Item 15. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES

| --- | --- |

(a) Documents filed as part of this report:

	(1)	The Company’s Consolidated Financial Statements at September 30, 2016 and October 2, 2015and for each of the three years in the period ended September 30, 2016, October 2, 2015 and September 26, 2014 and the notes thereto, together with the report of the independent auditors on those Consolidated Financial Statements are hereby filed as part of this report, beginning on page F-1.

	(2)	Financial statement schedules – no financial statement schedules are presented as the required information is either not applicable, or is included in the consolidated financial statements or notes thereto.

	(3)	See Exhibit Index below.

Page 55

(b) Exhibit Index:

2.1		Merger Implementation Deed between Sinclair Knight Merz Management Pty Limited and Sinclair Knight Merz Holdings Limited and Jacobs Engineering Group Inc. and Jacobs Australia Holdings Company Pty. Ltd, dated as of September 8, 2013. Filed as Exhibit 2.2 to the Registrant’s fiscal 2013 Annual Report on Form 10-K and incorporated herein by reference.
2.2		Sales Agreement between Sinclair Knight Merz Management Pty Limited, Sinclair Knight Merz Holdings Limited, Jacobs Engineering Group Inc. and Jacobs Australia Holdings Company Pty, Ltd., dated as of December 13, 2013. Filed as Exhibit 2.3 to the Registrant’s Quarterly Report on Form 10-Q for the first quarter of fiscal 2014 and incorporated herein by reference.
3.1		Amended and Restated Certificate of Incorporation of the Registrant. Filed as Exhibit 3.1 to the Registrant’s Current Report on Form 8-K on January 28, 2014 and incorporated herein by reference.
3.2		Amended and Restated Bylaws of the Registrant. Filed as Exhibit 3.1 to the Registrant’s Current Report on Form 8-K on July 16, 2015 and incorporated herein by reference.
4.1		See Sections 5 through 18 of Exhibit 3.1.
4.2		See Article II, Section 3.03 of Article III, Article VI and Section 7.04 of Article VII of Exhibit 3.2.
10.1#		The Jacobs Engineering Group Inc. Incentive Bonus Plan for Officers and Key Managers as amended and restated on May 22, 2014. Filed as Exhibit 10.1 to the Registrant’s Quarterly Report on Form 10-Q for the second quarter of fiscal 2015 and incorporated herein by reference.
10.2#		The Executive Security Program of Jacobs Engineering Group Inc. Filed as Exhibit 10.2 to the Registrant’s fiscal 2014 Annual Report on Form 10-K and incorporated herein by reference.
10.3#		Amendment to the Executive Security Program of Jacobs Engineering Group Inc., dated December 23, 2008. Filed as Exhibit 10.3 to the Registrant’s fiscal 2014 Annual Report on Form 10-K and incorporated herein by reference.
10.4#		Amendment to the Executive Security Program of Jacobs Engineering Group Inc., dated May 31, 2009. Filed as Exhibit 10.4 to the Registrant’s fiscal 2014 Annual Report on Form 10-K and incorporated herein by reference.
10.5#		Jacobs Engineering Group Inc. 1991 Executive Deferral Plan, effective June 1, 1991. Filed as Exhibit 10.5 to the Registrant’s fiscal 2012 Annual Report on Form 10-K and incorporated herein by reference.
10.6#		Jacobs Engineering Group Inc. 1993 Executive Deferral Plan, effective December 1, 1993. Filed as Exhibit 10.6 to the Registrant’s fiscal 2012 Annual Report on Form 10-K and incorporated herein by reference.
10.7#		Jacobs Engineering Group Inc. 1995 Executive Deferral Plan, effective January 1, 1995. Filed as Exhibit 10.7 to the Registrant’s fiscal 2014 Annual Report on Form 10-K and incorporated herein by reference.
10.8#		Jacobs Engineering Group Inc. Amended and Restated Executive Deferral Plan. Filed as Exhibit 10.8 to the Registrant’s fiscal 2012 Annual Report on Form 10-K and incorporated herein by reference.
10.9#		The Jacobs Engineering Group Inc. 1989 Employee Stock Purchase Plan, as Amended and Restated-effective January 22, 2009. Filed as Exhibit 10.9 to the Registrant’s fiscal 2014 Annual Report on Form 10-K and incorporated herein by reference.
10.10#		The Jacobs Engineering Group Inc. Global Employee Stock Purchase Plan. Filed as Exhibit 10.10 to the Registrant’s fiscal 2011 Annual Report on Form 10-K and incorporated herein by reference.
10.11#		Jacobs Engineering Group Inc. 401(k) Plus Savings Plan and Trust, as Amended and Restated April 1, 2003. Filed as Exhibit 10.12 to the Registrant’s fiscal 2012 Annual Report on Form 10-K and incorporated herein by reference.
10.12#		Jacobs Engineering Group Inc. 1999 Stock Incentive Plan, as Amended and Restated. Filed as Exhibit 10.1 to the Registrant’s Current Report on Form 8-K (File No. 333-157014) on January 28, 2014 and incorporated herein by reference.

Page 56

10.13#		Form of Indemnification Agreement entered into between the Registrant and certain of its officers and directors. Filed as Exhibit 10.1 to the Registrant's Quarterly Report on Form 10-Q for the third quarter of fiscal 2012 and incorporated herein by reference.
10.14#		Form of Jacobs Engineering Group Inc. Non-Qualified Stock Option Agreement. Filed as Exhibit 4.3 to the Registrant’s Registration Statement on Form S-8 filed on January 29, 2009 and incorporated herein by reference.
10.15#		Form of Jacobs Engineering Group Inc. Restricted Stock Agreement. Filed as Exhibit 10.3 to the Registrant's Quarterly Report on Form 10-Q for the second quarter of fiscal 2012 and incorporated herein by reference.
10.16#		Form of Restricted Stock Unit Award Agreement. Filed as Exhibit 10.2 to the Registrant’s Quarterly Report on Form 10-Q for the second quarter of fiscal 2012 and incorporated herein by reference.
10.17#		Form of Restricted Stock Award Agreement. Filed as Exhibit 10.3 to the Registrant’s Current Report on Form 8-K on June 1, 2011 and incorporated herein by reference.
10.18#		Jacobs Engineering Group Inc. 1999 Outside Director Stock Plan, as Amended and Restated. Filed as Exhibit 10.21 to the Registrant’s fiscal 2012 Annual Report on Form 10-K and incorporated herein by reference.
10.19#		Form of Restricted Stock Unit Award Agreement (Performance Shares - Net Earnings Growth 2013 Award). Filed as Exhibit 10.3 to the Registrant’s Quarterly Report on Form 10-Q for the third quarter of fiscal 2013 and incorporated herein by reference.
10.20#		Form of Restricted Stock Unit Award Agreement. (Performance Shares - TSR 2013 Award). Filed as Exhibit 10.4 to the Registrant’s Quarterly Report on Form 10-Q for the third quarter of fiscal 2013 and incorporated herein by reference.
10.21		Credit Agreement dated as of March 29, 2012 among Jacobs Engineering Group Inc. and certain of its subsidiaries as borrowers, and the Bank of America, N.A, (as Administrative Agent); BNP Paribas, and Wells Fargo Bank, N.A. (as Co-Syndication Agents); Union Bank, N.A. (as Documentation Agent); Merrill Lynch, Pierce, Fenner & Smith Incorporated (as Sole Book Manager); and Merrill Lynch, Pierce, Fenner & Smith Incorporated, BNP Paribas Securities Corp, and Wells Fargo Securities, LLC (as Joint Lead Arrangers). Filed as Exhibit 10.1 to the Registrant's Quarterly Report on Form 10-Q for the second quarter of fiscal 2012 and incorporated herein by reference.
10.22#		Employment agreement between Jacobs Engineering Group Inc. and Michael Tyler dated May 28, 2013. Filed as Exhibit 10.2 to the Registrant’s Quarterly Report on Form 10-Q for the third quarter of fiscal 2013 and incorporated herein by reference.
10.23#		Retirement Agreement dated April 14, 2014 between the Registrant and Thomas R. Hammond. Filed as Exhibit 10.1 to the Registrant’s Quarterly Report on Form 10-Q for the second quarter of fiscal 2014 and incorporated herein by reference.
10.24#		Jacobs Engineering Group Inc. 2005 Executive Deferral Plan, effective January 1, 2005. Filed as Exhibit 10.1 to the Registrant’s Quarterly Report on Form 10-Q for the second quarter of fiscal 2010 and incorporated herein by reference.
10.28#		Amendment No. 2 to Consulting Agreement between the Registrant and Noel G. Watson dated July 1, 2013. Filed as Exhibit 10.1 to the Registrant’s Quarterly Report on Form 10-Q for the third quarter of fiscal 2013 and incorporated herein by reference.
10.34#		Employment Agreement dated December 23, 2010 between the Registrant and Gary Mandel. Filed as Exhibit 10.6 to the Registrant’s Quarterly Report on Form 10-Q for the second quarter of fiscal 2011 and incorporated herein by reference.
10.35		Amended and Restated Credit Agreement dated as of February 7, 2014 among Jacobs Engineering Group Inc. and certain of its subsidiaries as borrowers, and the Bank of America, N.A. (as Administrative Agent); Bank of America, N.A., BNP Paribas, and Wells Fargo Bank, N.A. (as Co-Syndication Agents); The Bank of Tokyo-Mitsubishi UFJ, LTD, and TD Bank, N.A. (as Co-Documentation Agents); Merrill Lynch, Pierce, Fenner & Smith Incorporated (as Sole Book Manager); and Merrill Lynch, Pierce, Fenner & Smith Incorporated, BNP Paribas Securities Corp, and Wells Fargo Securities, LLC (as Joint Lead Arrangers). Filed as Exhibit 10.1 to the Registrant’s Current Report on Form 8-K on February 11, 2014 and incorporated herein by reference.

Page 57

10.36#		Form of Restricted Stock Unit Award Agreement (Performance Shares - Net Earnings Growth - 2014 Award). Filed as Exhibit 10.1 to the Registrant’s Quarterly Report on Form 10-Q for the third quarter of fiscal 2014 and incorporated herein by reference.
10.37#		Form of Restricted Stock Unit Award Agreement (Performance Shares - TSR - 2014 Award). Filed as Exhibit 10.2 to the Registrant’s Quarterly Report on Form 10-Q for the third quarter of fiscal 2014 and incorporated herein by reference.
10.39#		Offer Letter by and between Jacobs Engineering Group Inc. and Kevin C. Berryman, effective November 12, 2014. Filed as Exhibit 99.1 to Amendment No. 1 to the Registrant’s Current Report on Form 8-K/A on November 17, 2014 and incorporated herein by reference.
10.40#		Transition Agreement with Craig L. Martin, dated as of December 19, 2014. Filed as Exhibit 10.1 to the Registrant’s Current Report on Form 8-K on December 23, 2014 and incorporated herein by reference.
10.41#		Letter Agreement with Noel G. Watson, dated as of February 25, 2015. Filed as Exhibit 10.1 to the Registrant’s Current Report on Form 8-K on March 2, 2015 and incorporated herein by reference.
10.42		Amendment Agreement, dated as of March 4, 2015, among Jacobs Engineering Group, Inc., certain subsidiaries thereof party thereto, each lender party thereto, each issuer of letters of credit party thereto and Bank of America, N.A., as Administrative Agent and Swing Line Lender. Filed as Exhibit 10.1 to the Registrant’s Current Report on Form 8-K on March 5, 2015 and incorporated herein by reference.
10.43#		Form of Transition Agreement. Filed as Exhibit 10.2 to the Registrant’s Quarterly Report on Form 10-Q for the second quarter of fiscal 2015 and incorporated herein by reference.
10.44#		Form of Stock Option Agreement (December 2014 grants). Filed as Exhibit 10.3 to the Registrant’s Quarterly Report on Form 10-Q for the second quarter of fiscal 2015 and incorporated herein by reference.
10.45#		Offer Letter with Steven J. Demetriou, dated as of July 10, 2015. Filed as Exhibit 10.1 to the Registrant’s Current Report on Form 8-K on July 16, 2015 and incorporated herein by reference.
10.46#		Form of Nonqualified Stock Option Agreement. Filed as Exhibit 10.1 to the Registrant’s Quarterly Report on Form 10-Q for the third quarter of fiscal 2015 and incorporated herein by reference.
10.47#		Form of Restricted Stock Unit Award Agreement (Performance Shares - Net Earnings Growth). Filed as Exhibit 10.2 to the Registrant’s Quarterly Report on Form 10-Q for the third quarter of fiscal 2015 and incorporated herein by reference.
10.48#		Separation Agreement with Santo Rizzuto dated October 16, 2015. Filed as Exhibit 10.1 to the Registrant’s Current Report on Form 8-K on October 22, 2015 and incorporated herein by reference.
10.49#		Separation Agreement with Cora Carmody, effective September 15, 2015. Filed as Exhibit 10.49 to the Registrant’s fiscal 2015 Annual Report on Form 10-K and incorporated herein by reference.
10.50#		Jacobs Engineering Group Inc. Management Incentive Plan, as Amended and Restated, effective November 19, 2015. Filed as Exhibit 10.50 to the Registrant’s fiscal 2015 Annual Report on Form 10-K and incorporated herein by reference.
10.51#		Form of Restricted Stock Agreement (awarded pursuant to the 1999 Stock Incentive Plan). Filed as Exhibit 10.51 to the Registrant’s fiscal 2015 Annual Report on Form 10-K and incorporated herein by reference.
10.52#		Form of Restricted Stock Unit Agreement (awarded pursuant to the 1999 Stock Incentive Plan). Filed as Exhibit 10.52 to the Registrant’s fiscal 2015 Annual Report on Form 10-K and incorporated herein by reference.
10.53#		Form of Restricted Stock Unit Agreement (Performance Shares - Earnings Per Share Growth). Filed as Exhibit 10.53 to the Registrant’s fiscal 2015 Annual Report on Form 10-K and incorporated herein by reference.
10.54#		Form of Restricted Stock Unit Agreement (Performance Shares - TSR). Filed as Exhibit 10.54 to the Registrant’s fiscal 2015 Annual Report on Form 10-K and incorporated herein by reference.
10.55#		Form of Restricted Stock Unit Agreement (Cash Settled Non-US Employees). Filed as Exhibit 10.55 to the Registrant’s fiscal 2015 Annual Report on Form 10-K and incorporated herein by reference.

Page 58

10.56#		Form of Nonqualified Stock Option Agreement (1999 Stock Incentive Plan). Filed as Exhibit 10.56 to the Registrant’s fiscal 2015 Annual Report on Form 10-K and incorporated herein by reference.
10.57#		Form of Restricted Stock Unit Award Agreement (awarded pursuant to the 1999 Outside Directors Stock Plan). Filed as Exhibit 10.1 to the Registrant’s Quarterly Report on Form 10-Q for the second quarter of fiscal 2016 and incorporated herein by reference.
10.58#		Form of Stock Option Award Agreement (awarded pursuant to the 1999 Outside Directors Stock Plan). Filed as Exhibit 10.2 to the Registrant’s Quarterly Report on Form 10-Q for the second quarter of fiscal 2016 and incorporated herein by reference.
10.59#		Retirement Agreement with Phillip J. Stassi dated June 1, 2016. Filed as Exhibit 10.1 to the Registrant’s Quarterly Report on Form 10-Q for the third quarter of fiscal 2016 and incorporated herein by reference.
10.60#		Offer letter with William Benton Allen, Jr.. Filed as Exhibit 10.1 to the Registrant’s Current Report on Form 8-K on October 14, 2016 and incorporated herein by reference.
†10.61#		Offer letter with Robert V. Pragada, dated January 28, 2016.
†21.		List of Subsidiaries of Jacobs Engineering Group Inc.
†23.		Consent of Ernst & Young LLP, Independent Registered Public Accounting Firm.
†31.1		Certification of Chief Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
†31.2		Certification of Chief Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
†32.1		Certification of Chief Executive Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
†32.2		Certification of Chief Financial Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
†95.		Mine Safety Disclosure.
†101.INS		XBRL Instance Document
†101.SCH		XBRL Taxonomy Extension Schema Document
†101.CAL		XBRL Taxonomy Extension Calculation Linkbase Document
†101.DEF		XBRL Taxonomy Extension Definition Linkbase Document
†101.LAB		XBRL Taxonomy Extension Label Linkbase Document
†101.PRE		XBRL Taxonomy Extension Presentation Linkbase Document

†	Being filed herewith.

