UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

(Mark one)

☒ Quarterly Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934

For the quarterly period ended ~~January 1,~~December 31, 2021

☐ Transition Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934

For the transition period from to

Commission File Number 1-7463

JACOBS ENGINEERING GROUP INC.

(Exact name of registrant as specified in its charter)

Delaware

95-4081636

(State or other jurisdiction of incorporation or organization)

(I.R.S. Employer Identification Number)

1999 Bryan Street

Suite 1200

Dallas

Texas

75201

(Address of principal executive offices)

(Zip Code)

(214) 583 – 8500

(Registrant’s telephone number, including area code)

Securities registered pursuant to Section 12(b) of the Act:

_________________________________________________________________



Title of Each Class		Trading Symbol(s)	Name of Each Exchange on Which Registered
Common Stock	$1 par value	J	New York Stock Exchange

Indicate by check-mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the Registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days: ☒ Yes ☐ No

Indicate by check-mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). ☒ Yes ☐ No

Page 1

Indicate by check-mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

Large accelerated filer

☒

Accelerated filer

☐

Non-accelerated filer

☐

Smaller reporting company

☐

Emerging growth company

☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Indicate by check-mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). ☐ Yes ☒ No

Number of shares of common stock outstanding at January ~~29, 2021:~~ ~~130,086,161~~28 2022: 129,216,695

Page 2

JACOBS ENGINEERING GROUP INC.

INDEX TO FORM 10-Q


			Page No.
PART I	FINANCIAL INFORMATION

	Item 1.	Financial Statements	34

		Consolidated Balance Sheets - Unaudited	45

		Consolidated Statements of Earnings - Unaudited	56

		Consolidated Statements of Comprehensive Income - Unaudited	67

		Consolidated Statements of Stockholders’ Equity - Unaudited	78

		Consolidated Statements of Cash Flows - Unaudited	89

		Notes to Consolidated Financial Statements - Unaudited	910

	Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	3136

	Item 3.	Quantitative and Qualitative Disclosures About Market Risk	4647

	Item 4.	Controls and Procedures	4648

PART II	OTHER INFORMATION

	Item 1.	Legal Proceedings	4850

	Item 1A.	Risk Factors	4850

	Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	4850

	Item 3.	Defaults Upon Senior Securities	4950

	Item 4.	Mine Safety Disclosures	4950

	Item 5.	Other Information	4950

	Item 6.	Exhibits	5051

		SIGNATURES	5152

Page 23

Part I - FINANCIAL INFORMATION

Item 1. Financial Statements.

Page 34

JACOBS ENGINEERING GROUP INC. AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS

(In thousands, except share information)

~~(Unaudited)~~


							December 31, 2021		October 1, 2021
		January 1, 2021		October 2, 2020			(Unaudited)
ASSETS	ASSETS					ASSETS
Current Assets:	Current Assets:					Current Assets:
Cash and cash equivalents	Cash and cash equivalents	$	837,012	$	862,424	Cash and cash equivalents	$	1,245,024	$	1,014,249
Receivables and contract assets	Receivables and contract assets	3,265,260		3,167,310		Receivables and contract assets	2,992,814		3,101,418
Prepaid expenses and other	Prepaid expenses and other	144,224		162,355		Prepaid expenses and other	134,165		176,228
Investment in equity securities		540,357		347,510

Total current assets	Total current assets	4,786,853		4,539,599		Total current assets	4,372,003		4,291,895
Property, Equipment and Improvements, net	Property, Equipment and Improvements, net	318,042		319,371		Property, Equipment and Improvements, net	328,631		353,117
Other Noncurrent Assets:	Other Noncurrent Assets:					Other Noncurrent Assets:
Goodwill	Goodwill	5,808,484		5,639,091		Goodwill	7,350,494		7,197,000
Intangibles, net	Intangibles, net	715,641		658,340		Intangibles, net	1,618,913		1,565,758
Deferred income tax assets	Deferred income tax assets	158,491		211,047		Deferred income tax assets	102,416		103,193
Operating lease right-of-use assets	Operating lease right-of-use assets	582,985		576,915		Operating lease right-of-use assets	563,124		650,097
Miscellaneous	Miscellaneous	397,129		409,990		Miscellaneous	468,513		471,549
Total other noncurrent assets	Total other noncurrent assets	7,662,730		7,495,383		Total other noncurrent assets	10,103,460		9,987,597
		$	12,767,625	$	12,354,353		$	14,804,094	$	14,632,609
LIABILITIES AND STOCKHOLDERS’ EQUITY	LIABILITIES AND STOCKHOLDERS’ EQUITY					LIABILITIES AND STOCKHOLDERS’ EQUITY
Current Liabilities:	Current Liabilities:					Current Liabilities:
Short-term debt						Short-term debt	$	53,400	$	53,456
Accounts payable	Accounts payable	$	999,483	$	1,061,754	Accounts payable	816,815		908,441
Accrued liabilities	Accrued liabilities	1,193,818		1,249,883		Accrued liabilities	1,486,618		1,533,559
Operating lease liability	Operating lease liability	164,639		164,312		Operating lease liability	162,949		172,414
Contract liabilities	Contract liabilities	530,757		465,648		Contract liabilities	605,801		542,054
Total current liabilities	Total current liabilities	2,888,697		2,941,597		Total current liabilities	3,125,583		3,209,924
Long-term Debt	Long-term Debt	1,797,069		1,676,941		Long-term Debt	3,073,067		2,839,933
Liabilities relating to defined benefit pension and retirement plans	Liabilities relating to defined benefit pension and retirement plans	578,417		568,176		Liabilities relating to defined benefit pension and retirement plans	404,421		418,080
Deferred income tax liabilities	Deferred income tax liabilities	9,286		3,366		Deferred income tax liabilities	211,900		214,380
Long-term operating lease liability	Long-term operating lease liability	735,337		735,202		Long-term operating lease liability	706,288		758,358
Other deferred liabilities	Other deferred liabilities	615,452		573,404		Other deferred liabilities	545,226		559,375
Commitments and Contingencies	Commitments and Contingencies	0		0		Commitments and Contingencies	0		0
Redeemable Noncontrolling interests						Redeemable Noncontrolling interests	637,664		657,722
Stockholders’ Equity:	Stockholders’ Equity:					Stockholders’ Equity:
Capital stock:	Capital stock:					Capital stock:
Preferred stock, $1 par value, authorized - 1,000,000 shares; issued and outstanding - NaN		0		0
Common stock, $1 par value, authorized - 240,000,000 shares; issued and outstanding 130,035,258 shares and 129,747,783 shares as of January 1, 2021 and October 2, 2020, respectively		130,035		129,748
Preferred stock, $1 par value, authorized - 1,000,000 shares; issued and outstanding - none						Preferred stock, $1 par value, authorized - 1,000,000 shares; issued and outstanding - none	—		—
Common stock, $1 par value, authorized - 240,000,000 shares; issued and outstanding 129,153,184 shares and 128,892,540 shares as of December 31, 2021 and October 1, 2021, respectively						Common stock, $1 par value, authorized - 240,000,000 shares; issued and outstanding 129,153,184 shares and 128,892,540 shares as of December 31, 2021 and October 1, 2021, respectively	129,153		128,893
Additional paid-in capital	Additional paid-in capital	2,597,586		2,598,446		Additional paid-in capital	2,641,059		2,590,012
Retained earnings	Retained earnings	4,249,408		4,020,575		Retained earnings	4,087,390		4,015,578
Accumulated other comprehensive loss	Accumulated other comprehensive loss	(877,539)		(933,057)		Accumulated other comprehensive loss	(787,656)		(794,442)
Total Jacobs stockholders’ equity	Total Jacobs stockholders’ equity	6,099,490		5,815,712		Total Jacobs stockholders’ equity	6,069,946		5,940,041
Noncontrolling interests	Noncontrolling interests	43,877		39,955		Noncontrolling interests	29,999		34,796
Total Group stockholders’ equity	Total Group stockholders’ equity	6,143,367		5,855,667		Total Group stockholders’ equity	6,099,945		5,974,837
		$	12,767,625	$	12,354,353		$	14,804,094	$	14,632,609

See the accompanying Notes to Consolidated Financial Statements – ~~Unaudited.~~

~~Page 4~~

~~JACOBS ENGINEERING GROUP INC. AND SUBSIDIARIES~~

~~CONSOLIDATED STATEMENTS OF EARNINGS~~

~~Three Months EndedJanuary 1, 2021 and December 27, 2019~~

~~(In thousands, except per share information)~~

~~(Unaudited)~~

For the Three Months Ended
January 1, 2021 December 27, 2019
Revenues $ 3,381,836 $ 3,360,049
Direct cost of contracts (2,749,776) (2,715,478)
Gross profit 632,060 644,571
Selling, general and administrative expenses (418,120) (493,226)
Operating Profit 213,940 151,345
Other Income (Expense):
Interest income 1,124 946
Interest expense (17,313) (14,817)
Miscellaneous income (expense), net 156,360 116,695
Total other income (expense), net 140,171 102,824
Earnings from Continuing Operations Before Taxes 354,111 254,169
Income Tax Expense from Continuing Operations (87,023) (68,489)
Net Earnings of the Group from Continuing Operations 267,088 185,680
Net (Loss) Earnings of the Group from Discontinued Operations (14) 77,587
Net Earnings of the Group 267,074 263,267
Net Earnings Attributable to Noncontrolling Interests from Continuing Operations (10,026) (6,257)
Net Earnings Attributable to Jacobs from Continuing Operations 257,062 179,423
Net Earnings Attributable to Jacobs $ 257,048 $ 257,010
Net Earnings Per Share:
Basic Net Earnings from Continuing Operations Per Share $ 1.98 $ 1.35
Basic Net Earnings from Discontinued Operations Per Share $ 0 $ 0.58
Basic Earnings Per Share $ 1.98 $ 1.93
Diluted Net Earnings from Continuing Operations Per Share $ 1.96 $ 1.33
Diluted Net Earnings from Discontinued Operations Per Share $ 0 $ 0.58
Diluted Earnings Per Share $ 1.96 $ 1.91

~~See the accompanying Notes to Consolidated Financial Statements -~~ Unaudited.

Page 5

JACOBS ENGINEERING GROUP INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF ~~COMPREHENSIVE INCOME~~EARNINGS

Three Months Ended December 31, 2021 and January 1, 2021 ~~and December 27, 2019~~

(In ~~thousands)~~thousands, except per share information)

(Unaudited)

For the Three Months Ended
January 1, 2021 December 27, 2019
Net Earnings of the Group $ 267,074 $ 263,267
Other Comprehensive Income:
Foreign currency translation adjustment 86,338 52,297
Gain on cash flow hedges 3,583 18
Change in pension and retiree medical plan liabilities (19,353) (16,251)
Other comprehensive income before taxes 70,568 36,064
Income Tax (Expense) Benefit:
Foreign currency translation adjustment (14,445) 0
Cash flow hedges 221 0
Change in pension and retiree medical plan liabilities (826) 582
Income Tax (Expense) Benefit: (15,050) 582
Net other comprehensive income 55,518 36,646
Net Comprehensive Income of the Group 322,592 299,913
Net Earnings Attributable to Noncontrolling Interests (10,026) (6,257)
Net Comprehensive Income Attributable to Jacobs $ 312,566 $ 293,656


	For the Three Months Ended
	December 31, 2021		January 1, 2021
Revenues	$	3,380,625	$	3,381,836
Direct cost of contracts	(2,584,151)		(2,749,776)
Gross profit	796,474		632,060
Selling, general and administrative expenses	(619,141)		(418,120)
Operating Profit	177,333		213,940
Other Income (Expense):
Interest income	1,501		1,124
Interest expense	(19,426)		(17,313)
Miscellaneous income, net	9,682		156,360
Total other (expense) income, net	(8,243)		140,171
Earnings from Continuing Operations Before Taxes	169,090		354,111
Income Tax Expense from Continuing Operations	(15,889)		(87,023)
Net Earnings of the Group from Continuing Operations	153,201		267,088
Net Earnings of the Group from Discontinued Operations	(232)		(14)
Net Earnings of the Group	152,969		267,074
Net Earnings Attributable to Noncontrolling Interests from Continuing Operations	(9,252)		(10,026)
Net Earnings Attributable to Redeemable Noncontrolling interests	(9,683)		—
Net Earnings Attributable to Jacobs from Continuing Operations	134,266		257,062
Net Earnings Attributable to Jacobs	$	134,034	$	257,048
Net Earnings Per Share:
Basic Net Earnings from Continuing Operations Per Share	$	1.04	$	1.98
Basic Net Earnings from Discontinued Operations Per Share	$	—	$	—
Basic Earnings Per Share	$	1.04	$	1.98

Diluted Net Earnings from Continuing Operations Per Share	$	1.03	$	1.96
Diluted Net Earnings from Discontinued Operations Per Share	$	—	$	—
Diluted Earnings Per Share	$	1.03	$	1.96

See the accompanying Notes to Consolidated Financial Statements - Unaudited.

Page 6

JACOBS ENGINEERING GROUP INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

Three Months Ended December 31, 2021 and January 1, 2021

(In thousands)

(Unaudited)


	For the Three Months Ended
	December 31, 2021		January 1, 2021
Net Earnings of the Group	$	152,969	$	267,074
Other Comprehensive Income:
Foreign currency translation adjustment	(8,685)		86,338
Gain on cash flow hedges	8,855		3,583
Change in pension and retiree medical plan liabilities	8,039		(19,353)
Other comprehensive income before taxes	8,209		70,568
Income Tax Benefit (Expense):
Foreign currency translation adjustment	2,990		(14,445)
Cash flow hedges	(2,945)		221
Change in pension and retiree medical plan liabilities	(1,468)		(826)
Income Tax Expense:	(1,423)		(15,050)
Net other comprehensive income	6,786		55,518
Net Comprehensive Income of the Group	159,755		322,592
Net Earnings Attributable to Noncontrolling Interests	(9,252)		(10,026)
Net Earnings Attributable to Redeemable Noncontrolling interests	(9,683)		—
Net Comprehensive Income Attributable to Jacobs	$	140,820	$	312,566

See the accompanying Notes to Consolidated Financial Statements - Unaudited.

Page 7

JACOBS ENGINEERING GROUP INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY

For the Three Months Ended December 31, 2021 and January 1, 2021 ~~and December 27, 2019~~

(In thousands)

(Unaudited)

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 September 27, 2019 $ 132,879 $ 2,559,450 $ 3,939,174 $ (916,812) $ 5,714,691 $ 53,967 $ 5,768,658
Net earnings — — 257,010 — 257,010 6,257 263,267
Foreign currency translation adjustments — — — 52,297 52,297 — 52,297
Pension and retiree medical plan liability, net of deferred taxes of $582 — — — (15,669) (15,669) — (15,669)
Gain on derivatives, net of deferred taxes of $0 — — — 18 18 — 18
Dividends — — (68) — (68) — (68)
Noncontrolling interests - distributions and other — — — — — (2,478) (2,478)
Stock based compensation — 13,200 1,079 — 14,279 — 14,279
Issuances of equity securities including shares withheld for taxes 474 (10,115) (8,492) — (18,133) — (18,133)
Repurchases of equity securities (352) 43,230 (42,878) — — — 0
Balances at December 27, 2019 $ 133,001 $ 2,605,765 $ 4,145,825 $ (880,166) $ 6,004,425 $ 57,746 $ 6,062,171
Balances at October 2, 2020 $ 129,748 $ 2,598,446 $ 4,020,575 $ (933,057) $ 5,815,712 $ 39,955 $ 5,855,667
Net earnings — — 257,048 — 257,048 10,026 267,074
Foreign currency translation adjustments, net of deferred taxes of $14,445 — — — 71,893 71,893 — 71,893
Pension liability, net of deferred taxes of $826 — — — (20,179) (20,179) — (20,179)
Gain on derivatives, net of deferred taxes of $(221) — — — 3,804 3,804 — 3,804
Dividends — — (34) — (34) — (34)
Noncontrolling interests - distributions and other — — — — — (6,104) (6,104)
Stock based compensation — 11,841 — — 11,841 — 11,841
Issuances of equity securities including shares withheld for taxes 538 (7,674) (8,658) — (15,794) — (15,794)
Repurchases of equity securities (251) (5,027) (19,523) — (24,801) — (24,801)
Balances at January 1, 2021 $ 130,035 $ 2,597,586 $ 4,249,408 $ (877,539) $ 6,099,490 $ 43,877 $ 6,143,367


	Common Stock		Additional Paid-in Capital		Retained Earnings		Accumulated Other Comprehensive Income (Loss)		Total Jacobs Stockholders’ Equity		Noncontrolling Interests		Total Group Stockholders’ Equity
Balances at October 2, 2020	$	129,748	$	2,598,446	$	4,020,575	$	(933,057)	$	5,815,712	$	39,955	$	5,855,667
Net earnings	—		—		257,048		—		257,048		10,026		267,074
Foreign currency translation adjustments, net of deferred taxes of $14,445	—		—		—		71,893		71,893		—		71,893
Pension liability, net of deferred taxes of $826	—		—		—		(20,179)		(20,179)		—		(20,179)
(Loss) Gain on derivatives, net of deferred taxes of ($221)	—		—		—		3,804		3,804		—		3,804
Dividends	—		—		(34)		—		(34)		—		(34)
Noncontrolling interests - distributions and other	—		—		—		—		—		(6,104)		(6,104)
Stock based compensation	—		11,841		—		—		11,841		—		11,841
Issuances of equity securities including shares withheld for taxes	538		(7,674)		(8,658)		—		(15,794)		—		(15,794)
Repurchases of equity securities	(251)		(5,027)		(19,523)		—		(24,801)		—		(24,801)
Balances at January 1, 2021	$	130,035	$	2,597,586	$	4,249,408	$	(877,539)	$	6,099,490	$	43,877	$	6,143,367

Balances at October 1, 2021	$	128,893	$	2,590,012	$	4,015,578	$	(794,442)	$	5,940,041	$	34,796	$	5,974,837
Net earnings	—		—		134,034		—		134,034		9,252		143,286
Foreign currency translation adjustments, net of deferred taxes of $(2,990)	—		—		—		(5,695)		(5,695)		—		(5,695)
Pension liability, net of deferred taxes of $1,468	—		—		—		6,571		6,571		—		6,571
Gain on derivatives, net of deferred taxes of $2,945	—		—		—		5,910		5,910		—		5,910
Dividends	—		—		(123)		—		(123)		—		(123)
Redeemable Noncontrolling interests redemption value adjustment	—		—		(15,203)		—		(15,203)		—		(15,203)
Repurchase of redeemable noncontrolling interests	—		—		7,761		—		7,761		—		7,761
Noncontrolling interests - distributions and other	—		—		—		—		—		(14,049)		(14,049)
Stock based compensation	—		7,014		—		—		7,014		—		7,014
Issuances of equity securities including shares withheld for taxes	602		906		(11,872)		—		(10,364)		—		(10,364)
Repurchases of equity securities	(342)		43,127		(42,785)		—		—		—		—
Balances at December 31, 2021	$	129,153	$	2,641,059	$	4,087,390	$	(787,656)	$	6,069,946	$	29,999	$	6,099,945

See the accompanying Notes to Consolidated Financial Statements – Unaudited.

Page 78

JACOBS ENGINEERING GROUP INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS

For the Three Months Ended December 31, 2021 and January 1, 2021 ~~and December 27, 2019~~

(In thousands)

(Unaudited)

For the Three Months Ended
January 1, 2021 December 27, 2019
Cash Flows from Operating Activities:
Net earnings attributable to the Group $ 267,074 $ 263,267
Adjustments to reconcile net earnings to net cash flows provided by (used for) operations:
Depreciation and amortization:
Property, equipment and improvements 22,989 22,152
Intangible assets 23,155 21,845
Gain on sale of ECR business 0 (61,943)
Gain on investment in equity securities (190,368) (105,319)
Stock based compensation 11,841 14,279
Equity in earnings of operating ventures, net of return on capital distributions 1,159 (715)
(Gain) Loss on disposals of assets, net (134) 36
Impairment of equity method investment 27,902 0
Loss on pension and retiree medical plan changes 0 2,651
Deferred income taxes 53,008 102,487
Changes in assets and liabilities, excluding the effects of businesses acquired:
Receivables and contract assets, net of contract liabilities 33,250 (96,075)
Prepaid expenses and other current assets 25,144 (4,152)
Miscellaneous other assets 16,564 34,634
Accounts payable (63,985) (35,380)
Accrued liabilities (131,576) (236,090)
Other deferred liabilities 16,491 (60,562)
      Other, net 104 1,699
          Net cash provided by (used for) operating activities 112,618 (137,186)
Cash Flows from Investing Activities:
Additions to property and equipment (16,766) (22,260)
Capital contributions to equity investees, net of return of capital distributions (3,430) (12,000)
Acquisitions of businesses, net of cash acquired (173,012) 0
          Net cash used for investing activities (193,208) (34,260)
Cash Flows from Financing Activities:
Proceeds from long-term borrowings 603,500 841,544
Repayments of long-term borrowings (500,827) (631,000)
Proceeds from short-term borrowings 0 78
Repayments of short-term borrowings (7,675) (6)
Proceeds from issuances of common stock 9,541 6,201
Common stock repurchases (24,801) 0
Taxes paid on vested restricted stock (25,335) (24,334)
Cash dividends, including to noncontrolling interests (35,718) (25,618)
            Net cash provided by financing activities 18,685 166,865
Effect of Exchange Rate Changes 36,493 (7,275)
Net Decrease in Cash and Cash Equivalents (25,412) (11,856)
Cash and Cash Equivalents at the Beginning of the Period 862,424 631,068
Cash and Cash Equivalents at the End of the Period $ 837,012 $ 619,212


	For the Three Months Ended
	December 31, 2021		January 1, 2021
Cash Flows from Operating Activities:
Net earnings attributable to the Group	$	152,969	$	267,074
Adjustments to reconcile net earnings to net cash flows provided by operations:
Depreciation and amortization:
Property, equipment and improvements	26,237		22,989
Intangible assets	46,907		23,155

Gain on investment in equity securities	—		(190,368)
Stock based compensation	7,014		11,841
Equity in earnings of operating ventures, net of return on capital distributions	12,749		1,159
Loss (gain) on disposals of assets, net	151		(134)
Impairment of long-lived assets and equity method investment	72,266		27,902

Deferred income taxes	(17,659)		53,008
Changes in assets and liabilities, excluding the effects of businesses acquired:
Receivables and contract assets, net of contract liabilities	163,535		33,250
Prepaid expenses and other current assets	32,286		25,144
Miscellaneous other assets	24,618		16,564
Accounts payable	(88,470)		(63,985)
Accrued liabilities	(91,263)		(131,576)
Other deferred liabilities	(18,407)		16,491
Other, net	(1,288)		104
Net cash provided by operating activities	321,645		112,618
Cash Flows from Investing Activities:
Additions to property and equipment	(19,318)		(16,766)
Disposals of property and equipment and other assets	43		—
Capital contributions to equity investees, net of return of capital distributions	(480)		(3,430)
Acquisitions of businesses, net of cash acquired	(229,813)		(173,012)


Net cash used for investing activities	(249,568)		(193,208)
Cash Flows from Financing Activities:
Proceeds from long-term borrowings	637,000		603,500
Repayments of long-term borrowings	(400,287)		(500,827)

Repayments of short-term borrowings	(5,326)		(7,675)

Proceeds from issuances of common stock	17,862		9,541
Common stock repurchases	—		(24,801)
Taxes paid on vested restricted stock	(28,226)		(25,335)
Cash dividends, including to noncontrolling interests	(41,565)		(35,718)
Repurchase of redeemable noncontrolling interests	(35,095)		—
Net cash provided by financing activities	144,363		18,685
Effect of Exchange Rate Changes	2,722		36,493
Net Increase (Decrease) in Cash and Cash Equivalents and Restricted Cash	219,162		(25,412)
Cash and Cash Equivalents, including Restricted Cash, at the Beginning of the Period	1,026,575		862,424
Cash and Cash Equivalents, including Restricted Cash, at the End of the Period	$	1,245,737	$	837,012

See the accompanying Notes to Consolidated Financial Statements – Unaudited.

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JACOBS ENGINEERING GROUP INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

1.Basis of Presentation

Unless the context otherwise requires:

•References herein to “Jacobs” are to Jacobs Engineering Group Inc. and its predecessors;

•References herein to the “Company”, “we”, “us” or “our” are to Jacobs Engineering Group Inc. and its consolidated subsidiaries; and

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

The accompanying consolidated financial statements and financial information included herein have been prepared pursuant to the interim period reporting requirements of Form 10-Q. Consequently, certain information and note disclosures normally included in financial statements prepared in accordance with accounting principles generally accepted in the United States (“U.S. GAAP”) have been condensed or omitted. Readers of this Quarterly Report on Form 10-Q should also read our consolidated financial statements and the notes thereto included in our Annual Report on Form 10-K for the fiscal year ended October ~~2, 2020~~1, 2021 (“~~2020~~2021 Form 10-K”).

In the opinion of management, the accompanying unaudited consolidated financial statements contain all adjustments (consisting of normal recurring adjustments) necessary for a fair presentation of our consolidated financial statements at ~~January 1,~~December 31, 2021, and for the three ~~months~~month periods ended December 31, 2021 and January 1, 2021.

