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KBR, INC.

KBR, INC.KBR決算レポート

NYSE · 産業 · 建築工事以外の重型建設請負業者

KBR, Inc. is a U.S. based company operating in fields of science, technology and engineering. KBR works in various markets including aerospace, defense, industrial, intelligence, and energy. The company supports various NASA programs, international partner space agencies, and commercial partners.

What changed in KBR, INC.'s 10-K — 2024 vs 2025

Top changes in KBR, INC.'s 2025 10-K

384 paragraphs added · 428 removed · 305 edited across 9 sections

Item 1. Business

Business — how the company describes what it does

74 edited+19 added−24 removed36 unchanged
The investment is accounted for within our STS business segment using the equity method of accounting. HomeSafe, a KBR led joint venture with Tier One Relocation, was established to be the exclusive provider of household goods move management services for the U.S. Armed Forces, U.S. DoD civilians and their families. KBR owns a 72% interest in HomeSafe.
The investment is accounted for within our STS business segment using the equity method of accounting. HomeSafe, a joint venture with Tier One Relocation, was established to be the exclusive provider of household goods move management services for the U.S. Armed Forces, U.S. DoD civilians and their families. KBR owns a 72% interest in HomeSafe.
Risk Factors” contained in Part I of this Annual Report on Form 10-K. Our GS business segment also participates in PFI contracts, such as the Aspire Defence and UKMFTS projects. PFIs are long-term contracts that outsource the responsibility for the construction, procurement, financing, operation and maintenance of government-owned assets to the private sector.
Risk Factors” contained in Part I of this Annual Report on Form 10-K. Our GS business also participates in PFI contracts, such as the Aspire Defence and UKMFTS projects. PFIs are long-term contracts that outsource the responsibility for the construction, procurement, financing, operation and maintenance of government-owned assets to the private sector.
Through early planning and scope definition, advanced technologies and facility life-cycle optimization, our STS business segment works closely with customers to provide what we believe is the optimal approach to maximize their return on investment. Other. Our non-core Other segment includes corporate expenses and selling, general and administrative expenses not allocated to the business segments above.
Through early planning and scope definition, advanced technologies and facility life-cycle optimization, our STS business segment works closely with customers to provide what we believe is the optimal approach to maximize their return on investment. Corporate. Our non-core segment includes corporate expenses and selling, general and administrative expenses not allocated to the business segments above.
With respect to time-and-materials contracts, we assume the price risk because our costs of performance may exceed negotiated hourly rates. In commercial and non-U.S. government contracting, this contract is generally used for defined and non-defined scope contracts where there is a higher degree of uncertainty and risks as to the scope of work.
With respect to time-and-materials contracts, we assume the price risk because our costs of performance may exceed negotiated hourly rates. In commercial and non-U.S. government contracting, this contract is generally used for defined and non-defined scope contracts where there is a higher degree of uncertainty and risks of work.
Significant Joint Ventures and Alliances We enter into joint ventures and alliances with other reputable industry participants to capitalize on the strengths of each party, provide greater flexibility in delivering our services based on expertise, cost and geographical efficiency, increase the number of opportunities that can be pursued, reduce exposure and diversify risk.
Significant Joint Ventures and Alliances We enter into joint ventures and alliances with other industry participants to capitalize on the strengths of each party, provide greater flexibility in delivering our services based on expertise, cost and geographical efficiency, increase the number of opportunities that can be pursued, reduce exposure and diversify risk.
We promote a speak-up culture where employees are comfortable with making reports of possible unethical behavior and workplace issues. The Business Integrity Team has implemented a Question Manager as part of our Ethics Hotline for employees to receive advice, confidentially or anonymously, on ethical or other inquiries.
We promote a speak-up culture where employees are comfortable making reports of possible unethical behavior and workplace issues. The Business Integrity Team has implemented a Question Manager as part of our Ethics Hotline for employees to receive advice, confidentially or anonymously, on ethical or other inquiries.
STS also provides highly synergistic services including advisory and consulting focused on broad-based energy transition and net-zero carbon emission solutions, high-end engineering, design and program management centered around decarbonization, energy efficiency, environmental impact and asset optimization, as well as our digitally-enabled operating and monitoring solutions.
STS also provides highly synergistic services including advisory and consulting focused on energy security, broad-based energy transition and net-zero carbon emission solutions, high-end engineering, design and program management centered around decarbonization, energy efficiency, environmental impact and asset optimization, as well as our digitally-enabled operating and monitoring solutions.
By requiring all of our employees to personally internalize and adhere to these standards, we aim to safeguard our individual health and safety and the well-being of all those around us. We believe that KBR has provided the tools and processes our people need to achieve the mindset of 24/7 Zero Harm.
By requiring our employees to personally internalize and adhere to these standards, we aim to safeguard our individual health and safety and the well-being of all those around us. 15 We believe that KBR has provided the tools and processes our people need to achieve the mindset of 24/7 Zero Harm.
The joint venture is a VIE that is consolidated for financial reporting purposes and is accounted for within our GS business segment. Additional information relating to our joint ventures is described in Part II of this Annual Report on Form 10-K in Note 9 to our consolidated financial statements.
The joint venture is a VIE that is consolidated for financial reporting purposes and is accounted for within our GS business segment. Additional information relating to our joint ventures is described in Part II of this Annual Report on Form 10-K in Note 9.
In U.S. government contracting, this type of contract is generally used when there is 12 uncertainty of the extent or duration of the work to be performed by the contractor at the time of contract award or it is not possible to anticipate costs with any reasonable degree of confidence.
In U.S. government contracting, this type of contract is generally used when there is uncertainty of the extent or duration of the work to be performed by the contractor at the time of contract award or it is not possible to anticipate costs with any reasonable degree of confidence.
Our Values unite us across our diverse global cultures, guiding our behavior and decision making throughout KBR. We have embedded our values in our business processes, established them as a foundation for our learning and development activities and regularly celebrate employees who epitomize our values-led behavior.
Our Values unite us across global cultures, guiding our behavior and decision making throughout KBR. We have embedded our values in our business processes, established them as a foundation for our learning and development activities and regularly celebrate employees who epitomize our values-led behavior.
The six core processes that comprise our Transactional Health, Safety, Security, Environmental ("HSSE") Management that lead to Transformational Leadership are non-negotiable KBR safety standards that are required to be observed and 15 followed by employees and contractors at all locations and projects.
The six core processes that comprise our Transactional Health, Safety, Security, Environmental ("HSSE") Management that lead to Transformational Leadership are non-negotiable KBR safety standards that are required to be observed and followed by employees and contractors at all locations and projects.
The investment is accounted for within our STS business segment using the equity method of accounting. KZJV is a joint venture with Zachary Group that performs certain design, engineering, procurement and construction-related services for a LNG facility in Plaquemines Parish, Louisiana. KBR owns a 45% interest in KZJV, which is a VIE.
The investment is accounted for within our STS business segment using the equity method of accounting. KZJV is a joint venture with Zachry Group that performs certain design, engineering, procurement and construction-related services for a LNG facility in Plaquemines Parish, Louisiana. KBR owns a 45% interest in KZJV, which is a VIE.
We market high-end advisory and consulting services focused on broad-based energy transition and net-zero carbon emission solutions; high-end engineering, design and program management centered around decarbonization, energy efficiency, environmental impact and asset optimization; and digitally-enabled operating and monitoring solutions. Key customers include commercial and industrial companies.
We market high-end advisory and consulting services focused on broad-based energy transition and net-zero carbon emission solutions; high-end engineering, design and program management centered around energy security, decarbonization, energy efficiency, environmental impact and asset optimization; and digitally enabled operating and monitoring solutions. Key customers include governments and commercial and industrial companies.
Our GS business segment primarily performs work under cost-reimbursable contracts in the U.S. with the DoD and other U.S. governmental agencies.
Our GS business in the U.S. primarily performs work under cost-reimbursable contracts with the DoD and other U.S. governmental agencies.
Our commitment to the health and safety of each employee as well as anyone we work with is the foundation of our Zero Harm culture. We know that our employees’ willingness to implement each commitment into their daily work tasks is vital to our operations and has contributed to our strong safety performance among our customers, partners and peers.
Our commitment to the health and safety of each employee as well as anyone we work with is the foundation of our Zero Harm culture. We know that our employees’ willingness to implement each commitment into their daily work tasks is vital to our operations and has contributed to our industry-leading safety performance among our customers, partners and peers.
In addition, we invest in training our employees across a range of topics that align with and enhance our values, including programs that focus on leadership, I&D, ethics and technical development.
In addition, we invest in training our employees across a range of topics that align with and enhance our values, including programs that focus on leadership, ethics and technical development.
The SEC maintains a website that contains reports, proxy and information statements and other information regarding issuers like us that file electronically with the SEC at www.sec.gov. 19
The SEC maintains a website that contains reports, proxy and information statements and other information regarding issuers like us that file electronically with the SEC at www.sec.gov. 18
Purpose & Values At the center of our EVP is Purpose, because at KBR, we do work that matters, helping to solve the great challenges of our time while striving to create a better, safer, more sustainable world.
Purpose & Values At the center of our EVP is Purpose, because at KBR, we do work that matters, helping to solve the great challenges of our time while striving to create a secure, safer and more sustainable world.
Risk Factors” contained in Part I of this Annual Report on Form 10-K. Also, see further explanations in Note 1 to our consolidated financial statements in Part II, Item 8 of this Annual Report on Form 10-K.
Risk Factors” contained in Part I of this Annual Report on Form 10-K. Also, see further explanations in Note 1. "Significant Accounting Policies" to our consolidated financial statements in Part II, Item 8 of this Annual Report on Form 10-K.
Our Business Our people leverage dynamic teams that combine deep mission understanding, market-leading technical expertise and an unwavering operational focus to deliver solutions to solve our clients’ most complex issues.
We leverage dynamic teams that combine deep mission understanding, market-leading technical expertise and an unwavering operational focus to deliver solutions to solve our clients’ most complex issues.
Retaliation undermines a speak-up culture and is not tolerated. Our Code sets forth our anti-retaliation commitment, which is reinforced in our communications and our annual Ethics training. To further convey to the workforce that reports of unethical behavior are investigated and remediated, the Ethics training incorporates examples of past misconduct incidents.
Retaliation undermines a speak-up culture and is not tolerated. Our Code and our Business Integrity program set forth our anti-retaliation commitment, which is reinforced in our communications and our annual Ethics training. To further convey to the workforce that reports of unethical behavior are investigated and remediated, the Ethics training incorporates examples of past misconduct incidents.
Drawing from its rich 100-year history and culture of innovation and mission focus, KBR creates sustainable value by combining deep domain expertise with its full-life cycle capabilities to help clients meet their most pressing challenges.
Drawing from its culture of innovation and mission focus, KBR creates sustainable value by combining deep domain expertise with its full-life cycle capabilities to help clients meet their most pressing challenges.
Our significant joint ventures and alliances are described below. All joint venture ownership percentages presented are stated as of December 29, 2023. Aspire Defence Limited, a joint venture owned by KBR and two financial investors, provides a range of facilities life cycle management services at the British Army’s garrisons at Aldershot and across the Salisbury Plain in the U.K.
Our significant joint ventures and alliances are described below. All joint venture ownership percentages presented are stated as of January 3, 2025. Aspire Defence Limited, a joint venture owned by KBR and two financial investors, provides a range of facilities life cycle management services at the British Army’s garrisons at Aldershot and across the Salisbury Plain in the U.K.
Additional information relating to environmental regulations is described in "Item 1A. Risk Factors” contained in Part I of this Annual Report on Form 10-K and in Note 13 to our consolidated financial statements. 14 Human Capital Management Every day, the people of KBR help solve some of the world’s most challenging scientific, technological and engineering problems.
Additional information relating to environmental regulations is described in "Item 1A. Risk Factors” contained in Part I of this Annual Report on Form 10-K. 14 Human Capital Management Every day, the people of KBR help solve some of the world’s most challenging scientific, technological and engineering problems.
Our Sustainable Technology Solutions business segment is anchored by our portfolio of over 80 innovative, proprietary, sustainability-focused process technologies that accelerate and enable energy transition across the industrial base in four primary verticals: ammonia/syngas, chemical/petrochemicals, clean refining and circular process/circular economy solutions.
Our Sustainable Technology Solutions business segment is anchored by our portfolio of over 85 innovative, proprietary, sustainability-focused process technologies that reduce emissions, increase efficiency and/or accelerate and enable energy transition across the industrial base in four primary verticals: ammonia/syngas, chemical/petrochemicals, clean refining and circular process/circular economy solutions.
KBR owns 45% of Aspire Defence Limited that is reported within our GS business segment using the equity method of accounting. In 2016, we established the Affinity joint venture with Elbit Systems Ltd. to procure, operate and maintain aircraft and aircraft-related assets over an 18-year contract period, in support of the UKMFTS project. KBR owns a 50% interest in Affinity.
KBR owns 45% of Aspire Defence Limited that is reported within our GS business segment using the equity method of accounting. The Affinity joint venture, with Elbit Systems Ltd., procures, operates and maintains aircraft and aircraft-related assets over an 18-year contract period, in support of the UKMFTS project. KBR owns a 50% interest in Affinity.
KBR's services cover the full spectrum spanning research and development, advanced prototyping, acquisition support, systems engineering, C5ISR, cyber analytics, space domain awareness, test and evaluation, systems integration and program management, global supply chain management, operations readiness and support and professional advisory services across the defense, renewable energy and critical infrastructure sectors. Sustainable Technology Solutions.
KBR's full-spectrum solutions span research and development, advanced prototyping, acquisition support, systems engineering, C5ISR, cyber analytics, space domain awareness, test and evaluation, data analytics and integration, systems integration and program management, global supply chain management, operations readiness and support and professional advisory services across the defense, energy security and transition and critical infrastructure sectors.
From our promising new interns to world-renowned experts, this diverse Team of Teams delivers for our customers, so in turn, we put them first. At the end of 2023, we employed approximately 34,000 people performing diverse, complex and mission critical roles in over 30 countries. In addition, our unconsolidated joint ventures employ approximately 9,000 employees.
From our promising new interns to world-renowned experts, this Team of Teams delivers for our customers, so in turn, we put them first. At the end of fiscal 2024, we employed approximately 38,000 people performing multi-faceted, complex and mission critical roles in over 29 countries. In addition, our unconsolidated joint ventures employ approximately 10,000 employees.
Our procurement function seeks to leverage our size and buying power to ensure that we have access to key equipment and materials at low prices and ideal delivery schedules.
Our procurement function seeks to leverage our size and buying power to ensure that we have access to key equipment and materials at low prices and ideal delivery schedules. We purchase our required materials and equipment from a variety of sources.
Ethics and Compliance KBR's ethics and our Code of Business Conduct (the “Code”) are rooted in our values and provide the standards and support to help us successfully navigate issues, make the right decisions, and conduct our business with the integrity that reflects our heritage and ethical reputation.
When it comes to safety, we strive for one number: Zero. Ethics and Compliance KBR's ethics and our Code of Business Conduct (the “Code”) are rooted in our values and provide the standards and support to help us successfully navigate issues, make the right decisions, and conduct our business with the integrity that reflects our heritage and ethical reputation.
KBR delivers full life-cycle support solutions to defense, intelligence, space, aviation and other programs and missions for military and other government agencies primarily in the U.S., the U.K. and Australia under long-term programs with key technical, scientific or mission-specific differentiation.
Our key areas of strategic focus are as follows: • National Security and Defense. KBR delivers full life cycle support solutions to defense, intelligence, space, aviation and other programs and missions to military and other government agencies primarily in the U.S., the U.K. and Australia under long-term programs with key technical, scientific or mission-specific differentiation.
Revenues and percentage of consolidated revenues from major customers: Years ended, December 29, December 31, December 31, Dollars in millions 2023 2022 2021 U.S. government $ 4,000 58 % $ 4,034 61 % $ 5,122 70 % U.K. government $ 634 9 % $ 584 9 % $ 508 7 % 10 Information relating to our customer concentration is described in “Item 1A.
Revenues and percentage of consolidated revenues from major customers: Years ended, January 3, December 29, December 31, Dollars in millions 2025 2023 2022 U.S. government $ 4,382 57 % $ 4,000 58 % $ 4,034 61 % U.K. government $ 674 9 % $ 634 9 % $ 584 9 % Information relating to our customer concentration is described in “Item 1A.
We have developed, acquired or otherwise have the right to license leading technologies, including technologies held under license from third parties, used for the production of a variety of petrochemicals and in the areas of olefins, refining, fertilizers, coal gasification, semi-submersibles and specialty chemicals.
We have developed, acquired or otherwise have the right to license leading technologies, including technologies held under license from third parties, used for the production of a range of essential products in the areas of transportation fuels, petrochemicals and polymers, fertilizers, semi-submersibles and specialty chemicals.
We also license a variety of technologies for the transformation of raw materials into commodity chemicals such as phenol which is used in the production of consumer end products. In addition, we are a licensor of ammonia process technologies used in the conversion of natural gas to ammonia with a fully developed, proprietary, end-to-end green ammonia solution K-GreeN TM .
The technologies we license include the transformation of raw materials into commodity chemicals, such as phenol, which is used in the production of consumer end products and our ammonia process technologies used in the conversion of natural gas to ammonia with a fully developed, proprietary, end-to-end solutions for both fossil-based and green ammonia (K-GreeN TM) .
KBR's services cover the full spectrum spanning research and development, advanced prototyping, acquisition support, systems engineering, systems assurance and technology, C5ISR, cyber analytics, space domain awareness, test and evaluation, systems integration and program management, global supply chain management, digital transformation and operations readiness and support. Key customers include U.S. DoD agencies such as the U.S. Army, U.S. Navy and U.S.
KBR's full-spectrum, digitally enabled services span research and development, advanced prototyping, acquisition support, systems engineering, systems assurance and technology, C5ISR, cyber analytics, cybersecurity, space domain awareness, test and evaluation, data analytics and integration, systems integration and program management, global supply chain management, digital transformation, and operations readiness and support. Key customers include U.S.
However, various factors can affect the distribution of our sales between accounting periods, including the timing of government awards, the availability of government funding, product deliveries and customer acceptance. Additionally, weather and natural phenomena can temporarily affect the performance of our services.
However, various factors can affect the distribution of our sales between accounting periods, including the timing of government awards, the availability of government funding, timing of military moves, product deliveries and customer acceptance. Additionally, weather and natural phenomena can temporarily affect the performance of our services. Additional information relating to seasonality is described in "Item 1A.
Website Access Our Annual Reports on Form 10-K, Quarterly Reports on Form 10-Q, Current Reports on Form 8-K and amendments to those reports filed or furnished pursuant to Section 13(a) or 15(d) of the Exchange Act are made available free of charge on our website at www.kbr.com as soon as reasonably practicable after we have electronically filed the material with, or furnished it to, the SEC.
As a result, we hired over 8,600 employees in fiscal 2024, supporting our ability to deliver excellent solutions for our customers and meet our strategic growth targets. 17 Website Access Our Annual Reports on Form 10-K, Quarterly Reports on Form 10-Q, Current Reports on Form 8-K and amendments to those reports filed or furnished pursuant to Section 13(a) or 15(d) of the Exchange Act are made available free of charge on our website at www.kbr.com as soon as reasonably practicable after we have electronically filed the material with, or furnished it to, the SEC.
We also strengthen our future leadership by running regular Manager Excellence Programs, and in 2023, we launched our Front Line Leaders Program globally, to support employees newly transitioning into these critical roles.
We also strengthen our future leadership by running regular Manager Excellence Programs, and our Front Line Leaders Program grew substantially in fiscal 2024 to support over 1,000 employees globally who were newly transitioning into these critical leadership roles.
Our capabilities and offerings include the following: • Scientific research such as quantum science and computing; health and human performance; materials science; life science research; and earth sciences; • Defense systems engineering such as rapid prototyping; test and evaluation; aerospace acquisition support; systems and platform integration; and sustainment engineering; • Operational support such as space domain awareness; C5ISR; human spaceflight and satellite operations; integrated supply chain and logistics; and military aviation support; • Information operations such as cyber analytics and cybersecurity; data analytics; mission planning systems; virtual/augmented reality and technical training; and artificial intelligence and machine learning; • Professional advisory services across the defense, renewable energy and critical infrastructure sectors; and • Sustainable decarbonization solutions that accelerate and enable energy transition and climate change solutions such as proprietary, sustainability-focused process licensing; advisory services focused on energy transition; high-end engineering, design and management program offerings; and digitally-enabled asset optimization solutions.
Our capabilities and offerings include the following: • Leading national security and defense systems engineering; rapid prototyping; test and evaluation; aerospace acquisition support; data analytics and systems and platform integration; and sustainment engineering; • Operational expertise in areas such as space domain awareness; C5ISR; human spaceflight and satellite operations; integrated supply chain and logistics; and military aviation support; • Advanced digital, artificial intelligence, machine learning and information operations solutions in areas such as cyber analytics and cybersecurity; space and air dominance; connected battlespace; national security intelligence; data analytics; mission planning systems; virtual/augmented reality and technical training; and artificial intelligence and machine learning; • Scientific research such as quantum science and computing; health and human performance; materials science; life science research; and earth sciences • Engineering and project management solutions to advance energy security, sustainable decarbonization; energy transition and asset optimization; proprietary, sustainability-focused process licensing; energy transition and security advisory services; and digitally-enabled asset optimization solutions; and • Professional advisory services across the defense, renewable energy and critical infrastructure sectors; KBR's strategic growth vectors include: • Defense modernization; • National security space superiority; • Health and human performance; • Sustainable energy and industrial technology; • High-end defense engineering; • Energy security and energy transition; and • Digital asset modernization and optimization Our Business Our people make the difference.
While political and economic conditions and regional conflict and war have resulted in significant supply chain disruptions and inflation globally and within the United States that are still ongoing, we have not experienced, and do not anticipate experiencing, any significant procurement difficulties, as we purchase our required materials and equipment from a variety of sources.
We have not experienced, and do not anticipate experiencing, any significant procurement difficulties as a result of political and economic conditions and regional conflict and war that have resulted in significant supply chain disruptions and inflation globally and within the United States.
In 2023, KBR’s operating model continued to shift toward agile, technology-driven, solutions-oriented delivery and was streamlined to increase strategic focus to move upmarket into differentiated areas that we believe will provide attractive returns and consistent growth with favorable cash conversion. Our key areas of strategic focus are as follows: • Government.
In the fiscal year ended January 3, 2025 ("fiscal 2024"), KBR’s operating model continued to shift toward agile, technology-driven, solutions-oriented delivery and was streamlined to increase strategic focus and to move upmarket into differentiated areas that we believe will provide attractive returns and consistent growth with favorable cash conversion.
The future revenues we expect to realize as a result of backlog were $17.3 billion and $15.6 billion as of December 29, 2023 and December 31, 2022, respectively, with approximately 24% and 25%, respectively, related to work being executed by joint ventures accounted for using the equity method of accounting.
The future revenues we expect to realize in backlog were $17,264 million and $17,335 million as of January 3, 2025 and December 29, 2023, respectively, with approximately 16% and 24%, respectively, related to work being executed by joint ventures accounted for using the equity method of accounting.
KBR Communities of Interest ("COIs") are collaborative, virtual forums for subject matter experts and those who support them.
KBR Communities of Interest ("COIs") are also designed to foster technical development by providing collaborative, virtual forums for subject matter experts and those who support them.
We also offer technologies for crystallization and evaporation, concentration and purification of strong inorganic acids. We believe our technology portfolio and experience in the commercial application of these technologies and our related know-how differentiates us, enables our sustainability strategy and enhances our margins.
We believe our technology portfolio and experience in the 13 commercial application of these technologies and our related know-how differentiates us, enables our sustainability strategy and enhances our margins.
When working with these and other U.S. government agencies and entities, we must comply with various laws and regulations relating to the formation, administration and performance of contracts.
Government Contracts and Regulations Our business is heavily regulated. We contract with numerous U.S. government agencies and entities, principally the U.S. DoD, NASA and certain intelligence agencies. When working with these and other U.S. government agencies and entities, we must comply with various laws and regulations relating to the formation, administration and performance of contracts.
As well as developing strategic thinking through research projects ranging from sustainability investments to digital supply chain solutions, these leaders attended intense learning events focused on executive skills and leading courageously and with integrity.
As well as developing strategic thinking through research projects ranging from sustainability investments to digital supply chain solutions, these leaders attend intense learning events focused on executive skills and leading courageously and with integrity. The revamped course cultivates peer networks, sharpens enterprise mindsets and builds commercial and strategy acumen.
We are the exclusive licensor of Hydro-PRT TM , a cutting-edge, scalable technology that utilizes supercritical steam to convert a wide range of single-use and other plastics into commercial raw materials used to produce new plastics. In 2023, we launched our Sustainable Aviation Fuel technology to extend our decarbonization efforts into the aviation sector.
We are the exclusive licensor of Hydro-PRT TM , a cutting-edge, scalable technology that utilizes supercritical water to convert a wide range of single-use and other waste plastics into commercial raw materials used to produce new plastics, a circular solution.
Air Force, Missile Defense Agency, National Geospatial-Intelligence Agency, National Reconnaissance Office and other intelligence agencies; U.S. civilian agencies such as NASA, U.S. Geological Survey and National Oceanic and Atmospheric Administration; the U.K. MoD, London Metropolitan Police, other U.K. Crown Services; the Royal Australian Air Force, Navy and Army; and other national governments.
Department of Defense agencies such as the U.S. Army, Navy, Air Force, Space Force, Missile Defense Agency, National Geospatial-Intelligence Agency, National Reconnaissance Office and other intelligence agencies; U.S. civilian agencies such as NASA, U.S. Geological Survey and National Oceanic and Atmospheric Administration; the U.K. Ministry of Defence, other U.K.
Talent Development & Succession Planning In 2023, we continued to expand the scope of our Talent Calibration conversations, covering over 4,100 KBR employees in this rigorous assessment of performance and potential. As well as providing organization-wide talent trends and data, these conversations lead to individual career plans and added rigor to our succession plans.
Talent Development & Succession Planning In fiscal 2024, our Talent Calibration conversations covered over 5,000 KBR employees in a rigorous assessment of performance and potential. As well as providing organization-wide talent trends and data, these conversations lead to individual career plans and added rigor to our succession plans.
A significant majority of our employees who responded to the survey reported that they believe KBR is a Great Place to Work, resulting in KBR being certified as a Great Place to Work in several countries, including the U.S., U.K., Australia and India.
A significant majority of our employees who responded to the survey reported that they believe KBR is a great place to work, resulting in KBR being certified as a ‘Great Place to Work’ in several countries, taking us to thirteen countries where KBR is officially certified.
Employee Engagement Our annual employee survey measures our progress through the eyes of our people. We partner with Great Place to Work to conduct the survey on our behalf, enabling us to provide the survey in multiple languages and benchmark how we perform compared to other similar organizations.
We partner with Great Place to Work to conduct the survey on our behalf, enabling us to provide the survey in multiple languages and benchmark how we perform compared to other similar organizations. In fiscal 2024, our employee participation rate in our People’s Perspective survey increased by 10%.
Our COIs continue to evolve, ensuring that subject matter experts across the globe can connect and collaborate on Data Science & Analytics, Digital Engineering, Cloud, Cyber and other technical specialties that inform our customers’ and society’s greatest challenges today. 16 Leadership Our flagship leadership program, the Global Leadership Development Program, is designed to expand the capabilities of future executives.
Our COIs continue to evolve, ensuring that subject matter experts across the globe can connect and collaborate on Data Science and Digital Technologies, Sustainability and Energy Transition, Human Performance and other technical specialties that inform our customers’ and society’s greatest challenges today. 16 Leadership Our flagship leadership program, the Global Leadership Development Program, is expanding to go beyond training to develop capabilities in being effective future executive leaders.
We have a good reputation among our employees for providing growth opportunities and have continued to focus on enhancing these growth prospects in a number of ways throughout 2023 with the introduction of internal career fairs and expansion of global career opportunities.
We have a good reputation among our employees for providing growth opportunities and have continued to focus on enhancing these growth prospects in several ways throughout fiscal 2024 with the introduction of formal mentoring and sponsorship programs, skills for the future offerings and an internal career pathways forum.
Backlog of Unfulfilled Orders Backlog is our estimate of the U.S. dollar amount of future revenues we expect to realize as a result of performing work on awarded contracts. For projects within our unconsolidated joint ventures, we have included our percentage ownership of the joint venture’s estimated revenues in backlog to provide an indication of future work to be performed.
For projects within our unconsolidated joint ventures, we have included our percentage ownership of the joint venture’s estimated revenues in backlog to provide an indication of future work to be performed.
In 2024, this team will travel around the world with KBR, further building connections across business and geographic boundaries. With over 16,000 employee responses, the data from our survey was reviewed in detail by different team leaders and across different business areas, resulting in tailored action plans that are already being executed across KBR.
The data from our survey was reviewed in detail by different team leaders and across different business areas, resulting in tailored action plans that are already being executed across KBR.
At any given time, government programs and joint ventures represent a substantial part of our operations. Our business is organized into two core business segments and one non-core business segment as follows: Core business segments • Government Solutions • Sustainable Technology Solutions Non-core business segment • Other Our business segments are described below. Government Solutions.
Our business is organized into two core business segments and one non-core business segment as follows: Core business segments • Government Solutions • Sustainable Technology Solutions Non-core business segment • Corporate Our business segments are described below. Government Solutions.
Acknowledging this diversity, our sustainability culture weaves a golden thread through KBR. Our employees take enormous pride in being part of an organization with a philosophical, practical and proven commitment to Zero Harm. Health and Safety We are subject to numerous worker health and safety laws and regulations.
Our employees take enormous pride in being part of an organization with a philosophical, practical and proven commitment to fostering an environment in which our people can belong, connect and grow. Health and Safety We are subject to numerous worker health and safety laws and regulations.
These targets include a 25% reduction in business travel, renewable energy agreements and certifications and increasing our green fleets. ◦ We have a dedicated Net Zero Roadmap project team working with each section of the business to measure and monitor GHG emissions for developing discrete and tailored reduction programs, alongside the corporate level reduction plans and targets. ◦ As an industry leader, we have and will continue to invest in the development of disruptive, innovative clean energy solutions that promote a cleaner, greener future and a sustainable world. ◦ World leader in ammonia technology, a leading hydrogen energy enabler, with a fully developed, proprietary, end-to-end green ammonia solution K-GreeNTM. ◦ Exclusive licensor of Hydro-PRTTM, a cutting-edge, scalable technology that utilizes supercritical steam to convert a wide range of single-use and other plastics into virgin-grade feedstocks used to produce new plastics, delivering a truly circular economy. ◦ Safe and responsible operations are essential, and our Zero Harm culture prioritizes the safety and security of our people as well as the active management of our environmental impact. • Technical Excellence and Digital Solutions ◦ Innovative, sustainable, proprietary process technology, expertise and solutions. ◦ Innovative digital solutions and advanced capabilities to improve operations, reliability and environmental impact, including machine learning and artificial intelligence. ◦ Virtual and augmented reality visualizations to provide greater perspectives, insights and training in a controlled environment. • Customer Relationships ◦ Customer missions and objectives are placed at the center of our planning and delivery model. ◦ Decades of enduring relationships with government and commercial client base. • Financial Strength ◦ Diverse portfolio of multi-year, mission critical programs creating stability and resilience. ◦ Low capital intensity business model generating favorable operating cash flows. ◦ Strong liquidity with ample capacity for growth. 9 Our Business Segments We provide a wide range of professional services and the management of our business is heavily focused on major projects or programs within each of our reportable segments.
We seek to differentiate ourselves in areas in which we believe we have a competitive advantage, These include: • Our People ◦ Distinctive mission-focused and inclusive team ethos and culture, which we refer to as “ONE KBR”. ◦ Internationally recognized subject matter experts with deep domain knowledge. ◦ Employee base that includes individuals with high-level security clearance. • Sustainability Leadership ◦ Our Zero Harm philosophy includes ten key areas of sustainability focus across our company. ◦ Safe and responsible operations are essential, and our Zero Harm culture prioritizes the safety and security of our people as well as the active management of our environmental impact. ◦ We have a dedicated global Sustainability Committee made up of leaders from across key corporate and business functions, and the chair of that committee reports quarterly to the Board of Directors. ◦ We have achieved carbon neutrality annually since 2019 and have established net-zero carbon ambition. ◦ As an industry sustainability leader, we have invested and will continue to invest in the development of disruptive, innovative clean energy solutions and special chemicals that promote a cleaner, greener future and a sustainable world. ◦ As a world leader in ammonia technology, we are a leading hydrogen energy enabler, with a fully developed, proprietary, end-to-end green ammonia solution, K-GreeN TM . ◦ We are the exclusive licensor of Hydro-PRT TM , a cutting-edge, scalable technology that utilizes supercritical steam to convert a wide range of single-use and other plastics into virgin-grade feedstocks used to produce new plastics, delivering a truly circular economy. • Technical Excellence and Digital Solutions ◦ High-end differentiated capabilities spanning government and commercial missions, including data analytics and integration, model-based systems engineering, smart asset optimization, and more. ◦ Portfolio of over 85 innovative, sustainable, proprietary process technologies, expertise and solutions. ◦ Innovative, advanced digital capabilities to improve operations, reliability and environmental impact, including artificial intelligence and machine learning. ◦ Virtual and augmented reality visualizations in controlled environments that provide greater perspective and insights and more comprehensive training • Customer Relationships ◦ Customer missions and objectives placed at the center of our planning and delivery model. ◦ Decades of enduring relationships with government and commercial client base. 9 • Financial Strength ◦ Diverse portfolio of multi-year, mission-critical programs creating stability and resilience. ◦ Low capital intensity business model generating favorable operating cash flows. ◦ Strong liquidity with ample capacity for growth.
Additionally, unit-rate contracts are essentially fixed-price contracts with the only variable being units of work to be performed. Further, our fixed-price contracts may include cost escalation and other features that allow for increases in price should certain events occur or conditions change.
Further, our fixed-price contracts may include cost escalation and other features that allow for increases in price should certain events occur or conditions change. Fixed-price contracts are typically subject to change orders if the scope of work changes or unforeseen conditions arise resulting in adjustments to the fixed price.
The Board Nominations & Corporate Governance Committee received regular updates on this process throughout the year, culminating in detailed discussions on updated succession plans for the CEO and Executive Leadership Team. Performance Management 2023 also saw the expansion of our new agile approach to performance management, focused on forward-looking discussions on performance and priorities between managers and their team members.
The Board Nominations & Corporate Governance Committee received regular updates on this process throughout the year, culminating in detailed discussions on updated succession plans for the CEO and Executive Leadership Team.
Under fixed-price contracts, we perform a defined scope of work for a specified fee to cover all costs and any profit element. Fixed-price contracts entail risk to us because they require us to predetermine the work to be performed, the project execution schedule and all the costs associated with the scope of work.
Fixed-price contracts entail risk to us because they require us to predetermine the work to be performed, the project execution schedule and all the costs associated with the scope of work. Additionally, unit-rate contracts are essentially fixed-price contracts with the only variable being units of work to be performed.
The amount of renumeration from the customer to the contracting entity is negotiated on each contract and varies depending on the specific terms for each PFI. Contract Types The Company performs work under contracts that broadly consist of fixed-price, cost-reimbursable, time-and-materials or a combination of the three.
The amount of renumeration from the customer to the contracting entity is negotiated on each contract and varies depending on the specific terms for each PFI.
One process known as the Courage to Care Conversation is instrumental in developing a continual awareness of unsafe acts through observation, intervention and conversation. A web-application to log conversations was created in-house and is available to all KBR employees.
One process known as the Courage to Care Conversation is instrumental in developing a continual awareness of unsafe acts through observation, intervention and conversation. The goal of the Courage to Care Conversation is to continuously evaluate the work environment and to focus on people and their actions.
We expect these and other similar agreements to be extended so long as it is mutually advantageous to both parties at the time of renewal. For technologies we own, we protect our rights, know-how and trade secrets through patents and confidentiality agreements. 13 Seasonality Our operations are not generally affected by seasonality.
For technologies we own, we protect our rights, know-how and trade secrets through patents and confidentiality agreements. Seasonality The majority of our operations are not affected by seasonality.
Environmental Regulation Our business involves design, management, operations and maintenance at various project sites throughout the world, which may be in and around sensitive environmental areas, such as rivers, lakes and wetlands. Our operations may require us to manage, handle, transport and dispose of toxic or hazardous substances, which are subject to stringent and complex laws relating to environmental protection.
Our operations may require us to manage, handle, transport and dispose of toxic or hazardous substances, which are subject to stringent and complex laws relating to environmental protection.
We estimate as of December 29, 2023, 30% of our backlog will be recognized as revenues or equity in earnings of unconsolidated affiliates within fiscal year 2024. For additional information regarding backlog, see our discussion within “Item 7.
We estimate as of January 3, 2025, 40% of our backlog will be recognized as revenues or equity in earnings of unconsolidated affiliates within fiscal year 2025. For additional information regarding backlog, see our discussion within “Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations” contained in Part II of this Annual Report on Form 10-K.
Fixed-price contracts are typically subject to change orders if the scope of work changes or unforeseen conditions arise resulting in adjustments to the fixed price. Although fixed-price contracts involve greater risk than cost-reimbursable contracts, they also are potentially more profitable because the owner/customer pays a premium to transfer project risks to us.
Although fixed-price contracts involve greater risk than cost-reimbursable contracts, they also are potentially more profitable because the owner/customer pays a premium to transfer project risks to us. Time-and-materials contracts typically provide for negotiated fixed hourly rates for specified categories of direct labor. The rates cover the cost of direct labor, indirect expense and fee.
The goal of the Courage to Care Conversation is to continuously evaluate the work environment and to focus on people and their actions. Thanks to our people's commitment to our Zero Harm culture, we recorded another consecutive year of industry-leading HSSE performance, with a total recordable incident rate of 0.067.
Thanks to our people's commitment to our Zero Harm culture, we recorded another consecutive year of industry-leading HSSE performance, with a total recordable incident rate of 0.050. Our Journey to Zero Harm has allowed us to create a company culture where safe execution is non-negotiable and people take responsibility and accountability.
Our employees have told us that their experience is aligned to our values even in the ‘new normal’ of a hybrid and flexible working environment. While our One KBR Values unite us, as a global business operating in distinct markets and environments, we recognize and respect that our cultures are different.
While our One KBR Values unite us, as a global business operating in distinct markets and environments, we recognize and respect that our cultures are different. Acknowledging these differences, our culture weaves a golden thread through KBR.
Time-and-materials contracts typically provide for negotiated fixed hourly rates for specified categories of direct labor. The rates cover the cost of direct labor, indirect expense and fee. These contracts can also allow for reimbursement of cost of material plus a fee, if applicable.
These contracts can also allow for reimbursement of cost of material plus a fee, if applicable.
Throughout 2023, we introduced improved benefits packages for many employees as described above, and we continue to benchmark benefits in local markets and expand our offerings to help us attract and retain the best and brightest talent.
Throughout fiscal 2024, we continued to benchmark pay and benefits in local markets and expand our offerings to help us attract and retain the best and brightest talent. Talent Acquisition In fiscal 2024, we updated our comprehensive Talent Acquisition strategy, aligning recruitment efforts with broader business objectives.
Areas of long-term 8 strategic focus include sustainable technology solutions, energy transition, energy security and technology-led asset optimization. Competitive Advantages We operate in global markets with customers who demand innovation, technical and domain expertise and digitally-enabled, technology-led sustainable solutions.
KBR also develops and prioritizes investment in technologies that are disruptive, innovative and sustainability and safety-focused. These technologies and engineering solutions enable clients to achieve a safer, more secure and more sustainable global future. Competitive Advantages We operate in global markets with customers who demand innovation, technical and domain expertise and digitally enabled, technology-led sustainable solutions.
Significant Customers We provide services to a diverse customer base, including domestic and foreign governments and commercial and industrial companies. We generate significant revenues within our GS business segment from key U.S. government customers including U.S. DoD and NASA, and from the U.K government. No other customers represented 10% or more of consolidated revenues in any of the periods presented.
We generate significant revenues within our GS business segment from key U.S. government customers including U.S. DoD agencies such as the U.S.
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Areas of long-term strategic focus include defense modernization, space superiority and health and human performance. • Sustainable Technology. Consistent with our corporate focus towards sustainability, KBR continues to develop and prioritize investment in commercial process technologies that are innovative, proprietary and sustainability-focused.
Added
Crown Services; the Royal Australian Air Force, Navy and Army; and 8 other national governments; and a wide range of commercial and industrial companies. Areas of long-term strategic focus include defense modernization, space superiority, and health and human performance. • Sustainable Energy and Industrial Technologies.
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We seek to differentiate ourselves in areas in which we believe we have a competitive advantage, including: • People ◦ Distinctive, mission-focused and inclusive team ethos and culture, which we refer to as “One KBR”. ◦ Deep domain expertise resident across nationally recognized subject matter experts. ◦ Employee base that includes individuals with high-level security clearance. • Sustainability Leadership ◦ Our Zero Harm philosophy includes ten key areas of sustainability focus across our company and correspond with the United Nations’ (U.N.) Sustainable Development Goals (SDGs). ◦ As signatories to the U.N.
Added
We design and bring to market patented, proprietary process technology which we license to enable safe, energy efficient, and cost competitive production of energy and special chemical products to meet growing global consumer demand. With our proprietary technology, we also offer proprietary equipment, integration services, and catalysts that enable our clients to convert their raw material to valuable end products.
Removed
Global Compact, we align our business with the U.N.
Added
Areas of long-term strategic focus include sustainable technology solutions, energy transition, energy security and technology-led asset optimization. Our deployment priorities are to fund organic growth, maintain responsible leverage, maintain an attractive dividend, make strategic, accretive acquisitions and repurchase shares. Our acquisition thesis is centered around moving upmarket, expanding capabilities and broadening customer sets across strategic growth vectors.

