KBR (KBR) 10-Q 29 Apr 10 2010 Q1 Quarterly report Financial data

Condensed Consolidated Statemen

Condensed Consolidated Statements of Income (Unaudited) (USD $)
In Millions, except Per Share data	3 Months Ended Mar. 31, 2010	3 Months Ended Mar. 31, 2009
Revenue
Services	$2,616	$3,179
Equity in earnings of unconsolidated affiliates, net	15	21
Total revenue	2,631	3,200
Operating costs and expenses
Cost of services	2,483	3,009
General and administrative	49	49
Gain on disposition of assets, net	0	(2)
Total operating costs and expenses	2,532	3,056
Operating income	99	144
Interest income (expense), net	(4)	1
Foreign currency gains (losses), net	(2)	5
Income before income taxes and noncontrolling interests	93	150
Provision for income taxes	(34)	(55)
Net income	59	95
Less: Net income attributable to noncontrolling interests	(13)	(18)
Net income attributable to KBR	$46	$77
Net income attributable to KBR per share:
Basic	0.29	0.48
Diluted	0.29	0.48
Basic weighted average common shares outstanding	160	161
Diluted weighted average common shares outstanding	161	162
Cash dividends declared per share	0.05	0.05

Condensed Consolidated Balance

Condensed Consolidated Balance Sheets (Unaudited) (USD $)
In Millions	Mar. 31, 2010	Dec. 31, 2009
Current assets:
Cash and equivalents	$908	$941
Receivables:
Accounts receivable, net of allowance for bad debts of $25 and $26	1,693	1,243
Unbilled receivables on uncompleted contracts	486	657
Total receivables	2,179	1,900
Deferred income taxes	196	192
Other current assets	508	608
Total current assets	3,791	3,641
Property, plant, and equipment, net of accumulated depreciation of $300 and $264 (including $81 and $0, net, owned by a variable interest entity - see Note 11)	321	251
Goodwill	691	691
Intangible assets, net	75	58
Equity in and advances to related companies	167	164
Noncurrent deferred income taxes	127	120
Noncurrent unbilled receivables on uncompleted contracts	321	321
Other assets	96	81
Total assets	5,589	5,327
Current liabilities:
Accounts payable	1,009	1,045
Due to former parent, net	53	53
Advance billings on uncompleted contracts	554	407
Reserve for estimated losses on uncompleted contracts	36	40
Employee compensation and benefits	264	191
Current non-recourse project-finance debt of a variable interest entity (See Note 11)	8	0
Other current liabilities	505	552
Current liabilities related to discontinued operations, net	2	3
Total current liabilities	2,431	2,291
Noncurrent employee compensation and benefits	427	469
Noncurrent non-recourse project-finance debt of a variable interest entity (See Note 11)	97	0
Other noncurrent liabilities	92	106
Noncurrent income tax payable	63	43
Noncurrent deferred tax liability	125	122
Total liabilities	3,235	3,031
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, 170,829,734 and 170,686,531 shares issued, and 160,548,585 and 160,363,830 shares outstanding	0	0
Paid-in capital in excess of par	2,107	2,103
Accumulated other comprehensive loss	(436)	(444)
Retained earnings	900	854
Treasury stock, 10,281,149 shares and 10,322,701 shares, at cost	(224)	(225)
Total KBR shareholders' equity	2,347	2,288
Noncontrolling interests	7	8
Total shareholders' equity	2,354	2,296
Total liabilities and shareholders' equity	$5,589	$5,327

Parenthetical Data to the Conde

Parenthetical Data to the Condensed Consolidated Balance Sheets (Unaudited) (USD $)
In Millions, except Share data	Mar. 31, 2010	Dec. 31, 2009
Receivables:
Allowance for bad debts	$25	$26
Property Plant and Equipment
Accumulated depreciation of $300 and $264	300	264
PP&E owned by a variable interest entity, net	$81	$0
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	170,829,734	170,686,531
Common stock, shares, outstanding	160,548,585	160,363,830
Treasury stock, shares	10,281,149	10,322,701

