Item 15. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES

| --- | --- |

(a) Documents filed as part of this report:

	(1)	The Company’s Consolidated Financial Statements at September 29, 2017 and September 30, 2016 and for each of the three years in the period ended September 29, 2017, September 30, 2016 and October 2, 2015 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 61

(b) Exhibit Index:

2.1		Agreement and Plan of Merger, dated August 1, 2017, by and among Jacobs Engineering Group Inc., CH2M HILL Companies, Ltd. and Basketball Merger Sub Inc. Filed as Exhibit 2.1 to the Registrant’s Current Report on Form 8-K on August 2, 2017 and incorporated herein by reference.
2.2		Voting and Support Agreement, dated August 1, 2017, by and among Jacobs Engineering Group Inc., Basketball Merger Sub Inc. and AP VIII CH2 Holdings, L.P. Filed as Exhibit 2.2 to the Registrant’s Current Report on Form 8-K on August 2, 2017 and incorporated herein by reference.
3.1		Amended and Restated Certificate of Incorporation of Jacobs Engineering Group Inc. 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 Jacobs Engineering Group Inc., dated January 19, 2017. Filed as Exhibit 3.1 to the Registrant’s Current Report on Form 8-K/A on May 15, 2017 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 Sections 8.04 and 8.06 of Article VIII of Exhibit 3.2.
10.1		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.
10.2		Amendment No. 1, dated as of March 4, 2015, among Jacobs Engineering Group, Inc. and the lenders thereto, and Bank of America, N.A., as administrative agent, to the Amended and Restated Credit Agreement dated as of February 7, 2014, by and among Jacobs Engineering Group, Inc., the lenders from time to time party thereto and Bank of America, N.A., as administrative agent. Filed as Exhibit 10.1 to the Registrant’s Current Report on Form 8-K on March 5, 2015 and incorporated herein by reference.
10.3		Amendment No. 2, dated as of September 28, 2017, among Jacobs Engineering Group Inc. and the lenders thereto, and Bank of America, N.A., as administrative agent, to the Amended and Restated Credit Agreement dated as of February 7, 2014, by and among Jacobs Engineering Group Inc., the lenders from time to time party thereto and Bank of America, N.A., as administrative agent. Filed as Exhibit 10.1 to the Registrant’s Current Report on Form 8-K on September 29, 2017 and incorporated herein by reference.
10.4		Credit Agreement, dated as of September 28, 2017, among Jacobs Engineering Group Inc. and the lenders thereto, and BNP Paribas, as administrative agent. Filed as Exhibit 10.2 to the Registrant’s Current Report on Form 8-K on September 29, 2017 and incorporated herein by reference.
10.5		Term Loan Commitment Letter, dated August 1, 2017, by and among Jacobs Engineering Group Inc., BNP Paribas, BNP Paribas Securities Corp. and The Bank of Nova Scotia. Filed as Exhibit 10.1 to the Registrant’s Current Report on Form 8-K on August 2, 2017 and incorporated herein by reference.
10.6		Revolver Backstop Commitment Letter, dated August 1, 2017, by and among Jacobs Engineering Group Inc., BNP Paribas, BNP Paribas Securities Corp. and The Bank of Nova Scotia. Filed as Exhibit 10.2 to the Registrant’s Current Report on Form 8-K on August 2, 2017 and incorporated herein by reference.
10.7#		Offer Letter by and between Jacobs Engineering Group Inc. and Steven J. Demetriou, dated 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.
10.8#		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.
10.9#		Employment Agreement dated December 23, 2010 between Jacobs Engineering Group Inc. 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.

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10.10#		Offer letter by and between Jacobs Engineering Group Inc. and Robert V. Pragada, dated January 28, 2016. Filed as Exhibit 10.61 to the Registrant’s fiscal 2016 Annual Report on Form 10-K and incorporated herein by reference.
10.11#		Offer letter by and 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
10.12#		Offer letter by and between Jacobs Engineering Group Inc. and William Benton Allen, Jr. dated October 4, 2016. Filed as Exhibit 10.1 to the Registrant’s Current Report on Form 8-K on October 14, 2016 and incorporated herein by reference.
10.13#		Retirement Agreement by and between Jacobs Engineering Group Inc. and 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.
10.14#		Amended and Restated Separation Agreement by and between Jacobs Engineering Group Inc. and Lori Sundberg, dated July 26, 2017. Filed as Exhibit 10.3 to the Registrant’s Quarterly Report on Form 10-Q for the third quarter of fiscal 2017 and incorporated herein by reference.
10.15#		Form of Indemnification Agreement entered into between Jacobs Engineering Group Inc. and certain of its officers and directors. Filed as Exhibit10.1 to the Registrant's Quarterly Report on Form 10-Q for the third quarter of fiscal 2012 and incorporated herein by reference.
10.16#		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.
10.17#		Jacobs Engineering Group Inc. 1989 Employee Stock Purchase Plan (as amended and restated on January 19, 2017). Filed as Exhibit 10.1 to the Registrant’s Current Report on Form 8-K on January 24, 2017 and incorporated herein by reference.
10.18#		Jacobs Engineering Group Inc. Global Employee Stock Purchase Plan (as amended and restated on January 19, 2017). Filed as Exhibit 10.2 to the Registrant’s Current Report on Form 8-K on January 24, 2017 and incorporated herein by reference.
10.19#		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.
10.20#		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.
10.21#		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.
10.22#		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.
10.23#		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.
10.24#		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.
10.25#		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.
10.26#		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.
10.27#		Jacobs Engineering Group Inc. Executive Deferral Plan, effective January 1, 2018. Filed as Exhibit 10.1 to the Registrant’s Current Report on Form 8-K on October 2, 2017 and incorporated herein by reference.

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10.28#		Jacobs Engineering Group Inc. Directors Deferral Plan, effective January 1, 2018. Filed as Exhibit 10.2 to the Registrant’s Current Report on Form 8-K on October 2, 2017 and incorporated herein by reference.
10.29#		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.
10.30#		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 on January 28, 2014 and incorporated herein by reference.
10.31#		Jacobs Engineering Group Inc. 1999 Outside Director Stock Plan, as Amended and Restated. Filed as Exhibit 10.3 to the Registrant’s Quarterly Report on Form 10-Q for the first quarter of fiscal 2016 and incorporated herein by reference.
10.32#		Form of Stock Option Award Agreement (awarded pursuant to the Jacobs Engineering Group Inc. 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.
10.33#		Form of Nonqualified Stock Option Agreement (awarded pursuant to the Jacobs Engineering Group Inc. 1999 Stock Incentive Plan). 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.
10.34#		Form of Nonqualified Stock Option Agreement (awarded pursuant to the Jacobs Engineering Group Inc. 1999 Stock Incentive Plan). 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.
10.35#		Form of Nonqualified Stock Option Agreement (awarded pursuant to the Jacobs Engineering Group Inc. 1999 Stock Incentive Plan). Filed as Exhibit 10.49 to the Registrant’s fiscal 2015 Annual Report on Form 10-K and incorporated herein by reference.
10.36#		Form of Restricted Stock Unit Award Agreement (awarded pursuant to the Jacobs Engineering Group Inc. 1999 Stock Incentive Plan). 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.
10.37#		Form of Restricted Stock Unit Agreement (awarded pursuant to the Jacobs Engineering Group Inc. 1999 Stock Incentive Plan). Filed as Exhibit 10.45 to the Registrant’s fiscal 2015 Annual Report on Form 10-K and incorporated herein by reference.
10.38#		Summary Description of Amendment to Restricted Stock Unit Award Agreement (awarded pursuant to the Jacobs Engineering Group Inc. 1999 Stock Incentive Plan). Filed as Exhibit 10.4 to the Registrant’s Quarterly Report on Form 10-Q for the second quarter of fiscal 2017 and incorporated herein by reference.
10.39†#		Form of Restricted Stock Unit Agreement (with dividend equivalent rights) (awarded pursuant to the Jacobs Engineering Group Inc. 1999 Stock Incentive Plan).
10.40#		Form of Restricted Stock Unit Award Agreement (Performance Shares - Net Earnings Growth - 2014 Award) (awarded pursuant to the Jacobs Engineering Group Inc. 1999 Stock Incentive Plan). 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.
10.41#		Form of Restricted Stock Unit Award Agreement (Performance Shares - TSR - 2014 Award) (awarded pursuant to the Jacobs Engineering Group Inc. 1999 Stock Incentive Plan). 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.
10.42#		Form of Restricted Stock Unit Award Agreement (Performance Shares - Net Earnings Growth – 2015 Award) (awarded pursuant to the Jacobs Engineering Group Inc. 1999 Stock Incentive Plan). 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.
10.43#		Form of Restricted Stock Unit Agreement (Performance Shares - Earnings Per Share Growth – 2016 Award) (awarded pursuant to the Jacobs Engineering Group Inc. 1999 Stock Incentive Plan). Filed as Exhibit 10.46 to the Registrant’s fiscal 2015 Annual Report on Form 10-K and incorporated herein by reference.

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10.44#		Form of Restricted Stock Unit Agreement (Performance Shares – TSR – 2016 Award) (awarded pursuant to the Jacobs Engineering Group Inc. 1999 Stock Incentive Plan). Filed as Exhibit 10.47 to the Registrant’s fiscal 2015 Annual Report on Form 10-K and incorporated herein by reference.
10.45†#		Form of Restricted Stock Unit Agreement (Performance Shares – Earnings Per Share Growth – 2017 Award) (awarded pursuant to the Jacobs Engineering Group Inc. 1999 Stock Incentive Plan).
10.46†#		Form of Restricted Stock Unit Agreement (Performance Shares – ROIC – 2017 Award) (awarded pursuant to the Jacobs Engineering Group Inc. 1999 Stock Incentive Plan).
10.47#		Form of Restricted Stock Unit Agreement (Cash Settled Non-US Employees) (awarded pursuant to the Jacobs Engineering Group Inc. 1999 Stock Incentive Plan). Filed as Exhibit 10.48 to the Registrant’s fiscal 2015 Annual Report on Form 10-K and incorporated herein by reference.
10.48#		Form of Restricted Stock Award Agreement (awarded pursuant to the Jacobs Engineering Group Inc. 1999 Stock Incentive Plan). Filed as Exhibit 10.3 to the Registrant’s Current Report on Form 8-K on June 1, 2011 and incorporated herein by reference.
10.49#		Form of Restricted Stock Agreement (awarded pursuant to the Jacobs Engineering Group Inc. 1999 Stock Incentive Plan). 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.
10.50#		Form of Restricted Stock Agreement (awarded pursuant to the Jacobs Engineering Group Inc.1999 Stock Incentive Plan). Filed as Exhibit 10.44 to the Registrant’s fiscal 2015 Annual Report on Form 10-K and incorporated herein by reference.
10.51#		Form of Restricted Stock Unit Award Agreement (awarded pursuant to the Jacobs Engineering Group Inc. 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.
10.52#		Form of Restricted Stock Unit Award Agreement (awarded pursuant to the Jacobs Engineering Group Inc. 1999 Outside Directors Stock Plan). Filed as Exhibit 10.3 to the Registrant’s Quarterly Report on Form 10-Q for the second quarter of fiscal 2017 and incorporated herein by reference.
†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 65

