The following discussion and analysis should be read in conjunction with our financial statements and our 2020 10-K. Except as the context otherwise requires, the terms Fluor or the Registrant, as used herein, are references to Fluor and its predecessors and references to the company, we, us, or our, as used herein, shall include Fluor, its consolidated subsidiaries and joint ventures. CAUTIONARY STATEMENT REGARDING FORWARD-LOOKING STATEMENTS Certain statements made herein, including statements regarding our projected revenue and earnings levels, cash flow and liquidity, new awards and backlog levels and the implementation of strategic initiatives are forward-looking in nature. Under the Private Securities Litigation Reform Act of 1995, a "safe harbor" may be provided to us for certain of these forward-looking statements. We wish to caution readers that forward-looking statements, including disclosures which use words such as we "believe," "anticipate," "expect," "estimate" and similar statements, are subject to various risks and uncertainties which could cause actual results of operations to differ materially from expectations. Factors potentially contributing to such differences include, among others: •The severity and duration of the COVID-19 pandemic and actions by governments, businesses and individuals in response to the pandemic; •The cyclical nature of many of the markets we serve and our clients' vulnerability to downturns, which may result in decreased capital investment or expenditures and reduced demand for our services; •Our failure to receive anticipated new contract awards and the related impact on revenue, earnings, staffing levels and cost; •Failure to accurately estimate the cost and schedule for our contracts, resulting in cost overruns or liabilities, including those related to project delays and those caused by the performance of our clients, subcontractors, suppliers and joint venture or teaming partners; •Intense competition in the global EPC industry, which can place downward pressure on our contract prices and profit margins and may increase our contractual risks; •Failure of our joint venture partners to perform their venture obligations, which could impact the success of those ventures and impose additional financial and performance obligations on us, resulting in reduced profits or losses; •Cybersecurity breaches of our systems and information technology; •Civil unrest, security issues, labor conditions and other unforeseeable events in the countries in which we do business, resulting in unanticipated losses; •Project cancellations, scope adjustments or deferrals, or foreign currency fluctuations, that could reduce the amount of our backlog and the revenue and profits that we earn; •Inability to maintain safe work sites; •Repercussions of events beyond our control, such as severe weather conditions, natural disasters, pandemics, political crises or other catastrophic events, that may significantly affect operations, result in higher cost or subject the company to liability claims by our clients; •Differences between our actual results and the assumptions and estimates used to prepare our financial statements; •Client delays or defaults in making payments; •Failure of our suppliers or subcontractors to provide supplies or services at the agreed-upon levels or times; •Uncertainties, restrictions and regulations impacting our government contracts; •The inability to hire and retain qualified personnel; •The potential impact of changes in tax laws and other tax matters including, but not limited to, those from foreign operations, the realizability of our deferred tax assets and the ongoing audits by tax authorities; •Possible systems and information technology interruptions; •The impact of anti-bribery and international trade laws and regulations; •Our ability to secure appropriate insurance; •The failure to be adequately indemnified for our nuclear services; •The loss of business from one or more significant clients; •The failure to adequately protect intellectual property rights; •Impairments to goodwill, investments, deferred tax assets or other intangible assets; •Failure to maintain an effective system of internal controls; •Failure to prepare and timely file our periodic reports, which limits our access to public markets to raise debt and equity capital and restricts our ability to issue equity securities; 26 -------------------------------------------------------------------------------- Table of Contents •The restatement of certain of our previously issued consolidated financial statements, which may result in unanticipated costs and may affect investor confidence and our reputation; •The availability of credit and restrictions imposed by credit facilities, both for us and our clients, suppliers, subcontractors or other partners; •Possible limitations of bonding or letter of credit capacity; •Failure to obtain favorable results in existing or future litigation, regulatory proceedings