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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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Delaware
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20-4536774
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(State of incorporation)
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(I.R.S. Employer Identification No.)
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601 Jefferson Street, Suite 3400, Houston, Texas
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77002
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(Address of principal executive offices)
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(Zip Code)
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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
|
|
Item 1.
Financial Information
|
|
Condensed
Consolidated Statements of Income
(Loss)
|
|
Condensed
Consolidated Statements of Comprehensive Income
(Loss)
|
|
Condensed
Consolidated Balance Sheets
|
|
Condensed
Consolidated Statements of Cash Flows
|
|
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
|
|
Item 1. Legal Proceedings
|
|
Item 1A. Risk Factors
|
|
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds
|
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Item 3. Defaults Upon Senior Securities
|
|
Item 4. Mine Safety Disclosures
|
|
Item 5. Other Information
|
|
Item 6. Exhibits
|
|
|
Three Months Ended
|
|
Nine Months Ended
|
||||||||||||
|
September 30,
|
|
September 30,
|
||||||||||||
|
2014
|
|
2013
|
|
2014
|
|
2013
|
||||||||
|
|
|
As Restated
|
|
|
|
As Restated
|
||||||||
Revenues
|
$
|
1,657
|
|
|
$
|
1,755
|
|
|
$
|
4,949
|
|
|
$
|
5,534
|
|
Cost of revenues
|
(1,627
|
)
|
|
(1,641
|
)
|
|
(4,852
|
)
|
|
(5,124
|
)
|
||||
Gross profit
|
30
|
|
|
114
|
|
|
97
|
|
|
410
|
|
||||
Equity in earnings of unconsolidated affiliates
|
38
|
|
|
31
|
|
|
118
|
|
|
107
|
|
||||
General and administrative expenses
|
(58
|
)
|
|
(66
|
)
|
|
(178
|
)
|
|
(181
|
)
|
||||
Gain (loss) on disposition of assets
|
—
|
|
|
—
|
|
|
8
|
|
|
(1
|
)
|
||||
Operating income
|
10
|
|
|
79
|
|
|
45
|
|
|
335
|
|
||||
Interest income (expense), net
|
3
|
|
|
(1
|
)
|
|
(1
|
)
|
|
(3
|
)
|
||||
Foreign currency gains (losses)
|
7
|
|
|
(2
|
)
|
|
(4
|
)
|
|
(2
|
)
|
||||
Other non-operating income (expenses)
|
24
|
|
|
(1
|
)
|
|
23
|
|
|
(2
|
)
|
||||
Income before income taxes and noncontrolling interests
|
44
|
|
|
75
|
|
|
63
|
|
|
328
|
|
||||
Benefit (provision) for income taxes
|
1
|
|
|
(60
|
)
|
|
(30
|
)
|
|
(105
|
)
|
||||
Net income
|
45
|
|
|
15
|
|
|
33
|
|
|
223
|
|
||||
Net income attributable to noncontrolling interests
|
(15
|
)
|
|
(62
|
)
|
|
(54
|
)
|
|
(92
|
)
|
||||
Net income (loss) attributable to KBR
|
$
|
30
|
|
|
$
|
(47
|
)
|
|
$
|
(21
|
)
|
|
$
|
131
|
|
Net income (loss) attributable to KBR per share:
|
|
|
|
|
|
|
|
||||||||
Basic
|
$
|
0.21
|
|
|
$
|
(0.32
|
)
|
|
$
|
(0.14
|
)
|
|
$
|
0.88
|
|
Diluted
|
$
|
0.21
|
|
|
$
|
(0.32
|
)
|
|
$
|
(0.14
|
)
|
|
$
|
0.88
|
|
Basic weighted average common shares outstanding
|
145
|
|
|
148
|
|
|
145
|
|
|
148
|
|
||||
Diluted weighted average common shares outstanding
|
145
|
|
|
148
|
|
|
145
|
|
|
149
|
|
||||
Cash dividends declared per share
|
$
|
0.08
|
|
|
$
|
0.08
|
|
|
$
|
0.24
|
|
|
$
|
0.16
|
|
|
Three Months Ended
|
|
Nine Months Ended
|
||||||||||||
|
September 30,
|
|
September 30,
|
||||||||||||
|
2014
|
|
2013
|
|
2014
|
|
2013
|
||||||||
|
|
|
As Restated
|
|
|
|
As Restated
|
||||||||
Net income
|
$
|
45
|
|
|
$
|
15
|
|
|
$
|
33
|
|
|
$
|
223
|
|
Other comprehensive income (loss), net of tax:
|
|
|
|
|
|
|
|
||||||||
Cumulative translation adjustments (“CTA”):
|
|
|
|
|
|
|
|
||||||||
Cumulative translation adjustments, net of tax
|
(49
|
)
|
|
16
|
|
|
(27
|
)
|
|
(36
|
)
|
||||
Reclassification adjustment for CTA included in net income
|
—
|
|
|
—
|
|
|
1
|
|
|
1
|
|
||||
Net cumulative translation adjustment, net of taxes
|
(49
|
)
|
|
16
|
|
|
(26
|
)
|
|
(35
|
)
|
||||
Pension liability adjustments, net of tax:
|
|
|
|
|
|
|
|
||||||||
Pension liability adjustments, net of tax
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
||||
Reclassification adjustment for pension liability gains included in net income
|
8
|
|
|
4
|
|
|
25
|
|
|
20
|
|
||||
Net pension liability adjustments, net of taxes
|
8
|
|
|
4
|
|
|
25
|
|
|
20
|
|
||||
Unrealized (losses) on derivatives:
|
|
|
|
|
|
|
|
||||||||
Unrealized holding (losses) on derivatives, net of tax
|
—
|
|
|
—
|
|
|
(1
|
)
|
|
—
|
|
||||
Reclassification adjustment for losses included in net income
|
(1
|
)
|
|
—
|
|
|
(1
|
)
|
|
—
|
|
||||
Net unrealized loss on derivatives, net of taxes
|
(1
|
)
|
|
—
|
|
|
(2
|
)
|
|
—
|
|
||||
Other comprehensive income (loss), net of tax
|
(42
|
)
|
|
20
|
|
|
(3
|
)
|
|
(15
|
)
|
||||
Comprehensive income, net of tax
|
3
|
|
|
35
|
|
|
30
|
|
|
208
|
|
||||
Less: Comprehensive income attributable to noncontrolling interests
|
(16
|
)
|
|
(64
|
)
|
|
(55
|
)
|
|
(99
|
)
|
||||
Comprehensive income (loss) attributable to KBR
|
$
|
(13
|
)
|
|
$
|
(29
|
)
|
|
$
|
(25
|
)
|
|
$
|
109
|
|
|
September 30,
|
|
December 31,
|
||||
|
2014
|
|
2013
|
||||
|
(Unaudited)
|
|
|
||||
Assets
|
|
|
|
||||
Current assets:
|
|
|
|
||||
Cash and cash equivalents
|
$
|
1,048
|
|
|
$
|
1,106
|
|
Accounts receivable, net of allowance for doubtful accounts of $21 and $18
|
964
|
|
|
1,056
|
|
||
Costs and estimated earnings in excess of billings on uncompleted contracts ("CIE")
|
509
|
|
|
399
|
|
||
Deferred income taxes
|
151
|
|
|
168
|
|
||
Other current assets
|
151
|
|
|
196
|
|
||
Total current assets
|
2,823
|
|
|
2,925
|
|
||
Property, plant, and equipment, net of accumulated depreciation of $426 and $397 (including net PPE of $61 and $67 owned by a variable interest entity)
|
410
|
|
|
415
|
|
||
Goodwill
|
771
|
|
|
772
|
|
||
Intangible assets, net of accumulated amortization of $120 and $112
|
76
|
|
|
85
|
|
||
Equity in and advances to unconsolidated affiliates
|
149
|
|
|
156
|
|
||
Deferred income taxes
|
367
|
|
|
344
|
|
||
Claims and accounts receivable
|
598
|
|
|
628
|
|
||
Other assets
|
192
|
|
|
113
|
|
||
Total assets
|
$
|
5,386
|
|
|
$
|
5,438
|
|
Liabilities and Shareholders’ Equity
|
|
|
|
||||
