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 December ~~31, 2021~~30, 2022

☐ 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~~SOLUTIONS INC.

(Exact name of registrant as specified in its charter)

Delaware

~~95-4081636~~88-1121891

(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 ~~28 2022: 129,216,695~~27, 2023: 126,714,126

Page 2

JACOBS ~~ENGINEERING GROUP~~SOLUTIONS INC.

INDEX TO FORM 10-Q


			Page No.
PART I	FINANCIAL INFORMATION

	Item 1.	Financial Statements	4

		Consolidated Balance Sheets - Unaudited	5

		Consolidated Statements of Earnings - Unaudited	6

		Consolidated Statements of Comprehensive Income - Unaudited	7

		Consolidated Statements of Stockholders’ Equity - Unaudited	8

		Consolidated Statements of Cash Flows - Unaudited	9

		Notes to Consolidated Financial Statements - Unaudited	10

	Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	3633

	Item 3.	Quantitative and Qualitative Disclosures About Market Risk	4746

	Item 4.	Controls and Procedures	4856

PART II	OTHER INFORMATION

	Item 1.	Legal Proceedings	5048

	Item 1A.	Risk Factors	5048

	Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	5048

	Item 3.	Defaults Upon Senior Securities	5048

	Item 4.	Mine Safety Disclosures	5049

	Item 5.	Other Information	5049

	Item 6.	Exhibits	5150

		SIGNATURES	5251

Page 3

Part I - FINANCIAL INFORMATION

Item 1. Financial Statements.

Page 4

JACOBS ~~ENGINEERING GROUP~~SOLUTIONS INC. AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS

(In thousands, except share information)


		December 31, 2021		October 1, 2021			December 30, 2022		September 30, 2022
		(Unaudited)					(Unaudited)
ASSETS	ASSETS					ASSETS
Current Assets:	Current Assets:					Current Assets:
Cash and cash equivalents	Cash and cash equivalents	$	1,245,024	$	1,014,249	Cash and cash equivalents	$	1,211,102	$	1,140,479
Receivables and contract assets	Receivables and contract assets	2,992,814		3,101,418		Receivables and contract assets	3,439,940		3,405,381
Prepaid expenses and other	Prepaid expenses and other	134,165		176,228		Prepaid expenses and other	156,704		176,134

Total current assets	Total current assets	4,372,003		4,291,895		Total current assets	4,807,746		4,721,994
Property, Equipment and Improvements, net	Property, Equipment and Improvements, net	328,631		353,117		Property, Equipment and Improvements, net	356,784		346,676
Other Noncurrent Assets:	Other Noncurrent Assets:					Other Noncurrent Assets:
Goodwill	Goodwill	7,350,494		7,197,000		Goodwill	7,341,082		7,184,658
Intangibles, net	Intangibles, net	1,618,913		1,565,758		Intangibles, net	1,411,959		1,394,052
Deferred income tax assets	Deferred income tax assets	102,416		103,193		Deferred income tax assets	29,805		31,480
Operating lease right-of-use assets	Operating lease right-of-use assets	563,124		650,097		Operating lease right-of-use assets	466,331		476,913
Miscellaneous	Miscellaneous	468,513		471,549		Miscellaneous	504,466		504,646
Total other noncurrent assets	Total other noncurrent assets	10,103,460		9,987,597		Total other noncurrent assets	9,753,643		9,591,749
		$	14,804,094	$	14,632,609		$	14,918,173	$	14,660,419
LIABILITIES AND STOCKHOLDERS’ EQUITY	LIABILITIES AND STOCKHOLDERS’ EQUITY					LIABILITIES AND STOCKHOLDERS’ EQUITY
Current Liabilities:	Current Liabilities:					Current Liabilities:
Short-term debt		$	53,400	$	53,456
Current maturities of long-term debt						Current maturities of long-term debt	$	51,643	$	50,415
Accounts payable	Accounts payable	816,815		908,441		Accounts payable	929,745		966,792
Accrued liabilities	Accrued liabilities	1,486,618		1,533,559		Accrued liabilities	1,370,561		1,441,762
Operating lease liability	Operating lease liability	162,949		172,414		Operating lease liability	152,360		150,171
Contract liabilities	Contract liabilities	605,801		542,054		Contract liabilities	736,953		641,705
Total current liabilities	Total current liabilities	3,125,583		3,209,924		Total current liabilities	3,241,262		3,250,845
Long-term Debt	Long-term Debt	3,073,067		2,839,933		Long-term Debt	3,434,318		3,357,256
Liabilities relating to defined benefit pension and retirement plans	Liabilities relating to defined benefit pension and retirement plans	404,421		418,080		Liabilities relating to defined benefit pension and retirement plans	293,134		271,332
Deferred income tax liabilities	Deferred income tax liabilities	211,900		214,380		Deferred income tax liabilities	297,746		269,077
Long-term operating lease liability	Long-term operating lease liability	706,288		758,358		Long-term operating lease liability	607,674		607,447
Other deferred liabilities	Other deferred liabilities	545,226		559,375		Other deferred liabilities	182,532		167,548
Commitments and Contingencies	Commitments and Contingencies	0		0		Commitments and Contingencies
Redeemable Noncontrolling interests	Redeemable Noncontrolling interests	637,664		657,722		Redeemable Noncontrolling interests	627,909		632,522
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 - none	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		129,153		128,893
Common stock, $1 par value, authorized - 240,000,000 shares; issued and outstanding - 126,668,513 shares and 127,393,378 shares as of December 30, 2022 and September 30, 2022, respectively						Common stock, $1 par value, authorized - 240,000,000 shares; issued and outstanding - 126,668,513 shares and 127,393,378 shares as of December 30, 2022 and September 30, 2022, respectively	126,669		127,393
Additional paid-in capital	Additional paid-in capital	2,641,059		2,590,012		Additional paid-in capital	2,672,421		2,682,009
Retained earnings	Retained earnings	4,087,390		4,015,578		Retained earnings	4,230,866		4,225,784
Accumulated other comprehensive loss	Accumulated other comprehensive loss	(787,656)		(794,442)		Accumulated other comprehensive loss	(845,852)		(975,130)
Total Jacobs stockholders’ equity	Total Jacobs stockholders’ equity	6,069,946		5,940,041		Total Jacobs stockholders’ equity	6,184,104		6,060,056
Noncontrolling interests	Noncontrolling interests	29,999		34,796		Noncontrolling interests	49,494		44,336
Total Group stockholders’ equity	Total Group stockholders’ equity	6,099,945		5,974,837		Total Group stockholders’ equity	6,233,598		6,104,392
		$	14,804,094	$	14,632,609		$	14,918,173	$	14,660,419

See the accompanying Notes to Consolidated Financial Statements – Unaudited.

Page 5

JACOBS ~~ENGINEERING GROUP~~SOLUTIONS INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF EARNINGS

Three Months EndedDecember 30, 2022 and December 31, 2021 ~~and January 1, 2021~~

(In thousands, except per share information)

(Unaudited)


		For the Three Months Ended					For the Three Months Ended
		December 31, 2021		January 1, 2021			December 30, 2022		December 31, 2021
Revenues	Revenues	$	3,380,625	$	3,381,836	Revenues	$	3,798,668	$	3,380,625
Direct cost of contracts	Direct cost of contracts	(2,584,151)		(2,749,776)		Direct cost of contracts	(2,983,955)		(2,584,151)
Gross profit	Gross profit	796,474		632,060		Gross profit	814,713		796,474
Selling, general and administrative expenses	Selling, general and administrative expenses	(619,141)		(418,120)		Selling, general and administrative expenses	(576,908)		(619,141)
Operating Profit	Operating Profit	177,333		213,940		Operating Profit	237,805		177,333
Other Income (Expense):	Other Income (Expense):					Other Income (Expense):
Interest income	Interest income	1,501		1,124		Interest income	3,007		1,501
Interest expense	Interest expense	(19,426)		(17,313)		Interest expense	(40,077)		(19,426)
Miscellaneous income, net		9,682		156,360
Total other (expense) income, net		(8,243)		140,171
Miscellaneous (expense) income, net						Miscellaneous (expense) income, net	(3,254)		9,682
Total other expense, net						Total other expense, net	(40,324)		(8,243)
Earnings from Continuing Operations Before Taxes	Earnings from Continuing Operations Before Taxes	169,090		354,111		Earnings from Continuing Operations Before Taxes	197,481		169,090
Income Tax Expense from Continuing Operations	Income Tax Expense from Continuing Operations	(15,889)		(87,023)		Income Tax Expense from Continuing Operations	(50,103)		(15,889)
Net Earnings of the Group from Continuing Operations	Net Earnings of the Group from Continuing Operations	153,201		267,088		Net Earnings of the Group from Continuing Operations	147,378		153,201
Net Earnings of the Group from Discontinued Operations		(232)		(14)
Net Loss of the Group from Discontinued Operations						Net Loss of the Group from Discontinued Operations	(708)		(232)
Net Earnings of the Group	Net Earnings of the Group	152,969		267,074		Net Earnings of the Group	146,670		152,969
Net Earnings Attributable to Noncontrolling Interests from Continuing Operations	Net Earnings Attributable to Noncontrolling Interests from Continuing Operations	(9,252)		(10,026)		Net Earnings Attributable to Noncontrolling Interests from Continuing Operations	(7,031)		(9,252)
Net Earnings Attributable to Redeemable Noncontrolling interests	Net Earnings Attributable to Redeemable Noncontrolling interests	(9,683)		—		Net Earnings Attributable to Redeemable Noncontrolling interests	(3,992)		(9,683)
Net Earnings Attributable to Jacobs from Continuing Operations	Net Earnings Attributable to Jacobs from Continuing Operations	134,266		257,062		Net Earnings Attributable to Jacobs from Continuing Operations	136,355		134,266
Net Earnings Attributable to Jacobs	Net Earnings Attributable to Jacobs	$	134,034	$	257,048	Net Earnings Attributable to Jacobs	$	135,647	$	134,034
Net Earnings Per Share:	Net Earnings Per Share:					Net Earnings Per Share:
Basic Net Earnings from Continuing Operations Per Share	Basic Net Earnings from Continuing Operations Per Share	$	1.04	$	1.98	Basic Net Earnings from Continuing Operations Per Share	$	1.08	$	1.04
Basic Net Earnings from Discontinued Operations Per Share		$	—	$	—
Basic Net Loss from Discontinued Operations Per Share						Basic Net Loss from Discontinued Operations Per Share	$	(0.01)	$	—
Basic Earnings Per Share	Basic Earnings Per Share	$	1.04	$	1.98	Basic Earnings Per Share	$	1.07	$	1.04

Diluted Net Earnings from Continuing Operations Per Share	Diluted Net Earnings from Continuing Operations Per Share	$	1.03	$	1.96	Diluted Net Earnings from Continuing Operations Per Share	$	1.07	$	1.03
Diluted Net Earnings from Discontinued Operations Per Share		$	—	$	—
Diluted Net Loss from Discontinued Operations Per Share						Diluted Net Loss from Discontinued Operations Per Share	$	(0.01)	$	—
Diluted Earnings Per Share	Diluted Earnings Per Share	$	1.03	$	1.96	Diluted Earnings Per Share	$	1.06	$	1.03

See the accompanying Notes to Consolidated Financial Statements - Unaudited.

Page 6

JACOBS ~~ENGINEERING GROUP~~SOLUTIONS INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

Three Months Ended December ~~31, 2021~~30, 2022 and ~~January 1,~~December 31, 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


	For the Three Months Ended
	December 30, 2022		December 31, 2021
Net Earnings of the Group	$	146,670	$	152,969
Other Comprehensive Income:
Foreign currency translation adjustment	165,335		(8,685)
(Loss) gain on cash flow hedges	(10,144)		8,855
Change in pension and retiree medical plan liabilities	(22,266)		8,039
Other comprehensive income before taxes	132,925		8,209
Income Tax (Expense) Benefit:
Foreign currency translation adjustment	(6,609)		2,990
Cash flow hedges	3,270		(2,945)
Change in pension and retiree medical plan liabilities	(308)		(1,468)
Income Tax Benefit (Expense):	(3,647)		(1,423)
Net other comprehensive income	129,278		6,786
Net Comprehensive Income of the Group	275,948		159,755
Net Earnings Attributable to Noncontrolling Interests	(7,031)		(9,252)
Net Earnings Attributable to Redeemable Noncontrolling interests	(3,992)		(9,683)
Net Comprehensive Income Attributable to Jacobs	$	264,925	$	140,820

See the accompanying Notes to Consolidated Financial Statements - Unaudited.

Page 7

JACOBS ~~ENGINEERING GROUP~~SOLUTIONS INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY

For the Three Months Ended December ~~31, 2021~~30, 2022 and ~~January 1,~~December 31, 2021

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

Balances at September 30, 2022																Balances at September 30, 2022	$	127,393	$	2,682,009	$	4,225,784	$	(975,130)	$	6,060,056	$	44,336	$	6,104,392
Net earnings																Net earnings	—		—		135,647		—		135,647		7,031		142,678
Foreign currency translation adjustments, net of deferred taxes of $6,609																Foreign currency translation adjustments, net of deferred taxes of $6,609	—		—		—		158,726		158,726		—		158,726
Pension liability, net of deferred taxes of $308																Pension liability, net of deferred taxes of $308	—		—		—		(22,574)		(22,574)		—		(22,574)
Loss on derivatives, net of deferred taxes of $(3,270)																Loss on derivatives, net of deferred taxes of $(3,270)	—		—		—		(6,874)		(6,874)		—		(6,874)
Dividends																Dividends	—		—		(874)		—		(874)		—		(874)
Redeemable Noncontrolling interests redemption value adjustment																Redeemable Noncontrolling interests redemption value adjustment	—		—		(23,317)		—		(23,317)		—		(23,317)
Repurchase and issuance of redeemable noncontrolling interests																Repurchase and issuance of redeemable noncontrolling interests	—		—		11,337		—		11,337		—		11,337
Noncontrolling interests - distributions and other																Noncontrolling interests - distributions and other	—		—		—		—		—		(1,873)		(1,873)
Stock based compensation																Stock based compensation	—		20,231		—		—		20,231		—		20,231
Issuances of equity securities including shares withheld for taxes																Issuances of equity securities including shares withheld for taxes	514		(3,762)		(4,484)		—		(7,732)		—		(7,732)
Repurchases of equity securities																Repurchases of equity securities	(1,238)		(26,057)		(113,227)		—		(140,522)		—		(140,522)
Balances at December 30, 2022																Balances at December 30, 2022	$	126,669	$	2,672,421	$	4,230,866	$	(845,852)	$	6,184,104	$	49,494	$	6,233,598

See the accompanying Notes to Consolidated Financial Statements – Unaudited.

