Item 15. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES

(a) Documents filed as part of this report:

(1)The Company’s Consolidated Financial Statements at October 2, 2020 and September 27, 2019 and for each of the three years in the period ended October 2, 2020, 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 among The KeyW Holding Corporation, Jacobs Engineering Group Inc. and Atom Acquisition Sub, Inc., dated April 21, 2019. Filed as Exhibit 2.1 to the Registrant’s Current Report on Form 8-K on April 22, 2019 and incorporated herein by reference.
2.2						Amended and Restated Stock and Asset Purchase Agreement, dated as of April 26, 2019, by and between Jacobs Engineering Group Inc. and WorleyParsons Limited. Filed as Exhibit 2.1 to the Registrant's Current Report on Form 8-K on April 29, 2019 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 as of October 5, 2020. Filed as Exhibit 3.1 to the Registrant’s Current Report on Form 8-K on September 18, 2020 and incorporated herein by reference.
4.1†						Description of the Registrant’s Securities.
10.1						Second Amended and Restated Credit Agreement, dated March 27, 2019, by and among Jacobs Engineering Group Inc., certain of its subsidiaries party thereto, the lenders 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 28, 2019 and incorporated herein by reference.
10.2						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.
10.3						First Amendment to Credit Agreement, dated as of November 30, 2018, among Jacobs Engineering Group Inc., the lenders party thereto and BNP Paribas, as administrative agent. Filed as Exhibit 10.2 to the Registrant’s Current Report on Form 8-K on December 4, 2018 and incorporated herein by reference.
10.4						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.
10.5						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.
10.6						Credit Agreement, dated as of March 25, 2020, among Jacobs Engineering Group Inc. and Jacobs U.K. Limited, as borrowers, the lenders party thereto, 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 Nova Scotia, HSBC Bank USA, National Association, USA, PNC Bank, National Association, TD Bank, N.A., Truist Bank and U.S. Bank National Association, as co-documentation agents, and BofA Securities, Inc., BNP Paribas Securities Corp. and Wells Fargo Securities, LLC, as joint lead arrangers and joint bookrunners. Filed as Exhibit 10.1 to the Registrant’s Current Report on Form 8-K on March 27, 2020 and incorporated herein by reference.

Page 80

10.7#						Offer Letter by and between Jacobs Engineering Group Inc. and Steven J. Demetriou, dated July 10, 2015. Filed as Exhibit 10.1 to the Registrant’s Current Report on Form 8-K on July 16, 2015 and incorporated herein by reference.
10.8#						Offer Letter by and between Jacobs Engineering Group Inc. and Kevin C. Berryman, effective November 12, 2014. Filed as Exhibit 99.1 to Amendment No. 1 to the Registrant’s Current Report on Form 8-K/A on November 17, 2014 and incorporated herein by reference.
10.9#						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.
10.10#						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
10.11#						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.
10.12#						Offer Letter by and between Jacobs Engineering Group Inc. and Dawne Hickton, effective June 3, 2019. Filed as Exhibit 10.2 to the Registrant’s Current Report on Form 10-Q on August 5, 2019 and incorporated herein by reference.
10.13#						Retirement Transition Agreement by and between Jacobs Engineering Group Inc. and Terence Hagen, dated as of June 6, 2019. Filed as Exhibit 10.3 to the Registrant’s Current Report on Form 10-Q on August 5, 2019 and incorporated herein by reference.
10.14#						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.
10.15#						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.
10.16#						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.
10.17#						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.
10.18#						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.
10.19#						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.
10.20#						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.
10.21#						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.
10.22#						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.
10.23#						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.
10.24#						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.

Page 81

10.25#						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.
10.26#						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.
10.27#						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.
10.28#						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.
10.29#						Form of Restricted Stock Unit Agreement (Performance Shares - Earnings Per Share Growth - 2019 Award) (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 first quarter of fiscal 2018 filed February 6, 2019 and incorporated herein by reference.
10.30#						Form of Restricted Stock Unit Agreement (Performance Shares - ROIC - 2019 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 filed February 6, 2019 and incorporated herein by reference.
10.31#						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.
10.32#						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.
10.33#						Form of Restricted Stock Unit Agreement (Performance Shares – Earnings Per Share Growth – 2020 Award) (awarded pursuant to the Jacobs Engineering Group Inc. 1999 Stock Incentive Plan). Filed as Exhibit 10.1 to the Registrant’s Quarterly Report on Form 10-Q for the first quarter of fiscal 2020 and incorporated herein by reference.
10.34#						Form of Restricted Stock Unit Agreement (Performance Shares – ROIC – 2020 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 first quarter of fiscal 2020 and incorporated herein by reference.
10.35#						Form of Restricted Stock Unit Agreement (Time-Based Vesting) (awarded pursuant to the Jacobs Engineering Group Inc. 1999 Stock Incentive Plan). Filed as Exhibit 10.3 to the Registrant’s Quarterly Report on Form 10-Q for the first quarter of fiscal 2020 and incorporated herein by reference.
10.36						Transition Services Agreement, dated as of April 26, 2019, by and between Jacobs Engineering Group Inc. and WorleyParsons Limited. Filed as Exhibit 10.1 to the Registrant's Current Report on Form 8-K on April 29, 2019 and incorporated herein by reference.
10.37# †						Jacobs Engineering Group Inc. Leadership Performance Plan, as amended and restated effective November 18, 2020.
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.

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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.
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
104†						XBRL Coverpage interactive data file

†			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 24, 2020						By:						/S/ Steven J. Demetriou
																		Steven J. Demetriou
																		Chair of the Board and Chief Executive Officer (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 83

Signature						Title						Date
/S/ Steven J. Demetriou						Chair of the Board and Chief Executive Officer (Principal Executive Officer)						November 24, 2020
Steven J. Demetriou
/S/ Joseph R. Bronson						Director						November 24, 2020
Joseph R. Bronson
/S/ Vincent K. Brooks						Director						November 24, 2020
Vincent K. Brooks
/S/ Robert C. Davidson, Jr.						Director						November 24, 2020
Robert C. Davidson, Jr.
/S/ Ralph E. Eberhart						Director						November 24, 2020
Ralph E. Eberhart
/S/ Manny Fernandez						Director						November 24, 2020
Manny Fernandez
/S/ Georgette D. Kiser						Director						November 24, 2020
Georgette D. Kiser
/S/ Linda Fayne Levinson						Director						November 24, 2020
Linda Fayne Levinson
/S/ Barbara L. Loughran						Director						November 24, 2020
Barbara L. Loughran
/S/ Robert A. McNamara						Director						November 24, 2020
Robert A. McNamara
/S/ Peter J. Robertson						Director						November 24, 2020
Peter J. Robertson
/S/ Christopher M.T. Thompson						Director						November 24, 2020
Christopher M.T. Thompson
/S/ Kevin C. Berryman						Executive Vice President, Chief Financial Officer (Principal Financial Officer)						November 24, 2020
Kevin C. Berryman
/S/ William B. Allen						Senior Vice President and Chief Accounting Officer (Principal Accounting Officer)						November 24, 2020
William B. Allen

Page 84

JACOBS ENGINEERING GROUP INC. AND SUBSIDIARIES

CONSOLIDATED FINANCIAL STATEMENTS

WITH REPORTS OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

October 2, 2020

F-1

JACOBS ENGINEERING GROUP INC. AND SUBSIDIARIES

INDEX TO CONSOLIDATED FINANCIAL STATEMENTS

October 2, 2020

Consolidated Balance Sheets at October 2, 2020 and September 27, 2019						F-3
Consolidated Statements of Earnings for the Fiscal Years Ended October 2, 2020, September 27, 2019 and September 28, 2018						F-4
Consolidated Statements of Comprehensive Income for the Fiscal Years Ended October 2, 2020, September 27, 2019 and September 28, 2018						F-5
Consolidated Statements of Stockholders’ Equity for the Fiscal Years Ended October 2, 2020, September 27, 2019 and September 28, 2018						F-6
Consolidated Statements of Cash Flows for the Fiscal Years Ended October 2, 2020, September 27, 2019 and September 28, 2018						F-7
Notes to Consolidated Financial Statements						F-9
Reports of Ernst & Young LLP, Independent Registered Public Accounting Firm						F-62

F-2

JACOBS ENGINEERING GROUP INC. AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS

(In thousands, except share information)

			October 2, 2020						September 27, 2019
ASSETS
Current Assets:
Cash and cash equivalents			$	862,424					$	631,068
Receivables and contract assets			3,167,310						2,840,209
Prepaid expenses and other			162,355						189,358
Investment in equity securities			347,510						451,133
Total current assets			4,539,599						4,111,768
Property, Equipment and Improvements, net			319,371						308,143
Other Noncurrent Assets:
Goodwill			5,639,091						5,432,544
Intangibles, net			658,340						665,076
Deferred income tax assets			211,047						514,633
Operating lease right-of-use assets			576,915						—
Miscellaneous			409,990						430,547
Total other noncurrent assets			7,495,383						7,042,800
			$	12,354,353					$	11,462,711
LIABILITIES AND STOCKHOLDERS’ EQUITY
Current Liabilities:
Short-term debt			$	—					$	199,901
Accounts payable			1,061,754						1,072,645
Accrued liabilities			1,249,883						1,386,952
Operating lease liability			164,312						—
Contract liabilities			465,648						414,208
Total current liabilities			2,941,597						3,073,706
Long-term debt			1,676,941						1,201,245
Liabilities relating to defined benefit pension and retirement plans			568,176						575,897
Deferred income tax liabilities			3,366						233,111
Long-term operating lease liability			735,202						—
Other deferred liabilities			573,404						610,094
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 - 129,747,783 shares and 132,879,395 shares as of October 2, 2020 and September 27, 2019, respectively			129,748						132,879
Additional paid-in capital			2,598,446						2,559,450
Retained earnings			4,020,575						3,939,174
Accumulated other comprehensive loss			(933,057)						(916,812)
Total Jacobs stockholders’ equity			5,815,712						5,714,691
Noncontrolling interests			39,955						53,967
Total Group stockholders’ equity			5,855,667						5,768,658
			$	12,354,353					$	11,462,711

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 October 2, 2020, September 27, 2019 and September 28, 2018

(In thousands, except per share information)

			October 2, 2020						September 27, 2019						September 28, 2018
Revenues			$	13,566,975					$	12,737,868					$	10,579,773
Direct cost of contracts			(10,980,307)						(10,260,840)						(8,421,223)
Gross profit			2,586,668						2,477,028						2,158,550
Selling, general and administrative expenses			(2,050,695)						(2,072,177)						(1,771,107)
Operating Profit			535,973						404,851						387,443
Other Income (Expense):
Interest income			4,729						9,487						8,984
Interest expense			(62,206)						(83,847)						(76,760)
Miscellaneous (expense) income, net			(37,293)						20,468						11,314
Total other expense, net			(94,770)						(53,892)						(56,462)
Earnings from Continuing Operations Before Taxes			441,203						350,959						330,981
Income Tax Expense for Continuing Operations			(55,320)						(36,954)						(325,632)
Net Earnings of the Group from Continuing Operations			385,883						314,005						5,349
Net Earnings of the Group from Discontinued Operations			137,984						559,214						167,793
Net Earnings of the Group			523,867						873,219						173,142
Net Earnings Attributable to Noncontrolling Interests from Continuing Operations			(32,022)						(23,045)						(9,534)
Net Earnings (Loss) Attributable to Jacobs from Continuing Operations			353,861						290,960						(4,185)
Net Earnings Attributable to Noncontrolling Interests from Discontinued Operations			—						(2,195)						(177)
Net Earnings Attributable to Jacobs from Discontinued Operations			137,984						557,019						167,616
Net Earnings Attributable to Jacobs			$	491,845					$	847,979					$	163,431
Net Earnings (Loss) Per Share:
Basic Net Earnings (Loss) from Continuing Operations Per Share			$	2.69					$	2.11					$	(0.03)
Basic Net Earnings from Discontinued Operations Per Share			$	1.05					$	4.03					$	1.21
Basic Earnings Per Share			$	3.74					$	6.14					$	1.18
Diluted Net Earnings (Loss) from Continuing Operations Per Share			$	2.67					$	2.09					$	(0.03)
Diluted Net Earnings from Discontinued Operations Per Share			$	1.04					$	4.00					$	1.21
Diluted Earnings Per Share			$	3.71					$	6.08					$	1.18

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 October 2, 2020, September 27, 2019 and September 28, 2018

(In thousands)

			October 2, 2020						September 27, 2019						September 28, 2018
Net Earnings of the Group			$	523,867					$	873,219					$	173,142
Other Comprehensive Income (Loss):
Foreign currency translation adjustment			64,052						15,972						(109,877)
Gain (loss) on cash flow hedges			(21,883)						1,369						118
Change in pension and retiree medical plan liabilities			(75,334)						(157,632)						(27,231)
Other comprehensive income (loss) before taxes			(33,165)						(140,291)						(136,990)
Income Tax (Expense) Benefit:
Foreign currency translation adjustment			(3,722)						—						—
Cash flow hedges			7,285						(568)						859
Change in pension and retiree medical plan liabilities			13,357						30,750						(17,058)
Income Tax (Expense) Benefit:			16,920						30,182						(16,199)
Net other comprehensive income (loss)			(16,245)						(110,109)						(153,189)
Net Comprehensive Income (Loss) of the Group			507,622						763,110						19,953
Net (Earnings) Loss Attributable to Noncontrolling Interests			(32,022)						(25,240)						(9,711)
Net Comprehensive Income (Loss) Attributable to Jacobs			$	475,600					$	737,870					$	10,242

See the accompanying Notes to Consolidated Financial Statements including the Company's note on

Other Financial Information 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 October 2, 2020, September 27, 2019 and September 28, 2018

(In thousands)

			Common Stock						Additional Paid-in Capital						Retained Earnings						Accumulated Other Comprehensive Income (Loss)						Total Jacobs Stockholders’ Equity						Noncontrolling Interests						Total Group Stockholders’ Equity
Balances at 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 and retiree medical plan 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
Net earnings			—						—						847,979						—						847,979						25,240						873,219
Disposition of ECR business, net of deferred taxes of $5,402			—						—						—						112,764						112,764						(45,727)						67,037
Adoption of ASC 606, net of deferred taxes of $(10,825)			—						—						(37,209)						—						(37,209)						—						(37,209)
Foreign currency translation adjustments			—						—						—						(84,456)						(84,456)						—						(84,456)
Pension and retiree medical plan liability, net of deferred taxes of $25,348			—						—						—						(139,218)						(139,218)						—						(139,218)
Gain on derivatives, net of deferred taxes of $568			—						—						—						801						801						—						801
Noncontrolling interest acquired / consolidated			—						(1,113)						—						—						(1,113)						—						(1,113)
Dividends			—						—						(92,980)						—						(92,980)						—						(92,980)
Distributions to noncontrolling interests			—						—						—						—						—						(15,555)						(15,555)
Stock based compensation			—						69,128						9						—						69,137						—						69,137
Issuances of equity securities including shares withheld for taxes			1,681						43,508						(6,872)						—						38,317						—						38,317
Repurchases of equity securities			(11,020)						(260,912)						(581,744)						—						(853,676)						—						(853,676)
Balances at September 27, 2019			$	132,879					$	2,559,450					$	3,939,174					$	(916,812)					$	5,714,691					$	53,967					$	5,768,658
Net earnings			—						—						491,845						—						491,845						32,022						523,867
Foreign currency translation adjustments, net of deferred taxes of $3,722			—						—						—						60,330						60,330						—						60,330
Pension and retiree medical plan liability, net of deferred taxes of $(13,357)			—						—						—						(61,977)						(61,977)						—						(61,977)
(Loss) Gain on derivatives, net of deferred taxes of $(7,285)			—						—						—						(14,598)						(14,598)						—						(14,598)
Dividends			—						—						(99,921)						—						(99,921)						—						(99,921)
Noncontrolling interests - distributions and other			—						5,002						—						—						5,002						(46,034)						(41,032)
Stock based compensation			—						47,048						1,102						—						48,150						—						48,150
Issuances of equity securities including shares withheld for taxes			998						17,890						(9,447)						—						9,441						—						9,441
Repurchases of equity securities			(4,129)						(30,944)						(302,178)						—						(337,251)						—						(337,251)
Balances at October 2, 2020			$	129,748					$	2,598,446					$	4,020,575					$	(933,057)					$	5,815,712					$	39,955					$	5,855,667

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 October 2, 2020, September 27, 2019 and September 28, 2018

(In thousands)

			October 2, 2020						September 27, 2019						September 28, 2018
Cash Flows from Operating Activities:
Net earnings attributable to the Group			$	523,867					$	873,219					$	173,142
Adjustments to reconcile net earnings to net cash flows provided by (used for) operations:
Depreciation and amortization:
Property, equipment and improvements			91,070						90,171						117,856
Intangible assets			90,563						79,098						80,731
Gain on sale of ECR business			(110,236)						(935,110)						—
Loss on disposal of other businesses and investments			—						9,608						20,967
Loss on investment in equity securities			103,623						78,108						—
Stock based compensation			48,150						69,137						79,242
Equity in earnings of operating ventures, net of return on capital distributions			9,172						(8,784)						(2,639)
Loss on disposals of assets, net			766						6,222						17,491
Impairment of long-lived assets			162,238						—						—
Loss (Gain) on pension and retiree medical plan changes			4,598						(33,087)						5,414
Deferred income taxes			82,275						(105,939)						288,126
Changes in assets and liabilities, excluding the effects of businesses acquired:
Receivables and contract assets, net of contract liabilities			(107,784)						(67,894)						(428,930)
Prepaid expenses and other current assets			(27,280)						(13,117)						(19,134)
Accounts payable			(92,838)						295,146						183,057
Income taxes payable			35,194						(294,995)						68,970
Accrued liabilities			(27,849)						(305,716)						(37,746)
Other deferred liabilities			(64,390)						(106,256)						(79,280)
Other, net			85,710						3,753						13,885
Net cash provided by (used for) operating activities			806,849						(366,436)						481,152
Cash Flows from Investing Activities:
Additions to property and equipment			(118,269)						(135,977)						(94,884)
Disposals of property and equipment and other assets			96						7,177						3,293
Capital contributions to equity investees, net of return of capital distributions			(12,278)						(8,761)						(5,416)
Acquisitions of businesses, net of cash acquired			(293,580)						(575,110)						(1,488,336)
Disposals of investment in equity securities			—						64,708						—
(Payments) proceeds related to sales of businesses			(5,061)						2,801,425						7,736
Purchases of noncontrolling interests			—						(1,113)						—
Net cash (used for) provided by investing activities			(429,092)						2,152,349						(1,577,607)
Cash Flows from Financing Activities:
Proceeds from long-term borrowings			2,986,661						2,782,193						5,784,355
Repayments of long-term borrowings			(2,521,467)						(3,996,970)						(4,572,182)
Proceeds from short-term borrowings			78						200,001						712
Repayments of short-term borrowings			(200,008)						(28,566)						(3,391)
Debt issuance costs			(1,807)						(3,915)						—
Proceeds from issuances of common stock			37,235						64,958						53,584
Common stock repurchases			(337,251)						(853,676)						(2,981)
Taxes paid on vested restricted stock			(27,794)						(26,641)						(31,108)
Cash dividends, including to noncontrolling interests			(143,962)						(106,396)						(86,569)
Net cash (used for) provided by financing activities			(208,315)						(1,969,012)						1,142,420
Effect of Exchange Rate Changes			61,914						20,809						(26,758)
Net Increase (Decrease) in Cash and Cash Equivalents			231,356						(162,290)						19,207
Cash and Cash Equivalents at the Beginning of the Period			631,068						793,358						774,151
Cash and Cash Equivalents at the End of the Period			862,424						631,068						793,358
Less Cash and Cash Equivalents included in Assets held for Sale			—						—						(158,488)
Cash and Cash Equivalents of Continuing Operations at the End of the Period			$	862,424					$	631,068					$	634,870

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

Jacobs is a leading global professional services company that designs and deploys technology-centric solutions to solve many of the world’s most complex challenges. We operate in two lines of business: Critical Mission Solutions and People & Places Solutions.

