We were incorporated in 1918 as a successor to businesses that had been engaged in providing construction services since 1894. We provide diversified general contracting, construction management and design-build services to private customers and public agencies throughout the world. Our construction business is conducted through four basic segments or operations: Civil, Building, Specialty Contractors and Management Services. Our Civil segment specializes in public works construction and the repair, replacement and reconstruction of infrastructure, including highways, bridges, mass transit systems and water and wastewater treatment facilities, primarily in the western, northeastern and mid-Atlantic United States. Our Building segment has significant experience providing services to a number of specialized building markets, including the hospitality and gaming, transportation, healthcare, municipal offices, sports and entertainment, educational, correctional facilities, biotech, pharmaceutical and high-tech markets. Our Specialty Contractors segment specializes in plumbing, HVAC, electrical, mechanical, and pneumatically placed concrete for a full range of civil, building and management services construction projects in the industrial, commercial, hospitality and gaming, and transportation end markets, among others. Our Management Services segment provides diversified construction and design-build services to the U.S. military and federal government agencies, as well as to surety companies and multi-national corporations in the United States and overseas.

The contracting and management services that we provide consist of general contracting, pre-construction planning and comprehensive management services, including planning and scheduling the manpower, equipment, materials and subcontractors required for the timely completion of a project in accordance with the terms and specifications contained in a construction contract. We also offer self-performed construction services including site work, concrete forming and placement, steel erection, electrical and mechanical, plumbing and HVAC. We provide these services by using traditional general contracting arrangements, such as fixed price, guaranteed maximum price and cost plus fee contracts and, to a lesser extent, construction management or design-build contracting arrangements. In the ordinary course of our business, we enter into arrangements with other contractors, referred to as "joint ventures," for certain construction projects. Each of the joint venture participants is usually committed to supply a predetermined percentage of capital, as required, and to share in a predetermined percentage of the income or loss of the project. Generally, each joint venture participant is fully liable for the obligations of the joint venture.

We believe our leadership position as the contractor of choice for large, complex civil and nonresidential building projects will support our long-term backlog growth. We continued to experience increased contributions from our Civil and Specialty Contractor segments consistent with our focus on obtaining higher margin public works projects and enhancing our self-performance capabilities. We expect to continue to leverage our increased self-performance and schedule control capabilities to obtain additional large scale Civil and Building awards. We have capitalized on this leadership position and these synergies with significant new awards and pending awards across each of our segments, such as the $235 million Verrazano-Narrows Bridge upper deck replacement project in New York City (Civil); the $167 million signal modernization project for the New York City Transit Authority (Specialty Contractors); the $130 million irrigation and watershed management program for the U.S. government (Management Services); and several large pending awards for the Hudson Yards development project in New York City (Building), which will be booked into backlog as contracts for various phases are executed and work is released.

We have also experienced a shift in the stage of completion of our portfolio of large projects that significantly drive our operating results. As we entered into 2012, we had realized the benefits of successfully completing and closing out several large public works and hospitality and gaming projects across our Building, Civil and Specialty Contractor segments and we replaced several of the large projects discussed above with mid-size awards that are in earlier stages of completion. We continue our strategic focus on growing our business by pursuing and obtaining large complex public works projects.

The following tables set forth our consolidated results of operations:

                                       Consolidated Results of Operations                     % Change
                                             Year ended December 31,                  2012 vs.        2011 vs.
                                     2012             2011             2010             2011            2010
                                                  In thousands
Revenues                          $ 4,111,471      $ 3,716,317      $ 3,199,210            10.6 %          16.2 %
Cost of operations                  3,696,339        3,320,976        2,861,362            11.3 %          16.1 %
Gross profit                          415,132          395,341          337,848             5.0 %          17.0 %
General and administrative
expenses                              260,369          226,965          165,536            14.7 %          37.1 %
Goodwill and intangible asset
impairment                            376,574                -                -
(Loss) income from construction
operations                           (221,811 )        168,376          172,312          (231.7 )%         (2.3 )%
Other (expense) income, net            (1,857 )          4,421           (2,280 )        (142.0 )%       (293.9 )%
Interest expense                      (44,174 )        (35,750 )        (10,564 )          23.6 %         238.4 %
(Loss) income before income
taxes                                (267,842 )        137,047          159,468          (295.4 )%        (14.1 )%
Benefit (provision) for income
taxes                                   2,442          (50,899 )        (55,968 )        (104.8 )%         (9.1 )%
Net (loss) income                 $  (265,400 )    $    86,148      $   103,500          (408.1 )%        (16.8 )%


