values shine through in everything they do—safety first, integrity
LOOKING AHEAD
I’m approaching my role at Fluor with passion and humility.
to maximize long-term value for our shareholders and deliver
My promise is that I will come to work each day ready to engage,
on our stakeholders’ expectations.
collaborate, and compete while promoting a safe and inclusive
environment. I will strive to listen and to build strong
Fluor’s employees around the world are energized and
teams of highly talented people. Integrity and accountability
motivated to take this company to new levels of success.
are important to me, and will be top of mind going forward.
I am privileged to lead them and appreciate their significant
contributions during 2020.
Fluor is embarking on a new journey to become a leading provider
of professional and technical solutions while maintaining our
global leadership in engineering and construction. We believe this
strategic direction is aligned with the prevailing trends that are
transforming our markets, our customers, and the world around
us. The four strategic priorities we have established will enable us
David E. Constable
Chief Executive Officer
March 8, 2021
BUILDING A BET TER FUTURE 99
H I G H P E R F O R M A N C E
CULTURE WITH PURPOSE
Fluor’s high performance culture with purpose embraces a focus on ESG, DE&I, and Sustainability.
ENVIRONMENTAL, SOCIAL, AND GOVERNANCE
SAFETY IS FLUOR’S FIRST CORE VALUE.
Fluor’s robust health, safety, and environmental
culture is shaped by our uncompromised values.
Safety drives the actions of every employee at every
location, every day. Our people deserve it. Our clients
demand it. Our performance depends on it. We are
Safer TogetherSM.
STRONG CORPORATE GOVERNANCE
STANDARDS PROMOTE INTEGRITY,
TRANSPARENCY, AND ACCOUNTABILITY.
Members of our board of directors participate in five
standing committees: Audit, Executive, Governance,
Organization and Compensation, and Commercial
Strategies and Operational Risk. Nine of our
eleven board members are independent, and board
committees other than the executive committee are
composed solely of independent directors.
CANADIAN NUCLEAR LABORATORIES
MANAGEMENT & OPERATIONS
MULTIPLE LOCATIONS, CANADA
FLUOR HAS A STRONG TRADITION
OF COMMUNITY SERVICE.
Providing service to the communities where
Fluor employees live and work is our privilege.
Our employee volunteerism and giving efforts
support organizations working in community
development, education, environmental
stewardship, and social services.
SHELTER BUILD PROJECT
Employees in Finland complete a
shelter project for a local charity.
ENGINEERING CHALLENGE
Fluor volunteers in Dallas work
with students on the 2020 Fluor
Engineering Challenge.
DIVERSITY, EQUITY, AND INCLUSION
Fluor is diverse by nature. We have more than 44,000
employees operating in 60 countries, and we’re building an
inclusive culture with intention. At Fluor, every voice matters,
at every level. We embrace different ideas, perspectives, and
backgrounds. We listen actively, respect one another, and foster
an environment with a deep sense of pride and belonging.
Our DE&I strategy has four impact pillars: we champion an
inclusive culture; recruit, develop, and retain talent; enhance
the employee experience; and improve social progress
and impact. As part of our effort to champion an inclusive
culture, in the fourth quarter of 2020, we established our
first two Inclusion Councils—one in the United States and
one in Australia—with diverse membership to advance DE&I
throughout Fluor. Our plan is to learn from these two councils
prior to global implementation, covering every region in which
we have a strong employee presence.
LNG CANADA EXPORT FACILITY
KITIMAT, BRITISH COLUMBIA, CANADA
SUSTAINABILITY
FLUOR IS COMMITTED TO
ACHIEVING NET ZERO GREENHOUSE
GAS EMISSIONS BY THE END OF 2023
GHG EMISSIONS*
(ABSOLUTE IN METRIC TONS OF EQUIVALENT CARBON DIOXIDE)
2017
2018
2019
57,280
48,910
44,020
*Excludes Stork and CFHI.
At Fluor, sustainability is an important element of our
strategy that is deeply integrated into our business practices
and has been for decades. We strive to set the standard for
our industry as we work to safeguard the environment,
conserve energy, protect lives, and strengthen the economies
and social structures of communities where our employees
work and live. We are proud of our sustainability legacy at
Fluor. For decades, we have been committed to delivering
innovative, predictable, and sustainable solutions to help
build a better world. Our sustainability mission is to meet
the needs of our clients while conducting business in a
socially, economically, and environmentally responsible
manner to the benefit of current and future generations.
Looking at our continuing businesses, since 2017, we’ve been
able to achieve reductions of 25 percent in our Scope 1 and
2 greenhouse gas emissions. While we are proud of these
achievements, we have committed to doing more.
During Strategy Day in January of 2021, Fluor announced its
commitment to achieve net zero greenhouse gas emissions
for Scope 1 (direct) and Scope 2 (indirect) by the end of
2023. By achieving net zero, we address our impact on
climate change and demonstrate to our stakeholders the
importance of managing our greenhouse gas emissions.
This commitment applies to emissions from our offices and
associated fleets globally. Sources of GHG emissions include
electricity, natural gas, and refrigerants.
Since 2008, we have reported on Fluor’s sustainability
efforts, including our work in the communities we serve,
our HSE performance, the value in our supply chain, and
positive engagement with our employees in our annual
sustainability report. We first measured our GHG emissions
in 2006, and our efforts to reduce emissions since then have
been significant. The Net Zero 2023 commitment is the
next step in our sustainability journey and demonstrates
our leadership in the industry. This leadership is sought by
investors, clients, employees, and the general public.
BUILDING A BET TER FUTURE 1111
I N N OVAT I O N
LEADERS
FLUOR BELIEVES PEOPLE ARE OUR GREATEST ASSET
Fellows’ talents are leveraged across multiple business lines, regions, and projects;
helping clients and training the next generation of experts. Here we are highlighting
some of the vast experience in our organization.
HECTOR D’AVILA
Fellow in Pharmaceutical and Life Sciences Technology
Supported projects across APAC and
the Americas in Food and Beverage and
Drug Development projects in our Urban
Solutions group.
JAMES HAMBRIGHT III
Sustainable Building Design Fellow
Supported projects that brought more
sustainable designs to Urban Solutions
(both AT&LS and Metals Production),
Mission Solutions, and Energy
Solutions Projects.
NETO OBASI
Metallurgy, Welding, and Corrosion Fellow
Worked on projects in the EMEA region,
with a specific focus on qualification
procedures, fatigue analysis, and
corrosion assessment consulting to
ensure both supplier and weld quality
in the materials used on these projects.
CRAIG SANDSTROM
Single Use & Disposable Biotech Systems Fellow
Supported confidential projects across
the globe, primarily on new vaccine
development, as well as capacity
expansions for pharmaceutical
production in support of needs due to
the COVID-19 pandemic.
HANS GÖ EBEL
Methods and Data Senior Fellow
Supported projects across the EMEA
region in both Urban Solutions
(Life Sciences) and Energy Solutions,
including confidential feasibility
studies and research in support of
the Hydrogen Economy and other
“concept projects.”
LAN JI
Fellow in Upstream Integration
Spent her time focused on a series of
substantial emission reduction projects
across the Americas and APAC.
SARAH RADOVCICH
Unfired Heat Transfer Fellow
Supported conventional energy projects
in their heat transfer design and
worked on the development of cutting-
edge heat transfer designs in support
of pyrolysis, a key element in some new
Energy Transition technologies.
CATHY SHARGAY
Materials and Corrosion Senior Fellow
Supported projects across the three
global regions in Energy Solutions,
and North American projects for both
Mission Solutions and Urban Solutions.
She accomplished this in addition to
her leadership positions on API and
NACE Committee and task forces.
LEVERAGING TECHNICAL EXPERTISE ACROSS PROJECTS
Number of SMEs by Country
>200
81-200
21-80
1-20
TECHNOLOGY LEADERSHIP
As part of the Project Execution group, our Office of
SUBJECT MATTER EXPERTS
Fluor has more than 1,500 subject matter experts
Technology supports all business groups with a breadth
(SMEs) available to work or consult on projects. Our
and depth of technical expertise. Functions include
SME knowledge areas are wide-ranging, covering all
collaboration with external technology providers,
areas of expertise used in all engineering and support
maintenance of Fluor’s intellectual property, and review
disciplines that touch the engineering, procurement,
and approval of Fluor’s process guarantees. This large cross-
and construction project life cycle. The SME title at
section of experts is leveraged across projects globally.
Fluor is an honor that recognizes professional excellence
FELLOWS
We created the Fluor Fellows program in 2003 to
in specific subject matter areas critical to our clients.
Our population of SMEs is spread among our offices and
project sites across the globe. While expertise is typically
associated with engineering disciplines, the makeup of
recognize employees who excel in at least one area of
our SME population also covers functional categories
technical or functional expertise. To become a Fellow, an
including support, project controls, specific business
employee must be nominated and meet strict acceptance
lines, supply chain, construction, diversified services,
requirements. Our Fellows and Senior Fellows are
and human systems engineering.
recognized internally and externally as experts and stand
out among their global peer groups.
ENGINEERING TECHNOLOGISTS
These experts provide strategic direction regarding
technologies and project execution covering pipelines,
chemicals, carbon capture, process technology, life sciences,
metals recovery, mining, renewable fuels, and more.
Our people are at the
core of our success.
- Curt Graham -
Office of Technology Lead
BUILDING A BET TER FUTURE 13
CORPORATE MANAGEMENT
Alan Boeckmann
Executive Chairman
David Constable
Chief Executive Officer
Joe Brennan
Executive Vice President,
Chief Financial Officer
Jim Breuer
Group President,
Energy Solutions
Al Collins
Group President,
Corporate Development
& Sustainability
Tom D’Agostino
Group President,
Mission Solutions
Stacy Dillow
Executive Vice President,
Chief Human
Resources Officer
Mark Fields
Group President,
Project Execution
John Reynolds
Executive Vice President,
Chief Legal Officer
and Secretary
Robert Taylor
Senior Vice President,
Chief Information Officer
Terry Towle
Group President,
Urban Solutions
14 FLUOR 2020 ANNUAL REPORT
BOARD OF DIRECTORS
Alan Boeckmann
Executive Chairman of
Fluor; Former Chairman
and Chief Executive Officer
of Fluor; Director
of Sempra Energy
David Constable
Chief Executive Officer
of Fluor; Former Chief
Executive Officer and
President of Sasol Limited;
Director of ABB Ltd.
Alan Bennett
Lead Independent Director,
Fluor; Former President and
Chief Executive Officer of
H&R Block, Inc; Director of
Halliburton Company and
The TJX Companies, Inc.
Rosemary Berkery
Former Vice Chair of UBS
Wealth Management Americas
and Former Chair of UBS
Bank USA; Director of Mutual
of America Life Insurance
Company and The TJX
Companies, Inc.
Paulett Eberhart
Chair and Chief Executive Officer
of HMS Ventures; Former President
and Chief Executive Officer of
CDI Corp; Former President and
Chief Executive Officer of Invensys
Process Systems Inc.; Director of
LPL Financial Holdings Inc., Valero
Energy Corporation, and Jonah
Energy LLC
Peter Fluor
Chairman and Chief
Executive Officer of Texas
Crude Energy, LLC
James Hackett
President of Tessellation Services,
LLC; Former Executive Chairman of
Alta Mesa Resources, Inc.; Former
Chief Executive Officer of Kingfisher
Midstream, LLC; Former Executive
Chairman and Chief Executive Officer
of Anadarko Petroleum; Director of
Enterprise Products Holdings LLC
and National Oilwell Varco, Inc.
Thomas Leppert
Former Chief Executive
Officer of Kaplan, Inc.;
Former Chairman and Chief
Executive Officer of The
Turner Corporation; Former
Mayor of the City of Dallas
Teri McClure
Former Chief Human
Resources Officer and Senior
Vice President, Labor, at
United Parcel Service, Inc.;
Director of GMS, Inc., JetBlue
Airways Corporation, and
Lennar Corporation
Armando Olivera
Former President and
Chief Executive Officer
of Florida Power & Light
Company; Director of
Consolidated Edison, Inc.
and Lennar Corporation
Matthew Rose
Former Executive Chairman
and Chief Executive Officer
of Burlington Northern
Santa Fe, LLC; Director of
AT&T Inc.
BUILDING A BET TER FUTURE 15
FLUOR’S STRENGTHS & EXPERTISE
ENGINEERING
TECHNOLOGY
SUPPLY CHAIN
PROGRAM
MANAGEMENT
CONSTRUCTION
MANAGEMENT
GLOBAL
PLATFORM
S T R A T E G I C P R I O R I T I E S & G O A L S
DRIVE GROWTH ACROSS
THE PORTFOLIO
- 70% of revenue from nontraditional
oil and gas segments by 2023
PURSUE CONTRACTS WITH
FAIR AND BALANCED TERMS
- Backlog mix will be more than 75%
reimbursable by 2024
FOSTER A HIGH PERFORMANCE
CULTURE WITH PURPOSE
- Increase women and diversity in leadership positions
- Improve employee engagement annually
- Net Zero by the end of 2023 (Scope 1 and Scope 2)
REINFORCE
FINANCIAL DISCIPLINE
- Debt to capitalization ratio of 20% to 40% by 2024
- Return on invested capital of 20% by 2024
- Additional overhead reduction of $100 million by 2024
- EPS range of $3.00 to $3.50 by 2024
1
2
3
4
16 FLUOR 2020 ANNUAL REPORT
16
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
Form 10-K
☒ ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the fiscal year ended December 31, 2020
or
☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from to
Commission file number:
1-16129
FLUOR CORPORATION
(Exact name of registrant as specified in its charter)
Delaware
(State or other jurisdiction of
incorporation or organization)
6700 Las Colinas Boulevard
Irving, Texas
(Address of principal executive offices)
33-0927079
(I.R.S. Employer
Identification No.)
75039
(Zip Code)
469-398-7000
(Registrant’s telephone number, including area code)
Securities registered pursuant to Section 12(b) of the Act:
Title of Each Class
Common Stock, $.01 par value per share
Preferred Stock Purchase Rights
Trading Symbol(s)
FLR
FLR
Name of Each Exchange on Which Registered
New York Stock Exchange
New York Stock Exchange
Securities registered pursuant to Section 12(g) of the Act:
None
Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act. Yes o No þ
Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Exchange Act. Yes o No þ
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Exchange Act during the
preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days. Yes þ No o
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to
Rule 405 of Regulation S-T during the preceding 12 months (or for such shorter period that the registrant was required to submit such
files). Yes þ No o
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company
or an emerging growth company. See the definitions of "large accelerated filer," "accelerated filer," "smaller reporting company" and "emerging
growth company" in Rule 12b-2 of the Exchange Act.
Large accelerated filer þ Accelerated filer o Non-accelerated filer o Smaller reporting company ☐ Emerging growth company ☐
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with
any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. o
Indicate by check mark whether the registrant has filed a report on and attestation to its management's assessment of the effectiveness of its
internal control over financial reporting under Section 404(b) of the Sarbanes-Oxley Act (15 U.S.C. 7262(b)) by the registered public accounting firm
that prepared or issued its audit report. ☑
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No þ
As of June 30, 2020, the aggregate market value of the registrant's common stock held by non-affiliates of the registrant was approximately $1.7
billion based on the closing sale price as reported on the New York Stock Exchange.
As of January 31, 2021, 140,759,346 shares of the registrant’s common stock, $0.01 par value per share, were outstanding.
Document
Portions of the Proxy Statement for the Annual Meeting of Stockholders
to be held on May 6, 2021.
Parts Into Which Incorporated
Part III
DOCUMENTS INCORPORATED BY REFERENCE
FLUOR CORPORATION
INDEX TO ANNUAL REPORT ON FORM 10-K
For the Fiscal Year Ended December 31, 2020
Glossary of Terms . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Forward-Looking Information . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
PART I
Business . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Risk Factors . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Unresolved Staff Comments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Properties . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Legal Proceedings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Mine Safety Disclosures . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
PART II
Market for Registrant's Common Equity, Related Stockholder Matters and Issuer Purchases of Equity
Securities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Management's Discussion and Analysis of Financial Condition and Results of Operations . . . . . . . . . . . .
Quantitative and Qualitative Disclosures About Market Risk . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Financial Statements and Supplementary Data . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Changes in and Disagreements with Accountants on Accounting and Financial Disclosure . . . . . . . . . . .
Controls and Procedures . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Other Information . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
PART III
Directors, Executive Officers and Corporate Governance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Executive Compensation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters .
Certain Relationships and Related Transactions, and Director Independence . . . . . . . . . . . . . . . . . . . . . .
Principal Accountant Fees and Services . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
PART IV
Exhibits and Financial Statement Schedules . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Form 10-K Summary . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Item 1.
Item 1A.
Item 1B.
Item 2.
Item 3.
Item 4.
Item 5.
Item 7.
Item 7A.
Item 8.
Item 9.
Item 9A.
Item 9B.
Item 10.
Item 11.
Item 12.
Item 13.
Item 14.
Item 15.
Item 16.
Signatures . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
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i
Glossary of Terms
The definitions and abbreviations set forth below apply to the indicated terms used throughout this filing.
Abbreviation/Term
Definition
2019 10-K
2020 10-K
ABO
AOCI
ASC
ASU
Annual Report on Form 10-K for the year ended December 31, 2019
Annual Report on Form 10-K for the year ended December 31, 2020
Accumulated benefit obligation
Accumulated other comprehensive income (loss)
Accounting Standards Codification
Accounting Standards Update
Cont Ops
Continuing operations
Corporate G&A
Corporate general and administrative expense
COVID-19
DB plan
DC plan
Disc Ops
DOE
EPC
EPS
Coronavirus pandemic
Defined benefit pension plan
Defined contribution pension plan
Discontinued operations
U.S. Department of Energy
Engineering, procurement and construction
Earnings per share
Exchange Act
Securities Exchange Act of 1934
FEMA
GAAP
GILTI
ICFR
LNG
NCI
NM
NuScale
OCI
RSU
RUPO
SEC
SGI
Stork
VDI
VIE
U.S. Federal Emergency Management Agency
Accounting principles generally accepted in the United States
Global Intangible Low-Taxed Income
Internal control over financial reporting
Liquefied natural gas
Noncontrolling interests
Not meaningful
NuScale Power, LLC
Other comprehensive income (loss)
Restricted stock units
Remaining unsatisfied performance obligations
Securities and Exchange Commission
Stock growth incentive awards
Stork Holding B.V. and subsidiaries; Acquired by Fluor in 2016
Value driver incentive
Variable interest entity
Forward-Looking Information
From time to time, Fluor® Corporation makes certain comments and disclosures in reports and statements, including
this 2020 10-K, or statements are made by its officers or directors, that, while based on reasonable assumptions, may be
forward-looking in nature. Under the Private Securities Litigation Reform Act of 1995, a "safe harbor" may be provided to us
for certain of these forward-looking statements. We caution readers that forward-looking statements, including disclosures
which use words such as "will, "may," "could," "should" "believes," "anticipates," "plans," "expects," "intends," "estimates,"
"projects," "potential," "continue" and similar statements are subject to various future risks and uncertainties which could
cause actual results of operations to differ materially from expectations.
Any forward-looking statements that we may make are based on our current expectations and beliefs concerning future
developments and their potential effects on us. There can be no assurance that future developments affecting us will be those
anticipated by us. Any forward-looking statements are subject to the risks, uncertainties and other factors that could cause
actual results of operations, financial condition, cost reductions, acquisitions, dispositions, financing transactions, operations,
1
expansion, consolidation and other events to differ materially from those expressed or implied in such forward-looking
statements.
We are subject to known risks and to potentially unknown risks. While most risks affect only future cost or revenue
anticipated by us, some risks may relate to accruals that have already been reflected in earnings. Our failure to receive
payments of expected amounts or the incurrence of liabilities in excess of amounts recorded, could result in charges against
future earnings. As a result, the reader is cautioned to recognize and consider the inherently uncertain nature of forward-
looking statements and not to place undue reliance on them.
These factors include those referenced or described in this 2020 10-K (including in "Item 1A. — Risk Factors"). We
cannot control all risks and uncertainties, and in many cases, we cannot predict the risks and uncertainties that could cause
our actual results to differ materially from those indicated by the forward-looking statements. You should consider these risks
and uncertainties when you are evaluating us and deciding whether to invest in our securities. Except as otherwise required
by law, we undertake no obligation to publicly update or revise our forward-looking statements, whether as a result of new
information, future events or otherwise.
Defined Terms
Except as the context otherwise requires, the terms "Fluor" or the "Registrant" as used herein are references to Fluor
Corporation and its predecessors and references to the "company," "we," "us," or "our" as used herein shall include Fluor
Corporation, its consolidated subsidiaries and joint ventures.
2
Item 1. Business
PART I
Fluor Corporation was incorporated in Delaware in September, 2000. However, through our predecessors, we have
been in business for over a century.
Our common stock trades on the New York Stock Exchange under the ticker symbol "FLR".
Fluor Corporation is a holding company that owns a number of subsidiaries, as well as interests in joint ventures. Acting
through these entities, we are one of the largest professional services firms providing engineering, procurement,
construction, fabrication and modularization, operations, maintenance and asset integrity, as well as project management
services, on a global basis. We provide these services to our clients in a diverse set of industries worldwide including oil and
gas, chemicals and petrochemicals, mining and metals, infrastructure, life sciences, advanced manufacturing and advanced
technologies. We are also a service provider to the U.S. federal government and governments abroad; and, we perform
operations, maintenance and asset integrity activities globally for major industrial clients.
At December 31, 2020, we operated our business through six principal segments. The six segments were: Energy &
Chemicals; Mining & Industrial; Infrastructure & Power; Government; Diversified Services; and Other. Fluor Constructors
International, Inc., which is organized and operates separately from the rest of our business, provides unionized management
and construction services in the United States and Canada, both independently and as a subcontractor on projects in each of
our segments.
In January 2021, we introduced our new strategy, "Building a Better Future" during a Strategy Day event with investors.
At our Strategy Day, we outlined four strategic priorities for driving value creation for our shareholders:
•
•
•
•
Drive growth across our portfolio, by growing markets outside of the traditional oil and gas sector, including energy
transition, advanced technology and life sciences, high-demand metals, infrastructure and mission solutions;
Pursue contracts with fair and balanced commercial terms that reward value, with a bias towards reimbursable
contracts;
Reinforce financial discipline, maintaining a solid balance sheet by generating predictable cash flow and earnings;
and
Foster a high-performance culture with purpose, by advancing our diversity, equity and inclusion efforts and
promoting social progress and sustainability.
Competitive Strengths
As a world-class provider of our services, we believe that we bring capital efficient business solutions that combine
excellence in execution, safety, cost containment and experience to our clients. In that regard, we believe that our business
strengths and global positioning provide us with significant competitive advantages:
Safety. One of our core values is our constant focus on safety. Maintaining a safe and secure workplace is a key
business driver for us and our clients. In our experience, whether in an office or at a jobsite, a safe environment decreases
risks, assures a proper environment for all workers, enhances morale, improves productivity, reduces project cost and
generally improves client relations. We believe that our commitment to safety is one of our most distinguishing features.
Global Execution Platform. As one of the larger publicly-traded EPC companies, we have a global footprint with
employees situated throughout the world. Our global presence allows us to build local relationships to capitalize on
opportunities near these locations. We believe it also allows us to mobilize quickly to project sites around the world and to
draw on our local knowledge and talent pools. We continue to form strategic alliances with local partners, leverage our supply
chain expertise and emphasize local training programs. We also provide services from our distributed execution centers on a
cost-efficient basis.
Excellence in Execution. We believe that our ability to execute, maintain and manage complex projects, often in
geographically challenging locations, gives us a distinct competitive advantage. We strive to complete our projects meeting or
exceeding all client specifications. We have continued to shift toward data-driven execution, which we expect will enhance
our ability to meet our clients' needs.
Market Diversity. We serve multiple markets across a broad spectrum of industries around the globe. We feel that our
market diversity helps to mitigate the impact of the cyclicality in the markets we serve. Just as important, our concentrated
3
attention on market diversification should allow us to achieve more consistent growth and deliver solid financial returns. We
believe that maintaining a good mixture within our entire business portfolio permits us to both focus on our more stable
business markets and to capitalize on cyclical markets when the timing is appropriate.
Client Relationships. We actively pursue relationships with new clients while also building on our long-term
relationships with existing clients. We believe that long-term relationships with existing clients serve us well by allowing us to
better understand and be more responsive to their requirements. Regardless of whether our clients are new or have been
with us for many decades, our ability to successfully foster relationships is a key strength.
Risk Management. In combination with our new pursuit criteria and guidelines we believe we have enhanced our
ability to assess, mitigate and manage project risk, especially in difficult locations or circumstances. We have an experienced
management team, and utilize a systematic and disciplined approach towards identifying, assessing and managing risks. We
believe that our risk management approach helps us control costs and meet clients' schedules.
General Operations
Our services fall into six broad categories (outlined below). Our services can range from basic consulting activities, often
at the early stages of a project, to complete design-build, operations and maintenance contracts.
•
•
•
In engineering and design, we develop solutions to address our clients’ most complex problems. Our engineering
services range from traditional engineering disciplines such as piping, mechanical, electrical, control systems, civil,
structural and architectural to advanced engineering specialties including process engineering, chemical
engineering, simulation, integrated automation processes and interactive 3-D modeling. Through our design
solutions, we can provide clients with varied offerings which can include front-end engineering, conceptual design,
estimating, feasibility studies, permitting, process simulation, technology and licensing evaluation, scope definition
and siting.
Our procurement offerings include procurement and supply chain solutions aimed at improving product quality
and performance while also reducing project cost and schedule. Our clients draw upon our global sourcing and
supply expertise, global purchasing power, technical knowledge, processes, systems and experienced global
resources. Our procurement activities include strategic sourcing, material management, contracts management,
buying, expediting, supplier quality inspection and logistics.
In construction, we mobilize, execute, commission and demobilize projects on a self-perform or subcontracted
basis. Generally, we are responsible for the completion of a project, often in difficult locations and under
challenging circumstances. We are frequently designated as a program manager, and serve as such without regard
to whether the client has facilities in multiple locations, complex phases in a single project location, or a large-scale
investment in a facility.
• We also provide a variety of fabrication and modularization services, including integrated engineering and modular
fabrication and assembly, as well as modular construction and asset support services to clients around the globe
from our joint venture yards. By operating our own fabrication yards in key regions of the world, our off-site
fabrication solutions can help our clients achieve cost and schedule savings by reducing on-site craft needs and
shifting work to inherently safer and more controlled work environments.
• We offer operations, maintenance and asset integrity services intended to improve the performance and extend
the life of our clients’ facilities. This may include the global delivery of total maintenance services, facility
management, plant readiness, commissioning, start-up and maintenance technology, small capital projects, and
turnaround and outage services. Among other things, we can provide key management, staffing and management
skills to clients on-site at their facilities. These activities also include routine and outage/turnaround maintenance
services, general maintenance and asset management, emissions reduction technologies and services, and
restorative, repair, predictive and prevention services.
•
Project management involves managing all aspects of the effort to deliver projects on schedule and within budget,
and is critical on every project. We are often hired as the overall program manager on large complex projects
where various contractors and subcontractors are involved and multiple activities need to be integrated to ensure
the success of the overall project. Our services include logistics, development of project execution plans, detailed
schedules, cost forecasts, progress tracking and reporting, and the integration of EPC efforts. Project management
is accountable to the client to deliver the safety, functionality and financial performance requirements of the
project.
4
Business Segments (as of December 31, 2020)
Energy & Chemicals
Our Energy & Chemicals segment focuses on opportunities in the upstream, midstream, downstream, chemical,
petrochemical, offshore and onshore oil and gas production, LNG and pipeline markets. We have long served a broad
spectrum of industries offering a full range of design, engineering, procurement, construction, fabrication and project
management services. While we perform projects that range greatly in size and scope, we believe that one of our
distinguishing features is that we are one of the few companies that have the global strength and experience to perform
extremely large projects in difficult locations. As the locations of large scale energy and chemicals projects have become more
challenging geographically, geopolitically or otherwise, we believe that clients will continue to look to us based upon our size,
strength, global reach, experience and track record to manage their complex projects.
With each specific project, our role can vary. We may be involved in providing front-end engineering, program
management and final design services, construction management services, self-perform construction, or oversight of other
contractors, and we may also assume responsibility for the procurement of materials, equipment and subcontractors. We
have the capacity to design, fabricate and construct new facilities, upgrade, modernize and expand existing facilities, and
rebuild facilities following fires and explosions. We also provide consulting services ranging from feasibility studies to process
assessments to project finance structuring and studies.
In the upstream sector, our 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. We are also involved in offshore production
facilities and in conventional and unconventional gas projects in various geographic locations.
In the downstream sector, our clients have been modernizing and modifying existing refineries to increase capacity,
improve margins and improve environmental performance. We continue to play a key role in each of these markets. We are
also focused on sustainable markets, such as clean fuels, green energy and carbon sequestration, where an increasing number
of clients and countries are implementing stronger environmental standards and goals.
We have been very active for several decades in the chemicals and petrochemicals market, with major projects
involving the expansion of ethylene-based derivatives as well as specialty chemicals. The most active markets have been in
the United States, Middle East and Asia, where there is significant demand for chemical products.
Mining & Industrial
The Mining & Industrial segment provides design, engineering, procurement, construction and project management
services to the mining and metals, life sciences, advanced manufacturing and advanced technologies sectors.
In mining and metals, we provide a full range of services to our clients who produce a variety of commodities, including
bauxite, copper, gold, iron ore, diamond, nickel, alumina, aluminum and phosphates. Our services include conceptual and
feasibility studies through detailed engineering, design, procurement, construction, commissioning and startup support. Many
of these opportunities are being developed in remote and logistically challenging environments, such as the Andes Mountains,
Western Australia and Africa. We believe we are one of the few companies with the size, regional presence and experience to
execute large scale mining and metals projects in these difficult and remote locations.
For the advanced manufacturing and technologies market, we provide design, engineering, procurement, construction
and construction management services to a wide variety of industries on a global basis. We specialize in designing projects
that incorporate lean manufacturing concepts while also satisfying client sustainability goals. Our experience spans a wide
variety of market segments ranging from traditional manufacturing to advanced technology projects, such as data centers.
In life sciences, we provide design, engineering, procurement, construction and construction management services to
the pharmaceutical and biotechnology industries. We also specialize in providing validation and commissioning services where
we not only bring new facilities into production, but we also keep existing facilities operating. We believe the ability to
complete projects on a large scale basis, especially in a business where time to market is critical, enables us to better serve
our clients and is a key competitive advantage.
Infrastructure & Power
The Infrastructure & Power segment provides design, engineering, procurement, construction and project management
services to the infrastructure sector.
5
We are an industry leader in developing infrastructure projects such as roads, highways, bridges and rail for
governments, with particular interest in large, complex projects. We provide a broad range of services including consulting,
design, planning, financial structuring, engineering and construction. We also provide long-term operation and maintenance
services for transit and highway projects. Our projects may involve the use of public/private partnerships, which allow us to
develop and finance deals in concert with public entities for projects such as toll roads and rail lines that would not have
otherwise been undertaken with public funding alone. The replacement and expansion of aging infrastructure in North
America continues to drive project opportunities.
Historically, we have also offered a full range of services including engineering, procurement, construction, program
management, startup and commissioning and technical services to utilities, independent power producers, original
equipment manufacturers and other third parties.
Government
The Government segment provides engineering and construction services, logistics and life-support, as well as
contingency operations support, to the defense sector. We support military logistical and infrastructure needs around the
world, including life-support, engineering, procurement, construction and logistical augmentation services to the U.S. military
and coalition forces in various international locations. This segment also provides full life-cycle infrastructure support to the
U.S. intelligence community globally.
The Government segment also provides support to the U.S. Department of Energy and National Nuclear Security
Administration that includes management, mission operations, environmental remediation, decommissioning, engineering
and construction services that address the many environmental and regulatory challenges associated with legacy and
operational nuclear sites.
We also provide support to the U.S. Department of Homeland Security. This includes supporting the U.S. government’s
rapid response capabilities to address security issues and disaster relief, the latter primarily through our long-standing
relationship with the Federal Emergency Management Agency and in support of the Army Corps of Engineers.
Diversified Services
The Diversified Services segment provides a wide array of asset maintenance, asset integrity and staffing services. These
services are provided around the world during both the project delivery phase as well as to new or existing client production
assets.
Through our subsidiary, Stork, we provide asset maintenance and asset integrity services to the oil and gas, chemicals,
life sciences, power, mining and metals, consumer products and manufacturing industries. We focus on asset management
solutions, as well as providing asset services in areas such as electrical, instrumentation, mechanical and piping. We also
provide asset integrity services, including new asset readiness solutions, inspection of existing assets, and asset turnaround
and modification solutions. This business, driven by our clients' annual operating expenditures, often benefits from large
projects that originate in another of our segments, which can lead to long-term operations or maintenance opportunities. Our
long-term maintenance contracts can also lead to larger capital projects for our other business segments when those needs
arise. Our goal is to help clients improve the performance of their assets, including late-life management solutions. In the first
quarter of 2021, we announced a plan to sell Stork, which we expect will be reported as a discontinued operation beginning
with the first quarter of 2021.
The segment's staffing services are provided through TRS Staffing Solutions®. TRS is a global enterprise of staffing
specialists that provides the company and third party clients with technical, professional and craft resources either on a
contract or permanent placement basis.
Other
Our Other segment includes the financial information for NuScale, as well as two lump-sum projects for which the U.S.
government is either the client or ultimate client.
NuScale, a small modular nuclear reactor (“SMR”) technology company, is a leader in the development of light water,
passively safe SMRs, which we believe will provide us with significant future project opportunities. NuScale received final
design certification by the U.S. Nuclear Regulatory Commission in August 2020.
6
Discontinued Operations
In the third quarter of 2019, we implemented a number of strategic initiatives and organizational changes to strengthen
our financial position and improve operational performance. Among those initiatives, we committed to a plan to sell
substantially all of our AMECO business, which is reported as a discontinued operation for all periods presented.
AMECO provides integrated construction equipment, tool, scaffolding and fleet service solutions to the company and
third party clients in a focused number of locations around the world for construction projects and client production assets.
Business Segments (as of January 1, 2021)
At December 31, 2020, we operated our business through six principal business segments described above. In the first
quarter of 2021, we announced an updated organizational and reporting structure. Beginning in the first quarter of 2021, we
will operate through three business segments: Energy Solutions, Urban Solutions and Mission Solutions. Energy Solutions will
focus on energy transition, chemicals and traditional oil and gas opportunities. Urban Solutions will focus on mining, metals,
advanced technologies, manufacturing, life sciences, infrastructure and our professional staffing services. Mission Solutions
will focus on delivering solutions to federal agencies across the U.S. government and to select international opportunities.
Other Matters
Backlog
Backlog represents the total amount of revenue we expect to record in the future based upon contracts that have been
awarded to us. Backlog is stated in terms of gross revenues and may include significant estimated amounts of third-party,
subcontracted and pass-through costs.
Backlog in the engineering and construction industry is a measure of the value of work to be performed on contracts
already awarded and those in progress.
Energy & Chemicals
Mining & Industrial
Infrastructure & Power
Government
Diversified Services(1)
Other
Total Backlog(2)(3)
December 31, 2020
December 31, 2019
(in millions)
$
11,021
$
14,129
3,980
5,244
2,780
2,425
119
5,384
6,079
3,556
2,542
244
$
25,569
$
31,934
_______________________________________________________________________________
(1) With respect to our ongoing operations and maintenance and asset integrity contracts in the Diversified Services
segment, backlog includes the amount of revenue we expect to recognize for the remainder of the current year renewal
period plus up to three additional years if we consider renewal to be probable. The equipment and temporary staffing
businesses in the Diversified Services segment do not report backlog or new awards.
(2)
Includes backlog of $1.8 billion and $1.7 billion for projects in a loss position as of December 31, 2020 and 2019,
respectively.
(3) For projects related to proportionately consolidated joint ventures, we include only our percentage ownership of each
joint venture's backlog.
(in millions)
North America
Asia Pacific (including Australia)
Europe
Central and South America
Middle East and Africa
Total Backlog
_______________________________________________________________________________
7
December 31, 2020
17,438
$
December 31, 2019
19,205
$
1,604
3,199
2,469
859
2,627
5,739
3,210
1,153
$
25,569
$
31,934
Although backlog reflects business that we consider to be firm, cancellations, deferrals or scope adjustments may occur.
Backlog is adjusted to reflect any known project cancellations, revisions to project scope and cost, foreign currency exchange
fluctuations and project deferrals, as appropriate. The terms and conditions of some contracts include elements of both lump-
sum and reimbursable contracts. Also, certain contracts may be converted from reimbursable to lump-sum. Due to additional
factors outside of our control, such as changes in project schedules, we cannot accurately predict the exact timing that our
December 31, 2020 backlog will be earned as revenue. Accordingly, backlog is not necessarily indicative of future earnings or
revenues and no assurances can be provided that we will ultimately realize revenue on our backlog.
The following table sets forth our changes in consolidated backlog:
Backlog at beginning of year
New awards
Adjustments and cancellations, net(1)
Work performed
Backlog at end of year
2020
2019
(in millions)
$
$
31,934
9,005
188
(15,558)
25,569
$
$
40,051
12,563
(3,583)
(17,097)
31,934
_______________________________________________________________________________
(1) Adjustments and cancellations during 2019 included the cancellation of two infrastructure projects as well as the
suspension of certain contracts associated with our joint venture in Mexico.
In 2021, we expect to perform approximately 50% of our total backlog reported as of December 31, 2020, which is in
line with the last three years.
Types of Contracts
While the basic terms and conditions of the contracts that we perform may vary considerably, we typically perform our
work under two types of contracts: (a) reimbursable contracts and (b) lump-sum or guaranteed maximum contracts. In some
markets, we are seeing hybrid contracts containing both lump-sum and reimbursable elements. As of December 31, 2020, the
following table summarizes contract type within our ending backlog:
Reimbursable
Lump-Sum and Guaranteed Maximum
December 31, 2020
(in millions)
(percentage)
$
11,621
13,948
45 %
55 %
In accordance with industry practice, most of our contracts are subject to termination at the discretion of our client. In
such situations, our contracts typically provide for the payment of fees earned through the date of termination and the
reimbursement of costs incurred including demobilization costs.
Under reimbursable contracts, the client reimburses us based upon negotiated rates and pays us a pre-determined fee,
or a fee based upon a percentage of the cost incurred in completing the project. Our profit may be in the form of a fee, a
simple markup applied to labor cost incurred in performing the contract, or a combination of the two. The fee element may
also vary. The fee may be an incentive fee based upon achieving certain performance factors, milestones or targets; it may be
a fixed amount in the contract; or it may be based upon a percentage of the cost incurred. In some cases, reimbursable
contracts may be converted into lump-sum contracts.
Our Government segment, primarily acting as a prime contractor or a major subcontractor for a number of government
programs, generally performs its services under reimbursable contracts subject to applicable statutes and regulations. In
many cases, these contracts include incentive fee arrangements. The programs may span many years and may be
implemented by awards under multiple contracts. Some of our government contracts are known as indefinite delivery
indefinite quantity (“IDIQ”) agreements. Under these arrangements, we work closely with the government to define the scope
and amount of work required based upon an estimate of the maximum amount that the government desires to spend. While
the scope is often not initially fully defined or does not require any specific amount of work, once the project scope is
determined, additional work may be awarded to us without the need for further competitive bidding.
Under lump-sum contracts, we typically bid based upon specifications provided by the client. This type of contracting
presents risks because it requires us to predetermine the work to be performed, the project execution schedule and all costs
8
associated with the work. Another type of lump-sum contract is a negotiated fixed-price contract, under which we are
selected as contractor first, and then we negotiate price with the client. Negotiated fixed-price contracts frequently occur in
single-responsibility arrangements where we perform some of the work before negotiating the total price for the project.
Another type of lump-sum contract is a unit price contract under which we are paid a set amount for every “unit” of work
performed. If we perform well under these types of contracts, we can benefit from cost savings. However, if the project does
not proceed as originally planned, we may not be able to recover cost overruns except in certain situations.
Guaranteed maximum price contracts are reimbursable contracts except that the total fee plus the total cost cannot
exceed an agreed upon guaranteed maximum price. We can be responsible for some or all of the total cost of the project if
the cost exceeds the guaranteed maximum price. Where the total cost is less than the negotiated guaranteed maximum price,
we may receive the benefit of the cost savings based upon a negotiated agreement with the client.
Some of our contracts, regardless of type, may operate under joint ventures or other teaming arrangements. Typically,
we enter into these arrangements with reputable companies with whom we have worked previously. These arrangements are
generally made to strengthen our market position or technical skills, or where the size, scale or location of the project directs
the use of such arrangements.
Competition
We are one of the world’s larger providers of engineering, procurement, construction, fabrication and modularization,
operations, maintenance and asset integrity, and project management services. The markets served by our business are highly
competitive and, for the most part, require substantial resources and highly skilled and experienced technical personnel. A
large number of companies compete against us, including U.S.-based companies such as AECOM, Bechtel Group, Inc., EMCOR
Group, Inc., Jacobs Engineering Group, Inc., KBR, Inc., Kiewit Corporation, Granite Construction, Inc. and Quanta Services, Inc.,
and international-based companies such as ACS Actividades de Construccion y Servicios, Balfour Beatty plc, Chiyoda
Corporation, Hyundai Engineering & Construction Company, Ltd., JGC Corporation, McDermott International, Inc., Petrofac
Limited, SNC-Lavalin Group, Inc., Samsung Engineering, Stantec Inc., TechnipFMC plc, Wood Group plc, and WorleyParsons
Limited.
Competition for our Energy & Chemicals, Mining & Industrial and Infrastructure & Power segments is based on an ability
to provide the design, engineering, planning, management and project execution skills required to complete complex projects
in a safe, timely and cost-efficient manner. We believe our engineering, procurement, fabrication and construction business
derives its competitive strength from our diversity, excellence in execution, reputation for quality, technology, cost-
effectiveness, worldwide procurement capability, project management expertise, geographic coverage, ability to meet client
requirements by performing construction on either a union or an open shop basis, ability to execute complex projects of
varying sizes, strong safety record and lengthy experience with a wide range of services and technologies.
