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Item 2. Management’s Discussion and Analysis

2020-08-03 compared with 2020-05-06 · 150 added, 141 removed, 296 unchanged (50% of the section changed)

Management’s Discussion and Analysis of Financial Condition and Results of Operations.

The purpose of this Management’s Discussion and Analysis of Financial Condition and Results of Operations (“MD&A”) is to provide a narrative analysis explaining the reasons for material changes in the Company’s (i) financial condition from the most recent fiscal year-end to March 27, 2020 and (ii) results of operations during the current fiscal period(s) as compared to the corresponding period(s) of the preceding fiscal year.

The purpose of this Management’s Discussion and Analysis of Financial Condition and Results of Operations (“MD&A”) is to provide a narrative analysis explaining the reasons for material changes in the Company’s (i) financial condition from the most recent fiscal year-end to June 26, 2020 and (ii) results of operations during the current fiscal period(s) as compared to the corresponding period(s) of the preceding fiscal year.

In order to better understand such changes, readers of this MD&A should also read:

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When used herein, words such as “expects,” “anticipates,” “believes,” “seeks,” “estimates,” “plans,” “intends,” “future,” “will,” “would,” “could,” “can,” “may,” and similar words are intended to identify forward-looking statements.

Examples of forward-looking statements include, but are not limited to, statements we make concerning the potential effects of the COVID-19 pandemic on our business, financial condition and results of operations and our expectations as to our future growth, prospects, financial outlook and business strategy for fiscal 2020 or future fiscal years.

Examples of forward-looking statements include, but are not limited to, statements we make concerning the potential continued effects of the COVID-19 pandemic on our business, financial condition and results of operations and our expectations as to our future growth, prospects, financial outlook and business strategy for fiscal 2020 or future fiscal years.

You should not place undue reliance on these forward-looking statements.

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Such factors include the magnitude, timing, duration and ultimate impact of the COVID-19 pandemic and any resulting economic downturn on our results, prospects and opportunities;

Such impact includes, but is not limited to, the possible reduction in demand for certain of our services and the delay or abandonment of ongoing or anticipated projects due to the financial condition of our clients and suppliers or to governmental budget constraints;

the timeline for easing or removing “shelter-in-place”, “stay-at-home”, social distancing, travel restrictions and similar orders, measures or restrictions imposed by governments and health officials in response to the pandemic, or if such orders, measures or restrictions are re-imposed after being lifted or eased, including as a result of increases in cases of COVID-19;

and the development, effectiveness and distribution of vaccines or treatments for COVID-19.

The impact of such matters includes, but is not limited to, the possible reduction in demand for certain of our services and the delay or abandonment of ongoing or anticipated projects due to the financial condition of our clients and suppliers or to governmental budget constraints;

the inability of our clients to meet their payment obligations in a timely manner or at all;

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On March 11, 2020, the World Health Organization characterized the outbreak of the novel coronavirus (“COVID-19”) as a global pandemic and recommended certain containment and mitigation measures.

On March 13, 2020, the United States declared a national emergency concerning the outbreak, and the vast majority of states and many

municipalities have declared public health emergencies or taken similar actions.

Along with these declarations, there have been extraordinary and wide-ranging actions taken by international, federal, state and local public health and governmental authorities to contain and combat the outbreak of COVID-19 in regions across the United States and around the world.

These actions include quarantines and “stay-at-home” or “shelter-in-place” orders, social distancing measures, travel restrictions, school closures and similar mandates for many individuals in order to substantially restrict daily activities and orders for many businesses to curtail or cease normal operations unless their work is critical, essential or life-sustaining.

In addition, governments and central banks in the United States and other countries in which we operate have enacted fiscal and monetary stimulus measures to counteract the impacts of COVID-19.

On March 13, 2020, the United States declared a national emergency concerning the outbreak, and the vast majority of states and many municipalities have declared public health emergencies or taken similar actions.

Along with these declarations, there were extraordinary and wide-ranging actions taken by international, federal, state and local public health and governmental authorities to contain and combat outbreaks of COVID-19 in regions across the United States and around the world.

These actions included quarantines and “stay-at-home” or “shelter-in-place” orders, social distancing measures, travel restrictions, school closures and similar mandates for many individuals in order to substantially restrict daily activities and orders for many businesses to curtail or cease normal operations unless their work is critical, essential or life-sustaining.

A lthough certain jurisdictions have subsequently taken steps to lift or ease such restrictions to various degrees, some jurisdictions have subsequently reversed such lifting or easing in response to increased cases of COVID-19.

In addition, governments and central banks in the United States and other countries in which we operate have enacted fiscal and monetary stimulus and assistance measures to counteract the economic impacts of COVID-19.

We are a company operating in a critical infrastructure industry, as defined by the U.S.

Department of Homeland Security.

Consistent with international, federal, state and local requirements to date, we currently continue to materially operate.

In addition, demand for certain of our services, including those supporting health care relief efforts relating to COVID-19, could increase as a result of COVID-19.

Notwithstanding our continued critical operations, it is expected that the COVID-19 may have further adverse impacts on our continued operations.

Accordingly, we are reducing spending more broadly across the Company, only proceeding with operating and capital spending that is critical.

Consistent with international, federal, state and local requirements to date, we continue to materially operate.

In addition, demand for certain of our services, including those supporting health care relief efforts relating to COVID-19, has increased, and could continue to increase, as a result of COVID-19.

Notwithstanding our continued critical operations, COVID-19 has negatively impacted our business, and may have further adverse impacts, on our continued operations, including those listed and discussed in Item 1A, Risk Factors included in this Quarterly Report on Form 10-Q.

