What changed in this filing

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Item 1. Financial Statements

2021-05-10 compared with 2021-02-09 · 400 added, 220 removed, 675 unchanged (48% of the section changed)

4 unchanged sentences

(In thousands, except share information)

January 1, 2021 October 2, 2020

April 2, 2021 October 2, 2020

Current Assets:

15 unchanged sentences

Current Liabilities:

Short-term debt $ 53,813 $ —

Accounts payable 914,408 1,061,754

9 unchanged sentences

Commitments and Contingencies

Redeemable Noncontrolling interests 586,965 —

Stockholders’ Equity:

4 unchanged sentences

issued and outstanding 130,172,177 shares and 129,747,783

shares as of January 1, 2021 and October 2, 2020, respectively

shares as of April 2, 2021 and October 2, 2020, respectively

130,172 129,748

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CONSOLIDATED STATEMENTS OF EARNINGS

Three Months Ended January 1, 2021 and December 27, 2019

Three and Six Months Ended April 2, 2021 and March 27, 2020

(In thousands, except per share information)

For the Three Months Ended

January 1, 2021 December 27, 2019

For the Three Months Ended For the Six Months Ended

April 2, 2021 March 27, 2020 April 2, 2021 March 27, 2020

Revenues $ 3,547,873 $ 3,427,180 $ 6,929,708 $ 6,787,229

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Selling, general and administrative expenses ( 808,125 ) ( 480,357 ) ( 1,226,246 ) ( 973,582 )

Operating Profit 213,940 151,345

Operating (Loss) Profit ( 41,112 ) 167,778 172,826 319,125

Other Income (Expense):

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Interest expense ( 15,464 ) ( 15,154 ) ( 32,777 ) ( 29,971 )

Miscellaneous income (expense), net 156,360 116,695

Total other income (expense), net 140,171 102,824

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

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

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

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

Net Earnings of the Group 267,074 263,267

Miscellaneous (expense) income, net ( 56,313 ) ( 330,414 ) 100,047 ( 213,719 )

Total other (expense) income, net ( 71,169 ) ( 344,583 ) 69,002 ( 241,759 )

(Loss) Earnings from Continuing Operations Before Taxes ( 112,281 ) ( 176,805 ) 241,828 77,366

Income Tax Benefit (Expense) from Continuing Operations 20,772 61,122 ( 66,250 ) ( 7,368 )

Net (Loss) Earnings of the Group from Continuing Operations ( 91,509 ) ( 115,683 ) 175,578 69,998

Net Earnings of the Group from Discontinued Operations 11,320 29,880 11,305 107,468

Net (Loss) Earnings of the Group ( 80,189 ) ( 85,803 ) 186,883 177,466

Net Earnings Attributable to Noncontrolling Interests from Continuing Operations ( 10,158 ) ( 6,284 ) ( 20,184 ) ( 12,540 )

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

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

Net Loss Attributable to Redeemable Noncontrolling interests 101,392 — 101,392 —

Net (Loss) Earnings Attributable to Jacobs from Continuing Operations ( 275 ) ( 121,967 ) 256,786 57,458

Net Earnings (Loss) Attributable to Jacobs $ 11,045 $ ( 92,087 ) $ 268,091 $ 164,926

Net Earnings Per Share:

Basic Net Earnings from Continuing Operations Per Share $ 1.98 $ 1.35

Basic Net (Loss) Earnings from Continuing Operations Per Share $ — $ ( 0.92 ) $ 1.97 $ 0.43

Basic Net Earnings from Discontinued Operations Per Share $ 0.09 $ 0.23 $ 0.09 $ 0.81

Basic Earnings Per Share $ 1.98 $ 1.93

Diluted Net Earnings from Continuing Operations Per Share $ 1.96 $ 1.33

Basic Earnings (Loss) Per Share $ 0.08 $ ( 0.69 ) $ 2.06 $ 1.24

Diluted Net (Loss) Earnings from Continuing Operations Per Share $ — $ ( 0.92 ) $ 1.96 $ 0.43

Diluted Net Earnings from Discontinued Operations Per Share $ 0.09 $ 0.23 $ 0.09 $ 0.80

Diluted Earnings Per Share $ 1.96 $ 1.91

Diluted Earnings (Loss) Per Share $ 0.08 $ ( 0.69 ) $ 2.04 $ 1.23

See the accompanying Notes to Consolidated Financial Statements - Unaudited.

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CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

Three Months Ended January 1, 2021 and December 27, 2019

Three and Six Months Ended April 2, 2021 and March 27, 2020

(In thousands)

For the Three Months Ended

January 1, 2021 December 27, 2019

Net Earnings of the Group $ 267,074 $ 263,267

For the Three Months Ended For the Six Months Ended

April 2, 2021 March 27, 2020 April 2, 2021 March 27, 2020

Net (Loss) Earnings of the Group $ ( 80,189 ) $ ( 85,803 ) $ 186,883 $ 177,466

Other Comprehensive Income:

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( 4,744 ) 21,707 ( 19,794 ) 22,289

Net other comprehensive income 55,518 36,646

Net Comprehensive Income of the Group 322,592 299,913

Net other comprehensive income (loss) 8,900 ( 66,151 ) 64,418 ( 29,505 )

Net Comprehensive (Loss) Income of the Group ( 71,289 ) ( 151,954 ) 251,301 147,961

Net Earnings Attributable to Noncontrolling Interests ( 10,158 ) ( 6,284 ) ( 20,184 ) ( 12,540 )

Net Comprehensive Income Attributable to Jacobs $ 312,566 $ 293,656

Net Loss Attributable to Redeemable Noncontrolling interests 101,392 — 101,392 —

Net Comprehensive (Loss) Income Attributable to Jacobs $ 19,945 $ ( 158,238 ) $ 332,509 $ 135,421

See the accompanying Notes to Consolidated Financial Statements - Unaudited.

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CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY

For the Three Months Ended January 1, 2021 and December 27, 2019

For the Three Months Ended April 2, 2021 and March 27, 2020

(In thousands)

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

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

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

Foreign currency translation adjustments, net of deferred taxes of $( 18,429 )

— — — ( 98,146 ) ( 98,146 ) — ( 98,146 )

Pension liability, net of deferred taxes of $( 3,278 )

— — — 31,995 31,995 — 31,995

Dividends — — ( 25,453 ) — ( 25,453 ) — ( 25,453 )

Noncontrolling interests - distributions and other — 5,002 — — 5,002 ( 12,830 ) ( 7,828 )

Stock based compensation — 9,533 24 — 9,557 — 9,557

Issuances of equity securities including shares withheld for taxes 208 12,294 ( 190 ) — 12,312 — 12,312

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

Balances at March 27, 2020

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

Balances at January 1, 2021 $ 130,035 $ 2,597,586 $ 4,249,408 $ ( 877,539 ) $ 6,099,490 $ 43,877 $ 6,143,367

Net earnings, excluding $( 101.4 ) million in loss relating to redeemable noncontrolling interests

— — 11,045 — 11,045 10,158 21,203

Foreign currency translation adjustments, net of deferred taxes of $( 3,409 )

— — — ( 12,041 ) ( 12,041 ) — ( 12,041 )

Pension liability, net of deferred taxes of $ 838

— — — 652 652 — 652

Gain on derivatives, net of deferred taxes of $ 7,315

— — — 20,289 20,289 — 20,289

Dividends ( 27,482 ) ( 27,482 ) — ( 27,482 )

Redeemable Noncontrolling interests redemption value adjustment to Common Shareholders — — ( 107,238 ) — ( 107,238 ) — ( 107,238 )

Noncontrolling interests - distributions and other — — — — — ( 18,728 ) ( 18,728 )

Stock based compensation — 15,136 — — 15,136 — 15,136

Issuances of equity securities including shares withheld for taxes 137 8,732 ( 133 ) — 8,736 — 8,736

Repurchases of equity securities — — ( 148 ) — ( 148 ) — ( 148 )

Balances at April 2, 2021 $ 130,172 $ 2,621,454 $ 4,125,452 $ ( 868,639 ) $ 6,008,439 $ 35,307 $ 6,043,746

See the accompanying Notes to Consolidated Financial Statements – Unaudited.

JACOBS ENGINEERING GROUP INC.

AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY

For the Six Months Ended April 2, 2021 and March 27, 2020

(In thousands)

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

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

Net earnings — — 164,926 — 164,926 12,540 177,466

Foreign currency translation adjustments — — — 52,297 52,297 — 52,297

Foreign currency translation adjustments, net of deferred taxes of $( 18,429 )

— — — ( 45,849 ) ( 45,849 ) — ( 45,849 )

Pension and retiree medical plan liability, net of deferred taxes of $( 3,860 )

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

Balances at December 27, 2019

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

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

Balances at October 2, 2020 129,748 2,598,446 4,020,575 ( 933,057 ) 5,815,712 39,955 5,855,667

Net earnings — — 257,048 — 257,048 10,026 267,074

Net earnings, excluding $( 101.4 ) million million in loss relating to redeemable noncontrolling interests

— — 268,091 — 268,091 20,184 288,275

Foreign currency translation adjustments, net of deferred taxes of $ 11,036

2 unchanged sentences

— — — ( 19,527 ) ( 19,527 ) — ( 19,527 )

Gain on derivatives, net of deferred taxes of $( 221 )

(Loss) Gain on derivatives, net of deferred taxes of $ 7,094

— — — 24,093 24,093 — 24,093

Dividends — — ( 27,515 ) — ( 27,515 ) — ( 27,515 )

Redeemable Noncontrolling interests redemption value adjustment to Common Shareholders — — ( 107,238 ) — ( 107,238 ) — ( 107,238 )

Noncontrolling interests - distributions and other — — — — — ( 24,832 ) ( 24,832 )

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Repurchases of equity securities ( 251 ) ( 5,027 ) ( 19,671 ) — ( 24,949 ) — ( 24,949 )

Balances at January 1, 2021 $ 130,035 $ 2,597,586 $ 4,249,408 $ ( 877,539 ) $ 6,099,490 $ 43,877 $ 6,143,367

Balances at April 2, 2021 $ 130,172 $ 2,621,454 $ 4,125,452 $ ( 868,639 ) $ 6,008,439 $ 35,307 $ 6,043,746

See the accompanying Notes to Consolidated Financial Statements – Unaudited.

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CONSOLIDATED STATEMENTS OF CASH FLOWS

For the Three Months Ended January 1, 2021 and December 27, 2019

For the Six Months Ended April 2, 2021 and March 27, 2020

(In thousands)

For the Three Months Ended

January 1, 2021 December 27, 2019

For the Six Months Ended

April 2, 2021 March 27, 2020

Cash Flows from Operating Activities:

Net earnings attributable to the Group $ 186,883 $ 177,466

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

Adjustments to reconcile net earnings to net cash flows provided by operations:

Depreciation and amortization:

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Gain on sale of ECR business ( 15,608 ) ( 81,910 )

Gain on investment in equity securities ( 190,368 ) ( 105,319 )

(Gain) loss on investment in equity securities ( 114,443 ) 270,225

Stock based compensation 26,977 23,835

Equity in earnings of operating ventures, net of return on capital distributions 6,353 235

(Gain) Loss on disposals of assets, net ( 134 ) 36

Loss (gain) on disposals of assets, net 353 ( 247 )

Impairment of equity method investment 33,197 —

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Other, net ( 4,797 ) ( 25,612 )

Net cash provided by (used for) operating activities 112,618 ( 137,186 )

Net cash provided by operating activities 350,232 14,968

Cash Flows from Investing Activities:

Additions to property and equipment ( 45,053 ) ( 61,337 )

Disposals of property and equipment and other assets 427 38

Capital contributions to equity investees, net of return of capital distributions ( 4,193 ) ( 12,358 )

Acquisitions of businesses, net of cash acquired ( 1,741,062 ) ( 286,534 )

Disposal of investment in equity securities 13,027 —

Proceeds (payments) related to sales of businesses 36,360 ( 5,061 )

Net cash used for investing activities ( 1,740,494 ) ( 365,252 )

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Repayments of short-term borrowings ( 7,675 ) ( 200,008 )

Debt issuance costs ( 2,697 ) ( 1,807 )

Proceeds from issuances of common stock 18,585 18,920

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Effect of Exchange Rate Changes 28,918 20,705

Net Decrease in Cash and Cash Equivalents ( 25,412 ) ( 11,856 )

Cash and Cash Equivalents at the Beginning of the Period 862,424 631,068

Cash and Cash Equivalents at the End of the Period $ 837,012 $ 619,212

Net Increase in Cash and Cash Equivalents and Restricted Cash 304,430 1,024,811

Cash and Cash Equivalents, including Restricted Cash, at the Beginning of the Period 862,424 631,068

Cash and Cash Equivalents, including Restricted Cash at the End of the Period $ 1,166,854 $ 1,655,879

See the accompanying Notes to Consolidated Financial Statements – Unaudited.

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Readers of this Quarterly Report on Form 10-Q should also read our consolidated financial statements and the notes thereto included in our Annual Report on Form 10-K for the fiscal year ended October 2, 2020 (“2020 Form 10-K”).

In the opinion of management, the accompanying unaudited consolidated financial statements contain all adjustments (consisting of normal recurring adjustments) necessary for a fair presentation of our consolidated financial statements at January 1, 2021, and for the three months ended January 1, 2021.

In the opinion of management, the accompanying unaudited consolidated financial statements contain all adjustments (consisting of normal recurring adjustments) necessary for a fair presentation of our consolidated financial statements at April 2, 2021, and for the three and six month periods ended April 2, 2021.

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

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Please refer to Note-13 Leases for required disclosures related to leases.

On November 24, 2020, a subsidiary of Jacobs completed the acquisition of Buffalo Group LLC ("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.

On March 2, 2021, Jacobs completed the strategic investment of a 65 % interest in PA Consulting, a UK-based leading innovation and transformation consulting firm.

The total consideration paid by the Company was $ 1.7 billion, funded through cash on hand, a new term loan and draws on the Company's existing revolver.

Further, in connection with the transaction, an additional $ 266.6 million had not yet been distributed at April 2, 2021 due to continuing employment requirements.

Consequently, this amount represents compensation expense incurred related to the acquisition that is expected to be paid in the third quarter of fiscal 2021, and is reflected in selling, general and administrative expense on the consolidated income statement for the current fiscal quarter.

The remaining 35 % interest is held by PA Consulting employees, whose redeemable noncontrolling interests had a fair value of $ 581.1 million on the closing date.

PA Consulting is accounted for as a consolidated subsidiary and as a separate operating segment under U.S.

GAAP accounting rules.

See Note 15- PA Consulting Business Combination for more discussion on the investment and Note 12- Borrowings for more discussion on the financing for the transaction.

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 $ 190.1 million, which was comprised of approximately $ 182.4 million in cash to the former owners of Buffalo Group and contingent consideration of $ 7.7 million which is expected to be settled in fiscal 2022.

In conjunction with the acquisition, the Company assumed the Buffalo Group's debt of approximately $ 7.7 million.

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 .

The Company has recorded its preliminary purchase price allocation associated with the acquisition, which is summarized in Note 16- Other Business Combinations .

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

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

On April 26, 2019, Jacobs completed the sale of its Energy, Chemicals and Resources ("ECR") business to Worley Limited, a company incorporated in Australia ("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 “ECR sale”).

The Company has recorded its final purchase price allocation associated with the acquisition, which is summarized in Note 16- Other Business Combinations .

JACOBS ENGINEERING GROUP INC.

AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (CONTINUED)

cash plus (ii) 58.2 million ordinary shares of Worley, subject to adjustments for changes in working capital and certain other items (the “ECR sale”).

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

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For further discussion, see Note 17- Sale of Energy, Chemicals and Resources ("ECR") Business to the consolidated financial statements.

JACOBS ENGINEERING GROUP INC.

AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (CONTINUED)

Use of Estimates and Assumptions

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

JACOBS ENGINEERING GROUP INC.

AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (CONTINUED)

New Accounting Pronouncements

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The adoption of ASU 2017-04 did not have a material impact on the Company's financial position, results of operations or cash flows.

JACOBS ENGINEERING GROUP INC.

AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (CONTINUED)

2016-13, Financial Instruments - Credit Losses ("ASC 326"):

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There are other provisions within the standard that affect how impairments of other financial assets may be recorded and presented, and that expand disclosures.

This standard is effective beginning with the current fiscal quarter.

This standard was effective beginning with the first fiscal quarter 2021.

The adoption of ASU 326 did not have a material impact on the Company's financial position, results of operations or cash flows.

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Refer to Note 20- Segment Information for additional information on how we disaggregate our revenues by reportable segment.

The following table further disaggregates our revenue by geographic area for the three months ended January 1, 2021 and December 27, 2019 (in thousands):

Three Months Ended

January 1, 2021 December 27, 2019

The following table further disaggregates our revenue by geographic area for the three and six months ended April 2, 2021 and March 27, 2020 (in thousands):

Three Months Ended Six Months Ended

April 2, 2021 March 27, 2020 April 2, 2021 March 27, 2020

United States $ 2,474,672 $ 2,543,387 $ 4,931,712 $ 5,076,101

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

Revenue recognized for the three months ended January 1, 2021 and December 27, 2019 that was included in the contract liability balance on October 2, 2020 and September 27, 2019, respectively was $ 259.0 million and $ 244.1 million, respectively.

Revenue recognized for the three and six months ended April 2, 2021 that was included in the contract liability balance on October 2, 2020 was $ 96.5 million and $ 355.6 million, resp ectively.

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

Remaining Performance Obligations

The Company’s remaining performance obligations as of January 1, 2021 represent a measure of the total dollar value of work to be performed on contracts awarded and in progress.

The Company had approximately $ 17.3 billion in remaining performance obligations as of January 1, 2021.

