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2: EX-10.2 Material Contract HTML 67K
3: EX-10.3 Material Contract HTML 72K
4: EX-10.4 Material Contract HTML 82K
5: EX-31.1 Certification -- §302 - SOA'02 HTML 27K
6: EX-31.2 Certification -- §302 - SOA'02 HTML 26K
7: EX-32.1 Certification -- §906 - SOA'02 HTML 24K
8: EX-32.2 Certification -- §906 - SOA'02 HTML 24K
14: R1 Cover HTML 75K
15: R2 CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS - HTML 129K
Unaudited
16: R3 CONDENSED CONSOLIDATED STATEMENT OF COMPREHENSIVE HTML 75K
INCOME (LOSS) - Unaudited
17: R4 CONDENSED CONSOLIDATED BALANCE SHEET - Unaudited HTML 153K
18: R5 CONSOLIDATED BALANCE SHEET - Unaudited HTML 83K
(Parenthetical)
19: R6 CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS - HTML 106K
Unaudited
20: R7 CONDENSED CONSOLIDATED STATEMENT OF CHANGES IN HTML 72K
EQUITY - Unaudited
21: R8 Principles of Consolidation HTML 27K
22: R9 Recent Accounting Pronouncements HTML 34K
23: R10 Earnings Per Share HTML 47K
24: R11 Operating Information by Segment and Geographic HTML 76K
Area
25: R12 Impairment HTML 32K
26: R13 Income Taxes HTML 36K
27: R14 Partnerships and Joint Ventures HTML 26K
28: R15 Guarantees HTML 25K
29: R16 Contingencies and Commitments HTML 35K
30: R17 Contract Assets and Liabilities HTML 41K
31: R18 Remaining Unsatisfied Performance Obligations HTML 41K
32: R19 Debt and Lines of Credit HTML 48K
33: R20 Convertible Preferred Stock HTML 30K
34: R21 Fair Value Measurements HTML 86K
35: R22 Stock-Based Compensation HTML 30K
36: R23 Other Comprehensive Income (Loss) HTML 130K
37: R24 Discontinued Operations HTML 39K
38: R25 Recent Accounting Pronouncements - (Policies) HTML 24K
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40: R27 Operating Information by Segment and Geographic HTML 74K
Area - (Tables)
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42: R29 Income Taxes (Tables) HTML 34K
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47: R34 Stock-Based Compensation (Tables) HTML 28K
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49: R36 Discontinued Operations - (Tables) HTML 43K
50: R37 Earnings Per Share (Details) HTML 78K
51: R38 Earnings Per Share - Antidilutive Securities HTML 29K
Excluded from Computation of EPS (Details)
52: R39 Operating Information by Segment and Geographic HTML 70K
Area - Reportable Segments (Details)
53: R40 Operating Information by Segment and Geographic HTML 40K
Area - Narrative (Details)
54: R41 Operating Information by Segment and Geographic HTML 37K
Area - Other Segment Profit (Loss) (Details)
55: R42 Operating Information by Segment and Geographic HTML 42K
Area - Total Assets (Details)
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Area - External Revenue and Total Assets by
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Items Reclassified Out of AOCI (Details)
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(Exact name of registrant as specified in its charter)
iDelaware
i33-0927079
(State
or other jurisdiction of
(I.R.S. Employer
incorporation or organization)
Identification No.)
i6700 Las Colinas Boulevard
iIrving,
iTexas
i75039
(Address of principal executive offices)
(Zip
Code)
i469-i398-7000
(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
iCommon Stock, $.01 par value per share
iFLR
iNew
York Stock Exchange
1.750% Senior Notes due 2023
FLR 23
New York Stock Exchange
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. iYesý No o
Indicate
by check mark whether the registrant has submitted electronically, if any, every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). iYesý No o
Indicate by check mark whether the
registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company or an emerging growth company. See definitions of “large accelerated filer,”“accelerated filer,”“smaller reporting company” and “emerging growth company” in Rule 12b-2 of the Exchange Act. (Check one):
iLarge
accelerated filer
☒
Accelerated filer
☐
Non-accelerated filer
☐
Smaller reporting company
i☐
Emerging
growth company
i☐
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. o
Indicate by check mark whether the
registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes i☐ No ý
Other
current assets ($i34 and $i28 related to VIEs)
i432
i608
Total
current assets
i4,557
i5,181
Noncurrent
assets
PP&E, net ($i47 and $i46 related to VIEs)
i501
i456
Investments
i543
i517
Deferred
taxes
i55
i51
Deferred
compensation trusts
i267
i330
Goodwill
i251
i249
Other
assets ($i44 and $i45 related to VIEs)
i318
i305
Total
noncurrent assets
i1,935
i1,908
Total
assets
$
i6,492
$
i7,089
LIABILITIES
AND EQUITY
Current liabilities
Accounts payable ($i266 and $i261
related to VIEs)
$
i1,002
$
i1,220
Short-term
borrowings
i214
i18
Contract
liabilities ($i308 and $i351 related to VIEs)
i805
i945
Accrued
salaries, wages and benefits ($i21 and $i27 related to VIEs)
i580
i629
Other
accrued liabilities ($i37 and $i33 related to VIEs)
i594
i802
Total
current liabilities
i3,195
i3,614
Long-term
debt
i982
i1,174
Deferred
taxes
i70
i67
Other
noncurrent liabilities ($ii13/
related to VIEs in both periods)
i600
i667
Contingencies
and commitments
i
i
Equity
Shareholders’
equity
Preferred stock — authorized ii20,000,000/
shares ($ii0.01/ par value); issued and
outstanding —iiii600,000///
