What changed in this filing

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Item 1. Financial Statements

2021-08-03 compared with 2021-05-10 · 281 added, 262 removed, 813 unchanged (40% of the section changed)

4 unchanged sentences

(In thousands, except share information)

April 2, 2021 October 2, 2020

July 2, 2021 October 2, 2020

Current Assets:

34 unchanged sentences

issued and outstanding 130,293,392 shares and 129,747,783

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

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

130,293 129,748

10 unchanged sentences

CONSOLIDATED STATEMENTS OF EARNINGS

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

Three and Nine Months Ended July 2, 2021 and June 26, 2020

(In thousands, except per share information)

For the Three Months Ended For the Six Months Ended

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

For the Three Months Ended For the Nine Months Ended

July 2, 2021 June 26, 2020 July 2, 2021 June 26, 2020

Revenues $ 3,576,436 $ 3,260,057 $ 10,506,144 $ 10,047,286

2 unchanged sentences

Selling, general and administrative expenses ( 553,189 ) ( 434,650 ) ( 1,779,435 ) ( 1,408,232 )

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

Operating Profit 263,746 194,376 436,572 513,500

Other Income (Expense):

1 unchanged sentence

Interest expense ( 20,011 ) ( 18,193 ) ( 52,788 ) ( 48,163 )

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

Miscellaneous income (expense), net 38,658 126,249 138,705 ( 87,470 )

Total other income (expense), net 19,648 109,305 88,650 ( 132,453 )

Earnings from Continuing Operations Before Taxes 283,394 303,681 525,222 381,047

Income Tax Expense from Continuing Operations ( 109,186 ) ( 67,674 ) ( 175,437 ) ( 75,041 )

Net Earnings of the Group from Continuing Operations 174,208 236,007 349,785 306,006

Net Earnings of the Group from Discontinued Operations 384 18,043 11,690 125,511

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

Net Earnings of the Group 174,592 254,050 361,475 431,517

Net Earnings Attributable to Noncontrolling Interests from Continuing Operations ( 9,182 ) ( 9,121 ) ( 29,366 ) ( 21,662 )

Net Loss Attributable to Redeemable Noncontrolling interests 384 — 101,776 —

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 Attributable to Jacobs from Continuing Operations 165,410 226,886 422,195 284,344

Net Earnings Attributable to Jacobs $ 165,794 $ 244,929 $ 433,885 $ 409,855

Net Earnings Per Share:

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

Basic Net Earnings from Continuing Operations Per Share $ 0.83 $ 1.74 $ 2.80 $ 2.15

Basic Net Earnings from Discontinued Operations Per Share $ — $ 0.14 $ 0.09 $ 0.95

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

Basic Earnings Per Share $ 0.83 $ 1.88 $ 2.89 $ 3.11

Diluted Net Earnings from Continuing Operations Per Share $ 0.82 $ 1.73 $ 2.78 $ 2.13

Diluted Net Earnings from Discontinued Operations Per Share $ — $ 0.14 $ 0.09 $ 0.94

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

Diluted Earnings Per Share $ 0.83 $ 1.87 $ 2.87 $ 3.08

See the accompanying Notes to Consolidated Financial Statements - Unaudited.

2 unchanged sentences

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

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

Three and Nine Months Ended July 2, 2021 and June 26, 2020

(In thousands)

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

For the Three Months Ended For the Nine Months Ended

July 2, 2021 June 26, 2020 July 2, 2021 June 26, 2020

Net Earnings of the Group $ 174,592 $ 254,050 $ 361,475 $ 431,517

Other Comprehensive Income:

Foreign currency translation adjustment ( 1,823 ) 76,288 69,065 12,010

Gain on cash flow hedges 27,604 — 31,187 18

Loss (gain) on cash flow hedges ( 7,017 ) ( 20,944 ) 24,170 ( 20,926 )

Change in pension and retiree medical plan liabilities 3,778 3,405 ( 14,085 ) 15,872

Other comprehensive income before taxes 13,644 ( 87,858 ) 84,212 ( 51,794 )

Income Tax (Expense) Benefit:

Other comprehensive (loss) income before taxes ( 5,062 ) 58,749 79,150 6,956

Income Tax Benefit (Expense):

Foreign currency translation adjustment 2,361 ( 22,062 ) ( 8,675 ) ( 3,633 )

1 unchanged sentence

Change in pension and retiree medical plan liabilities ( 845 ) ( 8,324 ) ( 2,509 ) ( 4,465 )

Income Tax (Expense) Benefit:

Income Tax Benefit (Expense):

3,290 ( 24,124 ) ( 16,504 ) ( 1,836 )

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 other comprehensive (loss) income ( 1,772 ) 34,625 62,646 5,120

Net Comprehensive Income of the Group 172,820 288,675 424,121 436,637

Net Earnings Attributable to Noncontrolling Interests ( 9,182 ) ( 9,121 ) ( 29,366 ) ( 21,662 )

Net Loss Attributable to Redeemable Noncontrolling interests 384 — 101,776 —

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

Net Comprehensive Income Attributable to Jacobs $ 164,022 $ 279,554 $ 496,531 $ 414,975

See the accompanying Notes to Consolidated Financial Statements - Unaudited.

