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Item 2. Management’s Discussion and Analysis

2021-02-09 compared with 2020-08-03 · 210 added, 222 removed, 224 unchanged (66% 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 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.

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 January 1, 2021 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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The most current discussion of our critical accounting policies appears in Item 7, Management’s Discussion and Analysis of Financial Condition and Results of Operations of our 2020 Form 10-K, and the most current discussion of our significant accounting policies appears in Note 2- Significant Accounting Polices in Notes to Consolidated Financial Statements of our 2020 Form 10-K;

See also Note 13- Revenue Accounting for Contracts and Adoption of ASC 606 for a discussion of our updated policies related to revenue recognition;

• The Company’s fiscal 2020 audited consolidated financial statements and notes thereto included in our 2020 Form 10-K;

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

and the timing and scope of any government stimulus programs enacted in response to the impacts of the COVID-19 pandemic.

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;

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The foregoing factors and potential future developments are inherently uncertain, unpredictable and, in many cases, beyond our control.

For a description of these and additional factors that may occur that could cause actual results to differ from our forward-looking statements, see those listed and discussed in Item 1A, Risk Factors included in our 2019 Form 10-K and this Quarterly Report on Form 10-Q.

For a description of these and additional factors that may occur that could cause actual results to differ from our forward-looking statements, see those listed and discussed in Item 1A, Risk Factors included in our 2020 Form 10-K and our Quarterly Reports on Form 10-Q.

We undertake no obligation to release publicly any revisions or updates to any forward-looking statements.

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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.

Although certain jurisdictions have 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.

As it became clear that the pandemic was unparalleled in the rate of community spread, we took early, decisive action to put people first, help flatten the curve and take care of our clients and communities.

In early March 2020, we swiftly restricted travel and established return protocols for both client-related and personal travel.

In 10 days, we successfully transitioned more than 85% of our employees to a remote working environment to support physical distancing.

Where the essential and mission-critical nature of our work requires us to maintain staff at certain sites or locations, we worked closely with our clients and established project-specific plans designed to ensure the safety of our people and the integrity of our operations.

Using technology and optimizing our networks, we continue to offer flexible work scenarios for our people, and to deliver business continuity for and continued collaboration with our clients.

Our Executive Leadership Team met daily for the first three months and weekly thereafter, focusing on transparency, agile response and business resiliency;

and our global and regional crisis management teams continued to maintain consistent messaging and direct local responses.

Our regular global Town Halls, a weekly Chair and CEO email and short, self-produced leadership videos are intended to share open, transparent information to connect and unite our global community.

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

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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.

We also temporarily ceased all non-essential hiring and reduced discretionary expenses, including temporarily suspending certain employee benefits and compensation through the end of fiscal 2020.

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 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.

Based on current estimates, we expect the impact of COVID-19 to continue into the first half of fiscal 2021, although to a lesser degree than what was seen in fiscal 2020.

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 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”.

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.

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 Item 1A - Risk Factors contained in our 2020 Form 10-K.

Business Overview

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We operate in two lines of business:

Critical Mission Solutions (formerly Aerospace, Technology and Nuclear) and People & Places Solutions (formerly Buildings, Infrastructure and Advanced Facilities).

These new names better reflect outcome-focused solutions for our customers and the changes have no impact on reported financial statements, line of business leadership or customer relationships.

Critical Mission Solutions and People & Places Solutions.

After spending three years transforming our portfolio and setting the foundation to get us where we are today, we launched a three-year accelerated profitable growth strategy at our Investor Day in February 2019, focused on innovation and continued transformation to build upon our position as the leading solutions provider for our clients.

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.

Our acquisitions of KeyW, John Wood Group’s nuclear business and Buffalo Group 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 altered the course of Jacobs’ future and are now focused on broadening our leadership in high growth sectors.

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Revenue by Type ( Q1 FY 2021 ) 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 fourth quarter of fiscal 2020 and subsequent periods.

Lines of Business

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Critical Mission Solutions (CMS)

Our Critical Mission Solutions line of business provides a full spectrum of cybersecurity, data analytics, software application development, enterprise and mission IT, systems integration and other highly technical consulting solutions to government agencies as well as selective aerospace, automotive and telecom customers.

Our Critical Mission Solutions line of business provides a full spectrum of cyber, data analytics, systems and software application integration services and consulting, enterprise level operations and maintenance and mission IT, engineering and design, enterprise operations and maintenance, program management, and other highly technical consulting solutions to government agencies as well as commercial customers.

Our representative clients include the U.S.

Department of Defense (DoD), the U.S.

Special Operations Command (USSOCOM), the U.S.

Department of Defense (DoD), the Combatant Commands, the U.S.

Intelligence Community, NASA, the U.S.

Department of Energy (DoE), Ministry of Defence in the U.K.

Nuclear Decommissioning Authority (NDA), and the Australian Department of Defence, as well as private sector customers mainly in the automotive and telecom sectors.

Serving mission-critical industry sectors

Nuclear Decommissioning Authority (NDA), and the Australian Department of Defence, as well as private sector customers mainly in the aerospace, automotive, energy and telecom sectors.

Serving mission-critical industry end markets

Critical Mission Solutions serves broad sectors, including U.S.

government services, cybersecurity, nuclear, commercial, and international sectors.

government is the world’s largest buyer of technical services, and in fiscal 2019, approximately 77% of CMS’s revenue was earned from serving the DoD, Intelligence Community and civil governmental entities.

Trends affecting our government clients include electronic and cyber warfare, IT modernization, space exploration and intelligence, defense systems and intelligent asset management, which are driving demand for our highly technical solutions.

