pressrelease.htm

FOR IMMEDIATE RELEASE Contact: Zac Nagle

April 25, 2012 Vice President,

Investor Relations and Communications

713-753-5082

Rob Kukla, Jr.

Director, Investor Relations

713-753-5082

KBR ANNOUNCES EARNINGS PER DILUTED SHARE

OF $0.61 FOR FIRST QUARTER 2012

§	Revenue, excluding the LogCAP project, up 5% year-over-year

§	Job income margins up 50 basis points year-over-year

§	Backlog up 44% compared to December 31, 2011

§	Continued strong balance sheet with $837 million cash and equivalents

HOUSTON, Texas – KBR (NYSE:KBR) announced today that first quarter 2012 net income attributable to KBR was $91 million, or $0.61 per diluted share, compared to net income attributable to KBR of $105 million, or $0.69 per diluted share, in the first quarter of 2011.

Consolidated revenue in the first quarter 2012 was $2.0 billion compared to $2.3 billion in the first quarter of 2011. Operating income in the first quarter 2012 was $112 million compared to $144 million in the prior year first quarter.

“KBR’s first quarter performance was consistent with our expectations,” said Bill Utt, Chairman, President, and Chief Executive Officer of KBR. “In several of our end markets, project opportunities are beginning to accelerate which should drive stronger operating results through the balance of the year and into the future.”

Hydrocarbons Results (All comparisons are first quarter 2012 versus first quarter 2011, unless otherwise noted).

Hydrocarbons revenue was $1.1 billion, up $69 million, or 7%. Hydrocarbons job income was $136 million, up $11 million, or 9%.

Gas Monetization job income was $79 million, up $15 million, or 23%, primarily related to the start-up activities on the newly awarded Ichthys LNG project and increased activity on other LNG projects. Partially offsetting this increase was lower work volumes on the Skikda LNG and Pearl GTL projects. The increase included the receipt of a $9 million restitution payment from Jack Stanley related to the resolution of the FCPA matter which was substantially offset by an $8 million gain from the Tangguh LNG exit settlement with KBR’s former project partner in the first quarter 2011.

Oil and Gas job income was $23 million, down $1 million, or 4%, primarily related to the completion or near completion of several projects including the CLOV floating production, storage, and offloading (FPSO) vessel and Engevix projects. Partially offsetting the decrease was higher work volumes on the Shah Deniz FEED and Quad 204 detailed design work.

Downstream job income was $14 million, down $5 million, or 26%, primarily related to lower volumes on projects in the Middle East that are nearing completion and lower volumes on a refinery project in Africa. Partially offsetting the decrease was increased profits from projects in the United States and the new KBR-AMCDE entity in Saudi Arabia.

Technology job income was $20 million, up $2 million, or 11%, primarily related to the progress on a proprietary equipment project in Brazil and several license and engineering projects in Egypt, China and Russia. Partially offsetting the increase was the completion of engineering services on an ammonia project in Brazil.

Infrastructure, Government and Power (IGP) Results (All comparisons are first quarter 2012 versus first quarter 2011, unless otherwise noted).

IGP revenue was $518 million, down $337 million, or 39%. IGP job income was $75 million, down $32 million, or 30%.

North American Government and Logistics (NAGL) job income was $15 million, down $40 million, or 73%, primarily related to the completion of operations under the LogCAP III contract in Iraq and the $16 million awards fees received in the first quarter of 2011 which did not reoccur in the first quarter of 2012. Partially offsetting the decrease was income related to the LogCAP IV contract, including the U.S. Department of State project.

International Government, Defence and Support Services (IGDSS) job income was $36 million, up $19 million, or 112%, primarily related to reduced cost estimates for construction activities on the Allenby & Connaught project, increased activity on a NATO contract in Afghanistan, and a project close-out on an Afghanistan infrastructure project.

Infrastructure job income was $15 million, down $7 million, or 32%, primarily related to a first quarter 2011 incentive fee of $10 million received on a transport project which did not reoccur in the first quarter of 2012. Partially offsetting the decrease was higher work volumes on two expressway projects in Qatar and Australia.

·	Minerals job loss was $1 million, down $8 million, or 114%, primarily related to cost and schedule issues to complete a legacy EPC project. Partially offsetting the decrease was higher activity on the Hope Downs 4 iron ore project and the Rio Tinto fuels infrastructure and logistics project.

·	Power and Industrial (P&I) job income was $10 million, up $4 million, or 67%, primarily related to increased activity on waste-to-energy and coal gasification projects. Partially offsetting the increase was lower work volume from the completion of a waste-to-energy refurbishment project.

Services Results (All comparisons are first quarter 2012 versus first quarter 2011, unless otherwise noted).

Services revenue was $348 million, down $49 million, or 12%. Services job income was $28 million, down $4 million, or 13%, primarily related to lower work volumes on U.S. Construction and Industrial Services’ projects, as well as lower activity as a result of maintenance on a vessel in the MMM joint venture. Partially offsetting the decrease was increased activity on a new module assembly project and other projects in the Canada Operations.

Ventures Results (All comparisons are first quarter 2012 versus first quarter 2011, unless otherwise noted).

Ventures job income was $8 million, down $3 million, or 27%, primarily related to lower ammonia prices and non-cash hedge accounting adjustments at the EBIC ammonia plant in Egypt.

Corporate (All comparisons are first quarter 2012 versus first quarter 2011, unless otherwise noted).

Corporate general and administrative expense was $55 million, up $11 million, or 25%, primarily related to timing issues that gave rise to lower facilities and IT systems support costs, as well as lower costs associated with incentive compensation programs in the first quarter of 2011, which did not reoccur in the first quarter of 2012.

Total cash used in operating activities in the first quarter of 2012 was $107 million, primarily driven by the timing of working capital requirements on several large projects.

