What changed in this filing

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Item 1. Financial Statements

2022-08-01 compared with 2022-05-03 · 183 added, 181 removed, 872 unchanged (29% of the section changed)

4 unchanged sentences

(In thousands, except share information)

April 1, 2022 October 1, 2021

July 1, 2022 October 1, 2021

Current Assets:

30 unchanged sentences

Preferred stock, $ 1 par value, authorized - 1,000,000 shares;

outstanding - none

issued and outstanding - none

Common stock, $ 1 par value, authorized - 240,000,000 shares;

issued and outstanding 128,899,796 shares and 128,892,540

shares as of April 1, 2022 and October 1, 2021, respectively

issued and outstanding - 127,577,542 shares and 128,892,540 shares as of July 1, 2022 and October 1, 2021, respectively

127,578 128,893

10 unchanged sentences

CONSOLIDATED STATEMENTS OF EARNINGS

Three and Six Months Ended April 1, 2022 and April 2, 2021

Three and Nine Months Ended July 1, 2022 and July 2, 2021

(In thousands, except per share information)

For the Three Months Ended For the Six Months Ended

April 1, 2022 April 2, 2021 April 1, 2022 April 2, 2021

For the Three Months Ended For the Nine Months Ended

July 1, 2022 July 2, 2021 July 1, 2022 July 2, 2021

Revenues $ 3,827,093 $ 3,576,436 $ 11,041,777 $ 10,506,144

2 unchanged sentences

Selling, general and administrative expenses ( 558,713 ) ( 553,189 ) ( 1,882,049 ) ( 1,779,435 )

Operating Profit (Loss) 166,215 ( 41,112 ) 343,548 172,826

Operating Profit 265,762 263,746 609,310 436,572

Other Income (Expense):

1 unchanged sentence

Interest expense ( 26,129 ) ( 20,011 ) ( 67,551 ) ( 52,788 )

Miscellaneous income (expense), net 10,681 ( 56,313 ) 20,362 100,047

Total other (expense) income, net ( 10,933 ) ( 71,169 ) ( 19,177 ) 69,002

Earnings (Loss) from Continuing Operations Before Taxes 155,282 ( 112,281 ) 324,371 241,828

Income Tax (Expense) Benefit from Continuing Operations ( 46,166 ) 20,772 ( 62,054 ) ( 66,250 )

Net Earnings (Loss) of the Group from Continuing Operations 109,116 ( 91,509 ) 262,317 175,578

Miscellaneous income, net 31,440 38,658 51,802 138,705

Total other income (expense), net 6,353 19,648 ( 12,825 ) 88,650

Earnings from Continuing Operations Before Taxes 272,115 283,394 596,485 525,222

Income Tax Expense from Continuing Operations ( 59,491 ) ( 109,186 ) ( 121,545 ) ( 175,437 )

Net Earnings of the Group from Continuing Operations 212,624 174,208 474,940 349,785

Net (Loss) Earnings of the Group from Discontinued Operations ( 343 ) 384 ( 576 ) 11,690

Net Earnings (Loss) of the Group 109,115 ( 80,189 ) 262,084 186,883

Net Earnings of the Group 212,281 174,592 474,364 361,475

Net Earnings Attributable to Noncontrolling Interests from Continuing Operations ( 8,773 ) ( 9,182 ) ( 28,286 ) ( 29,366 )

Net (Earnings) Loss Attributable to Redeemable Noncontrolling interests ( 7,525 ) 384 ( 27,246 ) 101,776

Net Earnings (Loss) Attributable to Jacobs from Continuing Operations 88,817 ( 275 ) 223,082 256,786

Net Earnings Attributable to Jacobs from Continuing Operations 196,326 165,410 419,408 422,195

Net Earnings Attributable to Jacobs $ 195,983 $ 165,794 $ 418,832 $ 433,885

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CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

Three and Six Months Ended April 1, 2022 and April 2, 2021

Three and Nine Months Ended July 1, 2022 and July 2, 2021

(In thousands)

For the Three Months Ended For the Six Months Ended

April 1, 2022 April 2, 2021 April 1, 2022 April 2, 2021

Net Earnings (Loss) of the Group $ 109,115 $ ( 80,189 ) $ 262,084 $ 186,883

For the Three Months Ended For the Nine Months Ended

July 1, 2022 July 2, 2021 July 1, 2022 July 2, 2021

Net Earnings of the Group $ 212,281 $ 174,592 $ 474,364 $ 361,475

Other Comprehensive Income:

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Change in pension and retiree medical plan liabilities ( 688 ) ( 845 ) ( 2,884 ) ( 2,509 )

Income Tax Expense:

Income Tax (Expense) Benefit:

( 4,321 ) 3,290 ( 19,162 ) ( 16,504 )

Net other comprehensive (loss) income ( 154,138 ) ( 1,772 ) ( 148,070 ) 62,646

Net Comprehensive Income (Loss) of the Group 108,397 ( 71,289 ) 268,152 251,301

Net Comprehensive Income of the Group 58,143 172,820 326,294 424,121

Net Earnings Attributable to Noncontrolling Interests ( 8,773 ) ( 9,182 ) ( 28,286 ) ( 29,366 )

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CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY

For the Three Months Ended April 1, 2022 and April 2, 2021

For the Three Months Ended July 1, 2022 and July 2, 2021

(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 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 — — 165,794 — 165,794 9,182 174,976

10 unchanged sentences

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

Balances at July 2, 2021

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

Balances at December 31, 2021 $ 129,153 $ 2,641,059 $ 4,087,390 $ ( 787,656 ) $ 6,069,946 $ 29,999 $ 6,099,945

Balances at April 1, 2022 $ 128,900 $ 2,667,256 $ 4,069,664 $ ( 788,374 ) $ 6,077,446 $ 44,532 $ 6,121,978

Net earnings — — 195,983 — 195,983 8,773 204,756

7 unchanged sentences

Redeemable Noncontrolling interests redemption value adjustment — — 20,169 — 20,169 — 20,169

Repurchase and issuance of redeemable noncontrolling interests — — ( 5,147 ) — ( 5,147 ) — ( 5,147 )

Noncontrolling interests - distributions and other — — — — — ( 6,184 ) ( 6,184 )

2 unchanged sentences

Repurchases of equity securities ( 1,459 ) ( 30,193 ) ( 169,057 ) — ( 200,709 ) — ( 200,709 )

Balances at April 1, 2022 $ 128,900 $ 2,667,256 $ 4,069,664 $ ( 788,374 ) $ 6,077,446 $ 44,532 $ 6,121,978

Balances at July 1, 2022 $ 127,578 $ 2,666,157 $ 4,082,070 $ ( 942,512 ) $ 5,933,293 $ 47,121 $ 5,980,414

See the accompanying Notes to Consolidated Financial Statements – Unaudited.

