Fluor 2013 Annual Report Download - page 76

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Total assets in the segment were $1.6 billion as of December 31, 2013 and $1.7 billion as of
December 31, 2012.
Industrial & Infrastructure
Revenue and segment profit for the Industrial & Infrastructure segment are summarized as follows:
Year Ended December 31,
(in millions) 2013 2012 2011
Revenue $11,081.7 $13,237.8 $10,705.5
Segment profit 476.0 176.5 418.9
Revenue in 2013 decreased 16 percent compared to 2012 and revenue in 2012 increased 24 percent
from 2011, primarily due to changes in volume in the mining and metals business line.
Segment profit and segment profit margin increased significantly in 2013 compared to 2012 primarily
because the prior year results included a $416 million pre-tax charge in the fourth quarter of 2012 due to
an unexpected adverse decision in the arbitration proceedings related to the company’s claims for
additional compensation on the Greater Gabbard Project. Contributions to segment profit in 2013 by the
mining and metals business line declined 25 percent compared to the prior year as a result of the
aforementioned decrease in revenue in the current year. The reduced contributions by the mining and
metals business line were partially offset by improved performance in the industrial services business line
and positive contributions totaling $61 million for the achievement of key milestones and the successful
closeout of three domestic transportation projects. The 2012 Greater Gabbard Project charge was
somewhat offset by the favorable impact on segment profit of the substantially higher level of project
execution activities related to the growth in the mining and metals business line during that year, also
noted above, and a pre-tax gain of $43 million on the October 2012 sale of the company’s unconsolidated
interest in a telecommunications company located in the United Kingdom that was formed in connection
with the development and construction of a previously completed project. Segment profit for 2012 also
included positive contributions from various infrastructure projects, including $21 million due to the
achievement of significant progress milestones on one project, $20 million as an infrastructure road project
neared completion, and $19 million for fees earned at financial closing for another infrastructure road
project.
Segment profit and segment profit margin decreased substantially in 2012, compared to 2011 as a
result of the Greater Gabbard charge in the fourth quarter of 2012, as discussed previously. The impact of
this charge on 2012 segment profit and segment profit margin was mitigated somewhat by the positive
profit contributors that are discussed in the previous paragraph. During 2011, the segment recorded
charges totaling $60 million for the Greater Gabbard Project due to increased costs associated with project
execution activities. These charges were largely offset by positive contributions from other projects in the
segment during the year, including $20 million for forecast adjustments due to the achievement of progress
milestones on two infrastructure road projects, $11 million from the closeout of an infrastructure project,
$11 million of costs recovered in a settlement with a bankrupt client for a fixed-price infrastructure joint
venture project discussed in more detail below, and $10 million related to the favorable resolution of
certain disputed items and the achievement of incentive targets on a mining project.
New awards in the Industrial & Infrastructure segment were $6.6 billion during 2013, $10.4 billion
during 2012 and $13.3 billion during 2011. New awards in 2013 included the Tappan Zee Bridge project in
New York, a road project in Texas and a new award for the continued expansion of a large copper project
in Peru. New awards in 2012 included additional scope for an iron ore joint venture project in Western
Australia, copper mining projects in Peru and the United States and a managed toll lane project in
Virginia. New awards in 2011 included $6.2 billion for ongoing iron ore work in Australia, as well as a
major copper project in Peru. The year-to-year decrease in new awards since 2011 is primarily attributable
to the mining and metals business line. This decline is attributable to the deferral of major capital
investment decisions by some mining customers due to project cost escalation, softening commodity
demand and project-specific circumstances. The timing of when capital investment by these mining
customers could resume is uncertain, and the weakened mining market conditions could be prolonged.
36