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ý
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Quarterly Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
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¨
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Transition Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 for the transition period from to
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Large accelerated filer
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ý
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Accelerated filer
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¨
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Non-accelerated filer
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¨
(Do not check if a smaller reporting company)
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Smaller reporting company
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¨
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Page
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PART I
. FINANCIAL INFORMATION
|
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Item 1.
Financial Information
|
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Condensed
Consolidated Statements of Income
(Loss)
|
|
Condensed
Consolidated Statements of Comprehensive Income
(Loss)
|
|
Condensed
Consolidated Balance Sheets
|
|
Condensed
Consolidated Statements of Cash Flows
|
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Item
2. Management’s Discussion and Analysis of Financial Condition and Results of Operations
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Item 3.
Quantitative and Qualitative Disclosures About Market Risk
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Item 4.
Controls and Procedures
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PART II
. OTHER INFORMATION
|
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Item 1. Legal Proceedings
|
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Item 1A. Risk Factors
|
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Item 2. Unregistered Sales of Equity Securities and Use of Proceeds
|
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Item 3. Defaults Upon Senior Securities
|
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Item 4. Mine Safety Disclosures
|
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Item 5. Other Information
|
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Item 6. Exhibits
|
|
|
Three Months Ended March 31,
|
||||||
|
2014
|
|
2013
|
||||
Revenues
|
$
|
1,633
|
|
|
$
|
1,829
|
|
Cost of revenues
|
(1,594
|
)
|
|
(1,673
|
)
|
||
Gross profit
|
39
|
|
|
156
|
|
||
Equity in earnings of unconsolidated affiliates
|
31
|
|
|
30
|
|
||
General and administrative expenses
|
(60
|
)
|
|
(52
|
)
|
||
(Loss) on disposition of assets
|
—
|
|
|
(1
|
)
|
||
Operating income
|
10
|
|
|
133
|
|
||
Interest expense, net of interest income
|
(2
|
)
|
|
(1
|
)
|
||
Foreign currency losses
|
(7
|
)
|
|
(4
|
)
|
||
Other non-operating expenses
|
—
|
|
|
(1
|
)
|
||
Income before income taxes and noncontrolling interests
|
1
|
|
|
127
|
|
||
Provision for income taxes
|
(21
|
)
|
|
(30
|
)
|
||
Net income (loss)
|
(20
|
)
|
|
97
|
|
||
Net income attributable to noncontrolling interests
|
(23
|
)
|
|
(9
|
)
|
||
Net income (loss) attributable to KBR
|
$
|
(43
|
)
|
|
$
|
88
|
|
Net income (loss) attributable to KBR per share:
|
|
|
|
||||
Basic
|
$
|
(0.29
|
)
|
|
$
|
0.59
|
|
Diluted
|
$
|
(0.29
|
)
|
|
$
|
0.59
|
|
Basic weighted average common shares outstanding
|
146
|
|
|
147
|
|
||
Diluted weighted average common shares outstanding
|
146
|
|
|
148
|
|
||
Cash dividends declared per share
|
$
|
0.08
|
|
|
$
|
—
|
|
|
Three Months Ended March 31,
|
||||||
|
2014
|
|
2013
|
||||
Net income (loss)
|
$
|
(20
|
)
|
|
$
|
97
|
|
Other comprehensive income, net of tax:
|
|
|
|
||||
Cumulative translation adjustments (“CTA”):
|
|
|
|
||||
Cumulative translation adjustments, net of tax
|
9
|
|
|
(8
|
)
|
||
Reclassification adjustment for CTA included in net income
|
—
|
|
|
1
|
|
||
Net cumulative translation adjustment, net of tax
|
9
|
|
|
(7
|
)
|
||
Pension liability adjustments, net of tax:
|
|
|
|
||||
Pension liability adjustments, net of tax
|
1
|
|
|
—
|
|
||
Reclassification adjustment for pension liability losses included in net income
|
8
|
|
|
7
|
|
||
Net pension liability adjustments, net of tax
|
9
|
|
|
7
|
|
||
Unrealized gains (losses) on derivatives:
|
|
|
|
||||
Unrealized holding gains (losses) on derivatives, net of tax
|
(1
|
)
|
|
(1
|
)
|
||
Net unrealized gain (loss) on derivatives, net of tax
|
(1
|
)
|
|
(1
|
)
|
||
Other comprehensive income (loss), net of tax
|
17
|
|
|
(1
|
)
|
||
Comprehensive income, net of tax
|
(3
|
)
|
|
96
|
|
||
Less: Comprehensive income attributable to noncontrolling interests
|
(23
|
)
|
|
(9
|
)
|
||
Comprehensive income (loss) attributable to KBR
|
$
|
(26
|
)
|
|
$
|
87
|
|
|
March 31,
|
|
December 31,
|
||||
|
2014
|
|
2013
|
||||
|
(Unaudited)
|
|
|
||||
Assets
|
|
|
|
||||
Current assets:
|
|
|
|
||||
Cash and equivalents
|
$
|
996
|
|
|
$
|
1,106
|
|
Accounts receivable, net of allowance for doubtful accounts of $23 and $18
|
933
|
|
|
1,056
|
|
||
Costs and estimated earnings in excess of billings on uncompleted contracts ("CIE")
|
488
|
|
|
399
|
|
||
Deferred income taxes
|
150
|
|
|
168
|
|
||
Other current assets
|
214
|
|
|
196
|
|
||
Total current assets
|
2,781
|
|
|
2,925
|
|
||
Property, plant, and equipment, net of accumulated depreciation of $412 and $397 (including net PPE of $65 and $67 owned by a variable interest entity)
|
415
|
|
|
415
|
|
||
Goodwill
|
773
|
|
|
772
|
|
||
Intangible assets, net of amortization
|
82
|
|
|
85
|
|
||
Equity in and advances to unconsolidated affiliates
|
163
|
|
|
156
|
|
||
Deferred income taxes
|
363
|
|
|
344
|
|
||
Claims and accounts receivable
|
629
|
|
|
628
|
|
||
Other assets
|
117
|
|
|
113
|
|
||
Total assets
|
$
|
5,323
|
|
|
$
|
5,438
|
|
Liabilities and Shareholders’ Equity
|
|
|
|
||||
Current liabilities:
|
|
|
|
||||
Accounts payable
|
$
|
732
|
|
|
$
|
747
|
|
Payable to former parent
|
106
|
|
|
105
|
|
||
Billings in excess of costs and estimated earnings on uncompleted contracts ("BIE")
|
405
|
|
|
401
|
|
||
Accrued salaries, wages and benefits
|
224
|
|
|
235
|
|
||
Other current liabilities
|
421
|
|
|
419
|
|
||
Total current liabilities
|
1,888
|
|
|
1,907
|
|
||
Pension obligations
|
465
|
|
|
477
|
|
||
Employee compensation and benefits
|
115
|
|
|
114
|
|
||
Income tax payable
|
67
|
|
|
70
|
|
||
Deferred income taxes
|
86
|
|
|
86
|
|
||
Other liabilities
|
341
|
|
|
345
|
|
||
Total liabilities
|
2,962
|
|
|
2,999
|
|
||
KBR shareholders’ equity:
|
|
|
|
||||
Preferred stock, $0.001 par value, 50,000,000 shares authorized, 0 shares issued and outstanding
|
—
|
|
|
—
|
|
||
Common stock, $0.001 par value, 300,000,000 shares authorized, 174,308,474 and 173,924,509 shares issued, and 146,485,608 and 148,195,208 shares outstanding
|
—
|
|
|
—
|
|
||
Paid-in capital in excess of par ("PIC")
|
2,075
|
|
|
2,065
|
|
||
Accumulated other comprehensive loss ("AOCL")
|
(723
|
)
|
|
(740
|
)
|
||
Retained earnings
|
1,693
|
|
|
1,748
|
|
||
Treasury stock, 27,822,866 shares and 25,729,301 shares, at cost
|
(664
|
)
|
|
(610
|
)
|
||
Total KBR shareholders’ equity
|
2,381
|
|
|
2,463
|
|
||
Noncontrolling interests ("NCI")
|
(20
|
)
|
|
(24
|
)
|
||
Total shareholders’ equity
|
2,361
|
|
|
2,439
|
|
||
Total liabilities and shareholders’ equity
|
$
|
5,323
|
|
|
$
|
5,438
|
|
KBR, Inc.
