Good morning. My name is Rachael and I will be your conference operator today. At this time I would like to welcome everyone to the Jacobs fourth quarter earnings call. All lines have been placed on mute to prevent any background noise. After the speakers’ remarks there will be a question-and-answer session. (Operator instructions) Thank you. Ms. Patty Bruner, you may begin.

Thank you, Rachael. The company requests that we point out that any statements that the company makes today that are not based on historical fact are forward-looking statements. Although such statements are based on management’s current estimates and expectations, and currently available competitive financial and economic data, forward-looking statements are inherently uncertain and involve risks and uncertainties that could cause actually results of the company to differ materially from what maybe inferred from the forward-looking statements. For a description of some of the factors which may occur that could cause or contribute to such differences, the company requests that you read its most recent Annual Report on Form 10-K for the period ending September 30, 2008, including Item 1A, Risk Factors, Item 3, Legal Proceedings, and Item 7, Management Discussion and Analysis of Financial Condition and Results of Operations contained therein. The most recent Form 10-Q for the period ending June 30, 2009 for a description of our business, Legal Proceedings and other information that describes the factors that could cause actual results to differ from such forward-looking statements. The company undertakes no obligation to release publicly any revision or update to any forward-looking statements whether as a result of new information, future events or otherwise. Now, John Prosser, CFO of Jacobs will discuss the financial results.

Thank you, Patty. I will just briefly go over the financial highlights for the quarter and then I’ll turn it over to Craig Martin, our CEO for business overview. If you go to slide four on the presentation, the highlight sheet the diluted EPS for the year was reported at $3.21 for the fourth quarter it was $0.63. The net earnings were $399.9 million for the year. Our backlog came in at $15.2 billion and we continue to have a very strong balance sheet. We will be filing our 10-K by the end of the week so, you’ll be able to see the details of that when that is filed. Our cash balance are remains at $1 billion from about the same as last quarter, up significantly from the beginning of the year and we did include in our press release our initial guidance for fiscal year 2010, which is a range of $2 to $2.60. Going to slide five, looking at our 10 year growth history, this is the first year we did have a little bit of a downturn, but I’ll point out the bars underneath the graph, those bars represent the compounded annual growth rates for the past 10 years. The last few quarters we’ve been showing the five year growth rate, but we want to take a little bit longer view and to show, what we’ve done over a longer period of time. So these are all the 10 year growth rates, compounded growth rates over the periods ended the years indicated. Go to slide six, which is backlog. The year-over-year total backlog was down about a $1.5 billion to the $15.2, but professional services backlog was actually up a little bit. During the quarter we announced that there were a few cancellations, but it was primarily one cancellation, the total $320 million, most of that was in field services. There was about $265 million of the $320 million came from field services backlog with the balance coming from professional services. If you look at it for the total year, we had about $9 billion in cancellations that we’ve discussed on the various quarters and, of that $9 billion just about $200 million was professional services. So it was heavily weighted by cancellations in the field services arena. With that, I will now turn it over to Craig, to talk about our business overview.

Thank you, John. Good morning everyone. We’re going to take few more minutes this morning to talk a little bit about our strategies for growth and what we see as going on in our marketplace is going forward. So we’re going to cover these five bullets and I have slide for each one, so I won’t spend anymore time on slide seven. Moving to slide eight, we also want to talk about our relationship based business model. Our business model was driven a little differently than the industry and I think it’s important that we understand that. First, let me describe the types of business that we’ve identified here. We talk about transactional projects on this slide, you’ll see that predominately over on the industry model. Those are the big events, lump-sum turnkey projects, great big jobs and far away places for customers, you don’t know very well that sort of thing. There’s a lot of transactional work in our industry. Then we have what are called discreet projects, discreet projects are those where there’s a competition at the individual project level, but it is a combination of qualifications and price that drives the selection and a fairly high level of repeat business and then there’s the third category, which is the preferred relationship, long term relationships with clients, that overtime result in increasing share the customers wallet and a preferred position going forward. A limited price competition compared to the other choices, still some and mostly in terms of staying at market, but a business that has a little different perspective. Preferred relationships tend to be built on the back of what we characterize as base load business. That’s the work that goes on day in and day out, year in and year out, and it’s based largely on…

(Operator instructions) Your first question comes from Steven Fisher - UBS.

Craig, you mentioned there’s more opportunities for SG&A reductions, in the quarter it was flat with Q3 at $225 million on the lower revenues. Were there one-time or seasonal expenditures that offset other cost reductions?

The fourth quarter was a challenging quarter from a cost reduction point of view that there were some things that affected the numbers negatively. We try not to get into one of these, well, here is a one-time this and a one-time that and that excuses performance from one quarter to the next. So it’s not like we’re going to give you a list of all the challenges that we had in any given quarter, because we have them every quarter, but it was a little tougher quarter than some in that regard. It’s also historically a tough quarter, because it represents the end of the fiscal year, and so there’s always a challenge, as a sort of closing out the year and being sure everything is bowed and tied for year end. I anticipate though frankly we’re going to be able to do better in the coming quarters.

You think, we’ll start to see that in the fiscal first quarter?

Yes.

As you think about how 2010 could play out, I mean, is it your expectation that you would have more tailwinds exiting the year with stimulus and perhaps some broader business confidence or do you expect maybe some further headwinds as you get closer to completion on some of big North American downstream projects that have been going on in the last couple of years?

My view, and I’ll ask Noel to comment, but my view is that we should come out of the year with a good tailwind. Now, I’ll put a bracket around that by saying absent something bad happening, for example another banking meltdown because of the commercial real estate issues, which depending on who you listen to is either very likely to happen on not likely to happen at all, so, but absent some additional financial crisis that results in another sharp downturn, I’m expecting to come out of 2010 with a good, strong upbeat. Noel, do you want to comment.

