Good morning, and welcome to the Jacobs' First Quarter 2011 Results Conference Call. [Operator Instructions] I would now like to turn the conference over to Patty Bruner. Please go ahead, ma'am.

Thank you. 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 actual results of the company to differ materially from what may be 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 earnings release and its annual report on Form 10-K for the period ended October 1, 2010, including Item 1A, Risk Factors, Item 3, Legal Proceedings and Item 7, Management's Discussion and Analysis of Financial Condition and Results of Operations contained therein 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 revisions or updates to any forward-looking statements, whether as a result of new information, future events or otherwise. And now I'd like to turn the call over to John Prosser, CFO of Jacobs, to discuss the quarterly results.

Thank you, Patty. I will go through the financial highlights for the quarter, and then I'll turn it over to Craig Martin, our CEO, for the full review of the business strategies and the results of the quarter. If you go to Slide 4, this is a summary of the quarter. Earnings per share were $0.52. Net earnings of $65.8 million. These results included costs of $5.5 million after-tax or $0.04 related to acquisition costs that we incurred during the quarter. Backlog. We ended the quarter with Backlog of $13 billion. Our balance sheet continues strong. Net cash was actually up from last quarter at $957 million. And as we had in our press release earlier, we are raising our guidance for the year to a range of $2.40 to $2.85, and this increase includes the effects of the Aker Solutions' acquisition that we previously announced that we hope to close here in the next week or two. Moving on to Slide 5. This tracks the 10-year history of our earnings. I think the important thing is looking at the bars underneath the graph. If you look at the 10-year compounded annual growth rate, we continue to be able to meet the target that we have put on ourselves of a 15% earnings growth rate and even through '11 with the last couple of years being more difficult through the recession, we're still showing over 16% compounded growth rate. Moving on to Slide 6. And I can spend a little bit more time on this slide, because we did make some adjustments in Backlog this quarter. As I said earlier, the Backlog finished at $13 billion. This was down slightly from the prior quarter where it was $13.2 billion. But during the quarter, one client informed us that they were going to do some of the procurement, a pass-through cost on a direct basis and so took that out of our scope. So we reduced Backlog by about $450 million. So important to note that these are just pass-through costs, so the margin related to the activity of doing the procurement will still be going through our books as we assist our client in doing the procurement. But the pass-throughs will just be removed and won't be to revenues. The more important figure and as we've been talking for a few quarters is the professional services backlog increased nicely. It went up to and finished the quarter at $7.9 billion compared to $7.6 billion last quarter. So we're seeing a nice pickup in activity on the professional services side of the business. And as we've talked about in the past, that really is the precursor for a broader range of activity going forward as the professional services design and turns into construction a number of our business groups. With that, I will turn the call over to Craig to give a review of the quarter.

Thank you, John. Good morning, everyone. I'm going to take a few minutes to talk about our strategies for growth and also to update you a little bit on some of our acquisition activity in the last quarter. I'm going to spend some time on our business model, but not so much. I think most of you have heard that before. I'll touch on it briefly on the next slide but then we'll move on. I'm talking about selective market diversity as well, and I'll take time in that section to talk a little bit about what we see going on in the markets. We're going to go ahead and talk about our growth strategy. I'll discuss our multi-domestic strategy as a part of my discussion about the Aker Solutions' P&C acquisition. I'm not going to spend any time on driving down cost continuously. I think we've told you many times how important this is to our business and how effective we think we are at it in general. But it's always a challenge to get your margins up and your costs down in difficult markets like this one. And then I'm going to talk about the Aker acquisition in some detail. But we made several other acquisitions at close during the quarter. And I'll mention those briefly as we go through our discussion of the markets. Turning now to Slide 8. This is our conceptual framework for the industry business model and our business model. The industry, as far as we see, continues to be very event-driven. So the industry is focused on transactional projects, big, lump-sum turnkey projects, big events in faraway places. A lot of that just comes from the history of our industry, because a lot of the businesses that started out in our industry started…

[Operator Instructions] Our first question comes from Jamie Cook from Credit Suisse. Jamie Cook - Crédit Suisse AG: One, John, I was hoping you can provide a little more clarity on what your assumptions are for Aker in terms of what you're assuming for the year, because I'm just trying to get a feel for, is the raise all the acquisition, because you're incrementally more positive on the markets? And then Craig, I guess, your commentary across oil and gas was very interesting. You gave us some color on the chemical side, but on the other businesses, whether it's oil sands or refining, is there any way you can put into context the level of bidding activity you see today relative to where we were in the prior peak or how we think about that technical services order growth continuing? Any more color on that would be helpful.

On the first part of the question about the Aker contribution and the guidance change and such, it was the substantial part of any consideration. But that you got to remember that, that also includes the cost of the transaction and the integration and the impact on the overall. So we've already seen a little bit of the negative impact on the first quarter, but there'll continue to be costs this quarter as we get through the closing and then as we integrate. And then you always have the effects of the purchase price allocations. So the intangibles and amortization of intangibles. So we think Aker is a very positive move on our part. But the impact for the first couple of years, few years, is not as strong as it will be down the road. Jamie Cook - Crédit Suisse AG: But net-net, it sounds like the majority of the increase all-in-all is more Aker versus the organic business.