or dispute resolution proceedings (including claims for indemnification), or claims against project owners, subcontractors or suppliers; •Failure of our employees, agents or partners to comply with laws, which could result in harm to our reputation and reduced profits or losses; •The impact of new or changing legal requirements, as well as past and future environmental, health and safety regulations including climate change regulations; •Failure to successfully implement our strategic and operational initiatives; •The risks associated with acquisitions, dispositions or other investments, including the failure to successfully integrate acquired businesses; and •Restrictions on possible transactions imposed by our charter documents andDelaware law. Any forward-looking statements that we may make are based on our current expectations and beliefs concerning future developments and their potential effects on us. There can be no assurance that future developments affecting us will be those anticipated by us. Any forward-looking statements are subject to the risks, uncertainties and other factors that could cause actual results of operations, financial condition, cost reductions, acquisitions, dispositions, financing transactions, operations, expansion, consolidation and other events to differ materially from those expressed or implied in such forward-looking statements. Our actual results may differ materially from our expectations or projections. While most risks affect only future cost or revenue, some risks may relate to accruals that have already been reflected in earnings. Our failure to receive payments of accrued amounts or incurrence of liabilities in excess of amounts previously recognized could result in future charges. As a result, readers should recognize and consider the inherently uncertain nature of forward-looking statements and not place undue reliance on them. Additional information concerning these and other factors can be found in our press releases and periodic filings with theSEC , including the 2020 10-K. These filings are available publicly on theSEC's website at http://www.sec.gov, on our website at http://investor.fluor.com or upon request from our Investor Relations Department at (469) 398-7070. We cannot control such risk factors and other uncertainties, and in many cases, cannot predict the risks and uncertainties that could cause actual results to differ materially from those indicated by the forward-looking statements. These risks and uncertainties should be considered when evaluating Fluor and deciding whether to invest in our securities. Except as otherwise required by law, we undertake no obligation to publicly update or revise our forward-looking statements, whether as a result of new information, future events or otherwise. Results of Operations During the first quarter of 2021, we changed the composition of our segments to implement our new strategy and to pursue opportunities in our designated markets. We now report our operating results in four reportable segments as follows: Energy Solutions, Urban Solutions, Mission Solutions and Other. Segment operating information and assets for 2020 have been recast to conform to these changes. In the first quarter of 2021, we also committed to a plan to sell our Stork business, which had previously represented the majority of operations from our former diversified services segment. Our plan to sell the AMECO equipment business remains unchanged. Therefore, both Stork and AMECO are reported as Disc Ops along with other immaterial operations. We expect to complete the sale of Stork before the end of the first quarter of 2022 and the sale of AMECO within the first half of 2021. The assets and liabilities of the Stork and AMECO businesses are classified as held for sale for all periods presented. 27 --------------------------------------------------------------------------------
Table of Contents (In millions) THREE MONTHS ENDED MARCH 31 2021 2020 Revenue Energy Solutions$ 991.0 $ 1,359.3 Urban Solutions 1,194.2 1,592.2 Mission Solutions 753.3 746.2 Total revenue$ 2,938.5 $ 3,697.7 Segment profit (loss) $ and margin % Energy Solutions$ 2.2 0.2 %$ (5.9) (0.4) % Urban Solutions 29.8 2.5 % 51.3 3.2 % Mission Solutions 43.6 5.8 % 32.1 4.3 % Other (15.7) NM (22.8) NM Total segment profit (loss) $ and margin % (1)$ 59.9
2.0 %
Corporate G&A (65.5) (33.6) Impairment, restructuring and other exit costs (26.4) (102.4) Foreign currency gain (loss) (11.3) 45.2 Interest expense, net (17.1) (4.6) Earnings (loss) attributable to NCI from Cont Ops 32.8 9.1 Earnings (loss) from Cont Ops before taxes (27.6) (31.6) Income tax expense (benefit) 0.6 (62.3) Net earnings (loss) from Cont Ops (28.2) 30.7
Less: Net earnings (loss) attributable to NCI from Cont Ops