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CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY

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

For the Three Months Ended July 2, 2021 and June 26, 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 )

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

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

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

2 unchanged sentences

— — — ( 4,919 ) ( 4,919 ) — ( 4,919 )

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

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

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

2 unchanged sentences

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

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

Balances at March 27, 2020

Balances at June 26, 2020

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

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

Net earnings, excluding $( 0.4 ) million in loss relating to redeemable noncontrolling interests

4 unchanged sentences

— — — 2,933 2,933 — 2,933

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

(Loss) Gain on derivatives, net of deferred taxes of $( 1,774 )

— — — ( 5,243 ) ( 5,243 ) — ( 5,243 )

Dividends — — ( 27,586 ) — ( 27,586 ) — ( 27,586 )

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

Redeemable Noncontrolling interests redemption value adjustment — — ( 17,487 ) — ( 17,487 ) — ( 17,487 )

Noncontrolling interests - distributions and other — — — — — ( 10,778 ) ( 10,778 )

1 unchanged sentence

Issuances of equity securities including shares withheld for taxes 121 10,855 — — 10,976 — 10,976

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

Balances at July 2, 2021 $ 130,293 $ 2,646,851 $ 4,246,173 $ ( 870,411 ) $ 6,152,906 $ 33,711 $ 6,186,617

See the accompanying Notes to Consolidated Financial Statements – Unaudited.

2 unchanged sentences

CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY

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

For the Nine Months Ended July 2, 2021 and June 26, 2020

(In thousands)

6 unchanged sentences

— — — 11,407 11,407 — 11,407

Gain on derivatives, net of deferred taxes of $ —

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

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

4 unchanged sentences

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

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

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

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

Net earnings, excluding $( 101,776 ) in loss relating to redeemable noncontrolling interests

— — 433,885 — 433,885 29,366 463,251

3 unchanged sentences

— — — ( 16,594 ) ( 16,594 ) — ( 16,594 )

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

Gain on derivatives, net of deferred taxes of $ 5,320

— — — 18,850 18,850 — 18,850

Dividends — — ( 55,101 ) — ( 55,101 ) — ( 55,101 )

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

Redeemable Noncontrolling interests redemption value adjustment — — ( 124,725 ) — ( 124,725 ) — ( 124,725 )

Noncontrolling interests - distributions and other — — — — — ( 35,610 ) ( 35,610 )

2 unchanged sentences

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

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

Balances at July 2, 2021 $ 130,293 $ 2,646,851 $ 4,246,173 $ ( 870,411 ) $ 6,152,906 $ 33,711 $ 6,186,617

See the accompanying Notes to Consolidated Financial Statements – Unaudited.

2 unchanged sentences

CONSOLIDATED STATEMENTS OF CASH FLOWS

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

For the Nine Months Ended July 2, 2021 and June 26, 2020

(In thousands)

For the Six Months Ended

April 2, 2021 March 27, 2020

For the Nine Months Ended

July 2, 2021 June 26, 2020

Cash Flows from Operating Activities:

9 unchanged sentences

Loss (gain) on disposals of assets, net 749 ( 301 )

Impairment of equity method investment 33,197 —

Impairment of equity method investment and other long term assets 40,138 —

Loss on pension and retiree medical plan changes — 2,651

47 unchanged sentences

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 April 2, 2021, and for the three and six month periods ended April 2, 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 July 2, 2021, and for the three and nine month periods ended July 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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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.

Further, in connection with the transaction, an estimated additional $ 267 million had not yet been distributed at April 2, 2021 due to continuing employment requirements.

Consequently, this amount represented compensation expense incurred related to the acquisition that was expensed in the second quarter, and was reflected in selling, general and administrative expense on the consolidated income statement for the six month period ended April 2, 2021.

During the third quarter of fiscal 2021, an amount of $ 5.6 million of the above estimated charges was forfeited by employees that left the Company before payment, and as such, was recognized in earnings in the three month period ended July 2, 2021.

The updated amount of $ 261 million is reflected in earnings and cash from operations for the nine month period ended July 2, 2021.

