What changed in this filing

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Item 1. Financial Statements

2023-08-08 compared with 2023-05-09 · 204 added, 198 removed, 734 unchanged (35% of the section changed)

4 unchanged sentences

(In thousands, except share information)

March 31, 2023 September 30, 2022

June 30, 2023 September 30, 2022

Current Assets:

32 unchanged sentences

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

issued and outstanding - 126,805,092 shares and 127,393,378 shares as of March 31, 2023 and September 30, 2022, respectively

issued and outstanding - 125,880,738 shares and 127,393,378 shares as of June 30, 2023 and September 30, 2022, respectively

125,881 127,393

10 unchanged sentences

CONSOLIDATED STATEMENTS OF EARNINGS

Three and Six Months Ended March 31, 2023 and April 1, 2022

Three and Nine Months Ended June 30, 2023 and July 1, 2022

(In thousands, except per share information)

For the Three Months Ended For the Six Months Ended

March 31, 2023 April 1, 2022 March 31, 2023 April 1, 2022

For the Three Months Ended For the Nine Months Ended

June 30, 2023 July 1, 2022 June 30, 2023 July 1, 2022

Revenues $ 4,186,702 $ 3,827,093 $ 12,063,702 $ 11,041,777

7 unchanged sentences

Miscellaneous (expense) income, net ( 7,099 ) 31,440 ( 14,920 ) 51,802

Total other expense, net ( 37,550 ) ( 10,933 ) ( 77,873 ) ( 19,177 )

Total other (expense) income, net ( 43,056 ) 6,353 ( 120,930 ) ( 12,825 )

Earnings from Continuing Operations Before Taxes 226,685 272,115 676,478 596,485

1 unchanged sentence

Net Earnings of the Group from Continuing Operations 172,519 212,624 553,149 474,940

Net Loss of the Group from Discontinued Operations ( 75 ) ( 1 ) ( 783 ) ( 233 )

Net Earnings (Loss) of the Group from Discontinued Operations 294 ( 343 ) ( 489 ) ( 576 )

Net Earnings of the Group 172,813 212,281 552,660 474,364

14 unchanged sentences

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

Three and Six Months Ended March 31, 2023 and April 1, 2022

Three and Nine Months Ended June 30, 2023 and July 1, 2022

(In thousands)

For the Three Months Ended For the Six Months Ended

March 31, 2023 April 1, 2022 March 31, 2023 April 1, 2022

For the Three Months Ended For the Nine Months Ended

June 30, 2023 July 1, 2022 June 30, 2023 July 1, 2022

Net Earnings of the Group $ 172,813 $ 212,281 $ 552,660 $ 474,364

2 unchanged sentences

Change in cash flow hedges 15,644 9,440 ( 14,311 ) 64,786

Change in pension and retiree medical plan liabilities 6 12,036 ( 22,259 ) 20,075

Other comprehensive income before taxes 2,146 12,700 135,071 20,909

Change in pension plan liabilities ( 6,765 ) 28,584 ( 29,025 ) 48,659

Other comprehensive income (loss) before taxes 64,361 ( 149,817 ) 199,432 ( 128,908 )

Income Tax Benefit (Expense):

1 unchanged sentence

Cash flow hedges ( 3,637 ) ( 4,115 ) 4,680 ( 19,350 )

Change in pension and retiree medical plan liabilities ( 351 ) ( 728 ) ( 659 ) ( 2,196 )

Change in pension plan liabilities ( 363 ) ( 688 ) ( 1,022 ) ( 2,884 )

Income Tax Benefit (Expense):

9 unchanged sentences

CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY

For the Three Months Ended March 31, 2023 and April 1, 2022

For the Three Months Ended June 30, 2023 and July 1, 2022

(In thousands)

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

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

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

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

1 unchanged sentence

— — — ( 187,359 ) ( 187,359 ) — ( 187,359 )

Pension liability, net of deferred taxes of $ 728

Pension plan liability, net of deferred taxes of $ 688

— — — 27,896 27,896 — 27,896

3 unchanged sentences

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

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

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

2 unchanged sentences

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

Balances at April 1, 2022

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

Balances at March 31, 2023 $ 126,805 $ 2,697,523 $ 4,393,351 $ ( 838,042 ) $ 6,379,637 $ 48,387 $ 6,428,024

Net earnings — — 164,239 — 164,239 8,204 172,443

1 unchanged sentence

— — — 60,775 60,775 — 60,775

Pension liability, net of deferred taxes of $ 351

Pension plan liability, net of deferred taxes of $ 363

— — — ( 7,128 ) ( 7,128 ) — ( 7,128 )

3 unchanged sentences

Redeemable Noncontrolling interests redemption value adjustment — — 34,101 — 34,101 — 34,101

Repurchase and issuance of redeemable noncontrolling interests — — 3,599 — 3,599 — 3,599

Noncontrolling interests - distributions and other — — — — — ( 5,891 ) ( 5,891 )

1 unchanged sentence

Issuances of equity securities including shares withheld for taxes 164 12,493 ( 531 ) — 12,126 — 12,126

Balances at March 31, 2023 $ 126,805 $ 2,697,523 $ 4,393,351 $ ( 838,042 ) $ 6,379,637 $ 48,387 $ 6,428,024

Repurchases of equity securities ( 1,088 ) ( 23,145 ) ( 100,814 ) — ( 125,047 ) — ( 125,047 )

Balances at June 30, 2023 $ 125,881 $ 2,707,494 $ 4,460,729 $ ( 772,388 ) $ 6,521,716 $ 50,700 $ 6,572,416

See the accompanying Notes to Consolidated Financial Statements – Unaudited.