The various markets served by the Diversified Services segment, while having some similarities to other segments, tend
also to have discrete issues impacting individual business lines. Each of the markets we serve has a large number of competing
companies. In the operations and maintenance markets, barriers to entry are both financially and logistically low, resulting in
a fragmented industry with no single company being dominant. Competition in those markets is generally driven by
reputation, price and the capacity to perform. Temporary staffing is a highly fragmented market with over 1,000 companies
competing globally. The key competitive factors in this business line are price, service, quality, client relationships, breadth of
service and the ability to identify and retain qualified personnel and geographic coverage.
In the Government segment, key competitive factors are primarily centered on performance, reputation and the ability
to provide the design, engineering, planning, management and project execution skills required to complete complex projects
in a safe, timely, cost-efficient and compliant manner.
The AMECO business, which operates in numerous markets, is highly fragmented and very competitive, with a large
number of competitors mostly operating in specific geographic areas. The competition in the equipment business for larger
capital project services is more narrow and limited to only those capable of providing comprehensive equipment, tool and
management services.
Raw Materials
The principal products we use in our business include structural steel, metal plate, concrete, cable and various electrical
and mechanical components. These products and components are subject to raw material (aluminum, copper, nickel, iron
ore, etc.) availability and pricing fluctuations, which we monitor on a regular basis. We have access to numerous global supply
sources, and we do not foresee any unavailability of these items that would have a material adverse effect on our business in
the near term. However, the availability of these products, components and raw materials may vary significantly from year to
year due to various factors including client demand, producer capacity, market conditions and specific material shortages.
9
Compliance with Government Regulations, Including Environmental, Safety and Health Matters
We provide services at sites throughout the world. Work at some of these sites involves activities related to nuclear
facilities, hazardous waste, hydrocarbon production, distribution and transport, the military and infrastructure. Some of our
work can be performed adjacent to environmentally sensitive locations such as wetlands, lakes and rivers. We also contract
with governments to remediate hazardous materials, including chemical agents and weapons, as well as to decontaminate
and decommission nuclear sites. These activities can require us to manage, handle, remove, treat, transport and dispose of
toxic, radioactive or hazardous substances, and are subject to many environmental, health and safety laws and regulations.
We believe that we are generally compliant with all environmental, health and safety laws and regulations. We further
believe that any accruals with respect to future environmental costs are adequate and that any future costs will not have a
material effect on our financial position or results of operations. Some factors, however, could result in additional
expenditures or the provision of additional accruals in expectation of such expenditures. These include the imposition of more
stringent requirements under environmental laws or regulations, new developments or changes regarding site cleanup costs
or the allocation of such costs among potentially responsible parties, or a determination that we are potentially responsible
for the release of hazardous substances at sites other than those currently identified.
Human Capital Management
We promote a high performance culture with purpose and foster a diverse and inclusive workplace as a business
imperative because we consider people to be our single greatest asset. A high performance culture, where everyone is
treated fairly and respectfully and has equal access to opportunities based on capabilities and performance, regardless of
background, raises both the individual and collective performance of our company. Our culture drives employee engagement,
productivity and a sustainable competitive advantage.
The following summarizes our human capital information as of December 31, 2020:
Salaried Employees
Craft and Hourly Employees
TRS Agency
Total
Number of
Employees
24,203
16,514
3,000
43,717
The number of craft and hourly employees can vary in relation to the number, size and phase of execution of our
projects. We have employees in the following regions:
Region
North America
Europe, Africa and Middle East
Central and South America
Asia Pacific (includes Australia)
Health and Safety
% of Global
Workforce
36 %
27 %
25 %
12 %
Safety is one of our core values. We are committed to taking care of our employees and preventing injuries in our
offices and project locations. Our robust programs and procedures help us mitigate the hazards inherent in the work we do.
We are committed to fostering a caring, preventative culture founded on proactive action by engaged employees. We call this
Safer TogetherSM. Our 2020 safety performance resulted in a total case incident rate of 0.38 (calculated in accordance with
OSHA record keeping requirements), outperforming our goal of less than 0.40 and well below the comparable industry
benchmarks. From 2019 to 2020, we also experienced reductions in the number of work-related life-altering injuries, lost time
injuries and injuries requiring medical treatment or work restriction.
In response to COVID-19, we implemented a number of measures to protect the well-being of our employees and
mitigate COVID-19 transmission within our offices and on our projects. We established a global COVID-19 task force in January
2020 and implemented actions to empower remote working, restrict non-essential business travel, enhance sanitation at our
offices and project sites, and other return-to-work measures. We have an employee assistance program to support employee
well-being with a focus on mental health. We also created a Workplace Flexibility global task force to define the workplace of
the future.
10
Diversity, Equity and Inclusion
We are committed to advancing Diversity, Equity and Inclusion ("DE&I"). We believe that every voice matters, and we
value DE&I at every level. We embrace different ideas, perspectives and backgrounds. We listen actively, respect one another
and foster an environment with a deep sense of pride and belonging. We are focused on four key impact pillars to advance
DE&I:
•
•
•
•
Champion an inclusive culture;
Recruit, develop and retain talent;
Enhance employee experience; and
Improve social progress and impact.
We engage and partner with select organizations that represent and support gender, racial and ethnic diversity in the
engineering profession, and we work with a variety of university student associations to reach targeted populations. We
extend our job postings to the appropriate state workforce agencies as well as a syndicated network of partner sites, in order
to reach a diverse pool of candidates.
Development Opportunities
One of our top priorities is to provide ongoing training and development for our employees through multiple venues,
including Fluor University, our online learning platform. Employees can select from among a wide variety of self-paced, online
training courses and have options to sign up for location-specific, instructor-led and virtual courses. Topics range from
discipline-specific and targeted technical learning to general knowledge topics, such as leadership, business acumen,
communication and inclusive management. In 2020, our employees earned more than 98,000 credit hours through Fluor
University.
We have also developed several programs to help employees advance their careers, including Fluor Fellows for our
technical experts and Mentoring Circles. In addition, we currently have three employee resource groups: Growing
Representation & Opportunity for Women ("GROW"), Graduates Advancing to Professionalism ("GAP") and Emerging Leaders
Group ("ELG").
Community Responsibility
Part of building a high-performance culture with purpose is offering employees robust and enriching opportunities to
help build a better future through volunteerism and philanthropy. For more than 40 years, our employee volunteer program,
Fluor Cares, has given employees a conduit for giving back to the communities where we live and work. In 2020, employees
volunteered more than 24,000 hours to charitable organizations and causes. Additionally, employees pledged $3.6 million,
which included a 25 percent company match, through our North America employee giving campaign.
We remained true to our legacy of giving back even as COVID-19 continued to impact lives and communities in far-
reaching and profound ways. Our employees continued to exhibit compassion and generosity for those affected by the virus.
Local community relations teams directed financial resources to the most significant COVID-19 relief efforts in their local
communities with contributions exceeding $0.7 million to local COVID-19 relief funds organized by our community partners in
support of meal service charities, critical human needs and schools.
Information about our Executive Officers
The following information is being furnished with respect to our executive officers as of January 31, 2021:
Name
Alan L. Boeckmann
Joseph L. Brennan
James R. Breuer
Alvin C. Collins III
David E. Constable
Thomas P. D'Agostino
Stacy L. Dillow
Mark E. Fields
John C. Regan
John R. Reynolds
Terry W. Towle
Age
72
53
52
47
59
62
47
62
51
64
60
Executive Chairman
Position with the Company(1)
Executive Vice President and Chief Financial Officer
Group President, Energy Solutions
Group President, Corporate Development and Sustainability
Chief Executive Officer
Group President, Mission Solutions
Executive Vice President and Chief Human Resources Officer
Group President, Project Execution
Executive Vice President, Controller and Chief Accounting Officer
Executive Vice President, Chief Legal Officer and Secretary
Group President, Urban Solutions
11
_______________________________________________________________________________
(1) All references are to positions held with Fluor Corporation. All officers serve in their respective capacities at the pleasure
of the Board of Directors.
Alan L. Boeckmann
Mr. Boeckmann has been Executive Chairman since 2019. Prior to his retirement in 2012, he previously served as non-
executive Chairman of the company from 2011 to 2012 and Chairman and Chief Executive Officer of the company from 2002
to 2011. Mr. Boeckmann first joined the company in 1974.
Joseph L. Brennan
Mr. Brennan has been Executive Vice President and Chief Financial Officer since July 2020. Prior to that, he was Senior
Vice President and Operations Controller in 2020, Senior Vice President and Segment Controller — Energy & Chemicals from
2018 to 2020 and Vice President and Segment Controller — Energy & Chemicals from 2016 to 2018 and as the general
manager of the company's Southern California operations from 2013 to 2016. Mr. Brennan joined the company in 1991.
James R. Breuer
Mr. Breuer has been Group President, Energy Solutions since January 2021. Prior to that, he was President,
Downstream — Energy & Chemicals from 2019 to 2021, Vice President and General Manager, South America — Mining &
Metals from 2017 to 2019 and Director of Operations, ICA Fluor from 2013 to 2017. Mr. Breuer joined the company in 1993.
Alvin C. Collins III
Mr. Collins has been Group President, Corporate Development and Sustainability since January 2021. Prior to that, he
was Senior Vice President, Operations — Energy & Chemicals from 2019 to 2021, Senior Vice President, Global Business
Development — Energy & Chemicals in 2019, Senior Vice President, Operations in Europe, Africa and the Middle East —
Energy & Chemicals from 2016 to 2019. Mr. Collins joined the company in 1994.
David E. Constable
Mr. Constable has been Chief Executive Officer since January 2021, after serving as a member of Fluor's Board of
Directors since 2019. He previously served as Chief Executive Officer (from 2011) and Chief Executive Officer and President
(from 2014) of Sasol Ltd., an integrated energy and chemical company, until 2016. Prior to that, he was Group President,
Project Operations at the company from 2009 to 2011 and Group President, Power from 2005 to 2009. Mr. Constable first
joined the company in 1982.
Thomas P. D'Agostino
Mr. D'Agostino has been Group President, Mission Solutions since January 2021. Prior to that, he was Group President,
Government from 2017 to 2021, Senior Vice President, Sales —Government from 2015 to 2017 and Senior Vice President,
Strategic Planning and Development — Government from 2013 to 2015. Mr. D'Agostino joined the company in 2013.
Stacy L. Dillow
Ms. Dillow has been Executive Vice President and Chief Human Resources Officer since 2019. Prior to that, she was
Head of Supply Chain Transformation, Southeast Asia and Australasia at Unilever, a consumer goods company, from 2018 to
2019. Prior to that, she was Senior Project Director — Energy & Chemicals at the company from 2014 to 2017. Ms. Dillow first
joined the company in 1996.
Mark E. Fields
Mr. Fields has been Group President, Project Execution since January 2021. Prior to that, he was Group President,
Energy & Chemicals from 2019 to 2021, Senior Vice President, Energy & Chemicals Americas from 2017 to 2019 and Senior
Vice President, Project Director — Energy & Chemicals from 2009 to 2017. Mr. Fields joined the company in 1981.
John C. Regan
Mr. Regan has been Executive Vice President, Controller and Chief Accounting Officer since June 2020. Prior to joining
the company, he was Executive Vice President and Chief Financial Officer of Alta Mesa Resources, Inc., an upstream
exploration and production company, from 2019 to 2020, and Executive Vice President and Chief Financial Officer of Vine Oil
and Gas LP and Brix Oil and Gas LP, private companies focused on natural gas exploration, from 2015 to 2018. Alta Mesa
12
Resources, Inc. and certain of its subsidiaries filed for protection under Chapter 11 of the U.S. Bankruptcy Code in September
2019.
John R. Reynolds
Mr. Reynolds has been Executive Vice President and Chief Legal Officer since 2019 and Secretary since 2020. Prior to
that, he was Vice President and Senior Managing General Counsel from 2017 to 2019 and Managing General Counsel from
2005 to 2017. Mr. Reynolds joined the company in 1985.
Terry W. Towle
Mr. Towle has been Group President, Urban Solutions since January 2021. Prior to that, he was Group President,
Infrastructure & Power from 2019 to 2021, Senior Vice President, Project Director — Infrastructure from 2015 to 2019 and
Senior Vice President, Business Line President — Infrastructure from 2014 to 2015. Mr. Towle joined the company in 1985.
Available Information
Our website address is www.fluor.com. You may obtain free electronic copies of our annual reports on Form 10-K,
quarterly reports on Form 10-Q, current reports on Form 8-K, and all amendments to those reports on the “Investor
Relations” portion of our website, under the heading “SEC Filings” filed under “Financial Information.” These reports are
available on our website as soon as reasonably practicable after we electronically file them with the SEC. These reports, and
any amendments to them, are also available at the Internet website of the SEC, http://www.sec.gov. We also use our investor
relations website as a channel of distribution for important company information. Investors and others can receive
notifications of new information posted on our investor relations website in real time by signing up for e-mail alerts and RSS
feeds. We also maintain various documents related to our corporate governance including our Corporate Governance
Guidelines, our Board Committee Charters and our Code of Business Conduct and Ethics for Members of the Board of
Directors on the “Sustainability” portion of our website under the heading “Corporate Governance Documents” filed under
“Governance.”
Item 1A. Risk Factors
We operate in a complex and rapidly changing global environment that involves numerous known and unknown risks
and uncertainties that could materially adversely affect our business, financial condition, results of operations, and stock price.
The risks described below highlight some of the factors that have affected and could affect us in the future. We may also be
affected by unknown risks or risks that we currently think are immaterial. If any such events actually occur, our business,
financial condition, results of operations, and stock price could be materially adversely affected.
Summary Risk Factors
The following summarizes the risks and uncertainties that could materially adversely affect our business, financial
condition, results of operation and stock price. You should read this summary together with the more detailed description of
each risk factor contained below.
Risks Related to our Operations
• COVID-19 has had and could continue to have a material adverse effect on our business operations, results of
operations and financial position.
• We are vulnerable to the cyclical nature of the markets we serve.
• Our revenue and earnings are largely dependent on the award of new contracts, which is driven by our clients.
• The nature of our contracts, particularly our lump-sum contracts, subject us to risks associated with delays and cost
overruns, which may not be recoverable and may result in reduced profits or losses that could have a material impact
on our financial condition or results of operations.
• Intense competition in the global EPC industry can reduce our revenue and profits.
• The success of our use of teaming arrangements and joint ventures depends on the satisfactory performance by our
venture partners over whom we may have little or no control, and the failure of those partners to perform their
obligations could impose additional obligations on us that could have a material impact on our financial condition
and results of operations.
• Cybersecurity breaches of our systems and information technology could adversely impact our ability to operate.
• 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 backlog is subject to unexpected adjustments and cancellations.
13
• Our employees work on projects that are inherently dangerous and in locations where there are high security risks,
and a failure to maintain a safe work site could result in significant losses.
• Our businesses could be materially and adversely affected by events outside of our control.
• Our actual results could differ from the assumptions and estimates used to prepare our financial statements.
• If we experience delays and/or defaults in client payments, we could suffer liquidity problems or we could be unable
to recover all expenditures.
• We are dependent upon suppliers and subcontractors to complete many of our contracts.
• Our U.S. government contracts and contracting rights may be terminated or otherwise adversely impacted at any
time, and our inability to win or renew government contracts during regulated procurement processes could harm
our operations and reduce our projects and revenues.
• Our continued success requires us to hire and retain qualified personnel.
• Our effective tax rate and tax positions may vary.
• Systems and information technology interruption, as well as new systems implementation, could adversely impact
our ability to operate and our operating results.
• It can be very difficult and expensive to obtain the insurance we need for our business operations.
• If we do not have adequate indemnification for our nuclear services, it could adversely affect our business and
financial condition.
• Foreign currency risks could have an adverse impact on revenue, earnings and/or backlog.
• The loss of one or a few clients could have an adverse effect on us.
• Damage to our reputation could in turn cause damage to our business.
• Our business may be negatively impacted if we are unable to adequately protect intellectual property rights.
• Our results of operations could be adversely affected as a result of asset impairments.
Risks Related to Financial Reporting
• We identified material weaknesses in our ICFR in 2019, which were remediated in 2020. If we identify material
weaknesses in the future or otherwise fail to maintain an effective system of internal controls, we may not be able to
accurately and timely report our financial results.
• Our prior failure to prepare and timely file our periodic reports with the SEC limits our access to the public markets to
raise debt or equity capital and restricts our ability to issue equity securities.
• We restated certain of our previously issued financial statements during 2020, which resulted in unanticipated costs
and may affect investor confidence and raise reputational issues.
Risks Related to Indebtedness and other Credit Related Risks
• Adverse credit and financial market conditions could impair our, our clients' and our partners' borrowing capacity,
which could negatively affect our business operations, profits and growth objectives.
• Our indebtedness could lead to adverse consequences or adversely affect our financial position and prevent us from
fulfilling our obligations under such indebtedness, and any refinancing of this debt could be at significantly higher
interest rates.
• We may be unable to win new contract awards if we cannot provide clients with letters of credit, bonds or other
security or credit enhancements.
Legal and Regulatory Risks
• From time to time, we are involved in litigation and regulatory proceedings, potential liability claims and contract
disputes that may have a material impact on our financial condition and results of operations.
• Our failure to recover adequately on claims against project owners, subcontractors or suppliers for payment or
performance could have a material effect on our financial results.
• We could be adversely affected by violations of the U.S. Foreign Corrupt Practices Act and similar worldwide anti-
bribery laws.
• We could be adversely impacted if we fail to comply with domestic and international import and export laws.
• Employee, agent or partner misconduct or our overall failure to comply with laws or regulations could weaken our
ability to win contracts, which could result in reduced revenues and profits.
• New or changing legal requirements, including those relating to climate change, could adversely affect our operating
results.
• Past and future environmental, safety and health regulations could impose significant additional costs on us that
reduce our profits.
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Risks Related to Mergers & Acquisitions and Strategic Plans
• We cannot assure the successful implementation of our strategic and operational initiatives.
• Any acquisitions, dispositions or other investments are subject to various risks or uncertainties and may not be
completed in accordance with the expected plans or anticipated time frame, or at all, and will involve significant time
and expense, which could disrupt or adversely affect our business.
• We may be unable to successfully integrate acquisitions or investments we make into our businesses or capture the
anticipated benefits of these acquisitions and investments.
Risks Related to our Common Stock
• In the event we issue additional equity securities, stockholders' ownership percentages would be diluted.
• Delaware law, our charter documents and our stockholder rights agreement may impede or discourage a takeover or
change of control.
Risks Related to our Operations
COVID-19 has had and could continue to have a material adverse effect on our business operations, results of operations
and financial position.
There have been extraordinary and wide-ranging actions taken by international, federal, state and local public health
and governmental authorities in response to COVID-19, including quarantines, government restrictions on movement,
business closures and suspensions, canceled events and activities, self-isolation, and other voluntary or mandated changes in
behavior. Both the outbreak of the disease and actions in response thereto have created significant uncertainty and economic
volatility and disruption, which have impacted and may continue to impact our workforce and operations and have materially
adversely affected and may continue to materially adversely affect our results of operations and financial performance,
including, but not limited to, the following:
• We have experienced, and may continue to experience, reductions in demand for certain of our services and the
delay or abandonment of ongoing or anticipated projects due to our clients’, suppliers’ and other third parties’
diminished financial conditions or financial distress, as well as governmental budget constraints. These impacts are
expected to continue or worsen if stay-at-home, social distancing, travel restrictions and other similar orders or
restrictions remain in place for an extended period of time or are re-imposed after being lifted or eased.
•
Some clients have been, and may in the future be, unable to meet their payment obligations to us in a timely
manner, including as a result of deteriorating financial condition or bankruptcy. Further, other third parties, such as
suppliers, subcontractors, joint venture partners and other outside business partners, have experienced significant
disruptions in their ability to satisfy their obligations with respect to us, or they may be unable to do so in the future
altogether.
• Many employers, including us, and governments continue to require all or a significant portion of employees to
work remotely. While many of our employees can effectively perform their responsibilities while working remotely,
some work may not be completed as efficiently as if it were performed on site. Additionally, we may be exposed to
unexpected cybersecurity risks and additional information technology-related expenses as a result of these remote
working requirements.
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Illness, travel restrictions or other workforce disruptions have affected, and may continue to affect, our supply
chain, our ability to timely and satisfactorily complete our clients’ projects, our ability to provide services to our
clients or our other business processes.
• We have furloughed certain employees and may need to further furlough or reduce the number of employees that
we employ. We may experience difficulties associated with hiring additional employees or replacing employees, in
particular with respect to roles that require security clearances or other special qualifications that may be limited or
difficult to obtain.
•
In addition to existing travel restrictions implemented in response to COVID-19, jurisdictions may continue to close
borders, impose prolonged quarantines and further restrict travel and business activity, which could materially
impair our ability to conduct our operations, to source supplies through the global supply chain and to identify,
pursue and capture new business opportunities, and which could continue to restrict the ability of our employees to
access their workplaces. We also face the possibility of increased overhead or other expenses resulting from
compliance with any future government orders or other measures enacted in response to COVID-19.
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• We operate in many countries around the world, and certain of those countries’ governments may be unable to
effectively mitigate the financial or other impacts of COVID-19 on their economies and workforces and our
operations therein.
The extent to which COVID-19 will continue to impact us depends on numerous evolving factors and future
developments that we are not currently able to predict and may also exacerbate other risks discussed in this 2020 10-K, any of
which could have a material adverse effect on us, our business operations, results of operations and financial position.
We are vulnerable to the cyclical nature of the markets we serve.
The demand for our services is dependent upon the existence of projects with engineering, procurement, construction,
fabrication, maintenance and management needs. Our clients' interest in approving new projects, budgets for capital
expenditures and need for our services have in the past been, and may in the future be, adversely affected by, among other
things, poor economic conditions, low oil prices, political uncertainties and currency devaluations. Clients have been and
remain selective in how they allocate and expend their capital, which has resulted in a reduction of the number of projects we
may bid on and win, especially the larger scale projects in which we specialize. For example, in our Energy & Chemicals
segment, capital expenditures by our clients are influenced by factors such as prevailing prices and expectations about future
prices for underlying commodities, technological advances, the costs of exploration, production and delivery of product,
domestic and international political, military, regulatory and economic conditions and other similar factors. As a result of the
decline in oil prices in the first quarter of 2020, demand for our services in our Energy & Chemicals segment has been
adversely impacted. There is no guarantee that the current recovery in oil prices will be sustained, and the timing and extent
of any future improvements in demand remain uncertain. Industries served by that segment and many of the others we serve
have historically been and will continue to be vulnerable to general downturns, which in turn could materially and adversely
affect the demand for our services.
Our revenue and earnings are largely dependent on the award of new contracts, which is driven by our clients.
The awarding and timing of projects is unpredictable and driven by our clients. Awards, including expansions of existing
projects, often involve complex and lengthy negotiations and competitive bidding processes. These processes can be
impacted by a wide variety of factors including a client's decision to not proceed with the development of a project,
governmental approvals, financing contingencies, oil prices, environmental conditions and overall market and economic
conditions. We may not win contracts that we have bid on due to price, a client's perception of our ability to perform and/or
perceived technology advantages held by others. Many of our competitors may be more inclined to take greater or unusual
risks or include terms and conditions in a contract that we might not deem acceptable, especially when the markets for the
services we typically offer are relatively soft. Because a significant portion of our revenue is generated from large projects, our
results of operations can fluctuate depending on whether and when large project awards occur and the commencement and
progress of work under large contracts already awarded. 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. Additionally,
uncertain economic and political conditions may make it difficult for our clients, our vendors and us to accurately forecast and
plan future business activities. For example, recent changes to U.S. policies related to global trade and tariffs have resulted in
uncertainty surrounding the future of the global economy as well as retaliatory trade measures implemented by other
countries.
The nature of our contracts, particularly our lump-sum contracts, subject us to risks associated with delays and cost
overruns, which may not be recoverable and may result in reduced profits or losses that could have a material impact on
our financial condition or results of operations.
Because our projects are often technically complex, with multiple phases occurring over several years, we incur risks in
our project execution activities. These risks could result in project delays, cost overruns or other problems and can include the
following:
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Incorrect assumptions related to productivity, scheduling estimates or future economic conditions, including with
respect to the impacts of inflation on lump-sum contracts;
Unanticipated technical problems, including design or engineering issues;
Inaccurate representations of site conditions and unanticipated changes in the project execution plan;
Project modifications creating unanticipated costs or delays and failure to properly manage project modifications;
Inability to achieve guaranteed performance or quality standards with regard to engineering, construction or project
management obligations;
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Insufficient or inadequate project execution tools and systems needed to record, track, forecast and control cost
and schedule;
Reliance on historic cost and/or execution data that is not representative of current economic and/or execution
conditions;
Failure to accurately estimate the timing and cost of projects, including due to unforeseen increases in the cost of
labor;
Unanticipated increases in the cost of raw materials, components or equipment, including due to the imposition of
import tariffs;
Failure to properly make judgments in accordance with applicable professional standards, including engineering
standards;
Failure to properly assess and update appropriate risk mitigation strategies and measures;
Difficulties related to the performance of our clients, partners, subcontractors, suppliers or other third parties;
Delays or productivity issues caused by weather; and
Changes in local laws or difficulties or delays in obtaining permits, rights of way or approvals.
These and other risks have in the past and may in the future result in our failure to achieve contractual cost or schedule
commitments, safety performance, overall client satisfaction or other performance criteria. As a result, we may receive lower
fees or lose our ability to earn incentive fees. In other cases, our fee will not change but we will have to continue to perform
work without additional fees until the performance criteria is achieved. We may also be required to pay liquidated damages if
we fail to complete a project on schedule. In addition, if we fail to meet guaranteed performance or quality standards, we
may be held responsible under the guarantee or warranty provisions of our contract for cost impact to the client, generally in
the form of contractually agreed-upon liquidated damages or an obligation to re-perform work. To the extent these events
occur, the total cost to the project (including any liquidated damages we become liable to pay) could be material and could, in
some circumstances, equal or exceed the full value of the contract. In such events, our financial condition or results of
operations could be materially and negatively impacted.
In circumstances where the contract is lump-sum or the revenue is otherwise fixed, we bear significant risk for delays
and cost overruns. Reimbursable contract types, such as those that include negotiated hourly billing rates, may restrict the
kinds or amounts of costs that are reimbursable, therefore exposing us to the risk that we may incur certain costs in executing
these contracts that are above our estimates and not recoverable from our clients.
Intense competition in the global EPC industry can reduce our revenue and profits.
We serve markets that are highly competitive and in which a large number of multinational companies compete. These
markets require substantial resources and investment in technology and skilled personnel. We also see a continuing influx of
non-traditional competitors offering below-market pricing while accepting greater risk. Competition places downward
pressure on our contract prices and profit margins, and has in the past forced, and may in the future force, us to accept
contractual terms and conditions that are not normal or customary, thereby increasing the risk of losses on such contracts.
Intense competition is expected to continue in these markets, presenting us with significant challenges in our ability to
maintain strong growth rates and acceptable profit margins. To the extent we are unable to meet these competitive
challenges, we could lose revenue and experience an overall reduction in our profits.
The success of our use of teaming arrangements and joint ventures depends on the satisfactory performance by our venture
partners over whom we may have little or no control, and the failure of those partners to perform their obligations could
impose additional obligations on us that could have a material impact on our financial condition and results of operations.
In the ordinary course of business, and as has become increasingly common in our industry, we execute specific projects
and otherwise conduct certain operations through joint ventures, consortiums, partnerships and other collaborative
arrangements (collectively, "ventures"). We have various ownership interests in these ventures, with such ownership typically
being proportionate to our decision-making and distribution rights. The ventures generally contract directly with the third
party client; however, services may be performed directly by the venture, or may be performed by us, our partners, or a
combination thereof.
Our success in many markets is dependent, in part, on the presence or capability of a local partner. If we are unable to
compete alone, or with a quality partner, our ability to win work and successfully complete our contracts may be impacted.
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Differences in opinions or views between venture partners can result in delayed decision-making or failure to agree on
material issues, which could adversely affect the business and operations of our ventures. In many of the countries in which
we engage in joint ventures, it may be difficult to enforce our contractual rights under the applicable joint venture agreement.
At times, we also participate in ventures where we are not a controlling party or where we team with unaffiliated
parties on a particular project bid. In such instances, we may have limited control over venture decisions and actions,
including internal controls and financial reporting, which may have an impact on our business. If internal control problems
arise within the joint venture, or if our joint venture partners have financial or operational issues, there could be a material
impact on our business, financial condition or results of operations.
The success of these and other ventures also depends, in large part, on the satisfactory performance by our venture
partners of their venture obligations, including their obligation to commit working capital, equity or credit support as required
by the venture and to support their indemnification and other contractual obligations. If our venture partners fail to
satisfactorily perform their venture obligations, the venture may be unable to adequately perform or deliver its contracted
services. Under these circumstances, we may be required to make additional investments and provide additional services to
ensure the adequate performance and delivery by the venture of the contracted services and to meet any performance
guarantees. From time to time, in order to establish or preserve a relationship, or to better ensure venture success, we may
accept risks or responsibilities for the venture that are not necessarily proportionate with the reward we expect to receive or
that may differ from risks or responsibilities we would normally accept in our own operations. We may also be subject to joint
and several liability for our venture partners under the applicable contracts for venture projects. These additional obligations
could result in reduced profits or, in some cases, increased liabilities or significant losses for us with respect to the venture,
and in turn, our business and operations. In addition, a failure by a venture partner to comply with applicable laws, rules or
regulations could negatively impact our business and reputation and could result in fines, penalties, suspension or, in the case
of government contracts, even debarment.
Cybersecurity breaches of our systems and information technology could adversely impact our ability to operate.
We utilize, develop, install and maintain a number of information technology systems both for us and for others.
Various privacy and security laws require us to protect sensitive and confidential information from disclosure. In addition, we
are bound by our client and other contracts, as well as our own business practices, to protect confidential and proprietary
information (whether it be ours or a third party's information entrusted to us) from disclosure. Our computer systems, as well
as those of our clients, contractors and other vendors, face the threat of unauthorized access, computer hackers, viruses,
malicious code, cyber attacks, phishing and other security incursions and system disruptions, including attempts to improperly
access our confidential and proprietary information as well as the confidential and proprietary information of our clients and
other business partners. While we endeavor to maintain industry-accepted security measures and technology to secure our
computer systems and while we endeavor to ensure our cloud vendors that store our data maintain similar measures, these
systems and the information stored on these systems may still be subject to threats. There can be no assurance that our
efforts will protect us against all threats. Further, as these security threats continue to evolve, we may be required to devote
additional resources to protect, detect and respond against such threats. A party who circumvents our security measures, or
those of our clients, contractors or other vendors, could misappropriate confidential or proprietary information, improperly
manipulate data, or cause damage or interruptions to systems. Any of these events could damage our reputation, result in
litigation and regulatory fines and penalties, or have a material adverse effect on our business, financial condition or results of
operations. Furthermore, while we maintain insurance that specifically covers cybersecurity threats, our coverage may not
sufficiently cover all types of losses or claims that may arise.
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 that are beyond our control. 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:
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abrupt changes in government policies, laws, treaties (including those impacting trade), regulations or leadership;
embargoes or other trade restrictions, including sanctions;
restrictions on currency movement;
tax or tariff changes;
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currency exchange rate fluctuations;
changes in labor conditions and difficulties in staffing and managing international operations, including logistical
and communication challenges;
U.S. government trade or other policy changes in relation to the foreign countries in which we or our clients
operate;
other social, political and economic instability, including recessions and other economic crises in other regions;
natural disasters and public health crises, including pandemics such as COVID-19;
expropriation and nationalization of our assets in a foreign country;
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 locations where there is a
significant amount of political risk. In addition, military action or continued unrest 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 may
vary with each project, depending on the location of the project and its stage of completion. For example, our risk exposure
with respect to a project in an early development phase, such as engineering, will generally be less than our risk exposure on a
project that is in the construction phase. To the extent that our international business is affected by unexpected and adverse
foreign economic and political conditions and risks, we may experience project disruptions and losses. Project disruptions and
losses could significantly reduce our overall revenue and profits.
Our backlog is subject to unexpected adjustments and cancellations.
Our backlog generally consists of projects for which we have an executed contract or commitment with a client and
reflects our expected revenue from the contract or commitment, which is often subject to revision over time. We cannot
guarantee that the revenue projected in our backlog will be realized or profitable or will not be subject to delay or suspension.
Project cancellations, scope adjustments or deferrals, or foreign currency fluctuations may occur with respect to contracts
reflected in our backlog and could reduce the dollar amount of our backlog and the revenue and profits that we actually earn;
or, may cause the rate at which we perform on our backlog to decrease. Most of our contracts have termination for
convenience provisions in them allowing clients to cancel projects already awarded to us. Our contracts typically provide for
the payment of fees earned through the date of termination and the reimbursement of costs incurred including
demobilization costs. In addition, projects may remain in our backlog for an extended period of time. During periods of
economic slowdown, or decreases and/or instability in oil prices, the risk of projects being suspended, delayed or canceled
generally increases. 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.
Our employees work on projects that are inherently dangerous and in locations where there are high security risks, and a
failure to maintain a safe work site could result in significant losses.
We often work on complex projects, frequently in geographically remote or high-risk locations that are subject to
political, social or economic risks, or war 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 substances or highly regulated
materials, and in challenging environments. Safety is a primary focus of our business and is critical to our reputation and
performance. 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, the
completion of a project could be delayed and we could experience investigations or litigation. 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. Despite these activities, in these locations and at these sites, we cannot guarantee the safety of our personnel,
nor can we guarantee our work, equipment or supplies will be free from damage.
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Our businesses could be materially and adversely affected by events outside of our control.
Extraordinary or force majeure events beyond our control, such as natural or man-made disasters, severe weather
conditions, public health crises, political crises or other catastrophic events, could negatively impact our ability to operate or
increase our costs to operate. Such events may result in disruptions to our operations; evacuation of personnel; increased
labor and material costs or shortages; inability to deliver materials, equipment and personnel to jobsites in accordance with
contract schedules; and loss of productivity. We may remain obligated to perform our services after any such events, unless a
contract provision provides us with relief from our obligations. The extra costs incurred as a result of these events may not be
reimbursed by our clients. If we are not able to react quickly to such events, or if a high concentration of our projects are
impacted by such an event, our operations may be adversely affected. In addition, if we cannot complete our contracts on
time, we may be subject to potential liability claims by our clients, which may reduce our profits and result in losses.
Our actual results could differ from the assumptions and estimates used to prepare our financial statements.
In preparing our financial statements, we make estimates and assumptions through the filing date of the 2020 10-K.
These estimates and assumptions affect the reported values of assets, liabilities, revenue and expenses, and the disclosure of
contingent assets and liabilities. Areas requiring significant estimates by our management include:
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recognition of contract revenue, costs, profits or losses in applying the principles of percentage-of-completion
accounting;
recognition of revenues related to project incentives or awards we expect to receive;
recognition of recoveries under contract change orders or claims;
estimated amounts for expected project losses, warranty costs, contract close-out or other costs;
collectability of billed and unbilled accounts receivable and the need and amount of any allowance for doubtful
accounts;
asset valuations;
income tax provisions and related valuation allowances;
determination of expense and potential liabilities under pension and other post-retirement benefit programs; and
accruals for other estimated liabilities, including litigation and insurance revenues/reserves.
Estimates are based on management's reasonable assumptions and experience, but are only estimates. Our actual
business and financial results could differ from our estimates of such results due to changes in facts and circumstances, which
could have a material negative impact on our financial condition and reported results of operations. Further, we recognize
contract revenue as work on a contract progresses. The cumulative amount of revenue recorded on a contract at any point in
time is that percentage of total estimated revenues that costs incurred to date bear to estimated total costs. Accordingly,
contract revenue and total cost estimates are reviewed and revised as the work progresses. Adjustments are reflected in
contract revenue in the period when such estimates are revised. Such adjustments could be material and could result in
reduced profitability.
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
clients in amounts sufficient to cover expenditures as they are incurred. Some of our clients have found it difficult to pay
invoices for our services timely, increasing the risk that our accounts receivable could become uncollectible and ultimately be
written off. In certain cases, our clients for our large projects are project-specific entities that do not have significant assets
other than their interests in the project. From time to time, it has been and may in the future be difficult for us to collect
payments owed to us by these clients. In addition, clients may request extension of the payment terms otherwise agreed to
under our contracts. 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 dependent upon suppliers and subcontractors to complete many of our contracts.
Some of the work performed under our contracts is performed by third-party subcontractors. We also rely on third-
party suppliers to provide much of the equipment and materials used for projects. If we are unable to hire qualified
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subcontractors or find qualified suppliers, our ability to successfully or timely complete a project could be impaired. If the
amount we are required to pay for subcontractors or equipment and supplies exceeds what we have estimated, especially in a
lump-sum contract, we may suffer losses on these contracts. If a supplier or subcontractor fails to provide supplies,
technology, equipment or services as required under a contract to us, our joint venture partner, our client or any other party
involved in the project for any reason, or provides supplies, technology, equipment or services that are not an acceptable
quality, we may be required to source those supplies, technology, equipment or services on a delayed basis or at a higher
price than anticipated, which could impact contract profitability. In addition, faulty workmanship, equipment or materials
could impact the overall project, resulting in claims against us for failure to meet required project specifications. These risks
may be intensified during an economic downturn if these suppliers or subcontractors experience financial difficulties or find it
difficult to obtain sufficient financing to fund their operations or access to bonding, and are not able to provide the services or
supplies necessary for our business. In addition, in instances where we rely on a single contracted supplier or subcontractor or
a small number of suppliers or subcontractors, if a subcontractor or supplier were to fail, there may be no available
replacement technology, equipment, materials or services on a timely basis or at the costs we had anticipated. A failure by a
third-party subcontractor or supplier to comply with applicable laws, rules or regulations could negatively impact our business
and reputation and could result in fines, penalties, suspension, or in the case of government contracts, even debarment.
Our U.S. government contracts and contracting rights may be terminated or otherwise adversely impacted at any time, and
our inability to win or renew government contracts during regulated procurement processes could harm our operations and
reduce our projects and revenues.
We enter into significant government contracts, including those contracts that we have in place with the U.S.
Department of Energy and Department of Defense. U.S. government contracts are subject to various uncertainties,
restrictions and regulations, including oversight audits by government agencies and profit and cost controls, which could
result in withholding or delay of payments to us. U.S. government contracts are also subject to uncertainties associated with
Congressional funding, including the potential impacts of budget deficits, government shutdowns and federal sequestration.
Changes in U.S. government priorities, which can occur due to policy changes or changes in the economy, could adversely
impact our revenues. The U.S. government is under no obligation to maintain program funding at any specific level, and funds
for a program may even be eliminated. Our U.S. government clients may terminate or decide not to renew our contracts with
little or no prior notice.
In addition, U.S. government contracts are subject to specific regulations such as the Federal Acquisition Regulation
("FAR"), the Truth in Negotiations Act, the Cost Accounting Standards ("CAS"), the Service Contract Act and Department of
Defense security regulations. Failure to comply with any of these regulations and other government requirements may result
in contract price adjustments, financial penalties or contract termination. Our U.S. government contracts are also subject to
audits, cost reviews and investigations by U.S. government oversight agencies 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 ability to review how we have accounted for costs under the FAR and CAS. The DCAA presents its report
findings to the Defense Contract Management Agency ("DCMA"). Should the DCMA determine that we have not complied
with the terms of our contract and applicable statutes and regulations, or if they believe that we have engaged in
inappropriate accounting or other activities, payments to us may be disallowed or we could be required to refund previously
collected payments. Additionally, we may be subject to criminal and civil penalties, suspension or debarment from future
government contracts, and qui tam litigation brought by private individuals on behalf of the U.S. government under the False
Claims Act, which could include claims for treble damages. These suits may remain under seal (and hence, be unknown to us)
for some time while the government decides whether to intervene on behalf of the qui tam plaintiff. Furthermore, if we have
significant disagreements with our government clients concerning costs incurred, negative publicity could arise, which could
adversely affect our industry reputation and our ability to compete for new contracts in the government arena or otherwise.
Most U.S. government contracts are awarded through a rigorous competitive process. The U.S. government has
increasingly relied upon multiple-year contracts with pre-established terms and conditions that generally require those
contractors that have been previously awarded the contract to engage in an additional competitive bidding process for each
task order issued under the contract. Such processes require successful contractors to anticipate requirements and develop
rapid-response bid and proposal teams as well as dedicated supplier relationships and delivery systems to react to these
needs. We face rigorous competition and significant pricing pressures in order to win these task orders. If we are not
successful in containing costs or able to timely respond to government requests, we may not win additional awards.
Moreover, even if we are qualified to work on a government contract, we may be impacted in our pursuit of work by
government policies designed to protect small businesses and under- represented minority contractors.
Many of our U.S. government contracts require security clearances. Depending upon the level of clearance required,
security clearances can be difficult and time-consuming to obtain. If we or our employees are unable to obtain or retain
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necessary security clearances, we may not be able to win new business, and our existing government clients could terminate
their contracts with us or decide not to renew them.
Under the Budget Control Act of 2011, an automatic sequestration process, or across-the-board budget cuts, was
triggered when the Joint Select Committee on Deficit Reduction, a committee of twelve members of Congress, failed to agree
on a deficit reduction plan for the U.S. federal budget. The Bipartisan Budget Act of 2019 (the “BBA”) eliminates sequestration
on discretionary accounts in 2020 and 2021 by increasing federal discretionary spending limits until 2021. The BBA also
temporarily suspends the public debt limit through July 31, 2021. However, the Budget Control Act of 2011 remains in place,
extended through 2029, and absent additional legislative or other remedial action, the sequestration could require reduced
U.S. federal government spending from 2022 through 2029. A significant reduction in federal government spending or a
change in budgetary priorities could reduce demand for our services, cancel or delay federal projects, and result in the closure
of federal facilities and significant personnel reductions, which could have a material adverse effect on our results of
operations and financial condition.
Our continued success requires us to hire and retain qualified personnel.