Yes. I’ll just add to that Steve a little bit, the steep declines in the business climate as I see it from a little different perspective with the guys fighting it everyday, certainly the panic and the real uncertainty that existed six to nine months ago seems to be gone and so no one would call it a soft landing. I was thinking about that term this morning it’s probably not a soft landing. I think Craig and I see 2010 much the same way in terms of it is the year of consolidation it’s a year of as the markets start to pick up, and then the real question becomes when you get into ‘11, how fast does ‘11 really pick up and I don’t think that any of us are that smart sitting here today. So we see signs of stabilization all over the place and in the end markets I might add also.

Then just for projects that came out of backlog, is it fair to assume that some should be coming back in over the next year and, if so, what ways would they be different coming back in?

Well, it, individual projects, for example, the ones that cancellations are up in the oil sands in some of previous quarters. Many of those projects appear to be coming back and it’s a matter of what’s the timetable for when they’re going to come back, but most of those projects that got into backlog, their economics were not terrible by any means, they were just did market $40 and so we expect a lot of those projects to come back and frankly to come back in largely the same configuration as what we saw in the past, particularly with respect to the non-upgrading side of the oil sands. So the extraction side we think is going to come back just as strong and the projects that got canceled which that’s mostly where we were, will also come back. Up graders maybe not so much, the upgrading business maybe a little slower to come back, and some those projects may never come back. More broadly, as you look across other cancellations in the system, most of them were canceled for one of two reasons; either the economics did not work at lower oil prices and will work at higher oil prices. Those projects should come back or there was just a limit on how much money the customer is willing to spend. In the most recent cancellation of any size, which was an upstream project not in the oil sands, the issue really was the customer decided that incremental CapEx was not going to make the cut and so the overall CapEx budget didn’t have room for that project to me that means the numbers pencils and when the overall CapEx does have room for that project or some of the other projects get done, that project will come back. So long winded answer to for the most part I think the things that got canceled out of backlog, with the possible exception of up grader work in the oil sands are likely to come back in time.

Are you having to compete now for work that you already had in backlog and are that the pricing and margin terms or risk terms any different than when they were first in there?

That’s a yes and no answer. There are projects that we took out of backlog that when they come back we’ll have to compete for them over again and that wouldn’t be unusual, because in many cases the what happens in the interim is the mix of business of any individual company changes, you can find when a project comes back that Jacobs has a huge amount of work in that office or that location already and so we’re not perceived as being as competitive for the work or it might be different. A little bit it depends on the extent to which it is a core client involved, does the core client tend to bring the work back to us when they start the work back up and it will tend to be a little bit dependent it on what our workload looks like at the time they come back. So it’s kind of a mixed bag answer. To kind of poke at the other half of your question which is what are about margins, there continues to be pretty significant margin pressure on bid work. So if you look at that discreet projects part of our portfolio, certainly there’s significantly more margin pressure there today than there was two years ago and even in the preferred relationships, one of the things we have to do in preferred relationships is to be somewhere near market pricing. We don’t have to be below market or even at market, because we do get a premium for the work we do, but we can’t be 10% or 15% over market and hang onto work. It is just the procurement organizations for these big customers are way to aggressive and capable for us to do that. So even in preferred relationships, there’s some downward margin pressure. So some of gains we made in margins over the last couple of years, we’re going to get back over the next couple and that’s part of why we think that ongoing margin pressure will be a factor for the industry. So again I think there’s going to be a combination of factors that affect margins and private sector margins and I think that this is a specific to private sector discussion. I don’t think this is going to be a problem in public sector margins. Private sector margins are going to continue to have downward pressure all through 2010 and for a combination of the reasons that I just outlined.

Your next question comes from Andrew Kaplowitz - Barclays Capital.

Craig, so if we go back to last call, we talked about this pricing and competition question and I thought that the tone was maybe a little bit better than it is today around competition and pricing. It sounded like, you thought last quarter that margins could be a little bit better than maybe you thought in this downturn than in previous downturns and it seems like you’re being a little bit more cautious today. Could you sort of comment on that?

If I gave you that impression, I didn’t mean to. I do believe that for Jacobs, our margins will hold up better this downturn than they held up in prior downturns. I think that’s a combination of factors. It’s an improved motocross of business. The public sector business that we have is not nearly as margin sensitive. Your government pays whatever it costs. You may or may not like that as a taxpayer, but it’s a nice thing as a contractor. So I don’t want you to suggest that we think we’re going to go back to the margins of early ‘90s as an example. I don’t think we will, but we are still going to see private sector margin pressure and private sector makes up 60% of our work today from a revenue point of view, half of our work from a headcount point of view and so that margin pressure can’t be ignored. We’re not going to see the same margins today that we saw at the peak of the bubble.

What you’re saying is there’s no real change in what you see in the marketplace between three months ago and now, is that fair?

No. In fact, I think what we’re seeing is exactly what we expected to see.

So you made commentary about weaker markets in general maybe than some peers are seeing. I guess my question for you guys is, how much of the weak markets is because of certain geographic regions versus others like maybe you can characterize what you see maybe in emerging markets versus what you see in the U.S. and in Western Europe, excluding the oil sands?