Page 8

JACOBS ~~ENGINEERING GROUP~~SOLUTIONS INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS

For the Three Months Ended December ~~31, 2021~~30, 2022 and ~~January 1,~~December 31, 2021

(In thousands)

(Unaudited)


		For the Three Months Ended					For the Three Months Ended
		December 31, 2021		January 1, 2021			December 30, 2022		December 31, 2021
Cash Flows from Operating Activities:	Cash Flows from Operating Activities:					Cash Flows from Operating Activities:
Net earnings attributable to the Group	Net earnings attributable to the Group	$	152,969	$	267,074	Net earnings attributable to the Group	$	146,670	$	152,969
Adjustments to reconcile net earnings to net cash flows provided by operations:	Adjustments to reconcile net earnings to net cash flows provided by operations:					Adjustments to reconcile net earnings to net cash flows provided by operations:
Depreciation and amortization:	Depreciation and amortization:					Depreciation and amortization:
Property, equipment and improvements	Property, equipment and improvements	26,237		22,989		Property, equipment and improvements	27,979		26,237
Intangible assets	Intangible assets	46,907		23,155		Intangible assets	49,773		46,907

Gain on investment in equity securities		—		(190,368)

Stock based compensation	Stock based compensation	7,014		11,841		Stock based compensation	20,231		7,014
Equity in earnings of operating ventures, net of return on capital distributions	Equity in earnings of operating ventures, net of return on capital distributions	12,749		1,159		Equity in earnings of operating ventures, net of return on capital distributions	2,613		12,749
Loss (gain) on disposals of assets, net		151		(134)
Impairment of long-lived assets and equity method investment		72,266		27,902
Loss on disposals of assets, net						Loss on disposals of assets, net	241		151

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

Deferred income taxes	Deferred income taxes	(17,659)		53,008		Deferred income taxes	13,797		(17,659)
Changes in assets and liabilities, excluding the effects of businesses acquired:	Changes in assets and liabilities, excluding the effects of businesses acquired:					Changes in assets and liabilities, excluding the effects of businesses acquired:
Receivables and contract assets, net of contract liabilities	Receivables and contract assets, net of contract liabilities	163,535		33,250		Receivables and contract assets, net of contract liabilities	127,144		163,535
Prepaid expenses and other current assets	Prepaid expenses and other current assets	32,286		25,144		Prepaid expenses and other current assets	8,219		32,286
Miscellaneous other assets	Miscellaneous other assets	24,618		16,564		Miscellaneous other assets	42,578		24,618
Accounts payable	Accounts payable	(88,470)		(63,985)		Accounts payable	(51,669)		(88,470)
Accrued liabilities	Accrued liabilities	(91,263)		(131,576)		Accrued liabilities	(127,043)		(91,263)
Other deferred liabilities	Other deferred liabilities	(18,407)		16,491		Other deferred liabilities	8,462		(18,407)
Other, net	Other, net	(1,288)		104		Other, net	6,160		(1,288)
Net cash provided by operating activities	Net cash provided by operating activities	321,645		112,618		Net cash provided by operating activities	302,297		321,645
Cash Flows from Investing Activities:	Cash Flows from Investing Activities:					Cash Flows from Investing Activities:
Additions to property and equipment	Additions to property and equipment	(19,318)		(16,766)		Additions to property and equipment	(32,187)		(19,318)
Disposals of property and equipment and other assets	Disposals of property and equipment and other assets	43		—		Disposals of property and equipment and other assets	8		43
Capital contributions to equity investees, net of return of capital distributions	Capital contributions to equity investees, net of return of capital distributions	(480)		(3,430)		Capital contributions to equity investees, net of return of capital distributions	384		(480)
Acquisitions of businesses, net of cash acquired	Acquisitions of businesses, net of cash acquired	(229,813)		(173,012)		Acquisitions of businesses, net of cash acquired	(16,943)		(229,813)

Net cash used for investing activities	Net cash used for investing activities	(249,568)		(193,208)		Net cash used for investing activities	(48,738)		(249,568)
Cash Flows from Financing Activities:	Cash Flows from Financing Activities:					Cash Flows from Financing Activities:
Proceeds from long-term borrowings	Proceeds from long-term borrowings	637,000		603,500		Proceeds from long-term borrowings	1,282,000		637,000
Repayments of long-term borrowings	Repayments of long-term borrowings	(400,287)		(500,827)		Repayments of long-term borrowings	(1,289,421)		(400,287)

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

Proceeds from issuances of common stock	Proceeds from issuances of common stock	17,862		9,541		Proceeds from issuances of common stock	14,798		17,862
Common stock repurchases	Common stock repurchases	—		(24,801)		Common stock repurchases	(140,522)		—
Taxes paid on vested restricted stock	Taxes paid on vested restricted stock	(28,226)		(25,335)		Taxes paid on vested restricted stock	(22,530)		(28,226)
Cash dividends, including to noncontrolling interests		(41,565)		(35,718)
Cash dividends to shareholders						Cash dividends to shareholders	(29,811)		(27,498)
Net dividends associated with noncontrolling interests						Net dividends associated with noncontrolling interests	(2,307)		(14,067)
Repurchase of redeemable noncontrolling interests	Repurchase of redeemable noncontrolling interests	(35,095)		—		Repurchase of redeemable noncontrolling interests	(58,353)		(35,095)
Net cash provided by financing activities		144,363		18,685

Net cash (used for) provided by financing activities						Net cash (used for) provided by financing activities	(246,146)		144,363
Effect of Exchange Rate Changes	Effect of Exchange Rate Changes	2,722		36,493		Effect of Exchange Rate Changes	51,806		2,722
Net Increase (Decrease) in Cash and Cash Equivalents and Restricted Cash		219,162		(25,412)
Net Increase in Cash and Cash Equivalents and Restricted Cash						Net Increase in Cash and Cash Equivalents and Restricted Cash	59,219		219,162
Cash and Cash Equivalents, including Restricted Cash, at the Beginning of the Period	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 Beginning of the Period	1,154,207		1,026,575
Cash and Cash Equivalents, including Restricted Cash, at the End of the Period	Cash and Cash Equivalents, including Restricted Cash, at the End of the Period	$	1,245,737	$	837,012	Cash and Cash Equivalents, including Restricted Cash, at the End of the Period	$	1,213,426	$	1,245,737

See the accompanying Notes to Consolidated Financial Statements – Unaudited.

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JACOBS ~~ENGINEERING GROUP~~SOLUTIONS 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~~Solutions Inc. and its predecessors;

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

On August 29, 2022, Jacobs Engineering Group Inc. (JEGI), the predecessor to Jacobs Solutions Inc., implemented a holding company structure, which resulted in Jacobs Solutions Inc. becoming the parent company of, and successor issuer to, JEGI (the "Holding Company Reorganization"). For purposes of this Quarterly Report, references to the "Company", "we", "us" or "our" or our management or business at any point prior to August 29, 2022 (the "Holding Company Implementation Date") refer to JEGI and its consolidated subsidiaries as the predecessor to Jacobs Solutions Inc.

The accompanying consolidated financial statements and financial information included herein have been prepared pursuant to the interim period reporting requirements of Form 10-Q. 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 1, 2021~~September 30, 2022 (“~~2021~~2022 Form 10-K”).

In the opinion of management, the accompanying unaudited consolidated financial statements contain all adjustments (consisting of normal recurring adjustments) necessary for a fair presentation of our consolidated financial statements at December ~~31, 2021,~~30, 2022, and for the three month ~~periods~~period ended December ~~31, 2021 and January 1, 2021.~~30, 2022.

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

As part of the new Company strategy, during the first quarter of fiscal year 2023 Jacobs formed a reporting and operating segment, Divergent Solutions ("DVS"), to further strengthen our ability to drive value for our clients. DVS supports both lines of business as the core foundation for developing and delivering innovative, next-generation cloud, cyber, data and digital technologies. For a further discussion of our segment information, please refer to Note 18- Segment Information.

On February 4, 2022, the Company acquired StreetLight Data, Inc. ("StreetLight"). 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. The Company paid total base consideration of approximately $190.8 million in cash, and issued $0.9 million in equity and $5.2 million in in-the-money stock options to the former owners of StreetLight. The Company also paid off StreetLight's debt of approximately $1.0 million simultaneously with the consummation of the acquisition. The Company has recorded its final purchase price allocation associated with the acquisition, which is summarized in Note 15- Other Business Combinations.

On November 19, 2021, ~~a subsidiary of~~ Jacobs acquired all outstanding shares of common stock of BlackLynx, Inc. ("BlackLynx"), a provider of high-performance software, to complement Jacobs' portfolio of cyber, intelligence and digital solutions. The Company paid total base consideration of approximately ~~$234.9~~$235.4 million in cash to the former owners of BlackLynx. In addition, the transaction involved the potential payment of future consideration that is contingent upon the achievement of certain revenue and gross margin thresholds being achieved in calendar year 2022. The estimated fair value of the contingent consideration on the acquisition date is $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. The Company has recorded its ~~preliminary~~final purchase price allocation associated with the acquisition, which is summarized in Note ~~16-~~15- Other Business Combinations.

On March 2, 2021, Jacobs completed the strategic investment of a 65% interest in PA Consulting Group Limited ("PA Consulting"), a UK-based leading innovation and transformation consulting firm. The total consideration paid by the Company was $1.7 billion, funded through cash on hand, proceeds from a new term loan and draws on the Company's existing revolving credit facility. ~~Further, in connection with the transaction, an additional $261 million in investment proceeds had not yet been distributed at the investment date~~ ~~due~~ to continuing employment requirements of associated management owners. Consequently, this amount represented compensation expense incurred related to the investment that was expensed subsequent to the date of the transaction, and was reflected in selling, general and administrative expense and cash from operations for the fiscal year ended October 1, 2021. The remaining 35% interest was acquired by PA Consulting employees, whose redeemable noncontrolling interests had a fair value of $582.4 million on the closing date, including subsequent purchase accounting

Page 10

JACOBS SOLUTIONS INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (CONTINUED)

adjustments. PA Consulting is accounted for as a consolidated subsidiary and as a separate operating segment. See Note ~~15-~~14- PA Consulting Business Combination for more discussion on the investment and Note ~~12-~~11- Borrowings for more discussion on the financing for the transaction.

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

~~Page 10~~

~~JACOBS ENGINEERING GROUP INC. AND SUBSIDIARIES~~

~~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 ("Worley"), 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 1, 2021,~~presented and all of the ECR business to be sold under the terms of the ECR sale had been conveyed to Worley and as such, no amounts remain held for sale. ~~For further discussion, see Note 17-~~ ~~Sale of Energy, Chemicals and Resources ("ECR") Business~~ ~~to the consolidated financial statements.~~

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 believed to be reasonable under the circumstances and are based on management’s most recent assessment of the underlying facts and circumstances utilizing the most current information available and past experience, ~~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 ~~2021~~2022 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 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 ~~2021~~2022 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 ~~19-~~17- 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-~~11- Borrowings for a discussion of the fair value of long-term debt.

Fair value measurements relating to our business combinations and goodwill allocations related to our segment realignment are made primarily using Level 3 inputs including discounted cash flow ~~and to the extent applicable, Monte Carlo simulation~~ techniques. Fair value for the identified intangible assets is generally estimated using inputs primarily for the income approach using the multiple period excess earnings method and the relief from royalties method. The significant assumptions used in estimating fair value ~~include (i)~~

Page 11

JACOBS ~~ENGINEERING GROUP~~SOLUTIONS INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (CONTINUED)

include (i) revenue projections of the business, including profitability, (ii) ~~profitability~~attrition rates and (iii) the estimated discount rate that reflects the level of risk associated with receiving future cash flows. Other personal property assets, such as furniture, fixtures and equipment, are valued using the cost approach, which is based on replacement or reproduction costs of the asset less depreciation. 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. 2021-08,~~ ~~Business Combinations (Topic 805): Accounting for Contract Assets and Contract Liabilities from Contracts with Customers~~, is effective for fiscal years beginning after December 15, 2022. ASU 2021-08 requires contract assets and contract liabilities (i.e., deferred revenue) acquired in a business combination to be recognized and measured by the acquirer on the acquisition date in accordance with ASC 606, Revenue from Contracts with Customers. Generally, this new guidance will result in the acquirer recognizing contract assets and contract liabilities at the same amounts recorded by the acquiree. The Company adopted the new guidance in the first quarter of fiscal 2022 and the adoption had no impact on the Company's financial position, results of operations or cash flows.

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 consulting ~~process, scientific, and systems consulting~~ services. We provide our services through offices and subsidiaries located primarily in North America, Europe, the Middle East, India, Australia, Africa, and Asia. We provide our services under cost-reimbursable and fixed-price contracts. Our contracts are with many different customers in numerous industries. Refer to Note ~~20-~~18- 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~~30, 2022 and ~~January 1,~~December 31, 2021 (in thousands):


		Three Months Ended					Three Months Ended
		December 31, 2021		January 1, 2021			December 30, 2022		December 31, 2021
Revenues:	Revenues:					Revenues:
United States	United States	$	2,148,554	$	2,457,041	United States	$	2,536,114	$	2,148,554
Europe	Europe	866,351		639,315		Europe	854,734		866,351
Canada	Canada	65,039		55,627		Canada	61,829		65,039
Asia	Asia	32,087		27,405		Asia	34,824		32,087
India	India	22,148		14,548		India	40,344		22,148
Australia and New Zealand	Australia and New Zealand	177,652		137,408		Australia and New Zealand	161,040		177,652
Middle East and Africa	Middle East and Africa	68,794		50,492		Middle East and Africa	109,783		68,794
Total	Total	$	3,380,625	$	3,381,836	Total	$	3,798,668	$	3,380,625

Contract Liabilities

Contract liabilities represent amounts billed to clients in excess of revenue recognized to date. Revenue recognized for the three months ended December 30, 2022 that was previously included in the contract liability balance on September 30, 2022 was $330.3 million. Revenue recognized for the three months ended December 31, ~~2021 and January 1,~~ 2021 that was included in the contract liability balance on October 1, 2021 ~~and October 2, 2020~~ was $291.5 ~~million and~~ ~~$259.0 million~~ ~~respectively.~~million.

Remaining Performance Obligation

The Company’s remaining performance obligations as of December ~~31, 2021~~30, 2022 represent a measure of the total dollar value of work to be performed on contracts awarded and in progress. The Company had approximately ~~$13.2~~$17.2 billion in remaining performance obligations as of December ~~31, 2021.~~30, 2022. The Company expects to recognize approximately ~~57%~~46% of our remaining performance obligations into revenue within the next twelve months and the remaining ~~43%~~54% thereafter.

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

6.Page 12

JACOBS SOLUTIONS INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (CONTINUED)

5. 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 and the preferred redeemable noncontrolling interests redemption value adjustment associated with the PA Consulting transaction.~~securities.

The following table reconciles the denominator used to compute basic EPS to the denominator used to compute diluted EPS for the three months ended December ~~31, 2021~~30, 2022 and ~~January 1,~~December 31, 2021 (in thousands):

~~Page 13~~

~~JACOBS ENGINEERING GROUP INC. AND SUBSIDIARIES~~

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


		Three Months Ended					Three Months Ended
		December 31, 2021		January 1, 2021			December 30, 2022		December 31, 2021
Numerator for Basic and Diluted EPS:	Numerator for Basic and Diluted EPS:					Numerator for Basic and Diluted EPS:

Net earnings from continuing operations allocated to common stock for EPS calculation	Net earnings from continuing operations allocated to common stock for EPS calculation	$	134,266	$	257,062	Net earnings from continuing operations allocated to common stock for EPS calculation	$	136,355	$	134,266

Net earnings from discontinued operations allocated to common stock for EPS calculation		$	(232)	$	(14)
Net loss from discontinued operations allocated to common stock for EPS calculation						Net loss from discontinued operations allocated to common stock for EPS calculation	$	(708)	$	(232)

Net earnings allocated to common stock for EPS calculation	Net earnings allocated to common stock for EPS calculation	$	134,034	$	257,048	Net earnings allocated to common stock for EPS calculation	$	135,647	$	134,034

Denominator for Basic and Diluted EPS:	Denominator for Basic and Diluted EPS:					Denominator for Basic and Diluted EPS:

Shares used for calculating basic EPS attributable to common stock	Shares used for calculating basic EPS attributable to common stock	129,342		129,968		Shares used for calculating basic EPS attributable to common stock	126,824		129,342

Effect of dilutive securities:	Effect of dilutive securities:					Effect of dilutive securities:
Stock compensation plans	Stock compensation plans	952		1,182		Stock compensation plans	672		952
Shares used for calculating diluted EPS attributable to common stock	Shares used for calculating diluted EPS attributable to common stock	130,294		131,150		Shares used for calculating diluted EPS attributable to common stock	127,496		130,294

Net Earnings Per Share:	Net Earnings Per Share:					Net Earnings Per Share:
Basic Net Earnings from Continuing Operations Per Share	Basic Net Earnings from Continuing Operations Per Share	$	1.04	$	1.98	Basic Net Earnings from Continuing Operations Per Share	$	1.08	$	1.04
Basic Net Earnings from Discontinued Operations Per Share		$	—	$	—
Basic Net Loss from Discontinued Operations Per Share						Basic Net Loss from Discontinued Operations Per Share	$	(0.01)	$	—
Basic Earnings Per Share	Basic Earnings Per Share	$	1.04	$	1.98	Basic Earnings Per Share	$	1.07	$	1.04
Diluted Net Earnings from Continuing Operations Per Share	Diluted Net Earnings from Continuing Operations Per Share	$	1.03	$	1.96	Diluted Net Earnings from Continuing Operations Per Share	$	1.07	$	1.03
Diluted Net Earnings from Discontinued Operations Per Share		$	—	$	—
Diluted Net Loss from Discontinued Operations Per Share						Diluted Net Loss from Discontinued Operations Per Share	$	(0.01)	$	—
Diluted Earnings Per Share	Diluted Earnings Per Share	$	1.03	$	1.96	Diluted Earnings Per Share	$	1.06	$	1.03

Share Repurchases


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

Page 13

JACOBS SOLUTIONS INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (CONTINUED)

The following table summarizes the activity under the 2020 Repurchase Authorization through the first fiscal quarter of ~~2022:~~2023:

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


Amount Authorized (2020 Repurchase Authorization)	Average Price Per Share (1)	Total Shares Retired	Shares Repurchased
$1,000,000,000	$113.56	1,237,688	1,237,688

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

~~Page 14~~

~~JACOBS ENGINEERING GROUP INC. AND SUBSIDIARIES~~

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

AsThe 2020 Repurchase Authorization expired on January 15, 2023. On January 25, 2023, the Company's Board of ~~December 31, 2021,~~Directors authorized an incremental share repurchase program of up to $1.0 billion of the Company's stock, to expire on January 25, 2026 (the "2023 Repurchase Authorization"). No repurchase activity has taken place under the 2023 Share Repurchase Authorization to date. Subsequent to the expiration of the 2020 Repurchase Authorization and the approval of the 2023 Repurchase Authorization, the Company has ~~$782.9 million~~$1.0 billion remaining under the ~~2020~~2023 Repurchase Authorization.


