Company Quick10K Filing
Jacobs Engineering Group
Price-0.00 EPS6
Shares139 P/E-0
MCap-0 P/FCF0
Net Debt570 EBIT950
TEV570 TEV/EBIT1
TTM 2019-09-27, in MM, except price, ratios
10-Q 2021-01-01 Filed 2021-02-09
10-K 2020-10-02 Filed 2020-11-24
10-Q 2020-03-27 Filed 2020-05-06
10-Q 2019-12-27 Filed 2020-02-04
8-K 2020-11-27
8-K 2020-11-24
8-K 2020-08-14
8-K 2020-05-06
8-K 2020-05-06
8-K 2020-03-25
8-K 2020-02-04
8-K 2020-01-14

J 10Q Quarterly Report

Part I - Financial Information
Item 1. Financial Statements.
Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations.
Item 3. Quantitative and Qualitative Disclosures About Market Risk.
Item 4. Controls and Procedures.
Part II - Other Information
Item 1. Legal Proceedings.
Item 1A. Risk Factors.
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds.
Item 3. Defaults Upon Senior Securities
Item 4. Mine Safety Disclosure.
Item 5. Other Information.
Item 6. Exhibits.
EX-10.2 exhibit102q1fy2021.htm
EX-10.3 exhibit103q1fy2021.htm
EX-10.4 exhibit104q1fy2021.htm
EX-31.1 exhibit311q1fy2021.htm
EX-31.2 exhibit312q1fy2021.htm
EX-32.1 exhibit321q1fy2021.htm
EX-32.2 exhibit322q1fy2021.htm

Jacobs Engineering Group Earnings 2021-01-01

Balance SheetIncome StatementCash Flow
151296302018201820192020
Assets, Equity
3.42.72.01.40.70.02018201820192020
Rev, G Profit, Net Income
2.31.40.6-0.3-1.1-2.02018201820192020
Ops, Inv, Fin

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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 January 1, 2021
    Transition Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
For the transition period from              to             
Commission File Number 1-7463
JACOBS ENGINEERING GROUP INC.
(Exact name of registrant as specified in its charter)

Delaware95-4081636
(State or other jurisdiction of incorporation or organization)(I.R.S. Employer Identification Number)
1999 Bryan StreetSuite 1200DallasTexas75201
(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 ClassTrading Symbol(s)Name of Each Exchange on Which Registered
Common Stock$1 par valueJNew 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 filerAccelerated filer
Non-accelerated filerSmaller reporting company
Emerging growth company
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.
Indicate by check-mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).      Yes   ☒  No
Number of shares of common stock outstanding at January 29, 2021: 130,086,161
Page 2


JACOBS ENGINEERING GROUP INC.
INDEX TO FORM 10-Q

Page No.
PART I
Item 1.
Item 2.
Item 3.
Item 4.
PART II
Item 1.
Item 1A.
Item 2.
Item 3.
Item 4.
Item 5.
Item 6.


Page 2


Part I - FINANCIAL INFORMATION
Item 1.    Financial Statements.

Page 3


JACOBS ENGINEERING GROUP INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(In thousands, except share information)
(Unaudited)
January 1, 2021October 2, 2020
ASSETS
Current Assets:
Cash and cash equivalents$837,012 $862,424 
Receivables and contract assets3,265,260 3,167,310 
Prepaid expenses and other144,224 162,355 
Investment in equity securities540,357 347,510 
Total current assets4,786,853 4,539,599 
Property, Equipment and Improvements, net318,042 319,371 
Other Noncurrent Assets:
Goodwill5,808,484 5,639,091 
Intangibles, net715,641 658,340 
Deferred income tax assets158,491 211,047 
Operating lease right-of-use assets582,985 576,915 
Miscellaneous397,129 409,990 
Total other noncurrent assets7,662,730 7,495,383 
$12,767,625 $12,354,353 
LIABILITIES AND STOCKHOLDERS’ EQUITY
Current Liabilities:
Accounts payable$999,483 $1,061,754 
Accrued liabilities1,193,818 1,249,883 
Operating lease liability164,639 164,312 
Contract liabilities530,757 465,648 
Total current liabilities2,888,697 2,941,597 
Long-term Debt1,797,069 1,676,941 
Liabilities relating to defined benefit pension and retirement plans578,417 568,176 
Deferred income tax liabilities9,286 3,366 
Long-term operating lease liability735,337 735,202 
Other deferred liabilities615,452 573,404 
Commitments and Contingencies
Stockholders’ Equity:
Capital stock:
                Preferred stock, $1 par value, authorized - 1,000,000 shares; issued and
outstanding - none
  
                Common stock, $1 par value, authorized - 240,000,000 shares;
issued and outstanding 130,035,258 shares and 129,747,783
shares as of January 1, 2021 and October 2, 2020, respectively
130,035 129,748 
Additional paid-in capital2,597,586 2,598,446 
Retained earnings4,249,408 4,020,575 
Accumulated other comprehensive loss(877,539)(933,057)
Total Jacobs stockholders’ equity6,099,490 5,815,712 
Noncontrolling interests43,877 39,955 
Total Group stockholders’ equity6,143,367 5,855,667 
$12,767,625 $12,354,353 
See the accompanying Notes to Consolidated Financial Statements – Unaudited.

