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Business Combinations | 9 Months Ended
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Jun. 26, 2020
Business Combinations [Abstract] |
Business Combinations | 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. 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 approximately $298.4 million. The Company repaid all of the assumed KeyW debt by the end of the fourth fiscal quarter of 2019. The following summarizes the fair values of KeyW's assets acquired and 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 $136.0 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. For purposes of our comparative fiscal 2020 and 2019 reporting requirements in this Form 10-Q, the following presents summarized unaudited pro forma operating results of the Company for the nine months ended June 28, 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):
| Nine Months Ended June 28, 2019
Revenues | $ | 9,562.0 |
Net earnings of the Group | $ | 290.8 |
Net earnings (loss) attributable to Jacobs | $ | 275.3 |
Net earnings (loss) attributable to Jacobs per share: |
Basic earnings (loss) per share | $ | 1.98 |
Diluted earnings (loss) per share | $ | 1.96 |
Included in the table above are the unaudited pro forma operating results of continuing operations. Also, income tax expense (benefit) for the nine month pro forma period ended June 28, 2019 was $14.9 million.

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- Definition The entire disclosure for a business combination (or series of individually immaterial business combinations) completed during the period, including background, timing, and recognized assets and liabilities. The disclosure may include leverage buyout transactions (as applicable). + References Reference 1: http://fasb.org/us-gaap/role/ref/legacyRef -Publisher FASB -Name Accounting Standards Codification -Topic 805 -URI http://asc.fasb.org/topic&trid=2303972 + Details
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