KBR's Use of Private Security Contractors During Operations in Iraq Reaffirmed; Company Will Seek $45 Million Plus Interest in Compensation for Services Rendered

HOUSTON - June 26, 2014 - After five-plus years of litigation, the Armed Services Board of Contract Appeals (ASBCA) today reaffirmed KBR's KBR use of private security contractors during combat operations in Iraq. The ruling clears the way for KBR to recover $45 million plus interest from the U.S. government for services rendered in 2003-2007. It also confirms the appropriateness of an additional $10 million in billings previously paid to KBR.

The $45 million receivable had been included in KBR's prior years' financial statements and this ruling will not have a material impact on earnings in 2014. The company will seek immediate payment.    

"We are not surprised by the ASBCA's decision as they had previously ruled in April 2012 that the Logistics Civil Augmentation Program contract did not prohibit the use of private security contractors," said Andrew Farley, KBR executive vice president and general counsel. "It is unfortunate that it took five years and significant legal expense to KBR and U.S. taxpayers to confirm that KBR acted prudently in protecting our employees and subcontractors who were supporting our troops during very challenging war-time conditions."

The ASBCA opinion noted that the use of armed private security contractors "was both reasonable and necessary given the dangerous, life-threatening conditions under which KBR and its subcontractors were asked to perform." It also stated that the U.S. government lacked adequate force protection for U.S. contractors and that this was a "constant problem and the commanding generals testified they did not have the resources to provide it."

"KBR fulfilled its commitment to our troops and we are proud of the support that we provided our forces," Farley said. "Although ASBCA's ruling is appealable, we hope this latest decision will finally conclude the matter."

About KBR
KBR is a global engineering, construction and services company supporting the energy, hydrocarbons, power, industrial, civil infrastructure, minerals, government services and commercial markets. For more information, visit www.kbr.com.

Forward Looking Statement
The statements in this press release that are not historical statements, including statements regarding future financial performance and backlog information, are forward-looking statements within the meaning of the federal securities laws. These statements are subject to numerous risks and uncertainties, many of which are beyond the company's control that could cause actual results to differ materially from the results expressed or implied by the statements. These risks and uncertainties include, but are not limited to: the outcome of and the publicity surrounding audits and investigations by domestic and foreign government agencies and legislative bodies; potential adverse proceedings by such agencies and potential adverse results and consequences from such proceedings; the scope and enforceability of the company's indemnities from Halliburton Company; changes in capital spending by the company's customers; the company's ability to obtain contracts from existing and new customers and perform under those contracts; structural changes in the industries in which the company operates, escalating costs associated with and the performance of fixed-fee projects and the company's ability to control its cost under its contracts; claims negotiations and contract disputes with the company's customers; changes in the demand for or price of oil and/or natural gas; protection of intellectual property rights; compliance with environmental laws; changes in government regulations and regulatory requirements; compliance with laws related to income taxes; unsettled political conditions, war and the effects of terrorism; foreign operations and foreign exchange rates and controls; the development and installation of financial systems; increased competition for employees; the ability to successfully complete and integrate acquisitions; and operations of joint ventures, including joint ventures that are not controlled by the company.

KBR's Annual Report on Form 10-K/A dated May 5, 2014, Form 10-Q for the quarters ended March 31, 2013, June 30, 2013, and September 30, 2013, recent Current Reports on Forms 8-K, and other Securities and Exchange Commission filings discuss some of the important risk factors that KBR has identified that may affect the business, results of operations and financial condition. Except as required by law, KBR undertakes no obligation to revise or update publicly any forward-looking statements for any reason.

Contact: 
Investors
Zac Nagle
Vice President, Investor Relations and Communications
713-753-5082
Investors@kbr.com  

Media                                                                                           
Richard Goins
Director, Corporate Communications
713-751-9471
Mediarelations@kbr.com

###