Condensed Consolidated Statements of Cash Flows
(In millions)
(Unaudited)
|
|||||||
|
Three Months Ended March 31,
|
||||||
|
2014
|
|
2013
|
||||
Cash flows from operating activities:
|
|
|
|
||||
Net income (loss)
|
$
|
(20
|
)
|
|
$
|
97
|
|
Adjustments to reconcile net income to net cash provided by operating activities:
|
|
|
|
||||
Depreciation and amortization
|
18
|
|
|
15
|
|
||
Equity in earnings of unconsolidated affiliates
|
(31
|
)
|
|
(30
|
)
|
||
Deferred income tax expense
|
6
|
|
|
81
|
|
||
Other
|
12
|
|
|
8
|
|
||
Changes in operating assets and liabilities:
|
|
|
|
||||
Accounts receivable, net of allowance for doubtful accounts
|
121
|
|
|
(95
|
)
|
||
Costs and estimated earnings in excess of billings on uncompleted contracts
|
(70
|
)
|
|
(88
|
)
|
||
Accounts payable
|
(20
|
)
|
|
17
|
|
||
Billings in excess of costs and estimated earnings on uncompleted contracts
|
(15
|
)
|
|
(5
|
)
|
||
Accrued salary, wages and benefits
|
(9
|
)
|
|
(28
|
)
|
||
Reserve for loss on uncompleted contracts
|
18
|
|
|
(10
|
)
|
||
Receipts of advances from unconsolidated affiliates, net
|
7
|
|
|
—
|
|
||
Distributions of earnings from unconsolidated affiliates
|
19
|
|
|
41
|
|
||
Income taxes payable
|
(13
|
)
|
|
(73
|
)
|
||
Pension funding
|
(12
|
)
|
|
(7
|
)
|
||
Other assets and liabilities
|
(28
|
)
|
|
(16
|
)
|
||
Total cash flows used in operating activities
|
(17
|
)
|
|
(93
|
)
|
||
Cash flows from investing activities:
|
|
|
|
||||
Purchases of property, plant and equipment
|
(15
|
)
|
|
(20
|
)
|
||
Total cash flows used in investing activities
|
$
|
(15
|
)
|
|
$
|
(20
|
)
|
KBR, Inc.
Condensed Consolidated Statements of Cash Flows
(In millions)
(Unaudited)
|
|||||||
|
Three Months Ended March 31,
|
||||||
|
2014
|
|
2013
|
||||
Cash flows from financing activities:
|
|
|
|
||||
Payments to reacquire common stock
|
$
|
(56
|
)
|
|
$
|
(6
|
)
|
Distributions to noncontrolling interests
|
(19
|
)
|
|
(11
|
)
|
||
Payments of dividends to shareholders
|
(12
|
)
|
|
—
|
|
||
Net proceeds from issuance of common stock
|
4
|
|
|
2
|
|
||
Excess tax benefits from stock-based compensation
|
1
|
|
|
—
|
|
||
Payments on short-term and long-term borrowings
|
(2
|
)
|
|
—
|
|
||
Other
|
—
|
|
|
—
|
|
||
Total cash flows used in financing activities
|
(84
|
)
|
|
(15
|
)
|
||
Effect of exchange rate changes on cash
|
6
|
|
|
(21
|
)
|
||
Increase (decrease) in cash and equivalents
|
(110
|
)
|
|
(149
|
)
|
||
Cash and equivalents at beginning of period
|
1,106
|
|
|
1,053
|
|
||
Cash and equivalents at end of period
|
$
|
996
|
|
|
$
|
904
|
|
Supplemental disclosure of cash flows information:
|
|
|
|
||||
Cash paid for interest
|
$
|
3
|
|
|
$
|
3
|
|
Cash paid for income taxes (net of refunds)
|
$
|
29
|
|
|
$
|
17
|
|
Noncash operating activities
|
|
|
|
||||
Other assets change for Barracuda arbitration and FCPA matters (Note 12)
|
$
|
—
|
|
|
$
|
(219
|
)
|
Other liabilities change for Barracuda arbitration and FCPA matters (Note 12)
|
$
|
—
|
|
|
$
|
219
|
|
Noncash financing activities
|
|
|
|
||||
Dividends declared
|
$
|
12
|
|
|
$
|
—
|
|
•
|
project revenues, costs and profits on engineering, construction, pipe fabrication and module assembly, and government services contracts, including recognition of estimated losses on uncompleted contracts,
|
•
|
uncollectible receivables, claims to and from clients, recoveries of costs from subcontractors, vendors and others,
|
|
Three Months Ended March 31,
|
||||||
Millions of dollars
|
2014
|
|
2013
|
||||
Revenue:
|
|
|
|
||||
Gas Monetization
|
$
|
400
|
|
|
$
|
595
|
|
Hydrocarbons
|
452
|
|
|
342
|
|
||
Infrastructure, Government and Power
|
337
|
|
|
399
|
|
||
Services
|
433
|
|
|
478
|
|
||
Other
|
11
|
|
|
15
|
|
||
Total
|
$
|
1,633
|
|
|
$
|
1,829
|
|
Gross profit (loss):
|
|
|
|
||||
Gas Monetization
|
$
|
95
|
|
|
$
|
89
|
|
Hydrocarbons
|
22
|
|
|
49
|
|
||
Infrastructure, Government and Power
|
(20
|
)
|
|
19
|
|
||
Services
|
(60
|
)
|
|
11
|
|
||
Other
|
5
|
|
|
3
|
|
||
Labor cost absorption not allocated to the business segments
|
(3
|
)
|
|
(15
|
)
|
||
Total
|
$
|
39
|
|
|
$
|
156
|
|
Equity in earnings of unconsolidated affiliates:
|
|
|
|
||||
Gas Monetization
|
$
|
16
|
|
|
$
|
10
|
|
Hydrocarbons
|
—
|
|
|
—
|
|
||
Infrastructure, Government and Power
|
9
|
|
|
8
|
|
||
Services
|
—
|
|
|
7
|
|
||
Other
|
6
|
|
|
5
|
|
||
Total
|
$
|
31
|
|
|
$
|
30
|
|
Segment operating income (loss):
|
|
|
|
||||
Gas Monetization
|
$
|
111
|
|
|
$
|
99
|
|
Hydrocarbons
|
22
|
|
|
49
|
|
||
Infrastructure, Government and Power
|
(11
|
)
|
|
27
|
|
||
Services
|
(60
|
)
|
|
18
|
|
||
Other
|
11
|
|
|
7
|
|
||
Labor cost absorption not allocated to the business segments
|
(3
|
)
|
|
(15
|
)
|
||
Corporate general and administrative expense not allocated to the business segments
|
(60
|
)
|
|
(52
|
)
|
||
Total operating income
|
$
|
10
|
|
|
$
|
133
|
|
|
March 31, 2014
|
||||||||||
Millions of dollars
|
International (a)
|
|
Domestic (b)
|
|
Total
|
||||||
Operating cash
|
$
|
155
|
|
|
$
|
214
|
|
|
$
|
369
|
|
Time deposits
|
486
|
|
|
35
|
|
|
521
|
|
|||
Cash held in joint ventures
|
95
|
|
|
11
|
|
|
106
|
|
|||
Total
|
$
|
736
|
|
|
$
|
260
|
|
|
$
|
996
|
|
|
December 31, 2013
|
||||||||||
Millions of dollars
|
International (a)
|
|
Domestic (b)
|
|
Total
|
||||||
Operating cash
|
$
|
197
|
|
|
$
|
215
|
|
|
$
|
412
|
|
Time deposits
|
478
|
|
|
140
|
|
|
618
|
|
|||
Cash held in joint ventures
|
67
|
|
|
9
|
|
|
76
|
|
|||
Total
|
$
|
742
|
|
|
$
|
364
|
|
|
$
|
1,106
|
|
|
(a)
|
Includes deposits held in non-U.S. operating accounts considered to be permanently reinvested outside the U.S. and for which no incremental U.S. tax has been provisioned or paid
|
(b)
|
Includes U.S. dollar and foreign currency deposits held in operating accounts that constitute onshore cash for tax purposes but may reside either in the U.S. or in a foreign country
|
|
March 31, 2014
|
||||||||||
Millions of dollars
|
Trade
|
|
Retainage
|
|
Total
|
||||||
Gas Monetization
|
$
|
156
|
|
|
$
|
—
|
|
|
$
|
156
|
|
Hydrocarbons
|
290
|
|
|
17
|