32.8 9.1 Net earnings (loss) attributable to Fluor from Cont Ops$ (61.0) $ 21.6 New awards Energy Solutions$ 1,609.3 $ 1,542.3 Urban Solutions 1,061.3 1,607.8 Mission Solutions 991.8 684.0 Total new awards$ 3,662.4 $ 3,834.1 New awards related to projects located outside of the U.S. 67% 58% March 31, December 31, Backlog 2021 2020 Energy Solutions$ 11,097.2 $ 11,020.5 Urban Solutions 9,693.2 9,224.1 Mission Solutions 3,001.3 2,899.5 Total backlog$ 23,791.7 $ 23,144.1
Backlog related to projects located outside of the
65% 64% Backlog related to lump-sum projects 57% 60% (1) Total segment profit (loss) is a non-GAAP financial measure. We believe that total segment profit (loss) provides a meaningful perspective on our results as it is the aggregation of individual segment profit (loss) measures that we use to evaluate and manage our performance. Our business has been adversely affected by the economic impacts of the outbreak of COVID-19 and the steep decline in oil prices that occurred in the early part of 2020. These events have created significant uncertainty and economic volatility and disruption, which have impacted and may continue to impact our business. We have experienced, and may continue to experience, reductions in demand for certain of our services and the delay or abandonment of ongoing or anticipated projects due to our clients', suppliers' and other third parties' diminished financial condition or financial distress, as well as governmental budget constraints. Although we initially assessed our project estimates for COVID-19 during the first quarter of 2020, estimating isolated COVID-19 effects became increasingly difficult to measure. Our estimates reflect our best assessment of project results inclusive of COVID-19 effects, which have been dynamic as our projects have seen changes in prevailing regulations as COVID-19 cases crested and fell. These impacts may continue or worsen under prolonged stay-at-home, social 28 -------------------------------------------------------------------------------- Table of Contents distancing, travel restrictions and other similar orders or restrictions. Significant uncertainty still exists concerning the magnitude of the impact and duration of these events. During 2021, consolidated revenue declined primarily due to volume declines on Energy Solutions and Urban Solutions projects, principally for projects which were completed or nearing completion. The revenue decline in 2021 was further compounded by COVID-19 related delays on certain large projects. Total segment profit improved during the 2021 Quarter due to the adverse impacts of COVID-19 and expected credit losses recognized during the 2020 Quarter. The improvement in total segment profit in 2021 included the favorable resolution of certain client matters but was diminished by the factors driving the decline in revenue described above. Impairment, Restructuring and Other Exit Costs Impairment expense, included in Cont Ops, is summarized as follows: Three Months Ended March 31, (in thousands) 2021 2020
Impairment expense:
Equity method investments in Energy Solutions
- 16,269 Total impairment expense$ 26,392 $ 102,365
Impairment expense, included in Disc Ops, is summarized as follows:
Three Months Ended Three Months Ended March 31, March 31, 2021 2020 (in thousands) Stork Stork AMECO Total Impairment expense: Goodwill$ 12,700
- 26,671 - 26,671 Fair value adjustment and expected costs associated with sale 7,800 - 87,700 87,700 Total impairment expense$ 20,500
The effective tax rate on earnings (loss) from Cont Ops for the 2021 Quarter was (2.2)% compared to 197.5% for the 2020 Quarter. The effective tax rate in 2021 was unfavorably impacted by the increase in the valuation allowances against certain deferred benefits, primarily related to US net operating losses. The effective tax rate in 2020 was favorably impacted by the effect of the CARES Act on us. This 2020 benefit was offset by an increase in the valuation allowance against foreign tax credit carryforwards and certain foreign losses, as well as a small addition to uncertain tax benefits. Earnings attributable to NCI from Cont Ops, for which income taxes are not typically our responsibility, favorably impacted the effective tax rate for the 2021 Quarter. The lack of broad based new awards could continue to put pressure on our future earning streams, particularly in the Energy Solutions segment. The modest increase in backlog during 2021 primarily resulted from new award activity outpacing work performed. During the 2021 Quarter, we removed approximately$1 billion from backlog due to the cancellation of a chemicals project inNorth America . Backlog included$1.6 billion for projects in a loss position as ofMarch 31, 2021 . Although backlog reflects business that is considered to be firm, cancellations, deferrals or scope adjustments may occur. Backlog is adjusted to reflect any known project cancellations, revisions to project scope and cost, foreign currency exchange fluctuations and project deferrals, as appropriate. Backlog differs from RUPO discussed elsewhere. RUPO includes only the amount of revenue we expect to recognize under contracts with definite terms and substantive termination provisions. Segment Operations Energy Solutions Revenue in 2021 decreased compared to 2020 due to significant declines in the volume of execution activities for a large upstream project as well as several downstream and chemicals projects nearing completion, the absence of planned revenue from a canceled chemicals project inNorth America and COVID-19 related delays at a liquefied natural gas project. The revenue decline in 2021 was partially offset by the ramp up of execution activities for a chemicals project. 