Good day, and welcome to the KBR's Fourth Quarter 2011 Earnings Conference Call hosted by KBR. This call is being recorded. [Operator Instructions] For opening remarks and introductions, I would like to turn the call over to Mr. Zach Nagle, Vice President of Investor Relations and Communications. Please go ahead, sir.

Thank you, Cynthia. Good morning, and welcome to KBR's Fourth Quarter 2011 Earnings Conference Call. Today's call is also being webcast, and a replay will be available on KBR's website for 7 days. The press release announcing fourth quarter results is available on KBR's website. Joining me today are Bill Utt, Chairman, President and Chief Executive Officer; and Sue Carter, Executive Vice President and Chief Financial Officer. During today's call, Bill will provide an overview of KBR's fourth quarter and 2011 operating results, highlighting a number of key areas. He will also cover KBR's outlook and provide color around how we see 2012 coming together. Sue will address KBR's operating performance, financial position, backlog and other financial items in greater detail. After our prepared remarks, we will open the floor for questions. Before turning the call over to Bill, I would like to remind our audience that today's comments may include forward-looking statements, reflecting KBR's views about future events and their potential impact on performance. These matters involve risks and uncertainties that could impact operations and financial results and cause our actual results to differ from our forward-looking statements. These risks are discussed in KBR's Form 10-K for the year ended December 31, 2011, KBR's quarterly reports on Form 10-Q and KBR's current reports on Form 8-K. You can find all these documents at kbr.com. Now I'll turn the call over to Bill. Bill?

Thanks, Zach, and good morning, everyone. First off, I'd like to start by saying how pleased I am with KBR's results for the fourth quarter and for the full year 2011, with earnings per fully diluted share of $0.60 and $3.16, respectively. KBR's full year 2011 net revenue of $9.3 billion was in line with our expectations and when excluding the LogCAP project, was up 4% compared to 2010. We ended 2011 with a strong cash flow from operations of $650 million, a cash balance of $966 million and we returned approximately $148 million back to our shareholders. KBR's execution across our legacy businesses remained strong. Business unit income margins continue to strengthen and are 8.5% for 2011. Good overhead management and cost control within our business units contributed to the margin expansion. KBR's backlog at December 31 was $10.9 billion. While fourth quarter backlog was down sequentially, KBR's backlog at the conclusion of the 2012 first quarter will increase significantly, driven primarily by the booking of the Ichthys LNG project. As we closed the fourth quarter, I was disappointed by the $25 million in additional cost and schedule charges for 3 legacy international projects at Roberts & Schaefer. The projects were impacted by supplier delivery issues, damage to on-site equipment and related schedule delays. We are dedicating extra management time and focus to get these projects back on track, with 2 of the projects now scheduled for completion at the end of the 2012 first quarter and the third for completion by the end of 2012. With Roberts & Schaefer now fully integrated into KBR, we expect to see significant improvements in project execution going forward. Now I would like to talk about KBR's businesses. At Gas Monetization, the FEED for the Kitimat LNG project is essentially complete, while…

Thanks, Bill. Consolidated KBR revenue totaled $2.1 billion, a decline of $246 million or 11% from the prior year fourth quarter. As expected, LogCAP revenue decreased $222 million compared to prior year fourth quarter. Positive revenue contributions included a 39% revenue increase for International Government, Defence and Support Services, Technology up 34% and Infrastructure and Minerals revenue up 67%, primarily related to the addition of project revenue from the R&S acquisition and recently awarded projects. Consolidated operating income was $136 million in the fourth quarter of 2011 compared to $148 million in the fourth quarter of 2010. Business highlights comparing the fourth quarter 2011 to the fourth quarter of 2010 include: Gas Monetization margins increased 2 percentage points due to reduced work on the lower-margin Escravos and Skikda projects in the fourth quarter 2011. The Gorgon, Escravos and Skikda projects continue to be the majority of the revenue and income in the fourth quarter for the business unit and are progressing nicely. Technology margins increased 12.5 percentage points, primarily related to the sale of proprietary equipment for an ammonia plant in Brazil. The fourth quarter of 2010 included an unfavorable jury verdict on a project dispute. North American Government and Logistics margins improved 6.4 percentage points on reduced volumes but higher margins on LogCAP projects and the higher margin impact of other projects. The fourth quarter of 2011 also included a final $3 million award fee on LogCAP. International Government, Defence and Support Services margins improved 11.8 percentage points related to improvements on the Allenby & Connaught, Afghanistan ISP, Namsa and CONLOG projects. The Allenby & Connaught project also included an inception-to-date adjustment for the overall margin improvement. Power and Industrial margins improved by 6.7 percentage points related to execution of the waste-to-energy expansion and coal gasification projects, plus the…

