Good day and welcome to the Jacobs Engineering Fiscal Year 2014 Fourth Quarter Conference Call and Webcast. All participants will be in listen-only mode. [Operator Instructions] After today's presentation, there will be an opportunity to ask questions. [Operator Instructions] Please note, this event is being recorded. I would now like to turn the conference call over to Ms. Michelle Jones, Vice President of Corporate Communications. Ms. Jones, the floor is yours ma'am.

Thank you, Mike. Statements included in this webcast that are not based on historical facts 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 you should not place undue reliance on such statements as actual results may differ materially. There are a variety of risks, uncertainties and other factors that could cause actual results to differ materially from what is contained, projected or implied by our forward-looking statements. For a description of some of the risks, uncertainties and other factors that may occur that could cause actual results to differ from our forward-looking statements, see our Annual Report on Form 10-K for the period ended September 27, 2013, and in particular, the discussion contained in Item 1, Business; Item 1A, Risk Factors; Item 3, Legal Proceedings; and Item 7, Management's Discussion and Analysis of Financial Condition and Results of Operations, as well as the Company's other filings with the SEC. The Company undertakes no obligation to release publicly any revision or update any forward-looking statements that are discussed on this webcast. With that, I'd like to turn the call over to John Prosser, EVP of Finance and Accounting.

Thank you, Michelle. Welcome everyone to our fourth quarter year-end conference call. I will briefly go over the financial highlights for the quarter here and then I'll turn it over to Craig Martin, our CEO, to give a business overview and outlook. Moving to Slide 4, just on the financial highlights as we reported diluted earnings per share for the quarter was $0.65 and for the year year-to-date was $2.48 and neither of these numbers include the -- I should say - both these numbers include the effect of both the restructuring that we had in the second half of the year and also the items that we have called out earlier in the year in the first half. Our backlog ended up for the quarter at 18.4 billion, nice growth year-over-year, pretty much flat with the prior quarter. Nice growth in the professional services side but we continue to see a slowdown in the field service and on the conversion to field services. Book-to-bill still is a good 1.09 on a trailing 12. We continue to have a strong balance sheet. Our cash position is 732 million, is basically flat with last quarter but during the quarter we had both about 150 million that we spent for the acquisition of FNS and then the stock buyback that we initiated in September, we acquired a 1.5 million shares for a total cost of about $78 million. If you add those back into the cash, we actually had a very good cash generating quarter. And we are initiating fiscal year guidance of the range of 3.35 to 3.85. This is a nice growth I believe over this year. While we expect the year to be a good year in that line the first quarter as is typical historically will be down from the September quarter. We would anticipate that that could be in the range of $0.08 to $0.12 impact because of holidays, vacations and other slowdowns that we typically see in our first quarter. Moving to Slide 5, this is just a historical trend on our history and weighing in the growth that we expect for this next year looking at the historical growth rate, while we target the 15% long-term growth, this still is a little bit trailing below that but we believe this will be a [trend this] [ph] year and get us back toward that 15% long-term growth rate, that we still believe is a good target for us. Moving to Slide 6, backlog, again as I said nice year-over-year growth the - flat with last quarter, but still good growth on the professional services side while field service was down slightly from the last quarter and even from the last year. So with that, I will turn it over to Craig Martin to review our business strategies.

Thank you, John. Before I begin I just want to take a moment for those of you who are on this call who might not be with us next week in New York or Boston to remind you that John Prosser has elected to retire and will be leaving the Company’s full time engagement in January. John has been our CFO for 30 years and an employee for 40 and I just wanted to take this opportunity to congratulate him and compliment him on what a terrific job he has done as a part of our leadership team over a very long period of time. With that in mind, I’ll now talk about growth strategy, it doesn’t change and it hasn’t. We continue to focus on differentiating our business by using our relationship-based business model. We continue to work our market diversity to try to keep the business balanced across the various markets and keep the growth going. We are expanding our geographic presence every day for our multi-domestic approach. And we’re taking our cash and using it to promote growth whether that’s through acquisitions or as we have done recently through a buyback. We also continue to drive down cost. This is the only point I am going to expand on a little bit later on. And we are doing that from both the restructuring you saw and our constant attention to keeping our cost down, the market remains frankly very price sensitive. And what we’ve done in restructuring and what we’re doing to control G&A continues to improve our competitive position in that challenging market. Turning now to Slide 8, and I’ll remind you all of our business model, we’re very much focused on client loyalty and long-term repeat business. You can see how the model works here,…

and:

Thank you, sir. We will now begin the question-and-answer session. [Operator Instructions] First we have Tahira Afzal of KeyBanc. Please go ahead.

And I’d like to start by just thanking Mr. Prosser for all his help and guidance, since I’ve started in this sector in '03. I’m going to miss you very much and I look forward to saying goodbye in person soon. So first question is just in regards to – Craig, if I look at your comments around upstream and telecom so it really - more so the shale and telecom markets you’ve just gotten into, clearly you some sort of macro skittishness around that recently given where oil prices are going on the shale side and on the telecom side, we saw AT&T really coming down and notching down some of its CapEx on the wireless side, seems you’re still optimistic and upbeat about these markets, so would love to get your thoughts on why that’s the case?

