10-Q

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

Quarterly Report on

FORM 10-Q

(Mark one)

x Quarterly Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934

For the quarterly period ended March 31, 2005

¨ Transition Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934

For the transition period from                      to                     

Commission File Number 1-7463

JACOBS ENGINEERING GROUP INC.

(Exact name of Registrant as specified in its charter)

Delaware	95-4081636
(State of incorporation)	(I.R.S. employer identification number)
1111 South Arroyo Parkway, Pasadena, California	91105
(Address of principal executive offices)	(Zip code)

(626) 578 – 3500

(Registrant’s telephone number, including area code)

Indicate by check-mark whether the Registrant: (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the Registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days:

x  Yes - ¨  No

Indicate by check-mark whether the Registrant is an accelerated filer (as defined in Rule 12b-2 of the Exchange Act of 1934).

x  Yes - ¨  No

Number of shares of common stock outstanding at May 6, 2005: 57,364,526

JACOBS ENGINEERING GROUP INC.

INDEX TO FORM 10-Q

			Page No.
PART I	FINANCIAL INFORMATION
	Item 1.	Financial Statements
		Consolidated Balance Sheets – March 31, 2005 (Unaudited) and September 30, 2004	3
		Consolidated Statements of Earnings - Unaudited Three and Six Months Ended March 31, 2005 and 2004	4
		Consolidated Statements of Comprehensive Income - Unaudited Three and Six Months Ended March 31, 2005 and 2004	5
		Consolidated Statements of Cash Flows - Unaudited Six Months Ended March 31, 2005 and 2004	6
		Notes to Consolidated Financial Statements - Unaudited	7 – 13
	Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	14 – 20
	Item 3.	Quantitative and Qualitative Disclosures About Market Risk	20
	Item 4.	Controls and Procedures	21
PART II	OTHER INFORMATION
	Item 1.	Legal Proceedings	21
	Item 4.	Submission of Matters to a Vote of Security Holders	21 – 22
	Item 6.	Exhibits	23
SIGNATURES			23

Page 2

Part I - FINANCIAL INFORMATION

Item 1. Financial Statements.

JACOBS ENGINEERING GROUP INC. AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS

(In thousands, except share information)

	March 31, 2005 (Unaudited)			September 30, 2004
ASSETS
Current Assets:
Cash and cash equivalents	$	155,143		$	100,075
Receivables		1,020,525			902,444
Deferred income taxes		59,155			59,159
Prepaid expenses and other		27,145			21,835
Total current assets		1,261,968			1,083,513
Property, Equipment and Improvements, Net		156,213			151,182
Other Non-current Assets:
Goodwill		547,825			547,601
Other		285,454			288,748
Total other non-current assets		833,279			836,349
	$	2,251,460		$	2,071,044
LIABILITIES AND STOCKHOLDERS’ EQUITY
Current Liabilities:
Notes payable	$	11,982		$	1,257
Accounts payable		226,105			195,918
Accrued liabilities		400,159			377,168
Billings in excess of costs		123,318			103,750
Income taxes payable		2,612			7,821
Total current liabilities		764,176			685,914
Long-term Debt		109,312			78,758
Other Deferred Liabilities		281,237			295,689
Minority Interest		6,207			5,656
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 - 100,000,000 shares; 57,339,418 shares issued and outstanding at March 31, 2005; 56,698,514 shares issued and outstanding at September 30, 2004		57,339			56,699
Additional paid-in capital		198,802			174,563
Retained earnings		880,480			820,468
Accumulated other comprehensive loss		(42,904	)		(43,942	)
		1,093,717			1,007,788
Unearned compensation		(3,189	)		(2,761	)
Total stockholders’ equity		1,090,528			1,005,027
	$	2,251,460		$	2,071,044

See the accompanying Notes to Consolidated Financial Statements.

Page 3

JACOBS ENGINEERING GROUP INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF EARNINGS

(In thousands, except per share information)

(Unaudited)

	For the Three Months Ended March 31,						For the Six Months Ended March 31,
	2005			2004			2005			2004
Revenues	$	1,383,195		$	1,123,884		$	2,666,495		$	2,259,013
Costs and Expenses:
Direct costs of contracts		(1,181,719	)		(955,972	)		(2,276,281	)		(1,928,839	)
Selling, general and administrative expenses		(143,837	)		(115,127	)		(279,856	)		(224,971	)
Operating Profit		57,639			52,785			110,358			105,203
Other Income (Expense):
Interest income		977			584			1,787			1,544
Interest expense		(1,647	)		(756	)		(3,542	)		(1,572	)
Miscellaneous income (expense), net		(1,248	)		887			(2,053	)		325
Total other income (expense), net		(1,918	)		715			(3,808	)		297
Earnings Before Taxes		55,721			53,500			106,550			105,500
Income Tax Expense		(20,061	)		(18,725	)		(38,360	)		(36,925	)
Net Earnings	$	35,660		$	34,775		$	68,190		$	68,575
Net Earnings Per Share:
Basic	$	0.63		$	0.62		$	1.20		$	1.23
Diluted	$	0.61		$	0.61		$	1.17		$	1.20

See the accompanying Notes to Consolidated Financial Statements.

Page 4

JACOBS ENGINEERING GROUP INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

(In thousands)

(Unaudited)

	For the Three Months Ended March 31,						For the Six Months Ended March 31,
	2005			2004			2005			2004
Net Earnings	$	35,660		$	34,775		$	68,190		$	68,575
Other Comprehensive Income (Loss):
Relating to marketable securities:
Unrealized holding losses on securities-		—			(13	)		—			(71	)
Less: reclassification adjustment for gains realized in net earnings		—			—			—			(117	)
Unrealized losses on securities, net of reclassification adjustment		—			(13	)		—			(188	)
Foreign currency translation adjustments		249			(4,513	)		1,835			9,962
Minimum pension liability adjustment		—			—			—			(14,761	)
Loss on cash flow hedge		(664	)		—			(1,227	)		—
Other Comprehensive Income (Loss)
Before Taxes		(415	)		(4,526	)		608			(4,987	)
Income Tax Benefit Relating to Other
Comprehensive Income (Loss)		232			5			429			5,234
Other Comprehensive Income (Loss)		(183	)		(4,521	)		1,037			247
Total Comprehensive Income	$	35,477		$	30,254		$	69,227		$	68,822

See the accompanying Notes to Consolidated Financial Statements.

Page 5

JACOBS ENGINEERING GROUP INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS

For the Six Months Ended March 31, 2005 and 2004

(In thousands)

(Unaudited)

	2005			2004
Cash Flows from Operating Activities:
Net earnings	$	68,190		$	68,575
Adjustments to reconcile net earnings to net cash flows from operations:
Depreciation and amortization:
Property, equipment and improvements		19,065			17,226
Intangible assets		3,905			—
Net (gains) losses on sales of assets		249			(8	)
Changes in certain assets and liabilities:
Receivables		(99,365	)		(28,110	)
Prepaid expenses and other current assets		(4,736	)		(9,354	)
Accounts payable		27,062			1,876
Accrued liabilities		(1,325	)		(4,714	)
Billings in excess of costs		16,564			(2,109	)
Income taxes payable		123			5,286
Deferred income taxes		1,536			2,718
Other, net		727			397
Net cash provided by operations		31,995			51,783
Cash Flows from Investing Activities:
Additions to property, equipment and improvements		(22,883	)		(15,621	)
Disposals of property, equipment and improvements		527			2,594
Purchases on investments, net		(2,039	)		(570	)
Net increase in other, non-current assets		(1,955	)		(4,908	)
Net cash used for investing activities		(26,350	)		(18,505	)
Cash Flows from Financing Activities:
Proceeds from long-term borrowings		49,895			120,038
Repayments of long-term borrowings		(23,236	)		(119,978	)
Net repayments of short-term borrowings		10,783			402
Proceeds from issuances of common stock		15,624			13,596
Other, net		(769	)		(1,008	)
Net cash provided by financing activities		52,297			13,050
Effect of Exchange Rate Changes		(2,874	)		(491	)
Increase in Cash and Cash Equivalents		55,068			45,837
Cash and Cash Equivalents at the Beginning of the Period		100,075			126,155
Cash and Cash Equivalents at the End of the Period	$	155,143		$	171,992

See the accompanying Notes to Consolidated Financial Statements.

