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Item 2. Management’s Discussion and Analysis

2021-08-03 compared with 2021-05-10 · 146 added, 140 removed, 205 unchanged (58% of the section changed)

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

The purpose of this Management’s Discussion and Analysis of Financial Condition and Results of Operations (“MD&A”) is to provide a narrative analysis explaining the reasons for material changes in the Company’s (i) financial condition from the most recent fiscal year-end to April 2, 2021 and (ii) results of operations during the current fiscal period(s) as compared to the corresponding period(s) of the preceding fiscal year.

The purpose of this Management’s Discussion and Analysis of Financial Condition and Results of Operations (“MD&A”) is to provide a narrative analysis explaining the reasons for material changes in the Company’s (i) financial condition from the most recent fiscal year-end to July 2, 2021 and (ii) results of operations during the current fiscal period(s) as compared to the corresponding period(s) of the preceding fiscal year.

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

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

Examples of forward-looking statements include, but are not limited to, statements we make concerning the potential continued effects of the COVID-19 pandemic on our business, financial condition and results of operations and our expectations as to our future growth, prospects, financial outlook and business strategy for fiscal 2021 or future fiscal years and the anticipated benefits of the strategic partnership with PA Consulting.

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

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We caution the reader that there are a variety of risks, uncertainties and other factors that could cause actual results to differ materially from what is contained, projected or implied by our forward-looking statements.

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

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

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

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

the timing and scope of any government stimulus programs enacted in response to the impacts of the COVID-19 pandemic, including, but not limited to, any proposed infrastructure-related stimulus programs and the impact of such matters includes, but is not limited to, the possible reduction in demand for certain of our services and the delay or abandonment of ongoing or anticipated projects due to the financial condition of our clients and suppliers or to governmental budget constraints or changes to governmental budgetary priorities;

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

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

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Our business transformation over the last several years includes the $3.2 billion acquisition of CH2M Hill Companies, Ltd.

("CH2M"), the $3.4 billion divestiture of the Company's Energy, Chemicals and Resources business and the $1.7 billion investment in PA Consulting Group Limited (“PA Consulting”) in the current quarter.

("CH2M"), the $3.4 billion divestiture of the Company's Energy, Chemicals and Resources business and the $1.7 billion investment in PA Consulting Group Limited (“PA Consulting”).

Our acquisitions of KeyW Holding Corporation ("KeyW"), John Wood Group’s nuclear business and Buffalo Group LLC ("Buffalo Group"), further position us in high-value government services and technology-enabled solutions.

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People & Places Solutions (P&PS)

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

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

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

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

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

Jacobs' People & Places Solutions line of business provides end-to-end solutions for our clients’ most complex challenges - whether climate change, energy transition, connected mobility, integrated water management, smart cities or vaccine manufacturing.

In doing so, we incorporate the full spectrum of data science and technology-enabled toolsets within a human-centric solution development and delivery framework that embraces inclusive engagement of partners and stakeholders and generates enduring social equity/value as part of consulting, planning, architecture, design and engineering project outcomes, as well as long-term operation of facilities and infrastructure.

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

We also provide progressive design-build and construction management at-risk delivery solutions in targeted markets.

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

PA Consulting

Jacobs recently completed a strategic investment of a 65% interest in PA Consulting, an innovation and transformation consultancy which takes clients from an idea through prototype to market and enables those clients to achieve meaningful and enduring results.

PA Consulting clients benefit from diverse teams specializing in defense and security, consumer and manufacturing, energy and utilities, financial services, government, health and life sciences, and transport.

PA Consulting has capabilities in agile transformation and delivery, artificial intelligence and automation, business design, cyber security and digital trust, data analytics and business intelligence, digital, IT transformation, operational excellence, people and talent, program and portfolio management, product design and engineering, and strategy.

PA Consulting is headquartered in the UK, and its strategists, digital experts, consultants, designers, scientists, technologists and engineers work across a range of industries in the UK, US, Europe and the Nordics.

Jacobs recently invested in a 65% stake in PA Consulting.

PA provides consulting services based on its purpose:

Bringing Ingenuity to Life.

Its diverse teams of experts combine innovative thinking and breakthrough use of technologies to progress further, faster.

PA’s clients adapt and transform and achieve enduring results.

An innovation and transformation consultancy, PA has 3,300 specialists in consumer and manufacturing, defense and security, energy and utilities, financial services, government, health and life sciences, and transport.

PA people are strategists, innovators, designers, consultants, digital experts, scientists, engineers and technologists.

The team operates globally from offices across the UK, US, Netherlands and Nordics.

Energy, Chemicals and Resources (ECR)

ECR Disposition

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”).

