Fluor Reports Record Earnings, New Awards and Backlog for 2006

Fluor Corporation (NYSE:FLR) today announced financial results for its fourth quarter and year ended December 31, 2006. Net earnings rose 16 percent to a record $264 million, or $2.95 per diluted share, compared with $227 million, or $2.62 per diluted share in 2005. Full year results reflect substantial growth in the Oil & Gas, Industrial & Infrastructure and Global Services businesses, which was partly offset by cost overruns on fixed price projects in the Government segment. Consolidated operating profits for the year were $557 million, up 28 percent from $436 million a year ago. Operating margins increased to 4.0 percent from 3.3 percent in 2005, reflecting improvements in Oil & Gas and Industrial & Infrastructure. Revenues rose 7 percent over 2005, to $14.1 billion, primarily due to growth in work performed in all segments except Industrial & Infrastructure. Full year new awards of $19.3 billion eclipsed the previous company record of $13.0 billion set in 2004. New awards rose 54 percent over 2005 levels, driven by significant growth in Oil & Gas and Industrial & Infrastructure bookings. Strong fourth quarter awards of $4.9 billion drove backlog to a record high of $21.9 billion, up 47 percent from the end of last year, and up 11 percent sequentially over the prior quarter-end. "I am pleased with our overall performance in 2006,” said Chairman and Chief Executive Officer Alan Boeckmann. "We are winning a significant number of new projects which have taken our backlog to an unprecedented level. We expect sustained global demand for energy and infrastructure to continue to drive strong new awards for Fluor in 2007.” "Earnings also rose to the highest level in Fluor’s history driven by strong results from our Oil & Gas, Industrial & Infrastructure and Global Services businesses. These results reflect the significant global demand for the quality engineering and construction expertise that we provide to our diverse customer base,” added Boeckmann. Corporate G&A expense for the year was $179 million compared with $144 million a year ago, mainly due to adoption of the new share-based compensation accounting standard, costs associated with the relocation of the company’s corporate headquarters to Irving, Texas, and non-operating income from a gain on sale of real estate which reduced last year’s G&A expense. Fluor’s cash and cash equivalents grew to $976 million at year-end versus $789 million a year ago, reflecting substantial collection of receivables on Government contracts. The debt-to-total capital ratio was 24 percent, up from 21 percent a year ago. Outlook Looking ahead to 2007, Fluor continues to see a favorable outlook for new project awards, with positive capital spending trends in most of our major markets. Opportunities across all business segments continue to develop, with sizable prospects pending in the oil and gas, power, mining, and transportation markets. The pipeline of new Oil & Gas projects is particularly strong, especially in downstream refining, where a number of Front End Engineering & Design (FEED) projects are underway that could result in sizable awards in the future. Ongoing strength in new awards combined with strong backlog is expected to drive continued growth in 2007. Based on the outlook for each of our five segments, earnings guidance for 2007 remains in the range of $3.50 to $3.80 per share. Business Segments Fluor’s Oil & Gas segment reported very strong operating profits for the year of $306 million, an increase of 26 percent, compared with $242 million in 2005. Revenues increased two percent to $5.4 billion, versus the year ago period which included a $294 million settlement on a project in Venezuela. Operating margins increased to 5.7 percent, reflecting the impact of excellent project performance and an increased level of higher margin front-end work during the year. New