Current liabilities:
|
|
|
|
||||
Accounts payable
|
$
|
698
|
|
|
$
|
747
|
|
Payable to former parent
|
81
|
|
|
105
|
|
||
Billings in excess of costs and estimated earnings on uncompleted contracts ("BIE")
|
456
|
|
|
401
|
|
||
Accrued salaries, wages and benefits
|
213
|
|
|
235
|
|
||
Nonrecourse project debt
|
10
|
|
|
10
|
|
||
Other current liabilities
|
438
|
|
|
409
|
|
||
Total current liabilities
|
1,896
|
|
|
1,907
|
|
||
Pension obligations
|
423
|
|
|
477
|
|
||
Employee compensation and benefits
|
121
|
|
|
114
|
|
||
Income tax payable
|
118
|
|
|
70
|
|
||
Deferred income taxes
|
91
|
|
|
86
|
|
||
Nonrecourse project debt
|
70
|
|
|
78
|
|
||
Deferred income from unconsolidated affiliates
|
102
|
|
|
—
|
|
||
Other liabilities
|
248
|
|
|
267
|
|
||
Total liabilities
|
3,069
|
|
|
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, 174,459,008 and 173,924,509 shares issued, and 145,078,797 and 148,195,208 shares outstanding
|
—
|
|
|
—
|
|
||
Paid-in capital in excess of par ("PIC")
|
2,085
|
|
|
2,065
|
|
||
Accumulated other comprehensive loss ("AOCL")
|
(744
|
)
|
|
(740
|
)
|
||
Retained earnings
|
1,692
|
|
|
1,748
|
|
||
Treasury stock, 29,380,211 shares and 25,729,301 shares, at cost
|
(708
|
)
|
|
(610
|
)
|
||
Total KBR shareholders’ equity
|
2,325
|
|
|
2,463
|
|
||
Noncontrolling interests ("NCI")
|
(8
|
)
|
|
(24
|
)
|
||
Total shareholders’ equity
|
2,317
|
|
|
2,439
|
|
||
Total liabilities and shareholders’ equity
|
$
|
5,386
|
|
|
$
|
5,438
|
|
KBR, Inc.
Condensed Consolidated Statements of Cash Flows
(In millions)
(Unaudited)
|
|||||||
|
Nine Months Ended September 30,
|
||||||
|
2014
|
|
2013
|
||||
|
|
|
As Restated
|
||||
Cash flows from operating activities:
|
|
|
|
||||
Net income
|
$
|
33
|
|
|
$
|
223
|
|
Adjustments to reconcile net income to net cash provided by operating activities:
|
|
|
|
||||
Depreciation and amortization
|
55
|
|
|
49
|
|
||
Equity in earnings of unconsolidated affiliates
|
(118
|
)
|
|
(107
|
)
|
||
Deferred income tax (benefit) expense
|
(2
|
)
|
|
61
|
|
||
Gain on negotiated settlement with former parent
|
(24
|
)
|
|
—
|
|
||
Other
|
25
|
|
|
18
|
|
||
Changes in operating assets and liabilities:
|
|
|
|
||||
Accounts receivable, net of allowance for doubtful accounts
|
66
|
|
|
124
|
|
||
Costs and estimated earnings in excess of billings on uncompleted contracts
|
(109
|
)
|
|
(41
|
)
|
||
Accounts payable
|
(43
|
)
|
|
(64
|
)
|
||
Billings in excess of costs and estimated earnings on uncompleted contracts
|
53
|
|
|
(101
|
)
|
||
Accrued salaries, wages and benefits
|
(16
|
)
|
|
(14
|
)
|
||
Reserve for loss on uncompleted contracts
|
13
|
|
|
30
|
|
||
Receipts of advances from unconsolidated affiliates, net
|
14
|
|
|
12
|
|
||
Distributions of earnings from unconsolidated affiliates
|
212
|
|
|
151
|
|
||
Payment on performance bonds for EPC 1 project in Mexico
|
—
|
|
|
(108
|
)
|
||
Income taxes payable
|
22
|
|
|
(168
|
)
|
||
Pension funding
|
(37
|
)
|
|
(26
|
)
|
||
Other assets and liabilities
|
34
|
|
|
42
|
|
||
Total cash flows provided by operating activities
|
178
|
|
|
81
|
|
||
Cash flows from investing activities:
|
|
|
|
||||
Purchases of property, plant and equipment
|
(46
|
)
|
|
(57
|
)
|
||
Proceeds from sale of assets and investments
|
9
|
|
|
7
|
|
||
Total cash flows used in investing activities
|
$
|
(37
|
)
|
|
$
|
(50
|
)
|
KBR, Inc.
Condensed Consolidated Statements of Cash Flows
(In millions)
(Unaudited)
|
|||||||
|
Nine Months Ended September 30,
|
||||||
|
2014
|
|
2013
|
||||
|
|
|
As Restated
|
||||
Cash flows from financing activities:
|
|
|
|
||||
Payments to reacquire common stock
|
$
|
(102
|
)
|
|
$
|
(7
|
)
|
Distributions to noncontrolling interests, net of investments
|
(39
|
)
|
|
(49
|
)
|
||
Payments of dividends to shareholders
|
(35
|
)
|
|
(24
|
)
|
||
Net proceeds from issuance of common stock
|
4
|
|
|
5
|
|
||
Payments on short-term and long-term borrowings
|
(7
|
)
|
|
(9
|
)
|
||
Other
|
1
|
|
|
1
|
|
||
Total cash flows used in financing activities
|
(178
|
)
|
|
(83
|
)
|
||
Effect of exchange rate changes on cash
|
(21
|
)
|
|
(42
|
)
|
||
Decrease in cash and equivalents
|
(58
|
)
|
|
(94
|
)
|
||
Cash and equivalents at beginning of period
|
1,106
|
|
|
1,053
|
|
||
Cash and equivalents at end of period
|
$
|
1,048
|
|
|
$
|
959
|
|
Supplemental disclosure of cash flows information:
|
|
|
|
||||
Cash paid for interest
|
$
|
9
|
|
|
$
|
9
|
|
Cash paid for income taxes (net of refunds)
|
$
|
13
|
|
|
$
|
107
|
|
Noncash operating activities
|
|
|
|
||||
Other assets change for Barracuda arbitration (Note 13)
|
$
|
—
|
|
|
$
|
(219
|
)
|
Other liabilities change for Barracuda arbitration (Note 13)
|
$
|
—
|
|
|
$
|
219
|
|
Noncash financing activities
|
|
|
|
||||
Dividends declared
|
$
|
12
|
|
|
$
|
12
|
|
•
|
a reduction in "revenues" of
$25 million
consisting of a
$28 million
decrease related to the error on the contracts within our Services business segment, a
$4 million
increase related to an error on a long-term construction project in our Gas Monetization business segment and a
$1 million
decrease related to the correction of several immaterial errors;
|
•
|
an increase in "cost of revenues" of
$62 million
due to the recognition of a
$61 million
reserve for losses on uncompleted contracts related to the error on the contracts within our Services business segment and
$1 million
related to other immaterial corrections; and
|
•
|
a
$15 million
tax benefit consisting of a
$9 million
tax benefit related to the error in our Services business segment and a
$6 million
tax benefit representing the tax effect of the correction of several immaterial errors.
|
•
|
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 customers, recoveries of costs from subcontractors, vendors and others,
|
•
|
provisions for income taxes, recoverability of deferred tax assets and valuation of uncertain tax positions,
|
•
|
recoverability of goodwill, other intangibles and long-lived assets and related estimated lives,
|
•
|
recoverability of equity method and cost method investments,
|
•
|
valuation of pension obligations,
|
•
|
accruals for estimated liabilities and litigation outcomes,
|
•
|
consolidation of variable interest entities, and
|
•
|
valuation of stock-based compensation.
