What changed in this filing

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Item 1. Financial Statements

2020-08-03 compared with 2020-05-06 · 298 added, 277 removed, 731 unchanged (44% of the section changed)

4 unchanged sentences

(In thousands, except share information)

March 27, 2020 September 27, 2019

June 26, 2020 September 27, 2019

Current Assets:

29 unchanged sentences

Common stock, $ 1 par value, authorized - 240,000,000 shares;

issued and outstanding— 129,984,887 shares and 132,879,395

shares as of March 27, 2020 and September 27, 2019, respectively

issued and outstandin g 130,180,415 sh ares and 132,879,395

shares as of June 26, 2020 and September 27, 2019, respectively

130,180 132,879

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CONSOLIDATED STATEMENTS OF EARNINGS

Three and Six Months Ended March 27, 2020 and March 29, 2019

Three and Nine Months Ended June 26, 2020 and June 28, 2019

(In thousands, except per share information)

For the Three Months Ended For the Six Months Ended

March 27, 2020 March 29, 2019 March 27, 2020 March 29, 2019

For the Three Months Ended For the Nine Months Ended

June 26, 2020 June 28, 2019 June 26, 2020 June 28, 2019

Revenues $ 3,260,057 $ 3,169,622 $ 10,047,286 $ 9,345,005

3 unchanged sentences

Operating Profit 194,376 89,954 513,500 305,763

Other (Expense) Income:

Other Income (Expense):

Interest income 1,249 3,398 3,180 7,172

Interest expense ( 18,193 ) ( 18,978 ) ( 48,163 ) ( 73,727 )

Miscellaneous (expense) income, net ( 330,414 ) 36,904 ( 213,719 ) 39,186

Total other (expense) income, net ( 344,583 ) 9,151 ( 241,759 ) ( 11,789 )

(Loss) Earnings from Continuing Operations Before Taxes ( 176,805 ) 111,832 77,366 204,021

Income Tax Benefit (Expense) for Continuing Operations 61,122 7,947 ( 7,368 ) ( 14,811 )

Net (Loss) Earnings of the Group from Continuing Operations ( 115,683 ) 119,779 69,998 189,210

Net Earnings (Loss) of the Group from Discontinued Operations 29,880 ( 57,006 ) 107,468 3,153

Net (Loss) Earnings of the Group ( 85,803 ) 62,773 177,466 192,363

Miscellaneous income (expense), net 126,249 19,025 ( 87,470 ) 58,211

Total other income (expense), net 109,305 3,445 ( 132,453 ) ( 8,344 )

Earnings from Continuing Operations Before Taxes 303,681 93,399 381,047 297,419

Income Tax (Expense) Benefit from Continuing Operations ( 67,674 ) 1,981 ( 75,041 ) ( 12,829 )

Net Earnings of the Group from Continuing Operations 236,007 95,380 306,006 284,590

Net Earnings of the Group from Discontinued Operations 18,043 435,684 125,511 438,837

Net Earnings of the Group 254,050 531,064 431,517 723,427

Net Earnings Attributable to Noncontrolling Interests from Continuing Operations ( 9,121 ) ( 6,015 ) ( 21,662 ) ( 15,578 )

Net (Loss) Earnings Attributable to Jacobs from Continuing Operations ( 121,967 ) 114,755 57,458 179,648

Net Earnings Attributable to Jacobs from Continuing Operations 226,886 89,365 284,344 269,012

Net Earnings Attributable to Noncontrolling Interests from Discontinued Operations — ( 607 ) — ( 2,195 )

Net Earnings (Loss) Attributable to Jacobs from Discontinued Operations 29,880 ( 57,838 ) 107,468 1,565

Net (Loss) Earnings Attributable to Jacobs $ ( 92,087 ) $ 56,917 $ 164,926 $ 181,213

Net (Loss) Earnings Per Share:

Basic Net (Loss) Earnings from Continuing Operations Per Share $ ( 0.92 ) $ 0.83 $ 0.43 $ 1.28

Basic Net Earnings (Loss) from Discontinued Operations Per Share $ 0.23 $ ( 0.42 ) $ 0.81 $ 0.01

Basic (Loss) Earnings Per Share $ ( 0.69 ) $ 0.41 $ 1.24 $ 1.29

Diluted Net (Loss) Earnings from Continuing Operations Per Share $ ( 0.92 ) $ 0.82 $ 0.43 $ 1.27

Diluted Net Earnings (Loss) from Discontinued Operations Per Share $ 0.23 $ ( 0.41 ) $ 0.80 $ 0.01

Diluted (Loss) Earnings Per Share $ ( 0.69 ) $ 0.41 $ 1.23 $ 1.28

Net Earnings Attributable to Jacobs from Discontinued Operations 18,043 435,077 125,511 436,642

Net Earnings Attributable to Jacobs $ 244,929 $ 524,442 $ 409,855 $ 705,654

Net Earnings Per Share:

Basic Net Earnings from Continuing Operations Per Share $ 1.74 $ 0.65 $ 2.15 $ 1.93

Basic Net Earnings from Discontinued Operations Per Share $ 0.14 $ 3.18 $ 0.95 $ 3.14

Basic Earnings Per Share $ 1.88 $ 3.83 $ 3.11 $ 5.07

Diluted Net Earnings from Continuing Operations Per Share $ 1.73 $ 0.65 $ 2.13 $ 1.92

Diluted Net Earnings from Discontinued Operations Per Share $ 0.14 $ 3.15 $ 0.94 $ 3.11

Diluted Earnings Per Share $ 1.87 $ 3.80 $ 3.08 $ 5.02

See the accompanying Notes to Consolidated Financial Statements - Unaudited.

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CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS)

Three and Six Months Ended March 27, 2020 and March 29, 2019

Three and Nine Months Ended June 26, 2020 and June 28, 2019

(In thousands)

For the Three Months Ended For the Six Months Ended

March 27, 2020 March 29, 2019 March 27, 2020 March 29, 2019

Net (Loss) Earnings of the Group $ ( 85,803 ) $ 62,773 $ 177,466 $ 192,363

Other Comprehensive (Loss) Income:

For the Three Months Ended For the Nine Months Ended

June 26, 2020 June 28, 2019 June 26, 2020 June 28, 2019

Net Earnings of the Group $ 254,050 $ 531,064 $ 431,517 $ 723,427

Other Comprehensive Income:

Foreign currency translation adjustment 76,288 76,206 12,010 55,157

Gain (loss) on cash flow hedges — 348 18 2,138

(Loss) gain on cash flow hedges ( 20,944 ) ( 546 ) ( 20,926 ) 1,592

Change in pension and retiree medical plan liabilities 3,405 27,370 15,872 ( 14,641 )

Other comprehensive (loss) income before taxes ( 87,858 ) ( 12,135 ) ( 51,794 ) ( 60,920 )

Other comprehensive income before taxes 58,749 103,030 6,956 42,108

Income Tax (Expense) Benefit:

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( 24,124 ) ( 6,357 ) ( 1,836 ) 1,006

Net other comprehensive income (loss) ( 66,151 ) ( 3,708 ) ( 29,505 ) ( 53,557 )

Net Comprehensive (Loss) Income of the Group ( 151,954 ) 59,065 147,961 138,806

Net other comprehensive income 34,625 96,673 5,120 43,114

Net Comprehensive Income of the Group 288,675 627,737 436,637 766,541

Net (Earnings) Loss Attributable to Noncontrolling Interests ( 9,121 ) ( 6,622 ) ( 21,662 ) ( 17,773 )

Net Comprehensive (Loss) Income Attributable to Jacobs $ ( 158,238 ) $ 53,209 $ 135,421 $ 127,656

Net Comprehensive Income Attributable to Jacobs $ 279,554 $ 621,115 $ 414,975 $ 748,768

See the accompanying Notes to Consolidated Financial Statements - Unaudited.

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CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY

For the Three Months Ended March 27, 2020 and March 29, 2019

For the Three Months Ended June 26, 2020 and June 28, 2019

(In thousands)

Common Stock Additional Paid-in Capital Retained Earnings Accumulated Other Comprehensive Income (Loss) Total Jacobs Stockholders’ Equity Noncontrolling Interests Total Group Stockholders’ Equity

Balances at December 28, 2018 $ 140,400 $ 2,672,390 $ 3,796,864 $ ( 856,552 ) $ 5,753,102 $ 87,932 $ 5,841,034

Balances at March 29, 2019 $ 136,432 $ 2,568,809 $ 3,620,873 $ ( 860,260 ) $ 5,465,854 $ 89,727 $ 5,555,581

Net earnings — — 524,442 — 524,442 6,622 531,064

Disposition of ECR business, net of deferred taxes of $ 5,402

— — — 119,791 119,791 ( 45,727 ) 74,064

Foreign currency translation adjustments — — — ( 30,408 ) ( 30,408 ) — ( 30,408 )

1 unchanged sentence

— — — 8,173 8,173 — 8,173

Gain on derivatives, net of deferred taxes of $( 10 )

(Loss) Gain on derivatives, net of deferred taxes of $( 35 )

— — — ( 885 ) ( 885 ) — ( 885 )

Noncontrolling interest acquired / consolidated — — — — — — —

Dividends — — ( 23,477 ) — ( 23,477 ) — ( 23,477 )

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Repurchases of equity securities ( 986 ) 31,429 ( 66,626 ) — ( 36,183 ) — ( 36,183 )

Balances at March 29, 2019

Balances at June 28, 2019

$ 135,849 $ 2,634,177 $ 4,053,626 $ ( 763,589 ) $ 6,060,063 $ 48,054 $ 6,108,117

Balances at December 27, 2019 $ 133,001 $ 2,605,765 $ 4,145,825 $ ( 880,166 ) $ 6,004,425 $ 57,746 $ 6,062,171

Net (loss) earnings — — ( 92,087 ) — ( 92,087 ) 6,284 ( 85,803 )

Balances at March 27, 2020 $ 129,985 $ 2,569,417 $ 3,808,698 $ ( 946,317 ) $ 5,561,783 $ 51,200 $ 5,612,983

Net earnings — — 244,929 — 244,929 9,121 254,050

Foreign currency translation adjustments, net of deferred taxes of $ 22,062

2 unchanged sentences

— — ( 4,919 ) ( 4,919 ) — ( 4,919 )

(Loss) Gain on derivatives, net of deferred taxes of $( 6,262 )

— — — ( 14,682 ) ( 14,682 ) — ( 14,682 )

Dividends — — ( 24,857 ) — ( 24,857 ) ( 24,857 )

2 unchanged sentences

Issuances of equity securities including shares withheld for taxes 195 7,473 ( 708 ) — 6,960 — 6,960

Repurchases of equity securities ( 3,224 ) ( 63,177 ) ( 219,421 ) — ( 285,822 ) — ( 285,822 )

Balances at March 27, 2020 $ 129,985 $ 2,569,417 $ 3,808,698 $ ( 946,317 ) $ 5,561,783 $ 51,200 $ 5,612,983

Balances at June 26, 2020 $ 130,180 $ 2,589,263 $ 4,028,062 $ ( 911,692 ) $ 5,835,813 $ 49,181 $ 5,884,994

See the accompanying Notes to Consolidated Financial Statements – Unaudited.