Attacks by foreign entities and insider threats highlight potential cyber defense vulnerabilities.

government services, cyber, nuclear, commercial, and international sectors.

government is the world’s largest buyer of technical services, and in fiscal 2020, approximately 79% of CMS’s revenue was earned from serving the DoD, Intelligence Community and Federal Civilian governmental entities.

Trends affecting our government clients include information warfare, cyber, IT modernization, space exploration and intelligence, defense systems and intelligent asset management, which are driving demand for our highly technical solutions.

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.

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

Within the Nuclear sector, our customers have decades-long initiatives to manage, upgrade, decommission and remediate existing nuclear weapons and energy infrastructure.

Within the nuclear sector, our customers have decades-long initiatives to manage, upgrade, decommission and remediate existing energy infrastructure and nuclear weapons.

Our international customers, which accounted for 13% of fiscal 2020 revenue, have also increased demand for our IT and cybersecurity solutions an d nuclear projects, and the U.K.

Ministry of Defence continues to focus on accelerating its strategic innovative and technology focused initiatives.

Leveraging our base market of offering valued technical services to U.S.

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In fiscal 2020, approximately 8% of CMS’s r evenue was from various U.S.

commercial sectors, including the telecommunications market, which anticipates a large cellular infrastructure build-out from 4G to 5G technology.

commercial sectors, including the telecommunications sector, which anticipates a large cellular infrastructure build-out from 4G to 5G technology.

And like our government facility-based clients, our commercial manufacturing clients are seeking ways to reduce maintenance costs and optimize their facilities with network connected facilities and equipment to optimize operational systems, which we refer to as Intelligent Asset Management.

Our international customers, which accounted for 11% of fiscal 2019 revenue, have also increased demand for our IT and cybersecurity solutions and nuclear projects, and the U.K.

Ministry of Defence continues to focus on accelerating its strategic innovative and technology focused initiatives.

Leveraging strong domain expertise to deliver solutions

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Across various business units in CMS, we provide a wide range of software development and enterprise IT solutions.

We develop, modify and maintain software solutions and complex systems.

This service includes a broad array of lifecycle services, including requirements analysis, design, integration, testing, maintenance, quality assurance and documentation management.

We develop, integrate, modify and maintain software solutions and complex systems.

These services include a broad array of lifecycle services, including requirements analysis, design, integration, testing, maintenance, quality assurance and documentation management.

Our software activities support all major methodologies, including Agile, DevSecOps and other hybrid methodologies.

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Solutions typically include IT service management, data center consolidation, network operations, enterprise architecture, mobile computing, cloud computing and migration, software, infrastructure and platform as a service (SaaS, IaaS and PaaS), and data collection and analytics.

• Cybersecurity and Data Analytics .

With our recent acquisition of KeyW, CMS offers a full suite of cyber services for its government and commercial clients, including defensive cyber operations and training, offensive cyber operations, cloud and data analytics, threat intelligence, intelligence analysis, incident response and forensics, software and infrastructure security engineering, computer forensics and exploitation and information technology-operational technology (IT-OT) convergence services.

• Cyber and Data Analytics .

Strongly enhanced by our recent acquisition of KeyW, CMS offers a full suite of cyber services for our government and commercial clients, including defensive cyber operations and training, offensive cyber operations, cloud and data analytics, threat intelligence, intelligence analysis, incident response and forensics, software and infrastructure security engineering, computer forensics and exploitation and information technology-operational technology (IT-OT) convergence services.

• C5ISR (Command, Control, Communications, Computers, Combat Systems, Intelligence, Surveillance and Reconnaissance) .

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systems integration, specialized propulsion, avionics, electrical, materials, aerodynamics, manufacturing processes modeling and simulation, testing and evaluation, scientific research, intelligent asset management, program management and consulting.

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

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.

NASA is one of 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.

• Facility Engineering and Operations .

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• Nuclear Solutions .

We provide support across the nuclear energy life-cycle, including operational site management, program management and research and consulting, mainly to the U.S.

Department of Energy (DoE) and the Office for Nuclear Regulation (“ONR”) and NDA with the U.K.

We provide support across the full nuclear life cycle, including new build, operational support, and decommissioning.

Support includes project management, engineering, technical and R&D services, complemented by the full range of CMS' other services.

Customers include the U.S.

DoE, the UK's NDA, and commercial companies such as EDF Energy, the UK's largest producer of low-carbon energy.

Applying internally-developed technology

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Ginkgo is the only virtual learning environment specifically created for cybersecurity training.

Designed by experienced cybersecurity instructors at CMS’s Parrot Labs, Ginkgo offers a complete solution for implementing hands-on IT and cybersecurity training for both local and distance learning environments on desktops, tablets, and other mobile devices.

With the exponential growth of information being harvested, deriving meaningful insights from data collecting can be challenging for organizations.

TITAN is a suite of solutions (including Graph Database, Elastic Stack, and SocTraq) that leverages open-source technology to filter out noise to find the real needle in the haystack of threats, offering real-time detection and alerting capabilities for high-value asset and mission critical systems.

SOCTRAQ is a next-generation component of the larger TITAN cyber data platform that aids our federal clients in the automation of cybersecurity found in a security operations center (SOC).

The technology is a real-time threat detection and alerting heads-up display run on a client’s computer to provide incident detection, recommended response actions, and case management.

Features include alert visualization, depiction of threat-chain, and adaptive machine learning.