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 21, 2017		By:		/S/ Steven J. Demetriou
						Steven J. Demetriou
						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 21, 2017
Steven J. Demetriou
/S/ Joseph R. Bronson		Director		November 21, 2017
Joseph R. Bronson
/S/ Juan Jose Suarez Coppel		Director		November 21, 2017
Juan Jose Suarez Coppel
/S/ Robert C. Davidson, Jr.		Director		November 21, 2017
Robert C. Davidson, Jr.
/S/ Ralph E. Eberhart		Director		November 21, 2017
Ralph E. Eberhart
/S/ Dawne S. Hickton		Director		November 21, 2017
Dawne S. Hickton
/S/ Linda Fayne Levinson		Director		November 21, 2017
Linda Fayne Levinson
/S/ Robert A. McNamara		Director		November 21, 2017
Robert A. McNamara
/S/ Peter J. Robertson		Director		November 21, 2017
Peter J. Robertson
/S/ Christopher M.T. Thompson		Director		November 21, 2017
Christopher M.T. Thompson
/S/ Kevin C. Berryman		Executive Vice President, Chief Financial Officer (Principal Financial Officer)		November 21, 2017
Kevin C. Berryman
/S/ William B. Allen		Senior Vice President and Chief Accounting Officer (Principal Accounting Officer)		November 21, 2017
William B. Allen

Page 66

JACOBS ENGINEERING GROUP INC. AND SUBSIDIARIES

CONSOLIDATED FINANCIAL STATEMENTS

WITH REPORTS OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

September 29, 2017

F-1

JACOBS ENGINEERING GROUP INC. AND SUBSIDIARIES

INDEX TO CONSOLIDATED FINANCIAL STATEMENTS

September 29, 2017

Consolidated Balance Sheets at September 29, 2017 and September 30, 2016		F-3
Consolidated Statements of Earnings for the Fiscal Years Ended September 29, 2017, September 30, 2016 and October 2, 2015		F-4
Consolidated Statements of Comprehensive Income for the Fiscal Years Ended September 29, 2017, September 30, 2016 and October 2, 2015		F-5
Consolidated Statements of Changes in Stockholders’ Equity for the Fiscal Years Ended September 29, 2017, September 30, 2016 and October 2, 2015		F-6
Consolidated Statements of Cash Flows for the Fiscal Years Ended September 29, 2017, September 30, 2016, and October 2, 2015		F-7
Notes to Consolidated Financial Statements		F-8
Reports of Ernst & Young LLP, Independent Registered Public Accounting Firm		F-53

F-2

JACOBS ENGINEERING GROUP INC. AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS

(In thousands, except share information)

At September 29, 2017 and September 30, 2016

		September 29, 2017				September 30, 2016
ASSETS
Current Assets:
Cash and cash equivalents		$	774,151			$	655,716
Receivables			2,102,543				2,115,663
Prepaid expenses and other current assets			119,486				93,091
Total current assets			2,996,180				2,864,470
Property, Equipment, and Improvements, net			349,911				319,673
Other Noncurrent Assets:
Goodwill			3,009,826				3,079,628
Intangibles, net			332,920				336,922
Miscellaneous			692,022				759,329
Total other noncurrent assets			4,034,768				4,175,879
		$	7,380,859			$	7,360,022
LIABILITIES AND STOCKHOLDERS’ EQUITY
Current Liabilities:
Notes payable		$	3,071			$	2,421
Accounts payable			683,605				522,427
Accrued liabilities			939,687				938,378
Billings in excess of costs			299,864				319,460
Total current liabilities			1,926,227				1,782,686
Long-term Debt			235,000				385,330
Other Deferred Liabilities			732,281				861,824
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—120,385,544 shares and 120,950,899 shares as of September 29, 2017 and September 30, 2016, respectively			120,386				120,951
Additional paid-in capital			1,239,782				1,168,272
Retained earnings			3,721,698				3,586,647
Accumulated other comprehensive loss			(653,514	)			(610,594	)
Total Jacobs stockholders’ equity			4,428,352				4,265,276
Noncontrolling interests			58,999				64,906
Total Group stockholders’ equity			4,487,351				4,330,182
		$	7,380,859			$	7,360,022

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 29, 2017, September 30, 2016, and October 2, 2015

(In thousands, except per share information)

		September 29, 2017				September 30, 2016				October 2, 2015
Revenues		$	10,022,788			$	10,964,157			$	12,114,832
Costs and Expenses:
Direct costs of contracts			(8,250,536	)			(9,196,326	)			(10,146,494	)
Selling, general and administrative expenses			(1,379,983	)			(1,429,233	)			(1,522,811	)
Operating Profit			392,269				338,598				445,527
Other Income (Expense):
Interest income			8,748				7,848				7,262
Interest expense			(12,035	)			(15,260	)			(19,503	)
Gain/(Loss) on disposal of business and investments			10,880				(41,410	)			(2,909	)
Miscellaneous expense, net			(6,645	)			(3,053	)			(240	)
Total other income (expense), net			948				(51,875	)			(15,390	)
Earnings Before Taxes			393,217				286,723				430,137
Income Tax Expense			(105,842	)			(72,208	)			(101,255	)
Net Earnings of the Group			287,375				214,515				328,882
Net Loss (Earnings) Attributable to Noncontrolling Interests			6,352				(4,052	)			(25,911	)
Net Earnings Attributable to Jacobs		$	293,727			$	210,463			$	302,971
Net Earnings Per Share:
Basic		$	2.43			$	1.75			$	2.42
Diluted		$	2.42			$	1.73			$	2.40

See the accompanying Notes to Consolidated Financial Statements.

F-4

JACOBS ENGINEERING GROUP INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

For the Fiscal Years Ended September 29, 2017, September 30, 2016, and October 2, 2015

(In thousands)

		September 29, 2017				September 30, 2016				October 2, 2015
Net Earnings of the Group		$	287,375			$	214,515			$	328,882
Other Comprehensive (Loss) Income:
Foreign currency translation adjustments			(140,527	)			(46,515	)			(136,168	)
Change in pension liability			123,427				(111,488	)			33,208
(Losses) Gains on cash flow hedges			(1,350	)			(1,403	)			2,949
Other Comprehensive Loss Before Income Taxes			(18,450	)			(159,406	)			(100,011	)
Income Tax (Expense) Benefit:
Change in pension liability			(24,380	)			13,303				(438	)
(Losses) Gains on cash flow hedges			(90	)			273				(766	)
Income Tax (Expense) Benefit			(24,470	)			13,576				(1,204	)
Net Other Comprehensive Loss			(42,920	)			(145,830	)			(101,215	)
Net Comprehensive Income of the Group			244,455				68,685				227,667
Net Comprehensive Loss (Income) Attributable to Noncontrolling Interests			6,352				(4,052	)			(25,911	)
Total Comprehensive Income		$	250,807			$	64,633			$	201,756

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 29, 2017, September 30, 2016, and October 2, 2015

(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 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 taxes of $438			—				—				—				32,770				32,770				—				32,770
Gain on derivatives, net of deferred taxes 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 taxes 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 taxes of $13,303			—				—				—				(98,185	)			(98,185	)			—				(98,185	)
Loss on derivatives, net of deferred taxes 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 taxes 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
Net earnings			—				—				293,727				—				293,727				(6,352	)			287,375
Foreign currency translation adjustments			—				—				—				(140,527	)			(140,527	)			—				(140,527	)
Pension liability, net of deferred taxes of $24,380			—				—				—				99,047				99,047				—				99,047
Loss on derivatives, net of deferred taxes of $90			—				—				—				(1,440	)			(1,440	)			—				(1,440	)
Noncontrolling interest acquired / consolidated			—				—				—				—				—				445				445
Dividends			—				—				(72,765	)			—				(72,765	)			—				(72,765	)
Distributions to noncontrolling interests			—				—				(4,559	)			—				(4,559	)			—				(4,559	)
Issuances of equity securities, net of deferred taxes of $1,015			1,468				99,117				—				—				100,585				—				100,585
Repurchases of equity securities			(2,033	)			(27,607	)			(81,352	)			—				(110,992	)			—				(110,992	)
Balances at September 29, 2017		$	120,386			$	1,239,782			$	3,721,698			$	(653,514	)		$	4,428,352			$	58,999			$	4,487,351

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 29, 2017, September 30, 2016, and October 2, 2015

(In thousands)

		September 29, 2017				September 30, 2016				October 2, 2015
Cash Flows from Operating Activities:
Net earnings attributable to the Group		$	287,375			$	214,515			$	328,882
Adjustments to reconcile net earnings to net cash flows provided by operations:
Depreciation and amortization:
Property, equipment and improvements			76,418				82,363				99,924
Intangible assets			46,095				47,608				49,368
(Gain) Loss on sales of investments			(10,880	)			17,049				—
Loss on sales of business			822				24,361				2,909
Gain on benefit plan change			(9,955	)			—				—
Stock based compensation			38,764				32,370				41,412
Tax deficiency from stock based compensation			(2,877	)			(377	)			(1,237	)
Equity in losses (earnings) of operating ventures, net			(7,788	)			(11,892	)			5,483
Change in pension plan obligations			(26,990	)			(9,380	)			(5,980	)
Change in deferred compensation plans			(531	)			576				(3,229	)
Losses on disposals of assets, net			14,876				10,680				30,985
Deferred income taxes			36,663				(27,407	)			(31,177	)
Changes in assets and liabilities, excluding the effects of businesses acquired:
Receivables			75,441				397,268				172,958
Prepaid expenses and other current assets			(23,755	)			17,906				6,644
Accounts payable			153,961				(44,214	)			(28,943	)
Accrued liabilities			(56,279	)			(71,930	)			(120,847	)
Billings in excess of costs			(31,976	)			33,347				(52,441	)
Income taxes payable			4,264				(4,586	)			(22,685	)
Other deferred liabilities			(6,026	)			(28,801	)			(15,759	)
Deferred gain on synthetic lease transaction			—				—				23,343
Other, net			17,259				717				4,962
Net cash provided by operating activities			574,881				680,173				484,572
Cash Flows Used for Investing Activities:
Additions to property and equipment			(118,060	)			(67,688	)			(88,404	)
Disposals of property and equipment			2,387				10,479				369
Purchases of intangibles			—				(10,027	)			—
Purchases of investments			—				(3,403	)			—
Sales of investments			31,701				—				13
Acquisitions of businesses, net of cash acquired			(150,190	)			(49,943	)			(8,101	)
Sales of business			(2,036	)			(19,039	)			—
Net cash used for investing activities			(236,198	)			(139,621	)			(96,123	)
Cash Flows Used for Financing Activities:
Proceeds from long-term borrowings			1,694,023				1,649,653				1,768,639
Repayments of long-term borrowings			(1,846,797	)			(1,840,789	)			(1,907,109	)
Proceeds from short-term borrowings			1,347				3,040				362,433
Repayments of short-term borrowings			(702	)			(14,042	)			(382,190	)
Proceeds from issuances of common stock			62,645				43,140				33,222
Common stock repurchases			(97,180	)			(152,550	)			(422,316	)
Excess tax benefits from stock based compensation			2,877				377				1,237
Cash dividends			(54,234	)			—				—
Dividends paid to noncontrolling interests			(4,559	)			(5,855	)			(7,230	)
Net cash used for financing activities			(242,580	)			(317,026	)			(553,314	)
Effect of Exchange Rate Changes			22,332				(28,669	)			(106,923	)
Net Increase (Decrease) in Cash and Cash Equivalents			118,435				194,857				(271,788	)
Cash and Cash Equivalents at Beginning of Period			655,716				460,859				732,647
Cash and Cash Equivalents at End of Period		$	774,151			$	655,716			$	460,859

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 the fiscal years ended September 29, 2017, September 30, 2016 and October 2, 2015 was as follows:

		For the Year Ended
		September 29, 2017				September 30, 2016				October 2, 2015
Cost-reimbursable			81%				82	%			83	%
Fixed-price			19%				18	%			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 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

We recognize revenue earned on our technical professional and field services projects under the percentage-of-completion method described in ASC 605-35, Construction-Type and Production-Type Contracts. In general, we recognize revenues at the time we provide services. Pre-contract costs are generally expensed as incurred. Contracts are generally segmented between types of services, such as project services and construction, and accordingly, gross margin related to each activity is recognized as those separate services are rendered. For multiple contracts with a single customer we account for each contract separately.