shares in 2022 and 2021
i—
i—
Common
stock — authorized ii375,000,000/ shares ($ii0.01/
par value); issued and outstanding — ii142,008,804/
and ii141,434,771/ shares in 2022 and 2021, respectively
i1
i1
Additional
paid-in capital
i976
i967
AOCI
(i337)
(i366)
Retained
earnings
i829
i791
Total
shareholders’ equity
i1,469
i1,393
NCI
i176
i174
Total
equity
i1,645
i1,567
Total
liabilities and equity
$
i6,492
$
i7,089
The
accompanying notes are an integral part of these financial statements.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
UNAUDITED
1. iPrinciples
of Consolidation
These financial statements do not include footnotes and certain financial information presented annually under GAAP, and therefore, should be read in conjunction with our 2021 10-K. Accounting measurements at interim dates inherently involve greater reliance on estimates than at year-end. Although such estimates are based on management’s most recent assessment of the underlying facts and circumstances utilizing the most current information available, our reported results of operations may not necessarily be indicative of results that we expect for the full year.
The financial statements included herein are unaudited. We believe they contain all adjustments of a normal recurring nature which are necessary to present fairly our financial position and our operating results as of and for the periods presented. All significant intercompany transactions of consolidated
subsidiaries are eliminated. Certain amounts in tables may not total or agree back to the financial statements due to immaterial rounding differences. Management has evaluated all material events occurring subsequent to March 31, 2022 through the filing date of this Q1 2022 10-Q.
Quarters are typically 13 weeks in length but, due to our December 31 year-end, the number of weeks in a reporting period may vary slightly during the year and for comparable prior year periods. We report our quarterly results of operations based on periods ending on the Sunday nearest March 31, June 30 and September 30, allowing for 13-week interim reporting periods. For clarity of presentation, all periods are labeled as if the periods ended on March 31, June 30 and September 30.
In
the first quarter of 2022, we determined that our Stork business and remaining AMECO equipment business no longer met all of the requirements to be classified as Disc Ops as a result of uncertainties related to the timing of the planned sale. Therefore, both Stork and the remaining AMECO business are reported as Cont Ops for all periods presented and included in our Other segment. Further, we have remeasured the carrying value of these businesses under the held and used criteria and reversed $i63 million of previously recorded impairment expense.
2. iRecent
Accounting Pronouncements
iWe did not implement any new accounting pronouncements during the 2022 Quarter. However, we are currently evaluating the impact of the future disclosures that may arise under recent SEC proposals.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
UNAUDITED
3. iEarnings Per Share
Potentially dilutive securities include CPS, stock options, RSUs and performance-based award units. Diluted EPS reflects the assumed exercise or conversion of all dilutive securities using the if-converted and treasury
stock methods. In computing diluted EPS, only securities that are actually dilutive are included.
i
3ME March 31,
(in millions, except per share amounts)
2022
2021
Net
earnings (loss) from Cont Ops attributable to Fluor
$
i48
$
(i86)
Less:
Dividends on CPS
i10
i—
Net
earnings (loss) from Cont Ops available to Fluor common stockholders
i38
(i86)
Net
earnings (loss) from Disc Ops attributable to Fluor
i—
(i1)
Net
earnings (loss) available to Fluor common stockholders
$
i38
$
(i87)
Weighted
average common shares outstanding
i142
i141
Dilutive
effect:
CPS
i—
i—
Stock
options, RSUs and performance-based award units
i—
i—
Weighted
average diluted shares outstanding
i142
i141
Basic
EPS available to Fluor common stockholders:
Net earnings (loss) from Cont Ops
$
i0.27
$
(i0.61)
Net
earnings (loss) from Disc Ops
i—
(i0.01)
Diluted
EPS available to Fluor common stockholders:
Net earnings (loss) from Cont Ops
$
i0.27
$
(i0.61)
Net
earnings (loss) from Disc Ops
i—
(i0.01)
Anti-dilutive
securities not included in shares outstanding:
CPS
i27
N/A
Stock options, RSUs and
performance-based award units
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
UNAUDITED
4. iOperating Information by Segment and Geographic Area
i
3ME March
31,
(in millions)
2022
2021
Revenue
Energy Solutions
$
i1,174
$
i991
Urban
Solutions
i959
i1,194
Mission
Solutions
i593
i753
Other
i396
i409
Total
revenue
$
i3,122
$
i3,347
Segment profit (loss)
Energy
Solutions
$
i54
$
i2
Urban
Solutions
i15
i30
Mission
Solutions
i58
i44
Other
(i12)
(i16)
Total
segment profit (loss)
$
i115
$
i60
Corporate
G&A
(i71)
(i67)
Impairment
i63
(i47)
Foreign
currency gain (loss)
(i19)
(i11)
Interest
income (expense), net
(i9)
(i18)
Earnings
(loss) from Cont Ops attributable to NCI
i8
i33
Earnings
(loss) from Cont Ops before taxes
$
i87
$
(i50)
/
Energy
Solutions. Segment profit in the 2022 Quarter and 2021 Quarter included an expense of $i13 million and $i29 million,
respectively, related to an embedded foreign currency derivative.
