!'

a

-

r

i

1

.fr =

7/, 4 4."

A tl°

FLUOR I ANNUAL REPORT 1954 11

tip

.

Cooling tower installation for the Monongahela Power Company, Albright, West Virginia

Officers:

DONALD W. DARNELL, chairman of the board

J. SIMON FLUOR, president

J. ROBERT FLUOR, executive vice-president

JAMES P. WISEMAN, vice-president

MELVIN A. ELLSWORTH, vice-president

FRANCIS E. FISCHER, secretary-treasurer

JOHN T. SCHULER, assistant secretary

C. II. DIETER, vice-president, western area sales

W. P. DOWNEY, vice-president, construction division

J. W. ELIZARDI, JR., vice-president, Mid-Continent area sales

DR.W. R. HAINSWORTH, vice-president, research division

J. P. KNEUBUHL, vice-president, eastern area sales

J. G. mAnsnALL, vice-president, general engineering division

R. L. MERRICK, vice-president, engineering office

ERNEST MONCRIEF, vice-president, Mid-Continent division

F. M. STEPHENS, vice-president, products diViSiOn

LEE VAN HORN, vice-president, process engineering and development division

General Counsel: Meserve, Mumper, and Hughes, Los Angeles, California

Auditors: Alexander Grant & Company, Los Angeles, California

Stock Transfer Agent: Security-First National Bank, Los Angeles, California

Stock Registrar: California Trust Company, Los Angeles, California

Directors:

DONALD W. DARNELL,

chairman of the board

J. SIMON FLUOR,

president, The Fluor Corporation, Ltd.

J. ROBERT FLTJOR,

executive vice-president, The Fluor Corporation, Ltd.

JAMES P. WISEMAN,

president, The Fluor Corporation of Canada, Ltd.

FRANCIS E. FISCHER,

secretary-treasurer, The Fluor Corporation, Ltd.

DUDLEY E. BROWNE,

comptroller, Lockheed Aircraft Corporation

SHIRLEY E. MESERVE,

senior partner, Meserve, Mumper, and Hughes

JAN OOSTERMEYER,

formerly president, Shell Chemical Corporation

DONALD ROYCE,

president, William R. Staats and Company

FRANKLIN S. WADE,

chairman of the board, Southern California Gas Company

Executive offices and home plant: 2500 South Atlantic Boulevard, Los Angeles 22, California

ANNUAL MEETING: The annual shareholders' meeting of The Fluor Corporation, Ltd., is held on the second Monday in January at 10 a.m. at the executive ofEces of the home plant.

Some of the 400 draftsmen who work at the Los Angeles plant.

THE FLUOR CORPORATION, LTD. ANNUAL REPORT : 1954:

CONTENTS

Consolidated income statement

Expansion in 1954

New subsidiary

Fluor shareholders

Organizational changes

Engineering and construction

Atomic power

Canadian activity

Other foreign work

Products division

Research division

The coming year

Ten-year comparative statement

Consolidated balance sheet

Building organizational strength

COVER PHOTOGRAPH: Standard Oil Company of California's El Segundo Catalytic Cracking Unit.

for the fiscal year ended October 31

PAGE

3

4

5

5

5

8

8

64 YEARS OF PROGRESS: 1890-19549

10

10

11

12,13

14,15

17,18

0,

THE FLUOR CORPORATION,LTD.,AND SUBSIDIARIES

COMPARATIVE CONSOLIDATED STATEMENT OF EARNINGS

for the years ended October 31 . 1954 1953

THE CORPORATION RECEIVED FROMTo Our Employees and Shareholders:

Net sales As is customary, this Report will reach you following the annual Construction revenueincluding unbilled chargesshareholders' meeting held at the home plant on the second Monday on uncompleted construction contracts $84,290,834 $ 92,702,304in January, at which time we will be well into a new fiscal yearour

Product sales . . . . 9 180,586 12,980,93065th since John Simon Fluor, Sr., entered the construction business. Royalties, discounts and otherAlthough our expectations were not fulfilled during the fiscal period 201,039 218,461

- ended October 31, 1954, company accomplishments were noteworthy Total sales and revenue . $93,672,459 $105,901,695 - in many ways. Activities during 1954 characterize it as a year of ex- WHICH WAS USED FOR

pansion, with many of the decisions having been designed to prepare Wages and salaries $34 905,477 $ 37,528,350and strengthen our organization for future developments. Unavoidable strikes and more work stoppages than ever before, Materials and services purchased from others . 53,839,126 62,076,190

coupled with the inability to complete as many major jobs as antici- Depreciation, maintenance and repairs on plant pated, were the principal reasons for a decline in total income. and equipment 1,561,038 1,153,444

Net sales for the year amounted to $93,471,420, compared to Contributions to employees' benefit trust funds 540,877 690,879the $105,683,234 reported in 1953. Although this is a reduction of D. \V. Darnell. chairman of board

.