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JACOBS ENGINEERING GROUP INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF EARNINGS
Three Months Ended January 1, 2021 and December 27, 2019
(In thousands, except per share information)
(Unaudited)
For the Three Months Ended
January 1, 2021December 27, 2019
Revenues$3,381,836 $3,360,049 
Direct cost of contracts(2,749,776)(2,715,478)
Gross profit632,060 644,571 
Selling, general and administrative expenses(418,120)(493,226)
Operating Profit213,940 151,345 
Other Income (Expense):
Interest income1,124 946 
Interest expense(17,313)(14,817)
Miscellaneous income (expense), net156,360 116,695 
Total other income (expense), net140,171 102,824 
Earnings from Continuing Operations Before Taxes354,111 254,169 
Income Tax Expense from Continuing Operations(87,023)(68,489)
Net Earnings of the Group from Continuing Operations267,088 185,680 
Net (Loss) Earnings of the Group from Discontinued Operations(14)77,587 
Net Earnings of the Group267,074 263,267 
Net Earnings Attributable to Noncontrolling Interests from Continuing Operations(10,026)(6,257)
Net Earnings Attributable to Jacobs from Continuing Operations257,062 179,423 
Net Earnings Attributable to Jacobs$257,048 $257,010 
Net Earnings Per Share:
Basic Net Earnings from Continuing Operations Per Share$1.98 $1.35 
Basic Net Earnings from Discontinued Operations Per Share$ $0.58 
Basic Earnings Per Share$1.98 $1.93 
Diluted Net Earnings from Continuing Operations Per Share$1.96 $1.33 
Diluted Net Earnings from Discontinued Operations Per Share$ $0.58 
Diluted Earnings Per Share$1.96 $1.91 
See the accompanying Notes to Consolidated Financial Statements - Unaudited.

Page 5


JACOBS ENGINEERING GROUP INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
Three Months Ended January 1, 2021 and December 27, 2019
(In thousands)
(Unaudited)
For the Three Months Ended
January 1, 2021December 27, 2019
Net Earnings of the Group$267,074 $263,267 
Other Comprehensive Income:
Foreign currency translation adjustment86,338 52,297 
Gain on cash flow hedges3,583 18 
Change in pension and retiree medical plan liabilities(19,353)(16,251)
Other comprehensive income before taxes70,568 36,064 
Income Tax (Expense) Benefit:
Foreign currency translation adjustment(14,445) 
Cash flow hedges221  
Change in pension and retiree medical plan liabilities(826)582 
Income Tax (Expense) Benefit:(15,050)582 
Net other comprehensive income 55,518 36,646 
Net Comprehensive Income of the Group322,592 299,913 
Net Earnings Attributable to Noncontrolling Interests(10,026)(6,257)
Net Comprehensive Income Attributable to Jacobs$312,566 $293,656 
See the accompanying Notes to Consolidated Financial Statements - Unaudited.

Page 6


JACOBS ENGINEERING GROUP INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY
For the Three Months Ended January 1, 2021 and December 27, 2019
(In thousands)
(Unaudited)
Common StockAdditional Paid-in CapitalRetained EarningsAccumulated Other Comprehensive Income (Loss)Total Jacobs Stockholders’ EquityNoncontrolling InterestsTotal Group Stockholders’ Equity
Balances at September 27, 2019$132,879 $2,559,450 $3,939,174 $(916,812)$5,714,691 $53,967 $5,768,658 
Net earnings— — 257,010 — 257,010 6,257 263,267 
Foreign currency translation adjustments— — — 52,297 52,297 — 52,297 
Pension and retiree medical plan liability, net of deferred taxes of $582
— — — (15,669)(15,669)— (15,669)
Gain on derivatives, net of deferred taxes of $
— — — 18 18 — 18 
Dividends— — (68)— (68)— (68)
Noncontrolling interests - distributions and other— — — — — (2,478)(2,478)
Stock based compensation — 13,200 1,079 — 14,279 — 14,279 
Issuances of equity securities including shares withheld for taxes474 (10,115)(8,492)— (18,133)— (18,133)
Repurchases of equity securities(352)43,230 (42,878)— — —  
Balances at December 27, 2019
$133,001 $2,605,765 $4,145,825 $(880,166)$6,004,425 $57,746 $6,062,171 
Balances at October 2, 2020$129,748 $2,598,446 $4,020,575 $(933,057)$5,815,712 $39,955 $5,855,667 
Net earnings— — 257,048 — 257,048 10,026 267,074 
Foreign currency translation adjustments, net of deferred taxes of $14,445
— — — 71,893 71,893 — 71,893 
Pension liability, net of deferred taxes of $826
— — — (20,179)(20,179)— (20,179)
Gain on derivatives, net of deferred taxes of $(221)
— — — 3,804 3,804 — 3,804 
Dividends— — (34)— (34)— (34)
Noncontrolling interests - distributions and other— — — — — (6,104)(6,104)
Stock based compensation — 11,841 — — 11,841 — 11,841 
Issuances of equity securities including shares withheld for taxes538 (7,674)(8,658)— (15,794)— (15,794)
Repurchases of equity securities(251)(5,027)(19,523)— (24,801)— (24,801)
Balances at January 1, 2021$130,035 $2,597,586 $4,249,408 $(877,539)$6,099,490 $43,877 $6,143,367 
See the accompanying Notes to Consolidated Financial Statements – Unaudited.
.

