Good afternoon. My name is Syleste and I will be your conference operator today. At this time I would like to welcome everyone to the Jacobs Third Quarter Earnings Conference Call. All lines have been placed on mute to prevent any background noise. After the speakers' remarks there will be a question and answer session. (Operator instructions) Thank you. Ms. Bruner, you may now begin.

Thank you. Good morning. The company requests that we point out that any statements that the company makes today that are not based on historical fact are forward-looking statements. Although such statements are based on management's current estimates and expectations, and currently available competitive financial and economic data, forward-looking statements are inherently uncertain and involve risks and uncertainties that could cause actually results of the company to differ materially from what 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 annual report on Form 10-K for the period ending September 30th, 2008, including Item 1A, Risk Factors, Item 3, legal Proceedings, and Item 7, Management Discussion and Analysis of Financial Condition, and Results of Operations contained therein. And the most recent Form 10-Q for the period ending March 31st, 2009 for a description of our business, legal proceedings and other information that describes the factors that could cause actual results to differ from such forward-looking statements. The Company undertakes no obligation to release publicly any revision or update to any forward-looking statements whether as a result of new information, future events or otherwise. Now I would like to turn it over to John Prosser, CFO of Jacobs.

Thank you, Patty. Good morning everyone and thank you for joining us this morning. I will briefly go over the financial highlights for the quarter and then I will turn it over to Craig Martin, our CEO for business overview. If you turn to Slide #4 of the package, you will see the financial highlights for the quarter. We did have diluted EPS of $$0.76 for the quarter and net earnings of $94.4 million, for the year-to-date the diluted EPS was 2.58 a share and the net earnings were $320.5 million. The backlog reported at $15.8 billion and I will spend a little bit more time on that in a minute. The balance sheet continues strong. There was some highlight information in the press release in our 10-Q should be filed later this week so the details of the balance sheet and financials will be available at that time. Our net cash position grew to $1 billion; this is up $254 million from last quarter and over $450 million from the beginning of the year. So our cash generation ability continues to be strong. And as you saw in the press release, we have revised our guidance, narrowed the range to $3.10 to $3.35 through the balance of the year. This is narrowing from $3.10 to $3.50 that we had in the previous guidance. If you go to Slide #5, the history of our earnings, you can see that we have added tremendous growth over the last four years that we are in a flattening earnings cycle this year, but even with that flattening, the compounded growth rate over the last five years continues to be just over 30%. Going to Slide #6, talking about the backlog, you see the backlog was reported as I said $15.8 billion. This is down from last quarter for the year-end. However, the technical professional services was up about $300 million from both last quarter and the last year-end. During the quarter, we did take $665 million work out of backlog, albeit $20 million of this came out of field services. $300 million of this was the cancellation of a project, which in the upstream market, which had previously been on hold and the other $365 million was a shift of pass-through costs to the owners' responsibility on a project in the downstream market. Adjusting for these projects, total backlog was essentially flat with the prior quarter and prior year-end, just down slightly. And moving on, I will now turn it over to Craig to talk about the business overview.

Thank you, John. Good morning everyone. I'm going to take a few minutes to talk about how we're going to continue to try to grow this business at 15% compound over the long-term. And you will find that very little has changed about our approach. We remain committed to our business model and I will talk about that in more detail in a minute. We're going to continue to keep the company diverse in terms of the markets it serves, again, I will talk about more on that in a minute. And then we're going to try to continue to grow multi-domestically, let me take a moment to talk about that now. Our multi domestic strategy involves following our core clients around the globe to the places where they have installed assets. That’s the part that lets us get a base load of business and creates a stable earnings for our local operations that then we can then leverage into bigger projects for those customers as those customers invest in those areas. Today we're expanding aggressively in India and in the Middle East. We see lots of opportunity to grow our business there and increase our market share. We're particularly excited about the Middle East in that context, because it appears to us there is going to continue to be a fairly high level of the spend and there is a very significant installed base. You may recall couple of years ago we bought 60% interest in ZATE, Saudi Arabia engineering company, that leverage is working quite well for us, we're seeing good growth and we see now from our customers a much higher interest in doing business with companies like Jacobs, who have a local engineering presence than perhaps some of our competition. So we're pretty excited about what…

(Operator instructions) Your first question comes from the line of Andrea Wirth with Robert Baird. Andrea Wirth – Robert Baird: Good morning, gentlemen.

Good morning. Andrea Wirth – Robert Baird: Wondering if you could just address the implied guidance for 4Q. It's a fairly wide range. Just wondering if you can give us a little bit more color and understanding. One, why the range is so wide and really what are the key swing factors are from getting to the top of the range to the bottom of the range essentially?

.The range is wide because we like to keep it that way. The market being what it is and there are so many different dynamics going on that we just feel more comfortable leaving a fairly wide range. We started out the year with a wide range and now as we get closer to the end of the year, we have narrowed a bit, but it's still a broad range and we realize that. And there is just so many different factors going on with so many different markets that we feel it's appropriate to keep it fairly broad. Andrea Wirth – Robert Baird: And just given how great of a job you have done in controlling your SG&A costs, would you maybe say that part of the range could be more of a concern of what could happen on the top line versus you controlling your costs? Would that be a fair estimation?

I would say that we probably have a better control of our costs than we do of our work through.

We certainly have a better control of our costs than we do of our customers. I guess that would be a good way to put it. So, yes. Andrea Wirth – Robert Baird: Fair enough. And then just on your engineering backlog. It was up sequentially, but wondering if that’s a function of really new orders coming through or is it really more just a little bit of a slower burn rate?

