Document

Table of Contents

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended September 30, 2020

☐ 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		33-0927079
(State or other jurisdiction of		(I.R.S. Employer
incorporation or organization)		Identification No.)

6700 Las Colinas Boulevard
Irving,	Texas	75039
(Address of principal executive offices)		(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	Trading Symbol(s)	Name of each exchange on which registered
Common Stock, $.01 par value per share	FLR	New York Stock Exchange
Preferred Stock Purchase Rights	FLR	New York Stock Exchange

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 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 ý No o

Indicate by check mark whether the registrant has submitted electronically, if any, 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 ý 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 definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company” and “emerging growth company” in Rule 12b-2 of the Exchange Act. (Check one):



Large accelerated filer	☒	Accelerated filer	☐
Non-accelerated filer	☐	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 is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No ý

As of November 30, 2020, 140,715,205 shares of the registrant’s common stock, $0.01 par value, were outstanding.

Table of Contents

FLUOR CORPORATION

FORM 10-Q



TABLE OF CONTENTS			PAGE

	Glossary of Terms		2

Part I:	Financial Information

	Item 1:	Financial Statements

		Condensed Consolidated Statement of Operations (Unaudited)	3

		Condensed Consolidated Statement of Comprehensive Income (Loss) (Unaudited)	4

		Condensed Consolidated Balance Sheet (Unaudited)	5

		Condensed Consolidated Statement of Cash Flows (Unaudited)	6

		Condensed Consolidated Statement of Changes in Equity (Unaudited)	7

		Notes to Condensed Consolidated Financial Statements (Unaudited)	9

	Item 2:	Management’s Discussion and Analysis of Financial Condition and Results of Operations	29

	Item 3:	Quantitative and Qualitative Disclosures about Market Risk	39

	Item 4:	Controls and Procedures	39

	Changes in Consolidated Backlog (Unaudited)		41

Part II:	Other Information

	Item 1:	Legal Proceedings	42

	Item 1A:	Risk Factors	42

	Item 2:	Unregistered Sales of Equity Securities and Use of Proceeds	42

	Item 4:	Mine Safety Disclosures	42

	Item 6:	Exhibits	43

Signatures			44

Table of Contents

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	Annual Report on Form 10-K for the year ended December 31, 2019
2019 Period	Nine months ended September 30, 2019
2019 Quarter	Three months ended September 30, 2019
2020 Period	Nine months ended September 30, 2020
2020 Quarter	Three months ended September 30, 2020
AOCI	Accumulated other comprehensive income (loss)
ASC	Accounting Standards Codification
ASU	Accounting Standards Update
Cont Ops	Continuing operations
Corporate G&A	Corporate general and administrative expense
COVID-19	Coronavirus pandemic
Disc Ops	Discontinued operations
DOE	U.S. Department of Energy
EPC	Engineering, procurement and construction
EPS	Earnings per share
Exchange Act	Securities Exchange Act of 1934
GAAP	Accounting principles generally accepted in the United States
ICFR	Internal control over financial reporting
NCI	Noncontrolling interests
NM	Not meaningful
NuScale	NuScale Power, LLC
OCI	Other comprehensive income (loss)
Q1 2020 10-Q	Quarterly Report on Form 10-Q for the three months ended March 31, 2020
Q2 2020 10-Q	Quarterly Report on Form 10-Q for the three and six months ended June 30, 2020
Q3 2020 10-Q	Quarterly Report on Form 10-Q for the three and nine months ended September 30, 2020
RSU	Restricted stock units
RUPO	Remaining unsatisfied performance obligations
SEC	Securities and Exchange Commission
Stork	Stork Holding B.V. and subsidiaries; Acquired by Fluor in 2016
VIE	Variable interest entity

Table of Contents

PART I: FINANCIAL INFORMATION

Item 1. Financial Statements

FLUOR CORPORATION

CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS

UNAUDITED



	Three Months Ended September 30,						Nine Months Ended September 30,
(in thousands, except per share amounts)	2020			2019			2020			2019
Revenue	$	3,803,210		$	4,628,578		$	12,012,759		$	12,908,594
Cost of revenue	3,669,535			4,537,327			11,750,224			13,185,793
Other (income) and expenses
Corporate general and administrative expense	68,085			11,167			93,770			119,721
Impairment, restructuring and other exit costs	—			333,988			302,662			388,027
Interest expense	17,603			18,984			53,017			56,490
Interest income	(4,243		)	(14,088		)	(21,596		)	(41,797		)
Total cost and expenses	3,750,980			4,887,378			12,178,077			13,708,234
Earnings (loss) from Cont Ops before taxes	52,230			(258,800		)	(165,318		)	(799,640		)
Income tax expense (benefit)	28,804			495,307			(6,943		)	434,807
Net earnings (loss) from Cont Ops	23,426			(754,107		)	(158,375		)	(1,234,447		)
Net earnings (loss) from Disc Ops	214			23,453			(92,697		)	6,049
Net earnings (loss)	23,640			(730,654		)	(251,072		)	(1,228,398		)

