<SEC-DOCUMENT>0001193125-16-523088.txt : 20160513
<SEC-HEADER>0001193125-16-523088.hdr.sgml : 20160513
<ACCEPTANCE-DATETIME>20160330121306
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ACCESSION NUMBER:		0001193125-16-523088
CONFORMED SUBMISSION TYPE:	CORRESP
PUBLIC DOCUMENT COUNT:		1
FILED AS OF DATE:		20160330

FILER:

	COMPANY DATA:	
		COMPANY CONFORMED NAME:			JACOBS ENGINEERING GROUP INC /DE/
		CENTRAL INDEX KEY:			0000052988
		STANDARD INDUSTRIAL CLASSIFICATION:	HEAVY CONSTRUCTION OTHER THAN BUILDING CONST - CONTRACTORS [1600]
		IRS NUMBER:				954081636
		STATE OF INCORPORATION:			DE
		FISCAL YEAR END:			0930

	FILING VALUES:
		FORM TYPE:		CORRESP

	BUSINESS ADDRESS:	
		STREET 1:		155 NORTH LAKE AVENUE
		CITY:			PASADENA
		STATE:			CA
		ZIP:			91101
		BUSINESS PHONE:		6265783500

	MAIL ADDRESS:	
		STREET 1:		155 NORTH LAKE AVENUE
		CITY:			PASADENA
		STATE:			CA
		ZIP:			91101
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<TYPE>CORRESP
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 <P STYLE="margin-top:0pt; margin-bottom:0pt; font-size:10pt; font-family:Times New Roman">March 30, 2016 </P>
<P STYLE="margin-top:12pt; margin-bottom:0pt; font-size:10pt; font-family:Times New Roman">John Cash </P> <P STYLE="margin-top:0pt; margin-bottom:0pt; font-size:10pt; font-family:Times New Roman">Accounting Branch Chief </P>
<P STYLE="margin-top:0pt; margin-bottom:0pt; font-size:10pt; font-family:Times New Roman">United States Securities and Exchange Commission </P> <P STYLE="margin-top:0pt; margin-bottom:0pt; font-size:10pt; font-family:Times New Roman">100 F Street,
N.E., Stop 7010 </P> <P STYLE="margin-top:0pt; margin-bottom:0pt; font-size:10pt; font-family:Times New Roman">Washington, DC 20549-4631 </P> <P STYLE="font-size:12pt;margin-top:0pt;margin-bottom:0pt">&nbsp;</P>
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<TD WIDTH="4%" VALIGN="top" ALIGN="left">Re:</TD>
<TD ALIGN="left" VALIGN="top">Your Letter Dated March&nbsp;9, 2016 Regarding </TD></TR></TABLE>
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<TD WIDTH="4%" VALIGN="top" ALIGN="left">&nbsp;&nbsp;</TD>
<TD ALIGN="left" VALIGN="top">Jacobs Engineering Group Inc. (File No.&nbsp;1-7463) </TD></TR></TABLE>
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<TD WIDTH="4%" VALIGN="top" ALIGN="left">&nbsp;&nbsp;</TD>
<TD ALIGN="left" VALIGN="top">Form 10-K for the Year Ended October&nbsp;2, 2015 </TD></TR></TABLE>
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<TD ALIGN="left" VALIGN="top">Filed November&nbsp;24, 2015 (the &#147;2015 Form 10-K&#148;) </TD></TR></TABLE> <P STYLE="margin-top:12pt; margin-bottom:0pt; font-size:10pt; font-family:Times New Roman">Dear Mr.&nbsp;Cash: </P>
