JACOBS SOLUTIONS INC. [J] Filings

10-Q 1 jec-20230630.htm 10-Q jec-20230630

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

(Mark one)

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

For the quarterly period ended June 30, 2023

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

For the transition period from to

Commission File Number 1-7463

JACOBS SOLUTIONS INC.

(Exact name of registrant as specified in its charter)

Delaware

88-1121891

(State or other jurisdiction of incorporation or organization)

(I.R.S. Employer Identification Number)

1999 Bryan Street

Suite 3500

Dallas

Texas

75201

(Address of principal executive offices)

(Zip Code)

(214) 583 – 8500

(Registrant’s telephone number, including area code)

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

_________________________________________________________________



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

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

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

Page 1

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

Large accelerated filer

☒

Accelerated filer

☐

Non-accelerated filer

☐

Smaller reporting company

☐

Emerging growth company

☐

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

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

Number of shares of common stock outstanding at July 28, 2023: 125,917,550

Page 2

JACOBS SOLUTIONS INC.

INDEX TO FORM 10-Q


			Page No.
PART I	FINANCIAL INFORMATION

	Item 1.	Financial Statements	4

		Consolidated Balance Sheets - Unaudited	5

		Consolidated Statements of Earnings - Unaudited	6

		Consolidated Statements of Comprehensive Income - Unaudited	7

		Consolidated Statements of Stockholders’ Equity - Unaudited	8

		Consolidated Statements of Cash Flows - Unaudited	10

		Notes to Consolidated Financial Statements - Unaudited	11

	Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	34

	Item 3.	Quantitative and Qualitative Disclosures About Market Risk	49

	Item 4.	Controls and Procedures	56

PART II	OTHER INFORMATION

	Item 1.	Legal Proceedings	51

	Item 1A.	Risk Factors	51

	Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	51

	Item 3.	Defaults Upon Senior Securities	51

	Item 4.	Mine Safety Disclosures	52

	Item 5.	Other Information	52

	Item 6.	Exhibits	53

		SIGNATURES	54

Page 3

Part I - FINANCIAL INFORMATION

Item 1. Financial Statements.

Page 4

JACOBS SOLUTIONS INC. AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS

(In thousands, except share information)


	June 30, 2023		September 30, 2022
	(Unaudited)
ASSETS
Current Assets:
Cash and cash equivalents	$	1,092,127	$	1,140,479
Receivables and contract assets	3,558,724		3,405,381
Prepaid expenses and other	172,896		176,134

Total current assets	4,823,747		4,721,994
Property, Equipment and Improvements, net	378,410		346,676
Other Noncurrent Assets:
Goodwill	7,414,558		7,184,658
Intangibles, net	1,354,677		1,394,052
Deferred income tax assets	28,626		31,480
Operating lease right-of-use assets	437,419		476,913
Miscellaneous	499,262		504,646
Total other noncurrent assets	9,734,542		9,591,749
	$	14,936,699	$	14,660,419
LIABILITIES AND STOCKHOLDERS’ EQUITY
Current Liabilities:
Current maturities of long-term debt	$	55,743	$	50,415
Accounts payable	1,091,179		966,792
Accrued liabilities	1,238,545		1,441,762
Operating lease liability	152,945		150,171
Contract liabilities	761,574		641,705
Total current liabilities	3,299,986		3,250,845
Long-term debt	3,145,529		3,357,256
Liabilities relating to defined benefit pension and retirement plans	288,474		271,332
Deferred income tax liabilities	289,036		269,077
Long-term operating lease liability	570,321		607,447
Other deferred liabilities	126,590		167,548
Commitments and Contingencies
Redeemable Noncontrolling interests	644,347		632,522
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 - 125,880,738 shares and 127,393,378 shares as of June 30, 2023 and September 30, 2022, respectively	125,881		127,393
Additional paid-in capital	2,707,494		2,682,009
Retained earnings	4,460,729		4,225,784
Accumulated other comprehensive loss	(772,388)		(975,130)
Total Jacobs stockholders’ equity	6,521,716		6,060,056
Noncontrolling interests	50,700		44,336
Total Group stockholders’ equity	6,572,416		6,104,392
	$	14,936,699	$	14,660,419

See the accompanying Notes to Consolidated Financial Statements – Unaudited.

Page 5

JACOBS SOLUTIONS INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF EARNINGS

Three and Nine Months Ended June 30, 2023 and July 1, 2022

(In thousands, except per share information)

(Unaudited)


	For the Three Months Ended				For the Nine Months Ended
	June 30, 2023		July 1, 2022		June 30, 2023		July 1, 2022
Revenues	$	4,186,702	$	3,827,093	$	12,063,702	$	11,041,777
Direct cost of contracts	(3,329,959)		(3,002,618)		(9,501,953)		(8,550,418)
Gross profit	856,743		824,475		2,561,749		2,491,359
Selling, general and administrative expenses	(587,002)		(558,713)		(1,764,341)		(1,882,049)
Operating Profit	269,741		265,762		797,408		609,310
Other Income (Expense):
Interest income	7,830		1,042		18,467		2,924
Interest expense	(43,787)		(26,129)		(124,477)		(67,551)
Miscellaneous (expense) income, net	(7,099)		31,440		(14,920)		51,802
Total other (expense) income, net	(43,056)		6,353		(120,930)		(12,825)
Earnings from Continuing Operations Before Taxes	226,685		272,115		676,478		596,485
Income Tax Expense from Continuing Operations	(54,166)		(59,491)		(123,329)		(121,545)
Net Earnings of the Group from Continuing Operations	172,519		212,624		553,149		474,940
Net Earnings (Loss) of the Group from Discontinued Operations	294		(343)		(489)		(576)
Net Earnings of the Group	172,813		212,281		552,660		474,364
Net Earnings Attributable to Noncontrolling Interests from Continuing Operations	(8,204)		(8,773)		(23,038)		(28,286)
Net Earnings Attributable to Redeemable Noncontrolling interests	(370)		(7,525)		(13,225)		(27,246)
Net Earnings Attributable to Jacobs from Continuing Operations	163,945		196,326		516,886		419,408
Net Earnings Attributable to Jacobs	$	164,239	$	195,983	$	516,397	$	418,832
Net Earnings Per Share:
Basic Net Earnings from Continuing Operations Per Share	$	1.29	$	1.53	$	4.08	$	3.25
Basic Net Loss from Discontinued Operations Per Share	$	—	$	—	$	—	$	—
Basic Earnings Per Share	$	1.30	$	1.53	$	4.07	$	3.25