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

~~Effective~~On November 19, 2021, a subsidiary of Jacobs acquired all outstanding shares of common stock of BlackLynx, a provider of high-performance software, to complement Jacobs' portfolio of cyber, intelligence and digital solutions. The Company paid total base consideration of approximately $234.9 million in cash to the ~~beginning~~former owners of BlackLynx. In addition, the transaction involved the potential payment of future consideration that is contingent upon the achievement of certain revenue and gross margin thresholds being achieved in calendar year 2022. The estimated fair value of the contingent consideration on the acquisition date is $1.3 million. The future contingent consideration will be paid, if and to the extent achieved, in second quarter of fiscal ~~first quarter 2020,~~2023. In conjunction with the acquisition, the Company ~~adopted ASU 2016-02,~~ also paid off BlackLynx's debt of approximately $5.3 million simultaneously with the consummation of the acquisition.~~Leases ("ASC 842"), including the subsequent ASU's that amended and clarified the related guidance.~~ The Company ~~adopted ASC 842 using~~has recorded its preliminary purchase price allocation associated with the acquisition, which is summarized in Note 16- Other Business Combinations.

On March 2, 2021, Jacobs completed the strategic investment of a ~~modified retrospective approach,~~65% interest in PA Consulting, a UK-based leading innovation and ~~accordingly~~transformation consulting firm. The total consideration paid by the Company was $1.7 billion, funded through cash on hand, proceeds from a new ~~guidance~~term loan and draws on the Company's existing revolving credit facility. Further, in connection with the transaction, an additional $261 million in investment proceeds had not yet been distributed at the investment date due to continuing employment requirements of associated management owners. Consequently, this amount represented compensation expense incurred related to the investment that was ~~applied~~expensed subsequent to ~~leases that existed or were entered into after~~ the ~~first day~~date of ~~adoption without adjusting~~ the ~~comparative periods presented. Please refer to Note-13~~transaction, and was reflected in selling, general and administrative expense and cash from operations for the fiscal year ended October 1, 2021. The remaining 35% interest was acquired by PA Consulting employees, whose redeemable noncontrolling interests had a fair value of $582.4 million on the closing date, including subsequent purchase accounting adjustments. PA Consulting is accounted for as a consolidated subsidiary and as a separate operating segment. See ~~Leases~~Note 15- PA Consulting Business Combination for ~~required disclosures related to leases.~~more discussion on the investment and Note 12- Borrowings for more discussion on the financing for the transaction.

On November 24, 2020, a subsidiary of Jacobs completed the acquisition of Buffalo Group, ~~LLC ("Buffalo Group"),~~ a leader in advanced cyber and intelligence ~~solutions.~~solutions which allows Jacobs to further expand its cyber and intelligence solutions offerings to government clients. The Company paid total consideration of ~~$212.8~~$190.1 million, which was comprised of approximately ~~$181.4~~$182.4 million in cash to the former owners of Buffalo Group and contingent consideration of $7.7 million. The contingent consideration was subsequently recognized as an offset to selling, general and administrative expense when it was determined no amounts would be paid. In conjunction with the ~~assumption of~~acquisition, the Company assumed the Buffalo Group's debt of approximately $7.7 ~~million and $23.7 million in other assumed liabilities.~~million. The Company repaid all of the assumed Buffalo Group debt by the end of the first fiscal quarter of 2021. The Company has recorded its ~~preliminary~~final purchase price allocation associated with the acquisition, which is summarized in Note ~~15-~~16- Other Business ~~Combinations~~Combinations..

On March 6, 2020, a subsidiary of Jacobs completed the acquisition of the nuclear consulting, remediation and program management business of John Wood Group, a U.K.-based energy services company, for an enterprise value of £246 million, or approximately $317.9 million, less cash acquired of $24.3 million. The Company has recorded its preliminary purchase price allocation associated with the acquisition, which is summarized in Note 15-
~~Business Combinations~~.

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (CONTINUED)

On April 26, 2019, Jacobs completed the sale of its Energy, Chemicals and Resources ("ECR") business to Worley Limited, a company incorporated in Australia ("Worley"), for a purchase price of $3.4 billion consisting of (i) $2.8 billion in cash plus (ii) 58.2 million ordinary shares of Worley, subject to adjustments for changes in working capital and certain other items (the “ECR sale”). As a result of the ECR sale, substantially all ECR-related assets and liabilities were sold (the "Disposal Group"). We determined that the Disposal Group should be reported as discontinued operations in accordance with ASC 210-05, Discontinued Operations because their disposal represents a strategic shift that had a major effect on our operations and financial results. As such, the financial results of the ECR business are reflected in our unaudited Consolidated Statements of Earnings as discontinued operations for all periods presented. As of October ~~2, 2020,~~1, 2021, all of the ECR business to be sold under the terms of the ECR sale had been conveyed to Worley and as such, no amounts remain held for sale. For further discussion, see Note ~~16-~~17- Sale of Energy, Chemicals and Resources ("ECR") Business to the consolidated financial statements.

~~Page 9~~

~~JACOBS ENGINEERING GROUP INC. AND SUBSIDIARIES~~

~~NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (CONTINUED)~~

2. Use of Estimates and Assumptions

The preparation of financial statements in conformity with U.S. GAAP requires us to employ estimates and make assumptions that affect the reported amounts of certain assets and liabilities, the revenues and expenses reported for the periods covered by the accompanying consolidated financial statements, and certain amounts disclosed in these Notes to the Consolidated Financial Statements. Although such estimates and assumptions are based on management’s most recent assessment of the underlying facts and circumstances utilizing the most current information available and past experience including considerations for potential impacts of the continuing coronavirus (COVID-19) pandemic, actual results could differ significantly from those estimates and assumptions. Our estimates, judgments, and assumptions are evaluated periodically and adjusted accordingly.

Please refer to Note 2- Significant Accounting Policies of Notes to Consolidated Financial Statements included in our ~~2020~~2021 Form 10-K for a discussion of other significant estimates and assumptions affecting our consolidated financial statements.

3. Fair Value and Fair Value Measurements

Certain amounts included in the accompanying consolidated financial statements are presented at ~~“fair~~fair value.” Fair value is defined as the price that would be received from selling an asset or paid to transfer a liability in an orderly transaction between market participants as of the date fair value is determined (the “measurement date”). When determining fair value, we consider the principal or most advantageous market in which we would transact, and we consider only those assumptions we believe a typical market participant would consider when pricing an asset or liability. In measuring fair value, we use the following inputs in the order of priority indicated:

Level 1 - Quoted prices in active markets for identical assets or liabilities.

Level 2 - Observable inputs other than quoted prices in active markets included in Level 1, such as (i) quoted prices for similar assets or liabilities; (ii) quoted prices in markets that have insufficient volume or infrequent transactions (e.g., less active markets); and (iii) model-driven valuations in which all significant inputs are observable or can be derived principally from, or corroborated with, observable market data for substantially the full term of the asset or liability.

Level 3 - Unobservable inputs to the valuation methodology that are significant to the fair value measurement.

Please refer to Note 2- Significant Accounting Policies of Notes to Consolidated Financial Statements included in our ~~2020~~2021 Form 10-K for a more complete discussion of the various items within the consolidated financial statements measured at fair value and the methods used to determine fair value. Please also refer to Note ~~16-~~ ~~Sale of Energy, Chemicals and Resources~~ ~~for discussion regarding the Company's investment in Worley ordinary shares and Note 18-~~19- Commitments and Contingencies and Derivative Financial Instruments for discussion regarding the Company's derivative instruments.

The net carrying amounts of cash and cash equivalents, trade receivables and payables and short-term debt approximate fair value due to the short-term nature of these instruments. See Note 12- Borrowings for a discussion of the fair value of long-term debt.

~~4. New Accounting Pronouncements~~

~~ASU 2017-04,~~ ~~Simplifying~~Fair value measurements relating to our business combinations are made primarily using Level 3 inputs including discounted cash flow and to the ~~Test for Goodwill Impairment,~~ is effective for fiscal years beginning after December 15, 2019. ASU 2017-04 removed the second step of the goodwill impairment test, which requires a hypothetical purchase price allocation. An entity will now recognize a goodwill impairment chargeextent applicable, Monte Carlo simulation techniques. Fair value for the ~~amount by which a reporting unit's carrying value exceeds its~~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 not to exceed the amount of goodwill allocated to the reporting unit. The adoption of ASU 2017-04 did not have a material impact on the Company's financial position, results of operations or cash flows.

include (i)

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JACOBS ENGINEERING GROUP INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (CONTINUED)

revenue projections of the business, (ii) profitability 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. The fair value of the contingent consideration is estimated using a Monte Carlo simulation and the significant assumptions used include projections of revenues and probabilities of meeting those projections. Key inputs to the valuation of the noncontrolling interests include projected cash flows and the expected volatility associated with those cash flows.

4. New Accounting Pronouncements

ASU 2020-04, Reference Rate Reform, (Topic 848): Facilitation of the Effects of Reference Rate Reform on Financial Reporting is intended to provide relief for entities impacted by reference rate reform and contains provisions and optional expedients designed to simplify requirements around designation of hedging relationships, probability assessments of hedged forecasted transactions and accounting for modifications of contracts that refer to LIBOR or other rates affected by reference rate reform. The guidance is elective and is effective on the date of issuance. ASU 2020-04 is applied prospectively to contract modifications and as of the effective date for existing and new eligible hedging relationships. The guidance is temporary and will generally not be applicable to contract modifications which occur after December 31, 2022. The adoption of the new guidance in the first quarter of fiscal 2022 allowed the Company to continue its British pound denominated interest rate hedge relationships which previously defined LIBOR as the benchmark interest rate and in December 2021 were amended to replace LIBOR with the Sterling Overnight Index Average rate ("SONIA").

ASU No. ~~2016-13,~~2021-08, ~~Financial Instruments - Credit Losses ("~~Business Combinations (Topic 805): Accounting for Contract Assets and Contract Liabilities from Contracts with Customers, is effective for fiscal years beginning after December 15, 2022. ASU 2021-08 requires contract assets and contract liabilities (i.e., deferred revenue) acquired in a business combination to be recognized and measured by the acquirer on the acquisition date in accordance with ASC ~~326"): Measurement of Credit Losses on Financial Instruments~~ ~~requires entities to use a current lifetime expected credit loss methodology to measure impairments of certain financial assets. Using~~606, Revenue from Contracts with Customers. Generally, this ~~methodology~~new guidance will result in ~~earlier recognition~~the acquirer recognizing contract assets and contract liabilities at the same amounts recorded by the acquiree. The Company adopted the new guidance in the first quarter of ~~losses than under~~fiscal 2022 and the current incurred loss approach, which requires waiting to recognize a loss until it is probable of having been incurred. There are other provisions within the standard that affect how impairments of other financial assets may be recorded and presented, and that expand disclosures. This standard is effective beginning with the current fiscal quarter. The adoption ~~of ASU 326 did not have a material~~had no impact on the Company's financial position, results of operations or cash flows.

5. Revenue Accounting for Contracts

Disaggregation of Revenues

Our revenues are principally derived from contracts to provide a diverse range of technical, professional, and construction services to a large number of industrial, commercial, and governmental clients. We provide a broad range of engineering, design, and architectural services; construction and construction management services; operations and maintenance services; and technical, digital, process, scientific and systems consultingprocess, scientific, and systems consulting services. We provide our services through offices and subsidiaries located primarily in North ~~America, South~~ America, Europe, the Middle East, India, Australia, Africa, and Asia. We provide our services under cost-reimbursable and fixed-price contracts. Our contracts are with many different customers in numerous industries. Refer to Note ~~19-~~20- Segment Information for additional information on how we disaggregate our revenues by reportable segment.

Page 12

JACOBS ENGINEERING GROUP INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (CONTINUED)

The following table further disaggregates our revenue by geographic area for the three months ended December 31, 2021 and January 1, 2021 ~~and December 27, 2019~~ (in thousands):


		Three Months Ended				Three Months Ended
		January 1, 2021		December 27, 2019				December 31, 2021		January 1, 2021
Revenues:	Revenues:						Revenues:
United States	United States	$	2,457,041	$	2,532,716		United States	$	2,148,554	$	2,457,041
Europe	Europe	639,315		551,272			Europe	866,351		639,315
Canada	Canada	55,627		55,396			Canada	65,039		55,627
Asia	Asia	27,405		30,440			Asia	32,087		27,405
India	India	14,548		5,980			India	22,148		14,548
Australia and New Zealand	Australia and New Zealand	137,408		129,194			Australia and New Zealand	177,652		137,408
Middle East and Africa	Middle East and Africa	50,492		55,051			Middle East and Africa	68,794		50,492
Total	Total	$	3,381,836	$	3,360,049		Total	$	3,380,625	$	3,381,836

Contract Liabilities

Contract liabilities represent amounts billed to clients in excess of revenue recognized to date. Revenue recognized for the three months ended December 31, 2021 and January 1, 2021 ~~and December 27, 2019~~ that was included in the contract liability balance on October 1, 2021 and October 2, 2020 ~~and September 27, 2019, respectively~~ was ~~$259.0~~$291.5 million and ~~$244.1~~$259.0 million respectively.

Remaining Performance ~~Obligations~~Obligation

The Company’s remaining performance obligations as of ~~January 1,~~December 31, 2021 represent a measure of the total dollar value of work to be performed on contracts awarded and in progress. The Company had approximately ~~$17.3~~$13.2 billion in remaining performance obligations as of ~~January 1,~~December 31, 2021. The Company expects to recognize approximately ~~44%~~57% of our remaining performance obligations into revenue within the next twelve months and the remaining ~~56%~~43% thereafter.

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

~~Page 11~~

~~JACOBS ENGINEERING GROUP INC. AND SUBSIDIARIES~~

~~NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (CONTINUED)~~

6. Earnings Per Share and Certain Related Information

Basic and diluted earnings per share (“EPS”) are computed using the two-class method, which is an earnings allocation method that determines EPS for common shares and participating securities. The undistributed earnings are allocated between common shares and participating securities as if all earnings had been distributed during the period. Participating securities and common shares have equal rights to undistributed earnings. Net earnings used for the purpose of determining basic and diluted EPS is determined by taking net earnings, less earnings available to participating ~~securities. During~~securities and the ~~three months ended January 1, 2021,~~preferred redeemable noncontrolling interests redemption value adjustment associated with the ~~Company did not have any outstanding participating securities.~~PA Consulting transaction.

The following table reconciles the denominator used to compute basic EPS to the denominator used to compute diluted EPS for the three months ended December 31, 2021 and January 1, 2021 ~~and December 27, 2019~~ (in thousands):

Three Months Ended
January 1, 2021 December 27, 2019
Numerator for Basic and Diluted EPS:
Net earnings attributable to Jacobs from continuing operations $ 257,062 $ 179,423
Net earnings from continuing operations allocated to participating securities 0 (92)
Net earnings from continuing operations allocated to common stock for EPS calculation $ 257,062 $ 179,331
Net earnings attributable to Jacobs from discontinued operations $ (14) $ 77,587
Net earnings from discontinued operations allocated to participating securities 0 (40)
Net earnings from discontinued operations allocated to common stock for EPS calculation $ (14) $ 77,547
Net earnings allocated to common stock for EPS calculation $ 257,048 $ 256,878
Denominator for Basic and Diluted EPS:
Weighted average basic shares 129,968 133,202
Shares allocated to participating securities 0 (68)
Shares used for calculating basic EPS attributable to common stock 129,968 133,134
Effect of dilutive securities:
Stock compensation plans 1,182 1,484
Shares used for calculating diluted EPS attributable to common stock 131,150 134,618
Net Earnings Per Share:
Basic Net Earnings from Continuing Operations Per Share $ 1.98 $ 1.35
Basic Net Earnings from Discontinued Operations Per Share $ 0 $ 0.58
Basic Earnings Per Share $ 1.98 $ 1.93
Diluted Net Earnings from Continuing Operations Per Share $ 1.96 $ 1.33
Diluted Net Earnings from Discontinued Operations Per Share $ 0 $ 0.58
Diluted Earnings Per Share $ 1.96 $ 1.91

Page 13

JACOBS ENGINEERING GROUP INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (CONTINUED)


	Three Months Ended
	December 31, 2021		January 1, 2021
Numerator for Basic and Diluted EPS:




Net earnings from continuing operations allocated to common stock for EPS calculation	$	134,266	$	257,062



Net earnings from discontinued operations allocated to common stock for EPS calculation	$	(232)	$	(14)

Net earnings allocated to common stock for EPS calculation	$	134,034	$	257,048

Denominator for Basic and Diluted EPS:



Shares used for calculating basic EPS attributable to common stock	129,342		129,968

Effect of dilutive securities:
Stock compensation plans	952		1,182
Shares used for calculating diluted EPS attributable to common stock	130,294		131,150

Net Earnings Per Share:
Basic Net Earnings from Continuing Operations Per Share	$	1.04	$	1.98
Basic Net Earnings from Discontinued Operations Per Share	$	—	$	—
Basic Earnings Per Share	$	1.04	$	1.98
Diluted Net Earnings from Continuing Operations Per Share	$	1.03	$	1.96
Diluted Net Earnings from Discontinued Operations Per Share	$	—	$	—
Diluted Earnings Per Share	$	1.03	$	1.96

Share Repurchases


~~On January 17, 2019, the Company’s Board of Directors authorized a share repurchase program of up to $1.0 billion of the Company’s common stock, to expire on January 16, 2022 (the "2019 Repurchase Authorization").~~ On January 16, 2020, the Company's Board of Directors authorized ~~an additional~~a share repurchase program of up to $1.0 billion of the Company's common stock, to expire on January 15, 2023 (the "2020 Repurchase Authorization"). In the fourth quarter of fiscal 2021, the Company initiated an accelerated share repurchase program by advancing $250 million to a financial institution in a privately negotiated transaction, with final non-cash settlement on the program during the first quarter of fiscal 2022 of 342,054 shares as depicted in the table below.

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


Amount Authorized (2020 Repurchase Authorization)	Average Price Per Share (1)	Shares Repurchased	Total Shares Retired
$1,000,000,000	$137.55	342,054	342,054

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

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JACOBS ENGINEERING GROUP INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (CONTINUED)

~~The following table summarizes the activity under the 2019 and 2020 Repurchase Authorizations in the first quarter of fiscal 2021:~~

Amount Authorized
(2019 and 2020 Repurchase Authorizations) Average Price Per Share (1) Shares Repurchased Total Shares Retired
$2,000,000,000 $98.81 251,001 251,001

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

As a precautionary measure in light of the COVID-19 pandemic, the Company temporarily suspended purchases under the share repurchase plan in March 2020, with such suspension remaining in effect through the fiscal third quarter of 2020. During the fourth fiscal quarter of 2020, the Company resumed share repurchases on a limited basis while we continue to monitor developments in fiscal 2021 with the pandemic. As of ~~January 1,~~December 31, 2021, the Company h~~as $33.1~~has $782.9 million ~~remaining under the 2019 Repurchase Authorization and $1.0 billion~~ remaining under the 2020 Repurchase Authorization.


~~The~~Our share repurchase ~~programs do~~program does not obligate the Company to purchase any shares. Share repurchases may be executed through various means including, without limitation, accelerated share repurchases, open market transactions, privately negotiated transactions, purchases pursuant to Rule 10b5-1 plans or otherwise. The authorization for the share repurchase programs may be terminated, increased or decreased by the Company’s Board of Directors in its discretion at any time. 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.

~~Dividend Program~~Dividends

On January ~~27, 2021,~~26, 2022, the Company’s Board of Directors declared a quarterly dividend of ~~$0.21~~$0.23 per share of the Company’s common stock to be paid on March ~~26, 2021,~~25, 2022, to shareholders of record on the close of business on February ~~26, 2021.~~25, 2022. Future dividend declarations are ~~subje~~ctsubject to review and approval by the Company’s Board of Directors. Dividends ~~pai~~dpaid through the first fiscal quarter of ~~2021~~2022 and the preceding fiscal year are as follows:

Declaration Date

Record Date

Payment Date

Cash Amount (per share)

September 23, 2021

October 15, 2021

October 29, 2021

$0.21

July 14, 2021

July 30, 2021

August 27, 2021

$0.21

April 22, 2021

May 28, 2021

June 25, 2021

$0.21

January 27, 2021

February 26, 2021

March 26, 2021

$0.21

September 17, 2020

October 2, 2020

October 30, 2020

$0.19

~~July 9, 2020~~

~~July 24, 2020~~

~~August 21, 2020~~

~~$0.19~~

~~May 5, 2020~~

~~May 20, 2020~~

~~June 17, 2020~~

~~$0.19~~

~~January 16, 2020~~

~~January 31, 2020~~

~~February 28, 2020~~

~~$0.19~~

~~September 19, 2019~~

~~October 4, 2019~~

~~November 1, 2019~~

~~$0.17~~

~~7. Goodwill and Intangibles~~

The carrying value of goodwill associated with continuing operations and appearing in the accompanying Consolidated Balance Sheets at January 1, 2021 and October 2, 2020 was as follows (in thousands):

Critical Mission Solutions People & Places Solutions Total
Balance October 2, 2020 $ 2,409,081 $ 3,230,010 $ 5,639,091
Acquired 139,550 0 139,550
Foreign Exchange Impact 12,379 17,170 29,549
Post-Acquisition Adjustments 294 0 294
Balance January 1, 2021 $ 2,561,304 $ 3,247,180 $ 5,808,484

Page 1315

JACOBS ENGINEERING GROUP INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (CONTINUED)

7. Goodwill and Intangibles

The carrying value of goodwill and appearing in the accompanying Consolidated Balance Sheets at December 31, 2021 and October 1, 2021 was as follows (in thousands):


	Critical Mission Solutions		People & Places Solutions		PA Consulting		Total
Balance October 1, 2021	$	2,550,631	$	3,240,783	$	1,405,586	$	7,197,000
Acquired	158,498		—		—		158,498
Foreign Exchange Impact	(698)		(1,335)		(5,168)		(7,201)
Post-Acquisition Adjustments	—		—		2,197		2,197

Balance December 31, 2021	$	2,708,431	$	3,239,448	$	1,402,615	$	7,350,494

The following table provides certain information related to the Company’s acquired intangibles in the accompanying Consolidated Balance Sheets at ~~January 1,~~December 31, 2021 and October ~~2, 2020~~1, 2021 (in thousands):


		Customer Relationships, Contracts and Backlog		Developed Technology		Trade Names		Total			Customer Relationships, Contracts and Backlog		Developed Technology		Trade Names		Total
Balances October 2, 2020		$	614,045	$	43,572	$	723	$	658,340
Balances October 1, 2021										Balances October 1, 2021	$	1,309,061	$	40,020	$	216,677	$	1,565,758
Amortization	Amortization	(22,063)		(985)		(107)		(23,155)		Amortization	(42,965)		(1,119)		(2,823)		(46,907)
Acquired	Acquired	71,000		0		0		71,000		Acquired	88,002		15,539		—		103,541

Foreign currency translation	Foreign currency translation	9,112		339		5		9,456		Foreign currency translation	(2,734)		(20)		(725)		(3,479)
Balances January 1, 2021		$	672,094	$	42,926	$	621	$	715,641
Balances December 31, 2021										Balances December 31, 2021	$	1,351,364	$	54,420	$	213,129	$	1,618,913

The following table presents estimated amortization expense of intangible assets for the remainder of fiscal ~~2021~~2022 and for the succeeding years. The amounts below include preliminary amortization estimates for the BlackLynx and PA Consulting opening balance sheet fair values that are still preliminary and are subject to change.

Fiscal Year (in millions)
2021 $ 75.4
2022 98.8
2023 98.6
2024 98.6
2025 98.2
Thereafter 246.0
Total $ 715.6


Fiscal Year	(in millions)
2022	$	144.1
2023	191.8
2024	191.6
2025	191.2
2026	176.4
Thereafter	723.8
Total	$	1,618.9

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JACOBS ENGINEERING GROUP INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (CONTINUED)

8. Receivables and ~~contract assets~~Contract Assets

The following table presents the components of receivables appearing in the accompanying Consolidated Balance Sheets at ~~January 1,~~December 31, 2021 and October ~~2, 2020,~~1, 2021, as well as certain other related information (in thousands):


		January 1, 2021		October 2, 2020			December 31, 2021		October 1, 2021
Components of receivables and contract assets:	Components of receivables and contract assets:					Components of receivables and contract assets:
Amounts billed, net	Amounts billed, net	$	1,384,558	$	1,294,204	Amounts billed, net	$	1,311,468	$	1,278,087
Unbilled receivables and other	Unbilled receivables and other	1,439,632		1,449,184		Unbilled receivables and other	1,215,690		1,343,588
Contract assets	Contract assets	441,070		423,922		Contract assets	465,656		479,743
Total receivables and contract assets, net	Total receivables and contract assets, net	$	3,265,260	$	3,167,310	Total receivables and contract assets, net	$	2,992,814	$	3,101,418
Other information about receivables:	Other information about receivables:					Other information about receivables:
Amounts due from the United States federal government, included above, net of advanced billings		$	637,937	$	600,207
Amounts due from the United States federal government, included above, net of contract liabilities						Amounts due from the United States federal government, included above, net of contract liabilities	$	629,365	$	563,009

Amounts billed, net consist of amounts invoiced to clients in accordance with the terms of our client contracts and are shown net of an allowance for doubtful accounts. We anticipate that substantially all of such billed amounts will be collected over the next twelve months.

Unbilled receivables and other, which represent an unconditional right to payment subject only to the passage of time, are reclassified to amounts billed when they are billed under the terms of the contract. Prior to adoption of ASC 606, receivables related to contractual milestones or achievement of performance-based targets were included in unbilled receivables. These are now included in contract assets. We anticipate that substantially all of such unbilled amounts will be billed and collected over the next twelve months.

~~Page 14~~

~~JACOBS ENGINEERING GROUP INC. AND SUBSIDIARIES~~

~~NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (CONTINUED)~~

Contract assets represent unbilled amounts where the right to payment is subject to more than merely the passage of time and includes performance-based incentives and services provided ahead of agreed contractual milestones. Contract assets are transferred to unbilled receivables when the right to consideration becomes unconditional and are transferred to amounts billed upon invoicing. The increase in contract assets was a result of normal business activity and not materially impacted by any other factors.

