KBR to Restate 2013 Financial Statements
KBR, Inc. announced on May 5, 2014, that its Board of Directors' Audit Committee has determined that previously issued consolidated financial statements for the year ended December 31, 2013, should no longer be relied upon and will be restated.
KBR, Inc. announced on May 5, 2014, that its Audit Committee has concluded that the company's previously issued financial statements for the fiscal year 2013 require restatement. This determination was made in connection with the preparation of KBR's Form 10-Q filing for the first quarter ending March 31, 2014.
The restatement is related to cost estimates for seven Canadian pipe fabrication and module assembly contracts awarded in 2012-2013 within the company's Services business segment. KBR identified that the estimated costs to complete these contracts will result in significant pre-tax charges.
Specifically, KBR expects pre-tax charges totaling $158 million. This includes the reversal of $23 million in previously recognized pre-tax profits and the recognition of approximately $135 million in estimated pre-tax losses upon completion. The company noted that the majority of these losses should have been recognized in prior periods.
Regarding cash flow, KBR stated that the negative cash impact associated with the work released to date under these contracts has largely been incurred. The forecast net negative cash flow to complete the remaining work is expected to be less than $45 million. The company acknowledges that these figures are subject to change as its review is ongoing.