Diluted Net Earnings from Continuing Operations Per Share	$	1.29	$	1.52	$	4.06	$	3.23
Diluted Net Loss from Discontinued Operations Per Share	$	—	$	—	$	—	$	—
Diluted Earnings Per Share	$	1.29	$	1.52	$	4.06	$	3.23

See the accompanying Notes to Consolidated Financial Statements - Unaudited.

Page 6

JACOBS SOLUTIONS INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

Three and Nine Months Ended June 30, 2023 and July 1, 2022

(In thousands)

(Unaudited)


	For the Three Months Ended				For the Nine Months Ended
	June 30, 2023		July 1, 2022		June 30, 2023		July 1, 2022
Net Earnings of the Group	$	172,813	$	212,281	$	552,660	$	474,364
Other Comprehensive Income:
Foreign currency translation adjustment	55,482		(187,841)		242,768		(242,353)
Change in cash flow hedges	15,644		9,440		(14,311)		64,786
Change in pension plan liabilities	(6,765)		28,584		(29,025)		48,659
Other comprehensive income (loss) before taxes	64,361		(149,817)		199,432		(128,908)
Income Tax Benefit (Expense):
Foreign currency translation adjustment	5,293		482		(348)		3,072
Cash flow hedges	(3,637)		(4,115)		4,680		(19,350)
Change in pension plan liabilities	(363)		(688)		(1,022)		(2,884)
Income Tax Benefit (Expense):	1,293		(4,321)		3,310		(19,162)
Net other comprehensive income (loss)	65,654		(154,138)		202,742		(148,070)
Net Comprehensive Income of the Group	238,467		58,143		755,402		326,294
Net Earnings Attributable to Noncontrolling Interests	(8,204)		(8,773)		(23,038)		(28,286)
Net Earnings Attributable to Redeemable Noncontrolling interests	(370)		(7,525)		(13,225)		(27,246)
Net Comprehensive Income Attributable to Jacobs	$	229,893	$	41,845	$	719,139	$	270,762

See the accompanying Notes to Consolidated Financial Statements - Unaudited.

Page 7

JACOBS SOLUTIONS INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY

For the Three Months Ended June 30, 2023 and July 1, 2022

(In thousands)

(Unaudited)


	Common Stock		Additional Paid-in Capital		Retained Earnings		Accumulated Other Comprehensive Income (Loss)		Total Jacobs Stockholders’ Equity		Noncontrolling Interests		Total Group Stockholders’ Equity
Balances at April 1, 2022	$	128,900	$	2,667,256	$	4,069,664	$	(788,374)	$	6,077,446	$	44,532	$	6,121,978
Net earnings	—		—		195,983		—		195,983		8,773		204,756
Foreign currency translation adjustments, net of deferred taxes of $(482)	—		—		—		(187,359)		(187,359)		—		(187,359)
Pension plan liability, net of deferred taxes of $688	—		—		—		27,896		27,896		—		27,896
Change in cash flow hedges, net of deferred taxes of $4,115	—		—		—		5,325		5,325		—		5,325
Dividends	—		—		(29,479)		—		(29,479)		—		(29,479)
Redeemable Noncontrolling interests redemption value adjustment	—		—		20,169		—		20,169		—		20,169
Repurchase and issuance of redeemable noncontrolling interests	—		—		(5,147)		—		(5,147)		—		(5,147)
Noncontrolling interests - distributions and other	—		—		—		—		—		(6,184)		(6,184)
Stock based compensation	—		16,544		—		—		16,544		—		16,544
Issuances of equity securities including shares withheld for taxes	137		12,550		(63)		—		12,624		—		12,624
Repurchases of equity securities	(1,459)		(30,193)		(169,057)		—		(200,709)		—		(200,709)
Balances at July 1, 2022	$	127,578	$	2,666,157	$	4,082,070	$	(942,512)	$	5,933,293	$	47,121	$	5,980,414

Balances at March 31, 2023	$	126,805	$	2,697,523	$	4,393,351	$	(838,042)	$	6,379,637	$	48,387	$	6,428,024
Net earnings	—		—		164,239		—		164,239		8,204		172,443
Foreign currency translation adjustments, net of deferred taxes of $(5,293)	—		—		—		60,775		60,775		—		60,775
Pension plan liability, net of deferred taxes of $363	—		—		—		(7,128)		(7,128)		—		(7,128)
Change in cash flow hedges, net of deferred taxes of $3,637	—		—		—		12,007		12,007		—		12,007
Dividends	—		—		(33,216)		—		(33,216)		—		(33,216)
Redeemable Noncontrolling interests redemption value adjustment	—		—		34,101		—		34,101		—		34,101
Repurchase and issuance of redeemable noncontrolling interests	—		—		3,599		—		3,599		—		3,599
Noncontrolling interests - distributions and other	—		—		—		—		—		(5,891)		(5,891)
Stock based compensation	—		20,623		—		—		20,623		—		20,623
Issuances of equity securities including shares withheld for taxes	164		12,493		(531)		—		12,126		—		12,126
Repurchases of equity securities	(1,088)		(23,145)		(100,814)		—		(125,047)		—		(125,047)
Balances at June 30, 2023	$	125,881	$	2,707,494	$	4,460,729	$	(772,388)	$	6,521,716	$	50,700	$	6,572,416

See the accompanying Notes to Consolidated Financial Statements – Unaudited.

