Jacobs Engineering (J) 10-Q 29 Apr 10 2010 Q2 Quarterly report Financial data

Document and Entity Information

Document and Entity Information
	6 Months Ended Apr. 02, 2010	Apr. 22, 2010
Document Type	10-Q
Amendment Flag	false
Document Period End Date	2010-04-02
Document Fiscal Year Focus	2,010
Document Fiscal Period Focus	Q2
Trading Symbol	JEC
Entity Registrant Name	JACOBS ENGINEERING GROUP INC /DE/
Entity Central Index Key	0000052988
Current Fiscal Year End Date	--10-01
Entity Filer Category	Large Accelerated Filer
Entity Common Stock, Shares Outstanding		125,018,964

CONSOLIDATED BALANCE SHEETS

CONSOLIDATED BALANCE SHEETS (USD $)
In Thousands	6 Months Ended Apr. 02, 2010	12 Months Ended Oct. 02, 2009
Current Assets:
Cash and cash equivalents	$839,057	$1,033,619
Receivables	1,698,774	1,618,561
Deferred income taxes	128,444	117,066
Prepaid expenses and other	44,055	49,203
Total current assets	2,710,330	2,818,449
Property, Equipment and Improvements, Net	223,776	240,350
Other Noncurrent Assets:
Goodwill	1,125,591	929,842
Miscellaneous	591,125	439,973
Total other non-current assets	1,716,716	1,369,815
Assets, Total	4,650,822	4,428,614
Current Liabilities:
Notes payable	95,579	17,495
Accounts payable	316,308	340,651
Accrued liabilities	695,803	679,109
Billings in excess of costs	237,685	252,149
Income taxes payable	7,331	6,497
Total current liabilities	1,352,706	1,295,901
Long-term Debt	561	737
Other Deferred Liabilities	485,268	500,501
Commitments and Contingencies
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-124,904,879 shares and 124,229,933 shares, respectively	124,905	124,230
Additional paid-in capital	735,202	703,860
Retained earnings	2,156,895	2,009,338
Accumulated other comprehensive loss	(210,308)	(211,515)
Total Jacobs stockholders' equity	2,806,694	2,625,913
Noncontrolling interests	5,593	5,562
Total Group stockholders' equity	2,812,287	2,631,475
Liabilities and Stockholders' Equity, Total	$4,650,822	$4,428,614

CONSOLIDATED BALANCE SHEETS (Pa

CONSOLIDATED BALANCE SHEETS (Parenthetical) (USD $)
	Apr. 02, 2010	Oct. 02, 2009
Preferred stock, par value	$1	$1
Preferred stock, authorized	1,000,000	1,000,000
Preferred stock, issued	0	0
Preferred stock, outstanding	0	0
Common stock, par value	$1	$1
Common stock, authorized	240,000,000	240,000,000
Common stock, issued	124,904,879	124,229,933
Common stock, outstanding	124,904,879	124,229,933

CONSOLIDATED STATEMENTS OF EARN

CONSOLIDATED STATEMENTS OF EARNINGS (USD $)
In Thousands, except Per Share data	3 Months Ended Apr. 02, 2010	3 Months Ended Apr. 03, 2009	6 Months Ended Apr. 02, 2010	6 Months Ended Apr. 03, 2009
Revenues	$2,586,974	$2,975,452	$5,064,759	$6,208,105
Costs and Expenses:
Direct cost of contracts	(2,223,793)	(2,571,828)	(4,352,369)	(5,367,062)
Selling, general and administrative expenses	(241,177)	(232,936)	(476,905)	(489,287)
Operating Profit	122,004	170,688	235,485	351,756
Other Income (Expense):
Interest income	796	2,589	1,634	7,191
Interest expense	(705)	(797)	(1,317)	(2,026)
Miscellaneous expense, net	(935)	(1,853)	(1,494)	(4,712)
Total other income (expense), net	(844)	(61)	(1,177)	453
Earnings Before Taxes	121,160	170,627	234,308	352,209
Income Tax Expense	(43,593)	(61,457)	(84,340)	(126,922)
Net Earnings of the Group	77,567	109,170	149,968	225,287
Net (Income) Loss Attributable to Noncontrolling Interests	(67)	117	(31)	350
Net Earnings Attributable to Jacobs	$77,500	$109,287	$149,937	$225,637
Net Earnings Per Share:
Basic	0.63	0.89	1.21	1.84
Diluted	0.62	0.88	1.2	1.82

