Fluor Corporation (NYSE:FLR) today announced that its board of directors
has approved a spin-off, resulting in the creation of two publicly held
companies -- a "new" Fluor Corporation and Massey Energy Company.
Fluor shareholders at the time of the spin-off will retain their
existing Fluor stock, which will become Massey Energy shares, and will
also be issued one share in new Fluor stock through a tax-free
distribution. The old Fluor's name will be changed to Massey Energy
Company. The proposed transaction, which is expected to be completed
within six months, is subject to shareholder approval, establishment of
new capital structures, and a favorable ruling by the Internal Revenue
Service.
"The proposed transaction creates two separate companies, each a leader
in its respective field, with strong opportunities for future growth and
expansion," said Fluor's Philip Carroll, chairman and chief executive
officer. "We believe this transaction will enable the respective
management teams to focus more closely on their businesses and provide
the flexibility for each company to grow in a way best suited for its
industry.
"We also believe that the spin-off will allow investors to evaluate the
financial performance of each company independently and create
meaningful value for present Fluor shareholders," Carroll added.
"The proposed spin-off will allow Massey to keep a singular focus on our
goal of being the premier U.S. coal company," said Massey's Donald
Blankenship, chairman, president and chief executive officer. "As an
independent company, we will be better able to offer incentives to
management and employees, maintain the flexibility to grow our business,
and be nimble enough to take advantage of opportunities resulting from a
potential industry consolidation."
Each of the new companies will have a conservative capital structure
relative to its specific industries, permitting efficient access to
capital required to fund future growth. Under terms of the proposed
spin-off, Massey is expected to have a debt to total capitalization
ratio of less than 50 percent, conservative by the standards of the
mining industry. The company expects to secure an investment-grade
rating.
The new Fluor Corporation also is expected to maintain a conservative
statement of financial condition designed to preserve its "A" debt
rating, which is an indicator of the company's long-term strength and
solid financial footing. Any excess cash resulting from the transaction
will be utilized to fund new business initiatives.
"Both companies, each with significantly different financial
characteristics and strategic opportunities, will benefit from the
timing of today's announcement," said Ralph F. Hake, executive vice
president and chief financial officer. "Each will be positioned to
capitalize on growth opportunities -- opportunities that may not have
been optimal for either Fluor or Massey if they remained one company.
This move brightens everyone's future by allowing each enterprise to
focus on its industry and marketplace environments to drive value
creation."
For the fiscal year ended Oct. 31, 1999, A.T. Massey reported assets of
$2 billion with an operating profit of $147 million on revenues of $1.1
billion. Overall, for the same period, Fluor Corporation reported assets
of $4.5 billion with operating profits of $399 million (excluding a
special provision) on revenues of $12.4 billion.
Upon completion of the transaction, Fluor Corporation will be comprised
of three strategic business units -- Fluor Daniel, Fluor Global
Services, and Fluor Signature Services, all headquartered in Aliso
Viejo, California. Massey Energy Company will be headquartered in
Richmond, Virginia, its current base of operations.
Note On Forward-looking Statements:
Statements and press releases regarding the implementation of a proposed
transaction resulting in the creation of two publicly-held companies,
the benefits expected to be realized by such a transaction, the
anticipated impacts of such a transaction, growth opportunities and
potential share repurchases, are forward-looking in nature. Such
forward-looking statements reflect current analysis of existing
information.
Caution must be exercised in relying on forwarding-looking statements.
Due to known and unknown risks, actual results may differ materially
from expectations. Factors potentially contributing to such differences
include, among others:
-- Inability to consummate the transaction for any reason, including,
failure to obtain adequate assurances as to favorable tax
treatment, inability to establish new capital structures or
inability to obtain share holder approval.
-- Consummation of the transaction and realization of the anticipated
results could take longer than expected;
-- Each of the companies may fail to receive the credit rating
anticipated
-- Credit and other sources of funding necessary for the consummation
of the transaction may be less available than expected;
-- Implementation difficulties and market factors could alter the
proposed strategies and goals of each of the companies; and
-- Each of the companies could face difficulties in locating and/or
achieving anticipated consolidation, growth, expansion and new
business initiatives and opportunities.
Additional information concerning factors that may influence Fluor
Corporation's results can be found in its press releases as well as its
periodic filings with the Securities and Exchange Commission. In this
regard, risk factors are specifically discussed under the heading "Item
I. Business -- Other Matters -- Company Business Risks" in Fluor
Corporation's Annual Report on Form 10-K for its 1999 fiscal year. Such
filings are available publicly and upon request from Fluor Corporation's
Investor Relations Department: 949/349-3909. Fluor Corporation disclaims
any intent or obligation to update its forward-looking statements.
Fluor Corporation releases are available on Fluor's Corporate News on
the Net site at http://www.businesswire.com/cnn/flr.htm.
Fluor CorporationKeith Karpe, 949/349-7661orLori Serrato, 949/349-7420