Exhibit 99.1
UNAUDITED PRO FORMA CONSOLIDATED FINANCIAL INFORMATION
(In thousands, except share information)
Divestiture of Energy, Chemicals and Resources Business
On April 26, 2019, Jacobs Engineering Group Inc. ("Jacobs") completed the previously announced divestiture (the “Divestiture”) of its Energy, Chemicals and Resources ("ECR") Business to WorleyParsons Limited (the “Buyer”), pursuant to a Stock and Asset Purchase Agreement (the “Purchase Agreement”) entered into on October 21, 2018 for a purchase price of (i) $2.6 billion in cash plus (ii) 58.2 million ordinary shares of the Buyer, subject to adjustments for changes in working capital and certain other items. On April 26, 2019, Jacobs and the Buyer entered into an Amended and Restated Stock and Asset Purchase Agreement, pursuant to which the Purchase Agreement was amended and restated in its entirety, thereby modifying its terms.
Certain financial and information technology services are to be provided by Jacobs on a transitional basis for up to twelve months commencing immediately following the Divestiture subject to the terms and conditions of the Transition Services Agreement by and between Jacobs and the Buyer. These costs will be reimbursed by the Buyer during the transition period and such costs will no longer exist after the transition period.
Basis of Pro Forma Information
The following unaudited pro forma consolidated financial information is based upon the historical financial statements of Jacobs, adjusted to reflect the Divestiture. The following unaudited pro forma consolidated financial information of Jacobs should be read in conjunction with the related notes herein and with the historical consolidated financial statements of Jacobs and the related notes thereto included in previous filings with the Securities and Exchange Commission.
To provide a better understanding of the impact of the Divestiture, the following unaudited pro forma consolidated financial information is presented to reflect how the Divestiture might have affected the historical financial statements had the transactions been consummated at an earlier date. The unaudited pro forma consolidated statements of operations that follow are presented as if the Divestiture had occurred on October 3, 2015, the beginning of the earliest period presented. The unaudited pro forma consolidated balance sheet as of December 28, 2018 is presented as if the Divestiture had occurred on that date.
The unaudited pro forma consolidated financial information is provided for illustrative and informational purposes only and is not intended to reflect or be indicative of Jacobs' consolidated results of operations or financial position had the Divestiture occurred as of the dates presented and should not be taken as a representation of Jacobs' future consolidated results of operations or financial position. For example, the financial information does not reflect any potential earnings or other impacts from the use of the proceeds from the Divestiture or cost reductions of previously allocated corporate costs and potential subsequent restructuring charges.
JACOBS ENGINEERING GROUP INC. AND SUBSIDIARIES
UNAUDITED PRO FORMA CONSOLIDATED BALANCE SHEET
(In thousands, except share information)
|
| | | | | | | | | | | | | | | | | | |
| | | As of December 28, 2018 |
| | | Historical
(As Reported) | | Sale of ECR | | Pro Forma Adjustments | | | | Pro Forma |
| ASSETS | | | | | | | | | | |
| Current Assets: | | | | | | | | | | |
| Cash and cash equivalents | | $ | 886,707 |
| | $ | 2,682,945 |
| (a) | $ | (96,906 | ) | | (g) | | $ | 3,472,746 |
|
| Receivables and contract assets | | 2,681,908 |
| | — |
| | — |
| | | | 2,681,908 |
|
| Prepaid expenses and other | | 128,977 |
| | 598,581 |
| (a) | — |
| |
| | 727,558 |
|
| Current assets held for sale | | 1,201,270 |
| | (1,201,270 | ) | (b) | — |
| | | | — |
|
| Total current assets | | 4,898,862 |
| | 2,080,256 |
| | (96,906 | ) | | | | 6,882,212 |
|
| Property, Equipment and Improvements, net | | 256,488 |
| | — |
| | — |
| | | | 256,488 |
|
| Other Noncurrent Assets: | | | | | | | | | | |
| Goodwill | | 4,771,086 |
| | — |
| | — |
| | | | 4,771,086 |
|
