Revenue for the first nine months of 2009 increased 12% over the first nine months of the previous year

Operating income for the first nine months of 2009 increased 6% over the first nine months of 2008

Solid backlog at the end of September 30, 2009 of $13.5 billion, up 9% over the sequential quarter; no material project cancellations during the third quarter of 2009

Continued strong balance sheet with $1.0 billion cash and equivalents

Corporate G&A for the first nine months of 2009 down 4% compared to the first nine months of 2008, despite increased revenue over the same time period

KBR (NYSE:KBR) announced today that third quarter 2009 net income attributable to KBR was $73 million, or $0.45 per diluted share, compared to net income attributable to KBR of $85 million, or $0.51 per diluted share, in the third quarter of 2008. Net income attributable to KBR for the third quarter of 2008 included income from discontinued operations of $11 million, or $0.07 per diluted share resulting from foreign tax credits related to the sale of KBR's 51% ownership interest in Devonport Management Limited.

Consolidated revenue in the third quarter of 2009 was $2.8 billion compared to $3.0 billion in the third quarter of 2008. Consolidated operating income was $131 million in the third quarter of 2009 compared to $144 million in the third quarter of 2008.

For the third quarter of 2009, consolidated operating income included a $17 million reduction of a prior 2008 charge related to an unfavorable jury verdict on the LogCAP III contract and a net $25 million charge related to equipment failures, subcontractor claims, schedule delays, and project close out issues on three LNG projects which are now commercially operational. Net income for the third quarter of 2009 included a $10 million tax benefit related to a return to accrual adjustment for the 2008 tax year, partially offset by a $6 million impairment of goodwill at a staffing company acquired as part of the BE&K acquisition.

"The highlight of the quarter was the award for the Gorgon LNG project for engineering, procurement, and construction management services. KBR has been involved in this world-class project for several years and we are excited to have the opportunity to deliver quality execution on this project for our customers," said Bill Utt, Chairman, President, and Chief Executive Officer of KBR. "Operationally, our business delivered solid performance, despite experiencing several isolated items related to the completion or near completion of several LNG projects. In addition, we had a 15 percent quarter over quarter decline in our LogCAP revenue, consistent with reduced activity levels in Iraq."

2009 Third Quarter Business Unit Results

Upstream business unit income was $48 million in the third quarter of 2009 compared to business unit income of $53 million in the third quarter of 2008. Business unit income in the third quarter of 2009 had positive contributions from various gas monetization projects, including the Pearl GTL, Skikda LNG, Gorgon LNG, and Escravos GTL projects, an offshore related project in the Caspian area, the PNG LNG project, and several topside engineering projects.

Government and Infrastructure business unit income was $89 million in the third quarter of 2009 compared to business unit income of $104 million in the third quarter of 2008. Business unit income in the third quarter of 2009 had positive contributions from Iraq-related activities, the Allenby & Connaught project, work on the CENTCOM project, and numerous infrastructure projects, including the Qatar-Bahrain Causeway. Business unit income in the third quarters of 2009 and 2008 included a $17 million and $13 million reduction of a previous $40 million charge related to an unfavorable jury verdict from litigation with a subcontractor on the LogCAP III contract in the second quarter of 2008, respectively.

Services business unit income was $36 million in the third quarter of 2009 compared to business unit income of $27 million in the third quarter of 2008. Business unit income in the third quarter of 2009 had positive contributions from power projects in Georgia and Texas, the Scotford Upgrader project in Canada, construction and maintenance work in Texas, the offshore service vessels in the Gulf of Mexico, and an activated carbon project in Louisiana.

Downstream business unit income was $10 million in the third quarter of 2009 compared to business unit income of $15 million in the third quarter of 2008. Business unit income in the third quarter of 2009 had positive contributions from program management services for the Ras Tanura project in Saudi Arabia, the Lobito refinery FEED in Angola, and several other refining projects.

Technology business unit income was $7 million in the third quarter of 2009 compared to business unit income of $4 million in the third quarter of 2008. Business unit income in the third quarter of 2009 had positive contributions from several ammonia license and basic engineering projects in South America, one project in India, and one project completion in Trinidad.

Ventures business unit income was $4 million in the third quarter of 2009 compared to business unit income of $0 million in the third quarter of 2008.