                                       Consolidated Results of Operations
                                             Year ended December 31,
                                     2012             2011             2010
                                           As a percentage of Revenues
Revenues                                100.0 %          100.0 %          100.0 %
Cost of operations                       89.9 %           89.4 %           89.4 %
Gross profit                             10.1 %           10.6 %           10.6 %
General and administrative
expenses                                  6.3 %            6.1 %            5.2 %
Goodwill and intangible asset
impairment                                9.2 %            0.0 %            0.0 %
(Loss) income from construction
operations                               (5.4 )%           4.5 %            5.4 %
Other (expense) income, net               0.0 %            0.1 %           (0.1 )%
Interest expense                         (1.1 )%          (0.9 )%          (0.3 )%
(Loss) income before income
taxes                                    (6.5 )%           3.7 %            5.0 %
Benefit (provision) for income
taxes                                     0.0 %           (1.4 )%          (1.8 )%
Net (loss) income                        (6.5 )%           2.3 %            3.2 %

During 2012, we recorded revenues of $4.1 billion, loss from construction operations of $221.8 million and net loss of $265.4 million, or $5.59 per diluted share as compared to revenues of $3.7 billion, income from construction operations of $168.4 million and net income of $86.1 million, or $1.80 per diluted share during 2011.

Our revenues increased during 2012 by 10.6% primarily due to the full year contributions from our 2011 acquisitions, partially offset by a decline in our Building segment associated with the substantial completion of several large public works and hospitality and gaming projects in 2011.

Our gross profit increased in 2012 by 5.0% due to the reasons discussed above, partly offset by an unfavorable new work margin mix. Despite recent positive trends in the construction market, the current economic environment continues to provide for slower than expected release of large building and civil projects, which have resulted in delayed revenue opportunities and continued margin pressure.

Our general and administrative expenses increased in 2012 by 14.7% primarily due to the full-year impact of our 2011 acquisitions.

Our loss from construction operations of $221.8 million in 2012 was materially impacted by a $376.6 million goodwill and intangible asset impairment charge ($326.4 million after-tax), as discussed in further detail under Critical Accounting Policies below. Excluding the impact of the impairment charge, our results from construction operations decreased $13.6 million primarily due to the substantial completion of large projects discussed above and an unfavorable change in new work margin mix, partially offset by the full year contributions from our 2011 acquisitions.

Our interest expense increased from $35.8 million in 2011 to $44.2 million in 2012 primarily due to additional borrowings to fund operations and to complete the 2011 acquisitions.

Our income tax expense decreased from a $50.9 million expense in 2011 to an income tax benefit of $2.4 million in 2012 primarily due to the reasons discussed above. The income tax benefit in 2012 includes the impact of a $50.2 million reduction in our provision for income taxes recorded due to the $376.6 million goodwill and intangible asset impairment charges, and a $3.6 million increase to our provision for income taxes due to discrete tax adjustments.

In 2012, we received significant new contract awards, as well as additions to existing contracts, and ended the year with a contract backlog of $5.6 billion, a decrease of $0.5 billion from $6.1 billion as of December 31, 2011. The decrease was due to reduced backlog in our Building and Civil segments associated with continued activity on several large healthcare facility projects and certain tunnel projects on the West Coast, partially offset by increased backlog in our Specialty Contractors and Management Services segments associated with new recent project awards.