The Company’s remaining performance obligations as of April 2, 2021 represent a measure of the total dollar value of work to be performed on contracts awarded and in progress.

The Company had approximately $ 15.7 billion in remaining performance obligations as of April 2, 2021.

The Company expects to recognize approximately 48 % of our remaining performance obligations into revenue within the next twelve months and the remaining 52 % thereafter.

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

Remaining performance obligations are adjusted to reflect any known project cancellations, revisions to project scope and cost, foreign currency exchange fluctuations and project deferrals, as appropriate.

JACOBS ENGINEERING GROUP INC.

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (CONTINUED)

Earnings Per Share and Certain Related Information

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

During the three months ended January 1, 2021, the Company did not have any outstanding participating securities.

The following table reconciles the denominator used to compute basic EPS to the denominator used to compute diluted EPS for the three months ended January 1, 2021 and December 27, 2019 (in thousands):

Three Months Ended

January 1, 2021 December 27, 2019

During the three and six months ended April 2, 2021, the Company did not have any outstanding participating securities.

The following table reconciles the denominator used to compute basic EPS to the denominator used to compute diluted EPS for the three and six months ended April 2, 2021 and March 27, 2020 (in thousands):

JACOBS ENGINEERING GROUP INC.

AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (CONTINUED)

Three Months Ended Six Months Ended

April 2, 2021 March 27, 2020 April 2, 2021 March 27, 2020

Numerator for Basic and Diluted EPS:

Net earnings attributable to Jacobs from continuing operations $ 257,062 $ 179,423

Net (loss) earnings attributable to Jacobs from continuing operations $ ( 275 ) $ ( 121,967 ) $ 256,786 $ 57,458

Net earnings from continuing operations allocated to participating securities — — — ( 20 )

Net earnings from continuing operations allocated to common stock for EPS calculation $ 257,062 $ 179,331

Net (loss) earnings from continuing operations allocated to common stock for EPS calculation $ ( 275 ) $ ( 121,967 ) $ 256,786 $ 57,438

Net earnings attributable to Jacobs from discontinued operations $ 11,320 $ 29,880 $ 11,305 $ 107,468

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Net earnings from discontinued operations allocated to common stock for EPS calculation $ 11,320 $ 29,880 $ 11,305 $ 107,430

Net earnings allocated to common stock for EPS calculation $ 257,048 $ 256,878

Net earnings (loss) allocated to common stock for EPS calculation $ 11,045 $ ( 92,087 ) $ 268,091 $ 164,868

Denominator for Basic and Diluted EPS:

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Shares used for calculating diluted EPS attributable to common stock 130,262 132,531 131,157 134,090

Net Earnings Per Share:

Basic Net Earnings from Continuing Operations Per Share $ 1.98 $ 1.35

Net Earnings (Loss) Per Share:

Basic Net (Loss) Earnings from Continuing Operations Per Share $ — $ ( 0.92 ) $ 1.97 $ 0.43

Basic Net Earnings from Discontinued Operations Per Share $ 0.09 $ 0.23 $ 0.09 $ 0.81

Basic Earnings Per Share $ 1.98 $ 1.93

Diluted Net Earnings from Continuing Operations Per Share $ 1.96 $ 1.33

Basic Earnings (Loss) Per Share $ 0.08 $ ( 0.69 ) $ 2.06 $ 1.24

Diluted Net (Loss) Earnings from Continuing Operations Per Share $ — $ ( 0.92 ) $ 1.96 $ 0.43

Diluted Net Earnings from Discontinued Operations Per Share $ 0.09 $ 0.23 $ 0.09 $ 0.80

Diluted Earnings Per Share $ 1.96 $ 1.91

Diluted Earnings (Loss) Per Share $ 0.08 $ ( 0.69 ) $ 2.04 $ 1.23

(1) For the three months ended April 2, 2021 and March 27, 2020, because net (loss) earnings from continuing operations allocated to common stock for EPS was a loss, the effect of antidilutive securities of 902 and 1,032 , respectively, were excluded from the denominator in calculating diluted EPS.

Share Repurchases

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

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

JACOBS ENGINEERING GROUP INC.

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (CONTINUED)

The following table summarizes the activity under the 2019 and 2020 Repurchase Authorizations in the first quarter of fiscal 2021:

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

The following table summarizes the activity under the 2019 and 2020 Repurchase Authorizations through the second fiscal quarter of 2021:

Amount Authorized

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During the fourth fiscal quarter of 2020, the Company resumed share repurchases on a limited basis while we continue to monitor developments in fiscal 2021 with the pandemic.

As of January 1, 2021, the Company h as $ 33.1 million rema ining under the 2019 Repurchase Authorization and $ 1.0 billion remaining under the 2020 Repurchase Authorization.

As of April 2, 2021, the Company has $ 33.1 million remaining under the 2019 Repurchase Authorization and $ 1.0 billion remaining under the 2020 Repurchase Authorization.

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

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Dividend Program

On January 27, 2021, the Company’s Board of Directors declared a quarterly dividend of $ 0.21 per share of the Company’s common stock to be paid on March 26, 2021, to shareholders of record on the close of business on February 26, 2021.

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

Dividends pai d through the first fiscal quarter of 2021 and the preceding fiscal year are as follows:

On April 22, 2021, the Company’s Board of Directors declared a quarterly dividend of $ 0.21 per share of the Company’s common stock to be paid on June 25, 2021, to shareholders of record on the close of business on May 28, 2021.

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

Dividends pai d through the second fiscal quarter of 2021 and the preceding fiscal year are as follows:

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

January 27, 2021 February 26, 2021 March 26, 2021 $ 0.21

September 17, 2020 October 2, 2020 October 30, 2020 $ 0.19

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September 19, 2019 October 4, 2019 November 1, 2019 $ 0.17

JACOBS ENGINEERING GROUP INC.

AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (CONTINUED)

Goodwill and Intangibles

The carrying value of goodwill associated with continuing operations and appearing in the accompanying Consolidated Balance Sheets at January 1, 2021 and October 2, 2020 was as follows (in thousands):

Critical Mission Solutions People & Places Solutions Total

The carrying value of goodwill associated with continuing operations and appearing in the accompanying Consolidated Balance Sheets at April 2, 2021 and October 2, 2020 was as follows (in thousands):

Critical Mission Solutions People & Places Solutions PA Consulting Total

Balance October 2, 2020 $ 2,409,081 $ 3,230,010 $ — $ 5,639,091

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Post-Acquisition Adjustments ( 6,835 ) — — ( 6,835 )

Balance January 1, 2021 $ 2,561,304 $ 3,247,180 $ 5,808,484

JACOBS ENGINEERING GROUP INC.

AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (CONTINUED)

The following table provides certain information related to the Company’s acquired intangibles in the accompanying Consolidated Balance Sheets at January 1, 2021 and October 2, 2020 (in thousands):

Balance April 2, 2021 $ 2,555,300 $ 3,247,996 $ 1,432,224 $ 7,235,520

The following table provides certain information related to the Company’s acquired intangibles in the accompanying Consolidated Balance Sheets at April 2, 2021 and October 2, 2020 (in thousands):

Customer Relationships, Contracts and Backlog Developed Technology Trade Names Total

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Acquired 842,769 1,508 230,331 1,074,608

Post-Acquisition Adjustments 3,000 — — 3,000

Foreign currency translation 3,739 413 ( 1,665 ) 2,487

Balances January 1, 2021 $ 672,094 $ 42,926 $ 621 $ 715,641

Balances April 2, 2021 $ 1,412,928 $ 43,518 $ 228,236 $ 1,684,682

The following table presents estimated amortization expense of intangible assets for the remainder of fiscal 2021 and for the succeeding years.

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Total $ 1,684.7

JACOBS ENGINEERING GROUP INC.

AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (CONTINUED)

Receivables and Contract Assets

The following table presents the components of receivables appearing in the accompanying Consolidated Balance Sheets at January 1, 2021 and October 2, 2020, as well as certain other related information (in thousands):

January 1, 2021 October 2, 2020

The following table presents the components of receivables appearing in the accompanying Consolidated Balance Sheets at April 2, 2021 and October 2, 2020, as well as certain other related information (in thousands):

April 2, 2021 October 2, 2020

Components of receivables and contract assets:

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Unbilled receivables and other, which represent an unconditional right to payment subject only to the passage of time, are reclassified to amounts billed when they are billed under the terms of the contract.

Prior to adoption of ASC 606, receivables related to contractual milestones or achievement of performance-based targets were included in unbilled receivables.

These are now included in contract assets.

We anticipate that substantially all of such unbilled amounts will be billed and collected over the next twelve months.

JACOBS ENGINEERING GROUP INC.

AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (CONTINUED)

Contract assets represent unbilled amounts where the right to payment is subject to more than merely the passage of time and includes performance-based incentives and services provided ahead of agreed contractual milestones.

