FLUOR CORP

1. Principles of Consolidation

These financial statements do not include footnotes and certain financial information presented annually under GAAP, and therefore, should be read in conjunction with our 2024 10-K. Accounting measurements at interim dates inherently involve greater reliance on estimates than at year-end. Although such estimates are based on management’s most recent assessment of the underlying facts and circumstances utilizing the most current information available, our reported results of operations may not necessarily be indicative of results that we expect for the full year.

The financial statements included herein are unaudited. We believe they contain all adjustments of a normal recurring nature which are necessary to fairly present our financial position and our operating results as of and for the periods presented. All significant intercompany transactions of consolidated subsidiaries are eliminated. Certain amounts in tables may not total or agree back to the financial statements due to immaterial rounding differences. We have evaluated all material events occurring subsequent to September 30, 2025 through the filing date of this 10-Q.

2. Recent Accounting Pronouncements

In 2025, we adopted ASU 2023-05, which requires certain joint ventures to apply a new basis of accounting upon formation by recognizing and initially measuring most of their assets and liabilities at fair value. The guidance does not apply to joint ventures that may be proportionately consolidated and those that are collaborative arrangements. The adoption did not have any impact on our consolidated results.

During 2023, the FASB issued ASU 2023-09, which requires us to disclose income taxes paid, net of refunds, disaggregated by federal, state and foreign taxes and to provide more details in our rate reconciliation about items that meet a quantitative threshold. ASU 2023-09 is effective for annual reporting beginning in 2025. We do not expect this ASU to have any impact on our consolidated results.

During 2024, the FASB issued ASU 2024-03 on the disaggregation of income statement expenses or "DISE." This ASU requires additional footnote disclosure of the details of certain income statement expense line items, without changing amounts reported on the consolidated income statement. ASU 2024-03 is first effective for our annual reporting for 2027 and for our quarterly reporting beginning in 2028. We do not expect this ASU to have any impact on our consolidated results.

In May 2025, the FASB issued ASU 2025-03 on identifying the accounting acquirer in transactions involving VIEs. This ASU revises the guidance to require consideration of the same factors used in other business combinations when the legal acquiree is a VIE that qualifies as a business and the transaction is effected primarily through the exchange of equity interests. ASU 2025-03 is effective for our annual and quarterly reporting for 2027. We do not expect this ASU to have any impact on our consolidated results.

In July 2025, the FASB issued ASU 2025-05 on measurement of credit losses for accounts receivable and contract assets. This ASU introduces a practical expedient allowing us to assume that conditions at the balance sheet date remain unchanged over the life of these assets. ASU 2025-05 is effective prospectively for our annual and quarterly reporting for 2026. We do not expect this ASU to have any impact on our consolidated results.

In September 2025, the FASB issued ASU 2025-06 to make targeted improvements to the guidance on internal use software. This ASU removes all references to project stages in ASC 350-40 and clarifies the threshold entities apply to begin capitalizing costs. ASU 2025-06 is effective for our annual and quarterly reporting for 2028 and may be applied using a prospective, retrospective or modified transition approach. We are assessing any impact this ASU may have on our consolidated results.

3. Earnings Per Share

Potentially dilutive securities include convertible debt, stock options, RSUs and performance-based award units. Diluted EPS reflects the assumed exercise or conversion of all dilutive securities using the if-converted and treasury stock methods. In computing diluted EPS, only securities that are actually dilutive are included.

(1) Holders of our 2029 Notes may convert their notes at a conversion price of $45.37 per share when the stock price exceeds $58.98 for 20 of the last 30 days preceding quarter end. Upon conversion, we will repay the principal amount of the notes in cash and may elect to convey the conversion premium in cash, shares of our common stock or a combination of both. The conversion feature of our 2029 Notes has a dilutive impact on EPS when the average market price of our common stock exceeds the conversion price of $45.37 per share for the quarter. During the 2025 Quarter, the weighted average price of our common stock was below the minimum conversion price. During the 2024 Quarter, the weighted average price of our common stock was $47.17 which resulted in the addition of 484,208 shares to diluted shares outstanding during the 2024 Quarter.

