THE FLUOR CORPORATION, LTD. 1967 ANNUAL REPORT

9.

9,

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Highlights of the Year (Dollar amounts are in thousands, except per share amounts)

Sales Taxes

Income (federal and foreign) Payroll, state, local & miscellaneous

Total taxes Total tax per share

Net earnings Net earnings per share

Depreciation, depletion & amortization Additions to property, plant & equipment New orders received Backlog at October 31 Working capital Shareholders' equity at October 31

Per share Shares outstanding at October 31 Earned on average net worth tRestated to include Coral Drilling, Inc. *Adjusted for 5% stock dividend in 1967.

During the last 15 years, Fluor has designed and installed processing plants worth $2 billion, mainly for the petroleum, natural-gas, petrochemical and chemical industries. Half of this work was completed in the last five years. This report gives results for fiscal 1967, a record year, and discusses various areas of company interest and service.

COVER In fiscal 1967, Fluor completed 24 plants that required engineering, procurement and construction services. Among these was a 25,000 barrels-per-day refinery for Sequoia Refining Corporation at Hercules, California. OPPOSITE Another of the projects the company brought on stream during the year was a fertilizer plant in Korea for Chin Hae Chemical Company.

1967

$ 374,873

$ 10,529 $ 6,277

$ '6,8°6 $ 7.69 $ 12,062

$ 5.12 $ 6,330 $ 12,690

$ 513,000 $ 563,000 $ 30,495 $ 50,904 $ 23.27

2,187,217

26.6%

1966t % Change

$ 305,660 +22.6

$ 7,928 +32-8 4,252$ +47.6

$ 12,180 +38.0 $ 5.62 +36.8 $ 8,905 +35.5 $ 3.70 +38.4 $ 5,052 +25.3 $ 11,940 + 6.3 $ 341,000 +50.4 $ 509,000 +10.6 $ 25,952 +17.5 $ 39,865 +27.7 $ 18.27 +274

2,077,666 + 3* 25.1 %

4 Corporate Profile 8 Engineering and Construction

12 Diversified Activities 14 Financial Section

20 Fifteen Year Summary 22 Officers and Directors

33

Corporate Profile J. R. Fluor, Chairman and Chief Executive Officer M. A. Ellsworth, President

Fiscal 1967 was our best year, and we are grateful to the Fluor shareholders, employees, customers, and suppliers whose continued sup­port made this achievement possible. New records were established in sales, earnings, new orders, and backlog.

Sales of $374.9 million represented a 22.6 percent increase over the $305.7 million reported for fiscal 1966. Earnings of $12 million, equiva­lent to $5.12 a share, showed a 35.5 percent improvement over 1966 earnings of $8.9 million, or $3.70 a share (adjusted).

Comparative cash-flow figures for the two years were $18.4 million in 1967 and $14 million in 1966a 31.4 percent advance. During 1967, $12.7 million was spent on capital improve­ments, a 6.3 percent increase over 1966 expen­ditures.

Shareholders' equity at October 3i, our fiscal closing date, was $50.9 million, versus the $39.9 million a year earlier. This was equivalent to $23.27 for each of the 2,187,2 I 7 shares of com­mon stock outstanding. The book value of our shares has risen 27.4 percent in the last year. Earnings on average net worth moved up from 25.1 percent to 26.6 percent.

At its December 1967 meeting, the Board of Directors approved a two-for-one stock split to be submitted for shareholder approval at the Annual Meeting on March it, 1968. The Board also moved to list Fluor common stock on the London and Amsterdam stock exchanges.

The Board voted Fluor's sixth annual five­percent stock dividend, payable February 9,

1968, to shareholders of record on December 22, 1967. The Board has felt that Fluor share­holders would receive greater value in the long run by using earnings to expand the company, rather than to pay cash dividends.

Chairman of the Board J. S. Fluor retired on December 31, I 967, after 45 years of service. His colleagues on the Board named him Honorary Chairman for life and he will serve as a Director and as a most valuable consultant in the years ahead. He gave true leadership and can look back with pride on the organization he guided so well.

Mr. Fluor's retirement activated a manage­ment reorganization plan, which took effect January 1, 1968.1 R. Fluor was elected Chair­,

man of the Board and Chief Executive Officer. M. A. Ellsworth was named to replace him as President.

D. S. Tappan, Jr., was appointed Senior Vice President and General Manager. In this new position, he is in charge of all engineering, procurement, and construction operations.

J. L. Tathwell was also named a Senior Vice President, with overall responsibility for the company's Oil & Gas Division, Real Estate Development Division, Coral Drilling, Inc., Caldrill, Inc., and Deep Oil Technology, Inc.

W. F. Kane replaced Mr. Ellsworth as President of Fluor Products Company, Inc. L. O. Calkins filled Mr. Tappan's prior post as Vice President, Sales.