Page 8

JACOBS SOLUTIONS INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY

For the Nine Months Ended June 30, 2023 and July 1, 2022

(In thousands)

(Unaudited)


	Common Stock		Additional Paid-in Capital		Retained Earnings		Accumulated Other Comprehensive Income (Loss)		Total Jacobs Stockholders’ Equity		Noncontrolling Interests		Total Group Stockholders’ Equity
Balances at October 1, 2021	$	128,893	$	2,590,012	$	4,015,578	$	(794,442)	$	5,940,041	$	34,796	$	5,974,837
Net earnings	—		—		418,832		—		418,832		28,286		447,118
Foreign currency translation adjustments, net of deferred taxes of $(3,072)	—		—		—		(239,281)		(239,281)		—		(239,281)
Pension liability, net of deferred taxes of $2,884	—		—		—		45,775		45,775		—		45,775
Change in cash flow hedges, net of deferred taxes of $19,350	—		—		—		45,436		45,436		—		45,436
Dividends	—		—		(59,473)		—		(59,473)		—		(59,473)
Redeemable Noncontrolling interests redemption value adjustment	—		—		(30,152)		—		(30,152)		—		(30,152)
Repurchase of redeemable noncontrolling interests	—		—		2,614		—		2,614		—		2,614
Noncontrolling interests - distributions and other	—		—		—		—		—		(15,961)		(15,961)
Stock based compensation	—		41,705		—		—		41,705		—		41,705
Issuances of equity securities including shares withheld for taxes	881		29,590		(11,966)		—		18,505		—		18,505
Repurchases of equity securities	(2,196)		4,850		(253,363)		—		(250,709)		—		(250,709)
Balances at July 1, 2022	$	127,578	$	2,666,157	$	4,082,070	$	(942,512)	$	5,933,293	$	47,121	$	5,980,414

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	—		—		516,397		—		516,397		23,038		539,435
Foreign currency translation adjustments, net of deferred taxes of $348	—		—		—		242,420		242,420		—		242,420
Pension liability, net of deferred taxes of $1,022	—		—		—		(30,047)		(30,047)		—		(30,047)
Change in cash flow hedges, net of deferred taxes of $(4,680)	—		—		—		(9,631)		(9,631)		—		(9,631)
Dividends	—		—		(66,652)		—		(66,652)		—		(66,652)
Redeemable Noncontrolling interests redemption value adjustment	—		—		(10,393)		—		(10,393)		—		(10,393)
Repurchase and issuance of redeemable noncontrolling interests	—		—		14,936		—		14,936		—		14,936
Noncontrolling interests - distributions and other	—		—		—		—		—		(16,674)		(16,674)
Stock based compensation	—		55,908		—		—		55,908		—		55,908
Issuances of equity securities including shares withheld for taxes	814		18,779		(5,302)		—		14,291		—		14,291
Repurchases of equity securities	(2,326)		(49,202)		(214,041)		—		(265,569)		—		(265,569)
Balances at June 30, 2023	$	125,881	$	2,707,494	$	4,460,729	$	(772,388)	$	6,521,716	$	50,700	$	6,572,416

See the accompanying Notes to Consolidated Financial Statements – Unaudited.

Page 9

JACOBS SOLUTIONS INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS

For the Nine Months Ended June 30, 2023 and July 1, 2022

(In thousands)

(Unaudited)


	For the Nine Months Ended
	June 30, 2023		July 1, 2022
Cash Flows from Operating Activities:
Net earnings attributable to the Group	$	552,660	$	474,364
Adjustments to reconcile net earnings to net cash flows provided by operations:
Depreciation and amortization:
Property, equipment and improvements	76,870		77,921
Intangible assets	152,232		146,889

Gain on investment in equity securities	—		(13,862)
Stock based compensation	55,908		41,705
Equity in earnings of operating ventures, net of return on capital distributions	(2,963)		14,222
Loss (gain) on disposals of assets, net	590		(4,762)

Impairment of long-lived assets and equity method investment	38,131		74,585

Deferred income taxes	4,944		62,144
Changes in assets and liabilities, excluding the effects of businesses acquired:
Receivables and contract assets, net of contract liabilities	22,191		(114,607)
Prepaid expenses and other current assets	(7,244)		28,963
Miscellaneous other assets	70,218		119,238
Accounts payable	109,142		54,422
Accrued liabilities	(285,287)		(667,868)
Other deferred liabilities	(44,420)		(74,559)
Other, net	12,428		(21,626)
Net cash provided by operating activities	755,400		197,169
Cash Flows from Investing Activities:
Additions to property and equipment	(98,240)		(80,053)
Disposals of property and equipment and other assets	1,537		9,286
Capital contributions to equity investees, net of return of capital distributions	7,964		2,756
Acquisitions of businesses, net of cash acquired	(17,685)		(437,083)
Disposal of investment in equity securities	—		13,862

Net cash used for investing activities	(106,424)		(491,232)
Cash Flows from Financing Activities:
Proceeds from long-term borrowings	2,329,495		2,513,000
Repayments of long-term borrowings	(2,671,403)		(1,707,490)
Proceeds from short-term borrowings	3,353		—
Repayments of short-term borrowings	—		(6,359)
Debt issuance costs	(11,896)		—
Proceeds from issuances of common stock	38,051		40,987
Common stock repurchases	(265,569)		(250,709)
Taxes paid on vested restricted stock	(23,760)		(28,574)
Cash dividends to shareholders	(95,672)		(86,588)
Net dividends associated with noncontrolling interests	(17,287)		(16,103)
Repurchase of redeemable noncontrolling interests	(90,425)		(46,074)
Proceeds from issuances of redeemable noncontrolling interests	34,771		49,738
Net cash (used for) provided by financing activities	(770,342)		461,828
Effect of Exchange Rate Changes	61,309		(79,919)
Net (Decrease) Increase in Cash and Cash Equivalents and Restricted Cash	(60,057)		87,846
Cash and Cash Equivalents, including Restricted Cash, at the Beginning of the Period	1,154,207		1,026,575
Cash and Cash Equivalents, including Restricted Cash, at the End of the Period	$	1,094,150	$	1,114,421

See the accompanying Notes to Consolidated Financial Statements – Unaudited.

