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1999 Bryan Street | Suite | Dallas | Texas | 75201 | ||||||||||
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| Common Stock | $1 par value | J | New York Stock Exchange | ||||||||
| Large accelerated filer | ☒ | Accelerated filer | ☐ | |||||||||||
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Emerging growth company | ☐ | |||||||||||||
PART I Item 1. Item 2. Item 3. Item 4. PART II Item 1. Item 1A. Item 2. Item 3. Item 4. Item 5. December 29, 2017 (Unaudited) September 29, 2017 ASSETS Current Assets: Cash and cash equivalents $ 1,059,839 $ 774,151 Receivables 3,293,502 2,102,543 Prepaid expenses and other 193,614 119,486 Total current assets 4,546,955 2,996,180 Property, Equipment and Improvements, net 574,034 349,911 Other Noncurrent Assets: Goodwill 5,720,875 3,009,826 Intangibles, net 921,000 332,920 Miscellaneous 928,893 692,022 Total other noncurrent assets 7,570,768 4,034,768 $ 12,691,757 $ 7,380,859 LIABILITIES AND STOCKHOLDERS’ EQUITY Current Liabilities: Notes payable $ 5,450 $ 3,071 Accounts payable 947,199 683,605 Accrued liabilities 1,472,865 939,687 Billings in excess of costs 637,542 299,864 Total current liabilities 3,063,056 1,926,227 Long-term Debt 2,587,933 235,000 Other Deferred Liabilities 1,079,021 732,281 Commitments and Contingencies Stockholders’ Equity: Capital stock: 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—141,556,705 shares and 120,385,544 shares as of December 29, 2017 and September 29, 2017, respectively 141,557 120,386 Additional paid-in capital 2,628,012 1,239,782 Retained earnings 3,728,527 3,721,698 Accumulated other comprehensive loss (628,985 ) (653,514 ) Total Jacobs stockholders’ equity 5,869,111 4,428,352 Noncontrolling interests 92,636 58,999 Total Group stockholders’ equity 5,961,747 4,487,351 $ 12,691,757 $ 7,380,859 2022 thousands) For the Three Months Ended December 29, 2017 December 30, 2016 Revenues $ 2,750,311 $ 2,551,604 Direct cost of contracts (2,263,131 ) (2,132,292 ) Gross Profit 487,180 419,312 Selling, general and administrative expenses (439,536 ) (330,684 ) Operating Profit 47,644 88,628 Other Income (Expense): Interest income 3,834 1,486 Interest expense (7,092 ) (3,518 ) Miscellaneous expense, net (2,470 ) (716 ) Total other expense, net (5,728 ) (2,748 ) Earnings Before Taxes 41,916 85,880 Income Tax Expense (39,355 ) (24,727 ) Net Earnings of the Group 2,561 61,153 Net Earnings Attributable to Noncontrolling Interests (398 ) (617 ) Net Earnings Attributable to Jacobs $ 2,163 $ 60,536 Net Earnings Per Share: Basic $ 0.02 $ 0.50 Diluted $ 0.02 $ 0.50 See the accompanying Notes to Consolidated Financial Statements – Unaudited. CASH FLOWS 2022 For the Three Months Ended December 29, 2017 December 30, 2016 Net Earnings of the Group $ 2,561 $ 61,153 Other Comprehensive Income (Loss): Foreign currency translation adjustment 20,168 (287,524 ) Gain (loss) on cash flow hedges 890 (942 ) Change in pension liabilities 3,596 24,753 Other comprehensive income (loss) before taxes 24,654 (263,713 ) Income Tax Expense: Cash flow hedges — (82 ) Change in pension liabilities (125 ) (4,522 ) Income Tax Expense: (125 ) (4,604 ) Net other comprehensive income (loss) 24,529 (268,317 ) Net Comprehensive Income (Loss) of the Group 27,090 (207,164 ) Net Earnings Attributable to Noncontrolling Interests (398 ) (617 ) Net Comprehensive Income (Loss) Attributable to Jacobs $ 26,692 $ (207,781 ) See the accompanying Notes to Consolidated Financial Statements – Unaudited. For the Three Months Ended December 29, 2017 December 30, 2016 Cash Flows from Operating Activities: Net earnings attributable to the Group $ 2,561 $ 61,153 Adjustments to reconcile net earnings to net cash flows provided by operations: Depreciation and amortization: Property, equipment and improvements 24,832 16,621 Intangible assets 14,695 11,914 Debt Issuance Costs 218 — (Gain) Loss on sales of business (444 ) 822 Stock based compensation 24,619 10,205 Tax deficiency from stock based compensation (1,205 ) Equity in earnings of operating ventures, net (3,631 ) (902 ) (Gain) Losses on disposals of assets, net (20 ) 2,847 Change in pension plan obligations (10,227 ) (5,301 ) Pension Settlement Charge 3,819 — Change in deferred compensation plans (985 ) 463 Deferred income taxes (11,951 ) (565 ) Changes in assets and liabilities, excluding the effects of businesses acquired: Receivables 15,749 (19,627 ) Prepaid expenses and other current assets (1,550 ) (2,612 ) Accounts payable (38,875 ) (10,782 ) Accrued liabilities (110,140 ) (69,638 ) Billings in excess of costs 71,587 111,862 Other deferred liabilities 5,997 (576 ) Non-current assets and other, net 60,632 5,748 Net cash provided by operating activities 46,886 110,427 Cash Flows Used for Investing Activities: Additions to property and equipment (22,450 ) (21,054 ) Disposals of property and equipment 104 4 Purchases of investments (370 ) — Additions to intangibles (237 ) — Acquisitions of businesses, net of cash acquired (1,365,809 ) — Sales of business — (2,036 ) Net cash used for investing activities (1,388,762 ) (23,086 ) Cash Flows Provided by Financing Activities: Proceeds from long-term borrowings 2,733,475 314,460 Repayments of long-term borrowings (1,090,329 ) (303,128 ) Proceeds from short-term borrowings 721 669 Repayments of short-term borrowings (721 ) — Proceeds from issuances of common stock 14,454 37,396 Common stock repurchases — (30,221 ) Excess tax benefits from stock based compensation — 1,205 Taxes paid on vested restricted stock (13,780 ) (5,053 ) Cash dividends (18,143 ) — Net cash provided by financing activities 1,625,677 15,328 Effect of Exchange Rate Changes 1,887 (21,839 ) Net Increase in Cash and Cash Equivalents 285,688 80,830 Cash and Cash Equivalents at the Beginning of the Period 774,151 655,716 Cash and Cash Equivalents at the End of the Period $ 1,059,839 $ 736,546 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS •References herein to “Jacobs” are to Jacobs •References herein to the “Company”, “we”, “us” or “our” are to Jacobs •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. 2023. Please also refer to Note 17- Assets Cash and cash equivalents $ 315.2 Receivables 1,201.9 Prepaid expenses and other 72.7 Property, equipment and improvements, net 225.6 Goodwill 2,698.8 Identifiable intangible assets: Customer relationships, contracts and backlog 557.0 Trade name 40.0 Lease intangible assets 5.9 Total identifiable intangible assets 602.9 Miscellaneous 277.4 Total Assets $ 5,394.5 Liabilities Notes payable 2.2 Accounts payable 309.6 Accrued liabilities 659.0 Billings in excess of costs 263.5 Identifiable intangible liabilities: Lease intangible liabilities 9.6 Long-term debt 702.3 Other deferred liabilities 382.7 Total Liabilities 2,328.9 Noncontrolling interests (40.9) Net assets acquired $ 3,024.7 The Personnel costs $ 41,222 Professional service, real estate-related, and other expenses 26,675 Total $ 67,897 Three Months Ended See note 1 December 29, December 30, Revenues $ 3,778 $ 3,652 Net earnings (loss) $ 25.8 $ (47.0) Net earnings (loss) attributable to Jacobs $ 23.2 $ (56.6) Net earnings (loss) attributable to Jacobs per share: Basic earnings (loss) per share $ 0.16 $ (0.40) Diluted earnings (loss) per share $ 0.16 $ (0.40) Aerospace & Technology Buildings & Infrastructure Industrial Petroleum & Chemicals Total Balance September 29, 2017 $ 1,025.8 $ 751.4 $ 561.8 $ 670.8 $ 3,009.8 Acquired 945.2 1,417.9 – 335.7 2,698.8 Foreign Exchange Impact 4.2 3.1 2.3 2.7 12.3 Balance December 29, 2017 $ 1,975.2 $ 2,172.4 $ 564.1 $ 1,009.2 $ 5,720.9 The following table provides certain information related to the Company’s acquired intangibles in the accompanying Consolidated Balance Sheets at December 29, Customer Relationships, Contracts, and Backlog Developed Technology Trade Names Patents Lease Intangible Assets Other Total Balances, September 29, 2017 $ 301,468 $ 14,462 $ 6,699 $ 10,180 $ - $ 111 $ 332,920 Acquisitions and additions 557,000 237 40,000 - 5,951 - 603,188 Amortization (12,852 ) (384 ) (1,344 ) (104 ) - (11 ) (14,695 ) Foreign currency translation (346 ) - 26 (93 ) - - (413 ) Balances, December 29, 2017 $ 845,270 $ 14,315 $ 45,381 $ 9,983 $ 5,951 $ 100 $ 921,000 Fiscal Year (in millions) 2018 (nine months remaining) $ 90.5 2019 119.2 2020 117.1 2021 102.3 Under segments. For the Three Months Ended December 29, 2017 December 30, 2016 Revenues from External Customers: Aerospace & Technology $ 721,567 $ 577,436 Buildings & Infrastructure 658,466 580,617 Industrial 749,321 751,738 Petroleum & Chemicals 620,957 641,813 Total $ 2,750,311 $ 2,551,604 For the Three Months Ended December 29, 2017 December 30, 2016 Segment Operating Profit: Aerospace & Technology $ 65,820 $ 51,087 Buildings & Infrastructure 45,273 38,797 Industrial 38,113 25,129 Petroleum & Chemicals 27,557 23,652 Total Segment Operating Profit 176,763 138,665 Other Corporate Items (42,129 ) (18,296 ) Restructuring and Other Charges (19,349 ) (31,741 ) CH2M Transaction Costs (67,641 ) — Total U.S. GAAP Operating Profit 47,644 88,628 Total Other Expense (1) (5,728 ) (2,748 ) Earnings Before Taxes $ 41,916 $ 85,880 Includes an approximate $15 million pre-tax non-cash charge associated with an inventory write down during the fiscal 2024 period comprised of adjustments of immaterial cumulative inventory misstatements previously reported which would not have been material to any prior period financial statements nor any amounts reported in the current period. Personnel costs $ 41,222 Professional service, real estate-related, and other expenses (1) 26,675 Total $ 67,897 timing of the Separation Transaction, the impact of the Separation Transaction on Jacobs' and the combined company's businesses if the transaction is completed, including a possible impact on Jacobs' credit profile and a possible decrease in the trading price of Jacobs' and/or the combined company's shares, the possibility that the Separation Transaction, if completed, may not qualify for the expected tax treatment, the ability to obtain all required regulatory approvals, the possibility that closing conditions for the Separation Transaction may not be satisfied or waived, on a timely basis or otherwise, the risk that any consents or approvals required in connection with the Separation Transaction may not be received, the risk that the Separation Transaction may not be completed on the terms or in the time frame expected by the parties, uncertainties as to our and our stockholders' respective ownership percentages of the combined company and the value to be derived from the disposition of Jacobs’ stake in the combined company, unexpected costs, charges or expenses resulting from the Separation Transaction, business and management strategies and the growth expectations of the combined company, the inability of Jacobs' and the combined company to retain and hire key personnel, customers or suppliers while the Separation Transaction is pending or after it is completed, and the ability of the Company to eliminate all stranded costs, as well as other factors related to our business, such as our ability to fully execute on our three-year corporate strategy, including our ability to invest in the tools needed to implement our strategy, competition from existing and future competitors in our target markets, our ability to achieve the cost-savings and synergies contemplated by our recent acquisitions within the expected time frames or to achieve them fully and to successfully integrate acquired businesses while retaining key personnel, the impact of any pandemic, and any resulting economic downturn on our results, prospects and opportunities, measures or restrictions imposed by governments and health officials in response to the pandemic, the timing of the award of projects and funding and potential changes to the amounts provided for, under the Infrastructure Investment and Jobs Act, as well as other legislation related to governmental spending, any changes in U.S. or foreign tax laws, statutes, rules, regulations or ordinances that may adversely impact our future financial positions or results of operations, financial market risks that may affect the Company, including by affecting the Company's access to capital, the cost of such capital and/or the Company's funding obligations under defined benefit pension and postretirement plans, as well as general economic conditions, including inflation and the actions taken by monetary authorities in response to inflation, changes in interest rates and foreign currency exchange rates, changes in capital markets, instability in the banking industry, or the impact of a possible recession or economic downturn on our results, prospects and opportunities, and geopolitical events and conflicts, among others. The impact of such matters includes, but is not limited to, transport. For the Three Months Ended December 29, 2017 Aerospace & Technology Buildings & Infrastructure Industrial Petroleum & Chemicals Total Technical Professional Services Revenues Project Services $ 274,945 615,238 67,672 401,166 1,359,021 Process, Scientific, and Systems Consulting 244,128 - - 6,945 251,073 Total Technical Professional Services Revenues 519,073 615,238 67,672 408,111 1,610,094 Field Services Revenues Construction 121,869 42,653 496,632 212,415 873,569 Operations and Maintenance (“O&M”) 80,625 575 185,017 431 266,648 Total Field Services Revenues 202,494 43,228 681,649 212,846 1,140,217 Total Revenues $ 721,567 $ 658,466 $ 749,321 $ 620,957 $ 2,750,311 For the Three Months Ended December 30, 2016 Aerospace & Technology Buildings & Infrastructure Industrial Petroleum & Chemicals Total Technical Professional Services Revenues Project Services $ 176,464 $ 509,849 $ 2,616 $ 369,262 $ 1,058,191 Process, Scientific, and Systems Consulting 199,829 — — 6,917 206,746 Total Technical Professional Services Revenues 376,293 509,849 2,616 376,179 1,264,937 Field Services Revenues Construction 82,787 66,641 535,336 262,183 946,947 Operations and Maintenance (“O&M”) 118,356 4,127 213,786 3,451 339,720 Total Field Services Revenues 201,143 70,768 749,122 265,634 1,286,667 Total Revenues $ 577,436 $ 580,617 $ 751,738 $ 641,813 $ 2,551,604 December 29, 2017 September 29, 2017 Components of receivables: Amounts billed, net $ 1,691,229 $ 949,060 Unbilled receivables and other 1,577,005 1,118,144 Retentions receivable 25,268 35,339 Total receivables, net $ 3,293,502 $ 2,102,543 Other information about receivables: Amounts due from the United States federal government, included above, net of advanced billings $ 314,543 $ 226,236 Claims receivable $ 4,600 $ 4,600 December 29, 2017 September 29, Land $ 20,644 $ 17,197 Buildings 137,336 93,313 Equipment 777,361 627,609 Leasehold improvements 274,141 220,295 Construction in progress 22,372 21,300 1,231,854 979,714 Accumulated depreciation and amortization (657,820 ) (629,803 ) $ 574,034 $ 349,911 Three Months Ended December 29, 2017 December 30, 2016 Aerospace & Technology $ 289 $ 170 Buildings & Infrastructure 2,879 7,908 Industrial 435 2,524 Petroleum & Chemicals 3,363 13,584 Corporate 12,383 7,555 Total $ 19,349 $ 31,741 Balance at September 29, 2017 $ 174,343 CH2M Charges 19,349 Payments (34,226 ) Balance at December 29, 2017 $ 159,466 Three Months Ended Three Months Ended December 29, 2017 December 30, 2016 Lease Abandonments $ 3,363 $ 17,555 Involuntary Terminations 2,184 11,332 Outside Services 8,590 1,291 Other Restructuring Related 5,212 1,563 Total $ 19,349 $ 31,741 Lease Abandonments $ 242,222 Involuntary Terminations 186,763 Outside Services 32,957 Other restructuring related 14,145 Total $ 476,087 December 29, 2017 September 29, Term Loan Facility $ 1,500,000 $ - Less: Deferred Financing Fees (3,779) - Revolving Credit Facility 1,085,159 235,000 Equipment Financing 6,553 - Total Long-term debt, net $ 2,587,933 $ 235,000 For the Three Months Ended December 29, 2017 December 30, 2016 Pass-through costs included in revenues $ 596,169 $ 672,979 For the Three Months Ended December 29, 2017 December 30, 2016 Component: Service cost $ 3,063 $ 2,216 Interest cost 16,071 8,728 Expected return on plan assets (26,004 ) (15,588 ) Amortization of previously unrecognized items 2,453 3,556 Settlement (gain) loss 3,819 43 Net periodic benefit expense (income) $ (597 ) $ (1,045 ) Cash contributions made during the first three months of fiscal 2018 $ 5,811 Cash contributions we expect to make during the remainder of fiscal 2018 21,083 Total $ 26,895 For the Three Months Ended December 29, 2017 December 30, 2016 Amortization of Defined Benefit Items: Actuarial losses $ 3,596 $ (3,556 ) Prior service cost 77 Total Before Income Tax 3,596 (3,479 ) Income Tax Benefit (125 ) 803 Total reclassifications, after-tax $ 3,471 $ (2,676 ) For the Three Months Ended December 29, 2017 December 30, 2016 Numerator for Basic and Diluted EPS: Net income $ 2,163 $ 60,536 Net income allocated to participating securities (15 ) — Net income allocated to common stock for EPS calculation $ 2,148 $ 60,536 Denominator for Basic and Diluted EPS: Weighted average basic shares 124,122 119,438 Effect of dilutive securities: Stock compensation plans 1,023 1,477 Restricted stock 886 936 Diluted shares 126,031 121,851 Shares allocated to participating securities (886 ) — Shares used for calculating diluted EPS attributable to common stock 125,145 121,851 Basic EPS $ 0.02 $ 0.50 Diluted EPS $ 0.02 $ 0.50 Amount Authorized Average Price Per Share (1) Total Shares Retired Shares Repurchased $ 500,000 $ 48.44 5,156 5,156 to $45 million. Three Months Ended December 29, 2017 December 30, 2016 Aerospace & Technology $ 289 $ 170 Buildings & Infrastructure 2,879 7,908 Industrial 435 2,524 Petroleum & Chemicals 3,363 13,584 Corporate 12,383 7,555 Total $ 19,349 $ 31,741 Balance at September 29, 2017 $ 174,343 CH2M Charges 19,349 Payments (34,226 ) Balance at December 29, 2017 $ 159,466 Three Months Ended Three Months Ended December 29, 2017 December 30, 2016 Lease Abandonments $ 3,363 $ 17,555 Involuntary Terminations 2,184 11,332 Outside Services 8,590 1,291 Other Restructuring Related 5,212 1,563 Total $ 19,349 $ 31,741 Lease Abandonments $ 242,222 Involuntary Terminations 186,763 Outside Services 32,957 Other restructuring related charges 14,145 Total $ 476,087 For the Three Months Ended December 29, 2017 December 30, 2016 Revenues $ 2,750,311 $ 2,551,604 Direct cost of contracts (2,263,131 ) (2,132,292 ) Gross Profit 487,180 419,312 Selling, general and administrative expenses (439,536 ) (330,684 ) Operating Profit 47,644 88,628 Other Income (Expense): Interest income 3,834 1,486 Interest expense (7,092 ) (3,518 ) Miscellaneous expense, net (2,470 ) (716 ) Total other expense, net (5,728 ) (2,748 ) Earnings Before Taxes 41,916 85,880 Income Tax Expense (39,355) (24,727 ) Net Earnings of the Group 2,561 61,153 Net Earnings Attributable to Noncontrolling Interests (398 ) (617 ) Net Earnings Attributable to Jacobs $ 2,163 $ 60,536 Net Earnings Per Share: Basic $ 0.02 $ 0.50 Diluted $ 0.02 $ 0.50 integration initiatives. For the Three Months Ended December 29, 2017 December 30, 2016 Revenues from External Customers: Aerospace & Technology $ 721,567 $ 577,436 Buildings & Infrastructure 658,466 580,617 Industrial 749,321 751,738 Petroleum & Chemicals 620,957 641,813 Total $ 2,750,311 $ 2,551,604 For the Three Months Ended December 29, 2017 December 30, 2016 Segment Operating Profit: Aerospace & Technology $ 65,820 $ 51,087 Buildings & Infrastructure 45,273 38,797 Industrial 38,113 25,129 Petroleum & Chemicals 27,557 23,652 Total Segment Operating Profit 176,763 138,665 Other Corporate Expenses (42,129 ) (18,296 ) Restructuring and Other Charges (19,349 ) (31,741 ) CH2M Transaction Costs (67,641 ) — Total U.S. GAAP Operating Profit 47,644 88,628 Total Other Expense (1) (5,728 ) (2,748 ) Earnings Before Taxes $ 41,916 $ 85,880 Personnel costs $ 41,222 Professional service, real estate-related, and other expenses (1) 26,675 Total $ 67,897 For the Three Months Ended December 29, 2017 December 30, 2016 Revenue $ 721,567 $ 577,436 Segment Operating Profit 65,820 51,087 For the Three Months Ended December 29, 2017 December 30, 2016 Revenue $ 658,466 $ 580,617 Segment Operating Profit 45,273 38,797 For the Three Months Ended December 29, 2017 December 30, 2016 Revenue $ 749,321 $ 751,738 Segment Operating Profit 38,113 25,129 For the Three Months Ended December 29, 2017 December 30, 2016 Revenue $ 620,957 $ 641,813 Segment Operating Profit 27,557 23,652 non-cash intangibles impairment charges. December 29, 2017 December 30, 2016 Aerospace & Technology $ 6,323.6 $ 5,135.4 Buildings & Infrastructure 5,355.9 5,151.6 Industrial 2,619.6 2,493.7 Petroleum & Chemicals 5,281.4 5,368.8 CH2M 6,626.3 - Total $ 26,206.8 $ 18,149.4 our remaining performance obligations. co $7.4 million. borrowings denominated in U.S. dollars under the Revolving Credit Facility and the Term Loan Additionally, our Revolving Credit Facility, Term Loan Facilities and our 5.90% Bonds have interest rates subject to potential increases relating to certain ESG metrics as stipulated in the related agreements and as discussed in Note 12- 2024. fiscal 2024 under the 2023 Share Repurchase Authorization follows: June 7, 2024. /s/ Executive Vice President (Principal Financial Officer) Date: February ENGINEERING GROUPSOLUTIONS INC.Page No. 334567253637383838383838Item 6. Item 6.404223FINANCIALFINANCIAL INFORMATIONItem 1.December 29, 2023 December 29, 2023 September 29, 2023 (Unaudited) ASSETS ASSETS Current Assets: Current Assets: Cash and cash equivalents Cash and cash equivalents Receivables and contract assets Total current assets Total current assets Goodwill Goodwill Deferred income tax assets Operating lease right-of-use assets $ Current Liabilities: Current Liabilities: Short-term debt Short-term debt Short-term debt Operating lease liability Contract liabilities Long-term debt Liabilities relating to defined benefit pension and retirement plans Deferred income tax liabilities Long-term operating lease liability Other deferred liabilities Commitments and Contingencies Redeemable Noncontrolling interests 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 Common stock, $1 par value, authorized - 240,000,000 shares; issued and outstanding - 125,599,058 shares and 125,976,998 shares as of December 29, 2023 and September 29, 2023, respectively $