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Accumulated Other Comprehensive Income

The following table presents the Company's roll forward of accumulated other comprehensive income (loss) after-tax for the three months ended January 1, 2021 (in thousands):

The following table presents the Company's roll forward of accumulated other comprehensive income (loss) after-tax as of April 2, 2021 (in thousands):

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

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Reclassifications from accumulated other comprehensive income (loss) — — 3,671 3,671

Balance at January 1, 2021

Balance at April 2, 2021

$ ( 518,253 ) $ ( 359,863 ) $ 9,477 $ ( 868,639 )

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.

JACOBS ENGINEERING GROUP INC.

AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (CONTINUED)

The Company’s effective tax rates from continuing operations for the three months ended April 2, 2021 and March 27, 2020 were 18.5 % and 34.6 % , respectively.

The Company’s effective tax rate from continuing operations for the three months ended April 2, 2021 was lower than the corresponding rate in the prior period primarily due to a tax expense of $ 15.0 million attributable to a nondeductible compensation related charge associated with the PA Consulting acquisition, resulting in a decrease in tax rate as a consequence of an overall pre-tax loss position.

The current period expense was offset by a $ 7.7 million benefit related to a change in the Company’s assertion about indefinite reinvestment of certain foreign unremitted earnings in India.

Also, for the three months ended March 27, 2020, the effective tax rate was impacted by amended returns for foreign tax credits and research and development credits, an India withholding tax rate change and an Internal Revenue Code section 179D energy credit.

The Company is continuing to accrue taxes related to all other foreign earnings, except for certain entities in Canada.

The Company's effective tax rates from continuing operations for the six months ended April 2, 2021 and March 27, 2020 were 27.4 % and 9.5 % , respectively.

The Company’s effective tax rate from continuing operations for the six months ended April 2, 2021 was higher than the corresponding rate in the prior period primarily due to the current PA Consulting compensation expense charge mentioned above and $ 7.4 million attributable to US foreign inclusions.

Also contributing to the higher year to date rate is the absence of prior year favorable benefit of $ 5.8 million from amended returns for foreign tax credits and research and development credits, a $ 4.1 million benefit related to an India withholding tax rate change and $ 7.0 million benefit from an Internal Revenue Code section 179D energy credit for the period ending March 27, 2020.

The current year increase was further offset by a $ 3.6 million excess tax benefit attributable to stock compensation and a $ 12.1 million benefit related to a change in the Company’s assertion about indefinite reinvestment of certain foreign unremitted earnings in Canada and India.

See Note 17 - Sale of Energy, Chemicals and Resources ("ECR") Business for further information on the Company's discontinued operations reporting for the sale of the ECR business.

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Many of the joint ventures are deemed to be variable interest entities (“VIE”) because they lack sufficient equity to finance the activities of the joint venture.

JACOBS ENGINEERING GROUP INC.

AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (CONTINUED)

The assets of a joint venture are restricted for use to the obligations of the particular joint venture and are not available for general operations of the Company.

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

JACOBS ENGINEERING GROUP INC.

AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (CONTINUED)

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

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

For the consolidated VIEs, the carrying value of assets and liabilities was $ 297.6 million and $ 217.9 million, respectively, as of January 1, 2021 and $ 261.8 million and $ 190.3 million, respectively, as of October 2, 2020.

For the consolidated VIEs, the carrying value of assets and liabilities was $ 262.4 million and $ 199.5 million, respectively, as of April 2, 2021 and $ 261.8 million and $ 190.3 million, respectively, as of October 2, 2020.

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

On March 2, 2021, Jacobs completed the strategic investment of a 65 % interest in PA Consulting, a UK-based leading innovation and transformation consulting firm.

The remaining 35 % interest is held by PA Consulting employees.

PA Consulting is accounted for as a consolidated subsidiary under U.S.

GAAP accounting rules.

See Note 15- PA Consulting Business Combination for more discussion on the acquisition.

Unconsolidated joint ventures are accounted for under proportionate consolidation or the equity method.

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

For the proportionate consolidated VIEs, the carrying value of assets and liabilities was $ 67.2 million and $ 65.9 million, respectively, as of January 1, 2021, and $ 64.1 million and $ 63.0 million, respectively, as of October 2, 2020.

For the proportionate consolidated VIEs, the carrying value of assets and liabilities was $ 41.6 million and $ 44.9 million, respectively, as of April 2, 2021, and $ 64.1 million and $ 63.0 million, respectively, as of October 2, 2020.

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

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

As of January 1, 2021, the Company’s equity method investments exceeded its share of venture net assets by $ 44 million.

Our investments in equity method joint ventures on the Consolidated Balance Sheets as of January 1, 2021 and October 2, 2020 were $ 140.2 million and $ 161.3 million, respectively.

During the three months ended January 1, 2021 and December 27, 2019, we recognized income from equity method joint ventures of $ 18.3 million and $ 17.3 million, respectively.

Accounts receivable from unconsolidated joint ventures accounted for under the equity method is $ 5.4 million and $ 8.3 million as of January 1, 2021 and October 2, 2020, respectively.

As of April 2, 2021, the Company’s equity method investments exceeded its share of venture net assets by $ 35.9 million.

Our investments in equity method joint ventures on the Consolidated Balance Sheets as of April 2, 2021 and October 2, 2020 were $ 131.4 million and $ 161.3 million, respectively.

During the three months ended April 2, 2021 and March 27, 2020, we recognized income from equity method joint ventures of $ 11.9 million and $ 18.8 million, respectively.

During the six months ended April 2, 2021 and March 27, 2020, we recognized income from equity method joint ventures of $ 30.2 million and $ 36.0 million, respectively.

Accounts receivable from unconsolidated joint ventures accounted for under the equity method is $ 10.4 million and $ 8.3 million as of April 2, 2021 and October 2, 2020, respectively.

The Company currently holds a 24.5 % interest in AWE Management Ltd ("AWE ML") that is accounted for under the equity method, and the carrying value of the Company’s investment as of October 2, 2020 was approximately $ 38 million.

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Subsequent to year end, on November 2, 2020, the MoD unexpectedly announced plans to change its current operating agreements with AWE ML that would result in the early termination of the current contract in 2021.

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

During the six months ended April 2, 2021, the Company recorded other-than-temporary impairments on its investment in AWE ML in the amount of $ 33.2 million, which is included in miscellaneous income (expense), net in the consolidated statement of earnings.

At October 2, 2020, the Company held a cost method investment in C3.ai, Inc.

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In connection with the IPO, the Company became subject to a 180-day lock-up period, which restricts sales of the shares, subject to certain conditions that permit partial share sales based on C3's share performance during the lock-up period.

The fair value of the Company's investment at January 1, 2021 was $ 85.2 million and is included in investment in equity securities in the consolidated balance sheet.

Dividend income and unrealized gains and losses on changes in fair value of C3 shares are recognized in miscellaneous income (expense), net in the consolidated statement of earnings.

The Company sold 153,374 shares in the current quarter, the maximum allowable shares under the lock-up period discussed above, netting a realized gain of $ 12.5 million.

The fair value of the Company's investment at April 2, 2021 was $ 38.0 million and is included in investment in equity securities in the consolidated balance sheet.

Dividend income and unrealized gains and losses on changes in fair value and as a result of sales of C3 shares are recognized in miscellaneous income (expense), net in the consolidated statement of earnings.

Quoted market prices are available for these securities in an active market, however a discount is applied to account for the lock-up period restrictions and therefore the investment is categorized as a Level 2 input.

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (CONTINUED)

Long-Term Debt

At January 1, 2021 and October 2, 2020, long-term debt consisted of the following (principal amounts in thousands):

Interest Rate Maturity January 1, 2021 October 2, 2020

At April 2, 2021 and October 2, 2020, long-term debt consisted of the following (principal amounts in thousands):

Interest Rate Maturity April 2, 2021 October 2, 2020

Revolving Credit Facility LIBOR + applicable margin (1) March 2024 $ 862,794 $ 152,794

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March 2024 1,100,250 —

2020 Term Loan Facility LIBOR + applicable margin (3)

March 2025 (4) 1,022,438 1,025,826

Fixed-rate notes due:

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Senior Notes, Series C 4.52 % May 2030 130,000 130,000

Current Portion ( 53,813 ) —

Deferred Financing Fees ( 5,817 ) ( 1,679 )

Total Long-term debt, net $ 3,425,852 $ 1,676,941

(1) Depending on the Company’s Consolidated Leverage Ratio (as defined in the credit agreement governing the Revolving Credit Facility (defined below)), borrowings under the Revolving Credit Facility bear interest at either a eurocurrency rate plus a margin of between 0.875 % and 1.625 % or a base rate plus a margin of between 0 % and 0.625 %.

including applicable margins The applicable LIBOR rates at January 1, 2021 and October 2, 2020 were approxim ately 1.16 % a nd 1.39 %.

The applicable LIBOR rates including applicable margins at April 2, 2021 and October 2, 2020 were approximately 1.34 % and 1.39 %.

(2) Depending on the Company’s Consolidated Leverage Ratio (as defined in the credit agreement governing the 2021 Term Loan Facility (defined below)), borrowings under the 2021 Term Loan Facility bear interest at either a eurocurrency rate plus a margin of between 0.875%and 1.625 % or a base rate plus a margin of between 0% and 0.625 %, including applicable margins.