Page 10

JACOBS SOLUTIONS INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

1.Basis of Presentation

Unless the context otherwise requires:

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

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

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

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

The accompanying consolidated financial statements and financial information included herein have been prepared pursuant to the interim period reporting requirements of Form 10-Q. Consequently, certain information and note disclosures normally included in financial statements prepared in accordance with accounting principles generally accepted in the United States (“U.S. GAAP”) have been condensed or omitted. Readers of this Quarterly Report on Form 10-Q should also read our consolidated financial statements and the notes thereto included in our Annual Report on Form 10-K for the fiscal year ended September 30, 2022 (“2022 Form 10-K”).

In the opinion of management, the accompanying unaudited consolidated financial statements contain all adjustments (consisting of normal recurring adjustments) necessary for a fair presentation of our consolidated financial statements at June 30, 2023, and for the three and nine months ended June 30, 2023.

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

On May 9, 2023, the Company announced its intention to separate its Critical Mission Solutions ("CMS") business, resulting in two independent publicly traded companies. Jacobs expects to complete the separation in fiscal 2024 through a distribution to Jacobs' stockholders that is intended to be tax-free to Jacobs’ stockholders for U.S. federal income tax purposes. There can be no assurances with respect to the timing or form of a separation transaction and completion remains subject to final approval by Jacobs’ Board of Directors and other customary conditions. As of June 30, 2023, and the three and nine months then ended, Critical Mission Solutions continues to be presented in continuing operations.

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

On February 4, 2022, the Company acquired StreetLight Data, Inc. ("StreetLight"). StreetLight is a pioneer of mobility analytics who uses its data and machine learning resources to shed light on mobility and enable users to solve complex transportation problems. The Company paid total base consideration of approximately $190.8 million in cash, and issued $0.9 million in equity and $5.2 million in in-the-money stock options to the former owners of StreetLight. The Company also paid off StreetLight's debt of approximately $1.0 million simultaneously with the consummation of the acquisition. The Company has recorded its final purchase price allocation associated with the acquisition, which is summarized in Note 15- Other Business Combinations.

On November 19, 2021, Jacobs acquired all outstanding shares of common stock of BlackLynx, Inc. ("BlackLynx"), a provider of high-performance software, to complement Jacobs' portfolio of cyber, intelligence and digital solutions. The Company paid total base consideration of approximately $235.4 million in cash to the former owners of BlackLynx. In conjunction with the acquisition, the Company also paid off BlackLynx's debt of approximately $5.3 million simultaneously

Page 11

JACOBS SOLUTIONS INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (CONTINUED)

with the consummation of the acquisition. The Company has recorded its final purchase price allocation associated with the acquisition, which is summarized in Note 15- Other Business Combinations.

On March 2, 2021, Jacobs completed the strategic investment of a 65% interest in PA Consulting Group Limited ("PA Consulting"), a UK-based leading innovation and transformation consulting firm. The total consideration paid by the Company was $1.7 billion, funded through cash on hand, proceeds from a new term loan and draws on the Company's existing revolving credit facility. The remaining 35% interest was acquired by PA Consulting employees, whose redeemable noncontrolling interests had a fair value of $582.4 million on the closing date, including subsequent purchase accounting adjustments. PA Consulting is accounted for as a consolidated subsidiary and as a separate operating segment. See Note 14- PA Consulting Business Combination for more discussion on the investment and Note 11- Borrowings for more discussion on the financing for the transaction.

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

2. Use of Estimates and Assumptions

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

Please refer to Note 2- Significant Accounting Policies of Notes to Consolidated Financial Statements included in our 2022 Form 10-K for a discussion of other significant estimates and assumptions affecting our consolidated financial statements.

3. Fair Value and Fair Value Measurements

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

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

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

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

Please refer to Note 2- Significant Accounting Policies of Notes to Consolidated Financial Statements included in our 2022 Form 10-K for a more complete discussion of the various items within the consolidated financial statements measured at fair value and the methods used to determine fair value. Please also refer to Note 17- Commitments and Contingencies and Derivative Financial Instruments for discussion regarding the Company's derivative instruments.

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The net carrying amounts of cash and cash equivalents, trade receivables and payables and short-term debt approximate fair value due to the short-term nature of these instruments. See Note 11- Borrowings for a discussion of the fair value of long-term debt.

Fair value measurements relating to our business combinations and goodwill allocations related to our segment realignment are made primarily using Level 3 inputs including discounted cash flow techniques. Fair value for the identified intangible assets is generally estimated using inputs primarily for the income approach using the multiple period excess earnings method and the relief from royalties method. The significant assumptions used in estimating fair value include (i) revenue projections of the business, including profitability, (ii) attrition rates and (iii) the estimated discount rate that reflects the level of risk associated with receiving future cash flows. Other personal property assets, such as furniture, fixtures and equipment, are valued using the cost approach, which is based on replacement or reproduction costs of the asset less depreciation. The fair value of the contingent consideration is estimated using a Monte Carlo simulation and the significant assumptions used include projections of revenues and probabilities of meeting those projections. Key inputs to the valuation of the noncontrolling interests include projected cash flows and the expected volatility associated with those cash flows.