Page 7


JACOBS ENGINEERING GROUP INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
For the Three Months Ended January 1, 2021 and December 27, 2019
(In thousands)
(Unaudited)
For the Three Months Ended
January 1, 2021December 27, 2019
Cash Flows from Operating Activities:
Net earnings attributable to the Group$267,074 $263,267 
Adjustments to reconcile net earnings to net cash flows provided by (used for) operations:
Depreciation and amortization:
Property, equipment and improvements22,989 22,152 
Intangible assets23,155 21,845 
Gain on sale of ECR business (61,943)
Gain on investment in equity securities(190,368)(105,319)
Stock based compensation11,841 14,279 
Equity in earnings of operating ventures, net of return on capital distributions1,159 (715)
(Gain) Loss on disposals of assets, net(134)36 
Impairment of equity method investment27,902  
Loss on pension and retiree medical plan changes  2,651 
Deferred income taxes53,008 102,487 
Changes in assets and liabilities, excluding the effects of businesses acquired:
Receivables and contract assets, net of contract liabilities33,250 (96,075)
Prepaid expenses and other current assets25,144 (4,152)
Miscellaneous other assets16,564 34,634 
Accounts payable(63,985)(35,380)
Accrued liabilities(131,576)(236,090)
 Other deferred liabilities16,491 (60,562)
      Other, net104 1,699 
          Net cash provided by (used for) operating activities112,618 (137,186)
Cash Flows from Investing Activities:
Additions to property and equipment(16,766)(22,260)
Capital contributions to equity investees, net of return of capital distributions(3,430)(12,000)
Acquisitions of businesses, net of cash acquired(173,012) 
          Net cash used for investing activities(193,208)(34,260)
Cash Flows from Financing Activities:
Proceeds from long-term borrowings603,500 841,544 
Repayments of long-term borrowings(500,827)(631,000)
Proceeds from short-term borrowings 78 
Repayments of short-term borrowings(7,675)(6)
Proceeds from issuances of common stock9,541 6,201 
Common stock repurchases(24,801) 
Taxes paid on vested restricted stock(25,335)(24,334)
Cash dividends, including to noncontrolling interests(35,718)(25,618)
            Net cash provided by financing activities18,685 166,865 
Effect of Exchange Rate Changes36,493 (7,275)
Net Decrease in Cash and Cash Equivalents(25,412)(11,856)
Cash and Cash Equivalents at the Beginning of the Period862,424 631,068 
Cash and Cash Equivalents at the End of the Period$837,012 $619,212 
See the accompanying Notes to Consolidated Financial Statements – Unaudited.



Page 8


JACOBS ENGINEERING GROUP INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
1.Basis of Presentation
Unless the context otherwise requires:
References herein to “Jacobs” are to Jacobs Engineering Group 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 (“U.S. GAAP”) have been condensed or omitted. Readers of this Quarterly Report on Form 10-Q should also read our consolidated financial statements and the notes thereto included in our Annual Report on Form 10-K for the fiscal year ended October 2, 2020 (“2020 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 January 1, 2021, and for the three months ended January 1, 2021.
Our interim results of operations are not necessarily indicative of the results to be expected for the full fiscal year.
Effective the beginning of fiscal first quarter 2020, the Company adopted ASU 2016-02, Leases ("ASC 842"), including the subsequent ASU's that amended and clarified the related guidance. The Company adopted ASC 842 using a modified retrospective approach, and accordingly the new guidance was applied to leases that existed or were entered into after the first day of adoption without adjusting the comparative periods presented. Please refer to Note-13 Leases for required disclosures related to leases.
On November 24, 2020, a subsidiary of Jacobs completed the acquisition of Buffalo Group LLC ("Buffalo Group"), a leader in advanced cyber and intelligence solutions. The Company paid total consideration of $212.8 million, which was comprised of approximately $181.4 million in cash to the former owners of Buffalo Group and the assumption of Buffalo Group's debt of approximately $7.7 million and $23.7 million in other assumed liabilities. The Company repaid all of the assumed Buffalo Group debt by the end of the first fiscal quarter of 2021. The Company has recorded its preliminary purchase price allocation associated with the acquisition, which is summarized in Note 15- Business Combinations.
On March 6, 2020, a subsidiary of Jacobs completed the acquisition of the nuclear consulting, remediation and program management business of John Wood Group, a U.K.-based energy services company, for an enterprise value of £246 million, or approximately $317.9 million, less cash acquired of $24.3 million. The Company has recorded its preliminary purchase price allocation associated with the acquisition, which is summarized in Note 15- Business Combinations.
On April 26, 2019, Jacobs completed the sale of its Energy, Chemicals and Resources ("ECR") business to Worley Limited, a company incorporated in Australia ("Worley"), for a purchase price of $3.4 billion consisting of (i) $2.8 billion in cash plus (ii) 58.2 million ordinary shares of Worley, subject to adjustments for changes in working capital and certain other items (the “ECR sale”). As a result of the ECR sale, substantially all ECR-related assets and liabilities were sold (the "Disposal Group"). We determined that the Disposal Group should be reported as discontinued operations in accordance with ASC 210-05, Discontinued Operations because their disposal represents a strategic shift that had a major effect on our operations and financial results. As such, the financial results of the ECR business are reflected in our unaudited Consolidated Statements of Earnings as discontinued operations for all periods presented. As of October 2, 2020, all of the ECR business to be sold under the terms of the ECR sale had been conveyed to Worley and as such, no amounts remain held for sale. For further discussion, see Note 16- Sale of Energy, Chemicals and Resources ("ECR") Business to the consolidated financial statements.

