Press Release

Q4 and 2015 earnings significantly improved from 2014 driven by strong operating performance

On track to deliver strategic plan goals for cost savings / margins by end of 2016HOUSTON, Texas - February 26, 2016 - KBR, Inc. (NYSE: KBR), a global technology, engineering, procurement and construction company serving the hydrocarbons and government services industries, today announced strong fourth quarter 2015 financial results.

Net income attributable to KBR was $42 million or $0.29 per diluted share ($0.36 per diluted share as adjusted - see supplemental information), in the fourth quarter of 2015 compared to a net loss of $1.2 billion or ($8.57) per diluted share, in the fourth quarter of 2014. Consolidated revenue in the fourth quarter of 2015 was $1.1 billion compared to $1.4 billion in the fourth quarter of 2014 ($1.2 billion excluding 4Q14 revenues of businesses divested or deconsolidated in 2015). "Our fourth quarter and fiscal 2015 consolidated results reflect continued strength in our operational performance and progress towards achieving the strategic objectives we previously outlined. KBR's transformation is well underway and we are on track to achieve the year-end 2016 targets for segment profit margin percentages and at least $200 million in annual cost savings. To date the company has identified and actioned more than $165 million of the $200 million savings target," said Stuart Bradie, President and Chief Executive Officer of KBR, Inc.

"KBR's technology and project delivery capability, focused primarily on natural gas derivative products and associated downstream facilities, positions us well in what is likely to be a difficult market. Growth in our Technology and Government Services businesses continues to be strong and we believe this will continue throughout 2016 and beyond. In the fourth quarter we and a partner were awarded the Magnolia LNG project in Louisiana. This was a major win for KBR and our client is marketing the LNG to potential buyers and finalizing the project's financing. Our client remains confident the project will proceed and we expect to add this contract to KBR's backlog of unfilled orders upon financial close. Earlier this month we and a partner were awarded the £500 million U.K. Ministry of Defence (MoD) Military Flight Training Systems contract which will extend over 18 years, and we continue in sole source negotiations with the U.K. MoD on the Army 2020 rebasing project. We continue to make good progress in successfully closing a number of legacy U.S. Government disputes ranging from audits related to invoices from the Iraq War to winning a number of tort cases on their merits. Finally, we continued our balanced capital allocation policy by adding bolt on acquisitions while returning $109 million to shareholders in 2015 via share repurchases and dividends. Our cash performance was strong in 4Q15 and our balance sheet provides confidence to our clients and optionality in challenging markets. Additionally, we pay a competitive yielding dividend," Bradie said.

Business Discussion (All comparisons are fourth quarter 2015 versus fourth quarter 2014 unless otherwise noted.)

Technology & Consulting (T&C) Results

Technology & Consulting gross profit was $20 million, up $15 million from the prior year while revenue was $93 million, an increase of $25 million. Gross profit was higher primarily due to reductions in revenue estimates on a number of legacy projects in 4Q14 that did not reoccur in 4Q15. The higher revenue resulted from increased proprietary equipment sales in the quarter.

The acquisition of a number of Chematur technology subsidiaries completed in 1Q16 complements the existing technology business which should benefit from opportunities for syngas, refining and olefins projects including new builds and revamps to improve efficiencies of existing facilities, while the smaller upstream consulting business remains challenged from low oil prices. We also continue to explore additional technology based acquisitions.

Engineering & Construction (E&C) Results
Engineering & Construction gross profit was $69 million, up $37 million from the prior year. 4Q15 reflects good operational performance while 4Q14 included higher estimated costs to complete certain projects that did not reoccur in 4Q15.

Revenue was $696 million, a decrease of $342 million primarily related to the deconsolidation of KBR's Americas Industrial Services business which had revenues of $126 million in 4Q14, lower revenue on an LNG project as the project advances, and reduced activity on a number of other projects.
Equity in earnings of unconsolidated affiliates was $17 million.

Government Services (GS) Results
Government Services gross profit was a negative $6 million, an increase of $54 million while revenue was $174 million, an increase of $63 million from the prior year. The increase in both revenue and gross profit was primarily driven by $46 million in charges relating to the legacy LogCAP III and Restore Iraqi Oil (RIO) contracts and increased estimated costs to complete two other projects in 4Q14 that did not reoccur in 4Q15. The company also incurred $5 million in legacy legal fees in 4Q15.

