Delaware
|
1-33146
|
20-4536774
|
(State or other jurisdiction
|
(Commission File Number)
|
(IRS Employer
|
of incorporation)
|
Identification No.)
|
KBR, Inc. | |||
Date: February 26, 2016
|
By:
|
/s/ Beth Ann Dranguet | |
Beth Ann Dranguet | |||
Assistant Corporate Secretary | |||
KBR, Inc.: Consolidated Statements of Income
|
||||||||
(Millions, except for per share data)
|
||||||||
(Unaudited)
|
||||||||
Three Months Ended
|
||||||||
December 31,
|
December 31,
|
|||||||
2015
|
2014
|
|||||||
Revenues:
|
||||||||
Technology & Consulting
|
$
|
93
|
$
|
68
|
||||
Engineering & Construction
|
696
|
1,038
|
||||||
Government Services
|
174
|
111
|
||||||
Subtotal
|
963
|
1,217
|
||||||
Non-strategic Business
|
117
|
200
|
||||||
Total revenues
|
1,080
|
1,417
|
||||||
Gross profit (loss):
|
||||||||
Technology & Consulting
|
20
|
5
|
||||||
Engineering & Construction
|
69
|
32
|
||||||
Government Services
|
(6
|
)
|
(60
|
)
|
||||
Subtotal
|
83
|
(23
|
)
|
|||||
Non-strategic Business
|
11
|
(139
|
)
|
|||||
Total gross profit (loss)
|
94
|
(162
|
)
|
|||||
Equity in earnings of unconsolidated affiliates:
|
||||||||
Technology & Consulting
|
-
|
-
|
||||||
Engineering & Construction
|
17
|
27
|
||||||
Government Services
|
9
|
18
|
||||||
Subtotal
|
26
|
45
|
||||||
Non-strategic Business
|
-
|
-
|
||||||
Total equity in earnings of unconsolidated affiliates
|
26
|
45
|
||||||
General and administrative expenses
|
(36
|
)
|
(61
|
)
|
||||
Impairment of goodwill
|
-
|
(446
|
)
|
|||||
Asset impairment and restructuring charges
|
(36
|
)
|
(214
|
)
|
||||
Gain (loss) on disposition of assets
|
27
|
(1
|
)
|
|||||
Operating income (loss)
|
75
|
(839
|
)
|
|||||
Other non-operating expenses
|
(2
|
)
|
(1
|
)
|
||||
Income (loss) before income taxes and noncontrolling interests
|
73
|
(840
|
)
|
|||||
Provision for income taxes
|
(25
|
)
|
(391
|
)
|
||||
Net income (loss)
|
48
|
(1,231
|
)
|
|||||
Net income attributable to noncontrolling interests
|
(6
|
)
|
(10
|
)
|
||||
Net income (loss) attributable to KBR
|
$
|
42
|
$
|
(1,241
|
)
|
|||
Net income (loss) attributable to KBR per share:
|
||||||||
Basic
|
$
|
0.29
|
$
|
(8.57
|
)
|
|||
Diluted
|
$
|
0.29
|
$
|
(8.57
|
)
|
|||
Basic weighted average common shares outstanding
|
144
|
145
|
||||||
Diluted weighted average common shares outstanding
|
144
|
145
|
||||||
Cash dividends declared per share
|
$
|
0.08
|
$
|
0.08
|
||||
KBR, Inc.: Consolidated Statements of Income
|
||||||||||||
(Millions, except for per share data)
|
||||||||||||
(Unaudited)
|
||||||||||||
Twelve Months Ended
|
||||||||||||
December 31,
|
December 31,
|
December 31,
|
||||||||||
2015
|
2014
|
2013
|
||||||||||
Revenues:
|
||||||||||||
Technology & Consulting
|
$
|
324
|
$
|
353
|
$
|
330
|
||||||
Engineering & Construction
|
3,454
|
4,584
|
4,956
|
|||||||||
Government Services
|
663
|
638
|
931
|
|||||||||
Subtotal
|
4,441
|
5,575
|
6,217
|
|||||||||
Non-strategic Business
|
655
|
791
|
997
|
|||||||||
Total revenues
|
5,096
|
6,366
|
7,214
|
|||||||||
Gross profit (loss):
|
||||||||||||
Technology & Consulting
|
77
|
53
|
69
|
|||||||||
Engineering & Construction
|
224
|
141
|
263
|
|||||||||
Government Services
|
(3
|
)
|
(32
|
)
|
90
|
|||||||
Subtotal
|
298
|
162
|
422
|
|||||||||
Non-strategic Business
|
27
|
(227
|
)
|
(5
|
)
|
|||||||
Total gross profit (loss)
|
325
|
(65
|
)
|
417
|
||||||||
Equity in earnings of unconsolidated affiliates:
|
||||||||||||
Technology & Consulting
|
-
|
-
|
-
|
|||||||||
Engineering & Construction
|
104
|
90
|
76
|
|||||||||
Government Services
|
45
|
73
|
61
|
|||||||||