The remaining 35 % interest is held by PA Consulting employees, whose redeemable noncontrolling interests had a fair value of $ 582.4 million on the closing date, including subsequent purchase accounting adjustments.

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.

See 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.

During the third fiscal quarter, the Company recorded an adjustment to the contingent consideration of $ 3.8 million to selling, general and administrative expense, resulting in contingent consideration of $ 3.9 million at July 2, 2021.

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

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

JACOBS ENGINEERING GROUP INC.

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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”).

£ 246 million, or approximately $ 317.9 million, less cash acquired of $ 24.3 million, as updated for additional working capital adjustments.

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

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

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

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Please also refer to Note 17- Sale of Energy, Chemicals and Resources for discussion regarding the Company's investment in Worley ordinary shares and Note 19- Commitments and Contingencies and Derivative Financial Instruments for discussion regarding the Company's derivative instruments.

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

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

JACOBS ENGINEERING GROUP INC.

1 unchanged sentence

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (CONTINUED)

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

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

New Accounting Pronouncements

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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 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

The following table further disaggregates our revenue by geographic area for the three and nine months ended July 2, 2021 and June 26, 2020 (in thousands):

Three Months Ended Nine Months Ended

July 2, 2021 June 26, 2020 July 2, 2021 June 26, 2020

United States $ 2,364,034 $ 2,472,091 $ 7,295,818 $ 7,548,192

8 unchanged sentences

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

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 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.

Revenue recognized for the three and nine months ended July 2, 2021 that was included in the contract liability balance on October 2, 2020 was $ 24.8 million and $ 380.4 million , resp ectively.

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

JACOBS ENGINEERING GROUP INC.

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (CONTINUED)

Remaining Performance Obligations

The Company’s remaining performance obligations as of July 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 $ 13.8 billion in remaining performance obligations as of July 2, 2021.

The Company expects to recognize approximately 46 % of our remaining performance obligations into revenue within the next twelve months and the remaining 54 % 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.

4 unchanged sentences

Participating securities and common shares have equal rights to undistributed earnings.

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 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):

Net earnings used for the purpose of determining basic and diluted EPS is determined by taking net earnings, less earnings available to participating securities and the preferred redeemable noncontrolling interests redemption value adjustment associated with the PA Consulting transaction.

During the three and nine months ended July 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 nine months ended July 2, 2021 and June 26, 2020 (in thousands):

JACOBS ENGINEERING GROUP INC.

1 unchanged sentence

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (CONTINUED)

Three Months Ended Six Months Ended

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

Three Months Ended Nine Months Ended

July 2, 2021 June 26, 2020 July 2, 2021 June 26, 2020

Numerator for Basic and Diluted EPS:

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

Net earnings attributable to Jacobs from continuing operations $ 165,410 $ 226,886 $ 422,195 $ 284,344

Preferred Redeemable Noncontrolling interests redemption value adjustment (See Note 15- PA Consulting Business Combination )

( 57,307 ) — ( 57,307 ) —

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

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

Net earnings from continuing operations allocated to common stock for EPS calculation $ 108,103 $ 226,862 $ 364,888 $ 284,267

Net earnings attributable to Jacobs from discontinued operations $ 384 $ 18,043 $ 11,690 $ 125,511

1 unchanged sentence

Net earnings from discontinued operations allocated to common stock for EPS calculation $ 384 $ 18,041 $ 11,690 $ 125,477

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

Net earnings allocated to common stock for EPS calculation $ 108,487 $ 244,903 $ 376,578 $ 409,744

Denominator for Basic and Diluted EPS:

5 unchanged sentences

Shares used for calculating diluted EPS attributable to common stock 131,420 131,263 131,245 133,147

Net Earnings (Loss) Per Share:

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

Net Earnings Per Share:

Basic Net Earnings from Continuing Operations Per Share $ 0.83 $ 1.74 $ 2.80 $ 2.15

Basic Net Earnings from Discontinued Operations Per Share $ — $ 0.14 $ 0.09 $ 0.95

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

Basic Earnings Per Share $ 0.83 $ 1.88 $ 2.89 $ 3.11

Diluted Net Earnings from Continuing Operations Per Share $ 0.82 $ 1.73 $ 2.78 $ 2.13

Diluted Net Earnings from Discontinued Operations Per Share $ — $ 0.14 $ 0.09 $ 0.94

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.

Diluted Earnings Per Share $ 0.83 $ 1.87 $ 2.87 $ 3.08

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 stock, 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 through the second fiscal quarter of 2021:

The following table summarizes the activity under the 2019 and 2020 Repurchase Authorizations through the third 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 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.