#	Management contract or compensatory plan or arrangement.

Page 59

SIGNATURES

Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

				JACOBS ENGINEERING GROUP INC.
Dated:		November 22, 2016		By:		/S/ Steven J. Demetriou
						Steven J. Demetriou
						President, Chief Executive Officer, and Chairman (Principal Executive Officer)

Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the Registrant and in the capacities and on the dates indicated:

Signature		Title		Date
/S/ Steven J. Demetriou		Chairman of the Board and Chief Executive Officer (Principal Executive Officer)		November 22, 2016
Steven J. Demetriou
/S/ Joseph R. Bronson		Director		November 22, 2016
Joseph R. Bronson
/S/ John F. Coyne		Director		November 22, 2016
John F. Coyne
/S/ Juan Jose Suarez Coppel		Director		November 22, 2016
Juan Jose Suarez Coppel
/S/ Robert C. Davidson, Jr.		Director		November 22, 2016
Robert C. Davidson, Jr.
/S/ Ralph E. Eberhart		Director		November 22, 2016
Ralph E. Eberhart
/S/ Dawne S. Hickton		Director		November 22, 2016
Dawne S. Hickton
/S/ Linda Fayne Levinson		Director		November 22, 2016
Linda Fayne Levinson
		Director
Peter J. Robertson
/S/ Christopher M.T. Thompson		Director		November 22, 2016
Christopher M.T. Thompson
/S/ Noel G. Watson		Director		November 22, 2016
Noel G. Watson
/S/ Kevin C. Berryman		Executive Vice President, Chief Financial Officer (Principal Financial Officer)		November 22, 2016
Kevin C. Berryman
/S/ William B. Allen		Senior Vice President and Chief Accounting Officer (Principal Accounting Officer)		November 22, 2016
William B. Allen

Page 60

JACOBS ENGINEERING GROUP INC. AND SUBSIDIARIES

CONSOLIDATED FINANCIAL STATEMENTS

WITH REPORTS OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

September 30, 2016

F-1

JACOBS ENGINEERING GROUP INC. AND SUBSIDIARIES

INDEX TO CONSOLIDATED FINANCIAL STATEMENTS

September 30, 2016

Consolidated Balance Sheets at September 30, 2016 and October 2, 2015		F-3
Consolidated Statements of Earnings for the Fiscal Years Ended September 30, 2016, October 2, 2015, and September 26, 2014		F-4
Consolidated Statements of Comprehensive Income for the Fiscal Years Ended September 30, 2016, October 2, 2015 and September 26, 2014		F-5
Consolidated Statements of Changes in Stockholders’ Equity for the Fiscal Years Ended September 30, 2016, October 2, 2015 and September 26, 2014		F-6
Consolidated Statements of Cash Flows for the Fiscal Years Ended September 30, 2016, October 2, 2015, and September 26, 2014		F-7
Notes to Consolidated Financial Statements		F-8
Reports of Ernst & Young LLP, Independent Registered Public Accounting Firm		F-45

F-2

JACOBS ENGINEERING GROUP INC. AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS

(In thousands, except share information)

At September 30, 2016 and October 2, 2015

		2016				2015
ASSETS
Current Assets:
Cash and cash equivalents		$	655,716			$	460,859
Receivables			2,115,663				2,548,743
Prepaid expenses and other current assets			93,091				113,076
Total current assets			2,864,470				3,122,678
Property, Equipment, and Improvements, Net			319,673				381,238
Other Noncurrent Assets:
Goodwill			3,079,628				3,048,778
Intangibles			336,922				353,419
Miscellaneous			759,329				879,813
Total other noncurrent assets			4,175,879				4,282,010
		$	7,360,022			$	7,785,926
LIABILITIES AND STOCKHOLDERS’ EQUITY
Current Liabilities:
Notes payable		$	2,421			$	13,364
Accounts payable			522,427				566,866
Accrued liabilities			938,378				1,090,985
Billings in excess of costs			319,460				309,951
Total current liabilities			1,782,686				1,981,166
Long-term Debt			385,330				584,434
Other Deferred Liabilities			861,824				863,868
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—120,950,899 shares and 123,152,966 shares, respectively			120,951				123,153
Additional paid-in capital			1,168,272				1,137,144
Retained earnings			3,586,647				3,496,212
Accumulated other comprehensive loss			(610,594	)			(464,764	)
Total Jacobs stockholders’ equity			4,265,276				4,291,745
Noncontrolling interests			64,906				64,713
Total Group stockholders’ equity			4,330,182				4,356,458
		$	7,360,022			$	7,785,926

See the accompanying Notes to Consolidated Financial Statements.

F-3

JACOBS ENGINEERING GROUP INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF EARNINGS

For the Fiscal Years Ended September 30, 2016, October 2, 2015, and September 26, 2014

(In thousands, except per share information )

		2016				2015				2014
Revenues		$	10,964,157			$	12,114,832			$	12,695,157
Costs and Expenses:
Direct costs of contracts			(9,196,326	)			(10,146,494	)			(10,621,373	)
Selling, general and administrative expenses			(1,429,233	)			(1,522,811	)			(1,545,716	)
Operating Profit			338,598				445,527				528,068
Other (Expense) Income:
Interest income			7,848				7,262				9,693
Interest expense			(15,260	)			(19,503	)			(11,437	)
Loss on disposal of business and investments			(41,410	)			(2,909	)			—
Gain on sale of intellectual property, net			—				—				12,147
Miscellaneous income (expense), net			(3,053	)			(240	)			3,695
Total other income (expense), net			(51,875	)			(15,390	)			14,098
Earnings Before Taxes			286,723				430,137				542,166
Income Tax Expense			(72,208	)			(101,255	)			(190,054	)
Net Earnings of the Group			214,515				328,882				352,112
Net Earnings Attributable to Noncontrolling Interests			(4,052	)			(25,911	)			(24,004	)
Net Earnings Attributable to Jacobs		$	210,463			$	302,971			$	328,108
Net Earnings Per Share:
Basic		$	1.75			$	2.42			$	2.51
Diluted		$	1.73			$	2.40			$	2.48

F-4

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

For the Fiscal Years Ended September 30, 2016, October 2, 2015, and September 26, 2014

(In thousands)

		2016				2015				2014
Net Earnings of the Group		$	214,515			$	328,882			$	352,112
Other Comprehensive (Loss) Income:
Foreign currency translation adjustments			(46,515	)			(136,168	)			(33,316	)
Change in pension liability			(111,488	)			33,208				(15,303	)
Gains (losses) on cash flow hedges			(1,403	)			2,949				1,022
Other Comprehensive Income (Loss) Before Income Taxes			(159,406	)			(100,011	)			(47,597	)
Income Tax Benefit (Expense):
Foreign currency translation adjustments			—				—				3,250
Change in pension liability			13,303				(438	)			(14,562	)
Gains (losses) on cash flow hedges			273				(766	)			(513	)
Income Tax Benefit (Expense)			13,576				(1,204	)			(11,825	)
Net Other Comprehensive Income (Loss)			(145,830	)			(101,215	)			(59,422	)
Net Comprehensive Income of the Group			68,685				227,667				292,690
Net Comprehensive Income Attributable to Noncontrolling Interests			(4,052	)			(25,911	)			(24,004	)
Total Comprehensive Income		$	64,633			$	201,756			$	268,686

See the accompanying Notes to Consolidated Financial Statements including the Company's note on Other Comprehensive Income for a presentation of amounts reclassified to net income during the period

F-5

JACOBS ENGINEERING GROUP INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY

For the Fiscal Years Ended September 30, 2016, October 2, 2015, and September 26, 2014

(In thousands)

														Accumulated				Total								Total
														Other Comp-				Jacobs								Group
						Additional								rehensive				Stock-				Non-				Stock-
		Common				Paid-in				Retained				Income				holders’				controlling				holders’
		Stock				Capital				Earnings				(Loss)				Equity				Interests				Equity
Balances at September 27, 2013			131,639				1,084,624				3,300,961				(304,127	)			4,213,097				35,238				4,248,335
Net earnings			—				—				328,108				—				328,108				24,004				352,112
Foreign currency translation adjustments, net of deferred tax benefit of $3,250			—				—				—				(30,066	)			(30,066	)			—				(30,066	)
Pension liability, net of deferred tax expense of $14,562			—				—				—				(29,865	)			(29,865	)			—				(29,865	)
Gain on derivatives, net of deferred tax expense of $513			—				—				—				509				509				—				509
Noncontrolling interest acquired / consolidated			—				4,779				(15,704	)			—				(10,925	)			(17,724	)			(28,649	)
Distributions to noncontrolling interests			—				—				(968	)			—				(968	)			(5,113	)			(6,081	)
Issuances of equity securities, net of deferred tax expense of $1,264			2,254				114,953				—				—				117,207				—				117,207
Repurchases of equity securities			(2,140	)			(30,498	)			(85,204	)			—				(117,842	)			—				(117,842	)
Balances at September 26, 2014			131,753				1,173,858				3,527,193				(363,549	)			4,469,255				36,405				4,505,660
Net earnings			—				—				302,971				—				302,971				25,911				328,882
Foreign currency translation adjustments			—				—				—				(136,168	)			(136,168	)			—				(136,168	)
Pension liability, net of deferred tax expense of $438			—				—				—				32,770				32,770				—				32,770
Gain on derivatives, net of deferred tax expense of $766			—				—				—				2,183				2,183				—				2,183
Noncontrolling interest acquired / consolidated			—				—				(9,709	)			—				(9,709	)			9,627				(82	)
Distributions to noncontrolling interests			—				—				—				—				—				(7,230	)			(7,230	)
Issuances of equity securities, net of deferred tax expense of $10,332			1,590				80,801				—				—				82,391				—				82,391
Repurchases of equity securities			(10,190	)			(117,515	)			(324,243	)			—				(451,948	)			—				(451,948	)
Balances at October 2, 2015			123,153				1,137,144				3,496,212				(464,764	)			4,291,745				64,713				4,356,458
Net earnings			—				—				210,463				—				210,463				4,052				214,515
Foreign currency translation adjustments			—				—				—				(46,516	)			(46,516	)			—				(46,516	)
Pension liability, net of deferred tax income of $13,303			—				—				—				(98,185	)			(98,185	)			—				(98,185	)
Gain on derivatives, net of deferred tax income of $274			—				—				—				(1,129	)			(1,129	)			—				(1,129	)
Noncontrolling interest acquired / consolidated			—				(127	)			—				—				(127	)			(1,150	)			(1,277	)
Distributions to noncontrolling interests			—				—				(3,146	)			—				(3,146	)			(2,709	)			(5,855	)
Issuances of equity securities, net of deferred tax expense of $3,382			1,351				72,055				—				—				73,406				—				73,406
Repurchases of equity securities			(3,553	)			(40,800	)			(116,882	)			—				(161,235	)			—				(161,235	)
Balances at September 30, 2016		$	120,951			$	1,168,272			$	3,586,647			$	(610,594	)		$	4,265,276			$	64,906			$	4,330,182

See the accompanying Notes to Consolidated Financial Statements.

F-6

JACOBS ENGINEERING GROUP INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS

For the Fiscal Years Ended September 30, 2016, October 2, 2015, and September 26, 2014

(In thousands)

		2016				2015				2014
Cash Flows from Operating Activities:
Net earnings attributable to the Group		$	214,515			$	328,882			$	352,112
Adjustments to reconcile net earnings to net cash flows from operations:
Depreciation and amortization:
Property, equipment and improvements			82,363				99,924				98,592
Intangible assets			47,608				49,368				46,820
Loss on sales of investments			17,049				—				—
Loss on sales of business			24,361				2,909				—
Gain on sale of certain intellectual property			—				—				(12,147	)
Stock based compensation			32,370				41,412				43,400
Tax benefit (deficiency) from stock based compensation			(377	)			(1,237	)			1,344
Equity in earnings of operating ventures, net			(11,892	)			5,483				(8,394	)
Change in pension plan obligations			(9,380	)			(5,980	)			(37,218	)
Change in deferred compensation plans			576				(3,229	)			(7,062	)
Losses (gains) on disposals of assets, net			10,680				30,985				(4,668	)
Changes in assets and liabilities, excluding the effects of businesses acquired:
Receivables			397,268				172,958				107,944
Prepaid expenses and other current assets			17,906				6,644				(7,217	)
Accounts payable			(44,214	)			(28,943	)			108,241
Accrued liabilities			(71,930	)			(120,847	)			(2,172	)
Billings in excess of costs			33,347				(52,441	)			29,833
Income taxes			(4,586	)			(22,685	)			(17,373	)
Deferred income taxes			(27,407	)			(31,177	)			30,799
Other deferred liabilities			(28,801	)			(15,759	)			3,725
Deferred gain on synthetic lease transaction			—				23,343				—
Change in long-term receivables			—				—				2,828
Long-term insurance prepayment			—				—				(17,411	)
Other, net			717				4,962				9,740
Net cash provided by operating activities			680,173				484,572				721,716
Cash Flows from Investing Activities:
Additions to property and equipment			(67,688	)			(88,404	)			(132,146	)
Disposals of property and equipment			10,479				369				10,414
Purchases of intangibles			(10,027	)			—				—
Purchases of investments			(3,403	)			—				(25,137	)
Sales of investments			—				13				58
Sale of intellectual property			—				—				12,371
Acquisitions of businesses, net of cash acquired			(49,943	)			(8,101	)			(1,384,342	)
Sales of business			(19,039	)			—				—
Net cash used for investing activities			(139,621	)			(96,123	)			(1,518,782	)
Cash Flows from Financing Activities:
Proceeds from long-term borrowings			1,649,653				1,768,639				819,681
Repayments of long-term borrowings			(1,840,789	)			(1,907,109	)			(455,426	)
Proceeds from short-term borrowings			3,040				362,433				207,876
Repayments of short-term borrowings			(14,042	)			(382,190	)			(226,091	)
Proceeds from issuances of common stock			43,140				33,222				44,704
Common stock repurchases			(152,550	)			(422,316	)			(78,399	)
Tax benefit (deficiency) from stock based compensation			377				1,237				(1,344	)
Dividends paid to noncontrolling interests			(5,855	)			(7,230	)			(6,081	)
Net cash provided by (used for) financing activities			(317,026	)			(553,314	)			304,920
Effect of Exchange Rate Changes			(28,669	)			(106,923	)			(31,612	)
Net Increase (Decrease) in Cash and Cash Equivalents			194,857				(271,788	)			(523,758	)
Cash and Cash Equivalents at Beginning of Period			460,859				732,647				1,256,405
Cash and Cash Equivalents at End of Period		$	655,716			$	460,859			$	732,647

See the accompanying Notes to Consolidated Financial Statements.

F-7

JACOBS ENGINEERING GROUP INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

1. Description of Business and Basis of Presentation

Description of Business

We provide a broad range of technical, professional, and construction services including 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. The percentage of revenues realized from each of these types of contracts for each of the last three fiscal years was as follows:

		2016				2015				2014
Cost-reimbursable			82%				83	%			83	%
Fixed-price			18%				17	%			17	%

Basis of Presentation, Definition of Fiscal Year, and Other Matters

The accompanying Consolidated Financial Statements have been prepared in accordance with U.S. GAAP and include the accounts of Jacobs Engineering Group Inc. and its subsidiaries and affiliates which it controls. All significant intercompany accounts and transactions have been eliminated in consolidation.

The Company’s fiscal year ends on the Friday closest to September 30 (determined on the basis of the number of workdays) and, accordingly, an additional week of activity is added every five -to- six years. Fiscal 2015 included an extra week of activity.

During the second quarter of fiscal 2016, we reorganized our operating and reporting structure around four lines of business (“LOB”). This reorganization is intended to better serve our global clients, leverage our workforce, help streamline operations, and provide enhanced growth opportunities. The four global LOBs are: Petroleum & Chemicals, Buildings & Infrastructure, Aerospace & Technology, and Industrial. Previously, the Company operated its business as a single segment. For a further discussion of our segment information, please refer to Note 15-Segment Information.

Please refer to Note 17— Definitions for the definitions of certain terms used in the accompanying Consolidated Financial Statements and these Notes to Consolidated Financial Statements.

2. Significant Accounting Policies

Revenue Accounting for Contracts and Use of Joint Ventures

In general, we recognize revenues at the time we provide services. Depending on the commercial terms of the contract, we recognize revenues either when costs are incurred, or using the percentage-of-completion method of accounting by comparing contract costs incurred to date to the total estimated costs at completion. Contract losses are provided for in their entirety in the period they become known, without regard to the percentage-of-completion. For multiple contracts with a single customer we account for each contract separately. We also recognize as revenues, costs associated with claims and unapproved change orders to the extent it is probable that such claims and change orders will result in additional contract revenue and the amount of such additional revenue can be reliably estimated.

Certain cost-reimbursable contracts include incentive-fee arrangements. These incentive fees can be based on a variety of factors but the most common are the achievement of target completion dates, target costs, and/or other performance criteria. Failure to meet these targets can result in unrealized incentive fees. We recognize incentive fees based on expected results using the percentage-of-completion method of accounting. As the contract progresses and more information becomes available, the estimate of the anticipated incentive fee that will be earned is revised as necessary. We bill incentive fees based on the terms and conditions of the individual contracts. In certain situations, we are allowed to bill a portion of the incentive fees over the performance period of the contract. In other situations, we are allowed to bill incentive fees only after the target criterion has been achieved. Incentive fees which have been recognized but not billed are included in receivables in the accompanying Consolidated Balance Sheets.