Urban Solutions. Intercompany revenue for our professional staffing business, excluded from the amounts shown above, was $i60 million and $i69 million
for the 2022 Quarter and 2021 Quarter, respectively.
Other. Segment profit (loss) for NuScale, Stork and AMECO follows:
iImpairment,
included in Cont Ops, is summarized as follows:
3ME March 31,
(in millions)
2022
2021
Impairment:
Energy Solutions' equity method investment
$
i—
$
i26
Goodwill
i—
i13
Fair
value adjustment of Stork and AMECO assets
(i63)
i8
Total
impairment
$
(i63)
$
i47
/
During
the 2022 Quarter, we reversed $i63 million in impairment recognized in 2021 when our Stork and AMECO businesses were classified as held for sale due primarily to remeasurement under held and used impairment criteria, for which CTA balances are excluded from carrying value.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
UNAUDITED
6. iIncome Taxes
The effective tax rate on earnings (loss) from Cont Ops for the 2022 Quarter was i35.4%
compared to (i6.5)% for the 2021 Quarter. iA reconciliation of U.S. statutory federal income tax
expense (benefit) to income tax expense follows:
(In millions)
3ME MARCH 31
2022
2021
U.S statutory federal income tax expense (benefit)
$
i18
$
(i10)
Increase
(decrease) in taxes resulting from:
State and local income taxes
i1
i—
Valuation
allowance, net
i16
i10
Foreign
tax impact
i2
i2
Noncontrolling
interest
(i2)
(i6)
Other
(i4)
i7
Total
income tax expense (benefit)
$
i31
$
i3
7. iPartnerships
and Joint Ventures
Investments in a loss position of $i243 million and $i240 million were included in other accrued liabilities
as of March 31, 2022 and December 31, 2021, respectively, and consisted primarily of provision for anticipated losses on a legacy infrastructure project. Accounts receivable related to work performed for unconsolidated partnerships and joint ventures included in “Accounts receivable, net” was $i208 million and $i205
million as of March 31, 2022 and December 31, 2021, respectively.
Variable Interest Entities
The aggregate carrying value of unconsolidated VIEs (classified under both "Investments” and “Other accrued liabilities”) was a net asset of $i42 million and $i33
million as of March 31, 2022 and December 31, 2021, 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 March 31, 2022 for the unconsolidated VIEs were $i57
million.
In some cases, we are required to consolidate certain VIEs. Assets and liabilities associated with the operations of our consolidated VIEs are presented on the balance sheet. 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.
8. iGuarantees
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 $i14 billion as of March 31, 2022. 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 iino/t
material as of March 31, 2022 and December 31, 2021.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
UNAUDITED
9. iContingencies
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.
The following disclosures for commitments and contingencies have been updated since the matter was presented in the 2021 10-K.
Since May 2018, purported shareholders have filed various complaints against Fluor 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 power contracts, which plaintiffs assert were materially misleading. In May 2020, these complaints were consolidated into one matter. We filed a motion to dismiss the matter in July 2020. The motion was granted in part on May 5, 2021, and as a result the Court dismissed with prejudice all allegations except those related to a single statement made in 2015 about one gas-fired
power contract. During 2021, we recorded a liability for the estimated resolution of the matter and we also recognized the effects of expected insurance coverage. In the first quarter 2022, we reached a proposed settlement with the plaintiffs that is subject to and is pending Court approval. No additional liability or insurance recovery has been recognized in 2022.
There have been no substantive changes to the disclosures for the following commitments and contingencies since the matter was presented in the 2021 10-K.
Since September 2018, ieleven
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 is named as a nominal defendant in the actions. These derivative actions purport to assert claims on behalf of Fluor 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 were consolidated and stayed, at least while our motion to dismiss was pending in the securities class action matter. We anticipate seeking a further stay until final resolution of the securities class action. While no assurance can be
given as to the ultimate outcome of these matters, we do not believe it is probable that a loss will be incurred. Accordingly, we have not recorded any liability 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 $i1.47
billion. Santos has joined Fluor 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 any liability 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 $i100 million due under the contracts. As part of the arbitration proceedings, Sadara has asserted various counterclaims for damages and/or a refund of contract proceeds paid totaling approximately $i574
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 any further liability as a result of the counterclaims.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
UNAUDITED
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 Gold Corporation 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 $i250
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 $i36 million of letters of credit from Fluor/TECHINT ($i24
million from Fluor and $i12 million from TECHINT). Thereafter, Barrick proceeded to reactivate the arbitration. Barrick and Fluor/TECHINT have exchanged detailed statements of claim and counterclaim pursuant to which Barrick's claim against Fluor/TECHINT now totals approximately $i364 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 any liability as a result of these claims.