We think about how best to say that. Let me just sort of start with the Middle East. When we look at the Middle East, it continues to represent a very significant opportunity for us in terms of growth of our business and it’s the kind of growth that we always said we want to achieve. So that’s the base load business built around the installed asset base, and then increasing our share of larger projects and PMC’s and feeds from export point of view. All of that from our perspective is working well for us and driving growth, I mean in fact, a hiring challenge for us to keep up with our growth in the Middle East, but there’s a lot of project activity that is just lump-sum turnkey, hard money bidding and in part of the spend right now is in that category. That’s not our game. Somebody here remarked the other day that every lump-sum turnkey project looks great at 30% completion, but not so great at 90. We’re not going to get into that business or put ourselves in that position. That’s part of my comment earlier about that. So if you take the Middle East there’s a chunk, a substantial chunk frankly of project activity that we choose not to go after and that may mean that our mix in that part of the world is a little different than some of our competition, who tends to go after that work if there’s nothing else available. As you go on around in India, we’re doing extremely well in India. The market is very amenable to our business approach. We continue to grow share. We’ve got a nice acquisition, that’s half made that we continue to move ahead with, probably close the second half of that…

Just a real quick question on acquisitions, because you mentioned them again, I think you and your competitors have talked about acquisitions and it just seems like we still haven’t seen a lot of activity. What’s sort of holding you back is it just these conversations take a long time because the targets want some evaluation that needs to be corrected overtime or what’s going on there?

I think from our perspective, these deals can take little time or a long time. If you think about the two deals that we did in ‘09, one was the deal up in Canada for the non-building trades, construction business, construction and maintenance business, small deal, done very quickly and just exactly what we needed. Contrast that against doing AWE, which took us five years to get done. One of the most grindingly painful processes I’ve been through in the acquisition experience. So, it’s deal by deal. What I’m excited about as I sit here right now, I’m glad we got those two deals done, they were good deals and there’s a couple hundred million dollars worth of acquisition there, but what I’m excited about right now is that there are some companies that are more volunteers and by that I mean, many of the deals we’ve made over the years, it has taken us ten years of coaching and relationship building before the deal finally shows up. What I’m excited about now is, as we’ve seen two, three deals that we’re looking at and discussing that we’d have been glad to spend 10 years to get done, but doesn’t look like we’ll have to. So we see that as a real positive in terms of acquisitions in marketplace. I can’t emphasize enough the fact that the multipliers are coming down and that even private equity is spending less, is a big plus. The north government deal in aerospace was about a ten multiple and those peaked at 30. So a ten multiple is a lot more really as we could actually make money at a ten multiple and we certainly couldn’t find any way that our shareholders would benefit at 30 and so the other side of it is that pricing expectations were not unrealistic right now.

Your next question comes from Richard Padgett - Morgan Joseph.

I wonder if you could maybe extend a little bit on Andy’s first question and just getting back to you I guess, your relative pessimism compared to some of your other competitors about 2010. I mean would you characterize it more that it has to do with your business model versus maybe your geographic or end market mix in that: A, you’re not chasing some of those big transactional projects and, B, maybe your insight into your customers, just given the preferred relationship model is maybe a little bit different?

Yes, just another great yes and no question. I do think that we’re pretty close to our customers and we have a pretty clear understanding about where they are spending money and what they see as issues, and our conversations with the big money spenders now, particularly, Fortune 100 sort of big spenders, suggests that we shouldn’t be as positive about their CapEx as it appears other people are. Now you could argue that that’s partly where, the perspective from which we look at their CapEx and there would be maybe some truth to that, but I don’t think I see a lot of enthusiasm in the board rooms of our customers, certainly at the senior management levels, for spending a lot of money. I do get to talk to a lot of senior folks, both in our customer group and in our supplier group and I’m not seeing a lot of enthusiasm in any of those folks. I do think also that there the business mix difference in terms of things like lump-sum turnkey also drives a difference in our perspective about how good the market is. When there’s lots of work out there to bid, right even though it is lump-sum turnkey and challenging, you can be pretty excited, right. All these projects look great right up until about, half done and then some of them still look great, because we have got some really good competitors who are good at doing that kind of work, but the fact of the matter is that when we look at that work, we sort of look at it longer term and we don’t think it’s very good work long term and so we don’t get very excited about it. So some part of my contrarians positioning here or some part of our pessimism flows from the fact that there is a significant chunk of work out there that while it is out there it is not very attractive from our business perspective and, I guess it is a function of what kind of business you want to run. We just don’t really like that lumpy, three good quarters and a bad quarter kind of performance.

Then getting to the guidance for next year, clearly it’s probably lower than a lot of people were expecting, if we look at 2007 where you did, around the midpoint of where 2010 guidance is, I mean should is this more or less a margin story where, back in ‘06 you had a little less than $10 billion in backlog and that translated to, $235 in EPS this year you have $15 billion and if you take the midpoint of your range, that’s $230. So is this just a different margin profile or are you just being very conservative about how these projects are going to flow out of backlog?

Well, I think what we’re trying to do is to be honest in terms of our perspective on the business and conservative in terms of our forecast, because that’s I think we think that’s the way you see us and we don’t want to suddenly behave differently, I can tell you personally I found the last couple, three quarters very, very unpleasant. I don’t like revising guidance, particularly in the negative direction and we don’t like quarter-over-quarter earnings that are going the wrong direction. So, this hasn’t been a pleasant year for us and we would characterize it internally as disappointing, even though it’s the second highest profit in the history of the company and so as we look forward, I want to try to balance this. We’re not anxious to put ourselves in the position where we were last year, where we got too optimistic at the beginning of year and chased it down all year long. All that having been said this is, our guidance is our honest view of where the business is. So, I’m also not trying to tell you don’t ignore our guidance because our guidance is our guidance. Does that make sense?

Your next question comes from Tahira Afzal - KeyBanc.