On April 26, 2019, Jacobs completed the sale of its 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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For further discussion see Note 17- Sale of Energy, Chemicals and Resources ("ECR") Business to the consolidated financial statements.

Results of Operations for the three and six months ended April 2, 2021 and March 27, 2020

Results of Operations for the 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

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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):

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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

Overview – Three and Six Months Ended April 2, 2021

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

Overview – Three and Nine Months Ended July 2, 2021

COVID-19 Pandemic .

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

The Company’s operations for the second fiscal quarter of 2021 were adversely impacted by COVID-19.

While certain business units of Critical Mission Solutions, People & Places Solutions and PA Consulting have experienced, and may continue to experience, an increase in demand for certain of their services regarding new projects that may arise in response to the COVID-19 pandemic, it is still expected that COVID-19 is likely to continue to have an adverse impact on each of Critical Missions Solutions and People & Places Solutions continuing into fiscal 2021, although to a lesser degree than what was seen in fiscal 2020.

The Company’s operations for the third fiscal quarter of 2021 were adversely impacted by COVID-19.

While certain business units of Critical Mission Solutions, People & Places Solutions and PA Consulting have experienced, and may continue to experience, an increase in demand for certain of their services regarding new projects that may arise in response to the COVID-19 pandemic, it is still expected that COVID-19 is likely to continue to have an adverse impact on each of Critical Missions Solutions, People & Places Solutions and PA Consulting continuing through the remainder of fiscal 2021 and into fiscal 2022, although to a lesser degree than what was seen in fiscal 2020.

For a discussion of risks and uncertainties related to COVID-19, including the potential impacts on the Company’s business, financial condition and results of operations, see “Part I - Item 1A - Risk Factors” of our 2020 Form 10-K.

Net (loss) earnings attributable to the Company from continuing operations for the second fiscal quarter ended April 2, 2021 were $(0.3) million (or $0.00 per diluted share), an increase of $121.7 million, or 99.8%, from net losses of $(122.0) million (or $(0.92) per diluted share) for the corresponding period last year.

Included in the Compa ny’s operating results from continuing operations for the three months ended April 2, 2021 we re $21.8 million in after-tax fair value losses recorded in miscellaneous income (expense), net, assoc iated with our investment in Worley stock (net of Worley stock dividend) and certain foreign currency revaluations relating to the ECR sale and after-tax fair value losses associated with our investment in C3.ai, Inc.

("C3") o f $35.1 million.

These losses were partially offset by the after-tax realized gain of $9.5 million related to holdings of our C3 shares sold during the period as further discussed in Note 11- Joint Ventures, VIEs and Other Investments.

In addition, the current period selling, general and administrative expense includes after-tax costs incurred in connection with the investment in PA Consulting, in part classified as compensation costs of $292.0 million.

In comparison, the corresponding period in the prior year included $258.6 million in after-tax fair value losses associated with our investment in Worley stock (net of Worley stock dividend) and certain foreign currency revaluations relating to the ECR sale.

Net earnings attributable to the Company from discontinued operations for the second fiscal quarter ended April 2, 2021 were $11.3 million (or $0.09 per diluted share), a decrease of $18.6 million, or 62.1%, from earnings of $29.9 million (or $0.23 per diluted share) for the corresponding period last year.

Included in net earnings attributable to Jacobs from discontinued operations for the current quarter was the final working capital settlement with Worley, partially offset by accounts receivable from Worley.

Net earnings attributable to the Company from continuing operations for the third fiscal quarter ended July 2, 2021 were $165.4 million (or $0.82 per diluted share), a decrease of $61.5 million, or 27.1%, from net earnings of $226.9 million (or $1.73 per diluted share) for the corresponding period last year.

Overall favorable operating profit improvements during the current quarter compared to the last year benefited from our PA Consulting and Buffalo investing activities in the current year as well as operating profit results in our legacy businesses.

However this favorability was offset by comparatively unfavorable results in miscellaneous income (expense), net, for the quarter, with lower appreciation gains associated with our investment in Worley stock and certain foreign currency revaluations relating to the ECR sale of $29.1 million after-tax in comparison to $93.3 million in the third quarter fiscal 2020.

During the current year quarter, an additional $30.8 million in additional income tax expense was recognized for a revaluation of the deferred tax asset and liabilities in connection with a statutory tax rate increase in the UK.

Also, during third quarter 2021 the Company’s reported earnings per share was impacted by an unfavorable $(0.44) related to an allocation update between preferred and common shares for the PA Consulting investment as required under U.S.

This per share impact had no impact to the total consideration of the transaction and had no impact on the Company’s results of operations, financial position or cash flows;

see Note 15 - PA Consulting Business Combination in the consolidated financial statements .