Sure, let me start with the unconventional gas side. I think the unconventional gas is a two-story marketplace. If you have dry gas, it’s not a very attractive business right now. Cost of production is probably higher than the value of the gas once it’s produced. If you have wet gas, so if you’ve got a lot of liquids in your gas, it’s still extremely attractive. And so what we’re seeing is a concentration of investment in those areas that have the good combination of both gas and liquids. The good news about all that is, there’s still lots of that and so it continues even in these lower oil price markets to be a very attractive investment for our customers and we continue to see lots of activity there. Moreover, it’s still a business that’s largely populated by small contractors and small engineering companies. And so our ability to displace those companies and bring a broader and more geographically distributed solution to our customers is driving opportunities for us to replace those small as they’re often called mom and pop operations with a greater and more efficient Jacobs’ operation. So, I continue to be very optimistic, I don’t think a $75 plus or minus oil price has any impact, when you have both the liquids and the gas and dry gas is kind of just not a workable area right now. So, that’s where we’re at on all that. And with respect to telecom, again it’s a big business globally and we continue to have a small share, so a part of my optimism about telecom is just taking share from other players in the industry who can’t do the work quite as efficiently or quite as safely as we’re able to do it. And I think there’s plenty of opportunity for us for growth in that regard in spite of AT&T’s pullback, I think you can see from our press releases, we’ve been awarded a couple of nice chunks of work including a chunk from AT&T. So for us at least that continues to be a growing business and we continue to be very upbeat about the three year, five year billion dollar business kind of prospects that the telecom business represents. Did I answer your question Tahira?

Yes, you did Craig, thank you, and as a follow-up on the positive side, you talked a bit about the Middle East opportunities going up, would love to get a sense how it seems the Qatar World cup is back on if that helps. And number two on the buildings side you talked about some positive bookings post the quarter? Would love some color on those as well.

Let me start with Qatar just because that's -- we have talked about the rail program that we’re involved in. We have two major sections of the Qatar Metro Rail. We continue to get awards in Qatar that support the World Cup and all the things that Qatar is trying to do. So that's a very good business market for us as is the most of the rest of the Middle East. We have this strong base now of oil and gas capability and presence and relationship and we’re being able to leverage that into a broader infrastructure and buildings portfolio. I can't give you any details on the awards that I was talking about earlier because we don’t have permission from the clients to talk about them. But I think they are relatively big programs in which we are going to have a significant role. So as soon as we can press release those, I can give more color. I think there is much more of that kind of work to come, the investment in the Middle East in buildings and infrastructure is significant. And it's one of those areas where there has been an underinvestment up to now. So I expect we are going to see as various governments in the Middle East try to deal with the populous, the transportation issues, the lack of infrastructure in some cases, that's going to continue to be a big area of investment and I expect us to benefit differentially as a result of that. Does that help?

Yes, it does, thank you very much.

Next we have Jamie Cook with Credit Suisse

Hey, guys this Andrew on behalf of Jamie and good quarter and congrats to Mr. Prosser.

Thank you.

So just looking at your model and your guidance so far, I mean so you got Q1 coming down a bit seasonally it seems, but what gives you confidence in potentially achieving even the high-end of that your guidance range at 3.85 just seems that given where backlog is specifically with field services being a little bit more lukewarm recently, is there anything that you think could drive upside or that you have in mind that might push that earnings higher towards that 3.85?

Well, as you know we don’t give guidance within guidance but overall when we look at the markets we serve and in particular when we look at the balance of market between the industrial, the process and the public and institutional market, there is enough activity in those markets that we see decent growth in all three. And this is one of those businesses I think we've often talked over the years that it's like an 8-cylinder engine, I think it's more like nine or 10 now but it's like an 8-cylinder engine and if we can get five cylinders hitting well we can grow really-really well. And I think that potential is out there. When I look at micro trends, like what's happening to billable hours, those micro trends are also positive. So I think the guidance range is realistic but we will have to see how it all goes as the quarters unfold.

And then just back on that field services, I mean the revenues there were a little bit disappointing this quarter I think. And then the last couple of quarters, they have been sort of the same. I mean what do you see in that specific segment as it pertains to potentially picking up anytime sooner and is there anything out there that you think you might see a turnaround in '15 to drive those revenues a little bit higher?

