What changed in this filing

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Item 1. Financial Statements

2023-02-07 compared with 2022-08-01 · 290 added, 439 removed, 616 unchanged (54% of the section changed)

Financial Statements.

JACOBS ENGINEERING GROUP INC.

JACOBS SOLUTIONS INC.

AND SUBSIDIARIES

1 unchanged sentence

(In thousands, except share information)

July 1, 2022 October 1, 2021

December 30, 2022 September 30, 2022

Current Assets:

32 unchanged sentences

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

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

issued and outstanding - 126,668,513 shares and 127,393,378 shares as of December 30, 2022 and September 30, 2022, respectively

126,669 127,393

7 unchanged sentences

See the accompanying Notes to Consolidated Financial Statements – Unaudited.

JACOBS ENGINEERING GROUP INC.

JACOBS SOLUTIONS INC.

AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF EARNINGS

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

Three Months Ended December 30, 2022 and December 31, 2021

(In thousands, except per share information)

For the Three Months Ended For the Nine Months Ended

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

For the Three Months Ended

December 30, 2022 December 31, 2021

Revenues $ 3,798,668 $ 3,380,625

6 unchanged sentences

Interest expense ( 40,077 ) ( 19,426 )

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

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

Miscellaneous (expense) income, net ( 3,254 ) 9,682

Total other expense, net ( 40,324 ) ( 8,243 )

Earnings from Continuing Operations Before Taxes 197,481 169,090

1 unchanged sentence

Net Earnings of the Group from Continuing Operations 147,378 153,201

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

Net Loss of the Group from Discontinued Operations ( 708 ) ( 232 )

Net Earnings of the Group 146,670 152,969

Net Earnings Attributable to Noncontrolling Interests from Continuing Operations ( 7,031 ) ( 9,252 )

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

Net Earnings Attributable to Redeemable Noncontrolling interests ( 3,992 ) ( 9,683 )

Net Earnings Attributable to Jacobs from Continuing Operations 136,355 134,266

2 unchanged sentences

Basic Net Earnings from Continuing Operations Per Share $ 1.08 $ 1.04

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

Basic Net Loss from Discontinued Operations Per Share $ ( 0.01 ) $ —

Basic Earnings Per Share $ 1.07 $ 1.04

Diluted Net Earnings from Continuing Operations Per Share $ 1.07 $ 1.03

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

Diluted Net Loss from Discontinued Operations Per Share $ ( 0.01 ) $ —

Diluted Earnings Per Share $ 1.06 $ 1.03

See the accompanying Notes to Consolidated Financial Statements - Unaudited.

JACOBS ENGINEERING GROUP INC.

JACOBS SOLUTIONS INC.

AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

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

Three Months Ended December 30, 2022 and December 31, 2021

(In thousands)

For the Three Months Ended For the Nine Months Ended

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

For the Three Months Ended

December 30, 2022 December 31, 2021

Net Earnings of the Group $ 146,670 $ 152,969

1 unchanged sentence

Foreign currency translation adjustment 165,335 ( 8,685 )

Gain on cash flow hedges 9,440 ( 7,017 ) 64,786 24,170

(Loss) gain on cash flow hedges ( 10,144 ) 8,855

Change in pension and retiree medical plan liabilities ( 22,266 ) 8,039

4 unchanged sentences

Change in pension and retiree medical plan liabilities ( 308 ) ( 1,468 )

Income Tax (Expense) Benefit:

Income Tax Benefit (Expense):

( 3,647 ) ( 1,423 )

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

Net other comprehensive income 129,278 6,786

Net Comprehensive Income of the Group 275,948 159,755

Net Earnings Attributable to Noncontrolling Interests ( 7,031 ) ( 9,252 )

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

Net Earnings Attributable to Redeemable Noncontrolling interests ( 3,992 ) ( 9,683 )

Net Comprehensive Income Attributable to Jacobs $ 264,925 $ 140,820

See the accompanying Notes to Consolidated Financial Statements - Unaudited.

JACOBS ENGINEERING GROUP INC.

JACOBS SOLUTIONS INC.

AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY

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

For the Three Months Ended December 30, 2022 and December 31, 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 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

Foreign currency translation adjustments, net of deferred taxes of $( 2,361 )

— — — 538 538 — 538

Pension liability, net of deferred taxes of $ 845

— — — 2,933 2,933 — 2,933

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

— — — ( 5,243 ) ( 5,243 ) — ( 5,243 )

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

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

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

Stock based compensation — 14,542 — — 14,542 — 14,542

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

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

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

Net earnings — — 134,034 — 134,034 9,252 143,286

7 unchanged sentences

Redeemable Noncontrolling interests redemption value adjustment — — ( 15,203 ) — ( 15,203 ) — ( 15,203 )

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

Repurchase of Redeemable Noncontrolling interests — — 7,761 — 7,761 — 7,761

Noncontrolling interests - distributions and other — — — — — ( 14,049 ) ( 14,049 )

2 unchanged sentences

Repurchases of equity securities ( 342 ) 43,127 ( 42,785 ) — — — —

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.

JACOBS ENGINEERING GROUP INC.

AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY

For the Nine 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 October 2, 2020 $ 129,748 $ 2,598,446 $ 4,020,575 $ ( 933,057 ) $ 5,815,712 $ 39,955 $ 5,855,667

Net earnings — — 433,885 — 433,885 29,366 463,251

Foreign currency translation adjustments, net of deferred taxes of $ 8,675

— — — 60,390 60,390 — 60,390

Pension liability, net of deferred taxes of $ 2,509

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

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

Balances at December 31, 2021

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

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

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

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

Stock based compensation — 41,519 — — 41,519 — 41,519

Issuances of equity securities including shares withheld for taxes 796 11,913 ( 8,790 ) — 3,919 — 3,919

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

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

Balances at September 30, 2022 $ 127,393 $ 2,682,009 $ 4,225,784 $ ( 975,130 ) $ 6,060,056 $ 44,336 $ 6,104,392

Net earnings — — 135,647 — 135,647 7,031 142,678

3 unchanged sentences

— — — ( 22,574 ) ( 22,574 ) — ( 22,574 )

Gain on derivatives, net of deferred taxes of $ 19,350

Loss on derivatives, net of deferred taxes of $( 3,270 )

— — — ( 6,874 ) ( 6,874 ) — ( 6,874 )

6 unchanged sentences

Repurchases of equity securities ( 1,238 ) ( 26,057 ) ( 113,227 ) — ( 140,522 ) — ( 140,522 )

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

Balances at December 30, 2022 $ 126,669 $ 2,672,421 $ 4,230,866 $ ( 845,852 ) $ 6,184,104 $ 49,494 $ 6,233,598

See the accompanying Notes to Consolidated Financial Statements – Unaudited.

JACOBS ENGINEERING GROUP INC.