Net earnings attributable to the Company from discontinued operations for the third fiscal quarter ended July 2, 2021 were $0.4 million (or $0.00 per diluted share), a decrease of $17.7 million, or 97.9%, from earnings of $18.0 million (or $0.14 per diluted share) for the corresponding period last year.

Included in the prior year period was the recognition of the deferred gain for the delayed conveyance of the international entities and adjustments for working capital and certain other items in connection with the ECR sale.

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

For the six months ended April 2, 2021, net earnings attributable to the Company from continuing operations wer e $256.8 million (or $1.96 per diluted share), an increase of $199.3 million, or 346.9%, from $57.5 million (or $0.43 per diluted share) for the corresponding period last year.

Included in the Company’s operating results from continuing operations for the six months ended April 2, 2021 were $48.5 million in after-tax unrealized appreciation gains recorded in miscellaneous income (expense), net, associated with our investment in Worley stock (net of Worley stock dividend) and certain foreign currency revaluations relating to the ECR sale and after-tax unrealized appreciation gains associated with our investment in C3.ai, Inc.

("C3") of $27.2 million in addition to the after-tax realized gain of $9.5 million related to holdings of our C3 shares sold during the period as further discussed Note 11 - Joint Ventures, VIEs and Other Investments.

Also included in other income for the period was a $26.9 million after-tax other-than-temporary impairment in respect of our AWE investment.

In addition, the current year to date period selling, general and administrative expense includes after-tax costs incurred in connection with the investment in PA Consulting, in part classified as compensation costs, of $295.1 million.

In comparison, the corresponding period in the prior year included $183.7 million in after-tax fair value losses associated with our investment in Worley stock (net of Worley stock dividend) and certain foreign currency revaluations relating to the ECR sale.

For the six months ended April 2, 2021, net earnings attributable to the Company from discontinued operations w ere $11.3 million (or $0.09 per diluted share), a decrease of $96.2 million, or 89.5%, from $107.5 million (or $0.80 per diluted share) for the corresponding period last year.

Included in net earnings attributable to Jacobs from discontinued operations for the current year to date period was the final working capital settlement with Worley, partially offset by accounts receivable from Worley.

The prior year to date period included the settlement of the Nui Phao ("NPMC") legal matter that was reimbursed by insurance, the recognition of the deferred gain for the delayed conveyance of the

international entities and for the delivery of the ECR IT assets and adjustments for working capital and certain other items in connection with the ECR sale.

For the nine months ended July 2, 2021, net earnings attributable to the Company from continuing operations wer e $422.2 million (or $2.78 per diluted share), an increase of $137.9 million, or 48.5%, from $284.3 million (or $2.13 per diluted share) for the corresponding period last year.

While favorable underlying operating profit improvements for the nine month period in 2021 benefited from our PA Consulting and Buffalo investing activities as well as from underlying operating profit improvement in our legacy businesses, this was offset by the impact of a one-time post-completion compensation expense charge associated with the PA Consulting transaction of $261 million as reported in selling, general and administrative expenses in the current year.

Additionally, i ncluded in the Company’s reported results in miscellaneous income (expense), net from continuing operations for the nine months ended July 2, 2021 were $77.6 million in after-tax unrealized appreciation gains recorded in miscellaneous income (expense), net, associated with our investment in Worley stock (net of Worley stock dividend) and certain foreign currency revaluations relating to the ECR sale, as well as after-tax realized gains associated with the sale of our investment in C3 of $37.4 million as further discussed Note 11 - Joint Ventures, VIEs and Other Investments.

In comparison, miscellaneous income (expense), net for the corresponding 2020 period included $90.4 million in after-tax fair value losses associated with our investment in Worley stock (net of Worley stock dividend) and certain foreign currency revaluations relating to the ECR sale.

Further, a $31.5 million after-tax other-than-temporary impairment was recorded for our AWE investment.

Also, as mentioned above, the current year to date period also includes additional income tax expense attributable to the tax rate increase in the UK of $30.8 million, as well as the $(0.44) per share impact of the value allocation update between preferred and common shares for the PA Consulting investment.

For t he nine months ended July 2, 2021, net earnings attributable to the Company from discontinued operations w ere $11.7 million (or $0.09 per diluted share), a decrease of $113.8 million, or 90.7%, from $125.5 million (or $0.94 per diluted share) for the corresponding period last year.

Included in net earnings attributable to Jacobs from discontinued operations for the current year to date period was the pre-tax gain amount of approximately $16 million associated with the final working capital settlement with Worley in connection with the ECR sale.

Also, the comparative 2020 year to date period included the settlement of the Nui Phao ("NPMC") legal matter that was reimbursed by insurance, the recognition of the deferred gain for the delayed conveyance of the international entities and for the delivery of the ECR IT assets and adjustments for working capital and certain other items in connection with the ECR sale.

