Tutor Perini Corp (TPC) 2005 Q4 法說會逐字稿

Good afternoon. My name is Katie and I will be your conference operator today. At this time, I would like to welcome everyone to the Perini fourth-quarter 2005 results 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).

I would now like to turn the call over to Mr. [Mark Collison], Perini Corporation Investor Relations. Please go ahead, sir.

Thanks, Katie. Good afternoon, everyone, and thanks for joining us on Perini's fourth-quarter fiscal 2005 conference call. With us today are Perini's President, Robert Band, and the Company's Chief Financial Officer, Mike Ciskey.

Our agenda for today follows our usual format. Bob Band is going to discuss the highlights of the fourth quarter, new contract wins, other successes and issues. After that, Mike Ciskey will review the Company's Q4 financial results in detail. Then Bob is going to come back and make some closing remarks. And at that point, we will open the call up for questions.

Before we start, I'd like to remind our listeners that our comments today will contain forward-looking statements and that management may make additional forward-looking statements in response to your questions. These types of written and oral disclosures are made pursuant to the Safe Harbor provisions contained in the Private Securities Litigation Reform Act of 1995.

Investors are cautioned that such forward-looking statements do involve risks and uncertainties that could cause actual results to differ materially from anticipated results. The Company cautions that any such forward-looking statements are based upon assumptions that the Company believes are reasonable that are subject to a wide range of risks. And actual results may differ materially.

These types of statements and underlying factors related to the statements are listed in filed information with the SEC, including Perini's Annual Report on Form 10-K for the fiscal year ended December 31, 2005, as well as in today's news release.

Our statements on this call are made as of today, February 23, 2006, and the Company undertakes no obligation to update any of these forward-looking statements contained in the call, whether as a result of new information, future events, changes in expectations or otherwise.

With those formalities out of the way, it is my pleasure to turn the call over to Bob Band.

Well, thanks, Mark. Good afternoon, everyone, and thank you for joining us on the call today. Our fourth-quarter and full-year 2005 revenues were 603 million and 1.7 billion, respectively. Our fourth-quarter net loss was 13.9 million, and our full-year net income was 4.0 million.

Our results in the fourth quarter and the full year were severely impacted by a $24.9 million after-tax charge associated with the U.S. District Court's ruling against two Perini joint ventures in favor of the Washington Metropolitan Area Transit Authority, or WMATA. The $24.9 million after-tax charge includes the amount of the underlying judgment and an amount for prejudgment interest, which was decided just yesterday by the court, February 22, 2006.

Excluding this charge, pretax income for the full year 2005 would have been a record 47.3 million, the result of strong margins in each of our business segments and from the profit contributions of Rudolph and Sletten and Cherry Hill acquisitions in 2005. Mike Ciskey will review all of our financial results in more detail later in the call.

I'd like to take a moment to comment on the WMATA ruling. We believe that this ruling, which resolved a case that we originally lost in 1993 and then won on appeal in 1999 and then lost again in the November 28, 2005, decision, was an anomaly, primarily because the ruling by the court was in favor of the owners' counterclaim rather than the joint venture's affirmative claim, and the underlying construction contracts were awarded in the mid-1980s. Clearly, this was a legacy case.

Turning to our performance for the year, in 2005, the U.S. building market experienced solid growth. And there has been a high level of pre-construction activity, particularly in the hospitality and gaming markets, two strong areas of focus for Perini. Paired with our strong reputation for the timely and on-budget delivery of high-end projects, our work acquisition efforts resulted in significant progress on our growth objectives in 2005.

During the fourth quarter, we continued to convert pending awards and new work opportunities to contracts. And our backlog is now at a record 7.9 billion as of December 31, 2005, up over 500% from year end 2004. New contract awards and adjustments to contracts and process added to the backlog in the fourth quarter, totaled 5.2 billion, and included 3.4 billion of hotel and casino work in Las Vegas, 469 million of hotel and casino work in southeastern Connecticut and 1.2 billion from the October, 2005, acquisition of Rudolph and Sletten.