2 unchanged sentences

CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY

For the Six Months Ended March 27, 2020 and March 29, 2019

For the Nine Months Ended June 26, 2020 and June 28, 2019

(In thousands)

2 unchanged sentences

Net earnings — — 705,654 — 705,654 17,773 723,427

Disposition of ECR business, net of deferred taxes of $ 5,402

— 119,791 119,791 ( 45,727 ) 74,064

Adoption of ASC 606, net of deferred taxes of $( 10,285 )

11 unchanged sentences

Repurchases of equity securities ( 7,685 ) ( 146,253 ) ( 370,680 ) — ( 524,618 ) — ( 524,618 )

Balances at March 29, 2019 $ 136,432 $ 2,568,809 $ 3,620,873 $ ( 860,260 ) $ 5,465,854 $ 89,727 $ 5,555,581

Balances at June 28, 2019 $ 135,849 $ 2,634,177 $ 4,053,626 $ ( 763,589 ) $ 6,060,063 $ 48,054 $ 6,108,117

Balances at September 27, 2019 $ 132,879 $ 2,559,450 $ 3,939,174 $ ( 916,812 ) 5,714,691 $ 53,967 $ 5,768,658

4 unchanged sentences

— — — 11,407 11,407 — 11,407

Gain on derivatives, net of deferred taxes of $ —

(Loss) Gain on derivatives, net of deferred taxes of $( 6,262 )

— — — ( 14,664 ) ( 14,664 ) — ( 14,664 )

4 unchanged sentences

Repurchases of equity securities ( 3,576 ) ( 19,947 ) ( 262,299 ) — ( 285,822 ) — ( 285,822 )

Balances at March 27, 2020 $ 129,985 $ 2,569,417 $ 3,808,698 $ ( 946,317 ) $ 5,561,783 $ 51,200 $ 5,612,983

Balances at June 26, 2020 $ 130,180 $ 2,589,263 $ 4,028,062 $ ( 911,692 ) $ 5,835,813 $ 49,181 $ 5,884,994

See the accompanying Notes to Consolidated Financial Statements – Unaudited.

2 unchanged sentences

CONSOLIDATED STATEMENTS OF CASH FLOWS

For the Six Months Ended March 27, 2020 and March 29, 2019

For the Nine Months Ended June 26, 2020 and June 28, 2019

(In thousands)

For the Six Months Ended

March 27, 2020 March 29, 2019

For the Nine Months Ended

June 26, 2020 June 28, 2019

Cash Flows from Operating Activities:

Net (loss) earnings attributable to the Group $ 177,466 $ 192,363

Adjustments to reconcile net earnings to net cash flows (used for) provided by operations:

Net earnings attributable to the Group $ 431,517 $ 723,427

Adjustments to reconcile net earnings to net cash flows provided by (used for) operations:

Depreciation and amortization:

2 unchanged sentences

Gain on sale of ECR business ( 113,366 ) ( 917,697 )

Loss on investment in equity securities 270,225 —

Loss on disposal of other businesses and investments — 9,608

Loss (Gain) on investment in equity securities 138,875 ( 2,175 )

Stock based compensation 36,208 47,341

Equity in (loss) earnings of operating ventures, net 235 ( 5,325 )

Equity in earnings of operating ventures, net ( 1,689 ) ( 7,632 )

(Gain) Loss on disposals of assets, net ( 301 ) 1,998

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Disposals of property and equipment and other assets 96 7,300

Distributions of capital from (contributions to) equity investees ( 12,358 ) ( 3,904 )

Capital contributions to equity investees ( 12,358 ) ( 3,904 )

Acquisitions of businesses, net of cash acquired ( 286,534 ) ( 575,110 )

Proceeds (payments) related to sales of businesses ( 5,061 ) —

Disposals of investment in equity securities

(Payments) proceeds related to sales of businesses ( 5,061 ) 2,796,734

Purchases of noncontrolling interests — ( 1,113 )

12 unchanged sentences

Effect of Exchange Rate Changes 39,448 34,300

Net Increase (Decrease) in Cash and Cash Equivalents 1,024,811 57,280

Net Increase in Cash and Cash Equivalents 393,742 204,884

Cash and Cash Equivalents at the Beginning of the Period 631,068 793,358

Cash and Cash Equivalents at the End of the Period $ 1,024,810 $ 998,242

Less Cash and Cash Equivalents included in Assets held for Sale — ( 176,090 )

Cash and Cash Equivalents of Continuing Operations at the End of the Period $ 1,655,879 $ 674,548

See the accompanying Notes to Consolidated Financial Statements – Unaudited.

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Readers of this Quarterly Report on Form 10-Q should also read our consolidated financial statements and the notes thereto included in our Annual Report on Form 10-K for the fiscal year ended September 27, 2019 (“2019 Form 10-K”).

In the opinion of management, the accompanying unaudited consolidated financial statements contain all adjustments (consisting of normal recurring adjustments) necessary for a fair presentation of our consolidated financial statements at March 27, 2020, and for the three and six months ended March 27, 2020.

In the opinion of management, the accompanying unaudited consolidated financial statements contain all adjustments (consisting of normal recurring adjustments) necessary for a fair presentation of our consolidated financial statements at June 26, 2020, and for the three and nine months ended June 26, 2020.

Our interim results of operations are not necessarily indicative of the results to be expected for the full fiscal year.

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The Company repaid all of the assumed KeyW debt by the end of the fourth fiscal quarter of 2019.

The Company has recorded its preliminary purchase price allocation associated with the acquisition, which is summarized in Note 5- Business Combinations .

The Company has recorded its final purchase price allocation associated with the acquisition, which is summarized in Note 5- Business Combinations .

JACOBS ENGINEERING GROUP INC.

6 unchanged sentences

Additionally, assets and liabilities of the Disposal Group were reflected as held-for-sale in the Consolidated Balance Sheets through December 27, 2019.

As of March 27, 2020, all of the ECR business under the terms of the sale has been conveyed to Worley and as such, no amounts remain held for sale.

As of June 26, 2020, all of the ECR business to be sold under the terms of the sale has been conveyed to Worley and as such, no amounts remain held for sale.

For further discussion see Note 7- Sale of Energy, Chemicals and Resources ("ECR") Business to the consolidated financial statements.

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GAAP requires us to employ estimates and make assumptions that affect the reported amounts of certain assets and liabilities, the revenues and expenses reported for the periods covered by the accompanying consolidated financial statements, and certain amounts disclosed in these Notes to the Consolidated Financial Statements.

Although such estimates and assumptions are based on management’s most recent assessment of the underlying facts and circumstances utilizing the most current information available and past experience including considerations for potential impacts of the coronavirus (COVID-19) pandemic, actual results could differ significantly from those estimates and assumptions.

Although such estimates and assumptions are based on management’s most recent assessment of the underlying facts and circumstances utilizing the most current information available and past experience including considerations for potential impacts of the continuing coronavirus (COVID-19) pandemic, actual results could differ significantly from those estimates and assumptions.

Our estimates, judgments, and assumptions are evaluated periodically and adjusted accordingly.

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Please refer to Note 2- Significant Accounting Policies of Notes to Consolidated Financial Statements included in our 2019 Form 10-K for a more complete discussion of the various items within the consolidated financial statements measured at fair value and the methods used to determine fair value.

Please also refer to Note 7- Sale of Energy, Chemicals and Resources for discussion regarding the Company's investment in Worley ordinary shares.

Please also refer to Note 7- Sale of Energy, Chemicals and Resources for discussion regarding the Company's investment in Worley ordinary shares and Note 19- Commitments and Contingencies and Derivative Financial Instruments for discussion regarding the Company's derivative instruments.

The net carrying amounts of cash and cash equivalents, trade receivables and payables and short-term debt approximate fair value due to the short-term nature of these instruments.

See Note 12- Borrowings for a discussion of the fair value of long-term debt.

JACOBS ENGINEERING GROUP INC.

AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (CONTINUED)

New Accounting Pronouncements

2 unchanged sentences

Targeted Improvements to Accounting for Hedging Activities.

ASU 2017-12 provides financial reporting improvements related to hedging

JACOBS ENGINEERING GROUP INC.

AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (CONTINUED)

relationships to better portray the economic results of an entity’s risk management activities in its financial statements.

ASU 2017-12 provides financial reporting improvements related to hedging relationships to better portray the economic results of an entity’s risk management activities in its financial statements.

Additionally, ASU No.

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This standard will be effective for our interim and annual periods beginning with the first fiscal quarter of 2021 and must be applied on a modified retrospective basis.

Management does not expect the adoption of ASU 326 to have a material impact on the Company's financial position, results of operations or cash flows.

Business Combinations

John Wood Group's Nuclear Business

On March 6, 2020, a subsidiary of Jacobs completed the acquisition of the nuclear consulting, remediation and program management business of John Wood Group, a U.K.-based energy services company, for an enterprise value of £ 241 million, or approximately $ 310.9 million, less cash acquired of $ 24.3 million, subject to additional working capital adjustments.

The John Wood Group nuclear business allows Jacobs to further expand its nuclear remediation business.

On March 6, 2020, a subsidiary of Jacobs completed the acquisition of the nuclear consulting, remediation and program management business of John Wood Group, a U.K.-based energy services company, for an enterprise value of £ 246 million, or approximately $ 317.9 million, less cash acquired of $ 24.3 million, as updated for additional working capital adjustments.

The John Wood Group nuclear business allows Jacobs to further expand its lifecycle nuclear services business.