Thank you, Sue. I'd like to provide a general outlook for KBR's markets and businesses. From a market activity standpoint, as of December 31, KBR's outstanding bids and proposals are up 36% from the prior year. It is easy to see the high degree of activity in the LNG Minerals and Infrastructure markets in Australia, where KBR is well positioned on several major awards across these industries. We do, however, see labor shortages continuing to develop in-country and foreign expat laborers now becoming more prevalent across many of these projects. Project sponsors are aware of these constraints and along with their contractors, are taking proactive steps to minimize these impacts on their projects. We are also seeing continued strength in the export markets for LNG and other commodities coming out of Australia. After a seemingly quiet year in the Middle East, KBR is expecting an increased level of activity in the Downstream, Infrastructure and other industrial markets. There still appears to be some residual apprehension from the recent political turmoil in the region, but we are expecting projects to go forward in 2012 at an increased rate. We are also pleased to see the increased level of activity emerging in the African continent. While the timing of several projects remains unclear, we do see an emerging commitment to undertake more projects, perhaps at a higher lever than in the past 4 to 5 years. KBR continues to see an acceleration of activity in the North American markets. During 2011, the U.S. became a net energy exporter for the first time since 1949. Given the expected near-term natural gas forward price curve, we believe that domestic natural gas-based industries, once considered as globally noncompetitive, will see significantly higher levels of capital investment over the coming years. We also expect to see continued growth in capital spending in both the power and industrial sectors of the U.S. economy. In Canada, we expect the increase in capital spending in the oil sands and minerals markets to continue during 2012. In closing, KBR believes there is a significant quantity of project opportunities both in North America, as well as internationally. It is likely that some projects will be delayed, but that other unannounced projects could go forward in their place. Ultimately, these projects will get built. Only their schedule remains uncertain. KBR's near-term challenge is to continue to devote our resources to those projects that are moving forward in the near term. Now we'll take your questions. [Operator Instructions] Thank you.

[Operator Instructions] We will take our first question from Joe Ritchie with Goldman Sachs.

So Bill and Sue, thank you for the clarity on 2012 guidance. I was hoping that, Bill, maybe you could comment on your confidence in the range. And in the range specifically, it's still a fairly wide range of $2.45 to $2.80. What swings the low and high end of the range for you in 2012?

Joe, I think what swings the low and high range is the timing of the large EPC projects in the hydrocarbons business achieving FID. We think we've got a lot of projects that we're chasing, and we believe we factored in a very practical view on what will go forward and what may get delayed into the later years. And so that's really the biggest driver. I think the guidance, we try to give you a little bit more clarity, particularly in terms of shaping the year in 2012. Obviously, we've come off of a big effort on LogCAP to get the troops out of theater. But we're now just beginning to ramp up the work on the State Department, which is going to get stronger throughout the year. But obviously, with the transition, we expect to see some businesses have growing earnings profiles during the year that we wanted to communicate during this call to The Street.

Okay, that's helpful. And Bill, I guess your confidence in achieving that range?

Joe, at this stage, I think that the range is good. Obviously, we've got a lot of moving pieces still in the portfolio, a lot of work to get done. I'm comfortable that the work will get done. And as we get into the year, we'll continue to do our best efforts to narrow the range that exists there. But as of today, we're pretty comfortable that the guidance we have is appropriate, and that we're going to do everything we can to do our best with respect to the guidance.