29 -------------------------------------------------------------------------------- Table of Contents Segment profit in 2021 was adversely affected by an expense of$29 million related to an embedded foreign currency derivative. Segment profit in 2020 was adversely affected by the recognition of reserves totaling$55 million for expected credit losses, as well as margin diminution arising from the initial recognition of COVID-19 related schedule delays and associated cost growth. Excluding these items, segment profit declined in 2021 due to the reduced execution activity for the upstream, downstream and chemicals projects discussed above as well as an increase in overhead. The change in segment profit margin was attributable to the same factors affecting segment profit. New awards in 2021 increased compared to 2020 due to an incremental award for a refinery project inMexico . Backlog increased during the 2021 Quarter despite the cancellation of a chemicals project inNorth America . Although we expect to benefit from opportunities in the chemicals and non-traditional oil and gas markets, the lack of broad based new awards could continue to put pressure on the segment's earnings in the near and intermediate term. Urban Solutions Revenue in 2021 decreased compared to 2020 primarily due to the nearing completion of two data center projects inEurope , slower progress on a large mining project inSouth America due to COVID-19 restrictions and a decline in the volume of execution activities on a mining project inAustralia . Segment profit in 2021 declined compared to 2020 due to the impacts of COVID-19 on the large mining project inSouth America , the nearing completion of the data center projects inEurope and forecast revisions for cost-to-complete on two infrastructure projects. The decline in segment profit in 2021 was partially offset by the favorable resolution of a long-standing customer dispute and favorable adjustments for commercial close out of a completed project. The change in segment profit margin was attributable to the same factors affecting segment profit. New awards in 2021 decreased compared to 2020 partly due to more selectivity in project pursuits and delayed procurement efforts by many of our clients. In addition, we booked a significant North American steel project in the 2020 Quarter. New awards in the 2021 Quarter included a large life sciences project inEurope . Backlog increased slightly during the 2021 Quarter due to this award coupled with reduced burn as discussed above. Backlog included$1.4 billion for projects in a loss position as ofMarch 31, 2021 . Our staffing business does not report new awards or backlog. Mission Solutions Revenue in 2021 remained relatively flat compared to 2020. Increased execution activity at ourDOE project sites and an increase in projected performance scores on several projects during the 2021 Quarter was offset by a decrease in execution activity on army logistics assistance programs inAfghanistan andAfrica . The increase in segment profit in 2021 was substantially driven by favorable contract modifications and increased execution activity on ourDOE projects as well as the increase in projected performance scores on several projects. These effects were partially offset by the decrease in execution activity on army logistics assistance programs inAfghanistan andAfrica . The increase in segment profit margin was driven by these same factors. New awards in 2021 increased compared to 2020 due to extensions on a nuclear decontamination and decommissioning contract inOhio and an environmental cleanup contract inIdaho . Backlog increased slightly during the 2021 Quarter due to the new award activity. Backlog included$1.0 billion of unfunded government contracts as of bothMarch 31, 2021 andDecember 31, 2020 . Other Other includes the operations of NuScale. NuScale expenses included in the determination of segment loss were reported net of qualified reimbursable expenses of$15 million and$13 million during the 2021 Quarter and 2020 Quarter, respectively. During the 2021 Quarter, JGC Holdings Corporation invested$40 million in NuScale. We and our advisors continue to engage with potential investors and capital providers to fund NuScale's path to commercialization. 30 --------------------------------------------------------------------------------
