XML 37 R22.htm IDEA: XBRL DOCUMENT
v3.22.0.1

Income Taxes | 12 Months Ended
--- | ---
Dec. 31, 2021
Income Tax Disclosure [Abstract] |
Income Taxes | Income Taxes The United States and foreign components of income (loss) before income taxes and noncontrolling interests were as follows:
| Years ended December 31,
Dollars in millions | 2021 |  | 2020 |  | 2019
United States | $ | 165 |  |  | $ | (208) |  |  | $ | 2 |
Foreign: |  |  |  |  |
United Kingdom | 56 |  |  | 76 |  |  | 105 |
Australia | (199) |  |  | 37 |  |  | 15 |
Canada | (2) |  |  | (2) |  |  | 3 |
Middle East | 39 |  |  | 69 |  |  | 87 |
Africa | 3 |  |  | 4 |  |  | 5 |
Other | 72 |  |  | (1) |  |  | 51 |
Subtotal | (31) |  |  | 183 |  |  | 266 |
Total | $ | 134 |  |  | $ | (25) |  |  | $ | 268 |
The total income taxes included in the statements of operations and in shareholders' equity were as follows:
| Years ended December 31,
Dollars in millions | 2021 |  | 2020 |  | 2019
(Provision) benefit for income taxes | $ | (108) |  |  | $ | (26) |  |  | $ | (59) |
Shareholders' equity, foreign currency translation adjustment | (1) |  |  | 1 |  |  | 1 |
Shareholders' equity, pension and post-retirement benefits | (44) |  |  | 26 |  |  | 11 |
Shareholders' equity, changes in fair value of derivatives | (7) |  |  | 3 |  |  | 2 |
Total income taxes | $ | (160) |  |  | $ | 4 |  |  | $ | (45) |
The components of the provision for income taxes were as follows:
Dollars in millions | Current |  | Deferred |  | Total
Year ended December 31, 2021 |  |  |  |  |
Federal | $ | (1) |  |  | $ | (24) |  |  | $ | (25) |
Foreign | (49) |  |  | (22) |  |  | (71) |
State and other | (15) |  |  | 3 |  |  | (12) |
Provision for income taxes | $ | (65) |  |  | $ | (43) |  |  | $ | (108) |
Year ended December 31, 2020 |  |  |  |  |
Federal | $ | — |  |  | $ | 29 |  |  | $ | 29 |
Foreign | (62) |  |  | 11 |  |  | (51) |
State and other | (4) |  |  | — |  |  | (4) |
(Provision) benefit for income taxes | $ | (66) |  |  | $ | 40 |  |  | $ | (26) |
Year ended December 31, 2019 |  |  |  |  |
Federal | $ | (4) |  |  | $ | 15 |  |  | $ | 11 |
Foreign | (67) |  |  | 1 |  |  | (66) |
State and other | (2) |  |  | (2) |  |  | (4) |
(Provision) benefit for income taxes | $ | (73) |  |  | $ | 14 |  |  | $ | (59) |
The components of our total foreign income tax provision were as follows:
| Years ended December 31,
Dollars in millions | 2021 |  | 2020 |  | 2019
United Kingdom | $ | (22) |  |  | $ | (14) |  |  | $ | (19) |
Australia | (23) |  |  | (6) |  |  | (6) |
Canada | — |  |  | (1) |  |  | (1) |
Middle East | (9) |  |  | (18) |  |  | (20) |
Africa | — |  |  | — |  |  | (1) |
Other | (17) |  |  | (12) |  |  | (19) |
Foreign provision for income taxes | $ | (71) |  |  | $ | (51) |  |  | $ | (66) |
Our effective tax rates on income from operations differed from the statutory U.S. federal income tax rate of 21% as a result of the following:
| Years ended December 31,
| 2021 |  | 2020 |  | 2019
U.S. statutory federal rate, expected (benefit) provision | 21 | % |  | 21 | % |  | 21 | %
Increase (reduction) in tax rate from: |  |  |  |  |
Tax impact from foreign operations | — | % |  | 2 | % |  | 7 | %
Noncontrolling interests and equity earnings | 41 | % |  | (3) | % |  | — | %
State and local income taxes, net of federal benefit | 2 | % |  | — | % |  | 2 | %
Other permanent differences, net | 5 | % |  | 4 | % |  | 3 | %
Contingent liability accrual | 1 | % |  | 2 | % |  | 1 | %
U.S. taxes on foreign unremitted earnings | 1 | % |  | (1) | % |  | 3 | %
Change in valuation allowance | (4) | % |  | — | % |  | (10) | %
Research and development credits, net of provision | — | % |  | — | % |  | (5) | %
Non-deductible goodwill and restructuring charges | — | % |  | (130) | % |  | — | %
U.K. statutory rate change | 14 | % |  | — | % |  | — | %
Effective tax rate on income from operations | 81 | % |  | (105) | % |  | 22 | %
The primary components of our deferred tax assets and liabilities were as follows:
| Years ended December 31,
Dollars in millions | 2021 |  | 2020