Just had a couple of questions, number one, if we look at the catalyst and, that you have in front of you in terms of your cash balances, in terms of your relationship models, how do we think of Jacobs in terms of relative performance going into 2010? What do you think makes Jacobs, relatively a good well-positioned ENC company going into next year if we sort of mix out the fact that, some of your might be positioned in more favorable markets at the end of the day?

I think you have to look at our business from the standpoint of its reliability, its repeatability, the fact that we demonstrated over and over again that we can grind out that, 15% plus compound average growth over any ten year period that you want to. I think that it’s always been the case when these recessions come through the system that we break early, usually earlier than our competitors and we usually power out of downturn early compared to our competitors. Will there be a competitor, who can ride through the downturn and not have been affected, everybody has been affected. So we already know that’s not the case. I think that our model is one that’s very positive for the long term investor in our company. I do think we’ve demonstrated over and over again notwithstanding anything else that we have the ability to take share in these markets and come out of these markets in a much stronger position and I have ever reason to think we’ll be able to do that again.

If you look at the argument that I get the most pushback on which is perhaps that you geographically are in places and on the downstream side and those are going to see secular headwinds for several years. Do you feel that as you look beyond 2010 and outside of oil sands which, I agree seems to be picking up? Do you see your downstream business and your business model really gaining traction and really reversing some of the downstream headwinds, especially on the domestic side, which seemed like they could go on for a little while longer?

I think that the headwinds that you describe, particularly the ones that are related to capacity, are going to be there for sometime to come, because I think there’s excess capacity and will continue to be excess capacity for sometime to come. So we’re not really basing our business on the need for new capacity. The opposite side of that is that the installed asset base in where we are geographically positioned. So let’s set aside our growth in the Middle East, or India, or China or any of those things for a moment. Let’s look at where we have big operations today. Our growth in those locations has lots of opportunity to increase our share roll it from the capital investment that’s necessary, both for maintenance capital and for environmental capital and while I doesn’t think there’s going to be a lot of capacity related capital in North America or Europe. I think there’s going to be a tremendous amount of maintenance capital and what I’ll call environmental or regulatory capital. The regulatory capital side of that, just if you start to think about all of the things that have been installed about greenhouse gases and carbon capture, means that those customers are going to spend enormous amounts of money in those locations and their invested asset base is so large. They are not going to walk away from it. So the net effect for us is, I think if we stay the course as we always have and position to have a commanding share in those markets, we’ll get a commanding share of that business and that will be a very positive growth factor for Jacobs and then we duplicate that model in the Middle East, and in India, and in China, and Singapore, and the other places where there are significant installed asset bases and we become sort of the ideally positioned competitor. There will still be great business for companies who want to do big events in far away places, because there will be big events work done. The number of places that we characterize as far away will tend to go down overtime. As you would expect, but I really don’t think that our geographic positioning long term is a big growth issue. It doesn’t mean there won’t be times in the cycle when the money is getting spent in far away places and we aren’t there, there will be times like that, but we’ll accept those for the longer run.

Craig, longer run would be five years plus?

No, I think shorter than that.

I guess last question is in regards to acquisitions. I think Andy mentioned this earlier on, but every quarter goes by it’s painful to watch all of that cash probably sitting and incurring very low interest income and I think I appreciate that you want to be conservative and disciplined, but how far do you see some of these acquisitions being from pretty coming through, given the fact multiples are coming down and perhaps some of these companies are perhaps becoming a little more desperate?

I can’t really say anything specific about, when I think acquisitions are going to get done. They’ll get done when they get done, but I’ll reiterate my enthusiasm for the amount of activity it’s in the market and the attractiveness of the multiples in terms of the businesses that are out there. At any given moment we’re evaluating dozens of acquisitions in today’s climate. It really is remarkable the difference today from a year ago. When could deals start getting done? I can’t say. I don’t think I’m supposed to say, even if I know, but I am very optimistic about our ability to get a number of deals done in a relatively short timeframe, whatever ‘relatively short means in that context, less than five years like AWE, for sure. I know that’s not a great answer to the question, but it is a pretty exciting time. For your purposes though, remember that with the way that intangibles are amortized and like the immediate earnings impact of acquisitions is not that great. It takes a little bit before the acquisitions really start to add to the about the bottom line.

I guess, I was looking at it more from the perspective of market positioning and, your diversification as you continue to grow and really taking advantage of some of the opportunities you might have today, given that you have been conservative in terms of the risks you’ve taken so far

Your next question comes from John Rogers - D.A. Davidson.

Craig, maybe when you went through the various end markets, my sense that is the chemicals business, the pharma bio business, you’re operating there essentially at a maintenance level now for your customers. It sounds as if the still is running off in expansion mode, but going towards that kind of maintenance mode and I’m trying to understand if that’s 35% of your business, how much of that is sort of maintenance capital work versus expansion?

Well, when I described base load as being 35%, 40%, that’s the maintenance capital part. That doesn’t have the project work in it. So as you look at the spectrum, maintenance capital and pharma bio is actually a fairly small percentage. That’s more projects driven. Chemicals are more maintenance capital driven, but there’s project work in all of these. Oil and gas and refining are a more balanced mix of projects and base load work. So I won’t agree with the statement that refining is going to sort of pure base load. I do think big event refining programs. So if you’re talking to somebody who really thinks it’s important when it’s $1 billions, I don’t think we’ll see a lot of $1 billion projects, but I think they’ll continue to be as a number of projects in the minus 200 range and lots of maintenance capital which is minus $10 million.

I think with the government and infrastructure, I mean that’s less of a factor. I mean…?

Yes.