4. Revenue Accounting for Contracts

Disaggregation of Revenues

Our revenues are principally derived from contracts to provide a diverse range of technical, professional, and construction services to a large number of industrial, commercial, and governmental clients. We provide a broad range of engineering, design, and architectural services; construction and construction management services; operations and maintenance services; and technical, digital, process, scientific and systems consulting services. We provide our services through offices and subsidiaries located primarily in North America, Europe, the Middle East, India, Australia, Africa, and Asia. We provide our services under cost-reimbursable and fixed-price contracts. Our contracts are with many different customers in numerous industries. Refer to Note 18- Segment Information for additional information on how we disaggregate our revenues by reportable segment.

The following table further disaggregates our revenue by geographic area for the three and nine months ended June 30, 2023 and July 1, 2022 (in thousands):


	Three Months Ended				Nine Months Ended
	June 30, 2023		July 1, 2022		June 30, 2023		July 1, 2022
Revenues:
United States	$	2,816,773	$	2,577,892	$	8,047,887	$	7,226,189
Europe	905,917		862,011		2,691,479		2,666,219
Canada	70,164		74,509		193,880		206,701
Asia	35,054		35,741		105,520		104,361
India	39,749		30,761		126,922		81,753
Australia and New Zealand	181,308		172,926		512,416		532,228
Middle East and Africa	137,737		73,253		385,598		224,326
Total	$	4,186,702	$	3,827,093	$	12,063,702	$	11,041,777

Contract Liabilities

Contract liabilities represent amounts billed to clients in excess of revenue recognized to date. Revenue recognized for the three and nine months ended June 30, 2023 that was previously included in the contract liability balance on September 30, 2022 was $65.1 million and $483.9 million, respectively. Revenue recognized for the three and nine months ended July 1, 2022 that was included in the contract liability balance on October 1, 2021 was $36.3 million and $407.3 million, respectively.

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Remaining Performance Obligation

The Company’s remaining performance obligations as of June 30, 2023 represent a measure of the total dollar value of work to be performed on contracts awarded and in progress. The Company had approximately $17.2 billion in remaining performance obligations as of June 30, 2023. The Company expects to recognize approximately 51% of its remaining performance obligations into revenue within the next twelve months and the remaining 49% thereafter. The majority of the remaining performance obligations after the first twelve months are expected to be recognized over a four year period.

Although our remaining performance obligations reflect business volumes that are considered to be firm, normal business activities including scope adjustments, deferrals or cancellations may occur that impact volume or expected timing of their recognition. Remaining performance obligations are adjusted to reflect any known project cancellations, revisions to project scope and cost, foreign currency exchange fluctuations and project deferrals, as appropriate.

5. Earnings Per Share and Certain Related Information

Basic and diluted earnings per share (“EPS”) are computed using the two-class method, which is an earnings allocation method that determines EPS for common shares and participating securities. The undistributed earnings are allocated between common shares and participating securities as if all earnings had been distributed during the period. Participating securities and common shares have equal rights to undistributed earnings. Net earnings used for the purpose of determining basic and diluted EPS is determined by taking net earnings less earnings available to participating securities.

The following table reconciles the denominator used to compute basic EPS to the denominator used to compute diluted EPS for the three and nine months ended June 30, 2023 and July 1, 2022 (in thousands):

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	Three Months Ended				Nine Months Ended
	June 30, 2023		July 1, 2022		June 30, 2023		July 1, 2022
Numerator for Basic and Diluted EPS:





Net earnings from continuing operations allocated to common stock for EPS calculation	$	163,945	$	196,326	$	516,886	$	419,408



Net earnings (loss) from discontinued operations allocated to common stock for EPS calculation	$	294	$	(343)	$	(489)	$	(576)

Net earnings allocated to common stock for EPS calculation	$	164,239	$	195,983	$	516,397	$	418,832

Denominator for Basic and Diluted EPS:



Shares used for calculating basic EPS attributable to common stock	126,646		128,225		126,785		128,966

Effect of dilutive securities:
Stock compensation plans	492		708		546		767
Shares used for calculating diluted EPS attributable to common stock	127,138		128,933		127,331		129,733

Net Earnings Per Share:
Basic Net Earnings from Continuing Operations Per Share	$	1.29	$	1.53	$	4.08	$	3.25
Basic Net Loss from Discontinued Operations Per Share	$	—	$	—	$	—	$	—
Basic Earnings Per Share	$	1.30	$	1.53	$	4.07	$	3.25
Diluted Net Earnings from Continuing Operations Per Share	$	1.29	$	1.52	$	4.06	$	3.23
Diluted Net Loss from Discontinued Operations Per Share	$	—	$	—	$	—	$	—
Diluted Earnings Per Share	$	1.29	$	1.52	$	4.06	$	3.23

Note: Per share amounts may not add due to rounding.

Share Repurchases


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

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 June 30, 2023, the Company has $875.0 million remaining under the 2023 Repurchase Authorization.

The following table summarizes repurchase activity under the 2020 Repurchase Authorization during fiscal year 2023 through expiration during the second fiscal quarter of 2023:

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

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

The following table summarizes repurchase activity under the 2023 Repurchase Authorization from January 25, 2023 through the third fiscal quarter of 2023:


Amount Authorized (2023 Repurchase Authorization)	Average Price Per Share (1)	Total Shares Retired	Shares Repurchased
$1,000,000,000	$114.91	1,088,012	1,088,012

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


Our share repurchase program does not obligate the Company to purchase any shares. Share repurchases may be executed through various means including, without limitation, accelerated share repurchases, open market transactions, privately negotiated transactions, purchases pursuant to Rule 10b5-1 plans or otherwise. The authorization for the share repurchase programs may be terminated, increased or decreased by the Company’s Board of Directors in its discretion at any time. The timing, amount and manner of share repurchases may depend upon market conditions and economic circumstances, availability of investment opportunities, the availability and costs of financing, currency fluctuations, the market price of the Company's common stock, other uses of capital and other factors.

