Good day, and welcome to the KBR's Third Quarter 2012 Earnings Conference Call hosted by KBR. This call is being recorded. [Operator Instructions] For opening remarks and introductions, I'd like to turn the call over to Mr. Zac Nagle, Vice President of Investor Relations and Communications. Please go ahead, sir.

Thank you. Good morning, and welcome to KBR's Third Quarter 2012 Earnings Conference Call. Today's call is also being webcast and a replay will be available on KBR's website for 7 days at kbr.com. The press release announcing third quarter results is also 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 third quarter operating results highlighting the number of key areas. He will then take you through several of our strategic initiatives as well as several major prospects KBR is pursuing. Sue will then provide an overview of key financial takeaways for today's call. Lastly, before moving the call for Q&A, Bill is going to provide brief closing comments. 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 views of our 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 third quarter press release issued last night, KBR's Form 10-Q for the period ended September 30, 2012, and KBR's current reports on Form 8-K. You can find all these documents at kbr.com. Now, I'd like to turn the call over to Bill. Bill?

Thanks, Zac, and good morning, everyone. First, I want to talk about the $178 million noncash goodwill impairment that KBR took in the third quarter. As we stated over the past few quarters, KBR is well-positioned for many opportunities arising from the development of North American shale gas resources. We've talked about both engineering and construction opportunities for ammonia, ethylene, power, LNG and gas to liquids projects in North America. We've also discussed the adverse impact to the North American coal industry and by extension, the solid fuel material handling markets of Roberts & Schaefer related to the present and expected long-term low natural gas prices arising from shale gas resource development. Over the past few quarters, the Roberts & Schaefer business line has seen the cancellation of awarded projects as well as the cancellation of potential new projects in North America. These changed market conditions have caused KBR to revise our North American revenue forecast at Roberts & Schaefer. This reassessment has led KBR to take a noncash goodwill impairment charge at our Minerals business unit during the third quarter in the amount of $178 million. KBR remains enthusiastic and committed to the global minerals market and firmly believes that the people in legacy's track record of performance will contain to drive KBR's continued expansion in the global minerals market. Next, I would also like to discuss a few of the headwinds we encountered during the quarter both Roberts & Schaefer and in our U.S. Construction business. During the third quarter, KBR took an $8 million charge related to a legacy Roberts & Schaefer project, the same project we took charges against in the first quarter. We are clearly disappointed we did not make the progress we had expected coming out of the Q1 charges to eliminate additional charges.…

Thanks Bill and good morning everyone. We covered the highlights of our businesses in the press release and then won't repeat those items. I would, however, like to summarize my view of the P&L and balance sheet. First on the segments. Our Hydrocarbon segment had strong performance in all units. Gas Monetization had good performance on Gorgon, Skikda, Ichthys, Escravos and starting the new Tanzania LNG FEED. Margins were a strong 18.2%. Downstream had bookings and adjustments of $265 million for the quarter with awards on Yanbu, Jazan, Sasol and new work releases on Sadara. The IGP segment performed well and as expected with the exception of the goodwill and project charges in minerals. The goodwill impairment charges primarily driven by deterioration in economic conditions in the mineral markets globally, but primarily North America, and less than expected actual and projected performance for the minerals reporting unit. The combination of these trigger factors caused the evaluation of goodwill for Minerals in Q3. The charge has no effect on KBR's business operations, cash balances or operating cash flows. We are evaluating overhead reductions and an office closure in Europe for our Minerals business unit. Q4 charges associated with these activities are expected to be less than $5 million. Service's performance is somewhat overshadowed by the U.S. Construction charges. Canada and industrial services had good sequential revenue growth and margin expansion. Canada grew 22% in revenue and 54% in job income and industrial services grew 7% in revenue and 30% in job income from Q2 of 2012. KBR under absorbed its labor costs in our centralized engineering pool by $8 million as we balanced the talent needs for projects we see coming in the current work on hand. G&A was $56 million and on track with expectations for each of the overhead…

Thank you, Sue. KBR continues to benefit from the diversity offered by our 14 market-facing business units. We believe we've spread our bids thoughtfully on a geographic market and customer basis. I remain very pleased with the opportunities set of projects I see in front of KBR as a result of these diversification. Further, I feel that new project awards in 2013 will be much improved over 2012. As a result, we are leaving our guidance range unchanged at $2.60 to $2.80 per share excluding the third quarter goodwill impairment charges. In closing, absent our headwinds, this was really a strong quarter for KBR. Now, we'll open the call for questions. We ask that you please limit your comments to one question and one follow-up. Thank you.