Absolutely, I think there is two key areas to think about. And probably the most significant one is getting project out of FEED and getting them released to execute. We've got probably as much FEED business in the company right now in the process industries as we've ever had. But at this point it continues to just be FEED work. And the leverage, particularly the leverage for field services is in the execute phase. So probably the top of my list in terms of what will drive that expansion in field services is getting these projects released through the final investment decision into execute. We've got a number of customers who are talking about those kinds of things happening in the next two or three months, but frankly I've heard that story before. So that's clearly the number one question is when we get releases on the projects that are already in-house because that will have the biggest single impact on field services. The other has to do with what the turnaround situation is going to be in the spring. And right now, the turnaround situation is pretty unclear; it's a particularly important issue up in Canada. So it's hard for us to see just at this point in time what's going to happen in turnaround and what's going to drive our construction presence in Canada. If the turnaround season is good and it very well could be, that will also have a very strong impact on the last couple of quarters of the year. If it is a weak turnaround season, obviously that will be a bit of a drag on the number.

Next we have Sameer Rathod of Macquarie.

Can you tell us what the final goodwill allocation for SKM was since the K was announced and comment why goodwill continues to be written up every quarter since the transaction?

Well, I think the goodwill, obviously numbers will be indicating and that should be released before the end of the week. And as you go through the process of any acquisition you evaluate goodwill for about a 12 months period after the acquisition and look at that quarter-by-quarter and re-estimate it. We are approaching that 12 month period. So this last quarter we’ve taken and because it was the year-end we’ve taken another real strong look at it and such so you get a judgment for things that have changed, both on project side and other expenses and such that come through. So I don’t think you will see much change going forward particularly related to SKM, but we do as other acquisitions we’ve made this year while smaller then we’ll still go through that process.

One thing to be clear about it, we do not write projects up to market.

Okay, I guess that wasn’t my question, I was just curious.

We don’t think it’s a good practice, and so we haven’t done it, and that will continue to be our approach.

Okay, I guess my next question is, in your last filing which was Q3 you stated that goodwill associated with SKM will be tax deductible, which if I am correct is new language compared to prior acquisitions Jacob has done. So is that kind of a thing that you are expecting goodwill charge in the future or could you explain that language in the last filing?

It always depends on the circumstances and how we’ve written it up and such like that, because with SKM we could do 338 election and such we get tax benefits against the dividend payments out. We are doing it a fairly complex tax and in some cases we have that some cases we don’t, but depending on where acquisitions are done and forms of the acquisitions and such like that. It doesn’t have a future impact it just means that we can tax benefit it as we book the goodwill.

Luke Folta, Jefferies.

First question I had was just on the restructuring. You’ve had pretty significant charges this year. Is this the end of the charges you think going forward, and can you talk about when you look at your 2015 outlook what the implied benefit of cost savings associated with the restructuring is?

Well, let me answer the first part of your question. The restructuring that we did is done. We have charges every quarter for closing offices, and adjusting staff depending on the workload, but we consider all those things to be a normal part of business, we don’t break them out. And we’ll have those charges going forward, but they will just be in the noise. So the restructuring charges as we have described in the last few quarters that’s it. And so everything is done that we’re going to do in that way. The benefit of those charges is spread out over a number of years. It’s about half lease related so that is a fairly long tail, about half staff related and even that has a long tail in some cases. So you are going to see the benefit of that over the next few years as the business continues to grow. You will also see the benefit of it in the form of, while it’s lower G&A the competitive position of the firm is such that we may see some of that come back and go away I should say in the form of lower selling prices in this very competitive market, and our ability to maintain that margin. So, I think restructuring was a smart thing for us to have done and I think it does put us in a great position from a competitive point of view and I think we’re seeing some benefit of that. I think you will see in the G&A numbers as we go forward some benefit of that, but again not going to give guidance within guidance, so that’s really as much as I can say on the subject, John you have a comment?

No, well that was just it.

Well I guess without giving specific guidance on next year are you able to talk about what you think maybe the total magnitude of the long-term cost savings could have been?

We’ll get significantly more than the value of the charges over the life of that restructuring. So I think in general, leases are dollar-per-dollar but labor savings have a multiplier effect and so we’ll see more than the value of the charges come back to the shareholders over the next three or four years.

Okay. Alright, and then I guess just on share buybacks, it’s not something that’s historically been a big part of your capital allocation and obviously there is the upgradation that was announced since last quarter. Can you, John may be just talk about what your thoughts are in terms of what the magnitude of what you could do on this part, could be going forward and in terms of how you think about is more of an opportunistic thing or is this something that you are going to include sort of in the long-term allocation strategy?

As you’re aware the authorization is a $500 million buyback over three years. So we have said that we’re going to be opportunistic as I said we’ve bought 1.5 million shares in the month of September so that doesn’t have a big impact on EPS essentially that in the quarter because of the way it is, how you figure weighted average shares it’s a nice start going forward and certainly well above to have a pro rata buyback stream. I think we’ll continue to look and be active and looking for opportunities to buy that back my expectation would be particularly right now with the period where we don’t see a lot of larger acquisitions than we may be a little more aggressive on the buyback than just we might on a steady state basis. So I think that you’ll see probably that won’t last five year and three years and if the opportunity is still there it will get extended to and we’ll just have to play that by year, but I think given where we are our continued ability to generate good cash flow the focus right now on probably relatively small midsized acquisitions as opposed to any large acquisitions that is just another arrow in our quiver of use of capital and that is one that we haven’t use for a long time. I think last buyback was back in the late 80s and but as we’ve focused more on the acquisition side and have done a larger acquisitions relative to what we normally would do. But I think given the strength of our balance sheet and what we believe to be a well stock price relative to our future outlook but certainly now is an opportune time to be having the buyback ability and executing on.