Dividends

On July 6, 2023, the Company’s Board of Directors declared a quarterly dividend of $0.26 per share of the Company’s common stock to be paid on August 25, 2023, to shareholders of record on the close of business on July 28, 2023. Future dividend declarations are subject to review and approval by the Company’s Board of Directors. Dividends paid through the third fiscal quarter of 2023 and the preceding fiscal year are as follows:

Declaration Date

Record Date

Payment Date

Cash Amount (per share)

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

July 13, 2022

July 29, 2022

August 26, 2022

$0.23

April 28, 2022

May 27, 2022

June 24, 2022

$0.23

January 26, 2022

February 25, 2022

March 25, 2022

$0.23

September 23, 2021

October 15, 2021

October 29, 2021

$0.21

6. Goodwill and Intangibles

As a result of the formation of our new Divergent Solutions operating segment beginning in the first quarter of fiscal 2023, the historical carrying value of a portion of goodwill has been reallocated to this segment based on a relative

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fair value basis. The carrying value of goodwill appearing in the accompanying Consolidated Balance Sheets at June 30, 2023 and September 30, 2022 was as follows (in thousands):


	Critical Mission Solutions		People & Places Solutions		Divergent Solutions		PA Consulting		Total
Balance September 30, 2022	$	2,251,724	$	3,196,796	$	576,986	$	1,159,152	$	7,184,658
Acquired	—		—		—		11,956		11,956
Post-Acquisition Adjustments	—		(138)		—		877		739

Foreign currency translation and other	(1,379)		20,421		20,148		178,015		217,205
Balance June 30, 2023	$	2,250,345	$	3,217,079	$	597,134	$	1,350,000	$	7,414,558

The following table provides certain information related to the Company’s acquired intangibles in the accompanying Consolidated Balance Sheets at June 30, 2023 and September 30, 2022 (in thousands):


	Customer Relationships, Contracts and Backlog		Developed Technology		Trade Names		Total
Balances September 30, 2022	$	1,136,438	$	88,931	$	168,683	$	1,394,052
Amortization	(132,772)		(11,720)		(7,740)		(152,232)
Acquired	5,537		—		—		5,537
Post-Acquisition Adjustments	(1,409)		—		—		(1,409)
Foreign currency translation and other	83,415		1,785		23,529		108,729
Balances June 30, 2023	$	1,091,209	$	78,996	$	184,472	$	1,354,677

The following table presents estimated amortization expense of intangible assets for the remainder of fiscal 2023 and for the succeeding years.


Fiscal Year	(in millions)
2023	$	52.2
2024	207.0
2025	206.5
2026	183.6
2027	150.7
Thereafter	554.7
Total	$	1,354.7

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7. Receivables and Contract Assets

The following table presents the components of receivables and contract assets appearing in the accompanying Consolidated Balance Sheets at June 30, 2023 and September 30, 2022, as well as certain other related information (in thousands):


	June 30, 2023		September 30, 2022
Components of receivables and contract assets:
Amounts billed, net	$	1,518,268	$	1,400,088
Unbilled receivables and other	1,408,253		1,523,249
Contract assets	632,203		482,044
Total receivables and contract assets, net	$	3,558,724	$	3,405,381
Other information about receivables:
Amounts due from the United States federal government, included above, net of contract liabilities	$	749,767	$	749,323

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

Unbilled receivables and other, which represent an unconditional right to payment subject only to the passage of time, are reclassified to amounts billed when they are billed under the terms of the contract. We anticipate that substantially all of such unbilled amounts will be billed and collected over the next twelve months.

Contract assets represent unbilled amounts where the right to payment is subject to more than merely the passage of time and includes performance-based incentives and services that have been provided in advance of agreed contractual milestones. Contract assets are transferred to unbilled receivables when the right to consideration becomes unconditional and are transferred to amounts billed upon invoicing.

8. Accumulated Other Comprehensive Income

The following table presents the Company's roll forward of accumulated other comprehensive income (loss) after-tax as of June 30, 2023 (in thousands):


	Change in Net Pension Obligation		Foreign Currency Translation Adjustment (1)		Gain/(Loss) on Cash Flow Hedges (2)		Total
Balance at September 30, 2022	$	(307,395)	$	(786,040)	$	118,305	$	(975,130)
Other comprehensive (loss) income	(30,047)		242,420		10,987		223,360
Reclassifications from accumulated other comprehensive income (loss)	—		—		(20,618)		(20,618)
Balance at June 30, 2023	$	(337,442)	$	(543,620)	$	108,674	$	(772,388)

(1) Included in the overall foreign currency translation adjustment for the nine months ended June 30, 2023 and July 1, 2022 are $(93.5) million and $90.5 million, respectively in unrealized gains (losses) on long-term foreign currency denominated intercompany loans not anticipated to be settled in the foreseeable future.

(2) Included in the Company’s cumulative net unrealized gains from interest rate and cross currency swaps recorded in accumulated other comprehensive income as of June 30, 2023 were approximately $23.0 million in unrealized gains, net of taxes, which are expected to be realized in earnings during the twelve months subsequent to June 30, 2023.