Deferred tax assets: |  |  |
Employee compensation and benefits | $ | 88 |  |  | $ | 149 |
Foreign tax credit carryforwards | 200 |  |  | 243 |
Loss carryforwards | 111 |  |  | 105 |
Other credit carryforwards | 27 |  |  | 31 |
Insurance accruals | 10 |  |  | 8 |
Allowance for bad debt | 4 |  |  | 4 |
Lease obligation and accrued liabilities | 82 |  |  | 82 |
Contract liabilities | 35 |  |  | 7 |
Other | 56 |  |  | 67 |
Total gross deferred tax assets | 613 |  |  | 696 |
Valuation allowances | (204) |  |  | (220) |
Net deferred tax assets | 409 |  |  | 476 |
Deferred tax liabilities: |  |  |
Right-of-use assets | (37) |  |  | (37) |
Intangible amortization | (103) |  |  | (80) |
Indefinite-lived intangible amortization | (72) |  |  | (60) |
Other | (41) |  |  | (28) |
Total gross deferred tax liabilities | (253) |  |  | (205) |
Deferred income tax (liabilities) assets, net | $ | 156 |  |  | $ | 271 |
The valuation allowance for deferred tax assets was $204 million and $220 million at December 31, 2021 and 2020, respectively. The net change in the total valuation allowance was a decrease of $16 million in 2021 and an increase of $20 million in 2020. In 2021, KBR saw the benefit of a decrease in our valuation allowance associated with the ability to utilize foreign tax credits, while t he movement in the 2020 balance was mainly driven by a build-up in our state net operating losses. The valuation allowance balance at December 31, 2021 was primarily related to foreign tax credit carryforwards and foreign and state net operating loss carryforwards that, in the judgment of management, are not more likely than not to be realized. In assessing the realizability of deferred tax assets, management considers whether it is more likely than not that some portion or all of the deferred tax assets will not be realized. The ultimate realization of deferred tax assets is dependent on the generation of future taxable income during the periods in which those temporary differences become deductible. Management considers the scheduled reversal of deferred tax liabilities (including the impact of available carryback and carryforward periods), income available from carryback years, projected future taxable income and tax-planning strategies in making this assessment. We believe there is a reasonable possibility that within the next 12 months sufficient positive evidence may become available to allow us to conclude that a significant portion of the valuation allowance will no longer be needed. The release of the valuation allowance could result in a decrease to income tax expense. The timing of any release is dependent upon the potential HomeSafe contract booking. Income related to the U.S. branches totaled $56 million, $68 million and $90 million for the fiscal years 2021, 2020, and 2019, respectively, and is included in the foreign component of income in the notes to the financial statements in our Form 10-K. The total income (loss) related to the U.S., inclusive of branches and exclusive of non-recurring restructuring and impairment charges, totaled $92 million, ($26) million and $221 million for the fiscal years 2021, 2020, and 2019, respectively. We concluded that future taxable income and the reversal of deferred tax liabilities, excluding those associated with indefinite-lived intangible assets, were the only sources of taxable income available in determining the amount of valuation allowance to be recorded against our deferred tax assets. The deferred tax liabilities we relied on are projected to reverse in the same jurisdiction and are of the same character as the temporary differences that gave rise to the deferred tax assets. The deferred tax liabilities are projected to reverse in the same periods as the deferred tax assets and are projected to reverse beginning in fiscal year 2022 through fiscal year 2030. We estimated future taxable income by jurisdiction exclusive of reversing temporary differences and carryforwards and applied our foreign tax credit carryforwards based on the sourcing