Good day, everyone. Welcome to today's Fluor Corporation Fourth Quarter Conference Call. Today's call is being recorded. At this time, all participants are in a listen-only mode. A question-and-answer session will follow management's presentation. There will be a replay of today's conference call at 12.30 PM Eastern Time today accessible on Fluor's website at www.Fluor.com. The web replay will be available for 30 days. A telephone replay will also be available through 12 midnight Eastern Time on March 6 at the following telephone number, 888-203-1112. The pass code of 6055684 will be required. At this time for opening remarks and introductions, I would like to turn the call over to Ken Lockwood, Vice President of Investor Relations. Please go ahead, Mr. Lockwood.

Thank you operator. Welcome everyone to our fourth quarter and 2000 year-end conference call. With me today in the room are Alan Boeckmann, Fluor's Chairman and CEO; Mike Steuert, Fluor's Chief Financial Officer; and also joining us today is David Seaton, our Group President of Oil & Gas. Our earnings announcement was released this morning before the market opened and we have also posted a slide presentation on our website which the presenters will reference during their prepared remarks on today's call. Our Form 10-K will be filed tomorrow. Before getting started, I would like to read our cautionary note regarding forward-looking statements which is summarized on slide 2. In discussing certain subjects we will be making forward-looking statements regarding projected earnings, market outlook, new awards, margins, tax matters and other statements regarding the intent, belief or expectations of Fluor and its management. These forward-looking statements reflect our current analysis of existing trends and information and there is an inherent risk that actual results and experience could differ materially. These differences could arise from a number of factors. Information concerning these factors that could cause actual results to differ materially from the information that we give today is available in our Form 10-K filed on March 1st, 2007, which is available online or upon request. We will be updating these factors in our Form 10-K... our new Form 10-K, which we intend to file tomorrow and once filed, it will also be available online or upon request. The information in this conference call related to projections or other forward-looking statements may be relied upon subject to this cautionary note as of the date of this call. The Company undertakes no obligation to update publicly any forward-looking statements, whether as a result of new information, future events, or for any other reason. Now, I would like to turn it over to Alan Boeckmann, Fluor's Chairman and CEO. Alan?

Good morning everybody and thanks for joining us. Today, we will be reviewing our results for the fourth quarter and full year of 2007. We will be providing an update on our current business outlook and discussing our increased earnings guidance for 2008. But before we get to the specifics, let me just say that the fourth quarter and the full year of 2007 surpassed virtually all previous financial records. Fluor delivered record revenue, record operating profit, record earnings, record new awards, and record backlog. And with $1.7 billion in cash and marketable securities, our balance sheet has never been stronger. 2007 was without a doubt the best year in the company's history. And I am glad to add the qualifier, so far. Now I want to cover some highlights of our financial performance in 2007. For your reference, I'm on slide 3. Net earnings for 2007 rose 102% to a record $533 million or $5.85 per diluted share. That compares with $263 million or $2.95 per diluted share in 2006. In addition to very strong operating performance, net earnings in the fourth quarter included $123 million or $1.35 per diluted share from a final settlement of a tax audit for certain prior years. The full-year results reflect extremely strong growth in Oil & Gas, Global Services, Industrial & Infrastructure, and Power segments and also improved performance in our Government segment. Consolidated operating profit for the year was $802 million, up 44% from $556 million a year ago. Revenue for the year rose 19% over 2006 to a record $16.7 billion. As I move to slide 4, full year new awards for Fluor overall rose to an all-time high of $22.6 billion, up from $19.3 billion a year ago. It was driven by increases in Oil & Gas, Power, and…