Earlier in 1967, H. J. Neher was made Vice President, Diversification and Planning. R. B.

J. Robert Fluor, Board Chairman am! Chief Executive Officer Melvin A. Ellsworth, President

David S. Tappan, Jr., Senior Vice President and General Manager ,j.nues L. Tathwell, Senior Vice PI

4

Humbert replaced him as Vice President and Secretary, in addition to being responsible for Fluor's Law Department.

Jan Oostermeyer, a member of the Board since 1953, died in June following an extended illness. Formerly President of Shell Chemical Corporation, he had served as a chemical con­sultant in recent years.

Fluor Products Company, our subsidiary which manufactures and installs industrial water cooling towers, continued to improve earnings in 1967. The company has stream­lined its operations through the use of computers, and various cost-control techniques are helping to boost profit margins. A new research facility has been completed for testing cooling tower components.

The rate of engineering-construction contract

Net Earnings

1963

1964

1965

1966

1967

Shareholders' Equity

1963

1964

1965

1966

1967 10 20

New Orders

1963

1964

1965

1966

1967 o 100 200

6

awards was lower than anticipated during the first half of 1967. Many U. S. processing firms released new projects later than usual, appar­ently awaiting reinstatement of the seven per­cent tax credit and lower money rates.

As a consequence, we got started on a number of jobs later in the year than would ordinarily be the case. This will result in a slight decline in our revenues and profits in the first half of 1968. However, sales and earnings should resume an upward trend in the second half of 1968. Results for the full year should equal or possibly surpass those of fiscal 1967.

Sales prospects are good, and we should be able to obtain an adequate amount of new work in 1968. It is our belief, therefore, that 1969 could develop into an excellent year.

rnillions of dollars

10 12

millions of dollars

30 40 50 60

millions of dollars

300 400 500 600

Fluor Projects

Major job completions in fiscal 1967 ()Total responsibility completions

Projects now under way

DYMAXION WORLD MAP COURTESY OF R. BUCKMINSTER FULLER

Engineering and Construction D. S. Tappan, Jr., Senior Vice President and General Manager

Fluor's effort in securing engineering-construc­tion projects in fiscal 1967 produced $505 mil­lion in new ordersapproximately one-half more than in 1966. Some $380 million was for plants to be installed in the United States and Puerto Rico. The average new job totaled $13.4 million, compared with $6.2 million in 1963, and $5 million in 1957.

The company entered fiscal 1968 with 50 major projects in various stages of progress in 12 countries. Included are 2 complete refineries, 2 fertilizer complexes, 7 refinery modernizations, and 16 petrochemical plants.

Fluor completed 24 total-responsibility proj­ects in 1967. The international scope of our engineering and construction activities can be measured by these jobs.

In mid-year we completed twin fertilizer plants at Yong Nam and Chin Hae, Korea. Together they will produce more than 530,000 metric tons of fertilizer a year and will satisfy two-fifths of Korea's fertilizer requirements. The two installations are expected to increase annual crop production by $270 million.

In our first project in Spain, we completed a grass-roots refinery for Rio Gulf de Petroleos S.A. at Huelva. The plant can produce approxi­mately 55,000 barrels of petroleum products a day.

At Philadelphia, Fluor built a 30,000 barrels­per-day hydrocracker complex for Atlantic Richfield. The heart of the new addition is this country's second largest hydrocracker. The 550­ton reactor is one of the largest ever fabricated at a jobsite.

At Hercules, California, the company com­pleted for Sequoia Refining Corporation a 25,000 barrels-per-day refinery, which included a hydrocracker. Other notable completions dur­ing the year were Gulf Oil Corporation's plant at Cedar Bayou, Texas, capable of producing over 200 million pounds of low-density poly­ethylene a year, and a modernization and ex­pansion of Powerine Oil Company's refinery at Sante Fe Springs, California.

The world's largest multistage flash distilla­tion plant went on stream for the Florida Keys Aqueduct Commission at Key West, Florida. Fluor performed architect-engineering services for the plant, which produces 2.62 million gal­lons of fresh water daily.

Hydrocracking is one of the most productive and flexible refining processes developed by the petroleum industry. A refinery equipped with a hydrocracker can produce an entire range of petroleum products in ratios to meet market demand. Fluor is a leader in this process. The company has finished seven hydrocrackers and has five more under construction, three outside the U.S.

The largest project in Fluor history is for the Kuwait National Petroleum Company. This 95,000 barrels-per-day refinery in Kuwait will be the first in the world to use hydrogen in all downstream process units. Total hydrocracking output will be 37,860 barrels per day. In 1968, Fluor will break its own world record with the lifting and setting in place of a 650-ton vessel at this plant.

In Iran, we are nearing completion of a

The computer plays a role of increasing importance in our operations. Its flexibility, accuracy, and output enhance

the capability of the company's permanent staff of 5,000.