9. Accumulated Other Comprehensive Income

The following table presents the Company's roll forward of accumulated other comprehensive income (loss) after-tax ~~for the three months ended January 1,~~as of December 31, 2021 (in thousands):


		Change in Pension Liabilities		Foreign Currency Translation Adjustment		Gain/(Loss) on Cash Flow Hedges		Total			Change in Pension Liabilities		Foreign Currency Translation Adjustment		Gain/(Loss) on Cash Flow Hedges		Total
Balance at October 2, 2020		$	(498,726)	$	(419,715)	$	(14,616)	$	(933,057)
Balance at October 1, 2021										Balance at October 1, 2021	$	(394,561)	$	(407,240)	$	7,359	$	(794,442)
Other comprehensive income (loss)	Other comprehensive income (loss)	(20,179)		71,893		1,968		53,682		Other comprehensive income (loss)	6,571		(5,695)		3,973		4,849
Reclassifications from accumulated other comprehensive income (loss)	Reclassifications from accumulated other comprehensive income (loss)	0		0		1,836		1,836		Reclassifications from accumulated other comprehensive income (loss)	—		—		1,937		1,937
Balance at January 1, 2021		$	(518,905)	$	(347,822)	$	(10,812)	$	(877,539)
Balance at December 31, 2021										Balance at December 31, 2021	$	(387,990)	$	(412,935)	$	13,269	$	(787,656)

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10. Income Taxes


The Company’s effective tax rates from continuing operations for the three months ended December 31, 2021 and January 1, 2021 were 9.4% and ~~December 27, 2019 were~~ 24.6% ~~and 27.0%~~, respectively. The Company’s effective tax rate from continuing operations for the three months ended ~~January 1,~~December 31, 2021 was lower than the corresponding rate in the prior period primarily due to ~~one-time income~~a current year tax ~~charges associated with partnership interest basis differences generated during~~benefit of $15.7 million related to the ~~quarter ending December 27, 2019. For the three months ended January 1, 2021, the effective~~release of previously reserved foreign tax ~~rate was impacted by a $1.4 million benefit from an Internal Revenue Code section 179D energy credit, a $2.2~~credits, $4.2 million excess tax benefit attributable to stock compensation, and ~~a $5.0~~$4.0 million benefit related to a change in the Company’s assertion about indefinite reinvestment of certain foreign unremitted earnings in Canada. The Company is continuing to accrue taxes related to all other foreign earnings. from filing amended status returns.

~~See Note 16-~~ ~~Sale of Energy, Chemicals and Resources ("ECR") Business~~ ~~for further information on the Company's discontinued operations reporting for the sale of the ECR business.~~



The amount of income taxes the Company pays is subject to ongoing audits by tax jurisdictions around the world. In the normal course of business, the Company is subject to examination by tax authorities throughout the world, including such major jurisdictions as Australia, Canada, India, the Netherlands, the United Kingdom and the United States. Our estimate of the potential outcome of any uncertain tax issue is subject to our assessment of the relevant risks, facts, and circumstances existing at the time. The Company believes that it has adequately provided for reasonably foreseeable outcomes related to these matters. However, future results may include favorable or unfavorable adjustments to our estimated tax liabilities in the period the assessments are made or resolved, which may impact our effective tax rate.

11. Joint Ventures, VIEs and Other Investments

We execute certain contracts jointly with third parties through various forms of joint ventures. Although the joint ventures own and hold the contracts with the clients, the services required by the contracts are typically performed by us and our joint venture partners, or by other subcontractors under subcontracting agreements with the joint ventures. Many of these joint ventures are formed for a specific project. The assets of our joint ventures generally consist almost entirely of cash and receivables (representing amounts due from clients), and the liabilities of our joint ventures generally consist almost entirely of amounts due to the joint venture partners (for services provided by the partners to the joint ventures under their individual subcontracts) and other subcontractors. Many of the joint ventures are deemed to be variable interest entities (“VIE”) because they lack sufficient equity to finance the activities of the joint venture.

~~Page 15~~

~~JACOBS ENGINEERING GROUP INC. AND SUBSIDIARIES~~

~~NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (CONTINUED)~~

The assets of a joint venture are restricted for use to the obligations of the particular joint venture and are not available for general operations of the Company. Our risk of loss on these arrangements is usually shared with our partners. The liability of each partner is usually joint and several, which means that each partner may become liable for the entire risk of loss on the project. Furthermore, on some of our projects, the Company has granted guarantees that may encumber both our contracting subsidiary company and the Company for the entire risk of loss on the project. The Company is unable to estimate the maximum potential amount of future payments that we could be required to make under outstanding performance guarantees related to joint venture projects due to a number of factors, including but not limited to, the nature and extent of any contractual defaults by our joint venture partners, resource availability, potential performance delays caused by the defaults, the location of the projects, and the terms of the related contracts. Refer to Note 1819 - Commitments and Contingencies and Derivative Financial Instruments, for further discussion relating to performance guarantees.

For consolidated joint ventures, the entire amount of the services performed, and the costs associated with these services, including the services provided by the other joint venture partners, are included in the Company's ~~result~~results of operations. Likewise, the entire amount of each of the assets and liabilities are included in the Company’s Consolidated Balance Sheets. For the consolidated VIEs, the carrying value of assets and liabilities was ~~$297.6~~$266.8 million and ~~$217.9~~$208.7 million, respectively, as of ~~January 1,~~December 31, 2021 and ~~$261.8~~$289.8 million and ~~$190.3~~$220.8 million, respectively, as of October ~~2, 2020.~~1, 2021. There are no consolidated VIEs that have debt or credit facilities.

On March 2, 2021, Jacobs completed the strategic investment of a 65% interest in PA Consulting, a UK-based leading innovation and transformation consulting firm. The remaining 35% interest was acquired by PA Consulting employees. PA Consulting is accounted for as a consolidated subsidiary under U.S. GAAP accounting rules. See Note 15- PA Consulting Business Combination for more discussion on the acquisition.

Unconsolidated joint ventures are accounted for under proportionate consolidation or the equity method. Proportionate consolidation is used for joint ventures that include unincorporated legal entities and activities of the joint venture that are construction-related. For those joint ventures accounted for under proportionate consolidation, only the Company’s pro rata share of assets, liabilities, revenue, and costs are included in the Company’s balance sheet and results of operations.

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JACOBS ENGINEERING GROUP INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (CONTINUED)

For the proportionate consolidated VIEs, the carrying value of assets and liabilities was ~~$67.2~~$114.2 million and ~~$65.9~~$127.5 million, respectively, as of ~~January 1,~~December 31, 2021, and ~~$64.1~~$115.1 million and ~~$63.0~~$129.5 million, respectively, as of October ~~2, 2020.~~1, 2021. For those joint ventures accounted for under the equity method, the Company's investment balances for the joint venture are included in Other Noncurrent Assets: Miscellaneous on the balance sheet and the Company’s pro rata share of net income is included in revenue. In limited cases, there are basis differences between the equity in the joint venture and the Company's investment created when the Company purchased its share of the joint venture. These basis differences are amortized based on an internal allocation to underlying net assets, excluding allocations to goodwill. As of ~~January 1,~~December 31, 2021, the Company’s equity method investments exceeded its share of venture net assets by ~~$44~~$36.6 million. Our investments in equity method joint ventures on the Consolidated Balance Sheets as of ~~January 1,~~December 31, 2021 and October ~~2, 2020~~1, 2021 were ~~$140.2~~$106.7 million and ~~$161.3~~$121.3 million, respectively. During the three months ended December 31, 2021 and January 1, 2021, ~~and December 27, 2019,~~ we recognized income from equity method joint ventures of ~~$18.3~~$6.8 million and ~~$17.3~~$18.3 million, respectively.

Accounts receivable from unconsolidated joint ventures accounted for under the equity method is ~~$5.4~~$16.1 million and ~~$8.3~~$19.7 million as of ~~January 1,~~December 31, 2021 and October ~~2, 2020,~~1, 2021, respectively.

The Company ~~currently holds~~held a 24.5% interest in AWE Management Ltd ("AWE ML") that iswas accounted for under the equity ~~method, and the carrying value of the Company’s investment as of October 2, 2020 was approximately $38 million. As of October 2, 2020,~~method. AWE ML was previously under a contractual operating arrangement with the UK Ministry of Defence (MoD) with multiple years remaining under the ~~arrangement. Subsequent to year end, on November 2, 2020,~~arrangement, and during fiscal 2021, the MoD unexpectedly announced plans to change its ~~current~~ operating agreements with AWE ML that ~~would result~~resulted in the early termination of the current contract in 2021. During the three months ended January 1, 2021, the Company recorded an other-than-temporary impairment charge on its investment in AWE ML in the amount of $27.9 million, which iswas included in miscellaneous income (expense), net in the consolidated statement of ~~earnings.~~earnings as a result of the contract termination.

~~At October 2, 2020, the~~The Company held a cost method investment in C3.ai, Inc. ("C3") and in the first quarter of ~~approximately $2.5 million. On December 9, 2020,~~fiscal 2021, C3 completed an initial public offering and as a result the Company ~~now carries~~carried its investment in C3 at fair value, with ~~mark to market~~ changes reflected in net income as it is an investment in equity securities with a readily determinable fair value based on quoted market prices. ~~In connection with~~During fiscal 2021 and subsequent to the IPO, the Company ~~became subject to a 180-day lock-up period, which restricts sales of the~~sold all shares subject to certain conditions that permit partial share sales based on C3's share performance during the lock-up period. The fair value of the Company's investment at January 1, 2021 was $85.2 million and is includedowned in ~~investment in equity securities in the consolidated balance sheet.~~C3. Dividend income, ~~and~~ unrealized gains and losses on changes in fair value and related realized gains and losses on disposal of the C3 shares ~~are~~were recognized in miscellaneous income (expense), net in the consolidated statement of ~~earnings. Quoted market prices are available for these securities in an active market, however a discount is applied to account~~earnings, which was $82.6 million, net, for the ~~lock-up period restrictions and therefore the investment is categorized as a Level 2 input.~~three months ended January 1, 2021.

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JACOBS ENGINEERING GROUP INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (CONTINUED)

12. Borrowings

~~Long-Term Debt~~

At ~~January 1,~~December 31, 2021 and October ~~2, 2020,~~1, 2021, long-term debt consisted of the following (principal amounts in thousands):


		Interest Rate	Maturity	January 1, 2021		October 2, 2020			Interest Rate	Maturity	December 31, 2021		October 1, 2021
Revolving Credit Facility	Revolving Credit Facility	LIBOR + applicable margin (1)	March 2024	$	268,794	$	152,794	Revolving Credit Facility	Benchmark + applicable margin (1) (2)	March 2024	$	577,794	$	327,794
Term Loan Facility		LIBOR + applicable margin (2)	March 2025	1,029,889		1,025,826
2021 Term Loan Facility								2021 Term Loan Facility	Benchmark + applicable margin (1) (3)	March 2024	1,078,800		1,081,724
2020 Term Loan Facility								2020 Term Loan Facility	Benchmark + applicable margin (1) (4)	March 2025 (5)	974,550		988,940
Fixed-rate notes due:	Fixed-rate notes due:							Fixed-rate notes due:
Senior Notes, Series A	Senior Notes, Series A	4.27%	May 2025	190,000		190,000		Senior Notes, Series A	4.27%	May 2025	190,000		190,000
Senior Notes, Series B	Senior Notes, Series B	4.42%	May 2028	180,000		180,000		Senior Notes, Series B	4.42%	May 2028	180,000		180,000
Senior Notes, Series C	Senior Notes, Series C	4.52%	May 2030	130,000		130,000		Senior Notes, Series C	4.52%	May 2030	130,000		130,000
Less: Current Portion (5)								Less: Current Portion (5)			(53,400)		(53,456)
Less: Deferred Financing Fees	Less: Deferred Financing Fees			(1,614)		(1,679)		Less: Deferred Financing Fees			(4,677)		(5,069)

Total Long-term debt, net	Total Long-term debt, net			$	1,797,069	$	1,676,941	Total Long-term debt, net			$	3,073,067	$	2,839,933

(1)During the three months ended December 31, 2021, the aggregate principal amounts denominated in British pounds under the Revolving Credit Facility, 2021 Term Loan Facility and 2020 Term Loan Facility transitioned from underlying LIBOR benchmarked rates to SONIA rates. Borrowings denominated in U.S. dollars remained benchmarked to LIBOR rates.

(2)Depending on the Company’s Consolidated Leverage Ratio (as defined in the credit agreement governing the Revolving Credit Facility (defined below)), U.S. dollar denominated borrowings under the Revolving Credit Facility bear interest at either a eurocurrency rate plus a margin of between 0.875% and 1.625% or a base rate plus a margin of between 0% and 0.625%. ~~including applicable margins~~ The applicable LIBOR rates including applicable margins at ~~January 1,~~December 31, 2021 and October ~~2, 2020~~1, 2021 were ~~approximately~~ ~~1.16%~~approximately 1.46% and 1.45%. Borrowings denominated in British pounds bear interest at an adjusted SONIA rate plus a~~nd 1.39%~~ margin of between 0.875% and 1.625%. There were no amounts drawn in British pounds as of December 31, 2021.

~~(2)~~(3)Depending on the Company’s Consolidated Leverage Ratio (as defined in the credit agreement governing the 2021 Term Loan Facility (defined below)), U.S. dollar denominated borrowings under the 2021 Term Loan Facility bear interest at either a eurocurrency rate plus a margin of between 0.875% and 1.625% or a base rate plus a margin of between 0% and 0.625%. The applicable LIBOR rate including applicable margins for borrowings denominated in U.S. dollars at December 31, 2021 and October 1, 2021 was approximately 1.48% and 1.43%. Borrowings denominated in British pounds bear interest at an adjusted SONIA rate plus a margin of between 0.875% and 1.625%, which was approximately 1.60% at December 31, 2021.

(4)Depending on the Company’s Consolidated Leverage Ratio (as defined in the credit agreement governing the 2020 Term Loan Facility (defined below)), U.S. dollar denominated borrowings under the 2020 Term Loan Facility bear interest at either a eurocurrency rate plus a margin of between 0.875% and 1.5% or a base rate plus a margin of between 0% and 0.5% ~~including applicable margins. Th~~e. The applicable LIBOR rates including applicable margins for borrowings denominated in U.S. dollars at ~~January~~December 31, 2021 and October 1, 2021 ~~and~~ ~~October 2, 2020~~ were approximately 1.48% and 1.45%. Borrowings denominated in British pounds bear interest at an adjusted SONIA rate plus a margin of between 0.875% and 1.625%, which was approximately 1.55% at December 31, 2021.

(5)~~1.11%~~The 2020 Term Loan requires quarterly principal repayments of 1.25%, or $9.125 million and ~~1.37%.~~£3.125 million, of the aggregate initial principal amount borrowed.

On February 7, 2014, Jacobs and certain of its subsidiaries entered into a $1.6 billion long-term unsecured, revolving credit facility (as amended, the “2014 Revolving Credit Facility”) with a syndicate of U.S. and international banks and financial institutions. On March 27, 2019, the Company entered into a second amended and restated credit agreement (the "Revolving Credit Facility"), which amended and restated the 2014 Revolving Credit Facility by, among other things, (a) extending the maturity date of the credit facility to March 27, 2024, (b) increasing the facility amount to $2.25 billion (with an accordion feature that allows a further increase of the facility amount up to $3.25 billion), (c) eliminating the covenants restricting investments, joint ventures and acquisitions by the Company and its subsidiaries and (d) adjusting the financial covenants to eliminate the net worth covenant upon the removal of the same covenant from the Company’s existing Note Purchase Agreement (defined below). We were in compliance with the covenants under the Revolving Credit Facility at ~~January 1,~~December 31, 2021.

On December 16, 2020, Jacobs entered into a first amendment to the Revolving Credit Facility, which provides for, among other things, (a) administrative changes allowing a one-time limited conditionality draw under the Revolving Credit Facility in connection with the consummation of the proposed acquisition by the Company, indirectly through a subsidiary of the Company, of a majority interest in PA Consulting Group Limited, a private limited company organized under the laws of England and Wales and (b) an increase in the interest rate applicable margin to 1.625% per annum if the Consolidated Leverage Ratio (as defined in the Revolving Credit Facility) of the Company is equal to or greater than 3.00 to 1.00.

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JACOBS ENGINEERING GROUP INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (CONTINUED)

The Revolving Credit Facility permits the Company to borrow under 2 separate tranches in U.S. dollars, certain specified foreign currencies, and any other currency that may be approved in accordance with the terms of the Revolving Credit Facility. The Revolving Credit Facility also provides for a financial letter of credit sub facility of $400.0 million, permits performance letters of credit, and provides for a $50.0 million sub facility for swing line loans. Letters of credit are subject to fees based on the Company’s Consolidated Leverage Ratio. The Company pays a facility fee of between 0.08% and ~~0.20%~~0.23% per annum depending on the Company’s Consolidated Leverage Ratio.

~~Page 17~~

~~JACOBS ENGINEERING GROUP INC. AND SUBSIDIARIES~~

~~NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (CONTINUED)~~

On March 25, 2020, the Company entered into an unsecured term loan facility (the ~~“Term~~“2020 Term Loan Facility”) with a syndicate of financial institutions as lenders. Under the 2020 Term Loan Facility, the Company borrowed an aggregate principal amount of $730.0 million and one of the Company's U.K. subsidiaries borrowed an aggregate principal amount of £250.0 million. The proceeds of the term loans were used to repay an existing term loan with a maturity date of June 2020 and for general corporate purposes. The 2020 Term Loan Facility contains affirmative and negative covenants and events of default customary for financings of this type that are consistent with those included in the Revolving Credit Facility. During fiscal 2020, the Company entered into interest rate and cross currency derivative contracts to swap a portion of our variable rate debt to fixed rate debt. See Note ~~18-~~19- Commitments and Contingencies and Derivative Financial Instruments for discussion regarding the Company's derivative instruments.

On January 20, 2021, the Company entered into an unsecured delayed draw term loan facility (the “2021 Term Loan Facility”) with a syndicate of financial institutions as lenders. Under the 2021 Term Loan Facility, the Company borrowed an aggregate principal amount of $200.0 million and £650.0 million. The proceeds of the term loans were used primarily to fund the Company's investment in PA Consulting. The 2021 Term Loan Facility contains affirmative and negative covenants and events of default customary for financings of this type that are consistent with those included in the Revolving Credit Facility and the 2020 Term Loan Facility.

The 2020 Term Loan Facility and the 2021 Term Loan Facility are together referred to as the "Term Loan Facilities". We were in compliance with the covenants under the Term Loan Facilities at December 31, 2021.

On March 12, 2018, Jacobs entered into a note purchase agreement (as amended, the "Note Purchase Agreement") with respect to the issuance and sale in a private placement transaction of $500 million in the aggregate principal amount of the Company’s senior notes in three series (collectively, the “Senior Notes”). The Note Purchase Agreement provides that if the Company's consolidated leverage ratio exceeds a certain amount, the interest on the Senior Notes may increase by 75 basis points. The Senior Notes may be prepaid at any time subject to a make-whole premium. The sale of the Senior Notes closed on May 15, 2018. The Company used the net proceeds from the offering of Senior Notes to repay certain existing indebtedness and for other general corporate purposes. The Note Purchase Agreement contains affirmative, negative and financial covenants customary for financings of this type, including, among other things, covenants to maintain a minimum consolidated net worth and maximum consolidated leverage ratio and limitations on certain other liens, mergers, dispositions and transactions with affiliates. In addition, the Note Purchase Agreement contains customary events of default. We were in compliance with the covenants under the Note Purchase Agreement at ~~January 1,~~December 31, 2021.

We believe the carrying value of the Revolving Credit Facility, the Term Loan ~~Facility~~Facilities and other debt outstanding approximates fair value based on the interest rates and scheduled maturities applicable to the outstanding borrowings. The fair value of the Senior Notes is estimated to be ~~$547.8~~$547.5 million at ~~January 1,~~December 31, 2021, 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.

On January 20, 2021, Jacobs entered into a delayed draw term loan facility (the "Delayed Draw Term Loan Facility) with a syndicate of financial institutions as lenders. The Delayed Draw Term Loan Facility matures on the third anniversary of the date of closing. Under the Delayed Draw Term Loan Facility, the Company may borrow up to $200 million of U.S. dollar denominated term loans and up to £650 million U.K. pound sterling denominated loans. The proceeds of the term loans may be used to fund the acquisition of a majority interest in PA Consulting Group Limited, refinance certain existing indebtedness and pay related transaction costs and expenses. The Delayed Draw Term Loan Facility contains affirmative and negative covenants and events of default customary for financings of this type and that are consistent with those included in the Revolving Credit Facility and the Term Loan Facility. Depending on the Company’s consolidated leverage ratio, borrowings under the Delayed Draw Term Loan Facility will bear interest at either a eurocurrency rate plus a margin of between 0.875% and 1.625% or a base rate plus a margin of between 0% and 0.625%. From the date that is 90 days after the closing of the Delayed Draw Term Loan Facility, the Company must pay a ticking fee with respect to undrawn commitments under the facility at a rate that will range between 0.80% and 0.225% based on the Company’s Consolidated Leverage Ratio.

The Company has issued ~~$2.3~~$1.7 million in letters of credit under the Revolving Credit Facility, leaving $~~1.98~~1.67 billion of available borrowing capacity under the Revolving Credit Facility at ~~January 1,~~December 31, 2021. In addition, the Company had issued ~~$249.8~~$272.0 million under separate, committed and uncommitted letter-of-credit facilities for total issued letters of credit of $~~252.1~~273.7 million at ~~January 1,~~December 31, 2021.

13. Leases

The Company’s right-of use assets and lease liabilities relate to real estate, project assets used in connection with long-term construction contracts, IT assets and vehicles. The Company’s leases have remaining lease terms of one year to thirteen years. The Company’s lease obligations are primarily for the use of office space and are primarily operating leases. Certain of the Company’s leases contain renewal, extension, or termination options. The Company assesses each option on an individual basis and will only include options reasonably certain of exercise in the lease term. The Company generally

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JACOBS ENGINEERING GROUP INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (CONTINUED)

considers the base term to be the term provided in the contract. None of the Company’s lease agreements contain material options to purchase the lease property, material residual value guarantees, or material restrictions or ~~covenants.~~

~~Page 18~~

~~JACOBS ENGINEERING GROUP INC. AND SUBSIDIARIES~~

~~NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (CONTINUED)~~

covenants

Long-term project asset and vehicle leases (leases with terms greater than twelve months), along with all real estate and IT asset leases, are recorded on the consolidated balance sheet at the present value of the minimum lease payments not yet ~~paid.~~paid, net of impairments taken. Because the Company primarily acts as a lessee and the rates implicit in its leases are not readily determinable, the Company generally uses its incremental borrowing rate on the lease commencement date to calculate the present value of future lease payments. Certain leases include payments that are based solely on an index or rate. These variable lease payments are included in the calculation of the right-of-use ("ROU") asset and lease liability and are initially measured using the index or rate at the lease commencement date. Other variable lease payments, such as payments based on use and for property taxes, insurance, or common area maintenance that are based on actual assessments are excluded from the ROU asset and lease liability and are expensed as incurred. In addition to the present value of the future lease payments, the calculation of the ROU asset also includes any deferred rent, lease pre-payments and initial direct costs of obtaining the lease, such as commissions.

Certain lease contracts contain nonlease components such as maintenance and utilities. The Company has made an accounting policy election, as allowed under ASC 842-10-15-37 and discussed above, to capitalize both the lease component and nonlease components of its contracts as a single lease component for all of its right-of-use assets.

Short-term project asset and vehicle leases (project asset and vehicle leases with an initial term of twelve months or less or leases that are cancellable by the lessee and lessor without significant penalties) are not recorded on the consolidated balance sheet and are expensed on a straight-line basis over the lease term. The majority of the Company’s short-term leases relate to equipment used on construction projects. These leases are entered into at agreed upon hourly, daily, weekly or monthly rental rates for an unspecified duration and typically have a termination for convenience provision. Such equipment leases are considered short-term in nature unless it is reasonably certain that the equipment will be leased for a term greater than twelve months.

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JACOBS ENGINEERING GROUP INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (CONTINUED)

The components of lease expense (reflected in selling, general and administrative expenses) for the three months ended December 31, 2021 and January 1, 2021 ~~and December 27, 2019~~ were as follows (in thousands):

Three Months Ended
January 1, 2021 December 27, 2019
Lease cost
Operating lease cost $ 39,444 $ 44,080
Variable lease cost 8,183 8,597
Sublease income (3,396) (3,334)
Total lease cost $ 44,231 $ 49,343


	Three Months Ended
	December 31, 2021		January 1, 2021
Lease expense



Operating lease expense	$	40,538	$	39,444
Variable lease expense	7,084		8,183
Sublease income	(3,668)		(3,396)
Total lease expense	$	43,954	$	44,231

Supplemental information related to the Company's leases for the three months ended ~~January 1,~~December 31, 2021 was as follows (in thousands):

Three Months Ended

December 31, 2021

Cash paid for amounts included in the measurements of lease liabilities

48,909

Cash paid for amounts included in the measurements of lease liabilities

65,430

Right-of-use assets obtained in exchange for new operating lease liabilities

27,569

Right-of-use assets obtained in exchange for new operating lease liabilities

1,262

Weighted average remaining lease term - operating leases

7 years

Weighted average remaining lease term - operating leases

7 years

Weighted average discount rate - operating leases

2.7%

Weighted average discount rate - operating leases

2.7%

Total remaining lease payments under the Company's leases for the remainder of fiscal 2022 and for the succeeding years is as follows (in thousands):


Fiscal Year	Operating Leases
2022	$	141,807
2023	159,136
2024	146,064
2025	122,723
2026	105,223
Thereafter	278,300
	953,253
Less Interest	(84,016)
	$	869,237

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

In the first quarter of fiscal 2022, as a result of the Company's transformation initiatives including the changing nature of the Company's use of office space for its workforce, the Company evaluated its existing real estate lease portfolio. These initiatives during the current quarter resulted in the abandonment of certain leased office spaces and the establishment of a formal plan to sublease certain other leased spaces that will no longer be utilized by the Company. In connection with the Company’s actions related to these initiatives, the Company evaluated certain of its lease right-of-use assets and related property, equipment and leasehold improvements for impairment under ASC 360.

