KBR, INC. Management’s Discussion and Analysis of Financial Condition and Results of Operations (Form 10-Q)

Introduction


The purpose of MD&A is to disclose material changes in our financial condition
since the most recent fiscal year-end and results of operations during the
current fiscal period as compared to the corresponding period of the preceding
fiscal year. The MD&A should be read in conjunction with the condensed
consolidated financial statements, accompanying notes and our 2021 Annual Report
on Form 10-K.

Insight

KBR Inc., a Delaware corporation ("KBR"), delivers science, technology and
engineering solutions to governments and companies around the world. Drawing
from its rich 100-year history and culture of innovation and mission focus, KBR
creates sustainable value by combining deep domain expertise with its full life
cycle capabilities to help clients meet their most pressing challenges. Our
capabilities and offerings include the following:

•Scientific research such as quantum science and computing; health and human
performance; materials science; life science research; and earth sciences;
•Defense systems engineering such as rapid prototyping; test and evaluation;
aerospace acquisition support; systems and platform integration; and sustainment
engineering;
•Operational support such as space domain awareness; C4ISR; human spaceflight
and satellite operations; integrated supply chain and logistics; and military
aviation support;
•Information operations such as cyber analytics and cybersecurity; data
analytics; mission planning systems; virtual/augmented reality and technical
training; and artificial intelligence and machine learning; and
•Technology such as proprietary, sustainability-focused process licensing;
advisory services focused on energy transition; and digitally-enabled asset
optimization solutions.

KBR's strategic growth vectors include:
•Defense modernization;
•Space superiority;
•Health and human performance; and
•Sustainable technology.

Key customers include U.S. DoD agencies such as the U.S. Army, U.S. Navy and
U.S. Air Force, Missile Defense Agency, National Geospatial-Intelligence Agency,
National Reconnaissance Office and other intelligence agencies; U.S. civilian
agencies such as NASA, U.S. Geological Survey and National Oceanic and
Atmospheric Administration; the U.K. Ministry of Defence, London Metropolitan
Police and other U.K. Crown Services; the Royal Australian Air Force, Navy and
Army; other national governments; and a wide range of commercial and industrial
companies.

Our deployment priorities are to fund organic growth, maintain responsible
leverage, maintain an attractive dividend, make strategic, accretive
acquisitions and repurchase shares. Our acquisition thesis is centered around
moving upmarket, expanding capabilities and broadening customer sets across
strategic growth vectors. KBR also develops and prioritizes investment in
technologies that are disruptive, innovative and sustainability- and
safety-focused. These technologies and solutions enable clients to achieve a
cleaner, greener, more energy efficient global future.

On October 20, 2021, we acquired Frazer-Nash Consultancy Limited
("Frazer-Nash"), a leading provider of high-end systems engineering, assurance
and technology advisory services used to solve complex challenges. Frazer-Nash
provides a broad range of professional advisory services across the defense,
renewable energy and critical infrastructure sectors primarily in the U.K. and
Australia. Additional information relating to the Frazer-Nash acquisition is
described in Note 4 to our condensed consolidated financial statements.








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Business environment and trends

Government outlook


On March 15, 2022, President Biden signed into law the $1.5 trillion
Consolidated Appropriations Act 2022, which includes $782 billion in defense
spending, of which $742 billion is for the DoD, and $730 billion for non-defense
discretionary spending representing an increase from the fiscal 2021 budget of
6% and 7%, respectively. The fiscal 2022 U.S. defense spending budget
prioritizes and furthers a national security strategy to confront near peer
threats around the world, enhances the DoD's cybersecurity strategy and cyber
warfare capabilities, increases the priority of military space superiority,
directs innovation to meet long-range emerging threats and continues the
restoration of military readiness. The budget includes several measures to
strengthen emerging technologies including cyber-science and technologies,
artificial intelligence, directed energy, hypersonics and biotechnologies.
Additionally, the fiscal 2022 defense budget includes $13.6 billion for military
and humanitarian support for Ukraine. The non-defense discretionary budget
includes $24 billion, or a 3% increase, in funding for NASA to support the
continuation of scientific research and exploration as well as increased funding
across all agencies to tackle climate change.