Page 9

JACOBS ENGINEERING GROUP INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (CONTINUED)
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 based on management’s most recent assessment of the underlying facts and circumstances utilizing the most current information available and past experience including considerations for potential impacts of the continuing coronavirus (COVID-19) pandemic, actual results could differ significantly from those estimates and assumptions. Our estimates, judgments, and assumptions are evaluated periodically and adjusted accordingly.
Please refer to Note 2- Significant Accounting Policies of Notes to Consolidated Financial Statements included in our 2020 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 2020 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 16- Sale of Energy, Chemicals and Resources for discussion regarding the Company's investment in Worley ordinary shares and Note 18- Commitments and Contingencies and Derivative Financial Instruments for discussion regarding the Company's derivative instruments.
The net carrying amounts of cash and cash equivalents, trade receivables and payables and short-term debt approximate fair value due to the short-term nature of these instruments. See Note 12- Borrowings for a discussion of the fair value of long-term debt.
4.    New Accounting Pronouncements
ASU 2017-04, Simplifying the Test for Goodwill Impairment, is effective for fiscal years beginning after December 15, 2019. ASU 2017-04 removed the second step of the goodwill impairment test, which requires a hypothetical purchase price allocation. An entity will now recognize a goodwill impairment charge for the amount by which a reporting unit's carrying value exceeds its fair value, not to exceed the amount of goodwill allocated to the reporting unit. The adoption of ASU 2017-04 did not have a material impact on the Company's financial position, results of operations or cash flows.


Page 10

JACOBS ENGINEERING GROUP INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (CONTINUED)
ASU No. 2016-13, Financial Instruments - Credit Losses ("ASC 326"): Measurement of Credit Losses on Financial Instruments requires entities to use a current lifetime expected credit loss methodology to measure impairments of certain financial assets. Using this methodology will result in earlier recognition of losses than under the current incurred loss approach, which requires waiting to recognize a loss until it is probable of having been incurred. There are other provisions within the standard that affect how impairments of other financial assets may be recorded and presented, and that expand disclosures. This standard is effective beginning with the current fiscal quarter. The adoption of ASU 326 did not have a material impact on the Company's financial position, results of operations or cash flows.
5.    Revenue Accounting for Contracts
Disaggregation of Revenues
Our revenues are principally derived from contracts to provide a diverse range of technical, professional, and construction services to a large number of industrial, commercial, and governmental clients. We provide a broad range of engineering, design, and architectural services; construction and construction management services; operations and maintenance services; and process, scientific, and systems consulting services. We provide our services through offices and subsidiaries located primarily in North America, South America, Europe, the Middle East, India, Australia, Africa, and Asia. We provide our services under cost-reimbursable and fixed-price contracts. Our contracts are with many different customers in numerous industries. Refer to Note 19- 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 months ended January 1, 2021 and December 27, 2019 (in thousands):
Three Months Ended
January 1, 2021December 27, 2019
Revenues:
     United States$2,457,041 $2,532,716 
     Europe639,315 551,272 
     Canada55,627 55,396 
     Asia27,405 30,440 
     India14,548 5,980 
     Australia and New Zealand137,408 129,194 
     Middle East and Africa50,492 55,051 
Total$3,381,836 $3,360,049 
Contract Liabilities
Contract liabilities represent amounts billed to clients in excess of revenue recognized to date. Revenue recognized for the three months ended January 1, 2021 and December 27, 2019 that was included in the contract liability balance on October 2, 2020 and September 27, 2019, respectively was $259.0 million and $244.1 million, respectively.
Remaining Performance Obligations     
The Company’s remaining performance obligations as of January 1, 2021 represent a measure of the total dollar value of work to be performed on contracts awarded and in progress. The Company had approximately $17.3 billion in remaining performance obligations as of January 1, 2021. The Company expects to recognize approximately 44% of our remaining performance obligations into revenue within the next twelve months and the remaining 56% thereafter.
Although remaining performance obligations reflect business that is considered to be firm, cancellations, scope adjustments, foreign currency exchange fluctuations or deferrals may occur that impact their volume or the expected timing of their recognition. Remaining performance obligations are adjusted to reflect any known project cancellations, revisions to project scope and cost, foreign currency exchange fluctuations and project deferrals, as appropriate.

