Item 15. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES

(a) Documents filed as part of this report:

(1)	The Company’s Consolidated Financial Statements at September 28, 2018 and September 29, 2017 and for each of the three years in the period ended September 28, 2018, 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.

(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.
2.3			Stock and Asset Purchase Agreement, dated as of October 21, 2018, by and among Jacobs Engineering Group Inc. and WorleyParsons Limited. Filed as Exhibit 2.1 to the Registrant's Current Report on Form 8-K on October 22, 2018 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 December 18, 2017. Filed as Exhibit 3.1 to the Registrant’s Current Report on Form 8-K on December 18, 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.
4.3			See Exhibit 10.7.
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.

Page 57

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			Note Purchase Agreement, dated March 12, 2018, by and between Jacobs Engineering Group Inc. and the Purchasers identified therein. Filed as Exhibit 4.1 to the Registrant’s Current Report on Form 8-K on March 13, 2018, and incorporated herein by reference.
10.8			First Amendment to the Note Purchase Agreement, dated May 11, 2018, by and among Jacobs Engineering Group Inc. and the Purchasers identified therein. Filed as Exhibit 10.1 to the Registrant’s Current Report on Form 8-K on May 15, 2018 and incorporated herein by reference.
10.9#			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.
10.10#			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.
10.11#			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.
10.12#			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
10.13#			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.
10.14#			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.
10.15#			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.
10.16#			Amended and Restated Employment Agreement between Jacobs Engineering Group Inc. and Gary Mandel, effective as of December 30, 2017. Filed as Exhibit 10.9 to the Registrant's Quarterly Report on Form 10-Q for the first quarter of fiscal 2018 and incorporated herein by reference.
10.17†#			Retirement Transition Agreement by and between Jacobs Engineering Group Inc. and Gary Mandel, dated November 20, 2018.

Page 58

10.18#			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.
10.19#			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.
10.20#			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.
10.21#			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.
10.22#			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.
10.23#			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.
10.24#			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.
10.25#			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.
10.26#			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.
10.27#			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.
10.28#			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.
10.29#			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.
10.30#			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.
10.31#			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.
10.32#			Jacobs Engineering Group Inc. Management Incentive Plan, as amended and restated effective November 19, 2015. Filed as an exhibit to the Registrant’s fiscal 2015 Annual Report on Form 10-K and incorporated herein by reference.
10.33#			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.
10.34#			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.

Page 59

10.35#			Jacobs Engineering Group Inc. 1999 Stock Incentive Plan, as amended and restated, effective January 18, 2018. Filed as Exhibit 10.10 to the Registrant's Quarterly Report on Form 10-Q for the first quarter of fiscal 2018 and incorporated herein by reference.
10.36#			Jacobs Engineering Group Inc. 1999 Outside Director Stock Plan, as amended and restated. Filed as Exhibit 10.11 to the Registrant's Quarterly Report on Form 10-Q for the first quarter of fiscal 2018 and incorporated herein by reference.
10.37#			Jacobs Engineering Group Inc. Executive Severance Plan, effective May 2, 2018. Filed as Exhibit 10.1 to the Registrant's Current Report on Form 8-K on May 4, 2018 and incorporated herein by reference.
10.38#			CH2M HILL Companies, Ltd. Supplemental Executive Retirement and Retention Plan, effective September 19, 2014. Filed as Exhibit 10.6 to CH2M's Annual Report on Form 10-K on February 25, 2015 and incorporated herein by reference.
10.39#			CH2M HILL Companies, Ltd. Amended and Restated Deferred Compensation Plan, effective November 13, 2014. Filed as Exhibit 10.5 to CH2M’s Annual Report on Form 10-K on February 25, 2015 and incorporated herein by reference.
10.40#			CH2M HILL Companies, Ltd. Amended and Restated Long-Term Incentive Plan, as amended effective December 15, 2017. Filed as Exhibit 10.3 to the Registrant's Quarterly Report on Form 10-Q for the first quarter of fiscal 2018 and incorporated herein by reference.
10.41#			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.
10.42#			Form of non-qualified 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.
10.43#			Form of non-qualified 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.
10.44#			Form of non-qualified 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.
10.45#			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.
10.46#			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.
10.47#			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.
10.48#			Form of Restricted Stock Unit Agreement (with dividend equivalent rights) (awarded pursuant to the Jacobs Engineering Group Inc. 1999 Stock Incentive Plan). Filed as Exhibit 10.39 to the Registrant's fiscal 2017 Annual Report on Form 10-K and incorporated herein by reference.
10.49#			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.

Page 60

10.50#			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.
10.51#			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.
10.52#			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.
10.53#			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). Filed as Exhibit 10.45 to the Registrant's fiscal 2017 Annual Report on Form 10-K and incorporated herein by reference.
10.54#			Form of Restricted Stock Unit Agreement (Performance Shares – ROIC – 2017 Award) (awarded pursuant to the Jacobs Engineering Group Inc. 1999 Stock Incentive Plan). Filed as Exhibit 10.46 to the Registrant's fiscal 2017 Annual Report on Form 10-K and incorporated herein by reference.
10.55#			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.
10.56#			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.
10.57#			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.
10.58#			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.
10.59#			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 third quarter of fiscal 2016 and incorporated herein by reference.
10.60#			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.
10.61#			Form of Restricted Stock Unit Agreement (Performance Shares - Earnings Per Share Growth - 2018 Award) (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 first quarter of fiscal 2018 and incorporated herein by reference.
10.62#			Form of Restricted Stock Unit Agreement (Performance Shares - ROIC - 2018 Award) (awarded pursuant to the Jacobs Engineering Group Inc. 1999 Stock Incentive Plan). Filed as Exhibit 10.5 to the Registrant's Quarterly Report on Form 10-Q for the first quarter of fiscal 2018 and incorporated herein by reference.
10.63#			Form of Restricted Stock Unit Agreement (Time-Based Vesting) (awarded pursuant to the Jacobs Engineering Group Inc. 1999 Stock Incentive Plan). Filed as Exhibit 10.6 to the Registrant's Quarterly Report on Form 10-Q for the first quarter of fiscal 2018 and incorporated herein by reference.

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10.64#			Form of Restricted Stock Unit Agreement (awarded pursuant to the Jacobs Engineering Group, Inc. 1999 Outside Director Stock Plan). Filed as Exhibit 10.7 to the Registrant's Quarterly Report on Form 10-Q for the first quarter of fiscal 2018 and incorporated herein by reference.
10.65#			Form of Summary Description of Amendment to CH2M 2017 Long-Term Incentive Plan Award Agreements. Filed as Exhibit 10.8 to the Registrant's Quarterly Report on Form 10-Q for the first quarter of fiscal 2018 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.

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, 2018		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:

Page 62

Signature		Title		Date
/S/ Steven J. Demetriou		Chairman of the Board and Chief Executive Officer (Principal Executive Officer)		November 21, 2018
Steven J. Demetriou
/S/ Joseph R. Bronson		Director		November 21, 2018
Joseph R. Bronson
/S/ Juan Jose Suarez Coppel		Director		November 21, 2018
Juan Jose Suarez Coppel
/S/ Robert C. Davidson, Jr.		Director		November 21, 2018
Robert C. Davidson, Jr.
/S/ Ralph E. Eberhart		Director		November 21, 2018
Ralph E. Eberhart
/S/ Dawne S. Hickton		Director		November 21, 2018
Dawne S. Hickton
/S/ Linda Fayne Levinson		Director		November 21, 2018
Linda Fayne Levinson
/S/ Robert A. McNamara		Director		November 21, 2018
Robert A. McNamara
/S/ Peter J. Robertson		Director		November 21, 2018
Peter J. Robertson
/S/ Christopher M.T. Thompson		Director		November 21, 2018
Christopher M.T. Thompson
/S/ Barry Williams		Director		November 21, 2018
Barry Williams
/S/ Kevin C. Berryman		Executive Vice President, Chief Financial Officer (Principal Financial Officer)		November 21, 2018
Kevin C. Berryman
/S/ William B. Allen		Senior Vice President and Chief Accounting Officer (Principal Accounting Officer)		November 21, 2018
William B. Allen

Page 63

JACOBS ENGINEERING GROUP INC. AND SUBSIDIARIES

CONSOLIDATED FINANCIAL STATEMENTS

WITH REPORTS OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

September 28, 2018

F - 1

JACOBS ENGINEERING GROUP INC. AND SUBSIDIARIES

INDEX TO CONSOLIDATED FINANCIAL STATEMENTS

September 28, 2018

Consolidated Balance Sheets at September 28, 2018 and September 29, 2017		F-3
Consolidated Statements of Earnings for the Fiscal Years Ended September 28, 2018, September 29, 2017 and September 30, 2016		F-4
Consolidated Statements of Comprehensive Income for the Fiscal Years Ended September 28, 2018, September 29, 2017 and September 30, 2016		F-5
Consolidated Statements of Changes in Stockholders’ Equity for the Fiscal Years Ended September 28, 2018, September 29, 2017 and September 30, 2016		F-6
Consolidated Statements of Cash Flows for the Fiscal Years Ended September 28, 2018, September 29, 2017 and September 30, 2016		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)

	September 28, 2018				September 29, 2017
ASSETS
Current Assets:
Cash and cash equivalents	$	793,358			$	774,151
Receivables	3,554,930				2,102,543
Prepaid expenses and other	208,296				119,486
Total current assets	4,556,584				2,996,180
Property, Equipment and Improvements, net	457,706				349,911
Other Noncurrent Assets:
Goodwill	6,103,856				3,009,826
Intangibles, net	655,957				332,920
Miscellaneous	871,692				692,022
Total other noncurrent assets	7,631,505				4,034,768
	$	12,645,795			$	7,380,859
LIABILITIES AND STOCKHOLDERS’ EQUITY
Current Liabilities:
Notes payable	$	4,954			$	3,071
Accounts payable	1,127,671				683,605
Accrued liabilities	1,488,629				939,687
Billings in excess of costs	524,439				299,864
Total current liabilities	3,145,693				1,926,227
Long-term Debt	2,146,877				235,000
Other Deferred Liabilities	1,408,871				732,281
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—142,217,933 shares and 120,385,544 shares as of September 28, 2018 and September 29, 2017, respectively	142,218				120,386
Additional paid-in capital	2,708,839				1,239,782
Retained earnings	3,809,991				3,721,698
Accumulated other comprehensive loss	(806,703		)		(653,514		)
Total Jacobs stockholders’ equity	5,854,345				4,428,352
Noncontrolling interests	90,009				58,999
Total Group stockholders’ equity	5,944,354				4,487,351
	$	12,645,795			$	7,380,859

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 28, 2018, September 29, 2017 and September 30, 2016

(In thousands, except per share information)

	September 28, 2018				September 29, 2017				September 30, 2016
Revenues	$	14,984,646			$	10,022,788			$	10,964,157
Direct cost of contracts	(12,156,276		)		(8,250,536		)		(9,196,326		)
Gross profit	2,828,370				1,772,252				1,767,831
Selling, general and administrative expenses	(2,180,399		)		(1,379,983		)		(1,429,233		)
Operating Profit	647,971				392,269				338,598
Other Income (Expense):
Interest income	8,984				8,748				7,848
Interest expense	(76,760		)		(12,035		)		(15,260		)
Gain (Loss) on disposal of business and investments	(20,967		)		10,880				(41,410		)
Miscellaneous income (expense), net	(4,523		)		(6,645		)		(3,053		)
Total other (expense) income, net	(93,266		)		948				(51,875		)
Earnings Before Taxes	554,705				393,217				286,723
Income Tax Expense	(381,563		)		(105,842		)		(72,208		)
Net Earnings of the Group	173,142				287,375				214,515
Net (Earnings) Loss Attributable to Noncontrolling Interests	(9,711		)		6,352				(4,052		)
Net Earnings Attributable to Jacobs	$	163,431			$	293,727			$	210,463
Net Earnings Per Share:
Basic	$	1.18			$	2.43			$	1.75
Diluted	$	1.17			$	2.42			$	1.73

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 28, 2018, September 29, 2017 and September 30, 2016

(In thousands)

	September 28, 2018				September 29, 2017				September 30, 2016
Net Earnings of the Group	$	173,142			$	287,375			$	214,515
Other Comprehensive Income (Loss):
Foreign currency translation adjustment	(109,877		)		(140,527		)		(46,515		)
Gain (loss) on cash flow hedges	118				(1,350		)		(1,403		)
Change in pension liabilities	(27,231		)		123,427				(111,488		)
Other comprehensive income (loss) before taxes	(136,990		)		(18,450		)		(159,406		)
Income Tax (Expense) Benefit:
Cash flow hedges	859				(90		)		273
Change in pension liabilities	(17,058		)		(24,380		)		13,303
Income Tax (Expense) Benefit:	(16,199		)		(24,470		)		13,576
Net other comprehensive income (loss)	(153,189		)		(42,920		)		(145,830		)
Net Comprehensive Income (Loss) of the Group	19,953				244,455				68,685
Net (Earnings) Loss Attributable to Noncontrolling Interests	(9,711		)		6,352				(4,052		)
Net Comprehensive Income (Loss) Attributable to Jacobs	$	10,242			$	250,807			$	64,633

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 28, 2018, September 29, 2017 and September 30, 2016

(In thousands)

	Common Stock				Additional Paid-in Capital				Retained Earnings				Accumulated Other Comp-rehensive Income (Loss)				Total Jacobs Stock-holders’ Equity				Non-controlling Interests				Total Group Stock-holders’ Equity
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
Net earnings	—				—				163,431				—				163,431				9,711				173,142
Foreign currency translation adjustments	—				—				—				(109,877		)		(109,877		)		—				(109,877		)
Pension liability, net of deferred taxes of $17,058	—				—				10,160				(44,289		)		(34,129		)		—				(34,129		)
Gain on derivatives, net of deferred taxes of $(859)	—				—				—				977				977				—				977
Noncontrolling interest acquired / consolidated	—				3,456				—				—				3,456				33,690				37,146
Dividends	—				—				(85,608		)		—				(85,608		)		—				(85,608		)
Distributions to noncontrolling interests	—				—				7,705				—				7,705				(12,391		)		(4,686		)
Stock based compensation	—				81,196				(1,954		)		—				79,242				—				79,242
Issuances of equity securities	21,881				1,385,316				(3,420		)		—				1,403,777				—				1,403,777
Repurchases of equity securities	(49		)		(911		)		(2,021		)		—				(2,981		)		—				(2,981		)
Balances at September 28, 2018	$	142,218			$	2,708,839			$	3,809,991			$	(806,703	)		$	5,854,345			$	90,009			$	5,944,354