The largest addition to our backlog in the fourth quarter was the $3.4 billion contract for the MGM Mirage Project CityCenter, a multi-billion-dollar urban complex covering 66 acres located between the Bellagio and the Monte Carlo casino resorts in Las Vegas, Nevada.

The construction contract includes a 4000-room hotel tower, casino, convention center, showroom, approximately 500,000 square feet of retail and restaurants, three branded boutique hotel, and numerous residential towers. We are continuing with our work on the 5000-car garage on that site and expect to begin work on the hotel/casino portion in April of this year.

The other major addition to backlog during the fourth quarter was the $469 million expansion of the Foxwoods Resort Casino in southeastern Connecticut. This project features a 26-story, 825-room hotel tower and will emphasize non-gaming activities, including a 25,000-square-foot spa, a 4000-seat theater, and 115,000 square feet of meeting and convention space. We broke ground on that project in November of 2005. And it is moving forward according to plan.

With our backlog at a record high level, we have greater flexibility in selecting new work assignments that meet our profitability requirements and match our expertise. We're also in a position where we have excellent visibility into our future revenues over the next several years. Going forward, we expect continued growth in our revenues and improved profitability.

As we said in our last call, we are managing our dramatic growth in a controlled manner. Our building segment has the ability to absorb this significant volume of work. That being said, we believe that we are now approaching full capacity in the Las Vegas market area.

As a result, we are currently looking for new projects in the Las Vegas area with start dates beyond 2007. We are, however, actively looking for new building projects in other geographic areas. We believe that Rudolph and Sletten, our new acquisition, acquired in October of 2005, has strong opportunities for growth in their markets.

Our plan for Rudolph and Sletten is to continue to introduce them to our California-based clients in the Native American gaming market. The combination of Rudolph and Sletten's reputation for building high-quality corporate campuses, high-tech projects, with Perini's expertise for quality and on-time delivery of large-scale construction, gaming and hospitality projects results in a solid company poised to win significant contracts in the Native American gaming market in California.

Our James A. Cummings subsidiary continues its focus on the education market in the Southeast, but has recently expanded into building condominiums as well. We're also seeking new building business in the Northeast, and our recent win of the Foxwoods Resort and Casino show that opportunities exist in that region, too.

Our building segment added nearly 7.8 billion of new contract awards, including the 1.2 billion of backlog at the date of acquisition from Rudolph and Sletten. At year end, that $7.2 billion of backlog -- this was for the building segment -- represents 91% of total backlog.

Our civil division continues to perform well, primarily due to the acquisition of Cherry Hill Construction in January of last year, which was accretive to earnings throughout 2005. We are regularly bidding and pursuing new projects, but are being selective to maintain our margin goals.

In 2006, Cherry Hill will focus on increasing the average size of their civil projects, which overall should improve our margins in that business. Our combined civil operations added over $340 million of new work in 2005, and at year end, its $423 million of backlog is 5% of our total backlog.

In our management services division, we are continuing to work on the two new contracts that we were awarded in the third quarter of 2005 in Iraq, which totaled $185 million. These contracts involve the design and construction of 53 facilities at existing U.S. military locations across Iraq in support of U.S. Army Corps of Engineers construction programs. We're also working on a small communications project with General Dynamics, also in Iraq.

Our work in Afghanistan is winding down, and we're nearing completion on the last of the four military bases under contract. We believe there are good opportunities for new business inside and outside of Iraq and Afghanistan, including contract opportunities with the U.S. Navy, Air Force and other agencies of the Department of Defense. So we are actively pursuing a variety of projects at this time.

Perini Management Services added approximately $220 million of new contract awards in 2005, and its $294 million backlog at December 31, '05, is 4% of our total backlog.