The success of our business is dependent upon being able to attract, develop and retain personnel, including engineers,
project management, craft employees and management around the globe, who have the necessary and required experience
and expertise, and who will perform these services at a reasonable and competitive rate. Competition for these and other
experienced personnel is intense. It may be difficult to attract and retain qualified individuals with the expertise and in the
timeframe demanded by our clients. In certain geographic areas, for example, we may be unable to satisfy the demand for
our services because of our inability to deploy qualified personnel. Also, it may be difficult to replace personnel who hold
government granted eligibility that may be required to obtain certain government projects and/or who have significant
government contract experience. Loss of the services of, or failure to recruit, qualified technical and management personnel
could limit our ability to successfully complete existing projects and compete for new projects.
As some of our executives and other key personnel approach retirement age or otherwise leave the company, we need
to provide for smooth transitions, which may require that we devote time and resources to identify and integrate new
personnel into these leadership roles and other key positions. Changes in our management team may disrupt our business
and the failure to successfully transition and assimilate executives or other key personnel could adversely affect our results of
operation. If we are unable to employ a sufficient number of skilled personnel or effectively implement appropriate
succession plans, our ability to pursue projects may be adversely affected, the costs of executing our existing and future
projects may increase and our financial performance may decline.
In addition, the cost of providing our services, including the extent to which we utilize our workforce, affects our
profitability. For example, the uncertainty of contract award timing can present difficulties in matching our workforce size
with our contracts. If an expected contract award is delayed or not received, we could incur costs resulting from excess staff,
reductions in staff, or redundancy of facilities that could have a material adverse impact on our business, financial conditions
and results of operations.
Our effective tax rate and tax positions may vary.
We are subject to income taxes in the United States and numerous foreign jurisdictions. A change in tax laws, treaties or
regulations, or their interpretation, in any country in which we operate could change the tax rate on our earnings, which could
have a material impact on our results of operations. In addition, significant judgment is required in determining our
worldwide provision for income taxes and our judgments could prove inaccurate. In the ordinary course of our business, there
are many transactions and calculations where the ultimate tax determination is uncertain. We are regularly under audit by tax
authorities, and our tax estimates and tax positions could be materially affected by many factors including the final outcome
of tax audits and related litigation, the introduction of new tax accounting standards, legislation, regulations and related
interpretations, our global mix of earnings, our ability to realize deferred tax assets and changes in uncertain tax positions.
Future changes in our tax rate or adverse changes in tax laws could have a material adverse effect on our profitability and
liquidity.
Systems and information technology interruption, as well as new systems implementation, could adversely impact our
ability to operate and our operating results.
As a global company, we are heavily reliant on computer, information and communications technology and related
systems, some of which are hosted by third party providers, in order to operate. From time to time, we experience system
interruptions and delays that may be planned for upgrades or that may be unplanned. Unplanned interruptions could result
from natural disasters, power loss, telecommunications failures, acts of war or terrorism, acts of God, computer viruses,
physical or electronic break-ins and similar events or disruptions. Any of these or other events could cause system
interruptions, delays, loss of critical or sensitive data (including personal or financial data) or loss of funds; could delay or
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prevent operations (including the processing of transactions and reporting of financial results); and could adversely affect our
reputation or our operating results. While we have and require the maintenance of reasonable safeguards designed to protect
against unavailability or loss of data, these safeguards may not be sufficient. We may be required to expend significant
resources to protect against or alleviate damage caused by systems interruptions and delays, which could have a material
adverse effect on our business and cash flows.
We continue to evaluate the need to upgrade and/or replace our systems and network infrastructure to protect our
computing environment, to stay current on vendor supported products, to improve the efficiency of our systems and for
other business reasons. The implementation of new systems and information technology could adversely impact our
operations by imposing substantial capital expenditures, demands on management time and risks of delays or difficulties in
transitioning to new systems. Our systems implementations also may not result in productivity improvements at the levels
anticipated. Systems implementation disruption and any other information technology disruption, if not anticipated and
appropriately mitigated, could have a material adverse effect on our business.
It can be very difficult and 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 the
requirements of many of our contracts. Although we have been generally able to cover our insurance needs, there can be no
assurances that we can secure all necessary or appropriate insurance in the future, or that such insurance can be
economically secured. For example, catastrophic events can result in decreased coverage limits, more limited coverage,
increased premium costs or deductibles. We also monitor the financial health of the insurance companies from which we
procure insurance, and this is one of the factors we take into account when purchasing insurance. Our insurance is purchased
from a number of the world's leading providers, often in layered insurance or quota share arrangements. If any of our third
party insurers fail, abruptly cancel our coverage or otherwise cannot satisfy their insurance requirements to us, then our
overall risk exposure and operational expenses could be increased and our business operations could be interrupted.
If we do not have adequate indemnification for our nuclear services, it could adversely affect our business and financial
condition.
We provide services to the U.S. Department of Energy and the nuclear energy industry in the on-going maintenance and
modification of nuclear facilities as well as decontamination and decommissioning activities of nuclear plants. The Price-
Anderson Act generally indemnifies parties performing services to nuclear power plants and Department of Energy
contractors; however, not all activities we engage in on behalf of our clients are covered. Thus, if the Price-Anderson Act
indemnification protections do not apply to our services, or if the exposure occurs outside of the United States in a region that
does not have protections comparable to the Price-Anderson Act, our business and financial condition could be adversely
affected by our client's refusal to contract with us, by our inability to obtain commercially reasonable insurance or third party
indemnification, or by the potentially significant monetary damages we could incur.
Foreign currency risks could have an adverse impact on revenue, earnings and/or backlog.
Certain of our contracts subject us to foreign currency risk, particularly when project contract revenue is denominated
in a currency different than the contract costs. In addition, 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 and meet transactional requirements. We may attempt to minimize our exposure to foreign currency risk
by obtaining contract provisions that protect us from foreign currency fluctuations and/or by implementing hedging strategies
utilizing derivatives as hedging instruments. However, these actions may not always eliminate all foreign currency risk, and as
a result, our profitability on certain projects could be affected.
Our monetary assets and liabilities denominated in nonfunctional currencies are subject to remeasurement. In addition,
the U.S. dollar value of our backlog may from time to time increase or decrease significantly due to foreign currency volatility.
We may also be exposed to limitations on our ability to reinvest earnings from operations in one country to fund our
operations in other countries.
Our reported revenue and earnings of foreign subsidiaries could also be affected by foreign currency volatility. Revenue,
cost and earnings of foreign subsidiaries with functional currencies other than the U.S. dollar are translated into U.S. dollars. If
the U.S. dollar appreciates against a foreign subsidiary's non-U.S. dollar functional currency, we would report less revenue,
cost and earnings in U.S. dollars than it would have had the U.S. dollar depreciated against the same foreign currency or if
there had been no change in the exchange rate.
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The loss of one or a few clients could have an adverse effect on us.
A few clients, including the U.S. government, state governments and U.S. and state government agencies, have in the
past, and may in the future, account for a significant portion of our revenues in any one year or over a period of several
consecutive years, either directly or through participation in a joint venture that serves as a client. Although we have long-
standing relationships with many of our significant clients, our clients may unilaterally reduce, fail to renew or terminate their
contracts with us at any time. Most of our contracts have termination for convenience provisions in them. The loss of business
from a significant client could have a material adverse effect on our business, financial position and results of operations.
Damage to our reputation could in turn cause damage to our business.
Maintaining a positive reputation is critical to attracting and maintaining clients and other business relationships. If we
fail to address issues that may give rise to reputational risk, we could significantly harm our business. These issues may
include, but are not limited to, any of the risk factors discussed in this Item 1A, including compliance with laws, project
execution risk, cybersecurity and safety. If our reputation is harmed, we could suffer a number of adverse consequences, such
as:
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reduced demand for our services;
lack of investor confidence;
less favorable credit rating;
the inability to attract and retain qualified employees;
a loss or reduction in scope of current project contracts and fewer contract awards;
less favorable contract terms;
increased need for financial assurances;
increased litigation and costs; and
heightened regulatory scrutiny.
These and other consequences resulting from damage to our reputation could have a material adverse effect on our
business, financial condition or results of operations.
Our business may be negatively impacted if we are unable to adequately protect intellectual property rights.
Our success is dependent, in part, on our ability to differentiate our services through our technologies and know-how.
This success includes the ability of companies in which we invest, such as NuScale, to protect their intellectual property rights.
We utilize a combination of patents, copyrights, trade secrets, confidentiality agreements and other contractual arrangements
to protect our interests. However, these methods only provide a limited amount of protection and may not adequately
protect our interests. Our employees, contractors and joint venture partners are subject to confidentiality obligations, but this
protection may be inadequate to deter or prevent misappropriation of our confidential information and/or infringement of
our intellectual property rights. This can be especially true in certain foreign countries where intellectual property does not
have equivalent protections as in the United States, or when our joint venture partner is a competitor who will gain access to
our procedures and know-how while working with us in the performance of services.
Our clients require broad ownership rights in the work product and other materials we deliver. If we are not able to
retain ownership of our pre-existing intellectual property and improvements thereto, it may affect our ability to provide
similar services to other clients in the future, which ultimately, could have a material adverse effect on our operations.
Our competitors or others may independently develop technology substantially similar to our trade secret technology
or we may be unsuccessful in preserving our intellectual property rights in the future. Our intellectual property rights could be
invalidated, circumvented, challenged or infringed upon. Litigation to determine the scope of intellectual property rights, even
if ultimately successful, could be costly and could divert management's attention.
In addition, our clients or other third parties may also provide us with their technology and intellectual property. There
is a risk that we may not sufficiently protect our or their information from improper use or dissemination and, as a result,
could be subject to claims and litigation and resulting liabilities, loss of contracts or other consequences that could have an
adverse impact on our business, financial condition and results of operation.
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We also hold licenses from third parties that may be utilized in our business operations. If we are no longer able to
license such technology on commercially reasonable terms or otherwise, our business and financial performance could be
adversely affected. When we license our intellectual property to third parties, the scope of such license grant is limited to a
particular plant or project. If such third party exceeds the scope of the license grant, and if we are unable to detect
unauthorized use of our intellectual property or otherwise take appropriate steps to enforce our rights, our revenue and
margins will be adversely impacted, and the value of our intellectual property portfolio may decline thereby adversely
affecting our competitive advantage and ability to win future work.
Our results of operations could be adversely affected as a result of asset impairments.
Our results of operations and financial condition could be adversely affected by impairments to goodwill, investments,
deferred tax assets or other intangible assets. Goodwill and other intangible assets that have indefinite useful lives are not
amortized, but instead are tested at least annually for impairment. Any future impairments, including impairments of
goodwill, investments, deferred tax assets or other intangible assets, could have a material adverse effect on our financial
condition and results of operations.
In addition, if we determine that an other-than-temporary decline in the fair value exists for a company in which we
have invested, we may have to write down that investment to its fair value and recognize the related write-down as an
investment loss. For cases in which we are required under the equity method or the proportionate consolidation method of
accounting to recognize a proportionate share of another company's income or loss, such income or loss may impact our
earnings.
Risks Related to Financial Reporting
We identified material weaknesses in our ICFR in 2019, which were remediated in 2020. If we identify material weaknesses
in the future or otherwise fail to maintain an effective system of internal controls, we may not be able to accurately and
timely report our financial results.
In connection with our 2019 year-end assessment of ICFR, we determined that we did not have an effective ICFR at
December 31, 2019. We took steps to improve our ICFR and determined that we have an effective ICFR at December 31, 2020.
If we identify amaterial weaknesses in the future or are unable to successfully remediate any future material
weaknesses or other deficiencies in our ICFR, the accuracy and timing of our financial reporting may be adversely affected, we
may be unable to maintain or regain compliance with applicable securities laws and New York Stock Exchange listing
requirements and we may be subject to regulatory investigations and penalties.
Our prior failure to prepare and timely file our periodic reports with the SEC limits our access to the public markets to raise
debt or equity capital and restricts our ability to issue equity securities.
We did not timely file our 2019 10-K or our Quarterly Reports on Form 10-Q for the quarters ended March 31, 2020,
June 30, 2020 or September 30, 2020 within the timeframe specified by the SEC. This limits our ability to utilize a shelf
registration during 2021 to access the public markets to raise debt or equity capital, which could prevent us from pursuing
transactions or implementing business strategies that we might otherwise believe are beneficial to our business. We are not
eligible to use a registration statement on Form S-3 that would allow us to continuously incorporate by reference our SEC
reports until December 2021. If we wish to pursue a public offering ahead of that date, we would be required to file a
registration statement on Form S-1 and have it reviewed and declared effective by the SEC. Doing so could take significantly
longer than using a shelf registration statement on Form S-3, increase our transaction costs and adversely impact our ability to
raise capital or complete acquisitions of other companies in a timely manner.
We restated certain of our previously issued financial statements during 2020, which resulted in unanticipated costs and
may affect investor confidence and raise reputational issues.
As disclosed in our 2019 10-K, we restated our financial statements and related disclosures for the years ended
December 31, 2018, 2017 and 2016 and for each of the interim quarterly periods in 2018 and 2019, following the
identification of misstatements as a result of an internal review. The restatement also included other immaterial adjustments
to historical periods, including items previously identified and corrected in earlier periods and for other non-project items
identified outside of the internal review. As a result, we incurred previously unanticipated costs for accounting and legal fees
in connection with or related to the restatement, and have become subject to a number of additional risks and uncertainties,
which may affect investor confidence in the accuracy of our financial disclosures and may raise reputational issues for our
business.
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Risks Related to Indebtedness
Adverse credit and financial market conditions could impair our, our clients' and our partners' borrowing capacity, which
could negatively affect our business operations, profits and growth objectives.
Our ability to generate cash is important for the funding of our operations, investing in joint ventures, the servicing of
our indebtedness, paying dividends to stockholders and making acquisitions. To the extent that existing cash balances and
cash flow from operations, together with borrowing capacity under our credit facilities, are insufficient to make investments
or acquisitions or provide needed working capital, we may require additional financing from other sources. Our ability to
obtain such additional financing will depend upon prevailing capital market conditions, including those arising due to events
occurring in our industry, as well as conditions in our business and our operating results; and those factors may affect our
efforts to negotiate terms that are acceptable to us. Furthermore, if global economic, industry, political or other market
conditions adversely affect the financial institutions that provide credit to us, it is possible that our ability to establish or draw
upon our credit facilities may be impacted. In addition, a downgrade in our credit rating could increase the cost of our
borrowings or their refinancing, limit access to sources of financing or lead to other adverse consequences. If adequate funds
are not available, or are not available on acceptable terms, we may not be able to make future investments, take advantage
of acquisitions or other opportunities, or respond to competitive challenges.
In addition, adverse credit and financial market conditions also adversely affect our clients' and our partners' 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. These disruptions could
materially impact our backlog and profits. If we extend a significant portion of credit to our clients or projects in a specific
geographic region or industry, we may experience higher levels of collection risk or non-payment if those clients are impacted
by factors specific to their geographic industry or region.
Our indebtedness could lead to adverse consequences or adversely affect our financial position and prevent us from
fulfilling our obligations under such indebtedness, and any refinancing of this debt could be at significantly higher interest
rates.
Our indebtedness could have important consequences, including but not limited to:
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increasing our vulnerability to general adverse economic and industry conditions;
requiring us to dedicate a substantial portion of our cash flow from operations to make debt service payments,
thereby reducing the availability of cash flow to fund working capital, capital expenditures, acquisitions and
investments and other general corporate purposes;
limiting our flexibility in planning for, or reacting to, challenges and opportunities, and changes in our businesses
and the markets in which we operate; and
limiting our ability to obtain additional financing to fund our working capital, capital expenditures, acquisitions and
debt service requirements and other financing needs.
Our ability to service our indebtedness will depend on our future operating performance and financial results, which
may be subject to factors beyond our control, including general economic, financial and business conditions. If we do not have
sufficient cash flow to service our indebtedness, we may need to refinance all or part of our existing indebtedness, borrow
more money or sell securities or assets, some or all of which may not be available to us at acceptable terms or at all. In
addition, we may need to incur additional indebtedness in the future in the ordinary course of business. Although the terms
of our credit agreements and our bond indentures allow us to incur additional debt, there are limitations which may preclude
us from incurring the amount of indebtedness we otherwise desire.
Our credit facilities, senior notes, other outstanding indebtedness and any additional indebtedness we incur in the
future impose, or may impose, significant operating and financial restrictions on us. In addition, our credit facilities require us
to maintain specified financial covenants. A breach of any of these covenants could result in a default. If a default occurs, the
relevant lenders could elect to declare our indebtedness, together with accrued interest and other fees, to be immediately
due and payable. If our operating performance declines, or if we are unable to comply with any covenant, such as our ability
to timely prepare and file our periodic reports with the SEC, we have needed and may in the future need to obtain
amendments to our credit agreements or waivers from the required creditors under our indebtedness instruments to avoid
being in default. These factors could have a material adverse effect on our business, financial condition, results of operations
or share price.
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We may be unable to win new contract awards if we cannot provide clients with letters of credit, bonds or other security or
credit enhancements.
It is a common industry practice for clients to require us to provide surety bonds, letters of credit, bank guarantees or
other forms of financial assurance as credit enhancements. Surety bonds, letters of credit or guarantees indemnify our clients
if we fail to perform our obligations under our contracts. Historically, we have had strong surety bonding capacity due to our
investment-grade credit rating, but, bonding is provided at the surety's sole discretion. In addition, because of the overall
limitations in worldwide bonding capacity, we may find it difficult to access sufficient surety bonding capacity to meet our
total surety bonding needs. With regard to letters of credit, while we have historically had adequate capacity under our
existing credit facilities, any capacity that may be required in excess of our credit limits would be at our lenders' sole
discretion and therefore is not certain. Failure to provide credit enhancements on terms required by a client may result in an
inability to compete for or win a project.
Legal and Regulatory Risks
From time to time, we are involved in litigation and regulatory proceedings, potential liability claims and contract disputes
that may have a material impact on our financial condition and results of operations.
We may be subject to a variety of legal or regulatory proceedings, liability claims or contract disputes in virtually every
part of the world. We engage in engineering and construction activities for large facilities where design, construction or
systems failures can result in substantial injury or damage. In addition, the nature of our business results in clients,
subcontractors and suppliers occasionally presenting claims against us for recovery of costs they incurred in excess of what
they expected to incur, or for which they believe they are not contractually liable. We have been and may in the future be
named as a defendant in legal proceedings where parties may make a claim for damages or other remedies with respect to
our projects or other matters, including shareholder litigation. During times of economic uncertainty, especially with regard to
our commodity-based clients, claim frequencies and amounts tend to increase.
In proceedings where it is determined that we have liability, we may not be covered by insurance or, if covered, the
dollar amount of these liabilities may exceed our policy limits. In addition, even where insurance is maintained for such
exposure, the policies have deductibles resulting in our assuming exposure for a layer of coverage with respect to any such
claims. Our professional liability coverage is on a "claims-made" basis covering only claims actually made during the policy
period currently in effect. Any liability not covered by our insurance, in excess of our insurance limits or, if covered by
insurance but subject to a high deductible, could result in a material loss for us, and materially reduce our cash available for
operations.
As previously disclosed, we have received subpoenas from both the SEC and the U.S. Department of Justice ("DOJ")
seeking documents and information related to projects for which we recorded charges in the second quarter of 2019 and
certain project accounting, financial reporting and governance matters. We are coordinating our responses to the SEC and
DOJ and cooperating in providing the requested documents and information. In addition to these investigations, a special
committee of our Board of Directors independently conducted and completed a review of our prior period reporting and
related control environment.
If the SEC or DOJ commences legal action as a result of the investigations, we could be required to pay significant
penalties and become subject to injunctions, cease and desist orders, and other equitable remedies. We can provide no
assurances as to the outcome or timing of any governmental or regulatory investigation.
In addition to these investigations, we have also had numerous securities class action lawsuits and stockholder
derivative actions filed against us and certain of our current and former executive officers and directors.
We have incurred, and may continue to incur, significant expenses related to legal, accounting, and other professional
services in connection with the SEC investigation, the DOJ investigation, lawsuits and related legal and regulatory matters.
These expenses and the diversion of the attention of the management team that has occurred, and is expected to continue,
has adversely affected, and could continue to adversely affect, our business, financial condition and results of operations.
As a result of matters associated with the SEC and DOJ investigations and various lawsuits, we are exposed to greater
risks associated with litigation, regulatory proceedings, and government enforcement actions and additional subpoenas. Any
future investigations or additional lawsuits may have a material adverse effect on our business, financial condition and results
of operations.
In other legal or regulatory proceedings, liability claims or contract disputes, we may be covered by indemnification
agreements that may at times be difficult to enforce. Even if enforceable, it may be difficult to recover under these
agreements if the indemnitor does not have the ability to financially support the indemnity. Litigation and regulatory
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proceedings are subject to inherent uncertainties, and unfavorable rulings could occur, including for monetary damages. If we
were to receive an unfavorable ruling in a matter, our business and results of operations could be materially harmed. Such
proceedings can also be costly, time-consuming, disruptive to operations and distracting to management, regardless of the
outcome. For further information on matters in dispute, please see Notes to Consolidated Financial Statements.
Our failure to recover adequately on claims against project owners, subcontractors or suppliers for payment or
performance could have a material effect on our financial results.
We occasionally bring claims against clients for additional costs exceeding the contract price or for amounts not
included in the original contract price. Similarly, we present change orders and claims to our subcontractors and suppliers. If
we fail to properly provide notice or document the nature of change orders or claims, or are otherwise unsuccessful in
negotiating a reasonable settlement, we could incur reduced profits, cost overruns and in some cases a loss on the project.
These types of claims can often occur due to matters such as owner-caused delays or changes from the initial project scope,
which result in additional cost, both direct and indirect. From time to time, these claims can be the subject of lengthy and
costly proceedings, and it is often difficult to accurately predict when these claims will be fully resolved. When these types of
events occur and while unresolved claims are pending, we may invest significant working capital in projects to cover cost
overruns pending the resolution of the relevant claims. A failure to promptly recover on these types of claims could have a
material adverse impact on our liquidity and financial results.
We could be adversely affected by violations of the U.S. Foreign Corrupt Practices Act and similar worldwide anti-bribery
laws.
The U.S. Foreign Corrupt Practices Act, the U.K. Bribery Act of 2010 and similar anti-bribery laws in other jurisdictions
generally prohibit companies and their intermediaries from making improper payments to officials or others for the purpose
of obtaining or retaining business. While our policies mandate compliance with these anti-bribery laws, we operate in many
parts of the world that have experienced corruption to some degree and, in certain circumstances, strict compliance with anti-
bribery laws may conflict with local customs and practices. We train our personnel concerning anti-bribery laws and issues,
and we also inform our partners, subcontractors, suppliers, agents and others who work for us or on our behalf that they
must comply with anti-bribery law requirements. We also have procedures and controls in place to monitor compliance.
However, there is no assurance that our internal controls and procedures will always protect us from the possible reckless or
criminal acts committed by our employees or agents. If we are found to be liable for anti-bribery law violations (either due to
our own acts or our inadvertence, or due to the acts or inadvertence of others including our partners, agents, subcontractors
or suppliers), we could suffer from criminal or civil penalties or other sanctions, including contract cancellations or
debarment, and loss of reputation, any of which could have a material adverse effect on our business. Litigation or
investigations relating to alleged or suspected violations of anti-bribery laws, even if ultimately such litigation or investigations
demonstrate that we did not violate anti-bribery laws, could be costly and could divert management's attention away from
other aspects of our business.
We could be adversely impacted if we fail to comply with domestic and international import and export laws.
Our global operations require importing and exporting goods and technology across international borders on a regular
basis. Our policies mandate 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 within 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.
Employee, agent or partner misconduct or our overall failure to comply with laws or regulations could weaken our ability to
win contracts, which could result in reduced revenues and profits.
Misconduct, fraud, non-compliance with applicable laws and regulations, or other improper activities by one of our
employees, agents or partners could have a significant negative impact on our business and reputation. Such misconduct
could include the failure to comply with anti-corruption, export control and environmental regulations; federal procurement
regulations, regulations regarding the pricing of labor and other costs in government contracts and regulations regarding the
protection of sensitive government information; regulations on lobbying or similar activities; regulations pertaining to the
internal control over financial reporting; and various other applicable laws or regulations. The precautions we take to prevent
and detect fraud, misconduct or failures to comply with applicable laws and regulations may not be effective, and we could
face unknown risks or losses. Failure to comply with applicable laws or regulations or acts of fraud or misconduct could
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subject us to fines and penalties, loss of security clearance and suspension or debarment from contracting with government
agencies, which could weaken our ability to win contracts and have a material adverse impact on our revenues and profits.
New or changing legal requirements, including those relating to climate change, could adversely affect our operating
results.
Our business and results of operations could be affected by the passage of climate change, defense, environmental,
infrastructure, trade and other laws, policies and regulations. For example, growing concerns about climate change may result
in the imposition of additional environmental regulations. Legislation, international protocols or treaties, regulation or other
restrictions on emissions could affect our clients, including those who (a) are involved in the exploration, production or
refining of fossil fuels such as our energy and chemicals clients, (b) emit greenhouse gases through the combustion of fossil
fuels, or (c) emit greenhouse gases through the mining, manufacture, utilization or production of materials or goods. Such
legislation or restrictions could increase the costs of projects for us and our clients or, in some cases, prevent a project from
going forward, thereby potentially reducing the need for our services, which could in turn have a material adverse effect on
our operations and financial condition. However, legislation and regulation regarding climate change could also increase the
pace of development of carbon capture and storage projects, alternative transportation, alternative energy facilities, such as
wind farms or nuclear reactors, or incentivize increased implementation of clean fuel projects, which could positively impact
the demand for our services. As another example, the implementation of trade barriers, countervailing duties, or border
taxes, or the addition, relaxation or repeal of laws, policies and regulations regarding the industries and sectors in which we
work could result in a decline in demand for our services, or may make the manner in which we perform our services,
especially from outside the United States, less cost efficient. Furthermore, changes to existing trade agreements may impact
our business operations. We cannot predict when or whether any of these various legislative and regulatory proposals may
become law or what their effect will be on us and our clients.
Past and future environmental, safety and health regulations could impose significant additional costs 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, including nuclear and other radioactive materials, which, if
improperly handled or disposed of, could subject us to civil and criminal liabilities. It is impossible to reliably predict the full
nature and effect of judicial, legislative or regulatory developments relating to health and safety regulations and
environmental protection regulations applicable to our operations. The applicable regulations, as well as the length of time
available to comply with those regulations, continue to develop and change. The cost of complying with rulings and
regulations, satisfying any environmental remediation requirements for which we are found responsible, or satisfying claims
or judgments alleging personal injury, property damage or natural resource damages as a result of exposure to, or
contamination by, hazardous materials, including as a result of commodities such as lead or asbestos-related products, could
be substantial, may not be covered by insurance, could reduce our profits, and therefore, could materially impact our future
operations.
Our company, along with our investment in NuScale, is subject to a number of regulations such as those from the U.S.
Nuclear Regulatory Commission and non-U.S. regulatory bodies, such as the International Atomic Energy Commission and the
European Union, which can have a substantial effect on our nuclear operations and investments. Delays in receiving necessary
approvals, permits or licenses, the failure to maintain sufficient compliance programs, and other problems encountered
during construction (including changes to such regulatory requirements) could significantly increase our costs or have an
adverse effect on our results of operations, our return on investments and our financial position.
A substantial portion of our business is generated either directly or indirectly as a result of federal, state, local and
foreign laws and regulations related to environmental matters. A reduction in the number or scope of these laws or
regulations, or changes in government policies regarding the funding, implementation or enforcement of such laws and
regulations, could significantly reduce the size of one of our markets and limit our opportunities for growth or reduce our
revenue below current levels.
Risks Related to Mergers & Acquisitions and Strategic Plans
We cannot assure the successful implementation of our strategic and operational initiatives.
We have announced a number of strategic and operational initiatives designed to optimize costs and improve
operational efficiency, including plans to divest our AMECO and Stork businesses, monetize surplus real estate and non-core
investments, and rationalize resources and overhead across various geographies. Our ability to successfully execute these
initiatives is subject to various risks and uncertainties, including regulatory intervention, which may negatively impact the
realization of expected benefits. Our failure to realize the anticipated benefits, which may be due to our inability to execute,
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competition, economic conditions, and other risks described herein, could have a material adverse effect on our business,
financial condition, and results of operations.
Any acquisitions, dispositions or other investments are subject to various risks or uncertainties and may not be completed in
accordance with the expected plans or anticipated time frame, or at all, and will involve significant time and expense,
which could disrupt or adversely affect our business.
We have made and expect to continue to pursue selective acquisitions or dispositions of businesses, or investments in
strategic business opportunities. We may be unable to locate suitable acquisitions or investments, or we may be unable to
consummate any such transactions on terms and conditions acceptable to us. Acquisitions may bring us into businesses we
have not previously conducted or jurisdictions where we have had little to no prior operations experience and thus expose us
to additional business risks that are different from those we have traditionally experienced. We also may encounter
difficulties identifying all significant risks during our due diligence activities or integrating acquisitions and successfully
managing or achieving the growth we expect to experience from these acquisitions. We may invest in companies or
businesses that fail, causing a loss of all or part of our investment.
Divesting businesses involves risks and uncertainties, such as the difficulty separating assets related to such businesses
from the businesses we retain, employee distraction, the need to obtain regulatory approvals and other third-party consents,
which potentially disrupts customer and vendor relationships, and the fact that we may be subject to additional tax
obligations or loss of certain tax benefits. Such actions also involve significant costs and require time and attention of our
management, which may divert attention from other business operations. Because of these challenges, as well as market
conditions or other factors, anticipated divestitures may take longer or be costlier or generate fewer benefits than expected
and may not be completed at all. If we are unable to complete the divestitures or to successfully transition divested
businesses, our business and financial results could be negatively impacted. If we dispose of a business, we may not be able to
successfully cause a buyer of a divested business to assume the liabilities of that business or, even if such liabilities are
assumed, we may have difficulties enforcing our rights, contractual or otherwise, against the buyer. We may retain exposure
on financial or performance guarantees and other contractual, employment, pension and severance obligations, and potential
liabilities that may arise under law because of the disposition or the subsequent failure of an acquirer. As a result,
performance by the divested businesses or other conditions outside of our control could have a material adverse effect on our
results of operations. In addition, the divestiture of any business could negatively impact our profitability because of losses
that may result from such a sale, the loss of revenues or a decrease in cash flows. Following a divestiture, we may also have
less diversity in our business and in the markets we serve, as well as in our client base.
We may be unable to successfully integrate acquisitions or investments we make into our businesses or capture the
anticipated benefits of these acquisitions and investments.
Whenever we make an acquisition or investment, we have and will continue to devote significant management
attention and resources to integrating or aligning the business practices and operations of companies we acquire or invest in.
Difficulties we may encounter in the integration/alignment process include:
•
•
•
•
•
•
•
A delay in the integration or alignment of management teams, strategies, operations, products and services;
Diversion of the attention of management as a result of the acquisition or investment;
The consequences of a change in tax treatment, including the costs of integration/consolidation and compliance,
and the possibility that the anticipated benefits of the acquisition/investment will not be realized;
Differences in corporate culture and management philosophies;
The ability to retain key personnel;
The challenges of integrating or aligning complex systems, technology, networks and other assets into or to be
compatible with ours in a way that minimizes any adverse effects on the business; and
Potential unknown liabilities and unforeseen increased expenses or delays associated with the acquisition or
investment, including the costs to integrate or consolidate beyond current estimates.
Any of these factors could negatively affect our ability to maintain business relationships or to achieve the anticipated
benefits of the acquisition or investment.
30
Risks Related to our Common Stock
In the event we issue additional equity securities, stockholders' ownership percentages would be diluted.
We may in the future issue additional equity securities to pay for potential acquisitions or to otherwise fund our
corporate initiatives. If we do issue additional equity securities, the issuance may dilute our earnings per share and
stockholders' percentage ownership.
Delaware law, our charter documents and our stockholder rights agreement may impede or discourage a takeover or
change of control.
Fluor is a Delaware corporation. Various anti-takeover provisions under Delaware law impose impediments on the
ability of others to acquire control of us, even if a change of control would be beneficial to our stockholders. In addition,
certain provisions of our charters and bylaws may impede or discourage a takeover. For example:
•
•
•
stockholders may not act by written consent;
there are various restrictions on the ability of a stockholder to call a special meeting or to nominate a director for
election; and
our Board of Directors can authorize the issuance of preferred shares.
These types of provisions in our charters and bylaws could also make it more difficult for a third party to acquire control
of us, even if the acquisition would be beneficial to our stockholders. Accordingly, stockholders may be limited in the ability to
obtain a premium for their shares.
On March 24, 2020, our Board of Directors approved the adoption of a limited duration stockholder rights agreement
and declared a dividend distribution of one preferred share purchase right on each outstanding share of our common stock.
The rights are designed to ensure that all of our stockholders receive fair and equal treatment in the event of any proposed
takeover of the company and to protect against abusive tactics to gain control of the company without paying all stockholders
a premium for that control. The stockholder rights agreement would cause substantial dilution to any person or group that
attempts to acquire us on terms not approved in advance by our Board of Directors and may have the effect of delaying,
discouraging or preventing a change in control that might otherwise be beneficial to stockholders and might adversely affect
the market price of our common stock.
Item 1B. Unresolved Staff Comments
None.
Item 2. Properties
Major Facilities
Our operations are conducted at both owned and leased properties in U.S. and foreign locations totaling approximately
7.9 million rentable square feet. Our executive offices are located at 6700 Las Colinas Boulevard, Irving, Texas. As our business
frequently changes, the extent of utilization of the facilities by particular segments cannot be accurately stated. In addition,
certain of our properties are leased or subleased to third party tenants. While we have operations worldwide, the following
summarizes our more significant existing facilities:
31
Location
United States:
Greenville, South Carolina
Houston (Sugar Land), Texas
Irving, Texas (Corporate Headquarters)
Southern California (Aliso Viejo and Long Beach)
Canada:
Calgary, Alberta
Vancouver, British Columbia
Latin America:
Mexico City, Mexico
Santiago, Chile
Europe, Africa and Middle East:
Al Khobar, Saudi Arabia
Amsterdam, the Netherlands
Farnborough, England
Gliwice, Poland
Johannesburg, South Africa
Utrecht, the Netherlands
Asia/Asia Pacific:
Manila, the Philippines
New Delhi, India
Perth, Australia
Shanghai, China
Interest
Owned
Leased
Owned
Leased
Owned
Leased
Leased
Owned and Leased
Owned
Owned
Owned and Leased
Owned
Leased
Leased
Owned and Leased
Leased
Leased
Leased
In addition, we lease or own a number of individually insignificant offices, warehouses and equipment yards
strategically located throughout the world. We also, through various joint ventures, own or lease fabrication yards in China
and Mexico.
Item 3. Legal Proceedings
As part of our normal business activities, we are party to a number of legal proceedings and other matters in various
stages of development. We periodically assess our liabilities and contingencies for these matters based upon the latest
information available.
For information on legal proceedings and matters in dispute, see the Consolidated Financial Statements in this report.
Item 4. Mine Safety Disclosures
None.
32
PART II
Item 5. Market for Registrant's Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities
Our common stock is traded on the New York Stock Exchange under the symbol "FLR."
Any future cash dividends will depend upon our results of operations, financial condition, cash requirements, availability
of surplus and such other factors as our Board of Directors may deem relevant. See "Item 1A. — Risk Factors."
At January 31, 2021, there were 140,759,346 shares outstanding and 4,244 stockholders of record of the company's
common stock.
Issuer Purchases of Equity Securities
The following table provides information for the three months ended December 31, 2020 about purchases by the
company of equity securities that have been registered pursuant to Section 12 of the Securities Exchange Act of 1934, as
amended (the "Exchange Act").
Period
October 1–October 31, 2020
November 1–November 30, 2020
December 1–December 31, 2020
Total
Total Number
of Shares
Purchased
Average Price
Paid per
Share
Total Number of
Shares Purchased as
Part of Publicly
Announced Plans
or Programs
— $
—
—
— $
—
—
—
—
—
—
—
—
Maximum
Number of
Shares that May
Yet Be Purchased
Under Plans or
Programs(1)
10,513,093
10,513,093
10,513,093
_______________________________________________________________________________
(1) The share repurchase program, as amended, totals 34,000,000 shares. We may repurchase shares from time to time in
open market transactions or privately negotiated transactions, including through pre-arranged trading programs, at our
discretion, subject to market conditions and other factors and at such time and in amounts that we deem appropriate.
Item 7. Management's Discussion and Analysis of Financial Condition and Results of Operations
The following discussion and analysis should be read in conjunction with our financial statements.
Results of Operations
In early 2020, we decided to retain our government business, which had been included in Disc Ops since the third
quarter of 2019. As a result, the government business is no longer reported as a discontinued operation for any period
presented. Our plan to sell the AMECO equipment business remains unchanged and it remains reported as a discontinued
operation. We expect to complete the sale of the AMECO equipment business within the first half of 2021. The assets and
liabilities of the AMECO business are classified as held for sale for all periods presented.
In light of our decision to retain our government business in 2020, we had the following six reportable segments:
Infrastructure & Power
Energy & Chemicals
◦
◦ Mining & Industrial
◦
◦ Government
◦ Diversified Services
◦ Other
Beginning in the first quarter of 2021, we will operate through three business segments: Energy Solutions, Urban
Solutions and Mission Solutions. Energy Solutions will focus on energy transition, chemicals and traditional oil and gas
opportunities. Urban Solutions will focus on mining, metals, advanced technologies, manufacturing, life sciences,
infrastructure and our professional staffing services. Mission Solutions will focus on delivering solutions to federal agencies
across the U.S. government and to select international opportunities. Additionally, we are initiating plans to sell Stork.
During 2019, we approved and initiated a broad restructuring plan designed to optimize costs, improve operational
efficiency and support long-term sustainable growth. These restructuring activities included the rationalization of resources,
investments, real estate and overhead across various geographies. We also met with a number of our clients, subcontractors
33
and suppliers in an attempt to bring resolution to or get clarification on a variety of matters, including outstanding disputes
and claims, pending change orders, schedule extensions, accounts receivable and other project close out items. The
negotiations and agreements resulting from these meetings, as well as project developments during the second quarter,
resulted in the recognition of significant charges across three segments, which are reflected in the results for 2019.
(in millions)
Revenue
Energy & Chemicals
Mining & Industrial
Infrastructure & Power
Government
Diversified Services
Other
Total revenue
Segment profit (loss) $ and margin %
Energy & Chemicals
Mining & Industrial
Infrastructure & Power
Government
Diversified Services
Other
Total segment profit (loss) $ and margin %(1)
Corporate G&A
Impairment, restructuring and other exit costs
Gain (loss) on pension settlement
Interest expense, net
Earnings (loss) attributable to NCI from Cont Ops
Earnings (loss) from Cont Ops before taxes
Less: Income tax expense (benefit)
$
5,260.4
4,149.1
1,595.5
2,922.8
1,630.9
109.8
$ 15,668.5
$
$
163.7
122.4
13.7
88.4
14.2
(85.4)
317.0
(240.7)
(305.6)
0.4
(46.4)
68.3
(207.0)
18.6
YEAR ENDED DECEMBER 31,
2020
2019
2018
$
5,823.7
5,057.2
1,370.4
2,969.3
2,040.1
56.6
$ 17,317.3
$
$
7,695.5
3,491.0
1,668.0
3,678.5
2,257.2
60.8
18,851.0
3.1 % $
2.9 %
0.9 %
3.0 %
0.9 %
NM
2.0 % $
(95.0)
158.5
(243.9)
200.3
14.6
(1.6) % $
3.1 %
(17.8) %
6.7 %
0.7 %
(220.1) NM
(185.6)
(1.1) % $
(165.9)
(532.6)
(137.9)
(18.5)
(31.0)
(1,071.5)
485.2
Net earnings (loss) from Cont Ops
$
(225.6)
$
(1,556.7)
New awards
Energy & Chemicals
Mining & Industrial
Infrastructure & Power
Government
Diversified Services
Other
Total new awards
$
$
2,013.2
2,799.1
763.7
1,882.8
1,546.1
—
9,004.9
$
3,724.1
1,861.9
2,608.7
1,999.2
2,217.2
152.2
$ 12,563.3
New awards related to projects located outside of the U.S.
58%
51%
$
$
$
4.3 %
2.7 %
(1.8) %
5.1 %
3.0 %
NM
2.7 %
334.5
94.3
(30.1)
187.3
68.7
(144.7)
510.0
(121.2)
—
(21.9)
(40.6)
59.4
385.7
173.3
212.4
10,641.4
8,696.1
2,066.0
4,130.3
2,138.5
—
27,672.3
80%
(1) Total segment profit (loss) is a non-GAAP financial measure. We believe that total segment profit (loss) provides a
meaningful perspective on our results as it is the aggregation of individual segment profit (loss) measures that we use to
evaluate and manage our performance.
34
(in millions)
Backlog
Energy & Chemicals
Mining & Industrial
Infrastructure & Power
Government
Diversified Services
Other
Total backlog
Backlog related to projects located outside of the U.S.
Backlog related to lump-sum projects
December 31,
2020
December 31,
2019
$
$
11,020.5
3,979.7
5,244.3
2,780.3
2,425.4
119.2
$
25,569.4
$
14,128.9
5,383.9
6,079.4
3,556.1
2,541.6
244.0
31,933.9
64%
55%
67%
52%
Our business has been adversely affected by the economic impacts of the outbreak of COVID-19 and the steep decline
in oil prices that occurred in the early part of 2020. These events have created significant uncertainty and economic volatility
and disruption, which have impacted and may continue to impact our business. We have experienced, and may continue to
experience, reductions in demand for certain of our services and the delay or abandonment of ongoing or anticipated projects
due to our clients’, suppliers’ and other third parties’ diminished financial condition or financial distress, as well as
governmental budget constraints. Although we initially assessed our project estimates for COVID-19 during the first quarter of
2020, continued isolation of estimated COVID-19 effects became increasingly difficult to measure as 2020 progressed. Our
estimates reflect our best assessment of project results inclusive of COVID-19 effects, which have been dynamic as our
projects have seen changes in prevailing regulations as COVID cases crested and fell. These impacts may continue or worsen
under prolonged stay-at-home, social distancing, travel restrictions and other similar orders or restrictions. Significant
uncertainty still exists concerning the magnitude of the impact and duration of these events.