As of July 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 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:

On July 14, 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 August 27, 2021, to shareholders of record on the close of business on July 30, 2021.

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

Dividends paid through the third fiscal quarter of 2021 and the preceding fiscal year are as follows:

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

April 22, 2021 May 28, 2021 June 25, 2021 $ 0.21

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

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Goodwill and Intangibles

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):

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

Critical Mission Solutions People & Places Solutions PA Consulting Total

3 unchanged sentences

Post-Acquisition Adjustments 1,612 — — 1,612

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):

Balance July 2, 2021 $ 2,554,976 $ 3,245,682 $ 1,431,612 $ 7,232,270

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

Customer Relationships, Contracts and Backlog Developed Technology Trade Names Total

2 unchanged sentences

Acquired 849,117 — 229,075 1,078,192

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

Foreign currency translation 3,323 311 ( 1,637 ) 1,997

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

Balances July 2, 2021 $ 1,370,197 $ 40,916 $ 224,108 $ 1,635,221

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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Receivables and Contract Assets

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

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

July 2, 2021 October 2, 2020

Components of receivables and contract assets:

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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 as of April 2, 2021 (in thousands):

The following table presents the Company's roll forward of accumulated other comprehensive income (loss) after-tax as of July 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) — — 5,642 5,642

Balance at April 2, 2021

Balance at July 2, 2021

$ ( 515,320 ) $ ( 359,325 ) $ 4,234 $ ( 870,411 )

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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 Company’s effective tax rates from continuing operations for the three months ended July 2, 2021 and June 26, 2020 were 38.5 % and 22.3 % , respectively.

The Company’s effective tax rate from continuing operations for the three months ended July 2, 2021 was higher than the corresponding rate in the prior period primarily due to a tax expense of $ 30.8 million attributable to a revaluation of the deferred tax asset and liabilities for a tax rate increase in the UK during the current quarter, with offsetting benefits of $ 2.2 million for the release of uncertain tax positions due to the statute of limitations expiring and $ 0.9 million of Internal Revenue Code section 179D energy credit.

Comparatively, for the three months ended June 26, 2020, the Company had a $ 12.6 million benefit for the release of a valuation allowance in the UK.

The Company's effective tax rates from continuing operations for the nine months ended July 2, 2021 and June 26, 2020 were 33.4 % and 19.7 % , respectively.

The Company’s effective tax rate from continuing operations for the nine months ended July 2, 2021 was higher than the corresponding rate in the prior period primarily due to the revaluations of deferred tax assets and liabilities for the tax rate increase in the UK mentioned above and $ 15.0 million attributable to US foreign inclusions in the current year.

Also contributing to the higher year to date rate is the absence of a 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 June 26, 2020.

The current year increase was further offset by a $ 4.2 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.

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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 $ 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.

For the consolidated VIEs, the carrying value of assets and liabilities was $ 273.7 million and $ 211.7 million, respectively, as of July 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.

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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 $ 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 the proportionate consolidated VIEs, the carrying value of assets and liabilities was $ 50.3 million and $ 53.6 million, respectively, as of July 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 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.

As of July 2, 2021, the Company’s equity method investments exceeded its share of venture net assets by $ 38.8 million.

Our investments in equity method joint ventures on the Consolidated Balance Sheets as of July 2, 2021 and October 2, 2020 were $ 128.9 million and $ 161.3 million, respectively.

During the three months ended July 2, 2021 and June 26, 2020, we recognized income from equity method joint ventures of $ 16.6 million and $ 18.8 million, respectively.

During the nine months ended July 2, 2021 and June 26, 2020, we recognized income from equity method joint ventures of $ 46.9 million and $ 54.8 million, respectively.

Accounts receivable from unconsolidated joint ventures accounted for under the equity method is $ 15.3 million and $ 8.3 million as of July 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 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.

("C3") of approximately $ 2.5 million.

On December 9, 2020, C3 completed an initial public offering and as a result the Company now carries its investment in C3 at fair value, with mark to market changes reflected in net income as it is an investment in equity securities with a readily determinable fair value based on quoted market prices.

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 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.

During the nine months ended July 2, 2021, the Company recorded an other-than-temporary impairment on its investment in AWE ML in the amount of $ 38.9 million, which is included in miscellaneous income (expense), net in the consolidated statement of earnings.

JACOBS ENGINEERING GROUP INC.

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (CONTINUED)

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

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

("C3") of approximately $ 2.5 million.

On December 9, 2020, C3 completed an initial public offering and as a result the Company carried its investment in C3 at fair value, with mark to market changes reflected in net income as it is an investment in equity securities with a readily determinable fair value based on quoted market prices.