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (CONTINUED)

~~Total~~As a result of the analysis, the Company recognized an impairment loss during the first quarter of fiscal 2022 of $72.3 million, which is included in selling, general and administrative expenses in the accompanying statement of earnings for the current fiscal quarter. The impairment loss recorded includes $54.9 million related to right-of-use lease assets and $17.4 million related to other long-lived assets, including property, equipment and improvements and leasehold improvements.

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. The significant assumptions used in estimating fair value include the expected downtime prior to the commencement of future subleases, projected sublease income over the remaining lease ~~payments under~~periods and discount rates that reflect the ~~Company's leases for the remainder~~level of ~~fiscal 2021 and for the succeeding years is as follows (in thousands):~~

Fiscal Year Operating Leases
2021 $ 141,552
2022 170,667
2023 151,661
2024 132,968
2025 111,438
Thereafter 277,047
985,333
Less Interest (85,357)
$ 899,976

risk associated with receiving future cash flows.

14. Pension and Other Postretirement Benefit Plans

The following table presents the components of net periodic pension benefit recognized in earnings during the three months ended December 31, 2021 and January 1, 2021 ~~and December 27, 2019~~ (in thousands):


		Three Months Ended				Three Months Ended
		January 1, 2021		December 27, 2019				December 31, 2021		January 1, 2021
Component:	Component:						Component:
Service cost	Service cost	$	1,735	$	1,465		Service cost	$	1,709	$	1,735
Interest cost	Interest cost	11,785		13,031			Interest cost	13,784		11,785
Expected return on plan assets	Expected return on plan assets	(25,427)		(27,665)			Expected return on plan assets	(23,263)		(25,427)
Amortization of previously unrecognized items	Amortization of previously unrecognized items	4,032		3,110			Amortization of previously unrecognized items	3,092		4,032
Plan Amendment and settlement loss (gain)		0		2,651

Total net periodic pension benefit recognized	Total net periodic pension benefit recognized	$	(7,875)	$	(7,408)		Total net periodic pension benefit recognized	$	(4,678)	$	(7,875)

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. ~~In the first fiscal quarter of 2020, the Company incurred a settlement loss on one of its U.S. defined benefit plans of approximately $2.7 million.~~

The following table presents certain information regarding the Company’s cash contributions to our pension plans for fiscal ~~2021~~2022 (in thousands):


Cash contributions made during the first three months of fiscal ~~2021~~2022	$	~~9,096~~9,488
Cash contributions projected for the remainder of fiscal ~~2021~~2022	~~28,942~~26,703
Total	$	~~38,038~~36,191

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JACOBS ENGINEERING GROUP INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (CONTINUED)

15. PA Consulting Business ~~Combinations~~Combination

~~Buffalo Group~~Deal Summary, Opening Balance Sheet and Pro Forma Financial Information

On ~~November 24, 2020, a subsidiary of~~March 2, 2021, Jacobs completed the ~~acquisition~~strategic investment of ~~Buffalo Group,~~ a ~~leader~~65% interest in ~~advanced cyber~~PA Consulting, a UK-based leading innovation and ~~intelligence solutions.~~transformation consulting firm. The ~~Company paid~~ total consideration ~~of $212.8 million, which~~paid by the Company was ~~comprised of approximately $181.4~~$1.7 billion, funded through cash on hand, proceeds from a new term loan and draws on the Company's existing revolving credit facility. Further, in connection with the transaction, an estimated additional $261 million in ~~cash~~investment proceeds had not yet been distributed at the investment date due to continuing employment requirements of associated management owners. Consequently, this amount represented compensation expense incurred related to the ~~former owners of Buffalo Group and~~investment that was expensed subsequent to the ~~assumption of Buffalo Group's debt of approximately $7.7 million and $23.7 million in other assumed liabilities. The Company repaid all~~date of the ~~assumed Buffalo Group debt~~transaction, and was reflected in selling, general and administrative expense on the consolidated income statement for the fiscal year ended October 1, 2021. The remaining 35% interest was acquired by PA Consulting employees, whose redeemable noncontrolling interests had a fair value of $582.4 million on the ~~end of the first fiscal quarter of 2021. Additionally, the Company recorded contingent consideration of $14.6 million which~~closing date, including subsequent purchase accounting adjustments. PA Consulting is ~~expected to be settled in fiscal 2022. The acquisition of Buffalo Group allows Jacobs to further expand its cyber~~accounted for as a consolidated subsidiary and ~~intelligence solutions offering to government clients.~~as a separate operating segment. See Note 12- Borrowings for more discussion on the financing for the transaction.

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

~~Assets~~


Assets
Cash and cash equivalents	$	134.9
Receivables	164.9
Property, equipment and improvements, net	40.5
Goodwill	1,450.5
Identifiable intangible assets	1,004.2
Prepaid expenses and other current assets	9.5
Miscellaneous long term assets	83.7
Total Assets	$	2,888.2

Liabilities
Accounts payable	$	6.5
Accrued liabilities and other current liabilities	349.2
Other long term liabilities	248.2
Total Liabilities	$	603.9
Redeemable Noncontrolling interests	582.4
Net assets acquired	$	1,701.9

~~Cash and cash equivalents~~

~~8.4~~

~~Receivables~~

~~19.2~~

~~Property, equipment and improvements, net~~

~~2.3~~

~~Goodwill~~

~~139.6~~

~~Identifiable intangible assets~~

~~71.0~~

~~Prepaid expenses and other current assets~~

~~6.2~~

~~Total Assets~~

~~246.7~~

~~Liabilities~~

~~Accounts payable, accrued expenses and other current liabilities~~

~~46.9~~

~~Contingent consideration~~

~~14.6~~

~~Other long term liabilities~~

~~3.8~~

~~Total Liabilities~~

~~65.3~~

~~Net assets acquired~~

~~181.4~~

The purchase price allocation is based upon preliminary information and is subject to change when additional information is obtained. Goodwill recognized results from a substantial assembled workforce, which does not qualify for separate recognition, as well as expected future ~~synergies from combining operations. All~~economic benefits. None of the goodwill recognized is expected to be deductible for tax ~~purposes, given the acquisition was structured as an asset acquisition.~~purposes. The Company has not completed its final assessment of the fair values of ~~Buffalo Group's~~PA Consulting's assets acquired and liabilities assumed. The final purchase price allocation could result in adjustments to certain assets and liabilities, including the residual amount allocated to goodwill.

~~Identified~~

Since the initial preliminary estimates reported in the second quarter of fiscal 2021, the Company has updated certain provisional amounts reflected in the preliminary purchase price allocation, as summarized in the estimated fair values of PA Consulting assets acquired and liabilities assumed above. See below for further discussion on updates to redeemable noncontrolling interests.

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

Fair value measurements relating to the Buffalo Group are made primarily using Level 3 inputs including discounted cash flow and Monte Carlo simulation techniques. Fair value for the identified intangible assets is estimated using inputs primarily for the income approach, which include the use of both the multiple period excess earnings method and the relief from royalties method. The significant assumptions used in estimating fair value include (i) the estimated life the asset will contribute to cash flows, such as attrition rate of customers or remaining contractual terms, (ii) profitability 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. The fair value of the contingent consideration is estimated using a Monte Carlo simulation and the significant assumptions used include projections of revenues for Buffalo Group through fiscal 2021 and probabilities of meeting those projections.

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

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (CONTINUED)

~~John Wood Group's Nuclear~~The following presents summarized unaudited pro forma operating results of Jacobs from continuing operations assuming that the Company had the PA Consulting investment at September 28, 2019. These pro forma operating results are presented for illustrative purposes only and are not indicative of the operating results that would have been achieved had the related events occurred (in millions, except per share data):


	For the Three Months Ended
	January 1, 2021
Revenues	$	3,632.7
Net earnings (loss) of the Group	$	282.1
Net earnings attributable to Jacobs	$	264.6
Net earnings attributable to Jacobs per share:
Basic earnings per share	$	2.04
Diluted earnings per share	$	2.02

Income tax expense for the three-month pro forma period ended January 1, 2021 was $76.7 million.

Redeemable Noncontrolling Interest

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

During the first quarter of fiscal 2022, PA Consulting repurchased certain shares of the redeemable noncontrolling interest holders for $35.1 million in cash. The difference between the cash purchase price and the recorded book value of these repurchased interests was recorded in the Company’s consolidated retained earnings.

Changes in the redeemable noncontrolling interest during the three months ended December 31, 2021 are as follows (in thousands):




Balance at October 1, 2021	$	657,722
Accrued Preferred Dividend to Preference Shareholders	16,687
Attribution of Preferred Dividend to Common Shareholders	(16,687)

Net income attributable to redeemable noncontrolling interest to Common Shareholders	9,683
Redeemable Noncontrolling interests redemption value adjustment	15,203
Repurchase of redeemable noncontrolling interests	(42,856)
Cumulative translation adjustment and other	(2,088)
Balance at December 31, 2021	$	637,664

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

Employee Benefit Trust

PA Consulting is party to an employee benefit trust that is a separately administered discretionary trust for the benefit of employees and is consolidated under U.S. GAAP. At December 31, 2021, the Company held $0.7 million in cash within the employee benefit trust that is restricted from general use and is included in prepaid expenses and other current assets on the consolidated balance sheet.

Page 26

JACOBS ENGINEERING GROUP INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (CONTINUED)

16. Other Business Combinations

StreetLight Data, Inc.

On February 4, 2022, the Company acquired StreetLight Data, Inc., ("StreetLight") for a purchase price based on an enterprise value of $209 million on a cash-free, debt-free basis, subject to customary post-closing adjustments. StreetLight is a pioneer of mobility analytics who uses its data and machine learning resources to shed light on mobility and enable users to solve complex transportation problems.

BlackLynx

On ~~March 6, 2020,~~November 19, 2021, a subsidiary of Jacobs ~~completed~~acquired all outstanding shares of common stock of BlackLynx, a provider of high-performance software, to complement Jacobs' portfolio of cyber, intelligence and digital solutions. The Company paid total base consideration of approximately $234.9 million in cash to the former owners of BlackLynx. In addition, the transaction involved the potential payment of future consideration that is contingent upon the achievement of certain revenue and gross margin thresholds being achieved in calendar year 2022. The estimated fair value of the contingent consideration on the acquisition date is $1.3 million. The future contingent consideration will be paid, if and to the extent achieved, in second quarter of fiscal 2023. In conjunction with the acquisition, the Company also paid off BlackLynx's debt of approximately $5.3 million simultaneously with the consummation of the nuclear consulting, remediation and program management business of John Wood Group, a U.K.-based energy services company, for an enterprise value of £246 million, or approximately $317.9 million, less cash acquired of $24.3 million, as updated for additional working capital adjustments. The John Wood Group nuclear business allows Jacobs to further expand its lifecycle nuclear services business. acquisition.The following summarizes the fair values of ~~John Wood Group's~~BlackLynx's assets acquired and liabilities assumed as of the acquisition date (in millions):


Assets
Cash and cash equivalents	$	~~24.3~~5.1
Receivables	~~74.2~~
~~Other current assets~~	~~5.2~~7.7
Property, equipment and improvements, net	~~8.3~~0.8
Goodwill	~~206.2~~158.5
Identifiable intangible assets	~~80.0~~103.5
~~Miscellaneous~~Prepaid expenses and other current assets	~~19.4~~3.2
Total Assets	$	~~417.6~~278.8

Liabilities
Accounts payable, accrued expenses and other current liabilities	$	~~70.7~~19.5

~~Long~~Other long term liabilities	~~29.0~~23.1
Total Liabilities	~~99.7~~42.6
Net assets acquired	$	~~317.9~~236.2

The purchase price allocation is based upon preliminary information and is subject to change when additional information is obtained. Goodwill recognized results from a substantial assembled workforce, which does not qualify for separate recognition, as well as expected future synergies from combining operations. None of the goodwill recognized is expected to be deductible for tax purposes. The Company has not completed its final assessment of the fair values of ~~John Wood Group's~~BlackLynx's assets acquired and liabilities assumed. The final purchase price allocation could result in adjustments to certain assets and liabilities, including the residual amount allocated to goodwill.

~~Identified~~Identifiable intangibles ~~include~~are customer relationships, contracts and backlog and ~~developed technology. The customer relationships, contracts~~technology and backlog intangible represents the fair value of existing contracts, underlying customer relationships and backlog. The customer relationships, contracts and backlog intangible and the developed technology intangible have estimated lives of 12 and 15 years, respectively.

Fair value measurements relating to the John Wood Group nuclear business are made primarily using Level 3 inputs including discounted cash flow techniques. Fair value is estimated using inputs primarily for the income approach, which include the use of both the multiple period excess earnings method and the relief from royalties method. The significant assumptions used in estimating fair value include (i) the estimated life the asset will contribute to cash flows, such as attrition rate of customers or remaining contractual terms, (ii) profitability 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.

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

Buffalo Group

Page 2227

JACOBS ENGINEERING GROUP INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (CONTINUED)

~~PA Consulting Group Limited~~

On November ~~27,~~24, 2020, a subsidiary of Jacobs completed the acquisition of Buffalo Group, a leader in advanced cyber and intelligence solutions which allows Jacobs to further expand its cyber and intelligence solutions offerings to government clients. The Company paid total consideration of $190.1 million, which was comprised of approximately $182.4 million in cash to the former owners of Buffalo Group and contingent consideration of $7.7 million. The contingent consideration was subsequently recognized in fiscal 2021 as an offset to selling, general and administrative expense when it was determined no amounts would be paid. In conjunction with the acquisition, the Company ~~entered into an agreement to make an investment in PA Consulting~~assumed the Buffalo Group's debt of approximately $7.7 million. The Company repaid all of the assumed Buffalo Group ~~Limited~~debt by ~~acquiring approximately 65%~~the end of ~~its share capital in~~ the ~~form~~first fiscal quarter of ~~preferred~~2021.The following summarizes the fair values of Buffalo Group's assets acquired and ~~common equity~~liabilities assumed as of the acquisition date (in millions):


Assets
Cash and cash equivalents	$	8.4
Receivables	19.2
Property, equipment and improvements, net	2.3
Goodwill	130.7
Identifiable intangible assets	74.0
Prepaid expenses and other current assets	6.2
Total Assets	$	240.8

Liabilities
Accounts payable, accrued expenses and other current liabilities	$	46.9

Other long term liabilities	3.8
Total Liabilities	50.7
Net assets acquired	$	190.1

Goodwill recognized results from a substantial assembled workforce, which does not qualify for ~~an aggregate amount~~separate recognition, as well as expected future synergies from combining operations. All of ~~£1.8 billion. The transaction~~the goodwill recognized is expected to ~~close~~be deductible for tax purposes, given the acquisition was structured as an asset acquisition for tax purposes. The Company has completed its final assessment of the fair values of Buffalo Group's assets acquired and liabilities assumed. Since the initial preliminary estimates reported in the ~~second~~first quarter of fiscal ~~2021.~~2021, the Company has updated certain amounts reflected in the final purchase price allocation, as summarized in the fair values of Buffalo Group's assets acquired and liabilities assumed as of the acquisition date set forth above.

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

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

~~16.~~17. Sale of Energy, Chemicals and Resources ("ECR") Business

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

~~Discontinued Operations~~

As a result of the ECR sale, substantially all ECR-related assets and liabilities were sold (the "Disposal Group"). We determined that the Disposal Group should be reported as discontinued operations in accordance with ASC 210-05, Discontinued Operations because their disposal represent a strategic shift that had a major effect on our operations and financial results. As such, the financial results of the ECR business are reflected in our unaudited Consolidated Statements of Earnings as discontinued operations for all periods presented. Additionally, assets and liabilities of the ECR business were reflected as held-for-sale in the Consolidated Balance Sheets through December 27, 2019. As of the fiscal year ended October 2, 2020, all of the ECR business to be sold under the terms of the ECR sale had been conveyed to Worley and as such, no amounts remain held for sale.

~~Summarized Financial Information of Discontinued Operations~~

~~The following table represents earnings (loss) from discontinued operations, net of tax (in thousands):~~

For the Three Months Ended
January 1, 2021 December 27, 2019
Revenues $ 0 $ 7,099
Direct cost of contracts 0 (4,692)
Gross profit 0 2,407
Selling, general and administrative expenses (19) 47,159
Operating (Loss) Profit (19) 49,566
Gain on sale of ECR business — 61,943
Other (expense) income, net 0 1
Earnings Before Taxes from Discontinued Operations (19) 111,510
Income Tax Expense 5 (33,923)
Net Earnings of the Group from Discontinued Operations $ (14) $ 77,587

~~Page 23~~

~~JACOBS ENGINEERING GROUP INC. AND SUBSIDIARIES~~

~~NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (CONTINUED)~~

~~For~~ ~~the three months ended December 27, 2019, selling, general and administrative expenses included an offsetting insurance recovery of $50.0 million~~ recorded in connection with a legal matter. The gain on sale of the ECR business of $61.9 million for the three months ended December 27, 2019, primarily included additional income for the release of a deferred gain upon achievement of the IT Migration Date described below in connection with the delivery to Worley of certain IT application and hardware assets related to the ECR business, as well as adjustments to the purchase price for working capital and certain other items in connection with the ECR sale.

~~The Company expects to finalize the remaining purchase price adjustments in connection with the ECR sale before the end of fiscal 2021.~~

~~Gain on Sale and Deferred Gain~~

As a result of the ECR sale, the Company recognized a pre-tax gain of approximately ~~$1.0~~$1.1 billion, $935.1 million of which was recognized in fiscal 2019, $110.2 million for the year ended October 2, 2020 and $—15.6 million for the ~~three months~~year ended ~~January~~October 1, 2021.

Upon closing the ECR sale, the Company retained a noncontrolling interest (with significant influence) in People & Places Solutions ("P&PS")-related activities in one international legal entity acquired by Worley. The fair value of the Company’s retained interest in the net assets and liabilities of this entity was estimated at $33.0 million and recorded at closing. For another international legal entity, the closing and transfer of ECR-related assets to Worley were set to occur at a future date. At the time of the ECR sale, the Company allocated proceeds received to these deferred closing items on a relative fair value basis and recognized a deferred gain of $34.4 million. During the second fiscal quarter of 2020, the delayed transfer of the ECR-related assets and liabilities of these two international entities occurred, and as a result, previously deferred gain amounts were recognized.

In addition to consideration received for the sale of the business, the proceeds received included advanced consideration for the Company to deliver IT application and related hardware assets at a future date (“IT Migration Date”) to Worley upon completion of the interim transition services, described further below. This deliverable of IT assets was considered to be a separate element of the ECR business sale transaction, and accordingly, we allocated a portion of the proceeds received of $95.3 million on a relative fair value basis to this separate deliverable and recognized deferred income. Upon completion and acceptance of this deliverable by Worley in December 2019, the deferred proceeds were recognized in income, along with expenses associated with any costs incurred and deferred by the Company for this deliverable.

~~Investment in Worley Stock~~

As discussed above, subsequent to the ECR sale, the Company holds 51.4 million in ordinary shares of Worley. Dividend income and unrealized gains and losses on changes in fair value of Worley shares are recognized in miscellaneous income (expense), net in continuing operations. The Company's investment in Worley is measured at fair value through net income as it is an equity investment with a readily determinable fair value based on quoted market prices and is $455.2 million at January 1, 2021 and $347.5 million at October 2, 2020. For the three months ended~~January 1, 2021 and December 27, 2019, the Company recognize~~d a gain of $107.7 million and $105.3 million, respectively, associated with share price and currency changes on this investment. Quoted market prices are available for these securities in an active market and therefore categorized as a Level 1 input.

~~Transition Service Agreement~~

Upon closing of the ECR sale, the Company entered into a Transition Services Agreement (the "TSA") with Worley pursuant to which the Company, on an interim basis, provided various services to Worley, including executive consultation, corporate, information technology, and project services. The initial term of the TSA began immediately following closing of the ECR sale on April 26, 2019 and expired in April 2020, although the parties mutually agreed to extend certain of the services for additional time periods beyond the initial term. Pursuant to the terms of the TSA, the Company received payments for the interim services which approximate costs incurred to perform the services. The Company has recognized costs recorded in SG&A expense incurred to perform the TSA, offset by ~~$0.2 million~~ ~~and $12.0 million in~~ ~~TSA related income for such services that is reported in miscellaneous income (expense) for the~~ ~~three months ended~~ ~~January 1, 2021 and December 27, 2019, respectively, before inclusion of certain incremental outside service support costs agreed to be shared equally by the parties.~~

Page 2428

JACOBS ENGINEERING GROUP INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (CONTINUED)

~~17.~~In the second quarter of fiscal 2021, the Company received final working capital settlement proceeds of $36.4 million from Worley and as such, recorded a pre-tax gain of $15.6 million. Offsetting the proceeds from the settlement to arrive at the net gain amount were previously recorded accounts receivable from Worley.

Investment in Worley Stock

As discussed above, the Company held ordinary shares of Worley that it received in connection with the ECR sale. Dividend income, realized gains and losses on sale and unrealized gains and losses on changes in fair value of Worley shares were recognized in miscellaneous income (expense), net in continuing operations prior to sale. The Company's investment in Worley was measured at fair value through net income as it was an equity investment with a readily determinable fair value based on quoted market prices and for the three months endedJanuary 1, 2021, the Company recognized a $107.7 million gain associated with share price and currency changes on this investment. The Company completed the sale of all ordinary shares of Worley it held in the fourth fiscal quarter of fiscal 2021.

18. Restructuring and Other Charges

During first quarter fiscal 2022, the Company implemented certain restructuring and integration initiatives relating to the BlackLynx acquisition, the activities of which are expected to be substantially completed before the end of fiscal 2022. Also, during first quarter fiscal 2022, the Company implemented further real estate rescaling efforts that were associated with its fiscal 2020 transformation program relating to real estate and other staffing initiatives. These initiatives are expected to continue into fiscal 2023.

During fiscal 2021, the Company implemented certain restructuring and integration initiatives relating to the Buffalo Group ~~acquisition.~~acquisition and the PA Consulting investment. The activities of these initiatives are substantially completed and are expected to ~~be substantially completed~~end before the end of fiscal ~~2021.~~2022.

Additionally, the Company recorded an impairment charges on its investment in AWE during ~~the first quarter of~~ fiscal 2021. See related discussion in Note 11- Joint ventures, VIEs and other investments.

During fiscal 2020, the Company implemented certain restructuring and separation initiatives, including the Company's fourth quarter fiscal 2020 transformation initiatives relating to real estate and other staffing programs. The activities of these initiatives are expected to continue into fiscal 2023.

During fiscal 2019 and continuing into fiscal 2020, the Company implemented certain restructuring, separation and integration initiatives associated with the ECR sale, the acquisition of The KeyW Holding Corporation ("KeyW"), and other related cost reduction initiatives. Additionally, in fiscal 2020, the Company implemented certain restructuring and integration initiatives associated with the acquisition of John Wood Group's nuclear business. The restructuring activities and related costs were comprised mainly of separation and lease abandonment and sublease programs, while the separation and integration activities and costs were mainly related to the engagement of consulting services and internal personnel and other related costs dedicated to the Company’s ECR-business separation and integration of KeyW and the John Wood Group’s nuclear business. The activities of these initiatives ~~are expected to be~~have been substantially ~~completed before~~completed.

As part of the ~~end~~Company's acquisition of CH2M Hill Companies, Ltd. ("CH2M") during fiscal ~~2021.~~

~~During the fourth fiscal quarter of 2017,~~2018, the Company implemented certain restructuring ~~and pre-integration~~ plans ~~associated with the then-pending acquisition of CH2M, which closed on December 15, 2017. The restructuring activities and related costs under these plans~~that were comprised mainly of severance and lease abandonment programs ~~while the~~as well as integration activities ~~and costs were mainly related to~~involving the engagement of professional services and internal personnel ~~and other related costs~~ dedicated to the ~~Company’s~~Company's integration management efforts. ~~Following the closing of the CH2M acquisition, these~~These activities have continued through fiscal ~~2020~~2021 and are expected to be substantially completed before the end of fiscal 2022.

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 ~~LOB~~line of business ("LOB") in connection with the CH2M, John Wood Group's nuclear business, Buffalo Group and BlackLynx acquisitions and the PA Consulting investment, the ECR sale and the Company's first quarter fiscal 2022 transformation initiatives relating to real estate and other staffing programs and impairment of the AWE Management Ltd. investment for the three months ended December 31, 2021 and the CH2M, KeyW John Wood Group's nuclear business and Buffalo Group acquisitions, the ECR sale and the Company's fourth quarter fiscal 2020 transformation initiatives relating to real estate and other staffing programs and impairment of ~~the~~ AWE Management Ltd. investment for the three months ended January 1, 2021 ~~and the CH2M and KeyW acquisitions and the ECR sale for the December 27, 2019~~ (in thousands):

Three Months Ended
January 1, 2021 December 27, 2019
Critical Mission Solutions $ 3,209 $ 4,291
People & Places Solutions 5,167 10,153
Corporate 40,017 37,597
Total (1) $ 48,393 $ 52,041

Page 29

JACOBS ENGINEERING GROUP INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (CONTINUED)


	Three Months Ended
	December 31, 2021		January 1, 2021
Critical Mission Solutions	$	1,153	$	3,209
People & Places Solutions	61,169		5,167
PA Consulting	199		—
Corporate	6,838		40,017
Total (1)	$	69,359	$	48,393

(1)For the three months ended December 31, 2021 and January 1, 2021, ~~and December 27, 2019,~~ amounts include ~~$20.5~~$77.9 million and ~~$49.7~~$20.5 million, respectively, in items impacting operating profit, along with items recorded in other income (expense), net, which ~~include~~includes $1.7 million in income associated with final distributions from the exit of our AWE investment and a $(27.9) million charge, respectively, related to the impairment ofcharges on our AWE Management Ltd. investment and a gain of $6.9 million related to a lease termination which is reflected in other income (expense) for the three months ended January 1, ~~2021~~2021. See Note 20- Segment Information.