F-8

JACOBS ENGINEERING GROUP INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

Certain cost-reimbursable contracts with government customers as well as certain commercial clients provide that contract costs are subject to audit and adjustment. In this situation, revenues are recorded at the time services are performed based upon the amounts we expect to realize upon completion of the contracts. Revenues are not recognized for non-recoverable costs. In those situations where an audit indicates that we may have billed a client for costs not allowable under the terms of the contract, we estimate the amount of such nonbillable costs and adjust our revenues accordingly.

When we are directly responsible for subcontractor labor or third-party materials and equipment, we reflect the costs of such items in both revenues and costs (and we refer to such costs as “pass-through” costs). On those projects where the client elects to pay for such items directly and we have no associated responsibility for such items, these amounts are not reflected in either revenues or costs.

The following table sets forth pass-through costs included in revenues for each of the last three fiscal years (in millions):

2016				2015				2014
$	2,489.9			$	2,602.6			$	2,954.9

As is common to the industry, we execute certain contracts jointly with third parties through various forms of joint ventures and consortiums. Although the joint ventures own and hold the contracts with the clients, the services required by the contracts are typically performed by us and our joint venture partners, or by other subcontractors under subcontracting agreements with the joint ventures. The assets of our joint ventures, therefore, consist almost entirely of cash and receivables (representing amounts due from clients), and the liabilities of our joint ventures consist almost entirely of amounts due to the joint venture partners (for services provided by the partners to the joint ventures under their individual subcontracts) and other subcontractors. In general, at any given time, the equity of our joint ventures represents the undistributed profits earned on contracts the joint ventures hold with clients. Very few of our joint ventures have employees. None of our joint ventures have third-party debt or credit facilities. Our joint ventures, therefore, are simply mechanisms used to deliver engineering and construction services to clients. Rarely do they, in and of themselves, present any risk of loss to us or to our partners separate from those that we would carry if we were performing the contract on our own. Under U.S. GAAP, our share of profits and losses associated with the contracts held by the joint ventures, if and when they occur, has always been reflected in our Consolidated Financial Statements.

Certain of our joint ventures meet the definition of a VIE. In evaluating our VIEs for possible consolidation, we perform a qualitative analysis to determine whether or not we have a “controlling financial interest” in the VIE as defined by U.S. GAAP. We consolidate only those VIEs over which we have a controlling financial interest.

For the Company’s unconsolidated joint ventures, we use either the equity method of accounting or proportional consolidation.

There were no changes in facts and circumstances during the period that caused the Company to reassess the method of accounting for its VIEs.

Fair Value Measurements

The net carrying amounts of cash and cash equivalents, trade receivables and payables, and notes payable approximate Fair Value due to the short-term nature of these instruments. Similarly, we believe the carrying value of long-term debt also approximates Fair Value based on the interest rates and scheduled maturities applicable to the outstanding borrowings. Certain other assets and liabilities, such as forward contracts and an interest rate swap agreement we purchased as cash-flow hedges discussed in Note 11 — Commitments and Contingencies and Derivative Financial Instruments are required to be carried in our Consolidated Financial Statements at Fair Value.

The Fair Value of the Company’s reporting units (used for purposes of determining whether there is an indication of possible impairment of the carrying value of goodwill) is determined using both an income approach and a market approach. Both approaches require us to make certain estimates and judgments. Under the income approach, Fair Value is determined by using the discounted cash flows of our reporting units. Under the market approach, the Fair Values of our reporting units are determined by reference to guideline companies that are reasonably comparable to our reporting units; the Fair Values are estimated based on the valuation multiples of the invested capital associated with the guideline companies. In assessing

F-9

JACOBS ENGINEERING GROUP INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

whether there is an indication that the carrying value of goodwill has been impaired, we utilize the results of both valuation techniques and consider the range of Fair Values indicated. The range of values (both ends of the range) for each reporting unit exceeded the respective book values by over 28% to 90%.

With respect to equity-based compensation (i.e., share-based payments), we estimate the Fair Value of stock options granted to employees and directors using the Black-Scholes option-pricing model. Like all option-pricing models, the Black-Scholes model requires the use of subjective assumptions including (i) the expected volatility of the market price of the underlying stock, and (ii) the expected term of the award, among others. Accordingly, changes in assumptions and any subsequent adjustments to those assumptions can cause different Fair Values to be assigned to our stock option awards. For restricted stock units containing service and market conditions, compensation expense is based on the Fair Value of such units using a Monte Carlo simulation.

The Fair Values of the assets owned by the various pension plans that the Company sponsors are determined based on the type of asset, consistent with U.S. GAAP. Equity securities are valued by using market observable data such as quoted prices. Publicly traded corporate equity securities are valued at the last reported sale price on the last business day of the year. Securities not traded on the last business day are valued at the last reported bid price. Debt securities are valued at the last reported sale price on the last business day applicable. Real estate consists primarily of common or collective trusts, with underlying investments in real estate. These investments are valued using the best information available, including quoted market price, market prices for similar assets when available, internal cash flow estimates discounted at an appropriate interest rate, or independent appraisals, as appropriate. Insurance contracts, investments in infrastructure/raw goods, and hedge funds are valued using actuarial assumptions and values reported by the fund managers.

The methodologies described above and elsewhere in these Notes to Consolidated Financial Statements may produce a Fair Value measure that may not be indicative of net realizable value or reflective of future Fair Values. Furthermore, while the Company believes its valuation methods are appropriate and consistent with other market participants, the use of different methodologies or assumptions to determine the Fair Value of certain financial instruments could result in a different Fair Value measurement.

Cash Equivalents

We consider all highly liquid investments with original maturities of less than three months to be cash equivalents. Cash equivalents at September 30, 2016 and October 2, 2015 consisted primarily of money market mutual funds and overnight bank deposits.

Receivables and Billings in Excess of Costs

Receivables include billed receivables, unbilled receivables, and retentions receivable. Billed receivables represent amounts invoiced to clients in accordance with the terms of our client contracts. They are recorded in our financial statements when they are issued. Unbilled receivables and retentions receivable represent reimbursable costs and amounts earned and reimbursable under contracts in progress as of the respective balance sheet dates. Such amounts become billable according to the contract terms, which usually consider the passage of time, achievement of certain milestones or completion of the project. We anticipate that substantially all of such unbilled amounts will be billed and collected over the next fiscal year.

Certain contracts allow us to issue invoices to clients in advance of providing services. Billings in excess of costs represent billings to, and cash collected from, clients in advance of work performed. We anticipate that substantially all such amounts will be earned over the next twelve months.

Property, Equipment, and Improvements

Property, equipment and improvements are carried at cost, and are shown net of accumulated depreciation and amortization in the accompanying Consolidated Balance Sheets. Depreciation and amortization is computed primarily by using the straight-line method over the estimated useful lives of the assets. The cost of leasehold improvements is amortized using the straight-line method over the lesser of the estimated useful life of the asset or the remaining term of the related lease. Estimated useful lives range from 20 to 40 years for buildings, from 3 to 10 years for equipment and from 4 to 10 years for leasehold improvements.

F-10

JACOBS ENGINEERING GROUP INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

Goodwill and Other Intangible Assets

Goodwill represents the excess of the cost of an acquired business over the Fair Value of the net tangible and intangible assets acquired. Goodwill and intangible assets with indefinite lives are not amortized; instead, we test goodwill and intangible assets with indefinite lives for possible impairment. We conduct such tests annually (or more frequently if events occur or circumstances change that would more likely than not reduce the Fair Values of our reporting units below their respective carrying values).

In the second quarter of fiscal 2016, we reorganized of our operations around four global lines of business. The four global lines, which represent our reporting units are: Petroleum & Chemicals, Buildings & Infrastructure, Aerospace & Technology, and Industrial. Previously, the Company had two reporting units, “Europe” and “Non-Europe”

In conjunction with the aforementioned reorganization, we performed a quantitative impairment test and we allocated goodwill among our new reporting units based on the relative fair value of the new reporting units. As a result, during the second quarter of fiscal 2016, we performed a quantitative assessment of goodwill for each of the Company’s reporting units (both immediately before and after the reorganization). Based on this quantitative assessment, the fair value of each of the reporting units (pre and post reorganization) exceeded their respective net book values, and accordingly no impairment charge was recorded as a result of the reorganization.

In performing the Company’s annual impairment test as of the end of the third quarter of fiscal 2016 the Company performed a qualitative assessment, and determined that it was more likely than not that the fair value of its reporting units exceeded their carrying amounts. As a result, the Company did not proceed to a quantitative impairment assessment.

We have determined that the fair value of our reporting units substantially exceeded their respective carrying values for the Consolidated Balance Sheets presented.

The Company had $3.0 billion of Goodwill at October 2, 2015. The following table presents the components of our Goodwill at September 30, 2016 by Reporting Unit (in thousands):

		2016
Aerospace & Technology		$	988,274
Buildings & Infrastructure			792,561
Industrial			591,757
Petroleum & Chemicals			707,036
Total Goodwill		$	3,079,628

F-11

JACOBS ENGINEERING GROUP INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

The following table provides certain information related to the Company’s acquired intangible assets for each of the fiscal years presented (in thousands):

		Customer Relationships, Contracts, and Backlog				Developed Technology				Trade Names				Patents				Other				Total
Balances, September 27, 2013			195,527				18,911				2,179				-				1,287				217,904
Acquisitions			249,164				—				15,049				—				—				264,213
Amortization			(37,737	)			(1,533	)			(3,251	)			-				(693	)			(43,214	)
Foreign currency translation			1,087				—				171				-				31				1,289
Balances, September 26, 2014			408,041				17,378				14,148				-				625				440,192
Acquisitions			(4,315	)			—				(1,292	)			—				300				(5,307	)
Amortization			(39,967	)			(1,533	)			(4,172	)			-				(277	)			(45,949	)
Foreign currency translation			(34,418	)			—				(1,085	)			-				(14	)			(35,517	)
Balances, October 2, 2015			329,341				15,845				7,599				-				634				353,419
Acquisitions			7,286				—				859				10,027				-				18,172
Amortization			(38,595	)			(1,534	)			(3,819	)			-				(454	)			(44,402	)
Foreign currency translation			9,605				—				147				-				(19	)			9,733
Balances, September 30, 2016			307,637				14,311				4,786				10,027				161				336,922
Weighted Average Amortization Period (years)		8.4				9.3				5				25				3.2				8.9

The weighted average amortization period includes the effects of foreign currency translation.

The above table excludes the values assigned to those intangible assets embedded in the Company’s equity method investment in AWE Management Ltd. (“AWE”) and Guimar Engenharia LTDA ("Guimar"). Those amounts are included in the carrying value of the Company’s investment in AWE and Guimar. The amount of amortization expense we estimate we will record during each of the next five fiscal years relating to intangible assets existing at September 30, 2016, including those associated with AWE and Guimar, is: fiscal 2017 - $44.5 million; fiscal 2018 - $44.6 million; fiscal 2019 - $43.2 million; fiscal 2020 - $41.1 million; and fiscal 2021 - $37.7 million. The amounts reported for future amortization include the effect of exchange rate changes.

Foreign Currencies

In preparing our Consolidated Financial Statements, it is necessary to translate the financial statements of our subsidiaries operating outside the U.S., which are denominated in currencies other than the U.S. dollar, into the U.S. dollar. In accordance with U.S. GAAP, revenues and expenses of operations outside the U.S. are translated into U.S. dollars using weighted-average exchange rates for the applicable periods being translated while the assets and liabilities of operations outside the U.S. are generally translated into U.S. dollars using period-end exchange rates. The net effect of foreign currency translation adjustments is included in stockholders’ equity as a component of accumulated other comprehensive income (loss) in the accompanying Consolidated Balance Sheets.

Share-Based Payments

We measure the value of services received from employees and directors in exchange for an award of an equity instrument based on the grant-date Fair Value of the award. The computed value is recognized as a non-cash cost on a straight-line basis over the period the individual provides services, which is typically the vesting period of the award with the exception of awards containing an internal performance measure which is recognized on a straight-line basis over the vesting period subject to the probability of meeting the performance requirements and adjusted for the number of shares expected to be earned. The cost of these awards is recorded in selling, general and administrative expense in the accompanying Consolidated Statements of Earnings.

F-12

JACOBS ENGINEERING GROUP INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

The following table presents our stock-based compensation expense for the various types of awards made by the Company for each of the fiscal years presented (in thousands):

Award Type		2016				2015				2014
Restricted Stock and Restricted Stock Units (excluding Market and Performance Awards)		$	21,156			$	20,779			$	17,307
Stock Options			7,165				10,683				10,829
Market and Performance Awards			4,049				9,950				15,264
Total Expense		$	32,370			$	41,412			$	43,400

The Company has two incentive plans whereby eligible employees and directors of Jacobs may be granted stock options, restricted stock, and/or restricted stock units.

Stock Options —Substantially all of the stock options granted during the year were awarded on the same date for all employees and directors (although the date is different for employees and directors). The following table presents the assumptions used in the Black-Scholes option-pricing model during each of the last three fiscal years for awards made to employees and directors:

		Awards Made to Employees												Awards Made to Directors
		2016				2015				2014				2016				2015				2014
Dividend yield			—	%			—	%			—	%			—	%			—	%			—	%
Expected volatility			27.77	%			27.00	%			34.25	%			29.21	%			29.28	%			35.30	%
Risk-free interest rate			1.82	%			1.67	%			1.79	%			1.44	%			1.63	%			1.76	%
Expected term of options (in years)		5.82				5.82					5.82			5.82				5.82					5.82

Market and Performance Awards — The Company granted restricted stock units containing service, performance, and market conditions. The PSUs are earned over a three-year performance period if the specified performance metrics are met. During fiscal year 2014, the performance-based restricted stock unit award is split equally between Relative TSR Restricted Stock Units and Net Earnings Growth Restricted Stock Units. During fiscal year 2015, the Company only granted Net Earnings Growth Restricted Stock Units. For fiscal 2016, half of the PSUs granted were Relative TSR Restricted Stock Units and the other half of the PSUs were EPS Based Restricted Stock Units.

The number of Relative TSR Restricted Stock Units in which the employee may ultimately vest shall be equal to the Relative TSR grant multiplied by the TSR Performance Multiplier. The TSR Performance Multiplier will be determined by comparing the Company's total stockholder return to the total stockholder return of each of the companies in a specified industry peer group over the three year period immediately following the award date. For purposes of computing total stockholder return, the beginning stock price will be the average closing stock price over the 30 calendar day period ending on the award date ("Performance Period"), and the ending stock price will be the average closing price over the 30 calendar day period ending on the last day of the Performance Period. Any dividend payments made over the Performance Period will be deemed re-invested on the ex-dividend date in additional shares of the related Company.

The following table presents the basis on which the Relative TSR Restricted Stock Units are determined:

Company TSR Percentile Rank		TSR Performance Multiplier
Below 30th percentile			—	%
30th percentile			50	%
50th percentile			100	%
70th percentile or above			150	%

If the Company's total stockholder return over the Performance Period falls between any of the brackets described above, the TSR Performance Multiplier will be determined using straight line interpolation based on the actual percentile ranking.

F-13

JACOBS ENGINEERING GROUP INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

Substantially all of the TSR restricted stock units awarded during the year are awarded on the same date. The following table presents the assumptions used to value the TSR Restricted Stock Units:

		2016				2015				2014
Dividend yield			—	%			—	%			—	%
Expected volatility			25.06	%			—	%			24.77	%
Risk-free interest rate			1.21	%			—	%			0.80	%
Expected term (in years)			3				-				3

2013 Awards

The number of Net Earnings Growth Restricted Stock Units awarded in fiscal year 2013 in which an employee may ultimately vest shall be equal to the sum of the following: (1) an amount, not less than zero, equal to one-third of the earned Net Earnings Growth Restricted Stock Units grant multiplied by the Net Earnings Growth Performance Multiplier (or, "NEGPM", as defined) determined based upon the growth in the Company's Net Earnings (as defined) over the period starting on the first day of the Company's third quarter of fiscal 2013 and ending on the last day of the Company's second quarter of fiscal 2014; plus, (2) an amount, not less than zero, equal to (A) two-thirds of the earned Net Earnings Growth Restricted Stock Units grant multiplied by the NEGPM determined based upon the average growth in the Company's Net Earnings over the period starting on the first day of the Company's third quarter of fiscal 2013 and ending on the last day of the Company's second quarter of fiscal 2015, minus (B) the amount determined pursuant to (1) above; plus, (3) an amount, not less than zero, equal to (A) the earned Net Earnings Growth Restricted Stock Units grant multiplied by the NEGPM determined based upon the average growth in the Company's Net Earnings over the period starting on the first day of the Company's third quarter of fiscal 2013 and ending on the last day of the Company's second quarter of fiscal 2016, minus (B) the amount determined pursuant to (1) and (2) above.