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

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Consolidated Results of Operations

Revenues for the second fiscal quarter of 2021 were $3.55 billion, an increase of $120.7 million, or 3.5% from $3.43 billion for the corresponding period last year.

For the six months ended April 2, 2021 , revenues were $6.93 billion, an increase of $142.5 million, or 2.1%, from $6.79 billion for the corresponding period last year.

The increase in revenues for the year over year periods was due mainly to fiscal 2021 incremental revenues from the PA Consulting investment and the Buffalo Group and John Wood Group Nuclear business acquisitions, offset in part by impacts from the COVID 19 pandemic on our P&PS business, which resulted in a decrease to P&PS revenues period over period.

Pass-through costs included in revenues for the three and six months ended April 2, 2021 amounted to $576.6 million and $1.23 billion, respectively, a decrease of $64.8 million and $117.8 million, or 10.1% and 8.8%, from $641.4 million and $1.34 billion from the corresponding periods last year.

Gross profit for the second quarter of 2021 was $767.0 million, an increase of $118.9 million, or 18.3%, from $648.1 million from the corresponding period last year.

Our gross profit margins were 21.6% and 18.9% for the three months ended April 2, 2021 and March 27, 2020, respectively, with these trend differences being mainly attributable to favorable margin trends from our recent PA Consulting investment and the Buffalo Group and John Wood Group nuclear business acquisitions, offset in part by project mix impacts in our legacy portfolio year over year and lower overhead rate impacts on revenue resulting from our ongoing cost reduction programs partially offset by COVID-19 cost mitigation efforts.

Gross profit for the six months ended April 2, 2021 was $1.40 billion, an increase of $106.4 million, or 8.2%, from $1.29 billion from the corresponding period to date last year.

Our gross profit margins were 20.2% and 19.0% for the six months ended April 2, 2021 and March 27, 2020, respectively, with these trend differences being mainly attributable to the legacy portfolio mix and lower overhead rate impacts mentioned above, along with favorable margin trends from our recent acquisitions and investment in PA Consulting.

Revenues for the third fiscal quarter of 2021 were $3.58 billion, an increase of $316.4 million, or 9.7% from $3.26 billion for the corresponding period last year.

For the nine months ended July 2, 2021 , revenues were $10.51 billion, an increase of $458.9 million, or 4.6%, from $10.05 billion for the corresponding period last year.

The increase in revenues for the year over year periods was partly due to fiscal 2021 incremental revenues from the PA Consulting investment and the Buffalo Group and John Wood Group Nuclear business acquisitions.

In addition, revenue growth benefited from favorable foreign currency translation of $100.2 million and $213.1 million for the three and nine month periods ended July 2, 2021, respectively, in our international businesses, which was partially offset by market conditions and certain contract wind downs in our U.S.

businesses as compared to unfavorable impacts of $27.4 million and $63.1 million for the corresponding periods last year.

Pass-through costs included in revenues for the three and nine months ended July 2, 2021 amounted to $612.0 million and $1.84 billion, respectively, an increase of $33.3 million and decrease of $(84.5) million, or 5.8% and (4.4)%, from $578.7 million and $1.92 billion from the corresponding periods last year.

Gross profit for the third quarter of 2021 was $816.9 million, an increase of $187.9 million, or 29.9%, from $629.0 million from the corresponding period last year.

Our gross profit margins were 22.8% and 19.3% for the three months ended July 2, 2021 and June 26, 2020, respectively, with these trend differences being mainly attributable to favorable margin trends from our recent PA Consulting investment, the Buffalo Group and the John Wood Group nuclear business acquisitions along with favorable foreign currency translation impact in our international businesses, offset in part by higher overhead rate impacts on revenue.

Gross profit for the nine months ended July 2, 2021 was $2.22 billion, an increase of $294.3 million, or 15.3%, from $1.92 billion from the corresponding period to date last year.

Our gross profit margins were 21.1% and 19.1% for the nine months ended July 2, 2021 and June 26, 2020, respectively, with these trend differences being mainly attributable to the recent business acquisitions mentioned above along with favorable foreign currency translation impact in our international businesses and offset in part by higher overhead rate impacts mentioned above.

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

SG&A expenses for the three and six months ended April 2, 2021 were $808.1 million an d $1.23 billion, respectively , an increase of $327.8 million and $252.7 million, or 68.2% and 26.0%, from $480.4 million and $973.6 million for the corresponding periods last year.

Included in the current year's three and six months ended results were $321.5 million and $343.5 million, respectively, of restructuring and other charges and transaction costs primarily comprised of $296.1 million and $300.2 million in the respective periods for pre-tax costs incurred in connection with the investment in PA Consulting, in part classified as compensation costs, in addition to the Company's transformation initiatives relating to real estate and other staffing programs and the Company's impairment of its AWE investment.