The percentage-of-completion method of accounting is applied by comparing contract costs incurred to date to the total estimated costs at completion. On cost-reimbursable contracts, the cost of materials and subcontracts are generally excluded from the calculation of the measure of progress towards completion to provide a more meaningful allocation of income. Contract losses are provided for in their entirety in the period they become known, without regard to the percentage-of-completion.

Unapproved change orders are included in the contract price to the extent it is probable that such change orders will result in additional contract revenue and the amount of such additional revenue can be reliably estimated. Claims meeting these recognition criteria are included in revenues only to the extent of the related costs incurred.

F-8

JACOBS ENGINEERING GROUP INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

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.

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 in the accompanying Consolidated Statements of Earnings (in millions):

For the Year Ended
September 29, 2017				September 30, 2016				October 2, 2015
$	2,539.3			$	2,489.9			$	2,602.6

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. Under U.S. GAAP, our share of profits and losses associated with the contracts held by the joint ventures is 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 and are the primary beneficiary.

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.

F-9

JACOBS ENGINEERING GROUP INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

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 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 27% to 110%.

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 future stock option awards. For restricted stock units containing service, market and performance 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. Management values insurance contracts, investments in infrastructure/raw goods, and hedge funds using actuarial assumptions and certain values reported by 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 29, 2017 and September 30, 2016 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.

F-10

JACOBS ENGINEERING GROUP INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

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.

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, on an annual basis as of the end of the third quarter of each fiscal year we test goodwill and intangible assets with indefinite lives for possible impairment. Interim testing for impairment is performed if indicators of potential impairment exist. For purposes of impairment testing, goodwill is assigned to the applicable reporting units based on the current reporting structure.

During the second quarter of fiscal 2016, we reorganized our operations around four global lines of business, which also serve as our operating segments: Petroleum & Chemicals, Buildings & Infrastructure, Aerospace & Technology, and Industrial. We determined that this new organization would better support the needs of managing each unique set of customers that fall within each segment. As a result of the new organization, we subsequently realigned our internal reporting structures to enable our Chief Executive Officer, who is also our Chief Operating Decision Maker, to evaluate the performance of each of these segments and make appropriate resource allocations among each of the segments. For purposes of our goodwill impairment testing, we have determined that our operating segments are also our reporting units based on management’s conclusion that the components comprising each of our operating segments share similar economic characteristics and meet the aggregation criteria in accordance with ASC 350.

When testing goodwill for impairment quantitatively, the Company first compares the fair value of each reporting unit with its carrying amount. If the carrying amount of a reporting unit exceeds its fair value, a second step is performed to measure the amount of potential impairment. In the second step, the Company compared the implied fair value of the reporting unit goodwill with the carrying amount of the reporting unit's goodwill. If the carrying amount of reporting unit goodwill exceeds the implied fair value of that goodwill, an impairment loss is recognized. During 2017, we completed our annual goodwill impairment test and quantitatively determined that none of the goodwill was impaired. The Company recorded $119.3 million of goodwill during 2017 in conjunction with the acquisitions of Aquenta Consulting Pty Ltd. and Blue Canopy LLC. Goodwill for each of the Company's segments is presented in Note 15.

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

The following table presents the components of our goodwill by reporting unit appearing in the accompanying Consolidated Balance Sheets at September 29, 2017 (in thousands):

		September 29, 2017
Aerospace & Technology		$	1,025,780
Buildings & Infrastructure			751,407
Industrial			561,785
Petroleum & Chemicals			670,854
Total Goodwill		$	3,009,826

F-11

JACOBS ENGINEERING GROUP INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

During the preparation of the Form 10-Q for the first fiscal quarter of 2017, the Company determined that its prior financial statements contained immaterial misstatements related to incorrect translation of the Company’s non-U.S. goodwill balances from local currency to the U.S. Dollar reporting currency. It was determined that the Company had incorrectly used historical translation rates for the U.S. Dollar in place at the time of the Company’s recording of its foreign goodwill balances rather than using current translation rates at each balance sheet date in accordance with U.S. GAAP. The error dated back to the time of our initial reporting of non-US goodwill balances in the late 1990s and affected our historical quarterly and annual reporting periods through the first fiscal quarter of 2017.

As a result, goodwill and accumulated other comprehensive income in the Company’s September 30, 2016 consolidated balance sheet (which have not been adjusted) were each overstated by $209.9 million and were corrected in the first fiscal quarter of 2017 foreign currency translation adjustment. Consequently, the correction was a direct component of the overall translation adjustment amount of $140.5 million that was reported for fiscal 2017. These adjustments had no impact on the Company’s Consolidated Statements of Earnings or Cash Flows. Also, other comprehensive income for the year ended September 30, 2016 was overstated by $33.8 million as a result of these misstatements.

The following table provides certain information related to the Company’s acquired intangible assets in the accompanying Consolidated Balance Sheets at September 29, 2017, September 30, 2016 and October 2, 2015 (in thousands):

		Customer Relationships, Contracts, and Backlog				Developed Technology				Trade Names				Patents				Other				Total
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
Acquisitions			29,803				1,685				4,417				—				—				35,905
Amortization			(39,679	)			(1,534	)			(2,549	)			(400	)			(50	)			(44,212	)
Foreign currency translation			3,707				—				45				553				—				4,305
Balances, September 29, 2017		$	301,468				14,462				6,699				10,180				111				332,920
Weighted Average Amortization Period (years)		7.9				7.7				4.4				24				2.2				8.3

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 29, 2017, including those associated with AWE and Guimar, is: fiscal 2018 - $49.7 million; fiscal 2019 - $48.3 million; fiscal 2020 - $46.1 million; fiscal 2021 - $40.9 million; and fiscal 2022 - $39.5 million.

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

F-12

JACOBS ENGINEERING GROUP INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

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.

The following table presents our stock-based compensation expense for the various types of awards made by the Company as included in the Consolidated Statements of Earnings for the years ended September 29, 2017, September 30, 2016 and October 2, 2015 (in thousands):

		For the Years Ended
Award Type		September 29, 2017				September 30, 2016				October 2, 2015
Restricted Stock and Restricted Stock Units (excluding Market and Performance Awards)		$	26,393			$	21,156			$	20,779
Stock Options			4,338				7,165				10,683
Market and Performance Awards			8,033				4,049				9,950
Total Expense		$	38,764			$	32,370			$	41,412

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 previous years were awarded on the same date for all employees and directors (although the date is different for employees and directors). For fiscal year 2017, there were no stock options granted to either employees or directors. The following table presents the assumptions used in the Black-Scholes option-pricing model for awards made to employees and directors for the years ended September 30, 2016 and October 2, 2015:

		Awards Made to Employees								Awards Made to Directors
		September 30, 2016				October 2, 2015				September 30, 2016				October 2, 2015
Dividend yield			—	%			—	%			—	%			—	%
Expected volatility			27.77	%			27.00	%			29.21	%			29.28	%
Risk-free interest rate			1.82	%			1.67	%			1.44	%			1.63	%
Expected term of options (in years)		5.82					5.82			5.82					5.82

Market and Performance Awards — The Company granted restricted stock units containing service, performance, and market conditions (“PSUs”). PSUs are earned over a three-year performance period if the specified performance metrics are met. During fiscal 2015, the Company only granted PSUs based on net earnings growth (“Net Earnings Growth Based PSUs”). For fiscal 2016, half of the PSUs granted were based on relative total stockholder return (“Relative TSR Based PSUs”) and the other half of the PSUs were based on earnings per share (“EPS Based PSUs”). For fiscal 2017, half of the PSUs granted were EPS Based PSUs and the other half were based on return on invested capital (“ROIC Based PSUs”).

2014 and 2015 Awards

The number of Net Earnings Growth Based PSUs awarded in fiscal years 2014 and 2015 which may ultimately vest is equal to the sum of the following: (1) an amount, not less than zero, equal to one-third of the target Net Earnings Growth Based PSUs multiplied by the Net Earnings Growth Performance Multiplier (or, "NEGPM", as shown in the table below)

F-13

JACOBS ENGINEERING GROUP INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

determined based upon the growth in the Company's Adjusted Net Earnings (as defined in the applicable award agreements under the Stock Incentive Plan) over the period starting on the first day of the Company's third quarter of fiscal 2014 (in the case of Net Earnings Growth Based PSUs issued in fiscal 2014), or fiscal 2015 (in the case of Net Earnings Growth Based PSUs issued in fiscal 2015) and ending on the last day of the Company's second quarter of fiscal 2015 and fiscal 2016, respectively; plus, (2) an amount, not less than zero, equal to (A) two-thirds of the target Net Earnings Growth Based PSUs multiplied by the NEGPM determined based upon the average growth in the Company's Adjusted Net Earnings over the period starting on the first day of the Company's third quarter of fiscal 2014 (in the case of Net Earnings Growth Based PSUs issued in fiscal 2014), or fiscal 2015 (in the case of Net Earnings Growth Based PSUs issued in fiscal 2015) and ending on the last day of the Company's second quarter of fiscal 2016 and fiscal 2017, respectively, minus (B) the amount determined pursuant to (1) above; plus, (3) an amount, not less than zero, equal to (A) the target Net Earnings Growth Based PSUs multiplied by the NEGPM determined based upon the average growth in the Company's Adjusted Net Earnings over the period starting on the first day of the Company's third quarter of fiscal

2014 (in the case of Net Earnings Growth Based PSUs issued in fiscal 2014), or fiscal 2015 (in the case of Net Earnings Growth Based PSUs issued in fiscal 2015) and ending on the last day of the Company's second quarter of fiscal 2017 and fiscal 2018, respectively, minus (B) the amount determined pursuant to (1) and (2) above.

If the Company's average growth in Adjusted 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 Adjusted Net Earnings.

The following table presents the basis on which the Net Earnings Growth Based PSUs are determined:

Average Adjusted Net Earnings Growth				Net Earnings Growth Performance Multiplier
Less than 5%					0	%
	5%				50	%
	10%				100	%
	15%				150	%
	20%				200	%

Unless stated otherwise, the Net Earnings Growth Based PSUs 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

EPS Based PSUs

For the EPS Based PSUs issued in fiscal 2016, the number of restricted stock units to be issued on the vesting date of November 19, 2018 is based on the Company’s adjusted 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 (as defined below) for that period determined based upon the growth in the Company’s adjusted 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 (as defined below) 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 growth rate, which when multiplied two times fiscal 2015 adjusted EPS (in the case of clause (ii)) or three times fiscal 2015 adjusted EPS (in the case of clause (iii)) results in a number equal to actual fiscal 2017 adjusted EPS and fiscal 2018 adjusted EPS, respectively.

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JACOBS ENGINEERING GROUP INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

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 Human Resource and Compensation Committee of the Board of Directors of the Company 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%					0	%
	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 is determined using linear interpolation based on the actual growth in adjusted EPS.

Unless stated otherwise, the EPS Based PSUs 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.

Relative TSR Based PSUs

The number of Relative TSR Based PSUs which may ultimately vest is equal to the target Relative TSR Based PSUs multiplied by the TSR Performance Multiplier. The TSR Performance Multiplier is 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 is the average closing stock price over the 30 calendar day period ending on the award date ("Performance Period"), and the ending stock price is 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 are deemed re-invested on the ex-dividend date in additional shares of the applicable company.

The following table presents the basis on which the Relative TSR Based PSUs are determined:

Company TSR Percentile Rank		TSR Performance Multiplier
Below 30th percentile			0	%
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.

