Overview

Net earnings for fiscal 2009 decreased $20.9 million, or 5.0%, to $399.9 million as compared to $420.7 million for the prior fiscal year. Diluted earnings per share also declined by 5.0%, from $3.38 for fiscal 2008 to $3.21 for fiscal 2009.

Our results for fiscal 2009 reflect the continuing effects of the current global recession which has caused many of our private sector clients to re-examine their capital expenditure plans resulting in the delay in the release of new projects, and, in certain instances, cancellations. The current economic conditions have also had a negative effect on many of our public sector clients as we have seen spending reductions by federal and state governments and the delay and curtailment of key infrastructure programs.

Although consolidated revenues for fiscal 2009 increased by $215.2 million, or 2%, from fiscal 2008, most of the increase occurred during the first two quarters of fiscal 2009 as the Company completed a number of projects in several of the industries and markets we serve. During the second half of fiscal 2009, as the global economy continued to slow, revenues dropped-off significantly, project delays increased, and awards of new contracts slowed.

In response to the current recession, the Company is implementing a variety of cost-control measures that are intended to help stabilize our earnings. We have reduced personnel, implemented a salary and hiring freeze, and have closed a number of our smaller offices. In spite of these actions, the continuing and persistent economic sluggishness will most likely continue to impact our business in fiscal 2010, and may impair our ability to forecast business trends accurately.

On the other hand, we are a very diversified business. We provide a wide-range of services to customers operating in a wide range of industries and markets. Accordingly, we believe that as the global economy begins to recover, and depending on which industries and markets start their recovery first, we will be well positioned to capitalize on whatever increased capital spending occurs. Our cash and cash equivalents totaled $1.0 billion at October 2, 2009; this is $429.2 million higher than the comparable amount last year. Our debt-to-equity ratio was 0.7% at the end of fiscal 2009, and we have over $469.7 million available under our various credit facilities.

Our backlog totaled $15.2 billion at the end of fiscal 2009.

The Company's fiscal year ends on the Friday closest to September 30 (determined on the basis of the number of workdays) and, accordingly, an additional week of activity is added every five to six years, such as in fiscal 2009. In the past, and solely for ease of reference, we titled our financial statements as being "at" or "for the fiscal year ended" September 30. Henceforth, we will title our financial statements using the specific date on which our fiscal years end. There was no material effect on our consolidated financial statements from making this change in presentation.

Critical Accounting Policies

In order to understand better the changes that occur to key elements of our financial condition, results of operations, and cash flows, a reader of this Management's Discussion and Analysis should be aware of the critical accounting policies we apply in preparing our consolidated financial statements.

The consolidated financial statements contained in this report were prepared in accordance with accounting principles generally accepted in the United States ("U.S. GAAP"). The preparation of our consolidated financial statements and the financial statements of any business performing long-term engineering and construction-type contracts requires management to make certain estimates and judgments that affect both the entity's results of

operations and the carrying values of its assets and liabilities. Although our significant accounting polices are described in Note 2-Significant Accounting Policies of Notes to Consolidated Financial Statements beginning on page F-1 of this Annual Report on Form 10-K, the following discussion is intended to highlight and describe those accounting policies that are especially critical to the preparation of our consolidated financial statements.

Revenue Accounting for Contracts and Use of Joint Ventures-In general, we recognize revenues at the time we provide services. Depending on the commercial terms of the contract, we recognize revenues either when costs are incurred, or using the percentage-of-completion method of accounting by relating contract costs incurred to date to the total estimated costs at completion. This method of revenue recognition requires us to prepare estimates of costs to complete contracts in progress. In making such estimates, judgments are required to evaluate contingencies such as potential variances in schedule; the cost of materials and labor; productivity; and the impact of change orders, liability claims, contract disputes, and achievement of contractual performance standards. Many of our engineering and construction contracts provide for reimbursement of costs plus a fixed or percentage fee. In some of the markets we serve there is an increasing trend towards cost-reimbursable contracts with incentive-fee arrangements. In certain instances, we base our incentive fees on achievement of target completion dates, target costs, and/or other performance criteria. Failure to meet these targets or increases in contract costs can result in unrealized incentive fees or non-recoverable costs, which could exceed revenues recognized from the project.