4. Operating Information by Segment and Geographic Area

Urban Solutions. Segment profit in the 2025 Quarter and 2025 Period decreased due to an adjustment of $25 million (or $0.15 per share) for delay-related effects on an infrastructure project partially offset by a favorable negotiation with a designer on a separate infrastructure project as well as the ramp up of recently awarded projects in life sciences and mining. Segment profit in the 2025 Period included forecast adjustments totaling $54 million (or $0.30 per share) for cost growth on 3 infrastructure projects related to subcontracted design errors, price escalation and schedule impacts partially offset by a refinement of our expected recovery from claims against our subcontractors on these same projects.

Energy Solutions. Segment profit declined during the 2025 Quarter and 2025 Period primarily due to the reversal of previously recognized revenue of $653 million (or $3.99 per share) for a court ruling on the long completed Santos project in Australia that will require payment to our customer once the judgment is entered. This decline was partially offset by an increase on a large project nearing completion. Segment profit in the 2025 Period was also impacted by a decline in execution activity for projects nearing completion and for certain projects at our joint venture in Mexico where we slowed our execution activities beginning in the second quarter of 2025 through much of the third quarter pending customer payment. We also recognized a charge of $31 million (or $0.13 per share) during the 2025 Period for an arbitration ruling on a fabrication project at our joint venture in Mexico that was completed in 2021. Segment profit margin in the 2024 Period was adversely impacted by $57 million (or $0.23 per share) in cost growth on a construction-only subcontract executed by our joint venture in Mexico.

Mission Solutions. Segment profit declined during the 2025 Quarter due to the recognition of allowances for certain questioned and disputed costs on a DOD project mostly offset by the favorable resolution of a long-standing claim. Segment profit declined during the 2025 Period primarily due to the recognition of revenue reserves of $28 million (or $0.16 per share) resulting from a ruling on a long-standing claim for a project completed in 2019.

Other. Other included the operations of NuScale prior to deconsolidation in the fourth quarter of 2024 and the operations of the Stork businesses prior to their sale. In the 2025 Period, we completed the sale of Stork's operations in the U.K. and recognized a gain on sale of $7 million compared to an $11 million gain on the sale of Stork's operations in continental Europe in the 2024 Period. We expect results from our Other segment to be immaterial for 2025 and beyond.

Total assets by segment are as follows:

Revenue by project location follows:

5. Income Taxes

The effective tax rate on earnings, including equity method earnings, was 20% for the 2025 Quarter and 26% for the 2025 Period compared to 71% for the 2024 Quarter and 44% for the 2024 Period. A reconciliation of U.S. statutory federal income tax expense to income tax expense follows:

6. Partnerships and Joint Ventures

Many of our partnership and joint venture agreements provide for capital calls to fund operations, as necessary. Investments in a loss position of $58 million and $292 million were included in other accrued liabilities as of September 30, 2025 and December 31, 2024, respectively, and consisted primarily of provision for anticipated losses on a legacy infrastructure project and an Energy Solutions joint venture. Accounts receivable related to work performed for unconsolidated partnerships and joint ventures included in “Accounts receivable, net” was $206 million and $175 million as of September 30, 2025 and December 31, 2024, respectively.

During the 2025 Quarter, we converted 15 million of our NuScale voting shares (along with the associated ownership units in NuScale's operating subsidiary) into registered shares. We sold 10 million of those shares for net proceeds of $414 million during the 2025 Quarter. During October 2025, we sold an additional 5 million of shares in NuScale for net proceeds of $191 million. In addition, during November 2025 we reached an agreement to convert the remaining 111 million shares. We expect to complete the conversion and to begin selling those shares by mid-November. More information about the entire agreement can be found in Management’s Discussion and Analysis of Financial Condition and Results of Operations.