Next we have Jerry Revich of Goldman Sachs

Can you gentleman talk about the M&A pipeline at this point and John if you could just orient us on how we should be thinking about the balance sheet from here. Should we look for you to pay down some of the debt before you get aggressive on the M&A side I am just curious what your assessment is on bid ask and evaluations on potential acquisitions?

I think as I just said the pipeline is more focused a couple of areas in the upstream and in telecom business those are where we’re really focusing on as consolidation and kind of a roll up I hate to use that word but activity a lot of smaller fragmented marketplaces there. I think from a balance sheet standpoint we’re pretty close to net zero on debt and we’ve got $800 million of debt and $730 million of cash. So our balance sheet is in good position we have excess cash we pay down the debt because it’s all revolving debt and that cash is still available to us we’ll use some of it for buybacks. As the opportunity is there and we’ll also you probably see us doing a number of those small midsize acquisitions none of those are mutually exclusive and we all have to pay down debt I mean certainly the well of debt we’re at right now is very sustainable and if we have opportunities for cash elsewhere we’ll use it for that if not we’ll pay down debt and have it available for when we need it.

Just to amplify on that a little bit Jerry when I look at the acquisition that we have in discussion there is nothing today that I see as that’s a significant and a big number kind of deal. And I would consider anything about maybe $500 million to be a big number kind of deal. So there we are really not looking at anything like that at the moment not to say something wouldn’t come along but that’s not something we’re seeing right now. There are lots of eagles in size deals out there that we’re looking at, largely to support our upstream and telecom businesses and I think we’ll see and then like I said it will be these niche acquisitions from time-to-time that will be very small numbers kind of in the noise frankly from a cash flow point of view. So I think as we sit here today we’re going to continue to generate good cash flow and we’ll have some acquisition used for that but we’ll have other uses for it as well.

And on the backlog can you just talk about the drivers of the backlog decline in process? What particular end-markets drove that and maybe touch on where there any major projects within public and the institutional where you saw really significant backlog growth, any really meaningful parts of that growth that we should outline?

Let me touch one two different aspects. In the process area, the big weaknesses were field services work up in Canada, where the -- as I’ve mentioned earlier the outlook for turnaround work in the second half of the year is very uncertain. And so that was the pretty significant factor in the numbers and there’s I mentioned, we have one major project cancellation in the U.S. Gulf Coast and that was a pretty significant factor in changing the process number. So those are really part of the important drivers in the process numbers overall. On the public and institutional side, amidst the acquisition we talked about FNS. We were able to book a couple of very large new scope work for that business and so that was a nice positive for that. It doesn’t account for the bulk of the number, but there were some substantial additions to backlog because the business of supporting the intelligence community which we told that we were really positive about is proving to be as every bid as positive as we hoped. So those are probably the highlights without getting -- and I can’t really get more specific on that.

Next we’ve Andrew Kaplowitz of Barclays.

It’s Alan Fleming in for Andy. John congratulations on the retirement and good luck. Craig maybe taking a step back and asking a little bit of a broader question, where do you think we are in the current E&C cycle and how much has the recent volatility in oil prices impacted your views on maybe the sustainability of this cycle? It seems like more investors we talk to, either believe this cycle is ending or is significantly stalled here, and so I’d be very curious to how you respond to those types of comments?

Well, I think to the extent that oil prices are a key driver. We should expect oil prices to remain low throughout ‘15. I don’t mean low like $20 I mean low like where they are right now. And I do think that will make -- that will have some impact on investment decisions and where they’re made. Certainly, without pipeline capacity to Canada that’s going to impact the oil sand pretty significantly. Fundamentally, their new investments doesn’t make any sense at these kinds of oil prices and particularly with the capacity constraints that they have in terms of getting the [indiscernible] in the market. So I think it’s going to impact that business, I think though more globally, I think the impacts are probably less significant. So for example, if you look at the Middle-East, they’ve made the decision to continue to produce and let the price of oil come down. There’s a lot of interest particularly in Saudi Arabia in making sure that the social infrastructure and [soluziation] takes place and I think as a result that there is going to be continued investment in-spite of the lower oil price in that part of the world. So I think you’re going to see for lack of a better word sort of geographically area limited impacts on investments. So Canada probably down a bit, Middle-East still very strong, Gulf Coast frankly I think will continue to be very strong, Singapore pretty strong just because it’s in a terrific logistic position. I think Western Australia on the oil and gas side, probably we’re going to see the investment taper-off for a while, frankly there’s been a lot of maybe what -- maybe over investment in that part of the world and I think it’s going to be a challenging time till it sorts itself out. So I think what’s happening is not going to have a uninform impact across the global business. I think it will make customers even more cautious about the timing of their investments and when they make investment decisions, part of what we are reflecting in our outlook for ‘15 is a slower environment in terms of releasing projects, but I don’t think it’s an end-of-cycle conversation. So I don’t believe that we’re at that stage where everybody says okay, we’re at the end of the cycle and now we’re going to have a prolonged downturn. Generally, when our businesses are booming the cycles already over. And we’re not anywhere near that blooming stage yet. So I think what we may have is more like that a stagflation kind of growth. And I don’t mean that in the economic terms of that, I mean in the sense that growth is going to be slower than a normal up-cycle, but we’re going to continue to see an up-cycle. And that’s kind of where as best I can see it right now things are likely to go.