JACOBS SOLUTIONS INC.

AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS

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

For the Three Months Ended December 30, 2022 and December 31, 2021

(In thousands)

For the Nine Months Ended

July 1, 2022 July 2, 2021

For the Three Months Ended

December 30, 2022 December 31, 2021

Cash Flows from Operating Activities:

4 unchanged sentences

Intangible assets 49,773 46,907

Gain on sale of ECR business — ( 15,608 )

Gain on investment in equity securities ( 13,862 ) ( 152,145 )

Stock based compensation 20,231 7,014

Equity in earnings of operating ventures, net of return on capital distributions 2,613 12,749

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

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

Loss on disposals of assets, net 241 151

Impairment of long-lived assets 27,142 72,266

Deferred income taxes 13,797 ( 17,659 )

13 unchanged sentences

Acquisitions of businesses, net of cash acquired ( 16,943 ) ( 229,813 )

Disposal of investment in equity securities 13,862 52,021

Proceeds related to sales of businesses — 36,360

Net cash used for investing activities ( 48,738 ) ( 249,568 )

2 unchanged sentences

Repayments of long-term borrowings ( 1,289,421 ) ( 400,287 )

Proceeds from short-term borrowings — —

Repayments of short-term borrowings — ( 5,326 )

Debt issuance costs — ( 2,747 )

Proceeds from issuances of common stock 14,798 17,862

4 unchanged sentences

Repurchase of redeemable noncontrolling interests ( 58,353 ) ( 35,095 )

Proceeds from issuances of redeemable noncontrolling interests 49,738 —

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

Net cash (used for) provided by financing activities ( 246,146 ) 144,363

Effect of Exchange Rate Changes 51,806 2,722

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

Net Increase in Cash and Cash Equivalents and Restricted Cash 59,219 219,162

Cash and Cash Equivalents, including Restricted Cash, at the Beginning of the Period 1,154,207 1,026,575

1 unchanged sentence

See the accompanying Notes to Consolidated Financial Statements – Unaudited.

JACOBS ENGINEERING GROUP INC.

JACOBS SOLUTIONS INC.

AND SUBSIDIARIES

2 unchanged sentences

Unless the context otherwise requires:

• References herein to “Jacobs” are to Jacobs Engineering Group Inc.

• References herein to “Jacobs” are to Jacobs Solutions Inc.

and its predecessors;

• References herein to the “Company”, “we”, “us” or “our” are to Jacobs Engineering Group Inc.

• References herein to the “Company”, “we”, “us” or “our” are to Jacobs Solutions Inc.

and its consolidated subsidiaries;

• References herein to the “Group” are to the combined economic interests and activities of the Company and the persons and entities holding noncontrolling interests in our consolidated subsidiaries.

On August 29, 2022, Jacobs Engineering Group Inc.

(JEGI), the predecessor to Jacobs Solutions Inc., implemented a holding company structure, which resulted in Jacobs Solutions Inc.

becoming the parent company of, and successor issuer to, JEGI (the "Holding Company Reorganization").

For purposes of this Quarterly Report, references to the "Company", "we", "us" or "our" or our management or business at any point prior to August 29, 2022 (the "Holding Company Implementation Date") refer to JEGI and its consolidated subsidiaries as the predecessor to Jacobs Solutions Inc.

The accompanying consolidated financial statements and financial information included herein have been prepared pursuant to the interim period reporting requirements of Form 10-Q.

1 unchanged sentence

GAAP”) have been condensed or omitted.

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 July 1, 2022, and for the three and nine month periods ended July 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 December 30, 2022, and for the three month period ended December 30, 2022.

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

As part of the new Company strategy, during the first quarter of fiscal year 2023 Jacobs formed a reporting and operating segment, Divergent Solutions ("DVS"), to further strengthen our ability to drive value for our clients.

DVS supports both lines of business as the core foundation for developing and delivering innovative, next-generation cloud, cyber, data and digital technologies.

For a further discussion of our segment information, please refer to Note 18- Segment Information .

On February 4, 2022, the Company acquired StreetLight Data, Inc.

3 unchanged sentences

The Company also paid off StreetLight's debt of approximately $1.0 million simultaneously with the consummation of the acquisition.

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, Inc.

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

On November 19, 2021, 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.

1 unchanged sentence

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.

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

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

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

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

Further, in connection with the transaction, an additional $ 261 million in investment proceeds had not yet been distributed at the investment date due to continuing employment requirements of associated management owners.

Consequently, this amount represented compensation expense incurred related to the investment that was expensed subsequent to the date of the transaction, and was reflected in selling, general and administrative expense and cash from operations for the fiscal year ended October 1, 2021.

The remaining 35 % interest was acquired 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.

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 government clients.

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.

JACOBS SOLUTIONS INC.

AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (CONTINUED)

debt of approximately $ 7.7 million.

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

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

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

See Note 14- PA Consulting Business Combination for more discussion on the investment and Note 11- Borrowings for more discussion on the financing for the transaction.

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

1 unchanged sentence

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

As such, the financial results of the ECR business are reflected in our unaudited Consolidated Statements of Earnings as discontinued operations for all periods presented.

As of October 1, 2021, all of the ECR business to be sold under the terms of the ECR sale had been conveyed to Worley and as such, no amounts remain held for sale.

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

As such, the financial results of the ECR business are reflected in our unaudited Consolidated Statements of Earnings as discontinued operations for all periods presented and all of the ECR business to be sold under the terms of the ECR sale had been conveyed to Worley and as such, no amounts remain held for sale.

Use of Estimates and Assumptions

1 unchanged sentence

GAAP requires us to employ estimates and make assumptions that affect the reported amounts of certain assets and liabilities, the revenues and expenses reported for the periods covered by the accompanying consolidated financial statements, and certain amounts disclosed in these Notes to the Consolidated Financial Statements.

Although such estimates and assumptions are based on management’s most recent assessment of the underlying facts and circumstances utilizing the most current information available and past experience including considerations for potential impacts of the continuing coronavirus (COVID-19) pandemic, actual results could differ significantly from those estimates and assumptions.

Although such estimates and assumptions are believed to be reasonable under the circumstances and are based on management’s most recent assessment of the underlying facts and circumstances utilizing the most current information available and past experience, actual results could differ significantly from those estimates and assumptions.

Our estimates, judgments, and assumptions are evaluated periodically and adjusted accordingly.

14 unchanged sentences

See Note 11- Borrowings for a discussion of the fair value of long-term debt.

JACOBS ENGINEERING GROUP INC.

Fair value measurements relating to our business combinations and goodwill allocations related to our segment realignment are made primarily using Level 3 inputs including discounted cash flow techniques.

Fair value for the identified intangible assets is generally estimated using inputs primarily for the income approach using the multiple period excess earnings method and the relief from royalties method.

The significant assumptions used in estimating fair value

JACOBS SOLUTIONS INC.

AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (CONTINUED)

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.

The significant assumptions used in estimating fair value include (i) revenue projections of the business, including profitability, (ii) attrition rates and (iii) the estimated discount rate that reflects the level of risk associated with receiving future cash flows.

include (i) revenue projections of the business, including profitability, (ii) attrition rates and (iii) the estimated discount rate that reflects the level of risk associated with receiving future cash flows.

Other personal property assets, such as furniture, fixtures and equipment, are valued using the cost approach, which is based on replacement or reproduction costs of the asset less depreciation.

1 unchanged sentence

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

New Accounting Pronouncements

ASU 2020-04, Reference Rate Reform , (Topic 848):

Facilitation of the Effects of Reference Rate Reform on Financial Reporting is intended to provide relief for entities impacted by reference rate reform and contains provisions and optional expedients designed to simplify requirements around designation of hedging relationships, probability assessments of hedged forecasted transactions and accounting for modifications of contracts that refer to LIBOR or other rates affected by reference rate reform.

The guidance is elective and is effective on the date of issuance.

ASU 2020-04 is applied prospectively to contract modifications and as of the effective date for existing and new eligible hedging relationships.

The guidance is temporary and will generally not be applicable to contract modifications which occur after December 31, 2022.

The adoption of the new guidance in the first quarter of fiscal 2022 allowed the Company to continue its British pound denominated interest rate hedge relationships which previously defined LIBOR as the benchmark interest rate and in December 2021 were amended to replace LIBOR with the Sterling Overnight Index Average rate ("SONIA").

2021-08, Business Combinations (Topic 805):

Accounting for Contract Assets and Contract Liabilities from Contracts with Customers , is effective for fiscal years beginning after December 15, 2022.

ASU 2021-08 requires contract assets and contract liabilities (i.e., deferred revenue) acquired in a business combination to be recognized and measured by the acquirer on the acquisition date in accordance with ASC 606, Revenue from Contracts with Customers.

Generally, this new guidance will result in the acquirer recognizing contract assets and contract liabilities at the same amounts recorded by the acquiree.

The Company adopted the new guidance in the first quarter of fiscal 2022 and the adoption had no impact on the Company's financial position, results of operations or cash flows.

Revenue Accounting for Contracts

9 unchanged sentences

Refer to Note 18- Segment Information for additional information on how we disaggregate our revenues by reportable segment.

JACOBS ENGINEERING GROUP INC.

AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (CONTINUED)

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

The following table further disaggregates our revenue by geographic area for the three months ended December 30, 2022 and December 31, 2021 (in thousands):

Three Months Ended

December 30, 2022 December 31, 2021

United States $ 2,536,114 $ 2,148,554

8 unchanged sentences

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

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.

Revenue recognized for the three months ended December 30, 2022 that was previously included in the contract liability balance on September 30, 2022 was $ 330.3 million.

Revenue recognized for the three months ended December 31, 2021 that was included in the contract liability balance on October 1, 2021 was $ 291.5 million.

Remaining Performance Obligation

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’s remaining performance obligations as of December 30, 2022 represent a measure of the total dollar value of work to be performed on contracts awarded and in progress.

The Company had approximately $ 17.2 billion in remaining performance obligations as of December 30, 2022.

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

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

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

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

JACOBS SOLUTIONS INC.

AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (CONTINUED)

Earnings Per Share and Certain Related Information

2 unchanged sentences

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

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

AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (CONTINUED)

Three Months Ended Nine Months Ended

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

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 months ended December 30, 2022 and December 31, 2021 (in thousands):

Three Months Ended

December 30, 2022 December 31, 2021

Numerator for Basic and Diluted EPS:

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 $ 136,355 $ 134,266

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

Net loss from discontinued operations allocated to common stock for EPS calculation $ ( 708 ) $ ( 232 )

Net earnings allocated to common stock for EPS calculation $ 135,647 $ 134,034

6 unchanged sentences

Basic Net Earnings from Continuing Operations Per Share $ 1.08 $ 1.04

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

Basic Net Loss from Discontinued Operations Per Share $ ( 0.01 ) $ —

Basic Earnings Per Share $ 1.07 $ 1.04

Diluted Net Earnings from Continuing Operations Per Share $ 1.07 $ 1.03

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

Diluted Net Loss from Discontinued Operations Per Share $ ( 0.01 ) $ —

Diluted Earnings Per Share $ 1.06 $ 1.03

Share Repurchases

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

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 third fiscal quarter of 2022:

JACOBS ENGINEERING GROUP INC.

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

In the fourth quarter of fiscal 2021, the Company initiated an accelerated share repurchase program under the 2020 Repurchase Authorization 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.

JACOBS SOLUTIONS INC.

AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (CONTINUED)

The following table summarizes the activity under the 2020 Repurchase Authorization through the first fiscal quarter of 2023:

Amount Authorized

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

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

The 2020 Repurchase Authorization expired on January 15, 2023.

On January 25, 2023, the Company's Board of Directors authorized an incremental share repurchase program of up to $ 1.0 billion of the Company's stock, to expire on January 25, 2026 (the "2023 Repurchase Authorization").

No repurchase activity has taken place under the 2023 Share Repurchase Authorization to date.

Subsequent to the expiration of the 2020 Repurchase Authorization and the approval of the 2023 Repurchase Authorization, the Company has $ 1.0 billion remaining under the 2023 Repurchase Authorization.

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

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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 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.

On January 25, 2023, the Company’s Board of Directors declared a quarterly dividend of $ 0.26 per share of the Company’s common stock to be paid on March 24, 2023, to shareholders of record on the close of business on February 24, 2023.

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

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

Dividends paid through the first fiscal quarter of 2023 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

September 23, 2021 October 15, 2021 October 29, 2021 $ 0.21

September 15, 2022 September 30, 2022 October 28, 2022 $ 0.23

July 13, 2022 July 29, 2022 August 26, 2022 $ 0.23

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September 23, 2021 October 15, 2021 October 29, 2021 $ 0.21

JACOBS ENGINEERING GROUP INC.

Goodwill and Intangibles

As a result of the formation of a new operating segment this quarter, Divergent Solutions, see Note 1- b asis of Presentation, the historical carrying value of a portion of goodwill has been reallocated to the Divergent Solutions segment based on a relative fair value basis to the Divergent Solutions segment.

The carrying value of goodwill appearing in the

JACOBS SOLUTIONS INC.

AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (CONTINUED)

Goodwill and Intangibles

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

Balance October 1, 2021 $ 2,550,631 $ 3,240,783 $ 1,405,586 $ 7,197,000

accompanying Consolidated Balance Sheets at December 30, 2022 and September 30, 2022 was as follows (in thousands):

Critical Mission Solutions People & Places Solutions Divergent Solutions PA Consulting Total

Balance September 30, 2022 $ 2,251,724 $ 3,196,796 $ 576,986 $ 1,159,152 $ 7,184,658

Acquired — — — 16,425 16,425

Foreign currency translation ( 18,043 ) ( 29,688 ) ( 161,824 ) ( 209,555 )

Post-Acquisition Adjustments — ( 138 ) — 1,409 1,271

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):

Foreign currency translation and other 10,460 13,168 2,680 112,420 138,728

Balance December 30, 2022 $ 2,262,184 $ 3,209,826 $ 579,666 $ 1,289,406 $ 7,341,082

The following table provides certain information related to the Company’s acquired intangibles in the accompanying Consolidated Balance Sheets at December 30, 2022 and September 30, 2022 (in thousands):

Customer Relationships, Contracts and Backlog Developed Technology Trade Names Total

Balances October 1, 2021 $ 1,309,061 $ 40,020 $ 216,677 $ 1,565,758

Balances September 30, 2022 $ 1,136,438 $ 88,931 $ 168,683 $ 1,394,052

Amortization ( 43,383 ) ( 3,895 ) ( 2,495 ) ( 49,773 )

Acquired 1,318 — — 1,318

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

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

Post-Acquisition Adjustments ( 1,409 ) — — ( 1,409 )

Foreign currency translation and other 52,603 404 14,764 67,771

Balances December 30, 2022 $ 1,145,567 $ 85,440 $ 180,952 $ 1,411,959

The following table presents estimated amortization expense of intangible assets for the remainder of fiscal 2023 and for the succeeding years.

The amounts below include preliminary amortization estimates for the Streetlight and BlackLynx opening balance sheet fair values that are still subject to change.

Fiscal Year (in millions)

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Total $ 1,412.0

JACOBS ENGINEERING GROUP INC.

JACOBS SOLUTIONS INC.

AND SUBSIDIARIES

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Receivables and Contract Assets

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

The following table presents the components of receivables and contract assets appearing in the accompanying Consolidated Balance Sheets at December 30, 2022 and September 30, 2022, as well as certain other related information (in thousands):

December 30, 2022 September 30, 2022

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 July 1, 2022 (in thousands):

The following table presents the Company's roll forward of accumulated other comprehensive income (loss) after-tax as of December 30, 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

Balance at September 30, 2022

$ ( 307,395 ) $ ( 786,040 ) $ 118,305 $ ( 975,130 )

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Reclassifications from accumulated other comprehensive income (loss) — — ( 4,116 ) ( 4,116 )

Balance at July 1, 2022

Balance at December 30, 2022

$ ( 329,969 ) $ ( 627,314 ) $ 111,431 $ ( 845,852 )

(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.

( 1) Included in the overall foreign currency translation adjustment for the three months ended December 30, 2022 and December 31, 2021 are $( 74.9 ) million and $ 18.9 million, respectively in unreali zed gains (losses) on long-term foreign currency denominated intercompany loans not anticipated to be settled in the foreseeable future.

Included in the Company’s cumulative net unrealized gains from interest rate and cross currency swaps recorded in accumulated other comprehensive income as of December 30, 2022 were appro ximately $ 21.8 million in unrealized gains, net of taxes, which are expected to be realized in earnings during the twelve months subsequent to December 30, 2022 .

JACOBS SOLUTIONS 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 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 Company’s effective tax rates from continuing operations for the three months ended December 30, 2022 and December 31, 2021 were 25.4 % and 9.4 %, respectively.

The most significant items contributing to the difference between the statutory U.S.

federal corporate tax rate of 21.0% and the Company’s effective tax rate for the three months ended December 30, 2022 were U.S.

state income tax expense of $ 4.6 million and U.S.

tax on foreign earnings of $ 3.6 million.

Both items are expected to have a continuing impact on the Company's effective tax rate for the remainder of the fiscal year.

The most significant items contributing to the difference between the statutory U.S.

federal corporate tax rate of 21.0% and the Company's effective tax rate for the three months ended December 31, 2021 were a tax benefit of $ 15.7 million related to the release of previously reserved foreign tax credit assets, $ 4.2 million excess tax benefit attributable to stock compensation, and $ 4.0 million benefit from filing amended state returns.

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

In the normal course of business, the Company is subject to examination by tax authorities throughout the world, including such major jurisdictions as Australia, Canada, India, the Netherlands, the United Kingdom and the United States.

In the normal course of business, the Company i s subject to examination by tax authorities throughout the world, including such major jurisdictions as Australia, Canada, India, the Netherlands, the United Kingdom and the United States.

Our estimate of the potential outcome of any uncertain tax issue is subject to our assessment of the relevant risks, facts, and circumstances existing at the time.

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However, future results may include favorable or unfavorable adjustments to our estimated tax liabilities in the period the assessments are made or resolved, which may impact our effective tax rate.

During the next 12 months, it is reasonably possible that U.S.

tax audit resolutions may reduce unrecognized tax benefits by up to $ 44.2 million, resulting in a reduction of the Company's provision for taxes on earnings.

Joint Ventures, VIEs and Other Investments

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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 $ 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.

For the consolidated VIEs, the carrying value of assets and liabilities was $ 358.2 million and $ 218.4 million, respectively, as of December 30, 2022 and $ 353.9 million and $ 228.1 million, respectively, as of September 30, 2022.

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.

The remaining 35 % interest was acquired by PA Consulting employees.

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

GAAP accounting rules.

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

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

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

For the proportionate consolidated VIEs, the carrying value of assets and liabilities was $ 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.

JACOBS SOLUTIONS INC.

AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (CONTINUED)

For the proportionate consolidated VIEs, the carrying value of assets and liabilities was $ 118.7 million and $ 139.2 million, respectively, as of December 30, 2022, and $ 109.3 million and $ 129.2 million, respectively, as of September 30, 2022.

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:

Miscellaneous on the balance sheet and the Company’s pro rata share of net income is included in revenue.

Miscellaneous on the balance sheet and the Company’s pro rata share of net income is included in Revenues.

In limited cases, there are basis differences between the equity in the joint venture and the Company's investment created when the Company purchased its share of the joint venture.

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

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 contract in 2021.

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.

("C3") and in the first quarter of fiscal 2021, C3 completed an initial public offering and as a result the Company carried its investment in C3 at fair value, with changes reflected in net income as it is an investment in equity securities with a readily determinable fair value based on quoted market prices.

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 $ 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.

AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (CONTINUED)

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

As of December 30, 2022, the Company does not have any equity method investments that exceed its share of venture net assets.

Our investments in equity method joint ventures on the Consolidated Balance Sheets as of December 30, 2022 and September 30, 2022 were $ 55.9 million and $ 56.6 million, respectively.

During the three months ended December 30, 2022 and December 31, 2021, we recognized income from equity method joint ventures of $ 10.0 million and $ 6.8 million, respectively.