2 unchanged sentences

CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY

For the Six Months Ended March 31, 2023 and April 1, 2022

For the Nine Months Ended June 30, 2023 and July 1, 2022

(In thousands)

9 unchanged sentences

Dividends — — ( 59,473 ) — ( 59,473 ) — ( 59,473 )

Redeemable Noncontrolling interests redemption value adjustment to Common Shareholders — — ( 50,320 ) — ( 50,320 ) — ( 50,320 )

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

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

3 unchanged sentences

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

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

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

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

13 unchanged sentences

Repurchases of equity securities ( 2,326 ) ( 49,202 ) ( 214,041 ) — ( 265,569 ) — ( 265,569 )

Balances at March 31, 2023 $ 126,805 $ 2,697,523 $ 4,393,351 $ ( 838,042 ) $ 6,379,637 $ 48,387 $ 6,428,024

Balances at June 30, 2023 $ 125,881 $ 2,707,494 $ 4,460,729 $ ( 772,388 ) $ 6,521,716 $ 50,700 $ 6,572,416

See the accompanying Notes to Consolidated Financial Statements – Unaudited.

2 unchanged sentences

CONSOLIDATED STATEMENTS OF CASH FLOWS

For the Six Months Ended March 31, 2023 and April 1, 2022

For the Nine Months Ended June 30, 2023 and July 1, 2022

(In thousands)

For the Six Months Ended

March 31, 2023 April 1, 2022

For the Nine Months Ended

June 30, 2023 July 1, 2022

Cash Flows from Operating Activities:

4 unchanged sentences

Intangible assets 152,232 146,889

Gain on investment in equity securities — ( 13,862 )

Stock based compensation 55,908 41,705

Equity in earnings of operating ventures, net of return on capital distributions ( 2,963 ) 14,222

Loss on disposals of assets, net 828 421

Loss (gain) on disposals of assets, net 590 ( 4,762 )

Impairment of long-lived assets and equity method investment 38,131 74,585

14 unchanged sentences

Acquisitions of businesses, net of cash acquired ( 17,685 ) ( 437,083 )

Disposal of investment in equity securities — 13,862

Net cash used for investing activities ( 106,424 ) ( 491,232 )

2 unchanged sentences

Repayments of long-term borrowings ( 2,671,403 ) ( 1,707,490 )

Proceeds from short-term borrowings 3,353 —

Repayments of short-term borrowings — ( 6,359 )

6 unchanged sentences

Repurchase of redeemable noncontrolling interests ( 90,425 ) ( 46,074 )

Proceeds from issuances of redeemable noncontrolling interests 34,771 49,738

Net cash (used for) provided by financing activities ( 770,342 ) 461,828

Effect of Exchange Rate Changes 61,309 ( 79,919 )

Net Increase in Cash and Cash Equivalents and Restricted Cash 71,413 209,783

Net (Decrease) Increase in Cash and Cash Equivalents and Restricted Cash ( 60,057 ) 87,846

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

19 unchanged sentences

Readers of this Quarterly Report on Form 10-Q should also read our consolidated financial statements and the notes thereto included in our Annual Report on Form 10-K for the fiscal year ended September 30, 2022 (“2022 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 March 31, 2023, and for the three and six months ended March 31, 2023.

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 June 30, 2023, and for the three and nine months ended June 30, 2023.

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.

On May 9, 2023, the Company announced its intention to separate its Critical Mission Solutions ("CMS") business, resulting in two independent publicly traded companies.

Jacobs expects to complete the separation in fiscal 2024 through a distribution to Jacobs' stockholders that is intended to be tax-free to Jacobs’ stockholders for U.S.

federal income tax purposes.

There can be no assurances with respect to the timing or form of a separation transaction and completion remains subject to final approval by Jacobs’ Board of Directors and other customary conditions.

As of June 30, 2023, and the three and nine months then ended, Critical Mission Solutions continues to be presented in continuing operations.

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

9 unchanged sentences

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

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 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.

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

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

JACOBS SOLUTIONS INC.

1 unchanged sentence

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (CONTINUED)

with the consummation of the acquisition.

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.

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

22 unchanged sentences

Please also refer to Note 17- Commitments and Contingencies and Derivative Financial Instruments for discussion regarding the Company's derivative instruments.

JACOBS SOLUTIONS INC.

AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (CONTINUED)

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

2 unchanged sentences

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)

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.

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.

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.

7 unchanged sentences

operations and maintenance services;

and technical, digital, p rocess, scientific and systems consulting services.

and technical, digital, process, scientific and systems consulting services.

We provide our services through offices and subsidiaries located primarily in North America, Europe, the Middle East, India, Australia, Africa, and Asia.

2 unchanged sentences

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

The following table further disaggregates our revenue by geographic area for the three and six months ended March 31, 2023 and April 1, 2022 (in thousands):

Three Months Ended Six Months Ended

March 31, 2023 April 1, 2022 March 31, 2023 April 1, 2022

The following table further disaggregates our revenue by geographic area for the three and nine months ended June 30, 2023 and July 1, 2022 (in thousands):

Three Months Ended Nine Months Ended

June 30, 2023 July 1, 2022 June 30, 2023 July 1, 2022

United States $ 2,816,773 $ 2,577,892 $ 8,047,887 $ 7,226,189

8 unchanged sentences

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

Revenue recognized for the three and six months ended March 31, 2023 that was previously included in the contract liability balance on September 30, 2022 was $ 82.7 million and $ 413.0 million, respectively.

Revenue recognized for the three and six months ended April 1, 2022 that was included in the contract liability balance on October 1, 2021 was $ 79.6 million and $ 371.0 million, respectively.

Remaining Performance Obligation

The Company’s remaining performance obligations as of March 31, 2023 represent a measure of the total dollar value of work to be performed on contracts awarded and in progress.

The Company had approximately $ 16.7 billion in remaining performance obligations as of March 31, 2023.

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

Although remaining performance obligations reflect business that is considered to be firm, cancellations, scope adjustments 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.

