Fluor 2014 Annual Report Download - page 70

Download and view the complete annual report

Please find page 70 of the 2014 Fluor annual report below. You can navigate through the pages in the report by either clicking on the pages listed below, or by using the keyword search tool below to find specific information within the annual report.

Page out of 144

  • 1
  • 2
  • 3
  • 4
  • 5
  • 6
  • 7
  • 8
  • 9
  • 10
  • 11
  • 12
  • 13
  • 14
  • 15
  • 16
  • 17
  • 18
  • 19
  • 20
  • 21
  • 22
  • 23
  • 24
  • 25
  • 26
  • 27
  • 28
  • 29
  • 30
  • 31
  • 32
  • 33
  • 34
  • 35
  • 36
  • 37
  • 38
  • 39
  • 40
  • 41
  • 42
  • 43
  • 44
  • 45
  • 46
  • 47
  • 48
  • 49
  • 50
  • 51
  • 52
  • 53
  • 54
  • 55
  • 56
  • 57
  • 58
  • 59
  • 60
  • 61
  • 62
  • 63
  • 64
  • 65
  • 66
  • 67
  • 68
  • 69
  • 70
  • 71
  • 72
  • 73
  • 74
  • 75
  • 76
  • 77
  • 78
  • 79
  • 80
  • 81
  • 82
  • 83
  • 84
  • 85
  • 86
  • 87
  • 88
  • 89
  • 90
  • 91
  • 92
  • 93
  • 94
  • 95
  • 96
  • 97
  • 98
  • 99
  • 100
  • 101
  • 102
  • 103
  • 104
  • 105
  • 106
  • 107
  • 108
  • 109
  • 110
  • 111
  • 112
  • 113
  • 114
  • 115
  • 116
  • 117
  • 118
  • 119
  • 120
  • 121
  • 122
  • 123
  • 124
  • 125
  • 126
  • 127
  • 128
  • 129
  • 130
  • 131
  • 132
  • 133
  • 134
  • 135
  • 136
  • 137
  • 138
  • 139
  • 140
  • 141
  • 142
  • 143
  • 144

Ending backlog for the segment decreased to $7.3 billion for 2014 from $10.5 billion for 2013 and
$17.2 billion for 2012. The declining backlog trend was the direct result of the work-off of backlog
outpacing the reduced new award activity in mining and metals and due to 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 $872 million as of December 31, 2014 and
$910 million as of December 31, 2013.
Government
Revenue and segment profit for the Government segment are summarized as follows:
Year Ended December 31,
(in millions) 2014 2013 2012
Revenue $2,511.9 $2,749.1 $3,304.7
Segment profit 92.7 161.4 149.7
Revenue in 2014 decreased 9 percent compared to 2013, primarily due to the reduction in project
execution activities associated with LOGCAP IV in Afghanistan. Current year revenue benefited from
project execution activities for several contracts awarded during 2014, including a multi-year nuclear
decommissioning project in the United Kingdom (the ‘‘Magnox RSRL Project’’) and the Strategic
Petroleum Reserve Project. The current year also benefited from increased volume for the Savannah River
Site Management and Operating Project in South Carolina (the ‘‘Savannah River Project’’), which
contributed lower revenue in 2013 as a result of the federal government’s budget sequestration. Revenue in
2013 decreased 17 percent compared to 2012, primarily due to the reduction in project execution activities
associated with LOGCAP IV. Also contributing to the revenue decline in 2013 was a reduction in project
execution activities at the Savannah River Project, 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 2013 revenue decline
for the non-ARRA work at the Savannah River Project.
Segment profit for 2014 decreased 43 percent compared to 2013, primarily due to the resolution in the
prior year of several non-recurring matters with the U.S. government that favorably affected segment
profit in 2013 (discussed below), as well as the reduction in project execution activities for LOGCAP IV.
Segment profit for 2013 increased 8 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 in 2013 when compared to 2012. 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 margin was 3.7 percent, 5.9 percent and 4.5 percent for the years ended December 31,
2014, 2013 and 2012, respectively. The decrease in 2014 is primarily attributable to the aforementioned
favorable resolution of certain non-recurring matters with the U.S. government in 2013, along with lower
margin contributions from newly awarded contracts during 2014. The increase in segment profit in 2013
was largely due to the aforementioned favorable resolution of certain items with the U.S. government, as
37