The following summarizes the fair values of John Wood Group's assets acquired and liabilities assumed as of the acquisition date (in millions):

11 unchanged sentences

Net assets acquired $ 317.9

JACOBS ENGINEERING GROUP INC.

AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (CONTINUED)

The purchase price allocation is based upon preliminary information and is subject to change when additional information is obtained.

3 unchanged sentences

The final purchase price allocation could result in adjustments to certain assets and liabilities, including the residual amount allocated to goodwill.

JACOBS ENGINEERING GROUP INC.

AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (CONTINUED)

Identified intangibles include customer relationships, contracts and backlog and developed technology.

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The Company paid total consideration of $ 902.6 million, which was comprised of approximately $ 604.2 million in cash to the former stockholders and certain equity award holders of KeyW and the assumption of KeyW’s debt of approximately $ 298.4 million.

The Company has repaid all of the assumed KeyW debt by the end of the fourth fiscal quarter of 2019.

The Company repaid all of the assumed KeyW debt by the end of the fourth fiscal quarter of 2019.

JACOBS ENGINEERING GROUP INC.

AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (CONTINUED)

The following summarizes the fair values of KeyW's assets acquired and liabilities assumed as of the acquisition date (in millions):

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Net assets acquired $ 604.2

JACOBS ENGINEERING GROUP INC.

AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (CONTINUED)

The purchase price allocation is based upon preliminary information and is subject to change when additional information is obtained.

Goodwill recognized results from a substantial assembled workforce, which does not qualify for separate recognition, as well as expected future synergies from combining operations.

Goodwill of $ 136.0 million is expected to be deductible for tax purposes.

The Company will be completing its final assessment of the fair values of the opening balance sheet for this acquisition during the third fiscal quarter of 2020 which could result in adjustments to certain assets and liabilities, including the residual amount allocated to goodwill.

The Company has completed its final assessment of the fair values of the acquired assets and liabilities of KeyW.

Since the initial preliminary estimates reported in the third quarter of fiscal 2019, the Company has updated certain amounts reflected in the final purchase price allocation, as summarized in the fair values of KeyW assets acquired and liabilities assumed as of the acquisition date as set forth above.

Identified intangibles include customer relationships, contracts and backlog and developed technology.

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Other personal property assets, such as furniture, fixtures and equipment, are valued using the cost approach, which is based on replacement or reproduction costs of the asset less depreciation.

The following presents summarized unaudited pro forma operating results of the Company assuming that the Company had acquired KeyW at October 1, 2017.

For purposes of our comparative fiscal 2020 and 2019 reporting requirements in this Form 10-Q, t he following presents summarized unaudited pro forma operating results of the Company for the nine months ended June 28, 2019 assuming that the June 12, 2019 acquisition of KeyW had occurred at the beginning of fiscal 2018 for pro forma purposes.

These pro forma operating results are presented for illustrative purposes only and are not indicative of the operating results that would have been achieved had the related events occurred on such date (in millions, except per share data):

Six Months Ended March 29, 2019

JACOBS ENGINEERING GROUP INC.

AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (CONTINUED)

Nine Months Ended June 28, 2019

Revenues $ 9,562.0

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Included in the table above are the unaudited pro forma operating results of continuing operations.

Also, income tax expense (benefit) for the six-month pro forma period ended March 29, 2019 was $ 15.7 million .

Also, income tax expense (benefit) for the nine month pro forma period ended June 28, 2019 was $ 14.9 million.

Goodwill and Intangibles

The carrying value of goodwill associated with continuing operations and appearing in the accompanying Consolidated Balance Sheets at March 27, 2020 and September 27, 2019 was as follows (in millions):

The carrying value of goodwill associated with continuing operations and appearing in the accompanying Consolidated Balance Sheets at June 26, 2020 and September 27, 2019 was as follows (in millions):

Critical Mission Solutions People & Places Solutions Total

1 unchanged sentence

Acquired 206 — 206

Disposed — ( 6 ) ( 6 )

Post-Acquisition Adjustments 2 — 2

Foreign Exchange Impact ( 10 ) ( 8 ) ( 18 )

Balance March 27, 2020 $ 2,391 $ 3,205 $ 5,596

JACOBS ENGINEERING GROUP INC.

AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (CONTINUED)

The following table provides certain information related to the Company’s acquired intangibles in the accompanying Consolidated Balance Sheets at March 27, 2020 and September 27, 2019 (in thousands):

Post-Acquisition Adjustments 2 — 2

Disposed — ( 6 ) ( 6 )

Balance June 26, 2020 $ 2,400 $ 3,217 $ 5,617

The following table provides certain information related to the Company’s acquired intangibles in the accompanying Consolidated Balance Sheets at June 26, 2020 and September 27, 2019 (in thousands):

Customer Relationships, Contracts and Backlog Developed Technology Trade Names Other Total

3 unchanged sentences

Foreign currency translation ( 1,170 ) ( 232 ) ( 54 ) ( 551 ) ( 2,007 )

Balances March 27, 2020 $ 642,689 $ 45,046 $ 897 $ 1,163 $ 689,795

Balances June 26, 2020 $ 630,778 $ 44,302 $ 808 $ 117 $ 676,005

JACOBS ENGINEERING GROUP INC.

AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (CONTINUED)

The following table presents estimated amortization expense of intangible assets for the remainder of fiscal 2020 and for the succeeding years.

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The stock and asset purchase agreement for the ECR sale contained a lock-up on our ability to sell the Worley shares received in the transaction, which expired in the first fiscal quarter of 2020.

Discontinued Operations

As a result of the ECR sale, substantially all ECR-related assets and liabilities were sold (the "Disposal Group").

We determined that the Disposal Group should be reported as discontinued operations in accordance with ASC 210-05, Discontinued Operations because their disposal represent a strategic shift that had a major effect on our operations and financial results.

As such, the financial results of the ECR business are reflected in our unaudited Consolidated Statements of Earnings as discontinued operations for all periods presented.

Additionally, assets and liabilities of the ECR business were reflected as held-for-sale in the Consolidated Balance Sheets through December 27, 2019.

As of the quarter ended June 26, 2020, all of the ECR business to be sold under the terms of the sale has been conveyed to Worley and as such, no amounts remain held for sale.

Any assets and liabilities of the ECR business that were retained by the Company pursuant to the stock and asset purchase agreement with Worley were included in discontinued operations.

Summarized Financial Information of Discontinued Operations

The following table represents earnings (loss) from discontinued operations, net of tax (in thousands):

For the Three Months Ended

For the Nine Months Ended

June 26, 2020 June 28, 2019 June 26, 2020 June 28, 2019

Revenues $ 59 $ 392,526 $ 11,221 $ 2,718,317

Direct cost of contracts ( 69 ) ( 340,525 ) ( 6,124 ) ( 2,336,076 )

Gross profit ( 10 ) 52,001 5,097 382,241

Selling, general and administrative expenses ( 801 ) ( 39,556 ) 43,359 ( 333,155 )

Operating (Loss) Profit ( 811 ) 12,445 48,456 49,086

Gain on sale of ECR business 31,456 917,697 113,366 917,697

Other (expense) income, net 1,472 ( 7,864 ) 112 ( 40,158 )

Earnings Before Taxes from Discontinued Operations 32,117 922,278 161,934 926,625

Income Tax Expense ( 14,074 ) ( 486,594 ) ( 36,423 ) ( 487,788 )

Net Earnings of the Group from Discontinued Operations $ 18,043 $ 435,684 $ 125,511 $ 438,837

JACOBS ENGINEERING GROUP INC.

AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (CONTINUED)

Selling, general and administrative expenses includes an offsetting insuranc e recovery of $ 50.0 million for the nine months ended June 26, 2020 recorded in connection with the Nui Phao ("NPMC") legal matter described in Note 19- Commitments and Contingencies .

Additionally, the nine month period ended June 28, 2019 includes a charge for the award and recovery of costs, estimated related interest and attorneys' fees related to the NPMC legal matter.

For the nine months ended June 26, 2020, the gain on sale of $ 113.4 million relates mainly to the recognition of the deferred gain for the delayed transfer of the ECR-related assets and liabilities of the two international entities discussed above, adjustments for working capital and certain other items in connection with the sale and add itional income for the re lease of a deferred gain upon achievement of the IT Migration Date described below in connecti on with the delivery to Worley of certain IT application and hardware assets related to the ECR business.

Gain on Sale and Deferred Gain

As a result of the ECR sale, the Company recognized a pre-tax gain of $ 1.0 billion, $ 935.1 million of which was recognized in fiscal 2019 and $81.9 million of which is included in Net Earnings of the Group from Discontinued Operations on the consolidated statement of earnings for the six months ended March 27, 2020, which is further discussed below.

As a result of the ECR sale, the Company recognized a pre-tax gain of $ 1.0 billion, $ 935.1 million of which was recognized in fiscal 2019 and $ 113.4 million of which is included in Net Earnings of the Group from Discontinued Operations on the consolidated statement of earnings for the nine months ended June 26, 2020, which is further discussed below.

Upon closing the ECR sale, the Company retained a noncontrolling interest (with significant influence) in People & Places Solutions ("P&PS")-related activities in one international legal entity acquired by Worley.

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At the time of the ECR sale, the Company allocated proceeds received to these deferred closing items on a relative fair value basis and recognized a deferred gain of $ 34.4 million.

During the second fiscal quarter of 2020, the delayed transfer of the ECR-related assets and liabilities of these two international entities occurred, and as a result, all previously deferred gain amounts were recognized.

During the second fiscal quarter of 2020, the delayed transfer of the ECR-related assets and liabilities of these two international entities occurred, and as a result, previously deferred gain amounts were recognized.

In addition to consideration received for the sale of the business, the proceeds received included advanced consideration for the Company to deliver IT application and related hardware assets at a future date (“IT Migration Date”) to Worley upon completion of the interim transition services, described further below.

This deliverable of IT assets was

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considered to be a separate element of the ECR business sale transaction, and accordingly, we allocated a portion of the proceeds received of $ 95.3 million on a relative fair value basis to this separate deliverable and recognized deferred income.

This deliverable of IT assets was considered to be a separate element of the ECR business sale transaction, and accordingly, we allocated a portion of the proceeds received of $ 95.3 million on a relative fair value basis to this separate deliverable and recognized deferred income.

