Good afternoon, everyone, and welcome to Fluor Corporation's Second Quarter 2011 Conference Call. Today's call is being recorded. [Operator Instructions] A replay of today's conference call will be available at approximately 8:30 p.m. Eastern Time today, accessible on Fluor's website at www.fluor.com. A web replay will be available for 30 days. A telephone replay will also be available through 7:30 p.m. Eastern Time on August 10 at the following phone number, (888) 203-1112. The passcode of 6931964 will be required. At this time, for opening remarks, I'd like to turn the call over to Ken Lockwood, Vice President of Investor Relations. Please go ahead, sir.

Thank you, operator. Welcome, everyone, to our conference call today. And with us in the room are David Seaton, Fluor's Chief Executive Officer; and Mike Steuert, Fluor's Chief Financial Officer. Our earnings announcement, as you know, was released this afternoon after the market closed, and we have posted a slide presentation on our website, which we will reference while making prepared remarks today. Before getting started, I'd like to refer you to our Safe Harbor note regarding forward-looking statements, which is summarized on Slide 2. During today's call and slide presentation, we will be making forward-looking statements, which reflect our current analysis of existing trends and information, and there is an inherent risk that actual results and experience could differ materially. You can find a discussion of those risk factors in our 10-K, which was filed on February 23, 2011, and in our most recent Form 10-Q filed today, August 4, 2011. During this call, we may also discuss certain non-GAAP financial measures. Reconciliations of these amounts with the comparable GAAP measures are reflected in our earnings release and are posted in the Investor Relations section of our website at investor.fluor.com. With that, I'd like to turn the call over to David Seaton, Fluor's Chief Executive Officer. David?

Thanks, Ken. Good afternoon, everyone, and thank you for joining us on what has turned out to be a pretty interesting day in the markets. I'd like to start by highlighting a few of our accomplishments for the second quarter and ask you to please turn to Slide 3. Net earnings attributable to Fluor for the second quarter were $165 million or $0.94 per diluted share. Our segment profit totaled $280 million and included substantial positive contributions from all of our businesses. Our consolidated revenues totaled $6 billion, which represents a 17% increase over the second quarter of 2010. We also continue to have strong cash flow generation, ending the quarter with $2.5 billion in cash and marketable securities after utilizing $113 million during the quarter for repurchase of our shares. Increased demand for our services and our success in capturing key prospects is evident as new awards for the quarter were totaled $9.7 billion. We had substantial award activities across our businesses with Mining & Metals and Oil & Gas and Government contributing significantly during the quarter. As a result of our strong bookings, our backlog grew to a record $40.3 billion, which exceeds our previous high mark set last quarter by over $3 billion. If you turn to Slide 4, the Oil & Gas segment had a number of wins during the quarter, including a significant award for utilities and offsites component of the Dow/Aramco Ras Tanura integrated project or RTIP in Saudi Arabia. We're particularly pleased about our success in winning this critically important award in the project, which will become the largest integrated petrochemical complex in the world. We were able to leverage our strong relationship with Dow and our experiences with them in the Middle East and our extensive history with the Saudi -- excuse…

Thanks, David, and good afternoon. Detailed results for each operating segment can be found in our earnings release and in the 10-Q. My comments today will focus on a few highlights and some corporate items. Please turn to Slide 5 of the presentation. As David mentioned, Fluor's consolidated backlog increased to a record $40.3 billion at the end of the quarter. A percentage of fixed-price contracts in our overall backlog declined to 24% from 27% last quarter with 81% of our backlog currently outside the U.S., which I believe is a new high mark for international content. The continuing trend toward internationally focused prospects is reinforced by the fact that 92% of our new awards over the past 6 months were for projects outside the U.S. Moving on to a few select corporate items on Slide 6. G&A expense from the quarter was $31 million, increasing from $28 million a year ago, mainly due to higher stock-based compensation cost. Effective tax rate from the quarter was 32%. Let me shift to the balance sheet for a minute. Consolidated cash and marketable securities totaled $2.5 billion at quarter end, up from $2.1 billion a year ago. Cash from operations through 6 months was $428 million. This result reflects positive cash flow from earnings sources, partially offset by working capital increases in Industrial & Infrastructure and Oil & Gas businesses. As David mentioned, we repurchased a total of 1.6 million shares during the quarter for $113 million. We have authorization to repurchase approximately 4 million additional shares under our current program. During the quarter, we also paid off $40 million in cash to redeem the principal balance owed to convertible debt holders and $21 million in dividend payments. Capital expenditures for the quarter were a rather healthy, excuse me, $102 million. This compares with $75 million a year ago. The majority of the CapEx were driven by additional investment in construction equipment within our Global Services segment. Overall, Fluor's financial position remained strong, as we've said for quite a few quarters. And we're very well positioned to fund the future growth we see in front of us. Finally, let me conclude my comments by talking about our guidance for 2011, which is shown on Slide 7. With the strong financial results through our first 6 months, including earnings, new awards and backlog, we are raising the lower end of our 2011 EPS guidance to a range of $3.10 to $3.40 per share from the previous range of $3 to $3.40 per share. Our guidance for the year assumed strong new awards will continue throughout 2011. G&A expense will be in a range of $160 million to $180 million; capital expenditures of $260 million to $300 million; and an effective tax rate remaining at 32%, which is consistent with the trend that we've experienced to date. Operator, with that, we are ready to take questions.

