Delaware | 95-4081636 |
(State of incorporation) | (I.R.S. employer identification number) |
155 North Lake Avenue, Pasadena, California | 91101 |
(Address of principal executive offices) | (Zip code) |
Large accelerated filer | x | Accelerated filer | o |
Non-accelerated filer | o | Smaller reporting company | o |
Page No. | |||
PART I | |||
Item 1. | |||
Item 2. | |||
Item 3. | |||
Item 4. | |||
PART II | |||
Item 1. | |||
Item 1A. | |||
Item 2. | |||
Item 4. | |||
Item 6. | |||
Item 1. | Financial Statements. |
January 1, 2016 | October 2, 2015 | ||||||
(Unaudited) | |||||||
ASSETS | |||||||
Current Assets: | |||||||
Cash and cash equivalents | $ | 443,725 | $ | 460,859 | |||
Receivables | 2,424,447 | 2,548,743 | |||||
Deferred income taxes | 139,720 | 160,298 | |||||
Prepaid expenses and other | 104,404 | 113,076 | |||||
Total current assets | 3,112,296 | 3,282,976 | |||||
Property, Equipment and Improvements, Net | 361,006 | 381,238 | |||||
Other Noncurrent Assets: | |||||||
Goodwill | 3,059,279 | 3,048,778 | |||||
Intangibles | 345,770 | 353,419 | |||||
Miscellaneous | 737,500 | 719,515 | |||||
Total other non-current assets | 4,142,549 | 4,121,712 | |||||
$ | 7,615,851 | $ | 7,785,926 | ||||
LIABILITIES AND STOCKHOLDERS’ EQUITY | |||||||
Current Liabilities: | |||||||
Notes payable | $ | 2,833 | $ | 13,364 | |||
Accounts payable | 421,206 | 566,866 | |||||
Accrued liabilities | 1,033,906 | 1,090,985 | |||||
Billings in excess of costs | 327,031 | 309,951 | |||||
Total current liabilities | 1,784,976 | 1,981,166 | |||||
Long-term Debt | 621,899 | 584,434 | |||||
Other Deferred Liabilities | 838,717 | 863,868 | |||||
Commitments and Contingencies | |||||||
Stockholders’ Equity: | |||||||
Capital stock: | |||||||
Preferred stock, $1 par value, authorized - 1,000,000 shares; issued and outstanding - none | — | — | |||||
Common stock, $1 par value, authorized - 240,000,000 shares; issued and outstanding—122,776,878 shares and 123,152,966 shares, respectively | 122,777 | 123,153 | |||||
Additional paid-in capital | 1,142,010 | 1,137,144 | |||||
Retained earnings | 3,511,197 | 3,496,212 | |||||
Accumulated other comprehensive loss | (470,476 | ) | (464,764 | ) | |||
Total Jacobs stockholders’ equity | 4,305,508 | 4,291,745 | |||||
Noncontrolling interests | 64,751 | 64,713 | |||||
Total Group stockholders’ equity | 4,370,259 | 4,356,458 | |||||
$ | 7,615,851 | $ | 7,785,926 |
For the Three Months Ended | |||||||
January 1, 2016 | December 26, 2014 | ||||||
Revenues | $ | 2,847,934 | $ | 3,187,005 | |||
Costs and Expenses: | |||||||
Direct cost of contracts | (2,407,460 | ) | (2,667,559 | ) | |||
Selling, general and administrative expenses | (381,024 | ) | (361,223 | ) | |||
Operating Profit | 59,450 | 158,223 | |||||
Other Income (Expense): | |||||||
Interest income | 2,220 | 2,276 | |||||
Interest expense | (3,543 | ) | (5,318 | ) | |||
Miscellaneous income (expense), net | (340 | ) | (486 | ) | |||
Total other income (expense), net | (1,663 | ) | (3,528 | ) | |||
Earnings Before Taxes | 57,787 | 154,695 | |||||
Income Tax Expense | (7,481 | ) | (48,500 | ) | |||
Net Earnings of the Group | 50,306 | 106,195 | |||||
Net Earnings Attributable to Noncontrolling Interests | (3,792 | ) | (6,116 | ) | |||
Net Earnings Attributable to Jacobs | $ | 46,514 | $ | 100,079 | |||
Net Earnings Per Share: | |||||||
Basic | $ | 0.38 | $ | 0.78 | |||
Diluted | $ | 0.38 | $ | 0.77 |
For the Three Months Ended | |||||||
January 1, 2016 | December 26, 2014 | ||||||
Net Earnings of the Group | $ | 50,306 | $ | 106,195 | |||
Other Comprehensive Income (Loss): | |||||||
Foreign currency translation adjustment | (16,502 | ) | (48,373 | ) | |||
Gain (loss) on cash flow hedges | 2,552 | (1,919 | ) | ||||
Change in pension liabilities | 11,443 | 14,643 | |||||
Other comprehensive loss before taxes | (2,507 | ) | (35,649 | ) | |||
Income Tax Benefit (Expense): | |||||||
Foreign currency translation adjustments | — | — | |||||
Cash flow hedges | (723 | ) | 622 | ||||
Change in pension liabilities | (2,482 | ) | (2,928 | ) | |||
Income Tax Expense | (3,205 | ) | (2,306 | ) | |||
Net Other Comprehensive Loss | (5,712 | ) | (37,955 | ) | |||
Net Comprehensive Income of the Group | 44,594 | 68,240 | |||||
Net Comprehensive Income Attributable to Noncontrolling Interests | (3,792 | ) | (6,116 | ) | |||
Net Comprehensive Income Attributable to Jacobs | $ | 40,802 | $ | 62,124 |
JACOBS ENGINEERING GROUP INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF CASH FLOWS For the Three Months Ended January 1, 2016 and December 26, 2014 (In thousands) (Unaudited) | |||||||
January 1, 2016 | December 26, 2014 | ||||||
Cash Flows from Operating Activities: | |||||||
Net earnings attributable to the Group | $ | 50,306 | $ | 106,195 | |||
Adjustments to reconcile net earnings to net cash flows from operations: | |||||||
Depreciation and amortization: | |||||||
Property, equipment and improvements | 22,167 | 26,006 | |||||
Intangible assets | 11,726 | 12,981 | |||||
Stock based compensation | 8,134 | 16,504 | |||||
Tax benefit from stock based compensation | (5 | ) | (279 | ) | |||
Equity in earnings of operating ventures, net | (5,505 | ) | (4,616 | ) | |||
Change in pension plan obligations | 3,062 | (154 | ) | ||||
Change in deferred compensation plans | (163 | ) | (1,450 | ) | |||
(Gains) losses on disposals of assets, net | 6,058 | (22 | ) | ||||
Changes in certain assets and liabilities, excluding the effects of businesses acquired: | |||||||
Receivables | 90,783 | 65,538 | |||||
Prepaid expenses and other current assets | 7,740 | 5,230 | |||||
Accounts payable | (143,971 | ) | (80,520 | ) | |||
Accrued liabilities | (47,026 | ) | (33,198 | ) | |||
Billings in excess of costs | 25,141 | 23,948 | |||||
Income taxes | 3,114 | 14,543 | |||||
Deferred income taxes | (2,744 | ) | (2,602 | ) | |||
Other deferred liabilities | (3,476 | ) | (9,162 | ) | |||
Other, net | 1,376 | 29 | |||||
Net cash provided by operating activities | 26,717 | 138,971 | |||||
Cash Flows from Investing Activities: | |||||||
Additions to property and equipment | (15,987 | ) | (33,775 | ) | |||
Disposals of property and equipment | 133 | 3,374 | |||||
Sales of investments | — | 13 | |||||
Acquisitions of businesses, net of cash acquired | (10,500 | ) | — | ||||
Net cash used for investing activities | (26,354 | ) | (30,388 | ) |
JACOBS ENGINEERING GROUP INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF CASH FLOWS For the Three Months Ended January 1, 2016 and December 26, 2014 (In thousands) (Unaudited) (Continued) | |||||||
January 1, 2016 | December 26, 2014 | ||||||
Cash Flows from Financing Activities: | |||||||
Proceeds from long-term borrowings | 591,989 | 308,446 | |||||
Repayments of long-term borrowings | (549,010 | ) | (345,660 | ) | |||
Proceeds from short-term borrowings | 465 | 112,638 | |||||
Repayments of short-term borrowings | (10,911 | ) | (103,187 | ) | |||
Proceeds from issuances of common stock | 8,770 | 8,029 | |||||
Common stock repurchases | (42,097 | ) | (113,708 | ) | |||
Tax benefit from stock based compensation | 5 | 279 | |||||
Distributions to noncontrolling interests | (2,709 | ) | (7,230 | ) | |||
Net cash used for financing activities | (3,498 | ) | (140,393 | ) | |||
Effect of Exchange Rate Changes | (13,999 | ) | (30,756 | ) | |||
Net Decrease in Cash and Cash Equivalents | (17,134 | ) | (62,566 | ) | |||
Cash and Cash Equivalents at the Beginning of the Period | 460,859 | 732,647 | |||||
Cash and Cash Equivalents at the End of the Period | $ | 443,725 | $ | 670,081 |
• | References herein to "Jacobs" are to Jacobs Engineering Group Inc. and its predecessors; |
• | References herein to the "Company", "we", "us" or "our" are to Jacobs Engineering Group Inc. and its consolidated subsidiaries; and |
• | References herein to the "Group" are to the combined economic interests and activities of the Company and the persons and entities holding noncontrolling interests in our consolidated subsidiaries. |
January 1, 2016 | October 2, 2015 | ||||||
Components of receivables: | |||||||
Amounts billed | $ | 1,289,617 | $ | 1,213,892 | |||
Unbilled receivables and other | 1,041,538 | 1,252,509 | |||||
Retentions receivable | 93,292 | 82,342 | |||||
Total receivables, net | $ | 2,424,447 | $ | 2,548,743 | |||
Other information about receivables: | |||||||
Amounts due from the United States federal government, included above, net of advanced billings | $ | 299,972 | $ | 327,157 | |||
Claims receivable | $ | 19,948 | $ | 32,511 |
January 1, 2016 | October 2, 2015 | ||||||
Land | $ | 23,469 | $ | 23,757 | |||
Buildings | 92,404 | 97,597 | |||||
Equipment | 582,064 | 592,491 | |||||
Leasehold improvements | 250,294 | 259,544 | |||||
Construction in progress | 22,116 | 17,229 | |||||
970,347 | 990,618 | ||||||
Accumulated depreciation and amortization | (609,341 | ) | (609,380 | ) | |||
$ | 361,006 | $ | 381,238 |
For the Three Months Ended | |||||||
January 1, 2016 | December 26, 2014 | ||||||
Pass-through costs included in revenues | $ | 670,331 | $ | 706,830 |
For the Three Months Ended | |||||||
Component: | January 1, 2016 | December 26, 2014 | |||||
Service cost | $ | 8,676 | $ | 8,576 | |||
Interest cost | 15,702 | 16,658 | |||||
Expected return on plan assets | (19,507 | ) | (21,049 | ) | |||
Amortization of previously unrecognized items | 5,733 | 5,410 | |||||