Okay, it's helpful. And then one follow-up question on Ichthys. Can you provide some commentary on the earnings impact of that project in 2012 and how that accelerates into 2013? I would imagine that you would really start to accelerate your income from that project in '13. So any color there would be helpful.

Okay. I would say from a Professional Services standpoint, the margins on our services are market-based margins. We are probably going to see the work on the project from KBR Services standpoint be more later as opposed to earlier. We're not doing the design of the LNG trains. That's being done in Japan. We are supporting that design effort. But the bulk of the KBR services that will be provided will be in fabrication oversight, as well as the construction management, which will occur -- which will increase obviously from '11 -- from '12 to '13. We should hit our peak probably late '13 through 2015 on the Professional Services side. In terms of the underlying project profitability, we'll see a traditional percentage of completion, recognition of project profitability based on the normal S-Curve that we have on all projects. So it will be ramping up during 2012, it will be stronger in '13 and '14 and probably plateau in '15 and start coming down as we get into '16.

We will take our next question from Matt Tucker with Keybanc Capital Markets.

Okay. Matt, we bought Roberts & Schaefer at the end of last year, and we had a very specific integration plan that we put in place for the business. The first elements of the business were to get them up on our SAP system, to get the people transitioned to our human resources plans and programs and then to also bring them into our universe on the business development oversight. And I think those have been done. And as we've looked at projects coming in to the Roberts & Schaefer portfolio, since the acquisition -- and we put the business development oversight process in pretty quickly, I think we're pretty good on the backlog that we've acquired since the acquisition. Now again, it's an organization of a couple hundred people, and we can very easily, as KBR, overwhelm them in terms of this transition. And we did begin to bring in the project management reporting very quickly. What we were only able to do late in the year was to bring our trending in, which is a nuance in the project management systems where we drive a little more forward-look into what are the trends on the projects and how we expect to complete them. We found that as we develop this trending, that issues arose on the 3 projects that we spoke about. The good news is, 2 of them are supposed to be done in the first quarter, which intellectually limits your exposure, and I think speaking [ph] we reduced through our investigations both the probability and magnitude of any subsequent charges, although I can't say with a guarantee that they're going to be clean. But we certainly have brought the full KBR rigor on those. And we also believe that as we look at the remaining project in -- that gets completed in 2012, that our rigor has brought in the additional trending that we expect to see for the projects to be completed according to provisions we established in the fourth quarter.

Well, Matt, this is Sue. I think as you look at it and you think about the comment that I made in my portion of the script, if you look at the hydrocarbon space, Gas Monetization was up because they had a little less work on a year-over-year basis from Skikda and Escravos. And those are lower margin projects. So that was a natural lift. Technology margins were good, and they are just executing well. And as you think about the other businesses in terms of one-timers, I talked about the International Government, Defence and Support Services with the Allenby & Connaught project. And that one, the margins did improve, and I will continue to say that, that's good operating performance. But what does occur on a project like that one, when you get a margin overlift [ph] is you do have an inception-to-date catchup on that margin, which did appear in the fourth quarter. But other than that, pretty clean and good operating performance.

And the LogCAP III award fee, $3 million.

Yes. $3 million, yes.

We will take our next question from Andy Kaplowitz with Barclays Capital.

It's Alan Fleming standing in for Andy this morning. Actually, I wanted to start off with a question about what you're seeing kind of on the Upstream side of the business in North America. A couple of competitors have booked some large projects in the oil sands. Wondering what you're seeing kind of specifically in that region. And maybe if you could actually comment also on one of the competitors' large acquisitions in the last couple of days in that -- for a business that operates in that region, and what that could do to the competitive landscape.