[Operator Instructions] We'll take our first question today from Jamie Cook with Credit Suisse. Jamie Cook - Crédit Suisse AG: A couple of questions. First one, wanted to address the Oil & Gas margins in the quarter. One of my clients e-mailed me and told me they thought -- hoped my title would be Oil & Gas margins at Fluor. So I'm wondering if you could talk about what the issues were in the quarter and how we should -- if we should still expect margin improvement in the back half of the year. On the back half -- on the other -- flip side of that, your I&I margins were much better, and you've been playing those down. But we've had several quarters of better-than-expected margin improvements. I'm just wondering how we think about that. And last, can you talk about the profitability profile of the stuff you're putting in backlog today?

Well, Jamie, I think Oil & Gas margins, we're still kind of at an inflection point. I mean, we've had a lot of projects that have pushed further to the right on the schedule than we anticipated. So I think from a margin perspective, we're kind of rattling along the bottom, and probably, we'll start to see improvement as we start into 2012. As I said, there's a significant amount of feed work in that business. And I believe that both those and the ones we've won will improve the margin in our backlog relative to Oil & Gas. Now we've got a couple of this. We've said in previous calls we've got a couple of projects in there that have a high CFM content, client-furnished material, and they look more like the mining projects. Those will continue to be -- continue to burn big revenue numbers as we go throughout the rest of this year and into next year. But I think, as I've said and Alan said prior to me, we're pretty pleased with the amount of margin dollars coming out of the bottom of Oil & Gas. Now with regard to I&I, we've had a couple of one-time issues that have helped us there. But clearly, that business is really, really doing well, and we're pleased with that. But I think overall, we're seeing an improvement in the margin potential in the new awards that we're taking in the backlog even as we speak now.

We'll take our next question today from Andy Kaplowitz with Barclays Capital.

David, if you look at the Dow/Aramco contract -- and, I mean, we all know it was under some intense competition, so I'll just ask you. I mean, how aggressive were you in that contract? Could you talk about the terms of that contract in particular? And I know you don't like talking about specific contracts, but I think it's an important question. As we sit here, what did you have to do to win that contract?

Well, I'd like to answer it this way. I think that we provided a pretty competitive offering that came down to the people that the customer trusted to execute the program. We've had great success with Dow if you think about Kuwait and some of the investments that they've made there. We've got a strong following within Aramco that believes in the kinds of predictable outcomes that we provide. And I think that's what sold that project. It is a very competitive marketplace out there, but I wouldn't say that we were overly aggressive in capturing this project, and I think it came down to the value proposition that we provided.

Okay, that's very helpful. And then just overall backlog, I mean, your I&I backlog is obviously at a record. How hard then will it be to sustain that backlog going forward, David? Are there enough prospects out there that you may be able to sustain it?

Well, I think getting to a $40 billion mark is historic and something that we're really, really proud of. And I think staying there is going to be difficult, frankly, given the amount of burn that we're going to experience as we go through the next few quarters and work off the first part of that mining backlog that we brought in. I believe that we will continue to stay at these levels, if not improve, as we get into 2012. As I mentioned, within E&C, we're operating on probably -- I wouldn't put a number on it, but there's in excess of 25 feeds that we're working on that if you look at the TIC, and I know that's really a meaningless number relative to what our backlog could be, but it does run in excess of $30 billion. So I think when you look at Oil & Gas, I think when you look at Mining, there's still headroom in mining for growth and significant new awards as we go through the rest of this year and into next. I think we're poised to continue on a growth curve. I feel very good about where we sit in the individual markets. I feel good about, except for the United States, the stability of many of the markets outside that we deal in. I think some of the statistics that Mike gave during the prepared remarks around the percentage of our backlog outside the United States shows that our diversity is a great story. So I think when you put all of those things together, I think we're in different markets at different places. But all in all, I think we have the ability to continue to grow as we go into '12. Now I'll use that lumpy term again that you've heard us talk about in previous calls because frankly, the $9.6 billion new award, remember there was one project that shifted from Q3 to Q4. I mean, excuse me, Q3 to Q2. That doesn't mean that they were not looking at a robust new award plate for the rest -- the second half of this year and as we go into next.