| Intangibles, net | | 552,030 |
| | — |
| | — |
| | | | 552,030 |
|
| Miscellaneous | | 785,884 |
| | — |
| | — |
| | | | 785,884 |
|
| Noncurrent assets held for sale | | 1,680,909 |
| | (1,680,909 | ) | (b) | — |
| | | | — |
|
| Total other noncurrent assets | | 7,789,909 |
| | (1,680,909 | ) | | — |
| | | | 6,109,000 |
|
| | | $ | 12,945,259 |
| | $ | 399,347 |
| | $ | (96,906 | ) | | | | $ | 13,247,700 |
|
| LIABILITIES AND EQUITY | | | | | | | | | | |
| Current Liabilities: | | | | | | | | | | |
| Notes payable | | $ | 3,136 |
| | $ | — |
| | $ | — |
| | | | $ | 3,136 |
|
| Accounts payable | | 895,434 |
| | — |
| | — |
| | | | 895,434 |
|
| Accrued liabilities | | 994,111 |
| | 568,000 |
| (c) (d) | — |
| |
| | 1,562,111 |
|
| Contract liabilities | | 409,764 |
| | — |
| | — |
| | | | 409,764 |
|
| Current liabilities held for sale | | 792,279 |
| | (792,279 | ) | (b) | — |
| | | | — |
|
| Total Current Liabilities | | 3,094,724 |
| | (224,279 | ) | | — |
| | | | 2,870,445 |
|
| Long-term debt | | 2,668,993 |
| | — |
| | (96,906 | ) | | (g) | | 2,572,087 |
|
| Other Deferred Liabilities | | 1,201,786 |
| | — |
| | — |
| | | | 1,201,786 |
|
| Noncurrent liabilities held for sale | | 138,722 |
| | (138,722 | ) | (b) | — |
| | | | — |
|
| Stockholders' Equity: | | | | | | | | | | |
| Capital Stock: | | | | | | | | | | |
| Preferred stock | | — |
| | — |
| | — |
| | | | — |
|
| Common stock | | 140,400 |
| | — |
| | — |
| | | | 140,400 |
|
| Additional paid-in capital | | 2,672,390 |
| | — |
| | — |
| | | | 2,672,390 |
|
| Retained earnings | | 3,796,864 |
| | 683,979 |
| (e) | — |
| |
| | 4,480,843 |
|
| Accumulated other comprehensive loss | | (856,552 | ) | | 121,206 |
| (f) | — |
| | | | (735,346 | ) |
| Total Jacobs stockholders' equity | | 5,753,102 |
| | 805,185 |
| | — |
| |
| | 6,558,287 |
|
| Noncontrolling interests | | 87,932 |
| | (42,837 | ) | (f) | — |
| | | | 45,095 |
|
| Total Group stockholders' equity | | 5,841,034 |
| | 762,348 |
| | — |
| | | | 6,603,382 |
|
| | | $ | 12,945,259 |
| | $ | 399,347 |
| | $ | (96,906 | ) | | | | $ | 13,247,700 |
|
See accompanying notes to the unaudited pro forma consolidated financial information.
JACOBS ENGINEERING GROUP INC. AND SUBSIDIARIES
UNAUDITED PRO FORMA CONSOLIDATED STATEMENT OF EARNINGS
(In thousands, except share information)
|
| | | | | | | | | | | | | | | | | | |
| | | Three Months Ended December 28, 2018 |
| | | Historical
(As Reported) | | Sale of ECR (i) | | Pro Forma Adjustments | | | | Pro Forma |
| Revenues | | $ | 3,083,788 |
| | $ | — |
| | $ | — |
| | | | $ | 3,083,788 |
|
| Direct cost of contracts | | (2,515,268 | ) | | — |
| | — |
| | | | (2,515,268 | ) |
| Gross profit | | 568,520 |
| | — |
| | — |
| | | | 568,520 |
|
| Selling, general, and administrative expenses | | (455,390 | ) | | — |
| | — |
| |
| | (455,390 | ) |
| Operating Profit | | 113,130 |
| | — |
| | — |
| | | | 113,130 |
|
| Other Income (Expense): | | | | | | | | | | |
| Interest income | | 2,104 |
| | — |
| | — |
| | | | 2,104 |
|
| Interest expense | | (25,325 | ) | | — |
| | 803 |
| | (h) | | (24,522 | ) |
| Miscellaneous income (expense), net | | 2,282 |
| | — |
| | — |
| | | | 2,282 |
|
| Total other (expense) income, net | | (20,939 | ) | | — |
| | 803 |
| | | | (20,136 | ) |
| Earnings from Continuing Operations Before Taxes | | 92,191 |
| | — |
| | 803 |
| | | | 92,994 |
|
| Income Tax Expense for Continuing Operations | | (22,758 | ) | | — |
| | (201 | ) | | (h) | | (22,959 | ) |
| Net Earnings of the Group from Continuing Operations | | 69,433 |
| | — |
| | 602 |
| | | | 70,035 |
|
| Net (Earnings) Loss Attributable to Noncontrolling Interests from Continuing Operations | | (4,539 | ) | | — |
| | — |
| | | | (4,539 | ) |
| Net Earnings Attributable to Jacobs from Continuing Operations | | 64,894 |
| | — |
| | 602 |
| | | | 65,496 |
|
| Net Earnings Per Share: | | | | | | | | | | |
| Basic Net Earnings from Continuing Operations Per Share | | $ | 0.45 |
| | | | | | | | $ | 0.46 |
|
| Diluted Net Earnings from Continuing Operations Per Share | | $ | 0.45 |
| | | | | | | | $ | 0.46 |
|
See accompanying notes to the unaudited pro forma consolidated financial information.