|
|
307
|
|
|||
Infrastructure, Government and Power
|
133
|
|
|
15
|
|
|
148
|
|
|||
Services
|
276
|
|
|
42
|
|
|
318
|
|
|||
Other
|
4
|
|
|
—
|
|
|
4
|
|
|||
Total
|
$
|
859
|
|
|
$
|
74
|
|
|
$
|
933
|
|
|
December 31, 2013
|
||||||||||
Millions of dollars
|
Trade
|
|
Retainage
|
|
Total
|
||||||
Gas Monetization
|
$
|
255
|
|
|
$
|
—
|
|
|
$
|
255
|
|
Hydrocarbons
|
284
|
|
|
31
|
|
|
315
|
|
|||
Infrastructure, Government and Power
|
137
|
|
|
15
|
|
|
152
|
|
|||
Services
|
278
|
|
|
54
|
|
|
332
|
|
|||
Other
|
2
|
|
|
—
|
|
|
2
|
|
|||
Total
|
$
|
956
|
|
|
$
|
100
|
|
|
$
|
1,056
|
|
|
March 31,
|
|
December 31,
|
||||
Millions of dollars
|
2014
|
|
2013
|
||||
Gas Monetization
|
$
|
34
|
|
|
$
|
34
|
|
Hydrocarbons
|
207
|
|
|
146
|
|
||
Infrastructure, Government and Power
|
123
|
|
|
131
|
|
||
Services
|
118
|
|
|
83
|
|
||
Other
|
6
|
|
|
5
|
|
||
Total
|
$
|
488
|
|
|
$
|
399
|
|
|
March 31,
|
|
December 31,
|
||||
Millions of dollars
|
2014
|
|
2013
|
||||
Gas Monetization
|
$
|
38
|
|
|
$
|
30
|
|
Hydrocarbons
|
166
|
|
|
139
|
|
||
Infrastructure, Government and Power
|
178
|
|
|
199
|
|
||
Services
|
23
|
|
|
33
|
|
||
Other
|
—
|
|
|
—
|
|
||
Total
|
$
|
405
|
|
|
$
|
401
|
|
Millions of dollars
|
2014
|
|
2013
|
||||
Amounts included in project estimates-at-completion at January 1,
|
$
|
115
|
|
|
$
|
167
|
|
Changes in estimates-at-completion
|
(20
|
)
|
|
40
|
|
||
Approved
|
(30
|
)
|
|
(21
|
)
|
||
Amounts included in project estimates-at-completion at March 31,
|
$
|
65
|
|
|
$
|
186
|
|
|
|
|
|
||||
Amounts recorded in revenues on a percentage-of-completion basis at March 31,
|
$
|
50
|
|
|
$
|
149
|
|
|
March 31,
|
|
December 31,
|
||||
Millions of dollars
|
2014
|
|
2013
|
||||
Hydrocarbons
|
$
|
401
|
|
|
$
|
401
|
|
Infrastructure, Government and Power
|
227
|
|
|
226
|
|
||
Other
|
1
|
|
|
1
|
|
||
Total
|
$
|
629
|
|
|
$
|
628
|
|
Millions of dollars
|
2014
|
|
2013
|
||||
Balance at January 1,
|
$
|
156
|
|
|
$
|
217
|
|
Equity in earnings of unconsolidated affiliates
|
31
|
|
|
30
|
|
||
Dividends received
|
(19
|
)
|
|
(41
|
)
|
||
Advances
|
(7
|
)
|
|
—
|
|
||
Cumulative translation adjustment
|
2
|
|
|
(4
|
)
|
||
Balance at March 31,
|
$
|
163
|
|
|
$
|
202
|
|
|
March 31,
|
|
December 31,
|
||||
Millions of dollars
|
2014
|
|
2013
|
||||
Accounts Receivable, net of allowance for doubtful accounts
|
$
|
3
|
|
|
$
|
6
|
|
Costs and estimated earnings in excess of billings on uncompleted contracts
|
$
|
3
|
|
|
$
|
2
|
|
Billings in excess of costs and estimated earnings on uncompleted contracts
|
$
|
25
|
|
|
$
|
24
|
|
|
March 31,
|
|
December 31,
|
||||
Millions of dollars
|
2014
|
|
2013
|
||||
Current assets
|
$
|
4,016
|
|
|
$
|
4,114
|
|
Noncurrent assets
|
4,347
|
|
|
4,222
|
|
||
Total assets
|
$
|
8,363
|
|
|
$
|
8,336
|
|
Current liabilities
|
$
|
3,616
|
|
|
$
|
3,679
|
|
Noncurrent liabilities
|
4,437
|
|
|
4,400
|
|
||
Total KBR-partner equity
|
194
|
|
|
145
|
|
||
Noncontrolling interests
|
116
|
|
|
112
|
|
||
Total partners' equity
|
310
|
|
|
257
|
|
||
Total liabilities and partners' equity
|
$
|
8,363
|
|
|
$
|
8,336
|
|
|
Three Months Ended March 31,
|
||||||
Millions of dollars
|
2014
|
|
2013
|
||||
Revenue
|
$
|
1,236
|
|
|
$
|
903
|
|
Operating income
|
$
|
154
|
|
|
$
|
128
|
|
Net income
|
$
|
80
|
|
|
$
|
67
|
|
|
March 31, 2014
|
||||||||||
Millions of dollars
|
Total assets
|
|
Total liabilities
|
|
Maximum
exposure to
loss
|
||||||
Aspire Defence project
|
$
|
24
|
|
|
$
|
10
|
|
|
$
|
24
|
|
Ichthys LNG project
|
$
|
17
|
|
|
$
|
25
|
|
|
$
|
10
|
|
U.K. Road projects
|
$
|
35
|
|
|
$
|
10
|
|
|
$
|
34
|
|
EBIC Ammonia project
|
$
|
43
|
|
|
$
|
2
|
|
|
$
|
26
|
|
Fermoy Road project
|
$
|
3
|
|
|
$
|
4
|
|
|
$
|
2
|
|
Millions of dollars
|
December 31, 2013
|
||||||
Total assets
|
|
Total liabilities
|
|||||
Aspire Defence project
|
$
|
20
|
|
|
$
|
2
|
|
Ichthys LNG project
|
$
|
1
|
|
|
$
|
18
|
|
U.K. Road projects
|
$
|
34
|
|
|
$
|
8
|
|
EBIC Ammonia project
|
$
|
47
|
|
|
$
|
2
|
|
Fermoy Road project
|
$
|
1
|
|
|
$
|
2
|
|
Consolidated VIEs
Millions of dollars
|
March 31, 2014
|
||||||
VIE Total assets
|
|
VIE Total liabilities
|
|||||
Gorgon LNG project
|
$
|
430
|
|
|
$
|
454
|
|
Escravos Gas-to-Liquids project
|
$
|
45
|
|
|
$
|
72
|
|
Fasttrax Limited project
|
$
|
97
|
|
|
$
|
98
|
|
Consolidated VIEs
Millions of dollars
|
December 31, 2013
|
||||||
VIE Total assets
|
|
VIE Total liabilities
|
|||||
Gorgon LNG project
|
$
|
446
|
|
|
$
|
476
|
|
Escravos Gas-to-Liquids project
|
$
|
43
|
|
|
$
|
72
|
|
Fasttrax Limited project
|
$
|
96
|
|
|
$
|
98
|
|
|
Three Months Ended March 31,
|
||||||||||||||
|
2014
|
|
2013
|
||||||||||||
Millions of dollars
|
United States
|
|
Int’l
|
|
United States
|
|
Int’l
|
||||||||
Components of net periodic benefit cost
|
|
|
|
|
|
|
|
||||||||
Service cost
|
$
|
—
|
|
|
$
|
1
|
|
|
$
|
—
|
|
|
$
|
1
|
|
Interest cost
|
1
|
|
|
22
|
|
|
1
|
|
|
22
|
|
||||
Expected return on plan assets
|
(1
|
)
|
|
(26
|
)
|
|
(1
|
)
|
|
(22
|
)
|
||||
Recognized actuarial loss
|
1
|
|
|
10
|
|
|
—
|
|
|
7
|
|
||||
Net periodic benefit cost
|
$
|
1
|
|
|
$
|
7
|
|
|
$
|
—
|
|
|
$
|
8
|
|
|
|
||||
|
2014
|
|
2013
|
||
U.S. statutory federal rate
|
35.0
|
%
|
|
35.0
|
%
|
Rate differentials on foreign earnings
|
(5.8
|
)%
|
|
(6.4
|
)%
|
Taxes on unincorporated joint ventures
|
(4.6
|
)%
|
|
(2.1
|
)%
|
Taxes on unconsolidated affiliates
|
(9.7
|
)%
|
|
(3.3
|
)%
|
U.S. taxes provided on foreign earnings
|
5.7
|
%
|
|
1.2
|
%
|
State taxes
|
0.2
|
%
|
|
0.4
|
%
|
Other
|
1.4
|
%
|
|
2.7
|
%
|
Estimated annual effective tax rate
|
22.2
|
%
|
|
27.5
|
%
|
|
March 31,
|
|
December 31,
|
||||
Millions of dollars
|
2014
|
|
2013
|
||||
Form 1s (Total claimed by the government)
|
$
|
274
|
|
|
$
|
274
|
|
Amounts withheld by government (Included in the Form 1s amount above) (a)
|
137
|
|
|
137
|
|
||
Amounts withheld from subcontractors by us
|
50
|
|
|
50
|
|
||
Claims loss accruals (b)
|
74
|
|
|
74
|
|
|
(a)
|
Recorded in "claims and accounts receivable" on our condensed consolidated balance sheets.