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

During the second fiscal quarter of fiscal 2021, the Company sold 153,374 shares, the maximum allowable shares under the lock-up period discussed above, at a realized gain of $ 12.5 million.

During the current fiscal quarter, the Company sold the remaining shares owned in C3, at a realized pre-tax gain of $ 37.0 million.

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

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

Interest Rate Maturity July 2, 2021 October 2, 2020

Revolving Credit Facility LIBOR + applicable margin (1) March 2024 $ 517,795 $ 152,794

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

The applicable LIBOR rates including applicable margins at July 2, 2021 and October 2, 2020 were approximately 1.59 % 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.

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

The applicable LIBOR rate including applicable margin at July 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 %.

The applicable LIBOR rates including applicable margins at July 2, 2021 and October 2, 2020 were approximately 1.58 % 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.

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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 April 2, 2021.

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

JACOBS ENGINEERING GROUP INC.

AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (CONTINUED)

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.

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The Company pays a facility fee of between 0.08 % and 0.23 % per annum depending on the Company’s Consolidated Leverage Ratio.

JACOBS ENGINEERING GROUP INC.

AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (CONTINUED)

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

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The 2020 Term Loan Facility 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.

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

We were in compliance with the covenants under the Note Purchase Agreement at July 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 of the Senior Notes is estimated to be $ 556.9 million at July 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.

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 has issue d $ 1.7 million in letters of credit under the Revolving Credit Facility, leaving $ 1.73 billion of available borrowing capacity under the Revolving Credit Facility at July 2, 2021.

In addition, the Company had issued $ 267.2 million u nder separate, committed and uncommitted letter-of-credit facilities for total issued letters of credit of $ 268.9 million a t July 2, 2021.

JACOBS ENGINEERING GROUP INC.

AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (CONTINUED)

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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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.

AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (CONTINUED)

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

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.

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 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

JACOBS ENGINEERING GROUP INC.

AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (CONTINUED)

The components of lease expense (reflected in selling, general and administrative expenses) for th e three and nine months ended July 2, 2021 and June 26, 2020 were as follows (in thousands):

Three Months Ended Nine Months Ended

July 2, 2021 June 26, 2020 July 2, 2021 June 26, 2020

Operating lease cost $ 41,619 $ 39,123 $ 121,870 $ 126,855

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Total lease cost $ 46,962 $ 45,127 $ 135,703 $ 142,474

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

Six Months Ended

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

Nine Months Ended

Cash paid for amounts included in the measurements of lease liabilities $ 151,250

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Weighted average discount rate - operating leases 2.6 %

JACOBS ENGINEERING GROUP INC.

AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (CONTINUED)

Total remaining lease payments under the Company's leases for the remainder of fiscal 2021 and for the succeeding years is as follows (in thousands):

3 unchanged sentences

Less Interest ( 100,000 )

JACOBS ENGINEERING GROUP INC.

AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (CONTINUED)

Pension and Other Postretirement Benefit Plans

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

The following table presents the components of net periodic pension benefit recognized in earnings during the three and nine months ended July 2, 2021 and June 26, 2020 (in thousands):

Three Months Ended Nine Months Ended

July 2, 2021 June 26, 2020 July 2, 2021 June 26, 2020

Service cost $ 1,735 $ 1,464 $ 5,206 $ 4,394

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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.

PA Consulting has defined benefit plans that Jacobs now includes in our consolidated financial statements.

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 six months of fiscal 2021

Cash contributions made during the first nine months of fiscal 2021

Cash contributions projected for the remainder of fiscal 2021

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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.

Further, in connection with the transaction, an estimated additional $ 267 million had not yet been distributed at April 2, 2021 due to continuing employment requirements.

The updated amount of $ 261 million is reflected in earnings and cash from operations for the nine month period ended July 2, 2021.

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

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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.

Since the initial preliminary estimates reported in the second quarter of fiscal 2021, the Company has updated certain provisional amounts reflected in the preliminary purchase price allocation, as summarized in the estimated fair values of PA Consulting assets acquired and liabilities assumed above.

See below for further discussion on updates to redeemable noncontrolling interests.

JACOBS ENGINEERING GROUP INC.

AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (CONTINUED)

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).

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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.

Key inputs to the valuation of the noncontrolling interests include projected cash flows and the expected volatility with those cash flows.

Pre-tax transaction costs associated with the PA Consulting investment in the accompanying Consolidated Statements of Earnings for the nine months ended July 2, 2021 were $ 36.4 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

For the Nine Months Ended

July 2, 2021 June 26, 2020

Revenues $ 10,917.8 $ 10,634.6

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.