<P STYLE="margin-top:12pt; margin-bottom:0pt; text-indent:4%; font-size:10pt; font-family:Times New Roman">Thank you for your letter of March&nbsp;9. I assure you that Jacobs Engineering Group Inc. (the &#147;Company&#148;, &#147;we&#148; or
&#147;our&#148;) takes very seriously its responsibilities regarding the accuracy and completeness of the disclosures contained in its public filings. We appreciate Staff&#146;s comments as well as the opportunity this process provides to improve
the content of our public filings. </P> <P STYLE="margin-top:12pt; margin-bottom:0pt; text-indent:4%; font-size:10pt; font-family:Times New Roman">We acknowledge that we are responsible for the adequacy and accuracy of the disclosures in our
filings. Furthermore, we acknowledge that (i)&nbsp;neither your comments nor changes in disclosure in response to your comments preclude the Securities and Exchange Commission (the &#147;Commission&#148;) from taking any action with respect to the
above referenced filings, and (ii)&nbsp;we may not assert Staff comments as a defense in any proceeding initiated by the Commission or any person under the federal securities laws of the United Sates. </P>
<P STYLE="margin-top:12pt; margin-bottom:0pt; text-indent:4%; font-size:10pt; font-family:Times New Roman">We provide the following responses to Staff&#146;s comments. For ease of reference, the headings and numbered paragraphs below correspond to
the headings and numbered comments in your letter. Staff&#146;s comments are presented first in italicized text with our responses immediately following. </P>
<P STYLE="margin-top:18pt; margin-bottom:0pt; font-size:10pt; font-family:Times New Roman"><I><U>Controls and Procedures, page 54 </U></I></P>
<P STYLE="margin-top:6pt; margin-bottom:0pt; font-size:10pt; font-family:Times New Roman"><I><U>Management&#146;s Annual Report on Internal Control Over Financial Reporting, page 54 </U></I></P>
<P STYLE="margin-top:6pt; margin-bottom:0pt; font-size:10pt; font-family:Times New Roman">1. <I>Please revise future filings to clarify which version, 1992 or 2013, of the criteria set forth by the Committee of Sponsoring Organizations of the
Treadway Commission&#146;s Internal Control &#150; Integrated Framework you utilized when performing your assessment of internal control over financial reporting.</I> </P>
<P STYLE="margin-top:12pt; margin-bottom:0pt; font-size:10pt; font-family:Times New Roman">RESPONSE: </P> <P STYLE="margin-top:6pt; margin-bottom:0pt; text-indent:4%; font-size:10pt; font-family:Times New Roman">The criteria set forth by the
Committee of Sponsoring Organizations of the Treadway Commission&#146;s Internal Control &#150; Integrated Framework that the Company followed in performing its assessment of internal control over financial reporting as of October&nbsp;2, 2015 was
the 2013 Framework, and we will include this information in our future filings with the Commission. </P>