Accordingly, we have reduced spending broadly across the Company, only proceeding with operating and capital spending that is critical.

We have also ceased all non-essential hiring and reduced discretionary expenses, including certain employee benefits and compensation.

Looking ahead, we have developed contingency plans to reduce costs further if the situation deteriorates.

Looking ahead, we have developed contingency plans to reduce costs further if the situation further deteriorates or lasts longer than current expectations.

We will continue to actively monitor the situation and may take further actions that alter our business operations as may be necessary or appropriate for the health and safety of employees, contractors, customers, suppliers or others or as required by international, federal, state or local authorities.

Based on current estimates, we expect the impact of COVID-19 to primarily occur in the third fiscal quarter of 2020, which impact may continue into the fourth fiscal quarter of 2020 or beyond.

Based on current estimates, we expect the impact of COVID-19 to continue in the fourth fiscal quarter of 2020, although to a lesser degree than what was seen in the third fiscal quarter of 2020.

These impacts could also continue into fiscal 2021.

Although this business disruption is expected to be temporary, significant uncertainty exists concerning the magnitude, duration and impacts of the COVID-19 pandemic, including with regard to the effects on our customers and customer demand for our services.

Accordingly, actual results for future fiscal periods could differ materially versus current expectations and current results and financial condition discussed herein may not be indicative of future operating results and trends.

Accordingly, actual results for the fourth fiscal quarter of 2020 and future fiscal periods could differ materially versus current expectations and current results and financial condition discussed herein may not be indicative of future operating results and trends.

For a discussion of risks and uncertainties related to COVID-19, including the potential impacts on our business, financial condition and results of operations, see “Part II - Item 1A - Risk Factors”.

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At Jacobs, we’re challenging today to reinvent tomorrow by solving the world’s most critical problems for thriving cities, resilient environments, mission-critical outcomes, operational advancement, scientific discovery and cutting-edge manufacturing, turning abstract ideas into realities that transform the world for good.

Leveraging a talent force of approximately 55,000, Jacobs provides a full spectrum of professional services including consulting, technical, scientific and project delivery for the government and private sector.

Leveraging a talent force of nearly 55,000, Jacobs provides a full spectrum of professional services including consulting, technical, scientific and project delivery for the government and private sector.

The Company’s deep global domain knowledge - applied together with the latest advances in technology - are why customers large and small choose to partner with Jacobs.

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This transformation included the $3.2 billion acquisition of CH2M and the $3.4 billion divestiture of the Company's energy, chemicals and resources business.

Our acquisitions of KeyW and John Wood Group’s nuclear business will further position us as a leader in high-value government services and technology-enabled solutions, enhancing our portfolio by adding intellectual property-driven technology with unique proprietary C5ISR (command, control, communications, computer, combat systems, intelligence, surveillance and reconnaissance) rapid solutions, and amplifying Jacobs’ position as a Tier-1 global nuclear services provider.

We have turned the course of Jacobs’ future and are now focused on broadening our leadership in high growth sectors.

intellectual property-driven technology with unique proprietary C5ISR (command, control, communications, computer, combat systems, intelligence, surveillance and reconnaissance) rapid solutions, and amplifying Jacobs’ position as a Tier-1 global nuclear services provider.

We have altered the course of Jacobs’ future and are now focused on broadening our leadership in high growth sectors.

As part of our strategy, our new brand was created from an understanding of where we’ve been, what’s true to our culture and our strategy going forward.

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Revenue by Type ( Q3 FY 2020 ) 1

1 Due to COVID-19 and the actions taken by governmental authorities and others related thereto, some of the information provided in this summary relating to sources of revenue could be substantially different in the third quarter of fiscal 2020 and subsequent periods.

1 Due to COVID-19 and the actions taken by governmental authorities and others related thereto, some of the information provided in this summary relating to sources of revenue could be substantially different in the fourth quarter of fiscal 2020 and subsequent periods.

Lines of Business

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Another trend we are witnessing is an increase in the capabilities of unmanned aircraft and hypersonic weapons, which is impacting both offensive and defensive spending priorities among our clients and is a driver for next generation solutions such as C5ISR (command, control, communications, computer, combat systems, intelligence, surveillance and reconnaissance) and advanced aeronautical testing, respectively.

We are also seeing an increase in space exploration

initiatives both from the U.S.

We are also seeing an increase in space exploration initiatives both from the U.S.

government, such as NASA’s Artemis program to return to the moon in 2024, as well as the commercial sector.

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NASA is one our major government customers in the U.S., where we provide a wide range of technology services.

For our telecommunications customers, we provide permitting, site planning and engineering to enable the development of wireline and wireless communications including the development of 5G small cell sites.

telecommunications customers, we provide permitting, site planning and engineering to enable the development of wireline and wireless communications including the development of 5G small cell sites.

• Facility Engineering and Operations .

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As such, the assets and liabilities of the ECR business 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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Bridging the upstream, midstream and downstream industries, our services encompassed consulting, engineering, procurement, construction, maintenance and project management.

Results of Operations for the three and six months ended March 27, 2020 and March 29, 2019

Results of Operations for the 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

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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

Overview – Three and Six Months Ended March 27, 2020

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

Overview – Three and Nine Months Ended June 26, 2020

COVID-19 Pandemic .

There are many risks and uncertainties regarding the COVID-19 pandemic, including the anticipated duration of the pandemic and the extent of local and worldwide social, political, and economic disruption it

The Company’s operations for the second fiscal quarter of 2020 were not materially impacted by COVID-19, in part due to the timing of the spread of the virus, which escalated towards the end of the quarter.