Overall, the fourth quarter was very productive for our Company. We ended the year with a record level of backlog and visibility into our future revenue stream that is unprecedented for our Company and unique for our industry. Revenues increased significantly over those in the fourth quarter of 2004 due to the timing of new work awards in gaming and hospitality that shifted into the latter half of 2005, and our acquisitions.

Looking to 2006, we believe our building segment, including Rudolph and Sletten, will make a major contribution to our business based on the backlog in hand, as well as new awards. We expect margins to improve in the civil segment and anticipate another year of profitable earnings from the management services segment.

At this point, we reaffirm our guidance for our 2006 revenues in the range of 2.6 to $2.8 billion, with diluted earnings per share ranging from $1.30 to $1.45. This guidance will be updated during 2006 as project activity in the field increases and progress is better defined.

Now let me turn the discussion over to Mike Ciskey, who will give you the financial details for the quarter.

Thank you, Bob. I will now go through the fourth-quarter financial results in some detail. Fourth-quarter revenues were 603 million, an increase of 51% from the 398 million recorded in the fourth quarter of 2004.

On a reportable segment basis, revenues from our building segment were 462 million, an increase of 59% from the 291 million in the fourth quarter of 2004. This increase was due to an increase in revenues from our acquisition of Rudolph and Sletten effective October 3, 2005.

Revenues from our civil segment were 84 million, an increase of 203% from the 28 million reported in the fourth quarter of 2004. This increase is primarily due to the acquisition of Cherry Hill Construction as of January 1, 2005, as well as an increase in volume in our base civil construction segment.

Management services revenues were 58 million, a decrease of 28% from 80 million a year ago, due to a decline in the volume of work related to the rebuilding of Iraq.

Our total gross profit decreased 23.4 million to a loss of 2.5 million from a profit of 20.9 million in the fourth quarter of 2004. Overall gross profit margin for the quarter declined to a negative 400th of a percent, as compared to 5.2% a year ago.

While all three of our building segments had positive gross profit margins from current operations in the fourth quarter of 2005, the charge relating to the WMATA decision negatively impacted our fourth-quarter 2005 results compared to the fourth quarter of 2004.

Excluding this charge, gross profit margins for the quarter would have improved by 1.1% to 6.3%, compared to the 5.2% for the fourth quarter of 2004.

General and administrative expenses were 20.8 million, a 3.4% increase compared to the 11.3 million or 2.8% of revenues in the fourth quarter of 2004. Approximately 8.5 million of the increase was due to the general and administrative expenses related to the Rudolph and Sletten and Cherry Hill Construction acquisitions.

Loss from construction operations before corporate G&A was 20 million in the quarter versus the 12.5 million profit reported in the fourth quarter of 2004.

Breaking down the results from construction operations by segment, the building segment income from construction operations for the quarter was 11.7 million, an increase of 516% from 1.9 million in the fourth quarter of 2004. This increase was due to the acquisition of Rudolph and Sletten and to improved operating margins compared to the fourth quarter of 2004, which was negatively impacted by profit adjustments on several contracts. Operating margin improved to 2.5% from 0.7 in the fourth quarter of 2005.

Civil segment loss from construction operations was 34.9 million in the fourth quarter of 2005 versus income from construction operations of 3.4 million a year ago, reflecting the impact of the WMATA charge. Excluding this charge, income from construction operations would have increased 2.1 million to 5.5 million and operating margin in the civil segment would have been 6.6% in the fourth quarter of 2005 versus 12.3% last year, which was favorably impacted by profit adjustment on several contracts.

Management Services income from construction operations was 3.3 million compared to 7.2 million in the fourth quarter of 2004, and operating margins declined to 5.7% versus 9% a year ago. This decrease in income from construction operations and operating margins was primarily due to a decrease in revenues associated with the work in Iraq and the impact of contract profit adjustments.

