Fluor (FLR)

Item 7A.    Quantitative and Qualitative Discussions about Market Risk

        The company invests excess cash in short-term securities, primarily time deposits, that carry a floating money market rate of return. Additionally, a substantial portion of the company's cash balances are maintained in foreign countries. All of the company's long-term debt instruments carry a fixed rate coupon. The company's exposure to interest rate risk on fixed rate debt is not material due to the low interest rates on these obligations.

        The company does not currently use derivatives, such as swaps, to alter the interest characteristics of its short-term securities or its debt instruments. The company generally utilizes currency options and forward exchange contracts to hedge foreign currency transactions entered into in the ordinary course of business and does not engage in currency speculation. At December 31, 2007, the company had forward foreign exchange contracts of less than 8 months duration, to exchange major world currencies. The total gross notional amount of these contracts at December 31, 2007 was $65 million.

        During 2007, exchange rates for functional currencies for most of the company's international operations strengthened against the U.S. dollar, resulting in unrealized translation gains that are reflected in the cumulative translation component of other comprehensive income.

Item 7A.    Quantitative and Qualitative Discussions about Market Risk

        The company invests excess cash in short-term securities, primarily time deposits, that carry a floating money market rate of return. Additionally, a
substantial portion of the company's cash balances are maintained in foreign countries. All of the company's long-term debt instruments carry a fixed rate coupon. The company's exposure to
interest rate risk on fixed rate debt is not material due to the low interest rates on these obligations.

        The
company does not currently use derivatives, such as swaps, to alter the interest characteristics of its short-term securities or its debt instruments. The company
generally utilizes currency options and forward exchange contracts to hedge foreign currency transactions entered into in the ordinary course of business and does not engage in currency speculation.
At December 31, 2007, the company had forward foreign exchange contracts of less than 8 months duration, to exchange major world currencies. The total gross notional amount of these
contracts at December 31, 2007 was $65 million.

        During
2007, exchange rates for functional currencies for most of the company's international operations strengthened against the U.S. dollar, resulting in unrealized translation gains
that are reflected in the cumulative translation component of other comprehensive income.

Item 7A. Quantitative and Qualitative Discussions about Market Risk

The company invests excess cash in short-term securities that carry a floating money market rate of return. Additionally, a substantial portion of the company’s cash balances are maintained in foreign countries. The company’s presently outstanding debt instruments, except non-recourse and associated equity bridge loan project finance debt, carry a fixed rate coupon. The company’s exposure to interest rate risk on fixed rate debt is not material due to the low interest rates on these obligations. Outstanding project finance debt is subject to a floating interest rate and, commercial paper, when outstanding, is issued at current short-term interest rates, which could result in higher interest cost if such rates increase in the future.

The company does not currently use derivatives, such as swaps, to alter the interest characteristics of its short-term securities or its debt instruments. The company generally utilizes currency options and forward exchange contracts to hedge foreign currency transactions entered into in the ordinary course of business and does not engage in currency speculation. At December 31, 2006, the company had forward foreign exchange contracts of less than 15 months duration, to exchange major world currencies for U.S. dollars. The total gross notional amount of these contracts at December 31, 2006 was $242 million.

During 2006 and 2004, exchange rates for functional currencies for most of the company’s international operations strengthened against the U.S. dollar, resulting in unrealized translation gains that are reflected in the cumulative translation component of other comprehensive income. During 2005, the exchange rates for these currencies weakened against the U.S. dollar, and unrealized translation losses occurred. Because it is expected that most of this cash will be used for project execution expenditures in the currency in which it is held, the exposure to realized translation gains or losses is mitigated.