Discontinued Operations

12 Months Ended

Sep. 27, 2024

Discontinued Operations and Disposal Groups [Abstract]

Separation of Critical Mission Solutions (“CMS”) and Cyber & Intelligence (“C&I”) Businesses

On September 27, 2024, Jacobs completed the previously announced Reverse Morris Trust transaction pursuant to which (i) Jacobs first transferred its CMS and portions of its DVS business to Amazon Holdco Inc., a Delaware corporation (SpinCo), which has since been renamed Amentum Holdings, Inc., (ii) Jacobs then effectuated a spin-off of SpinCo by distributing 124,084,108 shares of SpinCo Common Stock, by way of a pro rata distribution to its shareholders such that each holder of shares of Jacobs Common Stock was entitled to receive one share of SpinCo Common Stock for each share of Jacobs common stock held as of the record date, September 23, 2024, and (iii) finally, Amentum Parent Holdings LLC merged with and into SpinCo, with SpinCo surviving the merger. Amentum Holdings, Inc., as the surviving entity of the Separation Transaction is now an independent public company with common stock listed on the New York Stock Exchange under the symbol “AMTM” (“Amentum”).

In connection and in accordance with the terms of the Separation Transaction, prior to the Distribution and Merger, Jacobs received a cash payment from SpinCo of approximately $911 million, after adjustments based on the levels of cash, debt and working capital in the SpinCo Business, which is subject to final settlement between the parties, as set forth in the Merger Agreement.

Summarized Financial Information of Discontinued Operations

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


	For the Years Ended
	September 27, 2024		September 29, 2023		September 30, 2022
Revenues	$	5,472,979	$	5,500,994	$	5,139,752
Direct cost of contracts	(4,692,921)		(4,738,539)		(4,392,670)
Gross profit	780,058		762,455		747,082
Selling, general and administrative expense (1)	(479,582)		(363,703)		(369,116)
Operating Profit	300,476		398,752		377,966
Other (expense) income, net (2)	(3,301)		(3,049)		20,883
Earnings Before Taxes from Discontinued Operations	297,175		395,703		398,849
Income Tax Expense	(89,737)		(94,845)		(94,574)
Net Earnings of the Group from Discontinued Operations	207,438		300,858		304,275
Net Earnings Attributable to Noncontrolling Interests from Discontinued Operations	(13,561)		(13,365)		(14,368)
Net Earnings Attributable to Jacobs from Discontinued Operations	$	193,877	$	287,493	$	289,907

(1)The increase in selling, general and administrative expense in the year ended September 27, 2024, is primarily related to professional services and other Separation Transaction related expenses of $97.6 million.

(2)The year ended September 30, 2022, included a $13.9 million gain related to a cost method investment sold during the period and a $4 million true-up related to the wind down and full impairment of AWE Management Ltd.

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


	September 29, 2023
Cash and cash equivalents	$	155,728
Accounts receivables and contract assets	1,127,865
Prepaid expenses and other	64,240
Current assets held for spin	$	1,347,833


Property, Equipment and Improvements, net	$	77,283
Goodwill	2,699,439
Intangibles, net	321,159
Deferred income tax assets	175
Operating lease right-of-use assets	89,527
Miscellaneous	67,949
Noncurrent assets held for spin	$	3,255,532


Accounts payable	$	221,448
Accrued liabilities	326,450
Operating lease liability	25,831
Contract liabilities	54,359
Current liabilities held for spin	$	628,088


Liabilities relating to defined benefit pension and retirement plans	$	11,263
Deferred income tax liabilities	99,802
Long-term operating lease liability	77,122
Other deferred liabilities	8,260
Noncurrent liabilities held for spin	$	196,447

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


	For the Years Ended
	September 27, 2024		September 29, 2023
Depreciation and amortization:
Property, equipment and improvements	$	16,245	$	19,075
Intangible assets	$	56,839	$	56,675
Deferred income taxes	$	(106,424)	$	(5,297)
Additions to property and equipment	$	(13,067)	$	(26,448)

Investment in Amentum Stock

As a result of the Separation Transaction on September 27, 2024, Jacobs held approximately 29 million of the outstanding shares of AMTM common stock initially recorded on a net book value basis under spin-off accounting rules.

Following the Merger and in accordance with the Escrow Agreement, Jacobs transferred 11 million shares of AMTM shares into escrow to be held and distributed between the parties to the Escrow Agreement based on terms and conditions set forth in the Merger Agreement, with final settlement of the shares between the parties (and associated financial statement impacts, if any) expected to be completed in fiscal 2025. The Company has indicated its intention to distribute shares held in escrow to Jacobs Shareholders’ post final settlement.

As of September 27, 2024, the Company's investment in AMTM shares (including shares held in escrow) was measured at fair value through net income as it is an investment in equity securities with a readily determinable fair value of approximately $749.5 million as of September 27, 2024. Additionally, fair value ("market") mark-to market gains of approximately $186.9 million were recorded in Miscellaneous income (expense), net during the fourth quarter of fiscal 2024 in association with the total AMTM share positions held. Further, as quoted market prices are available for these securities in an active market, the fair value measurement of the shares is categorized as a Level 1 input.

The Company intends to dispose of all of its final determined investment in AMTM shares within 12 months of the completion of the Separation and the Distribution.

Transition Services Agreement

Upon closing of the Separation, the Company entered into a Transition Services Agreement (the "TSA") with Amentum pursuant to which the Company, on an interim basis, provided various services to Amentum including corporate, information technology, and project services. The initial term of the TSA began immediately following the closing of the transaction on September 27, 2024 and expires in September 2025. Pursuant to the terms of the TSA, the Company will receive payments for the interim services and no services were provided under the TSA for the year ended September 27, 2024.

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

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”). For the years ended September 27, 2024 and September 29, 2023, $(0.6) million and $(0.8) million were reported in Net Earnings Attributable to Jacobs from Discontinued Operations on the Consolidated Statement of Earnings related to ECR.