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JACOBS ENGINEERING GROUP INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

Substantially all of the TSR Based PSUs awarded during fiscal year 2016 were awarded on the same date. For fiscal year 2017 and 2015, no TSR Based PSUs were awarded. The following table presents the assumptions used to value the TSR Based PSUs for the years ended September 29, 2017, September 30, 2016 and October 2, 2015:

		For the Years Ended
		September 29, 2017				September 30, 2016				October 2, 2015
Dividend yield			—	%			—	%			—	%
Expected volatility			—	%			25.06	%			—	%
Risk-free interest rate			—	%			1.21	%			—	%
Expected term (in years)			—				3				—

2017 Awards

For the EPS Based PSUs issued in fiscal 2017, the number of restricted stock units to be issued on the vesting date of November 16, 2019 is based on the Company’s adjusted EPS growth over fiscal 2017, 2018 and 2019. 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 (as shown in the table below) for that period determined based upon the growth in the Company’s adjusted EPS (“EPS Growth Rate”) from fiscal 2016 to fiscal 2017; (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 average EPS Growth Rate in fiscal years 2017 and 2018 as compared to fiscal 2016, 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 average EPS Growth Rate in fiscal years 2017, 2018 and 2019 as compared to fiscal 2016, minus the amount of shares earned pursuant to clauses (i) and (ii).

The “EPS Performance Multiplier” is determined by reference to the following table based upon the average growth in the Company’s adjusted EPS over the indicated fiscal periods. The Human Resource and Compensation Committee of the Board of Directors of the Company set these metrics based on the Company’s plan at the start of the fiscal year.

Average EPS Growth Rate from fiscal 2016 to fiscal 2017

Average EPS Growth Rate				EPS Performance Multiplier
Less than 0%					0
	2.3%				100	%
	4.3%				200	%

Average EPS Growth Rate from fiscal 2016 to fiscal 2018

Average EPS Growth Rate				EPS Performance Multiplier
Less than 2.1%					0
	4.1%				100	%
6.1%					200	%

Average EPS Growth Rate from fiscal 2016 to fiscal 2019

Average EPS Growth Rate				EPS Performance Multiplier
Less than 3.6%					0
	5.6%				100	%
7.6%					200	%

F-16

JACOBS ENGINEERING GROUP INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

If the average EPS Growth Rate falls between the percentages referenced in the tables above, the EPS Performance Multiplier will be determined using linear interpolation based on the actual average EPS Growth Rate.

Unless stated otherwise, the EPS Based PSUs 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.

For the ROIC Based PSUs issued in fiscal 2017, the number of restricted stock units to be issued on the vesting date of November 16, 2019 is based on the Company’s average annual return on invested capital (“ROIC”) from fiscal 2017 to fiscal 2019. The number of restricted stock units to be issued equals the target number of restricted stock units multiplied by an ROIC Performance Multiplier (as shown in the table below) determined based upon the Company’s average annual ROIC from fiscal 2017 to fiscal 2019.

Average ROIC – Fiscal 2017 - 2019				ROIC Performance Multiplier
Less than 8.9%					0	%
	8.9%				50	%
	9.9%				100	%
	10.9%				200	%

If the average annual ROIC falls between 8.9% and 9.9% and 10.9%, the ROIC Performance Multiplier will be determined using linear interpolation based on the actual average ROIC.

Concentrations of Credit Risk

Our cash balances and cash equivalents are maintained in accounts held by major banks and financial institutions located 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 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.

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JACOBS ENGINEERING GROUP INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

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.

During the fourth fiscal quarter of 2017, the Company acquired Blue Canopy LLC. During the second fiscal quarter of 2017, the Company acquired Aquenta Consulting Pty Ltd. During the first fiscal quarter of 2016, the Company acquired J.L. Patterson & Associates. These acquisitions were not material to the Company’s consolidated results for fiscal 2017 or 2016.

On May 19, 2017, the Company entered into an agreement with Saudi Aramco to form a 50/50 Saudi Arabia-based joint venture company to provide professional program and construction management (“PMCM”) services for social infrastructure projects throughout Saudi Arabia and across the Middle East and North Africa. The venture commenced start-up operations in fourth quarter fiscal 2017. Initial funding commitments from each of the partners include $6.5 million in capital contributions and $7.0 million in partner loans which are expected to be executed during fiscal 2018. The partners have also committed up to an additional $7.0 million each for future loans to the joint venture.

New Accounting Pronouncements

Revenue Recognition

From time to time, the Financial Accounting Standards Board (“FASB”) issues accounting standards updates (each being an “ASU”) to its Accounting Standards Codification (“ASC”), which constitutes the primary source of U.S. GAAP. The Company regularly monitors ASUs as they are issued and considers their applicability to its business. All ASUs applicable to the Company are adopted by the due date and in the manner prescribed by the FASB.

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 more useful information 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

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JACOBS ENGINEERING GROUP INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

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’s adoption activities will be performed over three phases: (i) assessment, (ii) design, and (iii) implementation. Our assessment phase is predominantly complete. The following are the potential significant differences identified during the assessment phase:

Performance Obligations

Under current U.S. GAAP the Company typically considers engineering and construction services as separate performance obligations. Under ASU 2014-09, the Company has determined that, in most instances, it is likely that engineering and construction services will be required to be combined into a single performance obligation. In these instances, this will likely change the timing and pattern of revenue recognition.

Contract Modifications

In many instances, the Company enters into contracts for construction services subsequent to entering in to engineering services contracts. Under ASU 2014-09, the construction services contract may be deemed to modify the engineering contract, or may be required to be combined with the engineering contract. This modification or combination of contracts may result in a cumulative catch-up adjustment, which will have an immediate impact on the Company’s results of operations in the period the contract combination or modification occurs. In addition, it will change the timing and pattern of revenue recognition after the period the contracts have been combined or modified.

The Company currently intends to adopt the new standard using 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 and will depend on the magnitude of the items discussed above. The Company will continue to evaluate the impact through the design and implementation phases.

Lease Accounting

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 administrative impact on its operations, and the Company will further assess the impact through its implementation program.

Employee Share-Based Payment Accounting

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. The Company is evaluating the impact of the new guidance on its consolidated financial statements and plans to adopt in fiscal 2018.

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

F-19

JACOBS ENGINEERING GROUP INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

shares are sold to employees. The following table summarizes the stock issuance activity under the 1989 ESPP and the GESPP for the fiscal years ended September 29, 2017, September 30, 2016 and October 2, 2015:

		For the Years Ended
		September 29, 2017				September 30, 2016				October 2, 2015
Aggregate Purchase Price Paid for Shares Sold:
Under the 1989 ESPP		$	21,084,657			$	23,631,241			$	28,621,800
Under the GESPP			2,105,834				2,660,067				3,535,479
Total		$	23,190,491			$	26,291,308			$	32,157,279
Aggregate Number of Shares Sold:
Under the 1989 ESPP			403,652				564,461				696,853
Under the GESPP			39,648				63,196				84,361
Total			443,300				627,657				781,214

On January 19, 2017, the Company’s stockholders approved an increase in the number of shares authorized by 4,350,000 shares for the 1989 ESPP and by 150,000 shares for the GESPP.

At September 29, 2017, there remains 4,545,854 shares reserved for issuance under the 1989 ESPP and 174,980 shares reserved for issuance under the GESPP.

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 ("SARs"), 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 29, 2017			9,641,396				539,787				10,181,183
Number of shares relating to outstanding stock options at September 29, 2017			2,289,450				227,375				2,516,825
Number of shares available for future awards:
At September 29, 2017			7,351,946				312,412				7,664,358
At September 30, 2016			7,233,173				319,535				7,552,708

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”).

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JACOBS ENGINEERING GROUP INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

The following table presents the Fair Value of shares (of restricted stock and restricted stock units) vested for the years ended September 29, 2017, September 30, 2016 and October 2, 2015 (in thousands):

		For the Years Ended
		September 29, 2017				September 30, 2016				October 2, 2015
Restricted Stock and Restricted Stock Units (service condition)		$	34,466			$	17,481			$	18,568
Restricted Stock Units (service, market, and performance conditions at target)			4,183				4,336				11,264
Total		$	38,649			$	21,817			$	29,832

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 for the years ended September 29, 2017, September 30, 2016 and October 2, 2015(in thousands):

				For the Years Ended
September 29, 2017				September 30, 2016				October 2, 2015
$	38,764			$	32,370			$	41,412

At September 29, 2017, the amount of compensation cost relating to nonvested awards not yet recognized in the financial statements is approximately $83.7 million. The majority of the unrecognized compensation costs will be recognized by the first quarter of fiscal 2019. The weighted average remaining contractual term of options currently exercisable is 4.8 years.

Stock Options

The following table summarizes the stock option activity for the years ended September 29, 2017, September 30, 2016 and October 2, 2015:

		Number of Stock Options				Weighted Average Exercise Price
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
Granted			—			$	—
Exercised			(906,648	)		$	43.79
Cancelled or expired			(154,039	)		$	48.79
Outstanding at September 29, 2017			2,516,825			$	46.19

F-21

JACOBS ENGINEERING GROUP INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

Stock options outstanding at September 29, 2017 consisted entirely of nonqualified stock options. The following table presents the total intrinsic value of stock options exercised for the fiscal years ended September 29, 2017, September 30, 2016 and October 2, 2015 (in thousands):

For the Years Ended
September 29, 2017				September 30, 2016				October 2, 2015
$	14,713			$	4,149			$	442

The total intrinsic value of stock options exercisable at September 29, 2017 was approximately $23.5 million. The following table presents certain other information regarding our 1999 SIP and 1999 OSDP for the fiscal years ended September 29, 2017, September 30, 2016 and October 2, 2015:

		September 29, 2017				September 30, 2016				October 2, 2015
At fiscal year end:
Range of exercise prices for options outstanding		$32.51–$80.63				$32.51–$80.63				$32.51–$80.63
Number of options exercisable			1,992,022				2,581,421				2,590,560
For the fiscal year:
Range of prices relating to options exercised		$37.03–$55.53				$36.88–$55.00				$25.87–$42.74
Estimated weighted average fair values of options granted		$	—			$	12.80			$	13.41

The following table presents certain information regarding stock options outstanding and stock options exercisable at September 29, 2017:

		September 29, 2017
		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			247,875				4.47			$	36.99				247,875			$	36.99
$37.43 - $46.09			1,360,188				5.63			$	42.69				890,206			$	42.65
$47.11 - $55.13			836,812				5.30			$	52.81				788,116			$	52.80
$60.08 - $80.63			71,950				4.23			$	66.92				65,825			$	67.52
			2,516,825				5.37			$	46.19				1,992,022			$	46.78

The 1999 ODSP and the 1999 SIP 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.

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JACOBS ENGINEERING GROUP INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

Restricted Stock

The following table presents the number of shares of restricted stock and restricted stock units issued as common stock under the 1999 SIP for the year ended September 29, 2017, September 30, 2016 and October 2, 2015:

		For the Years Ended
		September 29, 2017				September 30, 2016				October 2, 2015
Restricted stock			—				597,091				507,882
Restricted stock units (service condition)			496,951				183,131				126,635
Restricted stock units (service, market and performance conditions)			237,058				372,794				219,965

The amount of restricted stock units issued for awards with performance and market conditions in the above table are issued based on performance against 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 one 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 for the years ended September 29, 2017, September 30, 2016 and October 2, 2015:

		For the Years Ended
		September 29, 2017				September 30, 2016				October 2, 2015
Restricted stock			365,481				512,903				326,480
Restricted stock units (service condition)			128,536				177,640				70,296
Restricted stock units (service, market and performance conditions)			86,742				275,933				194,116

The amount of unvested restricted stock units cancelled for awards with service and performance conditions in the above table is based on the service period achieved and performance against the target amount.