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Item 1A. Risk Factors

Risk Factors — what could go wrong, per management

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With respect to any particular country, these risks may include, but not be limited to: • expropriation and nationalization of our assets in that country; • changes in government regimes and other developments that may cause, directly or indirectly, political and economic instability; • costs to maintain the safety of our personnel and clients in high-risk locations, including but not limited to, certain parts of Africa and the Middle East, where the country or surrounding area is suffering from political, social or economic issues, war or civil unrest; • changes in trade policies affecting the markets for our services (including but not limited to retaliatory tariffs between the United States and other countries); • civil unrest, acts of terrorism, war or other armed conflict (including but not limited to potential U.S. sanctions on other countries); • currency fluctuations, devaluations and conversion restrictions; • confiscatory taxation or other adverse tax policies; • uncertainties related to any geopolitical, economic and regulatory effects or changes due to recent or upcoming domestic and international elections; 25 • governmental activities or judicial actions that limit or disrupt markets, restrict payments, limit the movement of funds, result in the deprivation of contract rights or result in the inability for us to obtain or retain licenses required for operation; or • increased polarization of political parties, in the U.S. and abroad, which may lead to more volatility in government spending or other developments such as trade wars or changes in military priorities.
With respect to any particular country, these risks may include, but not be limited to: • expropriation and nationalization of our assets in that country; • changes in government regimes and other developments that may cause, directly or indirectly, political and economic instability; • costs to maintain the safety of our personnel and clients in high-risk locations, including but not limited to, certain parts of Africa and the Middle East, where the country or surrounding area is suffering from political, social or economic issues, war or civil unrest; • changes in trade policies affecting the markets for our services (including but not limited to retaliatory tariffs between the United States and other countries); • civil unrest, acts of terrorism, war or other armed conflict (including but not limited to potential U.S. sanctions on other countries); • currency fluctuations, devaluations and conversion restrictions; • confiscatory taxation or other adverse tax policies; • uncertainties related to any geopolitical, economic and regulatory effects or changes due to recent or upcoming domestic and international elections; • governmental activities or judicial actions that limit or disrupt markets, restrict payments, limit the movement of funds, result in the deprivation of contract rights or result in the inability for us to obtain or retain licenses required for operation; or • increased polarization of political parties, in the U.S. and abroad, which may lead to more volatility in government spending or other developments such as trade wars or changes in military priorities.
Our processes and controls for reporting ESG matters across our operations and supply chain are evolving along with multiple disparate standards for identifying, measuring and reporting ESG metrics, including ESG-related disclosures that may be required by the SEC, European and other regulators, and such standards may change over time, which could result in significant revisions to our current goals, reported progress in achieving such goals or ability to achieve such goals in the future.
Our processes and controls for reporting such matters across our operations and supply chain are evolving along with multiple disparate standards for identifying, measuring and reporting metrics, including related disclosures that may be required by the SEC, European and other regulators, and such standards may change over time, which could result in significant revisions to our current goals, reported progress in achieving such goals or ability to achieve such goals in the future.
Historically, omnibus contract vehicles have been used for work that is done on a contingency or as-needed basis. In more predictable “sustainment” environments, contracts may include fixed-price, 27 cost-reimbursable and time-and-materials elements. The U.S. government also favors multiple award task order contracts in which several contractors are selected as eligible bidders for future work.
Historically, omnibus contract vehicles have been used for work that is done on a contingency or as-needed basis. In more predictable “sustainment” environments, contracts may include fixed-price, cost-reimbursable and time-and-materials elements. The U.S. government also favors multiple award task order contracts in which several contractors are selected as eligible bidders for future work.
As a result of such acquisitions or arrangements, our current or potential competitors may be able to accelerate the adoption of new technologies that better address customer needs, devote greater resources to bring these products and services to market, initiate or withstand substantial price competition or develop and expand their product and service offerings at a more accelerated rate.
As a result of such acquisitions or 28 arrangements, our current or potential competitors may be able to accelerate the adoption of new technologies that better address customer needs, devote greater resources to bring these products and services to market, initiate or withstand substantial price competition or develop and expand their product and service offerings at a more accelerated rate.
These suits may remain under seal (and hence, be unknown to us) for some time while the U.S. government decides whether to intervene on behalf of the qui tam plaintiff. For more information, see Note 14 to our consolidated financial statements in Part II, Item 8 of this Annual Report on Form 10-K.
These suits may remain under seal (and hence, be unknown to us) for some time while the U.S. government decides whether to intervene on behalf of the qui tam plaintiff. For more information, see Note 14. "U.S. Government Matters" to our consolidated financial statements in Part II, Item 8 of this Annual Report on Form 10-K.
If any contract were so terminated, our ability to secure future contracts could be adversely affected. Other remedies that could be sought by our U.S. government customers for any 29 improper activities or performance issues include sanctions such as forfeiture of profits, suspension of payments, fines and suspensions or debarment from doing business with the U.S. government.
If any contract were so terminated, our ability to secure future contracts could be adversely affected. Other remedies that could be sought by our U.S. government customers for any improper activities or performance issues include sanctions such as forfeiture of profits, suspension of payments, fines and suspensions or debarment from doing business with the U.S. government.
As a U.S. government contractor and a provider of IT services operating in multiple regulated industries and geographies, we and our business partners (including our service providers, joint venture partners, suppliers and subcontractors) handle a variety of sensitive information including personally identifiable information, personnel information, protected health information, classified and controlled unclassified information, and financial information, concerning our business, employees and customers.
As a U.S. government contractor and a provider of services operating in multiple regulated industries and geographies, we and our business partners (including our service providers, joint venture partners, suppliers and subcontractors) handle a variety of sensitive information including personally identifiable information, personnel information, protected health information, classified and controlled unclassified information, and financial information, concerning our business, employees and customers.
Legislation, regulations and initiatives dealing with 28 procurement reform as well as any resulting shifts in the buying practices of U.S. government agencies, such as increased usage of fixed-price contracts, multiple-award contracts and small business set-aside contracts, could have adverse effects on government contractors, including us.
Legislation, regulations and initiatives dealing with procurement reform as well as any resulting shifts in the buying practices of U.S. government agencies, such as increased usage of fixed-price contracts, multiple-award contracts and small business set-aside contracts, could have adverse effects on government contractors, including us.
We face uncertainty with respect to our government contracts due to the fiscal, economic and budgetary challenges facing our customers. Potential contract delays, modifications or terminations may arise from resolution of these issues and could cause our revenues, profits and cash flows to be lower than our current projections.
We face uncertainty with respect to our government contracts due to the political, fiscal, economic and budgetary challenges facing our customers. Potential contract delays, modifications or terminations may arise from resolution of these issues and could cause our revenues, profits and cash flows to be lower than our current projections.
Adverse changes in the equity markets, interest rates or actuarial 32 assumptions and legislative or other regulatory actions could increase the risk that the funding requirements increase following the next triennial negotiation. A significant increase in our funding requirements for our U.K. pension plan could result in a material adverse effect on our cash flows and financial position.
Adverse changes in the equity markets, interest rates or actuarial assumptions and legislative or other regulatory actions could increase the risk that the funding requirements increase following the next triennial negotiation. A significant increase in our funding requirements for our U.K. pension plan could result in a material adverse effect on our cash flows and financial position.
Under certain contracts with the U.S. government subject to the FAR and CAS, the adequacy of our business processes and related systems could be called into question. Any significant disruptions or failures could damage our reputation or have a material adverse effect on our business operations, financial performance, financial condition and reputation.
Under certain contracts with the U.S. government subject to the FAR and CAS, the adequacy of our business processes and related systems could be called into question. Any significant disruptions or failures could have a material adverse effect on our business operations, financial performance, financial condition and reputation.
Additionally, government regulations generally include the right for government agencies to modify, delay, curtail, renegotiate or terminate contracts at their convenience any time prior to their completion. As we are a significant government contractor, our financial performance is affected by the allocation and prioritization of government spending.
Additionally, government regulations generally include the right for government agencies to modify, delay, curtail, renegotiate or terminate contracts at their convenience any time prior to their completion. As we are a significant government 29 contractor, our financial performance is affected by the allocation and prioritization of government spending.
Furthermore, if the amount we are required to pay for these goods and services exceeds the amount we have estimated in bidding for fixed-price contracts, we could experience losses in the performance of these contracts. We use estimates in recognizing revenues, and if we make changes to estimates used in recognizing revenues, our profitability may be adversely affected.
Furthermore, if the amount we are required to pay for these goods and services exceeds the amount we have estimated in bidding for fixed-price contracts, we could experience losses in the performance of these contracts. 22 We use estimates in recognizing revenues, and if we make changes to estimates used in recognizing revenues, our profitability may be adversely affected.
As with any joint venture arrangement, differences in views among the joint venture partners may result in delayed decisions or in failures to agree on 23 major issues. We also cannot control the actions of our joint venture partners, including failure to comply with applicable laws or regulations, nonperformance and default or bankruptcy of our joint venture partners.
As with any joint venture arrangement, differences in views among the joint venture partners may result in delayed decisions or in failures to agree on major issues. We also cannot control the actions of our joint venture partners, including failure to comply with applicable laws or regulations, nonperformance and default or bankruptcy of our joint venture partners.
We currently hold U.S. government-issued facility security clearances and a large number of our employees have qualified for and hold U.S. government-issued personal security clearances necessary to ultimately perform certain U.S. government contracts. Obtaining and maintaining security clearances for employees involves lengthy processes, and it is difficult to identify, recruit and retain employees who already hold security clearances.
We currently hold U.S. government-issued facility security clearances and a large number of our employees have qualified for and hold U.S. government-issued personal security clearances necessary to perform certain U.S. government contracts. Obtaining and maintaining security clearances for employees involves lengthy processes, and it is difficult to identify, recruit and retain employees who already hold security clearances.
We may experience similar security threats to the IT systems that we develop, install or maintain under customer contracts, including customer contracts under which we may have access to or management responsibility for customer databases or networks that contain sensitive information relating to our customers, their employees or related third parties.
We may experience similar security threats to the IT systems that we 25 develop, install or maintain under customer contracts, including customer contracts under which we may have access to or management responsibility for customer databases or networks that contain sensitive information relating to our customers, their employees or related third parties.
Demand for our services provided under government contracts is directly affected by spending by our customers. We derive a significant portion of our revenues from contracts with agencies and departments of the U.S., the U.K. and Australia governments, which is directly affected by changes in government spending and availability of adequate funding.
Demand for our services provided under government contracts is directly affected by spending by our customers. We derive a significant portion of our revenues from contracts with agencies and departments of the U.S., the U.K. and Australia governments, which is directly affected by changes in government spending priorities and availability of adequate funding.
However, we may not be successful in structuring our technology or developing, acquiring or implementing technology systems in ways that are competitive and responsive to the needs of our customers. We may lack sufficient resources to continue to make the significant technology investments to effectively compete with our competitors.
However, we may not be successful in structuring our technology or developing, acquiring or implementing technology systems in ways that are competitive and responsive to the needs of our customers. We may lack sufficient resources to continue to make the significant 20 technology investments to effectively compete with our competitors.
These disruptions could materially impact our backlog and financial performance. In addition, we are subject to the risk that the lending counterparties to our Revolver may be unable to meet their contractual obligations to us if they suffer catastrophic demands on their liquidity.
These disruptions could materially impact our backlog and financial performance. 30 In addition, we are subject to the risk that the lending counterparties to our Revolver may be unable to meet their contractual obligations to us if they suffer catastrophic demands on their liquidity.
As such, a potential disruption to our and our customer's businesses from a natural disaster may cause us to experience work stoppages, project delays, financial losses and additional costs to resume operations such as increased insurance costs or loss of coverage, legal liability and reputational damage.
As such, a potential disruption to our and our customer's businesses from a natural disaster may cause us to experience work stoppages, 35 project delays, financial losses and additional costs to resume operations such as increased insurance costs or loss of coverage, legal liability and reputational damage.
The potential risks associated with successful integration and realization of benefits include, but are not limited to the following: • our due diligence may not identify or fully assess valuation issues, potential liabilities or other acquisition risks; • acquired entities may not achieve anticipated revenue targets, cost savings or other synergies or benefits, or acquisitions may not result in improved operating performance, which could adversely affect our operating income or operating margins, and we may be unable to recover investments in any such acquisitions; • we may have difficulty integrating acquired businesses, resulting in unforeseen difficulties, such as incompatible accounting, information management or other control systems, and greater expenses than expected; • we may have difficulty entering into new markets in which we are not experienced, in an efficient and cost-effective manner while maintaining adequate standards, controls and procedures; • key personnel within an acquired organization may resign from their related positions resulting in a significant loss to our strategic and operational efficiency associated with the acquired company; • the effectiveness of our daily operations may be reduced by the redirection of employees and other resources to acquisition and integration activities; • we may assume liabilities of an acquired business (including litigation, tax liabilities, contingent liabilities, environmental issues), including liabilities that were unknown at the time of the acquisition, that pose future risks to our working capital needs, cash flows and the profitability of related operations; • we may assume unprofitable projects that pose future risks to our working capital needs, cash flows and the profitability of related operations; or • business acquisitions may include substantial transactional costs to complete the acquisition that exceed the estimated financial and operational benefits.
The potential risks associated with successful integration and realization of benefits include, but are not limited to the following: • our due diligence may not identify or fully assess valuation issues, potential liabilities or other acquisition risks; • acquired entities may not achieve anticipated revenue targets, cost savings or other synergies or benefits, or acquisitions may not result in improved operating performance, which could adversely affect our operating income or operating margins, and we may be unable to recover investments in any such acquisitions; • we may have difficulty integrating acquired businesses, resulting in unforeseen difficulties, such as incompatible accounting, information management or other control systems, and greater expenses than expected; • we may have difficulty entering into new markets in which we are not experienced, in an efficient and cost-effective manner while maintaining adequate standards, controls and procedures; • key personnel within an acquired organization may resign from their related positions resulting in a significant loss to our strategic and operational efficiency associated with the acquired company; • the effectiveness of our daily operations may be reduced by the redirection of employees and other resources to acquisition and integration activities; • we may assume liabilities of an acquired business (including litigation, tax liabilities, contingent liabilities, environmental issues), including liabilities that were unknown at the time of the acquisition, that pose future risks to our working capital needs, cash flows and the profitability of related operations; • we may assume unprofitable projects that pose future risks to our working capital needs, cash flows and the profitability of related operations; or • business acquisitions may include substantial transactional costs to complete the acquisition that exceed the estimated financial and operational benefits. 24 International and political events may adversely affect our operations.
Political, economic and other conditions in foreign countries and regions, including geopolitical risks, such as the current conflict between Russia and Ukraine and political and economic instability and conflict in the Middle East, may adversely affect our business and operations as a portion of our revenue is derived from foreign operations.
Political, economic and other conditions in foreign countries and regions, including geopolitical risks, such as the current conflict between Russia and Ukraine and political and economic instability and ongoing conflict in the Middle East, may adversely affect our business and operations as a portion of our revenue is derived from foreign operations.
Such risks include, but are not limited to, the following: 20 • adverse effects on macroeconomic conditions, including inflation, demand for our products and potential recessionary economic conditions; • increased cyber security threats; • adverse changes in trade policies, taxes, government regulations and tariffs; • our ability to obtain compensation for increased costs incurred related to rising costs of equipment, materials and labor on fixed-price contracts; • our ability to implement and execute our business strategy; • disruptions in global supply chains; • our exposure to foreign currency fluctuations; and • constraints, volatility or disruption in the capital markets.
Such risks include, but are not limited to, the following: 19 • adverse effects on macroeconomic conditions, including inflation, demand for our products and potential recessionary economic conditions; • increased cyber security threats; • adverse changes in trade policies, taxes, government regulations and tariffs; • our ability to obtain compensation for increased costs incurred related to rising costs of equipment, materials and labor on fixed-price contracts; • our ability to implement and execute our business strategy; • disruptions in global supply chains; • our exposure to foreign currency fluctuations; and • constraints, volatility or disruption in the capital markets.
Our policies mandate compliance with these Anti-bribery Laws. We operate in many parts of the world that have experienced governmental corruption to some degree and, in certain circumstances, strict compliance with Anti-bribery Laws may conflict with local customs and practices.
Our policies mandate compliance with these Anti-bribery Laws. We operate in many parts of the world that have experienced governmental corruption to some degree and, in certain circumstances, strict compliance with 33 Anti-bribery Laws may conflict with local customs and practices.
If these estimates prove inaccurate, if there are errors or ambiguities as to contract specifications or if circumstances change due to, among other things, the recent rise in interest rates, continued inflation, supply-chain disruptions, unanticipated technical problems, poor project execution, difficulties in obtaining permits or approvals, changes in local laws or labor conditions, weather delays, increased costs of equipment and materials from inflation or other factors or our suppliers’ or subcontractors’ inability to perform, then cost overruns may occur.
If these estimates prove inaccurate, if there are errors or ambiguities as to contract terms or specifications, or if circumstances change due to, among other things, the recent rise in interest rates, continued inflation, supply-chain disruptions, tariffs, unanticipated technical problems, poor project execution, difficulties in obtaining permits or approvals, changes in local laws or labor conditions, weather delays, increased costs of equipment and materials from inflation or other factors or our suppliers’ or subcontractors’ inability to perform, then cost overruns may occur.
Our failure to accurately estimate the resources and time required for fixed-price contracts or our failure to complete our contractual obligations within a specified time frame or cost estimate could result in reduced profits or, in certain cases, a loss for that contract.
Our failure to accurately estimate the resources and time required for fixed-price contracts or our failure to complete our contractual obligations within a specified time frame or cost estimate could result in reduced profits or, 23 in certain cases, a loss for that contract.
Climate change related events, such as increased frequency and severity of storms, floods, wildfires, droughts, hurricanes, freezing conditions and other natural disasters, may have a long-term impact on our business, financial condition and results of operations.
Climate-related events, such as increased frequency and severity of storms, floods, wildfires, droughts, hurricanes, freezing conditions and other natural disasters, may have a long-term impact on our business, financial condition and results of operations.
If we are unable to attract and retain a sufficient number of elite skilled professionals with appropriate government qualifications, our ability to pursue projects may be adversely affected, our operating income may decline, and our reputation may be damaged.
If we are unable to attract and retain a sufficient number of elite skilled professionals with appropriate government qualifications, our ability to pursue and execute projects may be adversely affected, our operating income may decline, and our reputation may be damaged.
We will need to continue to respond to and anticipate these changes by enhancing our product and service offerings to maintain our competitive position. 21 It is strategically important that we lead the digital transformation occurring in our industry.
We will need to continue to respond to and anticipate these changes by enhancing our product and service offerings to maintain our competitive position. It is strategically important that we lead the digital transformation occurring in our industry.
We are also subject to certain financial covenants, 31 including but not limited to maintenance of a maximum consolidated net leverage ratio and a consolidated interest coverage ratio as defined in the Senior Credit Facility agreement.
We are also subject to certain financial covenants, including but not limited to maintenance of a maximum consolidated net leverage ratio and a consolidated interest coverage ratio as defined in the Senior Credit Facility agreement.
If the contract is significant, or we encounter issues that impact multiple contracts, cost overruns could have a material adverse effect on our business, financial condition and results of operations. Our backlog of unfilled orders is subject to unexpected adjustments and cancellations and, therefore, may not be a reliable indicator of our future revenues or earnings.
If the contract is significant, or we encounter issues that impact multiple contracts, cost overruns or schedule delays could have a material adverse effect on our business, financial condition and results of operations. Our backlog of unfilled orders is subject to unexpected adjustments and cancellations and, therefore, may not be a reliable indicator of our future revenues or earnings.
Our revenues are directly and indirectly derived from contract awards. Reductions in the number and amounts of new awards, delays in the timing of anticipated awards or potential cancellations of such prospects as a result of economic conditions, material and equipment pricing and availability or other factors could adversely impact our long-term projected results.
Our revenues are directly and indirectly derived from contract awards. Reductions in the number and amounts of new awards, delays in the timing of anticipated awards or potential cancellations of such prospects as a result of economic conditions, funding priorities, material and equipment pricing and availability or other factors could adversely impact our long-term projected results.
These risks and uncertainties include, but are not limited to: our ability to execute our operational strategies and achieve our goals within the currently projected costs and the expected timeframes; the availability and cost of alternative fuels, global electrical charging infrastructure, off-site renewable energy and other materials and components; unforeseen design, operational and technological difficulties; the outcome of research efforts and future technology developments, including the ability to scale projects and technologies on a commercially competitive basis such as carbon sequestration and/or other related processes; compliance with, and changes or additions to, global and regional regulations, taxes, charges, mandates or requirements relating to greenhouse gas emissions, carbon costs or climate-related goals; labor-related regulations and requirements that restrict or prohibit our ability to impose requirements on third party contractors; adapting products to customer preferences and customer acceptance of sustainable supply chain solutions; the actions of competitors and competitive pressures; an acquisition of or merger with another company that has not adopted similar carbon negative goals or whose progress towards reaching its carbon negative goals is not as advanced as ours; and the pace of regional and global recovery from the COVID-19 pandemic.
These risks and uncertainties include, but are not limited to: our ability to execute our operational strategies and achieve our goals within the currently projected costs and the expected timeframes; the availability and cost of alternative fuels, global electrical charging infrastructure, off-site renewable energy and other materials and components; unforeseen design, operational and technological difficulties; the outcome of research efforts and future technology developments, including the ability to scale projects and technologies on a commercially competitive basis such as carbon sequestration and/or other related processes; compliance with, and changes or additions to, global and regional regulations, taxes, charges, mandates or requirements relating to greenhouse gas emissions, carbon costs or climate-related goals; labor-related regulations and requirements that restrict or prohibit our ability to impose requirements on third party contractors; adapting products to customer preferences and customer acceptance of sustainable supply chain solutions; the actions of competitors and competitive pressures; and an acquisition of or merger with another company that has not adopted similar carbon negative goals or whose progress towards reaching its carbon negative goals is not as advanced as ours.