In comparison, the three and six months ended March 27, 2020 included $44.4 million and $95.1 million of Restructuring and other charges and transaction costs.

Incremental SG&A expenses from the PA Consulting investment and the Buffalo Group and John Wood Group nuclear business acquisitions have been offset in part by continued reductions in personnel-related and other overhead costs resulting from our ongoing cost reduction programs, as well as COVID-19 cost mitigation efforts.

Unfavorable impacts on SG&A expenses from foreign exchange were $43.9 million and $50.0 million, respectively, for the three and six months ended April 2, 2021.

Net interest expense for the three and six months ended April 2, 2021 was $14.9 million and $31.0 million, respectively, an increase of $0.7 million and $3.0 million from $14.2 million and $28.0 million for the corresponding periods last year.

The increase in net interest expense for the three and six month periods year over year is due to higher levels of debt outstanding relating in part to the funding of the PA Consulting investment.

Miscellaneous (expense) income, net for the three and six months ended April 2, 2021 was $(56.3) million and $100.0 million, respectively, a decrease of $274.1 million and an increase of $313.8 million, respectively, from $(330.4) million and $(213.7) million for the corresponding periods last year.

The increase from the prior year was due primarily to pre-tax unrealized losses of $29.7 million and pre-tax unrealized gains of $63.5 million for the current three and six months ended respectively, compared to $341.0 million and $241.9 million in the prior year corresponding periods in pre-tax unrealized losses associated with changes in the fair value of our investment in Worley stock (net of Worley stock dividend) and certain foreign currency revaluations relating to the ECR sale and pre-tax unrealized losses of $46.6 million and pre-tax unrealized gains of $36.1 million for the three and six months ended respectively, related to the C3 investment in the current year.

The three and six months ended April 2, 2021 also included pre-tax realized gains of $12.5 million related to holdings of our C3 shares sold during the period, as further discussed in Note 11 - Joint Ventures, VIEs and Other Investments.

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

The Company’s effective tax rates from continuing operations for the three months ended 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.

SG&A expenses for the three and nine months ended July 2, 2021 were $553.2 million an d $1.78 billion, respectively , an increase of $118.5 million and $371.2 million, or 27.3% and 26.4%, from $434.7 million and $1.41 billion for the corresponding periods last year.

The current year's three and nine months ended results were impacted by incremental SG&A expenses from the recent business acquisitions mentioned above and higher personnel-related costs, partly offset by lower other operational overhead costs.

Additionally, higher Restructuring and other charges for the nine-month period of 2021 were mainly attributable to post-completion compensation expense of $261 million in connection with the investment in PA Consulting.

Incremental SG&A expenses from the above-mentioned business acquisitions have been offset in part by continued reductions in personnel-related and other overhead costs resulting from our ongoing cost reduction programs.

Unfavorable impacts on SG&A expenses from foreign exchange were $19.3 million and $66.7 million, respectively, for the three and nine months ended July 2, 2021 as compared to favorable impacts of $5.7 million and $12.4 million for the corresponding periods last year.

Net interest expense for the three and nine months ended July 2, 2021 was $19.0 million and $50.1 million, respectively, an increase of $2.1 million and $5.1 million from $16.9 million and $45.0 million for the corresponding

periods last year.

The increase in net interest expense for the three and nine month periods year over year is due to higher levels of average debt outstanding relating in part to the funding of the PA Consulting investment, partially offset by lower interest rates.

Miscellaneous income (expense), net for the three and nine months ended July 2, 2021 was $38.7 million and $138.7 million, respectively, in comparison to $126.2 million and $(87.5) million, respectively, for the corresponding periods last year.

The $87.6 million decrease from the prior year three-month period was due primarily to comparatively lower pre-tax unrealized appreciation gains on the Worley stock (net of dividends) and certain foreign currency revaluations relating to the ECR sale.

For the nine-month period comparison, the $226.2 million improvement was associated mainly with higher comparative results from current year performance of the Worley investment related activities mentioned above versus the prior year and was also attributable to pre-tax realized gains of $49.6 million related to holdings of our C3 shares sold during the period, as further discussed in Note 11 - Joint Ventures, VIEs and Other Investments.

These favorable impacts for the nine month period of 2021 were partially offset by an other-than-temporary impairment on its investment in AWE in the amount of $38.9 million.