That's probably fair. We normally wouldn't be changing a lot of our just base assumptions this early in the year as we go through. So you'd have to say that the primary driver for the change is the Aker deal. Jamie Cook - Crédit Suisse AG: And then Craig if you could just comment on the latter part of my question.

Let me make a quick comment about the earlier part. I think John's right. I think though that one of the most positive things that comes out of the Aker deal is a higher confidence in where things are going overall. As John pointed out, there's lots of issues with amortization of intangibles, with the difference between tax and book accounting for acquisition costs with integration and transition. So Aker doesn't contribute as much in the first part of the cycle of acquisitions as it will later on, but it does give us a little more confidence in our position over all in the marketplace. Going on to the color on the markets, the order book or release -- I shouldn't say the order book, let me talk about the prospect list. The prospect list in Upstream Oil and Gas is significantly up from the prior quarter and probably -- I'm kind of looking at our sales guys here, maybe where it was in Q2 '06 kind of timeframe?

78% of the peak.

It's not at the peak level yet, but directionally it is going in that way. And so we're pretty upbeat. And then that's mostly an oil sands conversation, obviously, because we're still mostly an oil sands player. Jamie Cook - Crédit Suisse AG: And what about on the refining side?

On the refining side, I'd say we're still pretty far back in the cycle. But it's interesting. One of the guys said he estimated that our prospect quality -- or number of prospects, I should say, has tripled quarter-over-quarter. So we're still a long way from the peak cycle in refining. I don't see a bunch of multi-billion-dollar investments in Europe or the U.S. Although I do see a lot of activity in the Middle East, India, and perhaps even some in the Far East that will be accessible to Jacobs as we go forward. But I don't think we're anywhere near the sort of boom refining period that we saw through 2007, 2008. That's got a ways to go, but that's runway. Jamie Cook - Crédit Suisse AG: But it's clear to say you're calling the turn here.

Well, it sure looks that way right now. I mean, always sort of blanket all the comments whether I'm positive or negative with, it's an uncertain world out there in many, many ways. But the evidence we have suggests that the markets are improving distinctly in a number of key businesses for us. And I think I characterized those in my previous comments. Jamie Cook - Crédit Suisse AG: Well, if you're cautiously optimistic, that makes everyone feel better because you guys are usually the more conservative guys out there. And then the last question, some of your peers are commenting on the competitive environment improving or capacity tightening. Are you seeing that yet or is it more a function of you just don't think things will get worse type of thing?

Well, I think, the challenges that you see in the numbers are what we've been saying for some time. The market clearly has been tough. Unit margins have been bid lower, and we saw some of that come home to us in this last quarter. On the other hand, billable hours are up and that usually is a precursor to price firming. Jamie Cook - Crédit Suisse AG: How much are billable hours up?

They're up modestly, in the single digit percent. So I'm not going to give you more data than that. Jamie Cook - Crédit Suisse AG: And that's year-over-year or sequentially?

Quarter-over-quarter.

Our next question comes from Scott Levine from JPMorgan. Scott Levine - JP Morgan Chase & Co: Diving in on the margins a little bit, I think, Craig, you just mentioned that the P&L reflected some competitive pressure. I just wanted to be sure that I heard that right. And then maybe if you can characterize what your expectations are there, because you're down a little bit sequentially. There were some one-off costs perhaps in the quarter. But if you can comment specifically regarding margins. And maybe as the follow-on, your indication that an uptick in billable hours here are sustainable should suggest margins should hold here, maybe improve a bit as we go through 2011 and beyond.

Clearly, the margins, as Craig said, are still under pressure. So we are not going to see any great rebound in those. And in fact, as we've been saying, there still could be some softness and such in the margins even as we start ticking up the hours. The hours always lead the recovery and as we start working those off and the market starts firming, then the margins start improving kind of after-the- fact. Now we are continuing to see a shift in mix more towards the professional services which tend to have a little bit better margin than the field services. But even with that, I would say the margins for the next few quarters still will be under pressure. I think we still believe that they're not going to be dramatically different than what we've been seeing, but they still could be down a little bit. And that as we -- the first rebound will be from volume and then the margins will follow. As we bring Aker in, that mix will change the percentages a little bit too because some of the costs that come in with that as far as the intangibles and such like that have a bigger impact on the margin percentages as well. And this will be one of the larger acquisitions we've done. So the impact will be a little bit more noticeable than what it would be from the smaller ones we tend to do over the last couple of years. Scott Levine - JP Morgan Chase & Co: And then maybe following on that last comment, John, on M&A so if this is a larger deal, there's more of an integration process here. You take your foot off the gas in terms of your focus on M&A in any way, shape or form or not. I'm guessing no. And if you can maybe update us on what your priorities are and in terms of your M&A program at this point.