and character of those estimates and considered any limitations. Our ability to utilize the unreserved foreign tax credit carryforwards is based on our ability to generate income from foreign sources of at least $662 million prior to their expiration whereas our ability to utilize other net deferred tax assets exclusive of those associated with indefinite-lived intangible assets is based on our ability to generate U.S. forecasted taxable income of at least $610 million. While our current projections of taxable income exceed these amounts, changes in our forecasted taxable income in the applicable taxing jurisdictions within the carryforward periods could affect the ultimate realization of deferred tax assets and our valuation allowance. The net deferred tax balance by major jurisdiction after valuation allowance as of December 31, 2021 was as follows:
Dollars in millions | Net Gross Deferred Asset (Liability) |  | Valuation Allowance |  | Deferred Asset (Liability), net
United States | $ | 362 |  |  | $ | (166) |  |  | $ | 196 |
United Kingdom | (61) |  |  | — |  |  | (61) |
Australia | 11 |  |  | — |  |  | 11 |
Canada | 22 |  |  | (21) |  |  | 1 |
Other | 26 |  |  | (17) |  |  | 9 |
Total | $ | 360 |  |  | $ | (204) |  |  | $ | 156 |
At December 31, 2021, the amount of gross tax attributes available prior to the offset with related uncertain tax positions were as follows:
Dollars in millions | December 31, 2021 |  | Expiration
Foreign tax credit carryforwards | $ | 200 |  |  | 2022-2029
Foreign net operating loss carryforwards | $ | 129 |  |  | 2022-2041
Foreign net operating loss carryforwards | $ | 41 |  |  | Indefinite
State net operating loss carryforwards | $ | 1,388 |  |  | Various
As a result of the enactment of the U.S. Tax Cuts and Jobs Act in December 2017, substantially all of our previously untaxed accumulated and current E&P of certain of our foreign subsidiaries were subject to U.S. tax. Repatriations of these foreign earnings will not be subject to additional U.S. tax but may incur withholding and/or state taxes. Although we have provided for taxes on our previously untaxed accumulated and current E&P of certain of our foreign subsidiaries pursuant to the Tax Act, we consider our future U.S. and non-U.S. cash needs such as 1) our anticipated foreign working capital requirements, including funding of our U.K. pension plan, 2) the expected growth opportunities across all geographical markets and 3) our plans to invest in strategic growth opportunities that may include acquisitions around the world. As of December 31, 2021, the cumulative amount of permanently reinvested foreign earnings is $2.3 billion. With the enactment of the Tax Act, these previously unremitted earnings have now been subject to U.S. tax. However, these undistributed earnings could be subject to additional taxes (withholding and/or state taxes) if remitted, or deemed remitted, as a dividend. A reconciliation of the beginning and ending amount of total unrecognized tax benefits is as follows:
Dollars in millions | 2021 |  | 2020 |  | 2019
Balance at January 1, | $ | 96 |  |  | $ | 97 |  |  | $ | 90 |
Increases related to current year tax positions | — |  |  | 1 |  |  | 2 |
Increases related to prior year tax positions | — |  |  | 6 |  |  | 7 |
Decreases related to prior year tax positions | (4) |  |  | (7) |  |  | — |
Settlements | — |  |  | — |  |  | — |
Lapse of statute of limitations | (2) |  |  | (3) |  |  | (1) |
Other, primarily due to exchange rate fluctuations affecting non-U.S. tax positions | (1) |  |  | 2 |  |  | (1) |
Balance at December 31, | $ | 89 |  |  | $ | 96 |  |  | $ | 97 |