[Operator Instructions] And we'll take our first question from Scott Levine with JPMorgan. Scott J. Levine - JP Morgan Chase & Co, Research Division: So Bill, you indicated that you do expect orders to be up in 2013 versus what you've seen in 2012. Obviously, there's a lot of large projects and generally, they've moved to the right. I was wondering if your comments are really kind of excluding the timing on those, and whether you're seeing just general momentum in the business, accepting for these larger projects, whether your expectations on some of the smaller jobs -- in general, that customers across the business are developing more confidence or additional color on your degree of confidence that bookings should accelerate as we move into next year?

Okay. I think you can look at some of the segments that we've talked about, the Oil and Gas business is obviously some projects that have a great deal of momentum and as we look at, Shah Deniz, we think that we're in the FEED and that's got a pretty identified FID for us early next year. The bids at ZADCO and SCR are marching according to a schedule that we don't see much slippage going in those opportunities. We are seeing enough opportunity surrounding the EPC and the ammonia business next year and then comments people are making about, making commitments in the first part of 2013 that lead as to believe that some of those projects will go forward. Technology remains strong. The LNG business, obviously, a lot of big things going on there and we do think that some of the delays that we have seen, we will see action in 2013. And certainly, we have been delayed on Kitimat and some of the Australian developments that we do think will move forward. But again, time will be the ultimate arbiter of when they go forward. As we look at some of the other areas, we do see a lot of stuff going on in Canada. Both from the LNG standpoint as well as up in the oil sands.That seems to be moving with a fairly solid pace. And again, we're not sure necessarily on the LNG side, which one may get there first, but we're certainly trying to play our bets as widely as possible and be there for whichever project does emerge. And similarly, we're trying to take some positions in the U.S. Gulf coast. You were also seeing discussions continue with some of our customers on gas to liquids projects. We do see --…

Well I think we're establishing ourselves as a player. We have one customer remark to us directly at the recent Minerals Convention out in Las Vegas. We're viewed as one of their Tier 1 contractors, which is good. The North American market of Roberts & Schaefer was largely solid pipe material handling projects, were around [indiscernible] projects, which haven't gone forward and we all know what's happened in the U.S. and certainly our forecast of revenues in North America have gone down. We do have a number of studies that we're working on in Australia, in Indonesia, in India but we think position us with opportunities to follow through on pre-FEEDs and FEEDs and ultimately the EPMC projects that from the present platform of our minerals business can represent some pretty significant growth for us.

And we'll take our next question from Andy Kaplowitz from Barclays Capital.

Can I ask a question to Sue and maybe Bill you can answer too but just -- in Gas Monetization, can you guys disclose the amount of the Skikda reversal of the contingencies that you have there just to help us sort of with modeling.

Well, I think what I would do, Andy, is as you think about that is the project has gone along over the last several years and we've obviously, talked about difficulties that we've had communicating with our customer because of their political situation and so on and so as you look at 2012 and in particular change orders that we're pursuing, some of those are current year and a good portion of what we booked in the third quarter is related to 2012. And the way I kind of think about the amounts overall is where the upside sort of offset the downside on the other project charges and other businesses.

Okay, that's helpful. Bill, so obviously, there's a lot going on with the company a lot of positive things. And that sort of offsets the large project you know as you answered sort of Scot's question, but maybe if I could ask it differently, as you look into the next year, how confident are you in the earnings growth of the company given that now it seems like the average large project is sort of mid next year or so for it to go forward. Is there enough in all of the other businesses that you still -- you feel pretty confident in earnings growth? How do you look at that?