Page 11

JACOBS ENGINEERING GROUP INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (CONTINUED)
6.     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. During the three months ended January 1, 2021, the Company did not have any outstanding participating securities.
The following table reconciles the denominator used to compute basic EPS to the denominator used to compute diluted EPS for the three months ended January 1, 2021 and December 27, 2019 (in thousands):
Three Months Ended
January 1, 2021December 27, 2019
Numerator for Basic and Diluted EPS:
Net earnings attributable to Jacobs from continuing operations$257,062 $179,423 
Net earnings from continuing operations allocated to participating securities (92)
Net earnings from continuing operations allocated to common stock for EPS calculation$257,062 $179,331 
Net earnings attributable to Jacobs from discontinued operations$(14)$77,587 
Net earnings from discontinued operations allocated to participating securities (40)
Net earnings from discontinued operations allocated to common stock for EPS calculation$(14)$77,547 
Net earnings allocated to common stock for EPS calculation$257,048 $256,878 
Denominator for Basic and Diluted EPS:
Weighted average basic shares129,968 133,202 
Shares allocated to participating securities (68)
Shares used for calculating basic EPS attributable to common stock129,968 133,134 
Effect of dilutive securities:
Stock compensation plans1,182 1,484 
Shares used for calculating diluted EPS attributable to common stock131,150 134,618 
Net Earnings Per Share:
Basic Net Earnings from Continuing Operations Per Share$1.98 $1.35 
Basic Net Earnings from Discontinued Operations Per Share$ $0.58 
Basic Earnings Per Share$1.98 $1.93 
Diluted Net Earnings from Continuing Operations Per Share$1.96 $1.33 
Diluted Net Earnings from Discontinued Operations Per Share$ $0.58 
Diluted Earnings Per Share$1.96 $1.91 
Share Repurchases
On January 17, 2019, the Company’s Board of Directors authorized a share repurchase program of up to $1.0 billion of the Company’s common stock, to expire on January 16, 2022 (the "2019 Repurchase Authorization"). On January 16, 2020, the Company's Board of Directors authorized an additional share repurchase program of up to $1.0 billion of the Company's common stock, to expire on January 15, 2023 (the "2020 Repurchase Authorization").

Page 12

JACOBS ENGINEERING GROUP INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (CONTINUED)
The following table summarizes the activity under the 2019 and 2020 Repurchase Authorizations in the first quarter of fiscal 2021:
Amount Authorized
(2019 and 2020 Repurchase Authorizations)
Average Price Per Share (1)Shares RepurchasedTotal Shares Retired
$2,000,000,000$98.81251,001251,001
(1)Includes commissions paid and calculated at the average price per share

As a precautionary measure in light of the COVID-19 pandemic, the Company temporarily suspended purchases under the share repurchase plan in March 2020, with such suspension remaining in effect through the fiscal third quarter of 2020. During the fourth fiscal quarter of 2020, the Company resumed share repurchases on a limited basis while we continue to monitor developments in fiscal 2021 with the pandemic. As of January 1, 2021, the Company has $33.1 million remaining under the 2019 Repurchase Authorization and $1.0 billion remaining under the 2020 Repurchase Authorization.
The share repurchase programs do 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.
Dividend Program
On January 27, 2021, the Company’s Board of Directors declared a quarterly dividend of $0.21 per share of the Company’s common stock to be paid on March 26, 2021, to shareholders of record on the close of business on February 26, 2021. Future dividend declarations are subject to review and approval by the Company’s Board of Directors. Dividends paid through the first fiscal quarter of 2021 and the preceding fiscal year are as follows:  
Declaration DateRecord DatePayment DateCash Amount (per share)
September 17, 2020October 2, 2020October 30, 2020$0.19
July 9, 2020July 24, 2020August 21, 2020$0.19
May 5, 2020May 20, 2020June 17, 2020$0.19
January 16, 2020January 31, 2020February 28, 2020$0.19
September 19, 2019October 4, 2019November 1, 2019$0.17

7.    Goodwill and Intangibles
The carrying value of goodwill associated with continuing operations and appearing in the accompanying Consolidated Balance Sheets at January 1, 2021 and October 2, 2020 was as follows (in thousands):
Critical Mission SolutionsPeople & Places SolutionsTotal
Balance October 2, 2020$2,409,081 $3,230,010 $5,639,091 
Acquired139,550  139,550 
Foreign Exchange Impact12,379 17,170 29,549 
Post-Acquisition Adjustments294  294 
Balance January 1, 2021$2,561,304 $3,247,180 $5,808,484 

Page 13

JACOBS ENGINEERING GROUP INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (CONTINUED)
The following table provides certain information related to the Company’s acquired intangibles in the accompanying Consolidated Balance Sheets at January 1, 2021 and October 2, 2020 (in thousands):
Customer Relationships, Contracts and BacklogDeveloped TechnologyTrade NamesTotal
Balances October 2, 2020$614,045 $43,572 $723 $658,340 
Amortization(22,063)(985)(107)(23,155)
Acquired71,000   71,000 
Foreign currency translation9,112 339 5 9,456 
Balances January 1, 2021$672,094 $42,926 $621 $715,641 
The following table presents estimated amortization expense of intangible assets for the remainder of fiscal 2021 and for the succeeding years.
Fiscal Year(in millions)
2021$75.4 
202298.8 
202398.6 
202498.6 
202598.2 
Thereafter246.0 
Total$715.6 