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, Europe, the Middle East, India, Australia, New Zealand and Asia. We provide our services under cost-reimbursable and fixed-price contracts, with our fixed-price contracts comprised mainly of professional services arrangements and in some limited cases, construction. The percentage of revenues realized from each of these types of contracts for the fiscal years ended October 2, 2020, September 27, 2019 and September 28, 2018 was as follows:

			For the Years Ended
			October 2, 2020						September 27, 2019						September 28, 2018
Cost-reimbursable			76%						76%						74%
Fixed-price			24%						24%						26%

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. Certain prior year balances have been reclassified to conform to current year presentation.

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 2020 included an extra week of activity.

Effective the beginning of fiscal first quarter 2020, the Company adopted ASU 2016-02, Leases ("ASC 842"), including the subsequent ASU's that amended and clarified the related guidance. The Company adopted ASC 842 using a modified retrospective approach, and accordingly the new guidance was applied to leases that existed or were entered into after the first day of adoption without adjusting the comparative periods presented. Please refer to Note 10- Leases for a discussion of our updated policies and disclosures related to leases.

Effective the beginning of fiscal first quarter 2019, the Company adopted ASC Topic 606, Revenue from Contracts with Customers, including the subsequent ASUs that amended and clarified the related guidance. The Company adopted ASC Topic 606 using the modified retrospective method, and accordingly the new guidance was applied retrospectively to contracts that were not completed or substantially completed as of September 29, 2018 (the date of initial application). Please refer to Note 3- Revenue Accounting for Contracts.

On March 6, 2020, a subsidiary of Jacobs completed the acquisition of the nuclear consulting, remediation and program management business of John Wood Group, a U.K.-based energy services company, for an enterprise value of £246 million, or approximately $317.9 million, less cash acquired of $24.3 million. The Company has recorded its preliminary purchase price allocation associated with the acquisition, which is summarized in Note 14- Business Combinations.

On June 12, 2019, Jacobs completed the acquisition of The KeyW Holding Corporation (“KeyW”), a U.S.-based national security solutions provider to the intelligence, cyber, and counterterrorism communities by acquiring 100% of the outstanding shares of KeyW common stock. The Company paid total consideration of $902.6 million which was comprised of approximately $604.2 million in cash to the former stockholders and certain equity award holders of KeyW and the assumption of KeyW’s debt of approximately $298.4 million. The Company repaid all of the assumed

F-8

JACOBS ENGINEERING GROUP INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued)

KeyW debt by the end of the fourth fiscal quarter of 2019. The Company has recorded its final purchase price allocation associated with the acquisition, which is summarized in Note 14- Business Combinations.

On April 26, 2019, Jacobs completed the sale of its Energy, Chemicals and Resources ("ECR") business to Worley Limited, a company incorporated in Australia ("Worley"), for a purchase price of $3.4 billion consisting of (i) $2.8 billion in cash plus (ii) 58.2 million ordinary shares of Worley, subject to adjustments for changes in working capital and certain other items (the “ECR sale”). As a result of the ECR sale, substantially all ECR-related assets and liabilities have been sold (the "Disposal Group"). We determined that the Disposal Group should be reported as discontinued operations in accordance with ASC 210-05, Discontinued Operations because their disposal represents a strategic shift that had a major effect on our operations and financial results. As such, the financial results of the ECR business are reflected in our Consolidated Statements of Earnings as discontinued operations for all periods presented. As of the year ended September 27, 2019, a portion of the ECR business remained held by Jacobs and continued to be classified as held for sale in accordance with U.S. GAAP. As of October 2, 2020, all of the ECR business to be sold under the terms of the sale has been conveyed to Worley and as such, no amounts remain held for sale. For further discussion see Note 15- Sale of Energy, Chemicals and Resources ("ECR") Business to the consolidated financial statements.

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 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 Company has finalized its purchase accounting processes associated with the acquisition, which is summarized in Note 14- Business Combinations.

**2.**Significant Accounting Policies

Revenue Accounting for Contracts

Engineering, Procurement & Construction Contracts and Service Contracts

On September 29, 2018, the Company adopted ASC Topic 606, Revenue from Contracts with Customers, including the subsequent ASUs that amended and clarified the related guidance. The Company recognizes engineering, procurement, and construction contract revenue over time, as performance obligations are satisfied, due to the continuous transfer of control to the customer. Upon adoption of ASC Topic 606, contracts which include engineering, procurement and construction services are generally accounted for as a single deliverable (a single performance obligation) and are no longer segmented between types of services. In some instances, the Company’s services associated with a construction activity are limited to specific tasks such as customer support, consulting or supervisory services. In these instances, the services are typically identified as separate performance obligations.

The Company recognizes revenue using the percentage-of-completion method, based primarily on contract costs incurred to date compared to total estimated contract costs. The percentage-of-completion method (an input method) is the most representative depiction of the Company’s performance because it directly measures the value of the services transferred to the customer. Subcontractor materials, labor and equipment and, in certain cases, customer-furnished materials and labor and equipment are included in revenue and cost of revenue when management believes that the company is acting as a principal rather than as an agent (e.g., the company integrates the materials, labor and equipment into the deliverables promised to the customer or is otherwise primarily responsible for fulfillment and acceptability of the materials, labor and/or equipment). The Company recognizes revenue, but not profit, on certain uninstalled materials that are not specifically produced, fabricated, or constructed for a project. Revenue on these uninstalled materials is recognized when control is transferred. Changes to total estimated contract cost or losses, if any, are recognized in the period in which they are determined as assessed at the contract level. Pre-contract costs are expensed as incurred unless they are expected to be recovered from the client. Project mobilization costs are generally charged to project costs as incurred when they are an integrated part of the performance obligation being transferred to the client. Under the typical payment terms of our engineering, procurement and construction contracts, amounts are billed as work progresses in accordance with agreed-upon contractual terms at periodic intervals (e.g., biweekly or monthly) and customer payments are typically due within 30 to 60 days of billing, depending on the contract.

F-9

JACOBS ENGINEERING GROUP INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued)

For service contracts, the Company recognizes revenue over time using the cost-to-cost percentage-of-completion method. Service contracts that include multiple performance obligations are segmented between types of services. For contracts with multiple performance obligations, the Company allocates the transaction price to each performance obligation using an estimate of the stand-alone selling price of each distinct service in the contract. In some instances where the Company is standing ready to provide services, the Company recognizes revenue ratably over the service period. Under the typical payment terms of our service contracts, amounts are billed as work progresses in accordance with agreed-upon contractual terms, and customer payments are typically due within 30 to 60 days of billing, depending on the contract.

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 acting as principal 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”).

Back charges to suppliers or subcontractors are recognized as a reduction of cost when it is determined that recovery of such cost is probable and the amounts can be reliably estimated. Disputed back charges are recognized when the same requirements described above have been satisfied.

Variable Consideration

The nature of the Company’s contracts gives rise to several types of variable consideration, including claims and unpriced change orders; awards and incentive fees; and liquidated damages and penalties. The Company recognizes revenue for variable consideration when it is probable that a significant reversal in the amount of cumulative revenue recognized will not occur. The Company estimates the amount of revenue to be recognized on variable consideration using the expected value (i.e., the sum of a probability-weighted amount) or the most likely amount method, whichever is expected to better predict the amount. Factors considered in determining whether revenue associated with claims (including change orders in dispute and unapproved change orders in regard to both scope and price) should be recognized include the following: (a) the contract or other evidence provides a legal basis for the claim, (b) additional costs were caused by circumstances that were unforeseen at the contract date and not the result of deficiencies in the company’s performance, (c) claim-related costs are identifiable and considered reasonable in view of the work performed, and (d) evidence supporting the claim is objective and verifiable. If the requirements for recognizing revenue for claims or unapproved change orders are met, revenue is recorded only when the costs associated with the claims or unapproved change orders have been incurred and only up to the amount of cost incurred.

The Company generally provides limited warranties for work performed under its engineering and construction contracts. The warranty periods typically extend for a limited duration following substantial completion of the Company’s work on the project. Historically, warranty claims have not resulted in material costs incurred for which the Company was not compensated for by the customer.

Practical Expedient

If the Company has a right to consideration from a customer in an amount that corresponds directly with the value of the Company’s performance completed to date (a service contract in which the company bills a fixed amount for each hour of service provided), the Company recognizes revenue in the amount to which it has a right to invoice for services performed.

The Company does not adjust the contract price for the effects of a significant financing component if the Company expects, at contract inception, that the period between when the Company transfers a service to a customer and when the customer pays for that service will be one year or less.

See Note 3- Revenue Accounting for Contracts for further discussion.

F-10

JACOBS ENGINEERING GROUP INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued)

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. The Company is unable to estimate the maximum potential amount of future payments that we could be required to make under outstanding performance guarantees related to joint venture projects due to a number of factors, including but not limited to, the nature and extent of any contractual defaults by our joint venture partners, resource availability, potential performance delays caused by the defaults, the location of the projects, and the terms of the related contracts. See Note 18- Contractual Guarantees, Litigation, Investigations and Insurance for further discussion.

Most 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.

Our unconsolidated joint ventures (including equity method investments) are reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount of the investment might not be recoverable, and impairment losses are recognized for such investments if there is a decline in fair value below carrying value that is considered to be other-than-temporary.

See Note 8- Joint Ventures and VIEs for further discussion.

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.

F-11

JACOBS ENGINEERING GROUP INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued)

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 short-term debt 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 17- Commitments and Contingencies and Derivative Financial Instruments and the Company's investment in Worley ordinary shares discussed in Note 15- Sale of Energy, Chemicals and Resources 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 an income and 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 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 October 2, 2020 and September 27, 2019 consisted primarily of money market mutual funds and overnight bank deposits.

Receivables, Contract Assets and Contract Liabilities

Receivables include amounts billed, net and unbilled receivables. 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.

F-12

JACOBS ENGINEERING GROUP INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued)

Unbilled receivables and other, which represent an unconditional right to payment subject only to the passage of time in connection with our client contracts, are reclassified to amounts billed when they are billed under the terms of the contract. Prior to adoption of ASC 606, receivables related to contractual milestones or achievement of performance-based targets were included in unbilled receivables. These are now included in contract assets. We anticipate that substantially all of such unbilled amounts will be billed and collected over the next twelve months.

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

Contract liabilities represent amounts billed to clients in excess of revenue recognized to date. We anticipate that substantially all such amounts will be earned over the next twelve months.

In order to manage short-term liquidity and credit exposure, Jacobs may sell current customer receivables to third parties. When Jacobs sells customer receivables to third parties it accelerates the receipt of cash that would otherwise have been collected from customers and records these transactions as reductions to the receivable amounts. Jacobs does not maintain continuing involvement in these arrangements.

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.

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 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 2020, 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.

Impairment of Long-Lived Assets

Our long-lived assets other than goodwill principally consist of right-of-use lease assets, property, equipment and improvements, and finite-lived intangible assets. These long-lived assets are evaluated for impairment for each of our asset groups in accordance with ASC 360 by first identifying whether indicators of impairment exist. If such indicators are present, we assess long-lived asset groups for recoverability based on estimated future undiscounted cash flows. For asset groups where the recoverability test fails, the fair value of each asset group is then estimated and compared to its carrying amount. An impairment loss is recognized for the amount by which an asset group’s carrying value exceeds its fair value.

F-13

JACOBS ENGINEERING GROUP INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued)

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 Earnings Per Share growth and Return on Invested Capital, 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.

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.

Leases

On September 28, 2019 the Company adopted ASU 2016-02, Leases ("ASC 842"), along with ASU 2018-01, ASU 2018-10, ASU 2018-11, ASU 2018-20 and ASU 2019-01, which amended and clarified the related guidance. ASC 842 requires lessees to recognize assets and liabilities for most leases. The Company determines if an arrangement is a lease at contract inception. A lease exists when a contract conveys to the customer the right to control the use of an identified asset for a period of time in exchange for consideration. The definition of a lease embodies two conditions: (1) there is an identified asset in the contract, and (2) the customer has the right to control the use of the identified asset. Lessees are required to classify leases as either finance or operating leases. This classification will determine whether lease expense is recognized based on an effective interest method or on a straight-line basis over the term of the lease.

ASC 842 provided several optional practical expedients for use in transition to and ongoing application of ASC 842. The Company elected to utilize the package of practical expedients in ASC 842-10-65-1(f) that, upon adoption of ASC 842, allows entities to (1) not reassess whether any expired or existing contracts are or contain leases, (2) retain the classification of leases (e.g., operating or finance lease) existing as of the date of adoption and (3) not reassess initial direct costs for any existing leases. The Company did not elect the practical expedient pertaining to the use of hindsight. The Company elected to utilize the practical expedient in ASC 842-10-15-37 in which the Company has chosen to account for each separate lease component of a contract and its associated non-lease components as a single lease component.

The Company adopted ASC 842 using the modified retrospective method, and accordingly, the new guidance was applied to leases that existed as of September 28, 2019 (the date of initial application) without adjusting the comparative periods presented. As a result, as of September 28, 2019, the Company has recorded total right-of-use ("ROU") assets of $767.0 million, which is comprised of approximately $82.3 million in reclassifications of previously recorded lease incentives and deferred rent, offset by $141.4 million in restructured lease cease-use liability.

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JACOBS ENGINEERING GROUP INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued)

Additionally, the Company has recorded total current lease liabilities of $180.7 million, and total noncurrent lease liabilities of $810.1 million. The adoption of ASC 842 did not have a material impact on the Company’s results of operations or any impact on the Company’s cash flows.

The Company’s right-of use assets and lease liabilities relate to real estate, project assets used in connection with long-term construction contracts, IT assets and vehicles. The Company’s leases have remaining lease terms of one year to thirteen years. The Company’s lease obligations are primarily for the use of office space and are primarily operating leases. Certain of the Company’s leases contain renewal, extension, or termination options. The Company assesses each option on an individual basis and will only include options reasonably certain of exercise in the lease term. The Company generally considers the base term to be the term provided in the contract. None of the Company’s lease agreements contain material options to purchase the leased property, material residual value guarantees, or material restrictions or covenants.

Long-term project asset and vehicle leases (leases with terms greater than twelve months), along with all real estate and IT asset leases, are recorded on the consolidated balance sheet at the present value of the minimum lease payments not yet paid. Because the Company primarily acts as a lessee and the rates implicit in its leases are not readily determinable, the Company generally uses its incremental borrowing rate on the lease commencement date to calculate the present value of future lease payments. Certain leases include payments that are based solely on an index or rate. These variable lease payments are included in the calculation of the ROU asset and lease liability and are initially measured using the index or rate at the lease commencement date. Other variable lease payments, such as payments based on use and for property taxes, insurance, or common area maintenance that are based on actual assessments are excluded from the ROU asset and lease liability and are expensed as incurred. In addition to the present value of the future lease payments, the calculation of the ROU asset also includes any deferred rent, lease pre-payments and initial direct costs of obtaining the lease, such as commissions.

Certain lease contracts contain nonlease components such as maintenance and utilities. The Company has made an accounting policy election, as allowed under ASC 842-10-15-37 and discussed above, to capitalize both the lease component and nonlease components of its contracts as a single lease component for all of its right-of-use assets.