At December 31, 2012, we had working capital of $747.6 million, a ratio of current assets to current liabilities of 1.61 to 1.00, and a ratio of debt to equity of 0.64 to 1.00, compared to working capital of $556.8 million, a ratio of current assets to current liabilities of 1.40 to 1.00 and a ratio of debt to equity of 0.48 to 1.00 at December 31, 2011. These results reflect the additional leverage we took on during 2011 to finance our acquisition strategy. Our stockholders' equity decreased to $1.1 billion as of December 31, 2012 from $1.4 billion as of December 31, 2011. The increase in our debt to equity ratio and the decrease in our stockholders' equity at December 31, 2012 compared to December 31, 2011 primarily reflect the impact of the $376.6 million goodwill and intangible asset impairment charge ($326.4 million after-tax) recorded during the second quarter of 2012.

Non-GAAP Measures

Our consolidated financial statements are presented based on accounting principles generally accepted in the United States ("U.S. GAAP"). We sometimes use non-GAAP measures of income from operations, net income, earnings per share and other measures that we believe are appropriate to enhance an overall understanding of our historical financial performance and future prospects. We are providing these non-GAAP measures to disclose additional information to facilitate the comparison of past and present operations, and they are among the indicators management uses as a basis for evaluating the Company's financial performance as well as for forecasting future periods. For these reasons, management believes these non-GAAP measures can be useful operating performance measures to be considered by investors, prospective investors and others. These non-GAAP measures are not intended to replace the presentation of our financial results in accordance with GAAP, and they may not be comparable to other similarly titled measures of other companies.

                                                               Reportable Segments
                                                                Specialty        Management       Consolidated
Year Ended December 31, 2012       Building        Civil       Contractors        Services         Total (1)

(Loss) income from construction
operations:
As reported                       $ (286,706 )   $  47,081     $     67,591     $     (4,683 )   $     (221,811 )
Plus impairment charge(2)            282,608        65,503           11,489           16,974            376,574
Plus litigation provision(3)               -         5,000                -                -              5,000
As adjusted to exclude discrete
items                             $   (4,098 )   $ 117,584     $     79,080     $     12,291     $      159,763

(1) Consolidated total includes corporate and other general and administrative expenses not impacted by the impairment and litigation charges.

(2) Since the interim goodwill impairment test as of June 30, 2012, our annual test, performed in the fourth quarter of 2012, did not indicate any further adjustment to goodwill.

(3) The Company recorded $5.0 million ($3.0 million after-tax) in the fourth quarter of 2012 related to legal developments in the Brightwater matter (see Note 9 - Contingencies and Commitments of Notes to Consolidated Financial Statements in Part IV, Item 15. Exhibits and Financial Statement Schedules).

The following table is a reconciliation of reported income (loss) from construction operations, net income (loss), and diluted earnings (loss) per share under GAAP to income from operations, net income and diluted earnings per share during the year ended December 31, 2012, excluding discrete items. Included in discrete items is the impact of one-time expenses or benefits: (i) the $326.4 million after-tax impairment charge, (ii) the $3.0 million after-tax litigation provision relating to an adverse court decision,
(iii) $3.6 million of discrete tax expense items related to an increase in unrecognized tax benefits and an adjustment, both associated with certain stock-based compensation items identified during the first quarter of 2012, and
(iv) the $2.7 million realized loss on the sale of auction rate securities in the first quarter of 2012.

     Year ended December 31, 2012
     Reported net loss                                             $ (265,400 )
     Plus: Impairment charge                                          376,574
     Less: Tax benefit provided on impairment charge                  (50,158 )
     Plus: Litigation provision less tax benefit                        2,980
     Plus: Realized loss on sale of investments                         2,699
     Plus: Discrete tax adjustments                                     3,649
     Net income, excluding discrete items                          $   70,344

     Reported diluted loss per common share                        $    (5.59 )
     Plus: Impairment charge                                             6.85
     Plus: Litigation provision less tax benefit                         0.06
     Plus: Realized loss on sale of investments                          0.06
     Plus: Discrete tax adjustments                                      0.08
     Diluted earnings per common share, excluding discrete items   $     1.46

For the years ended December 31, 2010 and 2011, there were no discrete adjustments to net income.

