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☒    Quarterly Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934

☐    Transition Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934

For the transition period from              to             

Indicate by check-mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the Registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days:     ☒ Yes    ☐  No

Indicate by check-mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). ☒ Yes ☐ No Indicate by check-mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company.

See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Indicate by check-mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).    ☐  Yes   ☒  No

Number of shares of common stock outstanding at April 28, 2023: 126,850,000

See the accompanying Notes to Consolidated Financial Statements – Unaudited.

(Unaudited)

(Unaudited)

(Unaudited)

			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 December 31, 2021			$	129,153					$	2,641,059					$	4,087,390					$	(787,656)					$	6,069,946					$	29,999					$	6,099,945
Net earnings			—						—						88,816						—						88,816						10,261						99,077
Foreign currency translation adjustments, net of deferred taxes of $400			—						—						—						(46,227)						(46,227)						—						(46,227)
Pension liability, net of deferred taxes of $728			—						—						—						11,308						11,308						—						11,308
Change in cash flow hedges, net of deferred taxes of $12,290			—						—						—						34,201						34,201						—						34,201
Dividends			—						—						(29,871)						—						(29,871)						—						(29,871)
Redeemable Noncontrolling interests redemption value adjustment			—						—						(35,117)						—						(35,117)						—						(35,117)
Noncontrolling interests - distributions and other			—						—						—						—						—						4,272						4,272
Stock based compensation			—						18,147						—						—						18,147						—						18,147
Issuances of equity securities including shares withheld for taxes			142						16,134						(33)						—						16,243						—						16,243
Repurchases of equity securities			(395)						(8,084)						(41,521)						—						(50,000)						—						(50,000)
Balances at April 1, 2022			$	128,900					$	2,667,256					$	4,069,664					$	(788,374)					$	6,077,446					$	44,532					$	6,121,978
Balances at December 30, 2022			$	126,669					$	2,672,421					$	4,230,866					$	(845,852)					$	6,184,104					$	49,494					$	6,233,598
Net earnings			—						—						216,512						—						216,512						7,803						224,315
Foreign currency translation adjustments, net of deferred taxes of $(968)			—						—						—						22,919						22,919						—						22,919
Pension liability, net of deferred taxes of $351			—						—						—						(345)						(345)						—						(345)
Change in cash flow hedges, net of deferred taxes of $(5,047)			—						—						—						(14,764)						(14,764)						—						(14,764)
Dividends			—						—						(32,564)						—						(32,564)						—						(32,564)
Redeemable Noncontrolling interests redemption value adjustment			—						—						(21,177)						—						(21,177)						—						(21,177)
Noncontrolling interests - distributions and other			—						—						—						—						—						(8,910)						(8,910)
Stock based compensation			—						15,054						—						—						15,054						—						15,054
Issuances of equity securities including shares withheld for taxes			136						10,048						(286)						—						9,898						—						9,898
Balances at March 31, 2023			$	126,805					$	2,697,523					$	4,393,351					$	(838,042)					$	6,379,637					$	48,387					$	6,428,024

(Unaudited)