Upon completion and acceptance of this deliverable by Worley in December 2019, the deferred proceeds were recognized in income, along with expenses associated with any costs incurred and deferred by the Company for this deliverable.

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As discussed above, the Company received 58.2 million in ordinary shares of Worley.

Pursuant to the purchase agreement for the ECR sale, 51.4 million of the shares were considered "restricted" during a lock-up period beginning April 26, 2019 and ending in December 2019.

Pursuant to the purchase agreement for the ECR sale, 51.4 million of the shares were considered "restricted" during a lock-up period beginning April 26, 2019 and ending in December 2019, after which these restrictions were lifted.

During the lock-up period the Company could not, without Worley's consent, directly or indirectly dispose of the "restricted" shares.

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The Company's investment in Worley is measured at fair value through net income as it is an equity investment with a readily determinable fair value based on quoted market prices.

The 51.4 million ordinary shares that are no longer considered "restricted" are recorded within prepaid expenses and other in the Company's consolidated balance sheets at their estimated fair value, which is $ 180.9 million as of March 27, 2020.

For the three and six month periods ended March 27, 2020, the Company recognized $ 375.5 million and $ 270.2 million, respectively in losses associated with share price and currency changes on this investment as well as dividends of $ 7.7 million.

The 51.4 million ordinary shares currently held are recorded within prepaid expenses and other in the Company's consolidated balance sheets at their estimated fair value, which is $ 312.3 million as of June 26, 2020.

For the three and nine month periods ended June 26, 2020, the Company recognize d a gain of $ 131.4 million and a loss of $ 138.9 million, respectively, associated with share price and currency changes on this investment as well as dividends of $ 7.7 million during the nine month period ended June 26, 2020.

Quoted market prices are available for these securities in an active market and therefore categorized as a Level 1 input.

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Transition Service Agreement

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Pursuant to the terms of the TSA, the Company received payments for the interim services which approximate costs incurred to perform the services.

The Company has recognized costs recorded in SG&A expense incurred to perform the TSA, offset b y $ 14.2 million in TSA related income for such services that is reported in miscellaneous income (expense) for the six months ended March 27, 2020 before inclusion of certain incremental outside service support costs agreed to be shared equally by the parties.

Discontinued Operations

As a result of the ECR sale, substantially all ECR-related assets and liabilities were sold (the "Disposal Group").

As such, the financial results of the ECR business are reflected in our unaudited Consolidated Statements of Earnings as discontinued operations for all periods presented.

Additionally, assets and liabilities of the ECR business were reflected as held-for-sale in the Consolidated Balance Sheets through December 27, 2019.

As of the quarter ended March 27, 2020, all of the ECR business under the terms of the sale has been conveyed to Worley and as such, no amounts remain held for sale.

Any assets and liabilities of the ECR business that were retained by the Company pursuant to the stock and asset purchase agreement with Worley are included in discontinued operations.

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Summarized Financial Information of Discontinued Operations

The following table represents earnings (loss) from discontinued operations, net of tax (in thousands):

Three Months Ended

For the Six Months Ended

March 27, 2020 March 29, 2019 March 27, 2020 March 29, 2019

Revenues $ 4,063 $ 1,161,083 $ 11,162 $ 2,325,790

Direct cost of contracts ( 1,363 ) ( 999,944 ) ( 6,055 ) ( 1,995,550 )

Gross profit 2,700 161,139 5,107 330,240

Selling, general and administrative expenses ( 2,999 ) ( 202,590 ) 44,161 ( 293,600 )

Operating (Loss) Profit ( 299 ) ( 41,451 ) 49,268 36,640

Gain on sale of ECR business 19,967 — 81,910 —

Other (expense) income, net ( 1,361 ) ( 34,413 ) ( 1,361 ) ( 32,293 )

Earnings (Loss) Before Taxes from Discontinued Operations 18,307 ( 75,864 ) 129,817 4,347

Income Tax Benefit (Expense) 11,573 18,858 ( 22,349 ) ( 1,194 )

Net Earnings (Loss) of the Group from Discontinued Operations $ 29,880 $ ( 57,006 ) $ 107,468 $ 3,153

Selling, general and administrative expenses includes an offsetting insuranc e recovery of $ 50.0 million for the six months ended March 27, 2020 recorded in connection with the Nui Phao ("NPMC") legal matter described in Note 19- Commitments and Contingencies .

Additionally, the three and six month periods ended March 29, 2019 include a charge for the award and recovery of costs, estimated related interest and attorneys' fees related to the NPMC legal matter.

The gain on sale of the ECR business of $20.0 million for the three months ended March 27, 2020 primarily relates to the recognition of the deferred gain for the delayed transfer of the ECR-related assets and liabilities of the two international entities discussed above and adjustments for working capital and certain other items in connection with the ECR sale.

For the six months ended March 27, 2020, the gain on sale of $81.9 million also includes additional income for the re lease of a deferred gain upon achievement of the IT Migration Date described above in connecti on with the delivery to Worley of certain IT application and hardware assets related to the ECR business, as well as adjustments to the purchase price for working capital and certain other items in connection with the ECR sale that have occurred through the first six months of fiscal 2020.

The Company’s effective tax rate from discontinued operations for the three months ended March 27, 2020 was (63.2)%.

The $11.6 million tax benefit for the current quarter was mainly driven by $9 million of tax benefit attributable to the reallocation of proceeds from the sale of ECR and $5.0 million of tax benefit related to certain non-taxable gains in local jurisdictions.

The Company has recognized costs recorded in SG&A expense incurred to perform the TSA, offset b y $ 15.2 million in TSA related income for such services that is reported in miscellaneous income (expense) for the nine months ended June 26, 2020 before inclusion of certain incremental outside service support costs agreed to be shared equally by the parties.

Segment Information

The Company's two operating segments and global lines of business ("LOBs") are as follows:

Critical Mission Solutions ("CMS") and People & Places Solutions ("P&PS");

with the previous Energy, Chemicals and Resources ("ECR") LOB reported as discontinued operations.

Critical Mission Solutions ("CMS") and People & Places Solutions ("P&PS"), with the previous Energy, Chemicals and Resources ("ECR") LOB reported as discontinued operations.

For further information on ECR, refer to Note 7- Sale of Energy, Chemicals and Resources ("ECR") Business.

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For purposes of the Company’s goodwill impairment testing, it has been determined that the Company’s operating segments are also its reporting units based on management’s conclusion that the components comprising each of its operating segments share similar economic characteristics and meet the aggregation criteria for reporting units in accordance with ASC 350, Intangibles-Goodwill and Other .

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Under this organization, the sales function is managed by LOB, and accordingly, the associated cost is embedded in the segments and reported to the respective head of each LOB.

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The following tables present total revenues and segment operating profit from continuing operations for each reportable segment (in thousands) and includes a reconciliation of segment operating profit to total U.S.

GAAP operating profit by including certain corporate-level expenses, Restructuring and other charges and transaction and integration costs (in thousands).

For the Three Months Ended For the Six Months Ended

March 27, 2020 March 29, 2019 March 27, 2020 March 29, 2019

GAAP operating profit by including certain corporate-level expenses, Restructuring and other charges (as defined in Note 11 - Restructuring and Other Charges) and transaction and integration costs (in thousands).

For the Three Months Ended For the Nine Months Ended

June 26, 2020 June 28, 2019 June 26, 2020 June 28, 2019

Revenues from External Customers:

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Total $ 3,260,057 $ 3,169,622 $ 10,047,286 $ 9,345,005

For the Three Months Ended For the Six Months Ended

March 27, 2020 March 29, 2019 March 27, 2020 March 29, 2019

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For the Three Months Ended For the Nine Months Ended

June 26, 2020 June 28, 2019 June 26, 2020 June 28, 2019

Segment Operating Profit:

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GAAP Operating Profit 194,376 89,954 513,500 305,763

Total Other (Expense) Income, net (2) ( 344,583 ) 9,151 ( 241,759 ) ( 11,789 )

(Loss) Earnings from Continuing Operations Before Taxes $ ( 176,805 ) $ 111,832 $ 77,366 $ 204,021

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(1) Other corporate expenses include costs that were previously allocated to the ECR segment prior to discontinued operations presentation in connection with the ECR sale in the approximate amount of $ 6.4 million and $ 12.8 million for the three and six month periods ended March 29, 2019.

Other corporate expenses also include intangibles amortization of $ 22.1 million and $ 18.7 million for the three-month periods ended March 27, 2020 and March 29, 2019, respectively, and $ 43.9 million and $ 37.3 million for the six months ended March 27, 2020 and March 29, 2019, respectively.

(2) For the three and six month periods ended March 27, 2020, i ncludes revenues under the Company's TSA with Worley of $ 2.2 million and $ 14.2 million, respectively, $( 341.0 ) million and $( 241.9 ) million in fair value adjustments related to our investment in Worley stock (net of Worley stock dividend) and certain foreign currency revaluations relating to the ECR sale, respectively, the amortization of deferred financing fees related to the CH2M acquisition of $ 0.1 million and $ 0.7 million, respectively, and the loss on settlement of the U.S.

pension plan of $ 0 and $ 2.7 million respectively.

For the three and six month periods ended March 29, 2019, includes the amortization of deferred financing fees related to the CH2M acquisition of $ 0.5 million and $ 1.0 million , re spectively and the gain on settlement of the CH2M portion of the U.S.

Total Other Income (Expense), net (2) 109,305 3,445 ( 132,453 ) ( 8,344 )

Earnings from Continuing Operations Before Taxes $ 303,681 $ 93,399 $ 381,047 $ 297,419

(1) Other corporate expenses include costs that were previously allocated to the ECR segment prior to discontinued operations presentation in connection with the ECR sale in the approximate amount of $ 2.0 million and $ 14.8 million for the three and nine month periods ended June 28, 2019, respectively.

Other corporate expenses also include intangibles amortization of $ 23.1 million and $ 18.4 million for the three-month periods ended June 26, 2020 and June 28, 2019, respectively, and $ 67.1 million and $ 55.7 million for the nine months ended June 26, 2020 and June 28, 2019, respectively.