Other Matters
We periodically evaluate our positions and the amounts recognized with respect to all our claims and back charges. As of both March 31, 2022 and December 31, 2021, we had recorded $ii215/
million 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 had no material disputed back charges to suppliers or subcontractors as of March 31, 2022 and December 31, 2021.
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 that our reserves with respect to future environmental cost are adequate and such future cost will not have a material effect on our financial position or results of operations.
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 and January 2022, Fluor received subpoenas 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. Such inquiries are ongoing, and we have continued to respond to the SEC and DOJ and cooperate in these investigations.
As of March 31, 2022, letters of credit totaling $i393 million were outstanding under our $i1.8
billion credit facility, which matures in February 2025. The credit facility contains customary financial covenants, including a debt-to-capitalization ratio that cannot exceed i0.60 to i1.0,
a limitation on the aggregate amount of debt of the greater of $i750 million or €i750 million for our subsidiaries,
and a minimum liquidity threshold of $i1.25 billion, defined in the amended credit facility, which may be reduced to $i1.00
billion upon the repayment of debt. The credit facility also contains provisions that will require us to provide collateral to secure the 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 March 31, 2022, our credit agreement limited our borrowings under the facility to $i806
million.
Uncommitted Lines of Credit
As of March 31, 2022, letters of credit totaling $i863 million were outstanding under uncommitted lines of credit.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
UNAUDITED
13. iConvertible Preferred Stock
Cumulative cash dividends on the preferred stock are payable at an annual rate of i6.5%
quarterly in arrears on February 15, May 15, August 15 and November 15, upon declaration of the dividend by our Board of Directors. Dividends accumulate from the most recent date on which dividends have been paid. First quarter CPS dividends of $i10 million were paid in February 2022. In April 2022, our Board of Directors approved the payment of second quarter CPS dividends of $i10 million,
payable in May 2022.
Each share of CPS is convertible at the holder's option at any time into i44.9585 shares of our common stock per share of preferred stock. The conversion rate is subject to certain customary adjustments, but no payment or adjustment for accumulated but unpaid dividends will be made upon conversion, subject to certain limited exceptions. The preferred stock may not be redeemed by us; however, we may, at any time on or after May 20,
2022, elect to cause all outstanding shares of preferred stock to be converted into shares of our common stock at the conversion rate, subject to certain conditions (and, if such conversion occurs prior to May 20, 2024, the payment of a cash make-whole premium). The most significant condition to our ability to force a conversion prior to May 2024 is the requirement that our common stock trade above $i28.92 for i20
consecutive trading days. We estimate that the cash make-whole payment would be $i101 million on May 20, 2022 and would be $i72
million at December 31, 2022 (assuming we minimally exceed the minimum trading price to invoke the conversion). If a make-whole fundamental change, as defined in the certificate of designations for the preferred stock, occurs, we will in certain circumstances be required to increase the conversion rate for a holder who elects to convert shares of preferred stock in connection with such make-whole fundamental change.
14. iFair
Value Measurements
i
The following table delineates assets and liabilities that are measured at fair value on a recurring basis:
(1)Consists
of registered money market funds and an equity index fund. These investments, which are trading securities, represent the net asset value at the close of business 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.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
UNAUDITED
We have measured assets and liabilities held for sale and certain other impaired assets at fair value on a nonrecurring basis. iThe following summarizes information about financial instruments that are not required to be measured at fair value:
(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.
(4) The fair value of the Senior Notes was estimated based on the quoted market prices and Level 2 inputs.
(5)Other
borrowings represent bank loans and other financing arrangements which mature within one year. The carrying amount of borrowings under these arrangements approximates fair value because of the short-term maturity.
15. iStock-Based Compensation
Our executive and director stock-based compensation plans are
described more fully in the 2021 10-K. In the 2022 and 2021 Quarters, RSUs totaling i367,380 and i545,527,
respectively, were granted to executives at a weighted-average grant date fair value of $i21.90 and $i18.13
per share, respectively, and generally vest over iithree years/.
Stock options for the purchase of i250,656 and i481,626
shares at a weighted-average exercise price of $i21.90 and $i17.96
per share were awarded to executives during the 2022 and 2021 Quarters, respectively. The options granted in 2022 and 2021 generally vest over ithree years and expire iten
years after the grant date.
Performance-based award units totaling i426,957 and i613,868
were awarded to Section 16 officers during the 2022 and 2021 Quarters, respectively. These awards generally cliff vest after i3 years and contain annual performance conditions for each of the i3
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 i3-year vesting periods. iDuring
2022, the following units were granted based upon the establishment of performance targets:
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
UNAUDITED
Performance-based Award Units Granted in 2022
Weighted
Average Grant Date Fair Value Per Share
2022 Performance Award Plan
i142,319
$i24.07
2021
Performance Award Plan
i204,623
$i24.48
2020
Performance Award Plan
i385,455
$i22.04
For
awards granted under the 2022, 2021 and 2020 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.
