Consolidated Statements of Inco
Consolidated Statements of Income (USD $) | |||||||||||||||||||
In Millions, except Per Share data | 12 Months Ended
Dec. 31, 2009 | 12 Months Ended
Dec. 31, 2008 | 12 Months Ended
Dec. 31, 2007 | ||||||||||||||||
Revenue | |||||||||||||||||||
Services | $12,060 | $11,493 | $8,642 | ||||||||||||||||
Equity in earnings of unconsolidated affiliates, net | 45 | 88 | 103 | ||||||||||||||||
Total revenue | 12,105 | 11,581 | 8,745 | ||||||||||||||||
Operating costs and expenses | |||||||||||||||||||
Cost of services | 11,348 | 10,820 | 8,225 | ||||||||||||||||
General and administrative | 217 | 223 | 226 | ||||||||||||||||
Impairment of goodwill | 6 | 0 | 0 | ||||||||||||||||
Gain on disposition of assets, net | (2) | (3) | 0 | ||||||||||||||||
Total operating costs and expenses | 11,569 | 11,040 | 8,451 | ||||||||||||||||
Operating income | 536 | 541 | 294 | ||||||||||||||||
Interest income (expense), net | (1) | 35 | 62 | ||||||||||||||||
Foreign currency gains (losses), net | 0 | (8) | (15) | ||||||||||||||||
Other non-operating income (expense) | (3) | 0 | 1 | ||||||||||||||||
Income from continuing operations before income taxes and noncontrolling interests | 532 | 568 | 342 | ||||||||||||||||
Provision for income taxes | (168) | (212) | (138) | ||||||||||||||||
Income from continuing operations, net of tax | 364 | 356 | 204 | ||||||||||||||||
Income from discontinued operations, net of tax benefit (provision) of $0, $11, and $(109) | 0 | 11 | 132 | ||||||||||||||||
Net income | 364 | 367 | 336 | ||||||||||||||||
Less: Net income attributable to noncontrolling interests | (74) | (48) | (34) | ||||||||||||||||
Net income attributable to KBR | 290 | 319 | 302 | ||||||||||||||||
Reconciliation of net income attributable to KBR common shareholders: | |||||||||||||||||||
Continuing operations | 290 | 308 | 182 | ||||||||||||||||
Discontinued operations, net | 0 | 11 | 120 | ||||||||||||||||
Net income attributable to KBR | $290 | $319 | $302 | ||||||||||||||||
Basic income per share (1): | |||||||||||||||||||
Continuing operations - Basic | 1.8 | [1] | 1.84 | [1] | 1.08 | [1] | |||||||||||||
Discontinued operations, net - Basic | $0 | [1] | 0.07 | [1] | 0.71 | [1] | |||||||||||||
Net income attributable to KBR per share - Basic | 1.8 | [1] | 1.91 | [1] | 1.79 | [1] | |||||||||||||
Diluted income per share (1): | |||||||||||||||||||
Continuing operations - Diluted | 1.79 | [1] | 1.84 | [1] | 1.08 | [1] | |||||||||||||
Discontinued operations, net - Diluted | $0 | [1] | 0.07 | [1] | 0.71 | [1] | |||||||||||||
Net income attributable to KBR per share - Diluted | 1.79 | [1] | 1.9 | [1] | 1.78 | [1] | |||||||||||||
Basic weighted average common shares outstanding | 160 | 166 | 168 | ||||||||||||||||
Diluted weighted average common shares outstanding | 161 | 167 | 169 | ||||||||||||||||
Cash dividends declared per share (See Note 13) | 0.2 | 0.2 | 0 | ||||||||||||||||
[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 Conso
Parenthetical Data to the Consolidated Statements of Income (USD $) | |||
In Millions | 12 Months Ended
Dec. 31, 2009 | 12 Months Ended
Dec. 31, 2008 | 12 Months Ended
Dec. 31, 2007 |
Income Statement [Abstract] | |||
Discontinued operations, tax benefit (provision) | $0 | $11 | ($109) |
Consolidated Balance Sheets
Consolidated Balance Sheets (USD $) | ||
In Millions | Dec. 31, 2009
| Dec. 31, 2008
|
Current assets: | ||
Cash and equivalents | $941 | $1,145 |
Receivables: | ||
Accounts receivable net of allowance for bad debts of $26 and $19 | 1,243 | 1,312 |
Unbilled receivables on uncompleted contracts | 657 | 835 |
Total receivables | 1,900 | 2,147 |
Deferred income taxes | 192 | 107 |
Other current assets | 608 | 743 |
Total current assets | 3,641 | 4,142 |
Property, plant, and equipment, net of accumulated depreciation of $264 and $224 | 251 | 245 |
Goodwill | 691 | 694 |
Intangible assets, net | 58 | 73 |
Equity in and advances to related companies | 164 | 185 |
Noncurrent deferred income taxes | 120 | 167 |
Noncurrent unbilled receivables on uncompleted contracts | 321 | 134 |
Other assets | 81 | 244 |
Total assets | 5,327 | 5,884 |
Current liabilities: | ||
Accounts payable | 1,045 | 1,387 |
Due to former parent, net | 53 | 54 |
Advance billings on uncompleted contracts | 407 | 519 |
Reserve for estimated losses on uncompleted contracts | 40 | 76 |
Employee compensation and benefits | 191 | 320 |
Other current liabilities | 552 | 680 |
Current liabilities related to discontinued operations, net | 3 | 7 |
Total current liabilities | 2,291 | 3,043 |
Noncurrent employee compensation and benefits | 469 | 403 |
Other noncurrent liabilities | 106 | 333 |
Noncurrent income tax payable | 43 | 34 |
Noncurrent deferred tax liability | 122 | 37 |
Total liabilities | 3,031 | 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, 170,686,531 and 170,125,715 shares issued, and 160,363,830 and 161,725,715 shares outstanding | 0 | 0 |
Paid-in capital in excess of par | 2,103 | 2,091 |
Accumulated other comprehensive loss | (444) | (439) |
Retained earnings | 854 | 596 |
Treasury stock, 10,322,701 shares and 8,400,000 shares, at cost | (225) | (196) |
Total KBR shareholders' equity | 2,288 | 2,052 |
Noncontrolling interests | 8 | (18) |
Total shareholders' equity | 2,296 | 2,034 |
Total liabilities and shareholders' equity | $5,327 | $5,884 |
1_Parenthetical Data to the Con
Parenthetical Data to the Consolidated Balance Sheets (USD $) | ||
In Millions, except Share data | Dec. 31, 2009
| Dec. 31, 2008
|
Receivables: | ||
Allowance for bad debts | $26 | $19 |
Property Plant and Equipment | ||
Accumulated depreciation | $264 | $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 | 170,686,531 | 170,125,715 |
Common stock, shares, outstanding | 160,363,830 | 161,725,715 |
Treasury stock, shares | 10,322,701 | 8,400,000 |
Consolidated Statements of Comp
Consolidated Statements of Comprehensive Income (USD $) | |||
In Millions | 12 Months Ended
Dec. 31, 2009 | 12 Months Ended
Dec. 31, 2008 | 12 Months Ended
Dec. 31, 2007 |
Statement of Income and Comprehensive Income [Abstract] | |||
Net income | $364 | $367 | $336 |
Other comprehensive income (loss), net of tax benefit (provision): | |||
Net cumulative translation adjustments | 18 | (117) | (11) |
Pension liability adjustments, net of taxes of $(5), $(85) and $116 | (15) | (226) | 178 |
Other comprehensive gains (losses) on investments and derivatives: | |||
Unrealized gains (losses) on derivatives | (3) | (1) | 1 |
Reclassification adjustments to net income | 1 | (1) | (4) |
Income tax benefit (provision) on derivatives | 0 | 1 | 1 |
Comprehensive income | 365 | 23 | 501 |
Less: Comprehensive income attributable to noncontrolling interests | (80) | (21) | (30) |
Comprehensive income attributable to KBR | $285 | $2 | $471 |
2_Parenthetical Data to the Con
Parenthetical Data to the Consolidated Statements of Comprehensive Income (USD $) | |||
In Millions | 12 Months Ended
Dec. 31, 2009 | 12 Months Ended
Dec. 31, 2008 | 12 Months Ended
Dec. 31, 2007 |
Statement of Income and Comprehensive Income [Abstract] | |||
Pension liability adjustments, taxes of $(5), $(85) and $116 | ($5) | ($85) | $116 |
Consolidated Statements of Shar
Consolidated Statements of Shareholders' Equity (USD $) | |||
In Millions | 12 Months Ended
Dec. 31, 2009 | 12 Months Ended
Dec. 31, 2008 | 12 Months Ended
Dec. 31, 2007 |
Statement of Stockholders' Equity [Abstract] | |||
Balance at January 1, | $2,034 | $2,235 | $1,829 |
Stock-based compensation | 17 | 16 | 11 |
Intercompany stock-based compensation | 0 | 0 | 1 |
Cumulative effect of initial adoption of accounting for uncertainty in income taxes | 0 | 0 | (10) |