That's helpful.

Our next question, we'll go to Alex Rygiel with FBR Capital Markets. Alexander Rygiel - FBR Capital Markets & Co.: I know it's a little early to talk about 2012, but given where backlog is today and kind of the year-over-year growth and change in backlog and your most recent comment with regards to a pickup in burn within the Mining segment, can you kind of comment or attempt to kind of bracket even in a wide range what revenue growth could look like or how revenues could ramp in the next couple of quarters?

Well, with the kind of backlog growth, you're right, Alex, we're seeing -- we are expecting some ramp-up in second half of the year in terms of revenue growth in terms of what we're going to burn in the company. Looking on to 2012, we really haven't gone through our planning process yet, but that's a little difficult to say. We did do a bottoms-up plan in September and October and are much better prepared to talk about that in our -- in November in our third quarter call. But certainly, as David described, the backlog growth that we've seen, we've got $40 billion now, it's going to be lumpy going forward. But there are some very attractive prospects out there, but -- for the latter half of this year, early next year. It'd be disappointing if we don't see continued ramp-up and revenue burn as we move through 2012. Alexander Rygiel - FBR Capital Markets & Co.: And just to follow up, if there was one item that was kind of at the top of the list of the reason why possibly you didn't raise this year's high end of the EPS guidance, what might that one reason be that kind of keeps you holding back a little bit until you see another quarter of earnings develop?

I think it's primarily some of the projects that have moved out in the quarters relative to when they're awarded, and also the continued delay on some projects that we've got in backlog that we're waiting on governmental approvals.

Right, and -- but that's particularly true in the Power segment.

Yes. Alexander Rygiel - FBR Capital Markets & Co.: Very helpful.

We'll go next to Brian Konigsberg with Vertical Research.

Actually, just coming back to the guidance again. I mean, you did raise the bottom slightly and kept the top, but it seems that actually, second half earnings generation would be down for this first half, which doesn't seem to make a lot of sense up given your backlog and momentum you're building. I mean, can you just give us a little more color on kind of the moving parts as it relates to the framework of your guidance?

Yes, let me add -- shed some light on that. If you take our first half results and annualize it, we're right around the top end of the range. And as we said, we do expect, because of some delays in projects and some things moving to the right, that we'll have a weaker second half in our Power business. In addition, if you look at our business over the last several years, corporate G&A goes up in the second half, especially in the fourth quarter. So that'll reduce some profitability. Take those couple of factors out, we expect some good improvement in the rest of the business in the second half. But given those factors, we're being somewhat conservative in saying that the top end of the range will be equal to the first half if you annualize it.

And also, can you just give us a taste of what the competitive environment looks like in terms of pricing? We've heard there's, at the margin, some improvements. Maybe if you'd give us some color by your different segments?

I'm not sure I'd do it by the segments, but I think what we've seen is something we talked about before. We've seen some significantly predatory pricing as we experienced last year and into this year. Most of those folks have almost filled their shops up. I think that some of the customers that were leery of that have made some different decisions. And as such, they're coming to companies like us where we demand a little bit higher profit. I mean, unlike our friends in Washington, I think profits are good. I think what we do is we look at every individual project on its own merits and see whether it takes -- it makes the hurdles that we expect given the risks that we're taking. And as I said earlier, I'm pretty pleased with the margin dollars that we're putting in the backlog.

We'll go next to Will Gabrielski with Gleacher. Will Gabrielski - Gleacher & Company, Inc.: So just a follow-up on the questions we heard earlier on Sadara. I guess, well, can you just say whether or not you were the low dollar bidder and if price was the final determinant on that project?

You'd have to ask the client that question. Will Gabrielski - Gleacher & Company, Inc.: They don't talk to me.

Seriously, they don't share. I mean, we've got an indication that we were very competitive. I don't know that we were the absolute lowest. There was -- several competitors, as I understand it, that were all grouped together. And they -- luckily, they -- for us, they made the decision to choose us. Will Gabrielski - Gleacher & Company, Inc.: Okay. A question on the E&C margins. How much of the difference or what you're seeing right now versus what you might have thought you'd be seeing at this point is related to utilization versus absolute margins? And within that question, between Kearl, West Qurna and Santos, are those ramping up on the schedule you would like to see at this point or is that part of the problem?