SGI awards granted to executives vest and become payable at a rate of one-third of the total award each year. Compensation expense of $i10 million
and $i32 million related to SGI awards was included in G&A in the 2022 and 2021 quarters, respectively. Liabilities associated with SGI awards were $i57 million
and $i73 million as of March 31, 2022 and December 31, 2021, respectively.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
UNAUDITED
17. iDiscontinued
Operations
In May 2021, we sold the North American operations of the AMECO equipment business for $i71 million and recognized a loss on the sale of $i27 million.
The results for the sold operations are reported in Disc Ops in the 2021 Quarter.
In
our 2021 10-K, we reported additional AMECO operations and Stork operations in Disc Ops. These operations are still being marketed but no longer qualify for all Disc Ops criteria. They are now reported in Cont Ops, until such time that they re-qualify for Disc Ops.
Item 2. 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 and our 2021 10-K. Except as the context otherwise requires, the terms Fluor or the Registrant, as used herein, are references to Fluor and references to the company, we, us, or our, as used herein, shall include Fluor, its consolidated subsidiaries and joint ventures.
Certain statements made herein, including statements regarding our projected operating results, liquidity and backlog levels and the implementation of strategic initiatives are 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 we “believe,”“anticipate,”“expect,”“estimate,”"commit,""will,""may" and similar statements, are subject to risks and uncertainties which could cause actual results to differ materially from stated expectations. Significant factors potentially contributing to such differences include:
•Repercussions of events beyond our control, such as severe weather conditions, natural disasters, pandemics, political crises or other catastrophic events, that may significantly affect operations, result in higher cost or subject the company to contract
claims by our clients;
•The severity and duration of the COVID pandemic and actions by governments, businesses and others in response to the pandemic;
•The cyclical nature of many of the markets we serve and our clients' vulnerability to economic downturns, such as recessions, which may result in decreased capital investment and reduced demand for our services;
•Our failure to receive anticipated new contract awards and the related impact on our operations;
•Failure to accurately estimate the cost and schedule on our projects, potentially resulting in cost overruns or obligations, including those related to project
delays and those caused by the performance of our clients, subcontractors, suppliers and partners;
•Intense competition in the global EPC industry, which can place downward pressure on our contract prices and profit margins and may increase our contractual risks;
•Failure of our joint venture partners to perform their venture obligations, which could impact the success of those ventures and impose additional financial and performance obligations on us;
•Cybersecurity breaches of our systems and information technology;
•Civil unrest, security issues, labor conditions and other unforeseeable events in the countries
in which we do business;
•Project cancellations, scope adjustments or deferrals, or foreign currency fluctuations, that could reduce the amount of our backlog and the revenue and profits that we earn;
•Differences between our actual results and the assumptions and estimates used to prepare our financial statements;
•Client delays or defaults in making payments;
•Failure of our suppliers or subcontractors to provide supplies or services at the agreed-upon levels or times;
•The inability to hire and retain qualified personnel;
•The potential impact of changes in tax laws
and other tax matters including, but not limited to, those from foreign operations, the realizability of our deferred tax assets and the ongoing audits by tax authorities;
•Our ability to secure appropriate insurance;
•The failure to be adequately indemnified for our nuclear services;
•The loss of business from one or more significant clients;
•The availability of credit and financial assurances plus restrictions imposed by credit facilities, both for us and our clients, suppliers, subcontractors or other partners;
•Adverse results in existing or future litigation, regulatory proceedings or dispute resolution proceedings (including claims
for indemnification), or claims against project owners, subcontractors or suppliers;
•Failure of our employees, agents or partners to comply with laws, which could result in harm to our reputation and reduced profits or losses;
•The impact of new or changing legal requirements, as well as past and future environmental, health and safety regulations including climate change regulations; and
•The risks associated with acquisitions, dispositions or other investments, including the failure to successfully integrate acquired businesses.
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 is no assurance that future
developments affecting us will be those presently anticipated by us.
Additional information concerning these and other factors can be found in our press releases and periodic filings with the SEC, including the 2021 10-K. These filings are available publicly on the SEC’s website at http://www.sec.gov, on our website at http://investor.fluor.com
or upon request from our Investor Relations Department at (469) 398-7070. We cannot control such risk factors and other uncertainties, and in many cases, cannot predict the risks and uncertainties that could cause actual results to differ materially from those indicated by the forward-looking statements. These risks and uncertainties should be considered when evaluating Fluor 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.
Results of Operations
In the first quarter of 2022, we determined that our Stork business and remaining AMECO equipment business no longer met all of the requirements
to be classified Disc Ops. Therefore, both Stork and the remaining AMECO business are reported as Cont Ops for all periods presented and included in our Other segment.
In May 2022, NuScale completed the merger with Spring Valley Acquisition Corp. and related private investment transactions. We will continue to consolidate the combined company although NCI balances will be higher.
Backlog related to projects located outside of the U.S.
62%
65%
Backlog
related to lump-sum projects
60%
59%
(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.
During 2022, we suspended any new investment in our Russian operations. We have evaluated our financial exposure through March 31, 2022 and do not believe that, should existing conditions in Eastern Europe persist, we would have a material impairment of our assets. Our backlog on projects
in the impacted region is not significant to future revenue or margin. We continue to monitor the circumstances in Eastern Europe and wind down our existing contractual obligations while complying with all regulatory limitations placed on new and existing business for projects and clients based in the region.