Because of the foregoing matters, we performed interim impairment testing of our goodwill, intangible assets and
investments. We also evaluated the impact of these events on our reserves for credit risk and the fair value of our assets held
for sale.
During 2020, we recognized the following significant charges:
• $298 million for impairments of goodwill, intangible assets, investments and other assets;
• $60 million for current expected credit losses associated with Energy & Chemicals clients;
• $146 million for impairments of assets held for sale (included in Disc Ops), of which $12 million related to goodwill; as
well as
• Significant forecast revisions for project positions due to COVID-19 related schedule delays and associated cost
growth.
During 2019, we recognized charges (related to cumulative catch up adjustments and loss projects) totaling $839 million
in the Energy & Chemicals, Infrastructure & Power and Other segments. We also recognized $533 million related to
impairments, restructuring and other exit costs. Additionally, we settled the remaining obligations associated with our defined
benefit pension plan in the United Kingdom and recognized a loss on pension settlement of $138 million during 2019. During
2018, we recognized charges totaling $417 million related to projects in the Energy & Chemicals, Infrastructure & Power and
Other segments. These project charges were partially offset by a gain of $125 million from the sale of a joint venture interest
in the United Kingdom. Earnings in 2018 also benefitted from the adoption of ASC 606 which increased earnings before taxes
by $132 million, primarily in the Energy & Chemicals segment.
During 2020, consolidated revenue declined primarily due to volume declines on Energy & Chemicals and Mining &
Industrial projects, many of which were completed or nearing completion. The revenue decline in 2020 was further
compounded by COVID-19 and the decline in oil prices. For example, a large mining project was suspended for six months due
to COVID-19 and the volume of work in the Diversified Services segment significantly declined as turnaround work was
delayed and maintenance scopes reduced. During 2019, consolidated revenue declined primarily due to volume declines on
Energy & Chemicals projects as well as the completion of a power restoration project in Puerto Rico in 2018 and three large
power projects in 2019.
During 2020, total segment profit increased due to the project charges in the Energy & Chemicals, Infrastructure &
Power and Other segments recognized in 2019 (discussed above). The increase in total segment profit in 2020 was diminished
35
by the impact of COVID-19 on numerous projects in 2020. During 2019, total segment profit significantly declined due to the
2019 project charges in the Energy & Chemicals, Infrastructure & Power and Other segments.
The effective tax rate from continuing operations was (9.0%), (45.3%) and 44.9% for 2020, 2019, and 2018, respectively.
The 2020 effective tax rate was favorably impacted by a $125 million benefit due to the utilization of a 2019 net operating loss
carryback as allowed under the CARES ACT enacted on March 27, 2020. This benefit was offset by a $149 million increase in
valuation allowances to reduce deferred tax assets primarily in the U.S. and the Netherlands. The 2019 effective tax rate was
unfavorably impacted by $731 million in charges related to establishing valuation allowances to reduce net deferred tax
assets in the U.S., the U.K. and Australia. The 2018 effective tax rate was unfavorably impacted due to a $79 million increase
in valuation allowances to reduce certain deferred tax assets in the U.S., the Netherlands and Belgium.
Our results reported by foreign subsidiaries with non-U.S. dollar functional currencies are affected by foreign currency
volatility. When the U.S. dollar appreciates against the non-U.S. dollar functional currencies of these subsidiaries, our reported
revenue, cost and earnings, after translation into U.S. dollars, are lower than what they would have been had the U.S. dollar
depreciated against the same foreign currencies or if there had been no change in the exchange rates.
Our margins, in some cases, may be favorably or unfavorably impacted by a change in the amount of materials and
customer-furnished materials, which are accounted for as pass-through costs.
The lack of broad based new awards could continue to put pressure on our future earnings streams, particularly in the
Energy & Chemicals segment. Backlog included $1.8 billion for projects in a loss position as of December 31, 2020. The decline
in backlog during 2020 and 2019 primarily resulted from new award activity being outpaced by work performed. During 2019,
certain suspended contracts associated with our joint venture in Mexico were removed from backlog. Although backlog
reflects business that is considered to be firm, cancellations, deferrals or scope adjustments may occur. Backlog is adjusted to
reflect any known project cancellations, revisions to project scope and cost, foreign currency exchange fluctuations and
project deferrals, as appropriate. Backlog differs from RUPO discussed elsewhere. Backlog includes the amount of revenue we
expect to recognize under ongoing operations and maintenance contracts for the remainder of the current year renewal
period plus up to three additional years if renewal is considered to be probable, while RUPO includes only the amount of
revenue we expect to recognize under ongoing operations and maintenance contracts with definite terms and substantive
termination provisions.
Impairment, Restructuring and Other Exit Costs
During 2019, we initiated a restructuring plan designed to optimize costs and improve operational efficiency. These
efforts primarily relate to the rationalization of resources, investments, real estate and overhead across various geographies,
as well as the liquidation of certain components of the AMECO business that are being excluded from sale. Our planned
restructuring activities were substantially completed by the end of 2020. Restructuring costs totaled $8 million and $240
million during 2020 and 2019, respectively.
Information about our restructuring, which we believe is complete as of December 31, 2020, follows:
(in millions)
Restructuring and other exit costs:
Severance
Asset impairments
Entity liquidation costs (including the recognition of cumulative translation adjustments)
Other exit costs
Total restructuring and other exit costs
Costs
Incurred in
2020
Costs Incurred
in
2019
$
$
6.6 $
0.4
—
1.0
8.0 $
63.9
90.4
83.7
2.0
240.0
36
Impairment expense is summarized as follows:
(in thousands)
Impairment expense:
Year Ended December 31,
2020
2019
Goodwill associated with the Diversified Services reporting unit
$
168,568
$
Intangible customer relationships associated with Stork
Equity method investments in the Energy & Chemicals segment
Information technology assets
Total impairment expense
26,671
86,096
16,269
2,125
33,657
256,769
—
$
297,604
$
292,551
In the first quarter of 2021, we announced a plan to sell Stork. Beginning in the first quarter of 2021, we expect Stork
will be reported as a discontinued operation and the assets and liabilities of Stork will be classified as held for sale. Once
classified as available for sale, Stork's assets will be subjected to a quarterly recoverability analysis.
Segment Operations
We provide professional services in the fields of engineering, procurement, construction, fabrication and
modularization, operations, maintenance and asset integrity, as well as project management services, on a global basis and
serve a diverse set of industries worldwide. We consider charges to include effects that negatively impact a project's gross
margin, including negative adjustments to revenue and recognition of project losses.
Energy & Chemicals
Revenue in 2020 decreased compared to 2019 due to significant declines in the volume of execution activities for
numerous upstream, downstream and chemicals projects nearing completion, partially offset by increased execution activity
for an LNG project in Canada. Revenue in 2019 decreased compared to 2018 due to a significant decline in the volume of
customer-furnished materials and project execution activities, combined with the impact of a lower volume of broad based
new awards. The revenue decline in 2019 was also partially offset by increased execution activity for the LNG project.
Segment profit significantly increased during 2020 despite the adverse impacts of the recognition of reserves totaling
$60 million for expected credit losses associated with certain joint venture clients, as well as margin diminution on a
percentage-of-completion basis resulting from project positions taken with respect to COVID-19 related schedule delays and
associated cost growth. The increase in segment profit during 2020 is primarily the result of charges taken during 2019,
discussed below. Excluding these items, segment profit declined in 2020 due to the reduced execution activity of the
upstream, downstream and chemicals projects discussed above, partially offset by the increase in activity for the LNG project
and a decrease in overhead.
Segment profit in 2019 significantly decreased compared to 2018 as a result of charges taken during 2019 including
$260 million for cost growth on an offshore project, $87 million for cost growth on two downstream projects and scope
reductions on a large upstream project, $26 million for the write-off of pre-contract costs, $26 million on embedded foreign
currency derivatives and $31 million from the resolution of close-out matters. Segment profit in 2018 was adversely impacted
by charges of $133 million for cost growth on a completed, downstream project and $40 million for cost growth on the
aforementioned offshore project.
The changes in segment profit margin in 2020 and 2019 were primarily attributable to the same factors that affected
revenue and segment profit. Segment profit margin in 2020 was also adversely impacted by a shift from higher margin work in
2019 to lower margin work in 2020 in certain geographies.
No significant awards were booked in 2020 due to the impact of COVID-19 and declining oil prices on our customers'
capital spend. New awards in 2019 included a downstream project in the United Kingdom as well as chemicals projects in
China, India and on the U.S. gulf coast. New awards in 2018 included an LNG export facility in Canada as well as an
engineering and procurement contract for a refinery in Texas.
The decline in backlog during 2020 resulted from the decline in new award activity and the de-recognition of a
suspended downstream project. The decrease in backlog during 2019 resulted primarily from new award activity being
outpaced by work performed as well as the removal of certain contracts associated with our joint venture in Mexico that were
suspended during 2019.
We expect our Energy & Chemicals segment to benefit from opportunities in the chemicals and non-traditional oil and
gas markets.
37
Mining & Industrial
Revenue decreased in 2020 compared to 2019 primarily due to a six month suspension during 2020 of a large mining
project in South America due to COVID-19 and a decline in the volume of execution activities for a large life sciences project
and two mining projects completed or nearing completion. These revenue declines were partially offset by increased
execution activities on two advanced technologies projects as well as a mining project and a metals project, both in North
America. Revenue increased in 2019 compared to 2018 primarily due to increased execution activities for several large mining
projects as well as ramping up construction activity on the two advanced technologies projects.
Segment profit declined in 2020 compared to 2019 primarily due to a gain of $31 million recognized in 2019 resulting
from a favorable resolution of a longstanding customer dispute on a mining project. Segment profit in 2020 was also adversely
impacted by the decline in activity for the life sciences project and mining projects nearing completion as well as the mining
project in South America that was impacted by COVID-19. The decrease in segment profit in 2020 was partially offset by a
reduction in overhead expenses. Segment profit in 2019 increased compared to 2018 due to the increased volume of
execution activities for the large mining projects and the two advanced technologies projects that drove the increase in
revenue as well as the favorable resolution of the customer dispute. The decline in segment profit margin in 2020 and the
increase in segment profit margin in 2019 was primarily the result of the favorable resolution of the customer dispute in 2019.
New awards in 2020 included a significant North American steel project as well as several front-end studies that we
believe positions the segment well for follow-on EPC awards. New awards in 2019 included an advanced manufacturing
project in the Netherlands. New awards in 2018 included a copper project in Peru, an iron ore replacement mine in Australia
and a mine expansion project in Peru. The decrease in backlog during 2020 and 2019 primarily resulted from work performed
outpacing new award activity.
We expect our mining business line to benefit from the growing global demand for copper and our advanced
technologies and life sciences business line to benefit from the increasing demand for data storage facilities and biological
facilities.
Infrastructure & Power
Revenue in 2020 increased compared to 2019 primarily driven by an increase in execution activities for several
infrastructure projects, including a year-over-year increase on a rail project which was canceled in the third quarter of 2020.
The increase in revenue during 2020 was partially offset by a decrease in execution activities for several infrastructure
projects nearing completion. Revenue in 2019 decreased compared to 2018 primarily due to the substantial completion of the
three large power projects during 2019. This decline was partially offset by increased project execution activities on several
infrastructure projects. Revenue also reflects the adverse impact of various forecast revisions discussed below.
Segment profit in 2020 significantly improved compared to 2019 primarily due to forecast revisions on several power
and infrastructure projects recognized in 2019 (discussed below). A positive settlement on a canceled rail project in 2020 was
offset by charges for cost growth in the infrastructure legacy portfolio. Segment profit in 2019 significantly decreased
compared to 2018 due to charges of $135 million for the settlement of client disputes and cost growth on certain close-out
matters for the three power projects discussed above and $133 million resulting from late engineering changes, schedule-
driven cost growth and negotiations with clients and subcontractors on pending change orders for several infrastructure
projects. Segment profit in 2018 included $188 million in charges on one of the aforementioned power projects as a result of
cost growth and a $125 million gain associated with the sale of a joint venture interest in the United Kingdom. The changes in
segment profit margin in 2020 and 2019 were primarily attributable to the same factors impacting segment profit in those
years. Lower margin contributions from certain infrastructure projects for which charges were recognized during 2020 and
2019 may continue to adversely impact near term segment profit margin. We expect approximately 35% of the segment's
revenue in 2021 will be generated from zero margin projects as of December 31, 2020.
New awards in 2020 included a highway project in Texas. New awards in 2019 included a road project in Texas and a rail
project in Chicago. New awards in 2018 included an international bridge project and the LAX Automated People Mover
project.
The decrease in backlog during 2020 was primarily due to a decline in new award activity in part driven by more
selectivity in pursuing projects as well as delayed procurements. The decrease in backlog during 2019 was primarily due to
work performed and project cancellations outpacing new award activity. Backlog included $1.5 billion for projects in a loss
position as of December 31, 2020.
We believe our infrastructure business is well positioned for select opportunities in the U.S. due to urbanization and an
aging infrastructure system. These opportunities may be enhanced with the introduction of a federal infrastructure spending
bill.
38
Government
Revenue in 2020 decreased compared to 2019 primarily due to the completion of a nuclear decommissioning project in
2019 as well a decline in work performed for FEMA. The decrease in 2020 revenue was further driven by the recognition of
service fee revenue in 2019 upon the favorable settlement of project claims on two cancelled nuclear power projects in the
U.S. The decline in revenue in 2020 was partially offset by increased project execution activities at the Strategic Petroleum
Reserve as well as our DOE sites. Revenue in 2019 decreased compared to 2018 substantially driven by the completion of a
power restoration project in Puerto Rico in 2018 as well as a decrease in project execution activities for a logistics assistance
program in Afghanistan, partially offset by an increase in execution activities at the Savannah River DOE site and the
favorable settlement of the two nuclear power plant projects in 2019.
The decrease in segment profit in 2020 was substantially driven by the favorable settlement of the two nuclear power
plant projects in 2019 as well as the completion of the nuclear decommissioning project in 2019 and the decline in FEMA work
in 2020. Segment profit in 2020 was also adversely impacted by COVID-19, particularly as it relates to estimated fee recoveries
on certain projects. The increase in segment profit in 2019 was due to the favorable settlement of the two nuclear power
plant projects. The changes in segment profit margin in 2020 and 2019 were primarily attributable to the same factors that
affected revenue and segment profit.
New awards in 2020, 2019 and 2018 included one-year extensions of the logistics assistance contract in Afghanistan and
the Savannah River environmental management contract. New awards in 2018 also included a five-year extension of the
Strategic Petroleum Reserve contract and a thirty-month extension at the Portsmouth Gaseous Diffusion Plant site.
The decline in backlog during 2020 and 2019 resulted from new award activity being outpaced by work performed.
Backlog included $1.0 billion and $1.9 billion of unfunded government contracts as of December 31, 2020 and 2019,
respectively.
Diversified Services
As discussed elsewhere, most of the operating results of our AMECO equipment business are included in Disc Ops. The
retained portion of the AMECO operations have been or are in the process of being liquidated but do not meet the
qualifications of Disc Ops. These retained operations remain in the Diversified Services segment.
Revenue in 2020 decreased compared to 2019 primarily due to the impact of COVID-19 and declining oil prices resulting
in lower volumes in the Stork business and the staffing business as turnaround work is delayed and maintenance scopes
reduced. Revenue declines in 2020 were further driven by reduced volume from the winding down of our AMECO operations
in Mexico. Revenue in 2019 decreased compared to 2018 primarily due to lower volumes in the Stork business in Europe, the
cancellation of a large operations and maintenance project in North America in 2018 and scope reductions on a maintenance
project in Australia. The decline in 2019 revenue was further driven by scope reductions on a large power services project in
the U.S. and lower volumes at the AMECO equipment business in Mexico. The revenue declines in 2019 were partially offset
by higher contributions from the staffing business in North America and Europe.
Segment profit in 2020 remained flat compared to 2019. The lower volumes in the Stork business and the staffing
business were offset by a reduction in expenses related to close out activities at our AMECO operations in Mexico as well as a
reduction in overhead costs. Segment profit in 2019 decreased compared to 2018 primarily driven by the above mentioned
reduced volumes in the operations and maintenance business, including higher margin specialty services, and the closure of
the AMECO equipment business in Mexico. The decline in segment profit in 2019 was further driven by charges related to
negotiations with clients and joint venture partners. The declines in segment profit margin in 2020 and 2019 were primarily
due to the same factors affecting segment profit.
The decrease in backlog during 2020 was primarily due to the postponement of new maintenance work due to COVID-19
and the decline in oil prices. The increase in backlog during 2019 was primarily due to a large award for the power services
business. Our equipment and staffing businesses do not report backlog or new awards.
Other
Other includes the operations of NuScale, as well as two lump-sum projects including a plant for which we serve as a
subcontractor to a commercial client (the "Radford" project) and a weapons storage and maintenance facility (the "Warren"
project). The Radford and Warren projects continue to project losses as of December 31, 2020.
Revenue in 2020 increased compared to 2019 due to increased execution activities for both the Radford and Warren
projects.
39
Segment loss in 2020 improved due to the recognition of significant charges on the Radford and Warren projects in
2019. Forecast revisions in 2019 resulted in charges of $59 million on the Warren project and $83 million on the Radford
project for various engineering and cost growth associated with the facilities. Segment loss in 2018 of $56 million was driven
by forecast revisions on the Radford project. Our forecast for both projects is based upon our assessment of the probable cost
to finish the projects as well as our assessment of the recovery of unapproved change orders. The Radford project is
substantially complete with systems turnover to the client expected in the first quarter of 2021.
NuScale expenses, net of qualified reimbursable expenses, included in the determination of segment loss, were $84
million, $66 million and $74 million during 2020, 2019 and 2018, respectively. The increase in NuScale costs during 2020 was
due to an increase in research and development activities as NuScale received final design certification by the U.S. Nuclear
Regulatory Commission in August of 2020. Capital contributions by NuScale's NCI holders of $9 million, $49 million and $2
million during 2020, 2019 and 2018, respectively, reduced the need for additional funding from Fluor.
Corporate and Other Matters
(in millions)
Corporate G&A
Compensation
Foreign currency (gains) losses
Legal and accounting fees associated with the 2020 internal review
Other
Corporate G&A
YEAR ENDED DECEMBER 31
2020
2019
2018
$
$
121.7
46.8
42.0
30.2
240.7
$
$
87.1
26.5
—
52.3
165.9
$
$
115.3
(33.4)
—
39.3
121.2
The increase in compensation expense in 2020 was primarily due to higher stock price driven compensation, as our
stock price increased from the date of grant to the end of the year. The decrease in compensation expense in 2019 was
primarily due to lower stock price and performance driven compensation. During 2020 and 2019, most major foreign
currencies strengthened against the U.S. dollar resulting in foreign currency exchange losses. In 2018, most major foreign
currencies weakened against the U.S. dollar resulting in foreign currency exchange gains. The decrease in other expense in
2020 was driven by the realization of our restructuring efforts and lower travel costs due to COVID-19.
The increase in net interest expense during 2020 was primarily attributable to a decrease in interest income driven by
lower interest rates in 2020. The decrease in net interest expense during 2019 was primarily attributable to an increase in
interest income from time deposits in 2019 as well as a payment made in 2018 for a "make-whole" premium associated with
the redemption of the 2021 Notes.
Critical Accounting Policies and Estimates
Our discussion and analysis of our financial condition and results of operations is based upon our financial statements,
which have been prepared in accordance with accounting principles generally accepted in the United States. Our significant
accounting policies are described in the notes to our financial statements. The preparation of our financial statements
requires management to make estimates and judgments that affect the reported amounts of assets, liabilities, revenue and
expenses, and related disclosure of contingent assets and liabilities. Estimates are based on information available through the
date of the issuance of the financial statements and, accordingly, actual results in future periods could differ from these
estimates. Significant judgments and estimates used in the preparation of our financial statements apply to the following
critical accounting policies:
Revenue Recognition for Long-Term Contracts. We recognize our engineering and construction contract revenue over
time as we provide services to satisfy our performance obligations. We generally use the cost-to-cost percentage-of-
completion measure of progress as it best depicts how control transfers to our clients. The cost-to-cost approach measures
progress towards completion based on the ratio of contract cost incurred to date compared to total estimated contract cost.
Use of the cost-to-cost measure of progress requires us to prepare estimates of total expected revenue and cost to complete
our projects.
40
Due to the nature of our industry, there is significant complexity in our estimation of total expected revenue and cost,
for which we must make significant judgments. Our contracts with our customers may contain award fees, incentive fees,
liquidated damages or other provisions that can either increase or decrease the contract price to arrive at estimated revenue.
These variable amounts generally are awarded upon achievement of certain performance metrics, program milestones or cost
targets and can be based upon customer discretion. We estimate variable consideration at the most likely amount to which
we expect to be entitled. We include estimated amounts in the transaction price to the extent it is probable we will realize
that amount. Our estimates of variable consideration and our determination of its inclusion in project revenue for accounting
purposes are based on an assessment of our anticipated performance and other information that may be available to us.
At a project level, we have specific practices and procedures to review our estimate of total revenue and cost. Each
project team reviews the progress and execution of our performance obligations, which impact the project’s accounting
outcome. As part of this process, the project team reviews information such as any outstanding key contract matters,
progress towards completion and the related program schedule and identified risks and opportunities. The accuracy of our
revenue and profit recognition in a given period depends on the accuracy of our project estimates, which can change from
period to period for factors such as:
• Complexity in original design;
• Extent of changes from original design;
• Different site conditions than assumed in our bid;
• The productivity, availability and skill level of labor;
• Weather conditions when executing a project;
• The technical maturity of the technologies involved;
• Length of time to complete the project;
• Availability and cost of equipment and materials;
• Subcontractor and joint venture partner performance;
• Expected costs of warranties; and
• Our ability to recover for additional contract costs.
We recognize changes in contract estimates on a cumulative catch-up basis in the period in which the changes are
identified. Such changes in contract estimates can result in the recognition of revenue in a current period for performance
obligations which were satisfied or partially satisfied in prior periods. Changes in contract estimates may also result in the
reversal of previously recognized revenue if the current estimate adversely differs from the previous estimate. If we estimate
that a project will have costs in excess of revenue, we recognize the total loss in the period it is identified.
Variable Consideration. The nature of our contracts gives rise to several types of variable consideration, including
claims, unpriced change orders, award and incentive fees, liquidated damages and penalties. We consider variable
consideration in the development of our project forecasts so that our forecasted revenue reflects the amount of
consideration we expect to be probable of recovering without a future significant reversal. We estimate the amount of
revenue attributable to variable consideration using the expected value method (i.e., the sum of probability-weighted
amounts) or the most likely amount method, whichever offers better prediction. Significant judgments are required in
developing estimates for variable consideration.
Fair Value Measurements. We are often required to use fair value measurement techniques with inputs that require the
use of estimates and involve significant judgment. These circumstances include:
• Goodwill impairment testing of reporting units when quantitative analysis is deemed necessary
• Impairment testing of intangible assets when impairment indicators are present
• Impairment testing of investments as part of other than temporary impairment assessments when impairment
indicators are present
• Fair value assessments of businesses held for sale that are reported at fair value less cost to sell
• Purchase price allocations for acquired businesses
When performing quantitative fair value or impairment evaluations, we estimate the fair value of our assets by
considering the results of either or both income-based and market-based valuation approaches. Under the income approach,
we prepare a discounted cash flow valuation model using recent forecasts and compare the estimated fair value of each asset
to its carrying value. Cash flow forecasts are discounted using the appropriate weighted-average cost of capital at the date of
evaluation. The weighted-average cost of capital is comprised of the cost of equity and the cost of debt with a weighting for
each that reflects our current capital structure. Preparation of long-term forecasts involve significant judgments involving
consideration of our backlog, expected future awards, customer attrition, working capital assumptions, and general market
trends and conditions. Significant changes in these forecasts or any valuation assumptions, such as the discount rate selected,
could affect the estimated fair value of our assets and could result in impairment expenses. Under the market approach, we
41
consider market information such as multiples of comparable publicly traded companies and/or completed sales transactions
to develop or validate our fair value conclusions, when appropriate and available.
Due to the impact of COVID-19 and the decline in oil prices in 2020, we performed interim impairment testing of our
goodwill, intangibles and certain other investments and recognized impairment expenses during the first quarter of 2020 of
$169 million, $27 million and $86 million, respectively. All other factors being equal, a one hundred basis point change in the
discount rates used in these valuations would change the fair value of these assets by $47 million, $2 million and $3 million,
respectively.
During the third quarter of 2019, we performed quantitative testing of our goodwill, intangibles and other investments.
The majority of our goodwill resides in our Diversified Services reporting unit. Based on the testing performed, the fair value
of the Diversified Services reporting unit exceeded its carrying value, including goodwill, by 20%. All other factors being equal,
a one hundred basis point increase in the discount rate used in the valuation would have resulted in its fair value exceeding its
carrying value by 7%. During the third quarter of 2019, we recognized impairment charges of $257 million related to certain
investments and $34 million related to customer relationship intangible assets. All other factors being equal, a one hundred
basis point change in the discount rates used in these valuations would have affected these impairments by $20 million and
$4 million, respectively.
Restructuring Accruals. We recognize and accrue restructuring related termination benefits when the recognition
criteria under GAAP have been met, depending on the nature of the termination benefit. Recognition of termination benefits
requires the use of estimates in determining the expected termination benefits payable, when they are probable of being
realized and can be reasonably estimated. Our estimates consider the number of employees that we expect will be eligible to
receive the benefit and the amount of benefit potentially payable to each employee based on either the terms of the plan or
statutory entitlement.
Recent Accounting Pronouncements
Item is described more fully in the Notes to Financial Statements.
Litigation and Matters in Dispute Resolution
Item is described more fully in the Notes to Financial Statements.
LIQUIDITY AND FINANCIAL CONDITION
Our liquidity is provided by available cash and cash equivalents and marketable securities, cash generated from
operations, capacity under our credit facility and, when necessary, access to the capital markets. We have both committed
and uncommitted lines of credit available for revolving loans and letters of credit. We believe that for at least the next
12 months, cash generated from operations, along with our unused credit capacity and cash position, is sufficient to support
operating requirements. However, we regularly review our sources and uses of liquidity and may pursue opportunities to
increase our liquidity position.
In February 2021, we entered into an amended and restated $1.65 billion credit facility which matures in February 2023
and replaces the now terminated $1.7 billion and $1.8 billion Revolving Loan and Letter of Credit Facilities. The amended
credit facility contains customary financial and restrictive covenants, including a debt-to-capitalization ratio that cannot
exceed 0.65 to 1.00, a limitation on the aggregate amount of debt of the greater of $750 million or €750 million for our
subsidiaries, and a minimum liquidity threshold, as defined in the amended credit facility, of $1.5 billion which may be
reduced to $1.25 billion upon the repayment of debt. If the amended credit facility had been in place as of December 31,
2020, our financial covenants would have limited our further borrowings to approximately $934 million. If there are future
losses, the amount of available credit capacity under our committed facility may be further reduced.
As of December 31, 2020, letters of credit totaling $418 million were outstanding under our predecessor lines of credit.
There were no borrowings outstanding under these facilities as of December 31, 2020. These credit facilities also contained
customary financial and restrictive covenants, including a debt-to-capitalization ratio that could not exceed 0.6 to 1.0.
Cash and cash equivalents combined with marketable securities were $2.2 billion as of December 31, 2020 and $2.0
billion as of December 31, 2019. Cash and cash equivalents are held in numerous accounts throughout the world to fund our
global project execution activities. Non-U.S. cash and cash equivalents amounted to $984 million and $944 million as of
December 31, 2020 and 2019, respectively. Non-U.S. cash and cash equivalents exclude deposits of U.S. legal entities that are
either swept into overnight, offshore accounts or invested in offshore, short-term time deposits, to which there is
unrestricted access.
42
In evaluating our liquidity needs, we consider cash and cash equivalents held by our consolidated variable interest
entities (joint ventures and partnerships). These amounts (which totaled $655 million and $393 million as of December 31,
2020 and 2019, respectively) were not necessarily readily available for general purposes. We also consider the extent to which
client advances (which totaled $125 million and $69 million as of December 31, 2020 and 2019, respectively) are likely to be
sustained or consumed over the near term for project execution activities and the cash flow requirements of our various
foreign operations. In some cases, it may not be financially efficient to move cash and cash equivalents between countries
due to statutory dividend limitations and/or adverse tax consequences. We did not consider any cash to be permanently
reinvested outside the U.S. as of December 31, 2020 and 2019, other than unremitted earnings required to meet our working
capital and long-term investment needs in non-U.S. foreign jurisdictions where we operate.
(in thousands)
OPERATING CASH FLOW
INVESTING CASH FLOW
Proceeds from sales and maturities (purchases) of marketable securities
Capital expenditures
Proceeds from sales of property, plant and equipment
Proceeds from sales of businesses and investments
Investments in partnerships and joint ventures
Other
Investing cash flow
FINANCING CASH FLOW
Repurchase of common stock
Dividends paid
Proceeds from issuance of Senior Notes
Repayment of 2021 Senior Notes
Distributions paid to NCI
Capital contributions by NCI
Other
Financing cash flow
Effect of exchange rate changes on cash
Increase (decrease) in cash and cash equivalents
Cash and cash equivalents at beginning of year
Cash and cash equivalents at end of year
Cash paid during the year for:
Interest
Income taxes (net of refunds)
Operating Activities
Year Ended December 31,
2020
$ 185,884
2019
$ 219,018
2018
$ 162,164
(15,430)
(113,442)
62,692
48,897
(29,219)
4,940
(41,562)
—
(28,720)
—
—
(23,184)
110,051
(9,701)
48,446
207,374
(180,842)
65,977
—
(52,305)
40,268
80,472
—
(118,073)
—
—
(33,674)
64,646
9,802
(77,299)
57,591
(210,998)
81,038
124,942
(73,145)
21,955
1,383
(50,022)
(118,734)
598,722
(503,285)
(63,523)
5,128
(8,777)
(140,491)
8,814
201,582
1,997,199
$ 2,198,781
10,262
232,453
1,764,746
$ 1,997,199
(62,385)
(39,329)
1,804,075
$ 1,764,746
$ 65,641
65,188
$ 71,938
204,080
$ 66,514
(28,408)
Cash flows from operating activities result primarily from our EPC activities and are affected by changes in working
capital associated with such activities. Working capital levels vary from period to period and are primarily affected by our
volume of work and the billing schedules on our projects. These levels are also impacted by the stage of completion and
commercial terms of engineering and construction projects, as well as our execution of our projects compared to their
budget. Working capital requirements also vary by project and the payments terms agreed to with our clients, vendors and
subcontractors. Most contracts require payments as the projects progress. Additionally, certain projects receive advance
payments from clients. A typical trend for our projects is to have higher cash balances during the initial phases of execution
due to deposits paid to us which then diminish toward the end of the construction phase. As a result, our cash position is
reduced as customer advances are utilized, unless they are replaced by advances on other projects. We maintain cash
reserves and borrowing facilities to provide additional working capital in the event that a project’s net operating cash
outflows exceed its available cash balances.
43
During 2020, consolidated working capital decreased. Specific factors related to the change in working capital include:
• Decreases in accounts receivable which resulted from normal billing and collections for several projects in the
Infrastructure & Power, Government and Diversified Services segments.
• Decreases in contract assets which resulted from normal project execution activities for several projects in the
Energy & Chemicals, Mining & Industrial, and Diversified Services segments.
During 2019, working capital significantly decreased. Specific factors related to the change in working capital include:
• Decreases in accounts receivable which resulted primarily from normal billing and collections for several projects in
the Mining & Industrial segment as well as the LOGCAP IV program in Afghanistan.
• Decreases in contract assets which resulted primarily from normal project execution activities for several projects in
the Energy & Chemicals, Infrastructure & Power and Government segments.
Excluding the non-cash impact of adopting ASC 606, working capital increased during 2018. Specific factors related to
the change in working capital include:
• Increases in contract assets which resulted primarily from normal project execution activities on a large mining
project and several infrastructure projects, partially offset by decreases in contract assets on several Energy &
Chemicals projects.
• A decrease in contract liabilities in the Energy & Chemicals segment, which resulted primarily from normal project
execution activities on several large projects.
• An increase in accounts payable in the Mining & Industrial segment, which resulted from normal invoicing activities
on a large mining project.
• A decrease in other current assets, driven primarily by the receipt of income tax refunds in 2018.
The decrease in operating cash flow in 2020 and the increase in operating cash flow in 2019 resulted primarily from
changes in working capital balances.
During the fourth quarter of 2020, we entered into a settlement agreement with a client in connection with a dispute
over client-imposed delays and cost overruns on a cancelled rail project in Maryland. We received an initial settlement
payment of $116 million in December 2020 and we are contractually owed an additional $150 million to be paid no later than
December 2021.
During 2020, we paid approximately $40 million in legal and accounting fees associated with the internal review that
was completed in December 2020.
We contributed $130 million, $115 million and $150 million into our DC plans during 2020, 2019 and 2018, respectively,
and $25 million, $15 million and $45 million into our DB plans during 2020, 2019 and 2018, respectively. We expect to
contribute up to $12 million to our DB plans in 2021, which is expected to be in excess of the minimum funding required.
All periods 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. NuScale expenses included in the
determination of segment profit were $84 million, $66 million and $74 million during 2020, 2019 and 2018, respectively.
NuScale expenses for 2020, 2019 and 2018 were reported net of qualified reimbursable expenses of $71 million, $56 million
and $62 million, respectively. Capital contributions by NuScale's NCI holders of $9 million, $49 million and $2 million during
2020, 2019 and 2018, respectively, reduced the need for additional funding from Fluor.
Investing Activities
We hold cash in bank deposits and marketable securities which are governed by our investment policy. This policy
focuses on, in order of priority, the preservation of capital, maintenance of liquidity and maximization of yield. These
investments may include money market funds, bank deposits placed with highly-rated financial institutions, repurchase
agreements that are fully collateralized by U.S. Government-related securities, high-grade commercial paper and high quality
short-term and medium-term fixed income securities.
44
Capital expenditures are primarily related to construction equipment associated with equipment operations now
included in Disc Ops, as well as expenditures for facilities and investments in information technology. Proceeds from the
disposal of property, plant and equipment are primarily related to the disposal of construction equipment associated with the
equipment business in Disc Ops.
During 2020, we sold substantially all of the assets of our AMECO equipment business in Jamaica as well as 100% of our
interest in an equipment rental business in Europe. The operations of the AMECO business in Jamaica were included in Disc
Ops through the date of sale. Also in 2020, we sold our interests in two infrastructure joint ventures in the Netherlands that
are currently in the operations and maintenance phase of the contract and one infrastructure joint venture in the U.S. In
2018, we sold our interest in a joint venture in the United Kingdom.
Investments in unconsolidated partnerships and joint ventures in 2020 and 2019 included capital contributions to two
infrastructure joint ventures in the United States. Investments in 2018 included capital contributions to an infrastructure joint
venture in the United States as well as investments in COOEC Fluor. We completed our final funding commitment to COOEC
Fluor of $26 million during 2021.
Financing Activities
We have a common stock repurchase program, authorized by the Board of Directors, to purchase shares in the open
market or privately negotiated transactions at our discretion. In 2018, we repurchased 1,097,126 shares of common stock
under our current and previously authorized stock repurchase programs. As of December 31, 2020, 10,513,093 shares could
still be purchased under the existing stock repurchase program.
Quarterly cash dividends were typically paid during the month following the quarter in which they were declared.
Therefore, dividends declared in the fourth quarter of 2019 were paid in the first quarter of 2020. Quarterly cash dividends of
$0.21 per share were declared in 2018 and in the first, second and third quarters of 2019. Quarterly cash dividends
of $0.10 per share were declared in the fourth quarter of 2019. We suspended our dividend during April 2020. The
payment and level of future cash dividends is subject to the discretion of our Board of Directors.
In August 2018, we issued $600 million of 4.250% Senior Notes (the “2028 Notes”) due September 15, 2028 and received
proceeds of $595 million, net of underwriting discounts. Interest on the 2028 Notes is payable semi-annually on March 15 and
September 15 of each year, beginning on March 15, 2019.
In September 2018, we used a portion of the proceeds from the 2028 Notes to fully redeem our $500 million 3.375%
Senior Notes (the “2021 Notes”) due September 15, 2021. The redemption price of $503 million was equal to 100 percent of
the principal amount of the 2011 Notes plus a “make-whole” premium of $3 million.
Other borrowings represent short-term bank loans and other financing arrangements associated with Stork. During the
second and third quarters of 2018, we issued commercial paper to meet our short-term liquidity needs. All of the outstanding
commercial paper was repaid in October 2018.
Distributions paid to holders of NCI represent cash outflows to partners of consolidated partnerships or joint ventures
created primarily for the execution of single contracts or projects. Distributions in 2020 and 2019 primarily related to a mining
joint venture project in Chile. Distributions in 2018 primarily related to transportation joint venture projects in the United
States. Capital contributions by NCI in 2020 related to three infrastructure joint ventures in the United States. Capital
contributions by NCI in 2019 primarily related to initial investments from new partners in NuScale.
Effect of Exchange Rate Changes on Cash
During 2019, most major foreign currencies strengthened against the U.S. dollar resulting in unrealized translation gains
of $101 million of which $10 million related to cash held by foreign subsidiaries. During 2018, most major foreign currencies
weakened against the U.S. dollar resulting in unrealized translation losses of $117 million of which $62 million related to cash
held by foreign subsidiaries. The cash held in foreign currencies will primarily be used for project-related expenditures in
those currencies, and therefore our exposure to exchange gains and losses is generally mitigated.
Off-Balance Sheet Arrangements
Letters of Credit
As of December 31, 2020, letters of credit totaling $418 million were outstanding under committed lines of credit and
letters of credit totaling $862 million were outstanding under uncommitted lines of credit. Letters of credit are provided in the
ordinary course of business primarily to indemnify our clients if we fail to perform our obligations under our contracts. Surety
bonds may be used as an alternative to letters of credit.
45
Guarantees
In the ordinary course of business, we enter into various agreements providing performance assurances and guarantees
to our clients. These agreements are entered into primarily to support project execution commitments. The performance
guarantees have various expiration dates ranging from mechanical completion of the project to a period extending beyond
contract completion. The maximum potential amount of future payments that we could be required to make under
outstanding performance guarantees, which represents the remaining cost of work to be performed, was estimated to be
$14 billion as of December 31, 2020. Amounts that may be required to be paid in excess of estimated cost to complete
contracts in progress are not estimable. For cost reimbursable contracts, amounts that may become payable pursuant to
guarantee provisions are normally recoverable from the client for work performed. For lump-sum contracts, the performance
guarantee amount is the cost to complete the contracted work, less amounts remaining to be billed to the client under the
contract. Remaining billable amounts could be greater or less than the cost to complete. In those cases where costs exceed
the remaining amounts payable under the contract, we may have recourse to third parties, such as owners, co-venturers,
subcontractors or vendors for claims. The performance guarantee obligation was not material as of December 31, 2020 and
2019.
Financial guarantees, made in the ordinary course of business in certain limited circumstances, are entered into with
financial institutions and other credit grantors and generally obligate us to make payment in the event of a default by the
borrower. These arrangements generally require the borrower to pledge collateral to support the fulfillment of the
borrower’s obligation.
Inflation
Although inflation and cost trends affect our results, we mitigate these trends by seeking to fix our cost at or soon after
the time of award on lump-sum or fixed-price contracts or to recover cost increases in cost reimbursable contracts.
Variable Interest Entities
We frequently form joint ventures or partnerships with others primarily for the execution of single contracts or projects.
We assess our joint ventures and partnerships at inception to determine if any meet the qualifications of a VIE as defined in
GAAP. If a joint venture or partnership is a VIE and we are the primary beneficiary, the joint venture or partnership is
consolidated and our partners' interests are recognized as NCI. Additional discussion of our VIEs may be found in the Notes to
the Consolidated Financial Statements.
Item 7A.
Quantitative and Qualitative Disclosures about Market Risk
Cash and marketable securities are deposited with major banks throughout the world. Such deposits are placed with
high quality institutions and the amounts invested in any single institution are limited to the extent possible in order to
minimize concentration of counterparty credit risk. Marketable securities may consist of time deposits, registered money
market funds, U.S. agency securities, U.S. Treasury securities, commercial paper, non-U.S. government securities and
corporate debt securities. We have not incurred any credit risk losses related to deposits in cash or investments in marketable
securities.
Certain of our contracts are subject to foreign currency risk. We limit exposure to foreign currency fluctuations in most
of our engineering and construction contracts through provisions that require client payments in currencies corresponding to
the currency in which cost is incurred. As a result, we generally do not need to hedge foreign currency cash flows for contract
work performed. However, in cases where revenue and expenses are not denominated in the same currency, we may hedge
our exposure, if material and if an efficient market exists, as discussed below.
We utilize derivative instruments to mitigate certain financial exposures, including currency and oil price risk associated
with engineering and construction contracts, currency risk associated with monetary assets and liabilities denominated in
nonfunctional currencies and risk associated with interest rate volatility. As of December 31, 2020, we had total gross notional
amounts of $977 million of foreign currency contracts (primarily related to the Canadian Dollar, Chinese Yuan, British Pound,
Euro, Indian Rupee and Philippine Peso) and $28 million of commodity contracts. The foreign currency and commodity
contracts are of varying duration, none of which extend beyond December 2024. Our historical gains and losses associated
with foreign currency contracts have typically been immaterial, and have largely mitigated the exposures being hedged. We
do not enter into derivative transactions for speculative purposes.
Our results reported by foreign subsidiaries with non-U.S. dollar functional currencies are also affected by foreign
currency volatility. When the U.S. dollar appreciates against the non-U.S. dollar functional currencies of these subsidiaries, our
reported revenue, cost and earnings, after translation into U.S. dollars, are lower than what they would have been had the
U.S. dollar depreciated against the same foreign currencies or if there had been no change in the exchange rates.
