SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the undersigned
hereunto duly authorized.
KBR, INC.
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Date: February 26, 2008
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By:
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/s/ Jeffrey B. King
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Jeffrey B. King
Vice President, Public Law
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Exhibit 99.1
601 Jefferson St. •
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Houston, Texas 77002
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Phone 713.753.3011 • Fax 713.753.5353
FOR IMMEDIATE RELEASE
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Contact:
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Rob Kukla, Jr.
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February 26, 2008
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Director, Investor Relations
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KBR ANNOUNCES FOURTH QUARTER AND FULL YEAR RESULTS
$0.42 fourth quarter 2007 net income per diluted share
and $1.79 full year 2007 net income per diluted share
HOUSTON, Texas
– KBR (NYSE:KBR)
announced today that income from continuing operations was $48 million, or $0.28 per
diluted share, compared to income from continuing operations of $45 million, or $0.30
per diluted share, in the fourth quarter of 2006. Net income was $71 million, or $0.42
per diluted share, in the fourth quarter of 2007, which included income from
discontinued operations of $23 million, or $0.14 per diluted share, primarily due to
tax benefits related to a previously uncertain tax position associated with the 2006
sale of Production Services. This compared to net income for the fourth quarter of 2006
of $43 million, or $0.28 per diluted share, which included a loss from discontinued
operations of $2 million, or $0.01 per diluted share.
Consolidated revenue in the fourth quarter of 2007 was $2.4 billion, an
increase of 4.3% from $2.3 billion in the fourth quarter of 2006.
Consolidated operating income was $82 million in the fourth quarter of
2007 compared to $90 million in the fourth quarter of 2006. Operating income in the
fourth quarter of 2007 included positive contributions from various gas monetization
projects, the Services business unit, and Iraq-related work. Operating income in the
fourth quarter of 2007 was partially offset by $22 million in charges related to
potentially disallowable costs incurred under U.S. government contracts in the Middle
East for activities dating from 2003.
Income from continuing operations for the full year of 2007 was $182
million, or $1.08 per diluted share, which represents a $128 million, or $0.69 per
diluted share, increase from the prior year. Net income in 2007 was $302 million, or
$1.79 per diluted share, compared to the 2006 net income of $168 million, or $1.20 per
diluted share. Net income in 2007 included $120 million after tax, or $0.71 per diluted
share, of income from discontinued operations primarily related to the operations of
Devonport Management Limited (“DML”), which we sold our 51% interest in the
second quarter of 2007 and the above mentioned tax benefits. Net income for 2006
included $114 million after tax, or $0.81 per diluted share, of income from
discontinued operations.
“2007 was a record year for KBR in terms of profitability and I am
pleased with the on-going performance improvement in KBR’s core businesses. We
continued to execute well on our current projects, ramped up work on several of our new
awards, and delivered solid operating results.” said Bill Utt, Chairman,
President, and Chief Executive Officer of KBR. “I am disappointed, however, in
the current period provisions in the Government and Infrastructure business unit
related to work beginning in 2003 under the LogCAP III contract. Looking to 2008, KBR
is well positioned to capitalize on the attractive growth opportunities before us and
to better serve our customers with market leading engineering, construction, and
services offerings.”
2007 Fourth Quarter Business Unit Results
Government and Infrastructure business unit income was $53 million in
the fourth quarter of 2007 compared to business unit income of $88 million in the
fourth quarter of 2006. The decrease in business unit income primarily relates to a
fourth quarter 2007 charge of $22 million related to potentially disallowable costs
incurred under U.S. government contracts in the Middle East for activities dating from
2003. During the fourth quarter of 2007, business unit income had positive
contributions from provision of services to the Allenby & Connaught project and
work on the CENTCOM project.
Upstream business unit income was $64 million in the fourth quarter of
2007 compared to business unit income of $67 million in the fourth quarter of 2006.
Business unit income during the fourth quarter of 2007 had positive contributions from
several gas monetization projects, including Skikda LNG, and various offshore projects,
including Kashagan.
Services business unit income was $23 million in the fourth quarter of
2007 compared to business unit income of $18 million in the fourth quarter of 2006.
Contributing to the business unit income was $11 million and $7 million in actuarially
determined insurance adjustments in the fourth quarters of 2007 and 2006, respectively.