Secondly, in terms of just the people that you have and that you’ve had to cut back, during this downturn, how does that position you for if we get an upturn in the market? I mean, are you going to be stuck in terms of bringing people back or how does that work for Jacobs?

I think the answer to that is no. We don’t expect to be stuck in terms of bringing people back. A substantial part of reduction in staff that we had up to now has been in the agency people who are working under contract. This is sort of the lifestyle they expect. They manage their lives and their finances accordingly. So, those folks are for the most part, available when and if we need them to come back to work. With respect to the permanent staff side of it, which we have had some reductions, frankly it appears to us as if we’ve had fewer reductions than most of our competition. Unfortunately, a lot of that stuff is in anecdotal information about somebody runs in and tells me XY Z just laid off X many people in X location. We have the sense that we haven’t reduced staff as much as our competition has had to reduce staff, which would suggest to us that when we need to staff back up, there will be plenty of resources available for us to do it. I’m not worried about not being able to catch an upswing because of staffing.

Then lastly, just in terms of your backlog and your booking activity, given that there’s appears to be excess capacity in this industry, should we be watching backlog as a sign that or booking activity as a sign that we’re in recovery, or do you think that they’ll improve simultaneously?

Well, I think that, based on quarterly reporting you may start to see signs at the bottom line as early as you same at the top line, but I think the top line still does lead a little in our industry.

There’s no reason to think it won’t for Jacobs?

Again the only caveat about that is the degree to which you need to separate field services revenue from technical professional services revenue, because field services revenue, that part of backlog could lambs so, I would not look at Jacobs backlog in one part, I would always break it into two.

Your next question comes from Michael Dudas - Jefferies.

Craig to follow up on your last comment, what you’ve said in the past is that the technical professional backlog is a key metric to focus on for investors and given what you’ve discussed with the environment, what is your expectation of what that number might be a year from now and what are the factors that may or may not get you there and is that one of the reasons why could guidance is conservative as you put forward?

We don’t forecast backlog, Michael, it is a great question that I really can’t give you a good answer to that I expect it to be more. I will say that much, but I do think that our technical professional services backlog tends to lead the business overall, and that, you’ll see some improvements in it as a pre-closure to significant improvements in the profitability. Now still has to be put into the context of reminding everyone here that there’s all kinds of revenues that go through our business that have lots of profit attached them and revenues go through our business that don’t have a lot of profits that’s term and projects where we’re in joint venture relationships where we get none of the revenue and a full share of the profit. So you can say all of those nice things about backlog, but unfortunately if we had a ton of backlog that was joint venture arrangements where we were 40% and the partner were 60%, the only thing in backlog would be profit and that would be very difficult for you to see in terms if that part of our backlog were going up rapidly, we’d all be really happy. Does that make sense you understand what I’m trying to say? It is only a very rough indicator of where the business is going.

The Northrop sale is that a business that you would have considered to look at and was the price or the size just too big for Jacobs is that kind of area with this conflict of interest issues that you want to take advantage of?

We would have like to have looked at it Northrop made the decision apparently to go to non-strategic buyers only.

Those sizes we not have dissuaded you?

That the size would have been, we would have had to take a really deep breath, about a deal that big, but I think we would have looked at it hard before we made a decision. I’m not saying we would have done a deal of that size, but it, we’ve done deals relatively speaking relative to our side that big the four was half the size of Jacobs when we did it and so a deal of $1.65 billion deal would not necessarily square us off. That was about revenue as well for Northrop and so it’s being afraid to do it no taking a really deep breath absolutely.

Your next question comes from Avram Fisher - BMO Capital Markets.

The oil sands, you talked about it in the prepared comments, oil sands and you compared it to what you were looking at two quarters ago, my question is how does it compare to what you were looking at, say, six quarters ago or more towards, when we were still in the peak of the bubble.

It has less of the bubble quality to it. So, at the peak of the bubble, folks were talking about projects that made I mean even at $100 oil made no economic stand and the oil get added to the list and if there is been something that I mean at least that there is moment time positive about in the oil sands is that I think the customers have more realistic expectations for what make sense in their business, right, is that what I think I characterize back in the bubble are maybe now that as a cowboy atmosphere. Does in appeared to be the case today. Right, much more reason, much more big oil like I will described it approach to CapEx that I think represents a decreasing likely sort of we are going to spend $1trillion day hear kind of cowboy. So as I look at what the guys are talking about today, if you take that $200 billion number that I mention. That’s it $20 billion, $25 billion spent annual clip that will be as good is the business ever actually got right even there was talk about lot more, but we probably won’t see all of the French players running in with their multibillion dollar investments. The overall number will appear little lower, but actually think that business is solid as it 2.5, 3 years ago.

I’ve heard essential event that some of the oil sands projects, the clients are looking more towards lump-sum turnkey up there, are you seeing that or fixed price work?

We haven’t seen it we’re positioned I think very well to take advantage of the markets, engineering side is dominated by cost reimbursable work, that’s of course our primary positioning, we’ll do a lot of maintenance work in Canada, obviously that’s not a lump-sum business. I think on the construction side, we’ll see a mix of lump-sum and cost reimbursable, obviously that will mean part of that work somebody else will have to do. The good news is that there is a limit on resources and we have a ton of construction resources in Canada. We’re one of the largest players in the country from a construction and maintenance point of view. So we’re going to get our share of the construction work just by virtue of the resourcing.

In terms of your mix, your revenue mix between private and public work? Where can that go could the private work slip below 60%? I mean do you aim for more balance in that market?