While certain business units of both Critical Mission Solutions and People & Places Solutions may experience an increase in demand for certain of their services regarding new projects that may arise in response to the COVID-19 pandemic, it is still expected that COVID-19 is likely to have an adverse impact on each of Critical Missions Solutions and People & Places Solutions in the third fiscal quarter of 2020, which may continue into the fourth fiscal quarter and beyond.

The Company’s operations for the third fiscal quarter of 2020 were adversely impacted by COVID-19.

While certain business units of both Critical Mission Solutions and People & Places Solutions have experienced, and may continue to experience, an increase in demand for certain of their services regarding new projects that may arise in response to the COVID-19 pandemic, it is still expected that COVID-19 is likely to continue to have an adverse impact on each of Critical Missions Solutions and People & Places Solutions in the fourth fiscal quarter of 2020, although to a lesser degree than what was seen in the third fiscal quarter of 2020.

These may continue into fiscal 2021.

For a discussion of risks and uncertainties related to COVID-19, including the potential impacts on the Company’s business, financial condition and results of operations, see “Part II - Item 1A - Risk Factors”.

Net loss attributable to the Company from continuing operations for the second fiscal quarter ended March 27, 2020 were $(122.0) million (or $(0.92) per diluted share), a decrease of $236.7 million, or 206.3%, from earnings of $114.8 million (or $0.82 per diluted share) for the corresponding period last year.

Included in the Compa ny’s operating results from continuing operations for the three months ended March 27, 2020 were $258.6 million in after-tax fair value losses recorded in miscellaneous (expense) income, net, associated with our investment in Worley stock (net of Worley stock dividend and certain foreign currency revaluations relating to the ECR sale) an d after-tax Restructuring and other charges and transaction costs of $32.8 million associated in part with the Company's acquisition of John Wood Groups' Nuclear consulting, remediation and program management business.

Net earnings attributable to the Company from discontinued operations for the second fiscal quarter ended March 27, 2020 were $29.9 million (or $0.23 per diluted share), an increase of $87.7 million, or 151.7%, from a loss of $(57.8) million (or $(0.41) per diluted share) for the corresponding period last year.

Included in net earnings attributable to the Company from discontinued operations for the current quarter was the recognition of the deferred gain for the delayed conveyance of the international entities discussed in Note 7- Sale of Energy, Chemicals and Resources ("ECR") Business and adjustments for working capital and certain other items in connection with the ECR sale.

Included in the prior year pre-tax results was a charge for the award and recovery of costs, estimated related interest and attorneys' fees in the amount of $147.0 million for the Nui Phao legal matter, see Note 19- Commitments and Contingencies .

Additionally, the change year-over-year was also driven by the absence in the current period of normal operating results of the ECR business as reported in the prior period.

For the six months ended March 27, 2020, net earnings attributable to the Company from continuing operations were $57.5 million (or $0.43 per diluted share), a decrease of $122.2 million, or 68.0%, from $179.6 million (or $1.27 per diluted share) for the corresponding period last year.

Included in the Company’s operating results from continu ing operations for the six months ended March 27, 2020 were $183.7 million in fair value losses recorded in miscellaneous income (expense), net, associated with our investment in Worley stock (net of Worley stock dividend) and certain foreign currency revaluations relating to the ECR sale, $73.1 million in after-tax Restructuring and other charges and transaction costs associated in part with the Company's acquisition of John Wood Groups' Nuclear consulting, remediation and program management business.

For the six months ended March 27, 2020, net earnings attributable to the Company from discontinued operations were $107.5 million (or $0.80 per diluted share), an increase of $105.9 million, or 6,767.0%, from $1.6 million (or $0.01 per diluted share) for the corresponding period last year.

Included in net earnings attributable to the Company from discontinued operations for the current year to date period was the settlement of the Nui Phao ("NPMC") legal matter described in Note 19- Commitments and Contingencies that was reimbursed by insurance, the recognition of the deferred gain for the delayed conveyance of the international entities and for the delivery of the ECR IT assets, as discussed in Note 7- Sale of Energy, Chemicals and Resources ("ECR") Business and adjustments for working capital and certain other items in connection with the ECR sale.

Additionally, the year-over-year change was also driven by the absence of normal operating results of the ECR business as reported in the prior period.

Net earnings attributable to the Company from continuing operations for the third fiscal quarter ended June 26, 2020 were $226.9 million (or $1.73 per diluted share), an increase of $137.5 million, or 153.9%, from earnings of $89.4 million (or $0.65 per diluted share) for the corresponding period last year.

Included in the Compa ny’s operating results from continuing operations for the three months ended June 26, 2020 were $93.3 million in after-tax unrealized appreciation gains recorded in miscellaneous income (expense), net, associated with our investment in Worley stock and certain foreign currency revaluations relating to the ECR sale an d after-tax Restructuring and other charges and transaction costs of $14.1 million associated in part with the Company's acquisition of John Wood Groups' Nuclear consulting, remediation and program management business.

Net earnings attributable to the Company from discontinued operations for the third fiscal quarter ended June 26, 2020 were $18.0 million (or $0.14 per diluted share), a decrease of $417.0 million, or 95.9%, from earnings of $435.1 million (or $3.15 per diluted share) for the corresponding period last year.

The change year-over-year was primarily driven by the gain on the ECR sale recognized in the 2019 period and the absence in the current period of normal operating results of the ECR business as reported also in the prior period.