Interest on indebtedness 137,489 129,216more than $12,000,000, it is still considerably higher than the State, local and miscellaneous taxes . 242,594 272,350$80,691,822 recorded in 1952. Our net operating capital and net assets

Total costs and expenses $91,226,601 $101,850,429have increased steadily in recent years, and we particularly call atten­tion to the substantial and continual increase in the net worth of the THIS LEFT EARNINGS FROM OPERATIONS BEFORE TAXES company as shown in the 10-year comparative chart on pages 12-13. ON INCOME AND MINORITY INTEREST OF . . 2,445,858 $ 4,051,266This indicates that Fluor has strengthened its position considerably during the past decade, despite temporary declines. THE CORPORATION'S TAXES ON INCOME WERE

In 1954, net income after taxes totaled $1,178,025, or $1.96 per share Federal income taxes 1,051,052 1,450,500 on the 600,000 shares of stock outstanding, as against $2,059,828, or Foreign governments' income taxes ,. 152,584 498,719$4.12 per share on the 500,000 shares outstanding in 1953.

THE MINORITY INTERESTS IN THE EARNINGSTotal taxes on income amounted to $1,203,636 in 1954, against the $1,949,219 reported in 1953. OF SUBSIDIARIES WERE 64,197 42,219

A complete percentage breakdown relating to the division of Fluor's $ 1,267,833 $ 1,991,438 gross income and expenditures during the year is given in the chart on THIS LEFT NET EARNINGS OF $ 1,178,025 8 2,059,828page 4. j. S. Fluor, president

The Auditors' Certification and Notes to Financial Statements, pages 16-17, should be read in conjunction with this consolidated statement of earnings.

2 3

Administrative offices and laboratories for the Research and Products Divisions at Whittier, California.

Expansion in 1954 Looking to the future, your Board of Directors outlined a plan of ex­pansion six years ago that has since resulted in securing additional quarters for company personnel in various areas of operation. The past year saw the plan further materialize with these results:

Completion of the $750,000 research and products headquarters at Whittier, Calif., providing ( a ) nine laboratories and 17,000 square feet of space for research employees; ( b ) administrative offices, and drafting and engineering facilities for our Products Division; and ( c ) a two-acre pilot plant for experimental purposes.

Completion of another new building to furnish much-needed space for home plant offices.

:3. Purchase of a 28-acre site at Niagara Falls, Ontario, and final ap­proval of plans for a $700,000 engineering-office structure for H. G. Acres & Company, Limited, a subsidiary of the Fluor Corporation of Canada, Ltd.

Enlargement of the Corporation's manufacturing plant at Paola, Kans., including acquisition of additional space for staff offices.

Establishment of permanent offices at Martinez, Calif., for Fluor Maintenance, Inc., which engages in maintenance and construction work for oil companies and other firms in the San Francisco Bay area.

Acquisition of new sales office facilities in New York City, Denver, and Calgary, Alberta, to improve the sales picture in these localities.

Expansion of the Los Angeles model shop to permit the smooth in­tegration of plant layout and model making. The new quarters at the home plant comprise 4000 square feet of space for wood shop, model

Fhior's Gross Income carne from:

and was spent for:

Architectural drawing of engineering building now under construction at Niagara Falls, Ontario, which will house the 300 employees of H. G. Acres & Company, Limited, a Fluor subsidiary.

1954

Petroleum installations 59.84 Government work 11.12

Manufactured products 9.82 Poner plank 4.98

Chemical plants 10.64 lqiscellaneous 3.60

Purchase of materials and services 57.88 Wages and contributions to

employees' trust funds 37.84 Income taxes 1.28

Retained for future needs .56 Depreciation and maintenance 1.67`as

Dividends to shareholders .77

1953

60.19 13.59 12.28

8.41 '2

59.03

36.09 1.84 1.38 1.09

.57

Most recent addition at the Los Angeles plant is this new office building which provides facilities for 200 employees.

assembly, and draftsmen associated in the work. This is believed to be the first major-scale attempt to use this method for solving engineer­ing design problems.

New Subsidiary During the year Fluor purchased a majority interest in the New York firm of Singmaster & Breyer, Inc. The new subsidiary, recognized as one of the outstanding firms in its field, specializes in process engi­neering services for the chemical and metallurgical industries.

-

Fluor Shareholders A total of 3322 shareholders held Fluor stock at the close of the fiscal year, an increase of 1165 since last year.

Cash dividends paid during 1954 amounted to $1.20 per share, con­tinuing the rate of 30 cents a quarter that has been in effect since October, 1952.

Fluor's present shareholders reside in 39 states of the nation and the District of Columbia, with others living in Canada, Mexico, Puerto Rico, the Virgin Islands, Hawaii, Lebanon, South America, and Saudi Arabia. In the states, California shareholders lead all others with a total of 2325 owning 463,277 shares.

Organizational Changes Major changes made during the year included the elevation of J. E. Winn, former vice-president of foreign construction and a 30-year employee, to the presidency of Fluor Maintenance, Inc. Responsi­bilities of W. P. Downey, another veteran employee and former vice­president of domestic construction, were increased to include all foreign and domestic activities under the title of vice-president of the Construction Division.