			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 October 1, 2021			$	128,893					$	2,590,012					$	4,015,578					$	(794,442)					$	5,940,041					$	34,796					$	5,974,837
Net earnings			—						—						222,849						—						222,849						19,514						242,363
Foreign currency translation adjustments, net of deferred taxes of $(2,590)			—						—						—						(51,922)						(51,922)						—						(51,922)
Pension liability, net of deferred taxes of $2,196			—						—						—						17,879						17,879						—						17,879
Change in cash flow hedges, net of deferred taxes of $15,235			—						—						—						40,111						40,111						—						40,111
Dividends			—						—						(29,994)						—						(29,994)												(29,994)
Redeemable Noncontrolling interests redemption value adjustment to Common Shareholders			—						—						(50,320)						—						(50,320)						—						(50,320)
Repurchase of redeemable noncontrolling interests			—						—						7,761						—						7,761						—						7,761
Noncontrolling interests - distributions and other			—						—						—						—						—						(9,778)						(9,778)
Stock based compensation			—						25,161						—						—						25,161						—						25,161
Issuances of equity securities including shares withheld for taxes			744						17,040						(11,904)						—						5,880						—						5,880
Repurchases of equity securities			(737)						35,043						(84,306)						—						(50,000)						—						(50,000)
Balances at April 1, 2022			$	128,900					$	2,667,256					$	4,069,664					$	(788,374)					$	6,077,446					$	44,532					$	6,121,978
Balances at September 30, 2022			$	127,393					$	2,682,009					$	4,225,784					$	(975,130)					$	6,060,056					$	44,336					$	6,104,392
Net earnings			—						—						352,160						—						352,160						14,834						366,994
Foreign currency translation adjustments, net of deferred taxes of $5,641			—						—						—						181,644						181,644						—						181,644
Pension liability, net of deferred taxes of $659			—						—						—						(22,918)						(22,918)						—						(22,918)
Change in cash flow hedges, net of deferred taxes of $(8,317)			—						—						—						(21,638)						(21,638)						—						(21,638)
Dividends			—						—						(33,438)						—						(33,438)						—						(33,438)
Redeemable Noncontrolling interests redemption value adjustment			—						—						(44,494)						—						(44,494)						—						(44,494)
Repurchase and issuance of redeemable noncontrolling interests			—						—						11,337						—						11,337						—						11,337
Noncontrolling interests - distributions and other			—						—						—						—						—						(10,783)						(10,783)
Stock based compensation			—						35,285						—						—						35,285						—						35,285
Issuances of equity securities including shares withheld for taxes			650						6,286						(4,771)						—						2,165						—						2,165
Repurchases of equity securities			(1,238)						(26,057)						(113,227)						—						(140,522)						—						(140,522)
Balances at March 31, 2023			$	126,805					$	2,697,523					$	4,393,351					$	(838,042)					$	6,379,637					$	48,387					$	6,428,024

(Unaudited)

			For the Six Months Ended
			March 31, 2023						April 1, 2022
Cash Flows from Operating Activities:
Net earnings attributable to the Group			$	379,849					$	262,084
Adjustments to reconcile net earnings to net cash flows provided by operations:
Depreciation and amortization:
Property, equipment and improvements			55,686						52,620
Intangible assets			100,247						95,338
Stock based compensation			35,285						25,161
Equity in earnings of operating ventures, net of return on capital distributions			(2,931)						13,280
Loss on disposals of assets, net			828						421
Impairment of long-lived assets and equity method investment			37,217						74,585
Deferred income taxes			20,785						16,040
Changes in assets and liabilities, excluding the effects of businesses acquired:
Receivables and contract assets, net of contract liabilities			63,229						(33,881)
Prepaid expenses and other current assets			(9,940)						15,916
Miscellaneous other assets			43,472						67,201
Accounts payable			(15,109)						18,448
Accrued liabilities			(228,857)						(119,982)
Other deferred liabilities			(53,896)						(33,305)
Other, net			8,474						(7,670)
Net cash provided by operating activities			434,339						446,256
Cash Flows from Investing Activities:
Additions to property and equipment			(67,389)						(48,223)
Disposals of property and equipment and other assets			15						1,064
Capital contributions to equity investees, net of return of capital distributions			8,384						1,082
Acquisitions of businesses, net of cash acquired			(17,685)						(412,748)
Net cash used for investing activities			(76,675)						(458,825)
Cash Flows from Financing Activities:
Proceeds from long-term borrowings			2,075,495						1,519,000
Repayments of long-term borrowings			(2,129,338)						(1,125,528)
Repayments of short-term borrowings			—						(6,359)
Debt issuance costs			(11,388)						—
Proceeds from issuances of common stock			25,374						28,187
Common stock repurchases			(140,522)						(50,000)
Taxes paid on vested restricted stock			(23,209)						(28,398)
Cash dividends to shareholders			(62,788)						(57,247)
Net dividends associated with noncontrolling interests			(11,283)						(9,416)
Repurchase of redeemable noncontrolling interests			(58,353)						(35,095)
Net cash (used for) provided by financing activities			(336,012)						235,144
Effect of Exchange Rate Changes			49,761						(12,792)
Net Increase in Cash and Cash Equivalents and Restricted Cash			71,413						209,783
Cash and Cash Equivalents, including Restricted Cash, at the Beginning of the Period			1,154,207						1,026,575
Cash and Cash Equivalents, including Restricted Cash, at the End of the Period			$	1,225,620					$	1,236,358