Revenue recognized for the three and nine months ended June 30, 2023 that was previously included in the contract liability balance on September 30, 2022 was $ 65.1 million and $ 483.9 million, respectively.

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

JACOBS SOLUTIONS INC.

1 unchanged sentence

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (CONTINUED)

Remaining Performance Obligation

The Company’s remaining performance obligations as of June 30, 2023 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 June 30, 2023.

The Company expects to recognize approximately 51 % of its remaining performance obligations into revenue within the next twelve months and the remaining 49 % thereafter.

The majority of the remaining performance obligations after the first twelve months are expected to be recognized over a four year period.

Although our remaining performance obligations reflect business volumes that are considered to be firm, normal business activities including scope adjustments, deferrals or cancellations may occur that impact volume or expected timing of their recognition.

Earnings Per Share and Certain Related Information

3 unchanged sentences

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

The following table reconciles the denominator used to compute basic EPS to the denominator used to compute diluted EPS for the three and six months ended March 31, 2023 and April 1, 2022 (in thousands):

Three Months Ended Six Months Ended

March 31, 2023 April 1, 2022 March 31, 2023 April 1, 2022

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 June 30, 2023 and July 1, 2022 (in thousands):

JACOBS SOLUTIONS INC.

AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (CONTINUED)

Three Months Ended Nine Months Ended

June 30, 2023 July 1, 2022 June 30, 2023 July 1, 2022

Numerator for Basic and Diluted EPS:

Net earnings from continuing operations allocated to common stock for EPS calculation $ 163,945 $ 196,326 $ 516,886 $ 419,408

Net loss from discontinued operations allocated to common stock for EPS calculation $ ( 75 ) $ ( 1 ) $ ( 783 ) $ ( 233 )

Net earnings (loss) from discontinued operations allocated to common stock for EPS calculation $ 294 $ ( 343 ) $ ( 489 ) $ ( 576 )

Net earnings allocated to common stock for EPS calculation $ 164,239 $ 195,983 $ 516,397 $ 418,832

13 unchanged sentences

Share Repurchases

JACOBS SOLUTIONS INC.

AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (CONTINUED)

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").

2 unchanged sentences

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 common 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.

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

At June 30, 2023, the Company has $ 875.0 million remaining under the 2023 Repurchase Authorization.

The following table summarizes repurchase activity under the 2020 Repurchase Authorization during fiscal year 2023 through expiration during the second fiscal quarter of 2023:

JACOBS SOLUTIONS INC.

AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (CONTINUED)

Amount Authorized

2 unchanged sentences

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

The following table summarizes repurchase activity under the 2023 Repurchase Authorization from January 25, 2023 through the third fiscal quarter of 2023:

Amount Authorized

(2023 Repurchase Authorization) Average Price Per Share (1) Total Shares Retired Shares Repurchased

$ 1,000,000,000 $ 114.91 1,088,012 1,088,012

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

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

2 unchanged sentences

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

On April 27, 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 June 23, 2023, to shareholders of record on the close of business on May 26, 2023.

On July 6, 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 August 25, 2023, to shareholders of record on the close of business on July 28, 2023.

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

Dividends paid through the second fiscal quarter of 2023 and the preceding fiscal year are as follows:

Dividends paid through the third fiscal quarter of 2023 and the preceding fiscal year are as follows:

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

April 27, 2023 May 26, 2023 June 23, 2023 $ 0.26

January 25, 2023 February 24, 2023 March 24, 2023 $ 0.26

10 unchanged sentences

fair value basis.

The carrying value of goodwill appearing in the accompanying Consolidated Balance Sheets at March 31, 2023 and September 30, 2022 was as follows (in thousands):

The carrying value of goodwill appearing in the accompanying Consolidated Balance Sheets at June 30, 2023 and September 30, 2022 was as follows (in thousands):

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

3 unchanged sentences

Foreign currency translation and other ( 1,379 ) 20,421 20,148 178,015 217,205

Balance March 31, 2023 $ 2,247,279 $ 3,212,585 $ 596,320 $ 1,309,688 $ 7,365,872

The following table provides certain information related to the Company’s acquired intangibles in the accompanying Consolidated Balance Sheets at March 31, 2023 and September 30, 2022 (in thousands):

Balance June 30, 2023 $ 2,250,345 $ 3,217,079 $ 597,134 $ 1,350,000 $ 7,414,558

The following table provides certain information related to the Company’s acquired intangibles in the accompanying Consolidated Balance Sheets at June 30, 2023 and September 30, 2022 (in thousands):

Customer Relationships, Contracts and Backlog Developed Technology Trade Names Total

4 unchanged sentences

Foreign currency translation and other 83,415 1,785 23,529 108,729

Balances March 31, 2023 $ 1,157,758 $ 81,755 $ 140,366 $ 1,379,879

Balances June 30, 2023 $ 1,091,209 $ 78,996 $ 184,472 $ 1,354,677

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

6 unchanged sentences

Receivables and Contract Assets

The following table presents the components of receivables and contract assets appearing in the accompanying Consolidated Balance Sheets at March 31, 2023 and September 30, 2022, as well as certain other related information (in thousands):

March 31, 2023 September 30, 2022

The following table presents the components of receivables and contract assets appearing in the accompanying Consolidated Balance Sheets at June 30, 2023 and September 30, 2022, as well as certain other related information (in thousands):

June 30, 2023 September 30, 2022

Components of receivables and contract assets:

12 unchanged sentences

Accumulated Other Comprehensive Income

The following table presents the Company's roll forward of accumulated other comprehensive income (loss) after-tax as of March 31, 2023 (in thousands):

The following table presents the Company's roll forward of accumulated other comprehensive income (loss) after-tax as of June 30, 2023 (in thousands):

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

4 unchanged sentences

Reclassifications from accumulated other comprehensive income (loss) — — ( 20,618 ) ( 20,618 )

Balance at March 31, 2023

Balance at June 30, 2023

$ ( 337,442 ) $ ( 543,620 ) $ 108,674 $ ( 772,388 )

( 1) Included in the overall foreign currency translation adjustment for the six months ended March 31, 2023 and April 1, 2022 are $( 87.2 ) million and $ 38.3 million, respectively in unreali zed gains (losses) on long-term foreign currency denominated intercompany loans not anticipated to be settled in the foreseeable future.

