1124198--3/1/2007--FLUOR

related topics

{cost, contract, operation}

{capital, credit, financial}

{acquisition, growth, future}

{tax, income, asset}

{system, service, information}

{interest, director, officer}

{cost, operation, labor}

{cost, regulation, environmental}

{investment, property, distribution}

{regulation, government, change}

{operation, international, foreign}

{debt, indebtedness, cash}

{condition, economic, financial}

{provision, law, control}

{personnel, key, retain}

{competitive, industry, competition}

{stock, price, share}

{product, candidate, development}

{product, liability, claim}

We are vulnerable to the cyclical nature of the markets we serve. Intense competition in the engineering and construction industry could reduce our market share and profits. We bear the risk of cost overruns in approximately 26% of the dollar-value of our contracts. We may experience reduced profits or, in some cases, losses under these contracts if cost increase above our estimates. Our backlog is subject to unexpected adjustments and cancellations and is, therefore, an uncertain indicator of our future earnings. If we guarantee the timely completion or performance standards of a project, we could incur additional cost to cover our guarantee obligations. The nature of our engineering and construction business exposes us to potential liability claims and contract disputes which may reduce our profits. Our failure to recover adequately on claims against project owners for payment could have a material effect on us. We maintain a workforce based upon current and anticipated workloads. If we do not receive future contract awards or if these awards are delayed, significant cost may result. We have international operations that are subject to foreign economic and political uncertainties. Unexpected and adverse changes in the foreign countries in which we operate could result in project disruptions, increased cost and potential losses. We work in international locations where there are high security risks, which could result in harm to our employees or unanticipated cost. Our continued success requires us to hire and retain qualified personnel. Our government contracts may be terminated at any time. Also, if we do not comply with restrictions and regulations imposed by the government, our government contracts may be terminated and we may be unable to enter into future government contracts. The termination of our government contracts could significantly reduce our expected revenue. We may have additional tax liabilities. Past and future environmental, safety and health regulations could impose significant additional cost on us that reduce our profits. The success of our joint ventures depend on the satisfactory performance by our joint venture partners of their joint venture obligations. The failure of our joint venture partners to perform their joint venture obligations could impose on us additional financial and performance obligations that could result in reduced profits or, in some cases, significant losses for us with respect to the joint venture. If we are unable to form teaming arrangements, our ability to compete for and win certain contracts may be negatively impacted. We are dependent upon third parties to complete many of our contracts. If we experience delays and/or defaults in customer payments, we could suffer liquidity problems or we could be unable to recover all expenditures. Our use of the percentage-of-completion method of accounting could result in a reduction or reversal of previously recorded revenue or profits. Some of our projects and new business may be located in environments where anti-corruption initiatives are not followed. We may need to raise additional capital in the future for working capital, capital expenditures and/or acquisitions, and we may not be able to do so on favorable terms or at all, which would impair our ability to operate our business or achieve our growth objectives. We continue to expand our business in areas where bonding is required, but bonding capacity is limited. It can be very difficult or expensive to obtain the insurance we need for our business operations. Any future acquisitions may not be successful. In the event we make acquisitions using our stock as consideration, we could dilute share ownership. Delaware law and our charter documents may impede or discourage a takeover or change of control. As a holding company, we are dependent on our subsidiaries for cash distributions to fund debt payments. Systems and information technology interruption could adversely impact our ability to operate.

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1124198--3/1/2007--FLUOR_CORP