1.Basis of Presentation

Unless the context otherwise requires:

•References herein to “Jacobs” are to Jacobs Solutions Inc. and its predecessors;

•References herein to the “Company”, “we”, “us” or “our” are to Jacobs Solutions Inc. and its consolidated subsidiaries; and

•References herein to the “Group” are to the combined economic interests and activities of the Company and the persons and entities holding noncontrolling interests in our consolidated subsidiaries.

On August 29, 2022, Jacobs Engineering Group Inc. ("JEGI"), the predecessor to Jacobs Solutions Inc., implemented a holding company structure, which resulted in Jacobs Solutions Inc. becoming the parent company of, and successor issuer to, JEGI (the "Holding Company Reorganization"). For purposes of this Quarterly Report, references to the "Company", "we", "us" or "our" or our management or business at any point prior to August 29, 2022 (the "Holding Company Implementation Date") refer to JEGI and its consolidated subsidiaries as the predecessor to Jacobs Solutions Inc.

The accompanying consolidated financial statements and financial information included herein have been prepared pursuant to the interim period reporting requirements of Form 10-Q. Consequently, certain information and note disclosures normally included in financial statements prepared in accordance with accounting principles generally accepted in the United States (“U.S. GAAP”) have been condensed or omitted. Readers of this Quarterly Report on Form 10-Q should also read our consolidated financial statements and the notes thereto included in our Annual Report on Form 10-K for the fiscal year ended September 30, 2022 (“2022 Form 10-K”).

In the opinion of management, the accompanying unaudited consolidated financial statements contain all adjustments (consisting of normal recurring adjustments) necessary for a fair presentation of our consolidated financial statements at March 31, 2023, and for the three and six months ended March 31, 2023.

Our interim results of operations are not necessarily indicative of the results to be expected for the full fiscal year.

As part of the new Company strategy, during the first quarter of fiscal year 2023, Jacobs formed a reporting and operating segment, Divergent Solutions ("DVS"), to further strengthen our ability to drive value for our clients. DVS supports both lines of business as the core foundation for developing and delivering innovative, next-generation cloud, cyber, data and digital technologies. For a further discussion of our segment information, please refer to Note 18- Segment Information.

On February 4, 2022, the Company acquired StreetLight Data, Inc. ("StreetLight"). StreetLight is a pioneer of mobility analytics who uses its data and machine learning resources to shed light on mobility and enable users to solve complex transportation problems. The Company paid total base consideration of approximately $190.8 million in cash, and issued $0.9 million in equity and $5.2 million in in-the-money stock options to the former owners of StreetLight. The Company also paid off StreetLight's debt of approximately $1.0 million simultaneously with the consummation of the acquisition. The Company has recorded its final purchase price allocation associated with the acquisition, which is summarized in Note 15- Other Business Combinations.

On November 19, 2021, Jacobs acquired all outstanding shares of common stock of BlackLynx, Inc. ("BlackLynx"), a provider of high-performance software, to complement Jacobs' portfolio of cyber, intelligence and digital solutions. The Company paid total base consideration of approximately $235.4 million in cash to the former owners of BlackLynx. In conjunction with the acquisition, the Company also paid off BlackLynx's debt of approximately $5.3 million simultaneously with the consummation of the acquisition. The Company has recorded its final purchase price allocation associated with the acquisition, which is summarized in Note 15- Other Business Combinations.