We provide for contract losses in their entirety in the period they become known, without regard to the percentage of completion.

The nature of our business sometimes results in clients, subcontractors or vendors presenting claims to us for recovery of costs they incurred in excess of what they expected to incur, or for which they believe they are not contractually responsible. In those situations where a claim against us may result in additional costs to the contract, we include in the total estimated costs of the contract (and therefore, the estimated amount of margin to be earned under the contract) an estimate, based on all relevant facts and circumstances available, of the additional costs to be incurred. Similarly, and in the normal course of business, we may present claims to our clients for costs we have incurred for which we believe we are not contractually responsible. In those situations where we have presented such claims to our clients, we include in revenues the amount of costs incurred, without profit, to the extent it is probable that the claims will result in additional contract revenue, and the amount of such additional revenue can be reliably estimated. Costs associated with unapproved change orders are included in revenues using substantially the same criteria used for claims.

Certain cost-reimbursable contracts with government customers as well as certain commercial clients provide that contract costs are subject to audit and adjustment. In this situation, revenues are recorded at the time services are performed based upon the amounts we expect to realize upon completion of the contracts. In those situations where an audit indicates that we may have billed a client for costs that are not allowable under the terms of the contract, we estimate the amount of such nonbillable costs and adjust our revenues accordingly.

As is common in the industry, we execute certain contracts jointly with third parties through various forms of joint ventures and consortiums. For certain of these joint ventures (i.e., where we have an undivided interest in the assets and liabilities of the venture), we recognize our proportionate share of joint venture revenues, costs and operating profit in our Consolidated Statements of Earnings. For other investments in engineering and construction joint ventures, we use the equity method of accounting.

Accounting for Stock Issued to Employees and Others-We measure the cost of employee services received in exchange for an award of equity instruments based on the estimated grant-date fair value of the award.

We use the Black-Scholes option pricing model to compute the grant date fair value of awards of equity instruments. The Black-Scholes model requires the use of highly subjective assumptions in order to compute the hypothetical fair value of a stock option. Changes in these assumptions can cause drastically different values

being assigned to a stock option. The value assigned to any stock options that may be awarded in the future as well as the related expense associated with any such awards will be dependent on the assumptions used at the time of award.

Accounting for Pension Plans-The accounting for pension plans requires the use of assumptions and estimates in order to calculate periodic pension cost and the value of the plans' assets and liabilities. These assumptions include discount rates, investment returns, and projected salary increases, among others. The actuarial assumptions used in determining the funded statuses of the plans are provided in Note 7-Pension Plans of Notes to Consolidated Financial Statement beginning on page F-1 of this Annual Report on Form 10-K.

The expected rates of return on plan assets for fiscal 2009 ranged from 2.3% to 8.0%; this compares to a range of 5.0% to 9.0% for fiscal 2008. We believe the range of rates we applied for fiscal 2009 reflects the long-term returns expected on the plans' assets, considering recent market conditions, projected rates of inflation, the diversification of the plans' assets, and the expected real rates of market returns. The discount rates used to compute plan liabilities were changed from a range of 5.25% to 6.25% in fiscal 2008 to a range of 2.5% to 5.6% in fiscal 2009. These assumptions represent the Company's best estimate of the rates at which its pension obligations could be effectively settled.

Changes in the actuarial assumptions often have a material affect on the values assigned to plan assets and liabilities, and the associated pension expense. For example, if the discount rate used to value the our net pension benefit obligation ("PBO") at October 2, 2009 was higher (lower) by 0.25%, the PBO would have been lower (higher) at that date by approximately $39 million, and the net periodic pension cost for fiscal 2010 would have been lower (higher) by approximately $4 million. Similarly, if the expected return on plan assets were increased (decreased) by 0.25%, the net periodic pension cost for fiscal 2010 would decrease (increase) by approximately $2 million. Differences between actuarial assumptions and actual performance (i.e., actuarial gains and losses) that are not recognized as a component of net periodic pension cost in the period in which such differences arise are recorded to accumulated other comprehensive income (loss) and are recognized as part of net periodic pension cost in future periods in accordance with U.S. GAAP. Management monitors trends in the marketplace within which our pension plans operate in an effort to assure the fairness of the actuarial assumptions used.