Thanks David. We are on slide 6 now for your reference. On the power front we grew the backlog substantially in 2007 and have numerous prospects across coal, gas, and plant betterment projects in 2008. But as you have heard, all of the discussion on carbon emissions, global warming, and the potential environmental impact is having a delay on some of the major investments in this market. In fact, the Desert Rock coal-fired plant has slipped out towards the end of 2008 based on the current view of when they will receive their environmental permit. Issues on the coal-fired side have clearly caused a pickup in prospects though on the gas-fired generation projects. In Industrial & Infrastructure, mining remains strong, especially copper and iron ore. And in Infrastructure, we expect to book the Greater Gabbard wind farm during 2008 as well. Life sciences continue to be soft, although we are pursuing some mid-sized opportunities in that market. As we move to the Government segment on slide 7, we have been talking about three key opportunities here. And to date we're batting two for two, with awards of both LOGCAP IV and Savannah River. As you know, both projects are currently entangled in a protest process, but the important point is that we said these jobs were key, and we went out and won them against very strong competition. I am encouraged by this group's success, and we look forward to hearing about Sellafield, the third and largest opportunity later this year. We expect the protests on the previous two to be resolved in the near term. Global services continues to be very effective at renewing existing contracts and expanding their services offerings globally. We expect new bookings in 2008 to be at least on a par with 2007 in this…

[OPERATOR INSTRUCTIONS] We will take our first question from Jamie Cook with Credit Suisse.

Good morning. And congratulations. I'm actually, I think, speechless on the quarter for once. I guess my first question, just, Mike, was there anything unusual in the Power segment? The margins there were pretty good. I'm just trying to think about how I should think about that going forward, I guess. D. Michael Steuert - Senior Vice President & Chief Financial Officer: There is nothing, I would say, unusual. The Power did have a very strong segment in the fourth quarter. But I wouldn't say there was anything unusual, Jamie.

But is that a normal trend that we should think… I mean, that is not something we should think about going forward in terms of a margin for '08? D. Michael Steuert - Senior Vice President & Chief Financial Officer: No, I… Power will definitely have a very solid year in '08, but I don't think you can take the fourth quarter and really annualize it. I think you have to look at a run rate slightly less for the total year.

Okay. Then I guess my other question is on the award outlook for Oil & Gas in 2008. It sounds like there's a lot more going on, on the downstream side. Or I guess more than I thought. I guess as I look to 2008, should I think of 2008 as a bigger award potential on downstream than on the upstream? So probably you are doing more feed work now and it materializes more in 2009. I'm just trying to think about the shift in those markets, I guess. David Seaton - Group President, Energy & Chemicals: Jamie, this is David. Basically what we are seeing is work that was awarded in '07 being released in '08. I think we had a tremendous new award year in '07, and I think we can see consistent new awards in '08.

And what about on the upstream side I'm sorry? David Seaton - Group President, Energy & Chemicals: Well, I was thinking more in the entire portfolio. Upstream I think will grow at an equal rate to the other units. We are seeing a lot of success in some of the front-end work, typically, offshore and onshore gas and oil production globally.

Okay. Then I guess just my last question, Alan, can you just give a little more color on what you are seeing on the Power side. In particular, gas. Sort of color on the number of projects out there you are bidding on, and potential for awards in 2008, and whether outside of what you have already won in coal. We're sort of dead on the coal side, I guess.

Well, yes, Jamie, it is possible that we will have two awards in coal in '08. We think we one is likely, on the outside chance there may be two. But what is happening, because of the difficulty in getting air permits, we are seeing a tremendous surge in people coming into ask for gas generation, fire generation, simply because they have got to be able to meet some of the energy demands in some of these regions. That is the only way that they can now get a permit and get a unit on the ground quickly. So we are seeing a lot more activity there than what we have seen in the past or what we actually, frankly thought we would see.

Do you expect cash awards in '08 just to be clear?

Yes we do.

Okay thanks, I'll get back in queue congratulations.

Thank you.

We ill take our next question from Michael Dudas with Bear Stearns.

Good morning gentlemen.

Good morning Mike.