|
|
Three Months Ended
|
|
Nine Months Ended
|
||||||||||||
|
September 30,
|
|
September 30,
|
||||||||||||
Dollars in millions
|
2014
|
|
2013
|
|
2014
|
|
2013
|
||||||||
|
|
|
As Restated
|
|
|
|
|
As Restated
|
|
||||||
Revenues:
|
|
|
|
|
|
|
|
||||||||
Gas Monetization
|
$
|
343
|
|
|
$
|
537
|
|
|
$
|
1,105
|
|
|
$
|
1,725
|
|
Hydrocarbons
|
559
|
|
|
364
|
|
|
1,544
|
|
|
1,050
|
|
||||
Infrastructure, Government and Power
|
342
|
|
|
373
|
|
|
994
|
|
|
1,147
|
|
||||
Services
|
405
|
|
|
465
|
|
|
1,277
|
|
|
1,563
|
|
||||
Other
|
8
|
|
|
16
|
|
|
29
|
|
|
49
|
|
||||
Total
|
$
|
1,657
|
|
|
$
|
1,755
|
|
|
$
|
4,949
|
|
|
$
|
5,534
|
|
Gross profit (loss):
|
|
|
|
|
|
|
|
||||||||
Gas Monetization
|
$
|
41
|
|
|
$
|
136
|
|
|
$
|
184
|
|
|
$
|
305
|
|
Hydrocarbons
|
18
|
|
|
40
|
|
|
74
|
|
|
133
|
|
||||
Infrastructure, Government and Power
|
(40
|
)
|
|
17
|
|
|
(80
|
)
|
|
44
|
|
||||
Services
|
2
|
|
|
(73
|
)
|
|
(98
|
)
|
|
(42
|
)
|
||||
Other
|
6
|
|
|
4
|
|
|
16
|
|
|
12
|
|
||||
Labor cost absorption not allocated to the business segments - favorable (unfavorable)
|
3
|
|
|
(10
|
)
|
|
1
|
|
|
(42
|
)
|
||||
Total
|
$
|
30
|
|
|
$
|
114
|
|
|
$
|
97
|
|
|
$
|
410
|
|
Equity in earnings of unconsolidated affiliates:
|
|
|
|
|
|
|
|
||||||||
Gas Monetization
|
$
|
23
|
|
|
$
|
19
|
|
|
$
|
57
|
|
|
$
|
46
|
|
Hydrocarbons
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
||||
Infrastructure, Government and Power
|
7
|
|
|
9
|
|
|
40
|
|
|
35
|
|
||||
Services
|
4
|
|
|
1
|
|
|
4
|
|
|
11
|
|
||||
Other
|
4
|
|
|
2
|
|
|
17
|
|
|
15
|
|
||||
Total
|
$
|
38
|
|
|
$
|
31
|
|
|
$
|
118
|
|
|
$
|
107
|
|
Segment operating income (loss):
|
|
|
|
|
|
|
|
||||||||
Gas Monetization
|
$
|
64
|
|
|
$
|
155
|
|
|
$
|
241
|
|
|
$
|
351
|
|
Hydrocarbons
|
18
|
|
|
40
|
|
|
74
|
|
|
133
|
|
||||
Infrastructure, Government and Power
|
(33
|
)
|
|
26
|
|
|
(40
|
)
|
|
79
|
|
||||
Services
|
6
|
|
|
(72
|
)
|
|
(94
|
)
|
|
(31
|
)
|
||||
Other
|
10
|
|
|
6
|
|
|
41
|
|
|
26
|
|
||||
Labor cost absorption not allocated to the business segments - favorable (unfavorable)
|
3
|
|
|
(10
|
)
|
|
1
|
|
|
(42
|
)
|
||||
Corporate general and administrative expense not allocated to the business segments
|
(58
|
)
|
|
(66
|
)
|
|
(178
|
)
|
|
(181
|
)
|
||||
Total operating income
|
$
|
10
|
|
|
$
|
79
|
|
|
$
|
45
|
|
|
$
|
335
|
|
|
September 30, 2014
|
||||||||||
Dollars in millions
|
International (a)
|
|
Domestic (b)
|
|
Total
|
||||||
Operating cash
|
$
|
362
|
|
|
$
|
215
|
|
|
$
|
577
|
|
Time deposits
|
348
|
|
|
43
|
|
|
391
|
|
|||
Cash held in joint ventures
|
64
|
|
|
16
|
|
|
80
|
|
|||
Total
|
$
|
774
|
|
|
$
|
274
|
|
|
$
|
1,048
|
|
|
December 31, 2013
|
||||||||||
Dollars in millions
|
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.
|
|
September 30, 2014
|
||||||||||
Dollars in millions
|
Trade
|
|
Retainage
|
|
Total
|
||||||
Gas Monetization
|
$
|
126
|
|
|
$
|
—
|
|
|
$
|
126
|
|
Hydrocarbons
|
319
|
|
|
21
|
|
|
340
|
|
|||
Infrastructure, Government and Power
|
188
|
|
|
29
|
|
|
217
|
|
|||
Services
|
239
|
|
|
40
|
|
|
279
|
|
|||
Other
|
2
|
|
|
—
|
|
|
2
|
|
|||
Total
|
$
|
874
|
|
|
$
|
90
|
|
|
$
|
964
|
|
|
December 31, 2013
|
||||||||||
Dollars in millions
|
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
|
|
|
September 30,
|
|
December 31,
|
||||
Dollars in millions
|
2014
|
|
2013
|
||||
Gas Monetization
|
$
|
5
|
|
|
$
|
34
|
|
Hydrocarbons
|
255
|
|
|
146
|
|
||
Infrastructure, Government and Power
|
100
|
|
|
131
|
|
||
Services
|
144
|
|
|
83
|
|
||
Other
|
5
|
|
|
5
|
|
||
Total
|
$
|
509
|
|
|
$
|
399
|
|
|
September 30,
|
|
December 31,
|
||||
Dollars in millions
|
2014
|
|
2013
|
||||
Gas Monetization
|
$
|
40
|
|
|
$
|
30
|
|
Hydrocarbons
|
185
|
|
|
139
|
|
||
Infrastructure, Government and Power
|
211
|
|
|
199
|
|
||
Services
|
20
|
|
|
33
|
|
||
Other
|
—
|
|
|
—
|
|
||
Total
|
$
|
456
|
|
|
$
|
401
|
|
Dollars in millions
|
2014
|
|
2013
|
||||
Amounts included in estimated project revenues at completion at January 1,
|
$
|
115
|
|
|
$
|
167
|
|
Increase in estimated project revenues at completion
|
81
|
|
|
69
|
|
||
Approved by client
|
(134
|
)
|
|
(26
|
)
|
||
Amounts included in estimated project revenues at completion at September 30,
|
$
|
62
|
|
|
$
|
210
|
|
|
|
|
|
||||
Amounts recorded in revenues on a percentage-of-completion basis at September 30,
|
$
|
53
|
|
|
$
|
165
|
|
|
September 30,
|
|
December 31,
|
||||
Dollars in millions
|
2014
|
|
2013
|
||||
Hydrocarbons
|
$
|
401
|
|
|
$
|
401
|
|
Infrastructure, Government and Power
|
196
|
|
|
226
|
|
||
Other
|
1
|
|
|
1
|
|
||
Total
|
$
|
598
|
|
|
$
|
628
|
|
Dollars in millions
|
2014
|
|
2013
|
||||
Balance at January 1,
|
$
|
156
|
|
|
$
|
217
|
|
Equity in earnings of unconsolidated affiliates
|
118
|
|
|
107
|
|
||
Dividends received (a)
|
(212
|
)
|
|
(151
|
)
|
||
Advances
|
(14
|
)
|
|
(12
|
)
|
||
Cumulative translation adjustment
|
(1
|
)
|
|
(7
|
)
|
||
Balance at September 30, before reclassification
|
47
|
|
|
154
|
|
||
Reclassification of excess distributions (a)
|
102
|
|
|
—
|
|
||
Balance at September 30,
|
$
|
149
|
|
|
$
|
154
|
|
|
(a)
|
During the third quarter of 2014, we received dividend distributions in excess of the carrying value of our investments by
$102 million
. We have no obligation to return any portion of the dividends received. We reclassified the excess distribution to “deferred income from unconsolidated affiliates” on our condensed consolidated balance sheets and this amount will be reduced as we recognize our share of future earnings.
