KBR, INC.

Previous wording

A continuing resolution funding measure has been enacted to finance all U.S. government activities through September 30, 2025, the remainder of the U.S. government's 2025 fiscal year. Under the continuing resolution, partial-year funding at amounts consistent with appropriated levels for fiscal year 2024 are available, subject to certain restrictions, but new spending initiatives are not authorized. Uncertainty continues to exist regarding the 2026 fiscal year budget and the impacts that the new legislative and executive branch will have on the next fiscal year budget. The Administration published its fiscal year 2026 budget request in June 2025. The budget request includes $848 billion in the base budget (discretionary) funding and $113 billion in reconciliation (mandatory) funding. The reconciliation bill H.R. 1 passed the Senate and House, and was signed by the President on July 4, 2025. The bill provides more than $150 billion in mandatory funding (inclusive of the $113 billion) for DoD available until September 30, 2029. We anticipate the federal budget will continue to be subject to debate and compromise shaped by, among other things, the new Administration and Congress, efficiency initiatives by the Department of Government Efficiency, the global security environment, inflationary pressures including tariffs and macroeconomic conditions. Thus far, the directives of the administration and actions of the DOGE have resulted in federal government staff reductions and hiring freezes and may result in delays in contract awards.

Current wording

Uncertainty continues to exist regarding the 2026 fiscal year budget and the impacts that the new legislative and executive branch will have on the final 2026 fiscal year budget. The Administration published its fiscal year 2026 budget request in June 2025. The budget request includes $848 billion in the base budget (discretionary) funding and $113 billion in reconciliation (mandatory) funding. The reconciliation bill H.R. 1 passed the Senate and House, and was signed by the President on July 4, 2025. The bill provides more than $150 billion in mandatory funding (inclusive of the $113 billion) for DoD available until September 30, 2029. We anticipate the federal budget will continue to be subject to debate and compromise shaped by, among other things, the new Administration and Congress, efficiency initiatives by the Department of Government Efficiency ("DOGE"), the global security environment, inflationary pressures including tariffs and macroeconomic conditions. Thus far, the directives of the administration and actions of the DOGE have resulted in federal government staff reductions and hiring freezes and may result in delays in contract awards.

Previous wording

Gross profit. The increase in overall gross profit of $20 million, or 7%, was primarily driven by items increasing revenues discussed above.

Current wording

Gross profit. The decrease in overall gross profit of $20 million, or 7%, was primarily driven by items decreasing revenues discussed above.

Previous wording

Equity in earnings of unconsolidated affiliates. Equity in earnings of unconsolidated affiliates increased by $11 million to $51 million in earnings for the three months ended July 4, 2025, compared to $40 million in earnings for the three months ended June 28, 2024. The increase is primarily attributed to equity in earnings from services on an LNG project within our STS segment.

Current wording

Equity in earnings of unconsolidated affiliates. Equity in earnings of unconsolidated affiliates increased by $43 million, or 159%, to $70 million in earnings for the three months ended October 3, 2025, compared to $27 million in earnings for the three months ended September 27, 2024. The increase is primarily attributed to equity in earnings from services on an LNG project within our STS segment.

Previous wording

Selling, general and administrative expenses. Selling, general and administrative expenses in the six months ended July 4, 2025 were $36 million higher, a 14% increase compared to the six months ended June 28, 2024, which was primarily driven by additional expenses incurred to support the growth in both our MTS and STS business segments.

Current wording

Selling, general and administrative expenses. Selling, general and administrative expenses in the three months ended October 3, 2025 were $9 million higher, a 6% increase compared to the three months ended September 27, 2024, which was primarily driven by additional expenses incurred related to the implementation of a new enterprise resource planning system.

Previous wording

Interest expense. The increase in interest expense was primarily driven by increased outstanding debt principal from the three months ended June 28, 2024 to the three months ended July 4, 2025.

Current wording

Interest expense. The increase in interest expense was primarily driven by increased average outstanding debt principal from the three months ended September 27, 2024 to the three months ended October 3, 2025.

Previous wording

Provision for income taxes. The provision for income taxes for income from continuing operations for the three months ended July 4, 2025 and June 28, 2024 reflects a 27% tax rate. The effective tax rate of 27% for the three months ended July 4, 2025 and June 28, 2024, as compared to the U.S. statutory rate of 21%, was primarily affected by the rate differential on our foreign earnings and the impact of state and local taxes in the U.S. See Note 9 "Income Taxes" to our condensed consolidated financial statements for further discussion on income taxes.

