The following discussion and analysis is provided to increase understanding of, and should be read in conjunction with, the Condensed Consolidated Financial Statements and notes and the company's December 31, 2008 annual report on Form 10-K. For purposes of reviewing this document, "segment profit" is calculated as revenue less cost of revenue and earnings attributable to noncontrolling interests excluding: corporate administrative and general expense; interest expense; interest income; domestic and foreign income taxes; and other non-operating income and expense items.

CAUTIONARY STATEMENT REGARDING FORWARD-LOOKING STATEMENTS

Certain statements made herein, including statements regarding the company's projected revenue and earnings levels, cash flow and liquidity, new awards and backlog levels and the implementation of strategic initiatives and organizational changes are forward-looking in nature. These forward-looking statements reflect current analysis of existing information and are subject to various risks and uncertainties. As a result, caution must be exercised in relying on forward-looking statements. Due to known and unknown risks, the company's actual results may differ materially from its expectations or projections. Factors potentially contributing to such differences include, among others:

†        The company's failure to receive anticipated new contract awards and the
         related impacts on staffing levels and cost;
†        Client cancellations of, or scope adjustments to, existing contracts,
         including our government contracts that may be terminated at any time
         and the related impacts on staffing levels and cost;
†        Client delays or defaults in making payments;
†        A failure to obtain favorable results in existing or future litigation
         or dispute resolution proceedings;
†        Difficulties or delays incurred in the execution of contracts, including
         performance by our joint venture or teaming partners, resulting in cost
         overruns or liabilities;
†        Failure to meet timely completion or performance standards that could
         result in higher cost and reduced profits or, in some cases losses on
         projects;
†        Decreased capital investment or expenditures, or a failure to make
         anticipated increased capital investment or expenditures, by the
         company's clients;
†        The availability of credit and restrictions imposed by credit
         facilities, both for the company and our clients;
†        The cyclical nature of many of the markets the company serves and its
         vulnerability to downturns such as the current worldwide economic
         downturn;
†        The current worldwide financial crisis, which may cause, accelerate or
         exacerbate a number of the other factors listed below;
†        Competition in the global engineering, procurement and construction
         industry;
†        Changes in global business, economic (including currency risk),
         political and social conditions;
†        The financial viability of our clients, subcontractors, suppliers and
         joint venture or teaming partners;
†        Civil unrest, security issues, labor conditions and other unforeseeable
         events in the countries in which we do business, resulting in
         unanticipated losses;
†        Possible limitations of bonding or letter of credit capacity;
†        The impact of anti-bribery and international trade laws and regulations;
†        The impact of past and future environmental, health and safety
         regulations;
†        The potential impact of certain tax matters including, but not limited
         to, those from foreign operations and the ongoing audits by tax
         authorities;
†        The company's ability to identify and successfully integrate
         acquisitions;
†        The company's ability to secure appropriate insurance;
†        Limitations on cash transfers from subsidiaries that may restrict the
         company's ability to satisfy financial obligations or to pay interest or
         principal when due on outstanding debt;
†        Restrictions on possible transactions imposed by Delaware law; and
†        Possible systems and information technology interruptions.

While most risks affect only future cost or revenue anticipated by the company, some risks may relate to accruals that have already been reflected in earnings. The company's failure to receive payments of accrued amounts or incurrence of liabilities in excess of amounts previously recognized could result in a charge against future earnings.

Additional information concerning these and other factors can be found in our press releases as well as our periodic filings with the Securities and Exchange Commission, including the discussion under the heading "Item 1A. Risk Factors" in this Form

10-Q as well as the company's Form 10-K filed February 25, 2009. These filings are available publicly on the SEC's website at http://www.sec.gov, on Fluor's website at http://investor.fluor.com or upon request from Fluor's Investor Relations Department at (469) 398-7220. Except as otherwise required by law, the company undertakes no obligation to publicly update or revise its forward-looking statements, whether as a result of new information, future events or otherwise.

RESULTS OF OPERATIONS

Consolidated revenue for the three months ended September 30, 2009 was $5.4 billion, reflecting a 4 percent decrease when compared to the $5.7 billion of revenue for the corresponding three months in 2008, primarily as the result of reduced revenue contributions from the Oil & Gas and Power segments. Consolidated revenue for the nine months ended September 30, 2009 increased slightly to $16.5 billion compared to $16.3 billion for the first nine months of the prior year, primarily driven by revenue increases in the Industrial & Infrastructure and Government segments, partially offset by revenue declines in Global Services and Power.