Cumulative effect of initial adoption of accounting for defined benefit pension and other postretirement plans | 0 | (1) | 0 |
Common stock issued upon exercise of stock options | 2 | 3 | 6 |
Tax benefit increase (decrease) related to stock-based plans | (7) | 2 | 11 |
Settlement of taxes with former parent | 0 | 0 | (17) |
Dividends declared to shareholders | (32) | (41) | 0 |
Repurchases of common stock | (31) | (196) | 0 |
Issuance of ESPP shares from treasury stock | 2 | 0 | 0 |
Distributions to noncontrolling shareholders, net | (54) | (21) | (42) |
Acquisition of noncontrolling interests related to purchase of BE&K | 0 | 2 | 0 |
Disposal of noncontrolling interests related to sale of DML | 0 | 0 | (50) |
Tax adjustments to noncontrolling interests | 0 | 12 | (5) |
Comprehensive income | 365 | 23 | 501 |
Balance at December 31, | $2,296 | $2,034 | $2,235 |
Consolidated Statements of Cash
Consolidated Statements of Cash Flows (USD $) | |||
In Millions | 12 Months Ended
Dec. 31, 2009 | 12 Months Ended
Dec. 31, 2008 | 12 Months Ended
Dec. 31, 2007 |
Cash flows from operating activities | |||
Net income | $364 | $367 | $336 |
Adjustments to reconcile net income to net cash provided by (used in) operating activities: | |||
Depreciation and amortization | 55 | 49 | 41 |
Equity in earnings of unconsolidated affiliates | (45) | (88) | (103) |
Deferred income taxes | 65 | 88 | (27) |
Gain on sale of assets | 0 | 0 | (216) |
Impairment of goodwill | 6 | 0 | 0 |
Other | 14 | 28 | 27 |
Changes in operating assets and liabilities: | |||
Receivables | 107 | (124) | (143) |
Unbilled receivables on uncompleted contracts | 156 | (45) | 264 |
Accounts payable | (355) | 214 | (92) |
Advance billings on uncompleted contracts | (98) | (315) | 11 |
Accrued employee compensation and benefits | (129) | (40) | 57 |
Reserve for loss on uncompleted contracts | (37) | (41) | (62) |
Collection (repayment) of advances from (to) unconsolidated affiliates, net | (18) | 68 | (35) |
Distributions of earnings from unconsolidated affiliates | 54 | 121 | 131 |
Other assets | (264) | (149) | (29) |
Other Liabilities | 89 | (9) | 88 |
Total cash flows provided by (used in) operating activities | (36) | 124 | 248 |
Cash flows from investing activities: | |||
Capital expenditures | (41) | (37) | (43) |
Sales of property, plant and equipment | 0 | 7 | 3 |
Acquisition of businesses, net of cash acquired | 0 | (526) | 0 |
Dispositions of businesses, net of cash | 0 | 0 | 334 |
Proceeds from sale of investments | 32 | 0 | 0 |
Other investing activities | 0 | 0 | (1) |
Total cash flows provided by (used in) investing activities | (9) | (556) | 293 |
Cash flows from financing activities: | |||
Payments to former parent, net | 0 | 0 | (120) |
Payments on long-term borrowings | 0 | 0 | (7) |
Payments to reacquire common stock | (31) | (196) | 0 |
Net proceeds from issuance of stock | 2 | 3 | 6 |
Excess tax benefits from stock-based compensation | (7) | 2 | 6 |
Payments of dividends to shareholders | (32) | (25) | 0 |
Distributions to noncontrolling shareholders, net | (54) | (28) | (35) |
Cash collateralization of letters of credit, net | (44) | 0 | 0 |
Total cash flows used in financing activities | (166) | (244) | (150) |
Effect of exchange rate changes on cash | 7 | (40) | 9 |
Increase (decrease) in cash and equivalents | (204) | (716) | 400 |
Cash and equivalents at beginning of period | 1,145 | 1,861 | 1,461 |
Cash and equivalents at end of period | 941 | 1,145 | 1,861 |
Supplemental disclosure of cash flow information: | |||
Cash paid for interest | 7 | 5 | 4 |
Cash paid for income taxes (net of refunds) | 166 | 200 | 229 |
Noncash operating activities | |||
Other assets (see Note 11) | 417 | (559) | 0 |
Other liabilities (see Note 11) | ($417) | $579 | $0 |
Note 1. Description of Business
Note 1. Description of Business and Basis of Presentation | |
12 Months Ended
Dec. 31, 2009 USD / shares | |
Notes to Financial Statements [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 7 for financial information about our reportable business segments. KBR, Inc., a Delaware corporation, was formed on March 21, 2006 as an indirect, wholly owned subsidiary of Halliburton. KBR, Inc. was formed to own and operate KBR Holdings, LLC (KBR Holdings). At inception, KBR, Inc. issued 1,000 shares of common stock for $1 to Halliburton. On October 27, 2006, KBR affected a 135,627-for-one split of its common stock. In connection with the stock split, the certificate of incorporation was amended and restated to increase the number of authorized shares of common stock from 1,000 to 300,000,000 and to authorize 50,000,000 shares of preferred stock with a par value of $0.001 per share. All share data of the company has been adjusted to reflect the stock split. In November 2006, KBR, Inc. completed an initial public offering of 32,016,000 shares of its common stock (the Offering) at $17.00 per share. The Company received net proceeds of $511 million from the Offering after underwriting discounts and commissions. Halliburton retained all of the KBR shares owned prior to the Offering and, as a result of the Offering, its 135,627,000 shares of our common stock represented 81% of the outstanding common stock of KBR, Inc. after the Offering. Simultaneous with the Offering, Halliburton contributed 100% of the common stock of KBR Holdings to KBR, Inc. KBR, Inc. had no operations from the date of its formation to the date of the contribution of KBR Holdings. See Note 17 for a discussion related to our transactions with our former parent. On February 26, 2007, Halliburtons board of directors approved a plan under which Halliburton would dispose of its remaining interest in KBR through a tax-free exchange with Halliburtons stockholders pursuant to an exchange offer. On April 5, 2007, Halliburton completed the separation of KBR by exchanging the 135,627,000 shares of KBR owned by Halliburton for publicly held shares of Halliburton common stock pursuant to the terms of the exchange offer (the Exchange Offer) commenced by Halliburton on March 2, 2007. We have evaluated subsequent events for potential recognition or disclosure in the financial statements through our Form 10-K issuance date of February 25, 2010. |
Note 2. Significant Accounting
Note 2. Significant Accounting Policies | |
12 Months Ended
Dec. 31, 2009 USD / shares | |
Notes to Financial Statements [Abstract] | |
Significant Accounting Policies | Note 2.Significant Accounting Policies Principles of consolidation Our consolidated financial statements include the accounts of majority-owned, controlled subsidiaries and variable interest entities where we are the primary beneficiary (see Note 16). 