Continued attention to issues concerning climate change or other environmental matters may result in the imposition of additional environmental regulations, rules, standards and policies that seek to restrict, or otherwise impose limitations or costs upon our operations and the emission of greenhouse gases.
Continued attention to issues concerning climate risks or other environmental matters may result in the imposition of additional environmental regulations, rules, standards and policies that seek to restrict, or otherwise impose limitations or costs upon our operations and the emission of greenhouse gases.
Our efforts to protest or challenge any bids for contracts that were not awarded to us also may be unsuccessful. Our profitability and cash flow may vary based on the mix of our contracts and programs, our performance, and our ability to control costs.
Our efforts to protest or challenge any bids for contracts that were not awarded to us also may be unsuccessful. Our profitability and cash flow may vary based on the mix of our contracts and programs, our performance, our ability to control costs and seasonal factors.
Any failure, or perceived failure, by us to comply fully with developing interpretations of ESG laws and regulations could harm our business, reputation, financial condition and operating results and require significant time and resources to make the necessary adjustments.
Any failure, or perceived failure, by us to comply fully with developing interpretations of such laws and regulations could harm our business, reputation, financial condition and operating results and require significant time and resources to make the necessary adjustments.
We may be required to contribute additional cash to meet any unfunded benefit obligations associated with defined benefit plans we manage. We have frozen defined benefit pension plans for employees primarily in the U.S., the U.K. and Germany.
We may be required to contribute additional cash to meet any unfunded benefit obligations associated with our defined benefit plans. We have frozen defined benefit pension plans for employees primarily in the U.S., the U.K. and Germany.
If we are unable to enforce our intellectual property rights, or if our intellectual property rights are challenged or become obsolete, our competitive position could be adversely impacted. We utilize a variety of intellectual property rights in providing services to our customers.
If we are unable to enforce our intellectual property rights, or if our intellectual property rights are challenged or become obsolete, our competitive position could be adversely impacted. We utilize a variety of intellectual property rights in providing technology and services to our customers.
It is particularly difficult to predict whether or when we will receive large-scale international and domestic projects as these contracts usually involve a lengthy and complex bidding and selection process.
It is particularly difficult to predict whether or when we will receive large-scale projects as these contracts usually involve a lengthy and complex bidding and selection process.
Although we are proactively seeking measures to mitigate our business risks associated with climate change, we recognize that there are innate climate related risks regardless of where and how we conduct our businesses.
Although we are proactively seeking measures to mitigate our business risks associated with climate-related events, we recognize that there are innate climate-related risks regardless of where and how we conduct our businesses.
If our ESG practices do not meet evolving investor or other stakeholder expectations and standards, then our reputation or our attractiveness as an investment, business partner, acquirer, service provider or employer could be negatively impacted. Climate change and related environmental issues could have a material adverse impact on our business, financial condition and results of operations.
If our corporate responsibility practices do not meet evolving investor or other stakeholder expectations and standards, then our reputation or our attractiveness as an investment, business partner, acquirer, service provider or employer could be negatively impacted. Climate risks and related environmental issues could have a material adverse impact on our business, financial condition and results of operations.
We had approximately $1.8 billion of indebtedness outstanding as of December 29, 2023 which could have negative consequences to us, including, but not limited to: • requiring us to dedicate cash flow from operations to the repayment of debt, interest and other related amounts, which reduces the funds we have available for other purposes, such as working capital, capital expenditures, acquisitions, payment of dividends and share repurchase programs; • making it more difficult or expensive for us to obtain any necessary future financing for working capital, capital expenditures, debt service requirements, debt refinancing, acquisitions or other purposes; • reducing our flexibility in planning for or reacting to changes in our industry and market conditions; • causing us to be more vulnerable in the event of a downturn in our business; • exposing us to increased interest rate risk given that a portion of our debt obligations are at variable interest rates; and • increasing our risk of a covenant violation under our Senior Credit Facility.
We had approximately $2.6 billion of indebtedness outstanding as of January 3, 2025 which could have negative consequences to us, including, but not limited to: 31 • requiring us to dedicate cash flow from operations to the repayment of debt, interest and other related amounts, which reduces the funds we have available for other purposes, such as working capital, capital expenditures, acquisitions, payment of dividends and share repurchase programs; • making it more difficult or expensive for us to obtain any necessary future financing for working capital, capital expenditures, debt service requirements, debt refinancing, acquisitions or other purposes; • reducing our flexibility in planning for or reacting to changes in our industry and market conditions; • causing us to be more vulnerable in the event of a downturn in our business; • exposing us to increased interest rate risk given that a portion of our debt obligations are at variable interest rates; and • increasing our risk of a covenant violation under our Senior Credit Facility.
The spread of COVID-19 and other pandemics, epidemics, outbreaks of infectious diseases or public health crises across the globe have disrupted, and may in the future disrupt our business, which could materially and adversely affect our financial condition, results of operations, cash flows and/or future expectations.
Pandemics, epidemics, outbreaks of infectious diseases or public health crises across the globe have disrupted, and may in the future disrupt our business, which could materially and adversely affect our financial condition, results of operations, cash flows and/or future expectations.
This could lead to disruptions in our business and result in decreased performance, significant remediation costs, transaction errors, loss of data (including personally identifiable information), processing inefficiencies, downtime, litigation and the loss of suppliers or customers.
This could lead to disruptions in our business and result in decreased performance, significant remediation costs, reputational damage, transaction errors, loss of data (including personally identifiable information), data leakage of confidential information, processing inefficiencies, downtime, litigation and the loss of suppliers or customers.
As of December 29, 2023, the future revenues we expect to realize as a result of backlog was approximately $17.3 billion. We cannot guarantee that the revenues projected in our backlog will be realized or that the projects will be profitable. Many of our contracts are subject to cancellation, termination or suspension at the discretion of the customer.
As of January 3, 2025, the future revenues we expect to realize as a result of backlog was approximately $17.3 billion. We cannot guarantee that the revenues projected in our backlog will be realized or that the projects will be profitable. Many of our contracts are subject to cancellation, termination or suspension at the discretion of the customer.
We may not properly leverage or appropriately invest in technology advancements, which could diminish any sustainable competitive advantage in our service offerings resulting in the potential loss of market share and profits. Our business is dependent on information technology as we operate in global markets with customers who demand innovation, technical and domain expertise and digitally-enabled, technology-led solutions.
We may not properly leverage or appropriately invest in technology advancements, which could diminish any sustainable competitive advantage in our service offerings resulting in the potential loss of market share and profits. We operate in global markets with customers who demand innovation, technical and domain expertise and digitally-enabled, technology-led solutions.
We cannot predict when or whether any of these various legislative and regulatory proposals may become law or what their effect will be on us and our customers. Furthermore, investor and societal expectations with respect to environmental, social and governance ("ESG") matters have been rapidly evolving and increasing.
We cannot predict when or whether any of these various legislative and regulatory proposals may become law or what their effect will be on us and our customers. Furthermore, investor and societal expectations with respect to corporate responsibility matters have been rapidly evolving and increasing.
We risk damage to our reputation if we do not act responsibly in the following key areas: inclusion and diversity, environmental stewardship, support for local communities and corporate governance and transparency.
We risk damage to our reputation if we do not act responsibly in the following key areas: anti-discrimination, environmental stewardship, support for local communities and corporate governance and transparency.
International and political events may adversely affect our operations. A portion of our revenues is derived from foreign operations, which exposes us to risks inherent in doing business in each of the countries where we transact business. The occurrence of any of the risks described below could have a material adverse effect on our business operations and financial performance.
A portion of our revenues is derived from foreign operations, which exposes us to risks inherent in doing business in each of the countries where we transact business. The occurrence of any of the risks described below could have a material adverse effect on our business operations and financial performance.
Additionally, our Senior Credit Facility contains a default provision that is triggered upon a change in control of at least 25%, which would impede a takeover and/or make a takeover more costly. We may change our dividend policy in the future. We have maintained a regular cash dividend program since 2007. We anticipate continuing to pay quarterly dividends during 2024.
Additionally, our Senior Credit Facility contains a default provision that is triggered upon a change in control of at least 25%, which would impede a takeover and/or make a takeover more costly. We may change our dividend policy in the future. We have maintained a regular cash dividend program since 2007.
Additionally, we currently are and may be subject to additional qui tam litigation brought by private individuals on behalf of the U.S. government under the Federal False Claims Act, which could include claims for treble damages.
Additionally, we previously have been, and may in the future be subject to additional qui tam litigation brought by private individuals on behalf of the U.S. government under the Federal False Claims Act, which could include claims for treble damages.
Factors that could affect current and future government spending include: • policy or spending changes implemented by the current administration, defense department or other government agencies; • increased polarization of political parties; • failure to pass budget appropriations, continuing funding resolutions or other budgetary decisions, including any failure of the U.S. federal government to manage its fiscal matters or to raise or further suspend the debt ceiling; • changes, delays or cancellations of government programs or requirements; • adoption of new laws or regulations that affect companies providing services to the governments; • reduced buying power as a result of inflation; • curtailment of the governments’ outsourcing of services to private contractors; or • the level of political instability due to war, conflict or natural disasters.
Factors that could affect current and future government spending include: • policy or spending changes, or changes in enforcement priorities or resource allocation, implemented by the current administrations, defense departments or other government agencies; • advisory commissions created to review budgetary priorities, including efficiency initiatives such as the Department of Government Efficiency; • increased polarization of political parties; • failure to pass budget appropriations, continuing funding resolutions or other budgetary decisions, including any failure of the U.S. federal government to manage its fiscal matters or to raise or further suspend the debt ceiling; • changes, delays or cancellations of government programs or requirements; • adoption of new laws, regulations or policies, or repeal of existing laws, regulations or policies, that affect companies providing services to the governments; • reduced buying power as a result of inflation; • curtailment of the governments’ outsourcing of services to private contractors; or • the level of political instability due to war, conflict or natural disasters.
Although we believe that our sustainability commitments and targets are achievable, there is no assurance that we will be able to successfully implement our strategies and achieve our 2030 operational net-zero targets. Investors have recently increased their focus on environmental, social and governance matters, including practices related to greenhouse gas emissions and climate change.
Although we believe that our sustainability commitments and targets are achievable, there is no assurance that we will be able to successfully implement our strategies and achieve our net-zero targets. Investors have recently increased their focus on sustainability matters, including practices related to greenhouse gas emissions and the environment.
Goodwill represents the excess of cost over the fair market value of net assets acquired in business combinations. We perform an annual analysis of our goodwill on October 1 to determine if it has become impaired.
Goodwill represents the excess of cost over the fair market value of net assets acquired in business combinations. We perform an annual analysis of our goodwill on the first day of the fourth fiscal quarter to determine if it has become impaired.
If the U.S. government concludes costs charged to a contract are not reimbursable under the terms of the contract or applicable procurement regulations, these costs are disallowed or, if already reimbursed, we may be required to refund the reimbursed amounts to the customer. Such conditions may also include interest and other financial penalties.
If the U.S. government concludes costs charged to a contract are not reimbursable under the terms of the contract or applicable procurement regulations, these costs are disallowed or, if already reimbursed, we may be required to refund the reimbursed amounts to the customer.
However, any future payment of dividends, including the timing and amount of any such dividends, is at the 33 discretion of our Board of Directors and may depend upon our earnings, liquidity, financial condition, alternate capital deployment opportunities or any other factors that our Board of Directors considers relevant.
We anticipate continuing to pay quarterly dividends during fiscal 2025. However, any future payment of dividends, including the timing and amount of any such dividends, is at the discretion of our Board of Directors and may depend upon our earnings, liquidity, financial condition, alternate capital deployment opportunities or any other factors that our Board of Directors considers relevant.
The largest potential source of deficit is related to our defined benefit pension plan in the U.K that is in a funding deficit position at December 29, 2023.
The largest potential source of deficit is related to our defined benefit pension plan in the U.K that is in a funding surplus position at January 3, 2025.
We cannot predict the impact that future economic conditions may have on our backlog, which could include a diminished ability to replace backlog once projects are completed or could result in the termination, modification or suspension of projects currently in our backlog.
We cannot predict the impact that future economic conditions may have on our backlog, which could include a diminished ability to replace backlog once projects are completed or could result in the termination, modification or suspension of projects currently in our backlog. Such developments could have a material adverse effect on our financial condition, results of operations and cash flows.
Any remediation costs, damages or other liabilities related to unauthorized access of sensitive information of ours or our customers caused by cyber or other security threats may not be fully insured or indemnified by other means or our insurers.
Any remediation costs, damages or other liabilities related to unauthorized access of sensitive information of ours or our customers caused by cyber or other security threats may not be fully insured or indemnified by other means or our insurers. Occurrence of any unauthorized access caused by these security threats could adversely affect our reputation, business operations and financial results.
An impairment of all or part of our goodwill or our intangible assets could have a material adverse impact on our net earnings and net worth. As of December 29, 2023, we had $2.1 billion of goodwill and $618 million of intangible assets recorded on our consolidated balance sheets.
An impairment of all or part of our goodwill or our intangible assets could have a material adverse impact on our net earnings and net worth. As of January 3, 2025, we had $2,630 million of goodwill and $763 million of intangible assets recorded on our consolidated balance sheets.
The lack of adequate credit or funding or the unavailability of funding on terms satisfactory to us, could have a material adverse effect on our business and financial performance.
The lack of adequate credit or funding or the unavailability of funding on terms satisfactory to us, could have a material adverse effect on our business and financial performance. Rising or high inflation and/or interest rates could have an adverse effect on our business, financial condition and results of operations.
In particular, international operations could adversely be affected by the Organization for Economic Co-operation and Development (OECD)’s proposed international taxation reform and introduction of a global minimum tax. A significant increase in tax rates could have a material adverse effect on our profitability and liquidity.
In particular, international operations could adversely be affected by the Organization for Economic Co-operation and Development (OECD)’s proposed international taxation reform and introduction of a global minimum tax.
We may not be able to obtain compensation for additional work performed or expenses incurred. Additionally, we have in the past and may in the future be required to pay liquidated damages upon our failure to meet schedule or performance requirements of our contracts.
Additionally, we have in the past and may in the future be required to pay liquidated damages upon our failure to meet schedule or performance requirements of our contracts.
At December 29, 2023, our defined benefit pension plans had an aggregate funding deficit (calculated as the excess of the projected benefit obligations over the fair value of plan assets) of approximately $15 million.
At January 3, 2025, our defined benefit pension plans had an aggregate funding surplus (calculated as the excess of the fair value of plan assets over the projected benefit obligations) of approximately $77 million.
In addition, standards for tracking and reporting ESG matters continue to evolve. New laws, regulations, policies and international accords relating to ESG matters, including sustainability, climate change, human capital and diversity, are being developed and formalized in Europe, the United States, Asia and elsewhere, which may entail specific, target-driven frameworks and/or disclosure requirements.
New laws, regulations, policies and international accords relating to such matters, including sustainability, climate-related risks, human capital and anti-discrimination, are being developed and formalized in Europe, the United States, Asia and elsewhere, which may entail specific, target-driven frameworks and/or disclosure requirements.
Methodologies 35 for reporting ESG data may be updated and previously reported ESG data may be adjusted to reflect improvement in availability and quality of internal and third-party data, changing assumptions, changes in the nature and scope of our operations and other changes in circumstances.
Methodologies for reporting data in these areas (e.g., sustainability and climate-related impacts, or human capital data) may also be updated and previously reported data may be adjusted to reflect improvement in availability and quality of internal and third-party data, changing assumptions, changes in the nature and scope of our operations and other changes in circumstances.
Furthermore, there is risk of mass casualty or environmentally damaging events that may involve our and third-party personnel and property, which could lead to future claims and litigation, impact our reputation and investor confidence and ultimately result in reduced share price. 22 We occasionally bring claims against project owners for additional costs exceeding the contract price or for amounts not included in the original contract price.
Furthermore, there is risk of mass casualty or environmentally damaging events that may involve our and third-party personnel and property, which could lead to future claims and litigation, impact our reputation and investor confidence and ultimately result in reduced share price.
A considerable percentage of our revenues, particularly in our GS business segment, is generated from transactions with certain significant customers. Revenues from the U.S. government represented 58% of our total consolidated revenues for the year ended December 29, 2023.
A considerable percentage of our revenues, particularly in our GS business segment, is generated under contracts with certain significant customers. Revenues from the U.S. government represented 57% of our total consolidated revenues for fiscal 2024.
Due to the fixed-price nature of the contracts, if our actual costs exceed our estimates, our margins and profits are reduced and we could incur a loss on the respective contract which could adversely affect our financial results. Under both fixed-price and cost-reimbursable contracts, if we are unable to control costs, our operating results could be adversely affected.
Due to the fixed-price nature of the contracts, if our actual costs exceed our estimates, our margins and profits are reduced and we could incur a loss on the respective contract which could adversely affect our financial results. In addition, the timing of our profitability and cash flows may be affected by seasonal factors.
Occurrence of any unauthorized access caused by these security threats could adversely affect our reputation, business operations and impact our financial results. While we have security measures and technology in place designed to protect our and our clients’ proprietary or classified information, there can be no assurance that our efforts will prevent all threats to our computer systems.
While we have security measures and technology in place designed to protect our and our clients’ proprietary or classified information, there can be no assurance that our efforts will prevent all threats to our computer systems.
In addition, more stringent regulation of our customers' operations with respect to the protection of the environment could also adversely affect their operations and reduce demand for our services. 34 Various U.S. federal, state and local as well as foreign environmental laws and regulations may impose liability for property damage and costs of investigation and cleanup of hazardous or toxic substances on property currently or previously owned by us or arising out of our waste management or environmental remediation activities.
Various U.S. federal, state and local as well as foreign environmental laws and regulations may impose liability for property damage and costs of investigation and cleanup of hazardous or toxic substances on property currently or previously owned by us or arising out of our waste management or environmental remediation activities.
Our business, operations and financial performance have been, and may continue to be affected by the still ongoing macroeconomic impacts resulting from the COVID-19 pandemic. As a result, our financial performance and growth rates may differ from pre-pandemic historical periods, and our future results may fall below expectations.
Our business, operations and financial performance have been, and may be affected by macroeconomic impacts resulting from pandemics, infectious disease outbreaks and public health crises. As a result, our financial performance and growth rates may differ from historical periods, and our future results may fall below expectations.
Dependence on third-party subcontractors and equipment manufacturers could adversely affect our financial performance on contracts. We rely on third-party subcontractors and equipment manufacturers in order to complete many of our projects.
A failure to recover on these types of claims fully or promptly could have a material adverse impact on our liquidity and financial results. Dependence on third-party subcontractors, suppliers and equipment manufacturers could adversely affect our financial performance on contracts. We rely on third-party subcontractors, suppliers and equipment manufacturers in order to complete many of our projects.
The loss of work we perform for governments or decreases in governmental spending and outsourcing could have a material adverse effect on our business, results of operations and cash flows . Fluctuations in commodity prices may affect our customers’ investment decisions which may result in existing project cancellations or delays or changes in the timing and funding of new awards.
The loss of work we perform for governments or decreases in governmental spending and outsourcing could have a material adverse effect on our business, results of operations and cash flows .
Disruptions of the capital markets could also adversely affect our clients’ ability to finance projects and could result in contract cancellations or suspensions, project delays and payment delays or defaults by our clients.
Inflation and rising and/or high interest rates could have a negative impact on our business and we may not be able to fully offset such higher rates. Disruptions of the capital markets could also adversely affect our clients’ ability to finance projects and could result in contract cancellations or suspensions, project delays and payment delays or defaults by our clients.
To the extent commodity prices decline or fluctuate, or the perceived risk thereof, and our customers defer new investments or cancel or delay existing projects, the demand for our services may decrease, which could have a material adverse impact on our business, financial condition and results of operations. 30 Risks Related to Financial Conditions and Markets Current or future economic conditions, including recession or inflation, in the credit markets may negatively affect the ability to operate our or our customers’ businesses, finance working capital, implement our acquisition strategy and access our cash and short-term investments.
To the extent commodity prices decline or fluctuate, or the perceived risk thereof, and our customers defer new investments or cancel or delay existing projects, the demand for our services may decrease, which could have a material adverse impact on our business, financial condition and results of operations.
If the fair value of a reporting unit is less than its carrying value, we could be required to record an impairment charge. An impairment of all or a part of our goodwill or intangible assets could have a material adverse effect on our net earnings and net worth.
If the fair value of a reporting unit is less than its carrying value, we could be required to record an impairment charge.
Risks Related to Our Common Stock If we need to sell or issue additional shares of common stock to refinance existing debt or to finance future acquisitions, our existing shareholder ownership could be diluted.
If we are unable to match our local currency costs with revenues in the local currency, we would be exposed to the risk of adverse changes in currency exchange rates. 32 Risks Related to Our Common Stock If we need to sell or issue additional shares of common stock to refinance existing debt or to finance future acquisitions or operations, our existing shareholder ownership could be diluted.
Risks Related to Climate Change There is a rapidly evolving awareness and focus from stakeholders, such as investors, customers and current and future employees, with respect to global climate change and the related emphasis on environmental, social and governance practices, which could affect our business.
A significant increase in tax rates could have a material adverse effect on our profitability and liquidity. 34 Risks Related to Climate There are rapidly evolving views from stakeholders, such as investors, customers and current and future employees, with respect to global climate risks and the related emphasis on sustainability practices, which could affect our business.
Additionally, future acquisitions may require us to obtain additional equity or debt financing, which may not be available on attractive terms, if at all. The success of our historical and future business combinations also depends on our ability to integrate the operations of the acquired businesses efficiently and effectively with our existing operations and realize the anticipated benefits from them.
The success of our historical and future business combinations also depends on our ability to integrate the operations of the acquired businesses efficiently and effectively with our existing operations and realize the anticipated benefits from them.