Settlement (gain) loss | (163 | ) | 59 | ||||
Net periodic benefit cost | $ | 10,441 | $ | 9,654 |
Cash contributions made during the first three months of fiscal 2016 | $ | 7,379 | |
Cash contributions we expect to make during the remainder of fiscal 2016 | 35,037 | ||
Total | $ | 42,416 |
For the Three Months Ended | |||||||
January 1, 2016 | December 26, 2014 | ||||||
Amortization of Defined Benefit Items: | |||||||
Actuarial losses | $ | (4,461 | ) | $ | (5,410 | ) | |
Prior service cost | 61 | 24 | |||||
Total Before Income Tax | (4,400 | ) | (5,386 | ) | |||
Income Tax Benefit | 1,046 | 1,508 | |||||
Total Reclassifications, After-tax | $ | (3,354 | ) | $ | (3,878 | ) |
For the Three Months Ended | |||||
January 1, 2016 | December 26, 2014 | ||||
Shares used to calculate EPS: | |||||
Weighted average shares outstanding (denominator used to compute basic EPS) | 120,888 | 128,652 | |||
Effect of stock options and restricted stock | 1,071 | 1,321 | |||
Denominator used to compute diluted EPS | 121,959 | 129,973 | |||
Antidilutive stock options and restricted stock | 4,011 | 3,169 | |||
Shares of common stock issued from the exercise of stock options and the release of restricted stock | 287 | 396 |
Amount Authorized | Average Price Per Share (1) | Total Shares Retired | Shares Repurchased | |||||
$500,000 | $41.09 | 1,024 | 1,024 |
(1) | Includes commissions paid and calculated as the average price per share since the repurchase |
Item 2. | Management’s Discussion and Analysis of Financial Condition and Results of Operations. |
• | The discussion of the critical and significant accounting policies used by the Company in preparing its consolidated financial statements. The most current discussion of our critical accounting policies appears in Management's Discussion and Analysis of Financial Condition and Results of Operations of our 2015 Form 10-K, and the most current discussion of our significant accounting policies appears in Note 2—Significant Accounting Polices in Notes to Consolidated Financial Statements of our 2015 Form 10-K; |
• | The Company’s fiscal 2015 audited consolidated financial statements and notes thereto included in our 2015 Form 10-K; and |
• | Item 7—Management’s Discussion and Analysis of Financial Condition and Results of Operations included in our 2015 Form 10-K. |
Three Months Ended | |||||||||||
January 1, 2016 | |||||||||||
U.S. GAAP | Effects of 2015 Restructuring | Without 2015 Restructuring | |||||||||
Consolidated pre-tax earnings | $ | 57,787 | $ | (68,383 | ) | $ | 126,170 | ||||
Tax expense | (7,481 | ) | 20,247 | (27,728 | ) | ||||||
Net earnings of the Group | 50,306 | (48,136 | ) | 98,442 | |||||||
Non-controlling interests | (3,792 | ) | — | (3,792 | ) | ||||||
Net earnings of Jacobs | $ | 46,514 | $ | (48,136 | ) | $ | 94,650 | ||||
Diluted earnings per share | $ | 0.38 | $ | (0.40 | ) | $ | 0.78 |
For the Three Months Ended | |||||||
January 1, 2016 | December 26, 2014 | ||||||
Technical Professional Services Revenues: | |||||||
Project Services | $ | 1,387,675 | $ | 1,623,587 | |||
Process, Scientific, and Systems Consulting | 258,915 | 308,937 | |||||
Total Technical Professional Services Revenues | 1,646,590 | 1,932,524 | |||||
Field Services Revenues: | |||||||
Construction | 897,050 | 947,792 | |||||
Operations and Maintenance ("O&M") | 304,294 | 306,689 | |||||
Total Field Services Revenues | 1,201,344 | 1,254,481 | |||||
Total Revenues | $ | 2,847,934 | $ | 3,187,005 |
For the Three Months Ended | |||||||
January 1, 2016 | December 26, 2014 | ||||||
National Government Programs | $ | 590,793 | $ | 668,342 | |||
Refining - Downstream | 551,735 | 508,888 | |||||
Chemicals and Polymers | 487,622 | 698,356 | |||||
Infrastructure | 392,828 | 385,585 | |||||
Buildings | 221,160 | 230,031 | |||||
Oil & Gas - Upstream | 194,311 | 246,014 | |||||
Industrial and Other | 179,128 | 177,914 | |||||
Pharmaceuticals and Biotechnology | 160,313 | 129,785 | |||||
Mining and Minerals | 70,044 | 142,090 | |||||
$ | 2,847,934 | $ | 3,187,005 |
January 1, 2016 | December 26, 2014 | ||||||
Technical professional services | $ | 11,421.4 | $ | 13,222.4 | |||
Field services | 6,801.0 | 5,885.0 | |||||
Total | $ | 18,222.4 | $ | 19,107.4 |
Item 3. | Quantitative and Qualitative Disclosures About Market Risk. |
Item 4. | Controls and Procedures. |
Item 1. | Legal Proceedings. |
Item 1A. | Risk Factors. |
Item 2. | Unregistered Sales of Equity Securities and Use of Proceeds. |
Period | Total Number of Shares Purchased | Average Price Paid per Share (1) | Total Numbers of Shares Purchased as Part of Publicly Announced Plans or Programs (2) | Approximate Dollar Value of Shares that May Yet Be Purchased Under the Plans or Programs | ||||||||||
October 3, 2015 through October 30, 2015 | 435 | $ | 39.83 | 435 | $ | 482,673 | ||||||||
October 31, 2015 through November 27, 2015 | 247 | 41.44 | 247 | 472,453 | ||||||||||
November 28, 2015 through January 1, 2016 | 343 | 42.45 | 343 | 457,903 | ||||||||||
Total | 1,024 | 41.09 | 1,024 | 457,903 |
(1) | Includes commissions paid. |
(2) | On July 23, 2015, the Board of Directors approved a program to repurchase up to $500 million of the Company's common stock over the next three years. Share repurchases may be executed through various means including, without limitation, open market transactions, privately negotiated transactions or otherwise. The share repurchase program does not oblige the Company to purchase any shares and expires on July 22, 2018. The authorization for the share repurchase program may be terminated, increased, or decreased by the Company's Board of Directors in its discretion at any time. The timing of our share repurchases may depend upon market conditions, other uses of capital, and other factors. |
Item 3. | Mine Safety Disclosure. |
Item 6. | Exhibits |
(a) | Exhibits |
†10.3 | Jacobs Engineering Group Inc. 1999 Outside Director Stock Plan, as amended and restated, effective December 9, 2015. | |
31.1 | Certification of Principal Executive Officer pursuant to Rule 13a-14(a) under the Securities Exchange Act of 1934. | |
31.2 | Certification of Chief Financial Officer pursuant to Rule 13a-14(a) under the Securities Exchange Act of 1934. | |
32.1 | Certification of Principal Executive Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002. | |
32.2 | Certification of Chief Financial Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002. | |
95 | Mine Safety Disclosure. | |
101.INS | XBRL Instance Document. | |
101.SCH | XBRL Taxonomy Extension Schema Document. | |
101.CAL | XBRL Taxonomy Extension Calculation Linkbase Document. | |
101.DEF | XBRL Taxonomy Extension Definition Linkbase Document. | |
101.LAB | XBRL Taxonomy Extension Label Linkbase Document. | |
101.PRE | XBRL Taxonomy Extension Presentation Linkbase Document. | |
† | Being filed herewith. | |
# | Indicates management contract or compensatory plan or arrangement. |
By: | /s/ Kevin C. Berryman | |
Kevin C. Berryman | ||
Executive Vice President | ||
and Chief Financial Officer | ||
(Principal Financial Officer) | ||
Date: | February 3, 2016 |
1. | I have reviewed this Quarterly Report on Form 10-Q for the quarter ended January 1, 2016 of Jacobs Engineering Group Inc.; |
2. | Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report; |
3. | Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report; |
4. | The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have: |
a. | Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared; |
b. | Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles; |
c. | Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and |
d. | Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and |
5. | The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions): |
a. | All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and |
b. | Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting. |
/s/ Steven J. Demetriou |
Steven J. Demetriou |
Chief Executive Officer |
February 3, 2016 |
1. | I have reviewed this Quarterly Report on Form 10-Q for the quarter ended January 1, 2016 of Jacobs Engineering Group Inc.; |
2. | Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report; |
3. | Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report; |
4. | The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have: |
a. | Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared; |
b. | Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles; |
c. | Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and |
d. | Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and |
5. | The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions): |
a. | All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and |
b. | Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting. |
/s/ Kevin C. Berryman |
Kevin C. Berryman |
Chief Financial Officer |
February 3, 2016 |
/s/ Steven J. Demetriou |
Steven J. Demetriou |
Chief Executive Officer |
February 3, 2016 |
/s/ Kevin C. Berryman |
Kevin C. Berryman |
Executive Vice President |
and Chief Financial officer |
February 3, 2016 |