And I’m going to play economist here a little bit, which is really-really dangerous. But the impact of lower oil and gas prices will have some positive impact on some of the economies as people get more spendable cash because they are not playing for gasoline and going into the winter for fuel oil and things like that, so you could see sort of little bit of stimulus on some of our other markets particularly the public sector and things like that, it could be balancing it.

Yes normally in the refining area for us, what we generally find in these situations is that lower oil prices don’t get reflected at the pump as fast as you might expect and therefore cash flow goes up for refiners and refiners like to spend cash flow on expanding plants and doing upgrades and retrofit. So I actually think the lower gas prices or lower oil prices may will be a positive for our refining business, at least in the next year or two.

I think I appreciate the robust response. Maybe a related follow up to that, can you talk a little bit about the pricing environment generally in your end markets? So I think last quarter you had said that you weren't seeing any areas in the market where you could get significant improvements in price. So is that still true, I think you had mentioned previously on this call about some increase in billable hours. But can you talk about that and how concerned do we have to be that pricing could get materially worse for you guys in '15 especially if we see some of this stagnation growth that you talked about.

I think pricing is -- all of our businesses with one or two acceptance continue to be very competitive. As you look around the globe, the overall level of investment is not robust outside of maybe oil and gas and as a result competition is up and pricing is aggressive to say the least. We -- as I think I mentioned at last quarter, we had seen and had continued -- and do continue to see a very faint uptick in pricing, but I’m talking about 5 basis points a quarter kind of uptick, not very much at all. And I think that's the best outlook as we go forward is about that, not much. I don't really see a collapse of pricing, I don't see a slowing back to the 2010 sort of pricing. I think there is an up work and there are -- there is enough activity that things won’t get quite that desperate, but I do think that looking for margin expansion in '15 is probably not the right strategy. We are certainly not basing our outlook on significant margin expansion.

Next we have Vishal Shah of Deutsche Bank. Please go ahead.

Hi, this is Chad Dillard on the line for Vishal, thanks for taking for my question. So just given the backdrop of oil prices and where they are right now and what you are seeing in your project pipeline. Do you think you can grow backlog in 2015 and to what extend do you think it will be driven by organic growth?

I think we can grow backlog well in 2015. I would expect we would be able to grow it in the 8% to 12% sort of range backlog growth which would be pretty consistent with what our expectations are for growth overall. I think that it's to a limited extent dependent on the things I've already described in this call in terms of how and when that happens, but I fully expect to see our backlog grow in '15. And I continue -- and I believe it will continue to grow into '16 and beyond. I think the mix for us will be pretty much across the Board. I expect recovery and the process industries from the drop off you saw in this quarter and I expect our other businesses to continue to be good. And I think the recovery in the minerals market and the PharmaBio business both bode well for growth in that backlog and I think you can see we are doing very well in the national government's buildings and infrastructure business growing backlog as well. So I don't know if I've answered your question, but we are I think pretty optimistic about our ability to grow backlog in '15.

That was very helpful. And then turning to the chemical side, now that some of the crackers have moved forward into construction, our greater focus has been placed on, on the derivatives market. And I was just curious to get a sense how do you see the cadence of UPC awards being build out going forward?

I've got George Kunberger here who is our head of sales and I am going to ask George to response to that.

So I think that as you well know our derivative capabilities both domestically and globally is very strong from a capabilities perspective. From an opportunity to turn new things and convert them into the ECC deliveries. We are starting to see signs that those opportunities are starting to present themselves in a reasonably significant way. I mean still what Craig said really about the cautiousness of with which people spend money and make decisions is, is there in it. That's driven by a couple of factors, it's driven just by the overall market conditions but it's also driven by the potential escalation of cost of capital in the project itself. So though really there is two factors that these clients look at when they try to make those decisions. So overall market versus for themselves and then what's happening to the cost of capital just as escalation happens with demand on construction, construction resource, et cetera. But despite all that, I mean I am certainly starting to see and I can't obviously talk about it. Prospects on our list that will I believe pretty soon turn into EPC opportunities for Jacobs in the derivatives and related derivatives marketplace in the U.S. particularly.

Thanks George.

Next we have Robert Connors location of Stifel.

Hello guys, can you hear me?

Yes.