2 unchanged sentences

CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY

For the Six Months Ended April 1, 2022 and April 2, 2021

For the Nine Months Ended July 1, 2022 and July 2, 2021

(In thousands)

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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

Balances at October 1, 2021 $ 128,893 $ 2,590,012 $ 4,015,578 $ ( 794,442 ) $ 5,940,041 $ 34,796 $ 5,974,837

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Redeemable Noncontrolling interests redemption value adjustment — — ( 30,152 ) — ( 30,152 ) — ( 30,152 )

Repurchase of redeemable noncontrolling interests 7,761 7,761 7,761

Repurchase and issuance of redeemable noncontrolling interests — — 2,614 — 2,614 — 2,614

Noncontrolling interests - distributions and other — — — — — ( 15,961 ) ( 15,961 )

2 unchanged sentences

Repurchases of equity securities ( 2,196 ) 4,850 ( 253,363 ) — ( 250,709 ) — ( 250,709 )

Balances at April 1, 2022 $ 128,900 $ 2,667,256 $ 4,069,664 $ ( 788,374 ) $ 6,077,446 $ 44,532 $ 6,121,978

Balances at July 1, 2022 $ 127,578 $ 2,666,157 $ 4,082,070 $ ( 942,512 ) $ 5,933,293 $ 47,121 $ 5,980,414

See the accompanying Notes to Consolidated Financial Statements – Unaudited.

2 unchanged sentences

CONSOLIDATED STATEMENTS OF CASH FLOWS

For the Six Months Ended April 1, 2022 and April 2, 2021

For the Nine Months Ended July 1, 2022 and July 2, 2021

(In thousands)

For the Six Months Ended

April 1, 2022 April 2, 2021

For the Nine Months Ended

July 1, 2022 July 2, 2021

Cash Flows from Operating Activities:

8 unchanged sentences

Equity in earnings of operating ventures, net of return on capital distributions 14,222 3,261

Loss on disposals of assets, net 421 353

(Gain) Loss on disposals of assets, net ( 4,762 ) 749

Impairment of long-lived assets and equity method investment 74,585 40,138

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Cash dividends to shareholders ( 86,588 ) ( 79,801 )

Net (dividends) contributions associated with noncontrolling interests ( 9,416 ) ( 29,442 )

Net (dividends) associated with noncontrolling interests ( 16,103 ) ( 40,083 )

Repurchase of redeemable noncontrolling interests ( 46,074 ) —

Proceeds from issuances of redeemable noncontrolling interests 49,738 —

Net cash provided by financing activities 461,828 1,280,193

Effect of Exchange Rate Changes ( 79,919 ) 34,617

Net Increase in Cash and Cash Equivalents and Restricted Cash 209,783 304,430

Net Increase (Decrease) in Cash and Cash Equivalents and Restricted Cash 87,846 116,307

Cash and Cash Equivalents, including Restricted Cash, at the Beginning of the Period 1,026,575 862,424

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Readers of this Quarterly Report on Form 10-Q should also read our consolidated financial statements and the notes thereto included in our Annual Report on Form 10-K for the fiscal year ended October 1, 2021 (“2021 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 1, 2022, and for the three and six month periods ended April 1, 2022.

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 1, 2022, and for the three and nine month periods ended July 1, 2022.

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

On November 19, 2021, a subsidiary of Jacobs acquired all outstanding shares of common stock of BlackLynx ("BlackLynx"), a provider of high-performance software, to complement Jacobs' portfolio of cyber, intelligence and digital solutions.

On November 19, 2021, a subsidiary of Jacobs acquired all outstanding shares of common stock of BlackLynx, Inc.

("BlackLynx"), a provider of high-performance software, to complement Jacobs' portfolio of cyber, intelligence and digital solutions.

The Company paid total base consideration of approximately $ 235.4 million in cash to the former owners of BlackLynx.

In addition, the transaction involved the potential payment of future consideration that is contingent upon the achievement of certain revenue and gross margin thresholds being achieved in calendar year 2022.

The estimated fair value of the contingent consideration on the acquisition date is $ 0.4 million.

The future contingent consideration will be paid, if and to the extent achieved, in the second quarter of fiscal 2023.

In conjunction with the acquisition, the Company also paid off BlackLynx's debt of approximately $ 5.3 million simultaneously with the consummation of the acquisition.

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

On November 24, 2020, a subsidiary of Jacobs completed the acquisition of Buffalo Group, a leader in advanced cyber and intelligence solutions, which allows Jacobs to further expand its cyber and intelligence solutions offerings to

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.

The contingent consideration was subsequently recognized as an offset to selling, general and administrative expense when it was determined no amounts would be paid.

In conjunction with the acquisition, the Company assumed the Buffalo Group's

JACOBS ENGINEERING GROUP INC.

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (CONTINUED)

government clients.

The contingent consideration was subsequently recognized as an offset to selling, general and administrative expense when it was determined no amounts would be paid.

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

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.

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Please also refer to 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.

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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.

Fair value measurements relating to our business combinations are made primarily using Level 3 inputs including discounted cash flow and to the extent applicable, Monte Carlo simulation techniques.

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (CONTINUED)

The following table further disaggregates our revenue by geographic area for the three and six months ended April 1, 2022 and April 2, 2021 (in thousands):

Three Months Ended Six Months Ended

April 1, 2022 April 2, 2021 April 1, 2022 April 2, 2021

The following table further disaggregates our revenue by geographic area for the three and nine months ended July 1, 2022 and July 2, 2021 (in thousands):

Three Months Ended Nine Months Ended

July 1, 2022 July 2, 2021 July 1, 2022 July 2, 2021

United States $ 2,577,892 $ 2,364,034 $ 7,226,189 $ 7,295,818

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 1, 2022 that was previously included in the contract liability balance on October 1, 2021 was $ 79.6 million and $ 371.0 million, respectively.

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

Revenue recognized for the three and nine months ended July 1, 2022 that was previously included in the contract liability balance on October 1, 2021 was $ 36.3 million and $ 407.3 million, respectively.

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 respectively.

Remaining Performance Obligation

The Company’s remaining performance obligations as of April 1, 2022 represent a measure of the total dollar value of work to be performed on contracts awarded and in progress.

The Company had approximately $ 15.2 billion in remaining performance obligations as of April 1, 2022.

The Company’s remaining performance obligations as of July 1, 2022 represent a measure of the total dollar value of work to be performed on contracts awarded and in progress.

The Company had approximately $ 14.4 billion in remaining performance obligations as of July 1, 2022.