Two questions. First, Alan, the Global Services business kind of being a sneaky business in the big portfolio for Fluor, very good results. Attribute some of the success there. Is it the outsourcing trend? Is it the deeper customer relationships on contracts that you have already built, that EPC work and then following through into the maintenance side, is there been a big up tick in demand from your customer base to do some of the lower-tech maintenance and operations at the plants? Could you color that and see what kind of sustainable trend we have in the Global Services area?

Well, you know, Global Services, if you look back at their record over the last several years, it has been growing at a fairly steady rate, a very good rate. It is… couple of drivers there, Mike. First of all, they do get a boost from the other Fluor activities, because they do provide services to the Fluor units. But they also have an extremely strong third-party market that is being driven a lot by the outsourcing, particularly in the construction equipment unit and in the operations and maintenance side. So it is a very solid business. It is one that is extremely complementary to the rest of our business, works very well within Fluor and has a very strong value proposition outside. I think we are going to continue to see it grow as we go through '08 and beyond.

So AMECO has been doing quite well?

They are doing well.

My second question is for you or for Mike. You addressed the balance sheet cash of $1.7 billion. How much does Fluor require for either bonding or for customer purposes. What was your view throughout 2007 relative to acquisitions. Maybe remind us what you have been targeting and how the market might be there. Do you think there is a chance that we see some reasonable allocation of capital into that market in 2008 from Fluor?

Let me address one issue then I will let Mike talk about the cash balance. We really didn't do any acquisitions of note in 2007. Not that we weren’t looking; we're continuing looking for the right opportunity for acquisitions. We just have put a very strong discipline in place about going for those that are accretive; and in the market today valuations are very high. So as a result, we went through the year without executing one. We are looking at some opportunities and some possibilities. So I wouldn't rule that out for 2008. Mike? D. Michael Steuert - Senior Vice President & Chief Financial Officer: Yes, in terms of our cash balance, given some of our restrictions by our JV agreements we need to operate both in the US and overseas. We view, Mike, that we need about $600 million in terms of for normal operations. So you could say that we roughly have about $1 billion above what we need as a company. We did increase our dividend. We are looking at share repurchases to offset the creep in number of shares in terms of dilution there, as well as acquisitions. But as Alan said, we are going to be very deliberate in terms of how we look at these actions. We're going to make investments only when we find them compelling. So we certainly expect to continue to build our cash position through the cycle, and we are going to continue to look for very attractive uses of that cash as we go through the cycle. But in the meantime, we certainly want to see our balance sheet continue to strengthen and continue to have the strongest balance sheet in this industry.

What about your thoughts on '08 capital spending trends versus depreciation? Is there anything on the horizon that could meaningfully impact that? D. Michael Steuert - Senior Vice President & Chief Financial Officer: No, our outlook for CapEx is very similar to '07, perhaps maybe a little bit lower than ‘07. We will see some investments in our equipment business and will see some investments in again continuing to support the kind of growth in our infrastructure to support the growth the company is seeing overall. But I would expect our CapEx in '08 to be in the $200 million to $250 million range, Mike.

Thank you gentlemen. D. Michael Steuert - Senior Vice President & Chief Financial Officer: Thank you.

We will go next to Curt Woodworth with J. P. Morgan.

Hi good morning.

Good morning Curt.

Question for David. You commented that on the downstream side you thought some of the Feed work you are doing right now will go into the project management role, you mentioned Russia, Europe, and the US. Could you just characterize the market opportunity there, would you say that that potential would be similar to what you did in 2007, which was obviously a very strong year. David Seaton - Group President, Energy & Chemicals: Well, I think downstream is going to continue to be robust. There has been a significant amount of spend early in this cycle in the United States and I think we have been positioned to capitalize on a lot of that. That will continue to flow into our backlog in '08. But we also are very well positioned globally. When you think about our global reach and our major project management capabilities, we see the same sort of spending trends in other parts of the world. I mentioned Russia, I mentioned Europe to a degree, but Asia is right behind it. When you think about the fuel specs, the global fuel specs that are being required in many of the countries around the world. So I could categorize the downstream market as continuing to be robust. I don't see it waning during '08.