Less: Net earnings (loss) attributable to NCI from Cont Ops	4,299			12,445			20,536			(2,374		)
Net earnings (loss) attributable to Fluor Corporation from Cont Ops	19,127			(766,552		)	(178,911		)	(1,232,073		)
Net earnings (loss) attributable to Fluor Corporation from Disc Ops	214			23,453			(92,697		)	6,049
Net earnings (loss) attributable to Fluor Corporation	$	19,341		$	(743,099	)	$	(271,608	)	$	(1,226,024	)

Basic earnings (loss) per share attributable to Fluor Corporation
Net earnings (loss) from Cont Ops	$	0.14		$	(5.47	)	$	(1.27	)	$	(8.80	)
Net earnings (loss) from Disc Ops	—			0.17			(0.66		)	0.04
Net earnings (loss)	$	0.14		$	(5.30	)	$	(1.93	)	$	(8.76	)

Diluted earnings (loss) per share attributable to Fluor Corporation
Net earnings (loss) from Cont Ops	$	0.14		$	(5.47	)	$	(1.27	)	$	(8.80	)
Net earnings (loss) from Disc Ops	—			0.17			(0.66		)	0.04
Net earnings (loss)	$	0.14		$	(5.30	)	$	(1.93	)	$	(8.76	)

The accompanying notes are an integral part of these financial statements.

Table of Contents

FLUOR CORPORATION

CONDENSED CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME (LOSS)

UNAUDITED



	Three Months Ended September 30,						Nine Months Ended September 30,
(in thousands)	2020			2019			2020			2019
Net earnings (loss)	$	23,640		$	(730,654	)	$	(251,072	)	$	(1,228,398	)
OCI, net of tax:
Foreign currency translation adjustment	4,201			(42,332		)	(75,828		)	(14,672		)
Ownership share of equity method investees’ OCI	(34		)	2,662			(18,860		)	(2,125		)
Defined benefit plan adjustments	1,070			1,990			3,071			6,093
Unrealized gain (loss) on derivative contracts	9,588			(6,294		)	5,883			(599		)
Total OCI, net of tax	14,825			(43,974		)	(85,734		)	(11,303		)
Comprehensive income (loss)	38,465			(774,628		)	(336,806		)	(1,239,701		)
Less: Comprehensive income (loss) attributable to NCI	3,804			10,696			18,245			(3,917		)
Comprehensive income (loss) attributable to Fluor Corporation	$	34,661		$	(785,324	)	$	(355,051	)	$	(1,235,784	)

The accompanying notes are an integral part of these financial statements.

Table of Contents

FLUOR CORPORATION

CONDENSED CONSOLIDATED BALANCE SHEET

UNAUDITED



(in thousands, except share and per share amounts)	September 30, 2020			December 31, 2019
ASSETS
Current assets
Cash and cash equivalents ($559,667 and $392,772 related to VIEs)	$	2,093,782		$	1,997,199
Marketable securities ($66 related to VIEs in both periods)	17,514			7,262
Accounts and notes receivable, net ($235,645 and $329,548 related to VIEs)	1,083,351			1,217,464
Contract assets ($330,343 and $294,116 related to VIEs)	1,132,976			1,238,173
Other current assets ($31,791 and $32,271 related to VIEs)	386,751			389,565
Current assets held for sale	296,025			517,100
Total current assets	5,010,399			5,366,763

Noncurrent assets
Property, plant and equipment, net ($41,404 and $29,492 related to VIEs)	563,624			594,826
Goodwill	326,892			508,415
Investments	558,690			600,814
Deferred taxes	69,008			62,688
Deferred compensation trusts	322,445			341,235
Other assets ($41,367 and $45,425 related to VIEs)	420,592			491,917
Total noncurrent assets	2,261,251			2,599,895
Total assets	$	7,271,650		$	7,966,658