Other income was 1.6 million in the fourth quarter of 2005, compared to other income of 900,000 in the fourth quarter of 2004. This reflects a net gain from the sale of a portion of land held for sale, offset by expenses associated with the secondary offering and settlement of the $21.25 preferred stock lawsuit, both of which closed in the fourth quarter of 2005. These items generally should be considered non-recurring and are not expected to significantly impact our future results.

Interest expense was 900,000, an increase of 700,000 from the fourth quarter of 2004. This increase is due primarily to interest expense on equipment financing debt we assumed in connection with the Cherry Hill acquisition and increased borrowing under our amended credit agreement to partially pay for the acquisition of Rudolph and Sletten.

The credit for income taxes was 8.7 million compared to a provision for income taxes of 4 million in the fourth quarter of 2004. The net loss was 13.9 million in the fourth quarter, compared to a profit of 6.2 million in the same quarter a year ago. Diluted loss per share for the quarter was $0.44 versus diluted earnings per share of $0.23 for the same period of 2004.

On a non-GAAP basis, adjusting diluted earnings per share for the $0.09 per share favorable impact due to the settlement of the $21.25 preferred stock lawsuit and the $0.94 per share negative impact as a result of the WMATA decision, diluted earnings per share in the fourth quarter would have been $0.41 per diluted share. For the year ended December 31, 2005, diluted earnings per share were $0.20.

Adjusting total earnings per share for the two items I just mentioned, diluted earnings per share would have been $1.06. We believe these adjusted diluted earnings per share results may be useful to investors in comparing our performance over these periods, but they are not meant to substitute for GAAP earnings.

Looking at our balance sheet, at December 31, 2005, our working capital stood at 153.3 million compared to 178 million at December 31, 2004. This represents a current ratio of 1.23 to 1, compared to 1.41 to 1 at December 31, 2004. The decrease in working capital is a result of the acquisition of Rudolph and Sletten and the WMATA decision.

As of December 31, 2005, we had 139.8 million in cash and cash equivalents compared to the December 31, 2004, balance of 136.3 million. During 2005, we generated approximately 30 million in cash from operating activities.

Long-term debt stood at 40 million, excluding current [portion], compared to 8.6 million at December 31, 2004. The long-term debt is comprised primarily of the secured term loan which was used to refinance a portion of the purchase of Rudolph and Sletten and mortgage debt on properties used in our operations.

At December 31, 2005, we had 7.2 million outstanding for letters of credit on our $50 million revolving credit facility, leaving a balance of 42.8 million available.

Our net loss in the fourth quarter of 2005 caused us to be in default of several of the financial covenants in our credit agreement. But we have received a waiver of such default from our lenders.

Stockholders' equity increased 9.2 million to 183.2 million, compared to 174 million at December 31, 2004. As Bob mentioned earlier, our backlog at December 31, 2005, improved 586% to 7.9 billion from 1.15 billion at the end of last year.

Backlog by segment is -- building segment backlog of 7.2 billion, civil segment backlog of 423 million and Management Services backlog of 294 million. Obviously, we are very pleased with the tremendous growth of backlog and the unique visibility into operating results that it provides, not only for 2006, but also for 2007 and '08. At the same time, we are trying to anticipate and prepare for the demands that this growth will place on both our financial and human resources.

With that covered, I will now turn the call back over to Bob for his closing comments.

Thanks, Mike. Well, fiscal 2005 established a solid base for 2006 and beyond. Our backlog grew six-fold due to several high-profile project awards in the Las Vegas market. We made two strategic acquisitions, Cherry Hill and Rudolph and Sletten, that added to our profitability and allowed us to expand our footprint geographically and also functionally.

Our reputation for on-time delivery, client service and execution of large, complex projects remains unmatched in the industry. We are pleased with our progress this year and look forward to building upon it in the future.

That ends our prepared remarks, and Mike Ciskey and I are happy to take your questions at this time.

(OPERATOR INSTRUCTIONS). Shaun Nicholson.