Accounts receivable from unconsolidated joint ventures accounted for under the equity method was $ 23.1 million and $ 21.1 million as of December 30, 2022 and September 30, 2022, respectively.

At December 30, 2022 and September 30, 2022, long-term debt consisted of the following (principal amounts in thousands):

Interest Rate Maturity December 30, 2022 September 30, 2022

Revolving Credit Facility Benchmark + applicable margin (1) (2) March 2024 $ 1,610,794 $ 1,105,294

10 unchanged sentences

Total Long-term debt, net $ 3,434,318 $ 3,357,256

(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.

(1) During fiscal 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 July 1, 2022 and October 1, 2021 were approximately 2.62 % and 1.45 %.

The applicable LIBOR rates including applicable margins at December 30, 2022 and September 30, 2022 were approximately 5.76 % and 4.08 %.

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 July 1, 2022.

There were no amounts drawn in British pounds as of December 30, 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 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.

dollars at December 30, 2022 and September 30, 2022 was approximately 5.76 % and 4.06 %.

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 4.84 % and 3.60 % at December 30, 2022 and September 30, 2022, respectively.

(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 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.

dollars at December 30, 2022 and September 30, 2022 were approximately 5.76 % and 4.49 %.

Borrowings denominated in British pounds bear interest at an adjusted SONIA rate plus

JACOBS SOLUTIONS INC.

AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (CONTINUED)

a margin of between 0.875 % and 1.625 %, which was approximately 4.84 % and 3.60 % at December 30, 2022 and September 30, 2022, respectively.

(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.

(6) All amounts due under the Note Purchase Agreement pursuant to which the Senior Notes were issued were repaid in the first fiscal quarter of 2023.

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.

On March 12, 2018, the Company 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, “Senior Notes”).

In connection with the Holding Company Reorganization, which was completed in August 2022, the Company launched an offer to repurchase its outstanding Senior Notes at par plus accrued and unpaid interest, and without any make-whole premium.

In fiscal first quarter 2023, the Company repurchased $ 481 million of Senior Notes held by holders who accepted the offer with proceeds from the Revolving Credit Facility.

In December 2022, the Company repurchased the remaining $ 19 million of Senior Notes.

Revolving Credit Facility and Term Loans

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

1 unchanged sentence

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 July 1, 2022.

JACOBS ENGINEERING GROUP INC.

AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (CONTINUED)

We were in compliance with the covenants under the Revolving Credit Facility at December 30, 2022.

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

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

During fiscal 2020, the Company entered into interest rate and cross currency derivative contracts to swap a portion of our variable rate debt to fixed rate debt.

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

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

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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 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”).

The Note Purchase Agreement provides that if the Company's consolidated leverage ratio exceeds a certain amount, the interest on the Senior Notes may increase by 75 basis points.

The Senior Notes may be prepaid at any time subject to a make-whole premium.

The sale of the Senior Notes closed on May 15, 2018.

The Company used the net proceeds from the offering of Senior Notes to repay certain existing indebtedness and for other general corporate purposes.

The Note Purchase Agreement contains affirmative, negative and financial covenants customary for financings of this type, including, among other things, covenants to maintain a minimum consolidated net worth and maximum consolidated leverage ratio and limitations on certain other liens, mergers, dispositions and transactions with affiliates.

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

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

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.

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.

JACOBS SOLUTIONS INC.

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (CONTINUED)

In the fourth quarter of fiscal year 2022, the Revolving Credit Facility and Term Loan Facilities were amended to permit the Holding Company Reorganization.

We were in compliance with the covenants under the Term Loan Facilities at December 30, 2022.

On February 6, 2023, the Company refinanced its Revolving Credit Facility and Term Loan Facilities (the "Refinancing").

In connection with the Refinancing, the Revolving Credit Facility was amended and restated to, among other things:

(a) extend the maturity date to February 6, 2028, (b) replace and adjust interest rates based on market conditions and incorporate a sustainability-linked pricing adjustment, (c) increase the Consolidated Leverage Ratio financial covenant to 3.50 :1.00 (subject to temporary increases to 4.00 :1.00 following the closing of certain material acquisitions), (d) eliminate the net worth financial covenant, and (e) add Jacobs as a guarantor of the obligations of JEGI and its subsidiaries under the Revolving Credit Agreement.

The 2021 Term Loan Facility was amended and restated to, among other things:

(a) extend the maturity date of the U.S.

dollar term loan to February 6, 2026 and the British sterling term loan to September 1, 2025, (b) replace and adjust interest rates based on market conditions and incorporate a sustainability-linked pricing adjustment, (c) increase the Consolidated Leverage Ratio financial covenant to 3.50 :1.00 (subject to temporary increases to 4.00 :1.00 following the closing of certain material acquisitions), (d) eliminate the net worth financial covenant, and (e) add Jacobs as a guarantor of the obligations of JEGI under the 2021 Term Loan Facility.

Finally, the Company amended the 2020 Term Loan Facility to, among other things:

(a) replace and adjust interest rates based on market conditions and incorporate a sustainability-linked pricing adjustment, (b) increase the Consolidated Leverage Ratio financial covenant to 3.50 :1.00 (subject to temporary increases to 4.00 :1.00 following the closing of certain material acquisitions), (c) eliminate the net worth financial covenant, and (d) add Jacobs as a guarantor of the obligations of JEGI and Jacobs U.K.

Other arrangements

During fiscal 2022 the Company entered into two treasury locks to manage its interest rate exposure with the anticipated issuance of fixed rate debt before December 2023.

During fiscal 2020, the Company entered into interest rate and cross currency derivative contracts to swap a portion of our variable rate debt to fixed rate debt.

See Note 17- Commitments and Contingencies and Derivative Financial Instruments for discussion regarding the Company's derivative instruments.

The Company has issued $ 1.3 million in letters of credit under the Revolving Credit Facility, leaving $ 637.9 million of available borrowing capacity under the Revolving Credit Facility at December 30, 2022.

In addition, the Company had issued $ 291.2 million under separate, committed and uncommitted letter-of-credit facilities for total issued letters of credit of $ 292.5 million at December 30, 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.

1 unchanged sentence

The Company’s lease obligations are primarily for the use of office space and are primarily operating leases.

JACOBS ENGINEERING GROUP INC.

AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (CONTINUED)

Certain of the Company’s leases contain renewal, extension, or termination options.

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In addition to the present value of the future lease payments, the calculation of the ROU asset also includes any deferred rent, lease pre-payments and initial direct costs of obtaining the lease, such as commissions.

JACOBS SOLUTIONS INC.

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (CONTINUED)

Certain lease contracts contain nonlease components such as maintenance and utilities.

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

JACOBS ENGINEERING GROUP INC.