8

I CI

grass-roots refinery for National Iranian Oil Company which features a 14,400 barrels-per­day hydrocracking unit. With a total capacity of 85,000 barrels per day, this plant will pro­duce jet fuel, gasoline, kerosene, and diesel and fuel oils.

Other important projects still under way are: a 40,000 barrels-per-day hydrocracking unit for American Oil Company at Texas City, Texas; a modernization and expansion of

Consolidated Backlog -October 31 (000 omitted)

1963 1964

% Petroleum/ Gas Processing 69,166 54.8 489,875 70,9

'Chemical/ Petrochemical 36,073 28.6 61,064 22.8

Other Projects, 17,798 14.1 1-3,258 4.y

Manufactured Products 3193, 2.5 3, 6 2 1 . 4

Total 1,26,224 00.0 2 6 7 , 8.5 9 00. 0

United States 42,454 33.6 108,098 40.4

Outside U.S. 83,770 66.4 '159,761 59-6 Total]. 126,224 100.0 267,859 100.0

Texaco's Wilmington, California, refinery that will feature a 22,000 barrels-per-day hydro­cracker and, when completed, the largest delayed coking unit in the world; a grass-roots fertilizer project currently being constructed for Esso Chemie, N.V., near Rotterdam under the super= vision of Fluor Nederland; and, Fluor (England) Limited's major expansion of Gulf Oil Cor­poration's 30,000 barrels-per-day refinery at Skaelskor, Denmark.

1965 1966 1967

279,282 61.6 296,641 58.2

J63,491 36.0 196,329 38.6 282,099

5,119 9,61 r 1.9, 2,697

5,658 1.3 6,704 1.3, 5,589. 1.0 453,550 100.0 509,285 100.0 563,382 100.0

272,997 48-4

199,339 44.9 253,082 49.7 370,900 65.8

254,211 56.0 256,203 50.3 192,482 34.2 453,550 100.0 509,285 100.0 563,382 100.0

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The largest project in Fluor history is a 95,000 barrels-per-day refinery for Kuwait National Petroleum

Company. It will be the first refinery to use hydrogen in all downstream process units.

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Diversified Activities J. L. Tathwell, Senior Vice President

Consistent with the company's plan for diver­sification, an agreement was finalized in January 1967 under which the B. L. McFarland Group of five contract drilling companies was merged into Fluor as a wholly owned subsidiary. En-. titled Coral Drilling, Inc., it operates.6 offshore drilling rigs in the Gulf of Mexico and 18 land drilling rigs in Texas and New Mexico.

Our goal is to become one of the leaders in offshore exploration and drilling. Therefore, three subsequent steps were taken to expand our position in this field.

The company purchased a whale-factory/ tanker vesselthe 665-foot Cruz del Sui and present plans call for converting her into a drill ship at a total cost of about $9 million. She will be able to stay at sea more than a year, carrying enough self-contained supplies to drill three 20,000-foot wells, or a larger number of shal, lower wells. While engineering studies for her conversion are being completed, the ship is being leased as an oil tanker during the current international shortage of such vessels.

Shortly after the close of the fiscal year, Fluor cquired Caldrill, Inc. Now a wholly owned

subsidiary, Caldrill operates three land drilling rigs in California, three offshore rigsone in Alaska and two in Californiaand a coring vessel. This ship, the C'aldrill I, does exploratory core sampling work for oil companies.

More recently, we formed Deep Oil Tech, nology, Inc., to carry out developmental wolil. in the deep-ocean recovery of oil. The new firm is 8o percent owned by Fluor and 20 perccnt

owned by Ocean Science and Engineering, Inc., in which Fluor also acquired an 8 percent interest. A

In addition to these new operations, Fluor has interests in two other diversified areasthe leasing of mineral rights and real estate develop­ment.

In fiscal 1967, our Oil & Gas Division gener­ated revenues of $2.7 million through royalty and working interests in oil and gas properties centered mainly in the Permian Basin area of West Texas and southeastern New Mexico. On a daily basis, these properties produced 1,820 barrels of oil and over II million cubic feet of gas. A total of 178 wells was drilled on our properties during the year, of which 157 were successful. At year end, a $14 million reserved production loan on these properties had been 1

reduced to $6.7 million; we expect to take full 'ownership in 1971.

Real estate development comprises four proj­ects in which Fluor has various equity interests ranging up to 50 percent. Completion of Lake Point Tower in Chicago is scheduled for midi 1968. Almost half of its goo apartments have

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already been leased. In Oregon, approximately 75 percent of Portland Center's apartments are rented. Three-quarters of our boat slips at the If!,.:1

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[el o 11111 4: Mariners Bay marina in Los Angeles are leased, and a combination administration and club building has been completed. Meanwhile, the o6-unit apartment project at Huntington

Beach, California, is moving on schedule; model 'apartments will be open in the spring, with' 'occupancy expected in early summer.