Our business has been adversely affected by the impacts of COVID and the steep decline in oil prices that occurred in early 2020. We experienced reductions in demand for certain services and the delay or abandonment of ongoing or anticipated projects. Although oil prices have rebounded, our energy clients have yet to respond with elevated capital expenditures
for our services. We continue to deal with the impacts of COVID in 2022. The lockdown of several large cities in China due to recent COVID outbreaks has impacted our ability to mobilize our workforce and supply chain at our fabrication yard in China. Our estimates reflect our best assessment of project results inclusive of continuing COVID effects (including client recoveries), which have been dynamic as our projects have seen changes in prevailing regulations.
During 2022, consolidated revenue declined due to volume declines on projects which were completed or nearing completion in the Urban Solutions and Mission Solutions segments combined with client delays on anticipated new awards. These declines were partially offset by an increase in execution activity on several Energy Solutions projects.
During 2022, improvements in segment profit resulted from increased execution activity
on several Energy Solutions projectsas well as a favorable resolution of an Army Corps of Engineers project.
During the 2022 Quarter, we reversed $63 million in impairment recognized in 2021 when our Stork and AMECO businesses were classified as held for sale due primarily to remeasurement under held and used impairment criteria, for which CTA balances are excluded from carrying value. If our Stork and AMECO businesses are sold or if they meet the held for sale criteria again, we might re-recognize some or all of the impairment expense related to remeasurement. During the 2021 Quarter, we recognized impairment on goodwill and one equity method investment in the Energy Solutions segment and we also recorded a fair value adjustment to our Stork business which was classified as held for sale in 2021.
The effective tax rate on earnings (loss)
from Cont Ops for the 2022 Quarter was 35.4% compared to (6.5)% for the 2021 Quarter. A reconciliation of U.S. statutory federal income tax expense (benefit) to income tax expense follows:
(In millions)
3ME MARCH 31
2022
2021
U.S statutory federal income tax expense (benefit)
$
18
$
(10)
Increase
(decrease) in taxes resulting from:
State and local income taxes
1
—
Valuation allowance, net
16
10
Foreign tax impact
2
2
Noncontrolling interest
(2)
(6)
Other
(4)
7
Total
income tax expense (benefit)
$
31
$
3
Recent indications by our prospective clients has given us optimism that our 2022 new awards will exceed the annualized 2022 Quarter amount. The decline in backlog during the 2022 Quarter primarily resulted from work performed outpacing new award activity. 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. RUPO includes only the amount of revenue
we expect to recognize under contracts with definite terms and substantive termination provisions.
Segment Operations
Energy Solutions
Revenue in 2022 increased due to the ramp up of execution activities on a refinery project in Mexico and a recently awarded LNG project as well as a higher volume of execution activity on a large upstream project and a large LNG project that was impacted by COVID related delays in the 2021 Quarter. The 2022 revenue increase was partially offset by revenue declines on an upstream project as well as declines in the volume of execution activity for projects nearing completion.
Segment profit in 2022 improved due to increased execution activities on a large LNG project and a refinery
project in Mexico, a decrease in expense related to embedded foreign currency derivatives and a reduction in overhead costs, partially offset by decreased execution activity on an upstream project.The increase in segment profit margin in 2022 reflects these same factors.
No significant awards were booked in the 2022 Quarter, whereas the 2021 Quarter had a new award for a refinery project in Mexico.
Urban Solutions
Revenue in 2022 decreased primarily due to the close out of data center projects in Europeand a mining project in Australia combined with client delays on anticipated new awards. The revenue decline in the 2022 Quarter was further driven by a favorable settlement on a rail project that was recognized during the 2021 Quarter. The revenue declines in 2022 were partially offset by the ramp up of execution activities on several other projects across the segment.
Segment profit in 2022 declined due to the settlement of the rail project recognized during the 2021 Quarter and cost growth on an advanced manufacturing project partially offset by increased execution activities on other projects across the segment.The change in segment profit margin in 2022 reflects these same factors.
New awards in 2022 decreased partly due to delayed procurement efforts by many of our clients, which also impacted backlog.
Mission
Solutions
Revenue in 2022 decreased primarily due to the completion of a DOE contract in the prior year and the closure of LOGCAP in Afghanistan. These revenue declines were partially offset by execution activities on a project to provide contingency and humanitarian support for Afghan evacuees in the United States as well as the favorable resolution of close out items on a completed Army Corps of Engineers project.
The increase in segment profit in 2022 was substantially driven by the favorable resolution of the Army Corps of Engineers project as well as execution of the evacuee support project partially offset by profit declines related to the completed DOE contract and the completion of LOGCAP in
Afghanistan. The increase in segment profit margin was driven by these same factors.
New awards in 2022 decreased due to extensions on two of our DOE contracts booked in the 2021 Quarter. Backlog decreased during the 2022 Quarter due to the delay of new awards. Backlog included $280 million and $445 million of unfunded government contracts as of March 31, 2022 and December 31, 2021, respectively. Unfunded backlog reflects our estimate of future revenue under awarded government contracts for which funding has not yet been appropriated.
