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| 8-K - EARNINGS - KBR, INC. | form8k.htm |
FOR IMMEDIATE RELEASE Contact: Rob Kukla, Jr.
February 23, 2011 Director, Investor Relations
713-753-5082
Gabriela Segura
Manager, Media Relations
713-753-8694
KBR ANNOUNCES EARNINGS PER DILUTED SHARE OF $0.51 FOR
FOURTH QUARTER 2010 AND $2.07 FOR FULL YEAR 2010
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Full year 2010 earnings per diluted share up 16% compared to the full year 2009
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Operating income of $609 million for the full year 2010, up 14% compared to the prior year; fourth quarter 2010 up 19% compared to prior year
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Net income attributable to KBR of $327 million for full year 2010, up 13% compared to the full year 2009
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Cash flows from operating activities of $549 million for full year 2010
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HOUSTON, Texas – KBR (NYSE:KBR) announced today that fourth quarter 2010 net income attributable to KBR was $78 million, or $0.51 per diluted share, compared to net income attributable to KBR of $73 million, or $0.45 per diluted share, in the fourth quarter of 2009.
Consolidated revenue in the fourth quarter was $2.3 billion compared to $3.0 billion in the fourth quarter of 2009; however, operating income was $148 million compared to $124 million in the prior year fourth quarter. Hydrocarbons business group revenue and job income of $1.1 billion and $150 million, declined $136 million and $115 million, from the fourth quarter of 2009, which included a $183 million gain from an arbitration award on the EPC-1 project. Infrastructure, Government, and Power (IGP) business group revenue in the fourth quarter was $845 million, which included an expected reduction of $483 million compared to the prior year fourth quarter related to reduced activity on the LogCAP project. IGP job income was $72 million in the fourth quarter, up $120 million compared to the prior year fourth quarter primarily related to a charge of $132 million related to an adverse award fee determination on the LogCAP project in the fourth quarter of 2009. Services revenue and job income in the fourth quarter was $408 million and $47 million, down $18 million and $4 million, respectively, compared to the fourth quarter of 2009.
“I am very pleased with KBR’s 2010 results, strong operating income and cash generation from operations, and solid execution across our businesses,” said Bill Utt, Chairman, President, and Chief Executive Officer of KBR. “In 2011, KBR expects to continue to successfully execute work and capture the excellent growth opportunities we see in an improving market environment, particularly in Hydrocarbons and Infrastructure and Minerals markets.”
Hydrocarbons Business Group Results
Gas Monetization job income was $57 million in the fourth quarter compared to job income of $23 million in the fourth quarter of 2009. The increase in job income was primarily related to increased work on the Gorgon LNG project and $24 million in costs and schedule delays in the fourth quarter of 2009 on two now completed LNG projects. Partially offsetting this increase was lower activity on the Escravos GTL project as well as substantial completion of several front-end engineering and design projects.
Oil and Gas job income was $37 million in the fourth quarter compared to job income of $210 million in the fourth quarter of 2009, which included a gain of $183 million related to a favorable arbitration award on the EPC-1 project. The fourth quarter of 2010 included an increase in job income on the newly awarded CLOV floating production, storage, and offloading (FPSO), Big Foot, and Jack St. Malo projects, as well as a gain from a project close-out settlement on an offshore FPSO project.
Downstream job income was $44 million in the fourth quarter compared to job income of $17 million in the fourth quarter of 2009. The increase in job income was primarily related to increased work on the Sonangol refinery project, increased work on the Yanbu export refinery project, and a contingency release on the Saudi Kayan project.
Technology job income was $12 million in the fourth quarter, which included an unfavorable jury verdict on a project dispute in the fourth quarter. Job income in the fourth quarter of 2009 was $15 million. Also during the fourth quarter of 2010, Technology had a $4 million asset impairment related to the closing of an operations center.
