Good day ladies and gentlemen and welcome to the Fourth Quarter and Full Year 2008 EnergySolutions Incorporated Earnings Conference Call. My name is Ann and I will be your coordinator for today's call. (Operator Instructions). As a reminder this conference is being recorded for replay purposes. At this time all participants are in listen-only mode and we will be facilitating a question-and-answer session towards the end of the presentation. I would now like to turn the presentation over to, Mr. John Rasmussen, Investor Relations. Please proceed.

Thank you and good morning everyone, welcome to EnergySolutions, Inc. fourth quarter and year-end fiscal 2008 conference call. With me today are EnergySolutions' Chairman and Chief Executive Officer, Steve Creamer and EnergySolutions Executive Vice President and Chief Financial Officer, Philip Strawbridge. Also joining us and available for the question-and-answer session will be Mark McBride, Senior Vice President and Chief Accounting Officer. Before I turn the call over to Steve, I would like to remind listeners that during today's call, managements remarks may contain forward-looking statements within the meaning of the Federal Securities law, including statements concerning plans, objectives, goals, strategies, projections of future events or performance and underlying assumptions many of which are based in turn on further assumptions. Also, forward-looking statements involve risks and uncertainties. Although EnergySolutions believes that its plans, intentions, and expectations are reasonable, it may not achieve those plans, intentions or expectations. There are important risks and uncertainties that could cause actual results to differ materially from the forward-looking statements made in this conference call. Such risks and uncertainties are discussed in the company's Form 10-Q for the quarter ended September 30, 2008 and in other documents filed by the company with the Securities and Exchange Commission. These and other risks could cause actual results to differ materially from those expressed in any forward-looking statements made. Any projections as to the company's future financial performance represent management's estimates as of today, February 26, 2009 and EnergySolutions assumes no obligations to update these projections in the future due to changing market conditions or otherwise. It is now my pleasure to turn the call over to EnergySolutions' Chairman and Chief Executive Officer, Steve Creamer.

Thank you John. Good morning everyone. EnergySolutions' fourth quarter was very good despite the nation suffering from the worst economic recession in decades which has caused a very turbulent market. We did an excellent job executing on existing contracts and we were successful in winning several new ones. As we -- as always we operated safely and we're successful in reducing costs. Our consistent performance demonstrates that we have a diversified set of capabilities that we can provide to our well capitalized customers throughout the world. We provide essential services to the nuclear industry and to our government customers. These services are needed in good times and in bad times. I would like to thank our team around the world for their outstanding commitment to safety, performance, and the drive to maintain EnergySolutions as one of the world's leaders in nuclear services field. As I explained last quarter our key growth drivers such as disposal of large components and management of the decommissioning of shutdown nuclear facilities remain viable, much needed solutions for nuclear power plant owners across the country and around the world. We continue to explore opportunities around the world in these areas. We are finding creative solutions as evidenced by our beginning work in the fourth quarter on the removal of eight retired steam generators at a nuclear station in North Carolina. There has been a lot of discussion in Utah on the disposal of internationally generated material at the Clive facility. We believe that we have the legal right to dispose this material and look to forward to the judge ruling on our motions for similar judgment on the first of three counts at our declaratory judgment action. All argument on this action is taking place today. Some have asked us why we want to dispose…

Thanks Steve. Good morning everyone. I'd like to echo what Steve has said, and say that we -- that last quarter we executed well given the economic climate. Our capital structure remains sound, and we continue to pay on debt with our free cash flow. I'll be discussing both GAAP and non-GAAP numbers for Q4 and the full year. We provided a reconciliation of the non-GAAP measures to GAAP net income in our earnings release, which hopefully you all have seen. Also note that the foreign exchange fluctuations had a meaningful impact in Q4 as the decrease in the pound sterling led to large differences between this year and last. I will try to separate out those effects for you at various points as well during this discussion. Revenues for the fourth quarter ended December 31, 2008 were $410 million compared to $428 million a year ago. The decline in revenues of $18 million was primarily due to a $63 million decrease from the effects of foreign currency exchange from our UK operations as the dollar strengthened against the pound in the fourth quarter and also 12 million in our LP&D segment mainly from the decline in disposal activity at our Clive, Utah facilities. These effects were offset primarily by increased revenues of 37 million from our Magnox contracts and by 29 million in our Federal Services segment as a result of the consolidation to two joint ventures that I've talked about before. Gross profit was 55.2 million for Q4 this year compared to 62.4 million for Q4 last year. Gross margin for the quarter was 13.5% compared to the 14.6% in the fourth quarter a year ago and I'll discuss the factors that contributed to the gross margin changes when we get to the segment numbers. SG&A expenses for…