Th e applicable LIBOR rates at January 1, 2021 and October 2, 2020 were approximately 1.11 % and 1.37 % .

The applicable LIBOR rate including applicable margin at April 2, 2021 was approximately 1.56 %.

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

The applicable LIBOR rates including applicable margins at April 2, 2021 and October 2, 2020 were approximately 1.34 % and 1.37 %.

(4) The 2020 Term Loan requires quarterly principal repayments of 1.25 %, or $ 9.125 million and £ 3.125 million, of the aggregate initial principal amount borrowed.

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

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

We were in compliance with the covenants under the Revolving Credit Facility at January 1, 2021.

On December 16, 2020, Jacobs entered into a first amendment to the Revolving Credit Facility, which provides for, among other things, (a) administrative changes allowing a one-time limited conditionality draw under the Revolving Credit Facility in connection with the consummation of the proposed acquisition by the Company, indirectly through a subsidiary of the Company, of a majority interest in PA Consulting Group Limited, a private limited company organized under the laws of England and Wales and (b) an increase in the interest rate applicable margin to 1.625 % per annum if the Consolidated Leverage Ratio (as defined in the Revolving Credit Facility) of the Company is equal to or greater than 3.00 to 1.00.

We were in compliance with the covenants under the Revolving Credit Facility at April 2, 2021.

On December 16, 2020, Jacobs entered into a first amendment to the Revolving Credit Facility, which provides for, among other things, (a) administrative changes allowing a one-time limited conditionality draw under the Revolving Credit Facility in connection with the March 2, 2021 investment by the Company, indirectly through a subsidiary of the Company, of a majority interest in PA Consulting, a private limited company organized under the laws of England and Wales and (b) an increase in the interest rate applicable margin to 1.625 % per annum if the Consolidated Leverage Ratio (as defined in the Revolving Credit Facility) of the Company is equal to or greater than 3.00 to 1.00.

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

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

On January 20, 2021, the Company entered into an unsecured delayed draw term loan facility (the “2021 Term Loan Facility”) with a syndicate of financial institutions as lenders.

Under the 2021 Term Loan Facility, the Company borrowed an aggregate principal amount of $ 200.0 million and £ 650.0 million.

The proceeds of the term loans were used primarily to fund the Company's investment in PA Consulting.

The 2021 Term Loan Facility contains affirmative and negative covenants and events of default customary for financings of this type that are consistent with those included in the Revolving Credit Facility and the 2020 Term Loan Facility.

The 2020 Term Loan Facility and the 2021 Term Loan Facility are together referred to as the "Term Loan Facilities".

We were in compliance with the covenants under the Term Loan Facilities at April 2, 2021.

On March 12, 2018, Jacobs entered into a note purchase agreement (as amended, the "Note Purchase Agreement") with respect to the issuance and sale in a private placement transaction o f $ 500 million in the aggregate principal amount of the Company’s senior notes in three series (collectively, the “Senior Notes”).

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

We were in compliance with the covenants under the Note Purchase Agreement at January 1, 2021.

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

The fair value of the Senior Notes is estimated to be $ 547.8 million at January 1, 2021, based on Level 2 inputs.

We were in compliance with the covenants under the Note Purchase Agreement at April 2, 2021.

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

The fair value of the Senior Notes is estimated to be $ 545.9 million at April 2, 2021, based on Level 2 inputs.

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

On January 20, 2021, Jacobs entered into a delayed draw term loan facility (the "Delayed Draw Term Loan Facility) with a syndicate of financial institutions as lenders.

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.

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

Depending on the Company’s consolidated leverage ratio, borrowings under the Delayed Draw Term Loan Facility will bear interest at either a eurocurrency rate plus a margin of between 0.875 % and 1.625 % or a base rate plus a margin of between 0 % and 0.625 %.

From the date that is 90 days after the closing of the Delayed Draw Term Loan Facility, the Company must pay a ticking fee with respect to undrawn commitments under the facility at a rate that will range between 0.80 % and 0.225 % based on the Company’s Consolidated Leverage Ratio.

The Company has issue d $ 2.3 million in letters of credit under the Revolving Credit Facility, leaving $ 1.98 billion of available borrowing capacity under the Revolving Credit Facility at January 1, 2021.

In addition, the Company had issued $ 249.8 million u nder separate, committed and uncommitted letter-of-credit facilities for total issued letters of credit of $ 252.1 million a t January 1, 2021.

The Company has issue d $ 1.7 million in letters of credit under the Revolving Credit Facility, leaving $ 1.39 billion of available borrowing capacity under the Revolving Credit Facility at April 2, 2021.

In addition, the Company had issued $ 261.9 million u nder separate, committed and uncommitted letter-of-credit facilities for total issued letters of credit of $ 263.6 million a t April 2, 2021.

The Company’s right-of use assets and lease liabilities relate to real estate, project assets used in connection with long-term construction contracts, IT assets and vehicles.

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None of the Company’s lease agreements contain material options to purchase the lease property, material residual value guarantees, or material restrictions or covenants

Long-term project asset and vehicle leases (leases with terms greater than twelve months), along with all real estate and IT asset leases, are recorded on the consolidated balance sheet at the present value of the minimum lease payments not yet paid, net of impairments taken.

Because the Company primarily acts as a lessee and the rates implicit in its leases are not readily determinable, the Company generally uses its incremental borrowing rate on the lease

JACOBS ENGINEERING GROUP INC.

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (CONTINUED)

Because the Company primarily acts as a lessee and the rates implicit in its leases are not readily determinable, the Company generally uses its incremental borrowing rate on the lease commencement date to calculate the present value of future lease payments.

commencement date to calculate the present value of future lease payments.

Certain leases include payments that are based solely on an index or rate.

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

The components of lease expense (reflected in selling, general and administrative expenses) for th e three months ended January 1, 2021 and December 27, 2019 were as follows (in thousands):

Three Months Ended

January 1, 2021 December 27, 2019

The components of lease expense (reflected in selling, general and administrative expenses) for th e three and six months ended April 2, 2021 and March 27, 2020 were as follows (in thousands):

Three Months Ended Six Months Ended

April 2, 2021 March 27, 2020 April 2, 2021 March 27, 2020

Operating lease cost $ 40,806 $ 43,652 $ 80,250 $ 87,732

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Total lease cost $ 44,509 $ 48,004 $ 88,740 $ 97,347

Supplemental information related to the Company's leases for the three months ended January 1, 2021 was as follows (in thousands):

Three Months Ended

Supplemental information related to the Company's leases for the six months ended April 2, 2021 was as follows (in thousands):

Six Months Ended

Cash paid for amounts included in the measurements of lease liabilities $ 100,932

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Pension and Other Postretirement Benefit Plans

The following table presents the components of net periodic pension benefit recognized in earnings during the three months ended January 1, 2021 and December 27, 2019 (in thousands):

Three Months Ended

January 1, 2021 December 27, 2019

The following table presents the components of net periodic pension benefit recognized in earnings during the three and six months ended April 2, 2021 and March 27, 2020 (in thousands):

Three Months Ended Six Months Ended

April 2, 2021 March 27, 2020 April 2, 2021 March 27, 2020

Service cost $ 1,735 $ 1,465 $ 3,471 $ 2,930

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defined benefit plans of approximately $ 2.7 million.

On March 2, 2021, Jacobs completed the strategic investment of a 65 % interest in PA Consulting, a UK-based leading innovation and transformation consulting firm.

PA Consulting has defined benefit plans that Jacobs now consolidates.

See Note 15- PA Consulting Business Combination for more discussion on the investment and the related defined benefit plans.

The following table presents certain information regarding the Company’s cash contributions to our pension plans for fiscal 2021 (in thousands):

Cash contributions made during the first three months of fiscal 2021

Cash contributions made during the first six months of fiscal 2021

Cash contributions projected for the remainder of fiscal 2021

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (CONTINUED)

PA Consulting Business Combination

Deal Summary, Opening Balance Sheet and Pro Forma Financial Information

On March 2, 2021, Jacobs completed the strategic investment of a 65 % interest in PA Consulting, a UK-based leading innovation and transformation consulting firm.

The total consideration paid by the Company was $ 1.7 billion, funded through cash on hand, a new term loan and draws on the Company's existing revolver.

Further, in connection with the transaction, an additional $ 266.6 million had not yet been distributed at April 2, 2021 due to continuing employment requirements.

The remaining 35 % interest is held by PA Consulting employees, whose redeemable noncontrolling interests had a fair value of $ 581.1 million on the closing date.

PA Consulting is accounted for as a consolidated subsidiary and as a separate operating segment under U.S.

GAAP accounting rules.

See Note 12- Borrowings for more discussion on the financing for the transaction.

