In early 2004, Fluor Corporation (NYSE: FLR) issued $330 million
principal amount of 1.5 percent senior convertible notes due 2024. The
conversion of the notes into the company's common stock is contingent
upon the share price reaching approximately $72.72, or a premium of 30
percent of the conversion trigger price of $55.94.
Fluor announced today that it has exercised its right under the
convertible notes indenture to pay in cash the principal amount of the
notes presented for conversion. Any stock appreciation amount above the
conversion trigger price of $55.94 will be satisfied by the company
through the issuance of common stock.
Statement of Financial Accounting Standards No. 128, "Earnings per
Share" had been widely interpreted to allow the exclusion of common
shares underlying contingently convertible debt instruments from the
calculation of diluted earnings per share until the contingent
conversion share price is reached (in Fluor's case, when the share price
reaches approximately $72.72). In late 2004, the Emerging Issues Task
Force of the Financial Accounting Standards Board reached a final
consensus that the accounting for contingent convertible instruments
should follow the same accounting treatment as traditional convertible
instruments -- the "if converted" method of accounting -- and that the
potential dilutive effect of the instrument should be included in
diluted earnings per share immediately upon its issuance, but that
principal amounts that must be settled entirely in cash may be excluded
from the computations. This consensus becomes effective December 31,
2004.
Fluor irrevocably elected to pay the principal amount of the convertible
debentures in cash, and, therefore, there will be no dilutive impact
until the average stock price exceeds the conversion trigger price of
$55.94. Fluor will then use the treasury stock method of accounting for
the difference between the market stock price in a quarter and $55.94.
The shares required to cover this difference will be included in
calculating diluted earnings per share. Previously reported diluted
earnings per share for the first, second, and third quarters of 2004
will not change as a result of the application of the consensus.
"This election to pay the principal amount of the notes in cash is in
line with Fluor's capital structure management strategy and reflective
of our financial strength and business outlook," states Michael Steuert,
Fluor Corporation's senior vice president and chief financial officer.
Fluor Corporation (NYSE: FLR) provides services on a global basis in the
fields of engineering, procurement, construction, operations,
maintenance and project management. Headquartered in Aliso Viejo,
California, Fluor is a FORTUNE 500 company with revenues of nearly $9
billion in 2003. For more information, visit www.fluor.com.
Additional information can be found in press releases as well as Fluor's
public periodic filings with the Securities and Exchange Commission.
Note: This document contains forward-looking statements regarding, among
other things, the Company's projected financial results and the expected
performance of the Company's business. These forward-looking statements
reflect current analysis of existing information. As a result, caution
must be exercised in relying on forward-looking statements. Due to known
and unknown risks, the Company's actual results may differ materially
from its expectations or projections. Additional information concerning
these and other factors can be found in press releases as well as
periodic filings with the Securities and Exchange Commission, including
the discussion under the heading "Item 1. Business-Other Matters-Company
Business Risks" in the Company's Form 10-K filed March 15, 2004. These
filings are available either publicly or upon request from Fluor's
Investor Relations Department: (949) 349-3909. The Company disclaims any
intent or obligation to update its forward-looking statements.
For further information, please contact: Media Relations, Jerry
Holloway, +1-949-349-7411, or Leann Vandergrift, +1-949-349-7420, or
Investor Relations, Lila Churney, +1-949-349-3909, or fax,
+1-949-349-5375, all of Fluor Corporation.
media relations, Jerry Holloway, +1-949-349-7411, or LeannVandergrift, +1-949-349-7420, or investor relations, Lila Churney,+1-949-349-3909, or fax, +1-949-349-5375, all of Fluor Corporation//Web site: http://www.fluor.com /