Subtotal
|
149
|
163
|
137
|
|||||||||
Non-strategic Business
|
-
|
-
|
-
|
|||||||||
Total equity in earnings of unconsolidated affiliates
|
149
|
163
|
137
|
|||||||||
General and administrative expenses
|
(155
|
)
|
(239
|
)
|
(248
|
)
|
||||||
Impairment of goodwill
|
-
|
(446
|
)
|
-
|
||||||||
Asset impairment and restructuring charges
|
(70
|
)
|
(214
|
)
|
-
|
|||||||
Gain on disposition of assets
|
61
|
7
|
2
|
|||||||||
Operating income (loss)
|
310
|
(794
|
)
|
308
|
||||||||
Other non-operating income (expenses)
|
2
|
17
|
(8
|
)
|
||||||||
Income (loss) before income taxes and noncontrolling interests
|
312
|
(777
|
)
|
300
|
||||||||
Provision for income taxes
|
(86
|
)
|
(421
|
)
|
(129
|
)
|
||||||
Net income (loss)
|
226
|
(1,198
|
)
|
171
|
||||||||
Net income attributable to noncontrolling interests
|
(23
|
)
|
(64
|
)
|
(96
|
)
|
||||||
Net income (loss) attributable to KBR
|
$
|
203
|
$
|
(1,262
|
)
|
$
|
75
|
|||||
Net income (loss) attributable to KBR per share:
|
||||||||||||
Basic
|
$
|
1.40
|
$
|
(8.66
|
)
|
$
|
0.50
|
|||||
Diluted
|
$
|
1.40
|
$
|
(8.66
|
)
|
$
|
0.50
|
|||||
Basic weighted average common shares outstanding
|
144
|
146
|
148
|
|||||||||
Diluted weighted average common shares outstanding
|
144
|
146
|
149
|
|||||||||
Cash dividends declared per share
|
$
|
0.32
|
$
|
0.32
|
$
|
0.24
|
||||||
KBR, Inc.: Consolidated Balance Sheet
|
||||||||
(Millions, except share data)
|
||||||||
December 31,
|
December 31,
|
|||||||
2015
|
2014
|
|||||||
(Unaudited)
|
||||||||
Assets
|
||||||||
Current assets:
|
||||||||
Cash and equivalents
|
$
|
883
|
$
|
970
|
||||
Accounts receivable, net of allowance for doubtful accounts of $17 and $19
|
628
|
847
|
||||||
Costs and estimated earnings in excess of billings on uncompleted contracts ("CIE")
|
224
|
490
|
||||||
Other current assets
|
109
|
147
|
||||||
Total current assets
|
1,844
|
2,454
|
||||||
Claims and accounts receivable
|
526
|
570
|
||||||
Property, plant, and equipment, net of accumulated depreciation of $352 and $385 (including net PPE of
|
||||||||
$48 and $57 owned by a variable interest entity)
|
169
|
247
|
||||||
Goodwill
|
324
|
324
|
||||||
Intangible assets, net of accumulated amortization of $91 and $96
|
35
|
41
|
||||||
Equity in and advances to unconsolidated affiliates
|
281
|
151
|
||||||
Deferred income taxes
|
99
|
143
|
||||||
Other assets
|
134
|
148
|
||||||
Total assets
|
$
|
3,412
|
$
|
4,078
|
||||
Liabilities and Shareholders' Equity
|
||||||||
Current liabilities:
|
||||||||
Accounts payable
|
$
|
438
|
$
|
742
|
||||
Payable to former parent
|
19
|
56
|
||||||
Billings in excess of costs and estimated earnings on uncompleted contracts ("BIE")
|
509
|
531
|
||||||
Accrued salaries, wages and benefits
|
173
|
197
|
||||||
Nonrecourse project debt
|
10
|
10
|
||||||
Other current liabilities
|
263
|
442
|
||||||
Total current liabilities
|
1,412
|
1,978
|
||||||
Pension obligations
|
333
|
502
|
||||||
Employee compensation and benefits
|
105
|
112
|
||||||
Income tax payable
|
78
|
69
|
||||||
Deferred income taxes
|
94
|
95
|
||||||
Nonrecourse project debt
|
51
|
63
|
||||||
Deferred income from unconsolidated affiliates
|
100
|
95
|
||||||
Other liabilities
|
187
|
229
|
||||||
Total liabilities
|
2,360
|
3,143
|
||||||
KBR shareholders' equity:
|
||||||||
Preferred stock
|
-
|
-
|
||||||
Common stock
|
-
|
-
|
||||||
Paid-in capital in excess of par
|
2,070
|
2,091
|
||||||
Accumulated other comprehensive loss
|
(831
|
)
|
(876
|
)
|
||||
Retained earnings
|
595
|
439
|
||||||
Treasury stock
|
(769
|
)
|
(712
|
)
|
||||
