Condensed Consolidated Statemen
Condensed Consolidated Statements of Income (USD $) | |||||||||||||||||||
In Millions, except Share data | 3 Months Ended
Sep. 30, 2009 | 3 Months Ended
Sep. 30, 2008 | 9 Months Ended
Sep. 30, 2009 | 9 Months Ended
Sep. 30, 2008 | |||||||||||||||
Revenue | |||||||||||||||||||
Services | $2,841 | $3,005 | $9,095 | $8,161 | |||||||||||||||
Equity in earnings (losses) of unconsolidated affiliates, net | (1) | 13 | 46 | 34 | |||||||||||||||
Total revenue | 2,840 | 3,018 | 9,141 | 8,195 | |||||||||||||||
Operating costs and expenses | |||||||||||||||||||
Cost of services | 2,648 | 2,819 | 8,567 | 7,646 | |||||||||||||||
General and administrative | 54 | 55 | 157 | 163 | |||||||||||||||
Impairment of goodwill | 6 | 0 | 6 | 0 | |||||||||||||||
Loss (gain) on disposition of assets | 1 | 0 | (1) | (2) | |||||||||||||||
Total operating costs and expenses | 2,709 | 2,874 | 8,729 | 7,807 | |||||||||||||||
Operating income | 131 | 144 | 412 | 388 | |||||||||||||||
Interest income, net | 0 | 7 | 1 | 32 | |||||||||||||||
Foreign currency gains (losses), net | 0 | 0 | 1 | (2) | |||||||||||||||
Other non-operating expense | (1) | 0 | (2) | 0 | |||||||||||||||
Income from continuing operations before income taxes and noncontrolling interests | 130 | 151 | 412 | 418 | |||||||||||||||
Provision for income taxes | (33) | (55) | (137) | (151) | |||||||||||||||
Income from continuing operations, net of tax | 97 | 96 | 275 | 267 | |||||||||||||||
Income from discontinued operations, net of tax benefit of $0, $11, $0, and $11 | 0 | 11 | 0 | 11 | |||||||||||||||
Net income | 97 | 107 | 275 | 278 | |||||||||||||||
Less: Net income attributable to noncontrolling interests | (24) | (22) | (58) | (47) | |||||||||||||||
Net income attributable to KBR | 73 | 85 | 217 | 231 | |||||||||||||||
Reconciliation of net income attributable to KBR, Inc. common shareholders: | |||||||||||||||||||
Continuing operations | 73 | 74 | 217 | 220 | |||||||||||||||
Discontinued operations, net | 0 | 11 | 0 | 11 | |||||||||||||||
Net income attributable to KBR | $73 | $85 | $217 | $231 | |||||||||||||||
Basic income per share (1): | |||||||||||||||||||
Continuing operations - Basic | 0.46 | 0.45 | 1.35 | 1.3 | |||||||||||||||
Discontinued operations, net - Basic | 0 | 0.07 | 0 | 0.07 | |||||||||||||||
Net income attributable to KBR per share - Basic | 0.46 | [1] | 0.51 | [1] | 1.35 | [1] | 1.37 | [1] | |||||||||||
Diluted income per share (1): | |||||||||||||||||||
Continuing operations - Diluted | 0.45 | 0.44 | 1.35 | 1.3 | |||||||||||||||
Discontinued operations, net - Diluted | 0 | 0.07 | 0 | 0.07 | |||||||||||||||
Net income attributable to KBR per share - Diluted | 0.45 | [1] | 0.51 | [1] | 1.35 | [1] | 1.37 | [1] | |||||||||||
Basic weighted average common shares outstanding | 160,000,000 | 166,000,000 | 160,000,000 | 168,000,000 | |||||||||||||||
Diluted weighted average common shares outstanding | 161,000,000 | 167,000,000 | 161,000,000 | 169,000,000 | |||||||||||||||
Cash dividends declared per share | 0.05 | 0.05 | 0.15 | 0.15 | |||||||||||||||
[1]Due to the effect of rounding, the sum of the individual per share amounts may not equal the total shown. |
Parenthetical Data to the Conde
Parenthetical Data to the Condensed Consolidated Statements of Income (USD $) | ||||
In Millions | 3 Months Ended
Sep. 30, 2009 | 3 Months Ended
Sep. 30, 2008 | 9 Months Ended
Sep. 30, 2009 | 9 Months Ended
Sep. 30, 2008 |
Income from discontinued operations, net of tax benefit | $0 | $11 | $0 | $11 |
Condensed Consolidated Balance
Condensed Consolidated Balance Sheets (USD $) | ||
In Millions | Sep. 30, 2009
| Dec. 31, 2008
|
Current assets: | ||
Cash and equivalents | $1,020 | $1,145 |
Receivables: | ||
Accounts receivable net of allowance for bad debts of $21 and $19 | 1,538 | 1,312 |
Unbilled receivables on uncompleted contracts | 732 | 835 |
Total receivables | 2,270 | 2,147 |
Deferred income taxes | 130 | 107 |
Other current assets | 507 | 743 |
Total current assets | 3,927 | 4,142 |
Property, plant, and equipment, net of accumulated depreciation of $258 and $224 | 242 | 245 |
Goodwill | 691 | 694 |
Intangible assets, net | 61 | 73 |
Equity in and advances to related companies | 197 | 185 |
Noncurrent deferred income taxes | 210 | 167 |
Unbilled receivables on uncompleted contracts | 135 | 134 |
Other assets | 115 | 244 |
Total assets | 5,578 | 5,884 |
Current liabilities: | ||
Accounts payable | 1,173 | 1,387 |
Due to former parent, net | 54 | 54 |
Advance billings and unearned revenue on uncompleted contracts | 443 | 519 |
Reserve for estimated losses on uncompleted contracts | 53 | 76 |
Employee compensation and benefits | 296 | 320 |
Other current liabilities | 548 | 680 |
Current liabilities related to discontinued operations, net | 4 | 7 |
Total current liabilities | 2,571 | 3,043 |
Noncurrent employee compensation and benefits | 439 | 403 |
Other noncurrent liabilities | 183 | 333 |
Noncurrent income tax payable | 44 | 34 |
Noncurrent deferred tax liability | 66 | 37 |
Total liabilities | 3,303 | 3,850 |
KBR Shareholders' equity | ||
Preferred stock, $0.001 par value, 50,000,000 shares authorized, 0 shares issued and outstanding | 0 | 0 |
Common stock, $0.001 par value, 300,000,000 shares authorized, 170,462,232 and 170,125,715 shares issued, and 160,386,291 and 161,725,715 shares outstanding | 0 | 0 |
Paid-in capital in excess of par | 2,104 | 2,091 |
Accumulated other comprehensive loss | (421) | (439) |
Retained earnings | 797 | 596 |
Treasury stock, 10,075,941 shares and 8,400,000 shares, at cost | (221) | (196) |
Total KBR shareholders' equity | 2,259 | 2,052 |
Noncontrolling interests | 16 | (18) |
Total shareholders' equity | 2,275 | 2,034 |