Well certainly we are still very focused on M&A. We think the market is still very receptive for deals. There's opportunities out there, both small deals like we talked about where Craig talked about four or five that we closed this last quarter. It ranged from some very small to something a little bit bigger. But we need to focus on the acquisitions when they're available. Aker will take some cash out of our tail, but we'll still have significant amount of cash available for doing the right deals. And with our strong balance sheet, we have the ability to borrow and to do any -- whatever deals that we think would be appropriate for us. I think Craig mentioned a couple of the markets as he went through the markets, certainly the Upstream Oil and Gas business is one that we've been looking at. The Government Services business still seems to be -- have opportunities. And as we did this little deal, the water, the expansion of our Water business, other infrastructure both domestically but, more importantly, globally are still there. And we still have the expectation that this next year we'll be doing the next step in the CES deal in India that we've talked about in the past where we have an investment. And that opportunity will be to take a bigger piece. So that's more of a geographic infrastructure market. And the opportunities in the Middle East continue to grow. And we think that, that's -- there's some room for maybe some consolidation and diversification in that region as well. Scott Levine - JP Morgan Chase & Co: One last one quickly, Craig, you mentioned some of the markets you're more positive on. It sounded like you're a little bit more guarded incrementally on the infrastructure market. Could you just indicate whether that's correct perception. Or if not, provide a little bit more clarity in your comments there, particularly on transportation.

No, I definitely am a little more guarded about infrastructure right now than I have been. The new Congress doesn't seem as willing to push that agenda forward, as I had hoped they might be. And we're, of course, still seeing lots of tax shortfalls in the state and local level. So as it relates particularly to transportation and infrastructure, I'm probably a little more guarded than I was even a quarter ago.

Our next question comes from Andrew Kaplowitz from Barclays Capital.

So Craig, when you closed the Aker business, I know you mentioned that it's not transactional in nature and you're not going to become more transactional in nature. But I can't help but think that, especially in the downstream area, it's going to strengthen your business and allow you to compete for larger EPC projects or EPCM. Is that there? I mean, is that one of the reasons to acquire that business? And what is the overlap in that business?

Well if you look specifically at the chemicals and refining piece of that business, it's mostly chemicals and not so much refining. They have a strong position as a licensor for some key technologies that are pretty popular in the world right now. So I think it does a lot towards accessing more of the chemicals market as a front-end and PMC contractors. I don't think that changes our view that we don't want to be in the transactional side of the business. But there's no question that this acquisition on the chemical side in particular, gives us access to more of the market and a better position in it. So that was a plus. Over and above the geography in the mining and metals business as we look at this acquisition.

Craig, isn't the margin of this overall Aker business higher than your core business? I mean, forgetting all of the amortization of intangibles as we go forward, isn't the margin a bit higher?

I would say probably not. I think you have -- you heard our friends at Fluor Daniel talk about the fact that the margins in the mining and minerals business are not as good as the margins in other businesses that they serve. And I think we'll find that to be true as well. Remember, we are a pretty fierce competitor. So if they don't like the margins now, they're not going to like them at all later. The other businesses, I think probably we do have a little better margin profile with their portfolio as you look at the chemicals business. And so that will be a plus from a margin point of view. I think they do a little better than we do. And on the energy and environmental side, I'd say they're about equal. So I don't expect it to have a big impact in terms of percentage-wise or gross margins as a percent of revenue than our base business does. It would be pretty close to the site.

Is that mining business of Aker? I mean, does it depend on whether it's services or sort of EPCM? So is it more EPCM these days? Conservatives have much higher margins as you know so I just [ph] .

It's both but it's probably more EPCM than pure services. The good thing about it is that it is key client relationships that are very strong. And a lot of the business that they do is at locations where the development program is going to last decades. So we like the shape of that business very much.

One question sort of on the pipeline. New awards have been sort of steadily improving over the last two quarters. And so I guess as we look forward, it seems like your confidence level of backlog growth and PPS has risen. Is that fair? I mean, I know we'll expect some lumpiness, but generally speaking as we go through the next couple of quarters, would you say the core business should still have nice PPS backlog growth?

I think the PPS backlog growth is likely to be good. I'm pretty optimistic -- honestly, I'm pretty optimistic is an exaggeration. I'm a little optimistic about that part of it. I think on the field services backlog, however, we're going to continue to face a headwind. We've got a little more Motiva to work off, and it'll be a while before these EPC and EPCM projects go from fee to full service. And so I think you'll see an ongoing lag in field services backlog. That may mean net-net that total backlog doesn't show a lot of growth. But I think on the professional services side, I think we're starting to see a lot of reasons to think that, that's going to get better.

Our next question comes from Yuri Lynk from Canaccord Genuity.

Back on the Aker acquisition, can you just highlight on the mining side what product lines Aker specializes in, in terms of gold, copper? Is there any potash in there? And can you give us an idea of who some of the -- what the client base looks like in terms of is it mostly Tier 1 mining clients were Tier 2?

I want to ask Tom Hammond to respond to that question. Tom led the due diligence on the Aker deal.

The end markets for Aker's mining business would be your base metals, copper, zinc, lead, typically found -- oftentimes found together. Precious metals, both gold and silver, either directly as a gold project or as a byproduct for base metals. And also they have a very nice position in uranium. The client mix are mostly names, almost entirely names that are very recognizable, BHP, RTZ, Anglo American, Vail, and in Chile, in particular CODELCO, obviously, which is part of the reason we were so attracted to the deal is that the scale of the operations of the global mining houses is very attractive to Jacobs in terms of having core client strategies.

On the purchase price, can we assume that, that was all cash or were there some shares?

Yes, it's all cash. We will be doing some short-term borrowings because, as you can tell from the geographies, this is a fairly complex organization and, in some cases, we'll be borrowing in local jurisdictions to do the acquisition to hedge against currency fluctuations and such. So there will be some borrowings, some cash. But we'll still have a nice net cash position after the deal closes. And there is no stock involved in it.