JACOBS ENGINEERING GROUP INC. AND SUBSIDIARIES
UNAUDITED PRO FORMA CONSOLIDATED STATEMENT OF EARNINGS
(In thousands, except share information)
|
| | | | | | | | | | | | | | | | | | |
| | | Year Ended September 28, 2018 |
| | | Historical
(As Adjusted for ASU 2017-07) | | Sale of ECR (i) | | Pro Forma Adjustments | | | | Pro Forma |
| Revenues | | $ | 14,984,646 |
| | $ | (4,404,873 | ) | | $ | — |
| | | | $ | 10,579,773 |
|
| Direct cost of contracts | | (12,177,486 | ) | | 3,756,263 |
| | — |
| | | | (8,421,223 | ) |
| Gross profit | | 2,807,160 |
| | (648,610 | ) | | — |
| | | | 2,158,550 |
|
| Selling, general, and administrative expenses | | (2,183,389 | ) | | 412,283 |
| | — |
| |
| | (1,771,106 | ) |
| Operating Profit | | 623,771 |
| | (236,327 | ) | | — |
| | | | 387,444 |
|
| Other Income (Expense): | | | | | | | | | | |
| Interest income | | 8,984 |
| | — |
| | — |
| | | | 8,984 |
|
| Interest expense | | (76,760 | ) | | — |
| | 2,394 |
| | (h) | | (74,366 | ) |
| Gain (Loss) on disposal of business and investments | | (20,967 | ) | | 20,969 |
| | — |
| | | | 2 |
|
| Miscellaneous income (expense), net | | 19,677 |
| | (8,365 | ) | | — |
| | | | 11,312 |
|
| Total other (expense) income, net | | (69,066 | ) | | 12,604 |
| | 2,394 |
| | | | (54,068 | ) |
| Earnings Before Taxes | | 554,705 |
| | (223,723 | ) | | 2,394 |
| | | | 333,376 |
|
| Income Tax Expense | | (381,563 | ) | | 65,185 |
| | (599 | ) | | (h) | | (316,977 | ) |
| Net Earnings of the Group | | 173,142 |
| | (158,538 | ) | | 1,795 |
| | | | 16,399 |
|
| Net (Earnings) Loss Attributable to Noncontrolling Interests | | (9,711 | ) | | 177 |
| | — |
| | | | (9,534 | ) |
| Net Earnings Attributable to Jacobs | | $ | 163,431 |
| | $ | (158,361 | ) | | $ | 1,795 |
| | | | $ | 6,865 |
|
| Net Earnings Per Share: | | | | | | | | | | |
| Basic | | $ | 1.18 |
| | | | | | | | $ | 0.05 |
|
| Diluted | | $ | 1.17 |
| | | | | | | | $ | 0.05 |
|
See accompanying notes to the unaudited pro forma consolidated financial information.