|
|
September 30,
|
|
December 31,
|
||||
Dollars in millions
|
2014
|
|
2013
|
||||
Accounts receivable, net of allowance for doubtful accounts
|
$
|
2
|
|
|
$
|
6
|
|
Costs and estimated earnings in excess of billings on uncompleted contracts
|
$
|
2
|
|
|
$
|
2
|
|
Billings in excess of costs and estimated earnings on uncompleted contracts
|
$
|
23
|
|
|
$
|
24
|
|
|
September 30,
|
|
December 31,
|
||||
Dollars in millions
|
2014
|
|
2013
|
||||
Current assets
|
$
|
3,968
|
|
|
$
|
4,114
|
|
Noncurrent assets
|
4,212
|
|
|
4,222
|
|
||
Total assets
|
$
|
8,180
|
|
|
$
|
8,336
|
|
|
|
|
|
||||
Current liabilities
|
$
|
3,597
|
|
|
$
|
3,679
|
|
Noncurrent liabilities
|
4,273
|
|
|
4,400
|
|
||
Total liabilities
|
$
|
7,870
|
|
|
$
|
8,079
|
|
|
Three Months Ended
|
|
Nine Months Ended
|
||||||||||||
|
September 30,
|
|
September 30,
|
||||||||||||
Dollars in millions
|
2014
|
|
2013
|
|
2014
|
|
2013
|
||||||||
Revenues
|
$
|
1,728
|
|
|
$
|
1,400
|
|
|
$
|
4,336
|
|
|
$
|
3,548
|
|
Operating income
|
$
|
175
|
|
|
$
|
135
|
|
|
$
|
503
|
|
|
$
|
434
|
|
Net income
|
$
|
101
|
|
|
$
|
81
|
|
|
$
|
307
|
|
|
$
|
276
|
|
|
September 30, 2014
|
||||||||||
Dollars in millions
|
Total assets
|
|
Total liabilities
|
|
Maximum
exposure to
loss
|
||||||
Aspire Defence project
|
$
|
17
|
|
|
$
|
126
|
|
|
$
|
17
|
|
Ichthys LNG project
|
$
|
30
|
|
|
$
|
37
|
|
|
$
|
30
|
|
U.K. Road projects
|
$
|
35
|
|
|
$
|
12
|
|
|
$
|
35
|
|
EBIC Ammonia project
|
$
|
43
|
|
|
$
|
2
|
|
|
$
|
27
|
|
Fermoy Road project
|
$
|
4
|
|
|
$
|
5
|
|
|
$
|
4
|
|
Dollars in millions
|
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
|
|
Dollars in millions
|
September 30, 2014
|
||||||
Total assets
|
|
Total liabilities
|
|||||
Gorgon LNG project
|
$
|
372
|
|
|
$
|
399
|
|
Escravos Gas-to-Liquids project
|
$
|
32
|
|
|
$
|
52
|
|
Fasttrax Limited project
|
$
|
90
|
|
|
$
|
89
|
|
Dollars in millions
|
December 31, 2013
|
||||||
Total assets
|
|
Total liabilities
|
|||||
Gorgon LNG project
|
$
|
446
|
|
|
$
|
476
|
|
Escravos Gas-to-Liquids project
|
$
|
43
|
|
|
$
|
72
|
|
Fasttrax Limited project
|
$
|
96
|
|
|
$
|
98
|
|
|
Three Months Ended September 30,
|
||||||||||||||
|
2014
|
|
2013
|
||||||||||||
Dollars in millions
|
United States
|
|
Int’l
|
|
United States
|
|
Int’l
|
||||||||
Components of net periodic benefit cost
|
|
|
|
|
|
|
|
||||||||
Service cost
|
$
|
—
|
|
|
$
|
1
|
|
|
$
|
—
|
|
|
$
|
1
|
|
Interest cost
|
1
|
|
|
23
|
|
|
1
|
|
|
18
|
|
||||
Expected return on plan assets
|
(1
|
)
|
|
(26
|
)
|
|
(2
|
)
|
|
(19
|
)
|
||||
Recognized actuarial loss
|
1
|
|
|
10
|
|
|
1
|
|
|
7
|
|
||||
Net periodic benefit cost
|
$
|
1
|
|
|
$
|
8
|
|
|
$
|
—
|
|
|
$
|
7
|
|
|
Nine Months Ended September 30,
|
||||||||||||||
|
2014
|
|
2013
|
||||||||||||
Dollars in millions
|
United States
|
|
Int’l
|
|
United States
|
|
Int’l
|
||||||||
Components of net periodic benefit cost
|
|
|
|
|
|
|
|
||||||||
Service cost
|
$
|
—
|
|
|
$
|
2
|
|
|
$
|
—
|
|
|
$
|
2
|
|
Interest cost
|
2
|
|
|
68
|
|
|
2
|
|
|
59
|
|
||||
Expected return on plan assets
|
(3
|
)
|
|
(78
|
)
|
|
(4
|
)
|
|
(64
|
)
|
||||
Recognized actuarial loss
|
3
|
|
|
29
|
|
|
2
|
|
|
24
|
|
||||
Net periodic benefit cost
|
$
|
2
|
|
|
$
|
21
|
|
|
$
|
—
|
|
|
$
|
21
|
|
|
2014
|
|
2013
|
||
U.S. statutory federal rate
|
35.0
|
%
|
|
35.0
|
%
|
Rate differentials on foreign earnings
|
(8.5
|
)%
|
|
(6.6
|
)%
|
Taxes on unincorporated joint ventures
|
(10.1
|
)%
|
|
(7.6
|
)%
|
Taxes on unconsolidated affiliates
|
(10.9
|
)%
|
|
(4.6
|
)%
|
U.S. taxes provided on foreign earnings
|
12.1
|
%
|
|
2.2
|
%
|
State taxes
|
0.3
|
%
|
|
0.5
|
%
|
Other
|
4.4
|
%
|
|
3.7
|
%
|
Estimated annual effective tax rate
|
22.3
|
%
|
|
22.6
|
%
|
|
September 30,
|
|
December 31,
|
||||
Dollars in millions
|
2014
|
|
2013
|
||||
Form 1s issued by the government and outstanding (a)
|
$
|
229
|
|
|
$
|
274
|
|
Amounts withheld by government (included in the Form 1s amount above) (b)
|
137
|
|
|
137
|
|
||
Amounts withheld from subcontractors by us
|
33
|
|
|
50
|
|
||
Claims loss accruals (c)
|
62
|
|
|
74
|
|
|
(a)
|
Included in the amounts shown is
$56 million
related to our Private Security matter discussed below in which KBR was granted full recovery of the amounts claimed. The September 30, 2014 balance excludes amounts related to H-29 as we have settled this matter. See discussion below.
|
(b)
|
Recorded in "claims and accounts receivable" on our condensed consolidated balance sheets. We believe these amounts are probable of collection.
|
(c)
|
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.
