Date: 8/1/2008 7:57 AM
HOUSTON (AP) _ Engineering and construction services provider KBR Inc. said Friday its second-quarter profit fell sharply from a year-ago period boosted by asset sale gains, and also said results were hurt by hefty project charges and a jury award on a 2003 subcontract.
The Houston-based company, which split off from Halliburton in 2007, said net income for the quarter ended June 30 slipped to $48 million, or 28 cents per share, from year-ago profit of $140 million, or 83 cents per share. The 2007 period included $90 million worth of earnings related to its former stake in Devonport Management, and the latest period includes 18 cents per share worth of charges.
Revenue grew 24 percent to $2.66 billion from $2.15 billion in the second quarter of 2007.
Analysts surveyed by Thomson Financial expected profit of 36 cents per share on revenue of $2.32 billion.
“Unfortunately, KBR had two items this quarter that overshadowed our strong underlying performance,” Bill Utt, chairman, president and chief executive, said in a statement.
He said he is “obviously disappointed in the unexpected and unfavorable jury award” related to a subcontractor on a U.S. Army project in 2003 and KBR’s inability to obtain in a timely fashion final approvals for a settlement reached on a liquefied natural gas project.
“Looking forward, I remain optimistic in KBR’s ability to execute on its projects and continue to deliver solid operating results.”
In a filing with the U.S. Securities and Exchange Commission Friday, KBR said a Texas jury on July 23 awarded a KBR subcontractor damages of $39 million and lawyers’ fees and interest subject to a final court judgment expected in 30 to 60 days.
Associated Construction Co. WLL, was a KBR subcontractor in Iraq in 2003 on a U.S. Army contract.
KBR said it believes it has a strong defense against Associated Construction’s claims and it intends to appeal.
“At this time, we cannot predict the likelihood of our succeeding in our appeal,” KBR said in the SEC filing.
KBR said it has accrued $40 million representing a “probable estimate” of the jury award, though it said it believes the amount of the jury award is billable to the customer.
“However, we are not able to determine if the jury award can be fully recovered at this time,” KBR said in the SEC filing.
Copyright 2008 The Associated Press.