Well, that's part of the problem. I think it's more utilization and timing than it is the margin dollars in the backlog. Santos is progressing nicely. So is Kearl. So we're -- it's just unfortunate that the way the amount of CFM in Kearl really skews, frankly, the margin percentage. But again, as I've stated, I'm pleased with the margin dollars that we have in backlog based on the risk that we've assumed. Will Gabrielski - Gleacher & Company, Inc.: Okay. You talked about 25 feeds with a $30 billion total investment estimate on those projects. Since you gave that, maybe you can give us some historical comparison so we can compare that to where we may have been at different parts of the last cycle.

That's a good question. I mean, it kind of -- if I think back to when I ran E&C, it kind of feels like the beginning of that last ramp-up. But it's completely different. There's some downstream in there, but it's more heavily weighted on the upstream side as well as the petrochemical side. So we do see that market resurging. But I guess in sheer dollars, it kind of feels like the '05, '06 kind of time frame. But the engineering content in those projects is a little bit less than it is in, say, a downstream project than what we anticipated in our last cycle. Will Gabrielski - Gleacher & Company, Inc.: Okay. And then lastly, I mean, I didn't know that the stock price had declined quite a bit since you last reported earnings, and your backlog's done nothing but go up. And presumably, the mix of work in your backlog continues to get better as you work off Gabbard's. I'm just wondering, what are you guys thinking about with the cash? And when you look at your Services business, is that still 1/4 of what you're doing? It certainly involves a lot of CapEx every year. So is there a way to monetize anything you have currently?

Well, I think our -- I'll let Mike mention it, but I think our strategy's still the same. By and large, we're looking at acquisition as being a good use of funds when we find something that makes sense from a strategic perspective and the price associated with that opportunity matches with what our expectations are, and I'll let Mike talk about it.

Right. Those are tough criteria to meet, and we've been looking. We haven't really found something that meets those criteria. And in the meantime, we have been buying back stock, and it's reasonable to assume that we'll continue to buy back stock, especially at these values where we think -- we personally think we're tremendously undervalued. I think it's a great buy. We have -- we do have 4 million shares left in the current authorization, and it's a good use of funds as we go forward.

For our next question, we'll go to Scott Levine with JPMorgan. Scott Levine - JP Morgan Chase & Co: Well, can you give a sense, a better sense of how the year's playing out relative to your initial expectations? Obviously, you've refined the EPS guidance, but you don't guide on bookings, and you have a record quarter here. Is this better than you would have thought at this point? Or basically, is the order book to date and what you guys see for the back half roughly consistent with what you guys anticipated in your guidance at the beginning of the year?

Yes, I think it's in line. As I said, we had one project shift from the third to the second quarter, which put it into record territory. But as we look about the first 6 months of the year and add to it what our prospects suggest, we're pretty much on target. Scott Levine - JP Morgan Chase & Co: Okay. And maybe turning to the U.S. Obviously, it seems to be the weak spot. Do you see -- it sounds like you don't feel any better about this market. You did announce a contract with Dow and Freeport earlier in the year. Is the market as weak as you thought it was at the beginning of the year? And maybe some thoughts on what's transpired on the Hill and expectations for businesses that are affected by policy in the back half of the year like infrastructure and things like that?

I guess I'll be running for President to answer those questions. It's interesting. I look at the U.S. market right now, and I see what we've got kind of in our sights and some things that are, like I mentioned, are kind of awaiting some permits or some new investment decisions. If the U.S. returns at all, it's upside for us. I think our diversity has allowed us to go and capture business outside that keeps us growing in spite of what we see in the U.S. I'm not sure I can add any color that already hasn't been talked about on the TV around tax policy, just some sort of logical energy policy, those kinds of things that the U.S. absolutely has to get figured out if the U.S. is going to maintain its position in the world market. Scott Levine - JP Morgan Chase & Co: Got it. One last one, maybe on Gabbard. You said that turbine inflation kicks in again in September. That was previously expected. Is there a period of time? Is the next couple of quarters kind of pivotal here in terms of the workflow? At what point do you really start to ramp down in terms of the mobilization? And maybe, if you could affirm, I guess, the prior completion date you've given on that project. I'm guessing that's still intact.