For the nine months ended June 26, 2020, net earnings attributable to the Company from continuing operations were $284.3 million (or $2.13 per diluted share), an increase of $15.3 million, or 5.7%, from $269.0 million (or $1.92 per diluted share) for the corresponding period last year.

Included in the Company’s operating results from continu ing operations for the nine months ended June 26, 2020 were $90.4 million in after-tax fair value losses recorded in miscellaneous income (expense), net, associated with our investment in Worley stock (net of Worley stock dividend) and certain foreign currency revaluations relating to the ECR sale, $87.2 million in after-tax Restructuring and other charges and transaction costs associated in part with the Company's acquisition of John Wood Groups' Nuclear consulting, remediation and program management business.

For the nine months ended June 26, 2020, net earnings attributable to the Company from discontinued operations were $125.5 million (or $0.94 per diluted share), a decrease of $311.1 million, or 71.3%, from $436.6 million (or $3.11 per diluted share) for the corresponding period last year.

Included in net earnings attributable to the Company from discontinued operations for the current year to date period was the settlement of the Nui Phao ("NPMC") legal matter described in Note 19- Commitments and Contingencies and Derivative Financial Instruments that was reimbursed by insurance, the recognition of the deferred gain for the delayed conveyance of the international entities and for the delivery of the ECR IT assets, as discussed in Note 7- Sale of Energy, Chemicals and Resources ("ECR") Business and adjustments for working capital and certain other items in connection with the ECR sale.

Additionally, the year-over-year change was also driven by the gain on sale recognized in the 2019 period and the absence of normal operating results of the ECR business as reported also in the prior period.

On March 6, 2020, Jacobs completed the acquisition of John Wood Group's Nuclear consulting, remediation and program management business.

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Consolidated Results of Operations

Revenues for the second fiscal quarter of 2020 were $3.43 billion, an increase of $335.6 million, or 10.9% from $3.09 billion for the corresponding period last year.

For the six months ended March 27, 2020, revenues were $6.79 billion, an increase of $611.8 million or 9.9% from $6.18 billion for the corresponding period last year.

The increase in revenues for the three month period year over year was due in part to fiscal 2020 incremental revenues from the June 2019 KeyW and the March 2020 John Wood Group Nuclear business acquisitions, in addition to overall growth in our Critical Mission Solutions (CMS) and People & Places Solutions (P&PS) businesses.

Pass-through costs included in revenues for the three and six months ended March 27, 2020 amounted to $641.4 million and $1.34 billion, respectively, an increase of $9.0 million and $36.5 million, or 1.4% and 2.8%, fro m $632.4 million and $1.31 billion from the corresponding periods last year.

Gross profit for the second quarter of 2020 was $648.1 million, an increase of $31.3 million, or 5.1% from $616.8 million fro m the corresponding period last year.

Our gross profit margins were 18.9% and 20.0% for the three month periods ended March 27, 2020 and March 29, 2019, respectively, with these trend differences being mainly attributable to project mix impacts in our legacy portfolio year over year, as well as year over year impacts from lower overhead reimbursement rates resulting from our ongoing cost reduction programs as well as COVID-19 cost mitigation efforts.

Gross profit for the six months ended March 27, 2020 was $1.29 billion, an increase of $107.3 million, or 9.1% from $1.19 billion from the corresponding period to date last year.

Our gross profit margins were 19.0% and 19.2% for the six month periods ended March 27, 2020 and March 29, 2019, respectively.

Revenues for the third fiscal quarter of 2020 were $3.26 billion, an increase of $90.4 million, or 2.9% from $3.17 billion for the corresponding period last year.

For the nine months ended June 26, 2020, revenues were $10.05 billion, an increase of $702.3 million or 7.5% from $9.35 billion for the corresponding period last year.

Pass-through costs included in revenues for the three and nine months ended June 26, 2020 amounted to $578.7 million and $1.92 billion, respectively, an increase of $44.8 million and $81.3 million, or 8.4% and 4.4%, fro m $533.9 million and $1.84 billion from the corresponding periods last year.

Gross profit for the third quarter of 2020 was $629.0 million, an increase of $2.9 million, or 0.5% from $626.1 million fro m the corresponding period last year.

Our gross profit margins were 19.3% and 19.8% for the three month periods ended June 26, 2020 and June 28, 2019, respectively, with these trend differences being mainly attributable to project mix impacts in our legacy portfolio year over year, as well as year over year impacts from lower overhead reimbursement rates resulting from our ongoing cost reduction programs partially offset by COVID-19 cost mitigation efforts.

Gross profit for the nine months ended June 26, 2020 was $1.92 billion, an increase of $110.2 million, or 6.1% from $1.81 billion from the corresponding period to date last year.

Our gross profit margins were 19.1% and 19.4% for the nine month periods ended June 26, 2020 and June 28, 2019, respectively.

The increase in our gross profit was attributable to overall growth in both our P&PS and CMS businesses along with favorable impacts from the KeyW and John Wood Group Nuclear business acquisitions.

The slight differences in year over year gross margin trends for the three and six month periods were attributable mainly to legacy portfolio mix and lower overhead rate impacts mentioned above, with partial offsets from favorable margin trends from our recent KeyW and Wood Group acquisitions.

The slight differences in year over year gross margin trends for th e three and nine month periods were attributable mainly to legacy portfolio mix and lower overhead rate impacts mentioned above, with partial offsets from favorable margin trends from our recent KeyW and Wood Group acquisitions.

See Segment Financial Information discussion for further information on the Company’s results of operations at the operating segment.

SG&A expenses for the three months ended March 27, 2020 were $480.4 million, a decrease of $33.8 million, or 6.6%, from $514.2 million fo r the corresponding period last year.