Total liabilities and shareholders' equity | $5,578 | $5,884 |
1_Parenthetical Data to the Con
Parenthetical Data to the Condensed Consolidated Balance Sheets (USD $) | ||
In Millions, except Share data | Sep. 30, 2009
| Dec. 31, 2008
|
Receivables: | ||
Allowance for bad debts | $21 | $19 |
Accumulated depreciation | $258 | $224 |
KBR Shareholders' equity | ||
Preferred stock, par or stated value per share | 0.001 | 0.001 |
Preferred stock, shares authorized | 50,000,000 | 50,000,000 |
Preferred stock, shares issued | 0 | 0 |
Preferred stock, shares outstanding | 0 | 0 |
Common stock, par or stated value per share | 0.001 | 0.001 |
Common stock, shares authorized | 300,000,000 | 300,000,000 |
Common stock, shares, issued | 170,462,232 | 170,125,715 |
Common stock, shares, outstanding | 160,386,291 | 161,725,715 |
Treasury stock, shares | 10,075,941 | 8,400,000 |
2_Condensed Consolidated Statem
Condensed Consolidated Statements of Comprehensive Income (USD $) | ||||
In Millions | 3 Months Ended
Sep. 30, 2009 | 3 Months Ended
Sep. 30, 2008 | 9 Months Ended
Sep. 30, 2009 | 9 Months Ended
Sep. 30, 2008 |
Net income | $97 | $107 | $275 | $278 |
Other comprehensive income (loss), net of tax | ||||
Net cumulative translation adjustments | 4 | (22) | 14 | (24) |
Pension liability adjustment | 1 | 6 | 11 | 8 |
Net unrealized gain (loss) on investments and derivatives | 1 | (1) | (1) | 0 |
Total other comprehensive income (loss), net of tax | 6 | (17) | 24 | (16) |
Comprehensive income | 103 | 90 | 299 | 262 |
Less: Comprehensive income attributable to noncontrolling interests | (23) | (24) | (64) | (47) |
Comprehensive income attributable to KBR | $80 | $66 | $235 | $215 |
3_Condensed Consolidated Statem
Condensed Consolidated Statements of Cash Flows (USD $) | ||
In Millions | 9 Months Ended
Sep. 30, 2009 | 9 Months Ended
Sep. 30, 2008 |
Cash flows from operating activities | ||
Net income | $275 | $278 |
Adjustments to reconcile net income to net cash provided by (used in) operations: | ||
Depreciation and amortization | 41 | 33 |
Equity in earnings of unconsolidated affiliates | (46) | (34) |
Deferred income taxes | (14) | 52 |
Impairment of goodwill | 6 | 0 |
Other | 10 | (37) |
Changes in operating assets and liabilities: | ||
Receivables | (191) | (119) |
Unbilled receivables on uncompleted contracts | 94 | 73 |
Accounts payable | (233) | (102) |
Advanced billings and unearned revenue on uncompleted contracts | (68) | (212) |
Accrued employee compensation and benefits | (24) | (2) |
Reserve for loss on uncompleted contracts | (23) | (25) |
Collection of advances from unconsolidated affiliates, net | (1) | 69 |
Distribution of earnings from unconsolidated affiliates, net | 35 | 88 |
Other assets | 25 | (89) |
Other Liabilities | 87 | 28 |
Total cash flows provided by (used in) operating activities | (27) | 1 |
Cash flows from investing activities: | ||
Capital expenditures | (22) | (27) |
Sales of property, plant and equipment | 0 | 6 |
Acquisition of businesses, net of cash acquired | 0 | (498) |
Other investing activities | 2 | 0 |
Total cash flows used in investing activities | (20) | (519) |
Cash flows from financing activities: | ||
Payments to reacquire common stock | (27) | (196) |
Net proceeds from issuance of common stock | 1 | 3 |
Excess tax benefits from stock-based compensation | (1) | 2 |
Payments of dividends to shareholders | (24) | (17) |
Distributions to noncontrolling shareholders, net | (30) | (23) |
Other financing activities | (11) | 0 |
Total cash flows used in financing activities | (92) | (231) |
Effect of Exchange Rate Changes on Cash | 14 | (2) |
Decrease in Cash and Equivalents | (125) | (751) |
Cash and equivalents at beginning of period | 1,145 | 1,861 |
Cash and equivalents at end of period | 1,020 | 1,110 |
Noncash operating activities | ||
Other assets (see Note 7) | 369 | 0 |
Other liabilities (see Note 7) | (369) | 0 |
Noncash financing activities | ||
Dividends declared or payable | $8 | $9 |
Description of Business and Bas
Description of Business and Basis of Presentation | |
9 Months Ended
Sep. 30, 2009 | |
Description Of Business And Basis Of Presentation [Abstract] | |
Description of Business and Basis of Presentation | Note 1. Description of Business and Basis of Presentation KBR, Inc. and its subsidiaries (collectively, KBR) is a global engineering, construction and services company supporting the energy, petrochemicals, government services, industrial and civil infrastructure sectors. We offer a wide range of services through six business units; Government and Infrastructure (GI), Upstream, Services, Downstream, Technology and Ventures. See Note 4 for financial information about our reportable business segments. The accompanying unaudited condensed consolidated financial statements have been prepared in accordance with the rules of the United States Securities and Exchange Commission (SEC) for interim financial statements and do not include all annual disclosures required by accounting principles generally accepted in the United States.These condensed consolidated financial statements should be read in conjunction with the audited consolidated financial statements and notes thereto included in our Annual Report on Form 10-K for the fiscal year ended December 31, 2008 filed with the SEC.We believe that the presentation and disclosures herein are adequate to make the information not misleading, and the condensed consolidated financial statements reflect all normal adjustments that management considers necessary for a fair presentation of our consolidated results of operations, financial position and cash flows.Operating results for interim periods are not necessarily indicative of results to be expected for the full fiscal year 2009 or any other future