Our share repurchase 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.

Dividends

On January ~~26, 2022,~~25, 2023, the Company’s Board of Directors declared a quarterly dividend of ~~$0.23~~$0.26 per share of the Company’s common stock to be paid on March ~~25, 2022,~~24, 2023, to shareholders of record on the close of business on February ~~25, 2022.~~24, 2023. Future dividend declarations are subject to review and approval by the Company’s Board of Directors. Dividends paid through the first fiscal quarter of ~~2022~~2023 and the preceding fiscal year are as follows:

Declaration Date

Record Date

Payment Date

Cash Amount (per share)

September 15, 2022

September 30, 2022

October 28, 2022

$0.23

July 13, 2022

July 29, 2022

August 26, 2022

$0.23

April 28, 2022

May 27, 2022

June 24, 2022

$0.23

January 26, 2022

February 25, 2022

March 25, 2022

$0.23

September 23, 2021

October 15, 2021

October 29, 2021

$0.21

~~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~~

6. Goodwill and Intangibles

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

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JACOBS ~~ENGINEERING GROUP~~SOLUTIONS 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~~30, 2022 and ~~October 1, 2021~~September 30, 2022 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


	Critical Mission Solutions		People & Places Solutions		Divergent Solutions		PA Consulting		Total
Balance September 30, 2022	$	2,251,724	$	3,196,796	$	576,986	$	1,159,152	$	7,184,658
Acquired	—		—		—		16,425		16,425
Post-Acquisition Adjustments	—		(138)		—		1,409		1,271

Foreign currency translation and other	10,460		13,168		2,680		112,420		138,728
Balance December 30, 2022	$	2,262,184	$	3,209,826	$	579,666	$	1,289,406	$	7,341,082

The following table provides certain information related to the Company’s acquired intangibles in the accompanying Consolidated Balance Sheets at December ~~31, 2021~~30, 2022 and ~~October 1, 2021~~September 30, 2022 (in thousands):

Customer Relationships, Contracts and Backlog Developed Technology Trade Names Total
Balances October 1, 2021 $ 1,309,061 $ 40,020 $ 216,677 $ 1,565,758
Amortization (42,965) (1,119) (2,823) (46,907)
Acquired 88,002 15,539 — 103,541
Foreign currency translation (2,734) (20) (725) (3,479)
Balances December 31, 2021 $ 1,351,364 $ 54,420 $ 213,129 $ 1,618,913


	Customer Relationships, Contracts and Backlog		Developed Technology		Trade Names		Total
Balances September 30, 2022	$	1,136,438	$	88,931	$	168,683	$	1,394,052
Amortization	(43,383)		(3,895)		(2,495)		(49,773)
Acquired	1,318		—		—		1,318
Post-Acquisition Adjustments	(1,409)		—		—		(1,409)
Foreign currency translation and other	52,603		404		14,764		67,771
Balances December 30, 2022	$	1,145,567	$	85,440	$	180,952	$	1,411,959

The following table presents estimated amortization expense of intangible assets for the remainder of fiscal ~~2022~~2023 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	Fiscal Year	(in millions)		Fiscal Year	(in millions)
2022		$	144.1
2023	2023	191.8		2023	$	151.6
2024	2024	191.6		2024	201.8
2025	2025	191.2		2025	201.4
2026	2026	176.4		2026	178.2
2027				2027	146.8
Thereafter	Thereafter	723.8		Thereafter	532.2
Total	Total	$	1,618.9	Total	$	1,412.0

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JACOBS ~~ENGINEERING GROUP~~SOLUTIONS INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (CONTINUED)

8.7. Receivables and Contract Assets

The following table presents the components of receivables and contract assets appearing in the accompanying Consolidated Balance Sheets at December ~~31, 2021~~30, 2022 and ~~October 1, 2021,~~September 30, 2022, as well as certain other related information (in thousands):


		December 31, 2021		October 1, 2021			December 30, 2022		September 30, 2022
Components of receivables and contract assets:	Components of receivables and contract assets:					Components of receivables and contract assets:
Amounts billed, net	Amounts billed, net	$	1,311,468	$	1,278,087	Amounts billed, net	$	1,457,752	$	1,400,088
Unbilled receivables and other	Unbilled receivables and other	1,215,690		1,343,588		Unbilled receivables and other	1,428,150		1,523,249
Contract assets	Contract assets	465,656		479,743		Contract assets	554,038		482,044
Total receivables and contract assets, net	Total receivables and contract assets, net	$	2,992,814	$	3,101,418	Total receivables and contract assets, net	$	3,439,940	$	3,405,381
Other information about receivables:	Other information about receivables:					Other information about receivables:
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 due from the United States federal government, included above, net of contract liabilities	$	796,118	$	749,323

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. We anticipate that substantially all of such unbilled amounts will be billed and collected over the next twelve months.

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 that have been provided ~~ahead~~in advance 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.~~

9.8. Accumulated Other Comprehensive Income

The following table presents the Company's roll forward of accumulated other comprehensive income (loss) after-tax as of December ~~31, 2021~~30, 2022 (in thousands):


		Change in Pension Liabilities		Foreign Currency Translation Adjustment		Gain/(Loss) on Cash Flow Hedges		Total			Change in Net Pension Obligation		Foreign Currency Translation Adjustment (1)		Gain/(Loss) on Cash Flow Hedges		Total
Balance at October 1, 2021		$	(394,561)	$	(407,240)	$	7,359	$	(794,442)
Balance at September 30, 2022										Balance at September 30, 2022	$	(307,395)	$	(786,040)	$	118,305	$	(975,130)
Other comprehensive income (loss)	Other comprehensive income (loss)	6,571		(5,695)		3,973		4,849		Other comprehensive income (loss)	(22,574)		158,726		(2,758)		133,394
Reclassifications from accumulated other comprehensive income (loss)	Reclassifications from accumulated other comprehensive income (loss)	—		—		1,937		1,937		Reclassifications from accumulated other comprehensive income (loss)	—		—		(4,116)		(4,116)
Balance at December 31, 2021		$	(387,990)	$	(412,935)	$	13,269	$	(787,656)
Balance at December 30, 2022										Balance at December 30, 2022	$	(329,969)	$	(627,314)	$	111,431	$	(845,852)

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

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

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JACOBS ~~ENGINEERING GROUP~~SOLUTIONS INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (CONTINUED)

~~10.~~9. Income Taxes


The Company’s effective tax rates from continuing operations for the three months ended December 30, 2022 and December 31, 2021 were 25.4% and ~~January 1, 2021 were~~ 9.4% ~~and 24.6%~~, respectively. The most significant items contributing to the difference between the statutory U.S. federal corporate tax rate of 21.0% and the Company’s effective tax rate ~~from~~for the three months ended December 30, 2022 were U.S. state income tax expense of $4.6 million and U.S. tax on foreign earnings of $3.6 million. Both items are expected to have a continuing ~~operations~~impact on the Company's effective tax rate for the remainder of the fiscal year.

The most significant items contributing to the difference between the statutory U.S. federal corporate tax rate of 21.0% and the Company's effective tax rate for the three months ended December 31, 2021 ~~was lower than the corresponding rate in the prior period primarily due to~~were a ~~current year~~ tax benefit of $15.7 million related to the release of previously reserved foreign tax ~~credits,~~credit assets, $4.2 million excess tax benefit attributable to stock compensation, and $4.0 million benefit from filing amended ~~status~~state returns.





The amount of income taxes the Company pays is subject to ongoing audits by tax jurisdictions around the world. In the normal course of business, the Company isis 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. During the next 12 months, it is reasonably possible that U.S. tax audit resolutions may reduce unrecognized tax benefits by up to $44.2 million, resulting in a reduction of the Company's provision for taxes on earnings.

~~11.~~10. 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.

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 ~~19 -~~17- 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 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 ~~$266.8~~$358.2 million and ~~$208.7~~$218.4 million, respectively, as of December ~~31, 2021~~30, 2022 and ~~$289.8~~$353.9 million and ~~$220.8~~$228.1 million, respectively, as of ~~October 1, 2021.~~September 30, 2022. 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~~SOLUTIONS INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (CONTINUED)

For the proportionate consolidated VIEs, the carrying value of assets and liabilities was ~~$114.2~~$118.7 million and ~~$127.5~~$139.2 million, respectively, as of December ~~31, 2021,~~30, 2022, and ~~$115.1~~$109.3 million and ~~$129.5~~$129.2 million, respectively, as of ~~October 1, 2021.~~September 30, 2022. For those joint ventures accounted for under the equity method, the Company's investment balances for the joint venture are included in Other Noncurrent Assets: Miscellaneous on the balance sheet and the Company’s pro rata share of net income is included in ~~revenue.~~Revenues. In limited cases, there are basis differences between the equity in the joint venture and the Company's investment created when the Company purchased its share of the joint venture. These basis differences are amortized based on an internal allocation to underlying net assets, excluding allocations to goodwill. As of December ~~31, 2021,~~30, 2022, the ~~Company’s~~Company does not have any equity method investments ~~exceeded~~that exceed its share of venture net ~~assets by $36.6 million.~~assets. Our investments in equity method joint ventures on the Consolidated Balance Sheets as of December ~~31, 2021~~30, 2022 and ~~October 1, 2021~~September 30, 2022 were ~~$106.7~~$55.9 million and ~~$121.3~~$56.6 million, respectively. During the three months ended December ~~31, 2021~~30, 2022 and ~~January 1,~~December 31, 2021, we recognized income from equity method joint ventures of ~~$6.8~~$10.0 million and ~~$18.3~~$6.8 million, respectively.

Accounts receivable from unconsolidated joint ventures accounted for under the equity method ~~is $16.1~~was $23.1 million and ~~$19.7~~$21.1 million as of December ~~31, 2021~~30, 2022 and ~~October 1, 2021,~~September 30, 2022, respectively.

The Company held a 24.5% interest in AWE Management Ltd ("AWE ML") that was accounted for under the equity method. AWE ML was previously under a contractual operating arrangement with the UK Ministry of Defence (MoD) with multiple years remaining under the arrangement, and during fiscal 2021, the MoD unexpectedly announced plans to change its operating agreements with AWE ML that resulted in the early termination of the current contract in 2021. During the 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 was included in miscellaneous income (expense), net in the consolidated statement of earnings as a result of the contract termination.

The Company held a cost method investment in C3.ai, Inc. ("C3") and in the first quarter of fiscal 2021, C3 completed an initial public offering and as a result the Company carried its investment in C3 at fair value, with changes reflected in net income as it is an investment in equity securities with a readily determinable fair value based on quoted market prices. During fiscal 2021 and subsequent to the IPO, the Company sold all shares owned in C3. Dividend income, unrealized gains and losses on changes in fair value and related realized gains and losses on disposal of the C3 shares were recognized in miscellaneous income (expense), net in the consolidated statement of earnings, which was $82.6 million, net, for the three months ended January 1, 2021.

~~Page 19~~

~~JACOBS ENGINEERING GROUP INC. AND SUBSIDIARIES~~

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

~~12.~~11. Borrowings

At December ~~31, 2021~~30, 2022 and ~~October 1, 2021,~~September 30, 2022, long-term debt consisted of the following (principal amounts in thousands):


		Interest Rate	Maturity	December 31, 2021		October 1, 2021			Interest Rate	Maturity	December 30, 2022		September 30, 2022
Revolving Credit Facility	Revolving Credit Facility	Benchmark + applicable margin (1) (2)	March 2024	$	577,794	$	327,794	Revolving Credit Facility	Benchmark + applicable margin (1) (2)	March 2024	$	1,610,794	$	1,105,294
2021 Term Loan Facility	2021 Term Loan Facility	Benchmark + applicable margin (1) (3)	March 2024	1,078,800		1,081,724		2021 Term Loan Facility	Benchmark + applicable margin (1) (3)	March 2024	987,410		923,580
2020 Term Loan Facility	2020 Term Loan Facility	Benchmark + applicable margin (1) (4)	March 2025 (5)	974,550		988,940		2020 Term Loan Facility	Benchmark + applicable margin (1) (4)	March 2025 (5)	890,833		882,263
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 (6)	—		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 (6)	—		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 (6)	—		130,000
Less: Current Portion (5)	Less: Current Portion (5)			(53,400)		(53,456)		Less: Current Portion (5)			(51,643)		(50,415)
Less: Deferred Financing Fees	Less: Deferred Financing Fees			(4,677)		(5,069)		Less: Deferred Financing Fees			(3,076)		(3,466)
Total Long-term debt, net	Total Long-term debt, net			$	3,073,067	$	2,839,933	Total Long-term debt, net			$	3,434,318	$	3,357,256

(1)During ~~the three months ended December 31, 2021,~~fiscal 2022, the aggregate principal amounts denominated in British pounds under the Revolving Credit Facility, 2021 Term Loan Facility and 2020 Term Loan Facility transitioned from underlying LIBOR benchmarked rates to SONIA rates. Borrowings denominated in U.S. 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%. The applicable LIBOR rates including applicable margins at December ~~31, 2021~~30, 2022 and ~~October 1, 2021~~September 30, 2022 were approximately ~~1.46%~~5.76% and ~~1.45%~~4.08%. Borrowings denominated in British pounds bear interest at an adjusted SONIA rate plus a margin of between 0.875% and 1.625%. There were no amounts drawn in British pounds as of December ~~31, 2021.~~30, 2022.

(3)Depending on the Company’s Consolidated Leverage Ratio (as defined in the credit agreement governing the 2021 Term Loan Facility (defined below)), U.S. 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~~30, 2022 and ~~October 1, 2021~~September 30, 2022 was approximately ~~1.48%~~5.76% and ~~1.43%~~4.06%. Borrowings denominated in British pounds bear interest at an adjusted SONIA rate plus a margin of between 0.875% and 1.625%, which was approximately ~~1.60%~~4.84% and 3.60% at December ~~31, 2021.~~30, 2022 and September 30, 2022, respectively.

(4)Depending on the Company’s Consolidated Leverage Ratio (as defined in the credit agreement governing the 2020 Term Loan Facility (defined below)), U.S. 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%. The applicable LIBOR rates including applicable margins for borrowings denominated in U.S. dollars at December ~~31, 2021~~30, 2022 and ~~October 1, 2021~~September 30, 2022 were approximately ~~1.48%~~5.76% and ~~1.45%~~4.49%. Borrowings denominated in British pounds bear interest at an adjusted SONIA rate plus

Page 18

JACOBS SOLUTIONS INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (CONTINUED)

a margin of between 0.875% and 1.625%, which was approximately ~~1.55%~~4.84% and 3.60% at December ~~31, 2021.~~30, 2022 and September 30, 2022, respectively.