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 28, 2018, September 29, 2017 and September 30, 2016

(In thousands)

	September 28, 2018				September 29, 2017				September 30, 2016
Cash Flows from Operating Activities:
Net earnings attributable to the Group	$	173,142			$	287,375			$	214,515
Adjustments to reconcile net earnings to net cash flows provided by operations:
Depreciation and amortization:
Property, equipment and improvements	117,856				76,418				82,363
Intangible assets	80,731				46,095				47,608
(Gain) loss on sales of businesses and investments	20,967				(10,058		)		41,410
Stock based compensation	79,242				38,764				32,370
Tax deficiency from stock based compensation	—				(2,877		)		(377		)
Equity in earnings of operating ventures, net	(2,639		)		(7,788		)		(11,892		)
(Gain) Losses on disposals of assets, net	17,491				14,876				10,680
Loss (gain) on pension plan changes	5,414				(9,955		)		—
Deferred income taxes	288,126				36,663				(27,407		)
Changes in assets and liabilities, excluding the effects of businesses acquired:
Receivables	(435,198		)		75,441				397,268
Prepaid expenses and other current assets	(19,134		)		(23,755		)		17,906
Accounts payable	183,057				153,961				(44,214		)
Accrued liabilities	(37,746		)		(56,279		)		(71,930		)
Billings in excess of costs	6,268				(31,976		)		33,347
Income taxes payable	68,970				4,264				(4,586		)
Other deferred liabilities	(79,280		)		(33,547		)		(37,605		)
Other, net	13,885				17,259				717
Net cash (used for) provided by operating activities	481,152				574,881				680,173
Cash Flows Used for Investing Activities:
Additions to property and equipment	(94,884		)		(118,060		)		(67,688		)
Disposals of property and equipment	3,293				2,387				10,479
Purchases of intangibles	—				—				(10,027		)
Distributions of capital from (contributions to) equity investees	(5,416		)		31,701				(3,403		)
Acquisitions of businesses, net of cash acquired	(1,488,336		)		(150,190		)		(49,943		)
Proceeds (payments) related to sales of businesses	7,736				(2,036		)		(19,039		)
Net cash used for investing activities	(1,577,607		)		(236,198		)		(139,621		)
Cash Flows Provided by Financing Activities:
Proceeds from long-term borrowings	5,784,355				1,694,023				1,649,653
Repayments of long-term borrowings	(4,572,182		)		(1,846,797		)		(1,840,789		)
Proceeds from short-term borrowings	712				1,347				3,040
Repayments of short-term borrowings	(3,391		)		(702		)		(14,042		)
Proceeds from issuances of common stock	53,584				62,645				43,140
Common stock repurchases	(2,981		)		(97,180		)		(152,550		)
Excess tax benefits from stock based compensation	—				2,877				377
Taxes paid on vested restricted stock	(31,108		)		—				—
Cash dividends, including to noncontrolling interests	(86,569		)		(58,793		)		(5,855		)
Net cash provided by (used for) financing activities	1,142,420				(242,580		)		(317,026		)
Effect of Exchange Rate Changes	(26,758		)		22,332				(28,669		)
Net Increase in Cash and Cash Equivalents	19,207				118,435				194,857
Cash and Cash Equivalents at the Beginning of the Period	774,151				655,716				460,859
Cash and Cash Equivalents at the End of the Period	$	793,358			$	774,151			$	655,716

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 28, 2018, September 29, 2017 and September 30, 2016 was as follows:

	For the Years Ended
	September 28, 2018			September 29, 2017			September 30, 2016
Cost-reimbursable	76	%		81	%		82	%
Fixed-price	24	%		19	%		18	%

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

The accompanying Consolidated Financial Statements have been prepared in accordance with accounting principles generally accepted in the United States ("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 2018, we reorganized our operating and reporting structure around three lines of business (“LOBs”). This reorganization occurred in conjunction with the integration of CH2M into the Company's legacy businesses, and was intended to better serve our global clients, leverage our workforce, help streamline operations and provide enhanced growth opportunities. The three global LOBs are as follows: Aerospace, Technology, Environmental and Nuclear ("ATEN"); Buildings, Infrastructure and Advanced Facilities ("BIAF"); and Energy, Chemicals and Resources ("ECR"). Previously, the Company operated its business around four global lines of businesses. For a further discussion of our segment information, please refer to Note 17- Segment Information.

2.	Significant Accounting Policies

Revenue Accounting for Contracts

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, unless they are directly associated with an anticipated contract and recoverability from that contract is probable. Contracts are generally segmented between types of services, such as engineering 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. 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.

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

F - 8

JACOBS ENGINEERING GROUP INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued)

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. 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.

Direct costs of contracts include all costs incurred in connection with and directly for the benefit of client contracts, including depreciation and amortization relating to assets used in providing the services required by the related projects. The level of direct costs of contracts may fluctuate between reporting periods due to a variety of factors, including the amount of pass-through costs we incur during a period. On those projects where we are responsible for subcontract labor or third-party materials and equipment, we reflect the amounts of such items in both revenues and costs (and we refer to such costs as “pass-through costs”). On other projects where the client elects to pay for such items directly and we have no associated responsibility for such items, these amounts are not considered pass-through costs and are, therefore, not reflected in either revenues or costs. To the extent that we incur a significant amount of pass-through costs in a period, our direct costs of contracts are likely to increase as well.

The following table sets forth pass-through costs included in revenues in the accompanying Consolidated Statements of Earnings (in millions):

For the Years Ended
September 28, 2018				September 29, 2017				September 30, 2016
$	3,058.6			$	2,539.3			$	2,489.9

Joint Ventures and VIEs

As is common to the industry, we execute certain contracts jointly with third parties through various forms of joint ventures. Although the joint ventures own and hold the contracts with the clients, the services required by the contracts are typically performed by us and our joint venture partners, or by other subcontractors under subcontracting agreements with the joint ventures. Many of these joint ventures are formed for a specific project. The assets of our joint ventures generally consist almost entirely of cash and receivables (representing amounts due from clients), and the liabilities of our joint ventures generally consist almost entirely of amounts due to the joint venture partners (for services provided by the partners to the joint ventures under their individual subcontracts) and other subcontractors. 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 or third-party debt or credit facilities. The debt held by the joint ventures is non-recourse to the general credit of Jacobs. The assets of a joint venture are restricted for use to the obligations of the particular joint venture and are not available for general operations of the Company. Our risk of loss on these arrangements is usually shared with our partners. The liability of each partner is usually joint and several, which means that each partner may become liable for the entire risk of loss on the project. Furthermore, on some of our projects, the Company has granted guarantees which may encumber both our contracting subsidiary company and the Company for the entire risk of loss on the project. See Note 15- Contractual Guarantees, Litigation, Investigations and Insurance for further discussion.

Many of the joint ventures are deemed to be variable interest entities (“VIE”) because they lack sufficient equity to finance the activities of the joint venture. The Company uses a qualitative approach to determine if the Company is the primary beneficiary of the VIE, which considers factors that indicate a party has the power to direct the activities that most significantly impact the joint venture’s economic performance. These factors include the composition of the governing board, how board decisions are approved, the powers granted to the operational manager(s) and partner that holds that position(s), and to a certain extent, the partner’s economic interest in the joint venture. The Company analyzes each joint venture initially to determine if it should be consolidated or unconsolidated.

•	Consolidated if the Company is the primary beneficiary of a VIE, or holds the majority of voting interests of a non-VIE (and no significant participative rights are available to the other partners).

•	Unconsolidated if the Company is not the primary beneficiary of a VIE, or does not hold the majority of voting interest of a non-VIE.

See Note 7-Joint Ventures and VIEs for further discussion.

F - 9

JACOBS ENGINEERING GROUP INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued)

Fair Value Measurements

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

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

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

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

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. See Note 9- Borrowings for a discussion of the fair value of long-term debt.

Certain other assets and liabilities, such as forward contracts and interest rate swap agreements we purchased as cash-flow hedges discussed in Note 14- 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.

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 awards (including restricted stock units) containing market conditions, compensation expense is based on the fair value of such awards using a Monte Carlo simulation. For restricted stock awards (including restricted stock units) containing service and performance conditions, compensation expense is based on the closing stock price on the date of grant.

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. Fixed income investment funds categorized as Level 2 are valued by the trustee using pricing models that use verifiable observable market data (e.g., interest rates and yield curves observable at commonly quoted intervals), bids provided by brokers or dealers, or quoted prices of securities with similar characteristics. 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 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

F - 10

JACOBS ENGINEERING GROUP INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued)

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 28, 2018 and September 29, 2017 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. Amounts billed, net consist of amounts invoiced to clients in accordance with the terms of our client contracts and are shown net of an allowance for doubtful accounts. We anticipate that substantially all of such billed amounts will be collected over the next twelve months.

Unbilled receivables and other and retentions receivable generally represent reimbursable costs, profit and amounts earned under contracts in progress, or in some cases completed, as of the respective balance sheet dates. Such amounts become billable according to the contract terms, which usually provide that such amounts become billable upon the passage of time, achievement of certain milestones or completion of the project. We anticipate that substantially all of such unbilled amounts will be billed and collected over the next fiscal year.

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

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

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 we test goodwill and intangible assets with indefinite lives for possible impairment. Intangible assets with finite lives are amortized on a straight-line basis over the useful lives of those assets.

During the quarter ended September 28, 2018, the Company voluntarily changed the date of its annual goodwill and indefinite-lived intangible asset impairment testing from the last day of the fiscal third quarter to the first day of the fourth quarter. This voluntary change is preferable under the circumstances as it results in better alignment with the Company’s strategic planning and forecasting process and provides the Company with additional time to complete its annual impairment testing. The voluntary change in accounting principle related to the annual testing date will not delay, accelerate or avoid an impairment charge. This change is not applied retrospectively as it is impracticable to do so because retrospective application would require application of significant estimates and assumptions with the use of hindsight. Accordingly, the change will be applied prospectively.

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. 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

F - 11

JACOBS ENGINEERING GROUP INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued)

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 2018, we completed our annual goodwill impairment test and quantitatively determined that none of our goodwill was impaired. We have determined that the fair value of our reporting units substantially exceeded their respective carrying values for the Consolidated Balance Sheets presented. The range of fair values (both ends of the range) for each reporting unit exceeded the respective book values by 31% to 132%. See Note 6- Goodwill and Intangibles.

Foreign Currencies

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

Share-Based Payments

We measure the value of services received from employees and directors in exchange for an award of an equity instrument based on the grant-date fair value of the award. The computed value is recognized as a non-cash cost on a straight-line basis over the period the individual provides services, which is typically the vesting period of the award with the exception of awards containing an internal performance measure, such as EPS growth and ROIC, 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.

During fiscal 2018, the Company adopted ASU No 2016-09, Improvements to Employee Share Based Payment Accounting. As a result, the cash paid by the Company to taxing authorities as a result of withholding shares for the exercise of employee stock awards is classified as financing activity and this change is adopted retrospectively. Additionally, all excess tax benefits related to share-based payments in our provision for income taxes are now classified as an operating activity along with other income taxes in the statement of cash flows and this change is applied prospectively. These items were historically recorded in additional paid-in capital and in financing activities. The amount recognized by the Company in excess tax benefits related to share-based payments in our provision for income taxes for the fiscal year ended September 28, 2018 was not material. Finally, we have elected to begin accounting for share-based compensation award forfeitures when they occur instead of estimating the number of forfeitures expected in accordance with the new guidance. This change in accounting policy for share-based compensation award forfeitures resulted in a $1.8 million cumulative effect of change in accounting principle to retained earnings in the Company’s Consolidated Balance Sheets.

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 contracts; the process for testing goodwill for

F - 12

JACOBS ENGINEERING GROUP INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued)

possible impairment; and the accounting for share-based payments to employees and directors. The following is a discussion of certain other significant accounting policies that rely on the use of estimates:

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

Accounting for Income Taxes - We determine our consolidated income tax expense using the asset and liability method prescribed by U.S. GAAP. Under this method, deferred tax assets and liabilities are recognized for the temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes and income tax purposes. Such deferred tax assets and liabilities are adjusted, as appropriate, to reflect changes in tax rates expected to be in effect when the temporary differences reverse. If and when we determine that a deferred tax asset will not be realized for its full amount, we will recognize and record a valuation allowance with a corresponding charge to earnings. Judgment is required in determining our 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 first fiscal quarter of 2018, the Company acquired CH2M HILL Companies, Ltd. ("CH2M"). 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. Other than the CH2M acquisition discussed in Note 5- Business Combinations, these acquisitions were not material to the Company’s consolidated results for fiscal 2018, 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 and initial funding commitments were made from each of the partners for $6.0 million in capital contributions each.

New Accounting Pronouncements

Revenue Recognition

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. The effective date for ASU 2014-09 is for annual reporting periods beginning after December 15, 2017 and interim periods therein.

F - 13

JACOBS ENGINEERING GROUP INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued)

The Company’s adoption activities have been performed over three phases: (i) assessment, (ii) design and (iii) implementation. As part of these phases, the Company has identified the following, potentially significant differences to date:

Performance Obligations

Under current U.S. GAAP, the Company typically segments contracts that contain multiple services by service type - for instance, engineering, procurement and construction services - for purposes of revenue recognition. Under ASU 2014-09, multiple-service contracts where the Company is responsible for providing a single deliverable (e.g., a constructed asset) will be treated as a single performance obligation for purposes of revenue recognition and thus no longer will be segmented. Typically, this will occur when the company is contracted to perform both engineering and construction on a project. In these circumstances, the timing and pattern of revenue recognition will change. The remainder of the Company's contracts will continue to be treated as having discrete units of account because they either contain only one service or because the Company has determined that the component services in the contract are distinct.

Contract Modifications

In many instances, the Company enters into separate contracts for related services (e.g., engineering and construction) but is held responsible for providing a single deliverable (“Phased Projects”). Under ASU 2014-09, the separate contracts may be required to be combined and treated as a single contract with one performance obligation. This modification or combination of contracts may result in a cumulative catchup 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. Based on the two noted changes above, the Company has identified selected changes to our systems, processes and internal controls and designed updates for each to meet the standard's revised reporting and disclosure requirements.

