Fluor 2013 Annual Report Download - page 77

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Ending backlog for the segment decreased to $10.5 billion for 2013 from $17.2 billion for 2012 and
$21.5 billion for 2011. The decline in 2013 and 2012 backlog was due to the work off of backlog outpacing
the reduced new award activity in the mining and metals business and the cancellations of a mining project
during the fourth quarter of 2013 totaling $1.8 billion and two mining projects during the third quarter of
2012 totaling $2.0 billion.
Total assets in the Industrial & Infrastructure segment were $910 million as of December 31, 2013 and
$752 million as of December 31, 2012. This increase in the segment’s total assets in 2013 was primarily
attributed to an increase in contract work in progress associated with the timing of billings for certain
projects.
Government
Revenue and segment profit for the Government segment are summarized as follows:
Year Ended December 31,
(in millions) 2013 2012 2011
Revenue $2,749.1 $3,304.7 $3,398.2
Segment profit 161.4 149.7 145.5
Revenue in 2013 decreased 17 percent compared to 2012, primarily due to the reduction in project
execution activities associated with the closure of bases for the Logistics Civil Augmentation Program
(‘‘LOGCAP IV’’) for the United States Army in Afghanistan. Also contributing to the revenue decline was
a reduction in project execution activities at the Savannah River Site Management and Operating Project
(the ‘‘Savannah River Project’’) in South Carolina, which was mostly attributable to the 2012 close-out of
the American Recovery and Reinvestment Act (‘‘ARRA’’) funded work at the site. The U.S. government’s
March 1, 2013 budget sequestration, which was lifted in June 2013, contributed to the revenue decline for
the non-ARRA work at the Savannah River Project when compared to the prior year. Revenue in 2012
decreased slightly compared to 2011, primarily due to the previously mentioned close-out of the ARRA
funded work at the Savannah River Project in late 2012.
Segment profit for 2013 increased eight percent compared to 2012. The company favorably resolved
challenges with the U.S. government as to the reimbursability of certain costs that were incurred during
2006 - 2013, resulting in contributions to segment profit of $31 million in the fourth quarter of 2013. Also
in the fourth quarter of 2013, segment profit was increased by $11 million as the result of a favorable court
ruling that resolved certain disputed items related to 2001-2007, and segment profit was increased by
$15 million for the closeout and final disposition of other matters. Segment profit for 2013 also benefitted
from changing the LOGCAP IV award fee to a fixed fee at the end of 2012 and the positive impact of
negotiations in the first quarter of 2013 related to the close-out of prior year indirect rates. The positive
impact of the above items more than offset the reduction of segment profit that resulted from the reduced
volume for LOGCAP IV and the ARRA work. Segment profit in 2013 included a $17 million charge
related to an adverse judgment associated with the company’s final claim on an embassy project, while
segment profit in 2012 was reduced for a $13 million charge associated with a claim on another embassy
project as the result of an adverse judgment in the first quarter of 2012. Segment profit during 2012
increased three percent compared to 2011. This modest improvement was primarily due to additional
contributions from project execution activities on LOGCAP IV task orders, which more than offset
charges totaling $13 million related to the charge on the embassy project noted above. Also affecting
segment profit in 2012 was the change of the LOGCAP IV award fee to a fixed fee, also mentioned
previously, and the resolution of certain open contract issues for the project that allowed the company to
recognize additional segment profit of $17 million in the fourth quarter of 2012, which largely offset the
impact of an unexpected lower award fee for LOGCAP IV in the third quarter of 2012.
Segment profit margin was 5.9 percent, 4.5 percent and 4.3 percent for the years ended December 31,
2013, 2012 and 2011, respectively. The increase in 2013 was primarily due to the aforementioned favorable
resolution of certain items with the U.S. government, as well as the impact of the other factors discussed
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