2014 and 2015 Awards

For Net Earnings Growth Restricted Stock Units awarded in fiscal years 2014 and 2015, all of the criteria referenced in the paragraph above are the same over the three year vesting period with the exception of the performance period. The performance periods for fiscal years 2014 and 2015 are based upon the Company's Net Earnings (as defined) over the period starting on the first day of the Company's third quarter of fiscal 2014 and ending on the last day of the Company's second quarter of fiscal 2017 and the Company's Net Earnings (as defined) over the period starting on the first day of the Company's third quarter of fiscal 2015 and ending on the last day of the Company's second quarter of fiscal 2018, respectively.

If the Company's average growth in Net Earnings over the applicable fiscal years during the respective performance periods is between 5% and 10%, 10% and 15%, or 15% and 20%, the Net Earnings Growth Performance Multiplier will be determined using straight line interpolation based on the actual average growth in the Company's consolidated net earnings attributable to Jacobs.

The following table presents the basis on which the Net Earnings Growth Restricted Stock Units are determined:

Average Net Earnings Growth				Net Earnings Growth Performance Multiplier
Less than 5%					—	%
	5%				50	%
	10%				100	%
	15%				150	%
	20%				200	%

Unless stated otherwise, the Net Earnings Growth Restricted Stock Units awards are valued based on the closing price of the Company's common stock as reported in the NYSE Composite Price History on their respective grant dates.

2016 Awards

F-14

JACOBS ENGINEERING GROUP INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

For the EPS Based Awards issued in fiscal 2016, the number of restricted stock units to be issued on the maturity date of November 19, 2018 is based on the Company’s EPS growth over fiscal 2016, 2017 and 2018. The number of restricted stock units to be issued equals the sum of: (i) an amount, not less than zero, equal to one-third of the target number of restricted stock units multiplied by an EPS Performance Multiplier for that period determined based upon the growth in the Company’s EPS (“EPS Growth Rate”) from fiscal 2015 to fiscal 2016; (ii) an amount, not less than zero, equal to two-thirds of the target number of restricted stock units multiplied by an EPS Performance Multiplier determined based upon the Compound Annual EPS Growth Rate for fiscal 2017 as compared to fiscal 2015, minus the amount of shares earned pursuant to clause (i); and (iii) an amount, not less than zero, equal to the target number of restricted stock units multiplied by an EPS Performance Multiplier determined based upon the Compound Annual EPS Growth Rate for fiscal 2018 as compared to fiscal 2015, minus the amount of shares earned pursuant to clauses (i) and (ii).

The “Compound Annual EPS Growth Rate” for purposes of clauses (ii) and (iii) above means the EPS Growth Rate, which when multiplied twice times fiscal 2015 EPS (in the case of clause (ii)) or three times fiscal 2015 EPS (in the case of clause (iii)) results in a number equal to actual fiscal 2017 EPS and fiscal 2018 EPS, respectively. The “EPS Performance Multiplier” is determined by reference to the following table based upon the Company’s EPS Growth Rate or Compound Annual EPS Growth Rate over the relevant fiscal periods. The Compensation Committee set these metrics based on the Company’s plan at the start of the fiscal year.

EPS Growth Rate or Compound Annual EPS Growth Rate				EPS Performance Multiplier
Less than 4%					—	%
	4%				50	%
7.5%					100	%
	15%				150	%
20% or greater					200	%

If the EPS Growth Rate or Compound Annual EPS Growth Rate falls between 4% and 7.5%, 7.5% and 15%, or 15% and 20%, the EPS Performance Multiplier will be determined using linear interpolation based on the actual growth in EPS.

Unless stated otherwise, the EPS Based Restricted Stock Units awards are valued based on the closing price of the Company's common stock as reported in the NYSE Composite Price History on their respective grant dates.

Concentrations of Credit Risk

Our cash balances and cash equivalents are maintained in accounts held by major banks and financial institutions located primarily in North America, South America, Europe, the Middle East, India, Australia, Africa, and Asia. In the normal course of business, and consistent with industry practices, we grant credit to our clients without requiring collateral. Concentrations of credit risk is the risk that, if we extend a significant amount of credit to clients in a specific geographic area or industry, we may experience disproportionately high levels of default if those clients are adversely affected by factors particular to their geographic area or industry. Concentrations of credit risk relative to trade receivables are limited due to our diverse client base, which includes the U.S. federal government and multi-national corporations operating in a broad range of industries and geographic areas. Additionally, in order to mitigate credit risk, we continually evaluate the credit worthiness of our major commercial clients.

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 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, actual results could differ

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JACOBS ENGINEERING GROUP INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

significantly from those estimates and assumptions. Our estimates, judgments, and assumptions are evaluated periodically and adjusted accordingly.

Earlier in these Notes to Consolidated Financial Statements we discussed three significant accounting policies that rely on the application of estimates and assumptions: revenue recognition for long-term construction contracts; the process for testing goodwill for possible impairment; and the accounting for share-based payments to employees and directors. The following is a discussion of certain other significant accounting policies that rely on the use of estimates:

Accounting for Pensions — We use certain assumptions and estimates in order to calculate periodic pension cost and the value of the assets and liabilities of our pension plans. These assumptions involve discount rates, investment returns, and projected salary increases, among others. Changes in the actuarial assumptions may have a material effect on the plans’ liabilities and the projected pension expense.

Accounting for Income Taxes — We determine our consolidated income tax expense using the asset and liability method prescribed by U.S. GAAP. Under this method, deferred tax assets and liabilities are recognized for the temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes and income tax purposes. Such deferred tax assets and liabilities are adjusted, as appropriate, to reflect changes in tax rates expected to be in effect when the temporary differences reverse. If and when we determine that a deferred tax asset will not be realized for its full amount, we will recognize and record a valuation allowance with a corresponding charge to earnings. Judgment is required in determining our worldwide provision for income taxes. In the normal course of business, we may engage in numerous transactions every day for which the ultimate tax outcome (including the period in which the transaction will ultimately be included in taxable income or deducted as an expense) is uncertain. Additionally, we file income, franchise, gross receipts and similar tax returns in many jurisdictions. Our tax returns are subject to audit and investigation by the Internal Revenue Service, most states in the U.S., and by various government agencies representing many jurisdictions outside the U.S.

Contractual Guarantees, Litigation, Investigations, and Insurance — In the normal course of business we are subject to certain contractual guarantees and litigation. We record in the Consolidated Balance Sheets amounts representing our estimated liability relating to such guarantees, litigation, and insurance claims. We perform an analysis to determine the level of reserves to establish for both insurance-related claims that are known and have been asserted against us as well as for insurance-related claims that are believed to have been incurred based on actuarial analysis, but have not yet been reported to our claims administrators as of the respective balance sheet dates. We include any adjustments to such insurance reserves in our Consolidated Statements of Earnings. In addition, as a contractor providing services to various agencies of the U.S. federal government, we are subject to many levels of audits, investigations, and claims by, or on behalf of, the U.S. federal government with respect to contract performance, pricing, costs, cost allocations, and procurement practices. We adjust revenues based upon the amounts we expect to realize considering the effects of any client audits or governmental investigations.

Accounting for Business Combinations — U.S. GAAP requires that the purchase price paid for business combinations accounted for using the acquisition method be allocated to the assets and liabilities acquired based on their respective Fair Values. Determining the Fair Value of contract assets and liabilities acquired often requires estimates and judgments regarding, among other things, the estimated cost to complete such contracts. The Company must also make certain estimates and judgments relating to other assets and liabilities acquired as well as any identifiable intangible assets acquired.

New Accounting Pronouncements

In May 2014, the FASB issued ASU No. 2014-09— Revenue from Contracts with Customers. The new guidance provided by ASU 2014-09 is intended to remove inconsistencies and perceived weaknesses in the existing revenue requirements, provide a more robust framework for addressing revenue issues, improve comparability, provide information that is more useful and simplify the preparation of financial statements. ASU 2014-09 was initially effective for annual and interim reporting periods beginning after December 15, 2016. On July 9, 2015, the FASB approved a one-year deferral of the effective date of this standard. The revised effective date for the standard is for annual reporting periods beginning after December 15, 2017 and interim periods therein. The FASB also approved changes allowing for early adoption of the standard as of the original effective date. The Company has completed its initial assessment of the new standard and is in the process of developing a plan to assess its contracts with customers. The Company currently intends to adopt the new standard using

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JACOBS ENGINEERING GROUP INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

the Modified Retrospective application. This standard could have a significant impact on the Company’s Consolidated Financial Statements and an administrative impact on its operations. The Company will further assess the impact through its implementation program.

In February 2016, the FASB issued ASU 2016-02— Leases. ASU 2016-02 requires lessees to recognize assets and liabilities for most leases. ASU 2016-02 is effective for public entity financial statements for annual periods beginning after December 15, 2018, and interim periods within those annual periods. Early adoption is permitted, including adoption in an interim period. The guidance must be adopted using a modified retrospective approach for leases that exist or are entered into after the beginning of the earliest comparative period in the financial statements. The Company is evaluating the impact of the new guidance on its consolidated financial statements. This standard could have a significant impact on the Company’s Consolidated Financial Statements and an administrative impact on its operations. The Company will further assess the impact through its implementation program.

In March 2016, the FASB issued ASU 2016-09— Improvements to Employee Share-Based Payment Accounting. ASU 2016-09 simplifies several aspects of the accounting for share-based payment transactions, including the income tax consequences, classification of awards as either equity or liabilities, and classification on the statement of cash flows. ASU 2016-09 is effective for annual periods beginning after December 15, 2016, and interim periods within those annual periods. Early adoption is permitted for any entity in any interim or annual period for which financial statements have not been issued or made available for issuance. If an entity early adopts the amendments in an interim period, any adjustments must be reflected as of the beginning of the fiscal year that includes that interim period. An entity that elects early adoption must adopt all of the amendments in the same period. The Company is evaluating the impact of the new guidance on its consolidated financial statements and does not expect it to have a material impact.

During the second quarter of fiscal 2016, the Company adopted the provisions of ASU 2015-17— Balance Sheet Classification of Deferred Taxes on a retrospective basis for all periods presented. ASU 2015-17 removes the requirement to separate deferred income tax liabilities and assets into current and noncurrent amounts in a classified statement of financial position. Instead, the update requires that deferred tax liabilities and assets be classified as noncurrent in a classified statement of financial position. As a result of the Company’s adoption of ASU 2015-17 in the second quarter of fiscal 2016, the current deferred taxes and noncurrent deferred tax assets included in miscellaneous noncurrent assets on the October 2, 2015 Consolidated Balance Sheet were reclassified to noncurrent deferred taxes, which increased noncurrent deferred tax assets by $160.3 million and decreased miscellaneous noncurrent assets by $213.8 million.

3. Employee Stock Purchase and Stock Option Plans

Broad-Based, Employee Stock Purchase Plans

Under the 1989 ESPP and the GESPP, eligible employees who elect to participate in these plans are granted the right to purchase shares of the common stock of Jacobs at a discount that is limited to 5% of the per-share market value on the day shares are sold to employees. The following table summarizes the stock issuance activity under the 1989 ESPP and the GESPP during each of the last three fiscal years:

		2016				2015				2014
Aggregate Purchase Price Paid for Shares Sold:
Under the 1989 ESPP		$	23,631,241			$	28,621,800			$	30,354,723
Under the GESPP			2,660,067				3,535,479				3,314,046
Total		$	26,291,308			$	32,157,279			$	33,668,769
Aggregate Number of Shares Sold:
Under the 1989 ESPP		$	564,461			$	696,853			$	553,201
Under the GESPP			63,196				84,361				59,883
Total		$	627,657			$	781,214			$	613,084

At September 30, 2016, there remains 599,506 shares reserved for issuance under the 1989 ESPP and 64,628 shares reserved for issuance under the GESPP.

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JACOBS ENGINEERING GROUP INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

Stock Incentive Plans

We also sponsor the 1999 SIP and the 1999 ODSP. The 1999 SIP provides for the issuance of incentive stock options, nonqualified stock options, share appreciation rights ("SAR"), restricted stock, and restricted stock units to employees. The 1999 ODSP provides for awards of shares of common stock, restricted stock, and restricted stock units, and grants of nonqualified stock options to our outside (i.e., nonemployee) directors. The following table sets forth certain information about the 1999 Plans:

		1999 SIP				1999 ODSP				Total
Number of shares authorized			29,850,000				1,100,000				30,950,000
Number of remaining shares reserved for issuance at September 30, 2016			10,532,310				597,910				11,130,220
Number of shares relating to outstanding stock options at September 30, 2016			3,299,137				278,375				3,577,512
Number of shares available for future awards:
At September 30, 2016			7,233,173				319,535				7,552,708
At October 2, 2015			7,103,759				41,125				7,144,884

Effective September 28, 2012, all grants of shares under the 1999 SIP are issued on a fungible basis. An award other than an option or SAR are granted on a 1.92-to-1.00 basis (“Fungible”). An award of an option or SAR are granted on a 1-to-1 basis (“Not Fungible”).

The following table presents the Fair Value of shares (of restricted stock and restricted stock units) vested during each of the last three fiscal years (in thousands):

		2016				2015				2014
Restricted Stock and Restricted Stock Units (service condition)		$	17,481			$	18,568			$	6,820
Restricted Stock Units (service, market, and performance conditions at target)			4,336				11,264				18,675
Total		$	21,817			$	29,832			$	25,495

The following table presents the Company’s total pre-tax compensation cost relating to share-based payments included in the accompanying Consolidated Statements of Earnings (in thousands):

2016				2015				2014
$	32,370			$	41,412			$	43,400

At September 30, 2016, the amount of compensation cost relating to nonvested awards not yet recognized in the financial statements is approximately $85.4 million. The majority of the unrecognized compensation costs will be recognized by the third quarter of fiscal 2019. The weighted average remaining contractual term of options currently exercisable is 5.4 years.

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JACOBS ENGINEERING GROUP INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

Stock Options

The following table summarizes the stock option activity for each of the last three fiscal years:

		Number of Stock Options				Weighted Average Exercise Price
Outstanding at September 27, 2013			4,606,212			$	52.33
Granted			602,525			$	53.51
Exercised			(718,065	)		$	47.18
Cancelled or expired			(269,525	)		$	54.46
Outstanding at September 26, 2014			4,221,147			$	53.23
Granted			614,759			$	43.56
Exercised			(34,000	)		$	31.54
Cancelled or expired			(729,199	)		$	86.15
Outstanding at October 2, 2015			4,072,707			$	46.06
Granted			460,770			$	42.17
Exercised			(412,416	)		$	40.88
Cancelled or expired			(543,549	)		$	49.13
Outstanding at September 30, 2016			3,577,512			$	45.69

Stock options outstanding at September 30, 2016 consisted entirely of nonqualified stock options. The following table presents the total intrinsic value of stock options exercised during each of the last three fiscal years (in thousands):

2016				2015				2014
$	4,149			$	442			$	9,590

The total intrinsic value of stock options exercisable at September 30, 2016 was approximately $17.9 million. The following table presents certain other information regarding our 1999 Plans:

		2016				2015				2014
At fiscal year end:
Range of exercise prices for options outstanding		$32.51–$80.63				$32.51–$80.63				$25.87–$94.11
Number of options exercisable			2,581,421				2,590,560				2,725,980
For the fiscal year:
Range of prices relating to options exercised		$36.88–$55.00				$25.87–$42.74				$20.98–$57.54
Estimated weighted average fair values of options granted		$	12.80			$	13.41			$	19.04

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JACOBS ENGINEERING GROUP INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

The following table presents certain information regarding stock options outstanding, and stock options exercisable at September 30, 2016:

		Options Outstanding												Options Exercisable
Range of Exercise Prices		Number				Weighted Average Remaining Contractual Life (years)				Weighted Average Price				Number				Weighted Average Exercise Price
$32.51 - $37.03			337,875				5.51				37.00				337,875				37.00
$37.43 - $46.37			2,096,554				5.87				42.67				1,328,450				42.60
$47.11 - $55.53			1,059,633				6.11				52.84				853,071				52.68
$60.08 - $80.63			83,450				5.48				65.99				62,025				67.93
			3,577,512				5.90				45.69				2,581,421				45.81

The 1999 Plans allow participants to satisfy the exercise price of stock options by tendering shares of Jacobs common stock that have been owned by the participants for at least six months. Shares so tendered are retired and canceled, and are shown as repurchases of common stock in the accompanying Consolidated Statements of Stockholders’ Equity.

Restricted Stock

The following table presents the number of shares of restricted stock and restricted stock units issued under the 1999 SIP during each of the last three fiscal years:

		2016				2015				2014
Restricted stock			597,091				507,882				589,150
Restricted stock units (service condition)			183,131				126,635				287,545
Restricted stock units (service and performance conditions)			372,794				219,965				432,700

The amount of restricted stock units issued for awards with performance and market conditions in the above table are based on the target amount. The number of shares ultimately issued, which could be greater or less than target, will be based on achieving specific performance conditions described in Note 2 – Significant Accounting Policies.

The share amounts in the above tables reflect the Non-Fungible share counting of 1 share for each share of restricted stock and restricted stock unit issued.