Designed by experienced cyber instructors, Ginkgo offers a complete solution for implementing hands-on IT and cybersecurity training for both local and distance learning environments on desktops, tablets, and other mobile devices.

ion© is our open architecture, multi-protocol Industrial Internet of Things (IIoT) software solution providing an integrated, secure, and scalable platform for data aggregation integration, analysis and visualization.

Ion© is both licensed and delivered as-a-service (aas) to commercial customers around the globe to enable a host of operational solutions, ranging from worker monitoring and safety to industrial asset visibility and management to smart/connected construction.

Most recently, Jacobs is using ion© to support Return to Work solutions that allow our pharmaceutical clients to return mission essential personnel to their advanced research and production facilities despite the ongoing COVID-19 pandemic.

People & Places Solutions (P&PS)

Jacobs' People & Places Solutions line of business provides end-to-end solutions for our clients’ most complex projects - whether connected mobility, water, smart cities, advanced manufacturing or the environment.

In doing so, we employ data analytics, artificial intelligence and automation, and software development to enable technology and digitally-driven consulting, planning, architecture, engineering, and implementation, as well as long-term operation of advanced facilities and infrastructure.

Solutions may be delivered as standalone engagements or through comprehensive program management solutions that integrate disparate workstreams to yield additional benefits not attainable through project-by-project implementation.

Our clients include national, state and local government in the U.S., Europe, U.K., Middle East, Australia, New Zealand and Asia, as well as the private sector throughout the world.

Serving broad industry sectors that support people and places

Environmental and infrastructure resilience, urbanization, digital transformation and the convergence of information and operational technology (IT/OT) are driving new infrastructure requirements and opportunities for our clients.

For example, an airport is no longer simply aviation infrastructure but is now a smart city with extensive operational, cybersecurity and autonomous mobility requirements.

Master planning for a city now requires advanced analytics to plan for the adaptation of next-generation mobility as well as revenue generating fiber infrastructure.

Furthermore, the future of nearly all water infrastructure will be highly technology-enabled, leveraging solutions with digital twins, predictive analytics and smart metering technology.

Jacobs' People & Places Solutions line of business provides end-to-end solutions for our clients’ most complex projects - whether connected mobility, integrated water management, smart cities, advanced manufacturing or environmental stewardship.

In doing so, we employ predictive analytics, artificial intelligence and automation, digital twin technology, IoT smart sensors, geospatial visualization and advanced delivery processes and tools for consulting, planning, architecture, design, engineering, and implementation, as well as long-term operation of facilities and infrastructure.

Solutions may be delivered as standalone engagements or through comprehensive program management solutions that integrates disparate workstreams to yield additional benefits not attainable through project-by-project implementation.

We also provide progressive design-build and construction management at-risk delivery for our P&PS clients.

Our clients include national, state and local government in the U.S., Europe, U.K., Middle East, Australia, New Zealand and Asia, as well as multinational private sector clients throughout the world.

Serving broad market sectors that support people and places

Aging infrastructure;

climate action;

urbanization;

water, food and energy security;

global supply chains;

pandemic preparedness and response;

environmental, social, and corporate governance (ESG);

and digital transformation are driving new challenges and opportunities for our clients.

These drivers are highlighting the need for holistic, integrated technology solutions that draw on the domain knowledge resident in the multidisciplinary consulting and delivery expertise of our global workforce.

For example, an airport is no longer simply aviation infrastructure but is now a smart city with extensive operational, cybersecurity and autonomous mobility requirements, as well as the contactless travel requirements necessary to best manage COVID-19.

Master planning for a city now requires advanced analytics to plan for climate adaption and next-generation mobility as well as revenue generating fiber infrastructure.

Furthermore, the future of nearly all water infrastructure will be highly technology-enabled, leveraging solutions with digital twins, predictive analytics and smart metering technology to ensure we are giving communities, industries and regions the secure water resource they need to flourish and expand.

This increase in technology requirements is a key factor in our organic growth strategy as well as our recent acquisitions and divestitures.

Moreover, our business model is evolving to now being a provider of digitally-enabled solutions to our infrastructure clients with less exposure to craft construction services.

Our focus on five core sectors of Transportation, Water, Built Environment, Environmental and Advanced Facilities provides us with the unique opportunity to leverage expertise across all sectors to provide end-to-end connected solutions for our client’s most complex projects.

We are executing complex city solutions that pull expertise from all markets, fused with digital expertise, for major developments in places like London, Dubai, Sydney, India and the United States.

Leveraging global platform to deliver integrated solutions to our customers

One of our key differentiators is our global integrated delivery model, which harnesses deep domain expertise from our global technology and solution organization that is leveraged with the benefits of scale when we focus the world’s best talent to deliver differentiated solutions and value to our clients.

• Within transportation , we provide sustainable solutions to plan, develop, finance, design and engineer, construct, operate and maintain, next generation mobility across all modes, including highway, bridge, rail and transit, aviation, port and maritime infrastructure.

For example, we do this by assessing the impact of autonomous vehicles on roadways and cities for transportation agencies, engineering and specifying vehicles for mass-transit, consulting services for digital fare payment systems, program management of the largest airport developments, designing cutting edge automated container terminals and ports infrastructure and utilizing digital data to develop cross modal mobility solutions.

Our customers include the world’s largest transportation agencies as well as private shipping and logistics companies worldwide, including the multi-modal Port Authority of New York and New Jersey, Transport for London, and Etihad Rail.

• Water is one of the most precious resources in the world, and extreme weather events are exacerbating supply and demand issues with drought, desertification and flooding at the same time population growth and industrialization are increasing demands.