Table of Contents Corporate and Other Matters Three Months Ended March 31, (in millions) 2021 2020 Corporate G&A Compensation$ 57.6 $ 18.8 SEC investigation / Internal review costs 2.7 2.0 Other 5.3 12.8 Corporate G&A$ 65.6 $ 33.6 The increase in compensation expense in the 2021 Quarter was primarily due to higher stock price driven compensation on liability awards, as our stock price increased from the date of grant to the closing price onMarch 31, 2021 . Lower levels of compensation expense were recognized during the 2020 Quarter primarily due to the deferral of long-term incentive award issuances until the latter half of 2020, as compared to the 2021 Quarter. The increase in net interest expense during the 2021 Quarter was primarily attributable to costs incurred to refinance our credit facility as well as a decrease in interest income driven by lower interest rates in the 2021 Quarter compared to the 2020 Quarter. We announced inJanuary 2021 that we had begun an undertaking to substantially reduce our overhead costs. Although we have not satisfied the requirements to recognize charges for any restructurings for the 2021 undertaking, we are likely to recognize expense later in 2021. Critical Accounting Estimates Fair Value Measurements. During the 2021 Quarter, we performed interim impairment testing of our goodwill associated with Stork and recognized impairment expense of$13 million , which was included in Disc Ops. All other factors being equal, a one hundred basis point change in the discount rate used in the valuation of goodwill would change the fair value by$25 million . Recent Accounting Pronouncements Item is described more fully in the Notes to Financial Statements. Litigation and Matters in Dispute Resolution Item is described more fully in the Notes to Financial Statements. LIQUIDITY AND FINANCIAL CONDITION Our liquidity is provided by available cash and cash equivalents and marketable securities, cash generated from operations, capacity under our credit facilities and, when necessary, access to the capital markets. We have committed and uncommitted lines of credit available for revolving loans and letters of credit. We believe that for at least the next 12 months, cash generated from operations, along with our unused credit capacity and cash position, is sufficient to support operating requirements, but we do have our credit facility and our 2023 Notes maturing in the next 24 months. We regularly review our sources and uses of liquidity and may pursue opportunities to increase our liquidity position to address upcoming maturities. As ofMarch 31, 2021 , letters of credit totaling$414 million were outstanding under our$1.65 billion credit facility, which matures inFebruary 2023 . The credit facility contains customary financial covenants, including a debt-to-capitalization ratio that cannot exceed 0.65 to 1.0, a limitation on the aggregate amount of debt of the greater of$750 million or €750 million for our subsidiaries, and a minimum liquidity threshold, defined in the amended credit facility, of$1.5 billion which may be reduced to$1.25 billion upon the repayment of debt. The credit facility also contains provisions that will require us to provide collateral to secure the facility should we be downgraded to BB by S&P and Ba2 by Moody's, such collateral consisting broadly of ourU.S. assets. Borrowings under the facility, which may be denominated in USD, EUR, GBP or CAD, bear interest at a base rate, plus an applicable borrowing margin. As ofMarch 31, 2021 , our financial covenants limited our further borrowings to approximately$869 million , although no amounts were drawn. Cash and cash equivalents combined with marketable securities were$2.0 billion as ofMarch 31, 2021 and$2.2 billion as ofDecember 31, 2020 . Cash and cash equivalents are held in numerous accounts throughout the world to fund our global project execution activities. Non-U.S. cash and cash equivalents amounted to$987 million and$984 million as ofMarch 31, 2021 andDecember 31, 2020 , respectively. Non-U.S. cash and cash equivalents exclude deposits ofU.S. legal entities that are 31 -------------------------------------------------------------------------------- Table of Contents either swept into overnight, offshore accounts or invested in offshore, short-term time deposits, to which there is unrestricted access. In evaluating our liquidity needs, we consider cash and cash equivalents held by our consolidated variable interest entities (joint ventures and partnerships). These amounts (which totaled$608 million and$655 million as ofMarch 31, 2021 andDecember 31, 2020 , respectively) were not necessarily readily available for general purposes. We also consider the extent to which client advances (which totaled$101 million and$80 million as ofMarch 31, 2021 andDecember 31, 2020 , respectively) are likely to be sustained or consumed over the near term for project execution activities and the cash flow requirements of our various foreign operations. In some cases, it may not be financially efficient to move cash and cash equivalents between countries due to statutory dividend limitations and/or adverse tax consequences. We did not consider any cash to be permanently reinvested outside theU.S. as ofMarch 31, 2021 andDecember 31, 2020 , other than unremitted earnings required to meet our working capital and long-term investment needs in non-U.S. foreign jurisdictions where we operate. Three Months Ended March 31, (in thousands) 2021 2020 OPERATING CASH FLOW$ (230,553) $ (63,743)