Variable Interest Entities

The aggregate carrying value of unconsolidated VIEs (classified under both "Investments” and “Other accrued liabilities”) was a net asset of $4.6 billion and $2.4 billion as of September 30, 2025 and December 31, 2024, respectively. Some of our VIEs have debt; however, such debt is typically non-recourse to us. Our maximum exposure to loss as a result of our investments in unconsolidated VIEs is typically limited to the aggregate of the carrying value of the investment and future funding necessary to satisfy the contractual obligations of the VIE. Future funding commitments as of September 30, 2025 for the unconsolidated VIEs were $48 million.

We are required to consolidate certain VIEs. Assets and liabilities associated with the operations of our consolidated VIEs are presented on the balance sheet. The assets of a VIE are restricted for use only for the particular VIE and are not available for our general operations. We have agreements with certain VIEs to provide financial or performance assurances to clients, as discussed elsewhere.

7. Guarantees

The maximum potential amount of future payments that we could be required to make under outstanding performance guarantees, which represents the remaining cost of work to be performed, was estimated to be $13 billion as of September 30, 2025. For cost reimbursable contracts, amounts that may become payable pursuant to guarantee provisions are normally recoverable from the client for work performed. For lump-sum contracts, the performance guarantee amount is the cost to complete the contracted work, less amounts remaining to be billed to the client under the contract. Remaining billable amounts could be greater or less than the cost to complete. In those cases where costs exceed the remaining amounts payable under the contract, we may have recourse to third parties, such as owners, partners, subcontractors or vendors for claims. The performance guarantee obligation wasnot material as of September 30, 2025 and December 31, 2024.

8. Contingencies and Commitments

We and certain of our subsidiaries are subject to litigation, claims and other commitments and contingencies, including matters arising in the ordinary course of business, of which the asserted value may be significant. We record accruals in the financial statements for contingencies when we determine that an unfavorable outcome is probable and the amount of the loss can be reasonably estimated. While there is at least a reasonable possibility that other losses may be incurred in excess of amounts accrued, management is unable to estimate the possible loss or range of loss or has determined such amounts to be immaterial, except as otherwise noted below. At present, except as set forth below, we do not expect that the ultimate resolution of any open matters will have a material adverse effect on our financial position or results of operations. However, legal proceedings and regulatory and governmental matters are subject to inherent uncertainties, and unfavorable rulings or other events could occur. Unfavorable outcomes could involve substantial monetary damages, fines, penalties and other expenditures. An unfavorable outcome might result in a material adverse impact on our business, results of operations or financial position. We might also enter into an agreement to settle one or more such matters if we determine such settlement is in the best interests of our stakeholders, and any such settlement could include substantial payments.

The following disclosures for commitments and contingencies are new or have been updated since the matter was presented in the 2024 10-K.

Fluor Australia Ltd., our wholly-owned subsidiary (“Fluor Australia”), completed a cost reimbursable engineering, procurement and construction management services project for Santos Ltd. (“Santos”) involving a large network of natural gas gathering and processing facilities in Queensland, Australia. On December 13, 2016, Santos filed an action in Queensland Supreme Court (the “Court”) against Fluor Australia, asserting various causes of action and seeking damages and/or a refund of contract proceeds paid of AUD $1.47 billion. Santos joined Fluor to the matter on the basis of a parent company guarantee issued for the project. In March 2023, a panel of 3 referees appointed by the Court (the "Panel”) issued a draft, non-binding report setting forth recommendations to the Court regarding liability and damages in the lawsuit. After consideration of further submissions by the parties, the Panel finalized its report on July 14, 2023. The Panel’s report has no legal effect unless adopted by the Court through an adoption hearing, and the Court could have accepted or rejected, in whole or in part, the Panel’s recommendations. In the final report, the Panel recommended judgment for Fluor onone of Santos’s damages claims that Santos contends has an approximate value of AUD $700 million, and recommended judgment for Santos on other claims that the Panel valued at approximately AUD $790 million excluding interest and costs. While the project contract contains a liability cap of approximately AUD $236 million, the Panel found that the liability cap did not apply to Santos’s claims. We made an application to have the Court set aside the reference to the Panel and the Panel’s recommendations on several procedural and substantive grounds, including in relation to apparent bias of the referees, a failure to comply with the order which established the reference to the Panel and a lack of procedural fairness. In July 2023, the Court held oral argument on that application and reserved its decision. Pursuant to an application by Santos to adopt the Panel’s report, the Court then held an adoption hearing in February and March 2024 at which we contended that the Court should not adopt the Panel’s recommendation based on numerous grounds, including the Panel’s failure to apply the project’s liability cap. The Court also reserved its decision at the close of the adoption hearing.