Mine or Operating Name/MSHA Identification Number | Section 104 S&S Citations (#) | Section 104(b) Orders (#) | Section 104(d) Citations and Orders (#) | Section 110(b)(2) Violations (#) | Section 107(a) Orders (#) | Total Dollar Value of MSHA Assessments Proposed ($) | Total Number of Mining Related Fatalities (#) | Received Notice of Pattern of Violations Under Section 104(e) (yes/no) | Received Notice of Potential to Have Pattern Under Section 104(e) (yes/no) | Legal Actions Initiated During Period (#) | Legal Actions Resolved During Period (#) | Legal Actions Pending as of Last Day of Period (#) | |||||||||||
Mine ID: 02-00024 Contractor ID: 1PL | $ | — | No | No | 2 | 3 | |||||||||||||||||
Mine ID: 02-00144 Contractor ID: 1PL | $ | — | No | No | |||||||||||||||||||
Mine ID: 02-03131 Contractor ID: 1PL | $ | — | No | No | |||||||||||||||||||
Mine ID: 02-00137 Contractor ID: 1PL | $ | — | No | No | |||||||||||||||||||
Mine ID: 02-00150 Contractor ID: 1PL | $ | — | No | No | |||||||||||||||||||
Mine ID: 26-01962 Contractor ID: 1PL | $ | — | No | No | |||||||||||||||||||
Mine ID: 29-00708 Contractor ID: 1PL | $ | — | No | No | 2 | ||||||||||||||||||
Mine ID: 29-00762 Contractor ID: 1PL | $ | — | No | No | |||||||||||||||||||
Mine ID: 26-02755 Contractor ID: 1PL | $ | — | No | No | 9 | ||||||||||||||||||
Mine ID: 04-00743 Contractor ID: Y713 | $ | — | No | No | |||||||||||||||||||
Totals | — | — | — | — | — | $ | — | — | No | No | — | 11 | 5 |
Document And Entity Information - shares |
3 Months Ended | |
---|---|---|
Jan. 01, 2016 |
Feb. 01, 2016 |
|
Document And Entity Information [Abstract] | ||
Entity Registrant Name | JACOBS ENGINEERING GROUP INC /DE/ | |
Trading Symbol | jec | |
Entity Central Index Key | 0000052988 | |
Current Fiscal Year End Date | --09-30 | |
Entity Filer Category | Large Accelerated Filer | |
Document Type | 10-Q | |
Document Period End Date | Jan. 01, 2016 | |
Document Fiscal Year Focus | 2016 | |
Document Fiscal Period Focus | Q1 | |
Amendment Flag | false | |
Entity Common Stock, Shares Outstanding | 122,537,019 |
Consolidated Balance Sheets (Parenthetical) - $ / shares |
Jan. 01, 2016 |
Oct. 02, 2015 |
---|---|---|
Statement of Financial Position [Abstract] | ||
Preferred stock, par value (in dollars per share) | $ 1 | $ 1 |
Preferred stock, authorized (in shares) | 1,000,000 | 1,000,000 |
Preferred stock, issued (in shares) | 0 | 0 |
Preferred stock, outstanding (in shares) | 0 | 0 |
Common stock, par value (in dollars per share) | $ 1 | $ 1 |
Common stock, authorized (in shares) | 240,000,000 | 240,000,000 |
Common stock, issued (in shares) | 122,776,878 | 123,952,156 |
Common stock, outstanding (in shares) | 122,776,878 | 123,952,156 |
Consolidated Statements of Earnings - USD ($) $ in Thousands |
3 Months Ended | |
---|---|---|
Jan. 01, 2016 |
Dec. 26, 2014 |
|
Income Statement [Abstract] | ||
Revenues | $ 2,847,934 | $ 3,187,005 |
Costs and Expenses: | ||
Direct cost of contracts | (2,407,460) | (2,667,559) |
Selling, general and administrative expenses | (381,024) | (361,223) |
Operating Profit | 59,450 | 158,223 |
Other Income (Expense): | ||
Interest income | 2,220 | 2,276 |
Interest expense | (3,543) | (5,318) |
Miscellaneous income (expense), net | (340) | (486) |
Total other income (expense), net | (1,663) | (3,528) |
Earnings Before Taxes | 57,787 | 154,695 |
Income Tax Expense | (7,481) | (48,500) |
Net Earnings of the Group | 50,306 | 106,195 |
Net Earnings Attributable to Noncontrolling Interests | (3,792) | (6,116) |
Net Earnings Attributable to Jacobs | $ 46,514 | $ 100,079 |
Net Earnings Per Share: | ||
Basic (in dollars per share) | $ 0.38 | $ 0.78 |
Diluted (in dollars per share) | $ 0.38 | $ 0.77 |
Consolidated Statements of Comprehensive Income - USD ($) $ in Thousands |
3 Months Ended | |
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Jan. 01, 2016 |
Dec. 26, 2014 |
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Statement of Comprehensive Income [Abstract] | ||
Net Earnings of the Group | $ 50,306 | $ 106,195 |
Other Comprehensive Income (Loss): | ||
Foreign currency translation adjustment | (16,502) | (48,373) |
Gain (loss) on cash flow hedges | 2,552 | (1,919) |
Change in pension liabilities | 11,443 | 14,643 |
Other comprehensive loss before taxes | (2,507) | (35,649) |
Income Tax Benefit (Expense): | ||
Foreign currency translation adjustments | 0 | 0 |
Cash flow hedges | (723) | 622 |
Change in pension liabilities | (2,482) | (2,928) |
Income Tax Expense | (3,205) | (2,306) |
Net Other Comprehensive Loss | (5,712) | (37,955) |
Net Comprehensive Income of the Group | 44,594 | 68,240 |
Net Comprehensive Income Attributable to Noncontrolling Interests | (3,792) | (6,116) |
Net Comprehensive Income Attributable to Jacobs | $ 40,802 | $ 62,124 |
Basis of Presentation |
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Jan. 01, 2016 | |||||||||||||
Basis of Presentation [Abstract] | |||||||||||||
Basis of Presentation | Basis of Presentation Unless the context otherwise requires:
The accompanying consolidated financial statements and financial information included herein have been prepared pursuant to the interim period reporting requirements of Form 10-Q. Consequently, certain information and note disclosures normally included in financial statements prepared in accordance with accounting principles generally accepted in the United States ("U.S. GAAP") have been condensed or omitted. Readers of this Quarterly Report on Form 10-Q should also read our consolidated financial statements and the notes thereto included in our Annual Report on Form 10-K for the fiscal year ended October 2, 2015 ("2015 Form 10-K") as well as Item 7—Management’s Discussion and Analysis of Financial Condition and Results of Operations, included in our 2015 Form 10-K. In the opinion of management, the accompanying unaudited consolidated financial statements contain all adjustments (consisting of normal recurring adjustments) necessary for a fair presentation of our consolidated financial statements at January 1, 2016, and for the three month periods ended January 1, 2016 and December 26, 2014. Our interim results of operations are not necessarily indicative of the results to be expected for the full fiscal year. Please refer to Note 16—Definitions of Notes to Consolidated Financial Statements included in our 2015 Form 10-K for the definitions of certain terms used herein. Use of Estimates and Assumptions The preparation of financial statements in conformity with U.S. GAAP requires us to employ estimates and make assumptions that affect the reported amounts of certain assets and liabilities, the revenues and expenses reported for the periods covered by the accompanying consolidated financial statements, and certain amounts disclosed in these Notes to the Consolidated Financial Statements. Although such estimates and assumptions are based on management's most recent assessment of the underlying facts and circumstances utilizing the most current information available and past experience, actual results could differ significantly from those estimates and assumptions. Our estimates, judgments, and assumptions are evaluated periodically and adjusted accordingly. Please refer to Note 2—Significant Accounting Policies of Notes to Consolidated Financial Statements included in our 2015 Form 10-K for a discussion of the significant estimates and assumptions affecting our consolidated financial statements. Fair Value and Fair Value Measurements Certain amounts included in the accompanying consolidated financial statements are presented at "fair value." Fair value is defined as the price that would be received from selling an asset or paid to transfer a liability in an orderly transaction between market participants as of the date fair value is determined (the "measurement date"). When determining fair value, we consider the principal or most advantageous market in which we would transact, and we consider only those assumptions we believe a typical market participant would consider when pricing an asset or liability. In measuring fair value, we use the following inputs in the order of priority indicated: Level 1 - Quoted prices in active markets for identical assets or liabilities. Level 2 - Observable inputs other than quoted prices in active markets included in Level 1, such as (i) quoted prices for similar assets or liabilities; (ii) quoted prices in markets that have insufficient volume or infrequent transactions (i.e., less active markets); and (iii) model-driven valuations in which all significant inputs are observable or can be derived principally from, or corroborated with, observable market data for substantially the full term of the asset or liability. Level 3 - Unobservable inputs to the valuation methodology that are significant to the fair value measurement. Please refer to Note 2—Significant Accounting Policies of Notes to Consolidated Financial Statements included in our 2015 Form 10-K for a more complete discussion of the various items within the consolidated financial statements measured at fair value and the methods used to determine fair value. |
New Accounting Standards |
3 Months Ended |
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Jan. 01, 2016 | |
New Accounting Pronouncements and Changes in Accounting Principles [Abstract] | |
