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 July 2, 2010
¨	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 (State of incorporation)	95-4081636 (I.R.S. employer identification number)
1111 South Arroyo Parkway, Pasadena, California (Address of principal executive offices)	91105 (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 has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).  x  Yes     ¨  No

Indicate by check-mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See the definitions of “large accelerated filer”, “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act.

Large accelerated filer	x	Accelerated filer	¨
Non-accelerated filer	¨	Smaller reporting company	¨

Indicate by check-mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).  ¨  Yes     x  No

Number of shares of common stock outstanding at July 22, 2010:    125,731,351

JACOBS ENGINEERING GROUP INC.

INDEX TO FORM 10-Q

			Page No.
PART I	FINANCIAL INFORMATION
	Item 1.	Financial Statements
		Consolidated Balance Sheets – July 2, 2010 (Unaudited) and October 2, 2009	3
		Consolidated Statements of Earnings –  Unaudited Three and Nine Months Ended July 2, 2010 and July 3, 2009	4
		Consolidated Statements of Comprehensive Income –  Unaudited Three and Nine Months Ended July 2, 2010 and July 3, 2009	5
		Consolidated Statements of Cash Flows – Unaudited Nine Months Ended July 2, 2010 and July 3, 2009	6
		Notes to Consolidated Financial Statements – Unaudited	7 – 14
	Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	15 – 23
	Item 3.	Quantitative and Qualitative Disclosures About Market Risk	24
	Item 4.	Controls and Procedures	24
PART II	OTHER INFORMATION
	Item 1.	Legal Proceedings	25
	Item 1A.	Risk Factors	26
	Item 6.	Exhibits	27
SIGNATURES			28

Page 2

Part I – FINANCIAL INFORMATION

Item 1. Financial Statements.

JACOBS ENGINEERING GROUP INC. AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS

(In thousands, except share information)

	July 2, 2010 (Unaudited)			October 2, 2009
ASSETS
Current Assets:
Cash and cash equivalents	$	941,680		$	1,033,619
Receivables		1,661,767			1,618,561
Deferred income taxes		128,508			117,066
Prepaid expenses and other		41,246			49,203
Total current assets		2,773,201			2,818,449
Property, Equipment and Improvements, Net		220,153			240,350
Other Noncurrent Assets:
Goodwill		1,118,195			929,842
Miscellaneous		549,227			439,973
Total other non-current assets		1,667,422			1,369,815
	$	4,660,776		$	4,428,614
LIABILITIES AND STOCKHOLDERS’ EQUITY
Current Liabilities:
Notes payable	$	93,610		$	17,495
Accounts payable		284,999			340,651
Accrued liabilities		784,213			679,109
Billings in excess of costs		203,876			252,149
Income taxes payable		—			6,497
Total current liabilities		1,366,698			1,295,901
Long-term Debt		517			737
Other Deferred Liabilities		475,769			500,501
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—125,622,661 shares and 124,229,933 shares, respectively		125,623			124,230
Additional paid-in capital		752,612			703,860
Retained earnings		2,174,378			2,009,338
Accumulated other comprehensive loss		(240,613	)		(211,515	)
Total Jacobs stockholders’ equity		2,812,000			2,625,913
Noncontrolling interests		5,792			5,562
Total Group stockholders’ equity		2,817,792			2,631,475
	$	4,660,776		$	4,428,614

See the accompanying Notes to Consolidated Financial Statements.

Page 3

JACOBS ENGINEERING GROUP INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF EARNINGS

For the Three and Nine Months Ended July 2, 2010 and July 3, 2009

(In thousands, except per share information)

	For the Three Months Ended						For the Nine Months Ended
	July 2, 2010			July 3, 2009			July 2, 2010			July 3, 2009
Revenues	$	2,507,725		$	2,706,724		$	7,572,484		$	8,914,829
Costs and Expenses:
Direct cost of contracts		(2,235,537	)		(2,334,861	)		(6,587,906	)		(7,701,923	)
Selling, general and administrative expenses		(227,105	)		(225,189	)		(704,010	)		(714,476	)
Operating Profit		45,083			146,674			280,568			498,430
Other Income (Expense):
Interest income		1,974			2,465			3,608			9,656
Interest expense		(8,174	)		(402	)		(9,491	)		(2,428	)
Miscellaneous expense, net		(1,644	)		(670	)		(3,138	)		(5,382	)
Total other income (expense), net		(7,844	)		1,393			(9,021	)		1,846
Earnings Before Taxes		37,239			148,067			271,547			500,276
Income Tax Expense		(17,999	)		(53,381	)		(102,339	)		(180,303	)
Net Earnings of the Group		19,240			94,686			169,208			319,973
Net (Income) Loss Attributable to Noncontrolling Interests		(197	)		214			(228	)		564
Net Earnings Attributable to Jacobs	$	19,043		$	94,900		$	168,980		$	320,537
Net Earnings Per Share:
Basic	$	0.15		$	0.77		$	1.36		$	2.61
Diluted	$	0.15		$	0.76		$	1.35		$	2.58

See the accompanying Notes to Consolidated Financial Statements.

Page 4

JACOBS ENGINEERING GROUP INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

For the Three and Nine Months Ended July 2, 2010 and July 3, 2009

(In thousands)

(Unaudited)

	For the Three Months Ended						For the Nine Months Ended
	July 2, 2010			July 3, 2009			July 2, 2010			July 3, 2009
Net Earnings of the Group	$	19,240		$	94,686		$	169,208		$	319,973
Other Comprehensive Income (Loss):
Foreign currency translation adjustment		(32,965	)		31,699			(39,276	)		(17,630	)
Gain (loss) on cash flow hedges		(2,513	)		3,147			(1,637	)		(5,956	)
Change in pension liability		5,714			(11,622	)		15,141			12,683
Other comprehensive income (loss) before taxes		(29,764	)		23,224			(25,772	)		(10,903	)
Income tax benefit (expense)		(537	)		2,141			(3,326	)		7,531
Net other comprehensive income (loss)		(30,301	)		25,365			(29,098	)		(3,372	)
Net comprehensive income (loss) of the group		(11,061	)		120,051			140,110			316,601
Net comprehensive income (loss) attributable to noncontrolling interests		(197	)		214			(228	)		564
Net comprehensive income (loss) attributable to Jacobs	$	(11,258	)	$	120,265		$	139,882		$	317,165

See the accompanying Notes to Consolidated Financial Statements.

Page 5

JACOBS ENGINEERING GROUP INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS

For the Nine Months Ended July 2, 2010 and July 3, 2009

(In thousands)

(Unaudited)

	2010			2009
Cash Flows from Operating Activities:
Net earnings	$	168,980		$	320,537
Adjustments to reconcile net earnings to net cash flows from operations:
Depreciation and amortization:
Property, equipment and improvements		48,202			50,081
Intangible assets		17,512			6,562
Gains from investments, net		—			(1,249	)
Stock based compensation		17,647			17,923
Excess tax benefits from stock based compensation		(3,014	)		(2,989	)
Changes in certain assets and liabilities, excluding the effects of businesses acquired:
Receivables		(33,332	)		247,243
Prepaid expenses and other current assets		8,223			(286	)
Accounts payable		(60,535	)		(103,912	)
Accrued liabilities		103,545			(82,334	)
Billings in excess of costs		(7,859	)		26,552
Income taxes payable		(27,420	)		4,456
Deferred income taxes		3,483			(1,449	)
Other, net		753			16
Net cash provided by operating activities		236,185			481,151
Cash Flows from Investing Activities:
Additions to property and equipment		(41,229	)		(46,778	)
Disposals of property and equipment		13,774			1,847
Changes in investments, net		(104,150	)		(29,838	)
Acquisitions of businesses, net of cash acquired		(258,798	)		(1,033	)
Changes in other non-current assets, net		(5,203	)		21,453
Net cash used for investing activities		(395,606	)		(54,349	)
Cash Flows from Financing Activities:
Repayments of long-term borrowings		(182	)		(33,879	)
Net change in short-term borrowings		77,254			31,110
Proceeds from issuances of common stock		27,642			32,451
Excess tax benefits from stock based compensation		3,014			2,989
Changes in other deferred liabilities, net		(6,014	)		(5,451	)
Net cash provided by financing activities		101,714			27,220
Effect of Exchange Rate Changes		(34,232	)		1,028
Net Increase (Decrease) in Cash and Cash Equivalents		(91,939	)		455,050
Cash and Cash Equivalents at the Beginning of the Period		1,033,619			604,420
Cash and Cash Equivalents at the End of the Period	$	941,680		$	1,059,470

See the accompanying Notes to Consolidated Financial Statements.

Page 6

JACOBS ENGINEERING GROUP INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – UNAUDITED

July 2, 2010

Basis of Presentation

Unless the context otherwise requires:

• 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.

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 consolidated financial statements and the notes thereto included in our Annual Report on Form 10-K for the fiscal year ended October 2, 2009 (“2009 Form 10-K”) as well as Item 7—Management’s Discussion and Analysis of Financial Condition and Results of Operations also included in our 2009 Form 10-K. Readers should also read our reports on Form 10-Q for the quarterly periods ended January 1, 2010 and April 2, 2010.

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 July 2, 2010 and for the three and nine month periods ended July 2, 2010 and July 3, 2009.

The Company has evaluated subsequent events through the date of filing this Form 10-Q with the SEC. No material subsequent events have occurred since July 2, 2010 that required recognition or disclosure in these financial statements.

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

New Accounting Standards

In December 2007, the Financial Accounting Standards Board (“FASB”) revised the accounting and reporting for business combinations. These revisions require, among other things, that acquisition-related costs be recognized separately from the costs of acquired businesses; that in a business combination achieved in stages, an acquiree to recognize the identifiable assets, liabilities and noncontrolling interest in the acquiree at the full amounts of their fair values as of the acquisition date; and, that an acquirer recognize assets or liabilities from contingencies as of the acquisition date. The requirement to measure the noncontrolling interests in the acquiree at fair value will result in recognizing the goodwill attributable to the noncontrolling interest in addition to that attributable to the acquirer. These revisions were effective for the Company October 3, 2009.

In December 2007, the FASB revised the accounting and reporting for noncontrolling (formerly known as minority) interests in consolidated financial statements. These revisions clarified that a noncontrolling interest in a subsidiary is an ownership interest in the consolidated entity that should be reported as equity in the consolidated financial statements. The revisions also established that net income attributable to both the parent and the noncontrolling interests be reported in the consolidated statement of earnings, and eliminated the requirement of purchase accounting for a parent’s acquisition of a noncontrolling ownership interest. These revisions were effective for the Company October 3, 2009.

Page 7

JACOBS ENGINEERING GROUP INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – UNAUDITED

July 2, 2010

(continued)

Depending on the size and nature of an acquisition, the changes described above could have a material effect on the Company’s consolidated financial statements.

In June 2009, the FASB revised the accounting for variable interest entities (“VIEs”). These revisions require the Company to perform an analysis to determine whether it is the primary beneficiary of its VIEs. The Company is deemed to be the primary beneficiary of a VIE if it has (i) the power to direct the activities of the VIE that most significantly impact the VIE’s economic performance, and (ii) the obligation to absorb losses or the right to receive benefits that could potentially be significant to the VIE. The revisions adopted by the FASB eliminate the quantitative approach previously required for determining the primary beneficiary of a VIE and significantly enhances disclosures. The new accounting requirements are effective for the Company October 2, 2010. The Company is currently evaluating the impact of this statement on its consolidated financial statements.

Business Combination

On February 16, 2010, the Company acquired Jordan, Jones and Goulding, Inc. (“JJG”), a 500-person professional services firm headquartered in Atlanta, Georgia. Founded in 1958, JJG provides engineering, planning, and consulting services for water, wastewater, environmental and other clients. The results of operations of JJG for the second quarter of fiscal 2010 were not material. The purchase price allocation has not been completed. Included in the Company’s Consolidated Balance Sheet at July 2, 2010 is goodwill of approximately $37.3 million associated with the acquisition of JJG.

Page 8

JACOBS ENGINEERING GROUP INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – UNAUDITED

July 2, 2010

(continued)

Receivables

The following table presents the components of “Receivables” appearing in the accompanying Consolidated Balance Sheets at July 2, 2010 and October 2, 2009 as well as certain other related information (in thousands):

	2010			2009
Components of receivables:
Amounts billed	$	847,003		$	846,716
Unbilled receivables and other		776,898			750,035
Retentions receivable		48,721			31,409
Allowance for doubtful accounts		(10,855	)		(9,599	)
Total receivables, net	$	1,661,767		$	1,618,561
Other information about receivables:
Amounts due from the United States federal government, included above, net of advanced billings	$	389,491		$	366,158
Claims receivable:
Relating to the waste incineration project, explained below	$	—		$	37,887
Other		12,511			19,813
Total	$	12,511		$	57,700

Unbilled receivables 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.