The Company will adopt the new standard using the Modified Retrospective application for periods beginning with the first fiscal quarter of 2019. This standard will impact the Company’s Consolidated Financial Statements and will its administrative operations. The impact will depend on the magnitude of the items discussed above. While the Company will continue to evaluate the impact through the implementation phase, we expect a reduction of retained earnings in our consolidated financial statements in the period of adoption due to revenue recognition timing for certain engineering and construction contracts shifting as a result of being accounted for as a single performance obligation. This adjustment will create a corresponding adjustment in the Company's consolidated financial statements to accounts receivable and unbilled receivables and to billings in excess of costs.

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 new guidance currently requires a modified retrospective transition approach for leases that exist or are entered into after the beginning of the earliest comparative period in the financial statements. ASU 2016-02 was further clarified and amended within ASU 2017-13, ASU 2018-01, ASU 2018-10 and ASU 2018-11 which included provisions that would provide us with the option to adopt the provisions of the new guidance using a modified retrospective transition approach, without adjusting the comparative periods presented. 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.

Other Pronouncements

In August 2017, the FASB issued ASU No. 2017-12, Derivatives and Hedging (Topic 815): Targeted Improvements to Accounting for Hedging Activities. ASU 2017-12 provides financial reporting improvements related to hedging relationships to better portray the economic results of an entity’s risk management activities in its financial statements. Additionally, ASU No. 2017-12 makes certain targeted improvements to simplify the application of the hedge accounting guidance. The revised guidance becomes effective for fiscal years beginning after December 15, 2018 with early adoption permitted. The Company is evaluating the impact of the new guidance on its consolidated financial statements. It is not expected that the updated guidance will have a significant impact on the Company’s consolidated financial statements.

ASU 2017-04, Simplifying the Test for Goodwill Impairment, is effective for fiscal years beginning after December 15, 2019 with early adoption permitted. ASU 2017-04 removes the second step of the goodwill impairment test, which requires a hypothetical purchase price allocation. An entity will now recognize a goodwill impairment charge for the amount by which a reporting unit's carrying value exceeds its fair value, not to exceed the amount of goodwill allocated. Management does not expect the adoption of ASU 2017-04 to have any impact on the Company's financial position, results of operations or cash flows.

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JACOBS ENGINEERING GROUP INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued)

In March 2017, the FASB issued ASU No. 2017-07, Compensation- Retirement Benefits (Topic 715): Improving the Presentation of Net Periodic Pension Cost and Net Periodic Postretirement Benefit Cost. This new standard intends to improve the presentation of net periodic pension cost and net periodic postretirement benefit cost. The new standard requires the service cost component of net periodic cost be reported in the same line item(s) as other employee compensation costs and all other components of the net periodic cost be reported in the consolidated statements of earnings and comprehensive income below operating income. ASU 2017-7 is effective for fiscal years beginning after December 15, 2017 for public companies and early adoption is permitted. Management is currently evaluating the impact that the adoption of ASU 2017-07 will have on the Company's financial position, results of operations and cash flows.

3.	Employee Stock Purchase and Stock Option Plans

Broad-Based, Employee Stock Purchase Plans

Under the 1989 ESPP and the GESPP, eligible employees who elect to participate in these plans are granted the right to purchase shares of the common stock of Jacobs at a discount that is limited to 5% of the per-share market value on the day shares are sold to employees. The following table summarizes the stock issuance activity under the 1989 ESPP and the GESPP for the fiscal years ended September 28, 2018, September 29, 2017 and September 30, 2016:

	For the Years Ended
	September 28, 2018				September 29, 2017				September 30, 2016
Aggregate Purchase Price Paid for Shares Sold:
Under the 1989 ESPP	$	21,590,858			$	21,084,657			$	23,631,241
Under the GESPP	2,240,609				2,105,834				2,660,067
Total	$	23,831,467			$	23,190,491			$	26,291,308
Aggregate Number of Shares Sold:
Under the 1989 ESPP	357,899				403,652				564,461
Under the GESPP	36,405				39,648				63,196
Total	394,304				443,300				627,657

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 28, 2018, there remains 4,187,955 shares reserved for issuance under the 1989 ESPP and 138,575 shares reserved for issuance under the GESPP.

Stock Incentive Plans

We also sponsor the 1999 Stock Incentive Plan, as amended and restated (the "SIP") and the 1999 Outside Director Stock Plan, as amended and restated (the "ODSP"). The 1999 SIP provides for the issuance of incentive stock options, non-qualified 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, restricted stock units and grants of non-qualified 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 28, 2018	6,911,375			486,755			7,398,130
Number of shares relating to outstanding stock options at September 28, 2018	1,575,634			191,125			1,766,759
Number of shares available for future awards:
At September 28, 2018	5,335,741			295,630			5,631,371
At September 29, 2017	7,351,946			312,412			7,664,358

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”).

F - 15

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 28, 2018, September 29, 2017 and September 30, 2016 (in thousands):

	For the Years Ended
	September 28, 2018				September 29, 2017				September 30, 2016
Restricted Stock and Restricted Stock Units (service condition)	$	64,121			$	34,466			$	17,481
Restricted Stock Units (service, market, and performance conditions at target)	2,626				4,183				4,336
Total	$	66,747			$	38,649			$	21,817

At September 28, 2018, the amount of compensation cost relating to non-vested awards not yet recognized in the financial statements is approximately $93.3 million. The majority of these unrecognized compensation costs will be recognized by the first quarter of fiscal 2020. The weighted average remaining contractual term of options currently exercisable is 4.3 years.

Stock Options

The following table summarizes the stock option activity for the years ended September 28, 2018, September 29, 2017 and September 30, 2016:

	Number of Stock Options			Weighted Average Exercise Price
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
Granted	—			$	—
Exercised	(636,019	)		$	46.93
Cancelled or expired	(114,047	)		$	52.26
Outstanding at September 28, 2018	1,766,759			$	45.53

Cash received from the exercise of stock options, net of tax remitted, during the year ended September 28, 2018 was $29.8 million.

Stock options outstanding at September 28, 2018 consisted entirely of non-qualified stock options. The following table presents the total intrinsic value of stock options exercised for the fiscal years ended September 28, 2018, September 29, 2017 and September 30, 2016 (in thousands):

For the Years Ended
September 28, 2018		September 29, 2017		September 30, 2016
$13,931		$14,713		$4,149

The total intrinsic value of stock options exercisable at September 28, 2018 was approximately $47.6 million. The following table presents certain other information regarding our 1999 SIP and 1999 OSDP for the fiscal years ended September 28, 2018,

F - 16

JACOBS ENGINEERING GROUP INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued)

September 29, 2017 and September 30, 2016:

	September 28, 2018				September 29, 2017				September 30, 2016
At fiscal year end:
Range of exercise prices for options outstanding	$32.51–$60.43				$32.51–$80.63				$32.51–$80.63
Number of options exercisable	1,557,900				1,992,022				2,581,421
For the fiscal year:
Range of prices relating to options exercised	$35.93–$61.26				$37.03–$55.53				$36.88–$55.00
Estimated weighted average fair values of options granted	$	—			$	—			$	12.80

The following table presents certain information regarding stock options outstanding and stock options exercisable at September 28, 2018:

	September 28, 2018
	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	153,000			3.49		$	37.01			153,000			$	37.01
$37.43 - $46.09	1,059,647			4.87		$	42.69			850,788			$	42.74
$47.11 - $55.13	513,237			4.48		$	52.74			513,237			$	52.74
$60.08 - $80.63	40,875			5.25		$	60.33			40,875			$	60.33
	1,766,759			4.65		$	45.53			1,557,900			$	45.93

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. The weighted average remaining contractual term of options currently exercisable is 4.30 years.

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 years ended September 28, 2018, September 29, 2017 and September 30, 2016:

	For the Years Ended
	September 28, 2018			September 29, 2017			September 30, 2016
Restricted stock	—			—			597,091
Restricted stock units (service condition)	1,087,724			496,951			183,131
Restricted stock units (service, market and performance conditions)	254,784			237,058			372,794

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 related to the awards.

The share amounts in the above tables reflect the Fungible share on a 1.92-to-1.00 basis of restricted stock and restricted stock unit issued.

The following table presents the number and weighted average grant-date fair value of restricted stock and restricted stock units at September 28, 2018:

F - 17

JACOBS ENGINEERING GROUP INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued)

Number of unvested Restricted Stock and Restricted Stock Units:	Number of Shares			Weighted Average Grant-Date Fair Value
Outstanding at September 29, 2017	2,514,387			$	49.62
Granted	1,364,128			$	65.64
Vested	(1,209,322	)		$	55.19
Cancelled	(339,658	)		$	49.57
Outstanding at September 28, 2018	2,329,535			$	56.11

The following table presents the number of shares of restricted stock and restricted stock units canceled and withheld for taxes under the 1999 SIP for the years ended September 28, 2018, September 29, 2017 and September 30, 2016:

	For the Years Ended
	September 28, 2018			September 29, 2017			September 30, 2016
Restricted stock	284,254			365,481			512,903
Restricted stock units (service condition)	336,516			128,536			177,640
Restricted stock units (service, market and performance conditions)	95,063			86,742			275,933

The amount of unvested restricted stock units canceled 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 Fungible share on a 1.92-to-1.00 basis 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 28, 2018 under the 1999 SIP. Shares granted in the table below are granted on a 1.92-to-1.00 basis (fungible):

	September 28, 2018
	Total
Restricted stock	337,805
Restricted stock units (service condition)	1,131,200
Restricted stock units (service, market and performance conditions)	735,438

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 28, 2018, September 29, 2017 and September 30, 2016:

	For the Years Ended
	September 28, 2018			September 29, 2017			September 30, 2016
Restricted stock units (service condition)	21,620			21,123			23,090

The following table provides the number of shares of restricted stock and restricted stock units outstanding at September 28, 2018 under the 1999 ODSP:

	September 28, 2018
Restricted stock	34,000
Restricted stock units (service condition)	91,092

F - 18

JACOBS ENGINEERING GROUP INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued)

All shares granted under the 1999 ODSP are issued on a 1.92-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 and Certain Related Information

Basic and Diluted Earnings Per Share

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

The following table reconciles the denominator used to compute basic EPS to the denominator used to compute diluted EPS for the years ended September 28, 2018, September 29, 2017 and September 30, 2016 (in thousands):

	For the Years Ended
	September 28, 2018				September 29, 2017				September 30, 2016
Numerator for Basic and Diluted EPS:
Net income	$	163,431			$	293,727			$	210,463
Net income allocated to participating securities	(788		)		(3,077		)		—
Net income allocated to common stock for EPS calculation	$	162,643			$	290,650			$	210,463
Denominator for Basic and Diluted EPS:
Weighted average basic shares	138,182				120,689				120,133
Shares allocated to participating securities	(646		)		(1,319		)		—
Shares used for calculating basic EPS attributable to common stock	137,536				119,370				120,133
Effect of dilutive securities:
Stock compensation plans	1,176				777				1,350
Shares used for calculating diluted EPS attributable to common stock	138,712				120,147				121,483
Basic EPS	$	1.18			$	2.43			$	1.75
Diluted EPS	$	1.17			$	2.42			$	1.73

F - 19

JACOBS ENGINEERING GROUP INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued)

Share Repurchases

On July 23, 2015, the Company’s Board of Directors authorized a share repurchase program of up to $500 million of the Company’s common stock, to expire on July 31, 2018. On July 19, 2018, the Company's Board of Directors authorized the continuation of this share repurchase program for an additional three years, to expire on July 31, 2021.

The following table summarizes the activity under this program during fiscal 2018:

		Average Price Per Share (1)		Shares Repurchased		Total Shares Retired
$500,000,000		$60.77		49,074		49,074

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

Share repurchases may be executed through various means including, without limitation, open market transactions, privately negotiated transactions or otherwise. The share repurchase program does not obligate the Company to purchase any shares. The authorization for the share repurchase program may be terminated, increased or decreased by the Company’s Board of Directors in its discretion at any time. The timing of share repurchases may depend upon market conditions, other uses of capital, and other factors.

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.

Dividend Program

In the fourth fiscal quarter of 2017, the Company declared a dividend of $0.15 per share of the Company’s common stock that was paid in the first fiscal quarter of 2018. In the second, third and fourth fiscal quarters of 2018, the Company declared and paid a dividend of $0.15 per share of the Company’s common stock, for a total of $0.60 per share paid during the year ended September 28, 2018. On September 11, 2018, the Company's Board of Directors declared a dividend of $0.15 per share of the Company's common stock that was paid on October 26, 2018 to shareholders of record on the close of business on September 28, 2018. Future dividend declarations are subject to review and approval by the Company’s Board of Directors.

5.	Business Combinations

On December 15, 2017, the Company completed the acquisition of CH2M HILL Companies, Ltd. (CH2M), an international provider of engineering, construction and technical services, by acquiring 100% of the outstanding shares of CH2M common stock and preferred stock. The purpose of the acquisition was to further diversify the Company’s presence in the water, nuclear and environmental remediation sectors and to further the Company’s profitable growth strategy. The Company paid total consideration of approximately $1.8 billion in cash (excluding $315.2 million of cash acquired) and issued approximately $1.4 billion of Jacobs’ common stock, or 20.7 million shares, to the former stockholders and certain equity award holders of CH2M. In connection with the acquisition, the Company also assumed CH2M’s revolving credit facility and second lien notes, including a $20.0 million prepayment penalty, which totaled approximately $700 million of long-term debt. Immediately following the effective time of the acquisition, the Company repaid CH2M’s revolving credit facility and second lien notes including the related prepayment penalty.