JACOBS ENGINEERING GROUP INC. AND SUBSIDIARIES
UNAUDITED PRO FORMA CONSOLIDATED STATEMENT OF EARNINGS
(In thousands, except share information)
|
| | | | | | | | | | | | | | | | | | |
| | | Year Ended September 29, 2017 |
| | | Historical
(As Adjusted for ASU 2017-07) | | Sale of ECR (i) | | Pro Forma Adjustments | | | | Pro Forma |
| Revenues | | $ | 10,022,788 |
| | (3,692,662 | ) | | — |
| | | | $ | 6,330,126 |
|
| Direct cost of contracts | | (8,261,838 | ) | | 3,191,747 |
| | — |
| | | | (5,070,091 | ) |
| Gross profit | | 1,760,950 |
| | (500,915 | ) | | — |
| | | | 1,260,035 |
|
| Selling, general, and administrative expenses | | (1,382,177 | ) | | 366,284 |
| | — |
| | | | (1,015,893 | ) |
| Operating Profit | | 378,773 |
| | (134,631 | ) | | — |
| | | | 244,142 |
|
| Other Income (Expense): | | | | | | | | | | |
| Interest income | | 8,748 |
| | — |
| | — |
| | | | 8,748 |
|
| Interest expense | | (12,035 | ) | | — |
| | — |
| | | | (12,035 | ) |
| Gain (Loss) on disposal of business and investments | | 10,880 |
| | (10,856 | ) | | — |
| | | | 24 |
|
| Miscellaneous income (expense), net | | 6,851 |
| | (4,576 | ) | | — |
| | | | 2,275 |
|
| Total other (expense) income, net | | 14,444 |
| | (15,432 | ) | | — |
| | | | (988 | ) |
| Earnings Before Taxes | | 393,217 |
| | (150,063 | ) | | — |
| | | | 243,154 |
|
| Income Tax Expense | | (105,842 | ) | | 32,739 |
| | — |
| | | | (73,103 | ) |
| Net Earnings of the Group | | 287,375 |
| | (117,324 | ) | | — |
| | | | 170,051 |
|
| Net (Earnings) Loss Attributable to Noncontrolling Interests | | 6,352 |
| | (6,236 | ) | | — |
| | | | 116 |
|
| Net Earnings Attributable to Jacobs | | $ | 293,727 |
| | $ | (123,560 | ) | | $ | — |
| | | | $ | 170,167 |
|
| Net Earnings Per Share: | | | | | | | | | | |
| Basic | | $ | 2.43 |
| | | | | | | | $ | 1.43 |
|
| Diluted | | $ | 2.42 |
| | | | | | | | $ | 1.42 |
|
See accompanying notes to the unaudited pro forma consolidated financial information.
JACOBS ENGINEERING GROUP INC. AND SUBSIDIARIES
UNAUDITED PRO FORMA CONSOLIDATED STATEMENT OF EARNINGS
(In thousands, except share information)
|
| | | | | | | | | | | | | | | | | | |
| | | Year Ended September 30, 2016 |
| | | Historical
(As Adjusted for ASU 2017-07) | | Sale of ECR (i) | | Pro Forma Adjustments | | | | Pro Forma |
| Revenues | | $ | 10,964,157 |
| | (4,706,679 | ) | | — |
| | | | $ | 6,257,478 |
|
| Direct cost of contracts | | (9,196,326 | ) | | 4,190,043 |
| | — |
| | | | (5,006,283 | ) |
| Gross profit | | 1,767,831 |
| | (516,636 | ) | | — |
| | | | 1,251,195 |
|
| Selling, general, and administrative expenses | | (1,429,233 | ) | | 446,263 |
| | — |
| |
| | (982,970 | ) |
| Operating Profit | | 338,598 |
| | (70,373 | ) | | — |
| | | | 268,225 |
|
| Other Income (Expense): | | | | | | | | | | |
| Interest income | | 7,848 |
| | — |
| | — |
| | | | 7,848 |
|
| Interest expense | | (15,260 | ) | | — |
| |
| |
| | (15,260 | ) |
| Gain (Loss) on disposal of business and investments | | (41,410 | ) | | — |
| | — |
| | | | (41,410 | ) |
| Miscellaneous income (expense), net | | (3,053 | ) | | — |
| | — |
| | | | (3,053 | ) |
| Total other (expense) income, net | | (51,875 | ) | | — |
| | — |
| | | | (51,875 | ) |
| Earnings Before Taxes | | 286,723 |
| | (70,373 | ) | | — |
| | | | 216,350 |
|
| Income Tax Expense | | (72,208 | ) | | 19,199 |
| | — |
| |
| | (53,009 | ) |
| Net Earnings of the Group | | 214,515 |
| | (51,174 | ) | | — |
| | | | 163,341 |
|
| Net (Earnings) Loss Attributable to Noncontrolling Interests | | (4,052 | ) | | 709 |
| | — |
| | | | (3,343 | ) |
| Net Earnings Attributable to Jacobs | | $ | 210,463 |
| | $ | (50,465 | ) | | $ | — |
| | | | $ | 159,998 |
|
| Net Earnings Per Share: | | | | | | | | | | |
| Basic | | $ | 1.75 |
| | | | | | | | $ | 1.33 |
|
| Diluted | | $ | 1.73 |
| | | | | | | | $ | 1.32 |
|
See accompanying notes to the unaudited pro forma consolidated financial information.
