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Fluor Takes $95-Million Charge Linked to SR-125 Court Ruling

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Fluor Corp., Irving, Texas, said on Oct. 29 it will take a $95-million charge in the third quarter after a court ruled the firm’s claim against the bankrupt operator of the SR-125 toll road in California would not take priority over other lenders owed money. The engineer-contractor was in a joint venture with Washington Group, now part of URS Corp., that built the road in 2009 for South Bay Expressway Ltd. That joint venture filed for Chapter 11 protection in March, citing inadequate revenue. Fluor said it is taking the write-down because the ruling hurts its ability to collect any compensation. The firm cut its earnings guidance for 2010 to $1.90 from $2.20 per share. Avram Fisher, an industry analyst for BMO Capital Markets, said on Nov. 1 that the impact on Fluor would be “neutral” since the project is completed. But he reiterated a warning about additional write-downs related to Fluor’s Greater Gabbard offshore wind energy project in the U.K. The company announced a $163-million charge linked to the project on Oct. 18, citing bad weather. “The implication is that it may not take much more abnormal weather in the future to lead to additional write-downs on the project,” he says. “We view these recent charges as setting a lower bar for growth in 2011.”

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