CONSOLIDATED STATEMENTS OF COMP

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (USD $)
In Thousands	3 Months Ended Apr. 02, 2010	3 Months Ended Apr. 03, 2009	6 Months Ended Apr. 02, 2010	6 Months Ended Apr. 03, 2009
Net Earnings of the Group	$77,567	$109,170	$149,968	$225,287
Other Comprehensive Income (Loss):
Foreign currency translation adjustment	(12,256)	(7,387)	(6,307)	(49,328)
Gain (loss) on cash flow hedges	(498)	4,878	876	(9,103)
Change in pension liability	11,571	(231)	9,428	24,304
Other comprehensive income (loss) before taxes	(1,183)	(2,740)	3,997	(34,127)
Income tax benefit (expense)	(2,918)	(1,569)	(2,790)	5,389
Net other comprehensive income (loss)	(4,101)	(4,309)	1,207	(28,738)
Net Comprehensive Income of the Group	73,466	104,861	151,175	196,549
Net Comprehensive (Income) Loss Attributable to Noncontrolling Interests	(67)	117	(31)	350
Net Comprehensive Income Attributable to Jacobs	$73,399	$104,978	$151,144	$196,899

CONSOLIDATED STATEMENTS OF CASH

CONSOLIDATED STATEMENTS OF CASH FLOWS (USD $)
In Thousands	6 Months Ended Apr. 02, 2010	6 Months Ended Apr. 03, 2009
Cash Flows from Operating Activities:
Net earnings	$149,937	$225,637
Depreciation and amortization:
Property, equipment and improvements	33,265	33,170
Intangible assets	11,576	4,234
Gain from investments		(1,249)
Stock based compensation	11,585	11,621
Excess tax benefits from stock based compensation	(1,477)	(2,048)
Losses on sales of assets, net	11	93
Changes in certain assets and liabilities, excluding the effects of businesses acquired:
Receivables	(53,874)	103,298
Prepaid expenses and other current assets	6,142	2,511
Accounts payable	(33,211)	(83,286)
Accrued liabilities	(2,860)	(84,331)
Billings in excess of costs	3,433	18,509
Income taxes payable	(8,768)	(23,082)
Deferred income taxes	1,017	(3,947)
Other, net	391
Net cash provided by operating activities	117,167	201,130
Cash Flows from Investing Activities:
Additions to property and equipment	(23,372)	(36,309)
Disposals of property and equipment	12,179	1,641
Changes in investments, net	(121,720)	(4,959)
Acquisitions of businesses, net of cash acquired	(261,850)	(1,033)
Changes in other non-current assets, net	(11,296)	23,514
Net cash used for investing activities	(406,059)	(17,146)
Cash Flows from Financing Activities:
Repayments of long-term borrowings	(150)	(18,985)
Net change in short-term borrowings	79,218	235
Proceeds from issuances of common stock	18,062	22,156
Excess tax benefits from stock based compensation	1,477	2,048
Changes in other deferred liabilities, net	(5,847)	(5,775)
Net cash provided by (used for) financing activities	92,760	(321)
Effect of Exchange Rate Changes	1,570	(15,431)
Net Increase (Decrease) in Cash and Cash Equivalents	(194,562)	168,232
Cash and Cash Equivalents at the Beginning of the Period	1,033,619	604,420
Cash and Cash Equivalents at the End of the Period	$839,057	$772,652