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

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 29, 2017 under the 1999 SIP. Shares granted in the table below are granted on a 1.92 -to-1.00 basis (fungible):

		September 29, 2017
		Total
Restricted stock			950,593
Restricted stock units (service condition)			766,759
Restricted stock units (service, market and performance conditions)			672,440

F-23

JACOBS ENGINEERING GROUP INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

The following table presents the number of shares of restricted stock and restricted stock units issued under the 1999 ODSP for the years ended September 29, 2017, September 30, 2016 and October 2, 2015:

		For the Years Ended
		September 29, 2017				September 30, 2016				October 2, 2015
Restricted stock units (service condition)			21,123				23,090				13,500

The following table provides the number of shares of restricted stock and restricted stock units outstanding at September 29, 2017 under the 1999 ODSP:

		September 29, 2017
Restricted stock			34,000
Restricted stock units (service condition)			90,595

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

Modification

On January 18, 2017, the Company modified time vested outstanding restricted stock units, paid out in stock and cash, specifically to allow participants to be entitled to dividend equivalents during the vesting period on the outstanding RSUs. Dividends will be paid out at the end of the vesting period and are forfeitable before the vesting period concludes. This modification affected 786 employees and resulted in $1.1 million of incremental compensation cost and will be recognized over the remaining vesting period for each grant, since dividends are forfeitable until vesting is achieved.

4. Earnings Per Share

Basic and Diluted Earnings Per Share

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

F-24

JACOBS ENGINEERING GROUP INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

The following table reconciles the denominator used to compute basic EPS to the denominator used to compute diluted EPS for the years ended September 29, 2017, September 30, 2016 and October 2, 2015 (in thousands):

		For the Years Ended
		September 29, 2017				September 30, 2016				October 2, 2015
Numerator for Basic and Diluted EPS:
Net income		$	293,727			$	210,463			$	302,971
Net income allocated to participating securities			(3,077	)			—				—
Net income allocated to common stock for EPS calculation		$	290,650			$	210,463			$	302,971
Denominator for Basic and Diluted EPS:
Weighted average basic shares			119,370				120,133				125,007
Effect of dilutive securities:
Stock compensation plans			777				680				481
Restricted stock			1,319				670				622
Diluted shares			121,466				121,483				126,110
Shares allocated to participating securities			(1,319	)			—				—
Shares used for calculating diluted EPS attributable to common stock			120,147				121,483				126,110
Basic EPS		$	2.43			$	1.75			$	2.42
Diluted EPS		$	2.42			$	1.73			$	2.40

Share Repurchases

On July 23, 2015, the Board of Directors approved a share repurchase program to repurchase 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 and/or privately negotiated transactions. The 2015 Share Repurchase Program does 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 2017 (in thousands, except per-share amounts):

Amount Authorized (in thousands)				Average Price Per Share (1)				Shares Retired (In thousands)				Shares Repurchased (In thousands)
$	500,000			$	55.60				1,748				1,748

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

Dividend Program

On December 1, 2016, the Company announced that the Board of Directors has approved the initiation of a cash dividend program. Quarterly dividends of $0.15 per share were paid in each of the second, third and fourth quarters of fiscal

F-25

JACOBS ENGINEERING GROUP INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

2017. On September 27, 2017, the Board of Directors declared a quarterly cash dividend of $0.15 per share, which was paid on November 10, 2017. Future dividend payments are subject to review and approval by the Company’s Board of Directors.

2018. Restructuring and Other Charges

During the second fiscal quarter of 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. We refer to these initiatives, in the aggregate, as the "2015 Restructuring". These activities evolved and developed over time as management identified and evaluated opportunities for changes in the Company’s operations (and related areas of potential cost savings), as economic conditions changed and as the realignment of the Company’s operations into its four global lines of business was implemented. Actions related to the 2015 Restructuring included involuntary terminations, the abandonment of certain leased offices, combining operational organizations, and the co-location of employees into other existing offices. We did not exit any service types or client end-markets in connection with the 2015 Restructuring.

The majority of the costs associated with the 2015 Restructuring are included in SG&A expense in the Consolidated Statements of Earnings. The following table summarizes the impacts of the 2015 Restructuring on the Company's reportable segment income by line of business for the years ended September 29, 2017 and September 30, 2016 (in thousands):

	September 29, 2017			September 30, 2016
Aerospace & Technology	$	1,820		$	5,835
Buildings & Infrastructure		23,675			23,378
Industrial		6,698			29,690
Petroleum & Chemicals		36,664			87,188
Corporate		29,831			41,816
Total Restructuring Charges	$	98,688		$	187,907

Total 2015 restructuring charges were $157,192 for the year ended October 2, 2015. The activity in the Company’s accrual for the 2015 Restructuring for the year ended September 29, 2017 is as follows (in thousands):

Balance at September 30, 2016	$	152,174
Charges		98,688
Payments		(122,407	)
Balance at September 29, 2017	$	128,455

The following table summarizes the 2015 Restructuring by major type of restructuring costs for the years ended September 29, 2017 and September 30, 2016 (in thousands):

		For the Years Ended
		September 29, 2017				September 30, 2016				October 2, 2015
Lease Abandonments		$	55,647			$	92,643			$	90,569
Involuntary Terminations			30,716				85,599				55,313
Outside Services			4,236				7,398				12,734
Other restructuring related costs, net			8,089				2,267				(1,424	)
Total		$	98,688			$	187,907			$	157,192

F-26

JACOBS ENGINEERING GROUP INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

Cumulative amounts incurred to date for the 2015 Restructuring by each major type of restructuring costs as of September 29, 2017 is as follows (in thousands):

Lease Abandonments	$	238,859
Involuntary Terminations		171,628
Outside Services		24,368
Other restructuring related costs, net		8,932
Total	$	443,787

The 2015 Restructuring was completed in the fourth quarter of fiscal 2017.

Also, during the second fiscal quarter of 2017, the Company entered into strategic business restructuring activities associated with realignment of its Europe, U.K. and Middle East regional operations in our Buildings & Infrastructure segment. Pre-tax net charges of $22.6 million were recorded associated mainly with net realizable value write-offs on contract accounts receivable of $16.5 million, with additional charges recorded for statutory redundancy and severance costs of $1.4 million and other liabilities of $4.7 million which are both expected to be paid or settled within fiscal 2018. Additional charges of $1.2 million were recorded under this business exit during third quarter fiscal 2017 associated mainly with contract accounts receivable charges. Further, management has determined that these business restructuring activities do not qualify for discontinued operations treatment in accordance with U.S. GAAP.

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 $3.1 million outstanding under these short-term credit facilities at a weighted average interest rate of 4.33% at September 29, 2017, and there were borrowings of $2.4 million outstanding under these short-term credit facilities at September 30, 2016.

Long-term Debt

On February 7, 2014, the Company and certain of its subsidiaries entered into a $1.6 billion long-term unsecured, revolving credit facility (as amended the "Revolving Credit 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 29, 2017 and September 30, 2016 (dollars in thousands):

September 29, 2017						September 30, 2016
Principal Balance Outstanding				Range of Interest Rates		Principal Balance Outstanding				Range of Interest Rates
$	235,000			1.0% – 2.23%		$	385,330			1.0% – 1.65%

The total amount outstanding under the Revolving Credit Facility in the form of direct borrowings at September 29, 2017 was $235.0 million. The Company issued $2.5 million in letters of credit leaving $1.363 billion of available borrowing capacity under the Revolving Credit Facility at September 29, 2017. In addition, the Company had $259.6 million issued under separate, committed and uncommitted letter-of-credit facilities for total issued letters of credit of $262.1 million at September 29, 2017.

The Revolving Credit Facility expires in February 2020 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 Revolving Credit Facility. Depending on the Company's Consolidated Leverage Ratio, borrowings under the Revolving Credit Facility will bear interest at either a euro 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 Revolving Credit 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

F-27

JACOBS ENGINEERING GROUP INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

issued. The Revolving Credit 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 Revolving Credit 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 Revolving Credit 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 Revolving Credit Facility contains customary events of default. We were in compliance with these debt covenants at September 29, 2017.

On September 28, 2017, the Company entered into a Second Amendment to the Revolving Credit Facility, which provides for, among other things, an amendment to certain financial definitions used in the Revolving Credit Facility, including “Consolidated EBITDA”. These amendments are effective upon the consummation of the acquisition of CH2M.

On September 28, 2017, the Company entered into a $1.5 billion unsecured delayed-draw term loan facility (the “Term Loan Facility”) with a syndicate of financial institutions as lenders and letter of credit issuers and BNP Paribas as administrative agent, TD Bank, N.A. and U.S. Bank National Association as co-documentation agent, BNP Paribas Securities Corp., The Bank of Nova Scotia and Wells Fargo Securities, LLC as joint book runners, and as joint arrangers.

Subject to certain terms and conditions set forth therein, loans under the Term Loan Facility may be incurred on the day the CH2M acquisition is consummated in order to pay cash consideration for the acquisition, and to pay fees and expenses related to the acquisition and the Term Loan Facility. The Term Loan Facility has a three year maturity from the date of initial funding and permits the Company to borrow in U.S. dollars at a base rate or a eurocurrency rate. Depending on the Company’s consolidated leverage ratio, borrowings under the Term Loan Facility will bear interest at either a eurocurrency rate plus a margin of between 1.00% and 1.50% or a base rate plus a margin of between 0.00% and 0.50%. In addition, prior to the date the acquisition is consummated, the Company must pay a ticking fee of between 0.10% and 0.25% of unused commitments under the Term Loan Facility. Amounts outstanding under the Term Loan 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 Term Loan Facility contains affirmative, negative and financial covenants customary for financings of this type, including, among other things, limitations on certain other indebtedness, investments, liens, mergers, asset sales and transactions with affiliates. In addition, the Term Loan Facility contains customary events of default. We were in compliance with these covenants at September 29, 2017.

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

		2017				2016
Maximum amount outstanding at any month-end during the fiscal year		$	659,103			$	958,460
Average amount outstanding during the year		$	639,210			$	825,641
Weighted average interest rate during the year			1.67	%			1.39	%

The following table presents the amount of interest paid by the Company during September 29, 2017, September 30, 2016 and October 2, 2015 (in thousands):

For the Years Ended
September 29, 2017				September 30, 2016				October 2, 2015
$	12,862			$	13,282			$	15,506

F-28

JACOBS ENGINEERING GROUP INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

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 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.) for the years ended September 29, 2017 and September 30, 2016 (in thousands):

		U.S. Pension Plans								Non-U.S. Pension Plans
		September 29, 2017				September 30, 2016				September 29, 2017				September 30, 2016
Net benefit obligation at the beginning of the year		$	185,664			$	533,665			$	1,363,782			$	1,155,592
Service cost			1,000				9,875				7,509				14,378
Interest cost			5,757				16,746				31,205				38,892
Participants’ contributions			—				1,847				250				2,255
Actuarial (gains)/losses			(9,922	)			29,129				(142,273	)			382,691
Benefits paid			(14,338	)			(14,143	)			(40,208	)			(32,277	)
Curtailments/settlements			—				(35,224	)			(1,375	)			(35,375	)
Transfers *			—				(356,231	)			—				—
Effect of exchange rate changes and other, net			1,781				—				87,917				(162,374	)
Net benefit obligation at the end of the year		$	169,942			$	185,664			$	1,306,807			$	1,363,782
* Pension plan transferred to a new sponsor 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.) for the year ended September 29, 2017 and September 30, 2016 (in thousands):

		U.S. Pension Plans								Non-U.S. Pension Plans
		September 29, 2017				September 30, 2016				September 29, 2017				October 2, 2016
Fair value of plan assets at the beginning of the year		$	142,464			$	379,907			$	1,003,911			$	896,298
Actual return on plan assets			18,662				28,835				16,789				242,927
Employer contributions			1,000				10,213				21,005				23,217
Participants’ contributions			—				1,847				250				2,255
Gross benefits paid			(14,338	)			(14,143	)			(40,208	)			(32,277	)
Curtailments/settlements			—				(35,224	)			(228	)			(1,863	)
Transfers*			—				(228,971	)			—				—
Effect of exchange rate changes and other, net			—				—				75,409				(126,646	)
Fair value of plan assets at the end of the year		$	147,788			$	142,464			$	1,076,928			$	1,003,911
* Pension plan transferred to a new sponsor for the plan

F-29

JACOBS ENGINEERING GROUP INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

During fiscal 2017 we curtailed the pension plan in Ireland and in fiscal 2016 we curtailed our U.K. and French pension plans.