Contractual Guarantees, Litigation, Investigations, and Insurance-In the normal course of business, we are subject to certain contractual guarantees and litigation. The guarantees to which we are a party generally relate to project schedules and plant performance. Most of the litigation in which we are involved has us as a defendant in workers' compensation; personal injury; environmental; employment/labor; professional liability; and other similar lawsuits. We maintain insurance coverage for various aspects of our business and operations. We have elected, however, to retain a portion of losses that occur through the use of various deductibles, limits, and retentions under our insurance programs. This situation may subject us to some future liability for which we are only partially insured, or completely uninsured, and we intend to mitigate any such future liability by continuing to exercise prudent business judgment in negotiating the terms and conditions of our contracts.

In accordance with U.S. GAAP, we record in our Consolidated Balance Sheets amounts representing our estimated liability relating to such guarantees, litigation, and insurance claims. We include any adjustments to such insurance reserves in our consolidated results of operations.

In addition, as a contractor providing services to the United States federal government and several of its agencies, we are subject to many levels of audits, investigations, and claims by, or on behalf of, the U.S. federal government with respect to contract performance, pricing, costs, cost allocations, and procurement practices. We adjust revenues based upon the amounts we expect to realize considering the effects of any client audits or governmental investigations.

Testing Goodwill for Possible Impairment-The goodwill carried in our Consolidated Balance Sheets is tested annually for possible impairment. In performing the annual impairment test, we evaluate our goodwill at

the reporting unit level. We have determined that we have two reporting units, which are based on geography. We refer to these reporting units internally as "Europe" and "Non-Europe". Each of our reporting units conducts the business activities described elsewhere in this 2009 Form 10-K, which includes providing professional technical services such as design, engineering, and architectural services; construction and/or construction management services; and maintenance and operations services.

Our geography-based reporting units reflect the Company's organizational structure, which is based predominately on geography, as well as our acquisition strategy, which favors acquisition targets that, among other things, provide access to new geographic areas. Our reporting units represent rational groupings into which substantially all of our major acquisitions (which are responsible for the goodwill appearing in our consolidated balance sheet) have been assimilated, and all of the operations under each reporting unit share in the benefits of the goodwill created by our acquisitions.

U.S. GAAP does not prescribe a specific valuation method for estimating the fair value of reporting units. We determined that a market approach is an appropriate method for valuing our reporting units in light of its common use as a technique for valuing businesses in general. Using this method, the fair value of our reporting units was estimated by multiplying their respective after-tax earnings for the trailing twelve months by the Company's overall average market earnings multiple. Since the activities of each reporting unit approximates that of the Company overall, we concluded that the use the Company's market multiple for purposes of applying the market-based valuation approach was reasonable. We also believe that the use of this multiple is appropriate considering that both reporting units have qualitative characteristics that are generally consistent with those of the parent company. Those characteristics include size in terms of resources (i.e., personnel); a large, diverse client base; broad geographic reach; and a broad range of design, engineering, and construction and construction management capabilities.

The determination of reporting units and the selection of the valuation technique used to estimate the fair value of the reporting units requires the exercise of judgment by management. The fair values resulting from the valuation technique used are not necessarily representative of the values we might obtain in a sale of the reporting units to willing third parties.

As mentioned above, the key inputs used in the valuation model are the after-tax earnings of our reporting units and the Company's market-driven average earnings multiple. The multiples used for fiscal 2009, 2008, and 2007 were approximately 15, 31, and 26, respectively. In the event either the after-tax earnings of the Company's reporting units or the Company's market earnings multiples decline significantly after the date the annual impairment test is performed, the Company will re-perform the test at a date closer to fiscal year-end.

Based on the results of the above-described tests, there were no indications of impairment of the goodwill shown in our Consolidated Balance Sheets for fiscal years 2009 and 2008.

Changes in the inputs used in our valuation model (i.e., declines in the Company's average earnings multiple or the after-tax earnings of our reporting units) could result in an indication of possible impairment of goodwill in the future.

