Discontinued Operations

9 Months Ended

Sep. 30, 2021

Discontinued Operations and Disposal Groups [Abstract]

In the first quarter of 2021, we committed to a plan to sell our Stork business, which had previously represented the majority of operations from our former diversified services segment. We sold the North American operations of the AMECO equipment business in May 2021 for $71 million and recognized a loss on the sale of $25 million. Smaller AMECO operations in South America and Africa remain held for sale.

Impairment expense, included in Disc Ops, is summarized as follows:


	3ME September 30, 2021				9ME September 30, 2021				9ME September 30, 2020
(in thousands)	Stork		AMECO		Stork		AMECO		Stork		AMECO
Impairment expense: (1)
Goodwill	$	—	$	—	$	12,700	$	—	$	168,568	$	12,300
Intangible customer relationships	—		—		—		—		26,671		—
Fair value adjustment and expected costs associated with sale	—		4,809		60,500		53,085		—		87,700
Total impairment expense	$	—	$	4,809	$	73,200	$	53,085	$	195,239	$	100,000

(1) There was no impairment expense recognized during the 2020 Quarter.

The fair value of the AMECO assets were determined using a combination of observable level 2 inputs, including indicative offers and ongoing negotiations for the related assets.

The fair value of the Stork assets were determined using an income based approach that utilized unobservable Level 3 inputs, including significant management assumptions such as expected awards, forecasted revenue and operating margins, weighted average cost of capital, working capital assumptions and general market trends and conditions.

The customer relationships' valuation approach utilized unobservable Level 3 inputs including ranges of assumptions of long-term revenue growth from 2% to 5.5% with a weighted average of 2.4%, weighted average cost of capital of 12% and a customer attrition factor of 10%.

Disc Ops information follows:


	3ME September 30, 2021								3ME September 30, 2020
(in thousands)	Stork		AMECO		Other		Total		Stork		AMECO		Other		Total
Revenue	$	376,668	$	22,963	$	—	$	399,631	$	346,702	$	57,807	$	—	$	404,509
Cost of revenue	366,640		21,453		1,568		389,661		345,984		54,240		2,055		402,279
Gross Profit	10,028		1,510		(1,568)		9,970		718		3,567		(2,055)		2,230

G&A	(1,246)		(4,800)		—		(6,046)		—		(13)		(3)		(16)
Impairment expense	—		(4,809)		—		(4,809)		—		—		—		—

Foreign currency gain (loss)	(387)		(654)		—		(1,041)		(678)		(113)		—		(791)
Operating profit (loss)	8,395		(8,753)		(1,568)		(1,926)		40		3,441		(2,058)		1,423

Interest (expense) income, net	(1,159)		(173)		—		(1,332)		(1,473)		(14)		—		(1,487)
Earnings (loss) before taxes from Disc Ops	7,236		(8,926)		(1,568)		(3,258)		(1,433)		3,427		(2,058)		(64)
Income tax expense (benefit)	1,491		1,123		—		2,614		287		1,720		—		2,007
Net earnings (loss) from Disc Ops	5,745		(10,049)		(1,568)		(5,872)		(1,720)		1,707		(2,058)		(2,071)

Less: Net earnings (loss) from Disc Ops attributable to NCI	390		(1)		—		389		106		—		—		106
Net earnings (loss) from Disc Ops attributable to Fluor	$	5,355	$	(10,048)	$	(1,568)	$	(6,261)	$	(1,826)	$	1,707	$	(2,058)	$	(2,177)


	9ME September 30, 2021								9ME September 30, 2020
(in thousands)	Stork		AMECO		Other		Total		Stork		AMECO		Other		Total
Revenue	$	1,184,694	$	100,490	$	—	$	1,285,184	$	1,122,540	$	170,085	$	—	$	1,292,625
Cost of revenue	1,154,204		96,573		4,444		1,255,221		1,130,485		148,727		11,424		1,290,636
Gross profit	30,490		3,917		(4,444)		29,963		(7,945)		21,358		(11,424)		1,989

G&A	(3,752)		(4,800)		—		(8,552)		—		(64)		(15)		(79)
Impairment expense	(73,200)		(53,085)		—		(126,285)		(195,239)		(100,000)		—		(295,239)
Loss on sale of AMECO North America	—		(24,864)		—		(24,864)		—		—		—		—
Foreign currency gain (loss)	(384)		424		—		40		(1,684)		(415)		—		(2,099)
Operating profit (loss)	(46,846)		(78,408)		(4,444)		(129,698)		(204,868)		(79,121)		(11,439)		(295,428)