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. Our revenue includes both equity in the earnings of unconsolidated affiliates as well as revenue from the sales of services into the joint ventures. We often participate on larger projects as a joint venture partner and also provide services to the venture as a subcontractor. The amount included in our revenue represents total project revenue, including equity in the earnings from joint ventures impairments of equity investments in joint ventures, if any, and revenue from services provided to joint ventures. Use of estimates Our financial statements are prepared in conformity with accounting principles generally accepted in the United States, requiring us to make estimates and assumptions that affect the reported amounts of assets, liabilities, revenues and expenses, and the disclosure of contingent assets and liabilities. Actual results could differ from those estimates. Engineering and construction contracts Revenue from contracts to provide construction, engineering, design or similar services is reported on the percentage-of-completion method of accounting. Progress is generally based upon physical progress, man-hours, or costs incurred, depending on the type of job. Physical progress is determined as a combination of input and output measures as deemed appropriate by the circumstances. All known or anticipated losses on contracts are provided for in the period they become evident. Claims and change orders that are in the process of being negotiated with customers for extra work or changes in the scope of work are included in contract value when collection is deemed probable. Our contracts often require us to pay liquidated damages should we not meet certain performance requirements, including completion of the project in accordance with a scheduled time. We include an estimate of liquidated damages in contract costs when it is deemed probable that they will be paid. Accounting for government contracts Most of the services provided to the United States government are governed by cost-reimbursable contracts. Generally, these contracts contain both a base fee (a fixed profit percentage applied to our actual costs to complete the work) and an award fee (a variable profit percentage applied to definitized costs, which is subject to our customers discretion and tied to the specific performance measures defined in the contract, such as adherence to schedule, health and safety, quality of work, responsiveness, cost performance and business management). Revenue is recorded at the time services are performed, and such revenues include base |
Note 3. Income per Share
Note 3. Income per Share | |
12 Months Ended
Dec. 31, 2009 USD / shares | |
Notes to Financial Statements [Abstract] | |
Income per Share | Note 3.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, using the treasury stock method. A reconciliation of the number of shares used for the basic and diluted income per share calculations is as follows: Millions of Shares 2009 2008 2007 Basic weighted average common shares outstanding 160 166 168 Stock options and restricted shares 1 1 1 Diluted weighted average common shares outstanding 161 167 169 For purposes of applying the two-class method in computing earnings per share, net earnings allocable to participating securities was approximately $2 million, or $0.01 per share, for the fiscal years 2009, 2008 and 2007.The diluted earnings per share calculation did not include 2.0 million, 0.8 million, and 0.5 million antidilutive weighted average shares for the years ended December 31, 2009, 2008, and 2007, respectively. |
Note 4. Acquisitions
Note 4. Acquisitions | |
12 Months Ended
Dec. 31, 2009 USD / shares | |
Notes to Financial Statements [Abstract] | |
Acquisitions | Note 4.Acquisitions BEK, Inc.On July 1, 2008, we acquired 100% of the outstanding common shares of BEK, Inc., (BEK) a privately held, Birmingham, Alabama-based engineering, construction and maintenance services company. The acquisition of BEK enhances our ability to provide contractor and maintenance services in North America. The agreed-upon purchase price was $550 million in cash subject to certain indemnifications and stockholders equity adjustments as defined in the stock purchase agreement. BEK and its acquired divisions have been integrated into our Services, Downstream and Government Infrastructure business units based upon the nature of the underlying projects acquired. As a result of the acquisition, the condensed consolidated statements of income for December 31, 2008, include the results of operations of BEK since the date of acquisition. In accordance with FASB ASC 805 Business Combinations, (ASC 805), the acquisition was accounted for using the purchase method. For accounting purposes, the purchase consideration paid was approximately $559 million, which included $550 million in cash paid at closing and $7 million in cash paid related to stockholders equity based purchase price adjustments, and $2 million of direct transaction costs. We conducted an external valuation of certain acquired assets for inclusion in our balance sheet at the date of acquisition. Long-lived assets such as property, plant and equipment largely reflect a value of replacing the assets, which takes into account changes in technology, usage, and relative obsolescence and depreciation of the assets. In addition, assets that would not normally be recorded in ordinary operations (i.e., customer relationships and other intangibles) were recorded at their estimated fair values. The excess of preliminary purchase price over the estimated fair values of the net assets acquired was recorded as goodwill. Our allocation of the purchase price to the fair value of the major assets acquired and liabilities assumed at the date of acquisition which has been adjusted to reflect the agreed upon stockholders equity and final asset valuation adjustments. Adjustments primarily related to the estimates used in the opening balance sheet valuation for certain intangibles, accounts receivables, accounts payables and other assets and liabilities, as well as the settlement of escrow obligations.In 2009, we decreased goodwill related to BEK by approximately $7 million due to an impairment charge of $6 million and purchase price allocation adjustments of $1 million related to the completion of our BEK asset valuation. Goodwill related to the BEK acquisition was allocated among our business segments and we currently have$371 million recognized in Services, $50 million in Other and $6 million in our Government Infrastructure segments.The intangible assets recognized apart from Goodwill consist primarily of customer relationships, tradename and backlog which are amortized over their estimated remaining life. Turnaround Group of Texas, Inc.In April 2008, we acquired 100% of the outstanding common stock of Turnaround Group of Texas, Inc. (TGI). TGI is a Houston-based tu |
Note 5. Percentage-of-Completio
Note 5. Percentage-of-Completion Contracts | |
12 Months Ended
Dec. 31, 2009 USD / shares | |
Notes to Financial Statements [Abstract] | |
Percentage-of-Completion Contracts | Note 5.Percentage-of-Completion Contracts Revenue from contracts to provide construction, engineering, design, or similar services is reported on the percentage-of-completion method of accounting using measurements of progress toward completion appropriate for the work performed. Commonly used measurements are physical progress, man-hours, and costs incurred. Billing practices for these projects are governed by the contract terms of each project based upon costs incurred, achievement of milestones, or pre-agreed schedules. Billings do not necessarily correlate with revenue recognized using the percentage-of-completion method of accounting. Billings in excess of recognized revenue are recorded in Advance billings on uncompleted contracts. When billings are less than recognized revenue, the difference is recorded in Unbilled receivables on uncompleted contracts. With the exception of claims and change orders that are in the process of being negotiated with customers, unbilled receivables are usually billed during normal billing processes following achievement of the contractual requirements. Recording of profits and losses on percentage-of-completion contracts requires an estimate of the total profit or loss over the life of each contract. This estimate requires consideration of contract value, change orders and claims reduced by costs incurred and estimated costs to complete. Anticipated losses on contracts are recorded in full in the period they become evident. Except in a limited number of projects that have significant uncertainties in the estimation of costs, we do not delay income