Recent Developments

Hudson Yards Project Breaks Ground on South Tower (Tower C)

In January 2012, we announced that we had been retained by Related Companies and Oxford Properties Group as general contractor for the Hudson Yards Development in midtown Manhattan ("Hudson Yards"). We were also retained for the construction of a residential tower being developed just south of Hudson Yards on 30th Street and 10th Avenue in New York City. Hudson Yards is a 26-acre mixed-use development accommodating over 13 million square feet of commercial and residential space. The master plan comprises approximately 5,000 residences, 6 million square feet of state-of-the-art commercial office space, a 1 million square-foot destination retail center with an over 130,000 square-foot two-level space of specialty destination restaurants, cafes, markets and bars, a five-star hotel, a unique cultural space, and a new 750-seat school, all carefully planned around 14 acres of public open space. Pre-construction activities related to the 30th Street residential tower began in early 2012 and substantial completion is expected in the spring of 2014. The total construction value of the 30th Street residential tower project is approximately $125 million. Physical construction operations at the Hudson Yards South Tower (Tower C), located across the street from the 30th Street residential tower, began in December 2012 and substantial completion is expected in late 2015. The total construction value of the South Tower phase of the project is approximately $800 million.

The Hudson Yards project will be booked into backlog as contracts for various phases are executed and work is released. It is likely that our backlog and eventual revenues associated with the various phases of our work at Hudson Yards may be significantly lower than the total construction value of each phase because the type of contracts for each phase may initially be construction management not at risk, whereby our backlog and revenues would be reported excluding external subcontractor progress. However, our profits related to each phase will be based on the total construction value, including the externally subcontracted portions. There may be provisions within each contract to allow our customer to convert from a construction management not at risk contract to a guaranteed maximum price contract. If such a conversion were to occur, the Company would then recognize the full construction value for each phase of the project as backlog and revenue.

Backlog Analysis for 2012

Our backlog of uncompleted construction work at December 31, 2012 was approximately $5.6 billion, as compared to $6.1 billion at December 31, 2011. Significant new awards included a $235 million bridge rehabilitation project, a $181 million hospitality and gaming project, a $167 million transit signal modernization project, a $130 million irrigation and watershed management program, a $116 million joint venture bridge and highway project, a $73 million educational facility, and a $63 million stadium renovation project. In addition, we have significant pending contract awards, including projects such as the Hudson Yards development, low bids on civil mass transit and bridge projects and various specialty contracts that we anticipate will enter into backlog in the near future as the contracts for these projects are executed. We are continuing to track several large scale civil and building prospects for both public and private sector customers as we continue to leverage our self-performance and schedule control capabilities.

The following table provides an analysis of our backlog by business segment for the year ended December 31, 2012.

                                          Backlog at           New Business           Revenues                Backlog at
                                      December 31, 2011        Awarded (1)       Recognized in 2012       December 31, 2012
                                                                          (in millions)
Building                             $            2,248.9     $      1,183.9     $          (1,467.9 )   $            1,964.9
Civil                                             2,222.2              800.1                (1,248.3 )                1,774.0
Specialty Contractors                             1,371.5            1,318.8                (1,183.0 )                1,507.3
Management Services                                 265.7              304.0                  (212.3 )                  357.4
Total                                $            6,108.3     $      3,606.8     $          (4,111.5 )   $            5,603.6

(1) New business awarded consists of the original contract price of projects added to our backlog plus or minus subsequent changes to the estimated total contract price of existing contracts.

Critical Accounting Policies

Our accounting and financial reporting policies are in conformity with U.S. GAAP. The preparation of our consolidated financial statements in conformity with U.S. GAAP requires us to make estimates and judgments that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the balance sheet date, and the reported amounts of revenues and expenses during the reporting period. Although our significant accounting policies are described in Note 1 - Description of Business and Summary of Significant Accounting Policies of the Notes to Consolidated Financial Statements in Part IV, Item 15. Exhibits and Financial Statement Schedules, the following discussion is intended to describe those accounting policies most critical to the preparation of our consolidated financial statements.