The Company expects to recognize approximately 53 % of our remaining performance obligations into revenue within the next twelve months and the remaining 47 % thereafter.

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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.

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 1, 2022 and April 2, 2021 (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.

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 1, 2022 and July 2, 2021 (in thousands):

JACOBS ENGINEERING GROUP INC.

1 unchanged sentence

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (CONTINUED)

Three Months Ended Six Months Ended

April 1, 2022 April 2, 2021 April 1, 2022 April 2, 2021

Three Months Ended Nine Months Ended

July 1, 2022 July 2, 2021 July 1, 2022 July 2, 2021

Numerator for Basic and Diluted EPS:

Net earnings (loss) from continuing operations allocated to common stock for EPS calculation $ 88,817 $ ( 275 ) $ 223,082 $ 256,786

Net earnings attributable to Jacobs from continuing operations $ 196,326 $ 165,410 $ 419,408 $ 422,195

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 common stock for EPS calculation $ 196,326 $ 108,103 $ 419,408 $ 364,888

Net (loss) earnings from discontinued operations allocated to common stock for EPS calculation $ ( 343 ) $ 384 $ ( 576 ) $ 11,690

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Diluted Earnings Per Share $ 1.52 $ 0.83 $ 3.23 $ 2.87

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

Share Repurchases

1 unchanged sentence

In the fourth quarter of fiscal 2021, the Company initiated an accelerated share repurchase program by advancing $ 250 million to a financial institution in a privately negotiated transaction, with final non-cash settlement on the program during the first quarter of fiscal 2022 of 342,054 shares.

The following table summarizes the activity under the 2020 Repurchase Authorization through the second fiscal quarter of 2022:

Amount Authorized

(2020 Repurchase Authorization) Average Price Per Share (1) Total Shares Retired Shares Repurchased

$ 1,000,000,000 $ 131.62 737,369 737,369

The following table summarizes the activity under the 2020 Repurchase Authorization through the third fiscal quarter of 2022:

JACOBS ENGINEERING GROUP INC.

1 unchanged sentence

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (CONTINUED)

Amount Authorized

(2020 Repurchase Authorization) Average Price Per Share (1) Total Shares Retired Shares Repurchased

$ 1,000,000,000 $ 135.56 2,196,484 2,196,484

(1) Includes commissions paid and calculated at the average price per share

As of April 1, 2022, the Company has $ 732.9 million remaining under the 2020 Repurchase Authorization.

As of July 1, 2022, the Company has $ 532.2 million remaining under the 2020 Repurchase Authorization.

Our share repurchase program does not obligate the Company to purchase any shares.

2 unchanged sentences

The timing, amount and manner of share repurchases may depend upon market conditions and economic circumstances, availability of investment opportunities, the availability and costs of financing, currency fluctuations, the market price of the Company's common stock, other uses of capital and other factors.

On April 28, 2022, the Company’s Board of Directors declared a quarterly dividend of $ 0.23 per share of the Company’s common stock to be paid on June 24, 2022, to shareholders of record on the close of business on May 27, 2022.

On July 13, 2022, the Company’s Board of Directors declared a quarterly dividend of $ 0.23 per share of the Company’s common stock to be paid on August 26, 2022, to shareholders of record on the close of business on July 29, 2022.

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

Dividends paid through the second fiscal quarter of 2022 and the preceding fiscal year are as follows:

Dividends paid through the third fiscal quarter of 2022 and the preceding fiscal year are as follows:

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

April 28, 2022 May 27, 2022 June 24, 2022 $ 0.23

January 26, 2022 February 25, 2022 March 25, 2022 $ 0.23

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Goodwill and Intangibles

The carrying value of goodwill and appearing in the accompanying Consolidated Balance Sheets at April 1, 2022 and October 1, 2021 was as follows (in thousands):

The carrying value of goodwill and appearing in the accompanying Consolidated Balance Sheets at July 1, 2022 and October 1, 2021 was as follows (in thousands):

Critical Mission Solutions People & Places Solutions PA Consulting Total

3 unchanged sentences

Post-Acquisition Adjustments — — 5,720 5,720

Balance April 1, 2022 $ 2,746,741 $ 3,381,186 $ 1,364,088 $ 7,492,015

The following table provides certain information related to the Company’s acquired intangibles in the accompanying Consolidated Balance Sheets at April 1, 2022 and October 1, 2021 (in thousands):

Balance July 1, 2022 $ 2,729,815 $ 3,327,752 $ 1,270,817 $ 7,328,384

The following table provides certain information related to the Company’s acquired intangibles in the accompanying Consolidated Balance Sheets at July 1, 2022 and October 1, 2021 (in thousands):

Customer Relationships, Contracts and Backlog Developed Technology Trade Names Total

3 unchanged sentences

Foreign currency translation ( 82,325 ) ( 628 ) ( 22,663 ) ( 105,616 )

Balances April 1, 2022 $ 1,269,757 $ 79,305 $ 204,221 $ 1,553,283

Balances July 1, 2022 $ 1,192,800 $ 94,086 $ 185,755 $ 1,472,641

The following table presents estimated amortization expense of intangible assets for the remainder of fiscal 2022 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 1, 2022 and October 1, 2021, as well as certain other related information (in thousands):

April 1, 2022 October 1, 2021

The following table presents the components of receivables and contract assets appearing in the accompanying Consolidated Balance Sheets at July 1, 2022 and October 1, 2021, as well as certain other related information (in thousands):

July 1, 2022 October 1, 2021

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 1, 2022 (in thousands):

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

The following table presents the Company's roll forward of accumulated other comprehensive income (loss) after-tax as of July 1, 2022 (in thousands):

Change in Net Pension Obligation Foreign Currency Translation Adjustment (1)

Gain/(Loss) on Cash Flow Hedges Total

Balance at October 1, 2021

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Reclassifications from accumulated other comprehensive income (loss) — — 5,081 5,081

Balance at April 1, 2022

Balance at July 1, 2022

$ ( 348,786 ) $ ( 646,521 ) $ 52,795 $ ( 942,512 )

(1) Included in the overall foreign currency translation adjustment for the three and nine months ended July 1, 2022 is $ 52.7 million and $ 90.5 million in unrealized gains (losses) on long-term foreign currency denominated intercompany loans not anticipated to be settled in the foreseeable future.

JACOBS ENGINEERING GROUP INC.

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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 1, 2022 and April 2, 2021 were 29.7 % and 18.5 %, respectively, with the change due primarily to the absence of a $ 7.7 million benefit the Company recognized in the three months ended April 2, 2021 associated with a change in the Company’s assertion about the indefinite reinvestment of certain foreign unremitted earnings in India, other discrete foreign tax items and higher state taxes, partly offset by the absence in the current year of certain nondeductible compensation related charges associated with our PA Consulting investment that occurred in the three month period of fiscal 2021.