(Operator Instructions). And the first question comes from the line of Jamie Cook with Credit Suisse. Please proceed.

Hi, good morning. It's actually James Becker for Jamie. How are you?

Good, how are you?

Doing well, congratulations.

Jamie or James.

I do, don't I. Congratulations on a nice quarter. Just with respect to a lot of the talk going on with the stimulus I know its still early but is there is anyway you can kind a handicap how you think these funds are going to be allocated between now and 2011. Do you think it's going to be 100 million here, 100 million there, go to existing contracts, what are your thoughts on that?

I'm actually sitting in Washington D.C on my way to DOE meeting on the stimulus bill. As soon as we finish this call and Philip and John are in Salt Lake City. So we're separate because of the stimulus bill this morning. It is our understanding, preliminary understanding which you will get more clarity on hopefully today that the money is going to be spent as fast as the money can be spent. It has to be spent by September of 2011. The President has been very, very specific with all the agencies that he wants the money put into the economy as rapidly as it can. So we anticipate that the money will, I mean money has been appropriated and I'm assuming we're going to learn more about the list where the money is going to be sent this year, where the money is going to be put on all these projects, and obviously on the contracts we're involved with we have a lot of plans on how we think we can put the money to work as rapidly as possible and have some good effect in 2009 but even more in '10 and '11. So we are very, very excited about it. We think there is great opportunity there for the company.

Okay, very helpful. And then just in terms of timing of some of the opportunities that you've been seeing in the past, what are your updated thoughts on Portsmouth, some of the subcontract work at Sellafield, I know that there was some issues there in terms of the subcontract work force, timing of the UK National Lab. Has anything materially changed from your previous expectations?

No, the Portsmouth and Paducah bids RFP's have been sent out in draft. Actually the Paducah is out in final form that Portsmouth what is that in the draft form right now. They are moving those through fairly rapidly. The UK National Lab, I think we'll hear on it probably sometime in late March, early April, we will here on that. The Sellafield work we're working with obvious with URS or even Amacker as the prime contractors there. We're working with them right now. We're trying to work out, waiting for them to come out with opportunities for Tier 2. They've have had a lot to swallow over there, since November. So they've got a management team over there working on it and we're certainly talking with them continually on opportunities and things that we think we can help them with.

Okay, great. I appreciate the color.

And the next question comes from the line of Scott Levine with JP Morgan. Please proceed.

Good morning guys.

Hey Scott.

I'm not sure if you touched in your guidance explicitly on free cash flow, but I was hoping you might be able to talk a little bit about what your thoughts. I know you have a CapEx guidance number, but if you could let us know maybe whether there is any other variables in building up to a free cash flow and operating cash flow number that might change 2009 versus 2008 that are notable number one? And then secondly if you could update us on your thoughts on uses of cash including debt pay down and comfort level with leverage and thoughts on the dividends?

Okay. Well I mean if you look generally, its kind of the same thing we talked a little bit about before I think Scott. When you look at what I characterize as true free cash flow, its probably going to be around the $60 million range after you take out and start with, if you look at EBITDA, look at taxes, dividend, others. And in CapEx as we said it's approximately 25 million. So that leaves you with the net $60 million to $65 million type of range. In terms of use of capital what we really anticipate is to continue to pay down debt. We think that given the economic climate and also kind of given the comment that we've gotten back from shareholders that that's the appropriate use if it. So, we really don't see any other mechanisms or changes or needs if you will in that mix even for the cash flow perspective. So what was your other question?