Use of and Changes in Estimates - The preparation of financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Our construction business involves making significant estimates and assumptions in the normal course of business relating to our contracts and our joint venture contracts due to, among other things, the one-of-a-kind nature of most of our projects, the long-term duration of our contract cycle and the type of contract utilized. Therefore, management believes that the "Method of Accounting for Contracts" is the most important and critical accounting policy. The most significant estimates with regard to these financial statements relate to the estimating of total forecasted construction contract revenues, costs and profits in accordance with accounting for long-term contracts (see Note 1 - Description of Business and Summary of Significant Accounting Policies, under the section entitled (d)Use of and Changes in Estimates of the Notes to Consolidated Financial Statements in Part IV, Item 15. Exhibits and Financial Statement Schedules) and estimating potential liabilities in conjunction with certain contingencies, including the outcome of pending or future litigation, arbitration or other dispute resolution proceedings relating to contract claims (see Note 9 - Contingencies and Commitments of the Notes to Consolidated Financial Statements in Part IV, Item 15. Exhibits and Financial Statement Schedules). Actual results could differ from these estimates and such differences could be material.

Our estimates of contract revenue and cost are highly detailed. We believe that, based on our experience, our current systems of management and accounting controls allow us to produce materially reliable estimates of total contract revenue and cost during any accounting period. However, many factors can and do change during a contract performance period which can result in a change to contract profitability from one financial reporting period to another. Some of the factors that can change the estimate of total contract revenue and cost include differing site conditions (to the extent that contract remedies are unavailable), the availability of skilled contract labor, the performance of major material suppliers to deliver on time, the performance of major subcontractors, unusual weather conditions and the accuracy of the original bid estimate. Because we have many contracts in process at any given time, these changes in estimates can offset each other minimizing the impact on overall profitability. However, large changes in cost estimates on larger, more complex construction projects can have a material impact on our financial statements and are reflected in our results of operations when they become known.

Management focuses on evaluating the performance of contracts individually. In the ordinary course of business, and at a minimum on a quarterly basis, we update projected total contract revenue, cost and profit or loss for each of our contracts based on changes in facts, such as an approved scope change, and changes in estimates. Normal, recurring changes in estimates include, but are not limited to: (i) changes in estimated scope as a result of unapproved or unpriced customer change orders; (ii) changes in estimated productivity assumptions based on experience to date; (iii) changes in estimated materials costs based on experience to date; (iv) changes in estimated subcontractor costs based on subcontractor buyout experience; (v) changes in the timing of scheduled work that may impact future costs; (vi) achievement of incentive income; and
(vii) changes in estimated recoveries through the settlement of litigation.

During the year ended December 31, 2012, our results of operations were impacted by a $12.4 million increase in the estimated recovery projected for a large hospitality and gaming project which was primarily driven by changes in cost recovery assumptions. Excluding the discrete items that impacted our estimated tax rate, this change in estimate resulted in a $12.4 million increase in our income from construction operations, a $7.5 million increase in our net income and a $0.16 increase in our diluted earnings per common share during 2012.

Contracts vary in lengths and larger contracts can span over three to four years. At various stages of a contract's life cycle, different types of changes in estimates are more typical. Generally during the early ramp up stage, cost estimates relating to purchases of materials and subcontractors are frequently subject to revisions. As a contract moves into the most productive phase of execution, change orders, project cost estimate revisions and claims are frequently the sources for changes in estimates. During the contract's final phase, remaining estimated costs to complete or provisions for claims will be closed out and adjusted based on actual costs incurred. The impact on operating margin in a reporting period and future periods from a change in estimate will depend on the stage of contract completion. Generally, if the contract is at an early stage of completion, the current period impact is smaller than if the same change in estimate is made to the contract at a later stage of completion. Likewise, if the company's overall project portfolio was to be at a later stage of completion during the reporting period, the overall gross margin could be subject to greater variability from changes in estimates.

. . .