On March 2, 2021, Jacobs completed the strategic investment of a 65% interest in PA Consulting Group Limited ("PA Consulting"), a UK-based leading innovation and transformation consulting firm. The total consideration paid by the Company was $1.7 billion, funded through cash on hand, proceeds from a new term loan and draws on the Company's existing revolving credit facility. The remaining 35% interest was acquired by PA Consulting employees, whose redeemable noncontrolling interests had a fair value of $582.4 million on the closing date, including subsequent purchase accounting adjustments.

PA Consulting is accounted for as a consolidated subsidiary and as a separate operating segment. See Note 14- PA Consulting Business Combination for more discussion on the investment and Note 11- Borrowings for more discussion on the financing for the transaction.

On April 26, 2019, Jacobs completed the sale of its Energy, Chemicals and Resources ("ECR") business to Worley Limited ("Worley"), a company incorporated in Australia, for a purchase price of $3.4 billion consisting of (i) $2.8 billion in cash plus (ii) 58.2 million ordinary shares of Worley, subject to adjustments for changes in working capital and certain other items (the “ECR sale”). As a result of the ECR sale, substantially all ECR-related assets and liabilities were sold (the "Disposal Group"). We determined that the Disposal Group should be reported as discontinued operations in accordance with ASC 210-05, Discontinued Operations because their disposal represents a strategic shift that had a major effect on our operations and financial results. As such, the financial results of the ECR business are reflected in our unaudited Consolidated Statements of Earnings as discontinued operations for all periods presented and all of the ECR business to be sold under the terms of the ECR sale had been conveyed to Worley and as such, no amounts remain held for sale.

The preparation of financial statements in conformity with U.S. GAAP requires us to employ estimates and make assumptions that affect the reported amounts of certain assets and liabilities, the revenues and expenses reported for the periods covered by the accompanying consolidated financial statements, and certain amounts disclosed in these Notes to the Consolidated Financial Statements. Although such estimates and assumptions are believed to be reasonable under the circumstances and 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.

Please refer to Note 2- Significant Accounting Policies of Notes to Consolidated Financial Statements included in our 2022 Form 10-K for a discussion of other significant estimates and assumptions affecting our consolidated financial statements.

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

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

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

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

Please refer to Note 2- Significant Accounting Policies of Notes to Consolidated Financial Statements included in our 2022 Form 10-K for a more complete discussion of the various items within the consolidated financial statements measured at fair value and the methods used to determine fair value. Please also refer to Note 17- Commitments and Contingencies and Derivative Financial Instruments for discussion regarding the Company's derivative instruments.

The net carrying amounts of cash and cash equivalents, trade receivables and payables and short-term debt approximate fair value due to the short-term nature of these instruments. See Note 11- Borrowings for a discussion of the fair value of long-term debt.

Fair value measurements relating to our business combinations and goodwill allocations related to our segment realignment are made primarily using Level 3 inputs including discounted cash flow techniques. Fair value for the identified intangible assets is generally estimated using inputs primarily for the income approach using the multiple period excess earnings method and the relief from royalties method. The significant assumptions used in estimating fair value include (i) revenue projections of the business, including profitability, (ii) attrition rates 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. The fair value of the contingent consideration is estimated using a Monte Carlo simulation and the significant assumptions used include projections of revenues and probabilities of meeting those projections. Key inputs to the valuation of the noncontrolling interests include projected cash flows and the expected volatility associated with those cash flows.

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 technical, digital, 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, 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 18- Segment Information for additional information on how we disaggregate our revenues by reportable segment.

The following table further disaggregates our revenue by geographic area for the three and six months ended March 31, 2023 and April 1, 2022 (in thousands):

Contract liabilities represent amounts billed to clients in excess of revenue recognized to date. Revenue recognized for the three and six months ended March 31, 2023 that was previously included in the contract liability balance on September 30, 2022 was $82.7 million and $413.0 million, respectively. Revenue recognized for the three and six months ended April 1, 2022 that was included in the contract liability balance on October 1, 2021 was $79.6 million and $371.0 million, respectively.