1_Condensed Consolidated Statem

Condensed Consolidated Statements of Comprehensive Income (Unaudited) (USD $)
In Millions	3 Months Ended Mar. 31, 2010	3 Months Ended Mar. 31, 2009
Statement of Income and Comprehensive Income [Abstract]
Net income	$59	$95
Other comprehensive income (loss), net of tax benefit (provision):
Net cumulative translation adjustments	2	(4)
Pension liability adjustments	3	6
Net unrealized gains (losses) on derivatives	3	(3)
Total other comprehensive income (loss), net of tax	8	(1)
Comprehensive income	67	94
Less: Comprehensive income attributable to noncontrolling interests	(13)	(20)
Comprehensive income attributable to KBR	$54	$74

2_Condensed Consolidated Statem

Condensed Consolidated Statements of Cash Flows (Unaudited) (USD $)
In Millions	3 Months Ended Mar. 31, 2010	3 Months Ended Mar. 31, 2009
Cash flows from operating activities
Net income	$59	$95
Adjustments to reconcile net income to net cash provided by (used in) operating activities:
Depreciation and amortization	15	14
Equity in earnings of unconsolidated affiliates	(15)	(21)
Deferred income taxes	(17)	(15)
Other	8	(5)
Changes in operating assets and liabilities:
Receivables	(438)	(223)
Unbilled receivables on uncompleted contracts	155	9
Accounts payable	(28)	(54)
Advanced billings on uncompleted contracts	169	17
Accrued employee compensation and benefits	74	35
Reserve for loss on uncompleted contracts	(4)	(13)
Collection (repayment) of advances from (to) unconsolidated affiliates, net	(1)	2
Distribution of earnings from unconsolidated affiliates	9	14
Other assets	(3)	(52)
Other Liabilities	12	25
Total cash flows used in operating activities	(5)	(172)
Cash flows from investing activities:
Capital expenditures	(14)	(7)
Investment in equity method joint venture	(4)	0
Investment in licensing arrangement	(20)	0
Proceeds from sale of investments	0	2
Total cash flows used in investing activities	(38)	(5)
Cash flows from financing activities:
Payments to reacquire common stock	(1)	(16)
Payments of dividends to shareholders	(8)	(8)
Distributions to noncontrolling shareholders, net	(7)	(17)
Return of cash collateral on letters of credit, net	17	0
Total cash flows provided by (used in) financing activities	1	(41)
Effect of exchange rate changes on cash	(13)	(6)
Decrease in cash and equivalents	(55)	(224)
Cash increase due to consolidation of a variable interest entity	22	0
Cash and equivalents at beginning of period	941	1,145
Cash and equivalents at end of period	908	921
Noncash operating activities
Other assets (see Note 7)	47	274
Other liabilities (see Note 7)	(47)	(274)
Noncash financing activities
Dividends declared or payable	$8	$8

Description of Business and Bas

Description of Business and Basis of Presentation
	3 Months Ended Mar. 31, 2010
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 four business segments: Infrastructure, Government and Power (IGP), Hydrocarbons, Services 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, 2009 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 2010 or any other future periods. 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, 2010, we elected to change our annual goodwill impairment testing to the fourth quarter of every year based on carrying values of our reporting units as of October 1 from our previous method of using our reporting unit carrying values as of September 30. An annual goodwill impairment test date of October 1 better aligns with our annual budgetary process which is completed during the fourth quarter of each year. In addition, performing our annual goodwill impairment test during the fourth quarter

Income per Share

Income per Share
	3 Months Ended Mar. 31, 2010
Notes to Financial Statements [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, 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: Three Months Ended March 31, Millions of Shares 2010 2009 Basic weighted average common shares outstanding 160 161 Dilutive effect of: Stock options and restricted shares 1 1 Diluted weighted average common shares outstanding 161 162 For purposes of applying the two-class method in computing earnings per share, net earnings allocable to participating securities did not have a material impact on earningsper share for the three months ended March 31, 2010 and 2009.The diluted earnings per share calculation did not include 1.4 million and 2.4 million antidilutive weighted average shares for the three months ended March 31, 2010 and 2009, respectively.