I just had, I guess, two questions, one dealing with concrete. Are you guys seeing any concrete shortages out there that may kind of delay some of these projects in Vegas or wherever else they are?

Well, presently, we are able to see our way clear to buy the concrete in quantities and on the schedule that we believe that we need it. There's no question that it is a worry point. And the earlier we line up our procurement commitments, the better off we are. And that is something we have impressed upon the owners throughout the pre-construction efforts that we make early on on these large hospitality and gaming projects. So that is how we've been handling it -- we've been trying to line up our commitments early in the progress.

What is your other question, Shaun?

On the new geographies you mentioned, obviously, California being, I would imagine -- is that one of the main geographies as far as the Indian gaming out there?

No, we've been doing Indian gaming work in California for a long time. We've built eight major programs out there. But certainly, it's new geography from the point of view of the general building market that Rudolph and Sletten is in. And also, remember we acquired Cherry Hill in the mid-Atlantic region, Maryland, Virginia, in that area, and also with an operation in Florida on the civil side. So there's additional new geography as well.

And Cherry Hill real quick -- will they see any of the Gulf Coast rebuild? Are they able to bid for that when that starts?

No -- well, probably, you know, if the large civil works is advertised as we think it will be, it will be our civil business that looks at that.

Steven Fisher.

First, just want to clarify something on the WMATA judgment, make sure I have this right -- was the total judgment 40.4 million?

Yes, the total judgment that was outlined in the court's decision yesterday provided for a -- the basic judgment itself was 21.256 million. And then the prejudgment interest was at 19.133 million. So for a total of approximately 40.4 million, right, pre-tax. Exactly.

But you took a charge for 24.9 million --

No, after-tax.

After-tax, Steve.

Okay, got it. Helpful. And then on the Project CityCenter, you have got it at 3.4 billion in the backlog at the end of December, which I guess is a bit higher than you talked about last quarter. But it wasn't until maybe a week or two ago that MGM Mirage raised the project by about $2 billion. So would the value of that contract be higher today than it was at 12/31?

Well, from our point of view, the numbers in our contract are reflected in our backlog. However, you are right, MGM did announce that the Project CityCenter overall budget has risen to -- I think they used the $7 billion range -- not all of that for construction. Certainly, the value of our work will rise as well. And as those are priced and agreed to with the owner, that will get added into backlog.

And just get one more in here -- there was an article in ENR Magazine this week. It mentioned that you guys are paying like a 10 to 15% premium on labor in Las Vegas. But then it also mentioned that the local unions are going to add about 2000 members by 2007. I guess will the 10 to 15% premiums you are paying, will that affect your margin? Or is that already kind of baked into the contract? And then secondly, do you think the 2000 laborers that are being added -- is that enough to help the market out?

Two answers. One, we had anticipated and are continuing to price what will be the correct labor rate. Remember, none of the guaranteed maximum prices for those jobs have been fixed. So we have always priced the Las Vegas labor high.

Secondly, the 2000 is probably a drop in the bucket. We still think that many, many travelers from various trades will be required and will most likely come into Vegas because of the higher wage scale.

Richard Paget.

On the civil side, have you guys started to see any activity from the SAFETY-LU money being let out?

Well, we have tracked the same consistent list of project opportunities. And they are coming to bid at approximately the same time as were estimated earlier back in '05. So it's hard to say that we see any direct fallout from the funded program, okay? I think that over time, there will be some fallout from that. But right now, the projects that we identified late in '05 are coming to bid as planned.

Okay, so with civil backlog being down a bit sequentially, do you think there's some project that had just been waiting?

No, I think it gets to who wins what share of their bids. We have consistently priced our work at our margins. And so we are not necessarily the low-priced brand all the time. We prefer to get them when we can get them right, then just pick them up to add revenue.

Now that you have Cherry Hill under your belt for over a year now, how has that performed to your expectations? And what was different either on the plus side or the minus side from what you guys were looking for?