awards increased 135 percent to $10.4 billion, including several large projects in the Middle East and a large refinery expansion in the United States. Ending backlog rose to $12.0 billion, doubling from $6.0 billion a year ago. Fluor’s Industrial & Infrastructure segment reported operating profits of $76 million, compared with an operating loss of $17 million last year. Improved results in 2006 reflect the favorable impact of good project performance, better margins on new projects and overhead spending reductions. While 2006 results include provisions of $30 million on a road project in California, this is a substantial improvement over 2005 which included provisions of $24 million relating to the road project and $82 million which related to the unfavorable resolution of various project disputes. Revenues of $3.2 billion were essentially flat with 2005. New awards and backlog rose 90 percent and 40 percent, to $4.5 billion and $5.4 billion respectively, driven by a number of large mining, life sciences and infrastructure project awards. The Government segment posted operating profits of $18 million, compared with $84 million a year ago. Increased profit contributions from work for the Federal Emergency Management Agency (FEMA) were more than offset by loss provisions totaling $183 million relating primarily to fixed price embassy projects. The 2005 period included embassy loss provisions of $56 million. Revenues increased 6 percent to $2.9 billion, from $2.7 billion last year, mainly due to disaster relief activities for FEMA, partly offset by lower Iraq reconstruction activity and lower revenues on Department of Energy contracts. Operating margins declined to 0.6 percent, from 3.1 percent a year ago, as a result of the loss provisions mentioned above. Operating profits for the Global Services segment grew by 34 percent in 2006 to $152 million, from last year’s $114 million, reflecting strong contributions across the segment including the positive impact of hurricane relief activities. Revenues rose 36 percent to $2.1 billion, from $1.6 billion a year ago, mainly driven by growth in operations and maintenance work and the equipment services business line. Operating margins held steady at 7.1 percent versus 7.2 percent a year ago. Fluor’s Power segment reported $4 million in operating profits, down from $13 million in 2005, primarily due to a $9 million charge associated with the final dispute resolution on the Dearborn project. Unit revenues increased 41 percent, to $542 million, reflecting progress on power generation and plant betterment projects. Operating margins declined to 0.8 percent, from 3.5 percent a year ago, mainly due to the impact of the charge mentioned above. Power segment backlog increased 15 percent to $1.3 billion. Fourth Quarter Results Net earnings for the fourth quarter were $81 million, or 90 cents per diluted share, compared with $65 million, or 74 cents per diluted share in 2005. The fourth quarter of 2005 was substantially improved by a $9 million income tax benefit, compared with a $38 million income tax expense in the fourth quarter of this year. Operating profits for the fourth quarter increased by 57 percent to $164 million, from $105 million a year ago which included $62 million in project loss provisions and a $19 million provision for employment taxes. Strong growth in Oil & Gas, Industrial & Infrastructure and Global Services was partly offset by lower profits in the Government segment. Revenues for the quarter declined 8 percent to $3.6 billion, compared with $4.0 billion a year ago, reflecting reductions in the volume of work performed in the Government and Industrial & Infrastructure segments. Fourth Quarter and Year-End Conference Call Fluor will host a conference call at 10:00 a.m. Eastern Standard Time on Friday, March 2, which will be webcast live on the internet and can be accessed by logging onto http://investor.fluor.com. The