Claims receivable represent 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. The claim relating to the waste incineration project involved a project to design and build a waste incineration plant in Sausheim, France by a consortium led by Serete for the SIVOM de Mulhousienne (“SIVOM”). The claim is discussed more fully in Note 11—Contractual Guarantees, Litigation, Investigations, and Insurance of Notes to Consolidated Financial Statements beginning on page F-25 of our 2009 Form 10-K. Due to the uncertainty as to when this claim was expected to settle, the receivable had been classified as long-term and was included in “Other Noncurrent Assets” in the accompanying Consolidated Balance Sheets. During the third quarter of fiscal 2010, the Company received an unfavorable court judgment against it relating to this claim. As a result, the Company recorded a pre-tax charge to earnings of $93.3 million. Included in this amount is $25.9 million (representing the net write-off of this receivable). The balance of the charge reflects the net cash payments the Company is obligated to make pursuant to the judgment.

The “other” claims receivable are included in “Receivables” in the accompanying Consolidated Balance Sheets.

Page 9

JACOBS ENGINEERING GROUP INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – UNAUDITED

July 2, 2010

(continued)

Property, Equipment and Improvements, Net

Property, Equipment and Improvements, net in the accompanying Consolidated Balance Sheets at July 2, 2010 and October 2, 2009 consisted of the following (in thousands):

	2010			2009
Land	$	11,988		$	11,901
Buildings		87,719			85,067
Equipment		423,445			430,220
Leasehold improvements		116,718			125,050
Construction in progress		27,879			5,845
		667,749			658,083
Accumulated depreciation and amortization		(447,596	)		(417,733	)
	$	220,153		$	240,350

Revenue Accounting for Contracts / Accounting for Joint Ventures

In general, we recognize revenues 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.

The nature of our business sometimes results in clients, subcontractors or vendors presenting claims to us for recovery of costs they incurred in excess of what they expected to incur, or for which they believe they are not contractually responsible. In those situations where a claim against us may result in additional costs to the contract, we include in the total estimated costs of the contract (and therefore, the estimated amount of margin to be earned under the contract) an estimate, based on all relevant facts and circumstances available, of the additional costs to be incurred. Similarly, and in the normal course of business, we may present claims to our clients for costs we have incurred for which we believe we are not contractually responsible. With respect to such claims, we include in revenues the amount of costs incurred, without profit, to the extent it is probable that the claims will result in additional contract revenue, and the amount of such additional revenue can be reliably estimated. Costs associated with unapproved change orders are included in revenues using substantially the same criteria used for claims.

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 or target costs, and/or meeting other performance criteria as defined in the contracts. 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.

Page 10

JACOBS ENGINEERING GROUP INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – UNAUDITED

July 2, 2010

(continued)

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.

As is common to the industry, we execute certain contracts jointly with third parties through various forms of joint ventures and consortiums. 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.

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 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. 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 accounting principles generally accepted in the United States (“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.

We have analyzed our joint ventures and have classified them into two groups: (i) those VIEs of which we are the primary beneficiary of the VIEs expected residual returns or losses; and (ii) those VIEs of which we are not the primary beneficiary of the VIEs expected residual returns or losses. In accordance with GAAP, we apply the consolidation method of accounting for our investment in material VIEs of which we are the primary beneficiary.

The following table presents certain financial information as of July 2, 2010 about those VIEs (i) for which we are the primary beneficiary, and (ii) for which we are not the primary beneficiary (in thousands):

Selected financial information about those VIEs for which we are the primary beneficiary:
Total assets	$	49,280
Total liabilities	$	39,990
Selected financial information about those VIEs for which we are not the primary beneficiary:
Total assets	$	210,313
Total liabilities	$	176,299

Page 11

JACOBS ENGINEERING GROUP INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – UNAUDITED

July 2, 2010

(continued)

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 the three and nine months ended July 2, 2010 and July 3, 2009 (in thousands):

	For the Three Months Ended				For the Nine Months Ended
	July 2, 2010		July 3, 2009		July 2, 2010			July 3, 2009
Pass-through costs included in revenues	$	705,600	$	883,902	$	2,154,547	$3,242,995

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 and nine month periods ended July 2, 2010 and July 3, 2009 (in thousands):

	For the Three Months Ended						For the Nine Months Ended
Component:	July 2, 2010			July 3, 2009			July 2, 2010			July 3, 2009
Service cost	$	5,734		$	4,901		$	17,122		$	14,133
Interest cost		13,648			12,670			40,691			36,745
Expected return on plan assets		(11,981	)		(11,386	)		(35,738	)		(33,071	)
Amortization of previously unrecognized items		3,185			1,379			9,478			4,003
Net periodic benefit cost	$	10,586		$	7,564		$	31,553		$	21,810

The following table presents certain information regarding Company cash contributions to our pension plans for fiscal 2010 (in thousands):

Cash contributions made during the first nine months of fiscal 2010	$	31,536
Cash contributions we expect to make during the remainder of fiscal 2010		7,374
Total	$	38,910

The change in pension liability included in the Consolidated Statements of Comprehensive Income for the three and nine months ended July 2, 2010 and July 3, 2009 relates primarily to the effects of exchange rate changes.

Income Tax Rate

The Company’s consolidated effective income tax rate was 48.3% and 37.7% for the three and nine months ended July 2, 2010, respectively. This compares to effective income tax rates of 36.1% and 36.0%, respectively, for the comparable periods last year. The increase in the Company’s effective tax rate during the current fiscal year as compared to last year is related to the SIVOM judgment. The effective tax rate applied to the SIVOM judgment was 30.6%. The effective tax rate for the rest of the Company’s operations remains at 36%.

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JACOBS ENGINEERING GROUP INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – UNAUDITED

July 2, 2010

(continued)

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 and nine months ended July 2, 2010 and July 3, 2009; (ii) provides information regarding the number of non-qualified stock options 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):

	For the Three Months Ended		For the Nine Months Ended
	July 2, 2010	July 3, 2009	July 2, 2010	July 3, 2009
Shares used to calculate EPS:
Weighted average shares outstanding (denominator used to compute basic EPS)	124,328	122,953	123,960	122,593
Effect of stock options and restricted stock	1,639	1,795	1,655	1,766
Denominator used to compute diluted EPS	125,967	124,748	125,615	124,359
Antidilutive stock options	2,380.4	2,276.1	3,120.0	2,959.3
Shares of common stock issued from the exercise of stock options and the release of restricted stock	374.6	385.5	1,072.2	1,192.8

Accounting for and Disclosure of Guarantees and Contingencies

Please refer to Note 10—Commitments and Contingencies, and Derivative Financial Instruments of Notes to Consolidated Financial Statements beginning on page F-24 of our 2009 Form 10-K for a discussion of our various commitments and contingencies.

Please refer to Note 11—Contractual Guarantees, Litigation, Investigations, and Insurance of Notes to Consolidated Financial Statements beginning on page F-25 of our 2009 Form 10-K for a discussion of the Company’s contractual guarantees and a description of the various types of litigation in which we’re involved.

On June 25, 2010, Jacobs’ subsidiary, Jacobs France SAS, received an unfavorable judgment from an Administrative Tribunal in Strasbourg, France relating to the SIVOM project. The contract was entered into in 1996, prior to the acquisition of Serete by Jacobs in 1997. Jacobs filed suit in 2002 seeking approximately $49 million in damages to recover its contract balance and additional project costs that it had incurred. The SIVOM counterclaimed for project completion costs, increased operating costs, and costs relating to emissions problems.

As a result of the judgment, the Company recorded a pre-tax charge to earnings of $93.3 million. Net of the effects on the Company’s incentive bonus plan and income taxes, the judgment resulted in a net, after-tax charge to earnings of approximately $60.3 million, or $0.48 per diluted share. The cash impact of the judgments is estimated to be approximately $61.4 million; however, this amount is subject to change based on the timing of and interest due on any cash payments that the parties will make to each other.

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JACOBS ENGINEERING GROUP INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — UNAUDITED

April 2, 2010

(continued)

Jacobs believes that the judgment of the Tribunal is not supported by the facts or by applicable law and intends to appeal.

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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, readers 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 33 through 36 of our 2009 Annual Report on Form 10-K (the “2009 Form 10-K”), and the most current discussion of our significant accounting policies appears on pages F-7 through F-13 of our 2009 Form 10-K), as well as the discussion of new accounting standards included in the Notes to Consolidated Financial Statements of this Form 10-Q;

• The Company’s fiscal 2009 audited consolidated financial statements and notes thereto included in its 2009 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 2009 Form 10-K (beginning on page 33 thereto).

In addition to historical information, this MD&A may contain forward-looking statements that are not based on historical fact. When used herein, words such as “expects”, “anticipates”, “believes”, “seeks”, “estimates”, “plans”, “intends”, and similar words identify forward-looking statements. You should not place undue reliance on these forward-looking statements. 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 involve risks and uncertainties that could cause our actual results to differ materially from what may be inferred from the forward-looking statements. Some of the factors that could cause or contribute to such differences are listed and discussed in Item 1A—Risk Factors, included in our 2009 Form 10-K (beginning on page 18 thereto). We undertake no obligation to release publicly any revisions or updates to any forward-looking statements. We encourage you to read carefully the risk factors described in other documents we file from time to time with the United States Securities and Exchange Commission.

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JACOBS ENGINEERING GROUP INC. AND SUBSIDIARIES

Results of Operations

During the third quarter of fiscal 2010, the Company received an unfavorable court judgment relating to a waste incineration project in France for the SIVOM de Mulhousienne (“SIVOM”). The SIVOM project was performed by a consortium of contractors that was led by one of Jacobs’ subsidiaries under a contract that was entered into in 1996, prior to the acquisition of that subsidiary by Jacobs. As a result of the judgment, the Company recorded a pre-tax charge to earnings of $93.3 million. Included in that amount is $25.9 million (representing the net write-off of a claim receivable). The balance of the charge reflects net cash payments the Company is obligated to make pursuant to the judgment. Net of the effects of the charge on the Company’s long-term incentive bonus plan and income taxes, the effect on net earnings attributable to Jacobs was approximately $60.3 million, or 0.48 per diluted share. Please refer to Part II, Item 1—Legal Proceedings of this Quarterly Report on Form 10-Q for additional details about this matter.

The $93.3 million pre-tax charge is reflected in the accompanying, unaudited Consolidated Statements of Earnings for the third quarter of fiscal 2010 as a $25.9 million reduction in revenues; an approximate $58.7 million increase in direct costs of contracts; and an $8.7 million increase to interest expense (which is net of certain interest the SIVOM has been ordered to pay to the Company). In addition, the SIVOM judgment resulted in a $6.4 million reduction to the Company’s incentive bonus plan (the cost of which is included in selling, general, and administrative (“SG&A”) expenses).

In addition, and in response to the global recession, the Company ceased using one of its offices located in Houston, Texas, and entered into a sublease for the entire property (the “Houston Sublease”). This transaction occurred in the first quarter of fiscal 2010. Accordingly, included in net earnings for the nine months ended July 2, 2010 is a pre-tax charge of $11.4 million relating to this real estate transaction. Net of the effects on the Company’s incentive bonus plan and income taxes, the Houston Sublease resulted in a net, after-tax charge of $5.8 million, or $0.04 per diluted share.

In this MD&A, the Company discusses and analyzes its results of operations before the effects of the SIVOM judgment and the Houston Sublease. Although such information is non-GAAP in nature, it is presented because Management believes it provides a better view of the Company’s operating results to the reader of this Form 10-Q to assess the Company’s performance and operating trends.

