Fluor Corporation
The company itself is basically a holding company which owns the stock of a number
of subsidiaries. It is through these subsidiaries that we perform our business.
We operate globally, with offices in 25 countries across six continents. We define
our business as providing engineering, procurement, construction and maintenance
services. We serve a diverse set of industries ranging from oil and gas to power
to industrial clients to the U.S.'federal government. We also perform operations
and maintenance activities for major industrial clients.
The company provides professional services on a global basis in the fields
of engineering, procurement, construction and maintenance. During the first
quarter of 2003, the company realigned certain operations to increase focus
on the chemicals market. Projects in this market were formerly in the Energy'
& Chemicals segment and will now be executed and reported in the Industrial'
& Infrastructure segment. The Energy'& Chemicals segment was renamed
Oil'& Gas and all prior periods have been restated to reflect this change.
We are aligned into five principal operating segments (each, a 'segment').
The five segments are Oil'& Gas,'Industrial'& Infrastructure, Government,
Global Services and Power. Fluor Constructors International,'Inc. which is organized
and operates separately from our business segments, provides unionized management,
construction and management services in the United States and Canada, both independently
and as a subcontractor on projects to our segments.
While the basic terms and conditions of the contracts that we perform may vary
considerably, generally we perform our work under two groups of contracts: cost
reimbursable, and guaranteed maximum and fixed price contracts.
Under cost reimbursable contracts, the client reimburses our costs in developing
a project and pays us a pre-determined fee or a fee based upon a percentage
of the costs incurred in completing the project. Our profit may be in the form
of a fee, a simple mark-up applied to labor costs incurred in the contract,
or a combination of the two. The fee element may also vary. The fee may be an
incentive fee based upon achieving certain performance factors, milestones or
targets; it may be a fixed amount in the contract; or it may be based upon a
percentage of the costs incurred.
Guaranteed maximum price contracts or GMAX contracts are performed in a manner
similar to cost reimbursable contracts except that the total fee plus the total
cost cannot exceed an agreed upon guaranteed maximum price. We can be responsible
for some or all of the total cost of the project if the cost exceeds the guaranteed
maximum price. Where the total cost is less than the negotiated guaranteed maximum
price, we will receive the benefit of the cost savings based upon a negotiated
agreement with the client.
Competition
We are one of the world's larger providers of engineering, procurement and
construction services. The markets served by our business are highly competitive
and for the most part require substantial resources, particularly highly skilled
and experienced technical personnel. A large number of companies are competing
in the markets served by the business, including the Bechtel Group,'Inc., the
Shaw Group, Jacobs Engineering Group, Kellogg Brown'& Root, Washington Group
International and Foster Wheeler Corp.
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