We provide solutions across water and wastewater treatment, water reuse, and water resources such as the deployment of next generation smart metering, digital twin technology and highly technical consulting, engineering, design-build and operation of complex water systems.

We support our customers on some of the world’s largest water infrastructure projects such as Delta Conveyance Project, Thames Tideway, Houston Water and Singapore National Water Agency.

• For the built environment , we deliver full-service solutions for cities, places and buildings, including smart-city and resiliency city solutions.

This also includes consulting, engineering and design services for transportation hubs in Boston and London, urban developments, corporate, national government, healthcare, education, science facilities for public sector and industrial clients across diverse markets and services.

Our solutions include multi-functional infrastructure that addresses economic, social and environmental issues spanning a range of sectors, technology and industries.

We also provide consulting around technology-enabled asset management, economic development and scientific advancement that enables our clients to make intelligent data-driven investment decisions.

• In our environmental business we provide all aspects of environmental planning, permitting, regulatory and compliance management, and consulting services related to remediation, revitalization and redevelopment.

We also provide critical consulting and technology related services to clients responsible for disaster planning, mitigation and response as well as logistics, planning and implementation support for leading edge scientific and research endeavors.

We recently provided a large confidential U.S.

customer with data analytics and visualization solutions to deliver actionable intelligence to help them understand and prioritize their approach to polyfluoroalkyl substances (PFAS) remediation.

• In our advanced facilities business, we provide fully integrated solutions for highly specialized facilities in the fields of medical research, sustainable manufacturing, nanoscience, biotechnology, semiconductor and data centers.

Our services also include implementation of operational environments and providing cybersecurity assessments, network architecture development and construction management for their operational environments.

Our clients include life sciences and pharmaceutical, specialty manufacturing, microelectronics and data intensive industries.

In addition to each of the industry sectors that we serve, we deploy solutions to the world’s most complex projects and major programs that span across all markets, such as the London 2012 Olympic and Paralympic Games, the Dubai Expo, and LaGuardia Airport Redevelopment.

Moreover, our business model is evolving to provision a broader spectrum of digital- and technology-enabled solutions to address our infrastructure clients' challenges with less exposure to craft construction services.

Our focus on the five core sectors of Transportation, Water, Built Environment, Environmental and Advanced Facilities provides us with the ability to leverage our expansive domain expertise across all global markets, enabling truly end-to-end connected solutions for our clients' most complex major projects and programs, including the London 2012 Olympic and Paralympic Games, Expo 2020 Dubai, and the LaGuardia Airport Redevelopment.

Today, we are executing complex solutions that pull expertise from all markets, fused with digital expertise, for major developments in places like London, Dubai, Sydney, Singapore, Miami, Los Angeles and Toronto.

Leveraging our global platform to deliver integrated solutions to clients

One of our key differentiators is our global integrated delivery model, which harnesses deep domain expertise from our global Solutions and Technology and solution organization that is leveraged with the benefits of scale when we focus the world’s best talent to deliver innovative solutions and value to our clients.

• Within transportation , we provide sustainable solutions to plan, develop, finance, design engineer, construct, operate and maintain, next generation mobility across all modes, including highway, bridge, rail and transit, aviation, port and maritime infrastructure.

providing program management of the largest airport developments, designing cutting edge automated container terminals and ports infrastructure and utilizing big data to develop cross modal mobility solutions.

Our clients encompass the world’s largest transportation agencies as well as private shipping and logistics companies worldwide, including the multi-modal Port Authority of New York and New Jersey, Transport for London, Highways England, Transport for New South Wales and Etihad Rail.

• Water is one of the most precious resources in the world.

Extreme weather events in the form of droughts, desertification and flooding are stressing water supplies, at the same time population growth and industrialization are increasing demand.

Addressing these challenges, we provide integrated solutions across water and wastewater treatment, water reuse, and water resources such as the deployment of next generation smart metering, digital twin technology and highly technical consulting, engineering, design-build and operation of complex water systems.

We support our clients on some of the world’s largest water infrastructure projects such as California WaterFix, Thames Tideway, Houston Water and Singapore National Water Agency.

• For the built environment, we deliver full-service architecture, engineering, interiors, planning, urban design, landscape architecture and project delivery solutions for government, corporate, commercial, institutional and industrial clients across diverse sectors.

Our technology-enabled expertise ranges from the future of work, transaction advisory and asset management to transportation hubs, urban developments, government, healthcare, higher education and science facilities, as well as sports and entertainment venues.

We plan and deliver resilient, triple bottom line-based solutions that are connected, secure and smart, including the rebuild of Tyndall Air Force Base in Florida into a visionary Installation of the Future;

the corporate headquarters and research facility relocation of Spark Therapeutics in Philadelphia, Pennsylvania;

and the expanded Blacktown Mount Druitt Hospital in New South Wales, Australia.

• In our environmental business, we utilize a multidisciplinary, systems-oriented approach to develop environmental planning for infrastructure development;

data-driven site remediation and regeneration for per- and poly-fluoroalkyl substances (PFAS) and other known and emerging contaminants;

environmental health & safety (EHS) operational excellence and information management;

and climate action solutions that incorporate sustainability and resiliency principles as essential to the well-being of all people and of our planet.

We also provide post-disaster response and recovery services in support of the Federal Emergency Management Agency’s mission throughout the U.S.

In addition to providing end-to-end technology-enabled solutions for multinational oil & gas, chemical and life sciences, mining, manufacturing and energy clients, Jacobs provides comprehensive environmental services for the U.S.