The following tables reconcile the Company’s non-GAAP results of operations to its GAAP results for those elements of the Company’s consolidated results of operations affected by the charges for the SIVOM litigation and the first-quarter charge for the Houston Sublease:

For the three months ended July 2, 2010

(in thousands, except per-share information):

Element	Non-GAAP Values			Effect of the Litigation			GAAP Values
Revenue	$	2,533,619		$	(25,894	)	$	2,507,725
Direct cost of contracts	$	(2,176,896	)	$	(58,641	)	$	(2,235,537	)
Selling, general, and administrative expenses	$	(233,468	)	$	6,363		$	(227,105	)
Operating profit	$	123,255		$	(78,172	)	$	45,083
Net interest income (expense)	$	2,525		$	(8,725	)	$	(6,200	)
Earnings (loss) before taxes	$	124,136		$	(86,897	)	$	37,239
Income tax (expense) benefit	$	(44,619	)	$	26,620		$	(17,999	)
Net earnings (loss) attributable to Jacobs	$	79,320		$	(60,277	)	$	19,043
Earnings per share (diluted)	$	0.63		$	(0.48	)	$	0.15

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JACOBS ENGINEERING GROUP INC. AND SUBSIDIARIES

For the nine months ended July 2, 2010

(in thousands, except for per-share information):

Element	Non-GAAP Values			Effect of the Litigation and the Houston Sublease			GAAP Values
Revenue	$	7,598,378		$	(25,894	)	$	7,572,484
Direct cost of contracts	$	(6,529,265	)	$	(58,641	)	$	(6,587,906	)
Selling, general, and administrative expenses	$	(701,273	)	$	(2,737	)	$	(704,010	)
Operating profit	$	367,840		$	(87,272	)	$	280,568
Net interest income (expense)	$	2,842		$	(8,725	)	$	(5,883	)
Earnings (loss) before taxes	$	367,544		$	(95,997	)	$	271,547
Income tax (expense) benefit	$	(132,235	)	$	29,896		$	(102,339	)
Net earnings (loss) attributable to Jacobs	$	235,081		$	(66,101	)	$	168,980
Earnings per share (diluted)	$	1.87		$	(0.52	)	$	1.35

“GAAP” means those accounting principles generally accepted in the United States.

In order to better understand the Company’s results of operations for the third quarter of fiscal 2010 (i.e., the current fiscal quarter) and the recent trends in our business, we present the following two tables which compare our operating results for the current fiscal quarter to the second quarter of fiscal 2010 (i.e., the immediately preceding fiscal quarter) and the third quarter of fiscal 2009. These tables exclude the effects of the SIVOM judgment. All dollar amounts are in thousands, except per-share amounts:

	Third Quarter FY 2010			Second Quarter FY 2010			Third Quarter FY 2009
Revenues	$	2,533,619		$	2,586,974		$	2,706,724
Direct costs of contracts		(2,176,896	)		(2,223,793	)		(2,334,861	)
SG&A Expenses		(233,468	)		(241,177	)		(225,189	)
Operating profit	$	123,255		$	122,004		$	146,674
Net earnings	$	79,320		$	77,500		$	94,900
Earnings per share (diluted)	$	0.63		$	0.62		$	0.76
Direct costs of contracts as a percentage of revenues		85.9	%		86.0	%		86.3	%

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JACOBS ENGINEERING GROUP INC. AND SUBSIDIARIES

Other Comparisons:

	Third Quarter of FY 2010 Increases (Decreases) as Compared to
	Second Quarter FY 2010		Third Quarter FY 2009
Percentage change in revenues	(2.1	%)	(6.4	%)
Percentage change in SG&A expenses	(3.2	%)	3.7	%
Percentage change in operating profit	1.0	%	(16.0	%)
Percentage change in net earnings	2.3	%	(16.4	%)

GAAP net earnings for the third quarter of fiscal 2010 ended July 2, 2010 totaled $19.0 million, or $0.15 per diluted share, compared to $94.9 million, or $0.76 per diluted share, for the third quarter of fiscal 2009 ended July 3, 2009. GAAP net earnings for the nine months ended July 2, 2010 totaled $169.0 million, or $1.35 per diluted share, compared to $320.5 million, or $2.58 per diluted share, for the comparable period last year. In addition to the effects of the SIVOM judgment, year-over-year (i.e., fiscal 2010 as compared to fiscal 2009) comparisons of net earnings, as well as most other elements of our results of operations, continue to reflect the effects on our business of the global recession which began in 2007. Because our business tends to lag the general economy, our results of operations usually do not reflect the full effects of a recession, nor any recovery, until several or more fiscal quarters later.

Excluding the effects of the SIVOM judgment, the Company achieved a 3.2% reduction in SG&A expenses during the third quarter of fiscal 2010 as compared to the immediately preceding fiscal quarter, as well as small increases (1.0% and 2.3%, respectively) in operating profit and net earnings. We believe these improvements in our results of operations are due primarily to the effects of the Management’s strict control over SG&A expenses.

We believe we are well positioned to weather the current recessionary business environment, but we can provide no assurance that we will be able to do so. The Company maintains its competitive cost posture by driving down costs and maintaining long-term relationships with core clients such as the U.S. federal and other national governments, and large, multinational companies. We also continue to monitor new project opportunities arising from the American Recovery and Reinvestment Act of 2009 (although the timing, size, and scope of any such new work cannot be presently predicted).

We continue to look for strategic acquisitions that expand our markets and geographic reach. Geographies where the Company sees opportunities include the Middle East, India, and China. Markets where the Company sees opportunities include aerospace and defense; water and wastewater; upstream oil and gas; power; and minerals. Our cash position supports our acquisition strategy.

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JACOBS ENGINEERING GROUP INC. AND SUBSIDIARIES

Excluding the effects of the SIVOM judgment, total revenues for the third quarter of fiscal 2010 decreased by $173.1 million, or 6.4%, to $2.5 billion compared to $2.7 billion for the third quarter of fiscal 2009. For the nine months ended July 2, 2010 and excluding the effects of the SIVOM judgment, total revenues decreased by $1.3 billion, or 14.8%, to $7.6 billion compared to $8.9 billion for the corresponding period last year.

The following table sets forth our revenues by the various types of services we provide for the three and nine months ended July 2, 2010 and July 3, 2009 (in thousands, and excluding the effects of the SIVOM judgment which have been adjusted for within “Construction” services):

	For the Three Months Ended				For the Nine Months Ended
	July 2, 2010		July 3, 2009		July 2, 2010		July 3, 2009
Project Services	$	1,054,646	$	1,123,924	$	3,177,666	$	3,601,584
Construction		993,025		1,092,002		2,949,485		3,760,033
Operations and Maintenance (“O&M”)		260,477		268,622		803,993		888,359
Process, Scientific and Systems Consulting		225,471		222,176		667,234		664,853
	$	2,533,619	$	2,706,724	$	7,598,378	$	8,914,829

As shown above, revenues for both the three and nine months ended July 2, 2010 among most of the types of services we provide were lower as compared to the corresponding periods last year, with revenues from construction services posting the largest declines.

The following table sets forth our revenues by the industry groups and markets in which our clients operate for the three and nine months ended July 2, 2010 and July 3, 2009 (in thousands, and excluding the effects of the SIVOM judgment which have been adjusted for within the “Infrastructure” market):

	For the Three Months Ended				For the Nine Months Ended
	July 2, 2010		July 3, 2009		July 2, 2010		July 3, 2009
Energy & Refining - Downstream	$	808,430	$	919,115	$	2,458,485	$	3,202,046
National Government Programs		576,923		538,471		1,715,040		1,591,115
Chemicals and Polymers		296,224		294,287		923,808		923,621
Oil & Gas - Upstream		163,021		173,982		408,703		734,687
Infrastructure		242,899		243,909		699,424		734,721
Buildings		213,568		189,278		627,219		602,770
Pharmaceuticals and Biotechnology		137,045		203,947		488,380		658,786
Industrial and Other		95,509		143,735		277,319		467,083
	$	2,533,619	$	2,706,724	$	7,598,378	$	8,914,829

Amounts relating to the Company’s buildings work for the U.S. Federal Government have been reclassified from the National Government Programs industry group to the Buildings market. Prior period information has been reclassified to conform to this new presentation.

As shown above, revenues for both the three and nine months ended July 2, 2010 from projects for clients operating in most of the markets and industry groups we serve were lower as compared to the corresponding periods last year, with revenues from clients operating in the energy and refining (downstream) and oil and gas (upstream) markets posting the largest declines.

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JACOBS ENGINEERING GROUP INC. AND SUBSIDIARIES

We believe these declines in revenues are attributable to the continuing effects of the current recession combined with the routine completion and normal winding-down of projects. Offsetting these declines in part is increased revenues from projects for our national government and buildings clients.

Excluding the effects of the SIVOM judgment, direct costs of contracts for the three months ended July 2, 2010 decreased $158.0 million, or 6.8%, to $2.2 billion as compared to $2.3 billion for the corresponding period last year. For the nine months ended July 2, 2010 and excluding the effects of the SIVOM judgment, direct costs of contracts decreased $1.2 billion, or 15.2%, to $6.5 billion as compared to $7.7 billion for the corresponding period last year. The level of direct costs of contracts may fluctuate between reporting periods due to a variety of factors including the amount of pass-through costs we incur during a period. On those projects where we are responsible for subcontract labor or third-party materials and equipment, we reflect the amounts of such items in both revenues and costs (and we refer to such items as “pass-through 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 considered pass-through costs and are, therefore, not reflected in either revenues or costs. To the extent that we incur a significant amount of pass-through costs in a period, our direct cost of contracts are likely to increase as well.

For the three and nine months ended July 2, 2010, pass-through costs decreased $178.3 million and $1.1 billion, respectively, as compared to the corresponding periods last year. In general, pass-through costs are more significant on projects that have a higher content of field services activities. Pass-through costs are generally incurred at a specific point in the lifecycle of a project and are highly dependent on the needs of our individual clients and the nature of the clients’ projects. However, because we have hundreds of projects which start at various times within a fiscal year, the effect of pass-through costs on the level of direct costs of contracts can vary between fiscal years without there being a fundamental or significant change to the underlying business.

As a percentage of revenues, and excluding the effects of the SIVOM judgment, direct costs of contracts for both the three and nine months ended July 2, 2010 was 85.9%. This compares to 86.3% and 86.4% for the three and nine months ended July 3, 2009, respectively. The 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. Generally speaking, the more procurement we do on behalf of our clients (i.e., where we purchase equipment and materials for use on projects, and/or procure subcontracts in connection with projects) and the more field services revenues we have relative to technical, professional services revenues, the higher the direct cost of contracts percentage will be. Because revenues from pass-through costs typically have lower margin rates associated with them, it is not unusual for us to experience an increase or decrease in such revenues without experiencing a corresponding increase or decrease in our gross margins and operating profit. The decreases in the direct cost of contracts percentage for the three and nine months ended July 2, 2010 as compared to the corresponding periods last year were due primarily to a combination of lower construction services revenue relative to project services, combined with better project performance.

Excluding the effects of the SIVOM judgment, SG&A expenses for the three months ended July 2, 2010 increased $8.3 million, or 3.7%, to $233.5 million compared to $225.2 million for the three months ended July 3, 2009. For the nine months ended July 2, 2010 and excluding the effects of the SIVOM judgment and the Houston Sublease, SG&A expenses decreased by $13.2 million, or 1.8%, to $701.3 million compared to $714.5 million for the nine months ended July 3, 2009.

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JACOBS ENGINEERING GROUP INC. AND SUBSIDIARIES

Included in SG&A expenses in the current fiscal year are the SG&A expenses of our recent acquisitions as well as the amortization expense associated with the acquired intangible assets.

Interest income for the three and nine months ended July 2, 2010 decreased $0.5 million and $6.0 million, respectively as compared to the corresponding periods last year. The decrease in interest income was due primarily to lower rates of interest earned during the current fiscal quarter as compared to last year.

Interest expense for the three and nine months ended July 2, 2010 increased $7.8 million and $7.1 million, respectively as compared to the corresponding periods last year. The increase in interest expense was due primarily to interest assessed by the court in connection with the SIVOM judgment.

The Company’s consolidated effective income tax rate was 48.3% and 37.7% for the three and nine months ended July 2, 2010, respectively. This compares to effective income tax rates of 36.1% and 36.0%, respectively, for the comparable periods last year. The increases in the Company’s effective income tax rate during the current fiscal year as compared to last year relate to the SIVOM judgment.

Backlog Information

We include in backlog the total dollar amount of revenues we expect to record in the future as a result of performing work under contracts that have been awarded to us. Because of the nature, size, expected duration, funding commitments, and the scope of services required by our contracts, the timing of when backlog will be recognized as revenues can vary greatly between individual contracts. Our policy with respect to O&M contracts, however, is to include in backlog the amount of revenues we expect to receive for one succeeding year, regardless of the remaining life of the contract. For national government programs (other than national government O&M contracts), our policy is to include in backlog the full contract award, whether funded or unfunded, and exclude option periods.

In accordance with industry practice, substantially all of our contracts are subject to cancellation or termination at the option of the client. In a situation where a client terminates a contract, we typically are entitled to receive payment for work performed up to the date of termination and, in certain instances, we may be entitled to allowable termination and cancellation costs. While management uses all information available to it to determine backlog, our backlog at any given time is subject to changes in the scope of services to be provided as well as increases or decreases in costs relating to the contracts included therein.

Because certain contracts (for example, contracts relating to large engineering, procurement, and construction projects as well as national government 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.