Short-term project asset and vehicle leases (project asset and vehicle leases with an initial term of twelve months or less or leases that are cancellable by the lessee and lessor without significant penalties) are not recorded on the consolidated balance sheet and are expensed on a straight-line basis over the lease term. The majority of the Company’s short-term leases relate to equipment used on construction projects. These leases are entered into at agreed upon hourly, daily, weekly or monthly rental rates for an unspecified duration and typically have a termination for convenience provision. Such equipment leases are considered short-term in nature unless it is reasonably certain that the equipment will be leased for a term greater than twelve months.

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.

We use a corridor approach to amortize actuarial gains and losses. Under this approach, net gains or losses in excess of ten percent of the larger of the pension benefit obligation or the market-related value of the assets are amortized on a straight-line basis. The period of amortization is the average remaining service of active participants who are expected to receive benefits under certain plans and the average remaining future lifetime of plan participants for certain plans.

We measure our defined benefit plan assets and obligations as of the end of the month closest to their fiscal year end, which is September 30, 2020 as the alternative measurement date in accordance with FASB guidance ASU 2015-04, Compensation Retirement Benefit (Topic 715): Practical Expedient for the Measurement Date of an Employer’s Defined Benefit Obligation and Plan Asset. This guidance allows employers with fiscal year ends that do not coincide with a calendar month end to make an accounting policy election to measure defined benefit plan assets and obligations as of the end of the month closest to their fiscal year end.

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued)

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. Guarantees are accounted for in accordance with ASC 460-10, Guarantees, at fair value at the inception of the guarantee. 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.

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.

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.

New Accounting Pronouncements

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 to the reporting unit. 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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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued)

ASU No. 2016-13, Financial Instruments - Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments requires entities to use a current lifetime expected credit loss methodology to measure impairments of certain financial assets. Using this methodology will result in earlier recognition of losses than under the current incurred loss approach, which requires waiting to recognize a loss until it is probable of having been incurred. There are other provisions within the standard that affect how impairments of other financial assets may be recorded and presented, and that expand disclosures. This standard will be effective for our interim and annual periods beginning with the first quarter of fiscal 2021, and must be applied on a modified retrospective basis. Management does not expect the adoption of ASU 326 to have a material 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)

3. Revenue Accounting for Contracts

Disaggregation of Revenues

Our revenues are principally derived from contracts to provide a diverse range of technical, professional, and construction services to a large number of industrial, commercial, and governmental clients. We provide a broad range of engineering, design, and architectural services; construction and construction management services; operations and maintenance services; and process, scientific, and systems consulting services. We provide our services through offices and subsidiaries located primarily in North America, South America, Europe, the Middle East, India, Australia, Africa, and Asia. We provide our services under cost-reimbursable and fixed-price contracts. Our contracts are with many different customers in numerous industries. Refer to Note 19- Segment Information for additional information on how we disaggregate our revenues by reportable segment.

The following table further disaggregates our revenue by geographic area for the years ended October 2, 2020, September 27, 2019 and September 28, 2018 (in thousands):

			For the Years Ended
			October 2, 2020						September 27, 2019						September 28, 2018
Revenues:
United States			$	10,158,508					$	9,006,730					$	6,908,988
Europe			2,253,284						2,242,976						2,495,805
Canada			227,067						213,172						189,865
Asia			117,698						195,023						163,761
India			50,618						62,543						52,533
Australia and New Zealand			537,076						533,251						578,108
South America and Mexico			11						7,416						17,656
Middle East and Africa			222,713						476,757						173,057
Total			$	13,566,975					$	12,737,868					$	10,579,773

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
October 2, 2020						September 27, 2019						September 28, 2018
33%						27%						32%

Contract Liabilities

Contract liabilities represent amounts billed to clients in excess of revenue recognized to date. Revenue recognized for the year ended October 2, 2020 that was included in the contract liability balance on September 27, 2019 was $410.0 million. Revenue recognized for the year ended September 27, 2019 that was included in the contract liability balance on September 28, 2018 was $350.3 million.

Remaining Performance Obligations

The Company’s remaining performance obligations as of October 2, 2020 represent a measure of the total dollar value of work to be performed on contracts awarded and in progress. The Company had approximately $14.6 billion in remaining performance obligations as of October 2, 2020. The Company expects to recognize 50% of our remaining performance obligations within the next twelve months and the remaining 50% thereafter.

Although remaining performance obligations reflect business that is considered to be firm, cancellations, scope adjustments, foreign currency exchange fluctuations or project deferrals may occur that impact their volume or the expected timing of their recognition. Remaining performance obligations are adjusted to reflect any known project

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued)

cancellations, revisions to project scope and cost, foreign currency exchange fluctuations and project deferrals, as appropriate.

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.

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JACOBS ENGINEERING GROUP INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued)

The following table reconciles the denominator used to compute basic EPS to the denominator used to compute diluted EPS for the years ended October 2, 2020, September 27, 2019 and September 28, 2018 (in thousands):

			For the Years Ended
			October 2, 2020						September 27, 2019						September 28, 2018
Numerator for Basic and Diluted EPS:
Net earnings (loss) attributable to Jacobs from continuing operations			$	353,861					$	290,960					$	(4,185)
Net earnings from continuing operations allocated to participating securities			(72)						(415)						—
Net earnings (loss) from continuing operations allocated to common stock for EPS calculation			$	353,789					$	290,545					$	(4,185)
Net earnings attributable to Jacobs from discontinued operations			$	137,984					$	557,019					$	167,616
Net earnings from discontinued operations allocated to participating securities			(28)						(795)						(808)
Net earnings from discontinued operations allocated to common stock for EPS calculation			$	137,956					$	556,224					$	166,808
Net earnings allocated to common stock for EPS calculation			$	491,745					$	846,769					$	162,623
Denominator for Basic and Diluted EPS:
Weighted average basic shares			131,541						138,104						138,182
Shares allocated to participating securities			(27)						(197)						(646)
Shares used for calculating basic EPS attributable to common stock			131,514						137,907						137,536
Effect of dilutive securities:
Stock compensation plans (1)			1,207						1,299						—
Shares used for calculating diluted EPS attributable to common stock			132,721						139,206						137,536
Net Earnings Per Share:
Basic Net Earnings (Loss) from Continuing Operations Per Share			$	2.69					$	2.11					$	(0.03)
Basic Net Earnings from Discontinued Operations Per Share			$	1.05					$	4.03					$	1.21
Basic EPS			$	3.74					$	6.14					$	1.18
Diluted Net Earnings (Loss) from Continuing Operations Per Share			$	2.67					$	2.09					$	(0.03)
Diluted Net Earnings from Discontinued Operations Per Share			$	1.04					$	4.00					$	1.21
Diluted EPS			$	3.71					$	6.08					$	1.18

(1) For the fiscal 2018 period, because net earnings (loss) from continuing operations was a loss, the effect of antidilutive securities of 1,176 was excluded from the denominator in calculating diluted EPS.

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JACOBS ENGINEERING GROUP INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued)

Share Repurchases

On January 17, 2019, the Company’s Board of Directors authorized a share repurchase program of up to $1.0 billion of the Company’s common stock, to expire on January 16, 2022 (the "2019 Repurchase Authorization"). During fiscal 2019, the Company launched accelerated share repurchase programs by advancing a total of $500 million to two financial institutions in privately negotiated transactions (collectively, the "2019 ASR Programs"). The specific number of shares that the Company repurchased under the 2019 ASR Programs was determined based generally on a discount to the volume-weighted average price per share of the Company's common stock during a calculation period which ended on June 5, 2019 for the first $250 million in repurchases and on December 4, 2019 for the second $250 million in repurchases. The purchases were recorded as share retirements for purposes of calculating earnings per share.

The following table summarizes the activity under the 2019 Repurchase Authorization during fiscal 2020:

Amount Authorized (2019 Repurchase Authorization)						Average Price Per Share (1)						Shares Repurchased						Total Shares Retired
$1,000,000,000						$81.68						4,129,003						4,129,003

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

As a precautionary measure in light of the COVID-19 pandemic, the Company temporarily suspended purchases under the share repurchase plan in March 2020, with such suspension remaining in effect through the fiscal third quarter of 2020. During the fourth fiscal quarter of 2020, the Company resumed share repurchases on a limited basis. As of October 2, 2020, the Company has $57.9 million remaining under the 2019 Repurchase Authorization.

On January 16, 2020, the Company’s Board of Directors authorized an additional share repurchase program of up to $1.0 billion of the Company’s common stock, to expire on January 15, 2023 (the "2020 Repurchase Authorization"). There have been no repurchases under the 2020 Repurchase Authorization as of October 2, 2020.

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

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.

Dividends

On September 17, 2020, the Company’s Board of Directors declared a quarterly dividend of $0.19 per share of the Company’s common stock which was paid on October 30, 2020, to shareholders of record on the close of business on October 2, 2020. Future dividend declarations are subject to review and approval by the Company’s Board of Directors. Dividends paid through October 2, 2020 and the preceding fiscal year are as follows:

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JACOBS ENGINEERING GROUP INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued)

Declaration Date						Record Date						Payment Date						Cash Amount (per share)
July 9, 2020						July 24, 2020						August 21, 2020						$0.19
May 5, 2020						May 20, 2020						June 17, 2020						$0.19
January 16, 2020						January 31, 2020						February 28, 2020						$0.19
September 19, 2019						October 4, 2019						November 1, 2019						$0.17
July 11, 2019						July 26, 2019						August 23, 2019						$0.17
May 2, 2019						May 17, 2019						June 14, 2019						$0.17
January 17, 2019						February 15, 2019						March 15, 2019						$0.17

5. Goodwill and Intangibles

The carrying value of goodwill associated with continuing operations and appearing in the accompanying Consolidated Balance Sheets October 2, 2020 and September 27, 2019 was as follows (in millions):

			Critical Mission Solutions						People & Places Solutions						Total
Balance September 27, 2019			$	2,202					$	3,231					$	5,433
Acquired			206						—						206
Post-Acquisition Adjustments			2						—						2
Disposed			—						(6)						(6)
Foreign Exchange Impact			(1)						5						4
Balance October 2, 2020			$	2,409					$	3,230					$	5,639

The following table provides a roll-forward of the Company’s acquired intangibles in the accompanying Consolidated Balance Sheets for the year ended October 2, 2020 (in thousands):

			Customer Relationships, Contracts and Backlog						Developed Technology						Trade Names												Other						Total
Balances, September 27, 2019			$	622,392					$	40,833					$	1,183											$	668					$	665,076
Acquired			73,558						6,452						—												—						80,010
Transfer to lease right-of-use asset as a result of adoption of ASC 842			—						—						—												(668)						(668)
Amortization			(86,401)						(3,734)						(428)												—						(90,563)
Foreign currency translation			4,496						21						(32)												—						4,485
Balances, October 2, 2020			$	614,045					$	43,572					$	723											$	—					$	658,340
Weighted Average Amortization Period (years)			8						11						10												—						8

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

The following table presents estimated amortization expense of intangible assets for fiscal 2021 and for the succeeding years. The amounts below include preliminary amortization estimates for the Wood Group opening balance sheet fair values that are still preliminary and are subject to change.

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JACOBS ENGINEERING GROUP INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued)

Fiscal Year						(in millions)
2021						$	90.7
2022						89.7
2023						89.4
2024						89.2
2025						88.8
Thereafter						210.5
Total						$	658.3

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JACOBS ENGINEERING GROUP INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued)

6. Other Financial Information

Receivables and contract assets

The following table presents the components of receivables appearing in the accompanying Consolidated Balance Sheets at October 2, 2020 and September 27, 2019 as well as certain other related information (in thousands):

			October 2, 2020						September 27, 2019
Components of receivables:
Amounts billed, net			$	1,294,204					$	1,222,339
Unbilled receivables and other			1,449,184						1,216,028
Contract assets			423,922						401,842
Total receivables and contract assets, net			$	3,167,310					$	2,840,209
Other information about receivables:
Amounts due from the United States federal government included above, net of advanced billings			$	600,207					$	630,975

Property, Equipment and Improvements, Net

The following table presents the components of our property, equipment and improvements, net at October 2, 2020 and September 27, 2019 (in thousands):

			October 2, 2020						September 27, 2019
Land			$	966					$	355
Buildings			21,550						14,331
Equipment			560,352						533,804
Leasehold improvements			187,980						247,660
Construction in progress			16,410						8,781
			787,258						804,931
Accumulated depreciation and amortization			(467,887)						(496,788)
			$	319,371					$	308,143

F-24

JACOBS ENGINEERING GROUP INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued)

The following table presents our property, equipment and improvements, net by geographic area for the years ended October 2, 2020 and September 27, 2019 (in thousands):

			For the Years Ended
			October 2, 2020						September 27, 2019
Property, equipment and improvements, net:
United States			$	230,881					$	230,476
Europe			59,321						52,775
Canada			2,599						3,199
Asia			3,817						5,652
India			10,710						2,379
Australia and New Zealand			10,492						12,091
Middle East and Africa			1,551						1,571
Total			$	319,371					$	308,143

See discussion in Note 10- Leases, regarding impairments recorded in the current year relating to the Company's real estate lease portfolio and related property, equipment and improvements, net.

Accrued Liabilities

The following table presents the components of “Accrued liabilities” shown in the accompanying Consolidated Balance Sheets at October 2, 2020 and September 27, 2019 (in thousands):

			October 2, 2020						September 27, 2019
Accrued payroll and related liabilities			$	746,637					$	677,313
Project-related accruals			60,531						58,835
Non project-related accruals			237,204						258,312
Insurance liabilities			75,267						83,968
Sales and other similar taxes			104,720						34,390
Deferred rent			—						68,914
Dividends payable			25,524						23,439
Deferred gain on ECR disposition (1)			—						179,208
Current liabilities held for sale			—						2,573
Total			$	1,249,883					$	1,386,952

(1) See Note 15- Sale of Energy, Chemicals and Resource ("ECR") Business for discussion regarding deferred gain.

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JACOBS ENGINEERING GROUP INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued)

Accumulated Other Comprehensive Income

The following table presents the Company's roll forward of accumulated income (loss) after-tax for the years ended October 2, 2020 and September 27, 2019 (in thousands):

			Change in Pension and Retiree Medical Plan Liabilities						Foreign Currency Translation Adjustment						Gain/(Loss) on Cash Flow Hedges						Total
Balance at September 28, 2018			$	(309,867)					$	(496,017)					$	(819)					$	(806,703)
Other comprehensive income (loss)			(104,434)						(84,456)						990						(187,900)
Reclassifications from other comprehensive income (loss)			(22,448)						100,428						(189)						77,791
Balance at September 27, 2019			$	(436,749)					$	(480,045)					$	(18)					$	(916,812)
Other comprehensive income (loss)			(61,994)						60,330						(17,569)						(19,233)
Reclassifications from other comprehensive income (loss)			17						—						2,971						2,988
Balance at October 2, 2020			$	(498,726)					$	(419,715)					$	(14,616)					$	(933,057)

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JACOBS ENGINEERING GROUP INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued)

7. Income Taxes

The following table presents the components of our consolidated income taxes for continuing operations for years ended October 2, 2020, September 27, 2019 and September 28, 2018 (in thousands):

			For the Years Ended
			October 2, 2020						September 27, 2019						September 28, 2018
Current income tax (benefit) expense from continuing operations:
Federal			$	(37,030)					$	25,549					$	49,829
State			(5,021)						6,639						(1,546)
Foreign			41,616						57,156						20,858
Total current tax expense from continuing operations			(435)						89,344						69,141
Deferred income tax expense (benefit) from continuing operations:
Federal			53,485						6,607						230,358
State			7,133						20,408						17,318
Foreign			(4,863)						(79,405)						8,815
Total deferred tax expense (benefit) from continuing operations			55,755						(52,390)						256,491
Consolidated income tax expense from continuing operations			$	55,320					$	36,954					$	325,632

On December 22, 2017, the Tax Cuts and Jobs Act (the “Act”) was enacted in the United States and significantly revised the U.S. corporate income tax laws. Given the significance of the legislation, the SEC staff issued Staff Accounting Bulletin No. 118 (SAB 118), which allowed registrants to record provisional amounts during a one year “measurement period” like that used when accounting for business combinations. As of December 22, 2018, we completed our accounting for the tax effects of the enactment of the Act. For the deferred tax balances, we measured 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 revised measurement resulted in cumulative charges to income tax expense of $144.4 million during fiscal year 2018. Additionally, in fiscal year 2019, the Company recorded $24.4 million of tax expense associated with the valuation of U.S. net operating losses that were expected to be recovered at 35%, but were actually utilized at 21%.

The Act called for a one-time tax on deemed repatriation of foreign earnings. This one-time transition tax was based on our total post-1986 earnings and profits (E&P) of certain of our foreign subsidiaries. We recorded $14.3 million in cumulative transition taxes during the measurement period in fiscal year 2018, although the transition tax was expected to be offset by foreign tax credits in the future, resulting in no additional cash tax liability.

In fiscal 2018 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 provides the option to reclassify to retained earnings tax effects related to items in accumulated other comprehensive income that the FASB refers 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 fiscal 2018 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.