The following table presents the number of shares of restricted stock and restricted stock units cancelled and withheld for taxes under the 1999 SIP during each of the last three fiscal years:

		2016				2015				2014
Restricted stock			512,903				326,480				147,221
Restricted stock units (service condition)			177,640				70,296				12,333
Restricted stock units (service and performance conditions)			275,933				194,116				52,000

The amount of restricted stock units cancelled for awards with market and performance conditions in the above table is based on the target amount.

The share amounts in the above tables reflect the Non-Fungible share counting of 1 share for each share of restricted stock and restricted stock unit issued.

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JACOBS ENGINEERING GROUP INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

The restrictions attached to restricted stock and restricted stock units generally relate to the recipient’s ability to sell or otherwise transfer the stock or stock units. There are also restrictions that subject the stock and stock units to forfeiture back to the Company until earned by the recipient through continued employment or service.

The following table provides the number of shares of restricted stock and restricted stock units outstanding at September 30, 2016 under the 1999 SIP. Shares granted prior to September 29, 2012 are not Fungible (granted on a 1-to-1 basis). Shares Granted after September 28, 2012 are Fungible (granted on a 1.92 -to-1.00 basis):

		Not Fungible				Fungible				Total
Restricted stock			245,150				1,444,927				1,690,077
Restricted stock units (service condition)			57,300				466,588				523,888
Restricted stock units (service and performance conditions at target)			—				721,934				721,934

The following table presents the number of shares of restricted stock and restricted stock units issued under the 1999 ODSP during each of the last three fiscal years:

		2016				2015				2014
Restricted stock units (service condition)			23,090				13,500				15,000

The following table provides the number of shares of restricted stock and restricted stock units outstanding at September 30, 2016 under the 1999 ODSP:

		2016
Restricted stock			34,000
Restricted stock units (service condition)			88,590

All shares granted under the 1999 ODSP are issued on a 1-to-1 basis.

4. Earnings Per Share

Basic and Diluted Earnings Per Share

The following table (i) reconciles the denominator used to compute Basic EPS to the denominator used to compute Diluted EPS for each of the last three fiscal years, and (ii) discloses the number of antidilutive stock options, shares of restricted stock, and restricted stock units outstanding at the end of each of the fiscal years indicated (in thousands):

		2016				2015				2014
Shares used to calculate EPS:
Weighted average shares outstanding (denominator used to compute basic EPS)			120,133				125,007				130,483
Diluted effect of stock options and restricted stock			1,350				1,103				1,888
Denominator used to compute diluted EPS			121,483				126,110				132,371
Antidilutive stock options and restricted stock			2,142				3,237				2,074

Share Repurchases

On July 23, 2015, the Board of Directors approved a share repurchase program up to $500 million of the Company's common stock over the ensuing three years (the "2015 Share Repurchase Program"). As authorized, share repurchases may be executed through various means including, without limitation, open market transactions, privately negotiated transactions

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JACOBS ENGINEERING GROUP INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

or otherwise. The share repurchase program did not obligate the Company to purchase any shares, and expires on July 22, 2018. The timing of shares repurchases may depend upon market conditions, other uses of capital, and other factors.

The following table summarizes the activity under this program during fiscal 2016 (in thousands, except per-share amounts):

Amount Authorized (in thousands)				Average Price Per Share (1)				Total Shares Retired (In thousands)				Shares Repurchased (In thousands) 2016
$	500,000			$	44.76				3,408				3,408

(1)	Includes commissions paid and calculated as the average price per share since the repurchase program authorization date.

5. Restructuring Charges

During the second quarter of fiscal 2015, the Company began implementing a series of initiatives intended to improve operational efficiency, reduce costs, and better position itself to drive growth of the business in the future (the “2015 Restructuring”). The 2015 Restructuring was not completed in fiscal 2015, and actions related to the 2015 Restructuring continued throughout fiscal 2016. Actions related to the 2015 Restructuring completed during fiscal 2015 and fiscal 2016 include involuntary terminations, the abandonment of certain leased offices, combining operational organizations, and the co-location of employees into other existing offices. We are not exiting any service types or client-end-markets in connection with the 2015 Restructuring.

The majority of the costs of the 2015 Restructuring are included in SG&A expense in the Consolidated Statement of Earnings for the fiscal year ended September 30, 2016. The following table summarizes the impact of the 2015 Restructuring on the Company’s reportable segments for the fiscal year ended September 30, 2016 (in thousands):

	2016
Aerospace & Technology		5,835
Buildings & Infrastructure		23,378
Industrial		29,690
Petroleum & Chemicals	$	87,188
Corporate		41,816
Total Restructuring Charges	$	187,907

The Company’s accrual for the 2015 Restructuring as of October 2, 2015 was $102.2 million. There were $187.9 million of charges and $137.9 million of payments during fiscal 2016. The accrual balance was $152.2 million at September 30, 2016.

6. Borrowings

Short-Term Credit Arrangements

The Company maintains both committed and uncommitted credit arrangements with several banks providing for short-term borrowing capacity and overdraft protection. There were borrowings of $2.4 million outstanding under these short-term credit facilities at a weighted average interest rate of 4.38% at September 30, 2016, and there were borrowings of $13.4 million outstanding under these short-term credit facilities at October 2, 2015.

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JACOBS ENGINEERING GROUP INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

Long-term Debt

On February 7, 2014, Jacobs and certain of its subsidiaries entered into a $1.6 billion long-term unsecured, revolving credit facility (the "2014 Facility") with a syndicate of large U.S. and international banks and financial institutions. The following table presents certain information regarding the Company’s long-term revolving credit facilities at September 30, 2016 and October 2, 2015 (dollars in thousands):

2016						2015
Principal Balance Outstanding				Range of Interest Rates		Principal Balance Outstanding				Range of Interest Rates
$	385,330			1.0% – 1.65%		$	584,434			1.0% – 1.51%

The total amount outstanding under the 2014 Facility in the form of direct borrowings at September 30, 2016 was $385.3 million. The Company issued $2.5 million in letters of credit leaving $1.21 billion of available borrowing capacity under the 2014 Facility at September 30, 2016. In addition, the Company had $253.5 million issued under separate, committed and uncommitted letter-of-credit facilities for total issued letters of credit of $256.0 million at September 30, 2016.

The 2014 Facility expires in February 2019 and permits the Company to borrow under two separate tranches in U.S. dollars, certain specified foreign currencies, and any other currency that may be approved in accordance with the terms of the 2014 Facility. Depending on the Company's Consolidated Leverage Ratio, borrowings under the 2014 Facility will bear interest at either a eurocurrency rate plus a margin of between 1.0% and 1.5% or a base rate plus a margin of between 0% and 0.5%. The 2014 Facility also provides for a financial letter of credit subfacility of $300.0 million, permits performance letters of credit, and provides for a $50.0 million subfacility for swingline loans. Letters of credit are subject to fees based on the Company's Consolidated Leverage Ratio at the time any such letter of credit is issued. The 2014 Facility also provides an accordion feature that allows the Company and the lenders to increase the facility amount to $2.1 billion. The Company pays a facility fee of between 0.100% and 0.25% per annum depending on the Company's Consolidated Leverage Ratio. Amounts outstanding under the 2014 Facility may be prepaid at the option of the Company without premium or penalty, subject to customary breakage fees in connection with the prepayment of eurocurrency loans. The 2014 Facility contains affirmative, negative, and financial covenants customary for financings of this type including, among other things, limitations on certain other indebtedness, loans and investments, liens, mergers, asset sales and transactions with affiliates. In addition, the 2014 Facility contains customary events of default. We were in compliance with our debt covenants at September 30, 2016.

The following table presents certain additional information regarding the Company’s long-term debt for the fiscal years shown:

		2016				2015
Maximum amount outstanding at any month-end during the fiscal year		$	958,460			$	1,006,899
Average amount outstanding during the year		$	825,641			$	943,258
Weighted average interest rate during the year			1.39	%			1.28	%

The following table presents the amount of interest paid by the Company during each of the last three fiscal years (in thousands):

2016				2015				2014
$	13,282			$	15,506			$	13,841

7. Pension and Other Postretirement Benefit Plans

Company-Only Sponsored Plans

We sponsor various defined benefit pension plans covering employees of certain U.S. and international subsidiaries. The pension plans provide pension benefits that are based on the employee’s compensation and years of service. Our funding

F-23

JACOBS ENGINEERING GROUP INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

policy is to fund the actuarially determined accrued benefits where applicable, allowing for projected compensation increases using the projected unit method.

The accounting for pension and other post-retirement benefit plans requires the use of assumptions and estimates in order to calculate periodic benefit cost and the value of the plans’ assets and benefit obligations. These assumptions include discount rates, investment returns, and projected salary increases, among others. The discount rates used in valuing the plans' benefit obligations were determined with reference to high quality corporate and government bonds that are appropriately matched to the duration of each plan's obligations. The expected long-term rate of return on plan assets is generally based on using country-specific simulation models which select a single outcome for expected return based on the target asset allocation. The expected long-term-rates of return used in the valuation are the annual average returns generated by these assumptions over a 20-year period for each asset class based on the expected long-term rate of return of the underlying assets.

The following table sets forth the changes in the plans’ combined net benefit obligation (segregated between plans existing within and outside the U.S.) during each of the fiscal years presented (in thousands):

		U.S. Pension Plans								Non-U.S. Pension Plans
		2016				2015				2016				2015
Net benefit obligation at the beginning of the year		$	533,665			$	495,788			$	1,155,592			$	1,196,520
Service cost			9,875				12,045				14,378				21,374
Interest cost			16,746				20,629				38,892				44,659
Participants’ contributions			1,847				2,743				2,255				4,402
Actuarial (gains)/losses			29,129				42,749				382,691				30,238
Benefits paid			(14,143	)			(40,289	)			(32,277	)			(35,662	)
Curtailments/settlements			(35,224	)			—				(35,375	)			(5,763	)
Plan amendments			—				—				—				(1,612	)
Transfers *			(356,231	)			—				—				—
Effect of exchange rate changes			—				—				(162,374	)			(98,564	)
Net benefit obligation at the end of the year		$	185,664			$	533,665			$	1,363,782			$	1,155,592
* Pension plan transferred to a new service provider for the plan

The following table sets forth the changes in the combined Fair Value of the plans’ assets (segregated between plans existing within and outside the U.S.) during each of the fiscal years presented (in thousands):

		U.S. Pension Plans								Non-U.S. Pension Plans
		2016				2015				2016				2015
Fair value of plan assets at the beginning of the year		$	379,907			$	415,350			$	896,298			$	876,171
Actual return on plan assets			28,835				(1,754	)			242,927				86,411
Employer contributions			10,213				3,857				23,217				39,326
Participants’ contributions			1,847				2,743				2,255				4,402
Gross benefits paid			(14,143	)			(40,289	)			(32,277	)			(35,662	)
Curtailments/settlements			(35,224	)			—				(1,863	)			(1,646	)
Transfers*			(228,971	)			—				—				—
Effect of exchange rate changes			—				—				(126,646	)			(72,704	)
Fair value of plan assets at the end of the year		$	142,464			$	379,907			$	1,003,911			$	896,298
* Pension plan transferred to a new service provider for the plan

During fiscal 2016 we also curtailed our U.K. and French pension plans.

F-24

JACOBS ENGINEERING GROUP INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

The following table reconciles the combined funded statuses of the plans recognized in the accompanying Consolidated Balance Sheets at September 30, 2016 and October 2, 2015 (segregated between plans existing within and outside the U.S.) (in thousands):

		U.S. Pension Plans								Non-U.S. Pension Plans
		2016				2015				2016				2015
Net benefit obligation at the end of the year		$	185,664			$	533,665			$	1,363,782			$	1,155,592
Fair value of plan assets at the end of the year			142,464				379,907				1,003,911				896,298
Under funded amount recognized at the end of the year		$	43,200			$	153,758			$	359,871			$	259,294

The following table presents the accumulated benefit obligation at September 30, 2016 and October 2, 2015 (segregated between plans existing within and outside the U.S.) (in thousands):

		U.S. Pension Plans								Non-U.S. Pension Plans
		2016				2015				2016				2015
Accumulated benefit obligation at the end of the year			185,664				488,024				1,331,884				1,113,016

The following table presents the amounts recognized in the accompanying Consolidated Balance Sheets at September 30, 2016 and October 2, 2015 (segregated between plans existing within and outside the U.S.) (in thousands):

		U.S. Pension Plans								Non-U.S. Pension Plans
		2016				2015				2016				2015
Prepaid benefit cost included in prepaid assets		$	—			$	—			$	492			$	4,054
Accrued benefit cost included in current liabilities			—				—				608				381
Accrued benefit cost included in noncurrent liabilities			43,200				153,758				359,755				262,967
Net amount recognized at the end of the year		$	43,200			$	153,758			$	359,871			$	259,294

In fiscal 2015 and through June 30, 2016, we were responsible for administering a U.S. pension plan for participating employees of which are assigned to, and worked exclusively on, a specific operating contract with the U.S. federal government. The costs of this pension plan were fully reimbursed by the U.S. federal government pursuant to applicable cost accounting standards. Accordingly, included in “Miscellaneous Noncurrent Assets” in the accompanying Consolidated Balance Sheet at October 2, 2015 was a receivable from the U.S. federal government of approximately $115.5 million representing the underfunded amount for this pension plan. As of June 30, 2016, we ceased performing on this operating contract, and, as such, we are no longer responsible for administering this pension plan. As a result of no longer administering the plan, we derecognized the plan benefit obligation and plan assets pertaining to the plan resulting in a decrease of plan benefit obligation by $356.2 million and plan assets by $229.0 million.

The following table presents the significant actuarial assumptions used in determining the funded statuses and the following year's benefit cost of the Company’s U.S. plans for each fiscal year presented:

		2016				2015				2014
Weighted average discount rates			3.2	%		3.9% to 4.0%				3.9% to 4.4%
Rates of compensation increases			—	%			3.0	%			2.95	%
Return on Assets			7.4	%			7.4	%			7.70	%

The following table presents the significant actuarial assumptions used in determining the funded statuses and the following year's benefit cost of the Company’s non-U.S. pension plans for each fiscal year presented:

		2016		2015		2014
Weighted average discount rates		0.7% to 7.0%		1.6% to 7.8%		1.8% to 8.8%
Rates of compensation increases		2.5% to 7.5%		2.4% to 7.5%		2.6% to 7.5%
Expected long-term rates of return on assets		3.5% to 8.5%		3.5% to 8.5%		4.5% to 8.5%

F-25

JACOBS ENGINEERING GROUP INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

The following table presents certain amounts relating to our U.S. pension plans recognized in accumulated other comprehensive loss at September 30, 2016, October 2, 2015 and September 26, 2014 (in thousands):

		2016				2015				2014
Arising during the period:
Net actuarial loss		$	4,337			$	12,237			$	1,378
Reclassification adjustments:
Net actuarial gain			(2,312	)			(2,347	)			(2,255	)
Total		$	2,025			$	9,890			$	(877	)

The following table presents certain amounts relating to our non-U.S. pension plans recognized in accumulated other comprehensive loss at September 30, 2016, October 2, 2015 and September 26, 2014(in thousands):

		2016				2015				2014
Arising during the period:
Net actuarial (gain) loss		$	102,925			$	(27,165	)		$	48,752
Prior service cost (benefit)			580				(1,512	)			(1	)
Total			103,505				(28,677	)			48,751
Reclassification adjustments:
Net actuarial gain			(7,508	)			(14,034	)			(12,914	)
Prior service benefit			163				51				(19	)
Total			(7,345	)			(13,983	)			(12,933	)
Total		$	96,160			$	(42,660	)		$	35,818

The following table presents certain amounts relating to our pension plans recorded in accumulated other comprehensive loss that have not yet been recognized as components of net periodic benefit cost at September 30, 2016, and October 2, 2015 (segregated between U.S. and non-U.S. plans) (in thousands):

		U.S. Pension Plans								Non-U.S. Pension Plans
		2016				2015				2016				2015
Net actuarial loss		$	61,483			$	59,458			$	304,345			$	208,929
Prior service cost			—				—				(1,203	)			(1,947	)
Total		$	61,483			$	59,458			$	303,142			$	206,982

The following table presents the amount of accumulated comprehensive income that will be amortized against earnings as part of our net periodic benefit cost in fiscal 2017 based on 2016 exchange rates (segregated between U.S. and non-U.S. plans) (in thousands):

		U.S. Pension Plans				Non-U.S. Pension Plans
Unrecognized net actuarial loss		$	3,985			$	10,676
Unrecognized prior service cost			—				(313	)
Accumulated comprehensive loss to be recorded against earnings		$	3,985			$	10,363

We consider various factors in developing the estimates for the expected, long-term rates of return on plan assets. These factors include the projected, long-term rates of returns on the various types of assets in which the plans invest, as well as historical returns. In general, investment allocations are determined by each plan’s trustees and/or investment committees. The objectives of the plans’ investment policies are to (i) maximize returns while preserving capital; (ii) provide returns sufficient to meet the current and long-term obligations of the plan as the obligations become due; and (iii) maintain a diversified portfolio of assets so as to reduce the risk associated with having a disproportionate amount of the plans’ total assets invested in any one type of asset, issuer or geography. None of our pension plans hold Jacobs common stock directly