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9. Income Taxes


The Company’s effective tax rates from continuing operations for the three months ended June 30, 2023 and July 1, 2022 were 23.9% and 21.9%, respectively. For the three months ended June 30, 2023, the primary differences between the statutory U.S. federal corporate tax rate of 21% and the Company’s effective tax rate were associated with U.S. state income tax expense of $5.3 million and U.S. tax on foreign earnings of $5.4 million, partly offset by a $3.5 million tax benefit for the release of previously valued foreign tax credits. For the three months ended July 1, 2022 the main differences were attributable to U.S. state income tax expense of $8.4 million and U.S tax on foreign earnings of $5.3 million, partly offset by a $9.1 million tax benefit related to the reversal of a withholding tax accrual on certain intercompany loans.

The Company's effective tax rates from continuing operations for the nine months ended June 30, 2023 and July 1, 2022 were 18.2% and 20.4%, respectively. The primary differences between the statutory U.S. federal corporate tax rate of 21.0% and the Company’s effective tax rate for the nine months ended June 30, 2023 were related to net tax benefits of $39.4 million mostly related to uncertain tax positions in the U.S. that were effectively settled, of which $30.8 million related to positions carried forward from the fiscal 2018 acquisition of CH2M Hill Companies Ltd., as well as a tax benefit of $12.1 million for the release of previously valued foreign tax credits. These benefits were partly offset by U.S. state income tax expense of $15.8 million and U.S. tax on foreign earnings of $13.6 million. For the nine months ended July 1, 2022, the main differences were associated with tax benefits of $15.4 million for the release of previously valued foreign tax credits, $9.1 million related to the reversal of a withholding tax accrual on certain intercompany loans, and $4.9 million from filing amended state tax returns. These benefits were partly offset by U.S. state income tax expense of $17.4 million and U.S. tax on foreign earnings of $9.3 million.

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

10. Joint Ventures, VIEs and Other Investments

For the Company's consolidated variable interest entities ("VIE") joint ventures, the carrying value of assets and liabilities was $385.9 million and $245.5 million, respectively, as of June 30, 2023 and $353.9 million and $228.1 million, respectively, as of September 30, 2022. There are no consolidated VIEs that have debt or credit facilities.

For the Company's proportionate consolidated VIEs, the carrying value of assets and liabilities was $133.2 million and $145.8 million, respectively, as of June 30, 2023, and $109.3 million and $129.2 million, respectively, as of September 30, 2022.

Our investments in equity method joint ventures on the Consolidated Balance Sheets (reported in Other Noncurrent Assets: Miscellaneous) as of June 30, 2023 and September 30, 2022 were $51.7 million and $56.6 million, respectively. Additionally, income from equity method joint ventures (reported in Revenue) was $7.6 million and $10.8 million, respectively, during the three months ended June 30, 2023 and July 1, 2022, with $25.1 million and $30.1 million, respectively, reporting in the corresponding nine month periods. As of June 30, 2023, the Company's equity method investment carrying values do not include material amounts exceeding their share of the respective joint ventures' reported net assets.

Accounts receivable from unconsolidated joint ventures accounted for under the equity method was $17.8 million and $21.1 million as of June 30, 2023 and September 30, 2022, respectively.

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11. Borrowings

At June 30, 2023 and September 30, 2022, long-term debt consisted of the following (principal amounts in thousands):


	Interest Rate	Maturity	June 30, 2023		September 30, 2022
Revolving Credit Facility	Benchmark + applicable margin (1) (2)	February 2028	$	806,147	$	1,105,294
2021 Term Loan Facility - USD Portion	Benchmark + applicable margin (1) (3)	February 2026	200,000		200,000
2021 Term Loan Facility - GBP Portion	Benchmark + applicable margin (3)	September 2025	826,280		723,580
2020 Term Loan Facility	Benchmark + applicable margin (1) (4)	March 2025 (7)	877,532		882,263
Fixed-rate notes due:
Bonds, Sustainability-Linked	5.9% (5)	March 2033	500,000		—

Senior Notes, Series A	4.27%	May 2025 (6)	—		190,000
Senior Notes, Series B	4.42%	May 2028 (6)	—		180,000
Senior Notes, Series C	4.52%	May 2030 (6)	—		130,000
Less: Current Portion (7)			(55,743)		(50,415)
Less: Deferred Financing Fees			(8,687)		(3,466)
Total Long-term debt, net			$	3,145,529	$	3,357,256

(1)During the second quarter of fiscal 2023, the aggregate principal amounts denominated in U.S. dollars under the Revolving Credit Facility, the 2021 Term loan facility and the 2020 Term Loan Facility (each as defined below) transitioned from underlying LIBOR benchmarked rates to the Term Secured Overnight Financing Rate ("SOFR"). During fiscal 2022, the aggregate principal amounts denominated in British pounds under the Revolving Credit Facility, 2021 Term Loan Facility and 2020 Term Loan Facility transitioned from underlying LIBOR benchmarked rates to Sterling Overnight Index Average ("SONIA") rates.

(2)Depending on the Company’s Consolidated Leverage Ratio or Debt Rating (each as defined in the credit agreement governing the Revolving Credit Facility), U.S. dollar denominated borrowings under the Revolving Credit Facility bear interest at either a SOFR rate plus a margin of between 0.975% and 1.725% or a base rate plus a margin of between 0% and 0.625%. The applicable SOFR rates, or LIBOR rate for the prior fiscal year end, including applicable margins at June 30, 2023 and September 30, 2022 were approximately 6.49% and 4.08%. Borrowings denominated in British pounds bear interest at an adjusted SONIA rate plus a margin of between 0.908% and 1.658%. There were no amounts drawn in British pounds as of June 30, 2023.