New Accounting Standards | New Accounting Standards From time to time, the Financial Accounting Standards Board ("FASB") issues accounting standards updates (each being an "ASU") to its Accounting Standards Codification ("ASC"), which constitutes the primary source of U.S. GAAP. The Company regularly monitors ASUs as they are issued and considers their applicability to its business. All ASUs applicable to the Company are adopted by the due date and in the manner prescribed by the FASB. In May 2014, the FASB issued ASU No. 2014-09—Revenue from Contracts with Customers. The new guidance provided by ASU 2014-09 is intended to remove inconsistencies and perceived weaknesses in the existing revenue requirements, provide a more robust framework for addressing revenue issues, improve comparability, provide more useful information and simplify the preparation of financial statements. ASU 2014-09 was initially effective for annual and interim reporting periods beginning after December 15, 2016. On July 9, 2015 the FASB approved a one year deferral of the effective date of this standard. The revised effective date for the standard is for annual reporting periods beginning after December 15, 2017 and interim periods therein. The FASB also approved changes allowing for early adoption of the standard as of the original effective date. The Company continues to evaluate the impact that the new guidance may have on its consolidated financial statements. In November 2015, the FASB issued Accounting Standards Update 2015-17—Balance Sheet Classification of Deferred Taxes. As part of the FASB's accounting simplification initiative, ASU 2015-17 removes the requirement to separate deferred income tax liabilities and assets into current and noncurrent amounts in a classified statement of financial position. Instead, the update requires that deferred tax liabilities and assets be classified as noncurrent in a classified statement of financial position. ASU 2015-17 is effective for entities (other than public business entities) for fiscal years beginning after December 15, 2016, with retrospective application to all periods presented. Early application is permitted. The Company does not expect the impact of this ASU to be material to its consolidated financial statements. |
Business Combinations |
3 Months Ended |
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Jan. 01, 2016 | |
Business Combinations [Abstract] | |
Business Combinations | Business Combinations During fiscal year 2016, the Company acquired J.L. Patterson & Associates. This acquisition was not material to the Company's consolidated results for the first quarter of fiscal 2016. |
Receivables |
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Accounts, Notes, Loans and Financing Receivable, Gross, Allowance, and Net [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Receivables | Receivables The following table presents the components of receivables appearing in the accompanying Consolidated Balance Sheets at January 1, 2016 and October 2, 2015 as well as certain other related information (in thousands):
Billed receivables consist of amounts invoiced to clients in accordance with the terms of our client contracts and are shown net of an allowance for doubtful accounts. We anticipate that substantially all of such billed amounts will be collected over the next twelve months. Unbilled receivables and retentions receivable represent reimbursable costs and amounts earned and reimbursable under contracts in progress as of the respective balance sheet dates. Such amounts become billable according to the contract terms, which usually consider the passage of time, achievement of certain milestones, or completion of the project. We anticipate that substantially all of such unbilled amounts will be billed and collected over the next twelve months. Claims receivable are included in receivables in the accompanying Consolidated Balance Sheets and represent certain costs incurred on contracts to the extent it is probable that such claims will result in additional contract revenue and the amount of such additional revenue can be reliably estimated. |
Property, Equipment and Improvements, Net |
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Property, Plant and Equipment [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Property, Equipment and Improvements, Net | Property, Equipment and Improvements, Net Property, Equipment and Improvements, Net in the accompanying Consolidated Balance Sheets at January 1, 2016 and October 2, 2015 consisted of the following (in thousands):
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Long-term Debt |
3 Months Ended |
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Jan. 01, 2016 | |
Debt Disclosure [Abstract] | |
Long-term Debt | Long-term Debt Jacobs and certain of its subsidiaries have a $1.6 billion long-term unsecured, revolving credit facility (the "2014 Facility") with a syndicate of large, U.S. and international banks and financial institutions. The 2014 Facility also provides an accordion feature that allows the Company and the lenders to increase the facility amount to $2.1 billion. The 2014 Facility did not change interest rates for borrowings outstanding under the Company's prior credit facility, but did reduce the fees on the unused portion of the facility. The total amount outstanding under the 2014 Facility in the form of direct borrowings at January 1, 2016 was $621.9 million. The Company has issued $2.5 million in letters of credit under the 2014 Facility leaving $975.6 million of available borrowing capacity under the 2014 Facility at January 1, 2016. In addition, the Company had $238.4 million issued under separate, committed and uncommitted letter-of-credit facilities for total issued letters of credit of $240.9 million at January 1, 2016. The 2014 Facility expires in February 2020 and permits the Company to borrow under two separate tranches in U.S. dollars, certain specified foreign currencies, and any other currency that may be approved in accordance with the terms of the 2014 Facility. Depending on the Company's Consolidated Leverage Ratio, borrowings under the 2014 Facility will bear interest at either a eurocurrency rate plus a margin of between 1.0% and 1.5% or a base rate plus a margin of between 0% and 0.5%. The 2014 Facility also provides for a financial letter of credit subfacility of $300.0 million, permits performance letters of credit, and provides for a $50.0 million subfacility for swingline loans. Letters of credit are subject to fees based on the Company's Consolidated Leverage Ratio at the time any such letter of credit is issued. The Company pays a facility fee of between 0.100% and 0.250% per annum depending on the Company's Consolidated Leverage Ratio. Amounts outstanding under the 2014 Facility may be prepaid at the option of the Company without premium or penalty, subject to customary breakage fees in connection with the prepayment of eurocurrency loans. The 2014 Facility contains affirmative, negative, and financial covenants customary for financings of this type including, among other things, limitations on certain other indebtedness, loans and investments, liens, mergers, asset sales and transactions with affiliates. In addition, the 2014 Facility contains customary events of default. We were in compliance with our debt covenants at January 1, 2016. |
Revenue Accounting for Contracts / Accounting for Joint Ventures |
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Revenue Accounting for Contracts / Accounting for Joint Ventures [Abstract] | |||||||||||||||||||||||||||||||||||||||||
Revenue Accounting for Contracts / Accounting for Joint Ventures | Revenue Accounting for Contracts / Accounting for Joint Ventures In general, we recognize revenue at the time we provide services. Depending on the commercial terms of the contract, we recognize revenues either when costs are incurred, or using the percentage-of-completion method of accounting by relating contract costs incurred to date to the total estimated costs at completion. Contract losses are provided for in their entirety in the period they become known, without regard to the percentage-of-completion. For multiple contracts with a single customer we account for each contract separately. We also recognize as revenues, costs associated with claims and unapproved change orders to the extent it is probable that such claims and change orders will result in additional contract revenue, and the amount of such additional revenue can be reliably estimated. A significant portion of the Company's revenue is earned on cost reimbursable contracts. The percentage of revenues realized by the Company by type of contract during fiscal 2015 can be found in Note 1—Description of Business and Basis of Presentation of Notes to Consolidated Financial Statements included in our 2015 Form 10-K. Certain cost-reimbursable contracts include incentive-fee arrangements. The incentive fees in such contracts can be based on a variety of factors but the most common are the achievement of target completion dates, target costs, and/or other performance criteria. Failure to meet these targets can result in unrealized incentive fees. We recognize incentive fees based on expected results using the percentage-of-completion method of accounting. As the contract progresses and more information becomes available, the estimate of the anticipated incentive fee that will be earned is revised as necessary. We bill incentive fees based on the terms and conditions of the individual contracts. In certain situations, we are allowed to bill a portion of the incentive fees over the performance period of the contract. In other situations, we are allowed to bill incentive fees only after the target criterion has been achieved. Incentive fees which have been recognized but not billed are included in Receivables in the accompanying Consolidated Balance Sheets. Certain cost-reimbursable contracts with government customers as well as certain commercial clients provide that contract costs are subject to audit and adjustment. In this situation, revenues are recorded at the time services are performed based upon the amounts we expect to realize upon completion of the contracts. Revenues are not recognized for non-recoverable costs. In those situations where an audit indicates that we may have billed a client for costs not allowable under the terms of the contract, we estimate the amount of such nonbillable costs and adjust our revenues accordingly. When we are directly responsible for subcontractor labor or third-party materials and equipment, we reflect the costs of such items in both revenues and costs. On those projects where the client elects to pay for such items directly and we have no associated responsibility for such items, these amounts are not reflected in either revenues or costs. The following table sets forth pass-through costs included in revenues for each of the three months ended January 1, 2016 and December 26, 2014 (in thousands):