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Item 1C. Cybersecurity

Cybersecurity — threats and controls disclosure

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We also engage with a range of external experts, including cybersecurity assessors, consultants and auditors, to assess and report on the effectiveness of our cybersecurity and data privacy controls, compliance with international and regional cybersecurity standards and our internal incident response preparedness, as well as to help identify areas for continued focus and improvement.
We also engage with a range of external experts to assess and report on the effectiveness of our cybersecurity and data privacy controls, compliance with international and regional cybersecurity standards and our internal incident response preparedness, as well as to help identify areas for continued focus and improvement.
Four members of our board of directors, two of whom serve as members of the Cybersecurity Committee, have cybersecurity experience. 39
Four members of our Board of Directors, two of whom serve as members of the Cybersecurity Committee, have cybersecurity experience. 38
The CISO and CIO routinely provide operational updates to the General Counsel and Chief Financial Officer as needed, and updates are provided by the CISO and CIO to both the Cybersecurity and Audit Committees of our board of directors at least quarterly and more often as appropriate, as discussed more fully below.
The CISO and CIO routinely provide operational updates to the General Counsel and Chief Financial Officer as needed, and updates are regularly provided by the CISO and CIO to both the Cybersecurity and Audit Committees of our Board of Directors as discussed more fully below.
Our CISO reports to the General Counsel, is supported by and collaborates with the Company's executive leadership team and regularly engages with cross-functional teams at the Company, including Digital Technology, Legal, Audit, Human Resources, Facilities and Corporate Risk.
Our Chief Information Security Officer (CISO) oversees the Company’s approach to managing cybersecurity and digital risk. Our CISO reports to the General Counsel, is supported by and collaborates with the Company's executive leadership team and regularly engages with cross-functional teams at the Company, including Digital Technology, Legal, Audit, Human Resources, Facilities and Corporate Risk.
The framework is built upon the National Institute of Standards and Technology (NIST) Cyber Security Framework for measuring overall readiness to respond to cyber threats and incorporates International Organization for Standardizations (ISO) 27001 standards for general information technology security controls and Sarbanes-Oxley (SOX) for assessment of internal controls.
The Company's cybersecurity and information security framework is built upon the National Institute of Standards and Technology (NIST) Cyber Security Framework and incorporates International Organization for Standardizations (ISO) 27001 standards for general information technology security controls and Sarbanes-Oxley (SOX) for assessment of internal controls.
Members of the board stay apprised of the rapidly evolving cyber threat landscape through our ongoing director education programming and provide guidance to management as appropriate in order to address the effectiveness of our overall data privacy and cybersecurity program.
Additionally, outside counsel advises the Board about best practices for cybersecurity oversight by the Board. Members of the Board stay apprised of the rapidly evolving cyber threat landscape through our ongoing director education programming and provide guidance to management as appropriate in order to address the effectiveness of our overall data privacy and cybersecurity program.
Other risks from cybersecurity threats have also not materially impacted our business strategy, results of operations or financial condition, and as of the date of this report, we do not reasonably believe that such risks will have a material impact on our business strategy, results of operations or financial condition.
Other risks from cybersecurity threats have also not materially impacted our business strategy, results of operations or financial condition, and as of the date of this report, we do not reasonably believe that such risks will have a material impact on our business strategy, results of operations or financial condition. 37 Governance Our CISO oversees the Company’s approach to managing cybersecurity and digital risk and leads our global Information Assurance team.
Our CIO brings over 30 years of experience, garnered across a diverse range of industries and countries, which includes implementing new systems and modifying existing systems for changes in policies and procedures.
Our CIO oversees the Company’s information technology infrastructure and implements policies and procedures issued by the CISO within the Company. Our CIO brings over 30 years of experience, garnered across a diverse range of industries and countries, which includes implementing new systems and modifying existing systems for changes in policies and procedures.
KBR's global cybersecurity risk program also integrates the following cybersecurity frameworks across our regional operations: US Defense Federal Acquisition Regulation Supplement (DFARS) and NIST 800-171, UK Cyber Essentials and Australia's Essential Eight.
KBR's global cybersecurity risk program also integrates the following cybersecurity frameworks across our regional operations: US Defense Federal Acquisition Regulation Supplement (DFARS) and NIST 800-171, UK Cyber Essentials and Australia's Essential Eight. The Company utilizes policies and procedures, software, training programs and hardware solutions to protect and monitor its environment.
The Cybersecurity and Audit Committees jointly assist the board of directors in its oversight of our data privacy and cybersecurity needs by staying apprised 38 of our data privacy and information security programs, strategy, policies, standards, architecture, processes and material risks and overseeing responses to security and data incidents.
The Cybersecurity and Audit Committees stay apprised of our data privacy and information security programs, strategy, policies, standards, architecture, processes and material risks and overseeing responses to security and data incidents.
The CIO, reporting to the Chief Financial Officer, is responsible for the Company’s IT security operations and the implementation of policies created by the CISO. All cyber incidents under our existing cyber policy are reported to both the CISO and CIO, which are then communicated through their reporting structure to the General Counsel and Chief Financial Offer.
The CISO reports to the General Counsel and the CIO reports to the Chief Financial Officer. All cyber incidents under our existing cyber policy are reported to both the CISO and CIO, which are then communicated through their reporting structure to the General Counsel and Chief Financial Officer.
The board of directors receives information security and privacy awareness training, which covers, among other matters, the board's oversight obligations and the privacy and security programs in place at the company.
The Board of Directors receives information security and privacy awareness training, which covers, among other matters, the Board's oversight obligations and the privacy and security programs in place at the company. Our Cybersecurity and Audit Committees regularly receive updates from our CISO and CIO on data privacy risks, security risks and any material incidents.
While the board of directors maintains ultimate responsibility for the oversight of our data privacy and cybersecurity program and risks, it has delegated certain responsibilities to our Cybersecurity Committee and Audit Committee. This committee-level focus on data privacy and cybersecurity allows the board to further enhance its oversight of our cyber risk management framework at the enterprise level.
Board of Directors Oversight Our board of directors is committed to mitigating data privacy and cybersecurity risks. While the Board of Directors maintains ultimate responsibility for the oversight of our data privacy and cybersecurity program and risks, it has delegated certain responsibilities to our Cybersecurity Committee and Audit Committee.
Our cybersecurity program includes controls designed to identify, protect against, detect, respond to and recover from cybersecurity and information security incidents. The Company's cybersecurity and information security framework includes risk assessment and mitigation procedures through a threat intelligence-driven approach, application controls and enhanced security with ransomware defense.
Our cybersecurity program includes controls designed to identify, protect against, detect, respond to and recover from cybersecurity and information security incidents.
Our CISO maintains the following internationally recognized certifications: ISC2 - Certified Information System Security Professional (CISSP) and Project Management Institute - Project Management Professional (PMP). Our CIO oversees the Company’s information technology infrastructure and implements policies and procedures issued by the CISO within the Company.
Our CISO brings over 15 years of experience, which includes implementing and verifying effectiveness of cybersecurity controls in high-security environments. Our CISO maintains the following internationally recognized certifications: ISC2 - Certified Information System Security Professional (CISSP) and Project Management Institute - Project Management Professional (PMP).
The Company also has a third-party risk management program that assesses the cyber-related risks from our vendors and suppliers. We share threat intelligence and collaborate with organizations across different industries to share best practices, fight cybercrime, enhance privacy, discuss new technologies, better understand the evolving regulatory environment and advance capabilities in these areas.
The Company also has a third-party risk management program that assesses the cyber-related risks from our vendors and suppliers. We also benchmark our activities and results against select peers.
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To assist us, we have a cybersecurity governance framework in place, which is designed to protect information and information systems from unauthorized access, use, disclosure, disruption, modification or destruction. The cybersecurity governance framework is built upon a foundation of advanced security technology, overseen by an experienced and trained team of experts with substantial knowledge of cybersecurity best practices.
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We update our Cybersecurity Incident Response Plan on a regular basis, and regularly measure our security posture and resilience through risk assessments, penetration testing, vulnerability scanning and attack simulation.
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The Company utilizes policies and procedures, software, training programs and hardware solutions to protect and monitor its environment, including multifactor authentication on all critical systems, firewalls, intrusion detection and prevention systems, vulnerability and penetration testing and identity management systems. Our Chief Information Security Officer (CISO) oversees the Company’s approach to managing cybersecurity and digital risk.
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The Company also conducts additional cybersecurity tabletop exercises using independent moderators with respect to breach and other problematic information security scenarios for executive management and employees, as well as our board of directors, when appropriate.
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Our Incident Response Plan includes the activities necessary to comply with applicable contractual and legal obligations and mitigate brand and reputational damage. We update our Cybersecurity Incident Response Plan on a regular basis.
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We also benchmark our activities and results against select peers. 37 Our cybersecurity team also regularly tests our controls through penetration testing, vulnerability scanning and attack simulation. We conduct annual cybersecurity penetration test exercises to evaluate the Company's cybersecurity controls, Cybersecurity Incident Response plans and identify areas for improvement.
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The Company conducts additional cybersecurity tabletop exercises moderated by an independent third party with respect to breach and other problematic information security scenarios. During each exercise, the moderator poses questions to participants and advises how other companies typically respond to similar situations.
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Participants have included the Company’s CEO; Presidents; Executive Vice President, General Counsel and Corporate Secretary; Executive Vice President and Chief Financial Officer; Senior Vice President, Finance Operations and Chief Accounting Officer; Vice President and Chief Compliance Officer; CIO; and CISO; and other members of executive management and employees, as well as our board of directors when appropriate.
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Governance Our CISO oversees the Company’s approach to managing cybersecurity and digital risk and leads our global Information Assurance team, which includes representatives based in several of our worldwide locations.
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Our CISO brings over 15 years of experience, which includes implementing and verifying effectiveness of cybersecurity controls in high-security environments, serving as a cybersecurity consultant and virtual CISO to clients in the government and defense sectors, and defining and executing cybersecurity strategy to enable business delivery while simultaneously protecting IP and privacy.
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Our governance structure applies a separation of duties approach between our CISO and CIO. The CISO, reporting to the General Counsel, is responsible for monitoring and ensuring that the Company’s cyber policy, risk assessment, verification and training responsibilities are in accordance with the relevant cybersecurity and information security framework.
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This structure ensures visibility from senior management of operations initiatives and cyber incidents while balancing risks with business needs.
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Board of Directors Oversight Our board of directors is committed to mitigating data privacy and cybersecurity risks and recognizes the importance of these issues as part of our risk management framework.
Removed
Our board of directors, Cybersecurity Committee and Audit Committee's principal role is one of oversight, recognizing that management is responsible for the design, implementation and maintenance of an effective program for protecting against and mitigating data privacy and cybersecurity risks.
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Our Cybersecurity and Audit Committees receive updates from our CISO and CIO, at least quarterly and more often as appropriate, on data privacy and security risks, including any material incidents, relevant industry developments, threat vectors and risks identified in periodic penetration tests or vulnerability scans.
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The committees' updates also include material legal and legislative developments concerning data privacy and security, our approach to complying with applicable law and material engagement with regulators concerning data privacy and cybersecurity from the CISO and General Counsel.
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Additionally, outside counsel advises the board about best practices for cybersecurity oversight by the board, and the evolution of that oversight over time.

Item 2. Properties

Properties — owned and leased real estate

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Our owned Leatherhead property is pledged to secure certain pension obligations in the U.K., and we believe all properties that we currently occupy are suitable for their intended use. 40
Our owned Leatherhead property is pledged to secure certain pension obligations in the U.K., and we believe all properties that we currently occupy are suitable for their intended use. 39
While we have operations worldwide, the following table describes the locations of our more significant existing office facilities: Location Owned/Leased Business Segment North America: Houston, Texas Leased All Fulton, Maryland Leased Government Solutions Columbia, Maryland Leased Government Solutions Lexington Park, Maryland Leased Government Solutions Chantilly, Virginia Leased Government Solutions Vienna, Virginia Leased Government Solutions Fairfax, Virginia Leased Government Solutions Dayton/Beavercreek, Ohio Leased Government Solutions Huntsville, Alabama Leased Government Solutions Phoenix, Arizona Leased Government Solutions El Segundo, California Leased Government Solutions Newark, Delaware Leased Sustainable Technology Solutions Europe, Middle East and Africa: Leatherhead, United Kingdom Owned All Glasgow, United Kingdom Leased Government Solutions Wiltshire, United Kingdom Leased / Owned Government Solutions Al Khobar, Saudi Arabia Leased Sustainable Technology Solutions Asia-Pacific: Chennai, India Leased All Majura Park, Australia Leased Government Solutions Delhi (Gurgaon), India Leased Sustainable Technology Solutions Brisbane, Australia Leased Government Solutions Sydney, Australia Leased Government Solutions Melbourne, Australia Leased Government Solutions We also own or lease numerous small facilities that include sales, administrative and offices as well as warehouses and equipment yards located throughout the world.
While we have operations worldwide, the following table describes the locations of our more significant existing office facilities: Location Owned/Leased Business Segment North America: Houston, Texas Leased All Fulton, Maryland Leased Government Solutions Columbia, Maryland Leased Government Solutions Lexington Park, Maryland Leased Government Solutions Chantilly, Virginia Leased Government Solutions Vienna, Virginia Leased Government Solutions Fairfax, Virginia Leased Government Solutions Herndon, Virginia Leased Government Solutions Huntsville, Alabama Leased Government Solutions Phoenix, Arizona Leased Government Solutions El Segundo, California Leased Government Solutions Newark, Delaware Leased Sustainable Technology Solutions Colorado Springs, Colorado Leased Government Solutions North Charleston, South Carolina Leased Government Solutions Dayton/Beavercreek, Ohio Leased Government Solutions Europe, Middle East and Africa: Leatherhead, United Kingdom Owned All Glasgow, United Kingdom Leased Government Solutions Al Khobar, Saudi Arabia Leased Sustainable Technology Solutions Asia-Pacific: Chennai, India Leased All Majura Park, Australia Leased Government Solutions Delhi (Gurgaon), India Leased Sustainable Technology Solutions Brisbane, Australia Leased Government Solutions Sydney, Australia Leased Government Solutions Melbourne, Australia Leased Government Solutions Adelaide, Australia Leased Sustainable Technology Solutions Canberra, Australia Leased Government Solutions We also own or lease numerous small facilities that include sales, administrative and offices as well as warehouses and equipment yards located throughout the world.