Alan, on the Upstream North America, we do see increased opportunities in the oil sands region. We've seen some pretty good bidding on some modules, particularly by some of the larger players in that market, which is a good indicator of additional construction work to install those modules that will follow. So the oil sands does appear to be moving up. I know, in some of the notes I have read, that several of our competitors feel strongly about it as well, and so our view of the oil sands is no different. We're seeing -- we're coming through the -- perhaps the Macondo drought in the Gulf of Mexico regarding the offshore oil and gas. Projects are starting to go forward. We're seeing some drilling activity resume, and we would expect our North American oil and gas business to pick up as these developments continue to mature and the cessation of activity related to Macondo clears. From a Downstream standpoint, we see lots of activity in the -- as I mentioned, in the ammonia, in the ethylene markets. We're seeing good industrial and power activity. We are seeing a lot of bidding activity for LNG projects, while maybe not upstream in the oil and gas world, they are upstream for us. And we're involved, obviously, in Kitimat. We're seeing other developments begin to develop in British Columbia. We're seeing the development of export facilities, or the concepts of permits being filed for potential export facilities, out of the U.S. Gulf Coast. So we see just a pretty robust market going forward, and we think it's a good time to have an integrated EPC position as KBR in the North American market. Regarding the large acquisition by a competitor in recent days, honestly, we don't think that changes the competitive dynamics all that much. We haven't increased the supply of engineers or constructors, we've simply changed the shareholders of that entity. And so we don't see any material changes arising out of that acquisition.

Bill, is there any -- do you have any update on the timing of a FID for Kitimat?

I think the -- we have to go back and rely on what Apache is saying, and we're working for them. We think we'll have our activity completed during the second quarter, and then it's really up to them to comment on how the other elements of the project come together. They obviously have to look at EPC, but they've got their permitting to do in British Columbia. I don't know where they stand specifically on gas sales, for example. So they're the ones who are trying to integrate a lot of different pieces, of which KBR is simply but one piece of that puzzle for them.

We will take our next question from Rob Norfleet with BB&T Capital Markets. Robert F. Norfleet - BB&T Capital Markets, Research Division: Just a couple of quick questions. I guess, first, when you look at IGP, I mean, clearly, the bookings in the quarter, as you discussed on the call, you and Sue were down mostly because of the line down at LogCAP III. But if you look at Infrastructure and Minerals, as well as Power and Industrial, they were a little weak. I'm just curious, is that more of a seasonal issue or was there some timing in terms of slipping from Q4 to Q1?

Well, on Power and Industrial, we did have a good Industrial booking during the fourth quarter for an EPC project. But for Power, we try to look at it over a longer horizon. I mean, the increase in backlog that we had during the year -- I think Sue was quoting 339% increase, was great. Those guys did a heck of a job this year, and we're counting on them to continue that good work during 2012. So a fourth quarter event for the long duration projects, the P&I books, is not a material concern for us. On the I&M side, we've brought in a new business unit leader, Mark Read, for the Minerals business. I've seen first-hand from a recent trip I took in Australia the very good high-level connections he has in the Australian mineral space. I think he brings a lot of energy, a lot of contacts, a great resumé for being a minerals participant. So I think we'll see our Minerals business grow and become a key part of KBR going forward under his leadership. On the Infrastructure side, you have the timing of issues. We've got some work that we're pursuing in the Middle East. That one project was awarded back in April. But we're still, with the Middle East way of negotiating contracts and some of the political overhang we see in the region, we still haven't got that award in the books just yet. But it is something that we're optimistic that our Infrastructure business will grow. And as we've simplified I&M to 2 separate business units, one Infrastructure-focused, one Minerals-focused, I think we'll see better performance out of the 2 because of the dissimilarity that existed between the 2 markets. Robert F. Norfleet - BB&T Capital Markets, Research Division: That was helpful. And my follow-up, just on the climate control equipment market, obviously, with the EPA standards out, we've got the CASP [ph] ruling stayed. The national is out there, but it's under a little pressure from a litigation standpoint. What are you seeing from your customers? Is there any pushback in terms of ordering equipment? Or are they actually going ahead and following the mandates as it relates to what the SOx and NOx mercury requirements, emissions requirements will be?