Well, they performed very well. They exceeded their initial 2005 target that we established. So from a profitability point of view, their results were very good. Work acquisition continues to be as expected. We have had to supplement some of the senior management, although part of that was planned. So I would say pretty much Cherry Hill has gone according to original plan.

And then with the lawsuit, will there be any other charges, perhaps in the first quarter? Or you are taking everything right now in the fourth?

Well, we are trying -- we booked a provision at the absolute maximum that was in the court's decision. And right now, the activity we're doing is focused on identifying whether there's strong arguments and clean arguments for appeal. So that's what we're doing right now. There might be some ongoing legal fees in support of that effort, but I think they would probably be minor.

John Rogers.

I was just wondering, Mike, I could not write down your numbers quickly enough, but operating income for Management Service was what in the quarter?

5.7% versus 9% a year ago.

And on the actual dollars?

Actual dollars were 3.3 million compared to 7.2 million.

And depreciation in the quarter?

We will send you an email on that.

Yes, because I don't have it.

And then, looking out into '06, especially with the building segment backlog of 7.2, can you give us a sense of what you have booked right now? What is the scheduled revenue recognition? In other words, how much of that is in '06, '08 and '09?

Well, we really have not gone out any further than '06. But what we have said that in our guidance revenue, which if you mid-point it at 2.7 billion, that approximately 2.2 billion of that comes out of our existing 12/31 backlog.

So without any additional bookings, '07 would grow just on what you have now?

That is correct. The burnoff of the '05 backlog in '07 should be larger than the burnoff in '06.

And I don't need it exactly, but is it heavily weighted toward the back end of this year? You mentioned starting up on --

Definitely. It definitely is. We have started several of the projects in Las Vegas. But the MGM project really doesn't kick off until probably mid-summer --

April.

-- really get going until, like I said, mid-summer. So it definitely will have a back-end effect in '06.

And tax rate, full tax, 36% for '06 is what you have figured. Is that right?

No, for '06? About 38.5.

38.5, okay. And then lastly, just on the cash balance that you gave us, the $40 million WMATA judgment -- that has not been taken out of the cash at December 31?

That is correct.

Ben [Warman].

Thank you very much, and wanted to congratulate all you guys. You have done a terrific job building up the Company going forward. The question I have was twofold. What, if any, possibility do you see about appealing that court decision? And if so, what impact does that ruling have on your taxes?

Well, you know, Ben, we are looking at the issues, the legal issues this week, of course, and early next week to determine our position on appeal. Obviously, you like to have a clean legal argument for appeal. But we're looking at that. So I can't say whether we will appeal at this point or not. But that's certainly getting a lot of attention right now.

And as to the taxes --

If we were to appeal the decision, it would not be tax-deductible for 2005. So as it is now, of course, we would not pay taxes or we would get an actual credit for that. But if we were to appeal the decision, then it would affect our 2005 tax payment. From a book standpoint, it really has no effect.

One final question. The previous time, everyone raised the question about the status of the preferred stock. And I understand with this hit you took with the court ruling, that's going to impact your possibility of clearing that up.

You have about 200,000 shares outstanding in the preferred. And that preferred is supposed to be able to be called in at $25 a share plus accrued interest. The stock selling now is above the $25 price, it's approximately $3 higher. Is there any creative way you can have to get rid of that by being able to substitute stocks back toward the $25 for the shareholders plus some nominal amount on the accrued interest?

Well, I will say this, that it is on the agenda for our March board meeting, Ben. And we continue to look at ways of satisfying that preferred. As you know, originally it was 1 million of those shares outstanding, down now I think around 180,000. We've done a good job of either buying it back in by tender or settling the preferred issue or the lawsuit. So we are continuing to look at it. I can assure you it is on the March agenda.

[Mark Valser].

Can you comment on your capacity in the Las Vegas market? It sounds like operators are continuing to knock them down and want to build new ones. Are you able to bid on those contracts? Or are you too tight in your capacity?

