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Item 2. Management’s Discussion and Analysis

2024-05-07 compared with 2024-02-06 · 155 added, 136 removed, 226 unchanged (56% of the section changed)

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

The purpose of this Management’s Discussion and Analysis of Financial Condition and Results of Operations (“MD&A”) is to provide a narrative analysis explaining the reasons for material changes in the Company’s (i) financial condition from the most recent fiscal year-end to December 29, 2023 and (ii) results of operations during the current fiscal period(s) as compared to the corresponding period(s) of the preceding fiscal year.

The purpose of this Management’s Discussion and Analysis of Financial Condition and Results of Operations (“MD&A”) is to provide a narrative analysis explaining the reasons for material changes in the Company’s (i) financial condition from the most recent fiscal year-end to March 29, 2024 and (ii) results of operations during the current fiscal period(s) as compared to the corresponding period(s) of the preceding fiscal year.

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

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

Such factors include uncertainties as to the timing of the Separation Transaction, the impact of the Separation Transaction on Jacobs' and the combined company's businesses if the transaction is completed, including a possible impact on Jacobs' credit profile and a possible decrease in the trading price of Jacobs' and/or the combined company's shares, the possibility that the Separation Transaction, if completed, may not qualify for the expected tax treatment, the ability to obtain all required regulatory approvals, the possibility that closing conditions for the Separation Transaction may not be satisfied or waived, on a timely basis or otherwise, the risk that any consents or approvals required in connection with the Separation Transaction may not be received, the risk that the Separation Transaction may not be completed on the terms or in the time frame expected by the parties, uncertainties as to our and our stockholders' respective ownership percentages of the combined company and the value to be derived from the disposition of Jacobs’ stake in the combined company, unexpected costs, charges or expenses resulting from the Separation Transaction, business and management strategies and the growth expectations of the combined company, the inability of Jacobs' and the combined company to retain and hire key personnel, customers or suppliers while the Separation Transaction is pending or after it is completed, and the ability of the Company to eliminate all stranded costs, as well as other factors related to our business, such as our ability to fully execute on our three-year corporate strategy, including our ability to invest in the tools needed to implement our strategy, competition from existing and future competitors in our target markets, our ability to achieve the cost-savings and synergies contemplated by our recent acquisitions within the expected time frames or to achieve them fully and to successfully integrate acquired businesses while retaining key personnel, the impact of any pandemic, and any resulting economic downturn on our results, prospects and opportunities, measures or restrictions imposed by governments and health officials in response to the pandemic, the timing of the award of projects and funding and potential changes to the amounts provided for, under the Infrastructure Investment and Jobs Act, as well as other legislation related to governmental spending, any changes in U.S.

or foreign tax laws, statutes, rules, regulations or ordinances that may adversely impact our future financial positions or results of operations, financial market risks that may affect the Company, including by affecting the Company's access to capital, the cost of such capital and/or the Company's funding obligations under defined benefit pension and postretirement plans, as well as general economic conditions, including inflation and the actions taken by monetary authorities in response to inflation, changes in interest rates and foreign currency exchange rates, changes in capital markets, instability in the banking industry, or the impact of a possible recession or economic downturn on our results, prospects and opportunities, and geopolitical events and conflicts, among others.

The impact of such matters includes, but is not limited to, the possible reduction in demand for

certain of our product solutions and services and the delay or abandonment of ongoing or anticipated projects due to the financial condition of our clients and suppliers or to governmental budget constraints or changes to governmental budgetary priorities;

Such factors include uncertainties as to the timing of the Separation Transaction, the impact of the Separation Transaction on Jacobs' and the combined company's businesses if the transaction is completed, including a possible impact on Jacobs' credit profile and a possible decrease in the trading price of Jacobs' and/or the combined company's shares, the possibility that the Separation Transaction, if completed, may not qualify for the expected tax treatment, the ability to obtain all required regulatory approvals, the possibility that closing conditions for the Separation Transaction may not be satisfied or waived, on a timely basis or otherwise, the risk that any consents or approvals required in connection with the Separation Transaction may not be received, the risk that the Separation Transaction may not be completed on the terms or in the time frame expected by the parties, uncertainties as to our and our stockholders' respective ownership percentages of the combined company and the value to be derived from the disposition of Jacobs’ stake in the combined company, unexpected costs, charges or expenses resulting from the Separation Transaction, business and management strategies and the growth expectations of the combined company, the inability of Jacobs' and the combined company to retain and hire key personnel, customers or suppliers while the Separation Transaction is pending or after it is completed, and the ability of the Company to eliminate all stranded costs, as well as other factors related to our business, such as our ability to fully execute on our three-year corporate strategy, including our ability to invest in the tools needed to implement our strategy, competition from existing and future competitors in our target markets, our ability to achieve the cost-savings and synergies contemplated by our recent acquisitions within the expected time frames or to achieve them fully and to successfully integrate acquired businesses, the impact of acquisitions, strategic alliances, divestitures, and other strategic events resulting from evolving business strategies, including on the Company’s ability to maintain its culture and retain key personnel, the impact of any pandemic, and any resulting economic downturn on our results, prospects and opportunities, measures or restrictions imposed by governments and health officials in response to the pandemic, the timing of the award of projects and funding and potential changes to the amounts provided for, under the Infrastructure Investment and Jobs Act, as well as other legislation related to governmental spending, any changes in U.S.

prospects and opportunities, and geopolitical events and conflicts, among others.

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

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

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We’re now focused on broadening our leadership in high growth sectors aligned with long-term secular trends, such as infrastructure renewal and investment, and the global transition to more sustainable ways of living.

Our strategy is driven by our purpose and values and reflects our vision of becoming a company like no other.

Our strategy is driven by our purpose to create a more connected, sustainable world and our values.

An extensive evaluation of global trends, capabilities and markets to understand the largest opportunities, projected spend and growth rates identified three growth accelerators:

Climate Response, Consulting & Advisory and Data Solutions, which cut across our entire organization and markets creating connections among global market trends, the solutions we deliver and our company purpose.

Climate Response, Data Solutions, and Consulting & Advisory, which cut across our entire organization and key sectors creating connections among global market trends, our client solutions and our company purpose.

Our three growth accelerators are delivering significant value for our clients, positioning Jacobs for high-margin growth while advancing sustainability and social value in the communities where we serve.