I think we will give guidance on the -- formal guidance for next year after we go through our budget discussions next week and then review this with our board. I think we've got a great run rate. I mean, I just will comment on existing projects. Obviously, Escravos has got to wind down, but that hasn't been much of a contributor for us since we converted it several years ago. Skikda, we're still working through items with the customers that remain to be addressed. We're confident that we've got -- we're performing well. That we're viewed as performing well and that I do believe that we still have some provisions, for example, the liquidated damages we took, that we've got a good shot at calling back with good and valid reasons. And we'll address that with the customer in due time. We still see Gorgon being strong. That project for '13 will be big in construction on that and even in just 2014, at the end of '14 we'll bring the first train up and we'll still have 2 more after that. Ichthys is just now making in our world kind of some impacts on the P&L but are worth talking about we're hitting the lift off point on project percent completed engineering. We're getting our teams mobilized now into the fabrication yards. We're setting up our initial construction management organization the latter 2 of which will start getting us services income. So I feel pretty good about our momentum on existing projects and I'd like to limit my comments to, we don't see a big falloff in terms of our activity on the big projects in the portfolio. So as things continue to move forward next year, we sign up additional work and we think we can get still some work signed up this fourth quarter that it will be an interesting discussion we'll have with our teams next week as we review their budgets.

And we'll take our next question from Jamie Cook with Credit Suisse.

This is actually Andy Buscaglia on behalf of Jamie Cook. So yes, I just wanted to actually follow up in terms of your capital allocation strategy, if you could comment, in particular, on M&A and just any update on your thoughts there?

Andrew, I think as we look at cash and deployment of that cash, we continue to look at the same buckets that we've looked at, which is return to shareholders through share repurchases and dividends, investment in organic growth and our ERP project. And M&A, certainly, still has a place in all of that. So I don't think that has changed any. And to be honest, as we look at all of the different markets and places for that, I think we'll continue to be very balanced.

Okay. And then, actually, just a follow-up. You guys talked about unbilled receivables in one of your segments. Is there anything to read into there? Is that just kind of typical of what you're seeing? And can you just talk a little bit more about that?

I think that as we think about receivables and unbilled receivables, as I said, I think that a good deal of the increases are coming from claims and unapproved change orders. All of those are fully vetted by our own internal teams as we go through this process, and we believe that they're going to be collected. And what we're signaling there is that over time, we're going to get those done, and I just wanted to provide a little bit of color on why there was growth there. And as we see other projects go forward, I personally believe that it's very important as a business to have a lot of discipline around getting your invoices up, getting them correct and collecting those receivables. And so that's really the nature of the commentary.

Yes. If I could add to that, we do have a very rigorous process involves both internal assessment, as well as supported by third-party outsiders. So we feel pretty good about where -- what we've booked. And then the one element that Sue talked about in her comments, we do have $82 million in unbilled receivables with the government, where we have performed work at their request that they haven't yet funded a task order or that they've asked us to continue working as we've exceeded the cost of the amount that has been funded on the task order. So I think those are some of the uncertainties we've seen arising from sequestration, and we're working very hard to help them see some of the shortcomings in their funding of the task orders.

We'll take our next question from George O'Leary with Tudor, Pickering. George O'Leary - Tudor, Pickering, Holt & Co. Securities, Inc., Research Division: Just kind of looking at gas monetization margins and the big uptick quarter-over-quarter. I'm just wondering if you guys could provide a little bit of incremental color between the breakdown from the roll-on of Ichthys and maybe some of the recoup cost or project closeouts that boosted the margin a little bit and how can we think about that trajectory of those margins going forward? I know you touched on that a little bit but maybe just a little bit more color on the breakdown there?

Yes. I think the 2 things that I would ask you to think about are the impact of Ichthys, which we have previously said comes in as an equity project. So again, we're not ramping up big on our services, so the income is percent complete x the profit pool. And that comes in at a $1 of revenue and a $1 of earnings, so that's 100% margin that does help lift up the margins. The other one is the -- as Sue talked about, was Gorgon. And you've got to look at the gas mon margins, and the vast majority of our noncontrolling interest at the bottom of the P&L is backing out 70% of those positive P&L impact. So yes, those went up way high, and we always try to be very clear referencing big gas mon margins by saying also look at the NCI line. And that will help bring it down a little bit, but it does present perhaps a more optimistic view when one only looks at the gas mon line without considering the minority interest backout on the Gorgon project. George O'Leary - Tudor, Pickering, Holt & Co. Securities, Inc., Research Division: Okay. That's very helpful, and then a follow-up. Looking at kind of Canadian LNG versus U.S. LNG projects, given kind of the remoteness and the large infrastructure costs, which potentially translate into incremental build-out time on those projects, is there any -- what would you say your thoughts are around timing of the U.S. LNG versus Canadian LNG, both from an FID perspective? And then assuming there's a longer build-out time for Canadian LNG, do you actually expect first gas to come from some of these U.S LNG projects?