Item 3. Legal Proceedings

Legal Proceedings — active lawsuits and investigations

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Mine Safety Disclosures Not applicable. 41 PART II
Mine Safety Disclosures Not applicable. 40 PART II

Item 5. Market for Registrant's Common Equity

Market for Common Equity — stock, dividends, buybacks

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Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities Our common stock is listed on the NYSE and trades under the symbol “KBR.” We have declared a dividend in each quarter during the years ended December 29, 2023 and December 31, 2022, and we currently expect that comparable quarterly cash dividends will continue to be paid for the foreseeable future.
Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities Our common stock is listed on the NYSE and trades under the symbol “KBR.” We have declared a dividend in each quarter during the years ended January 3, 2025 and December 29, 2023, and we currently expect that comparable quarterly cash dividends will continue to be paid for the foreseeable future.
The authorization does not obligate the Company to acquire any particular number of shares of common stock and may be commenced, suspended or discontinued without prior notice. The share repurchases are intended to be funded through the Company’s current and future cash flows and the authorization does not have an expiration date.
The authorization does not obligate us to acquire any particular number of shares of common stock and may be commenced, suspended or discontinued without prior notice. The share repurchases are intended to be funded through our current and future cash flows and the authorization does not have an expiration date.
The following performance graph compares the cumulative total shareholder return on shares of our common stock for the five-year period ended December 29, 2023, with the cumulative total return on the S&P 1500 IT Consulting & Other Services Index, the Russell 1000 Index, the S&P MidCap 400 Index and the Dow Jones Heavy Construction Industry Index for the same period.
The following performance graph compares the cumulative total shareholder return on shares of our common stock for the five-year period ended January 3, 2025, with the cumulative total return on the S&P 1500 IT Consulting & Other Services Index, the Russell 1000 Index, the S&P MidCap 400 Index and the Dow Jones Heavy Construction Industry Index for the same period.
The comparisons assume the investment of $100 on December 31, 2018 and reinvestment of all dividends.
The comparisons assume the investment of $100 on December 31, 2019 and reinvestment of all dividends.
The declaration, payment and amount of future cash dividends will be at the discretion of our Board of Directors. On February 19, 2024, the Board of Directors declared a dividend of $0.15 per share, which will be paid on April 15, 2024. At January 31, 2024, there were 59 shareholders of record.
The declaration, payment and amount of future cash dividends will be at the discretion of our Board of Directors. On February 20, 2025, the Board of Directors declared a dividend of $0.165 per share, which will be paid on April 15, 2025. At January 31, 2025, there were 58 shareholders of record.
The following is a summary of share repurchases of our common stock settled during the three months ended December 29, 2023, and the amount available to be repurchased under the authorized share repurchase program: Purchase Period Total Shares Repurchased (1) Average Price Paid per Share Shares Repurchased as Part of Publicly Announced Plan Dollar Value of Maximum Number of Shares that May Yet Be Purchased Under the Plan September 30, 2023 — $ — — $ 326,215,513 October 1 - 31, 2023 72 $ 58.15 — $ 326,215,513 November 1 - 30, 2023 10,088 $ 58.24 — $ 326,215,513 December 1 - 29, 2023 11,096 $ 53.30 — $ 326,215,513 Total 21,256 $ — — $ 326,215,513 (1) Included within the shares repurchased herein are 21,256 shares acquired from employees in connection with the settlement of income tax and related benefit withholding obligations arising from issuance of share-based equity awards under the KBR Stock and Incentive Plan at an average price of $55.66 per share. 42 Performance Graph The following performance graph and related information shall not be deemed “soliciting material” or to be “filed” with the SEC, nor shall the information be incorporated by reference into any future filing under the Securities Act or the Exchange Act, except to the extent that the Company specifically incorporates it by reference into such filing.
The following is a summary of share repurchases of our common stock settled during the three months ended January 3, 2025, and the amount available to be repurchased under the authorized share repurchase program as of January 3, 2025: Purchase Period Total Shares Repurchased (1) Average Price Paid per Share Shares Repurchased as Part of Publicly Announced Plan Dollar Value of Maximum Number of Shares that May Yet Be Purchased Under the Plan September 28, 2024 - October 25, 2024 509 $ 67.11 — $ 346,019,074 October 26, 2024 - November 22, 2024 548,898 $ 58.39 548,898 $ 313,966,395 November 23, 2024 - January 3, 2025 323,166 $ 57.58 311,707 $ 296,019,108 Total 872,573 $ 58.10 860,605 $ 296,019,108 (1) Included within the shares repurchased herein are 11,968 shares acquired from employees in connection with the settlement of income tax and related benefit withholding obligations arising from issuance of share-based equity awards under the KBR Stock and Incentive Plan at an average price of $58.06 per share. 41 Performance Graph The following performance graph and related information shall not be deemed “soliciting material” or to be “filed” with the SEC, nor shall the information be incorporated by reference into any future filing under the Securities Act or the Exchange Act, except to the extent that the Company specifically incorporates it by reference into such filing.
In calculating the number of shareholders, we consider clearing agencies and security position listings as one shareholder for each agency or listing. Share Repurchases On February 25, 2014, the Board of Directors authorized a $350 million share repurchase program. On October 18, 2022, the Board of Directors authorized an increase to the total authorization level to $500 million.
In calculating the number of shareholders, we consider clearing agencies and security position listings as one shareholder for each agency or listing. Share Repurchases On February 25, 2014, the Board of Directors authorized a plan to repurchase our outstanding shares of common stock, which replaced and terminated the August 26, 2011 share repurchase program.
As of December 29, 2023, $326 million remains available for repurchase under this authorization. On February 19, 2024, the Board of Directors authorized $174 million of share repurchases to be added to the prior authorizations. After the authorization on February 19, 2024, $500 million remains authorized and available for repurchase under this program.
As of January 3, 2025, $296 million remained available for repurchase under this authorization. On February 20, 2025, the Board of Directors authorized $454 million of share repurchases to be added to the prior authorizations, which increased the total amount authorized and available for repurchase under the share repurchase program to $750 million.
The shareholder return is not necessarily indicative of future performance. 12/31/2018 12/31/2019 12/31/2020 12/31/2021 12/31/2022 12/29/2023 KBR $ 100.00 $ 203.62 $ 210.06 $ 327.00 $ 366.03 $ 387.71 S&P 1500 IT Consulting & Other Services $ 100.00 $ 130.23 $ 147.73 $ 203.78 $ 155.69 $ 197.65 Russell 1000 $ 100.00 $ 131.43 $ 158.98 $ 201.03 $ 162.58 $ 205.72 S&P MidCap 400 $ 100.00 $ 126.20 $ 143.44 $ 178.95 $ 155.58 $ 181.15 Dow Jones Heavy Construction $ 100.00 $ 134.15 $ 162.88 $ 243.89 $ 280.60 $ 337.69 43 Item 6. [Reserved] 44
The shareholder return is not necessarily indicative of future performance. 12/31/2019 12/31/2020 12/31/2021 12/31/2022 12/29/2023 1/3/2025 KBR $ 100.00 $ 103.16 $ 160.59 $ 179.76 $ 190.41 $ 204.78 S&P 1500 IT Consulting & Other Services $ 100.00 $ 113.44 $ 156.48 $ 119.55 $ 151.77 $ 173.78 Russell 1000 $ 100.00 $ 120.96 $ 152.96 $ 123.71 $ 156.53 $ 197.12 S&P MidCap 400 $ 100.00 $ 113.66 $ 141.80 $ 123.28 $ 143.54 $ 165.20 Dow Jones Heavy Construction $ 100.00 $ 121.42 $ 181.81 $ 209.17 $ 251.72 $ 367.50 42 Item 6. [Reserved] 43

Item 6. [Reserved]

Selected Financial Data — reserved (removed by SEC in 2021)

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Item 6. [Reserved] 44 Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations 45 Item 7A. Quantitative and Qualitative Disclosures About Market Risk 62 Item 8.
Item 6. [Reserved] 43 Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations 44 Item 7A. Quantitative and Qualitative Disclosures About Market Risk 59 Item 8.
Financial Statements and Supplementary Data 64 Report of Independent Registered Public Accounting Firm 65 FINANCIAL STATEMENTS Consolidated Statements of Operations 67 Consolidated Statement of Comprehensive Income (Loss) 68 Consolidated Balance Sheets 69 Consolidated Statements of Shareholders’ Equity 70 Consolidated Statements of Cash Flows 71 Notes to Consolidated Financial Statements 73
Financial Statements and Supplementary Data 61 Report of Independent Registered Public Accounting Firm 62 FINANCIAL STATEMENTS Consolidated Statements of Operations 64 Consolidated Statement of Comprehensive Income (Loss) 65 Consolidated Balance Sheets 66 Consolidated Statements of Shareholders’ Equity 67 Consolidated Statements of Cash Flows 68 Notes to Consolidated Financial Statements 69