F-27

JACOBS ENGINEERING GROUP INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued)

The following table presents the components of our net deferred tax assets at October 2, 2020 and September 27, 2019 (in thousands):

			October 2, 2020						September 27, 2019
Deferred tax assets:
Obligations relating to:
Defined benefit pension plans			$	55,949					$	56,854
Other employee benefit plans			132,613						149,276
Net operating losses			197,987						241,033
Foreign tax credit			87,259						84,553
Other credits			6,808						13,881
Contract revenues and costs			70,733						51,579
Investments			49,848						23,204
Lease liability			154,979						—
Deferred rent			—						21,847
Restructuring			11,974						8,205
Valuation allowance			(140,578)						(153,257)
Gross deferred tax assets			627,572						497,175
Deferred tax liabilities:
Depreciation and amortization			(240,097)						(177,002)
Lease right of use asset			(89,824)						—
Unremitted earnings			(17,295)						(29,761)
Partnership investment			(66,082)						—
Other, net			(6,593)						(8,890)
Gross deferred tax liabilities			(419,891)						(215,653)
Net deferred tax assets			$	207,681					$	281,522

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 $140.6 million at October 2, 2020 and $153.3 million at September 27, 2019. Of the $12.7 million decrease in the valuation allowance, $15.1 million relates to a decrease for a change in judgment on the realizability of deferred tax assets in the U.K., which is offset by a $2.4 million increase attributable to current year activity.

At October 2, 2020 and September 27, 2019, the domestic and international net operating loss (NOL) carryforwards totaled $783.9 million and $945.1 million, resulting in an NOL deferred tax asset of $198.0 million and $241.0 million, respectively. The Company's net operating losses have various expiration periods between 2021 and indefinite periods. At October 2, 2020, the Company has foreign tax credit carryforwards of $87.3 million, expiring between 2022 and 2037.

The following table presents the income tax benefits from continuing operations 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 October 2, 2020, September 27, 2019 and September 28, 2018 (in millions):

For the Years Ended
October 2, 2020						September 27, 2019						September 28, 2018
$	10.2					$	7.9					$	2.2

F-28

JACOBS ENGINEERING GROUP INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued)

The following table reconciles total income tax expense from continuing operations using the statutory U.S. federal income tax rate to the consolidated income tax expense for continuing operations shown in the accompanying Consolidated Statements of Earnings for the years ended October 2, 2020, September 27, 2019 and September 28, 2018 (dollars in thousands):

			For the Years Ended
			October 2, 2020						%						September 27, 2019						%						September 28, 2018						%
Statutory amount			$	92,652					21.0		%				$	73,701					21.0		%				$	81,421					24.6		%
State taxes, net of the federal benefit			7,254						1.6		%				10,183						2.9		%				15,772						4.8		%
Exclusion of tax on non-controlling interests			(6,622)						(1.5)		%				(4,839)						(1.4)		%				(2,389)						(0.7)		%
Foreign:
Difference in tax rates of foreign operations			(6,267)						(1.4)		%				1,083						0.3		%				2,815						0.9		%
Benefit from foreign valuation allowance release			(16,861)						(3.8)		%				(29,125)						(8.3)		%				(5,088)						(1.5)		%
U.S. tax cost (benefit) of foreign operations			42,992						9.7		%				(17,760)						(5.1)		%				4,030						1.2		%
Tax differential on foreign earnings			19,864						4.5		%				(45,802)						(13.1)		%				1,757						0.6		%
Foreign tax credits			(26,471)						(6.0)		%				(15,682)						(4.5)		%				(21,735)						(6.6)		%
Tax Rate Change			(6,811)						(1.5)		%				—						—						—						—
Tax reform			—						—		%				36,674						10.4		%				155,756						47.1		%
Valuation allowance			—						—		%				(207)						(0.1)		%				104,221						31.5		%
Uncertain tax positions			(11,338)						(2.6)		%				(6,883)						(2.0)		%				(1,402)						(0.4)		%
Other items:
IRS §179D deduction			(7,267)						(1.6)		%				(2,957)						(0.8)		%				(4,557)						(1.4)		%
Disallowed officer compensation			5,081						1.2		%				5,568						1.6		%				1,510						0.5		%
Stock compensation			(10,234)						(2.3)		%				(7,864)						(2.2)		%				(2,158)						(0.7)		%
Other items – net			(788)						(0.2)		%				(4,938)						(1.4)		%				(2,564)						(0.8)		%
Total other items			(13,208)						(3.0)		%				(10,191)						(2.8)		%				(7,769)						(2.4)		%
Taxes on income from continuing operations			$	55,320					12.5		%				$	36,954					10.5		%				$	325,632					98.4		%

The following table presents income tax payments made during the years ended October 2, 2020, September 27, 2019 and September 28, 2018 (in millions):

October 2, 2020						September 27, 2019						September 28, 2018
$	39.8					$	291.7					$	44.3

The following table presents the components of our consolidated earnings from continuing operations before taxes for the years ended October 2, 2020, September 27, 2019 and September 28, 2018 (in thousands):

			For the Years Ended
			October 2, 2020						September 27, 2019						September 28, 2018
United States earnings			$	208,302					$	225,898					$	263,991
Foreign earnings			232,901						125,061						66,990
			$	441,203					$	350,959					$	330,981

The tax cost, net of applicable credits, have been provided on the undistributed earnings of the Company’s foreign subsidiaries. As of October 2, 2020, the estimated tax cost of repatriating earnings to the United States is approximately $16.2 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 reported above the line (i.e., not as part of income tax expense). The Company’s liability for gross unrecognized tax benefits was $93.4 million and $85.2 million at October 2, 2020 and September 27, 2019, respectively, after ASU 2013-11 netting of $9.1 million and $19.2 million, respectively. If recognized, $86.2 million would affect the Company’s consolidated effective income tax rate. The Company had $40.4 million and $51.1 million in accrued interest and penalties at October 2, 2020 and September 27, 2019, respectively. The Company estimates that, within twelve months, we may realize a decrease in our uncertain tax positions

F-29

JACOBS ENGINEERING GROUP INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued)

of approximately $5.5 million as a result of concluding various tax audits and closing tax years. As of October 2, 2020, the Company’s U.S. federal income tax returns for tax years 2013 and forward remain subject to examination.

The following table presents the reconciliation of the beginning and ending amount of unrecognized tax benefits for both continuing and discontinued operations, with ECR-sale related impacts removed in the Acquisitions/Divestitures row, for the years ended October 2, 2020, September 27, 2019 and September 28, 2018 (in thousands):

			For the Years Ended
			October 2, 2020						September 27, 2019						September 28, 2018
Balance, beginning of year			$	104,355					$	179,140					$	38,580
Acquisitions/Divestitures			—						(31,004)						137,912
Additions based on tax positions related to the current year			1,064						7,455						9,780
Additions for tax positions of prior years			7,472						1,994						5,561
Reductions for tax positions of prior years			(6,695)						(49,849)						(8,962)
Settlement			(3,712)						(3,381)						(3,731)
Balance, end of year			$	102,484					$	104,355					$	179,140

On March 6, 2020, the Company completed the acquisition of John Wood Group's nuclear business, on June 12, 2019, the Company completed the acquisition of KeyW and on December 15, 2017 the Company completed the acquisition of CH2M. For income tax purposes, the transactions were accounted for as stock purchases. As a result of the acquisitions, the Company adjusted its U.S. GAAP opening balance sheet of John Wood Group, KeyW and CH2M to reflect 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. For John Wood Group's nuclear business, 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. For KeyW, the Company completed its purchase accounting in the third quarter of the current fiscal year.

8. Joint Ventures and VIEs

For consolidated joint ventures, the entire amount of the revenue recognized for 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. There are no consolidated VIEs that have debt or credit facilities. Summary financial information of consolidated VIEs is as follows (in millions):

			October 2, 2020						September 27, 2019
Current assets			$	261.6					$	192.6
Non-Current assets			0.2						—
Total assets			$	261.8					$	192.6
Current liabilities			$	190.3					$	138.5
Non-current liabilities			—						—
Total liabilities			$	190.3					$	138.5

			For the Years Ended
			October 2, 2020						September 27, 2019						September 28, 2018
Revenue			$	912.9					$	571.6					$	481.4
Direct cost of contracts			(807.9)						(526.7)						(452.9)
Gross profit			105.0						44.9						28.5
Net earnings			$	72.6					$	45.2					$	28.4

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

F-30

JACOBS ENGINEERING GROUP INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued)

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 $64.1 million and $63.0 million as of October 2, 2020, respectively and $61.1 million and $63.7 million as of September 27, 2019, 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, excluding allocations to goodwill. As of October 2, 2020, the Company’s equity method investments exceeded its share of venture net assets by $71.1 million. Our investments in equity method joint ventures on the Consolidated Balance Sheets as of October 2, 2020 and September 27, 2019 were a net asset of $161.3 million and $157.9 million, respectively. During the years ended October 2, 2020, September 27, 2019, and September 28, 2018, we recognized income from equity method joint ventures of $82.2 million, $48.5 million, and $47.9 million, respectively.

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

			October 2, 2020						September 27, 2019
Current assets			$	1,697.0					$	1,443.5
Non-Current assets			34.9						29.9
Total assets			$	1,731.9					$	1,473.4
Current liabilities			$	889.7					$	692.1
Non-current liabilities			631.0						473.6
Total liabilities			1,520.7						1,165.7
Joint ventures' equity			211.2						307.7
Total liabilities & joint venture equity			$	1,731.9					$	1,473.4

			For the Years Ended
			October 2, 2020						September 27, 2019						September 28, 2018
Revenue			$	3,447.0					$	3,533.1					$	3,165.0
Direct cost of contracts			(3,126.6)						(3,176.2)						(2,902.5)
Gross profit			$	320.4					$	356.9					$	262.5
Net earnings			$	245.3					$	227.0					$	221.1

Accounts receivable from unconsolidated joint ventures accounted for under the equity method is $8.3 million and $19.5 million as of October 2, 2020 and September 27, 2019, respectively.

The Company currently holds a 24.5% interest in AWE Management Ltd (AWE ML) that is accounted for under the equity method, and the carrying value of the Company’s investment as of October 2, 2020 was approximately $38 million. As of October 2, 2020, AWE ML was under a contractual operating arrangement with the UK Ministry of Defence (MoD) with multiple years remaining under the arrangement. Subsequent to year end, on November 2, 2020, the MoD unexpectedly announced plans to change its current operating agreements with AWE ML that would result in the early termination of the current contract in 2021. The Company is currently evaluating this subsequent development, including the potential impact on our accounting for this equity method investment in future quarters.

9. Borrowings

Short-Term Debt

At September 27, 2019, short-term debt consisted of a bilateral term loan facility with an aggregate principal balance of $200.0 million (the "Bilateral Term Loan") and uncommitted credit arrangements with several banks providing short-term borrowing capacity and overdraft protection. Offset from the Bilateral Term Loan were deferred financing fees of $0.1 million. This loan was repaid during the second fiscal quarter of 2020.

F-31

JACOBS ENGINEERING GROUP INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued)

Long-term Debt

The following table presents certain information regarding the Company’s long-term debt at October 2, 2020 and September 27, 2019 (dollars in thousands):

			Interest Rate						Maturity						October 2, 2020						September 27, 2019
Revolving Credit Facility			LIBOR + applicable margin (1)						March 2024						$	152,794					$	303,780
2020 Term Loan Facility			LIBOR + applicable margin (2)						March 2025						1,025,826						—
2017 Term Loan Facility			LIBOR + applicable margin (3)						December 2020						—						400,000
Fixed-rate notes due:
Senior Notes, Series A			4.27%						May 2025						190,000						190,000
Senior Notes, Series B			4.42%						May 2028						180,000						180,000
Senior Notes, Series C			4.52%						May 2030						130,000						130,000
Less: Deferred Financing Fees															(1,679)						(2,535)
Total Long-term debt, net															$	1,676,941					$	1,201,245

(1)Depending on the Company’s Consolidated Leverage Ratio (as defined in the credit agreement governing the Revolving Credit Facility (defined below)), borrowings under the Revolving Credit Facility bear interest at either a eurocurrency rate plus a margin of between 0.875% and 1.5% or a base rate plus a margin of between 0% and 0.5%. The applicable LIBOR rates, including applicable margins, at October 2, 2020 and September 27, 2019 were approximately 1.39% and 2.97%.

(2)Depending on the Company’s Consolidated Leverage Ratio (as defined in the credit agreement governing the 2020 Term Loan Facility (defined below)), borrowings under the 2020 Term Loan Facility bear interest at either a eurocurrency rate plus a margin of between 0.875% and 1.5% or a base rate plus a margin of between 0% and 0.5%. The applicable LIBOR rate, including applicable margin, at October 2, 2020 was approximately 1.37%.

(3)Depending on the Company’s Consolidated Leverage Ratio (as defined in the credit agreement governing the 2017 Term Loan Facility (defined below)), borrowings under the 2017 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, including applicable margin, at September 27, 2019 was approximately 3.05%.

On February 7, 2014, Jacobs and certain of its subsidiaries entered into a $1.6 billion long-term unsecured, revolving credit facility (as amended, the “2014 Revolving Credit Facility”) with a syndicate of U.S. and international banks and financial institutions. On March 27, 2019, the Company entered into a second amended and restated credit agreement (the "Revolving Credit Facility") which amended and restated the 2014 Revolving Credit Facility by, among other things, (a) extending the maturity date of the credit facility to March 27, 2024, (b) increasing the facility amount to $2.25 billion (with an accordion feature that allows a further increase of the facility amount up to $3.25 billion), (c) eliminating the covenants restricting investments, joint ventures and acquisitions by the Company and its subsidiaries and (d) adjusting the financial covenants to eliminate the net worth covenant upon the removal of the same covenant from the Company’s existing Note Purchase Agreement (defined below). We were in compliance with the covenants under the Revolving Credit Facility at October 2, 2020.

The Revolving Credit Facility permits the Company to borrow under two separate tranches in U.S. dollars, certain specified foreign currencies, and any other currency that may be approved in accordance with the terms of the Revolving Credit Facility. The Revolving Credit Facility also provides for a financial letter of credit sub facility of $400.0 million, permits performance letters of credit, and provides for a $50.0 million sub facility for swing line loans. Letters of credit are subject to fees based on the Company’s Consolidated Leverage Ratio. The Company pays a facility fee of between 0.08% and 0.20% per annum depending on the Company’s Consolidated Leverage Ratio.

F-32

JACOBS ENGINEERING GROUP INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued)

On March 25, 2020, the Company entered into an unsecured term loan facility (the “2020 Term Loan Facility”) with a syndicate of financial institutions as lenders. Under the 2020 Term Loan Facility, the Company borrowed an aggregate principal amount of $730.0 million and one of the Company's U.K. subsidiaries borrowed an aggregate principal amount of £250.0 million. The proceeds of the term loans were used to repay the Bilateral Term Loan and for general corporate purposes. The 2020 Term Loan Facility contains affirmative and negative covenants and events of default customary for financings of this type that are consistent with those included in the Revolving Credit Facility. We were in compliance with the covenants under the 2020 Term Loan Facility at October 2, 2020. During fiscal 2020, the Company entered into interest rate and cross currency derivative contracts to swap a portion of our variable rate debt to fixed rate debt. See Note 17- Commitments and Contingencies and Derivative Financial Instruments for discussion regarding the Company's derivative instruments.

On September 28, 2017, the Company entered into a $1.5 billion unsecured delayed-draw term loan facility (as amended, the “2017 Term Loan Facility”) with a syndicate of financial institutions as lenders and letter of credit issuers. We incurred loans under the 2017 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 2017 Term Loan Facility. The 2017 Term Loan Facility was repaid in full during the first fiscal quarter of 2020.

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 $500.0 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 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 October 2, 2020.

We believe the carrying value of the Revolving Credit Facility and the 2020 Term Loan Facility 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 $543.7 million at October 2, 2020, 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 $2.3 million in letters of credit under the Revolving Credit Facility, leaving $2.09 billion of available borrowing capacity under the Revolving Credit Facility at October 2, 2020. In addition, the Company had issued $260.7 million under separate, committed and uncommitted letter-of-credit facilities for total issued letters of credit of $263.0 million at October 2, 2020.

The following table presents the amount of interest paid by the Company during October 2, 2020, September 27, 2019 and September 28, 2018 (in thousands):

For the Years Ended
October 2, 2020						September 27, 2019						September 28, 2018
$58,257						$81,582						$68,467

10. Leases

The components of lease expense (reflected in selling, general and administrative expenses) for the year ended October 2, 2020 were as follows (in thousands):

F-33

JACOBS ENGINEERING GROUP INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued)

												Year Ended
Lease cost
Operating lease cost												$	169,967
Variable lease cost												35,083
Sublease income												(14,719)
Total lease cost												$	190,331

Supplemental information related to the Company's leases for the year ended October 2, 2020 was as follows (in thousands):

						Year Ended
Cash paid for amounts included in the measurements of lease liabilities						$	195,345
Right-of-use assets obtained in exchange for new operating lease liabilities						$	66,761
Weighted average remaining lease term - operating leases						7 years
Weighted average discount rate - operating leases						2.7%

Total remaining lease payments under the Company's leases for each of the succeeding years is as follows (in thousands):

Fiscal Year						Operating Leases
2021						$	184,967
2022						163,166
2023						144,668
2024						127,472
2025						107,866
Thereafter						266,539
						994,678
Less Interest						(95,164)
						$	899,514

Right-of-Use and Other Long-Lived Asset Impairment

In the fourth fiscal quarter of 2020, as a result and in consideration of the impacts of the COVID-19 pandemic and the changing nature of the Company's use of office space for its workforce, the Company evaluated its existing real estate lease portfolio as part of its transformation initiatives related to real estate and staffing programs. These initiatives during the fourth quarter resulted in the actual abandonment of certain leased office spaces and the establishment of a formal plan to sublease certain other leased spaces that will no longer be utilized by the Company. In connection with the Company’s actions related to these initiatives, the Company evaluated certain of its lease right-of-use assets and related property, equipment and leasehold improvements for impairment under ASC 360.