Okay, if I just look back to past three years, I saw that the published data the chemical spending component has been the fastest sector on the non-res construction side in the U.S. So I guess stepping back, is there something about this market or maybe the Jacob’s relations model versus more of the transactional model is keeping you guys from booking some of these larger awards. Because I hear that from you guys, contractors tend to be a little bit more mom-n-pop and maybe the size of the projects are little -- coming from the smaller balance sheet. So I am just wondering if the model still applies in this sort of market.

It very much applies in this sort of market. Our relationship based model is frankly very effective in the chemicals business, and we continue to show growth in that business overall. I think the challenges are that we are not really out there chasing what are called [marque] process. We are not in the ethylene side of the business at all, so growth in the ethylene side of business isn’t going to impact us very significantly until it starts to be the derivative aspect that we were just talking about. A lot of our chemicals work is at smaller cap plant maintenance operations level. And so again no big numbers there, just slow steady growth as we expand our share of that marketplace. So I think the challenge is that we are not focused on -- to the same extent perhaps some of our other public sector competitors are on the giant events. And we’ve had a number of nice awards in the chemicals business, we continue to have a nice chunk of our backlog in the chemicals business but it’s not the high visibility stuff that you think of when you see a Fluor or perhaps CB&I. Does that help?

Yeah, that helps. And then just--

And one other comment. If you look at our growth in the chemicals industry over the last four or five years it’s been fairly significant as well and it’s been more on the side of the smaller existing plants as they’ve been upgraded and they’ve been brought back on to production as opposed to the big new builds. And so as we roll through this we will start getting some of the derivatives on the new builds and that’s just will even be more positive for us.

Okay, and then you guys have a number of as far as if you are able to transition a lot of that feed work into field services, what the potential pull-through could be?

We hasn’t sat down and tried to create a number like that, so I can’t answer that question. I am going to go look after this call though.

And then, I guess just one more quick one. Do you guys expect that TPS to stay relatively flat here 58% of the mix?

I think in the short term yes, in the longer term I think still expect that as these jobs going to execute the field services proportion of the total will go up and TPS will drop from a 58% range back down into the low 50s, maybe even little lower depending on how much of that work actually goes out as EPC.

Okay, great. Thank you.

The next question we have comes from the location of Andy Wittmann of Baird.

Hey guys thanks for taking my questions, I had a couple of just kind of quick technical ones to start out with. John can you give us the amount of revenue that was from acquisitions that contributed in the quarter?

Actually I don’t have that right here in front of me. FNS is relatively small, they wouldn’t have had a big impact for the quarter, I don’t think. So really only the SKM which is been running about 250 million a quarter.

Thank you. And John on the miscellaneous line on the income statement there was a little bit elevation this quarter about $6.8 million. Could you give us some help with what that was?

We actually sold piece of real-estate in India. That it’s been leased out so actually we have been getting revenue off of it -- income off of it in the form of lease payments and such, it was excess so we sold it, it’s been on the market for actually couple of quarters, just closed this quarter.

That’s helpful. And then just under restructuring charges of $36 million, can you give us a sense so we have better understanding where the -- maybe the underlying margins were. Was that all in the SG&A line or can you give us a split between gross margin and SG&A where that was?

It would evolve then in the SG&A line.

Great.

I take that back. There is a little bit that was going into cost of sales in the form of unbilled and stuff like that, but the vast majority of it was in G&A.

Okay, and then just as you look at the guidance and knowing that you did some restructuring actions to adjust the cost structure, I guess maybe the way to ask this is? How much for the EPS growth is due to taking under utilization from last year and then having it better utilized whether that billable hours or real estate. How much of that EPS growth is really purely as a result of mechanic of taking cost of the business?

We’re not going to give guidance within guidance as we’ve said and we’re not breaking it down specifically, but that’s certainly is in there just like the impact of continuous stock buyback as considered in that range and growth in the business because as Craig said we’re also seeing a pick up in the hours -- the billable hours being worked, so that’s in there as well. So we’re not going to break down as to how much of the guidance is related to each.

In that you mentioned the buyback, did you say -- is there incremental buyback associated that has not yet been completed as contemplated in that guidance range or would buyback from here be incremental for the guidance. I think you kind of touched on there on your answer, I wanted to make if we understood that correctly.

Well, we’re going to be keep doing the buyback opportunistically. So the idea of the buyback is included in the range, it wouldn’t be incremental at the top end of the range or incremental at the bottom is just going -- based on what we think is we’re going to be able to do based on a stock price so its factored into the range of the guidance.

Got it and then may be Craig maybe a little bit surprise in some of just have a cancellation on a Gulf Coast energy related project. Can you just talk about what some of the drivers may have been with that one or it does anything to read into it for the market as a whole, if it just one-off? I think some color would be helpful there.