The following summarizes the estimated fair values of CH2M assets acquired and liabilities assumed as of the acquisition date (in millions):

F - 20

JACOBS ENGINEERING GROUP INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued)

Assets
Cash and cash equivalents	$	315.2
Receivables	1,124.6
Prepaid expenses and other	72.7
Property, equipment and improvements, net	175.1
Goodwill	3,129.1
Identifiable intangible assets:
Customer relationships, contracts and backlog	412.3
Lease intangible assets	4.4
Total identifiable intangible assets	416.7
Miscellaneous	522.9
Total Assets	$	5,756.3
Liabilities
Notes payable	$	2.2
Accounts payable	309.6
Accrued liabilities	753.1
Billings in excess of costs	260.8
Identifiable intangible liabilities:
Lease intangible liabilities	9.6
Long-term debt	706.0
Other deferred liabilities	653.0
Total Liabilities	2,694.3
Noncontrolling interests	(37.3		)
Net assets acquired	$	3,024.7

The purchase price allocation is based upon preliminary information and is subject to change when additional information is obtained. Goodwill recognized results from a substantial assembled workforce, which does not qualify for separate recognition, as well as expected future synergies from combining operations. None of the goodwill recognized is expected to be deductible for tax purposes. The Company has not completed its final assessment of the fair values of purchased receivables, intangible assets, tax balances, contingent liabilities or acquired contracts. The final purchase price allocation will result in adjustments to certain assets and liabilities, including the residual amount allocated to goodwill. Accrued liabilities and other deferred liabilities include approximately $385.3 million related to provisional estimates related to various legal and other pre-acquisition contingent liabilities accounted for under ASC 450. See Note 15- Contractual Guarantees, Litigation, Investigations and Insurance relating to CH2M contingencies.

Since the initial preliminary estimates reported in the first quarter of 2018, the Company has updated certain provisional amounts reflected in the preliminary purchase price allocation, as summarized in the estimated fair values of CH2M assets acquired and liabilities assumed above. Specifically, the carrying amount of the intangible assets discussed above were decreased by $186.2 million as a result of valuation adjustments. Additionally, the carrying amount of property, equipment and improvements, net decreased by $50.5 million to reflect its estimated fair value, receivables decreased $77.3 million and accrued liabilities and other deferred liabilities increased $364.4 million primarily related to provisional estimates related to various legal and other pre-acquisition contingent liabilities. Further, miscellaneous long-term assets increased $245.5 million largely due to the deferred tax impact of these valuation adjustments. As a result of these adjustments to the initial preliminary purchase price allocation, goodwill has increased $430.3 million. Measurement period adjustments are recognized in the reporting period in which the adjustments are determined and calculated as if the accounting had been completed at the acquisition date.

Customer relationships, contracts and backlog represent the fair value of existing contracts, the underlying customer relationships and backlog of consolidated subsidiaries and have lives ranging from 9 to 11 years (weighted average life of approximately 10 years). Other intangible assets and liabilities primarily consist of the fair value of office leases and have a weighted average life of approximately 10 years.

F - 21

JACOBS ENGINEERING GROUP INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued)

Estimated fair value measurements relating to the CH2M acquisition are made using Level 3 inputs including discounted cash flow techniques. Fair value is estimated using inputs primarily from the income approach, which include the use of both the multiple period excess earnings method and the relief from royalties method. The significant assumptions used in estimating fair value include (i) the estimated life the asset will contribute to cash flows, such as attrition rate of customers or remaining contractual terms, (ii) profitability and (iii) the estimated discount rate that reflect the level of risk associated with receiving future cash flows. The estimated fair value of land has been determined using the market approach, which arrives at an indication of value by comparing the site being valued to sites that have been recently acquired in arm’s-length transactions. Personal property assets with an active and identifiable secondary market are valued using the market approach. Buildings and land improvements are valued using the cost approach using a direct cost model built on estimates of replacement cost. Other personal property assets such as furniture, fixtures and equipment are valued using the cost approach which is based on replacement or reproduction costs of the asset less depreciation.

From the acquisition date of December 15, 2017 through the end of September 28, 2018, CH2M contributed approximately $3.8 billion in revenue and $185.9 million in pretax income included in the accompanying consolidated statement of earnings. Included in these results were approximately $99.3 million in pre-tax restructuring and transaction costs.

Transaction costs associated with the CH2M acquisition in the accompanying consolidated statements of earnings for the years ended September 28, 2018 and September 29, 2017 are comprised of the following (in millions):

	For the Years Ended
	September 28, 2018				September 29, 2017
Personnel costs	$	50.2			$	2.2
Professional services and other expenses	27.5				14.9
Total	$	77.7			$	17.1

Personnel costs above include change of control payments and related severance costs.

The following presents summarized unaudited pro forma operating results assuming that the Company had acquired CH2M at October 1, 2016. These pro forma operating results are presented for illustrative purposes only and are not indicative of the operating results that would have been achieved had the related events occurred (in millions):

	For the Years Ended
	September 28, 2018				September 29, 2017
Revenues	$	16,012.4			$	14,612.4
Net earnings	$	196.3			$	264.8
Net earnings (loss) attributable to Jacobs	$	184.5			$	243.6
Net earnings (loss) attributable to Jacobs per share:
Basic earnings (loss) per share	$	1.28			$	1.73
Diluted earnings (loss) per share	$	1.27			$	1.72

Included in the unaudited pro forma operating results are charges relating to transaction expenses, severance expense and other items that are removed from the year ended September 28, 2018 and are reflected in the year ended September 29, 2017 due to the assumed timing of the transaction. Also, income tax expense (benefit) for the twelve month pro forma periods ended September 28, 2018 and September 29, 2017 was $409.7 million and $24.2 million, respectively.

In fiscal 2017, the Company recorded $119.3 million of goodwill in conjunction with the acquisitions of Aquenta Consulting Pty Ltd. and Blue Canopy LLC. The Company has completed its final assessment of the fair values of purchased assets and liabilities of the related companies acquired.

F - 22

JACOBS ENGINEERING GROUP INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued)

6.	Goodwill and Intangibles

As a result of the segment realignment this year, see Note 17- Segment Information, the historical carrying value of goodwill has been allocated to the three remaining reportable segments to present balances on a comparable basis. The roll-forward of goodwill by LOB appearing in the accompanying Consolidated Balance Sheets for the year ended September 28, 2018 was as follows (in millions):

	Aerospace, Technology, Environmental and Nuclear				Buildings, Infrastructure and Advanced Facilities				Energy, Chemicals and Resources				Total
Balance September 29, 2017	$	1,038			$	1,049			$	923			$	3,010
Acquired	1,147				1,585				397				3,129
Post-Acquisition Adjustments relating to prior year acquisition	4				—				—				4
Foreign Exchange Impact	(13		)		(14		)		(12		)		(39		)
Balance September 28, 2018	$	2,176			$	2,620			$	1,308			$	6,104

During the preparation of our Quarterly Report on 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-U.S. 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 a roll-forward of the Company’s acquired intangibles in the accompanying Consolidated Balance Sheets for the years ended September 28, 2018 and September 29, 2017 (in thousands):

	Customer Relationships, Contracts and Backlog			Developed Technology			Trade Names			Patents			Lease Intangible Assets			Other			Total
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
Acquisitions	412,300			237			—			—			4,415			—			416,952
Post-Acquisition Adjustments relating to prior year acquisition	200			(1,921	)		(1,700	)		—			—			—			(3,421	)
Amortization	(75,375	)		(1,533	)		(2,738	)		(410	)		(625	)		(50	)		(80,731	)
Foreign currency translation	(9,150	)		—			(159	)		(454	)		—			—			(9,763	)
Balances, September 28, 2018	629,443			11,245			2,102			9,316			3,790			61			655,957
Weighted Average Amortization Period (years)	9			8			8			24			8			2			9

In addition, we acquired $9.6 million in lease intangible liabilities in connection with the CH2M acquisition, of which $8.7 million remain unamortized at September 28, 2018.

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

F - 23

JACOBS ENGINEERING GROUP INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued)

The following table presents estimated amortization expense of intangible assets for fiscal 2019 and for the succeeding years. The amounts below include preliminary amortization estimates for the CH2M opening balance sheet fair values that are still preliminary and are subject to change.

Fiscal Year	(in millions)
2019	$	86.1
2020	83.0
2021	79.4
2022	78.2
2023	77.6
Thereafter	242.9
Total	$	647.2

7.	Joint Ventures and VIEs

For consolidated joint ventures, the entire amount of the services performed and the costs associated with these services, including the services provided by the other joint venture partners, are included in the Company's result of operations. Likewise, the entire amount of each of the assets and liabilities are included in the Company’s consolidated balance sheet. For the consolidated VIEs, the carrying value of assets and liabilities was $199.9 million and $125.6 million, respectively, as of September 28, 2018 and $9.6 million and $8.3 million, respectively as of September 29, 2017. There are no consolidated VIEs that have debt or credit facilities.

Unconsolidated joint ventures are accounted for under the equity method or proportionate consolidation. Proportionate consolidation is used for joint ventures that include unincorporated legal entities and activities of the joint venture are construction-related. For those joint ventures accounted for under proportionate consolidation, only the Company’s pro rata share of assets, liabilities, revenue, and costs are included in the Company’s balance sheet and results of operations. For the proportionate consolidated VIEs, the carrying value of assets and liabilities was $88.6 million and $79.3 million as of September 28, 2018, respectively and $50.3 million and $44.1 million as of September 29, 2017, respectively. For those joint ventures accounted for under the equity method, the Company's investment balances for the joint venture is included in Other Noncurrent Assets: Miscellaneous on the balance sheet and the Company’s pro rata share of net income is included in revenue. In limited cases, there are basis differences between the equity in the joint venture and Jacobs' investment created when Jacobs purchased their share of the joint venture. These basis differences are amortized based on an internal allocation to underlying net assets. As of September 28, 2018, the Company’s equity method investments exceeded its share of venture net assets by $82.8 million. Our investments in equity method joint ventures on the Consolidated Balance Sheets as of September 28, 2018 and September 29, 2017 was a net asset of $219.1 million and $131.4 million, respectively. During the years ended September 28, 2018, September 29, 2017, and September 30, 2016, we recognized income from equity method joint ventures of $55.4 million, $44.7 million, and $51.1 million, respectively.

Summary of financial information of the unconsolidated joint ventures accounted for under the equity method, as derived from their unaudited financial statements, is as follows (in millions):

	For the Years Ended
	September 28, 2018				September 29, 2017
Current assets	$	1,736.0			$	1,385.7
Non-Current assets	51.5				55.9
Total assets	$	1,787.5			$	1,441.6
Current liabilities	$	944.9			$	415.8
Non-current liabilities	664.1				845
Total liabilities	1,609				1,260.8
Joint ventures' equity	178.5				180.8
Total liabilities & joint venture equity	$	1,787.5			$	1,441.6

F - 24

JACOBS ENGINEERING GROUP INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued)

	For the Years Ended
	September 28, 2018				September 29, 2017				September 30, 2016
Revenue	$	3,334.5			$	2,015.6			$	2,199.1
Cost of revenue	3,034.1				1,829.5				1,998.0
Gross profit	$	300.4			$	186.1			$	201.1
Net income	$	233.2			$	140			$	136.5

Accounts receivable from unconsolidated joint ventures accounted for under the equity method is $13.0 million and $6.3 million as of September 28, 2018 and September 29, 2017, respectively.

In September 2018, the Company sold its 45% share of its equity method investment in the Guimar joint venture in Brazil. The interest was sold to the other partners in the venture. The Company recorded a $21.0 million loss, of which $9.0 million related to the reclassification of foreign currency translation losses accumulated in other comprehensive income.

8. Restructuring and Other Charges

During the fourth fiscal quarter of 2017, the Company implemented certain restructuring and pre-integration plans associated with the pending acquisition of CH2M, which closed on December 15, 2017. The restructuring activities and related costs under these plans were comprised mainly of severance and lease abandonment programs, while the pre-integration activities and costs were mainly related to the engagement of consulting services and internal personnel and other related costs dedicated to the Company’s integration management efforts.

Following the closing of the CH2M acquisition, these activities have continued into fiscal 2018 and include restructuring activities amounting to approximately $101.7 million in pre-tax charges during the year ended September 28, 2018. Combined with $89.2 million in integration activities for the same period, the total cost of these restructuring and integration activities approximated $190.8 million for the year ended September 28, 2018. These activities are expected to continue through fiscal 2019. These activities are not expected to involve the exit of any service types or client end-markets. Also during fiscal 2018 the Company disposed of its investment in Guimar in order to resolve potential conflicts arising from the CH2M acquisition, which resulted in a loss as discussed below.

During the second fiscal quarter of 2017, the Company entered into strategic business restructuring activities associated with realignment of its Europe, United Kingdom ("U.K.") and Middle East regional operations in our BIAF 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.

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 LOBs was implemented. Actions related to the 2015 Restructuring included involuntary terminations, the abandonment of certain leased offices, combining operational organizations, and the colocation of employees into other existing offices. These activities did not involve the exit of any service types or client end-markets. The 2015 Restructuring was completed in fiscal 2017, although cash payments continue to be made under the related accruals recorded in connection with these activities.

Collectively, the above mentioned restructuring activities are referred to as “Restructuring and other charges.”

The following table summarizes the impacts of the Restructuring and other charges (or recoveries, which primarily relate to the reversals of lease abandonment accruals related to previously vacated facilities which are now planned to be utilized) by line of business in connection with the CH2M acquisition for the year ended September 28, 2018 and the 2015 Restructuring and realignment of the Company's Europe, U.K. and Middle East regional operations for the year ended September 29, 2017 (in thousands):

F - 25

JACOBS ENGINEERING GROUP INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued)

	September 28, 2018				September 29, 2017				September 30, 2016
Aerospace, Technology, Environmental and Nuclear	$	20,254			$	2,356			8,210
Buildings, Infrastructure and Advanced Facilities	56,238				47,743				24,566
Energy, Chemicals and Resources	37,166				42,558				113,315
Corporate	77,148				42,781				41,816
Total	$	190,806			$	135,438			$	187,907

Restructuring and other charges are primarily reflected in Selling, general and administrative expenses in the accompanying Consolidated Statement of Earnings.

The activity in the Company’s accrual for the Restructuring and other charges for the year ended September 28, 2018 is as follows (in thousands):

Balance at Balance at September 29, 2017	$	142,767
CH2M Acquisition Assumed Liabilities	31,576
CH2M Charges	190,806
Payments & Usage	(189,673		)
Balance at September 28, 2018	$	175,476

The following table summarizes the Restructuring and other charges by major type of costs in connection with the CH2M acquisition for the years ended September 28, 2018, and the 2015 Restructuring and realignment of the Company's Europe, U.K. and Middle East regional operations for the years ended September 29, 2017 and September 30, 2016 (in thousands):

	September 28, 2018				September 29, 2017				September 30, 2016
Lease Abandonments	$	53,914			$	55,647			$	92,643
Involuntary Terminations	37,063				43,667				85,599
Outside Services	36,308				4,236				7,398
Other (1)	63,521				31,888				2,267
Total	$	190,806			$	135,438			$	187,907

(1) Includes $21.0 million in the fourth quarter of fiscal 2018 relating to the loss on the sale of our Guimar joint venture investment recognized in other income (expense).