Item 7. Management's Discussion & Analysis

Management's Discussion & Analysis (MD&A) — revenue / margin commentary

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The preparation of our consolidated financial statements requires us to make estimates and judgments that affect the determination of financial positions, results of operations, cash flows and related disclosures. Our significant accounting policies are described in Note 1 to our consolidated financial statements.
The preparation of our consolidated financial statements requires us to make estimates and judgments that affect the determination of financial positions, results of operations, cash flows and related disclosures. Our significant accounting policies are described in Note 1. "Significant Accounting Policies" to our consolidated financial statements.
Conversely, we consider a cumulative income position over the most recent twelve quarters to be significant positive evidence that a valuation allowance may not be required. Changes in the amount, timing and character of our forecasted taxable income could have a significant impact of our ability to utilize deferred tax assets and related valuation allowance.
Conversely, we consider a cumulative income position over the most recent twelve quarters to be 57 significant positive evidence that a valuation allowance may not be required. Changes in the amount, timing and character of our forecasted taxable income could have a significant impact of our ability to utilize deferred tax assets and related valuation allowance.
Changes in our forecasted taxable income in the applicable taxing jurisdictions within the carryforward periods could affect the ultimate realization of deferred tax assets and our valuation allowance. 60 We recognize the effect of income tax positions only if it is more likely than not that those positions will be sustained.
Changes in our forecasted taxable income in the applicable taxing jurisdictions within the carryforward periods could affect the ultimate realization of deferred tax assets and our valuation allowance. We recognize the effect of income tax positions only if it is more likely than not that those positions will be sustained.
Reductions in costs are recognized to the extent of the lesser of the amounts management expects to recover or actual costs incurred. Under cost-reimbursable contracts, the price is generally variable based upon our actual allowable costs incurred for materials, equipment, reimbursable labor hours, overhead and G&A expenses.
Reductions in costs are recognized to the extent of the lesser of the amounts management expects to recover or actual costs incurred. 56 Under cost-reimbursable contracts, the price is generally variable based upon our actual allowable costs incurred for materials, equipment, reimbursable labor hours, overhead and G&A expenses.
Plan assets are comprised primarily of equity securities, fixed income funds and securities, hedge funds, real estate and other funds. As we have both domestic and international plans, these assumptions differ based on varying factors specific to each particular country or economic environment.
Plan assets are comprised primarily of equity securities, fixed income funds and securities, real estate and other funds. As we have both domestic and international plans, these assumptions differ based on varying factors specific to each particular country or economic environment.
Cash used in investing activities totaled $70 million in 2023 and was primarily related to the second payment for an additional investment of $39 million in Mura Technology and capital expenditures of $80 million.
Cash used in investing activities totaled $70 million in fiscal 2023 and was primarily related to the second payment for an additional investment of $39 million in Mura Technology and capital expenditures of $80 million.
For fixed-price contracts, the performance guarantee amount is the cost to complete the contracted work, less amounts remaining to be billed to the client under the contract. Remaining billable amounts could be greater or less than the cost to complete the project.
For fixed-price contracts, the performance guarantee amount is the cost to 53 complete the contracted work, less amounts remaining to be billed to the client under the contract. Remaining billable amounts could be greater or less than the cost to complete the project.
Sustainable Technology Outlook Long-range commercial market fundamentals are supported by global population growth, expanding global development and an acceleration of demand for energy transition, renewable energy sources and climate change solutions. The globe is in search of the solution to the energy trilemma, the balance between energy affordability, ensuring energy security and achieving environmental sustainability.
Sustainable Technology Outlook Long-range commercial market fundamentals are supported by global population growth, expanding global development and an acceleration of demand for energy transition, renewable energy sources and climate-related solutions. The globe is in search of the solution to the energy trilemma, the balance between energy affordability, ensuring energy security and achieving environmental sustainability.
While we believe that the assumptions used are appropriate, differences in actual experience, expectations or changes in assumptions may materially affect our financial position or results of operations. Our actuarial estimates of pension expense and expected return on plan assets are discussed in Note 10 in the accompanying consolidated financial statements.
While we believe that the assumptions used are appropriate, differences in actual experience, expectations or changes in assumptions may materially affect our financial position or results of operations. Our actuarial estimates of pension expense and expected return on plan assets are discussed in Note 10. "Retirement Benefits" in the accompanying consolidated financial statements.
Our capital expenditures will be focused primarily on facilities and equipment to support our businesses. In addition, we will use cash to make payments under leases and various other obligations, including potential litigation payments, as they arise. 55 Other factors potentially affecting liquidity Ichthys LNG Project.
Our capital expenditures will be focused primarily on facilities and equipment to support our businesses. In addition, we will use cash to make payments under leases and various other obligations, including potential litigation payments, as they arise. 52 Other factors potentially affecting liquidity Ichthys LNG Project.
See Note 12 "Income Taxes" to our consolidated financial statements for further discussion on income taxes, including our reconciliation of the U.S. statutory tax rate to our effective tax rate. 50 Results of Operations by Business Segment We analyze the financial results of our two core business segments and one non-core business segment.
See Note 12 "Income Taxes" to our consolidated financial statements for further discussion on income taxes, including our reconciliation of the U.S. statutory tax rate to our effective tax rate. 47 Results of Operations by Business Segment We analyze the financial results of our two core business segments and one non-core business segment.
This was offset by a return of investment of approximately $61 million from JKC resulting from the receipt of the second payment from the Subcontractor Settlement Agreement. See Note 9 "Equity Method Investments and Variable Interest Entities" for further details.
This was offset by a return of equity method investment of approximately $61 million from JKC resulting from the receipt of the second payment from the Subcontractor Settlement Agreement . See Note 9 "Equity Method Investments and Variable Interest Entities" for further details. Financing Activities .
The implication of these non-deductible items were partially offset by the release of a previously reserved position based on developments associated with the ongoing IRS examination and appeals process for certain years.
The impacts of these non-deductible items were partially offset by the release of a previously reserved position based on developments associated with the ongoing IRS examination and appeals process for certain years.
While we have the option to proceed directly to the quantitative test, for 2023, management performed a qualitative impairment assessment of our reporting units, of which there were no indications that it was more likely than not that the fair value of our reporting units were less than their respective carrying values.
While we have the option to proceed directly to the quantitative test, for fiscal 2024, management performed a qualitative impairment assessment of our reporting units, of which there were no indications that it was more likely than not that the fair value of our reporting units were less than their respective carrying values.
Government Matters Information relating to U.S. government matters commitments and contingencies is described in Note 14 to our consolidated financial statements in Part II, Item 8 of this Annual Report on Form 10-K and the information discussed therein is incorporated by reference into this Part II, Item 7.
"Significant Accounting Policies" to our consolidated financial statements in Part II, Item 8 of this Annual Report on Form 10-K and the information discussed therein is incorporated by reference into this Part II, Item 7. U.S. Government Matters Information relating to U.S. government matters commitments and contingencies is described in Note 14. "U.S.
Company Overview KBR Inc., a Delaware corporation ("KBR"), delivers science, technology, engineering and logistics support solutions to governments and companies around the world . Drawing from its rich 100-year history and culture of innovation and mission focus, KBR creates sustainable value by combining deep domain expertise with its full life cycle capabilities to help clients meet their most pressing challenges.
Company Overview KBR Inc., a Delaware corporation ("KBR"), delivers science, technology, engineering and logistics support solutions to governments and companies around the world . Drawing from its culture of innovation and mission focus, KBR creates sustainable value by combining deep domain expertise with its full-life cycle capabilities to help clients meet their most pressing challenges.
Cash flows from operating activities result primarily from earnings and are affected by changes in operating assets and liabilities, which consist primarily of working capital balances for projects. Working capital levels vary from year to year and are primarily affected by the Company's volume of work.
Cash flows from operating activities result primarily from earnings and are affected by changes in operating assets and liabilities, which consist primarily of working capital balances for projects. Working capital levels vary from year to year and are primarily affected by our volume of work.
Our ability to obtain new project awards in the future may be dependent on our ability to maintain or increase our letter of credit and surety bonding capacity, which may be further dependent on the timely release of existing letters of credit and surety bonds.
Our ability to obtain new project awards in the future may be dependent on our letter of credit and surety bonding capacity, which may be further dependent on the timely release of existing letters of credit and surety bonds.
See “Item 1A. Risk Factors” contained in Part I of this Annual Report on Form 10-K for information regarding our fixed-price contracts and operations through joint ventures and partnerships.
Risk Factors” contained in Part I of this Annual Report on Form 10-K for information regarding our fixed-price contracts and operations through joint ventures and partnerships.
The business segments presented are consistent with our reportable segments discussed in Note 2 to our consolidated financial statements.
The business segments presented are consistent with our reportable segments discussed in Note 2. "Business Segment Information" to our consolidated financial statements.
(“MUFG”) under a Master Accounts Receivable Purchase Agreement (the “RPA”), which provides the sale to MUFG of certain of our designated eligible receivables, with a significant portion of such receivables being owed by the U.S. government. We plan to continue to utilize these programs to ensure we have flexibility in regards to meeting our capital needs.
(“MUFG”) under a Master Accounts Receivable Purchase Agreement, which provides the sale to MUFG of certain of our designated eligible receivables, with a significant portion of such receivables being owed by the U.S. government. We plan to continue to utilize these programs to ensure we have flexibility to meet our capital needs.
Our ability to utilize the unreserved foreign tax credit carryforwards is based on our ability to generate future taxable income of at least $333 million prior to their expiration whereas our ability to utilize other net deferred tax assets exclusive of those associated with indefinite-lived intangible assets is based on our ability to generate future taxable income of at least $933 million.
Our ability to utilize the unreserved foreign tax credit carryforwards is based on our ability to generate future taxable income of at least $295 million prior to their expiration whereas our ability to utilize other net deferred tax assets exclusive of those associated with indefinite-lived intangible assets is based on our ability to generate future taxable income of at least $1,014 million.
We expect that the majority of the joint venture cash balances will be utilized for the corresponding joint venture purposes or for paying dividends. As of December 29, 2023, substantially all of our excess cash was held in interest bearing operating accounts or short-term investment accounts with the primary objectives of preserving capital and maintaining liquidity.
We expect that the majority of the joint venture cash balances will be utilized for the corresponding joint venture purposes or for paying dividends. As of January 3, 2025, substantially all of our excess cash was held in interest bearing operating accounts or short-term investment accounts with the primary objectives of preserving capital and maintaining liquidity.
U.K. 25-basis-point decrease in discount rate $ — $ — $ 1 $ 38 25-basis-point increase in discount rate $ — $ — $ (1) $ (37) 25-basis-point decrease in expected long-term rate of return $ — $ 4 N/A N/A 25-basis-point increase in expected long-term rate of return $ — $ (4) N/A N/A Unrecognized actuarial gains and losses are recognized using the corridor method over a period of approximately 22 years, which represents a reasonable systematic method for amortizing gains and losses for the employee group.
U.K. 25-basis-point decrease in discount rate $ — $ 1 $ 1 $ 31 25-basis-point increase in discount rate $ — $ (1) $ (1) $ (29) 25-basis-point decrease in expected long-term rate of return $ — $ 4 N/A N/A 25-basis-point increase in expected long-term rate of return $ — $ (4) N/A N/A Unrecognized actuarial gains and losses are recognized using the corridor method over a period of approximately 20 years, which represents a reasonable systematic method for amortizing gains and losses for the employee group.
As discussed in Note 12 to our consolidated financial statements, deferred tax assets and liabilities are recognized for the expected future tax consequences of events that have been recognized in our consolidated financial statements or tax returns. We record a valuation allowance to reduce certain deferred tax assets to amounts that are more likely than not to be realized.
"Income Taxes" to our consolidated financial statements, deferred tax assets and liabilities are recognized for the expected future tax consequences of events that have been recognized in our consolidated financial statements or tax returns. We record a valuation allowance to reduce certain deferred tax assets to amounts that are more likely than not to be realized.
The effect of a potential government shutdown or the finalized fiscal year 2024 budget on KBR or our individual programs cannot be predicted at this time.
The effect of a potential government shutdown or the ultimate fiscal year 2025 budget on KBR or our individual programs cannot be predicted at this time.
For contracts that contain fixed-price, cost-reimbursable and time-and-materials components, we classify the individual components as either fixed-price, cost-reimbursable or time-and materials according to the composition of the contract; however, for smaller contracts, we characterize the entire contract based on the predominant component. As of December 29, 2023, $9.2 billion of our GS backlog was currently funded by our customers.
For contracts that contain fixed-price, cost-reimbursable and time-and-materials components, we classify the individual components as either fixed-price, cost-reimbursable or time-and materials according to the composition of the contract; however, for smaller contracts, we characterize the entire contract based on the predominant component. As of January 3, 2025, $9.1 billion of our GS backlog was currently funded by our customers.
We account for both financial and performance guarantees at fair value at issuance in accordance with ASC 460-10 Guarantees and, as of December 29, 2023, we had no material guarantees of the work or obligations of third parties recorded.
We account for both financial and performance guarantees at fair value at issuance in accordance with ASC 460-10 Guarantees and, as of January 3, 2025, we had no material guarantees of the work or obligations of third parties recorded.
Senior Notes Information relating to our Senior Notes is described in Note 11 "Debt and Other Credit Facilities" to our consolidated financial statements in Part II, Item 8 of this Annual Report on Form 10-K and the information discussed therein is incorporated by reference into this Part II, Item 7.
Senior Notes Information relating to our Senior Notes is described in Note 11 "Debt and Other Credit Facilities" to our consolidated financial statements in Part II, Item 8 of this Annual Report on Form 10-K and the information discussed therein is incorporated by reference into this Part II, Item 7. Off-Balance Sheet Arrangements Letters of credit, surety bonds and guarantees.
The effective tax rate of (57)%, as compared to the U.S. statutory rate of 21%, for the year ended December 29, 2023 was primarily impacted by the non-deductible portion of a legal settlement on a legacy matter and the non-deductible charge associated with the cash election and Convertible Notes repurchase discussed in Note 22.
The effective tax rate of (57)%, as compared to the U.S. statutory rate of 21%, for fiscal 2023 was primarily impacted by the non-deductible portion of a legal settlement on a legacy matter and the non-deductible charge associated with the cash election and Convertible Notes repurchase in fiscal 2023.
The difference between actual and expected returns is deferred as an unrecognized actuarial gain or loss on our consolidated statement of comprehensive income (loss) and is recognized as a decrease or an increase in future pension expense. Our pretax unrecognized net actuarial loss in accumulated other comprehensive loss at December 29, 2023 was $872 million.
The difference between actual and expected returns is deferred as an unrecognized actuarial gain or loss on our consolidated statement of comprehensive income (loss) and is recognized as a decrease or an increase in future pension expense. Our pretax unrecognized net actuarial loss in accumulated other comprehensive loss at January 3, 2025 was $887 million.
Off-Balance Sheet Arrangements Letters of credit, surety bonds and guarantees. In the ordinary course of business, we may enter into various arrangements providing financial or performance assurance to customers on behalf of certain consolidated and unconsolidated subsidiaries, joint ventures and other jointly executed contracts.
In the ordinary course of business, we may enter into various arrangements providing financial or performance assurance to customers on behalf of certain consolidated and unconsolidated subsidiaries, joint ventures and other jointly executed contracts.
Legal Proceedings Information relating to various commitments and contingencies is described in Notes 6, 13 and 14 to our consolidated financial statements in Part II, Item 8 of this Annual Report on Form 10-K and the information discussed therein is incorporated by reference into this Part II, Item 7.
Government Matters" to our consolidated financial statements in Part II, Item 8 of this Annual Report on Form 10-K and the information discussed therein is incorporated by reference into this Part II, Item 7. 55 Legal Proceedings Information relating to various commitments and contingencies is described in “Item 1A.
We often receive cash in advance on certain of our sustainable technology projects. On time-and-material and cost reimbursable contracts, we may utilize cash on hand or availability under our Senior Credit Facility to satisfy any periodic operating cash requirements for working capital, as we incur costs and subsequently invoice our customers.
On time-and-material and cost reimbursable contracts, we may utilize cash on hand or availability under our Senior Credit Facility to satisfy any periodic operating cash requirements for working capital, as we incur costs and subsequently invoice our customers.
Cash Flows The following table summarizes our cash flows for the periods indicated: Years ended, December 29, December 31, December 31, Dollars in millions 2023 2022 2021 Cash flows provided by operating activities $ 331 $ 396 $ 278 Cash flows provided by (used in) investing activities (70) 37 (428) Cash flows provided by (used in) financing activities (359) (399) 87 Effect of exchange rate changes on cash 13 (15) (3) Increase (decrease) in cash and cash equivalents $ (85) $ 19 $ (66) 54 Operating Activities .
Cash Flows The following table summarizes our cash flows for the periods indicated: Years ended, January 3, December 29, December 31, Dollars in millions 2025 2023 2022 Cash flows provided by operating activities $ 462 $ 331 $ 396 Cash flows provided by (used in) investing activities (776) (70) 37 Cash flows provided by (used in) financing activities 374 (359) (399) Effect of exchange rate changes on cash (14) 13 (15) Increase (decrease) in cash and cash equivalents $ 46 $ (85) $ 19 Operating Activities .
Contract Revenue and Contract Estimates . Our policy on revenue recognition is provided in Note 1 to our consolidated financial statements for the year ended December 29, 2023 and is also applied to the revenues of our equity method investments included in equity in earnings of unconsolidated affiliates.
Contract Revenue and Contract Estimates . Our policy on revenue recognition is provided in Note 1. "Significant Accounting Policies" to our consolidated financial statements for the year ended January 3, 2025 and is also applied to the revenues of our equity method investments included in equity in earnings of unconsolidated affiliates.
In situations where we account for our interest in the joint venture under the equity method of accounting, we do not eliminate any portion of our subcontractor revenues or expenses, however, we recognize profit on our subcontractor scope of work only to the extent the joint venture's scope of work to the end customer is complete.
In situations where we account for our interest in the joint venture under the equity method of accounting, we do not eliminate any portion of our subcontractor revenues or expenses, however, we recognize profit on our subcontractor scope of work up to but not in excess of the joint venture's percent complete on its scope of work.
The primary components of our working capital accounts are accounts receivable, contract assets, accounts payable and contract liabilities. These components are impacted by the size and changes in the mix of our cost-reimbursable and time-and-materials projects versus fixed price projects, and as a result, fluctuations in these components are not uncommon in our business. Investing Activities .
These components are impacted by the size and changes in the mix of our cost-reimbursable and time-and-materials projects versus fixed price projects, and as a result, fluctuations in these components are not uncommon in our business. Investing Activities .
See Note 4 "Acquisitions" for further details Financing activities . Cash used in financing activities totaled $359 million in 2023 and was primarily due to a net cash outflow of $567 million for the settlement and maturity of our outstanding Convertible Notes, corresponding Note Hedge and warrants settled and paid during the year.
See Note 11 "Debt and Other Credit Facilities" for further discussion of our Senior Credit Facility. Cash used in financing activities totaled $359 million in fiscal 2023 and was primarily due to a net cash outflow of $567 million for the settlement and maturity of our outstanding Convertible Notes, corresponding note hedge and warrants settled and paid during the year.
We estimate the amount of variable consideration at the most likely amount we expect to be entitled and include in the transaction price when it is probable that a significant reversal of cumulative revenue recognized will not occur.
We estimate the amount of variable consideration at the most likely amount we expect to be entitled and include in the transaction price when it is probable that a significant reversal of cumulative revenue recognized will not occur. Variable consideration associated with claims and unapproved change orders is included in the transaction price only to the extent of costs incurred.
Our expected long-term rates of return on plan assets utilized at the measurement date increased to 6.64% from 6.63% for our U.S. pension plans and increased to 6.79% from 6.00% for our U.K. pension plans, for the years ended December 29, 2023 and December 31, 2022, respectively. 61 The following table illustrates the sensitivity to changes in certain assumptions, holding all other assumptions constant, for our pension plans: Effect on Pretax Pension Cost in 2024 Pension Benefit Obligation at December 29, 2023 Dollars in millions U.S.