5

Chart indicates increase in number of Fluor shareholders during 5-year period.

34

32

30

28

26

24

22

20

18

16

14

12

10

8

66

4

2

o0.

,r .

Working model of chemical facilities under design and construction in Missouri.

Fluor also added three vice-presidents, all representing promotions within the company framework. They included Dr. W. R. Hainsworth, former technical advisor, to the post of vice-president of the Research Division; J. G. Marshall, former vice-president of the Fluor Corpora­tion of Canada, Ltd., Toronto, Ontario, as vice-president of the Gen­eral Engineering Division with headquarters in Los Angeles; and J. P. Kneubuhl, former manager of the New York sales office, as vice­president of eastern area sales with supervision over the New York and Philadelphia district offices and the sales representatives in Pittsburgh and Boston.

A new division of process engineering and development was created, headed by Vice-President Lee Van Horn. This unit combines the activities formerly carried on by process engineering ( of the Gen­eral Engineering Division ) and the development department con­nected with research and development.

Engineering and Construction Engineering and construction sales for 1954 amounted to $84,290,834. One of the Corporation's most significant achievements during the

to 0

Steam electric power plant in California.

year was the obtaining of increased business in the chemical field. Three major ammonia plants were started in Missouri, Alabama, and Canada. Construction also began on a large chlorohydrins plant in Louisiana, and a plant in Kentucky to manufacture acrylonitrile.

To further our position in this field, licensing agreements have been negotiated with the French firms of L'Air LiquideGrand Paroisse, and St. Gobain covering ammonia synthesis and phosphate fertiliz­ers, respectively. Under arrangements made with the former firm, Fluor has the exclusive right to use their process and know-how to engineer and construct plants for producing synthetic ammonia on the North American continent. The St. Gobain process covers the manufacture of chemical fertilizers.

In our petroleum -activities, Fluor was responsible for establishing three major firsts in construction: ( 1 ) a 40,000-barrel Model IV cata­)

lytic cracker for the Standard Oil Company of California, the largest unit of this type constructed to date ( see cover photo ); ( 2 ) the world's first fluid coking unit for the Carter Oil Company in Montana; and ( 3 ) the world's largest platform unit for the Gulf Oil Corporation in )

Texas. Steam electric power plant installations completed during the year

included work for the Kansas Power and Light Company, the Illinois Power Company, and the California Electric Power Company. The latter job entailed the installation of a 40,000-kilowatt turbine genera­tor at the Highgrove ( Calif. ) plant, the third such to be completed for)

that company in the past three years. Installations valued at more than $30,000,000 were completed by

our Mid-Continent Division, including plants in Oklahoma, Texas, and New Mexico. Other major projects were started in Louisiana, New Jersey, Texas and at San Juan, Puerto Rico.

The Construction Division purchased nearly $500,000 worth of new

7

Chemical plant to be completed during the coming year.

'4"

2

3

Technician secures research data from intricate recording device. Boiler plant built in Arabia for Aramco.

14

construction equipment, including a 70-ton crane and various other pieces of heavy equipment to replace that which had become obsolete and add to the jobsite requirements. The division also served as con­sultants to the Chinese Petroleum Corporation on equipment for use in Formosa, and prepared specifications for some $300,000 worth of tools and equipment purchased by Petroleos Mexicanos for use at the refinery at Minatitlan, Mexico.

Atomic Power Largely as a result of the cancellation of the Spoon River project in Illinois early in the year, the former Industrial and Government Proj­ects Division of the company was consolidated with the General Engineering Division and all efforts were concentrated in securing additional private contracts.

At present, Fluor's government work is concerned with ( 1 ) the continuation of work for the Corps of Engineers, U. S. Army, in Arabia, with company headquarters in New York City as far as State­side activity is concerned; and ( 2 ) continuing development work in atomic power in cooperation with the U. S. Atomic Energy Commis­sion. In this connection, Fluor is one of nine firms comprising the Rocky Mountain Nuclear Power Study Group, and the only West Coast representative among the engineering-construction, industrial manufacturing, and electric utility companies. Headquarters for the group is at Idaho Falls, not far from Arco, Idaho, where Fluor com­pleted work on the Materials Testing Reactor for the AEC in 1952.

Canadian Activity The year was one of intense activity for the Fluor Corporation of Canada, Ltd., and saw completion of projects for Canadian Oil Com­panies, Limited, at Montreal; major refinery expansion for Imperial

6

Oil, Ltd., at Regina; and new refinery installations for Shell Oil Com­pany of Canada, Ltd., and Standard Oil Company of British Columbia Limited at Vancouver.

Work was also started on an ammonia plant for DOW Chemical of Canada, Ltd., at Sarnia; a catalytic reforming unit and a boiler plant for the British American Oil Company, Ltd., at Calgary, Alberta, and Clarkson, Ontario, respectively; and a petroleum refinery for Wain­wright Producers and Refiners, Ltd., at Wainwright, Alberta.

