Yesterday afternoon, Fluor Daniel Caribbean, Inc., a wholly owned
subsidiary of Fluor Corporation (NYSE: FLR), received an unexpected
unfavorable jury verdict awarding $28.8 million to the developer of a
resort hotel project in the Caribbean. Fluor Daniel Caribbean, Inc. was
the general contractor on the project, which is located in the Cayman
Islands.
During the course of the project, Fluor ceased work on extra facilities
the developer added to the project scope without demonstrating the
availability of funding to pay for such extra work. Fluor continued to
perform the original contract base work. In January 2004, Fluor filed
suit to force collection of invoices for work that had been performed by
Fluor. Subsequent to the filing of the suit, the developer terminated
Fluor, claiming that Fluor's lack of progress constituted a material
breach of the contract. The jury's verdict awarded the developer damages
in the amount referred to above. Fluor strongly believes that this
verdict is not supported by the facts or by applicable law and will
pursue all possible avenues of reconsideration or appeal.
The overall financial impact to Fluor will be a charge of approximately
$60 million to pre-tax earnings, plus yet to be determined interest and
attorneys' fees. In addition to the jury award, the charge also includes
a reversal of amounts previously billed to the client by Fluor for work
performed, including recognized project earnings. The charge may have
minimal tax benefits, which would adversely impact Fluor's effective tax
rate. This charge will be reflected in the Company's second quarter
earnings statement while efforts for reconsideration and appeal continue.
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 $9.4 billion
in 2004. For more information, visit www.fluor.com.
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Fluor Corporation
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Lisa Boyette/Leann Vandergrift
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One Enterprise Drive
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Media Relations
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Aliso Viejo, California 92656-2606
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949.349.3652/949.349.7420
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949.349.2000 tel
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Lila Churney
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949.349.7175 fax
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Investor Relations
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949.349.3191
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Media Relations, Lisa Boyette, +1-949-349-3652, or LeannVandergrift, +1-949-349-7420, or Investor Relations, Lila Churney,+1-949-349-3191, all of Fluor Corporation//Web site: http://www.fluor.com/