Our next question comes from Steven Fisher from UBS.

What did acquisitions add to backlog in the quarter?

Well with the five or so that we talked about, it came in just under $100 million, mostly in the pro-services side. TechTeam was probably the biggest of that group, the others were all pretty small.

And then on the $459 adjustment, what stage of completion is the project in that, that adjustment related to?

Well this project is still in the front- end design portion, and these were the procurement activities that would go with some of the front-end. The pass-through cost related to materials, equipment, I guess some subcontracting but mostly materials and engineering equipment that would get ordered early on in the process, so I don't even think this one is out in the field yet. It's very minor, so it's very early in the process and the part that was taken out just relates to the procurement activity for the pass-through cost of that equipment.

And then Craig, you mentioned that things are clearly finally getting better. In order to hit the midpoint of your guidance, I think you need to ramp up to around $0.70 per quarter on average for the rest of the year. I was just wondering, where do you see that ramp-up coming from? And do you think you can get there with what we're seeing, 5% to 10% sequential growth on bookings?

Well obviously, we wouldn't have our guidance where we were if we didn't think we could achieve the guidance. It's still a wide range of guidance for obvious reasons because there's still uncertainty in terms of where the markets will take us. I think back to the basic point, yes, we are more optimistic about the markets going forward and more confident about our ability to see good growth. But beyond that, we're not going to try to give guidance within guidance.

But in terms of the markets that would ramp up in order to get you there, can you give any -- just more clarity on which one?

I think we'll see a nice -- I think we'll see upticks in the markets that I described as positive. So Refining, Upstream, Oil and Gas, Chemicals, maybe a little better in Pharmaceuticals. Buildings should be good for us going forward. I think infrastructure will be a little weak. I think our Other category will be another plus. And I think the national governments business will be a little bit of a mixed bag, good and bad, probably slightly good on the whole.

So same as the overall market commentary.

Pretty much. Whenever I talk about the overall markets unfortunately, they're pretty heavily colored by where we sit in the market. So the two are going to tend to be together.

And then just lastly, there's lots of focus on the State of the Union and infrastructure theme. I'm just wondering, given that you're a little more cautious there, what do you think you'd need to hear tonight for it to be tangibly positive for the outlook?

Well, anything I hear tonight I'll take with a pretty serious grain of salt, because I don't know that I believe we have the will in the government right now to do much of anything. I think the partisan politics are going to be a big problem. I would consider it positive if the President were to push for investment in infrastructure. And I don't mean by that as another stimulus bill. I mean, we appreciated the last one. We did very well in the stimulus last time around, we'd do very well if there's another stimulus. But I don't think that really addresses the fundamental challenges that our infrastructure faces. And what we really need is almost on Eisenhower- like commitment to rebuilding American infrastructure, both transportation infrastructure and water/wastewater infrastructure. I doubt that we'll see that, but that's what the country, really needs. The more that the President's comments head in that direction, the more positive I would think that would be for the Infrastructure business. But I would also tell you, there's a pretty significant lag time between when the government at the federal level starts moving and when it shows up in the P&L. And so we'd have to take that -- even that would have to take a little time to adjust [ph] set.

Our next question comes from Alex Rygiel from FBR Capital Markets. Alexander Rygiel - FBR Capital Markets & Co.: Craig, you just mentioned something that I found interesting. You said you did really good with stimulus last go around. Obviously, you booked some stimulus revenue in 2011. What is the outlook for revenue from stimulus projects in 2011 versus in 2010. Is it up a little bit, down a little bit? Any chance you could quantify that as a percent of total?

I wouldn't be able to quantify it as a percent of total. I would say that we're mostly in the work-off mode for stimulus now. And the work-off -- there's a fair chunk of work yet to be done, particularly for us in things like the big Amtrak program that we announced. But there's going to be obviously no new additions to that business to speak of. And so you have to treat it as, in the long run, as a declining tail. Alexander Rygiel - FBR Capital Markets & Co.: Could you comment on acquisition multiples out there in the marketplace, whether or not they've moved at all in the last 12 to 18 months. And also comment on acquisition opportunities or interest in the federal market itself.

Well, on the mobile side, things have stayed about in -- not moved very much in the last couple of quarters. So they've stayed pretty much in the same range, somewhere between kind of six for -- Construction and Maintenance business is up to something like a peak of 10. For pure services businesses, or somewhere in between, not every deal has the same qualities. I think there's a lot of opportunities still out there in the marketplace. We are aggressively continuing to look at acquisitions. We see a number of businesses where -- and I think John described most of them -- where we could leverage Jacobs very effectively with good acquisitions. I think they are for the most part in the size of the one that we just did or smaller. And lots of them are smaller. So I think there's plenty of opportunity for Jacobs to continue to add to its growth on the acquisition side. Specifically to the federal business, we continue to believe that federal government is a great source of business for the long run, that there is market share to be had. So as we see opportunities to augment our business on the federal side, we're going to do that. Alexander Rygiel - FBR Capital Markets & Co.: And lastly, you mentioned that feed work in Canada was picking up real nicely. And unfortunately, it sounds like you haven't been able to press release a lot of that activity. Irrespective of the press-releasing of that, what does the timeline look for those projects that are in feed right transition into construction? Is that in the next six months or the next two years?