Now that's a function of new orders for the most part. Andrea Wirth – Robert Baird: Great. Great. Thank you so much.

Your next question comes from the line of Michael Dudas with Jefferies. Michael Dudas – Jefferies: Good morning, everybody.

Good morning, Mike. Michael Dudas – Jefferies: Craig, if you could generally, I know you have a lot of different businesses, but the amount of incoming or proposal activity from your clients relative six months ago, better the same or less?

It varies by market, Mike. So let me just try to characterize it to broad categories. In the public sector businesses, the level of inquiries are up mildly. A little weaker in Europe than they are in the U.S. This is partly a stimulus thing, but not so much because of stimulus money, but because of the pause that stimulus caused in people deciding to release projects. So I would say pretty much across the public sector, things in terms of prospects, both prospect quality and number of prospects are a positive. We go to the private sector; it's more a mixed bag. Leaving out the pharma-bio and food and consumer products kind of stuff and just focus in on the heavy-process area, there seems to be a significant number of projects. So it's not like the number of projects has gone down, but the size is smaller and the distribution is different. So the effect has been that there I would say the overall prospect quantity, if you consider both size and number is down a bit from where it has been. But the good news for us is these smaller projects are our chances of winning go up significantly in $100 million and $200 million projects. So I think the prospects for our company are probably little better than what the prospect list would suggest the prospects are for the industry. Does that make sense? Michael Dudas – Jefferies: Does, Craig. And when you talk about your base load and regulatory-driven business in your model, can you characterize that to where you are today in looking out to 2010 and '11? Can we characterize it as your base load business seems solid, but we need some more confidence to get some reasonable projects to get booked so you can start working through things in the next couple of years maybe portray where the Company's growth outlook is?

Well, let's see. Starting with kind of where is the base load business. The base load business is north today of where it has been historically. Partly because we continue to add significant work to the base load business. Our reputation and our capability to deliver on this business has never been stronger and we're getting increasing recognition from our customers that we're really good at this part of the business. So the drivers I think are going forward is that we'll see an ongoing increase in base load work, but that will be tempered by our customers cutting back on how much they spend in the aggregate. So I think base load business will increase as a percentage going forward. I think it will represent some growth for us, but it's certainly not going to drive boom time kind of growth as we look at it today. Does that answer your question? Michael Dudas – Jefferies: It does, Craig. One final question. Characterize the next couple of years' contribution from your initiatives in India and China?

Let's see. Well, I don't think either initiative in and of itself i.e. from the P&L derived in country will have major impact in terms of moving the needle. Let's face it; it takes a lot of rupees to make a dollar. And even with the very substantial presence in India and I think shortly we will be the largest engineering company in India, period end of story, it still takes an awful lot of rupees to push through. But we will have (inaudible). However, we'll be able to leverage that presence from India, predominantly on the work share perspective to take bigger share market globally. And with respect to China, I think we'll be able to leverage our presence there into participation into bigger projects and programs where the significant part of the work will be exports that will drive better numbers for our Company in some of our established offices. So I like the initiative. I think it's a positive for our Company long-term in lots of ways. But I wouldn't expect that the two countries themselves would swing the needle very much. Michael Dudas – Jefferies: Thank you, Craig.

Your next question comes from the line of Alex Rygiel with FBR Capital Markets. Alex Rygiel – FBR Capital Markets: Thank you. Good morning, gentlemen. Few quick questions. First, as it relates to pricing, can you comment on whether or not pricing is holding up or becoming more competitive in the two public-private sectors?

Sure. Let me start with kind of an overall comment about pricing and then I will split it out. Overall, we're seeing pressure on margins and unit margins are declining slightly. That's bad news. The good news is the decline is smaller and slower than I would have told you we would expect from previous cycles. So it's kind of a good news, bad news thing. When you split it and look at the private sector markets, particularly heavy process, their margins are moving down a little more aggressively than the average, the company average you might expect, again though not as much as we have seen in the past. That may just mean the worst is yet to come or that may mean this is going to be a little softer cycle because everybody's margins were pretty low to start with. But we do see downward pressure in the heavy process business in particular. We think that's going to continue and it's just a question of how low will it go? I'm of the opinion today that it may not go as low as it did in the last cycle. That's the good news point as well. On the public sector side, an awful lot of that business is not price-sensitive. And so we're getting very little pressure on margins in that area. There is some pressure in areas, like design-build work, where we work as a designer supporting some contractor. There is still a little pressure in the aerospace and defense arena, but not significant. So there I think the margins are holding up pretty well and that part of why, overall, the margins are declining more moderately than what we expected. Alex Rygiel – FBR Capital Markets: And my second question, you identified the one upstream project of $300 million that was canceled in your backlog and you had mentioned that that project had been put on hold. Can you attempt to quantify or identity any other projects that are currently on hold in your backlog?

We've looked at that. We don't have any reason to think that the remainder of the backlog would get canceled. Of course, as I told you, some of our customers are a little bipolar about this. But right now, we think that the things that are in backlog that I would characterize is deferred are actually starting to come back to life. So we see that as a mild positive. Again lot depends on what oil prices do and what the economy does. And the other piece of work which we got a backlog in the refining side actually has no financial statement impact other than the pass-through revenue is not on our books any more. So from a P&L work hours, the things that drive our business. That particular change was just the customer doing the procurement on us doing the procurement for the customer on the customers' paper as opposed to us doing the procurement for the customer on our paper. Alex Rygiel – FBR Capital Markets: Very helpful. Thank you.