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People & Places Solutions (P&PS)

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

In doing so, we combine deep experience in the following markets - Infrastructure, Cities & Places, Energy & Environmental, Health & Life Sciences and Advanced Manufacturing.

Our core capabilities revolve around consulting, planning, science, architecture, design and engineering, as well as infrastructure delivery services and long-term operation of facilities.

Solutions may be delivered as standalone professional service engagements, comprehensive program management partnerships, and selective progressive design-build and construction management at-risk delivery services in targeted markets.

Increasingly, we leverage our data science and technology-enabled expertise with our core capabilities to deliver positive and enduring solutions for the clients and communities we serve.

Our clients include national, state and local governments in the U.S., Europe, U.K., Middle East and Asia-Pacific, as well as multinational and local private sector clients throughout the world.

In doing so, we combine deep experience in the following end markets - Advanced Manufacturing, Cities & Places, Energy, Environment, Transportation and Water.

Our core skills revolve around consulting, planning, architecture, design, engineering, infrastructure delivery services including project, program and construction management and long-term operation of facilities.

Solutions are delivered as standalone professional service engagements, comprehensive program management partnerships, and selective progressive design-build and construction management at-risk delivery services.

Increasingly, we use data science and technology-enabled expertise to deliver positive and enduring outcomes for the clients and communities we serve .

Our clients include national, state and local governments in the U.S., Europe, U.K., Middle East, and Asia Pacific, and multinational and local private sector clients throughout the world.

Divergent Solutions (DVS)

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DVS further strengthens our ability to drive value for clients of both LOBs by leveraging a full spectrum of cyber, data analytics, systems and software application integration services across Jacobs.

Our core capabilities include global strategic alliances, innovation collaboration, next-generation technologies, software and data as a service and data and secure solutions.

Our core capabilities include global strategic alliances, innovation collaboration, next-generation technologies, software and data as a service, and data and secure solutions, all aligned to high-growth verticals of Water, Transportation, Advanced Manufacturing and National Security.

DVS clients include government agencies and commercial clients in the U.S.

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Jacobs invested in a 65% stake in PA Consulting, the company that is bringing ingenuity to life.

PA accelerates new growth ideas from concept, through design and development and to commercial success, and revitalizes organizations, building leadership, culture, systems and processes to make innovation a reality.

PA Consulting accelerates new growth ideas from concept, through design and development and to commercial success, and revitalizes organizations, building leadership, culture, systems and processes to make innovation a reality.

PA Consulting's global team of approximately 4,000, which includes strategists, innovators, designers, consultants, digital experts, scientists, engineers and technologists work across seven sectors:

consumer and manufacturing, defense and security, energy and utilities, financial services, government, health and life sciences, and transport to make a positive impact alongside the clients it supports.

PA has a diverse mix of private and public sector clients.

Private sector clients include global household names like Unilever and Pret A Manger;

and start-ups like PulPac, which is converting plant fibers into sustainable packaging, and Hydrow, with its award-winning indoor rowing machine.

Public sector clients include national and local government entities like the U.K.’s Ministry of Defence and National Health Service, the Swedish Payments Authority (Utbetalningsmyndigheten), and the U.K.’s Hampshire County Council.

In a fast-moving, complex world, we’re deploying the collective strengths of Jacobs and PA to create significant opportunities for our clients to adapt, innovate and transform.

PA Consulting has a diverse mix of private and public sector clients.

Private sector clients include global household names like Unilever, and start-ups like PulPac, which converts plant fibers into sustainable packaging to reduce single-use plastic.

From sustainable airports with Amsterdam Airport Schiphol and enhanced home security with ADT, to resilient banking with Bankomat, pioneering medtech with Hubly Surgical, and accelerating the energy transition with Invenergy and energyRe.

Public sector clients include the U.K.'s Ministry of Defence, Nuclear Decommissioning Authority, Norwegian Labour and Welfare Administration, and Danish Tax Agency.

In a fast-moving, complex world, we’re deploying the collective strengths of Jacobs and PA Consulting to create significant opportunities for our clients.

Alongside Copenhagen Metro – one of the most advanced public transport systems in Europe – we’re providing strategic management and technical services to support its operations and maintenance.

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Department for Transport to provide technical and commercial advice on its portfolio of rail and other transport mode agreements, major projects and programs, and its policy and strategic work in transport.

Results of Operations for the three months ended December 29, 2023 and December 30, 2022

Results of Operations for the three and six months ended March 29, 2024 and March 31, 2023

(in thousands, except per share information)

For the Three Months Ended

December 29, 2023 December 30, 2022

For the Three Months Ended For the Six Months Ended

March 29, 2024 March 31, 2023 March 29, 2024 March 31, 2023

Revenues $ 4,269,093 $ 4,078,332 $ 8,428,318 $ 7,877,001

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Interest expense (44,232) (40,613) (87,584) (80,690)

Miscellaneous expense (3,195) (3,254)

Miscellaneous expense, net (4,576) (4,567) (7,771) (7,820)

Total other expense, net (39,403) (37,550) (77,716) (77,873)

Earnings from Continuing Operations Before Taxes 241,585 252,313 407,336 449,795

Income Tax benefit (expense) from Continuing Operations 16,279 (50,103)

Income Tax expense from Continuing Operations (67,283) (19,060) (51,005) (69,163)

Net Earnings of the Group from Continuing Operations 174,302 233,253 356,331 380,632

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Diluted Earnings Per Share $ 1.28 $ 1.70 $ 2.65 $ 2.76

Overview – Three Months Ended December 29, 2023

Net earnings attributable to the Company from continuing operations for the first fiscal quarter ended December 29, 2023 were $172.2 million (or $1.37 per diluted share), an increase of $35.8 million, from net earnings of $136.4 million (or $1.07 per diluted share) for the corresponding period last year.

The current results reflected lower operating profit in the first fiscal quarter of 2024, which was impacted by $55.3 million in pre-tax Restructuring and other charges and transaction costs due primarily to expenses incurred relating to the Separation Transaction (mainly professional services and employee separation costs), compared to fiscal 2023 amounts of $39.7 million mainly associated with the Company's transformation initiatives relating to real estate, which are discussed in Note 16- Restructuring and Other Charges.