Well, I think from a prospects standpoint, we've seen more prospects on the list. So it appears that our customers are more comfortable with the status of the climate control regulation of MACTS and CSPAR. And -- yes, so it does appear to have some clarity. I think that the absolute that I can say is, there's more activity on that front than we've seen in the last 1.5 years. So it's -- whether those projects get awarded or there are subsequent events that we can't envision that affect our customers' abilities to move forward, we are -- but we are seeing a more buoyant bidding environment or prospect environment than -- in those markets than we've seen for some time.

We will take our next question from Steven Fisher with UBS.

Cash flow was very strong in Q4. Just wondering why you didn't buy back more stock. And then how are you thinking about cash usage in 2012?

Well, Steve, thank you for the comments on cash. We did do a really nice job on cash in the fourth quarter. And as we went through the quarter, we had a defined process for buying back shares. We had a grid at which we were going to buy with numbers of shares, and we followed that all the way through the quarter. So we bought 818,000 shares, and we think that's good. In terms of cash, as we looked at the year, as I said in my comments, very balanced with the acquisitions, with return to shareholders, et cetera. And as we go into 2012 and look at the cash that's on the balance sheet, the $966 million, same stories: We're going to return cash to shareholders when it's appropriate. We're going to do acquisitions if they have the right fit in the margins. We're going to continue to invest in our capital and our ERP system, and just make the best decisions as the opportunities come up.

Steve, I would add that as we looked at what was transpiring in August, the time we announced our authorization, we were surprised by how quickly the KBR shares came off. Obviously, the events unfolding in Europe had some contribution to the broader market decline. But we weren't sure how long and how far the share price would be at those levels. So as Sue pointed out, we created a fairly thoughtful and disciplined grid that we are buying back, expecting that if the shares remained lower for longer periods of time, we would have a very, very attractive buying opportunity for KBR shares. Today, we're revisiting that. Now that the -- we've gotten through the quarter and the various blackout periods, we'll be looking at what do we want to update, if anything, regarding these share buybacks. And again, as I've commented on prior calls, we take a fundamental view of where we think KBR share value ought to be and a fundamental view of where we ought to transact to buy back shares. So we're keeping with the discipline. We think we're doing the right things. And so we'll see how things evolve in both our thinking in the market, and we'll continue to give updates on where our perspectives are regarding the -- and progress regarding share buybacks.

That makes sense. And then, Bill, how do you see competition playing out in the U.S. chemicals market? Do you foresee that there's going to be an ethylene cracker for everyone or will it be more tough competition? And then how do you see specialty chemicals factoring into the outlook?

I think in the U.S. market, with the property rights you have here, the free market, all sorts of stuff, you're going to see more developer proposals and a wider array of proposals than you might see in a different area internationally. I think you will see projects go forward. Our challenge is picking the winners. I think there are some projects that we're not sure are going to go forward with as high a probability of others. I like kind of where we're positioned because we've done a good job of integrating the BE&K acquisition to allow us to do U.S.-based EPC work. We're doing it on the BP Toledo refinery. We're doing it on Ratcliffe coal gasification facility, Molycorp, KiOR, CARBO Ceramics. So we've got a good model, and I think it's a very compelling offering here in the U.S, because of our ability to bring all the services together for these projects in a way that is a little more challenging for us internationally. And you heard some of our comments of how we're going to try to address that on our Investor and Analyst Day. But I think it's going to be a very good market. I think there will be a lot more capital spending in the U.S. market on the chemical side. I can't -- I don't have any unusual or different insights regarding specialty chemicals. But certainly, the forward curve of natural gas as it exists today and the expectation that we'll continue to see natural gas availability in the U.S. at very attractive prices for some time now, will be a driver for that new capital investment.

We will take our next question from Jamie Cook with Crédit Suisse. Jamie L. Cook - Crédit Suisse AG, Research Division: A couple of questions. One, Bill, I think in your prepared remarks, you mentioned something about direct labor already starting to become an issue in the use of more expats. So I was just wondering if you could just give a little more color about that and how that also impacts. You talked about, I think, at the Analyst Day increasing your direct construction content. And you talked about also increasing fab and some pretty sizable revenue opportunities longer term -- or actually, I even think you said by 2013. So I'm just trying to think longer-term out, where we are in that process, as well as the comments on labor.