Other includes the operations of NuScale, Stork and the remaining AMECO business.
3ME March 31,
(in millions)
2022
2021
NuScale (1)
$
(21)
$
(16)
Stork
6
3
AMECO
3
(3)
Segment
profit (loss)
$
(12)
$
(16)
(1) NuScale expenses included in the determination of segment profit were as follows:
NuScale expenses
$
(45)
$
(35)
Less:
DOE reimbursable expenses
23
15
NuScale expenses, net
(22)
(20)
Less: Attributable to NCI
1
4
NuScale profit (loss)
$
(21)
$
(16)
G&A
3ME March
31,
(in millions)
2022
2021
G&A
Compensation
$
55
$
58
SEC investigation
5
3
Facilities
6
3
Other
5
3
G&A
$
71
$
67
Net
Interest Expense
The decrease in interest expense during the 2022 Quarter was primarily due to the redemption of $509 million of 2023 and 2024 Notes in 2021 and by an increase in interest rates on deposits.
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 arises from available cash and cash equivalents and marketable securities, cash generated
from
operations, capacity under our credit facilities and, when necessary, access to capital markets. We have 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 and debt maturities. We regularly review our sources and uses of liquidity and may pursue opportunities to address our liquidity needs.
As of March 31, 2022, letters of credit totaling $393 million
were outstanding under our $1.8 billion credit facility, which matures in February 2025. The credit facility contains customary financial covenants, including a debt-to-capitalization ratio that cannot exceed 0.60 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 of $1.25 billion, all as defined in the amended credit facility. The credit facility also contains provisions that will require us to provide collateral if we are downgraded to BB by S&P and Ba2 by Moody's, such collateral consisting broadly of liens on 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 March 31, 2022, we had availability to
borrow $806 million under our credit facility.
We expect to address the maturities currently scheduled for 2023 and 2024 through available liquidity, cash generated by our operations or via a new securities issue.
Cash and cash equivalents combined with marketable securities were $2.1 billion as of March 31, 2022 and $2.3 billion as of December 31, 2021. 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 $997 million and $992 million as of March 31, 2022 and December 31, 2021, respectively. Non-U.S. cash and cash equivalents exclude deposits of U.S. legal entities
that are invested in offshore, overnight accounts or short-term time deposits, to which there is unrestricted access.
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 $509 million and $630 million as of March 31, 2022 and December 31, 2021, respectively) were not necessarily readily available for general purposes. We do not include our share of cash held by our proportionately consolidated joint ventures and partnerships in our consolidated cash balances even though these amounts may be significant. We also consider the extent to which client advances (which totaled $114 million and $127 million as of March 31, 2022 and December 31,
2021, 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 March 31, 2022 and December 31, 2021, other than unremitted earnings required to meet our working capital and long-term investment needs in non-U.S. foreign jurisdictions where we operate.
Proceeds
from sales and maturities (purchases) of marketable securities
(76)
5
Capital expenditures
(10)
(30)
Proceeds from sales of assets
3
8
Investments in partnerships and joint ventures
(24)
(48)
Other
2
—
Investing
cash flow
(105)
(65)
FINANCING CASH FLOW
Dividends paid
(10)
—
Other borrowings
7
3
Distributions
paid to NCI
(7)
(8)
Capital contributions by NCI
—
42
Other
(6)
(9)
Financing cash flow
(16)
28
Effect
of exchange rate changes on cash
13
6
Increase (decrease) in cash and cash equivalents
(296)
(261)
Cash and cash equivalents at beginning of period
2,209
2,199
Cash and cash equivalents
at end of period
$
1,913
$
1,938
Cash paid during the quarter for:
Interest
$
20
$
30
Income
taxes (net of refunds)
14
32
Operating Activities
Cash flows from operating activities result primarily from our EPC activities and are affected by our earnings levels and 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 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. As of March 31, 2022, our backlog included $1.0 billion for loss projects which may have a negative impact on our operating cash flow in future periods.
Our
operating cash flow for the 2022 and 2021 Quarters was negatively impacted by increases in working capital on several large projects.
NuScale expenses were $21 million and $16 million for the 2022 Quarter and 2021 Quarter, respectively, and were reported net of qualified reimbursable expenses of $23 million and $15 million, respectively.
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.
Capital expenditures are primarily related to construction equipment associated with equipment operations, 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.
Investments in unconsolidated partnerships and joint ventures in the 2022 quarter included capital contributions to a recently formed Mission Solutions joint venture. Investments in unconsolidated partnerships and joint ventures in the 2021 quarter included a $26 million capital contribution to
COOEC Fluor, which satisfied our contractual funding requirements, as well as capital contributions to a Mission Solutions joint venture.
In April 2022, we sold approximately 5% of the ownership of NuScale to Japan NuScale Innovation, LLC for approximately $110 million, subject to CFIUS review. The sale will not trigger any recognition of gain or loss but will be reported as an inflow from investing activities.