Yes, it's still intact. We're still working the plan that we established 6, 8 months ago. The weather still continues to be a challenge, and that's something that's outside of our control. But we feel pretty good about the progress we're making. The critical aspects of having the Leviathan there, which is one of our jack-up rigs that allows us to install the generator sets, is back on station and beginning -- well, we're beginning in a couple of weeks the installation in our plan. We hope to get all of the turbine generator sets set during this next couple-of-month period of time. But in our plan, we have planned in, if we don't get it all done, to do the remainder in January once the Leviathan is available again. So we're still working towards the plan we had in place. Weather is really the only challenging component at this point.

We'll go next to Joe Ritchie with Goldman Sachs.

So going back to Jamie's question earlier about Oil & Gas margins and whether we've hit a floor, and you guys mentioned that utilization is starting to improve in that part of the business. And that's not -- that hasn't been part of the issue for the lower margin. So, I mean, is it fair to say that we have hit a bottom there? Or is it possible we could still go lower from where we are today?

I think -- I mean, I think there's a chance it could go a little lower as we work out the rest of this year but in line with the guidance and the plans that we had. We kind of expected to have a little bit of a low from a percentage perspective. But on an individual project perspective, I think we're still happy. I believe that the improvement in E&C on a margin production perspective and a profitability production perspective, we're looking at '12.

Okay. And then if you are looking at '12, is it fair to say that what you're booking into your backlog today is higher than the 3.5% margins net that you're reporting?

In most cases, yes.

Okay, all right, great. And I guess one last question. You mentioned the 25 to 30 feeds that you're working on in Oil & Gas. Is there a sense of timing on when some of those feeds will turn into EPC contracts? Are you guys looking at the back half of this year? Or are most of these feeds going to turn into larger contracts in '12?

It's all over the map. There's not one quarter where we're anticipating some big slog coming in. It's really nicely spaced out, frankly, over the next 6 to 7 quarters.

Okay, great.

We'll go now to Andrew Wittmann with Robert W. Baird & Company. Andrew Wittmann - Robert W. Baird & Co. Incorporated: I guess, David, in your comments you mentioned that you're thinking about doing some strategic initiatives that are underway. You kind of put that out there and didn't give a whole lot of detail, so I was wondering if you could maybe fill us in a little about some of the things you might be thinking about.

Well, I think we're looking at growing all of our markets. We're looking at strategic initiatives that focus on allowing us to grow within any given markets but also, and maybe, interest in different geographic markets. There's some technology plays that we're looking at in various segments of our business. But there are things that'll enhance our offering and our footprint, frankly. And I really wouldn't want to go past that. Andrew Wittmann - Robert W. Baird & Co. Incorporated: Makes sense. Are there any end markets at all that you don't do today that can be a new end market that you're going into? Or would it just be kind of a niche in an existing broader end market today?

I think it would be niche and in a broader scheme. Andrew Wittmann - Robert W. Baird & Co. Incorporated: Makes sense. And then just, I guess, kind of a technical question. On the Power side, it looks like, even despite your revenues down pretty significantly, margins in are very well. Is there something that made it unique this quarter?

I wouldn't say unique. I think, I'll ask Mike to answer part of that. But I think we've continued to see a fair amount of work on the Plant Services side, the better plant betterment side that we continue to do that has been able to keep the earnings streams coming in, in Power even though we're waiting, certainly, for some of the bigger programs to kick back in.

And we're also wrapping up a couple of jobs that are essentially being -- that were completed in the quarter. And we had some favorable profit adjustments on those in the quarter. Andrew Wittmann - Robert W. Baird & Co. Incorporated: Great. Could you care to quantify the profit adjustments this year versus last year? Just so we can maybe get an apples-to-apples on the margins that your earning?

There are so many pluses and minuses, that's really hard to do.

And we'll go next to John Rogers with D.A. Davidson. John Rogers - D.A. Davidson & Co.: I was wondering, David, if could you talk for a second a little bit about your capacity to take on additional work? I mean, you've grown backlog and bookings, I think, probably to a greater extent than most at least to public peers. And as you talked about the business cycle getting better, are you concerned at all that the next wave of projects could offer even greater margins and you wouldn't be able to take advantage of that? Or do you have the ability to continue to add capacity and bring on the special project managers and other key people?