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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 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

The components of lease expense (reflected in selling, general and administrative expenses) for th e three months ended December 30, 2022 and December 31, 2021 were as follows (in thousands):

Three Months Ended

December 30, 2022 December 31, 2021

Lease expense

3 unchanged sentences

Total lease expense $ 40,222 $ 43,954

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

Nine Months Ended

Supplemental information related to the Company's leases for the three months ended December 30, 2022 and December 31, 2021 was as follows (in thousands):

Three Months Ended

December 30, 2022 December 31, 2021

Cash paid for amounts included in the measurements of lease liabilities $ 45,770 $ 65,430

Right-of-use assets obtained in exchange for new operating lease liabilities $ 29,801 $ 1,262

Weighted average remaining lease term - operating leases 6.5 Years

Weighted average remaining lease term - operating leases 6.2 years 7 Years

Weighted average discount rate - operating leases 3.0 % 2.7 %

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Right-of-Use and Other Long-Lived Asset Impairment

During fiscal 2022, as a result of the Company's transformation initiatives, including the changing nature of the Company's use of office space for its workforce, the Company evaluated its existing real estate lease portfolio.

These initiatives during the current fiscal year resulted in the abandonment of certain leased office spaces and the establishment of a formal plan to sublease certain other leased spaces that will no longer be utilized by the Company.

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 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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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (CONTINUED)

During fiscal 2023 and 2022, as a result of the Company's transformation initiatives, including the changing nature of the Company's use of office space for its workforce, the Company evaluated its existing real estate lease portfolio.

These initiatives resulted in the abandonment of certain leased office spaces and the establishment of a formal plan to sublease certain other leased spaces that will no longer be utilized by the Company.

As a result of the analysis, the Company recognized impairment losses during the first quarters of fiscal 2023 and 2022 of $ 27.1 million and $ 72.3 million, respectively, which is included in selling, general and administrative expenses in the accompanying statement of earnings.

The impairment losses recorded include $ 24.3 million and $ 54.9 million related to right-of-use lease assets and $ 2.8 million and $ 17.4 million related to other long-lived assets, including property, equipment and improvements and leasehold improvements for the fiscal 2023 and 2022 periods, respectively.

The fair values for the asset groups relating to the impaired long-lived assets were estimated primarily using discounted cash flow models (income approach) with Level 3 inputs.

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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 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

The following table presents the components of net periodic pension benefit recognized in earnings during the three months ended December 30, 2022 and December 31, 2021 (in thousands):

Three Months Ended

December 30, 2022 December 31, 2021

Service cost $ 1,748 $ 1,709

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Amortization of previously unrecognized items 1,304 3,092

Total net periodic pension benefit recognized $ ( 4,678 ) $ ( 7,875 ) $ ( 14,034 ) $ ( 23,627 )

Total net periodic pension benefit cost/(income) recognized $ 2,194 $ ( 4,678 )

The service cost component of net periodic pension benefit is presented in the same line item as other compensation costs (direct cost of contracts and selling, general and administrative expenses) and the other components of net periodic pension expense are presented in miscellaneous income (expense), net on the Consolidated Statements of Earnings.

The following table presents certain information regarding the Company’s cash contributions to our pension plans for fiscal 2023 (in thousands):

Cash contributions made during the first nine months of fiscal 2022

Cash contributions made during the first three months of fiscal 2023

Cash contributions projected for the remainder of fiscal 2023

Total $ 26,651

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PA Consulting Business Combination

Deal Summary, Opening Balance Sheet and Pro Forma Financial Information

Deal Summary and Opening Balance Sheet Financial Information

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

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

Further, in connection with the transaction, an estimated additional $ 261 million in investment proceeds had not yet been distributed at the investment date due to continuing employment requirements of associated management owners.

Approximately $ 267 million was recorded in the second quarter of fiscal 2021, with approximately $ 6 million of the estimated charges forfeited by employees that left the Company before payment and the net cash impact recorded in the third quarter of fiscal 2021.

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

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

No ne of the goodwill recognized was deductible for tax purposes.

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 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.

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

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (CONTINUED)

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

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

For the Nine Months Ended

Revenues $ 10,917.8

Net earnings (loss) of the Group $ 624.1

Net earnings attributable to Jacobs $ 503.2

Net earnings attributable to Jacobs per share:

Basic earnings per share $ 3.86

Diluted earnings per share $ 3.83

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

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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 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

During the first quarter of fiscal 2023 and 2022, PA Consulting repurchased certain shares of the redeemable noncontrolling interest holders for $ 58.4 million and $ 35.1 million, respectively, in cash.

Changes in the redeemable noncontrolling interests d uring the three months ended December 30, 2022 are as follows (in thousands):

Balance at September 30, 2022

Accrued Preferred Dividend to Preference Shareholders 16,290

Attribution of Preferred Dividend to Common Shareholders ( 16,290 )

Net income attributable to redeemable noncontrolling interests to Common Shareholders 27,246

Net earnings attributable to redeemable noncontrolling interests to Common Shareholders 3,992

Redeemable Noncontrolling interests redemption value adjustment 23,317

Repurchase of redeemable noncontrolling interests ( 69,690 )

Issuance of redeemable noncontrolling interests 54,884

Cumulative translation adjustment and other 37,768

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.

Employee Benefit Trust

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 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.

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Balance at December 30, 2022

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

During first quarter of fiscal 2023 and 2022, the Company recorded $ 4.3 million and $ 0.2 million, respectively, in expenses associated with these agreements which is reflected in selling, general and administrative expenses in the consolidated statements of earnings.

Restricted Cash

The Company, through its investment in PA Consulting, held $ 2.3 million and $ 13.7 million at December 30, 2022 and September 30, 2022, respectively, in cash that is restricted from general use and is included in prepaid expenses and other current assets on the Consolidated Balance Sheets.

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Net assets acquired $ 196.9

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

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

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

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

The Company has 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, data and customer relationships, contracts and backlog and have estimated lives of 5 , 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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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (CONTINUED)

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

On November 19, 2021, Jacobs acquired all outstanding shares of common stock of 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.

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Prepaid expenses and other current assets 3.2

Miscellaneous long term assets 12.9

Total Assets $ 263.7

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Net assets acquired $ 235.4

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

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

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

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

None of the goodwill recognized was deductible for tax purposes.

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

Since the initial preliminary estimates reported in the first quarter of fiscal 2022, the Company has updated certain amounts reflected in the preliminary purchase price allocation, as summarized in the fair values of BlackLynx'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 additional 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 11 years and 6 years, respectively.

Identifiable intangibles are technology and customer relationships, contracts and backlog and have estimated lives of 8 and 4 years, respectively.

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

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (CONTINUED)

Buffalo Group

The contingent consideration was subsequently recognized in fiscal 2021 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.