The Company's effective tax rates from continuing operations for the six months ended April 1, 2022 and April 2, 2021 were 19.1 % and 27.4 %, respectively, with the decrease primarily due to a tax benefit of $ 15.7 million related to the release of valuation allowance on foreign tax credits for the six months ended April 1, 2022 and the absence of certain non-deductible pre-tax compensation charges associated with our investment in PA Consulting for the six month period in fiscal 2021, partly offset by the absence of the 2021 period benefit from the India unremitted earnings reinvestment item mentioned above.

The Company’s effective tax rates from continuing operations for the three months ended July 1, 2022 and July 2, 2021 were 21.9 % and 38.5 %, respectively, with the decrease primarily due to the absence of a $ 30.8 million expense related to a change in tax rate applied to deferred tax assets in the United Kingdom and certain nondeductible compensation related charges associated with the Company's PA Consulting investment in the three months ended July 2, 2021, as well as a current period benefit of $ 9.1 million the Company recognized due to the reversal of a withholding tax accrual on certain intercompany loans, partly offset by increases in permanent book/tax adjustments, state taxes, and foreign inclusions for the three month period in fiscal 2022.

Additionally, a $ 15.6 million payment was made during the current quarter related to an amendment of an Australia tax return, which resulted in the removal of the associated uncertain tax position from the Consolidated Balance Sheet.

This payment had no impact on the current quarter income tax provision or effective tax rate.

The Company's effective tax rates from continuing operations for the nine months ended July 1, 2022 and July 2, 2021 were 20.4 % and 33.4 %, respectively, with the decrease primarily due to a current year tax benefit of $ 15.4 million related to the release of valuation allowance on foreign tax credits and $ 9.1 million related to the reversal of intercompany withholding tax noted above, as well as the absence of prior year expenses related to the United Kingdom’s change in tax rate mentioned above and certain non-deductible pre-tax compensation charges associated with our investment in PA Consulting, partly offset by the absence of the benefit from the change in the Company’s assertion about indefinite reinvestment of certain foreign unremitted earnings in India in fiscal 2021.

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

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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 $ 386.9 million and $ 255.8 million, respectively, as of April 1, 2022 and $ 289.8 million and $ 220.8 million, respectively, as of October 1, 2021.

For the consolidated VIEs, the carrying value of assets and liabilities was $ 359.0 million and $ 221.2 million, respectively, as of July 1, 2022 and $ 289.8 million and $ 220.8 million, respectively, as of October 1, 2021.

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

JACOBS ENGINEERING GROUP INC.

AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (CONTINUED)

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.

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

JACOBS ENGINEERING GROUP INC.

AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (CONTINUED)

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

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

For the proportionate consolidated VIEs, the carrying value of assets and liabilities was $ 119.5 million and $ 146.1 million, respectively, as of April 1, 2022, and $ 115.1 million and $ 129.5 million, respectively, as of October 1, 2021.

For the proportionate consolidated VIEs, the carrying value of assets and liabilities was $ 113.1 million and $ 134.4 million, respectively, as of July 1, 2022, and $ 115.1 million and $ 129.5 million, respectively, as of October 1, 2021.

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 1, 2022, the Company’s equity method investments exceeded its share of venture net assets by $ 36.3 million.

Our investments in equity method joint ventures on the Consolidated Balance Sheets as of April 1, 2022 and October 1, 2021 were $ 105.4 million and $ 121.3 million, respectively.

During the three months ended April 1, 2022 and April 2, 2021, we recognized income from equity method joint ventures of $ 12.5 million and $ 11.9 million, respectively.

During the six months ended April 1, 2022 and April 2, 2021, we recognized income from equity method joint ventures of $ 19.3 million and $ 30.2 million, respectively.

Accounts receivable from unconsolidated joint ventures accounted for under the equity method is $ 22.4 million and $ 19.7 million as of April 1, 2022 and October 1, 2021, respectively.

As of July 1, 2022, the Company’s equity method investments exceeded its share of venture net assets by $ 36.1 million.

Our investments in equity method joint ventures on the Consolidated Balance Sheets as of July 1, 2022 and October 1, 2021 were $ 98.5 million and $ 121.3 million, respectively.

During the three months ended July 1, 2022 and July 2, 2021, we recognized income from equity method joint ventures of $ 10.8 million and $ 16.6 million, respectively.

During the nine months ended July 1, 2022 and July 2, 2021, we recognized income from equity method joint ventures of $ 30.1 million and $ 46.9 million, respectively.

Accounts receivable from unconsolidated joint ventures accounted for under the equity method is $ 23.2 million and $ 19.7 million as of July 1, 2022 and October 1, 2021, respectively.

The Company held a 24.5 % interest in AWE Management Ltd ("AWE ML") that was accounted for under the equity method.

AWE ML was previously under a contractual operating arrangement with the UK Ministry of Defence (MoD) with multiple years remaining under the arrangement, and during fiscal 2021, the MoD unexpectedly announced plans to change its operating agreements with AWE ML that resulted in the early termination of the current contract in 2021.

During the six months ended April 2, 2021, the Company recorded an other-than-temporary impairment charge on its investment in AWE ML in the amount of $ 33.2 million, which was included in miscellaneous income (expense), net in the consolidated statement of earnings as a result of the contract termination.

During the nine months ended July 2, 2021, the Company recorded an other-than-temporary impairment charge on its investment in AWE ML in the amount of $ 38.9 million, which was included in miscellaneous income (expense), net in the Consolidated Statement of Earnings as a result of the contract termination.

The Company held a cost method investment in C3.ai, Inc.

1 unchanged sentence

During fiscal 2021 and subsequent to the IPO, the Company sold all shares owned in C3.

Dividend income, unrealized gains and related realized gains on disposal of these shares of $ 48.6 million were recognized in miscellaneous income (expense), net, in the consolidated statement of earnings for the six months ended April 2, 2021 .

Dividend income, unrealized gains and related realized gains on disposal of these shares of $ 49.6 million were recognized in miscellaneous income (expense), net, in the Consolidated Statement of Earnings for the nine months ended July 2, 2021.

JACOBS ENGINEERING GROUP INC.