Page 6

JACOBS ENGINEERING GROUP INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – UNAUDITED

MARCH 31, 2005

Basis of Presentation

Unless the context otherwise requires, references herein to “Jacobs” are to Jacobs Engineering Group Inc. and its predecessors, and references herein to the “Company,” “we,” “us” or “our” are to both Jacobs Engineering Group Inc. and its consolidated subsidiaries.

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 have been condensed or omitted. Readers of this report should also read our Annual Report on Form 10-K for the fiscal year ended September 30, 2004.

In the opinion of management, the accompanying unaudited consolidated financial statements contain all adjustments (consisting solely of normal recurring adjustments) necessary for a fair presentation of our consolidated financial statements at March 31, 2005 and September 30, 2004 and, where applicable, the three and six month periods ended March 31, 2005 and 2004.

Our interim results of operations are not necessarily indicative of the results to be expected for the full fiscal year.

Readers of these consolidated financial statements should also read our fiscal 2004 audited consolidated financial statements and notes thereto included in our 2004 Form 10-K as well as Item 7—Management’s Discussion and Analysis of Financial Condition and Results of Operations also included in our 2004 Form 10-K.

Stock-Based Compensation

We account for stock-based employee compensation plans using the intrinsic value method, in accordance with Accounting Principles Board Opinion No. 25—Accounting for Stock Issued to Employees (“APB 25”).

In accordance with Statement of Financial Accounting Standards No. 123—Accounting for Stock-Based Compensation (“SFAS 123”) and Statement of Financial Accounting Standards No. 148—Accounting for Stock-Based Compensation – Transition and Disclosure (“SFAS 148”), we compute a pro forma option expense amount using the Black-Scholes option pricing model.

Page 7

JACOBS ENGINEERING GROUP INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – UNAUDITED

MARCH 31, 2005

(continued)

In accordance with SFAS 148, we present the following table to illustrate the effects on net earnings and earnings per share if we had applied the fair value recognition provisions of SFAS 123, as amended (in thousands, except per share data):

	Three Months Ended March 31,				Six Months Ended March 31,
	2005		2004		2005		2004
Net earnings, as reported	$	35,660	$	34,775	$	68,190	$	68,575
Fair value of stock-based compensation, net of tax		7,828		3,537		11,494		7,630
Pro forma net earnings	$	27,832	$	31,238	$	56,696	$	60,945
Earnings per share:
Basic:
As reported	$	0.63	$	0.62	$	1.20	$	1.23
Pro forma	$	0.49	$	0.56	$	1.00	$	1.09
Diluted:
As reported	$	0.61	$	0.61	$	1.17	$	1.20
Pro forma	$	0.48	$	0.54	$	0.97	$	1.06

In December 2004, the Financial Accounting Standards Board issued SFAS 123(R)—Share-Based Payment (“SFAS 123(R)”). SFAS 123(R) requires that we measure the value of employee services received in exchange for an award of an equity instrument based on the grant-date fair value of the award. The computed value will be recognized as a non-cash cost over the period the employee is required to provide services in exchange for the award, usually the vesting period. SFAS 123(R) provides for two methods of transition: the modified retrospective method (whereby a company may restate compensation cost previously reported), and the modified prospective method (whereby there is no restatement of compensation cost reported on a pro forma basis in prior fiscal years, although a company may restate prior interim periods of the fiscal year in which SFAS 123(R) is adopted).

Adoption of SFAR 123(R) was initially required as of the beginning of the first interim or annual reporting period beginning after June 15, 2005. However, in April 2005 the Securities and Exchange Commission adopted a new rule deferring the effective date of SFAS 123(R) to the first fiscal year beginning after June 15, 2005. The Company is evaluating the potential impact of SFAS 123(R) and the transition method that we choose to apply.

Page 8

JACOBS ENGINEERING GROUP INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – UNAUDITED

MARCH 31, 2005

(continued)

Receivables

Included in “Receivables” in the accompanying consolidated balance sheets at March 31, 2005 and September 30, 2004 were $533.2 million and $450.8 million, respectively, of unbilled receivables, which represent amounts earned and reimbursable under contracts in progress at the respective balance sheet dates. These amounts become billable according to the contract terms, which usually consider the passage of time, achievement of certain milestones or completion of the project. Included in these unbilled receivables at March 31, 2005 and September 30, 2004 were contract retentions totaling $39.3 million and $44.9 million, respectively. In accordance with industry practice, we include in receivables claims representing the recovery of 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 revenues can be reliably estimated. Such amounts totaled $39.9 million and $38.7 million at March 31, 2005 and September 30, 2004, respectively, of which approximately $33.8 million and $32.5 million, respectively, pertain to one claim on a waste incineration project performed in Europe. Although we have initiated litigation against the client and are seeking damages in excess of €43.4 million (approximately $56.3 million at March 31, 2005), there can be no certainty as to the ultimate outcome of our claim. Other than costs relating to this claim, we anticipate that a substantial portion of our unbilled receivables will be billed and collected over the next twelve months.

Amounts due from the United States federal government totaled $186.1 million and $154.5 million at March 31, 2005 and September 30, 2004, respectively.

Property, Equipment and Improvements, Net

Property, equipment and improvements, net in the accompanying consolidated balance sheets consisted of the following (in thousands):

	March 31, 2005			September 30, 2004
Land	$	8,810		$	7,990
Buildings		67,911			66,046
Equipment		241,925			240,325
Leasehold improvements		53,467			38,993
Construction in progress		6,298			11,130
		378,411			364,484
Accumulated depreciation and amortization		(222,198	)		(213,302	)
	$	156,213		$	151,182

Page 9

JACOBS ENGINEERING GROUP INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – UNAUDITED

MARCH 31, 2005

(continued)

Revenue Accounting for Contracts / Accounting for Joint Ventures

In general, we recognize revenues at the time services are performed. On cost-reimbursable contracts, revenue is recognized as costs are incurred, and includes applicable fees earned through the date services are provided. On fixed-price contracts, revenues are recorded using the percentage-of-completion method of accounting by relating contract costs incurred to date to total estimated contract costs at completion. This method of revenue recognition requires us to prepare estimates of costs to complete contracts in progress. In making such estimates, judgments are required to evaluate contingencies such as potential variances in schedule, the cost of materials and labor, and productivity; and the impact of change orders, liability claims, contract disputes, and achievement of contractual performance standards. Many of our engineering and construction contracts provide for reimbursement of costs plus a fixed or percentage fee. In some of the markets we serve it is not uncommon for cost-reimbursable contracts to include incentive-fee arrangements. In certain instances, we base our incentive fees on achievement of target completion dates, target costs, and/or other performance criteria. Failure to meet these targets or increases in contract costs can result in unrealized incentive fees or non-recoverable costs, which could exceed revenues recognized from the project. We provide for contract losses in their entirety in the period they become known, without regard to the percentage-of-completion. We 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.

Most of our contracts with government customers as well as certain contracts with commercial clients provide that contract costs (including indirect costs) are subject to audit and adjustment. For all such contracts, revenues have been recorded at the time services were performed based upon those amounts expected to be realized upon completion of the contracts.

As is common to the industry, we execute certain contracts jointly with third parties through various forms of joint ventures. In general, such contracts fall within the scope of AICPA Statement of Position 81-1—Accounting for Performance of Construction Type and Certain Production Type Contracts (“SOP 81-1”). We therefore account for these investments in accordance with SOP 81-1 and Emerging Issues Task Force Issue 00-01—Investor Balance Sheet and Income Statement Display under the Equity Method for Investments in Certain Partnerships and Other Ventures. Accordingly, for certain of these joint ventures (i.e., where we have an undivided interest in the assets and liabilities of the joint venture), we recognize our proportionate share of joint venture revenues, costs and operating profit in our Consolidated Statements of Earnings. For other investments in engineering and construction joint ventures, we use the equity method of accounting.