LIABILITIES AND EQUITY
Current liabilities
Accounts payable ($396,297 and $501,525 related to VIEs)	$	1,338,153		$	1,546,840
Short-term borrowings	42,450			38,728
Contract liabilities ($290,757 and $232,160 related to VIEs)	1,062,342			1,157,788
Accrued salaries, wages and benefits ($30,995 and $31,178 related to VIEs)	609,878			609,094
Other accrued liabilities ($72,773 and $21,088 related to VIEs)	454,206			470,350
Current liabilities related to assets held for sale	37,584			82,322
Total current liabilities	3,544,613			3,905,122

Long-term debt	1,677,162			1,651,739
Deferred taxes	70,363			83,295
Other noncurrent liabilities ($10,015 and $11,366 related to VIEs)	672,828			742,410

Contingencies and commitments

Equity
Shareholders’ equity
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 — 140,609,216 and 140,174,400 shares in 2020 and 2019, respectively	1,403			1,399
Additional paid-in capital	177,617			165,314
AOCI	(463,316		)	(379,873		)
Retained earnings	1,413,242			1,700,912
Total shareholders’ equity	1,128,946			1,487,752
NCI	177,738			96,340
Total equity	1,306,684			1,584,092
Total liabilities and equity	$	7,271,650		$	7,966,658

The accompanying notes are an integral part of these financial statements.

Table of Contents

FLUOR CORPORATION

CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS

UNAUDITED



	Nine Months Ended September 30,
(in thousands)	2020			2019
OPERATING CASH FLOW
Net earnings (loss)	$	(251,072	)	$	(1,228,398	)
Adjustments to reconcile net earnings (loss) to operating cash flow:
Impairment expense - Cont Ops	297,604			347,411
Impairment expense - Disc Ops	100,000			—
Depreciation	76,619			129,014
Amortization of intangibles	2,673			13,032
(Earnings) loss from equity method investments, net of distributions	(2,005		)	6,510
Loss on sale of investment	10,780			—
(Gain) loss on sales of assets	(828		)	5,690
Amortization of stock-based awards	11,571			27,513
Deferred compensation trust	(4,810		)	(36,989		)
Deferred compensation obligation	3,136			34,827
Deferred taxes	(23,673		)	316,407
Net retirement plan accrual (contributions)	(8,507		)	(1,821		)
Changes in assets and liabilities	(62,230		)	443,663
Other	(5,018		)	10,039
Operating cash flow	144,240			66,898

INVESTING CASH FLOW
Purchases of marketable securities	(23,589		)	(31,165		)
Proceeds from the sales and maturities of marketable securities	13,339			197,923
Capital expenditures	(80,786		)	(140,058		)
Proceeds from sales of property, plant and equipment	34,964			56,431
Proceeds from sales of businesses	19,885			—
Investments in partnerships and joint ventures	(25,252		)	(34,502		)
Return of capital from partnerships and joint ventures	433			11,733
Proceeds from company owned life insurance	4,574			12,245
Other	(317		)	2,071
Investing cash flow	(56,749		)	74,678

FINANCING CASH FLOW
Dividends paid	(28,720		)	(88,708		)
Other borrowings	13,527			21,206
Distributions paid to NCI	(19,288		)	(26,123		)
Capital contributions by NCI	82,109			10,581
Taxes paid on vested restricted stock	(1,313		)	(3,572		)
Stock options exercised	—			1,466
Other	(356		)	(1,990		)
Financing cash flow	45,959			(87,140		)

Effect of exchange rate changes on cash	(36,867		)	(14,078		)
Increase (decrease) in cash and cash equivalents	96,583			40,358
Cash and cash equivalents at beginning of period	1,997,199			1,764,746
Cash and cash equivalents at end of period	$	2,093,782		$	1,805,104

The accompanying notes are an integral part of these financial statements.

Table of Contents

FLUOR CORPORATION

CONDENSED CONSOLIDATED STATEMENT OF CHANGES IN EQUITY



(in thousands, except per share amounts)	Common Stock			Additional Paid-In Capital		AOCI			Retained Earnings		Total Shareholders' Equity		NCI			Total Equity
(in thousands, except per share amounts)	Shares	Amount		Additional Paid-In Capital		AOCI			Retained Earnings		Total Shareholders' Equity		NCI			Total Equity
BALANCE AS OF JUNE 30, 2020	140,565	$	1,403	$	175,089	$	(478,636	)	$	1,393,866	$	1,091,722	$	139,172		$	1,230,894
Net earnings (loss)	—	—		—		—			19,341		19,341		4,299			23,640
OCI	—	—		—		15,320			—		15,320		(495		)	14,825
Distributions to NCI	—	—		—		—			—		—		(8,457		)	(8,457		)
Capital contributions by NCI	—	—		—		—			—		—		42,589			42,589
Other NCI transactions	—	—		321		—			—		321		630			951
Stock-based plan activity	44	—		2,207		—			35		2,242		—			2,242
BALANCE AS OF SEPTEMBER 30, 2020	140,609	$	1,403	$	177,617	$	(463,316	)	$	1,413,242	$	1,128,946	$	177,738		$	1,306,684