Infrastructure, Government, and Power Business Group Results
North America Government and Defense (NAGD) job income was $29 million in the fourth quarter compared to a loss of $112 million in the fourth quarter of 2009. The fourth quarter included lower overall volumes on the LogCAP project, while the fourth quarter of 2009 results included a charge of $132 million related to an adverse award fee determination on the LogCAP project. In addition, the fourth quarter of 2009 also included a charge of $19 million for an unfavorable court ruling and a $17 million loss for the reversal of previously recognized revenue associated with certain legal costs.
International Government and Defense (IGD) job income was $26 million in the fourth quarter compared to job income of $19 million in the fourth quarter of 2009. The increase in job income was primarily related to increased activity and efficiencies on the Allenby and Connaught project. Partially offsetting this increase was lower activity on the CONLOG project and the completion of the Tier 3 Basra project.
Infrastructure and Minerals (I&M) job income was $15 million in the fourth quarter compared to job income of $19 million in the fourth quarter of 2009. The decrease in job income was primarily related to the lower volume on the Qatar-Bahrain Causeway project.
Power and Industrial (P&I) job income was $2 million in the fourth quarter compared to job income of $26 million in the fourth quarter of 2009. The decrease in job income was primarily related to the completion of several power projects prior to the fourth quarter of 2010 as well as lower overall activity coupled with increased costs related to rework and repairs at a nearly-completed activated carbon project. Also contributing to the decrease in job income was a gain in the fourth quarter of 2009 related to the collection of a fully-reserved receivable on a completed project.
Services Results
Services job income was $47 million in the fourth quarter compared to job income of $51 million in the fourth quarter of 2009. The decrease in job income was driven by overall lower activity on the Shell Scotford Upgrader project in Canada and the completion of several construction projects in the U.S. The decline in job income was partially offset by increased levels of activity in the Industrial Services business, led by the multi-site DuPont project and turnaround projects in Canada.
Ventures Results
Ventures job income was $9 million in the fourth quarter compared to job income of $4 million in the fourth quarter of 2009. The increase in job income was primarily related to higher ammonia prices and increased shipments at the EBIC ammonia project in Egypt, as well as the consolidation of a heavy equipment transport project for the U.K. military effective January 1, 2010.
Corporate
Corporate general and administrative expense in the fourth quarter of 2010 was $55 million compared to $60 million in the prior year fourth quarter. The fourth quarter of 2009 included a $4 million write-off related to the Westside campus.
Total cash provided by operating activities for the twelve months of 2010 was $549 million, driven by overall earnings, improved working capital management on certain projects primarily in our Gas Monetization business unit, as well as the receipt of award fees on the LogCAP project in 2010.
Full Year 2011 Outlook
The KBR full year 2011 earnings per diluted share guidance is $2.05 to $2.30.
Significant Achievements and Awards
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KBR announced that it acquired Chicago-based Roberts & Schaefer Company. Roberts & Schaefer is a global leader in engineering, procurement and construction (EPC) services for bulk material handling and processing systems. The company provides services and associated processing infrastructure to customers in the mining and minerals, power, industrial, refining, aggregates, precious and base metals industries.
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KBR announced it completed the acquisition of the 44.94 percent share interest in M.W. Kellogg Limited (MWKL). With the completion of the transaction, MWKL is now a wholly-owned KBR subsidiary. The Agreement to enter into the transaction was previously announced on December 20, 2010.
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KBR announced that it was awarded a contract by Scottish and Southern Energy Plc (SSE) to provide Project Management Services for its capital investment program over the next five years. SSE has appointed KBR as Project Management Partner to help maintain the processes, systems and skills needed to deliver large capital projects. KBR will supplement and complement the work performed by SSE’s in-house major projects team.
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During the fourth quarter of 2010 and in January of 2011, KBR announced it was awarded contracts to execute the topsides detailed design for TOTAL’s CLOV FPSO unit and Chevron’s Big Foot integrated drilling and production platform.