On March 28, 2022, President Biden provided his proposed fiscal 2023 budget of
$1.6 trillion, which included $813 billion in defense spending, of which $773
billion is for the DoD, and $785 billion for non-defense discretionary spending
which represents an increase from the fiscal 2022 budget of 4% and 8%,
respectively. The U.S. defense spending budget prioritizes initiatives outlined
in the fiscal 2022 budget in addition to, among other things, increased support
for the U.S. European Command. The non-defense discretionary spending proposal
includes $26 billion, or an 8% increase from the fiscal 2022 budget, in funding
for NASA to support the continuation of scientific research, exploration and
space technology, as well as increased funding across all agencies to address
the climate crisis.

In connection with Operation Allies Welcome ("OAW"), KBR has been engaged by the
U.S. DoD to provide humanitarian support across numerous military bases to those
awaiting resettlement. Such support includes temporary housing, food service,
medical care and other services. We substantially completed this non-recurring
OAW support in the first quarter of 2022.

Internationally, our Government Solutions work is performed primarily for the
U.K. Ministry of Defence and the Australian Department of Defence. The U.K.
government has committed to a 14% increase in defense spending over the coming
four years. Recognizing the importance of strong defense and the role the U.K.
plays across the globe, the U.K. has prioritized investment in military research
and investment in key areas to advance and develop capabilities around
artificial intelligence, cyber security and space superiority. The Australian
government continues to invest in defense spending, with particular focus on
enhancing regional security, modernizing defense capabilities, strengthening
cyber defenses and promoting broader economic stability.

In November 2021, we announced that HomeSafe Alliance LLC ("HomeSafe"), a KBR
led joint venture with Tier One Relocation, was awarded the global household
goods contract by U.S. Transportation Command. The contract ceiling value is $20
billion with a potential 9-year term, inclusive of all options periods. HomeSafe
is expected to be the exclusive household goods move management service provider
for the U.S. Armed Forces, U.S. DoD civilians and their families. Under this
contract, HomeSafe plans to modernize and infuse technology to improve the
domestic and international relocation experience for all military personnel and
their families. The award of this program is being protested by the
non-prevailing parties at the Court of Federal Claims and the transition has
been placed on hold.

With defense and civilian budgets driven in part by political instability, military conflict, aging platforms and infrastructure, and the need for technological advancements, we expect continued opportunities to deliver solutions and critical work technologies aligned with the critical priorities of our customers and our country.











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Sustainable Technology Outlook


Long-range commercial market fundamentals are supported by global population
growth, expanding global development and an acceleration of demand for energy
transition and renewable energy sources. Clients continue to prioritize
investment in digital solutions to optimize operations, increase end-product
flexibility and energy efficiency, reduce unplanned downtime and minimize
environmental footprint. As companies continue to commit to near-term carbon
neutrality and longer-range net-zero carbon emissions, we expect spending to
continue in areas such as decarbonization; carbon capture, utilization and
sequestration; biofuels; and circular economy. Further, leading companies across
the world are proactively evaluating clean energy alternatives, including
hydrogen and green ammonia which complements KBR's proprietary process
technology and capabilities.

We expect climate change and energy transition to continue to be areas of
priority and investment as many countries, including the U.S., look to boost
their economies and invest in a cleaner future. In advance of the Conference of
the Parties 26 meeting in Scotland, the White House released details on its
strategy to achieve greenhouse gas emission reduction targets as part of their
agenda. On November 15, 2021, President Biden signed the bi-partisan
Infrastructure Investment and Jobs Act bill into law which includes climate
provisions focused on transportation and resiliency.

In response to Russia's military invasion of Ukraine, we announced our intent to
exit commercial projects in Russia in a responsible manner. We expect that the
reconfiguration of global supply and demand stemming from expanding sanctions on
Russia will result in near and mid-term investments to enable energy, chemical
and food production security globally.

Our business

KBR’s business is organized into two main and one non-main business segments as follows:


Core business segments
• Government Solutions
• Sustainable Technology Solutions

Non-core business segment
• Other

See additional information on our business segments in Note 2 to our condensed consolidated financial statements.