Current wording

Provision for income taxes. The provision for income taxes for income from continuing operations for the three months ended October 3, 2025 and September 27, 2024 reflects a 22% tax rate and 24% tax rate, respectively. The effective tax rate of 22% for the three months ended October 3, 2025, as compared to the U.S. statutory rate of 21%, was affected by the rate differential on our foreign earnings and the impact of state and local taxes in the U.S, offset by the resolution reached with tax authorities. See Note 9 "Income Taxes" to our condensed consolidated financial statements for further discussion on this tax resolution. The effective tax rate of 24% for the three months ended September 27, 2024, as compared to the U.S. statutory rate of 21%, was primarily affected by the rate differential on our foreign earnings and the impact of state and local taxes in the U.S.

Previous wording

Net income (loss) from discontinued operations, net of tax. Net income (loss) from discontinued operations, net of tax, was $(54) million and $1 million during the six months ended July 4, 2025 and June 28, 2024, respectively, due to the disposal of HomeSafe.

Current wording

Net loss from discontinued operations, net of tax. Net loss from discontinued operations, net of tax, was $1 million during the three months ended October 3, 2025 due to the disposal of HomeSafe. No similar net loss from discontinued operations, net of tax, was recognized during the three months ended September 27, 2024.

Previous wording

STS revenues increased by $9 million, or 2%, to $540 million in the three months ended July 4, 2025 compared to $531 million in the three months ended June 28, 2024. The increase in revenue is primarily from engineering and professional services.

Current wording

STS revenues decreased by $6 million, or 1%, to $525 million in the three months ended October 3, 2025 compared to $531 million in the three months ended September 27, 2024. The decrease in revenue is driven by a reduction in services related to the completion of projects.

Previous wording

STS operating income increased by $17 million, or 16%, to $123 million in the three months ended July 4, 2025 compared to $106 million in the three months ended June 28, 2024. The increase was primarily driven by items discussed above and increased equity in earnings from services on an LNG project.

Current wording

STS operating income increased by $14 million, or 13%, to $118 million in the three months ended October 3, 2025 compared to $104 million in the three months ended September 27, 2024. The increase was primarily driven by increased equity in earnings from services on an LNG project, offset by increased selling, general and administrative expenses incurred related to the implementation of a new enterprise resource planning system and the items discussed above.

Previous wording

The information below is an analysis of our consolidated results for the six months ended July 4, 2025 compared to the six months ended June 28, 2024. See Results of Operations by Business Segment below for additional information describing the performance of each of our reportable segments.

Current wording

The information below is an analysis of our consolidated results for the nine months ended October 3, 2025 compared to the nine months ended September 27, 2024. See Results of Operations by Business Segment below for additional information describing the performance of each of our reportable segments.

Previous wording

Revenues. The increase in overall revenue of $105 million, or 6%, to $1,952 million for the three months ended July 4, 2025 is primarily due to the acquisition of LinQuest in our MTS business and increased revenues from engineering and professional services in our STS business.

Current wording

Revenues. The increase in overall revenue of $299 million, or 5%, to $5,901 million for the nine months ended October 3, 2025 is due to increases in defense and intel programs associated with the acquisition of LinQuest in our MTS business and increased revenues from engineering and professional services in our STS segment, offset by decreases in revenue due to reduced activity within the European command in our MTS segment.

Previous wording

Gross profit. The increase in overall gross profit of $72 million, or 14%, was primarily driven by items increasing revenues discussed above.

Current wording

Gross profit. The increase in overall gross profit of $52 million, or 6%, was primarily driven by items increasing revenues discussed above.

Previous wording

Equity in earnings of unconsolidated affiliates. Equity in earnings of unconsolidated affiliates increased by $23 million to $93 million in earnings for the six months ended July 4, 2025, compared to $70 million in earnings for the six months ended June 28, 2024. The increase is primarily attributed to equity in earnings from services on an LNG project within our STS segment.

Current wording

Equity in earnings of unconsolidated affiliates. Equity in earnings of unconsolidated affiliates increased by $66 million, or 68%, to $163 million in earnings for the nine months ended October 3, 2025, compared to $97 million in earnings for the nine months ended September 27, 2024. The increase is primarily attributed to equity in earnings from services on an LNG project within our STS segment.