The following table reconciles the combined funded statuses of the plans recognized in the accompanying Consolidated Balance Sheets at September 29, 2017 and September 30, 2016 (segregated between plans existing within and outside the U.S.) (in thousands):

		U.S. Pension Plans								Non-U.S. Pension Plans
		September 29, 2017				September 30, 2016				September 29, 2017				September 30, 2016
Net benefit obligation at the end of the year		$	169,942			$	185,664			$	1,306,807			$	1,363,782
Fair value of plan assets at the end of the year			147,788				142,464				1,076,928				1,003,911
Under funded amount recognized at the end of the year		$	22,154			$	43,200			$	229,879			$	359,871

The following table presents the accumulated benefit obligation at September 29, 2017 and September 30, 2016 (segregated between plans existing within and outside the U.S.) (in thousands):

		U.S. Pension Plans								Non-U.S. Pension Plans
		September 29, 2017				September 30, 2016				September 29, 2017				September 30, 2016
Accumulated benefit obligation at the end of the year		$	169,942			$	185,664			$	1,291,600			$	1,331,884

The following table presents the amounts recognized in the accompanying Consolidated Balance Sheets at September 29, 2017 and September 30, 2016 (segregated between plans existing within and outside the U.S.) (in thousands):

		U.S. Pension Plans								Non-U.S. Pension Plans
		September 29, 2017				September 30, 2016				September 29, 2017				September 30, 2016
Prepaid benefit cost included in prepaid assets		$	—			$	—			$	3,035			$	492
Accrued benefit cost included in current liabilities			—				—				585				608
Accrued benefit cost included in noncurrent liabilities			22,154				43,200				232,329				359,755
Net amount recognized at the end of the year		$	22,154			$	43,200			$	229,879			$	359,871

In fiscal 2015 and through June 30, 2016, we were responsible for administering a U.S. pension plan for participating employees who were 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. 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 the years ended September 29, 2017, September 30, 2016 and October 2, 2015:

		For the Year Ended
		September 29, 2017				September 30, 2016				October 2, 2015
Weighted average discount rates			3.5	%		3.2				3.9% to 4.0%
Rates of compensation increases			—	%			—	%			3.0	%
Return on Assets			7.5	%			7.4	%			7.4	%

F-30

JACOBS ENGINEERING GROUP INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

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 the years ended September 29, 2017, September 30, 2016 and October 2, 2015:

		September 29, 2017		September 30, 2016		October 2, 2015
Weighted average discount rates		1.3% to 7.0%		0.7% to 7.0%		1.6% to 7.8%
Rates of compensation increases		2.5% to 7.5%		2.5% to 7.5%		2.4% to 7.5%
Expected long-term rates of return on assets		3.5% to 8.5%		3.5% to 8.5%		3.5% to 8.5%

The following table presents certain amounts relating to our U.S. pension plans recognized in accumulated other comprehensive (gain) loss at September 29, 2017, September 30, 2016 and October 2, 2015 (in thousands):

		September 29, 2017				September 30, 2016				October 2, 2015
Arising during the period:
Net actuarial (gain) loss		$	(11,372	)		$	4,337			$	12,237
Reclassification adjustments:
Net actuarial losses			(2,431	)			(2,312	)			(2,347	)
Total		$	(13,803	)		$	2,025			$	9,890

The following table presents certain amounts relating to our non-U.S. pension plans recognized in accumulated other comprehensive (gain) loss at September 29, 2017, September 30, 2016 and October 2, 2015 (in thousands):

		September 29, 2017				September 30, 2016				October 2, 2015
Arising during the period:
Net actuarial (gain) loss		$	(76,860	)		$	102,925			$	(27,165	)
Prior service cost (benefit)			119				580				(1,512	)
Total			(76,741	)			103,505				(28,677	)
Reclassification adjustments:
Net actuarial losses			(8,732	)			(7,508	)			(14,034	)
Prior service cost			229				163				51
Total			(8,503	)			(7,345	)			(13,983	)
Total		$	(85,244	)		$	96,160			$	(42,660	)

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 29, 2017, and September 30, 2016 (segregated between U.S. and non-U.S. plans) (in thousands):

		U.S. Pension Plans								Non-U.S. Pension Plans
		September 29, 2017				September 30, 2016				September 29, 2017				September 30, 2016
Net actuarial loss		$	47,681			$	61,483			$	218,752			$	304,345
Prior service cost			—				—				(855	)			(1,203	)
Total		$	47,681			$	61,483			$	217,897			$	303,142

F-31

JACOBS ENGINEERING GROUP INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

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 2018 based on 2017 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		$	3,325			$	6,829
Unrecognized prior service cost			—				(277	)
Accumulated comprehensive loss to be recorded against earnings		$	3,325			$	6,552

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 (although some plans may hold shares indirectly through investments in mutual funds). The plans’ weighted average asset allocations at September 29, 2017 and September 30, 2016 (the measurement dates used in valuing the plans’ assets and liabilities) were as follows:

		U.S. Pension Plans								Non-U.S. Pension Pans
		September 29, 2017				September 30, 2016				September 29, 2017				September 30, 2016
Equity securities			70	%			71	%			24	%			25	%
Debt securities			23	%			20	%			32	%			32	%
Real estate investments			—	%			2	%			5	%			6	%
Other			7	%			7	%			39	%			37	%

The following table presents the Fair Value of the Company’s Domestic U.S. plan assets at September 29, 2017, segregated by level of Fair Value measurement inputs within the Fair Value hierarchy promulgated by U.S. GAAP (in thousands):

		September 29, 2017
		Fair Value, Determined Using Fair Value Measurement Inputs
		Level 1				Level 3				Total
U.S. Domestic equities		$	103,760			$	—			$	103,760
U.S. Domestic bonds			33,404				—				33,404
Cash and equivalents			4,448				—				4,448
Hedge funds			—				6,176				6,176
Total		$	141,612			$	6,176			$	147,788

F-32

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 September 29, 2017, segregated by level of Fair Value measurement inputs within the Fair Value hierarchy promulgated by U.S. GAAP (in thousands):

		September 29, 2017
		Fair Value, Determined Using Fair Value Measurement Inputs
		Level 1				Level 3				Total
U.S. Domestic equities		$	30,916			$	—			$	30,916
Overseas equities			229,205				—				229,205
U.S. Domestic bonds			263,145				—				263,145
Overseas bonds			77,682				—				77,682
Cash and equivalents			38,924				—				38,924
Real estate			—				58,974				58,974
Insurance contracts			—				74,353				74,353
Other			—				303,729				303,729
Total		$	639,872			$	437,056			$	1,076,928

The following table presents the Fair Value of the Company’s 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):

		September 30, 2016
		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):

		September 30, 2016
		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

At September 29, 2017 and September 30, 2016, the Company holds no assets in the U.S. or non-U.S. pension plans that use Level 2 fair value measurement inputs.

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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 U.S. Pension Plans’ Level 3 assets for the year ended September 29, 2017 (in thousands):

		Real Estate				Hedge Funds
Balance at September 30, 2016		$	3,477			$	5,715
Purchases, sales, and settlements			(3,477	)			(557	)
Realized and unrealized gains			—				1,018
Balance at September 29, 2017		$	—			$	6,176

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 29, 2017 (in thousands):

		Real Estate				Insurance Contracts				Hedge Funds
Balance at September 30, 2016		$	55,665			$	39,473			$	272,517
Purchases, sales, and settlements			(1,199	)			422				(9,022	)
Realized and unrealized gains (losses)			2,642				(7,572	)			19,662
Transfers			—				40,031				11,758
Effect of exchange rate changes			1,866				1,999				8,814
Balance at September 29, 2017		$	58,974			$	74,353			$	303,729

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 at October 2, 2015		$	9,914			$	16,372
Purchases			(6,530	)			(10,788	)
Realized and unrealized gains			93				131
Balance at September 30, 2016		$	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 at October 2, 2015		$	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 at September 30, 2016		$	55,665			$	39,473			$	272,517

The following table presents the amount of cash contributions we anticipate making into the plans during fiscal 2018 (in thousands):

		U.S. Pension Plans				Non-U.S. Pension Pans
Anticipated cash contributions		$	1,300			$	22,574

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JACOBS ENGINEERING GROUP INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

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
2018		$	21,506			$	31,063
2019			11,372				32,509
2020			11,377				32,923
2021			11,472				36,220
2022			11,485				38,086
For the periods 2023 through 2027			54,747				231,183

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 the years ended September 29, 2017, September 30, 2016 and October 2, 2015 (in thousands):

		September 29, 2017				September 30, 2016				October 2, 2015
Service cost		$	1,000			$	9,875			$	12,045
Interest cost			5,757				16,746				20,629
Expected return on plan assets			(9,942	)			(22,368	)			(29,526	)
Actuarial loss			3,985				7,512				3,756
Prior service cost			—				(176	)			(239	)
Net pension cost, before special items			800				11,589				6,665
Contractual expense/Settlement loss			1,781				8,061				—
Total net periodic pension cost recognized		$	2,581			$	19,650			$	6,665

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.

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 the years ended September 29, 2017, September 30, 2016 and October 2, 2015 (in thousands):

		September 29, 2017				September 30, 2016				October 2, 2015
Service cost		$	7,509			$	14,378			$	21,374
Interest cost			31,205				38,892				44,659
Expected return on plan assets			(56,269	)			(50,190	)			(53,052	)
Actuarial loss			10,616				9,092				17,398
Prior service cost			(329	)			(260	)			(96	)
Net pension cost, before special items			(7,268	)			11,912				30,283
Curtailments and settlements			(298	)			(7,512	)			255
Total net periodic pension cost recognized		$	(7,566	)		$	4,400			$	30,538

The fiscal 2016 settlement loss included in the Non-U.S. pension plan net periodic benefit cost table above related to the 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

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

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 for the years ended September 29, 2017, September 30, 2016 and October 2, 2015 (in thousands):

		September 29, 2017				September 30, 2016				October 2, 2015
Canada		$	35,182			$	44,912			$	42,575
Europe		$	6,212			$	8,771			$	10,902
United States		$	4,548			$	5,058			$	5,968
Contributions to multiemployer pension plans		$	45,942			$	58,741			$	59,445

Other Benefit Plans

During the second fiscal quarter of 2017, the Company restructured certain employee welfare trust plans benefitting certain of its employees within its India operations by moving these plans under the legal ownership and operation of the Company’s legal entity structure in the region. Historically, the Company structured these plans as separate, stand-alone entities outside of the Company’s consolidated legal entity framework. As a result of these changes, the Company has recorded a one-time, non-cash benefit of $9.9 million reported in SG&A expense in its Consolidated Statement of Earnings for the year ended September 29, 2017, with corresponding assets in the plans associated with restricted investments of $7.7 million and employee loans receivable of $2.2 million and both recorded in Total other non-current assets in our Consolidated Balance Sheet at September 29, 2017.