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Operating results

Three months completed March 31, 2022 compared to the three months ended March 31, 2021


The information below is an analysis of our consolidated results for the three
months ended March 31, 2022 compared to the three months ended March 31, 2021.
See Results of Operations by Business Segment below for additional information
describing the performance of each of our reportable segments.

Consolidated Results                                                     

Three months completed March, 31st,

                                                                                                      2022 vs. 2021
Dollars in millions                                    2022               2021 (1)                $                    %
Revenues                                        $     1,714              $  1,461          $        253                  17  %
Cost of revenues                                $    (1,518)             $ (1,293)         $        225                  17  %
Gross profit                                    $       196              $    168          $         28                  17  %
Equity in earnings (losses) of unconsolidated
affiliates                                      $      (118)             $     12          $       (130)                   n/m
Selling, general and administrative expenses    $      (107)             $    (89)         $         18                  20  %
Acquisition and integration related costs       $        (1)             $     (1)         $          -                    n/m

Restructuring charges and asset impairments     $        (1)             $      -          $          1                    n/m
Loss on disposition of assets and investments   $         -              $     (1)         $         (1)                   n/m
Operating income (loss)                         $       (31)             $     89          $       (120)               (135) %
Interest expense                                $       (20)             $    (19)         $          1                   5  %
Other non-operating expense                     $         -              $     (3)         $         (3)               (100) %
Income (loss) before provision for income taxes
and noncontrolling interests                    $       (51)             $     67          $       (118)               (176) %
Provision for income taxes                      $       (19)             $    (17)         $          2                    n/m
Net income (loss)                               $       (70)             $     50          $       (120)               (240) %
Net income attributable to noncontrolling
interests                                       $         1              $      1          $          -                    n/m
Net income (loss) attributable to KBR           $       (71)       0     $     49          $       (120)               (245) %


(1) Adjusted for the adoption of ASU 2020-06 using the full retrospective method.



n/m - not meaningful

Revenues. Revenues increased by $253 million, or 17%, to $1.7 billion for the
three months ended March 31, 2022 compared to $1.5 billion for three months
ended March 31, 2021. The increase was primarily driven by our GS business
segment attributable to continued organic growth in our GS business units,
including the OAW program which contributed $269 million in 2022, and the
acquisition of Frazer-Nash in October 2021. This growth was partially offset by
reduced GS operational tempo in the Middle East, the impact of our announced
intent to exit commercial operations in Russia, timing of certain STS projects
and the completion or near completion of remaining projects that we
strategically exited in 2020.

Gross profit. The increase in overall gross profit of $28 million, or 17%, was
primarily driven by items discussed above and lower amortization of intangibles
from the Centauri acquisition.

Equity in earnings (losses) of unconsolidated affiliates. The overall decrease
in equity in earnings (losses) of unconsolidated affiliates was primarily driven
by a non-cash charge in the amount of $137 million associated with the Ichthys
LNG Project recognized in the current quarter as a result of a settlement
agreement entered into with JKC and the consortium of subcontractors of the
Combined Cycle Power Plant. As a result of the settlement agreement, the
outstanding claims and disputes between the parties related to the Combined
Cycle Power Plant have been resolved and the parties agreed to withdraw all
claims and terminate all ongoing arbitration and court proceedings.

Selling, general and administrative expenses. Selling, general and administrative expenses during the three months ended March 31, 2022 have been $18 million higher than the same period in 2021, which was primarily due to increased expenses from the Frazer-Nash business and the company’s return to the office, increased travel and other corporate initiatives ‘business.

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Acquisition and integration related costs. Acquisition and integration related
costs were $1 million for each of the three months ended March 31, 2022 and 2021
primarily due to costs incurred related to the Company's historical
acquisitions.

Loss on disposal of assets and investments. Loss on disposal of assets and investments remained substantially constant for each of the three months ended March 31, 2022 and 2021.

Interest charges. The increase in interest expense was primarily due to increased borrowings to fund the acquisition of Frazer-Nash in October 2021.