As a result of the analysis, the Company recognized an impairment loss during the fourth quarter of fiscal 2020 of $162 million, which is included in selling, general and administrative expenses in the accompanying statement of earnings for the fiscal year ended October 2, 2020. The impairment loss recorded includes $127 million related to right-of-use lease assets and $35 million related to other long-lived assets, including property, equipment and improvements and leasehold improvements.

The fair values for the asset groups relating to the impaired long-lived assets were estimated primarily using discounted cash flow models (income approach) with Level 3 inputs. The significant assumptions used in estimating fair value include the expected downtime prior to the commencement of future subleases, projected sublease income over the remaining lease periods and discount rates that reflects the level of risk associated with receiving future cash flows.

F-34

JACOBS ENGINEERING GROUP INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued)

11. Employee Stock Purchase and Stock Incentive Plans

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 October 2, 2020, September 27, 2019 and September 28, 2018:

			For the Years Ended
			October 2, 2020						September 27, 2019						September 28, 2018
Aggregate Purchase Price Paid for Shares Sold:
Under the 1989 ESPP			$	25,364,252					$	24,824,232					$	21,590,858
Under the GESPP			2,448,349						2,471,193						2,240,609
Total			$	27,812,601					$	27,295,425					$	23,831,467
Aggregate Number of Shares Sold:
Under the 1989 ESPP			304,018						354,580						357,899
Under the GESPP			29,060						34,843						36,405
Total			333,078						389,423						394,304

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 October 2, 2020, there remains 3,529,357 shares reserved for issuance under the 1989 ESPP and 74,672 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 October 2, 2020			5,272,572						359,875						5,632,447
Number of shares relating to outstanding stock options at October 2, 2020			568,114						138,375						706,489
Number of shares available for future awards:
At October 2, 2020			4,704,458						221,500						4,925,958
At September 27, 2019			4,963,761						256,252						5,220,013

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

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JACOBS ENGINEERING GROUP INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued)

The following table presents the fair value of shares (of restricted stock and restricted stock units) vested for the years ended October 2, 2020, September 27, 2019 and September 28, 2018 (in thousands):

			For the Years Ended
			October 2, 2020						September 27, 2019						September 28, 2018
Restricted Stock and Restricted Stock Units (service condition)			$	29,209					$	37,864					$	64,121
Restricted Stock Units (service, market, and performance conditions at target)			20,998						17,124						2,626
Total			$	50,207					$	54,988					$	66,747

At October 2, 2020, the amount of compensation cost relating to non-vested awards not yet recognized in the financial statements is approximately $61.3 million. The majority of these unrecognized compensation costs will be recognized by the first quarter of fiscal 2022. The weighted average remaining contractual term of options currently exercisable is 2.1 years.

Stock Options

The following table summarizes the stock option activity for the years ended October 2, 2020, September 27, 2019 and September 28, 2018:

			Number of Stock Options						Weighted Average Exercise Price
Outstanding at September 29, 2017			2,516,825						$	46.19
Exercised			(636,019)						$	46.93
Cancelled or expired			(114,047)						$	52.26
Outstanding at September 28, 2018			1,766,759						$	45.53
Exercised			(828,529)						$	45.63
Cancelled or expired			(11,624)						$	42.10
Outstanding at September 27, 2019			926,606						$	45.48
Exercised			(212,467)						$	44.05
Cancelled or expired			(7,650)						$	45.31
Outstanding at October 2, 2020			706,489						$	45.91

Cash received from the exercise of stock options, net of tax remitted, during the year ended October 2, 2020 was $9.4 million.

Stock options outstanding at October 2, 2020 consisted entirely of non-qualified stock options. The following table presents the total intrinsic value of stock options exercised for the fiscal years ended October 2, 2020, September 27, 2019 and September 28, 2018 (in thousands):

For the Years Ended
October 2, 2020						September 27, 2019						September 28, 2018
$9,986						$27,720						$13,931

F-36

JACOBS ENGINEERING GROUP INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued)

The total intrinsic value of stock options exercisable at October 2, 2020 was approximately $34.1 million. The following table presents certain other information regarding our 1999 SIP and 1999 OSDP for the fiscal years ended October 2, 2020, September 27, 2019 and September 28, 2018:

			October 2, 2020						September 27, 2019						September 28, 2018
At fiscal year end:
Range of exercise prices for options exercisable			$32.51–$60.43						$32.51–$60.43						$32.51–$60.43
Number of options exercisable			706,489						860,114						1,557,900
For the fiscal year:
Range of prices relating to options exercised			$37.03–$60.08						$36.88-$60.43						$35.93-$61.26

The following table presents certain information regarding stock options outstanding and stock options exercisable at October 2, 2020:

			October 2, 2020
			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			36,500						1.63						$	36.97					36,500						$	36.97
$37.43 - $46.09			468,077						4.51						$	43.08					468,077						$	43.08
$47.11 - $55.13			173,537						2.72						$	53.05					173,537						$	53.05
$60.08 - $80.63			28,375						3.35						$	60.39					28,375						$	60.39
			706,489						3.88						$	45.91					706,489						$	45.91

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 3.88 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 October 2, 2020, September 27, 2019 and September 28, 2018:

			For the Years Ended
			October 2, 2020						September 27, 2019						September 28, 2018
Restricted stock			—						—						—
Restricted stock units (service condition)			351,670						318,056						1,087,724
Restricted stock units (service and performance conditions)			202,792						240,068						254,784

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 as well as achieving the service condition required for the restricted stock units to vest.

F-37

JACOBS ENGINEERING GROUP INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued)

The following table presents the number and weighted average grant-date fair value of restricted stock and restricted stock units at October 2, 2020:

			Number of Shares						Weighted Average Grant-Date Fair Value
Outstanding at September 27, 2019			1,723,037						$	65.80
Granted			728,478						$	85.61
Vested			(850,054)						$	60.37
Canceled			(75,935)						$	75.86
Outstanding at October 2, 2020			1,525,526						$	77.88

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 October 2, 2020, September 27, 2019 and September 28, 2018:

			For the Years Ended
			October 2, 2020						September 27, 2019						September 28, 2018
Restricted stock			34,417						105,301						284,254
Restricted stock units (service condition)			183,099						295,122						336,516
Restricted stock units (service, market and performance conditions)			160,781						183,654						95,063

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 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 restricted stock units outstanding at October 2, 2020 under the 1999 SIP. No shares of restricted stock were issued under the 1999 ODSP during such periods.

			October 2, 2020
Restricted stock			—
Restricted stock units (service condition)			756,054
Restricted stock units (service, market and performance conditions)			647,262

The following table presents the number of shares of restricted stock and restricted stock units issued under the 1999 ODSP for the years ended October 2, 2020, September 27, 2019 and September 28, 2018:

			For the Years Ended
			October 2, 2020						September 27, 2019						September 28, 2018
Restricted stock units (service condition)			18,100						26,372						21,620

The following table provides the number of shares of restricted stock and restricted stock units outstanding at October 2, 2020 under the 1999 ODSP:

			October 2, 2020
Restricted stock			34,000
Restricted stock units (service condition)			88,210

All shares granted under the 1999 ODSP are issued on a 1.92-to-1.00 basis.

F-38

JACOBS ENGINEERING GROUP INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued)

12. Savings and Deferred Compensation Plans

Savings Plans

We sponsor various defined contribution savings plans which allow participants to make voluntary contributions by salary deduction. Such plans cover substantially all of our domestic, nonunion employees in the U.S. and are qualified under Section 401(k) of the U.S. Internal Revenue Code. Similar plans outside the U.S. cover various groups of employees of our international subsidiaries and affiliates. Several of these plans allow the Company to match, on a voluntary basis, a portion of the employee contributions. The following table presents the Company’s contributions to these savings plans for the years ended October 2, 2020, September 27, 2019 and September 28, 2018 (in thousands):

October 2, 2020						September 27, 2019						September 28, 2018
$	91,833					$	114,006					$	113,135

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. Participants' cash deferrals earn a return based on the participants' selection of investments in several hypothetical investment options. Participants are also able to defer stock based compensation in the plans, which must remain invested in Company stock and are distributed in shares of Jacobs common stock. Since no investment diversification is permitted, changes in the fair value of Jacobs' common stock are not recognized. For the deferred compensation held in company stock, the number of shares needed to settle the liability is included in the denominator in both the basic and diluted earnings per share calculations. The following table presents the amount charged to expense for the Company’s deferred compensation plans for the years ended October 2, 2020, September 27, 2019 and September 28, 2018 (in thousands):

October 2, 2020						September 27, 2019						September 28, 2018
$	203					$	2,395					$	4,445

The following table presents the amount relating to assets held as deferred compensation arrangement investments for the years ended October 2, 2020 and September 27, 2019 (in thousands):

			October 2, 2020						September 27, 2019
Deferred compensation arrangement investments			$194,933						$219,948

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.

F-39

JACOBS ENGINEERING GROUP INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued)

13. 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.

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.

As a result of the ECR sale, ECR-related pension assets and liabilities that have been sold are reported as discontinued operations in accordance with ASC 210-05, Discontinued Operations. Activity for the year ended September 27, 2019 is shown in the appropriate rows and the balances as of the sale date are shown in the Disposition of ECR Plans rows below.

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 October 2, 2020 and September 27, 2019 (in thousands):

			U.S. Plans												Non-U.S. Plans
			October 2, 2020						September 27, 2019						October 2, 2020						September 27, 2019
Net benefit obligation at the beginning of the year			$	448,540					$	448,402					$	2,258,129					$	2,149,246
Service cost			409						2,784						5,710						7,171
Interest cost			12,673						16,697						39,469						52,627
Participants’ contributions			—						243						167						367
Actuarial (gains)/losses			15,584						52,720						35,626						314,889
Benefits paid			(22,836)						(30,648)						(64,395)						(72,453)
Curtailments/settlements/plan amendments			(16,450)						(39,388)						(4,782)						30,124
Disposition of ECR Plans			—						—						—						(99,504)
Effect of exchange rate changes and other, net			—						(2,270)						118,153						(124,338)
Net benefit obligation at the end of the year			$	437,920					$	448,540					$	2,388,077					$	2,258,129

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 October 2, 2020 and September 27, 2019 (in thousands):

F-40

JACOBS ENGINEERING GROUP INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued)

			U.S. Plans												Non-U.S. Plans
			October 2, 2020						September 27, 2019						October 2, 2020						September 27, 2019
Fair value of plan assets at the beginning of the year			$	390,210					$	390,829					$	1,916,637					$	1,867,481
Actual return on plan assets			33,345						31,140						61,221						280,785
Employer contributions			88						10,668						33,192						32,063
Participants’ contributions			—						243						167						367
Gross benefits paid			(22,836)						(30,648)						(64,395)						(72,453)
Curtailments/settlements/plan amendments			(18,557)						(9,751)						(4,782)						(5,814)
Disposition of ECR Plans			—						—						—						(76,111)
Effect of exchange rate changes and other, net			—						(2,271)						101,316						(109,681)
Fair value of plan assets at the end of the year			$	382,250					$	390,210					$	2,043,356					$	1,916,637

During fiscal 2020, the Company incurred combined curtailment and settlement losses on our defined benefit plans of approximately $4.6 million primarily related to the Ireland and U.S. plans. During fiscal 2019, the Company incurred combined curtailment and settlement gains on its defined benefit plans of approximately $33.1 million primarily related to the CH2M retiree medical (further discussed below) and Ireland plans.

The following table reconciles the combined funded statuses of the plans recognized in the accompanying Consolidated Balance Sheets at October 2, 2020 and September 27, 2019 (segregated between plans existing within and outside the U.S.) (in thousands):

			U.S. Plans												Non-U.S. Plans
			October 2, 2020						September 27, 2019						October 2, 2020						September 27, 2019
Net benefit obligation at the end of the year			$	437,920					$	448,540					$	2,388,077					$	2,258,129
Fair value of plan assets at the end of the year			382,250						390,210						2,043,356						1,916,637
Underfunded amount recognized at the end of the year			$	55,670					$	58,330					$	344,721					$	341,492

The following table presents the accumulated benefit obligation at October 2, 2020 and September 27, 2019 (segregated between plans existing within and outside the U.S.) (in thousands):

			U.S. Plans												Non-U.S. Plans
			October 2, 2020						September 27, 2019						October 2, 2020						September 27, 2019
Accumulated benefit obligation at the end of the year			$	436,770					$	447,609					$	2,376,059					$	2,244,710

The following table presents the amounts recognized in the accompanying Consolidated Balance Sheets at October 2, 2020 and September 27, 2019 (segregated between plans existing within and outside the U.S.) (in thousands):

			U.S. Plans												Non-U.S. Plans
			October 2, 2020						September 27, 2019						October 2, 2020						September 27, 2019
Prepaid benefit cost included in noncurrent assets			$	—					$	—					$	1,037					$	2,939
Accrued benefit cost included in current liabilities			85						85						4,375						4,177
Accrued benefit cost included in noncurrent liabilities			57,919						58,245						339,049						340,254
Net amount recognized at the end of the year			$	58,004					$	58,330					$	342,387					$	341,492

F-41

JACOBS ENGINEERING GROUP INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued)

The following table presents the significant actuarial assumptions used in determining the funded statuses and the following year's benefit cost of the Company’s U.S. plans for the years ended October 2, 2020, September 27, 2019 and September 28, 2018:

			For the Years Ended
			October 2, 2020						September 27, 2019						September 28, 2018
Discount rates			2.0% to 2.7%						2.8% to 3.1%						3.9% to 4.2%
Rates of compensation increases			3.5%						3.5%						3.5%
Expected long-term rates of return on assets			4.6% to 4.7%						5.1%						5.8% to 5.9%

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 October 2, 2020, September 27, 2019 and September 28, 2018:

			For the Years Ended
			October 2, 2020						September 27, 2019						September 28, 2018
Discount rates			0.4% to 6.6%						0.2% to 7.1%						1.3% to 8.1%
Rates of compensation increases			2.7% to 7.5%						3.7% to 7.5%						3.8% to 7.5%
Expected long-term rates of return on assets			1.8% to 7.0%						2.3% to 7.5%						3.8% to 7.5%

The following table presents certain amounts relating to our U.S. plans recognized in accumulated other comprehensive (gain) loss at October 2, 2020, September 27, 2019 and September 28, 2018 (in thousands):

			October 2, 2020						September 27, 2019						September 28, 2018
Arising during the period:
Net actuarial (gain) loss			$	(900)					$	36,108					$	(7,514)
Prior service cost (benefit)			1,589						—						—
Total			689						36,108						(7,514)
Reclassification adjustments:
Net actuarial losses			(2,653)						(2,282)						(2,913)
Prior service cost (benefit)			(244)						—						—
Total			(2,897)						(2,282)						(2,913)
Total			$	(2,208)					$	33,826					$	(10,427)

The following table presents certain amounts relating to our non-U.S. plans recognized in accumulated other comprehensive (gain) loss at October 2, 2020, September 27, 2019 and September 28, 2018 (in thousands):

			October 2, 2020						September 27, 2019						September 28, 2018
Arising during the period:
Net actuarial (gain) loss			$	71,676					$	83,368					$	59,827
Net (gain) loss on Sale of ECR			—						(12,520)						—
Prior service cost (benefit)			—						29,829						215
Total			71,676						100,677						60,042
Reclassification adjustments:
Net actuarial losses			(6,322)						(6,546)						(5,507)
Prior service cost			(1,169)						(1,075)						181
Total			(7,491)						(7,621)						(5,326)
Total			$	64,185					$	93,056					$	54,716

F-42

JACOBS ENGINEERING GROUP INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued)

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 October 2, 2020 and September 27, 2019 (segregated between U.S. and non-U.S. plans) (in thousands):

			U.S. Plans												Non-U.S. Plans
			October 2, 2020						September 27, 2019						October 2, 2020						September 27, 2019
Net actuarial loss			$	67,530					$	71,083					$	401,930					$	365,661
Prior service cost			1,345						—						27,921						28,346
Total			$	68,875					$	71,083					$	429,851					$	394,007

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 2021 based on 2020 exchange rates (segregated between U.S. and non-U.S. plans) (in thousands):

			U.S. Plans						Non-U.S. Plans
Unrecognized net actuarial loss			$	4,249					$	10,016
Unrecognized prior service cost			431						1,431
Accumulated comprehensive loss to be recorded against earnings			$	4,680					$	11,447

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 October 2, 2020 and September 27, 2019 (the measurement dates used in valuing the plans’ assets and liabilities) were as follows:

			U.S. Plans												Non-U.S. Plans
			October 2, 2020						September 27, 2019						October 2, 2020						September 27, 2019
Equity securities			3		%				3		%				21		%				20		%
Debt securities			58		%				58		%				56		%				52		%
Real estate investments			—		%				—		%				7		%				7		%
Other			39		%				39		%				17		%				21		%

The following table presents the Fair Value of the Company’s Domestic U.S. plan assets at October 2, 2020, segregated by level of Fair Value measurement inputs within the Fair Value hierarchy promulgated by U.S. GAAP (in thousands):

			October 2, 2020
			Fair Value, Determined Using Fair Value Measurement Inputs
			Level 1						Level 2						Level 3						Investments measured at Net Asset Value						Total
Domestic equities			$	12,376					$	—					$	—					$	—					$	12,376
Domestic bonds			68,324						131,534						—						—						199,858
Overseas bonds			—						19,223						—						—						19,223
Cash and equivalents			18,226						—						—						—						18,226
Mutual funds			132,567						—						—						—						132,567
Total			$	231,493					$	150,757					$	—					$	—					$	382,250

F-43

JACOBS ENGINEERING GROUP INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued)

The following table presents the Fair Value of the Company’s non-U.S. plan assets at October 2, 2020, segregated by level of Fair Value measurement inputs within the Fair Value hierarchy promulgated by U.S. GAAP (in thousands):