Percentage-of-Completion Contra

Percentage-of-Completion Contracts
	3 Months Ended Mar. 31, 2010
Notes to Financial Statements [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 are as follows: March 31, December 31, Millions of dollars 2010 2009 Probable unapproved claims $ 33 $ 33 Probable unapproved change orders 21 61 Probable unapproved change orders related to unconsolidated subsidiaries 5 2 As of March 31, 2010, the probable unapproved claims primarily related to two contracts.See Note 6 for a discussion of U.S. government contract claims, which are not included in the table above. Included in the table above are contracts with probable unapproved claims that will likely not be settled within one year totaling $19 million at March 31, 2010 and $20 million at December 31, 2009, 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. 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, Procurement and Construction (EPC) 1, EPC 22 and EPC 28.All three projects encountered significant schedule delays and increased costs due to problems with design work, late delivery and defects in equipment, increases in scope and other changes.PEMEX took possession of the offshore facilities of EPC 1 in March 2004 after having achieved oil production but prior to our completion of our scope of work pursuant to the contract. We filed for arbitration with the International Chamber of Commerce (ICC) in 2004 claiming recovery of damages of $323 million for EPC 1 and PEMEX subsequently filed counterclaims totaling $157 million.The EPC 1 arbitration hearings were held in November 2007. In December 2009, the ICC ruled in our favor and we were awarded a total of approximately $351 million including legal and administrative recovery fees as well as interest. PEMEX was awarded approximately $6 million on counterclaims, plus interest on a portion of that sum.The amount of the award exceeded the book value of our claim receivable resulting in our recognition of a $183 million of operating income and $117 million of net income in the fourth quarter of 2009.The arbitration award is legally binding and we have filed a proceeding in U.S. Federal Court to recognize the award.PEMEX has attempted to challenge jurisdiction of the U.S. Federal Court and to nullify the award in Mexican court.To date, PEMEX has been unsuccessful on procedural grounds in its nullification efforts in the Mexican courts.We will respond to further efforts by PEMEX to nullify our award as may be required.We believe the timing of the collection of the award is uncertain and therefore, we have classified the amount d

Business Segment Information

Business Segment Information
	3 Months Ended Mar. 31, 2010
Notes to Financial Statements [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.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. Business Reorganization 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. In the first quarter of 2010, we reorganized our business into discrete engineering and construction business units, each focused on a specific segment of the market with identifiable customers, business strategies, and sales and marketing capabilities.The reorganization includes the realignment of certain underlying projects among our existing business units as well as the transfer of certain projects to several newly formed business units as further described below.Certain realigned business units are reported under the newly formed Hydrocarbons and Infrastructure, Government Power (IGP) business groups which are reportable segments as defined by the criteria in Financial Accounting Standard Board (FASB) Accounting Standard Codification (ASC) 280 Segment Reporting.Power and Industrial was previously reported as part of the Services operating segment.Each business group is led by a business group president who reports directly to our chief operating decision maker.Our Services business unit was also impacted by the reorganization, but continues to operate as a stand-alone reportable segment reporting directly to our chief operating decision maker. Our Ventures business unit was not impacted by the reorganization.We have revised our segment reporting to represent how we now manage our business, restating prior periods to conform to the current segment presentation. The following is a description of our three reportable segments: Hydrocarbons.Our Hydrocarbons business group serves the Hydrocarbon industry by providing services ranging from prefeasibility studies to designing, and construction to commissioning of process facilities in remote locations around the world.We are involved in hydrocarbon processing which includes constructing liquefied natural gas (LNG) plants in several countries.Our teams of global engineers also execute and provide solutions for projects in the biofuel, carbon capture, oil and gas, olefins and petrochemical markets.The Hydrocarbons business group includes the Gas Monetization, Oil Gas, Downstream, and Technology business units.Prior to the 2010 business reorganization, the Downstream and Technology business units were reported as part of the Other segment and our Gas Monetization and Oil Gas business units were collectively reported as the Upstream segment. Our Gas Monetization business unit designs and constructs gas monetization facilities. We create LNG and gas-to-liquid