Well, I would say if I could really simplify, it's a horse race between Canada and the U.S. One horse is can you get your pipeline infrastructure permitted on the native lands up in British Columbia? And on the other horse being can you get your export permits from the FERC and the Department of Energy, given some of the statements made by the American Manufacturers Association regarding, "Don't export the gas, let us export value-added products with gas as a feedstock?" So I think those are the 2 items that we're watching and, I think, are going to be the critical path drivers for the generic Canadian project and the generic U.S. project moving forward.

We'll take our next question from Tahira Afzal with KeyBanc.

First question is in regards to some of the big cracker prospects in the U.S. From a technology standpoint, it seems that they might not be a good fit for you but would love to get a sense on really the Ichthys side, where your positioning is and if you can provide any color on the timing, if you are positioned on those?

Well, the ethylene projects that we've talked about, I think the ethylene technology that KBR has in markets historically has performed better on naphtha as a feedstock as compared to methane. And so our technology doesn't line up as well in the U.S. and the methane-based market. And also, it's a very high-efficiency, high-complex technology that does get great yields, but the benefit of yields is not as relevant compared to the other technologies when you're looking at low natural gas price environment. So we're not seeing much there for us. As we look at our portfolio of opportunities, we're clearly much more bullish on ammonia, power, LNG and also gas to liquids, where we can find opportunities to participate in the ethylene market perhaps as a constructor or in other areas we'll look at it. But from the KBR suite of opportunities, that's probably the -- our least competitive or least advantaged position.

Got it. Okay. And really a follow-up, some of the problem projects you've seen. Clearly, your construction opportunities could be fairly notable over the next few years based on the shale in North American energy independent story. How are you looking at your construction [indiscernible] and execution, given the issues you have? And really what is -- how important role is that construction group going to play as you ramp up on your execution in the U.S.?

Well, the construction business, if we look at where the man hours are being spent, most of our construction man hours are spent on EPC projects in power, in downstream, primarily. And they're doing well. I mean those have done fine. We did have the 2 headwinds and on one where -- the one project, we ran into a lead contamination and a hurricane. Well, if you're doing fixed-price work and you have increased cost, because of items like that, you've got to book the cost until you get the customer to give you permission to book to build them for the change order in an entitlement sense. And so we're working through that. That's a little bit of an oddball. But the one area we were surprised about has been the changing labor situation at the power project in Georgia. We had been there for a number of years. And all of a sudden, it just changed pretty dramatically for us. We can't tell you yet if that's a systematic or market-wide trend or just something in an isolated geographic area. I do say -- I do see that most of our work that we're looking at going forward with our construction resources is very much focused on supporting the EPC business of KBR. We look at the power projects, the ammonia projects and other ones that we're involved in that we feel very good about the resource availability and our ability to perform. And so as we get into resource trade-offs, where we might find more project opportunities to participate as a constructor, either directly or as part of an EPC player, we're going to be moving more towards the EPC side. And that's -- we think that's the highest and best use of that resource at KBR.

And we'll take our next question from John Rogers with D.A. Davidson. John Rogers - D.A. Davidson & Co., Research Division: Couple of things. Sue, did you say that the embedded profits in backlog, how much that was up?

What I said was that the backlog -- the revenue backlog year-over-year, quarter-over-quarter was up 27%. And I said the job income was also up 27% for the same period. John Rogers - D.A. Davidson & Co., Research Division: Okay. So -- and any comment then on the profitability in the backlog?

Well, we continue to manage our business around the profitability in the backlog. We're pleased that we're continuing to maintain our backlog margin. Sue's comment implies that backlog margin is the same, which means that despite taking on a big EPC project in Ichthys, we're still selling some pretty good work at the remaining parts of the business. John Rogers - D.A. Davidson & Co., Research Division: And I guess what I'm getting at is that there's a big chunk of that backlog, the 70% of Ichthys that you don't -- that won't go through your P&L that accounts for part of the 27% increase. So as your -- has the income gone up even more?