|
(b)
|
Recorded as a reduction to "claims and accounts receivable" and in "other liabilities" on our condensed consolidated balance sheets. At this time, we believe the likelihood we would incur a loss related to this matter in excess of the loss accruals we have recorded is remote.
|
Millions of dollars
|
Total
|
|
PIC
|
|
Retained
Earnings
|
|
Treasury
Stock
|
|
AOCL
|
|
NCI
|
||||||||||||
Balance at December 31, 2013
|
$
|
2,439
|
|
|
$
|
2,065
|
|
|
$
|
1,748
|
|
|
$
|
(610
|
)
|
|
$
|
(740
|
)
|
|
$
|
(24
|
)
|
Share-based compensation
|
5
|
|
|
5
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
||||||
Common stock issued upon exercise of stock options
|
4
|
|
|
4
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
||||||
Tax benefit increase related to share-based plans
|
1
|
|
|
1
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
||||||
Dividends declared to shareholders
|
(12
|
)
|
|
—
|
|
|
(12
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
||||||
Repurchases of common stock
|
(56
|
)
|
|
—
|
|
|
—
|
|
|
(56
|
)
|
|
—
|
|
|
—
|
|
||||||
Issuance of ESPP shares
|
2
|
|
|
—
|
|
|
—
|
|
|
2
|
|
|
—
|
|
|
—
|
|
||||||
Distributions to noncontrolling interests
|
(19
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(19
|
)
|
||||||
Net income (loss)
|
(20
|
)
|
|
—
|
|
|
(43
|
)
|
|
—
|
|
|
—
|
|
|
23
|
|
||||||
Other comprehensive income, net of tax
|
17
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
17
|
|
|
—
|
|
||||||
Balance at March 31, 2014
|
$
|
2,361
|
|
|
$
|
2,075
|
|
|
$
|
1,693
|
|
|
$
|
(664
|
)
|
|
$
|
(723
|
)
|
|
$
|
(20
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Millions of dollars
|
Total
|
|
PIC
|
|
Retained
Earnings
|
|
Treasury
Stock
|
|
AOCL
|
|
NCI
|
||||||||||||
Balance at December 31, 2012
|
$
|
2,511
|
|
|
$
|
2,049
|
|
|
$
|
1,709
|
|
|
$
|
(606
|
)
|
|
$
|
(610
|
)
|
|
$
|
(31
|
)
|
Share-based compensation
|
4
|
|
|
4
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
||||||
Common stock issued upon exercise of stock options
|
3
|
|
|
3
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
||||||
Repurchases of common stock
|
(6
|
)
|
|
—
|
|
|
—
|
|
|
(6
|
)
|
|
—
|
|
|
—
|
|
||||||
Issuance of ESPP shares
|
2
|
|
|
—
|
|
|
—
|
|
|
2
|
|
|
—
|
|
|
—
|
|
||||||
Distributions to noncontrolling interests
|
(11
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(11
|
)
|
||||||
Net income
|
97
|
|
|
—
|
|
|
88
|
|
|
—
|
|
|
—
|
|
|
9
|
|
||||||
Other comprehensive (loss), net of tax
|
(1
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(1
|
)
|
|
—
|
|
||||||
Balance at March 31, 2013
|
$
|
2,599
|
|
|
$
|
2,056
|
|
|
$
|
1,797
|
|
|
$
|
(610
|
)
|
|
$
|
(611
|
)
|
|
$
|
(33
|
)
|
|
March 31,
|
||||||
Millions of dollars
|
2014
|
|
2013
|
||||
Accumulated CTA, net of tax of $3 and $27
|
$
|
(122
|
)
|
|
$
|
(95
|
)
|
Accumulated pension liability adjustments, net of tax of $(218) and $(201)
|
(599
|
)
|
|
(514
|
)
|
||
Accumulated unrealized losses on derivatives, net of tax of $0 and $0
|
(2
|
)
|
|
(2
|
)
|
||
Total accumulated other comprehensive loss
|
$
|
(723
|
)
|
|
$
|
(611
|
)
|
Millions of dollars
|
Accumulated CTA
|
|
Accumulated pension liability adjustments
|
|
Accumulated unrealized losses on derivatives
|
|
Total
|
||||||||
Balance at December 31, 2013
|
$
|
(131
|
)
|
|
$
|
(608
|
)
|
|
$
|
(1
|
)
|
|
$
|
(740
|
)
|
Other comprehensive income adjustments before reclassifications
|
9
|
|
|
1
|
|
|
(1
|
)
|
|
9
|
|
||||
Amounts reclassified from accumulated other comprehensive income
|
—
|
|
|
8
|
|
|
—
|
|
|
8
|
|
||||
Balance at March 31, 2014
|
$
|
(122
|
)
|
|
$
|
(599
|
)
|
|
$
|
(2
|
)
|
|
$
|
(723
|
)
|
Millions of dollars
|
Accumulated CTA
|
|
Accumulated pension liability adjustments
|
|
Accumulated unrealized losses on derivatives
|
|
Total
|
||||||||
Balance at December 31, 2012
|
$
|
(88
|
)
|
|
$
|
(521
|
)
|
|
$
|
(1
|
)
|
|
$
|
(610
|
)
|
Other comprehensive income adjustments before reclassifications
|
(8
|
)
|
|
—
|
|
|
(1
|
)
|
|
(9
|
)
|
||||
Amounts reclassified from accumulated other comprehensive income
|
1
|
|
|
7
|
|
|
—
|
|
|
8
|
|
||||
Balance at March 31, 2013
|
$
|
(95
|
)
|
|
$
|
(514
|
)
|
|
$
|
(2
|
)
|
|
$
|
(611
|
)
|
|
Three Months Ended March 31,
|
Affected line item in the Condensed Consolidated Statements of Income
|
||||||
Millions of dollars
|
2014
|
|
2013
|
|||||
Accumulated CTA
|
|
|
|
|
||||
Realized CTA
|
$
|
—
|
|
|
$
|
(1
|
)
|
Loss (gain) on disposition of assets, net
|
Tax expense
|
—
|
|
|
—
|
|
Provision for income taxes
|
||
Net CTA realized
|
$
|
—
|
|
|
$
|
(1
|
)
|
Net of tax
|
|
|
|
|
|
||||
Accumulated pension liability adjustments
|
|
|
|
|
||||
Amortization of actuarial loss (a)
|
$
|
(11
|
)
|
|
$
|
(9
|
)
|
See (a) below
|
Tax benefit
|
3
|
|
|
2
|
|
Provision for income taxes
|
||
Net pension liability adjustment realized
|
$
|
(8
|
)
|
|
$
|
(7
|
)
|
Net of tax
|
|
Millions of dollars
|
2014
|
||
Authorization amount
|
$
|
350
|
|
Repurchases under the Authorization of 1,570,346 shares at the average price of $27.70
|
43
|
|
|
Remaining authorization amount as of March 31,
|
$
|
307
|
|
|
Three Months Ended March 31,
|
||||
Millions of shares
|
2014
|
|
2013
|
||
Basic weighted average common shares outstanding
|
146
|
|
|
147
|
|
Stock options and restricted shares
|
—
|
|
|
1
|
|
Diluted weighted average common shares outstanding
|
146
|
|
|
148
|
|
Revenues
|
Three Months Ended March 31,
|
|||||||||||||
|
|
|
|
|
2014 vs. 2013
|
|||||||||
Millions of dollars, except for percentages
|
2014
|
|
2013
|
|
$
|
|
%
|
|||||||
Revenues
|
$
|
1,633
|
|
|
$
|
1,829
|
|
|
$
|
(196
|
)
|
|
(11
|
)%
|
Gross Profit
|
Three Months Ended March 31,
|
|||||||||||||
|
|
|
|
|
2014 vs. 2013
|
|||||||||
Millions of dollars, except for percentages
|
2014
|
|
2013
|
|
$
|
|
%
|
|||||||
Gross Profit
|
$
|
39
|
|
|
$
|
156
|
|
|
$
|
(117
|
)
|
|
(75
|
)%
|
General and Administrative Expenses
|
Three Months Ended March 31,
|
|||||||||||||
|
|
|
|
|
2014 vs. 2013
|
|||||||||
Millions of dollars, except for percentages
|
2014
|
|
2013
|
|
$
|
|
%
|
|||||||