Committed and Restricted Cash

Committed and Restricted Cash
	3 Months Ended Mar. 31, 2010
Notes to Financial Statements [Abstract]
Committed and Restricted Cash	Note 5.Committed and Restricted Cash Cash and equivalents include cash related to contracts in progress, as well as cashheld by our joint ventures that we consolidate for accounting purposes.Joint venturecash balancesare limited to joint venture activities andare 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 held by our joint ventures that we consolidate for accounting purposes totaled approximately $264 million at March 31, 2010 and $236 million at December 31, 2009.In addition, cash and equivalents includes $134 million and $75 million as of March 31, 2010 and December 31, 2009, respectively, of cash related to a contract in progress that is approximately 64% complete at March 31, 2010. We expect to use the cash on these projects to pay project costs. Included in Other current assets and Other assets at March 31, 2010 is restricted cash in the amounts of $19 million and $10 million, respectively.Restricted cash primarily consists of amounts held in deposit with certain banks to collateralize standby letters of credit.

United States Government Contra

United States Government Contract Work
	3 Months Ended Mar. 31, 2010
Notes to Financial Statements [Abstract]
United States Government Contract Work	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 the U.S. Army Europe (USAREUR) contract. Given the demands of working in Iraq and elsewhere for the United States government, as discussed further below, we have disagreements and have experienced performance issues with the various government customers for which we work. When 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 monthly eva

Other Commitments and Contingen

Other Commitments and Contingencies
	3 Months Ended Mar. 31, 2010
Notes to Financial Statements [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 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 Hydrocarbons 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 six installments totaling $287 million to the DOJ and $177 million to the SEC as of March 31, 2010, and such payments totaled $464 million.Of the p

Income Taxes

Income Taxes
	3 Months Ended Mar. 31, 2010
Notes to Financial Statements [Abstract]
Income Taxes	Note 8.Income Taxes Our effective tax rate was approximately 36% for the three months ended March 31, 2010 and 2009. Our effective tax rate for the first quarter of 2010 was higher than our statutory rate of 35% primarily due to discrete items charged to income tax expense related to increased tax accruals due to several items including Subpart F income and true-up of prior year foreign taxes.Our effective tax rate for the first quarter of 2009 was higher than our statutory rate of 35% primarily due to discrete items charged to income tax expense from the true-up of prior year foreign and domestic taxes.

Shareholders' Equity

Shareholders' Equity
	3 Months Ended Mar. 31, 2010
Notes to Financial Statements [Abstract]
Shareholders' Equity	Note 9.Shareholders Equity The following tables summarize our shareholders equity activities in the first quarter of 2010: KBR Shareholders Millions of dollars Total Paid-inCapital in Excessof par RetainedEarnings TreasuryStock Accumulated Other Comprehensive Loss Noncontrolling Interests Balance at December 31, 2009 $ 2,296 $ 2,103 $ 854 (225 ) $ (444 ) $ 8 Stock-based compensation 4 4 Common stock issued upon exercise of stock options Tax benefit related to stock-based plans Repurchases of common stock (1 ) (1 ) Issuance of ESPP shares 2 2 Dividends paid to noncontrolling interests (7 ) (7 ) Consolidation of Fasttrax Limited (7 ) (7 ) Comprehensive income: Net income 59 46 13 Other comprehensive income, net of tax (provision): Net cumulative translation adjustment 2 3 (1 ) Pension liability adjustment, net of tax 3 2 1 Net unrealized gains (losses) on derivatives 3 3 Total 67 Balance at March 31, 2010 $ 2,354 $ 2,107 $ 900 $ (224 ) $ (436 ) $ 7 The following tables summarize our shareholders equity activities in the first quarter of 2009: KBR Shareholders Millions of dollars Total Paid-inCapital in Excessof par RetainedEarnings TreasuryStock Accumulated Other Comprehensive Loss Noncontrolling Interests Balance at December 31, 2008 $ 2,034 $ 2,091 $ 596 (196 ) $ (439 ) $ (18 ) Stock-based compensation 3 3 Common stock issued upon exercise of stock options 1 1 Tax benefit related to stock-based plans Repurchases of common stock (16 ) (16 ) Dividends paid to noncontrolling interests (17 ) (17 ) Comprehensive income: Net income 95 77 18 Other comprehensive income, net of tax (provision): Net cumulative translation adjustment (4 ) (4 ) Pension liability adjustment, net of tax 6 4 2 Net unrealized gains (losses) on derivatives (3 ) (3 ) Total 94 Balance at March 31, 2009 $ 2,099 $ 2,095 $ 673 $ (212 ) $ (442 ) $ (15 ) Accumulated other comprehensive loss consisted of the following balances: March 31, December 31, Millions of dollars 2010 2009 Cumulative translation adjustments $ (51 ) $ (54 ) Pension liability adjustments (384 ) (386 ) Unrealized losses on investments and derivatives (1 ) (4 ) Total accumulated other comprehensive loss $ (436 ) $ (444 )