The question was regarding your comfort zone around leverage just in general.

No, I think, we are very comfortable given where we are and given the fact that we do create so much free cash flow. Those leverage requirements of course from our credit agreement changed through the year a little bit, but still we're very comfortable through the year.

You see any on the CapEx number you guys laid out there, is that kind of like a bear bones CapEx or kind of a reasonable meaning CapEx as a potential downside if the economy tightens up further and you need to cut back on spending a little bit?

Yeah, I mean I think that we have a little bit flexibility and a lot of it though is build on your anticipated contract that we have where we have to put up some capital to get going. So certainly we want to make sure that we invest that CapEx wisely, but we also don't want to restrain our growth.

Okay. Got you and then if you can just update us a little bit on the tax rate that's embedded in your earnings guidance, is that kind of consistent with the 38% we've been talking looking backward really?

Yeah what we're talking about is like 34 to 36.

34 to 36. Okay, great. And then one last one, if you could talk a little bit more in detail about the component removal opportunities and you've been talking about some alternative funding sources, you had one project announced late last year, little bit more insight into some of the funding mechanisms outside of the -- the more making change that might support some project load, just in general looking forward?

Yes, several other things are happening on that front. A lot of these projects just like the one down North Carolina are not tied. I mean if the decommissioning funds has two or three different segments inside the fund then they can use funds that aren't control by NRC to be able to fund these types of projects with just approval of the State Public Service Commissions. And so obviously those are the ones that we're targeting really hard to look at, the ones that have segmented areas inside of them so we can move those ahead. I am testifying before the NRC in the latter part of April on overall removal of large components and there is a full day uptake to the commission on these who is out there both people from utilities and people from our services are going to be testifying then. So things are moving ahead. There is a good number of the projects out there that are not tied to the NRC. Those are the ones we are targeting right now. We're also working with the power plants that do have these to make separated funds so that they can bring them new money coming in can separate out to be used for these type of things and which is legal under the current NRC rules and so we're working on that. We think we have some great opportunities to be able to move forward on the large components over this year and going on in the future.

Thanks, nice quarter.

Thank you.

And the next question comes from the line of Sanjay Shrestha with Lazard Capital Markets. Please proceed.

Great, thank you. Good morning guys again. Good quarter. Couple of quick questions clarification if I may, so we have it seems like a pretty good outlook on what the spending is going to be on the federal level. Its up year-over-year, we got some incremental project announcement and you guys are sort of on the stimulus packages there yet we're sort of talking about a flat year-over-year performance. So is it then fair to assume that you guys aren't really counting on any major component work to materialize this share and it sort of like the bear bone something will probably go wrong given the macro outlook and if things were just to go right, there is some upside to that number?

What we have in there Sanjay is certainly we want to be careful from our guidance perspective but what we outlined in our guidance and as I said the assumption is that, from the federal spending perspective from our guidance we've said that spending is going to remain the same. We recognize, we certainly recognize as we talk about in this call that the stimulus package is going be something very positive. But we haven't incorporated that in our guidance yet simply because we don't have the details. So, that is the potential upside. In terms of major components, what we talked about before is that what we put into our guidance is really three different major components jobs, one of which was we've already announced. The other two, we had already had good visibility as a mater of fact one of the other one said that they had to have the components off by the end of the year. So as Steve mentioned, we are working on several of those and so we will see how those goes. But suffice it to say that from a guidance perspective, yeah we've said flat year-over-year but we are very excited as Steve mentioned about the stimulus package and once those things have a little move visibility and we can see how it really impacts our projects then we may look at what we need to do to update you on that.

Got it, much appreciated and just a couple of follow up on that. Am I right in reading that there was I think a language in that stimulus bill now that you got to sort of reduce the footprint as well. Now how do you guys sort of see that potentially impacting the sort of the business opportunity for you?