Well, the job income if we're talking about backlog -- so within the backlog accounts, the job income margin has not changed. As our backlog rolls into the P&L, our margins will go up because the job income will go into the P&L dollar for dollar. The revenue backlog will go in at $0.30 on the dollar. John Rogers - D.A. Davidson & Co., Research Division: Okay, okay. And then, Bill, just...

With respect to the Ichthys project. John Rogers - D.A. Davidson & Co., Research Division: Yes, that's what I just want to make sure I'm clear on. Okay. And then your comment on the labor change on the power plant, could you -- what was the labor change?

Well, this is the anecdotal discussion from the guys who were on the site and trying to explain to us how this happened, and they said that there have been a lot of people working on that site for several years and many of them working for us for several years. And the sense is they just want to work somewhere else. It's as specific as that. It wasn't a changing labor management regime. It wasn't a changing project complexity or safety issue. It just surprised us. We thought it would be more predictable, and so we saw per diems go up. The wage rates creeped up a little bit. The turnover was higher and maybe there's more competition in the Georgia market from other projects, which drove cost up and with that turnover came change productivity. And this sort of cascaded down to where we had to reset or mark to market, essentially, the current labors that we see for the rest of the project into the P&L, which gave rise to the loss. John Rogers - D.A. Davidson & Co., Research Division: I mean this is -- and you said that it was confined to this project. But I mean, given the growth in -- I guess, in some of the industrial projects potentially in the U.S. that you're looking at, I mean, how big a concern is this?

It was clearly a surprise for us, and I think it has heightened our sensitivity to this issue on all projects we're looking at. It's something that maybe we had gotten complacent, that it would be the same labor situation. But obviously, something changed in that market that caught us by surprise. So as we go out and do our labor studies, availability traveling, per diems, wage rates, we're now having to look harder and factor that in. So yes, it has caused us to really look harder at what might repeat itself if we're not careful.

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

I'm wondering if you could just comment on the utilization of your engineering resources and how you're managing staffing levels in the face of uncertainty on the timing of large projects. And I guess related to this, that unallocated labor was a bit bigger this quarter. So I guess, what's your visibility to that over the next couple of quarters? Will that flatten out or could that still go up if these bigger projects don't start to come through?

Well, at every one of our resource centers, and we tracked probably on the order of 20, we look at what is the existing contract, backlog, burn off over the next 12 months. And then we factor in kind of our weighted views, risk-adjusted views of new work that has been bid or expected to be assigned into that office. And so we're obviously looking at where we are today but with an eye towards where do we think we'll be in 3 to 6 months in terms of staffing. And so we've elected to make decisions to key people and lower our chargeability targets at some of the resource centers because we think the work will be ramping up in the next 3 to 6 months in the way that says we're better off holding and eating the cost now than having to go out and recruit people and try to deal with a less certain labor force as this new work comes in over the next 3 to 6 months. So we have made that decision. It's something that we think is prudent. It's been made over an affirmative basis. It's not an omission or, "Oops, we missed it." We follow this thing really rigorously, and we're making a management decision to carry more non-chargeable labor now in light of what we see coming down the road for KBR, which has given rise to the turnaround we've seen on the labor cost absorption line in the P&L.

Okay. So it sounds like maybe a little bit more headwind to go there on that line item?

I think we gave -- we've made some comments on that last quarter about how you think about the year but that's probably -- we won't make any further comment because it's a -- if we though it was going to be a longer-term issue, we probably would take some different decisions.

Okay. And I guess this is sort of a related question. But the divisional overhead in IGP is coming down a little bit, but I'm not quite in line with sales. And so I guess, can you take out costs more aggressively in that division? And I guess, more broadly, are there any other places in the organization that you would consider taking any other types of cost out non -- you just said you're going to keep staffing around. But are there any other types of cost you could be more vigilant with?