H. G. Acres & Company, Limited, a subsidiary of Fluor of Canada, reports a backlog of about three years of work in its specialty of hydro-electric and steam power plant engineering and development. One of the current studies is related to the Bersimis River develop­ment in Quebec, which is expected to result in the construction of one of the largest hydro-electric projects in eastern Canada.

Other Foreign Work Fluor completed work on a gasoline absorption plant and crude strip­ping facilities for the Colombian Petroleum Company at Tiblí, Colombia, South America, and began a refinery modernization pro­gram for Petroleos Mexicanos at Minatitlan, Mexico, in 1954. The latter promises to be an extensive operation and one that may result in additional contracts. Progress is also being made on installations previously reported in the Virgin Islands. In Puerto Rico, where Fluor employees are engaged on a $10,000,000 project for the Caribbean Refining Company, work is expected to be finished in early 1955. Some 300 American and native employees are engaged in the con­struction of this refinery.

Other foreign work concerns the engineering and procurement of material for a thermal catalytic cracking unit for the Chinese Petro­leum Corporation at Taiwan ( Formosa ); and extensive studies for

Map shmvs ninnber of engineering and construction jobs completed or

under way in various arras during 1954. Other countries %vith Fluor

work in progress include Saudi Arabia, Formosa, France, Australia,

Pakistan, Sumatra and Bolivia.

8 II 9

Gas Cleaners, a Fluor product.

hydro-electric development and power plant surveys in Pakistan. The Pakistan jobs are being done by H. G. Acres & Company, Limited, under provisions of the Canadian Government Colombo Plan.

Products Division

Increased competition, as well as a decrease in market potential, re­sulted in product sales declining to $9,180,586 in 1954, compared to the $12,980,930 reported last year. Sales of cooling towers, pulsation dampeners, and prefabricated pipe all showed the effect of an inac­tive-market during the third and fourth quarters, while reduced Fin Fan sales reflected completion of the recent expansion programs of the major gas transmission companies.

Consolidation of all Los Angeles and Paola metal product activities at our Kansas location during the coming year will not only give Fluor improved manufacturing facilities, but will enable us to be more competitive in the eastern areas. The expanded Paola plant will continue to provide all manufacturing facilities needed for prefabri­cation of piping systems and structural steel fabrication, as well as the manufacture of pressure vessels.

Product personnel located at the new development center in Whittier, Calif., will handle product engineering, design, and de­velopment, as well as cooling tower material procurement, billing,and estimating.

Research Division

Organizational changes during 1954 resulted in the research depart­ment acquiring divisional status and complete modern laboratory facilities to meet the needs of the expanding company.

In addition to numerous studies conducted in experimental supportof our engineering design operations, considerable effort of the re­

10

11111111111111111111111111I1111111111

111111111111111111111ME1111

1111111111111111 11/11/11

1 111¡1111

1Ill

View of aerator natural draft cooling towers, a Fluor installation. Intake Gas Cleaners with automatic shutdown valves shown in foreground.

search staff was directed toward improvements in Fluor's manufac­tured products and in exploration for new products that may assist in diversifying our manufacturing operations. Particular emphasis has been placed on the development. of processes in the synthetic nitro­genous and complex fertilizer fields.

In the interest of several of our customers, cooperative research projects were carried on for the improvement of their processes, as well as the furnishing of design data for plant construction.

New pilot plants were designed and constructed at the Research Center, where two acres are available for such experimental plants.

Other active research projecis during the year included studies of gas cleaning and treating, evaporative water cooling, and methods for improving cooling tower performance.

The Coining Year Fluor's business volume should continue at a reasonably high level in 1955, although the outlook is not as promising as that of the past sev­eral years. Our backlog of uncompleted orders as of October 31. amounted to $75,000,000, which was $13,000,000 below that of 1953.

New orders were slow in materializing during the last half of the fiscal year, .and this trend showed little improvement during the months of November and December. The industries we serve esti­mate that their capital expenditures will be from five to ten percent less in 1955 than in 1954. This, coupled with keener competition, will make it extremely difficult to maintain the peak production we have enjoyed during the past three years.

With the continued support and cooperation of employees and shareholders, we look forward to a good year in 1955.

Respectfully submitted for the Board of Directors,

CHAIRMAN, BOARD OF DIRECTORS PRESIDENT

General purpose lal,,,ratory, one of nine laboratories now available in Fluor's new research center.

THE FLUOR CORPORATION,LTD.,AND SUBSIDIARIES

COMPARATIVE STATEMENT OF INCOME AND INVESTED CAPITAL

for the years ended October 31, 1945 through 1954

Percentage of Net Income to Total Sales

°Represents Decrease

THE CORPORATION RECEIVED FROM

Net sales Construction revenue Product sales

Royalties, discounts and other Total sales and revenue

WHICH WAS USED FOR

Wages and salaries Materials and services purchased from others Depreciation, maintenance and repairs on plant and equipment Contributions to employees' benefit trust funds Interest on indebtedness State, local and miscellaneous taxes