Well, that's a great question. I think we have continued capacity in just about all our markets. And part of it has to do with, I think, the robust training process that we have in Fluor and how we bring up that next wave of management. We saw that certainly when we grew, during from '05 to '08 and the opportunities that people were afforded to step up. And I think that's our first avenue towards being able to multiply our coverage. Secondly, we've invested a lot of money in our systems and tools that allow us to have a very robust dispersed execution model to where we're not forced to ramp up in one place versus another like many of our competition or our competitors have to do. And then finally, I think that we're very competitive in the market, and I would say one of the employers of choice in our markets. So not only do we have the organic growth available to us, I think we've got the ability to bring in the talent that we need to continue to grow. I feel really good about where we stand in our ability to continue to grow our people and provide opportunities for growth, for not only the folks we have inside, but also to attract that next wave of employee in. But I think the key part is in at growing that organic talent base, they clearly understand our tools and systems and what our expectations are, and I think that just adds to the quality and the surety of delivery that Fluor provides. John Rogers - D.A. Davidson & Co.: Just one other follow up. Mike, you mentioned that, I think, for the first 6 months, 92% of your work or your bookings were for work outside of the U.S. What's the breakdown of your current backlog relative to international and domestic work? And how much of it is actually being executed outside the U.S.?

John, it's about 80% of our backlog is outside of the U.S. John Rogers - D.A. Davidson & Co.: Okay. And the engineering on that, how much of that is being executed outside the U.S.?

We don't really have a breakdown...

It's all over the Board but I mean, we still have a significant presence from a talent standpoint in the U.S. and between the various offices that you know. I guess, the way to explain that is our U.S. offices, we probably, during the trough or the financial meltdown, we probably decreased our U.S. staff by about, I don't know, 15%. And I think we've kind of stabilized to where we're back up from there. And I'd say we're probably 5% down from where we were before.

But John, our systems, our staff, we're able to work share around the globe 24/7, and a lot of these jobs have both domestic and non-U.S. content. John Rogers - D.A. Davidson & Co.: Okay. But it sounds as if, I mean, at least, compared to the previous peak, more of the work as a percentage is going to be completed outside of the U.S.?

Well, from a location of project, you're absolutely correct. But again, the numbers, I may have misspoke. The 5% down since the peak is basically the global number. But I think the fact of the matter is, is that we're going to continue to utilize the talent that we have based on that talent, and we've got a competitive offering when you combine it with our global reach. I mean, we've really spent a lot of time and effort in perfecting in that dispersed process that allows us to move stuff, as Mike says, around the globe and really work 24/7.

And for our next question, we'll go to Tahira Afzal with KeyBanc.

What I have noticed is that you've done a really commendable job in keeping G&A under control, and really versus your initial guidance, it seems like it's tracking much lower. I would love to get a sense in how we should be looking at corporate G&A for the rest of this year? And as you ramp up in 2012, do you know what the run rate could be as a follow-up?

Let me first address this year. If you look back at the last several years, we are typically lower in the first half in terms of our G&A run rate. We usually see a modest increase in the third quarter in terms of our G&A. And just given our spending patterns and when a lot of our renewals come up for maintenance and for other things, we see some fairly heavy spending in the fourth quarter. And we expect that pattern to continue this year. We did reduce our outlook for G&A by about $10 million this quarter versus what we talked about last quarter on the call. That reflects what you've said, the really good performance that we've seen in the first half. But we do expect some increase in the second half and some of that could be compensation-based as well, as we saw some increase this year over the last year due to stock-based compensation and could see more of that in the second half of the year.

Got it. And for next year, I mean, would it be, if you do see an increase, is it again going to be driven more by compensation? Or as you ramp up, would you have any requirements outside of that?

I think as we look at -- I mean, it's early. We haven't done our plan, as I said earlier. I think as we look at 2012, the only basis for any major shift in corporate G&A would just be the normal annual salary increases, things like that, which should be rather modest.

We'll go next to Avi Fisher with BMO Capital Markets.

It seems like you said that I&I margin strength is due to the heavy engineering component in the phases of the contracts. When do those projects convert to the EPC? Or to the P&C side I guess?

The I&I margins were very attractive the last 2 quarters, I would say, higher than normal. That was reflective of a number of items that occurred in terms of progress, in terms of settlements and things like that. It really wasn't due to any kind of special engineering content at this stage. Those margins typically are more typical in the 3% to 4% range than what we've seen. And I think over time, as we move through these large projects, we'll be getting back to that range. What it just really reflects is just super performance in the last 2 quarters with the I&I business. And that includes closing out other contracts and reaching settlements on certain items and what have you.

It's been exceptional performance. Since the close of the quarter, have you sensed any changes in clients' willingness to spend CapEx or spend money or pursue projects?