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 <P STYLE="margin-top:0pt; margin-bottom:0pt; font-size:10pt; font-family:Times New Roman"><I><U>Financial Statements </U></I></P>
<P STYLE="margin-top:6pt; margin-bottom:0pt; font-size:10pt; font-family:Times New Roman"><I><U>9. Income Taxes, page F-31 </U></I></P> <P STYLE="margin-top:6pt; margin-bottom:0pt; font-size:10pt; font-family:Times New Roman"><I></I>2. <I>Based on
your income tax footnote disclosures, it appears that there is a significant disparity in the effective tax rates of your domestic and international operations. In this regard, we also note that although your foreign earnings before taxes declined
from $253.4 million in 2014 to $146.4 million in 2015, the tax differential of foreign earnings increased from $(8.8 million) in 2014 to $(60.1 million) in 2015. Please revise your discussion herein or in Management&#146;s Discussion and Analysis to
address why your tax differential on foreign earnings increased disproportionately to your decrease in pre-tax foreign earnings. We note your disclosure in page 48 which discusses the reasons for the decline in your effective tax rate, including the
$23.1 million tax benefit related to the 2015 Inter-company Debt Refinancing. However, based on the reconciliation you have presented on page F-32, it appears that this discussion should be expanded. If a particular country contributes
disproportionately to your income based on significantly lower tax rates, explain the impact such tax structures had on your results. If changes in the geographical mix of income were a significant driver of changes in your effective tax rate,
please disclose the facts and circumstances leading to the changes in the geographical mix of income and whether you expected these changes to continue. Refer to Item&nbsp;303(a)(3)(i) of Regulation S-K and Section III.B of SEC Release
No.&nbsp;33-8350. </I></P> <P STYLE="margin-top:12pt; margin-bottom:0pt; font-size:10pt; font-family:Times New Roman">RESPONSE: </P> <P STYLE="margin-top:6pt; margin-bottom:0pt; text-indent:4%; font-size:10pt; font-family:Times New Roman">The
Company&#146;s consolidated income tax expense decreased significantly in fiscal 2015 when compared to fiscal 2014. The primary reason for the decrease was a reduction in foreign income tax expense. </P>
<P STYLE="margin-top:12pt; margin-bottom:0pt; text-indent:4%; font-size:10pt; font-family:Times New Roman">Although we conduct operations in those geographic areas listed in Note 1 to Notes to Consolidated Financial Statements, the more significant
non-U.S. operations include Australia, Canada, India, Ireland, Netherlands, Saudi Arabia, and the United Kingdom. During fiscal 2015, there were no significant changes in the geographical mix of income or tax structures that would have caused a
disproportionate year-over-year tax differential. </P> <P STYLE="margin-top:12pt; margin-bottom:0pt; text-indent:4%; font-size:10pt; font-family:Times New Roman">The $51.3&nbsp;million change in the effect on our consolidated income tax expense
relating to the foreign tax differential in fiscal 2015 when compared to fiscal 2014 was primarily the result of certain discrete tax items described below: </P> <P STYLE="font-size:6pt;margin-top:0pt;margin-bottom:0pt">&nbsp;</P>
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<TD WIDTH="5%">&nbsp;</TD>
<TD WIDTH="2%" VALIGN="top" ALIGN="left">&#149;</TD>
<TD WIDTH="1%" VALIGN="top">&nbsp;</TD>
<TD ALIGN="left" VALIGN="top">A tax deductible foreign currency loss was incurred as part of a 2015 Inter-company Debt Refinancing plan in the Company&#146;s Asia-Pacific operations. The tax benefit as disclosed in the 2015 10-K was
$23.1&nbsp;million; </TD></TR></TABLE> <P STYLE="font-size:6pt;margin-top:0pt;margin-bottom:0pt">&nbsp;</P>
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<TD WIDTH="5%">&nbsp;</TD>
<TD WIDTH="2%" VALIGN="top" ALIGN="left">&#149;</TD>
<TD WIDTH="1%" VALIGN="top">&nbsp;</TD>
<TD ALIGN="left" VALIGN="top">The Company had a discrete adjustment relating to certain European deferred tax assets which resulted in a non-recurring tax expense in fiscal year 2014 of $18.3 million; and, </TD></TR></TABLE>
<P STYLE="font-size:6pt;margin-top:0pt;margin-bottom:0pt">&nbsp;</P>
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<TD WIDTH="5%">&nbsp;</TD>
<TD WIDTH="2%" VALIGN="top" ALIGN="left">&#149;</TD>
<TD WIDTH="1%" VALIGN="top">&nbsp;</TD>
<TD ALIGN="left" VALIGN="top">The Company had recorded a valuation allowance against certain European deferred tax assets which resulted in a non-reoccurring tax expense in fiscal year 2014 of $11.7 million. </TD></TR></TABLE>
<P STYLE="margin-top:12pt; margin-bottom:0pt; text-indent:4%; font-size:10pt; font-family:Times New Roman">In describing the decrease in our effective tax rate from fiscal 2014 to fiscal 2015, we disclosed on page 48 of the 2015 Form 10-K, &#147;The
Company&#146;s effective income tax rate for fiscal 2015 declined to 23.5% from 35.1% in fiscal 2014. The decrease was primarily the result of the $23.1 million, or $0.18 per share, tax benefit related to the 2015 Inter-company Debt Refinancing
discussed earlier. Also contributing to the decrease in the tax rate when compared to prior year were the benefits realized by other, individually insignificant discrete and non-discrete items realized in the third and fourth quarters of fiscal
2015.&#148; </P>