Well, we're pretty aggressive on cost. I think the -- I think what you see is a couple of different things going on. One, for each business unit -- and again, we've made an affirmative decision to have 14 business units. You got to have a business unit head. You got to have sales guys. You got to have project managers and support staff to run a business staff unit. And certainly, these are very leverageable overheads that we're not going to -- if we double the volume, we're not going to double the amount of overhead in the business. So as we bring it down, we're bringing it down. And we challenge all of our business units every month about that to bring it down to where you think the business will be over the -- not next month or not next quarter but over the near -- the next 12 months. There are also some areas where we've got just some structural overhead in the North American government business, where we're trying to manage the very large volume of work that -- the tail work that remains on the big LogCAP project from '03 to 2011. And so we've got a big chunk of folks there who are working on those issues, and they're all disclosed in our Q and our K about the magnitude of stuff. But we are trying to bring it down very aggressively, and I think you'll see that we will continue to be good stewards of overhead spending throughout the company, not only at the corporate level but also in the business units. But they are, I think, appropriately sized given the work we're expecting to see in those units over the next 12 months.

We'll take our next question from Will Gabrielski with Lazard Capital Markets.

Can you just talk about a little bit more in Georgia, I guess, maybe looking at that as a parallel for might be -- what might happen eventually on the Gulf Coast? I would suspect that the big nuclear construction job down there is creating some competition for labor. So as you talk about construction opportunities on the Gulf Coast and your willingness to maybe take some fixed-priced construction exposure, which we heard from one of your competitors earlier this week, how would you go about managing that risk? And how comfortable are you taking that risk going forward? And is there any other way you can look to gain entry into those projects without assuming maybe the fixed-price exposure at this point?

Did you say that one of our competitors said we were taking fixed-price risk?

No. I said that they were willing to.

I think we'd look at it on a case-by-case basis. Obviously, when you look at the risk from our view, you can either pass it on to somebody else or you can underwrite it yourself. Clearly, what we're seeing in the Georgia market may or may not manifest itself in other parts of the Gulf Coast depending upon labor availability and where projects are. We're very mindful of the expected ramp-up in projects in the U.S. Gulf Coast area over the coming years and have done our modeling on the construction labor peak that we would see in 2014, '15 and '16. I think that's going to put a lot of strain on the resources, and we're going to look real hard about what we take as lump sum and how we can make sure that we've got enough contingencies, risks and profit in it. So that if we take that decision, it will be a good decision. I think you just have -- we have to look at how this market evolves. But if form -- if everybody's expectations are manifested in the projects that come forward, we're going to have some labor challenges in the Gulf Coast area, and we'll just have to play that one, one at a time depending upon do we really think we can manage that risk. And certainly today, if we sign up a project on November 1, we're not going to be in the field for -- in any material way for another year. So we've got to forward project where that inventory of projects are and what it means to the labor resource.

Okay. And just as my follow-up on your comments. Has something changed structurally? Because you hear everyone in the industry talking about the risk of labor shortages in the U.S., specialized labor, skilled craft labor, et cetera, and everybody wants to self-perform, direct hire on this construction work. But it seems like no one is talking about maybe a shift towards cost-plus and the leverage swinging back towards the contractors. And I'm just wondering why that would be the case unlike 5 years ago when we're talking about this type of shortage globally, that the mix seem to shift more towards cost-plus work. Does that leverage not exist for some reason right now? Or do we just need it to get into the cycle before it develops?

Well, I think most of what we've seen in the U.S., because of the very high degree of hands-on involvement by the customers in the projects, is you'll probably see more cost reimbursable construction than you do in other parts of the world so -- and I think that's going to continue. I think you're going to see others wanting to understand what the real risks are and be able to apportion out who's got resources to be able to do that work on an effective basis. I think you'll see a lot more interaction with customers. If it does get as challenging as we believe it will be for construction resources, then the pricing for fixed-price is going to have a significant premium. And so the owners are going to have to make decisions on, "Am I willing to pay a very high premium for the risk of getting a fixed-price construction? Or should I take it on a much lower cost basis on a cost reimbursable?" And that's an owner's decision. All we can do at KBR is price the risk as we see it. I think we do have a good view in the market, and I do think we do a good job of assessing and pricing those kinds of risks. And the owners will have to make their decision on how they want to contract for that work over the next couple years.

And we'll take our next question from Chase Jacobson with William Blair. Chase Jacobson - William Blair & Company L.L.C., Research Division: Sue, just a quick question. You mentioned that Gorgon contributed about $10 million to noncontrolling interest. Was there anything included in job income related to that? I think you said there was an incentive payment?