I would expect the transitioning to detailed design in the next six months and into the field in the next nine to 12.

Our next question comes from Avram Fisher from BMO Capital Markets.

Craig, you mentioned briefly that the RDTE and such side, you bring up the inherently governmental, non-governmental or not inherently governmental. Could you break out a little bit more about what part of that government business is considered inherently versus not inherently governmental if you can?

That maybe the most difficult question to answer that I've ever heard, believe it or not.

Because even they don't know what it is.

That's exactly right. Even they don't know. For the most part, what seems to be consistently addressed as an in-sourcing activity is procurement-related functions. So if we have a team that's doing technical evaluations and acquisition assistance, we used to have procurement people as a part of our team, those procurement people were being asked to become government employees. And that hasn't been much of an issue up to now because we've had to replace those people with a bunch of folks honestly to do the work that these new government procurement people generate. But the trend continues. And we think that's going to be a little bit of a headwind in that business. Interestingly, we had conversation earlier this week where a fairly significant number of our employees, eight or nine employees, quit. And the reason they quit is that they didn't want to be in-sourced, which I find kind of interesting in and of itself. But this headwind in in-sourcing, because it isn't clear what it is or where it stops, is one of those challenges that I think we're going to face for another year or two.

Is some of the NASA work you're doing, the science-related work, is that considered inherently? I would assume that's not.

No, it's not. The in-sourcing is largely, honestly, on the DoD side, not so much on the NASA side. So it affects our contracts where we're doing scientific and technical evaluation and acquisition services.

So the consultants-judging-consultants kind of thing.

Judging consultants, judging hardware. We do a lot of work where we help the government first specify and then select various kinds of hardware. And a part of that is a procurement process. And some of those people are the ones who are getting in-sourced.

Swinging to the margin line. If you look historically at sort of TPS backlog as a percent of total, it tends to trend in line with gross profit margins after excluding the pass-through costs. I know we've talked about some of the weak margins and the headwinds there, but we're seeing a real divergence from this trend. I'm trying to understand what's driving that. Is that a signal of really the pricing pressures we're seeing on TPS? Is it the pricing pressure in the field services? Is it across the board? We're in uncharted territory here.

I have to admit I haven't calculated those precise percentages and such. But we are seeing continued pressure on the professional services side. And as we are going through this transition, field services are coming down and new projects aren't starting up yet, some of the people from the field services have slowed down a little bit as well. So there's a competitive market out there on both sides of the business and we're even sitting in some of that in the private sector which we've talked about being a little less prone to it but as you see some of the private -- public partnerships and such in design build where the pricing is a little less transparent in how you bid it, there is a little more competition and such. Now we're in a good position because our costs tend to be lower than others in the industry, so what is a real stretch for some of our competitors is kind of normal business for us. But it still is putting some pressure -- and continued pressure -- on our overall margin.

I guess, historically, how long does it take for pricing to lag the turn? Because if you're talking about, here's the turn, how long could it take pricing quickly to lag that?

And that's a tough one to call because, frankly, an awful lot of that is how fast does it turn up. So if the market turns up fast quickly, pricing goes up very quickly. If everybody is slowly filling up the shops, we all tend to be a little nervous about that. And we tend to keep the margins down longer. So at least as I sit here today, I don't think that there's enough confidence in the market that they're going to see a rapid improvement in margins. In fact, I think it might be another quarter in terms -- or two even -- in the bidding cycle before we see an improvement in margins at all.

Finally, how much is Motiva left with backlog? Could you disclose that?

That would be the same answer I give you every quarter. We really can't go down to that detail level because our client doesn't want us to.

But the answer to that would definitely be less than last quarter.

Our next question comes from John Rogers from D.A. Davidson. John Rogers - D.A. Davidson & Co.: In terms of the acquisition cost and the due diligence cost you broke out, are all the due diligence costs for Aker in there now? Or are there more coming?

You expense them as you incur them so there's still some additional legal and ongoing costs, closing costs, transactional costs that will be incurred in this quarter. We're also planning and working on transition plans and such so those costs are still being incurred. So when we talk about kind of the net impact of Aker as we've looked at it on the guidance and such, it includes the impact of all what we anticipate in all those costs. John Rogers - D.A. Davidson & Co.: And John, the costs that you've incurred and you broke out, are those all related to either Aker or completed acquisitions or where you've got an agreement? Are there any deals that fell through?

First of all, we're not going to talk about deals that fell through or deals that are ongoing. So I can't very well give you a big affirmative on that, because that would just tell you that we didn't have any other deals that we were working on. And so I'll have to say that the costs that were incurred were primarily related to Aker and then secondarily related to the other projects, other acquisitions that were closed during the quarter. But I'll leave it at that. John Rogers - D.A. Davidson & Co.: And then just lastly on Aker, in terms of their backlog, is it similar to yours in the sense of how far out or multiples of revenue that it is? Or are these mining projects from the type of work that you had -- is it longer-lived projects? I'm just curious how to think about that.

I think the backlog run-off and their business will look very much like ours does. It may even be a little shorter because they tend to do more CM and less procurement through their books and such. So historically that's been their model. And they don't have any of these longer-term government contracts like we would have on that side of the business. They could have some longer tail on them.

And it sounds as if, Craig, from your comments, the ratio of discrete projects to your ideal model is at least similar or in the same range.