periods.We have evaluated subsequent events for potential recognition or disclosure in the financial statements through our Form 10-Q issuance date of October 29, 2009. The preparation of our condensed consolidated financial statements in conformity with GAAP requires us to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosures of contingent assets and liabilities at the balance sheet dates and the reported amounts of revenue and costs during the reporting periods.Actual results could differ materially from those estimates.On an ongoing basis, we review our estimates based on information currently available, and changes in facts and circumstances may cause us to revise these estimates. Our condensed consolidated financial statements include the accounts of majority-owned, controlled subsidiaries and variable interest entities where we are the primary beneficiary.The equity method is used to account for investments in affiliates in which we have the ability to exert significant influence over the affiliates operating and financial policies.The cost method is used when we do not have the ability to exert significant influence.All material intercompany accounts and transactions are eliminated. Effective January 1, 2009, we adopted guidance for noncontrolling interests in consolidated financial statements in accordance with the FASB Accounting Standards Codification TM (ASC) 810 - Consolidation.Noncontrolling interests in consolidated subsidiaries in our condensed consolidated balance sheets represent noncontrolling shareholders proportionate sha |
Income per Share
Income per Share | |
9 Months Ended
Sep. 30, 2009 | |
Income per Share [Abstract] | |
Income per Share | Note 2.Income per Share Basic income per share is based upon the weighted average number of common shares outstanding during the period.Dilutive income per share includes additional common shares that would have been outstanding if potential common shares with a dilutive effect had been issued.A reconciliation of the number of shares used for the basic and diluted income per share calculations is as follows: Three Months Ended Nine Months Ended September30, September30, Millions of shares 2009 2008 2009 2008 Basic weighted average common sharesoutstanding 160 166 160 168 Dilutive effect of: Stock options and restricted shares 1 1 1 1 Diluted weighted average common shares outstanding 161 167 161 169 No adjustments to net income were made in calculating diluted earnings per share for the three months ended September 30, 2009 and 2008.The diluted earnings per share calculation did not include 1.4 million and 1.7 million antidilutive weighted average shares for the three and nine months ended September 30, 2009, respectively.The antidilutive weighted average shares were 1.0 million and 0.4 million for the three and nine months ended September 30, 2008, respectively.For purposes of applying the two-class method in computing earnings per share, net earnings allocable to participating securities was approximately $1 million for both the nine months ended September 30, 2009 and 2008. |
Percentage of Completion Contra
Percentage of Completion Contracts | |
9 Months Ended
Sep. 30, 2009 | |
Percentage Of Completion Contracts [Abstract] | |
Percentage-of-Completion Contracts | Note 3. Percentage-of-Completion Contracts Unapproved claims The amounts of unapproved claims included in determining the profit or loss on contracts and the amounts recorded as Unbilled receivables on uncompleted contracts as of September 30, 2009 and December 31, 2008 are as follows: Millions of dollars September30, 2009 December31, 2008 Probable unapproved claims $ 134 $ 133 Probable unapproved change orders 17 5 Probable unapproved claims related to unconsolidated subsidiaries 33 Probable unapproved change orders related to unconsolidated subsidiaries 3 5 As of September 30, 2009, the probable unapproved claims, including those from unconsolidated subsidiaries, primarily related to three completed contracts.See Note 6 for a discussion of United States government contract claims, which are not included in the table above. We have contracts with probable unapproved claims that will likely not be settled within one year totaling $121 million at September 30, 2009 and $130 million at December 31, 2008, respectively, included in the table above, which are reflected as a non-current asset in Unbilled receivables on uncompleted contracts on the condensed consolidated balance sheets. Other probable unapproved claims that we believe will be settled within one year have been recorded as a current asset in Unbilled receivables on uncompleted contracts on the condensed consolidated balance sheets. Escravos Project In July 2007, we and our joint venture partner modified the contract terms and conditions converting the project from a fixed-price to a reimbursable contract whereby we will be paid our actual cost incurred less a credit that approximates the charge we identified in the second quarter of 2006.The unamortized balance of the charge is included as a component of the Reserve for estimated losses on uncompleted contracts in the accompanying condensed consolidated balance sheets. Skopje Embassy Project In 2005, we were awarded a fixed-price contract to design and build a U.S. embassy in Skopje, Macedonia.We recorded losses of $21 million in 2008, bringing our total losses to $60 million.On March 31, 2009 we received notice of substantial completion from our customer which ended our exposure to liquidated damages.The customer took control of the facility on April 27, 2009.We have not incurred any further losses since 2008.Although we do not expect to incur additional losses on this project, it is possible that additional losses could be incurred if we exceed the amounts currently estimated for warranty type items.The warranty period expires in March 2010 per the terms of the contract.Additionally, we are pursuing claims filed with the Department of State to recover a portion of the losses we incurred primarily related to certain schedule delays and errors included in the bid for this project. PEMEX Arbitration In 1997 and 1998 we entered into three contracts with PEMEX, the project owner, to build offshore platforms, pipelines and related structures in the Bay of Campeche offshore Mexico.The three contracts were known as Engineering, Proc |