			October 2, 2020
			Fair Value, Determined Using Fair Value Measurement Inputs
			Level 1						Level 2						Level 3						Investments measured at Net Asset Value						Total
Domestic equities			$	—					$	103,036					$	—					$	5,745					$	108,781
Overseas equities			—						229,576						—						87,725						317,301
Domestic bonds			—						34,469						—						1,175						35,644
Overseas bonds			—						1,049,119						—						58,493						1,107,612
Cash and equivalents			24,568						—						—						—						24,568
Real estate			—						10,383						105,422						—						115,805
Insurance contracts			—						4,402						67,709						17,909						90,020
Hedge funds			—						—						171,730						7,153						178,883
Mutual funds			—						64,742						—						—						64,742
Total			$	24,568					$	1,495,727					$	344,861					$	178,200					$	2,043,356

The following table presents the Fair Value of the Company’s U.S. plan assets at September 27, 2019, segregated by level of Fair Value measurement inputs within the Fair Value hierarchy promulgated by U.S. GAAP (in thousands):

			September 27, 2019
			Fair Value, Determined Using Fair Value Measurement Inputs
			Level 1						Level 2						Level 3						Investments measured at Net Asset Value						Total
Domestic equities			$	10,890					$	—					$	—					$	—					$	10,890
Domestic bonds			65,490						134,594						—						—						200,084
Overseas bonds			—						20,020						—						—						20,020
Cash and equivalents			28,972						—						—						—						28,972
Mutual funds			130,244						—						—						—						130,244
Total			$	235,596					$	154,614					$	—					$	—					$	390,210

The following table presents the Fair Value of the Company’s non-U.S. plan assets at September 27, 2019, segregated by level of Fair Value measurement inputs within the Fair Value hierarchy promulgated by U.S. GAAP (in thousands):

F-44

JACOBS ENGINEERING GROUP INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued)

			September 27, 2019
			Fair Value, Determined Using Fair Value Measurement Inputs
			Level 1						Level 2						Level 3						Investments measured at Net Asset Value						Total
Domestic equities			$	—					$	17,255					$	—					$	19,413					$	36,668
Overseas equities			—						182,600						—						50,127						232,727
Domestic bonds			—						306,225						—						34,408						340,633
Overseas bonds			—						728,616						—						39,292						767,908
Cash and equivalents			37,811						(16)						—						—						37,795
Real estate			—						24,735						97,539						15,198						137,472
Insurance contracts			—						4,478						72,788						—						77,266
Derivatives			—						—						—						—						—
Hedge funds			—						—						130,200						7,156						137,356
Mutual funds			—						148,812						—						—						148,812
Total			$	37,811					$	1,412,705					$	300,527					$	165,594					$	1,916,637

The following table summarizes the changes in the Fair Value of the Company’s non-U.S. Pension Plans’ Level 3 assets for the years ended September 27, 2019 and October 2, 2020 (in thousands):

			Real Estate						Insurance Contracts						Hedge Funds
Balance at Balance at September 28, 2018			$	99,587					$	95,782					$	135,786
Purchases, sales, and settlements			(17,902)						(5,126)						(26,591)
Realized and unrealized gains			21,838						9,134						29,161
Disposition of ECR Assets			—						(22,885)						—
Effect of exchange rate changes			(5,984)						(4,117)						(8,156)
Balance at September 27, 2019			$	97,539					$	72,788					$	130,200
Purchases, sales, and settlements			(475)						(7,375)						29,999
Realized and unrealized gains (losses)			3,337						(1,399)						5,435
Effect of exchange rate changes			5,021						3,695						6,096
Balance at October 2, 2020			$	105,422					$	67,709					$	171,730

The following table presents the amount of cash contributions we anticipate making into the plans during fiscal 2021 (in thousands):

			U.S. Plans						Non-U.S. Plans
Anticipated cash contributions			$	—					$	31,258

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
2021			$	34,757					$	70,264
2022			32,690						69,594
2023			32,022						71,386
2024			30,710						72,131
2025			29,312						73,217
For the periods 2026 through 2030			129,516						406,156

F-45

JACOBS ENGINEERING GROUP INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued)

The following table presents the components of net periodic benefit cost for the Company’s U.S. plans recognized in the accompanying Consolidated Statements of Earnings for the years ended October 2, 2020, September 27, 2019 and September 28, 2018 (in thousands):

			October 2, 2020						September 27, 2019						September 28, 2018
Service cost			$	409					$	2,784					$	4,765
Interest cost			12,673						16,697						13,778
Expected return on plan assets			(17,670)						(21,508)						(19,663)
Actuarial loss			3,518						3,026						3,845
Prior service cost			323						—						—
Net pension cost, before special items			$	(747)					$	999					$	2,725
Curtailment expense/Settlement (gain) loss			3,436						(35,020)						4,146
Total net periodic pension cost recognized			$	2,689					$	(34,021)					$	6,871

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 October 2, 2020, September 27, 2019 and September 28, 2018 (in thousands):

			October 2, 2020						September 27, 2019						September 28, 2018
Service cost			$	5,710					$	7,171					$	8,269
Interest cost			39,469						52,627						49,324
Expected return on plan assets			(93,407)						(82,274)						(83,328)
Actuarial loss			7,578						7,854						6,655
Prior service cost			1,405						1,263						(257)
Net pension cost, before special items			$	(39,245)					$	(13,359)					$	(19,337)
Curtailment expense/Settlement (gain) loss			1,341						1,933						1,268
Total net periodic pension (income) cost recognized			$	(37,904)					$	(11,426)					$	(18,069)
Total net periodic pension (income) cost recognized from Discontinued Operations			$	—					$	2,282					$	3,606
Total net periodic pension (income) cost recognized from Continuing Operations			$	(37,904)					$	(13,708)					$	(21,675)

As a result of the adoption of ASU 2017-07, Compensation- Retirement Benefits (Topic 715): Improving the Presentation of Net Periodic Pension Cost and Net Periodic Postretirement Benefit Cost in the first quarter of fiscal 2019, the service cost component of net periodic pension expense has been presented in the same line item as other compensation costs (direct cost of contracts and selling, general and administrative expenses) and the other components of net periodic pension expense have been reclassified from selling, general and administrative expense and direct cost of contracts and instead presented in miscellaneous income (expense), net on the Consolidated Statements of Earnings for the year ended September 28, 2018 in the amount of $24.2 million.

In the first quarter of fiscal 2019, the Company elected to discontinue the CH2M Hill Retiree Medical Plan and the OMI Retiree Medical Plan, effective December 31, 2018. Lump sum payments were made to participants in fiscal 2019, resulting in a plan settlement and related settlement gain of $35.0 million recognized in fiscal 2019.

On January 1, 2019, the CH2M Hill Pension Plan and the CH2M Hill IDC Pension Plan merged into the Company's Sverdrup Pension Plan. The newly combined plan is called the Jacobs Consolidated Pension Plan.

Due to a ruling by the High Court in the United Kingdom regarding equalization between men and women of a tranche of pension (the Guaranteed Minimum Pension) accrued between 1990 and 1997, Jacobs measured the estimated impact of this ruling in its consolidated financial statements, resulting in an increase of approximately $38.2 million in the ASC 715 balance sheet liability in fiscal 2019, with an offset to other comprehensive income, net of tax. Additionally, the Company recognized an additional $1.5 million in additional net periodic benefit cost during the year ended September 27, 2019 as a result of the ruling.

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JACOBS ENGINEERING GROUP INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued)

Multiemployer Plans

In the U.S. and various other countries, we contribute to trusteed pension plans covering hourly and certain salaried employees under industry-wide agreements. 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. Additionally, in fiscal year 2019, all Canadian and some US and European multiemployer plans were sold in connection with the ECR sale, which resulted in a year over year decrease in contributions made.

The following table presents the Company’s contributions to these multiemployer plans for the years ended October 2, 2020, September 27, 2019 and September 28, 2018 (in thousands):

			October 2, 2020						September 27, 2019						September 28, 2018
Canada			$	—					$	16,625					$	36,354
Europe			1,922						9,413						10,677
United States			6,637						7,149						9,536
Contributions to multiemployer pension plans			$	8,559					$	33,187					$	56,567

F-47

JACOBS ENGINEERING GROUP INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued)

14. Business Combinations

John Wood Group's Nuclear Business

On March 6, 2020, a subsidiary of Jacobs completed the acquisition of the nuclear consulting, remediation and program management business of John Wood Group, a U.K.-based energy services company, for an enterprise value of £246 million, or approximately $317.9 million, less cash acquired of $24.3 million, as updated for additional working capital adjustments. The John Wood Group nuclear business allows Jacobs to further expand its lifecycle nuclear services business. The following summarizes the fair values of John Wood Group's assets acquired and liabilities assumed as of the acquisition date (in millions):

Assets
Cash and cash equivalents			$	24.3
Receivables			75.9
Other current assets			5.2
Property, equipment and improvements, net			8.3
Goodwill			205.8
Identifiable intangible assets			80.0
Miscellaneous			19.4
Total Assets			$	418.9
Liabilities
Accounts payable, accrued expenses and other current liabilities			$	71.8
Long term liabilities			29.2
Total Liabilities			101.0
Net assets acquired			$	317.9

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 John Wood Group's assets acquired and liabilities assumed. The final purchase price allocation could result in adjustments to certain assets and liabilities, including the residual amount allocated to goodwill.

Identified intangibles include customer relationships, contracts and backlog and developed technology. The customer relationships, contracts and backlog intangible represents the fair value of existing contracts, underlying customer relationships and backlog. The customer relationships, contracts and backlog intangible and the developed technology intangible have lives of 12 and 15 years, respectively.

Fair value measurements relating to the John Wood Group nuclear business are made primarily using Level 3 inputs including discounted cash flow techniques. Fair value is estimated using inputs primarily for 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 reflects the level of risk associated with receiving future cash flows. Other personal property assets, such as furniture, fixtures and equipment, are valued using the cost approach, which is based on replacement or reproduction costs of the asset less depreciation.

No summarized unaudited pro forma results are provided for the John Wood Group nuclear business due to the immateriality of this acquisition relative to the Company's consolidated financial position and results of operations.

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JACOBS ENGINEERING GROUP INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued)

KeyW

On June 12, 2019, Jacobs completed the acquisition of The KeyW Holding Corporation (“KeyW”), a U.S. based national security solutions provider to the intelligence, cyber, and counterterrorism communities by acquiring 100% of the outstanding shares of KeyW common stock (the "KeyW acquisition"). The KeyW acquisition allows Jacobs to further expand its government services business. The Company paid total consideration of $902.6 million which was comprised of approximately $604.2 million in cash to the former stockholders and certain equity award holders of KeyW and the assumption of KeyW’s debt of $298.4 million. The Company repaid all of KeyW's debt by the end of the fourth fiscal quarter of 2019.

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

Assets
Cash and cash equivalents			$	29.1
Receivables			79.1
Inventories, net			19.3
Prepaid expenses and other			2.4
Property, equipment and improvements, net			24.5
Deferred tax asset and other			37.8
Goodwill			615.6
Identifiable intangible assets			179.0
Total Assets			$	986.8
Liabilities
Accounts payable			$	8.3
Accrued expenses			69.1
Short term debt			298.4
Other current liabilities			3.9
Other non-current liabilities			2.9
Total Liabilities			382.6
Net assets acquired			$	604.2

Goodwill recognized results from a substantial assembled workforce, which does not qualify for separate recognition, as well as expected future synergies from combining operations. Goodwill of $136.3 million is expected to be deductible for tax purposes. The Company has completed its final assessment of the fair values of the acquired assets and liabilities of KeyW. Since the initial preliminary estimates reported in the third quarter of fiscal 2019, the Company has updated certain amounts reflected in the final purchase price allocation, as summarized in the fair values of KeyW assets acquired and liabilities assumed as of the acquisition date as set forth above.

Identified intangibles include customer relationships, contracts and backlog and developed technology. The customer relationships, contracts and backlog intangible represents the fair value of existing contracts, underlying customer relationships and backlog. The customer relationships, contracts and backlog intangible, and the developed technology intangible have lives of 10 and 12 years, respectively. Other intangible liabilities consist of the fair value of office leases and have a weighted average life of approximately 9 years.

Fair value measurements relating to the KeyW acquisition are made primarily using Level 3 inputs including discounted cash flow techniques. Fair value is estimated using inputs primarily for 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 reflects the level of risk associated with receiving future cash flows. Other personal property assets, such as furniture, fixtures and equipment, are valued using the cost approach, which is based on replacement or reproduction costs of the asset less depreciation.

F-49

JACOBS ENGINEERING GROUP INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued)

For purposes of our comparative fiscal 2020 and 2019 reporting requirements in this Form 10-K, the following presents summarized unaudited pro forma operating results of the Company for the year ended September 27, 2019 assuming that the June 12, 2019 acquisition of KeyW had occurred at the beginning of fiscal 2018 for pro forma purposes. 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 on such date (in millions, except per share data):

						For the Year Ended
						September 27, 2019
Revenues						$	13,068.7
Net earnings of the Group from Continuing Operations						$	326.0
Net earnings (loss) attributable to Jacobs from continuing operations						$	303.0
Net earnings (loss) attributable to Jacobs from continuing operations per share:
Basic earnings (loss) from continuing operations per share						$	2.19
Diluted earnings (loss) from continuing operations per share						$	2.17

Included in the table above are the unaudited pro forma operating results of continuing operations. Also, income tax expense (benefit) for the fiscal year pro forma period ended September 27, 2019 was $41.3 million.

CH2M

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 "CH2M acquisition"). The purpose of the CH2M 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 CH2M 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 CH2M 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-50

JACOBS ENGINEERING GROUP INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued)

Assets
Cash and cash equivalents			$	315.2
Receivables			1,120.6
Prepaid expenses and other			72.7
Property, equipment and improvements, net			175.1
Goodwill			3,165.5
Identifiable intangible assets:
Customer relationships, contracts and backlog			412.3
Lease intangible assets			4.4
Total identifiable intangible assets			416.7
Miscellaneous			530.8
Total Assets			$	5,796.6
Liabilities
Notes payable			$	2.2
Accounts payable			309.6
Accrued liabilities			787.4
Contract liabilities			260.8
Identifiable intangible liabilities:
Lease intangible liabilities			9.6
Long-term debt			706.0
Other deferred liabilities			659.0
Total Liabilities			$	2,734.6
Noncontrolling interests			(37.3)
Net assets acquired			$	3,024.7

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. During the first quarter of fiscal 2019, the Company completed its final assessment of the fair values of the acquired assets and liabilities of CH2M. Accrued liabilities and other deferred liabilities include approximately $404.7 million related to estimates for various legal and other pre-acquisition contingent liabilities accounted for under ASC 450. See Note 18- Contractual Guarantees, Litigation, Investigations and Insurance relating to CH2M contingencies.

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.

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.

F-51

JACOBS ENGINEERING GROUP INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued)

From the acquisition date of December 15, 2017 through September 28, 2018, CH2M consolidated, including both continuing and discontinued operations, 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 year ended September 28, 2018 are comprised of the following (in millions):

			For the Year Ended
			September 28, 2018
Personnel costs			$	50.2
Professional services and other expenses			27.5
Total			$	77.7

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). Additionally, these pro forma operating results have not been recast for the sale of our ECR business.

			For the Year Ended
			September 28, 2018
Revenues			$	16,012.4
Net earnings			$	196.3
Net earnings (loss) attributable to Jacobs			$	184.5
Net earnings (loss) attributable to Jacobs per share:
Basic earnings (loss) per share			$	1.28
Diluted earnings (loss) per share			$	1.27

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 period ended September 28, 2018 was $409.7 million.

15. Sale of Energy, Chemicals and Resources ("ECR") Business

On April 26, 2019, Jacobs completed the sale of its ECR business to Worley for a purchase price of $3.4 billion consisting of (i) $2.8 billion in cash plus (ii) 58.2 million ordinary shares of Worley, subject to adjustments for changes in working capital and certain other items (the “ECR sale”). The stock and asset purchase agreement for the ECR sale contained a restriction on our ability to sell the Worley shares received in the transaction, which expired in the first fiscal quarter of 2020.

Discontinued Operations

As a result of the ECR sale, substantially all ECR-related assets and liabilities have been sold (the "Disposal Group"). We determined that the Disposal Group should be reported as discontinued operations in accordance with ASC 210-05, Discontinued Operations because their disposal represents a strategic shift that had a major effect on our operations and financial results. As such, the financial results of the ECR business are reflected in our Consolidated Statements of Earnings as discontinued operations for all periods presented. As of the year ended October 2, 2020, all of the ECR business to be sold under the terms of the sale has been conveyed to Worley and as such, no amounts remain held for sale.

F-52

JACOBS ENGINEERING GROUP INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued)

Summarized Financial Information of Discontinued Operations

The following table represents earnings (loss) from discontinued operations, net of tax (in thousands):

			For the Years Ended (1)
			October 2, 2020						September 27, 2019						September 28, 2018
Revenues			$	11,235					$	2,725,699					$	4,404,873
Direct cost of contracts			(6,152)						(2,338,113)						(3,756,263)
Gross profit			5,083						387,586						648,610
Selling, general and administrative expenses			32,668						(320,264)						(412,282)
Operating Profit (Loss)			37,751						67,322						236,328
Gain on sale of ECR business			110,236						935,110						—
Other (expense) income, net			515						(47,390)						(12,604)
Earnings Before Taxes from Discontinued Operations			148,502						955,042						223,724
Income Tax Expense			(10,518)						(395,828)						(55,931)
Net Earnings of the Group from Discontinued Operations			$	137,984					$	559,214					$	167,793

(1) The ECR business was sold April 26, 2019, therefore the year ended September 27, 2019 includes only seven months of results.