Total costs and expenses

THIS LEFT INCOME FRONI OPERATIONS BEFORE INCOME TAXES AND

MINORITY INTEREST OF

Percentage of Income to Total Sales

THE CORPORATION'S INCOME TAXES WERE

Federal income taxes Foreign governments' income taxes

TFIE MINORITY INTERESTS IN THE EARNINGS OF

H. G. Acres & Company, Limited ( Canadian subsidiary ) and Singmaster & Breyer, Inc., were

THIS LEFT NET INCOME FROM OPERATIONS OF

OTHER ADJUSTNIENTS TO RETAINED EARNINGS

THIS LEFT ADJUSTED INCREASE IN RETAINED EARNINGS OF

FROM WHICH THE CORPORATION PAID DIVIDENDS OF

AND RETAINED IN THE BUSINESS

THE CORPORATION ALSO RECEIVED DURING THE YEAR

Proceeds from the Sale of Stock Par Value of the Stock Excess of Sales Price Over Par Value of Stock

THIS LEFT RETAINED INCOME AND ADDITIONAL CAPITAL OF

NET WORTH-Beginning of 10 Year Period-November 1944 End of Each Fiscal Yeqr Percentage of Net Income to Net Worth

...

. ....

....

.

.

. .

1.26%

1954

$84,290,834

201,039

$34,905,477 53,839,126

1,561,038

137,489 242,594

$91,226,601

$ 2,445,858 2.61%

$ 1,051,052 152,584

64,197 $ 1,267,833

$ 1,178,025

$ 584,657*

$ 593,368

720,000

$ 126,632°

250,000 1,354,626

$ 1,477,994

$12,567,043 9.37%

9,180,586

$93,672,459

540,877 ,

250,000.

.

U

1.95%

1953

$ 92,702,304

218,461

$ 37,528,350 62,076,190

1,153,444

129,216 272,350

$101,850,429

$ 4,051,266 3.83%

$ 1,450,500 498,719

42,219 $ 1,991,438

$ 2,059,828

$

$ 2,059,828

600,000

1,459,828

250,000 1,203,418

$ 2,913,246

$ 11,089,049 18.58%

$ 16,501

$ 1,757,784

420,000

$ 1,337,784

$ 1,337,784

$ 8,175,803 21.30%

1952

$72,143,015 8,548,807

214,642 $80,906,464

$29,516,181 45,969,769

775,061 814,352 108,376 215,742

$77,399,481

$ 3,506,983

43* $ 1,765,700

$ 1,765,700

$ 1,741,283 2.16%

$

$ 1,136,417 320,000

$ 816,417

$ 816,417

$ 6,838,019 16.62%

1951

$42,751,254 9,334,842

183,298 $52,269,394

$17,977,896 30,621,384

644,583 569,501

78,061 114,167

$50,005,592

$ 2,263,802

$ 1,127,385

$ 1,127,385

$ 1,136,417 2.18%

d

2.93%

1950

$21,030,588 5,395,275

151,832 $26,577,695

$10,660,401 14,164,911

554,844 263,706

831 158,317

$25,803,010

$ 774,685

$ 174,405

$ 653,840 198,291

$ 455,549

36,700 55,050

$ 547,299

$ 6,021,602 7.96%

295,250

$ 295,250

$ 479,435 1.81%

,

,

5.20%

1949

$24,677,993 8,781,764

105,119 $33,564,876

$11,701,381 19,034,191

529,285 434,573

13,650 113,504

$31,826,584

$ 1,738,292

$ 42,939*

$ 1,034,518 198,777

$ 835,741

159,250 238,875

$ 1,233,866

$ 5,474,303 19.68%

$ 660,835

$ 660,835

$ 1,077,457 3.22%

,

9.09%

1948

$24,372,648 8,682,704

141,780 $33,197,132

$11,085,841 17,790,269

472,033 751,582

16,830 74,249

$30,190,804

$ 3,006,328

$ 17,248*

$ 1,845,479 192,496

$ 1,652,983

1,624

$ 1,654,607

$ 4,240,437 43.93%

$ 1,143,601

$ 1,143,601

$ 1,862,727 5.64%

t

7.48 %

1947

$15,720,709 6,518,648

162,729 $22,402,086

$ 6,677,879 13,231,847

355,128 415,917

21,860 35,788

$20,738,419

$ 1,663,667

$ 36,882°

$ 993,446 128,648

$ 864,798

$ 864,798

$ 2,585,830 39.85%

$ 633,339

$ 633,339

$ 1,030,328 4.63%

1.21%

0.80%

1946

$ 9,955,305 2,363,828

56,446 $12,375,579

$ 5,597,960 6,241,004

301,938 37,126 23,993 25,823

$12,227,074

$ 148,505

$ 77,155°

$ 20,863 32,162

$ 11,299°

1,450 1,160

$ 8,689°

$ 1,721,032 5.70%

$ 50,487

$ 50,487

$ 98,018

$

0.60%

0.31%

$ 186,441

$ 231,504 87,480

$ 144,024

22,350 17,880

$ 184,254

1,545,467 $ 1,729,721

2.61%

1945

$11,893,769 2,564,143

8,402 $14,466,314

$ 6,865,060 6,990,332

455,122 21,633 23,498 24,137

$14,379,782

$ 86,532

$ 41,469

$ 41,469

$ 45,063

$

$ .

