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In 2000, Fluor Corporation continued to execute
key initiatives for financial performance improvement. We closed
a chapter of our history at the end of our fiscal year with the
reverse spin-off of our investment in Massey Coal Company. We believed
that both entities would serve their shareholders better by being
stand-alone companies, and the market’s initial reaction validates
those beliefs.
The “new” Fluor is now positioned to
focus on delivering knowledge-based services to our clients and
creating a financial structure that supports our business purpose.
As “new” Fluor we will have a lower debt-to-capital ratio
and will generate substantially greater free cash flow, after meeting
all of our requirements for dividends and internal capital needs.
This enables our company to invest in new initiatives or return
cash to shareholders. Either way, the prospects for value creation
are substantially enhanced.
“New” Fluor will continue to take the
necessary portfolio actions to achieve operational improvements
and enhance returns. By doing so, we expect to achieve above cost-of-capital
returns during 2001, and will accomplish this by growing revenues,
increasing margins and utilizing our capital more efficiently. This
focus on balance sheet performance offers significant opportunity
for “new” Fluor to create value in our core businesses.
Through our continued implementation of business
model analysis, goal setting, and reviews with each enterprise,
we have clarified our performance improvement opportunities and
focused management’s attention on the actions required to move
our business forward. Beginning this year, we will incorporate a
more rigorous and disciplined risk measurement and mitigation methodology,
which will help assure that we make better risk-return tradeoffs.
This systematic approach also will enable us to identify and mitigate
risk earlier through a broader array of tools and capabilities.
As “new” Fluor we have raised our corporate
financial targets as well. We believe that with our growth prospects
and initiatives in place we should be able to achieve returns on
capital employed in the 15% range and grow our trended EPS at a
rate of 15% annually. We also believe that these targets, when achieved
con sistently, will generate substantial shareholder value.
We look forward to 2001 as a year of change and
growth. As an enterprise, we succeed by serving our customers and
clients superbly well, but we remain focused on the clearly defined
elements of value creation that are essential to creating the company
that we all envision.
Ralph F. Hake
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