Total KBR shareholders' equity
|
1,065
|
942
|
||||||
Noncontrolling interests ("NCI")
|
(13
|
)
|
(7
|
)
|
||||
Total shareholders' equity
|
1,052
|
935
|
||||||
Total liabilities and shareholders' equity
|
$
|
3,412
|
$
|
4,078
|
KBR, Inc.: Consolidated Statements of Cash Flows
|
||||||||
(Millions)
|
||||||||
(Unaudited)
|
||||||||
Twelve Months Ended
|
||||||||
December 31,
|
December 31,
|
|||||||
2015
|
2014
|
|||||||
Cash flows from operating activities:
|
||||||||
Net income (loss)
|
$
|
226
|
$
|
(1,198
|
)
|
|||
Adjustments to reconcile net income to net cash provided by operating activities:
|
||||||||
Depreciation and amortization
|
39
|
72
|
||||||
Equity in earnings of unconsolidated affiliates
|
(149
|
)
|
(163
|
)
|
||||
Deferred income tax expense
|
14
|
353
|
||||||
Gain on disposition of assets
|
(61
|
)
|
(7
|
)
|
||||
Gain on negotiated settlement with former parent
|
-
|
(24
|
)
|
|||||
Impairment of Goodwill
|
-
|
446
|
||||||
Asset impairment
|
31
|
171
|
||||||
Other
|
21
|
11
|
||||||
Changes in operating assets and liabilities:
|
||||||||
Accounts receivable, net of allowance for doubtful accounts
|
41
|
170
|
||||||
Costs and estimated earnings in excess of billings on uncompleted contracts
|
224
|
(107
|
)
|
|||||
Accounts payable
|
(274
|
)
|
(10
|
)
|
||||
Billings in excess of costs and estimated earnings on uncompleted contracts
|
(2
|
)
|
144
|
|||||
Accrued salaries, wages and benefits
|
(8
|
)
|
(29
|
)
|
||||
Reserve for loss on uncompleted contracts
|
(94
|
)
|
57
|
|||||
Receipts of advances from unconsolidated affiliates, net
|
10
|
13
|
||||||
Distributions of earnings from unconsolidated affiliates
|
92
|
249
|
||||||
Income taxes payable
|
26
|
14
|
||||||
Pension funding
|
(48
|
)
|
(48
|
)
|
||||
Retainage payable
|
(2
|
)
|
(16
|
)
|
||||
Subcontractor advances
|
(12
|
)
|
(3
|
)
|
||||
Net settlement of derivative contracts
|
(44
|
)
|
(40
|
)
|
||||
Other assets and liabilities
|
17
|
115
|
||||||
Total cash flows provided by operating activities
|
47
|
170
|
||||||
Cash flows from investing activities:
|
||||||||
Purchases of property, plant and equipment
|
(10
|
)
|
(53
|
)
|
||||
Payment for investment in partnership
|
(19
|
)
|
-
|
|||||
Proceeds from sale of assets or investments
|
130
|
9
|
||||||
Total cash flows provided by (used in) investing activities
|
101
|
(44
|
)
|
|||||
Cash flows from financing activities:
|
||||||||
Payments to reacquire common stock
|
(62
|
)
|
(106
|
)
|
||||
Acquisition of noncontrolling interest
|
(40
|
)
|
-
|
|||||
Investments from noncontrolling interests
|
-
|
10
|
||||||
Distributions to noncontrolling interests
|
(28
|
)
|
(61
|
)
|
||||
Payments of dividends to shareholders
|
(47
|
)
|
(47
|
)
|
||||
Net proceeds from issuance of common stock
|
1
|
4
|
||||||
Payments on borrowings
|
(11
|
)
|
(11
|
)
|
||||
Other
|
(5
|
)
|
1
|
|||||
Total cash flows used in financing activities
|
(192
|
)
|
(210
|
)
|
||||
Effect of exchange rate changes on cash
|
(43
|
)
|
(52
|
)
|
||||
Decrease in cash and equivalents
|
(87
|
)
|
(136
|
)
|
||||
Cash and equivalents at beginning of period
|
970
|
1,106
|
||||||
Cash and equivalents at end of period
|
$
|
883
|
$
|
970
|
KBR, Inc.: Consolidated Statements of Cash Flows
|
||||||||
(Millions)
|
||||||||
(Unaudited)
|
||||||||
Three Months Ended
|
||||||||
December 31,
|
December 31,
|
|||||||
2015
|
2014
|
|||||||
Cash flows from operating activities:
|
||||||||
Net income (loss)
|
$
|
48
|
$
|
(1,231
|
)
|
|||
Adjustments to reconcile net income to net cash provided by (used in) operating activities:
|
||||||||