webcast will be archived for 30 days following the call. About Fluor Corporation Fluor Corporation (NYSE:FLR) provides services on a global basis in the fields of engineering, procurement, construction, operations, maintenance and project management. Headquartered in Irving, Texas, Fluor is a FORTUNE 500 company with revenues of $14.1 billion in 2006. For more information, visit www.fluor.com. Forward-Looking Statements: This release contains forward-looking statements, including, without limitation, statements relating to future backlog, revenue and earnings, expected performance of the Company's business and the expansion of the markets which the Company serves. The forward-looking statements are based on current management expectations and involve risks and uncertainties. Actual results may differ materially as a result of a number of factors, including, among other things: failure to achieve projected backlog, revenue and/or earnings levels; the timely and successful implementation of strategic initiatives; customer cancellations of, or scope adjustments to, existing contracts; difficulties or delays incurred in the execution of contracts, including performance by our joint venture or teaming partners, resulting in cost overruns or liabilities; decreased capital investment or expenditures, or a failure to make anticipated increased capital investment or expenditures, by the Company's clients; the Company's failure to receive anticipated new contract awards; failure to obtain favorable results in existing or future litigation or dispute resolution proceedings; increased liability risks in any of the markets the Company serves; the Company’s inability to successfully convert front-end engineering services into future project awards; the cyclical nature of many of the markets the Company serves; and, changes in global business, economic, political and social conditions. Caution must be exercised in relying on these and other forward-looking statements. Due to known and unknown risks, the Company's results may differ materially from its expectations and projections. Additional information concerning these and other factors can be found in press releases as well as the Company's public periodic filings with the Securities and Exchange Commission, including the discussion under the heading "Item 1A. Risk Factors" in the Company's Form 10-K filed on March 1, 2007. Such filings are available either publicly or upon request from Fluor's Investor Relations Department: (469) 398-7220. The Company disclaims any intent or obligation to update its forward-looking statements in light of new information or future events.   FLUOR CORPORATION (in millions, except per share amounts)                 CONSOLIDATED OPERATING RESULTS   THREE MONTHS ENDED DECEMBER 31 2006  2005  Revenues $ 3,633.2  $ 3,962.8  Costs and Expenses: Cost of Revenues 3,469.3  3,858.2  Corporate G&A 50.1  52.9  Net Interest Income   (5.0)   (4.2) Total Costs and Expenses   3,514.4    3,906.9  Earnings before Income Taxes 118.8  55.9  Income Tax Expense (Credit)   38.1    (9.2) Net Earnings $ 80.7  $ 65.1  Basic Earnings per Share Net Earnings $ 0.93  $ 0.76  Weighted Average Shares 86.8  85.4  Diluted Earnings per Share Net Earnings $ 0.90  $ 0.74  Weighted Average Shares 89.3  88.3  New Awards $ 4,904.1  $ 3,403.1  Backlog $ 21,877.7  $ 14,926.6  Work Performed $ 3,469.7  $ 3,882.6                  YEAR ENDED DECEMBER 31 2006  2005  Revenues $ 14,078.5  $ 13,161.1  Costs and Expenses: Cost of Revenues 13,522.0  12,725.1  Corporate G&A 178.8  143.7  Net Interest Income   (4.3)   (7.3) Total Costs and Expenses   13,696.5    12,861.5  Earnings before Income Taxes 382.0  299.6  Income Tax Expense   118.5    72.3  Net Earnings $ 263.5  $ 227.3  Basic Earnings per Share Net Earnings $ 3.05  $ 2.68  Weighted Average Shares 86.3  84.8  Diluted Earnings per Share Net Earnings $ 2.95  $ 2.62  Weighted Average