46
Our long-term debt obligations typically carry a fixed-rate coupon, and therefore, our exposure to interest rate risk is
not material.
Item 8.
Financial Statements and Supplementary Data
The information required by this Item is submitted as a separate section of this Form 10-K as described in Item 15.
Item 9.
Changes in and Disagreements with Accountants on Accounting and Financial Disclosure
None.
Item 9A. Controls and Procedures
Evaluation of Disclosure Controls and Procedures
As defined in Rule 13a-15 and 15d-15 of the Exchange Act, our management, with the participation of our CEO and CFO,
is responsible for establishing and maintaining disclosure controls and procedures. These controls and procedures should be
designed to provide reasonable assurance that information required to be disclosed by us in reports we file or submit under
the Exchange Act is recorded, processed, summarized and reported within the time periods specified in the rules and forms of
the SEC, and that the information required to be disclosed by us in reports that we file or submit under the Exchange Act is
accumulated and communicated to our management, including the CEO and CFO to allow timely decisions regarding required
disclosure.
Based on their evaluation, our CEO and CFO have concluded that our disclosure controls and procedures were effective
as of December 31, 2020.
Management's Report on Internal Control over Financial Reporting
Our management is responsible for establishing and maintaining adequate ICFR that is designed to provide reasonable
assurance regarding the reliability of financial reporting and the preparation of financial statements in accordance with GAAP.
Our management, including our CEO and CFO, conducted an assessment of the effectiveness of our ICFR as of
December 31, 2020 based upon the framework issued by the Committee of Sponsoring Organizations of the Treadway
Commission (COSO 2013) and concluded that our ICFR was effective.
Ernst & Young LLP, our independent registered public accounting firm, has issued an attestation report on the
effectiveness of our ICFR. Their report follows this management report.
Changes in Internal Control over Financial Reporting
As disclosed in Part II, Item 9A. Controls and Procedures in our 2019 10-K, we concluded that our disclosure controls and
procedures were not effective as of December 31, 2019 due to the existence of material weakness in our ICFR. Material
weakness describes a deficiency, or combination of deficiencies, in ICFR, such that there is a reasonable possibility that a
material misstatement of our annual or interim financial statements would not be prevented or detected on a timely basis.
During 2020, management implemented several remediations to address the material weakness by:
•
•
•
•
Taking personnel actions, including separations, for individuals involved in projects associated with the material
weaknesses
Establishing additional monitoring procedures to help ensure that our policies and procedures are consistently
followed at the project level, including enhanced requirements for business line approval and supporting
documentation
Reinforcing existing policies, including those policies that are critical to the generation of accounting information, to
provide further assurance that the financial statements are subject to additional project-level controls; and
Conducting expanded training on ethical behavior and internal certification processes.
Except for the changes made in connection with our implementation of the remediation efforts discussed above, there
have been no changes in our ICFR during the fourth quarter of 2020 that have materially affected, or are reasonably likely to
materially affect, our ICFR.
47
Report of Independent Registered Public Accounting Firm
To the Shareholders and the Board of Directors of Fluor Corporation
Opinion on Internal Control Over Financial Reporting
We have audited Fluor Corporation’s internal control over financial reporting as of December 31, 2020, based on criteria
established in Internal Control-Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway
Commission (2013 framework) (the COSO criteria). In our opinion, Fluor Corporation (the Company) maintained, in all
material respects, effective internal control over financial reporting as of December 31, 2020, based on the COSO criteria.
We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States)
(PCAOB), the consolidated balance sheets of Fluor Corporation as of December 31, 2020 and 2019, the related consolidated
statements of operations, comprehensive income (loss), changes in equity and cash flows for each of the three years in the
period ended December 31, 2020, and the related notes (collectively referred to as the “consolidated financial statements”)
and our report dated February 26, 2021 expressed an unqualified opinion thereon.
Basis for Opinion
Fluor Corporation’s management is responsible for maintaining effective internal control over financial reporting and for its
assessment of the effectiveness of internal control over financial reporting included in the accompanying Management’s
Report on Internal Control Over Financial Reporting. Our responsibility is to express an opinion on Fluor Corporation’s internal
control over financial reporting based on our audit. We are a public accounting firm registered with the PCAOB and are
required to be independent with respect to Fluor Corporation in accordance with the U.S. federal securities laws and the
applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.
We conducted our audit in accordance with the standards of the PCAOB. Those standards require that we plan and perform
the audit to obtain reasonable assurance about whether effective internal control over financial reporting was maintained in
all material respects.
Our audit included obtaining an understanding of internal control over financial reporting, assessing the risk that a material
weakness exists, testing and evaluating the design and operating effectiveness of internal control based on the assessed risk,
and performing such other procedures as we considered necessary in the circumstances. We believe that our audit provides a
reasonable basis for our opinion.
Definition and Limitations of Internal Control Over Financial Reporting
A company’s internal control over financial reporting is a process designed to provide reasonable assurance regarding the
reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally
accepted accounting principles. A company’s internal control over financial reporting includes those policies and procedures
that (1) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and
dispositions of the assets of the company; (2) provide reasonable assurance that transactions are recorded as necessary to
permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and
expenditures of the company are being made only in accordance with authorizations of management and directors of the
company; and (3) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or
disposition of the company’s assets that could have a material effect on the financial statements.
Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also,
projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate
because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.
/s/ Ernst & Young LLP
Dallas, Texas
February 26, 2021
48
Item 9B. Other Information
None.
49
Item 10. Directors, Executive Officers and Corporate Governance
Directors, Executive Officers, Promoters and Control Persons
PART III
The information required by Paragraph (a), and Paragraphs (c) through (g) of Item 401 of Regulation S-K (except for
information required by Paragraphs (d) — (f) of that Item to the extent the required information pertains to our executive
officers) and Item 405 of Regulation S-K will be set forth in our definitive proxy statement to be filed with the SEC pursuant to
Regulation 14A within 120 days after the close of our fiscal year (our "Proxy Statement") and is incorporated herein by
reference. The information required by Paragraph (b) of Item 401 of Regulation S-K, as well as the information required by
Paragraphs (d) — (f) of that Item to the extent the required information pertains to our executive officers, is set forth herein
at Part I, Item 1 of this 2020 10-K under the heading "Information about our Executive Officers."
Code of Ethics
We have long maintained and enforced a Code of Business Conduct and Ethics that applies to our CEO, CFO and CAO. 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.
We have disclosed and intend to continue to disclose any changes or amendments to our code of ethics or waivers from
our code of ethics applicable to our CEO, CFO and CAO by posting such changes or waivers to our website.
Corporate Governance
We have adopted corporate governance guidelines, which are available on our website at www.fluor.com under the
"Sustainability" portion of our website under the heading "Corporate Governance Documents" filed under "Governance."
Information regarding the Audit Committee is hereby incorporated by reference from the information that will be contained
in our Proxy Statement.
Item 11. Executive Compensation
Information required by this item will be included in our Proxy Statement, which information is incorporated herein by
reference.
Item 12. Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters
Equity Compensation Plan Information
The following table provides information as of December 31, 2020 with respect to the shares of common stock that may
be issued under our equity compensation plans:
Plan Category
Equity compensation plans approved by
stockholders(1)
Equity compensation plans not approved by
stockholders(2)
Total
(a)
Number of securities to be
issued upon exercise of
outstanding options,
warrants and rights
(b)
Weighted average
exercise price of
outstanding options,
warrants and rights
(c)
Number of securities available for
future issuance under equity
compensation plans (excluding
securities listed in column (a))
9,434,449
427,420
9,861,869
$45.80(3)
$16.55(3)
9,179,797
—
9,179,797
_______________________________________________________________________________
(1) Consists of (a) the Amended and Restated 2008 Executive Performance Incentive Plan, under which 3,631,290 shares are
issuable upon exercise of outstanding options, and under which no shares remain for future issuance; (b) the 2017
Performance Incentive Plan, under which 1,845,282 shares are issuable upon exercise of outstanding options, 2,096,516
shares are issuable upon vesting of outstanding restricted stock units, 1,554,108 shares are issuable if specified
performance target awards are met under outstanding performance-based award units, and under which no shares
remain available for issuance; (c) the 2020 Performance Incentive Plan, under which 9,179,797 remain available for
issuance; (d) 17,212, 23,177 and 8,708 vested restricted stock units under the 2008 Executive Performance Plan, 2017
Performance Incentive Plan and 2020 Performance Incentive Plan, respectively, that were deferred by non-associate
directors participating in the 409A Director Deferred Compensation Program that are distributable in the form of shares;
50
(e) 108,734 vested restricted stock units granted to non-associate directors under the 2017 Performance Incentive Plan
that are subject to a post-vest holding period and for which shares have not been issued; and (f) 149,422 vested
restricted stock units and performance-based award units deferred by executive officers under the 2008 Executive
Performance Incentive Plan.
(2) Consists of inducement awards made to Mr. David E. Constable in connection with his appointment as CEO.
(3) Weighted-average exercise price of outstanding options only.
The additional information required by this item will be included in our Proxy Statement, which information is
incorporated by reference.
Item 13. Certain Relationships and Related Transactions, and Director Independence
Information required by this item will be included in our Proxy Statement, which information is incorporated herein by
reference.
Item 14. Principal Accountant Fees and Services
Information required by this item will be included in our Proxy Statement, which information is incorporated herein by
reference.
51
Item 15. Exhibits and Financial Statement Schedules
(a) Documents filed as part of this 2020 10-K:
1.
Financial Statements:
PART IV
Our consolidated financial statements at December 31, 2020 and 2019 and for each of the three years in the period
ended December 31, 2020, together with the report of our independent registered public accounting firm on those
consolidated financial statements are hereby filed as part of this 2020 10-K, beginning on page F-1.
2.
Financial Statement Schedules:
No financial statement schedules are presented since the required information is not present or not present in amounts
sufficient to require submission of the schedule, or because the information required is included in the consolidated financial
statements and notes thereto.
3.
Exhibits:
EXHIBIT INDEX
Exhibit
3.1
3.2
3.3
4.1
4.2
4.3
4.4
4.5
4.6
4.7
4.8
4.9
Description
Amended and Restated Certificate of Incorporation of the registrant (incorporated by reference to Exhibit 3.1 to
the registrant's Current Report on Form 8-K (Commission file number 1-16129) filed on May 8, 2012).
Amended and Restated Bylaws of the registrant (incorporated by reference to Exhibit 3.2 to the registrant's
Current Report on Form 8-K (Commission file number 1-16129) filed on February 9, 2016).
Certificate of Designation, Preferences, and Rights of Series A Junior Participating Preferred Stock of the
registrant (incorporated by reference to Exhibit 3.1 to the registrant's Current Report on Form 8-K (Commission
file number 1-16129) filed on March 25, 2020).
Senior Debt Securities Indenture between Fluor Corporation and Wells Fargo Bank, National Association, as
trustee, dated as of September 8, 2011 (incorporated by reference to Exhibit 4.3 to the registrant's Current
Report on Form 8-K (Commission file number 1-16129) filed on September 8, 2011).
First Supplemental Indenture between Fluor Corporation and Wells Fargo Bank, National Association, as trustee,
dated as of September 13, 2011 (incorporated by reference to Exhibit 4.4 to the registrant's Current Report on
Form 8-K (Commission file number 1-16129) filed on September 13, 2011).
Second Supplemental Indenture between Fluor Corporation and Wells Fargo Bank, National Association, as
trustee, dated as of June 22, 2012 (incorporated by reference to Exhibit 4.2 to the registrant's Registration
Statement on Form S-3 (Commission file number 333-182283) filed on June 22, 2012).
Third Supplemental Indenture between Fluor Corporation and 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 (Commission file number 1-16129) filed on November 25, 2014).
Fourth Supplemental Indenture between Fluor Corporation and Wells Fargo Bank, National Association, as
trustee, dated as of March 21, 2016 (incorporated by reference to Exhibit 4.3 to the registrant's Current Report
on Form 8-K (Commission file number 1-16129) filed on March 21, 2016).
Fifth Supplemental Indenture between Fluor Corporation and Wells Fargo Bank, National Association, as
trustee, dated as of August 29, 2018 (incorporated by reference to Exhibit 4.1 to the registrant's Current Report
on Form 8-K (Commission file number 1-16129) filed on August 29, 2018).
Description of Securities (incorporated by reference to Exhibit 4.7 to the registrant's Annual Report on Form 10-
K (Commission file number 1-16129) filed on September 25, 2020).
Rights Agreement dated as of March 25, 2020, by and between Fluor Corporation and Computershare Trust
Company, N.A., as rights agent, which includes as Exhibit B the Form of Rights Certificate (incorporated by
reference to Exhibit 4.1 to the registrant's Current Report on Form 8-K (Commission file number 1-16129) filed
on March 25, 2020).
Amendment to Rights Agreement dated as of July 29, 2020, by and between Fluor Corporation and
Computershare Trust Company, N.A., as rights agent (incorporated by reference to Exhibit 4.2 to the registrant's
Current Report on Form 8-K (commission file number 1-16129) filed on August 3, 2020).
4.10
Second Amendment to Rights Agreement dated as of December 22, 2020, by and between Fluor Corporation
and Computershare Trust Company, N.A. as rights agent (incorporated by reference to Exhibit 4.3 to the
registrant's Current Report on Form 8-K (commission file number 1-16129) filed on December 28, 2020).
52
Exhibit
10.1
Description
Fluor Corporation Amended and Restated 2008 Executive Performance Incentive Plan (incorporated by
reference to Exhibit 10.1 to the registrant's Current Report on Form 8-K (Commission file number 1-16129) filed
on May 3, 2013).**
10.2
10.3
10.4
10.5
10.6
10.7
10.8
10.9
10.10
10.11
10.12
10.13
10.14
10.15
10.16
10.17
10.18
10.19
Form of Option Agreement (2015 grants) under the Fluor Corporation Amended and Restated 2008 Executive
Performance Incentive Plan (incorporated by reference to Exhibit 10.26 to the registrant's Quarterly Report on
Form 10-Q (Commission file number 1-16129) filed on April 30, 2015).**
Form of Option Agreement (2017 grants) under the Fluor Corporation Amended and Restated 2008 Executive
Performance Incentive Plan (incorporated by reference to Exhibit 10.6 to the registrant's Annual Report on
Form 10-K (Commission file number 1-16129) filed on February 17, 2017).**
Form of Value Driver Incentive Award Agreement (for the senior team, with a post-vesting holding period)
under the Fluor Corporation Amended and Restated 2008 Executive Performance Incentive Plan (incorporated
by reference to Exhibit 10.7 to the registrant's Quarterly Report on Form 10-Q (Commission file number
1-16129) filed on May 5, 2016).**
Form of Value Driver Incentive Award Agreement (2017 grants) under the Fluor Corporation Amended and
Restated 2008 Executive Performance Incentive Plan (incorporated by reference to Exhibit 10.9 to the
registrant's Annual Report on Form 10-K (Commission file number 1-16129) filed on February 17, 2017).**
Form of Restricted Stock Unit Agreement (for the senior team, with a post-vesting holding period) under the
Fluor Corporation Amended and Restated 2008 Executive Performance Incentive Plan (incorporated by
reference to Exhibit 10.10 to the registrant's Quarterly Report on Form 10-Q (Commission file number 1-16129)
filed on May 5, 2016).**
Form of Restricted Stock Unit Agreement (2017 grants) under the Fluor Corporation Amended and Restated
2008 Executive Performance Incentive Plan (incorporated by reference to Exhibit 10.14 to the registrant's
Annual Report on Form 10-K (Commission file number 1-16129) filed on February 17, 2017).**
Fluor Corporation 2017 Performance Incentive Plan (incorporated by reference to Exhibit 10.1 to the
registrant's Registration Statement on Form S-8 (Commission file number 333-217653) filed on May 4, 2017).**
Form of Restricted Stock Unit Agreement under the Fluor Corporation 2017 Performance Incentive Plan
(incorporated by reference to Exhibit 10.15 to the registrant's Quarterly Report on Form 10-Q (Commission file
number 1-16129) filed on May 3, 2018).**
Form of Restricted Stock Unit Agreement (2020 grant) under the Fluor Corporation 2017 Performance Incentive
Plan (incorporated by reference to Exhibit 10.1 to the registrant's Quarterly Report on Form 10-Q (Commission
file number 1-16129) filed on December 10, 2020).**
Form of Option Agreement under the Fluor Corporation 2017 Performance Incentive Plan (incorporated by
reference to Exhibit 10.16 to the registrant's Quarterly Report on Form 10-Q (Commission file number 1-16129)
filed on May 3, 2018).**
Form of Option Agreement (2020 grant) under the Fluor Corporation 2017 Performance Incentive Plan
(incorporated by reference to Exhibit 10.2 to the registrant's Quarterly Report on Form 10-Q (Commission file
number 1-16129) filed on December 10, 2020).**
Form of Value Driver Incentive Award Agreement under the Fluor Corporation 2017 Performance Incentive Plan
(incorporated by reference to Exhibit 10.17 to the registrant's Quarterly Report on Form 10-Q (Commission file
number 1-16129) filed on May 3, 2018).**
Form of Performance Award Agreement (2020 grant) under the Fluor Corporation 2017 Performance Incentive
Plan (incorporated by reference to Exhibit 10.3 to the registrant's Quarterly Report on Form 10-Q (Commission
file number 1-16129) filed on December 10, 2020).**
Form of Stock Growth Incentive Award Agreement (2020 grant) under the Fluor Corporation 2017 Performance
Incentive Plan (incorporated by reference to Exhibit 10.4 to the registrant's Quarterly Report on Form 10-Q
(Commission file number 1-16129) filed on December 10, 2020).**
Fluor Corporation 2020 Performance Incentive Plan (incorporated by reference to Exhibit 99.1 to the
registrant's Registration Statement on Form S-8 (Commission file number 333-251426) filed on December 17,
2020.**
Fluor Executive Deferred Compensation Plan, as amended and restated effective April 21, 2003 (incorporated by
reference to Exhibit 10.5 to the registrant's Annual Report on Form 10-K (Commission file number 1-16129) filed
on February 29, 2008).**
Fluor 409A Executive Deferred Compensation Program, as amended and restated effective January 1, 2017
(incorporated by reference to Exhibit 10.16 to the registrant's Quarterly Report on Form 10-Q (Commission file
number 1-16129) filed on November 2, 2017).**
Executive Severance Plan (incorporated by reference to Exhibit 10.7 to the registrant's Annual Report on
Form 10-K (Commission file number 1-16129) filed on February 22, 2012).**
53
Exhibit
10.20
Description
Retention Award, dated November 26, 2019, granted to Alan L. Boeckmann (incorporated by reference to
Exhibit 10.17 to the registrant's Annual Report on Form 10-K (Commission file number 1-16129) filed on
September 25, 2020).**
10.21
10.22
10.23
10.24
10.25
10.26
10.27
10.28
10.29
10.30
10.31
10.32
10.33
10.34
10.35
10.36
10.37
10.38
10.39
10.40
Retention Award, dated November 14, 2019, granted to Carlos M. Hernandez (incorporated by reference to
Exhibit 10.18 to the registrant's Annual Report on Form 10-K (Commission file number 1-16129) filed on
September 25, 2020).**
Retirement and Release Agreement, effective September 10, 2019, between the registrant and David T. Seaton
(incorporated by reference to Exhibit 10.1 to the registrant's Quarterly Report on Form 10-Q (Commission file
number 1-16129) filed on October 31, 2019).**
Retirement and Release Agreement, effective October 11, 2019, between the registrant and Bruce A. Stanski
(incorporated by reference to Exhibit 10.20 to the registrant's Annual Report on Form 10-K (Commission file
number 1-16129) filed on September 24, 2020).**
Retirement and Release Agreement, effective October 30, 2020, between the registrant and Carlos M.
Hernandez.* **
Consulting Agreement, effective July 1, 2021, between FDEE Consulting, Inc. and Carlos M. Hernandez.* **
Offer Letter, dated October 30, 2020, between the registrant and David E. Constable.* **
Option Agreement, dated December 23, 2020, between the registrant and David E. Constable.* **
Restricted Stock Unit Agreement, dated December 23, 2020, between the registrant and David E. Constable.* **
Summary of Fluor Corporation Non-Management Director Compensation.*
Form of Restricted Stock Unit Agreement granted to directors under the Fluor Corporation 2017 Performance
Incentive Plan (incorporated by reference to Exhibit 10.19 to the registrant's Quarterly Report on Form 10-Q
(Commission file number 1-16129) filed on August 3, 2017).**
Form of Restricted Stock Unit Agreement granted to directors (2018 grant) under the Fluor Corporation 2017
Performance Incentive Plan (incorporated by reference to Exhibit 10.25 to the registrant's Quarterly Report on
Form 10-Q (Commission file number 1-16129) filed on August 2, 2018).**
Form of Restricted Stock Unit Agreement granted to directors (2020 grant) under the Fluor Corporation 2020
Performance Incentive Plan.* **
Fluor Corporation Deferred Directors' Fees Program, as amended and restated effective January 1, 2002
(incorporated by reference to Exhibit 10.9 to the registrant's Annual Report on Form 10-K (Commission file
number 1-16129) filed on March 31, 2003).**
Fluor Corporation 409A Director Deferred Compensation Program, as amended and restated effective as of
November 2, 2016 (incorporated by reference to Exhibit 10.22 to the registrant's Annual Report on Form 10-K
(Commission file number 1-16129) filed on February 17, 2017).**
Directors' Life Insurance Summary (incorporated by reference to Exhibit 10.12 to the registrant's Registration
Statement on Form 10/A (Amendment No. 1) (Commission file number 1-16129) filed on November 22,
2000).**
Form of Indemnification Agreement entered into between the registrant and each of its directors and executive
officers (incorporated by reference to Exhibit 10.21 to the registrant's Annual Report on Form 10-K (Commission
file number 1-16129) filed on February 25, 2009).
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 (Commission file
number 1-16129) filed on June 29, 2010).**
$1,800,000,000 Amended and Restated Revolving Loan and Letter of Credit Facility Agreement dated as of
February 25, 2016, among Fluor Corporation, Fluor B.V., the Lenders thereunder, BNP Paribas, as Administrative
Agent and an Issuing Lender, Bank of America, N.A., as Syndication Agent, and Citibank, N.A. and The Bank of
Tokyo — Mitsubishi UFJ, Ltd., as Co-Documentation Agents (incorporated by reference to Exhibit 10.1 to the
registrant's Current Report on Form 8-K (Commission file number 1-16129) filed on March 2, 2016).
Amendment No. 1, dated as of August 20, 2018, to $1,800,000,000 Amended and Restated Revolving Loan and
Letter of Credit Facility Agreement dated as of February 25, 2016, among Fluor Corporation, Fluor B.V., the
financial institutions party thereto and BNP Paribas, as Administrative Agent (incorporated by reference to
Exhibit 10.1 to the registrant’s Current Report on Form 8-K (Commission file number 1-16129) filed on
August 23, 2018).
Amendment No. 2, dated as of April 2, 2020, to $1,800,000,000 Amended and Restated Revolving Loan and
Letter of Credit Facility Agreement dated as of February 25, 2016, among Fluor Corporation, Fluor B.V., the
financial institutions party thereto and BNP Paribas, as Administrative Agent (incorporated by reference to
Exhibit 10.1 to the registrant's Current Report on Form 8-K (Commission file number 1-16129) filed on April 3,
2020).
54
Exhibit
10.41
10.42
10.43
10.44
10.45
10.46
10.47
10.48
21.1
23.1
31.1
31.2
32.1
32.2
101.INS
Description
Amendment No. 3, dated as of July 7, 2020, to $1,800,000,000 Amended and Restated Revolving Loan and
Letter of Credit Facility Agreement dated as of February 25, 2016, among Fluor Corporation, Fluor B.V., the
financial institutions party thereto and BNP Paribas, as Administrative Agent (incorporated by reference to
Exhibit 10.1 to the registrant's Current Report on Form 8-K (Commission file number 1-16129) filed on July 8,
2020).
Amendment No. 4, dated as of September 17, 2020, to $1,800,000,000 Amended and Restated Revolving Loan
and Letter of Credit Facility Agreement dated as of February 25, 2016, among Fluor Corporation, Fluor B.V., the
financial institutions party thereto and BNP Paribas, as Administrative Agent (incorporated by reference to
Exhibit 10.1 to the registrant's Current Report on Form 8-K (Commission file number 1-16129) filed on
September 21, 2020).
$1,700,000,000 Amended and Restated Revolving Loan and Letter of Credit Facility Agreement dated as of
February 25, 2016, among Fluor Corporation, Fluor B.V., the Lenders thereunder, BNP Paribas, as Administrative
Agent and an Issuing Lender, Bank of America, N.A., as Syndication Agent, and Citibank, N.A. and The Bank of
Tokyo — Mitsubishi UFJ, Ltd., as Co-Documentation Agents (incorporated by reference to Exhibit 10.2 to the
registrant's Current Report on Form 8-K (Commission file number 1-16129) filed on March 2, 2016).
Amendment No. 1, dated as of August 20, 2018, to $1,700,000,000 Amended and Restated Revolving Loan and
Letter of Credit Facility Agreement dated as of February 25, 2016, among Fluor Corporation, Fluor B.V., the
financial institutions party thereto and BNP Paribas, as Administrative Agent (incorporated by reference to
Exhibit 10.2 to the registrant’s Current Report on Form 8-K (Commission file number 1-16129) filed on
August 23, 2018).
Amendment No. 2, dated as of April 2, 2020, to $1,700,000,000 Amended and Restated Revolving Loan and
Letter of Credit Facility Agreement dated as of February 25, 2016, among Fluor Corporation, Fluor B.V., the
financial institutions party thereto and BNP Paribas, as Administrative Agent (incorporated by reference to
Exhibit 10.2 to the registrant's Current Report on Form 8-K (Commission file number 1-16129) filed on April 3,
2020).
Amendment No. 3, dated as of July 7, 2020, to $1,700,000,000 Amended and Restated Revolving Loan and
Letter of Credit Facility Agreement dated as of February 25, 2016, among Fluor Corporation, Fluor B.V., the
financial institutions party thereto and BNP Paribas, as Administrative Agent (incorporated by reference to
Exhibit 10.2 to the registrant's Current Report on Form 8-K (Commission file number 1-16129) filed on July 8,
2020).
Amendment No. 4, dated as of September 17, 2020, to $1,700,000,000 Amended and Restated Revolving Loan
and Letter of Credit Facility Agreement dated as of February 25, 2016, among Fluor Corporation, Fluor B.V., the
financial institutions party thereto and BNP Paribas, as Administrative Agent (incorporated by reference to
Exhibit 10.2 to the registrant's Current Report on Form 8-K (Commission file number 1-16129) filed on
September 21, 2020).
$1,650,000 Second Amended and Restated Revolving Loan and Letter of Credit Facility Agreement dated as of
February 19, 2021, among Fluor Corporation, the Lenders thereunder, BNP Paribas, as Administrative Agent and
an Issuing Lender, Bank of America, N.A., as Syndication Agent, and Citibank, N.A. and Wells Fargo Bank,
National Association, as Co-Documentation Agents.*
Subsidiaries of the registrant.*
Consent of Independent Registered Public Accounting Firm.*
Certification of Chief Executive Officer pursuant to Rule 13a-14(a) or Rule 15d-14(a) of the Securities Exchange
Act of 1934.*
Certification of Chief Financial Officer pursuant to Rule 13a-14(a) or Rule 15d-14(a) of the Securities Exchange
Act of 1934. of Chief Financial Officer pursuant to Rule 13a-14(a) or Rule 15d-14(a) of the Securities Exchange
Act of 1934.*
Certification of Chief Executive Officer pursuant to Rule 13a-14(b) or Rule 15d-14(b) of the Securities Exchange
Act of 1934 and 18 U.S.C. Section 1350. of Chief Executive Officer pursuant to Rule 13a-14(b) or Rule 15d-14(b)
of the Securities Exchange Act of 1934 and 18 U.S.C. Section 1350.*
Certification of Chief Financial Officer pursuant to Rule 13a-14(b) or Rule 15d-14(b) of the Securities Exchange
Act of 1934 and 18 U.S.C. Section 1350.*
Inline XBRL Instance Document.*
101.SCH
Inline XBRL Taxonomy Extension Schema Document.*
101.CAL
Inline XBRL Taxonomy Extension Calculation Linkbase Document.*
101.LAB
Inline XBRL Taxonomy Extension Label Linkbase Document.*
101.PRE
Inline XBRL Taxonomy Extension Presentation Linkbase Document.*
55
Exhibit
101.DEF
Description
Inline XBRL Taxonomy Extension Definition Linkbase Document.*
104
The cover page from the Company's 2020 10-K for the year ended December 31, 2020, formatted in Inline XBRL
(included in the Exhibit 101 attachments).*
_______________________________________________________________________________
*
**
Exhibit filed with this report.
Management contract or compensatory plan or arrangement.
Attached as Exhibit 101 to this report are the following documents formatted in XBRL (Extensible Business Reporting
Language): (i) the Consolidated Statement of Operations for the years ended December 31, 2020, 2019 and 2018, (ii) the
Consolidated Balance Sheet at December 31, 2020 and December 31, 2019, (iii) the Consolidated Statement of Cash Flows for
the years ended December 31, 2020, 2019 and 2018 and (iv) the Consolidated Statement of Equity for the years ended
December 31, 2020, 2019 and 2018.
Item 16. Form 10-K Summary
None.
Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the registrant has duly
caused this 2020 10-K to be signed on its behalf by the undersigned, thereunto duly authorized.
SIGNATURES
FLUOR CORPORATION
By:
/s/ JOSEPH L. BRENNAN
Joseph L. Brennan,
Chief Financial Officer
February 26, 2021
Pursuant to the requirements of the Securities Exchange Act of 1934, this 2020 10-K has been signed below by the
following persons on behalf of the registrant and in the capacities and on the dates indicated.
56
Signature
Title
Date
Principal Executive Officer and Director:
/s/ DAVID E. CONSTABLE
David E. Constable
Principal Financial Officer:
/s/ JOSEPH L. BRENNAN
Joseph L. Brennan
Principal Accounting Officer:
/s/ JOHN C. REGAN
John C. Regan
Other Directors:
/s/ ALAN L. BOECKMANN
Alan L. Boeckmann
/s/ ALAN M. BENNETT
Alan M. Bennett
/s/ ROSEMARY T. BERKERY
Rosemary T. Berkery
/s/ H. PAULETT EBERHART
H. Paulett Eberhart
/s/ PETER J. FLUOR
Peter J. Fluor
/s/ JAMES T. HACKETT
James T. Hackett
/s/ THOMAS C. LEPPERT
Thomas C. Leppert
/s/ TERI P. MCCLURE
Teri P. McClure
/s/ ARMANDO J. OLIVERA
Armando J. Olivera
/s/ MATTHEW K. ROSE
Matthew K. Rose
Chief Executive Officer
February 26, 2021
Chief Financial Officer
February 26, 2021
Chief Accounting Officer
February 26, 2021
Executive Chairman
February 26, 2021
February 26, 2021
February 26, 2021
February 26, 2021
February 26, 2021
February 26, 2021
February 26, 2021
February 26, 2021
February 26, 2021
February 26, 2021
Director
Director
Director
Director
Director
Director
Director
Director
Director
57
(This page has been left blank intentionally)
FLUOR CORPORATION
INDEX TO CONSOLIDATED FINANCIAL STATEMENTS
TABLE OF CONTENTS
Report of Independent Registered Public Accounting Firm
Consolidated Statement of Operations
Consolidated Statement of Comprehensive Income (Loss)
Consolidated Balance Sheet
Consolidated Statement of Cash Flows
Consolidated Statement of Changes in Equity
Notes to Consolidated Financial Statements
PAGE
F-2
F-5
F-6
F-7
F-8
F-9
F-10
F-1
Report of Independent Registered Public Accounting Firm
To the Shareholders and the Board of Directors of Fluor Corporation
Opinion on the Financial Statements
We have audited the accompanying consolidated balance sheets of Fluor Corporation (the Company) as of December 31,
2020 and 2019, the related consolidated statements of operations, comprehensive income (loss), changes in equity and cash
flows for each of the three years in the period ended December 31, 2020, and the related notes (collectively referred to as the
“consolidated financial statements“). In our opinion, the consolidated financial statements present fairly, in all material
respects, the financial position of the Company at December 31, 2020 and 2019, and the results of its operations and its cash
flows for each of the three years in the period ended December 31, 2020, in conformity with U.S. generally accepted
accounting principles.
We have also audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States)
(PCAOB), the Company’s internal control over financial reporting as of December 31, 2020, 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 26, 2021 expressed an unmodified opinion thereon.
Basis for Opinion
These financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion
on the Company’s financial statements based on our audits. We are a public accounting firm registered with the PCAOB and
are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the
applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.
We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform
the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether
due to error or fraud. Our audits included performing procedures to assess the risks of material misstatement of the financial
statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures include
examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements. Our audits also
included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the
overall presentation of the financial statements. We believe that our audits provide a reasonable basis for our opinion.
Critical Audit Matters
The critical audit matters communicated below are matters arising from the current period audit of the financial statements
that were communicated or required to be communicated to the audit committee and that: (1) relate to accounts or
disclosures that are material to the financial statements and (2) involved our especially challenging, subjective or complex
judgments. The communication of the critical audit matters does not alter in any way our opinion on the consolidated
financial statements, taken as a whole, and we are not, by communicating the critical audit matters below, providing separate
opinions on the critical audit matters or on the accounts or disclosures to which they relate.
F-2
Description of
the Matter
Estimation of the Fair Value of Goodwill and Intangibles
As more fully described in Note 6 to the consolidated financial statements, certain of the Company’s
businesses were adversely affected by the economic impacts of the steep decline in oil prices and the
outbreak of COVID-19. These events caused significant uncertainty, economic volatility and disruption
that affected certain of the Company’s operations, and the Company’s impairment tests of its goodwill
and intangible assets. As a result of the impairment tests, the Company recognized a $195 million
impairment loss related to goodwill and certain intangible customer relationships within the Diversified
Services reporting unit, which is the amount by which the carrying value exceeded the estimated fair
value of these assets.
Auditing management’s assessment of impairment involved a high degree of subjectivity due to the
significant estimation uncertainty related to assumptions used in estimating the fair value of the
reporting units of goodwill and intangible assets. When estimating the fair value of the reporting units
for purposes of testing goodwill for impairment, significant assumptions used in management’s
assessments included revenue growth rates, expected cash outflows, terminal growth rates and
discount rates. When estimating the fair value of intangible assets for purposes of testing for
impairment, significant assumptions used in management’s assessments included revenue growth
rates, expected cash outflows, royalty rates, attrition rate and discount rates. The aforementioned
assumptions are affected by expectations about future market or economic conditions that materially
impact the fair value of the reporting units as well as intangible assets.
How We
Addressed the
Matter in Our
Audit
We obtained an understanding, evaluated the design, and tested the operating effectiveness of controls
over the Company's processes to estimate the fair value of the Company’s reporting units of goodwill
and intangible assets. This included controls over management's review of the significant assumptions
underlying the fair value estimates.
Our testing of the Company's estimates of fair value included, among other procedures, evaluating the
significant assumptions as discussed above. For example, we compared the significant assumptions to
current industry and economic trends and historical performance, performed sensitivity analyses of the
significant assumptions to evaluate the change in the fair value estimates that would result from
changes in the assumptions and recalculated management's estimates. We also involved our valuation
specialists to assist in our evaluation of key assumptions, which included terminal growth rates, royalty
rates, attrition rate, and the discount rates used in the fair value estimates.
F-3
Description of
the Matter
Long-term revenue recognition on engineering and construction contracts
As described in Note 2 to the consolidated financial statements, the Company recognizes engineering
and construction contract revenue over time, as performance obligations are satisfied, due to the
continuous transfer of control to the customer, using the percentage-of-completion method of
accounting, based primarily on contract cost incurred to date compared to total estimated contract
cost. Revenue recognition under this method is judgmental, particularly on lump-sum contracts, as it
requires the Company to prepare estimates of total contract revenue and total contract costs, including
costs to complete in-process contracts.
Auditing the Company’s estimates of total contract revenue and costs used to recognize revenue on
engineering and construction contracts involved significant auditor judgment, as it required the
evaluation of subjective factors such as assumptions related to project schedule and completion,
forecasted labor, material and subcontract costs and variable consideration estimates related to
incentive fees, unpriced changes orders and contractual disputes and claims. These assumptions
involved significant management judgment, which affects the measurement of revenue recognized by
the Company.
How We
Addressed the
Matter in Our
Audit
We obtained an understanding, evaluated the design, and tested the operating effectiveness of controls
over the estimation process that affect revenue recognized on engineering and construction contracts.
This included controls over management’s monitoring and review of project costs and variable
consideration estimates, including the Company’s procedures to validate the completeness and
accuracy of data used to determine the estimates.
To evaluate the Company’s contract estimates related to revenue recognized on engineering and
construction contracts, we selected a sample of projects and, among other procedures, obtained and
inspected the contract agreements, amendments and change orders to test the existence of customer
arrangements and understand the scope and pricing of the related contracts; performed site-visits for
certain contracts to observe progress; observed selected contract review meetings, inspected
presentations prepared by management and interviewed contract team personnel to obtain an
understanding of the status of operational performance and progress on the related contracts;
evaluated the Company’s estimated revenue and costs to complete by obtaining and analyzing
supporting documentation of management’s estimates of variable consideration and contract costs,
including external letters from legal counsel supporting the Company’s legal basis related to certain
contractual matters including contractual disputes; and compared contract profitability estimates in the
current year to historical estimates and actual performance.
We have served as the Company‘s auditor since 1973.
Dallas, Texas
February 26, 2021
/s/ Ernst & Young LLP
F-4
FLUOR CORPORATION
CONSOLIDATED STATEMENT OF OPERATIONS
(in thousands, except per share amounts)
Revenue
Cost of revenue
Other (income) and expenses
Corporate general and administrative expense
Impairment, restructuring and other exit costs
(Gain) loss on pension settlement
Interest expense
Interest income
2020
$ 15,668,477
15,283,226
Year Ended December 31,
2019
$ 17,317,284
17,533,864
2018
$ 18,851,008
18,281,628
240,692
305,590
(406)
72,120
(25,693)
165,921
532,600
137,898
74,104
(55,608)
121,164
—
21,900
77,144
(36,577)
Total cost and expenses
15,875,529
18,388,779
18,465,259
Earnings (loss) from Cont Ops before taxes
(207,052)
(1,071,495)
Income tax expense (benefit)
Net earnings (loss) from Cont Ops
Net earnings (loss) from Disc Ops
Net earnings (loss)
Less: Net earnings (loss) attributable to NCI from Cont Ops
Net earnings (loss) attributable to Fluor Corporation from Cont Ops
Net earnings (loss) attributable to Fluor Corporation from Disc Ops
18,592
(225,644)
(141,147)
(366,791)
68,255
(293,899)
(141,147)
485,230
(1,556,725)
3,603
(1,553,122)
(30,958)
(1,525,767)
3,603
385,749
173,331
212,418
20,435
232,853
59,385
153,033
20,435
Net earnings (loss) attributable to Fluor Corporation
$
(435,046)
$ (1,522,164)
$
173,468
Basic earnings (loss) per share attributable to Fluor Corporation
Net earnings (loss) from Cont Ops
Net earnings (loss) from Disc Ops
Net earnings (loss)
Diluted earnings (loss) per share attributable to Fluor Corporation
Net earnings (loss) from Cont Ops
Net earnings (loss) from Disc Ops
Net earnings (loss)
$
$
$
$
(2.09)
$
(10.89)
$
(1.01)
0.02
(3.10)
$
(10.87)
$
$
(2.09)
(1.01)
$
(10.89)
0.02
(3.10)
$
(10.87)
$
1.09
0.15
1.24
1.08
0.15
1.23
The accompanying notes are an integral part of these financial statements.
F-5
FLUOR CORPORATION
CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME (LOSS)
(in thousands)
Net earnings (loss)
OCI, net of tax:
Foreign currency translation adjustment
Ownership share of equity method investees' OCI
Defined benefit plan adjustments
Unrealized gain (loss) on hedges
Unrealized gain (loss) on available-for-sale securities
Total OCI, net of tax
Comprehensive income (loss)
Less: Comprehensive income (loss) attributable to NCI
Year Ended December 31,
2019
2020
(366,791)
(17,127)
(18,528)
(19,392)
18,897
—
(36,150)
(402,941)
69,138
(1,553,122)
65,500
(11,784)
105,452
3,140
—
162,308
(1,390,814)
(32,310)
2018
232,853
(100,561)
8,942
(52,591)
274
709
(143,227)
89,626
57,145
Comprehensive income (loss) attributable to Fluor Corporation
$
(472,079)
$ (1,358,504)
$
32,481
The accompanying notes are an integral part of these financial statements.