Equity in earnings of unconsolidated affiliates was $9 million, down $9 million, primarily driven by a 4Q14 increase in the inception-to-date margin recognized on a construction project for the U.K. MoD that did not reoccur in 4Q15. Equity in earnings reflects continued strong performance on joint venture annuity type contracts in the U.K.

Subsequent to the year-end results, the KBR and Elbit Systems Affinity Flying Training joint venture was awarded a U.K. MoD Fixed Wing Training procurement, operations and maintenance contract valued at approximately £500 million. This project is expected to be accounted for as equity in earnings over the 18-year term.

Looking forward, KBR remains well placed in sole source negotiations on the U.K. MoD's large scale Army 2020 rebasing contract, which is the latest phase of an existing contract already being executed by KBR and its partners. KBR's U.S. business is also expected to continue to grow supporting the US military internationally. Finally, we continued to make good progress in resolving audit and legal issues resulting from the legacy LogCAP III and RIO contracts.

Non-Strategic Business (NSB) Results
Non-Strategic Business gross profit was $11 million, up $150 million, primarily driven by good performance on the company's portfolio of power projects in 4Q15 versus significant loss provisions taken in 4Q14. Revenue was $117 million, down $83 million, primarily related to the sale of the Building Group business unit in 2Q15 which had revenues of approximately $81 million in 4Q14 and from reduced activities on two power projects. Two of the company's three remaining power projects are now largely complete and the third project is scheduled for completion in 2017.

Strategic Actions Update
During the fourth quarter, the company incurred $36 million in pre-tax restructuring and asset impairment costs and recorded a $27 million pre-tax gain on the disposition of certain assets as it continued to rebalance its business portfolio to focus on Global Hydrocarbons and International Government Services.

2016 Guidance
The company initiates 2016 fully diluted EPS guidance with a range of $1.20 to $1.45, excluding legal costs associated with legacy U.S. Government contracts, as the company continues to defend against unjustified claims. KBR currently expects these legal costs to be approximately $15 million, or $0.11 per fully diluted share in 2016.

About KBR, Inc.
KBR, Inc.is a global technology, engineering, procurement and construction company serving the hydrocarbons and government services industries, employing approximately 22,000 people worldwide with customers in more than 70 countries and operations in 40 countries across three distinct global businesses: Technology & Consulting, including proprietary technology in refining, ethylene, ammonia and fertilizers, and gasification; and niche consulting and know-how through subsidiaries Granherne, Energo and GVAEngineering & Construction, including Offshore Oil & Gas; Onshore Oil & Gas; LNG/GTL; Refining; Petrochemicals; Chemicals; differentiated EPC, and Industrial ServicesGovernment Services, including program management and long-term annuity contracts
KBR is proud to work with its customers across the globe to provide technology, value-added consulting services, integrated EPC delivery and Long Term Industrial Services to ensure consistent project delivery with predictable results.

At KBR, we deliver. Visit www.kbr.com.

Forward Looking Statements
The statements in this press release that are not historical statements, including statements regarding future financial performance, 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 its former parent; 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 most recently filed Form 10-K, any subsequent Form 10-Qs and 8-Ks, and other U.S. 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.

For further information, please contact:

Investors
Zac Nagle
Vice President, Investor Relations
713-753-5082
[email protected]

Media
Marit Babin
Director, Global Communications & Government Relations
713-753-3800
[email protected]

ÊKBR, Inc.: Consolidated Statements of Income
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ÊKBR, Inc.: Consolidated Statements of Income
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ÊKBR, Inc.: Consolidated Balance Sheets
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ÊKBR, Inc.: Consolidated Statements of Cash Flows
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ÊKBR, Inc.: Statements of Cash Flows
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ÊKBR, Inc.:Ê Backlog Information (a)
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KBR, Inc.: Supplemental Information
Adjusted diluted earnings per common share reconciliation
The following table reconciles our financial results reported in accordance with generally accepted accounting principles ("GAAP") to non-GAAP financial results. KBR has provided this non-GAAP financial information to aid investors in better understanding the company's performance.