Okay. The comments on labor were specifically addressed to the Australian market. In our meetings with the labor ministers of -- within the various states of Australia, as well as discussions with our customers, who have even more meetings with these folks, there's a recognition that with all the projects going on in Australia, that they're really approaching full employment of their available labor force, including training of the indigenous population of Australia. There has been a recognition that it is necessary to bring in expats from the U.S., the U.K., Asia to do project work because that work is really, in the minds of the Australians, the bubble or the pig in the snake -- that we bring them in for projects and when the projects are finished, those people will go away. And where you have businesses that are going concerns, that are doing electric transmission lines, et cetera, that aren't project-specific, they're not able to get the 4, 5, 7 visas that those of us in the LNG side have been able to get approved by the government. So there is an equilibrium being established. In many respects, we're seeing our ability to land U.S. expats at a cost that are not terribly different from what we're paying the Australia laborer, because of the scarcity of that resource across the country. In terms of the efforts on direct hire and fabrication, we're pleased with the progress we've made over the last 3.5 months on those 2 initiatives. We're continuing to address in greater detail how we participate in a direct-hire market for certain elements of mechanical, electrical and instrumentation construction in the Australia markets, and hope to be able to take a lot of the skill sets we have in terms of our processes and systems and…

I'm still working on '12. I mean, I'm still working on Ritchie's question of how do I deliver the guidance. Jamie L. Cook - Crédit Suisse AG, Research Division: I passed Ritchie.

I know. You've always been a forward-looking individual, Jamie. And I think it's probably a little early for us to look at '13. I mean, if we get the projects signed up that we believe are out there for us -- now we'll get them, over time. I mean, I think you're going to see just a tremendous backlog growth even beyond what we've commented on the impact of Ichthys in the portfolio. And I think you'll see revenues and profitability go with it. So we've got, I think, some great opportunities to really organically grow the business. But I also think our shareholders would -- are best served by us looking to do those other things that give us a greater degree of vertical integration across our product offering. And we think we can do both.

We will take our next question from John Rogers with D.A. Davidson. John Rogers - D.A. Davidson & Co., Research Division: Bill, I appreciate your comments on sort of the status of all the LNG projects, but as I sort of look at these comments quickly, I mean, it seems as if, I mean, you're going to have a big surge in backlog with Ichthys. And then depending on these, it could trail off through the year, but the earnings are going to be ramping up through the year? I mean, I'm just trying to get a little more color there.

Okay. Well, the Ichthys earnings are going to be ramping up during the year. We're expecting that the backlog we signed up in Power and in the Construction business is going to continue to ramp up across 2011. I think we'll see our backlog -- we're expecting to continue to sell good work beyond the Ichthys project during 2012 on LNG. We're expecting Downstream to be very active. We're expecting Power to have another good year. We think the North American business overall is going to accelerate for KBR. So I mean, when you talk about Ichthys and how we work off the backlog, you got to remember the nuances in terms of our recognizing revenue as a -- excuse me, revenue and profits on a percent-complete basis, on an S-Curve during 2012, plus our services, which will grow over the next 12 to 36 months. And then as we work off the percent complete on the cost side of the project, I think that -- I think the story holds together despite maybe at a front-end level saying, "Impacts backlog going down. KBR profits going up." But that's just the nature of how our accounting is working with respect to that microcosm called impacts. John Rogers - D.A. Davidson & Co., Research Division: Okay. I guess I was just trying to relate it to some of your comments about timing of these projects, and maybe back to Jamie's question about maybe is there a lull coming in terms of bookings.

Well, as I said, we're not sure when, what project is going to close. We have a lot of irons in the fire, both inside of -- at the [ph] LNG business, as well as outside of it at KBR. And we still think that where we are in terms of our revenue guidance is good. And we don't have a backlog guidance we give. We give you the number on impacts. But I think there's -- over time, it's going to be a continuing growing backlog story here at KBR based on what we've got out there in front of us. John Rogers - D.A. Davidson & Co., Research Division: Okay. And then just one follow-up, I guess, maybe for you or Sue. The distribution of cash flow that you talked about for 2011, should we think about that same sort of ratios in 2012 between buybacks, investment, et cetera?

