Discontinued Operations

3 Months Ended

Dec. 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 the 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 continues to be subject to final settlement between the parties, as set forth in the Agreement and Plan of Merger, dated as of November 20, 2023 (as amended, the “Merger Agreement").

Summarized Financial Information of Discontinued Operations

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


	Three Months Ended
	December 27, 2024		December 29, 2023
Revenues	$	64	$	1,348,998
Direct cost of contracts	(60)		(1,163,190)
Gross profit	4		185,808
Selling, general and administrative expense	(1,348)		(123,745)
Operating (Loss) Profit	(1,344)		62,063
Other income, net	—		482
(Loss) Earnings Before Taxes from Discontinued Operations	(1,344)		62,545
Income Tax Benefit (Expense)	343		(15,332)
Net (Loss) Earnings of the Group from Discontinued Operations	(1,001)		47,213
Net Earnings Attributable to Noncontrolling Interests from Discontinued Operations	—		(3,375)
Net (Loss) Earnings Attributable to Jacobs from Discontinued Operations	$	(1,001)	$	43,838

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


	For the Three Months Ended
	December 27, 2024		December 29, 2023
Depreciation and amortization:
Property, equipment and improvements	$	—	$	3,475
Intangible assets	$	—	$	14,187
Deferred income taxes	$	—	$	(6,206)
Additions to property and equipment	$	—	$	(2,340)

There were no assets and liabilities held for spin as of September 27, 2024.

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. To the extent the Company and its shareholders become entitled to any portion of the contingent consideration, the first 0.5% of the outstanding shares of AMTM will be released from escrow and delivered to the Company. Any further contingent consideration to which we and our shareholders may become entitled will be distributed on a pro rata basis to shareholders as of a record date to be determined in the future. Any shares of contingent consideration to which we and our shareholders do not become entitled to receive will be delivered to the former equity holder of Amentum.

The Company's investment in AMTM shares (including shares held in escrow) is measured at fair value through net income as it is an investment in equity securities with a readily determinable fair value of approximately $597.9 million as of December 27, 2024. Additionally, fair value ("market") mark-to market losses of approximately $145.2 million were recorded in Miscellaneous income (expense), net during the first quarter of fiscal 2025 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, but there can be no assurance regarding the ultimate timing of such divestiture. The Company cannot predict the trading price of shares of Amentum’s common stock and the market value of the Amentum shares are subject to market volatility and other factors outside of our control. Unanticipated developments could delay, prevent or otherwise adversely affect the divestiture, including but not limited to financial market conditions.

Transition Services Agreement

Upon closing of the Separation Transaction, the Company entered into a Transition Services Agreement (the "TSA") with Amentum pursuant to which the Company, on an interim basis, will provide 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. Since inception of the TSA agreement, the Company has recognized costs recorded in SG&A expense incurred to perform the TSA, offset by $11.4 million in TSA related income for such services that is reported in miscellaneous income (expense) for the three month period ended December 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. For the three months ended December 27, 2024 and December 29, 2023, $0 and $(0.6) million were reported in Net Earnings Attributable to Jacobs from Discontinued Operations on the Consolidated Statement of Earnings related to ECR.