|
Dollars in millions
|
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
|
16
|
|
|
16
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
||||||
Common stock issued upon exercise of stock options
|
4
|
|
|
4
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
||||||
Dividends declared to shareholders
|
(35
|
)
|
|
—
|
|
|
(35
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
||||||
Repurchases of common stock
|
(102
|
)
|
|
—
|
|
|
—
|
|
|
(102
|
)
|
|
—
|
|
|
—
|
|
||||||
Issuance of ESPP shares
|
4
|
|
|
—
|
|
|
—
|
|
|
4
|
|
|
—
|
|
|
—
|
|
||||||
Investments by noncontrolling interests
|
10
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
10
|
|
||||||
Distributions to noncontrolling interests
|
(49
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(49
|
)
|
||||||
Net income (loss)
|
33
|
|
|
—
|
|
|
(21
|
)
|
|
—
|
|
|
—
|
|
|
54
|
|
||||||
Other comprehensive income (loss), net of tax
|
(3
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(4
|
)
|
|
1
|
|
||||||
Balance at September 30, 2014
|
$
|
2,317
|
|
|
$
|
2,085
|
|
|
$
|
1,692
|
|
|
$
|
(708
|
)
|
|
$
|
(744
|
)
|
|
$
|
(8
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Dollars in millions
|
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
|
13
|
|
|
13
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
||||||
Common stock issued upon exercise of stock options
|
5
|
|
|
5
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
||||||
Adjustment pursuant to Accounting Referee's report on tax sharing agreement
|
(7
|
)
|
|
(7
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
||||||
Dividends declared to shareholders
|
(24
|
)
|
|
—
|
|
|
(24
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
||||||
Repurchases of common stock
|
(7
|
)
|
|
—
|
|
|
—
|
|
|
(7
|
)
|
|
—
|
|
|
—
|
|
||||||
Issuance of ESPP shares
|
4
|
|
|
1
|
|
|
—
|
|
|
3
|
|
|
—
|
|
|
—
|
|
||||||
Investments by noncontrolling interests
|
9
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
9
|
|
||||||
Distributions to noncontrolling interests
|
(58
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(58
|
)
|
||||||
Change in NCI due to consolidation of previously unconsolidated JV and other transactions
|
2
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
2
|
|
||||||
Net income
|
223
|
|
|
—
|
|
|
131
|
|
|
—
|
|
|
—
|
|
|
92
|
|
||||||
Other comprehensive income (loss), net of tax
|
(8
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(15
|
)
|
|
7
|
|
||||||
Balance at September 30, 2013
|
$
|
2,663
|
|
|
$
|
2,061
|
|
|
$
|
1,816
|
|
|
$
|
(610
|
)
|
|
$
|
(625
|
)
|
|
$
|
21
|
|
|
September 30,
|
||||||
Dollars in millions
|
2014
|
|
2013
|
||||
Accumulated CTA, net of tax
|
$
|
(158
|
)
|
|
$
|
(123
|
)
|
Accumulated pension liability adjustments, net of tax
|
(583
|
)
|
|
(501
|
)
|
||
Accumulated unrealized losses on derivatives, net of tax
|
(3
|
)
|
|
(1
|
)
|
||
Total accumulated other comprehensive loss
|
$
|
(744
|
)
|
|
$
|
(625
|
)
|
Dollars in millions
|
Accumulated CTA
|
|
Accumulated pension liability adjustments
|
|
Accumulated unrealized losses on derivatives
|
|
Total
|
||||||||
Balance at December 31, 2013
|
$
|
(131
|
)
|
|
$
|
(608
|
)
|
|
$
|
(1
|
)
|
|
$
|
(740
|
)
|
Other comprehensive income (loss) adjustments before reclassifications
|
(28
|
)
|
|
—
|
|
|
(1
|
)
|
|
(29
|
)
|
||||
Amounts reclassified from accumulated other comprehensive income (loss)
|
1
|
|
|
25
|
|
|
(1
|
)
|
|
25
|
|
||||
Balance at September 30, 2014
|
$
|
(158
|
)
|
|
$
|
(583
|
)
|
|
$
|
(3
|
)
|
|
$
|
(744
|
)
|
Dollars in millions
|
Accumulated CTA
|
|
Accumulated pension liability adjustments
|
|
Accumulated unrealized losses on derivatives
|
|
Total
|
||||||||
Balance at December 31, 2012
|
$
|
(88
|
)
|
|
$
|
(521
|
)
|
|
$
|
(1
|
)
|
|
$
|
(610
|
)
|
Other comprehensive income (loss) adjustments before reclassifications
|
(36
|
)
|
|
—
|
|
|
—
|
|
|
(36
|
)
|
||||
Amounts reclassified from accumulated other comprehensive income (loss)
|
1
|
|
|
20
|
|
|
—
|
|
|
21
|
|
||||
Balance at September 30, 2013
|
$
|
(123
|
)
|
|
$
|
(501
|
)
|
|
$
|
(1
|
)
|
|
$
|
(625
|
)
|
|
Nine Months Ended September 30,
|
Affected line item in the Condensed Consolidated Statements of Income
|
||||||
Dollars in millions
|
2014
|
|
2013
|
|||||
Accumulated pension liability adjustments
|
|
|
|
|
||||
Amortization of actuarial loss (a)
|
$
|
(32
|
)
|
|
$
|
(26
|
)
|
See (a) below
|
Tax benefit
|
7
|
|
|
6
|
|
Provision for income taxes
|
||
Net pension liability adjustment realized
|
$
|
(25
|
)
|
|
$
|
(20
|
)
|
Net of tax
|
|
|
Dollars in Millions
|
|
Number of Shares Repurchased
|
||||||||||
|
Three Months Ended
|
|
Nine Months Ended
|
|
Three Months Ended
|
|
Nine Months Ended
|
||||||
|
September 30, 2014
|
|
September 30, 2014
|
|
September 30, 2014
|
|
September 30, 2014
|
||||||
Repurchases under the $350 million authorized share repurchase program
|
$
|
4
|
|
|
$
|
85
|
|
|
175,522
|
|
|
3,149,151
|
|
Repurchases under the existing share maintenance program
|
2
|
|
|
17
|
|
|
131,300
|
|
|
661,020
|
|
||
Total
|
$
|
6
|
|
|
$
|
102
|
|
|
306,822
|
|
|
3,810,171
|
|
|
Three Months Ended
|
|
Nine Months Ended
|
||||||||
|
September 30,
|
|
September 30,
|
||||||||
Millions of shares
|
2014
|
|
2013
|
|
2014
|
|
2013
|
||||
Basic weighted average common shares outstanding
|
145
|
|
|
148
|
|
|
145
|
|
|
148
|
|
Stock options and restricted shares
|
—
|
|
|
—
|
|
|
—
|
|
|
1
|
|
Diluted weighted average common shares outstanding
|
145
|
|
|
148
|
|
|
145
|
|
|
149
|
|
•
|
a reduction in "revenues" of
$25 million
consisting of a
$28 million
decrease related to the error on the contracts within our Services business segment, a
$4 million
increase related to an error on a long-term construction project in our Gas Monetization business segment and a
$1 million
decrease related to the correction of several immaterial errors;
|
•
|
an increase in "cost of revenues" of
$62 million
due to the recognition of a $61 million reserve for losses on uncompleted contracts related to the error on the contracts within our Services business segment and $1 million related to other immaterial corrections; and
|
•
|
a
$15 million
tax benefit consisting of a $9 million tax benefit related to the error in our Services business segment and a
$6 million
tax benefit representing the tax effect of the correction of several immaterial errors.