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Alaska. This new Fluor subsidiary provides additional services with its coring vessel, Caldrill I.

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----

Consolidated Balance Sheets The Fluor Corporation, Ltd. and Subsidiaries October 31, 1967 and 1966

ASSETS

CURRENT ASSETS

Cash Marketable securities and time deposits Accounts receivable Unbilled charges on contracts in process Inventoriesat the lower of cost

(determined by the average method) or market

Prepaid charges and deposits Total current assets

PROPERTY, PLANT AND EOUIPMENTAT COST Buildings, improvements, machinery

and equipment Less accumulated depreciation and

amortization

Land

Oil and gas properties and equipment Less depletion and depreciation

Less balance of reserved production payment

OTHER ASSETS

The accompanying notes are an integral part of these statements.

967

$ 10,1 74,124 13,915,1 96 23,404,876 22,576,555

2,102,852 1,623,407

73,797,010

54,630,026

26,200,258

28,420,768 2,140,535

30,570,303 25,845,181

7,076,000

18,769,181

6,692,521

12,076,660

42,646,963

4,496,123

$120,940,096

I 966

Restated (Note A)

$ 8,444,770 28,819,674 17,292,741 20,881,523

2,989,567 2,430,199

80,858,474 .

45,629,083

22,829,193 22,799,890

1,008,385

23,808,275 25,436,568

5,807,151

19,629,417

8,393,739 I 1,235,678

35,043,953 3,325,435

$119,227,862

As previously reported

$ 7,030,035 28,819,674 15,137,011 20,255,627

2,877,247 2,245,496

76,365,090

22,530,649

139:050282:33407

985,519 13,993,861 22,247,373

05:49426747:4841

8,393,739 04/2,/88

23,406,049 3,093,660

$102,864,799

LIABILITIES AND STOCKHOLDERS' EQUITY 1967

CURRENT LIABILITIES Current portion of long-term debt $ 3,836,606 Accounts payable 14,481,973Customers' deposits and advance

payments 9,422,270Federal and foreign income taxes 6,073,003 Accrued liabilities 9,487,808

Total current liabilities 43,301,660 LONG-TERM DEBTLESS CURRENT PORTION 16,043,936 DEFERRED CREDITS

Unearned fees on engineering and construction contracts 6,960,376

Other 3,73°,430 I 0,690,806

STOCKHOLDERS' EQUITY

Capital stock Preferredauthorized, j ,000,000

shares without par value; issued and outstanding

1967-158,425 shares 578,344I 966 I 6o,000 shares

Common-authorized, 6,000,000 shares of $1.25 par value; issued and outstanding

1967-2,187,217 shares 2,734,021 1966-2,077,666 shares

Additional capital 18,387,953 Retained earnings 29,203,376

50,903,694

$ 120,940,096

Fluor has worked continuously since I 964 in Puerto Rico installing

extensive petrochemical facilities for Commonwealth Oil Refining Company

and its joint-venture partners.

Restated (Note A)

$ 4,722,997 15,523,175

19,037,764 9,045,645 6,576,233

54,9°5,814 13,324,272

9,270,581 1,862,456

11,133,037

584,094

2,597,083 14,645,457 22,038,105

39,864,739

$119,227,862

1966 As previously

reported

$ 58,980 '3,774,797

19,037,764 8,447,818 6,430,923

47,750,282 9,294,204

9,270,581 1,901,956

11,172,537

2,597,083 14,638,831 17,411,862

34,647,776

$102,864,799

14 15

Statements of Consolidated Earnings The Fluor Corporation, Ltd. and Subsidiaries Years ended October 31, 1967 and 1966

1966

Restated 1967 (Note A)

Revenue Engineering and construction­

including unbilled charges on contracts in process $348,093,055 $277,471,702

Products 10,678,668 11,219,798

Offshore and onshore drilling 12,857,152 13,820,452

Oil and gas 3,243,804 3,147,875 Interest and other 1,942,647 2,210,720

376,815,326 307,870,547

Costs and expenses Engineering and construction 322,084,322 258,305,678

Products 7,829,899 8,925,795 Offshore and onshore drilling 10,539,157 10,579,986

Oil and gas 2,737,027 3,176,906 Selling and administrative 9,282,554 8,173,051

Interest 1,092,958 1,063,437

Other 812,196657,737

354,223,654 291,037,049

Earnings before income taxes 22,591,672 16,833,498 Federal and foreign income taxes 10,529,254 7,928,078

NET EARNINGS $ 12,062,418 $ 8,905,420

Earnings per share of common stock $5.12 $3.70 Depreciation, depletion and amortization

included above in costs and expenses $ 6,329,920 $ 5,052,241

The acconzpanying notes are an integral part of (hese statements.

u

A 1,500-man construction force representing 7 nations is completing an 85,000 barrels-per-day refinery for National Iranian Oil Company near Tehran.