This is partially offset by the 2023 first fiscal quarter net favorable impact of approximately $15.0 million in overhead cost reductions associated mainly with one-time benefit program changes, which was offset in part by higher incentive and other compensation charges and higher investments in company technology platforms.

First quarter fiscal 2024 other expense, net, was $38.3 million, a decrease of $2.0 million versus first quarter fiscal 2023 amounts of $40.3 million, with the current period primarily impacted by favorable higher interest income, partly offset by unfavorable higher interest expense.

Further, our reported net earnings for the current year quarter were favorably impacted by a decrease in income taxes of $66.4 million compared to the fiscal 2023 period, attributable mainly to a deferred income tax benefit of $61.6 million in Australia.

Overview – Three and Six Month Periods Ended March 29, 2024

Net earnings attributable to the Company from continuing operations for the second fiscal quarter ended March 29, 2024 were $162.9 million (or $1.29 per diluted share), a decrease of $53.7 million, from net ear nings of $216.6 million (or $1.70 per diluted share) for the corresponding period last year.

C urrent quarter favorable underlying operating performance compared to the prior year period was more than offset mainly by $52.3 million in pre-tax Restructuring and other charges and transaction costs due primarily to expenses incurred relating to the Separation Transaction (mainly professional services and employee separation costs), co mpared to fiscal 2023 amounts of $19.1 million mainly associated with the Company's transformation initiatives relating to real estate, which are discussed in Note 16- Restructuring and Other Charges.

Further, our reported net earnings for the current year quarter were unfavorably impacted by an increase in income taxes of $48.2 million compared to the fiscal 2023 period, attributable mainly to a tax benefit in the prior year quarter of $40.2 million related to uncertain tax positions in the U.S.

that were effectively settled as discussed in Note 10 - Income Taxes .

For the six months ended March 29, 2024, net earnings attributable to the Company from continuing operations were $335.1 million (or $2.66 per diluted share), a decrease of $17.9 million , from net earnings of $352.9 million (or $2.77 per diluted share) for the corresponding period last year.

Current favorable underlying operating performance compared to the prior year period was more than offset by approximately $98.5 million in Restructuring and other charges and transactions costs activities relating to the Separation Transaction for the current fiscal year-to-date period, compared to fiscal 2023 amounts of $38.7 million associated with the Company's transformation initiatives relating to real estate, which are discussed in Note 16- Restructuring and Other Charges .

Further, the 2023 first fiscal quarter included a net favorable impact of approximately $15.0 million in overhead cost reductions associated mainly with one-time benefit program changes, which was offset in part by higher incentive and other compensation charges and higher investments in company technology platforms.

Our reported net earnings for the first half of fiscal 2024 were also favorably impacted by lower income taxes of $18.2 million compared to the fiscal 2023 period , due mainly to a deferred income tax benefit of $61.6 million related to Australia in the first quarter of fiscal 2024 and offset in part mainly by the uncertain tax positions in the U.S.

that were effectively settled in the prior year period as mentioned above , combined with other current quarter income tax items further discussed in Note 10 - Income Taxes.

Finally, earnings attributable to redeemable noncontrolling interests were $6.2 million lower for the six months ended March 29, 2024 due to lower net earnings results in our PA Consulting investment compared to the corresponding period last year.

Consolidated Results of Operations

Revenues for the first fiscal quarter of 2024 were $4.16 billion, an increase of $0.36 billion, or 9.5%, from $3.80 billion for the corresponding period last year.

Revenue increases for the year over year period were due mainly to the Company's P&PS business, as well as revenue increases seen across our other reporting segments.

The P&PS business benefited primarily from stronger performance in its Advanced Facilities, Federal & Environmental and Energy & Power operations.

Our CMS business benefited from increased volume in the nuclear remediation sector in the U.S.

and United Kingdom as well as strong performance in the space, defense, and energy markets.

Also, revenue was favorably impacted by foreign currency translation of $53.1 million for the three months ended December 29, 2023, across our international businesses, as compared to an unfavorable $158.5 million for the three months ended December 30, 2022.

Gross profit for the first fiscal quarter of 2024 was $850.5 million, an increase of $35.8 million, or 4.4%, from $814.7 million from the corresponding period last year, with gross profit margins of 20.4% and 21.4% for the respective periods.

Our absolute increase in gross profit was attributable mainly due to favorable benefits from recent new program startups won in the prior year, with slight margins impacts from year over year mix as well as personnel cost impacts.

R evenues for the second fiscal quarter of 2024 were $4.27 billion, an increase of $190.8 million, or 4.7%, from $4.08 billion for the corresponding period last year.

For the six months ended March 29, 2024, revenues were $8.43 billion, an increase of $551.3 million , or 7.0%, from $7.88 billion for the corresponding period last year.

Revenue increases for the quarterly year over year period were due mainly to the Company's P&PS business as well as increases seen in our CMS business.

For the six month periods higher revenue levels in P&PS as well as across all of our lines of businesses contributed to our favorable revenue results.

The P&PS business benefited primarily from stronger performance in its Advanced Facilities, Federal & Environmental and Energy & Power operations while our CMS business benefited from stronger performance in Energy, Security & Technology.

Our revenues were favorably impacted by foreign currency translation of $31.4 million and $82.3 for the three and six months ended March 29, 2024, respectively, across our international businesses, as compared to an unfavorable impact of $109.0 million and $267.0 million for the three and six months ended March 31, 2023, respectively.

Gross profit for the second fiscal quarter of 2024 was $904.6 million, an increase of $14.3 million, or 1.6%, from $890.3 million from the corresponding period last year, with gross profit margins of 21.2% and 21.8% for the respective periods.

Gross profit for the six months ended March 29, 2024 was $1.76 billion, an increase of $50.1 million, or 2.9%, from $1.71 billion from the corresponding period last year.

Our gross profit margins were 20.8% and 21.6% for the six months ended March 29, 2024 and March 31, 2023, respective ly.

The Company's increase in gross profit was mainly attributable to higher revenues as mentioned above, with slight margin impacts from year over year mix as well as personnel cost impacts primarily in the six month period.

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

SG&A expenses for the three months ended December 29, 2023 were $646.5 million, compared to $576.9 million for the corresponding period last year, representing an increase of $69.6 million or 12.1%.