Shares 89.2  86.7  New Awards $ 19,276.2  $ 12,517.4  Backlog $ 21,877.7  $ 14,926.6  Work Performed $ 13,637.0  $ 12,888.7    FLUOR CORPORATION                         BUSINESS SEGMENT FINANCIAL REVIEW ($ in millions)   THREE MONTHS ENDED DECEMBER 31 2006  2005  Revenues Oil & Gas $ 1,492.6  $ 1,446.8  Industrial & Infrastructure 858.9  1,114.9  Government 359.7  848.6  Global Services 710.6  461.6  Power   211.4    90.9  Total revenues $ 3,633.2  $ 3,962.8    Operating Profit (Loss) Margin $ and %   $ %   $ % Oil & Gas $ 85.7  5.7  $ 54.0  3.7  Industrial & Infrastructure 23.5  2.7  (17.2) (1.6) Government 9.7  2.7  34.3  4.0  Global Services 45.4  6.4  32.3  7.0  Power   (0.4) (0.2)   1.2  1.3  Total Operating Profit (Loss) Margin $ and % $ 163.9  4.5  $ 104.6  2.6        YEAR ENDED DECEMBER 31 2006  2005  Revenues Oil & Gas $ 5,368.0  $ 5,291.2  Industrial & Infrastructure 3,171.1  3,200.4  Government 2,859.9  2,708.2  Global Services 2,137.9  1,577.7  Power   541.6    383.6  Total revenues $ 14,078.5  $ 13,161.1    Operating Profit (Loss) Margin $ and %   $ %   $ % Oil & Gas $ 305.7  5.7  $ 242.0  4.6  Industrial & Infrastructure 76.4  2.4  (16.7) (0.5) Government 17.7  0.6  83.7  3.1  Global Services 152.4  7.1  113.7  7.2  Power   4.3  0.8    13.3  3.5  Total Operating Profit (Loss) Margin $ and % $ 556.5  4.0  $ 436.0  3.3    FLUOR CORPORATION                     SELECTED BALANCE SHEET ITEMS ($ in millions, except per share amounts) DECEMBER 31, 2006 DECEMBER 31, 2005 Cash and Cash Equivalents $ 976.1  $ 789.0  Total Current Assets 3,323.6  3,108.2  Total Assets 4,874.9  4,574.4  Total Short-Term Debt 372.5  330.0  Total Current Liabilities 2,406.3  2,339.3  Long-term Debt 187.1  92.0  Shareholders' Equity 1,730.5  1,630.6    Total Debt to Capitalization % 24.4  % 20.6  % Shareholders' Equity Per Share $ 19.66  $ 18.72                      SELECTED CASH FLOW ITEMS ($ in millions) YEAR ENDED DECEMBER 31 2006  2005    Cash Provided by Operating Activities $ 296.1  $ 408.7    Investing Activities Capital Expenditures (274.1) (213.2) Other Items 36.3  54.1  Cash Utilized by Investing Activities (237.8) (159.1)   Financing Activities Decrease in Short-Term Borrowings -  (129.9) Non-Recourse Project Financing 127.3  57.6  Issuance of Common Stock -  41.8  Cash Dividends (52.9) (68.7) Other Items 44.0  67.1  Cash Provided (Utilized) by Financing Activities 118.4  (32.1)   Effect of Exchange Rate Changes on Cash 10.3  (33.0)     Increase in Cash and Cash Equivalents $ 187.0  $ 184.5                        Depreciation $ 124.1  $ 102.0      FLUOR CORPORATION Supplemental Fact Sheet                           NEW AWARDS ($ in millions)   THREE MONTHS ENDED DECEMBER 31 2006    2005    % Chg   Oil & Gas $ 3,024  61% $ 1,551  45% 95 % Industrial & Infrastructure 773  16% 720  21% 7 % Government 231  5% 601  18% (62)% Global Services 526  11% 165  5% 219 % Power 350  7% 366  11% (4)%             TOTAL NEW AWARDS $ 4,904  100% $ 3,403  100% 44 %   YEAR ENDED DECEMBER 31 2006    2005    % Chg   Oil & Gas $ 10,410  54% $ 4,430  36% 135 % Industrial & Infrastructure 4,455  23% 2,350  19% 90 % Government 2,170  11% 2,535  20% (14)% Global Services 1,606  9% 2,177  17% (26)% Power 635  3% 1,025  8% (38)%             TOTAL NEW AWARDS $ 19,276  100% $ 12,517  100% 54 %                         BACKLOG TRENDS ($ in millions)   AS OF DECEMBER 31 2006    2005    % Chg   Oil & Gas $ 11,986  55% $ 6,044  40% 98 % Industrial & Infrastructure 5,438  25% 3,886  26% 40 % Government 840  4% 1,422  10% (41)% Global Services 2,337  10% 2,463  17% (5)% Power 1,277  6% 1,112  7% 15 %             TOTAL BACKLOG $ 21,878  100% $ 14,927  100% 47 %   United States $ 9,010  41% $ 5,290  35% 70 % The Americas 2,692  12% 2,518  17% 7 % Europe, Africa and the Middle East 9,080  42% 5,890  40% 54 % Asia Pacific 1,096  5% 1,229  8% (11)%             TOTAL BACKLOG $ 21,878  100% $ 14,927  100% 47 %   (FLRF)