Page 10

JACOBS ENGINEERING GROUP INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – UNAUDITED

MARCH 31, 2005

(continued)

Very few of our joint ventures have employees. 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 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 the 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) and other subcontractors. In general, at any given time, the equity of our joint ventures represents the undistributed profits earned under the contracts with clients. 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. They do not, in and of themselves, present any risk of loss to us or to our partners. Our share of losses associated with the contracts held by our joint ventures, if and when they occur, has always been reflected in our consolidated financial statements.

In accordance with the provisions of FASB Interpretation No. 46R—Consolidation of Variable Interest Entities (“FIN 46”), we have analyzed our joint ventures and have classified them into two groups: those variable interest entities (“VIEs”) of which we are the primary beneficiary; and those VIEs of which we are not the primary beneficiary. In accordance with FIN 46, we apply the consolidation method of accounting for our investment in material VIEs of which we are the primary beneficiary.

At March 31, 2005, the total assets and liabilities of those VIEs for which we are the primary beneficiary were $114.4 million and $95.9 million, respectively. At March 31, 2005, the total assets and liabilities of those VIEs for which we are not the primary beneficiary were $24.5 million and $28.2 million, respectively.

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 other 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 amount of such “pass-through” costs included in revenues during the three and six months ended March 31, 2005 and 2004 totaled $377.2 million and $711.8 million, and $219.6 million and $501.9 million, respectively.

Page 11

JACOBS ENGINEERING GROUP INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – UNAUDITED

MARCH 31, 2005

(continued)

Disclosures About Pension Benefit Obligations

The components of net periodic benefit costs relating to our defined benefit pension plans are as follows (in thousands):

	Three Months Ended March 31,						Six Months Ended March 31,
	2005			2004			2005			2004
Service cost	$	5,235		$	1,343		$	10,839		$	2,642
Interest cost		8,821			4,126			17,825			8,109
Expected return on plan assets		(8,325	)		(4,413	)		(16,770	)		(8,680	)
Amortization of prior service cost		—			5			—			10
Amortization of net loss		1,554			1,173			3,147			2,329
Net periodic benefit cost	$	7,284		$	2,234		$	15,040		$	4,410

Most of the increase in net periodic pension cost for the three and six months ended March 31, 2005 as compared to the corresponding period last year relates to Babtie Group Limited (now, “Jacobs-Babtie”), a business we acquired during the fourth quarter of fiscal 2004.

During the six months ended March 31, 2005, we made cash contributions of approximately $15.5 million to our plans, and we expect to make cash contributions of an additional $15.9 million over the remaining two quarters of fiscal 2005.

Earnings Per Share

The following table reconciles the denominator used to compute basic earnings per share to the denominator used to compute diluted earnings per share (“EPS”) (in thousands):

	Three Months Ended March 31,		Six Months Ended March 31,
	2005	2004	2005	2004
Weighted average shares outstanding (denominator used to compute basic EPS)	56,953	55,995	56,848	55,932
Effect of employee and outside director stock options	1,491	1,348	1,356	1,417
Denominator used to compute diluted EPS	58,444	57,343	58,204	57,349

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JACOBS ENGINEERING GROUP INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – UNAUDITED

MARCH 31, 2005

(continued)

Accounting for and Disclosure of Guarantees

At March 31, 2005, we had guaranteed the repayment of certain bank debt of an unconsolidated affiliate. The term of the guarantee is equal to the remaining term of the underlying debt, which is scheduled to terminate on July 31, 2005. We would be required to perform on the guarantee in the event of default by the primary obligor. The maximum potential amount of future payments we could be required to make under this guarantee at March 31, 2005 is $4.0 million.

Prior to fiscal 2004, we leased certain real property located in Houston, Texas (property consisting of office space which we use in our operations) from a VIE, which property was later sold to an unrelated third party that is not a VIE. Our lease agreement with the new owner of the property gives us the option to purchase the real property at the end of the lease term in 2011 for $49.0 million. We also have the right to request an extension of the lease, or we may assist the owner in selling the property at the end of the lease term. The proceeds from any such sale would be used to reduce our end-of-term return payment obligation of $35.3 million.

We have determined that the aggregate fair value of the aforementioned financial guarantees was not significant at March 31, 2005.

Page 13

JACOBS ENGINEERING GROUP INC. AND SUBSIDIARIES

Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations.

General

The purpose of this Management’s Discussion and Analysis (“MD&A”) is to provide a narrative analysis explaining the reasons for material changes in the Company’s (i) financial condition since the most recent fiscal year-end, and (ii) results of operations during the current fiscal period(s) as compared to the corresponding period(s) of the preceding fiscal year. In order to better understand such changes, a reader of this MD&A should also read:

• 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 on pages 22 through 25 of our 2004 Annual Report on Form 10-K, and the most current discussion of our significant accounting policies appears on pages F-7 through F-13 of our 2004 Form 10-K);

• The Company’s fiscal 2004 audited consolidated financial statements and notes thereto included in its 2004 Form 10-K (beginning on page F-1 thereto); and

• Item 7—Management’s Discussion and Analysis of Financial Condition and Results of Operations included in our 2004 Form 10-K (beginning on page 21 thereto).

In this MD&A, we may make statements that are not based on historical fact. All such statements are “forward-looking statements” within the meaning of the “safe harbor” provisions of Private Securities Litigation Reform Act of 1995. Although such statements are based on management’s current estimates and expectations, and currently available competitive, financial and economic data, forward-looking statements are inherently uncertain, and we caution the reader of this MD&A that a variety of factors could cause business conditions and results to differ materially from what is contained in our forward-looking statements. A list of some of the factors most likely to occur that could cause actual results to differ from our forward-looking statements is presented on pages 31 through 32 of our 2004 Annual Report on Form 10-K, and is incorporated herein by reference. That list is not all-inclusive, and we undertake no obligation to update publicly any forward-looking statements, whether as a result of new information, future events or otherwise.

Overview

We recorded net earnings of $35.7 million, or $0.61 per diluted share, for the second quarter of fiscal 2005 compared to net earnings of $34.8 million, or $0.61 per diluted share, for the second quarter of fiscal 2004. For the first six months of fiscal 2005, we recorded net earnings of $68.2 million, or $1.17 per diluted share, compared to net earnings of $68.6 million, or $1.20 per diluted share, for the corresponding period last year.

Total revenues for the second quarter ended March 31, 2005 increased by $259.3 million, or 23.1%, to $1.4 billion compared to $1.1 billion for the second quarter of fiscal 2004. Total revenues for the six months ended March 31, 2005 increased by $407.5 million, or 18.0%, to $2.7 billion compared to $2.3 billion for the corresponding period last year. In general, the increases in revenues were due to increased business activity from clients in the oil and gas and refining, federal programs, and chemicals and polymers industry groups and markets, combined with the additive effect of Jacobs-Babtie (discussed below). These increases were partially off-set by a decline in revenues from clients operating in the pharmaceuticals and biotechnology industries.

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JACOBS ENGINEERING GROUP INC. AND SUBSIDIARIES

Our results of operations for the three and six months ended March 31, 2005 include the results of operations of Babtie Group Limited (now, “Jacobs-Babtie”), a business we acquired during the fourth quarter of fiscal 2004. For the three months ended March 31, 2005, Jacobs-Babtie contributed approximately $83.5 million of revenues and approximately $22.9 million of selling, general and administrative (“SG&A”) expenses. For the six months ended March 31, 2005, Jacobs-Babtie contributed approximately $162.4 million of revenues and approximately $45.2 million of SG&A expenses. Included in Jacobs-Babtie’s SG&A expense for the three and six months ended March 31, 2005 is approximately $1.8 million and $3.6 million, respectively, of amortization expense relating to intangible assets. These intangible assets were acquired at the time of acquisition and were recorded in accordance with Statement of Financial Accounting Standards No. 141—Business Combinations.