Business Segment Information
Business Segment Information | |
9 Months Ended
Sep. 30, 2009 | |
Business Segment Information [Abstract] | |
Business Segment Information | Note 4.Business Segment Information We provide a wide range of services, but the management of our business is heavily focused on major projects within each of our reportable segments.At any given time, a relatively few number of projects and joint ventures represent a substantial part of our operations. Intersegment revenues are immaterial.Our equity in earnings and losses of unconsolidated affiliates that are accounted for using the equity method of accounting is included in revenue of the applicable segment. The table below presents information on our business segments. Three Months Ended Nine Months Ended September30, September30, Millions of dollars 2009 2008 2009 2008 Revenue: Government and Infrastructure $ 1,376 $ 1,759 $ 4,672 $ 5,150 Upstream 735 550 2,273 1,860 Services 566 539 1,723 776 Other 163 170 473 409 Total revenue $ 2,840 $ 3,018 $ 9,141 $ 8,195 Operating segment income: Government and Infrastructure $ 89 $ 104 $ 250 $ 247 Upstream 48 53 186 197 Services 36 27 89 57 Other 16 20 50 50 Operating segment income (a) $ 189 $ 204 $ 575 $ 551 Unallocated amounts: Loss on disposition of assets corporate (1 ) (1 ) Labor cost absorption (b) (3 ) (5 ) (5 ) Corporate general and administrative (54 ) (55 ) (157 ) (163 ) Total operating income $ 131 $ 144 $ 412 $ 388 ____________________ (a) Operating segment performance is evaluated by our chief operating decision maker using operating segment income which is defined as operating segment revenue less the cost of services and segment overhead directly attributable to the operating segment.Operating segment income excludes certain cost of services directly attributable to the operating segment that is managed and reported at the corporate level, and corporate general and administrative expenses.We believe this is the most accurate measure of the ongoing profitability of our operating segments. (b) Labor cost absorption represents costs incurred by our central service labor and resource groups (above)/under the amounts charged to the operating segments. |
Committed and Restricted Cash
Committed and Restricted Cash | |
9 Months Ended
Sep. 30, 2009 | |
Committed And Restricted Cash [Abstract] | |
Committed and Restricted Cash | Note 5. Committed and Restricted Cash Cash and equivalents include cash from advanced payments related to contracts in progress held by our joint ventures that we consolidate for accounting purposes.The use of these cash balances is limited to joint venture activities and is not available for other projects, general cash needs, or distribution to us without approval of the board of directors of the respective joint ventures.Cash from advanced payments held by our joint ventures that we consolidate for accounting purposes totaled approximately $185 million at September 30, 2009 and $175 million at December 31, 2008.Cash and equivalents also includes $20 million at September 30, 2009 and $179 at December 31, 2008, of cash from advance payments that are not available for other projects related to a contract in progress that is not executed through a joint venture. Included in Other current assets and Other assets at September 30, 2009 is restricted cash in the amounts of $4 million and $11 million, respectively.Restricted cash consists of amounts held in deposit with certain banks to collateralize standby letters of credit. |
United States Government Contra
United States Government Contract Work | |
9 Months Ended
Sep. 30, 2009 | |
U S Government Contract Work [Abstract] | |
Commitments and Contingencies Disclosure - Government contracts [Text Block] | Note 6.United States Government Contract Work We provide substantial work under our government contracts to the United States Department of Defense and other governmental agencies. These contracts include our worldwide United States Army logistics contracts, known as LogCAP and U.S. Army Europe (USAREUR). Given the demands of working in Iraq and elsewhere for the United States government, we expect that from time to time we will have disagreements or experience performance issues with the various government customers for which we work. If performance issues arise under any of our government contracts, the government retains the right to pursue remedies, which could include threatened termination or termination, under any affected contract. If any contract were so terminated, we may not receive award fees under the affected contract, and our ability to secure future contracts could be adversely affected, although we would receive payment for amounts owed for our allowable costs under cost-reimbursable contracts. Other remedies that could be sought by our government customers for any improper activities or performance issues include sanctions such as forfeiture of profits, suspension of payments, fines, and suspensions or debarment from doing business with the government.Further, the negative publicity that could arise from disagreements with our customers or sanctions