That's actually one of the more positive things because what that does is that it says they're going to be tearing down buildings and facilities in order to reduce the footprint, that's the way you reduce it so. But, for example on down the Savannah River side, I mean their goal is for use it from 300 square miles down to 75 square miles and so what they'll be doing is going out and tearing down all the facilities around the outside of that to try to get that done. Same way in Portsmouth, Paducah, or Oakridge, White Well what they are trying to do is get rid of lot of old facilities so as that they can reduce the footprint and thus after the stimulus is over, their ongoing cost can actually be the money I think we'll continue to stay the same or rise higher but it will be able to get more accomplished because they won't have as much hotel cost or ongoing maintenance cost. They can actually accelerate what needs to be done on the side. So we were very excited to be honest with you with the House part of the 2009 bill which is being passed for the rest of this year. They actually increased over the Bush's administration for the first three months are up over $1 billion on that one. So we look at that as being a great indicator of what the House has normally been the really conservative ones on AM spending. And the senate has been more liberal. So we're very positive that the administration and the new Congress is both very positive to accelerating the clean up which will be very good for our company.

Got it, one last question then guys, and I hope I am not putting you guys on a spot by asking this, but I am going to try. So given all this, so let's say '09 is a flat year but is there any reason for us to think why we cannot see at least double-digit growth in 2010?

Well I guess to keep in here Sanjay is going to be as we get through the years looking at how quickly we can close on the license to chip (ph) and how many of the major components that we're able to line up as well as the specifics of the economic stimulus plan. But certainly all those things go right worse we could see that.

No question. I am just going to say if I don't read the newspapers, I think we are going to have a lot more growth than that but when I read the newspaper like all others, we go down a little bit and -- we have -- we are very, very bullish on our company right now and especially through these types of times I think we're strong as anybody could possibly be and we're excited about where we sit.

Perfect. Much appreciated guys, congratulations again.

Thank you

And the next question comes from the line of Preetesh Munshi with Piper Jaffray. Please proceed.

Thanks, good morning Steve and Philip.

Preetesh, how are you today?

Good. Good quarter obviously, couple of quick questions. In your -- if they are talking about Exelon and NRG Energy potentially merging, how will this impact the licensing stewardship project discussions. I mean do you guys go back to the drawing board on that if that happens between now and whenever it happens or how are you -- can you give us some color there?

No, it has nothing to do with it really because Exelon would be the resulting owner of the company. So we are -- Exelon will be buying NRG and their management team would be the surviving group. And so we -- it doesn't effect license stewardship. Of course the two we have life of planned agreements with both Exelon and NRG and so we are looking out and they're both great customers. We appreciate both of them.

So this will potentially be a positive in terms of licensing stewardship business then in that case?

Absolutely yes, it's positive all the way around.

And then with your Federal and LP&D business where you have the longer-term visibility especially with the LP&D as the life of planned contracts, how many contracts are expiring if any in the next couple of years and are you adding new contracts to kind of account for the ones that might be falling off. Can you give us some color there please?

Well obviously the LP&D, the life of plan agreements especially the life of plans some of those are 30 and 40 years and none of those have any terminations coming in and there are any even relooks in the next foreseeable future. They have re-openers as we've indicated before. Most of them are on a 10 years basis. But it's a long time out on any of those contracts. Those re-openers both we and they, we have the opportunity to re-look at pricing there, we have to opportunity to re-look whether there is another alternative. But it's a very positive cash flow situation we have there. On the LA yield, obviously, our commercial service division has a lot of earn and burn type contracts, they are going off and on all the time and we are out marketing and selling those services all the time. And they have some -- but those projects are more in the $15 million to $20 million range and they roll off, they roll on and we just have a good book that we keep working on those. We've got pretty good visibility into those for this year and also even moving into 2010. The Federal Service division, we don't have any major contracts. We're partners right now on the Portsmouth contract and on the Paducah contract there. They're fairly small. Obviously we'll be really re-bidding those over again and with the increased funding, we think that no matter what will see an increase in our Federal Services business in 2009 and '10.

Great, last question, with regards to the potential of importing a Italian waste, does it -- is it just more of a political battle or is it -- are there any regulatory hurdles there and given what you know today, what's the kind of probability you would put on that happening in the near future or even in the mid to long-term?