Depreciation and amortization
|
10
|
17
|
||||||
Equity in earnings of unconsolidated affiliates
|
(26
|
)
|
(45
|
)
|
||||
Deferred income tax expense
|
-
|
355
|
||||||
Gain on disposition of assets
|
(27
|
)
|
1
|
|||||
Impairment of Goodwill
|
-
|
446
|
||||||
Asset impairment
|
19
|
171
|
||||||
Other
|
4
|
(22
|
)
|
|||||
Changes in operating assets and liabilities:
|
||||||||
Accounts receivable, net of allowance for doubtful accounts
|
60
|
104
|
||||||
Costs and estimated earnings in excess of billings on uncompleted contracts
|
56
|
2
|
||||||
Accounts payable
|
(35
|
)
|
33
|
|||||
Billings in excess of costs and estimated earnings on uncompleted contracts
|
8
|
91
|
||||||
Accrued salaries, wages and benefits
|
(3
|
)
|
(13
|
)
|
||||
Reserve for loss on uncompleted contracts
|
6
|
44
|
||||||
Receipts of advances from unconsolidated affiliates, net
|
-
|
(1
|
)
|
|||||
Distributions of earnings from unconsolidated affiliates
|
8
|
37
|
||||||
Income taxes payable
|
33
|
(8
|
)
|
|||||
Pension funding
|
(11
|
)
|
(11
|
)
|
||||
Retainage payable
|
(11
|
)
|
(8
|
)
|
||||
Subcontractor advances
|
1
|
(3
|
)
|
|||||
Net settlement of derivative contracts
|
(4
|
)
|
(42
|
)
|
||||
Other assets and liabilities
|
(4
|
)
|
75
|
|||||
Total cash flows provided by (used in) operating activities
|
132
|
(8
|
)
|
|||||
Cash flows from investing activities:
|
||||||||
Purchases of property, plant and equipment
|
(2
|
)
|
(7
|
)
|
||||
Payment for investment in partnership
|
(4
|
)
|
-
|
|||||
Proceeds from sale of assets or investments
|
59
|
-
|
||||||
Total cash flows provided by (used in) investing activities
|
53
|
(7
|
)
|
|||||
Cash flows from financing activities:
|
||||||||
Payments to reacquire common stock
|
(40
|
)
|
(4
|
)
|
||||
Distributions to noncontrolling interests
|
(7
|
)
|
(12
|
)
|
||||
Payments of dividends to shareholders
|
(12
|
)
|
(12
|
)
|
||||
Payments on borrowings
|
(4
|
)
|
(4
|
)
|
||||
Other
|
(1
|
)
|
-
|
|||||
Total cash flows used in financing activities
|
(64
|
)
|
(32
|
)
|
||||
Effect of exchange rate changes on cash
|
(6
|
)
|
(31
|
)
|
||||
Increase (decrease) in cash and equivalents
|
115
|
(78
|
)
|
|||||
Cash and equivalents at beginning of period
|
768
|
1,048
|
||||||
Cash and equivalents at end of period
|
$
|
883
|
$
|
970
|
KBR, Inc.: Backlog Information(a)
|
||||||||||||
(Millions)
|
||||||||||||
(Unaudited)
|
||||||||||||
December 31,
|
September 30,
|
December 31,
|
||||||||||
2015
|
2015
|
2014
|
||||||||||
Technology & Consulting
|
$
|
430
|
$
|
423
|
$
|
400
|
||||||
Engineering & Construction
|
5,148
|
5,740
|
7,788
|
|||||||||
Government Services
|
6,516
|
6,783
|
1,763
|
|||||||||
Subtotal
|
12,094
|
12,946
|
9,951
|
|||||||||
Non-strategic Business
|
239
|
354
|
908
|
|||||||||
Total backlog
|
$
|
12,333
|
$
|
13,300
|
$
|
10,859
|
||||||
(a)
|
Backlog is presented differently depending on whether the contract is consolidated by KBR or is accounted for under the equity method of accounting. Backlog related to consolidated projects is presented as 100% of the expected revenue from the project. Backlog generally includes total expected revenues in backlog when a contract is awarded under a legally binding commitment. In many instances, arrangements included in backlog are complex, nonrepetitive and may fluctuate depending on estimated revenues and contract duration. Where contract duration is indefinite and clients can terminate for convenience at any time without having to compensate us for periods beyond the date of termination, projects included in backlog are limited to