as a result thereof could have an adverse effect on our reputation in the industry, reduce our ability to compete for new contracts, and may also have a material adverse effect on our business, financial condition, results of operations, and cash flow. We have experienced and expect to be a party to various claims against us by employees, third parties, soldiers, subcontractors and others that have arisen out of our work in Iraq such as claims for wrongful termination, assaults against employees, personal injury claims by third parties and army personnel, and subcontractor claims. While we believe we conduct our operations safely, the environments in which we operate often lead to these types of claims. We believe the vast majority of these types of claims are governed by the Defense Base Act or precluded by other defenses. We have a dispute resolution program under which most of these employee claims are subject to binding arbitration. However, an unfavorable resolution or disposition of these matters could have a material adverse effect on our business, financial condition, results of operations, and cash flow. Award fees In accordance with the provisions of the LogCAP III contract, we earn profits on our services rendered based on a combination of a fixed fee plus award fees granted by our customer. Both fees are measured as a percentage rate applied to estimated and negotiated costs.The LogCAP III customer is contractually obligated to periodically convene Award-Fee Boards, which are comprised of individuals who have been designated to assist the AwardFee Determining official in making award fee determinations. Award fees are based on evaluations of our performance using criteria set forth in the contract, which include non-binding monthly evaluations made b |
Other Commitments and Contingen
Other Commitments and Contingencies | |
9 Months Ended
Sep. 30, 2009 | |
Other Commitments And Contingencies [Abstract] | |
Other Commitments and Contingencies | Note 7.Other Commitments and Contingencies Foreign Corrupt Practices Act investigations On February 11, 2009 KBR LLC, entered a guilty plea related to the Bonny Island investigation in the United States District Court, Southern District of Texas, Houston Division (the Court).KBR LLC plead guilty to one count of conspiring to violate the FCPA and four counts of violating the FCPA, all arising from the intent to bribe various Nigerian officials through commissions paid to agents working on behalf of TSKJ on the Bonny Island project.The plea agreement reached with the DOJ resolves all criminal charges in the DOJs investigation into the conduct of KBR LLC relating to the Bonny Island project, so long as the conduct was disclosed or known to DOJ before the settlement, including previously disclosed allegations of coordinated bidding. The plea agreement calls for the payment of a criminal penalty of $402 million, of which Halliburton pays $382 million under the terms of the indemnity in the master separation agreement, while we pay $20 million.The criminal penalties are to be paid in quarterly payments over a two-year period ending October 2010.We also agreed to a period of organizational probation of three years, during which we retain a monitor who assesses our compliance with the plea agreement and evaluate our FCPA compliance program over the three year period, with periodic reports to the DOJ. On the same date, the SEC filed a complaint and we consented to the filing of a final judgment against us in the Court. The complaint and the judgment were filed as part of a settled civil enforcement action by the SEC, to resolve the civil portion of the governments investigation of the Bonny Island project. The complaint alleges civil violations of the FCPAs antibribery and books-and-records provisions related to the Bonny Island project. The complaint enjoins us from violating the FCPAs antibribery, books-and-records, and internal-controls provisions and requires Halliburton and KBR, jointly and severally, to make payments totaling $177 million, all of which has been paid by Halliburton pursuant to the indemnification under the master separation agreement.The judgment also requires us to retain an independent monitor on the same terms as the plea agreement with the DOJ. Under both the plea agreement and judgment, we have agreed to cooperate with the SEC and DOJ in their investigations of other parties involved in TSKJ and the Bonny Island project. As a result of the settlement, in the fourth quarter 2008 we recorded the $402 million obligation to the DOJ and, accordingly, recorded a receivable from Halliburton for the $382 million that Halliburton will pay to the DOJ on our behalf.The resulting charge of $20 million to KBR was recorded in cost of sales of our Upstream business unit in the fourth quarter of 2008. Likewise, we recorded an obligation to the SEC in the amount of $177 million and a receivable from Halliburton in the same amount.Halliburton paid their first four installments totaling $192 million to the DOJ and $177 million to the SEC in the first nine months of 2009, and such payments totaling $369 million have been refle |
Income Taxes
Income Taxes | |
9 Months Ended
Sep. 30, 2009 | |
Income Taxes [Abstract] | |
Income Taxes | Note 8.Income Taxes Our effective tax rate was 25% in the third quarter of 2009 and 33% for the nine months ended September 30, 2009.Our effective tax rate for both the three and nine months ended September 30, 2008 was approximately 36%.Our effective tax rate for the three and nine months of 2009 was lower than our statutory rate of 35% primarily due to the final determination of previously estimated 2008 domestic and foreign taxable income, made in connection with the preparation and filing of our 2008 consolidated tax returns as well as the benefit associated with income on unincorporated joint ventures.Our effective tax rate for the three and nine months of 2008 exceeded our statutory rate of 35% primarily due to non-deductible operating losses from our railroad investment in Australia, and state and other taxes. |