8.    Receivables and contract assets
The following table presents the components of receivables appearing in the accompanying Consolidated Balance Sheets at January 1, 2021 and October 2, 2020, as well as certain other related information (in thousands):
January 1, 2021October 2, 2020
Components of receivables and contract assets:
Amounts billed, net$1,384,558 $1,294,204 
Unbilled receivables and other1,439,632 1,449,184 
Contract assets441,070 423,922 
Total receivables and contract assets, net$3,265,260 $3,167,310 
Other information about receivables:
Amounts due from the United States federal government, included above, net of advanced billings$637,937 $600,207 
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. Prior to adoption of ASC 606, receivables related to contractual milestones or achievement of performance-based targets were included in unbilled receivables. These are now included in contract assets. We anticipate that substantially all of such unbilled amounts will be billed and collected over the next twelve months.

Page 14

JACOBS ENGINEERING GROUP INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (CONTINUED)
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 provided ahead of agreed contractual milestones. Contract assets are transferred to unbilled receivables when the right to consideration becomes unconditional and are transferred to amounts billed upon invoicing. The increase in contract assets was a result of normal business activity and not materially impacted by any other factors.
9.     Accumulated Other Comprehensive Income
The following table presents the Company's roll forward of accumulated other comprehensive income (loss) after-tax for the three months ended January 1, 2021 (in thousands):
Change in Pension LiabilitiesForeign Currency Translation AdjustmentGain/(Loss) on Cash Flow HedgesTotal
Balance at October 2, 2020
$(498,726)$(419,715)$(14,616)$(933,057)
Other comprehensive income (loss)(20,179)71,893 1,968 53,682 
Reclassifications from accumulated other comprehensive income (loss)  1,836 1,836 
Balance at January 1, 2021
$(518,905)$(347,822)$(10,812)$(877,539)

10.    Income Taxes
                The Company’s effective tax rates from continuing operations for the three months ended January 1, 2021 and December 27, 2019 were 24.6% and 27.0%, respectively. The Company’s effective tax rate from continuing operations for the three months ended January 1, 2021 was lower than the corresponding rate in the prior period primarily due to one-time income tax charges associated with partnership interest basis differences generated during the quarter ending December 27, 2019. For the three months ended January 1, 2021, the effective tax rate was impacted by a $1.4 million benefit from an Internal Revenue Code section 179D energy credit, a $2.2 million excess tax benefit attributable to stock compensation, and a $5.0 million benefit related to a change in the Company’s assertion about indefinite reinvestment of certain foreign unremitted earnings in Canada. The Company is continuing to accrue taxes related to all other foreign earnings.
See Note 16- Sale of Energy, Chemicals and Resources ("ECR") Business for further information on the Company's discontinued operations reporting for the sale of the ECR business.
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.

11.    Joint Ventures, VIEs and Other Investments
We execute certain contracts jointly with third parties through various forms of joint ventures. Although the joint ventures own and hold the contracts with the clients, the services required by the contracts are typically performed by us and our joint venture partners, or by other subcontractors under subcontracting agreements with the joint ventures. Many of these joint ventures are formed for a specific project. The assets of our joint ventures generally consist almost entirely of cash and receivables (representing amounts due from clients), and the liabilities of our joint ventures generally consist almost entirely of amounts due to the joint venture partners (for services provided by the partners to the joint ventures under their individual subcontracts) and other subcontractors. Many of the joint ventures are deemed to be variable interest entities (“VIE”) because they lack sufficient equity to finance the activities of the joint venture.