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

Three Months Ended Six Months Ended

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

Revenues from External Customers:

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

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

Segment Operating Profit:

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Restructuring, Transaction and Other Charges (2) (1,968) (20,472) (345,725) (115,539)

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

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

(Loss) Earnings Before Taxes from Continuing Operations

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

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

Earnings Before Taxes from Continuing Operations

$ 283,394 $ 303,681 $ 525,222 $ 381,047

(1) Other corporate expenses also include intangibles amortization of $30.6 million and $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 include $29.7 million and $(63.5) million, respectively, in fair value adjustments related to our investment in Worley stock (net of Worley stock dividend) and certain foreign currency revaluations relating to the ECR sale, $34.1 million and $(48.6) million, respectively, in fair adjustments related to our investment in C3 stock.

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

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

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

(1) 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.

Critical Mission Solutions

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

Revenue $ 1,218,089 $ 1,211,143 $ 3,822,949 $ 3,636,978

Operating Profit $ 108,131 $ 89,608 $ 332,133 $ 264,323

Critical Mission Solutions (CMS) segment revenues for the three and six months ended April 2, 2021 were $1.31 billion and $2.60 billion, respectively, an increase of $66.2 million and $179.0 million, or 5.3% and 7.4%, from $1.24 billion and $2.43 billion for the corresponding periods last year.

The increase in revenue was primarily attributable to incremental revenue from the Buffalo Group and John Wood Group nuclear business acquisitions.

Also, there was comparable revenue growth from most elements of our legacy portfolio, driven by increased spending by customers in the U.S.

government business sector, although offset by a few more large contracts winding down.

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

Impa cts on revenues from favorable foreign currency translation were approximately $20.3 million and $27.6 million for the three and six month periods ended April 2, 2021, respectively, compared to $5.1 million and $6.4 million in unfavorable impacts, respectively, in the corresponding prior year periods.

Operating profit for the segment was $113.9 million and $224.0 million, respectively, for the three and six months ended April 2, 2021, an increase of $29.6 million and $49.3 million, or 35.2% and 28.2%, from $84.3 million and $174.7 million for the corresponding periods last year.

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

governmental business sector.

Impacts on operating profit from favorable foreign currency translation were approximately $3.2 million and $4.5 million for the three and six months ended April 2, 2021, respectively, compared to immaterial impacts in the corresponding prior year periods.

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

Critical Mission Solutions (CMS) segment revenues for the three and nine months ended July 2, 2021 were $1.22 billion and $3.82 billion, respectively, an increase of $6.9 million and $186.0 million, or 0.6% and 5.1%, from $1.21 billion and $3.64 billion for the corresponding periods last year.

The increase in revenue was attributable mainly to incremental revenue from the Buffalo Group acquisition for the three and nine-month periods and also the John Wood Group nuclear business acquisition for the nine month period.

There was also comparable revenue growth from most elements of our legacy portfolio, driven by increased spending by customers in the U.S.

government business sector and our legacy international clients, mitigated by several large contracts winding down in the U.S.

Impa cts on revenues from favorable foreign currency translation were approximately $26.6 million and $54.2 million for the three and nine month periods ended July 2, 2021, respectively, compared to $7.0 million and $13.4 million in unfavorable impacts, respectively, in the corresponding prior year periods.

Operating profit for the segment was $108.1 million and $332.1 million, respectively, for the three and nine months ended July 2, 2021, an increase of $18.5 million and $67.8 million, or 20.7% and 25.7%, from $89.6 million and $264.3 million for the corresponding periods last year.

The increase from the prior year was attributable to incremental operating profit from the Buffalo Group acquisition for the three and nine-month periods and also the John Wood Group nuclear business acquisition for the nine month period and the continued growth in profits from our U.S.

governmental business sector and our legacy international business.

Impacts on operating profit from favorable foreign currency translation were approximately $4.3 million and $8.8 million for th e three and nine months ended July 2, 2021, respectively, compared to immaterial impacts in the corresponding prior year periods.

People & Places Solutions

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

Revenue $ 2,102,550 $ 2,048,914 $ 6,329,088 $ 6,410,308

Operating Profit $ 205,324 $ 190,453 $ 603,654 $ 557,864

Revenues for the People & Places Solutions (P&PS) segment for the three and six months ended April 2, 2021 were $2.14 billion and $4.23 billion, respectively, a decrease of $43.8 million and $134.9 million, or (2.0)% and (3.1)%, from $2.18 billion and $4.36 billion for the corresponding periods last year.

The decreases in revenue were primarily due to lower volume in the advanced facilities sector.

Impacts on revenues from favorable foreign currency translation were approximately $55.3 million and $85.4 million for the three and six month periods ended April 2, 2021 compared to $19.7 million and $29.3 million in unfavorable impacts, respectively, in the corresponding prior year period.

Operating profit for the segment for the three and six months ended April 2, 2021 were $202.0 million and $398.3 million, respectively, an increase of $12.9 million and $30.9 million, or 6.8% and 8.4%, from $189.1 million and $367.4 million for the corresponding periods last year.