In August 2025, the Court generally accepted the recommendations of the panel of referees. Accordingly, we anticipate that, in the fourth quarter of 2025, Santos will move the Supreme Court of Queensland for judgment. The precise amount of the judgment is still pending determination by the Court, but we expect that Santos will seek judgment for approximately $665 million, including interest but excluding GST and Santos’ legal fees. Legal fees are likely to be assessed in a separate process after the judgment. We have appealed the court ruling to the Queensland Court of Appeal and could be required to pay the judgment while the appeal is ongoing. We are working with our insurance carriers to address the obligations expected to arise from the judgment and the costs related to the appeal. After allowing for committed insurance proceeds and reserves, we recognized a charge in the 2025 Quarter as a reduction to revenue of $653 million reflecting the net estimated impact of the anticipated judgment. We have commenced discussions with our insurers which, if successful, may further reduce the ultimate obligation. In mid-October 2025, five of our more than 30 insurers filed a complaint in the Superior Court of California, County of Orange, disputing coverage by seeking various declaratory judgments. We will contest.

In September 2025, purported shareholders filed a complaint against Fluor and certain of its current and former executives in the U.S. District Court for the Northern District of Texas. The plaintiffs purport to represent a class of shareholders who purchased or otherwise acquired Fluor securities between February 18, 2025 and July 31, 2025, and seek to recover damages arising from alleged violations of federal securities laws. These claims are based on statements concerning market conditions, rising costs on three infrastructure projects and the effectiveness of our risk mitigation strategies, which statements the plaintiffs assert were materially misleading.

In October 2025, a purported shareholders' derivative action was filed against current and former members of our Board of Directors, as well as certain current and former executives in the U.S. District Court for the Northern District of Texas. Fluor is named as a nominal defendant in the action. The action purports to assert claims on behalf of Fluor and makes substantially the same factual allegations as the securities class action matter discussed above and seeks various forms of declaratory and monetary relief, as well as corporate reforms.

9. Contract Assets and Liabilities

The following summarizes information about our contract assets and liabilities:

We periodically evaluate our project forecasts and the amounts recognized with respect to claims. We include estimated amounts for claims in project revenue to the extent it is probable we will realize those amounts. As of September 30, 2025 and December 31, 2024, we had recorded $233 million and $244 million, respectively, of revenue associated with claims for costs incurred to date. Additional costs, which will increase this balance over time, are expected to be incurred in future periods. We had $92 million and $23 million of back charges that may be disputed as of September 30, 2025 and December 31, 2024, respectively.

10. Remaining Unsatisfied Performance Obligations

We estimate that our RUPO will be satisfied over the following periods:

11. Debt and Letters of Credit

Debt consisted of the following:

Credit Facility

As of September 30, 2025, letters of credit totaling $409 million were outstanding under our $2.2 billion credit facility, which matures in February 2028. This credit facility contains customary financial covenants, including a debt-to-capitalization ratio that cannot exceed 0.60 to 1.00, a limitation on the aggregate amount of debt of the greater of $750 million or €750 million for our subsidiaries, and a minimum liquidity threshold of $1.1 billion, all as defined in the amended credit facility, which may be reduced to $1.0 billion upon the repayment of debt. The credit facility also contains provisions that will require us to provide collateral to secure the facility should we be downgraded to BB by S&P and Ba2 by Moody's, such collateral consisting broadly of our U.S. assets. Borrowings under the facility, which may be denominated in USD, EUR or GBP, bear interest at a base rate, plus an applicable borrowing margin. As of September 30, 2025, we had not made any borrowings under our credit facility line and maintained a borrowing capacity of $902 million.