Your next question comes from the line of Jamie Cook with Credit Suisse.

Hi, Jamie. Jamie Cook – Credit Suisse: Good morning.

Good morning. Jamie Cook – Credit Suisse: Just a follow-up question on your Q4 guidance. Can you guys just speak to – I know it's obviously a top-line issue, but can you speak to the one or two markets that's driving that or is it one or two markets are the particular project or two that's driving a wide range? And then also, I'm just trying to think about Q4 and what the implications are for 2010. If you take the mid-point it assumes like 260, again is another down year. So in order for you to have up earnings, I mean how dependent is it on? Do we need to get a lot more aggressive on the acquisitions or what are your expectations for oil and gas picking up in the next quarter or so to help 2010?

I will let John comment on the wide range here in a minute. Let me just talk about what's happening in the industry from the standpoint of what we think might happen in '10 and particularly on acquisitions. It's still an industry that’s highly uncertain. You saw my quote in the press release and we talked about this on the last conference call I think uncertainty is a big factor still going forward. When I talked to our customers CEOs, when I talk to some of our competitors CEOs, uniformly we're still getting the response that I had mentioned last time, which is my business is not so bad, but. And the "But" always involves cutting back and being cautious, those kinds of things. So, how cautious our customers are going forward. You have some people out there declaring that the recession is over, and you have some other people declaring that we haven't even hit bottom yet. And so those uncertainties are translating into confidence problems in our customers that makes the path forward kind of murky. With respect to acquisitions, I think we have said this before. I'm sure we have. You can't really make acquisitions that have significant earnings impact in the year in which they are acquired. Because of the amortization of goodwill and the way in which the accounting treatment for the acquired assets works, they don't have a big impact on earnings. You might get out of a sizeable deal. You might get a penny or two or three, but they are not going to be a big swing. The bigger swing tends to come when the amortization expires. So to the extent that acquisitions are going to help us next year it will be more of a function of deals we've already made than deals we'll make. Does that make sense? Jamie Cook – Credit Suisse: Yeah, that makes sense

John, you want to comment on the guidance?

The guidance, the wide range is one that we're going to probably stay with. There is a lot of complexity in the markets. As Craig has touched on clients are watching their cash flows closely and so things can be accelerated or decelerated over the short-term on projects which can affect the work up and man hours, work hours going through our books. We are seeing, even in the public sector, where there is some spending pick up or funding coming from stimulus. Some clients are using some of that to accelerate their own or keep their own employees busy as opposed to putting it out to contractors or folks like us. There is just a lot of uncertainty in how the work is released and how the work through. So there is a range there that just the pure number of work hours that might be put through in the quarter. The other side of it is we had a very good success at reducing our G&As in line with the reductions we have seen at the top line, the gross margin but as we go through that, it becomes more difficult and there are pressures on that. So are we going to be successful in keeping the trend down or as you reduce people and such, you get some auxiliary costs, like healthcare costs and people go to the doctor, making sure things are done before they got a concern about being laid-off. So you get some acceleration in some of those costs. So we really have to keep an eye on and keep controls. So there is just I guess this is the way I'm saying there is a lot of complexity in the elements and there is multiple elements moving and we just felt that it was appropriate to keep a fairly wide range looking at the fourth quarter.

In fact, we'd argue that it's not a wide range, it just reflects the uncertainty of the marketplace. Jamie Cook – Credit Suisse: I guess a follow-up question, as I just think longer term, there are two things that would make me believe that if things do recover, Jacobs might be laid out to see the benefits. One, we're seeing the markets move towards fixed price, couple of projects that have gone ahead have won fixed price and low-bidder has gotten it. You guys typically on a fixed price contract you see the benefits later and then I guess just the other question, you know on the upstream side, Jacobs is still very focused on the oil sands. I wonder where we should be focusing because that's the one area of the world that seems to have more stops than goes relative to a place like the Middle East. Does it make sense strategically to focus on other regions or to reduce your exposure to the oil stands because those projects seem to stop and go depending on the wind?

We like our exposure to the oil sands to be smaller because our exposure to the other aspects of the upstream business is bigger. There is no reason for us to think about downsizing our operation in Canada. It's a terrific market. We're a dominant player in SAGD. We got a really good reputation in that part of the world. So there are lots of opportunities for us to grow and we'll just have to learn to deal with whatever their cycles are as we go forward. But the bigger opportunity, obviously, is the expansion of our business into other upstream arenas. And I think we're in a great position to do that. As to the lump sum, yes, there will be a lot of work done lump sum, but somebody has got to engineer it first. By that sense I mean do the feedwork, do the front-end and as the largest EPC engineering contractor in the business, we usually benefit from that upsurge in engineering and then have less of a construction tail than some of our competition. Jamie Cook – Credit Suisse: Okay, thanks, I'll get back in queue.

Your next question comes from the line of Steven Fisher with UBS. Steven Fisher – UBS: Good morning. On the SG&A, Craig, let's say your business is flat at the current levels. How much more SG&A do you still think you can still cut? It doesn't sound like you have reached the point where you have done everything, taken out everything material that you can?

Well, we always run a pretty tight shop. So getting G&A out of Jacobs is not an easy thing to do, but I believe there is still opportunity to continue to drive our G&A down significantly over the next few quarters. If always comes harder as you get further down into the number, right? You start facing redundancies in Europe, because you have laid off your contractors. You start to have to deal with leases and vacancy and space that takes longer to get rid of, but I'm still confident that we can get a significant amount of money out of our G&A over the next few quarters, if that’s what we need to do.