The year-over-year increases in operating profit were due primarily to lower travel, real estate and discretionary spending related to COVID-19 mitigation efforts.

Impacts on operating profit from favorable foreign currency translation were approximately $9.6 million and $13.7 million for the three and six month periods ended April 2, 2021, compared to $3.2 million and $4.4 million in unfavorable impacts, respectively, in the corresponding prior year periods.

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

Revenues for the People & Places Solutions (P&PS) segment for the three and nine months ended July 2, 2021 were $2.10 billion and $6.33 billion, respectively, an increase of $53.6 million and a decrease of $(81.2) million, or 2.6% and (1.3)%, from $2.05 billion and $6.41 billion for the corresponding periods last year.

The revenue growth for the three months ended July 2, 2021 was primarily driven by $73.6 million in favorable foreign currency translation in our international businesses which was partially offset by softer market conditions in the U.S.

For the nine months ended July 2, 2021, volume decreases in our U.S.

markets and our advanced facilities business were partially offset by $158.9 million in favorable foreign currency translation in our international businesses.

Comparatively, unfavorable impacts on revenues from foreign currency translation were approximately $20.3 million and $49.6 million, respectively, for the three and nine month periods ended June 26, 2020.

Operating profit for the segment for the three and nine months ended July 2, 2021 were $205.3 million and $603.7 million, respectively, an increase of $14.9 million and $45.8 million, or 7.8% and 8.2%, from $190.5 million and $557.9 million for the corresponding periods last year.

The year-over-year increase in operating profit for the three months ended July 2, 2021 was driven by higher revenues which more than offset an increase in labor-related expenses as the Company moderated COVID-19 mitigation efforts from the prior year.

For the nine months ended July 2, 2021, operating profit increased relative to the prior year period due to lower spend on travel, real estate and discretionary expenditures.

Impacts on operating profit from favorable foreign currency translation were approximately $13.9 million and $27.7 million for the three and nine month periods ended July 2, 2021, compared to $4.5 million and $8.9 million in unfavorable impacts, respectively, in the corresponding prior year periods.

PA Consulting

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

Revenue $ 255,797 $ — $ 354,107 $ —

Operating Profit $ 56,791 $ — $ 84,708 $ —

Revenues for the PA Consulting segment for the three and six months ended April 2, 2021 were $98.3 million.

Operating profit for the segment for the three and six months ended April 2, 2021 was $27.9 million.

Revenues for the PA Consulting segment for the three and nine months ended July 2, 2021 were $255.8 million and $354.1 million.

Operating profit for the segment for the three and nine months ended July 2, 2021 was $56.8 million and $84.7 million.

There were no comparable periods in the prior year, given the transaction closed on March 2, 2021.

Other Corporate Expenses

Other corporate expenses for the three and six months ended April 2, 2021 were $63.3 million and $133.7 million an increase of $2.1 million and $5.7 million from $61.2 million and $127.9 million for the corresponding periods last year.

Other corporate expenses for the three and nine months ended July 2, 2021 were $104.5 million and $238.2 million an increase of $39.3 million and $45.1 million from $65.2 million and $193.1 million for the corresponding periods last year.

This increase was due primarily to higher intangible amortization expense from the PA Consulting investment and the Buffalo Group and John Wood Group nuclear business acquisitions, as well as impacts from Company benefit program enhancements.

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quarters (and sometimes over fiscal years), we evaluate our backlog on a year-over-year basis, rather than on a sequential, quarter-over-quarter basis.

The following table summarizes our backlog at April 2, 2021 and March 27, 2020 (in millions):

April 2, 2021 March 27, 2020

The following table summarizes our backlog at July 2, 2021 and June 26, 2020 (in millions):

July 2, 2021 June 26, 2020

Critical Mission Solutions $ 9,565 $ 9,066

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Total $ 25,436 $ 23,674

The increase in backlog in Critical Mission Solutions (CMS) from March 27, 2020 was primarily the result of the acquisition of the Buffalo Group and conversion of the other robust CMS pipeline.

The increase in backlog in People & Places Solutions (P&PS) from March 27, 2020 was primarily the result of new awards in the U.S.

Backlog in PA Consulting as of April 2, 2021 was $280.0 million.

The increase in backlog in Critical Mission Solutions (CMS) from June 26, 2020 was primarily the result of the acquisition of the Buffalo Group and conversion of the other robust CMS pipeline.

The increase in backlog in People & Places Solutions (P&PS) from June 26, 2020 was primarily the result of new awards in the U.S.

Backlog in PA Consulting as of July 2, 2021 was $314.0 million.