Cumulative amounts incurred to date for Restructuring and other charges by each major type of cost as of September 28, 2018 are as follows (in thousands):

Lease Abandonments	$	292,773
Involuntary Terminations	221,642
Outside Services	60,677
Other	96,252
Total	$	671,344

9. Borrowings

Short-Term Credit Arrangements

The Company maintains uncommitted credit arrangements with several banks providingshort-term borrowing capacity and overdraft protection. There were borrowings of $5.0 million outstanding under these short-term credit facilities at a weighted average interest rate of 4.47% at September 28, 2018. There were borrowings of $3.1 million outstanding under these short-term credit facilities at September 29, 2017.

Long-term Debt

F - 26

JACOBS ENGINEERING GROUP INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued)

The following table presents certain information regarding the Company’s long-term debt at September 28, 2018 and September 29, 2017 (dollars in thousands):

	Interest Rate		Maturity		September 28, 2018				September 29, 2017
Revolving Credit Facility	LIBOR + applicable margin (1)		February 2020		$	149,129			$	235,000
Term Loan Facility	LIBOR + applicable margin (2)		December 2020		1,500,000				—
Fixed-rate notes due:
Senior Notes, Series A	4.27%		May 2025		190,000				—
Senior Notes, Series B	4.42%		May 2028		180,000				—
Senior Notes, Series C	4.52%		May 2030		130,000				—
Less: Deferred Financing Fees					(4,998		)		—
Other	Varies		Varies		2,746				—
Total Long-term debt, net					$	2,146,877			$	235,000

(1)

Depending on the Company’s Consolidated Leverage Ratio (as defined in the credit agreement governing the Revolving Credit Facility), borrowings under the Revolving Credit Facility bear interest at either a eurocurrency rate plus a margin of between 1.0% and 1.5% or a base rate plus a margin of between 0% and 0.5%. The applicable LIBOR rates at September 28, 2018 and September 29, 2017 were approximately 1.38% to 3.47% and 1.0% to 2.23%, respectively.

(2)	Depending on the Company’s Consolidated Leverage Ratio (as defined in the credit agreement governing the Term Loan Facility), borrowings under the Term Loan Facility bear interest at either a eurocurrency rate plus a margin of between 1.0% and 1.5% or a base rate plus a margin of between 0% and 0.5%. The applicable LIBOR rate at September 28, 2018 was approximately 3.71%.

On February 7, 2014, Jacobs and certain of its subsidiaries entered into a $1.6 billion long-term unsecured, revolving credit facility (as amended, the “Revolving Credit Facility”) with a syndicate of large U.S. and international banks and financial institutions. The Revolving Credit Facility provides an accordion feature that allows the Company and the lenders to increase the facility amount to $2.1 billion. 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” and increases the permitted leverage ratio on a short-term basis in relation to the acquisition of CH2M and future permitted material acquisitions. This Second Amendment was effective upon the consummation of the acquisition of CH2M in December 2017.

The Revolving Credit Facility permits the Company to borrow under two separate tranches in U.S. dollars, certain specified foreign currencies, and any other currency that may be approved in accordance with the terms of the Revolving Credit Facility. The Revolving Credit Facility also provides for a financial letter of credit sub facility of $300 million, permits performance letters of credit, and provides for a $50 million sub facility for swing line loans. Letters of credit are subject to fees based on the Company’s Consolidated Leverage Ratio at the time any such letter of credit is issued. The Company pays a facility fee of between 0.10% 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 euro currency loans. Any prepayments made under the Revolving Credit Facility are available for re-borrowing subject to the terms and conditions therein. 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, investments, liens, acquisitions, dispositions, fundamental changes and transactions with affiliates. In addition, the Revolving Credit Facility contains customary events of default. We were in compliance with the covenants under the Revolving Credit Facility at September 28, 2018.

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. We incurred loans under the Term Loan Facility on December 15, 2017 in connection with the closing of the CH2M acquisition in order to pay cash consideration for the acquisition, and to pay fees and expenses related to the acquisition and 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. Any prepayments made under the Term Loan Facility are not available for re-borrowing. 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, acquisitions, dispositions, fundamental changes and transactions with affiliates. In addition, the Term Loan Facility contains customary events of default. We were in compliance with the covenants under the Term Loan Facility at September 28, 2018.

F - 27

JACOBS ENGINEERING GROUP INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued)

On March 12, 2018, Jacobs entered into a note purchase agreement (as amended, the "Note Purchase Agreement") with respect to the issuance and sale in a private placement transaction of $500 million in the aggregate principal amount of the Company’s senior notes in three series (collectively, the “Senior Notes”). The Note Purchase Agreement provides that if the Company's consolidated leverage ratio exceeds a certain amount, the interest on the Senior Notes may increase by 75 basis points. The Senior Notes may be prepaid at any time subject to a make-whole premium. The sale of the Senior Notes closed on May 15, 2018. The Company used the net proceeds from the offering of Senior Notes to repay certain existing indebtedness and for other general corporate purposes. The Note Purchase Agreement contains affirmative, negative and financial covenants customary for financings of this type, including, among other things, covenants to maintain a minimum consolidated net worth and maximum consolidated leverage ratio and limitations on certain other indebtedness, liens, mergers, dispositions and transactions with affiliates. In addition, the Note Purchase Agreement contains customary events of default. We were in compliance with the covenants under the Note Purchase Agreement at September 28, 2018.

In conjunction with the acquisition of CH2M, the Company assumed certain long-term financing that was incurred by CH2M prior to the acquisition. The total balance included in long-term debt as of September 28, 2018 was $2.7 million, which is primarily comprised of equipment financing, bearing interest rates ranging from 0.22% to 3.29% due in monthly installments through September 2021.

We believe the carrying value of the Revolving Credit Facility, the Term Loan Facility and Other debt outstanding approximates fair value based on the interest rates and scheduled maturities applicable to the outstanding borrowings. The fair value of the Senior Notes is estimated to be $491.7 million at September 28, 2018, based on Level 2 inputs. The fair value is determined by discounting future cash flows using interest rates available for issuances with similar terms and average maturities.

The Company has issued $2.5 million in letters of credit under the Revolving Credit Facility, leaving $1.4 billion of available borrowing capacity under the Revolving Credit Facility at September 28, 2018. In addition, the Company had issued $444.1 million under separate, committed and uncommitted letter-of-credit facilities for total issued letters of credit of $446.6 million at September 28, 2018.

The following table presents the amount of interest paid by the Company during September 28, 2018, September 29, 2017 and September 30, 2016 (in thousands):

For the Years Ended
September 28, 2018		September 29, 2017		September 30, 2016
$68,467		$12,862		$13,282

10. Pension and Other Postretirement Benefit Plans

Company-Only Sponsored Plans

We sponsor various defined benefit pension and other post retirement 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 varies by country and plan according to applicable local funding requirements and plan-specific funding agreements. In connection with the acquisition of CH2M on December 15, 2017, the Company acquired CH2M’s pension plan assets and liabilities, which are reflected in the amounts disclosed for the year ended September 28, 2018 below.

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 28, 2018 and September 29, 2017 (in thousands):

F - 28

JACOBS ENGINEERING GROUP INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued)

	U.S. Plans								Non-U.S. Plans
	September 28, 2018				September 29, 2017				September 28, 2018				September 29, 2017
Net benefit obligation at the beginning of the year	$	169,942			$	185,664			$	1,306,807			$	1,363,782
Service cost	4,765				1,000				8,269				7,509
Interest cost	13,778				5,757				49,324				31,205
Participants’ contributions	839				—				451				250
Actuarial (gains)/losses	(30,730		)		(9,922		)		(43,595		)		(142,273		)
Benefits paid	(27,914		)		(14,338		)		(75,711		)		(40,208		)
Curtailments/settlements/plan amendments	(9,434		)		—				(6,136		)		(1,375		)
Acquisition of CH2M Plans	327,156				—				924,233				—
Effect of exchange rate changes and other, net	—				1,781				(14,396		)		87,917
Net benefit obligation at the end of the year	$	448,402			$	169,942			$	2,149,246			$	1,306,807

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 years ended September 28, 2018 and September 29, 2017 (in thousands):

	U.S. Plans								Non-U.S. Plans
	September 28, 2018				September 29, 2017				September 28, 2018				September 29, 2017
Fair value of plan assets at the beginning of the year	$	147,788			$	142,464			$	1,076,928			$	1,003,911
Actual return on plan assets	9,891				18,662				(19,883		)		16,789
Employer contributions	58,097				1,000				31,556				21,005
Participants’ contributions	839				—				451				250
Gross benefits paid	(27,914		)		(14,338		)		(75,711		)		(40,208		)
Curtailments/settlements/plan amendments	(9,434		)		—				(5,496		)		(228		)
Acquisition of CH2M Plans	211,562				—				869,414				—
Effect of exchange rate changes and other, net	—				—				(9,778		)		75,409
Fair value of plan assets at the end of the year	$	390,829			$	147,788			$	1,867,481			$	1,076,928

During fiscal 2018, the Company incurred combined curtailment and settlement losses on its defined benefit plans of approximately $5.4 million primarily related to its Sverdrup and Ireland pension plans. During fiscal 2017, we curtailed the pension plan in Ireland.

The following table reconciles the combined funded statuses of the plans recognized in the accompanying Consolidated Balance Sheets at September 28, 2018 and September 29, 2017 (segregated between plans existing within and outside the U.S.) (in thousands):

	U.S. Plans								Non-U.S. Plans
	September 28, 2018				September 29, 2017				September 28, 2018				September 29, 2017
Net benefit obligation at the end of the year	$	448,402			$	169,942			$	2,149,246			$	1,306,807
Fair value of plan assets at the end of the year	390,829				147,788				1,867,481				1,076,928
Under funded amount recognized at the end of the year	$	57,573			$	22,154			$	281,765			$	229,879

The following table presents the accumulated benefit obligation at September 28, 2018 and September 29, 2017 (segregated between plans existing within and outside the U.S.) (in thousands):

F - 29

JACOBS ENGINEERING GROUP INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued)

	U.S. Plans								Non-U.S. Plans
	September 28, 2018				September 29, 2017				September 28, 2018				September 29, 2017
Accumulated benefit obligation at the end of the year	$	447,549			$	169,942			$	2,123,839			$	1,291,600

The following table presents the amounts recognized in the accompanying Consolidated Balance Sheets at September 28, 2018 and September 29, 2017 (segregated between plans existing within and outside the U.S.) (in thousands):

	U.S. Plans								Non-U.S. Plans
	September 28, 2018				September 29, 2017				September 28, 2018				September 29, 2017
Prepaid benefit cost included in noncurrent assets	$	—			$	—			$	19,736			$	3,035
Accrued benefit cost included in current liabilities	2,548				—				3,671				585
Accrued benefit cost included in noncurrent liabilities	55,025				22,154				297,830				232,329
Net amount recognized at the end of the year	$	57,573			$	22,154			$	281,765			$	229,879

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 28, 2018, September 29, 2017 and September 30, 2016:

	For the Years Ended
	September 28, 2018		September 29, 2017			September 30, 2016
Discount rates	3.9% to 4.2%		3.5	%		3.2	%
Rates of compensation increases	3.5%		—	%		—	%
Return on Assets	5.8% to 5.9%		7.5	%		7.4	%

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. plans for the years ended September 28, 2018, September 29, 2017 and September 30, 2016:

	For the Years Ended
	September 28, 2018		September 29, 2017		September 30, 2016
Discount rates	1.3% to 8.1%		1.3% to 7.0%		0.7% to 7.0%
Rates of compensation increases	2.5% to 7.5%		2.5% to 7.5%		2.5% to 7.5%
Expected long-term rates of return on assets	2.9% to 7.5%		3.5% to 8.5%		3.5% to 8.5%

The following table presents certain amounts relating to our U.S. plans recognized in accumulated other comprehensive (gain) loss at September 28, 2018, September 29, 2017 and September 30, 2016 (in thousands):

	September 28, 2018				September 29, 2017				September 30, 2016
Arising during the period:
Net actuarial (gain) loss	$	(7,514	)		$	(11,372	)		$	4,337
Reclassification adjustments:
Net actuarial losses	(2,913		)		(2,431		)		(2,312		)
Total	$	(10,427	)		$	(13,803	)		$	2,025

The following table presents certain amounts relating to our non-U.S. plans recognized in accumulated other comprehensive (gain) loss at September 28, 2018, September 29, 2017 and September 30, 2016 (in thousands):

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JACOBS ENGINEERING GROUP INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued)

	September 28, 2018				September 29, 2017				September 30, 2016
Arising during the period:
Net actuarial (gain) loss	$	59,827			$	(76,860	)		$	102,925
Prior service cost (benefit)	215				119				580
Total	60,042				(76,741		)		103,505
Reclassification adjustments:
Net actuarial losses	(5,507		)		(8,732		)		(7,508		)
Prior service cost	181				229				163
Total	(5,326		)		(8,503		)		(7,345		)
Total	$	54,716			$	(85,244	)		$	96,160

The following table presents certain amounts relating to our plans recorded in accumulated other comprehensive loss that have not yet been recognized as components of net periodic benefit cost at September 28, 2018 and September 29, 2017 (segregated between U.S. and non-U.S. plans) (in thousands):

	U.S. Plans								Non-U.S. Plans
	September 28, 2018				September 29, 2017				September 28, 2018				September 29, 2017
Net actuarial loss	$	37,255			$	47,681			$	273,312			$	218,752
Prior service cost	—				—				(700		)		(855		)
Total	$	37,255			$	47,681			$	272,612			$	217,897

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 2019 based on 2018 exchange rates (segregated between U.S. and non-U.S. plans) (in thousands):

	U.S. Plans				Non-U.S. Plans
Unrecognized net actuarial loss	$	2,925			$	8,616
Unrecognized prior service cost	—				(258		)
Accumulated comprehensive loss to be recorded against earnings	$	2,925			$	8,358