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

Cash and cash equivalents $ 134.9

Receivables 165.0

Property, equipment and improvements, net 39.2

Goodwill 1,442.8

Identifiable intangible assets 1,003.6

Prepaid expenses and other current assets 9.5

Miscellaneous long term assets 83.7

Total Assets $ 2,878.7

Accounts payable $ 5.0

Accrued liabilities and other current liabilities 344.8

Other long term liabilities 245.9

Total Liabilities

Redeemable Noncontrolling interests 581.1

Net assets acquired $ 1,701.9

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

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

None of the goodwill recognized is expected to be deductible for tax purposes.

The Company has not completed its final assessment of the fair values of PA Consulting's assets acquired and liabilities assumed.

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

Identifiable intangibles are customer relationships, contracts and backlog and trade name and have estimated lives ranging from 9 to 20 years (weighted average life of approximately 12 years).

Fair value measurements relating to PA Consulting are made primarily using Level 3 inputs including discounted cash flow techniques.

Fair value is estimated using inputs primarily from the income approach, which include the use of both the multiple period excess earnings method and the relief from royalties method.

The significant assumptions used in estimating fair value include (i) the estimated life the asset will contribute to cash flows, such as attrition rate of customers or remaining contractual terms, (ii) profitability and (iii) the estimated discount rate that reflects the level of risk associated with receiving future cash flows.

Other personal property assets, such as buildings, furniture, fixtures and equipment, are valued using the cost approach, which is based on estimates of replacement cost.

JACOBS ENGINEERING GROUP INC.

AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (CONTINUED)

Pre-tax transaction costs associated with the PA Consulting investment in the accompanying Consolidated Statements of Earnings for the six months ended April 2, 2021 were $33.5 million.

The following presents summarized unaudited pro forma operating results of Jacobs from continuing operations assuming that the Company had the PA Consulting investment at September 28, 2019.

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

For the Six Months Ended

April 2, 2021 March 27, 2020

Revenues $ 7,341.4 $ 7,184.9

Net earnings of the Group $ 449.9 $ ( 238.0 )

Net earnings (loss) attributable to Jacobs $ 337.7 $ ( 157.0 )

Net earnings (loss) attributable to Jacobs per share:

Basic earnings (loss) per share $ 2.60 $ ( 1.18 )

Diluted earnings (loss) per share $ 2.58 $ ( 1.17 )

Included in the table above are charges relating to transaction expenses, a nonrecurring compensation charge and other items that are removed from the six months ended April 2, 2021 and are reflected in the prior fiscal year due to the assumed timing of the transaction.

Also, income tax (expense) benefit for the six-month pro forma periods ended April 2, 2021 and March 27, 2020 was $( 122.1 ) million and $ 44.9 million, respectively.

JACOBS ENGINEERING GROUP INC.

AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (CONTINUED)

Redeemable Noncontrolling Interest

In connection with the PA Consulting investment, the Company recorded redeemable noncontrolling interests of approximately $ 581.1 million, representing the interest holders' 35 % equity interest in the form of common and preferred shares of PA Consulting, with substantially all of the value associated with these interests allocable to the preferred shares.

The preferred shares are entitled to a cumulative compounding 12 % dividend based on the outstanding preferred share subscription price.

These interest holders have certain option rights to put the common and preferred share interests back to the Company at fair value.

Additionally, the Company has an option to call the interests in certain circumstances.

Because the interests are redeemable at the option of the holders and not solely within the control of the Company, the Company classified the interests in redeemable noncontrolling interests within its Consolidated Balance Sheet at their acquisition date fair values.

Such fair values were estimated based on an assessment of the economic rights and characteristics of each instrument in the capital structure and a market approach analysis, looking at the transaction and the dynamics of that acquisition.

Key inputs include the price paid by each independent party and the rights on the instruments acquired.

The optional redemption features may become exercisable no earlier than four years from the closing date of the PA Consulting investment.

The Company has concluded these interests are probable of becoming redeemable with these interests measured at the greater of (i) the redemption amount that would be paid if settlement occurred at the balance sheet date, or (ii) the historical value resulting from the original acquisition date fair value plus or minus any earnings or loss attribution amounts, including dividends.

The amount of the redemption value in excess of the historical values of the interests is recognized as an increase to redeemable noncontrolling interest and a charge to retained earnings, except for amounts related to preferred shares, which, if are incurred in the future, are reflected as adjustments to net earnings (loss) attributable to Jacobs.

Changes in the redeemable noncontrolling interest during the three months ended April 2, 2021 are as follows (in thousands):

Fair value of redeemable noncontrolling interests at acquisition $ 581,119

Cumulative Accrued Preferred Dividend to Preference Shareholders 5,844

Attribution of Preferred Dividend to Common Shareholders ( 5,844 )

Net loss attributable to redeemable noncontrolling interest to Common Shareholders ( 101,392 )

Redeemable Noncontrolling interests redemption value adjustment to Common Shareholders 107,238

Balance at April 2, 2021 $ 586,965

In addition, certain employees of PA Consulting are expected to receive equity based incentive grants in the future under the terms of the applicable agreements.

Employee Benefit Trust, Defined Contribution Plans and Defined Benefit Plans

PA Consulting is party to an employee benefit trust arrangement, defined contribution plans and defined benefit plans.

PA Consulting is party to an employee benefit trust that is a separately administered discretionary trust for the benefit of employees and are consolidated under US GAAP.

At April 2, 2021, the Company held $ 273.6 million in cash within the employee benefit trust that is restricted from general use and is included in prepaid expenses and other current assets on the consolidated balance sheet.

The PA Consulting defined benefit plans include UK and Germany based plans.

The UK arrangement is a defined benefit plan which has been closed to new participants since 1998 and is expected to wind down in the current fiscal year.

Prior to the investment in PA Consulting, PA Consulting completed a pension buy-in transaction for the primary UK defined benefit pension plan where the assets of the plan were invested in a bulk-purchase annuity policy with an insurance company.

As such, the UK defined benefit plan is fully funded.

JACOBS ENGINEERING GROUP INC.

AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (CONTINUED)

Regarding the defined contribution plans, PA Consulting matches a certain amount on behalf of the employees and pays the administration costs, which are both recognized in the income statement in the period in which they become payable.

JACOBS ENGINEERING GROUP INC.

AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (CONTINUED)

Business Combinations

1 unchanged sentence

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

In conjunction with the acquisition, the Company assumed the Buffalo Group's debt of approximately $ 7.7 million.

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

Additionally, the Company recorded contingent consideration of $ 14.6 million which is expected to be settled in fiscal 2022.

The acquisition of Buffalo Group allows Jacobs to further expand its cyber and intelligence solutions offering to government clients.

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Accounts payable, accrued expenses and other current liabilities $ 46.9

Contingent consideration 14.6

Other long term liabilities 3.8

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

Identified intangibles are customer relationships, contracts and backlog and have estimated lives of 9 years.

Identifiable intangibles are customer relationships, contracts and backlog and have estimated lives of 9 years.

Fair value measurements relating to the Buffalo Group are made primarily using Level 3 inputs including discounted cash flow and Monte Carlo simulation techniques.

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Net assets acquired $ 317.9

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

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

None of the goodwill recognized is expected to be deductible for tax purposes.

The Company has not completed its final assessment of the fair values of John Wood Group's assets acquired and liabilities assumed.

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

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

The Company has completed its final assessment of the fair values of the acquired assets and liabilities of John Wood Group's nuclear business.

Since the initial preliminary estimates reported in the second quarter of fiscal 2020, the Company has updated certain amounts reflected in the final purchase price allocation, as summarized in the fair values of John Wood Group's nuclear business assets acquired and liabilities assumed as of the acquisition date as set forth above.

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

The customer relationships, contracts and backlog intangible represents the fair value of existing contracts, underlying customer relationships and backlog.

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (CONTINUED)

PA Consulting Group Limited

On November 27, 2020, the Company entered into an agreement to make an 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.

Sale of Energy, Chemicals and Resources ("ECR") Business

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

For the Three Months Ended

January 1, 2021 December 27, 2019

For the Three Months Ended For the Six Months Ended

April 2, 2021 March 27, 2020 April 2, 2021 March 27, 2020

Revenues $ — $ 4,063 $ — $ 11,162

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Gain on sale of ECR business 15,608 19,967 15,608 81,910

Other (expense) income, net — 1

Other expense, net ( 583 ) ( 1,361 ) ( 583 ) ( 1,361 )

Earnings Before Taxes from Discontinued Operations 15,011 18,307 14,992 129,817

Income Tax Expense 5 ( 33,923 )

Income Tax (Expense) Benefit ( 3,691 ) 11,573 ( 3,687 ) ( 22,349 )

Net Earnings of the Group from Discontinued Operations $ 11,320 $ 29,880 $ 11,305 $ 107,468

In the second quarter of fiscal 2021, the Company received the final working capital settlement of $ 36.4 million from Worley and as such, recorded a gain of $ 15.6 million.

Offsetting the proceeds from the settlement to arrive at the net gain amount were previously recorded accounts receivable from Worley.

For the six months ended March 27, 2020, selling, general and administrative expenses included an offsetting insuranc e recovery of $ 50.0 million recorded in connection with a legal matter.