The decrease in SG&A expenses as compared to the corresponding period last year was due primarily to less expense relating to the Transition Services Agreement (the "TSA") with Worley which terminated in April 2020 and reductions in personnel related and other overhead costs, partly offset by incremental SG&A increases from the KeyW and John Wood Group Nuclear business acquisitions.

SG&A expenses for the six months ended March 27, 2020 were $973.6 million , an increase of $4.0 million, or 0.4%, from $969.6 million for the corresponding period last year.

The increase in SG&A expenses as compared to the corresponding period last year was due primarily to incremental SG&A from the KeyW and John Wood Group Nuclear business acquisitions, offset by less expense relating to the Transition Services Agreement (the "TSA") with Worley which terminated in April 2020 and reductions in personnel related and other overhead costs resulting from our ongoing cost reduction programs as well as COVID-19 cost mitigation efforts.

Favorable impacts on SG&A expenses from foreign exchange were $6.3 million and $6.7 million, respectively for the three and six months ended March 27, 2020.

Net interest expense for the three and six months ended March 27, 2020 was $14.2 million and $28.0 million, respectively, a decrease of $13.6 million and $22.9 million from $27.8 million and $51.0 million f or the corresponding period last year.

The decrease in net interest expense for the three month period year over year is due to the paydown of debt subsequent to the ECR sale in the prior year third quarter.

Miscellaneous (expense) income, net for the three and six months ended March 27, 2020 was $(330.4) million and $(213.7) million, respectively, a decrease of $367.3 million and $252.9 million from $36.9 million a nd $39.2 million for the corresponding periods last year.

The decrease from the prior year was due primarily to $341.0 million and $241.9 million for the three and six months ended March 27, 2020, respectively, in pre-tax unrealized losses associated with changes in the fair value of our investment in Worley stock (net of Worley stock dividend) and certain foreign currency revaluations relating to the ECR sale.

Also included in miscellaneous (expense) income during the three and six months ended March 27, 2020 is $2.2 million and $14.2 million, respectively, in TSA related income associated with the ECR sale as discussed in Note 7- Sale of Energy, Chemicals and Resources ("ECR") Business.

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.

SG&A expenses for the three months ended June 26, 2020 were $434.7 million, a decrease of $101.5 million, or 18.9%, from $536.2 million fo r the corresponding period last year.

SG&A expenses for the nine months ended June 26, 2020 were $1.41 billion , a decrease of $97.5 million, or 6.5%, from $1.51 billion for the corresponding period last year.

The decrease in SG&A expenses as compared to the corresponding periods last year was due primarily to less expense relating to the Transition Services Agreement (the "TSA") with Worley which terminated in April 2020 and reductions in personnel related and other overhead costs resulting from our ongoing cost reduction programs as well as COVID-19 cost mitigation efforts, partially offset by incremental SG&A expenses from the KeyW and John Wood Group Nuclear business acquisitions.

Favorable impacts on SG&A expenses from foreign exchange were $5.7 million and $12.4 million , respectively for th e three and nine months ended June 26, 2020, although impacts from foreign exchange were immaterial to the Company's operating profit as a whole.

Net interest expense for the three and nine months ended June 26, 2020 was $16.9 million and $45.0 million, respectively, a decrease of $1.4 million and $21.6 million from $15.6 million and $66.6 million f or the corresponding periods last year.

The decrease in net interest expense for the nine month period year over year is due to the paydown of debt subsequent to the ECR sale in the prior year third quarter.

Miscellaneous income (expense), net for the three months ended June 26, 2020 was $126.2 million, an increase of $107.2 million, from $19.0 million fo r the corresponding period last year.

The increase from the prior year was due primarily to $123.1 million in pre-tax unrealized gains associated with changes in the fair value of our investment in Worley stock and certain foreign currency revaluations relating to the ECR sale.

Miscellaneous income (expense), net for the nine months ended June 26, 2020 was $(87.5) million, a decrease of $145.7 million, from $58.2 million for the corresponding periods last year.

The decrease from prior year was due primarily to $118.8 million in pre-tax unrealized losses associated with changes in the fair value of our investment in Worley stock (net of Worley stock dividend) and certain foreign currency revaluations relating to the ECR sale.

Also included in miscellaneous (expense) income during the three and nine months ended June 26, 2020 is $1.0 million and $15.2 million, respectively, in TSA related income associated with the ECR sale as discussed in Note 7- Sale of Energy, Chemicals and Resources ("ECR") Business.

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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GAAP operating profit from continuing operations by including certain corporate-level expenses, Restructuring and other charges and transaction and integration costs (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

Revenues from External Customers:

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

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

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

(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, includes 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, respectively 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 Before Taxes from Continuing Operations

$ 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, includes 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, respectively, 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.

Critical Mission Solutions

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

Revenue $ 1,211,143 $ 1,156,488 $ 3,636,978 $ 3,251,024

Operating Profit $ 89,608 $ 76,306 $ 264,323 $ 222,289

Critical Mission Solutions (CMS) segment revenues for the three and six months ended March 27, 2020 were $1.24 billion and $2.43 billion, respectively, an increase of $183.9 million and $331.3 million, or 17.4% and 15.8% from $1.06 billion and $2.09 billion for the corresponding periods last year.

Our increase in revenue was primarily attributable to incremental revenue from the KeyW and John Wood Group Nuclear business acquisitions, combined with year over year revenue volume growth across our legacy portfolio, highlighted by increased spending by customers in the U.S.