F-6
FLUOR CORPORATION
CONSOLIDATED BALANCE SHEET
(in thousands, except share and per share amounts)
ASSETS
Current assets
Cash and cash equivalents ($654,852 and $392,772 related to VIEs)
Marketable securities ($66 related to VIEs in both periods)
Accounts and notes receivable, net ($248,106 and $329,548 related to VIEs)
Contract assets ($244,552 and $294,116 related to VIEs)
Other current assets ($33,884 and $32,271 related to VIEs)
Current assets held for sale
Total current assets
Noncurrent assets
Property, plant and equipment ($37,236 and $29,492 related to VIEs)
Goodwill
Investments
Deferred taxes
Deferred compensation trusts
Other assets ($41,124 and $45,425 related to VIEs)
Total noncurrent assets
Total assets
LIABILITIES AND EQUITY
Current liabilities
Accounts payable ($335,902 and $501,525 related to VIEs)
Short-term borrowings
Contract liabilities ($262,812 and $232,160 related to VIEs)
Accrued salaries, wages and benefits ($28,381 and $31,178 related to VIEs)
Other accrued liabilities ($44,244 and $21,088 related to VIEs)
Current liabilities related to assets held for sale
Total current liabilities
Long-term debt
Deferred taxes
Other noncurrent liabilities ($9,528 and $11,366 related to VIEs)
Contingencies and commitments
Equity
Shareholders' equity
December 31,
2020
December 31,
2019
$ 2,198,781
23,345
1,181,590
967,827
424,849
237,617
5,034,009
561,084
349,258
532,065
77,915
350,427
405,054
2,275,803
$ 1,997,199
7,262
1,217,464
1,238,173
389,565
517,100
5,366,763
594,826
508,415
600,814
62,688
341,235
491,917
2,599,895
$ 7,309,812
$ 7,966,658
$ 1,232,236
25,415
1,141,415
637,563
490,104
45,304
3,572,037
1,710,033
80,745
683,770
$ 1,546,840
38,728
1,157,788
609,094
470,350
82,322
3,905,122
1,651,739
83,295
742,410
Preferred stock — authorized 20,000,000 shares ($0.01 par value), none issued
Common stock — authorized 375,000,000 shares ($0.01 par value); issued and outstanding —
140,715,205 and 140,174,400 shares in 2020 and 2019, respectively
Additional paid-in capital
AOCI
Retained earnings
Total shareholders' equity
NCI
Total equity
Total liabilities and equity
The accompanying notes are an integral part of these financial statements.
—
—
1,404
195,940
(416,906)
1,249,809
1,030,247
232,980
1,263,227
$ 7,309,812
1,399
165,314
(379,873)
1,700,912
1,487,752
96,340
1,584,092
$ 7,966,658
F-7
FLUOR CORPORATION
CONSOLIDATED STATEMENT OF CASH FLOWS
(in thousands)
OPERATING CASH FLOW
Net earnings (loss)
Adjustments to reconcile net earnings (loss) to operating cash flow:
Impairment expense - Cont Ops
Impairment expense - Disc Ops
(Gain) loss on pension settlement
Write-off of cumulative translation loss
Depreciation
Amortization of intangibles
(Earnings) loss from equity method investments, net of distributions
(Gain) loss on sales of assets
Amortization of stock-based awards
(Gain) loss on deferred compensation trust
(Gain) loss on deferred compensation obligation
Deferred taxes
Net retirement plan accrual (contributions)
Changes in assets and liabilities
Other
Operating cash flow
INVESTING CASH FLOW
Purchases of marketable securities
Proceeds from sales and maturities of marketable securities
Capital expenditures
Proceeds from sales of property, plant and equipment
Proceeds from sales of other assets
Investments in partnerships and joint ventures
Return of capital from partnerships and joint ventures
Proceeds from company owned life insurance
Other
Investing cash flow
FINANCING CASH FLOW
Repurchase of common stock
Dividends paid
Proceeds from issuance of 2028 Notes
Repayment of 2021 Notes
Debt issuance costs
Other borrowings
Distributions paid to NCI
Capital contributions by NCI
Taxes paid on vested restricted stock
Stock options exercised
Other
Financing cash flow
Effect of exchange rate changes on cash
Increase (decrease) in cash and cash equivalents
Cash and cash equivalents at beginning of year
Cash and cash equivalents at end of year
The accompanying notes are an integral part of these financial statements.
F-8
Year Ended December 31,
2020
2019
2018
$
(366,791)
$ (1,553,122)
$
232,853
297,604
145,700
(406)
—
102,451
3,123
(3,881)
(510)
21,882
(32,792)
34,039
(20,285)
(20,770)
29,801
(3,281)
185,884
(35,078)
19,648
(113,442)
62,692
48,897
(29,219)
529
4,574
(163)
(41,562)
383,017
—
137,898
83,665
154,599
15,882
9,348
7,284
36,075
(55,820)
54,490
320,633
(2,325)
633,027
(5,633)
219,018
(31,165)
238,539
(180,842)
65,977
—
(52,305)
24,065
16,414
(211)
80,472
—
—
21,900
—
197,585
19,071
980
(147,074)
43,029
18,010
(22,272)
60,709
(38,372)
(227,732)
3,477
162,164
(483,513)
541,104
(210,998)
81,038
124,942
(73,145)
22,284
1,040
(1,369)
1,383
—
(28,720)
—
—
—
3,881
(23,184)
110,051
(1,313)
—
(12,269)
48,446
8,814
201,582
1,997,199
$ 2,198,781
—
(118,073)
—
—
—
9,093
(33,674)
64,646
(3,572)
1,466
2,815
(77,299)
10,262
232,453
1,764,746
$ 1,997,199
(50,022)
(118,734)
598,722
(503,285)
(5,061)
3,235
(63,523)
5,128
(5,686)
7,258
(8,523)
(140,491)
(62,385)
(39,329)
1,804,075
$ 1,764,746
FLUOR CORPORATION
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
(in thousands, except per share
amounts)
Common Stock
Shares
Amount
Additional
Paid-In
Capital
AOCI
Retained
Earnings
Total
Shareholders'
Equity
NCI
Total
Equity
BALANCE AS OF DECEMBER 31, 2017
139,918 $ 1,399 $
88,222 $
(402,543) $ 3,566,194 $
3,253,272 $
150,089 $ 3,403,361
Net earnings
Cumulative adjustment for the adoption of
ASC 606
OCI
Dividends ($0.84 per share)
Distributions to NCI
Capital contributions by NCI
Other NCI transactions
Stock-based plan activity
—
—
—
—
—
—
—
833
—
—
—
—
—
—
—
8
—
—
—
153
—
—
5,329
38,413
Repurchase of common stock
(1,097)
(11)
(50,011)
—
—
173,468
173,468
59,385
232,853
(326,639)
(326,639)
(963)
(327,602)
(140,988)
—
(140,988)
(2,239)
(143,227)
—
—
—
—
—
—
(118,869)
(118,716)
—
(118,716)
—
—
—
—
—
—
—
5,329
38,421
(50,022)
(63,523)
(63,523)
5,128
(1,749)
—
—
5,128
3,580
38,421
(50,022)
BALANCE AS OF DECEMBER 31, 2018
139,654 $ 1,396 $
82,106 $
(543,531) $ 3,294,154 $
2,834,125 $
146,128 $ 2,980,253
Net loss
Cumulative adjustment for the adoption of
ASC 842
Cumulative adjustment for the adoption of
ASC 606 for certain investments
OCI
Dividends ($0.73 per share)
Distributions to NCI
Capital contributions by NCI
Other NCI transactions
Stock-based plan activity
—
—
—
—
—
—
—
—
520
—
—
—
—
—
—
—
—
3
—
—
—
—
304
—
—
48,997
33,907
—
(1,522,164)
(1,522,164)
(30,958)
(1,553,122)
—
—
163,658
20,544
20,544
11,934
—
11,934
163,658
—
—
20,544
11,934
(1,350)
162,308
—
—
—
—
—
(103,556)
(103,252)
—
(103,252)
—
—
—
—
—
—
48,997
33,910
(33,674)
(33,674)
64,646
(48,452)
—
64,646
545
33,910
BALANCE AS OF DECEMBER 31, 2019
140,174 $ 1,399 $ 165,314 $
(379,873) $ 1,700,912 $
1,487,752 $
96,340 $ 1,584,092
(435,046)
(435,046)
68,255
(366,791)
Net earnings (loss)
Cumulative adjustment for the adoption of
ASC 326
OCI
Dividends ($0.10 per share)
Distributions to NCI
Capital contributions by NCI
Other NCI transactions
Stock-based plan activity
—
—
—
—
—
—
—
541
—
—
—
—
—
—
—
5
—
—
—
—
—
—
10,099
20,527
—
—
(1,977)
(37,033)
—
—
—
—
—
—
(14,120)
—
—
—
40
(1,977)
(37,033)
(14,120)
—
—
10,099
20,572
—
883
—
(1,977)
(36,150)
(14,120)
(23,184)
(23,184)
110,051
110,051
(19,365)
—
(9,266)
20,572
BALANCE AS OF DECEMBER 31, 2020
140,715 $ 1,404 $ 195,940 $
(416,906) $ 1,249,809 $
1,030,247 $
232,980 $ 1,263,227
The accompanying notes are an integral part of these financial statements.
F-9
FLUOR CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
1. Description of Business
Fluor Corporation (“we”, “us”, “our” or “the company”) is a holding company that owns the stock of a number of
subsidiaries, as well as interests in joint ventures. Acting through these entities, we are one of the largest professional services
firms providing engineering, procurement, construction, fabrication and modularization, operations, maintenance and asset
integrity, as well as project management services, on a global basis. We provide services to our clients in a diverse set of
industries worldwide including oil and gas, chemicals and petrochemicals, mining and metals, infrastructure, life sciences,
advanced manufacturing and advanced technologies. We are also a service provider to the U.S. federal government and
governments abroad; and, we perform operations, maintenance and asset integrity activities globally for major industrial
clients.
We had the following six reportable segments as of December 31, 2020:
• Energy & Chemicals
• Mining & Industrial
• Infrastructure & Power
• Government
• Diversified Services
• Other
The Energy & Chemicals segment focuses on opportunities in the upstream, midstream, downstream, chemical,
petrochemical, offshore and onshore oil and gas production, LNG and pipeline markets. This segment has long served a broad
spectrum of industries offering a full range of design, engineering, procurement, construction, fabrication and project
management services.
The Mining & Industrial segment provides design, engineering, procurement, construction and project management
services to the mining and metals, life sciences, advanced manufacturing and advanced technologies sectors.
The Infrastructure & Power segment provides design, engineering, procurement, construction and project management
services to the transportation and power sectors.
The Government segment provides engineering and construction services, logistics and life-support, contingency
operations support, management, mission operations, environmental remediation and decommissioning to the U.S.
government and governments abroad.
The Diversified Services segment provides a wide array of asset maintenance, asset integrity and staffing services
around the world. Most of the operating results of our AMECO equipment business previously included in Diversified Services
are now included in discontinued operations. Certain operations of AMECO, primarily in Mexico, are in the process of being
liquidated and did not meet the qualifications of discontinued operations. These retained operations will remain in the
Diversified Services segment until their liquidation.
Other includes the operations of NuScale, as well as two lump-sum projects including a plant for which we serve as a
subcontractor to a commercial client (the "Radford" project) and a weapons storage and maintenance facility (the "Warren"
project). The Radford project is substantially complete with systems turnover to the client expected in the first quarter of
2021.
In the first quarter of 2020, we decided to retain our government business, which had previously been included in Disc
Ops. As a result, the government business is no longer reported as a discontinued operation for any period presented. Our
plan to sell the AMECO equipment business remains unchanged and it remains reported as a discontinued operation. We
expect to complete the sale of the AMECO equipment business within the first half of 2021. The assets and liabilities of the
AMECO business are classified as held for sale for all periods presented.
In the first quarter of 2021, we announced a plan to sell Stork, which we expect will be reported as a discontinued
operation beginning with the first quarter of 2021.
F-10
FLUOR CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
2.
Significant Accounting Policies
Principles of Consolidation
The financial statements include the accounts of Fluor Corporation and its subsidiaries. All significant intercompany
transactions of consolidated subsidiaries are eliminated. Certain amounts disclosed in 2019 and 2018 have been reclassified
to conform to the 2020 presentation, which includes presenting the operations of the government business in Cont Ops.
Management has evaluated all material events occurring subsequent to December 31, 2020 through the filing date of the
2020 10-K.
We frequently form joint ventures or partnerships with others primarily for the execution of single contracts or projects.
If a joint venture or partnership is a VIE and we are the primary beneficiary, the joint venture or partnership is consolidated
and our partners' interests are recognized as NCI. As is customary in our industry, for other construction partnerships and
joint ventures, we generally recognize our proportionate share of revenue, cost and profit and use the one-line equity method
for the investment. In other instances, the cost and equity methods of accounting are used, depending on our respective
ownership interest and amount of influence on the entity, as well as other factors. At times, we also execute projects through
collaborative arrangements for which we recognize our relative share of revenue and cost.
Use of Estimates
The preparation of financial statements in accordance with GAAP requires management to make estimates and
assumptions that affect reported amounts. These estimates are based on information available through the date of the
issuance of the financial statements. Therefore, actual results could differ from those estimates.
Foreign Currency Translation
Our reporting currency is the U.S. dollar. For our international subsidiaries, the functional currency is typically the
currency of the primary economic environment in which each subsidiary operates. Translation gains and losses are recorded
in OCI. Gains and losses from remeasuring foreign currency transactions into the functional currency are included in earnings.
Revenue Recognition
Engineering and construction contracts. We recognize engineering and construction contract revenue over time as we
provide services to satisfy our performance obligations. We generally use the cost-to-cost percentage-of-completion measure
of progress as it best depicts how control transfers to our clients. The cost-to-cost approach measures progress towards
completion based on the ratio of contract cost incurred to date compared to total estimated contract cost. Engineering and
construction contracts are generally accounted for as a single unit of account (a single performance obligation) and are not
segmented between types of services on a single project. Cost of revenue includes an allocation of depreciation and
amortization. Where applicable, customer-furnished materials, labor and equipment and subcontractor materials, labor and
equipment, are included in revenue and cost of revenue when management believes that we are acting as a principal rather
than as an agent (i.e., we integrate the materials, labor and equipment into the deliverables promised to the customer).
Customer-furnished materials are only included in revenue and cost when the contract includes construction activity and we
have visibility into the amount the customer is paying for the materials or there is a reasonable basis for estimating the
amount. We recognize revenue, but not profit, on certain uninstalled materials that are not specifically produced, fabricated,
or constructed for a project. Revenue on these uninstalled materials is recognized when the cost is incurred and control is
transferred. Changes to total estimated contract cost or losses, if any, are recognized in the period in which they are
determined as assessed at the contract level. Pre-contract costs are expensed as incurred unless they are expected to be
recovered from the client. Project mobilization costs are generally charged to project costs as incurred when they are an
integrated part of the performance obligation being transferred to the client. Customer payments on engineering and
construction contracts are typically due within 30 to 45 days of billing, depending on the contract.
Service contracts. For the majority of our operations and maintenance contracts, revenue is recognized when services
are performed and contractually billable. For all other service contracts, we recognize revenue over time using the cost-to-
cost percentage-of-completion method. Service contracts that include multiple performance obligations are segmented
between types of services. For contracts with multiple performance obligations, we allocate the transaction price to each
performance obligation using an estimate of the stand-alone selling price of each distinct service in the contract. Revenue
recognized on service contracts that has not been billed to clients is recorded as contract assets. Amounts billed to clients in
excess of revenue recognized on service contracts to date are recorded as contract liabilities. Customer payments on service
contracts are typically due within 30 to 90 days of billing, depending on the contract.
F-11
FLUOR CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
Variable consideration. The nature of our contracts gives rise to several types of variable consideration, including claims,
unpriced change orders, award and incentive fees, liquidated damages and penalties. We consider variable consideration in
the development of our project forecasts so that our forecasted revenue reflects the amount of consideration we expect to be
probable of recovering without a significant reversal. We estimate the amount of revenue to be recognized on variable
consideration using the expected value method (i.e., the sum of probability-weighted amounts) or the most likely amount
method, whichever offers better prediction.
Warranties. We generally provide limited duration warranties for work performed under our contracts. Historically,
warranty claims have not resulted in material costs incurred, and any estimated costs for warranties are included in the
individual project cost estimates for purposes of accounting for long-term contracts.
Practical Expedients. If we have a right to consideration from a customer in an amount that corresponds directly with
the value of our performance completed to date (a service contract in which we bill a fixed amount for each hour of service
provided), we recognize revenue in the amount to which we have a right to invoice for services performed. We do not adjust
the contract price for the effects of a significant financing component where, at contract inception, the period between
service provision and customer payment will be one year or less. We exclude from the measurement of the transaction price
all taxes assessed by governmental authorities that are collected by us from our customers (use taxes, value added taxes,
some excise taxes).
RUPO. RUPO represents a measure of the value of work to be performed on contracts awarded and in progress.
Although RUPO reflects business that is considered to be firm, cancellations, deferrals or scope adjustments may occur. RUPO
is adjusted to reflect any known project cancellations, revisions to project scope and cost, foreign currency exchange
fluctuations and project deferrals, as appropriate. RUPO differs from backlog discussed elsewhere in the 2020 10-K. Backlog
includes the amount of revenue we expect to recognize under ongoing operations and maintenance contracts for the
remainder of the current year renewal period plus up to three additional years if renewal is considered to be probable, while
RUPO includes only the amount of revenue we expect to recognize under ongoing operations and maintenance contracts with
definite terms and substantive termination provisions.
Project Estimates
Due to the nature of our industry, there is significant complexity in our estimation of total expected revenue and cost,
for which we must make significant judgments. Our contracts with our customers may contain award fees, incentive fees,
liquidated damages or other provisions that can either increase or decrease the contract price to arrive at estimated revenue.
These variable amounts generally are earned upon achievement of certain performance metrics, program milestones or cost
targets and can be based upon customer discretion. We estimate variable consideration at the most likely amount to which
we expect to be entitled. We include estimated amounts in the transaction price to the extent it is probable we will realize
that amount. Our estimates of variable consideration and our determination of its inclusion in project revenue for accounting
purposes are based on an assessment of our anticipated performance and other information that may be available to us.
At a project level, we have specific practices and procedures to review our estimate of total revenue and cost. Each
project team reviews the progress and execution of our performance obligations, which impact the project’s accounting
outcome. As part of this process, the project team reviews information such as any outstanding key contract matters,
progress towards completion and the related program schedule and identified risks and opportunities. The accuracy of our
revenue and profit recognition in a given period depends on the accuracy of our project estimates, which can change from
period to period for factors such as:
• Complexity in original design;
• Extent of changes from original design;
• Different site conditions than assumed in our bid;
• The productivity, availability and skill level of labor;
• Weather conditions when executing a project;
• The technical maturity of the technologies involved;
• Length of time to complete the project;
• Availability and cost of equipment and materials;
• Subcontractor and joint venture partner performance;
• Expected costs of warranties; and
F-12
FLUOR CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
• Our ability to recover for additional contract costs.
We recognize changes in contract estimates on a cumulative catch-up basis in the period in which the changes are
identified. Such changes in contract estimates can result in the recognition of revenue in a current period for performance
obligations which were satisfied or partially satisfied in prior periods. Changes in contract estimates may also result in the
reversal of previously recognized revenue if the current estimate adversely differs from the previous estimate. If we estimate
that a project will have costs in excess of revenue, we recognize the total loss in the period it is identified.
Contract Assets and Liabilities
Contract assets represent revenue recognized in excess of amounts billed and include unbilled receivables (typically for
cost reimbursable contracts) and contract work in progress (typically for fixed-price contracts). Unbilled receivables, which
represent an unconditional right to payment subject only to the passage of time, are recognized as accounts receivable when
they are billed under the terms of the contract. Advances that are payments on account of contract assets are deducted from
contract assets. We anticipate that substantially all incurred cost associated with contract assets as of December 31, 2020 will
be billed and collected within one year. Contract liabilities represent amounts billed to clients in excess of revenue recognized
to date.
Segment Reporting
Management evaluates segment performance based on segment profit. We incur cost and expenses and hold certain
assets at the corporate level which relate to our business as a whole. Certain of these amounts have been charged to our
business segments by various methods, largely on the basis of usage. Total assets not allocated to segments and held in
"Corporate and other" primarily include cash, marketable securities, income-tax related assets, pension assets, deferred
compensation trust assets and corporate property, plant and equipment.
Segment profit is an earnings measure that we utilize to evaluate and manage our business performance. Segment
profit is calculated as revenue less cost of revenue and earnings attributable to NCI.
Variable Interest Entities
We assess our partnerships and joint ventures at inception to determine if any meet the qualifications of a VIE. We
consider a partnership or joint venture a VIE if it has any of the following characteristics:
(a) the total equity investment is not sufficient to permit the entity to finance its activities without additional
subordinated financial support,
(b) characteristics of a controlling financial interest are missing (either the ability to make decisions through voting or
other rights, the obligation to absorb the expected losses of the entity or the right to receive the expected residual
returns of the entity), or
(c) the voting rights of the equity holders are not proportional to their obligations to absorb the expected losses of the
entity and/or their rights to receive the expected residual returns of the entity, and substantially all of the entity's
activities either involve or are conducted on behalf of an investor that has disproportionately few voting rights.
Upon the occurrence of certain events, we reassess our initial determination of whether the partnership or joint venture
is a VIE. The majority of our partnerships and joint ventures qualify as VIEs because the total equity investment is typically
nominal and not sufficient to permit the entity to finance its activities without additional subordinated financial support.
We also perform a qualitative assessment of each identified VIE to determine if we are its primary beneficiary. We
conclude that we are the primary beneficiary and consolidate the VIE if we have both:
(a) the power to direct the economically significant activities of the entity and
(b) the obligation to absorb losses of, or the right to receive benefits from, the entity that could potentially be significant
to the VIE.
We consider the contractual agreements that define the ownership structure, distribution of profits and losses, risks,
responsibilities, indebtedness, voting rights and board representation of the respective parties in determining if we are the
primary beneficiary. We also consider all parties that have direct or implicit variable interests when determining whether we
F-13
FLUOR CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
are the primary beneficiary. Management's assessment of whether we are the primary beneficiary of a VIE is continuously
performed.
Cash and Cash Equivalents
Cash and cash equivalents include securities with maturities of three months or less at the date of purchase.
Marketable Securities
Marketable securities consist of time deposits placed with investment grade banks with original maturities greater than
three months, which are typically held-to-maturity because we have the intent and ability to hold them until maturity. Held-
to-maturity securities are carried at amortized cost. Our investments in debt securities are classified as available-for-sale
because they may be sold prior to their maturity date. Available-for-sale securities are carried at fair value. The cost of
securities sold is determined by using the specific identification method. Marketable securities are assessed at least annually
for other-than-temporary impairment.
Research and Development
We have a controlling interest in NuScale, a research and development operation associated with the licensing and
commercialization of small modular nuclear reactor technology. Since May 2014, NuScale has been receiving reimbursement
from the DOE for certain qualified expenditures under cost-sharing award agreements that require NuScale to use the DOE
funds to cover first-of-a-kind engineering costs associated with small modular reactor design development and certification.
Costs incurred by NuScale are expensed as incurred, net of qualifying DOE reimbursements, and reported in "Cost of
revenue". The U.S. Nuclear Regulatory Commission approved NuScale's design certification application in August 2020. Aside
from NuScale, we generally do not engage in significant research and development activities.
Property, Plant and Equipment
Property, plant and equipment is recorded at cost. Leasehold improvements are amortized over the shorter of their
economic lives or the lease terms. Depreciation is calculated using the straight-line method over the following ranges of
estimated useful service lives, in years:
Buildings
Building and leasehold improvements
Machinery and equipment
Furniture and fixtures
Estimated Useful
Service Lives
20 – 40
6 – 20
2 – 10
2 – 10
Goodwill and Intangible Assets
Goodwill and intangible assets with indefinite lives are not amortized but are subject to at least annual impairment tests
during the fourth quarter. For impairment testing, goodwill is allocated to the applicable reporting units based on the current
reporting structure. We compare the fair value of each reporting unit with its carrying amount. If the carrying amount of a
reporting unit exceeds its fair value, an impairment loss is recognized. Intangible assets with indefinite lives are impaired if
their carrying value exceeds their fair value. In-process research and development associated with our investment in NuScale
is considered indefinite lived until the related technology is available for commercial use.
Interim impairment testing of goodwill and intangible assets is performed if indicators of potential impairment exist.
Such indicators may include the results of operations of certain businesses and geographies and the performance of the
company stock price.
Intangible assets with finite lives are amortized on a straight-line basis over their useful lives.
F-14
FLUOR CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
Income Taxes
Deferred tax assets and liabilities are recognized for the expected future tax consequences of events that have been
recognized in our financial statements or tax filings. We evaluate the realizability of our deferred tax assets and record a
valuation allowance to reduce deferred tax assets to amounts that are more likely than not to be realized. The factors used to
assess the likelihood of realization are our forecast of future taxable income and available tax planning strategies that could
be implemented to realize such assets. Failure to achieve forecasted taxable income could affect the ultimate realization of
deferred tax assets and could adversely impact our future effective tax rate.
Income tax positions are recognized when they meet a more-likely-than-not recognition threshold. Previously
recognized tax positions that no longer meet the more-likely-than-not threshold are derecognized upon such determination.
We recognize potential interest and penalties related to unrecognized tax positions as a component of income tax expense.
Judgment is required in determining the provision for income taxes as we consider our worldwide taxable earnings and
the impact of the continuing audit process conducted by various tax authorities. The final outcome of any audits could differ
materially from amounts recognized by the company.
We account for the GILTI effects in the period that is subject to such tax.
Derivatives and Hedging
We attempt to limit foreign currency exposure in most of our contracts by denominating contract revenue in the
currencies in which cost is incurred. Certain financial exposure, which includes currency and commodity price risk associated
with engineering and construction contracts, currency risk associated with monetary assets and liabilities denominated in
nonfunctional currencies and risk associated with interest rate volatility, may subject us to earnings volatility. We may
implement a hedging strategy utilizing derivatives instruments or hedging instruments to mitigate such risk. Our hedging
instruments are designated as either fair value or cash flow hedges. We formally document our hedge relationships at
inception, including identification of the hedging instruments and the hedged items, our risk management objectives and
strategies for undertaking the hedge transaction, and the initial quantitative assessment of the hedging instrument's
effectiveness in offsetting changes in the fair value of the hedged items. We subsequently assess hedge effectiveness
qualitatively, unless the hedge relationship is no longer highly effective. All hedging instruments are recorded at fair value. For
fair value hedges, the change in fair value is offset against the change in the fair value of the underlying asset or liability
through earnings. For cash flow hedges, the change in fair value is recorded as a component of AOCI and is reclassified into
earnings when the hedged item settles. For derivatives that are not designated or do not qualify as hedging instruments, the
change in the fair value of the derivative is offset against the change in the fair value of the underlying asset or liability
through earnings. In certain limited circumstances, foreign currency payment provisions could be deemed embedded
derivatives. If an embedded foreign currency derivative is identified, the derivative is bifurcated from the host contract and
the change in fair value is recognized through earnings. We maintain master netting arrangements with certain counterparties
to facilitate the settlement of derivative instruments; however, we report the fair value of derivatives on a gross basis.
Concentrations of Credit Risk
Accounts receivable and all contract work in progress are from clients in various industries and locations throughout the
world. Most contracts require payments as the projects progress or, in certain cases, advance payments. We generally do not
require collateral, but in most cases can place liens against the project assets or terminate the contract, if a material default
occurs. We evaluate the counterparty credit risk as part of our project risk review process and in determining the appropriate
level of reserves. We maintain reserves for potential credit losses and generally such losses have been minimal and within
management's estimates.
Cash and marketable securities are deposited with major banks throughout the world. Such deposits are placed with
high quality institutions and the amounts invested in any single institution are limited to the extent possible in order to
minimize concentration of counterparty credit risk.
Our counterparties for derivatives are large financial institutions selected based on profitability, strength of balance
sheet, credit ratings and capacity for timely payment of financial commitments. There are no significant concentrations of
credit risk with any individual counterparty related to our derivative contracts.
We monitor the credit quality of our counterparties and have not incurred any significant credit risk losses related to
our deposits or derivative contracts.
F-15
FLUOR CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
Stock-Based Plans
Our stock plans provide for grants of nonqualified or incentive stock options, RSUs, restricted stock and performance-
based award units, including VDI units. All grants of stock options and RSUs as well as performance-based units awarded to
Section 16 officers in 2020, 2019 and 2018 can only be settled in company stock and are accounted for as equity awards.
All expense under stock-based awards is recognized based on the fair values of the awards. Stock option awards have
grant exercise prices equal to the grant date market price of the company's stock. The fair value of grants of RSUs and
restricted stock is determined using the closing price of our common stock on the date of grant but may be discounted for any
post-vest holding periods. The grant date fair value of performance-based award units is determined by adjusting the closing
price of the company's common stock on the date of grant for any post-vest holding period discounts and for the effect of
market conditions, when applicable. Stock-based compensation expense is generally recognized over the required service
period, or over a shorter period when employee retirement eligibility is a factor.
We also grant SGI awards and performance-based awards to non-Section 16 executives which are settled in cash. These
awards are classified as liabilities and remeasured at fair value through expense at the end of each reporting period using our
closing stock price until the awards are settled. Awards that may be settled in cash or company stock at the election of the
recipient are also classified as liability awards.
Leases
We recognize right-of-use assets and lease liabilities for leases with terms greater than 12 months or leases that contain
a purchase option that is reasonably certain to be exercised. Leases are classified as either finance or operating leases. This
classification dictates whether lease expense is recognized based on an effective interest method or on a straight-line basis
over the term of the lease.
Our right-of use assets and lease liabilities primarily relate to office facilities, equipment used in connection with long-
term construction contracts and other personal property. Certain of our facility and equipment leases include one or more
options to renew, with renewal terms that can extend the lease term up to 10 years. The exercise of lease renewal options is
at our discretion. Renewal periods are included in the expected lease term if they are reasonably certain of being exercised by
us. Certain leases also include options to purchase the leased property. None of our lease agreements contain material
residual value guarantees or material restrictions or covenants.
Long-term leases (leases with terms greater than 12 months) are recorded as liabilities at the present value of the
minimum lease payments not yet paid. We use our incremental borrowing rate to determine the present value of the lease
when the rate implicit in the lease is not readily determinable. Certain lease contracts contain nonlease components such as
maintenance, utilities, fuel and operator services. We recognize both the lease component and nonlease components as a
single lease component for all of its right-of-use assets. From time to time, certain service or purchase contracts may contain
an embedded lease.
Short-term leases (leases with an initial term of 12 months or less or leases that are cancelable by the lessee and lessor
without significant penalties) are not capitalized but are expensed on a straight-line basis over the lease term. The majority of
our short-term leases relate to equipment used on construction projects. These leases are entered into at periodic rental
rates for an unspecified duration and typically have a termination for convenience provision.
3.
Recent Accounting Pronouncements
Accounting Pronouncements Implemented During 2020
On January 1, 2020, we adopted ASC Topic 326, “Financial Instruments - Credit Losses,” which replaces the incurred loss
impairment methodology with a methodology that reflects expected credit losses and requires consideration of a broader
range of information to estimate credit losses. The new guidance requires financial assets measured at amortized cost to be
presented at the net amount expected to be collected. We adopted ASC 326 using the modified retrospective method, and
accordingly, the new guidance was applied to financial assets measured at amortized cost (primarily accounts receivable and
contract assets) that existed as of January 1, 2020 (the date of initial application). As a result, we recorded additional reserves
for credit losses of $2 million and a cumulative effect adjustment to decrease retained earnings by $2 million as of January 1,
2020. The adoption of ASC 326 did not have a material impact on our results of operations or any impact on our cash flows.
We utilize a combination of methods for estimating expected credit losses including loss rates, aging schedules and
F-16
FLUOR CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
probability-of-default. In evaluating our historical loss rates, accounts receivable and contract assets are pooled into the
following categories based on similar risk characteristics: (1) EPC management; (2) government; (3) operations and
maintenance; and (4) equipment leasing. Historical loss experience is adjusted for current conditions and reasonable and
supportable forecasts, when applicable. Significantly aged receivables are evaluated individually by credit rating. Our reserve
for credit losses amounted to $39 million and $35 million as of December 31, 2020 and 2019.
In the first quarter of 2020, we adopted ASU 2019-12, “Simplifying the Accounting for Income Taxes,” which eliminates
certain exceptions related to the approach for intraperiod tax allocation, the methodology for calculating income taxes in an
interim period and the recognition of deferred tax liabilities for outside basis differences. The adoption did not have a
material impact on our financial statements.
In the first quarter of 2020, we adopted ASU 2018-18, “Clarifying the Interaction between Topic 808 and Topic 606,”
which clarifies that certain transactions between participants in a collaborative arrangement should be accounted for under
ASC 606 when the counterparty is a customer. The adoption did not have any impact on our financial statements.
In the first quarter of 2020, we adopted ASU 2018-17, “Targeted Improvements to Related Party Guidance for Variable
Interest Entities,” which amends the guidance for determining whether a decision-making fee is a variable interest. The
adoption did not have any impact on our financial statements.
In the first quarter of 2020, we adopted ASU 2018-15, “Customer’s Accounting for Implementation Costs Incurred in a
Cloud Computing Arrangement That Is a Service Contract,” which requires customers in a hosting arrangement that is a
service contract to capitalize certain implementation costs as if the arrangement was an internal-use software project. The
adoption did not have any impact on our financial statements.
In the first quarter of 2020, we adopted ASU 2018-13, “Disclosure Framework - Changes to the Disclosure Requirements
for Fair Value Measurement,” which amends certain disclosure requirements for fair value measurements. For example,
public companies will now be required to disclose the range and weighted average used to develop significant unobservable
inputs for Level 3 fair value measurements. The adoption did not have any impact on our financial statements, but we have
made additional disclosures related to the range and weighted average rates used to develop significant inputs for
nonrecurring Level 3 measurements.
In the fourth quarter of 2020, we adopted ASU 2018-14, “Disclosure Framework - Changes to the Disclosure
Requirements for Defined Benefit Plans,” which amends certain disclosure requirements related to defined benefit pension
and other postretirement plans. The adoption did not have a material impact on our financial statements.
F-17
FLUOR CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
4.
Earnings Per Share
Potentially dilutive securities include stock options, RSUs, restricted stock and performance-based award units. Diluted
EPS reflects the assumed exercise or conversion of all dilutive securities using the treasury stock method.
(in thousands, except per share amounts)
Amounts attributable to Fluor Corporation:
Net earnings (loss) from Cont Ops
Net earnings (loss) from Disc Ops
Net earnings (loss)
Basic EPS attributable to Fluor Corporation:
Weighted average common shares outstanding
Net earnings (loss) from Cont Ops
Net earnings (loss) from Disc Ops
Net earnings (loss)
Diluted EPS attributable to Fluor Corporation:
Weighted average common shares outstanding
Dilutive effects:
Stock options, RSUs, restricted stock and performance-based award units (1)
Weighted average diluted shares outstanding
Net earnings (loss) from Cont Ops
Net earnings (loss) from Disc Ops
Net earnings (loss)
(1) Anti-dilutive securities not included in shares outstanding
Year Ended December 31,
2020
2019
2018
$
$
(293,899) $ (1,525,767) $
(141,147)
(435,046) $ (1,522,164) $
3,603
153,033
20,435
173,468
$
$
$
$
140,511
140,061
140,413
(2.09) $
(1.01)
(3.10) $
(10.89) $
0.02
(10.87) $
1.09
0.15
1.24
140,511
140,061
140,413
—
140,511
—
140,061
859
141,272
(2.09) $
(1.01)
(3.10) $
(10.89) $
0.02
(10.87) $
709
593
1.08
0.15
1.23
—
During 2018, we repurchased and canceled 1.1 million shares of common stock for $50 million.
Limited Duration Stockholder Rights Agreement
In March 2020, the board of directors declared a dividend distribution of one preferred share purchase right for each
outstanding share of our common stock, payable to holders of record as of April 10, 2020. The rights are designed to protect
against unsolicited takeovers. The rights will be exercisable only if a person or group acquires 10% or more of our outstanding
common stock. Each right will entitle stockholders to purchase one one thousandth of a share of a new series of junior
participating preferred stock at an exercise price of $50. In addition, if a person or group acquires 10% of our outstanding
common stock (unless such person or group acquires 50% or more), the board of directors may exchange one share of
common stock for each outstanding right. Prior thereto, the rights are redeemable for $0.01 per right at the option of the
board of directors. The rights are scheduled to expire in March 2021.
F-18
FLUOR CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
5.
Operating Information by Segment and Geographic Area
(in millions)
Revenue
Energy & Chemicals
Mining & Industrial
Infrastructure & Power
Government
Diversified Services
Other
Total revenue
Segment profit (loss)
Energy & Chemicals
Mining & Industrial
Infrastructure & Power
Government
Diversified Services
Other
Total segment profit
Depreciation (all but Corporate included in segment profit)
Energy & Chemicals
Mining & Industrial
Infrastructure & Power
Government
Diversified Services
Other
Corporate
Total depreciation(1)
Capital expenditures
Energy & Chemicals
Mining & Industrial
Infrastructure & Power
Government
Diversified Services
Other
Corporate
Total capital expenditures(2)
Total assets
Energy & Chemicals
Mining & Industrial
Infrastructure & Power
Government
Diversified Services
Other
Corporate
Discontinued Operations - Assets held for sale
Total assets
Goodwill
Energy & Chemicals
Mining & Industrial
Infrastructure & Power
Government
Diversified Services
Other
Total Goodwill
F-19
Year Ended December 31,
2020
2019
2018
$
$
$
$
$
$
$
$
7,695.5
3,491.0
1,668.0
3,678.5
2,257.2
60.8
18,851.0
334.5
94.3
(30.1)
187.3
68.7
(144.7)
510.0
—
—
6.7
3.6
52.1
3.2
59.8
125.4
—
—
24.5
6.9
46.9
1.8
90.0
170.1
$
$
$
$
$
$
$
$
5,260.4
4,149.1
1,595.5
2,922.8
1,630.9
109.8
15,668.5
163.7
122.4
13.7
88.4
14.2
(85.4)
317.0
—
—
10.0
4.0
21.9
1.7
64.9
102.5
—
—
28.8
3.2
24.6
3.4
30.0
90.0
$
$
$
$
$
$
$
$
5,823.7
5,057.2
1,370.4
2,969.3
2,040.1
56.6
17,317.3
(95.0)
158.5
(243.9)
200.3
14.6
(220.1)
(185.6)
—
—
7.3
4.0
34.5
2.8
61.7
110.3
—
—
12.2
3.0
33.6
1.5
62.5
112.8
December 31,
2020
December 31,
2019
$
$
$
$
1,004.6
508.5
469.3
575.4
950.6
38.1
3,574.7
188.6
7,309.8
12.6
9.2
2.5
58.0
260.8
6.2
349.3
$
$
$
$
1,139.3
594.9
471.3
629.1
1,290.6
68.5
3,379.3
393.7
7,966.7
12.6
8.2
2.5
58.0
420.9
6.2
508.4
FLUOR CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
(1) Depreciation of $44 million and $72 million during 2019 and 2018, respectively, was included in discontinued
operations and excluded from the table above.
(2) Capital expenditures of $23 million, $68 million and $41 million during 2020, 2019 and 2018, respectively, were
included in discontinued operations and excluded from the table above.
Energy & Chemicals. The revenue of a single Energy & Chemicals customer and its affiliates amounted to 12% of our
consolidated revenue during 2020. The revenue of a different Energy & Chemicals customer and its affiliates amounted to
11% and 18% of our consolidated revenue during 2019 and 2018, respectively.
Segment profit in 2020 included the adverse impacts of the recognition of reserves totaling $60 million for expected
credit losses associated with certain joint venture clients, as well as margin diminution on a percentage-of-completion basis
resulting from project positions taken with respect to COVID-19 related schedule delays and associated cost growth. Segment
loss in 2019 included charges associated with forecast revisions on certain projects including $260 million (or $1.85 per share)
for cost growth on an offshore project; $87 million (or $0.62 per share) for cost growth on two downstream projects and
scope reductions on a large upstream project; $26 million (or $0.19 per share) for the write-off of pre-contract costs, $26
million (or $0.19 per share) on embedded foreign currency derivatives and $31 million (or $0.22 per share) from the
resolution of close-out matters. Segment profit in 2018 included charges of $133 million (or $0.89 per share) for cost growth
on a completed, downstream project and $40 million (or $0.23 per share) for cost growth on the aforementioned offshore
project.
We are currently in discussions with the clients of the two lump-sum, downstream projects mentioned above over
unapproved change orders totaling $66 million for cost growth and extension of time due to client-caused delays. Our current
forecasts are based on the probability of favorably resolving these matters. Revenue and segment profit could be adversely
affected if these matters are not successfully resolved, including the assessment of liquidated damages for which our
combined maximum exposure for both projects is approximately $121 million.
Mining & Industrial. Segment profit in 2019 included a gain of $31 million (or $0.16 per share) resulting from a
favorable resolution of a longstanding customer dispute on a mining project.
Infrastructure & Power. Segment profit in 2020 included a positive settlement on a canceled rail project offset by
charges for cost growth in the infrastructure legacy portfolio. Segment loss in 2019 included charges totaling $135 million (or
$0.96 per share) for the settlement of client disputes and cost growth on certain close-out matters for three power projects
that were substantially complete as of December 31, 2019. Segment loss in 2019 was further driven by charges totaling
$133 million (or $0.95 per share) resulting from late engineering changes, schedule-driven cost growth and negotiations with
clients and subcontractors on pending change orders, for several infrastructure projects. Segment loss in 2018 included
charges totaling $188 million (or $1.02 per share) resulting from cost growth at one of the aforementioned power projects.
The charges in 2018 were largely offset by a gain of $125 million (or $0.74 per share) on the sale of a joint venture interest in
the United Kingdom.
Government. Revenue from work performed for various agencies of the U.S. government amounted to 18%, 15% and
18% of our consolidated revenue during 2020, 2019 and 2018, respectively.
During 2019, we settled with a client in connection with the cancellation of two subcontracts at nuclear power plant
projects in South Carolina and Georgia. The settlement resolved our claims arising prior to the bankruptcy filing in March
2017. Proceeds from the settlement were received during 2019. As a result of the settlement, we de-recognized pre-petition
accounts receivable of $68 million and also recorded $89 million of previously unrecognized service fee revenue.
Diversified Services. During 2020, 2019 and 2018, intercompany revenue for the Diversified Services segment, excluded
from the amounts shown above, was $270 million, $322 million and $332 million, respectively.
Other. Segment loss in 2019 included charges of $59 million (or $0.42 per share) on the Warren project and $83 million
(or $0.59 per share) on the Radford project for various engineering and cost growth associated with the facilities. Segment
loss in 2018 of $56 million (or $0.30 per share) was driven by forecast revisions on the Radford project. There were no similar
material charges in 2020. Segment loss for all periods 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.
NuScale expenses included in the determination of segment loss were $84 million, $66 million and $74 million during 2020,
F-20
FLUOR CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
2019 and 2018, respectively. NuScale expenses in 2020, 2019 and 2018 were reported net of qualified reimbursable expenses
of $71 million, $56 million and $62 million, respectively.