Okay, in terms of, maybe thinking about the… you talked about the geographic mix. Is the front-end work, say relative to a year or a year and a half ago, are you seeing a larger shift towards international projects relative to the US? David Seaton - Group President, Energy & Chemicals: You know, the US has been such a big part of that growth spurt, I wouldn't categorize it as larger, but certainly consistent with.

Great, just last question on the polysilicon. Could you try to frame that market opportunity for us, how much do these plants cost? What is the opportunity for you? David Seaton - Group President, Energy & Chemicals: You know, the market, I think when you look at some of the alternative energy sources, this is a key part of that. This is a precursor to the photocell that we all have in calculators and telephones and everything else. So the demand on the consumer side is extremely strong, and many of our customers are continuing to spend. I really wouldn't venture a comment on a cost per copy because they are using different technologies, different capacities based on their end consumer user. But it is a large component of our backlog, and we see it continuing to grow as we go through '08.

And what percent of backlog would it be? David Seaton - Group President, Energy & Chemicals: I wouldn't venture to guess that one either, because it is in varying stages of development from a Feed to the EPC values.

Okay, great thank you.

We'll go next to Steven Fisher with UBS.

Good morning.

Good morning Steve.

Wondering how you factor Sellafield, LOGCAP, and Savannah River into your guidance? And it sounds like there are some uncertainties. But it also sounds like you expect some of to contribute in the latter part of the year. D. Michael Steuert - Senior Vice President & Chief Financial Officer: Yes, as we look at 2008, the impact of those is very modest, if any in our guidance for 2008. We expect those to support the Government group through 2009 and beyond. I would... our current estimate is the first major impact of those will really show up in 2009.

Okay, great. Then you mentioned that there were no further charges on the Bagram Air Force Base and the Haiti Embassy. But wondering if you could just give a little more color on the status of those projects?

Well, at the Bagram we have turned the facilities over to the military and have destaffed that project, so we're pretty much done there. On Haiti, a good portion of that Embassy is now turned over to the client. It is virtually done. We will be out of there, I would venture in sometime in March. So a good position on both projects.

Great. Just one last quick one. Wondering if you are pursuing any or you might pursue any project in the LNG area in Asia geographic region?

We are in the LNG business. We do re-gasification projects, and we do program management offsites and infrastructure for the front-end work of LNG, for the cold [ph] side. Certainly, we would be pursuing those as appropriate in Asia.

Okay great. Thanks a lot.

We will go next to Andy Kaplowitz with Lehman Brothers.

Good morning guys. Nice quarter.

Thank you.

Good morning, guys. Nice quarter. Can you talk about the global mining markets in general. Obviously you guys are very strong on project management in that space and it seems like there is a real global shortage here of mining, and commodity prices are still very high. So can we expect big projects in the mining segment over the next couple of years?

Well, we have had a good run in mining over the last several years. We are very strong in project program management. We also have a pretty strong capability technically, particularly when it comes into the copper market in mining and to the precious metal side and into the iron ore side. And those best made up the bulk of our awards; we see nothing in the next year or two that is going to stop the development that's going on and some of the final work that we are doing kind of shows that. How long that cycle is going to, it's hard for me to say. It can be very volatile, but right now it looks strong.

Great. And Alan your oil and gas margins had a nice up tick in the quarter and I know that it is lumpy. So I guess the question is where do we go from here? Can we sustain the margins that we have here as you still have projects ramping up?

I think you said one of my favorite words that’s lumpy. It does... it will differ from quarter-to-quarter just simply by the mix of work, where each of the projects are. But I think if you look at where we are at today, this is sort of a very quarter. We should be able to do close to that, I'm not sure we would be able to repeat that every quarter going forward.

I understand. And in any activity in the nuclear space above and beyond, obviously you have some news on that late last year. Anything else that you guys are doing there, any thing that you see out there in the sort of near-to-medium term?

