Fluor 2001 Annual Report Download - page 15

Download and view the complete annual report

Please find page 15 of the 2001 Fluor annual report below. You can navigate through the pages in the report by either clicking on the pages listed below, or by using the keyword search tool below to find specific information within the annual report.

Page out of 56

  • 1
  • 2
  • 3
  • 4
  • 5
  • 6
  • 7
  • 8
  • 9
  • 10
  • 11
  • 12
  • 13
  • 14
  • 15
  • 16
  • 17
  • 18
  • 19
  • 20
  • 21
  • 22
  • 23
  • 24
  • 25
  • 26
  • 27
  • 28
  • 29
  • 30
  • 31
  • 32
  • 33
  • 34
  • 35
  • 36
  • 37
  • 38
  • 39
  • 40
  • 41
  • 42
  • 43
  • 44
  • 45
  • 46
  • 47
  • 48
  • 49
  • 50
  • 51
  • 52
  • 53
  • 54
  • 55
  • 56

FLUOR CORPORATION 2001 ANNUAL REPORT
Opportunities for transportation pro-
jects, which utilize Fluor’s unique skills
in this market and fit its project selectivity
criteria, continue to expand. Fluor’s demon-
strated track record of successful projects
over the past several years, applying the
innovative public/private partnership (PPP)
business model, has firmly established
the company as a major participant in this
growth market.
Fluor specializes in the development,
financing, design/build and program man-
agement of large, complex transportation
projects. Targeted opportunities are princi-
pally major road projects in the U.S. and rail
projects in the U.K. and Europe.
In the U.S., increased federal and state
funding, along with growing political resolve
to address much needed improvements
and upgrades in the country’s transporta-
tion infrastructure, has created attractive
opportunities for Fluor. Serving as overall
managing partner, a Fluor-led team was awarded the Legacy Parkway project in 2001, a
$330 million limited-access highway in the greater Salt Lake City area.
Employing the PPP approach, another Fluor-led team secured project financing
clearing the way to proceed with a high-speed rail project in The Netherlands. This land-
mark project, demonstrating successful use of the PPP business model to accelerate the
development process of a major project, is the first of its kind in the European Union. The
success of this approach has attracted significant interest by several other countries in
the region to address their transportation upgrade requirements.
With an estimated £100+ billion of required upgrades to its rail system, the U.K.
market represents a particularly significant opportunity for Fluor. Through its work on
existing contracts with Britain’s Railtrack and other activities in the U.K., Fluor has estab-
lished a strong presence and important relationships in this target market.
POWER
Fluor’s power business is primarily conducted through Duke/Fluor Daniel (D/FD), a 50/50
partnership, which capitalized on an extremely robust U.S. market in 2001. The com-
pany also executes power projects in Mexico and Central America through its joint-
venture ICA Fluor. New power awards for the year were a record $3.6 billion, with backlog
rising to an all-time high of $2.3 billion. Deregulation of the U.S. power industry combined
with strong demand growth fueled significant investment in new power generation facil-
ities. Operating profit for Fluor’s power business improved significantly in 2001 to $74 mil-
lion. This compares with essentially breakeven operating performance in fiscal 2000, which
included a provision of $60 million for a project cost overrun.
As the end of 2001 approached, a variety of factors converged to significantly
moderate the expected continuing pace of new power project awards. Softening whole-
sale electricity prices, the impact of weakened economic conditions, warmer-than-
normal temperatures and the financial collapse of a major energy producer which
damaged investor confidence, all had a negative impact on the ability of many merchant
power developers to secure further financing for their projects.
PAGE 13