See the accompanying Notes to Consolidated Financial Statements – Unaudited.35For the Three Months Ended December 29, 2023 December 30, 2022 Revenues $ 4,159,225 $ 3,798,668 Direct cost of contracts (3,308,687) (2,983,955) Gross profit 850,538 814,713 Selling, general and administrative expenses (646,475) (576,908) Operating Profit 204,063 237,805 Other Income (Expense): Interest income 8,233 3,007 Interest expense (43,352) (40,077) Miscellaneous expense (3,195) (3,254) Total other expense, net (38,314) (40,324) Earnings from Continuing Operations Before Taxes 165,749 197,481 Income Tax benefit (expense) from Continuing Operations 16,279 (50,103) Net Earnings of the Group from Continuing Operations 182,028 147,378 Net Loss of the Group from Discontinued Operations (574) (708) Net Earnings of the Group 181,454 146,670 Net Earnings Attributable to Noncontrolling Interests from Continuing Operations (7,226) (7,031) Net Earnings Attributable to Redeemable Noncontrolling interests (2,618) (3,992) Net Earnings Attributable to Jacobs from Continuing Operations 172,184 136,355 Net Earnings Attributable to Jacobs $ 171,610 $ 135,647 Net Earnings Per Share: Basic Net Earnings from Continuing Operations Per Share $ 1.38 $ 1.08 Basic Net Loss from Discontinued Operations Per Share $ — $ (0.01) Basic Earnings Per Share $ 1.37 $ 1.07 Diluted Net Earnings from Continuing Operations Per Share $ 1.37 $ 1.07 Diluted Net Loss from Discontinued Operations Per Share $ — $ (0.01) Diluted Earnings Per Share $ 1.37 $ 1.06 For the Three Months Ended December 29, 2023 December 30, 2022 Net Earnings of the Group $ 181,454 $ 146,670 Other Comprehensive Income: Foreign currency translation adjustment 108,048 165,335 Change in cash flow hedges (27,666) (10,144) Change in pension plan liabilities (10,753) (22,266) Other comprehensive income before taxes 69,629 132,925 Income Tax Benefit (Expense): Foreign currency translation adjustment — (6,609) Cash flow hedges 7,196 3,270 Change in pension plan liabilities (462) (308) Income Tax Benefit (Expense): 6,734 (3,647) Net other comprehensive income 76,363 129,278 Net Comprehensive Income of the Group 257,817 275,948 Net Earnings Attributable to Noncontrolling Interests (7,226) (7,031) Net Earnings Attributable to Redeemable Noncontrolling interests (2,618) (3,992) Net Comprehensive Income Attributable to Jacobs $ 247,973 $ 264,925 20172023 and December 30, 2016thousands, except per share information)Common Stock Additional Paid-in Capital Retained Earnings Accumulated Other Comprehensive Income (Loss) Total Jacobs Stockholders’ Equity Noncontrolling Interests Total Group Stockholders’ Equity Balances at September 30, 2022 $ 127,393 $ 2,682,009 $ 4,225,784 $ (975,130) $ 6,060,056 $ 44,336 $ 6,104,392 Net earnings — — 135,647 — 135,647 7,031 142,678 Foreign currency translation adjustments, net of deferred taxes of $6,609 — — — 158,726 158,726 — 158,726 Pension plan liability, net of deferred taxes of $308 — — — (22,574) (22,574) — (22,574) Change in cash flow hedges, net of deferred taxes of $(3,270) — — — (6,874) (6,874) — (6,874) Dividends — — (874) — (874) — (874) Redeemable Noncontrolling interests redemption value adjustment — — (23,317) — (23,317) — (23,317) Repurchase and issuance of redeemable noncontrolling interests — — 11,337 — 11,337 — 11,337 Noncontrolling interests - distributions and other — — — — — (1,873) (1,873) Stock based compensation — 20,231 — — 20,231 — 20,231 Issuances of equity securities including shares withheld for taxes 514 (3,762) (4,484) — (7,732) — (7,732) Repurchases of equity securities (1,238) (26,057) (113,227) — (140,522) — (140,522) Balances at December 30, 2022 $ 126,669 $ 2,672,421 $ 4,230,866 $ (845,852) $ 6,184,104 $ 49,494 $ 6,233,598 Balances at September 29, 2023 $ 125,977 $ 2,735,325 $ 4,542,872 $ (857,954) $ 6,546,220 $ 53,862 $ 6,600,082 Net earnings — — 171,610 — 171,610 7,226 178,836 Foreign currency translation adjustments — — — 108,048 108,048 — 108,048 Pension plan liability, net of deferred taxes of $462 — — — (11,215) (11,215) — (11,215) Change in cash flow hedges, net of deferred taxes of $(7,196) — — — (20,470) (20,470) — (20,470) Dividends — — (361) — (361) — (361) Redeemable Noncontrolling interests redemption value adjustment — — (25,718) — (25,718) — (25,718) Repurchase and issuance of redeemable noncontrolling interests — — 1,898 — 1,898 — 1,898 Noncontrolling interests - distributions and other — — — — — (4,512) (4,512) Stock based compensation — 19,310 — — 19,310 — 19,310 Issuances of equity securities including shares withheld for taxes 411 (8,093) (3,350) — (11,032) — (11,032) Repurchases of equity securities (789) (17,126) (82,101) — (100,016) — (100,016) Balances at December 29, 2023 $ 125,599 $ 2,729,416 $ 4,604,850 $ (781,591) $ 6,678,274 $ 56,576 $ 6,734,850 48COMPREHENSIVE INCOME (LOSS)20172023 and December 30, 2016For the Three Months Ended December 29, 2023 December 30, 2022 Cash Flows from Operating Activities: Net earnings attributable to the Group $ 181,454 $ 146,670 Adjustments to reconcile net earnings to net cash flows provided by operations: Depreciation and amortization: Property, equipment and improvements 25,169 27,979 Intangible assets 51,119 49,773 Stock based compensation 19,310 20,231 Equity in earnings of operating ventures, net of return on capital distributions 1,870 2,613 Loss on disposals of assets, net 608 241 Impairment of long-lived assets and equity method investment — 27,142 Deferred income taxes (58,239) 13,797 Changes in assets and liabilities, excluding the effects of businesses acquired: Receivables and contract assets, net of contract liabilities 102,705 127,144 Prepaid expenses and other current assets 50,216 8,219 Miscellaneous other assets 28,385 42,578 Accounts payable (35,843) (51,669) Accrued liabilities 37,584 (127,043) Other deferred liabilities (1,665) 8,462 Other, net 15,688 6,160 Net cash provided by operating activities 418,361 302,297 Cash Flows from Investing Activities: Additions to property and equipment (17,306) (32,187) Disposals of property and equipment and other assets 43 8 Capital contributions to equity investees, net of return of capital distributions 1,266 384 Acquisitions of businesses, net of cash acquired — (16,943) Net cash used for investing activities (15,997) (48,738) Cash Flows from Financing Activities: Proceeds from long-term borrowings 540,401 1,282,000 Repayments of long-term borrowings (567,752) (1,289,421) Repayments of short-term borrowings (6,262) — Debt issuance costs (1,606) — Proceeds from issuances of common stock 11,355 14,798 Common stock repurchases (100,016) (140,522) Taxes paid on vested restricted stock (22,387) (22,530) Cash dividends to shareholders (33,366) (29,811) Net dividends associated with noncontrolling interests (4,708) (2,307) Repurchase of redeemable noncontrolling interests (24,360) (58,353) Net cash used for financing activities (208,701) (246,146) Effect of Exchange Rate Changes 34,148 51,806 Net Increase in Cash and Cash Equivalents and Restricted Cash 227,811 59,219 Cash and Cash Equivalents, including Restricted Cash, at the Beginning of the Period 929,445 1,154,207 Cash and Cash Equivalents, including Restricted Cash, at the End of the Period $ 1,157,256 $ 1,213,426 59ENGINEERING GROUPSOLUTIONS INC. AND SUBSIDIARIESCONSOLIDATED STATEMENTS OF CASH FLOWSFor the Three Months Ended December 29, 2017 and December 30, 2016(In thousands)(Unaudited)See the accompanying Notes to Consolidated Financial Statements – Unaudited.Page 6JACOBS ENGINEERING GROUP INC. AND SUBSIDIARIESJACOBS ENGINEERING GROUP INC. AND SUBSIDIARIES – UNAUDITEDDecember 29, 20171.Basis of PresentationEngineering GroupSolutions Inc. and its predecessors;Engineering GroupSolutions Inc. and its consolidated subsidiaries; and20172023 (“20172023 Form 10-K”).2017,2023, and for the three-month periodthree months ended December 29, 2017.Please referNote 17 Definitionsspin-off and combine our Critical Mission Solutions ("CMS") and portions of Notesour Divergent Solutions business, including Cyber & Intelligence (the "Separated Businesses") with Amentum Parent Holdings LLC ("Amentum"), in a Reverse Morris Trust transaction intended to Consolidated Financial Statements includedbe tax-free to Jacobs’ shareholders for U.S. federal income tax purposes (hereinafter referred to as the “Separation Transaction”). The Separation Transaction, which is expected to close in fiscal year 2024, is subject to regulatory approvals and other customary closing conditions.2017 Form 10-Kunaudited Consolidated Statements of Earnings as discontinued operations for all periods presented and all of the definitionsECR business to be sold under the terms of certain terms used herein.the ECR sale had been conveyed to Worley and as such, no amounts remain held for sale.2.Use of Estimates and Assumptionsliabilities,liabilities; the revenues and expenses reported for the periods covered by the accompanying consolidated financial statements,statements; and certain amounts disclosed in these Notes to the Consolidated Financial Statements. Although such estimates and assumptions are based on management’s most recent assessment of the underlying facts and circumstances utilizing the most current information available and past experience, actual results could differ significantly from those estimates and assumptions. Our estimates, judgments and assumptions are evaluated periodically and adjusted accordingly.2 2- Significant Accounting Policies of Notes to Consolidated Financial Statements included in our 20172023 Form 10-K for a discussion of theother significant estimates and assumptions affecting our consolidated financial statements.3.Fair Value and Fair Value Measurements“fairfair 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:Page 7JACOBS ENGINEERING GROUP INC. AND SUBSIDIARIES2 2- Significant Accounting Policies of Notes to Consolidated Financial Statements included in our 20172023 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.notes payableshort-term debt approximate Fair Valuefair value due to the short-term nature of these instruments. Similarly, we believe the carrying value of long-term debt also approximates Fair Value based on the interest rates and scheduled maturities applicable to the outstanding borrowings.4.New Accounting Pronouncements Revenue RecognitionFrom time to time, the Financial Accounting Standards Board (“FASB”) issues accounting standards updates (each being an “ASU”) to its Accounting Standards Codification (“ASC”), which constitutes the primary source of U.S. GAAP. The Company regularly monitors ASUs as they are issued and considers their applicability to its business. All ASUs applicable to the Company are adopted by the due date and in the manner prescribed by the FASB.In May 2014, the FASB issued ASU No. 2014-09 Revenue from Contracts with Customers. The new guidance provided by ASU 2014-09 is intended to remove inconsistencies and perceived weaknesses in the existing revenue requirements, provideSee Note 12- more robust framework for addressing revenue issues, improve comparability, provide more useful information and simplify the preparation of financial statements. ASU 2014-09 was initially effective for annual and interim reporting periods beginning after December 15, 2016. On July 9, 2015, the FASB approved a one-year deferral of the effective date of this standard. The revised effective date for the standard is for annual reporting periods beginning after December 15, 2017 and interim periods therein. The FASB also approved changes allowing for early adoption of the standard as of the original effective date. The Company’s adoption activities will be performed over three phases: (i) assessment, (ii) design, and (iii) implementation. Our assessment phase is complete. We have established a cross-functional team to implement ASU 2014-09. We have identified and are in the process of implementing changes to our systems, processes and internal controls to meet the standard’s updated reporting and disclosure requirements. The following are the potential significant differences identified during the assessment phase:Performance ObligationsUnder current U.S. GAAP, the Company typically considers engineering and construction services as separate performance obligations. Under ASU 2014-09, the Company has determined, in most instances, it is likely that engineering and construction services will be required to be combined into a single performance obligation. In these instances, this will likely change the timing and pattern of revenue recognition.Contract ModificationsIn many instances, the Company enters into contracts for construction services subsequent to entering in to engineering services contracts (“Phased Projects”). Under ASU 2014-09, the construction services contract may be deemed to modify the engineering contract, or may be required to be combined with the engineering contract. This modification or combination of contracts may result in a cumulative catchup adjustment, which will have an immediate impact on the Company’s results of operations in the period the contract combination or modification occurs. In addition, it will change the timing and pattern of revenue recognition after the period the contracts have been combined or modified. The Company analyzed its current Phased Projects and concluded that a significant number of these arrangements would be combined under ASU 2014-09.The Company currently intends to adopt the new standard using the Modified Retrospective application. This standard could have a significant impact on the Company’s Consolidated Financial Statements and an administrative impact on its operations and will depend on the magnitude of the items discussed above. The Company will continue to evaluate the impact through the design and implementation phases. Lease AccountingIn February 2016, the FASB issued ASU 2016-02 Leases. ASU 2016-02 requires lessees to recognize assets and liabilities for most leases. ASU 2016-02 is effective for public entity financial statements for annual periods beginning after December 15, 2018, and interim periods within those annual periods. Early adoption is permitted, including adoption in an interim period. The guidance must be adopted using a modified retrospective approach for leases that exist or are entered into after the beginning of the earliest comparative period in the financial statements. The Company is evaluating the impact of the new guidance on its consolidatedPage 8JACOBS ENGINEERING GROUP INC. AND SUBSIDIARIESfinancial statements. This standard could have a significant administrative impact on its operations, and the Company will further assess the impact through its implementation program.Hedge AccountingIn August 2017, the FASB issued ASU No. 2017-12, Derivatives and Hedging (Topic 815): Targeted Improvements to Accounting for Hedging Activities. ASU No. 2017-12 makes targeted improvements to the current guidance on accounting for hedges so that it provides a better view of an entity’s risk management activities and how the entity’s hedging strategies are being used to manage risk. In addition, ASU No. 2017-12 further simplifies the application of certain aspects of hedge accounting, including the measurement of hedge effectiveness. The revised guidance becomes effective for fiscal years beginning after December 15, 2018. The Company is evaluating the impact of the new guidance on its consolidated financial statements. It is not expected that the updated guidance will have a significant impact on the Company’s consolidated financial statements.5.Business CombinationsOn December 15, 2017, the Company completed the acquisition of CH2M HILL Companies, Ltd. (CH2M), an international provider of engineering, construction, and technical services, by acquiring 100% of the outstanding shares of CH2M common stock and preferred stock. The purpose of the acquisition is to further diversify the Company’s presence in the water, nuclear and environmental remediation sectors and to further the Company’s profitable growth strategy. The Company paid total consideration of approximately $1.8 billion in cash and issued approximately $1.4 billion of Jacobs’ common stock, or 20.7 million shares, to the former stockholders and certain equity award holders of CH2M. In connection with the acquisition, the Company also assumed CH2M’s revolving credit facility and second lien notes, including a $20 million prepayment penalty, which totaled approximately $700 million of long-term debt. Immediately following the effective time of the acquisition, the Company repaid CH2M’s revolving credit facility and second lien notes including the related prepayment penalty.The following summarizes the estimated fair values of CH2M assets acquired and liabilities assumed as of the acquisition date (in millions):Page 9JACOBS ENGINEERING GROUP INC. AND SUBSIDIARIESCustomer relationships, contracts and backlog represent the fair value of existing contracts, the underlying customer relationships and backlog of consolidated subsidiaries and have lives ranging from 5 to 13 years (weighted average life of approximately 8 years). The fair value of the acquired trade name has an estimated life of three years. Other intangible assets and liabilities primarily consistdiscussion of the fair value of office leases and have a weighted average life of approximately 12 years.Estimated fairlong-term debt.the CH2M acquisitionour business combinations and goodwill allocations related to our segment realignment are made primarily using Level 3 inputs including discounted cash flow techniques. Fair value for the identified intangible assets is generally estimated using inputs primarily fromfor the income approach which include the use of bothusing the multiple period excess earnings method and the relief from royalties method. The significant assumptions used in estimating fair value include (i) revenue projections of the estimated life the asset will contribute to cash flows, such asbusiness, including profitability, (ii) attrition rate of customers or remaining contractual terms, (ii) profitabilityrates and (iii) the estimated discount rate that reflectreflects the level of risk associated with receiving future cash flows. The estimated fair value of land has been determined using the market approach, which arrives at an indication of value by comparing the site being valued to sites that have been recently acquired in arm’s-length transactions. Personal property assets with an active and identifiable secondary market are valued using the market approach. Buildings and land improvements are valued using the cost approach using a direct cost model built on estimates of replacement cost. 