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (CONTINUED)

At April 1, 2022 and October 1, 2021, long-term debt consisted of the following (principal amounts in thousands):

Interest Rate Maturity April 1, 2022 October 1, 2021

At July 1, 2022 and October 1, 2021, long-term debt consisted of the following (principal amounts in thousands):

Interest Rate Maturity July 1, 2022 October 1, 2021

Revolving Credit Facility Benchmark + applicable margin (1) (2) March 2024 $ 1,172,794 $ 327,794

10 unchanged sentences

Total Long-term debt, net $ 3,520,494 $ 2,839,933

(1) During the six months ended April 1, 2022, the aggregate principal amounts denominated in British pounds under the Revolving Credit Facility, 2021 Term Loan Facility and 2020 Term Loan Facility transitioned from underlying LIBOR benchmarked rates to SONIA rates.

(1) During the nine months ended July 1, 2022, the aggregate principal amounts denominated in British pounds under the Revolving Credit Facility, 2021 Term Loan Facility and 2020 Term Loan Facility transitioned from underlying LIBOR benchmarked rates to SONIA rates.

Borrowings denominated in U.S.

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dollar denominated 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 %.

The applicable LIBOR rates including applicable margins at April 1, 2022 and October 1, 2021 were approximately 1.82 % and 1.45 %.

The applicable LIBOR rates including applicable margins at July 1, 2022 and October 1, 2021 were approximately 2.62 % and 1.45 %.

Borrowings denominated in British pounds bear interest at an adjusted SONIA rate plus a margin of between 0.875 % and 1.625 %.

There were no amounts drawn in British pounds as of April 1, 2022.

There were no amounts drawn in British pounds as of July 1, 2022.

(3) Depending on the Company’s Consolidated Leverage Ratio (as defined in the credit agreement governing the 2021 Term Loan Facility (defined below)), U.S.

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The applicable LIBOR rate including applicable margins for borrowings denominated in U.S.

dollars at April 1, 2022 and October 1, 2021 was approximately 1.68 % and 1.43 %.

Borrowings denominated in British pounds bear interest at an adjusted SONIA rate plus a margin of between 0.875 % and 1.625 %, which was approximately 2.10 % at April 1, 2022.

dollars at July 1, 2022 and October 1, 2021 was approximately 2.53 % and 1.43 %.

Borrowings denominated in British pounds bear interest at an adjusted SONIA rate plus a margin of between 0.875 % and 1.625 %, which was approximately 2.60 % at July 1, 2022.

(4) Depending on the Company’s Consolidated Leverage Ratio (as defined in the credit agreement governing the 2020 Term Loan Facility (defined below)), U.S.

1 unchanged sentence

The applicable LIBOR rates including applicable margins for borrowings denominated in U.S.

dollars at April 1, 2022 and October 1, 2021 were approximately 1.82 % and 1.45 %.

Borrowings denominated in British pounds bear interest at an adjusted SONIA rate plus a margin of between 0.875 % and 1.625 %, which was approximately 2.10 % at April 1, 2022.

dollars at July 1, 2022 and October 1, 2021 were approximately 3.04 % and 1.45 %.

Borrowings denominated in British pounds bear interest at an adjusted SONIA rate plus a margin of between 0.875 % and 1.625 %, which was approximately 2.60 % at July 1, 2022.

(5) 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 1, 2022.

We were in compliance with the covenants under the Revolving Credit Facility at July 1, 2022.

JACOBS ENGINEERING GROUP INC.

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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 1, 2022.

We were in compliance with the covenants under the Term Loan Facilities at July 1, 2022.

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 1, 2022.

We were in compliance with the covenants under the Note Purchase Agreement at July 1, 2022.

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 $ 507.6 million at April 1, 2022, based on Level 2 inputs.

The fair value of the Senior Notes is estimated to be $ 486.9 million at July 1, 2022, 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 $ 1.50 billion of available borrowing capacity under the Revolving Credit Facility at April 1, 2022.

In addition, the Company had issued $ 272.9 million u nder separate, committed and uncommitted letter-of-credit facilities for total issued letters of credit of $ 274.6 million a t April 1, 2022.

Th e Company has issued $ 1.3 million in letters of credit under the Revolving Credit Facility, leaving $ 1.08 billion of available borrowing capacity under the Revolving Credit Facility at July 1, 2022.

In addition, the Company had issued $ 285.6 million under separate, committed and uncommitted letter-of-credit facilities for total issued letters of credit of $ 286.9 million at July 1, 2022.

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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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (CONTINUED)

The components of lease expense (reflected in selling, general and administrative expenses) for th e three and six months ended April 1, 2022 and April 2, 2021 were as follows (in thousands):

Three Months Ended Six Months Ended

April 1, 2022 April 2, 2021 April 1, 2022 April 2, 2021

The components of lease expense (reflected in selling, general and administrative expenses) for th e three and nine months ended July 1, 2022 and July 2, 2021 were as follows (in thousands):

Three Months Ended Nine Months Ended

July 1, 2022 July 2, 2021 July 1, 2022 July 2, 2021

Lease expense

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Total lease expense $ 41,423 $ 46,962 $ 127,523 $ 135,703

Supplemental information related to the Company's leases for the six months ended April 1, 2022 was as follows (in thousands):

Six Months Ended

April 1, 2022

Supplemental information related to the Company's leases for the nine months ended July 1, 2022 was as follows (in thousands):

Nine Months Ended

Cash paid for amounts included in the measurements of lease liabilities $ 173,639

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In connection with the Company’s actions related to these initiatives, the Company evaluated certain of its lease right-of-use assets and related property, equipment and leasehold improvements for impairment under ASC 360.

As a result of the analysis, the Company recognized an impairment loss during the six month period of fiscal 2022 of $ 74.6 million, which is included in selling, general and administrative expenses in the accompanying statement of earnings for the current year-to-date period.

As a result of the analysis, the Company recognized an impairment loss during the nine month period of fiscal 2022 of $ 74.6 million, which is included in selling, general and administrative expenses in the accompanying statement of earnings for the current year-to-date period.

The impairment loss recorded includes $ 56.6 million related to right-of-use lease assets and $ 18.0 million related to other long-lived assets, including property, equipment and improvements and leasehold improvements.

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Pension and Other Postretirement Benefit Plans

The following table presents the components of net periodic pension benefit recognized in earnings during the three and six months ended April 1, 2022 and April 2, 2021 (in thousands):

Three Months Ended Six Months Ended

April 1, 2022 April 2, 2021 April 1, 2022 April 2, 2021

The following table presents the components of net periodic pension benefit recognized in earnings during the three and nine months ended July 1, 2022 and July 2, 2021 (in thousands):

Three Months Ended Nine Months Ended

July 1, 2022 July 2, 2021 July 1, 2022 July 2, 2021

Service cost $ 1,709 $ 1,735 $ 5,127 $ 5,206

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The following table presents certain information regarding the Company’s cash contributions to our pension plans for fiscal 2022 (in thousands):

Cash contributions made during the first six months of fiscal 2022

Cash contributions made during the first nine months of fiscal 2022

Cash contributions projected for the remainder of fiscal 2022

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The Company has completed its final assessment of the fair values of PA Consulting's assets acquired and liabilities assumed.