Well, I think as you look at it, I mean, obviously, the components are the same. But as you look at it going forward, the pension contribution that we made in 2011 included a $40 million catch-up contribution that we made. I don't expect to make that again in 2012. The acquisitions and return to shareholders, we'll see what that split looks like, given what the best opportunities are for us. But I think the items are the same, and just what varies is going to be the difference between the share buyback and/or acquisitions.

We will take our next question from Brian Konigsberg with Vertical Research.

A question. Just coming back to the Roberts & Schaefer projects that impacted your quarterly results. Out of the 3 projects, can you just give us a little granularity of the 2 that are ending at the end of Q1? How much did those 2 contribute versus the third that will be closed out by year end '12?

I think the largest series of the charges were on the projects that will get closed out in the first quarter. It's north of 75% of the charges, maybe 80%. It was $22 million or so of the $25 million was those near-term projects.

Got you. And separately, so PEMEX, it seems they are still making some legal noise in regards to the cash they owe you from a project way back when. Just what's your outlook on actually collecting that? Is that a potential 2012 or is it just kind of TBD?

Well, we kind of watch this with great interest, as do you, and it's really interesting. And for us, I'm trying to temper my comments a bit, in that when you enter into a contract with a branch of a sovereign government that's part of NAFTA and as part of the contract, it has a dispute resolution that gets to both parties accepting international arbitration. And having completed the project with our disputes, we followed the contract to go to international arbitration. We get a ruling that is obviously very favorable for KBR. And then the customer starts forum-shopping in Mexico to find a court, any court that might allow them to overturn the contract and, in their mind, void the entirety of the contract including the international arbitration after the international arbitration has taken place. So we kind of watch this and we understand what they're doing and why, but it really borders on just trivializing the whole status of the country as a place where it's good to do business. Now we've had our district court finding that was -- that affirmed the arbitration award. It went to the appellate court. The appellate court said they want the first court now to consider PEMEX's actions after the arbitration, after the first court made its ruling, to see if it has any impact on the initial ruling by the first court. We think that the court will take a look at the award, which they, in the first case, deemed it to be enforceable. We don't believe there is a strong basis for the first court to reverse its initial ruling, and I think they will affirm the initial ruling that the order was enforceable or is enforceable. It will be appealed again back to the appellate court. The appellate court will say, "Thank you for your ruling." And we expect the appellate court to dismiss this and get it back to -- and allow us to get the monies that we were awarded through the international arbitration, which are supported by a bond posted by our customer in the New York courts. That being said, we think the issues that are in front of us today are relatively rifle-shot issues. We are optimistic that we will get this resolved during 2012 and put this -- the saga behind us. But it's been something to watch, to see an entity of a sovereign government try to void a contract that it entered into willingly, which included provisions for international arbitration, and try to void the contract after the arbitration award has been made. So a little bit on a soapbox, but yes, we think we'll get it done later this year. It's our expectation.

We will take our next question from Randy Bhatia with Capital One Southcoast.

If you could, can you tell me when you guys kind of see the inflection point in revenue, when this kind of flat-to-down revenue scenario turns around, when the LogCAP fade impact is less than the increase in revenue that we're going to see on these projects?

Well, I think we're already at the inflection point for LogCAP. One of the things we've been looking at for years was LogCAP. And the work in Afghanistan and Iraq used to be 65% of KBR's revenues, and we knew eventually that, that was going to stop this year at a level between 3% to 5% of our earnings. For us, it's just another contract. And I think the acceleration we're seeing in our Services business, in our hydrocarbons business, in our non-government businesses, in IGP, I think we're -- we should expect to see increasing revenues going forward. And even in a relatively quiet year, 2011, without any of the LNG awards, we were able to move revenues up 4%, x LogCAP.