Note 1 — Basis of Preparation
The unaudited pro forma consolidated financial information is based upon the historical financial statements of Jacobs, adjusted to reflect the Divestiture. The unaudited pro forma consolidated financial information of Jacobs should be read in conjunction with the other related notes herein and with the historical consolidated financial statements of Jacobs and the related notes thereto included in previous filings with the Securities and Exchange Commission.
Financial information as reported is adjusted for the adoption of ASU 2017-07, Compensation- Retirement Benefits (Topic 715): Improving the Presentation of Net Periodic Pension Cost and Net Periodic Postretirement Benefit Cost ("ASU 2017-07"), as to show all historical unaudited pro forma consolidated financial information on a comparable basis with the first quarter of fiscal 2019, for which the standard has been adopted and is reflected.
To provide a better understanding of the impact of the Divestiture, the unaudited pro forma consolidated financial information is presented to reflect how the Divestiture might have affected the historical financial statements had the transactions been consummated at an earlier date. The unaudited pro forma consolidated statements of operations are presented as if the Divestiture had occurred on October 3, 2015, the beginning of the earliest period presented. The unaudited pro forma consolidated balance sheet as of December 28, 2018 is presented as if the Divestiture had occurred on that date.
The unaudited pro forma consolidated financial information is provided for illustrative and informational purposes only and are not intended to reflect or be indicative of Jacobs' consolidated results of operations or financial position had the Divestiture occurred as of the dates presented and should not be taken as representation of Jacobs' future consolidated results of operations or financial condition. For example, these financial statements do not reflect any potential earnings or other impacts from the use of the proceeds from the Divestiture or cost reductions of previously allocated corporate costs and potential subsequent restructuring charges.
The historical consolidated financial information has been adjusted in the unaudited pro forma consolidated financial statements to give effect to pro forma events that are (i) directly attributable to the Divestiture, (ii) factually supportable, and (iii) with respect to the statements of operations, expected to have a continuing impact on Jacobs' results.
The pro forma adjustments described below were based on management’s assumptions and estimates, including assumptions relating to the consideration received.
Note 2 — Unaudited Pro Forma Adjustments
| |
| (a) | Represents the impact of the $2.6 billion in cash proceeds, the 58.2 million ordinary shares of the Buyer received from the Divestiture and the closing share price of the Buyer's ordinary shares on April 26, 2019 of $598 million, adjusted for estimated working capital and purchase price adjustment. The ordinary shares received are subject to a lock-up as provided in the Amended Purchase Agreement and the value of the shares received is subject to change over the holding period. |
| |
| (b) | Represents the disposition of the ECR business' assets and liabilities which had been reported as “held for sale” as of December 28, 2018. |
| |
| (c) | Represents an estimated increase to accrued income taxes of $535 million due to the amount owed on the gain on sale. |
| |
| (d) | Represents estimated transaction advisory costs of $33 million, net of taxes. |
| |
| (e) | The gain on the Divestiture assuming we had completed the sale as of October 3, 2015 is as follows (in millions): |
|
| | | | |
| Net cash proceeds | | $ | 2,683 |
|
| Ordinary shares of the Buyer received | | 598 |
|
| Transaction costs | | (33 | ) |
| Net assets sold | | (1,951 | ) |
| Accumulated other comprehensive loss | | (121 | ) |
| Elimination of noncontrolling interests | | 43 |
|
| Pre-tax gain on sale | | $ | 1,219 |
|
| Income taxes | | (535 | ) |
| After-tax gain on sale | | $ | 684 |
|
The tax effect of the gain exceeds the applicable statutory rate principally due to non-deductible goodwill.
(f) Reflects the disposition of the accumulated other comprehensive loss which is comprised primarily of related foreign currency translation adjustments and noncontrolling interests accounts associated with legal entities that have been sold in connection with the Divestiture.
(g) Represents the required long-term debt to be paid down as part of the Divestiture of $97 million.
(h) Reflects the elimination of interest expense relating to long-term debt required to be paid down and the related income tax effect of pro forma adjustments based on the estimated blended statutory rate of 25%.
(i) Represents the elimination of the operating results of the ECR business in the unaudited statements of earnings for the periods presented.
Not included above are costs associated with certain financial and information technology services to be provided by Jacobs on a transitional basis for up to twelve months commencing immediately following the Divestiture subject to the terms and conditions of the Transition Services Agreement. These costs will be reimbursed by the Buyer during the transition period and such costs will no longer exist after the transition period. These amounts are not expected to have a continuing impact to Jacobs; therefore, are not included as a pro forma adjustment.