Shareholders' Equity
Shareholders' Equity | |
9 Months Ended
Sep. 30, 2009 | |
Shareholders' Equity [Abstract] | |
Shareholders' Equity | Note 9.Shareholders Equity The following tables summarize our shareholders equity activities for the first nine months of 2009: KBR Shareholders Millions of dollars Total Paid-in Capital in Excess of par Retained Earnings Treasury Stock Accumulated Other Comprehensive Loss Noncontrolling Interests Balance at December 31, 2008 $ 2,034 $ 2,091 $ 596 (196 ) $ (439 ) $ (18 ) Stock-based compensation 13 13 Common stock issued upon exercise of stock options 1 1 Tax benefit related to stock-based plans (1 ) (1 ) Dividends declared to shareholders (16 ) (16 ) Repurchases of common stock (27 ) (27 ) Issuance of ESPP shares 2 2 Distributions to noncontrolling interests (42 ) (42 ) Investments by noncontrolling interests 12 12 Comprehensive income: Net income 275 217 58 Other comprehensive income, net of tax (provision): Net cumulative translation adjustment 14 11 3 Pension liability adjustment, net of tax 11 8 3 Net unrealized gains (losses) on derivatives (1 ) (1 ) Comprehensive income, total 299 Balance at September 30, 2009 $ 2,275 $ 2,104 $ 797 $ (221 ) $ (421 ) $ 16 The following tables summarize our shareholders equity activity for the first nine months of 2008: KBR Shareholders Millions of dollars Total Paid-in Capital in Excess of par Retained Earnings Treasury Stock Accumulated Other Comprehensive Loss Noncontrolling Interests Balance at December 31, 2007 $ 2,235 $ 2,070 $ 319 $ (122 ) $ (32 ) Opening balance sheet adjustment (a) 2 2 FAS 158 remeasurement date (1 ) (1 ) Stock-based compensation 11 11 Common stock issued upon exercise of stock options 3 3 Tax benefit related to stock-based plans 2 2 Dividends declared to shareholders (26 ) (26 ) Repurchases of common stock (196 ) (196 ) Distributions to noncontrolling interests (15 ) (15 ) Comprehensive income: Net income 278 231 47 Other comprehensive income, net of tax (provision): Net cumulative translation adjustment (24 ) (21 ) (3 ) Pension liability adjustment, 8 5 3 Net unrealized gains (losses) on derivatives Comprehensive income, total 262 Balance at September 30, 2008 $ 2,277 $ 2,086 $ 523 $ (196 ) $ |
Fair Value Measurements
Fair Value Measurements | |
9 Months Ended
Sep. 30, 2009 | |
Fair Value Measurement [Abstract] | |
Fair Value Measurements | Note 10.Fair Value Measurements The financial assets and liabilities measured at fair value on a recurring basis are included below: Fair Value Measurements at Reporting Date Using Millions of dollars September30, 2009 Quoted Prices in Active Markets for Identical Assets (Level 1) Significant Other Observable Inputs (Level 2) Significant Unobservable Inputs (Level 3) Marketable securities $ 18 $ 13 $ 5 $ Derivative assets $ 3 $ $ 3 $ Derivative liabilities $ 10 $ $ 10 $ We manage our currency exposures through the use of foreign currency derivative instruments denominated in our major currencies, which are generally the currencies of the countries for which we do the majority of our international business. We utilize derivative instruments to manage the foreign currency exposures related to specific assets and liabilities that are denominated in foreign currencies, and to manage forecasted cash flows denominated in foreign currencies generally related to long-term engineering and construction projects. The purpose of our foreign currency risk management activities is to protect us from the risk that the eventual dollar cash flow resulting from the sale and purchase of products and services in foreign currencies will be adversely affected by changes in exchange rates. The currency derivative instruments are carried on the condensed consolidated balance sheet at fair value and are based upon market observable inputs. |
Equity Method Investments and V
Equity Method Investments and Variable Interest Entities | |
9 Months Ended
Sep. 30, 2009 | |
Equity Method Investments And Variable Interest Entities [Abstract] | |
Equity Method Investments and Variable Interest Entities | Note 11.Equity Method Investments and Variable Interest Entities We conduct some of our operations through joint ventures which are in partnership, corporate, undivided interest and other business forms and are principally accounted for using the equity method of accounting. Brown Root Condor Spa (BRC). BRC was a joint venture in which we sold our 49% interest and other rights in BRC in the third quarter of 2007 to Sonatrach for approximately $24 million, resulting in a pre-tax gain of approximately $18 million.As of September 30, 2009, we have not collected the outstanding amount of $18 million due from Sonatrach for the sale of our interest in BRC, which is included in Accounts receivable in the accompanying balance sheets.In the fourth quarter of 2008, we filed for arbitration in an attempt to force collection and we will take other actions, as deemed necessary, to collect the outstanding amounts. Roads project.During the first quarter of 2008, we acquired an additional 8% interest in a joint venture related to one of our privately financed projects to design, build, operate, and maintain roadways for certain government agencies in the United Kingdom.The additional interest was purchased from an existing shareholder for approximately $8 million in cash.As of March 31, 2008, we owned a 33% interest in the joint venture.The