As previously reported

$277,471,702 11,219,798

2,588,921

1,975,394 293,255,815

258,305,678

8,925,795

2,221,872 7,259,721

582,670 671,001

277,966,737

15,289,078 7,396,076

$ 7,893,002

$3.64

$ 2,971,230

Statements of Consolidated Additional Capital The Fluor Corporation, Ltd. and Subsidiaries Years ended October 31, 1967 and 1966

1966 Restated As previously

1967 (Note A) reported

Additional capitalbeginning of year Amounts arising from acquisition of

companies in pooling of interests­including expenses

Excess of fair market value over par

$14,645,457

(376,760)

$11,295,977

6,626

$11,295,977

value of common shares issued as 5 % stock dividends

103,897 shares 48,824 shares

4,077,957 3,088,118 3,088,118

Credits arising from exercise of common stock options

1,524 shares 21,704 shares

40,711 254, 736 254,736

Credits arising from conversion of 1,575 preferred shares into 4,130 common shares 588

Additional capitalend of year $18,387,953 $ 1 4, 645, 45 7 $ 1 4,638,83 1

Statements of Consolidated Retained Earnings The Fluor Corporation, Ltd. and Subsidiaries Years ended October 31, 1967 and 1966 1966

Restated As previously 1967 (Note A) reported

Retained earningsbeginning of year Retained earnings arising from acquisition

of companies in pooling of interests Net earnings for the year

$22,038,105

12,062,418

$12,792,748

3,613,825 8,905,420

$12,792,748

7,893,002

34,100,523 25,311,993 20,685,750 Dividends paid

Cashpreferred stockCommon stock-5 %at fair market value

689,319

103,897 shares 48,824 shares

4, 2 0 7, 82 8 3,210,178 3,210,178

Cost of common treasury shares issued upon exercise of options 63,710 63,710

4,897,147 3,273,888 3,273,888

Retained earningsend of year $29,203,376 $22,038,105 $17,411,862

The accoinpanying notes are an integral part of these statements.

ALEXANDER GRANT & COMPANY CERTIFIED PUBLIC ACCOUNTANTS

15., WI l5.117e aouLtTAAR

LOS ANGELES,CAL1FORNIA 00017

Board of Directors and Shareholders The Fluor Corporation, Ltd. We have examined the consolidated balance sheet of THE In our opinion, the accompanying consolidated financial FLUOR CORPORATION, LTD. and subsidiaries as of statements present fairly thc financial position of The Fluor

Corporation, Ltd. and subsidiaries at October 31, 1967, andOctober 31, 1967 and the related statements of consolidated the results of their operations for the ycar then ended, inearnings, retained earnings and additional capital for the conformity with generally accepted accounting principlesyear then ended. Our examination was madc in accordance applied on a basis consistent with that of the restated pre­with generally accepted auditing standards, and accordingly

included such tests of the accounting records and such other ceding year. auditing procedures as we considered necessary in the cir- Xactmke_Grannt Cb-mpai^^"-

Los Angeles, Californiacumstances. We made a similar examination for the year December 15, 1967ended October 31, 1966.

16 17

1967

Notes to Consolidated Financial Statements

NOTE A-PRINCIPLES OF CONSOLIDATION: The consort.­dated financial statements include the accounts of The Fluor Corporation, Ltd. and all domestic and foreign subsidiaries. All subsidiaries are wholly owned.

During fiscal i 967 the company issued i 60,000 shares of $5.50 cumulative convertible preferred stock-Series A in exchange for the business and assets of five com­panies (McFarland Group) in a pooling of interests transaction; accordingly, the results of operations of the acquired companies are included in the consolidated financial statements for fiscal 1967. The financial state­ments for fiscal 1966 have been restated to include the accounts of the pooled companies.

Subsequent to October 31, 1967 the company issued 42,000 shares of common stock in exchange for all the capital stock of Caldrill, Inc., Caldrill Alaska, Inc., and Caldrill Offshore, Inc. The consolidated financial state­ments do not include the accounts of these companies;the omission of their accounts does not significantly affect the accompanying financial statements. NOTE B - NET ASSETS OF FOREIGN SUBSIDIARIES: The accounts of foreign subsidiaries have been translated into U.S. dollars at appropriate exchange rates, which give effect to foreign currency devaluations subsequentto October 31, 1967. The equity in their net assets approximated $10,335,000 at October 31, 1967. NOTE C -ENGINEERING AND CONSTRUCTION CONTRACTS: The company and subsidiaries follow the general prin­ciple of recognizing income on engineering and con­struction contracts on the percentage of completion method in the proportion that aggregate costs incurredbear to total estimated costs of the work being per­formed under the contract. Fees billed in advance are not recognized as income until earned. NOTE D - OIL AND GAS PROPERTIES : Certain Of the oil and gas properties are subject to a production payment reserved by the seller. Since this production payment(together with interest at 55/3% per annum) will be liquidated solely from 93% to 98% of the proceeds of production and is not a liability of the company, the balance is deducted from the total cost of the properties. The statements of earnings include total revenues and expenses related to oil and gas properties. NOTE E -INCOME TAXES: The company and subsidiaries have provided for all known income taxes to which they believe they are subject.