The Company’s remaining performance obligations as of March 31, 2023 represent a measure of the total dollar value of work to be performed on contracts awarded and in progress. The Company had approximately $16.7 billion in remaining performance obligations as of March 31, 2023. The Company expects to recognize approximately 48% of our remaining performance obligations into revenue within the next twelve months and the remaining 52% thereafter.

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

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

The following table reconciles the denominator used to compute basic EPS to the denominator used to compute diluted EPS for the three and six months ended March 31, 2023 and April 1, 2022 (in thousands):

Note: Per share amounts may not add due to rounding.

The 2020 Repurchase Authorization expired on January 15, 2023. On January 25, 2023, the Company's Board of Directors authorized an incremental share repurchase program of up to $1.0 billion of the Company's common stock, to expire on January 25, 2026 (the "2023 Repurchase Authorization"). No repurchase activity has taken place under the 2023 Share Repurchase Authorization to date. Subsequent to the expiration of the 2020 Repurchase Authorization and the approval of the 2023 Repurchase Authorization, the Company has $1.0 billion remaining under the 2023 Repurchase Authorization.

The following table summarizes the activity under the 2020 Repurchase Authorization through the second fiscal quarter of 2023:

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

On April 27, 2023, the Company’s Board of Directors declared a quarterly dividend of $0.26 per share of the Company’s common stock to be paid on June 23, 2023, to shareholders of record on the close of business on May 26, 2023. Future dividend declarations are subject to review and approval by the Company’s Board of Directors. Dividends paid through the second fiscal quarter of 2023 and the preceding fiscal year are as follows:

As a result of the formation of our new Divergent Solutions operating segment beginning in the first quarter of fiscal 2023, the historical carrying value of a portion of goodwill has been reallocated to this segment based on a relative fair value basis.

The carrying value of goodwill appearing in the accompanying Consolidated Balance Sheets at March 31, 2023 and September 30, 2022 was as follows (in thousands):

The following table provides certain information related to the Company’s acquired intangibles in the accompanying Consolidated Balance Sheets at March 31, 2023 and September 30, 2022 (in thousands):

The following table presents estimated amortization expense of intangible assets for the remainder of fiscal 2023 and for the succeeding years.

Fiscal Year						(in millions)
2023						$	102.4
2024						203.9
2025						203.5
2026						180.5
2027						149.2
Thereafter						540.4
Total						$	1,379.9

7.    Receivables and Contract Assets

The following table presents the components of receivables and contract assets appearing in the accompanying Consolidated Balance Sheets at March 31, 2023 and September 30, 2022, as well as certain other related information (in thousands):

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

Unbilled receivables and other, which represent an unconditional right to payment subject only to the passage of time, are reclassified to amounts billed when they are billed under the terms of the contract. 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 that have been provided in advance of agreed contractual milestones. Contract assets are transferred to unbilled receivables when the right to consideration becomes unconditional and are transferred to amounts billed upon invoicing.

The following table presents the Company's roll forward of accumulated other comprehensive income (loss) after-tax as of March 31, 2023 (in thousands):

(1) Included in the overall foreign currency translation adjustment for the six months ended March 31, 2023 and April 1, 2022 are $(87.2) million and $38.3 million, respectively in unrealized gains (losses) on long-term foreign currency denominated intercompany loans not anticipated to be settled in the foreseeable future.

(2) Included in the Company’s cumulative net unrealized gains from interest rate and cross currency swaps recorded in accumulated other comprehensive income as of March 31, 2023 were approximately $19.6 million in unrealized gains, net of taxes, which are expected to be realized in earnings during the twelve months subsequent to March 31, 2023.

For the Company's consolidated variable interest entities ("VIE") joint ventures, the carrying value of assets and liabilities was $362.6 million and $223.7 million, respectively, as of March 31, 2023 and $353.9 million and $228.1 million, respectively, as of September 30, 2022. There are no consolidated VIEs that have debt or credit facilities.

For the Company's proportionate consolidated VIEs, the carrying value of assets and liabilities was $123.5 million and $139.8 million, respectively, as of March 31, 2023, and $109.3 million and $129.2 million, respectively, as of September 30, 2022.