I think we've had some decisions that have gone forward, but I think that most of the markets that we're really pursuing, we're pretty far down in that decision-making loop. I mean, commodities held, by and large, which continues to push the mining segment, all prices have stayed reasonably stable and people have gotten their approvals in place. I think the projects, just 2 kind of color comment there. One is, projects have gotten so big that many companies are having to go back to their boards multiple times and get these approvals, and the impact to us is the impact of it pushing out a quarter or 2. So I think the diligence around the capital spending decisions has increased within our customer base. But also, I think a lot of the capital plans that we chase, there is a long gestation period on it anyway. And I think that's what has pushed a lot of the new awards around within a quarter in a year but also, as I mentioned relative to Oil & Gas, pushing it towards the 2012 timeframe.

And do you have any -- or significant backlog that's not burning?

No.

Okay. And on Kearl, what's the impact of the sort of the situations there with the modular transportation? And being back to you, I guess.

Well, that's not part of our scope, but it really doesn't have any impact.

Okay. And finally, just taking a stab at guidance. You are normally pretty conservative with guidance. Would you qualify your guidance now as normally conservative?

There's nothing unusual about our guidance this quarter.

That was an interesting way to put it, well, I'll give you that.

And we'll go next to Andrew Obin with Merrill Lynch.

My favorite question. On cash flow, we went back to burning capital on sort of working capital. Could you sort of explain what happened in terms of work in progress and receivables? And when do you think this will reverse itself?

I mean, what you saw and you saw our revenue burn and increase in the quarter over the prior quarter. And with that, you saw an increase in both accounts receivable and in work in process. Andrew, that's just a reflection of the growth we're seeing in the business. It's going to be a little bit lumpy. It's also impacted by where we stand on our collections with LOGCAP. That our LOGCAP contract also has some -- now it's a very overused word, but also has some very lumpy cash flows. Since the end of the quarter, we've had some significant collections on LOGCAP. And our cash position is back up to a little over $2.6 billion, about where it was at the end of the first quarter. So we've seen some of the receivables and work from process come down.

Just for the second half of the year, should we expect working capital will -- or working capital use to be a neutral, a use of cash or you think you're going to get back some of that working capital used that you had in second quarter?

I think given the growth we're seeing and the fact that, in response to an earlier question, I said that we would expect our revenue burn to increase as we go through the second half of the year. I think you could see a modest use of cash during the second half of the year. It won't be great, but it will just be modest.

Sure. And could you just comment about chemical opportunities in the U.S. going forward? I know U.S. is sort of not the most exciting market, but there's been some announcements in the industry. What are you seeing there a couple of years out?

Well, I just was being somewhat flippant about the U.S. economy, given the circumstances. There are some pretty good things going on right now. I think one of the projects that was mentioned is the Dow project at Freeport. We are seeing a larger level of study work in that particular market, but it's more around the downstream derivatives, which I think plays in well with our skill set. It's the de-bottlenecking of crackers, it's the monetization of that downstream and upgrading that production capacity, primarily given the change in the gas price.

[Operator Instructions] We'll go next to Robert Connors with Stifel, Nicolaus. Robert Connors - Stifel, Nicolaus & Co., Inc.: Just getting back to that $30 billion of TIC that's in feed right now in Oil & Gas, will that have to require a JV partner or any sort of M&A activity in order to book? Or do you think you can pretty much do it organically?

Well, I think we could do it organically, but I wouldn't say that we wouldn't look at JV partners in some areas. We've got some really good partners around the globe on certain projects, and we'll look to leverage that. But our ability to do it organically is not a limiting factor. Robert Connors - Stifel, Nicolaus & Co., Inc.: And then, can you just sort of give us a taste of what sort of end markets? Is it predominantly mostly going to be upstream related with a little slice of petchem, and maybe some refining? Just any color on that.

As I said, it's all over the board, and I think the way you described it is appropriate. It's mostly upstream, with really good prospects and projects in both petrochemicals and in refining. Robert Connors - Stifel, Nicolaus & Co., Inc.: And just sort of one more question going back to the comments on cash flow is, one of the good things about Fluor is that if you were to look at contract capital as a percent of revenue, it always hovers around a very low level. Do you see that changing much as you pursue more lump-sum-oriented projects particularly within Oil & Gas? Or does the working capital characteristics sort of stay the same at Fluor?

We don't really see it changing much. In fact, if we would have a higher lump-sum content, it would be even better. On lump-sum jobs, we tend to get advanced payments, on some jobs, you work on the client's money throughout the whole life of the job. Robert Connors - Stifel, Nicolaus & Co., Inc.: Would you also say you're probably being compensated, too, on the margin side? Where traditionally, you probably do more cost plus, but pursuing more lump-sum in the future, you're seeing better pricing on that?

