Fluor 2001 Annual Report Download - page 4

FLUOR CORPORATION 2001 ANNUAL REPORT
ALAN L. BOECKMANN
DEAR FELLOW SHAREHOLDERS
OUTSTANDING PROGRESS HAS BEEN MADE OVER THE PAST TWO YEARS IN STRENGTHENING
FLUOR’S BUSINESS OPERATIONS AND ESTABLISHING A SOLID FOUNDATION FOR EARN-
INGS GROWTH AND CREATION OF SHAREHOLDER VALUE. DURING 2001, WE INITIATED
THE STRATEGIC ACTIONS TO COMPLETE OUR EXIT FROM NON-CORE BUSINESSES AND
REFOCUS THE COMPANY ON STRENGTHENING NEW BUSINESS OPPORTUNITIES WITHIN
OUR CORE COMPETENCIES OF ENGINEERING, PROCUREMENT, CONSTRUCTION AND
MAINTENANCE, OR EPCM AS WE CALL IT.
Importantly, the market for engineering and construction services is in the early stages of
a long-term upcycle. We firmly believe that our capabilities and experience position us
better than any other competitor to capitalize on this major investment cycle that is just
now getting underway.
In December, I was extremely honored to be appointed by the Board to the position
of Chairman and Chief Executive Officer, effective February 6, 2002, succeeding Philip J.
Carroll, Jr., who is retiring. We are grateful to Phil for his significant contributions in
repositioning the company for improved future performance.
Importantly, the transition to the next generation of leadership throughout the com-
pany has been accomplished, our financial strength is excellent and our strategic focus
is clear. I am looking forward with great enthusiasm to leading our highly capable man-
agement team and talented global work force in achieving the kind of performance that
will make Fluor the undeniable leader in the global building and services marketplace
as well as a superior investment for shareholders.
FINANCIAL PERFORMANCE
Fluor’s financial performance in 2001 provides solid evidence that we are beginning
to achieve our goal to deliver sustainable long-term earnings growth. Earnings from con-
tinuing operations, excluding unusual items, increased 23 percent to $143.0 million, or $1.81
per share, compared with earnings from continuing operations of $116.3 million, or $1.52
per share in fiscal 2000. New awards and backlog, which are leading indicators of future
performance, also posted encouraging
growth. New awards increased 12 percent to
$10.8 billion for the year, while backlog grew
15 percent to $11.5 billion. Importantly, back-
log gross margin increased to $764 million
or 6.6 percent, a 24 percent increase
in backlog gross margin compared with a
year ago.
Despite these accomplishments and the
positive investor reaction to the strategic
actions taken, Fluor’s stock price experi-
enced significant volatility during the year.
Highly optimistic investor sentiment early
in 2001, fueled in large part by expectations
for an extremely robust power market, was
replaced with increasing pessimism in the
latter half of the year. This was primarily due
to growing concerns over slowing economic
conditions that were exacerbated by the
tragic events of September 11. Investor fears
were then further heightened by the financial
collapse of Enron, a major power producer,
and its negative implications on the outlook
for the power market, which was an area of
strength for Fluor and others in our industry
during the year.
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