The effective tax rate for the first quarter 2012 was approximately 9% which was lower than the operating tax rate of approximately 27% primarily due to discrete tax benefits related to tax deductions arising from an unconsolidated joint venture in Australia, as well as the reduction of reserves based on progress in resolving transfer pricing matters with certain taxing jurisdictions.

During the first quarter of 2012, KBR had share repurchases of $7 million, capital expenditures of $16 million, pension contributions of $8 million, and quarterly dividend payments of $7 million.

Full Year 2012 Outlook

KBR full year 2012 earnings per diluted share guidance remains in the $2.45 to $2.80 range.

Significant Achievements and Awards

KBR, along with its joint venture with JGC Corporation and Chiyoda Corporation, the JKC JV, signed the formal contract for engineering, procurement and construction (EPC) activities on the Ichthys LNG Project in Northern Australia. The JKC JV partners signed this EPC contract, valued at US$15 billion, with the Ichthys LNG Project owners, INPEX and Total. The Ichthys LNG Project is a Joint Venture between INPEX (76%, the Operator) and Total (24%). The Ichthys Project is expected to produce 8.4 million tonnes of LNG and 1.6 million tonnes of LPG per annum, along with approximately 100,000 barrels of condensate per day at peak.

KBR announced it will design and construct an ethylene furnace for INEOS Olefins & Polymers USA (INEOS) that upon commissioning will provide the highest achievable ethylene yields in the industry. The executed agreements with INEOS include provision of a technology license, engineering, procurement, supply of equipment and materials, and construction of the furnace. The furnace design will add 465 million pounds per year of furnace production capacity to the INEOS Chocolate Bayou Works Olefins Complex in Alvin, Texas.

KBR completed the registration and licensing of a new entity to carry out general engineering and project management services under the Saudi Arabian Oil Company (Saudi Aramco) GES+ initiative. As part of completing the GES+ initiative, KBR acquired the business of Abdulhadi and Al-Moaibed Consulting Engineering Co. (AMCDE), a Saudi owned professional engineering company, and officially formed KBR-AMCDE. KBR will hold a 67% interest in this new entity. This new entity will provide front-end engineering and design, detailed design, procurement and project management services for Saudi Aramco. Initial staffing of the KBR-AMCDE enterprise is approximately 400 people.

KBR was awarded a contract by Devon Energy to provide construction services for a new 150 million standard cubic feet per day (MMSCFD) gas processing plant. KBR will provide pre-construction services and installation for the processing plant expansion at its existing 200 MMSCFD gas processing plant. The expansion will increase the cryogenic gas processing plant’s capacity by 150 MMSCFD, bringing the total processing capacity to 350 MMSCFD in the Woodford Shale.

KBR was awarded a contract by TAIF Group to provide licensing and engineering services for the Veba Combi Cracker (VCC) to be implemented at the Nizhnikamsk refinery in the Republic of Tatarstan, Russia. Under the terms of the contract, KBR will provide the License, Basic Engineering Package (LBEP), and other services for TAIF’s VCC-based Deep Conversion Complex. This award marks the third VCC license, and KBR’s largest VCC project award since the acquisition of the rights to the technology in January 2010.

KBR announced The Shooshan Company awarded the KBR Building Group a contract to provide construction services for The Place at Founders Square. KBR Building Group will execute construction services for the 17-story, 238,060 square-foot residential tower, which will include design features such as a prominently curved window wall, a rooftop terrace with wood decking, two custom year-round spas, a resident-use bar and interior clubroom.

KBR is a global engineering, construction and services company supporting the energy, hydrocarbons, government services, minerals, civil infrastructure, power, industrial, and commercial markets. For more information, visit www.kbr.com.

NOTE: The statements in this press release that are not historical statements, including statements regarding future financial performance and backlog information, are forward-looking statements within the meaning of the federal securities laws. These statements are subject to numerous risks and uncertainties, many of which are beyond the company’s control, that could cause actual results to differ materially from the results expressed or implied by the statements. These risks and uncertainties include, but are not limited to: the outcome of and the publicity surrounding audits and investigations by domestic and foreign government agencies and legislative bodies; potential adverse proceedings by such agencies and potential adverse results and consequences from such proceedings; the scope and enforceability of the company’s indemnities from Halliburton Company; changes in capital spending by the company’s customers; the company’s ability to obtain contracts from existing and new customers and perform under those contracts; structural changes in the industries in which the company operates, escalating costs associated with and the performance of fixed-fee projects and the company’s ability to control its cost under its contracts; claims negotiations and contract disputes with the company’s customers; changes in the demand for or price of oil and/or natural gas; protection of intellectual property rights; compliance with environmental laws; changes in government regulations and regulatory requirements; compliance with laws related to income taxes; unsettled political conditions, war and the effects of terrorism; foreign operations and foreign exchange rates and controls; the development and installation of financial systems; increased competition for employees; the ability to successfully complete and integrate acquisitions; and operations of joint ventures, including joint ventures that are not controlled by the company.

KBR’s Annual Report on Form 10-K dated February 22, 2012, recent Current Reports on Forms 8-K, and other Securities and Exchange Commission filings discuss some of the important risk factors that KBR has identified that may affect the business, results of operations and financial condition. KBR undertakes no obligation to revise or update publicly any forward-looking statements for any reason.

KBR, Inc.: Condensed Consolidated Statements of Income

(Millions, except per share data) (Unaudited)

KBR, Inc.: Condensed Consolidated Balance Sheets

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KBR, Inc.: Condensed Consolidated Statements of Cash Flows

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KBR, Inc.: Revenue and Operating Results by Business Unit

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KBR, Inc.: Backlog Information (a)

(Millions)(Unaudited)