Well I don’t know that is a one off I certainly would not say that. I can’t tell you much about it because the customer wouldn’t appreciate my sharing about a lot of detail. But fundamentally the cost of the project was high enough that the economics didn’t make sense. And the so the return on investment was in adequate to justify going forward with the project. This is the issue that I’ve been raising for some time now about why the customer are being so cautious and why there is this recycling of feeds to try to get give the costs forecast down to the plus zero, minus ten kind of range even though that really can’t be done. These customer are very, very sensitive whether the investment return that there committed to are actually going to be achieved and there are all coming off experiences from the 2005 to 2008 time frame where those things weren’t achieved because costs over ran significantly its lots and lots, lots project around the globe and so there is very strong level of caution. And occasionally I think that’s going to result in projects getting cancelled and where the number just doesn’t work for the customer and therefore the job doesn’t go forward. If you talk about the dark side of our outlook going forward that certainly it. George you want to comment?

This is George. Just to elaborate a little bit on the question knowing Craig’s answer, a lot of times within these larger organization it’s not so much that the project by itself does not pencil-out it’s that it doesn’t pencil-out relative to a lot of the other opportunities that the clients have to spend cash around the world. So that’s not a universal statement, but that often the case, there is a lot of competing opportunities all around the world as we all know and the chemical and the hydro carbon stage is well known. And so if you’re looking at some of these big Companies, looking where to put the cash their, its more competing return on investment not just at any particular return investment is not attractive.

That being said that wasn’t the case for cancellation I just mentioned.

Thanks for all the color there.

Next we have a question from the location of Steven Fisher, UBS.

Great thanks good morning. In terms of your cash flow expectations for 2015 is there any reason to assume that free cash flow won’t exceed net income next year. I am assuming that depreciation and amortization should be above CapEx, is that the right way to think about it?

Yes I think that we’ve always said that we should be able to convert our bottom-lines into cash and that depreciation kind of offset from the CapEx and things like that, so I think certainly that would our expectation if you look at -- you see the number for this year, I think we’ve had -- this year was the year’s been a little bit below that, but I think going forward that would certainly be my expectation that we should be able to have good strong cash flow.

Okay great and then Craig you give us some color on the process industry I think around the world maybe can you speak about the business and its entirety in terms of your growth expectations by region in organically or an aggregate.

Sure let me try to work my way around that. North America good growth in the U.S. Probably one of our better growth markets frankly, weak or no growth in Canada, South America is still for us pretty much our mining and minerals dependent marketplace. We’re doing a good job of capturing share in the small cap in the world, but to see real significant growth there we’ve got to see some bigger projects get going. And I think that’s probably a late ‘15 sort of timeframe. There might be a little activity between now and then, but not a bunch. Europe’s going to be very slow, there’ll be some projects specific opportunities for growth, but overall it’s kind of a waste land from an economic growth point of view and a waste land in terms of return on investment of new projects and program. So we see Europe as largely a maintenance capital, there’s a ton of investment there that’s got to be maintained, but we don’t expect to see a whole lot of new investment in Europe. Middle-East it’ll be continuing to be very hot, as we expand the services and the markets that we serve. I expect to see really good growth in Middle-East. Africa will be pretty slow from a growth standpoint, we have a huge position in North Africa with Morocco and OCP. I don’t expect that to get much bigger in the near-term, but it will continue to be a very strong business for us. South Africa probably not a lot of expansion there and certainly not enough to move the needle in anyway, so Africa will be flat to zero kind of growth. India will be a big growth opportunity for us next year, both in terms of foreign direct investment in India, investment by Indian customers, India and our high value engineering center. I expect our high value engineering center particularly show really dramatic growth in the next 12 months. Moving onto Asia. China, Singapore, Malaysia all three look like they’re going to have good but not great growth next year. So I think that’ll be a positive story. Australia is going to be a tale of two different aspects, I think our buildings and an infrastructure sort of public and institutional business is going to show really good growth. I think the mining and minerals get oil and gas process industry and end up processing industrial stuff probably pretty slow. Overall though I think we’ll see some single-digit kind of growth out of Australia. So I don’t think I left anywhere out. Did I?

No, I think you hit them all. Thank you very much.

The next question we have comes from the location of Justin Ward, Wells Fargo.

John a quick congrats and wish you an excellent retirement. I’ll speak-in a couple of quick one, just on the revenue growth in the quarter, we saw continued year-over-year moderation there, I mean it was up 2% and versus up 5 in Q3 and up 12 in Q2. In Q3 a lot of the drag really came from Pharma and Biotech and industrial other segments those are pretty weak year-over-year, was there any concentrated weakness this quarter revenue growth on year-over-year basis that you guys can call out or?

Well I think if you look at the revenue for mining and minerals, it was down as a percentage of the total, even though revenue was up in the aggregate. We continue to come off big project work in the mining and minerals segment and replacing it with a good profitability line in terms of small project capital and maintenance kinds of engineering services. They just don’t carry the revenue right, it’s a service-only aspect of business whereas big mining and minerals construction carries a ton of revenue with it. So that’s probably the one place I can point to where there is a significant swing from quarter to quarter and that’s really been happening to us all year.

And then just one more on the growth, is there any sense -- you guys have done a lot of restructuring last couple of quarters, is there any sense to your trading maybe some revenue growth in the near-term for margin there, as you spend less from the SG&A line?