joint venture is considered a variable interest entity; however, we are not the primary beneficiary.We continue to account for this investment using the equity method of accounting.In the second quarter of 2008, we sold the additional 8% interest in the joint venture to an unrelated party for approximately $9 million, leaving us with a 25% interest in the joint venture.In the first quarter of 2009, we negotiated and settled with the purchaser an additional $2 million in sales proceeds which was contingent upon certain tax rulings in the United Kingdom.The additional sales proceeds were recorded as Gain on sale of assets. Variable Interest Entities We assess all newly created entities and those with which we become involved to determine whether such entities are variable interest entities and, if so, whether or not we are the primary beneficiary of such entities.Most of the entities we assess are incorporated or unincorporated joint ventures formed by us and our partner(s) for the purpose of executing a project or program for a customer, such as a governmental agency or a commercial enterprise, and are generally dissolved upon completion of the project or program.Many of our long-term energy-related construction projects in our Upstream business unit are executed through such joint ventures.Typically, these joint ventures are funded by advances from the project owner, and accordingly, require little or no equity investment by the joint venture partners but may require subordinated financial support from the joint venture partners such as letters of credit, performance and financial guarantees or obligations to fund any losses incurred by the joint venture.Other joint ventures, such as privately financed initiatives in our Ventures business unit, generally require the partners to invest equity and take an |
Retirement Plans
Retirement Plans | |
9 Months Ended
Sep. 30, 2009 | |
Retirement Plan [Abstract] | |
Retirement Plans | Note 12.Retirement Plans The components of net periodic benefit cost related to pension benefits for the three and nine months ended September 30, 2009 and 2008 were as follows: Three Months Ended September30, 2009 2008 Millions of dollars United States International United States International Components of net periodic benefit cost: Service cost $ $ $ $ 3 Interest cost 1 20 24 Expected return on plan assets (23 ) (1 ) (27 ) Amortization of prior service cost (1 ) Amortization of net loss 2 3 Net periodic benefit cost $ 1 $ (1 ) $ (1 ) $ 2 Nine Months Ended September 30, 2009 2008 Millions of dollars United States International United States International Components of net periodic benefit cost: Service cost $ $ 2 $ $ 7 Interest cost 3 57 2 74 Expected return on plan assets (2 ) (63 ) (3 ) (83 ) Amortization of prior service cost (1 ) Amortization of net loss 1 8 9 Curtailment (4 ) Net periodic benefit cost (benefit) $ 2 $ $ (1 ) $ 6 As of September 30, 2009, we contributed $9 million of the $11million we currently expect to contribute in 2009 to our international plans.We contributed $5 million, which is our total expected contribution to our domestic plans in 2009.The assets held by the trustee of the plans sustained significant declines in market value during 2008, the effects of which are accounted for as a component of accumulated other comprehensive loss in our Condensed Consolidated Balance Sheets and our Shareholders Equity footnote (See Note 9).If the market values of assets remain depressed, our levels of contribution could be impacted in future years. In March 2009, we amended the terms and conditions of one of our international pension plans and ceased future service and benefit accruals for all plan participants.This action meets the definition of a curtailment under FASB ASC 715 - Compensation - Retirement Benefits, and resulted in a curtailment gain of approximately $4 million during the first quarter of 2009. The components of net periodic benefit cost related to other postretirement benefits were immaterial for the three and nine months ended September 30, 2009 and 2008. |
Transactions with Former Parent
Transactions with Former Parent and Other Related Party Transactions | |
9 Months Ended
Sep. 30, 2009 | |
Transactions With Former Parent And Other Related Party Transactions [Abstract] | |
Transactions with Former Parent and Other Related party Transactions | Note 13. Transactions with Former Parent and Other Related Party Transactions Our balance payable to Halliburton of $54 million at September 30, 2009 and December 31, 2008, was comprised of amounts owed to Halliburton primarily for estimated outstanding income taxes under the tax sharing agreement.The amounts due to or from Halliburton will be dependent upon the final resolution of IRS audits and other matters that will be determined under the tax sharing agreement. We perform many of our projects through incorporated and unincorporated joint ventures.In addition to participating as a joint venture partner, we often provide engineering, procurement, construction, operations or maintenance services to the joint venture as a subcontractor.Where we provide services to a joint venture that we control and therefore consolidate for financial reporting purposes, we eliminate intercompany revenues and expenses on such transactions.In situations where we account for our interest in the joint venture under the equity method of accounting, we do not eliminate any portion of our revenues or expenses.We recognize the profit on our services provided to joint ventures that we consolidate and joint ventures that we record under the equity method of accounting primarily using the percentage-of-completion method.Total revenues from services provided to our unconsolidated joint ventures recorded in our consolidated statements of income were $46 million and $48 million for the three months ended September 30, 2009 and 2008, respectively, and revenues of $126 million and $163 million for the nine months ended September 30, 2009 and 2008, respectively.Income from services provided to our unconsolidated joint ventures was $3 million and $4 million for the three months ended September 30, 2009 and 2008, respectively, and a loss of $4 million and income of $22 million for the nine months ended September 30, 2009, and 2008, respectively. |