Uncommitted Lines of Credit

As of September 30, 2025, letters of credit totaling $918 million were outstanding under uncommitted lines of credit.

Redemption of 2028 Notes

During the 2025 and 2024 Periods, we redeemed $37 million and $44 million, respectively, of the aggregate outstanding 2028 Notes, with an immaterial impact on earnings in both periods.

12. Fair Value Measurements

The following table delineates assets and liabilities that are measured at fair value on a recurring basis:

(1) We recognize the fair value of our investment in NuScale on a mark-to-market basis based upon the prevailing price of their stock on our balance sheet dates, which resulted in a pre-tax loss of $401 million for the 2025 Quarter and a pre-tax gain of $2.3 billion for the 2025 Period. During the 2025 Quarter, we converted 15 million of our NuScale voting shares into registered shares and sold 10 million of those shares for net proceeds of $414 million.

(2) Consists of registered money market funds and an equity index fund held in deferred compensation trusts. These investments represent the net asset value at the close of business of the period based on the last trade or official close of an active market or exchange.

The following summarizes information about financial instruments that are not required to be measured at fair value:

(1) Cash consists of bank deposits. Carrying amounts approximate fair value.

(2) Cash equivalents and marketable securities primarily consists of time deposits. Carrying amounts approximate fair value because of the short-term maturity of these instruments. Amortized cost is not materially different from the fair value.

(3) Notes receivable are carried at net realizable value which approximates fair value. Factors considered in determining the fair value include the credit worthiness of the borrower, current interest rates, the term of the note and any collateral pledged as security. Notes receivable are periodically assessed for impairment.

(4) The fair value of the Senior Notes was estimated based on quoted market prices and Level 2 inputs.

13. Stock-Based Compensation

Our executive and director stock-based compensation plans are described more fully in the 2024 10-K.

Equity Awards

Performance-based award units totaling 278,193 and 272,844 were awarded to most officers, including all Section 16 officers, during the 2025 and 2024 Periods, respectively. These awards generally cliff vest after 3 years and contain annual performance conditions for each of the 3 years of the vesting period. Under GAAP, performance-based elements of such awards are not deemed granted until the performance targets have been established. The performance targets for each year are generally established in the first quarter.

For awards granted under the 2025 performance award plan,70% of the award is earned based on achievement of earnings before taxes targets over three 1-year periods and 30% of the award is earned based on our 3-year cumulative TSR relative to companies in the S&P 500 on the date of the award. For awards granted under the 2024 and 2023 performance award plan,80% of the award is earned based on achievement of earnings before taxes targets over three 1-year periods and 20% of the award is earned based on our 3-year cumulative TSR relative to companies in the S&P 500 on the date of the award. The performance component of these awards is deemed granted when targets are set while the TSR component of these awards is deemed granted upon issuance. During the 2025 Period, the following units were granted based upon the establishment of performance targets:

For awards granted under these performance award plans, the number of units are adjusted at the end of each performance period based on attainment of certain performance targets and on market conditions, pursuant to the terms of the award agreements. As of September 30, 2025, there were 191,810 shares associated with performance awards that had been awarded to employees, but which are not deemed granted due to the underlying performance targets having not yet been established.

Liability Awards

SGI awards granted to executives vest and become payable at a rate of 1/3 of the total award each year. Performance-based awards were awarded to non-Section 16 executives and will be settled in cash on a single date each year.