(2) For the three and nine month periods ended June 26, 2020, i ncludes revenues under the Company's TSA with Worley of $ 1.0 million and $ 15.2 million, respectively, $ 122.9 million and $( 119.0 ) million in fair value adjustments related to our investment in Worley stock (net of Worley stock dividend) and certain foreign currency revaluations relating to the ECR sale, respectively, the amortization of deferred financing fees related to the acquisition of CH2M HILL Companies Ltd.

("CH2M") in December 2017 (the "CH2M acquisition") of $— million and $ 0.7 million, respectively, and the loss on settlement of the U.S.

pension plan of $— million and $ 2.7 million respectively.

For the three and nine month periods ended June 28, 2019, includes the amortization of deferred financing fees related to the CH2M acquisition of $ 0.5 million and $ 1.5 million , re spectively, and the gain on settlement of the CH2M portion of the U.S.

pension plan of $ 0.0 million and $ 34.6 million , respectively.

Also includes revenues under the Company's TSA with Worley of $ 14.1 million for the three and nine month periods ended June 28, 2019 , for which the related costs are included in SG&A.

(1) Included in “other corporate expenses” in the above table are costs and expenses which relate to general corporate activities as well as corporate-managed benefit and insurance programs.

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In addition, other corporate expenses may also include from time to time certain adjustments to contract margins (both positive and negative) associated with projects where it has been determined, in the opinion of management, that such adjustments are not indicative of the performance of the related LOB.

See also MD&A results of operations for our operating segments in Item 2- Management’s Discussion and Analysis of Financial Condition and Results of Operations .

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Receivables and contract assets

The following table presents the components of receivables appearing in the accompanying Consolidated Balance Sheets at March 27, 2020 and September 27, 2019, as well as certain other related information (in thousands):

March 27, 2020 September 27, 2019

The following table presents the components of receivables appearing in the accompanying Consolidated Balance Sheets at June 26, 2020 and September 27, 2019, as well as certain other related information (in thousands):

June 26, 2020 September 27, 2019

Components of receivables and contract assets:

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The increase in contract assets was a result of normal business activity and not materially impacted by any other factors.

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Joint Ventures and VIEs

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The Company is unable to estimate the maximum potential amount of future payments that we could be required to make under outstanding performance guarantees related to joint venture projects due to a number of factors, including but not limited to, the nature and extent of any contractual defaults by our joint venture partners, resource availability, potential performance delays caused by the defaults, the location of the projects, and the terms of the related contracts.

Refer to Note 19 - Commitments and Contingencies, for further discussion relating to performance guarantees.

Refer to Note 19 - Commitments and Contingencies and Derivative Financial Instruments, for further discussion relating to performance guarantees.

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For consolidated joint ventures, the entire amount of the services performed, and the costs associated with these services, including the services provided by the other joint venture partners, are included in the Company's result of operations.

Likewise, the entire amount of each of the assets and liabilities are included in the Company’s Consolidated Balance Sheets.

For the consolidated VIEs, the carrying value of assets and liabilities was $ 237.3 million and $ 134.3 million, respectively, as of March 27, 2020 and $ 192.6 million and $ 138.5 million, respectively, as of September 27, 2019.

For the consolidated VIEs, the carrying value of assets and liabilities was $ 304.0 million and $ 188.8 million, respectively, as of June 26, 2020 and $ 192.6 million and $ 138.5 million, respectively, as of September 27, 2019.

There are no consolidated VIEs that have debt or credit facilities.

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For those joint ventures accounted for under proportionate consolidation, only the Company’s pro rata share of assets, liabilities, revenue, and costs are included in the Company’s balance sheet and results of operations.

For the proportionate consolidated VIEs, the carrying value of assets and liabilities was $ 96.0 million and $ 87.5 million as of March 27, 2020, respectively, and $ 61.1 million and $ 63.7 million as of September 27, 2019, respectively.

For the proportionate consolidated VIEs, the carrying value of assets and liabilitie s was $ 61.3 million and $ 63.6 million , respectively, a s of June 26, 2020, and $ 61.1 million and $ 63.7 million, respectively, as of September 27, 2019.

For those joint ventures accounted for under the equity method, the Company's investment balances for the joint venture are included in Other Noncurrent Assets:

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These basis differences are amortized based on an internal allocation to underlying net assets, excluding allocations to goodwill.

As of March 27, 2020, the Company’s equity method investments exceeded its share of venture net assets by $ 70.3 million.

Our investments in equity method joint ventures on the Consolidated Balance Sheets as of March 27, 2020 and September 27, 2019 were $ 166.9 million and $ 157.9 million, respectively.

During the three months ended March 27, 2020 and March 29, 2019, we recognized income from equity method joint ventures of $ 18.8 million and $ 12.4 million, respectively.

During the six months ended March 27, 2020 and March 29, 2019, we recognized income from equity method joint ventures of $ 36.0 million and $ 25.9 million , respectively.

Accounts receivable from unconsolidated joint ventures accounted for under the equity method is $ 7.4 million and $ 19.5 million as of March 27, 2020 and September 27, 2019, respectively.

As of June 26, 2020, the Company’s equity method investments exceeded its share of venture net assets by $ 70.4 million.

Our investments in equity method joint ventures on the Consolidated Balance Sheets as of June 26, 2020 and September 27, 2019 were $ 170.5 million and $ 157.9 million, respectively.

During the three months ended June 26, 2020 and June 28, 2019, we recognized income from equity method joint ventures of $ 18.8 million and $ 13.2 million, respectively.

During the nine months ended June 26, 2020 and June 28, 2019, we recognized income from equity method joint ventures of $ 54.8 million and $ 39.1 million, respectively.

Accounts receivable from unconsolidated joint ventures accounted for under the equity method is $ 7.6 million and $ 19.5 million as of June 26, 2020 and September 27, 2019, respectively.

Restructuring and Other Charges

During fiscal 2019 and fiscal 2020, the Company implemented certain restructuring and pre-separation initiatives associated with the ECR sale, the KeyW acquisition, the acquisition of John Wood Group's nuclear business and other related cost reduction initiatives.

The restructuring activities and related costs were comprised mainly of separation and lease abandonment programs, while the pre-separation activities and costs were mainly related to the engagement of consulting services and internal personnel and other related costs dedicated to the Company’s ECR-business separation.

During fiscal 2019 and fiscal 2020, the Company implemented certain restructuring and preliminary separation initiatives associated with the ECR sale, the KeyW acquisition, the acquisition of John Wood Group's nuclear business and other related cost reduction initiatives.

The restructuring activities and related costs were comprised mainly of separation and lease abandonment programs, while the preliminary separation activities and costs were mainly related to the engagement of consulting services and internal personnel and other related costs dedicated to the Company’s ECR-business separation.

During the fourth fiscal quarter of 2017, the Company implemented certain restructuring and preliminary integration initiatives associated with the then-impending acquisition of CH2M, which closed in December 2017 (the "CH2M acquisition").

The restructuring activities and related costs were comprised mainly of integration, severance and lease abandonment programs, while the preliminary integration activities and costs were mainly related to the engagement of consulting services and internal personnel and other related costs dedicated to the Company’s acquisition integration management efforts.

Following the closing of the CH2M acquisition, these activities continued through the third fiscal quarter of 2020 and continue to be comprised mainly of severance, lease abandonment, IT related, consulting and other professional services as well as internal personnel costs.

The activities of the above-mentioned programs are expected to be substantially completed before the end of fiscal 2021.

Collectively, the above-mentioned restructuring activities are referred to as “Restructuring and other charges.”

The following table summarizes the impacts of the Restructuring and other charges by LOB in connection with the CH2M, KeyW and John Wood Group's nuclear business acquisitions and the ECR sale for the three and nine months ended June 26, 2020 and June 28, 2019 (in thousands):

JACOBS ENGINEERING GROUP INC.

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (CONTINUED)

During the fourth fiscal quarter of 2017, the Company implemented certain restructuring and pre-integration initiatives associated with the impending acquisition of CH2M, which closed on December 15, 2017 (the "CH2M acquisition").

The restructuring activities and related costs were comprised mainly of severance and lease abandonment programs, while the pre-integration activities and costs were mainly related to the engagement of consulting services and internal personnel and other related costs dedicated to the Company’s acquisition integration management efforts.

Following the closing of the CH2M acquisition, these activities continued through the second fiscal quarter of 2020 and continue to be comprised mainly of severance, lease abandonment, IT related, consulting and other professional services as well as internal personnel costs.

The activities of the above-mentioned programs are expected to be substantially completed before the end of fiscal 2020.

Collectively, the above-mentioned restructuring activities are referred to as “Restructuring and other charges.”

The following table summarizes the impacts of the Restructuring and other charges by LOB in connection with the CH2M, KeyW and John Wood Group's nuclear business acquisitions and the ECR sale for the three and six months ended March 27, 2020 and March 29, 2019 (in thousands):

Three Months Ended Six Months Ended

March 27, 2020 March 29, 2019 March 27, 2020 March 29, 2019

Three Months Ended Nine Months Ended

June 26, 2020 June 28, 2019 June 26, 2020 June 28, 2019

Critical Mission Solutions $ 3,173 $ 7,699 $ 11,248 $ 8,489

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Total $ 19,681 $ 95,959 $ 112,309 $ 204,981

(1) For the three months ended March 27, 2020 and March 29, 2019, amounts include $40.6 million and $ 93.9 million, respectively, and for the six months ended March 27, 2020 and March 29, 2019 amounts include $90.5 million and $ 141.2 million, respectively, in items impacting operating profit, along with items recorded in other income (expense), net, which are the loss on settlement of the CH2M portion of the U.S.

pension plan of $ 0 and $ 2.1 million for the three and six months ended March 27, 2020, respectively, the gain on the settlement of the CH2M retiree medical plans of $ 32.4 million and $ 34.6 million for the three and six months ended March 29, 2019, respectively, and write-off of fixed assets related to restructured leases of $5.3 million for the three and six months ended March 29, 2019.

(1) For the three months ended June 26, 2020 and June 28, 2019, amounts include $ 19.7 million and $92.4 million, respectively, and for the nine months ended June 26, 2020 and June 28, 2019 amounts include $109.6 million and $233.6 million, respectively, in items impacting operating profit, along with items recorded in other income (expense), net, which are the loss on settlement of the CH2M portion of the U.S.

pension plan of $— and $ 2.1 million for the three and nine months ended June 26, 2020, respectively, the gain on the settlement of the CH2M retiree medical plans of $— and $ 34.6 million for the three and nine months ended June 28, 2019, respectively, and write-off of fixed assets related to restructured leases of $ 0.9 million and $ 6.2 million for the three and nine months ended June 28, 2019, and other miscellaneous expenses of $0.6 million for the nine months ended June 26, 2020.