Some of the other things that we have already done don't get the benefit immediately. Some of those have a tail that the benefit actually gets better as you go down a quarter or two. Steven Fisher – UBS: So do you think you can offset the pricing pressure or do you still expect weakening in the operating margin level?

I think there will be some weakening in the operating margin level. I think we'll offset a chunk of it, but there will still be a bit of a down draft there, net/net. Steven Fisher – UBS: Okay. Relative to your expectations were the growing markets not growing as much? It was it both or was it something else?

I think I hinted at this in the press release, but we expected that the public sector markets would be stronger and offset a lit more what is happening in the private sector markets than they did. It's a function of slowness of stimulus, slow starts on projects, these holdups in bond issues, things that I think now we're starting to see now release, that represented the challenge in terms of looking ahead. Again, we're living in uncertain times. Steven Fisher – UBS: That’s fair. And just lastly, let's say the transportation bill is delayed 18 months, but stimulus works out nicely the way you anticipate. Does that mean you still think you can grow your infrastructure business modestly next year and how much is a factor of actual state budgets?

The health of state budgets is a key factor, so the resection impacts on taxes are an issue there. But if we get a delay in the transportation authorization, but stimulus goes like it looks like it's going to go, I think we'll be able to grow modestly, high single-digits maybe. If the transportation bill goes, I think queue with do a little better. And of course, all of that depend on not having a double-dip recession. Because a double-dip will throw what we're talking about out the window. Steven Fisher – UBS: Okay. Thanks a lot. Appreciate it.

Your next question comes from the line of Andy Kaplowitz with Barclays Capital. Andy Kaplowitz – Barclays Capital: Good morning, guys.

Good morning, Andy. Andy Kaplowitz – Barclays Capital: Excluding a double-dip recession, if we're thinking about the future and we're looking at your quarter, you booked from my count, $2.5 billion in gross new awards which was down a decent amount from last quarter and what I hear on the conference call is some things are good and some things are bad and I think what we're trying to figure out is, can you do that kind of new awards going forward or more? Have things weakened enough in that 2.5 that that’s sort of a base load amount as we go forward and things could get better or could we see weaker than $2.5 billion.

First of all, we remind you of this fairly often, backlog is really lumpy. Because it is revenue backlog, it's affected by what kind of construction dollars are getting backlog. What kind of pass-throughs are out there. So it's a little difficult looking at any one quarter to say, that’s the bottom part or the benchmark or whatever you want to call it. I felt like this quarter was a decent, but not great quarter for sales. And without trying to predict the numbers, I think we ought to be able to sell in that range or better going forward. That will depend, I think, a lot on the public sector. I don't think there is as much construction dollars out there to get as is usual. So that may make the backlog numbers look softer than they are. Right? Customers are being very careful when they award fees or even when they are talking about awarding detailed engineering they are holding back construction. So part of why you see the nice uptick in technical/professional services backlog and the down tick overall is that exact issue. Some, some good new awards on the engineering side that don't reflect construction. They may but I suspect it may be quarters out. So the long-winded way of saying, I think what we're seeing in terms of business is about what we are going to see for a while. Andy Kaplowitz – Barclays Capital: Got you, but, Craig, is it fair to say that if oil and gas activity stays exactly as it was in the quarter and stimulus starts to kick in like we think it should eventually, that things might look better than worse in terms of awards excluding lumpiness, of course.

I think it's far to say that. Andy Kaplowitz – Barclays Capital: Could you go into SAGD more? You have talked about in the past, Craig, that in the oil price for SAGD to go forward is a decent amount lower than other types of oil sands work. So where are we? Clients just you been certain of drifting oil right now, so they are just waiting, but they are close on these projects?

I would say that describes it very well. Our conversations with your customers in the SAGD world, they are all talking about reinitiating or releasing investment if oil prices stay in the range where they are and appear to be stable in that range. So the things that they are looking for and think one of the Canadian forecasters here a couple of quarters ago had said it right. It wasn't so much the price as it was the uncertainty that drove a lot of stopping of projects. And in order to get a feeling of certainty back, there has got to be a reasonable stability of oil prices in a solid north of 50 kind of range. If we get that, I think we're going to see a lot of release of new project work or release of delayed project work, as the case may be. Even if the average price of oil stays relatively high, but oscillates significantly, I think that will be a negative for investment. Andy Kaplowitz – Barclays Capital: Thank you. I will get back in queue.

Your next question comes from the line Andrew Obin with Bank of America Securities. Andrew Obin – Bank of America Securities: Yes, hi.

Hi, Andrew. Andrew Obin – Bank of America Securities: In terms of the margin and I apologize for beating this sort of horse to death, but if I look at margins back in '03 into '06, which was still a pretty decent time period, they were quite a bit below versus what we are right now. And given your comments, sort of forecasting a more mild recession in terms of contract, I guess, pricing that it's better than you think, if you go back to when things are really bad, margins were lower than '03-'06. So where do you think the margins bottom was '03-'06 was a reference point or it's too early to tell?

I wouldn't say that '03-'06 is necessarily a good reference point and the reason I suggest that’s that we made a significant number of acquisitions in the infrastructure space in that period. '04, '07, '08, all brought big chunks of infrastructure which carries higher margins and is less price sensitive into our numbers. So I don't think that '03-'06 would be representative of our business. Andrew Obin – Bank of America Securities: That’s a very clear answer. Thank you very much.