I think that the private work could slip close to 50% in the very long run, I have to tell you though, Avram and there’s two reasons why I think that’s a very long run discussion. One, the nature of the public sector businesses for the most part, we don’t see a lot of construction revenue and therefore those numbers tend to be all pro services or substantially pro services, not all. We see a lot of construction revenue in the private sector side and so, the business mix will be tilted that way for a long time, as long as we continue to penetrate the construction business at the rate we’re being able to do so today. So, that’s why I think the mix we’d like to have is on a going to more of a pro service business I think the mix we would like to have would be more in the 50/50 range and we’re close to that today.

With regard to the public work, I know you’ve talked about it in the past, is there any general way that you can talk about the margins between the public and the private side? .

The margins on the public sector side appear right this is gross margin now appear to be quite a, but higher than those on the private sector side and there are two reasons for that. One is that the private sector tends to pay for an awful lot of its costs as direct costs of the project, as opposed to as a part of overhead. So that’s part of it and then the second reason is that the private sector customer tends to be aggressive about how much overhead they are willing to pay and public sector customer does not care and so the net effect is that gross margins can appear to be quite a bit higher in the public sector work, outside the DoD, DOE stuff. Than they appear to be in the private sector. Now of course you have all the costs to serve, which the costs to serve are significantly higher in the public sector business, so when you get down to the net margin line, the difference is not so significant. Its still there public sector work is more profitable, but it is not nearly as significant as it appears to be at the gross margin line.

Then finally, I mean, could you sort of breakout a little bit how much of your backlog is stimulus related work?

I couldn’t give you a number. I think we reported 38 projects in the first round of stimulus. The Amtrak one that we press released is by far the biggest of those.

When that does start materially kind of to roll through your P&L?

Amtrak will start through this quarter.

Your next question comes from Barry Bannister - Stifel.

For some time I’ve been concerned about your margins and two or three quarters ago the learn earnings on a LTM basis were hitting 350, 360 you used the word bubble yourself. One of the charges that we do for the last seven years is that there’s a very, very tight relationship between the TPS percent of revenue and the gross margin of Jacobs. For the last two quarters as TPS has a surge several 100 basis points as a percentage of your revenue. You gotten no lift, you’re about a 100 basis points low on margin versus where you should be. So there’s something impacting gross margin, it just not hitting SG&A operating margin. Can you talk about that gross margin deficiency?

I have to sit back and analyze that on that basis a little bit. I can’t tell you with any certainty, why you would proceed there’s a deficiency there. We certainly don’t think there’s a deficiency in the margins we’re seeing out of the TPS business. Other than what we’re seeing in terms of overall margin pressure on a price sector side. So it’s a question on that I want to have to differ more detail answer to, but I don’t think it’s a fundamental shift in the business somehow.

Even on the private sector side, as we’ve focused on our G&A is goes done. Some of that reduces the gross margins on the public sector side, because we don’t have that there to give reimburse for it. So when it comes out of the gross margin, the G&A it doesn’t change our operating margins that much, but it does have an impact on the gross margin one.

Then you’ve always talked about a 15% long term CAGR and if I CAGR the EBIT since 1998 at 15% you’d be earning around 270, 275, which your guidance obviously came in below the consensus in 2010, but brings you probably close to towards the long term growth rate of EBIT. So should we assume that you’re still sticking to the 15% long term CAGR and what we’re really seeing is partly recession and partly mean reversion?

I hope a little of what you’re seeing is mean reversion. We don’t like the idea of that, but certainly we haven’t given up at all on the 15% compound CAGR. In fact we continue to believe that sort of the better is where we want to run the business and where we can and we’ll run the business going forward.

It goes back on a 15% CAGR this next year, if guidance is anywhere remotely correct even at the high end.

That’s right, we’ll converge back on it and if you go back at the slide right in front me, but if you look back about five years, we were at 15/1. I think if you look at this five, ten year cohorts, you’ll see that they go up and down from even maybe a little under 15% sometimes up into those mid 20s kind of a range. I think if you go sort of longer term lifetime members bidding on what years you pick, you can get in from 15% to 21%.

Your next question comes from Andrew Obin - Banc of America/Merrill Lynch. Andrew Obin - Banc of America/Merrill Lynch: Jeff, there’s a simple question. You answered a lot of the questions. I look at the earnings guidance, it effectively implies the run rate for the quarter, I don’t know between $0.58 to $0.65, so you were $0.63 in Q4, so should are you thinking that sometime in the middle of 2010 on a sequential basis, earnings were actually bottom. Is that for guidance implies, when I think about quarters?

We feel that we’re approaching a bottom and so that would be a reasonable kind of assumption, but frankly our crystal ball is unclear not to say whether that’s the first quarter, second quarter, third quarter, and fourth quarter. So as Craig commented earlier, I think certainly our view is that we are approaching somewhere in the near term or it should be a bottom. Andrew Obin - Banc of America/Merrill Lynch: Because there’s a difference in business model and you reliance on design, your relationships, what do you think as the lack between here and the rest of the industry in this timing when you guys going to hit the bottom versus the industry?

Noel, do you want to comment?

Sometimes the guidance that have portfolio of gigantic projects were lag is going down and then the other lag is coming out. Typically, if you go and look at the last three or four of these, second goal is that being form of alliance. We basically beat the industry out and I don’t know whether we go down a little faster or whether it’s a fact that we position ourselves well during the downturn. So we also go back to the four cycles that I’m talking about and we always gaining market share coming out. So it really repeats itself will be the first one out of the box. Andrew Obin - Banc of America/Merrill Lynch: Let me state one last question, this is maybe a nice question, but how easy it is to shift guys who will work on downstream projects. How we did this to shift them over a year or two to long term product to upstream project? How admirable you long term customers be to given you more work outside of their downstream, just to keep the relationship with you going forward? I’m talking about over the next three to five years.