As is common to the industry, we execute certain contracts jointly with third parties through various forms of joint ventures and consortiums. Although the joint ventures own and hold the contracts with the clients, the services required by the contracts are typically performed by us and our joint venture partners, or by other subcontractors under subcontracting agreements with the joint ventures. The assets of our joint ventures, therefore, consist almost entirely of cash and receivables (representing amounts due from clients), and the liabilities of our joint ventures consist almost entirely of amounts due to the joint venture partners (for services provided by the partners to the joint ventures under their individual subcontracts) and other subcontractors. In general, at any given time, the equity of our joint ventures represents the undistributed profits earned on contracts the joint ventures hold with clients. Very few of our joint ventures have employees. None of our joint ventures have third-party debt or credit facilities. Our joint ventures, therefore, are simply mechanisms used to deliver engineering and construction services to clients. Rarely do they, in and of themselves, present any risk of loss to us or to our partners separate from those that we would carry if we were performing the contract on our own. Under U.S. GAAP, our share of losses associated with the contracts held by the joint ventures, if and when they occur, has always been reflected in our Consolidated Financial Statements. Certain of our joint ventures meet the definition of a "variable interest entity" ("VIE"). As defined in U.S. GAAP, a VIE is a legal entity in which equity investors do not have sufficient equity at risk for the entity to finance its activities without additional subordinated financial support or, as a group, the holders of the equity investment at risk lack any one of the following three characteristics: (i) the power, through voting rights or similar rights, to direct the activities of a legal entity that most significantly impact the entity's economic performance; (ii) the obligation to absorb the expected losses of the legal entity; or (iii) the right to receive the expected residual returns of the legal entity. Accordingly, entities issuing consolidated financial statements (i.e., a "reporting entity") shall consolidate a VIE if the reporting entity has a "controlling financial interest" in the VIE, as demonstrated by the reporting entity having both (i) the power to direct the activities of a VIE that most significantly impact the VIE's economic performance; and (ii) the right to receive benefits from the VIE that could potentially be significant to the VIE or the obligation to absorb losses of the VIE that could potentially be significant to the VIE. In evaluating our VIEs for possible consolidation, we perform a qualitative analysis to determine whether or not we have a "controlling financial interest" in the VIE as defined by U.S. GAAP. We consolidate only those VIEs over which we have a controlling financial interest. For the Company’s unconsolidated joint ventures, we use the equity method of accounting. The Company does not currently participate in any significant VIEs in which it has a controlling financial interest. |
Disclosures About Defined Pension Benefit Obligations |
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Defined Benefit Pension Plans and Defined Benefit Postretirement Plans Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Disclosures About Defined Pension Benefit Obligations | Disclosures About Defined Pension Benefit Obligations The following table presents the components of net periodic benefit cost recognized in earnings during each of the three months ended January 1, 2016 and December 26, 2014 (in thousands):
Included in the above table are amounts relating to a U.S. pension plan, the participating employees of which are assigned to, and work exclusively on, a specific operating contract with the U.S. federal government. It is the expectation of the parties to this contract that the cost of this pension plan will be fully reimbursed by the U.S. federal government pursuant to applicable cost accounting standards. The underfunded amount for this pension plan is included in "Other Noncurrent Assets" in the accompanying Consolidated Balance Sheets at January 1, 2016. Net periodic pension costs for this pension plan for the three months ended January 1, 2016 were $3.4 million and for the three months ended December 26, 2014 were $1.5 million. The following table presents certain information regarding Company cash contributions to our pension plans for fiscal 2016 (in thousands):
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Other Comprehensive Income |
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Other Comprehensive Income | Other Comprehensive Income The following table presents amounts reclassified from change in pension liabilities in other comprehensive income to direct cost of contracts and selling, general and administrative expenses in the Company's Consolidated Statements of Earnings for the three months ended January 1, 2016 and December 26, 2014 related to the Company's defined benefit pension plans (in thousands):
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Income Taxes |
3 Months Ended |
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Jan. 01, 2016 | |
Income Tax Disclosure [Abstract] | |
Income Taxes | Income Taxes During the three months ended January 1, 2016, the Company released a valuation allowance on deferred tax assets pertaining to foreign net operating losses, resulting in a one-time tax benefit of $11.2 million recorded in Income Tax Expense in the accompanying Consolidated Statements of Earnings. |
Earnings Per Share and Certain Related Information |
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Earnings Per Share Reconciliation [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Earnings Per Share and Certain Related Information | Earnings Per Share and Certain Related Information The following table (i) reconciles the denominator used to compute basic earnings per share ("EPS") to the denominator used to compute diluted EPS for the three months ended January 1, 2016 and December 26, 2014; (ii) provides information regarding the number of non-qualified stock options and shares of restricted stock that were antidilutive and therefore disregarded in calculating the weighted average number of shares outstanding used in computing diluted EPS; and (iii) provides the number of shares of common stock issued from the exercise of stock options and the release of restricted stock (in thousands):
Share Repurchases On July 23, 2015, the Company's Board of Directors authorized a share repurchase program of up to $500 million of the Company's common stock. The following table summarizes the activity under this program from the authorization date (in thousands, except per-share amounts):
program authorization date. Share repurchases may be executed through various means including, without limitation, open market transactions, privately negotiated transactions or otherwise. The share repurchase program does not obligate the Company to purchase any shares and expires on July 22, 2018. The authorization for the share repurchase program may be terminated, increased or decreased by the Company’s Board of Directors in its discretion at any time. The timing of share repurchases may depend upon market conditions, other uses of capital, and other factors. |
Commitments and Contingencies |
3 Months Ended |
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Jan. 01, 2016 | |
Commitments and Contingencies Disclosure [Abstract] | |