Our investments in equity method joint ventures on the Consolidated Balance Sheets (reported in Other Noncurrent Assets: Miscellaneous) as of March 31, 2023 and September 30, 2022 were $54.3 million and $56.6 million, respectively. Additionally, income from equity method joint ventures (reported in Revenue) was $7.5 million and $12.5 million, respectively, during the three months ended March 31, 2023 and April 1, 2022, with $17.5 million and $19.3 million, respectively, reporting in the corresponding six month periods. As of March 31, 2023, the Company does not have any material equity method investments that exceed its share of venture net assets.

Accounts receivable from unconsolidated joint ventures accounted for under the equity method was $19.3 million and $21.1 million as of March 31, 2023 and September 30, 2022, respectively.

At March 31, 2023 and September 30, 2022, long-term debt consisted of the following (principal amounts in thousands):

(1)During the second quarter of fiscal 2023, the aggregate principal amounts denominated in U.S. dollars under the Revolving Credit Facility, the 2021 Term loan facility and the 2020 Term Loan Facility (each as defined below) transitioned from underlying LIBOR benchmarked rates to the Term Secured Overnight Financing Rate ("SOFR"). During fiscal 2022, the aggregate principal amounts denominated in British pounds under the Revolving Credit Facility, 2021 Term Loan Facility and 2020 Term Loan Facility transitioned from underlying LIBOR benchmarked rates to Sterling Overnight Index Average ("SONIA") rates.

(2)Depending on the Company’s Consolidated Leverage Ratio or Debt Rating (each as defined in the credit agreement governing the Revolving Credit Facility), U.S. dollar denominated borrowings under the Revolving Credit Facility bear interest at either a SOFR rate plus a margin of between 0.975% and 1.725% or a base rate plus a margin of between 0% and 0.625%. The applicable SOFR rates, or LIBOR rate for the prior fiscal year end, including applicable margins at March 31, 2023 and September 30, 2022 were approximately 6.24% and 4.08%. Borrowings denominated in British pounds bear interest at an adjusted SONIA rate plus a margin of between 0.908% and 1.658%. There were no amounts drawn in British pounds as of March 31, 2023.

(3)Depending on the Company’s Consolidated Leverage Ratio or Debt Rating (each as defined in the credit agreement governing the 2021 Term Loan Facility), U.S. dollar denominated borrowings under the 2021 Term Loan Facility bear interest at either a SOFR rate plus a margin of between 0.975% and 1.725% or a base rate plus a margin of between 0% and 0.625%. The applicable SOFR, or LIBOR rate for the prior fiscal year end, including applicable margins for borrowings denominated in U.S. dollars at March 31, 2023 and September 30, 2022 was approximately 6.23% and 4.06%. Borrowings denominated in British pounds bear interest at an adjusted SONIA rate plus a margin of between 0.908% and 1.658%, which was approximately 5.58% and 3.60% at March 31, 2023 and September 30, 2022, respectively.

(4)Depending on the Company’s Consolidated Leverage Ratio or Debt Rating (each as defined in the credit agreement governing the 2020 Term Loan Facility), U.S. dollar denominated borrowings under the 2020 Term Loan Facility bear interest at either a SOFR rate plus a margin of between 0.975% and 1.725% or a base rate plus a margin of between 0% and 0.625%. The applicable SOFR, or LIBOR rate for the prior fiscal year end, including applicable margins for borrowings denominated in U.S. dollars at March 31, 2023 and September 30, 2022 were approximately 6.28% and 4.49%. Borrowings denominated in British pounds bear interest at an adjusted SONIA rate plus a margin of between 0.908% and 1.658%, which was approximately 5.58% and 3.60% at March 31, 2023 and September 30, 2022, respectively.

