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PA Consulting Business Combination | 6 Months Ended
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Apr. 01, 2022
Business Acquisition [Line Items] |
PA Consulting Business Combination | Other Business Combinations StreetLight Data, Inc. 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 $190.7 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 following summarizes the fair values of StreetLight's assets acquired and liabilities assumed as of the acquisition date (in millions):
Assets |
Cash and cash equivalents | $ | 7.3 |
Receivables | 5.2 |
Property, equipment and improvements, net | 0.1 |
Goodwill | 147.6 |
Identifiable intangible assets | 63.9 |
Prepaid expenses and other current assets | 2.0 |
Total Assets | $ | 226.1 |
Liabilities |
Accounts payable, accrued expenses and other current liabilities | $ | 23.1 |
Other long term liabilities | 6.2 |
Total Liabilities | 29.3 |
Net assets acquired | $ | 196.8 |
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 StreetLight'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. Identifiable intangibles are technology and customer relationships, contracts and backlog and have estimated lives of 5 and 9 years, respectively. No summarized unaudited pro forma results are provided for the StreetLight acquisition due to the immateriality of this acquisition relative to the Company's consolidated financial position and results of operations. BlackLynx On November 19, 2021, a subsidiary of Jacobs acquired all outstanding shares of common stock of 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 addition, the transaction involved the potential payment of future consideration that is contingent upon the achievement of certain revenue and gross margin thresholds being achieved in calendar year 2022. The estimated fair value of the contingent consideration on the acquisition date is $0.4 million. The future contingent consideration will be paid, if and to the extent achieved, in second quarter of fiscal 2023. 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 following summarizes the fair values of BlackLynx's assets acquired and liabilities assumed as of the acquisition date (in millions):
Assets |
Cash and cash equivalents | $ | 5.1 |
Receivables | 7.7 |
Property, equipment and improvements, net | 0.8 |
Goodwill | 199.6 |
Identifiable intangible assets | 48.5 |
Prepaid expenses and other current assets | 3.2 |
Miscellaneous long term assets | 13.5 |
Total Assets | $ | 278.4 |
Liabilities |
Accounts payable, accrued expenses and other current liabilities | 19.5 |
Other long term liabilities | 23.1 |
Total Liabilities | 42.6 |
Net assets acquired | $ | 235.8 |
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 BlackLynx's assets acquired and liabilities assumed. Since the initial preliminary estimates reported in the first quarter of fiscal 2021, the Company has updated certain amounts reflected in the preliminary purchase price allocation, as summarized in the fair values of BlackLynx's assets acquired and liabilities assumed as of the acquisition date set forth above, the majority of which related to reclassifications between goodwill and intangibles and for deferred taxes. The final purchase price allocation could result in additional adjustments to certain assets and liabilities, including the residual amount allocated to goodwill. Identifiable intangibles are technology and customer relationships, contracts and backlog and have estimated lives of 11 years and 6 years, respectively. No summarized unaudited pro forma results are provided for the BlackLynx acquisition due to the immateriality of this acquisition relative to the Company's consolidated financial position and results of operations. Buffalo Group On November 24, 2020, a subsidiary of Jacobs completed the acquisition of Buffalo Group, a leader in advanced cyber and intelligence solutions, which allows Jacobs to further expand its cyber and intelligence solutions offerings to government clients. The Company paid total consideration of $190.1 million, which was comprised of approximately $182.4 million in cash to the former owners of Buffalo Group and contingent consideration of $7.7 million. The contingent consideration was subsequently recognized in fiscal 2021 as an offset to selling, general and administrative expense when it was determined no amounts would be paid. In conjunction with the acquisition, the Company assumed the Buffalo Group's debt of approximately $7.7 million. The Company repaid all of the assumed Buffalo Group debt by the end of the first fiscal quarter of 2021. The following summarizes the fair values of Buffalo Group's assets acquired and liabilities assumed as of the acquisition date (in millions):
Assets |
Cash and cash equivalents | $ | 8.4 |
Receivables | 19.2 |
Property, equipment and improvements, net | 2.3 |
Goodwill | 130.7 |
Identifiable intangible assets | 74.0 |
Prepaid expenses and other current assets | 6.2 |
Total Assets | $ | 240.8 |
Liabilities |
Accounts payable, accrued expenses and other current liabilities | $ | 46.9 |
Other long term liabilities | 3.8 |
Total Liabilities | 50.7
Net assets acquired | $ | 190.1 |
Goodwill recognized results from a substantial assembled workforce, which does not qualify for separate recognition, as well as expected future synergies from combining operations. All of the goodwill recognized is expected to be deductible for tax purposes, given the acquisition was structured as an asset acquisition for tax purposes. The Company has completed its final assessment of the fair values of Buffalo Group's assets acquired and liabilities assumed. Since the initial preliminary estimates reported in the first quarter of fiscal 2021, the Company has updated certain amounts reflected in the final purchase price allocation, as summarized in the fair values of Buffalo Group's assets acquired and liabilities assumed as of the acquisition date set forth above. Identifiable intangibles are customer relationships, contracts and backlog and have estimated lives of 9 years. No summarized unaudited pro forma results are provided for the Buffalo Group acquisition due to the immateriality of this acquisition relative to the Company's consolidated financial position and results of operations.