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KBR is a global engineering, construction and services company supporting the energy, hydrocarbons, government services, minerals, civil infrastructure, power, and industrial markets. For more information, visit www.kbr.com.
NOTE: The statements in this press release that are not historical statements, including statements regarding future financial performance and backlog information, are forward-looking statements within the meaning of the federal securities laws. These statements are subject to numerous risks and uncertainties, many of which are beyond the company’s control, that could cause actual results to differ materially from the results expressed or implied by the statements. These risks and uncertainties include, but are not limited to: the outcome of and the publicity surrounding audits and investigations by domestic and foreign government agencies and legislative bodies; potential adverse proceedings by such agencies and potential adverse results and consequences from such proceedings; the scope and enforceability of the company’s indemnities from Halliburton Company; changes in capital spending by the company’s customers; the company’s ability to obtain contracts from existing and new customers and perform under those contracts; structural changes in the industries in which the company operates, escalating costs associated with and the performance of fixed-fee projects and the company’s ability to control its cost under its contracts; claims negotiations and contract disputes with the company’s customers; changes in the demand for or price of oil and/or natural gas; protection of intellectual property rights; compliance with environmental laws; changes in government regulations and regulatory requirements; compliance with laws related to income taxes; unsettled political conditions, war and the effects of terrorism; foreign operations and foreign exchange rates and controls; the development and installation of financial systems; increased competition for employees; the ability to successfully complete and integrate acquisitions; and operations of joint ventures, including joint ventures that are not controlled by the company.
KBR’s Annual Report on Form 10-K dated February 23, 2011, recent Current Reports on Forms 8-K, and other Securities and Exchange Commission filings discuss some of the important risk factors that KBR has identified that may affect the business, results of operations and financial condition. KBR undertakes no obligation to revise or update publicly any forward-looking statements for any reason.
KBR, Inc.: Condensed Consolidated Statements of Income
(Millions, except per share data)
(Unaudited)
KBR, Inc.: Condensed Consolidated Statements of Income
(Millions, except per share data)
(Unaudited)
KBR, Inc.: Condensed Consolidated Balance Sheets
(Millions)
(Unaudited)
KBR, Inc.: Condensed Consolidated Statements of Cash Flows
(Millions)
(Unaudited)
KBR, Inc.: Revenue and Operating Results by Business Unit
(Millions)
(Unaudited)
KBR, Inc.: Revenue and Operating Results by Business Unit
(Millions)
(Unaudited)
KBR, Inc.: Backlog Information (a)
(Millions)
(Unaudited)
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(a) Backlog is presented differently depending on if the contract is consolidated by KBR or is accounted for under the equity method of accounting. Backlog related to consolidated projects is presented as 100% of the expected revenue from the project. Backlog related to unconsolidated joint ventures is presented as KBR’s percentage ownership of the joint venture’s revenue. However, because these projects are accounted for under the equity method, only KBR’s share of future earnings from these projects will be recorded in revenue. Our backlog for projects related to unconsolidated joint ventures totaled $1.7 billion, $1.9 billion and $2.1 billion at December 31, 2010, September 30, 2010, and December 31, 2009, respectively. Our backlog related to consolidated joint ventures with noncontrolling interest totaled $4.4 billion, $4.3 billion and $4.6 billion at December 31, 2010, September 30, 2010, and December 31, 2009, respectively.
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As of December 31, 2010, 21% of our backlog was attributable to fixed-price contracts and 79% was attributable to cost-reimbursable contracts. For contracts that contain both fixed-price and cost-reimbursable components, we classify the components as either fixed-price or cost-reimbursable according to the composition of the contract except for smaller contracts where we characterize the entire contract based on the predominate component.
All backlog is attributable to firm orders as of December, 31, 2010, September 30, 2010, December 31, 2009.
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(b)
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Backlog attributable to unfunded government orders was $0.1 billion, $0.1 billion and $0.3 billion as of December 31, 2010, September 30, 2010, and December 31, 2009, respectively.
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