|
Revenues
|
Three Months Ended September 30,
|
|||||||||||||
|
|
|
|
|
2014 vs. 2013
|
|||||||||
Dollars in millions
|
2014
|
|
2013
|
|
$
|
|
%
|
|||||||
Revenues
|
$
|
1,657
|
|
|
$
|
1,755
|
|
|
$
|
(98
|
)
|
|
(6
|
)%
|
Gross Profit
|
Three Months Ended September 30,
|
|||||||||||||
|
|
|
|
|
2014 vs. 2013
|
|||||||||
Dollars in millions
|
2014
|
|
2013
|
|
$
|
|
%
|
|||||||
Gross profit
|
$
|
30
|
|
|
$
|
114
|
|
|
$
|
(84
|
)
|
|
(74
|
)%
|
Equity in Earnings of Unconsolidated Affiliates
|
Three Months Ended September 30,
|
|||||||||||||
|
|
|
|
|
2014 vs. 2013
|
|||||||||
Dollars in millions
|
2014
|
|
2013
|
|
$
|
|
%
|
|||||||
Equity in earnings of unconsolidated affiliates
|
$
|
38
|
|
|
$
|
31
|
|
|
$
|
7
|
|
|
23
|
%
|
General and Administrative Expenses
|
Three Months Ended September 30,
|
|||||||||||||
|
|
|
|
|
2014 vs. 2013
|
|||||||||
Dollars in millions
|
2014
|
|
2013
|
|
$
|
|
%
|
|||||||
General and administrative expenses
|
$
|
(58
|
)
|
|
$
|
(66
|
)
|
|
$
|
8
|
|
|
12
|
%
|
Interest Income (Expense), net
|
Three Months Ended September 30,
|
|||||||||||||
|
|
|
|
|
2014 vs. 2013
|
|||||||||
Dollars in millions
|
2014
|
|
2013
|
|
$
|
|
%
|
|||||||
Interest income (expense), net
|
$
|
3
|
|
|
$
|
(1
|
)
|
|
$
|
4
|
|
|
400
|
%
|
Foreign Currency
|
Three Months Ended September 30,
|
|||||||||||||
|
|
|
|
|
2014 vs. 2013
|
|||||||||
Dollars in millions
|
2014
|
|
2013
|
|
$
|
|
%
|
|||||||
Foreign currency gains (losses)
|
$
|
7
|
|
|
$
|
(2
|
)
|
|
$
|
9
|
|
|
450
|
%
|
Other Non-operating Income (Expenses)
|
Three Months Ended September 30,
|
|||||||||||||
|
|
|
|
|
2014 vs. 2013
|
|||||||||
Dollars in millions
|
2014
|
|
2013
|
|
$
|
|
%
|
|||||||
Other non-operating income (expenses)
|
$
|
24
|
|
|
$
|
(1
|
)
|
|
$
|
25
|
|
|
2,500
|
%
|
Provision for Income Taxes
|
Three Months Ended September 30,
|
|||||||||||||
|
|
|
|
|
2014 vs. 2013
|
|||||||||
Dollars in millions
|
2014
|
|
2013
|
|
$
|
|
%
|
|||||||
Income before provision for income taxes
|
$
|
44
|
|
|
$
|
75
|
|
|
$
|
(31
|
)
|
|
(41
|
)%
|
Benefit (provision) for income taxes
|
$
|
1
|
|
|
$
|
(60
|
)
|
|
$
|
61
|
|
|
102
|
%
|
Net Income Attributable to Noncontrolling Interests
|
Three Months Ended September 30,
|
|||||||||||||
|
|
|
|
|
2014 vs. 2013
|
|||||||||
Dollars in millions
|
2014
|
|
2013
|
|
$
|
|
%
|
|||||||
Net income attributable to noncontrolling interests
|
$
|
(15
|
)
|
|
$
|
(62
|
)
|
|
$
|
47
|
|
|
76
|
%
|
|
Three Months Ended September 30,
|
|||||||||||||
|
|
|
|
|
2014 vs. 2013
|
|||||||||
Dollars in millions
|
2014
|
|
2013
|
|
$
|
|
%
|
|||||||
Revenues
|
|
|
|
|
|
|
|
|||||||
Gas Monetization
|
$
|
343
|
|
|
$
|
537
|
|
|
$
|
(194
|
)
|
|
(36
|
)%
|
Hydrocarbons
|
559
|
|
|
364
|
|
|
195
|
|
|
54
|
%
|
|||
Infrastructure, Government and Power
|
342
|
|
|
373
|
|
|
(31
|
)
|
|
(8
|
)%
|
|||
Services
|
405
|
|
|
465
|
|
|
(60
|
)
|
|
(13
|
)%
|
|||
Other
|
8
|
|
|
16
|
|
|
(8
|
)
|
|
(50
|
)%
|
|||
Total
|
$
|
1,657
|
|
|
$
|
1,755
|
|
|
$
|
(98
|
)
|
|
(6
|
)%
|
|
|
|
|
|
|
|
|
|||||||
Gross profit (loss)
|
|
|
|
|
|
|
|
|||||||
Gas Monetization
|
$
|
41
|
|
|
$
|
136
|
|
|
$
|
(95
|
)
|
|
(70
|
)%
|
Hydrocarbons
|
18
|
|
|
40
|
|
|
(22
|
)
|
|
(55
|
)%
|
|||
Infrastructure, Government and Power
|
(40
|
)
|
|
17
|
|
|
(57
|
)
|
|
(335
|
)%
|
|||
Services
|
2
|
|
|
(73
|
)
|
|
75
|
|
|
103
|
%
|
|||
Other
|
6
|
|
|
4
|
|
|
2
|
|
|
50
|
%
|
|||
Labor cost not allocated to the business segments - favorable (unfavorable)
|
3
|
|
|
(10
|
)
|
|
13
|
|
|
130
|
%
|
|||
Total
|
$
|
30
|
|
|
$
|
114
|
|
|
$
|
(84
|
)
|
|
(74
|
)%
|
|
|
|
|
|
|
|
|
|||||||
Equity in earnings of unconsolidated affiliates
|
|
|
|
|
|
|
|
|||||||
Gas Monetization
|
$
|
23
|
|
|
$
|
19
|
|
|
$
|
4
|
|
|
21
|
%
|
Hydrocarbons
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
%
|
|||
Infrastructure, Government and Power
|
7
|
|
|
9
|
|
|
(2
|
)
|
|
(22
|
)%
|
|||
Services
|
4
|
|
|
1
|
|
|
3
|
|
|
300
|
%
|
|||
Other
|
4
|
|
|
2
|
|
|
2
|
|
|
100
|
%
|
|||
Total
|
$
|
38
|
|
|
$
|
31
|
|
|
$
|
7
|
|
|
23
|
%
|
|
|
|
|
|
|
|
|
|||||||
Gain on disposition of assets
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
—
|
%
|
|
|
|
|
|
|
|
|
|||||||
Amounts not allocated to the business segments
|
|
|
|
|
|
|
|
|||||||
General and administrative expenses
|
$
|
(58
|
)
|
|
$
|
(66
|
)
|
|
$
|
8
|
|
|
12
|
%
|
Total operating income
|
$
|
10
|
|
|
$
|
79
|
|
|
$
|
(69
|
)
|
|
(87
|
)%
|
Labor Cost not Allocated to the Business Segments
|
Three Months Ended September 30,
|
|||||||||||||
|
|
|
|
|
2014 vs. 2013
|
|||||||||
Dollars in millions
|
2014
|
|
2013
|
|
$
|
|
%
|
|||||||
Labor cost not allocated to the business segments - favorable (unfavorable)
|
$
|
3
|
|
|
$
|
(10
|
)
|
|
$
|
13
|
|
|
130
|
%
|
Revenues
|
Nine Months Ended September 30,
|
|||||||||||||
|
|
|
|
|
2014 vs. 2013
|
|||||||||
Dollars in millions
|
2014
|
|
2013
|
|
$
|
|
%
|
|||||||
Revenues
|
$
|
4,949
|
|
|
$
|
5,534
|
|
|
$
|
(585
|
)
|
|
(11
|
)%
|
Gross Profit
|
Nine Months Ended September 30,
|
|||||||||||||
|
|
|
|
|
2014 vs. 2013
|
|||||||||
Dollars in millions
|
2014
|
|
2013
|
|
$
|
|
%
|
|||||||
Gross profit
|
$
|
97
|
|
|
$
|
410
|
|
|
$
|
(313
|
)
|
|
(76
|
)%
|
Equity in Earnings of Unconsolidated Affiliates
|
Nine Months Ended September 30,
|
|||||||||||||
|
|
|
|
|
2014 vs. 2013
|
|||||||||
Dollars in millions
|
2014
|
|
2013
|
|
$
|
|
%
|
|||||||
Equity in earnings of unconsolidated affiliates
|
$
|
118
|
|
|
$
|
107
|
|
|
$
|
11
|
|
|
10
|
%
|
General and Administrative Expenses
|
Nine Months Ended September 30,
|
|||||||||||||