They don't have the same degree of core client focus that we have. That's one of the things we'll bring to the equation. So we'll increase their sort of Preferred Relationships business fairly significantly because they just haven't traditionally thought about the business the way we think about it. On the other hand, their actual business is very similar to ours in terms of what it reflects, transactions versus not -- they're a little more transactional than we are. They have more discrete projects than we do but that's very amenable to moving the way we would expect it to move.

Our next question comes from Tahira Afzal from KeyBanc.

First question is in your press release you had mentioned that you were a little disappointed in the kickoff for the fiscal first quarter. Could you provide a little more color where you felt that you would have done better. It seems on the infrastructure side, but would love to get a little more color there.

I think there are two things that were disappointing about the quarter from my perspective. First, the margins were a little weaker than I wanted to see and expected to see. And so the margin pressures were a little higher. And frankly, our response to those margin pressures in terms of driving down our costs, our G&A, wasn't as good as I expected. So we didn't achieve in the quarter the G&A performance that I would've expected us to and that we had planned to achieve. And we didn't achieve that in the face of margin pressure so the net effect was we missed our objectives for the quarter and yours. And so that's where my disappointment comes from.

The second question is you've seen a couple of these procurement adjustments out of your backlog over the last couple of years, could you elaborate on, number one, why customers have been asking to do this themselves. And then going forward, are we going to start to see maybe some of the larger projects work? Are we going to start to see more of the procurement being done by the customers themselves?

I don't think there's a trend. I think what we've seen is individual customers swing back and forth. So you'll have a customer who essentially wants the contractor to put all that stuff on their paper and they just want to deal with one invoice, and that sort of thing. And then you will see them some swing back the other way where they have a new broom [ph] in procurement internally who once all that stuff done through their SAP system and wants us to do all the procurement on their paper. And the biggest challenge for us of course is we're completely indifferent. Maybe we shouldn't be, maybe we should be arguing to keep those revenues just so the numbers look better. But the fact of the matter is, since it doesn't affect the bottom line at all, we've sort of taken the position that we don't care and maybe that's actually made us a little more vulnerable to these swings. I don't know that. But I don't think we're seeing a trend long- term or short-term for customers taking more on their paper or less on their paper. I'm looking at my three EVPs and they're all agreeing with me. So I think that's probably a good solid statement.

So when we look at that oil and gas pipeline and prospects that you have, which you highlighted have materially grown, you would say that the mix of procurement versus the rest of the mix is around the same as we saw maybe a couple of years ago?

Yes.

Tahira, with one caveat. We still are for the most part early in the process. So in the fees and such, we may not have gotten into that yet.

That's right, but we don't see any -- right now there's no reason for us to think that as these move into EPC or EPCM, that they will be collectively significantly different than they were in the last cycle in terms of who does what or whose books and what's on [ph].

Our next question comes from Sameer Rathod with Macquarie.

What is the expected backlog contribution of the acquisition?

Normally, we don't give that kind of detail until it actually happens when we book it and we disclose it. But I'm not sure I really have an accurate number right now, because they account for a little different than we do. So once we get it on our systems and such, it will be more accurate. But they've got 4,500 people, so it will be in line with kind of that range.

Remember that when we talk about backlog, there are no rules for how you measure backlog. So some companies measure backlog including, for example, procurement they do for the customer on the customer's paper where they feel that they are at risk for it. Other companies don't include that. We're one of those companies. Some companies only account for backlog as scope backlog, others don't. So you guys see all that, I'm sure, as you look around us and our competitors and the different ways we look at backlog. So fundamentally at this stage, we don't know, at least I don't know, what their backlog will look when we put it on our terms. But we'll certainly know that by the next time we talk.

Our next question comes from Robert Connors from Stifel Nicolaus.

Just wondering how much cash Jacobs likes to keep on the books just for general working capital needs particularly as it relates to after this acquisition?

Historically, we really don't need a lot of net cash for operations. We have at times when we worked off of almost negative cash just because you're using lines of credit and such. But just because of the size and breadth of our organization, it would probably be tough to get under $100 million in cash just on the balance sheet just from the flow of cash that we would normally see. So it would be somewhere in that range. So it probably be kind of the minimum cash you'd see on our balance sheet.

And then disregarding the margins in pricing, can you sort of give any flavor around which end markets it's affecting more rather than others? Because really, when I look at oil sands' CapEx, it's been recovering for about a year, a year and a half. So, I mean, are we just starting to see some of the pricing in billable hours start to increase there, or did that sort of turn before the rest?

There's no question, I think we said this three quarters ago that the oil sands turned before much of the rest of our private sector business. So it is leading. If you think about where margin pressures are starting to moderate. They're certainly moderating to a limited degree up there compared to the rest of the world. But it takes -- you not only have to have the margin pressures moderate, but then you got to get the work through the books before you actually see it at the gross and net margin lines. And so we're still not seeing that improvement in margins pretty much anywhere in the private sector business. I think next quarter we'll still be under pressure for sure from a margin point of view and possibly, we'll see that pressure throughout the year.

But even focused on Canada, the owners up there are very conscious of escalation [ph] and so they're being very careful about pricing infection or looking at and are much more receptive to getting some of the services done outside of Canada so that it isn't quite the price pressure that we saw on the last go-around because they still have the sting of the price increases they saw in both engineering labor and field labor from that last go-around.