General and administrative expenses
|
$
|
(60
|
)
|
|
$
|
(52
|
)
|
|
$
|
(8
|
)
|
|
(15
|
)%
|
Interest Expense, net of Interest Income
|
Three Months Ended March 31,
|
|||||||||||||
|
|
|
|
|
2014 vs. 2013
|
|||||||||
Millions of dollars, except for percentages
|
2014
|
|
2013
|
|
$
|
|
%
|
|||||||
Interest expense, net of interest income
|
$
|
(2
|
)
|
|
$
|
(1
|
)
|
|
$
|
(1
|
)
|
|
100
|
%
|
Foreign Currency
|
Three Months Ended March 31,
|
|||||||||||||
|
|
|
|
|
2014 vs. 2013
|
|||||||||
Millions of dollars, except for percentages
|
2014
|
|
2013
|
|
$
|
|
%
|
|||||||
Foreign currency losses
|
$
|
(7
|
)
|
|
$
|
(4
|
)
|
|
$
|
(3
|
)
|
|
75
|
%
|
|
Three Months Ended March 31,
|
|||||||||||||
|
|
|
|
|
2014 vs. 2013
|
|||||||||
Millions of dollars, except for percentages
|
2014
|
|
2013
|
|
$
|
|
%
|
|||||||
Income before provision for income taxes
|
$
|
1
|
|
|
$
|
127
|
|
|
$
|
(126
|
)
|
|
(99
|
)%
|
Provision for income taxes
|
$
|
(21
|
)
|
|
$
|
(30
|
)
|
|
$
|
9
|
|
|
(30
|
)%
|
Net Income Attributable to Noncontrolling Interests
|
Three Months Ended March 31,
|
|||||||||||||
|
|
|
|
|
2014 vs. 2013
|
|||||||||
Millions of dollars, except for percentages
|
2014
|
|
2013
|
|
$
|
|
%
|
|||||||
Net income attributable to noncontrolling interests
|
$
|
(23
|
)
|
|
$
|
(9
|
)
|
|
$
|
(14
|
)
|
|
156
|
%
|
|
Three Months Ended March 31,
|
|||||||||||||
|
|
|
|
|
2014 vs. 2013
|
|||||||||
Millions of dollars
|
2014
|
|
2013
|
|
$
|
|
%
|
|||||||
Revenue
|
|
|
|
|
|
|
|
|||||||
Gas Monetization
|
$
|
400
|
|
|
$
|
595
|
|
|
$
|
(195
|
)
|
|
(33
|
)%
|
Hydrocarbons
|
452
|
|
|
342
|
|
|
110
|
|
|
32
|
%
|
|||
Infrastructure, Government and Power
|
337
|
|
|
399
|
|
|
(62
|
)
|
|
(16
|
)%
|
|||
Services
|
433
|
|
|
478
|
|
|
(45
|
)
|
|
(9
|
)%
|
|||
Other
|
11
|
|
|
15
|
|
|
(4
|
)
|
|
(27
|
)%
|
|||
Total
|
$
|
1,633
|
|
|
$
|
1,829
|
|
|
$
|
(196
|
)
|
|
(11
|
)%
|
|
|
|
|
|
|
|
|
|||||||
Gross profit (loss)
|
|
|
|
|
|
|
|
|||||||
Gas Monetization
|
$
|
95
|
|
|
$
|
89
|
|
|
$
|
6
|
|
|
7
|
%
|
Hydrocarbons
|
22
|
|
|
49
|
|
|
(27
|
)
|
|
(55
|
)%
|
|||
Infrastructure, Government and Power
|
(20
|
)
|
|
19
|
|
|
(39
|
)
|
|
(205
|
)%
|
|||
Services
|
(60
|
)
|
|
11
|
|
|
(71
|
)
|
|
(645
|
)%
|
|||
Other
|
5
|
|
|
3
|
|
|
2
|
|
|
67
|
%
|
|||
Labor cost not allocated to the business segments
|
(3
|
)
|
|
(15
|
)
|
|
12
|
|
|
80
|
%
|
|||
Total
|
$
|
39
|
|
|
$
|
156
|
|
|
$
|
(117
|
)
|
|
(75
|
)%
|
|
|
|
|
|
|
|
|
|||||||
Equity in earnings of unconsolidated affiliates
|
|
|
|
|
|
|
|
|||||||
Gas Monetization
|
$
|
16
|
|
|
$
|
10
|
|
|
$
|
6
|
|
|
60
|
%
|
Hydrocarbons
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
%
|
|||
Infrastructure, Government and Power
|
9
|
|
|
8
|
|
|
1
|
|
|
13
|
%
|
|||
Services
|
—
|
|
|
7
|
|
|
(7
|
)
|
|
(100
|
)%
|
|||
Other
|
6
|
|
|
5
|
|
|
1
|
|
|
20
|
%
|
|||
Total
|
$
|
31
|
|
|
$
|
30
|
|
|
$
|
1
|
|
|
3
|
%
|
|
|
|
|
|
|
|
|
|||||||
(Loss) on disposition of assets
|
$
|
—
|
|
|
$
|
(1
|
)
|
|
$
|
1
|
|
|
100
|
%
|
|
|
|
|
|
|
|
|
|||||||
Amounts not allocated to the business segments
|
|
|
|
|
|
|
|
|||||||
General and administrative expenses
|
$
|
(60
|
)
|
|
$
|
(52
|
)
|
|
$
|
(8
|
)
|
|
(15
|
)%
|
Total operating income
|
$
|
10
|
|
|
$
|
133
|
|
|
$
|
(123
|
)
|
|
(92
|
)%
|
Labor Cost not allocated to our Business Segments
|
Three Months Ended March 31,
|
|||||||||||||
|
|
|
|
|
2014 vs. 2013
|
|||||||||
Millions of dollars, except for percentages
|
2014
|
|
2013
|
|
$
|
|
%
|
|||||||
Labor cost not allocated to the business segments
|
$
|
(3
|
)
|
|
$
|
(15
|
)
|
|
$
|
12
|
|
|
80
|
%
|
|
Three Months Ended March 31, 2014
|
||||||||||
Millions of dollars
|
Business
Segment Revenue |
|
Services
Revenue
|
|
Total
Revenue by
Market
Sectors
|
||||||
Gas Monetization
|
$
|
400
|
|
|
$
|
—
|
|
|
$
|
400
|
|
Hydrocarbons
|
452
|
|
|
264
|
|
|
716
|
|
|||
Infrastructure, Government and Power
|
337
|
|
|
169
|
|
|
506
|
|
|||
Services
|
433
|
|
|
(433
|
)
|
|
—
|
|
|||
Other
|
11
|
|
|
—
|
|
|
11
|
|
|||
Total KBR Revenue
|
$
|
1,633
|
|
|
$
|
—
|
|
|
$
|
1,633
|
|
|
Three Months Ended March 31, 2013
|
||||||||||
Millions of dollars
|
Business
Segment Revenue |
|
Services
Revenue
|
|
Total
Revenue by
Market
Sectors
|
||||||
Gas Monetization
|
$
|
595
|
|
|
$
|
—
|
|
|
$
|
595
|
|
Hydrocarbons
|
342
|
|
|
253
|
|
|
595
|
|
|||
Infrastructure, Government and Power
|
399
|
|
|
225
|
|
|
624
|
|
|||
Services
|
478
|
|
|
(478
|
)
|
|
—
|
|
|||
Other
|
15
|
|
|
—
|
|
|
15
|
|
|||
Total KBR Revenue
|
$
|
1,829
|
|
|
$
|
—
|
|
|
$
|
1,829
|
|
|
December 31,
|
|
|
|
Changes in scope on existing contracts
|
|
|
|
March 31,
|
||||||||||
Millions of dollars
|
2013
|
|
New Awards
|
|
|
Net Workoff (a)
|
|
2014
|
|||||||||||
Gas Monetization
|
$
|
6,169
|
|
|
$
|
33
|
|
|
$
|
(19
|
)
|
|
$
|
(417
|
)
|
|
$
|
5,766
|
|
Hydrocarbons
|
2,619
|
|
|
75
|
|
|
175
|
|
|
(452
|
)
|
|
2,417
|
|
|||||
Infrastructure, Government and Power
|
2,079
|
|
|
35
|
|
|
85
|
|
|
(353
|
)
|
|
1,846
|
|
|||||
Services
|
2,254
|
|
|
107
|
|
|
99
|
|
|
(433
|
)
|
|
2,027
|
|
|||||
Other
|
997
|
|
|
—
|
|
|
(31
|
)
|
|
(9
|
)
|
|
957
|
|
|||||
Total backlog
|
$
|
14,118
|
|
|
$
|
250
|
|
|
$
|
309
|
|
|
$
|
(1,664
|
)
|
|
$
|
13,013
|
|
|
|
March 31,
|
|
December 31,
|
||||
Millions of dollars
|
2014
|
|
2013
|
||||
Domestic U.S. cash
|
$
|
249
|
|
|
$
|
355
|
|
International cash
|
641
|
|
|
675
|
|
||
Joint venture cash
|
106
|
|
|
76
|
|
||
Total
|
$
|
996
|
|
|
$
|
1,106
|
|
Summary of Cash Flow Activity
|
|
|
|
|
||||
|
|
Three Months Ended March 31,
|
||||||
Millions of dollars
|
|
2014
|
|
2013
|
||||
Cash flows used in operating activities
|
|
$
|
(17
|
)
|
|
$
|
(93
|
)
|
Cash flows used in investing activities
|
|
(15
|
)
|
|
(20
|
)
|
||
Cash flows used in financing activities
|
|
(84
|
)
|
|
(15
|
)
|
||
Effect of exchange rate changes on cash
|
|
6
|
|
|
(21
|
)
|
||
Decrease in cash and equivalents
|
|
$
|
(110
|
)
|
|
$
|
(149
|
)
|
•
|
volatility of the currency rates;
|
•
|
time horizon of the derivative instruments;
|
•
|
market cycles; and
|
•
|
the type of derivative instruments used.