Department of Defense, the U.S.

Environmental Protection Agency, NASA and other civilian agencies, the UK Environment Agency, and the Australian Department of Defense.

• Within advanced facilities, we provide fully integrated solutions for highly specialized facilities in the fields of medical research, sustainable manufacturing, nanoscience, biotechnology, semiconductor and data centers.

Our services span the full range of facility work, from early planning and site selection through architecture, engineering, construction and facility operations, all tailored to specific client needs in the life sciences and pharmaceutical, specialty manufacturing, microelectronics and data intensive industries.

As the largest professional services provider to the biopharmaceutical industry, we are working with our multinational clients to rapidly increase capacity for vaccines and therapeutics, as well as reshoring manufacturing facilities, in response to the COVID-19 pandemic.

Representative projects include the retrofit of AstraZeneca’s West Chester, Ohio manufacturing facility to deliver a potential COVID-19 vaccine;

the Mountbatten Nanotechnology Electronics Research Complex, University of Southampton, U.K.;

and the Procter & Gamble, Singapore Innovation Center.

Applying internally developed technology

A strong foundation of data-rich innovative solutions is woven into every project that we deliver.

These solutions employ an array of technical expertise to enable the most efficient, effective and predictable solutions for our customers, such as our proprietary technology software.

This may include Jacobs-developed proprietary software that employs an array of technical expertise to enable the most efficient, effective and predictable solutions for our clients.

Examples of these technologies include:

• TrackRecord is a workflow automation and compliance management platform for the delivery of major projects.

• AquaDNA is a wastewater asset management platform that lowers operation and maintenance costs and facilitates a move from reactive to proactive maintenance.

• AquaDNA is a predictive analytics platform that integrates innovative technologies for wastewater asset management through an AI learning platform, facilitating a move from reactive to proactive maintenance and reduced operation and maintenance costs.

• Travel Service Optimisation (TSO) is Jacobs' travel sharing solution for Special Education needs children which centers on the children’s ability to travel together rather than focusing on their disability.

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• Flood Modeller provides proactive decision-making to help manage our environment and the challenges associated with flood risk.

It is suitable for a wide range of engineering and environmental applications, from calculating simple backwater profiles to modeling entire catchments to mapping potential flood risk for entire countries.

It is suitable for a wide range of engineering and environmental applications, from calculating simple backwater profiles and modeling entire catchments to mapping potential flood risk for entire countries.

• ion© is an Industrial Internet of Things (IoT) multi-protocol wireless application networking system which provides an open, integrated, secure and scalable system for data aggregation and viewing.

• Replica™ is Jacobs’ digital twin solution software platform and consists of the following capabilities:

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Rapid design development in Replica Parametric Design and visualization with Replica Preview allows for informed analysis of many alternatives and sound decision-making.

• Replica Systems Analysis™ (formerly Voyage™) is a very flexible platform that can simulate resource systems dynamically, over time.

• Replica Systems Analysis™ (formerly Voyage™) is a flexible platform that can simulate resource systems dynamically, over time.

Examples of modeled systems include water resources, energy, solid waste and traffic.

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The software's controls capabilities and functionality align with industry design standards and its ability to predict full scale performance is unmatched due to the connectivity with Replica Hydraulics.

• Replica Air™ simulates all aspects of compressible fluid (e.g.

• Replica Air™ simulates all aspects of a compressible fluid (e.g.

air) supply system, including pipes, valves, diffusers and blowers.

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

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 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.

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

As of the year ended October 2, 2020, all of the ECR business to be sold under the terms of the ECR sale had been conveyed to Worley and as such, no amounts remain held for sale.

For further discussion see Note 16- Sale of Energy, Chemicals and Resources ("ECR") Business to the consolidated financial statements.

Prior to the sale, we served the energy, chemicals and resources sectors, including upstream, midstream and downstream oil, gas, refining, chemicals and mining and minerals industries.

Prior to the ECR sale, the ECR business served the energy, chemicals and resources sectors, including upstream, midstream and downstream oil, gas, refining, chemicals and mining and minerals industries.

We provided integrated delivery of complex projects for our Oil and Gas, Refining, and Petrochemicals clients.

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 nine months ended June 26, 2020 and June 28, 2019

Results of Operations for the three months ended January 1, 2021 and December 27, 2019

(in thousands, except per share information)

For the Three Months Ended For the Nine Months Ended

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

For the Three Months Ended

January 1, 2021 December 27, 2019

Revenues $ 3,381,836 $ 3,360,049

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Earnings from Continuing Operations Before Taxes 354,111 254,169

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

Income Tax Expense from Continuing Operations (87,023) (68,489)

Net Earnings of the Group from Continuing Operations 267,088 185,680

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

Net (Loss) Earnings of the Group from Discontinued Operations (14) 77,587

Net Earnings of the Group 267,074 263,267

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Net Earnings Attributable to Jacobs from Continuing Operations 257,062 179,423

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

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

Net Earnings Attributable to Jacobs $ 257,048 $ 257,010

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Diluted Earnings Per Share $ 1.96 $ 1.91

Overview – Three and Nine Months Ended June 26, 2020

Overview – Three Months Ended January 1, 2021

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 may cause.

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 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.

The Company’s operations for the first fiscal quarter of 2021 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 continuing into fiscal 2021, although to a lesser degree than what was seen in fiscal 2020.