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.Other deferred liabilities were comprised of pensions and other long-term employee related liabilities totaling approximately $291.0 million. purchase price allocation is based upon preliminary information and is subject to change when additional information is obtained. Goodwill recognized largely results from a substantial assembled workforce, which does not qualify for separate recognition, as well as expected future synergies from combining operations. Nonefair value of the goodwill recognizedcontingent 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.deductible for tax purposes.applied prospectively; however, retrospective application is also permitted. ASU 2023-09 will be effective in the Company's annual fiscal 2026 period. The Company has not completedidentified and is implementing changes to processes and internal controls to meet the standard’s updated reporting and disclosure requirements.final assessmentcomposition for other segment items to reconcile to segment profit or loss, and the title and position of the fair values of purchased receivables, intangible assets and liabilities, property and equipment, tax balances, contingent liabilities, long-term leases or acquired contracts.entity’s CODM. The final purchase price allocation will resultamendments in adjustments to certain assets and liabilities, includingthis update also expand the residual amount allocated to goodwill. See Note 18, Commitments and Contingencies, relating to CH2M contingencies.From the acquisition date ofinterim segment disclosure requirements. ASU 2023-07 is effective for annual periods beginning after December 15, 2017 through2023 and interim periods within fiscal years beginning after December 15, 2024. Early adoption is permitted and the endamendments in this update are required to be applied on a retrospective basis. The Company is evaluating the impact of this guidance on its consolidated financial statements and related disclosures.first fiscal quarterSecurities and Exchange Commission ("SEC"). The Financial Accounting Standards Board issued the standard to introduce changes to US GAAP that originate in either SEC Regulation S-X or S-K, which are rules about the form and content of 2018, CH2M contributed approximately $131 million in revenue and $15.7 million in net earnings included in the accompanying consolidated statement of earnings. Included in these results were approximately $30 million in pre-tax restructuring and transaction costs.Transaction costs associatedfinancial reports filed with the CH2M acquisitionSEC. The provisions of the standard are contingent upon instances where the SEC removes the related disclosure provisions from Regulation S-X and S-K. The Company does not expect that the application of this standard will have a material impact on our consolidated financial statements and related disclosures.accompanying consolidated statements of operationsMiddle 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 18- Segment Information for additional information on how we disaggregate our revenues by reportable segment.2017 are comprised2023 and December 30, 2022 (in thousands):Three Months Ended December 29, 2023 December 30, 2022 Revenues: United States $ 2,798,055 $ 2,536,114 Europe 925,197 854,734 Canada 63,375 61,829 Asia 30,940 34,824 India 35,743 40,344 Australia and New Zealand 173,771 161,040 Middle East and Africa 132,144 109,783 Total $ 4,159,225 $ 3,798,668 following (in millions):total dollar value of work to be performed on contracts awarded and in progress. The Company had approximately $17.7 billion in remaining performance obligations as of December 29, 2023. The Company expects to recognize approximately 56% of its remaining performance obligations into revenue within the next twelve months and the remaining 44% thereafter. The majority of the remaining performance obligations after the first twelve months are expected to be recognized over a four year period.presents summarized unaudited pro forma operating results assuming thattable reconciles the Company had acquired CH2M at October 1, 2016. These pro forma operating results are presenteddenominator used to compute basic EPS to the denominator used to compute diluted EPS for illustrative purposes onlythe three months ended December 29, 2023 and areDecember 30, 2022 (in thousands):Three Months Ended December 29, 2023 December 30, 2022 Numerator for Basic and Diluted EPS: Net earnings attributable to Jacobs from continuing operations $ 172,184 $ 136,355 1,766 — Net earnings from continuing operations allocated to common stock for EPS calculation $ 173,950 $ 136,355 Net loss from discontinued operations allocated to common stock for EPS calculation $ (574) $ (708) Net earnings allocated to common stock for EPS calculation $ 173,376 $ 135,647 Denominator for Basic and Diluted EPS: Shares used for calculating basic EPS attributable to common stock 126,105 126,824 Effect of dilutive securities: Stock compensation plans 708 672 Shares used for calculating diluted EPS attributable to common stock 126,813 127,496 Net Earnings Per Share: Basic Net Earnings from Continuing Operations Per Share $ 1.38 $ 1.08 Basic Net Loss from Discontinued Operations Per Share $ — $ (0.01) Basic Earnings Per Share $ 1.37 $ 1.07 Diluted Net Earnings from Continuing Operations Per Share $ 1.37 $ 1.07 Diluted Net Loss from Discontinued Operations Per Share $ — $ (0.01) Diluted Earnings Per Share $ 1.37 $ 1.06 indicative of the operating results that would have been achieved had the related events occurred (in millions):add due to rounding.
2017
2016On January 16, 2020, the Company's Board of Directors authorized a share repurchase program of up to $1.0 billion of the Company's common stock (the "2020 Repurchase Authorization"). The 2020 Repurchase Authorization expired on January 15, 2023. On January 25, 2023, the Company's Board of Directors authorized an incremental share repurchase program of up to $1.0 billion of the Company's common stock, to expire on January 25, 2026 (the "2023 Repurchase Authorization"). At December 29, 2023, the Company has $774.8 million remaining under the 2023 Repurchase Authorization. Amount Authorized
(2023 Repurchase Authorization)Average Price Per Share (1) Total Shares Retired Shares Repurchased $1,000,000,000 $126.80 788,758 788,758 1IncludedOur 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 unaudited pro forma operating results are charges relating to transaction expenses, severance expenseavailability and costs of financing, currency fluctuations, the market price of the Company's common stock, other uses of capital and other items that are removed from the three months ended December 29, 2017 and are reflected in the three months ended December 30, 2016 due to the assumed timing of the transaction. Also, income tax expense (benefit) for the three month pro forma periods ended December 29, 2017 and December 30, 2016 were $67.4 million and ($78.6) million, respectively.factors.Declaration Date Record Date Payment Date Cash Amount (per share) September 28, 2023 October 27, 2023 November 9, 2023 $0.26 July 6, 2023 July 28, 2023 August 25, 2023 $0.26 April 27, 2023 May 26, 2023 June 23, 2023 $0.26 January 25, 2023 February 24, 2023 March 24, 2023 $0.26 September 15, 2022 September 30, 2022 October 28, 2022 $0.23 1015ENGINEERING GROUPSOLUTIONS INC. AND SUBSIDIARIESby reportable segment appearing in the accompanying Consolidated Balance Sheets at December 29, 20172023 and September 29, 2017 were2023 was as follows (in millions)thousands):Critical Mission Solutions People & Places Solutions Divergent Solutions PA Consulting Total Balance September 29, 2023 $ 2,244,985 $ 3,208,193 $ 595,712 $ 1,294,636 $ 7,343,526 Foreign currency translation and other 6,530 8,954 1,733 60,655 77,872 Balance December 29, 2023 $ 2,251,515 $ 3,217,147 $ 597,445 $ 1,355,291 $ 7,421,398 During the preparation of the Form 10-Q for the first fiscal quarter of 2017, the Company determined that its prior financial statements contained immaterial misstatements related to incorrect translation of the Company’s non-U.S. goodwill balances from local currency to the U.S. Dollar reporting currency. It was determined that the Company had incorrectly used historical translation rates for the U.S. Dollar in place at the time of the Company’s recording of its foreign goodwill balances rather than using current translation rates at each balance sheet date in accordance with U.S. GAAP. The error dated back to the time of our initial reporting of non-US goodwill balances in the late 1990s and affected our historical quarterly and annual reporting periods through the first fiscal quarter of 2017. Goodwill and accumulated other comprehensive income in the Company’s September 30, 2016 consolidated balance sheet (which have not been adjusted) were each overstated by $209.9 million and was corrected in the first fiscal quarter of 2017 foreign currency translation adjustment. Consequently, the correction was a direct component of the overall translation adjustment amount of $287.5 million that was reported for the three months ended December 30, 2016. These adjustments had no impact on the Company’s Consolidated Statements of Earnings or Cash Flows.20172023 and September 29, 20172023 (in thousands):Customer Relationships, Contracts and Backlog Developed Technology Trade Names Total Balance September 29, 2023 $ 1,022,401 $ 74,791 $ 174,751 $ 1,271,943 Amortization (44,602) (3,971) (2,546) (51,119) Foreign currency translation and other 25,655 244 21,606 47,505 Balance December 29, 2023 $ 1,003,454 $ 71,064 $ 193,811 $ 1,268,329 In addition, we acquired $9.6 million in lease intangible liabilities in connection with the CH2M acquisition.20182024 and for the succeeding years.Fiscal Year (in millions) 2024 $ 158.5 2025 211.0 2026 187.8 2027 155.3 2028 144.4 Thereafter 411.3 Total $ 1,268.3 December 29, 2023 September 29, 2023 Components of receivables and contract assets: Amounts billed, net $ 1,546,936 $ 1,457,334 Unbilled receivables and other 1,443,568 1,442,486 Contract assets 686,004 658,986 Total receivables and contract assets, net $ 3,676,508 $ 3,558,806 Other information about receivables: Amounts due from the United States federal government, included above, net of contract liabilities $ 789,949 $ 802,566 below include preliminary amortization estimatesinvoiced 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.Change in Net Pension Obligation Total Balance at September 29, 2023 $ (325,692) $ (635,937) $ 103,675 $ (857,954) Other comprehensive (loss) income (11,215) 108,048 (10,785) 86,048 Reclassifications from accumulated other comprehensive income (loss) — — (9,685) (9,685) Balance at December 29, 2023 $ (336,907) $ (527,889) $ 83,205 $ (781,591) CH2M opening balance sheet fairthree months ended December 29, 2023 and December 30, 2022 are $(37.7) million and $(74.9) million, respectively in unrealized gains (losses) on long-term foreign currency denominated intercompany loans not anticipated to be settled in the foreseeable future.Interest Rate Maturity December 29, 2023 September 29, 2023 Revolving Credit Facility Benchmark + applicable margin (1) (2) February 2028 $ — $ 10,000 2021 Term Loan Facility - USD Portion Benchmark + applicable margin (1) (3) February 2026 120,000 120,000 2021 Term Loan Facility - GBP Portion Benchmark + applicable margin (1) (3) September 2025 829,075 794,170 2020 Term Loan Facility Benchmark + applicable margin (1) (4) March 2025 (6) 852,210 854,246 Fixed-rate: 5.9% Bonds, due 2033 5.9% (5) March 2033 500,000 500,000 6.35% Bonds, due 2028 6.35% August 2028 600,000 600,000 Less: Current Portion (6) (52,444) (51,773) Less: Deferred Financing Fees (13,961) (13,172) Total Long-term debt, net $ 2,834,880 $ 2,813,471 are still preliminaryis 15 days prior to the First Step Up Date that the Percentage of Gender Diversity Performance Target (as defined in the First Supplemental Indenture (as defined below)) has been satisfied and receives a related assurance letter verifying such compliance. From and including September 1, 2030 (the “Second Step Up Date”), the interest rate payable on the 5.90% Bonds will be increased by 12.5 basis points to (x) 6.150% per annum if the First Step Up Interest Rate was in effect immediately prior to the Second Step Up Date or (y) 6.025% per annum if the initial interest rate was in effect immediately prior to the Second Step Up Date, unless the Company notifies the Trustee on or before the date that is 15 days prior to the Second Step Up Date that the GHG Emissions Performance Target (as defined in the First Supplemental Indenture) has been satisfied and receives a related assurance letter verifying such compliance.change.fees based on the Company’s Consolidated Leverage Ratio and Debt Rating, whichever is more favorable to the Company.1120ENGINEERING GROUPSOLUTIONS INC. AND SUBSIDIARIESThree Months Ended December 29, 2023 December 30, 2022 Lease expense Operating lease expense $ 34,200 $ 35,282 Variable lease expense 9,337 9,346 Sublease income (4,711) (4,406) Total lease expense $ 38,826 $ 40,222 Three Months Ended December 29, 2023 December 30, 2022 Cash paid for amounts included in the measurements of lease liabilities $ 47,413 $ 45,770 Right-of-use assets obtained in exchange for new operating lease liabilities $ 8,384 $ 29,801 Weighted average remaining lease term - operating leases 5.8 years 6.2 years Weighted average discount rate - operating leases 3.4% 3.0% Fiscal Year Operating Leases 2024 $ 131,023 2025 146,078 2026 122,727 2027 100,231 2028 82,567 Thereafter 160,807 743,433 Less Interest (68,291) $ 675,142 Three Months Ended December 29, 2023 December 30, 2022 Component: Service cost $ 2,261 $ 1,748 Interest cost 21,560 20,233 Expected return on plan assets (23,726) (21,091) Amortization of previously unrecognized items 1,949 1,304 Total net periodic pension benefit expense recognized $ 2,044 $ 2,194 7.Cash contributions made during the first three months of fiscal 2024 Segment Information5,297 Cash contributions projected for the remainder of fiscal 2024 13,984 Total $ 19,281 organizedas follows (in thousands):Balance at September 29, 2023 $ 632,979 Accrued Preferred Dividend to Preference Shareholders 19,285 Attribution of Preferred Dividend to Common Shareholders (19,285) Net earnings attributable to redeemable noncontrolling interests to Common Shareholders 2,618 Redeemable Noncontrolling interests redemption value adjustment 25,718 Repurchase of redeemable noncontrolling interests (26,258) Cumulative translation adjustment and other 19,019 Balance at December 29, 2023 $ 654,076 Three Months Ended December 29, 2023 December 30, 2022 Critical Mission Solutions $ 2,163 $ 2,212 People & Places Solutions 8,129 27,317 Divergent Solutions 900 1,581 PA Consulting 1,175 — Corporate 29,002 3,333 Total $ 41,369 $ 34,443 Amounts included in: $ 41,369 $ 35,072 Other Income, net — (629) $ 41,369 $ 34,443 Balance at September 29, 2023 $ 37,318 41,320 Payments and other (46,145) Balance at December 29, 2023 $ 32,493 Three Months Ended December 29, 2023 December 30, 2022 Lease Abandonments and Impairments $ 49 $ 26,831 Voluntary and Involuntary Terminations 11,728 6,570 24,983 675 4,609 367 Total $ 41,369 $ 34,443 Lease Abandonments and Impairments $ 432,773 Voluntary and Involuntary Terminations 180,044 Outside Services 370,673 Other 200,543 Total $ 1,184,033 (“LOBs”("LOBs"): Critical Mission Solutions ("CMS") and People & Places Solutions ("P&PS"), which also serve as the Company’s operating segments: Aerospace & Technology, Buildings & Infrastructure, Industrialits business unit Divergent Solutions ("DVS") and Petroleum & Chemicals. its majority investment in PA Consulting. LOB leadership and internal reporting structures report to the Chief Executive Officer who is also the Chief Operating Decision Maker (“CODM”), and enable the CODM tocan 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 in accordance with ASC 350, Intangibles-Goodwill and Other.the currentthis organization, each LOB has a president that reports directly to the CODM. In addition, the sales function which had been managed centrally for many years, is managed on an LOB basis,by segment, and accordingly, the associated cost is embedded in the new segments and reported to the respective LOB presidents.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 LOBsegment 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, (“MIP”) and the expense associated with the Jacobs Engineering Group Inc. 1999 Stock Incentive Plan, (“1999 SIP”which was amended and restated in the second quarter of 2023 and is now referred to as the Jacobs 2023 Stock Incentive Plan (the "2023 SIP") have likewise been charged to the LOBssegments except for those amounts determined to relate to the business as a whole (which amounts remain in corporate’s results of operations)other corporate expenses).LOBsegment 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 LOBsoperating segments using segment operating profit, which is defined as margin less “corporate charges” (e.g., the allocated amounts described above). The Company incurs certain Selling, General and Administrative costs (“SG&A”) that relate to its business as a whole which are not allocated to the LOBs.On December 15, 2017, the Company completed the acquisition of CH2M. For purposes of the Company’s first quarter fiscal 2018 segment reporting, the operating financial information of CH2M has been categorized within the Company’s existing LOB business structure, with its sales and operating profit results for the time period during which CH2M has been under the ownership of the Company (December 15, 2017 - December 29, 2017) being allocated to the Company’s A&T, B&I and P&C lines of business under a transitional business organization structure. Additionally, the preliminary purchase accounting for the acquisition, including opening balance sheet fair value determinations as well as final segment categorizations are still in process.and expenses relating to the Restructuring and other charges (as defined in Note 16- Restructuring and CH2MOther Charges) and transaction and integration costs (in thousands).1231For the Three Months Ended December 29, 2023 December 30, 2022 Revenues from External Customers: Critical Mission Solutions $ 1,128,603 $ 1,075,175 People & Places Solutions 2,470,441 2,226,985 Divergent Solutions 254,180 214,465 PA Consulting 306,001 282,043 Total $ 4,159,225 $ 3,798,668 For the Three Months Ended December 29, 2023 December 30, 2022 Segment Operating Profit: Critical Mission Solutions $ 93,407 $ 82,220 People & Places Solutions 224,998 226,619 Divergent Solutions (1) 7,581 11,967 PA Consulting 54,455 51,027 Total Segment Operating Profit 380,441 371,833 Other Corporate Expenses (2) (121,060) (93,686) Restructuring, Transaction and Other Charges (3) (55,318) (40,342) Total U.S. GAAP Operating Profit 204,063 237,805 Total Other Expense, net (38,314) (40,324) Earnings from Continuing Operations Before Taxes $ 165,749 $ 197,481 (1) (2) Other corporate expenses included intangibles amortization of deferred financing fees related to the CH2M acquisition of $256 thousand for the three-month period ended December 29, 2017.During the fourth fiscal quarter of 2017, the Company implemented certain restructuring activities (primarily severance related activities) associated with the Company’s announced definitive agreement to acquire CH2M. Following the closing of the CH2M acquisition, these activities have continued into the first fiscal quarter of 2018 and include associated charges for professional services, personnel costs, severance and costs associated with co-locating Jacobs and CH2M offices, amounting to approximately $19.3$51.1 million and $49.8 million in pre-tax charges during first quarter ended December 29, 2017. These activities are expected to continue through 2019. These activities are not expected to involve the exit of any service types or client end-markets.Transaction costs associated with the CH2M acquisition in the accompanying consolidated statements of operations for the three months ended December 29, 2017 are comprised of the following (in millions):(1)Includes deferred financing fees related to the CH2M acquisition of $256 thousand for the three months endingended December 29, 2017.