Our income tax expense for the three and six months ended March 31, 2005 reflects a consolidated effective tax rate of 36%, one percent higher than the rate for all of fiscal 2004.

Our backlog increased $1.0 billion, or 13.0%, to $8.2 billion from $7.2 billion at March 31, 2004.

Our net cash balance (i.e., cash and cash equivalents less bank debt) decreased $21.2 million during the second quarter ended March 31, 2005, from $55.1 million at the beginning of the second quarter to $33.8 million at March 31, 2005. However, our net cash balance at March 31, 2005 was $13.8 million higher than the September 30, 2004 balance of $20.1 million. We believe our cash balances combined with a borrowing capacity of $290.0 million under our long-term, unsecured revolving credit facility provide sufficient capital resources for us to help fund our on-going operations as well as support our acquisition strategy. Strategic acquisitions have been and will continue to be an important part of maintaining our long-term growth.

Page 15

JACOBS ENGINEERING GROUP INC. AND SUBSIDIARIES

The following table sets forth our revenues by the various types of services we provide for the three and six months ended March 31, 2005 and 2004 (in thousands):

	For the Three Months Ended March 31				For the Six Months Ended March 31
	2005		2004		2005		2004
Project Services	$	640,721	$	510,213	$	1,220,268	$	1,017,157
Construction		427,825		419,244		836,236		802,142
Operations and Maintenance		223,203		131,089		457,251		317,358
Process, Scientific and Systems Consulting		91,446		63,338		152,740		122,356
	$	1,383,195	$	1,123,884	$	2,666,495	$	2,259,013

Certain amounts for fiscal year 2004 have been reclassified to conform to the current year presentation.

The following table sets forth our revenues by the industry groups and markets in which our clients operate for the three and six months ended March 31, 2005 and 2004 (in thousands):

	For the Three Months Ended March 31				For the Six Months Ended March 31
	2005		2004		2005		2004
Oil & Gas and Refining	$	441,538	$	287,314	$	862,043	$	582,458
Federal Programs		293,959		257,051		563,086		531,879
Pharmaceuticals and Biotechnology		128,016		195,161		269,515		369,149
Chemicals and Polymers		179,004		139,020		338,397		284,345
Buildings		134,544		78,554		247,755		168,265
Infrastructure		123,106		75,183		228,987		144,153
Technology and Manufacturing		29,067		59,459		58,411		116,356
Pulp and Paper		15,866		10,185		28,525		21,634
Other		38,095		21,957		69,776		40,774
	$	1,383,195	$	1,123,884	$	2,666,495	$	2,259,013

Page 16

JACOBS ENGINEERING GROUP INC. AND SUBSIDIARIES

Results of Operations

Our results of operations for the three months and six months ended March 31, 2005 include those of Jacobs-Babtie, a business we acquired during the fourth quarter of fiscal 2004. As more fully discussed in our 2004 Form 10-K, Jacobs-Babtie is a leading provider of technical and professional services to clients in a number of industries including infrastructure, facilities, environmental and defense.

Results of Operations Excluding the Effects of Jacobs-Babtie:

• Total revenues for the second quarter ended March 31, 2005 increased by $175.8 million or 15.6%, to $1.3 billion compared to $1.1 billion for the corresponding period in fiscal 2004;

• Total revenues for the first six months of fiscal 2005 increased by $245.1 million, or 10.8%, to $2.5 billion compared to $2.3 billion for the corresponding period in fiscal 2004;

• SG&A expense for the second quarter ended March 31, 2005 increased by $5.8 million or 5.1%, to $121.0 million compared to $115.1 million for the corresponding period in fiscal 2004;

• SG&A expense for the first six months of fiscal 2005 increased by $9.7 million or 4.3%, to $234.7 million compared to $225.0 million for the corresponding period in fiscal 2004.

We recorded net earnings of $35.7 million, or $0.61 per diluted share, for the second quarter of fiscal 2005 compared to net earnings of $34.8 million, or $0.61 per diluted share, for the corresponding period last year. For the first half of fiscal 2005, we recorded net earnings of $68.2 million, or $1.17 per diluted share, compared to net earnings of $68.6 million, or $1.20 per diluted share, for the corresponding period last year.

Total revenues for the second quarter ended March 31, 2005 increased by $259.3 million, or 23.1%, to $1.4 billion compared to $1.1 billion for the second quarter of fiscal 2004. Total revenues for the six months ended March 31, 2005 increased by $407.5 million, or 18.0%, to $2.7 billion compared to $2.3 billion for the corresponding period last year. Jacobs-Babtie contributed $83.5 million and $162.4 million of revenues during the three-month and six-month periods ended March 31, 2005, respectively.

Also contributing to the increase in revenues during the three-month and six-month periods ended March 31, 2005 as compared to the corresponding periods last year was an increase in the level of pass-through costs. As more fully explained in our 2004 Form 10-K, the level of pass-through costs included in revenues and costs will vary between reporting periods depending principally on the amount of procurement that clients choose to do themselves as opposed to using our services, as well as on the normal ramping-up and winding-down of field services activities on construction and O&M projects. For the three months ended March 31, 2005, pass-through costs were $157.6 million higher than the amount for the corresponding period last year. For the six months ended March 31, 2005, pass-through costs were $209.9 million higher than the amount for the corresponding period last year.

Page 17

JACOBS ENGINEERING GROUP INC. AND SUBSIDIARIES

As a percentage of revenues, direct costs of contracts were 85.4% for both the three and six months ended March 31, 2005. This compares to 85.1% and 85.4% for the three months and six months ended March 31, 2004, respectively. The percentage relationship between direct costs of contracts and revenues will fluctuate between reporting periods depending on a variety of factors including the mix of business during the reporting periods being compared as well as the level of margins earned from the various types of services provided. The increase in this percentage relationship during the three months ended March 31, 2005 as compared to the three months ended March 31, 2004 was due primarily to the increase in pass-through costs described above.

Operating profit for the second quarter ended March 31, 2005 totaled $57.6 million (or 4.2% of revenues) compared to $52.8 million (or 4.7% of revenues) for the corresponding period last year. For the six months ended March 31, 2005, operating profit totaled $110.4 million (or 4.1% of revenues) compared to $105.2 million (or 4.7% of revenues) for the corresponding period last year. The decline in operating profit as a percentage of revenues was due primarily to the change in our business mix and the increase in pass-through costs, combined with the level of SG&A expense added by Jacobs-Babtie.

SG&A expenses for the three months ended March 31, 2005 increased $28.7 million, or 24.9%, to $143.8 million compared to $115.1 million for the three months ended March 31, 2004. For the six months ended March 31, 2005, SG&A expenses increased by $54.9 million, or 24.4%, to $279.9 million compared to $225.0 million for the six months ended March 31, 2004. The operations of Jacobs-Babtie contributed approximately $22.9 million and $45.2 million of SG&A expenses during the three months and six months ended March 31, 2005, respectively.

During the six months ended March 31, 2005, interest expense totaled $3.5 million compared to $1.6 million for the six months ended March 31, 2004. This increase is due primarily to the increased level of borrowings associated with the acquisition of Jacobs-Babtie. Amounts outstanding at March 31, 2005 under our $290.0 million long-term, unsecured revolving credit facility totaled $109.3 million bearing interest of 4.4%.

Our income tax expense for the three and six months ended March 31, 2005 reflects a consolidated effective tax rate of 36%; one percent higher than the rate for all of fiscal 2004. The higher tax rate takes into account the non-deductibility of the amortization of certain intangible assets we acquired with Jacobs-Babtie as well as a shift in earnings among our overseas operations.