Net earnings (loss) of the Group $ 624.1 $ ( 8.1 )

Net earnings attributable to Jacobs $ 503.2 $ 63.7

Net earnings attributable to Jacobs per share:

Basic earnings per share $ 3.86 $ 0.05

Diluted earnings per share $ 3.83 $ 0.05

Included in the table above are charges relating to transaction expenses, a nonrecurring compensation charge, an EPS numerator adjustment relating to the PA preference shares redemption value which does not affect net earnings.

and other items that are removed from the nine months ended July 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 ni ne-month p ro forma periods ended July 2, 2021 and June 26, 2020 wa s $( 231.3 ) million and $( 29.5 ) million, respectively.

JACOBS ENGINEERING GROUP INC.

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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.

In connection with the PA Consulting investment, the Company recorded redeemable noncontrolling interests of approximately $ 582.4 million, including subsequent purchase accounting adjustments, representing the interest holders' 35 % equity interest in the form of preferred and common 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.

These interest holders have certain option rights to put the preferred and common share interests back to the Company at a value based on the fair value of PA Consulting (the redemption values).

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

The optional redemption features may become exercisable no earlier than five years from the March 2, 2021 closing date , or upon the occurrence of certain other events.

The Compa ny has deemed these interests probable of becoming redeemable in the future and requiring their measurement 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 divi dends, in accordance with U.S.

generally accepted accounting principles.

Further, any excess in redemption amounts over the historical values of the interests is recognized as an increase to redeemable noncontrolling interests and an offsetting decrease in consolidated retained earnings.

Additionally, particular to the preference share component of redeemable noncontrolling interests, this retained earnings decrease is also reflected as a corresponding downward adjustment to net earnings attributable to Jacobs for purposes of the calculation of consolidated earnings per share.

During the third quarter of fiscal 2021, updates to the Company’s preliminary opening balance sheet fair value estimates of the noncontrolling interests resulted in an offsetting decrease and increase in fair value of the preference share and common share components of the interests by $ 57.3 million, respectively, with the corresponding redemption value adjustment associated with the preference share portion decreasing consolidated retained earnings and earnings per share by $ 0.44 .

See Note 6- Earnings Per Share and Certain Related Information .

The results of these adjustments had no impact on the Company’s overall results of operations, financial position, or cash flows.

Changes in the redeemable noncontrolling interest d uring the nine months ended July 2, 2021 are as follows (in thousands):

Fair value of redeemable noncontrolling interests at acquisition on March 2, 2021 $ 581,119

Cumulative Accrued Preferred Dividend to Preference Shareholders 23,151

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Net loss attributable to redeemable noncontrolling interest to Common Shareholders ( 101,776 )

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.

Redeemable Noncontrolling interests redemption value adjustment (1)

Cumulative translation adjustment and other ( 2,893 )

Balance at July 2, 2021

(1) Includes impacts from updates to the preliminary opening balance fair value estimates of the noncontrolling interests and corresponding redemption value adjustments described above.

In addition, certain employees and nonemployees 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.

JACOBS ENGINEERING GROUP INC.

AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (CONTINUED)

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

At July 2, 2021, t he Company held $ 12.6 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.

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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.

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (CONTINUED)

Business Combinations

Other Business Combinations

Buffalo Group

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

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

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

Fair value for the identified intangible assets is estimated using inputs primarily for the income approach, which include the use of both the multiple period excess earnings 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.

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

For the Three Months Ended For the Six Months Ended

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

For the Three Months Ended For the Nine Months Ended

July 2, 2021 June 26, 2020 July 2, 2021 June 26, 2020

Revenues $ — $ 59 $ — $ 11,221

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Net Earnings of the Group from Discontinued Operations $ 384 $ 18,043 $ 11,690 $ 125,511

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.

In t he second quarter of fiscal 2021, the Company received final working capital settlement proceeds of $ 36.4 million from Worley and as such, recorded a pre-tax 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.

For the nine months ended June 26, 2020, selling, general and administrative expenses included an offsetting insuranc e recovery of $ 50.0 million recorded in connection with a legal matter.

For the nine months ended June 26, 2020, the gain on sale of $ 113.4 million relates mainly to the recognition of the deferred gain for the delayed transfer of the ECR-related assets and liabilities of the two international entities discussed below, adjustments for working capital and certain other items in connection with the sale and 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.

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.

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 $ 0.0 million and $ 15.6 million for the three and nine months ended July 2, 2021 respectively.

JACOBS ENGINEERING GROUP INC.

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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 $ 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.

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 $ 450.1 million at July 2, 2021 and $ 347.5 million at October 2, 2020.

