Fluor Suspends Dividend; Will Use Savings for Gold Production, Acquisitions

Fluor Corp. said Friday that it is suspending its quarterly dividend in an effort to raise funds to acquire other engineering and construction companies and to accelerate its gold mine production.

Irvine-based Fluor’s first-ever dividend suspension is expected to save the company nearly $32 million a year. Fluor, which has sustained two consecutive years of net losses despite attempts to cut costs and diversify into non-energy fields, has been paying dividends of 10 cents per share since 1984.

David S. Tappan Jr., Fluor’s chairman and chief executive, said in a statement: “There are alternative uses for corporate cash at this time which are in the best interests of Fluor shareholders.�

“Specifically,� Tappan said, “we are expediting the development of the company’s North American gold operations to increase production. In the energy and construction area we are actively seeking acquisitions to enhance our position in certain growth markets and are currently engaged in discussions with two such companies.�

Fluor spokesman Jim Rollans said that the dividend suspension does not indicate a cash flow problem at the company. “We have in excess of $100 million in cash and short-term investments on the balance sheet today,� Rollans said.

Rollans declined to identify the companies that Fluor is negotiating to acquire.

In 1977, Fluor bought Daniel International Corp., a non-union general construction firm based in Greenville, S.C., for $230 million.

Fluor said it may use some of the dividend savings to speed gold production and exploration at the Golden Patricia site in Ontario, Canada. The company said it will be spending more than $15 million over the next 14 months to build production facilities on the tract, which the corporation said has shown exceptional potential.

The decision to step up its gold production comes as gold prices are rising. On Friday, gold closed on the Zurich exchange at $405.20 per ounce.

In 1986, the average price received by the company for gold was $355 per ounce. That was up from 1985’s price of $320 per ounce, the lowest since 1979.

Fluor, which was incorporated in 1950, began paying its first cash dividends at 20 cents per quarter in 1974, Rollans said. But in the third quarter of 1984 the dividend rate was cut in half to 10 cents in response to collapsing oil prices and sharp cutbacks in the construction of petrochemical plants that were Fluor’s specialty.

The Fluor board of director’s decision Friday to suspend dividends will first apply to the company’s fiscal quarter that ended Jan. 31.

In its latest fiscal year, ended Oct. 31, Fluor posted a loss of $60.4 million on sales $4.66 billion.