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JACOBS ENGINEERING GROUP INC. AND SUBSIDIARIES

The following table summarizes our backlog at July 2, 2010 and July 3, 2009 (in millions):

	2010		2009
Technical professional services	$	7,793.2	$	8,390.2
Field services		5,662.5		7,413.5
Total	$	13,455.7	$	15,803.7

Our backlog decreased $2.3 billion, or 14.9%, to $13.5 billion at July 2, 2010 from $15.8 billion at July 3, 2009. Backlog at July 2, 2010 includes new awards from our public sector clients.

Liquidity and Capital Resources

At July 2, 2010, our principal sources of liquidity consisted of $941.7 million of cash and cash equivalents, and $264.3 million of available borrowing capacity under our $290.0 million, long-term, unsecured revolving credit facility. We finance as much of our operations and growth as possible through cash generated by our operations.

In addition to our $290.0 million revolving credit facility, we have also entered into a short-term credit facility with a bank in the U.S. We entered into the facility in connection with our acquisition of a one-third interest in AWE Management Ltd. (“AWE”). Approximately $93.3 million was outstanding under this facility at July 2, 2010.

During the first nine months of fiscal 2010, our cash and cash equivalents decreased by $91.9 million to $941.7 million at July 2, 2010. This compares to a net increase in cash and cash equivalents of $455.1 million, to $1.1 billion, during the corresponding period last year. During the nine months ended July 2, 2010, we had cash outflows of $395.6 million from investing activities and $34.2 million from the effects of exchange rate changes. These cash outflows were offset in part by net cash inflows of $236.2 million from operating activities and $101.7 million from financing activities.

Our operations provided net cash of $236.2 million during the nine months ended July 2, 2010. This compares to net cash inflows of $481.2 million for the corresponding period last year. The $245.0 million decrease in cash provided by operations for the nine months ended July 2, 2010 as compared to the corresponding period last year was due primarily to the following factors:

• a $151.6 million decrease in net earnings; and,

• a $109.1 million decrease relating to changes in our working capital accounts (discussed below).

These decreases in cash flows from operations were offset in part by the following:

• a $11.0 million change relating to the amortization of intangibles; and,

• a $4.9 million change relating to deferred income taxes.

Except for the $93.3 million charge recorded in connection with the SIVOM judgment, there was no unusual activity occurring within our working capital accounts during the nine months ended July 2, 2010. Because such a high percentage of our revenues are earned on cost-plus type contracts, and due to the significance of revenues relating to pass-through costs, most of the costs we incur are included in invoices we send to clients. Although we continually monitor our accounts receivable, we manage the operating cash flows of the Company by managing the working capital accounts in total, rather than by the individual elements. The primary elements of the Company’s working capital accounts are accounts receivable, accounts payable, and billings in excess of cost. Accounts payable consists of obligations to third parties relating primarily to costs incurred for projects which are generally billable to clients. Accounts receivable consist of billings to our clients — a substantial portion of which is for project-related costs. Billings in excess of cost consist of billings to and payments from our clients for costs yet to be incurred.

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JACOBS ENGINEERING GROUP INC. AND SUBSIDIARIES

This relationship between revenues and costs, and between receivables and payables is unique for our industry, and facilitates review of our liquidity at the total working capital level. The $109.1 million decrease in cash flows relating to changes in our working capital accounts was due primarily to the timing of cash receipts and payments within our working capital accounts and is not indicative of any known trend or fundamental change to the underlying business.

We used $395.6 million of cash and cash equivalents for investing activities during the nine months ended July 2, 2010 as compared to $54.3 million during the corresponding period last year. The $341.3 million increase in cash used for investing activities for the nine months ended July 2, 2010 as compared to the corresponding period last year was due primarily to acquisitions of businesses and changes in investments.

During the nine months ended July 2, 2010 we acquired JJG and TYBRIN Corporation, and we completed our investment in AWE.

Our financing activities resulted in net cash inflows of $101.7 million during the nine months ended July 2, 2010. This compares to net cash inflows of $27.2 million during the corresponding period last year. The $74.5 million net increase in cash flows from financing activities during the nine months ended July 2, 2010 as compared to the corresponding period last year was due primarily to changes in borrowings.

We believe we have adequate liquidity and capital resources to fund our operations, support our acquisition strategy, and service our debt for the next twelve months. We had $941.7 million in cash and cash equivalents at July 2, 2010, compared to $1.0 billion at October 2, 2009. Although our consolidated working capital position decreased $116.0 million during the nine months ended July 2, 2010, it totals $1.4 billion as of that date, which management believes is adequate. We have a long-term, unsecured, revolving credit facility providing up to $290.0 million of debt capacity, under which approximately $264.3 million was utilized at July 2, 2010 in the form of direct borrowings and letters of credit. While our access to capital has not been severely affected by the credit crisis currently impacting global markets, we believe the full effect of the crisis may increase our borrowing costs in the future. We believe that the capacity, terms and conditions of our long-term revolving credit facility, combined with other committed and uncommitted facilities we have in place, are adequate for our working capital and general business requirements.

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JACOBS ENGINEERING GROUP INC. AND SUBSIDIARIES

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. As more fully discussed below and in Item 1A—Risk Factors of our 2009 Form 10-K (beginning on page 18 thereto), our results of operations are exposed to risks associated with fluctuations in interest rates and currency exchange rates.

Interest Rate Risk

Our only committed source for long-term credit is a $290.0 million, long-term, unsecured revolving credit facility. The total amount outstanding under this facility at July 2, 2010 was $0.5 million. This agreement expires in May 2012, 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. To achieve these objectives, we continuously monitor changes in interest rates, and use cash provided from operations to re-pay our borrowings as quickly as possible. Furthermore, the Company can use a combination of both fixed rate and variable rate debt to manage our exposure to interest rate risk.

Foreign Currency Risk

In situations where our operations incur contract costs in currencies other than their functional currency, we attempt to have a portion of the related contract revenues denominated in the same currencies as the costs. In those situations where revenues and costs are transacted in different currencies, we sometimes enter into foreign exchange contracts in order to limit our exposure to fluctuating foreign currencies. The Company does not currently have exchange rate sensitive instruments that would have a material effect on our consolidated financial statements or results of operations.

Item 4. Controls and Procedures.

The Company’s management, with the participation of its Chief Executive Officer and Chief Financial Officer, evaluated the effectiveness of the Company’s disclosure controls and procedures as defined by Rule 13a-15(e) of the Securities Exchange Act of 1934, as amended (the “Exchange Act”) as of July 2, 2010, the end of the period covered by this Quarterly Report on Form 10-Q (the “Evaluation Date”). Based on that evaluation, the Chief Executive Officer and Chief Financial Officer concluded that the Company’s disclosure controls and procedures were effective as of the Evaluation Date.

There were no changes in the Company’s internal control over financial reporting during the quarter ended July 2, 2010 that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

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JACOBS ENGINEERING GROUP INC. AND SUBSIDIARIES

PART II – OTHER INFORMATION

Item 1. Legal Proceedings.

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 involves 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. We have elected, however, to retain a portion of losses that occur through the use of various deductibles, limits, and retentions under our insurance programs. This situation may subject us to some 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.

Additionally, as a contractor providing services to agencies of the United States federal government, 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 United States as well as by various government agencies representing jurisdictions outside the United States.

In accordance with Accounting Standards Codification 450—Contingencies and Accounting Standards Codification 740—Income Taxes, we record in our Consolidated Balance Sheets amounts representing our estimated liability relating to such claims, guarantees, litigation, and audits and investigations. We include any adjustments to such reserves in our consolidated results of operations.

Management believes, after consultation with counsel, that such guarantees, litigation, United States 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 1, 2007 the I-35W bridge in Minneapolis, Minnesota suffered a tragic collapse. The bridge was designed and built in the early 1960’s. Sverdrup & Parcel and Associates, Inc. (“Sverdrup & Parcel”) provided design services to the Minnesota Department of Transportation (“MnDOT”) on the bridge. Sverdrup & Parcel was a predecessor company to Sverdrup Corporation, a company acquired by Jacobs in 1999. Several lawsuits have been filed against a consultant who had been providing engineering analyses of the bridge prior to its collapse, and against a contractor who was providing maintenance and construction work on the bridge at the time of its collapse. No lawsuits have been filed directly against the Company by any of the primary plaintiffs. The consultant and the contractor have filed suit against the Company claiming that the Company was liable for negligent design services by Sverdrup & Parcel, and against MnDOT claiming that MnDOT had an obligation to inspect, maintain and repair the bridge and that it failed to do so. MnDOT has filed a suit against the Company claiming that it is entitled to be indemnified for any and all amounts that it pays out under its Victims Compensation Fund. We understand that the contractor has settled all of the plaintiffs’ claims against it. The contractor’s suit against the Company is in the process of being dismissed without any compensation being paid by the Company. The Company’s motions to dismiss the remaining claims against it by the consultant and MnDOT based on the State Statute of Repose were denied. The Company has filed an appeal. The Company does not expect this matter to have any material adverse effect on its consolidated financial statements.

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JACOBS ENGINEERING GROUP INC. AND SUBSIDIARIES

On June 25, 2010, Jacobs’ subsidiary, Jacobs France SAS, received an unfavorable judgment from an Administrative Tribunal in Strasbourg, France relating to a waste incineration plant project in France.

The dispute involved a project to design and build a waste incineration plant in Sausheim, France by a consortium led by Serete for the SIVOM de Mulhousienne. The contract was entered into in 1996, prior to the acquisition of Serete by Jacobs in 1997. Jacobs filed suit in 2002 seeking approximately $49 million in damages to recover its contract balance and additional project costs that it had incurred. The SIVOM counterclaimed for project completion costs, increased operating costs, and costs relating to emissions problems.

As a result of the judgment, the Company recorded a net, after-tax charge to earnings of approximately $60.3 million, or $0.48 per diluted share. The cash impact of the judgments is estimated to be approximately $61.4 million; however, this amount is subject to change based on the timing of and interest due on any cash payments that the parties will make to each other.

Jacobs believes that the judgment of the Tribunal is not supported by the facts or by applicable law and intends to appeal.

Item 1A. Risk Factors.

Please refer to Item 1A—Risk Factors on pages 18 through 29 of our 2009 Form 10-K, which is incorporated herein by reference. There have been no material changes from those risk factors previously disclosed in our 2009 Form 10-K.

Page 26

JACOBS ENGINEERING GROUP INC. AND SUBSIDIARIES

Item 6. Exhibits

(a) Exhibits

10.1 # —	Agreement between Jacobs Engineering Group Inc. and Noel G. Watson dated July 1, 2010.
10.2 # —	Consulting Agreement between Jacobs Engineering Group Inc. and Noel G. Watson dated July 1, 2010.
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.
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

# Management contract or compensatory plan or arrangement

Page 27

JACOBS ENGINEERING GROUP INC. AND SUBSIDIARIES

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

(Principal Financial Officer)

Date: July 30, 2010

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EX-10.1

EXHIBIT 10.1

AGREEMENT

This Agreement is effective this 1st day of July 2010, between Jacobs Engineering Group Inc. (“Jacobs”) and Noel G. Watson (“Mr. Watson”).

WHEREAS, the Board of Directors of Jacobs has accepted the offer by Mr. Watson to end his employment with Jacobs effective July 1, 2010.

WHEREAS, Mr. Watson will continue to play an active role with Jacobs as its Chairman of the Board and as a consultant on special projects and client relationships.

NOW, THEREFORE, in consideration of the valuable promises and the agreements contained herein, it is agreed as follows:

Member of the Board of Directors. Mr. Watson will continue as a non-employee Director of Jacobs, in Class I. Nothing in this Agreement is intended to affect any compensation that Mr. Watson is eligible to receive as a non-employee Director or to waive any rights, duties and obligations that Mr. Watson may have as a Director of Jacobs. Mr. Watson’s Officer and Director Indemnification Agreement dated February 11, 2003, a copy of which is attached hereto as Exhibit C, remains in full force and effect for all of his activities.

Last Date of Employment. Mr. Watson’s last date of employment is June 30, 2010. Effective July 1, 2010, Mr. Watson resigns as an officer of Jacobs and as an officer and director of any of Jacobs’ affiliated and subsidiary companies.

Payment of Amounts Owed. Jacobs agrees to pay Mr. Watson all remuneration owed to him as a result of his employment with Jacobs through June 30, 2010. Any outstanding expense reports and account balances for expenses incurred by Mr. Watson in the course of his employment with Jacobs through his last date of employment will be paid to him in accordance with normal approval and payment procedures.