Restructuring and other charges for the three months ended December 29, 2023 included $40.1 million in restructuring and other charges, primarily related to the Separation Transaction (mainly professional services and employee separation costs).

Additionally, the three months ended December 29, 2023 included an approximate $15 million pre-tax non-cash charge associated with an inventory write down and an approximate $10 million non-cash intangibles impairment.

The three months ended December 30, 2022 included $27.1 million in costs associated with the Company's transformation initiatives relating to real estate.

Lastly, SG&A expenses were impacted by unfavorable foreign currency translation of $9.3 million for the three months ended December 29, 2023 as compared to favorable impacts of $27.5 million for the corresponding period last year with the remainder associated with other miscellaneous separation and transaction professional services costs from the prior year.

Net interest expense for the three months ended December 29, 2023 was $35.1 million, a decrease of $2.0 million from $37.1 million, or 5.3%, for the corresponding period last year.

The decrease in net interest expense for the three month period was due primarily to higher interest rates in the current year compared to the prior year period, resulting in increases in interest income as well as interest expense.

The increase in interest expense is partly offset by lower overall levels of debt compared to the corresponding period last year.

Miscellaneous expense, net for the three months ended December 29, 2023 was $(3.2) million, in comparison to $(3.3) million for the corresponding period last year.

The unfavorable $0.1 million impacts compared to the prior three

month comparable period were due primarily to comparatively unfavorable foreign exchange gains and losses in the current year period.

The Company’s effective tax rates from continuing operations for the three months ended December 29, 2023 and December 30, 2022 were (9.8)% and 25.4%, respectively.

The most significant item 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-month period ended December 29, 2023 relates to a discrete event associated with the election to treat an Australian subsidiary as a corporation versus a partnership for U.S.

tax purposes.

The election resulted in the derecognition of a deferred tax liability, resulting in a discrete income tax benefit of $61.6 million as the Company asserts that a component of the investment will be indefinitely reinvested.

This benefit was partly offset by U.S.

SG&A expenses for the three and six months ended March 29, 2024 were $623.6 million and $1.27 billion respectively, compared to $600.4 million and $1.18 billion for the corresponding period last year, representing an

increase of $23.2 million and $92.8 million or 3.9% and 7.9%, respectively.

SG&A expenses for the three and six months ended March 29, 2024 were impacted by R estructuring and other charges of $47.4 million and $98.5 million respectively, primarily related to the Separation Transaction (mainly professional services and employee separation costs), in comparison to prior period Restructuring and other charges related to real estate related costs of $11.0 million and $38.7 million respectively.

These unfavorable items were offset in part by department spend decreas es compared to the prior year periods in connection with the Company's cost reduction programs.

Also, SG&A expenses were impacted by unfavorable foreign currency translation of $4.6 million and $13.9 million, respectively, for the three and six months March 29, 2024 as compared to favorable impacts of $23.1 million and $50.6 million for the corresponding periods last year.

Net interest expense for the three and six months ended March 29, 2024 was $34.8 million and $69.9 million respectively, an increase of $1.8 million and decrease of $0.1 million from $33.0 million and $70.1 million, or 5.6% and 0.2%, respectively, for the corresponding periods last year.

The increase in net interest expense for the three month period ended March 29, 2024 is due primarily to interest rates increasing throughout fiscal year 2023 and fiscal year 2024.

The increase in interest expense was offset in part by higher interest rates on cash held and by the Company's lower overall levels of outstanding debt compared to the corresponding periods last year.

Miscellaneous expense, net for the three and six months ended March 29, 2024 of $4.6 million and $7.8 million, respectively, remained flat in comparison to $4.6 million and $7.8 million for the corresponding periods last year.

The Company’s effective tax rates from continuing operations for the three months ended March 29, 2024 and March 31, 2023 were 27.9% and 7.6%, respectively.

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

federal corporate tax rate of 21% and the Company's effective tax rate for the three-month period ended March 29, 2024 were U.S.

state income tax expense of $4.0 million and U.S.

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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 December 30, 2022, were U.S.

For the three months ended March 31, 2023, the main differences were attributable to a tax benefit of $40.2 million related to uncertain tax positions (“UTPs”) in the U.S.

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.

state income tax expense of $5.9 million and U.S.

tax on foreign earnings of $4.6 million.

The Company's effective tax rates from continuing operations for the six months ended March 29, 2024 and March 31, 2023 were 12.6% and 15.4%, respectively.

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

federal corporate tax rate of 21% and the Company’s effective tax rate for the six-month period ended March 29, 2024 related to a discrete event associated with the election to treat an Australian subsidiary as a corporation versus a partnership for U.S.

tax purposes, with this election resulting in the derecognition of a deferred tax liability and yielding a discrete income tax benefit of $61.6 million as the Company asserts that a component of the investment will be indefinitely reinvested.

This benefit was partly offset by U.S.

state income tax expense of $7.3 million and U.S.

tax on foreign earnings of $8.6 million, which are expected to have a continuing impact on the Company's effective tax rate for the remainder of the fiscal year.

For the six months ended March 31, 2023, the main differences were associated with 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.

state income tax expense of $10.5 million and U.S.

tax on foreign earnings of $8.2 million.

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

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

Net earnings attributable to noncontrolling interests for the three and six months ended March 29, 2024 of $11.4 million and $21.3 million, respectively and $16.7 million and $27.7 million for the corresponding periods last year were lower primarily due to lower net earnings results in our PA Consulting investment compared to the prior year quarter.

Restructuring and Other Charges

During fiscal 2023, the Company implemented restructuring initiatives relating to the Separation Transaction.

The Company incurred approximately $19.8 million in fiscal 2023 and $10.6 million in the three months ended December 29, 2023, in pre-tax cash ch arges in connection with these initiatives.

These actions, which are expected to be substantially completed before the end of fiscal 2025, are expected to result in estimated gross annualized pre-tax cash savings of approximatel y $72 million to $88 million.

We will likely incur additional charges under this program through fiscal 2025, which are expected to result in additional savings in future periods.

The Company incurred approximately $19.8 million in fiscal 2023 and $19.7 million during the six months ended March 29, 2024, in pre-tax cash charges in connection with these initiatives.

W e will likely incur additional charges under this program through fiscal 2025, which are expected to result in additional savings in future periods.

During third quarter fiscal 2023, the Company approved a plan to improve business processes and cost structures of our PA Consulting investment by reorganizing senior management and reducing headcount.