Critical Mission Solutions (CMS) segment revenues for the three and nine months ended June 26, 2020 were $1.21 billion and $3.64 billion, respectively, an increase of $54.7 million and $386.0 million, or 4.7% and 11.9% from $1.16 billion and $3.25 billion for the corresponding periods last year.

Our increase in revenue was primarily attributable to incremental revenue from the KeyW and John Wood Group Nuclear business acquisitions, combined with areas of year over year revenue volume growth across our legacy portfolio, highlighted by increased spending by customers in the U.S.

government business sector.

Impacts on revenues from unfavorable foreign currency translation were approximately $5.1 million and $6.4 million, respectively, for the three and six month periods ended March 27, 2020 compared to the corresponding prior year periods.

Operating profit for the segment was $84.3 million and $174.7 million, respectively, for the three and six months ended March 27, 2020, an increase of $10.5 million and $28.7 million, or 14.2% and 19.7%, from $73.8 million and $146.0 million for the corresponding periods last year.

These favorable performance trends more than offset unfavorable COVID-19 related revenue impacts mainly due to challenges from physical distancing requirements, client scheduling changes and other related factors.

Impacts on revenues from unfavorable foreign currency translation were approximately $7.0 million and $13.4 million, r espectively, for the three and nine month periods ended June 26, 2020 compared to the corresponding prior year periods.

Operating profit for the segment was $89.6 million and $264.3 million, respectively, for the three and nine months ended June 26, 2020, an increase of $13.3 million and $42.0 million, or 17.4% and 18.9%, from $76.3 million and $222.3 million for the corresponding periods last year.

The increases from the prior year were primarily attributable to incremental operating profit from the KeyW and John Wood Group Nuclear business acquisitions, the continued growth in profits from our U.S.

governmental business sector and the favorable close out of a large program management contract in the first fiscal quarter of 2020.

Impacts on operating profit from foreign currency were not material for the three and six month periods ended March 27, 2020, compared to the corresponding prior year periods.

Impacts on operating profit from unfavorable foreign currency translation were approximately $1.0 million and $1.9 million respectively, for t he three and nine months periods ended June 26, 2020, compared to the corresponding prior year periods.

Unfavorable revenue impacts from COVID-19 mentioned above were largely offset by the Company’s mitigating actions in discretionary operating spend and benefits costs, government assistance programs and other areas of improved operating performance.

People & Places Solutions

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

Revenue $ 2,048,914 $ 2,013,134 $ 6,410,308 $ 6,093,981

Operating Profit $ 190,453 $ 183,318 $ 557,864 $ 515,465

Revenues for the People & Places Solutions (P&PS) segment for the three and six months ended March 27, 2020 were $2.18 billion and $4.36 billion, respectively, an increase of $151.7 million and $280.5 million, or 7.5%, and 6.9% from $2.03 billion and $4.08 billion for the corresponding periods last year.

Revenues for the People & Places Solutions (P&PS) segment for the three and nine months ended June 26, 2020 were $2.05 billion and $6.41 billion, respectively, an increase of $35.8 million and $316.3 million, or 1.8%, and 5.2% from $2.01 billion and $6.09 billion for the corresponding periods last year.

The increases in revenue were due in part to portfolio growth across our businesses, highlighted by strong investment in advanced facilities, water and transport infrastructure and project management/construction management ("PMCM") sectors.

Impacts on revenues from unfavorable foreign currency translation were approximately $19.7 million and $29.3 million, respectively, for the three and six month periods ended March 27, 2020 compared to the corresponding prior year periods.

Operating profit for the segment for the three and six months ended March 27, 2020 was $189.1 million and $367.4 million, respectively, an increase of $16.4 million and $35.3 million, or 9.5%, and10.6% from $172.7 million and $332.1 million for the corresponding periods last year.

The year over year increase in operating profit was due primarily to positive impacts from the higher year over year revenues for the segment and reductions in personnel related costs.

Impacts on operating profit from unfavorable foreign currency translation were approximately $3.2 million and $4.4 million for the three and six month periods ended March 27, 2020, compared to the corresponding prior year periods.

Impacts on revenues from unfavorable foreign currency translation were approximately $20.3 million and $49.6 million, respectively, for the three an d nine month periods en ded June 26, 2020 compared to the corresponding prior year periods.

Operating profit for the segment for the three and nine months ended June 26, 2020 were $190.5 million and $557.9 million, respectively, an increase of $7.1 million and $42.4 million, or 3.9%, and 8.2% from $183.3 million and $515.5 million for the corresponding periods last year.

The year over year increase in operating profit was due primarily to positive impacts from the higher year over year revenues for the segment and reductions in costs related to COVID-19 impacts and mitigation efforts.

Impacts on operating profit from unfavorable foreign currency translation were approximately $4.5 million and $8.9 million for the three and nine month periods ended June 26, 2020, compared to the corresponding prior year periods.

Other Corporate Expenses

Other corporate expenses for the three and six months ended March 27, 2020 were $61.2 million and $127.9 million, an increase of $11.3 million and $6.7 million from $49.9 million and $121.1 million for the corresponding periods last year.

Other corporate expenses for the three and nine months ended June 26, 2020 were $65.2 million and $193.1 million, an increase of $0.7 million and $7.4 million from $64.5 million and $185.7 million for the corresponding periods last year.

This increase was due primarily to higher intangible amortization expense from the KeyW and John Wood Group nuclear business acquisitions, as well as impacts from company benefit program enhancements.