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

For the six months ended March 27, 2020, the gain on sale of $ 81.9 million i ncluded additional income for the release of a deferred gain upon achievement of the IT Migration Date describe d below i n connection with the delivery to Worley of certain IT application and hardware assets related to the ECR business, as well as adjustments to the purchase price for working capital and certain other items in connection with the ECR sale.

Gain on Sale and Deferred Gain

As a result of the ECR sale, the Company recognized a pre-tax gain of approximately $ 1.0 billion, $ 935.1 million of which was recognized in fiscal 2019, $ 110.2 million for the year ended October 2, 2020 and $ 15.6 million for the three and six months ended April 2, 2021.

JACOBS ENGINEERING GROUP INC.

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (CONTINUED)

For the three months ended December 27, 2019, selling, general and administrative expenses included an offsetting insuranc e recovery of $ 50.0 million recorded in connection with a legal matter.

The gain on sale of the ECR business of $ 61.9 million for the three months ended December 27, 2019, primarily included additional income for the release of a deferred gain upon achievement of the IT Migration Date described below in connection with the delivery to Worley of certain IT application and hardware assets related to the ECR business, as well as adjustments to the purchase price for working capital and certain other items in connection with the ECR sale.

The Company expects to finalize the remaining purchase price adjustments in connection with the ECR sale before the end of fiscal 2021.

Gain on Sale and Deferred Gain

As a result of the ECR sale, the Company recognized a pre-tax gain of approximately $ 1.0 billion, $ 935.1 million of which was recognized in fiscal 2019, $ 110.2 million for the year ended October 2, 2020 and $— million for the three months ended January 1, 2021.

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

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Dividend income and unrealized gains and losses on changes in fair value of Worley shares are recognized in miscellaneous income (expense), net in continuing operations.

The Company's investment in Worley is measured at fair value through net income as it is an equity investment with a readily determinable fair value based on quoted market prices and is $ 455.2 million at January 1, 2021 and $ 347.5 million at October 2, 2020.

For the three months ended January 1, 2021 and December 27, 2019, the Company recognize d a gain of $ 107.7 million and $ 105.3 million, respectively, associated with share price and currency changes on this investment.

The Company's investment in Worley is measured at fair value through net income as it is an equity investment with a readily determinable fair value based on quoted market prices and is $ 413.4 million at April 2, 2021 and $ 347.5 million at October 2, 2020.

For the three months ended April 2, 2021 and March 27, 2020, the Company recognize d $ 41.9 million and $ 375.5 million , respectively in losses associated with share price and currency changes on this investment.

For the six months ended April 2, 2021 and March 27, 2020, the Company recognize d a gain of $ 65.9 million and a loss of $ 270.2 million , respectively, associated with share price and currency changes on this investment.

The three and six months ended April 2, 2021 include Worley stock dividends of $ 9.8 million and for the three and six months ended March 27, 2020, $ 7.7 million.

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

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

The Company has recognized costs recorded in SG&A expense incurred to perform the TSA, offset b y $ 0.2 million and $ 12.0 million in TSA related income for such services that is reported in miscellaneous income (expense) for the three months ended January 1, 2021 and December 27, 2019, respectively, before inclusion of certain incremental outside service support costs agreed to be shared equally by the parties .

JACOBS ENGINEERING GROUP INC.

AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (CONTINUED)

The Company has recognized costs recorded in SG&A expense incurred to perform the TSA, offset b y $ 0.2 million and $ 14.2 million in TSA related income for such services that is reported in miscellaneous income (expense) for the six months ended April 2, 2021 and March 27, 2020, respectively, before inclusion of certain incremental outside service support costs agreed to be shared equally by the parties .

Restructuring and Other Charges

During fiscal 2021, the Company implemented certain restructuring and integration initiatives relating to the Buffalo Group acquisition.

During fiscal 2021, the Company implemented certain restructuring and integration initiatives relating to the Buffalo Group acquisition and the PA Consulting investment.

The activities of these initiatives are expected to be substantially completed before the end of fiscal 2021.

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The activities of these initiatives are expected to continue into fiscal 2023.

JACOBS ENGINEERING GROUP INC.

AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (CONTINUED)

During fiscal 2019 and continuing into fiscal 2020, the Company implemented certain restructuring, separation and integration initiatives associated with the ECR sale, the acquisition of KeyW Holding Corporation ("KeyW"), and other related cost reduction initiatives.

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The activities of these initiatives are expected to be substantially completed before the end of fiscal 2021.

During the fourth fiscal quarter of 2017, the Company implemented certain restructuring and pre-integration plans associated with the then-pending acquisition of CH2M, which closed on December 15, 2017.

During the fourth fiscal quarter of 2017, the Company implemented certain restructuring and pre-integration plans associated with the then-pending acquisition of CH2M Hill Companies, Ltd.

("CH2M"), an international provider of engineering, construction and technical services (the "CH2M acquisition"), which closed on December 15, 2017.

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

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

The following table summarizes the impacts of the Restructuring and other charges by LOB in connection with the CH2M, KeyW, John Wood Group's nuclear business and Buffalo Group acquisitions, the ECR sale and the Company's fourth quarter fiscal 2020 transformation initiatives relating to real estate and other staffing programs and impairment of the AWE Management Ltd.

investment for the three months ended January 1, 2021 and the CH2M and KeyW acquisitions and the ECR sale for the December 27, 2019 (in thousands):

Three Months Ended

January 1, 2021 December 27, 2019

The following table summarizes the impacts of the Restructuring and other charges by line of business ("LOB") in connection with the CH2M, KeyW, John Wood Group's nuclear business and Buffalo Group acquisitions and the PA Consulting investment, the ECR sale and the Company's fourth quarter fiscal 2020 transformation initiatives relating to real estate and other staffing programs and impairment of the AWE Management Ltd.

investment for the three and six months ended April 2, 2021 and the CH2M, KeyW and John Wood Group's nuclear business acquisitions and the ECR sale for the three and six months ended March 27, 2020 (in thousands):

Three Months Ended Six Months Ended

April 2, 2021 March 27, 2020 April 2, 2021 March 27, 2020

Critical Mission Solutions $ 710 $ 3,785 $ 3,919 $ 8,076

People & Places Solutions 1,533 5,536 6,699 15,689

PA Consulting 13,098 — 13,098 —

Corporate 15,006 31,265 55,025 68,862

Total (1) $ 30,347 $ 40,586 $ 78,741 $ 92,627

(1) For the three months ended January 1, 2021 and December 27, 2019, amounts include $ 20.5 million and $ 49.7 million, respectively, in items impacting operating profit, along with items recorded in other income (expense), net, which include $( 27.9 ) million related to the impairment of our AWE Management Ltd.

investment which is reflected in other income (expense) for the three months ended January 1, 2021 and the loss on settlement of the CH2M portion of the U.S.

pension plan of $( 2.4 ) million for the three months ended December 27, 2019.

(1) For the three months ended April 2, 2021 and March 27, 2020, amounts include $ 25.1 million and $ 40.6 million, respectively, and for the six months ended April 2, 2021 and March 27, 2020, amounts include $ 45.6 million and $ 90.5 million, respectively, in items impacting operating profit, along with items recorded in other income (expense), net, which includes $( 33.2 ) million related to the impairment of our AWE Management Ltd.

investment which is reflected in other income (expense) for the six months ended April 2, 2021 and the loss on settlement of the CH2M portion of the U.S.

pension plan of $ 2.1 million for the six months ended March 27, 2020.

See Note 20 - Segment Information.

JACOBS ENGINEERING GROUP INC.

AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (CONTINUED)

The activity in the Company’s accrual for the Restructuring and other charges, including the program activities described above, for the three months ended January 1, 2021 is as follows (in thousands):

The activity in the Company’s accrual for the Restructuring and other charges, including the program activities described above, for the six months ended April 2, 2021 is as follows (in thousands):

Balance at October 2, 2020

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Payments and Usage ( 106,127 )

Balance at January 1, 2021 $ 30,274

The following table summarizes the Restructuring and other charges by major type of costs for the three months ended January 1, 2021 and December 27, 2019 (in thousands):

Three Months Ended

January 1, 2021 December 27, 2019

Balance at April 2, 2021 $ 25,468

JACOBS ENGINEERING GROUP INC.

AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (CONTINUED)

The following table summarizes the Restructuring and other charges by major type of costs for the three and six months ended April 2, 2021 and March 27, 2020 (in thousands):

Three Months Ended Six Months Ended

April 2, 2021 March 27, 2020 April 2, 2021 March 27, 2020

Lease Abandonments and Impairments $ 2,062 $ 4,782 $ 2,211 $ 4,782

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(1) Includes $( 33.2 ) million related to the impairment of our AWE Management Ltd.

investment for the three months ended January 1, 2021.

Cumulative amounts since 2017 incurred to date under our various restructuring and other activities described above by each major type of cost as of January 1, 2021 are as follows (in thousands):

investment for the six months ended April 2, 2021.