Generally, yes, but it's all over the place. I mean, it's really hard to generalize on that.

The problem with how large and diverse we are, I mean, there's a lot of moving parts, and to give any guidance along one dynamic would be misleading because we really have a convergence of a lot of good things, I think, happening to us now.

We'll take our next question from Steven Fisher with UBS.

Mike, is there any carryover of the Power closeouts into the third quarter?

Not to the extent that we're seeing in the first and second, there'll be less.

Okay. So just a little bit then.

Right.

And then, David, on the competitive side, how much of a factor do you think flexibility on terms and conditions is in winning new contracts in today's environment relative to offering discounts on price?

We've seen some -- if you go back a little bit of time, we saw some pretty interesting things around terms. That's moderated. And I wouldn't suggest that anything we're putting into our backlog today is much difference from a term standpoint of what we've historically seen. We have seen an erosion of margin availability, but I think as we get through this year and into next, you're going to start to see that leverage pick back up and see some better opportunities. But as I've said previously, I'm pretty pleased with what's going into the backlog right now as we start to work towards 2012 and '13.

Okay, so no material trade up in risk in exchange for kind of holding pricing sort of...

No, no.

We'll go next to Chris Wiggins with Oppenheimer. Christopher Wiggins - Oppenheimer & Co. Inc.: Just a couple of quick ones. Did you buy back any shares so far in the third quarter?

No, we have not yet. Christopher Wiggins - Oppenheimer & Co. Inc.: Okay. And you'd called out some increased capital spending in the Government business in the quarter. Does that continue into the third quarter? Or have you kind of wrapped that up?

We had a roughly $100 million of CapEx in the second quarter. And that's really not in the Government business. That's in our American equipment business. That's in Global Services. Christopher Wiggins - Oppenheimer & Co. Inc.: Okay. And then just one last one. It looks like there was a risk added in the Q about uncertainty of past or future acquisitions. Is that just a new generic? Or does that point to anything specific?

That's just generic risk. We take a close look at our risk factors every quarter and we'll update them as appropriate.

We'll go next to Sameer Rathod with Macquarie.

Some of your earlier comments indicated that projects were getting pushed out and delayed. Given the murky macro picture, can you indicate what you're seeing today? How it compares to what we saw in 2008?

Well, I think there's more surety today than there was as far as new awards. I mean, you got to look at what we were earning in 2008, we're basically taking in the backlog in '06 and '07. So if I compare it to the '05 timeframe, it feels about the same. But the things that were coming in the backlog in 2008 were what we were earning on it, it'd come in a prior time. So I don't think that from a macro standpoint in the markets that we are in that are really moving the needle that we see much change.

And we'll take our next question from Will Gabrielski with Gleacher. Will Gabrielski - Gleacher & Company, Inc.: You made a comment on M&A and technology, and I wanted to know if you would just drill down a little bit further into that, because it runs counter to historically your view on technology and your idea of being agnostic. So I'm just wondering, is there's something that's changed in the specific end market? Or something that's come across that's more intriguing to you about that?

Well, I don't think we've necessarily changed that agnostic approach. I think we're looking at some things that, with a fresh pair of eyes so to speak, and in certain places, I wouldn't want to be specific about that. But by and large, nothing that we're looking at would demonstratively change the way we look at technology ownership. Will Gabrielski - Gleacher & Company, Inc.: Okay. And if you'll allow me, on the P3 market, it was something that we talked a lot about last year. It hasn't been much talked about at this year. Just any updates on your pipeline and opportunities?

The pipeline is still healthy, it's just these are just very long development cycles on the P3 side. The one thing we talked about was I-95/395 that we think has a good chance of closing in the fourth quarter. We still believe that's the business model of choice for those kind of infrastructure projects that are out there. But our growth currently in I&I is really been on the Mining side as opposed to P3 side. But the P3 side pipeline still remains robust.

Ladies and gentlemen, this concludes our question-and-answer session. I'll turn the call back to David Seaton for any closing remarks

Thank you, operator. I really would like to thank everyone for participating in this call this afternoon, specifically given how the day went. I'm sure you're all headed to the cocktail hour. But as we've indicated, I think, in the prepared remarks as well as in the Q&A, we feel very good about the strength of our results for the first half of the year. We continue to look at a number of opportunities that will position our company for growth over the long term. Again, we greatly appreciate your interest and your confidence in our company. And with that, have a good day.

And ladies and gentlemen, this does conclude our conference. We appreciate your participation.