Net earnings attributable to Fluor Corporation were $162 million, or $0.89 per diluted share, and $536 million, or $2.93 per diluted share, for the three and nine months ended September 30, 2009, compared to net earnings attributable to Fluor Corporation of $182 million, or $1.00 per diluted share, and $527 million, or $2.86 per diluted share, for the corresponding periods of 2008. The decrease in net earnings attributable to Fluor Corporation for the three months ended September 30, 2009 compared to the three months ended September 30, 2008 was primarily due to lower contributions from the Oil & Gas and Global Services segments, partially offset by earnings increases in the other segments. The 2009 results for Global Services included a $45 million provision in the current quarter for the potential lack of collectability of a client receivable. The increase in net earnings attributable to Fluor Corporation for the nine months ended September 30, 2009 when compared to the nine months ended September 30, 2008 was primarily due to improved contributions from the Oil & Gas, Government and Power segments and a 20 percent decrease in corporate administrative and general expense in the 2009 period, partially offset by decreased contributions from the Industrial & Infrastructure and Global Services segments and lower net interest income. Earnings for the Industrial & Infrastructure segment declined for the nine months ended September 30, 2009 compared to the corresponding period of the prior year because the results in 2008 included the favorable impact of a pre-tax gain of $79.2 million from the sale a joint venture interest in a wind farm project. The global recession continues to impact the near-term capital investment plans of many of the company's clients across all of the company's segments except Government.

The effective tax rate, based on the company's operating results for the three and nine months ended September 30, 2009 was 34.6 percent and 34.5 percent, respectively compared to 37.2 percent and 37.5 percent for the corresponding periods of 2008. The lower effective tax rate for the three and nine month periods ending September 30, 2009 was primarily attributable to the recognition of a deferred tax benefit associated with taxes on unremitted foreign earnings and increased earnings attributable to noncontrolling interests for which the taxes are not paid by the company.

Consolidated new awards for the three and nine months ended September 30, 2009 were $2.9 billion and $15.1 billion, respectively, compared to new awards of $8.8 billion and $20.9 billion for the three and nine months ended September 30, 2008. The Oil & Gas and Government segments were the major contributors to the new award activity for the third quarter of 2009, and the Oil & Gas and Industrial & Infrastructure segments were the principal drivers of new award activity for the nine months ended September 30, 2009. Approximately 74 percent of consolidated new awards for the nine months ended September 30, 2009 were for projects located outside of the United States.

Consolidated backlog at September 30, 2009 was $28.0 billion compared to $36.5 billion at September 30, 2008. The decline in backlog is primarily due to project cancellations, scope reductions and lower 2009 new award bookings in the Oil & Gas segment. As of September 30, 2009, approximately 61 percent of consolidated backlog relates to international projects. Although backlog reflects business which is considered to be firm, cancellations, scope adjustments or deferrals may occur. Backlog is adjusted to reflect any known project cancellations, revisions to project scope and cost, and deferrals, as appropriate.

OIL & GAS



Revenue and segment profit for the Oil & Gas segment are summarized as follows:



                   Three Months Ended       Nine Months Ended
                     September 30,            September 30,
(in millions)       2009        2008        2009        2008

Revenue          $  2,925.0   $ 3,302.9   $ 9,322.9   $ 9,248.4
Segment profit        189.2       205.6       570.8       512.1

Revenue for the three months ended September 30, 2009 decreased 11 percent when compared to the same quarter of 2008 due

to reduced project execution activities as a number of large projects within the segment near completion. Revenue for the nine months ended September 30, 2009 was up only slightly compared to the first nine months of 2008, as the growth experienced by the segment over the last several years has slowed.

Segment profit for the three months ended September 30, 2009 decreased 8 percent when compared to the third quarter of 2008, primarily driven by the reduced revenue volume. Segment profit for the nine months ended September 30, 2009 increased 11 percent compared to the same period of 2008 primarily due to the net positive impact of forecast adjustments for certain projects nearing completion, which were primarily due to the approval of change orders and successful resolution of disputed items.