Cumulative amounts since 2017 incurred to date under our various restructuring and other activities described above by each major type of cost as of April 2, 2021 are as follows (in thousands):

Lease Abandonments and Impairments $ 315,727

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

In fiscal 2020 we entered into interest rate swap agreements with a notional value of $ 798.4 million as of January 1, 2021 to manage the interest rate exposure on our variable rate loans.

In fiscal 2020 we entered into interest rate swap agreements with a notional value of $ 801.5 million as of April 2, 2021 to manage the interest rate exposure on our variable rate loans.

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

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

The fair value of the interest rate and cross currency swaps at January 1, 2021 was $( 34.8 ) million, which is included in other deferred liabilities on the consolidated balance

The fair value of the interest rate and cross currency swaps at April 2, 2021 and October 2, 2020 was $( 1.0 ) million and $( 31.5 ) million, respectively, of which $( 13.2 ) million is included in other deferred liabilities and $ 12.3 million is included in miscellaneous other assets on the consolidated balance sheets at April 2, 2021.

The entire amount was included in other deferred liabilities at October 2, 2020.

The unrealized net gain (loss) on these interest rate and cross currency swaps was $ 9.5 million and $( 14.6 ) million, net of tax, and was included in accumulated other comprehensive inc ome as of April 2, 2021 and October 2, 2020, respectively .

JACOBS ENGINEERING GROUP INC.

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (CONTINUED)

The unrealized net losses on these interest rate and cross currency swaps was $ 10.8 million, net of tax, and was included in accumulated other comprehensive income as of January 1, 2021.

Additionally, the Company held foreign exchange forward contracts in currenc ies that support our operations, including British Pound, Euro, Australian Dollar and other currencies, with notional values of $ 425.8 million at January 1, 2021.

Additionally, the Company held foreign exchange forward contracts in currenc ies that support our operations, in cluding British Pound, Euro, Australian Dollar and other currencies, with notional values of $ 447.4 million at April 2, 2021 and $ 393.7 million at October 2, 2020 .

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

The fair value of the foreign exchange contracts at January 1, 2021 was $ 82.3 million, which is included in current assets within re ceivables and contract assets on the consolidated balance sheet and with associated income statement impacts included in miscellaneous income (expense) in the consolidated statement of earnings.

The fair value of the foreign exchange contracts at April 2, 2021 and October 2, 2020 w as $ 79.2 million and $ 53.5 million , respectively, which is included in current assets within re ceivables and contract assets on the consolidated balance sheets and with associated income statement impacts included in miscellaneous income (expense) in the consolidated statements of earnings.

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

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

At January 1, 2021 and October 2, 2020, the Company had issued and outstanding approximate ly $ 252.1 million and $ 263.0 million, respectively, in LOCs and $ 2.1 billion an d $ 2.3 billion, respectively, in surety bonds.

At April 2, 2021 and October 2, 2020, the Company had issued and outstanding approximate ly $ 263.6 million and $ 263.0 million , respectively, in LOCs and $ 2.1 billion an d $ 2.3 billion, respectively, in surety bonds.

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

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Insurance recoveries are recorded as assets if recovery is probable and estimated liabilities are not reduced by expected insurance recoveries.

The Company believes, after consultation with counsel, that such guarantees, litigation, U.S.

government contract-related audits, investigations and claims, and income tax audits and investigations should not have a material adverse effect on our consolidated financial statements, beyond amounts currently accrued.

JACOBS ENGINEERING GROUP INC.

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (CONTINUED)

The Company believes, after consultation with counsel, that such guarantees, litigation, U.S.

Litigation and Investigations

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JKC is seeking damages in excess of $ 1.7 billion and has drawn on the bonds.

In light of the COVID-19 pandemic, a November 2020 date for commencement of the hearing has been vacated and the hearing has been rescheduled for opening arguments in April and the remaining proceedings in July and August 2021.

Although an earlier decision is possible, no decision is expected before 2022.

In light of the COVID-19 pandemic, a November 2020 date for commencement of the hearing was vacated and the hearing was rescheduled for opening arguments in April 2021 and the remaining proceedings in July and August 2021.

The opening arguments did occur as scheduled, but in light of the Covid-19 pandemic, the remaining proceedings were rescheduled to now occur in April and May 2022.

It is anticipated that closing arguments will be made in July 2022.

Although an earlier decision is possible, no decision is expected before the end of 2022 or 2023.

In September 2018, JKC filed a declaratory judgment action in Western Australia alleging that the entities which executed parent company guaranties for the Consortium, including CH2M Hill Companies, Ltd., have an obligation to pay JKC’s ongoing costs to complete the project after termination.

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District Court for the Eastern District of Tennessee, consists of 10 consolidated cases.

This case and the related cases involve several hundred plaintiffs that have been filed against the Company by employees of the contractors that completed the remediation and dredging work.

This case and the related cases involve several hundred plaintiffs that were employees of the contractors that completed the remediation and dredging work.

The cases are at various stages of litigation, and several of the cases are currently stayed pending resolution of other cases.

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

The Company and TVA filed separate motions to dismiss the Delozier case in April 2020, which remain pending before the Court.

The Company and TVA filed separate motions to dismiss the Delozier case in April 2020.

In February 2021, the Court granted dismissal of the Delozier Complaint with prejudice, with the exception of Plaintiffs’ nuisance cause of action.

The Court has granted Plaintiffs’ leave to file an amended Complaint.

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

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Segment Information

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

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

For further information on ECR, refer to Note 16- Sale of Energy, Chemicals and Resources ("ECR") Business.

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

Critical Mission Solutions ("CMS") and People & Places Solutions ("P&PS"), along with the addition of a new LOB in the second quarter of fiscal year 2021, PA Consulting, as a result of the recent strategic investment in this business.

For further information on the PA Consulting investment, refer to Note 15 - PA Consulting Business Combination .

The Company’s Chair and Chief Executive Officer is the Chief Operating Decision Maker (“CODM”) and can evaluate the performance of each of these segments and make appropriate resource allocations among each of the segments.

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GAAP operating profit by including certain corporate-level expenses, Restructuring and other charges (as defined in Note 18 - Restructuring and Other Charges) and transaction and integration costs (in thousands).

For the Three Months Ended

January 1, 2021 December 27, 2019

For the Three Months Ended For the Six Months Ended

April 2, 2021 March 27, 2020 April 2, 2021 March 27, 2020

Revenues from External Customers:

1 unchanged sentence

People & Places Solutions 2,139,990 2,183,802 4,226,538 4,361,394

PA Consulting 98,310 — 98,310 —

Total $ 3,547,873 $ 3,427,180 $ 6,929,708 $ 6,787,229

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (CONTINUED)

For the Three Months Ended

January 1, 2021 December 27, 2019

For the Three Months Ended For the Six Months Ended

April 2, 2021 March 27, 2020 April 2, 2021 March 27, 2020

Segment Operating Profit:

1 unchanged sentence

People & Places Solutions 202,030 189,082 398,330 367,411

PA Consulting 27,917 — 27,917 —

Total Segment Operating Profit 343,880 273,375 650,249 542,126

1 unchanged sentence

Restructuring, Transaction and Other Charges (2) ( 321,665 ) ( 44,381 ) ( 343,756 ) ( 95,067 )

GAAP Operating Profit 213,940 151,345

Total Other Income (Expense), net (2) 140,171 102,824

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

(1) Other corporate expenses also include intangibles amortization of $ 23.2 million a nd $ 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, i ncludes $ 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 .

GAAP Operating (Loss) Profit ( 41,112 ) 167,778 172,826 319,125

Total Other (Expense) Income, net (3) ( 71,169 ) ( 344,583 ) 69,002 ( 241,759 )

(Loss) Earnings from Continuing Operations Before Taxes $ ( 112,281 ) $ ( 176,805 ) $ 241,828 $ 77,366

(1) Other corporate expenses also include intangibles amortization of $ 30.6 million a nd $ 22.1 million for the three months ended April 2, 2021 and March 27, 2020, respectively, and $ 53.8 million and $ 43.9 million for the six months ended April 2, 2021 and March 27, 2020, respectively.

(2) Included in the three and six months ended April 2, 2021 are $ 296.1 million and $ 300.2 million , respectively, of costs incurred in connection with the investment in PA Consulting, in part classified as compensation costs.

(3) The three and six months ended April 2, 2021 i nclude $ 29.7 million and $( 63.5 ) million, respectively, 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, $ 34.1 million and $( 48.6 ) million, respectively, in fair adjustments related to our investment in C3 stock.

The six months ended April 2, 2021 also includes $( 33.2 ) million related to impairment of our AWE Management Ltd.

The three and six months ended March 27, 2020 include revenues under the Company's TSA with Worley of $ 2.2 million and $ 14.2 million, respectively, $( 341.0 ) million and $( 241.9 ) million, respectively, 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, the amortization of deferred financing fees related to the CH2M acquisition of $ 0.1 million and $ 0.7 million , respectively, and the loss on settlement of the CH2M portion of the U.S.

pension plan of $ 0 and $ 2.7 million , respectively .

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

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

What changed 10-Q

Item 1. Financial Statements