(3) The three months ended December 29, 2023 included $40.1 million in restructuring and $11.0 million of transaction charges, mainly relating to the Separation Transaction (primarily professional services and employee separation costs). Included in the three months ended December 30, 2022 were mainly $27.1 million in restructuring and other charges associated mainly with real estate impairments with the remainder associated with other miscellaneous separation and transaction professional services costs from the prior year. “otherother corporate items”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 the Management Incentive Plan and the 1999 SIPour 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 purchased 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, “otherother corporate items” includesexpenses 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 in the opinion of management, that such adjustments are not indicative of the performance of the related LOBLOB.thereforeAnalysis of Financial Condition and Results of Operations.be attributedplace 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 uncertainties as to the LOB.provideundertake 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").broad rangetalent force of technical,approximately 60,000, Jacobs provides a full spectrum of professional and construction services including consulting, technical, engineering, scientific and project delivery for the government and private sector.architectural services; construction of specialized technical facilities and systems; environmental remediation; specialized training; robotics and automation; and other highly technical consulting solutions. We deliver these capabilities for government agencies as well as commercial clients in the U.S. and international markets.services;at-risk delivery services in targeted markets. Increasingly, we leverage our data science and technology-enabled expertise with our core capabilities to deliver positive and enduring solutions for the clients and communities we serve.maintenance services;maintenance. We’ve also been selected by the U.K. Department for Transport to provide technical and process, scientific,commercial advice on its portfolio of rail and systems consulting services. We provide our services through officesother transport mode agreements, major projects and subsidiaries located primarilyprograms, and its policy and strategic work in North America, South America, Europe, the Middle East, India, Australia, Africa, and Asia. We provide our services under cost-reimbursable and fixed-price contracts.1336JACOBS ENGINEERING GROUP INC. AND SUBSIDIARIESThe following tables present total services revenues for each reportable segment20172023 and December 30, 2016 (in thousands).20228.ReceivablesThe following table presents the components of receivables appearing (in the accompanying Consolidated Balance Sheets atthousands, except per share information)For the Three Months Ended December 29, 2023 December 30, 2022 Revenues $ 4,159,225 $ 3,798,668 Direct cost of contracts (3,308,687) (2,983,955) Gross profit 850,538 814,713 Selling, general and administrative expenses (646,475) (576,908) Operating Profit 204,063 237,805 Other Income (Expense): Interest income 8,233 3,007 Interest expense (43,352) (40,077) Miscellaneous expense (3,195) (3,254) Total other expense, net (38,314) (40,324) Earnings from Continuing Operations Before Taxes 165,749 197,481 Income Tax benefit (expense) from Continuing Operations 16,279 (50,103) Net Earnings of the Group from Continuing Operations 182,028 147,378 Net Loss of the Group from Discontinued Operations (574) (708) Net Earnings of the Group 181,454 146,670 Net Earnings Attributable to Noncontrolling Interests from Continuing Operations (7,226) (7,031) Net Earnings Attributable to Redeemable Noncontrolling interests (2,618) (3,992) Net Earnings Attributable to Jacobs from Continuing Operations 172,184 136,355 Net Earnings Attributable to Jacobs $ 171,610 $ 135,647 Net Earnings Per Share: Basic Net Earnings from Continuing Operations Per Share $ 1.38 $ 1.08 Basic Net Loss from Discontinued Operations Per Share $ — $ (0.01) Basic Earnings Per Share $ 1.37 $ 1.07 Diluted Net Earnings from Continuing Operations Per Share $ 1.37 $ 1.07 Diluted Net Loss from Discontinued Operations Per Share $ — $ (0.01) Diluted Earnings Per Share $ 1.37 $ 1.06 2017 and September 29, 2017, as well as certain other related information (in thousands):2023Amounts 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 and Retentions receivable represent reimbursable costs and amounts earned and reimbursable under contracts in progress as of the respective balance sheet dates. Such amounts become billable accordingNet earnings attributable to the contract terms, which usually provide that such amounts become billable uponCompany from continuing operations for the passage of time, achievement of certain milestones, or completion of the project. We anticipate that substantially all of such unbilled amounts will be billed and collected over the next twelve months.Page 14JACOBS ENGINEERING GROUP INC. AND SUBSIDIARIESClaims receivable are included in receivables in the accompanying Consolidated Balance Sheets and represent certain costs incurred on contracts to the extent it is probable that such claims will result in additional contract revenue and the amount of such additional revenue can be reliably estimated.9.Property, Equipment and Improvements, NetProperty, Equipment and Improvements, Net in the accompanying Consolidated Balance Sheets atfirst fiscal quarter ended December 29, 2017 and September 29, 2017 consist2023 were $172.2 million (or $1.37 per diluted share), an increase of $35.8 million, from net earnings of $136.4 million (or $1.07 per diluted share) for the following (in thousands):
201710.Restructuring and Other ChargesDuring the fourth fiscal quarter of 2017, the Company implemented certain restructuring activities (primarily severance related activities) associated with the Company’s announced definitive agreement to acquire CH2M. Following the closing of the CH2M acquisition, these activities have continued intocorresponding period last year. The current results reflected lower operating profit in the first fiscal quarter of 2018 and include associated charges for professional services, personnel costs, severance and costs associated with co-locating Jacobs and CH2M offices amounting to approximately $19.32024, which was impacted by $55.3 million in pre-tax charges during first quarter ended December 29, 2017. These activities are expected to continue through 2019. These activities are not expected to involve the exit of any service types or client end-markets.During the second fiscal quarter of 2017, the Company entered into strategic business restructuring activities associated with realignment of its Europe, U.K. and Middle East regional operations in our B&I segment. Pre-tax net charges of $22.6 million were recorded associated mainly with net realizable value write-offs on contract accounts receivable of $16.5 million, with additional charges recorded for statutory redundancy and severance costs of $1.4 million and other liabilities of $4.7 million which are both expected to be paid or settled within the next 12 months. Additional charges of $1.2 million were recorded under this business exit during third quarter fiscal 2017 associated mainly with contract accounts receivable charges. During the second fiscal quarter of 2015, the Company began implementing a series of initiatives intended to improve operational efficiency, reduce costs, and better position itself to drive growth of the business in the future. We refer to these initiatives, in the aggregate, as the “2015 Restructuring”. These activities evolved and developed over time as management identified and evaluated opportunities for changes in the Company’s operations (and related areas of potential cost savings), as economic conditions changed and as the realignment of the Company’s operations into its four global LOBs was implemented. Actions related to the 2015 Restructuring included involuntary terminations, the abandonment of certain leased offices, combining operational organizations, and the colocation of employees into other existing offices. These activities did not involve the exit of any service types or client end-markets. The 2015 Restructuring was completed in fiscal 2017 although related cash payments continue to be made under the related obligations recorded in connection with these activities. Page 15JACOBS ENGINEERING GROUP INC. AND SUBSIDIARIESCollectively, 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 onand transaction costs due primarily to expenses incurred relating to the Company’s reportable segment income by lineSeparation Transaction (mainly professional services and employee separation costs), compared to fiscal 2023 amounts of business in connection$39.7 million mainly associated with the CH2M acquisitionCompany's transformation initiatives relating to real estate, which are discussed in Note 16- Restructuring and Other Charges. This is partially offset by the 2023 first fiscal quarter net favorable impact of approximately $15.0 million in overhead cost reductions associated mainly with one-time benefit program changes, which was offset in part by higher incentive and other compensation charges and higher investments in company technology platforms. First quarter fiscal 2024 other expense, net, was $38.3 million, a decrease of $2.0 million versus first quarter fiscal 2023 amounts of $40.3 million, with the current period primarily impacted by favorable higher interest income, partly offset by unfavorable higher interest expense. Further, our reported net earnings for the three months ended December 29, 2017 andcurrent year quarter were favorably impacted by a decrease in income taxes of $66.4 million compared to the 2015 Restructuringfiscal 2023 period, attributable mainly to a deferred income tax benefit of $61.6 million in Australia.three months ended December 30, 2016 (in thousands):The activity in the Company’s accrualfirst fiscal quarter of 2024 were $4.16 billion, an increase of $0.36 billion, or 9.5%, from $3.80 billion for the Restructuring and other activitiescorresponding period last year. Revenue increases for the three-monthyear over year period ended December 29, 2017 is as follows (in thousands):The following table summarizes the Restructuring and other activities by major type of costs in connection with the CH2M acquisition for the three-month period ended December 29, 2017 and the 2015 Restructuring for the three months ended December 30, 2016 (in thousands):Cumulative amounts incurred to date for Restructuring and other activities by each major type of cost as of December 29, 2017 are as follows (in thousands):Page 16JACOBS ENGINEERING GROUP INC. AND SUBSIDIARIESAt December 29, 2017 and September 29, 2017, long-term debt consisted of the following:
2017On February 7, 2014, Jacobs and certain of its subsidiaries entered into a $1.6 billion long-term unsecured, revolving credit facility (the “Revolving Credit Facility”) with a syndicate of large U.S. and international banks and financial institutions. The Revolving Credit Facility provides an accordion feature that allows the Company and the lenders to increase the facility amount to $2.1 billion.The total amount outstanding under the Revolving Credit Facility in the form of direct borrowings at December 29, 2017 was $1,085.2 million. The Company has issued $2.5 million in letters of credit under the Revolving Credit Facility, leaving $512.3 million of available borrowing capacity under the Revolving Credit Facility at December 29, 2017. In addition, the Company had issued $491.6 million under separate, committed and uncommitted letter-of-credit facilities for total issued letters of credit of $494.1 million at December 29, 2017.The Revolving Credit Facility expires in February 2020 and permits the Company to borrow under two 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. Depending on the Company’s Consolidated Leverage Ratio (as defined in the credit agreement governing the Revolving Credit Facility), borrowings under the Revolving Credit Facility bear interest at either a eurocurrency rate plus a margin of between 1.0% and 1.5% or a base rate plus a margin of between 0% and 0.5%. The Revolving Credit Facility also provides for a financial letter of credit sub facility of $300.0 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 at the time any such letter of credit is issued. The Company pays a facility fee of between 0.100% and 0.250% per annum depending on the Company’s Consolidated Leverage Ratio. Amounts outstanding under the Revolving Credit Facility may be prepaid at the option of the Company without premium or penalty, subject to customary breakage fees in connection with the prepayment of euro currency loans. The Revolving Credit Facility contains affirmative, negative, and financial covenants customary for financings of this type including, among other things, limitations on certain other indebtedness, loans and investments, liens, mergers, asset sales and transactions with affiliates. In addition, the Revolving Credit Facility contains customary events of default. We were in compliance with our debt covenants at December 29, 2017.On September 28, 2017, the Company entered into a Second Amendmentdue mainly to the Revolving Credit Facility, which provides for, among other things, an amendment to certain financial definitions used in the Revolving Credit Facility, including “Consolidated EBITDA”. These amendments were effective upon the consummation of the acquisition of CH2M in December 2017.On September 28, 2017, the Company entered into a $1.5 billion unsecured delayed-draw term loan facility (the “Term Loan Facility”) with a syndicate of financial institutions as lenders and letter of credit issuers and BNP Paribas as administrative agent, TD Bank, N.A. and U.S. Bank National Association as co-documentation agent, BNP Paribas Securities Corp., The Bank of Nova Scotia and Wells Fargo Securities, LLC as joint book runners, and as joint arrangers.We incurred loans under the Term Loan Facility on December 15, 2017 in connection with the closing of the CH2M acquisition in order to pay cash consideration for the acquisition, and to pay fees and expenses related to the acquisition and the Term Loan Facility. The Term Loan Facility matures in December 2020 and permits the Company to borrow in U.S. dollars at a base rate or a eurocurrency rate. Depending on the Company’s consolidated leverage ratio, borrowings under the Term Loan Facility bear interest at either a eurocurrency rate plus a margin of between 1.00% and 1.50% or a base rate plus a margin of between 0.00% and 0.50%. Amounts outstanding under the Term Loan Facility may be prepaid at the option of the Company without premium or penalty, subject to customary breakage fees in connection with the prepayment of eurocurrency loans.The Term Loan Facility contains affirmative, negative and financial covenants customary for financings of this type, including, among other things, limitations on certain other indebtedness, investments, liens, mergers, asset sales and transactions with affiliates. In addition, the Term Loan Facility contains customary events of default. We were in compliance with these covenants at December 29, 2017.Page 17JACOBS ENGINEERING GROUP INC. AND SUBSIDIARIESIn conjunction with the acquisition of CH2M, the Company assumed certain equipment financing that was incurred by CH2M prior to the acquisition. The balance of the equipment financing as of December 29, 2017 was $6.6 million and is due in monthly installments through September 2021. The financing bears interest at rates ranging from 0.22% to 3.29%. The financing is secured by certain equipment.12.Revenue Accounting for Contracts / Accounting for Joint VenturesWe recognize revenue earned on our technical professional and field services projects under the percentage-of-completion method described in ASC 605-35, Construction-Type and Production-Type Contracts. In general, we recognize revenues at the time we provide services. Pre-contract costs are generally expensed as incurred. Contracts are generally segmented between types of services, such as project services and construction, and accordingly, gross margin related to each activity is recognized as those separate services are rendered. For multiple contracts with a single customer we account for each contract separately.The percentage-of-completion method of accounting is applied by comparing contract costs incurred to date to the total estimated costs at completion. On cost-reimbursable contracts, the cost of materials and subcontracts are generally excluded from the calculation of the measure of progress towards completion to provide a more meaningful allocation of income. Contract losses are provided for in their entirety in the period they become known, without regard to the percentage-of-completion. Unapproved change orders are included in the contract price to the extent it is probable that such change orders will result in additional contract revenue and the amount of such additional revenue can be reliably estimated. Claims meeting these recognition criteria are included in revenues only to the extent of the related costs incurred. The percentage of revenues realized by the Company by type of contract during fiscal 2017 can be found in Note 1 Description of Business and Basis of Presentation of Notes to Consolidated Financial Statements included in our 2017 Form 10-K.Certain cost-reimbursable contracts include incentive-fee arrangements. These incentive fees can be based on a variety of factors but the most common are the achievement of target completion dates, target costs, and/or other performance criteria. Failure to meet these targets can result in unrealized incentive fees. We recognize incentive fees based on expected results using the percentage-of-completion method of accounting. As the contract progresses and more information becomes available, the estimate of the anticipated incentive fee that will be earned is revised as necessary. We bill incentive fees based on the terms and conditions of the individual contracts. In certain situations, we are allowed to bill a portion of the incentive fees over the performance period of the contract. In other situations, we are allowed to bill incentive fees only after the target criterion has been achieved. Incentive fees which have been recognized but not billed are included in receivables in the accompanying Consolidated Balance Sheets. Certain cost-reimbursable contracts with government customersCompany's P&PS business, as well as certain commercial clients provide that contract costs are subject to auditrevenue increases seen across our other reporting segments. The P&PS business benefited primarily from stronger performance in its Advanced Facilities, Federal & Environmental and adjustment. In this situation, revenues are recorded at the time services are performed based upon the amounts we expect to realize upon completion of the contracts. Revenues are not recognized for non-recoverable costs. In those situations where an audit indicates that we may have billed a client for costs not allowable under the terms of the contract, we estimate the amount of such non-billable costs and adjust our revenues accordingly.When we are directly responsible for subcontractor labor or third-party materials and equipment, we reflect the costs of such items in both revenues and costs (and we refer to such costs as “pass-through” costs). On those projects where the client elects to pay for such items directly and we have no associated responsibility for such items, these amounts are not reflected in either revenues or costs.The following table sets forth pass-through costs included in revenues for each of the three months ended December 29, 2017 and December 30, 2016 (in thousands):As is common to the industry, we execute certain contracts jointly with third parties through various forms of joint ventures and consortiums. 