Results of Operations

General

Our business focuses exclusively on providing technical, professional, and construction services to a large number of industrial, commercial, and governmental clients around the world. The services we provide generally fall into four broad categories:

• Project Services (which includes engineering, design, architectural, and similar services);

• Process, Scientific, and Systems Consulting services (which includes services performed in connection with a wide variety of scientific testing, analysis, and consulting activities);

• Operations and Maintenance services (which includes services performed in connection with operating large, complex facilities on behalf of clients as well as services involving process plant maintenance).

The scope of services we can provide our clients, therefore, ranges from consulting and conceptual design services (which are often required by clients in the very early stages of a project) to complete, single-responsibility, design-build-operate contracts.

The following table sets forth our revenues by type of service for each of the last three fiscal years (in thousands):

                                                      2009            2008           2007
Technical Professional Services Revenues:
Project Services                                  $  4,644,043    $  5,128,456    $ 3,828,179
Process, Scientific, and Systems Consulting            894,446         770,223        597,116

Total Technical Professional Services Revenues       5,538,489       5,898,679      4,425,295

Field Services Revenues:
Construction                                         4,763,640       4,239,439      2,990,177
Operations and Maintenance                           1,165,247       1,114,041      1,058,498

Total Field Services Revenues                        5,928,887       5,353,480      4,048,675

                                                  $ 11,467,376    $ 11,252,159    $ 8,473,970

We focus our services on clients operating in certain industry groups and markets. We believe these industry groups and markets have sufficient common needs to permit cross-utilization of our resources. The following table sets forth our revenues by these industry groups and markets for each of the last three fiscal years (in thousands):

                                              2009           2008          2007
      Energy & Refining-Downstream        $  4,047,789   $  3,687,798   $ 2,520,064
      National Government Programs           2,424,624      1,976,184     1,500,007
      Chemicals and Polymers                 1,210,027      1,409,868     1,238,350
      Infrastructure                           933,519        935,333       681,367
      Oil & Gas-Upstream                       895,284      1,102,743       890,943
      Pharmaceuticals and Biotechnology        875,007        978,867       756,178
      Buildings                                517,085        708,081       437,122
      Industrial and Other (a)                 564,041        453,285       449,939

                                          $ 11,467,376   $ 11,252,159   $ 8,473,970

(a) Includes projects for our clients operating in the technology and manufacturing; pulp and paper; food and consumer products; and basic resources industries, among others.

Fiscal 2009 Compared to Fiscal 2008

We recorded net earnings of $399.9 million, or $3.21 per diluted share, for the fiscal year ended October 2, 2009, compared to net earnings of $420.7 million, or $3.38 per diluted share, for fiscal 2008.

Although consolidated revenues for fiscal 2009 increased by $215.2 million, or 2.0%, from fiscal 2008, most of the increase occurred during the first two quarters of fiscal 2009 as the Company completed a number of projects for clients operating in several of the industries and markets we serve. During the second half of fiscal 2009, as the global economy continued to slow, revenues dropped-off significantly, while project delays increased and awards of new contracts also slowed.

Revenues during fiscal 2009 from projects for clients operating in the energy & refining (downstream) and the oil & gas (upstream) industries increased a total of $152.5 million, or 3.2%, from last year. All of the increase related to projects for clients operating in the energy & refinery sector and reflects the ramping-up of work performed at a large, U.S. oil refinery. This increase was off-set in part by the winding-down of work on certain projects in the upstream sector of the petroleum market that were awarded to the Company in prior years when oil prices were at historically high levels.

Revenues during fiscal 2009 from projects for our national government clients increased by $448.4 million, or 22.7%, from last year. Most of the increase continues to relate to revenues from the U.S. federal government on projects for research and development test engineering, scientific, and other technical services. Although the Company performed services during fiscal 2009 for projects that were funded in part under the American Recovery and Reinvestment Act of 2009 ("ARRA"), such revenues were not significant.

Revenues during fiscal 2009 from projects for clients operating in the chemicals and polymers industries, and the pharmaceuticals and biotechnology industries as well as the buildings market all declined as compared to last year, as clients reviewed their capital expenditure plans in light of the global recession and delayed the release of new projects.