Sure. Yes. So that's how it works. So the comment that I was making was trying to give you guys a bridge from what our typical noncontrolling interest runs to where it was. And so the $10 million is our partners share of the incentive payments, which means that the -- 100% of that was in the job income. Chase Jacobson - William Blair & Company L.L.C., Research Division: Okay. So it was $10 million and $10 million? [indiscernible]

Well, now we -- I think we -- our share of Gorgon, we talked about previously, is 30%. So for every dollar of Gorgon profit that shows up in gas monetization, $0.70 is backed out at noncontrolling interest. That's how you do the math. Chase Jacobson - William Blair & Company L.L.C., Research Division: Got you. And then in the context of the Roberts & Schaefer acquisition and how that's performed over the last 2 years. When you look at growing your share of the wallet on some of these projects and at other acquisitions you're either looking at or they have looked at, can you talk about how maybe you're changing the way as you do the due diligence on what the history of the target company is?

Well, I'm having a trouble knitting together the question because I think as we look at the projects and the share of wallet, we are trying to do projects, certainly, in oil and gas beyond and other business units beyond just doing the engineering. And so we've talked about project delivery at Shah Deniz [indiscernible] Pluto LNG. When you think about the Roberts & Schaefer project, the acquisition, that's somewhat a different question. I think we've got to look -- the last one or some of the takeaways we have there. We've got to look at better the capabilities of the people doing fixed-price work and their ability to deal with the complexities, and so that was the lesson learned. We've got to clearly understand what the customer is buying, how they buy. And while I'm very pleased with shale gas developments in general for KBR, it certainly has been an area where -- and this part of the portfolio was adversely impacted. But from a broader standpoint, we're pleased with the acquisition it has given us. We are now perceived in the mineral sector as being a minerals player, not a hydrocarbon guy trying to sell in the minerals markets. So it's been successful there. It's gotten us recognition for the projects and capabilities of the people at Roberts & Schaefer, which are still very good, and we just need to make sure that as we continue to integrate that business into KBR, that the processes, systems and culture regarding project execution can continue to be transferred into that organization.

We'll take our next question from Robert Connors with Stifel, Nicolaus. Robert F. Norfleet - BB&T Capital Markets, Research Division: Sue, can you just clarify more for me. You gave some details of the $2.9 billion in KBR work scope with 4 commitments of contingencies. Can you discuss what the $2.9 billion entails, whether it'd be procurement or labor and when you are expected to forecast to use such for commitments? And also, what does the $350 million entail?

The $2.9 billion, we've made comments previously, we've got a lot of back-to-back procurement with GE on compressors, with Siemens on motors, things like that, that technically are not an open fixed-price exposure. If you wanted to get precise as more of a credit risk on those. And the other de-risk aspect is some of our labor, where we have a certain amount of pain that we take before resuming to a cost reimbursable base. So we feel really good about the 89% of the backlog that's technically listed as fixed price in terms of how we've covered that exposure. The remaining $350 million is materials, steel, aluminum, wire, cable, the normal stuff you see on a normal kind of project that gets bought out in time, and we've done our forward pricing. And we've done estimates of where that will be at the time we're expected to purchase those elements. Robert Connors - Stifel, Nicolaus & Co., Inc., Research Division: Okay. I guess you're probably not able to discuss but any sort of discussion as far as what sort of labor rate increases you would need to see before it does switch over to cost plus?

Probably, you're right. We're probably not willing to comment on it. It's -- the risk is on aggregate dollars. So whether it's labor rate increase or productivity leading to more hours, it's just the dollar exposure we're referring to. Robert Connors - Stifel, Nicolaus & Co., Inc., Research Division: Okay. And any status on the update of Jazan. Just some recent trade press that some of the subcontractor costs have been a little bit higher than originally forecasted due to the remote nature?

I don't really have anything to add to that. It hasn't bubbled up to our screen and our reviews of the project.

I'd now like to turn it back over to Mr. Bill Utt.

Okay. Well, thank you, all, very much for tuning in with us on the KBR Third Quarter Earnings Call. We appreciate your following KBR, the questions you had and Zac and Sue and Rob will be available over the coming days to answer any subsequent questions you all may have regarding our presentation and discussion. So have a great day, and thank you very much.

This does conclude today's conference call. Thank you all for your participation.