Your next question comes from the line of Will Kabruski [ph] with Broadpoint [ph]. Will Kabruski – Broadpoint: Thank you very much. One quick one on AWA that you closed in June, any impact to the numbers that you reported at that point?

AWA was slightly positive, but it was – as we say, it was not a move-the-needle kind of thing. But it will be slightly positive going forward. Will Kabruski – Broadpoint: Was there any backlog associated with that that in any way that was consolidated?

No. Will Kabruski – Broadpoint: Okay.

It's one of those things that I think there should be backlog, but the rules don't allow it. We have a pile of projects in the Company because they are owned companies or the way in which the ownership of the actual entity doing the work works, we don't get to put any significant backlog on our books. And so sometimes some of these big wins, things can represent real generation are no relationship to the backlog numbers. Will Kabruski – Broadpoint: Could you possibly provide guidance for the run rate of that business might look like? I'm not sure if you are would be willing to do that, but that would be helpful.

I'm sorry? Will Kabruski – Broadpoint: The run rate what we could expect or color historically what that business may have generated.

First of all, we're one-third owner of AWA and will come through as our share of net operations. As I say, it will be a small positive and it will be a fairly steady type of contribution, but it's not a move-the-needle. It's in the kind of one-two cents a quarter type of thing at best. Will Kabruski – Broadpoint: That’s really helpful. Thank you. The framework agreement you signed in the quarter with Abu Dhabi National Chemical Company, Can you maybe give us some color beyond the press release and your expectations in the agreement in general. What the opportunity looks like over the next few years or several years?

No, we really can't. We're very religious about not doing anything that hasn't been approved by the customer from a press release point of view. So what you see in the press release unfortunately is what you get. Will Kabruski – Broadpoint: Fair enough on that one as well. Last one for me. In terms of Middle East in general and obviously what you are making there, could you update on what your headcount was in the Middle East and the bigger picture. What is the competitive environment and what prices looks like right now? There has been a lot obviously written about in the news and competition coming out of Asia and how you fit into that competitive matrix and fill your position from a pricing standpoint, things being dominated in dollars, versus some of the competitors who are not.

Headcount question, headcount has grown modestly quarter-over-quarter. I don't have the numbers in front of me, but we are up a little bit. There are two or three trends going on that are interesting. There is a fair amount of work that’s being competed or recompeted on a lump sum basis. We will not be a prime competitor to that kind of work. We enjoy a pretty good position in country and I'm talking specifically about Saudi Arabia right now. So we're the engineering contractor for other contractors doing that kind of work, which is good business for us. Yes, there are pricing pressures but no more so than on the Gulf Coast of the US. In terms of what is happening marketwise, the customers there have concluded that the business model that Jacobs is using is attractive. And we're actually seeing some changes in the procurement strategy of your customers to better utilize companies like Jacobs. And that’s a pretty small set of companies relatively speaking. So we're actually pretty excited where had that might take us longer term. Will Kabruski – Broadpoint: And beyond just the pricing, maybe some of the terms in the contract that are being let right now, any color in terms of that as well of the your comfort level from a risk standpoint.

We're seeing more than an adequate supply of work that’s work from a risk point of view that we would be comfortable with. The lump sum turnkey competitively bid stuff; I couldn't tell you the terms are better or worse than they were, because we're not looking at it either way. Will Kabruski – Broadpoint: Fair enough. Last one for me. You might have addressed this already. But could you quantify what is deferred in backlog? What percentage of your backlog would you consider projects that are deferred or delayed today posted on the cancellations that you have had?

I don't have that data. Will Kabruski – Broadpoint: A range? No, I haven't gone back to try to add that up. I could do that, but I don't have it in front of me today. I don't think it would be a very big number frankly. I will follow-up you. Thank you very much.

Your next question comes from the line of John Rogers with DA Davidson. John Rogers – D.A. Davidson: Hi. Good morning.

Hi, John. John Rogers – D.A. Davidson: Just a little bit of follow-up. Craig, you talked about your base load business. What portion of your business right now would you put into that category?

It's probably pushing 40%. John Rogers – D.A. Davidson: Okay. And the rest would be more discretionary construction.

It's more specific project-related than ongoing maintenance capital kind of spending. What is in base load tends to be maintenance capital and small projects, small projects generally under $20 million in size. John Rogers – D.A. Davidson: Okay.

And then what is above that, what we don't consider base load would be the $50 million, $100 million and $1 billion and that makes up the rest of your book of business. A lot of those projects come to us because we have the base load position. So the leverage and base load is not just volume, but positioning for whatever investment above that they are threshold level. John Rogers – D.A. Davidson: Looking at your backlog numbers and your bookings, you give us technical and professional services, still ramping up, but the field service, obviously, coming down pretty sharply. Given your current mix of business compared to past cycles, down turns and upturns, do you expect the technical services to lead the cycle, lead the field services still?

Absolutely. We find that the engineering business is really where you power out of a down turn. And when we talk to your folks internally, that’s what we talk about to be in a position to power out of that down turn and it all comes down to the fact if you maintain share in a down cycle, you get a bigger share of the upcycle. And one of the reasons we real lie like that base load work as a percentage of the total marketplace, our share goes up during the down cycle. So we really feel we come out of the cycle early and strong. We got the people. John Rogers – D.A. Davidson: Yes. And is that business what you refer to when you talk about your home office staff being about 40% public service work?