Other non-operating charges. Other non-operating expenses include interest income, foreign exchange gains and losses and other non-operating income or expense items, with the variation being mainly due to foreign exchange gains and losses.


Provision for income taxes. The provision for income taxes for the three months
ended March 31, 2022 reflects a (37)% tax rate as compared to a 25% tax rate for
the three months ended March 31, 2021. The effective tax rate of (37)% for the
three months ended March 31, 2022 was primarily impacted by the non-cash charge
in equity in earnings associated with the Ichthy's LNG project. Excluding the
tax impact of discrete items, our tax rate would be 25% for the three months
ended March 31, 2022. See Note 11 to our condensed consolidated financial
statements for further discussion on income taxes.

Net income attributable to noncontrolling interests. The net income attributable
to noncontrolling interests remained materially consistent for each of the three
months ended March 31, 2022 and 2021.
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Operating results by business segment

Three months completed March, 31st,

                                                                                                  2022 vs. 2021
Dollars in millions                                  2022               2021                  $                    %
Revenues
Government Solutions                             $    1,459          $  1,164          $        295                  25  %
Sustainable Technology Solutions                        255               297                   (42)                (14) %

Total revenues                                   $    1,714          $  1,461          $        253                  17  %

Gross profit
Government Solutions                             $      159          $    116          $         43                  37  %
Sustainable Technology Solutions                         37                52                   (15)                (29) %

Total gross profit                               $      196          $    168          $         28                  17  %

Equity in earnings (losses) of unconsolidated
affiliates
Government Solutions                             $       10          $      7          $          3                  43  %
Sustainable Technology Solutions                       (128)                5                  (133)                   n/m

Total equity in earnings (losses) of
unconsolidated affiliates                        $     (118)         $     12          $       (130)                   n/m

Total selling, general and administrative
expenses                                         $     (107)         $    (89)         $         18                  20  %

Acquisition and integration costs $ (1) $ (1) $-

                    n/m

Restructuring charges and asset impairments $ (1) $-$1

                    n/m

Loss on disposition of assets and investments    $        -          $     (1)         $         (1)                   n/m

Operating income (loss)                          $      (31)         $     89          $       (120)               (135) %




n/m - not meaningful

Government Solutions

GS revenues increased by $295 million, or 25%, to $1.5 billion for the three
months ended March 31, 2022, compared to $1.2 billion for the three months ended
March 31, 2021. The increase was primarily driven by organic revenue growth
across our GS business units, including work associated with the OAW program
which contributed $269 million during the three months ended March 31, 2022.
Additionally, the increase is attributed to the acquisition of Frazer-Nash in
October 2021. These increases were partially offset by reduced activity in the
Middle East.

GS gross profit increased by $43 million, to $159 million for the three months
ended March 31, 2022, compared to $116 million for the three months ended March
31, 2021. The increase was primarily driven by items discussed above as well as
lower amortization of intangibles from the Centauri acquisition.

GS equity in earnings of unconsolidated affiliates increased by $3 million to
$10 million for the three months ended March 31, 2022, compared to $7 million
for the three months ended March 31, 2021. The increase was primarily driven by
better performance of joint ventures and increased work in our International
business.

Sustainable technological solutions


STS revenues decreased by $42 million, or 14%, to $255 million for the three
months ended March 31, 2022, compared to $297 million for the three months ended
March 31, 2021. STS gross profit decreased by $15 million, or 29%, to $37
million
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for the three months ended March 31, 2022, compared to $52 million in the three
months ended March 31, 2021. The decreases in revenues and gross profit were
primarily driven by the $12 million non-cash impact to gross profit resulting
from our announced intent to exit commercial operations in Russia, timing of
certain STS projects and the completion or near completion of remaining projects
that we strategically exited in 2020.

STS equity in earnings (losses) of unconsolidated affiliates decreased by $133
million to $128 million loss for the three months ended March 31, 2022, compared
to $5 million in equity earnings for the three months ended March 31, 2021. The
decrease was primarily driven by a non-cash charge in the amount of $137 million
relating to the settlement agreement with the consortium of subcontractors of
the Combined Cycle Power Plant.