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

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

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

Senior Notes

On March 12, 2018, the Company entered into a note purchase agreement (as amended, the "Note Purchase Agreement") with respect to the issuance and sale in a private placement transaction of $500 million in the aggregate principal amount of the Company’s senior notes in three series (collectively, “Senior Notes”). In connection with the Holding Company Reorganization, which was completed in August 2022, the Company launched an offer to repurchase its outstanding Senior Notes at par plus accrued and unpaid interest, and without any make-whole premium. In fiscal first quarter 2023, the Company repurchased $481 million of Senior Notes held by holders who accepted the offer with proceeds from the Revolving Credit Facility. In December 2022, the Company repurchased the remaining $19 million of Senior Notes.

Revolving Credit Facility and Term Loans

On February 7, 2014, Jacobs and certain of its subsidiaries entered into a $1.6 billion long-term unsecured, revolving credit facility (as amended, the “2014 Revolving Credit Facility”) with a syndicate of U.S. 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 December ~~31, 2021.~~

~~Page 20~~

~~JACOBS ENGINEERING GROUP INC. AND SUBSIDIARIES~~

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

30, 2022.

The Revolving Credit Facility permits the Company to borrow under 2two 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 0.23% per annum depending on the Company’s Consolidated Leverage Ratio.

On March 25, 2020, the Company entered into an unsecured term loan facility (the “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 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".

Page 19

JACOBS SOLUTIONS INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (CONTINUED)

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

We were in compliance with the covenants under the Term Loan Facilities at December ~~31, 2021.~~30, 2022.

On ~~March 12, 2018, Jacobs entered into a note purchase agreement (as amended,~~February 6, 2023, the ~~"Note Purchase Agreement") with respect to the issuance~~Company refinanced its Revolving Credit Facility 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”~~Term Loan Facilities (the "Refinancing"). 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~~connection with the ~~covenants under the Note Purchase Agreement at December 31, 2021.~~

~~We believe the carrying value of~~Refinancing, the Revolving Credit Facility was amended and restated to, among other things: (a) extend the maturity date to February 6, 2028, (b) replace and adjust interest rates based on market conditions and incorporate a sustainability-linked pricing adjustment, (c) increase the Consolidated Leverage Ratio financial covenant to 3.50:1.00 (subject to temporary increases to 4.00:1.00 following the closing of certain material acquisitions), (d) eliminate the net worth financial covenant, and (e) add Jacobs as a guarantor of the obligations of JEGI and its subsidiaries under the Revolving Credit Agreement. The 2021 Term Loan ~~Facilities~~Facility was amended and restated to, among other ~~debt outstanding approximates fair value~~things: (a) extend the maturity date of the U.S. dollar term loan to February 6, 2026 and the British sterling term loan to September 1, 2025, (b) replace and adjust interest rates based on market conditions and incorporate a sustainability-linked pricing adjustment, (c) increase the Consolidated Leverage Ratio financial covenant to 3.50:1.00 (subject to temporary increases to 4.00:1.00 following the closing of certain material acquisitions), (d) eliminate the net worth financial covenant, and (e) add Jacobs as a guarantor of the obligations of JEGI under the 2021 Term Loan Facility. Finally, the Company amended the 2020 Term Loan Facility to, among other things: (a) replace and adjust interest rates based on market conditions and ~~scheduled maturities applicable~~incorporate a sustainability-linked pricing adjustment, (b) increase the Consolidated Leverage Ratio financial covenant to 3.50:1.00 (subject to temporary increases to 4.00:1.00 following the ~~outstanding borrowings. The fair value~~closing of certain material acquisitions), (c) eliminate the net worth financial covenant, and (d) add Jacobs as a guarantor of the ~~Senior Notes is estimated~~obligations of JEGI and Jacobs U.K.

Other arrangements

During fiscal 2022 the Company entered into two treasury locks to ~~be $547.5 million at~~manage its interest rate exposure with the anticipated issuance of fixed rate debt before December ~~31, 2021, based on Level 2 inputs. The fair value is determined by discounting future cash flows using~~2023. During fiscal 2020, the Company entered into interest ~~rates available~~ rate and cross currency derivative contracts to swap a portion of our variable rate debt to fixed rate debt. See Note 17- Commitments and Contingencies and Derivative Financial Instruments for ~~issuances with similar terms and average maturities.~~discussion regarding the Company's derivative instruments.

The Company has ~~issued $1.7~~issued $1.3 million in letters of credit under the Revolving Credit Facility, leaving ~~$1.67 billion~~$637.9 million of available borrowing capacity under the Revolving Credit Facility at December ~~31, 2021.~~30, 2022. In addition, the Company had issued ~~$272.0~~ $291.2 million u~~nder~~under separate, committed and uncommitted letter-of-credit facilities for total issued letters of credit of ~~$273.7~~$292.5 million at at December ~~31, 2021.~~30, 2022.

~~13.~~12. 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

~~Page 21~~

~~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~~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~~Consolidated Balance Sheet at the present value of the minimum lease payments not yet 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.

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JACOBS SOLUTIONS INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (CONTINUED)

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~~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~~30, 2022 and ~~January 1,~~December 31, 2021 were as follows (in thousands):


		Three Months Ended					Three Months Ended
		December 31, 2021		January 1, 2021			December 30, 2022		December 31, 2021
Lease expense	Lease expense					Lease expense

Operating lease expense	Operating lease expense	$	40,538	$	39,444	Operating lease expense	$	35,282	$	40,538
Variable lease expense	Variable lease expense	7,084		8,183		Variable lease expense	9,346		7,084
Sublease income	Sublease income	(3,668)		(3,396)		Sublease income	(4,406)		(3,668)
Total lease expense	Total lease expense	$	43,954	$	44,231	Total lease expense	$	40,222	$	43,954

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


		Three Months Ended			Three Months Ended
		December 31, 2021			December 30, 2022		December 31, 2021
Cash paid for amounts included in the measurements of lease liabilities	Cash paid for amounts included in the measurements of lease liabilities	$	65,430	Cash paid for amounts included in the measurements of lease liabilities	$	45,770	$	65,430

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

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

Weighted average discount rate - operating leases	Weighted average discount rate - operating leases	2.7%		Weighted average discount rate - operating leases	3.0%		2.7%

Total remaining lease payments under the Company's leases for the remainder of fiscal ~~2022~~2023 and for the succeeding years is as follows (in thousands):


Fiscal Year	Fiscal Year	Operating Leases		Fiscal Year	Operating Leases
2022		$	141,807
2023	2023	159,136		2023	$	131,069
2024	2024	146,064		2024	157,609
2025	2025	122,723		2025	131,712
2026	2026	105,223		2026	110,618
2027				2027	90,708
Thereafter	Thereafter	278,300		Thereafter	212,711
		953,253			834,427
Less Interest	Less Interest	(84,016)		Less Interest	(74,393)
		$	869,237		$	760,034

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

~~In the first quarter of~~

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JACOBS SOLUTIONS INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (CONTINUED)

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

~~Page 23~~

~~JACOBS ENGINEERING GROUP INC. AND SUBSIDIARIES~~

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

As a result of the analysis, the Company recognized an impairment ~~loss~~losses during the first ~~quarter~~quarters of fiscal 2023 and 2022 of $27.1 million and $72.3 million, respectively, which is included in selling, general and administrative expenses in the accompanying statement of ~~earnings for the current fiscal quarter.~~earnings. The impairment ~~loss~~losses recorded ~~includes~~include $24.3 million and $54.9 million related to right-of-use lease assets and $2.8 million and $17.4 million related to other long-lived assets, including property, equipment and improvements and leasehold ~~improvements.~~improvements for the fiscal 2023 and 2022 periods, respectively.

The fair values for the asset groups relating to the impaired long-lived assets were estimated primarily using discounted cash flow models (income approach) with Level 3 inputs. 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 periods and discount rates that reflect the level of risk associated with receiving future cash flows.

~~14.~~13. 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~~30, 2022 and ~~January 1,~~December 31, 2021 (in thousands):


		Three Months Ended					Three Months Ended
		December 31, 2021		January 1, 2021			December 30, 2022		December 31, 2021
Component:	Component:					Component:
Service cost	Service cost	$	1,709	$	1,735	Service cost	$	1,748	$	1,709
Interest cost	Interest cost	13,784		11,785		Interest cost	20,233		13,784
Expected return on plan assets	Expected return on plan assets	(23,263)		(25,427)		Expected return on plan assets	(21,091)		(23,263)
Amortization of previously unrecognized items	Amortization of previously unrecognized items	3,092		4,032		Amortization of previously unrecognized items	1,304		3,092

Total net periodic pension benefit recognized		$	(4,678)	$	(7,875)
Total net periodic pension benefit cost/(income) recognized						Total net periodic pension benefit cost/(income) recognized	$	2,194	$	(4,678)

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

The following table presents certain information regarding the Company’s cash contributions to our pension plans for fiscal ~~2022~~2023 (in thousands):


Cash contributions made during the first three months of fiscal ~~2022~~2023	$	~~9,488~~7,260
Cash contributions projected for the remainder of fiscal ~~2022~~2023	~~26,703~~19,391
Total	$	~~36,191~~26,651

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JACOBS ~~ENGINEERING GROUP~~SOLUTIONS INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (CONTINUED)

~~15.~~14. PA Consulting Business Combination

Deal Summary and Opening Balance Sheet ~~and Pro Forma~~ Financial Information

On March 2, 2021, Jacobs completed the strategic investment of a 65% interest in PA Consulting, a UK-based leading innovation and transformation consulting firm. The total consideration paid by the Company was $1.7 billion, funded through cash on hand, proceeds from a new term loan and draws on the Company's existing ~~revolving credit facility. Further, in connection with the transaction, an estimated additional $261 million in investment proceeds had not yet been distributed at the investment date~~ ~~due~~ to continuing employment requirements of associated management owners. Consequently, this amount represented compensation expense incurred related to the investment that was expensed subsequent to the date of the transaction, and was reflected in selling, general and administrative expense on the consolidated income statement for the fiscal year ended October 1, 2021.Revolving Credit Facility. The remaining 35% interest was acquired by PA Consulting employees, whose redeemable noncontrolling interests had a fair value of $582.4 million on the closing date, including subsequent purchase accounting adjustments. PA Consulting is accounted for as a consolidated subsidiary and as a separate operating segment. See Note ~~12-~~11- Borrowings for more discussion on the financing for the transaction.

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

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


Assets
Cash and cash equivalents	$	134.9
Receivables	166.5
Property, equipment and improvements, net	40.5
Goodwill	1,454.0
Identifiable intangible assets	1,004.2
Prepaid expenses and other current assets	9.5
Miscellaneous long term assets	84.0
Total Assets	$	2,893.6

Liabilities
Accounts payable	$	6.5
Accrued liabilities and other current liabilities	354.8
Other long term liabilities	248.0
Total Liabilities	609.3
Redeemable Noncontrolling interests	582.4
Net assets acquired	$	1,701.9

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

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

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JACOBS ~~ENGINEERING GROUP~~SOLUTIONS INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (CONTINUED)

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


	~~For the 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~~Interests

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~~interests in the form of preferred and common shares of PA Consulting, with substantially all of the value associated with these interests allocable to the preferred shares.

During the first quarter of fiscal 2023 and 2022, PA Consulting repurchased certain shares of the redeemable noncontrolling interest holders for $58.4 million and $35.1 million, respectively, in cash.~~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~~interests during the three months ended December ~~31, 2021~~30, 2022 are as follows (in thousands):

Balance at ~~October 1, 2021~~September 30, 2022

~~657,722~~632,522

Accrued Preferred Dividend to Preference Shareholders

~~16,687~~16,290

Attribution of Preferred Dividend to Common Shareholders

~~(16,687)~~(16,290)

Net ~~income~~earnings attributable to redeemable noncontrolling ~~interest~~interests to Common Shareholders

~~9,683~~3,992

Redeemable Noncontrolling interests redemption value adjustment

~~15,203~~23,317

Repurchase of redeemable noncontrolling interests

~~(42,856)~~(69,690)

Cumulative translation adjustment and other

~~(2,088)~~37,768

Balance at December ~~31, 2021~~30, 2022

~~637,664~~627,909

In addition, certain employees and ~~nonemployees~~non-employees of PA Consulting are eligible to receive equity-based incentive grants in the future under the terms of the applicable agreements. During first quarter of fiscal 2023 and 2022, the Company recorded $4.3 million and $0.2 million, respectively, in expenses associated with these agreements which is reflected in selling, general and administrative expenses in the consolidated statements of earnings.

~~Employee Benefit Trust~~Restricted Cash

The Company, through its investment in PA Consulting, ~~is party to an employee benefit trust that is a separately administered discretionary trust for the benefit of employees~~held $2.3 million and ~~is consolidated under U.S. GAAP. At~~$13.7 million at December ~~31, 2021, the Company held $0.7 million~~30, 2022 and September 30, 2022, respectively, 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.~~Consolidated Balance Sheets.

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JACOBS ~~ENGINEERING GROUP~~SOLUTIONS INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (CONTINUED)

~~16.~~15. 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. The Company paid total base consideration of approximately $190.8 million in cash, and issued $0.9 million in equity and $5.2 million in in-the-money stock options to the former owners of StreetLight. The Company also paid off StreetLight's debt of approximately $1.0 million simultaneously with the consummation of the acquisition. The following summarizes the fair values of StreetLight's assets acquired and liabilities assumed as of the acquisition date (in millions):


Assets
Cash and cash equivalents	$	7.3
Receivables	5.2
Property, equipment and improvements, net	0.1
Goodwill	116.4
Identifiable intangible assets	105.1
Prepaid expenses and other current assets	2.0
Total Assets	$	236.1

Liabilities
Accounts payable, accrued expenses and other current liabilities	$	23.1
Other long term liabilities	16.1
Total Liabilities	39.2
Net assets acquired	$	196.9

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

Identifiable intangibles are technology, data and customer relationships, contracts and backlog and have estimated lives of 5, 4 and 9 years, respectively.

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

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JACOBS SOLUTIONS INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (CONTINUED)

BlackLynx

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~~$235.4 million in cash to the former owners of BlackLynx. In addition, the transaction involved the potential payment of future consideration that is contingent upon the achievement of certain revenue and gross margin thresholds being achieved in calendar year 2022. The estimated fair value of the contingent consideration on the acquisition date is $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. The following summarizes the fair values of BlackLynx's assets acquired and liabilities assumed as of the acquisition date (in millions):


Assets
Cash and cash equivalents	$	5.1
Receivables	7.7
Property, equipment and improvements, net	0.8
Goodwill	~~158.5~~195.8
Identifiable intangible assets	~~103.5~~51.1
Prepaid expenses and other current assets	3.2

Total Assets	$	~~278.8~~263.7

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

Other long term liabilities	~~23.1~~8.8
Total Liabilities	~~42.6~~28.3
Net assets acquired	$	~~236.2~~235.4

~~The purchase price allocation is based upon preliminary information and is subject to change when additional information is obtained.~~ Goodwill recognized results from a substantial assembled workforce, which does not qualify for separate recognition, as well as expected future synergies from combining operations. None of the goodwill recognized ~~is expected to be~~was deductible for tax purposes. The Company has ~~not~~ completed its final assessment of the fair values of BlackLynx's assets acquired and liabilities assumed. ~~The final~~Since the initial preliminary estimates reported in the first quarter of fiscal 2022, the Company has updated certain amounts reflected in the preliminary purchase price allocation, ~~could result~~as summarized in ~~adjustments to certain~~the fair values of BlackLynx's assets acquired and liabilities ~~including~~assumed as of the ~~residual amount allocated~~acquisition date set forth above, the majority of which related to ~~goodwill.~~ reclassifications between goodwill and intangibles and for deferred taxes.