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

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

Cash and cash equivalents $ 8.4

Receivables 19.2

Property, equipment and improvements, net 2.3

Goodwill 130.7

Identifiable intangible assets 74.0

Prepaid expenses and other current assets 6.2

Total Assets $ 240.8

Accounts payable, accrued expenses and other current liabilities $ 46.9

Other long term liabilities 3.8

Total Liabilities

Net assets acquired $ 190.1

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

All of the goodwill recognized is expected to be deductible for tax purposes, given the acquisition was structured as an asset acquisition for tax purposes.

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

Since the initial preliminary estimates reported in the first quarter of fiscal 2021, the Company has updated certain amounts reflected in the final purchase price allocation, as summarized in the fair values of Buffalo Group's assets acquired and liabilities assumed as of the acquisition date set forth above.

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

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

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

On April 26, 2019, Jacobs completed the sale of its ECR business to Worley for a purchase price of $ 3.4 billion consisting of (i) $ 2.8 billion in cash plus (ii) 58.2 million ordinary shares of Worley, subject to adjustments for changes in working capital and certain other items (the “ECR sale”).

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

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

As such, the financial results of the ECR business are reflected in our unaudited Consolidated Statements of Earnings as discontinued operations for all periods presented.

As a result of the ECR sale, the Company recognized a pre-tax gain of approximately $ 1.1 billion, $ 935.1 million of which was recognized in fiscal 2019, $ 110.2 million in fiscal 2020 and $ 15.6 million for the year ended October 1, 2021.

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (CONTINUED)

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

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

Investment in Worley Stock

As discussed above, the Company held ordinary shares of Worley that it received in connection with the ECR sale.

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 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.

Restructuring and Other Charges

During fiscal 2022, the Company implemented certain restructuring and integration initiatives relating to the StreetLight and BlackLynx acquisitions, the activities of which are expected to be substantially completed before the end of fiscal 2023.

Also, during fiscal 2022, the Company implemented further real estate rescaling efforts that were associated with its fiscal 2020 transformation program relating to real estate and other staffing initiatives.

These initiatives are expected to continue into fiscal 2023.

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

Also, during fiscal 2022 and continuing into fiscal 2023, the Company implemented further real estate rescaling efforts that were associated with its fiscal 2020 transformation program relating to real estate and other staffing initiatives.

These initiatives are expected to continue through the remainder of fiscal 2023.

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

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.

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

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

Additionally, in fiscal 2020, the Company implemented certain restructuring and integration initiatives associated with the acquisition of John Wood Group's nuclear business.

The restructuring activities and related costs were comprised mainly of separation and lease abandonment and sublease programs, while the separation and integration activities and costs were mainly related to the engagement of consulting services and internal personnel and other related costs dedicated to the Company’s ECR-business separation and integration of KeyW and the John Wood Group’s nuclear business.

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

Additionally, in fiscal 2020, the Company implemented certain restructuring and

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (CONTINUED)

integration initiatives associated with the acquisition of John Wood Group's nuclear business.

The activities of these initiatives have been substantially completed.

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("CH2M") during fiscal 2018, the Company implemented certain restructuring plans that were comprised mainly of severance and lease abandonment programs as well as integration activities involving the engagement of professional services and internal personnel dedicated to the Company's integration management efforts.

These activities have continued through fiscal 2021 and are expected to be substantially completed before the end of fiscal 2022.

The activities of these initiatives have been substantially completed.

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 nine month periods ended July 1, 2022 and July 2, 2021 (in thousands):

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (CONTINUED)

Three Months Ended Nine Months Ended

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

The following table summarizes the impacts of the Restructuring and other charges by reportable segment in connection with the CH2M, KeyW, John Wood Group's nuclear business, Buffalo Group, StreetLight and BlackLynx acquisitions, the PA Consulting investment, the ECR sale and the Company's transformation initiatives relating to real estate and other staffing programs for the three months ended December 30, 2022 and December 31, 2021 (in thousands):

Three Months Ended

December 30, 2022 December 31, 2021

Critical Mission Solutions $ 2,212 $ 1,153

People & Places Solutions 27,317 61,169

Divergent Solutions 1,581 —

PA Consulting — 199

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$ 34,443 $ 69,359

(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 nine months ended July 1, 2022 is as follows (in thousands):

Balance at October 1, 2021

Net (Credits) Charges (1) 19,604

(1) Included in the three month periods ended December 30, 2022 and December 31, 2021 were $ 27.8 million and $ 71.0 million in charges associated mainly with real estate impairments and related charges, the majority of which related to People and Places Solutions.

(2) The three month periods ended December 30, 2022 and December 31, 2021 included gains of $ 0.6 million and $ 6.9 million related to lease terminations.

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (CONTINUED)

The activity in the Company’s accruals for Restructuring and other charges for the three months ended December 30, 2022 is as follows (in thousands):

Balance at September 30, 2022

Net Charges (Credits) (1) 6,685

Payments and other ( 3,178 )

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

Balance at December 30, 2022 $ 7,644

(1) Excludes $ 27.8 million associated mainly with real estate related impairments and other transformation activities described above during the three months ended December 30, 2022.

T he following table summarizes the Restructuring and other charges by major type of costs for the three months ended December 30, 2022 and December 31, 2021 (in thousands):

Three Months Ended

December 30, 2022 December 31, 2021

Lease Abandonments and Impairments $ 26,831 $ 65,542

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Total $ 34,443 $ 69,359

(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):

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (CONTINUED)

Cumulative amounts incurred to date under our various Restructuring and other activities described above by each major type of cost as of December 30, 2022 are as follows (in thousands):

Lease Abandonments and Impairments $ 414,432

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

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 .

dollar denominated interest rate swap agreements, the Company receives the one month LIBOR rate and pays monthly a fixed rate ranging from 0.704 % to 1.116 %.

For interest rate swaps denominated in British pounds, the Company receives a one month adjusted SONIA rate and pays a monthly fixed rate of 0.820 %.

Under the cross currency swap agreement, the Company receives the one month LIBOR rate plus 0.875 % in USD and pays monthly a Euro fixed rate of 0.726 % to 0.746 % for the term of the swaps.

During fiscal 2022, the Company entered into two treasury lock agreements with a total notional value of $ 500.0 million to manage its interest rate exposure to the anticipated issuance of fixed rate debt before December 2023.

The fair value of the treasury locks at December 30, 2022 and September 30, 2022 was $ 41.5 million and $ 40.9 million, respectively, all of which is included in current assets within receivables and contract assets on the consolidated balance sheets.

The unrealized net gain on these instruments was $ 31.3 million and $ 30.8 million, net of tax, and is included in accumulated other comprehensive income as of December 30, 2022 and September 30, 2022, respectively.

Upon issuance of up to $ 500 million of fixed rate debt, the gain (loss) will be amortized to interest expense over the term of the debt.

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 December 30, 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

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (CONTINUED)

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 .