recognition until projects have reached a specified percentage of completion. Generally, profits are recorded from the commencement date of the contract based upon the total estimated contract profit multiplied by the current percentage complete for the contract. When calculating the amount of total profit or loss on a percentage-of-completion contract, we include unapproved claims in total estimated contract value when the collection is deemed probable based upon the four criteria for recognizing unapproved claims in accordance with FASB ASC 605-35 related to accounting for performance of construction-type and certain production-type contracts. Including unapproved claims in this calculation increases the operating income (or reduces the operating loss) that would otherwise be recorded without consideration of the probable unapproved claims. Probable unapproved claims are recorded to the extent of costs incurred and include no profit element. In all cases, the probable unapproved claims included in determining contract profit or loss are less than the actual claim that will be or has been presented to the customer. When recording the revenue and the associated unbilled receivable for unapproved claims, we only accrue an amount equal to the costs incurred related to probable unapproved claims. The amounts of unapproved claims and change orders recorded as Unbilled work on uncompleted contracts or Other assets for each period are as follows: Years ended December 31, Millions of dollars 2009 2008 Probable unapproved claims |
Note 6. Dispositions
Note 6. Dispositions | |
12 Months Ended
Dec. 31, 2009 USD / shares | |
Notes to Financial Statements [Abstract] | |
Dispositions | Note 6.Dispositions Devonport Management Limited.On June 28, 2007, we consummated the sale of our 51% ownership interest in DML for cash proceeds of approximately $345 million, net of direct transaction costs, resulting in a gain of approximately $101 million, net of tax of $115 million. Our DML operations were part of our GI business unit.See Note 20 (Discontinued Operations). |
Note 7. Business Segment Inform
Note 7. Business Segment Information | |
12 Months Ended
Dec. 31, 2009 USD / shares | |
Notes to Financial Statements [Abstract] | |
Business Segment Information | Note 7.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. Our reportable segments are consistent with the financial information that our chief executive officer (CEO), who is our chief operating decision maker, reviews to evaluate operating performance and make resource allocation decisions. Our reportable segments are Government and Infrastructure, Upstream and Services. Our segment information has been prepared in accordance with FASB ASC 280 Segment Reporting. We have reorganized our internal reporting structure based on similar products and services. The following is a description of our three reportable segments: Government and Infrastructure.Our GI reportable segment delivers on-demand support services across the full military mission cycle from contingency logistics and field support to operations and maintenance on military bases. In the civil infrastructure market, we operate in diverse sectors, including transportation, waste and water treatment, and facilities maintenance. We provide program and project management, contingency logistics, operations and maintenance, construction, management, engineering, and other services to military and civilian branches of governments and private clients worldwide. Upstream.Our Upstream reportable segment designs and constructs energy and petrochemical projects, including large, technically complex projects in remote locations around the world. Our expertise includes LNG and GTL gas monetization facilities, refineries, petrochemical plants, onshore and offshore oil and gas production facilities (including platforms, floating production and subsea facilities), onshore and offshore pipelines. We provide a complete range of EPC-CS services, as well as program and project management, consulting and technology services. Services.Our Services business unit delivers full scope engineering, construction, construction management, fabrication, maintenance, and turnaround expertise to customers worldwide.Our experience is broad and based on 90 years of successful project realization beginning with the founding of legacy company Brown Root in 1919.With the acquisition of BEK, our market reach has expanded and now includes power, power cogeneration, pulp and paper, industrial and manufacturing, and pharmaceutical industries in addition to our base markets in the oil, gas, oil sands, petrochemicals and hydrocarbon processing industries.We provide commercial building construction services to education, food and beverage, healthcare, hospitality and entertainment, life science and technology, and mixed use building clients through our Building Group.KBR Services and its joint venture partner offer maintenance, small capital construction, and drilling support services for offshore oil and gas producing facilities in the Bay of Campeche through the use of semisubmersible vessels. Certain of our operating segments do not individually meet the qu |
Note 8. Property, Plant and Equ
Note 8. Property, Plant and Equipment | |
12 Months Ended
Dec. 31, 2009 USD / shares | |
Notes to Financial Statements [Abstract] | |
Property, Plant and Equipment | Note 8.Property, Plant and Equipment Other than those assets that have been written down to their fair values due to impairment, property, plant, and equipment are reported at cost less accumulated depreciation, which is generally provided on the straight-line method over the estimated useful lives of the assets. Some assets are depreciated on accelerated methods. Accelerated depreciation methods are also used for tax purposes, wherever permitted. Upon sale or retirement of an asset, the related costs and accumulated depreciation are removed from the accounts and any gain or loss is recognized. Property, plant and equipment are composed of the following: Estimated Useful December 31 Millions of dollars Lives in Years 2009 2008 Land N/A $ 31 $ 30 Buildings and property improvements 5-44 203 185 Equipment and other 3-20 281 254 Total 515 469 Less accumulated depreciation (264 ) (224 ) Net property, plant and equipment $ 251 $ 245 |
Note 9. Debt and Other Credit F
Note 9. Debt and Other Credit Facilities | |
12 Months Ended
Dec. 31, 2009 USD / shares | |
Notes to Financial Statements [Abstract] | |
Debt and Other Credit Facilities | Note 9.Debt and Other Credit Facilities On November 3, 2009, we entered into a new syndicated, unsecured $1.1 billion three-year revolving credit agreement (the Revolving Credit Facility), with Citibank, N.A., as agent, and a group of banks and institutional lenders replacing our previous facility, which was terminated when we entered into the new Revolving Credit Facility.The Revolving Credit Facility will be used for working capital and letters of credit for general corporate purposes and expires in November 2012.While there is no sublimit for letters of credit under this facility, letters of credit fronting commitments at December 31, 2009 totaled $830 million and was expanded in January 2010 to$880 million, which we would seek to expand if necessary.Amounts drawn under the Revolving Credit Facility will bear interest at variable rates based either on the London interbank offered rate plus 3%, or a base rate plus 2%, with the base rate being equal to the highest of reference banks publicly announced base rate, the Federal Funds Rate plus 0.5%, or the London interbank offered rate plus 1%.The Revolving Credit Facility provides for fees on the undrawn amounts