$

$

12 13

COMPARATIVE CONSOLIDATED BALANCE SHEET for the years ended October 31

ASSETS

CURRENT ASSETS

Cash

United States Government securitiesat cost Accounts receivable

Unbilled charges on uncompleted contracts

Inventories

Prepaid insurance, taxes and deposits .

Total current assets

FUNDS RESTRICTED TO GOVERNMENT CONTRACTS

PROPERTY, PLANT AND EQUIPMENT

Land Buildings and land improvementsnet Machinery and equipmentnet .

OTHER ASSETS

October 31, October 31, 1954 1953

$ 3,101,940 $ 2,180,755

. , 999,912 -0­

9,606,263 9,798,006

5,226,023 6,616,904

3,338,603 3,185,444 411

191,676 230,008

. $22,464,417 $22,011,117

190,874 71,732

206,459 140,038 ..... 2,003,056 1,577,522 .... 3,176,164 2,965,416

$ 5,385,679 $ 4,682,976

Patents, cash value of life insurance and sundry 183,027 98,561

$28,223,997 $26,864,386

14

THE FLUOR CORPORATION,LTD. AND SUBSIDIARIES

LIABILITIES

CURRENT LIABILITIES

Notes payable Accounts payable . . ..

Customers' deposits, advance payments and fee adjustments Taxes on income

Accrued liabilities

Total current liabilities

ADVANCES ON GOVERNMENT CONTRACTS :ADVANCES

NONCURRENT LIABILITIES

Notes payablenoncurrent maturities

DEFERRED INCOME

Unearned fees on construction contracts

MINORITY INTERESTS IN SUBSIDIARIES ..

CAPITAL

Contributed capital Capital stockauthorized, 1,000,000 shares of $2.50 par value; issued

and outstanding: 1954-600,000 shares; 1953-500,000 shares

Capital contributed in excess of par value of capital stock

Retained earnings

Total capital

October 31, 1954

$ 465,000

7,226,387

1,370,452

1,128,766

2,137,325

$12,327,930

190,874

2,360,000

229,519

548,631

, 1,500,000

3,158,076

7,908,967

$12,567,043

$28,223,997

The Notes to Financial Statements on page 17 are an integral part of this comparative consolidated balance sheet.

15

October 31, 1953

$ 300,000

7,018,887

703,781

1,903,733

2,742,532

$12,668,933

71,732

2,700,000

342,042

262,630

1,250,000

1,803,450

7,765,599

$10,819,049

$26,864,386

THE FLUOR CORPORATION,LTD.,AND SUBSIDIARIES

CONSOLIDATED STATEMENT OF RETAINED EARNINGS Year ended October 31, 1954 NOTES TO FINANCIAL STATEMENTS Year ended October 31, 1954

NOTE A: Principles of Consolidation

The consolidated balance sheet of the company at October 31, 1954 includes the accounts of the following subsidiaries: Fluor Maintenance, Inc., Middle-East, Inc., Middle-East Fluor, S. A., Fluor Peruana, S. A., Fluor International, S. A., The Fluor Cor­poration of Canada, Ltd., H. G. Acres & Company, Limited and Singmaster & Breyer, Inc. All the subsidiaries are wholly-owned except Singmaster & Breyer, Inc., which is 55% owned by the company and H. G. Acres & Company, Limited which is 60%

- owned by The Fluor Corporation of Canada, Ltd. Tbe consoli­dated statement of income and retained earnings for the years ended October 31, 1954 and 1953 includes the operations of these subsidiaries for the respective periods of ownership by the com­pany.

All intercompany accounts and transactions have been elimi­nated in consolidation.

The excess of the company's equity in the net assets of the subsidiaries over its investment therein has been included in the retained earnings in the consolidated balance sheet.

NOTE B: Accounting treatment with respect to construction contracts

In general, the company follows the policy of recognizing income on construction contracts in the proportion that aggregate ex­penditures incurred bear to the total estimated cost of the work being performed under tbe contracts. Fees billed in advance to customers under the terms of the contracts are considered to be deferred income and are not recognized as income until earned.

NOTE C: Funds restricted to government contracts

Represents unexpended balance of funds advanced by a govern­ment agency for use only on specific contracts.

NOTE D: Federal taxes on income

Federal income tax returns of the company have been examined . for all years to and including the year ended October 31, 1950,

and all of the necessary adjustments have been recorded.

NOTE E: Net Assets of Foreign Subsidiaries

Assets and liabilities of The Fluor Corporation of Canada, Ltd. and its subsidiary, H. G. Acres & Company, Limited, have been included in the accompanying balance sheet in Canadian dollars because of the small difference in the rate of exchange. The net assets in Canada included in tbe balance sheet at October 31, 1954 amounted to approximately $759,785.