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JACOBS ENGINEERING GROUP INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (CONTINUED)
The assets of a joint venture are restricted for use to the obligations of the particular joint venture and are not available for general operations of the Company. Our risk of loss on these arrangements is usually shared with our partners. The liability of each partner is usually joint and several, which means that each partner may become liable for the entire risk of loss on the project. Furthermore, on some of our projects, the Company has granted guarantees that may encumber both our contracting subsidiary company and the Company for the entire risk of loss on the project. The Company is unable to estimate the maximum potential amount of future payments that we could be required to make under outstanding performance guarantees related to joint venture projects due to a number of factors, including but not limited to, the nature and extent of any contractual defaults by our joint venture partners, resource availability, potential performance delays caused by the defaults, the location of the projects, and the terms of the related contracts. Refer to Note 18 - Commitments and Contingencies and Derivative Financial Instruments, for further discussion relating to performance guarantees.
For consolidated joint ventures, the entire amount of the services performed, and the costs associated with these services, including the services provided by the other joint venture partners, are included in the Company's result of operations. Likewise, the entire amount of each of the assets and liabilities are included in the Company’s Consolidated Balance Sheets. For the consolidated VIEs, the carrying value of assets and liabilities was $297.6 million and $217.9 million, respectively, as of January 1, 2021 and $261.8 million and $190.3 million, respectively, as of October 2, 2020. There are no consolidated VIEs that have debt or credit facilities.
Unconsolidated joint ventures are accounted for under proportionate consolidation or the equity method. Proportionate consolidation is used for joint ventures that include unincorporated legal entities and activities of the joint venture that are construction-related. For those joint ventures accounted for under proportionate consolidation, only the Company’s pro rata share of assets, liabilities, revenue, and costs are included in the Company’s balance sheet and results of operations. For the proportionate consolidated VIEs, the carrying value of assets and liabilities was $67.2 million and $65.9 million, respectively, as of January 1, 2021, and $64.1 million and $63.0 million, respectively, as of October 2, 2020. For those joint ventures accounted for under the equity method, the Company's investment balances for the joint venture are included in Other Noncurrent Assets: Miscellaneous on the balance sheet and the Company’s pro rata share of net income is included in revenue. In limited cases, there are basis differences between the equity in the joint venture and the Company's investment created when the Company purchased its share of the joint venture. These basis differences are amortized based on an internal allocation to underlying net assets, excluding allocations to goodwill. As of January 1, 2021, the Company’s equity method investments exceeded its share of venture net assets by $44 million. Our investments in equity method joint ventures on the Consolidated Balance Sheets as of January 1, 2021 and October 2, 2020 were $140.2 million and $161.3 million, respectively. During the three months ended January 1, 2021 and December 27, 2019, we recognized income from equity method joint ventures of $18.3 million and $17.3 million, respectively.
Accounts receivable from unconsolidated joint ventures accounted for under the equity method is $5.4 million and $8.3 million as of January 1, 2021 and October 2, 2020, respectively.
The Company currently holds a 24.5% interest in AWE Management Ltd ("AWE ML") that is accounted for under the equity method, and the carrying value of the Company’s investment as of October 2, 2020 was approximately $38 million. As of October 2, 2020, AWE ML was under a contractual operating arrangement with the UK Ministry of Defence (MoD) with multiple years remaining under the arrangement. Subsequent to year end, on November 2, 2020, the MoD unexpectedly announced plans to change its current operating agreements with AWE ML that would result in the early termination of the current contract in 2021. During the three months ended January 1, 2021, the Company recorded an other-than-temporary impairment on its investment in AWE ML in the amount of $27.9 million, which is included in miscellaneous income (expense), net in the consolidated statement of earnings.
At October 2, 2020, the Company held a cost method investment in C3.ai, Inc. ("C3") of approximately $2.5 million. On December 9, 2020, C3 completed an initial public offering and as a result the Company now carries its investment in C3 at fair value, with mark to market changes reflected in net income as it is an investment in equity securities with a readily determinable fair value based on quoted market prices. In connection with the IPO, the Company became subject to a 180-day lock-up period, which restricts sales of the shares, subject to certain conditions that permit partial share sales based on C3's share performance during the lock-up period. The fair value of the Company's investment at January 1, 2021 was $85.2 million and is included in investment in equity securities in the consolidated balance sheet. Dividend income and unrealized gains and losses on changes in fair value of C3 shares are recognized in miscellaneous income (expense), net in the consolidated statement of earnings. Quoted market prices are available for these securities in an active market, however a discount is applied to account for the lock-up period restrictions and therefore the investment is categorized as a Level 2 input.

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JACOBS ENGINEERING GROUP INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (CONTINUED)
12.    Borrowings
Long-Term Debt
At January 1, 2021 and October 2, 2020, long-term debt consisted of the following (principal amounts in thousands):
Interest RateMaturityJanuary 1, 2021October 2, 2020
Revolving Credit FacilityLIBOR + applicable margin (1)March 2024$268,794 $152,794 
Term Loan Facility
LIBOR + applicable margin (2)
March 20251,029,889 1,025,826 
Fixed-rate notes due:
Senior Notes, Series A4.27%May 2025190,000 190,000 
Senior Notes, Series B4.42%May 2028180,000 180,000 
Senior Notes, Series C4.52%May 2030130,000 130,000 
Less: Deferred Financing Fees(1,614)(1,679)
Total Long-term debt, net$1,797,069 $1,676,941 
(1)Depending on the Company’s Consolidated Leverage Ratio (as defined in the credit agreement governing the Revolving Credit Facility (defined below)), borrowings under the Revolving Credit Facility bear interest at either a eurocurrency rate plus a margin of between 0.875% and 1.625% or a base rate plus a margin of between 0% and 0.625%. including applicable margins The applicable LIBOR rates at January 1, 2021 and October 2, 2020 were approximately 1.16% and 1.39%.
(2)Depending on the Company’s Consolidated Leverage Ratio (as defined in the credit agreement governing the Term Loan Facility (defined below)), borrowings under the Term Loan Facility bear interest at either a eurocurrency rate plus a margin of between 0.875% and 1.5% or a base rate plus a margin of between 0% and 0.5% including applicable margins. The applicable LIBOR rates at January 1, 2021 and October 2, 2020 were approximately 1.11% and 1.37%.
On February 7, 2014, Jacobs and certain of its subsidiaries entered into a $1.6 billion long-term unsecured, revolving credit facility (as amended, the “2014 Revolving Credit Facility”) with a syndicate of U.S. and international banks and financial institutions. On March 27, 2019, the Company entered into a second amended and restated credit agreement (the "Revolving Credit Facility"), which amended and restated the 2014 Revolving Credit Facility by, among other things, (a) extending the maturity date of the credit facility to March 27, 2024, (b) increasing the facility amount to $2.25 billion (with an accordion feature that allows a further increase of the facility amount up to $3.25 billion), (c) eliminating the covenants restricting investments, joint ventures and acquisitions by the Company and its subsidiaries and (d) adjusting the financial covenants to eliminate the net worth covenant upon the removal of the same covenant from the Company’s existing Note Purchase Agreement (defined below). We were in compliance with the covenants under the Revolving Credit Facility at January 1, 2021.
On December 16, 2020, Jacobs entered into a first amendment to the Revolving Credit Facility, which provides for, among other things, (a) administrative changes allowing a one-time limited conditionality draw under the Revolving Credit Facility in connection with the consummation of the proposed acquisition by the Company, indirectly through a subsidiary of the Company, of a majority interest in PA Consulting Group Limited, a private limited company organized under the laws of England and Wales and (b) an increase in the interest rate applicable margin to 1.625% per annum if the Consolidated Leverage Ratio (as defined in the Revolving Credit Facility) of the Company is equal to or greater than 3.00 to 1.00.
The Revolving Credit Facility permits the Company to borrow under two separate tranches in U.S. dollars, certain specified foreign currencies, and any other currency that may be approved in accordance with the terms of the Revolving Credit Facility. The Revolving Credit Facility also provides for a financial letter of credit sub facility of $400.0 million, permits performance letters of credit, and provides for a $50.0 million sub facility for swing line loans. Letters of credit are subject to fees based on the Company’s Consolidated Leverage Ratio. The Company pays a facility fee of between 0.08% and 0.20% per annum depending on the Company’s Consolidated Leverage Ratio.