Identifiable intangibles are technology and customer relationships, contracts and backlog and ~~technology and~~ have estimated lives of 128 and 154 years, respectively.

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

~~Buffalo Group~~

~~Page 27~~

~~JACOBS ENGINEERING GROUP INC. AND SUBSIDIARIES~~

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

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


~~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 separate recognition, as well as expected future synergies from combining operations. All of the goodwill recognized is expected to be deductible for tax purposes, given the acquisition was structured as an asset acquisition for tax purposes. The Company has completed its final assessment of the fair values of Buffalo Group's assets acquired and liabilities assumed. Since the initial preliminary estimates reported in the first quarter of fiscal 2021, the Company has updated certain amounts reflected in the final purchase price allocation, as summarized in the fair values of Buffalo Group's assets acquired and liabilities assumed as of the acquisition date set forth above.

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

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

~~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”).

As a result of the ECR sale, substantially all ECR-related assets and liabilities were sold (the "Disposal Group"). We determined that the Disposal Group should be reported as discontinued operations in accordance with ASC 210-05, ~~Discontinued Operations~~ because their disposal represent a strategic shift that had a major effect on our operations and financial results. As such, the financial results of the ECR business are reflected in our unaudited Consolidated Statements of Earnings as discontinued operations for all periods presented.

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

~~Page 28~~

~~JACOBS ENGINEERING GROUP INC. AND SUBSIDIARIES~~

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

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

~~Investment in Worley Stock~~

As discussed above, the Company held ordinary shares of Worley that it received in connection with the ECR sale. Dividend income, realized gains and losses on sale and unrealized gains and losses on changes in fair value of Worley shares were recognized in miscellaneous income (expense), net in continuing operations prior to sale. The Company's investment in Worley was measured at fair value through net income as it was an equity investment with a readily determinable fair value based on quoted market prices and for the three 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.~~16. Restructuring and Other Charges

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

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

~~Additionally, the Company recorded impairment charges on its investment in AWE during fiscal 2021. See related discussion in Note 11- Joint ventures, VIEs and other investments.~~2025.

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"~~('KeyW"), and other related cost reduction initiatives. Additionally, in fiscal 2020, the Company implemented certain restructuring and

Page 26

JACOBS SOLUTIONS INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (CONTINUED)

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.~~separation. The activities of these initiatives have been substantially completed.

As part of the Company's acquisition of CH2M Hill Companies, Ltd. ("CH2M") during fiscal 2018, the Company implemented certain restructuring plans that were comprised mainly of severance and lease abandonment programs as well as integration activities involving the engagement of professional services and internal personnel dedicated to the Company's integration management efforts. ~~These~~The activities of these initiatives have ~~continued through fiscal 2021 and are expected to be~~been substantially ~~completed before the end of fiscal 2022.~~completed.

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

The following table summarizes the impacts of the Restructuring and other charges by ~~line of business ("LOB")~~reportable segment in connection with the CH2M, KeyW, John Wood Group's nuclear business, Buffalo Group, StreetLight 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~~30, 2022 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 AWE Management Ltd. investment for the three months ended January 1,December 31, 2021 (in thousands):


	Three Months Ended
	December 30, 2022		December 31, 2021
Critical Mission Solutions	$	2,212	$	1,153
People & Places Solutions	27,317		61,169
Divergent Solutions	1,581		—
PA Consulting	—		199
Corporate	3,333		6,838
Total	$	34,443	$	69,359
Amounts included in:
Operating profit (mainly SG&A) (1)	$	35,072	$	77,903
Other (Income) Expense, net (2)	(629)		(8,544)
	$	34,443	$	69,359

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

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

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (CONTINUED)

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, amounts include $77.9 million and $20.5 million, respectively, in items impacting operating profit, along with items recorded in other income (expense), net, which 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 charges 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. See Note 20~~- Segment Information.~~

The activity in the Company’s accruals for ~~restructuring~~Restructuring and other charges for the three months ended December ~~31, 2021~~30, 2022 is as follows (in thousands):


Balance at ~~October 1, 2021~~September 30, 2022	$	~~14,031~~4,137
Net Charges (Credits) ~~Charges~~ (1)	~~(1,594)~~6,685
Payments and other	~~(1,672)~~(3,178)
Balance at December ~~31, 2021~~30, 2022	$	~~10,765~~7,644

(1) Excludes ~~$70,953 in other net charges~~$27.8 million associated mainly with real estate related impairments and other transformation activities described ~~above.~~above during the three months ended December 30, 2022.

The following table summarizes the Restructuring and other charges by major type of costs for the three months ended December ~~31, 2021~~30, 2022 and ~~January 1,~~December 31, 2021 (in thousands):

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

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


	Three Months Ended
	December 30, 2022		December 31, 2021
Lease Abandonments and Impairments	$	26,831	$	65,542
Voluntary and Involuntary Terminations	6,570		563
Outside Services	675		4,676
Other	367		(1,422)
Total	$	34,443	$	69,359

Cumulative amounts incurred to date under our various ~~restructuring~~Restructuring and other activities described above by each major type of cost as of December ~~31, 2021~~30, 2022 are as follows (in thousands):


Lease Abandonments and Impairments	$	~~383,341~~414,432
Voluntary and Involuntary Terminations	~~145,305~~156,947
Outside Services	~~298,670~~317,009
Other	~~143,557~~208,632
Total	$	~~970,873~~1,097,020

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~~JACOBS ENGINEERING GROUP INC. AND SUBSIDIARIES~~

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

~~19.~~17. 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.

During fiscal 2022, the Company entered into two treasury lock agreements with a total notional value of $500.0 million to manage its interest rate exposure to the anticipated issuance of fixed rate debt before December 2023. The fair value of the treasury locks at December 30, 2022 and September 30, 2022 was $41.5 million and $40.9 million, respectively, all of which is included in current assets within receivables and contract assets on the consolidated balance sheets. The unrealized net gain on these instruments was $31.3 million and $30.8 million, net of tax, and is included in accumulated other comprehensive income as of December 30, 2022 and September 30, 2022, respectively. Upon issuance of up to $500 million of fixed rate debt, the gain (loss) will be amortized to interest expense over the term of the debt.

The Company is party to interest rate swap agreements and a cross-currency swap agreement with notional values of ~~$795.7~~$766.7 million and ~~$127.8~~$127.8 million, respectively, as of December ~~31, 2021~~30, 2022 to manage the interest rate exposure on our variable rate loans and the foreign currency exposure on our USD borrowings by a European subsidiary. By entering into

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JACOBS SOLUTIONS INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (CONTINUED)

the swap agreements, the Company converted the LIBOR and SONIA rate based liabilities into fixed rate liabilities and, for the cross currency swap, our LIBOR rate based borrowing in USD to a fixed rate Euro liability, for periods ranging from three and a half to ten years. 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 0.704% to 1.116%. For interest rate swaps denominated in British pounds, the Company receives a one month adjusted SONIA rate and pays a monthly fixed rate of 0.820%. Under the cross currency swap agreement, the Company receives the one month LIBOR rate plus 0.875% in USD and pays monthly a Euro fixed rate of 0.726% to 0.746% for the term of the swaps. 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 December ~~31, 2021~~30, 2022 and ~~October 1, 2021~~September 30, 2022 was ~~$11.2~~$108.0 million and ~~$(0.8)~~$128.2 million, respectively, of which ~~$(7.4) million is included 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 included in other deferred liabilities and~~ ~~$10.2 million is included in miscellaneous other assets on the consolidated balance sheets.~~Consolidated Balance Sheets. The unrealized net gain (loss) on these interest rate and cross currency swaps was ~~$13.3~~$80.2 million and ~~$7.4~~$87.5 million, net of tax, and was included in accumulated other comprehensive income as of December ~~31, 2021~~30, 2022 and ~~October 1, 2021,~~September 30, 2022, respectively.

Additionally, the Company held foreign exchange forward contracts in currencies that support our operations, including British Pound, Euro, Australian Dollar and other currencies, with notional values of ~~$503.5~~$382.5 million at December ~~31, 2021~~30, 2022 and $~~506.5~~298.2 million at ~~October 1, 2021~~September 30, 2022. The length of these contracts currently ranges from one to 12 ~~months.~~months. The fair value of the foreign exchange contracts at December ~~31, 2021~~30, 2022 and ~~October 1, 2021~~September 30, 2022 was ~~$53.8~~$12.1 million and ~~$55.5~~$(3.2) million, respectively, which is included ~~in current assets~~ within re~~ceivables~~receivables and contract assets for the current period and within accounts payable for the prior period on the ~~consolidated balance sheets~~Consolidated Balance Sheets and with associated income statement impacts included in miscellaneous income (expense) in the ~~consolidated statements~~Consolidated Statements of ~~earnings.~~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 o~~bservable~~observable inputs other than quoted prices in active ~~markets~~.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 December ~~31, 2021~~30, 2022 and ~~October 1, 2021,~~September 30, 2022, the Company had issued and ~~outstanding approximate~~outstaly ~~$273.7~~nding approximately $292.5 million and ~~$263.8~~$280.5 million,, respectively, in LOCs and $~~2.3~~2.0 billion an~~d $2.1~~and $2.2 billion, respectively, in surety bonds.

~~Page 31~~

~~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

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JACOBS SOLUTIONS INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (CONTINUED)

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.

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 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 was vacated and the hearing 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 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 in July 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 15- Other Business Combinations in the Company's fiscal 2021 Form 10-K for further information related to CH2M contingencies.

~~Page 32~~

~~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 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.~~a ruling from the Tennessee Supreme Court. Additionally, in May 2019, Roane County and the cities of Kingston and Harriman filed a lawsuit against TVA and the Company alleging that they misled the public about risks associated with the released fly ash. In October 2020, the Court granted Jacobs and TVA’s motion to dismiss the Roane County litigation and closed the case. In addition, in November 2019, a resident of Roane County, Margie Delozier, filed a putative class action against TVA and the Company alleging they failed to adequately warn local residents about risks associated with the released fly ash. The Company and TVA filed separate motions to dismiss the Delozier case in April 2020. In February 2021, the Court granted dismissal of the Delozier Complaint with prejudice, with the exception of plaintiffs’ nuisance cause of action, which plaintiffs voluntarily dismissed in ~~July~~June 2021. ~~Finally, in~~In August 2021, Thomas Ryan, a resident of Roane County, filed an action against Jacobs and TVA claiming personal injury and property damage.In June 2022, the Court granted Jacobs' motion to dismiss Ryan’s action in its entirety, closing the case. Separately, in February 2020, the Company learned that the district attorney in Roane County recommended that the Tennessee Bureau of Investigation investigate issues pertaining to clean up worker safety at Kingston. On November ~~15,~~16, 2021, the Roane County district attorney announced that it had concluded its investigation into issues pertaining to the Kingston coal ash spill cleanup. No indictments were issued. There has been no finding of liability against the Company or that any of the alleged illnesses are the result of exposure to fly ash in any of the above matters. The Company disputes the allegations asserted in all of the above matters and is vigorously defending these 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.

~~On October 31, 2019,~~

18. Segment Information

During the first quarter of fiscal 2023, the Company ~~received~~reorganized its operating and reporting structure to report results under a request from the Enforcement Division of the Securities and Exchange Commission ("the SEC") for the production of certain information and documents. The information and documents sought by the SEC primarily relatenew operating segment, Divergent Solutions (DVS), in addition to the operations of a joint venture in Morocco which was at one time partially-owned by the Company (and subsequently divested), including in respect of possible corrupt practices. The Company is fully cooperating with the SEC and is continuing to produce information and documents in its possession in response to subsequent requests by the SEC. The Company does not expect the resolution of this matter to have a material adverse effect on the Company's business, financial condition, results of operations or cash flows.

~~20. Segment Information~~

current operating segments. The Company's 3four operating segments are now comprised of its two global lines of business ("LOBs"): Critical Mission Solutions ("CMS") and People & Places Solutions ("P&PS"), its business unit Divergent Solutions ("DVS") and its majority investment in PA Consulting. ~~For further information on~~The formation of the ~~PA Consulting investment, refer~~DVS operating segment resulted in certain portions of our CMS and PPS businesses moving to ~~Note 15 -~~ ~~PA ConsultingBusiness Combination~~.the new segment to align with the Company's business strategy.

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,~~segment, and accordingly, the associated cost is embedded in the segments and reported to the respective head of each segment. In addition, a portion of the costs of other support functions (e.g., finance, legal, human resources, and information technology) is allocated to each ~~LOB~~segment using methodologies which, we believe, effectively attribute the cost of these support functions to the revenue generating activities of the Company on a rational basis. The cost of the Company’s cash incentive plan, the Leadership Performance Plan ("LPP"), formerly named the Management Incentive Plan, and the expense associated with the Jacobs ~~Engineering Group Inc.~~ 1999 Stock

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JACOBS SOLUTIONS INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (CONTINUED)

Incentive Plan, which was amended and restated in the second quarter of 2023 and is now referred to as the Jacobs 2023 Stock Incentive Plan ~~(“1999 SIP”~~(the "2023 SIP") have likewise been charged to the ~~LOBs~~segments 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 segment is reviewed by the CODM to assess performance and make decisions regarding the allocation of resources. ~~The Company generally does not track assets by LOB, nor does it provide such information to the CODM.~~

The CODM evaluates the operating performance of our operating segments using segment operating profit, which is defined as margin less “corporate charges” (e.g., the allocated amounts described above). 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 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 ~~18 -~~ 16- Restructuring and Other ~~Charges)~~Charges) and transaction and integration costs (in thousands).


		For the Three Months Ended					For the Three Months Ended
		December 31, 2021		January 1, 2021			December 30, 2022		December 31, 2021
Revenues from External Customers:	Revenues from External Customers:					Revenues from External Customers:
Critical Mission Solutions	Critical Mission Solutions	$	1,162,505	$	1,295,287	Critical Mission Solutions	$	1,075,175	$	976,777
People & Places Solutions	People & Places Solutions	1,928,146		2,086,549		People & Places Solutions	2,226,985		1,920,997
Divergent Solutions						Divergent Solutions	214,465		192,877
PA Consulting	PA Consulting	289,974		—		PA Consulting	282,043		289,974
Total	Total	$	3,380,625	$	3,381,836	Total	$	3,798,668	$	3,380,625


		For the Three Months Ended					For the Three Months Ended
		December 31, 2021		January 1, 2021			December 30, 2022		December 31, 2021
Segment Operating Profit:	Segment Operating Profit:					Segment Operating Profit:
Critical Mission Solutions	Critical Mission Solutions	$	111,496	$	110,072	Critical Mission Solutions	$	82,220	$	91,239
People & Places Solutions	People & Places Solutions	191,692		196,300		People & Places Solutions	226,619		188,841
Divergent Solutions						Divergent Solutions	11,967		23,108
PA Consulting	PA Consulting	63,071		—		PA Consulting	51,027		63,071
Total Segment Operating Profit	Total Segment Operating Profit	366,259		306,372		Total Segment Operating Profit	371,833		366,259
Other Corporate Expenses (1)	Other Corporate Expenses (1)	(105,360)		(70,341)		Other Corporate Expenses (1)	(93,686)		(105,360)
Restructuring, Transaction and Other Charges (2)	Restructuring, Transaction and Other Charges (2)	(83,566)		(22,091)		Restructuring, Transaction and Other Charges (2)	(40,342)		(83,566)

Total U.S. GAAP Operating Profit	Total U.S. GAAP Operating Profit	177,333		213,940		Total U.S. GAAP Operating Profit	237,805		177,333
Total Other (Expense) Income, net (3)		(8,243)		140,171
Total Other Income (Expense), net (3)						Total Other Income (Expense), net (3)	(40,324)		(8,243)
Earnings from Continuing Operations Before Taxes	Earnings from Continuing Operations Before Taxes	$	169,090	$	354,111	Earnings from Continuing Operations Before Taxes	$	197,481	$	169,090


(1)			Other corporate expenses ~~also include~~included intangibles amortization of ~~$46.9~~$49.8 million and ~~$23.2~~$46.9 million for the three months ended December 30, 2022 and December 31, 2021, ~~and January 1, 2021, respectively, with this increase mainly attributable~~respectively. Additionally, the three month period of fiscal 2023 included approximately $15.0 million in net favorable impacts from cost reductions compared to the ~~PA Consulting investment.~~prior year period, which was associated mainly with net favorable impacts during the current quarter from changes in employee benefit programs of $41 million offset by approximately $26 million in higher quarter over quarter spend in company technology platforms and other personnel and corporate cost increases.
(2)			Included in the three months ended December 30, 2022 and December 31, 2021 isare $27.1 million and $72.3 million, of respectively, in 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~~included a gain of $6.9 million related to a lease termination. ~~The three months ended January 1, 2021 include $93.1 million~~Additionally, the increase in ~~fair value adjustments related to our investment in Worley stock (net of Worley stock dividend) and certain foreign currency revaluations relating~~net interest expense year over year is primarily due to the ~~ECR sale, $82.6 million in fair value adjustments related~~higher levels of debt outstanding due to ~~our investment in C3 stock~~the funding of the StreetLight and ~~$(27.9) million related to impairment charges on our AWE Management Ltd. investment. The investments in Worley and C3 were sold~~BlackLynx acquisitions in fiscal ~~2021~~2022 and ~~therefore there are no comparable amounts~~increased borrowings associated with the payment of the Legacy CH2M Matter settlement also in the ~~current quarter.~~prior year, in addition to higher interest rates.