(5)From and including September 1, 2028 (the “First Step Up Date”), the interest rate payable on the Bonds (as defined below) will be increased by an additional 12.5 basis points to 6.025% per annum (the “First Step Up Interest Rate”) unless the Company notifies the Trustee (as defined below) on or before the date that is 15 days prior to the First Step Up Date that the Percentage of Gender Diversity Performance Target (as defined in the First Supplemental Indenture (as defined below)) has been satisfied and receives a related assurance letter verifying such compliance. From and including September 1, 2030 (the “Second Step Up Date”) the interest rate payable on the Bonds will be increased by 12.5 basis points to (x) 6.150% per annum if the First Step Up Interest Rate was in effect immediately prior to the Second Step Up Date or (y) 6.025% per annum if the initial interest rate was in effect immediately prior to the Second Step Up Date, unless the Company notifies the Trustee on or before the date that is 15 days prior to the Second Step Up Date that the GHG Emissions Performance Target (as defined in the First Supplemental Indenture) has been satisfied and receives a related assurance letter verifying such compliance.

(6)All amounts due under the Note Purchase Agreement pursuant to which the Senior Notes (each as defined below) were issued were repaid in the first fiscal quarter of 2023.

(7)The 2020 Term Loan requires quarterly principal repayments of 1.25%, or $9.125 million and £3.125 million, of the aggregate initial principal amount borrowed.

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). On February 6, 2023, the Company amended and restated the Revolving Credit Facility to, among other things: (a) extend the maturity date to February 6, 2028, (b) replace and adjust interest rates based on market conditions and incorporate a sustainability-linked pricing adjustment, (c) increase the Consolidated Leverage Ratio financial covenant to 3.50:1.00 (subject to temporary increases to 4.00:1.00 following the closing of certain material acquisitions), (d) eliminate the net worth financial covenant, and (e) add Jacobs Solutions Inc. as a guarantor of the obligations of JEGI and its subsidiaries under the Revolving Credit Facility.

The Revolving Credit Facility permits the Company to borrow 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 $100.0 million sub facility for swing line loans. Letters of credit are subject to fees based on the Company’s Consolidated Leverage Ratio and Debt Rating, whichever is more favorable to the Company. The Company pays a facility fee of between 0.10% and 0.25% per annum depending on the Company’s Consolidated Leverage Ratio and Debt Rating.

On January 20, 2021, the Company entered into an unsecured delayed draw term loan facility (the “2021 Term Loan Facility”) with a syndicate of financial institutions as lenders. Under the 2021 Term Loan Facility, the Company borrowed an aggregate principal amount of $200.0 million and £650.0 million. The proceeds of the term loans were used primarily to fund the Company's investment in PA Consulting. The 2021 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 and the 2020 Term Loan Facility. On February 6, 2023, the Company amended and restated the 2021 Term Loan Facility to, among other things: (a) extend the maturity date of the U.S. dollar term loan to February 6, 2026 and the British sterling term loan to September 1, 2025, (b) replace and adjust interest rates based on market conditions and incorporate a sustainability-linked pricing adjustment, (c) increase the Consolidated Leverage Ratio financial covenant to 3.50:1.00 (subject to temporary increases to 4.00:1.00 following the closing of certain material acquisitions), (d) eliminate the net worth financial covenant, and (e) add Jacobs as a guarantor of the obligations of JEGI under the 2021 Term Loan Facility.

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 an existing term loan with a maturity date of June 2020 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. On February 6, 2023, the Company amended the 2020 Term Loan Facility to, among other things: (a) replace and adjust interest rates based on market conditions and incorporate a sustainability-linked pricing adjustment, (b) increase the Consolidated Leverage Ratio financial covenant to 3.50:1.00 (subject to temporary increases to 4.00:1.00 following the closing of certain material acquisitions), (c) eliminate the net worth financial covenant, and (d) add Jacobs as a guarantor of the obligations of JEGI and Jacobs U.K.

The 2020 Term Loan Facility and the 2021 Term Loan Facility are together referred to as the "Term Loan Facilities".

In the fourth quarter of fiscal year 2022, the Revolving Credit Facility and Term Loan Facilities were amended to permit the Holding Company Reorganization.

We were in compliance with the covenants under the Revolving Credit Facility and Term Loan Facilities at March 31, 2023.