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. The assets of our joint ventures, therefore, consist almost entirely of cash and receivables (representing amounts dueEnergy & Power operations. Our CMS business benefited from clients), and the liabilities of our joint ventures 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. In general, at any given time, the equity of our joint ventures represents the undistributed profits earned on contracts the joint ventures hold with clients. Very few of our joint ventures have employees. None of our joint ventures have third-party debt or credit facilities. Under U.S. GAAP, our share of profits and losses associated with the contracts held by the joint ventures is reflected in our Consolidated Financial Statements.Page 18JACOBS ENGINEERING GROUP INC. AND SUBSIDIARIESCertain of our joint ventures meet the definition of a variable interest entity (“VIE”). In evaluating our VIEs for possible consolidation, we perform a qualitative analysis to determine whether or not we have a “controlling financial interest”increased volume in the VIE as defined by U.S. GAAP. We consolidate only those VIEs over which we have a controlling financial interest and are the primary beneficiary.For the Company’s unconsolidated joint ventures, we use either the equity method of accounting or proportionate consolidation. There were no changes in facts and circumstances during the period that caused the Company to reassess the method of accounting for its VIEs.13. Defined Pension Benefit ObligationsJacobs UK Limited (“JUK”) is the sponsor of certain pension plans in the UK (“UK Plans”). The UK Plans currently have an estimated funding deficit of approximately $201.3 million. Given the current estimated funding deficit, the Company replaced JUK’s current recovery plan with an intercompany asset backed pension contribution arrangement.The contribution arrangement establishes funding for the UK pension plans via a 15-year long term note issued by Jacobs through a non-US affiliate to the UK pension plans. The Note is USD denominated with a stated principal of approximately $131.6 million. Payments of principal and interest on the note are approximately $12.5 million per year.In connection with the acquisition of CH2M on December 15, 2017, the Company has preliminarily recorded estimates of CH2M’s pension plan assets and liabilities which are reflected in the amounts of $1.1 billion and ($1.2 billion), respectively as of December 29, 2017. CH2M sponsors several defined benefit pension plans primarilynuclear remediation sector in the U.S. and the United Kingdom (“U.K.”). In the U.S., CH2M has three noncontributory defined benefit pension plans. Plan benefits are generally based on years of service and compensation during the span of employment. The following table presents the components of net periodic benefit cost recognized in earnings during the three months ended December 29, 2017 and December 30, 2016 (in thousands):In December 2017, the Company incurred a settlement loss of approximately $3.8 million related to its Sverdrup pension planas well as strong performance in the U.S. The following table presents certain information regarding the Company’s cash contributions to our pension plans for fiscal 2018 (in thousands):Page 19JACOBS ENGINEERING GROUP INC. AND SUBSIDIARIESDuring the first quarterspace, defense, and energy markets. Also, revenue was favorably impacted by foreign currency translation of fiscal year 2018, the Company adopted ASU No 2016-09, Improvements to Employee Share Based Payment Accounting. As a result, the cash paid by the Company to taxing authorities as a result of withholding shares for the exercise of employee stock awards is classified as financing activity and this change is adopted retrospectively. The Company paid $13.8$53.1 million for the three months ended December 29, 2017 and $5.12023, across our international businesses, as compared to an unfavorable $158.5 million for the three months ended December 30, 20162022.these taxes. Additionally, all excess taxgross profit was attributable mainly due to favorable benefits related to share-based payments in our provision for income taxes are now classified as anoperating activity along with other income taxesfrom recent new program startups won in the statementprior year, with slight margins impacts from year over year mix as well as personnel cost impacts.cash flows and this change is applied prospectively. These items were historically recorded in additional paid-in capital and in financing activities. The Company recognized $0.9 million of excess tax benefits related to share-based payments in our provision for income taxesoperations at the operating segment.2017. Finally, we have elected2023 were $646.5 million, compared to begin accounting$576.9 million for share-based compensation award forfeitures when they occur insteadthe corresponding period last year, representing an increase of estimating the number of forfeitures expected in accordance with the new guidance. This change in accounting policy for share-based compensation award forfeitures resulted in a $1.8$69.6 million cumulative effect of change in accounting principle to retained earnings in the Company’s consolidated balance sheets.15.Other Comprehensive IncomeThe following table presents amounts reclassified from change in pension liabilities inor 12.1%. Restructuring and other comprehensive income to direct cost of contracts and SG&A expenses in the Company’s Consolidated Statements of Earningscharges for the three months ended December 29, 20172023 included $40.1 million in restructuring and other charges, primarily related to the Separation Transaction (mainly professional services and employee separation costs). Additionally, the three months ended December 29, 2023 included an approximate $15 million pre-tax non-cash charge associated with an inventory write down and an approximate $10 million non-cash intangibles impairment. The three months ended December 30, 2022 included $27.1 million in costs associated with the Company's transformation initiatives relating to real estate. Lastly, SG&A expenses were impacted by unfavorable foreign currency translation of $9.3 million for the three months ended December 29, 2023 as compared to favorable impacts of $27.5 million for the corresponding period last year with the remainder associated with other miscellaneous separation and transaction professional services costs from the prior year.2016 related2022 were (9.8)% and 25.4%, respectively. The most significant item contributing to the Company’s defined benefit pension plans (in thousands):16.Income TaxesOndifference between the statutory U.S. federal corporate tax rate of 21.0% and the Company's effective tax rate for the three-month period ended December 22, 2017,29, 2023 relates to a discrete event associated with the Tax Cuts and Jobs Act (the “Act”) was enactedelection to treat an Australian subsidiary as a corporation versus a partnership for U.S. tax purposes. The election resulted in the United States. The Act reduces the top corporate U.S. federal statutoryderecognition of a deferred tax rate from 35% to 21% starting on January 1, 2018,liability, resulting in a blended statutorydiscrete income tax benefit of $61.6 million as the Company asserts that a component of the investment will be indefinitely reinvested. This benefit was partly offset by U.S. state income tax expense of $3.2 million and U.S. tax on foreign earnings of $3.2 million. These expense items are expected to have a continuing impact on the Company's effective tax rate for the remainder of the fiscal year filers. year.
The Company’s blendedmost significant items contributing to the difference between the statutory U.S. federal statutorycorporate tax rate for fiscal 2018 is 24.6%. It also requires companies to pay a one-time transition tax on earnings of certain foreign subsidiaries, places limitations and exclusions on varied tax deductions and creates new taxes on certain foreign sourced earnings. The majority of the tax provisions, excluding the change in corporate tax rates, are effective for the first tax year beginning after January 1, 2018. For Jacobs that will be the Company’s taxable year beginning October 1, 2018. Given the significance of the legislation, the SEC staff issued Staff Accounting Bulletin No. 118 (SAB 118), which allows registrants to record provisional amounts during a one year “measurement period” similar to that used when accounting for business combinations. However, the measurement period is deemed to have ended earlier when the registrant has obtained, prepared and analyzed the information necessary to finalize its accounting. During the measurement period, impacts of the law are expected to be recorded at the time a reasonable estimate for all or a portion of the effects can be made, and provisional amounts can be recognized and adjusted as information becomes available, prepared or analyzed.SAB 118 summarizes a three-step process to be applied at each reporting period to account for and qualitatively disclose: (1) the effects of the change in tax law for which accounting is complete; (2) provisional amounts (or adjustments to provisional amounts) for the effects of the tax law where accounting is not complete, but that a reasonable estimate has been determined; and (3) a reasonable estimate cannot yet be made and therefore taxes are reflected in accordance with law prior to the enactment of the Act.As of the end of the first quarter of fiscal 2018, December 29, 2017, we had not completed our accounting for the tax effects of the enactment of the Act. However, we have made a provisional estimate of the effects of the statutory tax rate reduction impact on our existing deferred tax balances21.0% and the one-time transition tax. We are not yet able to make a reasonable estimate on the other aspects of the Act and continue to account for those items based on our existing accounting under ASC 740, Income Taxes, and the provisions of the tax laws that were in effect immediately prior to enactment of the Act.Page 20JACOBS ENGINEERING GROUP INC. AND SUBSIDIARIESFor the deferred tax balances, we remeasured the U.S. deferred tax assets and liabilities based on the rates at which they are expected to reverse in the future, which is generally 21%. The Company’s provisional remeasurement resulted in a $24 million net favorable discrete benefit to income tax expense for the period. In addition, the Company has reached a preliminary conclusion that it should record a valuation allowance with respect to certain foreign tax credit deferred tax assets in the current quarter as a result of the Tax Act. The estimated amount of the valuation allowance is $53 million and is treated as a discrete charge for the period. We are still analyzing many aspects of the Act and refining our calculations, which could potentially affect the measurement of these balances or potentially give rise to new deferred tax assets and liabilities.The Act calls for a one-time tax on deemed repatriation of foreign earnings. This one-time transition tax is based on our total post-1986 earnings and profits (E&P) of certain of our foreign subsidiaries. We have made a provisional estimate of the transition tax. Based upon our review of the Company’s historical foreign tax credit position and post-1986 E&P, it is estimated at this time that the Company should not have any liability for the transition tax. However, we are still in the process of completing our calculation of the total post-1986 E&P for the newly acquired foreign subsidiaries related to the recent CH2M acquisition. Our estimate may change when we finalize the calculation of post-1986 foreign E&P previously deferred from U.S. federal taxation and finalize the amounts held in cash or other specified assets. The Company’s consolidatedCompany's effective income tax rate for the three months ended December 29, 2017 was 93.9%, an increase from 28.8% for the corresponding period last year. The increase in the quarterly effective30, 2022, were U.S. state income tax rate is due to $29expense of $4.6 million in net discrete charges during the current year quarter, comprisedand U.S. tax on foreign earnings of a $24 million benefit from the provisional remeasurement of the deferred tax items in the U.S., offset by a corresponding valuation allowance charge of $53$3.6 million.liabilitiesliabilities in the period the assessments are made or resolved, which may impact our effective tax rate.It is reasonably possible that, during the next 12 months, we may realize a decrease in our uncertain tax positions of approximately $7 million as a result of concluding various tax auditsclosing tax years.On December 15, 2017Other Chargescompletedimplemented restructuring initiatives relating to the acquisition of CH2M. For income tax purposes, the transaction was accounted for as a stock purchase. As a result of the acquisition, the Company adjusted its U.S. GAAP opening balance sheet of CH2M to reflect preliminary estimates of the fair value of the net assets acquired. For income tax purposes, the tax attributes and basis of net assets acquired carryover without any step-up to fair value.Separation Transaction. The Company has made preliminary estimatesincurred approximately $19.8 million in fiscal 2023 and recorded deferred taxes associated with the purchase accounting. It is expected that the Company will make adjustments to the purchase accounting over the relevant measurement period as allowed by ASC 805. 17.Earnings Per Share and Certain Related InformationBasic 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. Page 21JACOBS ENGINEERING GROUP INC. AND SUBSIDIARIESThe following table reconciles the denominator used to compute basic EPS to the denominator used to compute diluted EPS for$10.6 million in the three months ended December 29, 2017 and December 30, 2016 (in thousands):Share RepurchasesOn July 23, 2015,2023, in pre-tax cash chCompany’s Boardend of Directors authorized a share repurchase programfiscal 2025, are expected to result in estimated gross annualized pre-tax cash savings of upapproximately $72 million to $500 million of the Company’s common stock. The following table summarizes the activity$88 million. We will likely incur additional charges under this program from the authorization date (in thousands, except per-share amounts):(1)Includes commissions paid and calculated at the average price per share since the repurchase program authorization date.There were no share repurchases during the firstthrough fiscal 2025, which are expected to result in additional savings in future periods.of 2018.Page 22JACOBS ENGINEERING GROUP INC. AND SUBSIDIARIESShare repurchases may be executed through various means including, without limitation, open market transactions, privately negotiated transactions or otherwise. The share repurchase program does not obligatefiscal 2023, the Company approved a plan to purchase any sharesimprove business processes and expires on July 22, 2018. The authorization forcost structures of our PA Consulting investment by reorganizing senior management and reducing headcount. In connection with these initiatives, which are expected to be substantially complete before the share repurchase program may be terminated, increased or decreased by the Company’s Boardend of Directors in its discretion at any time. The timing of share repurchases may depend upon market conditions, other uses of capital, and other factors.Dividend ProgramOn December 1, 2016,fiscal 2024, the Company announced that the Board of Directors approved the initiation of a cash dividend program. A quarterly dividend of $0.15 per share was paid on November 10, 2017 to shareholders of record as of the close of business on September 27, 2017. There were no dividends paidincurred approximately $14.3 million during fiscal 2023 andcorresponding period of fiscal 2017.On January 18, 2018, the Company’s Board of Directors declared a quarterly dividend of $0.15 per share of the Company’s common stock that will be paid on March 16, 2018, to shareholders of record on the close of business on February 16, 2018. Future dividend payments are subject to review and approval by the Company’s Board of Directors. 18.Commitments and ContingenciesIn the normal course of business, we are subject to certain contractual guarantees and litigation. The guarantees to which we are a party generally relate to project schedules and plant performance. Most of the litigation in which we are involved has us as a defendant in workers’ compensation, personal injury, environmental, employment/labor, professional liability, and other similar lawsuits.We maintain insurance coverage for various aspects of our business and operations. Our insurance programs have varying coverage limits and maximums, and insurance companies may seek to not pay any claims we might make. We have also elected to retain a portion of losses that occur through the use of various deductibles, limits, and retentions under our insurance programs. As a result, we may be subject to 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 our contracts. 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 and several of its agencies, we are subject to many levels of audits, investigations, and claims by, or on behalf of, the U.S. federal government with respect to our contract performance, pricing, costs, cost allocations, and procurement practices. 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 U.S., as well as by various government agencies representing jurisdictions outside the U.S.We record in our Consolidated Balance Sheets amounts representing our estimated liability relating to such claims, guarantees, litigation, and audits and investigations. We perform an analysis to determine the level of reserves to establish for insurance-related claims that are known and have been asserted against us, and 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.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 any material adverse effect on our consolidated financial statements.On September 30, 2015, Nui Phao Mining Company Limited (“NPMC”) commenced arbitration proceedings against Jacobs E&C Australia Pty Limited (“Jacobs E&C”). The arbitration is pending in Singapore before the Singapore International Arbitration Centre. In March 2011, Jacobs E&C was engaged by NPMC for the provision of management, design, engineering, and procurement services for the Nui Phao mine/mineral processing project in Vietnam. In the Notice of Arbitration and in a subsequently filed Statement of Claim and Supplementary Statement of Claim dated February 1, 2016 and February 26, 2016, respectively, NPMC asserts various causes of action and alleges that the quantum of its claim exceeds $167 million. Jacobs has denied liability and is vigorously defending this claim. A three week hearing on the merits concluded on December 15, 2017 and a decision is expected later this year. The Company does not expect the resolution of this matter to have a material adverse effect on its financial condition, results of operations and/or cash flows.On December 7, 2009, the Judicial Council of California, Administrative Office of the Courts (“AOC”) initiated an action in the San Francisco County Superior Court against Jacobs Facilities Inc. (“JFI”) and Jacobs Project Management (“JPM”) and subsequently added Jacobs as a defendant. The action arises out of a contract between AOC and JFI pursuant to which JFI provided regular maintenance and repairs at certain AOC court facilities. AOC has alleged, among other things, that the Jacobs entities are requiredPage 23JACOBS ENGINEERING GROUP INC. AND SUBSIDIARIESunder California’s Contractors’ State License Law (“CSLL”) to disgorge certain fees paid by AOC, and the Jacobs entities have, among other things, cross-claimed for unpaid sums for work performed. On May 2, 2012, the jury returned a special verdict in favor of the Jacobs entities finding, among other things, JPM was owed approximately $4.7 million in unpaid fees and that JFI was not required to disgorge the approximate $18.3 million that AOC had paid for work performed. On August 20, 2015, the California Court of Appeal reversed the jury’s verdict, holding that JFI had violated the CSLL. The Court of Appeal remanded to the San Francisco County Superior Court for an evidentiary hearing to determine whether the JFI had “substantially complied” with the CSLL under California Business and Professions Code Section 7031(e). Establishing “substantial compliance” would prevent $18.3 million in disgorgement against Jacobs and permit Jacobs to recover $4.7 million. The evidentiary hearing on substantial compliance was conducted between July 18 and August 5, 2016. Onmonths ending December 29, 2016, the court issued a Statement of Decision in favor of the Company, finding that Jacobs Facilities had substantially complied with the CSLL, and entered a judgment in favor of JPM in the amount of $4.7 million plus prejudgment interest. On January 30, 2017, AOC filed a notice of appeal. The Company does not expect the resolution of this matter to have a material adverse effect on its financial condition, results of operations and/or cash flows.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 JV 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 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 for $665.5 million for repudiatory breach or, in the alternative, seeking damages for unresolved contract claims and change orders. JKC has provided a preliminary estimate of the monetary value of its claims in the amount of approximately $1.66 billion. If the Consortium is found liable, this matter could have a material adverse effect on the Company’s business, financial condition, results of operations and /or cash flows, particularly in the short term. However, the Consortium has denied liability and is vigorously defending these claims, and 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.Page 24JACOBS ENGINEERING GROUP INC. AND SUBSIDIARIESGeneralThe purpose of this Management’s Discussion and Analysis of Financial Condition and Results of Operations (“MD&A”) is to provide a narrative analysis explaining the reasons for material changes in the Company’s (i) financial condition from the most recent fiscal year-end to December 29, 2017, 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 2017 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 2017 Form 10-K;The Company’s fiscal 2017 audited consolidated financial statements and notes thereto included in our 2017 Form 10-K; andItem 7, Management’s Discussion and Analysis of Financial Condition and Results of Operations included in our 2017 Form 10-K.In addition to historical information, this MD&A and other parts of this Quarterly Report on Form 10-Q may contain forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. Forward-looking statements are statements that do not directly relate to any historical or current fact. When used herein, words such as “expects,” “anticipates,” “believes,” “seeks,” “estimates,” “plans,” “intends,” “future,” “will,” “would,” “could,” “can,” “may,” and similar words are intended to identify forward-looking statements. 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 involve risks and uncertainties that could cause our actual results to differ materially from what may be inferred from the forward-looking statements. Some of the factors that could cause or contribute to such differences include, but are not limited to, those listed and discussed in Item 1A, Risk Factors included in this quarterly report on Form 10-Q and our 2017 Form 10-K. 