the estimated amount of expected revenue within the following twelve months. Certain contracts provide maximum dollar limits, with actual authorization to perform work under the contract agreed upon on a periodic basis with the customer. In these arrangements, only the amounts authorized are included in backlog. For projects where we act solely in a project management capacity, we only include the value of our services of each project in backlog. Previously, for long term contracts associated with the U.K. government's privately financed initiatives or projects ("PFIs" also "service concession arrangements"), the amount included in backlog was limited to five years. Effective in the second quarter of 2015, we modified our backlog policy and now record the estimated value of all work forecast to be performed under the PFI contracts. The reason for the change is that under these PFI contracts, the client is obligated to pay us certain amounts spanning periods beyond five years even if the client terminates the contracts for convenience. This change only relates to backlog of unfilled orders and does not alter our longstanding polices for revenue recognition; therefore, it has no impact on our financial statements. Our estimate of revenues related to payment obligations for periods beyond the five years is $5.4 billion and was included in the total ending backlog at June 30, 2015.
Included in the backlog table above is our proportionate share of unconsolidated joint ventures' estimated revenues. However, because these projects are accounted for under the equity method, only our share of future earnings from these projects will be recorded in our results of operations. Our backlog for projects related to unconsolidated joint ventures totaled $8.5 billion, including the PFI change discussed above, at December 31, 2015 and $4.3 billion at December 31, 2014. Our backlog included in the table above for projects related to consolidated joint ventures with noncontrolling interest totaled $285 million and $928 million at December 31, 2015 and December 31, 2014, respectively.
As of December 31, 2015, 22% of our backlog was attributable to fixed-price contracts, 49% was attributable to services concession arrangements, and 29% of our backlog was attributable to cost-reimbursable contracts. For contracts that contain both fixed-price and cost-reimbursable components, we classify the components as either fixed-price or cost-reimbursable according to the composition of the contract; however, except for smaller contracts, we characterize the entire contract based on the predominant component.
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KBR, Inc.: Supplemental Information
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Adjusted diluted earnings per common share reconciliation
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Three months ended
December 31, 2015
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||||
Adjusted diluted earnings per common share reconciliation:
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||||
Diluted EPS as reported (GAAP)
|
$
|
0.29
|
||
Non-strategic Business gross profit
|
(0.08
|
)
|
||
Asset Impairment and Restructuring Charges
|
0.22
|
|||
Gain on Disposition of Assets
|
(0.16
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)
|
||
U.K. Tax Rate Change (Impact to Deferred Tax Asset)
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0.06
|
|||
U.S. Government Legacy Legal Fees
|
0.03
|
|||
Adjusted diluted EPS (Non - GAAP)
|
$
|
0.36
|
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