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JACOBS ENGINEERING GROUP INC. AND SUBSIDIARIES

Backlog Information

Because certain contracts that we are awarded (for example, large engineering, procurement and construction projects as well as U.S. federal programs) can cause large increases to backlog in the fiscal period in which we recognize the award, and because many of our contracts require us to provide services that span over a number of fiscal quarters (and sometimes over fiscal years), we evaluate our backlog on a year-over-year basis, rather than on a sequential, quarter-over-quarter basis. The following table summarizes our backlog at March 31, 2005 and 2004 (in millions):

	2005		2004
Technical professional services	$	4,537.6	$	3,614.0
Field services		3,690.3		3,609.7
Total	$	8,227.9	$	7,223.7

Our backlog increased $1.0 billion, or 13.9%, to $8.2 billion from $7.2 billion at March 31, 2004. Included in backlog at March 31, 2005 was approximately $379.0 million relating to Jacobs-Babtie. Also contributing to the growth in backlog were significant wins from clients in the oil and gas, U.S. federal programs, and infrastructure markets.

Liquidity and Capital Resources

We endeavor to finance our operations primarily through cash provided by operations. At March 31, 2005, our principal source of liquidity consisted of $155.1 million of cash and cash equivalents, and $180.7 million of available borrowing capacity under our $290.0 million long-term, unsecured revolving credit facility.

During the first half of fiscal 2005, our cash and cash equivalents increased by $55.1 million, to $155.1 million. This compares to a net increase of $45.8 million, to $172.0 million during the first half of fiscal 2004. During the first half of fiscal 2005, we experienced net cash inflows from operating activities and financing activities of $43.4 million and $40.9 million, respectively. These inflows were offset in part by net cash outflows from investing activities and the effect of exchange rate changes of $26.4 million and $2.9 million, respectively.

Our operations provided net cash of $32.0 million during the six months ended March 31, 2005 compared to $51.8 million during the corresponding period last year. In comparing the six months ended March 31, 2005 to the six months ended March 31, 2004, the timing of cash receipts and payments within our working capital accounts accounted for a $24.6 million decrease in cash flows from operations. Also contributing to the decline in cash flows was a $1.2 million change in deferred tax assets and a slight decrease in net earnings. These declines in cash flows from operations were partially offset by increases in certain non-cash expense items, principally a $1.8 million increase in depreciation of property, equipment and improvements and a $3.9 million increase in amortization of intangible assets, most of which relates to the acquisition of Jacobs-Babtie.

Page 19

JACOBS ENGINEERING GROUP INC. AND SUBSIDIARIES

We used $26.4 million of cash for investing activities during the six months ended March 31, 2005. This compares to net cash outflows of $18.5 million during the corresponding period last year. Additions to property and equipment (net of disposals) for the six months ended March 31, 2005 totaled $22.4 million compared to net additions of $13.0 million for the corresponding period last year. The increase was due primarily to costs associated with certain office expansion activities within the United States.

Our financing activities provided net cash inflows of $52.3 million during the six months ended March 31, 2005. This compares to net cash inflows of $13.1 million during the corresponding period last year. The $39.2 million net increase in cash provided by financing activities during the current fiscal period as compared to last year was due primarily to increased borrowing activities, net of repayments.

We believe we have adequate liquidity and capital resources to fund our operations, support our acquisition strategy, and service our debt for the foreseeable future. We had $155.1 million in cash and cash equivalents at March 31, 2005, compared to $100.1 million at September 30, 2004, and $172.0 million a year ago. Our consolidated working capital position at March 31, 2005 was $497.8 million, compared to $397.6 million at September 30, 2004, and $450.9 million at March 31, 2004. We have a long-term, unsecured revolving credit facility providing up to $290.0 million of debt capacity, under which $109.3 million was utilized at March 31, 2005 in the form of direct borrowings. We believe that the capacity, terms and conditions of our credit facility are adequate for our working capital and general business requirements. We also have $39.9 million available through committed short-term credit facilities, under which $12.0 million was outstanding at March 31, 2005 in the form of direct borrowings.

Item 3. Quantitative and Qualitative Disclosures About Market Risk.

We do not enter into derivative financial instruments for trading, speculation or other purposes that would expose us to market risk. In the normal course of business, our results of operations are exposed to risks associated with fluctuations in interest rates and currency exchange rates.

Interest Rate Risk

Our only source for long-term credit is a $290.0 million unsecured revolving credit facility. The total amount outstanding under this facility at March 31, 2005 was $109.3 million. This agreement expires on January 29, 2010, and provides for both fixed-rate and variable-rate borrowings. Our objectives in managing our interest rate risk are to limit the impact of interest rate changes on earnings and cash flows, and to lower our overall borrowing costs.

Foreign Currency Risk

In general, our exposure to fluctuating exchange rates relates to the effects of translating the financial statements of our subsidiaries operating outside the United States, which are denominated in currencies other than the U.S. dollar, into the U.S. dollar. We follow the provisions of Statement of Financial Accounting Standards No. 52—Foreign Currency Translation in preparing our consolidated financial statements.

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JACOBS ENGINEERING GROUP INC. AND SUBSIDIARIES

We believe our exposure to the effects that fluctuating foreign currencies may have on our consolidated results of operations is somewhat limited because, in general, our various operations invoice customers and satisfy their financial obligations in their respective local currencies. In situations where our operations incur contract costs in currencies other than their own functional currencies, we strive to have a portion of the related contract revenues denominated in the same currencies as the costs.

Item 4. Controls and Procedures.

As required by Rule 13a-15(b) of the Securities Exchange Act of 1934, as amended, the Company carried out an evaluation, under the supervision and with the participation of the Company’s management, including the Company’s Chief Executive Officer and Chief Financial Officer, of the effectiveness of the Company’s disclosure controls and procedures as of the end of the period covered by this Quarterly Report on Form 10-Q. Based upon that evaluation, the Chief Executive Officer and Chief Financial Officer concluded that the Company’s disclosure controls and procedures were effective as of the end of the period covered by this report. As required by Rule 13a-15(d), the Company also carried out an evaluation, under the supervision and with the participation of the Company’s management, including the Company’s Chief Executive Officer and Chief Financial Officer, of the Company’s system of internal controls over financial reporting to determine whether any changes occurred during the quarter that have materially affected, or are reasonably likely to materially affect, the Company’s system of internal controls over financial reporting. Based on that evaluation, there has been no such change during the period covered by this report.

It should be noted that any system of internal controls, however well designed and operated, can provide only reasonable, and not absolute, assurance that the objectives of the system will be met. In addition, the design of any system of internal controls is based in part upon management’s judgment as well as certain assumptions about the likelihood of future events.

PART II - OTHER INFORMATION

Item 1. Legal Proceedings.

Please refer to Item 3 of Part I of the Company’s 2004 Annual Report on Form 10-K, which is incorporated herein by reference.

Item 4. Submission of Matters to a Vote of Security Holders.

The Company’s 2005 Annual Meeting of Shareholders was held at its headquarters on February 8, 2005, as previously announced in its Notice of Annual Meeting of Shareholders and Proxy Statement dated January 3, 2005, copies of which have been filed with the Commission pursuant to Regulation 14A.

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JACOBS ENGINEERING GROUP INC. AND SUBSIDIARIES

There were three matters voted upon by the stockholders at the Annual Meeting. Those matters were: (i) the election of three directors to hold office until the 2008 annual meeting; (ii) the approval of an amendment to the Company’s 1999 Stock Incentive Plan (the “1999 SIP”) increasing the number of authorized shares by 2.0 million and providing that no more than 50% of the increase, and any subsequent increase in the number of shares authorized under the plan, may be awarded in the form of restricted stock; and (iii) the approval of Ernst & Young LLP as the Company’s independent registered public accounting firm for the year ending September 30, 2005.

The results of the shareholder voting were as follows (all shares voted were voted by proxy):

	Votes For	Votes Against or Withheld	Abstentions	Broker Non-votes
1. Election of Directors:
Dr. Dale R. Laurance	49,307,043	1,740,566	-0-	-0-
Linda Fayne Levinson	50,448,190	599,419	-0-	-0-
Craig L. Martin	50,237,845	809,764	-0-	-0-
2. Approval of the amendment to the 1999 SIP	36,170,529	6,867,540	850,436	7,159,104
3. Ratification of the Appointment of Ernst & Young LLP	50,128,095	800,861	118,653	-0-

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JACOBS ENGINEERING GROUP INC. AND SUBSIDIARIES

Item 6. Exhibits.