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 SG&A expenses in the Company's Consolidated Statements of Earnings for the years ended September 29, 2017, September 30, 2016 and October 2, 2015 related to the Company's defined benefit pension plans (in thousands):

		September 29, 2017				September 30, 2016				October 2, 2015
Amortization of Defined Benefit Items:
Actuarial losses		$	(14,601	)		$	(12,880	)		$	(21,153	)
Prior service cost			328				260				96
Total Before Income Tax			(14,273	)			(12,620	)			(21,057	)
Income Tax Benefit			3,339				2,963				4,727
Total reclassifications after-tax		$	(10,934	)		$	(9,657	)		$	(16,330	)

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

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JACOBS ENGINEERING GROUP INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

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 for the years ended September 29, 2017, September 30, 2016 and October 2, 2015 (in thousands):

September 29, 2017				September 30, 2016				October 2, 2015
$	82,882			$	89,966			$	87,973

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 for the years ended September 29, 2017, September 30, 2016 and October 2, 2015 (in thousands):

September 29, 2017				September 30, 2016				October 2, 2015
$	4,368			$	5,792			$	5,536

10. Income Taxes

The following table presents the components of our consolidated income tax expense for years ended September 29, 2017, September 30, 2016 and October 2, 2015 (in thousands):

		For the Years Ended
		September 29, 2017				September 30, 2016				October 2, 2015
Current income tax expense:
Federal		$	29,297			$	36,020			$	72,840
State			8,535				11,336				16,248
Foreign			31,347				52,259				43,344
Total current tax expense			69,179				99,615				132,432
Deferred income tax expense (benefit):
Federal			29,390				6,439				13,337
State			3,407				485				2,295
Foreign			3,866				(34,331	)			(46,809	)
Total deferred tax expense (benefit)			36,663				(27,407	)			(31,177	)
Consolidated income tax expense		$	105,842			$	72,208			$	101,255

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

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 29, 2017 and September 30, 2016 (in thousands):

		September 29, 2017				September 30, 2016
Deferred tax assets:
Obligations relating to:
Defined benefit pension plans		$	52,299			$	77,834
Other employee benefit plans			192,299				179,063
Net Operating Losses			136,783				139,125
Self-insurance programs			489				1,722
Contract revenues and costs			(18,374	)			(8,177	)
Deferred Rent			25,654				7,955
Restructuring			18,258				47,792
Other			19,389				9,933
Valuation Allowance			(58,097	)			(41,684	)
Gross deferred tax assets			368,700				413,563
Deferred tax liabilities:
Depreciation and amortization			(176,327	)			(154,939	)
Other, net			(1,438	)			(1,555	)
Gross deferred tax liabilities			(177,765	)			(156,494	)
Net deferred tax assets		$	190,935			$	257,069

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 29, 2017 and September 30, 2016 was $58.1 million and $41.7 million, respectively.

Net operating loss carry forwards of foreign subsidiaries at September 29, 2017 and September 30, 2016 totaled $490.9 million and $483.4 million, respectively. If unused, foreign net operating losses of $117.1 million will expire between 2018 and 2037. Net operating losses of $373.8 million can be carried forward indefinitely.

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 for the years ended September 29, 2017, September 30, 2016 and October 2, 2015 (in millions):

For the Years Ended
September 29, 2017				September 30, 2016				October 2, 2015
$	5.20			$	1.50			$	0.20

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JACOBS ENGINEERING GROUP INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

The Company’s consolidated effective income tax rate is generally lower than the US statutory rate of 35% primarily due to the impacts of favorable tax rate differences in our foreign operations. 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 the years ended September 29, 2017, September 30, 2016 and October 2, 2015 (dollars in thousands):

	For the Years Ended
		September 29, 2017			%				September 30, 2016							%			October 2, 2015						%
Statutory amount		$	137,626		35.0%			$		100,353						35.0%			$			150,548			35.0%
State taxes, net of the federal benefit			8,955		2.3%					7,853						2.7%						12,857			3.0%
Exclusion of tax on non-controlling interests			2,223		0.6%					(1,418					)	(0.5%		)				(9,069		)	(2.1%)
Foreign:
Difference in tax rates of foreign operations			(16,987	)	(4.3%	)				(17,184					)	(6.0%		)				(19,180		)	(4.5%)
Benefit from foreign valuation allowance release			(3,085	)	(0.8%	)				(11,182					)	(3.9%		)				(3,372		)	(0.8%)
Tax deductible foreign currency loss			—		0.0%					—						0.0%						(23,100		)	(5.4%)
U.K. tax rate change on deferred tax assets			—		0.0%					8,853						3.1%						—			0.0%
Nontaxable income from foreign affiliate			(3,280	)	(0.8%	)				—						0.0%						—			0.0%
U.S. tax cost of foreign operations			18,612		4.7%					30,850						10.9%						6,814			1.6%
Tax differential on foreign earnings			(4,740	)	(1.2%	)				11,337						4.1%						(38,838		)	(9.0%)
Foreign tax credits			(20,454	)	(5.2%	)				(44,018					)	(15.4%		)				(21,313		)	(5.0%)
Uncertain tax positions			(5,779	)	(1.5%	)				1,449						0.5%						2,281			0.5%
Other items:
IRS §179D deduction			(3,351	)	(0.8%	)				(2,153					)	(0.8%		)				—			0.0%
IRS §199D deduction			(2,113	)	(0.5%	)				(2,800					)	(1.0%		)				(4,582		)	(1.1%)
Foreign partnership income/(loss)			(9,861	)	(2.5%	)				(2,658					)	(0.9%		)				11,858			2.8%
Other items – net			3,336		0.7%					4,263						1.5%						(2,487		)	(0.6%)
Total other items			(11,989	)	(3.1%	)				(3,348					)	(1.2%		)				4,789			1.1%
Taxes on income		$	105,842		26.9%			$		72,208						25.2%			$			101,255			23.5%

The Company’s consolidated effective income tax rate for the year ended September 29, 2017 increased to 26.9% from 25.2% for fiscal 2016. Key drivers for this year over year increase include the impacts of lower foreign tax credit benefits and lower benefits from valuation allowance releases on foreign deferred tax assets, partly offset by favorable impacts of U.S. tax cost of foreign operations, the non-recurrence of 2016 tax rate change impacts on deferred income tax assets in the UK and favorable impacts from change in uncertain tax positions.

The Company’s consolidated effective income tax rate for the year ended September 30, 2016 increased to 25.2% from 23.5% for fiscal 2015. The primary components of this increase in tax rate were due mainly to unfavorable impacts from U.S. tax cost of foreign operations, the non-recurrence of tax deductible foreign currency losses in fiscal 2015, unfavorable impacts from U.K. tax rates changes on deferred tax assets and other unfavorable items. These unfavorable impacts on the tax rate were partly offset by favorable foreign tax credits year over year, favorable income levels from our foreign partnerships in 2016 and comparably higher benefits from foreign valuation allowance releases in fiscal 2016.

The following table presents income tax payments made during the years ended September 29, 2017, September 30, 2016 and October 2, 2015 (in millions):

September 29, 2017				September 30, 2016				October 2, 2015
$	78.39			$	116.30			$	156.50

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JACOBS ENGINEERING GROUP INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

The following table presents the components of our consolidated earnings before taxes for the years ended September 29, 2017, September 30, 2016 and October 2, 2015 (in thousands):

		For the Years Ended
		September 29, 2017				September 30, 2016				October 2, 2015
United States earnings		$	232,342			$	206,159			$	283,504
Foreign earnings			160,875				80,564				146,633
		$	393,217			$	286,723			$	430,137

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 29, 2017, approximately $26.1 million of such undistributed earnings of certain foreign subsidiaries have been permanently reinvested. Should these earnings be repatriated, approximately $6.0 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 $38.6 million and $44.2 million at September 29, 2017 and September 30, 2016, respectively, all of which, if recognized, would affect the Company’s consolidated effective income tax rate. The Company had $36.6 million and $36.4 million in accrued interest and penalties at September 29, 2017 and September 30, 2016, respectively. The Company estimates that, within 12 months, $6.5 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 29, 2017, the Company’s U.S. federal income tax returns for tax years 2015 and forward remain subject to examination.

The following table presents the reconciliation of the beginning and ending amount of unrecognized tax benefits for the years ended September 29, 2017, September 30, 2016 and October 2, 2015 (in thousands):

		For the Years Ended
		September 29, 2017				September 30, 2016				October 2, 2015
Balance, beginning of year		$	44,167			$	42,666			$	41,923
Additions based on tax positions related to the current year			5,900				5,670				6,440
Additions for tax positions of prior years			237				367				—
Reductions for tax positions of prior years			(4,524	)			(2,451	)			(5,697	)
Settlement			(7,200	)			(2,085	)			—
Balance, end of year		$	38,580			$	44,167			$	42,666

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JACOBS ENGINEERING GROUP INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

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 $753,102 million at September 29, 2017, payable as follows (in thousands):

In fiscal years,
2018		$	139,967
2019			133,609
2020			118,207
2021			97,062
2022			104,990
Thereafter			174,269
			768,104
Amounts representing sublease income			(15,002	)
		$	753,102

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 for the years ended September 29, 2017, September 30, 2016 and October 2, 2015 (in thousands):

		For the Years Ended
		September 29, 2017				September 30, 2016				October 2, 2015
Rent expense		$	145,344			$	151,539			$	175,067
Sublease income			(7,052	)			(7,212	)			(5,275	)
Net rent		$	138,292			$	144,327			$	169,792

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 29, 2017.

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

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 29, 2017 totaled $262.1 million. Of this amount, $2.5 million has been issued under the Revolving Credit Facility and $259.6 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 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. Insurance recoveries are recorded as assets if recovery is probable. Estimated liabilities are not reduced by expected insurance recoveries.

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”) seeking monetary relief in excess of $8 billion from the Bechtel-Jacobs CEP Port Arthur Joint Venture (“BJJV”), a joint venture between Bechtel Corporation (“Bechtel”) and the Company. On December 30, 2016, the arbitral panel in this matter issued its unanimous decision, which rejected all of Motiva’s claims and assigned no liability to BJJV, the Company or Bechtel.

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,

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JACOBS ENGINEERING GROUP INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

design, engineering, and procurement services for the Nui Phao mine/mineral processing project in Vietnam. In the Notice of Arbitration dated February 1, 2016, and in a subsequently filed Statement of Claim and Supplementary Statement of Claim dated February 26, 2016, and an Amended Statement of Claim dated August 17, 2017, 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 is scheduled to begin on November 27, 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”) and subsequently 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 has alleged, among other things, that the Jacobs entities are required under California’s Contractors’ State License Law (“CSLL”) to disgorge certain fees paid by AOC, and the Jacobs entities have, among other things, cross-claimed for unpaid sums for work performed. On May 2, 2012, the jury returned a special verdict in favor of the Jacobs entities finding, among other things, 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 work performed. 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 JFI 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. The evidentiary hearing on substantial compliance was conducted between July 18 and August 5, 2016. On December 29, 2016, the court issued a Statement of Decision in favor of the Company, finding that Jacobs Facilities had substantially complied with the CSLL, and entered a judgment in favor of JPM in the amount of $4.7 million plus prejudgment interest. On January 30, 2017, AOC filed a notice of appeal and has filed its opening brief. The Company’s response is due in January 2018, subject to any extensions. 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 Company’s Board of Directors at the time each series is issued. Except as may be provided by the Company’s 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 Company’s Board of Directors from whatever assets are legally available for that purpose.