Income tax deficiencies have been proposed by the Internal Revenue Service for the years ended October 31, 1960 and 1961. The company has protested thesedeficiencies, and the outcome is not determinable at this time. If the proposed deficiencies are sustained,substantial offsetting tax benefits will be realized in subsequent years. Tax returns for years subsequent toOctober 31, t961 are still subject to examination by the Internal Revenue Service. NOTE F-$550 CUMULATIVE CONVERTIBLE PREFERRED STOCK-SERIES A : Each share of preferred stock is en­titled to one vote and is convertible into 2.625 shares of common, adjusted as necessary to prevent dilution. There were 415,866 common shares reserved at October 31, 1967 to cover the conversion privilege.

Other provisions of the preferred stock include re­demption on or after November 1, 1971 at $ oo a share

plus accrued dividends, and requires Sinking Fund contributions commencing February 1, 1972. Liquida­,

tion preference on this stock is $100 per share plus accrued dividends.

Dividends have been paid or declared through Octo­ber 31, 1967. NOTE G - LONG-TERM DEBT: At October 31, 1967 the long-term debt was as follows:

Current Noncurrent Total portion portion

53/e % note (A) $ 7,500,000 $ 500,000 $ 7,000,000

5% subordinated note (B) 1,400,000 1,400,000

6% note-secured by first trust deed-due monthly including interest 2,616,761 150,872 2,465,889

61/2 % notes-secured by equipment mort­gages-due in monthly installments of $113,490 plus interest, final installment due October 25, 1970 4,085,641 1,361,880 2,723,761

6% note-secured­due in monthly install­ments of $100,000 plus interest, final installment due February 1, 1970 2,700,000 1,200,000 1,500,000

Other notes and mortgages 1,578,140 623,854 954,286

$19,880,542 $3,836,606 $16,043.936

Payable in annual installments of $500,000 com­mencing November I , 1967, and $750,000 commencing November 1, 1973, to maturity November 1, 1978. Interest is payable semiannually. The loan agreement includes certain provisions restricting working capital and payment of cash dividends. At October 31, 1967 approximately $14,500,000 of consolidated retainedearnings were unrestricted for payment of cash divi­dends.

Payable in annual installments of $too,000 com­mencing December i , 1968, with final maturity Decem­ber 1, 1972. Interest is payable semiannually. NOTE II - COMMON STOCK: In December 1967 the Board of Directors declared a 5% stock dividend payable February 9, 1968 to shareholders of record December 22, 1967. This transaction will be recorded as a reduc­tion of retained earnings and an addition to capital accounts.

In addition, the Board of Directors approved a two­for-one stock split. This proposal will be submitted to the shareholders at the March i 968 annual meeting. NOTE I -STOCK OPTIONS: At October 31, 1967 various officers and employees held options to purchase 38,161 shares of common stock at prices ranging from $9.80 to $31.67 a share. The options become exercisable twoyears from date of grant and expire five years fromdate of grant. Options for 1,524 shares of common stock were exercised during fiscal 1967 at prices ranging from $10.29 to $31.67. At October 31, 1967 n0 options were available for granting.

Statement of Change in Consolidated Working Capital

SOURCES OF WORKING CAPITAL (In thousands) Funds provided by operations

Net income for the period $12,062Provision for depreciation, depletion and amortization 6,330

Proceeds from sale of capital stock Additions to long-term debt Increase in deferred credits Miscellaneous

APPLICATION OF WORKING CAPITAL

Reduction of reserved production payment Net additions to property, plant and equipment Investments Reduction of long-term debt Merger costs Cash dividends on preferred stock

Increase in working capital Working capital at beginning of period Working capital at end of period

Source and Disposition of the Fluor Revenue Dollar

SOURCE

Petroleum and natural gas industries Chemical industry Power industry Government projects

Total engineering-construction Manufactured products Mineral interests Offshore and onshore drilling Other

DISPOSITION

Materials and services Employee compensation Depreciation, depletion and amortization Maintenance and repair Interest Taxes Reinvested earnings

*1966 restated lo include Coral Drilling, Inc.

1967 1966* (In thousands)

$227,924 115,203

4,417550

348,094 10,679 3,243

12,857 1,942

$376,815

$232,356 105,366

6,330 2,802 1,093

16080612:62

$3 76,81 5

$184,53088,867 2,509 1,566

277,47211,220 3,148

13,820 2,211

$307,871

$208,396

750,305727

1,898 1,063

12,180 8,905

$307,87!