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 described in this quarterly report on Form 10-Q and our 2017 Form 10-K and in other documents we file from time to time with the United States Securities and Exchange Commission.Lines of BusinessThe Company’s operations are organized around four global lines of business (“LOBs”), which also serve as the Company’s operating segments: Aerospace & Technology, Buildings & Infrastructure, Industrial and Petroleum & Chemicals. The Company’s LOB leadership and internal reporting structures report to the Chief Executive Officer, who is also the Chief Operating Decision Maker (“CODM”), and enable the CODM to 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 in accordance with ASC 350, Intangibles-Goodwill and Other.Under the current organization, each LOB has a president that reports directly to the CODM. In addition, the sales function is managed on an LOB basis, and accordingly, the associated cost is embedded in the new segments and reported to the respective LOB presidents. In addition, a portion of the costs of other support functions (e.g., finance, legal, human resources, and information technology) is allocated to each LOB using methodologies which, we believe, effectively attribute the cost of these support functions to the revenue generating activities of the Company on a rational basis. The cost of the Company’s cash incentive plan, the Management Incentive Plan (“MIP”) and the expense associated with the Jacobs Engineering Group Inc. 1999 Stock Incentive Plan (“1999 SIP”) have likewise been charged to the LOBs except for those amounts determined to relate to the business as a whole (which amounts remain in corporate’s results of operations).Aerospace and Technology (A&T) – We provide an in-depth range of scientific, engineering, construction, nuclear and technical support services to the aerospace, defense, technical and automotive industries in several countries. Long-term clients include the Ministry of Defence in the U.K., the UK Nuclear Decommissioning Authority, NASA, the U.S. Department of Defense (“DoD”), the U.S. Special Operations Command ("USSOCOM"), the U.S. Intelligence community, and the Australian Department of Defence. Specific to NASA, one of our major government customers in the U.S., is our ability to design, build, operate, and maintainPage 25JACOBS ENGINEERING GROUP INC. AND SUBSIDIARIEShighly complex facilities relating to space systems, including test and evaluation facilities, launch facilities, and support infrastructure. We provide environmental characterization and restoration services to commercial and government customers both in the U.S. and U.K. This includes designing, building and operating high hazard remediation systems including for radiologically contaminated media.In addition, we design and build aerodynamic, climatic, altitude and acoustic facilities in support of the automotive industry, as well as provide a wide range of services in the telecommunications market.Our experience in the defense sector includes military systems acquisition management and strategic planning; operations and maintenance of test facilities and ranges; test and evaluation services in computer, laboratory, facility, and range environments; test facility computer systems instrumentation and diagnostics; and test facility design and build. We also provide systems engineering and integration of complex weapons and space systems, as well as hardware and software design of complex flight and ground systems.We have provided advanced technology engineering services to the DoD for more than 50 years, and currently support major defense programs in the U.S. and internationally. We operate and maintain several DoD test centers and provide services and assist in the acquisition and development of systems and equipment for Special Operations Forces, as well as the development of biological, chemical, and nuclear detection and protection systems.We maintain enterprise information systems for government and commercial clients worldwide, ranging from the operation of complex computational networks to the development and validation of specific software applications. We also support the DoD and the intelligence community in a number of information technology programs, including network design, integration, and support; command and control technology; development and maintenance of databases and customized applications; and cyber security solutions.Also, the A&T segment includes professional services related to the Federal business of CH2M which adds substantial capabilities in Environmental and Nuclear remediation businesses.Buildings & Infrastructure (B&I) – We provide services to transit, aviation, built environment, mission critical, rail, and civil construction projects throughout North America, Europe, India, the Middle East, Australia, and Asia. Our representative clients include national government departments/agencies in the U.S., U.K., Australia, and Asia, state and local departments of transportation within the U.S, and private industry freight transport firms.Typical projects include providing development/rehabilitation plans for highways, bridges, transit, tunnels, airports, railroads, intermodal facilities, and maritime or port projects. Our interdisciplinary teams can work independently or as an extension of the client’s staff. We have experience with alternative financing methods, which have been used in Europe through the privatization of public infrastructure systems.Our water infrastructure group aids emerging economies, which are investing heavily in water and wastewater systems, and governments in North America and Europe, which are addressing the challenges of drought and an aging infrastructure system. We develop or rehabilitate critical water resource systems, water/wastewater conveyance systems, and flood defense projects.We also plan, design, and construct buildings for a variety of clients and markets. We believe our global presence and understanding of contracting and delivery demands keep us well positioned to provide professional services worldwide. Our diversified client base encompasses both public and private sectors and relates primarily to institutional, commercial, government and corporate buildings, including projects at many of the world's leading medical and research centers, and universities. We focus our efforts and resources in two areas: where capital-spending initiatives drive demand, and where changes and advances in technology require innovative, value-adding solutions. We also provide integrated facility management services (sometimes through joint ventures with third parties) for which we assume responsibility for the ongoing operation and maintenance of entire commercial or industrial complexes on behalf of clients.We have specific capabilities in energy and power, master planning, and commissioning of office headquarters, aviation facilities, mission-critical facilities, municipal and civic buildings, courts and correctional facilities, mixed-use and commercial centers, healthcare and education campuses, and recreational complexes. For advanced technology clients, who require highly specialized buildings in the fields of medical research, nano science, biotechnology, and laser sciences, we offer total integrated design and construction management solutions. We also have global capabilities in the pharma-bio, data center, government intelligence, corporate headquarters/interiors, and science and technology-based education markets. Our government building projects include large, multi-year programs in the U.S. and Europe supporting various U.S. and U.K. government agenciesPage 26JACOBS ENGINEERING GROUP INC. AND SUBSIDIARIESOur B&I segment also includes additional capabilities from the CH2M acquisition including Water, Remediation Consulting, Design Build and Conveyance capabilities. Industrial – We provide engineering, procurement, project management, construction, and on-site maintenance to our global clients in the Life Sciences, Mining & Minerals, Specialty Chemicals & Manufacturing and Field Services markets. We provide our Life Sciences clients single-point consulting, engineering, procurement, construction management, and validation project delivery, enabling us to execute capital programs on a single-responsibility basis. Typical projects in the life sciences sector include laboratories, research and development facilities, pilot plants, bulk active pharmaceutical ingredient production facilities, full-scale biotechnology production facilities, and tertiary manufacturing facilities.We provide services relating to modular construction, as well as other consulting and strategic planning to help our clients complete capital projects faster and more efficiently.In addition, we offer services in containment, barrier technology, locally controlled environments, building systems automation, and off-the-site design and fabrication of facility modules, as well as vaccine production and purification, and aseptic processing.Our mining and minerals business targets the non-ferrous and ferrous metal markets, precious metals, energy minerals (uranium, coal, oil sands), and industrial and fertilizer minerals (borates, trona, phosphates and potash). We work with many resource companies undertaking new and existing facility upgrades, process plant and underground and surface material handling and infrastructure developments.We offer project management, front-end studies, full engineering, procurement and construction management (“EPCM”) and engineering, procurement and construction (“EPC”) capabilities, and completions, commissioning and start-up services specializing in new plant construction, brownfield expansions, and sustaining capital and maintenance projects. We are also able to deliver value to our mining clients by providing distinctive adjacent large infrastructure capabilities to support their mining operations.We provide a wide range of services, technology and manufactured equipment through our specialty chemicals group, where we own and license our proprietary technology. Our specialty chemicals areas are focused on sulfuric acid, sulphur, bleaching chemicals for pulp & paper, and synthetic chemicals, and manufactured equipment. Our manufacturing business areas include the Food & Beverage, Consumer Products, Semi-Conductor, and Pulp & Paper markets.Our global Field Services unit supports construction and operations and maintenance (“O&M”) across the company, and performs our direct hire services.Our construction activities include providing both construction management services and traditional field construction services to our clients. Historically, our field construction activities focused primarily on those construction projects where we perform much of the related engineering and design work (EPC/EPCM). However, we deliver construction-only projects when we have negotiated pricing and other contract terms we deem acceptable and which result in a fair return for the degree of risk we assume.In our O&M business, we provide all services required to operate and maintain large, complex facilities on behalf of clients including asset management, direct hire maintenance and operations, complex turn-around planning and execution, and small capital programs. We provide key management and support services over all aspects of the operations of a facility, including managing subcontractors and other on-site personnel. Petroleum & Chemicals (P&C) –We provide integrated delivery of complex projects for our Oil and Gas, Refining, and Petrochemicals clients. Bridging the upstream, midstream and downstream industries, our services encompass consulting, engineering, procurement, construction, maintenance, and project management. We provide services relating to onshore and offshore oil and gas production facilities, including fixed and floating platforms and subsea tie-backs, as well as full field development solutions, including processing facilities, gathering systems, transmission pipelines and terminals. Our heavy oil experience makes us a leader in upgrading, steam-assisted gravity drainage and in-situ oil sands projects. We have developed modular well pad and central processing facility designs. We also provide fit-for-purpose and standardized designs in the onshore conventional and unconventional space, paying particular attention to water and environmental issues.In addition, we provide our refining customers with feasibility/economic studies, technology evaluation and conceptual engineering, front end loading (FEED), detailed engineering, procurement, construction, maintenance and commissioning services. We deliver installed EPC solutions as to grass root plants, expansions and revamps of existing units. Our focus is on bothPage 27JACOBS ENGINEERING GROUP INC. AND SUBSIDIARIESthe inside the battery limit (ISBL) processing units as well as utilities and off-sites. We have engineering alliances and maintenance programs that span decades with core clients. With the objective of driving our clients’ total installed costs down, we endeavor to leverage emerging market sourcing and high value engineering. Our Comprimo Sulfur Solutions® is a significant technology for gas treatment and sulfur recovery plants around the world.We provide services as to technically complex petrochemical facilities; from new manufacturing complexes, to expansions and modifications and management of plant relocations. We have experience with many licensed technologies, integrated basic petrochemicals, commodity and specialty chemicals projects, and olefins, aromatics, synthesis gas and their respective derivatives.CH2M AcquisitionOn December 15, 2017, the Company completed the acquisition of CH2M. For purposes of the Company’s first quarter fiscal 2018 segment reporting, the operating financial information of CH2M has been categorized within the Company’s existing LOB business structure, with its sales and operating profit results for the time period during which CH2M has been under the ownership of the Company (December 15, 2017-December 29, 2017) being allocated to the Company’s A&T, B&I and P&C lines of business under a transitional business organization structure. As part of the integration of the CH2M businesses into the Company’s business operating structures, the Company expects to realign its business financial reporting framework into three global business lines by no later than the second half of fiscal 2018 under the following new lines of business:• Aerospace, Technology, Environmental and Nuclear (ATEN): serving global aerospace, automotive, defense, telecommunications, nuclear and environmental clients and the U.S. intelligence community.• Buildings, Infrastructure and Advanced Facilities (BIAF): serving broad sectors including buildings, water, transportation (roads, rail, aviation and ports), and advanced facilities for life sciences, semiconductors, data centers, consumer products and other advanced manufacturing operations.• Energy, Chemicals and Resources (ECR): serving energy, chemicals and resources sectors, including upstream, midstream and downstream oil, gas, refining, chemicals and mining and minerals industries.Restructuring and Other Charges During the fourth fiscal quarter of 2017, the Company implemented certain restructuring activities (primarily severance related activities) associated with the Company’s announced definitive agreement to acquire CH2M. Following the closing of the CH2M acquisition, these activities have continued into the first fiscal quarter of 2018 and include associated charges for professional services, personnel costs, severance and costs associated with co-locating Jacobs and CH2M offices and have amounted to approximately $19.3 million2023, in pre-tax charges during first quarter ended December 29, 2017.cash charges. These activities are expected to continue through 2019. These activities are not expected to involve the exit of any service types or client end-markets. The Company is targeting to achieve annual costresult in estim$150approximately $40 million upon the completion of these activities.the second fiscal quarter of 2017,2023, the Company entered into strategic businessimplemented restructuring activities associated with realignment of its Europe, U.K. and Middle East regional operations in our B&I segment. Pre-tax net charges of $22.6 million were recorded associated mainly with net realizable value write-offs on contract accounts receivable of $16.5 million, with additional charges recorded for statutory redundancy and severance costs of $1.4 million and other liabilities of $4.7 million which are both expectedcost reduction initiatives relating to be paid or settled within the next 12 months. Additional charges of $1.2 million were recorded under this business exit during third quarter fiscal 2017 associated mainly with contract accounts receivable charges. During the second fiscal quarter of 2015, the Company began implementing a series of initiatives intended to improve operational efficiency, reduce costs, and better position itself to drive growthformation of the business in the future. We refer to these initiatives, in the aggregate, as the “2015 Restructuring”. These activities evolvedreporting and developed over time as management identified and evaluated opportunities for changes in the Company’s operations (and related areas of potential cost savings), as economic conditions changed and as the realignment of the Company’s operations into its four global LOBs was implemented. Actions related to the 2015 Restructuring included involuntary terminations, the abandonment of certain leased offices, combining operational organizations, and the colocation of employees into other existing offices. These activities did not involve the exit of any service types or client end-markets. The 2015 Restructuring wasoperating segment, Divergent Solutions, which were substantially completed in fiscal 2017 although related2023. The Company incurred approximately $7.5payments continue under the related obligations recordedcharges in connection with these activities.Page 28JACOBS ENGINEERING GROUP INC. AND SUBSIDIARIESCollectively,initiatives during the above mentioned restructuringyear ended September 29, 2023. These actions are expected to result in estimated gross annualized pre-tax cash savings of approximately $20 million to $24 million.are referred to as “Restructuring and other charges.”The following table summarizes the impacts of the Restructuring and other charges on the Company's reportable segment income by line of businesswere substantially completed in fiscal 2023. In connection with these efforts, the CH2M acquisitionCompany has incurred $47.3 million and $72.4 million for the three monthsyears ended DecemberSeptember 29, 20172023 and September 30, 2022, respectively, in pre-tax mainly non-cash charges. These actions resulted in non-cash savings related to the 2015 Restructuring forfuture amortization of lease right-of-use assets over the three months ended December 30, 2016 (in thousands):The activity inremaining lease terms. Additionally, the Company’s accrual for the Restructuringobjective of these initiatives was to create a modern, flexible work platform tailored to employees’ needs due to globalization and other activities for the three-month period ended December 29, 2017 isdigital advances and to create total emissions savings that will be realized as follows (in thousands):The following table summarizes the Restructuring and other activities by major type of costs in connection with the CH2M acquisition for the three-month period ended December 29, 2017 and the 2015 Restructuring for the three months ended December 30, 2016(in thousands):Cumulative amounts incurredwe continue to date for Restructuring and other activities by each major type of costs as of December 29, 2017 are as follows (in thousands):Page 29JACOBS ENGINEERING GROUP INC. AND SUBSIDIARIESResults of Operations for the three months ended December 29, 2017 and December 30, 2016(in thousands, except per share information)Overview – Three Months EndedDecember 29, 2017Net earnings for the first fiscal quarter of 2018 ended December 29, 2017 were $2.2 million (or $0.02 per diluted share), a decrease of $58.4 million from $60.5 million (or $0.50 per diluted share) for the corresponding period last year. Included in the Company’s operating results for the 2018 quarterly period were $14.7 million (or $0.11 per share) in after tax Refer to Note 16– Restructuring and Other Charges $51.4 million (or $0.41 per share) in transaction costs associated with the Company’s December 15, 2017 acquisition of CH2M HILL Companies, Ltd. (“CH2M”) for further information regarding restructuring and $28.8 million in income tax charges associated with the Tax Cuts and Jobs Act (the “Act”). Our first quarter fiscal 2017 results included $22.8 million (or $0.18 per share) after tax charges associated with the 2015 Restructuring.On December 15, 2017, the Company completed the acquisition of CH2M, an international provider of engineering, construction, and technical services, by acquiring 100% of the outstanding shares of CH2M common stock and preferred stock. The purpose of the acquisition was to further diversify the Company’s market presence in the water, nuclear and environmental remediation sectors and to further the Company’s growth strategy. The Company paid total consideration of approximately $1.8 billion in cash and issued approximately $1.4 billion of Jacobs’ common stock to the former stockholders and certain equity award holders of CH2M.Consolidated Results of OperationsRevenues for the first fiscal quarter of 2018 were $2.75 billion, an increase of $198.7 million, or 7.8% from $2.55 billion for the corresponding period last year. The increase in revenues was