(2) Included in the Company’s cumulative net unrealized gains from interest rate and cross currency swaps recorded in accumulated other comprehensive income as of March 31, 2023 were approximately $ 19.6 million in unrealized gains, net of taxes, which are expected to be realized in earnings during the twelve months subsequent to March 31, 2023.

( 1) Included in the overall foreign currency translation adjustment for the nine months ended June 30, 2023 and July 1, 2022 are $( 93.5 ) million and $ 90.5 million, respectively in unreali zed gains (losses) on long-term foreign currency denominated intercompany loans not anticipated to be settled in the foreseeable future.

(2) Included in the Company’s cumulative net unrealized gains from interest rate and cross currency swaps recorded in accumulated other comprehensive income as of June 30, 2023 were approximately $ 23.0 million in unrealized gains, net of taxes, which are expected to be realized in earnings during the twelve months subsequent to June 30, 2023.

JACOBS SOLUTIONS INC.

1 unchanged sentence

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (CONTINUED)

The Company’s effective tax rates from continuing operations for the three months ended March 31, 2023 and April 1, 2022 were 7.6 % and 29.7 %, 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 March 31, 2023 were a tax benefit of $ 40.2 million related to uncertain tax positions (“UTPs”) in the United States that were effectively settled, of which $ 30.8 million relates to positions carried forward from the acquisition of CH2M Hill Companies Ltd.

that was completed in 2018, as well as a tax benefit of $ 8.6 million for the release of previously valued foreign tax credits.

These benefits were partly offset by U.S.

The Company’s effective tax rates from continuing operations for the three months ended June 30, 2023 and July 1, 2022 were 23.9 % and 21.9 %, respectively.

For the three months ended June 30, 2023, the primary differences between the statutory U.S.

federal corporate tax rate of 21% and the Company’s effective tax rate were associated with U.S.

state income tax expense of $ 5.3 million and U.S.

tax on foreign earnings of $ 4.6 million.

These expense 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 April 1, 2022 were U.S.

state income tax expense of $ 5.8 million, discrete foreign tax items of $ 5.2 million, none of which are individually significant, and U.S tax on foreign earnings of $ 1.3 million.

The Company's effective tax rates from continuing operations for the six months ended March 31, 2023 and April 1, 2022 were 15.4 % and 19.1 %, 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 six months ended March 31, 2023 were net tax benefits of $ 39.0 million mostly related to UTPs mentioned above and a tax benefit of $ 8.6 million for the release of previously valued foreign tax credits, partly offset by U.S.

tax on foreign earnings of $ 5.4 million, partly offset by a $ 3.5 million tax benefit for the release of previously valued foreign tax credits.

For the three months ended July 1, 2022 the main differences were attributable to U.S.

state income tax expense of $ 8.4 million and U.S tax on foreign earnings of $ 5.3 million, partly offset by a $ 9.1 million tax benefit related to the reversal of a withholding tax accrual on certain intercompany loans.

The Company's effective tax rates from continuing operations for the nine months ended June 30, 2023 and July 1, 2022 were 18.2 % and 20.4 %, respectively.

The primary differences between the statutory U.S.

federal corporate tax rate of 21.0% and the Company’s effective tax rate for the nine months ended June 30, 2023 were related to net tax benefits of $ 39.4 million mostly related to uncertain tax positions in the U.S.

that were effectively settled, of which $ 30.8 million related to positions carried forward from the fiscal 2018 acquisition of CH2M Hill Companies Ltd., as well as a tax benefit of $ 12.1 million for the release of previously valued foreign tax credits.

These benefits were partly offset by U.S.

state income tax expense of $ 15.8 million and U.S.

tax on foreign earnings of $ 13.6 million.

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 six months ended April 1, 2022 were a net tax benefit of $ 12.6 million from the change in valuation allowances for previously valued foreign tax credits and India’s minimum alternate tax credit and a tax benefit of $ 4.9 million related to filing amended state returns, partly offset by U.S.

For the nine months ended July 1, 2022, the main differences were associated with tax benefits of $ 15.4 million for the release of previously valued foreign tax credits, $ 9.1 million related to the reversal of a withholding tax accrual on certain intercompany loans, and $ 4.9 million from filing amended state tax returns.

These benefits were partly offset by U.S.

state income tax expense of $ 17.4 million and U.S.

6 unchanged sentences

Joint Ventures, VIEs and Other Investments

For the Company's consolidated variable interest entities ("VIE") joint ventures, the carrying value of assets and liabilities was $ 362.6 million and $ 223.7 million, respectively, as of March 31, 2023 and $ 353.9 million and $ 228.1 million, respectively, as of September 30, 2022.

For the Company's consolidated variable interest entities ("VIE") joint ventures, the carrying value of assets and liabilities was $ 385.9 million and $ 245.5 million, respectively, as of June 30, 2023 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.

For the Company's proportionate consolidated VIEs, the carrying value of assets and liabilities was $ 123.5 million and $ 139.8 million, respectively, as of March 31, 2023, and $ 109.3 million and $ 129.2 million, respectively, as of September 30, 2022.

For the Company's proportionate consolidated VIEs, the carrying value of assets and liabilities was $ 133.2 million and $ 145.8 million, respectively, as of June 30, 2023, and $ 109.3 million and $ 129.2 million, respectively, as of September 30, 2022.

Our investments in equity method joint ventures on the Consolidated Balance Sheets (reported in Other Noncurrent Assets:

Miscellaneous) as of March 31, 2023 and September 30, 2022 were $ 54.3 million and $ 56.6 million, respectively.