Basis of Presentation

Basis of Presentation
	6 Months Ended Apr. 02, 2010
Basis of Presentation	Basis of Presentation Unless the context otherwise requires: References herein to Jacobs are to Jacobs Engineering Group Inc. and its predecessors; References herein to the Company, we, us or our are to Jacobs Engineering Group Inc. and its consolidated subsidiaries; and References herein to the Group are to the combined economic interests and activities of the Company and the persons and entities holding noncontrolling interests in our consolidated subsidiaries. The accompanying consolidated financial statements and financial information included herein have been prepared pursuant to the interim period reporting requirements of Form 10-Q. Consequently, certain information and note disclosures normally included in financial statements prepared in accordance with accounting principles generally accepted in the United States have been condensed or omitted. Readers of this report should also read our consolidated financial statements and the notes thereto included in our Annual Report on Form 10-K for the fiscal year ended October2, 2009 (2009 Form 10-K) as well as Item7Managements Discussion and Analysis of Financial Condition and Results of Operations also included in our 2009 Form 10-K. Readers should also read our report on Form 10-Q for the quarterly period ended January1, 2010. In the opinion of management, the accompanying unaudited consolidated financial statements contain all adjustments (consisting of normal recurring adjustments) necessary for a fair presentation of our consolidated financial statements at April2, 2010 and for the three and six month periods ended April2, 2010 and April3, 2009. The Company has evaluated subsequent events through the date of filing this Form 10-Q with the SEC. No material subsequent events have occurred since April2, 2010 that required recognition or disclosure in these financial statements. Our interim results of operations are not necessarily indicative of the results to be expected for the full fiscal year.

New Accounting Standards

New Accounting Standards
	6 Months Ended Apr. 02, 2010
New Accounting Standards	New Accounting Standards In December 2007, the Financial Accounting Standards Board (FASB) revised the accounting and reporting for business combinations. These revisions require, among other things, that acquisition-related costs be recognized separately from the costs of acquired businesses; that in a business combination achieved in stages, an acquiree to recognize the identifiable assets, liabilities and noncontrolling interest in the acquiree at the full amounts of their fair values as of the acquisition date; and, that an acquirer recognize assets or liabilities from contingencies as of the acquisition date. The requirement to measure the noncontrolling interests in the acquiree at fair value will result in recognizing the goodwill attributable to the noncontrolling interest in addition to that attributable to the acquirer. These revisions were effective for the Company October3, 2009. In December 2007, the FASB revised the accounting and reporting for noncontrolling (formerly known as minority) interests in consolidated financial statements. These revisions clarified that a noncontrolling interest in a subsidiary is an ownership interest in the consolidated entity that should be reported as equity in the consolidated financial statements. The revisions also established that net income attributable to both the parent and the noncontrolling interests be reported in the consolidated statement of earnings, and eliminated the requirement of purchase accounting for a parents acquisition of a noncontrolling ownership interest. These revisions were effective for the Company October3, 2009. Depending on the size and nature of an acquisition, the changes described above could have a material effect on the Companys consolidated financial statements. In June 2009, the FASB revised the accounting for variable interest entities (VIEs). These revisions require the Company to perform an analysis to determine whether its variable interests in VIEs give the Company a controlling financial interest in such entities. The Company is also required to assess whether it has the power to direct the activities of its VIEs and if it has the obligation to absorb losses or the right to receive benefits that could potentially be significant to the VIEs. The revisions adopted by the FASB eliminate the quantitative approach previously required for determining the primary beneficiary of a VIE and significantly enhances disclosures. The new accounting requirements are effective for the Company October2, 2010. The Company is currently evaluating the impact of this statement on its consolidated financial statements.