Incentive Bonus Plan. Mr. Watson is currently a participant in the Incentive Bonus Plan for Officers and Key Managers (Incentive Bonus Plan) and therefore will not be eligible to receive a bonus award for FY2010 or thereafter. However, Mr. Watson shall be paid a bonus amount of Eight Hundred Twenty-two Thousand and Eighty-two Dollars ($822,082.00), less statutorily-required deductions and withholdings, pursuant to a bona fide retirement under the Incentive Bonus Plan, within fifteen (15) calendar days after his last date of employment.

Additional Compensation. Mr. Watson will receive supplementary cash compensation for FY2010 attributable to his service as an employee during the year. The amount of supplementary cash compensation is dependent on the financial performance of Jacobs for FY2010 and will be determined at the discretion of the Human Resource and Compensation Committee of the Board of Directors in the fall of 2010. If a discretionary payment is approved it will be paid no later than December 15, 2010.

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Consulting Agreement. In further consideration of the promises provided herein, Mr. Watson and Jacobs concurrently agree to enter into the Consulting Agreement attached hereto as Exhibit “A” upon his retirement.

Acknowledgment of Full Payment. Mr. Watson acknowledges that the payments and arrangements described herein shall constitute full and complete satisfaction of any and all amounts properly due and owing to Mr. Watson as a result of his employment with Jacobs.

Stock Options. In accordance with the terms and conditions of Mr. Watson’s Nonqualified Stock Option Agreements, Mr. Watson’s change in employment status will be treated as a retirement and any vested options that he may have will remain exercisable for the life of the option term.

Other Employee Benefits. Nothing herein shall deprive Mr. Watson of any vested benefits that Mr. Watson has in the Jacobs’ Section 401(k) or other employee benefit plan.

Right to Elect Continued Coverage. Upon Mr. Watson’s termination of employment, he may elect to continue health insurance coverage for himself and his spouse (medical, dental, vision, employee assistance program, and healthcare flexible spending account) as permitted under COBRA.

Non-Disclosure of Trade Secrets, Confidential and Proprietary Information. Mr. Watson executed a confidential information and invention agreement dated 6 December, 1965 (the “1965 Agreement”), a copy of which is attached hereto as Exhibit B, in which he made certain specifically enforceable promises. Mr. Watson’s obligations under the 1965 Agreement continue and may be enforced by Jacobs.

Mr. Watson’s position at Jacobs placed him in the possession of highly sensitive and extremely proprietary information of Jacobs. Under the 1965 Agreement, Mr. Watson must hold in confidence, and may not disclose, any proprietary or confidential information disclosed to him by Jacobs or by its customers or prospective customers or any subsidiary, parent or affiliate of Jacobs. Furthermore, Mr. Watson may utilize such information only as authorized by Jacobs. Thus, Mr. Watson may not use or disclose any of this information during any new employment.

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The confidential proprietary information and trade secrets covered by the 1965 Agreement include, but are not limited to, the following:

(i) All business development and client information within the exclusive control of Jacobs;

(ii) Strategic business plans and marketing initiatives of Jacobs which are not general public knowledge; and

(iii) Any other confidential or proprietary information received by Mr. Watson during his employment.

Entire Agreement; Choice of Law. This Agreement, which incorporates by reference the Consulting Agreement to be entered into between Mr. Watson and Jacobs, constitutes the entire agreement between the parties pertaining to the subject matter contained in it and supersedes all prior and contemporaneous agreements, representations, and understandings of the parties. No provision of this Agreement may be modified, waived or discharged unless such modification, waiver or discharge is agreed to in writing signed by Mr. Watson and an executive officer of Jacobs. The validity, interpretation, construction and performance of this Agreement shall be governed by the laws of the State of California (without giving effect to its conflicts of laws, rules or principles) and no failure or delay in exercising any right, power or privilege hereunder shall operate as a waiver thereof, nor shall any single or partial exercise thereof preclude any other or further exercise thereof or the exercise of any other right, power or privilege hereunder.

Severability. The invalidity or unenforceability of any provision of this Agreement shall not affect the validity or enforceability of any other provision of this Agreement, which shall remain in full force and effect.

Release of Claims. In further consideration of the foregoing, Mr. Watson hereby releases and discharges Jacobs, its affiliated and subsidiary companies, and its and their respective present and former agents, officers, directors, employees, successors and assigns (hereinafter collectively “Releasees”) from any and all matters, claims, demands, causes of action, debts, liabilities, controversies, judgments and suits of every kind and nature whatsoever, foreseen or unforeseen, known or unknown, whether in law or in equity, which Mr. Watson has or may have against the Releasees. This release includes, without limitation, all claims and causes of action, known or unknown by Mr. Watson, arising out of or in any way connected with his employment relationship with Jacobs. This release includes, without limitation, claims arising under federal, state or local laws prohibiting employment discrimination and/or claims arising out of any legal restrictions upon Jacobs’ right to terminate Mr. Watson’s employment. Mr. Watson expressly understands that among the various rights and claims being waived by him in this Agreement are those arising under the Age Discrimination in Employment Act, (29 U.S.C. § 621, et seq.), as amended. Mr. Watson further warrants that he has not filed any claims against the Releasees

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15. Waiver. Section 1542 of the Civil Code of the State of California provides, generally, that a release does not extend to unknown claims. Specifically, Section 1542 of the Civil Code of the State of California states as follows:

“A general release does not extend to claims which the creditor does not know or suspect to exist in his or her favor at the time of executing the release, which if known by him or her must have materially affected his or her settlement with the debtor.”

For the purposes of implementing a full and complete release and discharge of Releasees, Mr. Watson expressly waives and relinquishes all rights and benefits afforded by Section 1542 of the Civil Code of the State of California and acknowledges that this Agreement is intended to include and discharge all claims which he does not know or suspect to exist at the time of execution of this Agreement related to his employment with Jacobs.

16. Consideration Period. Mr. Watson acknowledges that under the Age Discrimination in Employment Act, Mr. Watson has twenty-one (21) days within which to consider this Agreement before executing it. If, however, Mr. Watson executes this Agreement before the expiration of the 21-day consideration period, he acknowledges that he has knowingly and voluntarily waived the consideration period and further acknowledges that he has taken sufficient time to consider this Agreement before executing it.

17. Release Revocation Period. The Release and Waiver under Paragraphs 14 and 15 above shall not become binding until seven (7) calendar days after the date of the last signature. During this 7-day period, Mr. Watson may revoke his agreement to Paragraphs 14 and 15. Such revocation must be in writing, directed to Patricia H. Summers, Senior Vice President, Global Human Resources, Jacobs Engineering Group Inc., 1111 South Arroyo Parkway, Pasadena, California, 91105, and received by Jacobs within said 7-day period. Should Mr. Watson revoke his agreement to Paragraphs 14 and 15, then he will not be entitled to the Additional Compensation payment under Paragraph 5. Notwithstanding such revocation the remainder of this Agreement remains in full force and effect. Upon expiration of the 7-day period, Mr. Watson acknowledges that Paragraphs 14 and 15 of this Agreement become final and binding.

18. Individual Agreement. This Agreement has been individually negotiated and is not part of a group exit incentive or other termination program.

19. Non-Disparagement. Mr. Watson agrees that he will not in any way disparage Jacobs, including current or former officers, directors, agents and/or employees of Jacobs, nor make or solicit any comments, statements or the like to the media or to others, that may be considered to be derogatory or detrimental to the good name or business reputation of Jacobs.

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20. Sensitive Information. Mr. Watson recognizes that as an officer of Jacobs he has occupied a position of trust with respect to business information of a highly sensitive and confidential nature, including but not limited to, names and duties of key personnel, business and growth/expansion plans, marketing and business development initiatives and prospects, financial results and forecasts, bidding information, cost and charging rates and their make up and structure, customer lists, and profit and operating margins (“Sensitive Information”).

Mr. Watson agrees that for a period of two (2) years immediately following his last day as a Director of Jacobs, that he will not either directly or indirectly:

(a) Disclose any Sensitive Information to any person, firm or corporation (Sensitive Information does not include information that is generally available in the public domain, other than as a result of any action by Mr. Watson; provided, however, Sensitive Information shall not be deemed to be in the public domain merely because individual features of it are in the public domain unless the combination itself and the principle of operation are also in the public domain.);

(b) Make known to any person, firm or corporation the names or addresses of any of the customers of Jacobs or Jacobs’ affiliated companies or any other information pertaining to them that such recipient would be able to use in competition with Jacobs or Jacobs’ affiliated companies; or

(c) Call on, solicit or take away, or attempt to call on, solicit or take away any of the customers of Jacobs or Jacobs’ affiliated and subsidiary companies on whom Mr. Watson called or with whom he became acquainted during his employment either on behalf of herself or for any other person, firm or corporation with the intent to be in competition with Jacobs or Jacobs’ affiliated companies; or

(d) Directly or indirectly, for himself or on behalf of any third party, solicit, induce, recruit, or cause another person in the employ of Jacobs to terminate his or her employment for the purpose of joining, associating or becoming employed with any business or activity which is in competition with any business or activity engaged in by Jacobs.

21. Voluntary Agreement. Mr. Watson understands that this Agreement involves the knowing and voluntary release of known and unknown claims by Mr. Watson against Jacobs. Mr. Watson understands that he has the right to, and has been given the opportunity to, consult with an attorney of his choice. Mr. Watson acknowledges that he has been (and hereby is) advised by Jacobs that he should consult with an attorney prior to executing this Agreement. Mr. Watson further acknowledges that he has not been discouraged or dissuaded from consulting with an attorney by Jacobs.

Executed at Pasadena, California, this 6th day of July 2010.

By:	/s/ NOEL G. WATSON
	Noel G. Watson

5

Executed at Pasadena, California, this 7th day of July 2010

Jacobs Engineering Group Inc.
By:	/s/ CRAIG L. MARTIN
	Craig L. Martin
Title:	President and CEO

6

EXHIBIT “A”

CONSULTING AGREEMENT

THIS CONSULTING AGREEMENT is executed and made effective as of the 1^st day of July 2010, between Jacobs Engineering Group Inc. (hereinafter referred to as “Jacobs”), and Noel G. Watson (hereinafter referred to as “Mr. Watson”).

WHEREAS, Mr. Watson is engaged in providing consulting services in the areas of special projects and client relationships; and

WHEREAS, Jacobs desires to have the services of Mr. Watson made available to it on the terms and conditions hereinafter set forth;

NOW THEREFORE, in consideration of the premises and other good and valuable consideration, receipt of which is hereby acknowledged by each party, the parties hereto agree as follows:

1. Consulting Services. During the period of this Consulting Agreement, Mr. Watson agrees to perform services in a consulting capacity on a general basis and on the particular individual projects assigned and accepted in accordance with the provisions hereof. Mr. Watson agrees to provide such services on an as requested basis. Jacobs agrees to furnish Mr. Watson the use of office facilities, staff support, and supplies during the periods that the services are being performed. Mr. Watson will also be provided a company Corporate American Express Card and International Calling Card for his use in performing his services for Jacobs. He will also continue to be covered by Jacobs’ Business Travel Accident Policy, and International SOS and Control Risks programs.

2. Term. These services will be performed between July 1, 2010, and June 30, 2011. This Consulting Agreement may be extended for additional periods by mutual agreement executed in writing between the parties.

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3. Service Requests. Any task upon which Jacobs desires the services of Mr. Watson will be provided to Mr. Watson by the President and CEO of Jacobs or his designee.

4. Specified Cost. Jacobs shall pay Mr. Watson a quarterly retainer of Seventy-five Thousand Dollars ($75,000) per quarter through the term of this Consulting Agreement as set forth in paragraph 2. Mr. Watson shall be reimbursed at cost for reasonable travel and other usual and customary expenses incurred with the prior written approval of Jacobs in connection with the performance of his services.

5 Right to Decline. Mr. Watson shall have the right to decline the acceptance of any task requested of him by Jacobs in the event that such task may come into conflict with other activity of Mr. Watson or for any other good and sufficient reason. In such case, Mr. Watson shall give Jacobs notice in writing that he declines to accept any task within five (5) working days of receipt of said request.

6. Progress Reports. Mr. Watson shall submit progress reports to Jacobs at reasonable intervals as may be specifically requested by Jacobs.

7. Invoices and Payment. Mr. Watson shall be paid his quarterly retainer in advance starting July 1, 2010, payable within thirty (30) days. Mr. Watson shall promptly submit invoices for costs and expenses as they are incurred in the performance of his services. Such invoices shall be due and payable within thirty (30) days after receipt by Jacobs.