Financing Activities
Cumulative cash dividends on the preferred stock are payable at an annual rate of 6.5% quarterly in arrears on February 15, May 15, August 15 and November 15, upon declaration of the dividend by our Board of Directors. Dividends accumulate from the most recent date on which dividends have been paid. First quarter CPS dividends of $10 million were paid in February 2022. In April 2022, our Board of Directors approved
the payment of second quarter CPS dividends of $10 million, payable in May 2022.
Each share of CPS is convertible at the holder's option at any time into 44.9585 shares of our common stock per share of preferred stock. The conversion rate is subject to certain customary adjustments, but no payment or adjustment for accumulated but unpaid dividends will be made upon conversion, subject to certain limited exceptions. The preferred stock may not be redeemed by us; however, we may, at any time on or after May 20, 2022, elect to cause all outstanding shares of preferred stock to be converted into shares of our common stock at the conversion rate, subject to certain conditions (and, if such conversion occurs prior to May 20, 2024, the payment of a cash make-whole premium). The most significant condition to our ability to force a conversion
prior to May 2024 is the requirement that our common stock trade above $28.92 for 20 consecutive trading days. We estimate that the cash make-whole payment would be $101 million on May 20, 2022 and would be $72 million at December 31, 2022 (assuming we minimally exceed the minimum trading price to invoke the conversion). If a make-whole fundamental change, as defined in the certificate of designations for the preferred stock, occurs, we will in certain circumstances be required to increase the conversion rate for a holder who elects to convert shares of preferred stock in connection with such make-whole fundamental change.
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 the 2022 Quarter primarily related to a petrochemical joint venture project in Canada. Distributions in the 2021 Quarter primarily related to a transportation joint venture project in the United States.
Capital contributions by NCI during the 2021 Quarter primarily related to JGC Holdings Corporation's $40 million investment in NuScale.
We have a common stock repurchase program, authorized by our Board of Directors, to purchase shares in the open market or privately negotiated transactions at our discretion. As of March 31, 2022, over 10 million shares could still be purchased under the existing stock repurchase program, although we do not have any immediate intent to begin such repurchases.
Off-Balance Sheet Arrangements
Letters
of Credit
As of March 31, 2022, letters of credit totaling $393 million were outstanding under committed lines of credit and letters of credit totaling $863 million were outstanding under uncommitted lines of credit. Letters of credit are ordinarily provided 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.
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 March 31, 2022.
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.
Sustainability
Our sustainability mission envisions meeting the needs of our clients while conducting business in an environmentally and socially responsible manner. We consistently apply prudent governance
principles to the benefit of current and future generations, thereby creating value for all stakeholders. Every day, we help clients safeguard the environment, conserve energy, protect lives, and strengthen the economies and social structures of communities in which our employees work and live.
As a key priority for our sustainability program, we have committed to reduce our greenhouse gas emissions. Early in 2021, we committed to achieving net zero emissions for Scopes 1 and 2 absolute greenhouse gas emissions by the end of 2023, and we believe we are on track to meet that objective.
We have a Sustainability Committee to oversee our sustainability policies, strategies and programs. The Sustainability Committee includes representatives from each of our business segments, as well as a cross-functional team of subject matter experts from communications, health, safety and environmental,
human resources, supply chain, investor relations and legal, who serve as advisors to the Sustainability Committee. In furtherance of our Board of Directors' commitment to sustainability, our Board of Directors and Governance Committee reviews and receives reports from management on our sustainability efforts.
Item 3. Quantitative and Qualitative Disclosures about Market Risk
There have been no material changes to market risk during the 2022 Quarter. Accordingly, the disclosures provided in the 2021 10-K remain relevant.
Item 4. Controls and Procedures
Evaluation
of Disclosure Controls and Procedures
Based on their evaluation as of the end of the period covered by this report, our principal executive officer and principal financial officer have concluded that our disclosure controls and procedures (as defined in Rules 13a-15(e) or 15d-15(e) of the Exchange Act) are effective as required by paragraph (b) of Rule 13a-15 or Rule 15d-15 of the Exchange Act.
Changes in Internal Control over Financial Reporting
There were no changes to our ICFR that occurred during the period covered by this report that have materially affected, or are reasonably likely to materially affect, our ICFR.
As part of our normal business activities, we are party to a number of legal proceedings and other matters in various stages of development. Management periodically assesses our liabilities and contingencies in connection with these matters based upon the latest information available. We disclose material pending legal proceedings pursuant to SEC rules and other pending matters as we may determine to be appropriate.
Additional information on matters in dispute may be found in Item 8 of the 2021 10-K and Item 1 of this Q1 2022 10-Q.
Item
1A. Risk Factors
There have been no material changes from our risk factors as disclosed in the 2021 10-K.
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds
(c)The following table provides information for the quarter ended March 31, 2022 about purchases by the company of equity securities that have been registered pursuant to Section 12 of the Exchange Act.
Issuer Purchases of Equity Securities
Period
Total Number of Shares Purchased
Average Price Paid per Share
Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs
(1)The
share repurchase program, as amended, totals 34,000,000 shares. We may repurchase shares from time to time in open market 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.
Pursuant to the requirements of the Exchange Act, the
registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.