|
•
|
Implement a control to include the actual and estimated foreign currency effects in the estimates of revenues, costs and profit at completion on projects with multiple currencies by enhancing the design of our project status templates and our procedures for completion of our project status templates.
|
•
|
Enhance the design of our monitoring controls over the completeness and accuracy of estimated revenues, costs and profit at completion for long-term construction projects with multiple currencies to specifically include a process for monitoring and reviewing project status reports for proper application of foreign currency effects in project estimates.
|
•
|
Provide training to our personnel involved in the estimation of revenues, costs and profit at completion on projects with multiple currencies.
|
•
|
Conduct town hall meetings throughout the Company's worldwide organization led by executive management to provide encouragement for employees to follow the Company's corporate culture and policies and procedures.
|
•
|
Change certain management and increase the number of qualified professionals
|
•
|
Provide training to new and key personnel on roles and responsibilities, including line of communications in the event of concerns.
|
•
|
Provide training to new and key personnel on Company standard processes and systems across all project operations, oversight and support functions, including project management and module yard management.
|
•
|
Implement and monitor execution of KBR standard project controls work processes and systems across the Canada pipe fabrication and module assembly projects.
|
•
|
Implement standard project management oversight from corporate management.
|
Item 2.
|
Unregistered Sales of Equity Securities and Use of Proceeds
|
(a)
|
None.
|
(b)
|
None.
|
(c)
|
On February 25, 2014, our Board of Directors authorized a new
$350 million
share repurchase program, which replaces and terminates the August 26, 2011 share repurchase program. The authorization does not specify an expiration date for the share repurchase program. The following is a summary of share repurchases of our common stock settled during the three months ended
March 31, 2014
.
We also have a share maintenance program to repurchase shares based on vesting and other activity under our equity compensation plans. Shares purchased under "Employee transactions" in the table below reflects shares acquired from employees in connection with the settlement of income tax and related benefit-withholding obligations arising from vesting of restricted stock units.
|
Purchase Period
|
Total Number
of Shares
Purchased (a)
|
|
Average
Price Paid
per Share
|
|
Total Number of
Shares Purchased
as Part of Publicly
Announced Plans
or Programs
|
|
Dollar Value of
Shares that May Yet Be
Purchased Under the
Plans or Programs (a)
|
||||||
January 1 – 31, 2014
|
|
|
|
|
|
|
|
||||||
Repurchase program
|
—
|
|
|
$
|
—
|
|
|
—
|
|
|
—
|
|
|
Maintenance program
|
—
|
|
|
$
|
—
|
|
|
—
|
|
|
—
|
|
|
Employee transactions
|
4,074
|
|
|
$
|
31.60
|
|
|
—
|
|
|
—
|
|
|
February 3 – 28, 2014
|
|
|
|
|
|
|
|
||||||
Repurchase program
|
—
|
|
|
$
|
—
|
|
|
—
|
|
|
$
|
350,000,000
|
|
Maintenance program
|
—
|
|
|
$
|
—
|
|
|
—
|
|
|
—
|
|
|
Employee transactions
|
1,234
|
|
|
$
|
30.74
|
|
|
—
|
|
|
—
|
|
|
March 3 – 31, 2014
|
|
|
|
|
|
|
|
||||||
Repurchase program
|
1,570,346
|
|
|
$
|
27.70
|
|
|
1,570,346
|
|
|
$
|
306,501,416
|
|
Maintenance program
|
403,298
|
|
|
$
|
27.70
|
|
|
—
|
|
|
—
|
|
|
Employee transactions
|
44,986
|
|
|
$
|
28.40
|
|
|
—
|
|
|
—
|
|
|
Total
|
|
|
|
|
|
|
|
||||||
Repurchase program
|
1,570,346
|
|
|
$
|
27.70
|
|
|
1,570,346
|
|
|
$
|
306,501,416
|
|
Maintenance program
|
403,298
|
|
|
$
|
27.70
|
|
|
—
|
|
|
—
|
|
|
Employee transactions
|
50,294
|
|
|
$
|
28.72
|
|
|
—
|
|
|
—
|
|
(a)
|
Represents remaining authorization that may be used for repurchases pursuant to the share repurchase program authorized and announced on February 25, 2014.
|
Exhibit
Number |
|
Description
|
|
|
|
3.1
|
|
KBR Amended and Restated Certificate of Incorporation (incorporated by reference to Exhibit 3.1 to KBR’s current report on Form 8-K filed June 7, 2012; File No. 3-33146)
|
|
|
|
3.2
|
|
Amended and Restated Bylaws of KBR, Inc. (incorporated by reference to Exhibit 3.2 to KBR’s annual report on Form 10-K for the year ended December 31, 2013; File No. 3-33146)
|
|
|
|
4.1
|
|
Form of specimen KBR common stock certificate (incorporated by reference to Exhibit 4.1 to KBR’s registration statement on Form S-1; Registration No. 333-133302)
|
|
|
|
*10.1+
|
|
Form of revised KBR Performance Award Agreement pursuant to KBR, Inc. 2006 Stock and Incentive Plan
|
|
|
|
*10.2+
|
|
Form of revised Nonstatutory Stock Option Agreement for US and Non-US Employees pursuant to KBR, Inc. 2006 Stock and Incentive Plan
|
|
|
|
*10.3+
|
|
Form of revised Restricted Stock Unit Agreement (U.S. Employee) pursuant to KBR, Inc. 2006 Stock and Incentive Plan
|
|
|
|
*31.1
|
|
Certification of the Chief Executive Officer Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
|
|
|
|
*31.2
|
|
Certification of the Chief Financial Officer Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
|
|
|
|
**32.1
|
|
Certification Furnished Pursuant to 18 U.S.C. Section 1350 as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
|
|
|
|
**32.2
|
|
Certification Furnished Pursuant to 18 U.S.C. Section 1350 as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
|
|
|
|
***101.INS
|
|
XBRL Instance Document
|
|
|
|
***101.SCH
|
|
XBRL Taxonomy Extension Schema Document
|
|
|
|
***101.CAL
|
|
XBRL Taxonomy Extension Calculation Linkbase Document
|
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Management contracts or compensatory plans or arrangements
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*
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Filed herewith
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**
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Furnished herewith
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***
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Interactive data files
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/s/ Brian K. Ferraioli
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/s/ Nelson E. Rowe
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Brian K. Ferraioli
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Nelson E. Rowe
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Executive Vice President and Chief Financial Officer
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Vice President and Chief Accounting Officer
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(a)
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Vesting
. Except as otherwise provided in subparagraphs (b) and (d) below, you will vest in the Performance Units earned (if any) for the Performance Period only if you are an employee of the Company or a Subsidiary on the date such earned Performance Units are paid, as provided in Paragraph 3 below.
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(b)
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Death, Disability, Retirement or Early Retirement
. Unless otherwise provided in an agreement pursuant to Paragraph 13, if you cease to be an employee of the Company or a Subsidiary as a result of (i) your death, (ii) your permanent disability (disability being defined as being physically or mentally incapable of performing either your usual duties as an employee or any other duties as an employee that the Company reasonably makes available and such condition is likely to remain continuously and permanently, as determined by the Company or employing Subsidiary), (iii) normal retirement on or after reaching age 65, or (iv) your early retirement prior to reaching age 65 with the approval of both (A) the Company or employing Subsidiary and (B) the Committee or its delegate (with such approval to be granted or withheld in the sole discretion of the Company, employing Subsidiary, Committee and/or delegate of the Committee, as applicable), then, in any such case, a prorata portion of your Performance Units that become “earned”, if any, as provided in Exhibit A, will become vested. The “prorata portion” that becomes vested shall be a fraction, the numerator of which is the number of days in the Performance Period in which you were an employee of the Company or a Subsidiary and the denominator of which is the total number of days in the Performance Period. If your termination for the above reasons is after the end of the Performance Period but before payment of the Performance Units earned, if any, for such Performance Period, you will be fully vested in any such earned Performance Units.