Commitments and Contingencies | Commitments and Contingencies In the normal course of business, we are subject to certain contractual guarantees and litigation. The guarantees to which we are a party generally relate to project schedules and plant performance. Most of the litigation in which we are involved has us as a defendant in workers' compensation, personal injury, environmental, employment/labor, professional liability, and other similar lawsuits. We maintain insurance coverage for various aspects of our business and operations. Our insurance programs have varying coverage limits and maximums, and insurance companies may seek to not pay any claims we might make. We have also elected to retain a portion of losses that occur through the use of various deductibles, limits, and retentions under our insurance programs. As a result, we may be subject to future liability for which we are only partially insured or completely uninsured. We intend to mitigate any such future liability by continuing to exercise prudent business judgment in negotiating the terms and conditions of our contracts. Our insurers are also subject to business risk and, as a result, one or more of them may be unable to fulfill their insurance obligations due to insolvency or otherwise. Additionally, as a contractor providing services to the U.S. federal government and several of its agencies, we are subject to many levels of audits, investigations, and claims by, or on behalf of, the U.S. federal government with respect to our contract performance, pricing, costs, cost allocations, and procurement practices. Furthermore, our income, franchise, and similar tax returns and filings are also subject to audit and investigation by the Internal Revenue Service, most states within the U.S. as well as by various government agencies representing jurisdictions outside the U.S. We record in our Consolidated Balance Sheets amounts representing our estimated liability relating to such claims, guarantees, litigation, and audits and investigations. We perform an analysis to determine the level of reserves to establish for insurance-related claims that are known and have been asserted against us, and for insurance-related claims that are believed to have been incurred based on actuarial analysis, but have not yet been reported to our claims administrators as of the respective balance sheet dates. We include any adjustments to such insurance reserves in our consolidated results of operations. The Company believes, after consultation with counsel, that such guarantees, litigation, U.S. government contract-related audits, investigations and claims, and income tax audits and investigations should not have any material adverse effect on our consolidated financial statements. On August 9, 2014, the Company received a Notice of Arbitration from Motiva Enterprises LLC ("Motiva"). The arbitration is pending in Houston, Texas before the International Institute for Conflict Prevention and Resolution and is currently scheduled to begin on September 26, 2016. In 2006, Motiva contracted with Bechtel-Jacobs CEP Port Arthur Joint Venture (“BJJV”), a joint venture between Bechtel Corporation and Jacobs to perform professional services in connection with the expansion project at the Motiva Port Arthur, Texas refinery. In the Notice of Arbitration, Motiva asserts various causes of action and alleges fraud and breach of fiduciary duty and entitlement to equitable and monetary relief in excess of $7 billion. BJJV has denied liability and is vigorously defending these claims, but the Company cannot provide assurance that BJJV will be successful in these efforts as litigation is subject to inherent uncertainties and unfavorable rulings can and do occur. Based on the information currently available to management, the Company does not expect this matter to have a material adverse effect on the Company's business, financial condition, results of operations and/or cash flows. On September 30, 2015, Nui Phao Mining Company Limited (“NPMC”) commenced arbitration proceedings against Jacobs E&C Australia Pty Limited ("Jacobs E&C"). The arbitration is pending in Singapore before the Singapore International Arbitration Centre. In March 2011, Jacobs E&C was engaged by NPMC for the provision of management, design, engineering, and procurement services for the Nui Phao mine/mineral processing project in Vietnam. In the Notice of Arbitration and in a subsequently filed Statement of Claim dated February 1, 2016, NPMC asserts various causes of action and alleges that the quantum of its claim exceeds $167 million. Jacobs has denied liability and is vigorously defending this claim. No hearing date has been set. The Company does not expect this matter to have a material adverse effect on its financial condition, results of operations and/or cash flows. On August 7, 2015, Jacobs and Jacobs Field Services N.A. Inc. (collectively the “Jacobs Parties”) filed a demand for arbitration before the American Arbitration Association against Freeport-McMoran Corporation (“Freeport”) alleging breach of contract for failure to pay invoices of approximately $58 million and for statutory penalties for failure to pay, and asserting that they are entitled to a total of $71.0 million in damages from Freeport (which amount includes the outstanding invoices). On August 28, 2015, Freeport filed an answering statement denying the Jacobs Parties’ claims and asserting counterclaims against the Jacobs Parties for breach of contract and alleging damages of $116.0 million. The Jacobs Parties have denied liability and are vigorously defending these claims. No hearing date has been set. The Company does not expect this matter to have a material adverse effect on its financial condition, results of operations and/or cash flows. On December 7, 2009, the Judicial Council of California, Administrative Office of the Courts (“AOC”) initiated an action in the San Francisco County Superior Court against Jacobs Facilities Inc. (“JFI”) and Jacobs Project Management (“JPM”). On June 6, 2011, AOC filed an operative Second Amended Complaint, which added Jacobs as a defendant. The action arises out of an assignment and assumption agreement between AOC and JFI pursuant to which JFI agreed to provide regular maintenance and repairs at certain AOC court facilities. AOC alleged three causes of action: (i) breach of contract based on the expiration of JFI’s contractor’s license before the assignment and assumption agreement was executed; (ii) disgorgement of all fees paid to JFI and JPM under the contract pursuant to California’s Contractors’ State License Law (“CSLL”); and (iii) breach of Jacobs’ parent guarantee agreement. JPM cross-claimed for unpaid sums for services that the licensed JPM had performed pursuant to the assigned contract between August 2009 and November 2009. A jury trial was held on the parties’ CSLL claims in April 2012 and, on May 2, 2012, the jury returned a special verdict in favor of the Jacobs entities finding, among other things, that JPM was owed approximately $4.7 million in unpaid fees and that JFI was not required to disgorge the approximate $18.3 million that AOC had paid for its work under the contract. AOC subsequently dismissed its cause of action for breach of contract, and JPM dismissed its cross-claims other than those for its unpaid invoices. AOC’s third cause of action for breach of the parent guaranty was resolved by a stipulation, which provided that if AOC obtains a judgment against JFI, the judgment will also be against its parent, Jacobs. The trial court entered judgment in the Jacobs entities’ favor. On August 20, 2015, the California Court of Appeal for the First Appellate District reversed the jury’s verdict, holding that JFI had violated the CSLL. The Court of Appeal remanded for an evidentiary hearing to determine whether JFI and JPM had “substantially complied” with, and may therefore avoid disgorgement under, the CSLL. The Jacobs entities have contested, and will continue to vigorously contest, the AOC’s claims and will vigorously litigate JPM’s claim for unpaid sums. The Company does not expect this matter to have a material adverse effect on its financial condition, results of operations and/or cash flows. |
Basis of Presentation (Policies) |
3 Months Ended |
---|---|
Jan. 01, 2016 | |
Basis of Presentation [Abstract] | |
Use of Estimates and Assumptions | The preparation of financial statements in conformity with U.S. GAAP requires us to employ estimates and make assumptions that affect the reported amounts of certain assets and liabilities, the revenues and expenses reported for the periods covered by the accompanying consolidated financial statements, and certain amounts disclosed in these Notes to the Consolidated Financial Statements. Although such estimates and assumptions are based on management's most recent assessment of the underlying facts and circumstances utilizing the most current information available and past experience, actual results could differ significantly from those estimates and assumptions. Our estimates, judgments, and assumptions are evaluated periodically and adjusted accordingly. Please refer to Note 2—Significant Accounting Policies of Notes to Consolidated Financial Statements included in our 2015 Form 10-K for a discussion of the significant estimates and assumptions affecting our consolidated financial statements. |