And just real quick regarding Aker, the mix of TPS and FS and also where the M&A cost flowed through on the P&L.

The second answer is easy, it was all through the G&A line. The breakdown in such, we'll have a better handle on and we'll include that when we have it in our second quarter. So I don't think we're ready to give that right now.

Our next question comes from Andrew Wittmann from Baird. Andrew Wittmann - Robert W. Baird & Co. Incorporated: I just have a quick question Upstream Oil and Gas. I think, Craig, in your comments you talked about obviously that business is getting better, winning business. But you said you had some concerns about cost or how that relates to how feed could turn into construction projects. Could you just give us a little bit more color there about what you meant? Were you talking about the cost like you wonder if there's enough capital to get all the work done or were you talking about cost in terms of your ability to deliver projects on time and on cost?

Neither actually. What I'm talking about is this is kind of specific to the oil sands comment and there is, between the work that under contract with us and our competition and the work that our customers suggest they're going to release, there's going to be considerable escalation of costs in Canada again. And our concern is, my concern is that, that escalation could result in either cutbacks of projects or having those projects distributed over a longer period of time. And that would have, obviously, negative implications in terms of how quickly we could earn the margin that's there to be earned. I don't think it's a long-term problem, but I think it could affect '11 and '12 if our customers get scared.

Our next question comes from Chase Jacobson from Sterne Agee. Chase Jacobson - Sterne Agee & Leach Inc.: I was wondering if you could talk a little bit about the timing of the deal. Back in November at the analyst dinner, you talked about really wanting to do an acquisition in this space. But it was a little bit tough to find a deal given the limited number of competitors. How much of this -- or how much of the timing of this is related to Aker's announcement of spinning off some of the businesses?

These deals take a long time to develop and we've been in and out of Aker for a long time. Obviously, we can't talk about a deal until it's a deal. And so as we sit here today, we clearly have worked on this for more than just since November. I think in our situation, it's something we've said for more than year we wanted to do and obviously even in November we couldn't tell anybody how close we were so that's where we sat. Chase Jacobson - Sterne Agee & Leach Inc.: You talked about the South American business, and clearly South America is a strong growth opportunity right now. What gives you the confidence that you can expand the business beyond the mining and metals exposure that Aker has there? And is it just Chile and Peru or is it other areas in South America as well, like Brazil?

Well, it is all or much of South America. And I base our ability to do that in that we have done that repeatedly with virtually every acquisition we've made. We've been able to come in on to the acquisition on the back of whatever line of business it was in and then lever that acquisition into other Jacobs lines of businesses. That's one of the strengths of our core client strategies. So as a pharma customer starts to think about investment in South America, they're going to look to, one, a pharma company, a design company and construction company that really knows the pharma business. That would be us. And then they're going to say, "Well now, do you know how to deliver projects in XYZ country?" And as we build our leverage in places like South America, we can answer that in the affirmative. And that combination is compelling. And so that's how we end up taking -- well, for example, a pharma business in Singapore because that's how we got to Singapore, and turning it into a major downstream presence in the Oil and Gas business. That's how we take our own Oil and Gas business in the Middle East and turned it into a Buildings business as well. So that's a fundamental part our strategy, is to lever off of a presence and a local knowledge to a broader spectrum of our markets for our core clients. Andrew Wittmann - Robert W. Baird & Co. Incorporated: So it sounds like it takes some time but you have the ability to do it.

Yes, it will take some time, certainly Brazil and some of the Northern, Southern American countries, Venezuela, Bolivia will be key factors in that. But then we have a terrific position in Chile and in Peru.

Our next question comes from Will Gabrielski from Gleacher. Will Gabrielski - Gleacher & Company, Inc.: Can you guys -- could we talk about margins again? I'm sorry if I missed this, I had to step out for a few minutes. But maybe by segment, what you're seeing. I know that's a little granular, but I just want to understand why the decline there and then versus what you're booking right now. Obviously I think the front end makes the shifting a little bit maybe than what you saw in '06 when you had similar level of activity. And I'm wondering if you can just talk about the margin profile just based on the changing dynamics of the end markets and how that's -- what the mix is in that front end backlog and what we can expect the recovery to look like over the next, say, four to six quarters.

Well I think as we answered earlier, the margin continues to be under pressure. Pricing continues to be under pressure on -- we are seeing a pickup in the hours, the volume side of our business. That hasn't translated into any pricing increases even where the markets are a little stronger. We aren't going to go through and we don't break down the margin by markets and such like that, but we would expect to see the pickup in volume come first and the margin pickup will follow and it really depends on how quickly that volume picks up to see how robust the margins come. Right now, it's a very soft upturn, modest upturn. And so we're not seeing any upward pressure in margins. And so what we're booking today is at or below where we've been booking over the last few quarters. I don't think there's any significant change. That's one of the reasons, comments Craig made, why it's so important for us to continue to control our costs and keep our operating costs down so that we can continue to report decent operating margin percentages even in the face of a weaker gross margin percentages. I guess that's kind of a long-winded answer without getting exactly to your point. But that's kind of the broader picture, and we're not going to go down into the granularity that you might like. Will Gabrielski - Gleacher & Company, Inc.: So at this point in the '06 since you used that as kind of a benchmark for the last time you saw this level of activity, were margins picking up at that point and is there something structurally different that we should be thinking about that's causing margins to take longer to come back this time?