New awards for the three months ended September 30, 2009 were $1.2 billion, compared to $5.1 billion for the corresponding period of 2008. Current quarter awards included a European underground gas storage facility and two clean gasoline projects in Mexico. New awards for the nine months ended September 30, 2009 were $6.1 billion, compared to $12.4 billion for the first nine months of 2008. Backlog at September 30, 2009 decreased 43 percent to $13.1 billion compared to $22.8 billion at September 30, 2008. The decrease in backlog is the result of cancellations and scope reductions of certain projects, primarily in the first quarter of 2009, along with lower new award bookings in 2009. In addition, during the third quarter of 2009, the company reduced backlog by $1.2 billion for a gas processing project in Russia that has been delayed indefinitely by the client. Though the project has not been formally canceled, there is significant uncertainty as to whether it will proceed.

The segment has been a participant in an expanding market that includes very large projects in diverse geographical locations, which are well suited to the company's global execution and project management capabilities and strong financial position. However, the global credit crisis and recession have resulted in some clients reassessing their capital spending plans for 2009 and beyond, with others delaying projects or attempting to renegotiate commercial terms for awarded projects in an attempt to obtain lower capital costs. As such, the high growth and operating profit margins recently experienced by the segment will be increasingly difficult to sustain.

INDUSTRIAL & INFRASTRUCTURE



Revenue and segment profit for the Industrial & Infrastructure segment are
summarized as follows:



                   Three Months Ended       Nine Months Ended
                     September 30,            September 30,
(in millions)        2009        2008       2009        2008

Revenue          $    1,105.5   $ 878.5   $ 3,280.1   $ 2,587.2
Segment profit           41.6      27.9       103.8       178.7

Revenue for the three months ended September 30, 2009 increased 26 percent compared to the three months ended September 30, 2008, due to growth in the mining and metals and infrastructure business lines. Revenue for the nine months ended September 30, 2009 increased 27 percent compared to the corresponding period in the prior year due to growth across all business lines.

Segment profit was higher in the current quarter compared to the third quarter of last year because the prior year period included the impact of a provision totaling $15.5 million for the London Connect Project, a fixed-price telecommunications project in the United Kingdom.

Segment profit for the nine months ended September 30, 2009 declined compared to the nine months ended September 30, 2008 primarily because the prior year period included a pre-tax gain of $79.2 million from the sale of a joint venture interest in the Greater Gabbard Offshore Wind Farm ("Greater Gabbard") Project. The 2008 period also reflected the impact of provisions totaling $32.7 million related to the London Connect project. Segment profit declined across all business lines for the first nine months of 2009. Segment margins have decreased during 2009 as the result of a significant shift in the mix of work from higher margin engineering and feasibility studies to lower margin construction activities, the continuation of the downturn in the life sciences market and reduced margins on Greater Gabbard project execution activities.

The company has been involved in dispute resolution proceedings in connection with the London Connect Project, a $500 million lump-sum project to design and install a telecommunications network that allows transmission and reception throughout

the London Underground system. The project, which is now complete, was subject to significant delays, resulting in additional costs to the company and claims against the client. During the third quarter of 2009, the company settled the dispute, with no material change to segment profit. As a result of the settlement, the company is no longer reporting claim revenue for the project, which totaled $108 million at the end of the second quarter of 2009.

The company is involved in a dispute in connection with the Greater Gabbard Project, a $1.5 billion lump-sum project to provide engineering, procurement and construction services for the client's offshore wind farm project in the United Kingdom. The dispute relates to specifications for monopiles and transition pieces required under the contract. In the third quarter of 2009, the company recorded $115 million of claim revenue related to this issue for costs incurred through the end of the quarter. Substantial additional costs arising from this dispute are expected to be incurred in future quarters. The company believes the ultimate recovery of incurred and future costs is probable. The company does not expect to recognize any profit related to this project until the dispute is resolved.

New awards for the three months ended September 30, 2009 were $0.5 billion compared to $2.2 billion for the 2008 comparison period. The new awards in the 2008 period included a large mining project. New awards for the nine months ended September 30, 2009 were $5.3 billion compared to $5.0 billion for the nine months ended September 30, 2008. Backlog increased to $9.7 billion at September 30, 2009 compared to $8.5 billion at September 30, 2008, due to substantial new award activity in the mining and metals business line.