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(c)
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Other Terminations
. If you terminate from the Company and its Subsidiaries for any reason other than as provided in subparagraph (b) above or subparagraph (d) below, all unvested Performance Units held by you shall be forfeited without payment immediately upon such termination.
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(d)
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Corporate Change
. Notwithstanding any other provision hereof, unless otherwise provided in an agreement pursuant to Paragraph 13, your Performance Units shall become fully vested at the maximum earned percentage provided in Exhibit A upon your Involuntary Termination or termination for Good Reason within two years following a Corporate Change (as provided in the Plan) (a “Double Trigger Event”) during the Performance Period. If a Double Trigger Event occurs after the end of the Performance Period and prior to payment of the earned Performance Units, you will be 100% vested in your earned Performance Units upon the Double Trigger Event and payment will be made in accordance with the results achieved for the Performance Period ended as provided in Exhibit A.
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3.
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Payment of Vested Performance Units
. As soon as administratively practicable after the end of the Performance Period, but no later than the March 15th following the end of the Performance Period, or with respect to a Double Trigger Event occurring prior to the end of the Performance Period, the date of the Double Trigger Event (but no later than the March 15
th
following the calendar year in which occurs the date of the Double Trigger Event), you shall be entitled to receive from the Company a payment in cash equal to the product of the Payout Percentage (as defined in Exhibit A) and the sum of the target values of your vested Performance Units. Except as provided in Exhibit A with respect to a Double Trigger Event, if the performance thresholds set forth in Exhibit A are not met, no payment shall be made with respect to the Performance Units, whether or not vested. Notwithstanding the foregoing, in no event may the amount paid to you by the Company in any year with respect to Performance Units earned hereunder exceed the applicable limit under Article V of the Plan.
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4.
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Recovery of Payment of Vested Performance Units
. The Company may seek recovery of any benefits provided to you under this Agreement if such recovery is required by any clawback policy adopted by the Company, which may be amended from time to time, including, but not limited to, any clawback policy adopted to satisfy the minimum clawback requirements adopted under the Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010 and the regulations thereunder or any other applicable law.
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5.
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Limitations Upon Transfer
. All rights under this Agreement shall belong to you and may not be transferred, assigned, pledged, or hypothecated in any way (whether by operation of law or otherwise), other than by will or the laws of descent and distribution or pursuant to a “qualified domestic relations order” (as defined by the Code), and shall not be subject to execution, attachment, or similar process. Upon any attempt to transfer, assign, pledge, hypothecate, or otherwise dispose of such rights contrary to the provisions in this Agreement or the Plan, or upon the levy of any attachment or similar process upon such rights, such rights shall immediately become null and void.
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6.
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Withholding of Tax
. You acknowledge that, regardless of any action taken by the Company or, if different, your employer (the “Employer”), the ultimate liability for all income tax, social insurance, payroll tax, fringe benefits tax, payment on account or other tax-related items related to your participation in the Plan and legally applicable to you (“Tax-Related Items”), is and remains your responsibility and may exceed the amount actually withheld by the Company or the Employer. You further acknowledge that the Company and/or the Employer (1) do not make representations or undertakings regarding the treatment of any Tax-Related Items in connection with any aspect of the Performance Units including, but not limited to, the grant, vesting or payout of the Performance Units; and (2) do not commit to the structure of the terms of the Performance Units or any aspect of the Performance Units to reduce or eliminate your liability for Tax-Related Items or achieve any particular tax result. Further, if you are subject to Tax-Related Items in more than one jurisdiction between the date of grant and the date of any relevant taxable event, as applicable, you acknowledge that the Company and/or Employer (or former employer, as applicable) may be required to withhold or account for Tax-Related Items in more than one jurisdiction.
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7.
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Nature of Grant
. In accepting the Performance Units, you acknowledge, understand and agree that: (a) the Plan is established voluntarily by the Company, it is discretionary in nature and it may be modified, amended, suspended or terminated by the Company at any time, to the extent permitted by the Plan; (b) the grant of the Performance Units is voluntary and occasional and does not create any contractual or other right to receive future grants of Performance Units, or benefits in lieu of Performance Units, even if Performance Units have been granted in the past; (c) all decisions with respect to future Performance Units or other grants, if any, will be at the sole discretion of the Company; (d) the grant of Performance Units and your participation in the Plan shall not create a right to employment or be interpreted as forming an employment or service contract with the Company, your Employer, or any Subsidiary of the Company and shall not interfere with the ability of the Company, your Employer or any Subsidiary of the Company, as applicable to terminate your employment or service relationship (if any); (e) you are voluntarily participating in the Plan; (f) the Performance Units are not intended to replace any pension rights or compensation; (g) the Performance Units and the income and value of same, are not part of normal or expected compensation for purposes of calculating any severance, resignation, termination, redundancy, dismissal, end-of-service payments, bonuses, long-service awards, pension or retirement benefits or similar payments; (h) the future value of the Performance Units is unknown, indeterminable and cannot be predicted with certainty; (i) no claim or entitlement to compensation or damages shall arise from the forfeiture of the Performance Units resulting from you ceasing to provide employment or other services to the Company or your Employer (for any reason whatsoever whether or not later found to be invalid or in breach of employment laws in the jurisdiction where you are employed or the terms of your employment agreement, if any) and in consideration of the grant of the Performance Units to which you are otherwise not entitled, you irrevocably agree never to institute any claim against the Company, or your Employer or any Subsidiary; (j) in the event of involuntary termination of your active employment or other services (for any reason whatsoever, whether or not later found to be invalid or in breach of employment laws in the jurisdiction where you are employed or the terms of your employment agreement, if any), unless otherwise provided in this Agreement or determined by the Company, your right to vest in the Performance Units under the Plan, if any, will terminate effective as of the date that you are no longer actively providing services and will not be extended by any notice period (
e.g.
, active services would not include any contractual notice period or any period of “garden
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8.
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No Advice Regarding Grant
. The Company is not providing any tax, legal or financial advice, nor is the Company making any recommendations regarding your participation in the Plan. You are hereby advised to consult with your own personal tax, legal and financial advisors regarding your participation in the Plan before taking any action related to the Plan.
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9.
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Data Privacy
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You hereby explicitly and unambiguously consent to the collection, use and transfer, in electronic or other form, of your personal data as described in this document by and among, as applicable, the Employer, and the Company and its Subsidiaries, for the exclusive purpose of implementing, administering and managing your participation in the Plan. You understand that the Company and your Employer hold certain personal information about you, including, but not limited to, your name, home address and telephone number, date of birth, social insurance number or other identification number, salary, nationality, job title, details of all Performance Units outstanding in your favor, for the exclusive purpose of implementing, administering and managing the Plan (“Data”). You understand that Data may be transferred to Morgan Stanley Smith Barney LLC or such other service provider as may be selected by the Company in the future, which is assisting the Company with the implementation, administration and management of the Plan. You understand that the recipients may be located in the United States or elsewhere, and that the recipient’s country (e.g., the United States) may have different data privacy laws and protections from your country. You understand that if you reside outside the United States, you may request a list with the names and addresses of any potential recipients of the Data by contacting your local human resources representative. You authorize the Company, Morgan Stanley Smith Barney LLC and any other possible recipients which may assist the Company (presently or in the future) to receive, possess, use, retain and transfer
the Data, in electronic or other form, for the purposes of implementing, administering and managing your participation in the Plan. You understand that Data will be held only as long as is necessary to implement, administer and manage your participation in the Plan. You understand that if you reside outside the United States, you may, at any time, view Data, request
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10.
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Binding Effect
. This Agreement shall be binding upon and inure to the benefit of any successor or successors of the Company or upon any person lawfully claiming under you.
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11.
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Modification
. Except to the extent permitted by the Plan, any modification of this Agreement will be effective only if it is in writing and signed by each party whose rights hereunder are affected thereby.
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12.
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Plan Controls
. This grant is subject to the terms of the Plan, which are hereby incorporated by reference. In the event of a conflict between the terms of this Agreement and the Plan, the Plan shall be the controlling document. Capitalized terms used herein or in Exhibit A and not otherwise defined herein or in Exhibit A shall have the meaning ascribed to them in the Plan.
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13.
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Other Agreements
. Notwithstanding anything in this Agreement to the contrary, the terms of this Agreement shall be subject to and governed by, and shall not modify, the terms and conditions of any employment, severance, and/or change-in-control agreement between the Company (or a Subsidiary) and you.
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14.
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Electronic Delivery and Acceptance
. The Company may, in its sole discretion, decide to deliver any document related to current or future participation in the Plan by electronic means. You hereby consent to receive such documents by electronic delivery and agree to participate in the Plan through an on-line or electronic system established and maintained by the Company or a third party designated by the Company.