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (CONTINUED)

(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 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.

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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 December ~~31, 2021~~30, 2022 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 ~~2021~~2022 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 ~~2021~~2022 Form 10-K;

•The Company’s fiscal ~~2021~~2022 audited consolidated financial statements and notes thereto included in our ~~2021~~2022 Form 10-K; and

•Item 7, Management’s Discussion and Analysis of Financial Condition and Results of Operations included in our ~~2021~~2022 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 United States 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 ~~2022~~year 2023 or future fiscal years, our expectations for the percentage of backlog we will realize as revenue in fiscal year 2023, and the anticipated benefits of ~~acquisitions and~~any acquisition or 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 our ability to execute on our three-year corporate strategy, including our ability to invest in the ~~magnitude, timing, duration~~tools needed to fully implement our strategy, competition from existing and ~~ultimate~~future competitors in our target markets, our ability to achieve the cost-savings and synergies contemplated by our recent acquisitions within the expected time frames or to achieve them fully and to successfully integrate acquired businesses while retaining key personnel, the impact of the COVID-19 pandemic ~~including the emergence and spread of variants of COVID-19,~~or any future pandemic, and any resulting economic downturn on our results, prospects and opportunities, measures or restrictions imposed by governments and health officials in response to ~~the~~such 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 effectiveness and distribution of vaccines or treatments for COVID-19; the timing and scope of any government stimulus programs enacted in response to the impacts of the COVID-19 pandemic, including, but not limited to, any additional infrastructure-related stimulus programs, and the timing of the award of projects and funding and potential changes to the amounts provided for, under the Infrastructure Investment and Jobs Act, ~~signed into law~~financial market risks that may affect the Company, including by ~~President Biden~~affecting the Company's access to capital, the cost of such capital and/or the Company's funding obligations under defined benefit pension and postretirement plans, as well as general economic conditions, including inflation and the actions taken by monetary authorities in response to inflation, changes in interest rates and foreign currency exchange rates, changes in capital markets, the impact of a possible recession or economic downturn on ~~November 15, 2021.~~our results, prospects and opportunities, and geopolitical events and conflicts, among others. The impact of such matters includes, but is not limited to, the possible reduction in demand for certain of our product solutions and services and the delay or abandonment of ongoing or anticipated projects due to the financial condition of our clients and suppliers or to governmental budget constraints or changes to governmental budgetary priorities; 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 have and could continue to negatively affect our supply chain and our ability to timely and satisfactorily complete our clients’ projects; difficulties associated with retaining and hiring additional employees; 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~~pandemics 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 ~~2021~~2022 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"~~(the "SEC").

~~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,

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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 most jurisdictions in which we operate have lifted or eased such restrictions to various degrees, some jurisdictions have subsequently 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. We successfully transitioned 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.

~~Notwithstanding our continued critical operations, COVID-19 negatively impacted our business, and may have further adverse impacts, on our operations, including those listed and discussed in Item 1A,~~ ~~Risk Factors~~ included in our 2021 Form 10-K. Accordingly, at the height of the pandemic, we temporarily reduced spending broadly across the Company, only proceeding with operating and capital spending that was 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 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.

The impacts of the COVID-19 pandemic continue to be 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 continues to exist concerning the magnitude, duration and impacts of the COVID-19 pandemic, including with regard to the effects on our customers, customer demand for our 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 2021 Form 10-K.

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.~~

~~Revenue by Type (Q1 FY2022)~~manufacturing, turning abstract ideas into realities that transform the world for good. Leveraging a talent force of more than 160,000, Jacobs provides a full spectrum of professional services including consulting, technical, engineering, scientific and project delivery for the government and private sectors.

Our previous three-year corporate strategy launched 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. Setting the wheels in motion for our current path, this transformation included acquiring a 65% stake in PA Consulting Group Limited ("PA Consulting") in fiscal year 2021. Acquisitions of John Wood Group’s nuclear business, The Buffalo Group and most recently BlackLynx and StreetLight further position us as a leader in high-value government services and technology-enabled solutions.

We are now focused on broadening our leadership in sustainable, high growth sectors. As part of our strategy, our brand promise: "Challenging today. Reinventing tomorrow." signals our transition to a global technology-forward solutions company. We began trading as “J” on the New York Stock Exchange in December 2019, and in March 2021 our Global Industry Classifications Standard code changed to Research & Consulting Services. Our Focus 2023 Transformation Office is charged with driving further innovation, delivering value-creating solutions for our clients and leveraging an integrated digital and technology strategy to improve our efficiency and effectiveness, ultimately freeing up valuable time and resources for reinvestment in our people.

In the fourth quarter fiscal 2022, Jacobs Engineering Group Inc. (the predecessor parent company) created a new holding company, Jacobs Solutions Inc., which, through a reverse triangular merger, became the new parent company of Jacobs Engineering Group, Inc. As a result of the transaction, the predecessor parent company's then-current stockholders automatically became stockholders of Jacobs Solutions Inc., on a one-for-one basis, with the same number of shares and same ownership percentage of the predecessor parent company’s common stock that they held immediately prior to the transaction.

~~Page 37~~

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 2022.

~~Lines of Business~~Operating Segments

The services we provide fall into the following two lines of business (LOB): Critical Mission Solutions (CMS) and People & Places Solutions (P&PS). ~~The~~Our LOBs, our business unit Divergent Solutions (DVS), which operates as an integrated offering to both LOBs, and a majority investment in PA Consulting (PA) constitute the Company’s reportable ~~segments.~~segments and are the foundation for how Jacobs helps create a more connected, sustainable world. For additional information regarding our segments, including information about our financial results by segment and financial results by geography, see Note ~~5 -~~4- Revenue Accounting for Contracts of Notes to Consolidated Financial Statements.

Critical Mission Solutions (CMS)

~~Our~~Jacobs' Critical Mission Solutions line of business provides a full spectrum of solutions for clients to address evolving challenges like information and cyber ~~data analytics,~~warfare, digital transformation and modernization, national security and defense, space exploration, digital asset management and the green energy transition. Our core capabilities include program management and mission operations; systems digital engineering and mission integration, research development, test and evaluation; integration, operation, maintenance and sustainment of systems and facilities; enterprise-level IT operations and mission IT delivery, software development, and software application ~~integration services~~integration; engineering, design and ~~consulting, enterprise level operations~~construction of specialized technical facilities and ~~maintenance~~systems; environmental remediation; specialized training; robotics and ~~mission IT, engineering and design, enterprise operations and maintenance, program management,~~automation; and other highly technical consulting ~~solutions to~~solutions. We deliver these capabilities for government agencies as well as commercial ~~customers~~clients in the U.S. and international markets. ~~Our representative~~

We leverage our deep experience to support 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, 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~~Aerospace, Automotive, Space, Telecom, Intel, Defense and ~~telecom sectors.~~

~~The U.S. government is~~Energy sectors to develop lasting solutions in the ~~world’s largest buyer of technical services,~~communities where we live and in fiscal 2021, approximately 74% of CMS’s revenue was earned from serving the DoD, intelligence community and Federal Civilian governmental entities. Our international customers, which accounted for 18% of fiscal 2021 revenue, have also increased demand for our IT and cybersecurity solutions and nuclear projects, and the U.K. Ministry of Defence continues to focus on accelerating its strategic innovative and technology focused initiatives.work.

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People & Places Solutions (P&PS)

Jacobs' People & Places Solutions line of business provides end-to-end solutions for our clients’ most complex challenges ~~- whether~~related to climate change, energy transition, connected mobility, integrated water management, smart cities ~~or vaccine~~and biopharmaceutical manufacturing. In doing so, we ~~incorporate~~combine deep experience in the ~~full spectrum of data science~~following markets - Infrastructure, Cities & Places, Energy & Environmental, Health & Life Sciences and technology-enabled toolsets within a human-centric solution development and delivery framework. We embrace inclusive engagement of partners and stakeholders and generate enduring social equity/value throughAdvanced Manufacturing. Our core capabilities revolve around consulting, planning, science, architecture, design and engineering, ~~project outcomes,~~ as well as infrastructure delivery services and long-term operation of ~~facilities and infrastructure.~~facilities. Solutions may be delivered as standalone professional service engagements, ~~or through~~ comprehensive program management ~~that integrates disparate workstreams to yield additional benefits not attainable through project-by-project implementation. We also provide~~partnerships, and selective progressive design-build and construction management at-risk delivery ~~solutions~~services in targeted markets. Increasingly, we leverage our data science and technology-enabled expertise with our core capabilities to deliver positive and enduring solutions for the clients and communities we serve.

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

Divergent Solutions (DVS)

Jacobs’ new operating segment, Divergent Solutions (DVS), serves as the core foundation for developing and delivering innovative, next-generation cloud, cyber, data and digital technologies. DVS further strengthens our ability to drive value for clients of both LOBs by leveraging a full spectrum of cyber, data analytics, systems and software application integration services across Jacobs. Our core capabilities include global strategic alliances, innovation collaboration, next-generation technologies, software and data as a service and data and secure solutions. DVS clients include government agencies and commercial clients in the U.S. and international markets.

PA Consulting

~~In fiscal 2021,~~ Jacobs invested in a 65% stake in PA Consulting, the consultancy that is Bringing Ingenuity to ~~Life. Its diverse teams~~Life, which offers end-to-end innovation to accelerate new growth ideas from concept, through design and development and to commercial success. We revitalize organizations, building the leadership, culture, systems and processes to make innovation a reality. PA Consulting's team of roughly 4,000 strategists, innovators, designers, consultants, digital experts, ~~combine innovative thinking~~scientists, engineers and breakthrough use of technologies to progress further, faster. PA’s clients adapt and transform and achieve enduring results. An innovation and transformation consultancy, PA's roughly 3,300 employeestechnologists work across seven sectors: consumer and manufacturing, defense and security, energy and utilities, financial services, government, health and life sciences, and 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., Nordics and the 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 processestransport to make ~~innovation~~ a ~~reality.~~positive impact alongside the clients it supports. PA Consulting has a diverse mix of private and public sector clients, from global household names to start-ups, to national and local public services.

Recently, PA Consulting supported the launch of a new Electric Vehicle Infrastructure Fund to drive the roll-out of electric vehicle charging infrastructure in the U.K.; innovated cell and gene therapy manufacturing with Ori Biotech in the U.S.; and designed a growth strategy for Green Boom, a U.S.-based start-up that has developed a patent-pending and sustainable way to help prevent, reduce and clean up oil spills.

Together, the collective strengths of PA Consulting and Jacobs drive value creation for clients around the globe and support projects to address five key trends: product and service innovation, the future of work, sustainability and climate change.

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Results of Operations for the three months ended December 30, 2022 and December 31, 2021

(in thousands, except per share information)


	For the Three Months Ended
	December 30, 2022		December 31, 2021
Revenues	$	3,798,668	$	3,380,625
Direct cost of contracts	(2,983,955)		(2,584,151)
Gross profit	814,713		796,474
Selling, general and administrative expenses	(576,908)		(619,141)
Operating Profit	237,805		177,333
Other Income (Expense):
Interest income	3,007		1,501
Interest expense	(40,077)		(19,426)
Miscellaneous (expense) income, net	(3,254)		9,682
Total other expense, net	(40,324)		(8,243)
Earnings from Continuing Operations Before Taxes	197,481		169,090
Income Tax Expense from Continuing Operations	(50,103)		(15,889)
Net Earnings of the Group from Continuing Operations	147,378		153,201
Net Loss of the Group from Discontinued Operations	(708)		(232)
Net Earnings of the Group	146,670		152,969
Net Earnings Attributable to Noncontrolling Interests from Continuing Operations	(7,031)		(9,252)
Net Earnings Attributable to Redeemable Noncontrolling interests	(3,992)		(9,683)
Net Earnings Attributable to Jacobs from Continuing Operations	136,355		134,266
Net Earnings Attributable to Jacobs	$	135,647	$	134,034
Net Earnings Per Share:
Basic Net Earnings from Continuing Operations Per Share	$	1.08	$	1.04
Basic Net Loss from Discontinued Operations Per Share	$	(0.01)	$	—
Basic Earnings Per Share	$	1.07	$	1.04

Diluted Net Earnings from Continuing Operations Per Share	$	1.07	$	1.03
Diluted Net Loss from Discontinued Operations Per Share	$	(0.01)	$	—
Diluted Earnings Per Share	$	1.06	$	1.03

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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

~~Page 40~~36

Overview – Three Months Ended December ~~31, 2021~~30, 2022

Net earnings attributable to the Company from continuing operations for the first fiscal quarter ended December ~~31, 2021~~30, 2022 were $136.4 million (or $1.07 per diluted share), an increase of $2.1 million, from net earnings of $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) for the corresponding period last year. ~~The~~While operating profit levels were up for the respective three-month periods of fiscal 2023 due primarily to our P&PS business, the first fiscal quarter of ~~2022~~2023 was impacted by ~~$75.0~~$39.7 million in pre-tax Restructuring and other charges and transaction costs compared to fiscal 2022 amounts of $75.0 million, for both periods associated mainly with the Company's transformation initiatives relating to real estate which is discussed in Note ~~18-~~16- Restructuring and Other Charges. ~~This decrease~~Additionally, the 2023 first fiscal quarter was ~~partially~~impacted by approximately $15.0 million in net favorable impacts from overhead cost reductions associated mainly with one-time benefit program changes, while partly offset by higher incentive and other compensation charges and higher investments in company technology platforms. Also, first quarter fiscal 2023 other expense, net, of $40.3 million was higher by $32.1 million versus first quarter fiscal 2022 amounts of $8.2 million, with the current period primarily impacted by unfavorable higher net interest expense compared to the prior year quarter as discussed further below. Our reported net earnings for the current year quarter were unfavorably impacted by higher income taxes of $34.2 million compared to the fiscal 2022 period, attributable to higher effective tax rates in the current quarter ~~operating~~due mainly to the absence of prior year tax benefits including $15.7 million related to the release of previously valued foreign tax credits and other prior year favorable tax items combined with current quarter income tax expense items further discussed in Note 9- Income Taxes. Additionally, redeemable noncontrolling interests was $5.7 million lower in the current quarter due to unfavorable net earnings results ~~benefiting from~~in our ~~BlackLynx, Inc. ("BlackLynx"),~~ PA Consulting and Buffalo Group investing activities. The comparable period ended January 1, 2021 benefited from $93.1 million in pre-tax unrealized appreciation gains recorded in miscellaneous income (expense), net, associated with our investment ~~in Worley stock and certain foreign currency revaluations relating~~compared to the ~~ECR sale and pre-tax unrealized appreciation gains associated with our investment in C3.ai, Inc. ("C3") of $82.6 million, which were both sold during the fiscal~~prior year ~~ended 2021. These were partially offset by $27.9 million in fiscal 2021 pre-tax other-than-temporary impairment charges in respect of our AWE investment.~~

~~For discussion of discontinued operations, see Note 17 -~~ ~~Sale of Energy, Chemicals and Resources ("ECR") Business.~~quarter.