Total assets in the segment increased to $712 million at September 30, 2009 from $536 million at December 31, 2008, due to the Greater Gabbard Project and increased volume across all business lines.

GOVERNMENT



Revenue and segment profit for the Government segment are summarized as follows:



                   Three Months Ended       Nine Months Ended
                     September 30,            September 30,
(in millions)       2009         2008        2009        2008

Revenue          $    543.8    $  368.7   $   1,393.6   $ 948.8
Segment profit         23.6        17.7          84.8      36.5

Revenue for both the three months and nine months ended September 30, 2009 increased 47 percent compared to the same periods in the prior year primarily as the result of project execution activities for the Savannah River Site Management and Operating Project ("Savannah River") in South Carolina and Logistics Augmentation Program ("LOGCAP IV") task orders. The higher revenue in the 2009 periods was offset somewhat by reduced volume at the Hanford Environmental Management Program Project ("Hanford") in Washington.

Segment profit for the three months ended September 30, 2009 improved 34 percent from the corresponding period of 2008 principally due to contributions from LOGCAP IV task orders, Savannah River and work related to American Recovery and Reinvestment Act ("ARRA") funding at Savannah River. Segment profit for the nine months ended September 30, 2009 more than doubled when compared to the performance in the prior year as the result of contributions from LOGCAP IV task orders, Savannah River, project execution activities associated with ARRA funding at Savannah River and a favorable outcome of $15.3 million related to requests for equitable adjustment on a fixed-price contract at the Bagram Air Base in Afghanistan. The higher segment profit in both the three month and nine month 2009 periods was offset somewhat by reduced volume at Hanford and for Iraq-related work.

New awards for the three months ended September 30, 2009 were $872 million compared to $922 million in the same period in the prior year. New awards for the first nine months of 2009 were $2.0 billion compared to $1.1 billion for the first nine months of 2008. The most significant new award for the quarter was the annual funding at Savannah River. Other new awards for the nine months ended September 30, 2009 included the multi-year ARRA funding at Savannah River, LOGCAP IV task orders and Federal Emergency Management Agency ("FEMA") Public Assistance Program task orders. Backlog at September 30, 2009 is $1.3 billion compared to $886 million at September 30, 2008. The significant increase over the prior year is primarily due to multi-year funding at Savannah River related to ARRA work.

Total assets in the Government segment were $506 million at September 30, 2009 compared to $326 million at December 31, 2008. The increase in total assets corresponded to an increase in working capital to support project execution activities.

GLOBAL SERVICES



Revenue and operating profit for the Global Services segment are summarized as
follows:



                   Three Months Ended       Nine Months Ended
                     September 30,            September 30,
(in millions)       2009         2008       2009        2008

Revenue          $    529.0    $  592.9   $ 1,523.3   $ 1,995.2
Segment profit          0.5        49.0        90.0       168.6

Revenue decreased during the three and nine months ended September 30, 2009 compared to the same periods in 2008, primarily due to declining volumes of capital work and continued delay of refinery turnarounds and shutdowns which impacted the operations and maintenance business line, as well as a $45 million provision for the potential lack of collectability of a client receivable for a paper mill where the company's scope of work was to recommission, start up and operate the facility. The significant decline in segment profit during the three months ended September 30, 2009 compared to the three months ended September 30, 2008 was primarily the result of the provision for the paper mill receivable. The substantial decline in segment profit during the first nine months of 2009 compared to the same period in the prior year was primarily due to the provision for the paper mill receivable and the impact of the reduced volume of capital work and delays, all in the operations and maintenance business line. Global Services began to be impacted by the global recession during the fourth quarter of 2008, particularly for natural resource prospects. The drop in commodity prices and the overall economic environment have caused delays of work originally planned for late 2008 and 2009, a condition which continues.

New awards for the three months ended September 30, 2009 were $183 million compared to $405 million for the three months ended September 30, 2008. New awards for the first nine months of 2009 were $1.0 billion, compared to $1.7 billion for the comparable period in 2008. Backlog at September 30, 2009 was $2.4 billion, down from $2.7 billion at September 30, 2008. The decline in both new awards and backlog for the segment was attributable to the global recession, as there were significantly lower renewals from existing clients in the current year.