Previous wording

Selling, general and administrative expenses. Selling, general and administrative expenses in the three months ended July 4, 2025 were $17 million higher, a 13% increase compared to the three months ended June 28, 2024, which was primarily driven by additional expenses incurred to support the growth in both our MTS and STS business segments.

Current wording

Selling, general and administrative expenses. Selling, general and administrative expenses in the nine months ended October 3, 2025 were $45 million higher, a 12% increase compared to the nine months ended September 27, 2024, which was primarily driven by additional expenses incurred to support the growth in both our MTS and STS business segments and expenses incurred related to the implementation of a new enterprise resource planning system.

Previous wording

Interest expense. The increase in interest expense was primarily driven by increased outstanding debt principal from the six months ended June 28, 2024 to the six months ended July 4, 2025.

Current wording

Interest expense. The increase in interest expense was primarily driven by increased outstanding average debt principal from the nine months ended September 27, 2024 to the nine months ended October 3, 2025.

Previous wording

Provision for income taxes. The provision for income taxes for income from continuing operations for the six months ended July 4, 2025 and June 28, 2024 reflects a 27% tax rate. The effective tax rate of 27%, as compared to the U.S. statutory rate of 21%, for the six months ended July 4, 2025 and June 28, 2024, was primarily affected by the rate differential on our foreign earnings and the impact of state and local taxes in the U.S. See Note 9 "Income Taxes" to our condensed consolidated financial statements for further discussion on income taxes.

Current wording

Provision for income taxes. The provision for income taxes for income from continuing operations for the nine months ended October 3, 2025 and September 27, 2024 reflects a 25% tax rate and a 26% tax rate, respectively. The effective tax rate of 25% for the nine months ended October 3, 2025, as compared to the U.S. statutory rate of 21%, was affected by the rate differential on our foreign earnings and the impact of state and local taxes in the U.S, offset by the resolution reached with tax authorities. See Note 9 "Income Taxes" to our condensed consolidated financial statements for further discussion on this tax resolution. The effective tax rate of 26% for the nine months ended September 27, 2024, as compared to the U.S. statutory rate of 21%, was primarily affected by the rate differential on our foreign earnings and the impact of state and local taxes in the U.S.

Previous wording

Net income (loss) from discontinued operations, net of tax. Net income (loss) from discontinued operations, net of tax, was $(48) million and $1 million during the three months ended July 4, 2025 and June 28, 2024, respectively, due to the disposal of HomeSafe.

Current wording

Net income (loss) from discontinued operations, net of tax. Net income (loss) from discontinued operations, net of tax, was $(55) million and $1 million during the nine months ended October 3, 2025 and September 27, 2024, respectively, due to the disposal of HomeSafe.

Previous wording

Net income (loss) attributable to noncontrolling interests included in discontinued operations. Net income (loss) attributable to noncontrolling interests included in discontinued operations was $(18) million and $1 million during the six months ended July 4, 2025 and June 28, 2024, due to the disposal of HomeSafe.

Current wording

Net income (loss) attributable to noncontrolling interests included in discontinued operations. Net income (loss) attributable to noncontrolling interests included in discontinued operations was $(18) million and $1 million during the nine months ended October 3, 2025 and September 27, 2024, respectively, due to the disposal of HomeSafe.

Previous wording

MTS revenues increased by $239 million, or 9%, to $2,880 million for the six months ended July 4, 2025, compared to $2,641 million for the six months ended June 28, 2024. The increase in revenue is primarily due to the acquisition of LinQuest.

Current wording

MTS revenues increased by $239 million, or 6%, to $4,286 million for the nine months ended October 3, 2025, compared to $4,047 million for the nine months ended September 27, 2024. The increase in revenue is primarily due to increases in defense and intel programs associated with the acquisition of LinQuest, offset by decreases in revenue due to reduced activity within the European command. On August 30, 2024, we acquired LinQuest.

Previous wording

MTS operating income increased by $12 million, or 5%, to $231 million for the six months ended July 4, 2025, compared to $219 million for the six months ended June 28, 2024. The increase in operating income was primarily driven by the growth associated with LinQuest. This growth was offset by a $6 million gain related to the sale of our investment interest in a joint venture during the six months ended June 28, 2024 that did not recur during the six months ended July 4, 2025.