10.1	Second Amendment to Credit Agreement dated January 31, 2005 among Jacobs Engineering Group Inc. and certain of its subsidiaries (as “Borrowers”), and the Bank of Nova Scotia, as Canadian Facility Agent, Bank of America, N.A. as Administrative Agent, and certain other lenders.
10.2	The Jacobs Engineering Group Inc. and Subsidiaries Incentive Bonus Plan for Officers and Key Mangers.
31.1	Certification of Chief Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
31.2	Certification of Chief Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
32.1	Certification of Chief 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.

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

JACOBS ENGINEERING GROUP INC.
By:	/s/    JOHN W. PROSSER, JR.
	John W. Prosser, Jr. Executive Vice President Finance and Administration and Treasurer

Date: May 4, 2005

Page 23

EX-10.1

Exhibit 10.1

Execution Version

SECOND AMENDMENT

This SECOND AMENDMENT (this “Amendment”) is entered into as of January 31, 2005, among Jacobs Engineering Group Inc., a Delaware corporation (the “Company”), certain Subsidiaries of the Company party hereto (each a “Designated Borrower” and, together with the Company, the “Borrowers” and each, a “Borrower”), each lender party hereto (collectively, the “Lenders” and individually, a “Lender”), each issuer of letters of credit party hereto (collectively, the “L/C Issuers” and individually, a “L/C Issuer”), THE BANK OF NOVA SCOTIA, as Canadian Facility Agent and Canadian Swing Line Lender, and BANK OF AMERICA, N.A., as Administrative Agent and U.S. Swing Line Lender.

The Company, the Designated Borrowers, the Lenders, the L/C Issuers, the Canadian Facility Agent, the Canadian Swing Line Lender, the Administrative Agent and the U.S. Swing Line Lender have entered into a Credit Agreement dated as of August 22, 2003, as amended as of June 7, 2004 (as in effect as of the date of this Amendment, the “Credit Agreement”).

The Company has requested that the Lenders agree to certain amendments to the Credit Agreement and the Lenders have agreed to such request, subject to the terms and conditions of this Amendment.

In consideration of the mutual covenants and agreements herein contained, the parties hereto covenant and agree as follows:

1. Definitions; References; Interpretation.

(a) Unless otherwise specifically defined herein, each term used herein (including in the Recitals hereof and in the Consent and Agreement of Guarantors attached hereto) which is defined in the Credit Agreement shall have the meaning assigned to such term in the Credit Agreement.

(b) As used herein, “Amendment Documents” means this Amendment and the Credit Agreement (as amended by this Amendment).

(c) Each reference to “this Agreement”, “hereof”, “hereunder”, “herein” and “hereby” and each other similar reference contained in the Credit Agreement, and each reference to “the Credit Agreement” and each other similar reference in the other Loan Documents, shall from and after the Effective Date (as defined in Section 2) refer to the Credit Agreement as amended hereby.

(d) The rules of interpretation set forth in Sections 1.02 and 1.05 of the Credit Agreement shall be applicable to this Amendment.

2. Amendment to Credit Agreement. Subject to the terms and conditions hereof, the defined term “Maturity Date” in Section 1.01 of the Credit Agreement is amended in its entirety

1.

to read as follows, effective as of the date of satisfaction of the conditions set forth in Section 4 (the “Effective Date”):

“Maturity Date” means January 29, 2010.

3. Representations and Warranties. Each Borrower hereby represents and warrants to the Administrative Agent and the Lenders as follows:

(a) No Default has occurred and is continuing (or would result from the amendment of the Credit Agreement contemplated hereby).

(b) The execution, delivery and performance by each Borrower of the Amendment Documents have been duly authorized by all necessary corporate and other action and do not and will not require any registration with, consent or approval of, or notice to or action by, any Person (including any Governmental Authority) in order to be effective and enforceable.

(c) The Amendment Documents constitute the legal, valid and binding obligations of each Borrower, enforceable against it in accordance with their respective terms.

(d) All representations and warranties of each Borrower contained in the Credit Agreement are true and correct (except to the extent such representations and warranties expressly refer to an earlier date, in which case they shall be true and correct as of such earlier date, and except that for purposes of this Section 3(d) the representations and warranties contained in subsections (a) and (b) of Section 5.05 of the Credit Agreement shall be deemed to refer to the most recent statements furnished pursuant to clauses (a) and (b), respectively, of Section 6.01 of the Credit Agreement.

(e) Each Borrower is entering into this Amendment on the basis of its own investigation and for its own reasons, without reliance upon the Administrative Agent and the Lenders or any other Person.

(f) Each Borrower’s obligations under the Credit Agreement and under the other Loan Documents are not subject to any defense, counterclaim, set-off, right of recoupment, abatement or other claim.

4. Conditions of Effectiveness.

(a) The effectiveness of Section 2 of this Amendment shall be subject to the satisfaction of each of the following conditions precedent:

(1) The Administrative Agent shall have received from each Borrower, each of the Lenders, the Swing Line Lenders, the L/C Issuers and the Agents a duly executed original (or, if elected by the Administrative Agent, an executed facsimile copy) of this Amendment.

2.

(2) The Administrative Agent shall have received the consent, in form and substance satisfactory to the Administrative Agent, of each Subsidiary party to a Guaranty (in its capacity as such) to the execution and delivery hereof by the Borrowers.

(3) The Administrative Agent shall have received such documents and certifications as it may reasonably require from each Borrower, in form and substance satisfactory to the Administrative Agent, with respect to (A) the due authorization by such Borrower of the execution, delivery and performance of this Amendment and (B) the incumbency, authority and signatures of the Responsible Officer of such Borrower executing and delivering this Amendment.

(4) The Administrative Agent shall have received evidence of payment by the Company of all fees, costs and expenses due and payable as of the Effective Date hereunder and under the Credit Agreement, including any costs and expenses payable under Section 6(g) of this Amendment (including the Administrative Agent’s Attorney Costs, to the extent invoiced on or prior to the Effective Date).

(5) The Administrative Agent shall have received all other documents it, any L/C Issuer or the Lenders may reasonably request relating to any matters relevant hereto, all in form and substance satisfactory to the Administrative Agent.

(6) The representations and warranties in Section 3 of this Amendment shall be true and correct on and as of the Effective Date with the same effect as if made on and as of the Effective Date.

(b) For purposes of determining compliance with the conditions specified in Section 4(a), each Lender that has signed this Amendment shall be deemed to have consented to, approved or accepted or to be satisfied with, each document or other matter required thereunder to be consented to or approved by or acceptable or satisfactory to a Lender unless the Administrative Agent shall have received notice from such Lender prior to the Effective Date specifying its objection thereto.

(c) From and after the Effective Date, the Credit Agreement is amended as set forth herein. Except as expressly amended pursuant hereto, the Credit Agreement shall remain unchanged and in full force and effect and is hereby ratified and confirmed in all respects.

(d) The Administrative Agent will notify the Company and the Lenders of the occurrence of the Effective Date.

5. Fees. The Company shall pay (through the Administrative Agent) to each Lender that executes and delivers this Amendment by no later than 12:00 noon (Pacific time) on January 28, 2005, a non-refundable amendment fee equal to .025% of such Lender’s Commitment as of the Effective Date. Such amendment fee shall be fully-earned upon becoming due and payable, shall not be refundable for any reason whatsoever and shall be in addition to any fee, cost or expense otherwise payable by the Company pursuant to the Credit Agreement or this Amendment.

3.

6. Miscellaneous.

(a) The Company acknowledges and agrees that the execution and delivery by the Administrative Agent, the L/C Issuers, the Canadian Facility Agent, the Canadian Swing Line Lender, the U.S. Swing Line Lender and the Lenders of this Amendment shall not be deemed to create a course of dealing or an obligation to execute similar waivers or amendments under the same or similar circumstances in the future.

(b) This Amendment shall be binding upon and inure to the benefit of the parties hereto and their respective successors and assigns.