Also contributing to the increase was work on the Scotford Upgrader project in
Canada.
Downstream business unit income was $3 million in the fourth quarter of
2007 compared to business unit income of $5 million in the fourth quarter of 2006.
Business unit income during the fourth quarter of 2007 was positively impacted by the
Yanbu export refinery project and the Ras Tanura program management project in Saudi
Arabia and the EBIC ammonia plant in Egypt.
Technology business unit income was $1 million in the fourth quarter of
2007 compared to business unit income of $6 million in the fourth quarter of 2006.
Contributing to the decrease was the delay and cancellation of two projects in the
fourth quarter of 2007 which were awarded in 2006. Partially offsetting this decrease
was the awarding and work performed for the MAN Ferrostaal ammonia process project in
Venezuela.
Ventures business unit loss was $3 million in the fourth quarter of 2007
compared to a business unit loss of $8 million in the fourth quarter of 2006. The
improvement was primarily related to lower losses on the Australian rail road project
and increased profitability on the Allenby & Connaught investment in the
UK.
Corporate general and administrative expense in the fourth quarter of
2007 was $49 million compared to $78 million in the prior year quarter. This decrease
was primarily related to lower financial systems and SAP implementation costs, lower
real estate expenses, and a $5 million restructuring charge in the fourth quarter of
2006. Interest income in the fourth quarter of 2007 included $4 million related to the
Pemex EPC 22 settlement, which was partially offset by lower interest income on cash
associated with consolidated joint ventures.
Significant Achievements and Awards
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KBR was awarded a Canadian construction and fabrication
contract of a gasification unit by Lurgi AG. KBR’s scope of work
will include the fabrication of nearly 100 modules and will peak at
approximately 400 personnel performing field construction and module
service work on this 30-month project. The contract has an approximate
value of $225 million (CAD).
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KBR was awarded a contract by PetroSA to conduct the
pre-feasibility study to build a 200,000 barrel per day crude oil
refinery in Coega, Port Elizabeth. The pre-feasibility study focuses on
determining the economic optimum configuration for the refinery
including crude oil type and costs, required product slate, prices and
specifications, and capital and operating costs.
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KBR subsidiary, Granherne, Inc., was awarded a
three-year engineering services contract by Petrobras America.
Granherne will provide technical support for design of the hull for the
early production system, floating production storage and offloading
system (FPSO), and later phase full field development. The FPSO will be
located in approximately 2,600 meters of water. The Cascade/Chinook
FPSO, when deployed, will be the first in the U.S. Gulf of Mexico,
and will be the world’s deepest FPSO to date.
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KBR announced that its “Eos” joint venture
with WorleyParsons, was awarded a contract option worth approximately
USD$24 million for the detailed engineering, procurement management and
construction management assistance services for Woodside’s Pluto
LNG Project offshore production platform north west of Karratha,
Western Australia.
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KBR was awarded a contract by MAN Ferrostaal AG (MFS) to
provide basic and detailed engineering services for an 1,800 MTPD
ammonia plant for Petroquímica de Venezuela, S.A. (Pequiven).
The plant will be the first in Venezuela to utilize KBR’s
proprietary KAAP™ ammonia process technology.
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In November 2007, KBR announced that it successfully met
all contractual obligations related to the 600,000 ton/year Lanzhou
ethylene plant in China. This milestone represents the first facility
in China to utilize KBR’s proprietary SCORE (Selective Cracking
Optimum REcovery) technology for both the furnace cracking and recovery
sections.
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In January 2008, KBR announced that its joint venture,
TSKJ Nigeria Ltd., successfully completed the construction and
commissioning phase of the Nigeria LNG Limited (NLNG) Train 6 project
on Bonny Island, Nigeria. NLNG awarded TSKJ the lump sum engineering,
procurement, and construction contract (EPC) for LNG train six in July
2004.
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KBR is a global engineering, construction and
services company supporting the energy, petrochemicals, government services, and civil
infrastructure sectors. The company offers a wide range of services through its
Downstream, Government and Infrastructure, Services, Technology, Upstream, and Ventures
business units.
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 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; 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 26, 2008,
subsequent Forms 10-Q and 10-Q/A, 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.