Current wording

MTS operating income increased by $12 million, or 4%, to $345 million for the nine months ended October 3, 2025, compared to $333 million for the nine months ended September 27, 2024. The increase in operating income was primarily driven by the growth associated with LinQuest. The increase was offset by a $6 million gain related to the sale of our investment interest in a joint venture during the nine months ended September 27, 2024 that did not recur during the nine months ended October 3, 2025.

Previous wording

STS revenues increased by $66 million, or 6%, to $1,090 million for the six months ended July 4, 2025, compared to $1,024 million for the six months ended June 28, 2024. This increase is primarily driven by increased revenues from engineering and professional services.

Current wording

STS revenues increased by $60 million, or 4%, to $1,615 million for the nine months ended October 3, 2025, compared to $1,555 million for the nine months ended September 27, 2024. This increase is primarily driven by increased revenues from engineering and professional services.

Previous wording

STS operating income increased by $41 million, or 20%, to $242 million for the six months ended July 4, 2025, compared to $201 million for the six months ended June 28, 2024. The increase in operating income is primarily due to the items discussed above and increased equity in earnings from services on an LNG project.

Current wording

STS operating income increased by $55 million, or 18%, to $360 million for the nine months ended October 3, 2025, compared to $305 million for the nine months ended September 27, 2024. The increase in operating income is primarily due to increased equity in earnings from services on an LNG project and the items discussed above, offset by increased selling, general and administrative expenses related to growth in the business and expenses incurred related to the implementation of a new enterprise resource planning system.

Previous wording

We estimate that as of July 4, 2025, 34% of our backlog will be executed within one year. Of this amount, we estimate that 88% will be recognized in revenues on our condensed consolidated statement of operations and 12% will be recorded by our unconsolidated joint ventures. As of July 4, 2025, $175 million of our backlog relates to active contracts that are in a loss position.

Current wording

We estimate that as of October 3, 2025, 35% of our backlog will be executed within one year. Of this amount, we estimate that 89% will be recognized in revenues on our condensed consolidated statement of operations and 11% will be recorded by our unconsolidated joint ventures. As of October 3, 2025, $141 million of our backlog relates to active contracts that are in a loss position.

Previous wording

As of July 4, 2025, 14% of our backlog was attributable to fixed-price contracts, 41% was attributable to PFIs, 27% was attributable to cost-reimbursable contracts and 18% was attributable to time-and-materials contracts. For contracts that contain fixed-price, cost-reimbursable and time-and-materials components, we classify the individual components as either fixed-price, cost-reimbursable or time-and-materials according to the composition of the contract; however, for smaller contracts, we characterize the entire contract based on the predominant component. As of July 4, 2025, $9.5 billionof our MTS backlog was currently funded by our customers.

Current wording

As of October 3, 2025, 15% of our backlog was attributable to fixed-price contracts, 39% was attributable to PFIs, 28% was attributable to cost-reimbursable contracts and 18% was attributable to time-and-materials contracts. For contracts that contain fixed-price, cost-reimbursable and time-and-materials components, we classify the individual components as either fixed-price, cost-reimbursable or time-and-materials according to the composition of the contract; however, for smaller contracts, we characterize the entire contract based on the predominant component. As of October 3, 2025, $9.5 billionof our MTS backlog was currently funded by our customers.

Previous wording

As of July 4, 2025, we had approximately $4.9 billion of priced option periods not yet exercised by the customer for U.S. government contracts that are not included in the backlog amounts presented above.

Current wording

As of October 3, 2025, we had approximately $6.2 billion of priced option periods not yet exercised by the customer for U.S. government contracts that are not included in the backlog amounts presented above.

Previous wording

The difference between backlog of $16.7 billion and the remaining performance obligations as defined by ASC 606 of$13.1 billion is primarily due to our proportionate share of backlog related to unconsolidated joint ventures which is not included in our remaining performance obligations. See Note 3 "Revenue" to our condensed consolidated financial statements for discussion of the remaining performance obligations.

Current wording

The difference between backlog of $17.1 billion and the remaining performance obligations as defined by ASC 606 of$13.5 billion is primarily due to our proportionate share of backlog related to unconsolidated joint ventures which is not included in our remaining performance obligations. See Note 3 "Revenue" to our condensed consolidated financial statements for discussion of the remaining performance obligations.