Interest (expense) income, net	(3,768)		30		—		(3,738)		(4,494)		26		—		(4,468)
Earnings (loss) before taxes from Disc Ops	(50,614)		(78,378)		(4,444)		(133,436)		(209,362)		(79,095)		(11,439)		(299,896)
Income tax expense (benefit)	5,674		—		—		5,674		(4,537)		3,662		—		(875)
Net earnings (loss) from Disc Ops	(56,288)		(78,378)		(4,444)		(139,110)		(204,825)		(82,757)		(11,439)		(299,021)

Less: Net earnings (loss) from Disc Ops attributable to NCI	981		(1)		—		980		793		—		—		793
Net earnings (loss) from Disc Ops attributable to Fluor	$	(57,269)	$	(78,377)	$	(4,444)	$	(140,090)	$	(205,618)	$	(82,757)	$	(11,439)	$	(299,814)

The following summarizes information related to assets and liabilities classified as held for sale:


	September 30, 2021												December 31, 2020
(in thousands)	Stork		AMECO		Other		Total from Disc Ops		Other Assets and Liabilities from Cont Ops		Total		Stork		AMECO		Other		Total from Disc Ops		Other Assets and Liabilities from Cont Ops		Total
Accounts receivable, net	$	196,104	$	29,117	$	10,476	$	235,697	$	—	$	235,697	$	245,105	$	42,797	$	10,475	$	298,377	$	—	$	298,377
Contract assets	159,579		—		—		159,579		—		159,579		108,152		2,188		—		110,340		—		110,340
Other current assets	44,638		21,625		—		66,263		—		66,263		45,384		73,618		—		119,002		—		119,002
Current assets held for sale	400,321		50,742		10,476		461,539		—		461,539		398,641		118,603		10,475		527,719		—		527,719

PP&E, net	94,686		4,017		—		98,703		24,326		123,029		97,258		67,380		—		164,638		24,538		189,176
Goodwill	118,710		—		—		118,710		—		118,710		141,889		—		—		141,889		—		141,889
Investments	3,522		—		—		3,522		5,712		9,234		4,649		—		—		4,649		5,064		9,713

Other assets	120,826		15,315		—		136,141		—		136,141		135,421		13,810		—		149,231		—		149,231
Noncurrent assets held for sale(1)	337,744		19,332		—		357,076		30,038		387,114		379,217		81,190		—		460,407		29,602		490,009
Total assets held for sale	$	738,065	$	70,074	$	10,476	$	818,615	$	30,038	$	848,653	$	777,858	$	199,793	$	10,475	$	988,126	$	29,602	$	1,017,728

Accounts payable	$	97,651	$	6,684	$	268	$	104,603	$	—	$	104,603	$	116,580	$	17,388	$	13	$	133,981	$	—	$	133,981
Short-term borrowings	17,953		—		—		17,953		—		17,953		20,525		—		—		20,525		—		20,525
Contract liabilities	40,194		10		—		40,204		—		40,204		46,997		782		—		47,779		—		47,779
Accrued salaries, wages and benefits	60,573		1,099		—		61,672		—		61,672		57,626		7,152		—		64,778		—		64,778
Other accrued liabilities	175,220		47,528		—		222,748		—		222,748		113,965		11,977		—		125,942		—		125,942
Current liabilities held for sale	391,591		55,321		268		447,180		—		447,180		355,693		37,299		13		393,005		—		393,005

Noncurrent liabilities held for sale(1)	82,961		6,768		—		89,729		—		89,729		98,940		9,478		—		108,418		—		108,418
Total liabilities held for sale	$	474,552	$	62,089	$	268	$	536,909	$	—	$	536,909	$	454,633	$	46,777	$	13	$	501,423	$	—	$	501,423

(1) Noncurrent assets and liabilities held for sale as of September 30, 2021 are reported as current given the expected sale timing.

Our cash flow information included the following activities related to Disc Ops:


	9ME September 30,
	2021						2020
(in thousands)	Stork		AMECO		Total		Stork		AMECO		Total
Capital expenditures	$	(10,413)	$	(11,012)	$	(21,425)	$	(16,410)	$	(18,772)	$	(35,182)