Well, the home office business, which is engineering procurement, various other kinds of services, is 40,000 people plus or minus globally and about half of those folks are involved in public sector work or alliance work or small-cap work. The other half are involved on the engineering of the maintenance capital, small projects, bigger projects for your private sector customers. The field services portion is staffed in the field, and that number is always smaller, considerably smaller, than the home office side. John Rogers – D.A. Davidson: Okay. But those are all out of the home office, the field services?

Yes. John Rogers – D.A. Davidson: Okay. Great. That’s helpful. Thank you.

Your next question comes from the line of Tahira Afzal with KeyBanc. Tahira Afzal – KeyBanc: Hi, gentlemen.

How are you? Tahira Afzal – KeyBanc: Surviving. Just wanted to ask you in regards to your margin commentary, it seemed incrementally more positive than the prior quarter and I recall that in the last call you mentioned that you thought there might be the second quarter would be fairly critical in gauging competitive pressures on the processing side. So could you first comment a bit on what has transpired in the bidding season in the second quarter and is your commentary incrementally better because you haven't seen the level of competition that you perhaps thought you would.

I would have to say that the margins are incrementally a little better than what we expected and that in part is from less competition than we thought we would see by this time in the cycle. And also, I think by more of our base load and alliance related work. Remember we told you what the market was going up like gangbusters, our margins would tend not to move up as rapidly and that they thought in exchange for that, that what the market went the other way; they won't move down as sharply. At least to this point, that appears to be true. There are lots of procurement people trying to help us fix that, but at least to this point we're doing okay. Tahira Afzal – KeyBanc: The procurement goes down; does that help your margins as well?

Certainly as a percentage, it does, because the pass-throughs disappear from the accounts. So long as the procurement work itself, the actual doing of the services doesn't disappear, then we're margin-incentive. We are profit incentive if you get right down to it. Whether or not those revenues pass through our books. Tahira Afzal – KeyBanc: Great. If you could just comment on how that has performed and how that’s delivered versus your initial expectations.

We have been very happy with the Carter acquisition. There are some pieces of that business that were challenged. We had a small business supporting the real estate development side of the world. That has not gone well. Other aspects have gone a little better than expected. Overall, it's meeting our expectations from when we started. Tahira Afzal – KeyBanc: Great. And then one last question, if you look back a couple of years back from now, how would you have used your cash, looking on a retrospective base

Well, all of it would have gone would have gone for acquisitions that were accretive and strategically smart and we would be reaping the benefit of that on the P&L. and rapidly replacing the absent cash because we're profitable and therefore, need to continue to grow and make future acquisitions. So three years from now, we're sitting with money on the balance sheet for future acquisitions and acquisitions that we have made that have had positive impact on the bottom line. Tahira Afzal – KeyBanc: If I look back to fiscal third quarter '04, would you say it's a bit of a deja vu and it did help drive a more aggressive acquisition strategy. Would this be a bit similar?

Well, I would tell you that '04 did represent a point in time when we were able to make some acquisitions that attracted multiples, that maybe you couldn't have made three years before that or certainly couldn't have made three years after that. So maybe you could say that acquisitions would be more attractive and more accretive in a down cycle like this than if you make them at some other time. Again, the acquisitions is a long game. It really doesn't do much in the short-run. Tahira Afzal – KeyBanc: Got it. Okay. Thank you very much, gentlemen.

Your next come from Avram Fisher with BMO Capital. Fisher Avram – BMO Capital: Good morning.

Good morning. Fisher Avram – BMO Capital: Capital expenditures really kind of declined as a percentage of revenues. If you look at the trends of trailing 12-months bookings going back a few years, it suggests that you expect a continued slow down, even a steeper slow down in bookings than we have seen so far. Wonder if you could comment on that?

Capital expenditures are driven in our business a lot by people. It's tenant improvements and the computers and such like that. The people have leveled off and we know longer have to spend that money, then couple elements are that with our continued drive to lower cost of doing business, any discretionary kinds of capital spending we're looking at extending lives and not putting in new equipment and new computers and those kind of things. So our capital expenditures over the last cycle were driven just by the headcount increases. Fisher Avram – BMO Capital: So I would imply that you are still reducing headcount or your reductions in headcount therefore implies a steeper decline in bookings than we have seen so far.

We are not growing, so you are not having to add the incremental pcs and because the headcount has come down a little bit, we had a few people and you don't have to buy new pcs because you have the pc's, you have the desks and you have the work space to have them. Fisher Avram – BMO Capital: In terms of pricing pressure and I know people asked about it, but I have three specific questions on it. In the Middle East, if you rear the industry sources and believe their scuttlebutt, it would appear there is competition on pricing. Is that a way to generate relationships there? Is that something that you are seeing?

Well, again, I think I have tried to say this earlier, but we're not – we as a Company are not seeing significant pricing pressure on your activities in the Middle East. We're seeing the same kind of pressure for that work that we see on the Gulf Coast or up in northern Europe. But we don't participate in the highly competitive lump-sum business that there is a chunk of. Somebody wrote a write-up about the activity of the Japanese and winning lump-sum turnkey assignments and what that would mean for the US? I don't know what it's going to mean for everybody else, but for us it's irrelevant. Fisher Avram – BMO Capital: If you win a contract by a huge margin, 30, 40% margin, maybe that’s just an industry source, industry scuttlebutt.

Well, I don't know what pricing they are getting or wins. So there may be some significant cost-cutting going on in lump-sum turnkey contractor community as they fight it out among themselves. I have heard of things like that happening, but not for us. We don't compete in that space. Fisher Avram – BMO Capital: Specific to the oil sands, you said in the heavy-process margins holding steady, private sector. Is that a result of wages? Sun Corp talks about sticky wages? Is that sort of a function of what is keeping your margins steady also?