See Note 8 - Segment Information.

The activity in the Company’s accrual for the Restructuring and other charges including the program activities described above for the six months ended March 27, 2020 is as follows (in thousands):

The activity in the Company’s accrual for the Restructuring and other charges including the program activities described above for the nine months ended June 26, 2020 is as follows (in thousands):

Balance at September 27, 2019

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Payments and Usage ( 133,668 )

Balance at March 27, 2020 $ 38,053

Balance at June 26, 2020 $ 24,546

(1) In addition, there was $ 24.6 million in lease cease-use liabilities relating to 2015 restructuring initiatives which were reclassified to ROU asset balances in accordance with the adoption of ASC 842, see Note 14- Leases .

The 2015 restructuring initiatives are no longer active and therefore activity associated with lease cease-use liabilities for those initiatives is not included in the table.

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The following table summarizes the Restructuring and other charges by major type of costs in connection with the CH2M, KeyW and John Wood Group nuclear business acquisitions and the ECR sale for the three and six months ended March 27, 2020 and March 29, 2019 (in thousands):

Three Months Ended Six Months Ended

March 27, 2020 March 29, 2019 March 27, 2020 March 29, 2019

The following table summarizes the Restructuring and other charges by major type of costs in connection with the CH2M, KeyW and John Wood Group nuclear business acquisitions and the ECR sale for the three and nine months ended June 26, 2020 and June 28, 2019 (in thousands):

Three Months Ended Nine Months Ended

June 26, 2020 June 28, 2019 June 26, 2020 June 28, 2019

Lease Abandonments $ ( 11,776 ) $ 22,982 $ ( 7,860 ) $ 72,296

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Total $ 19,681 $ 93,239 $ 112,309 $ 205,119

Cumulative amounts since 2017 incurred to date under our various restructuring and other activities described above by each major type of cost as of March 27, 2020 are as follows (in thousands):

Cumulative amounts since 2017 incurred to date under our various restructuring and other activities described above by each major type of cost as of June 26, 2020 are as follows (in thousands):

Lease Abandonments $ 154,507

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Total $ 590,050

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Short-Term Debt

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Offset from the Bilateral Term Loan were deferred financing fees of $ 0.1 million .

This loan was repaid during the quarter ended March 27, 2020.

This loan was repaid during the second fiscal quarter of 2020.

Long-Term Debt

At March 27, 2020 and September 27, 2019, long-term debt consisted of the following (principal amounts in thousands):

Interest Rate Maturity March 27, 2020 September 27, 2019

At June 26, 2020 and September 27, 2019, long-term debt consisted of the following (principal amounts in thousands):

Interest Rate Maturity June 26, 2020 September 27, 2019

Revolving Credit Facility LIBOR + applicable margin (1) March 2024 $ 617,794 $ 303,780

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Total Long-term debt, net $ 2,155,166 $ 1,201,245

(1) Depending on the Company’s Consolidated Leverage Ratio (as defined in the credit agreement governing the Revolving Credit Facility (defined below)), borrowings under the Revolving Credit Facility bear interest at either a eurocurrency rate plus a margin of

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between 0.875 % and 1.5 % or a base rate plus a margin of between 0 % and 0.5 %.

The applicable LIBOR rates at March 27, 2020 and September 27, 2019 were approximatel y 0.55 % and 1.17 %.

The applicable LIBOR rates at June 26, 2020 and September 27, 2019 were approxim ately 0.06 % and 1.17 %.

(2) Depending on the Company’s Consolidated Leverage Ratio (as defined in the credit agreement governing the 2020 Term Loan Facility (defined below)), borrowings under the 2020 Term Loan Facility bear interest at either a eurocurrency rate plus a margin of between 0.875 % and 1.5 % or a base rate plus a margin of between 0 % and 0.5 %.

The applicable LIBOR rate at March 27, 2020 was approximately 0.72 % .

The applicable LIBOR rate at June 26, 2020 was approximately 0.67 %.

(3) Depending on the Company’s Consolidated Leverage Ratio (as defined in the credit agreement governing the 2017 Term Loan Facility (defined below)), borrowings under the 2017 Term Loan Facility bear interest at either a eurocurrency rate plus a margin of between 1.0 % and 1.5 % or a base rate plus a margin of between 0 % and 0.5 %.

The applicable LIBOR rate at September 27, 2019 was approxima tely 2.05 % .

The a pplicable LIBOR rate at September 27, 2019 was approximately 2.05 %.

On February 7, 2014, Jacobs and certain of its subsidiaries entered into a $ 1.6 billion long-term unsecured, revolving credit facility (as amended, the “2014 Revolving Credit Facility”) with a syndicate of U.S.

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On March 27, 2019, the Company entered into a second amended and restated credit agreement (the "Revolving Credit Facility"), which amended and restated the 2014 Revolving Credit Facility by, among other things, (a) extending the maturity date of the credit facility to March 27, 2024, (b) increasing the facility amount to $ 2.25 billion (with an accordion feature that allows a further increase of the facility amount up to $ 3.25 billion), (c) eliminating the covenants restricting investments, joint ventures and acquisitions by the Company and its subsidiaries and (d) adjusting the financial covenants to eliminate the net worth covenant upon the removal of the same covenant from the Company’s existing Note Purchase Agreement (defined below).

We were in compliance with the covenants under the Revolving Credit Facility at March 27, 2020.

We were in compliance with the covenants under the Revolving Credit Facility at June 26, 2020.

The Revolving Credit Facility permits the Company to borrow under two separate tranches in U.S.

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The Company pays a facility fee of between 0.08 % and 0.20 % per annum depending on the Company’s Consolidated Leverage Ratio.

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On March 25, 2020, the Company entered into an unsecured term loan facility (the “2020 Term Loan Facility”) with a syndicate of financial institutions as lenders.

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The 2020 Term Loan Facility contains affirmative and negative covenants and events of default customary for financings of this type that are consistent with those included in the Revolving Credit Facility.

Subsequent to quarter end, the Company entered into interest rate derivative contracts to swap a portion of our variable rate debt to fixed rate debt.

During the three month period ended June 26, 2020, the Company entered into interest rate and cross currency derivative contracts to swap a portion of our variable rate debt to fixed rate debt.

See Note 19- Commitments and Contingencies and Derivative Financial Instruments for discussion regarding the Company's derivative instruments.

On September 28, 2017, the Company entered into a $ 1.5 billion unsecured delayed-draw term loan facility (as amended, the “2017 Term Loan Facility”) with a syndicate of financial institutions as lenders and letter of credit issuers.

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The 2017 Term Loan Facility was repaid in full during the first fiscal quarter of 2020.

On March 12, 2018, Jacobs entered into a note purchase agreement (as amended, the "Note Purchase Agreement") with respect to the issuance and sale in a private placement transaction of $ 500.0 million in the aggregate principal amount of the Company’s senior notes in three series (collectively, the “Senior Notes”).

On March 12, 2018, Jacobs entered into a note purchase agreement (as amended, the "Note Purchase Agreement") with respect to the issuance and sale in a private placement transaction o f $ 500.0 million in the aggregate principal amount of the Company’s senior notes in three series (collectively, the “Senior Notes”).

The Note Purchase Agreement provides that if the Company's consolidated leverage ratio exceeds a certain amount, the interest on the Senior Notes may increase by 75 basis points.

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In addition, the Note Purchase Agreement contains customary events of default.

We were in compliance with the covenants under the Note Purchase Agreement at March 27, 2020.

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We were in compliance with the covenants under the Note Purchase Agreement at June 26, 2020.

We believe the carrying value of the Revolving Credit Facility, the 2020 Term Loan Facility and other debt outstanding approximates fair value based on the interest rates and scheduled maturities applicable to the outstanding borrowings.

The fair value of the Senior Notes is estimated to be $ 525.9 million at March 27, 2020, based on Level 2 inputs.

The fair value of the Senior Notes is estimated to be $ 528.7 million at June 26, 2020, based on Level 2 inputs.

The fair value is determined by discounting future cash flows using interest rates available for issuances with sim ilar terms and average maturities.

The Company has issued $ 2.3 million in letters of credit under the Revolving Credit Facility, leaving $ 679.4 million of available borrowing capacity under the Revolving Credit Facility at March 27, 2020.

In addition, the Company had issued $ 260.5 million under separate, committed and uncommitted letter-of-credit facilities for total issued letters of credit of $ 262.8 million a t March 27, 2020.

The Company has issue d $ 2.3 million in letters of credit under the Revolving Credit Facility, leaving $ 1.63 billion of available borrowing capacity under the Revolving Credit Facility at June 26, 2020.

In addition, the Company had issued $ 257.3 million u nder separate, committed and uncommitted letter-of-credit facilities for total issued letters of credit of $ 259.5 million a t June 26, 2020.

Revenue Accounting for Contracts

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Refer to Note 8- Segment Information for additional information on how we disaggregate our revenues by reportable segment.

The following table further disaggregates our revenue by geographic area for the three and six months ended March 27, 2020 and March 29, 2019 (in thousands):

Three Months Ended Six Months Ended

March 27, 2020 March 29, 2019 March 27, 2020 March 29, 2019

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The following table further disaggregates our revenue by geographic area for the three and nine months ended June 26, 2020 and June 28, 2019 (in thousands):

Three Months Ended Nine Months Ended

June 26, 2020 June 28, 2019 June 26, 2020 June 28, 2019

United States $ 2,472,091 $ 2,357,836 $ 7,548,192 $ 6,701,474

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Contract liabilities represent amounts billed to clients in excess of revenue recognized to date.

Revenue recognized for the three and six months ended March 27, 2020 that was included in the contract liability balance on September 27, 2019 was $ 66.4 million and $ 310.5 million, respectively.

Revenue recognized for the three and six months ended March 29, 2019 that was included in the contract liability balance on September 28, 2018 was $ 200.2 million and $ 410.0 million, respectively.

Revenue recognized for the three and nine months ended June 26, 2020 that was included in the contract liability balance on September 27, 2019 was $ 42.4 million and $ 352.9 million, respectively.