F-26

JACOBS ENGINEERING GROUP INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

(although some plans may hold shares indirectly through investments in mutual funds). The plans’ weighted average asset allocations at September 30, 2016 and October 2, 2015 (the measurement dates used in valuing the plans’ assets and liabilities) were as follows:

		U.S. Pension Plans								Non-U.S. Pension Pans
		2016				2015				2016				2015
Equity securities			71	%			70	%			25	%			25	%
Debt securities			20	%			21	%			32	%			31	%
Real estate investments			2	%			3	%			6	%			7	%
Other			7	%			6	%			37	%			37	%

The following table presents the Fair Value of the Company’s Domestic U.S. plan assets at September 30, 2016, segregated by level of Fair Value measurement inputs within the Fair Value hierarchy promulgated by U.S. GAAP (in thousands):

		Fair Value, Determined Using Fair Value Measurement Inputs
		Level 1				Level 3				Total
U.S. Domestic equities		$	85,494			$	—			$	85,494
Overseas equities			15,169				—				15,169
U.S. Domestic bonds			28,886				—				28,886
Cash and equivalents			3,723				—				3,723
Real estate			—				3,477				3,477
Hedge funds			—				5,715				5,715
Total		$	133,272			$	9,192			$	142,464

The following table presents the Fair Value of the Company’s non-U.S. pension plan assets at September 30, 2016, segregated by level of Fair Value measurement inputs within the Fair Value hierarchy promulgated by U.S. GAAP (in thousands):

		Fair Value, Determined Using Fair Value Measurement Inputs
		Level 1				Level 3				Total
U.S. Domestic equities		$	31,972			$	—			$	31,972
Overseas equities			220,179				—				220,179
U.S. Domestic bonds			258,949				—				258,949
Overseas bonds			61,974				—				61,974
Cash and equivalents			63,182				—				63,182
Real estate			—				55,665				55,665
Insurance contracts			—				39,473				39,473
Hedge funds			—				272,517				272,517
Total		$	636,256			$	367,655			$	1,003,911

The following table presents the Fair Value of the Company’s U.S. pension plan assets at October 2, 2015, segregated by level of Fair Value measurement inputs within the Fair Value hierarchy promulgated by U.S. GAAP (in thousands):

		Fair Value, Determined Using Fair Value Measurement Inputs
		Level 1				Level 3				Total
U.S. Domestic equities		$	225,362			$	—			$	225,362
Overseas equities			41,414				—				41,414
U.S. Domestic bonds			80,804				—				80,804
Cash and equivalents			6,041				—				6,041
Real estate			—				9,914				9,914
Hedge funds			—				16,372				16,372
Total		$	353,621			$	26,286			$	379,907

F-27

JACOBS ENGINEERING GROUP INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

The following table presents the Fair Value of the Company’s non-U.S. pension plan assets at October 2, 2015, segregated by level of Fair Value measurement inputs within the Fair Value hierarchy promulgated by U.S. GAAP (in thousands):

		Fair Value, Determined Using Fair Value Measurement Inputs
		Level 1				Level 3				Total
U.S. Domestic equities		$	28,007			$	—			$	28,007
Overseas equities			198,309				—				198,309
U.S. Domestic bonds			203,266				—				203,266
Overseas bonds			71,545				—				71,545
Cash and equivalents			39,933				—				39,933
Real estate			—				61,996				61,996
Insurance contracts			—				32,522				32,522
Hedge funds			—				260,720				260,720
Total		$	541,060			$	355,238			$	896,298

At September 30, 2016 and October 2, 2015, the Company holds no assets in the U.S. or non-U.S. pension plans that use Level 2 fair value measurement inputs.

The following table summarizes the changes in the Fair Value of the Company’s U.S. Pension Plans’ Level 3 assets for the year ended September 30, 2016 (in thousands):

		Real Estate				Hedge Funds
Balance, beginning of year		$	9,914			$	16,372
Purchases, sales, and settlements			(6,530	)			(10,788	)
Realized and unrealized gains (losses)			93				131
Balance, end of year		$	3,477			$	5,715

The following table summarizes the changes in the Fair Value of the Company’s non-U.S. Pension Plans’ Level 3 assets for the year ended September 30, 2016 (in thousands):

		Real Estate				Insurance Contracts				Hedge Funds
Balance, beginning of year		$	61,996			$	32,522			$	260,720
Purchases, sales, and settlements			(462	)			(165	)			(1,205	)
Realized and unrealized gains			2,572				6,451				57,656
Effect of exchange rate changes			(8,441	)			665				(44,654	)
Balance, end of year		$	55,665			$	39,473			$	272,517

The following table summarizes the changes in the Fair Value of the Company’s U.S. Pension Plans’ Level 3 assets for the year ended October 2, 2015 (in thousands):

		Real Estate				Hedge Funds
Balance, beginning of year		$	-			$	16,304
Purchases			10,616				—
Sales			—				68
Realized and unrealized losses			(702	)			-
Balance, end of year		$	9,914			$	16,372

F-28

JACOBS ENGINEERING GROUP INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

The following table summarizes the changes in the Fair Value of the Company’s non-U.S. Pension Plans’ Level 3 assets for the year ended October 2, 2015 (in thousands):

		Real Estate				Insurance Contracts				Hedge Funds
Balance, beginning of year		$	59,966			$	37,468			$	213,936
Purchases, sales, and settlements			1,271				526				4,760
Realized and unrealized gains			5,390				1,353				54,719
Effect of exchange rate changes			(4,631	)			(6,825	)			(12,695	)
Balance, end of year		$	61,996			$	32,522			$	260,720

The following table presents the amount of cash contributions we anticipate making into the plans during fiscal 2017 (in thousands):

		U.S. Pension Plans				Non-U.S. Pension Pans
Anticipated cash contributions			—			$	20,016

The following table presents the total benefit payments expected to be paid to pension plan participants during each of the next five fiscal years, and in total for the five years thereafter (in thousands):

		U.S. Pension Plans				Non-U.S. Pension Pans
2017		$	11,589			$	27,902
2018			11,916				29,627
2019			11,935				31,039
2020			12,009				30,416
2021			12,095				31,933
For the periods 2022 through 2026			59,090				194,569

The following table presents the components of net periodic benefit cost for the Company’s U.S. pension plans recognized in the accompanying Consolidated Statements of Earnings for each of the last three fiscal years (in thousands):

		2016				2015				2014
Service cost		$	9,875			$	12,045			$	12,077
Interest cost			16,746				20,629				22,041
Expected return on plan assets			(22,368	)			(29,526	)			(28,495	)
Actuarial loss			7,512				3,756				3,608
Prior service cost			(176	)			(239	)			(103	)
Net pension cost, before special items			11,589				6,665				9,128
Settlement loss			8,061				—				—
Total net periodic pension cost recognized		$	19,650			$	6,665			$	9,128

The fiscal 2016 settlement loss included in the U.S. pension plan net periodic benefit cost table above related to the previously discussed transfer of a U.S. pension plan to a new service provider.

F-29

JACOBS ENGINEERING GROUP INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

The following table presents the components of net periodic benefit cost for the Company’s Non-U.S. pension plans recognized in the accompanying Consolidated Statements of Earnings for each of the last three fiscal years (in thousands):

		2016				2015				2014
Service cost		$	14,378			$	21,374			$	25,374
Interest cost			38,892				44,659				54,208
Expected return on plan assets			(50,190	)			(53,052	)			(56,394	)
Actuarial loss			9,092				17,398				15,993
Prior service cost			(260	)			(96	)			(28	)
Net pension cost, before special items			11,912				30,283				39,153
Curtailments and settlements			(7,512	)			255				(15,894	)
Total net periodic pension cost recognized		$	4,400			$	30,538			$	23,259

The fiscal 2016 settlement loss included in the Non-U.S. pension plan net periodic benefit cost table above related to the previously discussed sale of the Company’s French subsidiary.

Multiemployer Plans

In Canada and the U.S., we contribute to various trusteed pension plans covering hourly construction employees under industry-wide agreements. We also contribute to various trusteed plans in Australia and certain countries in Europe covering both hourly and certain salaried employees. Contributions are based on the hours worked by employees covered under these agreements and are charged to direct costs of contracts on a current basis.

The majority of the contributions the Company makes to multiemployer pension plans are outside the U.S. With respect to these multiemployer plans, the Company's liability to fund these plans is generally limited to the contributions we are required to make under collective bargaining agreements.

Based on our review of our multiemployer pension plans under the guidance provided in ASU 2011-09— Compensation-Retirement Benefits-Multiemployer Plans, we have concluded that none of the multiemployer pension plans into which we contribute are individually significant to our Consolidated Financial Statements.

The following table presents the Company’s contributions to these multiemployer plans during each of the last three fiscal years (in thousands):

		2016				2015				2014
Canada		$	44,912			$	42,575			$	56,341
Europe		$	8,771			$	10,902			$	12,693
United States		$	5,058			$	5,968			$	4,485
Contributions to multiemployer pension plans		$	58,741			$	59,445			$	73,519

F-30

JACOBS ENGINEERING GROUP INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

8. Other Comprehensive Income

The following table presents amounts reclassified from changes in pension liabilities in other comprehensive income to direct cost of contracts and selling, general and administrative expenses in the Company's Consolidated Statements of Earnings for the periods presented related to the Company's defined benefit pension plans (in thousands):

		2016				2015				2014
Amortization of Defined Benefit Items:
Actuarial losses		$	(12,880	)		$	(21,153	)		$	(19,601	)
Prior service cost			260				96				28
Total Before Income Tax			(12,620	)			(21,057	)			(19,573	)
Income Tax Benefit			2,963				4,727				4,385
Total reclassifications after-tax		$	(9,657	)		$	(16,330	)		$	(15,188	)

9. Savings and Deferred Compensation Plans

Savings Plans

We sponsor various defined contribution savings plans which allow participants to make voluntary contributions by salary deduction. Such plans cover substantially all of our domestic, nonunion employees in the U.S. and are qualified under Section 401(k) of the U.S. Internal Revenue Code. Similar plans outside the U.S. cover various groups of employees of our international subsidiaries and affiliates. Several of these plans allow the Company to match, on a voluntary basis, a portion of the employee contributions. The following table presents the Company’s contributions to these savings plans during each of the last three fiscal years (in thousands):

2016				2015				2014
$	89,966			$	87,973			$	88,951

Deferred Compensation Plans

Our Executive Security Plan and Executive Deferral Plans are nonqualified deferred compensation programs that provide benefits payable to directors, officers, and certain key employees or their designated beneficiaries at specified future dates, upon retirement, or death. Benefit payments under both plans are funded by a combination of contributions from participants and the Company, and most of the participants are covered by life insurance policies with the Company designated as the beneficiary. The following table presents the amount charged to expense for the Company’s deferred compensation plans during each of the last three fiscal years (in thousands):

2016				2015				2014
$	5,792			$	5,536			$	5,321

F-31

JACOBS ENGINEERING GROUP INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

10. Income Taxes

The following table presents the components of our consolidated income tax expense for each of the last three fiscal years (in thousands):

		2016				2015				2014
Current income tax expense:
Federal		$	36,020			$	72,840			$	102,450
State			11,336				16,248				18,698
Foreign			52,259				43,344				38,107
Total current tax expense			99,615				132,432				159,255
Deferred income tax expense (benefit):
Federal			6,439				13,337				7,561
State			485				2,295				2,789
Foreign			(34,331	)			(46,809	)			20,449
Total deferred tax expense (benefit)			(27,407	)			(31,177	)			30,799
Consolidated income tax expense		$	72,208			$	101,255			$	190,054

Deferred taxes reflect the tax effects of temporary differences between the amounts recorded as assets and liabilities for financial reporting purposes and the comparable amounts recorded for income tax purposes. Deferred tax assets and liabilities are measured using the enacted tax rates and laws that will be in effect when the differences are expected to reverse. The following table presents the components of our net deferred tax assets at September 30, 2016 and October 2, 2015 (in thousands):

		2016				2015
Deferred tax assets:
Obligations relating to:
Defined benefit pension plans		$	77,834			$	64,644
Other employee benefit plans			179,063				186,701
Net Operating Losses			139,125				134,467
Self-insurance programs			1,722				473
Contract revenues and costs			(8,177	)			25,579
Deferred Rent			7,955				9,428
Restructuring			47,792				6,722
Other			9,933				6,370
Valuation Allowance			(41,684	)			(60,320	)
Gross deferred tax assets			413,563				374,064
Deferred tax liabilities:
Depreciation and amortization			(154,939	)			(187,099	)
Other, net			(1,555	)			(3,994	)
Gross deferred tax liabilities			(156,494	)			(191,093	)
Net deferred tax assets		$	257,069			$	182,971

A valuation allowance is recorded to reduce deferred tax assets to the amount that is more likely than not to be realized based on an assessment of positive and negative evidence, including estimates of future taxable income necessary to realize future deductible amounts. The valuation allowance at September 30, 2016 and October 2, 2015 was $41.7 million and $60.3 million, respectively.

Net operating loss carry forwards of foreign subsidiaries at September 30, 2016 and October 2, 2015 totaled $483.4 million and $455.1 million, respectively. If unused, foreign net operating losses of $26.1 million will expire between 2017 and 2036. Net operating losses of $361.5 million can be carried forward indefinitely.

F-32

JACOBS ENGINEERING GROUP INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

The following table presents the income tax benefits realized from the exercise of nonqualified stock options and disqualifying dispositions of stock sold under our employee stock purchase plans during each of the last three fiscal years (in millions):

2016				2015				2014
$	1.50			$	0.20			$	3.40

The following table reconciles total income tax expense using the statutory U.S. federal income tax rate to the consolidated income tax expense shown in the accompanying Consolidated Statements of Earnings for each of the last three fiscal years (dollars in thousands):

		2016				2015				2014
Statutory amount		$	98,935			$	141,479			$	189,758
State taxes, net of the federal benefit			7,853				12,857				12,750
Tax differential on foreign earnings			11,337				(38,838	)			11,991
Foreign Tax Credits			(44,018	)			(21,313	)			(20,802	)
Uncertain Tax Positions			1,449				2,281				(9,847	)
Other, net			(3,348	)			4,789				6,204
Consolidated income tax expense		$	72,208			$	101,255			$	190,054
Rates used to compute statutory amount			35.0	%			35.0	%			35.0	%
Consolidated effective income tax rate			25.2	%			23.5	%			35.1	%

The Company’s consolidated effective income tax rate was 25.2% for fiscal 2016, compared to 23.5% in fiscal 2015. Contributing to the increase in the effective tax rate when compared to the prior year is the absence of a $23.1 million nonrecurring benefit related to foreign currency loss in 2015. The fiscal 2016 effective tax rate is lower than the statutory rate due to an $11.2 million benefit related to a valuation allowance release, a $6.9 million benefit from a prior period adjustment to income taxes payable, and an $8.7 million benefit recorded upon the filing of a US amended tax return to claim additional foreign tax credits and an U.S. Internal Revenue Code Section 179D benefit for the design of energy efficient buildings. Offsetting the current year benefits was an $8.9 million expense charge related to the revaluation of deferred tax assets due to a statutory tax rate change in the United Kingdom.

The following table presents income tax payments made during each of the last three fiscal years (in millions):

2016				2015				2014
$	116.30			$	156.50			$	173.60

The following table presents the components of our consolidated earnings before taxes for each of the last three fiscal years (in thousands):

		2016				2015				2014
United States earnings		$	206,159			$	283,504			$	288,800
Foreign earnings			80,564				146,633				253,366
		$	286,723			$	430,137			$	542,166

United States income taxes, net of applicable credits, have been provided on the undistributed earnings of the Company’s foreign subsidiaries, except in those instances where the earnings have been permanently reinvested. At September 30, 2016, approximately $26.1 million of such undistributed earnings of certain foreign subsidiaries have been permanently reinvested. Should these earnings be repatriated, approximately $5.4 million of income taxes would be payable.

The Company accounts for unrecognized tax benefits in accordance with ASC Topic 740, Income Taxes. It accounts for interest and penalties on unrecognized tax benefits as interest and penalties (i.e., not as part of income tax expense). The Company’s liability for gross unrecognized tax benefits was $44.2 million and $42.7 million at September 30, 2016 and October 2, 2015, respectively, all of which, if recognized, would affect the Company’s consolidated effective income tax rate. The Company had $36.4 million and $42.1 million in accrued interest and penalties at September 30, 2016 and October 2,

F-33

JACOBS ENGINEERING GROUP INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

2015, respectively. The Company estimates that, within 12 months, $4.3 million of gross, primarily non-U.S. unrecognized tax benefits will reverse due to the anticipated expiration of time to assess tax. As of September 30, 2016, the Company’s U.S. federal income tax returns for tax years 2013 through 2016 remain subject to examination.