The total amount of unrecognized tax benefits that, if recognized, would affect our effective tax rate was approximately $75 million as of December 31, 2021. The difference between this amount and the amounts reflected in the tabular reconciliation above relates primarily to deferred income tax benefits on uncertain tax positions. In the next twelve months, it is reasonably possible that our uncertain tax positions could change by approximately $21 million due to settlements with tax authorities and the expirations of statutes of limitations. We recognize accrued interest and penalties related to uncertain tax positions in income tax expense in our consolidated statements of operations. Our accrual for interest and penalties was $31 million and $29 million as of December 31, 2021 and 2020, respectively. During the years ended December 31, 2021, 2020 and 2019 we recognized net interest and penalty charges of $1 million, $4 million and $3 million related to uncertain tax positions. KBR is the parent of a group of domestic companies that are members of a U.S. consolidated federal income tax return. We also file income tax returns in various states and foreign jurisdictions. With few exceptions, we are no longer subject to examination by tax authorities for U.S. federal or state and local income tax for years before 2007. KBR is subject to a tax sharing agreement primarily covering periods prior to the April 2007 separation from Halliburton. The tax sharing agreement provides, in part, that KBR will be responsible for any audit settlements directly attributable to our business activity for periods prior to our separation from our former parent. As of December 31, 2021 and 2020, we have recorded $5 million in other liabilities on our consolidated balance sheets for tax related items under the tax sharing agreement. The balance is not due until receipt by KBR of a future foreign tax credit refund claim filed with the IRS.

X
- References No definition available. + Details
Name: | us-gaap_IncomeTaxDisclosureAbstract
Namespace Prefix: | us-gaap_
Data Type: | xbrli:stringItemType
Balance Type: | na
Period Type: | duration

X
- Definition The entire disclosure for income taxes. Disclosures may include net deferred tax liability or asset recognized in an enterprise's statement of financial position, net change during the year in the total valuation allowance, approximate tax effect of each type of temporary difference and carryforward that gives rise to a significant portion of deferred tax liabilities and deferred tax assets, utilization of a tax carryback, and tax uncertainties information. + References Reference 1: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 740 -SubTopic 10 -Section 50 -Paragraph 21 -URI http://asc.fasb.org/extlink&oid=121826272&loc=d3e32857-109319 Reference 2: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 740 -SubTopic 10 -Section S99 -Paragraph 2 -Subparagraph (SAB Topic 11.C) -URI http://asc.fasb.org/extlink&oid=122134291&loc=d3e330215-122817 Reference 3: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 740 -SubTopic 10 -Section 50 -Paragraph 17 -Subparagraph (b) -URI http://asc.fasb.org/extlink&oid=121826272&loc=d3e32809-109319 Reference 4: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 740 -SubTopic 10 -Section S99 -Paragraph 1 -Subparagraph (SAB TOPIC 6.I.5.Q1) -URI http://asc.fasb.org/extlink&oid=122134291&loc=d3e330036-122817 Reference 5: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 740 -SubTopic 10 -Section 50 -Paragraph 14 -URI http://asc.fasb.org/extlink&oid=121826272&loc=d3e32705-109319 Reference 6: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 740 -SubTopic 270 -Section 50 -Paragraph 1 -URI http://asc.fasb.org/extlink&oid=6424409&loc=d3e44925-109338 Reference 7: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 740 -URI http://asc.fasb.org/topic&trid=2144680 Reference 8: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 740 -SubTopic 30 -Section 50 -Paragraph 2 -Subparagraph (a) -URI http://asc.fasb.org/extlink&oid=6424122&loc=d3e41874-109331 Reference 9: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 235 -SubTopic 10 -Section S99 -Paragraph 1 -Subparagraph (SX 210.4-08(h)(2)) -URI http://asc.fasb.org/extlink&oid=120395691&loc=d3e23780-122690 + Details
Name: | us-gaap_IncomeTaxDisclosureTextBlock
Namespace Prefix: | us-gaap_
Data Type: | dtr-types:textBlockItemType
Balance Type: | na
Period Type: | duration