We’ve been very careful to focus our restructuring on eliminating excess office space that’s unoccupied on dealing with historic operations that where we don’t believe the growth potentials there. And refocusing our energy where we do believe there’s growth, so I’d say if anything just the opposite, I think the energy we put into restructuring makes us a stronger and more focused organization going forward. And I would expect that to produce better result.

And I guess, I don’t know if I can get you to come on this, but it seems as if, if we kind of back into the organic growth rate in the quarter is kind of that maybe down mid-single digits. Is there any sense that, there’s maybe inflection point in that organic growth rate and we may see that to start to go back toward positive or?

Well I certainly expect organic growth to be almost all of our growth in ‘15 and a substantial part of our growth in ‘16. So in the grand scheme of things we’re not expecting much growth from acquisitions partly because we’re not going to make much, we don’t think, in the way of acquisitions in ‘15 and probably into some part of ‘16. So I think we’re very focused at this stage on driving organic growth. We've got some really good acquisitions in the company and I think we have the opportunity to leverage those very aggressively for organic growth as well.

[Operator Instructions]. Next we have John Rogers' location of D. A. Davidson.

I guess the question I have is Craig as you look at your business now between TPS and field services, how much of the work do you end up or do you think the field is flowing through TPS, in other words that you are doing the front-end work on.

It's the vast majority. Exceptions to that are the maintenance business which is probably about 20% of our total field services and that's not an accurate number, it's just a rough estimate. So the maintenance business doesn't have a big TPS component, but the rest of it is pretty TPS related and pretty much again in the public, the private sector side of our business. So Pharma, mining and minerals, heavy process, that's really where TPS drives field services kinds of volume and the vast majority of field service come as a consequence of that fee going into the execute and it be in a full service execution. If you look at the national government side, there is a chunk of field services there that tends to come with a chunk of TPS as its gets awarded, as a lot of our programs and projects in that space have a combination when we win them or when we renew them. On the buildings and infrastructure side, very little field services ever. For the most part what we see in the field services space there is very unattractive from a risk point of view. So that tends to be TPS only.

So I guess I am trying to think about a little bit is that, if we are not seeing work go to field and is indicated that it just seems slower and I’ve heard that from others as well. Are we creating a backup in the TPS backlog that the bookings could materially slow as if you stop studying these projects and just await a decision on whether to go or no go?

We don't generally find that the customers stop spending money while they are thinking about it. In fact, what we generally find John is that they tend to recycle stuff. So what we are seeing is a situation where we go through FEL 3 is the phase that we are generally talking about feed. We get a number or a schedule in a range of outcomes from a plus or minus X percent and the customers go, no that number doesn't work. Let's look at this and then we go and study yet another aspect of the project where we redesign it to eliminate some aspect of the project, something that the customer believes that can do without. And that recycling tends to be what occurs between the onset of feed and the final investment decision. So what really happens is we continue work along kind of steady base load feed work, the final investment decisions is made and assuming it made favorably then we get a big tick up in execute both in the TPS associated doing the engineering and procurement work and in the field services associated with the construction. Now the final investment decisions is that job is no go forward job, then it's pencils down and we got to find work for all those folks that were involved in the feed on some other feed somewhere. And usually at least for now we have been able to do that. And so as long as market has growth then the TPS backlog should be backlog that we can eat and it should be a work that we can continue to expand on. If the market goes south like it did in '09 and '10, then obviously there is a situation where we don't have enough work for the people we have and you are back in the mode of lay-offs and dramatic price cuts and all those kinds of things. So you can't say that's not a possibility but I don't put a lot of likelihood on it right now.

Okay. But on the other hand with the extensive TPS backlog that you have now, I presume you've got pretty good visibility at least to that 8% to 12% growth range without significant field services growth to hold it up.

Yes. I think we have a really good visibility in terms of where the business is now. Remember, I think we talked about this many times, about 65% of what we are going to do in FY '15 was in backlog at the end of the September So there is still a lot of selling to do. And if we are unsuccessful at selling or if the market is not there, then we are going to go fall short of our expectation. We don’t see any reason to think that’s true today, but that’s really where the big risk to FY ‘15 results is, is in what’s going to be out there to win and how quickly can you win it and get it in the backlog and execute it.

Okay, thank you that’s helpful.

[Operator Instructions]. At this time we are showing no further questions, we will go ahead and conclude our question-and-answer session. I would now like to turn the conference back over to Mr. Craig Martin, CEO and President. Mr. Martin?

Before Craig wraps-up I just like to thank all of you for the many years that we have worked together and all your support and have enjoyed working with all of you and hopefully will see many of you next week in New York and Boston.

And with that, I am going to thank you all for joining us. I think we got a great story for ’15 and I look forward to, like John, look forward to seeing all of you next week. Have a good week.

And we thank you sir and to the rest of the management team for your time today. The conference call is now concluded. At this time you may disconnect your lines. Thank you again everyone. And have a great day.