The activity in the Company’s accruals for restructuring and ~~the loss on settlement of the CH2M portion of the U.S. pension plan of $(2.4) million~~other charges for the three months ended December ~~27, 2019. See Note 19- Segment Information.~~

~~Page 25~~

~~JACOBS ENGINEERING GROUP INC. AND SUBSIDIARIES~~

~~NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (CONTINUED)~~

~~The activity in the Company’s accrual for the Restructuring and other charges, including the program activities described above, for the three months ended January 1,~~31, 2021 is as follows (in thousands):


Balance at October ~~2, 2020~~1, 2021	$	~~52,854~~14,031
Net (Credits) Charges (1)	~~48,393~~ (1,594)
Payments and ~~Usage~~other	~~(70,973)~~(1,672)
Balance at ~~January 1,~~December 31, 2021	$	~~30,274~~10,765

(1)Excludes $70,953 in other net charges associated mainly with real estate related impairments and other transformation activities described above.

The following table summarizes the Restructuring and other charges by major type of costs for the three months ended December 31, 2021 and January 1, 2021 ~~and December 27, 2019~~ (in thousands):


		Three Months Ended				Three Months Ended
		January 1, 2021		December 27, 2019				December 31, 2021		January 1, 2021
Lease Abandonments and Impairments	Lease Abandonments and Impairments	$	148	$	0		Lease Abandonments and Impairments	$	65,542	$	148
Voluntary and Involuntary Terminations	Voluntary and Involuntary Terminations	9,503		13,153			Voluntary and Involuntary Terminations	563		9,503
Outside Services	Outside Services	7,399		31,466			Outside Services	4,676		7,399
Other (1)	Other (1)	31,343		7,422			Other (1)	(1,422)		31,343
Total	Total	$	48,393	$	52,041		Total	$	69,359	$	48,393

(1)Includes ~~$27.9~~$(27.9) million related to the impairment ofcharges on our AWE Management Ltd. investment for the three months ended January 1, 2021.

Cumulative amounts ~~since 2017~~ incurred to date under our various restructuring and other activities described above by each major type of cost as of ~~January 1,~~December 31, 2021 are as follows (in thousands):


Lease Abandonments and Impairments	$	~~313,665~~383,341
Voluntary and Involuntary Terminations	~~138,472~~145,305
Outside Services	~~266,523~~298,670
Other	~~131,657~~143,557
Total	$	~~850,317~~970,873

~~18.~~Page 30

JACOBS ENGINEERING GROUP INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (CONTINUED)

19. Commitments and Contingencies and Derivative Financial Instruments

Derivative Financial Instruments

The Company is exposed to interest rate risk under its variable rate borrowings and additionally, due to the nature of the Company's international operations, we are at times exposed to foreign currency risk. As such, we sometimes enter into foreign exchange hedging contracts and interest rate hedging contracts in order to limit our exposure to fluctuating foreign currencies and interest rates.

~~In fiscal 2020 we entered into~~The Company is party to interest rate swap agreements and a cross-currency swap agreement with a notional ~~value~~values of ~~$798.4~~$795.7 million and $127.8 million, respectively, as of ~~January 1,~~December 31, 2021 to manage the interest rate exposure on our variable rate ~~loans. Additionally, we entered into a cross-currency swap agreement with a notional value of $127.8 million to manage~~loans and the ~~interest rate and~~ 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 ~~liability~~liabilities into a fixed rate ~~liability~~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. ~~Under the~~For U.S. dollar denominated interest rate swap agreements, the Company receives the one month LIBOR rate and pays monthly a fixed rate ranging from ~~.704%~~0.704% to 1.116%. For interest rate swaps denominated in British pounds, the Company receives a one month adjusted SONIA rate and ~~under~~pays a monthly fixed rate of 0.820%. Under the cross currency swap agreement, the Company receives the one month LIBOR rate plus 0.875% in USD and pays monthly a Euro fixed rate of ~~.726%~~0.726% to ~~.746%~~0.746% for the term of the swaps. The swaps were designated as cash-flow hedges in accordance with ASC 815, Derivatives and Hedging. See Note 4- New Accounting Pronouncements for additional discussion related to the application of SONIA to existing hedge contracts. The fair value of the interest rate and cross currency swaps at ~~January~~December 31, 2021 and October 1, 2021 was $11.2 million and $(0.8) million, respectively, of which $(7.4) million is inc ~~$(34.8) million, which is included~~luded in other deferred liabilities and $18.6 million is included in miscellaneous other assets on the consolidated balance sheets at December 31, 2021. As of October 1, 2021, $(11.0) million is inc

luded in other deferred liabilities and

~~Page 26~~

~~JACOBS ENGINEERING GROUP INC. AND SUBSIDIARIES~~

~~NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (CONTINUED)~~

~~sheet.~~$10.2 million is included in miscellaneous other assets on the consolidated balance sheets. The unrealized net ~~losses~~gain (loss) on these interest rate and cross currency swaps was ~~$10.8~~$13.3 million and $7.4 million, net of tax, and was included in accumulated other comprehensive ~~income~~income as of ~~January~~December 31, 2021 and October 1, ~~2021.~~2021, respectively.

Additionally, the Company held foreign exchange forward contracts in currencies that support our operations, ~~including~~including British Pound, Euro, Australian Dollar and other currencies, with notional values of ~~$425.8~~ $503.5 million at ~~January~~December 31, 2021 and $506.5 million at October 1, ~~2021.~~2021. The length of these contracts currently ranges from one to 12 months. The fair value of the foreign exchange contracts at ~~January~~December 31, 2021 and October 1, 2021 ~~was $82.3~~was $53.8 million and $55.5 million, respectively, which is included in current assets within receivables and contract assets on the consolidated balance ~~sheet~~sheets and with associated income statement impacts included in miscellaneous income (expense) in the consolidated ~~statement~~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. We are exposed to risk from credit-related losses resulting from nonperformance by counterparties to our financial instruments. We perform credit evaluations of our counterparties under forward exchange and interest rate contracts and expect all counterparties to meet their obligations. We have not experienced credit losses from our counterparties.

Contractual Guarantees and Insurance

In the normal course of business, we make contractual commitments (some of which are supported by separate guarantees) and on occasion we are a party in a litigation or arbitration proceeding. The litigation or arbitration in which we are involved includes personal injury claims, professional liability claims and breach of contract claims. Where we provide a separate guarantee, it is strictly in support of the underlying contractual commitment. Guarantees take various forms including surety bonds required by law, or standby letters of credit ("LOC" and also referred to as “bank guarantees”) or corporate guarantees given to induce a party to enter into a contract with a subsidiary. Standby LOCs are also used as security for advance payments or in various other transactions. The guarantees have various expiration dates ranging from an arbitrary date to completion of our work (e.g., engineering only) to completion of the overall project. We record in the Consolidated Balance Sheets amounts representing our estimated liability relating to such guarantees, litigation and insurance claims. Guarantees are accounted for in accordance with ASC 460-10, Guarantees, at fair value at the inception of the guarantee.

At ~~January 1,~~December 31, 2021 and October ~~2, 2020,~~1, 2021, the Company had issued and outstanding approximately ~~$252.1~~$273.7 million and ~~$263.0~~$263.8 million, respectively, in LOCs and ~~$2.1~~$2.3 billion and ~~$2.3~~$2.1 billion, respectively, in surety bonds.

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JACOBS ENGINEERING GROUP INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (CONTINUED)

We maintain insurance coverage for most insurable aspects of our business and operations. Our insurance programs have varying coverage limits depending upon the type of insurance and include certain conditions and exclusions which insurance companies may raise in response to any claim that is asserted by or against the Company. We have also elected to retain a portion of losses and liabilities that occur through using various deductibles, limits, and retentions under our insurance programs. As a result, we may be subject to a future liability for which we are only partially insured or completely uninsured. We intend to mitigate any such future liability by continuing to exercise prudent business judgment in negotiating the terms and conditions of the contracts which the Company enters with its clients. Our insurers are also subject to business risk and, as a result, one or more of them may be unable to fulfill their insurance obligations due to insolvency or otherwise.

Additionally, as a contractor providing services to the U.S. federal government, we are subject to many types of audits, investigations, and claims by, or on behalf of, the government including with respect to contract performance, pricing, cost allocations, procurement practices, labor practices, and socioeconomic obligations. Furthermore, our income, franchise, and similar tax returns and filings are also subject to audit and investigation by the Internal Revenue Service, most states within the United States, as well as by various government agencies representing jurisdictions outside the United States.

Our Consolidated Balance Sheets include amounts representing our probable estimated liability relating to such claims, guarantees, litigation, audits, and investigations. We perform an analysis to determine the level of reserves to establish for insurance-related claims that are known and have been asserted against us, as well as for insurance-related claims that are believed to have been incurred based on actuarial analysis but have not yet been reported to our claims administrators as of the respective balance sheet dates. We include any adjustments to such insurance reserves in our consolidated results of operations. Insurance recoveries are recorded as assets if recovery is probable and estimated liabilities are not reduced by expected insurance recoveries.

~~Page 27~~

~~JACOBS ENGINEERING GROUP INC. AND SUBSIDIARIES~~

~~NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (CONTINUED)~~

The Company believes, after consultation with counsel, that such guarantees, litigation, U.S. government contract-related audits, investigations and claims, and income tax audits and investigations should not have a material adverse effect on our consolidated financial statements, beyond amounts currently accrued.

Litigation and Investigations

In 2012, CH2M HILL Australia ~~Pty~~PTY Limited, a subsidiary of CH2M, entered into a 50/50 integrated joint venture with Australian construction contractor UGL Infrastructure Pty Limited. The joint venture entered into a Consortium Agreement with General Electric and GE Electrical International Inc. The Consortium was awarded a subcontract by JKC Australia LNG Pty Limited ("JKC") for the engineering, procurement, construction and commissioning of a 360 MW Combined Cycle Power Plant for INPEX Operations Australia Pty Limited at Blaydin Point, Darwin, NT, Australia. In January 2017, the Consortium terminated the Subcontract because of JKC’s repudiatory breach and demobilized from the work site. JKC claimed the Consortium abandoned the work and itself purported to terminate the Subcontract. The Consortium and JKC are now in dispute over the termination. In August 2017, the Consortium filed an International Chamber of Commerce arbitration against JKC and is seeking compensatory damages in the amount of approximately $530.0 million for repudiatory breach or, in the alternative, seeking damages for unresolved contract claims and change orders. JKC is seeking damages in excess of $1.7 billion and has drawn on the bonds. In light of the COVID-19 pandemic, a November 2020 date for commencement of the hearing ~~has been~~was vacated and the hearing ~~has been~~was rescheduled for opening arguments in April 2021 and the remaining proceedings in July and August 2021. The opening arguments did occur as scheduled, but in light of the Covid-19 pandemic, the remaining proceedings were rescheduled to now occur in April and May 2022. It is anticipated that closing arguments will be made in July 2022. Although an earlier decision is possible, no decision is expected before ~~2022.~~the end of 2022 or 2023. In September 2018, JKC filed a declaratory judgment action in Western Australia alleging that the entities which executed parent company guaranties for the Consortium, including CH2M Hill Companies, Ltd., have an obligation to pay JKC’s ongoing costs to complete the project after termination. A hearing on that matter was held in March 2019, and a decision in favor of the Consortium was issued. JKC appealed the decision, a hearing on the appeal took place in March 2020 and a decision was handed down onin July ~~22,~~ 2020 denying JKC’s appeal in its entirety. The Consortium has denied liability and is vigorously defending JKC's claims and pursuing its affirmative claims against JKC. Based on the information currently available, the Company does not expect the resolution of this matter to have a material adverse effect on the Company’s business, financial condition, results of operations or cash flows, in excess of the current reserve for this matter. See Note ~~14-~~15- Other Business Combinations in the Company's fiscal ~~2020~~2021 Form ~~10K~~10-K for further information related to CH2M contingencies.

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JACOBS ENGINEERING GROUP INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (CONTINUED)

On December 22, 2008, a coal fly ash pond at the Kingston Power Plant of the Tennessee Valley Authority ("TVA") was breached, releasing fly ash waste into the Emory River and surrounding community. In February 2009, TVA awarded a contract to the Company to provide project management services associated with the clean-up. All remediation and dredging were completed in August 2013 by other contractors under direct contracts with TVA. The Company did not perform the remediation, and its scope was limited to program management services. Certain employees of the contractors performing the cleanup work on the project filed lawsuits against the Company beginning in August 2013, alleging they were injured due to the Company's failure to protect the plaintiffs from exposure to fly ash, and asserting related personal injuries. The primary case, Greg Adkisson, et al. v. Jacobs Engineering Group Inc., case No. 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 ~~have been filed against the Company by~~were employees of the contractors that completed the remediation and dredging work. The cases are at various stages of litigation, and several of the cases are currently stayed pending resolution of other cases. Additionally, in May 2019, Roane County and the cities of Kingston and Harriman filed a ~~claim~~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,~~2020. In February 2021, the Court granted dismissal of the Delozier Complaint with prejudice, with the exception of plaintiffs’ nuisance cause of action, which ~~remain pending before the Court. In~~plaintiffs voluntarily dismissed in July 2021. Finally, in August 2021, a resident of Roane County filed an action against Jacobs and TVA claiming personal injury and property damage. 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 15, 2021, the Roane County district attorney announced that it had concluded its investigation into issues pertaining to the Kingston ~~with that investigation still pending.~~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. The Company disputes the ~~claims~~allegations asserted in all of the above matters and is vigorously defending these ~~claims.~~matters. The Company does not expect the resolution of these matters to have a material adverse effect on the Company's business, financial condition, results of operations or cash flows.

~~Page 28~~

~~JACOBS ENGINEERING GROUP INC. AND SUBSIDIARIES~~

~~NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (CONTINUED)~~

On October 31, 2019, the Company received a request from the Enforcement Division of the Securities and Exchange Commission ~~(the "SEC"~~("the SEC") for the ~~voluntary~~ production of certain information and documents. The information and documents sought by the SEC primarily relate to the operations of a joint venture in Morocco which was at one time partially-owned by the Company (and subsequently divested), including in respect of possible corrupt practices. The Company is fully cooperating with the SEC and is ~~producing the requested~~continuing to produce information and documents in its ~~possession.~~possession in response to subsequent requests by the SEC. The Company does not expect the resolution of this matter to have a material adverse effect on the Company's business, financial condition, results of operations or cash flows.

~~19.~~20. Segment Information

The Company's 23 operating segments ~~and~~are comprised of its two global lines of business ("LOBs") ~~are as follows:~~: Critical Mission Solutions ("CMS") and People & Places Solutions ("P&PS")~~, with the previous Energy, Chemicals~~ and ~~Resources ("ECR") LOB reported as discontinued operations.~~its majority investment in PA Consulting. For further information on ~~ECR,~~the PA Consulting investment, refer to Note ~~16-~~ 15 -~~Sale of Energy, Chemicals and Resources ("ECR") Business.~~ PA ConsultingBusiness Combination.

The Company’s Chair and Chief Executive Officer is the Chief Operating Decision Maker (“CODM”) and can evaluate the performance of each of these segments and make appropriate resource allocations among each of the segments. For purposes of the Company’s goodwill impairment testing, it has been determined that the Company’s operating segments are also its reporting units based on management’s conclusion that the components comprising each of its operating segments share similar economic characteristics and meet the aggregation criteria for reporting units in accordance with ASC 350, Intangibles-Goodwill and Other.

Under this organization, the sales function is managed by LOB and PA Consulting, and accordingly, the associated cost is embedded in the segments and reported to the respective head of each ~~LOB.~~segment. In addition, a portion of the costs of other support functions (e.g., finance, legal, human resources, and information technology) is allocated to each LOB using methodologies which, we believe, effectively attribute the cost of these support functions to the revenue generating activities of the Company on a rational basis. The cost of the Company’s cash incentive plan, the Leadership Performance Plan ("LPP"), formerly named the Management Incentive Plan, and the expense associated with the Jacobs Engineering Group Inc. 1999 Stock Incentive Plan (“1999 SIP”) have likewise been charged to the LOBs except for those amounts determined to relate to the business as a whole (which amounts remain in other corporate expenses).

Page 33

JACOBS ENGINEERING GROUP INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (CONTINUED)

Financial information for each ~~LOB~~segment is reviewed by the CODM to assess performance and make decisions regarding the allocation of resources. The Company generally does not track assets by LOB, nor does it provide such information to the CODM.

The CODM evaluates the operating performance of our ~~LOBs~~operating segments using segment operating profit, which is defined as margin less “corporate charges” (e.g., the allocated amounts described above). The Company incurs certain Selling, General and Administrative costs (“SG&A”) that relate to its business as a whole which are not allocated to the ~~LOBs.~~segments.

The following tables present total revenues and segment operating profit from continuing operations for each reportable segment (in thousands) and includes a reconciliation of segment operating profit to total U.S. GAAP operating profit by including certain corporate-level expenses, Restructuring and other charges (as defined in Note 1718 - Restructuring and Other Charges) and transaction and integration costs (in thousands).


		For the Three Months Ended				For the Three Months Ended
		January 1, 2021		December 27, 2019				December 31, 2021		January 1, 2021
Revenues from External Customers:	Revenues from External Customers:						Revenues from External Customers:
Critical Mission Solutions	Critical Mission Solutions	$	1,295,287	$	1,182,457		Critical Mission Solutions	$	1,162,505	$	1,295,287
People & Places Solutions	People & Places Solutions	2,086,549		2,177,592			People & Places Solutions	1,928,146		2,086,549
PA Consulting							PA Consulting	289,974		—
Total	Total	$	3,381,836	$	3,360,049		Total	$	3,380,625	$	3,381,836


	For the Three Months Ended
	December 31, 2021		January 1, 2021
Segment Operating Profit:
Critical Mission Solutions	$	111,496	$	110,072
People & Places Solutions	191,692		196,300
PA Consulting	63,071		—
Total Segment Operating Profit	366,259		306,372
Other Corporate Expenses (1)	(105,360)		(70,341)
Restructuring, Transaction and Other Charges (2)	(83,566)		(22,091)

Total U.S. GAAP Operating Profit	177,333		213,940
Total Other (Expense) Income, net (3)	(8,243)		140,171
Earnings from Continuing Operations Before Taxes	$	169,090	$	354,111


(1)			Other corporate expenses also include intangibles amortization of $46.9 million and $23.2 million for the three months ended December 31, 2021 and January 1, 2021, respectively, with this increase mainly attributable to the PA Consulting investment.
(2)			Included in the three months ended December 31, 2021 is $72.3 million of real estate impairment charges related to the Company's transformation initiatives.

(3)			The three months ended December 31, 2021 include $1.7 million in income associated with final distributions from the exit of our AWE investment and a gain of $6.9 million related to a lease termination. The three months ended January 1, 2021 include $93.1 million in fair value adjustments related to our investment in Worley stock (net of Worley stock dividend) and certain foreign currency revaluations relating to the ECR sale, $82.6 million in fair value adjustments related to our investment in C3 stock and $(27.9) million related to impairment charges on our AWE Management Ltd. investment. The investments in Worley and C3 were sold in fiscal 2021 and therefore there are no comparable amounts in the current quarter.

Page 2934

JACOBS ENGINEERING GROUP INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (CONTINUED)

For the Three Months Ended
January 1, 2021 December 27, 2019
Segment Operating Profit:
Critical Mission Solutions $ 110,072 $ 90,422
People & Places Solutions 196,300 178,328
Total Segment Operating Profit 306,372 268,750
Other Corporate Expenses (1) (70,341) (66,719)
Restructuring, Transaction and Other Charges (22,091) (50,686)
Total U.S. GAAP Operating Profit 213,940 151,345
Total Other Income (Expense), net (2) 140,171 102,824
Earnings from Continuing Operations Before Taxes $ 354,111 $ 254,169


~~(1)~~			~~Other corporate expenses also include intangibles amortization of~~ ~~$23.2 million and $21.8 million for the three-month periods ended January 1, 2021 and December 27, 2019, respectively.~~

~~(2)~~			~~For the~~ ~~three month period ended January 1, 2021, includes $93.1 million~~ ~~in fair value adjustments related to our investment in Worley stock and~~ ~~certain foreign currency revaluations relating to the ECR sale,~~ ~~$82.6 million~~ ~~in fair adjustments related to our investment in C3 stock and $(27.9) million related to impairment of our AWE Management Ltd. investment. For the~~ ~~three month period ended December 27, 2019, includes~~ ~~revenues under the Company's TSA with Worley of $12.0 million, $99.1 million in fair value adjustments related to our investment in~~ ~~Worley stock and certain foreign currency revaluations relating to the ECR~~ ~~sale, the amortization of deferred financing fees related to the CH2M acquisition of~~ ~~$0.6 million and the loss on settlement of the CH2M portion of the U.S. pension plan of $2.4 million~~.

(1)Included in other corporate expenses in the above table are costs and expenses, which relate to general corporate activities as well as corporate-managed benefit and insurance programs. Such costs and expenses include: (i) those elements of SG&A expenses relating to the business as a whole; (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; (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; and (v) certain adjustments relating to costs associated with the Company’s international defined benefit pension plans. In addition, other corporate expenses may also include from time to time certain adjustments to contract margins (both positive and negative) associated with projects, as well as other items, where it has been determined that such adjustments are not indicative of the performance of the related LOB.

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

Page 3035

Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations.

General

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 ~~January 1,~~December 31, 2021 and (ii) results of operations during the current fiscal period(s) as compared to the corresponding period(s) of the preceding fiscal year. In order to better understand such changes, readers of this MD&A should also read:

•The discussion of the critical and significant accounting policies used by the Company in preparing its consolidated financial statements. The most current discussion of our critical accounting policies appears in Item 7, Management’s Discussion and Analysis of Financial Condition and Results of Operations of our ~~2020~~2021 Form 10-K, and the most current discussion of our significant accounting policies appears in Note 2- Significant Accounting Polices in Notes to Consolidated Financial Statements of our ~~2020~~2021 Form 10-K;

•The Company’s fiscal ~~2020~~2021 audited consolidated financial statements and notes thereto included in our ~~2020~~2021 Form 10-K; and

•Item 7, Management’s Discussion and Analysis of Financial Condition and Results of Operations included in our ~~2020~~2021 Form 10-K.

In addition to historical information, this MD&A and other parts of this Quarterly Report on Form 10-Q may contain forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. Forward-looking statements are statements that do not directly relate to any historical or current fact. When used herein, words such as “expects,” “anticipates,” “believes,” “seeks,” “estimates,” “plans,” “intends,” “future,” “will,” “would,” “could,” “can,” “may,” and similar words are intended to identify forward-looking statements. Examples of forward-looking statements include, but are not limited to, statements we make concerning the potential continued effects of the COVID-19 pandemic on our business, financial condition and results of operations and our expectations as to our future growth, prospects, financial outlook and business strategy for fiscal ~~2021~~2022 or future fiscal ~~years.~~years and the anticipated benefits of acquisitions and the strategic investment in PA Consulting. You should not place undue reliance on these forward-looking statements. Although such statements are based on management’s current estimates and expectations, and/or currently available competitive, financial, and economic data, forward-looking statements are inherently uncertain, and you should not place undue reliance on such statements as actual results may differ materially. We caution the reader that there are a variety of risks, uncertainties and other factors that could cause actual results to differ materially from what is contained, projected or implied by our forward-looking statements. Such factors include the magnitude, timing, duration and ultimate impact of the COVID-19 pandemic, including the emergence and spread of variants of COVID-19, and any resulting economic downturn on our results, prospects and ~~opportunities; the timeline for easing or removing “shelter-in-place”, “stay-at-home”, social distancing, travel restrictions and similar orders,~~opportunities, measures or restrictions imposed by governments and health officials in response to the pandemic, or if such orders, measures or restrictions are re-imposed after being lifted or eased, including as a result of increases in cases of COVID-19; the ~~development,~~ effectiveness and distribution of vaccines or treatments for COVID-19; ~~and~~ the timing and scope of any government stimulus programs enacted in response to the impacts of the COVID-19 ~~pandemic.~~pandemic, including, but not limited to, any additional infrastructure-related stimulus programs, and the timing of the award of projects and funding under the Infrastructure Investment and Jobs Act signed into law by President Biden on November 15, 2021. The impact of such matters includes, but is not limited to, the possible reduction in demand for certain of our services and the delay or abandonment of ongoing or anticipated projects due to the financial condition of our clients and suppliers or to governmental budget ~~constraints;~~constraints or changes to governmental budgetary priorities; the inability of our clients to meet their payment obligations in a timely manner or at all; potential issues and risks related to a significant portion of our employees working remotely; illness, travel restrictions and other workforce disruptions that could negatively affect our supply chain and our ability to timely and satisfactorily complete our clients’ projects; difficulties associated with hiring additional ~~employees or replacing any furloughed~~ employees; ~~increased volatility in the capital markets that may affect our ability to access sources of liquidity on acceptable pricing or borrowing terms or at all;~~ and the inability of governments in certain of the countries in which we operate to effectively mitigate the financial or other impacts of the COVID-19 pandemic on their economies and workforces and our operations therein. The foregoing factors and potential future developments are inherently uncertain, unpredictable and, in many cases, beyond our control. For a description of these and additional factors that may occur that could cause actual results to differ from our forward-looking statements, see those listed and discussed in Item 1A, Risk Factors included in our ~~2020~~2021 Form 10-K and our Quarterly Reports on Form 10-Q. We undertake no obligation to release publicly any revisions or updates to any forward-looking statements. We encourage you to read carefully the risk factors, as well as the financial and business disclosures contained in this Quarterly Report on Form 10-Q and in other documents we file from time to time with the United States Securities and Exchange Commission ("the SEC").