Selling, general and administrative expenses includes a reduction for net insurance recoveries of approximately $40.0 million for the year ended October 2, 2020 recorded in connection with the Nui Phao ("NPMC") legal matter described in Note 18- Contractual Guarantees, Litigations, Investigations and Insurance. Additionally, the year ended September 27, 2019 includes a charge for the award and recovery of costs, estimated related interest and attorneys' fees related to the NPMC legal matter. For the year ended October 2, 2020, the gain on sale of $110.2 million relates mainly to the recognition of the deferred gain for the delayed transfer of the ECR-related assets and liabilities of the two international entities discussed below, adjustments for working capital and certain other items in connection with the ECR sale and additional income for the release of a deferred gain upon achievement of the IT Migration Date described below in connection with the delivery to Worley of certain IT application and hardware assets related to the ECR business. For the year ended September 27, 2019, other expense (income), net was comprised of $35.0 million in interest expense relating to the Nui Phao settlement, $6.0 million in foreign currency revaluations, $9.6 million in loss on the sale of a joint venture which is offset by $4.4 million in miscellaneous income. For the year ended September 28, 2018, other expense (income), net was comprised of an approximate $21.0 million loss on the sale of the Guimar joint venture, offset by $8.4 million in miscellaneous income.

The following tables represent the assets and liabilities held for sale (in thousands):

			September 27, 2019
Cash and cash equivalents			$	—
Receivables and contract assets			871
Prepaid expenses and other			81
Current assets held for sale (1)			$	952

Property, Equipment and Improvements, net			$	1,643
Goodwill			24,896
Intangibles, net			—
Miscellaneous			439
Noncurrent assets held for sale (1)			$	26,978

F-53

JACOBS ENGINEERING GROUP INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued)

Notes payable			$	—
Accounts payable			—
Accrued liabilities			2,495
Contract liabilities			78
Current liabilities held for sale (1)			$	2,573

(1)At September 27, 2019, current assets held for sale and noncurrent assets held for sale were included in the within prepaid expenses and other and miscellaneous, respectively. At September 27, 2019, current liabilities held for sale and noncurrent liabilities held for sale were included within accrued liabilities and other deferred liabilities, respectively.

The significant components included in our Consolidated Statements of Cash Flows for discontinued operations are as follows (in thousands):

			For the Year Ended
			September 27, 2019
Depreciation and amortization:
Property, equipment and improvements			$	2,110
Intangible assets			$	614
Additions to property and equipment			$	(9,204)
Stock based compensation			$	10,852

Gain on Sale and Deferred Gain

As a result of the ECR sale, the Company recognized a pre-tax gain of $1.0 billion, $935.1 million of which was recognized in fiscal 2019 and $110.2 million of which is included in Net Earnings of the Group from Discontinued Operations on the consolidated statement of earnings for the year ended October 2, 2020, which is further discussed below.

Upon closing the ECR sale, the Company retained a noncontrolling interest (with significant influence) in P&PS-related activities in one international legal entity acquired by Worley. The fair value of the Company’s retained interest in the net assets and liabilities of this entity was estimated at $33.0 million and recorded at closing. For another international legal entity, the closing and transfer of ECR-related assets to Worley were set to occur at a future date. At the time of the ECR sale, the Company allocated proceeds received to these deferred closing items on a relative fair value basis and recognized a deferred gain of $34.4 million. During the second fiscal quarter of 2020, the delayed transfer of the ECR-related assets and liabilities of these two international entities occurred, and as a result, previously deferred gain amounts were recognized.

In addition to consideration received for the sale of the ECR business, the proceeds received included advanced consideration for the Company to deliver IT application and related hardware assets at a future date (“IT Migration Date”) to Worley upon completion of the interim transition services provided under the TSA, described further below. This deliverable of IT assets is considered to be a separate element of the ECR business sale transaction, and accordingly, we have allocated a portion of the proceeds received of $95.3 million on a relative fair value basis to this separate deliverable and recognized deferred income. Upon completion and acceptance of this deliverable by Worley in December 2019, the deferred proceeds were recognized in earnings from discontinued operations, along with expenses associated with any costs incurred and deferred by the Company for this deliverable.

Investment in Worley Stock

As discussed above, the Company received 58.2 million in ordinary shares of Worley in connection with the ECR sale. Pursuant to the purchase agreement for the ECR sale, 51.4 million of the shares were considered "restricted" during a lock-up period ending in December 2019. During the lock-up period, Jacobs could not, without Worley's consent, directly or indirectly dispose of the "restricted" shares. The remaining 6.8 million shares not considered "restricted" were sold in fiscal 2019, netting a loss of $4.9 million, which was recognized in miscellaneous income (expense), net. Dividend income and unrealized gains and losses on changes in fair value of Worley shares are recognized in miscellaneous income (expense), net in continuing operations.

F-54

JACOBS ENGINEERING GROUP INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued)

The Company's investment in Worley is measured at fair value through net income as it is an equity investment with a readily determinable fair value based on quoted market prices. The 51.4 million ordinary shares currently held are recorded within investment in equity securities in the Company's Consolidated Balance Sheets at their estimated fair value, which is $347.5 million as of October 2, 2020 and $451.1 million as of September 27, 2019. For the years ended October 2, 2020 and September 27, 2019, the Company recognized a loss of $103.6 million and a loss of $78.1 million, respectively, associated with share price and currency changes on this investment, as well as dividend income related to the equity investment in the amount of $16.9 million and $5.2 million, respectively. Quoted market prices are available for these securities in an active market and therefore categorized as a Level 1 input.

Transition Services Agreement

Upon closing of the ECR sale, the Company entered into a Transition Services Agreement (the "TSA") with Worley pursuant to which the Company, on an interim basis, provided various services to Worley including executive consultation, corporate, information technology, and project services. The initial term of the TSA began immediately following the closing of the ECR sale on April 26, 2019 and expired in April 2020, although the parties mutually agreed to extend certain of the services for additional time periods beyond the initial term. All services under the TSA were terminated in October 2020. Pursuant to the terms of the TSA, the Company received payments for the interim services which approximate costs incurred to perform the services. The Company has recognized costs recorded in SG&A expense incurred to perform the TSA, offset by $15.8 million and $35.4 million in TSA related income for such services that is reported in miscellaneous income (expense) in continuing operations for the year ended October 2, 2020 and September 27, 2019, respectively, before inclusion of certain incremental outside service support costs agreed to be shared equally by the parties.

F-55

JACOBS ENGINEERING GROUP INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued)

16. Restructuring and Other Charges

During fiscal 2020, the Company implemented certain restructuring and separation initiatives, including the Company's fourth quarter fiscal 2020 transformation initiatives relating to real estate and other staffing programs. The activities of these initiatives are expected to continue into fiscal 2023.

During fiscal 2019 and continuing into fiscal 2020, the Company implemented certain restructuring and separation initiatives associated with the ECR sale, the KeyW acquisition, and other related cost reduction initiatives. Additionally, in fiscal 2020, the Company implemented certain restructuring and separation initiatives associated with the acquisition of John Wood Group's nuclear business. The restructuring activities and related costs were comprised mainly of separation and lease abandonment and sublease programs, while the separation activities and costs were mainly related to the engagement of consulting services and internal personnel and other related costs dedicated to the Company’s ECR-business separation. The activities of these initiatives are expected to be substantially completed before the end of fiscal 2021.

During the fourth fiscal quarter of 2017, the Company implemented certain restructuring and pre-integration plans associated with the then-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 integration activities and costs were mainly related to the engagement of professional 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 through fiscal 2020 and are expected to be substantially completed before the end of fiscal 2022.

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 by LOB in connection with the CH2M, KeyW and John Wood Group nuclear business acquisitions, the ECR sale and the Company's fourth quarter fiscal 2020 transformation initiatives relating to real estate and other staffing programs for the year ended October 2, 2020, the CH2M and KeyW acquisitions and the ECR sale for the year ended September 27, 2019 and the CH2M acquisition for the year ended September 28, 2018 (in thousands):

			October 2, 2020						September 27, 2019						September 28, 2018
Critical Mission Solutions			$	24,083					$	17,989					20,254
People & Places Solutions			170,631						108,835						56,238
Corporate			129,469						184,646						77,148
Continuing Operations (1)			324,183						311,470						153,640
Energy, Chemicals and Resources (included in Discontinued Operations)			—						(138)						37,166
Total			$	324,183					$	311,332					$	190,806

(1)For the years ended October 2, 2020, September 27, 2019 and September 28, 2018, amounts include $321.6 million, $337.0 million and $154.0 million, respectively, in items impacting operating profit, along with items recorded in other income (expense), net, which are the loss on settlement of the CH2M portion of the U.S. pension plan of $2.1 million for the year ended October 2, 2020, the gain on the settlement of the CH2M retiree medical plans of $35.0 million for the year ended September 27, 2019 and the write-off of fixed assets related to restructured leases of $10 million for the year ended September 27, 2019 and other miscellaneous adjustments of $(0.5) million, $0.5 million and $0.3 million for the years ended October 2, 2020, September 27, 2019 and September 28, 2018, respectively. See Note 19- Segment Information.

The activity in the Company’s accrual for the Restructuring and other charges including the program activities described above for the year ended October 2, 2020 is as follows (in thousands):

Balance at September 27, 2019			$	162,702
Transfer to lease right-of-use asset as a result of adoption of ASC 842 (1)			(116,797)
Net Charges			324,183
Payments & Usage			(317,234)
Balance at October 2, 2020			$	52,854

(1)In addition, there was $24.6 million in lease cease-use liabilities relating to 2015 restructuring initiatives which were reclassified to ROU asset balances in accordance with the adoption of ASC 842, see Note 10- Leases. The 2015 restructuring initiatives are no longer active and therefore activity associated with lease cease-use liabilities for those initiatives is not included in the table.

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued)

The following table summarizes the Restructuring and other charges by major type of costs for the years ended October 2, 2020, September 27, 2019 and September 28, 2018 (in thousands):

			October 2, 2020						September 27, 2019						September 28, 2018
Lease Abandonments and Impairments			$	151,150					$	99,976					$	61,526
Voluntary and Involuntary Terminations			53,484						33,742						29,056
Outside Services			88,476						133,148						35,987
Other (1)			31,073						44,604						27,071
Total			$	324,183					$	311,470					$	153,640

(1)Includes $35.0 million in pre-tax gains associated with the Company's CH2M retiree medical plan settlement during the year ended September 27, 2019.

Cumulative amounts since 2017 incurred to date under our various restructuring and other activities described above by each major type of cost as of October 2, 2020 are as follows (in thousands):

Lease Abandonments and Impairments			$	313,517
Voluntary and Involuntary Terminations			128,969
Outside Services			259,124
Other (1)			100,314
Total			$	801,924

(1)Includes $35.0 million in pre-tax gains associated with the Company's CH2M retiree medical plan settlement during the year ended September 27, 2019.

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued)

17. Commitments and Contingencies and Derivative Financial Instruments

Derivative Financial Instruments

The Company is exposed to interest rate risk under its variable rate borrowings and additionally, due to the nature of the Company's international operations, we are at times exposed to foreign currency risk. As such, we sometimes enter into foreign exchange contracts and interest rate contracts in order to limit our exposure to fluctuating foreign currencies and interest rates.

In fiscal 2020 we entered into interest rate swap agreements with a notional value of $783.7 million as of October 2, 2020 to manage the interest rate exposure on our variable rate loans. Additionally, we entered into a cross-currency swap agreement with a notional value of $127.8 million to manage the interest rate and foreign currency exposure on our USD borrowings by a European subsidiary. By entering into the swap agreements, the Company converted the LIBOR rate based liability into a fixed rate liability and, for the cross currency swap, our LIBOR rate based borrowing in USD to a fixed rate Euro liability, for periods ranging from three and a half to ten years. Under the interest rate swap agreements, the Company receives the one month LIBOR rate and pays monthly a fixed rate ranging from .704% to 1.116%, and under the cross currency swap agreement, the Company receives the one month LIBOR rate plus 0.875% in USD and pays monthly a Euro fixed rate of .726% to .746% for the term of the swaps. The swaps were designated as cash-flow hedges in accordance with ASC 815, Derivatives and Hedging. The fair value of the interest rate and cross currency swaps at October 2, 2020 was $(31.5) million, which is included in other deferred liabilities on the consolidated balance sheet. The unrealized net losses on these interest rate and cross currency swaps was $14.6 million, net of tax, and was included in accumulated other comprehensive income as of October 2, 2020.

Additionally, at October 2, 2020, the Company held foreign exchange forward contracts in currencies that support our operations, including British Pound, Euro, Australian Dollar and other currencies, with notional values of $393.7 million at October 2, 2020. The length of these contracts currently ranges from one to twelve months. The fair value of the foreign exchange contracts at October 2, 2020 was $53.5 million, which is included in current assets within receivables and contract assets on the consolidated balance sheet and with associated income statement impacts included in miscellaneous income (expense) in the consolidated statement of earnings.

The fair value measurements of these derivatives are being made using Level 2 inputs under ASC 820, Fair Value Measurement, as the measurements are based on observable inputs other than quoted prices in active markets. We are exposed to risk from credit-related losses resulting from nonperformance by counterparties to our financial instruments. We perform credit evaluations of our counterparties under forward exchange and interest rate contracts and expect all counterparties to meet their obligations. We have not experienced credit losses from our counterparties.

Letters of Credit

At October 2, 2020, the Company had issued and outstanding approximately $263.0 million in LOCs and $2.3 billion in surety bonds. Of the outstanding LOC amount, $2.3 million has been issued under the Revolving Credit Facility and $260.7 million are issued under separate, committed and uncommitted letter-of-credit facilities.

18. 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 primarily includes personal injury claims, professional liability claims and breach of contract claims. 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 17- Commitments and Contingencies and Derivative Financial Instruments for more information surrounding LOCs and surety bonds.

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued)

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, beyond amounts currently accrued.

On September 30, 2015, Nui Phao Mining Company Limited (“NPMC”) commenced arbitration proceedings against Jacobs E&C Australia Pty Limited (“Jacobs E&C”) in Singapore before the Singapore International Arbitration Centre. Jacobs E&C was engaged by NPMC for the provision of management, design, engineering, and procurement services for a Nui Phao mine/mineral processing project in Vietnam as part of the Company’s former Energy, Chemicals & Resources (“ECR”) line of business. A three-week hearing on the merits concluded on December 15, 2017, and on March 28, 2019, the arbitration panel issued a decision finding against Jacobs E&C. On August 30, 2019, NPMC and Jacobs E&C settled all of the proceedings related to this matter. Under the terms of the settlement, Jacobs E&C made a payment to NPMC in the amount of $130.0 million in the fourth fiscal quarter of 2019. The settlement otherwise remains confidential. During the year ended October 2, 2020, the Company recognized the reduction of $40.0 million of selling, general and administrative expenses in discontinued operations as a result of the realization of related net insurance recoveries. Under the terms of the sale of the Company's ECR business to Worley on April 26, 2019, the Company retained liability with respect to this matter.

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 ("JKC") 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 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 and is seeking compensatory damages in the amount of approximately $530.0 million for repudiatory breach or, in the alternative, seeking damages for unresolved contract claims and change orders. JKC is seeking damages in excess of $1.7 billion and has drawn on the bonds. In light of the COVID-19 pandemic, a November 2020 date for commencement of the hearing has been vacated and the hearing has been rescheduled for opening arguments in April and the remaining proceedings in July and August 2021. Although an earlier decision is possible, no decision is expected before 2022. In September 2018, JKC filed a declaratory judgment action in Western Australia alleging that the entities which executed parent company guaranties for the Consortium, including CH2M Hill Companies, Ltd., have an obligation to pay JKC’s ongoing costs to complete the project after termination. A hearing on that matter was held in March 2019, and a decision in favor of the Consortium was issued. JKC appealed the decision, a hearing on the

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued)

appeal took place in March 2020 and a decision was handed down on July 22, 2020 denying JKC’s appeal in its entirety. If the Consortium is found liable, these matters 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, in excess of the current reserve for this matter. See Note 14- Business Combinations, for further information related to CH2M contingencies.

On December 22, 2008, a coal fly ash pond at the Kingston Power Plant of the Tennessee Valley Authority ("TVA") was breached, releasing fly ash waste into the Emory River and surrounding community. In February 2009, TVA awarded a contract to the Company to provide project management services associated with the clean-up. All remediation and dredging were completed in August 2013 by other contractors under direct contracts with TVA. The Company did not perform the remediation, and its scope was limited to program management services. Certain employees of the contractors performing the cleanup work on the project filed lawsuits against the Company beginning in August 2013, alleging they were injured due to the Company's failure to protect the plaintiffs from exposure to fly ash, and asserting related personal injuries. There are currently six separate cases pending against the Company. The primary case, Greg Adkisson, et al. v. Jacobs Engineering Group Inc., case No. 3:13-CV-505-TAV-HBG, filed in the U.S. District Court for the Eastern District of Tennessee, consists of 10 consolidated cases. This case and the related cases involve several hundred plaintiffs that have been filed against the Company by employees of the contractors that completed the remediation and dredging work. The cases are at various stages of litigation, and several of the cases are currently stayed pending resolution of other cases. Separately, in May 2019, Roane County and the cities of King and Herriman filed a claim against TVA and the Company alleging that they misled the public about risks associated with the released fly ash. In October 2020, the Court granted Jacobs and TVA’s motion to dismiss with prejudice the Roane County litigation based on the expiration of the applicable statute of limitations. In addition, in November 2019, a resident of Roane County filed a putative class action against TVA and the Company alleging they failed to adequately warn local residents about risks associated with the released fly ash. In February 2020, the Company learned that the district attorney in Roane County recommended that the Tennessee Bureau of Investigation investigate issues pertaining to clean up worker safety at Kingston, with that investigation still pending. There has been no finding of liability against the Company or that any of the alleged illnesses are the result of exposure to fly ash in any of the above matters. The Company disputes the claims asserted in all of the above matters and is vigorously defending these claims. The Company does not expect the resolution of these matters to have a material adverse effect on the Company's business, financial condition, results of operations or cash flows.