8. Confidential Information. It is recognized that in performing the services covered by this Consulting Agreement, and as result of Mr. Watson’s former employment with Jacobs, Mr. Watson may acquire from Jacobs certain proprietary, sensitive and confidential information. Mr. Watson, therefore, agrees to hold in confidence any and all such information disclosed to it by Jacobs, except (i) information which at the time of disclosure by Jacobs to him is in the public domain; (ii) information which, after its disclosure by Jacobs to him enters the public domain through no fault of his; (iii) information which he can show was in his possession at the time of Jacobs’s disclosure to him and which was not acquired, directly or indirectly, from Jacobs; and (iv) information which was received by him before or after the time of disclosure hereunder from a third party who did not require him to hold such information in confidence and who, to the best of his knowledge and belief did not acquire it, directly or indirectly, from Jacobs under an obligation to confidence. Notwithstanding anything in this Consulting Agreement to the contrary, Mr. Watson’s obligations of confidentiality shall continue to be governed by the Employee Invention and Confidential Information Agreement previously executed by him, the terms of which are incorporated herein by reference and shall survive the completion or cancellation of this Consulting Agreement.

8

9. Proprietary Rights. All materials prepared or developed by Mr. Watson in the performance and completion of services hereunder shall be and become the sole and exclusive property of Jacobs, without limitation, when made or prepared whether or not delivered to Jacobs, or subject to his right of use thereof to perform the tasks under this Consulting Agreement, and such materials, together with any materials furnished by Jacobs to him hereunder, shall be delivered to Jacobs upon request, and in any event upon completion or cancellation of this Consulting Agreement.

10. Termination. By thirty (30) days’ prior written notice to Jacobs, Mr. Watson may terminate this Consulting Agreement at any time. Jacobs may terminate this Consulting Agreement at any time for cause. For the purposes of this Consulting Agreement, “cause” shall be limited to the following actions of Mr. Watson:

a. Fraud, conviction of a felony, or any misdemeanor involving moral turpitude;

b. Material breach of any provision of this Consulting Agreement;

c. Material breach of, or willful failure to abide by, the provisions of Jacobs’ Business Conduct Policy or the Employee Invention and Confidential Information Agreement; or

d. His resignation or removal from the Board of Directors of Jacobs.

11. Assignment. Neither party may assign this Consulting Agreement or any part thereof without the prior consent in writing of the other party, except that it may be assigned without such consent to a successor of Jacobs, or to a person, firm, or corporation acquiring all or substantially all of the business and assets of Jacobs. No assignment of this Consulting Agreement shall relieve the assignor until this Consulting Agreement shall have been assumed by the assignee. When duly assigned in accordance with the foregoing, this Assignment shall be binding upon and shall inure to the benefit of the assignee.

9

12. Subcontracts. Mr. Watson shall not be entitled to subcontract any portion of any services hereunder without the prior written consent of the Jacobs.

13. Warranty. Mr. Watson warrants that he shall perform such services as shall be submitted and accepted hereunder in accordance with recognized professional standards but Mr. Watson shall in no event be held liable for any loss or damage, consequential or otherwise, however sustained by Jacobs as a consequence of Jacobs’s application or utilization of the services or of the results of the services provided hereunder. The foregoing warranty shall constitute the sole liability of Mr. Watson with respect to the services provided hereunder and Jacobs hereby releases Mr. Watson from and against any further liability in connection therewith.

14. Indemnity. Since Mr. Watson is continuing as a non-employee Director of Jacobs during the term of this Agreement, Jacobs agrees that the terms and conditions of Mr. Watson’s Officers and Directors Indemnification Agreement dated February 11, 2003 shall apply to his services under this Agreement.

15. Independent Contractor. Nothing in this Consulting Agreement shall be deemed to constitute Mr. Watson to be an employee of Jacobs. Mr. Watson shall be an independent contractor and shall have responsibility for and control over the details and means of performing his services hereunder and shall be subject to the directions of Jacobs only with respect to the scope and general results required.

16. Integration. This Consulting Agreement contains the entire understanding between the parties with respect to the subject matter hereof, and there are no understandings or representations not set forth or incorporated by reference herein. No subsequent modifications of this Consulting Agreement shall be of any force or effect unless in writing and signed by both parties hereto.

IN WITNESS WHEREOF, the parties have executed this Consulting Agreement as of the day and year first above written.

10

JACOBS ENGINEERING GROUP INC.			NOEL G. WATSON
By:
	Craig L. Martin President and CEO
		Date:
Date:

11

EXHIBIT B

AGREEMENT

WHEREAS, Jacobs Engineering Co. hereinafter called “Jacobs” having a place of business at 837 So. Fair Oaks Avenue, Pasadena, California, is engaged in the design, engineering and construction of equipment and plants for carrying out chemical and related processes; and

WHEREAS, certain of the work engaged in by Jacobs is confidential in nature or may involve the utilization of confidential or secret information imparted to it by its customers; and

WHEREAS, the nature of the business of Jacobs is such that the compensation paid to its employees is in part for conceiving, making, or developing inventions, discoveries, or improvements, or for work done in connection therewith; and

WHEREAS, I am an employee of Jacobs and have or may have access to and knowledge of confidential or secret information relating to the aforesaid business of Jacobs or the business of Jacobs’ customers:

NOW, THEREFORE, it is agreed as follows:

In consideration of One Dollar ($1.00) the receipt whereof by me is hereby acknowledged, in consideration of the foregoing premises, and in consideration of my employment by Jacobs, during such time as may be mutually agreeable to Jacobs, and myself, I hereby assign and agree to assign to Jacobs, its successors and assigns, all my rights to inventions, discoveries or improvements, which, during the period of my employment by Jacobs or its successors in business or by its assigns, I have made or conceived or may hereafter make or conceive, either solely or jointly with others, in the course of such employment or with the use of Jacobs’ time, material or facilities, relating to the activities or business of Jacobs; and I further agree, without charge to Jacobs but at its expense for any out-of-pocket expenditures, to execute, acknowledge and deliver all such further papers, including applications for patents, as may be necessary to obtain patents for said invention in any and all countries and to vest title thereto in Jacobs, its nominees, successors, or assigns; and I further agree to testify, at the request of Jacobs, in any proceedings as, for example, without limiting the generality, patent interference proceedings or patent infringements suits, provided, however, that should such testimony be required at a time when I am not in the employ of Jacobs then Jacobs shall reimburse me for any out-of-pocket expenses and for my time at a reasonable rate per diem in connection therewith; and I further agree that Jacobs may assign this agreement, either in its entirety or severally from time to time with respect to said inventions, and may grant to any such assignee the right to enforce the same with respect to inventions so assigned; and I further agree to promptly disclose and deliver to the President of Jacobs, or to such other representatives of Jacobs as Jacobs shall designate, all information and data at any time in my possession necessary to impart a full understanding of said inventions, discoveries, or improvements; and I further agree that I will not, without written approval of Jacobs, use, publish or disclose or authorize anyone else to use, publish or disclose, during such term employment or subsequent thereto, any secret or confidential information relating to the activities of Jacobs, either technical or other, acquired by me in the course of my employment by Jacobs.

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WITNESS my hand and seal this 6th day of December, 1965.

/s/ Noel G. Watson

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EXHIBIT C

INDEMNIFICATION AGREEMENT

THIS AGREEMENT is made this 11^th day of February, 2003, between JACOBS ENGINEERING GROUP INC., a Delaware corporation (the “Company”), and Noel G. Watson (“Indemnitee”).

R E C I T A L S

A. The Company is aware that competent and experienced persons are increasingly reluctant to serve as directors or officers of corporations unless they are protected by comprehensive liability insurance or indemnification, due to increased exposure to litigation costs and risks resulting from their service to such corporations, and due to the fact that the exposure frequently bears no reasonable relationship to the compensation of such directors and officers;

B. The statutes and judicial decisions regarding the duties of directors and officers are often difficult to apply, ambiguous, or conflicting, and therefore fail to provide such directors and officers with adequate, reliable knowledge of legal risks to which they are exposed or information regarding the proper course of action to take;

C. Plaintiffs often seek damages in such large amounts, and the costs of litigation may be so enormous (whether or not the case is meritorious), that the defense and/or settlement of such litigation is often beyond the personal resources of officers and directors;

D. The Company believes that it is unfair for its directors and officers to assume the risk of huge judgments and other expenses which may occur in cases in which the director or officer received no personal profit and in cases where the director or officer was not culpable;

E. The Company recognizes that the issues in controversy in litigation against a director or officer of a corporation such as the Company or a subsidiary of the Company are often related to the knowledge, motives and intent of such director or officer, that she or he is usually the only witness with knowledge of the essential facts and exculpating circumstances regarding such matters, and that the long period of time which usually elapses before the trial or other disposition of such litigation often extends beyond the time that the director or officer can reasonably recall such matters; and may extend beyond the normal time for retirement for such director or officer with the result that she or he, after retirement or in the event of his or her death, his or her spouse, heirs, executors or administrators, may be faced with limited ability and undue hardship in maintaining an adequate defense, which may discourage such a director or officer from serving in that position;

F. Based upon their experience as business managers, the Board of Directors of the Company (the “Board”) has concluded that, to retain and attract talented and experienced individuals to serve as officers and directors of the Company and to encourage such individuals to take the business risks necessary for the success of the Company, it is necessary for the Company to contractually indemnify its officers and directors and to assume for itself maximum liability for expenses and damages in connection with claims against such officers and directors in connection with their service to the Company, and has further concluded that the failure to provide such contractual indemnification could result in great harm to the Company and its shareholders;

14

G. Section 145 of the General Corporation Law of Delaware, under which the Company is organized, (“Section 145”) empowers the Company to indemnify its officers, directors, employees and agents by agreement and to indemnify persons who serve, at the request of the Company, as the directors, officers, employees or agents of other corporations or enterprises, and expressly provides that the indemnification provided by Section 145 is not exclusive;

H. The Company, after reasonable investigation, believes that the interests of its shareholders would best be served by a combination of such liability insurance coverage as the Company may from time to time obtain and the indemnification by the Company of the directors and officers of the Company and its subsidiaries;

I. The Company desires and has requested the Indemnitee to serve or continue to serve as a director or officer of the Company of one or more of its subsidiaries free from undue concern for claims for damages arising out of or related to such services to the Company; and

J. The Indemnitee is willing to serve, or to continue to serve, the Company and/or such subsidiaries, provided that he or she is furnished the indemnity provided for herein.

NOW, THEREFORE, in consideration of Indemnitee’s continued service after the date hereof the parties hereto agree as follows:

1. Certain Definitions.

(a) Change in Control: shall be deemed to have occurred if (i) any “person” (as such term is used in Sections 13(d) and 14(d) of the Securities Exchange Act of 1934, as amended (the “1934 Act”)), other than a trustee or other fiduciary holding securities under an employee benefit plan of the Company or a corporation owned directly or indirectly by the stockholders of the Company in substantially the same proportions as their ownership of stock of the Company, is or becomes the “beneficial owner” (as defined in Rule 13d-3 under the 1934 Act), directly or indirectly, of securities of the Company representing 25% or more of the total voting power represented by the Company’s then outstanding Voting Securities (as defined below), (ii) during any period of two consecutive years, individuals who at the beginning of such period constitute the Board of Directors of the Company and any new director whose election by the Board of Directors or nomination for election by the Company’s stockholders was approved by a vote of at least two-thirds ( ²/3) of the directors then still in office who either were directors at the beginning of the period or whose election or nomination for election was previously so approved, cease for any reason to constitute a majority thereof, (iii) the stockholders of the Company approve a merger or consolidation of the Company with any other corporation, other than a merger or consolidation which would result in the Voting Securities of the Company outstanding immediately prior thereto continuing to represent (either by remaining outstanding or by being converted into Voting Securities of the surviving entity) at least 50% of the total voting power represented by the Voting Securities of the Company or such surviving entity outstanding immediately after such merger or consolidation, or (iv) the stockholders of the Company approve a plan of complete liquidation of the Company or an agreement for the sale or disposition by the Company (in one transaction or a series of transactions) of 50% or more of the Company’s assets.

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(b) Potential Change in Control: shall be deemed to have occurred if (i) the Company enters into an agreement or arrangement, the consummation of which will result in the occurrence of a Change in Control; (ii) any person (including the Company) publicly announces an intention to take or to consider taking actions which if consummated would constitute a Change in Control; or (iii) the Board adopts a resolution to the effect that, for purposes of this Agreement a Potential Change in Control has occurred.

(f) Reviewing Party: the Company’s Non-Employee Directors (as defined by Rule 16b-3 of the 1934 Act) or any other person or body appointed by the Board who is not a party to the particular proceeding for which Indemnitee is seeking indemnification.

(d) Voting Securities: any securities of the Company which vote generally in the election of directors.