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

Since the initial preliminary estimates reported in the second quarter of fiscal 2021, the Company updated certain provisional amounts reflected in the final 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.

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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

For the Nine Months Ended

Revenues $ 10,917.8

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Diluted earnings per share $ 3.83

Income tax expense for the six -month p ro forma period ended April 2, 2021 wa s $( 122.1 ) million.

Income tax expense for the nine -month p ro forma period ended July 2, 2021 wa s $( 231.3 ) million.

JACOBS ENGINEERING GROUP INC.

3 unchanged sentences

In connection with the PA Consulting investment, the Company recorded redeemable noncontrolling interests, including subsequent purchase accounting adjustments, representing the noncontrolling interest holders' equity interests 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.

During the first quarter of fiscal 2022, PA Consulting repurchased certain shares of the redeemable noncontrolling interest holders for $ 35.1 million in cash.

The difference between the cash purchase price and the recorded book value of these repurchased interests was recorded in the Company’s consolidated retained earnings.

There were no such repurchases in the second quarter of fiscal 2022.

Changes in the redeemable noncontrolling interests d uring the six months ended April 1, 2022 are as follows (in thousands):

During the first and third quarters of fiscal 2022, PA Consulting repurchased certain shares of the redeemable noncontrolling interest holders for $ 35.1 million and $ 11.0 million, respectively, in cash and during the third quarter of fiscal 2022, PA Consulting issued certain shares of redeemable noncontrolling interest holders for $ 49.7 million.

The difference between the cash purchase prices and the recorded book values of these repurchased and issued interests was recorded in the Company’s consolidated retained earnings.

During the third quarter of fiscal 2021, updates to the Company’s preliminary opening balance sheet fair value estimates of the redeemable 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 interests d uring the nine months ended July 1, 2022 are as follows (in thousands):

Balance at October 1, 2021

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Repurchase of redeemable noncontrolling interests ( 53,834 )

Issuance of redeemable noncontrolling interests 54,884

Cumulative translation adjustment and other ( 51,651 )

Balance at April 1, 2022

Balance at July 1, 2022

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

1 unchanged sentence

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 U.S.

At April 1, 2022, t he Company held $ 0.9 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.

At July 1, 2022, t he Company held $ 12.0 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.

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

Since the initial preliminary estimates reported in the second quarter of fiscal 2022, the Company has updated certain amounts reflected in the preliminary purchase price allocation, as summarized in the fair values of StreetLight's assets acquired and liabilities assumed as of the acquisition date set forth above, the majority of which related to reclassifications between goodwill and intangibles and for deferred taxes.

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

Identifiable intangibles are technology and customer relationships, contracts and backlog and have estimated lives of 5 and 9 years, respectively.

Identifiable intangibles are technology, data and customer relationships, contracts and backlog and have estimated lives of 7 , 4 and 9 years, respectively.

No summarized unaudited pro forma results are provided for the StreetLight acquisition due to the immateriality of this acquisition relative to the Company's consolidated financial position and results of operations.

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The Company paid total base consideration of approximately $ 235.4 million in cash to the former owners of BlackLynx.

The estimated fair value of the contingent consideration on the acquisition date is $ 0.4 million.

The future contingent consideration will be paid, if and to the extent achieved, in second quarter of fiscal 2023.

In conjunction with the acquisition, the Company also paid off BlackLynx's debt of approximately $ 5.3 million simultaneously with the consummation of the acquisition.

61 unchanged sentences

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

The Company's investment in Worley was measured at fair value through net income as it was an equity investment with a readily determinable fair value based on quoted market prices and for the three and six month periods ended April 2, 2021, the Company recognized a $ 41.9 million loss and a $ 65.9 million gain, respectively, associated with share price and currency changes on this investment.

The three and six months ended April 2, 2021 included Worley stock dividends of $ 9.8 million.

The Company's investment in Worley was measured at fair value through net income as it was an equity investment with a readily determinable fair value based on quoted market prices and for the three and nine month periods ended July 2, 2021, the Company recognized $ 36.8 million and $ 102.6 million gains, respectively, associated with share price and currency changes on this investment.

The nine months ended July 2, 2021 included Worley stock dividends of $ 9.8 million.

The Company completed the sale of all ordinary shares of Worley it held in the fourth fiscal quarter of fiscal 2021.

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

The activities of these initiatives are substantially completed and are expected to end before the end of fiscal 2025.

The activities of the Buffalo Group initiative are substantially completed and the activities of the PA Consulting initiative are expected to end before the end of fiscal 2025.

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

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

The following table summarizes the impacts of the Restructuring and other charges by line of business ("LOB") in connection with the CH2M acquisition, John Wood Group's nuclear business, Buffalo Group, StreetLight and BlackLynx acquisitions, the PA Consulting investment, the ECR sale, the Company's transformation initiatives relating to real estate and other staffing programs, and the impairment and final exit activities of the AWE ML investment for the three and six month periods ended April 1, 2022 and April 2, 2021 (in thousands):

The following table summarizes the impacts of the Restructuring and other charges by line of business ("LOB") in connection with the CH2M acquisition, John Wood Group's nuclear business, Buffalo Group, StreetLight and BlackLynx acquisitions, the PA Consulting investment, the ECR sale, the Company's transformation initiatives relating to real estate and other staffing programs, and the impairment and final exit activities of the AWE ML investment for the three and nine month periods ended July 1, 2022 and July 2, 2021 (in thousands):

JACOBS ENGINEERING GROUP INC.

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (CONTINUED)

Three Months Ended Six Months Ended

April 1, 2022 April 2, 2021 April 1, 2022 April 2, 2021

Three Months Ended Nine Months Ended

July 1, 2022 July 2, 2021 July 1, 2022 July 2, 2021

Critical Mission Solutions $ ( 255 ) $ 921 $ 4,361 $ 4,840

7 unchanged sentences

$ 4,577 $ 13,768 $ 182,100 $ 92,509

(1) Included in the three and six month periods ended April 1, 2022 was $ 91.3 million related to the final pre-tax settlement of the Legacy CH2M Matter (as defined in Note 19 - Commitments and Contingencies and Derivative Financial Instruments ), net of previously recorded reserves.

The six month period in fiscal 2022 included approximately $ 71.0 million in charges associated mainly with real estate related impairments and other transformation activities, the majority of which related to People and Places Solutions.

(2) The six month period ended April 1, 2022 included gains of $( 7.1 ) million related to lease terminations.