For the three months ended July 2, 2021 and June 26, 2020, the Company recognize d $ 36.8 million and $ 131.4 million , respectively in gains associated with share price and currency changes on this investment.

For the nine months ended July 2, 2021 and June 26, 2020, the Company recognize d a gain of $ 102.6 million and a loss o f $ 138.9 million, respectively, associated with share price and currency changes on this investment.

The nine months ended July 2, 2021 include Worley stock dividends of $ 9.8 million and for the nine months ended June 26, 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 $ 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 .

The Company has recognized costs recorded in SG&A expense incurred to perform the TSA, offset b y $ 0.2 million and $ 15.2 million in TSA related income for such services that is reported in miscellaneous income (expense) for the nine months ended July 2, 2021 and June 26, 2020, respectively, before inclusion of certain incremental outside service support costs agreed to be shared equally by the parties .

Restructuring and Other Charges

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

Additionally, the Company recorded an impairment on its investment in AWE during the first quarter of fiscal 2021.

Additionally, the Company recorded an impairment on its investment in AWE during fiscal 2021.

See related discussion in Note 11- Joint ventures, VIEs and other investments.

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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

investment for the three and nine months ended July 2, 2021 and the CH2M, KeyW and John Wood Group's nuclear business acquisitions and the ECR sale for the three and nine months ended June 26, 2020 (in thousands):

Three Months Ended Nine Months Ended

July 2, 2021 June 26, 2020 July 2, 2021 June 26, 2020

Critical Mission Solutions $ 921 $ 3,173 $ 4,840 $ 11,248

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Total (1) $ 13,768 $ 19,681 $ 92,509 $ 112,309

(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.

(1) For the three months ended July 2, 2021 and June 26, 2020, amounts include $ 8.0 million and $ 19.7 million, respectively, and for the nine months ended July 2, 2021 and June 26, 2020, amounts include $ 53.6 million and $ 109.6 million, respectively, in items impacting operating profit, along with items recorded in other income (expense), net, which includes a $ 38.9 million charge related to the impairment of our AWE Management Ltd.

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

pension plan of $ 2.1 million for the nine months ended June 26, 2020.

See Note 20 - Segment Information.

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

Balance at October 2, 2020

Net Charges 78,741

Payments and Usage ( 106,127 )

Balance at April 2, 2021 $ 25,468

JACOBS ENGINEERING GROUP INC.

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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

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

Balance at October 2, 2020

Net Charges 92,509

Payments and Usage ( 131,758 )

Balance at July 2, 2021 $ 13,605

The following table summarizes the Restructuring and other charges by major type of costs for the three and nine months ended July 2, 2021 and June 26, 2020 (in thousands):

Three Months Ended Nine Months Ended

July 2, 2021 June 26, 2020 July 2, 2021 June 26, 2020

Lease Abandonments and Impairments $ 354 $ ( 11,776 ) $ 2,565 $ ( 7,860 )

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(1) Includes $ 38.9 million related to the impairment of our AWE Management Ltd.

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):

investment for the nine months ended July 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 July 2, 2021 are as follows (in thousands):

Lease Abandonments and Impairments $ 316,081

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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 $ 801.5 million as of April 2, 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 $ 801.9 million as of July 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 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 .

The fair value of the interest rate and cross currency swaps at July 2, 2021 and October 2, 2020 was $( 9.2 ) million and $( 31.5 ) million, respectively, of which $( 14.7 ) million is inc luded in

JACOBS ENGINEERING GROUP INC.

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (CONTINUED)

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 .

other deferred liabilities and $ 5.5 million is included in miscellaneous other assets on the consolidated balance sheets at July 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 $ 4.2 million and $( 14.6 ) million, net of tax, and was included in accumulated other comprehensive inc ome as of July 2, 2021 and October 2, 2020, respectively .

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 $ 498.0 million at July 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 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 of the foreign exchange contracts at July 2, 2021 and October 2, 2020 w as $ 67.5 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 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.

At July 2, 2021 and October 2, 2020, the Company had issued and outstanding approximate ly $ 268.9 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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We perform an analysis to determine the level of reserves to establish for insurance-related claims that are known and have been asserted against us, as well as for insurance-related claims that are believed to have been incurred based on actuarial analysis but have not yet been reported to our claims administrators as of the respective balance sheet dates.

We include any adjustments to such insurance reserves in our consolidated results of operations.

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.

We include any adjustments to such insurance reserves in our

JACOBS ENGINEERING GROUP INC.

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (CONTINUED)

consolidated results of operations.

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.

Litigation and Investigations

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See Note 14- Business Combinations in the Company's fiscal 2020 Form 10-K for further information related to CH2M contingencies.