~~Page 31~~

Impact of COVID-19 on Our Business

On March 11, 2020, the World Health Organization characterized the outbreak of the novel coronavirus (“COVID-19”) as a global pandemic and recommended certain containment and mitigation measures. On March 13, 2020,

Page 36

the United States declared a national emergency concerning the outbreak, and the vast majority of states and many municipalities have declared public health emergencies or taken similar actions. Along with these declarations, there were extraordinary and wide-ranging actions taken by international, federal, state and local public health and governmental authorities to contain and combat outbreaks of COVID-19 in regions across the United States and around the world. These actions included quarantines and “stay-at-home” or “shelter-in-place” orders, social distancing measures, travel restrictions, school closures and similar mandates for many individuals in order to substantially restrict daily activities and orders for many businesses to curtail or cease normal operations unless their work is critical, essential or life-sustaining. Although ~~certain~~most jurisdictions in which we operate have ~~taken steps to lift~~lifted or ~~ease~~eased such restrictions to various degrees, some jurisdictions have subsequently ~~reversed such lifting or easing~~reimposed restrictions to varying degrees in response to increased cases caused by variants of COVID-19. In addition, governments and central banks in the United States and other countries in which we operate have periodically enacted fiscal and monetary stimulus and assistance measures to counteract the economic impacts of COVID-19.

As it became clear that the pandemic was unparalleled in the rate of community spread, we took early, decisive action to put people first, help flatten the curve and take care of our clients and communities. ~~In early March 2020, we swiftly restricted travel and established return protocols for both client-related and personal travel. In 10 days, we~~We successfully transitioned ~~more than 85%~~the vast majority of our employees to a remote working environment to support physical distancing. Where the essential and mission-critical nature of our work requires us to maintain staff at certain sites or locations, we worked closely with our clients and established project-specific plans designed to ensure the safety of our people and the integrity of our operations. Using technology and optimizing our networks, we continue to offer flexible work scenarios for our people, and to deliver business continuity for and continued collaboration with our clients. Our Executive Leadership Team met daily for the first three months and weekly thereafter, focusing on transparency, agile response and business resiliency; and our global and regional crisis management teams continued to maintain consistent messaging and direct local responses. Our regular global Town Halls, a weekly Chair and CEO email and short, self-produced leadership videos are intended to share open, transparent information to connect and unite our global community.

We are a company operating in a critical infrastructure industry, as defined by the U.S. Department of Homeland Security. Consistent with international, federal, state and local requirements to date, we continue to materially operate. In addition, demand for certain of our services, including those supporting health care relief efforts relating to COVID-19, has increased, and could continue to increase, as a result of COVID-19. Notwithstanding our continued critical operations, COVID-19 ~~has~~ negatively impacted our business, and may have further adverse impacts, on our ~~continued~~ operations, including those listed and discussed in Item 1A, Risk Factors included in our ~~2020~~2021 Form 10-K. Accordingly, at the height of the pandemic, we ~~have~~temporarily reduced spending broadly across the Company, only proceeding with operating and capital spending that iswas critical. We had also temporarily ceased all non-essential hiring and reduced discretionary expenses, including temporarily suspending certain employee benefits and compensation through the end of fiscal 2020. Subsequently, we have adjusted our response according to the circumstances and local laws in the jurisdictions in which we operate, including the emergence and spread of variants, such as the omicron variant. Looking ahead, we have developed contingency plans ~~to reduce costs further~~ if the situation further deteriorates or lasts longer than current expectations. We will continue to actively monitor the situation and may take further actions that alter our business operations as may be necessary or appropriate for the health and safety of employees, contractors, customers, suppliers or others or as required by international, federal, state or local authorities.

~~Based on current estimates, we expect~~The impacts of the ~~impact of~~ COVID-19 topandemic continue ~~into the first half of fiscal 2021, although to a lesser degree than what was seen in fiscal 2020. Although this business disruption is expected~~ to be ~~temporary,~~felt in our operating results as compared to business levels pre-pandemic, although not significantly impacting the current fiscal quarter as compared to the corresponding quarter of the 2021 fiscal year. Further, for future periods, significant uncertainty ~~exists~~continues to exist concerning the magnitude, duration and impacts of the COVID-19 pandemic, including with regard to the effects on our customers, ~~and~~ customer demand for our ~~services.~~services and disruptions to supply chains and labor forces. Accordingly, actual results for future fiscal periods could differ materially versus current expectations and current results and financial condition discussed herein may not be indicative of future operating results and trends.

For a discussion of risks and uncertainties related to COVID-19, including the potential impacts on our business, financial condition and results of operations, see Item 1A - Risk Factors contained in our ~~2020~~2021 Form 10-K.

~~Page 32~~

Business Overview

At Jacobs, we’re challenging today to reinvent tomorrow by solving the world’s most critical problems for thriving cities, resilient environments, mission-critical outcomes, operational advancement, scientific discovery and cutting-edge manufacturing, turning abstract ideas into realities that transform the world for good. Leveraging a talent force of nearly 55,000, Jacobs provides a full spectrum of professional services including consulting, technical, scientific and project delivery for the government and private sector.

The Company’s deep global domain knowledge - applied together with the latest advances in technology - are why customers large and small choose to partner with Jacobs. We operate in two lines of business: Critical Mission Solutions and People & Places Solutions. After spending three years transforming our portfolio and setting the foundation to get us where we are today, we launched a three-year accelerated profitable growth strategy at our Investor Day in February 2019, focused on innovation and continued transformation to build upon our position as the leading solutions provider for our clients. This transformation included the $3.2 billion acquisition of CH2M and the $3.4 billion divestiture of the Company's energy, chemicals and resources business. Our acquisitions of KeyW, John Wood Group’s nuclear business and Buffalo Group will further position us as a leader in high-value government services and technology-enabled solutions, enhancing our portfolio by adding intellectual property-driven technology with unique proprietary C5ISR (command, control, communications, computer, combat systems, intelligence, surveillance and reconnaissance) rapid solutions, and amplifying Jacobs’ position as a Tier-1 global nuclear services provider.

We have altered the course of Jacobs’ future and are now focused on broadening our leadership in high growth sectors. As part of our strategy, our new brand was created from an understanding of where we’ve been, what’s true to our culture and our strategy going forward. Central to it is our new tagline: Challenging today. Reinventing tomorrow. Signaling our transition from an engineering and construction company to a global technology-forward solutions company, we have a new look, and we plan to change our name to Jacobs Solutions Inc.manufacturing.

Revenue by Type (Q1 ~~FY2021)~~FY2022)1

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1 Due to COVID-19 and the actions taken by governmental authorities and others related thereto, some of the information provided in this summary relating to sources of revenue could be substantially different in the remainder of fiscal ~~2021.~~2022.

Lines of Business

The ~~Company's~~services we provide fall into the following two ~~operating segments and global~~ lines of business ~~("LOBs") are as follows: (i)~~(LOB): Critical Mission Solutions (CMS) and ~~(ii)~~ People & Places ~~Solutions; with~~Solutions (P&PS). The LOBs and a majority investment in PA Consulting (PA) constitute the ~~previous Energy, Chemicals~~Company’s reportable segments. For additional information regarding our segments, including information about our financial results by segment and ~~Resources ("ECR") line~~financial results by geography, see Note 5 - Revenue Accounting for Contracts of ~~business now reported as discontinued operations.~~Notes to Consolidated Financial Statements.

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Critical Mission Solutions (CMS)

Our Critical Mission Solutions line of business provides a full spectrum of cyber, data analytics, systems and software application integration services and consulting, enterprise level operations and maintenance and mission IT, engineering and design, enterprise operations and maintenance, program management, and other highly technical consulting solutions to government agencies as well as commercial ~~customers.~~customers and international markets. Our representative clients include the U.S. Department of Defense (DoD), the Combatant Commands, the U.S. Intelligence Community, NASA, the U.S. Department of Energy (DoE), U.K. Ministry of Defence, in the U.K. Nuclear Decommissioning Authority (NDA), and the Australian Department of Defence, as well as private sector customers mainly in the aerospace, automotive, energy and telecom sectors.

~~Serving mission-critical industry end markets~~

~~Critical Mission Solutions serves broad sectors, including U.S. government services, cyber, nuclear, commercial, and international sectors.~~

The U.S. government is the world’s largest buyer of technical services, and in fiscal ~~2020,~~2021, approximately ~~79%~~74% of CMS’s revenue was earned from serving the DoD, ~~Intelligence Community~~intelligence community and Federal Civilian governmental entities.

Trends affecting our government clients include information warfare, cyber, IT modernization, space exploration and intelligence, defense systems and intelligent asset management, which are driving demand for our highly technical solutions.

Another trend we are witnessing is an increase in the capabilities of unmanned aircraft and hypersonic weapons, which is impacting both offensive and defensive spending priorities among our clients and is a driver for next generation solutions such as C5ISR (command, control, communications, computer, combat systems, intelligence, surveillance and reconnaissance) and advanced aeronautical testing, respectively. We are also seeing an increase in space exploration initiatives both from the U.S. government, such as NASA’s Artemis program to return to the moon in 2024, as well as the commercial sector.

~~Within the nuclear sector, our customers have decades-long initiatives to manage, upgrade, decommission and remediate existing energy infrastructure and nuclear weapons.~~

Our international customers, which accounted for ~~13%~~18% of fiscal ~~2020~~2021 revenue, have also increased demand for our IT and cybersecurity solutions andand nuclear projects, and the U.K. Ministry of Defence continues to focus on accelerating its strategic innovative and technology focused initiatives.

~~Leveraging our base market of offering valued technical services to U.S. government customers, CMS also serves commercial and international markets. In fiscal 2020, approximately 8% of CMS’s r~~evenue was from various U.S. commercial sectors, including the telecommunications sector, which anticipates a large cellular infrastructure build-out from 4G to 5G technology. And like our government facility-based clients, our commercial manufacturing clients are seeking ways to reduce maintenance costs and optimize their facilities with network connected facilities and equipment to optimize operational systems, which we refer to as Intelligent Asset Management.

~~Leveraging strong domain expertise to deliver solutions~~

~~CMS brings domain-specific capability and cross-market innovations in each of the above sectors by leveraging six core capability groups.~~

•I~~nformation Technology Services~~. Across various business units in CMS, we provide a wide range of software development and enterprise IT solutions. We develop, integrate, modify and maintain software solutions and complex systems. These services include a broad array of lifecycle services, including requirements analysis, design, integration, testing, maintenance, quality assurance and documentation management. Our software activities support all major methodologies, including Agile, DevSecOps and other hybrid methodologies. For our enterprise IT capability, we develop, implement and sustain enterprise information technology systems, with a focus on improving mission performance, increasing security and reducing cost for our customers. Solutions typically include IT service management, data center consolidation, network operations, enterprise architecture, mobile computing, cloud computing and migration, software, infrastructure and platform as a service (SaaS, IaaS and PaaS), and data collection and analytics.

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•~~Cyber and Data Analytics~~. Strongly enhanced by our recent acquisition of KeyW, CMS offers a full suite of cyber services for our government and commercial clients, including defensive cyber operations and training, offensive cyber operations, cloud and data analytics, threat intelligence, intelligence analysis, incident response and forensics, software and infrastructure security engineering, computer forensics and exploitation and information technology-operational technology (IT-OT) convergence services.

•~~C5ISR (Command, Control, Communications, Computers, Combat Systems, Intelligence, Surveillance and Reconnaissance)~~. CMS is a leader in the design, development, analysis, implementation and support of C5ISR systems and technology in any environment, including land, sea, air, space and cyber domains. We provide advanced solutions for collecting, processing, exploiting and disseminating geospatial intelligence for the U.S. and Allied Intelligence Communities and Special Forces organizations. Core capabilities include: imaging systems, radar systems, precision geo-location products, custom packaging and microelectronics and customizable tagging, tracking and locating devices.

•~~Technical Services~~. We provide a broad range of technical consulting services to our government and commercial clients, including: systems integration, specialized propulsion, avionics, electrical, materials, aerodynamics, manufacturing processes modeling and simulation, testing and evaluation, scientific research, intelligent asset management, program management and consulting. NASA is one of our major government customers in the U.S., where we provide a wide range of technology services. For our telecommunications customers, we provide permitting, site planning and engineering to enable the development of wireline and wireless communications including the development of 5G small cell sites.

•~~Facility Engineering and Operations~~. We provide services for advanced technical structures and systems, including flight/launch facilities, R&D facilities, test facilities and military range facilities. Customers also engage us to operate, maintain and provide technical services for these facilities and systems over their lives. We also provide sustainment and technical services for facility-oriented clients including for the automotive industry where we provide highly technical aerodynamic, climatic, altitude and acoustic solutions for our customer research and development operations.

•~~Nuclear Solutions~~. We provide support across the full nuclear life cycle, including new build, operational support, and decommissioning. Support includes project management, engineering, technical and R&D services, complemented by the full range of CMS' other services. Customers include the U.S. DoE, the UK's NDA, and commercial companies such as EDF Energy, the UK's largest producer of low-carbon energy.

~~Applying internally-developed technology~~

~~Across multiple businesses within CMS we license internally developed technology such as:~~

•~~KeyRadar®~~: The acquisition of KeyW brought numerous internally developed technologies, including KeyRadar, a scalable, software-defined synthetic aperture radar that can be configured to address a variety of missions, ranging from foliage penetration to long-range maritime domain awareness or long-range moving target detection.

•~~Ginkgo~~: Ginkgo is the only virtual learning environment specifically created for cybersecurity training. Designed by experienced cyber instructors, Ginkgo offers a complete solution for implementing hands-on IT and cybersecurity training for both local and distance learning environments on desktops, tablets, and other mobile devices.

•~~ion©~~: ion© is our open architecture, multi-protocol Industrial Internet of Things (IIoT) software solution providing an integrated, secure, and scalable platform for data aggregation integration, analysis and visualization. Ion© is both licensed and delivered as-a-service (aas) to commercial customers around the globe to enable a host of operational solutions, ranging from worker monitoring and safety to industrial asset visibility and management to smart/connected construction. Most recently, Jacobs is using ion© to support Return to Work solutions that allow our pharmaceutical clients to return mission essential personnel to their advanced research and production facilities despite the ongoing COVID-19 pandemic.

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People & Places Solutions (P&PS)

Jacobs' People & Places Solutions line of business provides end-to-end solutions for our clients’ most complex ~~projects~~challenges - whether climate change, energy transition, connected mobility, integrated water management, smart cities ~~advanced manufacturing~~ or ~~environmental stewardship.~~vaccine manufacturing. In doing so, we ~~employ predictive analytics, artificial intelligence~~incorporate the full spectrum of data science and ~~automation, digital twin technology, IoT smart sensors, geospatial visualization~~technology-enabled toolsets within a human-centric solution development and ~~advanced~~ delivery ~~processes~~framework. We embrace inclusive engagement of partners and ~~tools for~~stakeholders and generate enduring social equity/value through consulting, planning, architecture, design and engineering ~~and implementation,~~project outcomes, as well as long-term operation of facilities and infrastructure. Solutions may be delivered as standalone engagements or through comprehensive program management ~~solutions~~ that integrates disparate workstreams to yield additional benefits not attainable through project-by-project implementation. We also provide progressive design-build and construction management at-risk delivery ~~for our P&PS clients.~~solutions in targeted markets.

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

~~Serving broad market sectors that support people and places~~PA Consulting

Aging infrastructure; climate action; urbanization; water, food and energy security; global supply chains; pandemic preparedness and response; environmental, social, and corporate governance (ESG); and digital transformation are driving new challenges and opportunities for our clients. These drivers are highlightingIn fiscal 2021, Jacobs invested in a 65% stake in PA, the need for holistic, integrated technology solutions that draw on the domain knowledge resident in the multidisciplinary consulting and delivery expertise of our global workforce. For example, an airport is no longer simply aviation infrastructure but is now a smart city with extensive operational, cybersecurity and autonomous mobility requirements, as well as the contactless travel requirements necessary to best manage COVID-19. Master planning for a city now requires advanced analytics to plan for climate adaption and next-generation mobility as well as revenue generating fiber infrastructure. Furthermore, the future of nearly all water infrastructure will be highly technology-enabled, leveraging solutions with digital twins, predictive analytics and smart metering technology to ensure we are giving communities, industries and regions the secure water resource they need to flourish and expand.

This increase in technology requirements is a key factor in our organic growth strategy as well as our recent acquisitions and divestitures. Moreover, our business model is evolving to provision a broader spectrum of digital- and technology-enabled solutions to address our infrastructure clients' challenges with less exposure to craft construction services. Our focus on the five core sectors of Transportation, Water, Built Environment, Environmental and Advanced Facilities provides us with the ability to leverage our expansive domain expertise across all global markets, enabling truly end-to-end connected solutions for our clients' most complex major projects and programs, including the London 2012 Olympic and Paralympic Games, Expo 2020 Dubai, and the LaGuardia Airport Redevelopment.

Today, we are executing complex solutions that pull expertise from all markets, fused with digital expertise, for major developments in places like London, Dubai, Sydney, Singapore, Miami, Los Angeles and Toronto.

~~Leveraging our global platform to deliver integrated solutions to clients~~

~~One of our key differentiators is our global integrated delivery model, which harnesses deep domain expertise from our global Solutions and Technology and solution organization~~consultancy that is ~~leveraged with the benefits~~Bringing Ingenuity to Life. Its diverse teams of ~~scale when we focus the world’s best talent~~experts combine innovative thinking and breakthrough use of technologies to ~~deliver innovative solutions~~progress further, faster. PA’s clients adapt and ~~value to our clients.~~

•~~Within~~ ~~transportation, we provide sustainable solutions to plan, develop, finance, design engineer, construct, operate~~transform and ~~maintain, next generation mobility~~achieve enduring results. An innovation and transformation consultancy, PA's roughly 3,300 employees work across ~~all modes, including highway, bridge, rail~~seven sectors: consumer and ~~transit, aviation, port~~manufacturing, defense and ~~maritime infrastructure. For example, we do this by assessing the impact of autonomous vehicles on roadways~~security, energy and ~~cities for transportation agencies, engineering and specifying vehicles for mass-transit, delivering consulting~~utilities, financial services, for digital fare payment systems; providing program management of the largest airport developments, designing cutting edge automated container terminals and ports infrastructure and utilizing big data to develop cross modal mobility solutions. Our clients encompass the world’s largest transportation agencies as well as private shipping and logistics companies worldwide, including the multi-modal Port Authority of New York and New Jersey, Transport for London, Highways England, Transport for New South Wales and Etihad Rail.

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•~~Water~~ is one of the most precious resources in the world. Extreme weather events in the form of droughts, desertification and flooding are stressing water supplies, at the same time population growth and industrialization are increasing demand. Addressing these challenges, we provide integrated solutions across water and wastewater treatment, water reuse, and water resources such as the deployment of next generation smart metering, digital twin technology and highly technical consulting, engineering, design-build and operation of complex water systems. We support our clients on some of the world’s largest water infrastructure projects such as California WaterFix, Thames Tideway, Houston Water and Singapore National Water Agency.

•~~For the~~ ~~built environment,~~ ~~we deliver full-service architecture, engineering, interiors, planning, urban design, landscape architecture and project delivery solutions for~~ government, corporate, commercial, institutional and industrial clients across diverse sectors. Our technology-enabled expertise ranges from the future of work, transaction advisory and asset management to transportation hubs, urban developments, government, healthcare, higher education and science facilities, as well as sports and entertainment venues. We plan and deliver resilient, triple bottom line-based solutions that are connected, secure and smart, including the rebuild of Tyndall Air Force Base in Florida into a visionary Installation of the Future; the corporate headquarters and research facility relocation of Spark Therapeutics in Philadelphia, Pennsylvania; and the expanded Blacktown Mount Druitt Hospital in New South Wales, Australia.

•In our environmental business, we utilize a multidisciplinary, systems-oriented approach to develop environmental planning for infrastructure development; data-driven site remediation and regeneration for per- and poly-fluoroalkyl substances (PFAS) and other known and emerging contaminants; environmental health & safety (EHS) operational excellence and information management; and climate action solutions that incorporate sustainability and resiliency principles as essential to the well-being of all people and of our planet. We also provide post-disaster response and recovery services in support of the Federal Emergency Management Agency’s mission throughout the U.S. In addition to providing end-to-end technology-enabled solutions for multinational oil & gas, chemical and life sciences, ~~mining, manufacturing~~ and ~~energy clients, Jacobs provides comprehensive environmental services for~~transport. PA people are strategists, innovators, designers, consultants, digital experts, scientists, engineers and technologists. The team operates globally from offices across the U.K., U.S. ~~Department of Defense, the U.S. Environmental Protection Agency, NASA and other civilian agencies, the UK Environment Agency,~~, Nordics and the ~~Australian Department of Defense.~~

•~~Within~~ ~~advanced facilities,~~ we provide fully integrated solutions for highly specialized facilities in the fields of medical research, sustainable manufacturing, nanoscience, biotechnology, semiconductor and data centers. Our services span the full range of facility work, from early planning and site selection through architecture, engineering, construction and facility operations, all tailored to specific client needs in the life sciences and pharmaceutical, specialty manufacturing, microelectronics and data intensive industries. As the largest professional services provider to the biopharmaceutical industry, we are working with our multinational clients to rapidly increase capacity for vaccines and therapeutics, as well as reshoring manufacturing facilities, in response to the COVID-19 pandemic. Representative projects include the retrofit of AstraZeneca’s West Chester, Ohio manufacturing facility to deliver a potential COVID-19 vaccine; the Mountbatten Nanotechnology Electronics Research Complex, University of Southampton, U.K.; and the Procter & Gamble, Singapore Innovation Center.

~~Applying internally developed technology~~

A strong foundation of data-rich innovative solutions is woven into every project that we deliver. This may include Jacobs-developed proprietary software that employs an array of technical expertise to enable the most efficient, effective and predictable solutions for our clients. Examples of these technologies include:

•~~TrackRecord~~ ~~is a workflow automation and compliance management platform for the delivery of major projects.~~

•~~AquaDNA~~ is a predictive analytics platform that integrates innovative technologies for wastewater asset management through an AI learning platform, facilitating a move from reactive to proactive maintenance and reduced operation and maintenance costs.

•~~Travel Service Optimisation~~ ~~(TSO) is Jacobs' travel sharing solution for Special Education needs children which centers on the children’s ability to travel together rather than focusing on their disability.~~

•~~SafetyWeb~~ ~~is a site hazard management and compliance tool.~~

•~~ProjectMapper~~ ~~is a web based geospatial mapping and project visualization software platform.~~

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•~~Flood Modeller~~ provides proactive decision-making to help manage our environment and the challenges associated with flood risk. It is suitable for a wide range of engineering and environmental applications, from calculating simple backwater profiles and modeling entire catchments to mapping potential flood risk for entire countries.

•~~ion©~~ ~~is an Industrial Internet of Things (IoT) multi-protocol wireless application networking system which provides an open, integrated, secure and scalable system for data aggregation and viewing.~~

•~~Replica™~~ ~~is Jacobs’ digital twin solution software platform and consists of the following capabilities:~~

•~~Replica Parametric Design™~~ (formerly CPES™) provides outputs on construction quantities and costs, life cycle quantities and costs, and estimates of environmental impacts. Rapid process design in Replica Process and the resulting development of the Replica Parametric Designs allows for thorough alternatives analysis and enhanced team communication.

•~~Replica Preview™~~ is used for early stage visualization of facility designs. This software rapidly creates scaled three-dimensional designs, which can be placed on Google Earth®. Rapid design development in Replica Parametric Design and visualization with Replica Preview allows for informed analysis of many alternatives and sound decision-making.

•~~Replica Systems Analysis™~~ (formerly Voyage™) is a flexible platform that can simulate resource systems dynamically, over time. Examples of modeled systems include water resources, energy, solid waste and traffic. The ability to connect complex systems together in a single interface that is visually intuitive leads to informed team collaboration and creative solutions.

•~~Replica Process™~~ allows Jacobs' world-renowned expertise in water treatment to be simulated both statically and dynamically over time in Replica Process™ software. Much of the process predictive capabilities in Replica Process are founded on the Jacobs' Pro2D2™ and Source™ software. Informed decisions are founded on the ability of Replica Process to provide details on system performance among many alternatives, very quickly.

•~~Replica Hydraulics™~~ was designed to simulate all pressurized and gravity flow hydraulics of a system, simultaneously. Replica’s hydraulic blocks were built on accepted engineering practice equations and have been successfully verified on hundreds of projects. The Replica Hydraulics library is the foundation for complete, dynamic water system analysis and can be used exclusively for hydraulic analysis of a system or in conjunction with Replica Process, Replica Controls and/or Replica Air.

•~~Replica Controls™~~ allows for dynamic simulation of system instrumentation such as flow meters, indicator transmitters, limit switches and stream analyzers as well as the logic objects including PID controllers, sequencers, units, controller and alarms. The software's controls capabilities and functionality align with industry design standards and its ability to predict full scale performance is unmatched due to the connectivity with Replica Hydraulics.