We look at it, its something obviously that's not in our numbers today and its really not even in our growth projections going into the future. We've always known that we were going to be and we have been building and growing internationally. We're spending most, we obviously are being very cautious, because of the times and spending very much money in expansion, but the money that we are spending is in expanding and diversifying our international segment. Obviously if we're able to do this, it's going to enhance the speed that we are able to move the international expansion and we are going to do it over a long period, over a continual everyday grind it out type thing. We're going to have, if we're able to do this, it will accelerate how fast we can grow that international division. I don't have to put the odds on it. We believe that the law will ultimately rule in our position and that we will have the opportunity to be able to it. We have been trying everywhere we can to make the -- we have great support in the legislature in the State of Utah, but we also have a Governor who really doesn't want us to do this and so we are very politically attuned to what's going on. We're trying to be as good a corporate citizen in the State of Utah that we possibly can and I think ultimately, we will win, but it maybe several years down the line, before we actually get it done depending on, if the Governor decides to appeal on this issue, if we win in the district court or what happens there. But we think under any circumstances ultimately we will be able to do it. The only regulatory thing here is that NRC has issued us an import license. They judge it based on two things health and safety and they have -- they've already ruled many times that there is no health and safety issues with what we do at all. And the other thing there is a willing receiver until it is law, until its declaratory judgment is over. They're not going to issue us another import license until that case is over. So we'll sit and watch it and see how it goes but we're pretty bullish on it. We are not letting it distract us for the main core businesses to make sure we deliver for our shareholder day after day but we think it is a great real opportunity if we're able to do it.

Great, sounds good. Well stay tuned, thanks.

Thanks. Thank you.

And the next question comes from the line of Alex Rygiel with FBR. Please proceed.

Thank you and nice quarter gentleman.

Thank you.

Thanks Alex.

First, Philip, as we think about 2009 on a quarterly basis, can you kind of walk us through the pluses and minuses taking into consideration kind of the variability in recognizing profit with the Magnox contract?

Well Alex, I mean, we don't -- we try to stay away from quarterly guidance. I know people still try to still kind of want some guidance there. We have -- Q1 and Q2 has always been somewhat stronger because of Magnox. We think that will be down a little bit because as you saw we are trying to flatten those out. Q4 historically has always been our largest one. We still anticipate that. So, really when we look at the way the things are laid out, we think that it's probably going to be Q3, Q4, will be... Q4, for sure will be largest and then you've got probably Q3 to Q2 to Q1. I know it is not much help, but again we try to stay away from guidance on a quarterly basis.

That's helpful and as it relates to the large component contracts and understanding everyone a little bit different in size and time line but can you just talk about the average and what is from the start dates, how long are you in kind of the upfront processing side of it. And then how long is the disposal period?

Well I mean, once we get the contract in place, it depends upon the size of the steam generators as an example or the major components and what we have to do on site to prepare them for shipment. But once the contracts are in place which we've announced, you've got a couple of months work in terms of on site work. And then probably a couple of months before at most until it get it actually in the cell which is when we do the LP&D portion which is the highest margin. So, three to four months tops from the time that the contract is actually signed and announced. You look at the one in North Carolina, you know we anticipate having those -- the actual steam generators in the cell by the beginning of Q2.

Perfect. Thank you very much.

And the next question comes from the line of Al Kaschalk with Wedbush Morgan. Please proceed

Good morning guys. Steve or Phil could you maybe give a little bit more clarity on why you are trying to level out profit or the operating results in the international segment particular on Magnox.

Well, I mean again the purpose is that because we want -- ideally we have a perfectly flat year and we recognized that in the past that its been Q1 and Q2 that's been the largest piece. And every time, you will recall last year, every time we got into a quarter, particularly in the say Q3 timeframe, everybody was saying, what's happening to Magnox; it seems like their margins are going down. And you continually remind people, no, that it was more Q1, Q2, explain that situation. So the ideal situation would be to flatten our (ph) perspective.

