Fluor 2007 Annual Report Download - page 64

New awards in the Global Services segment were $2.2 billion during 2007, $1.6 billion during 2006 and
$2.2 billion during 2005. New awards during 2007 include new work and renewals for key clients. New
awards in 2005 included two large multi-year operations and maintenance awards.
Backlog for the Global Services segment was $2.5 billion at December 31, 2007. During 2006, backlog
for the Global Services segment declined to $2.3 billion, compared with $2.5 billion at the end of 2005.
Contributing to the 2006 backlog decline was the execution in 2006 of a substantial portion of a fixed
duration contract.
Total assets in the Global Services segment increased to $856 million at December 31, 2007, up from
$721 million at December 31, 2006 and $640 million at December 31, 2005 as the principal result of
investments in equipment and working capital to support revenue growth.
Power
Revenue and operating profit for the Power segment are summarized as follows:
Year Ended December 31,
(in millions) 2007 2006 2005
Revenue $1,167.9 $541.6 $383.6
Operating profit 38.0 4.3 13.3
Revenue in 2007 increased compared to 2006 and 2005 primarily due to higher volume of work
performed on a new project awarded in 2007 and continuing activities on projects awarded in 2006 and
2005. Revenue levels in 2006 and 2005 were negatively impacted by the reduced level of construction of
new power plants following the completion of the most recent building cycle in 2003.
Operating profit margin in the Power segment increased to 3.3 percent during 2007 from 0.8 percent
during 2006. The 2007 increase in operating profit is the result of higher levels of project execution
activities. The lower 2006 operating profit was the combined result of a charge associated with the final
resolution of a project dispute, a loss on another project, a concentration of projects that were in the early
stages where profit recognition is generally lower and higher overhead spending in anticipation of
increasing revenue in an expanding market. The 2005 operating results include the negative impact of a
loss on one project, partly offset by successful project close-out activities on a number of other projects.
Projects in the Power segment are often bid and awarded on a fixed-price basis. This method of contracting
provides opportunities for margin improvement resulting from successful execution, but also exposes the
segment to the risk of cost overruns due to factors such as material cost and labor productivity variances or
schedule delays.
The power market is entering an expansion phase that the company believes will translate to higher
operating performance for the segment. New awards in the Power segment are typically large in amount,
but occur on an irregular basis. New awards of $2.2 billion in 2007 include a $1.7 billion award for the Oak
Grove coal-fired power units in Texas for Luminant, a unit of Energy Future Holdings Corporation. New
awards of $635 million during 2006 included a plant retrofit project in South Carolina. New awards of
$1.0 billion during 2005 included a contract for the installation of three flue-gas desulphurization units at a
coal-fired power facility in Kentucky and a 200 megawatt power plant in Nevada.
Backlog for the Power segment increased to $2.4 billion at December 31, 2007 from $1.3 billion at
December 31, 2006 and from $1.1 billion at December 31, 2005, reflecting growth in the number of
projects in progress.
Total assets in the Power segment increased to $150 million at December 31, 2007 from $137 million
at December 31, 2006 and $94 million at December 31, 2005, due to additional working capital associated
with the higher level of project execution activities.
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