Our expected long-term rates of return on plan assets utilized at the measurement date of January 3, 2025 and December 29, 2023 was 6.64% for our U.S. pension plans and 6.80% and 6.79% for our U.K. pension plans, respectively. 58 The following table illustrates the sensitivity to changes in certain assumptions, holding all other assumptions constant, for our pension plans: Effect on Pretax Pension Cost in Fiscal 2025 Pension Benefit Obligation at January 3, 2025 Dollars in millions U.S.
The discount rate used to determine the projected benefit obligation at the measurement date for our U.K. pension plan, which constitutes 96% of all pension plans, decreased to 4.79% at December 29, 2023 from 5.00% at December 31, 2022.
The discount rate used to determine the projected benefit obligation at the measurement date for our U.K. pension plan, which constitutes 95% of all pension plans, increased to 5.54% at January 3, 2025 from 4.79% at December 29, 2023.
Recent Accounting Pronouncements Information relating to recent accounting pronouncements is described in Note 21 to our consolidated financial statements in Part II, Item 8 of this Annual Report on Form 10-K and the information discussed therein is incorporated by reference into this Part II, Item 7. 58 U.S.
"Equity Method Investments and Variable Interest Entities" to our consolidated financial statements in Part II, Item 8 of this Annual Report on Form 10-K for more information. The information discussed therein is incorporated by reference into this Part II, Item 7. Recent Accounting Pronouncements Information relating to recent accounting pronouncements is described in Note 1.
The purchase obligations disclosed above do not include purchase obligations that we enter into with vendors in the normal course of business that support direct project costs on existing contracting arrangements with our customers. We expect to recover such obligations from our customers. (e) We have excluded uncertain tax positions totaling $74 million as of December 29, 2023.
The purchase obligations disclosed above do not include purchase obligations that we enter into with vendors in the normal course of business that support direct project costs on existing contracting arrangements with our customers. We expect to recover such obligations from our customers.
The discount rate used to calculate the projected benefit obligation at the measurement date for our U.S. pension plan decreased to 4.70% at December 29, 2023 from 4.91% at December 31, 2022.
The discount rate used to calculate the projected benefit obligation at the measurement date for our U.S. pension plan increased to 5.32% at January 3, 2025 from 4.70% at December 29, 2023.
Cash provided by operations totaled $331 million and $396 million in 2023 and 2022, respectively, as compared to a net loss of $261 million and net income of $192 million in 2023 and 2022, respectively.
Cash provided by operations totaled $462 million and $331 million in fiscal 2024 and fiscal 2023, respectively, as compared to net income of $381 million and net loss of $261 million in fiscal 2024 and fiscal 2023, respectively.
We entered into Amendment No.12 to our Credit Agreement on February 7, 2024. This amendment consolidated the USD denominated Term A-1, Term A-2 and Term A-4 loan facilities under our Credit Agreement into the amended USD denominated Term A-1 loan facility and continued the GBP denominated Term A-3 loan facility outstanding at December 29, 2023.
This amendment consolidated all USD denominated Term Loans A including: Term A-1, Term A-2 and Term A-4 loan facilities under our Credit Agreement into the amended singular USD denominated Term A-1 loan facility and continued the GBP denominated Term A-3 loan facility outstanding at December 29, 2023.
In December 2023, President Biden signed into law the National Defense Authorization Act ("NDAA") for fiscal year 2024. The NDAA authorizes programs, projects and policies to be carried out with funds appropriated by Congress as part of the annual budgetary process.
Business" in this Annual Report on Form 10-K. Business Environment and Trends Government Outlook In December 2024, the National Defense Authorization Act ("NDAA") for fiscal year 2025 was signed into law. The NDAA authorizes programs, projects and policies to be carried out with funds appropriated by Congress as part of the annual budgetary process.
Consolidated Results Year Ended Change December 29, December 31, December 31, 2023 vs. 2022 2022 vs. 2021 Dollars in millions 2023 2022 2021 $ % $ % Revenues $ 6,956 $ 6,564 $ 7,339 $ 392 6 % $ (775) (11) % Cost of revenues $ (5,979) $ (5,736) $ (6,533) $ 243 4 % $ (797) (12) % Gross profit $ 977 $ 828 $ 806 $ 149 18 % $ 22 3 % Equity in earnings (losses) of unconsolidated affiliates $ 114 $ (80) $ (170) $ 194 n/m $ 90 53 % Selling, general and administrative expenses $ (488) $ (420) $ (393) $ 68 16 % $ 27 7 % Legal settlement of legacy matter $ (144) $ — $ — $ 144 n/m $ — — % Gain (loss) on disposition of assets and investments $ (7) $ 19 $ 2 $ (26) n/m $ 17 n/m Other $ (4) $ (4) $ (14) $ — — % $ (10) (71) % Operating income $ 448 $ 343 $ 231 $ 105 31 % $ 112 48 % Interest expense $ (115) $ (87) $ (80) $ 28 32 % $ 7 9 % Unrealized gain on other investment $ — $ 16 $ 4 $ (16) n/m $ 12 300 % Charges associated with Convertible Notes $ (494) $ — $ — $ 494 n/m $ — — % Other non-operating income (expense) $ (5) $ 12 $ (9) $ (17) n/m $ 21 n/m Income (loss) before income taxes $ (166) $ 284 $ 146 $ (450) n/m $ 138 95 % Provision for income taxes $ (95) $ (92) $ (111) $ 3 3 % $ (19) (17) % Net income (loss) $ (261) $ 192 $ 35 $ (453) n/m $ 157 449 % Less: Net income attributable to noncontrolling interests $ 4 $ 2 $ 8 $ 2 100 % $ (6) (75) % Net income (loss) attributable to KBR $ (265) $ 190 $ 27 $ (455) n/m $ 163 604 % n/m - not meaningful Revenues.
Consolidated Results Year Ended Change January 3, December 29, December 31, 2024 vs. 2023 2023 vs. 2022 Dollars in millions 2025 2023 2022 $ % $ % Revenues $ 7,742 $ 6,956 $ 6,564 $ 786 11 % $ 392 6 % Cost of revenues (6,639) (5,979) (5,736) 660 11 % 243 4 % Gross profit 1,103 977 828 126 13 % 149 18 % Equity in earnings (losses) of unconsolidated affiliates 107 114 (80) (7) (6) % 194 n/m Selling, general and administrative expenses (544) (488) (420) 56 11 % 68 16 % Legal settlement of legacy matter — (144) — (144) (100) % 144 n/m Gain (loss) on disposition of assets and investments 7 (7) 19 14 n/m (26) n/m Other (11) (4) (4) 7 n/m — — % Operating income 662 448 343 214 48 % 105 31 % Interest expense (144) (115) (87) 29 25 % 28 32 % Gain on other investment — — 16 — — % (16) n/m Charges associated with Convertible Notes — (494) — (494) (100) % 494 n/m Other non-operating income (expense) (7) (5) 12 2 40 % (17) n/m Income (loss) before income taxes 511 (166) 284 677 n/m (450) n/m Provision for income taxes (130) (95) (92) 35 37 % 3 3 % Net income (loss) 381 (261) 192 642 n/m (453) n/m Less: Net income attributable to noncontrolling interests 6 4 2 2 50 % 2 100 % Net income (loss) attributable to KBR $ 375 $ (265) $ 190 $ 640 n/m $ (455) n/m n/m - not meaningful Revenues.
These decreases were partially offset by $785 million in borrowings related to our revolving credit facility and $5 million in net proceeds from the issuance of common stock. See Note 11 "Debt and Other Credit Facilities" for further discussion of our Senior Credit Facility.
These decreases were partially offset by $785 million in borrowings related to our Revolver. See Note 11 "Debt and Other Credit Facilities" for further discussion of our Senior Credit Facility. Future sources of cash.
We have the option to first assess qualitative factors to determine whether it is more likely than not that the fair value of a reporting unit is less than its carrying value.
For purposes of impairment testing, goodwill is assigned to the applicable reporting units based on our current reporting structure. We have the option to first assess qualitative factors to determine whether it is more likely than not that the fair value of a reporting unit is less than its carrying value.
The following table summarizes our backlog by business segment for the years ended December 29, 2023 and December 31, 2022, respectively: Dollars in millions December 29, 2023 December 31, 2022 Government Solutions $ 12,790 $ 11,543 Sustainable Technology Solutions 4,545 4,012 Total backlog $ 17,335 $ 15,555 We estimate that as of December 29, 2023, 30% of our backlog will be executed within one year.
The following table summarizes our backlog by business segment as of January 3, 2025 and December 29, 2023, respectively: Dollars in millions January 3, 2025 December 29, 2023 Government Solutions $ 13,554 $ 12,790 Sustainable Technology Solutions 3,710 4,545 Total backlog $ 17,264 $ 17,335 We estimate that as of January 3, 2025, 40% of our backlog will be executed within one year.
Cash and cash equivalents totaled $304 million at December 29, 2023 and $389 million at December 31, 2022 and consisted of the following: December 29, December 31, Dollars in millions 2023 2022 Domestic U.S. cash $ 44 $ 27 International cash 128 255 Joint venture and Aspire Defence project cash 132 107 Total $ 304 $ 389 Our cash balances are held in numerous accounts throughout the world to fund our global activities, including acquisitions, joint ventures and other business partnerships.
As of January 3, 2025, we are in compliance with all financial covenants related to our debt agreements. 50 Cash and cash equivalents totaled $350 million at January 3, 2025 and $304 million at December 29, 2023 and consisted of the following: January 3, December 29, Dollars in millions 2025 2023 Domestic U.S. cash $ 24 $ 44 International cash 207 128 Joint venture and Aspire Defence project cash 119 132 Total $ 350 $ 304 Our cash balances are held in numerous accounts throughout the world to fund our global activities, including acquisitions, joint ventures and other business partnerships.
These technologies and engineering solutions enable clients to achieve a cleaner, greener, more energy efficient global future. 45 Our Business Segments KBR's business is organized into two core business segments and one non-core business segment as follows: Core business segments • Government Solutions • Sustainable Technology Solutions Non-core business segment • Other See additional information on our business segments in Note 2 to our consolidated financial statements and under "Item 1.
Our Business Segments KBR's business is organized into two core business segments and one non-core business segment as follows: Core business segments • Government Solutions • Sustainable Technology Solutions Non-core business segment • Corporate See additional information on our business segments in Note 2. "Business Segment Information" to our consolidated financial statements and under "Item 1.
As of December 29, 2023, we had $1 billion in a committed line of credit on the Revolver under our Senior Credit Facility and $392 million of bilateral and uncommitted lines of credit to support the issuance of letters of credit. As of December 29, 2023, with respect to our Revolver, we had $505 million of outstanding borrowings.
As of January 3, 2025, we had a $1 billion committed line of credit on the Revolver under our Senior Credit Facility and $466 million of bilateral and uncommitted lines of credit. As of January 3, 2025, with respect to our Revolver, we had $345 million of outstanding borrowings.
In 2023 we recorded a charge of $144 million related to the settlement of a legacy legal matter. Gain (loss) on disposition of assets and investments. In 2023, we recognized a loss on disposition of assets and investments of $7 million related to the sale of our operations in Russia.
In fiscal 2023, we recorded a charge of $144 million related to the settlement of a legacy legal matter that did not recur in fiscal 2024. Gain (loss) on disposition of assets and investments.
Our proportionate share of backlog for projects related to unconsolidated joint ventures totaled $4.1 billion at December 29, 2023, and $3.9 billion at December 31, 2022. As a result of U.S.
Our proportionate share of backlog for projects related to unconsolidated joint ventures totaled $2.8 billion at January 3, 2025, and $4.1 billion at December 29, 2023.
Variable consideration 59 associated with claims and unapproved change orders is included in the transaction price only to the extent of costs incurred. We recognize claims against suppliers and subcontractors as a reduction in recognized costs when enforceability is established by the contract and the amounts are reasonably estimable and probable of recovery.
We recognize claims against suppliers and subcontractors as a reduction in recognized costs when enforceability is established by the contract and the amounts are reasonably estimable and probable of recovery.
Additionally, this amendment extended the maturity date of the $1 billion Revolver, amended Term A-1 loan facility and Term A-3 loan facility to February 2029.
Additionally, this amendment extended the maturity date of the $1 billion Revolver, amended Term A-1 loan facility and Term A-3 loan facility to February 2029. We entered into Amendment No. 13 to our Credit Agreement on August 14, 2024.
In addition to participating as a joint venture partner, we often provide engineering, procurement, construction, operations or maintenance services to the joint venture as a subcontractor. Where we provide services to a joint venture that we control and therefore consolidate for financial reporting purposes, we eliminate intercompany revenues and expenses on such transactions.
Where we provide services to a joint venture that we control and therefore consolidate for financial reporting purposes, we eliminate intercompany revenues and expenses on such transactions.
A discussion regarding our financial condition and results of operations for the years ended December 31, 2022 and 2021 is included in Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations of our Annual Report on Form 10-K for the year ended December 31, 2022, as filed with the SEC on February 17, 2023.
Management’s Discussion and Analysis of Financial Condition and Results of Operations of our Annual Report on Form 10-K for the year ended December 29, 2023 ("fiscal 2023"), as filed with the SEC on February 20, 2024.
Years Ended Change December 29, December 31, December 31, 2023 vs. 2022 2022 vs. 2021 Dollars in millions 2023 2022 2021 $ % $ % Revenues Government Solutions $ 5,353 $ 5,320 $ 6,149 $ 33 1 % $ (829) (13) % Sustainable Technology Solutions 1,603 1,244 1,190 359 29 % 54 5 % Total revenues $ 6,956 $ 6,564 $ 7,339 $ 392 6 % $ (775) (11) % Operating income Government Solutions $ 285 $ 441 $ 414 $ (156) (35) % $ 27 7 % Sustainable Technology Solutions 324 47 (30) 277 n/m 77 n/m Other (161) (145) (153) (16) (11) % 8 5 % Operating income $ 448 $ 343 $ 231 $ 105 31 % $ 112 48 % n/m - not meaningful Government Solutions GS revenues increased by $33 million, or 1%, to $5,353 million in 2023 compared to $5,320 million in 2022.
Years Ended Change January 3, December 29, December 31, 2024 vs. 2023 2023 vs. 2022 Dollars in millions 2025 2023 2022 $ % $ % Revenues Government Solutions $ 5,871 $ 5,353 $ 5,320 $ 518 10 % $ 33 1 % Sustainable Technology Solutions 1,871 1,603 1,244 268 17 % 359 29 % Total revenues $ 7,742 $ 6,956 $ 6,564 $ 786 11 % $ 392 6 % Operating income Government Solutions $ 453 $ 285 $ 441 $ 168 59 % $ (156) (35) % Sustainable Technology Solutions 370 324 47 46 14 % 277 n/m Corporate (161) (161) (145) — — % (16) (11) % Operating income $ 662 $ 448 $ 343 $ 214 48 % $ 105 31 % n/m - not meaningful Government Solutions GS revenues increased by $518 million, or 10%, to $5,871 million in fiscal 2024 compared to $5,353 million in fiscal 2023.
Immediately following execution of Amendment No. 12, we had approximately $500 million outstanding related to the remaining Term Loan A facilities and $117 million outstanding on our Revolver. 53 We believe that existing cash balances, internally generated cash flows, availability under our Senior Credit Facility and other lines of credit are sufficient to support our business operations for the next 12 months.
We believe that existing cash balances, internally generated cash flows, availability under our Senior Credit Facility and other lines of credit are sufficient to support our business operations for the next 12 months.
We recognize revenue over time on our services provided to joint ventures that we consolidate and our services provided to joint ventures that we record under the equity method of accounting. See Note 9 to our consolidated financial statements in Part II, Item 8 of this Annual Report on Form 10-K for more information.
We recognize revenue over time on our services provided to joint ventures that we consolidate and our services provided to joint ventures that we record under the equity method of accounting. See Note 9.
The NDAA supports approximately $874 billion in fiscal year 2024 funding for national defense, $841 billion of which is for the DoD. The requested amount is an increase of $27 billion when compared to the authorized defense spending for fiscal year 2023.
The NDAA supports approximately $884 billion in fiscal year 2025 funding for national defense, $850 billion of which is for the DoD. The requested amount is an increase of $9 billion when compared to the authorized defense spending for fiscal year 2024. The U.S. government has not yet enacted an annual budget for its fiscal year 2025.
We have recognized on our consolidated balance sheets a funding deficit of approximately $15 million (calculated as the excess of the projected benefit obligations over the fair value of plan assets) as of December 29, 2023) for our frozen U.K. defined benefit pension plan.
JKC has provided for and continues to maintain a provision for this contingent liability. U.K. pension obligation. We have recognized on our consolidated balance sheets a funding surplus of approximately $82 million (calculated as the excess of the fair value of plan assets over projected benefit obligations) as of January 3, 2025 for our frozen U.K. defined benefit pension plan.
The provision for income taxes for the year ended December 29, 2023 reflects a (57)% tax rate as compared to a 32% tax rate for the year ended December 31, 2022.
The provision for income taxes for fiscal 2024 reflects a 25% tax rate as compared to a (57)% tax rate for fiscal 2023.
Sustainable Technology Solutions STS revenues increased by $359 million, or 29%, to $1,603 million in 2023 compared to $1,244 million in 2022. The increase from 2022 to 2023 was primarily driven by increased revenues from technology sales and engineering and professional services. STS operating income increased by $277 million to $324 million in 2023 compared to $47 million in 2022.
Sustainable Technology Solutions STS revenues increased by $268 million, or 17%, to $1,871 million in fiscal 2024 compared to $1,603 million in fiscal 2023. This increase is primarily driven by increased revenues from engineering and professional services. STS operating income increased by $46 million, or 14%, to $370 million in fiscal 2024 compared to $324 million in fiscal 2023.
Additionally, nearly all contracts allow customers to terminate the agreement at any time for convenience, and from time to time customers may dispute or try to renegotiate existing contracts.
Additionally, nearly all contracts allow customers to terminate the agreement at any time for convenience, and from time to time customers may dispute or try to renegotiate existing contracts. These and other factors may result in delays or changes in our recognition of revenue from our backlog versus amounts we book as backlog.
We entered into Amendment No.11 to our Credit Agreement on January 19, 2024. This amendment provides for an incremental Term Loan B facility in an aggregate principal amount of $1 billion and extends the Term Loan B maturity date to January 2031.
This amendment provided for an incremental Term Loan B facility in an aggregate principal amount of $1 billion and extended the Term Loan B maturity date to January 2031. We borrowed the full $1 billion principal amount available under this loan.
These levels are also impacted by the mix, stage of completion and commercial terms of projects. Working capital requirements also vary by project depending on the type of client and location throughout the world.
These levels are also impacted by the mix, stage of completion and commercial terms of projects.
As such, a quantitative goodwill test was not required, and no goodwill impairment was recognized in 2023. Deferred Taxes, Valuation Allowances and Tax Contingencies.
As such, a quantitative goodwill test was not required, and no goodwill impairment was recognized in fiscal 2024. Our goodwill and intangible assets are discussed in Note 8. "Goodwill and Intangible Assets" in the accompanying consolidated financial statements. Deferred Taxes, Valuation Allowances and Tax Contingencies. As discussed in Note 12.
The Australian government continues to invest in defense spending, with particular focus on enhancing regional security, modernizing defense capabilities, strengthening cyber defenses and promoting broader economic stability.
The Australian government continues to invest in defense spending, with particular focus on enhancing regional security, modernizing defense capabilities, strengthening cyber defenses and promoting broader economic stability. The fiscal year budget for Australia for the 2024 - 2025 financial year was finalized, with the Australian government increasing defense spending to AUD 55.7 billion, or approximately 2.00% of GDP.
As the need for credit support arises, letters of credit may be issued under the Revolver (as defined below) or with lending counterparties on a bilateral, syndicated or other basis.
As the need for credit support arises, letters of credit may be issued under the Revolver (as defined below) or with lending counterparties on a bilateral, syndicated or other basis. As discussed in Note 11 "Debt and Other Credit Facilities" of our consolidated financial statements, we entered into Amendment No.11 to our Credit Agreement on January 19, 2024.
We also have $14 million of outstanding letters of credit on our Senior Credit Facility. With respect to our $392 million of bilateral and uncommitted lines of credit, we utilized $298 million for letters of credit as of December 29, 2023. The total remaining capacity of these committed and uncommitted lines of credit was approximately $575 million.
We also have $14 million of outstanding letters of credit on our Senior Credit Facility. With respect to our $466 million of bilateral and uncommitted lines of credit, we utilized $284 million for letters of credit as of January 3, 2025.
The most recent "laddered" continuing resolution passed in January 2024 funds the government through March 2024, depending on the appropriation bill. Under the continuing resolution, partial-year funding at amounts consistent with appropriated levels for fiscal year 2023 are available, subject to certain restrictions, but new spending initiatives are not authorized.
To avert a government shutdown, a continuing resolution funding measure has been enacted to finance all U.S. government activities through March 14, 2025. Under the continuing resolution, partial-year funding at amounts consistent with appropriated levels for fiscal year 2024 are available, subject to certain restrictions, but new spending initiatives are not authorized.
In these arrangements, only the amounts authorized are included in backlog. For projects where we act solely in a project management capacity, we only include the expected value of our services in backlog.
Certain contracts provide maximum dollar limits, with actual authorization to perform work under the contract agreed upon on a periodic basis with the customer. In these arrangements, only the amounts authorized and probable are included in backlog. For projects where we act solely in a project management capacity, we only include the expected value of our services in backlog.
Goodwill and Intangible Assets . Goodwill is tested annually for possible impairment as of the first day of the fourth fiscal quarter within our fiscal year, and on an interim basis when indicators of possible impairment exist. For purposes of impairment testing, goodwill is assigned to the applicable reporting units based on our current reporting structure.
Our purchase price allocation is discussed in Note 4. "Acquisition of LinQuest Corporation" in the accompanying consolidated financial statements. Goodwill and Intangible Assets . Goodwill and intangible assets is tested annually for possible impairment as of the first day of the fourth fiscal quarter within our fiscal year, and on an interim basis when indicators of possible impairment exist.
Of this amount, we estimate that 87% will be recognized in revenues on our consolidated statement of operations and 13% will be recorded by our unconsolidated joint ventures.
Of this amount, we estimate that 89% will be recognized in revenues on our consolidated statement of operations and 11% will be recorded by our unconsolidated joint ventures. As of January 3, 2025, $193 million of our backlog relates to active contracts that are in a loss position.
The payments due for interest reflect the cash interest that will be paid, which includes interest on outstanding borrowings and commitment fees. These amounts exclude the amortization of discounts or debt issuance costs. (c) Included in our pension funding obligations are payments related to our agreement with the trustees of our U.K. pension plan.
The payments due for interest reflect the cash interest that will be paid, which includes interest on outstanding borrowings and commitment fees. These amounts exclude the amortization of discounts or debt issuance costs. (b) In the ordinary course of business, we enter into commitments to purchase software and related maintenance, materials, supplies and similar items.