Net earnings attributable to the Company from continuing operations for the first fiscal quarter ended January 1, 2021 were $257.1 million (or $1.96 per diluted share), an increase of $77.6 million, or 43.3%, from earnings of $179.4 million (or $1.33 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 January 1, 2021 we re $70.4 million in after-tax unrealized appreciation gains recorded in miscellaneous income (expense), net, assoc iated with our investment in Worley stock and certain foreign currency revaluations relating to the ECR sale, after-tax unrealized appreciation gains associated with our investment in C3.ai, Inc.

("C3") o f $62.3 million.

Also included in other income for the period was a $22.6 million after-tax other-than-temporary impairment in respect of our AWE investment.

Net earnings attributable to the Company from discontinued operations for the first fiscal quarter ended January 1, 2021 were $(14.0) thousand (or $0.00 per diluted share), a decrease of $77.6 million, or 100.0%, from earnings of $77.6 million (or $0.58 per diluted share) for the corresponding period last year.

Included in net earnings attributable to Jacobs from discontinued operations for the prior year was the settlement of a legal matter that was reimbursed by insurance, the release of the deferred gain for the delivery of the ECR IT Instance and the adjustment for working capital and certain other items in connection with the ECR sale.

For further discussion, see Note 16- Sale of Energy, Chemicals and Resources ("ECR") Business .

On November 24, 2020, Jacobs completed the acquisition of Buffalo Group.

For further discussion, see Note 15- Business Combinations .

On November 27, 2020, the Company entered into an agreement to make a strategic investment in PA Consulting Group Limited by acquiring approximately 65% of its share capital in the form of preferred and common equity for an aggregate amount of £1.8 billion.

The transaction is expected to close in the second quarter of fiscal 2021.

Consolidated Results of Operations

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.

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, largely offset by impacts from the COVID 19 pandemic.

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 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.

Revenues for the first fiscal quarter of 2021 were $3.38 billion, an increase of $21.8 million, or 0.6% from $3.36 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 Buffalo Group and John Wood Group Nuclear business acquisitions, in addition to overall growth in our Critical Mission Solutions (CMS) business, largely offset by impacts from the COVID 19 pandemic on our P&PS business which resulted in a decrease to P&PS revenues period over period.

Pass-through costs included in revenues for the three months ended January 1, 2021 amounted to $648.7 million, a decrease of $53.1 million, or 7.6%, fro m $701.8 million from the corresponding periods last year.

Gross profit for the first quarter of 2021 was $632.1 million, a decrease of $12.5 million, or 1.9% from $644.6 million fro m the corresponding period last year.

Our gross profit margins were 18.7% and 19.2% for the three month periods ended January 1, 2021 and December 27, 2019, respectively, with these trend differences being mainly attributable to project mix impacts in our legacy portfolio year over year and lower overhead rate impacts on revenue, with partial offsets from favorable margin trends from our recent Buffalo Group and John Wood Group nuclear business acquisitions and 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.

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 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.

SG&A expenses for the three months ended January 1, 2021 were $418.1 million, a decrease of $75.1 million, or 15.2%, from $493.2 million for 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, although the parties agreed to extend certain of the services beyond the initial term, 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 Buffalo Group and John Wood Group nuclear business acquisitions.

Also, included in the current year results were $22.0 million of Restructuring and other charges and transaction costs associated in part with the Company's transformation initiatives relating to real estate and other staffing programs.

In comparison, the prior year included $50.7 million ofRestructuring and other charges and transaction costs.

Unfavorable impacts on SG&A expenses from foreign exchange were $3.8 million for th e three months ended January 1, 2021, although impacts from foreign exchange were immaterial to the Company's operating profit as a whole.

Net interest expense for the three months ended January 1, 2021 was $16.2 million, an increase of $2.3 million from $13.9 million for the corresponding period last year.

The increase in net interest expense for the three month period year over year is due to higher levels of debt outstanding.

Miscellaneous income (expense), net for the three months ended January 1, 2021 was $156.4 million, an increase of $39.7 million, from $116.7 million for the corresponding period last year.

The increase from the prior year was due primarily to $93.1 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, compared to $99.1 million in the prior year and $82.6 million in net gains related to the C3 investment in the current year.

Additionally, during the three months ended January 1, 2021, the Company recorded an other-than-temporary impairment on its investment in AWE in the amount of $27.9 million, which is also included in miscellaneous income (expense), net on its consolidated statement of earnings.

The Company’s effective tax rates from continuing operations for the three months ended January 1, 2021 and December 27, 2019 were 24.6% and 27.0%, respectively.

The Company’s effective tax rate from continuing operations for the three months ended January 1, 2021 was lower than the corresponding rate in the prior period primarily due to one-time income tax charges associated with partnership interest basis differences generated during the quarter ending December 27, 2019.

For the three months ended January 1, 2021, the effective tax rate was impacted by a $1.4 million benefit from an Internal Revenue Code section 179D energy credit, a $2.2 million excess tax benefit attributable to stock compensation, and a $5.0 million benefit related to a change in the Company’s assertion about indefinite reinvestment of certain foreign unremitted earnings in Canada.

The Company is continuing to accrue taxes related to all other foreign earnings.

See Note 16- 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.

On December 22, 2017, the Tax Cuts and Jobs Act (the “Act”) was enacted in the United States and significantly revised the U.S.

corporate income tax laws.

Given the significance of the legislation, the SEC staff issued Staff Accounting Bulletin No.

118 (SAB 118), which allowed registrants to record provisional amounts during a one year “measurement period” like that used when accounting for business combinations.

As of December 22, 2018, we completed our accounting for the tax effects of the enactment of the Act.

For the deferred tax balances, we remeasured the U.S.

deferred tax assets and liabilities based on the rates at which they are expected to reverse in the future, which is generally 21%.