of letters of credit issued under the Revolving Credit Facility of 1.5% for performance and commercial letters of credit and 3% for all others.We are also charged an issuance fee of 0.05% for the issuance of letters of credit, a per annum commitment fee of 0.625% for any unused portion of the credit line, and a per annum fronting commitment fee of 0.25%.As of December 31, 2009 and 2008, there were zero borrowings/cash drawings and $371 million and $510 million, respectively, in letters of credit issued and outstanding under the applicable facilities. The Revolving Credit Facility includes financial covenants requiring maintenance of a ratio of consolidated debt to consolidated EBITDA of 3.5 to 1 and a minimum consolidated net worth of $2 billion plus 50% of consolidated net income for each quarter ending after September 30, 2009 plus 100% of any increase in shareholders equity attributable to the sale of equity securities. The Revolving Credit Facility contains a number of covenants restricting, among other things, our ability to incur additional liens and sales of our assets, as well as limiting the amount of investments we can make.The Revolving Credit Facility also permits us, among other things, to declare and pay shareholder dividends and/or engage in equity repurchases not to exceed $400 million in the aggregate and to incur indebtedness in respect of purchase money obligations, capitalized leases and refinancing or renewals secured by liens upon or in property acquired, constructed or improved in an aggregate principal amount not to exceed $200 million.Our subsidiaries may incur unsecured indebtedness not to exceed $100 million in aggregate outstanding principal amount at any time. Letters of credit In connection with certain projects, we are required to provide letters of credit or surety bonds to our customers.Letters of credit are provided to customers in the ordinary course of business to guarantee advance payments from certain customers, support future join |
Note 10. United States Governme
Note 10. United States Government Contract | |
12 Months Ended
Dec. 31, 2009 USD / shares | |
Notes to Financial Statements [Abstract] | |
United States Government Contract Work | Note 10.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 the U.S. Army Europe (USAREUR) contract. 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, results of operations, financial condition 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 Award Fee Determining Official (AFDO) 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 mont |
Note 11. Other Commitments and
Note 11. Other Commitments and Contingencies | |
12 Months Ended
Dec. 31, 2009 USD / shares | |
Notes to Financial Statements [Abstract] | |
Other Commitments and Contingencies | Note 11.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 pled 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 called for the payment of a criminal penalty of $402 million, of which Halliburton was obligated to pay $382 million under the terms of the indemnity in the master separation agreement, while we were obligated to 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 five installments totaling $240 million to the DOJ and $177 million to the SEC as of December 31, 2009, and such payments totaling $41 |
Note 12. Income Taxes
Note 12. Income Taxes | |
12 Months Ended
Dec. 31, 2009 USD / shares | |
Notes to Financial Statements [Abstract] | |
Income Taxes | Note 12.Income Taxes The components of the (provision) benefit for income taxes are as follows: Years ended December 31 Millions of dollars 2009 2008 2007 Current income taxes: Federal $ 3 $ 41 $ (101 ) Foreign (99 ) (165 ) (58 ) State (7 ) (6 ) Total current (103 ) (124 ) (165 ) Deferred income taxes: Federal 39 (107 ) 30 Foreign (105 ) 13 (6 ) State 1 6 3 Total deferred (65 ) (88 ) 27 Provision for income taxes $ (168 ) $ (212 ) $ (138 ) Prior to the separation from Halliburton, income tax expense for KBR, Inc. was calculated on a pro rata basis.Under this method, income tax expense was determined based on KBR, Inc. operations and their contributions to income tax expense of the Halliburton consolidated group.For the period post separation from Halliburton, income tax expense is calculated on a stand alone basis.Payments made to or received from Halliburton to settle tax assets and liabilities are classified as contributions to capital in the accompanying financial statements.KBR is subject to a tax sharing agreement primarily covering periods prior to the separation from Halliburton.The tax sharing agreement provides, in part, that KBR will be responsible for any audit settlements related to its business activity for periods prior to its separation from Halliburton for which KBR recorded a charge to equity of $17 million in 2007. As of December 31, 2009, KBR has recorded a $53 million payable to Halliburton for tax related items under the tax sharing agreement.See Note 17 for further discussion related to our transactions with Halliburton. The United States and foreign components of income from continuing operations before income taxes and noncontrolling interests were as follows: Years ended December 31 Millions of dollars 2009 2008 2007 United States $ (128 ) $ (50 ) $ (42 ) Foreign 660 618 384 Total $ 532 $ 568 $ 342 The reconciliations between the actual provision for income taxes on continuing operations and that computed by applying the United States statutory rate to income from continuing operations before income taxes and noncontrolling interests are as follows: Years ended December 31 2009 2008 2007 United States Statutory Rate 35.0 % 35.0 % 35.0 % Rate differentials on foreign earnings (2.3 ) 1.6 7.3 Non-deductible loss 0.4 1.6 State income taxes 0.9 0.1 1.0 Prior year foreign, federal and state taxes (1.0 ) (1.2 ) (1.3 ) Valuation allowance 1.7 0.1 (2.3 ) Tax on unincorporated joint ventures (2.0 ) Other (1.2 ) 0.1 0.5 Total effective tax rate on continuing operations 31.5 % 37.3 % 40.2 |
Note 13. Shareholders' Equity
Note 13. Shareholders' Equity | |
12 Months Ended
Dec. 31, 2009 USD / shares | |
Notes to Financial Statements [Abstract] | |
Shareholders' Equity | Note 13.Shareholders Equity The following tables summarize our shareholders equity activity: Millions of dollars Total Paid-in Capital in Excess of par Retained Earnings Treasury Stock Accumulated Other Comprehensive Income (Loss) Noncontrolling Interests Balance at December 31, 2006 $ 1,829 $ 2,058 $ 27 $ (291 ) $ 35 Cumulative effect of initial adoption of accounting for uncertainty in income taxes (10 ) (10 ) Stock-based compensation 11 11 Intercompany stock-based compensation 1 1 Settlement of taxes with former parent (17 ) (17 ) Common stock issued upon exercise of stock options 6 6 Tax benefit increase related to stock-based plans 11 11 Distributions to noncontrolling interests (42 ) (42 ) Disposal of noncontrolling interests related to sale of DML (50 ) (50 ) Tax adjustments to noncontrolling interests (5 ) (5 ) Comprehensive income: Net income 336 302 34 Other comprehensive income, net of tax (provision): Cumulative translation adjustment (11 ) (5 ) (6 ) Pension liability adjustment, net of tax of $116 178 176 2 Other comprehensive gains (losses) on derivatives: Unrealized gains (losses) on derivatives 1 1 Reclassification adjustments to net income (loss) (4 ) (4 ) Income tax benefit (provision) on derivatives 1 1 Comprehensive income, total 501 Balance at December 31, 2007 $ 2,235 $ 2,070 $ 319 $ (122 ) $ (32 ) Cumulative effect of initial adoption of accounting for defined benefit pension and other postretirement plans (1 ) (1 ) Stock-based compensation 16 16 Common stock issued upon exercise of stock options 3 3 Tax benefit increase related to stock-based plans 2 2 Dividends declared to shareholders (41 ) (41 ) Repurchases of common stock (196 ) (196 ) Distributions to noncontrolling interests (21 ) (21 ) Acquisition of noncontrolling interests related to purchase of BEK 2 2 Tax adjustments to noncontrolling interests 12 12 Comprehensive income: Net income 367 319 48 Other comprehensive income, net of tax (provision): Cumulative translation adjustment (117 ) (107 ) (10 ) Pension liability adjustment, net of tax of $(85) (226 ) (209 ) (17 ) Other comprehensive gains (losses) on derivatives: Unrealized gains (losses) on derivatives (1 ) (1 ) Reclassification adj |