The PA Consulting transaction closed on March 2, 2021.

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Liquidity and Capital Resources

At April 2, 2021, our principal sources of liquidity consisted of $ 893.3 million in cash and cash equivalents and $1.39 billion of available borrowing capacity under our $2.25 billion r evolving credit agreement (the "Revolving Credit Facility").

At July 2, 2021, our principal sources of liquidity consisted of $ 966.1 million in cash and cash equivalents and $1.73 billion of available borrowing capacity under our $2.25 billion r evolving credit agreement (the "Revolving Credit Facility").

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

The amount of cash and cash equivalents at April 2, 2021 represented an increase of $30.9 million from $862.4 million at October 2, 2020 , the reasons for which are described below.

The Company also holds $273.6 million in restricted cash as of April 2, 2021, relating to the PA Consulting employee benefit trust, the majority which is expected to be paid out in the third fiscal quarter of 2021 and will be recorded in cash from operations.

Our cash flow provided by operations of $350.2 million during the six months ended April 2, 2021 was favorable by $335.3 million in co mparison to the cash flow used for operations of $15.0 million for the corresponding prior year peri od.

This improvement was due mainly to lower uses of cash and a slight increase in non-cash add backs in other working capital.

The improvement due to lower uses of cash was primarily due to improved receivable collections compared to the previous period, along with an increase in cash from accrued liabilities primarily associated with non-cash accruals of PA Consulting compensation expense and favorability in other deferred liabilities.

Our cash used for investing activities for the six months ended wa s $1.74 billion, compared to cash used for investing activities of $365.3 million in the corresponding prior year period, the change due primarily to the acquisition of the Buffalo Group in the first fiscal quarter and the investment in PA Consulting and final ECR sale proceeds received in the current quarter and the acquisition of John Wood Group's Nuclear Business in the prior year period of $286.5 million.

Our cash provided by financing activities o f $1.67 billion for the six months ended April 2, 2021 resulted mainly from net proceeds from borr owings of $1.78 billion, partly offset by cash used for share repurchases of $24.9 million and $81.9 million in dividends to shareholders and noncontrolling interests .

Cash provided by financing activities in the corresponding prior year period was $1.35 billion , due primarily to net proceeds from borrowings of $1.71 billion , offset by cash used for share repurchases of $285.8 million and $63.5 million in dividends to shareholders and noncontrolling interests.

At April 2, 2021, the Company had approximately $134.7 million in cash and cash equivalents held in the U.S.

The amount of cash and cash equivalents at July 2, 2021 represented an increase of $103.7 million from $862.4 million at October 2, 2020 , the reasons for which are described below.

Our cash flow provided by operations of $523.6 million during the nine months ended July 2, 2021 was favorable by $149.1 million in co mparison to the cash flow provided by operations o f $374.5 million for the corresponding prior year peri od.

This year-over-year increase was due mainly to improved working capital performance overall, with favorability in accounts receivable collections trends partly offset by the $261 million in PA Consulting post combination incentive payments made during the quarter.

Our cash used for investing activities for the nine months ended wa s $1.72 billion, compared to cash used for investing activities of $392.7 million in the corresponding prior year period, with this change due primarily to the acquired investments in the Buffalo Group and PA Consulting during the current year as well as proceeds received from the Company’s disposal of its investment in C3 and the final ECR sale working capital settlement.

Investing activities in the nine month period of 2020 were largely associated with the acquisition of the John Wood Group's Nuclear Business for $286.5 million.

Our cash provided by financing activities o f $1.28 billion for the nine months ended July 2, 2021 resulted mainly from net proceeds from borr owings of $1.42 billion mainly in connection with the PA Consulting investment, partly offset by cash used for share repurchases of $24.9 million and $119.9 million in dividends to shareholders and noncontrolling interests .

Cash provided by financing activities in the corresponding prior year period was $372.5 million, due primarily to net proceeds from borrowings of $756.5 million, offset by cash used for share repurchases of $285.8 million and $97.5 million in div idends to shareholders and noncontrolling interests.

At July 2, 2021, the Company had approximately $151.3 million in cash and cash equivalents held in the U.S.

and $814.8 million held outside of the U.S.

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

The Company had $263.6 million in letters of credit outstanding at April 2, 2021.

The Company had $268.9 million in letters of credit outstanding at July 2, 2021.

Of this amount, $1.7 million was issued under the Revolving Credit Facility and $267.2 million was issued under separate, committed and uncommitted letter-of-credit facilities.

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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.

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.

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

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

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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.

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

We were in compliance with all of our debt covenants at April 2, 2021.

We were in compliance with all of our debt covenants at July 2, 2021.

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

What changed 10-Q

Item 2. Management’s Discussion and Analysis