The following table presents the reconciliation of the beginning and ending amount of unrecognized tax benefits for the years presented (in thousands):

		2016				2015				2014
Balance, beginning of year			42,666				41,923				51,770
Additions based on tax positions related to the current year			5,670				6,440				6,528
Additions for tax positions of prior years			367				—				—
Reductions for tax positions of prior years			(2,451	)			(5,697	)			(16,375	)
Settlement			(2,085	)			—				—
Balance, end of year			44,167				42,666				41,923

11. Commitments and Contingencies, and Derivative Financial Instruments

Commitments Under Operating Leases

We lease certain of our facilities and equipment under operating leases with net aggregate future lease payments of approximately $794,068 million at September 30, 2016, payable as follows (in thousands):

In fiscal years,
2017		$	144,326
2018			129,837
2019			111,306
2020			91,827
2021			77,788
Thereafter			277,385
			832,469
Amounts representing sublease income			(38,401	)
		$	794,068

We recognize rent expense, inclusive of landlord concessions and tenant allowances, over the lease term on a straight-line basis. We also recognize rent expense on a straight-line basis for leases containing fixed escalation clauses and rent holidays. Contingent rentals are included in rent expense as accruable. Operating leases relating to many of our major offices generally contain renewal options, and provide for additional rental based on escalation in operating expenses and real estate taxes.

The following table presents rent expense and sublease income offsetting the Company’s rent expense during each of the last three fiscal years (in thousands):

		2016				2015				2014
Rent expense		$	151,539			$	175,067			$	194,796
Sublease income			(7,212	)			(5,275	)			(6,102	)
Net rent		$	144,327			$	169,792			$	188,694

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

Guarantee

We are party to a synthetic lease agreement involving certain real and personal property located in Houston, Texas that we use in our operations. A synthetic lease is a type of off-balance sheet transaction which provides us with certain tax and other financial benefits. Significant terms of the lease are as follows:

End of lease term			2025
End of term purchase option (in thousands)		$	76,950
Residual value guaranty (in thousands)		$	62,412

The Company refinanced the synthetic lease agreement effective July 28, 2015 with a ten-year term. The new lease agreement continues to gives us the right to request an extension of the lease term. We may also assist the owner in selling the property at the end of the lease term, the proceeds from which would be used to reduce our residual value guarantee. The minimum lease payments required by the lease agreement is included in the above lease pay-out schedule. We have determined that the estimated Fair Value of the aforementioned financial guarantee was not significant at September 30, 2016.

Derivative Financial Instruments

In situations where our operations incur contract costs in currencies other than their functional currency, we attempt to have a portion of the related contract revenues denominated in the same currencies as the costs. In those situations where revenues and costs are transacted in different currencies, we sometimes enter into foreign exchange contracts in order to limit our exposure to fluctuating foreign currencies. The Company does not currently have exchange rate sensitive instruments that would have a material effect on our consolidated financial statements or results of operations.

Letters of Credit

Letters of credit outstanding at September 30, 2016 totaled $256.0 million. Of this amount, $2.5 million has been issued under the 2014 Facility and $253.5 million are issued under separate, committed and uncommitted letter-of-credit facilities.

12. Contractual Guarantees, Litigation, Investigations, and Insurance

In the normal course of business, we are subject to certain contractual guarantees and litigation. The guarantees to which we are a party generally relate to project schedules and plant performance. Most of the litigation in which we are involved has us as a defendant in workers’ compensation, personal injury, environmental, employment/labor, professional liability, and other similar lawsuits.

We maintain insurance coverage for various aspects of our business and operations. Our insurance programs have varying coverage limits and maximums, and insurance companies may seek to not pay any claims we might make. We have also elected to retain a portion of losses that occur through the use of various deductibles, limits, and retentions under our insurance programs. As a result, we may be subject to future liability for which we are only partially insured or completely uninsured. We intend to mitigate any such future liability by continuing to exercise prudent business judgment in negotiating the terms and conditions of our contracts. Our insurers are also subject to business risk and, as a result, one or more of them may be unable to fulfill their insurance obligations due to insolvency or otherwise.

Additionally, as a contractor providing services to the U.S. federal government and several of its agencies, we are subject to many levels of audits, investigations, and claims by, or on behalf of, the U.S. federal government with respect to our contract performance, pricing, costs, cost allocations, and procurement practices. Furthermore, our income, franchise, and similar tax returns and filings are also subject to audit and investigation by the Internal Revenue Service, most states within the U.S., as well as by various government agencies representing jurisdictions outside the U.S.

We record in our Consolidated Balance Sheets amounts representing our estimated liability relating to such claims, guarantees, litigation, and audits and investigations. We perform an analysis to determine the level of reserves to establish for

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

insurance-related claims that are known and have been asserted against us, and for insurance-related claims that are believed to have been incurred based on actuarial analysis, but have not yet been reported to our claims administrators as of the respective balance sheet dates. We include any adjustments to such insurance reserves in our consolidated results of operations.

The Company believes, after consultation with counsel, that such guarantees, litigation, U.S. government contract-related audits, investigations and claims, and income tax audits and investigations should not have any material adverse effect on our consolidated financial statements.

On August 9, 2014, the Company received a Notice of Arbitration from Motiva Enterprises LLC (“Motiva”) alleging fraud and breach of fiduciary duty with respect to an expansion project at the Motiva, Port Arthur, Texas refinery. The arbitration relates to the professional services provided by Bechtel-Jacobs CEP Port Arthur Joint Venture (“BJJV”), a joint venture between Bechtel Corporation and Jacobs, in connection with that project. On March 1, 2016, Motiva submitted an amended Notice of Arbitration, asserting the same causes of actions in its original notice (fraud and breach of fiduciary duty) and alleged entitlement to monetary relief in excess of $8 billion of alleged actual damages, punitive damages, attorneys' fees and interest. The non-appealable arbitration is pending in Houston, Texas before a panel utilizing the rules of the International Institute for Conflict Prevention and Resolution and an evidentiary hearing was conducted, which concluded on October 21, 2016. Post-hearing briefing was requested by the arbitration panel and is expected to be submitted by late November 2016. A decision is expected thereafter. If BJJV is found liable, this matter could have a material adverse effect on the Company’s business, financial condition, results of operations and/or cash flows, particularly in the short term. However, BJJV has denied liability and is vigorously defending these claims, and based on the information currently available, the Company does not expect the resolution of this matter to have a material adverse effect on the Company’s business, financial condition, results of operations and/or cash flows.

On September 30, 2015, Nui Phao Mining Company Limited (“NPMC”) commenced arbitration proceedings against Jacobs E&C Australia Pty Limited (“Jacobs E&C”). The arbitration is pending in Singapore before the Singapore International Arbitration Centre. In March 2011, Jacobs E&C was engaged by NPMC for the provision of management, design, engineering, and procurement services for the Nui Phao mine/mineral processing project in Vietnam. In the Notice of Arbitration and in a subsequently filed Statement of Claim and Supplementary Statement of Claim dated February 1, 2016 and February 26, 2016, respectively, NPMC asserts various causes of action and alleges that the quantum of its claim exceeds $167 million. Jacobs has denied liability and is vigorously defending this claim. A hearing on the merits has been set for November 2017. The Company does not expect the resolution of this matter to have a material adverse effect on its financial condition, results of operations and/or cash flows.

On December 7, 2009, the Judicial Council of California, Administrative Office of the Courts (“AOC”) initiated an action in the San Francisco County Superior Court against Jacobs Facilities Inc. (“JFI”) and Jacobs Project Management (“JPM”). On May 12, 2011, AOC filed an operative Second Amended Complaint, which added Jacobs as a defendant. The action arises out of a contract between AOC and JFI pursuant to which JFI provided regular maintenance and repairs at certain AOC court facilities.

AOC alleged three causes of action: (i) breach of contract based on the expiration of JFI’s contractor’s license before JFI executed an assignment and assumption agreement to formally transfer the contract to JPM, a licensed entity; (ii) disgorgement of all fees AOC paid before the assignment and assumption agreement pursuant to California’s Contractors’ State License Law (“CSLL”); and (iii) breach of Jacobs’ parent guarantee agreement. JPM cross-claimed for unpaid sums for contract services that the licensed JPM had performed between August 2009 and November 2009. A jury trial was held on the parties’ CSLL claims in April 2012 and, on May 2, 2012, the jury returned a special verdict in favor of the Jacobs entities finding, among other things, that JPM was owed approximately $4.7 million in unpaid fees and that JFI was not required to disgorge the approximate $18.3 million that AOC had paid for its work under the contract.

AOC subsequently dismissed its cause of action for breach of contract, and JPM dismissed its cross-claims other than those for its unpaid invoices. AOC’s third cause of action for breach of the parent guaranty was resolved by a stipulation, which provided that if AOC obtains a judgment against JFI, the judgment will also be against its parent, Jacobs. The trial court entered judgment in the Jacobs entities’ favor.

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JACOBS ENGINEERING GROUP INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

On August 20, 2015, the California Court of Appeal reversed the jury’s verdict, holding that JFI had violated the CSLL. The Court of Appeal remanded to the San Francisco County Superior Court for an evidentiary hearing to determine whether the Jacobs’ entities had “substantially complied” with the CSLL under California Business and Professions Code Section 7031(e). Establishing “substantial compliance” would prevent $18.3 million in disgorgement against Jacobs and permit Jacobs to recover $4.7 million in unpaid contract amounts. The evidentiary hearing on substantial compliance was conducted between July 18 and August 5, 2016. On August 30, 2016, the California State Legislature amended the applicable substantial compliance provision of the CSLL. On September 9, 2016, Jacobs filed a motion to apply the newly amended substantial compliance provision to the AOC contract. AOC filed a response and agreed that the new statute “will apply” to the case “as of January 1, 2017,” the new law’s effective date. The Court ordered the parties to submit proposed tentative statements of decision applying the newly amended and prior versions of substantial compliance in the alternative. The parties submitted proposed tentative statements of decision on October 21, 2016. A hearing regarding the parties’ proposed tentative statements of decision is scheduled for mid-December 2016. In advance of that hearing, the Court issued a tentative ruling in favor of the Company but there is no assurance that the tentative decision will be the final ruling of the Court after it hears argument by the parties.

The Jacobs entities have contested, and will continue to vigorously contest, the AOC’s claims and will vigorously litigate JPM’s claim for unpaid sums. The Company does not expect the resolution of this matter to have a material adverse effect on its financial condition, results of operations and/or cash flows.

13. Common and Preferred Stock

Jacobs is authorized to issue two classes of capital stock designated “common stock” and “preferred stock” (each has a par value of $1.00 per share). The preferred stock may be issued in one or more series. The number of shares to be included in a series as well as each series’ designation, relative powers, dividend and other preferences, rights and qualifications, redemption provisions, and restrictions are to be fixed by the Board of Directors at the time each series is issued. Except as may be provided by the Board of Directors in a preferred stock designation, or otherwise provided for by statute, the holders of shares of common stock have the exclusive right to vote for the election of directors and on all other matters requiring stockholder action. The holders of shares of common stock are entitled to dividends if and when declared by the Board of Directors from whatever assets are legally available for that purpose.

14. Other Financial Information

Receivables

The following table presents the components of “Receivables” as shown in the accompanying Consolidated Balance Sheets at September 30, 2016 and October 2, 2015 as well as certain other related information (in thousands):

		2016				2015
Amounts billed, net		$	1,110,042			$	1,213,892
Unbilled receivables and other			937,552				1,252,509
Retentions receivable			68,069				82,342
Total receivables, net		$	2,115,663			$	2,548,743
Other information about receivables:
Amounts due from the United States federal government included above, net of advanced billings		$	235,203			$	327,157
Claims receivable		$	26,061			$	32,511

Billed receivables, net consist of amounts invoiced to clients in accordance with the terms of the 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 retentions receivable represent reimbursable costs and amounts earned and reimbursable under contracts in progress as of the respective balance sheet dates. Such amounts become billable according to the contract

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JACOBS ENGINEERING GROUP INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

terms, which usually consider the passage of time, achievement of certain milestones or completion of the project. We anticipate that substantially all of such unbilled amounts will be billed and collected over the next twelve months.

Claims receivable are included in “Receivables” in the accompanying Consolidated Balance Sheets and represent certain costs incurred on contracts to the extent it is probable that such claims will result in additional contract revenue and the amount of such additional revenue can be reliably estimated.

Property, Equipment, and Improvements, Net

The following table presents the components of our property, equipment, and improvements, net at September 30, 2016 and October 2, 2015 (in thousands):

		2016				2015
Land		$	16,680			$	23,757
Buildings			91,194				97,597
Equipment			531,539				592,491
Leasehold improvements			221,437				259,544
Construction in progress			36,764				17,229
			897,614				990,618
Accumulated depreciation and amortization			(577,941	)			(609,380	)
		$	319,673			$	381,238

Miscellaneous Noncurrent Assets

The following table presents the components of “Miscellaneous noncurrent assets” shown in the accompanying Consolidated Balance Sheets at September 30, 2016 and October 2, 2015 (in thousands):

		2016				2015
Deferred income taxes		$	413,563			$	374,064
Cash surrender value of life insurance policies			122,364				115,440
Investments			178,256				222,941
Notes receivable			18,303				13,197
Reimbursable pension costs (a)			-				119,548
Other			26,843				34,623
Total		$	759,329			$	879,813

(a)	Consists primarily of costs incurred relating to a defined benefit pension plan covering employees providing services on a contract with, and for the benefit of, the U.S. federal government pursuant to which such costs are fully reimbursable. As of June 30, 2016, we ceased performing on this operating contract, and, as such, we are no longer responsible for administering this pension plan.

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JACOBS ENGINEERING GROUP INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

Accrued Liabilities

The following table presents the components of “Accrued liabilities” shown in the accompanying Consolidated Balance Sheets at September 30, 2016 and October 2, 2015 (in thousands):

		2016				2015
Accrued payroll and related liabilities		$	561,652			$	623,297
Project-related accruals			102,400				130,401
Non project-related accruals			87,813				102,324
Insurance liabilities			54,984				59,081
Sales and other similar taxes			37,029				53,476
Deferred rent			69,059				93,040
Other			25,441				29,366
Total		$	938,378			$	1,090,985

Other Deferred Liabilities

The following table presents the components of “Other deferred liabilities” shown in the accompanying Consolidated Balance Sheets at September 30, 2016 and October 2, 2015 (in thousands):

		2016				2015
Liabilities relating to defined benefit pension and early retirement plans		$	402,955			$	416,725
Liabilities relating to nonqualified deferred compensation arrangements			123,926				129,982
Deferred income taxes			156,494				191,093
Miscellaneous			178,449				126,068
Total		$	861,824			$	863,868

Total Accumulated Other Comprehensive Loss

The following table presents the components of “Accumulated other comprehensive loss” shown in the accompanying Consolidated Balance Sheets at September 30, 2016, and October 2, 2015 (in thousands):

		2016				2015
Foreign currency translation adjustments		$	(245,603	)		$	(199,087	)
Adjustments relating to defined benefit pension plans			(364,625	)			(266,440	)
Other			(366	)			763
Total		$	(610,594	)		$	(464,764	)

Supplemental Cash Flow Information

During fiscal 2016 and fiscal 2015, the Company acquired businesses for cash and stock of $49.9 million and $8.1 million, respectively. The following table presents the non-cash adjustments relating to these acquisitions made in preparing the accompanying Consolidated Statements of Cash Flows (in thousands):

		2016				2015
Working capital		$	10,023			$	(8,749	)
Property and equipment			879				71
Noncurrent assets			8,192				(4,334	)
Deferred liabilities			—				(1,316	)
Goodwill			30,849				22,429

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JACOBS ENGINEERING GROUP INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

15. Segment Information

During the second quarter of fiscal 2016, we reorganized our operating and reporting structure around four lines of business (“LOB”). This reorganization is intended to better serve our global clients, leverage our workforce, help streamline operations, and provide enhanced growth opportunities. The four global LOBs are: Aerospace & Technology, Buildings & Infrastructure, Industrial, and Petroleum & Chemicals. Previously, the Company operated its business as a single segment.

Under the new organization, each LOB has a president that reports directly to the Company's Chairman and CEO (who is also the Company’s Chief Operating Decision Maker, or “CODM”). As part of the reorganization, the sales function, which had been managed centrally for many years, is now managed on a LOB basis, and accordingly, the associated cost is now embedded in the new segments and report to the respective LOB presidents. In addition, a portion of the costs of other support functions (e.g., finance, legal, human resources, and information technology) are allocated to each LOB using methodologies which, we believe, effectively attribute the cost of these support functions to the revenue-generating activities of the Company on a rational basis. In addition, the cost of the Company’s cash incentive plan, the Jacobs Engineering Group Inc. Management Incentive Plan (“MIP”) and the expense associated with the Jacobs Engineering Group Inc. Stock Incentive Plan (“1999 SIP”) have likewise been charged to the LOBs except for those amounts determined to relate to the business as a whole (which amounts remain in corporate’s results of operations).

Financial information for each LOB is reviewed by the CODM to assess performance and make decisions regarding the allocation of resources. The Company does not track assets by LOB, nor does it provide such information to the CODM.