43 6,943 (442) 459

$25,395

$ 1,701 12,232

1,631

4,223 377 689

$20,853

4,542 25,953

$30,495

1967 1966 (Percent)

60.5 59.9 30.6 28.9

1.2 .8 .1 .5

92.4 90.1 2.8 3.7

1.0.9 3.4 4.5

.5 .7

100.0 100.0.

61.7 67.7 27.9 22.9

1.7 1.6 .6.7

.3 .3 4.5 4.° 3.2 2.9

100.0 100.0

18 19

Operating Results 15 Year Financial & Operating Summary (Dollar amounts are in thousands except per share amounts.)

Operating Results

Wages and

Materials and.

Revenue Salaries Services

1967 376,815 101,674 232,356 1966** 307,871 67,460 208,396 1965 1964

170,582 109,138

31,944 23,596

122,842 76,364

1963 144,902 40,735 95,985 1962 174,600 50,769 118,001 196 1

ig6o 130,275 85,949

42,699 29,646

78,356 51,408

1959 110,398 40,870 66,752 1958 1957

120,767 152,709

44,363 51,822

67,375 89,767

1956 121,268 39,079 76,917 1955

1954 1953

106,479 93,672

105,901

36,136 34,905 37,528

64,378 53,116 61,362

Equity and Dividends % Net

Shareholders' Equity Earnings to Average

Aggregate Per Share* Equity

23.27 26.61967 50,904 11996664** 3269:86475 18.27 25.1 1965 I 2.3 I 19.1

0964 21,636 10.25 7.2 1963 19,965 9-59 6.4 1962 19,019 8.99 2.4 1961 18,989 8.8o 13-4 1960 16,605 7.81 4.8

15,8191959 7.44 1958 17,558 8.27 11.4 1957 15,861 7.78 18.2 1956 13,098 6.79 5.6 1955 13,081 6.78 9.6

12,567 6.51 10.01954 11,089 6.90 21.41953

* Adjusted for 20% stock dividend in 1957, 5% stock dividends in 1962, 1963, 1964, and 1965, and 5% stock dividend and aTfor-s stock split in 1966, and 5% stock dividend in 1967. "1966 restated to include Coral Drilling, Inc.

Contributions to Employees'

Benefit Trust Funds

3,692 2,917 1,790

854 499 702

1,136 107

81

965 1,227

298 500

541 691

Interest on

Indebtedness

1,093 1,063

528 637

544 314 328 400 375 162 159 181

146 138 129

Payroll Taxes

4,996 3;472285

1,764 1,283

1,532 1,384 1,044

1,

1;012428159

1,028 i,oio

723

714

Depreciation, Depletion

and Amortization

6,330 5,052 2,342 2,192 1,862 1,031

847 1,007 1,163 1,299 1,200

946 911

945 717

Maintenance and

Repairs

2,802 1,898

921 804 850 684 794

853 838 906 821 501 532 616 437

Financial Po on

Cash Dividends - % of Net

Per Share* Earnings

.41

.43 47.8

.38 29.2

.37 97.7 :37 58.3

.

.37 61.1

-37 29.1

State, LocalLncd

TMa ixs ce s.

1,281 824 654 618

371 341 239 292

346 373 288 300 236 243 272

E a re nf oi in: s

Income Taxes

22,591 16,833

7,797 2,790 2,331 1,226

;444 9425 1,192

(1,246) 4,312 5,940 2,018 2,630

4,05'

1967 I 966 ** 1965 1964 1963 1962 I 961

i960

Current Assets

73,797 80,858 59,939 32,875 34,680 31,248 29,467 20,240

U.S. and Foreign Income Taxes

10,529 7,928 3,201 1,290

837

994 2,037

293

(428) 2,188 2,969 1,022 1,258 1,203

1,949

Cuient t Liabilities

43,302 54,906 38, 616 16,275

544 19,423 18,106 11,585

9,463 15,560 18,251 17,666 10,338

M nitne'ri ttYaoIncomeIress and Other

--238

(231) 63

113 68

215

338 259 138 64 42

VV orking Capital

30,495 25,952 21,323 16,600 13,136 11,825 11,361 8,655

11,263

13,932 9,069 6,931 8,923

Net

Er ni ng s21a2,O6

8,905 4,596 1,500 1,256

463 2,392

786 (886)

1,909 2,633

737 1,234 1,178 2,060

Net Eahrpanerirne gs

Per

5.12 3.70 2.14

.71 .6o .22

1.11

.37

.90 1.29 .38 .64 .61

1.28

Property, Plant and Equiprnent

Gross Net

75,923 42,647 63,680 35,044 24,606 15,945 21,106 13,412 22,004 13,532 14,121 6,366 13,646 65530 12,604 5,987 13,652 7,211