Revenue recognized for the three and nine months ended June 28, 2019 that was included in the contract liability balance on September 28, 2018 was $ 33.0 million and $ 331.0 million, respectively.

Remaining Performance Obligations

The Company’s remaining performance obligations as of March 27, 2020 represent a measure of the total dollar value of work to be performed on contracts awarded and in progress.

The Company had approximately $ 13.0 billion in remaining performance obligations as of March 27, 2020.

The Company’s remaining performance obligations as of June 26, 2020 represent a measure of the total dollar value of work to be performed on contracts awarded and in progress.

The Company had approximately $ 13.8 billion in remaining performance obligations as of June 26, 2020.

The Company expects to recognize approximately 45 % of our remaining performance obligations into revenue within the next twelve months and the remaining 55 % thereafter.

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Although remaining performance obligations reflect business that is considered to be firm, cancellations, scope adjustments, foreign currency exchange fluctuations or deferrals may occur that impact their volume or the expected timing of their recognition.

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The Company elected to utilize the practical expedient in ASC 842-10-15-37 in which the Company has chosen to account for each separate lease component of a contract and its associated non-lease components as a single lease component.

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The Company adopted ASC 842 using the modified retrospective method, and accordingly, the new guidance was applied to leases that existed as of September 28, 2019 (the date of initial application) without adjusting the comparative periods presented.

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The Company has made an accounting policy election, as allowed under ASC 842-10-15-37 and discussed above, to capitalize both the lease component and nonlease components of its contracts as a single lease component for all of its right-of-use assets.

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Short-term project asset and vehicle leases (project asset and vehicle leases with an initial term of twelve months or less or leases that are cancellable by the lessee and lessor without significant penalties) are not recorded on the consolidated balance sheet and are expensed on a straight-line basis over the lease term.

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Such equipment leases are considered short-term in nature unless it is reasonably certain that the equipment will be leased for a term greater than twelve months.

The components of lease expense (reflected in selling, general and administrative expenses) for the three and six month periods ended March 27, 2020 were as follows (in thousands):

Three Months Ended Six Months Ended

The components of lease expense (reflected in selling, general and administrative expenses) for th e three and nine month periods ended June 26, 2020 were as follows (in thousands):

Three Months Ended Nine Months Ended

Operating lease cost $ 39,123 $ 126,855

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Total lease cost $ 45,127 $ 142,474

Information related to the Company's right-of use assets and lease liabilities as of March 27, 2020 was as follows (in thousands):

Information related to the Company's right-of use assets and lease liabilities as of June 26, 2020 was as follows (in thousands):

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Lease Asset/Liabilities Balance Sheet Classification

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Total lease liabilities $ 921,812

Supplemental information related to the Company's leases for the six months ended March 27, 2020 was as follows (in thousands):

Six Months Ended

Supplemental information related to the Company's leases for the nine months ended June 26, 2020 was as follows (in thousands):

Nine Months Ended

Cash paid for amounts included in the measurements of lease liabilities $ 148,047

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Weighted average discount rate - operating leases 2.8 %

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Total remaining lease payments under the Company's leases for the remainder of fiscal 2020 and for the succeeding years is as follows (in thousands):

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Less Interest ( 109,661 )

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Pension and Other Postretirement Benefit Plans

The following table presents the components of net periodic benefit cost recognized in earnings during the three and six month periods ended March 27, 2020 and March 29, 2019 (in thousands):

Three Months Ended Six Months Ended

March 27, 2020 March 29, 2019 March 27, 2020 March 29, 2019

The following table presents the components of net periodic benefit cost recognized in earnings during the three and nine month periods ended June 26, 2020 and June 28, 2019 (in thousands):

Three Months Ended Nine Months Ended

June 26, 2020 June 28, 2019 June 26, 2020 June 28, 2019

Service cost $ 1,464 $ 1,212 $ 4,394 $ 5,545

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Plan Amendment and settlement loss (gain) — — 2,651 ( 34,621 )

$ ( 10,059 ) $ ( 35,827 ) $ ( 17,467 ) $ ( 41,707 )

Total net periodic pension cost recognized $ ( 10,063 ) $ ( 4,809 ) $ ( 27,530 ) $ ( 46,516 )

The service cost component of net periodic pension expense is presented in the same line item as other compensation costs (direct cost of contracts and selling, general and administrative expenses) and the other components of net periodic pension expense are presented in miscellaneous income (expense), net on the Consolidated Statements of Earnings.

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The following table presents certain information regarding the Company’s cash contributions to our pension plans for fiscal 2020 (in thousands):

Cash contributions made during the first six months of fiscal 2020

Cash contributions made during the first nine months of fiscal 2020

Cash contributions projected for the remainder of fiscal 2020

Total $ 26,829

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Accumulated Other Comprehensive Income

The following table presents the Company's roll forward of accumulated other comprehensive income (loss) after-tax for the six months ended March 27, 2020 (in thousands):

The following table presents the Company's roll forward of accumulated other comprehensive income (loss) after-tax for the nine months ended June 26, 2020 (in thousands):

Change in Pension Liabilities Foreign Currency Translation Adjustment Gain/(Loss) on Cash Flow Hedges Total

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Reclassifications from other comprehensive income (loss) 7,853 — 1,042 8,895

Balance at March 27, 2020

Balance at June 26, 2020

$ ( 425,342 ) $ ( 471,668 ) $ ( 14,682 ) $ ( 911,692 )

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (CONTINUED)

The Company’s effective tax rates from continuing operations for the three months ended March 27, 2020 and March 29, 2019 were 34.6 % and ( 7.1 )%, respectively.

The Company’s effective tax rates from continuing operations for the six months ended March 27, 2020 and March 29, 2019 were 9.5 % and 7.3 %, respectively.

The comparatively higher quarterly tax rate was primarily due to a $ 37.4 million tax benefit in the three months ended March 29, 2019 for remeasurement of the Company's deferred tax liability for unremitted earnings to account for the change in expected manner of recovery due to the ECR divestiture.

For the three months ended March 27, 2020, the effective tax rate was impacted by $ 5.8 million from amended returns for foreign tax credits and research and development credits, a $ 4.1 million benefit related to an India withholding tax rate change and benefits from an Internal Revenue Code section 179D energy credit.

The Company’s effective tax rate from continuing operations for the six months ended March 27, 2020 was impacted by the quarterly tax benefit items noted above as well as impacts from a $ 3.7 million favorable settlement with the Indian Revenue Services in the first quarter fiscal 2020.

The Company’s effective tax rates from continuing operations for the three months ended June 26, 2020 and June 28, 2019 were 22.3 % and ( 2.1 )%, respectively.

The Company’s effective tax rates from continuing operations for the nine months ended June 26, 2020 and June 28, 2019 were 19.7 % and 4.3 %, respectively.

The comparatively higher quarterly tax rate was primarily due to a $ 21.7 million tax benefit in the three months ended June 28, 2019, which related to the release of a valuation allowance on previously fully valued foreign tax credits.

For the three months ended June 26, 2020, the effective tax rate was impacted by a $ 4.1 million benefit for the release of uncertain tax positions due to the statute of limitations expiring and a $ 12.6 million benefit for the release of a valuation allowance in the UK, with offsetting unfavorable impacts from other discrete items.

The Company’s effective tax rate from continuing operations for the nine months ended June 26, 2020 was higher primarily due to $ 62.6 million in discrete benefits in the nine months ended June 28, 2019, predominantly comprised of $ 37.4 million for a remeasurement of the Company's deferred tax liability for unremitted earnings to account for the change in expected manner of recovery and an additional benefit of $ 21.7 million as a result of a valuation allowance release on foreign tax credits that were previously fully reserved.

Comparatively, in the nine months ended June 26, 2020, the Company had a $ 12.6 million benefit for the release of a valuation allowance in the UK, a $ 6.9 million of benefit from the application of the Internal Revenue Code section 179D, a $ 3.7 million favorable settlement with the Indian Revenue Services, an amended tax return generating $ 5.8 million of foreign tax credits and research and development, and a $ 4.1 million benefit for an India tax rate change, with offsetting unfavorable impacts from other discrete items.

See Note 7- Sale of Energy, Chemicals and Resources ("ECR") Business for further information on the Company's discontinued operations reporting for the sale of the ECR business.

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However, future results may include favorable or unfavorable adjustments to our estimated tax liabilities in the period the assessments are made or resolved, which may impact our effective tax rate.

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Earnings Per Share and Certain Related Information

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Net earnings used for the purpose of determining basic and diluted EPS is determined by taking net earnings, less earnings available to participating securities.

The following table reconciles the denominator used to compute basic EPS to the denominator used to compute diluted EPS for the three and nine months ended June 26, 2020 and June 28, 2019 (in thousands):

JACOBS ENGINEERING GROUP INC.

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (CONTINUED)

The following table reconciles the denominator used to compute basic EPS to the denominator used to compute diluted EPS for the three and six months ended March 27, 2020 and March 29, 2019 (in thousands):

Three Months Ended Six Months Ended

March 27, 2020 March 29, 2019 March 27, 2020 March 29, 2019

Three Months Ended Nine Months Ended

June 26, 2020 June 28, 2019 June 26, 2020 June 28, 2019

Numerator for Basic and Diluted EPS:

Net (loss) earnings attributable to Jacobs from continuing operations $ ( 121,967 ) $ 114,755 $ 57,458 $ 179,648

Net earnings attributable to Jacobs from continuing operations $ 226,886 $ 89,365 $ 284,344 $ 269,012

Net earnings from continuing operations allocated to participating securities ( 24 ) ( 105 ) ( 77 ) ( 444 )

Net (loss) earnings from continuing operations allocated to common stock for EPS calculation $ ( 121,967 ) $ 114,564 $ 57,438 $ 179,310

Net earnings (loss) attributable to Jacobs from discontinued operations $ 29,880 $ ( 57,838 ) $ 107,468 $ 1,565

Net (earnings) loss from discontinued operations allocated to participating securities — 96 ( 38 ) ( 3 )

Net earnings (loss) from discontinued operations allocated to common stock for EPS calculation $ 29,880 $ ( 57,742 ) $ 107,430 $ 1,562

Net (loss) earnings allocated to common stock for EPS calculation $ ( 92,087 ) $ 56,822 $ 164,868 $ 180,872

Net earnings from continuing operations allocated to common stock for EPS calculation $ 226,862 $ 89,260 $ 284,267 $ 268,568