|
|
|
|
|
2014 vs. 2013
|
|||||||||
Dollars in millions
|
2014
|
|
2013
|
|
$
|
|
%
|
|||||||
General and administrative expenses
|
$
|
(178
|
)
|
|
$
|
(181
|
)
|
|
$
|
3
|
|
|
2
|
%
|
Interest Expense, net of Interest Income
|
Nine Months Ended September 30,
|
|||||||||||||
|
|
|
|
|
2014 vs. 2013
|
|||||||||
Dollars in millions
|
2014
|
|
2013
|
|
$
|
|
%
|
|||||||
Interest expense, net of interest income
|
$
|
(1
|
)
|
|
$
|
(3
|
)
|
|
$
|
2
|
|
|
67
|
%
|
Foreign Currency
|
Nine Months Ended September 30,
|
|||||||||||||
|
|
|
|
|
2014 vs. 2013
|
|||||||||
Dollars in millions
|
2014
|
|
2013
|
|
$
|
|
%
|
|||||||
Foreign currency losses
|
$
|
(4
|
)
|
|
$
|
(2
|
)
|
|
$
|
(2
|
)
|
|
(100
|
)%
|
Other Non-operating Income (Expenses)
|
Nine Months Ended September 30,
|
|||||||||||||
|
|
|
|
|
2014 vs. 2013
|
|||||||||
Dollars in millions
|
2014
|
|
2013
|
|
$
|
|
%
|
|||||||
Other non-operating income (expenses)
|
$
|
23
|
|
|
$
|
(2
|
)
|
|
$
|
25
|
|
|
1,250
|
%
|
Provision for Income Taxes
|
Nine Months Ended September 30,
|
|||||||||||||
|
|
|
|
|
2014 vs. 2013
|
|||||||||
Dollars in millions
|
2014
|
|
2013
|
|
$
|
|
%
|
|||||||
Income before provision for income taxes
|
$
|
63
|
|
|
$
|
328
|
|
|
$
|
(265
|
)
|
|
(81
|
)%
|
Provision for income taxes
|
$
|
(30
|
)
|
|
$
|
(105
|
)
|
|
$
|
75
|
|
|
71
|
%
|
Net Income Attributable to Noncontrolling Interests
|
Nine Months Ended September 30,
|
|||||||||||||
|
|
|
|
|
2014 vs. 2013
|
|||||||||
Dollars in millions
|
2014
|
|
2013
|
|
$
|
|
%
|
|||||||
Net income attributable to noncontrolling interests
|
$
|
(54
|
)
|
|
$
|
(92
|
)
|
|
$
|
38
|
|
|
41
|
%
|
|
Nine Months Ended September 30,
|
|||||||||||||
|
|
|
|
|
2014 vs. 2013
|
|||||||||
Dollars in millions
|
2014
|
|
2013
|
|
$
|
|
%
|
|||||||
Revenues
|
|
|
|
|
|
|
|
|||||||
Gas Monetization
|
$
|
1,105
|
|
|
$
|
1,725
|
|
|
$
|
(620
|
)
|
|
(36
|
)%
|
Hydrocarbons
|
1,544
|
|
|
1,050
|
|
|
494
|
|
|
47
|
%
|
|||
Infrastructure, Government and Power
|
994
|
|
|
1,147
|
|
|
(153
|
)
|
|
(13
|
)%
|
|||
Services
|
1,277
|
|
|
1,563
|
|
|
(286
|
)
|
|
(18
|
)%
|
|||
Other
|
29
|
|
|
49
|
|
|
(20
|
)
|
|
(41
|
)%
|
|||
Total
|
$
|
4,949
|
|
|
$
|
5,534
|
|
|
$
|
(585
|
)
|
|
(11
|
)%
|
|
|
|
|
|
|
|
|
|||||||
Gross profit (loss)
|
|
|
|
|
|
|
|
|||||||
Gas Monetization
|
$
|
184
|
|
|
$
|
305
|
|
|
$
|
(121
|
)
|
|
(40
|
)%
|
Hydrocarbons
|
74
|
|
|
133
|
|
|
(59
|
)
|
|
(44
|
)%
|
|||
Infrastructure, Government and Power
|
(80
|
)
|
|
44
|
|
|
(124
|
)
|
|
(282
|
)%
|
|||
Services
|
(98
|
)
|
|
(42
|
)
|
|
(56
|
)
|
|
(133
|
)%
|
|||
Other
|
16
|
|
|
12
|
|
|
4
|
|
|
33
|
%
|
|||
Labor cost not allocated to the business segments - favorable (unfavorable)
|
1
|
|
|
(42
|
)
|
|
43
|
|
|
102
|
%
|
|||
Total
|
$
|
97
|
|
|
$
|
410
|
|
|
$
|
(313
|
)
|
|
(76
|
)%
|
|
|
|
|
|
|
|
|
|||||||
Equity in earnings of unconsolidated affiliates
|
|
|
|
|
|
|
|
|||||||
Gas Monetization
|
$
|
57
|
|
|
$
|
46
|
|
|
$
|
11
|
|
|
24
|
%
|
Hydrocarbons
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
%
|
|||
Infrastructure, Government and Power
|
40
|
|
|
35
|
|
|
5
|
|
|
14
|
%
|
|||
Services
|
4
|
|
|
11
|
|
|
(7
|
)
|
|
(64
|
)%
|
|||
Other
|
17
|
|
|
15
|
|
|
2
|
|
|
13
|
%
|
|||
Total
|
$
|
118
|
|
|
$
|
107
|
|
|
$
|
11
|
|
|
10
|
%
|
|
|
|
|
|
|
|
|
|||||||
Gain (loss) on disposition of assets
|
$
|
8
|
|
|
$
|
(1
|
)
|
|
$
|
9
|
|
|
900
|
%
|
|
|
|
|
|
|
|
|
|||||||
Amounts not allocated to the business segments
|
|
|
|
|
|
|
|
|||||||
General and administrative expenses
|
$
|
(178
|
)
|
|
$
|
(181
|
)
|
|
$
|
3
|
|
|
2
|
%
|
Total operating income
|
$
|
45
|
|
|
$
|
335
|
|
|
$
|
(290
|
)
|
|
(87
|
)%
|
Labor Cost not Allocated to the Business Segments
|
Nine Months Ended September 30,
|
|||||||||||||
|
|
|
|
|
2014 vs. 2013
|
|||||||||
Dollars in millions
|
2014
|
|
2013
|
|
$
|
|
%
|
|||||||
Labor cost not allocated to the business segments - favorable (unfavorable)
|
$
|
1
|
|
|
$
|
(42
|
)
|
|
$
|
43
|
|
|
102
|
%
|
|
December 31,
|
|
|
|
Changes in scope on existing contracts (a)
|
|
|
|
September 30,
|
||||||||||
Dollars in millions
|
2013
|
|
New Awards
|
|
|
Net Workoff (b)
|
|
2014
|
|||||||||||
Gas Monetization
|
$
|
6,169
|
|
|
$
|
50
|
|
|
$
|
(348
|
)
|
|
$
|
(1,163
|
)
|
|
$
|
4,708
|
|
Hydrocarbons
|
2,619
|
|
|
1,163
|
|
|
535
|
|
|
(1,546
|
)
|
|
2,771
|
|
|||||
Infrastructure, Government and Power
|
2,079
|
|
|
785
|
|
|
278
|
|
|
(1,050
|
)
|
|
2,092
|
|
|||||
Services
|
2,254
|
|
|
391
|
|
|
289
|
|
|
(1,280
|
)
|
|
1,654
|
|
|||||
Other
|
997
|
|
|
—
|
|
|
(50
|
)
|
|
(28
|
)
|
|
919
|
|
|||||
Total backlog
|
$
|
14,118
|
|
|
$
|
2,389
|
|
|
$
|
704
|
|
|
$
|
(5,067
|
)
|
|
$
|
12,144
|
|
|
|
September 30,
|
|
December 31,
|
||||
Dollars in Millions
|
2014
|
|
2013
|
||||
Domestic U.S. cash
|
$
|
258
|
|
|
$
|
355
|
|
International cash
|
710
|
|
|
675
|
|
||
Joint venture cash
|
80
|
|
|
76
|
|
||
Total
|
$
|
1,048
|
|
|
$
|
1,106
|
|
Summary of Cash Flow Activity
|
|
|
|
|
||||
|
|
Nine Months Ended September 30,
|
||||||
Dollars in millions
|
|
2014
|
|
2013
|
||||
Cash flows provided by operating activities
|
|
$
|
178
|
|
|
$
|
81
|
|
Cash flows used in investing activities
|
|
(37
|
)
|
|
(50
|
)
|
||
Cash flows used in financing activities
|
|
(178
|
)
|
|
(83
|
)
|
||
Effect of exchange rate changes on cash
|
|
(21
|
)
|
|
(42
|
)
|
||
Decrease in cash and equivalents
|
|
$
|
(58
|
)
|
|
$
|
(94
|
)
|
•
|
volatility of the currency rates;
|
•
|
time horizon of the derivative instruments;
|
•
|
market cycles; and
|
•
|
the type of derivative instruments used.