Assets and liabilities of other foreign subsidiaries are included in the balance sheet at the official rate of exchange. Net assets of these foreign subsidiaries at October 31, 1954 amounted to:

Middle-East Fluor, S A $775,774 Fluor International S A 62,727 Fluor Peruana, S. A. . deficit ( 5,582 ).

Retained earnings-November 1, 1953

Less write off of portion of goodwill shown on books of H. G. Acres

& Company, Limited attributable to investment therein by The Fluor Corporation of Canada, Ltd

Retained earnings-November 1, 1953, as adjusted .

Add net earnings for the year ended October 31, 1954 .

Less:

Dividends paid

$1.20 a share on 600,000 shares of capital stock

Write off the excess of cost over the book value of assets

acquired from Singmaster & Breyer ( a partnership ) .

RETAINED EARNINGS-OCTOBER 31, 1954 .

AUDITORS CERTIFICATION Board of Directors

The Fluor Corporation, Ltd.

We have examined the consolidated balance sheet of THE FLUOR CORPORATION, LTD. ( a California corporation ) and its subsidiaries as of October 31, 1954, and the related con­solidated statements of income and retained earnings for the year then ended. Our examination, which did not include the accounts of two Canadian subsidiaries, was made in accordance with generally accepted auditing standards, and accordingly included such tests of the accountingrecords and such other auditing procedures as we considered necessary in the r.iircumstances.As to the Canadian subsidiaries ( The Fluor Corporation of Canada, Ltd. and H. G. Acres & Company, Limited ) we have accepted reports of examination furnished us by independentChartered Accountants.

In our opinion, the accompanying consolidated balance sheet and consolidated state­ments of income and retained earnings present fairly the consolidated financial position of The Fluor Corporation, Ltd. and its subsidiaries at October 31, 1954, and the consolidated results of their operations for the year then ended, in conformity with generally accepted accounting principles applied on a consistent basis.

irtA7ac,--17

Los Angeles, California December 14, 1954

NOTE F: Noncurrent Liability

The company negotiated a 10 year, 491% unsecured loan in the amount of $3,000,000 with two insurance companies. The note agreements, dated October 12, 1953, will be discharged by semi­annual payments of $150,000, plus interest, commencing March 1, 1954 and extending to September 1, 1963 subject to contingent and optional amortization provisioris.

The company is required to maintain net current assets of $5,000,000 or 200% of the outstanding notes whichever is greater. Also the current assets must not be less than 150% of the current liabilities.

Further, the company is prohibited generally from paying cash dividends aggregating in excess of the net earnings of the company ( as defined ) after October 31, 1952.

Under these restrictions the company is prohibited from pay­ing cash dividends in excess of approximately $604,000 at October 31, 1954.

NOTE G: Contingent Liability

Subsequent to October 31, 1954 the company received a Noticea of Assessment from the California State Board of Equalization in the amount of $88,907 for sales tax on certain products manu­factured in California and shipped to customers outside the State during the three year period ended March 31, 1954. No pro­vision has been made for this assessment as the management believes that the company is not liable for such tax.

NOTE H: Renegotiation

The company has made sales under certain contracts with the government which may be subject to the Renegotiation Acts of 1948 and 1951 and amendments thereto. Such sales for the year ended October 31, 1954 are estimated at $16,700,000. Renego­tiable sales for all periods to October 31, 1953 have been re­viewed by government agencies, clearances issued and no funds requested. It is the opinion of the management that no provision for renegotiation is required in respect to the current period.

NOTE I: Commitment

The Fluor Corporation of Canada, Ltd., is committed to pur­chase, upon request of the owners thereof, all or any part of the outstanding shares of H. G. Acres & Company, Limited not pres­ently held by the company. The price payable for such shares would be the greater of $18.31 a share or an amount determined by reference to an agreed formula which is based, in part, on the amount of the undistributed earnings of H. G. Acres & Company, Limited accuinulated since February 28, 1953. As of October 31, 1954 the purchase of all outstanding shares not presently held by the company would involve a payment of approximately $400,000.

17 .

fit

. $8,035,599

270,000

$7,765,599

1,178,025

$8,943,624

$720,000

314,657 1,034,657

$7,908,967

The Notes to Financial Statements on the following page are an integral part of this consolidated statement of retained earnings.

+N.;

:I 1 f

s.,

--

A' ,N. N. oao..."

' S a

14P1'

BUILDING ORGANIZATIONAL STRENGTH THROUGH EMPLOYEES

Trust Fund's

.r Fluor employees numbered 4855 at the close of the year, with length of service qualifying a majority for benefits in the company's Trust

ig Fund plan established in 1941. As of October 31, a total of 1632 em­.ployees were listed as participants in Trust Fund No. 1, and 2732 in

7_1 I-4 , Trust Fund No. 2, yearly contributions for which are shown in the L financial statements on pages 3 and 12, ­il

- Service Pin Awards 11

"" '- ' ..- 1 For their long service and satisfactory performance, 188 employees,...,1--1 -- 1:.., received pins signifying the completion of from five to thirty years of

. ...:. , ,L7: r service. The group included 81 men elf Fluor Maintenance, Inc.' .3.'" -,......'''''......,........,...z.,.. -;trA Since.1941, when the custom was inaugurated, a total of 850 ein..