Direct costs of contracts for fiscal 2009 increased $388.8 million, or 4.1%, to $9.9 billion, compared to $9.5 billion for fiscal 2008. The level of direct costs of contracts may fluctuate between reporting periods due to a variety of factors including the amount of pass-through cost we incur during a period. On those projects where we are responsible for subcontract labor or third-party materials and equipment, we reflect the amounts of such items in both revenues and costs (and we refer to such costs as "pass-through costs"). On other projects, where the client elects to pay for such items directly and we have no associated responsibility for such items, these amounts are not considered pass-through costs and are, therefore, not reflected in either revenues or costs. To the extent that we incur a significant amount of pass-through costs in a period, our direct cost of contracts are likely to increase as well.

Pass-through costs for fiscal 2009 increased $499.6 million, or 14.2%, to $4.0 billion, compared to $3.5 billion for fiscal 2008. In general, pass-through costs are more significant on projects that have a higher content of field services activities. Field services revenues for fiscal 2009 increased $575.4 million, or 10.7%, to $5.9 billion, compared to $5.4 billion for fiscal 2008. Pass-through costs are generally incurred at a specific point in the lifecycle of a project and are highly dependent on the needs of our individual clients and the nature of the clients' projects. However, because we have hundreds of projects which start at various times within a fiscal year, the effect of pass-through costs on the level of direct costs of contracts can vary between fiscal years without there being a fundamental or significant change to the underlying business.

As a percentage of revenues, direct costs of contracts were 86.4% for fiscal 2009, compared to 84.6% for fiscal 2008. The relationship between direct costs of contracts and revenues will fluctuate between reporting periods depending on a variety of factors including the mix of business during the reporting periods being compared as well as the level of margins earned from the various types of services provided. Generally speaking, the more procurement we do on behalf of our clients (i.e., where we purchase equipment and materials for use on projects, and/or procure subcontracts in connection with projects) and the more field services revenues we have relative to technical, professional services revenues, the higher the ratio will be of direct costs of contracts to revenues. Because revenues from pass-through costs typically have lower margin rates associated with them, it is not unusual for us to experience an increase or decrease in such revenues without experiencing a corresponding

increase or decrease in our gross margins and operating profit. The increase in the ratio of direct costs of contracts to revenues in fiscal 2009 as compared to last year was due primarily to higher levels of pass-through costs combined with a slight decrease in the margin rates earned on our technical professional services revenues.

SG&A expenses for fiscal 2009 decreased by $151.1 million, or 13.8%, to $940.3 million, compared to $1.1 billion for fiscal 2008. Our SG&A expenses typically fluctuate as a result of changes in head count and the spending required to support our technical professional services revenues, which normally require additional overhead costs. Therefore, when our technical professional services revenues increase or decrease, we typically see a corresponding change in SG&A expenses. The decrease in SG&A expenses was due primarily to the decline in our project services revenues combined with management's efforts to reduce SG&A expenses.

Operating profit for fiscal 2009 decreased by $22.5 million, or 3.5%, to $620.6 million, compared to $643.1 million for fiscal 2008. As a percentage of revenues, operating profit was 5.4% for fiscal 2009, compared to 5.7% in fiscal 2008. This decrease in operating profit is due primarily to the overall decline in business volume, and in particular, the decrease in project services revenues.

Interest income for fiscal 2009 decreased by $2.3 million, or 14.9%, to $13.1 million, compared to $15.4 million for fiscal 2008. Even though the Company maintained higher average cash balances during fiscal 2009 as compared to fiscal 2008, the rate of interest earned on our deposits and investments was significantly lower in 2009 as compared to fiscal 2008.

Interest expense for fiscal 2009 decreased by $1.5 million, or 33.9%, to $2.9 million, compared to $4.4 million for fiscal 2008. The decrease in interest expense was due primarily to lower average borrowings outstanding during fiscal 2009 as compared to last year.

Miscellaneous expense, net for fiscal 2009 totaled $6.0 million as compared to miscellaneous income, net of $3.3 million for fiscal 2008. Included in miscellaneous income, net last year was a $10.6 million gain from the sale of . . .