On ~~November 19, 2021, a subsidiary of Jacobs~~February 4, 2022, the Company acquired ~~BlackLynx.~~StreetLight Data, Inc., ("StreetLight"). 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 16-~~15- Other Business Combinations.

Consolidated Results of Operations

Revenues for the first fiscal quarter of ~~2022~~2023 were $3.80 billion, an increase of $418.0 million, or 12.4%, from $3.38 billion ~~in line with our revenues reported in~~for the corresponding period last year. ~~The slight decrease in revenues~~Revenue increases for the year over year period were due mainly to the Company's P&PS and CMS legacy businesses and in addition, to a smaller degree, fiscal 2023 incremental revenues benefited from the StreetLight acquisition (owned for the full period in fiscal 2023) and other increases in our DVS business. The P&PS business benefited primarily from stronger performance in its Advanced Facilities and U.S. business operations. Our CMS business benefited from increased spending in our U.S. government business sector, which was ~~in part due~~primarily attributable to ~~certain~~fiscal 2022 contract ~~wind downs in~~awards for the U.S. ~~and volume decreases in our P&PS America's business due~~Department of Energy. 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 impacts, revenues in our PA Consulting investment decreased (excluding translation impacts, PA Consulting experienced year over year growth). Also, revenue was unfavorably impacted by foreign currency translation of $158.5 million for the three months ended December 30, 2022 in our international businesses, ~~of $24.1 million,~~ with no significant impact in the ~~current~~prior year period. ~~This is partly offset due to fiscal 2022 incremental revenues from the PA Consulting investment and the BlackLynx and Buffalo Group acquisitions.~~ Pass-through costs included in revenues for the three months ended December ~~31, 2021~~30, 2022 amounted to ~~$472.4~~$673.7 million, ~~a decrease~~an increase of ~~$176.3~~$195.6 million, or ~~27.2%~~40.9%, from ~~$648.7~~$478.1 million from the corresponding period last ~~year, which was primarily attributable to our advanced facilities business.~~year.

Gross profit for the first fiscal quarter of ~~2022~~2023 was ~~$796.5~~$814.7 million, an increase of ~~$164.4~~$18.2 million, or ~~26.0%~~2.3%, from ~~$632.1~~$796.5 million from the corresponding period last year. Our gross profit margins were ~~23.6%~~21.4% and ~~18.7%~~23.6% for the three months ended December ~~31, 2021~~30, 2022 and ~~January 1,~~December 31, 2021, respectively, with these ~~trend~~margin differences being mainly attributable to ~~favorable margin~~lower utilization trends ~~from our recent~~primarily in the PA Consulting ~~investment, the BlackLynx~~business, project mix impacts in our legacy CMS portfolio and ~~Buffalo Group acquisitions, partially~~unfavorable foreign currency translation impacts, partly offset by ~~market conditions~~new program startups won in fiscal 2022 and ~~certain contract wind downs~~favorable performance in our P&PS advanced facilities and U.S. businesses. Additionally, gross profit benefited from favorable impacts from overhead cost reductions associated mainly with one-time benefit program changes, while partly offset by higher incentive and other compensation charges and higher investments in company technology platforms in the current year, as mentioned above.

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

SG&A expenses for the three months ended December ~~31, 2021~~30, 2022 were ~~$619.1~~$576.9 million, ~~an increase~~a decrease of ~~$201.0~~$42.2 million or ~~48.1%,~~(6.8)% from ~~$418.1~~$619.1 million for the corresponding period last year. The current year's three months ended results were impacted by ~~incremental SG&A expenses from recent business acquisitions (mainly PA Consulting), of $93.5 million and higher personnel-related~~decreases in real estate related costs, ~~partly offset by lower~~as well as other ~~operational overhead costs.Additionally, higher~~department spend decreases due in part to the Company's transformation initiatives. Also, Restructuring and other charges for ~~the three-month period of~~fiscal 2023 and 2022 ~~related in part to~~included $27.1 million and $73.2 million, respectively, in costs associated ~~in part~~ with the Company's transformation initiatives relating to real ~~estate which is discussed in Note 18-~~

Page 37

estate.~~Restructuring and Other Charges. Prior year~~Lastly, SG&A expenses ~~included unfavorable~~benefited from favorable foreign exchange impacts ~~from foreign currency~~ of ~~$3.8~~$27.5 million for the three months ended December 30, 2022, with no significant impact in the ~~current~~corresponding prior year period.

Net interest expense for the three months ended December ~~31, 2021~~30, 2022 was ~~$17.9~~$37.1 million, an increase of ~~$1.7~~$19.1 million from ~~$16.2~~$17.9 million for the corresponding period last year. The increase in net interest expense for the three month

~~Page 41~~

period ~~year over year is~~was due to higher levels of ~~average~~ debt outstanding ~~relating in part~~due to the funding of the ~~PA Consulting investment~~StreetLight and BlackLynx acquisitions and increased borrowings associated with the ~~BlackLynx acquisition,~~payment of the settlement of a legacy litigation matter involving a subsidiary of CH2M (the "Legacy CH2M Matter") in fiscal 2022, in addition to higher interest rates.

Miscellaneous (expense) income, net for the three months ended December ~~31, 2021~~30, 2022 was ~~$9.7~~$(3.3) million in comparison to ~~$156.4~~$9.7 million for the corresponding period last year. The ~~$146.7~~$12.9 million decrease from the prior ~~year~~ three-month comparable period was due primarily to an increase in pension costs due to higher interest rate impacts in the current year along with the 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~~$6.9 million in pre-tax unrealized gains associated with changes in the fair value of our investment in Worley stock and certain foreign currency revaluations relating to the ECR sale and $82.6 million in net gainsgain related to ~~the C3 investment. These were partially offset by $27.9 million in fiscal 2021 pre-tax other-than-temporary impairment charges in respect of our AWE investment.~~a lease termination.

The Company’s effective tax rates from continuing operations for the three months ended December 30, 2022 and December 31, 2021 were 25.4% and ~~January 1, 2021 were~~ 9.4% ~~and 24.6%~~, respectively. The most significant items contributing to the difference between the statutory U.S. federal corporate tax rate of 21.0% and the Company’s effective tax rate ~~from~~for the three months ended December 30, 2022 were U.S. state income tax expense of $4.6 million and U.S. tax on foreign earnings of $3.6 million. Both items are expected to have a continuing ~~operations~~impact on the Company's effective tax rate for the remainder of the fiscal year.

The most significant items contributing to the difference between the statutory U.S. federal corporate tax rate of 21.0% and the Company's effective tax rate for the three months ended December 31, 2021 ~~was lower than the corresponding rate in the prior period primarily due to~~were a ~~current year~~ tax benefit of $15.7 million related to the release of previously reserved foreign tax ~~credits,~~credit assets, $4.2 million excess tax benefit attributable to stock compensation, and $4.0 million benefit from filing amended ~~status~~state returns.

The amount of income taxes the Company pays is subject to ongoing audits by tax jurisdictions around the world. In the normal course of business, the Company is subject to examination by tax authorities throughout the world, including such major jurisdictions as Australia, Canada, India, the Netherlands, the United Kingdom and the United States. 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 38

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					Three Months Ended
		December 31, 2021		January 1, 2021			December 30, 2022		December 31, 2021
Revenues from External Customers:	Revenues from External Customers:					Revenues from External Customers:
Critical Mission Solutions	Critical Mission Solutions	$	1,162,505	$	1,295,287	Critical Mission Solutions	$	1,075,175	$	976,777
People & Places Solutions	People & Places Solutions	1,928,146		2,086,549		People & Places Solutions	2,226,985		1,920,997
Divergent Solutions						Divergent Solutions	214,465		192,877
PA Consulting	PA Consulting	289,974		—		PA Consulting	282,043		289,974
Total	Total	$	3,380,625	$	3,381,836	Total	$	3,798,668	$	3,380,625

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 Before Taxes from Continuing Operations $ 169,090 $ 354,111

~~Page 42~~


	Three Months Ended
	December 30, 2022		December 31, 2021
Segment Operating Profit:
Critical Mission Solutions	$	82,220	$	91,239
People & Places Solutions	226,619		188,841
Divergent Solutions	11,967		23,108
PA Consulting	51,027		63,071
Total Segment Operating Profit	371,833		366,259
Other Corporate Expenses (1)	(93,686)		(105,360)
Restructuring, Transaction and Other Charges (2)	(40,342)		(83,566)

Total U.S. GAAP Operating Profit	237,805		177,333
Total Other Income (Expense), net (3)	(40,324)		(8,243)
Earnings Before Taxes from Continuing Operations	$	197,481	$	169,090


(1)			Other corporate expenses ~~also include~~included intangibles amortization of ~~$46.9~~$49.8 million and ~~$23.2~~$46.9 million for the three months ended December 30, 2022 and December 31, 2021, ~~and January 1, 2021, respectively, with this increase mainly attributable~~respectively. Additionally, the three month period of fiscal 2023 included approximately $15.0 million in net favorable impacts from cost reductions compared to the ~~PA Consulting investment.~~prior year period, which was associated mainly with net favorable impacts during the current quarter from changes in employee benefit programs of $41 million offset by approximately $26 million in higher quarter over quarter spend in company technology platforms and other personnel and corporate cost increases.

(2)			Included in the three months ended December 30, 2022 and December 31, 2021 isare $27.1 million and $72.3 million, ofrespectively, in 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~~included a gain of $6.9 million related to a lease termination. ~~The three months ended January 1, 2021 include $93.1 million~~Additionally, the increase in ~~fair value adjustments related to our investment in Worley stock (net of Worley stock dividend) and certain foreign currency revaluations relating~~net interest expense year over year is primarily due to the ~~ECR sale, $82.6 million in fair value adjustments related~~higher levels of debt outstanding due to ~~our investment in C3 stock~~the funding of the StreetLight and ~~$(27.9) million related to impairment charges on our AWE Management Ltd. investment. The investments in Worley and C3 were sold~~BlackLynx acquisitions in fiscal ~~2021~~2022 and ~~therefore there are no comparable amounts~~increased borrowings associated with the payment of the Legacy CH2M Matter settlement also in the ~~current quarter.~~prior year, in addition to higher interest rates.

Page 39

Critical Mission Solutions

Three Months Ended
December 31, 2021 January 1, 2021
Revenue $ 1,162,505 $ 1,295,287
Operating Profit $ 111,496 $ 110,072


	Three Months Ended
	December 30, 2022		December 31, 2021
Revenue	$	1,075,175	$	976,777
Operating Profit	$	82,220	$	91,239

Critical Mission Solutions (CMS) segment revenues for the three months ended December ~~31, 2021~~30, 2022 were ~~$1.16~~$1.08 billion, ~~a decrease~~an increase of ~~$132.8~~$98.4 million, or ~~10.3%~~10.1%, from ~~$1.30 billion~~$976.8 million for the corresponding period last year. ~~The decrease~~During the three months ended December 30, 2022, revenue benefited from contracts awarded in ~~revenue was primarily driven by several large contracts winding down in~~late fiscal 2022, including the ~~U.S., partially offset by revenue growth from certain elements~~Department of ~~our legacy portfolio, driven by increased spending by customers in the U.S. government business sector and our legacy international clients. Impacts~~Energy Nuclear remediation program. Also, impacts on revenues from ~~favorable~~unfavorable foreign currency translation were approximately ~~$2.2~~$33.1 million for the three month period ended December ~~31, 2021~~30, 2022, compared to ~~$4.6~~$2.2 million in favorable impacts in the corresponding prior year period.

Operating profit for the segment was ~~$111.5~~$82.2 million for the three months ended December ~~31, 2021, an increase~~30, 2022, representing a decrease of ~~$1.4~~$9.0 million, or ~~1.3%~~(9.9)%, from ~~$110.1~~$91.2 million for the corresponding period last year. ~~This slight increase~~Operating profit levels were down from the prior year, ~~was mainly attributable to growth in higher margin U.S. government business sectors as well as our recent acquisitions, offsetting~~with impacts from ~~the~~ large contract wind downs ~~mentioned~~in early fiscal 2022, which carried higher profit margins, offset in part by growth in nuclear remediation work for the U.S. Department of Energy noted above.Impacts on operating profit from unfavorable foreign currency translation were ~~not significant~~approximately $3.9 million for ~~either~~the three months ended December 30, 2022, as compared to insignificant impacts in the corresponding prior year period.

People & Places Solutions

Three Months Ended
December 31, 2021 January 1, 2021
Revenue $ 1,928,146 $ 2,086,549
Operating Profit $ 191,692 $ 196,300


	Three Months Ended
	December 30, 2022		December 31, 2021
Revenue	$	2,226,985	$	1,920,997
Operating Profit	$	226,619	$	188,841

Revenues for the People & Places Solutions (P&PS) segment for the three months ended December ~~31, 2021~~30, 2022 was ~~$1.93~~$2.23 billion, an increase of $306.0 million, or 15.9%, from $1.92 billion for the corresponding period last year. The increase in revenue for the three months ended December 30, 2022 was primarily driven by growth in both our advanced facilities and U.S. businesses as compared to the prior year corresponding period. Foreign currency translation had a $83.2 million unfavorable impact on revenues in our international businesses for the three period ended December 30, 2022, respectively, as compared to unfavorable impacts of $2.6 million in the corresponding prior year period.

Operating profit for the segment for the three month period ended December 30, 2022 was $226.6 million, an increase of $37.8 million, or 20.0%, from $188.8 million for the corresponding period last year. The year-over-year increase in operating profit for the three months ended December 30, 2022 was driven primarily by the revenue growth mentioned above while holding selling, general and administrative expenses relatively flat. Foreign currency translation had a $15.9 million unfavorable impact on operating profit in our international businesses for the three month periods ended December 30, 2022, respectively as compared to insignificant impacts in the corresponding prior year period.

Page 40

Divergent Solutions


	Three Months Ended
	December 30, 2022		December 31, 2021
Revenue	$	214,465	$	192,877
Operating Profit	$	11,967	$	23,108

Revenues for the Divergent Solutions segment for the three months ended December 30, 2022 were $214.5 million, an increase of $21.6 million, or 11.2%, from $192.9 million for the corresponding period last year. The increase in revenue for the three months ended December 30, 2022 benefited from incremental revenues from the StreetLight acquisition (owned for the full period in fiscal 2023) and the startup of new programs previously won in fiscal 2022. Foreign currency translation impacts on revenue were not significant for either period.

Operating profit for the segment was $12.0 million for the three months ended December 30, 2022, a decrease of ~~$158.4~~$11.1 million, or ~~7.6%~~48.2%, from ~~$2.09 billion~~$23.1 million, for the corresponding period last year. The decrease in operating profit for the three months ended December 30, 2022 was primarily driven by unfavorable impacts of changes in overhead billing rates during the current year quarter of 2023 vs. the prior year quarter mainly in our cyber intelligence market. Impacts on operating profit from foreign currency were not significant for either period.

PA Consulting


	Three Months Ended
	December 30, 2022		December 31, 2021
Revenue	$	282,043	$	289,974
Operating Profit	$	51,027	$	63,071

Revenues for the PA Consulting segment for the three months ended December 30, 2022 were $282.0 million, a decrease of $7.9 million, or 2.7%, from $290.0 million for the corresponding period last year. The decrease in revenue for the three months ended December ~~31, 2021~~30, 2022 was ~~primarily~~ driven by ~~volume decreases in our U.S. markets and lower pass through costs within our advanced facilities business. Foreign~~foreign currency translation which had a ~~$2.6~~ $41.6 million unfavorable impact on revenues in our international businesses for the ~~current year period. Comparatively,~~three months ended December 30, 2022, and a favorable ~~impacts on revenues from foreign currency translation was approximately $19.5~~impact of $5.3 million for the ~~three month~~corresponding prior year quarter. In local currency (primarily GBP), PA Consulting experienced an approximate 10% increase in revenues as compared to the prior year period, ~~ended January 1, 2021.~~primarily due to higher volumes in PA Consulting's existing business for previously delayed projects in fiscal 2022.