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JACOBS ENGINEERING GROUP INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (CONTINUED)
On March 25, 2020, the Company entered into an unsecured term loan facility (the “Term Loan Facility”) with a syndicate of financial institutions as lenders. Under the 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 Term Loan Facility contains affirmative and negative covenants and events of default customary for financings of this type that are consistent with those included in the Revolving Credit Facility. During fiscal 2020, the Company entered into interest rate and cross currency derivative contracts to swap a portion of our variable rate debt to fixed rate debt. See Note 18- Commitments and Contingencies and Derivative Financial Instruments for discussion regarding the Company's derivative instruments.
On March 12, 2018, Jacobs entered into a note purchase agreement (as amended, the "Note Purchase Agreement") with respect to the issuance and sale in a private placement transaction of $500 million in the aggregate principal amount of the Company’s senior notes in three series (collectively, the “Senior Notes”). The Note Purchase Agreement provides that if the Company's consolidated leverage ratio exceeds a certain amount, the interest on the Senior Notes may increase by 75 basis points. The Senior Notes may be prepaid at any time subject to a make-whole premium. The sale of the Senior Notes closed on May 15, 2018. The Company used the net proceeds from the offering of Senior Notes to repay certain existing indebtedness and for other general corporate purposes. The Note Purchase Agreement contains affirmative, negative and financial covenants customary for financings of this type, including, among other things, covenants to maintain a minimum consolidated net worth and maximum consolidated leverage ratio and limitations on certain other liens, mergers, dispositions and transactions with affiliates. In addition, the Note Purchase Agreement contains customary events of default. We were in compliance with the covenants under the Note Purchase Agreement at January 1, 2021.
We believe the carrying value of the Revolving Credit Facility, the Term Loan Facility and other debt outstanding approximates fair value based on the interest rates and scheduled maturities applicable to the outstanding borrowings. The fair value of the Senior Notes is estimated to be $547.8 million at January 1, 2021, based on Level 2 inputs. The fair value is determined by discounting future cash flows using interest rates available for issuances with similar terms and average maturities.
On January 20, 2021, Jacobs entered into a delayed draw term loan facility (the "Delayed Draw Term Loan Facility) with a syndicate of financial institutions as lenders. The Delayed Draw Term Loan Facility matures on the third anniversary of the date of closing. Under the Delayed Draw Term Loan Facility, the Company may borrow up to $200 million of U.S. dollar denominated term loans and up to £650 million U.K. pound sterling denominated loans. The proceeds of the term loans may be used to fund the acquisition of a majority interest in PA Consulting Group Limited, refinance certain existing indebtedness and pay related transaction costs and expenses. The Delayed Draw Term Loan Facility contains affirmative and negative covenants and events of default customary for financings of this type and that are consistent with those included in the Revolving Credit Facility and the Term Loan Facility. Depending on the Company’s consolidated leverage ratio, borrowings under the Delayed Draw Term Loan Facility will bear interest at either a eurocurrency rate plus a margin of between 0.875% and 1.625% or a base rate plus a margin of between 0% and 0.625%. From the date that is 90 days after the closing of the Delayed Draw Term Loan Facility, the Company must pay a ticking fee with respect to undrawn commitments under the facility at a rate that will range between 0.80% and 0.225% based on the Company’s Consolidated Leverage Ratio.
The Company has issue