So does it mean the volume of work is level, the fee that was heavily paid in Q1 or Q2, based on the results, that fee is now going to be assessed on a quarterly basis or what --

Well I would say that, I would anticipate that we are always going to have Q1, Q2 as the larger quarter simply because whenever we set up the incentive fee targets, and that's what drive this, when we set those incentive fee targets, those are usually negotiated at the beginning of their year. And their year, as you know, is really an April timeframe, the UK year, since we are dealing with the UK government. So those are usually set up. What we are trying to do is have targets that we can quantify throughout that year and so that we can start to recognize that revenue as we achieve those targets. Of course, by its nature, a lot those targets still are going to be coming up due at the end of the year. So it's not just trying to change something that's been done for a long time in the past; it's trying to create specific quantifiable targets that we can achieve throughout the year.

I don't think it's really changing how we operate over there at all. What we trying to do is get better money management by finishing these negotiations up along the way, getting them (ph) build up through the end of the year. And so we look at it as just being good management. And I think the NDA looks at it too because it allows them a more even workflow going through. It's makes our... we challenge our people to get the things finished up, and so they're not all sitting down in the last month of the year trying to figure out what... negotiating every one of these performance-based incentives out. So it really... it's better for Energy Solutions, it's also better for the NDA, for our customers. So we think it's a very positive thing to be able to do. And of course finished these things up through the year is just better project management.

All right.

And I'll say, Al, just the other comment you talked about, sort of stable funding. There has always been questions around the funding for Magnox. And I know that people brought that up. If you look and to reemphasize year-over-year, we've actually increased, when you look at it on a pound-for-pound basis. And the reason for that increase quite frankly is because of the good performance our guys have over there. You've heard us say we are the number one rated tier 1 contractor in the United Kingdom. So there we are able to provide them more work and so they have given us more money. Unfortunately, that good performance has been masked, if you will, by things out of our control like the exchange rate.

But won't your performance be masked now if you level it out? I mean we are going to see the variance, or are we going to see...

No, I think what you ought to evaluate it on is the total year... for the total year.

Okay.

And what that's going to do as well as kind of smooth out those margins, because you will recall, in the past, Q3 and Q4 margins were either zero, or in some cases negative. So we'll... that was all because of the way of those incentive fees and so that will be changed.

But I guess the point is the ability to get a high watermark in a given quarter, the range is going to be tighter. But it also doesn't sound like the range, the top end of the range can increase.

Well I think... no, the top end of the range as we continue to do better and we negotiate better incentives, will be able to be increased.

Okay. If may just flip over to Commercial Services for a second, I don't know, if you stated this, I apologize. But how are the trends there in terms of funding for that business segment? Because I would anticipate that, and I think you made a comment in your prepared remarks, that that activity is slow or has felt some pressure. So is the first half definitely softer than the second half expectations in that regard?

Well I think in terms of... I will talk about the whole year. Commercial Services has been one of our more successful segments. And when you look at the total increase year-over-year, they've grown and we anticipate that they'll continue to grow as we're able to provide more and more capabilities to our customers. They are today as an example, they are focused on those... really the major component types of opportunities. And we see several of those coming in, in Q3 and Q4, Q2 and Q3, then they hit disposal in Q3 and Q4 types of periods. So for the most part, we anticipate that for the year, they are going to be, I'll say, relatively flat. But we anticipate year-over-year that they'll up. So they've had good growth year-over-year.

And I think another, Al, on that, I think there is two other pieces of the stimulus bill that we haven't even talked about. And that's one going to about... a little over $1 billion going to the Corps of Engineers, another $1 billion going to EPA for super fund. Our Commercial Services, those are handled... the on-site services there on those types of projects are actually handled by our Commercial Services group rather than our Federal Services group because you are more tied directly to companies and that. So we can see some... we think the stimulus is even going to help that division out also. There is a couple of billion dollars there which is significant when you look at the size of that division. And we're well positioned to be able to get our share in those also. So we think there are some good opportunities there. But we are trying to get visibility on those two. They are not... I don't think they are as far along in their plans as the DOE is, but we're excited about that. But there is also a continuing... there is many, many projects out there that we're working on all the time. Our sales force is not finding a pullback in the opportunities. And so we feel like there is... as Philip says, we'll continue to grow that segment year-over-year.