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Such costs and expenses include:

(i) those elements of SG&A expenses relating to the business as a whole;

elements of SG&A expenses relating to the business as a whole;

(ii) those elements of our incentive compensation plans relating to corporate personnel whose other compensation costs are not allocated to the LOBs;

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

For the three and six months end ed March 27, 2020, net earnings attributable to Jacobs from discontinued operations after income taxes were $29.9 million and $107.5 million, respectively, and for the three and six months ended March 29, 2019, net (loss) earnings attributable to discontinued operations after income taxes were $(57.8) million and $1.6 million, respectively.

While the ECR business sale closed in April 2019, the Company recognized additional pretax income from discontinued operations of $18.3 million and $129.8 million in the three and six months ended March 27, 2020, primarily for the release of the deferred gain related to the delayed conveyance of the international entities in the three months ended March 27, 2020, and, additionally, for the six months ended March 27, 2020, the deferred gain upon achievement of the IT Migration Date in connection with the delivery to Worley of certain IT application and hardware assets related to the ECR business, as well as adjustment for working capital and certain other items resolved during the year to date period, described in Note 7.

Additionally, for the six months ended March 27, 2020, the Company recognized

a reduction to selling, general and administrative expenses in discontinued operations related to an insurance recovery of $50.0 million in connection with the NPMC legal matter.

For the three and nine months end ed June 26, 2020, net earnings attributable to Jacobs from discontinued operations after income taxes were $18.0 million and $125.5 million, respectively, and for the three and nine months ended June 28, 2019, net earnings attributable to discontinued operations after income taxes were $435.1 million and $436.6 million, respectively.

While the ECR business sale closed in April 2019, the Company recognized additional pretax income from discontinued operations of $32.1 million and $161.9 million in the three and nine months ended June 26, 2020.

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 above in connecti on with the delivery to Worley of certain IT application and hardware assets related to the ECR business.

Restructuring and Other Charges

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Because certain contracts (e.g., contracts relating to large EPC projects as well as national government programs) can cause large increases to backlog in the fiscal period in which we recognize the award, and because many of our contracts require us to provide services that span over several fiscal quarters (and sometimes over fiscal years), we evaluate our backlog on a year-over-year basis, rather than on a sequential, quarter-over-quarter basis.

The following table summarizes our backlog at March 27, 2020 and March 29, 2019 (in millions):

March 27, 2020 March 29, 2019

The following table summarizes our backlog at June 26, 2020 and June 28, 2019 (in millions):

June 26, 2020 June 28, 2019

Critical Mission Solutions $ 9,066 $ 8,456

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Total $ 23,674 $ 22,467

The increase in backlog in Critical Mission Solutions (CMS) from March 29, 2019 was primarily the result of the acquisition of KeyW and John Wood Group's Nuclear consulting, remediation and program management business

The increase in backlog in People & Places Solutions (P&PS) from March 29, 2019 was primarily the result of new awards in the U.K.

The increase in backlog in Critical Mission Solutions (CMS) from June 28, 2019 was primarily the result of the acquisition of John Wood Group's Nuclear consulting, remediation and program management business.

The increase in backlog in People & Places Solutions (P&PS) from June 28, 2019 was primarily the result of new awards in the U.K.

Consolidated backlog differs from the Company’s remaining performance obligations as defined by ASC 606 primarily because of our national government contracts (other than national government O&M contracts).

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Liquidity and Capital Resources

At March 27, 2020, our principal sources of liquidity consisted of $1.66 billion in cash and cash equivalents and $679.4 million of available borrowing capacity under our $2.25 billion revolving credit agreement (the "Revolving Credit Facility").

The amount of cash and cash equivalents at March 27, 2020 represented an increase of $1.0 billion from $631.1 million at September 27, 2019, the changes of which are described below.

Our cash flow provided by operations of $15.0 million during the six-month period ended March 27, 2020 was comparatively favorable to the cash flow used for operations of $55.2 million for the corresponding prior year period.

This improvement was due primarily to favorable net earnings adjusted for noncash items compared to the previous period driven by improved operating performance.

Partly offsetting this favorable impact was slightly higher uses of cash in working capital, due mainly to higher cash amounts used in accrued liabilities and accounts payable.

The higher cash amounts used in accrued liabilities in the current period are primarily related to higher payments in personnel related liabilities and professional services and the current year payment for the Nui Phao legal matter settlement accrued in the prior year.

We expect the COVID-19 pandemic and resulting economic conditions may have an adverse impact on cash flow provided from operations beginning in the third quarter of fiscal 2020.

Our cash used for investing activities for the six months ended March 27, 2020 was $365.3 million, compared to cash used for investing of $59.3 million in the prior year, the change due primarily to the current period acquisition of John Wood Group's Nuclear business.

Our cash provided by financing activities of $1.35 billion for the six months ended March 27, 2020 resulted mainly from net proceeds from borrowings of $1.7 billion, partly offset by cash used for share repurchases of $285.8 million, $63.5 million in dividends to shareholders and noncontrolling interest and approximately $5.8 million in stock-based compensation and benefit plan related activity.

Cash provided by financing activities in the prior period was $152.6 million, due primarily from net borrowings of $695.6 million, partly offset by cash used for share repurchases of $488.4 million and $56.4 million in dividends to shareholders and noncontrolling interests.

At March 27, 2020, the Company had approximat ely $860.1 million in cash and cash equivalents held in the U.S.

and $795.8 mi llion held outside of the U.S.

At June 26, 2020, our principal sources of liquidity consisted of $1.02 billion in cash and cash equivalents and $1.63 billion of available borrowing capacity under our $2.25 billion r evolving credit agreement (the "Revolving Credit Facility").