INVESTING CASH FLOW Proceeds from sales and maturities (purchases) of marketable securities
4,731 806 Capital expenditures (30,141) (30,094) Proceeds from sales of property, plant and equipment 8,301 13,465 Investments in partnerships and joint ventures (47,829) (5,971) Other 433 56 Investing cash flow (64,505) (21,738) FINANCING CASH FLOW Dividends paid - (14,700) Other borrowings 3,264 22,203 Distributions paid to NCI (8,418) (2,751) Capital contributions by NCI 42,101 19,968 Other (8,557) (2,092) Financing cash flow 28,390 22,628 Effect of exchange rate changes on cash 5,687 (63,472) Increase (decrease) in cash and cash equivalents (260,981) (126,325) Cash and cash equivalents at beginning of period 2,198,781 1,997,199 Cash and cash equivalents at end of period $
1,937,800
Cash paid during the quarter for: Interest$ 29,784 $ 26,624 Income taxes (net of refunds) 31,794 7,486 32
-------------------------------------------------------------------------------- Table of Contents Operating Activities Cash flows from operating activities result primarily from our EPC activities and are affected by changes in working capital associated with such activities. Working capital levels vary from period to period and are primarily affected by our volume of work and the billing schedules on our projects. These levels are also impacted by the stage of completion and commercial terms of engineering and construction projects, as well as our execution of our projects compared to their budget. Working capital requirements also vary by project and the payments terms agreed to with our clients, vendors and subcontractors. Most contracts require payments as the projects progress. Additionally, certain projects receive advance payments from clients. A typical trend for our projects is to have higher cash balances during the initial phases of execution due to deposits paid to us which then diminish toward the end of the construction phase. As a result, our cash position is reduced as customer advances are utilized, unless they are replaced by advances on other projects. We maintain cash reserves and borrowing facilities to provide additional working capital in the event that a project's net operating cash outflows exceed its available cash balances. Our operating cash flow for the 2021 Quarter was negatively impacted by increased funding of COVID-19 costs on our projects, higher cash payments of Corporate G&A (including the timing and extent of employee bonuses) and increased tax payments. We contributed$10 million and$7 million into our DB plans during the 2021 Quarter and 2020 Quarter, respectively. We expect to contribute up to$16 million to our DB plans during 2021, which is expected to be in excess of the minimum funding required. The remaining obligations under our Dutch DB plan may be settled in late 2021, subject to regulatory approval. If the plan is settled, we expect that any deferred pension costs in AOCI would be reclassified to earnings upon settlement. NuScale expenses were$16 million and$23 million for the 2021 Quarter and 2020 Quarter, respectively, and were reported net of qualified reimbursable expenses of$15 million and$13 million during the 2021 Quarter and 2020 Quarter, respectively. Capital contributions by NuScale's NCI holders, which reduced the need for additional funding from Fluor in the 2021 Quarter, are discussed below. Investing Activities We hold cash in bank deposits and marketable securities which are governed by our investment policy. This policy focuses on, in order of priority, the preservation of capital, maintenance of liquidity and maximization of yield. These investments may include money market funds, bank deposits placed with highly-rated financial institutions, repurchase agreements that are fully collateralized byU.S. Government -related securities, high-grade commercial paper and high quality short-term and medium-term fixed income securities. Capital expenditures are primarily related to construction equipment associated with equipment operations now included in Disc Ops, as well as expenditures for facilities and investments in information technology. Proceeds from the disposal of property, plant and equipment are primarily related to the disposal of construction equipment associated with the equipment business in Disc Ops. Investments in unconsolidated partnerships and joint ventures in the 2021 quarter included a$26 million capital contribution to COOEC Fluor, which satisfied our contractual funding requirements, as well as capital contributions to a recently