Reconciliation of Total Segment Profit (Loss) to Earnings (Loss) from Continuing
Operations Before Taxes
(in millions)
Total segment profit (loss)
Corporate general and administrative expense
Impairment, restructuring and other exit costs
Gain (loss) on pension settlement
Interest income (expense), net
Earnings (loss) attributable to NCI from continuing operations
Year Ended December 31,
2020
2019
2018
$
317.0 $
(185.6) $
(240.7)
(305.6)
0.4
(46.4)
68.2
(165.9)
(532.6)
(137.9)
(18.5)
(31.0)
510.0
(121.2)
—
(21.9)
(40.6)
59.4
385.7
Earnings (loss) from continuing operations before taxes
$
(207.1) $
(1,071.5) $
Foreign currency exchange gains and (losses) of ($47 million), ($27 million) and $33 million were included in Corporate
G&A during 2020, 2019 and 2018, respectively.
Operating Information by Geographic Area
(in millions)
North America
Asia Pacific (includes Australia)
Europe
Central and South America
Middle East and Africa
Total
6.
Impairment, Restructuring and Other Exit Costs
Restructuring and Other Exit Costs
Revenue by project location
Year Ended December 31,
Total Assets
As of December 31,
2020
9,806.4 $
2019
8,439.7 $
2018
8,982.1 $
2020
3,982.4 $
2019
3,728.8
$
1,398.2
1,763.3
1,494.0
562.1
533.7
2,517.5
3,731.6
5,326.6
1,403.9
1,906.9
1,388.1
2,375.3
1,262.6
558.3
1,007.4
1,785.7
812.8
548.6
1,233.6
563.7
$ 15,668.5 $ 17,317.3 $ 18,851.0 $
7,309.8 $
7,966.7
During 2019, we initiated a restructuring plan designed to optimize costs and improve operational efficiency. These
efforts primarily relate to the rationalization of resources, investments, real estate and overhead across various geographies,
as well as the liquidation of certain components of the AMECO business that are being excluded from sale. Our planned
restructuring activities were substantially completed by the end of 2020. Restructuring costs totaled $8 million and
$240 million during 2020 and 2019, respectively.
Information about our restructuring, which we believe is complete as of December 31, 2020, follows:
(in millions)
Restructuring and other exit costs:
Severance
Asset impairments
Entity liquidation costs (including the recognition of cumulative translation adjustments)
Other exit costs
Total restructuring and other exit costs
Costs
Incurred in
2020
Costs
Incurred in
2019
$
$
6.6
0.4
—
1.0
8.0
$
$
63.9
90.4
83.7
2.0
240.0
F-21
FLUOR CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
Asset impairment charges included the write down of assets held for sale to fair value less cost to sell and the write
down of certain other assets to fair value. The fair value of assets and liabilities held for sale and other impaired assets,
primarily construction equipment, was estimated using observable Level 2 inputs for identical assets. See Note 24 for a
summary of assets and liabilities classified as held for sale as of December 31, 2020 and 2019. The fair value of the other
impaired assets was $25 million as of December 31, 2019. These assets were included in "Property, plant and equipment" and
"Other assets". The fair value of these other assets was estimated using observable Level 2 inputs for identical assets.
A reconciliation of restructuring liabilities follow:
(in thousands)
Balance as of December 31, 2019
Restructuring charges accrued during the period
Cash payments / settlements during the period
Currency translation
Balance as of December 31, 2020
Impairment
Impairment expense is summarized as follows:
(in thousands)
Impairment expense:
Intangible customer relationships associated with Stork
Equity method investments in the Energy & Chemicals segment
Information technology assets
Total impairment expense
2020 Impairment
Severance
$ 46,303 $
6,965
(32,292)
2,282
$ 23,258 $
Lease Exit
Costs
Other
Total
570 $
334
(799)
1
106 $
307 $ 47,180
7,986
687
(34,084)
(993)
(1)
2,282
— $ 23,364
Year Ended December 31,
2020
2019
26,671
86,096
16,269
2,125
33,657
256,769
—
$
297,604
$
292,551
Goodwill associated with the Diversified Services reporting unit
$
168,568
$
Our business has been adversely affected by the economic impacts of the outbreak of COVID-19 and the steep decline
in oil prices that occurred in the early part of 2020. These events have created significant uncertainty and economic volatility
and disruption, which have impacted and may continue to impact our business. We have experienced, and may continue to
experience, reductions in demand for certain of our services and the delay or abandonment of ongoing or anticipated projects
due to our clients’, suppliers’ and other third parties’ diminished financial condition or financial distress, as well as
governmental budget constraints. These impacts are expected to continue or worsen under prolonged stay-at-home, social
distancing, travel restrictions and other similar orders or restrictions. Significant uncertainty still exists concerning the
magnitude of the impact and duration of these events. Because of these events, we performed interim impairment testing of
our goodwill, intangible assets and investments and recognized the above impairment expense during the first quarter of
2020.
As part of our assessment of goodwill, the fair value of the reporting units was determined using an income based
approach that utilized unobservable Level 3 inputs, including significant management assumptions such as expected awards,
forecasted revenue and operating margins, weighted average cost of capital, working capital assumptions and general market
trends and conditions.
The customer relationships' valuation approach utilized unobservable Level 3 inputs including ranges of assumptions of
long-term revenue growth from 2% to 5.5% with a weighted average of 2.4%, weighted average cost of capital of 12% and a
customer attrition factor of 10%.
The valuation of the equity method investments utilized unobservable Level 3 inputs based on the forecast of
anticipated volumes and overhead absorption in a cyclical business.
F-22
FLUOR CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
2019 Impairment
During 2019, we recognized impairment expense on our intangible customer relationships associated with Stork. The fair
value of the customer relationships was determined by a third party using an income-based approach that utilized
unobservable Level 3 inputs, including significant management assumptions such as forecasted revenue and operating
margins, customer attrition and weighted average cost of capital. The net carrying value of the customer relationships was
$31 million as of December 31, 2019.
We also evaluated our significant investments and determined that certain of our investments were impaired during
2019. The fair value of these investments were determined using income-based approaches that utilized unobservable Level 3
inputs, including significant management assumptions such as forecasted revenue and operating margins and weighted
average cost of capital. The net carrying value of these investments totaled $95 million as of December 31, 2019.
7.
Income Taxes
In March 2020, the Coronavirus Aid, Relief and Economic Security Act (“CARES Act”) was enacted. The CARES Act,
among other things, includes provisions relating to net operating loss carryback periods, alternative minimum tax credit
refunds, modifications to the net interest deduction limitations and deferral of employer payroll taxes. We recorded a
discrete benefit of $125 million due to utilization of a 2019 net operating loss in the carryback period. Prior to the CARES Act,
this loss could only be carried forward and was offset by a valuation allowance. Through December 31, 2020, we have
deferred payroll taxes of $41 million under the CARES Act, with approximately half of the deferral payable in 2021 and and the
remainder payable in 2022.
The income tax expense (benefit) components recognized in continuing operations follow:
(in thousands)
Current:
Federal
Foreign
State and local
Total current
Deferred:
Federal
Foreign
State and local
Total deferred
Total income tax expense
Year Ended December 31,
2020
2019
2018
$ (121,411)
$
(36,591)
$
(19,199)
140,551
5,343
24,483
17,451
(23,342)
—
163,141
4,295
130,845
325,351
9,593
19,441
(5,891)
354,385
115,281
12,377
108,459
16,800
55,208
(7,136)
64,872
$
18,592
$ 485,230
$ 173,331
F-23
FLUOR CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
A reconciliation of U.S. statutory federal income tax expense (benefit) to income tax expense (benefit) from continuing
operations follows:
(in thousands)
U.S. statutory federal tax expense (benefit)
Increase (decrease) in taxes resulting from:
State and local income taxes
U.S. tax on GILTI
NCI
Foreign tax differential, net
Valuation allowance, net
Other changes to uncertain tax positions
Stranded tax effects from AOCI
Impact of tax reform
CARES Act Benefit
Other, net
Total income tax expense
Year Ended December 31,
2020
(43,481)
$
2019
$ (225,014)
2018
81,007
$
(10,614)
(11,135)
—
(9,466)
38,667
148,783
7,484
—
—
(124,753)
11,972
—
11,565
13,479
730,787
4,098
(35,619)
—
—
(13,668)
10,649
(7,200)
1,460
79,168
7,753
—
(1,373)
—
(2,931)
15,535
$
18,592
$ 485,230
$ 173,331
Deferred taxes reflect the tax effects of differences between the amounts recorded as assets and liabilities for financial
reporting purposes and the amounts recorded for income tax purposes. The tax effects of significant temporary differences
giving rise to deferred tax assets and liabilities are as follows:
(in thousands)
Deferred tax assets:
Accrued liabilities not currently deductible:
Employee compensation and benefits
Project and non-project reserves
Net operating loss carryforward
Tax basis of investment in excess of book basis
U.S. foreign tax credit carryforward
AOCI
Other
Total deferred tax assets
Valuation allowance
Deferred tax assets, net
Deferred tax liabilities:
Book basis of property and equipment in excess of tax basis
Dividend withholding on unremitted non-U.S. earnings
Other
Total deferred tax liabilities
Deferred tax assets, net of deferred tax liabilities
December 31,
2020
2019
$ 104,305
$ 116,162
71,999
60,768
326,402
357,803
118,915
88,255
414,348
226,845
62,681
103,955
67,258
85,059
1,202,605
1,002,150
(1,080,752)
(910,336)
$ 121,853
$ 91,814
(43,475)
(57,859)
(23,349)
(29,846)
(49,663)
(32,912)
(124,683)
(112,421)
$
(2,830)
$
(20,607)
As of December 31, 2020, we are indefinitely reinvested only with respect to unremitted earnings required to meet our
working capital and long-term investment needs in the foreign jurisdictions within which we operate. Beyond those limits, we
expect current earnings to be available for distribution. Deferred tax liabilities of approximately $28 million have not been
recorded with respect to unremitted earnings that are considered indefinitely reinvested, again primarily associated with
F-24
FLUOR CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
foreign withholding and income taxes that would be due upon remittance. We have no intention of initiating any actions that
would lead to taxation of the earnings deemed indefinitely reinvested.
We have U.S federal and state net operating loss carryforwards of $159 million and $908 million, respectively. The
federal net operating loss carryforwards can be carried forward indefinitely. If not used, the state net operating loss
carryforwards will begin to expire in 2021. Approximately $117 million of the state net operating loss carryforwards will expire
in 2021. We also have non-U.S. net operating loss carryforwards related to various jurisdictions of approximately $1.2 billion.
Non-U.S. net operating losses include $599 million in the United Kingdom and $345 million in the Netherlands as of December
31, 2020. Of the total non-U.S. losses, $800 million can be carried forward indefinitely. The majority of the remaining $296
million net operating losses, if unused, will expire between 2023 and 2028.
We had U.S. foreign tax credits of approximately $414 million as of December 31, 2020, which will begin to expire in
2028, but which are fully reserved for in our valuation allowance
During 2020 and 2019, we were in a three-year cumulative loss on a consolidated, jurisdictional basis in Australia, the
Netherlands, the U.K. and the U.S. Such cumulative loss constitutes significant negative evidence (with regards to future
taxable income) for assessing likelihood of realization. We also considered positive evidence but concluded it did not
outweigh this significant negative evidence of a three-year cumulative loss. Accordingly, we recognized non-cash charges to
tax expense of $142 million and $602 million to record a valuation allowance against net U.S. deferred tax assets and
$28 million and $129 million against certain net foreign deferred tax assets during 2020 and 2019, respectively.
In the normal course of business, we are subject to examination by taxing authorities worldwide, including such major
jurisdictions as Australia, Canada, the Netherlands, South Africa, the United Kingdom, and the United States. Although we
believe our reserves for our tax positions are reasonable, the outcome of tax audits could be materially different, both
favorably and unfavorably. With a few exceptions, we are no longer subject to U.S. federal, state and local, or non-U.S.
income tax examinations for years before 2012.
A summary of unrecognized tax benefits follows:
(in thousands)
Balance at beginning of year
Change in tax positions of prior years
Change in tax positions of current year
Reduction in tax positions for statute expirations
Reduction in tax positions for audit settlements
Balance at end of year
2020
$ 42,394
2019
$ 55,476
8,166
—
(1,510)
(637)
6,359
—
(16,894)
(2,547)
$ 48,413
$ 42,394
If recognized, the total amount of unrecognized tax benefits as of December 31, 2020 and 2019, would favorably impact
the effective tax rates by $30 million and $22 million, respectively. We had $11 million and $10 million of accrued interest and
penalties as of December 31, 2020 and 2019, respectively. We do not anticipate any significant changes to the unrecognized
tax benefits within the next twelve months.
U.S. and foreign earnings (loss) from continuing operations before taxes are as follows:
Year Ended December 31,
(in thousands)
United States
Foreign
Total
2020
$ (265,682)
58,630
$ (207,052)
F-25
2019
$ (968,280) $
(103,215)
2018
(252,376)
638,125
$ (1,071,495) $ 385,749
FLUOR CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
8.
Supplemental Cash Flow Information
The changes in assets and liabilities included in operating cash flow follow:
(in thousands)
(Increase) decrease in:
Year Ended December 31,
2020
2019
2018
Accounts and notes receivable, net
$
138,388 $
210,419 $
(40,632)
Contract assets
Other current assets
Other assets
Increase (decrease) in:
Accounts payable
Contract liabilities
Accrued liabilities
Other liabilities
Increase (decrease) in cash due to changes in assets and liabilities
Cash paid during the year for:
Interest
Income taxes (net of refunds)
9.
Partnerships and Joint Ventures
280,360
207,467
(83,774)
3,893
(80,248)
168,021
109,405
100,527
(25,424)
(343,113)
(46,873)
176,335
(53,580)
(11,829)
(93,723)
202,359
(307,844)
29,880
9,496
(75,878)
(38,536)
29,801 $
633,027 $
(227,732)
65,641 $
71,938 $
66,514
65,188
204,080
(28,408)
$
$
In the normal course of business, we form partnerships or joint ventures primarily for the execution of single contracts
or projects. The majority of these partnerships or joint ventures are characterized by a 50 percent or less, noncontrolling
ownership or participation interest, with decision making and distribution of expected gains and losses typically being
proportionate to the ownership or participation interest. Many of the partnership and joint venture agreements provide for
capital calls to fund operations, as necessary. Accounts receivable related to work performed for unconsolidated partnerships
and joint ventures included in "Accounts and notes receivable, net" were $218 million and $149 million as of December 31,
2020 and 2019, respectively.
The following is a summary of aggregate, unaudited balance sheet data for unconsolidated entities where our
investment is presented as a one-line equity method investment:
(in millions)
Current assets
Noncurrent assets
Current liabilities
Noncurrent liabilities
$
December 31,
2020
2019
8,138 $
4,745
6,307
4,354
6,927
5,109
4,605
5,256
The following is a summary of aggregate, unaudited income statement data for unconsolidated entities where the
equity method of accounting is used to recognize our share of net earnings or loss of investees:
(in millions)
Revenue
Cost of revenue
Net earnings
2020
2019
2018
$
1,209 $
1,104
54
1,258 $
1,151
45
1,465
1,338
35
During 2020 and 2019, we evaluated our significant investments and determined that certain of our investments were
impaired. As a result, we recognized impairment expense of $86 million and $257 million during 2020 and 2019, respectively.
F-26
FLUOR CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
One of our more significant joint ventures is COOEC Fluor, in which we have a 49% ownership interest. COOEC Fluor
owns, operates and manages the Zhuhai Fabrication Yard in China’s Guangdong province. We completed our final funding
commitment to the joint venture of $26 million during 2021.
During 2020, we sold our interests in three infrastructure joint ventures and recognized a gain of $8 million. We also
sold our 50% interest in an Energy & Chemicals joint venture during 2020 and recognized a loss of $11 million.
Variable Interest Entities
The net carrying value of the unconsolidated VIEs (classified under both investments and other accrued liabilities) was a
net asset of $174 million and $217 million as of December 31, 2020 and 2019, respectively. Some of our VIEs have debt;
however, such debt is typically non-recourse in nature. Our maximum exposure to loss as a result of our investments in
unconsolidated VIEs is typically limited to the aggregate of the carrying value of the investment and future funding necessary
to satisfy the contractual obligations of the VIE. Future funding commitments as of December 31, 2020 for the unconsolidated
VIEs were $72 million.
In some cases, we are required to consolidate certain VIEs. As of December 31, 2020, the carrying values of the assets
and liabilities associated with the operations of the consolidated VIEs were $1.3 billion and $703 million, respectively. As of
December 31, 2019, the carrying values of the assets and liabilities associated with the operations of the consolidated VIEs
were $1.1 billion and $798 million, respectively. The assets of a VIE are restricted for use only for the particular VIE and are
not available for our general operations.
We have agreements with certain VIEs to provide financial or performance assurances to clients, as discussed
elsewhere.
10. Guarantees
In the ordinary course of business, we enter into various agreements providing performance assurances and guarantees
to our clients on behalf of certain unconsolidated and consolidated partnerships, joint ventures and other jointly executed
contracts. These agreements are entered into primarily to support project execution commitments. The performance
guarantees have various expiration dates ranging from mechanical completion of the project to a period extending beyond
contract completion. The maximum potential amount of future payments that we could be required to make under
outstanding performance guarantees, which represents the remaining cost of work to be performed, was estimated to be
$14 billion as of December 31, 2020. For cost reimbursable contracts, amounts that may become payable pursuant to
guarantee provisions are normally recoverable from the client for work performed. For lump-sum contracts, the performance
guarantee amount is the cost to complete the contracted work, less amounts remaining to be billed to the client under the
contract. Remaining billable amounts could be greater or less than the cost to complete. In those cases where costs exceed
the remaining amounts payable under the contract, we may have recourse to third parties, such as owners, partners,
subcontractors or vendors for claims. The performance guarantee obligation was not material as of December 31, 2020 and
2019.
Financial guarantees, made in the ordinary course of business in certain limited circumstances, are entered into with
financial institutions and other credit grantors and generally obligate the company to make payment in the event of a default
by the borrower. These arrangements generally require the borrower to pledge collateral to support the fulfillment of the
borrower's obligation.
11. Contingencies and Commitments
We and certain of our subsidiaries are subject to litigation, claims and other commitments and contingencies arising in
the ordinary course of business. Although the asserted value of these matters may be significant, we currently do not expect
that the ultimate resolution of any open matters will have a material adverse effect on our financial position or results of
operations.
Since May 2018, purported shareholders have filed various complaints against Fluor Corporation and certain of its
current and former executives in the U.S. District Court for the Northern District of Texas. The plaintiffs purport to represent a
class of shareholders who purchased or otherwise acquired Fluor common stock from August 14, 2013 through February 14,
2020, and seek to recover damages arising from alleged violations of federal securities laws. These claims are based on
statements concerning Fluor’s internal and disclosure controls, risk management, revenue recognition, and Fluor’s gas-fired
F-27
FLUOR CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
power business, which plaintiffs assert were materially misleading. As of May 26, 2020, these complaints have been
consolidated into one matter. We filed a motion to dismiss the matter on July 1, 2020. While no assurance can be given as to
the ultimate outcome of this matter, we do not believe it is probable that a loss will be incurred. Accordingly, we have not
recorded a charge as a result of this action.
Since September 2018, ten separate purported shareholders' derivative actions were filed against current and former
members of the Board of Directors, as well as certain of Fluor’s current and former executives. Fluor Corporation is named as
a nominal defendant in the actions. These derivative actions purport to assert claims on behalf of Fluor Corporation and make
substantially the same factual allegations as the securities class action matter discussed above and seek various forms of
monetary and injunctive relief. These actions are pending in Texas state court (District Court for Dallas County), the U.S.
District Court for the District of Delaware, the U.S. District Court for the Northern District of Texas, and the Court of Chancery
of the State of Delaware. Certain of these actions have been consolidated and stayed until our motion to dismiss is ruled upon
in the securities class action matter. While no assurance can be given as to the ultimate outcome of this matter, we do not
believe it is probable that a loss will be incurred. Accordingly, we have not recorded a charge as a result of these actions.
Fluor Australia Ltd., our wholly-owned subsidiary (“Fluor Australia”), completed a cost reimbursable engineering,
procurement and construction management services project for Santos Ltd. (“Santos”) involving a large network of natural
gas gathering and processing facilities in Queensland, Australia. On December 13, 2016, Santos filed an action in Queensland
Supreme Court against Fluor Australia, asserting various causes of action and seeking damages and/or a refund of contract
proceeds paid of approximately AUD $1.47 billion. Santos has joined Fluor Corporation to the matter on the basis of a parent
company guarantee issued for the project. We believe that the claims asserted by Santos are without merit and we are
vigorously defending these claims. While no assurance can be given as to the ultimate outcome of this matter, we do not
believe it is probable that a loss will be incurred. Accordingly, we have not recorded a charge as a result of this action.
Fluor Limited, our wholly-owned subsidiary (“Fluor Limited”), and Fluor Arabia Limited, a partially-owned subsidiary
(“Fluor Arabia”), completed cost reimbursable engineering, procurement and construction management services for Sadara
Chemical Company (“Sadara”) involving a large petrochemical facility in Jubail, Kingdom of Saudi Arabia. On August 23, 2019,
Fluor Limited and Fluor Arabia Limited commenced arbitration proceedings against Sadara after it refused to pay invoices
totaling approximately $100 million due under the parties’ agreements. As part of the arbitration proceedings, Sadara has
asserted various counterclaims for damages and/or a refund of contract proceeds paid totaling approximately $574 million
against Fluor Limited and Fluor Arabia Limited. We believe that the counterclaims asserted by Sadara are without merit and
are vigorously defending these claims. While no assurance can be given as to the ultimate outcome of the counterclaims, we
do not believe it is probable that a loss will be incurred in excess of amounts reserved for this matter. Accordingly, we have
not recorded a charge as a result of the counterclaims.
Various wholly-owned subsidiaries of Fluor, in conjunction with a partner, TECHINT, (“Fluor/TECHINT”) performed
engineering, procurement and construction management services on a cost reimbursable basis for Barrick involving a gold
mine and ore processing facility on a site straddling the border between Argentina and Chile. In 2013, Barrick terminated the
Fluor/TECHINT agreements for convenience and not due to the performance of Fluor/TECHINT. On August 12, 2016, Barrick
filed a notice of arbitration against Fluor/TECHINT, demanding damages and/or a refund of contract proceeds paid of not less
than $250 million under various claims relating to Fluor/TECHINT’s alleged performance. Proceedings were suspended while
the parties explored a possible settlement. In August 2019, Barrick drew down $36 million of letters of credit from Fluor/
TECHINT ($24 million from Fluor and $12 million from TECHINT). Thereafter, Barrick proceeded to reactivate the arbitration. In
December 2020, Barrick and Fluor/TECHINT exchanged detailed statements of claim and counterclaim pursuant to which
Barrick’s claim against Fluor/TECHINT now totals approximately $330 million. We believe that the claims asserted by Barrick
are without merit and are vigorously defending these claims. While no assurance can be given as to the ultimate outcome of
this matter, we do not believe it is probable that a loss will be incurred. Accordingly, we have not recorded a charge as a result
of these claims.
Purple Line Transit Partners, LLC (“PLTP”) entered into a Public Private Partnership Agreement (“PPPA”) with the
Maryland Department of Transportation and the Maryland Transit Administration (together, the “State”) for the finance,
design, construction, and operation of the Purple Line Project, a new light rail line in Maryland (the “Project”). PLTP is a
limited liability company in which Fluor has a 15% membership interest. PLTP entered into an Amended and Restated Design-
Build Contract (the “DB Contract”) with Purple Line Transit Constructors, LLC (“PLTC”) as design-build contractor to perform
PLTP’s design and construction obligations under the PPPA on a back-to-back basis. PLTC is a limited liability company in
which Fluor has a 50% membership interest. The design and construction of the Project was significantly delayed by more
F-28
FLUOR CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
than two and a half years due to events outside of PLTP or PLTC’s control. The PPPA contained a provision allowing PLTP the
unconditional right to terminate the PPPA if certain events delayed the design and construction of the Project by 365 days or
more. The DB Contract contained a similar provision allowing PLTC to terminate the DB Contract. Because of significant
Project delays, in excess of 365 days, on May 1, 2020, PLTC gave notice to PLTP of PLTC’s intent to terminate the DB Contract.
Upon receiving PLTC’s notice, on June 23, 2020, PLTP exercised its unconditional right to terminate the PPPA. The State
challenged PLTP’s termination of the PPPA and commenced a lawsuit in Maryland state court against PLTP alleging breach of
the PPPA. This matter has now been resolved. PLTC, PLTP and the State entered into a comprehensive settlement in
December, 2020. As part of the settlement, Fluor transferred its 15% interest in PLTP to the remaining partners. Fluor also
sold its 50% interest in the operations & maintenance entity to the remaining partners. PLTC received an initial settlement
payment of $116 million from PLTP in December 2020, and we are contractually owed an additional $150 million to be paid
no later than December 2021. The lawsuit has been dismissed with prejudice, the DB Contract is officially terminated, and
PLTC has received a final release from PLTP and the State.
Other Matters
We have made claims arising from the performance under our contracts. We recognize revenue for claims, including
change orders in dispute and unapproved change orders, when it is probable that a significant reversal in the amount of
cumulative revenue recognized will not occur. We estimate the amount of revenue to be recognized on claims using the
expected value method (i.e., the sum of probability-weighted amounts) or the most likely amount method, whichever offers
better prediction. Factors considered in determining whether revenue associated with claims should be recognized include
the following: (a) the legal basis for the claim, (b) additional costs were caused by circumstances that were unforeseen at the
contract date and not the result of deficiencies in our performance, (c) claim-related costs are identifiable and considered
reasonable in view of the work performed, and (d) evidence supporting the claim is objective and verifiable. Similarly, we
recognize disputed back charges to suppliers or subcontractors as a reduction of cost when the same requirements have been
satisfied. We periodically evaluate our positions and the amounts recognized with respect to all our claims and back charges.
As of December 31, 2020 and 2019, we had recorded $216 million and $198 million, respectively, of claim revenue for costs
incurred to date. Additional costs, which will increase the claim revenue balance over time, are expected to be incurred in
future periods. We also had recorded disputed back charges to suppliers or subcontractors as of December 31, 2020 and
2019, none of which were material.
From time to time, we enter into contracts with the U.S. government and its agencies. Government contracts are subject
to audits and investigations by government representatives with respect to our compliance with various restrictions and
regulations applicable to government contractors, including but not limited to the allowability of costs incurred under
reimbursable contracts. In connection with performing government contracts, we maintain reserves for estimated exposures
associated with these matters.
Our operations are subject to and affected by federal, state and local laws and regulations regarding the protection of
the environment. We maintain reserves for potential future environmental cost where such obligations are either known or
considered probable, and can be reasonably estimated. We believe, based upon present information available to us, that our
reserves with respect to future environmental cost are adequate and such future cost will not have a material effect on our
consolidated financial position, results of operations or liquidity.
In February 2020, we announced that the SEC is conducting an investigation and has requested documents and
information related to projects for which we recorded charges in the second quarter of 2019. In April 2020, the Corporation
received a subpoena from the U.S. Department of Justice (“DOJ”) seeking documents and information related to the second
quarter 2019 charges; certain of the projects associated with those charges; and certain project accounting, financial
reporting and governance matters. We are coordinating responses to the SEC and DOJ and cooperating in providing the
requested documents and information, which efforts are ongoing.
F-29
FLUOR CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
12. Contract Assets and Liabilities
The following summarizes information about our contract assets and liabilities:
(in millions)
Information about contract assets:
Contract assets
Unbilled receivables
Contract work in progress
Contract assets
Advance billings deducted from contract assets
Information about contract liabilities:
Provision for anticipated losses on contracts included in contract liabilities
Revenue recognized that was included in contract liabilities as of January 1
13. Remaining Unsatisfied Performance Obligations
We estimate that our RUPO will be satisfied over the following periods:
(in millions)
Within 1 year
1 to 2 years
Thereafter
Total remaining unsatisfied performance obligations
14.
Lines of Credit, Senior Notes and Other Borrowings
Debt consisted of the following:
(in thousands)
Current:
Other borrowings
Long-Term:
Senior Notes
2023 Notes
2024 Notes
2028 Notes
Other borrowings
Borrowings under committed lines of credit
Committed Line of Credit
December 31,
2020
2019
$
$
$
$
681 $
287
968 $
310 $
851
387
1,238
574
Year Ended December 31,
2020
2019
203 $
755
371
779
December 31,
2020
$
$
10,873
6,150
6,445
23,468
December 31,
2020
2019
$
25,415 $
38,728
$
$
609,764 $
496,200
595,134
8,935
557,185
495,240
594,502
4,812
— $
—
In February 2021, we entered into an amended and restated $1.65 billion credit facility which matures in February 2023.
This credit facility contains customary financial covenants, including a debt-to-capitalization ratio that cannot exceed 0.65 to
1.00, a limitation on the aggregate amount of debt of the greater of $750 million or €750 million for our subsidiaries, and a
minimum liquidity threshold, as defined in the amended credit facility, of $1.5 billion which may be reduced to $1.25 billion
F-30
FLUOR CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
upon the repayment of debt. If this credit facility had been in place as of December 31, 2020, our financial covenants would
have limited our further borrowings to approximately $934 million. The credit facility also contains provisions that will require
us to provide collateral to secure this facility should we be downgraded to BB by S&P and Ba2 by Moody's, such collateral
consisting broadly of our U.S. assets. Borrowings under the facility, which may be denominated in USD, EUR, GBP or CAD, bear
interest at a base rate, plus an applicable borrowing margin.
As of December 31, 2020, letters of credit totaling $418 million were outstanding under our predecessor lines of credit,
which consisted of a $1.7 billion Revolving Loan and Letter of Credit Facility and a $1.8 billion Revolving Loan and Letter of
Credit Facility. There were no borrowings outstanding under these facilities as of December 31, 2020. These credit facilities
also contained customary financial and restrictive covenants, including a debt-to-capitalization ratio that could not exceed 0.6
to 1.0.
Senior Notes
In August 2018, we issued $600 million of 4.250% Senior Notes due in September 2028 ("2028 Notes") and received
proceeds of $595 million. Interest on the 2028 Notes is payable semi-annually in March and September. Prior to June 2028,
we may redeem the 2028 Notes at a redemption price equal to 100% of the principal amount, plus a “make whole” premium
described in the indenture. After June 2028, the 2028 Notes can be redeemed at par plus accrued interest.
In March 2016, we issued €500 million of 1.750% Senior Notes due in March 2023 ("2023 Notes") and received
proceeds of €497 million. Interest on the 2023 Notes is payable annually in March. Prior to December 2022, we may redeem
the 2023 Notes at a redemption price equal to 100% of the principal amount, plus a "make whole" premium described in the
indenture. After December 2022, the 2023 Notes can be redeemed at par plus accrued interest. Additionally, we may redeem
the 2023 Notes at par plus accrued interest if certain changes in U.S. tax laws occur.
In November 2014, we issued $500 million of 3.5% Senior Notes due in December 2024 ("2024 Notes") and received
proceeds of $491 million. Interest on the 2024 Notes is payable semi-annually in June and December. Prior to September
2024, we may redeem the 2024 Notes at a redemption price equal to 100% of the principal amount, plus a "make whole"
premium described in the indenture. After September 2024, the 2024 Notes can be redeemed at par plus accrued interest.
For all of the Senior Notes, a change of control (as defined by the terms of the respective indentures) could require the
company to repay them at 101% of the principal amount, plus accrued interest. We may incur additional indebtedness if we
are in compliance with certain restrictive covenants, including restrictions on liens and restrictions on sale and leaseback
transactions.
Other Borrowings and Letters of Credit
Other borrowings of $34 million and $44 million as of December 31, 2020 and 2019, respectively, primarily represent
bank loans and other financing arrangements associated with Stork.
Letters of credit are provided in the ordinary course of business primarily to indemnify our clients if we fail to perform
our obligations under our contracts. Surety bonds may be used as an alternative to letters of credit. As of December 31, 2020,
letters of credit totaling $862 million were outstanding under uncommitted lines of credit.
15.
Fair Value Measurements
The fair value hierarchy prioritizes the use of inputs used in valuation techniques into the following three levels:
•
•
•
Level 1 — quoted prices in active markets for identical assets and liabilities
Level 2 — inputs other than quoted prices in active markets for identical assets and liabilities that are observable,
either directly or indirectly
Level 3 — unobservable inputs
We perform procedures to verify the reasonableness of pricing information received from third parties for significant
assets and liabilities classified as Level 2.
F-31
FLUOR CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
The following table delineates assets and liabilities that are measured at fair value on a recurring basis:
(in thousands)
Assets:
Deferred compensation trusts(1)
Derivative assets(2)
Foreign currency
Commodity
Liabilities:
Derivative liabilities(2)
Foreign currency
Commodity
December 31, 2020
December 31, 2019
Total
Level 1
Level 2
Level 3
Total
Level 1
Level 2
Level 3
$ 9,626 $ 9,626 $
— $
— $ 7,719 $ 7,719 $
— $
—
22,667
— 22,667
806
—
806
—
—
7,167
46
—
—
7,167
46
$ 2,571 $
— $ 2,571 $
— $ 6,561 $
— $ 6,561 $
5,059
—
5,059
—
1,247
—
1,247
—
—
—
—
(1) Consists of registered money market funds and an equity index fund. These investments, which are trading securities,
represent the net asset value as of the close of business at the end of the period based on the last trade or official close
of an active market or exchange.
(2) Foreign currency and commodity derivatives are estimated using pricing models with market-based inputs, which take
into account the present value of estimated future cash flows.
During 2018, proceeds from sales and maturities of available-for-sale securities were $175 million. There were no sales
or maturities of available-for-sale securities during 2020 and 2019.
We have measured assets and liabilities held for sale and certain other impaired assets at fair value on a nonrecurring
basis.
The following summarizes information about our financial instruments that are not required to be measured at fair
value:
(in thousands)
Assets:
Cash(1)
Cash equivalents(2)
Marketable securities, current(2)
Notes receivable, including noncurrent portion(3)
Liabilities:
2023 Senior Notes(4)
2024 Senior Notes(4)
2028 Senior Notes(4)
Other borrowings, including noncurrent portion(5)
Fair Value
Hierarchy
Level 1
Level 2
Level 2
Level 3
Level 2
Level 2
Level 2
Level 2
December 31, 2020
December 31, 2019
Carrying Value
Fair Value
Carrying Value
Fair Value
$ 1,180,024 $ 1,180,024 $ 1,014,138 $ 1,014,138
1,018,757
1,018,757
983,061
983,061
23,345
38,295
23,345
38,295
7,262
28,117
7,262
28,117
$
609,764 $
578,554 $
557,185 $
562,399
496,200
595,134
34,350
494,045
599,220
34,350
495,240
594,502
43,539
510,145
609,918
43,539
_______________________________________________________________________________
(1) Cash consists of bank deposits. Carrying amounts approximate fair value.
(2) The carrying amounts of these time deposits approximate fair value because of the short-term maturity of these
instruments. Amortized cost is not materially different from the fair value.
(3) Notes receivable are carried at net realizable value which approximates fair value. Factors considered in determining the
fair value include the credit worthiness of the borrower, current interest rates, the term of the note and any collateral
pledged as security. Notes receivable are periodically assessed for impairment.
F-32
FLUOR CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
(4) The fair value of the Senior Notes was estimated based on quoted market prices and Level 2 inputs.
(5) Other borrowings primarily represent bank loans and other financing arrangements which primarily mature within one
year. The carrying amount of borrowings under these arrangements approximates fair value because of the short-term
maturity.
16. Goodwill and Intangible Assets
As discussed above, we performed interim impairment testing of our goodwill and intangible assets in the first quarter
of 2020 due to the impacts of COVID-19 and the decline in oil prices. We recognized impairment expense of $169 million on
goodwill associated with Diversified Services and $27 million on intangible customer relationships associated with Stork. No
additional impairment on goodwill or intangible assets was recognized during the remainder of 2020. During 2019, we
recognized impairment expense of $34 million on intangible customer relationships associated with Stork.
The following table provides a summary of each major intangible asset class:
December 31, 2020
December 31, 2019
(in thousands)
Customer relationships (finite-lived)
Trade names (finite-lived)
Trade names (indefinite-lived)
In-process research and
development (indefinite-lived)
Other (finite-lived)
Total intangible assets(1)
Gross
Carrying
Amount
Accumulated
Amortization
$
— $
— $
Net Book
Value
Gross
Carrying
Amount
— $ 31,894 $
Accumulated
Amortization
Net Book
Value
(451) $ 31,443
Weighted
Average
Life
8
9,169
53,411
16,900
10,742
(4,844)
4,325
—
53,411
—
16,900
(7,805)
2,937
8,388
49,789
16,900
10,399
(3,460)
4,928
13
—
49,789 —
—
16,900 —
(6,919)
3,480
10
$ 90,222 $
(12,649) $ 77,573 $ 117,370 $
(10,830) $ 106,540
(1) The aggregate amortization expense for intangible assets with finite lives is expected to be $2 million during 2021 and $1
million during 2022, 2023, 2024 and 2025.
17. Property, Plant and Equipment
Property, plant and equipment is as follows:
(cost in thousands)
Land
Buildings
Building and leasehold improvements
Machinery and equipment
Furniture and fixtures
Construction in progress
Less accumulated depreciation
Net property, plant and equipment
18.
Stock-Based Compensation
Equity Awards
December 31,
2020
2019
$
52,424 $
299,560
153,333
927,075
144,667
21,250
1,598,309
(1,037,225)
$
561,084 $
50,129
279,901
155,917
875,581
133,573
63,814
1,558,915
(964,089)
594,826
Stock-based compensation, which is generally recognized on a straight-line basis, totaled $22 million, $36 million and
$43 million during 2020, 2019 and 2018, respectively. We recognized tax benefits of $5 million, $8 million and $10 million
related to stock-based compensation during 2020, 2019 and 2018, respectively.
F-33
FLUOR CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
The following table summarizes RSU, restricted stock and stock option activity:
Outstanding as of December 31, 2017
Granted
Forfeited or expired
Vested/exercised
Outstanding as of December 31, 2018
Granted
Forfeited or expired
Vested/exercised
RSU or
Restricted Stock
Stock Options
Weighted
Average
Grant Date
Fair Value
Per Share
$51.85
57.88
54.07
51.58
Number
933,464
603,111
(38,365)
(513,078)
985,132
$53.78
1,356,303
(173,604)
(507,520)
32.68
39.57
47.72
Weighted
Average
Exercise Price
Per Share
$60.08
58.15
64.64
44.92
$60.25
22.47
60.56
30.46
Number
5,069,956
33,615
(352,624)
(161,562)
4,589,385
1,192,108
(351,885)
(48,131)
Outstanding as of December 31, 2019
1,660,311
$39.88
5,381,477
$52.13
Granted
Forfeited or expired
Vested/exercised
Outstanding as of December 31, 2020
Options exercisable as of December 31, 2020
Remaining unvested options outstanding and expected to vest
1,355,975
(114,352)
(643,340)
10.30
33.74
42.23
2,258,594
$21.76
975,290
(603,835)
—
5,752,932
3,784,647
1,948,602
11.06
59.46
—
$44.40
$58.80
$16.72
Our stock-based plans provide that RSUs and restricted stock may not be sold or transferred until service-based
restrictions have lapsed and any performance objectives have been attained. Generally, upon termination of employment,
RSUs and restricted stock which have not vested are forfeited. RSUs granted to executives in 2020, 2019 and 2018 generally
vest ratably over 3 years. RSUs granted to one executive in 2020 vest over 5 years. RSUs granted to directors in 2020, 2019
and 2018 vested upon grant. RSUs awarded to directors in 2019 and 2018 (as well as one RSU award to a director in 2020) are
subject to a post-vest holding period of 3 years. During 2020, 2019 and 2018, compensation expense related to RSUs of $17
million, $32 million and $30 million, respectively, was included in corporate G&A. The fair value of RSUs that vested during
2020, 2019 and 2018 was $5 million, $14 million and $28 million, respectively. The balance of unamortized RSU expense as of
December 31, 2020 was $10 million, which is expected to be recognized over a weighted-average period of 1.4 years.
The exercise price of options represents the closing price of our common stock on the date of grant. The options
granted in 2020, 2019 and 2018 generally vest over 3 years and expire 10 years after the grant date. Options granted to one
executive in 2020 vest over 5 years. Stock option expense during 2020, 2019 and 2018 included in corporate G&A totaled $5
million, $4 million and $4 million, respectively. The aggregate intrinsic value of stock options exercised during 2019 and 2018
was $0.3 million and $2 million, respectively. There were no stock option exercises during 2020. The balance of unamortized
stock option expense as of December 31, 2020 was $6 million, which is expected to be recognized over a weighted-average
period of 2.2 years.
The grant date fair value of options and other significant assumptions follow:
Weighted average grant date fair value
Expected life of options (in years)
Risk-free interest rate
Expected volatility
Expected annual dividend per share
January 1 -
November 30,
2020
December 31,
2020
January 1 -
September 30,
2019
October 1 -
December 31,
2019
2018
$9.05
7.2
0.5 %
60.8 %
$0.00
$7.99
5.6
2.6 %
33.3 %
$0.84
$6.93
5.4
1.7 %
46.6 %
$0.40
$14.87
5.3
2.7 %
28.2 %
$0.84
$4.59
4.6
0.4 %
64.9 %
$0.00
F-34
FLUOR CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
The computation of the expected volatility assumption used in the Black-Scholes calculations is based on a 50/50 blend
of historical and implied volatility.
