Fluor 2013 Annual Report Download - page 140

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FLUOR CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
determining whether it is the primary beneficiary. As required by ASC 810, management’s assessment of
whether the company is the primary beneficiary of a VIE is continuously performed.
In most cases, when the company is not the primary beneficiary and not required to consolidate the
VIE, the proportionate consolidation method of accounting is used for joint ventures and partnerships in
the construction industry, whereby the company recognizes its proportionate share of revenue, cost and
profit in its Consolidated Statement of Earnings and uses the one-line equity method of accounting in the
Consolidated Balance Sheet, which is a common application of ASC 810-10-45-14 in the construction
industry. The equity and cost methods of accounting for the investments are also used, depending on the
company’s respective ownership interest, amount of influence over the VIE and the nature of services
provided by the VIE. The net carrying value of the unconsolidated VIEs classified under ‘‘Investments’’
and ‘‘Other accrued liabilities’’ in the Consolidated Balance Sheet was a net asset of $122 million and
$22 million as of December 31, 2013 and 2012, respectively. Some of the company’s VIEs have debt;
however, such debt is typically non-recourse in nature. The company’s maximum exposure to loss as a
result of its investments in unconsolidated VIEs is typically limited to the aggregate of the carrying value of
the investment and future funding commitments. Future funding commitments as of December 31, 2013
for the unconsolidated VIEs were $36 million.
In some cases, the company is required to consolidate certain VIEs. As of December 31, 2013, the
carrying values of the assets and liabilities associated with the operations of the consolidated VIEs were
$1.2 billion and $731 million, respectively. As of December 31, 2012, the carrying values of the assets and
liabilities associated with the operations of the consolidated VIEs were $1.0 billion and $664 million,
respectively. The assets of a VIE are restricted for use only for the particular VIE and are not available for
general operations of the company.
The company has agreements with certain VIEs to provide financial or performance assurances to
clients. See ‘‘13. Contingencies and Commitments’’ for a further discussion of such agreements. None of
the VIEs are individually material to the company’s results of operations, financial position or cash flows
except for the Fluor SKM joint venture, which is material to the company’s revenue and is discussed below
under ‘‘— Fluor SKM Joint Venture.’’ Below is a discussion of some of the company’s more significant or
unique VIEs and related accounting considerations.
Interstate 95 High-Occupancy Toll (‘‘HOT’’) Lanes Project
In August 2012, the company was awarded the $925 million Interstate 95 HOT Lanes Project in
Virginia. The project is a public-private partnership between the Virginia Department of Transportation
(‘‘VDOT’’) and 95 Express Lanes, LLC, a joint venture in which the company has a 10 percent interest and
Transurban (USA) Inc. has a 90 percent interest. Under the agreement, VDOT owns and oversees the
addition and extension of HOT lanes, interchange improvements and construction of commuter parking
lots on 29 miles of I-95 in northern Virginia. As concessionaire, 95 Express Lanes, LLC will develop,
design, finance, construct, maintain and operate the improvements and HOT lanes under a 75-year
concession agreement. The construction is being financed primarily through grant funding from VDOT,
private activity bonds, a non-recourse loan from the federal Transportation Infrastructure Finance
Innovation Act (‘‘TIFIA’’), which is administered by the U.S. Department of Transportation, and equity
contributions from the joint venture members.
The construction of the improvements and HOT lanes are being performed by a construction joint
venture in which the company has a 65 percent interest and Lane Construction has a 35 percent interest
(‘‘Fluor-Lane 95’’). Transurban (USA) Inc. will perform the operations and maintenance upon completion
of the improvements and commencement of operations of the toll lanes. The company has evaluated its
interest in Fluor-Lane 95 and has determined that it is the primary beneficiary. Accordingly, the company
consolidates the accounts of Fluor-Lane 95. As of December 31, 2013, the company’s financial statements
F-41