formed Mission Solutions joint venture. There were no significant investments in unconsolidated partnerships and joint ventures in the 2021 quarter. Financing Activities We have a common stock repurchase program, authorized by our Board of Directors, to purchase shares in the open market or privately negotiated transactions at our discretion. As ofMarch 31, 2021 , over 10 million shares could still be purchased under the existing stock repurchase program, although we don't have any immediate intent to begin such repurchases. Quarterly cash dividends of$0.10 per share were declared in the fourth quarter of 2019 and paid in the first quarter of 2020. We suspended our dividend duringApril 2020 . The payment and level of future cash dividends is subject to the discretion of our Board of Directors. Other borrowings represent short-term bank loans and other financing arrangements associated with Stork. 33 -------------------------------------------------------------------------------- Table of Contents Distributions paid to holders of NCI represent cash outflows to partners of consolidated partnerships or joint ventures created primarily for the execution of single contracts or projects. Distributions in the 2021 Quarter primarily related to a transportation joint venture project inthe United States . Distributions in the 2020 Quarter were not significant. Capital contributions by NCI during the 2021 Quarter primarily related to JGC Holdings Corporation's$40 million investment in NuScale. We and our advisors continue to engage with potential investors and capital providers to fund NuScale's path to commercialization. Capital contributions by NCI during the 2020 Quarter primarily related to 3 transportation joint venture projects. Effect of Exchange Rate Changes on Cash During the 2021 Quarter, most major foreign currencies strengthened against theU.S. dollar resulting in unrealized translation gains of$3 million , of which$6 million related to cash held by foreign subsidiaries. During the 2020 Quarter, most major foreign currencies weakened against theU.S. dollar resulting in unrealized translation losses of$111 million , of which$63 million related to cash held by foreign subsidiaries. The cash held in foreign currencies will primarily be used for project-related expenditures in those currencies, and therefore our exposure to exchange gains and losses is generally mitigated. Off-Balance Sheet Arrangements Letters of Credit As ofMarch 31, 2021 , letters of credit totaling$414 million were outstanding under committed lines of credit, and letters of credit totaling$927 million were outstanding under uncommitted lines of credit. Letters of credit are provided in the ordinary course of business primarily to indemnify our clients if we fail to perform our obligations under our contracts. Surety bonds may be used as an alternative to letters of credit. Guarantees The maximum potential amount of future payments that we could be required to make under outstanding performance guarantees, which represents the remaining cost of work to be performed, was estimated to be$16 billion as ofMarch 31, 2021 Financial guarantees, made in the ordinary course of business in certain limited circumstances, are entered into with financial institutions and other credit grantors and generally obligate us to make payment in the event of a default by the borrower. These arrangements generally require the borrower to pledge collateral to support the fulfillment of the borrower's obligation. Sustainability Our sustainability mission envisions meeting the needs of our clients while conducting business in a socially, economically and environmentally responsible manner to the benefit of current and future generations, thereby creating value for all stakeholders. We help clients safeguard the environment, conserve energy, protect lives and strengthen economies and social structures of communities. As a key priority for our sustainability program, we have committed to reduce our greenhouse gas emissions. Early in 2021, we committed to achieving net zero emissions for Scopes 1 and 2 absolute greenhouse gas emissions by the end of 2023. We have a Sustainability Committee to oversee our sustainability policies, strategies and programs. The Sustainability Committee includes representatives from each of our business segments, as well as a cross-functional team of subject matter experts from communications, health, safety and environmental, investor relations and legal, who serve as advisors to the Sustainability Committee. In furtherance of our Board of Directors' commitment to sustainability, our Governance Committee reviews and receives reports from management on our sustainability efforts. Item 3. Quantitative and Qualitative Disclosures about Market Risk There have been no material changes to market risk during the 2021 Quarter. Accordingly, the disclosures provided in the 2020 10-K remain relevant. 34
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