Information related to options outstanding as of December 31, 2020 follows:
Range of Exercise Prices
$8.81 - $29.50
$46.07 - $62.50
$70.76 - $79.19
Options Outstanding
Options Exercisable
Weighted
Average
Remaining
Contractual
Life (In Years)
9.2
4.4
2.3
5.9
Weighted
Average
Exercise
Price
Per Share
Number
Exercisable
$
17.27
130,947
56.48
3,043,252
76.77
610,448
$
44.40
3,784,647
Weighted
Average
Remaining
Contractual
Life (In Years)
8.4
4.4
2.3
4.2
Weighted
Average
Exercise Price
Per Share
$
$
29.03
56.47
76.77
58.80
Number
Outstanding
2,088,027
3,054,457
610,448
5,752,932
As of December 31, 2020, options outstanding had an aggregate intrinsic value of $5 million, and there was no intrinsic
value for options exercisable.
During 2020, 2019 and 2018, performance-based award units totaling 1,156,365; 350,532; and 206,598, respectively,
were awarded to Section 16 officers. These awards generally vest after a period of 3 years and contain annual performance
conditions for each of the 3 years of the vesting period. Under GAAP, performance-based awards are not deemed granted
until the performance targets have been established. The performance targets for each year are generally established in the
first quarter. Accordingly, only one-third of the units awarded in any given year are deemed to be granted each year of the 3
year vesting periods. During 2020, the following units were granted:
2020 Performance Award Plan
2019 Performance Award Plan
2018 Performance Award Plan
Performance-
based Award
Units Granted in
2020
385,455
116,844
68,866
Weighted
Average
Grant Date
Fair Value
Per Share
$9.05
$9.77
$10.75
For awards granted under the 2020, 2019 and 2018 performance award plans, the number of units are adjusted at the
end of each performance period based on achievement of certain performance targets and market conditions, as defined in
the award agreements.
Compensation expense of $1 million and $9 million related to performance-based award units was included in
corporate G&A in 2019 and 2018, respectively. Compensation expense related to performance-based award units in 2020 was
immaterial. The balance of unamortized compensation expense associated with performance-based award units as of
December 31, 2020 was less than $0.1 million, which is expected to be recognized over a weighted-average period of 0.2
years.
Liability Awards
We grant SGI awards in the form of stock units, determined by dividing the target amount by the closing price of our
common stock at the grant date. Each stock unit represents the right to receive cash equal to the value of one share upon
settlement. SGI awards granted to executives vest and become payable at a rate of one-third of the total award each year.
Compensation expense of $25 million, $6 million and $6 million related to SGI awards was included in corporate G&A in 2020,
2019 and 2018, respectively. Liabilities associated with SGI awards were $29 million and $8 million as of December 31, 2020
and 2019, respectively.
During 2020, 2019 and 2018, performance-based awards were awarded to non-Section 16 executives and will be settled
in cash. Compensation expense of $3 million, $8 million and $10 million related to these performance-based awards was
included in corporate G&A in 2020, 2019 and 2018, respectively. Liabilities associated with these awards were $16 million and
$14 million as of December 31, 2020 and 2019, respectively.
F-35
FLUOR CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
19. Retirement Plans
DC Plans
Domestic and international DC plans are available to eligible salaried and craft employees. Company contributions to DC
plans are based on an employee's eligible compensation and participation rate. We recognized expense of $130 million, $115
million and $150 million associated with contributions to our DC plans during 2020, 2019 and 2018, respectively.
DB Plans
Certain DB plans are available to eligible international salaried employees. Contributions to DB plans are at least the
minimum amounts required by applicable regulations. Benefit payments under these plans are generally based upon length of
service and/or qualifying compensation.
Net periodic pension expense for our DB Plans included the following components:
(in thousands)
Service cost
Interest cost
Expected return on assets
Amortization of prior service credit
Recognized net actuarial loss
(Gain) loss on settlement
Net periodic pension expense
Year Ended December 31,
$
2020
18,129
9,899
$
2019
15,750
19,617
$
2018
17,999
21,820
(26,304)
(32,645)
(38,064)
(903)
5,806
(406)
(886)
10,303
137,898
(935)
8,368
21,900
$
6,221
$ 150,037
$
31,088
The service cost component of net periodic pension expense is presented in “Cost of revenue” and the other
components of net periodic pension expense are presented in “Corporate G&A” and "(Gain) loss on pension settlement".
UK Plan
In 2018, we executed a buy-in policy contract with an insurance company to fully insure the benefits of the DB plan in
the United Kingdom ("UK plan"). The UK plan was terminated in December 2019 and moved from "buy-in" to "buy-out"
status, at which point the remaining benefit obligations were transferred to the insurer and we were relieved of any further
obligation. During 2019, we recorded a loss on pension settlement of $138 million, which consisted primarily of unrecognized
actuarial losses included in AOCI. The settlement of the plan did not impact our cash position.
During 2018, lump-sum distributions to participants of the UK plan exceeded the sum of the service and interest cost
components of net periodic pension cost. As a result, we recorded a loss on partial pension settlement of $22 million.
DB Plan Assumptions
The ranges of assumptions indicated below cover DB plans in the Netherlands, Germany, the Philippines and the UK
(2018 only) and are based on the economic environment in each host country at the end of each reporting period. The
discount rates for the DB plans were determined primarily based on a hypothetical yield curve developed from the yields on
high quality corporate and government bonds with durations consistent with the pension obligations in those countries. The
expected long-term rate of return on asset assumptions utilizing historical returns, correlations and investment manager
forecasts are established for all relevant asset classes including international equities and government, corporate and other
debt securities.
F-36
FLUOR CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
For determining projected benefit obligation ("PBO") at
year-end:
Discount rates
Rates of increase in compensation levels
For determining net periodic cost for the year:
Discount rates
Rates of increase in compensation levels
Expected long-term rates of return on assets
2020
December 31,
2019
2018
0.80-3.50%
2.25-6.00%
1.20-4.75%
2.25-6.00%
1.20-5.60%
1.20-4.75%
2.25-6.00%
1.80-7.25%
2.25-7.00%
1.80-8.20%
1.80-7.25%
2.25-7.00%
1.90-5.50%
2.25-7.00%
1.90-7.00%
We evaluate the funded status of each of our DB plans using the above assumptions and determine the appropriate
funding level in light of applicable regulatory requirements, tax deductibility, reporting considerations and other factors. The
funding status of the plans is sensitive to changes in long-term interest rates and returns on plan assets, and funding
obligations could increase substantially if interest rates fall dramatically or returns on plan assets are below expectations.
Assuming no changes in current assumptions, we expect to contribute up to $12 million to our DB plans in 2021, which is
expected to be in excess of the minimum funding required. If the discount rates were reduced by 25 basis points, plan
liabilities would increase by approximately $57 million.
DB Plan Assets
The following table sets forth the target and actual allocations of plan assets:
Asset category:
Debt securities
Equity securities
Other
Total
2020 Target Allocation
2020
2019
December 31,
55% - 65%
25% - 35%
0% - 10%
63 %
28 %
9 %
100 %
60 %
31 %
9 %
100 %
Our investment strategy is to maintain asset allocations that appropriately manage risk within the context of seeking
adequate returns. Investment allocations are determined by each plan's governing body. Asset allocations may be affected by
local regulations. Long-term allocation guidelines are established with a target range allocation for each asset class. Short-
term deviations from these allocations may exist from time to time for tactical investment or strategic implementation
purposes.
Investments in debt securities are used to provide stable investment returns while protecting the funding status of the
plans. Investments in equity securities are utilized to generate long-term capital appreciation to mitigate the effects of
increases in benefit obligations resulting from inflation, longer life expectancy and salary growth. While most of our plans may
invest in the company's securities, there are no such direct investments at the present time.
Plan assets included investments in common or collective trusts ("CCTs"), which offer efficient access to diversified
investments across various asset categories. The estimated fair value of the investments in the CCTs represents the net asset
value of the shares or units of such funds as determined by the issuer. A redemption notice period of no more than 30 days is
required for the plans to redeem certain investments in CCTs. At the present time, there are no other restrictions on how the
plans may redeem their investments.
Debt securities are comprised of corporate bonds, government securities and CCTs with underlying investments in
corporate bonds, government and asset backed securities and interest rate swaps. Corporate bonds primarily consist of
investment-grade rated bonds and notes, of which no significant concentration exists in any one rating category or industry.
Government securities include international government bonds, some of which are inflation-indexed. Corporate bonds and
government securities are valued based on pricing models, which are determined from a compilation of primarily observable
market information, broker quotes in non-active markets or similar assets.
F-37
FLUOR CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
Equity securities span various industries and are comprised of common stocks of international companies as well as
CCTs with underlying investments in common and preferred stocks. Publicly traded corporate equity securities are valued
based on the closing price of an active market or exchange. Inactive securities are valued at the last reported bid price. As of
both December 31, 2020 and 2019, direct investments in equity securities were concentrated in international securities.
Other plan assets include guaranteed investment contracts and CCTs. Guaranteed investment contracts are insurance
contracts that guarantee a principal repayment and a stated rate of interest. The estimated fair value of these insurance
contracts, which are Level 3 assets, represents the discounted value of guaranteed benefit payments. CCTs hold underlying
investments primarily in commodities.
The following table delineates the fair value of the plan assets and liabilities of our DB Plans:
(in thousands)
Assets:
Equity securities:
Common stock
CCTs
Debt securities:
Corporate bonds
Government securities
CCTs
Other:
Guaranteed investment
contracts
CCTs
Plan assets measured at fair
value, net
Plan assets not measured at fair
value, net
Total plan assets, net
December 31, 2020
December 31, 2019
Total
Level 1
Level 2
Level 3
Total
Level 1
Level 2
Level 3
$
5,252 $ 5,252 $
— $
— $
5,346 $ 5,346 $
— $
230,135
— 230,135
—
215,904
— 215,904
532
12,036
—
—
532
12,036
507,691
— 507,691
—
—
—
493
12,962
—
—
493
12,962
412,416
— 412,416
—
—
—
—
—
20,588
51,679
—
—
—
20,588
51,679
—
19,650
43,302
—
—
— 19,650
43,302
—
$ 827,913 $ 5,252 $ 802,073 $ 20,588 $ 710,073 $ 5,346 $ 685,077 $ 19,650
1,507
$ 829,420
590
$ 710,663
The following table presents information about Level 3 fair value measurements:
(in thousands)
Balance at beginning of year
Actual return on plan assets:
Assets still held at reporting date
Assets sold during the period
Purchases
Settlements
Balance at end of year
2020
19,650 $ 374,724
2019
$
2,092
—
343
1,609
49,524
187
(1,497)
(406,394)
$
20,588 $
19,650
F-38
FLUOR CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
The following table presents expected future benefit payments related to our DB Plans:
Year Ended December 31,
2021
2022
2023
2024
2025
2026 — 2030
The following table sets forth the change in PBO, plan assets and funded status of the plans:
(in thousands)
Change in PBO:
Benefit obligation at beginning of year
Service cost
Interest cost
Employee contributions
Currency translation
Actuarial (gain) loss (1)
Benefits paid
Divestitures
Curtailments
Settlements
PBO at end of year
Change in plan assets:
Plan assets at beginning of year
Actual return on plan assets
Company contributions
Employee contributions
Currency translation
Benefits paid
Settlements
Plan assets at end of year
Funded status — (Under)/overfunded
Amounts recognized in the Consolidated Balance Sheet:
Pension assets included in other assets
Pension liabilities included in other accrued liabilities
Pension liabilities included in noncurrent liabilities
AOCI (pre-tax)
Plans with PBO in excess of plan assets:
PBO
Plan assets
Plans with ABO in excess of plan assets:
ABO
Plan assets
F-39
$
$
$
$
$
$
(in thousands)
21,387
$
21,461
21,677
22,347
23,065
125,302
December 31,
2020
2019
748,784 $ 1,020,633
15,750
19,617
3,382
(2,794)
117,549
(27,362)
(1,669)
—
(396,322)
748,784
18,129
9,899
2,860
72,178
58,258
(17,224)
—
(6,574)
(16,475)
869,835
710,663
55,819
24,752
2,860
69,025
(17,224)
(16,475)
829,420
(40,415) $
964,289
153,033
14,591
3,382
(948)
(27,362)
(396,322)
710,663
(38,121)
— $
(647)
(39,768)
161,534 $
1,349
(2,041)
(37,429)
130,619
869,835 $
829,420
78,961
39,491
45,757 $
20,588
73,865
39,491
FLUOR CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
(1) Actuarial losses are primarily due to assumption changes.
The total ABO for all DB Plans as of December 31, 2020 and 2019 was $793 million and $681 million, respectively.
Multiemployer Pension Plans
In addition to our DB plans discussed above, we participate in multiemployer pension plans for unionized construction
and maintenance craft employees. Company contributions are based on the hours worked by employees covered under
various collective bargaining agreements and totaled $38 million, $32 million and $30 million during 2020, 2019 and 2018,
respectively. We are not aware of any significant future obligations or funding requirements related to these plans other than
the ongoing contributions that are paid as hours are worked by plan participants. None of these multiemployer pension plans
are individually significant to us. The preceding information does not include amounts related to benefit plans applicable to
employees associated with certain contracts with the U.S. Department of Energy because we are not responsible for the
current or future funding of these plans.
20. Other Noncurrent Liabilities
We have deferred compensation plans and other retirement arrangements for executives which generally provide for
payments upon retirement, death or termination of employment. As of December 31, 2020 and 2019, the obligations related
to these plans totaled $329 million and $338 million, respectively, within noncurrent liabilities. To fund these obligations, we
have established non-qualified trusts, which are included in noncurrent assets. These trusts hold life insurance policies and
marketable securities. These trusts were valued at $350 million and $341 million as of December 31, 2020 and 2019,
respectively. Periodic changes in the value of these trust investments, most of which are unrealized, are recognized in
earnings, and serve to mitigate changes to the obligations which are also reflected in earnings.
We maintain appropriate levels of insurance for business risks, including workers compensation and general liability.
Insurance coverages contain various retention amounts for which we provide accruals based on the aggregate of the liability
for reported claims and an actuarially determined estimated liability for claims incurred but not reported. As of December 31,
2020 and 2019, insurance liabilities of $70 million and $80 million, respectively, were included in noncurrent liabilities.
21.
Leases
The following summarizes lease expense:
Lease Expense / (Sublease Income)
(in thousands)
Operating lease cost
Finance lease cost
Amortization of right-of-use assets
Interest on lease liabilities
Variable lease cost (1)
Short-term lease cost
Sublease income
Total lease expense
Year Ended
December 31, 2020
Year Ended December 31,
2019
Continuing
Operations
Discontinued
Operations
Continuing
Operations
Discontinued
Operations
$
83,938 $
792 $
90,591 $
809
651
23
7,415
92,161
(6,797)
676
117
—
24,900
(10,278)
1,394
65
19,231
119,737
(8,905)
$
177,391 $
16,207 $
222,113 $
27
2
—
43,807
(25,832)
18,813
(1)
Primarily relates to rent escalation due to cost of living indexation and payments for property taxes, insurance or
common area maintenance based on actual assessments.
F-40
FLUOR CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
Information related to our right-of use assets and lease liabilities follows:
Lease Assets / Liabilities
(in thousands)
Right-of-use assets
Operating lease assets
Operating lease assets
Finance lease assets
Finance lease assets
Total right-of-use assets
Lease liabilities
Operating lease liabilities, current
Operating lease liabilities, noncurrent
Operating lease liabilities
Finance lease liabilities, current
Finance lease liabilities, noncurrent
Finance lease liabilities
Total lease liabilities
Balance Sheet Classification
Cont Ops
Disc Ops
December 31, 2020
December 31, 2019
Disc Ops
Cont Ops
Other assets
Current assets held for sale
Other assets
Current assets held for sale
$ 215,134 $
—
2,434
—
9,069
$ 215,534 $ 11,503
—
400
—
Other accrued liabilities
Noncurrent liabilities
Current liabilities held for sale
Other accrued liabilities
Noncurrent liabilities
Current liabilities held for sale
$
62,180 $
—
—
2,434
—
—
8,327
$ 239,070 $ 10,761
176,776
—
114
—
—
$ 259,169 $
13,123
937
—
$ 273,229 $
$ 65,961 $
219,146
13,228
906
8
—
$ 299,249 $
—
3,259
—
181
3,440
—
—
3,180
—
—
191
3,371
Supplemental information related to our leases follows:
(in thousands)
Cash paid for amounts included in the measurement of lease liabilities:
Year Ended
December 31, 2020
Disc Ops
Cont Ops
Year Ended
December 31, 2019
Cont Ops Disc Ops
$ 91,308 $
65
1,547
96,984
—
6.5 years
2.2 years
3.34 %
3.38 %
787
3
25
546
222
4.8 years
3.5 years
3.50 %
2.64 %
Operating cash flows from operating leases
Operating cash flows from finance leases
Financing cash flows from finance leases
$ 89,649
23
761
Right-of-use assets obtained in exchange for new operating lease liabilities 20,471
Right-of-use assets obtained in exchange for new finance lease liabilities
—
Weighted-average remaining lease term - operating leases
Weighted-average remaining lease term - finance leases
Weighted-average discount rate - operating leases
Weighted-average discount rate - finance leases
6.1 years
2.1 years
3.04 %
3.39 %
$
780
117
1,365
—
8,663
4.3 years
5.0 years
3.47 %
2.72 %
F-41
FLUOR CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
The remaining lease payments under our operating and finance leases follows:
Year Ended December 31,
(in thousands)
2021
2022
2023
2024
2025
Thereafter
Total lease payments
Less: Interest
Present value of lease liabilities
Cont Ops
Disc Ops
Operating
Leases
Finance
Leases
Operating
Leases
Finance
Leases
$ 68,649
55,736
41,029
28,211
20,275
47,358
$ 261,258
(22,302)
$ 238,956
$
$
$
8
55
62
—
—
—
125
(11)
114
$
$
$
654
609
554
482
324
—
2,623
(189)
2,434
$
$
$
2,927
2,906
1,436
821
612
—
8,702
(375)
8,327
During 2018, net rental expense amounted to $360 million (including $2 million from discontinued operations).
22. Derivatives and Hedging
Derivatives Designated as Hedges
As of December 31, 2020, we had total gross notional amounts of $749 million of foreign currency contracts
outstanding (primarily related to the Canadian Dollar, Chinese Yuan, British Pound, Euro, Indian Rupee and Philippine Peso)
that were designated as hedges. The foreign currency contracts are of varying duration, none of which extend beyond
December 2024. There were no commodity contracts outstanding that were designated as hedges as of December 31, 2020.
The fair values of derivatives designated as hedging instruments follows:
Asset Derivatives
Liability Derivatives
Balance Sheet
Location
December 31,
2020
December 31,
2019
Balance Sheet
Location
December 31,
2020
December 31,
2019
(in thousands)
Foreign currency contracts Other current assets $
Commodity contracts
Foreign currency contracts
Total
Other current assets
Other assets
$
20,004 $
—
2,184
22,188 $
2,871 Other accrued liabilities $
10 Other accrued liabilities
Noncurrent liabilities
3,757
6,638
$
4 $
—
25
29 $
1,585
—
4,747
6,332
The after-tax amount of gain (loss) recognized in OCI and reclassified from AOCI into earnings associated with derivative
instruments designated as cash flow hedges follows:
After-Tax Amount of Gain
(Loss) Recognized in OCI
After-Tax Amount of Gain
(Loss) Reclassified from
AOCI into Earnings
Cash Flow Hedges (in thousands)
Foreign currency contracts
2020
2019
$ 19,608 $ 1,043 $
2018
(5,207)
Location of Gain (Loss)
Cost of revenue
2020
$ 2,382 $
2019
(1,041) $
2018
(4,432)
Commodity contracts
Interest rate contracts
(107)
—
460
—
—
—
Cost of revenue
(100)
453
—
Interest expense
(1,678)
(1,049)
(1,049)
Total
$ 19,501 $ 1,503 $
(5,207)
$
604 $
(1,637) $
(5,481)
Derivatives Not Designated as Hedges
As of December 31, 2020, we also had total gross notional amounts of $228 million of foreign currency contracts and
$28 million of commodity contracts outstanding that were not designated as hedges. The foreign currency contracts primarily
F-42
FLUOR CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
related to contract obligations denominated in nonfunctional currencies. The gains and losses associated with derivatives not
designated as hedges were not material for any period presented.
23.
Other Comprehensive Income (Loss)
The components of OCI follow:
Year Ended December 31,
2020
Tax
(Expense)
Benefit
Before-Tax
Amount
Net-of-Tax
Amount
Before-Tax
Amount
2019
Tax
(Expense)
Benefit
Net-of-Tax
Amount
Before-Tax
Amount
2018
Tax
(Expense)
Benefit
Net-of-Tax
Amount
$
(17,127) $
— $
(17,127) $ 101,096 $
(35,596) $
65,500 $ (116,775) $
16,214 $ (100,561)
(21,837)
3,309
(18,528)
(15,630)
3,846
(11,784)
12,118
(3,176)
8,942
(in thousands)
OCI:
Foreign currency translation
adjustments
Ownership share of equity
method investees' OCI
DB plan adjustments
(19,392)
—
(19,392)
150,427
(44,975)
105,452
(59,920)
7,329
(52,591)
Unrealized gain (loss) on hedges
23,531
(4,634)
18,897
4,734
(1,594)
3,140
1,490
(1,216)
Unrealized gain (loss) on
available-for-sale securities
—
—
—
—
—
—
1,134
(425)
274
709
Total OCI
(34,825)
(1,325)
(36,150)
240,627
(78,319)
162,308
(161,953)
18,726
(143,227)
Less: OCI attributable to NCI
883
—
883
(1,350)
—
(1,350)
(2,239)
—
(2,239)
OCI attributable to Fluor
Corporation
$
(35,708) $
(1,325) $
(37,033) $ 241,977 $
(78,319) $ 163,658 $ (159,714) $
18,726 $ (140,988)
The changes in AOCI balances follow:
(in thousands)
Attributable to Fluor Corporation:
Balance as of December 31, 2019
OCI before reclassifications
Amounts reclassified from AOCI
Net OCI
Balance as of December 31, 2020
Attributable to NCI:
Balance as of December 31, 2019
OCI before reclassifications
Amount reclassified from AOCI
Net OCI
Foreign
Currency
Translation
Ownership
Share of
Equity Method
Investees' OCI
DB
Plans
Unrealized
Gain (Loss)
on Hedges
AOCI, Net
$
(242,950) $
(35,456) $
(99,197) $
(2,270) $
(379,873)
$
$
(18,010)
(19,076)
(22,921)
19,501
—
548
3,529
(604)
(18,010)
(18,528)
(19,392)
18,897
(40,506)
3,473
(37,033)
(260,960) $
(53,984) $
(118,589) $
16,627 $
(416,906)
(5,051) $
— $
— $
— $
(5,051)
883
—
883
—
—
—
—
—
—
—
—
—
883
—
883
Balance as of December 31, 2020
$
(4,168) $
— $
— $
— $
(4,168)
F-43
FLUOR CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
Foreign
Currency
Translation
Ownership
Share of
Equity Method
Investees' OCI
DB
Plans
Unrealized Gain
(Loss) on
Hedges
AOCI, Net
$
(309,800) $
(23,672) $
(204,649) $
(5,410) $
(543,531)
19,957
46,893
66,850
(12,304)
520
(11,784)
4,006
101,446
105,452
1,503
1,637
3,140
13,162
150,496
163,658
(242,950) $
(35,456) $
(99,197) $
(2,270) $
(379,873)
$
$
(3,701) $
(1,350)
—
(1,350)
— $
— $
— $
—
—
—
—
—
—
—
—
—
(in thousands)
Attributable to Fluor Corporation:
Balance as of December 31, 2018
OCI before reclassifications
Amounts reclassified from AOCI
Net OCI
Balance as of December 31, 2019
Attributable to NCI:
Balance as of December 31, 2018
OCI before reclassifications
Amount reclassified from AOCI
Net OCI
Balance as of December 31, 2019
$
(5,051) $
— $
— $
— $
(in thousands)
Attributable to Fluor Corporation:
Foreign
Currency
Translation
Ownership
Share of
Equity Method
Investees' OCI
DB
Plans
Unrealized
Gain (Loss)
on Hedges
Unrealized
Gain (Loss)
on Available-
for-Sale
Securities
AOCI, Net
Balance as of December 31, 2017
$
(211,478) $
(32,614) $
(152,058) $
OCI before reclassifications
Amounts reclassified from AOCI
Net OCI
Balance as of December 31, 2018
Attributable to NCI:
Balance as of December 31, 2017
OCI before reclassifications
Amount reclassified from AOCI
Net OCI
(98,322)
—
(98,322)
7,986
956
8,942
(77,209)
24,618
(52,591)
(5,684) $
(5,207)
5,481
274
(709) $
—
709
709
$
$
(309,800) $
(23,672) $
(204,649) $
(5,410) $
— $
(1,462) $
(2,239)
—
(2,239)
— $
— $
— $
— $
—
—
—
—
—
—
—
—
—
—
—
—
Balance as of December 31, 2018
$
(3,701) $
— $
— $
— $
— $
F-44
(3,701)
(1,350)
—
(1,350)
(5,051)
(402,543)
(172,752)
31,764
(140,988)
(543,531)
(1,462)
(2,239)
—
(2,239)
(3,701)
FLUOR CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
Ownership share of equity method investees'
OCI
Income tax benefit
Cost of revenue
Income tax expense (benefit)
Location in Consolidated
Statement of Operations
Year Ended December 31,
2020
2019
2018
Impairment, restructuring &
other exit costs
Income tax expense (benefit)
$
$
$
$
$
— $
(84,286) $
—
37,393
— $
(46,893) $
—
—
—
(730) $
(695) $
(1,297)
182
175
(548) $
(520) $
341
(956)
(3,529) $ (146,579) $
(28,730)
Various accounts(1)
Income tax expense (benefit)
—
45,133
4,112
$
(3,529) $ (101,446) $
(24,618)
The reclassifications out of AOCI follow:
(in thousands)
Component of AOCI:
Foreign currency translation adjustment
Income tax benefit
Net of tax
Net of tax
DB plan adjustments
Income tax benefit
Net of tax
Unrealized gain (loss) on hedges:
Interest rate contracts
Income tax benefit
Net of tax:
Commodity and foreign currency contracts
Various accounts(2)
$
1,837 $
(1,370) $
(6,540)
Interest expense
(1,678)
(1,678)
(1,678)
Income tax expense (benefit)
445
1,411
2,737
Unrealized loss on available-for-sale securities
Income tax benefit
Corporate G&A
Income tax expense (benefit)
Net of tax
$
$
$
604 $
(1,637) $
(5,481)
— $
—
— $
— $
(1,134)
—
— $
425
(709)
(1) DB plan adjustments were reclassified to "Corporate G&A" and "Loss on pension settlement".
(2) Gains and losses on commodity and foreign currency derivatives were reclassified to "Cost of revenue" and "Corporate
G&A".
24. Discontinued Operations
We expect to complete the sale of the AMECO equipment business, which is reported in Disc Ops, within the first half of
2021. The assets and liabilities of the AMECO business are classified as held for sale. During 2020, we recognized impairment
expense of $146 million, of which $12 million related to goodwill, to reduce the AMECO assets to their fair value less cost to
sell. The fair value of the AMECO assets were determined using a combination of observable level 2 inputs, including
indicative offers and ongoing negotiations for the related assets.
In August 2020, we sold our AMECO equipment business in Jamaica for $18 million and recognized a loss of $1 million.
The operations of the AMECO business in Jamaica were included in Disc Ops through the date of sale.
In August 2019, we settled legal matters related to a previously divested business. The resulting gain and all associated
legal fees were included in "Other" in the tables below.
F-45
FLUOR CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
Disc Ops information follows:
(in thousands)
Revenue
Cost of revenue
Year Ended December 31, 2020
Year Ended December 31, 2019
Year Ended December 31, 2018
AMECO
Other
Total
AMECO
Other
Total
AMECO
Other
Total
$ 215,684
$
— $ 215,684
$ 260,276 $
— $ 260,276
$ 253,130
$
— $ 253,130
193,583
—
193,583
277,420
—
277,420
222,139
—
222,139
Corporate general and administrative expense
234
13,198
Impairment of assets held for sale
Interest expense (income), net
145,700
159
—
—
13,432
145,700
159
239
—
(341)
(21,152)
(20,913)
—
—
—
(341)
282
—
(354)
4,792
—
—
5,074
—
(354)
Total cost and expenses
339,676
13,198
352,874
277,318
(21,152)
256,166
222,067
4,792
226,859
Earnings (loss) before taxes from Disc Ops
(123,992)
(13,198)
(137,190)
(17,042)
Income tax expense (benefit)
3,957
—
3,957
(3,940)
21,152
4,447
4,110
507
31,063
6,900
(4,792)
(1,064)
26,271
5,836
Net earnings (loss) from Disc Ops
$ (127,949) $
(13,198) $ (141,147) $
(13,102) $
16,705 $
3,603
$
24,163
$
(3,728) $
20,435
The following summarizes information related to assets and liabilities classified as held for sale:
(in thousands)
AMECO
Other
December 31, 2020
December 31, 2019
Other
Assets and
Liabilities
from
Continuing
Operations
Total from
Discontinued
Operations
Other
Assets and
Liabilities
from
Continuing
Operations
Total from
Discontinued
Operations
Total
Total
AMECO
Other
Accounts and notes receivable, net
$41,988 $10,476
$52,464
$64
$52,528
$69,126 $15,925
$85,051
$17,513
$102,564
Contract assets
Other current assets
2,188
7,098
—
—
2,188
7,098
—
2,188
3,497
2,712
9,810
54,116
—
—
3,497
54,116
3,779
8,112
7,276
62,228
Current assets held for sale
51,274
10,476
61,750
2,776
64,526
126,739
15,925
142,664
29,404
172,068
Property, plant and equipment, net
113,080
Goodwill
Investments
Other assets
Noncurrent assets held for sale (1)
Total assets held for sale
—
—
13,788
126,868
—
—
—
—
—
113,080
41,160
154,240
232,792
—
—
—
—
12,338
5,063
5,063
—
13,788
—
13,788
5,868
126,868
46,223
173,091
250,998
—
—
—
—
—
232,792
64,792
297,584
12,338
—
9,295
7,293
21,633
7,293
5,868
12,654
18,522
250,998
94,034
345,032
$178,142 $10,476
$188,618
$48,999 $237,617
$377,737 $15,925
$393,662
$123,438
$517,100
Accounts payable
Contract liabilities
$17,355 $
125
Accrued salaries, wages and benefits
6,042
Other accrued liabilities
Current liabilities held for sale
11,780
35,302
13
—
—
—
13
$17,368
$75
$17,443
$24,692 $
125
6,042
11,780
35,315
10
98
135
4,466
6,140
327
12,107
8,913
9,451
510
35,825
47,522
Noncurrent liabilities held for
sale(1)
Total liabilities held for sale
9,479
$44,781
—
$13
9,479
—
9,479
4,272
$44,794
$510
$45,304
$51,794 $
—
—
—
—
—
—
—
$24,692
$6,702
$31,394
4,466
25
4,491
8,913
9,451
47,522
919
11,562
19,208
9,832
21,013
66,730
4,272
11,320
15,592
$51,794
$30,528
$82,322
(1) Noncurrent assets and liabilities held for sale were classified as current as we expect to complete the sale of the AMECO
businesses within the first half of 2021.
Our cash flow information for 2020, 2019 and 2018 included the following activities related to AMECO Disc Ops:
(in thousands)
Impairment expense - Disc Ops
Depreciation of fixed assets
Amortization of stock-based awards
Capital expenditures
$
F-46
Year Ended December 31,
2019
2018
2020
145,700 $
—
56
— $
—
44,295
123
72,137
103
(23,430)
(68,048)
(40,856)
FLUOR CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
25. Quarterly Financial Data (Unaudited)
(in millions, except per share amounts)
Year ended December 31, 2020
Revenue
Cost of revenue
Earnings (loss) from Cont Ops before taxes
Net earnings (loss) from Cont Ops
Amounts attributable to Fluor Corporation:
Net earnings (loss) from Cont Ops
Net earnings (loss) from Disc Ops
Net earnings (loss)
Basic earnings (loss) per share attributable to Fluor Corporation:
Net earnings (loss) from Cont Ops
Net earnings (loss) from Disc Ops
Net earnings (loss)
Diluted earnings (loss) per share attributable to Fluor Corporation:
Net earnings (loss) from Cont Ops
Net earnings (loss) from Disc Ops
Net earnings (loss)
(in millions, except per share amounts)
Year ended December 31, 2019
Revenue
Cost of revenue
Earnings (loss) from Cont Ops before taxes
Net earnings (loss) from Cont Ops
Amounts attributable to Fluor Corporation:
Net earnings (loss) from Cont Ops
Net earnings (loss) from Disc Ops
Net earnings (loss)
Basic earnings (loss) per share attributable to Fluor Corporation:
Net earnings (loss) from Cont Ops
Net earnings (loss) from Disc Ops
Net earnings (loss)
Diluted earnings (loss) per share attributable to Fluor Corporation:
Net earnings (loss) from Cont Ops
Net earnings (loss) from Disc Ops
Net earnings (loss)
F-47
First
Quarter
Second
Quarter
Third
Quarter
Fourth
Quarter
$ 4,118.6
$ 4,091.0
$ 3,803.2
$ 3,655.7
4,057.2
4,023.5
3,669.5
3,533.0
(228.4)
(161.6)
(171.1)
(94.9)
10.9
(20.2)
(26.9)
1.9
52.2
23.4
19.1
0.2
(41.7)
(67.2)
(115.0)
(48.3)
$
(266.0) $
(25.0) $
19.3
$
(163.3)
$
(1.22) $
(0.19) $
0.14
$
(0.82)
(0.68)
0.01
—
(0.34)
$
(1.90) $
(0.18) $
0.14
$
(1.16)
$
(1.22) $
(0.19) $
0.14
$
(0.82)
(0.68)
0.01
—
(0.34)
$
(1.90) $
(0.18) $
0.14
$
(1.16)
First
Quarter
Second
Quarter
Third
Quarter
Fourth
Quarter
$ 4,133.6
$ 4,146.4
$ 4,628.6
$ 4,408.7
4,070.9
4,577.6
4,537.3
4,348.0
(29.0)
(44.2)
(68.1)
(0.8)
(511.9)
(436.1)
(258.8)
(754.1)
(271.8)
(322.3)
(397.4)
(16.6)
(766.6)
(293.7)
23.5
(2.5)
$
(68.9) $ (414.0) $
(743.1) $
(296.2)
$
(0.49) $
(2.84) $
(5.47) $
(2.10)
—
(0.11)
0.17
(0.01)
$
(0.49) $
(2.95) $
(5.30) $
(2.11)
$
(0.49) $
(2.84) $
(5.47) $
(2.10)
—
(0.11)
0.17
(0.01)
$
(0.49) $
(2.95) $
(5.30) $
(2.11)
FLUOR CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
Significant items affecting 2020 earnings included the following:
•
•
•
•
Charges totaling $298 million for impairments of goodwill, intangible assets, investments and other assets during the
first quarter of 2020.
Charges totaling $55 million for current expected credit losses associated with Energy & Chemicals clients during the
first quarter of 2020.
Charges totaling $52 million for project positions due to COVID-19 related schedule delays and associated cost growth
during the first quarter of 2020.
Charges totaling $100 million and $46 million for impairments of assets held for sale (included in Disc Ops) during the
first and fourth quarters of 2020, respectively.
Significant items affecting 2019 earnings included the following:
•
•
•
•
•
•
•
•
•
•
•
•
•
Charges totaling $31 million from the resolution of certain close-out matters with a customer during the first quarter
of 2019.
Charges totaling $61 million, $179 million and $20 million from late design changes, schedule-driven cost growth
including liquidated damages, and subcontractor negotiations on a lump-sum, offshore project during the first, second
and fourth quarters of 2019, respectively.
Charges totaling $26 million and $109 million, including the settlement of client disputes, as well as cost growth
related to certain close-out matters, on three lump-sum, gas-fired power plant projects during the first and second
quarters of 2019, respectively.
Charges totaling $26 million from the write-off of pre-contract costs during the second quarter of 2019.
Charges totaling $87 million from schedule-driven cost growth and client and subcontractor negotiations on two
lump-sum, downstream projects and scope reductions on a large upstream project during the second quarter of 2019.
Charges totaling $55 million and $78 million from late engineering changes and schedule-driven cost growth, as well
as negotiations with clients and subcontractors on pending change orders, for several infrastructure projects during
the second and fourth quarters of 2019, respectively.
Charges totaling $4 million, $57 million and $21 million for late engineering changes and cost growth related to the
Radford project during the first, second and third quarters of 2019, respectively.
Gains of $13 million and $18 million resulting from the favorable resolution of a longstanding customer dispute during
the second and third quarters of 2019, respectively.
Charges totaling $59 million for cost growth on the Warren project during the third quarter of 2019.
Charges totaling $546 million and $185 million related to establishing a valuation allowance against deferred tax
assets during the third and fourth quarters of 2019, respectively.
Impairment, restructuring and other exit costs totaling $27 million, $27 million, $334 million and $145 million during
the first, second, third and fourth quarters of 2019, respectively.
Loss on pension settlement of $138 million during the fourth quarter of 2019.
Gain of $89 million related to the settlement agreement with Westinghouse during the fourth quarter of 2019.
F-48
TABLE OF CONTENTS
A LETTER FROM THE EXECUTIVE CHAIRMAN
A LETTER FROM THE CHIEF EXECUTIVE OFFICER
HIGH PERFORMANCE CULTURE WITH PURPOSE
02
06
10
12
14
15
16
17
INNOVATION LEADERS
CORPORATE MANAGEMENT
BOARD OF DIRECTORS
STRATEGIC PRIORITIES
FORM 10-K
F L U O R C O R P O R A T I O N ( N Y S E : F L R ) is building a better future by applying world-class expertise to solve its clients’ greatest challenges. Fluor’s 44,000
employees provide professional and technical solutions that deliver safe, well-executed, capital-efficient projects to clients around the world. Fluor is ranked
181 among the Fortune 500 companies. With headquarters in Irving, Texas, Fluor has provided engineering, procurement and construction services for more
than 100 years.
F O R W A R D - L O O K I N G S T A T E M E N T S This annual report contains statements that may constitute forward-looking statements involving risks and
uncertainties, including statements about market outlook, new awards, backlog levels, competition, and the implementation of strategic initiatives. These
forward-looking statements reflect the Company’s current analysis of existing information as of the date of this annual report, and are subject to various risks and
uncertainties. As a result, caution must be exercised in relying on forward-looking statements. Due to known and unknown risks, the Company’s actual results
may differ materially from our expectations or projections. Additional information concerning factors that may influence Fluor’s results can be found in the Form
10-K that follows this annual report.
ON THE FRONT COVER:
BHP SPENCE COPPER CONCENTRATOR PROJECT, NORTHERN CHILE.
When complete, this project will deliver 95,000 tons per day of copper concentrator and associated works.
Copper production is an important part of the world’s transition to a lower carbon future, and Fluor views
projects like this one as an important part of our strategy to be a part of the world’s energy transition.
B U ILD I N G A B E T T E R FU T U RE 2 0 2 0 A N N U A L R E P O R T
S H A RE H O LD E R RE FE RE N CE
Common Stock Information
On February 16, 2021, there were
140,759,346 shares outstanding and
approximately 4,234 shareholders of
record of Fluor’s common stock.
Registrar and Transfer Agent
Computershare
P.O. Box 505000
Louisville, KY 40233-5000
877.870.2366
computershare.com/investor
Independent Registered Public
Accounting Firm
Ernst & Young LLP
One Victory Park
Suite 2000
2323 Victory Avenue
Dallas, TX 75219
Annual Shareholders’ Meeting
Please visit investor.fluor.com for
information regarding the time and
location of our shareholders’ meeting.
Stock Trading
Fluor’s stock is traded on the
New York Stock Exchange.
Common stock domestic
trading symbol: FLR
PERFORMANCE GRAPH
The graph to the right depicts the
Company’s total return to shareholders
from December 31, 2015, through
December 31, 2020, relative to the
performance of the S&P MidCap 400
Composite Index, the Dow Jones
Heavy Construction Industry Group
Index (“DJ Heavy”), which is a published
industry index, and the S&P 500
Composite Index. This graph assumes
the investment of $100 on December
31, 2015, in each of Fluor Corporation,
the S&P MidCap 400 Composite Index,
the DJ Heavy, the S&P 500 Composite
Index, and the reinvestment of
dividends paid since that date.
Environmental Benefits Statement
Environmental impact estimates were
made using the Environmental Defense
Paper Calculator.
For More Information, Visit:
papercalculator.org
By using Sappi McCoy Silk, Fluor saved
the following resources:
Trees: 4.5 trees planted
Water: 300 gallons
Solid Waste: 20 pounds
Greenhouse Gases: 1900 pounds
Investor Relations
Jason Landkamer
469.398.7222
Electronic Delivery of Annual Report
and Proxy Statements
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annual meeting and conserve natural
resources, we are offering you, as a
Fluor shareholder, the option of viewing
future Fluor Annual Reports and Proxy
Statements on the internet. Please visit
investor.fluor.com to register and learn
more about this feature.
Unless indicated otherwise, all trade
and service marks are the intellectual
property of Fluor Corporation or its
subsidiaries.
© 2021 Fluor Corporation.
All Rights Reserved.
2015
2016
2017
2018
2019
2020
Fluor
S&P 400
DJ Heavy
S&P 500
$100.00
$113.07
$113.23
$71.78
$43.41
$37.11
$100.00
$120.73
$140.32
$124.75
$157.40
$178.88
$100.00
$123.36
$129.98
$96.04
$128.84
$156.43
$100.00
$111.95
$136.38
$130.39
$171.44
$202.96
2 0 2 0 A N N U A L R E P O R T
2
2
2
0
0
0
2
2
2
0
0
0
A
A
A
N
N
N
N
N
N
U
U
U
A
A
A
L
L
L
R
R
R
E
E
E
P
P
P
O
O
O
R
R
R
T
T
T
F L U O R C O R P O R A T I O N
6 7 0 0 L A S C O L I N A S B O U L E V A R D , I R V I N G , T E X A S 7 5 0 3 9
F L U O R . C O M
B U I L D I N G A B E T T E R F U T U R E
2 0 2 0 A N N U A L R E P O R T
BUILD ING
A BET TER FUTURE