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Item 7A. Quantitative and Qualitative Disclosures About Market Risk

Market Risk — interest-rate, FX, commodity exposure

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Borrowings under the Senior Credit Facility bear interest at variable rates as described in Note 11 "Debt and Other Credit Facilities" to our consolidated financial statements. 62 We use interest rate swaps to reduce interest rate risk and to manage net interest expense by converting our variable rate debt under our Senior Credit Facility into fixed-rate debt.
Borrowings under the Senior Credit Facility bear interest at variable rates as described in Note 11 "Debt and Other Credit Facilities" to our consolidated financial statements. 59 We use interest rate swaps to reduce interest rate risk and to manage net interest expense by converting our variable rate debt under our Senior Credit Facility into fixed-rate debt.
The fair value of these derivatives was not material to our consolidated balance sheet for the periods presented. For more information, see Note 20 to our consolidated financial statements in Part II, Item 8 of this Annual Report on Form 10-K and the information discussed therein is incorporated by reference into this Part II, Item 7A. Interest Rate Risk.
For more information, see Note 20. "Fair Value of Financial Instruments and Risk Management" to our consolidated financial statements in Part II, Item 8 of this Annual Report on Form 10-K and the information discussed therein is incorporated by reference into this Part II, Item 7A. Interest Rate Risk.
If interest rates were to increase by 50 basis points, pre-tax interest expense would increase by approximately $2 million in the next twelve months net of the impact from our swap agreements, based on outstanding borrowings as of December 29, 2023. 63
If interest rates were to increase by 50 basis points, pre-tax interest expense would increase by approximately $5 million in the next twelve months net of the impact from our swap agreements, based on outstanding borrowings as of January 3, 2025. 60
Information relating to our portfolio of interest rate swaps is described in Note 20 "Fair Value of Financial Instruments and Risk Management" to our consolidated financial statements, which is incorporated by reference into this Item 7A.
During fiscal 2024, we entered into additional interest rate swap agreements to term SOFR. Information relating to our portfolio of interest rate swaps is described in Note 20 "Fair Value of Financial Instruments and Risk Management" to our consolidated financial statements, which is incorporated by reference into this Item 7A.
We are exposed to market risk for changes in interest rates for the Revolver and term loan borrowings under the Senior Credit Facility. We had $505 million of borrowings issued under the Revolver as of December 29, 2023. Additionally, we had $1,096 million outstanding under the term loan portions of the Senior Credit Facility as of December 29, 2023.
We are exposed to market risk for changes in interest rates for the Revolver and term loan borrowings under the Senior Credit Facility. We had $345 million of borrowings issued under the Revolver as of January 3, 2025. Additionally, we had $1,999 million outstanding under the term loan portions of the Senior Credit Facility as of January 3, 2025.
At December 29, 2023, we had fixed rate debt aggregating $1,353 million and variable rate debt aggregating $498 million, after taking into account the effects of the interest rate swaps that were effective at December 29, 2023. Our weighted average interest rate for the year ended December 29, 2023 was 5.81%.
At January 3, 2025, we had fixed rate debt aggregating $1,543 million and variable rate debt aggregating $1,051 million, after taking into account the effects of the interest rate swaps that were effective at January 3, 2025. Our weighted average interest rate for fiscal 2024 was 5.52%.
The fair value of the interest rate swaps at December 29, 2023 was a $36 million net asset, of which $24 million is included in other current assets, $18 million is included in other assets and $6 million is included in other liabilities.
The fair value of the interest rate swaps at January 3, 2025 was a $37 million net asset, of which $19 million is included in other current assets and $18 million is included in other assets. The unrealized net gains on these interest rate swaps was $37 million and is included in AOCL as of January 3, 2025.
Within other non-operating income (expense) on our consolidated statements of operations, we recorded a net loss of $6 million for the year ended December 29, 2023, a net gain of $4 million for the year ended December 31, 2022 and a net loss of $8 million for the year ended December 31, 2021 .
We recorded a net loss of $3 million for fiscal 2024, a net loss of $6 million for fiscal 2023 and a net gain of $4 million for fiscal 2022 within other non-operating income (expense) on our consolidated statements of operations. The fair value of these derivatives was not material to our consolidated balance sheet for the periods presented.
Removed
During the year ended December 29, 2023, we amended all of our existing interest rate swap agreements to term SOFR effective March 2023. In March 2023, we entered into additional USD denominated interest rate swap agreements with a notional value of $205 million effective April 2023 and expiring January 2027.
Added
Our portfolio of interest rate swaps consists of the following: Dollars in millions Notional Amount at January 3, 2025 Pay Fixed Rate (Weighted Average) Receive Variable Rate Settlement and Termination March 2020 Interest Rate Swaps $ 400 0.89 % Term SOFR Monthly through January 2027 September 2022 Interest Rate Swaps $ 350 3.43 % Term SOFR Monthly through January 2027 March 2023 Interest Rate Swaps $ 205 3.61 % Term SOFR Monthly through January 2027 March 2023 Amortizing Interest Rate Swaps £ 110 3.81 % Term SONIA Monthly through November 2026 September 2024 Interest Rate Swaps $ 200 3.27 % Term SOFR Monthly through August 2027 The swap agreements were designated as cash flow hedges at inception in accordance with ASC Topic 815 Derivative and Hedging .
Removed
We will receive SOFR and pay a fixed rate of 3.61%. We also entered into GBP denominated amortizing swaps with an initial notional value of £118 million that are effective April 2023 and expire in November 2026. As of December 29, 2023, the notional value of the GBP denominated amortizing swaps was £116 million.
Removed
We will receive SONIA and pay a fixed rate of 3.81% for the term of the swaps. Additionally, in November 2023, the notional value of our September 2022 interest rate swap agreement expiring January 2027 increased to $350 million. We will receive SOFR and pay a fixed rate of 3.43%.
Removed
The swap agreements were designated as cash flow hedges at inception in accordance with ASC Topic 815 Derivative and Hedgi ng .

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