JACOBS ENGINEERING GROUP INC.

AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (CONTINUED)

On December 22, 2008, a coal fly ash pond at the Kingston Power Plant of the Tennessee Valley Authority ("TVA") was breached, releasing fly ash waste into the Emory River and surrounding community.

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

Additionally, in May 2019, Roane County and the cities of Kingston and Harriman filed a claim against TVA and the Company alleging that they misled the public about risks associated with the released fly ash.

Additionally, in May 2019, Roane County and the cities of Kingston and Harriman filed a lawsuit against TVA and the Company alleging that they misled the public about risks associated with the released fly ash.

In October 2020, the Court granted Jacobs and TVA’s motion to dismiss the Roane County litigation and closed the case.

1 unchanged sentence

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 2021, the Court granted dismissal of the Delozier Complaint with prejudice, with the exception of plaintiffs’ nuisance cause of action, which plaintiffs voluntarily dismissed in July 2021.

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

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

The Company disputes the claims asserted in all of the above matters and is vigorously defending these claims.

The Company disputes the allegations asserted in all of the above matters and is vigorously defending these matters.

The Company does not expect the resolution of these matters to have a material adverse effect on the Company's business, financial condition, results of operations or cash flows.

JACOBS ENGINEERING GROUP INC.

AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (CONTINUED)

On October 31, 2019, the Company received a request from the Enforcement Division of the Securities and Exchange Commission (the "SEC") for the voluntary production of certain information and documents.

On October 31, 2019, the Company received a request from the Enforcement Division of the Securities and Exchange Commission (the "SEC") for the production of certain information and documents.

The information and documents sought by the SEC primarily relate to the operations of a joint venture in Morocco which was at one time partially-owned by the Company (and subsequently divested), including in respect of possible corrupt practices.

The Company is fully cooperating with the SEC and is producing the requested information and documents in its possession.

The Company is fully cooperating with the SEC and is continuing to produce information and documents in its possession in response to subsequent requests by the SEC.

The Company does not expect the resolution of this matter to have a material adverse effect on the Company's business, financial condition, results of operations or cash flows.

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1999 Stock Incentive Plan (“1999 SIP”) have likewise been charged to the LOBs except for those amounts determined to relate to the business as a whole (which amounts remain in other corporate expenses).

JACOBS ENGINEERING GROUP INC.

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (CONTINUED)

Financial information for each LOB is reviewed by the CODM to assess performance and make decisions regarding the allocation of resources.

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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 For the Six Months Ended

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

For the Three Months Ended For the Nine Months Ended

July 2, 2021 June 26, 2020 July 2, 2021 June 26, 2020

Revenues from External Customers:

3 unchanged sentences

Total $ 3,576,436 $ 3,260,057 $ 10,506,144 $ 10,047,286

JACOBS ENGINEERING GROUP INC.

AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (CONTINUED)

For the Three Months Ended For the Six Months Ended

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

For the Three Months Ended For the Nine Months Ended

July 2, 2021 June 26, 2020 July 2, 2021 June 26, 2020

Segment Operating Profit:

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Total Other (Expense) Income, net (3) 19,648 109,305 88,650 ( 132,453 )

(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 .

Earnings from Continuing Operations Before Taxes $ 283,394 $ 303,681 $ 525,222 $ 381,047

(1) Other corporate expenses also include intangibles amortization of $ 49.6 million and $ 23.1 million for the three months ended July 2, 2021 and June 26, 2020, respectively, and $ 103.3 million and $ 67.1 million for the nine months ended July 2, 2021 and June 26, 2020, respectively.

(2) Included in the three and nine months ended July 2, 2021 are $( 2.8 ) million and $ 297.4 million , respectively, of costs incurred in connection with the investment in PA Consulting, in part classified as compensation costs.

(3) The three and nine months ended July 2, 2021 include $ 38.7 million and $ 102.2 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, $ 1.0 million and $ 49.6 million, respectively, in fair value adjustments related to our investment in C3 stock.

The nine months ended July 2, 2021 also includes $( 38.9 ) million related to impairment of our AWE Management Ltd.

The three and nine months ended June 26, 2020 include revenues under the Company's TSA with Worley of $ 1.0 million and $ 15.2 million, respectively, and $ 123.1 million and $( 119.0 ) 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.

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

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

(iv) the quarterly variances between the Company’s actual

JACOBS ENGINEERING GROUP INC.

AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (CONTINUED)

costs of certain of its self-insured integrated risk and employee benefit programs and amounts charged to the LOBs;

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

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

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

See also the further description o f results of operations for our operating segments in Item 2- Management’s Discussion and Analysis of Financial Condition and Results of Operations .

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