2. Indemnification

(a) Third Party Proceedings. The Company shall indemnify Indemnitee if Indemnitee is or was a party to any threatened, pending or completed action, suit or proceeding, whether civil, criminal, administrative or investigative (other than an action by or in the right of the Company) by reason of the fact that Indemnitee is or was a director or officer of the Company, or any subsidiary of the Company, by reason of any action or inaction on the part of Indemnitee while an officer or director or by reason of the fact that Indemnitee is or was serving at the request of the Company as a director, officer, employee or agent of another corporation, partnership, joint venture, trust or other enterprise (an “Affiliate”), against expenses (including attorneys’ fees), judgments, fines and amounts paid in settlement actually and reasonably incurred by Indemnitee in connection with the investigation, defense, settlement or appeal of such action, suit or proceeding if Indemnitee acted in good faith and in a manner that Indemnitee reasonably believed to be in or not opposed to the best interests of the Company, and, with respect to any criminal action or proceeding, had no reasonable cause to believe Indemnitee’s conduct was unlawful.

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(b) Proceedings by or in the Right of the Company. The Company shall indemnify Indemnitee if Indemnitee was or is a party or is threatened to be made a party to any threatened, pending or completed action, suit or proceeding by or in the right of the Company or any subsidiary of the Company to procure a judgment in its favor by reason of the fact that Indemnitee is or was a director or officer of the Company, or any subsidiary of the Company, by reason of any action or inaction on the part of Indemnitee while an officer or director or by reason of the fact that Indemnitee is or was serving at the request of the Company as a director, officer, employee or agent another corporation, partnership, joint venture, trust or other enterprise, against expenses (including attorneys’ fees) and amounts paid in settlement actually and reasonably incurred by Indemnitee in connection with the investigation, defense, settlement or appeal of such action, suit or proceeding if Indemnitee acted in good faith and in a manner that Indemnitee reasonably believed to be in or not opposed to the best interests of the Company and except that no indemnification shall be made in respect of any claim, issue or matter as to which Indemnitee shall have been adjudged to be liable to the Company unless and only to the extent that the Court of Chancery of the State of Delaware or the court in which such action or suit was brought shall determine upon application that, despite the adjudication of liability but in view of all the circumstances of the case, Indemnitee is fairly and reasonably entitled to indemnity for such expenses which the Court of Chancery of the State of Delaware or such other court shall deem proper.

(c) Proceedings involving a Deceased Indemnitee. The Company shall indemnify Indemnitee if Indemnitee is or was a party to any threatened, pending or completed action, suit or proceeding, whether civil, criminal, administrative or investigative (other than an action by or in the right of the Company) by reason of the fact that Indemnitee is or was a director or officer of the Company, or any subsidiary of the Company, by reason of any action or inaction on the part of Indemnitee while a director of officer or by reason of the fact that Indemnitee is or was serving at the request of the Company as a director, officer, employee or agent of another corporation, partnership, joint venture, trust or other enterprise, against expenses (including attorneys’ fees), judgments, fines and amounts paid in settlement actually and reasonably incurred by Indemnitee in connection with the investigation, defense, settlement or appeal of such action, suit or proceeding if Indemnitee acted in good faith and in a manner that Indemnitee reasonably believed to be in or not opposed to the best interests of the Company, and prior to, during the pendency or after completion of such suit, action or proceeding Indemnitee is deceased, except that no indemnification shall be due under the provisions of this subsection to the extent a court of competent jurisdiction shall have found in such suit, action or proceeding that Indemnitee defrauded or stole from the Company or an Affiliate of the Company or converted to his own personal use and benefit business or properties of the Company or an Affiliate of the Company or was guilty of gross negligence or willful misconduct of a culpable nature to the Company or an Affiliate of the Company.

(d) Mandatory Payment of Expenses. To the extent that Indemnitee has been successful on the merits or otherwise in defense of any action, suit or proceeding referred to in Subsections (a), (b) or (c) of this Section 2 or the defense of any claim, issue or matter therein, Indemnitee shall be indemnified against expenses (including attorneys’ fees) actually and reasonably incurred by Indemnitee in connection therewith.

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3. Assumption of Liability by the Company. If Indemnitee is deceased and is entitled to indemnification under any provision of this Agreement, the Company shall indemnify Indemnitee’s estate and his or her spouse, heirs, administrators and executors against and the Company shall, and does hereby agree, to assume any and all expenses (including attorneys’ fees), penalties and fines actually and reasonably incurred by or for Indemnitee or his or her estate, in connection with the investigation, defense, settlement or appeal of any such action, suit or proceeding. Further, when requested in writing by the spouse of Indemnitee, and/or the heirs, executors or administrators of Indemnitee’s estate, the Company shall provide appropriate evidence of the Company’s agreement set out herein, to indemnify Indemnitee against, and to itself assume, such costs, liabilities and expenses.

4. Limitation of Actions and Release of Claims. No legal action shall be brought and no cause of action shall be asserted by or on behalf of the Company or any Affiliate of the Company against Indemnitee, his or her spouse, heirs, executors or administrators after the expiration of two years from the date of accrual of such cause of action, and any claim or cause of action of the Company or its Affiliate shall be extinguished and deemed released unless asserted by filing of a legal action within such two (2) year period.

5. Agreement to Serve. In consideration of the protection afforded by this Agreement, if Indemnitee is a director of the Company, he or she agrees to serve at least for the balance of the current term as a director and not to resign voluntarily during such period without the written consent of a majority of the Board of Directors. If Indemnitee is an officer of the Company, he or she agrees to serve in such capacity at least for the balance of the current fiscal year of the Company and not to resign voluntarily during such period without the written consent of a majority of the Board of Directors. Following the applicable period set forth above, Indemnitee agrees to continue to serve in such capacity at the will of the Company (or under separate agreement, if such agreement exists) so long as she or he is duly appointed or elected and qualified in accordance with the applicable provisions of the Bylaws of the Company or any subsidiary of the Company or until such time as he or she tenders his or her resignation in writing. Nothing contained in this Agreement is intended to create any right to continued employment of Indemnitee.

6. Expenses; Indemnification Procedure.

(a) Advancement of Expenses. The Company shall advance all expenses incurred by Indemnitee in connection with the investigation, defense, settlement or appeal of any civil or criminal action, suit or proceeding referenced in Section 2(a), (b) or (c) hereof, including attorneys’ fees and fees of expert witnesses, professional advisors, (e.g. accountants) and private investigators. Indemnitee hereby undertakes to repay such amounts advanced only if, and to the extent that, it shall ultimately be determined by a court in a final adjudication from which there is no further right of appeal that Indemnitee is not entitled to be indemnified by the Company as authorized hereby. The advances to be made hereunder shall be paid by the Company to Indemnitee within twenty (20) days following delivery of a written request therefor by Indemnitee to the Company. Notwithstanding the foregoing, any indemnification provided for in Section 2 and this Section 6 shall be made no later than forty-five (45) days after receipt of the written request of Indemnitee.

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(b) Notice/Cooperation by Indemnitee. Indemnitee shall, as a condition precedent to his or her right to be indemnified under this Agreement, give the Company notice in writing pursuant to Section 22, below, as soon as practicable of any claim made against Indemnitee for which indemnification will or could be sought under this Agreement. Notice shall be deemed received on the third business day after the date postmarked if sent by domestic certified or registered mail, properly addressed; otherwise notice shall be deemed received when such notice shall actually be received by the Company. In addition, Indemnitee shall give the Company such information and cooperation as it may reasonably require and as shall be within Indemnitee’s power.

(c) Procedure. Any indemnification and advances provided for in Section 2 and this Section 6 shall be made no later than forty-five (45) days after receipt of the written request of Indemnitee unless a determination is made by the Reviewing Party that Indemnitee is not entitled to indemnification pursuant to the terms of this Agreement. If a claim under this Agreement, under any statute, or under any provision of the Company’s Certificate of Incorporation or Bylaws providing for indemnification, is not paid in full by the Company within forty-five (45) days after a written request for payment thereof has first been received by the Company, then Indemnitee may, but need not, at any time within two (2) years thereafter bring an action against the Company to recover the unpaid amount of the claim, and, subject to Section 20 of this Agreement, Indemnitee shall also be entitled to be paid for the expenses (including attorneys’ fees) of bringing such action. It shall be a defense to any such action (other than an action brought to enforce a claim for expenses incurred in connection with any action, suit or proceeding in advance of its final disposition) that Indemnitee has not met the standards of conduct which make it permissible under applicable law for the Company to indemnify Indemnitee for the amount claimed, but the burden of proving such defense shall be on the Company, and Indemnitee shall be entitled to receive interim payments of expenses pursuant to Section 6(a) unless and until such defense may be finally adjudicated by court order or judgment from which no further right of appeal exists. It is the parties’ intention that, if the Company contests Indemnitee’s right to indemnification, the question of Indemnitee’s right to indemnification shall be for the court to decide, and neither the failure of the Reviewing Party to have made a determination that indemnification of Indemnitee is proper in the circumstances because Indemnitee has met the applicable standard of conduct required by applicable law, nor an actual determination by the Reviewing Party that Indemnitee has not met such applicable standard of conduct, shall create a presumption that Indemnitee has or has not met the applicable standard of conduct.

(d) Notice to Insurers. If, at the time of the receipt of a notice of a claim pursuant to Section 6(b) hereof, the Company has directors and officers liability insurance in effect, the Company shall give prompt notice of the commencement of such proceeding to the insurers in accordance with the procedures set forth in the respective policies. The Company shall thereafter take all necessary or desirable action to cause such insurers to pay, on behalf of the Indemnitee, all amounts payable as a result of such proceeding in accordance with the terms of such policies.

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(e) Selection of Counsel. In the event the Company shall be obligated under Section 6(a) hereof to pay the expenses of any proceeding against Indemnitee, the Company, if appropriate, shall be entitled to assume the defense of such proceeding, with counsel approved by Indemnitee, upon the delivery to Indemnitee of written notice of its election to do so. After delivery of such notice, approval of such counsel by Indemnitee and the retention of such counsel by the Company, the Company will not be liable to Indemnitee under this Agreement for any fees of counsel subsequently incurred by Indemnitee with respect to the same proceeding, provided that (i) Indemnitee shall have the right to employ his or her counsel in any such proceeding at Indemnitee’s expense; and (ii) if (A) the employment of counsel by Indemnitee has been previously authorized by the Company, (B) Indemnitee shall have reasonably concluded that there may be a conflict of interest between the Company and Indemnitee in the conduct of any such defense or (C) the Company shall not, in fact, have employed counsel to assume the defense of such proceeding, then the fees and expenses of Indemnitee’s counsel shall be at the expense of the Company.

7. Establishment of Trust. In the event of a Potential Change in Control, the Company shall, upon written request by Indemnitee, create a trust for the benefit of Indemnitee and from time to time upon written request of Indemnitee shall fund such trust in an amount (the “Trust Fund Amount”) which is the lesser of (i) the total of all sums sufficient to satisfy the expenses (including attorneys’ fees) reasonably anticipated at the time of each such request to be incurred in connection with investigating, preparing for and defending any proceeding that is indemnifiable under this Agreement, plus any and all judgments, fines, penalties and settlement amounts relating to the proceeding from time to time actually paid or claimed, or reasonably anticipated or proposed to be paid or (ii) Five Million Dollars ($5,000,000). The Trust Fund Amount shall be determined by the Reviewing Party. The Company shall maintain funds in the trust account in the Trust Fund Amount, depositing such additional amounts as may be appropriate as a result of disbursements from the account or increases which, from time to time, may occur in the Trust Fund Amount. The terms of the trust shall provide that upon a Change in Control (i) the trust shall not be revoked or the principal thereof invaded, without the written consent of the Indemnitee, (ii) the trustee shall advance, within twenty (20) business days of a request by Indemnitee, expenses to Indemnitee (and Indemnitee hereby agrees to reimburse the trust under the circumstances under which the Indemnitee would be required to reimburse the Company under Section 6(a) of this Agreement), (iii) the trust shall continue to be funded by the Company in accordance with the finding obligation set forth above, (iv) the trustee shall promptly pay to Indemnitee all amounts for which Indemnitee shall be entitled to indemnification pursuant to this Agreement or otherwise, and (v) all unexpended funds in such trust shall revert to the Company upon a final determination by the Reviewing Party or a court of competent jurisdiction, as the case may be, that the Indemnitee has been fully indemnified under the terms of this Agreement. The trustee shall be chosen by Indemnitee. Nothing in this Section 7 shall relieve the Company of any of its obligations under this Agreement. All income earned on the assets held in the trust shall be reported as income by the Company for federal, state, local and foreign tax purposes.

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8. Additional Indemnification Rights; Nonexclusivity.