Business Combination

Business Combination
	6 Months Ended Apr. 02, 2010
Business Combination	Business Combination On February16,2010, the Company acquired Jordan, Jones and Goulding, Inc. (JJG), a 500-person professional services firm headquartered in Atlanta, Georgia. Founded in 1958, JJG provides engineering, planning, and consulting services for water, wastewater, environmental and other clients. The results of operations of JJG for the second quarter of fiscal 2010 were not material. The purchase price allocation has not been completed. Included in the Companys Consolidated Balance Sheet at April2, 2010 is goodwill of approximately $37.3million associated with the acquisition ofJJG.

Receivables

Receivables
	6 Months Ended Apr. 02, 2010
Receivables	Receivables The following table presents the components of Receivables appearing in the accompanying Consolidated Balance Sheets at April2, 2010 and October2, 2009 as well as certain other related information (in thousands): 2010 2009 Components of receivables: Amounts billed $ 866,797 $ 846,716 Unbilled receivables and other 794,825 750,035 Retentions receivable 46,934 31,409 Allowance for doubtful accounts (9,782 ) (9,599 ) Total receivables, net $ 1,698,774 $ 1,618,561 Other information about receivables: Amounts due from the United States federal government, included above, net of advanced billings $ 394,054 $ 366,158 Claims receivable: Relating to the waste incineration project, explained below $ 35,197 $ 37,887 Other 17,172 19,813 Total $ 52,369 $ 57,700 Unbilled receivables represent reimbursable costs and amounts earned and reimbursable under contracts in progress as of the respective balance sheet dates. Such amounts become billable according to the contract terms, which usually consider the passage of time, achievement of certain milestones or completion of the project. Claims receivable represent 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. The claim relating to the waste incineration project is discussed more fully in Note 11 Contractual Guarantees, Litigation, Investigations, and Insurance of Notes to Consolidated Financial Statements beginning on page F-25 of our 2009 Form 10-K. Due to the timing of when this claim may be settled, the receivable is included in Other Noncurrent Assets in the accompanying Consolidated Balance Sheets. The claim relates to a dispute involving proper waste feed, content of residues, final acceptance of the plant, and costs of operation and maintenance of the plant. The other claims receivable are included in Receivables in the accompanying Consolidated Balance Sheets.

Property, Equipment and Improve

Property, Equipment and Improvements, Net
	6 Months Ended Apr. 02, 2010
Property, Equipment and Improvements, Net	Property, Equipment and Improvements, Net Property, Equipment and Improvements, net in the accompanying Consolidated Balance Sheets at April2, 2010 and October2, 2009 consisted of the following (in thousands): 2010 2009 Land $ 12,173 $ 11,901 Buildings 88,332 85,067 Equipment 434,145 430,220 Leasehold improvements 119,146 125,050 Construction in progress 16,552 5,845 670,348 658,083 Accumulated depreciation and amortization (446,572 ) (417,733 ) $ 223,776 $ 240,350

Revenue Accounting for Contract

Revenue Accounting for Contracts / Accounting for Joint Ventures
	6 Months Ended Apr. 02, 2010
Revenue Accounting for Contracts / Accounting for Joint Ventures	Revenue Accounting for Contracts / Accounting for Joint Ventures In general, we recognize revenues at the time we provide services. Depending on the commercial terms of the contract, we recognize revenues either when costs are incurred, or using the percentage-of-completion method of accounting by relating contract costs incurred to date to the total estimated costs at completion. Contract losses are provided for in their entirety in the period they become known, without regard to the percentage-of-completion. The nature of our business sometimes results in clients, subcontractors or vendors presenting claims to us for recovery of costs they incurred in excess of what they expected to incur, or for which they believe they are not contractually responsible. In those situations where a claim against us may result in additional costs to the contract, we include in the total estimated costs of the contract (and therefore, the estimated amount of margin to be earned under the contract) an estimate, based on all relevant facts and circumstances available, of the additional costs to be incurred. Similarly, and in the normal course of business, we may present claims to our clients for costs we have incurred for which we believe we are not contractually responsible. With respect to such claims, we include in revenues the amount of costs incurred, without profit, to the extent it is probable that the claims will result in additional contract revenue, and the amount of such additional revenue can be reliably estimated. Costs associated with unapproved change orders are included in revenues using substantially the same criteria used for claims. Certain cost-reimbursable contracts include incentive-fee arrangements. The incentive fees in such contracts can be based on a variety of factors but the most common are the achievement of target completion dates or target costs, and/or meeting other performance criteria as defined in the contracts. 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 customers as well as certain commercial clients provide that contract costs are subject to audit 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