Well we have... we have got started to put a pretty good staff on the front-end work for the South Texas project, that's the one that's getting our major focus right now because that's going to be, probably the first one thought the NRC line and it's going to take… it depends on the development over that time to get that licensed. I think you are going to see others come in behind it and we are focused on several. So I am hopeful that when we get into... truly into the next decade, this will be a strong market for us with a lot of revenue generation to show for it.

Okay. Thank you very much.

We will go next to Barry Bannister from Stifel Nicolaus.

Hi, great quarter. One question on the escalating costs for power generation facilities going on around the world. How comfortable are you with the fixed price portion of the Texas coal plant you are working on? And is your oil and gas executive seeing improved pricing discipline given that some overseas, EMCs have been burnt by prior fixed price bids.

Well, let me talk about the power fist and will let David answer the last part of your question. Every power project that we've done including the one that in Texas... was a negotiated lump sum, where we worked with the client to fix prices to fix quotes for equipment material before we arrived at lump sum price. So we had the ability on that project to commit the material, place the orders and have the numbers for that before we close the book and made it a lump sum. So, no, we are not having any kind of escalation pressures that would threaten our lump sum on that project or any of other power projects for that matter because of the nature of the negotiation. We are seeing increased cost pressure on a global basis, as there is escalation both in terms of material and labor. But again when we go into bid a lump sum, this is true in any of our units, we get fixed form prices for the material into our lump sum bid quoted from our suppliers before we put our number together, and that limits our exposure in that. And that's not a practice it is… that is followed by everybody in the market. David, if you-- David Seaton - Group President, Energy & Chemicals: No, I would agree. I think that discipline is the key to our success and the lump sum, features that we do have in making sure that we do have those firm lump sum, or firm prices on material and equipment before we provided any lump sums. The amount of escalation that we see in the market place has forced many of our customers to take on a different contracting method and more of a reimbursable cost method, which we're certainly very comfortable with and it's a bit predominant amount of our backlog is reimbursable cost. But I think the key is the discipline that we used across the company and getting into some of these things. Just one more comment. When you look at some of the projects and the length of them, many of the projects that you've seen in the press, they are challenged right now and we'll bid prior to the big ramp-up of a lot of the commodity pricing and they're suffering because of that.

And then on the power. Given that coal and nuclear costs are gone up and even NRG has been negotiating on the STP with their vendors, pretty heavily. Are you seeing on a cost per kilowatt basis, even from a lower base that gas fired power not withstanding the surprises that are going to get on the cost of the gas. Gas fired power costs per kilowatts are rising as well. Is that something you are seeing?

Well, I think it's safe to say that when the price of steel goes up or electrical cable, it affects any project that uses that commodity. So, yeah, the gas is going up as wall on a cost per kilowatt based on the market prices for material and labor.

And before I hop off, Mike did you say and just need to clarify in the slide 9 that Savannah River was under protest or was that a typo? D. Michael Steuert - Senior Vice President & Chief Financial Officer: No it is under protest. D. Michael Steuert - Senior Vice President & Chief Financial Officer: By the other bidding team, which is being led by URS Washington Group.

Okay. When is the decision due on that?

It's hard to say, typically there is a 100-day cycle on adjudicating these. D. Michael Steuert - Senior Vice President & Chief Financial Officer: The 100 days will run out in May.

Thank you.

We will go next to Graham Madison with Lazard Capital Markets.

Hi good morning guys. Just a quick clarification. You mentioned that you are expecting two coal plants this year. Are these ones that you are waiting on an air permit for or are these new projects?

No, I didn't... I said... I didn't say expecting. I said it's possible that we will get two. I would like to think that we are going to get one. It is absolute permits that are the key to that. So, if we are fortunate and get both permits then we will have two projects with. I am looking for one and that's what we planning on

Got you, thank you. And then just a question on the polysilicon plant you guys are doing in China, I know you booked the feed work on that in 3Q of last year with the expectation about the EPCM work in 2008. Any update on the timing or the possibility that it might shift to 2009 given the weather and some of the other customer specific constraints on that?