•~~Replica Air™~~ simulates all aspects of a compressible fluid (e.g. air) supply system, including pipes, valves, diffusers and blowers. The ability to couple Replica Air with Replica Controls in a single simulation allows for the development of unique and robust designs that reduce energy use and life cycle costs.

~~Energy, Chemicals and Resources(ECR)~~

~~ECR Disposition~~

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As a result of the ECR sale, substantially all ECR-related assets and liabilities were sold (the "Disposal Group"). We determined that the disposal group should be reported as discontinued operations in accordance with ASC 210-05, ~~Discontinued Operations~~ because their disposal represented a strategic shift that had a major effect on our operations and financial results. As such, the assets and liabilities of the ECR business were reflected as held-for-sale in the Consolidated Balance Sheets through September 27, 2019. As of the year ended October 2, 2020, all of the ECR business to be sold under the terms of the ECR sale had been conveyed to Worley and as such, no amounts remain held for sale. For further discussion see Note 16- ~~Sale of Energy, Chemicals and Resources ("ECR") Business~~ ~~to the consolidated financial statements.~~

Prior to the ECR sale, the ECR business served the energy, chemicals and resources sectors, including upstream, midstream and downstream oil, gas, refining, chemicals and mining and minerals industries. We provided integrated delivery of complex projects for our Oil and Gas, Refining, and Petrochemicals clients. Bridging the upstream, midstream and downstream industries, our services encompassed consulting, engineering, procurement, construction, maintenance and project management. Netherlands.

PA offers end-to-end innovation, accelerating new growth ideas from concept, through design, development, and to commercial success, and revitalizing organizations, building the leadership, culture, systems and processes to make innovation a reality. PA has a diverse mix of private and public sector clients, from global household names to start-ups, to national and local public services.

~~Results of Operations for the three months ended January 1, 2021 and December 27, 2019~~

~~(in thousands, except per share information)~~

For the Three Months Ended
January 1, 2021 December 27, 2019
Revenues $ 3,381,836 $ 3,360,049
Direct cost of contracts (2,749,776) (2,715,478)
Gross profit 632,060 644,571
Selling, general and administrative expenses (418,120) (493,226)
Operating Profit 213,940 151,345
Other Income (Expense):
Interest income 1,124 946
Interest expense (17,313) (14,817)
Miscellaneous income (expense), net 156,360 116,695
Total other income (expense), net 140,171 102,824
Earnings from Continuing Operations Before Taxes 354,111 254,169
Income Tax Expense from Continuing Operations (87,023) (68,489)
Net Earnings of the Group from Continuing Operations 267,088 185,680
Net (Loss) Earnings of the Group from Discontinued Operations (14) 77,587
Net Earnings of the Group 267,074 263,267
Net Earnings Attributable to Noncontrolling Interests from Continuing Operations (10,026) (6,257)
Net Earnings Attributable to Jacobs from Continuing Operations 257,062 179,423
Net Earnings Attributable to Jacobs $ 257,048 $ 257,010
Net Earnings Per Share:
Basic Net Earnings from Continuing Operations Per Share $ 1.98 $ 1.35
Basic Net Earnings from Discontinued Operations Per Share $ — $ 0.58
Basic Earnings Per Share $ 1.98 $ 1.93
Diluted Net Earnings from Continuing Operations Per Share $ 1.96 $ 1.33
Diluted Net Earnings from Discontinued Operations Per Share $ — $ 0.58
Diluted Earnings Per Share $ 1.96 $ 1.91

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Results of Operations for the three months ended December 31, 2021 and January 1, 2021

(in thousands, except per share information)


	For the Three Months Ended
	December 31, 2021		January 1, 2021
Revenues	$	3,380,625	$	3,381,836
Direct cost of contracts	(2,584,151)		(2,749,776)
Gross profit	796,474		632,060
Selling, general and administrative expenses	(619,141)		(418,120)
Operating Profit	177,333		213,940
Other Income (Expense):
Interest income	1,501		1,124
Interest expense	(19,426)		(17,313)
Miscellaneous income, net	9,682		156,360
Total other (expense) income, net	(8,243)		140,171
Earnings from Continuing Operations Before Taxes	169,090		354,111
Income Tax Expense from Continuing Operations	(15,889)		(87,023)
Net Earnings of the Group from Continuing Operations	153,201		267,088
Net Earnings of the Group from Discontinued Operations	(232)		(14)
Net Earnings of the Group	152,969		267,074
Net Earnings Attributable to Noncontrolling Interests from Continuing Operations	(9,252)		(10,026)
Net Earnings Attributable to Redeemable Noncontrolling interests	(9,683)		—
Net Earnings Attributable to Jacobs from Continuing Operations	134,266		257,062
Net Earnings Attributable to Jacobs	$	134,034	$	257,048
Net Earnings Per Share:
Basic Net Earnings from Continuing Operations Per Share	$	1.04	$	1.98
Basic Net Earnings from Discontinued Operations Per Share	$	—	$	—
Basic Earnings Per Share	$	1.04	$	1.98

Diluted Net Earnings from Continuing Operations Per Share	$	1.03	$	1.96
Diluted Net Earnings from Discontinued Operations Per Share	$	—	$	—
Diluted Earnings Per Share	$	1.03	$	1.96

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Overview – Three Months Ended ~~January 1,~~December 31, 2021

~~COVID-19 Pandemic~~. There are many risks and uncertainties regarding the COVID-19 pandemic, including the anticipated duration of the pandemic and the extent of local and worldwide social, political, and economic disruption it may cause. The Company’s operations for the first fiscal quarter of 2021 were adversely impacted by COVID-19. While certain business units of both Critical Mission Solutions and People & Places Solutions have experienced, and may continue to experience, an increase in demand for certain of their services regarding new projects that may arise in response to the COVID-19 pandemic, it is still expected that COVID-19 is likely to continue to have an adverse impact on each of Critical Missions Solutions and People & Places Solutions continuing into fiscal 2021, although to a lesser degree than what was seen in fiscal 2020.

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

Net earnings attributable to the Company from continuing operations for the first fiscal quarter ended ~~January 1,~~December 31, 2021 were $134.3 million (or $1.03 per diluted share), a decrease of $122.8 million, or 47.8%, from net earnings of $257.1 million (or $1.96 ~~per diluted share), an increase of $77.6 million, or 43.3%, from earnings of $179.4 million (or $1.33~~ per diluted share) for the corresponding period last year. ~~Included~~The first fiscal quarter of 2022 was impacted by $75.0 million in pre-tax Restructuring and other charges and transaction costs associated mainly with the ~~Compa~~Company's transformation initiatives relating to real estate which is discussed in Note 18- ~~ny’s~~Restructuring and Other Charges. This decrease was partially offset by the current quarter operating results benefiting from ~~continuing operations for the three months~~our BlackLynx, Inc. ("BlackLynx"), PA Consulting and Buffalo Group investing activities. The comparable period ended January 1, 2021 we~~re $70.4~~benefited from $93.1 million in ~~after-tax~~pre-tax unrealized appreciation gains recorded in miscellaneous income (expense), net, ~~associated~~associated with our investment in Worley stock and certain foreign currency revaluations relating to the ECR sale ~~after-tax~~and pre-tax unrealized appreciation gains associated with our investment in C3.ai, Inc. ("C3") o~~f $62.3 million. Also included~~of $82.6 million, which were both sold during the fiscal year ended 2021. These were partially offset by $27.9 million in ~~other income for the period was a $22.6 million after-tax~~fiscal 2021 pre-tax other-than-temporary impairment charges in respect of our AWE investment.

~~Net earnings attributable to the Company from~~For discussion of discontinued operations, for the first fiscal quarter ended January 1, 2021 were $(14.0) thousand (or $0.00 per diluted share), a decrease of $77.6 million, or 100.0%, from earnings of $77.6 million (or $0.58 per diluted share) for the corresponding period last year. Included in net earnings attributable to Jacobs from discontinued operations for the prior year was the settlement of a legal matter that was reimbursed by insurance, the release of the deferred gain for the delivery of the ECR IT Instance and the adjustment for working capital and certain other items in connection with the ECR sale. For further discussion, see Note ~~16-~~17 - Sale of Energy, Chemicals and Resources ("ECR") Business.

On November 19, 2021, a subsidiary of Jacobs acquired BlackLynx. For further discussion, see Note 16- Other Business Combinations.

On March 2, 2021, Jacobs completed the strategic investment of a 65% interest in PA Consulting. For further discussion, see Note 15 - PA ConsultingBusiness Combination.

On November 24, 2020, a subsidiary of Jacobs completed the acquisition of Buffalo Group. For further discussion, see Note ~~15-~~16- Other Business Combinations.

On November 27, 2020, the Company entered into an agreement to make a strategic investment in PA Consulting Group Limited by acquiring approximately 65% of its share capital in the form of preferred and common equity for an aggregate amount of £1.8 billion. The transaction is expected to close in the second quarter of fiscal 2021.

Consolidated Results of Operations

Revenues for the first fiscal quarter of ~~2021~~2022 were $3.38 billion, ~~an increase of $21.8 million, or 0.6% from $3.36 billion for~~in line with our revenues reported in the corresponding period last year. The ~~increase~~slight decrease in revenues for the ~~three month period~~ year over year period was ~~due~~ in part due to certain contract wind downs in the U.S. and volume decreases in our P&PS America's business due to softer U.S. market conditions as well as lower pass-through revenues in advanced facilities. In addition, revenue decreases from the prior year resulted from prior year favorable foreign currency translation in our international businesses of $24.1 million, with no significant impact in the current period. This is partly offset due to fiscal ~~2020~~2022 incremental revenues from the PA Consulting investment and the BlackLynx and Buffalo Group and John Wood Group Nuclear business acquisitions, in addition to overall growth in our Critical Mission Solutions (CMS) business, largely offset by impacts from the COVID 19 pandemic on our P&PS business which resulted in a decrease to P&PS revenues period over period.acquisitions. Pass-through costs included in revenues for the three months ended ~~January 1,~~December 31, 2021 amounted to ~~$648.7~~$472.4 million, a decrease of ~~$53.1~~$176.3 million, or ~~7.6%~~27.2%, ~~from $701.8~~from $648.7 million from the corresponding ~~periods~~period last ~~year.~~year, which was primarily attributable to our advanced facilities business.

Gross profit for the first quarter of ~~2021~~2022 was $796.5 million, an increase of $164.4 million, or 26.0%, from $632.1 million ~~a decrease of $12.5 million, or 1.9%~~ from~~$644.6 million fro~~m the corresponding period last year. Our gross profit margins were ~~18.7%~~23.6% and ~~19.2%~~18.7% for the three ~~month periods~~months ended December 31, 2021 and January 1, 2021, ~~and December 27, 2019,~~ respectively, with these trend differences being mainly attributable to ~~project mix impacts in our legacy portfolio year over year and lower overhead rate impacts on revenue, with partial offsets from~~ favorable margin trends from our recent PA Consulting investment, the BlackLynx and Buffalo Group ~~and John Wood Group nuclear business~~ acquisitions, ~~and as well as year over year impacts from lower overhead reimbursement rates resulting from our ongoing cost reduction programs~~ partially offset by ~~COVID-19 cost mitigation efforts.~~market conditions and certain contract wind downs in our U.S. businesses.

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

~~Page 40~~

SG&A expenses for the three months ended ~~January 1,~~December 31, 2021 were ~~$418.1~~$619.1 million, ~~a decrease~~an increase of ~~$75.1~~$201.0 million, or ~~15.2%~~48.1%, from ~~$493.2~~$418.1 million for the corresponding period last year. The decrease in SG&A expenses as compared to the corresponding period last year was due primarily to less expense relating to the Transition Services Agreement (the "TSA") with Worley which terminated in April 2020, although the parties agreed to extend certain of the services beyond the initial term, and reductions in personnel related and other overhead costs resulting from our ongoing cost reduction programs as well as COVID-19 cost mitigation efforts, partially offsetcurrent year's three months ended results were impacted by incremental SG&A expenses from ~~the Buffalo Group~~recent business acquisitions (mainly PA Consulting), of $93.5 million and ~~John Wood Group nuclear business acquisitions. Also, included in the current year results were $22.0 million of~~higher personnel-related costs, partly offset by lower other operational overhead costs.Additionally, higher Restructuring and other charges ~~and transaction~~for the three-month period of 2022 related in part to $73.2 million in costs associated in part with the Company's transformation initiatives relating to real estate which is discussed in Note 18- Restructuring and ~~other staffing programs. In comparison, the prior~~Other Charges. Prior year ~~included $50.7 million ofRestructuring and other charges and transaction costs. Unfavorable impacts on~~ SG&A expenses ~~from foreign exchange were $3.8 million for th~~e ~~three months~~ ~~ended~~ ~~January 1, 2021, although~~included unfavorable impacts from foreign ~~exchange were immaterial to~~currency of $3.8 million, with no significant impact in the ~~Company's operating profit as a whole.~~current year period.

Net interest expense for the three months ended ~~January 1,~~December 31, 2021 was ~~$16.2~~$17.9 million, an increase of ~~$2.3~~$1.7 million from ~~$13.9~~$16.2 million for the corresponding period last year. The increase in net interest expense for the three month

Page 41

period year over year is due to higher levels of average debt ~~outstanding.~~outstanding relating in part to the funding of the PA Consulting investment and the BlackLynx acquisition, in addition to higher interest rates.

Miscellaneous income, ~~(expense),~~ net for the three months ended ~~January 1,~~December 31, 2021 was ~~$156.4~~$9.7 million ~~an increase of $39.7 million, from $116.7~~in comparison to $156.4 million for the corresponding period last year. The ~~increase~~$146.7 million decrease from the prior year three-month period was due primarily to prior year pre-tax unrealized gains on the Company's equity investments in Worley and C3, which were sold during fiscal year 2021. The three months ended January 1, 2021 included $93.1 million in pre-tax unrealized gains associated with changes in the fair value of our investment in Worley stockand certain foreign currency revaluations relating to the ECR sale ~~compared to $99.1 million in the prior year~~ and $82.6 million in net gains related to the C3 ~~investment~~investment. These were partially offset by $27.9 million in ~~the current year. Additionally, during the three months ended January 1,~~fiscal 2021 ~~the Company recorded an~~pre-tax other-than-temporary impairment ~~on its investment~~charges in respect of our AWE ~~in the amount of $27.9 million, which is also included in miscellaneous income (expense), net on its consolidated statement of earnings.~~investment.

The Company’s effective tax rates from continuing operations for the three months ended December 31, 2021 and January 1, 2021 were 9.4% and ~~December 27, 2019 were~~ 24.6% ~~and 27.0%~~, respectively. The Company’s effective tax rate from continuing operations for the three months ended ~~January 1,~~December 31, 2021 was lower than the corresponding rate in the prior period primarily due to ~~one-time income~~a current year tax ~~charges associated with partnership interest basis differences generated during~~benefit of $15.7 million related to the ~~quarter ending December 27, 2019. For the three months ended January 1, 2021, the effective~~release of previously reserved foreign tax ~~rate was impacted by a $1.4 million benefit from an Internal Revenue Code section 179D energy credit, a $2.2~~credits, $4.2 million excess tax benefit attributable to stock compensation, and ~~a $5.0~~$4.0 million benefit related to a change in the Company’s assertion about indefinite reinvestment of certain foreign unremitted earnings in Canada. The Company is continuing to accrue taxes related to all other foreign earnings.

~~See Note 16- Sale of Energy, Chemicals and Resources ("ECR") Business for further information on the Company's discontinued operations reporting for the sale of the ECR business.~~from filing amended status returns.

The amount of income taxes the Company pays is subject to ongoing audits by tax jurisdictions around the world. In the normal course of business, the Company is subject to examination by tax authorities throughout the world, including such major jurisdictions as Australia, Canada, India, the Netherlands, the United Kingdom and the United States. Our estimate of the potential outcome of any uncertain tax issue is subject to our assessment of the relevant risks, facts, and circumstances existing at the time. The Company believes that it has adequately provided for reasonably foreseeable outcomes related to these matters. However, future results may include favorable or unfavorable adjustments to our estimated tax liabilities in the period the assessments are made or resolved, which may impact our effective tax rate.

~~Page 41~~

Segment Financial Information

The following table provides selected financial information for our operating segments and includes a reconciliation of segment operating profit to total U.S. 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 31, 2021		January 1, 2021
Revenues from External Customers:
Critical Mission Solutions	$	1,162,505	$	1,295,287
People & Places Solutions	1,928,146		2,086,549
PA Consulting	289,974		—
Total	$	3,380,625	$	3,381,836


		Three Months Ended				Three Months Ended
		January 1, 2021		December 27, 2019				December 31, 2021		January 1, 2021
Revenues from External Customers:
Segment Operating Profit:							Segment Operating Profit:
Critical Mission Solutions	Critical Mission Solutions	$	1,295,287	$	1,182,457		Critical Mission Solutions	$	111,496	$	110,072
People & Places Solutions	People & Places Solutions	2,086,549		2,177,592			People & Places Solutions	191,692		196,300
Total		$	3,381,836	$	3,360,049
PA Consulting							PA Consulting	63,071		—
Total Segment Operating Profit							Total Segment Operating Profit	366,259		306,372
Other Corporate Expenses (1)							Other Corporate Expenses (1)	(105,360)		(70,341)
Restructuring, Transaction and Other Charges (2)							Restructuring, Transaction and Other Charges (2)	(83,566)		(22,091)

Total U.S. GAAP Operating Profit							Total U.S. GAAP Operating Profit	177,333		213,940
Total Other (Expense) Income, net (3)							Total Other (Expense) Income, net (3)	(8,243)		140,171
Earnings Before Taxes from Continuing Operations							Earnings Before Taxes from Continuing Operations	$	169,090	$	354,111

Three Months Ended
January 1, 2021 December 27, 2019
Segment Operating Profit:
Critical Mission Solutions $ 110,072 $ 90,422
People & Places Solutions 196,300 178,328
Total Segment Operating Profit 306,372 268,750
Other Corporate Expenses (1) (70,341) (66,719)
Restructuring, Transaction and Other Charges (22,091) (50,686)
Total U.S. GAAP Operating Profit 213,940 151,345
Total Other Income (Expense), net (2) 140,171 102,824
Earnings Before Taxes from Continuing Operations $ 354,111 $ 254,169
Page 42


(1)			Other corporate expenses also include intangibles amortization of ~~$23.2~~$46.9 million and ~~$21.8~~$23.2 million for the ~~three-month periods~~three months ended December 31, 2021 and January 1, 2021, ~~and December 27, 2019, respectively.~~respectively, with this increase mainly attributable to the PA Consulting investment.

(2)			~~For~~Included in the three ~~month period~~months ended December 31, 2021 is $72.3 million of real estate impairment charges related to the Company's transformation initiatives.
(3)			The three months ended December 31, 2021 include $1.7 million in income associated with final distributions from the exit of our AWE investment and a gain of $6.9 million related to a lease termination. The three months ended January 1, 2021 ~~includes~~include $93.1 million in fair value adjustments related to our investment in Worley stock (net of Worley stock dividend) and certain foreign currency revaluations relating to the ECR sale, $82.6 million in fair value adjustments related to our investment in C3 stock and $(27.9) million related to impairment ofcharges on our AWE Management Ltd. investment. ~~For the three month period ended December 27, 2019, includes revenues under the Company's TSA with Worley of $12.0 million, $99.1 million in fair value adjustments related to our investment~~The investments in Worley ~~stock~~ and ~~certain foreign currency revaluations relating to~~C3 were sold in fiscal 2021 and therefore there are no comparable amounts in the ~~ECR sale, the amortization of deferred financing fees related to the CH2M acquisition of $0.6 million and the loss on settlement of the CH2M portion of the U.S. pension plan of $2.4 million.~~current quarter.

Critical Mission Solutions


		Three Months Ended				Three Months Ended
		January 1, 2021		December 27, 2019				December 31, 2021		January 1, 2021
Revenue	Revenue	$	1,295,287	$	1,182,457		Revenue	$	1,162,505	$	1,295,287
Operating Profit	Operating Profit	$	110,072	$	90,422		Operating Profit	$	111,496	$	110,072

~~Page 42~~

Critical Mission Solutions (CMS) segment revenues for the three months ended ~~January 1,~~December 31, 2021 were ~~$1.30~~$1.16 billion, ~~an increase~~a decrease of ~~$112.8~~$132.8 million, or ~~9.5%~~10.3%, from ~~$1.18~~$1.30 billion for the corresponding period last year. The ~~increase~~decrease in revenue was primarily ~~attributable to incremental~~driven by several large contracts winding down in the U.S., partially offset by revenue growth from ~~the Buffalo Group and John Wood Group nuclear business acquisitions, combined with areas~~certain elements of ~~year over year revenue volume growth across~~ our legacy portfolio, ~~highlighted~~driven by increased spending by customers in the U.S. government business sector. These favorable performance trends more than offset limited unfavorable COVID-19 related revenue impacts mainly due to challenges from physical distancing requirements, client scheduling changessector and ~~other related factors. Impacts~~our legacy international clients. Impacts on revenues from favorable foreign currency translation were approximately ~~$4.6~~$2.2 million for the three month period ended ~~January 1,~~December 31, 2021 compared to $4.6 million in favorable impacts in the corresponding prior year period.

Operating profit for the segment was ~~$110.1~~$111.5 million for the three months ended ~~January 1,~~December 31, 2021, an increase of ~~$19.7~~$1.4 million, or ~~21.7%~~1.3%, from ~~$90.4~~$110.1 million for the corresponding period last year. ~~The~~This slight increase from the prior year was ~~primarily~~mainly attributable to ~~incremental operating profit~~growth in higher margin U.S. government business sectors as well as our recent acquisitions, offsetting impacts from the ~~Buffalo Group and John Wood Group nuclear business acquisitions and the continued growth in profits from our U.S. governmental business sector, offset by the favorable close out of a~~ large ~~program management~~ contract ~~in the first fiscal quarter of 2020.~~ wind downs mentioned above.Impacts on operating profit from ~~favorable~~ foreign currency ~~translation~~ were ~~approximately $0.8 million~~not significant for ~~the three months ended January 1, 2021, compared to the corresponding prior year~~either period. ~~Limited revenue impacts from COVID-19 mentioned above were largely offset by the Company’s limited discretionary spend actions and other areas of improved operating performance.~~

People & Places Solutions


		Three Months Ended				Three Months Ended
		January 1, 2021		December 27, 2019				December 31, 2021		January 1, 2021
Revenue	Revenue	$	2,086,549	$	2,177,592		Revenue	$	1,928,146	$	2,086,549
Operating Profit	Operating Profit	$	196,300	$	178,328		Operating Profit	$	191,692	$	196,300

Revenues for the People & Places Solutions (P&PS) segment for the three months ended ~~January 1,~~December 31, 2021 ~~were $2.09~~was $1.93 billion, a decrease of ~~$91.0~~$158.4 million, or ~~4.2%~~7.6%, from ~~$2.18~~$2.09 billion for the corresponding period last year. The decrease in revenue for the three months ended December 31, 2021 was primarily ~~due to~~driven by volume decreases in our U.S. markets and lower pass through ~~activity as well as client scheduling changes from COVID-19, particularly in the transportation and~~costs within our advanced facilities ~~sectors, which was partially offset by growth~~business. Foreign currency translation had a $2.6 million unfavorable impact on revenues in ~~environmental services. Impacts~~our international businesses for the current year period. Comparatively, favorable impacts on revenues from ~~favorable~~ foreign currency translation ~~were~~was approximately $19.5 million for the three month period en~~ded~~ended January 1, 2021.

Page 43

Operating profit for the segment for the three months ended December 31, 2021 was $191.7 million, a decrease of $4.6 million, or 2.3%, from $196.3 million for the corresponding period last year. The year-over-year decrease in operating profit for the three months ended December 31, 2021 was driven mainly by the decline in lower revenues mentioned above and higher costs associated labor, travel, and other spending as COVID-19 mitigation efforts were moderated as well as incremental investments in support of projected future growth later this year. Impacts on operating profit from foreign currency were not significant for the current year period, compared to $2.1 million in favorable impacts in the corresponding prior year period.

PA Consulting


	Three Months Ended
	December 31, 2021		January 1, 2021
Revenue	$	289,974	$	—
Operating Profit	$	63,071	$	—

Revenues for the PA Consulting segment for the three months ended December 31, 2021 were $290.0 million. Operating profit for the segment for the three months ended January 1, 2021 was ~~$196.3 million, an increase of $18.0 million, or 10.1%, from $178.3 million for~~$63.1 million. There were no comparable periods in the ~~corresponding period last year. The year over year~~ ~~increase in operating profit was due primarily to lower labor, travel and discretionary spending related to COVID-19 mitigation efforts. Impacts on operating profit from favorable foreign currency translation were approximately~~ ~~$2.1 million~~ ~~for~~ ~~the three month period ended January 1, 2021, compared to the corresponding~~ prior year, ~~period. The unfavorable revenue impacts mentioned above were more than offset by~~given the ~~Company’s cost mitigation actions.~~transaction closed on March 2, 2021.

Other Corporate Expenses

Other corporate expenses for the three months ended ~~January 1,~~December 31, 2021 were ~~$70.3~~$105.4 million, an increase of ~~$3.6~~$35.0 million from ~~$66.7~~$70.3 million for the corresponding period last year. This increase was due primarily to higher intangible amortization expense from the ~~John Wood Group nuclear business acquisition,~~PA Consulting investment and other acquisitions, as well as impacts from higher Company benefit program ~~enhancements. These increases were partly offset by employee related~~costs and other ~~cost reductions across the Company's corporate functions.~~department spend increases.

Included in other corporate expenses in the above table are costs and expenses which relate to general corporate activities as well as corporate-managed benefit and insurance programs. Such costs and expenses include: (i) those elements of SG&A expenses relating to the business as a whole; (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; (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; and (v) certain adjustments relating to costs associated with the Company’s international defined benefit pension plans. In addition, other corporate expenses may also include from time to time certain adjustments to contract margins (both positive and negative) associated with projects, as well as other items, where it has been determined that such adjustments are not indicative of the performance of the related LOB.