The CODM evaluates the operating performance of our LOBs using operating profit, which is defined as margin less “corporate charges” (e.g., the allocated amounts described above). The Company incurs certain selling, general and administrative (“SG&A”) costs which relate to its business as a whole which are not allocated to the LOBs.

The following tables present total revenues and operating profit for each reportable segment. Prior period information has been restated to reflect the current period presentation (in thousands).

	2016				2015				2014
Revenues from External Customers:
Aerospace & Technology	$	2,657,433			$	2,924,753			$	2,306,453
Buildings & Infrastructure		2,253,512				2,458,379				2,705,197
Industrial		2,793,713				2,517,571				2,956,391
Petroleum & Chemicals		3,259,499				4,214,129				4,727,116
Total	$	10,964,157			$	12,114,832			$	12,695,157

	2016				2015				2014
Operating Profit:
Aerospace & Technology	$	203,808			$	205,368			$	139,684
Buildings & Infrastructure		174,648				145,299				164,439
Industrial		81,268				126,531				134,230
Petroleum & Chemicals		126,604				138,351				162,462
Total Segment Operating Profit		586,328				615,549				600,815
Other Corporate Items		(60,100	)			(15,739	)			20,583
Restructuring Charges		(187,630	)			(154,283	)			(93,330	)
(Loss) Gain on disposal of business and investments		(41,410	)			(2,909	)			12,147
Total Other Expense		(10,465	)			(12,481	)			1,951
Earnings Before Taxes	$	286,723			$	430,137			$	542,166

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JACOBS ENGINEERING GROUP INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

Included in “other corporate items” in the above table are costs and expenses which relate to general corporate activities as well as corporate-managed benefit and insurance programs. Such costs and expenses include: (i) those elements of SG&A expenses relating to the business as a whole; (ii) those elements of the MIP and the 1999 SIP relating to corporate personnel whose other compensation costs are not allocated to the LOBs; (iii) the amortization of intangible assets acquired as part of purchased business combinations; (iv) the quarterly variances between the Company’s actual costs of certain of its self-insured integrated risk and employee benefit programs and amounts charged to the LOBs; and (v) certain adjustments relating to costs associated with the Company’s international defined benefit pension plans. In addition, “other corporate items” includes adjustments to contract margins (both positive and negative) associated with projects where it has been determined, in the opinion of management, that such adjustments are not indicative of the performance of the related LOB and therefore should not be attributed to the LOB.

Included in (Loss) Gain on disposal of business and investments was the losses associated with the sale of the Company’s French subsidiary and a non-cash write-off on an equity investment.

We provide a broad range of technical, professional, and construction services including 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.

The following table presents certain financial information by geographic area for fiscal 2016, 2015, and 2014 (in thousands):

		2016				2015				2014
Revenues:
United States		$	6,247,448			$	7,154,433			$	7,078,366
Europe			2,346,224				2,074,837				2,402,399
Canada			927,942				1,065,651				1,344,632
Asia			299,952				304,393				299,086
India			187,929				163,871				148,453
Australia and New Zealand			436,670				611,271				709,379
South America and Mexico			125,610				143,014				271,213
Middle East and Africa			392,382				597,362				441,629
Total		$	10,964,157			$	12,114,832			$	12,695,157
Long-Lived Assets:
United States		$	195,392			$	208,155			$	240,501
Europe			37,163				55,713				58,562
Canada			21,464				36,647				51,622
Asia			3,069				3,859				4,063
India			13,350				16,264				17,960
Australia and New Zealand			18,888				24,460				49,436
South America and Mexico			5,621				9,127				11,084
Middle East and Africa			24,726				27,013				23,569
Total		$	319,673			$	381,238			$	456,797

Revenues were earned from unaffiliated clients located primarily within the various and respective geographic areas shown. Long-lived assets consist of property and equipment, net of accumulated depreciation and amortization.

The following table presents the revenues earned directly or indirectly from the U.S. federal government and its agencies, expressed as a percentage of total revenues, for fiscal 2016, 2015 and 2014:

2016				2015				2014
	21.4%				21.7%				17.8%

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JACOBS ENGINEERING GROUP INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

16. Selected Quarterly Information — Unaudited

The following table presents selected quarterly financial information for each of the last three fiscal years. (in thousands, except for per share amounts):

		First Quarter				Second Quarter				Third Quarter				Fourth Quarter				Fiscal Year
2016
Revenues		$	2,847,934			$	2,781,763			$	2,693,873			$	2,640,587			$	10,964,157
Operating profit (a)			59,450				86,781				109,556				82,811				338,598
Earnings before taxes			57,787				90,456				102,807				35,673				286,723
Net earnings of the Group			50,306				63,389				70,937				29,883				214,515
Net earnings attributable to Jacobs			46,514		(b)		65,250		(b)		69,055		(b)		29,644		(b)		210,463
Earnings per share:
Basic			0.38		(b)		0.54		(b)		0.58		(b)		0.25		(b)		1.75
Diluted			0.38		(b)		0.54		(b)		0.57		(b)		0.24		(b)		1.73
2015
Revenues		$	3,187,005			$	2,903,332			$	2,907,541			$	3,116,954			$	12,114,832
Operating profit (a)			158,223				133,045				100,434				53,825				445,527
Earnings before taxes			154,695				128,962				97,188				49,292				430,137
Net earnings of the Group			106,195				88,110				97,308				37,269				328,882
Net earnings attributable to Jacobs			100,079				81,967		(c)		91,062		(c)		29,863		(c)		302,971
Earnings per share:
Basic			0.78				0.65		(c)		0.74		(c)		0.00		(c)		2.42
Diluted			0.77				0.64		(c)		0.73		(c)		0.24		(c)		2.40
2014
Revenues		$	3,068,891			$	3,176,033			$	3,231,791			$	3,218,442			$	12,695,157
Operating profit (a)			145,047				122,434				123,937				136,650				528,068
Earnings before taxes			146,921				132,394				118,046				144,805				542,166
Net earnings of the Group			98,949				90,800				71,309		(d)		91,054		(d)		352,112
Net earnings attributable to Jacobs			93,732				83,460		(e)		64,842				86,074				328,108
Earnings per share:
Basic			0.72				0.64		(e)		0.50		(d)		0.66		(d)		2.51
Diluted			0.71				0.63		(e)		0.49		(d)		0.65		(d)		2.48

(a)	Operating profit represents revenues less (i) direct costs of contracts, and (ii) selling, general and administrative expenses.

(b)

Includes costs of $48.1 million, or $0.39 per diluted share, in the first quarter of fiscal 2016, $25.7 million or $0.21 per diluted share in the second quarter of fiscal 2016, $25.8 million, or $0.21 per diluted share, in the third quarter, and $36.0 million or $0.3 per diluted share in the fourth quarter of fiscal 2016, in each case, related to the 2015 Restructuring. Also included in the fourth quarter of fiscal 2016 were $17.1 million, or $0.14 per diluted share related to the loss on sale of our French subsidiary; and $10.4 million, or $0.09 per diluted share related to the non-cash write-off on an equity investment.

(c)	Includes costs of $9.6 million, or $0.08 per diluted share, in the second quarter of fiscal 2015, $30.1 million or $0.24 per diluted share in the third quarter of fiscal 2015, and $68.2 million, or $0.56 per diluted share, in the fourth quarter of fiscal 2015, in each case, related to the 2015 Restructuring.

(d)	Includes costs of $47.0 million, or $0.35 per diluted share, in the third quarter of fiscal 2014, and $30.4 million, or $0.23 per diluted share, in the fourth quarter of fiscal 2014, in each case, related to the 2014 Restructuring.

(e)	Includes $6.4 million, or $0.05 per diluted share, increase to net earnings related to a gain on the sale of certain intellectual property in the second quarter of fiscal 2014.

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JACOBS ENGINEERING GROUP INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

17. Definitions

The following terms used in the accompanying Consolidated Financial Statements and these Notes to Consolidated Financial Statements have the meanings set forth below:

“1989 ESPP” means the Jacobs Engineering Group Inc. 1989 Employee Stock Purchase Plan, as amended. The 1989 ESPP is a shareholder-approved, broad-based, employee stock purchase plan qualified under Section 423 of the U.S. Internal Revenue Code.

“1999 ODSP" means the Jacobs Engineering Group Inc. 1999 Outside Director Stock Plan, as amended. The 1999 ODSP is a shareholder-approved, equity-based compensation plan covering Jacobs' non-management directors.

“1999 SIP” means the Jacobs Engineering Group Inc. Stock Incentive Plan, as amended. The 1999 SIP is a shareholder-approved, equity-based compensation plan covering the Company's officers and key employees.

The "2015 Restructuring" refers to a series of initiatives intended to improve operational efficiency, reduce costs, and better position the Company to drive growth of the business in the future. Actions included involuntary terminations, the abandonment of certain leased offices, and the co-location of employees. Included in the Company's consolidated results of operations for fiscal 2016 and fiscal 2015 are pre-tax costs of $187.9 million and $157.2 million, respectively, relating to the 2015 Restructuring. These costs are primarily included in selling, general, and administrative expense in the accompanying Consolidated Statements of Earnings.

The "2014 Restructuring" refers to a series of initiatives intended to improve operational efficiency, reduce costs, accelerate the integration of SKM, and better position the Company to drive growth of the business in the future. Actions included involuntary terminations, the abandonment of certain leased offices, and the co-location of employees. Included in the Company's consolidated results of operations for fiscal 2014 are pre-tax costs of $93.3 million relating to the 2014 Restructuring. These costs are included in selling, general, and administrative expense in the accompanying Consolidated Statements of Earnings.

“ASC” refers to the Accounting Standards Codification as maintained by the FASB. The ASC is the primary source of U.S. GAAP to be applied by the Company and all other nongovernmental entities. The ASC organizes and presents hundreds of previously separate pieces of authoritative accounting guidance into a single on-line research database. The accounting principles promulgated by the ASC are organized therein by broad topics, and is updated by the FASB through the issuances of ASUs.

“ASU” means Accounting Standards Updates, the primary means by which the ASC is updated by the FASB.

“Company” (including “we”, “us” or “our”) means Jacobs Engineering Group Inc. and its consolidated subsidiaries and affiliates.

“Consolidated EBITDA" generally means consolidated net earnings attributable to Jacobs, plus consolidated (i) interest expense, (ii) tax expense, and (iii) depreciation and amortization expense (including amortization expense relating to intangible assets).

"Consolidated Funded Indebtedness" generally means the sum of (i) the balances outstanding under all loan, credit, and similar agreements for borrowed money (including purchase money indebtedness), (ii) all amounts representing direct obligations arising under letters of credit, (iii) indebtedness in respect of capital leases and similar financing arrangements, and (iv) the value of all guarantees issued with respect to the types of indebtedness described in (i) through (iii).

"Consolidated Leverage Ratio" means, as of any date of determination, the ratio of (i) the Company's Consolidated Funded Indebtedness as of such date to (ii) the Company's Consolidated EBITDA for the immediately preceding four consecutive fiscal quarters.

“EPS” means earnings-per-share. “Basic EPS” is computed by dividing the consolidated net earnings attributable to Jacobs by the weighted average number of shares of common stock outstanding during the period. “Diluted EPS” is

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JACOBS ENGINEERING GROUP INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

computed in a manner similar to the computation of Basic EPS, but gives effect to all dilutive securities that were outstanding during the period. Our dilutive securities consist of nonqualified stock options and restricted stock (including restricted stock units)

“Fair Value” means 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 (i.e., the “measurement date”). When determining fair value, U.S. GAAP requires that we consider the principal or most advantageous market in which we would transact any sale or purchase. U.S. GAAP also requires that the inputs (factors) we use (consider) to determine fair value be considered in the following order of priority:

	•	Level 1 inputs are quoted prices in active markets for identical assets or liabilities;

	•	Level 2 inputs are 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 (i.e., 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; and

	•	Level 3 inputs are unobservable inputs to the valuation methodology that are significant to the fair value measurement.

“FASB” means the Financial Accounting Standards Board. The FASB is the designated organization within the U.S. for establishing standards of financial accounting that govern the preparation of financial reports by nongovernmental entities.

“GESPP” means the Jacobs Engineering Group Inc. Global Employee Stock Purchase Plan, as amended. The GESPP is a shareholder-approved, broad-based, employee stock purchase plan covering employees of certain of Jacobs' non-U.S. subsidiaries.

“Group” refers to the combined economic interests and activities of Jacobs and the persons and entities holding noncontrolling interests in the subsidiaries and affiliates that are consolidated into the accompanying Consolidated Financial Statements.

“Jacobs” means Jacobs Engineering Group Inc.

“U.S. GAAP” means those accounting principles and practices generally accepted in the United States.

“U.S. IRC” means the U.S. Internal Revenue Code of 1986, as amended.

“VIE” means a “Variable Interest Entity” as defined in U.S. GAAP. A VIE is a legal entity in which equity investors do not have sufficient equity at risk for the entity to finance its activities without additional subordinated financial support or, as a group, the holders of the equity investment at risk lack any one of the following three characteristics: (i) the power, through voting rights or similar rights, to direct the activities of a legal entity that most significantly impact the entity's economic performance; (ii) the obligation to absorb the expected losses of the legal entity; or (iii) the right to receive the expected residual returns of the legal entity. Accordingly, entities issuing consolidated financial statements (i.e., a “reporting entity”) shall consolidate a VIE if the reporting entity has a “controlling financial interest” in the VIE, as demonstrated by the reporting entity having both (i) the power to direct the activities of a VIE that most significantly impact the VIE's economic performance; and (ii) the right to receive benefits from the VIE that could potentially be significant to the VIE or the obligation to absorb losses of the VIE that could potentially be significant to the VIE.

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Report of Ernst & Young LLP

Independent Registered Public Accounting Firm

The Board of Directors and Stockholders

Jacobs Engineering Group Inc.

We have audited the accompanying consolidated balance sheets of Jacobs Engineering Group Inc. and subsidiaries as of September 30, 2016 and October 2, 2015, and the related consolidated statements of earnings, comprehensive income, stockholders' equity, and cash flows for each of the three fiscal years in the period ended September 30, 2016. These financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on these financial statements based on our audits.

We conducted our audits in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion.

In our opinion, the financial statements referred to above present fairly, in all material respects, the consolidated financial position of Jacobs Engineering Group Inc. and subsidiaries at September 30, 2016 and October 2, 2015, and the consolidated results of their operations and their cash flows for each of the three fiscal years in the period ended September 30, 2016, in conformity with U.S. generally accepted accounting principles.

We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States), Jacobs Engineering Group Inc. and subsidiaries’ internal control over financial reporting as of September 30, 2016, based on criteria established in Internal Control-Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (2013 framework) and our report dated November 22, 2016 expressed an unqualified opinion thereon.

As discussed in Note 2 to the consolidated financial statements, the Company changed the presentation of its deferred tax assets and liabilities to noncurrent in the consolidated balance sheets as a result of the adoption of Accounting Standards Update No. 2015-17 - Balance Sheet Classification of Deferred Taxes.

/S/ Ernst & Young LLP

Los Angeles, California

November 22, 2016

F-45

Report of Ernst & Young LLP

Independent Registered Public Accounting Firm

The Board of Directors and Stockholders

Jacobs Engineering Group Inc.

We have audited Jacobs Engineering Group Inc. and subsidiaries’ internal control over financial reporting as of September 30, 2016, based on criteria established in Internal Control—Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (2013 framework) (the COSO criteria). Jacobs Engineering Group Inc. and subsidiaries’ management is responsible for maintaining effective internal control over financial reporting, and for its assessment of the effectiveness of internal control over financial reporting included in the accompanying Management’s Annual Report on Internal Control over Financial Reporting. Our responsibility is to express an opinion on the company’s internal control over financial reporting based on our audit.

We conducted our audit in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether effective internal control over financial reporting was maintained in all material respects. Our audit included obtaining an understanding of internal control over financial reporting, assessing the risk that a material weakness exists, testing and evaluating the design and operating effectiveness of internal control based on the assessed risk, and performing such other procedures as we considered necessary in the circumstances. We believe that our audit provides a reasonable basis for our opinion.

A company’s internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles. A company’s internal control over financial reporting includes those policies and procedures that (1) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the company; (2) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the company are being made only in accordance with authorizations of management and directors of the company; and (3) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the company’s assets that could have a material effect on the financial statements.

Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.

In our opinion, Jacobs Engineering Group Inc. and subsidiaries maintained, in all material respects, effective internal control over financial reporting as of September 30, 2016, based on the COSO criteria.

We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States), the consolidated balance sheets of Jacobs Engineering Group Inc. and subsidiaries as of September 30, 2016 and October 2, 2015 and the related consolidated statements of earnings, comprehensive income, stockholders’ equity, and cash flows for each of the three fiscal years in the period ended September 30, 2016 of Jacobs Engineering Group Inc. and subsidiaries and our report dated November 22, 2016 expressed an unqualified opinion thereon.

/S/ Ernst & Young LLP

Los Angeles, California

November 22, 2016

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