Operations and maintenance activities that have yet to be performed comprise Global Services backlog. The equipment, temporary staffing and supply chain solutions business lines do not report backlog or new awards. In recent years, Global Services has derived larger percentages of its revenue and segment profit from these non-backlog reporting business lines and from short-duration operations and maintenance activities.

POWER



Revenue and segment profit for the Power segment are summarized as follows:



                   Three Months Ended       Nine Months Ended
                     September 30,            September 30,
(in millions)       2009         2008       2009        2008

Revenue          $    317.2    $  530.8   $   991.0   $ 1,474.8
Segment profit         44.9        24.1        91.9        69.9

Revenue for the three and nine months ended September 30, 2009 decreased 40 percent and 33 percent, respectively, compared to the three and nine months ended September 30, 2008 primarily due to the expected reduction in project execution activities on the Luminant Oak Grove coal-fired power project that is progressing closer to completion.

Segment profit for the three and nine months ended September 30, 2009 increased 86 percent and 31 percent, respectively, compared to the three and nine months ended September 30, 2008 primarily due to increased pre-construction services on a nuclear new build project in Texas, increased activity on several gas turbine projects and project completion adjustments for two emissions control programs. Segment profit margins for the three and nine months ended September 30, 2009 are considerably higher compared to the corresponding periods of 2008 primarily due to project completion adjustments for certain projects that are progressing closer to completion.

The Power segment has been impacted by delays in obtaining air permits for coal-fired power plants due to concerns over carbon emissions. In addition, power producers have been impacted by the global credit crisis and recession. New awards in the Power segment are typically large in amount, but occur on an irregular basis. New project awards in the third quarter of 2009

were $152 million compared to $226 million in the corresponding period of the prior year. Backlog at September 30, 2009 was $1.5 billion compared to $1.6 billion at September 30, 2008.

OTHER

Corporate administrative and general expense for the three months ended September 30, 2009 was $49.6 million, reflecting a 10 percent increase from $45.1 million for the three months ended September 30, 2008. The increase was primarily due to foreign currency losses in the current quarter, offset somewhat by overhead reductions. Corporate administrative and general expense for the nine months ended September 30, 2009 decreased 20 percent to $117.0 million compared to $146.3 million for the same period in 2008. This decrease is primarily due to the impact of reduced compensation cost and overhead reduction efforts in the current year period.

Net interest income of $3.1 million and $11.1 million during the three and nine month periods ended September 30, 2009 decreased from net interest income of $14.7 million and $37.0 million during the corresponding periods of 2008. This decline is primarily due to the impact of lower interest rates, offset somewhat by higher balances of cash and marketable securities, with some of the latter being long-term.

Income tax expense for the three and nine months ended September 30, 2009 and 2008 is discussed above under "Results of Operations."

RECENT ACCOUNTING PRONOUNCEMENTS

See Note 2 of the Notes to Condensed Consolidated Financial Statements.

LITIGATION AND MATTERS IN DISPUTE RESOLUTION

See Note 13 of the Notes to Condensed Consolidated Financial Statements.

FINANCIAL POSITION AND LIQUIDITY

During the nine months ended September 30, 2009, cash provided by operating activities of $539.9 million resulted primarily from earnings sources. The company currently expects to fund approximately $50 million to $70 million into its defined benefit pension plans during 2009, which is expected to be in excess of the minimum funding required. Contributions of approximately $30 million were made by the company during the nine months ended September 30, 2009. During the nine months ended September 30, 2008, cash provided by operating activities of $873.9 million resulted primarily from earnings sources and increases in client advance billings.

The company used significant cash in the first nine months of 2009 to fund on-going work related to the dispute over monopiles and transition pieces on the Greater Gabbard Project in the United Kingdom. The company is incurring substantial costs for work that is not covered by the billings on this $1.5 billion lump-sum project. As of September 30, 2009, the company has incurred costs and recorded claim revenue of $115 million related to this dispute, of which $101 million has been funded during 2009. These costs are reflected in the change of operating assets and liabilities for the nine months ended September 30, 2009.

Cash utilized by investing activities was $864.0 million in the first nine . . .