Great. And then finally, a much broader and a little bit longer term, although it relates to 2009 EBITDA guidance, 165 to 180. If you looked at a recent investor presentation, I think the range is 155 to 174. So it appears that you are expecting a stronger year relative to '08 versus previous comment of being flat. So what's the catalyst on the $10 million above those historical, or the ongoing trend? And in relation to that, how much in 2008 fourth quarter did HTP contribute to the revenue or earnings front?

Trying to understand your question, Al.

Well in a February presentation... investor presentation, you have a segment EBITDA guidance or trends, I should say, 155 to 174, you take the top end.

Right.

And what you provided for '09 is 165 to 180 that we are hearing some... a little bit of struggles on the front end of 2009 to get started but a strong back half, implying that you are going to be up at least maybe 5 to 10 million versus '08. So what I am trying to understand, what segment is really pushing your performance in the given year relative to 2008 and above what would be viewed as, or what you have disclosed as a trend in your ongoing business or base businesses?

Well, first of all, that's your characterization. I don't think we are struggling at the beginning. I think that we have got a good start, we've got good visibility on... in all segments for the beginning in 2008. As we jump in a year, just from our planning purposes, what we have is, as I mentioned before, a couple of those major component types of jobs that will start off and are already started. In the commercial services arena, you get the services on the front end, but that means that LP&D, in terms of receiving those major components coming in, in Q3 and Q4. And that is some of our most profitable business, and that's why the back end is going to be probably a little heavier loaded. It's not necessarily because of revenue; it's more because of that profitability of those major components. So that's just kind of the way we've modeled our year, if you will. And so, as I said before, in my comments actually, I think from when we look at visibility this year, we've got very good visibility for this first half and we feel very comfortable.

I would say that we have much better visibility this year than we had last year, and that's what we continue to work on is as we mature as a... we brought the companies together to make one company and is the rigor of looking forward and budgeting. And I think we are in much... today, we have much better visibility into 2009 than we had in 2008. And I think we are already working on projects for 2010. So we have some very strong goals to build the visibility every quarter after quarter after quarter.

Thanks a lot.

Again, Al, just as you'll recall, that slide you are talking about wasn't our guidance slide. That wasn't the purpose of that slide. That slide was put out there because of the questions we get in terms of what's kind of your, what I will say, is our ongoing or base business. And so the questions were around, so if you didn't win projects, where would they go? And that's what we said, that's what that bottom number is on that slide. So that slide is not our guidance and that's why the difference there.

Right. No, and I understand that, and that's why I was just trying to get the delta off of it. If one would think you had a flat year, 155 or 160 range, you would hit the low end of your guidance. But there is some room there on the upside and I... but I think it sounds like it's still dependent on a few conversions on some contracts is what I am trying to get at.

Yes, it still is on a couple of major components, but also the visibility with regard to the stimulus package, which, again is already passed. So it's not a debate of how much or those types of things; it's a matter of how can we get that allocated as quickly as we can so that we can start moving on and getting the earnings in '09.

Very good. Thank you.

And the next question comes from the line of Vance Edelson with Morgan Stanley. Please proceed.

Thanks a lot. Could you just comment on the competitive threat, if any, from the WCS facility now that is has a license? Would that be considered direct competition in any sense in your mind? Thanks.

They have their license. They don't have... it's a conditional... I mean they have a license that has 94 conditions on it. If you really look at their license, they are still... we still... some of the same issues that they have had since 1994 still exist today. We watch and monitor it. Some day, they may get their license, but they've still got a lot of the same hurdles that they have had for the last 14 years. And they do have some support in their Governor's office, but they... they're pushing it really hard, but the regulators, if you look at their license and review it, if it's online, they've got 94 conditions that they've still got to answer before they can actually operate under that license. So at least in the short term, and we believe we look at it, we don't know exactly how everything will play out. But we still think they have major hurdles before they can operate that they've got be able to take care of.

Okay. That's very helpful. And one more question on the license stewardship, any update on kind of the state of the trust funds given the continued market slump, how they look right now in relation to what's ultimately required. And do you think you can move forward on projects with only partial funding? Thanks.