Previous wording

Cash and cash equivalents totaled $403 million at July 4, 2025, and $342 million at January 3, 2025, and consisted of the following:

Current wording

Cash and cash equivalents totaled $539 million at October 3, 2025, and $342 million at January 3, 2025, and consisted of the following:

Previous wording

Our cash balances are held in numerous accounts throughout the world to fund our global activities, including acquisitions, joint ventures and other business partnerships. Domestic cash relates to cash balances held by U.S. entities and is largely used to support project activities of those businesses as well as general corporate needs such as the payment of dividends to shareholders, repayment of debt and potential repurchases of our outstanding common stock. Additionally, domestic cash and cash equivalents includes $11 million and $12 million held by our wholly owned captive insurance company as of July 4, 2025 and January 3, 2025, respectively, which is generally not available to KBR to support its other operations.

Current wording

Our cash balances are held in numerous accounts throughout the world to fund our global activities, including acquisitions, joint ventures and other business partnerships. Domestic cash relates to cash balances held by U.S. entities and is largely used to support project activities of those businesses as well as general corporate needs such as the payment of dividends to shareholders, repayment of debt and potential repurchases of our outstanding common stock. Additionally, domestic cash and cash equivalents includes $16 million and $12 million held by our wholly owned captive insurance company as of October 3, 2025 and January 3, 2025, respectively, which is generally not available to KBR to support its other operations.

Previous wording

Operating Activities - continuing operations. Cash provided by operations totaled $308 million and $256 million for the six months ended July 4, 2025 and June 28, 2024, respectively, as compared to net income from continuing operations of $227 million and $200 million for the six months ended July 4, 2025 and June 28, 2024, respectively. Cash flows from operating activities result primarily from earnings and are affected by changes in operating assets and liabilities, which consist primarily of working capital balances for projects. Working capital levels vary from year to year and are primarily affected by our volume of work. These levels are also impacted by the mix, stage of completion and commercial terms of projects. Working capital requirements also vary by project depending on the type of client and location throughout the world.

Current wording

Operating Activities - continuing operations. Cash provided by operations totaled $506 million and $409 million for the nine months ended October 3, 2025 and September 27, 2024, respectively, as compared to net income from continuing operations of $345 million and $302 million for the nine months ended October 3, 2025 and September 27, 2024, respectively. Cash flows from operating activities result primarily from earnings and are affected by changes in operating assets and liabilities, which consist primarily of working capital balances for projects. Working capital levels vary from year to year and are primarily affected by our volume of work. These levels are also impacted by the mix, stage of completion and commercial terms of projects. Working capital requirements also vary by project depending on the type of client and location throughout the world.

Previous wording

During the six months ended July 4, 2025, cash flows increased primarily due to the resolution of an outstanding unapproved change order within our Mission Technology Solutions segment. Additionally, there were increases in distributions of earnings from unconsolidated affiliates and decreases in pension funding that resulted in additional operating cash flows. These increases were offset primarily by changes in the primary components of our working capital. The primary components of our working capital accounts are accounts receivable, contract assets, accounts payable and contract liabilities. These components are impacted by the size and changes in the mix of our cost-reimbursable and time-and-materials projects versus fixed price projects, and as a result, fluctuations in these components are not uncommon in our business.

Current wording

During the nine months ended October 3, 2025, cash flows increased primarily due to the resolution of an outstanding unapproved change order within our Mission Technology Solutions segment. Additionally, there were increases in distributions of earnings from unconsolidated affiliates and decreases in pension funding that resulted in additional operating cash flows. These increases were offset primarily by changes in the primary components of our working capital. The primary components of our working capital accounts are accounts receivable, contract assets, accounts payable and contract liabilities. These components are impacted by the size and changes in the mix of our cost-reimbursable and time-and-materials projects versus fixed price projects, and as a result, fluctuations in these components are not uncommon in our business.

Previous wording

Investing Activities - continuing operations. Cash used in investing activities totaled $24 million for the six months ended July 4, 2025 primarily due to $16 million of capital expenditures and $11 million related to the acquisition of Infrastar Limited. This was offset by a return of equity method investment of $3 million associated with a joint venture in our STS segment.