Net earnings attributable to Jacobs from discontinued operations $ 18,043 $ 435,077 $ 125,511 $ 436,642

Net earnings from discontinued operations allocated to participating securities ( 2 ) ( 513 ) ( 34 ) ( 720 )

Net earnings from discontinued operations allocated to common stock for EPS calculation $ 18,041 $ 434,564 $ 125,477 $ 435,922

Net earnings allocated to common stock for EPS calculation $ 244,903 $ 523,824 $ 409,744 $ 704,490

Denominator for Basic and Diluted EPS:

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Net Earnings Per Share:

Basic Net (Loss) Earnings from Continuing Operations Per Share $ ( 0.92 ) $ 0.83 $ 0.43 $ 1.28

Basic Net Earnings from Continuing Operations Per Share $ 1.74 $ 0.65 $ 2.15 $ 1.93

Basic Net Earnings from Discontinued Operations Per Share $ 0.14 $ 3.18 $ 0.95 $ 3.14

Basic (Loss) Earnings Per Share $ ( 0.69 ) $ 0.41 $ 1.24 $ 1.29

Diluted Net (Loss) Earnings from Continuing Operations Per Share $ ( 0.92 ) $ 0.82 $ 0.43 $ 1.27

Basic Earnings Per Share $ 1.88 $ 3.83 $ 3.11 $ 5.07

Diluted Net Earnings from Continuing Operations Per Share $ 1.73 $ 0.65 $ 2.13 $ 1.92

Diluted Net Earnings from Discontinued Operations Per Share $ 0.14 $ 3.15 $ 0.94 $ 3.11

Diluted (Loss) Earnings Per Share $ ( 0.69 ) $ 0.41 $ 1.23 $ 1.28

(1) For the three months ended March 27, 2020, because net (loss) earnings from continuing operations was a loss, the effect of antidilutive securities of 1,032 was excluded from the denominator in calculating diluted EPS.

Diluted Earnings Per Share $ 1.87 $ 3.80 $ 3.08 $ 5.02

Share Repurchases

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (CONTINUED)

Share Repurchases

On January 17, 2019, the Company’s Board of Directors authorized a share repurchase program of up to $ 1.0 billion of the Company’s common st ock, to expire on January 16, 2022 (the "2019 Repurchase Authorization").

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(1) Includes commissions paid and calculated at the average price per share

As a precautionary measure in light of the COVID-19 pandemic, the Company temporarily suspended purchases under the share repurchase plan in March 2020.

As of March 27, 2020, the Company h as $ 107.9 million remaining under the 2019 Repurchase Authorization.

As a precautionary measure in light of the COVID-19 pandemic, the Company temporarily suspended purchases under the share repurchase plan in March 2020, with such suspension remaining in effect through the fiscal third quarter of 2020.

As of June 26, 2020, the Company h as $ 107.9 million rema ining under the 2019 Repurchase Authorization.

On January 16, 2020, the Company’s Board of Directors authorized an additional share repurchase program of up to $ 1.0 billion of the Company’s common stock, to expire on January 15, 2023 (the "2020 Repurchase Authorization").

There have been no repurchases under the 2020 Repurchase Authorization as of March 27, 2020.

There have been no repurchases under the 2020 Repurchase Authorization as of June 26, 2020.

The share repurchase programs do not obligate the Company to purchase any shares.

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Dividend Program

On May 5, 2020, the Company’s Board of Directors declared a quarterly dividend of $ 0.19 per share of the Company’s common stock to be paid on June 17, 2020, to shareholders of record on the close of business on May 20, 2020.

O n July 9, 2020, the Company’s Board of Directors declared a quarterly dividend of $0.19 per share of the Company’s common stock to be paid on August 21, 2020, to shareholders of record on the close of business on July 24, 2020.

Future dividend declarations are subject to review and approval by the Company’s Board of Directors.

Dividends paid through the second fiscal quarter of 2020 and the preceding fiscal year are as follows:

Dividends pai d through the third fiscal quarter of 2020 and the preceding fiscal year are as follows:

Declaration Date Record Date Payment Date Cash Amount (per share)

May 5, 2020 May 20, 2020 June 17, 2020 $ 0.19

January 16, 2020 January 31, 2020 February 28, 2020 $ 0.19

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Derivative Financial Instruments

Due to the nature of the Company's international operations, we are at times exposed to foreign currency risk.

Additionally, the Company is exposed to interest rate risk under its variable rate borrowings.

As such, we sometimes enter into foreign exchange contracts and interest rate contracts in order to limit our exposure to fluctuating foreign currencies

The Company is exposed to interest rate risk under its variable rate borrowings and additionally, due to the nature of the Compan y's international operations, we are at times exposed to foreign currency risk.

As such, we sometimes enter

JACOBS ENGINEERING GROUP INC.

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (CONTINUED)

and interest rates.

The Company did not have outstanding foreign currency or interest rate derivatives that would have a material effect on our consolidated financial statements or results of operations as of March 27, 2020 .

into foreign exchange contracts and interest rate contracts in order to limit our exposure to fluctuating foreign currencies and interest rates.

In April 2020 we entered into interest rate swap agreements with a notional value of $ 771.8 million as of June 26, 2020 to manage the interest rate exposure on our variable rate loans.

Additionally, we entered into a cross-currency swap agreement with a notional value of $ 127.8 million to manage the interest rate and foreign currency exposure on our USD borrowings by a European subsidiary.

By entering into the swap agreements, the Company converted the LIBOR rate based liability into a fixed rate liability and, for the cross currency swap, our LIBOR rate based borrowing in USD to a fixed rate Euro liability, for periods ranging from three and a half to ten years .

Under the interest rate swap agreements, the Company receives the one month LIBOR rate and pays monthly a fixed rate ranging from .704 % to 1.116 % and under the cross currency swap agreement, the Company receives the one month LIBOR rate plus 0.875 % in USD and pays monthly a Euro fixed rate of .726 % to .746 % for the term of the swaps.

The swaps were designated as cash-flow hedges in accordance with ASC 815, Derivatives and Hedging .

The fair value of the interest rate and cross currency swaps at June 26, 2020 was $ 25.0 million, which is included in other deferred liabilities on the consolidated balance sheet.

The unrealized net losses on these interest rate and cross currency swaps was $ 14.7 million, net of tax, and was included in accumulated other comprehensive income as of June 26, 2020.

Additionally, at June 26, 2020, the Company held foreign exchange forward contracts in currencies that support our operations, including British Pound, Euro, Australian Dollar and other currencies, with notional values of $ 388.4 million at June 26, 2020.

The length of these contracts currently ranges from one to 12 months.

The fair value of the foreign exchange contracts at June 26, 2020 was $ 38.7 million, which is included within current assets on the consolidated balance sheet and with associated income statement impacts included in miscellaneous income (expense) in the consolidated statement of earnings.

The fair value measurements of these derivatives are being made using Level 2 inputs under ASC 820, Fair Value Measurement , as the measurements are based on o bservable inputs other than quoted prices in active markets .

We are exposed to risk from credit-related losses resulting from nonperformance by counterparties to our financial instruments.

We perform credit evaluations of our counterparties under forward exchange and interest rate contracts and expect all counterparties to meet their obligations.

We have not experienced credit losses from our counterparties.

Contractual Guarantees and Insurance

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Guarantees are accounted for in accordance with ASC 460-10, Guarantees , at fair value at the inception of the guarantee.

At March 27, 2020 and September 27, 2019, the Company had issued and outstanding approximately $ 262.8 million an d $ 262.2 million , respectively, in LOCs and $ 1.97 billion an d $ 2.0 billion, respectively, in surety bonds.

At June 26, 2020 and September 27, 2019, the Company had issued and outstanding approximate ly $ 259.5 million and $ 262.2 million, respectively, in LOCs and $ 2.1 billion an d $ 2.0 billion, respectively, in surety bonds.

We maintain insurance coverage for most insurable aspects of our business and operations.

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federal government, we are subject to many types of audits, investigations, and claims by, or on behalf of, the government including with respect to contract performance, pricing, cost allocations, procurement practices, labor practices, and socioeconomic obligations.

Furthermore, our income, franchise, and similar tax returns and filings are also subject to audit and investigation by the Internal Revenue Service, most states within the United States, as well as by various government agencies representing jurisdictions outside the United States.

Furthermore, our income,

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franchise, and similar tax returns and filings are also subject to audit and investigation by the Internal Revenue Service, most states within the United States, as well as by various government agencies representing jurisdictions outside the United States.

Our Consolidated Balance Sheets include amounts representing our probable estimated liability relating to such claims, guarantees, litigation, audits, and investigations.

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Litigation and Investigations

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On September 30, 2015, Nui Phao Mining Company Limited (“NPMC”) commenced arbitration proceedings against Jacobs E&C Australia Pty Limited (“Jacobs E&C”) in Singapore before the Singapore International Arbitration Centre.

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This draw on bonds does not impact the Company's ultimate liability.

In light of the COVID-19 pandemic, the Tribunal has rescheduled the arbitration hearing, which was previously scheduled to begin in May 2020 and continue in August 2020.

The hearing is now scheduled to commence in November 2020 and continue in March and April 2021.

In light of the COVID-19 pandemic, a November 2020 date for commencement of the hearing has been vacated and the parties are seeking an allotted time for the hearing in 2021.

No decision is expected before late 2021.

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A hearing on that matter was held in March 2019, and a decision in favor of the Consortium was issued.

JKC has appealed the decision and a hearing on the appeal took place in March 2020, and a decision is pending.

JKC appealed the decision, a hearing on the appeal took place in March 2020 and a decision was handed down on July 22, 2020 denying JKC’s appeal in its entirety.

If the Consortium is found liable, these matters could have a material adverse effect on the Company’s business, financial condition, results of operations and /or cash flows, particularly in the short term.

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In addition, in November 2019, a resident of Roane County filed a putative class action against TVA and the Company alleging they failed to adequately warn local residents about risks associated with the released fly ash.

In February 2020, the Company learned that the district attorney in Roane County recommended that the Tennessee Bureau of Investigation investigate issues pertaining to clean up worker safety at Kingston, with that investigation still pending.

There has been no finding of liability against the Company or that any of the alleged illnesses are the result of exposure to fly ash in any of the above matters.

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Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-Q

Item 1. Financial Statements