~~Page 43~~

Restructuring and Other Charges

See Note ~~17-~~18- Restructuring and Other Charges for information on the Company’s activity relating to restructuring and other charges.

Backlog Information

We include in backlog the total dollar amount of revenues we expect to record in the future as a result of performing work under contracts that have been awarded to us. Our policy with respect to Operations & Maintenance ("O&M&M") contracts, however, is to include in backlog the amount of revenues we expect to receive for one succeeding year, regardless of the remaining life of the contract. For national government programs (other than national government O&M contracts, which are subject to the same policy applicable to all other O&M contracts), our policy is to include in backlog the full contract award, whether funded or unfunded, excluding option periods. Because of variations in the nature, size, expected duration, funding commitments, and the scope of services required by our contracts, the timing of when backlog will be recognized as revenues can vary greatly between individual contracts.

Consistent with industry practice, substantially all of our contracts are subject to cancellation or termination at the option of the client, including our U.S. government work. While management uses all information available to determine

Page 44

backlog, at any given time our backlog is subject to changes in the scope of services to be provided as well as increases or decreases in costs relating to the contracts included therein. Backlog is not necessarily an indicator of future revenues.

Because certain contracts (e.g., contracts relating to large ~~EPC~~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 evaluate our backlog on a year-over-year basis, rather than on a sequential, quarter-over-quarter basis.

The following table summarizes our backlog at December 31, 2021 and January 1, 2021 ~~and December 27, 2019~~ (in millions):


		January 1, 2021		December 27, 2019			December 31, 2021		January 1, 2021
Critical Mission Solutions	Critical Mission Solutions	$	9,683	$	8,473	Critical Mission Solutions	$	10,798	$	9,683
People & Places Solutions	People & Places Solutions	15,422		14,197		People & Places Solutions	16,932		15,422
PA Consulting						PA Consulting	276		—
Total	Total	$	25,105	$	22,670	Total	$	28,006	$	25,105

The increase in backlog in Critical Mission Solutions (CMS) from ~~December 27, 2019~~January 1, 2021 was primarily driven by success in closing on a number of key opportunities in the ~~result of~~U.S government space and the ~~acquisition of the Buffalo Group and John Wood Group's nuclear consulting, remediation and program management business.~~BlackLynx acquisition.

The increase in backlog in People & Places Solutions (P&PS) from ~~December 27, 2019~~January 1, 2021 was primarily ~~the result of~~driven by new business awards in ~~the U.S. markets.~~our advanced facilities business.

Backlog in PA Consulting as of December 31, 2021 was $276.0 million. The PA Consulting transaction closed on March 2, 2021.

Consolidated backlog differs from the Company’s remaining performance obligations as defined by ASC 606 primarily because of our national government contracts (other than national government O&M contracts). Our policy is to generally include in backlog the full contract award, whether funded or unfunded excluding the 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. Additionally, the Company includes our proportionate share of backlog related to unconsolidated joint ventures which is not included in our remaining performance obligations.

Liquidity and Capital Resources

At ~~January 1,~~December 31, 2021, our principal sources of liquidity consisted of $~~837.0 million~~1.25 billion in cash and cash equivalents and ~~$1.98~~$1.67 billion of available borrowing capacity under our ~~$2.25~~$2.25 billion revolving credit agreement (the "Revolving Credit Facility"). We finance much of our operations and growth through cash generated by our operations.

The amount of cash and cash equivalents at ~~January 1,~~December 31, 2021 represented a ~~decrease~~an increase of ~~$25.4~~$230.8 million from ~~$862.4 million~~$1.01 billion at October ~~2, 2020,~~1, 2021, the reasons for which are described below.

~~Page 44~~

Our cash flow provided by operations of ~~$112.6~~$321.6 million during the three ~~month period~~months ended ~~January 1,~~December 31, 2021 was favorable by ~~$249.8~~$209.0 million in comparison to the cash flow ~~used for~~provided by operations ~~of $137.2~~of $112.6 million for the corresponding prior year period. This improvement was due mainly to ~~lower uses of cash in other~~improved working capital ~~which~~performance along with favorable impacts from net cash earnings year over year. The improvement in ~~turn~~working capital performance was primarily ~~due to improved~~driven by favorability in accounts receivable collections ~~compared to the previous period~~trends along with less cash used in accrued ~~liabilities year over year. The cash spend decrease in accrued liabilities is associated with lower payments in personnel related~~ liabilities year over year.

Our cash used for investing activities for the three months ended ~~January 1, 2021~~ was ~~$193.2~~$249.6 million, compared to cash used for investing activities of ~~$34.3~~$193.2 million in the corresponding prior year period, ~~the~~with this change due primarily to the acquisition of BlackLynx in the current quarter and Buffalo Group in the ~~current quarter.~~prior year.

Our cash provided by financing activities of ~~$18.7~~$144.4 million for the three months ended ~~January 1,~~December 31, 2021 resulted mainly from net proceeds from borrowings of ~~$95.0~~$231.4 million mainly in connection with the BlackLynx acquisition,

Page 45

partly offset by cash used for ~~share repurchases~~repurchase of ~~$24.8~~redeemable noncontrolling interests of $35.1 million ~~$35.7~~and $41.6 million in dividends to shareholders and noncontrolling ~~interest and approximately $15.8 million in s~~interests~~tock-based compensation and benefit plan related activity.~~. Cash provided by financing activities in the corresponding prior year period was ~~$166.9~~ $18.7 million, due primarily to net proceeds from borrowings of ~~$210.6~~$95.0 million, ~~partly~~ offset by ~~dividends~~cash used for share repurchases of ~~$25.6~~$24.8 million and ~~stock-based compensation~~$35.7 million in dividends to shareholders and ~~benefit plan related activity of $18.1 million.~~noncontrolling interests.

At ~~January 1,~~December 31, 2021, the Company had ~~approximately $129.8~~approximately $162.2 million in cash and cash equivalents held in the U.S. and ~~$707.2 million~~$1.08 billion held outside of the U.S. (primarily in thethe U.K., the Eurozone, Australia, India, Japan 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. (see Note 7- Income Taxes of Notes to Consolidated Financial Statements included in our ~~2020~~2021 Form 10-K), there are no material impediments to repatriating these funds to the U.S.

The Company had ~~$252.1~~$273.7 million in letters of credit outstanding at ~~January 1,~~December 31, 2021. Of this amount, ~~$2.3~~$1.7 million was issued under the Revolving Credit Facility and ~~$249.8~~$272.0 million was issued under separate, committed and uncommitted letter-of-credit facilities.

Page 46

On November 19, 2021, a subsidiary of Jacobs acquired all outstanding shares of common stock of BlackLynx, a provider of high-performance software, to complement Jacobs' portfolio of cyber, intelligence and digital solutions. The Company paid total base consideration of approximately $234.9 million in cash to the former owners of BlackLynx. In addition, the transaction involved the potential payment of future consideration that is contingent upon the achievement of certain revenue and gross margin thresholds being achieved in calendar year 2022. The estimated fair value of the contingent consideration on the acquisition date is $1.3 million. The future contingent consideration will be paid, if and to the extent achieved, in second quarter of fiscal 2023. In conjunction with the acquisition, the Company also paid off BlackLynx's debt of approximately $5.3 million simultaneously with the consummation of the acquisition.

On March 2, 2021, Jacobs completed the strategic investment of a 65% interest in PA Consulting, a UK-based leading innovation and transformation consulting firm. The total consideration paid by the Company was $1.7 billion, funded through cash on hand, proceeds from a new term loan and draws on the Company's existing revolving credit facility. Further, in connection with the transaction, an additional $261 million in investment proceeds had not yet been distributed at the investment date due to continuing employment requirements of associated management owners. Consequently, this amount represented compensation expense incurred related to the investment that was expensed subsequent to the acquisition date, and was reflected in selling, general and administrative expense and cash from operations for the fiscal year ended October 1, 2021. The remaining 35% interest was acquired by PA Consulting employees, whose redeemable noncontrolling interests had a fair value of $582.4 million on the closing date, including subsequent purchase accounting adjustments. PA Consulting is accounted for as a consolidated subsidiary and as a separate operating segment under U.S. GAAP accounting rules. See Note 15- PA Consulting Business Combination for more discussion on the investment and Note 12- Borrowings for more discussion on the financing for the transaction.

On January 20, 2021, the Company entered into an unsecured delayed draw term loan facility (the “2021 Term Loan Facility”) with a syndicate of financial institutions as lenders. Under the 2021 Term Loan Facility, the Company borrowed an aggregate principal amount of $200.0 million and £650.0 million. The proceeds of the term loans were used primarily to fund the investment in PA Consulting. The 2021 Term Loan Facility contains affirmative and negative covenants and events of default customary for financings of this type that are consistent with those included in the Revolving Credit Facility and the 2020 Term Loan Facility.

On November 24, 2020, a subsidiary of Jacobs completed the acquisition of Buffalo Group, a leader in advanced cyber and intelligence ~~solutions.~~solutions which allows Jacobs to further expand its cyber and intelligence solutions offerings to government clients. The Company paid total consideration of ~~$212.8~~$190.1 million, which was comprised of approximately ~~$181.4~~$182.4 million in cash to the former owners of Buffalo Group and contingent consideration of $7.7 million, The contingent consideration was subsequently recognized as an offset to selling, general and administrative expense when it was determined no amounts would be paid. In conjunction with the ~~assumption of~~acquisition, the Company assumed the Buffalo Group's debt of approximately $7.7 ~~million and $23.7 million in other assumed liabilities.~~million. The Company repaid all of the assumed Buffalo Group debt by the end of the first fiscal quarter of 2021. The Company has recorded its ~~preliminary~~final purchase price allocation associated with the acquisition, which is summarized in Note ~~15-~~16- Other Business ~~Combinations~~Combinations..

On March 6, 2020, a subsidiary of Jacobs completed the acquisition of John Wood Group's nuclear consulting, remediation and program management business for an enterprise value of £246 million, or approximately $317.9 million, less cash acquired of $24.3 million. The Company has recorded its preliminary purchase accounting allocation associated with the acquisition, which is summarized in Note 15- ~~Business Combinations~~.

On January 20, 2021, Jacobs entered into a delayed draw term loan facility (the "Delayed Draw Term Loan Facility) under the Revolving Credit Facility. The Delayed Draw Term Loan Facility matures on the third anniversary of the date of closing. Under the Delayed Draw Term Loan Facility, the Company may borrow up to $200 million of U.S. dollar denominated term loans and up to £650 million U.K. pound sterling denominated loans. The proceeds of the term loans may be used to fund the acquisition of a majority interest in PA Consulting Group Limited, refinance certain existing indebtedness and pay related transaction costs and expenses.

~~Page 45~~

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 further believe that our financial resources and discretionary spend controls, as well as near term benefits from government assistance programs, will allow us to continue managing the negative impacts of the COVID-19 pandemic on our business operations for the foreseeable ~~future, which are expected~~future. We continue to ~~include reduced revenue from operating activities, based~~evaluate the impact of the pandemic on ~~current assumptions~~our business and expectations regarding the pandemic. We have taken actions to reduce spending more broadly across the Company, only proceeding with operating and capital spending that is critical. We also ceased all non-essential hiring and reduced discretionary expenses, including certain employee benefits and compensation through the end of fiscal 2020. In addition, as a precautionary measure, we temporarily suspended purchases under the share repurchase plan in March 2020, with such suspension remaining in effect through the third fiscal quarter of 2020. During the fourth fiscal quarter of 2020, we resumed share repurchases on a limited basis. Looking ahead, we have developed contingency plans to reduce costs further if the situation deteriorates beyond or lasts longer than current assumptions and expectations.reassess accordingly.

We were in compliance with all of our debt covenants at ~~January 1,~~December 31, 2021.

Item 3. Quantitative and Qualitative Disclosures About Market Risk.

We do not enter into derivative financial instruments for trading, speculation or other similar purposes that would expose the Company to market risk. In the normal course of business, our results of operations are exposed to risks associated with fluctuations in interest rates and currency exchange rates.

Page 47

Interest Rate Risk

Please see the Note 12- Borrowings in Notes to Consolidated Financial Statements appearing under Part I, Item 1 of this Quarterly Report on Form 10-Q, which is incorporated herein by reference, for a discussion of the Revolving Credit Facility, Term Loan ~~Facility~~Facilities and Note Purchase Agreement.

Our Revolving Credit Facility, Term Loan ~~Facility~~Facilities and certain other debt obligations are subject to variable rate interest which could be adversely affected by an increase in interest rates. As of ~~January 1,~~December 31, 2021, we had an aggregate of $~~1.30~~2.63 billion in outstanding borrowings under our Revolving Credit Facility and Term Loan ~~Facility.~~Facilities. Interest on amounts borrowed under these agreements is subject to adjustment based on the Company’s Consolidated Leverage Ratio (as defined in the credit agreements governing the Revolving Credit Facility and the Term Loan ~~Facility)~~Facilities). Depending on the Company’s Consolidated Leverage Ratio, borrowings denominated in U.S. dollars under the Revolving Credit Facility and the Term Loan ~~Facility~~Facilities bear interest at a Eurocurrency rate plus a margin of between 0.875% and 1.625% or a base rate plus a margin of between 0.0% and 0.625% including applicable ~~margins.~~margins while borrowings denominated in British pounds under these respective facilities bear interest at an adjusted SONIA rate plus a margin of between 0.875% and 1.625%. Additionally, if our Consolidated Leverage Ratio exceeds a certain amount, the interest on the Senior Notes may increase by 75 basis points. However, as discussed in Note ~~18-~~19- Commitments and Contingencies and Derivative Financial Instruments, we ~~have entered into~~are party to swap agreements with an aggregate notional value of ~~$926.2~~$923.5 million to convert the variable rate interest based liabilities associated with a corresponding amount of our debt into fixed interest rate liabilities, leaving ~~$372.5 million~~$1.71 billion in principal amount subject to variable interest rate risk.

For the three months ended ~~January 1,~~December 31, 2021, our weighted average borrowings that are subject to floating rate exposure were approximately ~~$466.2 million.~~$1.78 billion. If floating interest rates had increased by 1.00%, our interest expense for the three months ended ~~January 1,~~December 31, 2021 would have increased by approximately ~~$1.2~~$4.5 million.

Foreign Currency Risk

In situations where the Company incurs costs in currencies other than our functional currency, we sometimes enter into foreign exchange contracts to limit our exposure to fluctuating foreign currencies. We follow the provisions of ASC No. 815, Derivatives and Hedging in accounting for our derivative contracts. The Company has ~~$425.8~~$503.5 million in notional value of exchange rate sensitive instruments at ~~January 1,~~December 31, 2021. See Note ~~18-~~19- Commitments and Contingencies and Derivative Financial Instruments for discussion.

Page 4648

Item 4. Controls and Procedures.

Evaluation of Disclosure Controls and Procedures

Disclosure controls and procedures are those controls and procedures that are designed to ensure that information required to be disclosed in our reports filed or submitted under the Securities Exchange Act of 1934, as amended (the “Exchange Act”) are recorded, processed, summarized and reported within the time periods specified in the SEC’s rules and forms. Disclosure controls and procedures include, without limitation, controls and procedures designed to ensure that information required to be disclosed in our reports filed under the Exchange Act is accumulated and communicated to management, including our Chair and Chief Executive Officer (principal executive officer) and Chief Financial Officer (principal financial officer), to allow timely decisions regarding required disclosure.

The Company’s management, with the participation of its Chair and Chief Executive Officer (principal executive officer) and Chief Financial Officer (principal financial officer), evaluated the effectiveness of the Company’s disclosure controls and procedures as defined by Rule 13a-15(e) of the Exchange Act defined above, as of ~~January 1,~~December 31, 2021, the end of the period covered by this Quarterly Report on Form 10-Q (the “Evaluation Date”). Based on that evaluation, the Company’s management, with the participation of the Chief Executive Officer (principal executive officer) and Chief Financial Officer (principal financial officer) concluded that the Company’s disclosure controls and procedures, as of the Evaluation Date, were effective to ensure that information required to be disclosed by the Company in the reports that it files or submits under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in the SEC’s rules and forms and that such information is accumulated and communicated to the Company’s management, including the Company’s Chair and Chief Executive Officer (principal executive officer) and Chief Financial Officer (principal financial officer), as appropriate to allow timely decisions regarding required disclosure.

Changes in Internal Control Over Financial Reporting

There were no changes to our internal control over financial reporting which were identified in connection with the evaluation required by paragraph (d) of Rules 13a-15 and 15d-15 under the Exchange Act during the quarter ended ~~January 1,~~December 31, 2021 that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

Page 4749

PART II - OTHER INFORMATION

Item 1. Legal Proceedings.

The information required by this Item 1 is included in the Note ~~18-~~19- Commitments and Contingencies and Derivative Financial Instruments included in the Notes to Consolidated Financial Statements appearing under Part I, Item 1 of this Quarterly Report on Form 10-Q, which is incorporated herein by reference.

Item 1A. Risk Factors.

Please refer to Item 1A- Risk Factors in our ~~2020~~2021 Form 10-K, which is incorporated herein by reference, for a discussion of some of the factors that have affected our business, financial condition, and results of operations in the past and which could affect us in the future. There have been no material changes to those risk factors. Before making an investment decision with respect to our common stock, you should carefully consider those risk factors, as well as the financial and business disclosures contained in this Quarterly Report on Form 10-Q and our other current and periodic reports filed with the SEC.

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds.

There were no sales of unregistered equity securities during the first fiscal quarter of ~~2021.~~2022.

Share Repurchases

On January 17, 2019, the Company’s Board of Directors authorized a share repurchase program of up to $1.0 billion of the Company’s common stock, to expire on January 16, 2022 (the "2019 Repurchase Authorization"). On January 16, 2020, the Company's Board of Directors authorized ~~an additional~~a share repurchase program of up to $1.0 billion of the Company's common stock, to expire on January 15, 2023 (the "2020 Repurchase Authorization"). In the fourth quarter of fiscal 2021, the Company initiated an accelerated share repurchase program by advancing $250 million to a financial institution in a privately negotiated transaction, with final non-cash settlement on the program during the first quarter of fiscal 2022 of 342,054 shares as depicted in the table below.

The following table summarizes the activity under the 2020 Repurchase Authorization through the ~~2019 and 2020~~first ~~Repurchase Authorizations during the first~~fiscal quarter of ~~fiscal 2021:~~2022:


Amount Authorized (2020 Repurchase Authorization)	Average Price Per Share (1)	Shares Repurchased	Total Shares Retired
$1,000,000,000	$137.55	342,054	342,054

Period Total Number of Shares Purchased Average Price Paid Per
Share (1) Total Numbers of Shares Purchased as Part of the 2019 and 2020 Repurchase Authorizations Approximate Dollar Value of Shares that May Yet Be Purchased Under the 2019 and 2020 Repurchase Authorizations
October 7, 2020 - October 30, 2020 138,320 $97.93 138,320 $1,044,330,855
November 2, 2020 - November 27, 2020 108,081 $99.61 108,081 $1,033,564,473
November 30, 2020 - December 1, 2020 4,600 $106.33 4,600 $1,033,075,335

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

As ~~a precautionary measure in light~~ of ~~the COVID-19 pandemic,~~December 31, 2021, the Company ~~temporarily suspended purchases~~has $782.9 million remaining under the 2020 Repurchase Authorization.

Our share repurchase plan in March 2020, with such suspension remaining in effect through the fiscal third quarter of 2020. During the fourth fiscal quarter of 2020, the Company resumed share repurchases on a limited basis while we continue to monitor developments in fiscal 2021 with the pandemic.

~~The share repurchase programs do~~program does not obligate the Company to purchase any shares. Share repurchases may be executed through various means including, without limitation, accelerated share repurchases, open market transactions, privately negotiated transactions, purchases pursuant to Rule 10b5-1 plans or otherwise. The authorization for the share repurchase programs may be terminated, increased or decreased by the Company’s Board of Directors in its discretion at any time. 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.

~~Page 48~~

Item 3. Defaults Upon Senior Securities

None.

Item 4. Mine Safety Disclosure.

None.

Item 5. Other Information.

None.

Page 4950

Item 6. Exhibits.



~~2.1~~10.1#*			~~Implementation Deed, dated as~~Form of ~~November 27, 2020, by and among PA Consulting Group Limited, CEP IV Garden S.A.R.L., Jacobs Consulting Solutions Limited,~~Restricted Stock Unit Agreement (Performance Shares – Earnings Per Share Growth) (awarded pursuant to the Jacobs Engineering Group Inc. ~~and the persons set out in Schedule 1 thereto. Filed as Exhibit 2.1~~1999 Stock Incentive Plan).
10.2#*			Form of Restricted Stock Unit Agreement (Performance Shares – ROIC) (awarded pursuant to the ~~Registrant’s Current Report on Form 8-K on November 30, 2020 and incorporated herein by reference.~~Jacobs Engineering Group Inc. 1999 Stock Incentive Plan).
~~2.2~~10.3#*			~~Warranty Deed, dated as~~Form of ~~November 27, 2020, by and among the Warrantors named therein and Jacobs Consulting Solutions Limited. Filed as Exhibit 2.2~~Restricted Stock Unit Agreement (Time-Based Vesting) (awarded pursuant to the ~~Registrant’s Current Report on Form 8-K on November 30, 2020 and incorporated herein by reference.~~Jacobs Engineering Group Inc. 1999 Stock Incentive Plan).
~~10.1~~10.4*			~~First~~Second Amendment to Second Amended and Restated Credit Agreement, dated as of December ~~16, 2020, among~~ 6, 2021, between Jacobs Engineering Group Inc.~~, the designated borrowers party thereto, and the lenders thereto,~~ and Bank of America, N.A., as administrative agent, to the Second Amended and Restated Credit Agreement dated as of March 27, 2019, by and among Jacobs Engineering, Inc., the designated borrowers party thereto, the lenders ~~from time to time~~ party thereto, and Bank of America, N.A., as administrative agent.
10.5*			Amendment to Credit Agreement (LIBOR Transition), dated as of December ~~Filed~~6 , 2021, among Jacobs Engineering Group Inc. and Jacobs U.K. Limited, as ~~Exhibit 10.1~~borrowers, and Bank of America, N.A., as administrative agent, to the ~~Registrant’s Current Report on Form 8-K on December 18,~~Credit Agreement, dated as of March 25, 2020, by and ~~incorporated herein by reference.~~among Jacobs Engineering Group Inc. and Jacobs U.K. Limited, as borrowers, the lenders party thereto, and Bank of America, N.A. as administrative agent.
10.2#10.6			~~Form~~Amendment to Term Loan Agreement (LIBOR Transition), dated as of ~~Restricted Stock Unit Agreement (Performance Shares – Earnings Per Share Growth) (awarded pursuant to the~~December 6 , 2021, between Jacobs Engineering Group Inc. ~~1999 Stock Incentive Plan).~~
10.3#*			~~Form~~and Bank of ~~Restricted Stock Unit~~America, N.A., as administrative agent, to the Term Loan Agreement, ~~(Performance Shares – ROIC) (awarded pursuant to the~~dated as of January 20, 2021, among Jacobs Engineering Group Inc. ~~1999 Stock Incentive Plan).~~, the lenders party thereto, and Bank of America, N.A., as administrative agent
10.4#*			~~Form of Restricted Stock Unit Agreement (Time-Based Vesting) (awarded pursuant to the Jacobs Engineering Group Inc. 1999 Stock Incentive Plan)~~.
31.1*			Certification of Chief Executive Officer pursuant to Rule 13a-14(a) under the Securities Exchange Act of 1934.
31.2*			Certification of Chief Financial Officer pursuant to Rule 13a-14(a) under the Securities Exchange Act of 1934.
32.1*			Certification of Chief Executive Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
32.2*			Certification of Chief Financial Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
101			The following financial statements from the Company’s Quarterly Report on Form 10-Q for the quarter ended ~~January 1,~~December 31, 2021, formatted in Inline XBRL: (i) Consolidated Balance Sheets, (ii) Consolidated Statements of Earnings, (iii) Consolidated Statements of Comprehensive Income (Loss), (iv) Consolidated Statements of Stockholders’ Equity, (v) Consolidated Statements of Cash Flows and (vi) Notes to Consolidated Financial Statements, tagged as blocks of text and including detailed ~~tags.~~tags
104			The cover page from the Company’s Quarterly Report on Form 10-Q for the quarter ~~ended January 1,~~ended December 31, 2021, ~~(formatted~~(formatted as Inline XBRL and contained in Exhibit 101).

# Management contract or compensatory plan or arrangement

*Filed herewith

Page 5051

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, as amended, the Registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

JACOBS ENGINEERING GROUP INC.


By:			/s/ Kevin C. Berryman
			Kevin C. Berryman
			President
			and Chief Financial Officer
			(Principal Financial Officer)

Date:			February ~~9, 2021~~8, 2022

Page 5152


Fiscal Year	(in millions)
2021	$	75.4
2022	98.8
2023	98.6
2024	98.6
2025	98.2
Thereafter	246.0
Total	$	715.6


Period	Total Number of Shares Purchased	Average Price Paid Per Share (1)	Total Numbers of Shares Purchased as Part of the 2019 and 2020 Repurchase Authorizations	Approximate Dollar Value of Shares that May Yet Be Purchased Under the 2019 and 2020 Repurchase Authorizations
October 7, 2020 - October 30, 2020	138,320	$97.93	138,320	$1,044,330,855
November 2, 2020 - November 27, 2020	108,081	$99.61	108,081	$1,033,564,473
November 30, 2020 - December 1, 2020	4,600	$106.33	4,600	$1,033,075,335