Unfilled order book


Backlog generally represents the dollar amount of revenues we expect to realize
in the future as a result of performing work on contracts and our pro-rata share
of work to be performed by our consolidated and unconsolidated joint ventures.
We generally include total expected revenues in backlog when a contract is
awarded under a legally binding agreement. In many instances, arrangements
included in backlog are complex, nonrepetitive and may fluctuate over the
contract period due to the release of contracted work in phases by the customer.
Additionally, nearly all contracts allow customers to terminate the agreement at
any time for convenience. Certain contracts provide maximum dollar limits, with
actual authorization to perform work under the contract agreed upon on a
periodic basis with the customer. In these arrangements, only the amounts
authorized are included in backlog. For projects where we act solely in a
project management capacity, we only include the expected value of our services
in backlog.

We define backlog, as it relates to U.S. government contracts, as our estimate
of the remaining future revenue from existing signed contracts over the
remaining base contract performance period (including customer approved option
periods) for which work scope and price have been agreed with the customer. We
define funded backlog as the portion of backlog for which funding currently is
appropriated, less the amount of revenue we have previously recognized. We
define unfunded backlog as the total backlog less the funded backlog. Our GS
backlog does not include any estimate of future potential delivery orders that
might be awarded under our government-wide acquisition contracts,
agency-specific indefinite delivery/indefinite quantity contracts or other
multiple-award contract vehicles, nor does it include option periods that have
not been exercised by the customer.

Within our GS business segment, we calculate estimated backlog for long-term
contracts associated with the U.K. government's PFIs based on the aggregate
amount that our client would contractually be obligated to pay us over the life
of the project. We update our estimates of the future work to be executed under
these contracts on a quarterly basis and adjust backlog if necessary.

We have included in the table below our proportionate share of unconsolidated
joint ventures' estimated backlog. As these projects are accounted for under the
equity method, only our share of future earnings from these projects will be
recorded in our results of operations. Our proportionate share of backlog for
projects related to unconsolidated joint ventures totaled $2.5 billion at March
31, 2022, and $2.6 billion at December 31, 2021. As a result of our intent to
exit commercial projects in Russia, ending backlog was reduced by $56 million as
of March 31, 2022.

The following table summarizes our backlog by business segment at March 31, 2022and December 31, 2021respectively:


                                    March 31,      December 31,
Dollars in millions                   2022             2021
Government Solutions               $  11,572      $      12,628
Sustainable Technology Solutions       2,412              2,345
Total backlog                      $  13,984      $      14,973



We estimate that as of March 31, 2022, 29% of our backlog will be executed
within one year. Of this amount, 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 March 31, 2022, $71 million of our backlog
relates to active contracts that are in a loss position.

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As of March 31, 2022, 11% of our backlog was attributable to fixed-price
contracts, 46% was attributable to PFIs, 25% 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 March 31, 2022, $8.5
billion of our GS backlog was currently funded by our customers.

As of March 31, 2022, we had approximately $4.6 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.

The difference between backlog of $14.0 billion and the remaining performance
obligations as defined by ASC 606 of $10.9 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 to our
condensed consolidated financial statements for discussion of the remaining
performance obligations.

Transactions with joint ventures


We perform many of our projects through incorporated and unincorporated joint
ventures. In addition to participating as a joint venture partner, we often
provide engineering, procurement, construction, operations or maintenance
services to the joint venture as a subcontractor. Where we provide services to a
joint venture that we control and therefore consolidate for financial reporting
purposes, we eliminate intercompany revenues and expenses on such transactions.
In situations where we account for our interest in the joint venture under the
equity method of accounting, we do not eliminate any portion of our
subcontractor revenues or expenses. We recognize the profit on our services
provided to joint ventures that we consolidate and joint ventures that we record
under the equity method of accounting primarily using the
percentage-of-completion method. See Note 8 to our condensed consolidated
financial statements in Part I, Item 1 of this Quarterly Report on Form 10-Q for
more information. The information discussed therein is incorporated by reference
into this Part I, Item 2.

Legal Proceedings

Information relating to various commitments and contingencies is described in
Notes 6, 12 and 13 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.