PA Consulting Group Limited |
Business Acquisition [Line Items] |
PA Consulting Business Combination | PA Consulting Business Combination Deal Summary, Opening Balance Sheet and Pro Forma Financial Information On March 2, 2021, Jacobs completed the strategic investment of a 65% interest in 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. Further, in connection with the transaction, an estimated additional $261 million in investment proceeds had not yet been distributed at the investment date due to continuing employment requirements of associated management owners. Consequently, this amount represented compensation expense incurred related to the investment that was expensed subsequent to the date of the transaction, and was reflected in selling, general and administrative expense and cash from operations for the fiscal year ended October 1, 2021. Approximately $267 million was recorded in the second quarter of fiscal 2021, with approximately $6 million of the estimated charges forfeited by employees that left the Company before payment and the net cash impact recorded in the third quarter of fiscal 2021. 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 12 - Borrowings for more discussion on the financing for the transaction. The following summarizes the fair values of PA Consulting's assets acquired and liabilities assumed as of the acquisition date (in millions):
Assets |
Cash and cash equivalents | $ | 134.9 |
Receivables | 166.5 |
Property, equipment and improvements, net | 40.5 |
Goodwill | 1,454.3 |
Identifiable intangible assets | 1,004.2 |
Prepaid expenses and other current assets | 9.5 |
Miscellaneous long term assets | 84.0 |
Total Assets | $ | 2,893.9 |
Liabilities |
Accounts payable | $ | 6.5 |
Accrued liabilities and other current liabilities | 355.1 |
Other long term liabilities | 248.0 |
Total Liabilities | $ | 609.6
Redeemable Noncontrolling interests | 582.4 |
Net assets acquired | $ | 1,701.9 |
Goodwill recognized results from a substantial assembled workforce, which does not qualify for separate recognition, as well as expected future economic benefits. None of the goodwill recognized is expected to be deductible for tax purposes. The Company has completed its final assessment of the fair values of PA Consulting's assets acquired and liabilities assumed. Since the initial preliminary estimates reported in the second quarter of fiscal 2021, the Company has updated certain provisional amounts reflected in the final purchase price allocation, as summarized in the estimated fair values of PA Consulting assets acquired and liabilities assumed above. See below for further discussion on updates to redeemable noncontrolling interests. Identifiable intangibles are customer relationships, contracts and backlog and trade name and have estimated lives ranging from 9 to 20 years (weighted average life of approximately 12 years). The following presents summarized unaudited pro forma operating results of Jacobs from continuing operations assuming that the Company had the PA Consulting investment at September 28, 2019. 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, except per share data):
|  |  | For the Six Months Ended
|  |  | April 2, 2021
Revenues |  |  | $ | 7,341.4 |
Net earnings (loss) of the Group |  |  | $ | 449.9 |
Net earnings attributable to Jacobs |  |  | $ | 337.7 |
Net earnings attributable to Jacobs per share: |  |  |
Basic earnings per share |  |  | $ | 2.60 |
Diluted earnings per share |  |  | $ | 2.58 |
Income tax expense for the six-month pro forma period ended April 2, 2021 was $(122.1) million. Redeemable Noncontrolling Interests In connection with the PA Consulting investment, the Company recorded redeemable noncontrolling interests, including subsequent purchase accounting adjustments, representing the noncontrolling interest holders' equity interests in the form of preferred and common shares of PA Consulting, with substantially all of the value associated with these interests allocable to the preferred shares. During the first quarter of fiscal 2022, PA Consulting repurchased certain shares of the redeemable noncontrolling interest holders for $35.1 million in cash. The difference between the cash purchase price and the recorded book value of these repurchased interests was recorded in the Company’s consolidated retained earnings. There were no such repurchases in the second quarter of fiscal 2022. Changes in the redeemable noncontrolling interests during the six months ended April 1, 2022 are as follows (in thousands):
Balance at October 1, 2021 |  |  |  |  |  |  |  | $ | 657,722 |
Accrued Preferred Dividend to Preference Shareholders |  |  |  |  |  |  |  | 33,927 |
Attribution of Preferred Dividend to Common Shareholders |  |  |  |  |  |  |  | (33,927) |
Net income attributable to redeemable noncontrolling interests to Common Shareholders |  |  |  |  |  |  |  | 19,721 |
Redeemable Noncontrolling interests redemption value adjustment |  |  |  |  |  |  |  | 50,320 |
Repurchase of redeemable noncontrolling interests |  |  |  |  |  |  |  | (42,856) |
Cumulative translation adjustment and other |  |  |  |  |  |  |  | (15,380) |
Balance at April 1, 2022 |  |  |  |  |  |  |  | $ | 669,527 |
In addition, certain employees and nonemployees of PA Consulting are eligible to receive equity-based incentive grants in the future under the terms of the applicable agreements. Employee Benefit Trust PA Consulting is party to an employee benefit trust that is a separately administered discretionary trust for the benefit of employees and is consolidated under U.S. GAAP. At April 1, 2022, the Company held $0.9 million in cash within the employee benefit trust that is restricted from general use and is included in prepaid expenses and other current assets on the consolidated balance sheet.

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