The six months ended April 2, 2021 included $ 33.2 million in charges related to the impairment of our AWE ML investment.

(1) Included in the nine month period ended July 1, 2022 was $ 91.3 million related to the final pre-tax settlement of the Legacy CH2M Matter (as defined in Note 19 - Commitments and Contingencies and Derivative Financial Instruments ), net of previously recorded reserves and approximately $ 77 million in charges associated mainly with real estate impairments and related charges and $ 24.5 million in transformation and other charges, the majority of which related to People and Places Solutions.

(2) The nine month period ended July 1, 2022 included gains of $( 7.1 ) million related to lease terminations.

The nine months ended July 2, 2021 included $ 38.9 million in charges related to the impairment of our AWE ML investment.

See Note 20 - Segment Information .

The activity in the Company’s accruals for Restructuring and other charges for the six months ended April 1, 2022 is as follows (in thousands):

The activity in the Company’s accruals for Restructuring and other charges for the nine months ended July 1, 2022 is as follows (in thousands):

Balance at October 1, 2021

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Payments and other ( 25,297 )

Balance at April 1, 2022 $ 15,622

(1) Excludes $ 162.6 million in other net charges mainly comprised of $ 91.3 million in charges for the final pre-tax settlement of the Legacy CH2M Matter (net of previously recorded reserves) during the three months ended April 1, 2022, and $ 71.0 million associated mainly with real estate related impairments and other transformation activities described above during the six months ended April 1, 2022.

The following table summarizes the Restructuring and other charges by major type of costs for the three and six months ended April 1, 2022 and April 2, 2021 (in thousands):

Three Months Ended Six Months Ended

April 1, 2022 April 2, 2021 April 1, 2022 April 2, 2021

Balance at July 1, 2022 $ 8,338

(1) Excludes $ 162.5 million in other net charges mainly comprised of $ 91.3 million in charges and payments for the final pre-tax settlement of the Legacy CH2M Matter (net of previously recorded reserves) during the three months ended July 1, 2022, and $ 71.2 million associated mainly with real estate related impairments and other transformation activities described above during the nine months ended July 1, 2022.

The following table summarizes the Restructuring and other charges by major type of costs for the three and nine months ended July 1, 2022 and July 2, 2021 (in thousands):

Three Months Ended Nine Months Ended

July 1, 2022 July 2, 2021 July 1, 2022 July 2, 2021

Lease Abandonments and Impairments (1) $ ( 32 ) $ 354 $ 67,805 $ 2,565

3 unchanged sentences

Total $ 4,577 $ 13,768 $ 182,100 $ 92,509

(1) The six month period in fiscal 2022 includes approximately $ 71.0 million in charges associated mainly with real estate related impairments and other transformation activities reflected in Lease Abandonments and Impairments.

(2) The three and six month periods ended April 1, 2022 amounts are comprised mainly of $ 91.3 million in other charges related to the final pre-tax settlement of the Legacy CH2M Matter, net of previously recorded reserves.

Also, the six months ended April 2, 2021 included $ 33.2 million in Other charges associated with the impairment of our investment in AWE ML.

Cumulative amounts incurred to date under our various Restructuring and other activities described above by each major type of cost as of April 1, 2022 are as follows (in thousands):

(1) The nine month period in fiscal 2022 includes approximately $ 74.9 million in charges associated mainly with real estate related impairments and other transformation activities reflected in Lease Abandonments and Impairments.

(2) The nine month period ended July 1, 2022 amounts are comprised mainly of $ 91.3 million in other charges related to the final pre-tax settlement of the Legacy CH2M Matter, net of previously recorded reserves.

Also, the nine months ended July 2, 2021 included $ 38.9 million in Other charges associated with the impairment of our investment in AWE ML.

Cumulative amounts incurred to date under our various Restructuring and other activities described above by each major type of cost as of July 1, 2022 are as follows (in thousands):

JACOBS ENGINEERING GROUP INC.

10 unchanged sentences

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.

The Company is party to interest rate swap agreements and a cross-currency swap agreement with notional values of $ 787.1 million and $ 127.8 million , respectively, as of April 1, 2022 to manage the interest rate exposure on our variable rate loans and the foreign currency exposure on our USD borrowings by a European subsidiary.

The Company is party to interest rate swap agreements and a cross-currency swap agreement with notional values of $ 766.7 million and $ 127.8 million , respectively, as of July 1, 2022 to manage the interest rate exposure on our variable rate loans and the foreign currency exposure on our USD borrowings by a European subsidiary.

By entering into the swap agreements, the Company converted the LIBOR and SONIA rate based liabilities into fixed rate liabilities and, for the cross currency swap, our LIBOR rate based borrowing in USD to a fixed rate Euro liability, for periods ranging from three and a half to ten years .

4 unchanged sentences

See Note 4- New Accounting Pronouncements for additional discussion related to the application of SONIA to existing hedge contracts.

The fair value of the interest rate and cross currency swaps at April 1, 2022 and October 1, 2021 was $ 60.4 million and $( 0.8 ) million, respectively, of which $( 2.1 ) million is inc luded in other deferred liabilities and $ 62.5 million is included in miscellaneous other assets on the consolidated balance sheets at April 1, 2022.

The fair value of the interest rate and cross currency swaps at July 1, 2022 and October 1, 2021 was $ 74.9 million and $( 0.8 ) million, respectively, of which all $ 74.9 million is included in miscellaneous other assets on the Consolidated Balance Sheets at July 1, 2022.

As of October 1, 2021, $( 11.0 ) million is inc luded in other deferred liabilities and $ 10.2 million is included in miscellaneous other assets on the Consolidated Balance Sheets.

The unrealized net gain (loss) on these interest rate and cross currency swaps was $ 47.5 million and $ 7.4 million, net of tax, and was included in accumulated other comprehensive inc ome as of April 1, 2022 and October 1, 2021, 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 $ 576.5 million at April 1, 2022 and $ 506.5 million at October 1, 2021 .

The unrealized net gain (loss) on these interest rate and cross currency swaps was $ 52.8 million and $ 7.4 million, net of tax, and was included in accumulated other comprehensive inc ome as of July 1, 2022 and October 1, 2021, 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 $ 186.1 million at July 1, 2022 and $ 506.5 million at October 1, 2021 .

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

The fair value of the foreign exchange contracts at April 1, 2022 and October 1, 2021 w as $ 2.4 million and $ 55.5 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.

During the second quarter, the Company settled $ 66.7 million in fair value related to certain Australian Dollar foreign exchange forward contracts and received cash and subsequently entered into a new Australian Dollar instrument with an equal notional value.

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 .