In connection with these initiatives, which are expected to be substantially complete before the end of fiscal 2024, the Company incurred approximately $14.3 million during fiscal 2023 and $1.2 million in the three months ending December 29, 2023, in pre-tax cash charges.

These activities are expected to result in estim ated gross annualized pre-tax cash savings of approximately $40 million to $45 million.

In connection with these initiatives, which are expected to be substantially complete before the end of fiscal 2024, the Company incurred approximately $14.3 million during fiscal 2023 and $4.2 million in the six months ending March 29, 2024, in pre-tax cash charges.

These activities are expected to result in estimated gross annualized pre-tax cash savings of approximately $45 million to $60 million.

During fiscal 2023, the Company implemented restructuring and cost reduction initiatives relating to the formation of the reporting and operating segment, Divergent Solutions, which were substantially completed in fiscal 2023.

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

Three Months Ended

December 29, 2023 December 30, 2022

Three Months Ended Six Months Ended

March 29, 2024 March 31, 2023 March 29, 2024 March 31, 2023

Revenues from External Customers:

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Total $ 4,269,093 $ 4,078,332 $ 8,428,318 $ 7,877,001

Three Months Ended

December 29, 2023 December 30, 2022

Three Months Ended Six Months Ended

March 29, 2024 March 31, 2023 March 29, 2024 March 31, 2023

Segment Operating Profit:

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$ 241,585 $ 252,313 $ 407,336 $ 449,795

(1) Includes an approximate $15 million pre-tax non-cash charge associated with an inventory write down during the fiscal 2024 period comprised of adjustments of immaterial cumulative inventory misstatements previously reported which would not have been material to any prior period financial statements nor any amounts reported in the current period.

(2) Other corporate expenses included intangibles amortization of $51.1 million and $49.8 million for the three months ended December 29, 2023 and December 30, 2022, respectively, along with an approximate $10 million intangibles impairment charge in the three month ended December 29, 2023 period.

Additionally, the comparison of the three month period of fiscal 2024 to the corresponding 2023 period was unfavorably impacted by the one-time net favorable impacts of $41 million relating mainly to changes in employee benefits programs in the prior year, partly offset by year over year favorable department spending as well as favorable impacts of corporate functional overhead cost recovery by our lines of business.

(3) The three months ended December 29, 2023 included $40.1 million in restructuring and $11.0 million of transaction charges, mainly relating to the Separation Transaction (primarily professional services and employee separation costs).

Included in the three months ended December 30, 2022 were mainly $27.1 million in restructuring and other charges associated mainly with real estate impairments with the remainder associated with other miscellaneous separation and transaction professional services costs from the prior year.

(1) For the six months ended March 29, 2024, operating profit included an approximate $15 million pre-tax non-cash charge associated with an inventory write down during the fiscal 2024 period comprised of cumulative adjustments of immaterial inventory misstatements previously reported which would not have been material to any prior period financial statements nor to any amounts reported in the current period.

(2) Other corporate expenses included intangibles amortization of $52.6 million and $50.5 million for the three months ended March 29, 2024 and March 31, 2023, respectively, and $103.8 million and $100.2 million, for the six months ended March 29, 2024 and March 31, 2023, respectively, along with approximately $11.0 million intangibles impairment charge in the six month period ended, March 29, 2024 .

Additionally, the comparison of the six month period of fiscal 2024 to the corresponding 2023 period was unfavorably impacted by the one-time net favorable impact of $41 million relating mainly to changes in employee benefits programs in the prior year, partly offset by year over year favorable department spending as well as favorable impacts of corporate functional overhead cost recovery by our lines of business.

(3) The three months and six months ended March 29, 2024 included $38.9 million and $79.1 million, respectively, in restructuring and other charges and $8.4 million and $19.4 million, respectively, of transaction charges, mainly relating to the Separation Transaction (primarily professional services and employee separation costs).

Included in the three months and six months ended March 31, 2023 were $10.1 million and $37.2 million, respectively, mainly in real estate impairment charges related to the Company's transformation initiatives.

Critical Mission Solutions

Three Months Ended

December 29, 2023 December 30, 2022

Three Months Ended Six Months Ended

March 29, 2024 March 31, 2023 March 29, 2024 March 31, 2023

Revenue $ 1,229,226 $ 1,191,056 $ 2,357,829 $ 2,266,231

Operating Profit $ 103,649 $ 93,943 $ 197,056 $ 176,163

Critical Mission Solutions segment revenues for the three months ended December 29, 2023 were $1.13 billion, an increase of $0.05 billion, or 5.0%, from $1.08 billion for the corresponding period last year.

During the three months ended December 29, 2023, revenue benefited from increased volume in the nuclear remediation sector in the U.S.

and United Kingdom as well as strong performance in the space, defense, and energy markets.

Our fiscal first quarter 2024 exchange rates compared to our fiscal first quarter 2023 period rates contributed approximately $13.1 million in favorable impacts on revenues for the current period quarter.

In the corresponding prior year period, our fiscal first quarter 2023 exchange rates compared to the rates of our fiscal first quarter 2022 period contributed $33.1 million in unfavorable impacts on revenues.

Operating profit for the segment was $93.4 million, for the three months ended December 29, 2023, which was an increase of $11.2 million, or 13.6%, from $82.2 million for the quarter-to-date period compared to the prior year.

Operating profit level trends for the year-over-year quarterly period were favorably impacted by growth in the nuclear remediation market and strong performance in U.S.

government space market and international defense and energy markets.

Our fiscal first quarter 2024 exchange rates compared to our fiscal first quarter 2023 period rates contributed approximately $1.8 million in favorable impacts for the current period quarter.

In the corresponding prior year period, our fiscal first quarter 2023 exchange rates compared to the rates of our fiscal first quarter 2022 period contributed approximately $3.9 million in unfavorable impacts on operating profit.

Critical Mission Solutions segment revenues for the three and six months ended March 29, 2024 were $1.23 billion and $2.36 billion respectively, an increase of $38.2 million and $91.6 million, or 3.2% and 4.0%, from reported amounts of $1.19 billion and $2.27 billion for the corresponding periods last year.

During the three and six months ended March 29, 2024, revenue benefited from increased volume in the nuclear remediation and energy sectors in the United Kingdom as well as strong performance in the U.S.

space, defense, and energy markets.