Note 14. Stock-based Compensati
Note 14. Stock-based Compensation and Incentive Plans | |
12 Months Ended
Dec. 31, 2009 USD / shares | |
Notes to Financial Statements [Abstract] | |
Stock-based Compensation and Incentive Plans | Note 14.Stock-based Compensation and Incentive Plans Stock Plans In 2009, 2008 and 2007 stock-based compensation awards were granted to employees under KBR stock-based compensation plans. KBR 2006 Stock and Incentive Plan In November 2006, KBR established the KBR 2006 Stock and Incentive Plan (KBR 2006 Plan) which provides for the grant of any or all of the following types of stock-based awards: stock options, including incentive stock options and nonqualified stock options; stock appreciation rights, in tandem with stock options or freestanding; restricted stock; restricted stock unit; performance awards; and stock value equivalent awards. Under the terms of the KBR 2006 Plan, 10 million shares of common stock have been reserved for issuance to employees and non-employee directors. The plan specifies that no more than 3.5 million shares can be awarded as restricted stock or restricted stock units or pursuant to performance awards. At December 31, 2009, approximately 5.7 million shares were available for future grants under the KBR 2006 Plan, of which approximately 1.2 million shares remained available for restricted stock awards or restricted stock unit awards. KBR Transitional Stock Adjustment Plan The KBR Transitional Stock Adjustment Plan was adopted solely for the purpose to convert Halliburton equity awards to KBR equity awards.No new awards can be made under this plan.Upon our separation from Halliburton on April 5, 2007, Halliburton stock options and restricted stock awards (with restrictions that have not yet lapsed as of the final separation date) granted to KBR employees under Halliburtons 1993 Stock and Incentive Plan were converted to KBR stock options and restricted stock awards.A total of 1,217,095 Halliburton stock options and 612,857 Halliburton restricted stock awards were converted into 1,966,061 KBR stock options with a weighted average exercise price per share of $9.35 and 990,080 restricted stock awards with a weighted average grant-date fair value per share of $11.01.The conversion ratio for restricted stock was based on comparative KBR and Halliburton share prices. The conversion ratio was based upon the volume weighted average stock price of KBR and Halliburton shares for a three-day average. The converted equity awards are subject to substantially the same terms as they were under the Halliburton 1993 Stock and Incentive Plan prior to conversion.All stock options under Halliburtons 1993 Stock and Incentive Plan were granted at the fair market value of the common stock at the grant date.Employee stock options vest ratably over a three- or four-year period and generally expire 10 years from the grant date. There were no Halliburton stock options granted to KBR employees in 2009, 2008 or 2007. The conversion of such stock options and restricted stock was accounted for as a modification in accordance with FASB ASC 718-10 and resulted in an incremental charge to expense of less than $1 million, recognized in 2007, representing the change in fair value of the converted awards from Halliburton stock options and restricted stock awards to KBR stock options |
Note 15. Financial Instruments
Note 15. Financial Instruments and Risk Management | |
12 Months Ended
Dec. 31, 2009 USD / shares | |
Notes to Financial Statements [Abstract] | |
Financial Instruments and Risk Management | Note 15.Financial Instruments and Risk Management Foreign currency risk. Techniques in managing foreign currency risk include, but are not limited to, foreign currency borrowing and investing and the use of currency derivative instruments. We selectively manage significant exposures to potential foreign exchange losses considering current market conditions, future operating activities and the associated cost in relation to the perceived risk of loss. 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. We manage our foreign currency exposure through the use of currency derivative instruments as it relates to the major currencies, which are generally the currencies of the countries for which we do the majority of our international business. These contracts generally have an expiration date of two years or less. Forward exchange contracts, which are commitments to buy or sell a specified amount of a foreign currency at a specified price and time, are generally used to manage identifiable foreign currency commitments. Forward exchange contracts and foreign exchange option contracts, which convey the right, but not the obligation, to sell or buy a specified amount of foreign currency at a specified price, are generally used to manage exposures related to assets and liabilities denominated in a foreign currency. None of the forward or option contracts are exchange traded. While derivative instruments are subject to fluctuations in value, the fluctuations are generally offset by the value of the underlying exposures being managed. The use of some contracts may limit our ability to benefit from favorable fluctuations in foreign exchange rates. Foreign currency contracts are not utilized to manage exposures in some currencies due primarily to the lack of available markets or cost considerations (non-traded currencies). We attempt to manage our working capital position to minimize foreign currency commitments in non-traded currencies and recognize that pricing for the services and products offered in these countries should cover the cost of exchange rate devaluations. We have historically incurred transaction losses in non-traded currencies. Assets, liabilities and forecasted cash flow denominated in foreign currencies. We utilize the derivative instruments described above to manage the foreign currency exposures related to specific assets and liabilities, that are denominated in foreign currencies; however, we have not elected to account for these instruments as hedges for accounting purposes. Additionally, we utilize the derivative instruments described above to manage forecasted cash flow denominated in foreign currencies generally related to long-term engineering and construction projects. Since 2003, we have designated these contracts related to engineering and construction projects as cash flow hedges. The ineffective portion of these hedges is included in operating income in the accompanying consolidated statements |
Note 16. Equity Method Investme
Note 16. Equity Method Investments and Variable Interest Entities | |
12 Months Ended
Dec. 31, 2009 USD / shares | |
Notes to Financial Statements [Abstract] | |