Additionally, income from equity method joint ventures (reported in Revenue) was $ 7.5 million and $ 12.5 million, respectively, during the three months ended March 31, 2023 and April 1, 2022, with $ 17.5 million and $ 19.3 million, respectively, reporting in the corresponding six month periods.

As of March 31, 2023, the Company does not have any material equity method investments that exceed its share of venture net assets.

Miscellaneous) as of June 30, 2023 and September 30, 2022 were $ 51.7 million and $ 56.6 million, respectively.

Additionally, income from equity method joint ventures (reported in Revenue) was $ 7.6 million and $ 10.8 million, respectively, during the three months ended June 30, 2023 and July 1, 2022, with $ 25.1 million and $ 30.1 million, respectively, reporting in the corresponding nine month periods.

As of June 30, 2023, the Company's equity method investment carrying values do not include material amounts exceeding their share of the respective joint ventures' reported net assets.

Accounts receivable from unconsolidated joint ventures accounted for under the equity method was $ 17.8 million and $ 21.1 million as of June 30, 2023 and September 30, 2022, respectively.

JACOBS SOLUTIONS INC.

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (CONTINUED)

Accounts receivable from unconsolidated joint ventures accounted for under the equity method was $ 19.3 million and $ 21.1 million as of March 31, 2023 and September 30, 2022, respectively.

At March 31, 2023 and September 30, 2022, long-term debt consisted of the following (principal amounts in thousands):

Interest Rate Maturity March 31, 2023 September 30, 2022

At June 30, 2023 and September 30, 2022, long-term debt consisted of the following (principal amounts in thousands):

Interest Rate Maturity June 30, 2023 September 30, 2022

Revolving Credit Facility Benchmark + applicable margin (1) (2) February 2028 $ 806,147 $ 1,105,294

2021 Term Loan Facility - US Portion Benchmark + applicable margin (1) (3)

2021 Term Loan Facility - USD Portion Benchmark + applicable margin (1) (3)

February 2026 200,000 200,000

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dollar denominated borrowings under the Revolving Credit Facility bear interest at either a SOFR rate plus a margin of between 0.975 % and 1.725 % or a base rate plus a margin of between 0 % and 0.625 %.

The applicable SOFR rates, or LIBOR rate for the prior fiscal year end, including applicable margins at March 31, 2023 and September 30, 2022 were approximately 6.24 % and 4.08 %.

The applicable SOFR rates, or LIBOR rate for the prior fiscal year end, including applicable margins at June 30, 2023 and September 30, 2022 were approximately 6.49 % and 4.08 %.

Borrowings denominated in British pounds bear interest at an adjusted SONIA rate plus a margin of between 0.908 % and 1.658 %.

There were no amounts drawn in British pounds as of March 31, 2023.

There were no amounts drawn in British pounds as of June 30, 2023.

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

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The applicable SOFR, or LIBOR rate for the prior fiscal year end, including applicable margins for borrowings denominated in U.S.

dollars at March 31, 2023 and September 30, 2022 was approximately 6.23 % and 4.06 %.

Borrowings denominated in British pounds bear interest at an adjusted SONIA rate plus a margin of between 0.908 % and 1.658 %, which was approximately 5.58 % and 3.60 % at March 31, 2023 and September 30, 2022, respectively.

dollars at June 30, 2023 and September 30, 2022 was approximately 6.50 % and 4.06 %.

Borrowings denominated in British pounds bear interest at an adjusted SONIA rate plus a margin of between 0.908 % and 1.658 %, which was approximately 6.21 % and 3.60 % at June 30, 2023 and September 30, 2022, respectively.

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

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The applicable SOFR, or LIBOR rate for the prior fiscal year end, including applicable margins for borrowings denominated in U.S.

dollars at March 31, 2023 and September 30, 2022 were approximately 6.28 % and 4.49 %.

(5) From and including September 1, 2028 (the “First Step Up Date”), the interest rate payable on the Bonds (as defined below) will be increased by an additional 12.5 basis points to 6.025 % per annum (the “First Step Up Interest Rate”) unless the Company notifies the Trustee (as defined below) on or before the date that is 15 days prior to the First Step Up Date that the Percentage of Gender Diversity Performance Target (as defined in the First Supplemental Indenture (as defined below)) has been satisfied and receives a

dollars at June 30, 2023 and September 30, 2022 were approximately 6.45 % and 4.49 %.

From and including September 1, 2030 (the “Second Step Up Date”) the interest rate payable on the Bonds will be increased by 12.5 basis points to (x) 6.150 % per annum if the First Step Up Interest Rate was in effect immediately prior to the Second Step Up Date or (y) 6.025 % per annum if the initial interest rate was in effect immediately prior to the Second Step Up Date, unless the Company notifies the Trustee on or before the date that is 15 days prior to the Second

JACOBS SOLUTIONS INC.

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (CONTINUED)

related assurance letter verifying such compliance.

Step Up Date that the GHG Emissions Performance Target (as defined in the First Supplemental Indenture) has been satisfied and receives a related assurance letter verifying such compliance.

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

(7) 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.

(7) The current portion of long-term debt is comprised primarily of the 2020 Term Loan quarterly principal repayments of 1.25 %, or $ 9.125 million and £ 3.125 million, of the aggregate initial principal amount borrowed.

Revolving Credit Facility and Term Loans

24 unchanged sentences

(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.

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

JACOBS SOLUTIONS INC.

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (CONTINUED)

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

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 Revolving Credit Facility and Term Loan Facilities at March 31, 2023.

We were in compliance with the covenants under the Revolving Credit Facility and Term Loan Facilities at June 30, 2023.

Bonds, Sustainability-Linked

14 unchanged sentences

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

The fair value of the Bonds is estimated to be $ 497.1 million at March 31, 2023, based on Level 2 inputs.