Fair Value Measurements

Fair Value Measurements
	3 Months Ended Mar. 31, 2010
Notes to Financial Statements [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 March 31, 2010 Quoted Prices in Active Markets for Identical Assets (Level 1) Significant Other Observable Inputs (Level 2) Significant Unobservable Inputs (Level 3) Marketable securities $ 16 $ 11 $ 5 $ Derivative assets $ 16 $ $ 16 $ Derivative liabilities $ 2 $ $ 2 $ 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
	3 Months Ended Mar. 31, 2010
Notes to Financial Statements [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.Additionally, the majority of our joint ventures are also variable interest entities which are further described under Variable Interest Entities. Equity Method Investments 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 March 31, 2010, 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. Variable Interest Entities We account for variable interest entities (VIEs) in accordance with FASB ASC 810. As a result of the adoption of ASU 2009-17, Consolidations (Topic 810) Improvements to Financial Reporting by Enterprises Involved with Variable Interest Entities, effective January 1, 2010, FASB ASC 810 requires the consolidation of VIEs in which a company has both the power to direct the activities of the VIE that most significantly impact the VIEs economic performance and the obligation to absorb losses or the right to receive the benefits from the VIE that could potentially be significant to the VIE.If a reporting enterprise meets these conditions then it has a controlling financial interest and is the primary beneficiary of the VIE.We have applied the requirements of FASB ASC 810 on a prospective basis from the date of adoption. We assess all newly created entities and those with which we become involved to determine whether such entities are VIEs and, if so, whether or not we are their primary beneficiary.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 Hydrocarbons business group 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 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 ownership position in an entity that manages and operates an asset post construction. As required by ASC 810-10, we perform a qualitati

Retirement Plans

Retirement Plans
	3 Months Ended Mar. 31, 2010
Notes to Financial Statements [Abstract]
Retirement Plans	Note 12.Retirement Plans The components of net periodic benefit cost related to pension benefits for the three months ended March 31, 2010 and 2009 were as follows: Three Months Ended March 31, 2010 2009 Millions of dollars United States International United States International Components of net periodic benefit cost: Service cost $ $ $ $ 2 Interest cost 1 22 1 18 Expected return on plan assets (1 ) (23 ) (1 ) (21 ) Recognized actuarial loss 5 3 Curtailment (4 ) Net periodic benefit cost (benefit) $ $ 4 $ $ (2 ) For the three months ended March 31, 2010, we contributed $2 million of the $11 million we currently expect to contribute in 2010 to our international plans, and less than $1 million of the $3 million we currently expect to contribute to our domestic plans in 2010. 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 months ended March 31, 2010 and 2009.