due primarily to favorable impacts from the CH2M acquisition, which contributed approximately $131 million in incremental revenue for the quarter. Also, higher volumes in our legacy A&T and B&I businesses also contributed to the increase, partly offset by lower revenues in P&C and with Industrial revenues being flat for the comparative periods. Pass-through costs included in revenues for the first fiscal quarter of 2018 were $596.2 million, a decrease of $76.8 million, or 11.4%, from $673.0 million for the corresponding period last year.Gross profit for first quarter 2018 was $487.2 million, up $67.9 million, or 16.2% from $419.3 million from the corresponding quarter in 2017. Our gross profit margins were 17.7% and 16.4% for the three month periods ended December 29, 2017 and December 30, 2016, respectively. The higher volume impacts seen in our A&T and B&I business, incremental benefits of the CH2M businesses acquired, and our continuing strategic focus on realigning our portfolio to higher margin businesses and project execution drove improving gross profit and margins for the year over year periods across our lines of business.3039JACOBS ENGINEERING GROUP INC. AND SUBSIDIARIES SG&A expenses for the three months ended December 29, 2017 were $439.5 million, an increase of $108.9 million, or 32.9%, from $330.7 million for the corresponding period last year. The increase in SG&A expenses for the three month comparative periods was due mainly to CH2M transaction costs of $67.6 million, Restructuring and other associated costs of $19.3 million and higher year over year personnel costs during first quarter fiscal 2018, offset in part by $31.7 million in charges during first quarter fiscal 2017 from the 2015 Restructuring which concluded at the end of fiscal 2017. Also, incremental SG&A expense from the acquired CH2M businesses approximated $20 million during the three-month 2018 period.Net interest expense for the three months ended December 29, 2017 was $3.3 million, an increase of $1.3 million from $2.0 million for the corresponding period last year. The increase in net interest expense for the three months ended December 29, 2017 as compared to the corresponding period last year was due primarily to higher levels of average debt balances outstanding related to financing activities for the acquisition of CH2M, which was partially funded with term loan financing of $1.5 billion and increased revolving credit line borrowings of $850.2 million.Miscellaneous expense, net for the three months ended December 29, 2017 was $2.5 million, up $1.8 million from $0.7 million for the corresponding period last year. The increase was due primarily to unfavorable year over year impacts from unrealized gains and losses from foreign exchange. On December 22, 2017, the Tax Cuts and Jobs Act (the “Act”) was enacted in the United States. The Act reduces the top corporate US federal statutory tax rate from 35% to 21% starting on January 1, 2018, resulting in a blended statutory tax rate for fiscal year filers. The Company’s blended federal statutory tax rate for fiscal 2018 is 24.6%. It also requires companies to pay a one-time transition tax on earnings of certain foreign subsidiaries, places limitations and exclusions on varied tax deductions and creates new taxes on certain foreign sourced earnings. The majority of the tax provisions are effective for the first tax year beginning after January 1, 2018. For Jacobs that will be the Company’s taxable year beginning October 1, 2018.The Company’s consolidated effective income tax rate for the three months ended December 29, 2017 was 93.9%, an increase from 28.8% for the corresponding period last year. The increase in the quarterly effective tax rate is due to $29 million in net discrete charges during the current year quarter resulting from the Act, comprised of a $24 million benefit from the provisional remeasurement of the deferred tax items in the U.S., offset by a corresponding valuation allowance charge of $53 million.It is reasonably possible that, during the next 12 months, we may realize a decrease in our uncertain tax positions of approximately $7 million (being realized as a reduction in income tax expense) as a result of concluding various tax audits and closing tax years.table providestables provide 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, and expenses relating to Restructuring and Other Chargesother charges and transaction and integration costs (in thousands).Three Months Ended December 29, 2023 December 30, 2022 Revenues from External Customers: Critical Mission Solutions $ 1,128,603 $ 1,075,175 People & Places Solutions 2,470,441 2,226,985 Divergent Solutions 254,180 214,465 PA Consulting 306,001 282,043 Total $ 4,159,225 $ 3,798,668 Page 31JACOBS ENGINEERING GROUP INC. AND SUBSIDIARIESThree Months Ended December 29, 2023 December 30, 2022 Segment Operating Profit: Critical Mission Solutions $ 93,407 $ 82,220 People & Places Solutions 224,998 226,619 Divergent Solutions (1) 7,581 11,967 PA Consulting 54,455 51,027 Total Segment Operating Profit 380,441 371,833 Other Corporate Expenses (2) (121,060) (93,686) Restructuring, Transaction and Other Charges (3) (55,318) (40,342) Total U.S. GAAP Operating Profit 204,063 237,805 Total Other Expense, net (38,314) (40,324) Earnings Before Taxes from Continuing Operations $ 165,749 $ 197,481 (1) (1)(2) Includes deferred financing fees related to the CH2M acquisitionOther corporate expenses included intangibles amortization of $256 thousand$51.1 million and $49.8 million for the three months endingended December 29, 2017.(3) The three months ended December 29, 2023 included $40.1 million in restructuring and $11.0 million of transaction charges, mainly relating to the Separation Transaction (primarily professional services and employee separation costs). Included in the three months ended December 30, 2022 were mainly $27.1 million in restructuring and other charges associated mainly with real estate impairments with the remainder associated with other miscellaneous separation and transaction professional services costs from the prior year. During the fourth fiscal quarter of 2017, the Company implemented certain restructuring activities (primarily severance related activities) associated with the Company’s announced definitive agreement to acquire CH2M. Following the closing of the CH2M acquisition, these activities have continued into the first fiscal quarter of 2018 and include associated charges for professional services, personnel costs, severance and costs associated with co-locating Jacobs and CH2M offices, amounting to approximately $19.3 million in pre-tax charges during first quarter ended December 29, 2017. These activities are expected to continue through 2019. These activities are not expected to involve the exit of any service types or client end-markets.Transaction costs associated with the CH2M acquisition in the accompanying consolidated statements of operations for the three months ended December 29, 2017 are comprised of the following (in millions):Three Months Ended December 29, 2023 December 30, 2022 Revenue $ 1,128,603 $ 1,075,175 Operating Profit $ 93,407 $ 82,220 (1)Includes deferred financing fees related to the CH2M acquisition of $256 thousandCritical Mission Solutions segment revenues for the three months endingended December 29, 2017.2023 were $1.13 billion, an increase of $0.05 billion, or 5.0%, from $1.08 billion for the corresponding period last year. During the three months ended December 29, 2023, revenue benefited from increased volume in the nuclear remediation sector in the U.S. and United Kingdom as well as strong performance in the space, defense, and energy markets. Our fiscal first quarter 2024 exchange rates compared to our fiscal first quarter 2023 period rates contributed approximately $13.1 million in favorable impacts on revenues for the current period quarter. In the corresponding prior year period, our fiscal first quarter 2023 exchange rates compared to the rates of our fiscal first quarter 2022 period contributed $33.1 million in unfavorable impacts on revenues.Operating profit for the segment was $93.4 million, for the three months ended December 29, 2023, which was an increase of $11.2 million, or 13.6%, from $82.2 million for the quarter-to-date period compared to the prior year. Operating profit level trends for the year-over-year quarterly period were favorably impacted by growth in the nuclear remediation market and strong performance in U.S. government space market and international defense and energy markets. Our fiscal first quarter 2024 exchange rates compared to our fiscal first quarter 2023 period rates contributed approximately $1.8 million in favorable impacts for the current period quarter. In the corresponding prior year period, our fiscal first quarter 2023 exchange rates compared to the rates of our fiscal first quarter 2022 period contributed approximately $3.9 million in unfavorable impacts on operating profit. In evaluating the Company’s performance by operating segment, the CODM reviews revenues and operating profit. As discussed above, segment operating profit includes not only local SG&A expenses but the SG&A expenses of the Company’s support groups that have been allocated to the segments. In addition, the Company attributes each LOB’s specific incentive compensation plan costs to the LOBs. The revenues of certain LOBs are more affected by pass-through revenues than other LOBs. The methods for recognizing revenue, incentive fees, project losses, and change orders are consistent among the LOBs.On December 15, 2017, the Company completed the acquisition of CH2M. For purposes of the Company’s first quarter fiscal 2018 segment reporting, the operating financial information of CH2M has been categorized within the Company’s existing LOB structure, with its sales and operating profit results for the stub period from December 15, 2017 through December 29, 2017 being allocated to the Company’s A&T, B&I and P&C lines of businesses under a transitional business organization structure.AerospaceTechnologyPlaces SolutionsThree Months Ended Three Months Ended Three Months Ended December 29, 2023 December 29, 2023 December 29, 2023 Revenue Revenue Operating Profit Operating Profit Operating Profit Aerospace & Technology segment revenues for the three months ended December 29, 2017 were $721.6 million, up $144.1 million, or 25%, from $577.4 million for the corresponding period last year. The increase was due in large part to approximately $84 million in incremental nuclear and environmental revenue resulting from the CH2M acquisition. Also, our revenues were positivelyRevenues for the People & Places Solutions segment for the three months ended December 29, 2023 was $2.47 billion, an increase of $243.5 million, or 10.9%, from $2.23 billion for the corresponding period last year. The increase in revenue for the three months ended December 29, 2023 was primarily driven by net revenue growth across all businesses as well as an increase in pass-through revenue within Advanced Facilities. Our fiscal first quarter 2024 exchange rates compared to our fiscal first quarter 2023 period rates contributed $22.9 million in favorable impacts on revenues for the current period quarter. In the corresponding prior year period, our fiscal first quarter 2023 exchange rates compared to the rates of our fiscal first quarter 2022 period contributed unfavorable impacts on revenues of $83.2 million. Operating profit for the People & Places Solutions segment for the three month period ended December 29, 2023 was $225.0 million and approximately flat with the corresponding period last year, with higher year over year segment revenues mentioned above but with offsetting impacts from higher corporate cost allocations versus the prior year period. Our fiscal first quarter 2024 exchange rates compared to our fiscal first quarter 2023 period rates contributed $4.2 million in favorable impacts on operating profit for the current period quarter. In the corresponding prior year period, our fiscal first quarter 2023 exchange rates compared to the rates of our fiscal first quarter 2022 period contributed unfavorable impacts of $15.9 million on operating profit. 3241JACOBS ENGINEERING GROUP INC. AND SUBSIDIARIESimpacted by year over year revenue volume growth across our legacy portfolio, highlighted by increased spending by customers in the U.S. government business sector. Year over year impacts on revenues from unfavorable foreign currency were not material.Operating profit for the segment was $65.8 million for the three months ended December 29, 2017, up $14.7 million, or 28.8% from $51.1 million for the corresponding period last year. In addition to incremental operating profit benefits from the CH2M acquisition, the increase from the prior year was primarily attributable to improvements in our nuclear and defense unit in the U.K. and fee income with our AWE business. Additionally, segment SG&A was up approximately $10 million for the three months ended December 29, 2017 of which approximately half of this increase was attributable to incremental SG&A coming with the CH2M business acquired.Buildings & InfrastructureRevenues for the Buildings & Infrastructure segment for the three months ended December 29, 2017 were $658.5 million, up $77.8 million, or 13.4%, from $580.6 million for the corresponding period last year. The year over year increase in revenues for the three months was in part due to favorable impacts from the CH2M acquisition of approximately $30 million in the period, together with revenue increases in Australian and U.K. client spending levels in the project-management/construction-management (“PMCM”) market. Impacts on revenues from favorable foreign currency were approximately $10 million for the three-month period of 2018 vs. the corresponding prior year period.Operating profit for Buildings & Infrastructure for the three months ended December 29, 2018 was $45.3 million, an increase of $6.5 million, or 16.7%, from $38.8 million for the comparative period in 2017. The year over year increases in operating profit for the three months was spread across all regions of Buildings & Infrastructure with the exception of the Middle East where we completed and closed a number of projects during the quarter. Also, SG&A was up for the segment by approximately $20 million for the year over year periods, due mainly to incremental cost associated with the CH2M business of $13 million with the remainder due mainly to higher personnel costs.IndustrialIndustrial revenues for the three months ended December 29, 2017 were $749.3 million, a slight decrease of $2.4 million versus $751.7 million from the corresponding period last year. The slight decrease in revenues for the three-month comparative periods was due mainly to declines in the Field Services business offset in part by improved performance in our Life Sciences business group. Additionally, foreign currency impacts were favorable in the current year three-month period of approximately $11 million compared to the corresponding period in the prior year.Operating profit for the three months ended December 29, 2017 was $38.1 million, an increase of $13.0 million, or 51.7%, compared to $25.1 million for the corresponding period last year. The increase in profitability for the comparative three-month period in the current year was due mainly to improved project performance in the Mining and Minerals business as well as improved profitability in Life Sciences based on higher revenues. Declines in lower margin Field Services revenues were largely offset by improved project execution and favorable mix. Also, SG&A for the segment was roughly flat between the periods. Petroleum & ChemicalsThree Months Ended Three Months Ended Three Months Ended December 29, 2023 December 29, 2023 December 29, 2023 Revenue Revenue Operating Profit Operating Profit Operating Profit Page 33JACOBS ENGINEERING GROUP INC. AND SUBSIDIARIESPetroleum & Chemicals revenues for the three months ended December 29, 2017 were $620.9 million, a decrease of $20.9 million, or 3.2%, from $641.8 million for the corresponding period last year. The decrease in revenues for the three months ended December 29, 2017 as compared to the prior year was due primarily to the completion or wind-down of several projects with significant pass through revenue as well as award delays of large post front-end engineering and design projects, as clients continue to evaluate their capital spending plans. Both of these factors resulted in lower field service revenues compared with the prior year period, while client investment spending continues primarily on compliance, maintenance and sustaining capital programs. Additionally, foreign currency impacts were favorable by approximately $12 million for the three-month period of 2018 versus the corresponding period of 2017.Operating profit for the three months ended December 29, 2017 was $27.6 million, an increase of $3.9 million or 16.5% from $23.6 million for the corresponding period last year, with the increase in profitability due to improving business mix. SG&A was up approximately $7 million due mainly to incremental operating general and administrative expense coming with the CH2M acquisition with otherwise flat SG&A spend for the year over year periods due to the continued strong focus on cost control.Revenues for the Divergent Solutions segment for the three months ended December 29, 2023 were $254.2 million, an increase of $39.7 million, or 18.5%, from $214.5 million for the corresponding period last year. The increase in revenue for the three months ended December 29, 2023 was mainly due to the startup of new programs previously won in fiscal 2023. Foreign currency translation did not have a material impact on revenue in our Divergent Solutions segment for either period presented. Operating profit for the segment was $7.6 million, for the three months ended December 29, 2023, a decrease of $4.4 million, or 36.7%, from $12.0 million for the corresponding period last year. Operating profit for the three month period reflected strong underlying performance in the Cyber & Intelligence business unit and the new programs previously won in fiscal 2023, although fully offset by an approximate one-time $15 million pre-tax non-cash charge associated with an inventory write down during the fiscal 2024 period as mentioned above. Foreign currency translation had an immaterial impact on operating profit in our Divergent Solutions segment for either period presented. Three Months Ended December 29, 2023 December 30, 2022 Revenue $ 306,001 $ 282,043 Operating Profit $ 54,455 $ 51,027 Revenues for the PA Consulting segment for the three months ended December 29, 2023 were $306.0 million, an increase of $24.0 million, or 8.5%, from $282.0 million in the corresponding period last year, primarily due to growth in PA Consulting's Defence & Security, Public Sector, and Energy & Utilities businesses. Our fiscal first quarter 2024 exchange rates compared to our fiscal first quarter 2023 period rates contributed favorable impacts of $16.7 million on revenues for the current period quarter. In the corresponding prior year period, our fiscal first quarter 2023 exchange rates compared to the rates of our fiscal first quarter 2022 period contributed unfavorable impacts on revenues of $41.6 million. Operating profit for the segment for the three months ended December 29, 2023 was $54.5 million, an increase of $3.4 million, or 6.7%, from $51.0 million in the corresponding period last year, slightly favorable versus the prior year period due mainly to impacts from the revenue growth mentioned above. 2017 was $42.12023 were $121.1 million, an increase of $23.8$27.4 million, or 29.2%, from $18.3$93.7 million for the corresponding period last year. While first quarterThe comparison of the three month period of fiscal 2018 G&A costs were up2024 to the corresponding 2023 period was unfavorably impacted by a one-time net favorable impact of $41 million relating mainly to changes in employee benefits programs in the prior year, partly offset by year over year favorable department spending as well as favorable impacts of corporate functional overhead cost recovery by our lines of business. Additionally, the fiscal 2024 period reflects approximately half of the increase was driven by a partial lump sum pension settlement, discrete personnel cost accrual adjustments and increased legal fees. The increase$10 million in other corporate expenses for the three month comparative periods was due mainly to higher professional service fees, personnel related costs and settlement charges associated with the Sverdrup U.S. pension plan amounting to $3.8 million, partially offset by savings associated with the 2015 Restructuring program. 