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 <P STYLE="margin-top:0pt; margin-bottom:0pt; text-indent:4%; font-size:10pt; font-family:Times New Roman">In our business, discrete items affecting our consolidated tax expense occur frequently and are
viewed by us as &#147;ordinary course of business&#148;-type items. The Inter-company Debt Refinancing transaction, however, was unusual and not indicative of the Company&#146;s normal financial performance. Therefore, additional disclosure was
provided. We intended the last sentence in the paragraph cited above to address the types of discrete items described in the second and third bullet items listed above, which we view as occurring in the normal course of business. </P>
<P STYLE="margin-top:12pt; margin-bottom:0pt; text-indent:4%; font-size:10pt; font-family:Times New Roman">Nevertheless, we agree with Staff&#146;s comment and will provide a more comprehensive discussion of elements affecting the comparability of
the items listed in the rate reconciliation table in the future. Accordingly, please see the revised disclosure in Appendix A that will be included in the Company&#146;s Fiscal 2016 Annual Report on Form 10-K. The Company will make similar
disclosures in any interim period where the discrete items described above are present in the comparable period financial statements. </P> <P STYLE="margin-top:12pt; margin-bottom:0pt; text-indent:4%; font-size:10pt; font-family:Times New Roman">We
hope this response has addressed all of Staff&#146;s comments. Should you have additional questions regarding the information contained herein, we would be pleased to discuss them with you. </P>
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<TD VALIGN="top" COLSPAN="3">Very truly yours,</TD></TR>
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<TD VALIGN="top" COLSPAN="3"><B>JACOBS ENGINEERING GROUP INC.</B></TD></TR>
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<TD VALIGN="top">By:</TD>
<TD VALIGN="bottom">&nbsp;</TD>
<TD VALIGN="bottom"> <P STYLE="margin-top:0pt; margin-bottom:1pt; border-bottom:1px solid #000000; font-size:10pt; font-family:Times New Roman">/s/ Kevin C. Berryman</P></TD></TR>
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<TD VALIGN="top"></TD>
<TD VALIGN="bottom">&nbsp;</TD>
<TD VALIGN="bottom">Kevin C. Berryman</TD></TR>
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<TD VALIGN="top"></TD>
<TD VALIGN="bottom">&nbsp;</TD>
<TD VALIGN="bottom">Executive Vice President</TD></TR>
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<TD VALIGN="top"></TD>
<TD VALIGN="bottom">&nbsp;</TD>
<TD VALIGN="bottom">Chief Financial Officer</TD></TR>
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 <P STYLE="margin-top:0pt; margin-bottom:0pt; font-size:10pt; font-family:Times New Roman"><B><U>Appendix A </U></B></P>
<P STYLE="margin-top:6pt; margin-bottom:0pt; text-indent:4%; font-size:10pt; font-family:Times New Roman">The Company&#146;s effective income tax rate for fiscal 2015 declined to 23.5% from 35.1% in fiscal 2014. Contributing to the decrease was a
$23.1 million, or $0.18 per share, tax benefit related to the 2015 Inter-company Debt Refinancing discussed earlier. Also contributing to the decrease in the tax rate when compared to the prior year were the benefits realized by other, individually
insignificant discrete and non-discrete items realized in the third and fourth quarters of fiscal 2015. </P> <P STYLE="margin-top:12pt; margin-bottom:0pt; text-indent:4%; font-size:10pt; font-family:Times New Roman">The Company&#146;s foreign
pre-tax earnings were down $106.8 million in fiscal 2015 when compared to fiscal 2014. There were no significant changes in the geographical mix of income or tax structures that would have caused a disproportionate year-over-year tax differential.
As such, there was only a small foreign tax rate differential in fiscal 2015 when compared to fiscal 2014. </P> <P STYLE="margin-top:12pt; margin-bottom:0pt; text-indent:4%; font-size:10pt; font-family:Times New Roman">The Company experienced an
incremental decrease in foreign tax expense of $51.4 million in fiscal 2015 when compared to fiscal 2014. In addition to the effects of the fiscal 2015 Inter-company Debt Refinancing discussed above, the Company had discrete adjustments in fiscal
2014 related to certain European deferred tax assets which resulted in a non-recurring tax expense of $18.3&nbsp;million and a valuation allowance recorded against certain European deferred tax assets which resulted in a non-recurring tax expense of
$11.7 million. </P>
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