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 28, 2018 and September 29, 2017 (the measurement dates used in valuing the plans’ assets and liabilities) were as follows:

	U.S. Plans						Non-U.S. Pans
	September 28, 2018			September 29, 2017			September 28, 2018			September 29, 2017
Equity securities	27	%		70	%		24	%		24	%
Debt securities	39	%		23	%		49	%		32	%
Real estate investments	—	%		—	%		8	%		5	%
Other	34	%		7	%		19	%		39	%

The following table presents the Fair Value of the Company’s Domestic U.S. plan assets at September 28, 2018, segregated by level of Fair Value measurement inputs within the Fair Value hierarchy promulgated by U.S. GAAP (in thousands):

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JACOBS ENGINEERING GROUP INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued)

	September 28, 2018
	Fair Value, Determined Using Fair Value Measurement Inputs
	Level 1				Level 2				Level 3				Investments measured at Net Asset Value				Total
U.S. Domestic equities	$	13,861			$	63,937			$	—			$	—			$	77,798
Overseas equities	26,699				—				—				—				26,699
U.S. Domestic bonds	84,894				58,229				—				—				143,123
Overseas bonds	938				9,570				—				—				10,508
Cash and equivalents	6,631				—				—				—				6,631
Mutual funds	126,042				—				—				—				126,042
Hedge funds	$	—			$	—			$	—			28				28
Total	$	259,065			$	131,736			$	—			$	28			$	390,829

The following table presents the Fair Value of the Company’s non-U.S. plan assets at September 28, 2018, segregated by level of Fair Value measurement inputs within the Fair Value hierarchy promulgated by U.S. GAAP (in thousands):

	September 28, 2018
	Fair Value, Determined Using Fair Value Measurement Inputs
	Level 1				Level 2				Level 3				Investments measured at Net Asset Value				Total
Domestic equities	$	—			31,868				$	—			36,642				$	68,510
Overseas equities	—				327,309				—				44,675				371,984
Domestic bonds	252				222,282				—				1,080				223,614
Overseas bonds	—				641,966				—				60,804				702,770
Cash and equivalents	33,482				7,822				—				—				41,304
Real estate	—				26,987				99,587				17,568				144,142
Insurance contracts	—				4,188				95,782				—				99,970
Derivatives	—				(26,656		)		—				—				$	(26,656	)
Hedge funds	—				—				135,786				8,047				$	143,833
Mutual funds	69				97,941								—				98,010
Total	$	33,803			$	1,333,707			$	331,155			$	168,816			$	1,867,481

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

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

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JACOBS ENGINEERING GROUP INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued)

	September 29, 2017
	Fair Value, Determined Using Fair Value Measurement Inputs
	Level 1				Level 3				Total
Domestic equities	$	30,916			$	—			$	30,916
Overseas equities	229,205				—				229,205
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 summarizes the changes in the Fair Value of the Company’s U.S. plans’ Level 3 assets for the year ended September 28, 2018 (in thousands):

	Hedge Funds
Balance at September 29, 2017	$	6,176
Purchases, sales, and settlements	(6,176		)
Realized and unrealized gains	—
Balance at September 28, 2018	$	—

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 28, 2018 (in thousands):

	Real Estate				Insurance Contracts				Hedge Funds
Balance at September 29, 2017	$	58,974			$	74,353			$	303,729
Purchases, sales, and settlements	42,711				21,626				(154,446		)
Realized and unrealized gains (losses)	(784		)		1,551				(6,650		)
Transfers	—				—				—
Effect of exchange rate changes	(1,314		)		(1,748		)		(6,847		)
Balance at September 28, 2018	$	99,587			$	95,782			$	135,786

The following table summarizes the changes in the Fair Value of the Company’s U.S. 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	(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. plans’ Level 3 assets for the year ended September 29, 2017 (in thousands):

F - 33

JACOBS ENGINEERING GROUP INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued)

	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	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 presents the amount of cash contributions we anticipate making into the plans during fiscal 2019 (in thousands):

	U.S. Plans				Non-U.S. Plans
Anticipated cash contributions	$	2,601			$	31,549

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

	U.S. Plans				Non-U.S. Pans
2019	$	31,785			$	70,313
2020	31,270				71,337
2021	31,740				74,906
2022	31,818				78,097
2023	31,857				81,569
For the periods 2024 through 2028	154,755				448,246

The following table presents the components of net periodic benefit cost for the Company’s U.S. plans recognized in the accompanying Consolidated Statements of Earnings for the years ended September 28, 2018, September 29, 2017 and September 30, 2016 (in thousands):

	September 28, 2018				September 29, 2017				September 30, 2016
Service cost	$	4,765			$	1,000			$	9,875
Interest cost	13,778				5,757				16,746
Expected return on plan assets	(19,663		)		(9,942		)		(22,368		)
Actuarial loss	3,845				3,985				7,512
Prior service cost	—				—				(176		)
Net pension cost, before special items	2,725				800				11,589
Contractual expense/Settlement loss	4,146				1,781				8,061
Total net periodic pension cost recognized	$	6,871			$	2,581			$	19,650

The following table presents the components of net periodic benefit cost for the Company’s Non-U.S. plans recognized in the accompanying Consolidated Statements of Earnings for the years ended September 28, 2018, September 29, 2017 and September 30, 2016 (in thousands):

F - 34

JACOBS ENGINEERING GROUP INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued)

	September 28, 2018				September 29, 2017				September 30, 2016
Service cost	$	8,269			$	7,509			$	14,378
Interest cost	49,324				31,205				38,892
Expected return on plan assets	(83,328		)		(56,269		)		(50,190		)
Actuarial loss	6,655				10,616				9,092
Prior service cost	(257		)		(329		)		(260		)
Net pension cost, before special items	(19,337		)		(7,268		)		11,912
Curtailment expense/Settlement loss	1,268				(298		)		(7,512		)
Total net periodic pension (income) cost recognized	$	(18,069	)		$	(7,566	)		$	4,400

During fiscal 2018, the Company incurred combined curtailment and settlement losses on its defined benefit plans primarily related to its Sverdrup and Ireland pension plans. During fiscal 2017, we curtailed the pension plan in Ireland. The fiscal 2016 settlement loss included in the U.S. pension plan net periodic benefit cost table above related to the transfer of a U.S. pension plan to a new service provider. 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 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 28, 2018, September 29, 2017 and September 30, 2016 (in thousands):

	September 28, 2018				September 29, 2017				September 30, 2016
Canada	$	36,354			$	35,182			$	44,912
Europe	$	10,677			$	6,212			$	8,771
United States	$	9,536			$	4,548			$	5,058
Contributions to multiemployer pension plans	$	56,567			$	45,942			$	58,741

Other Benefit Plans

During the second fiscal quarter of 2017, the Company restructured certain employee welfare trust plans benefiting 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 selling, general and administrative 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.

11. Savings and Deferred Compensation Plans

Savings Plans

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JACOBS ENGINEERING GROUP INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued)

We sponsor various defined contribution savings plans which allow participants to make voluntary contributions by salary deduction. Such plans cover substantially all of our domestic, nonunion employees in the U.S. and are qualified under Section 401(k) of the U.S. Internal Revenue Code. Similar plans outside the U.S. cover various groups of employees of our international subsidiaries and affiliates. Several of these plans allow the Company to match, on a voluntary basis, a portion of the employee contributions. The following table presents the Company’s contributions to these savings plans for the years ended September 28, 2018, September 29, 2017 and September 30, 2016 (in thousands):

September 28, 2018				September 29, 2017				September 30, 2016
$	113,135			$	82,882			$	89,966

Deferred Compensation Plans

Our Executive Security Plan, Executive Deferral Plans, Directors Deferral Plan, legacy CH2M Supplemental Executive Retirement and Retention Plan and legacy CH2M Deferred Compensation Plan are non-qualified 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. The plans are unfunded; therefore, benefits are paid from the general assets of the Company. The following table presents the amount charged to expense for the Company’s deferred compensation plans for the years ended September 28, 2018, September 29, 2017 and September 30, 2016 (in thousands):

September 28, 2018				September 29, 2017				September 30, 2016
$	4,445			$	4,368			$	5,792

12.	Accumulated Other Comprehensive Income

The following table presents the Company's roll forward of accumulated income (loss) after-tax for the years ended September 28, 2018 and September 29, 2017 (in thousands):

	Change in Pension Liabilities				Foreign Currency Translation Adjustment				Gain/(Loss) on Cash Flow Hedges				Total
Balance at September 30, 2016	$	(364,625	)		$	(245,613	)		$	(356	)		$	(610,594	)
Other comprehensive income (loss)	88,113				(140,527		)		834				(51,580		)
Reclassifications from other comprehensive income (loss)	10,934				—				(2,274		)		8,660
Balance at September 29, 2017	(265,578		)		(386,140		)		(1,796		)		(653,514		)
Other comprehensive income (loss)	(52,528		)		(119,070		)		618				(170,980		)
Reclassifications from other comprehensive income (loss)	8,239				9,193				359				17,791
Balance at September 28, 2018	$	(309,867	)		$	(496,017	)		$	(819	)		$	(806,703	)

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JACOBS ENGINEERING GROUP INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued)

13. Income Taxes

The following table presents the components of our consolidated income tax expense for years ended September 28, 2018, September 29, 2017 and September 30, 2016 (in thousands):

	For the Years Ended
	September 28, 2018				September 29, 2017				September 30, 2016
Current income tax expense:
Federal	$	34,145			$	29,297			$	36,020
State	(597		)		8,535				11,336
Foreign	59,889				31,347				52,259
Total current tax expense	93,437				69,179				99,615
Deferred income tax expense (benefit):
Federal	252,730				29,390				6,439
State	15,485				3,407				485
Foreign	19,911				3,866				(34,331		)
Total deferred tax expense (benefit)	288,126				36,663				(27,407		)
Consolidated income tax expense	$	381,563			$	105,842			$	72,208

On December 22, 2017, the Tax Cuts and Jobs Act (the “Act”) was enacted in the United States. The Act reduced the top corporate U.S. federal statutory tax rate from 35% to 21% starting on January 1, 2018, resulting in a blended statutory tax rate for fiscal year filers. It also requires companies to pay a one-time transition tax on earnings of certain foreign subsidiaries, places limitations and exclusions on varied tax deductions and creates new taxes on certain foreign sourced earnings. The majority of the tax provisions, excluding the change in corporate tax rates, are effective for the first tax year beginning after January 1, 2018, which will be the Company’s taxable year beginning fiscal 2019.

Given the significance of the legislation, the SEC staff issued Staff Accounting Bulletin No. 118 (SAB 118), which allows registrants to record provisional amounts during a one year “measurement period” similar to that used when accounting for business combinations. However, the measurement period is deemed to have ended earlier when the registrant has obtained, prepared and analyzed the information necessary to finalize its accounting. During the measurement period, impacts of the law are expected to be recorded at the time a reasonable estimate for all or a portion of the effects can be made, and provisional amounts can be recognized and adjusted as information becomes available, prepared or analyzed.

SAB 118 summarizes a three-step process to be applied at each reporting period to account for and qualitatively disclose: (1) the effects of the change in tax law for which accounting is complete; (2) provisional amounts (or adjustments to provisional amounts) for the effects of the tax law where accounting is not complete, but that a reasonable estimate has been determined; and (3) a reasonable estimate cannot yet be made and therefore taxes are reflected in accordance with law prior to the enactment of the Act.

As of September 28, 2018, the Company has not completed the accounting for the tax effects of the enactment of the Act. However, the Company has made a provisional estimate of the effects of the statutory tax rate reduction impact on our existing deferred tax balances, the tax on global intangible low-taxed income and the one-time transition tax.

The Act calls for a one-time tax on deemed repatriation of foreign earnings. This one-time transition tax is based on the Company's total post-1986 earnings and profits (E&P) of certain of our foreign subsidiaries. The Company has made a revised provisional estimate of the transition tax. Based upon our review of the Company’s historical foreign tax credit position and post-1986 E&P, it is estimated at this time that the Company will incur approximately $14.3 million transition tax expense net of foreign tax credits. The Company is still in the process of completing our calculation of the total post-1986 E&P. The estimate may change when the Company finalizes the calculation of post-1986 foreign E&P previously deferred from U.S. federal taxation and finalizes the amounts held in cash or other specified assets.

The Company has also recorded a provisional expense of $104.2 million after consideration for valuation allowance with respect to certain foreign tax credits as a result of integration impacts.

In the current fiscal year, the Company adopted ASU No 2018-02, Income Statement - Reporting Comprehensive Income (Topic 220): Reclassification of Certain Tax Effects from Accumulated Other Comprehensive Income. The guidance gives entities the option to reclassify to retained earnings tax effects related to items in accumulated other comprehensive income that the FASB refers

F - 37

JACOBS ENGINEERING GROUP INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued)

to as having been stranded in accumulated other comprehensive income as a result of tax reform. As a result of adoption of ASU 2018-02, the Company reclassified $10.2 million in accumulated other comprehensive income to retained earnings relating to the current year deferred tax activity for its U.S. pension plans resulting from the Act.

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 28, 2018 and September 29, 2017 (in thousands):

	September 28, 2018				September 29, 2017
Deferred tax assets:
Obligations relating to:
Defined benefit pension plans	$	30,483			$	52,299
Other employee benefit plans	190,548				192,299
Net Operating Losses	167,424				136,783
Foreign Tax Credit	145,931				—
Other Credits	8,764
Self-insurance programs	—				489
Contract revenues and costs	130,116				(18,374		)
Deferred Rent	5,454				25,654
Restructuring	14,515				18,258
Other	3,533				19,389
Valuation Allowance	(264,944		)		(58,097		)
Gross deferred tax assets	431,824				368,700
Deferred tax liabilities:
Depreciation and amortization	(206,705		)		(176,327		)
Self-insurance programs	(3,513		)		—
Unremitted earnings	(79,418		)		—
Other, net	—				(1,438		)
Gross deferred tax liabilities	(289,636		)		(177,765		)
Net deferred tax assets	$	142,188			$	190,935

We remeasured the U.S. deferred tax assets and liabilities based on the rates at which they are expected to reverse in the future, which is generally 21%. The Company’s provisional remeasurement resulted in a $139.8 million net unfavorable charge to income tax expense for the year ended September 28, 2018. The Company is still analyzing purchase accounting related to CH2M Hill and refining the calculations, which could potentially affect the measurement of these balances or potentially give rise to new deferred tax assets and liabilities.