(c) THIS AMENDMENT SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE LAW OF THE STATE OF NEW YORK.

(d) This Amendment may be executed in any number of counterparts, each of which shall be deemed an original, but all such counterparts together shall constitute but one and the same instrument. Each of the parties hereto understands and agrees that this document (and any other document required herein) may be delivered by any party thereto either in the form of an executed original or an executed original sent by facsimile transmission to be followed promptly by mailing of a hard copy original, and that receipt by the Administrative Agent of a facsimile transmitted document purportedly bearing the signature of a Lender or the Company shall bind such Lender or the Company, respectively, with the same force and effect as the delivery of a hard copy original. Any failure by the Administrative Agent to receive the hard copy executed original of such document shall not diminish the binding effect of receipt of the facsimile transmitted executed original of such document of the party whose hard copy page was not received by the Administrative Agent.

(e) This Amendment and the other Amendment Documents contains the entire and exclusive agreement of the parties hereto with reference to the matters discussed herein. This Amendment supersedes all prior drafts and communications with respect hereto. This Amendment may not be amended except in accordance with the provisions of Section 10.01 of the Credit Agreement.

(f) If any term or provision of this Amendment shall be deemed prohibited by or invalid under any applicable law, such provision shall be invalidated without affecting the remaining provisions of this Amendment, the Credit Agreement or the Loan Documents.

(g) The Company agrees to pay or reimburse Bank of America (including in its capacity as Administrative Agent), upon demand, for all reasonable costs and expenses (including reasonable Attorney Costs) incurred by Bank of America (including in its capacity as Administrative Agent) in connection with the development, preparation, negotiation, execution and delivery of the Amendment Documents.

(h) This Amendment shall constitute a Loan Document.

[signature pages follow]

4.

IN WITNESS WHEREOF, the parties hereto have caused this Amendment to be duly executed as of the date first above written.

JACOBS ENGINEERING GROUP, INC.
By:	/s/    JOHN W. PROSSER, JR.
Name:	John W. Prosser, Jr.
Title:	Executive Vice President: Finance and Administration
JACOBS CANADA INC.
By:	/s/    JOHN W. PROSSER, JR.
Name:	John W. Prosser, Jr.
Title:	Treasurer
JACOBS FRANCE S.A.S.
By:	/s/    JOHN W. PROSSER, JR.
Name:	John W. Prosser, Jr.
Title:	Attorney-In-Fact
GIBB HOLDINGS LIMITED
By:	/s/    JOHN W. PROSSER, JR.
Name:	John W. Prosser, Jr.
Title:	Attorney-In-Fact

S-1.

JACOBS U.K. HOLDINGS LIMITED
By:	/s/    JOHN W. PROSSER, JR.
Name:	John W. Prosser, Jr.
Title:	Attorney-In-Fact
JACOBS ENGINEERING U.K. LIMITED
By:	/s/    JOHN W. PROSSER, JR.
Name:	John W. Prosser, Jr.
Title:	Attorney-In-Fact
JACOBSGIBB LIMITED
By:	/s/    JOHN W. PROSSER, JR.
Name:	John W. Prosser, Jr.
Title:	Attorney-In-Fact

S-2.

BANK OF AMERICA, N.A., as Administrative Agent
By:	/s/    KENNETH J. BECK
Name:	Kenneth J. Beck
Title:	Senior Vice President

S-3.

THE BANK OF NOVA SCOTIA, as Canadian Facility Agent
By:	/s/    JAMES J. RHEE
Name:	James J. Rhee
Title:	Director

/s/    STEPHEN H. COREY        

Stephen H. Corey

Associate Director

S-4.

BANK OF AMERICA, N.A., as a Tranche 1 Lender, L/C Issuer and U.S. Swing Line Lender
By:	/s/    KENNETH J. BECK
Name:	Kenneth J. Beck
Title:	Senior Vice President

S-5.

THE BANK OF NOVA SCOTIA, as Tranche 2 Lender and as Canadian Swing Line Lender
By:	/s/    JAMES J. RHEE
Name:	James J. Rhee
Title:	Director

/s/    STEPHEN H. COREY        

Stephen H. Corey

Associate Director

S-6.

BNP PARIBAS, as a Tranche 1 Lender
By:	/s/    JANICE S. H. HO
Name:	Janice S. H. Ho
Title:	Director
By:	/s/    FREDERIQUE MERHAUT
Name:	Frederique Merhaut
Title:	Director

S-7.

WACHOVIA BANK, NATIONAL ASSOCIATION, as a Tranche 1 Lender and as L/C Issuer
By:	/s/    JOHN G. TAYLOR
Name:	John G. Taylor
Title:	Vice President

S-8.

THE ROYAL BANK OF SCOTLAND PLC, as a Tranche 1 Lender
By:	/s/    DAVID APPS
Name:	David Apps
Title:	Senior Vice President

S-9.

U.S. BANK NATIONAL ASSOCIATION, as a Tranche 1 Lender
By:	/s/    JANET E. JORDAN
Name:	Janet E. Jordan
Title:	Vice President

S-10.

UNION BANK OF CALIFORNIA, N.A., as a Tranche 1 Lender
By:	/s/    PETER THOMPSON
Name:	Peter Thompson
Title:	Vice President

S-11.

HARRIS TRUST AND SAVINGS BANK, as a Tranche 1 Lender
By:	/s/    JOANN HOLMAN
Name:	Joann Holman
Title:	Director

S-12.

WELLS FARGO BANK, N.A., as a Tranche 1 Lender
By:	/s/    LING LI
Name:	Ling Li
Title:	Vice President

S-13.

CREDIT LYONNAIS, as a Tranche 1 Lender
By:	CREDIT LYONNAIS PARIS.
Name:	Y. Le Blevec
Title:	Directeur Commercial
	/s/    LE BLEVEC YANNICk
	Le Blevec Yannick
	Directeur Commercial CREDIT LYONNAIS DRE - lle de France Est

S-14.

KEYBANK NATIONAL ASSOCIATION, as a Tranche 1 Lender
By:	/s/    BRENDAN A. LAWLOR
Name:	BRENDAN A. LAWLOR
Title:	SENIOR VICE PRESIDENT

S-15.

SUMITOMO MITSUI BANKING CORPORATION, as a Tranche 1 Lender
By:	/s/    AL GALLUZZO
Name:	Al Galluzzo
Title:	Senior Vice President

S-16.

COMERICA BANK, as a Tranche 1 Lender
By:	/s/    ELISE WALKER
Name:	Elise Walker
Title:	Vice President

S-17.

THE NORTHERN TRUST COMPANY, as a Tranche 1 Lender
By:	/s/    STEVE RYAN
Name:	Steve Ryan
Title:	Vice President

S-18.

CONSENT AND AGREEMENT OF GUARANTORS

Each of the undersigned, in its capacity as a Subsidiary party to a Guaranty, acknowledges that its consent to the foregoing Second Amendment (the “Agreement”) is not required, but each of the undersigned nevertheless does hereby consent to the foregoing Agreement and to the documents and agreements referred to therein. Nothing herein shall in any way limit any of the terms or provisions of the Guaranty of the undersigned executed by the undersigned in the Agents’, the L/C Issuers’, the Swing Line Lenders’ and the Lenders’ favor, or any other Loan Document executed by the undersigned (as the same may be amended from time to time), all of which are hereby ratified and affirmed in all respects.

IN WITNESS WHEREOF, the parties hereto have caused this Consent and Agreement of Guarantors to be duly executed as of January 28, 2005.

JE MERIT CONSTRUCTORS, INC., as a Guarantor
By	/s/    JOHN W. PROSSER, JR.
Name:	John W. Prosser, Jr.
Title:	Treasurer
JACOBS ENGINEERING INC., as a Guarantor
By	/s/    JOHN W. PROSSER, JR.
Name:	John W. Prosser, Jr.
Title:	Treasurer
JACOBS FACILITIES INC., as a Guarantor
By	/s/    JOHN W. PROSSER, JR.
Name:	John W. Prosser, Jr.
Title:	Treasurer
SVERDRUP TECHNOLOGY, INC., as a Guarantor
By	/s/    JOHN W. PROSSER, JR.
Name:	John W. Prosser, Jr.
Title:	Treasurer

1.