Current wording

Investing Activities - continuing operations. Cash provided by investing activities totaled $47 million for the nine months ended October 3, 2025 primarily due to a return of equity method investment from BRIS of $82 million. This was offset by $24 million of capital expenditures and $13 million related to the acquisition of Infrastar Limited. See Note 6 "Equity Method Investments and Variable Interest Entities" to our condensed consolidated financial statements for further discussion on the return of equity method investment from BRIS.

Previous wording

Cash provided by investing activities totaled $19 million for the six months ended June 28, 2024. In 2024, we received a return of investment from JKC of approximately $36 million related to our proportionate share of a tax refund. Additionally, we received $6 million from the sale of our investment interest in a joint venture within our MTS segment. This was offset by $24 million in capital expenditures.

Current wording

Cash used in investing activities totaled $733 million for the nine months ended September 27, 2024 and was primarily related to the acquisition of LinQuest, net of cash acquired of $739 million, capital expenditures of $36 million and funding in other investment of $5 million. This was offset by a return of equity method investment from JKC of approximately $36 million related to our proportionate share of a tax refund. Additionally, we received $6 million from the sale of our investment interest in a joint venture within our MTS segment.

Previous wording

Financing Activities - continuing operations. Cash used in financing activities totaled $219 million for the six months ended July 4, 2025. The primary uses of cash in financing activities were $323 million in payments on the Revolver, $13 million in payments on on our Term Loan A, $5 million in payments on our Term Loan B, $198 million for the repurchase of common stock under our share repurchase program, $6 million for the repurchase of common stock under our "withhold to cover" program and $41 million of dividend payments to common shareholders. These decreases were offset by $373 million in borrowings on our Revolver.

Current wording

Financing Activities - continuing operations. Cash used in financing activities totaled $350 million for the nine months ended October 3, 2025. The primary uses of cash in financing activities were $505 million in payments on the Revolver, $20 million in payments on our Term Loan A, $7 million in payments on our Term Loan B, $298 million for the repurchase of common stock under our share repurchase program, $6 million for the repurchase of common stock under our "withhold to cover" program and $63 million of dividend payments to common shareholders. These decreases were offset by $555 million in borrowings on our Revolver.

Previous wording

Cash used in financing activities totaled $158 million for the six months ended June 28, 2024. The primary uses of cash in financing activities were $81 million of principal payments related to our Senior Credit Facility, $13 million in payments on the Revolver, $146 million for the repurchase of common stock under our share repurchase program and $12 million for the repurchase of common stock under our "withhold to cover" program. Cash used in financing activities also included $33 million payment for the settlement of warrants, $39 million of dividend payments to common shareholders and $16 million in debt issuance costs associated with Amendment No. 11 and No. 12 to our Credit Agreement for our Senior Credit Facility. These decreases were offset by $168 million in borrowings on our Revolver and $24 million in borrowings associated with Amendment No. 11 to our Credit Agreement.

Current wording

Cash provided by financing activities totaled $475 million for the nine months ended September 27, 2024 and was primarily related to $343 million in borrowings on our Revolver and $574 million in borrowings associated with Amendment No. 11 and No. 13 to our Credit Agreement. These increases were offset by $81 million of principal payments related to our Senior Credit Facility, $63 million in payments on the Revolver, $154 million for the repurchase of common stock under our share repurchase program and $13 million for the repurchase of common stock under our "withhold to cover" program. Cash used in financing activities also included $33 million payment for the settlement of warrants, $59 million of dividend payments to common shareholders, $18 million in debt issuance costs associated with Amendment No. 11, No. 12 and No. 13 to our Credit Agreement for our Senior Credit Facility and $10 million for the acquisition of a noncontrolling interest.

Previous wording

Cash flows from discontinued operations. Cash flows from discontinued operations are associated with the disposal of HomeSafe. Cash used in operations totaled $27 million for the six months ended July 4, 2025 and cash provided by operations totaled $5 million for the six months ended June 28, 2024. Changes in HomeSafe's working capital accounts were the primary components of operating cash flows for the six months ended July 4, 2025 and June 28, 2024. Cash used in investing activities totaled $12 million and $11 million for the six months ended July 4, 2025 and June 28, 2024, respectively, which is related to capital expenditures. Cash provided by financing activities totaled $8 million for the six months ended July 4, 2025 due to investments from the noncontrolling interest partner. See Note 17 "Discontinued Operations" for additional information.