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

14. Other Financial Information

Receivables

The following table presents the components of “Receivables” as shown in the accompanying Consolidated Balance Sheets at September 29, 2017 and September 30, 2016 as well as certain other related information (in thousands):

		September 29, 2017				September 30, 2016
Amounts billed, net		$	949,060			$	1,110,042
Unbilled receivables and other			1,118,144				937,552
Retentions receivable			35,339				68,069
Total receivables, net		$	2,102,543			$	2,115,663
Other information about receivables:
Amounts due from the United States federal government included above, net of advanced billings		$	226,236			$	235,203
Claims receivable		$	4,600			$	26,061

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 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 29, 2017 and September 30, 2016 (in thousands):

		September 29, 2017				September 30, 2016
Land		$	17,197			$	16,680
Buildings			93,313				91,194
Equipment			627,609				531,539
Leasehold improvements			220,295				221,437
Construction in progress			21,300				36,764
			979,714				897,614
Accumulated depreciation and amortization			(629,803	)			(577,941	)
		$	349,911			$	319,673

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

Miscellaneous Noncurrent Assets

The following table presents the components of “Miscellaneous noncurrent assets” shown in the accompanying Consolidated Balance Sheets at September 29, 2017 and September 30, 2016 (in thousands):

		September 29, 2017				September 30, 2016
Deferred income taxes		$	368,700			$	413,563
Cash surrender value of life insurance policies			130,411				122,364
Investments			145,069				178,256
Notes receivable			17,839				18,303
Other			30,003				26,843
Total		$	692,022			$	759,329

Accrued Liabilities

The following table presents the components of “Accrued liabilities” shown in the accompanying Consolidated Balance Sheets at September 29, 2017 and September 30, 2016 (in thousands):

		September 29, 2017				September 30, 2016
Accrued payroll and related liabilities		$	572,946			$	561,652
Project-related accruals			71,815				102,400
Non project-related accruals			68,025				87,813
Insurance liabilities			67,546				54,984
Sales and other similar taxes			32,163				37,029
Deferred rent			60,593				69,059
Dividends payable			18,180				—
Other			48,419				25,441
Total		$	939,687			$	938,378

Other Deferred Liabilities

The following table presents the components of “Other deferred liabilities” shown in the accompanying Consolidated Balance Sheets at September 29, 2017 and September 30, 2016 (in thousands):

		September 29, 2017				September 30, 2016
Liabilities relating to defined benefit pension and early retirement plans		$	254,483			$	402,955
Liabilities relating to nonqualified deferred compensation Arrangements			114,616				123,926
Deferred income taxes			177,765				156,494
Miscellaneous			185,417				178,449
Total		$	732,281			$	861,824

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

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 29, 2017, and September 30, 2016 (in thousands):

		September 29, 2017				September 30, 2016
Foreign currency translation adjustments		$	(386,131	)		$	(245,603	)
Adjustments relating to defined benefit pension plans			(265,578	)			(364,625	)
Other			(1,805	)			(366	)
Total		$	(653,514	)		$	(610,594	)

Supplemental Cash Flow Information

During fiscal 2017 and fiscal 2016, the Company acquired businesses for cash of $150.2 million and cash and stock of $49.9 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):

		September 29, 2017				September 30, 2016
Working capital		$	9,121			$	10,023
Property and equipment			912				879
Noncurrent assets			35,976				8,192
Deferred liabilities			(273	)			—
Goodwill			104,454				30,849

15. Segment Information

During the second fiscal quarter of 2016, we reorganized our operations around four global lines of business (“LOB”), which also serve as our operating segments: Petroleum & Chemicals, Buildings & Infrastructure, Aerospace & Technology, and Industrial. We determined that this new organization would better support the needs of managing each unique set of customers that fall within each segment. As a result of the new organization, we subsequently realigned our internal reporting structures to enable our Chief Executive Officer, who is also our Chief Operating Decision Maker (“CODM”), to evaluate the performance of each of these segments and make appropriate resource allocations among each of the segments. For purposes of our goodwill impairment testing, we have determined that our operating segments are also our reporting units based on management’s conclusion that the components comprising each of our operating segments share similar economic characteristics and meet the aggregation criteria in accordance with ASC 350.

Under the current organization, each LOB has a president that reports directly to the Company's Chairman and CEO or CODM. In addition, the sales function, which had been managed centrally for many years, is now managed on an LOB basis, and accordingly, the associated cost is now embedded in the new segments and reported 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) is 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. The cost of the Company’s cash incentive plan, the Management Incentive Plan (“MIP”) and the expense associated with the Jacobs Engineering Group Inc. 1999 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 generally does not track assets by LOB, nor does it provide such information to the CODM.

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

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 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 (in thousands) and includes a reconciliation of segment operating profit to total U.S. GAAP operating profit by including certain corporate-level expenses and expenses relating to the Restructuring and other charges and CH2M professional fees and integration costs (in thousands).

		For the Years Ended
	September 29, 2017				September 30, 2016				October 2, 2015
Revenues from External Customers:
Aerospace & Technology	$	2,360,613			$	2,657,433			$	2,924,753
Buildings & Infrastructure		2,452,321				2,253,512				2,458,379
Industrial		2,743,662				2,793,713				2,517,571
Petroleum & Chemicals		2,466,192				3,259,499				4,214,129
Total	$	10,022,788			$	10,964,157			$	12,114,832

	For the Years Ended
	September 29, 2017				September 30, 2016				October 2, 2015
Operating Profit:
Aerospace & Technology	$	202,595			$	203,808			$	205,368
Buildings & Infrastructure (1)		193,455				174,648				145,299
Industrial		115,262				81,268				126,531
Petroleum & Chemicals		113,858				126,604				138,351
Total Segment Operating Profit		625,170				586,328				615,549
Other Corporate Items		(81,595	)			(60,100	)			(15,739	)
Restructuring and Other Charges		(134,206	)			(187,630	)			(154,283	)
CH2M Professional Fees and Integration Costs		(17,100	)			—				—
Total U.S. GAAP Operating Profit		392,269				338,598				445,527
Gain (Loss) on disposal of business and investments		10,880				(41,410	)			(2,909	)
Total Other Expense (2)		(9,932	)			(10,465	)			(12,481	)
Earnings Before Taxes	$	393,217			$	286,723			$	430,137

	(1)	Excludes $ 23,844 in restructuring and other charges for the fiscal year ended September 29, 2017.

	(2)	Years ending September 29, 2017 and September 30, 2016 include Restructuring and other charges of $1,233 and $277, respectively.

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 Management Incentive Plan 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 gain on disposal of business and investments for the year ended September 29, 2017 was a gain on the sale of the Company’s ownership interest in the Neste Jacobs joint venture. Included in loss on disposal of business and investments for the year ended September 30, 2016 was the losses associated with the sale of the Company’s French subsidiary and a non-cash write-off on an equity investment.

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

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 tables present total services revenues for each reportable segment for the three years ended September 29, 2017, September 30, 2016 and October 2, 2015 (in thousands):

			For the Year Ended
			September 29, 2017
			Aerospace & Technology			Buildings & Infrastructure				Industrial				Petroleum & Chemicals				Total
Technical Professional Services Revenues
Project Services		$	960,374			$	2,185,220			$	196,171			$	1,464,098			$	4,805,863
Process, Scientific and Systems Consulting			774,063				—				—				31,081				805,144
Total Technical Professional Services Revenues			1,734,437				2,185,220				196,171				1,495,179				5,611,007
Field Services Revenues
Construction			250,956				254,118				1,901,299				967,888				3,374,261
Operations and Maintenance ("O&M")			375,220				12,983				646,192				3,125				1,037,520
Total Field Services Revenues			626,176				267,101				2,547,491				971,013				4,411,781
Total Revenues		$	2,360,613			$	2,452,321			$	2,743,662			$	2,466,192			$	10,022,788

		For the Year Ended
		September 30, 2016
			Aerospace & Technology			Buildings & Infrastructure				Industrial				Petroleum & Chemicals				Total
Technical Professional Services Revenues
Project Services		$	910,290			$	2,094,282			$	891,018			$	1,843,250			$	5,738,840
Process, Scientific and Systems Consulting			803,654				—				—				48,675				852,329
Total Technical Professional Services Revenues			1,713,944				2,094,282				891,018				1,891,925				6,591,169
Field Services Revenues
Construction			171,614				119,463				1,601,562				1,366,251				3,258,890
Operations and Maintenance ("O&M")			771,875				39,767				301,133				1,323				1,114,098
Total Field Services Revenues			943,489				159,230				1,902,695				1,367,574				4,372,988
Total Revenues		$	2,657,433			$	2,253,512			$	2,793,713			$	3,259,499			$	10,964,157

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

The following table presents certain financial information by geographic area (in thousands):

		For the Years Ended
		September 29, 2017				September 30, 2016				October 2, 2015
Revenues:
United States		$	5,822,843			$	6,247,448			$	7,154,433
Europe			2,262,092				2,346,224				2,074,837
Canada			590,604				927,942				1,065,651
Asia			253,167				299,952				304,393
India			165,295				187,929				163,871
Australia and New Zealand			628,945				436,670				611,271
South America and Mexico			73,456				125,610				143,014
Middle East and Africa			226,386				392,382				597,362
Total		$	10,022,788			$	10,964,157			$	12,114,832
Property, equipment and improvements, net:
United States		$	220,416			$	195,392			$	208,155
Europe			46,108				37,163				55,713
Canada			18,435				21,464				36,647
Asia			2,793				3,069				3,859
India			19,191				13,350				16,264
Australia and New Zealand			18,692				18,888				24,460
South America and Mexico			4,619				5,621				9,127
Middle East and Africa			19,657				24,726				27,013
Total		$	349,911			$	319,673			$	381,238

Revenues were earned from unaffiliated clients located primarily within the various and respective geographic areas shown.

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 the Years Ended
September 29, 2017				September 30, 2016				October 2, 2015
	19.2%				21.4%				21.7%

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

16. Selected Quarterly Information — Unaudited

The following table presents selected quarterly financial information. (in thousands, except for per share amounts):

		First Quarter				Second Quarter				Third Quarter				Fourth Quarter				Fiscal Year
September 29, 2017
Revenues		$	2,551,604			$	2,302,567		(f)	$	2,514,751		(f)	$	2,653,866			$	10,022,788
Operating profit (a)			88,628				68,173		(f)		128,475		(f)		106,993				392,269
Earnings before taxes			85,880				60,491				127,396				119,450				393,217
Net earnings of the Group			61,153				44,165				88,629				93,428				287,375
Net earnings attributable to Jacobs			60,536		(f)		50,018		(f)		89,032		(f)		94,141		(f)(g)		293,727
Earnings per share:
Basic			0.50		(f)		0.41		(f)		0.74		(f)		0.78		(f)(g)		2.43
Diluted			0.50		(f)		0.41		(f)		0.74		(f)		0.78		(f)(g)		2.42
September 30, 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
October 2, 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)		0.25		(c)		2.42
Diluted			0.77				0.64		(c)		0.73		(c)		0.24		(c)		2.40

(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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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

(f)

Includes costs of $31.7 million, or $0.18 per diluted share, in the first quarter of fiscal 2017; includes $16.5 million in revenue, $72.2 million in operating profit, $45.2 million in net earnings attributable to Jacobs, or $0.37 per diluted share, in the second quarter of fiscal 2017; includes $1 million in revenue, $10.7 million in operating profit and $6.3 million in net earnings attributable to Jacobs, or $0.05 per diluted share, in the third quarter of fiscal 2017; includes $19.5 million in operating profit, $13.6 million in net earnings attributable to Jacobs, or $0.11 per diluted share, in the fourth quarter of fiscal 2017, in each case, related to restructuring and other charges.

(g)	Includes costs of $10.6 million, or $0.09 per diluted share, in the fourth quarter of fiscal 2017 related to professional fees and integration costs for the CH2M acquisition.

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 and restated. 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 and restated. The 1999 ODSP is a shareholder-approved, equity-based compensation plan covering Jacobs' non-management directors.

“1999 SIP” means the Jacobs Engineering Group Inc. 1999 Stock Incentive Plan, as amended and restated. 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 2017, fiscal 2016 and fiscal 2015 are pre-tax costs of $98.7 million, $187.9 million and $157.2 million, respectively, relating to the 2015 Restructuring. These costs are primarily included in SG&A 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 SG&A 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 are 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).

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

"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 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 29, 2017 and September 30, 2016, 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 29, 2017. 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 29, 2017 and September 30, 2016, and the consolidated results of their operations and their cash flows for each of the three fiscal years in the period ended September 29, 2017, 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 29, 2017, 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 21, 2017 expressed an unqualified opinion thereon.

/S/ Ernst & Young, LLP

Dallas, Texas

November 21, 2017

F-53

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 29, 2017, 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 29, 2017, 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 29, 2017 and September 30, 2016 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 29, 2017 of Jacobs Engineering Group Inc. and subsidiaries and our report dated November 21, 2017 expressed an unqualified opinion thereon.

/S/ Ernst & Young, LLP

Dallas, Texas

November 21, 2017

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