|
•
|
Continuing to 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.
|
•
|
Continuing to 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.
|
•
|
Continuing to provide training to our personnel involved in the estimation of revenues, costs and profit at completion on projects with multiple currencies.
|
•
|
Conducted town hall meetings throughout the Company's worldwide organization led by executive management to reinforce the requirement for employees to follow the Company's corporate culture, policies and procedures.
|
•
|
Changed certain management personnel and increase the number of qualified professionals.
|
•
|
Continuing to provide training to new and key personnel on roles and responsibilities, including line of communications in the event of concerns.
|
•
|
Continuing to 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.
|
•
|
Implemented and are actively monitoring execution of KBR standard project controls work processes and systems across the Canada pipe fabrication and module assembly projects.
|
•
|
Implemented 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
nine
months ended
September 30, 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
(1)
|
|
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
(1)
|
||||||
July 1 – 31, 2014
|
|
|
|
|
|
|
|
||||||
Repurchase program
(2) (3)
|
(97,868
|
)
|
|
$
|
20.78
|
|
|
(97,868
|
)
|
|
$
|
271,011,384
|
|
Maintenance program
(2) (3)
|
97,868
|
|
|
$
|
20.78
|
|
|
—
|
|
|
—
|
|
|
Employee transactions
|
3,201
|
|
|
$
|
23.54
|
|
|
—
|
|
|
—
|
|
|
August 1 – 29, 2014
|
|
|
|
|
|
|
|
||||||
Repurchase program
|
274,119
|
|
|
$
|
20.78
|
|
|
274,119
|
|
|
$
|
265,315,027
|
|
Maintenance program
|
26,481
|
|
|
$
|
20.78
|
|
|
—
|
|
|
—
|
|
|
Employee transactions
|
1,713
|
|
|
$
|
21.60
|
|
|
—
|
|
|
—
|
|
|
September 1 – 30, 2014
|
|
|
|
|
|
|
|
||||||
Repurchase program
(2) (3)
|
(729
|
)
|
|
$
|
20.78
|
|
|
(729
|
)
|
|
$
|
265,330,176
|
|
Maintenance program
(2) (3)
|
729
|
|
|
$
|
20.78
|
|
|
—
|
|
|
—
|
|
|
Employee transactions
|
1,308
|
|
|
$
|
19.28
|
|
|
—
|
|
|
—
|
|
|
Total
|
|
|
|
|
|
|
|
||||||
Repurchase program
|
175,522
|
|
|
$
|
20.78
|
|
|
175,522
|
|
|
$
|
265,330,176
|
|
Maintenance program
|
125,078
|
|
|
$
|
20.78
|
|
|
—
|
|
|
—
|
|
|
Employee transactions
|
6,222
|
|
|
$
|
22.11
|
|
|
—
|
|
|
—
|
|
|
(1)
|
Represents remaining authorization that may be used for repurchases pursuant to the share repurchase program authorized and announced on February 25, 2014.
|
(2)
|
There were no shares repurchased during this period; however, share grants under our equity compensation plans vested and shares were issued in accordance with those plans.
|
(3)
|
In a given fiscal year, we allocate repurchased shares first to our maintenance program and second to our Board-authorized repurchase program. Negative values reflect repurchased shares in excess of available maintenance shares in previous periods that have been reallocated in the current period as repurchases under the maintenance program from repurchases under the Board-authorized repurchase program.
|
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. 1-33146)
|
|
|
|
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. 1-33146)
|
|
|
|
*10.1+
|
|
Form of revised Restricted Stock Unit Agreement (U.S. Employee - 3 Year Vesting) pursuant to KBR, Inc. 2006 Stock and Incentive Plan
|
|
|
|
*10.2+
|
|
Form of revised Restricted Stock Unit Agreement (International Employee - 3 Year Vesting) pursuant to KBR, Inc. 2006 Stock and Incentive Plan
|
|
|
|
*10.3+
|
|
Form of revised Restricted Stock Unit Agreement (U.S. Employee - 3 Year Vesting; Involuntary Termination Trigger) pursuant to KBR, Inc. 2006 Stock and Incentive Plan
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*10.4+
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Form of revised Restricted Stock Unit Agreement (U.S. Employee - 5 Year Vesting; TSR Requirement) pursuant to KBR, Inc. 2006 Stock and Incentive Plan
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*31.1
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Certification of the Chief Executive Officer Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
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*31.2
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Certification of the Chief Financial Officer Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
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**32.1
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Certification Furnished Pursuant to 18 U.S.C. Section 1350 as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
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**32.2
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Certification Furnished Pursuant to 18 U.S.C. Section 1350 as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
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***101.INS
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XBRL Instance Document
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***101.SCH
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XBRL Taxonomy Extension Schema Document
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***101.CAL
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XBRL Taxonomy Extension Calculation Linkbase Document
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+
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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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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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Vesting Date
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Vested Percentage of Total Number
of Restricted Stock Units
|
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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(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.
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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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(4)
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Que KBR, Inc. y sus Entidades Relacionadas no son responsables por cualquier pérdida en el valor de el Premio 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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First Anniversary of Grant Date
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33 ⅓%
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Second Anniversary of Grant Date
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66 ⅔%
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Third Anniversary of Grant Date
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100%
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Vesting Date
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Vested Percentage of Total Number
of Restricted Stock Units
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First Anniversary of Grant Date
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20%
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Second Anniversary of Grant Date
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40%
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Third Anniversary of Grant Date
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60%
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Fourth Anniversary of Grant Date
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80%
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Fifth Anniversary of Grant Date
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100%
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A
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means the Fair Market Value of a share of Stock on the last day of such period;
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B
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means the Fair Market Value of a share of Stock on the day immediately preceding the first day of such period; and
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C
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means the aggregate amount of dividends per share of Stock paid over such period by the Company. Dividends per share of Stock paid other than in the form of cash shall have a value equal to the amount of such dividends reported by the Company to is shareholders for purposes of Federal income taxation.
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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 September 30, 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 as amended; 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 September 30, 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 as amended; 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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