The fair value of the foreign exchange contracts at July 1, 2022 and October 1, 2021 w as $( 3.2 ) million and $ 55.5 million , respectively, which is included in within accounts payable for the current period and re ceivables and contract assets for the prior period on the Consolidated Balance Sheets and with associated income statement impacts included in miscellaneous income (expense) in the Consolidated Statements of Earnings.

During the second quarter of fiscal 2022, the Company settled $ 66.7 million in cash related to certain Australian Dollar foreign exchange forward contracts and subsequently entered into a new Australian Dollar instrument with an equal notional value which was ultimately settled in the third quarter of fiscal 2022.

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 observable inputs other than quoted prices in active markets.

We are exposed to risk from credit-related losses resulting from nonperformance by counterparties to our financial instruments.

13 unchanged sentences

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

At April 1, 2022 and October 1, 2021, the Company had issued and outstanding approximate ly $ 274.6 million and $ 263.8 million , respectively, in LOCs and $ 2.1 billion an d $ 2.1 billion, respectively, in surety bonds.

At July 1, 2022 and October 1, 2021, the Company had issued and outstanding approximate ly $ 286.9 million and $ 263.8 million , respectively, in LOCs and $ 2.2 billion an d $ 2.1 billion, respectively, in surety bonds.

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

23 unchanged sentences

On April 12, 2022, JKC and the Consortium entered into a confidential deed of settlement (“Settlement Agreement”).

Under the terms of the Settlement Agreement, CH2M, as guarantor of CH2M Australia PTY Limited’s obligations with respect to the subcontract with JKC, made a cash payment to JKC of AUD 640 million (or approximately $ 475 million using mid-April 2022 exchange rates).

As a result of the settlement, additional pre-tax charges of $ 91.3 million were recorded during the three-months ended April 1, 2022 for this matter (over amounts previously reserved and reported in long-term Other Deferred Liabilities in the Company's consolidated balance sheet).

Further, the related final settlement liability was reclassified to current Accrued Liabilities at April 1, 2022 due to its short term nature.

Under the terms of the Settlement Agreement, CH2M, as guarantor of CH2M Australia PTY Limited’s obligations with respect to the subcontract with JKC, made a cash payment to JKC in April 2022 of AUD 640 million (or approximately $ 475 million using mid-April 2022 exchange rates).

As a result of the settlement, additional pre-tax charges of $ 91.3 million were recorded during the nine-months ended July 1, 2022 for this matter (over amounts previously reserved and reported in long-term Other Deferred Liabilities in the Company's Consolidated Balance Sheet).

The Settlement Agreement provided for a release of claims between JKC and each member of the Consortium, and in connection with this agreement the members of the Consortium also waived all claims against each other and their respective parent guarantors relating to the project.

9 unchanged sentences

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

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

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

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.

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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, which plaintiffs voluntarily dismissed in July 2021.

Finally, in August 2021, a resident of Roane County filed an action against Jacobs and TVA claiming personal injury and property damage.

In August 2021, Thomas Ryan, a resident of Roane County, filed an action against Jacobs and TVA claiming personal injury and property damage.

I n June 2022, the Court granted Jacobs' motion to dismiss Ryan’s action in its entirety, closing the case.

Separately, 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.

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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 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.

In July 2022, the Company received a confirmatory letter from the SEC staff stating that its investigation of this matter had been terminated and that the staff does not intend to recommend an enforcement action against the Company.

JACOBS ENGINEERING GROUP INC.

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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 1, 2022 April 2, 2021 April 1, 2022 April 2, 2021

For the Three Months Ended For the Nine Months Ended

July 1, 2022 July 2, 2021 July 1, 2022 July 2, 2021

Revenues from External Customers:

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Total $ 3,827,093 $ 3,576,436 $ 11,041,777 $ 10,506,144

For the Three Months Ended For the Six Months Ended

April 1, 2022 April 2, 2021 April 1, 2022 April 2, 2021

For the Three Months Ended For the Nine Months Ended

July 1, 2022 July 2, 2021 July 1, 2022 July 2, 2021

Segment Operating Profit:

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GAAP Operating Profit 265,762 263,746 609,310 436,572

Total Other (Expense) Income, net (3) ( 10,933 ) ( 71,169 ) ( 19,177 ) 69,002

Total Other Income (Expense), net (3) 6,353 19,648 ( 12,825 ) 88,650

Earnings from Continuing Operations Before Taxes $ 272,115 $ 283,394 $ 596,485 $ 525,222

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (CONTINUED)

(1) Other corporate expenses also include intangibles amortization of $ 48.4 million and $ 30.6 million for the three months ended April 1, 2022 and April 2, 2021, respectively, and $ 95.3 million and $ 53.8 million for the six months ended April 1, 2022 and April 2, 2021, respectively, with the increase mainly attributable to the PA Consulting investment.

(2) Included in the three and six months ended April 1, 2022 is $ 91.3 million related to the final pre-tax settlement of the Legacy CH2M Matter, net of previously recorded reserves and included in the six months ended April 1, 2022 are $ 74.6 million of real estate impairment charges related to the Company's transformation initiatives.

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 six months ended April 1, 2022 include $ 3.5 million in income associated with final exit activities associated with our AWE ML investment and a gain of $ 7.1 million related to a lease termination.

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 and $ 34.1 million and $( 48.6 ) million, respectively, in fair value 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 ML investment.

The investments in Worley and C3 were sold in fiscal 2021 and therefore there are no comparable amounts in the current quarter.

(1) Other corporate expenses also included intangibles amortization of $ 51.6 million and $ 49.6 million for the three months ended July 1, 2022 and July 2, 2021, respectively, and $ 146.9 million and $ 103.3 million for the nine months ended July 1, 2022 and July 2, 2021, respectively, with the comparative year-to-date period increase mainly attributable to higher amortization from the PA Consulting investment.

(2) Included in the nine months ended July 1, 2022 is $ 91.3 million in charges related to the final pre-tax settlement of the Legacy CH2M Matter, net of previously recorded reserves and $ 74.6 million of real estate impairment charges and $ 24.5 million in other transformation and other charges related to the Company's transformation initiatives.

Included in the nine months ended July 2, 2021 are $ 297.4 million 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 1, 2022 included a $ 13.9 million gain related to a cost method investment sold during the period.

The nine months ended July 1, 2022 included a gain of $ 7.1 million related to a lease termination.

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 (including Worley stock dividends) and certain foreign currency revaluations relating to the ECR sale and $ 1.0 million and $ 49.6 million, respectively, in fair value adjustments related to our investment in C3 stock, with both of these investments sold in fiscal 2021.

The nine months ended July 2, 2021 also includes $ 38.9 million related to impairment of our AWE ML investment.

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

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

What changed 10-Q

Item 1. Financial Statements