On February 16, 2023, JEGI completed an offering of $500 million aggregate principal amount of Sustainability-Linked Senior Notes due 2033 (the “Bonds”). The Bonds are fully and unconditionally guaranteed by the Company (the “Guarantee”). The Bonds and the Guarantee were offered pursuant to a prospectus supplement, dated February 13, 2023, to the prospectus dated February 6, 2023, that forms a part of the Company's and JEGI’s automatic shelf registration statement on Form S-3ASR previously filed with the Securities and Exchange Commission, and were issued pursuant to an Indenture, dated as of February 16, 2023, between JEGI, as issuer, the Company, as guarantor, and U.S. Bank Trust Company, National Association, as trustee (the “Trustee”), as amended and supplemented by the First Supplemental Indenture, dated as of February 16, 2023 (the “First Supplemental Indenture”). Interest on the Bonds is payable semi-annually in arrears on each March 1 and September 1, commencing on September 1, 2023, until maturity. The Bonds bear interest at 5.9% per annum, subject to adjustments, as discussed in note (5) to the table above.

Prior to December 1, 2032 (the “Par Call Date”), JEGI may redeem the Bonds at its option, in whole or in part, at any time and from time to time, at the redemption price calculated by JEGI (expressed as a percentage of principal amount and rounded to three decimal places) equal to the greater of: (1) (a) the sum of the present values of the remaining scheduled payments of principal and interest on the Bonds being redeemed, assuming that such Bonds matured on the Par Call Date, discounted to the redemption date on a semiannual basis (assuming a 360-day year of twelve 30-day months), at the Treasury Rate (as defined in the First Supplemental Indenture) plus 35 basis points, less (b) interest accrued to the redemption date, and (2) 100% of the principal amount of such Bonds to be redeemed, plus, in either case, accrued and unpaid interest on the Bonds, if any, to, but excluding, the redemption date. At any time and from time to time on or after the Par Call Date, JEGI may redeem the Bonds, at its option, in whole or in part, at a redemption price equal to 100% of the principal amount of the Bonds to be redeemed, plus accrued and unpaid interest thereon, if any, up to, but excluding, the redemption date.

On March 12, 2018, the Company entered into a note purchase agreement (as amended, the "Note Purchase Agreement") with respect to the issuance and sale in a private placement transaction of $500 million in the aggregate principal amount of the Company’s senior notes in three series (collectively, “Senior Notes”). In connection with the Holding Company Reorganization, which was completed in August 2022, the Company launched an offer to repurchase its outstanding Senior Notes at par plus accrued and unpaid interest, and without any make-whole premium. In fiscal first quarter 2023, the Company repurchased $481 million of Senior Notes held by holders who accepted the offer with proceeds from the Revolving Credit Facility. In December 2022, the Company repurchased the remaining $19 million of Senior Notes.

We believe the carrying value of the Revolving Credit Facility, the Term Loan Facilities and other debt outstanding approximates fair value based on the interest rates and scheduled maturities applicable to the outstanding borrowings. The fair value of the Bonds is estimated to be $497.1 million at March 31, 2023, 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.

During fiscal 2022, the Company entered into two treasury lock agreements with an aggregate notional value of $500.0 million to manage its expected interest rate exposure in anticipation of issuing up to $500 million of fixed rate debt. On February 13, 2023 and with the issuance of the Bonds, the Company settled these treasury lock agreements. See Note 17- Commitments and Contingencies and Derivative Financial Instruments for more discussion around this transaction.

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.

The Company has issued $1.3 million in letters of credit under the Revolving Credit Facility, leaving $1.17 billion of available borrowing capacity under the Revolving Credit Facility at March 31, 2023. In addition, the Company had issued $321.1 million under separate, committed and uncommitted letter-of-credit facilities for total issued letters of credit of $322.4 million at March 31, 2023.

The components of lease expense (reflected in selling, general and administrative expenses) for the three and six months ended March 31, 2023 and April 1, 2022 were as follows (in thousands):