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 was $264.9 million at September 28, 2018 and $58.1 million at September 29, 2017.

Net operating loss carry forwards of foreign subsidiaries at September 28, 2018 and September 29, 2017 totaled $662.4 million and $490.9 million, respectively. If unused, foreign net operating losses of $168.1 million will expire between 2019 and 2038. Net operating losses of $494.3 million can be carried forward indefinitely.

The following table presents the income tax benefits realized from the exercise of non-qualified stock options and disqualifying dispositions of stock sold under our employee stock purchase plans for the years ended September 28, 2018, September 29, 2017 and September 30, 2016 (in millions):

F - 38

JACOBS ENGINEERING GROUP INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued)

For the Years Ended
September 28, 2018				September 29, 2017				September 30, 2016
$	4.7			$	5.2			$	1.5

The Company’s consolidated effective income tax rate is higher than the US statutory rate of 24.6% primarily due to a $139.8 million detriment from the provisional remeasurement of the deferred tax items in the U.S. from the reduction in the U.S. statutory rate, as well as a charge for valuation allowance related to foreign tax credits of $104.2 million. In addition, there was an increase due to the difference in foreign tax rates compared to the new U.S. statutory rate of $9.9 million. The unfavorable charges were partially offset by a $5.7 million benefit related to a federal hurricane credit and $4.5 million benefit related to the Internal Revenue Code section 179D deduction for the design of energy efficient facilities.

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 28, 2018, September 29, 2017 and September 30, 2016 (dollars in thousands):

	For the Years Ended
	September 28, 2018				%			September 29, 2017				%			September 30, 2016				%
Statutory amount	$	136,458			24.6	%		$	137,626			35.0	%		$	100,353			35.0	%
State taxes, net of the federal benefit	7,587				1.4	%		8,955				2.3	%		7,853				2.7	%
Exclusion of tax on non-controlling interests	(2,389)				(0.4	)%		2,223				0.6	%		(1,418		)		(0.5	)%
Foreign:
Difference in tax rates of foreign operations	9,860				1.8	%		(16,987		)		(4.3	)%		(17,184		)		(6.0	)%
Benefit from foreign valuation allowance release	(5,105)				(0.9	)%		(3,085		)		(0.8	)%		(11,182		)		(3.9	)%
U.K. tax rate change on deferred tax assets	—				—			—				—	%		8,853				3.1	%
Nontaxable income from foreign affiliate	—				—			(3,280		)		(0.8	)%		—				—
U.S. tax cost of foreign operations	6,577				1.2	%		18,612				4.7	%		30,850				10.9	%
Tax differential on foreign earnings	11,332				2.0	%		(4,740		)		(1.2	)%		11,337				4.1	%
Foreign tax credits	(21,729)				(3.9	)%		(20,454		)		(5.2	)%		(44,018		)		(15.4	)%
Tax Reform	154,150				27.8	%		—				—			—				—
Valuation Allowance	104,221				18.8	%		—				—			—				—
Uncertain tax positions	(1,297)				(0.2	)%		(5,779		)		(1.5	)%		1,449				0.5	%
Other items:
IRS §179D deduction	(4,520)				(0.8	)%		(3,351		)		(0.8	)%		(2,153		)		(0.8	)%
IRS §199D deduction	—				—			(2,113		)		(0.5	)%		(2,800		)		(1.0	)%
Foreign partnership income/(loss)	(3,990)				(0.7	)%		(9,861		)		(2.5	)%		(2,658		)		(0.9	)%
Other items – net	1,740				0.3	%		3,336				0.7	%		4,263				1.5	%
Total other items	(6,770)				(1.2	)%		(11,989		)		(3.1	)%		(3,348		)		(1.2	)%
Taxes on income	$	381,563			68.9	%		$	105,842			26.9	%		$	72,208			25.2	%

The Company’s consolidated effective income tax rate for the year ended September 28, 2018 increased to 68.9% from 26.9% for fiscal 2017. Key drivers for this year over year increase include the reduction in the U.S. statutory tax rate causing a detriment for provisional remeasurement of the deferred tax items in the U.S. of $139.8 million, as well as a charge for valuation allowance related to foreign tax credits of $104.2 million. In addition, there was an increase due to the difference in foreign tax rates compared to the new U.S. statutory rate of $26.8 million. These detriments were partially offset by a $4.5 million benefit related to internal revenue service code section 179D, a nonrecurring benefit of $2.8 million related to tax accounting method changes and a $5.7 million federal hurricane credit.

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 included 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.

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued)

The following table presents income tax payments made during the years ended September 28, 2018, September 29, 2017 and September 30, 2016 (in millions):

September 28, 2018				September 29, 2017				September 30, 2016
$	44.29			$	78.39			$	116.30

The following table presents the components of our consolidated earnings before taxes for the years ended September 28, 2018, September 29, 2017 and September 30, 2016 (in thousands):

	For the Years Ended
	September 28, 2018				September 29, 2017				September 30, 2016
United States earnings	$	282,123			$	232,342			$	206,159
Foreign earnings	272,582				160,875				80,564
	$	554,705			$	393,217			$	286,723

The tax cost, net of applicable credits, have been provided on the undistributed earnings of the Company’s foreign subsidiaries. As of September 28, 2018, the provisional estimate of repatriating earnings to the United States is estimated at $93.0 million. The Company does not assert any earnings to be permanently reinvested.

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 $76.7 million and $38.6 million at September 28, 2018 and September 29, 2017, respectively, all of which, if recognized, would affect the Company’s consolidated effective income tax rate. The Company had $56.3 million and $36.6 million in accrued interest and penalties at September 28, 2018 and September 29, 2017, respectively. The Company estimates that, within twelve months, we may realize a decrease in our uncertain tax positions of approximately $6.5 million as a result of concluding various tax audits and closing tax years. As of September 28, 2018, the Company’s U.S. federal income tax returns for tax years 2009 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 28, 2018, September 29, 2017 and September 30, 2016 (in thousands):

	For the Years Ended
	September 28, 2018				September 29, 2017				September 30, 2016
Balance, beginning of year	$	38,580			$	44,167			$	42,666
Acquisition of CH2M	137,912				—				—
Additions based on tax positions related to the current year	9,780				5,900				5,670
Additions for tax positions of prior years	5,561				237				367
Reductions for tax positions of prior years	(8,962		)		(4,524		)		(2,451		)
Settlement	(3,731		)		(7,200		)		(2,085		)
Balance, end of year	$	179,140			$	38,580			$	44,167

On December 15, 2017 the Company completed the acquisition of CH2M. For income tax purposes, the transaction was accounted for as a stock purchase. As a result of the acquisition, the Company adjusted its U.S. GAAP opening balance sheet of CH2M to reflect preliminary estimates of the fair value of the net assets acquired. For income tax purposes, the tax attributes and basis of net assets acquired carryover without any step-up to fair value. The Company has made preliminary estimates and recorded deferred taxes associated with the purchase accounting. It is expected that the Company will make adjustments to the purchase accounting over the relevant measurement period as allowed by ASC 805.

14.	Commitments and Contingencies and Derivative Financial Instruments

Commitments Under Operating Leases

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JACOBS ENGINEERING GROUP INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued)

We lease certain of our facilities and equipment under operating leases with net aggregate future lease payments at September 28, 2018, payable as follows (in thousands):

In fiscal years,
2019	$	215,375
2020	187,228
2021	158,781
2022	135,991
2023	115,614
Thereafter	344,120
	1,157,109
Amounts representing sublease income	(19,443		)
	$	1,137,666

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 incurred. 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 28, 2018, September 29, 2017 and September 30, 2016 (in thousands):

	For the Years Ended
	September 28, 2018				September 29, 2017				September 30, 2016
Rent expense	$	217,550			$	145,344			$	151,539
Sublease income	(5,514		)		(7,052		)		(7,212		)
Net rent expense	$	212,036			$	138,292			$	144,327

Synthetic Lease 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 guarantee (in thousands)	$	62,412

The Company refinanced the synthetic lease agreement effective July 28, 2015 with a 10-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 payment schedule. We have determined that the estimated Fair Value of the aforementioned financial guarantee was not significant at September 28, 2018.

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

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued)

At September 28, 2018, the Company had issued and outstanding approximately $446.6 million in LOCs and $870.3 million in surety bonds. Of the outstanding LOC amount, $2.5 million has been issued under the Revolving Credit Facility and $444.1 million are issued under separate, committed and uncommitted letter-of-credit facilities.

15.	Contractual Guarantees, Litigation, Investigations and Insurance

In the normal course of business, we make contractual commitments some of which are supported by separate guarantees; and on occasion we are a party in a litigation or arbitration proceeding. The litigation or arbitration in which we are involved includes personal injury claims, professional liability claims and breach of contract claims. In most cases, we are the defendant. Where we provide a separate guarantee it is strictly in support of the underlying contractual commitment. Guarantees take various forms including surety bonds required by law, or standby letters of credit ("LOC") (also referred to as “bank guarantees”) or corporate guarantees given to induce a party to enter into a contract with a subsidiary. Standby LOCs are also used as security for advance payments or in various other transactions. The guarantees have various expiration dates ranging from an arbitrary date to completion of our work (e.g., engineering only) to completion of the overall project. See Note 14- Commitments and Contingencies and Derivative Financial Instruments for more information surrounding LOCs and surety bonds.

We maintain insurance coverage for most insurable aspects of our business and operations. Our insurance programs have varying coverage limits depending upon the type of insurance, and include certain conditions and exclusions which insurance companies may raise in response to any claim that the Company brings. We have also elected to retain a portion of losses and liabilities that occur through the use of various deductibles, limits, and retentions under our insurance programs. As a result, we may be subject to a 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 the contracts which the Company enters with its clients. 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 we are subject to many types of audits, investigations and claims by, or on behalf of, the government including with respect to contract performance, pricing, cost allocations, procurement practices, labor practices and socioeconomic obligations. 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.

Our Consolidated Balance Sheets include amounts representing our probable estimated liability relating to such claims, guarantees, litigation, 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 and 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 a material adverse effect on our consolidated financial statements.

On September 30, 2015, Nui Phao Mining Company Limited (“NPMC”) commenced arbitration proceedings against Jacobs E&C Australia Pty Limited (“Jacobs E&C”). The arbitration is pending in Singapore before the Singapore International Arbitration Centre. In March 2011, Jacobs E&C was engaged by NPMC for the provision of management, design, engineering and procurement services for the Nui Phao mine/mineral processing project in Vietnam. In the Notice of Arbitration and in a subsequently filed Statement of Claim and Supplementary Statement of Claim dated February 1, 2016 and February 26, 2016, respectively, NPMC asserts various causes of action and alleges that the quantum of its claim exceeds $167.0 million. Jacobs has denied liability and is vigorously defending this claim. A three week hearing on the merits concluded on December 15, 2017 and a decision is expected as soon as later this calendar year. 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.

In 2012, CH2M HILL Australia Pty Limited, a subsidiary of CH2M, entered into a 50/50 integrated joint venture with Australian construction contractor UGL Infrastructure Pty Limited. The joint venture entered into a Consortium Agreement with General Electric and GE Electrical International Inc. The Consortium was awarded a subcontract by JKC Australia LNG Pty Limited for the engineering, procurement, construction and commissioning of a 360 MW Combined Cycle Power Plant for INPEX Operations Australia Pty Limited at Blaydin Point, Darwin, NT, Australia. In January 2017, the Consortium terminated the Subcontract because of JKC’s repudiatory breach and demobilized from the work site. JKC claimed the Consortium abandoned the work and itself

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JACOBS ENGINEERING GROUP INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued)

purported to terminate the Subcontract. The Consortium and JKC are now in dispute over the termination. In August 2017, the Consortium filed an International Chamber of Commerce arbitration against JKC for compensatory damages in the amount of $665.5 million for repudiatory breach or, in the alternative, seeking damages for unresolved contract claims and change orders. JKC has provided a preliminary estimate of the monetary value of its claims in excess of $1.7 billion and has drawn on bonds. This draw on bonds does not impact the Company's ultimate liability. A decision in this matter is not expected before 2020. If the Consortium is found liable, this matter could have a material adverse effect on the Company’s business, financial condition, results of operations and /or cash flows, particularly in the short term. However, the Consortium has denied liability and is vigorously defending these claims and pursuing its affirmative claims against JKC, and based on the information currently available, the Company does not expect the resolution of this matter to have a material adverse effect on the Company’s business, financial condition, results of operations, or cash flows. See Note 5- Business Combinations for further information relating to CH2M contingencies.

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JACOBS ENGINEERING GROUP INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued)

16.	Other Financial Information

Receivables

The following table presents the components of “Receivables” as shown in the accompanying Consolidated Balance Sheets at September 28, 2018 and September 29, 2017 as well as certain other related information (in thousands):

	September 28, 2018				September 29, 2017
Components of receivables:
Amounts billed, net	$	1,597,297			$	949,060
Unbilled receivables and other	1,933,000				1,118,144
Retentions receivable	24,633				35,339
Total receivables, net	$	3,554,930			$	2,102,543
Other information about receivables:
Amounts due from the United States federal government included above, net of advanced billings	$	472,846			$	226,236
Claims receivable	$	—			$	4,600

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 28, 2018 and September 29, 2017 (in thousands):

	September 28, 2018				September 29, 2017
Land	$	19,327			$	17,197
Buildings	129,336				93,313
Equipment	721,274				627,609
Leasehold improvements	268,979				220,295
Construction in progress	17,685				21,300
	1,156,601				979,714
Accumulated depreciation and amortization	(698,895		)		(629,803		)
	$	457,706			$	349,911

Miscellaneous Noncurrent Assets

The following table presents the components of “Miscellaneous noncurrent assets” shown in the accompanying Consolidated Balance Sheets at September 28, 2018 and September 29, 2017 (in thousands):

F - 44

JACOBS ENGINEERING GROUP INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued)

	September 28, 2018				September 29, 2017
Deferred income taxes	$	319,405			$	368,700
Deferred compensation arrangement investments	282,974				142,522
Equity Method Investments	219,614				131,400
Notes receivable	1,274				17,839
Other	48,425				31,561
Total	$	871,692			$	692,022

Deferred compensation arrangement investments are comprised of the cash surrender value of life insurance policies and pooled-investment funds. The fair value of the pooled investment funds is derived using Level 2 inputs.