Current wording

Cash flows from discontinued operations. Cash flows from discontinued operations are associated with the disposal of HomeSafe. Cash used in operations totaled $31 million for the nine months ended October 3, 2025 and cash provided by operations totaled $13 million for the nine months ended September 27, 2024. Changes in HomeSafe's working capital accounts were the primary components of operating cash flows for the nine months ended October 3, 2025 and September 27, 2024. Cash used in investing activities totaled $12 million and $18 million for the nine months ended October 3, 2025 and September 27, 2024, respectively, which is related to capital expenditures. Cash provided by financing activities totaled $10 million for the nine months ended October 3, 2025 due to investments from the noncontrolling interest partner. See Note 17 "Discontinued Operations" for additional information.

Previous wording

U.K. pension obligation. We have recognized on our condensed consolidated balance sheets a funding surplus of $115 million (calculated as the difference between the fair value of plan assets and the projected benefit obligation as of July 4, 2025) for our frozen U.K. defined benefit pension plan. The funding requirements for our U.K. pension plan are determined based on the U.K. Pensions Act 1995. Annual minimum funding requirements are based on a binding agreement with the Trustee of the U.K. pension plan that is negotiated on a triennial basis. This schedule of contributions will be reviewed by the Trustee and KBR no later than 15 months after the effective date of each actuarial valuation, due every three years. In 2024, the Trustee of the U.K. defined benefit pension plan commenced the triennial actuarial valuation of the plan which was finalized during the three months ended July 4, 2025. At this time, we do not anticipate contributing additional funding to this plan at least until the next triennial valuation occurs. In the future, pension funding may increase or decrease depending on changes in the levels of interest rates, pension plan asset return performance and other factors. A significant increase in our funding requirements for the U.K. pension plan could result in a material adverse impact on our financial position.

Current wording

U.K. pension obligation. We have recognized on our condensed consolidated balance sheets a funding surplus of $126 million (calculated as the difference between the fair value of plan assets and the projected benefit obligation as of October 3, 2025) for our frozen U.K. defined benefit pension plan. The funding requirements for our U.K. pension plan are determined based on the U.K. Pensions Act 1995. Annual minimum funding requirements are based on a binding agreement with the Trustee of the U.K. pension plan that is negotiated on a triennial basis. This schedule of contributions will be reviewed by the Trustee and KBR no later than 15 months after the effective date of each actuarial valuation, due every three years. In 2024, the

Previous wording

As of July 4, 2025, we had a $1 billion committed line of credit on the Revolver under our Senior Credit Facility and $490 million of bilateral and uncommitted lines of credit. As of July 4, 2025, with respect to our Revolver, we had $395 million of outstanding borrowings. We also have $14 million of outstanding letters of credit on our Senior Credit Facility. With respect to our $490 million of bilateral and uncommitted lines of credit, we had utilized $271 million for letters of credit as of July 4, 2025. The total remaining capacity of these committed and uncommitted lines of credit was approximately $810 million as of July 4, 2025, all of which can be used toward issuing letters of credit. Information relating to our letters of credit is described in Note 8 "Debt and Other Credit Facilities" to our condensed consolidated financial statements in Part I, Item 1 of this Quarterly Report on Form 10-Q and the information discussed therein is incorporated by reference into this Part I, Item 2. Other than discussed in this Quarterly Report on Form 10-Q, we have not engaged in any material off-balance sheet financing arrangements through special purpose entities.

Current wording

As of October 3, 2025, we had a $1 billion committed line of credit on the Revolver under our Senior Credit Facility and $489 million of bilateral and uncommitted lines of credit. As of October 3, 2025, with respect to our Revolver, we had $395 million of outstanding borrowings. We also have $14 million of outstanding letters of credit on our Senior Credit Facility. With respect to our $489 million of bilateral and uncommitted lines of credit, we had utilized $266 million for letters of credit as of October 3, 2025. The total remaining capacity of these committed and uncommitted lines of credit was approximately $814 million as of October 3, 2025, all of which can be used toward issuing letters of credit. Information relating to our letters of credit is described in Note 8 "Debt and Other Credit Facilities" to our condensed consolidated financial statements in Part I, Item 1 of this Quarterly Report on Form 10-Q and the information discussed therein is incorporated by reference into this Part I, Item 2. Other than discussed in this Quarterly Report on Form 10-Q, we have not engaged in any material off-balance sheet financing arrangements through special purpose entities.