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15.
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Severability
. If one or more of the provisions of this Agreement shall be held invalid, illegal or unenforceable in any respect, the validity, legality and enforceability of the remaining provisions shall not in any way be affected or impaired thereby and the invalid, illegal or unenforceable provisions shall be deemed null and void; however, to the extent permissible by law, any provisions which could be deemed null and void shall first be construed, interpreted or revised retroactively to permit this Agreement to be construed so as to foster the intent of this Agreement and the Plan.
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16.
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Language
. If you have received this Agreement or any other document related to the Plan translated into a language other than English and if the translated version is different from the English version, the English version will control.
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17.
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Governing Law and Venue
. This Agreement shall be governed by, and construed in accordance with, the laws of the State of Texas, U.S.A., except to the extent that it implicates matters that are the subject of the General Corporation Law of the State of Delaware, which matters shall be governed by the latter law notwithstanding any conflicts of laws principles that may be applied or invoked directing the application of the laws of another jurisdiction. Exclusive venue for any action, lawsuit or other proceedings brought to enforce this Agreement, relating to it or arising from it, or dispute resolution proceeding arising hereunder for any claim or dispute, the parties hereby submit to and consent to the sole and exclusive jurisdiction of Houston, Harris County, Texas, notwithstanding any conflicts of laws principles that may direct the jurisdiction of any other court, venue, or forum, including the jurisdiction of the employee’s home country.
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18.
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Compliance with Law
. Notwithstanding any other provision of the Plan or this Agreement, unless there is an available exemption from any registration, qualification or other legal requirement applicable to the Performance Units, the Company shall not be required to deliver any payment from the payout of the Performance Units prior to the completion of any registration or qualification of the shares under any local, state, federal or foreign securities or exchange control law or under rulings or regulations of the U.S. Securities and Exchange Commission (“SEC”) or of any other governmental regulatory body, or prior to obtaining any approval or other clearance from any local, state, federal or foreign governmental agency, which registration, qualification or approval, the Company shall, in its absolute discretion, deem necessary or advisable. You understand that the Company is under no obligation to register or qualify the shares with the SEC or any state or foreign securities commission or to seek approval or clearance from any governmental authority for payout of the Performance Units. Further, you agree that the Company shall have unilateral authority to amend the Plan and the Agreement without your consent to the extent necessary to comply with securities or other laws applicable to issuance of shares.
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19.
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Exhibit B
. Notwithstanding any provisions in this document, the Performance Units shall be subject to any special terms and conditions set forth in Exhibit B to this Agreement for your country. Moreover, if you relocate to one of the countries included in Exhibit B, the special terms and conditions for such country will apply to you, to the extent the Company determines that the application of such terms and conditions is necessary or advisable for legal or administrative reasons. Exhibit B constitutes part of this Agreement.
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20.
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Imposition of Other Requirements
. The Company reserves the right to impose other requirements on your participation in the Plan, or on the Performance Units, to the extent the Company determines it is necessary or advisable for legal or administrative reasons and to require you to sign any additional agreements or undertakings that may be necessary to accomplish the foregoing.
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21.
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Waiver
. You acknowledge that a waiver by the company of breach of any provision of this Agreement shall not operate or be construed as a waiver of any other provision of this Agreement, or of any subsequent breach by you or any other Participant.
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22.
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Total Shareholder Return.
Notwithstanding any provisions in this document (other than the last sentence of this Paragraph), if you are a senior executive of the Company (defined as an employee of the Company or any employing Subsidiary of the Company who is either the Chief Executive Officer of the Company (the “CEO”) or a direct report to the CEO) on the Grant Date and the Company’s average Total Shareholder Return (as defined and determined pursuant to Part II.A. of Exhibit A) at the end of the Performance Period is negative (i.e., an index below 100), the payment of your vested Performance Units shall not exceed the Target (100%) payout under the TSR Peer Group Percentile and Payout Table set forth in Exhibit A. The preceding sentence shall not apply if, pursuant to the first sentence of Paragraph 2(d), your Performance Units become fully vested at the maximum earned percentage provided in Exhibit A upon a Double Trigger Event during the Performance Period.
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A.
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Average TSR
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* Share price adjusted for dividends paid in the period, where the dividend payment date is the ex-dividend date.
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B.
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Peer Group and Payout
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TSR Peer Group Percentile and Payout Table
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Threshold
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Target
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Maximum
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Percentile
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<20%
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20%
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50%
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≥90%
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Payout
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0%
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25%
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100%
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200%
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LTI TSR Calculation Method
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Performance
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Ranking
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Percentile *
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Payout *
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Level
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1
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100.0
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%
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200.0
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%
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Maximum
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2
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90.0
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%
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200.0
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%
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3
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80.0
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%
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175.0
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%
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4
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70.0
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%
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150.0
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%
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5
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60.0
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%
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125.0
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%
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Target
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6
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50.0
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%
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100.0
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%
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7
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40.0
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%
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75.0
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%
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8
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30.0
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%
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50.0
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%
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Threshold
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9
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20.0
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%
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25.0
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%
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10
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10.0
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%
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0.0
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%
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11
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0.0
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%
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0.0
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%
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* Rounded to 1 decimal place
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Percentile for TSR purposes
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Percentile = (
n - r)
* 100%
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(n - 1)
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where:
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n = number of Peer Group companies (including KBR)
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r = KBR ranking in the list of companies (including KBR)
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Example 1
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Example 3
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KBR ranked 8th out of 11 companies
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KBR ranked 7th out of 10 companies
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(11 - 8)
* 100% = 30.0%
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(10 - 7)
* 100% = 33.3%
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(11 - 1)
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(10 - 1)
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Example 2
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Example 4
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KBR ranked 4th out of 11 companies
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KBR ranked 3rd out of 9 companies
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(11 - 4)
* 100% = 70.0%
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(9 - 3)
* 100% = 75.0%
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(11 - 1)
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(9 - 1)
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Performance Percentage
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Column A
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Column B
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Weighting
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<Threshold
0%
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Threshold
25%
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Target
100%
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Maximum
200%
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Company’s Average TSR Rank with Peer Group Members’ Average TSR
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100%
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<20%
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20%
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50%
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90%
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(1)
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Your participation in the Plan does not constitute an acquired right.
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(2)
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The Plan and your participation in the Plan are offered by the Company on a wholly discretionary basis.
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(3)
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Your participation in the Plan is voluntary.
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(1)
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La participación del Participante en el Plan de ninguna manera constituye un derecho adquirido.
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(2)
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Que el Plan y la participación del Participante en el mismo es una oferta por parte de KBR, Inc. de forma completamente discrecional.
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(3)
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Que la participación del Participante en el Plan es voluntaria.
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KBR, INC.
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By:
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Employee
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(1)
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Employee’s participation in the Plan does not constitute an acquired right.
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(2)
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The Plan and Employee’s participation in the Plan are offered by the Company on a wholly discretionary basis.
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(3)
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Employee’s participation in the Plan is voluntary.
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(4)
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The Company and its Subsidiaries are not responsible for any decrease in the value of the underlying shares of Stock.
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(1)
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La participación del Employeee en el Plan de ninguna manera constituye un derecho adquirido.
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(2)
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Que el Plan y la participación del Employeee en el mismo es una oferta por parte de KBR, Inc. de forma completamente discrecional.
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(3)
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Que la participación del Employeee en el Plan es voluntaria.
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(4)
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Que KBR, Inc. y sus Entidades Relacionadas no son responsables por cualquier pérdida en el valor de la Opción y/o Acciones otorgadas mediante el Plan.
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Vesting Date
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Vested Percentage of Total Number
of Restricted Stock Units
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1st Anniversary of Grant Date
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33 ⅓%
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2nd Anniversary of Grant Date
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66 ⅔%
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3rd Anniversary of Grant Date
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100%
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KBR, INC.
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By:
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Employee
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/s/ Stuart Bradie
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Stuart Bradie
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Chief Executive Officer
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/s/ Brian K. Ferraioli
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Brian K. Ferraioli
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Chief Financial Officer
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a)
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the Form 10-Q of the Company for the period ended
March 31, 2014
, filed on the date hereof with the Securities and Exchange Commission (the “Report”) fully complies with the requirements of Section l3(a) or 15(d) of the Securities Exchange Act of 1934; and
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b)
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the information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.
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/s/ Stuart Bradie
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Stuart Bradie
Chief Executive Officer
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a)
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the Form 10-Q of the Company for the period ended
March 31, 2014
, filed on the date hereof with the Securities and Exchange Commission (the “Report”) fully complies with the requirements of Section l3(a) or 15(d) of the Securities Exchange Act of 1934; and
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b)
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the information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.
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/s/ Brian K. Ferraioli
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Brian K. Ferraioli
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Chief Financial Officer
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