8,35814,430 8,303

1123:404531

7,670 9,366 5,821

12 ,328 10,136 8,331 5,38612,6697,0719,342 4,683

Dividends Paid

----

873 912 768 '720i 720 720 600

4'°',4:shget'6'

3,325 2,384 2,216 4,152 4,825 6,404 7,202 3,804 2,783 2,772 1,968 1,076

183

99

Reinvested Earnings

12,062 8,905 4,596 1,500 1,256

463 2,392

786

(1,759) 997

1,865 17

514 458

1,460

Deferred Credits

10,691 I 1,133

3,897 742

879 264 524 518 575

1,257 884 311

19 230 342

1967 1966 1965 1964 1963 1962 1961 1960 1959 1958

1957 1956 1955

1954 1953

Total Capitalization

66,947 53,188 35,755 31,486 29,941 22,752 23,771 21,326 21,703 23,816 19,260 16,258 15,801 15,475 13,782

195920,726 1958 29,492 1957 27,32o 1956 1955 2149:526971

22,464'954 1953 22,011

More than 17,000 construction craftsmen were employed in fiscal 1967

under Fluor's supervisory field staff. L

-20

21

Officers

J. Robert Fluor Melvin A. Ellsworth David S. Tappan, Jr. James L. Tathwell Edmund C. Austin James G. Bounds Lyman O. Calkins William F. Chapin George H. Dieter Richard B. Humbert H. Thomas Lorne John G. Marshall William I. McKay James P. Milor Ernest Moncrief Donald M. Morgan Harold J. Neher Jay L. Reed C. Fred Royse Donald J. Engleman

Directors J. Robert Fluor Donald W. Darnell Melvin A. Ellsworth J. Simon Fluor Sibrand Jurriaans Ernest Moncrief Loren K. Olson Maurice H. Stans

David S. Tappan, Jr. James L. Tathwell Stanley Weiner Ted Weiner

Note: Figures in parentheses

Chairman of the Board and Chief Executive Officer (1946)

President (1940) Senior Vice President and General Manager (1952)

Senior Vice President (194.1) Vice President, Procurement (1958) Vice President, Construction (1939) Vice President, Sales (1942) Vice President, Process Engineering and Development (1944) Vice President, International Sales (1940) Vice President and Secretary (1956) Vice President, International Sales (1953) Vice President, Real Estate Development (1946) Vice President, Project and Design Engineering (1954)

Vice President, Oil and Gas Division (1963) Vice President, Houston Division (1937) Vice President, Finance, and Treasurer (1941) Vice President, Diversification and Planning (1952) Vice President, Administration (1949) Vice President, International Sales (1947) Controller (1946)

Chairman of the Board and Chief Executive Officer (1946) Former Vice Chairman of the Board (1928) President (1956) Honorary Chairman of the Board (1949) Partner, Pierson, Heldring & Pierson (1964) Vice President (1967) Attorney; former Member, U.S. Atomic Energy Commission (1962) President, Glore Forgan, Wm. R. Staats, Inc.; former Director, U.S. Bureau of the Budget (1963) Senior Vice President and General Manager (1965) Senior Vice President (1966) Chairman of the Board and President, Coral Drilling, Inc. (1967)

Director, Coral Drilling, Inc. (1967)

indicate the year each Officer joined the Corporation, or year each Director was elected to the Board.

Fluor constructors in Kuwait will break the company's current world record in :968 by raising and anchoring to its foundation a hydrocracking reactor which will weigh in excess of 650 tons.

Major Subsidiaries

Fluor (England) Limited Finwell House, 26 Finsbury Square, London, E.C. 2, England Managing Director: Arthur C. Sheffield (1942)

Fluor Nederland N.V. J. J. Hamelinkstraat 4-6, Haarlem, Holland Managing Director: Frank G. Crawford (1942)

Fluor Products Company, Inc. P.O. Box 1267, Santa Rosa, California 95404 President: Warren F. Kane (1961)

Fluor Canada Ltd. 123 Eglinton Avenue East, Toronto 12, Ontario, Canada President: James L. Tathwell (i941)

Coral Drilling, Inc. 3612 West Wall Street, Midland, Texas 79704 President: Stanley Weiner (1966)

Caldrill, Inc. 3400 Loma Vista Road, Ventura, California 93003 President: Leon Moore (1967)

Stock Registrars United California Bank, Los Angeles The Chase Manhattan Bank, N.A., New York

Auditor Alexander Grant & Company, Los Angeles

Transfer Agents Security First National Bank, Los Angeles First National City Bank, New York

The Annual Meeting will be held at the main office, 10 a.m., Monday, March i i, 1968

22 23

The Fluor Corporation, Ltd., Engineers and Constructors, 2500 South Atlantic Boulevard, Los Angeles, California 90022