...,-..,...d... .212 ­h1,7ga.. --3SEIPIIF

ri -1. ployees ployees.have,received the distinctive pin at anniversary parties.kit,. -,,,,m 11/401o. risir,F1 .r.

..... ,,, 1st. - a F.e.. ,

.1 -- Industry-Education Program-. T1.- .

-. I An increasing number of employées participated in educational ac­. irtio4=I ime.è :- ' N"Irg tivities dming 1954, seiving on school and college committees, co­.... 7:-7.'4.,..--, -I ..-.....-, _., 1747.1"--Zitt.

. operating in curriculum development, and instructing classes during- ' ° I ;71-1-:71 p.L11,14,

411 evening hours. The program stresses active participation in industrial I.71;:2 r.---1-V' 'i-.. 1 - workshops, conferences, and clinics held at the university level.

. ., 1.,1 I Moreover, the company's one-year junior engineer training program

was redesigned to encourage selected technical employees to secure -

-*, .practical experience in various company divisions.

In addition to the cooperation accorded schools and colleges, the a I% company extended a series of development conferences to all officers,

I

-division heads, and department managers. Twenty-two executives at­

we. re tended the four-week management course conducted in New York

OW. by the American Management Association,

=nor o/...A

134- - ....>// ;Iwo ..!"

V.W. - .110* .

C

SE 19 '

- ; Catalytic Light Ends Unit built by Fluor in' Texas.I 4 -

LEFT: Teachers serve on Fluor's staff each summer as part of industry-education program. L to r: John Barnhart, Pomona; Robert Reece, California State Polytechnic College, San Luis Obispo; and Fred Rupp, of Eagle Rock.

'ABOVE: Joseph Moore, left, qualified for national Turtle Club membership as part of Fluor's safety program stressing the importance of wearing hard hats at jobsites. Be is shown with Foreman Richard Ransom after narrow escape from a fallinga

drift pin.

tu or Cmploptts' fientfirIrrosi Yonb Itmmmt,rr OneIre/ 7.= 7.7. oerv././14

.".-^ el-et Aria

or Trropitte WOO( r u itY.1,fam ir itilb

a

11=ZILF

Quarterly reports are issued to'ail Trust Fund participants.

1. ... L ­5 I ,

;,

-Tar

Open House Research, Products, and Sales Promotion personnel combined to spon­sor a highly successful open house event at the new Research Center in October. More than 2000 persons visited the Whittier quarters to witness various laboratory demonstrations and become better ac­quainted with Fluor products.

Job Evaluation The company's job evaluation program was completely revised dur­ing the year. On a trial basis, regular semi-annual employee perform­ance reviews were initiated, including a counseling interview between the employee and departmental supervisor.

Annual Charity Drive Believed to be one of the most successful employee-managed charity campaigns in the nation, the drive in 1954 totaled $47,000 in employee and firm pledges.

The first Employees Combined Charities Drive was held in 1949. Contributions, including company donations during the six-year period, exceed $200,000.

Technical Writing Engineering and research studies during the year resulted in hundreds of requests being received for technical article material. Prepared by employees and processed through a technical coordinating committee, articles dealing with results of the various studies appeared in trade journals, newspapers, and company publications. Papers were also presented before learned societies, and at national conferences and conventions of petroleum, chemical, and power-related organizations.

20

LEFT Plant tours are arranged for business, civic and community groups, including scouts .d their mothers. Henry Nuzum, assistant mill superintendent, left, explains redwood processing to members of Cub Pack 223 of Alhambra, Calif.

ABOVE : Company canteen proves a popular spot for employees during coffee breaks.

210 200 190

1954: $47,000 180 170

160 150

140 1953: $47,000 130

120 110

100

1952: $39,000 90

80 70

1951: $31,000 60 50 40

1950: $21,000 30

20

1949: $19.000 10

Contributions to charity: 6-year period

J

Subsidiaries and Affiliates H. G. Acres & Company, Ltd., Niagara Falls, Ontario Fluor Corporation of Canada, Ltd., Toronto, Ontario Fluor Maintenance, Inc., Martinez, California Fluor International, S. A., Panama, C. Z.e ..5e, Fluor Peruana, S. A., Lima, Peru Head Wrightson Processes, Ltd., London, England Middle-East Fluor, S. A., Panama, C. Z. Middle-East, Inc., Los Angeles, California Singmaster & Breyer, Inc., New York, New York

Nami.71

Refinery of Imperial Oil, Ltd., at Regina, Saskatchewan

Sales and Service Offices

Birmingham Boston Buffalo Calgary Chicago Denver Detroit Houston

Manufacturing Plants

London Los Angeles New York Philadelphia Pittsburgh San Francisco Toronto Tulsa

Paola, Kansas Los Angeles

a

Be sure with Fluor

SINCE 1890

THE FLUOR CORPORATION, LTD. Executive offices and home plant: 2500 South Atlantic Boulevard, Los Angeles 22, California

Printed in U.S.A.