Foreign currency translation had approximately $9.6 million and $22.6 million in favorable impacts on revenues for the three and six months ended March 29, 2024, respectively, compared to $25.5 million and $58.6 million in unfavorable impacts in the corresponding prior year periods.

Operating profit for the segment was $103.6 million and $197.1 million respectively, for the three and six months ended March 29, 2024, which was an increase of $9.7 million and $20.9 million, or 10.3% and 11.9%, from $93.9 million and $176.2 million compared to the corresponding periods in the prior year.

Operating profit level and margin trends for the year-over-year periods were favorably impacted by increased profitability in the United Kingdom and U.S.

nuclear remediation markets, and U.S.

commercial markets.

Foreign currency translation had approximately $1.3 million and $3.1 million in favorable impacts on operating profit for the three and six months ended March 29, 2024, as compared to $3.3 million and $7.2 million in unfavorable impacts in the corresponding prior year periods.

People & Places Solutions

Three Months Ended

December 29, 2023 December 30, 2022

Three Months Ended Six Months Ended

March 29, 2024 March 31, 2023 March 29, 2024 March 31, 2023

Revenue $ 2,521,860 $ 2,345,065 $ 4,992,301 $ 4,572,050

Operating Profit $ 267,765 $ 232,205 $ 492,763 $ 458,825

Revenues for the People & Places Solutions segment for the three months ended December 29, 2023 was $2.47 billion, an increase of $243.5 million, or 10.9%, from $2.23 billion for the corresponding period last year.

The increase in revenue for the three months ended December 29, 2023 was primarily driven by net revenue growth across all businesses as well as an increase in pass-through revenue within Advanced Facilities.

Our fiscal first quarter 2024 exchange rates compared to our fiscal first quarter 2023 period rates contributed $22.9 million in favorable impacts on revenues for the current period quarter.

In the corresponding prior year period, our fiscal first quarter 2023 exchange rates compared to the rates of our fiscal first quarter 2022 period contributed unfavorable impacts on revenues of $83.2 million.

Operating profit for the People & Places Solutions segment for the three month period ended December 29, 2023 was $225.0 million and approximately flat with the corresponding period last year, with higher year over year segment revenues mentioned above but with offsetting impacts from higher corporate cost allocations versus the prior year period.

Our fiscal first quarter 2024 exchange rates compared to our fiscal first quarter 2023 period rates contributed $4.2 million in favorable impacts on operating profit for the current period quarter.

Revenues for the People & Places Solutions segment for the three and six months ended March 29, 2024 was $2.52 billion and $4.99 billion respectively, an increase of $176.8 million and $420.3 million, or 7.5% and 9.2%, from reported amounts of $2.35 billion and $4.57 billion for the corresponding periods last year.

The increase in revenue for the three and six months ended March 29, 2024 was driven by net revenue growth across all sectors, specifically in water, life sciences and energy.

Foreign currency translation had approximately $8.9 million and $29.6 million in favorable impacts on revenues for the three and six months ended March 29, 2024, as compared to $51.2 million and $134.5 million in unfavorable impacts in the corresponding prior year periods.

Operating profit for the People & Places Solutions segment for the three and six month period ended March 29, 2024 was $267.8 million and $492.8 million respectively, an increase of $35.6 million and $33.9 million, or 15.3% and 7.4%, from $232.2 million and $458.8 million for the corresponding period last year.

The increase in the three and six month periods is a result of higher year over year segment revenues mentioned above with partially offsetting impacts from higher corporate cost allocations versus the prior year period.

Foreign currency translation had approximately $1.9 million and $5.4 million in favorable impacts on operating profit for the three and six months ended March 29, 2024, as compared to $9.5 million and $25.4 million in unfavorable impacts in the corresponding prior year periods.

Divergent Solutions

Three Months Ended

December 29, 2023 December 30, 2022

Three Months Ended Six Months Ended

March 29, 2024 March 31, 2023 March 29, 2024 March 31, 2023

Revenue $ 224,040 $ 241,224 $ 478,220 $ 455,690

Operating Profit $ 18,973 $ 24,861 $ 26,556 $ 36,828

Revenues for the Divergent Solutions segment for the three months ended December 29, 2023 were $254.2 million, an increase of $39.7 million, or 18.5%, from $214.5 million for the corresponding period last year.

The increase in revenue for the three months ended December 29, 2023 was mainly due to the startup of new programs previously won in fiscal 2023.

Revenues for the Divergent Solutions segment for the three and six months ended March 29, 2024 were $224.0 million and $478.2 million, respectively, a change of $(17.2) million and $22.5 million, or (7.1)% and 4.9%, from $241.2 million and $455.7 million for the corresponding periods last year.

The decrease in revenue for the three months ended March 29, 2024 was mainly due to a national government program ending.

The six month increase is due to a startup of new programs previously won in fiscal 2023.

Foreign currency translation did not have a material impact on revenue in our Divergent Solutions segment for either period presented.

Operating profit for the segment was $7.6 million, for the three months ended December 29, 2023, a decrease of $4.4 million, or 36.7%, from $12.0 million for the corresponding period last year.

Operating profit for the three month period reflected strong underlying performance in the Cyber & Intelligence business unit and the new programs previously won in fiscal 2023, although fully offset by an approximate one-time $15 million pre-tax non-cash charge associated with an inventory write down during the fiscal 2024 period as mentioned above.

Foreign currency translation had an immaterial impact on operating profit in our Divergent Solutions segment for either period presented.

Operating profit for the segment was $19.0 million and $26.6 million, for the three and six months ended March 29, 2024, respectively, a decrease of $5.9 million and $10.3 million, or 23.7% and 27.9%, from $24.9 million and $36.8 million for the corresponding periods last year.

The three month decrease is driven by higher software licensing revenue in the second quarter of fiscal 2023.

Operating profit for the six month period reflected strong underlying performance in the Cyber & Intelligence business unit and the new programs previously won in fiscal 2023, although fully offset by an approximate one-time $15 million pre-tax non-cash charge associated with an inventory write down during the fiscal 2024 period.

Foreign currency translation had an immaterial impact on operating profit in our Divergent Solutions segment for both periods presented.