On October 31, 2019, the Company received a request from the Enforcement Division of the Securities and Exchange Commission (the "SEC") for the voluntary production of certain information and documents. The information and documents sought by the SEC primarily relate to the operations of a joint venture in Morocco which was at one time partially-owned by the Company (and subsequently divested), including in respect of possible corrupt practices. The Company is fully cooperating with the SEC and is producing the requested information and documents in its possession. 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.

19. Segment Information

The Company's two operating segments and global lines of business ("LOBs") are as follows: Critical Mission Solutions ("CMS") and People & Places Solutions ("P&PS"), with the previous Energy, Chemicals and Resources ("ECR") LOB reported as discontinued operations. For further information on ECR, refer to Note 15- Sale of Energy, Chemicals and Resources ("ECR") Business.

The Company’s Chair and Chief Executive Officer is the Chief Operating Decision Maker (“CODM”) and can 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 operating segments share similar economic characteristics and meet the aggregation criteria for reporting units in accordance with ASC 350, Intangibles-Goodwill and Other.

Under this organization, the sales function is managed by LOB, and accordingly, the associated cost is embedded in the segments and reported to the respective head of each LOB. 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

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued)

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 Leadership Performance Plan ("LPP"), formerly named the Management Incentive Plan, and the expense associated with the Jacobs Engineering Group Inc. 1999 Stock Incentive Plan (“1999 SIP”) have likewise been charged to the LOBs except for those amounts determined to relate to the business as a whole (which amounts remain in 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.

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).

			For the Years Ended
			October 2, 2020						September 27, 2019						September 28, 2018
Revenues from External Customers:
Critical Mission Solutions			$	4,965,952					$	4,551,162					$	3,725,365
People & Places Solutions			8,601,023						8,186,706						6,854,408
Total			$	13,566,975					$	12,737,868					$	10,579,773

			For the Years Ended
			October 2, 2020						September 27, 2019						September 28, 2018
Segment Operating Profit:
Critical Mission Solutions (1)			$	372,070					$	310,043					$	255,718
People & Places Solutions (2)			740,707						714,394						527,900
Total Segment Operating Profit			1,112,777						1,024,437						783,618
Other Corporate Expenses (3)			(249,391)						(264,351)						(161,788)
Restructuring, Transaction and Other Charges			(327,413)						(355,235)						(234,387)
Total U.S. GAAP Operating Profit			535,973						404,851						387,443
Total Other (Expense) Income, net (4)			(94,770)						(53,892)						(56,462)
Earnings from Continuing Operations Before Taxes			$	441,203					$	350,959					$	330,981

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

(2)Includes $25.0 million in charges associated with a certain project for the year ended September 27, 2019.

(3)Other corporate expenses include costs that were previously allocated to the ECR segment prior to discontinued operations presentation in connection with the ECR sale in the approximate amount of $— million, $14.8 million and $25.6 million for the years ended October 2, 2020, September 27, 2019 and September 28, 2018, respectively. Also includes intangibles amortization of $90.6 million, $79.1 million and $68.1 million for the years ended October 2, 2020, September 27, 2019 and September 28, 2018, respectively.

(4)For the years ended October 2, 2020 and September 27, 2019, other expenses includes revenues under the Company's TSA with Worley of $15.8 million and $35.4 million, respectively, $74.3 million and $64.8 million in fair value adjustments related to our investment in Worley stock (net of Worley Stock dividends) and certain foreign currency revaluations relating to ECR sale proceeds, respectively. Also included for the years ended October 2, 2020, September 27, 2019 and September 28, 2018 is amortization of deferred financing fees related to the CH2M acquisition of $0.7 million, $3.2 million and $1.8 million respectively. Lastly, includes loss on settlement of U.S. pension plan of $2.7 million for the year ended October 2, 2020 and includes gain on settlement of the CH2M retiree medical plans of $35.0 million for the year ended September 27, 2019.

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued)

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 our incentive compensation plans 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 may also include from time to time certain 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.

20. 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
October 2, 2020
Revenues			$	3,360,049					$	3,427,180					$	3,260,057					$	3,519,689					$	13,566,975
Operating profit (a)			$	151,345		(b)			$	167,778		(b)			$	194,376		(b)			$	22,474		(b)			$	535,973
Earnings (Loss) from Continuing Operations Before Taxes			$	254,169					$	(176,805)					$	303,681					$	60,158					$	441,203
Net Earnings (Loss) of the Group from Continuing Operations			$	185,680					$	(115,683)					$	236,007					$	79,879					$	385,883
Net Earnings (Loss) Attributable to Jacobs from Continuing Operations			$	179,423		(b)			$	(121,967)		(b)			$	226,886		(b)			$	69,519		(b)			$	353,861
Net Earnings (Loss) Attributable to Jacobs			$	257,010		(b)			$	(92,087)		(b)			$	244,929		(b)			$	81,993		(b)			$	491,845
Earnings per share:
Basic Net Earnings (Loss) from Continuing Operations Per Share			$	1.35					$	(0.92)					$	1.74					$	0.53					$	2.69
Basic Net Earnings from Discontinued Operations Per Share			$	0.58					$	0.23					$	0.14					$	0.10					$	1.05
Basic Earnings (Loss) Per Share			$	1.93					$	(0.69)					$	1.88					$	0.63					$	3.74
Diluted Net Earnings (Loss) from Continuing Operations Per Share			$	1.33		(b)			$	(0.92)		(b)			$	1.73		(b)			$	0.53		(b)			$	2.67
Diluted Net Earnings (Loss) from Discontinued Operations Per Share			$	0.58					$	0.23					$	0.14					$	0.09		(c)			$	1.04
Diluted Earnings (Loss) Per Share			$	1.91					$	(0.69)					$	1.87					$	0.62					$	3.71
September 27, 2019
Revenues			$	3,083,788					$	3,091,596					$	3,169,622					$	3,392,862					$	12,737,868
Operating profit (a)			$	113,130		(c)			$	102,681		(c)			$	89,954		(c)			$	99,086		(c)			$	404,851
Earnings from Continuing Operations Before Taxes			$	92,191					$	111,832					$	93,399					$	53,537					$	350,959
Net Earnings of the Group from Continuing Operations			$	69,433					$	119,779					$	95,380					$	29,413					$	314,005
Net Earnings Attributable to Jacobs from Continuing Operations			$	64,894		(c)			$	114,755		(c)			$	89,365		(c)			$	21,946		(c)			$	290,960
Net Earnings Attributable to Jacobs			$	124,296		(c)			$	56,917		(c)			$	524,442		(c)			$	142,324		(c)			$	847,979
Earnings per share:
Basic Net Earnings from Continuing Operations Per Share			$	0.45					$	0.83					$	0.65					$	0.16					$	2.11
Basic Net Earnings (Loss) from Discontinued Operations Per Share			$	0.42					$	(0.42)					$	3.18					$	0.89					$	4.03
Basic Earnings Per Share			$	0.87					$	0.41					$	3.83					$	1.06					$	6.14
Diluted Net Earnings from Continuing Operations Per Share			$	0.45		(c)			$	0.82		(c)			$	0.65		(c)			$	0.16		(c)			$	2.09
Diluted Net Earnings (Loss) from Discontinued Operations Per Share			$	0.41					$	(0.41)					$	3.15					$	0.88		(d)			$	4.00
Diluted Earnings Per Share			$	0.86					$	0.41					$	3.80					$	1.04					$	6.08

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

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued)

(b)Includes $85.2 million in operating profit and $(17.7) million in net earnings from continuing operations attributable to Jacobs, or $(0.13) per diluted share from continuing operations in the first quarter of fiscal 2020; includes $68.7 million in operating profit, $308.2 million in net loss from continuing operations attributable to Jacobs, or $2.31 per diluted share from continuing operations in the second quarter of fiscal 2020; includes $44.6 million in operating profit and $(61.6) million in net earnings from continuing operations attributable to Jacobs, or $(0.47) per diluted share from continuing operations in the third quarter of fiscal 2020; includes $235.4 million in operating profit and $144.8 million in both net earnings from continuing operations attributable to Jacobs, and net earnings attributable to Jacobs, or $1.10 per diluted share in the fourth quarter of fiscal 2020 related to restructuring, transaction and other charges (including the Company's fourth quarter fiscal 2020 transformation initiatives relating to real estate and other staffing programs), amortization of intangibles and fair value adjustments related to our investment in Worley stock (net of Worley stock dividend) and certain foreign currency revaluations relating to ECR sale. On a year to date basis, impacts on net earnings from continuing operations attributable to Jacobs were (i) $248.2 million in restructuring, transaction and other charges (includes $146.6 million related to charges for the Company's fourth quarter fiscal 2020 transformation initiatives relating to real estate and other staffing programs,), (ii) $68.3 million of intangible asset amortization and (iii) $56.9 million in fair value adjustments related to our investment in Worley stock (net of Worley stock dividend) and certain foreign currency revaluations relating to the ECR sale.

(c)Includes $47.2 million in operating profit and $46.8 million in net earnings from continuing operations attributable to Jacobs, or $0.33 per diluted share from continuing operations in the first quarter of fiscal 2019; includes $119.0 million in operating profit, $50.8 million in net earnings from continuing operations attributable to Jacobs, or $0.36 per diluted share from continuing operations in the second quarter of fiscal 2019; includes $142.8 million in operating profit and $103.8 million in net earnings from continuing operations attributable to Jacobs, or $0.75 per diluted share from continuing operations in the third quarter of fiscal 2019; includes $154.2 million in operating profit, $179.3 million in both net earnings from continuing operations attributable to Jacobs and net earnings attributable to Jacobs, or $1.32 per diluted share in the fourth quarter of fiscal 2019 related to restructuring, transaction and other charges, amortization of intangibles and fair value adjustments related to our investment in Worley stock (net of Worley stock dividend) and certain foreign currency revaluations relating to the ECR sale. On a year to date basis, impacts on net earnings from continuing operations attributable to Jacobs were (i) $259.8 million in restructuring, transaction and other charges, (ii) $59.0 million of intangible asset amortization and (iii) $48.6 million in fair value adjustments related to our investment in Worley stock (net of Worley stock dividend) and certain foreign currency revaluations relating to the ECR sale.

(d)For the three-month period ended September 27, 2019, diluted net earnings (loss) per share from discontinued operations included $89.7 million related to revisions to previous income tax expense estimates, $17.4 million in finalization of the pre-tax gain on the sale of our ECR business and $9.8 million related to the difference between Nui Phao loss contingency as originally recorded and fourth quarter 2019 settlement amount.

F-63

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 October 2, 2020 and September 27, 2019, the related consolidated statements of earnings, comprehensive income, stockholders' equity and cash flows for each of the three fiscal years in the period ended October 2, 2020, 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 October 2, 2020 and September 27, 2019, and the results of its operations and its cash flows for each of the three fiscal years in the period ended October 2, 2020, 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 October 2, 2020, 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 24, 2020 expressed an unqualified opinion thereon.

Adoption of New Accounting Standards

As discussed in Note 2 to the consolidated financial statements, the Company changed its method of accounting for leases in 2020 to reflect the accounting method change due to the adoption of ASU 2016-02, Leases (Topic 842). As discussed in Note 2 to the consolidated financial statements, the Company changed its method of accounting for revenue recognition on contracts with customers in 2019 to reflect the accounting method change due to the adoption of ASU 2014-09, Revenue from Contracts with Customers (Topic 606).

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.

Critical Audit Matters

The critical audit matters communicated below are matters arising from the current period audit of the financial statements that were communicated or required to be communicated to the audit committee and that: (1) relate to accounts or disclosures that are material to the financial statements and (2) involved our especially challenging, subjective or complex judgments. The communication of critical audit matters does not alter in any way our opinion on the consolidated financial statements, taken as a whole, and we are not, by communicating the critical audit matters below, providing separate opinions on the critical audit matters or on the accounts or disclosures to which they relate.

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						Revenue Recognition for Fixed-Price Engineering, Procurement and Construction Contracts
Description of the Matter						As described in Note 2 to the consolidated financial statements, the Company recognizes engineering, procurement and construction contract revenue over time, as performance obligations are satisfied, using the percentage-of-completion method (an input method) based primarily on contract costs incurred to date compared to total estimated contract costs. Revenue recognition under this method is judgmental, as it requires the Company to prepare estimates of total contract revenue and total contract costs, including costs to complete in-process contracts. Auditing the Company’s estimates of total contract revenue and costs used to recognize revenue on fixed-price engineering, procurement and construction contracts involved significant auditor judgment, as it required the evaluation of subjective factors, such as assumptions related to estimated labor, forecasted material and subcontractor costs and variable consideration estimates related to incentive fees and unpriced change orders. These assumptions involved significant management judgment, which affects the measurement of revenue recognized by the Company.
How We Addressed the Matter in Our Audit						We tested certain of the Company’s controls over the estimation process that affect revenue recognized on fixed-price engineering, procurement and construction contracts. For example, we tested controls over management’s monitoring and review of project cost and variable consideration estimates, including the Company’s procedures to validate the completeness and accuracy of the data used to determine the estimates. To test the Company’s contract estimates related to revenues recognized on fixed-price engineering, procurement, and construction projects, our audit procedures included selecting a sample of projects and, among other procedures, we obtained and inspected related contract agreements, amendments, and change orders to test the existence of customer arrangements and understand the scope and pricing of the related projects; observed selected project team status meetings at the Company and interviewed project team personnel to obtain an understanding of the status of operational performance and progress on the related projects; evaluated the reasonableness of the Company’s estimated costs to complete by obtaining and analyzing supporting documentation for a sample of cost estimate components; and compared contract profitability estimates in the current year to historical estimates and actual performance for the same projects.
						Legal Contingencies
Description of the Matter						As described in Note 17 to the consolidated financial statements, the Company is subject to litigation and arbitration proceedings, including a material legal contingency related to a dispute with JKC Australia LNG Pty Limited. Auditing the Company’s estimates related to legal contingencies was especially subjective due to the judgment required to evaluate information used by management to determine whether a probable loss exists and whether a loss can be reasonably estimated, and if so, the assumptions used by management to estimate the potential range of losses. Management’s assumptions had a significant effect on loss contingency accruals recorded.
How We Addressed the Matter in Our Audit						We tested the Company’s controls over the identification and evaluation of the completeness and valuation of contingent liabilities related to legal matters. For example, we tested controls over the Company’s assessment and valuation of loss contingencies, including their evaluation of whether a loss is probable, and measurement of the contingent liability associated with probable losses. To test the Company’s accounting and disclosure for legal contingencies, we performed audit procedures that included, among others, inspecting legal claim documentation submitted by counterparties, assessing management’s assumptions regarding cost estimates related to potential loss contingencies, inspecting minutes of meetings of the board of directors, and obtaining audit inquiry responses from external and internal legal counsel related to loss contingencies.

F-65

						Impairment of Right-of-Use and Other Long-Lived Assets
Description of the Matter						As described in Note 10 to the consolidated financial statements, the Company recognized long-lived asset impairment charges during 2020 related to right-of-use assets and related property, equipment and improvements associated with real estate lease space the Company has abandoned or identified for subleasing. The Company evaluates long-lived assets for impairment by first identifying whether indicators of impairment exist. If indicators are present for an asset group, the Company evaluates recoverability by comparing the estimated future undiscounted cash flows to the carrying amount of the asset group. If the asset group's carrying amount exceeds its estimated future undiscounted cash flows, the fair value of the asset group is then estimated by management and compared to its carrying amount. An impairment charge is recognized on a long-lived asset group when the carrying amount exceeds fair value. Auditing management’s evaluation of long-lived asset impairment involved subjectivity due to the estimation required to assess significant assumptions utilized in estimating the fair value of asset groups based on discounted cash flow models, such as assumptions related to expected downtime prior to the commencement of future subleases, projected sublease income over the remaining lease periods, and discount rates.
How We Addressed the Matter in Our Audit						We obtained an understanding, evaluated the design and tested the operating effectiveness of controls over the Company’s long-lived asset impairment evaluation process, including controls over management’s review of significant assumptions used. To test the Company’s long-lived asset impairment evaluation process, we performed audit procedures that included, among others, assessing the methodologies used, evaluating the significant assumptions discussed above and testing the completeness and accuracy of the underlying data used by the Company in its analysis. We inspected lease agreements related to impaired right-of-use assets and compared significant assumptions used by management as part of fair value estimates to current industry and economic trends and performed sensitivity analysis over significant assumptions, among other procedures. We involved our valuation specialists to assist in our evaluation of certain significant assumptions used on the calculation of fair value estimates specific to market participant real estate data.

/s/ Ernst & Young LLP

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

Dallas, Texas

November 24, 2020

F-66

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 October 2, 2020, 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, Jacobs Engineering Group Inc. and subsidiaries (the Company) maintained, in all material respects, effective internal control over financial reporting as of October 2, 2020, based on the COSO criteria.

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 October 2, 2020 and September 27, 2019, the related consolidated statements of earnings, comprehensive income, stockholders’ equity and cash flows for each of the three fiscal years in the period ended October 2, 2020, and the related notes and our report dated November 24, 2020 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 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.

F-67

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 24, 2020

F-68