Okay. Great. Also if you could just in terms of what you guys are seeing in the near term where, I guess, on the same North America and the low natural gas price-driven theme that's been discussed here at length, where do you kind of see the biggest near-term opportunity? Is it in refining or is it in new gas-fire gen? I mean, what are your -- and I mean that in terms of what your customers are saying, as well as what you guys are seeing in terms of bid activity.

I think we're seeing good opportunities in Power. I think on a prior call, we talked about the amount of prospects we saw out there for KBR, on the order of $3 billion, and we thought $1 billion of that would be bid during 2012. So that remains steady for us. But we are seeing -- and this is not a relative statement, this is an independent statement, we're seeing an acceleration of activities in the North American market for our Downstream business. We are seeing discussions on multiple ammonia plants, which we haven't had discussions in the U.S. on ammonia plants in 35 years. We're seeing a lot of chemical facilities being talked about, less petrochem but more chemical where you've got natural gas as a feedstock, the ethylene facilities. So Power remains, we think, a pretty robust bidding environment. And the near-term opportunities in our Downstream, principally in the chemicals business, are growing very, very attractively for us.

Operator, we'll take just one more question, please.

We will take our last question from Robert Connors with Stifel, Nicolaus. Robert Connors - Stifel, Nicolaus & Co., Inc., Research Division: The strategy for Upstream oil and gas has always been to, if I understand it correctly, to build up a pretty good prospect list with FEED work and then eventually to turn that into procurement and construction management services. So it looks like you're making some pretty good headwinds along that. So I'm just wondering if going forward, does that segment start to see a little bit of lower margins as you start to transition into procurement and construction management but offset obviously by higher backlog levels?

Well, I think the margins that we see on these projects, Rob, are for -- the component of percentage of completion based on project profits, that's going to follow an S-Curve in terms of what we recognize and how we get profits. In terms of the services, you probably see a little bit better margin when we're doing the engineering and the home office services than in the field, just given the amount of people that are involved and the margin that we have on those folks. I'd say today that we probably have slack capacity in a lot of our front-end engineering capability, both in Houston and in London on -- as these FEEDs are getting ready to transition. So we're not facing any resource constraints. We think revenues will grow. We think, overall, just the volume of work will continue to deliver an increasing profitability at KBR. And we still think our business unit incomes are going to increase by virtue of the higher dollar value of job income we're going to get over a relatively stable and constant amount of business unit overhead. So I think we're going to see new opportunities, particularly in our Gas Monetization business, for margins to move up over time because we're -- of the volume at recently consistent margins being amortized across a fixed overhead base. Robert Connors - Stifel, Nicolaus & Co., Inc., Research Division: And then what are you seeing as a typical turnaround time for when LNG projects transition from, say, the bid-and-tender submission phase to full EPC awards, especially considering the fact that there's numerous project operators involved and all of their boards need to approve these massive undertakings?

Yes, I don't think the board approvals are the constraint. Because once people get as committed as they do at the time a board approval is made, there's some cost or several hundred million dollars, not just our FEED contracts but to all levels of their value chain and supply chain. These projects take a long time to go forward. I mean, we looked at the Ichthys LNG project, and we started talking about that in 2006. Gorgon was 2005. And so Gorgon, if we start in '05 and it gets the FID in '09, that's probably moving at a -- on the faster side of the average clip. I think you look at the Ichthys project, and that took 5 years to get to fruition. So that's a typical timeline. And we always worry about whether some of our messaging gets old at KBR when we get a pre-FEED or get a FEED. But we look at that as inventory, we look at that as an indication of future growth of the company and our backlog and our profitability over time. But it is something that just takes time to get there, given the very complex structures that you're putting together, ranging from resource development to the production facilities, all the way through your end-market sales to customers. So they move like battleships. Once they get moving, it's hard for them to stop. It's just a matter of being able to have the staying power to reel these things in as they ultimately mature at their respective gestation periods.

Thank you all for your questions.

Ladies and gentlemen, this will conclude today's question-and-answer session, and this will conclude today's conference call. We do thank you for your participation.