Well, right now, what we have said in Las Vegas, we are approaching full capacity. So we are still talking to our client base, but looking at projects that would start beyond 2007. So that's where we are right now.

And then with respect to the '07 -- sorry, the '06 outlook and cash flow, is there anything unusual or anything we need to know about cash flow relative to net income?

Not at this time --

Well, except that from a timing standpoint, if we do pay the WMATA judgment, that will be a cash flow issue in '06. Outside of that, we, barring timing differences, which are not unusual in our business due to the large contract nature and the large receivable nature that we have, we kind of anticipate cash flows to be in line with our operating income.

And then my final question is with respect to, say, the guidance range, what are the swing factors that move you from the bottom of the revenue range to the top of the revenue range?

Well, a lot of it is just simply progress on the jobs. And everybody is estimating and working off the schedules that we have now. But occasionally, jobs move around a little bit on us. So it's really progress in the field that determines work in place, especially with such a large piece of it already in backlog now.

Jeff [Cutshall].

Just a question on the margins. In your prepared remarks, you mentioned as you were going through the margins by segment that you were expecting civil to improve from here. Just curious, does that mean improve from the 6.6% level on an annual basis or improve from where the year wound up, which I think was just below 5%?

That reference really was to the total year margin, which was just below 5%. We would expect that margin to kind of move up between the 5 and 6% area.

That's something that we could expect to see in '06?

We hope so.

What about the same question as it pertains to building and management services?

The building margin for '05 wound up being about 2.5%, which is kind of on the high of our historical rate. We have said that the '06 margin we would expect to be between 2.2% and 2.5%, somewhere in that range, but that during '07 and '08, that that should creep up. And Management Services margins, they actually declined in '05 to -- 6.9? Is that--?

Yes.

6.9%. And again, we would expect it to be somewhere in that 6.5 to 7.5% area. But we would anticipate that in '06, the Management Services revenues would probably kind of flatten out on us.

I'm just curious, because when I put those kind of margins in based on your revenue guidance, I'm coming up with a number that is materially higher than the high end of your guidance range. Is there something maybe below the operating line that I'm not factoring in that you could think of?

I mean, your tax rate doesn't seem to be increased -- or rather changing substantially from last year. Your interest is pretty much the same. I'm just curious what you are maybe factoring into your $1.30, $1.45 guidance that we might not be missing -- or rather, we might be missing.

I would say that you may not have the correct amount of amortization expense in your numbers for both the acquisitions, and we are anticipating issuing some stock grants that -- in order to help retain people that will be amortized over some rather lengthy vesting period, but certainly could affect 2006.

How big could those potentially be?

We have not decided that yet.

Yes, that might be something that we pick up on the next call, too.

Steven Fisher.

It sounds like Rudolph and Sletten is well-positioned for new work in the Native American gaming area. Could you just give me a sense of what you're hearing from your customers about planned activity?

Well, the total planned activity in California is fairly strong. And I think it is probably in the $2 billion range over a period of years. So I would say that they are only looking at the tip of the iceberg right now. And there will be some significant programs coming, which is great.

And they have started; they are working on a smaller scale, but also looking at some larger programs as well. It will take a little time for that to mature, Steve.

Yes, those programs, Steve, probably won't have a big impact on '06. But Rudolph and Sletten, from their core business, is expecting a fairly significant growth in '06.

Do you think maybe some of those projects come in the backlog maybe in '07?

Certainly possibly.

Yes, late '06 --

Late '06 --

And through '07, right.

And then second one was the Red Rock -- I think that is supposed to come to completion sometime in April? Is that on track?

It is on track, as far as we know. Our last phone call, it was on track.

At this time, there are no further questions.

Okay, thank you, everyone. I appreciate your attention, and the questions were great. And look forward to next quarter. Bye-bye now.

This concludes today's conference call. You may now disconnect.