No, I don't see it shifting to '09. In fact, it's just progressing quite nicely. I think it will be in '08. It will be part of '08.

Okay, great, thank you very much.

[Operator Instructions]. We will go next to John Rogers with D.A. Davidson.

Hi, congratulations on the quarter as well.

Thank you. D. Michael Steuert - Senior Vice President & Chief Financial Officer: Thanks John.

In the past, you guys have talked about some markets that you are not in. I think you mentioned offshore oil and gas and some other areas. And you obviously have a lot on your plate. But what are you think about in terms of just over the next couple of years in terms of new segments or areas of expertise you would like to develop?

It's not that we are not in offshore, we are, but it's an area we would like… we truly would like to strengthen and build more capability. I would say and I have mentioned several times that our focus in terms of adding to our capability is in the areas of offshore oil and gas, it is in the infrastructure arena even though we have an extremely strong model there. We think the global effort and that is... one that would put us very nicely, and we'll continue to look at that into our capability on the nuclear side both in terms of new power generation and in terms of remediation.

Okay. Thank you.

We'll go next to Alex Rygiel with FBR Capital Markets.

Thank you. Two quick questions. First Alan, in the past you have commented on your outlook for backlog expansion in the future. What are your thoughts on backlog at the end of '08 versus '07?

We will continue to grow backlog through 2008. If you look at what it is at today and project forward to a year from now, we will have grown the backlog through 2008.

Great. And two quick questions. Could you quantify or put perspective... the number of employees or the size and contribution of your effort in the South Texas nuclear project today?

Well, the nuclear project. It's strictly an engineering effort today doing conceptual work around support of the license application. I would say it's probably somewhere in a range of 50 to 60 people.

And lastly. Could you comment on the domestic wind farm market and how active you are or whether or not it will ever develop to be a market that you are or want to be active in?

I think it's a market, that's going to grow. I think clearly there's going to be some challenges not at least of which is delivery of the turbines for that business. Every turbine manufacturer in world is pretty full from their shop space standpoint. But, I do think it's an area that we can play in, particularly as some of these growing size and scale, which they would have to be to have an affect. That starts to get into areas where the... our size and strength and financial capability would be a significant determining factor. So, it is an area we're looking at. And I think to the extent that it develops as a market we'll be a player in it.

Excellent. Thank you.

We'll take a follow-up question from Barry Bannister with Stifel Nicholas.

Mike. Isn’t a lot of your cash overseas and doesn't that limit your maneuvering room on what you can do with the cash? D. Michael Steuert - Senior Vice President & Chief Financial Officer: Barry, that was the case a couple of years ago. Increasingly as we generate cash, it's more and more as in the U.S, and if you look at our $1.7 billion, roughly $1 billion of that is in the U.S., and $700 million overseas. So, the mix has shifted you are correct, that was the situation a couple of years ago.

Okay. And news reports that the NRC has tabled the COL application for South Texas. Are they correct regarding maybe deficiencies in the application or negotiations on cost? D. Michael Steuert - Senior Vice President & Chief Financial Officer: I think it has more...I think it has more to do with the participant list and I really can't go much further than that. But I don't think it will have an effect on the end date of the COL.

Okay. Thank you.

And it appears we have no further questions at this time. Mr. Boeckmann, I would like to turn the conference back over to you for any additional or closing remarks.

Thank you operator. And first of all let me thank you everybody for participating on our call this morning. As I said earlier, we posted our best year ever in 2007, but as you see from our increased guidance for 2008, we expect to continue to grow earnings at a healthy rate and to grow our backlog. We continue to be very upbeat about our markets and on prospects, and it will be another strong year. We greatly appreciate your interest in Fluor and your confidence in our company. Have a good day.

Thank you ladies and gentlemen. Once again that does conclude today's conference, we thank you for your participation.