The fair value of the Bonds is estimated to be $ 488.9 million at June 30, 2023, based on Level 2 inputs.

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

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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 $ 1.17 billion of available borrowing capacity under the Revolving Credit Facility at March 31, 2023.

In addition, the Company had issued $ 321.1 million under separate, committed and uncommitted letter-of-credit facilities for total issued letters of credit of $ 322.4 million at March 31, 2023.

The components of lease expense (reflected in selling, general and administrative expenses) for th e three and six months ended March 31, 2023 and April 1, 2022 were as follows (in thousands):

Three Months Ended Six Months Ended

March 31, 2023 April 1, 2022 March 31, 2023 April 1, 2022

The Company has issued $ 0.9 million in letters of credit under the Revolving Credit Facility, leaving $ 1.44 billion of available borrowing capacity under the Revolving Credit Facility at June 30, 2023.

In addition, the Company had issued $ 325.3 million under separate, committed and uncommitted letter-of-credit facilities for total issued letters of credit of $ 326.2 million at June 30, 2023.

The components of lease expense (reflected in selling, general and administrative expenses) for th e three and nine months ended June 30, 2023 and July 1, 2022 were as follows (in thousands):

Three Months Ended Nine Months Ended

June 30, 2023 July 1, 2022 June 30, 2023 July 1, 2022

Lease expense

3 unchanged sentences

Total lease expense $ 40,282 $ 41,423 $ 121,044 $ 127,523

Supplemental information related to the Company's leases for the six months ended March 31, 2023 and April 1, 2022 was as follows (in thousands):

Six Months Ended

March 31, 2023 April 1, 2022

Supplemental information related to the Company's leases for the nine months ended June 30, 2023 and July 1, 2022 was as follows (in thousands):

Nine Months Ended

June 30, 2023 July 1, 2022

Cash paid for amounts included in the measurements of lease liabilities $ 138,213 $ 173,639

14 unchanged sentences

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 impairment losses during the three and six months ended March 31, 2023 of $ 10.1 million and $ 37.2 million, respectively, compared to $ 2.3 million and $ 74.6 million from the corresponding periods last year, which are included in selling, general and administrative expenses in the accompanying statement of earnings.

The impairment losses recorded include $ 32.4 million and $ 56.6 million related to right-of-use lease assets and $ 4.8 million and $ 18.0 million related to other long-lived assets, including property, equipment and improvements and leasehold improvements for the fiscal 2023 and 2022 periods, respectively.

As a result of the analysis, the Company recognized impairment losses during the nine months ended June 30, 2023 of $ 38.1 million compared to $ 74.6 million for the corresponding period last year, which are included in selling, general and administrative expenses in the accompanying statement of earnings.

The impairment losses recorded include $ 33.1 million and $ 56.6 million related to right-of-use lease assets and $ 5.0 million and $ 18.0 million related to other long-lived assets, including property, equipment and improvements and leasehold improvements for the fiscal year-to-date 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 six months ended March 31, 2023 and April 1, 2022 (in thousands):

Three Months Ended Six Months Ended

March 31, 2023 April 1, 2022 March 31, 2023 April 1, 2022

The following table presents the components of net periodic pension benefit expense (income) recognized in earnings during the three and nine months ended June 30, 2023 and July 1, 2022 (in thousands):

Three Months Ended Nine Months Ended

June 30, 2023 July 1, 2022 June 30, 2023 July 1, 2022

Service cost $ 1,748 $ 1,709 $ 5,244 $ 5,127

2 unchanged sentences

Amortization of previously unrecognized items 1,304 3,092 3,912 9,276

Total net periodic pension benefit cost/(income) recognized $ 2,194 $ ( 4,678 ) $ 4,388 $ ( 9,356 )

Total net periodic pension benefit expense/(income) recognized $ 2,194 $ ( 4,678 ) $ 6,582 $ ( 14,034 )

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 six months of fiscal 2023

Cash contributions made during the first nine months of fiscal 2023

Cash contributions projected for the remainder of fiscal 2023

11 unchanged sentences

In connection with the PA Consulting investment, the Company recorded redeemable noncontrolling interests, including subsequent purchase accounting adjustments, representing the noncontrolling interest holders' equity interests in the form of preferred and common shares of PA Consulting, with substantially all of the value associated with these interests allocable to the preferred shares.

During the first half 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 six months ended March 31, 2023 are as follows (in thousands):

During the first nine months of 2023 and 2022, PA Consulting repurchased certain shares of the redeemable noncontrolling interest holders for $ 90.4 million and $ 46.1 million, respectively, and issued certain shares of redeemable noncontrolling interest holders for $ 34.8 million and $ 49.7 million, respectively.

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.

Changes in the redeemable noncontrolling interests d uring the nine months ended June 30, 2023 are as follows (in thousands):

Balance at September 30, 2022

4 unchanged sentences

Repurchase of redeemable noncontrolling interests ( 108,379 )

Issuance of redeemable noncontrolling interests 37,789

Cumulative translation adjustment and other 58,797

Balance at March 31, 2023

Balance at June 30, 2023

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 six months of fiscal 2023 and 2022, the Company recorded $ 1.1 million and $ 1.0 million, respectively, in expenses associated with these agreements which is reflected in selling, general and administrative expenses in the consolidated statements of earnings.

During first nine months of fiscal 2023 and 2022, the Company recorded $ 5.1 million and $ 1.6 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 March 31, 2023 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.

The Company, through its investment in PA Consulting, held $ 2.0 million and $ 13.7 million at June 30, 2023 and September 30, 2022, respectively, in cash that is restricted from general use and is included in Prepaid expenses and other on the Consolidated Balance Sheets.

JACOBS SOLUTIONS INC.