New Accounting Pronouncements | From time to time, the Financial Accounting Standards Board ("FASB") issues accounting standards updates (each being an "ASU") to its Accounting Standards Codification ("ASC"), which constitutes the primary source of U.S. GAAP. The Company regularly monitors ASUs as they are issued and considers their applicability to its business. All ASUs applicable to the Company are adopted by the due date and in the manner prescribed by the FASB. In May 2014, the FASB issued ASU No. 2014-09—Revenue from Contracts with Customers. The new guidance provided by ASU 2014-09 is intended to remove inconsistencies and perceived weaknesses in the existing revenue requirements, provide a more robust framework for addressing revenue issues, improve comparability, provide more useful information and simplify the preparation of financial statements. ASU 2014-09 was initially effective for annual and interim reporting periods beginning after December 15, 2016. On July 9, 2015 the FASB approved a one year deferral of the effective date of this standard. The revised effective date for the standard is for annual reporting periods beginning after December 15, 2017 and interim periods therein. The FASB also approved changes allowing for early adoption of the standard as of the original effective date. The Company continues to evaluate the impact that the new guidance may have on its consolidated financial statements. In November 2015, the FASB issued Accounting Standards Update 2015-17—Balance Sheet Classification of Deferred Taxes. As part of the FASB's accounting simplification initiative, ASU 2015-17 removes the requirement to separate deferred income tax liabilities and assets into current and noncurrent amounts in a classified statement of financial position. Instead, the update requires that deferred tax liabilities and assets be classified as noncurrent in a classified statement of financial position. ASU 2015-17 is effective for entities (other than public business entities) for fiscal years beginning after December 15, 2016, with retrospective application to all periods presented. Early application is permitted. The Company does not expect the impact of this ASU to be material to its consolidated financial statements. |
Revenue Recognition | In general, we recognize revenue at the time we provide services. Depending on the commercial terms of the contract, we recognize revenues either when costs are incurred, or using the percentage-of-completion method of accounting by relating contract costs incurred to date to the total estimated costs at completion. Contract losses are provided for in their entirety in the period they become known, without regard to the percentage-of-completion. For multiple contracts with a single customer we account for each contract separately. We also recognize as revenues, costs associated with claims and unapproved change orders to the extent it is probable that such claims and change orders will result in additional contract revenue, and the amount of such additional revenue can be reliably estimated. A significant portion of the Company's revenue is earned on cost reimbursable contracts. The percentage of revenues realized by the Company by type of contract during fiscal 2015 can be found in Note 1—Description of Business and Basis of Presentation of Notes to Consolidated Financial Statements included in our 2015 Form 10-K. Certain cost-reimbursable contracts include incentive-fee arrangements. The incentive fees in such contracts can be based on a variety of factors but the most common are the achievement of target completion dates, target costs, and/or other performance criteria. Failure to meet these targets can result in unrealized incentive fees. We recognize incentive fees based on expected results using the percentage-of-completion method of accounting. As the contract progresses and more information becomes available, the estimate of the anticipated incentive fee that will be earned is revised as necessary. We bill incentive fees based on the terms and conditions of the individual contracts. In certain situations, we are allowed to bill a portion of the incentive fees over the performance period of the contract. In other situations, we are allowed to bill incentive fees only after the target criterion has been achieved. Incentive fees which have been recognized but not billed are included in Receivables in the accompanying Consolidated Balance Sheets. Certain cost-reimbursable contracts with government customers as well as certain commercial clients provide that contract costs are subject to audit and adjustment. In this situation, revenues are recorded at the time services are performed based upon the amounts we expect to realize upon completion of the contracts. Revenues are not recognized for non-recoverable costs. In those situations where an audit indicates that we may have billed a client for costs not allowable under the terms of the contract, we estimate the amount of such nonbillable costs and adjust our revenues accordingly. When we are directly responsible for subcontractor labor or third-party materials and equipment, we reflect the costs of such items in both revenues and costs. On those projects where the client elects to pay for such items directly and we have no associated responsibility for such items, these amounts are not reflected in either revenues or costs. |
Consolidation, Variable Interest Entity | As is common to the industry, we execute certain contracts jointly with third parties through various forms of joint ventures and consortiums. Although the joint ventures own and hold the contracts with the clients, the services required by the contracts are typically performed by us and our joint venture partners, or by other subcontractors under subcontracting agreements with the joint ventures. The assets of our joint ventures, therefore, consist almost entirely of cash and receivables (representing amounts due from clients), and the liabilities of our joint ventures consist almost entirely of amounts due to the joint venture partners (for services provided by the partners to the joint ventures under their individual subcontracts) and other subcontractors. In general, at any given time, the equity of our joint ventures represents the undistributed profits earned on contracts the joint ventures hold with clients. Very few of our joint ventures have employees. None of our joint ventures have third-party debt or credit facilities. Our joint ventures, therefore, are simply mechanisms used to deliver engineering and construction services to clients. Rarely do they, in and of themselves, present any risk of loss to us or to our partners separate from those that we would carry if we were performing the contract on our own. Under U.S. GAAP, our share of losses associated with the contracts held by the joint ventures, if and when they occur, has always been reflected in our Consolidated Financial Statements. Certain of our joint ventures meet the definition of a "variable interest entity" ("VIE"). As defined in U.S. GAAP, a VIE is a legal entity in which equity investors do not have sufficient equity at risk for the entity to finance its activities without additional subordinated financial support or, as a group, the holders of the equity investment at risk lack any one of the following three characteristics: (i) the power, through voting rights or similar rights, to direct the activities of a legal entity that most significantly impact the entity's economic performance; (ii) the obligation to absorb the expected losses of the legal entity; or (iii) the right to receive the expected residual returns of the legal entity. Accordingly, entities issuing consolidated financial statements (i.e., a "reporting entity") shall consolidate a VIE if the reporting entity has a "controlling financial interest" in the VIE, as demonstrated by the reporting entity having both (i) the power to direct the activities of a VIE that most significantly impact the VIE's economic performance; and (ii) the right to receive benefits from the VIE that could potentially be significant to the VIE or the obligation to absorb losses of the VIE that could potentially be significant to the VIE. In evaluating our VIEs for possible consolidation, we perform a qualitative analysis to determine whether or not we have a "controlling financial interest" in the VIE as defined by U.S. GAAP. We consolidate only those VIEs over which we have a controlling financial interest. For the Company’s unconsolidated joint ventures, we use the equity method of accounting. The Company does not currently participate in any significant VIEs in which it has a controlling financial interest. |
Receivables (Tables) |
3 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Jan. 01, 2016 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Accounts, Notes, Loans and Financing Receivable, Gross, Allowance, and Net [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Accounts, Notes, Loans and Financing Receivable | The following table presents the components of receivables appearing in the accompanying Consolidated Balance Sheets at January 1, 2016 and October 2, 2015 as well as certain other related information (in thousands):
|
Property, Equipment and Improvements, Net (Tables) |
3 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Jan. 01, 2016 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Property, Plant and Equipment [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Property, Plant and Equipment | Property, Equipment and Improvements, Net in the accompanying Consolidated Balance Sheets at January 1, 2016 and October 2, 2015 consisted of the following (in thousands):