The amount of cash and cash equivalents at June 26, 2020 represented an increase of $393.7 million from $631.1 million at September 27, 2019, the changes of which are described below.

Our cash flow provided by operations of $374.5 million during the nine month period ended June 26, 2020 was favorable by $594.8 million in comparison to the cash flow used for operations of $220.3 million for the corresponding prior year period.

This improvement was due primarily to favorable net earnings adjusted for noncash items compared to the previous period driven by improved operating profit performance.

Partly offsetting this favorable impact were higher uses of cash in other working capital, due mainly to higher accounts receivable partially impacted by collection timing impacts from COVID-19 as well as higher cash used in accounts payable, offset by favorable cash flow impacts in accrued liabilities including the deferral of certain payments associated mainly with COVID-19 government assistance programs in the U.S.

Our cash used for investing activities for the nine months ended June 26, 2020 was $392.7 million, compared to cash provided by investing activities of $2.18 billion in the prior year, the change due primarily to the impact of the ECR sale in the third quarter of the prior fiscal year compared to the acquisition of John Wood Group's Nuclear business in the second quarter of fiscal year 2020.

Our cash provided by financing activities of $372.5 million for the nine months ended June 26, 2020 resulted mainly from net proceeds from borrowings of $756.5 million, partly offset by cash used for share repurchases of $285.8 million, $97.5 million in dividends to shareholders and noncontrolling interest and approximately $1.1 million in stock-based compensation and benefit plan related activity.

Cash used for financing activities in the prior period was $1.79 billion, due primarily to net debt repayments of $1.20 billion, share repurchases of $524.6 million $82.3 million in dividends to shareholders and noncontrolling interest and approximately $20.0 million in stock-based compensation and benefit plan related activity.

At June 26, 2020, the Company had approximat ely $244.3 million in cash and cash equivalents held in the U.S.

and $780.5 million held outside of the U.S.

(primarily in the U.K., the Eurozone, Australia, India and the United Arab Emirates), which is used primarily for funding operations in those regions.

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

The principal balance of the 2020 Term Loan Facility wa s $1.0 billion a s of March 27, 2020.

The principal balance of the 2020 Term Loan Facility wa s $1.04 billion a s of June 26, 2020.

The terms and other important details are summarized in Note 12- Borrowings .

The 2020 Term Loan Facility was entered into as part of our strategy to increase the portion of our long-term debt that is represented by term loan facilities.

Although the Company had intended to use the majority of the proceeds of the 2020 Term Loan Facility to repay outstanding amounts under the Revolving Credit Facility, the Company used proceeds to repay $200 million in short-term debt and retained the remaining cash proceeds as a precautionary measure.

As a result, the Company maintained a higher level of long-term indebtedness in order to increase its cash position and preserve financial flexibility in light of current uncertainties resulting from the COVID-19 pandemic.

The Company had $262.8 million in letters of credit outstanding at March 27, 2020.

In the second quarter of fiscal 2020, the Company used proceeds of the 2020 Term Loan Facility to repay $200.0 million in short-term debt a nd retained the remaining cash proceeds as a precautionary measure due to uncertainties resulting from the COVID-19 pandemic that was emerging at the time.

In the third quarter of fiscal 2020, after gaining additional insight into the impact of the pandemic on the Company’s business and improved cash flow, the Company used the remaining cash proceeds and excess cas h to repay $954.9 million of outstanding amounts under the Revolving Credit Facility.

The Company had $259.5 million in letters of credit outstanding at June 26, 2020.

Of this amount, $2.3 million was issued under the Revolving Credit Facility and $257.3 million was issued under separate, committed and uncommitted letter-of-credit facilities.

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The Company repaid all of KeyW's outstanding debt by the end of the fourth fiscal quarter of 2019.

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

On April 26, 2019, Jacobs completed the sale of its ECR business to Worley for a purchase price of $3.4 billion consisting of (i) $2.8 billion in cash plus (ii) 58.2 million ordinary shares of Worley, subject to adjustments for changes in working capital and certain other items.

We believe we have adequate liquidity and capital resources to fund our projected cash requirements for the next twelve months based on the liquidity provided by our cash and cash equivalents on hand, our borrowing capacity and our

continuing cash from operations.

We further believe that our financial resources, along with managing discretionary expenses, will allow us to manage the potential impacts of the COVID-19 pandemic on our business operations for the foreseeable future, which is expected to include reduced revenue from operating activities, based on current assumptions and expectations regarding the pandemic.

We are reducing spending more broadly across the Company, only proceeding with operating and capital spending that is critical.

We further believe that our financial resources, discretionary spend controls as well as near term benefits from government assistance programs, will allow us to continue managing the negative impacts of the COVID-19 pandemic on our business operations for the foreseeable future, which is expected to include reduced revenue from operating activities, based on current assumptions and expectations regarding the pandemic.

We have taken actions to reduce spending more broadly across the Company, only proceeding with operating and capital spending that is critical.

We have also ceased all non-essential hiring and reduced discretionary expenses, including certain employee benefits and compensation.

In addition, as a precautionary measure, we temporarily suspended purchases under the share repurchase plan in March 2020.

Looking ahead, we have developed contingency plans to reduce costs further if the situation deteriorates beyond current assumptions and expectations.

We were in compliance with all of our debt covenants at March 27, 2020.

Looking ahead, we have developed contingency plans to reduce costs further if the situation deteriorates beyond or lasts longer than current assumptions and expectations.

We were in compliance with all of our debt covenants at June 26, 2020.

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 2. Management’s Discussion and Analysis