Disclosures About Defined Pensi

Disclosures About Defined Pension Benefit Obligations
	6 Months Ended Apr. 02, 2010
Disclosures About Defined Pension Benefit Obligations	Disclosures About Defined Pension Benefit Obligations The following table presents the components of net periodic benefit cost recognized in earnings during each of the three and six month periods ended April2, 2010 and April3, 2009 (in thousands): FortheThreeMonths Ended FortheSixMonths Ended Component: April 2, 2010 April 3, 2009 April 2, 2010 April 3, 2009 Service cost $ 5,308 $ 4,553 $ 11,387 $ 9,232 Interest cost 12,784 11,843 27,043 24,075 Expected return on plan assets (11,295 ) (10,661 ) (23,757 ) (21,684 ) Amortization of previously unrecognized items 2,986 1,286 6,293 2,623 Net periodic benefit cost $ 9,783 $ 7,021 $ 20,966 $ 14,246 The following table presents certain information regarding Company cash contributions to our pension plans for fiscal 2010 (in thousands): Cash contributions made during the first six months of fiscal 2010 $ 25,265 Cash contributions we expect to make during the remainder of fiscal 2010 17,075 Total $ 42,340 The change in pension liability included in the Consolidated Statements of Comprehensive Income for the three and six months ended April2, 2010 and April3, 2009 relates primarily to the effects of exchange rate changes.

Earnings Per Share and Certain

Earnings Per Share and Certain Related Information
	6 Months Ended Apr. 02, 2010
Earnings Per Share and Certain Related Information	Earnings Per Share and Certain Related Information The following table (i)reconciles the denominator used to compute basic earnings per share (EPS) to the denominator used to compute diluted EPS for the three and six months ended April2, 2010 and April3, 2009; (ii)provides information regarding the number of non-qualified stock options that were antidilutive and therefore disregarded in calculating the weighted average number of shares outstanding used in computing diluted EPS; and (iii)the number of shares of common stock issued from the exercise of stock options and the release of restricted stock (in thousands): For the Three Months Ended For the Six Months Ended April 2, 2010 April 3, 2009 April 2, 2010 April 3, 2009 Shares used to calculate EPS: Weighted average shares outstanding (denominator used to compute basic EPS) 123,911 122,605 123,771 122,414 Effect of stock options and restricted stock 1,654 1,753 1,670 1,757 Denominator used to compute diluted EPS 125,565 124,358 125,441 124,171 Antidilutive stock options 2,887.7 2,309.7 2,887.7 2,309.7 Shares of common stock issued from the exercise of stock options and the release of restricted stock 426.1 416.8 697.7 807.3

Accounting for and Disclosure o

Accounting for and Disclosure of Guarantees and Contingencies
	6 Months Ended Apr. 02, 2010
Accounting for and Disclosure of Guarantees and Contingencies	Accounting for and Disclosure of Guarantees and Contingencies Please refer to Note 10 Commitments and Contingencies, and Derivative Financial Instruments of Notes to Consolidated Financial Statements beginning on page F-24 of our 2009 Form 10-K for a discussion of our various commitments and contingencies. Please refer to Note 11 Contractual Guarantees, Litigation, Investigations, and Insurance of Notes to Consolidated Financial Statements beginning on page F-25 of our 2009 Form 10-K for a discussion of the Companys contractual guarantees and a description of the various types of litigation in which were involved.