JACOBS CIVIL INC., as a Guarantor
By	/s/    JOHN W. PROSSER, JR.
Name:	John W. Prosser, Jr.
Title:	Treasurer
JACOBS CANADA INC., as a Guarantor
By	/s/    JOHN W. PROSSER, JR.
Name:	John W. Prosser, Jr.
Title:	Treasurer
JACOBS FRANCE S.A.S., as a Guarantor
By	/s/    JOHN W. PROSSER, JR.
Name:	John W. Prosser, Jr.
Title:	Attorney-In-Fact
GIBB HOLDINGS LIMITED, as a Guarantor
By	/s/    JOHN W. PROSSER, JR.
Name:	John W. Prosser, Jr.
Title:	Attorney-In-Fact
JACOBS U.K. HOLDINGS LIMITED, as a Guarantor
By	/s/    JOHN W. PROSSER, JR.
Name:	John W. Prosser, Jr.
Title:	Attorney-In-Fact
JACOBS ENGINEERING U.K. LIMITED, as a Guarantor
By	/s/    JOHN W. PROSSER, JR.
Name:	John W. Prosser, Jr.
Title:	Attorney-In-Fact

2.

JACOBSGIBB LIMITED, as a Guarantor
By	/s/    JOHN W. PROSSER, JR.
Name:	John W. Prosser, Jr.
Title:	Attorney-In-Fact

3.

EX-10.2

Exhibit 10.2

JACOBS ENGINEERING GROUP INC. AND SUBSIDIARIES

INCENTIVE BONUS PLAN

Effective 10/1/2004

FOR OFFICERS AND KEY MANAGERS

Summary of the Program

The purpose of the Jacobs Engineering Group Inc. and its subsidiaries (“Company”) Incentive Bonus Plan (the “Plan”) is to promote the success of the Company by attracting and retaining highly qualified people who perform to the best of their abilities to achieve Company objectives and profitability. This program is designed to cover designated officers and key managers of Jacobs Engineering Group Inc. and its subsidiaries. Key managers are defined as management level personnel who do not normally receive overtime compensation and who have been approved for participation by the President, the Chairman and Chief Executive Officer and the Human Resources and Compensation Committee (“Committee”) of Jacobs’ Board of Directors.

Each year a bonus pool is determined by a formula approved by the Committee. From the pool up to 80 percent activities is allocated to participants in the Plan, with the balance reserved for distribution to nonparticipating employees who have made an outstanding contribution during the year. The allocation of the participant’s portion of the pool may be up to 50 percent by formula with the balance allocated solely at the discretion of the President and the Chairman and Chief Executive Officer. The allocation of the nonparticipant’s portion of the pool is totally at the discretion of the President and Chairman of the Board and Chief Executive Officer. All award recommendations are approved by the Committee who has sole and absolute discretion to administer the plan.

Bonuses are paid in three annual installments. The first installment is paid approximately three months after the close of the first fiscal year to which it pertains. A participant is not vested in any future installments. A participant must be employed by the Company at the date each future installment is paid as the bonus is not only for service done in a particular year but also for services to be rendered in the years when future installments may be paid. The bonus award reflects recognition of performance attained and expected to be attained in the future. If an employee is a participant in the plan for less than a full year, the measure of his or her

Page #2	CONFIDENTIAL
Incentive Bonus Plan

bonus will be prorated accordingly. If a participant’s employment is severed from the Company at any time prior to the time a future installment is to be paid, such installment and any and all future installments are automatically forfeited. For the purposes of this program, a participant will be

considered employed by the Company for purposes of receiving future installments only if on the date of payment, the participant is an active full time employee with the Company.

Bonus Pool Formula

The bonus pool is established as a percentage of pretax, pre-bonus earnings above a preset trigger point. The trigger point for each fiscal year will be established by the Committee. Once the trigger point is reached, the bonus pool accrues at 20 percent of pretax, pre-bonus income in excess of the trigger point. When a pretax, pre-bonus earnings reaches two times the trigger point, the accrual increases to 25 percent of pretax, pre-bonus income in excess of two times the trigger point. The percentage rate used for calculating the trigger point is established each year based on economic and market conditions in effect at that time. The bonus pool formula is subject to change at any time and is determined at the sole and absolute discretion of the Committee.

Allocation of Bonus Pool

Twenty percent of the bonus pool is reserved for nonparticipants in the Plan. The balance of the pool is allocated to the Plan participants, 50 percent based on their weighted salary (using factors approved by the Committee each year) versus the total weighted salaries of all participants of the plan and 50 percent at the discretion of the President and Chairman. The weighted salaries will be determined by multiplying the salary earned while a participant in the plan times the weighting factors as determined by the Chairman of the Board and Chief Executive Officer and the Committee.

If a participant moves from one level to another during the year, the different weighting factors would be applied to the salary earned at each level.

Page #3	CONFIDENTIAL
Incentive Bonus Plan

Payments

An Award shall be paid at such time or times as determined by the Committee, in its sole and absolute discretion. The Committee may reduce any award up to the date of payment. All payments are subject to federal, state, or local taxes unless deferred pursuant to the terms of a Company sponsored plan a participant may be eligible for.

Modifications and Administration

This Plan is provided at the discretion of the Committee and the Committee reserves the right to alter or modify it in the future. The Committee is responsible for the administration of the Plan and has the exclusive right to make any and all interpretations, rules, and regulations regarding the Plan.

EX-31.1

EXHIBIT 31.1

CERTIFICATION OF CHIEF EXECUTIVE OFFICER

Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002

I, Noel G. Watson, certify that:

1. I have reviewed this Quarterly Report on Form 10-Q for the fiscal quarter ended March 31, 2005 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)) 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. 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

c. 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.

Date: May 4, 2005

/s/    NOEL G. WATSON        

Noel G. Watson

Chief Executive Officer

EX-31.2

EXHIBIT 31.2

CERTIFICATION OF CHIEF FINANCIAL OFFICER

Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002

I, John W. Prosser, Jr., certify that:

1. I have reviewed this Quarterly Report on Form 10-Q for the fiscal quarter ended March 31, 2005 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)) 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. 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

c. 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.

Date: May 4, 2005

/s/    JOHN W. PROSSER, JR.        

John W. Prosser, Jr.

Chief Financial Officer

EX-32.1

EXHIBIT 32.1

CERTIFICATION OF CHIEF EXECUTIVE OFFICER

Pursuant to 18 U.S.C. Section 1350

Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002

In connection with the Quarterly Report on Form 10-Q of Jacobs Engineering Group Inc. (the “Company”) for the period ended March 31, 2005 as filed with the Securities and Exchange Commission on the date hereof (the “Report”), I, Noel G. Watson, Chief Executive Officer of the Company, certify, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that: (1) the Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and (2) the information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

/s/    NOEL G. WATSON        

Noel G. Watson

Chief Executive Officer

May 4, 2005

A signed original of this written statement required by Section 906 has been provided to the Company and will be retained by the Company and furnished to the Securities and Exchange Commission or its staff upon request.

EX-32.2

EXHIBIT 32.2

CERTIFICATION OF CHIEF FINANCIAL OFFICER

Pursuant to 18 U.S.C. Section 1350

Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002

In connection with the Quarterly Report on Form 10-Q of Jacobs Engineering Group Inc. (the “Company”) for the period ended March 31, 2005 as filed with the Securities and Exchange Commission on the date hereof (the “Report”), I, John W. Prosser, Jr., Chief Financial Officer of the Company, certify, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that: (1) the Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and (2) the information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

/s/    JOHN W. PROSSER, JR.        

John W. Prosser, Jr.

Chief Financial Officer

May 4, 2005

A signed original of this written statement required by Section 906 has been provided to the Company and will be retained by the Company and furnished to the Securities and Exchange Commission or its staff upon request.