49 unchanged sentences

Restructuring and Other Charges

During fiscal 2023, the Company implemented certain initiatives relating to the CMS separation, the activities of which are expected to continue through fiscal 2024, and restructuring related to the DVS segment reorganization and our investment in PA Consulting, the activities of which are expected to continue through fiscal 2023.

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.

4 unchanged sentences

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

The restructuring activities

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

JACOBS SOLUTIONS INC.

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (CONTINUED)

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.

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.

The activities of these initiatives have been substantially completed.

3 unchanged sentences

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 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 and six months ended March 31, 2023 and April 1, 2022 (in thousands):

Three Months Ended Six Months Ended

March 31, 2023 April 1, 2022 March 31, 2023 April 1, 2022

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, the CMS separation, the DVS segment reorganization and the Company's transformation initiatives relating to real estate and other staffing programs for the three and nine months ended June 30, 2023 and July 1, 2022 (in thousands):

Three Months Ended Nine Months Ended

June 30, 2023 July 1, 2022 June 30, 2023 July 1, 2022

Critical Mission Solutions $ ( 1,128 ) $ ( 255 ) $ 2,136 $ 4,361

6 unchanged sentences

Operating profit (mainly SG&A) (1) $ 31,184 $ 4,707 $ 79,129 $ 192,782

Other (Income) Expense, net (2) ( 33 ) ( 2,007 ) ( 661 ) ( 10,551 )

Other Income, net (2) ( 272 ) ( 130 ) ( 933 ) ( 10,682 )

$ 30,912 $ 4,577 $ 78,196 $ 182,100

(1) Included in the three and six month periods ended March 31, 2023 were $ 11.0 million and $ 38.7 million, respectively, and the six month period in fiscal 2022 included approximately $ 71.0 million in charges associated mainly with real estate impairments and related charges, the majority of which related to People and Places Solutions.

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

(2) The six month periods ended March 31, 2023 and April 1, 2022 included gains of $ 0.7 million and $ 7.1 million, respectively, related to lease terminations.

(1) The three and nine months ended June 30, 2023 included $ 17.2 million in restructuring and other charges relating to the Company's investment in PA Consulting (primarily employee separation costs) and $ 13.4 million relating to the separation activities (mainly professional services) around the CMS separation.

Included in the nine month period ended June 30, 2023 and July 1, 2022 were approximately $ 40.0 million and $ 77.0 million, respectively, in charges associated mainly with real estate impairments and related charges.

Also 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 (defined below), net of previously recorded reserves and $ 24.5 million in transformation and other charges, the majority of which related to People and Places Solutions.

(2) The nine month periods ended June 30, 2023 and July 1, 2022 included gains of $ 0.9 million and $ 7.1 million, respectively, related to lease terminations.

JACOBS SOLUTIONS INC.

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (CONTINUED)

The activity in the Company’s accruals for Restructuring and other charges for the six months ended March 31, 2023 is as follows (in thousands):

The activity in the Company’s accruals for Restructuring and other charges for the nine months ended June 30, 2023 is as follows (in thousands):

Balance at September 30, 2022

1 unchanged sentence

Payments and other ( 17,127 )

Balance at March 31, 2023 $ 3,115

(1) Excludes $ 38.7 million associated mainly with real estate related impairments and other transformation activities described above during the six months ended March 31, 2023.

The following table summarizes the Restructuring and other charges by major type of costs for the three and six months ended March 31, 2023 and April 1, 2022 (in thousands):

Three Months Ended Six Months Ended

March 31, 2023 April 1, 2022 March 31, 2023 April 1, 2022

Balance at June 30, 2023 $ 26,098

(1) Excludes $ 39.1 million in charges associated mainly with real estate related impairments and other transformation activities described above during the nine months ended June 30, 2023.

The following table summarizes the Restructuring and other charges by major type of costs for the three and nine months ended June 30, 2023 and July 1, 2022 (in thousands):

Three Months Ended Nine Months Ended

June 30, 2023 July 1, 2022 June 30, 2023 July 1, 2022

Lease Abandonments and Impairments $ 803 $ ( 32 ) $ 38,076 $ 67,805

3 unchanged sentences

Total $ 30,912 $ 4,577 $ 78,196 $ 182,100

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

Cumulative amounts incurred to date under our various Restructuring and other activities described above by each major type of cost as of March 31, 2023 are as follows (in thousands):

(1) 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.

Cumulative amounts incurred to date under our various Restructuring and other activities described above by each major type of cost as of June 30, 2023 are as follows (in thousands):

Lease Abandonments and Impairments $ 425,678

11 unchanged sentences

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

The net gain on these instruments was $ 27.9 million and $ 30.8 million, net of tax, and is included in accumulated other comprehensive income as of March 31, 2023 and September 30, 2022, respectively.

The net gain on these instruments was $ 27.2 million and $ 30.8 million, net of tax, and is included in accumulated other comprehensive income as of June 30, 2023 and September 30, 2022, respectively.

JACOBS SOLUTIONS INC.

1 unchanged sentence

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (CONTINUED)

The Company is party to interest rate swap agreements and a cross-currency swap agreement with notional values of $ 771.7 million and $ 127.8 million, respectively, as of March 31, 2023 to manage the interest rate exposure on our variable rate loans and the foreign currency exposure on our USD borrowings by a European subsidiary.

The Company is party to interest rate swap agreements and a cross-currency swap agreement with notional values of $ 778.9 million and $ 127.8 million, respectively, as of June 30, 2023 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 .

2 unchanged sentences

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

The fair value of the interest rate and cross currency swaps at March 31, 2023 and September 30, 2022 was $ 91.3 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 $ 68.8 million and $ 87.5 million, net of tax, and was included in accumulated other comprehensive inc ome as of March 31, 2023 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 $ 720.9 million at March 31, 2023 and $ 298.2 million at September 30, 2022 .