Well we are working... we're obviously being very cautious because the one thing we want to do is make sure that we protect our... we have a very strong business; we don't want to do something dumb in the name of hurting it. And so we're working very hard. But we have five or six different alternatives we are working on with Exelon in order to make it happen in a secure way that both companies are comfortable in moving ahead. They are very supportive in trying to get it done. The fund obviously, it has less impact now because obviously the stock portion of the fund that was at about 40% back in August has probably dropped to 25% today just because of the value of that portion has gone down. But they are continuing to moderate. Obviously, we need the market to come back some, but there is also some other things that we are working on like everything from the letter of credit to extending it to 12 to 14 years and so the 10 years... or several to take... there is several operating things there that can save $20 million to $30 million a piece by changing the way it's done and what Exelon was thinking. And so we are just working together with them on a continual basis to move it forward. And we are very positive that we will get it done as I think if you ask them, they will say the same thing.

Okay, that makes sense. Thanks a lot.

Thanks.

And our next question comes from the line of Ben Elias with Sterne, Agee. Please proceed.

Good morning, thank you. I had a question about the case on the Italian waste as well as the efforts in legislature now. The court case, is that particular to Italian waste or is it for international waste? And if it Italian waste or international, how would you eventually get some of the Magnox waste back in the country as well?

Well, we are recycling Magnox waste today in our Tennessee facility; that's a recycling process and we continue to do that. We've always done it. There is nothing in that law or in anything in Congress that would preclude the recycling of these materials. And so from that standpoint, nothing changes at all on that. We would like to be able to possibly bring more Italy. It's just the case is not about Italy; it about international waste, as is the opportunity in the... where we were playing in the legislature. And I think it's just going to be a long play out opportunity. And just a minute, we just have breaking... we don't have breaking news. We do have breaking news, or we don't have breaking news? Our President and General Counsel is here and I'll just let him tell you. This is Val Christensen who is the President, and is not doing this, but. Okay, I guess we don't want to announce it yet, so. But they are all smiling in the room, so it must be good news. So you will see something later today. But it does sound like maybe there was positive outcome today. And I don't know what it is; they are all just smiling around me, so.

Okay.

Sorry.

So I guess any time is a good time. But could you also address the trend in margins? I have noticed that the Federal Service as well as the LP&D... Commercial, I am noticing a trend of declining margins over the last eight quarters on the Federal side as well as the Commercial side. I mean I think for a while (ph) your segments, you started the year significantly higher that where you finished.

Yes, I mean on Federal, the only reason the margins have changed is because... primarily because of the consolidation of joint venture income. We talked about that in earlier quarters. That's where we have a small percentage ownership. But what's happened in two jobs, both that we've talked about before, is that the customer came to us and asked us to take over leadership in those jobs, which means that we had the controlling interest even though we don't have the largest ownership interest. What that means from an accounting perspective is that we had to flow all that revenue through our books. And so that's the difference in terms of the Federal stuff. In terms of the company overall, as we mentioned before, yes, the margin is down because you've got full year impact of RSMC. RSMC is a business as we know has a smaller margin, essentially related to its risk because it's a pass through type contract. And this year, 2008, was the first year that we had the full year impact of it. So when you compare it back '08 to '07, that's the major driver there.

Okay. Thank you very much.

And ladies and gentlemen, I'm sorry, but we have no more time for any additional questions. I would now like to turn the meeting over to Steve Creamer for closing remarks. Please proceed.

Thank you very much everyone. As I said before, we have had a solid quarter and we really do have a great company and a great business that generates great cash flows and is good in whatever type of economic times we are in. We appreciate... we understand a lot of frustration because we have a lot of frustration over the market volatility over the last six months. But we feel strongly about our business. We don't think anything has changed; it's just the whole market has change. And so we plan to work hard to deliver shareholder value today and on into the future and we appreciate all of your support and we are looking forward to continuing working with all of you as shareholders and certainly with our utility and our government customers. Thank you very much and this will conclude our call today. Thank you all.

Ladies and gentlemen, thank you for your participation in today's conference. This concludes the presentation and you may now disconnect. Have a good day.