First of all, our shift is relatively easy to make. Our peer scales that are different and you need to have a few people with those scales in order to make that shift. If the customer thinks your team is credible at the sort of leadership level and your company’s track record is credible. Shifting the bulk of the work force is not an issue. In fact we have a couple of major alliance customers who are talking to us about giving us part of their upstream portfolio, because they don’t have enough downstream work to keep our team busy and we see that as a real positive for two reasons. It’s a really cheap and easy way to penetrate the upstream business and it’s a good solid indication with our relationship with that customer is continuing to flower.

Your next question comes from David Yuschak - SMH Capital.

Just a couple of questions for you, as far as your multipliers on your engineering cost, what does that look like now compete with kind of multiply you achieving 18 months ago?

Again that would be very market specific. In some markets there’s been a little change. Most of the public sector markets are unchanged, except to the extent we’ve reduced costs and therefore get a little more multiply or consequents. In the private sector markets you’re seeing some downward shift, but even there it depends on the market and the geography. So you really can’t generalize with the number. It is not unusual to see 10% plus decline from peek to bottom in multipliers and say the refining industry that you can see more than that.

So the most part you say it’s still kind of relatively holding up though…?

What I’ll say is that in some market, probably second markets for example, we’re holding up by no change. Some private sector markets, pharmaceutical, pulp & paper, it’s not changing very much, but in other private sector markets particularly heavy hydrocarbons, there’s significant downward pressure.

Could you just maybe give us an update on how you see the multiple projects working out at this point?

It’s going to get done. They’re going to make a lot of gasoline. I mean I know that it sounds like a thesis statement, but the project is going well. We’re meeting the challenges that the customer set for us. I’ve got Greg Landry here, who is the executive responsible for that project. Let me just ask him to comment.

As we look at the project to-date, we’re still shooting for the number that we set on revised number that we had refreshed out of the project and were it went to. The construction resources are available. The marketing shift on construction resources to where we are having better pricing in that area. So at this point in time, the project is on its way and looking for a schedule completion in another year or so.

Thanks Greg.

One last question, just on your own CapEx spending, how do you see next 12 months for you guys in terms versus…?

We think CapEx will be fairly low with the next 12 months. During the bubble, we bought lots of computers and lots of debts and we won’t have to buy a lot of computers and a lot of debts in the next 12 months.

Any excellence, but how around them might be?

I think, I saw a forecast it’s probably going to be half.

Your next question comes from Peter Chang - Credit Suisse.

You mentioned earlier in your prepared remarks that multiple expanding is slowing down. Is that just a slow in CapEx from your customers and when do you think that this will start to pick? I think on the last call was characterized as $3 billion to $4 billion in spending in 2010?

If I said it’s slowing down, it has yet started the issue. We are still expecting to start to see that expenditure in 2010. Our guys still believe that $4 billion number is a reasonable number. Remember, that the total from our poll is something north of $80 billion. So it’s a big expansion program longer term or environmental program as we look at it, but we expect to see initial feeds and those kinds of things start to drive the business in 2010.

I guess, one more question on acquisitions no that you guys have had enough, but as far as the acquisitions into China. What kind of markets are you trying to get into it? Is it going to mirror sort of the pie chart I believe is on the slide seven?

Yes.

Would you do that through joint venture arrangements or just straight up acquisitions?

Overtime, we expect our business to mirror that pie chart, everywhere we do business. So our objective is to get that geographic diversity and get the market diversity in those geographies. In China, we’re going to be driven as we always are first and foremost by our co-clients and their investments and what their asset tool is on the ground. So I think things like pharma and chemicals will tend to drive our business in China first, although we do have a budding infrastructure in buildings business, particularly at Hong Kong and Shanghai. Some of that will be based on acquisitions, we’ve already made. Some of that will be based on just bootstrap organic growth. Some will be additional acquisitions and I would rule out joint ventures. Although, frankly joint ventures are not normally our long term strategy for penetrating market. Again, China is a little bit unique. We’re still looking at options that might make sense. We certainly see some opportunities to take the interest in companies from an acquisition point of view, that would be attractive, but there maybe other things we need to consider as we go along.

Your next question comes from Will Gabrielski - Broadpoint.

A couple of questions, one the Suncor CapEx update from last week. So that have any impact on what you have in backlog today or did their commentary have implications going forward, what you’re expecting?

Actually, we thought the Suncor update was pretty positive and for the most part, it was consistent with our expectations. We had a little side bit going inside the company about whether the Four Hills work would beyond it or not, those we’re seeing and testing one to bet, but in other words anything surprising about it, certainly nothing negative from our perspective.

Typically quantify to say, but I’m curious, can you help us understand. How much oil fence work is in backlog today, as a percentage of total backlogs?

We are typically breakdown our backlog markets in touch, but so I really can’t give you the specifics, but probably, when you look at our upstream, it probably causes mere as little bit about what the revenue mix is again break it down between Canada the other places.

The fire backs three, specifically I’m curious, do you have any exposure of that project and thus the mid October re-tender and then announcement this week from a company called Aecon on the mechanical engineering side and what I’ve read is that takes some work kind of probably this well. Does that have any implications, so you may have been doing in that arena of that company?

Obviously, we don’t talk specifically about our work with any customer. We have a great relationship with Suncor. We expect to continue to have a significant share of their work. We’d like not to have Aecon to that anybody involved, but I don’t really think that’s realistic.