The fair value of the interest rate and cross currency swaps at June 30, 2023 and September 30, 2022 was $ 107.4 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 $ 81.5 million and $ 87.5 million, net of tax, and was included in accumulated other comprehensive inc ome as of June 30, 2023 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 $ 829.3 million at June 30, 2023 and $ 298.2 million at September 30, 2022 .

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

The fair value of the foreign exchange contracts at March 31, 2023 and September 30, 2022 w as $ 20.4 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 of the foreign exchange contracts at June 30, 2023 and September 30, 2022 w as $ 15.9 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.

11 unchanged sentences

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

At March 31, 2023 and September 30, 2022, the Company had issued and outstanding approximately $ 322.4 million and $ 280.5 million, respectively, in LOCs and $ 2.0 billion and $ 2.2 billion, respectively, in surety bonds.

At June 30, 2023 and September 30, 2022, the Company had issued and outstanding approximately $ 326.2 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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3:13-CV-505-TAV-HBG, filed in the U.S.

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

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 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.

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

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

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

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

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

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

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

On November 16, 2021, the Roane County district attorney announced that it had concluded its investigation into issues pertaining to the Kingston coal ash spill cleanup.

No indictments were issued.

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

In the second fiscal quarter of 2023, the Company entered into a settlement agreement with the remaining plaintiffs;

the amount of the settlement is not material to the Company's business, financial condition, results of operations or cash flows.

JACOBS SOLUTIONS INC.

AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (CONTINUED)

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

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

In the second fiscal quarter of 2023, the Company entered into a settlement agreement with the plaintiffs whose cases had not been previously dismissed.

As of the third fiscal quarter of 2023, all conditions to the settlement have been satisfied, and the cases have been dismissed.

The amount of the settlement was not material to the Company's business, financial condition, results of operations or cash flows.

Segment Information

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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.

Under this organization, the sales function is managed by segment, and accordingly, the associated cost is embedded in the

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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.

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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 Six Months Ended

March 31, 2023 April 1, 2022 March 31, 2023 April 1, 2022

For the Three Months Ended For the Nine Months Ended

June 30, 2023 July 1, 2022 June 30, 2023 July 1, 2022

Revenues from External Customers:

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Total $ 4,186,702 $ 3,827,093 $ 12,063,702 $ 11,041,777

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For the Three Months Ended For the Six Months Ended

March 31, 2023 April 1, 2022 March 31, 2023 April 1, 2022

For the Three Months Ended For the Nine Months Ended

June 30, 2023 July 1, 2022 June 30, 2023 July 1, 2022

Segment Operating Profit:

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GAAP Operating Profit 269,741 265,762 797,408 609,310

Total Other Expense, net (3) ( 37,550 ) ( 10,933 ) ( 77,873 ) ( 19,177 )

Total Other (Expense) Income, net (3) ( 43,056 ) 6,353 ( 120,930 ) ( 12,825 )

Earnings from Continuing Operations Before Taxes $ 226,685 $ 272,115 $ 676,478 $ 596,485

(1) Other corporate expenses included intangibles amortization of $ 50.5 million and $ 48.4 million for the three months ended March 31, 2023 and April 1, 2022, respectively, and $ 100.2 million and $ 95.3 million, for the six months ended March 31, 2023 and April 1, 2022, respectively.

Additionally, the six 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 first quarter from changes in employee benefit programs of $ 41 million offset by approximately $ 26 million in higher spend in company technology platforms and other personnel and corporate cost increases.

(2) The three months ended March 31, 2023 and April 1, 2022 included real estate impairment charges related to the Company's transformation initiatives of $ 10.1 million and $ 2.3 million, respectively, and $ 37.2 million and $ 74.6 million for the six months ended March 31, 2023 and April 1, 2022, respectively.

Also included in the three and six months ended April 1, 2022 is $ 91.3 million related to the final pre-tax settlement of the Legacy CH2M Matter, net of previously recorded reserves.

(3) The six month period ended April 1, 2022 included $ 3.5 million in income associated with final exit activities associated with our AWE ML investment and a gain of $ 7.1 million related to a lease termination.

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(1) Other corporate expenses included intangibles amortization of $ 52.0 million and $ 51.6 million for the three months ended June 30, 2023 and July 1, 2022, respectively, and $ 152.2 million and $ 146.9 million, for the nine months ended June 30, 2023 and July 1, 2022, respectively.

Additionally, the nine 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 first quarter from changes in employee benefit programs of $ 41 million offset by approximately $ 26 million in higher spend in company technology platforms and other personnel and corporate cost increases.

(2) The three and nine months ended June 30, 2023 included $ 17.2 million in restructuring and other charges relating to the Company's investment in PA Consulting (primarily employee separation costs) and $ 13.4 million relating to the separation activities (mainly professional services) around the CMS separation, and the nine months ended June 30, 2023 and July 1, 2022 included $ 38.1 million and $ 74.6 million, respectively in real estate impairment charges relating to the Company's transformation initiatives.

Also included in the nine months ended July 1, 2022 is $ 91.3 million related to the final pre-tax settlement of the Legacy CH2M Matter, net of previously recorded reserves.

(3) The three and nine month periods 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 $ 3.5 million in income associated with final exit activities associated with our AWE ML investment and a gain of $ 7.1 million related to a lease termination.

Additionally, the unfavorable change in Other Expense, net for the periods presented are attributable mainly to higher net interest expense year over year, primarily due to higher interest rates as well as the full 2023 period impacts of increased levels of debt outstanding due to fiscal 2022 incremental borrowings associated with the funding of the StreetLight and BlackLynx acquisitions and the payment of the Legacy CH2M Matter settlement.

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

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Subsequent Event

On May 9, 2023, the Company announced its intention to spin-off its CMS business into an independent publicly traded company to Jacobs’ stockholders.

Jacobs expects to complete the separation by the end of fiscal year 2024 through a distribution that is intended to be tax-free to Jacobs’ shareholders for U.S.

federal income tax purposes.

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