PA Consulting

Three Months Ended

December 29, 2023 December 30, 2022

Three Months Ended Six Months Ended

March 29, 2024 March 31, 2023 March 29, 2024 March 31, 2023

Revenue $ 293,967 $ 300,987 $ 599,968 $ 583,030

Operating Profit $ 60,169 $ 65,631 $ 114,624 $ 116,658

Revenues for the PA Consulting segment for the three months ended December 29, 2023 were $306.0 million, an increase of $24.0 million, or 8.5%, from $282.0 million in the corresponding period last year, primarily due to growth in PA Consulting's Defence & Security, Public Sector, and Energy & Utilities businesses.

Our fiscal first quarter 2024 exchange rates compared to our fiscal first quarter 2023 period rates contributed favorable impacts of $16.7 million on revenues for the current period quarter.

Operating profit for the segment for the three months ended December 29, 2023 was $54.5 million, an increase of $3.4 million, or 6.7%, from $51.0 million in the corresponding period last year, slightly favorable versus the prior year period due mainly to impacts from the revenue growth mentioned above.

Revenues for the PA Consulting segment for the three and six months ended March 29, 2024 were $294.0 million and $600.0 million, respectively, a change of $(7.0) million and $16.9 million, or (2.3)% and 2.9%, from $301.0 million and $583.0 million in the corresponding periods last year.

The three and six month changes are primarily due to growth in PA Consulting's Defence & Security, Public Sector, Energy & Utilities, and Advanced Facilities businesses with stronger growth during the first fiscal quarter.

Foreign currency translation had approximately $12.4 million and $29.1 million in favorable impacts on revenues for the three and six months ended March 29, 2024, respectively, as compared to $30.7 million and $72.3 million in unfavorable impacts in the corresponding prior year periods.

Operating profit for the segment for the three and six months ended March 29, 2024 was $60.2 million and $114.6 million, respectively, a decrease of $5.5 million and $2.0 million, or 8.3% and 1.7%, from $65.6 million and $116.7 million in the corresponding periods last year, due mainly to impacts from changes in revenue noted above as well as impacts from timing of certain personnel related expenses incurred in connection with our cost management programs.

Other Corporate Expenses

Other corporate expenses for the three months ended December 29, 2023 were $121.1 million, an increase of $27.4 million, or 29.2%, from $93.7 million for the corresponding period last year.

The comparison of the three month period of fiscal 2024 to the corresponding 2023 period was unfavorably impacted by a one-time net favorable impact of $41 million relating mainly to changes in employee benefits programs in the prior year, partly offset by year over year favorable department spending as well as favorable impacts of corporate functional overhead cost recovery by our lines of business.

Additionally, the fiscal 2024 period reflects approximately $10 million in non-cash intangibles impairment charges.

Other corporate expenses for the three and six months ended March 29, 2024 were $117.3 million and $238.4 million, respectively, an increase of $9.7 million and $37.1 million, or 9.0% and 18.4%, from $107.6 million and $201.3 million for the corresponding periods last year.

The three month period of fiscal 2024 was impacted mainly by increases in expense associated with certain contingent equity-based agreements in connection with our PA Consulting investment.

The comparison of the six months period of fiscal 2024 to the corresponding 2023 period was further unfavorably impacted by a one-time net favorable impact of $41 million relating mainly to changes in employee benefits programs during first quarter 2023, partly offset by year over year favorable department spending as well as favorable impacts of

corporate functional overhead cost recovery by our lines of business.

Additionally, the fiscal 2024 year-to-date period reflects approximately $11 million in one-time non-cash intangibles impairment charges.

Included in other corporate expenses are costs and expenses which relate to general corporate activities as well as corporate-managed benefit and insurance programs.

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(ii) those elements of our incentive compensation plans relating to corporate personnel whose other compensation costs are not allocated to the LOBs;

(iii) the amortization of intangible assets

acquired as part of business combinations;

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

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

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Because certain contracts (e.g., contracts relating to large Engineering, Procurement & Construction ("EPC") projects as well as national government programs) can cause large increases to backlog in the fiscal period in which we recognize the award, and because many of our contracts require us to provide services that span over several fiscal quarters (and sometimes over fiscal years), we have presented our backlog on a year-over-year basis, rather than on a sequential, quarter-over-quarter basis.

The following table summarizes our backlog at December 29, 2023 and December 30, 2022 (in millions):

December 29, 2023 December 30, 2022

The following table summarizes our backlog at March 29, 2024 and March 31, 2023 (in millions):

March 29, 2024 March 31, 2023

Critical Mission Solutions $ 8,453 $ 8,136

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Total $ 29,408 $ 28,974

The increase in backlog in Critical Mission Solutions from December 30, 2022 was primarily driven by new business awards in the U.S.

government space sector along with growth in the U.K.

defense and nuclear remediation sectors that offset slower growth in the U.S.

Defense market.

Backlog in People & Places Solutions and Divergent Solutions remained relatively consistent year-over-year.

The increase in backlog in PA Consulting from December 30, 2022 was primarily driven by strategic focus on long-term projects as well as organic year-over-year growth of the business.

The increase in backlog in Critical Mission Solutions from March 31, 2023 was primarily driven by growth and increased funding levels in the United Kingdom and U.S.

nuclear remediation markets along with growth in the U.K.

defense sector that offset slower growth in the U.S.

Defense sector.

The increase in backlog in People & Places Solutions from March 31, 2023 was predominantly driven by growth in the Life Sciences and Energy markets.

The decrease in backlog in Divergent Solutions (DVS) from March 31, 2023 was primarily due to a major program ending prior than expected, as discussed above.

The increase in backlog in PA Consulting from March 31, 2023 was primarily driven by strategic focus on long-term projects as well as organic year-over-year growth of the business.

Consolidated backlog differs from the Company’s remaining performance obligations as defined by ASC 606 primarily because of contract change orders or new wins not yet processed and our national government contracts where our policy is to generally include in backlog the contract award, whether funded or unfunded excluding certain option periods while our remaining performance obligations represent a measure of the total dollar value of work to be performed on contracts awarded and in progress.

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Liquidity and Capital Resources

At December 29, 2023, our principal sources of liquidity consisted of $1.14 billion in cash and cash equivalents and $2.25 billion of available borrowing capacity under our $2.25 billion r evolving credit agreement (the "Revolving Credit Facility").