Equity Method Investments and Variable Interest Entities | Note 16.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.Additionally, the majority of our joint ventures are also variable interest entities which are further described under Variable Interest Entities.The following is a description of our significant investments accounted for on the equity method of accounting that are not variable interest entities. Brown Root Condor Spa (BRC) BRC is a joint venture in which we owned 49% interest. During the third quarter of 2007, we sold our 49% interest and other rights in BRC to Sonatrach for approximately $24 million resulting in a pre-tax gain of approximately $18 million which is included in Equity in earnings (losses) of unconsolidated affiliates. As of December 31, 2009, we have not collected the remaining $18 million due from Sonatrach for the sale of our interest in BRC, which is included in Accounts receivable. 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 remaining amounts. MMM.MMM is a joint venture formed under a Partners Agreement related to the Mexico contract with PEMEX. The MMM joint venture was set up under Mexican maritime law in order to hold navigation permits to operate in Mexican waters. The scope of the business is to render services of maintenance, repair and restoration of offshore oil and gas platforms and provisions of quartering in the territorial waters of Mexico.KBR holds a 50% interest in the MMM joint venture.In 2009, the MMM joint venture repurchased outstanding equity interests from each of the joint venture partners on a pro-rata basis.We accounted for the transaction as a return of our initial investment resulting in a $28 million reduction of Equity in and advances to related companies in our Consolidated Balance Sheet. Consolidated summarized financial information for all jointly owned operations including variable interest entities that are accounted for using the equity method of accounting is as follows: Balance Sheets December 31, Millions of dollars 2009 2008 Current assets $ 3,217 $ 3,618 Noncurrent assets 3,973 3,342 Total assets $ 7,190 $ 6,960 Current liabilities $ 1,804 $ 2,013 Noncurrent liabilities 5,550 4,971 Members equity (164 ) (24 ) Total liabilities and members equity $ 7,190 $ 6,960 Statements of Operations Years ended December 31, Millions of dollars 2009 2008 2007 Revenue $ 2,535 $ 2,642 $ 3,426 Operating income $ 221 $ 79 $ 343 Net income (loss) $ 63 $ (45 ) $ 227 Variable Interest Entities We account for variable interest entities in accordance with FASB ASC 810-10, which requires the consolidation of entities in which a company absorb |
Note 17. Transactions with Form
Note 17. Transactions with Former Parent and Other Related Party Transactions | |
12 Months Ended
Dec. 31, 2009 USD / shares | |
Notes to Financial Statements [Abstract] | |
Transactions with Former Parent and Other Related party Transactions | Note 17.Transactions with Former Parent and Other Related Party Transactions In connection with the initial public offering in November 2006 and the separation of our business from Halliburton, in April 2007, we entered into various agreements with Halliburton including, among others, a master separation agreement, tax sharing agreement, transition services agreements and an employee matters agreement.Pursuant to our master separation agreement, we agreed to indemnify Halliburton for, among other matters, all past, present and future liabilities related to our business and operations.We agreed to indemnify Halliburton for liabilities under various outstanding and certain additional credit support instruments relating to our businesses and for liabilities under litigation matters related to our business.Halliburton agreed to indemnify us for, among other things, liabilities unrelated to our business, for certain other agreed matters relating to the investigation of FCPA and related corruption allegations and the Barracuda-Caratinga project and for other litigation matters related to Halliburtons business.Under the transition services agreements, Halliburton provided various interim corporate support services to us and we provided various interim corporate support services to Halliburton.The tax sharing agreement provides for certain allocations of U.S. income tax liabilities and other agreements between us and Halliburton with respect to tax matters. Costs for all services provided by Halliburton were $2 million, $6 million, and $13 million for the years ended December 31, 2009, 2008 and 2007, respectively and primarily related to risk management, information technology, legal and internal audit.All of the charges described above have been included as costs of our operations in our consolidated statements of income. It is possible that the terms of these transactions may differ from those that would result from transactions among third parties. Subsequent to our separation from Halliburton and in accordance with the Master Separation Agreement, Halliburton continues to bear the direct costs associated with overseeing and directing the FCPA and related corruption allegations. At December 31, 2009 and 2008, we had a $53 million and a $54 million balance payable to Halliburton, respectively, which consists of amounts KBR owes Halliburton for estimated outstanding income taxes under the tax sharing agreement and amounts owed pursuant to our transition services agreement for credit support arrangements and information technology.See Note 12 for further discussion of amounts outstanding 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 joi |
Note 18. Retirement Plans
Note 18. Retirement Plans | |
12 Months Ended
Dec. 31, 2009 USD / shares | |
Notes to Financial Statements [Abstract] | |
Retirement Plans | Note 18.Retirement Plans We have various plans that cover a significant number of our employees. These plans include defined contribution plans, defined benefit plans, and other postretirement plans: Our defined contribution plans provide retirement benefits in return for services rendered. These plans provide an individual account for each participant and have terms that specify how contributions to the participants account are to be determined rather than the amount of pension benefits the participant is to receive. Contributions to these plans are based on pretax income and/or discretionary amounts determined on an annual basis. Our expense for the defined contribution plans totaled $61 million in 2009, $47 million in 2008 and $44 million in 2007. Additionally, we participate in a Canadian multi-employer plan to which we contributed $17 million in 2009, $9 million in 2008 and $7 million in 2007; Our defined benefit plans are funded pension plans, which define an amount of pension benefit to be provided, usually as a function of age, years of service, or compensation; and Our postretirement medical plan is offered to specific eligible employees. This plan is contributory. Our liability is limited to a fixed contribution amount for each participant or dependent. The plan participants share the total cost for all benefits provided above our fixed contributions. Participants contributions are adjusted as required to cover benefit payments. We have made no commitment to adjust the amount of our contributions; therefore, the computed accumulated postretirement benefit obligation amount is not affected by the expected future health care cost inflation rate.The components of benefit obligation and plan assets and other activities related to other postretirement benefits were immaterial for the year ended December 31, 2009, 2008 and 2007. We account for our defined benefit pension and other postretirement plans in accordance with FASB ASC 715 Compensation Retirement Benefits, which requires an employer to: recognize on its balance sheet the funded status (measured as the difference between the fair value of plan assets and the benefit obligation) of pension and other postretirement benefit plans; recognize, through comprehensive income, certain changes in the funded status of a defined benefit and postretirement plan in the year in which the changes occur; measure plan assets and benefit obligations as of the end of the employers fiscal year; and disclose additional information. Benefit obligation and plan assets We used a December 31 measurement date for all plans in 2009 and 2008.Plan asset, expenses, and obligation for retirement plans are presented in the following tables. Pension Benefits Benefit obligation United States Intl United States Intl Millions of dollars 2009 2008 Change in benefit obligation Benefit obligation at beginning of period $ 73 $ 1,256 $ 45 $ 1,689 Service cost 2 8 Interest cost 5 77 4 90 Plan Amendments 1 Curtailment |