Accrued Liabilities

The following table presents the components of “Accrued liabilities” shown in the accompanying Consolidated Balance Sheets at September 28, 2018 and September 29, 2017 (in thousands):

	September 28, 2018				September 29, 2017
Accrued payroll and related liabilities	$	864,670			$	572,946
Project-related accruals	45,349				71,815
Non project-related accruals	349,384				116,051
Insurance liabilities	64,976				67,546
Sales and other similar taxes	83,151				32,163
Deferred rent	58,988				60,593
Dividends payable	22,111				18,573
Total	$	1,488,629			$	939,687

Other Deferred Liabilities

The following table presents the components of “Other deferred liabilities” shown in the accompanying Consolidated Balance Sheets at September 28, 2018 and September 29, 2017 (in thousands):

	September 28, 2018				September 29, 2017
Liabilities relating to defined benefit pension and early retirement plans	$	352,855			$	254,483
Liabilities relating to nonqualified deferred compensation arrangements	238,830				114,616
Deferred income taxes	177,217				177,765
Miscellaneous	639,969				185,417
Total	$	1,408,871			$	732,281

17.	Segment Information

During the second quarter of fiscal 2018, we reorganized our operating and reporting structure around three lines of business (“LOBs”), which also serve as the Company’s operating segments. This reorganization occurred in conjunction with the integration of CH2M into the Company's legacy businesses, and was intended to better serve our global clients, leverage our workforce, help streamline operations and provide enhanced growth opportunities. The three global LOBs are as follows: Aerospace, Technology, Environmental and Nuclear ("ATEN"); Buildings, Infrastructure and Advanced Facilities ("BIAF"); and Energy, Chemicals and Resources ("ECR"). Previously, the Company operated its business around four operating segments: Petroleum & Chemicals, Buildings & Infrastructure, Aerospace & Technology and Industrial. Beginning in the second quarter of fiscal 2018, management no longer views or manages our Industrial line of business as a separate, distinct operating segment. Therefore, the elements of our former Industrial business are now presented within each of the three current operating segments as appropriate. The Company’s LOB leadership and internal reporting structures report to the Chief Executive Officer, who is also the Chief Operating Decision Maker (“CODM”), and enable the CODM to evaluate the performance of each of these segments and make appropriate resource allocations among each of the segments. For purposes of the Company’s goodwill impairment testing, it has been determined that the Company’s operating segments are also its reporting units based on management’s conclusion that the components comprising each of its

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JACOBS ENGINEERING GROUP INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued)

operating segments share similar economic characteristics and meet the aggregation criteria for reporting units in accordance with ASC 350, Intangibles-Goodwill and Other.

Under the new organization, each LOB has a president that reports directly to the CODM. The sales function is managed on an LOB basis, and accordingly, the associated cost is 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 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 other corporate expenses).

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.

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

On December 15, 2017, the Company completed the acquisition of CH2M. For purposes of the Company’s fiscal 2018 segment reporting, the operating financial information of CH2M has been categorized within the Company’s new LOB business structure, with its sales and operating profit results for the time period during which CH2M has been under the ownership of the Company being allocated to the Company’s ATEN, BIAF and ECR lines of business under a transitional business organization structure. The Company has not completed its final assessment of the CH2M purchase price allocation, including the fair value estimates of assets acquired and liabilities assumed.

The following tables present total revenues and segment 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 transaction costs associated with the CH2M transaction and integration costs and the ECR sale (in thousands). Prior period information has been recast to reflect the current period presentation.

	For the Years Ended
	September 28, 2018				September 29, 2017				September 30, 2016
Revenues from External Customers:
Aerospace, Technology, Environmental and Nuclear	$	4,372,008			$	2,464,363			$	2,845,913
Buildings, Infrastructure and Advanced Facilities	6,184,883				3,830,697				3,419,505
Energy, Chemicals and Resources	4,427,755				3,727,728				4,698,739
Total	$	14,984,646			$	10,022,788			$	10,964,157

	For the Years Ended
	September 28, 2018				September 29, 2017				September 30, 2016
Segment Operating Profit:
Aerospace, Technology, Environmental and Nuclear (1)	$	311,871			$	200,179			$	215,119
Buildings, Infrastructure and Advanced Facilities (2)	482,277				263,679				217,412
Energy, Chemicals and Resources	218,109				161,312				153,797
Total Segment Operating Profit	1,012,257				625,170				586,328
Other Corporate Expenses	(113,702		)		(81,595		)		(60,100		)
Restructuring and Other Charges	(170,148		)		(134,206		)		(187,630		)
Transaction Costs	(80,436		)		(17,100		)		—
Total U.S. GAAP Operating Profit	647,971				392,269				338,598
Gain (Loss) on disposal of business and investments	(20,967		)		10,880				(41,410		)
Total Other (Expense) Income, net (3)	(72,299		)		(9,932		)		(10,465		)
Earnings Before Taxes	$	554,705			$	393,217			$	286,723

(1) Includes $15.0 million in charges during the year ended September 28, 2018 associated with a legal matter.

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued)

(2)	Excludes $23.8 million in restructuring and other charges for the year ended September 29, 2017. See Note 8, Restructuring and Other Charges.

(3)	Includes amortization of deferred financing fees related to the CH2M acquisition of $1.8 million for the year ended September 28, 2018. Also, includes $1.2 million and $277 thousand of restructuring and other charges for the years ended September 29, 2017 and September 30, 2016, respectively.

Included in “other corporate expenses” 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 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 expenses” 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 (loss) on disposal of business and investments for the year ended September 28, 2018 was a loss on the sale of the Company’s ownership interest in the Company's Guimar Engenharia LTDA ("Guimar") joint venture. Included in gain (loss) 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 gain (loss) on disposal of business and investments for the year ended September 30, 2016 was the loss associated with the sale of the Company’s French subsidiary and a non-cash write-off on an equity investment.

We provide a broad range of technical, professional and construction services including engineering, design and architectural services; construction and construction management services; operations and maintenance services; and process, scientific and systems consulting services. We provide our services through offices and subsidiaries located primarily in North America, South America, Europe, the Middle East, India, Australia, Africa and Asia. We provide our services under cost-reimbursable and fixed-price contracts.

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

	For the Years Ended
	September 28, 2018				September 29, 2017				September 30, 2016
Revenues:
United States	$	9,519,085			$	5,822,843			$	6,247,448
Europe	2,768,739				2,262,092				2,346,224
Canada	863,531				590,604				927,942
Asia	316,339				253,167				299,952
India	211,983				165,295				187,929
Australia and New Zealand	719,566				628,945				436,670
South America and Mexico	159,700				73,456				125,610
Middle East and Africa	425,703				226,386				392,382
Total	$	14,984,646			$	10,022,788			$	10,964,157
Property, equipment and improvements, net:
United States	$	316,633			$	220,416			$	195,392
Europe	59,019				46,108				37,163
Canada	21,559				18,435				21,464
Asia	3,588				2,793				3,069
India	19,446				19,191				13,350
Australia and New Zealand	16,151				18,692				18,888
South America and Mexico	4,562				4,619				5,621
Middle East and Africa	16,748				19,657				24,726
Total	$	457,706			$	349,911			$	319,673

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

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JACOBS ENGINEERING GROUP INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued)

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 28, 2018		September 29, 2017		September 30, 2016
23%		19%		21%

18. 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 28, 2018
Revenues	$	2,750,311			$	3,935,028			$	4,156,663			$	4,142,644			$	14,984,646
Operating profit (a)	$	47,644		(e)	$	146,286		(e)	$	212,729		(e)	$	241,312		(e)	$	647,971
Earnings before taxes	$	41,916			$	122,167			$	192,783			$	197,839			$	554,705
Net earnings of the Group	$	2,561			$	51,932			$	150,071			$	(31,422	)		$	173,142
Net earnings attributable to Jacobs	$	2,163		(e)	$	48,587		(e)	$	150,222		(e)	$	(37,541	)	(e)	$	163,431
Earnings per share:
Basic	$	0.02		(e)	$	0.34		(e)	$	1.05		(e)	$	(0.26	)	(e)	$	1.18
Diluted	$	0.02		(e)	$	0.34		(e)	$	1.05		(e)	$	(0.26	)	(e)	$	1.17
September 29, 2017
Revenues	$	2,551,604			$	2,302,567		(c)	$	2,514,751		(c)	$	2,653,866			$	10,022,788
Operating profit (a)	$	88,628			$	68,173		(c)	$	128,475		(c)	$	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		(c)	$	50,018		(c)	$	89,032		(c)	$	94,141		(c)(d)	$	293,727
Earnings per share:
Basic	$	0.50		(c)	$	0.41		(c)	$	0.74		(c)	$	0.78		(c)(d)	$	2.43
Diluted	$	0.50		(c)	$	0.41		(c)	$	0.74		(c)	$	0.78		(c)(d)	$	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

(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 $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.

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JACOBS ENGINEERING GROUP INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued)

(d)	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.

(e)

Includes $87.0 million in operating profit, $94.8 million in net earnings attributable to Jacobs, or $0.75 per diluted share, in the first quarter of fiscal 2018; includes $73.7 million in operating profit, $95.4 million in net earnings attributable to Jacobs, or $0.66 per diluted share, in the second quarter of fiscal 2018; includes $51.3 million in operating profit and $43.9 million in net earnings attributable to Jacobs, or $0.31 per diluted share, in the third quarter of fiscal 2018; includes $38.5 million in operating profit, $225.9 million in net earnings attributable to Jacobs, or $1.57 per diluted share, in the fourth quarter of fiscal 2018, in each case, related to restructuring and other charges, transaction costs and charges relating to U.S. tax reform. During the fourth quarter, the $225.9 million in restructuring and other charges included in net earnings attributable to Jacobs includes $21.0 million related to the loss on the sale of our Guimar joint venture investment.

19. Subsequent Events

On October 21, 2018, Jacobs and WorleyParsons Limited, a company incorporated in Australia (“Buyer”), entered into a Stock and Asset Purchase Agreement pursuant to which Buyer agreed to acquire the Company’s ECR business for a purchase price of $3.3 billion consisting of (i) $2.6 billion in cash plus (ii) ordinary shares of the Buyer equal to $700 million, subject to adjustments for changes in working capital and certain other items (the “Transaction”). The Transaction, which has been approved by the boards of directors of the Company and Buyer, is expected to close in the first half of calendar year 2019.

The completion of the Transaction is subject to certain customary closing conditions, including, but not limited to, (i) the absence of any law or order prohibiting the consummation of the Transaction, (ii) the expiration or termination of the waiting period (and any extensions thereof) applicable under the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended (the “HSR Act”), (iii) the expiration or termination of all applicable waiting periods and the receipt of all applicable approvals required pursuant to or in connection with the competition laws of certain foreign jurisdictions in which the Business operates, (iv) the receipt of approval from the Committee on Foreign Investment in the United States (“CFIUS”), (v) the completion of a certain number of agreed upon steps of the Reorganization (as defined in the Purchase Agreement) and (vi) the transfer of certain owned real property of the Business.

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REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

To the Stockholders and the Board of Directors of Jacobs Engineering Group Inc.

Opinion on the Financial Statements

We have audited the accompanying consolidated balance sheets of Jacobs Engineering Group Inc. and subsidiaries (the Company) as of September 28, 2018 and September 29, 2017, 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 28, 2018, and the related notes (collectively referred to as the “consolidated financial statements”). In our opinion, the consolidated financial statements present fairly, in all material respects, the financial position of the Company at September 28, 2018 and September 29, 2017, and the consolidated results of its operations and its cash flows for each of the three fiscal years in the period ended September 28, 2018, 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) (PCAOB), the Company's internal control over financial reporting as of September 28, 2018, 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, 2018 expressed an adverse opinion thereon.

Basis for Opinion

These financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on the Company’s financial statements based on our audits. We are a public accounting firm registered with the PCAOB and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.

We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud. Our audits included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that our audits provide a reasonable basis for our opinion.

/s/ Ernst & Young LLP

We have served as the Company’s auditor since 1987.

Dallas, Texas

November 21, 2018

F - 50

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

To the Stockholders and the Board of Directors of Jacobs Engineering Group Inc.

Opinion on Internal Control over Financial Reporting

We have audited Jacobs Engineering Group Inc. and subsidiaries’ internal control over financial reporting as of September 28, 2018, 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). In our opinion, because of the effect of the material weakness described below based on the achievement of the objectives of the control criteria, Jacobs Engineering Group Inc. and subsidiaries (the Company) has not maintained effective control over financial reporting as of September 28, 2018, based on the COSO criteria.

As indicated in the accompanying Management’s Annual Report on Internal Control Over Financial Reporting, management’s assessment of and conclusion on the effectiveness of internal control over financial reporting did not include the internal controls of the CH2M HILL Companies, Ltd. (CH2M) acquired on December 15, 2017, which is included in the 2018 consolidated financial statements of the Company and constituted 42% of total assets as of September 28, 2018, 25% of revenues and 30% of operating profit for the fiscal year then ended. Our audit of internal control over financial reporting of the Company also did not include an evaluation of the internal control over financial reporting of CH2M.

A material weakness is a deficiency, or combination of deficiencies, in internal control over financial reporting, such that there is a reasonable possibility that a material misstatement of the company’s annual or interim financial statements will not be prevented or detected on a timely basis. The following material weakness has been identified and included in management’s assessment. Management has identified a material weakness in controls related to the Company’s accounting for income taxes in connection with the CH2M business combination.

We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB), the consolidated balance sheets of the Company as of September 28, 2018 and September 29, 2017, 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 28, 2018, and the related notes. This material weakness was considered in determining the nature, timing and extent of audit tests applied in our audit of the 2018 consolidated financial statements, and this report does not affect our report dated November 21, 2018, which expressed an unqualified opinion thereon.

Basis for Opinion

The Company’s 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 are a public accounting firm registered with the PCAOB and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.

We conducted our audit in accordance with the standards of the PCAOB. 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.

Definition and Limitations of Internal Control Over Financial Reporting

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

F - 51

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.

/s/ Ernst & Young LLP

Dallas, Texas

November 21, 2018

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