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

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 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 $ 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 fair value of the interest rate and cross currency swaps at December 30, 2022 and September 30, 2022 was $ 108.0 million and $ 128.2 million, respectively, which 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 $ 80.2 million and $ 87.5 million, net of tax, and was included in accumulated other comprehensive inc ome as of December 30, 2022 and September 30, 2022, 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 $ 382.5 million at December 30, 2022 and $ 298.2 million at September 30, 2022 .

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

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 of the foreign exchange contracts at December 30, 2022 and September 30, 2022 w as $ 12.1 million and $( 3.2 ) million , respectively, which is included within receivables and contract assets for the current period and within accounts payable 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.

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.

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We have not experienced credit losses from our counterparties.

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Contractual Guarantees and Insurance

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

At 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.

At December 30, 2022 and September 30, 2022, the Company had issued and outsta nding approximately $ 292.5 million and $ 280.5 million, respectively, in LOCs and $ 2.0 billion and $ 2.2 billion, respectively, in surety bonds.

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

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Our Consolidated Balance Sheets include amounts representing our probable estimated liability relating to such claims, guarantees, litigation, audits, and investigations.

We perform an analysis to determine the level of reserves to establish for insurance-related claims that are known and have been asserted against us, as well as for insurance-related claims that are believed to have been incurred based on actuarial analysis but have not yet been reported to our claims administrators as of the respective balance sheet dates.

We perform an analysis to determine the level of reserves to

JACOBS SOLUTIONS INC.

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establish for insurance-related claims that are known and have been asserted against us, as well as for insurance-related claims that are believed to have been incurred based on actuarial analysis but have not yet been reported to our claims administrators as of the respective balance sheet dates.

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

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

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Litigation and Investigations

In 2012, CH2M HILL Australia PTY Limited, a subsidiary of CH2M, entered into a 50/50 integrated joint venture with Australian construction contractor UGL Infrastructure Pty Limited.

The joint venture entered into a Consortium Agreement with General Electric and GE Electrical International Inc.

The Consortium was awarded a subcontract by JKC Australia LNG Pty Limited ("JKC") for the engineering, procurement, construction and commissioning of a 360 MW Combined Cycle Power Plant for INPEX Operations Australia Pty Limited at Blaydin Point, Darwin, NT, Australia (the "Legacy CH2M Matter").

The subcontract was terminated in January 2017.

In or around August 2017, the Consortium commenced an arbitration.

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 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.

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

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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 and/or appeal.

The cases are at various stages of litigation and are currently stayed pending a ruling from the Tennessee Supreme Court.

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

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

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

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.

Segment Information

During the first quarter of fiscal 2023, the Company reorganized its operating and reporting structure to report results under a new operating segment, Divergent Solutions (DVS), in addition to the current operating segments.

The Company's four operating segments are now comprised of its two global lines of business ("LOBs"):

Critical Mission Solutions ("CMS") and People & Places Solutions ("P&PS"), its business unit Divergent Solutions ("DVS") and its majority investment in PA Consulting.

The formation of the DVS operating segment resulted in certain portions of our CMS and PPS businesses moving to the new segment to align with the Company's business strategy.

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

Under this organization, the sales function is managed by segment, and accordingly, the associated cost is embedded in the segments and reported to the respective head of each segment.

In addition, a portion of the costs of other support functions (e.g., finance, legal, human resources, and information technology) is allocated to each segment using methodologies which, we believe, effectively attribute the cost of these support functions to the revenue generating activities of the Company on a rational basis.

The cost of the Company’s cash incentive plan, the Leadership Performance Plan ("LPP"), formerly named the Management Incentive Plan, and the expense associated with the Jacobs 1999 Stock

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Segment Information

The Company's three operating segments are comprised of its two global lines of business ("LOBs"):

Critical Mission Solutions ("CMS") and People & Places Solutions ("P&PS") and its majority investment in PA Consulting.

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

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

Under this organization, the sales function is managed by LOB and PA Consulting, and accordingly, the associated cost is embedded in the segments and reported to the respective head of each segment.

In addition, a portion of the costs of other support functions (e.g., finance, legal, human resources, and information technology) is allocated to each LOB using methodologies which, we believe, effectively attribute the cost of these support functions to the revenue generating activities of the Company on a rational basis.

The cost of the Company’s cash incentive plan, the Leadership Performance Plan ("LPP"), formerly named the Management Incentive Plan, and the expense associated with the Jacobs Engineering Group Inc.

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

Incentive Plan, which was amended and restated in the second quarter of 2023 and is now referred to as the Jacobs 2023 Stock Incentive Plan (the "2023 SIP") have likewise been charged to the segments except for those amounts determined to relate to the business as a whole (which amounts remain in other corporate expenses).

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

The Company generally does not track assets by LOB, nor does it provide such information to the CODM.

The CODM evaluates the operating performance of our operating segments using segment operating profit, which is defined as margin less “corporate charges” (e.g., the allocated amounts described above).

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GAAP operating profit by including certain corporate-level expenses, Restructuring and other charges (as defined in Note 16- Restructuring and Other Charges ) and transaction and integration costs (in thousands).

For the Three Months Ended For the Nine Months Ended

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

For the Three Months Ended

December 30, 2022 December 31, 2021

Revenues from External Customers:

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People & Places Solutions 2,226,985 1,920,997

Divergent Solutions 214,465 192,877

PA Consulting 282,043 289,974

Total $ 3,798,668 $ 3,380,625

For the Three Months Ended For the Nine Months Ended

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

For the Three Months Ended

December 30, 2022 December 31, 2021

Segment Operating Profit:

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People & Places Solutions 226,619 188,841

Divergent Solutions 11,967 23,108

PA Consulting 51,027 63,071

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Earnings from Continuing Operations Before Taxes $ 197,481 $ 169,090

JACOBS ENGINEERING GROUP INC.

(1) Other corporate expenses included intangibles amortization of $ 49.8 million and $ 46.9 million for the three months ended December 30, 2022 and December 31, 2021, respectively.

Additionally, the three month period of fiscal 2023 included approximately $ 15.0 million in net favorable impacts from cost reductions compared to the prior year period, which was associated mainly with net favorable impacts during the current quarter from changes in employee benefit programs of $ 41 million offset by approximately $ 26 million in higher quarter over quarter spend in company technology platforms and other personnel and corporate cost increases.

(2) Included in the three months ended December 30, 2022 and December 31, 2021 are $ 27.1 million and $ 72.3 million, respectively, in real estate impairment charges related to the Company's transformation initiatives.

(3) The three months ended December 31, 2021 included a gain of $ 6.9 million related to a lease termination.

Additionally, the increase in net interest expense year over year is primarily due to the higher levels of debt outstanding due to the funding of the StreetLight and BlackLynx acquisitions in fiscal 2022 and increased borrowings associated with the payment of the Legacy CH2M Matter settlement also in the prior year, in addition to higher interest rates.

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(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