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Cash and capital resources


Liquidity is provided by available cash and cash equivalents, cash generated
from operations, our Senior Credit Facility, (as defined below) and access to
capital markets. Our operating cash flow can vary significantly from year to
year and is affected by the mix, terms, timing and stage of completion of our
projects. We often receive cash in the early phases of our technology projects.
On time-and-material and cost reimbursable contracts, we may utilize cash on
hand or availability under our Senior Credit Facility to satisfy any periodic
operating cash requirements for working capital, as we incur costs and
subsequently invoice our customers.

STS services projects may require us to provide credit support for our
performance obligations to our customers in the form of letters of credit,
surety bonds or guarantees. Our ability to obtain new project awards in the
future may be dependent on our ability to maintain or increase our letter of
credit and surety bonding capacity, which may be further dependent on the timely
release of existing letters of credit and surety bonds. As the need for credit
support arises, letters of credit may be issued under the Revolver (as defined
below) or with lending counterparties on a bilateral, syndicated or other basis.

As discussed in Note 10 "Debt and Other Credit Facilities" of our condensed
consolidated financial statements, on November 18, 2021, we entered into
Amendment No. 5 under our existing Credit Agreement, dated as of April 25, 2018
("Pro Rata Facilities") consisting of a $1 billion revolving credit facility
(the "Revolver"), a $442 million Term Loan A, ("Term Loan A") with debt tranches
denominated in US dollars, Australian dollars and British pound sterling and a
$512 million Term Loan B ("Term Loan B"), with an aggregate capacity of
$1.954 billion ("Senior Credit Facility"). The Amendment, among other things,
(i) established an additional tranche of £122.1 million in Term Loan A incurred
by Kellogg Brown & Root Limited, a wholly owned indirect subsidiary of KBR,
Inc., organized under the laws of England and Wales, (ii) increased capacity and
flexibility under certain negative covenants, (iii) permits the netting of
unrestricted cash up to a specified cap for purposes of calculating the leverage
ratio and (iv) reduced the interest rate payable for applicable margins and
commitment fees and extended the maturity dates to November 2026 for Term Loan A
and the Revolver. The maturity date of Term Loan B remained unchanged maturing
February 2027.

We believe existing cash balances, internally generated cash flow, availability under our senior credit facility and other lines of credit are sufficient to support our business operations for the next 12 months. From
March 31, 2022we were in compliance with all financial covenants related to our debt agreements.

Total cash and cash equivalents $412 million to March 31, 2022and $370 million to December 31, 2021and consisted of the following:

                                                 March 31,       December 31,
Dollars in millions                                 2022             2021
Domestic U.S. cash                              $       52      $          34
International cash                                     238                220
Joint venture and Aspire Defence project cash          122                116
Total                                           $      412      $         370


Our cash balances are held in numerous accounts throughout the world to fund our
global activities. 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.

Our international cash balances may be available for general corporate purposes
but are subject to local restrictions, such as capital adequacy requirements and
maintaining sufficient cash balances to support our U.K. pension plan and other
obligations incurred in the normal course of business by those foreign entities.
Repatriations of our undistributed foreign earnings are generally free of U.S.
tax but may incur withholding and/or state taxes. We consider our future U.S.
and non-U.S. cash needs 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, which may include acquisitions around the world,
including whether foreign earnings are permanently reinvested. If management
were to completely remove the indefinite investment assertion on all foreign
subsidiaries, the exposure to local withholding taxes would be less than
$9 million.

Joint venture cash and Aspire Defence project cash balances reflect the amounts
held by joint venture entities that we consolidate for financial reporting
purposes. These amounts are limited to those entities' activities and are not
readily available
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for general corporate purposes; however, portions of such amounts may become
available to us in the future should there be a distribution of dividends to the
joint venture partners. We expect that the majority of the joint venture cash
balances will be utilized for the corresponding joint venture purposes or for
paying dividends.

As of March 31, 2022, substantially all of our excess cash was held in interest
bearing operating accounts or short-term investment accounts with the primary
objectives of preserving capital and maintaining liquidity.

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