Note 19. Recent Accounting Pron
Note 19. Recent Accounting Pronouncements | |
12 Months Ended
Dec. 31, 2009 USD / shares | |
Notes to Financial Statements [Abstract] | |
Recent Accounting Pronouncements | Note 19.Recent Accounting Pronouncements 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 year ended December 31, 2008 and 2007. 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 |
Note 20. Discontinued Operation
Note 20. Discontinued Operations | |
12 Months Ended
Dec. 31, 2009 USD / shares | |
Notes to Financial Statements [Abstract] | |
Discontinued Operations | Note 20.Discontinued Operations During 2007, we settled certain claims and provided an allowance against certain receivables from the Production Services group resulting in a charge of approximately $15 million. In the fourth quarter of 2007, we recognized a tax benefit of $23 million in discontinued operations primarily related to a previously uncertain tax position associated with the sale of Production Services group. On June 28, 2007, we completed the disposition of our 51% interest in DML to Babcock International Group plc. In connection with the sale, we received $345 million in cash proceeds, net of direct transaction costs for our 51% interest in DML.The sale of DML resulted in a gain of approximately $101 million, net of tax of $115 million, in the year ended December 31, 2007.During the preparation of our 2007 tax return in 2008, we identified additional foreign tax credits upon completion of a tax pool study resulting from the sale of our interest in DML in the U.K. Approximately $11 million of the foreign tax credits were recorded as a tax benefit in discontinued operations in the third quarter of 2008. In accordance with the provisions of SFAS No. 144, Accounting for Impairment or Disposal of Long-Lived Assets, the results of operations of the Production Services group and DML for the current and prior periods have been reported as discontinued operations. Total liabilities of discontinued operations were $3 million and $7 million in the consolidated balance sheet at December 31, 2009 and 2008, respectively. The consolidated operating results of our Production Services group and DML, which are classified as discontinued operations in our consolidated statements of income, are summarized in the following table: Yearended December 31, Millions of dollars 2007 Revenue $ 449 Operating profit $ 22 Pretax income $ 11 |
Note 21. Quarterly Data
Note 21. Quarterly Data (Unaudited) | |
12 Months Ended
Dec. 31, 2009 USD / shares | |
Notes to Financial Statements [Abstract] | |
Quarterly Data | Note 21.Quarterly Data (Unaudited) Summarized quarterly financial data for the years ended December 31, 2009 and 2008 are as follows Quarter (in millions, except per share amounts) First Second Third Fourth (3) Year 2009 Revenue $ 3,200 $ 3,101 $ 2,840 $ 2,964 $ 12,105 Operating income 144 137 131 124 536 Income from continuing operations, net of tax 95 83 97 89 364 Net income attributable to KBR 77 67 73 73 290 Net income attributable to KBR per share (1) (2): Net income attributable to KBR per share Basic $ 0.48 $ 0.42 $ 0.46 $ 0.46 $ 1.80 Net income attributable to KBR per share Diluted $ 0.48 $ 0.42 $ 0.45 $ 0.45 $ 1.79 2008 Revenue $ 2,519 $ 2, 658 $ 3,018 $ 3,386 $ 11,581 Operating income 154 90 144 153 541 Income from continuing operations, net of tax 107 64 96 89 356 Income from discontinued operations, net of tax 11 11 Net income attributable to KBR 98 48 85 88 319 Net income attributable to KBR per share Basic (1) (2): Continuing operations - Basic $ 0.58 $ 0.28 $ 0.45 $ 0.54 $ 1.84 Discontinued operations, net - Basic 0.07 0.07 Net income attributable to KBR per share - Basic $ 0.58 $ 0.28 $ 0.51 $ 0.54 $ 1.91 Net income attributable to KBR per share Diluted (1) (2): Continuing operations - Diluted $ 0.58 $ 0.28 $ 0.44 $ 0.54 $ 1.84 Discontinued operations, net - Diluted 0.07 0.07 Net income attributable to KBR per share - Diluted $ 0.58 $ 0.28 $ 0.51 $ 0.54 $ 1.90 _______________________ (1) The sum of income (loss) per share for the four quarters may differ from the annual amounts due to the required method of computing weighted average number of shares in the respective periods. (2) Due to the effect of rounding, the sum of the individual per share amounts may not equal the total shown. (3) Net income attributable to KBR for the quarter ended December 31, 2009 includes a correction of errors related to prior periods which resulted in a decrease to net income of approximately $12 million, net of tax of $6 million, or approximately $0.08 per share.See Note 2 for further discussion. |
Valuation and Qualifying Accoun
Valuation and Qualifying Accounts | |
12 Months Ended
Dec. 31, 2009 USD / shares | |
Notes to Financial Statements [Abstract] | |
Schedule II - Valuation and Qualifying Accounts | KBR, Inc. Schedule II - Valuation and Qualifying Accounts (Millions of Dollars) The table below presents valuation and qualifying accounts for continuing operations. Additions Descriptions Balance at Beginning Period Charged to Costs and Expenses Charged to Other Accounts Deductions Balance at End of Period Year ended December 31, 2007: Deducted from accounts and notes receivable: Allowance for bad debts $ 57 $ 19 $ 2 $ (55 )(a) $ 23 Reserve for losses on uncompleted contracts $ 180 $ 26 $ $ (89 ) $ 117 Reserve for potentially disallowable costs incurred under government contracts $ 77 $ $ 34 (b) $ (12 ) $ 99 Year ended December 31, 2008: Deducted from accounts and notes receivable: Allowance for bad debts $ 23 $ 1 $ 1 $ (6 )(a) $ 19 Reserve for losses on uncompleted contracts $ 117 $ 27 $ $ (68 ) $ 76 Reserve for potentially disallowable costs incurred under government contracts $ 99 $ $ 18 (b) $ (5 ) $ 112 Year ended December 31, 2009: Deducted from accounts and notes receivable: Allowance for bad debts $ 19 $ 6 $ 3 $ (2) (a) $ 26 Reserve for losses on uncompleted contracts $ 76 $ 3 $ $ (39) $ 40 Reserve for potentially disallowable costs incurred under government contracts $ 112 $ $ 9 (b) $ (5) $ 116 _________________________ (a) Receivable write-offs, net of recoveries, and reclassifications. (b) Reserves have been recorded as reductions of revenue, net of reserves no longer required. |
Document Information
Document Information | |
12 Months Ended
Dec. 31, 2009 USD / shares | |
Document Information [Text Block] | |
Document Type | 10-K |
Amendment Flag | false |
Document Period End Date | 2009-12-31 |
Entity Information
Entity Information (USD $) | |||
12 Months Ended
Dec. 31, 2009 | Feb. 19, 2010
| Jun. 30, 2009
| |
Entity [Text Block] | |||
Entity Registrant Name | KBR, Inc. | ||
Entity Central Index Key | 0001357615 | ||
Current Fiscal Year End Date | --12-31 | ||
Entity Well-known Seasoned Issuer | Yes | ||
Entity Voluntary Filers | No | ||
Entity Current Reporting Status | Yes | ||
Entity Filer Category | Large Accelerated Filer | ||
Entity Public Float | $2,947,702,000 | ||
Entity Common Stock, Shares Outstanding | 160,466,526 |