I guess, I just really don’t have good hands on what your exposure to fire backs three may have been in the past and whether or not that maybe one of the projects cancelled from backlog. I was trying to get any answer on that?

I really can’t disclose anymore in the customer components early issues.

The question from DOE side, I was wondering, there’s a few bigger program that looks like coming up for bid this year. Any expectations or any particular projects that you’re focusing more on then say others?

I would say that what we do in all those cases is we’re evaluating projects opportunity-by-opportunity. There’s a fairly healthy list of DOE and DoD project that we’re chasing. We don’t say, which ones are which till after we won them, but I agree with your assessments that there’s pretty good opportunities out there and we’re confident where we in our share and maybe a little more.

In terms of environmental management stimulus funding, has all that been booked at this point, somewhat coming out the stimulus package or their incremental words that will see come out overtime?

I believe, there’ll incremental awards, there’s a significant amount of while our characterized timely a discretionary stimulus money and environmental management and where it get spend is yet to be determined.

In the Middle East, I’m curious, one, the relationships with Abu Dhabi and the chemical side and two, just in general headcount trend there, where you are today versus a year ago and what do think that might look like 12 months from now?

Our headcount trends up, I don’t have he numbers right front me, but we continue to see growth. I think we should start to push forward 1500 to 2000 people in next couple of three years. So we’re well ahead of schedule in terms of what we think we’ll see in the Middle East between Saudi Arabia and the Emirates.

The EPS guidance for fiscal 2010, we don’t capture basically, is that the earnings power of the relationship driven non-discrete, non one of project. Is that the earnings power of the core business excluding all those projects, the mega projects you put in the last few years in North American downstream?

I’ve never thought about it that way, but I’ve to say no. I think the vast majority of the earnings power of the company is in that relationship model, remember even discrete projects are repeat business. That’s at the slow grinding process of converting short term discrete project clients in the long term relationship clients. So at last a very big project work comes out of the relationship. So the relationship based business and the base load business intersects, but they’re not the same things.

I guess, if I asked another way, if one assumes that the North American mega project, refining projects reserves in the past few years, did not repeat with or without macro crisis. Somewhat if said to BP enlightening project is probably the last big North American refining project we would see for sometime. If I exclude all of those big projects, what would the core earnings of the business have grown at over the past few years, maybe now obviously not seeing those awards, because that’s what I think they are talking about in terms of new version to that 15% CAGR?

We were delighted to have some of the big refinery projects in some part of those in our backlog. BP enlightening was not a huge number for us, material is obviously a pretty significant number, but I think the contribution of those big projects, while it’s significant wouldn’t move us back to various mean or well build the P&L numbers technically. Our business doesn’t make its big money on big events. I could draw your graph we had video conferencing today that really characterizes our business works, but we’re built to make money starting on very small projects and it continue to make money all the way after this spectrum of work we do. We don’t need big events to drive our profitability and would different than most of our competition in that regard, most of our competition it’s big events that swing the profit numbers one way the other we just not that way.

What I’m trying to illustrate is, what contribution that those mega projects that you happen to booked as a result of a North American refining cycle that may not repeat have on the EPS growth rate and now we’re sort of just getting back to, this is what kept us well and if there’s not a North American refining cycle with mega projects in it, this is what the business will look like and now we can grow to 15% CAGR from this level plus maybe a little incremental growth for economic recovery.

Again, I don’t think those mega projects had it’s not in significant, but it’s not huge difference on the P&L. If you think about businesses like that, look I don’t know how to do this exactly, but let me try at this way. Let’s say that you had a $3 billion project that went through the company’s books over three years that will be a big event for us. Let’s say that, after tax profit on that business were 3%. So, that met $90 million went through the company’s books over three years or about $30 million a year. It’s a significant number, but that isn’t the driver that makes the difference between $400 million and $450 million in bottom line numbers.

No, it does, but if there is a few of those running at the same time, I think say, I think it would have maybe 10% impact on the growth rate or some in that effect.

I look forward to the day, when we have many of those running at the same time in addition to our base, forward today we consider $1 billion business a base load project, we got a few years of those to go it and it really is, our business just made up of 1,000s and 1,000s of projects the average project size in the company is a $1 million of where about maybe a little less. We make a little money on a lot of projects and so while those big projects going through the system are nice to have. They’re as lucrative nor they have a biggest swing of impact on the bottom line for us as they do for commit use business that is do those big events.

Okay I think we’re saying the same things with different ways, I appreciate the color thank you.

I certainly you think your point as well made.

Your final question comes from [Minshew] - FBR Capital Markets.

Just a quick question on you guidance range, so obviously it’s a pretty large range $2 to $2.60, putting word assumption you were making in terms of market trend on at lower number versus the higher number? In other words, do you still need stimulus to pick up and we need the environment to improve a little bit to get to that $2 number is that a pretty good base case given your current backlog?

It will be book in record, but we don’t give guidance within the guidance, so taking in our expectation in the market and what the range of activities and possibilities might be. We expect that we will be somewhere between $2 and $2.50, there is a lot of other factors in there is due as well, as far as G&A costs and such like that, where we’re not going into what individual assumptions are they and what they have to be in order to get the one level or two another level.

At this time there are no further questions.

Alright, we’ll take that as a good time to break up the call. Thank you all for your interest in the company. We appreciate your listening and we appreciate your taken the time to consider what obviously as a little bit of contrarians position about what the markets are. I will say, we continue to be very, very confident about our company, our positioning in the marketplace and our ability to deliver on our promises of growth in the long run and I look forward having the opportunity demonstrated to you. Thanks again everybody.

Thank you, ladies and gentlemen for your participation in the Jacobs fourth quarter earnings call. You may now disconnect.