The Company’s revised remeasurement resulted in cumulative charges to income tax expense of $144.4 million for the measurement period.

The Act called for a one-time tax on deemed repatriation of foreign earnings.

This one-time transition tax was based on our total post-1986 earnings and profits (E&P) of certain of our foreign subsidiaries.

We recorded $14.3 million in cumulative transition taxes during the measurement period, although the transition tax was expected to be offset by foreign tax credits in the future, resulting in no additional cash tax liability.

In addition, the Company recorded $104.2 million in cumulative valuation expense charges during the measurement period with respect to certain foreign tax credit deferred tax assets as a result of the Act and CH2M integration.

The amount of income taxes the Company pays is subject to ongoing audits by tax jurisdictions around the world.

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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 Nine Months Ended

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

Three Months Ended

January 1, 2021 December 27, 2019

Revenues from External Customers:

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Total $ 3,381,836 $ 3,360,049

Three Months Ended Nine Months Ended

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

Three Months Ended

January 1, 2021 December 27, 2019

Segment Operating Profit:

8 unchanged sentences

$ 354,111 $ 254,169

(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.

(1) Other corporate expenses also include intangibles amortization of $23.2 million and $21.8 million for the three-month periods ended January 1, 2021 and December 27, 2019, respectively.

(2) For the three month period ended January 1, 2021, includes $93.1 million in fair value adjustments related to our investment in Worley stock and certain foreign currency revaluations relating to the ECR sale, $82.6 million in fair adjustments related to our investment in C3 stock and $(27.9) million related to impairment of our AWE Management Ltd.

For the three month period ended December 27, 2019, includes revenues under the Company's TSA with Worley of $12.0 million, $99.1 million in fair value adjustments related to our investment in Worley stock and certain foreign currency revaluations relating to the ECR sale, the amortization of deferred financing fees related to the CH2M acquisition of $0.6 million and the loss on settlement of the CH2M portion of the U.S.

pension plan of $2.4 million.

Critical Mission Solutions

Three Months Ended Nine Months Ended

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

Three Months Ended

January 1, 2021 December 27, 2019

Revenue $ 1,295,287 $ 1,182,457

Operating Profit $ 110,072 $ 90,422

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.

Critical Mission Solutions (CMS) segment revenues for the three months ended January 1, 2021 were $1.30 billion, an increase of $112.8 million, or 9.5%, from $1.18 billion for the corresponding period last year.

The increase in revenue was primarily attributable to incremental revenue from the Buffalo Group 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.

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 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.

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

Impa cts on revenues from favorable foreign currency translation were approximately $4.6 million for the three month period ended January 1, 2021 compared to the corresponding prior year period.

Operating profit for the segment was $110.1 million for the three months ended January 1, 2021, an increase of $19.7 million, or 21.7%, from $90.4 million for the corresponding period last year.

The increase from the prior year was primarily attributable to incremental operating profit from the Buffalo Group and John Wood Group nuclear business acquisitions and the continued growth in profits from our U.S.

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

Impacts on operating profit from favorable foreign currency translation were approximately $0.8 million for the three months ended January 1, 2021, compared to the corresponding prior year period.

Limited revenue impacts from COVID-19 mentioned above were largely offset by the Company’s limited discretionary spend actions and other areas of improved operating performance.

People & Places Solutions

Three Months Ended Nine Months Ended

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

Three Months Ended

January 1, 2021 December 27, 2019

Revenue $ 2,086,549 $ 2,177,592

Operating Profit $ 196,300 $ 178,328

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 $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.

Revenues for the People & Places Solutions (P&PS) segment for the three months ended January 1, 2021 were $2.09 billion, a decrease of $91.0 million, or 4.2%, from $2.18 billion for the corresponding period last year.

The decrease in revenue was primarily due to lower pass through activity as well as client scheduling changes from COVID-19, particularly in the transportation and advanced facilities sectors, which was partially offset by growth in environmental services.

Impacts on revenues from favorable foreign currency translation were approximately $19.5 million for the three month period en ded January 1, 2021 compared to the corresponding prior year period.

Operating profit for the segment for the three months ended January 1, 2021 was $196.3 million, an increase of $18.0 million, or 10.1%, from $178.3 million for the corresponding p eriod last year.

The year over year increase in operating profit was due primarily to lower labor, travel and discretionary spending related to COVID-19 mitigation efforts.

Imp acts on operating profit from favorable foreign currency translation were approximately $2.1 million for the three month period ended January 1, 2021, compared to the corresponding prior year period.

The unfavorable revenue impacts mentioned above were more than offset by the Company’s cost mitigation actions.

Other Corporate Expenses

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.

Other corporate expenses for the three months ended January 1, 2021 were $70.3 million, an increase of $3.6 million from $66.7 million for the corresponding period last year.

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

These increases were partly offset by employee related and other cost reductions across the Company's corporate functions.

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Such costs and expenses include:

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

(i) those 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;

(iii) the amortization of intangible assets acquired as part of purchased business combinations;

(iii) the amortization of intangible assets acquired as part of business combinations;

(iv) the quarterly variances between the Company’s actual costs of certain of its self-insured integrated risk and employee benefit programs and amounts charged to the LOBs;

and (v) certain adjustments relating to costs associated with the Company’s international defined benefit pension plans.

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.

Discontinued Operations

The results from our ECR business formerly reported as a stand-alone segment are reflected in our unaudited consolidated financial statements as discontinued operations for all periods presented.

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

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.