(3)Depending on the Company’s Consolidated Leverage Ratio or Debt Rating (each as defined in the credit agreement governing the 2021 Term Loan Facility), U.S. dollar denominated borrowings under the 2021 Term Loan Facility bear interest at either a SOFR rate plus a margin of between 0.975% and 1.725% or a base rate plus a margin of between 0% and 0.625%. The applicable SOFR, or LIBOR rate for the prior fiscal year end, including applicable margins for borrowings denominated in U.S. dollars at June 30, 2023 and September 30, 2022 was approximately 6.50% and 4.06%. Borrowings denominated in British pounds bear interest at an adjusted SONIA rate plus a margin of between 0.908% and 1.658%, which was approximately 6.21% and 3.60% at June 30, 2023 and September 30, 2022, respectively.

(4)Depending on the Company’s Consolidated Leverage Ratio or Debt Rating (each as defined in the credit agreement governing the 2020 Term Loan Facility), U.S. dollar denominated borrowings under the 2020 Term Loan Facility bear interest at either a SOFR rate plus a margin of between 0.975% and 1.725% or a base rate plus a margin of between 0% and 0.625%. The applicable SOFR, or LIBOR rate for the prior fiscal year end, including applicable margins for borrowings denominated in U.S. dollars at June 30, 2023 and September 30, 2022 were approximately 6.45% and 4.49%. Borrowings denominated in British pounds bear interest at an adjusted SONIA rate plus a margin of between 0.908% and 1.658%, which was approximately 6.21% and 3.60% at June 30, 2023 and September 30, 2022, respectively.

(5)From and including September 1, 2028 (the “First Step Up Date”), the interest rate payable on the Bonds (as defined below) will be increased by an additional 12.5 basis points to 6.025% per annum (the “First Step Up Interest Rate”) unless the Company notifies the Trustee (as defined below) on or before the date that is 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 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

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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.

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

(7)The current portion of long-term debt is comprised primarily of the 2020 Term Loan quarterly principal repayments of 1.25%, or $9.125 million and £3.125 million, of the aggregate initial principal amount borrowed.

Revolving Credit Facility and Term Loans

On February 7, 2014, Jacobs and certain of its subsidiaries entered into a $1.6 billion long-term unsecured, revolving credit facility (as amended, the “2014 Revolving Credit Facility”) with a syndicate of U.S. and international banks and financial institutions. On March 27, 2019, the Company entered into a second amended and restated credit agreement (the "Revolving Credit Facility"), which amended and restated the 2014 Revolving Credit Facility by, among other things, (a) extending the maturity date of the credit facility to March 27, 2024, (b) increasing the facility amount to $2.25 billion (with an accordion feature that allows a further increase of the facility amount up to $3.25 billion), (c) eliminating the covenants restricting investments, joint ventures and acquisitions by the Company and its subsidiaries and (d) adjusting the financial covenants to eliminate the net worth covenant upon the removal of the same covenant from the Company’s existing Note Purchase Agreement (defined below). On February 6, 2023, the Company amended and restated the Revolving Credit Facility to, among other things: (a) extend the maturity date to February 6, 2028, (b) replace and adjust interest rates based on market conditions and incorporate a sustainability-linked pricing adjustment, (c) increase the Consolidated Leverage Ratio financial covenant to 3.50:1.00 (subject to temporary increases to 4.00:1.00 following the closing of certain material acquisitions), (d) eliminate the net worth financial covenant, and (e) add Jacobs Solutions Inc. as a guarantor of the obligations of JEGI and its subsidiaries under the Revolving Credit Facility.

The Revolving Credit Facility permits the Company to borrow in U.S. dollars, certain specified foreign currencies, and any other currency that may be approved in accordance with the terms of the Revolving Credit Facility. The Revolving Credit Facility also provides for a financial letter of credit sub facility of $400.0 million, permits performance letters of credit, and provides for a $100.0 million sub facility for swing line loans. Letters of credit are subject to fees based on the Company’s Consolidated Leverage Ratio and Debt Rating, whichever is more favorable to the Company. The Company pays a facility fee of between 0.10% and 0.25% per annum depending on the Company’s Consolidated Leverage Ratio and Debt Rating.

On January 20, 2021, the Company entered into an unsecured delayed draw term loan facility (the “2021 Term Loan Facility”) with a syndicate of financial institutions as lenders. Under the 2021 Term Loan Facility, the Company borrowed an aggregate principal amount of $200.0 million and £650.0 million. The proceeds of the term loans were used primarily to fund the Company's investment in PA Consulting. The 2021 Term Loan Facility contains affirmative and negative covenants and events of default customary for financings of this type that are consistent with those included in the Revolving Credit Facility and the 2020 Term Loan Facility. On February 6, 2023, the Company amended and restated the 2021 Term Loan Facility to, among other things: (a) extend the maturity date of the U.S. dollar term loan to February 6, 2026 and the British sterling term loan to September 1, 2025, (b) replace and adjust interest rates based on market conditions and incorporate a sustainability-linked pricing adjustment, (c) increase the Consolidated Leverage Ratio financial covenant to 3.50:1.00 (subject to temporary increases to 4.00:1.00 following the closing of certain material acquisitions), (d) eliminate the net worth financial covenant, and (e) add Jacobs as a guarantor of the obligations of JEGI under the 2021 Term Loan Facility.

On March 25, 2020, the Company entered into an unsecured term loan facility (the “2020 Term Loan Facility”) with a syndicate of financial institutions as lenders. Under the 2020 Term Loan Facility, the Company borrowed an aggregate principal amount of $730.0 million and one of the Company's U.K. subsidiaries borrowed an aggregate principal amount of £250.0 million. The proceeds of the term loans were used to repay an existing term loan with a maturity date of June 2020 and for general corporate purposes. The 2020 Term Loan Facility contains affirmative and negative covenants and events of default customary for financings of this type that are consistent with those included in the Revolving Credit Facility. On February 6, 2023, the Company amended the 2020 Term Loan Facility to, among other things: (a) replace and adjust interest rates based o