(in thousands, except per share amounts)	Common Stock			Additional Paid-In Capital		AOCI			Retained Earnings			Total Shareholders' Equity			NCI			Total Equity
	Shares	Amount
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
Net earnings (loss)	—	—		—		—			(271,608		)	(271,608		)	20,536			(251,072		)
Cumulative adjustment for the adoption of ASC 326	—	—		—		—			(1,977		)	(1,977		)	—			(1,977		)
OCI	—	—		—		(83,443		)	—			(83,443		)	(2,291		)	(85,734		)
Dividends ($0.10 per share)	—	—		—		—			(14,120		)	(14,120		)	—			(14,120		)
Distributions to NCI	—	—		—		—			—			—			(19,288		)	(19,288		)
Capital contributions by NCI	—	—		—		—			—			—			82,109			82,109
Other NCI transactions	—	—		2,057		—			—			2,057			332			2,389
Stock-based plan activity	435	4		10,246		—			35			10,285			—			10,285
BALANCE AS OF SEPTEMBER 30, 2020	140,609	$	1,403	$	177,617	$	(463,316	)	$	1,413,242		$	1,128,946		$	177,738		$	1,306,684

The accompanying notes are an integral part of these financial statements.

Table of Contents

FLUOR CORPORATION

CONDENSED CONSOLIDATED STATEMENT OF CHANGES IN EQUITY (Continued)



(in thousands, except per share amounts)	Common Stock			Additional Paid-In Capital			AOCI			Retained Earnings			Total Shareholders' Equity			NCI			Total Equity
(in thousands, except per share amounts)	Shares	Amount		Additional Paid-In Capital			AOCI			Retained Earnings			Total Shareholders' Equity			NCI			Total Equity
BALANCE AS OF JUNE 30, 2019	140,174	$	1,399	$	113,043		$	(511,066	)	$	2,772,110		$	2,375,486		$	123,252		$	2,498,738
Net earnings (loss)	—	—		—			—			(743,099		)	(743,099		)	12,445			(730,654		)
OCI	—	—		—			(42,225		)	—			(42,225		)	(1,749		)	(43,974		)
Dividends ($0.21 per share)	—	—		—			—			(29,677		)	(29,677		)	—			(29,677		)
Distributions to NCI	—	—		—			—			—			—			(10,551		)	(10,551		)
Capital contributions by NCI	—	—		—			—			—			—			2,760			2,760
Other NCI transactions	—	—		1,105			—			—			1,105			(1,721		)	(616		)
Stock-based plan activity	—	—		(2,291		)	—			—			(2,291		)	—			(2,291		)
BALANCE AS OF SEPTEMBER 30, 2019	140,174	$	1,399	$	111,857		$	(553,291	)	$	1,999,334		$	1,559,299		$	124,436		$	1,683,735



(in thousands, except per share amounts)	Common Stock			Additional Paid-In Capital		AOCI			Retained Earnings			Total Shareholders' Equity			NCI			Total Equity
	Shares	Amount
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 earnings (loss)	—	—		—		—			(1,226,024		)	(1,226,024		)	(2,374		)	(1,228,398		)
Cumulative adjustment for the adoption of ASC 842	—	—		—		—			20,544			20,544			—			20,544
OCI	—	—		—		(9,760		)	—			(9,760		)	(1,543		)	(11,303		)
Dividends ($0.63 per share)	—	—		218		—			(89,340		)	(89,122		)	—			(89,122		)
Distributions to NCI	—	—		—		—			—			—			(26,123		)	(26,123		)
Capital contributions by NCI	—	—		—		—			—			—			10,581			10,581
Other NCI transactions	—	—		4,188		—			—			4,188			(2,233		)	1,955
Stock-based plan activity	520	3		25,345		—			—			25,348			—			25,348
BALANCE AS OF SEPTEMBER 30, 2019	140,174	$	1,399