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

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 June 26, 2020 and June 28, 2019 (in millions):

June 26, 2020 June 28, 2019

The following table summarizes our backlog at January 1, 2021 and December 27, 2019 (in millions):

January 1, 2021 December 27, 2019

Critical Mission Solutions $ 9,683 $ 8,473

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Total $ 25,105 $ 22,670

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.

The increase in backlog in Critical Mission Solutions (CMS) from December 27, 2019 was primarily the result of the acquisition of the Buffalo Group and John Wood Group's nuclear consulting, remediation and program management business.

The increase in backlog in People & Places Solutions (P&PS) from December 27, 2019 was primarily the result of new awards in the U.S.

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 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.

At January 1, 2021, our principal sources of liquidity consisted of $ 837.0 million in cash and cash equivalents and $1.98 billion of available borrowing capacity under our $2.25 billion r evolving credit agreement (the "Revolving Credit Facility").

We finance much of our operations and growth through cash generated by our operations.

The amount of cash and cash equivalents at January 1, 2021 represented a decrease of $25.4 million from $862.4 million at October 2, 2020, the reasons for which are described below.

Our cash flow provided by operations of $112.6 million during the three month period ended January 1, 2021 was favorable by $249.8 million in co mparison to the cash flow used for operations of $137.2 million for the corresponding prior year peri od.

This improvement was due mainly to lower uses of cash in other working capital, which in turn was primarily due to improved receivable collections compared to the previous period along with less cash used in accrued liabilities year over year.

The cash spend decrease in accrued liabilities is associated with lower payments in personnel related liabilities year over year.

Our cash used for investing activities for the three months ended January 1, 2021 wa s $193.2 million, compared to cash used for investing activities of $34.3 million in the corresponding prior year period, the change due primarily to the acquisition of the Buffalo Group in the current quarter.

Our cash provided by financing activities o f $18.7 million for the three months ended January 1, 2021 resulted mainly from net proceeds from borr owings of $95.0 million, partly offset by cash used for share repurchases of $24.8 million, $35.7 million in dividends to shareholders and noncontrolling interest and approximately $15.8 million in s tock-based compensation and benefit plan related activity.

Cash provided by financing activities in the corresponding prior year period was $166.9 million, due primarily to net proceeds from borrowings of $210.6 million, partly offset by dividends of $25.6 million and stock-based compensation and benefit plan related activity of $18.1 million.

At January 1, 2021, the Company had approxim ately $129.8 million in cash and cash equivalents held in the U.S.

and $707.2 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.

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

Other than the tax cost of repatriating funds to the U.S.

(see Note 7- Income Taxes of Notes to Consolidated Financial Statements included in our 2020 Form 10-K), there are no material impediments to repatriating these funds to the U.S.

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 $1.04 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.

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.

The Company had $252.1 million in letters of credit outstanding at January 1, 2021.

Of this amount, $2.3 million was issued under the Revolving Credit Facility and $249.8 million was issued under separate, committed and uncommitted letter-of-credit facilities.

On November 24, 2020, a subsidiary of Jacobs completed the acquisition of Buffalo Group, a leader in advanced cyber and intelligence solutions.

The Company paid total consideration of $212.8 million, which was comprised of approximately $181.4 million in cash to the former owners of Buffalo Group and the assumption of Buffalo Group's debt of approximately $7.7 million and $23.7 million in other assumed liabilities.

The Company repaid all of the assumed Buffalo Group debt by the end of the first fiscal quarter of 2021.

The Company has recorded its preliminary purchase price allocation associated with the acquisition, which is summarized in Note 15- Business Combinations .

On March 6, 2020, a subsidiary of Jacobs completed the acquisition of John Wood Group's nuclear consulting, remediation and program management business for an enterprise value of £246 million, or approximately $317.9 million, less cash acquired of $24.3 million.

The Company has recorded its preliminary purchase accounting processes associated with the acquisitions, which are summarized in Note 5- Business Combinations .

On June 12, 2019, Jacobs completed the acquisition of The KeyW Holding Corporation (“KeyW”), a U.S.

based innovative national security solutions provider to the intelligence, cyber, and counterterrorism communities by acquiring 100% of the outstanding shares of KeyW common stock.

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 $298.4 million.

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.

The Company has recorded its preliminary purchase accounting allocation associated with the acquisition, which is summarized in Note 15- Business Combinations .

The transaction is expected to be funded by cash on hand and debt proceeds and to close in the second quarter of fiscal 2021 .

On January 20, 2021, Jacobs entered into a delayed draw term loan facility (the "Delayed Draw Term Loan Facility) under the Revolving Credit Facility.

The Delayed Draw Term Loan Facility matures on the third anniversary of the date of closing.

Under the Delayed Draw Term Loan Facility, the Company may borrow up to $200 million of U.S.

dollar denominated term loans and up to £650 million U.K.

pound sterling denominated loans.

The proceeds of the term loans may be used to fund the acquisition of a majority interest in PA Consulting Group Limited, refinance certain existing indebtedness and pay related transaction costs and expenses.

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, 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 further believe that our financial resources and 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 are 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.

We also ceased all non-essential hiring and reduced discretionary expenses, including certain employee benefits and compensation through the end of fiscal 2020.

In addition, as a precautionary measure, we temporarily suspended purchases under the share repurchase plan in March 2020, with such suspension remaining in effect through the third fiscal quarter of 2020.

During the fourth fiscal quarter of 2020, we resumed share repurchases on a limited basis.

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.

We were in compliance with all of our debt covenants at January 1, 2021.

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