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Revenue Accounting for Contracts / Accounting for Joint Ventures (Tables) |
3 Months Ended | ||||||||||||||||||||||||||||||||||||||||
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Jan. 01, 2016 | |||||||||||||||||||||||||||||||||||||||||
Revenue Accounting for Contracts / Accounting for Joint Ventures [Abstract] | |||||||||||||||||||||||||||||||||||||||||
Schedule of Variable Interest Entities | The following table sets forth pass-through costs included in revenues for each of the three months ended January 1, 2016 and December 26, 2014 (in thousands):
|
Disclosures About Defined Pension Benefit Obligations (Tables) |
3 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Jan. 01, 2016 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Defined Benefit Pension Plans and Defined Benefit Postretirement Plans Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Pension Plans' Net Benefit Obligation | The following table presents the components of net periodic benefit cost recognized in earnings during each of the three months ended January 1, 2016 and December 26, 2014 (in thousands):
|
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Defined Contribution Plans | The following table presents certain information regarding Company cash contributions to our pension plans for fiscal 2016 (in thousands):
|
Other Comprehensive Income (Tables) |
3 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Jan. 01, 2016 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Equity [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Reclassification out of Accumulated Other Comprehensive Income | The following table presents amounts reclassified from change in pension liabilities in other comprehensive income to direct cost of contracts and selling, general and administrative expenses in the Company's Consolidated Statements of Earnings for the three months ended January 1, 2016 and December 26, 2014 related to the Company's defined benefit pension plans (in thousands):
|
Earnings Per Share and Certain Related Information (Tables) |
3 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Jan. 01, 2016 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Earnings Per Share Reconciliation [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Earnings Per Share | The following table (i) reconciles the denominator used to compute basic earnings per share ("EPS") to the denominator used to compute diluted EPS for the three months ended January 1, 2016 and December 26, 2014; (ii) provides information regarding the number of non-qualified stock options and shares of restricted stock that were antidilutive and therefore disregarded in calculating the weighted average number of shares outstanding used in computing diluted EPS; and (iii) provides the number of shares of common stock issued from the exercise of stock options and the release of restricted stock (in thousands):
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Share Repurchases | The following table summarizes the activity under this program from the authorization date (in thousands, except per-share amounts):
program authorization date. |
Receivables (Details) - USD ($) $ in Thousands |
3 Months Ended | |
---|---|---|
Jan. 01, 2016 |
Oct. 02, 2015 |
|
Components of receivables: | ||
Amounts billed | $ 1,289,617 | $ 1,213,892 |
Unbilled receivables and other | 1,041,538 | 1,252,509 |
Retentions receivable | 93,292 | 82,342 |
Total receivables, net | 2,424,447 | 2,548,743 |
Other information about receivables: | ||
Amounts due from the United States federal government, included above, net of advanced billings | 299,972 | 327,157 |
Claims receivable | $ 19,948 | $ 32,511 |
Duration which unbilled amounts will be billed and collected over (duration) | 12 months |
Property, Equipment and Improvements, Net (Details) - USD ($) $ in Thousands |
Jan. 01, 2016 |
Oct. 02, 2015 |
---|---|---|
Property, Plant and Equipment [Line Items] | ||
Property, equipment and improvements, gross | $ 970,347 | $ 990,618 |
Accumulated depreciation and amortization | (609,341) | (609,380) |
Property, equipment and improvements, net | 361,006 | 381,238 |
Land | ||
Property, Plant and Equipment [Line Items] | ||
Property, equipment and improvements, gross | 23,469 | 23,757 |
Buildings | ||
Property, Plant and Equipment [Line Items] | ||
Property, equipment and improvements, gross | 92,404 | 97,597 |
Equipment | ||
Property, Plant and Equipment [Line Items] | ||
Property, equipment and improvements, gross | 582,064 | 592,491 |
Leasehold improvements | ||
Property, Plant and Equipment [Line Items] | ||
Property, equipment and improvements, gross | 250,294 | 259,544 |
Construction in progress | ||
Property, Plant and Equipment [Line Items] | ||
Property, equipment and improvements, gross | $ 22,116 | $ 17,229 |
Revenue Accounting for Contracts / Accounting for Joint Ventures (Subcontractor Costs) (Details) - USD ($) $ in Thousands |
3 Months Ended | |
---|---|---|
Jan. 01, 2016 |
Dec. 26, 2014 |
|
Revenue Accounting for Contracts / Accounting for Joint Ventures [Abstract] | ||
Pass-through costs included in revenues | $ 670,331 | $ 706,830 |
Disclosures About Defined Pension Benefit Obligations (Schedule of Pension Plans' Expense) (Details) - USD ($) $ in Thousands |
3 Months Ended | |
---|---|---|
Jan. 01, 2016 |
Dec. 26, 2014 |
|
Component: | ||
Service cost | $ 8,676 | $ 8,576 |
Interest cost | 15,702 | 16,658 |
Expected return on plan assets | (19,507) | (21,049) |
Amortization of previously unrecognized items | 5,733 | 5,410 |
Settlement (gain) loss | (163) | 59 |
Net periodic benefit cost | $ 10,441 | $ 9,654 |
Disclosures About Defined Pension Benefit Obligations (Narrative) (Details) - USD ($) $ in Thousands |
3 Months Ended | |
---|---|---|
Jan. 01, 2016 |
Dec. 26, 2014 |
|
Defined Benefit Plans and Other Postretirement Benefit Plans Table Text Block [Line Items] | ||
Net periodic pension costs | $ 10,441 | $ 9,654 |
U.S. Pension Plan | ||
Defined Benefit Plans and Other Postretirement Benefit Plans Table Text Block [Line Items] | ||
Net periodic pension costs | $ 3,400 | $ 1,500 |
Disclosures About Defined Pension Benefit Obligations (Defined Contribution Plans) (Details) $ in Thousands |
3 Months Ended |
---|---|
Jan. 01, 2016
USD ($)
| |
Defined Benefit Pension Plans and Defined Benefit Postretirement Plans Disclosure [Abstract] | |
Cash contributions made during the first three months of fiscal 2016 | $ 7,379 |
Cash contributions we expect to make during the remainder of fiscal 2016 | 35,037 |
Total | $ 42,416 |
Other Comprehensive Income (Details) - USD ($) $ in Thousands |
3 Months Ended | |
---|---|---|
Jan. 01, 2016 |
Dec. 26, 2014 |
|
Amortization of Defined Benefit Items: | ||
Earnings Before Taxes | $ 57,787 | $ 154,695 |
Income Tax Benefit | (7,481) | (48,500) |
Reclassification out of Accumulated Other Comprehensive Income | Accumulated Defined Benefit Plans Adjustment | ||
Amortization of Defined Benefit Items: | ||
Actuarial losses | (4,461) | (5,410) |
Prior service cost | 61 | 24 |
Earnings Before Taxes | (4,400) | (5,386) |
Income Tax Benefit | 1,046 | 1,508 |
Total Reclassifications, After-tax | $ (3,354) | $ (3,878) |
Income Taxes (Details) $ in Millions |
3 Months Ended |
---|---|
Jan. 01, 2016
USD ($)
| |
Income Tax Disclosure [Abstract] | |
One-time tax benefit | $ 11.2 |
Earnings Per Share and Certain Related Information (Details) - USD ($) $ / shares in Units, shares in Thousands |
3 Months Ended | ||
---|---|---|---|
Jul. 23, 2015 |
Jan. 01, 2016 |
Dec. 26, 2014 |
|
Shares used to calculate EPS: | |||
Weighted average shares outstanding (denominator used to compute basic EPS) | 120,888 | 128,652 | |
Effect of stock options and restricted stock | 1,071 | 1,321 | |
Denominator used to compute diluted EPS | 121,959 | 129,973 | |
Antidilutive stock options and restricted stock | 4,011 | 3,169 | |
Shares of common stock issued from the exercise of stock options and the release of restricted stock | 287 | 396 | |
Share Repurchases | |||
Amount authorized to be repurchased | $ 500,000,000 | ||
Average cost per share repurchased ($ per share) | $ 41.09 | ||
Number of shares repurchased (in shares) | 1,024 |
Commitments and Contingencies (Details) - USD ($) $ in Millions |
Sep. 30, 2015 |
Aug. 28, 2015 |
Aug. 07, 2015 |
Aug. 09, 2014 |
May. 02, 2012 |
---|---|---|---|---|---|
Nui Phao Mining Company | |||||
Loss Contingencies [Line Items] | |||||
Damages sought | $ 167.0 | ||||
Freeport-McMoran Breach of Contract (Invoices) | |||||
Loss Contingencies [Line Items] | |||||
Damages sought | $ 58.0 | ||||
Freeport-McMoran | |||||
Loss Contingencies [Line Items] | |||||
Damages sought | $ 116.0 | ||||
Damages entitled to | $ 71.0 | ||||
Judicial Council Of California - Unpaid Fees | |||||
Loss Contingencies [Line Items] | |||||
Litigation amount | $ 4.7 | ||||
Judicial Council Of California, Disgorged Fees | |||||
Loss Contingencies [Line Items] | |||||
Litigation amount | $ 18.3 | ||||
Pending Litigation | Motiva vs. Bechtel-Jacobs CEP Port Arthur Joint Venture | |||||
Loss Contingencies [Line Items] | |||||
Damages sought | $ 7,000.0 |
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