Transactions with Former Parent

Transactions with Former Parent and Other Related Party Transactions
	3 Months Ended Mar. 31, 2010
Notes to Financial Statements [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 $53 million at both March 31, 2010 and December 31, 2009, was comprised of amounts owed to Halliburton primarily for estimated outstanding income taxes 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 condensed consolidated statements of income were $34 million and $53 million for the quarters ended March31, 2010 and 2009, respectively. On transactions with our joint ventures, we recognized in our condensed consolidated statements of income a profit of $6 million for the quarter ended March 31, 2010 and a loss of $5 million for the quarter ended March31, 2009.

Recent Accounting Pronouncement

Recent Accounting Pronouncements
	3 Months Ended Mar. 31, 2010
Notes to Financial Statements [Abstract]
Recent Accounting Pronouncements	Note 14.Recent Accounting Pronouncements 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 deliverable, which is based on: (a) vendor-specific objective evidence; (b) third-party evidence; or (c) estimates. This guidance also eliminates the residual method of allocation and requires that arrangement consideration be allocated at the inception of the arrangement to all deliverables using the relative selling price method. In addition, this guidance significantly expands required disclosures related to a vendor's multiple-deliverable revenue arrangements. ASU 2009-13 is effective prospectively for revenue arrangements entered into or materially modified in fiscal years beginning on or after June 15, 2010. We are evaluating the impact that the adoption of ASU 2009-13 will have on our financial position, results of operations, cash flows and disclosures. In December2009, the FASB issued ASU 2009-16, Transfers and Servicing (Topic 860) - Accounting for Transfers of Financial Assets, which codifies FASB Statement No. 166, Accounting for Transfers of Financial Assets. ASU 2009-16 will require additional information regarding transfers of financial assets, including securitization transactions, and where companies have continuing exposure to the risks related to transferred financial assets. ASU 2009-16 eliminates the concept of a qualifying special-purpose entity, changes the requirements for derecognizing financial assets, and requires additional disclosures.ASU 2009-16 is effective for fiscal years beginning after November15, 2009.The adoption of ASU 2009-16 does not have a material impact on our financial position, results of operations, cash flows and disclosures. In January 2010, the FASB issued ASU No. 2010-06, Fair Value Measurements and Disclosures (Topic 820) Improving Disclosures about Fair Value Measurements. This ASU requires some new disclosures and clarifies some existing disclosure requirements about fair value measurement as set forth in Codification Subtopic 820-10. The FASBs objective is to improve these disclosures and, thus, increase the transparency in financial reporting. Specifically, ASU 2010-06 amends Codification Subtopic 820-10 to now require: A reporting entity should disclose separately the amounts of significant transfers in and out of Level 1 and Level 2 fair value measurements and describe the reasons for the transfers; and In the reconciliation for fair value measurements using significant unobservable inputs, a reporting entity should present separately information about purchases, sales, issuances, and settlements. In addition, ASU 2010-06 clar

Subsequent Events

Subsequent Events
	3 Months Ended Mar. 31, 2010
Notes to Financial Statements [Abstract]
Subsequent Event	Note 15.Subsequent Event On April 5, 2010, we acquired 100% of the outstanding common stock of Houston-based Energo Engineering (Energo) for approximately $16 million in cash, subject to an escrowed holdback amount of $6 million to secure working capital adjustments, indemnification obligations of the sellers, and other contingent obligations related to the operation of the business.Energo provides Integrity Management (IM) and advanced structural engineering services to the offshore oil and gas industry. Energo will be integrated into our Hydrocarbons segment, which will enable that business to expand its capabilities worldwide as well as support FEED and detailed design projects.We have not yet completed our purchase price allocation related to this transaction.

Document Information

Document Information
	3 Months Ended Mar. 31, 2010
Document Information [Text Block]
Document Type	10-Q
Amendment Flag	false
Document Period End Date	2010-03-31

Entity Information

Entity Information (USD $)
	3 Months Ended Mar. 31, 2010	Jun. 30, 2009	Apr. 23, 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	Yes
Entity Current Reporting Status	Yes
Entity Filer Category	Large Accelerated Filer
Entity Public Float		$2,947,702,000
Entity Common Stock, Shares Outstanding			160,592,436
Document Fiscal Year Focus	2,010
Document Fiscal Period Focus	Q1