Goodwill Impairment
Goodwill Impairment | |
9 Months Ended
Sep. 30, 2009 | |
Goodwill Impairment [Abstract] | |
Goodwill and Intangibles | Note 14.Goodwill and Intangibles In the third quarter of 2009, we recognized a goodwill impairment charge of approximately $6 million as a result of our annual goodwill impairment test on September 30, 2009.The charge was taken against our reporting unit related to a small staffing business acquired in the acquisition of BEK included in our "Other" reportable segment.The charge was primarily the result of a decline in the staffing market, the current effect of the recession on the market, and our reduced forecasts of the sales, operating income and cash flows for this reporting unit that were identified through the course of our annual planning process.As of September 30, 2009, goodwill and intangibles for this reporting unit were approximately $18 million, including goodwill of $12 million, after recognition of the impairment charge.The fair value of all of our other reporting units exceeded their respective carrying amounts as of September 30, 2009. |
New Accounting Standards
New Accounting Standards | |
9 Months Ended
Sep. 30, 2009 | |
New Accounting Standards [Abstract] | |
New Accounting Standards | Note 15.New Accounting Standards In March 2008, the FASB issued accounting guidance related to employers disclosure about postretirement benefit plan assets which is discussed under FASB ASC 715 - Compensation - Retirement Benefits.This topic addresses concerns from users of financial statements about their need for more information on pension plan assets, obligations, benefit payments, contributions, and net benefit cost. The disclosures about plan assets are intended to provide users of employers financial statements with more information about the nature and valuation of postretirement benefit plan assets, and are effective for fiscal years ending after December 15, 2009. Effective January 1, 2009, we adopted guidance for participating securities and the two-class method in accordance with FASB ASC 260 - Earnings Per Share related to determining whether instruments granted in share-based payment transactions are participating securities.The standard provides that unvested share-based payment awards that contain rights to non-forfeitable dividends or dividend equivalents (whether paid or unpaid) participate in undistributed earnings with common shareholders.Certain KBR restricted stock units and restricted stock awards are considered participating securities since the share-based awards contain a non-forfeitable right to dividends irrespective of whether the awards ultimately vest.The standard requires that the two-class method of computing basic EPS be applied.Under the two-class method, KBR stock options are not considered to be participating securities.As a result of adopting FASB ASC 260, previously reported basic net income attributable to KBR per share decreased by $0.01 per share for the nine months ended September 30, 2008. Effective September 30, 2009, we adopted guidance for the accounting standards codification and the hierarchy of generally accepted accounting principles in accordance with FASB ASC 105 - Generally Accepted Accounting Principles.The standard establishes the FASB Accounting Standards CodificationTM (ASC) as the single source of authoritative U.S. generally accepted accounting principles (U.S. GAAP) recognized by the FASB to be applied by nongovernmental entities. Rules and interpretive releases of the SEC under authority of federal securities laws are also sources of authoritative U.S. GAAP for SEC registrants.The FASB ASC supersedes all existing non-SEC accounting and reporting standards.The FASB ASC does not have an impact on our financial position, results of operations or cash flows. In October 2009, the FASB issued Accounting Standards Update (ASU) 2009-13, Revenue Recognition (Topic 605) - Multiple-Deliverable Revenue Arrangements. ASU 2009-13 addresses the accounting for multiple-deliverable arrangements to enable vendors to account for products or services (deliverables) separately rather than as a combined unit. Specifically, this guidance amends the criteria in Subtopic 605-25, Revenue Recognition-Multiple-Element Arrangements, for separating consideration in multiple-deliverable arrangements. This guidance establishes a selling price hierarchy for determining the selling price of a delive |
Document Information
Document Information | |
9 Months Ended
Sep. 30, 2009 | |
Document Information [Line Items] | |
Document Type | 10-Q |
Amendment Flag | false |
Document Period End Date | 2009-09-30 |
Entity Information
Entity Information (USD $) | |||
9 Months Ended
Sep. 30, 2009 | Oct. 23, 2009
| Jun. 30, 2008
| |
Entity Information [Line Items] | |||
Entity Registrant Name | KBR, Inc. | ||
Entity Central Index Key | 0001357615 | ||
Current Fiscal Year End Date | --12-31 | ||
Entity Well-known Seasoned Issuer | No | ||
Entity Voluntary Filers | No | ||
Entity Current Reporting Status | Yes | ||
Entity Filer Category | Large Accelerated Filer | ||
Entity Public Float | $5,423,000,000 | ||
Entity Common Stock, Shares Outstanding | 160,357,250 |