At March 29, 2024, our principal sources of liquidity consisted of $1.03 billion in cash and cash equivalents and $2.11 billion of available borrowing capacity under our $2.25 billion revolving credit agreement (the "Revolving Credit Facility").

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

Cash and cash equivalents at December 29, 2023 were $1.14 billion, representing an increase of $215.6 million from $926.6 million at September 29, 2023 , the reasons for which are described below.

Our net cash flow provided by operations of $418.4 million during the three months ended December 29, 2023 was favorable by $116.1 million in co mparison to the cash flow provided by operations of $302.3 million for the corresponding prior year period.

The year-over-year increase in cash from operations is primarily attributable to an improvement in working capital performance, partly offset by lower earnings after adjustments for non-cash items year-over-year.

Our net cash used for investing activities for the three months ended December 29, 2023 wa s $16.0 million , compared to cash used for investing activities of $48.7 million in the corresponding prior year period, with this change due primarily to no acquisitions in the current year, compared to PA Consulting's acquisition of The Cambridge Group in the corresponding prior period, and fewer additions to plant, property and equipment in the current year.

Our net cash used for financing activities of $208.7 million for the three months ended December 29, 2023 is driven by share repurchases of $100.0 million, $33.6 million in net repayments of borrowings, $33.4 million in dividends to shareholders, and $24.4 million in net PA Consulting related redeemable noncontrolling interests purchase and issuance activity.

Cash used by financing activities in the corresponding prior year period was $246.1 million, due primarily to share repurchases of $140.5 million, $58.4 million in net PA Consulting related redeemable noncontrolling interests purchase and issuance activity, $29.8 million in dividends to shareholders, and net repayments from borrowings of $7.4 million.

At December 29, 2023, the Company had approximately $259.4 million in cash and cash equivalents held in the U.S.

Cash and cash equivalents at March 29, 2024 were $1.03 billion, representing an increase of $106.9 million from $926.6 million at September 29, 2023, the reasons for which are described below.

Our net cash flow provided by operations of $375.5 million during the six months ended March 29, 2024 was unfavorable by $58.8 million in comparison to the cash flow provided by operations of $434.3 million for the corresponding prior year period.

The year-over-year decrease in cash from operations is due mainly to higher cash used for income tax payments and increases in accounts receivable, partly offset by higher cash generated from net earnings.

Our net cash used for investing activities for the six months ended March 29, 2024 was $57.3 million, compared to cash used for investing activities of $76.7 million in the corresponding prior year period, with this change due primarily to lower levels of additions to plant, property and equipment in the current year.

Our net cash used for financing activities of $230.8 million for the six months ended March 29, 2024 is driven by share repurchases of $195.5 million, $70.1 million in dividends to shareholders, and $24.4 million in net PA Consulting related redeemable noncontrolling interests purchase and issuance activity, partly offset by net proceeds from borrowings of $85.5 million.

Cash used for financing activities in the corresponding prior year period was $336.0 million, due primarily to share repurchases of $140.5 million, $62.8 million in dividends to shareholders, $58.4 million in net PA Consulting related redeemable noncontrolling interests purchase and issuance activity, and net repayments from borrowings of $53.8 million.

At March 29, 2024, the Company had approximately $250.1 million in cash and cash equivalents held in the U.S.

and $783.4 million held outside of the U.S.

(primarily in the U.K., the Eurozone, Australia, India, Canada, Saudi Arabia and the United Arab Emirates), which is used primarily for funding operations in those regions.

Other than the tax cost of repatriating funds to the U.S.

Other than the tax cost of

repatriating funds to the U.S.

(see Note 7- Income Taxes of Notes to Consolidated Financial Statements included in our 2023 Form 10-K), there are no material impediments to repatriating these funds to the U.S.

The Compan y had $311.5 million in letters of credit outstanding at December 29, 2023.

The Company had $289.7 million in letters of credit outstanding at March 29, 2024.

Of this amount, $0.5 million was issued under the Revolving Credit Facility and $289.2 million was issued under separate, committed and uncommitted letter-of-credit facilities.

Long-term debt as of March 29, 2024 decreased by $648.6 million compared to September 29, 2023 primarily due to the reclassification of $785.7 million from long-term to short-term in March 2024 in connection with the March 25, 2025 scheduled maturity of the 2020 Term Loan Facility.

Under the Separation Transaction, Jacobs and its shareholders will own up to 63% of the combined company's common stock upon consummation of the transaction, the exact amount of which will be determined based on the achievement of certain fiscal year 2024 operating profit targets.

Jacobs is also expected to receive $1 billion of cash proceeds at closing, subject to customary adjustments.

The Company expects to use this cash received at closing to repay outstanding indebtedness.

Jacobs is also expected to realize additional value after closing through the disposition of its retained equity stake in the combined company within 12 months.

The Company expects to use the cash received at closing to repay outstanding indebtedness.

On February 6, 2023, the Company refinanced its Revolving Credit Facility and Term Loan Facilities, and on February 16, 2023, the Company issued the 5.90% Bonds in the aggregate principal amount of $500.0 million.

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We believe we have adequate liquidity and capital resources to fund our projected cash requirements for the next twelve months based on the liquidity provided by our cash and cash equivalents on hand, our borrowing capacity and our continuing cash from operations.

We were in compliance with all of our debt covenants at December 29, 2023.

We were in compliance with all of our debt covenants at March 29, 2024.

Supplemental Obligor Group Financial Information

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This summarized financial information (in thousands) has been prepared and presented pursuant to Regulation S-X Rule 13-01, “Financial Disclosures about Guarantors and Issuers of Guaranteed Securities” and is not intended to present the financial position or results of operations of the Obligor Group in accordance with U.S.

Three Months Ended

(in thousands) December 29, 2023

Six Months Ended

(in thousands) March 29, 2024

Summarized Statement of Earnings Data

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Selling, General and Administrative Expenses $ 275,859

Net earnings attributable to Guarantor Subsidiaries from continuing operations $ (11,325)

Net loss attributable to Guarantor Subsidiaries from continuing operations $ (17,360)

Noncontrolling interests $ 1,126

(in thousands) December 29, 2023 September 29, 2023

(in thousands) March 29, 2024 September 29, 2023

Summarized Balance Sheet Data

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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 2. Management’s Discussion and Analysis