Well in '06 I don't believe margins were picking up significantly just yet. They were about to but they hadn't really started picking up. But remember '06 we weren't coming off the back of a major trough. And so you didn't have the downward pressure in the margins preceding '06 that we have as we sit here today. So I think in fact, the circumstances are different between '06 and now. And the resultant activity is going to be different as well. Just to reiterate what John said, we think margins will firm very slowly and that our recovery, and probably the industry recovery, will be led by volume first. Will Gabrielski - Gleacher & Company, Inc.: So your reported margin -- I mean, you just took another $450 million of what I presume would be close to zero margin dollars out of your backlog. And you're talking about a lot of front-end work in the oil sands and upstream. It would seem to me that the mix within your business is moving more towards front-end work in general and high-value front-end work on big energy projects. And I'm just wondering why that's not more than -- along with you taking that $450 million out, why that wouldn't be having a more positive impact, why we would see such a steep decline sequentially?

Well remember the decline sequentially is driven by lot a of different factors. But I think what you need to recognize, we all have to keep in mind as we talk about how much better things look, there are still a lot of competitors out there whose shops are not full. And while we are in places like Canada, we're hiring like crazy. That's not true for everybody with whom we compete. And there's -- so our competition is still pretty desperate in some cases. And we are not about to let them take our market share. So we are prepared to get down just as desperate as they are to preserve our market position and that means margins have improved like you would otherwise expect. Will Gabrielski - Gleacher & Company, Inc.: I guess at your Analyst Day you laid out some interesting math of course how government contracting works. We tell them it costs $2 and they costs $4, but either way we make our profit margin. Have you seen any shift in that model at all? Or is there something changing structurally within federal that you see on the horizon?

I think the federal market is, where things like the Brooks bill are involved, the federal markets largely unchanged. What we are seeing though is where the Brooks bill doesn't apply, where you're seeing value-based procurements, we're seeing pricing pressure on those value-based procurements even in the federal sector. So it's a mixed bag. If you look at the state and local level, again, I'm kind of focused on infrastructure here, what you're seeing today is there's no real price competition, but there are 40 bidders. In all seriousness, 40 bidders. And so that makes it challenging to preserve your position and it raises your costs for pursuing work. Will Gabrielski - Gleacher & Company, Inc.: And then lastly, I don't know how granular or how close you are to some of the people in DC, but conversations that you may have had with -- surrounding the new committee chair people, [indiscernible] commerce and transportation and infrastructure, is there any sense that they might be able to work better with the administration now getting Republican support for ideas that are infrastructure related, possibly that Obama could support versus the constant pushback from Republicans during the last congressional period?

I'm going to turn that question to Bill Birkhofer. He kind of heads up our Government Relations business as one of his evening jobs. Bill, do you want to comment?

The issue here is whether the political equilibrium is going to come back to the center. As it moves back to the center and we see more collaboration, then we're going to get more play on some of the issues that Craig talked about earlier. What we've gone through in the past couple of cycles has been late appropriations, very little work on long-term authorizations, the kinds of things that will sustain our federal business interests over the longer term. So I'd be hopeful that we can get back to that. And honestly, I think that will mean we'll see a more orderly process this year. We'll see a budget resolution. We'll see appropriations moving back on schedule. And frankly, timely authorizations as in transportation. If we see those things, then I think the whole climate improves and that'll be a change from what we've seen over the past couple of cycles. Will Gabrielski - Gleacher & Company, Inc.: So is that your expectation or is that sort of just an analysis of if they did this?

I think that is the expectation. I mean, it's certainly the hope and I think, to a degree, the expectation.

I might put it more in the hope category than Bill does. But he is a little closer to it than I am. Will Gabrielski - Gleacher & Company, Inc.: Well, we have a country built on hope, so no worries.

We have a follow-up question from Robert Connors of Stifel Nicolaus.

Just real quick just to keep beating the margin question, is that last time scope gross profit margins were really robust, say, about late '08, early '09 period, was actually when TPS revenue as a percent of the total was actually declining. So was this really like particularly within oil sands, like we could see a surprise may be nine to 12 months down the road when the FS portions sort of picks up? Or is it just too early to tell?

Well I think I've said that we think margins will start to improve in two or three quarters. So I guess that does kind of fit what you've just described. And it wouldn't surprise me. Again, there's a significant lag between when margins are bid and when they go through the books. Remember, these projects tend to run two years. The engineering portion, the technical professional services part of it will run 12 months. And so you're going to see that work that was bid 15 months ago is just now coming off the books from an execution point of view. And I think that's part of what you're seeing when you look back at that late '08, early '09 timeframe.

I am showing no further questions. So this concludes our question-and-answer session. I would like to turn the conference back over to Craig Martin for any closing remarks. Mr. Martin?

I want to thank you all for your interest. I think there were some great questions. I hope you see that we are optimistic. I hope you see that we're not wildly optimistic or anywhere close to wildly optimistic. We think things are better. We do think there's still a lot of uncertainty out there, so it still remains a mixed bag, but I think it's more on the positive side than not. And with that, I think we're done. Thank you. Operator?

Yes, sir. The conference has now concluded. Thank you for attending today's presentation. You may now disconnect your lines.