Certainly, the fact that wages send not to decline in down cycles keeps margins stable. We have seen a couple of our competitors in isolated markets actually cut wages for their staff. Obviously, if you are working on a multiplier, cost reversal kind of basis, that’s going to take margins down. We haven't seen that. We haven't seen the need to do that at this stage. So I think the stickiness of wages, is actually, for our industry, a good thing and I could see why the customer might be complaining about. Because all of our customers would like to go back to 2004-2005 in terms of what the industry cost to utilize. Fisher Avram – BMO Capital: Okay. And then specific to pricing pressure, in your alliance work, I mean, the analogy is the pool shrinks, more people start to fish at the same spot. Are you seeing any competitive pressure on the alliance work as people go after your customers?

No. The key thing with the alliance work is that so long as you are treating the customer well and as long as the customer thinks they are getting pricing that’s reasonable relative to what the market is, not necessarily rock bottom, they tend not to compete and allow competition. Right? That’s really one of powers of these long-term relationships is that our customers don't go out and look for a new supplier, so long as we're doing great work for them, at a price that’s somewhere around what market is. So what we have so do is as alliance partner is understand where market is and make sure your pricing reflects that range, so that there is no incentive for the customer to go out and try to compete it. Remember, if the customer goes out and competes, they have significant issues. They have major problems with switching-costs. We have become increasingly effective at delivering our services in such a way that they are customized to the customer and the customer gets the benefit of that. When they switch contractors they lose that benefit and have to essentially retrain the whole team. So as long as we do a good job on the work, right, because that’s one reason that the customer would recompete a contract tract if you do something dumb. Fisher Avram – BMO Capital: Right.

As long as our pricing is in the market range where the pain and anguish of procurement cycle and switching cost is more than the customer wants to try to deal with, right? We can defend off the procurement people who like to compete for the sheer joy of. It we tend to keep that work without a lot of competition. Fisher Avram – BMO Capital: In that vein and as (inaudible) to it, this is my last question, is there any impact from the strike at Lindsey refinery that doesn't compete next quarter. Any comments you can make on this?

Let me let Tom Hammond, who is here with us, comment on that.

No, we don't expect any measurable impact on the overall numbers from anything going on alt Lindsey in this quarter, where it seems to have stabilized as of today, as opposed to the last quarter it was, I would say, more volatile than today. That job is nearing completion, so we're hopefully that the stability will last and we can see the job out in an orderly fashion. Fisher Avram – BMO Capital: And is there any impact on the relationship with the client as far as you know or have you heard?

Certainly the whole background of the event has strained everyone's good humor, and it's been a very tough environment to operate when the local unions have elected to engage in these labor actions. Fisher Avram – BMO Capital: Appreciate the color. Thanks a lot.

Your next question comes from the line of Laura Sloate. Your line is open.

Yes, I'm sorry. I want to know how much of your future is going to be in the foreign market as opposed to the domestic market and will that be also in the engineer and technology?

We see continuing opportunities for growth both domestically and internationally. We're about 60/40, roughly today. 60 domestic, 40% international. I could see that getting more to 50/50 in the reasonable near term and certainly, it includes substantial engineering presence outside the US and I would think that would continue to expand proportionately. So I think from that standpoint, we're expecting that the balance will stay in that range from 60/40 to 40/60. And we're expecting to see our physical presence in terms of engineering operations and technical support of our customers wherever our customers have significant assets installed.

And how much of that would be reliant on the energy industry is?

I think our reliance on the energy industry will be in the same range that it is for some time to come. I expect to see significant growth in upstream oil and gas over time. I think we'll be putting a lot of energy into the public sector side of our business as well. You have to recall when we break out these markets by revenue, the construction revenue is significant and there is a lot more of that on the heavy process side than there is on the public sector side.

Your next question goes tot line of David Yuschak at SMH Capital. David Yuschak – SMH Capital: Good morning, gentlemen. I am just kind of curious, the way our reports have terrible throughput margins of business this morning and a lot of refiners are certainly having a lot of other problems too. I'm wondering as you look forward, how would you see the downstream business changing in your key areas of competence, if we see the downstream business end up going to be the orphan/stepchild a few years ago when we talked about closing plants and not refurbishing them

You really need an economist to give you an answer to that question, not me. My view is that gasoline demand is down and will stay down for a while. The crack spread is narrow and refiners aren't going to be making money, certainly in the developed world. And I think that’s going to cause some marginal facilities to get shuttered. So I think you may see some capacity taken out from customers that probably shouldn't have had the capacity back in the first place. David Yuschak – SMH Capital: I'm just curious, does that change the kind of things that you would do in downstream, and if we would see a more orphan market again. I'm just curious.

I think what debts down in downstream to some degree, because I don't think you will see a lot of capacity expansion. If you go back to the last time we had this sort of similar situation, where refinery managers were terrible, we weren't getting capacity expansion there either. So I think what you are going to see is the continuing drivers are going to be investment sort of safety-related, investments that environmentally-related and investments that allow them to change the profitability of the refinery by changing the cost of inputs. I think you are going to see some closures that will drive up operating rates. But I think the refining business, it's here to stay and it will get done, but we'll see movement in who invests and what they investment and when. In terms of major new capacity, I don't think you will see any major new capacity in the developed world. I could see limited new capacity in the third world. David Yuschak – SMH Capital: As far as your multiplier on your billable hours, how much off of your peak would you say that multiply is in last 12 months?