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 purchased 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 in the opinion of management, that such adjustments are not indicative of the performance of the related LOB.We include in backlog the total dollar amount of revenuesrecord in the future as a resultrealize for work to be completed by our consolidated subsidiaries and our proportionate share of performing work under contracts that have been awarded to us. Our policy with respect to 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), our policy is to include in backlog the full contract award, whether funded or unfunded, excluding option periods.be performed by unconsolidated joint ventures. Because of variations in the nature, size, expected duration, funding commitments, and the scope of services required by our contracts, the amount and timing of when backlog will be recognized as revenues includes significant estimates and can vary greatly between individual contracts.client.client, including our U.S. government work. While management uses all information available to it to determine 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.EPCEngineering, 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 a number ofseveral fiscal quarters (and sometimes over fiscal years), we evaluatehave presented our backlog on a year-over-year basis, rather than on a sequential, quarter-over-quarter basis.Page 34JACOBS ENGINEERING GROUP INC. AND SUBSIDIARIES20172023 and December 30, 20162022 (in millions):December 29, 2023 December 30, 2022 Critical Mission Solutions $ 8,311 $ 7,632 People & Places Solutions 17,857 17,243 Divergent Solutions 3,110 3,077 PA Consulting 317 306 Total $ 29,595 $ 28,258 IncreasesThe increase in backlog in Critical Mission Solutions from December 30, 2022 was primarily driven by new business awards in the U.S. government space sector along with growth in the U.K. defense and nuclear remediation sectors that offset slower growth in the U.S. Defense market. Backlog in People & Places Solutions and Divergent Solutions remained relatively consistent year-over-year. The increase in backlog in PA Consulting from December 30, 2022 was primarily driven by strategic focus on long-term projects as well as organic year-over-year growth of the business. Aerospace & Technology from December 30, 2016 was primarilyprogress. Additionally, the resultCompany does not include our proportionate share of new awards from the U.S. federal government.Increasesbacklog related to unconsolidated joint ventures in backlog in Building & Infrastructure from December 30, 2016 was primarily the result of new awards in Australia and the U.S. markets.Increases in backlog in the Industrial line of business from December 30, 2016 was mainly from growth in field services across the U.S. and Canada markets. Backlog activity during the three-month period ended December 30, 2016 included a large cancellation in the Life Sciences area. The decrease in backlog in Petroleum & Chemicals from December 30, 2016 was due mainly to work off of projects in the Americas with significant pass through costs.2017,2023, our principal sources of liquidity consisted of $1,059.8 million$1.14 billion in cash and cash equivalents $512 millionand $2.25 billion of available borrowing capacity under our $1.6$2.25 billion 2014 revolving revolving credit facilityagreement (the “Revolving"Revolving Credit Facility”Facility"),. We finance much of our operations and growth through cash flows from operating activities.On December 15, 2017, the Company completed the acquisition of CH2M HILL Companies, Ltd. (CH2M), an international provider of engineering, construction, and technical services,generated by acquiring 100% of the outstanding shares of CH2M common stock and preferred stock. The Company paid total consideration of approximately $1.8 billion in cash and issued approximately $1.4 billion of Jacobs’ common stock to the former stockholders and certain equity award holders of CH2M. In connection with the acquisition, the Company also assumed CH2M’s revolving credit facility and second lien notes, including a $20 million prepayment penalty, which totaled approximately $700 million. Immediately following the effective time of the acquisition, the Company repaid CH2M’s revolving credit facility and second lien notes including the related prepayment penalty. The Company financed the cash consideration for the CH2M acquisition, the repayment of CH2M’s outstanding indebtedness and other transaction expenses with a combination of cash on hand and debt financing, which included borrowings under the Term Loan Facility in an aggregate principal amount of $1.5 billion and additional borrowings under the Revolving Credit Facility.At December 29, 2017, our cashoperations.$1,059.8 million,$1.14 billion, representing an increase of $285.7 $215.6 million from $774.2$926.6 million at September 29, 2017.The most significant drivers contributing to2023increase in cash and cash equivalents from September 29, 2017 to December 29, 2017 were favorable cash flows from financing activities of $1.6 billion, offsetflow provided by $1.4 billion used in investing cash flows, both of which activities were largely driven by the CH2M acquisition. Cash flows from operations of $46.9$418.4 million also contributed to the increase. On a comparative basis, cash and cash equivalents increased $80.8 million to $736.5 million during the three-month period ended December 30, 2016 from $655.7 million at September 30, 2016. This increase was driven mainly from cash flow from operations of $110.4 million and cash flow from financing activities of $15.3 million, partially offset by cash flows from investing activities of $23.1 million and exchange rate effects on cash of $21.8 million. Page 35JACOBS ENGINEERING GROUP INC. AND SUBSIDIARIESOur cash flow from operations of $46.9 million during the three-month period ended December 29, 2017 was comparatively lower than the $110.4 million in cash flow from operations for the corresponding period in fiscal 2017, due mainly to lower net earnings in the current period which reflect the CH2M acquisition related expenses and restructuring and other costs, partly offset by reductions in non-current assets. Included in our cash flows from operations were payments of approximately $34.2 million in restructuring and other costs and $27.6 million in CH2M transaction expenses. For the three months ended December 30, 2016 we had payments of $44.229, 2023 was favorable restructuring and other costs.infor investing activities for the three months ended December 29, 2017 was $1.4 billion and primarily driven by2023 was $16.0 million, compared to cash used for investing activities of $48.7 million in the CH2M acquisition, net of cash amounts acquired fromcorresponding prior year period, with this change due primarily to no acquisitions in the current year, compared to PA Consulting's acquisition of $315 million. AdditionsThe Cambridge Group in the corresponding prior period, and fewer additions to plant, property and equipment were roughly flatin the current year. the comparative periods. Our cash from financing activities of $1.6 billion$208.7 million for the three months ended December 29, 2017 resulted mainly from proceeds2023 is driven by share repurchases of $100.0 million, $33.6 million in net repayments of borrowings, $33.4 million in dividends to shareholders, and $24.4 million in net PA Consulting related redeemable noncontrolling interests purchase and issuance activity. Cash used by financing activities in the corresponding prior year period was $246.1 million, due primarily to share repurchases of $140.5 million, $58.4 million in net PA Consulting related redeemable noncontrolling interests purchase and issuance activity, $29.8 million in dividends to shareholders, and net repayments from borrowings of $2.7 billion, most of which was used in connection with financing of the CH2M acquisition. Repayments of long term debt of $1.1 billion during first quarter fiscal 2018 were up compared to $303 million in first quarter fiscal 2017, with this increase due mainly to payoff of CH2M’s legacy debt balances in connection with the closing of the acquisition. Comparatively lower cash flows from proceeds from issuances of common stock during the current quarter were offset by lower cash outflows for common stock repurchases. The Company paid $18.1 million in dividends during the three-month period ended December 29, 2017, with no dividends paid in the comparative prior year period.2017,2023, the Company had approximately $586.9$259.4 million in cash and cash equivalents held in the U.S. and $633.6$882.8 million held outside of the U.S. (primarily in the U.K., the Eurozone, Chile,Australia, India, Canada, Saudi Arabia and India)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 10, 7- Income Taxes of Notes to Consolidated Financial Statements included in our 20162023 Form 10-K), there are no material impediments to repatriating these funds to the U.S.CompanyCompany had $341.6$311.5 million in letters of credit outstanding at December 29, 2017.2023. Of this amount, $2.5$0.9 million was issued under the Revolving Credit Facility and $339.1$310.7 million was issued under separate, committed and uncommitted letter-of-credit facilities.operations, support our debt service, pay dividends and buy back shares and support our ongoing acquisition strategyprojected cash requirements for the next twelve months based on the liquidity provided by our cash and cash equivalents on hand, our borrowing capacity remaining under the Revolving Credit Facility and our continuing cash from operations.2017.Contractual ObligationsAs2023.resultwholly-owned subsidiary of Jacobs Solutions Inc. (together, the "Obligor Group"), completed an offering of $500 million aggregate principal amount of 5.90% Bonds, due 2033 and on August 18, 2023, completed an offering of $600 million aggregate principal amount of 6.35% Bonds, due 2028 (collectively the “Bonds”). The Bonds are fully and unconditionally guaranteed by the Company (the “Guarantees”). The Bonds and the respective Guarantees were offered pursuant to prospectus supplements, dated February 13, 2023 and August 15, 2023, respectively, to the prospectus dated February 6, 2023, that forms a part of the acquisitionCompany and JEGI’s automatic shelf registration statement on Form S-3ASR (File Nos. 333-269605 and 333-269605-01) previously filed with the SEC.CH2M on December 15, 2017, we now are party(i) intercompany transactions and balances between Jacobs and JEGI and (ii) equity in the earnings from and investments in all other subsidiaries of the Company that do not guarantee the registered securities of either Jacobs or JEG. This summarized financial information (in thousands) has been prepared and presented pursuant to lettersRegulation S-X Rule 13-01, “Financial Disclosures about Guarantors and Issuers of creditGuaranteed Securities” and bank guaranteesis not intended to present the financial position or results of approximately $127.6 million asoperations of December 29, 2017. Additionally, we are now party to surety and bid bonds of $820.6 million as of December 29, 2017.the Obligor Group in accordance with U.S. GAAP.Three Months Ended (in thousands) December 29, 2023 Summarized Statement of Earnings Data Revenue $ 932,689 Direct Costs $ 788,955 Selling, General and Administrative Expenses $ 130,947 Net earnings attributable to Guarantor Subsidiaries from continuing operations $ (11,325) Noncontrolling interests $ 691 (in thousands) December 29, 2023 September 29, 2023 Summarized Balance Sheet Data Current assets, less receivables from Non-Guarantor Subsidiaries $ 925,256 $ 693,037 Current receivables from Non-Guarantor Subsidiaries $ — $ — Noncurrent assets, less noncurrent receivables from Non-Guarantor Subsidiaries $ 466,219 $ 459,276 Noncurrent receivables from Non-Guarantor Subsidiaries $ 605,863 $ 610,900 Current liabilities $ 696,793 $ 616,140 Current liabilities to Non-Guarantor Subsidiaries $ 626,572 $ 387,461 Long-term Debt $ 2,575,894 $ 2,561,590 Other Noncurrent liabilities, less amounts payable to Non-Guarantor Subsidiaries $ 250,417 $ 248,852 Noncurrent liabilities to Non-Guarantor Subsidiaries $ 369,949 $ 343,674 Noncontrolling interests $ 827 $ 577 Accumulated deficit $ (2,523,114) $ (2,395,081) Item 3.11 Long-term Debt12- 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, and Term Loan Facility. Facility, Revolving Credit Facility,Facilities and certain other debt obligations are subject to variable rate interest which could be adversely affected by an increase in interest rates. As of December 29, 2017,2023, we had an aggregate of $2,585.2 million$1.80 billion in outstanding borrowings under our Revolving Credit Facility and Term Loan Facility and our Revolving Credit Facility.Facilities. Interest on amounts borrowed under these agreementsagreements is subject to adjustment based on the Company’sCompany’s Consolidated Leverage Ratio (as defined in the credit agreements governing the Revolving Credit Facility and the Term Loan Facility and Revolving Credit Facility)Facilities). Depending on the Company’s Consolidated Leverage Ratio,Page 36JACOBS ENGINEERING GROUP INC. AND SUBSIDIARIESFacility and Revolving Credit FacilityFacilities bear interest at a EurocurrencySOFR rate plus a margin of between 1.0%0.975% and 1.5%1.725% or a base rate plus a margin of between 0%0.0% and 0.5%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 0.908% and 1.658%. 2017,2023, our weighted average borrowings that are subject to floating rate borrowingsexposure were approximately $918 million.$1.29 billion. If floating interest rates had increased by 1.00%, our interest expense for the three months ended December 29, 20172023 would have increased by approximately $2.4$3.2 million.our operations incur contractthe Company incurs costs in currencies other than theirour functional currency, we attempt to have a portion of the related contract revenues denominated in the same currencies as the costs. In those situations, where revenues and costs are transacted in different currencies, we sometimes enter into foreign exchange contracts in order 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 does not currently havehas $964.9 million in notional value of exchange rate sensitive instruments that would have a material effect on our consolidated financial statements or results of operations.at December 29, 2023. See Note 17- Commitments and Contingencies and Derivative Financial Instruments for discussion.Item 4. Chairman 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 Securities Exchange Act of 1934, as amended (the “Exchange Act”),defined above, as of December 29, 2017,2023, 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 Chairman and 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 U.S. Securities and Exchange Commission’sSEC’s rules and forms and that such information is accumulated and communicated to the Company’s management, including the Company’s Chairman and Chief Executive Officer (principal executive officer) and Chief Financial Officer (principal financial officer), as appropriate to allow timely decisions regarding required disclosure.As previously disclosed, the Company acquired CH2M in December 2017. Prior to the acquisition, CH2M reported in their Annual Report on Form 10-K Part II – Item 9A – Controls and Procedures for the year ended December 30, 2016 that it had identified a material weakness in its internal controls over financial reporting relating to internal control deficiencies that involved the development of project cost estimates for long-term contracts accounted for under the percentage-of-completion method. Prior to the closing of the acquisition, CH2M management developed and initiated a plan to remediate these internal control deficiencies, which included the implementation of new and revised key internal controls. As of December 29, 2017, management of the Company has not fully assessed CH2M’s internal control over financial reporting and is currently testing new and revised internal controls for design and operating effectiveness. As permitted by SEC guidance for newly acquired businesses, management’s assessment of the Company’s disclosure controls and procedures did not include an assessment of those disclosure controls and procedures of CH2M that are subsumed by internal control over financial reporting. CH2M accounted for approximately 42% of total assets as of the Evaluation Date and approximately 5% of total revenues of the Company for the fiscal quarter ended on the Evaluation Date.in the Company’s system ofto 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 29, 20172023 that have materially affected, or are reasonably likely to materially affect, itsour internal control over financial reporting.3747JACOBS ENGINEERING GROUP INC. AND SUBSIDIARIESOTHEROTHER INFORMATIONItem 1.18, 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.1A, 1A- Risk Factors in our 20172023 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 since the date of the 2017 Form 10-K, except for thefactors. Before making an investment decision with respect to our common stock, you should carefully consider those risk factors, described belowas well as the financial and the information disclosed elsewherebusiness disclosures contained in this quarterly reportQuarterly Report on Form 10-Q that provides factual updates to risk factors contained inand our 2017 Form 10-K.If we do not have adequate indemnification for our nuclear services, it could adversely affect our businessother current and financial condition.The Price-Anderson Nuclear Industries Indemnity Act, commonly calledperiodic reports filed with the Price-Anderson Act (“PAA”), is a U.S. federal law, which, among other things, regulates radioactive materials and the nuclear energy industry, including liability and compensation in the event of nuclear related incidents. The PAA provides certain protections and indemnification to nuclear energy plant operators and U.S. Department of Energy (“DOE”) contractors. The PAA protections and indemnification apply to us as part of our services to the U.S. nuclear energy industry and DOE for new facilities, maintenance, modification, decontamination and decommissioning of nuclear energy, weapons, and research facilities.We offer similar services in other jurisdictions outside the U.S. For those jurisdictions, varying levels of nuclear liability protection is provided by international treaties, and/or domestic laws, such as the Nuclear Liability and Compensation Act of Canada and the Nuclear Installations Act of the United Kingdom, insurance and/or assets of the nuclear installation operators (some of which are backed by governments) as well as under appropriate enforceable contractual indemnifications and hold-harmless provisions. These protections and indemnifications, however, may not cover all of our liability that could arise in the performance of these services. To the extent the PAA or other protections and indemnifications do not apply to our services, our business could be adversely affected because of the cost of losses associated with liability not covered by the available protections and indemnifications, or by virtue of our loss of business because of these added costsItem 2. equity securities during the first fiscal quarter of 2018.There were nofiscal quarter of 2018.Period Total Number of Shares Purchased Average Price Per Share (1) Total Number of Shares Purchased under the 2023 Repurchase Authorization Approximate Dollar Value of Shares that May Yet Be Purchased Under the 2023 Repurchase Authorization November 24, 2023 - December 8, 2023 788,758 $126.80 788,758 $774,818,943 Section 1503 of the Dodd-Frank Wall Street Reform and Consumer Protection Act (the “Dodd-Frank Act”) requires domestic mine operators to disclose violations and orders issued under the Federal Mine Safety and Health Act of 1977 (the “Mine Act”) by the federal Mine Safety and Health Administration. Under the Mine Act, an independent contractor, suchDisclosure.Jacobs, that performs services or construction of a mine is included within the definition of a mining operator. We do not act as the owner of any mines.Information concerning mine safety violations or other regulatory matters required by Section 1503(a) of the Dodd-Frank Wall Street Reform and Consumer Protection Act anddefined in Item 104408(a) of Regulation S-K, is includedintended to satisfy the affirmative defense conditions of Rule 10b5-1(c) under the Exchange Act. The arrangement provided for the sale of an aggregate of up to 42,000 shares of the Company’s common stock, subject to certain conditions. The arrangement will terminate on August 2, 2024.Exhibit 95Item 408(a) of Regulation S-K, intended to this Quarterly Reportsatisfy the affirmative defense conditions of Rule 10b5-1(c) under the Exchange Act. The arrangement provided for the sale of up to an aggregate of 5,486 shares of the Company’s common stock, subject to certain conditions. The arrangement will terminate on Form 10-Q.5. Other Information.Page 38JACOBS ENGINEERING GROUP INC. AND SUBSIDIARIESNone.Page 39JACOBS ENGINEERING GROUP INC. AND SUBSIDIARIESPage 40JACOBS ENGINEERING GROUP INC. AND SUBSIDIARIES*Filed herewith#101 Indicates management contract or compensatory plan or arrangement.104 4151JACOBS ENGINEERING GROUP INC. AND SUBSIDIARIESENGINEERING GROUPSOLUTIONS INC.By: Kevin C. BerrymanKevin C. Berrymanand Chief Financial Officer7, 20184252