~~Page 43~~

Operating profit for the segment for the three months ended December ~~31, 2021~~30, 2022 was ~~$191.7~~$51.0 million, a decrease of ~~$4.6~~$12.0 million, or ~~2.3%~~19.1%, from ~~$196.3~~$63.1 million, for the corresponding period last yeyear, with the decrease partly due to unfavorable f~~ar. The year-over-year decrease~~oreign currency translation impacts 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~~our international business of $6.9 million 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~~$1.0 million in favorable ~~impacts~~impact 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~~ Additionally, operating profit ~~for the segment for the three months ended January 1, 2021~~ was ~~$63.1 million. There were no comparable periods in~~impacted by lower utilization as compared to the prior year ~~given the transaction closed on March 2, 2021.~~quarter.

Other Corporate Expenses

Other corporate expenses for the three months ended December ~~31, 2021~~30, 2022 were ~~$105.4~~$93.7 million, ~~an increase~~a decrease of ~~$35.0~~$11.7 million from ~~$70.3~~$105.4 million for the corresponding period last year. This ~~increase~~decrease during the three month period was ~~due~~ primarily todriven by approximately $15.0 million in net favorable impacts from overhead cost reductions associated mainly with one-time benefit program changes, while partly offset by higher ~~intangible amortization expense from the PA Consulting investment~~incentive and other ~~acquisitions, as well as impacts from~~compensation charges and higher ~~Company benefit program costs and other department spend increases.~~investments in company technology platforms.

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)

Page 41

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.

Restructuring and Other Charges

See Note ~~18-~~16- 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") 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 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~~have presented our backlog on a year-over-year basis, rather than on a sequential, quarter-over-quarter basis.

The following table summarizes our backlog at December ~~31, 2021~~30, 2022 and ~~January 1,~~December 31, 2021 (in millions):


		December 31, 2021		January 1, 2021			December 30, 2022		December 31, 2021
Critical Mission Solutions	Critical Mission Solutions	$	10,798	$	9,683	Critical Mission Solutions	$	7,632	$	7,525
People & Places Solutions	People & Places Solutions	16,932		15,422		People & Places Solutions	17,243		16,930
Divergent Solutions						Divergent Solutions	3,077		3,275
PA Consulting	PA Consulting	276		—		PA Consulting	306		276
Total	Total	$	28,006	$	25,105	Total	$	28,258	$	28,006

The increase in backlog in Critical Mission Solutions (CMS) from ~~January 1,~~December 31, 2021 was primarily driven by ~~success in closing on a number of key opportunities~~new business awards in the ~~U.S~~U.S. government space and nuclear remediation sectors offsetting slower growth in the ~~BlackLynx acquisition.~~U.S. Defense market.

The increase in backlog in People & Places Solutions (P&PS) from ~~January 1,~~December 31, 2021 was primarily driven by new business awards in our federal, environmental and advanced facilities business.

~~Backlog~~The decrease in ~~PA Consulting as of~~backlog in Divergent Solutions (DVS) from December 31, 2021 was ~~$276.0 million.~~ primarily driven by delays of new awards because of continuing resolution throughout fiscal 2022.

The increase in backlog in PA Consulting ~~transaction closed~~from December 31, 2021 was primarily driven by strategic focus on ~~March 2, 2021.~~long-term projects as well as organic year over year growth of the business.

Page 42

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 December ~~31, 2021,~~30, 2022, our principal sources of liquidity consisted of $$1.21 billion~~1.25 billion~~ in cash and cash equivalents and ~~$1.67 billion~~$637.9 million of available borrowing capacity under our $2.25 billion revolving credit agreement (the "Revolving Credit Facility"). We finance much of our operations and growth through cash generated by our operations.

The amount of cash and cash equivalents at December ~~31, 2021~~30, 2022 represented an increase of ~~$230.8~~$70.6 million from ~~$1.01~~$1.14 billion at ~~October 1, 2021~~September 30, 2022, the reasons for which are described below.

Our net cash flow provided by operations of ~~$321.6~~$302.3 million during the three months ended December ~~31, 2021~~30, 2022 was unfavorable ~~favorable~~ by ~~$209.0~~$19.3 million in comparison to the cash flow provided by operations o~~f $112.6~~of $321.6 million for the corresponding prior year ~~period.~~ ~~This improvement was due mainly~~period. The year-over-year decrease in cash from operations is primarily attributable to ~~improved working capital performance along with favorable impacts from net cash~~lower earnings ~~year over year. The improvement~~after adjustments for non-cash items compared to the prior period, in addition to a small decrease in working capital performance ~~was primarily driven by favorability in accounts receivable collections trends along with less cash used in accrued liabilities year over year.~~compared to the prior period.

Our net cash used for investing activities for the three months ended December 30, 2022 was ~~$249.6~~$48.7 million, compared to cash used for investing activities of ~~$193.2~~$249.6 million in the corresponding prior year period, with this change due primarily to the acquisition of BlackLynx in the ~~current quarter and Buffalo Group in the~~ prior year.

Our net cash ~~provided by~~used for financing activities o~~f $144.4~~of $246.1 million for the three months ended December ~~31, 2021~~30, 2022 resulted mainly from ~~net proceeds from borrowings of $231.4 million mainly in connection with the BlackLynx acquisition,~~

~~Page 45~~

~~partly~~ ~~offset~~ by cash used for share repurchases of $140.5 million, $58.4 million in repurchase of redeemable noncontrolling interests ~~of $35.1 million~~ and ~~$41.6~~$29.8 million in dividends to shareholders and $2.3 million in dividends to noncontrolling ~~interests~~.interest holders, partly offset by net proceeds from issuance of common stock of $14.8 million. Cash provided by financing activities in the corresponding prior year period was ~~$18.7~~ $144.4 million, due primarily to net proceeds from borrowings of ~~$95.0~~$231.4 million, offset by cash used for ~~share~~ repurchases of ~~$24.8~~redeemable noncontrolling interests of $35.1 million and ~~$35.7~~$27.5 million in ~~dividends~~dividends to shareholders and $14.1 million in net dividends to noncontrolling ~~interests.~~interest holders.

At December ~~31, 2021,~~30, 2022, the Company had approximately ~~$162.2~~$210.0 million in cash and cash equivalents held in the U.S. and ~~$1.08~~$1.0 billion held outside of the U.S. (primarily in the U.K., the Eurozone, Australia, India, ~~Japan~~Canada, Israel 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 7-6- Income Taxes of Notes to Consolidated Financial Statements included in our ~~2021~~2022 Form 10-K), there are no material impediments to repatriating these funds to the U.S.

The ~~Company~~Company had ~~$273.7~~$292.5 million in letters of credit outstanding at December ~~31, 2021.~~30, 2022. Of this amount, ~~$1.7~~$1.3 million was issued under the Revolving Credit Facility and ~~$272.0~~$291.2 million was issued under separate, committed and uncommitted letter-of-credit facilities.

On February 6, 2023, the Company refinanced its Revolving Credit Facility and Term Loan Facilities. See Note 11- Borrowings for further discussion relating to the terms of the Revolving Credit Facility and Term Loan Facilities following the refinancing.

Page 4643

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

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. We continue to evaluate the impact of the pandemic on our business and reassess accordingly.

We were in compliance with all of our debt covenants at December ~~31, 2021.~~30, 2022.

Page 44

Supplemental Obligor Group Financial Information

On February 6, 2023, Jacobs and its wholly-owned subsidiary, JEGI (together, the "Obligor Group"), filed an automatic shelf registration statement on Form S-3, registering, among other securities, Senior Debt Securities, and Subordinated Debt Securities of Jacobs, which may be fully and conditionally guaranteed by JEGI, and Senior Debt Securities, and Subordinated Debt Securities of JEGI, which may be fully and conditionally guaranteed by Jacobs. All other subsidiaries of the Company that will not guarantee the registered debt securities of either JEGI or Jacobs are referred to collectively as the "Non-Obligor Subsidiaries". As of the date of this report, no Senior or Subordinated Debt Securities subject to such guarantees have been issued.

In accordance with the SEC Regulation S-X Rule 13-01, set forth below is the summarized financial information for the Obligor Group on a combined basis after elimination of (i) intercompany transactions and balances between Jacobs and JEGI and (ii) equity in the earnings from and investments in the Non-Obligor Subsidiaries. This summarized financial information (in thousands) has been prepared and presented pursuant to Regulation S-X Rule 13-01, “Financial Disclosures about Guarantors and Issuers of Guaranteed Securities” and is not intended to present the financial position or results of operations of the Obligor Group in accordance with U.S. GAAP.


	Three Months Ended
(in thousands)	December 30, 2022
Summarized Statement of Earnings Data
Revenue	$	757,688

Direct Costs	$	645,637

Selling, General and Administrative Expenses	$	121,268
Net earnings attributable to Guarantor Subsidiaries from continuing operations	$	(26,927)
Noncontrolling interests	$	(227)


(in thousands)	December 30, 2022		September 30, 2022
Summarized Balance Sheet Data
Current assets, less receivables from Non-Guarantor Subsidiaries	$	670,764	$	641,281
Current receivables from Non-Guarantor Subsidiaries	$	132,560	$	144,564
Noncurrent assets, less noncurrent receivables from Non-Guarantor Subsidiaries	$	489,598	$	494,185
Noncurrent receivables from Non-Guarantor Subsidiaries	$	654,156	$	612,260
Current liabilities	$	591,260	$	573,614
Long-term Debt	$	3,045,486	$	2,986,124
Other Noncurrent liabilities, less amounts payable to Non-Guarantor Subsidiaries	$	289,442	$	289,452
Noncurrent liabilities to Non-Guarantor Subsidiaries	$	462,306	$	434,092
Noncontrolling interests	$	765	$	947
Accumulated deficit	$	(2,442,181)	$	(2,391,939)

Page 45

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-~~11- 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 Facilities and Note Purchase Agreement.

Our Revolving Credit Facility, Term Loan 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 December ~~31, 2021,~~30, 2022, we had an aggregate of ~~$2.63~~$3.49 billion in outstanding borrowings under our Revolving Credit Facility and Term Loan Facilities. Interest on amounts borrowed under these ~~agreements~~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 Facilities). Depending on the Company’s Consolidated Leverage Ratio, borrowings denominated in U.S. dollars under the Revolving Credit Facility and the Term Loan 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 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 ~~19-~~17- Commitments and Contingencies and Derivative Financial Instruments, we are party to swap agreements with an aggregate notional value of ~~$923.5~~$894.5 million to convert the variable rate interest based liabilities associated with a corresponding amount of our debt into fixed interest rate liabilities, leaving ~~$1.71~~$2.59 billion in principal amount subject to variable interest rate risk. Additionally, during fiscal 2022, we entered into two treasury lock arrangements with an aggregate notional value of $500.0 million which is disclosed in further detail in Note 17- Commitments and Contingencies and Derivative Financial Instruments.

For the three months ended December ~~31, 2021,~~30, 2022, our weighted average borrowings that are subject to floating rate exposure were approximately ~~$1.78~~$2.81 billion. If floating interest rates had increased by 1.00%, our interest expense for the three months ended December ~~31, 2021~~30, 2022 would have increased by approximately ~~$4.5~~$7.0 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 ~~$503.5~~$382.5 million in notional value of exchange rate sensitive instruments at December ~~31, 2021.~~30, 2022. See Note ~~19-~~17- Commitments and Contingencies and Derivative Financial Instruments for discussion.

Page 4846

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 December ~~31, 2021,~~30, 2022, 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 December ~~31, 2021~~30, 2022 that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

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PART II - OTHER INFORMATION

Item 1. Legal Proceedings.

The information required by this Item 1 is included in the Note ~~19-~~17- 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 ~~2021~~2022 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 ~~2022.~~2023.

Share Repurchases

On January 16, 2020, the Company's Board of Directors authorized a share repurchase program of up to $1.0 billion of the Company's common stock, ~~to expire~~that expired on January 15, 2023 (the "2020 Repurchase Authorization"). InA summary of repurchases of 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 programCompany’s common stock made during the first quarter of fiscal ~~2022 of 342,054 shares as depicted in the table below.~~

~~The following table summarizes the activity~~2023 under the 2020 Share Repurchase Authorization ~~through the~~ ~~first~~ ~~fiscal quarter of 2022:~~follows:

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 Per Share (1)	Total Number of Shares Purchased under the 2020 Repurchase Authorization	Approximate Dollar Value of Shares that May Yet Be Purchased Under the 2020 Repurchase Authorization (2)
October 3, 2022 - October 28, 2022	912,812	$112.10	912,812	$398,661,297
October 31, 2022 - November 25, 2022	316,876	$117.49	316,876	$361,430,317
November 28, 2022 - December 30,2022	8,000	$123.36	8,000	$360,443,420

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

~~As of December 31, 2021, the Company has $782.9 million remaining under the~~(2)Expired on January 15, 2023 when 2020 Repurchase ~~Authorization.~~Authorization expired.

On January 25, 2023, the Company's Board of Directors authorized an incremental share repurchase program of up to $1.0 billion of the Company's stock, to expire on January 25, 2026 (the "2023 Repurchase Authorization"). No repurchase activity has taken place under the 2023 Share Repurchase Authorization to date.

Our share repurchase 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.

Item 3. Defaults Upon Senior Securities

None.

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Item 4. Mine Safety Disclosure.

None.

Item 5. Other Information.

None.

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Item 6. Exhibits.



3.1			Amended and Restated Bylaws of Jacobs Solutions Inc., dated as of October11, 2022. Filed as Exhibit 3.1 to the Registrant’s Current Report on Form 8-K/A on October14, 2022 and incorporated herein by reference.
10.1#*			Form of Restricted Stock Unit Agreement (Performance Shares – Earnings Per Share Growth) (awarded pursuant to the Jacobs ~~Engineering Group~~Solutions Inc. 1999 Stock Incentive Plan)..
10.2#*			Form of Restricted Stock Unit Agreement (Performance Shares – ROIC) (awarded pursuant to the Jacobs ~~Engineering Group~~Solutions Inc. 1999 Stock Incentive Plan).
10.3#*			Form of Restricted Stock Unit Agreement (Time-Based Vesting) (awarded pursuant to the Jacobs ~~Engineering Group~~Solutions Inc. 1999 Stock Incentive Plan).
10.410.4#			~~Second Amendment to Second Amended~~Employment Agreement by and ~~Restated Credit Agreement, dated~~between Patrick X. Hill and Jacobs Group (Australia) Pty Ltd, effective as of ~~December~~ 6, 2021, between Jacobs Engineering Group Inc. 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 ~~party thereto, and Bank of America, N.A., as administrative agent.~~August 1, 2021.
10.5*10.5 #			J~~Amendment~~acobs Solutions Inc. Executive Severance Plan, as amended and restated effective November 16, 2022. Filed as Exhibit 10.25 to ~~Credit Agreement (LIBOR Transition), dated as of December~~ 6t ~~, 2021, among Jacobs Engineering Group Inc.~~he Registrants Annual Report on Form 10-K on November 21, 2022 and ~~Jacobs U.K. Limited, as borrowers, and Bank of America, N.A., as administrative agent, to the Credit Agreement, dated as of March 25, 2020,~~incorporated herein by ~~and 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.~~
10.6*			~~Amendment to Term Loan Agreement (LIBOR Transition), dated as of December~~ 6 , 2021, between Jacobs Engineering Group Inc. and Bank of America, N.A., as administrative agent, to the Term Loan Agreement, dated as of January 20, 2021, among Jacobs Engineering Group Inc., the lenders party thereto, and Bank of America, N.A., as administrative agent.reference.
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 December ~~31, 2021,~~30, 2022, 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
104			The cover page from the Company’s Quarterly Report on Form 10-Q for the quarter ended December ~~31, 2021,~~30, 2022, (formatted as Inline XBRL and contained in Exhibit 101).

* Filed herewith

# Management contract or compensatory plan or arrangement

* Filed herewith

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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~~SOLUTIONS INC.


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

Date:			February ~~8, 2022~~7, 2023

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