Hadn't thought about it that way. Don't really pay attention to consolidate multiplier. So I don't have a number to reference. A little. I'm sorry, that’s a bad answer, but that’s really all I can tell you is a little. David Yuschak – SMH Capital: Are you seeing because what is happening in the dynamics with the hours being shifted more towards less robust multipliers then, is that a better way to look at that?

No, I wouldn't say that. David Yuschak – SMH Capital: On the highway thing, we find it interesting down in Texas and there are big debates how we fund our own construction down here, because we do have heavy requirements being as big as we have. But big debate about what it's going to be toll ways, taxes on gasoline, is it going to be client-owned? We don't seem to be getting anywhere in terms of any kind of strategy. Is that your kind of answer as you look at the federal programs, it's one of those things look we're seeing here, who is going to pay for it? Do you think that’s going to be a problem in trying to get that past?

I think you have a whole set of problem getting the transportation bill passed. To go back to the earlier part your question. I think we're going to see transportation funding come from a mix of sources and I think if has to come from a mix of sources. There is part of transportation funding that’s essentially big projects over big distances and it lends itself very well to tolling and to design-build, PPP, PFI kind of deliveries. Required in quarters and locations that don't lend themselves to a private alternative and we're going to have to rely on gas taxes and federal funding and local bond issues to deal with those problems. And I think what we'll find absent maybe the liquidity issues that we have been dealing with, is a lot of that non-amenable to private-public partnership kind of work will come from local bond issues and local sales tax and it will come from the reasons it's been coming already. People are just tired of taking two hours to get to work. David Yuschak – SMH Capital: Yes. Right.

And most of those two hours to get to work quarters don't lend themselves to some sort of private investment. David Yuschak – SMH Capital: I guess the issue then is just getting everybody used to accommodating that that’s the way we have to go and other than what you said on a project-by-project base is the way we would have to take a look.

Your frustration with Texas is not nearly as great as mine with California. David Yuschak – SMH Capital: I would suppose to. You guys have a budget problem. We don't have too much of a budget problem, just who is paying for what.

It starts with the leadership though. I wish that Texans were running California right now. David Yuschak – SMH Capital: I always said what people don't understand about Texas our legislature meets five months out of 24. All right. Thanks a lot, guys.

Thank you, David.

Your next question comes from the line of Mark Thomas from Simmons & Company. Mark Thomas – Simmons & Co.: Good morning.

Good morning. Mark Thomas – Simmons & Co.: John, first question I have, could you remind me how margins differ between technical professor services and field services.

At gross margin level, there is quite a bit of difference. When you get down to the operating level, there is a much smaller difference. Historically, they have been fairly narrow differences, but over this last cycle the professional services have improved. So the margin expansion was more driven by the professional services than the field services. So there is small margin difference at the operating level between the professional services being a little bit higher than field services. Mark Thomas – Simmons & Co.: Thank you. That’s helpful. Craig, when it comes to acquisitions and how you think about them, is your focus more on geographic expansion than technology or would you make an acquisition solely to bolster your backlog.

I don't think we would ever make one for bolster your backlog purposes. We are almost entirely focused on strategic fitting. So markets we don't serve, geographies that we don't have are probably top of the list in terms of where we're trying to find acquisitions. There are some industries that would benefit where we're still a small player and you could benefit from mass in the business. And we might look at acquisitions there to increase the business to critical mass, so that we could compete effectively across the full spectrum of projects. It's always more than anything else, a strategic business market focus. Mark Thomas – Simmons & Co.: Okay. Thank you very much for your time.

Thank you.

Your final question comes from the line of Barry Bannister with Stifel Nicolaus. Barry Bannister – Stifel Nicolaus: Hi guys. The call has gone on for a while, so I will be brief. What were the pass-through revenues in the quarter?

I don't have that figure in front of me. It will be in the queue when that comes out, but don't have that. Barry Bannister – Stifel Nicolaus: It's a pretty important number. Yes. I'm just trying to gage the margin. Let me switch the gears on the same question. Historically, TPS as a percentage of revenue correlates with SG&A. There was a big swing in orders and even backlog this quarter towards TPS. On the surface that would argue good support for the margin as we look out the rest of the year and into 2010. I know you are not talking about 2010 yet, but just based on what we seeing from the swing in the backlog. You should be able to maintain something around 13.5 on the gross margin and perhaps 8.5 on the SG&A. So what I'm asking is structurally, Jacobs' long-term average margin is not five at the operating line. But it seems to be the new normal. So do you feel comfortable with that sort of five as a number given the cost controls and changes in the business as a floor?

I wouldn't characterize any number as an absolute floor. Our industry is still too volume-sensitive to say that, but I do think that the mix is different than it has been historically and that, therefore, the dark side of margins is also different than it has been historically. Whether that’s precisely five or not, Barry, I couldn't say. Barry Bannister – Stifel Nicolaus: But it does look like TPS will hug about 50% of total revs going forward, that would have implications for margin. I know it's not a floor, but think of it as a plush carpet. Is that the expectation?

I guess, if you want to use the plush carpet analogy, that’s okay. Nobody likes my coffee story. Barry Bannister – Stifel Nicolaus: All right. Five sounds good. Thanks.

And we have no further questions. Do you have any closing remarks?

Well, I want to thank everybody for their interest. This is the longest call we have had. I assume that’s a good thing in terms of your interest in the Company and the business. I look forward to talking you a quarter or so from now.

Ladies and gentlemen, this concludes today's Jacobs Third Quarter Earnings Conference Call. You may now disconnect.