(a) Scope. Notwithstanding any other provision of this Agreement, the Company hereby agrees to indemnify Indemnitee to the fullest extent permitted by law, notwithstanding that such indemnification is not specifically authorized by the other provisions of this Agreement, the Company’s Certificate of Incorporation, the Company’s Bylaws or by statute. In the event of any change, after the date of this Agreement, in any applicable law, statute, or rule which expands the right of a Delaware corporation to indemnify a member of its board of directors or an officer, such changes shall be, ipso facto, within the purview of Indemnitee’s rights and Company’s obligations under this Agreement. In the event of any change in any applicable law, statute or rule which narrows the right of a Delaware corporation to indemnify a member of its board of directors or an officer, such changes, to the extent not otherwise required by such law, statute or rule to be applied to this Agreement shall have no effect on this Agreement or the parties’ rights and obligations hereunder.

(b) Nonexclusivity. The indemnification provided by this Agreement shall not be deemed exclusive of any rights to which Indemnitee may be entitled under the Company’s Certificate of Incorporation, its Bylaws, any agreement, any vote of stockholders or disinterested directors, the General Corporation Law of the State of Delaware, or otherwise, both as to action in Indemnitee’s official capacity and as to action in another capacity while holding such office. The indemnification provided under this Agreement shall continue as to Indemnitee for any action taken or not taken while serving in an indemnified capacity even though he or she may have ceased to serve in such capacity at the time of any action, suit or other covered proceeding.

9. Partial Indemnification. If Indemnitee is entitled under any provision of this Agreement to indemnification by the Company for some or a portion of the expenses, judgments, fines or penalties actually and reasonably incurred by him or her in the investigation, defense, appeal or settlement of any civil or criminal action, suit or proceeding, but not, however, for the total amount thereof, the Company shall nevertheless indemnify Indemnitee for the portion of such expenses, judgments, fines or penalties to which Indemnitee is entitled.

10. Plea of Nolo Contendere. The termination of any action, suit or proceeding by judgment, order, settlement, conviction, or upon a plea of nolo contendere or its equivalent, shall not, of itself, create a presumption that Indemnitee did not act in good faith and in a manner that Indemnitee reasonably believed to be in or not opposed to the best interests of the Company, and, with respect to any criminal action or proceeding, had reasonable cause to believe that Indemnitee’s conduct was unlawful.

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11. Mutual Acknowledgment. Both the Company and Indemnitee acknowledge that in certain instances, federal law or public policy may override applicable state law and prohibit the Company from indemnifying its directors and officers under this Agreement or otherwise. For example, the Company and Indemnitee acknowledge that the Securities and Exchange Commission has taken the position that indemnification is not permissible for liabilities arising under certain federal securities laws, and federal legislation prohibits indemnification for certain ERISA violations. Indemnitee understands and acknowledges that the Company has undertaken or may be required in the future to undertake with the SEC to submit the question of indemnification to a court in certain circumstances for a determination of the Company’s right under public policy to indemnify Indemnitee.

12. Directors and Officers Liability Insurance. The Company shall, from time to time, make the good faith determination whether or not it is practicable for the Company to obtain and maintain a policy or policies of insurance with reputable insurance companies providing the officers and directors of the Company with coverage for losses from wrongful acts, or to ensure the Company’s performance of its indemnification obligations under this Agreement. Among other considerations, the Company will weigh the costs of obtaining such insurance coverage against the protection afforded by such coverage. In all policies of directors and officers liability insurance, Indemnitee shall be named as an insured in such a manner as to provide Indemnitee the same rights and benefits as are accorded to the most favorably insured of the Company’s directors, if the Indemnitee is a director, or of the Company’s officers if Indemnitee is not a director of the Company but is an officer. Notwithstanding the foregoing, the Company shall have no obligation to obtain or maintain such insurance if the Company determines in good faith that such insurance is not reasonably available, if the premium costs for such insurance are disproportionate to the amount of coverage provided, or if the coverage provided by such insurance is limited by exclusions so as to provide an insufficient benefit.

13. Severability. Nothing in this Agreement is intended to require or shall be construed as requiring the Company to do or fail to do any act in violation of applicable law. The Company’s inability, pursuant to court order, to perform its obligations under this Agreement shall not constitute a breach of this Agreement. The provisions of this Agreement shall be severable as provided in this Section 13. If this Agreement or any portion hereof shall be invalidated on any ground by any court of competent jurisdiction, then the Company shall nevertheless indemnify Indemnitee to the fullest extent permitted by any applicable portion of this Agreement that shall not have been invalidated, and the balance of this Agreement not so invalidated shall be enforceable in accordance with its terms.

14. Exceptions. Any other provision herein to the contrary notwithstanding, the Company shall not be obligated pursuant to the terms of this Agreement:

(a) Claims Initiated by Indemnitee. To indemnify or advance expenses to Indemnitee with respect to proceedings or claims initiated or brought voluntarily by Indemnitee and not by way of defense, except with respect to proceedings brought to establish or enforce a right to indemnification under this Agreement or any other statute or law or otherwise as required under Section 145 of the Delaware General Corporation Law, but such indemnification or advancement of expenses may be provided by the Company in specific cases if the Reviewing Party finds it to be appropriate;

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(b) Lack of Good Faith. To indemnify Indemnitee for any expenses incurred by the Indemnitee with respect to any proceeding instituted by Indemnitee to enforce or interpret this Agreement, if a court of competent jurisdiction determines that each of the material assertions made by the Indemnitee in such proceedings was not made in good faith or was frivolous;

(c) Insured Claims. To indemnify Indemnitee for expenses or liabilities of any type whatsoever (including, but not limited to, judgments, fines, ERISA excise taxes or penalties, and amounts paid in settlements) which have been paid directly to Indemnitee by an insurance carrier under a policy of directors’ and officers’ liability insurance maintained by the Company; and

(d) Claims Under Section 16(b). To indemnify Indemnitee for expenses or the payment of profits arising from the purchase and sale by Indemnitee of securities in violation of Section 16(b) of the Securities Exchange Act of 1934, as amended, or any similar successor statute.

15. Settlement. The Company shall have no obligation to indemnify Indemnitee under this Agreement for any amounts paid in settlement of any action, suit or proceeding effected without the Company’s prior written consent. The Company shall not settle any claim in any manner which would impose any fine or any obligation on Indemnitee without Indemnitee’s written consent. Neither the Company nor Indemnitee shall unreasonably withhold their consent to any proposed settlement.

16. Construction of Certain Phrases. For purposes of this Agreement, references to “other enterprises” shall include employee benefit plans; references to “fines” shall include any excise taxes assessed on Indemnitee with respect to an employee benefit plan; and references to “serving at the request of the Company” shall include any service as a director, officer, employee or agent of the Company which imposes duties on, or involves services by, such director, officer, employee or agent with respect to an employee benefit plan, its participants or beneficiaries; and if Indemnitee acted in good faith and in a manner Indemnitee reasonably believed to be in the interest of the participants and beneficiaries of an employee benefit plan, Indemnitee shall be deemed to have acted in a manner “not opposed to the best interests of the Company” as referred to in this Agreement.

17. Counterparts. This Agreement may be executed in one or more counterparts, each of which shall constitute an original.

18. Successors and Assigns. This Agreement shall be (i) binding upon all successors and assigns of the Company (including any transferee of all or substantially all of its assets and any successor by merger or otherwise by operation of law) and (ii) shall be binding on and inure to the benefit of Indemnitee and Indemnitee’s estate, heirs, legal representatives and assigns.

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19. Modification and Waiver. No supplement, modification or amendment of this Agreement shall be binding unless executed in writing by both of the parties hereto. No waiver of any of the provisions of this Agreement shall be deemed or shall constitute a waiver of any other provisions hereof (whether or not similar) nor shall such waiver constitute a continuing waiver.

20. Attorneys’ Fees. In the event that any action is instituted by Indemnitee under this Agreement to enforce or interpret any of the terms hereof, Indemnitee shall be entitled to be paid all court costs and expenses, including reasonable attorneys’ fees, incurred by Indemnitee with respect to such action, unless as a part of such action, the court of competent jurisdiction determines that each of the material assertions made by Indemnitee as a basis for such action were not made in good faith or were frivolous. In the event of an action instituted by or in the name of the Company under this Agreement or to enforce or interpret any of the terms of this Agreement, Indemnitee shall be entitled to be paid all court costs and expenses, including attorneys’ fees, incurred by Indemnitee in defense of such action (including with respect to Indemnitee’s counterclaims and cross-claims made in such action), unless as a part of such action the court determines that each of Indemnitee’s material defenses to such action were made in bad faith or were frivolous.

21. Notice. All notice, requests, demands and other communications under this Agreement shall be in writing and shall be deemed duly given (i) if delivered by hand and receipted for by the party addressee on the date of such receipt, or (ii) if mailed by domestic certified or registered mail with postage prepaid, on the third business day after the date postmarked. Addresses for notice to either party are as shown on the signature page of this Agreement, or as subsequently modified by written notice.

22. Consent to Jurisdiction. The Company and Indemnitee each hereby irrevocably consent to the jurisdiction of the courts of the State of Delaware for all purposes in connection with any action or proceeding which arises out of or relates to this Agreement and agree that any action instituted under this Agreement shall be brought only in the state courts of the State of Delaware.

23. Choice of Law. This Agreement shall be governed by and its provisions construed in accordance with the laws of the State of Delaware, as applied to contracts between Delaware residents entered into and to be performed entirely within Delaware.

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IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of the date first above written.

	JACOBS ENGINEERING GROUP INC.
ATTEST:
/s/ William C. Markley
William C. Markley, III, Secretary
	By:	/s/ Joseph J. Jacobs
		Joseph J. Jacobs
	Its:	Chairman of the Board
		1111 South Arroyo Parkway
		Pasadena, California 91105
(SEAL)
AGREED TO AND ACCEPTED:
INDEMNITEE:
/s/ Noel G. Watson
Noel G. Watson
Chief Executive Officer
Jacobs Engineering Group Inc.
1111 South Arroyo Parkway
Pasadena, CA 91105

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EX-10.2

EXHIBIT 10.2

CONSULTING AGREEMENT

THIS CONSULTING AGREEMENT is executed and made effective as of the 1^st day of July 2010, between Jacobs Engineering Group Inc. (hereinafter referred to as “Jacobs”), and Noel G. Watson (hereinafter referred to as “Mr. Watson”).

WHEREAS, Mr. Watson is engaged in providing consulting services in the areas of special projects and client relationships; and

WHEREAS, Jacobs desires to have the services of Mr. Watson made available to it on the terms and conditions hereinafter set forth;

NOW THEREFORE, in consideration of the premises and other good and valuable consideration, receipt of which is hereby acknowledged by each party, the parties hereto agree as follows:

1. Consulting Services. During the period of this Consulting Agreement, Mr. Watson agrees to perform services in a consulting capacity on a general basis and on the particular individual projects assigned and accepted in accordance with the provisions hereof. Mr. Watson agrees to provide such services on an as requested basis. Jacobs agrees to furnish Mr. Watson the use of office facilities, staff support, and supplies during the periods that the services are being performed. Mr. Watson will also be provided a company Corporate American Express Card and International Calling Card for his use in performing his services for Jacobs. He will also continue to be covered by Jacobs’ Business Travel Accident Policy, and International SOS and Control Risks programs.

2. Term. These services will be performed between July 1, 2010, and June 30, 2011. This Consulting Agreement may be extended for additional periods by mutual agreement executed in writing between the parties.

3. Service Requests. Any task upon which Jacobs desires the services of Mr. Watson will be provided to Mr. Watson by the President and CEO of Jacobs or his designee.

4. Specified Cost. Jacobs shall pay Mr. Watson a quarterly retainer of Seventy-five Thousand Dollars ($75,000) per quarter through the term of this Consulting Agreement as set forth in paragraph 2. Mr. Watson shall be reimbursed at cost for reasonable travel and other usual and customary expenses incurred with the prior written approval of Jacobs in connection with the performance of his services.

5 Right to Decline. Mr. Watson shall have the right to decline the acceptance of any task requested of him by Jacobs in the event that such task may come into conflict with other activity of Mr. Watson or for any other good and sufficient reason. In such case, Mr. Watson shall give Jacobs notice in writing that he declines to accept any task within five (5) working days of receipt of said request.

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6. Progress Reports. Mr. Watson shall submit progress reports to Jacobs at reasonable intervals as may be specifically requested by Jacobs.

7. Invoices and Payment. Mr. Watson shall be paid his quarterly retainer in advance starting July 1, 2010, payable within thirty (30) days. Mr. Watson shall promptly submit invoices for costs and expenses as they are incurred in the performance of his services. Such invoices shall be due and payable within thirty (30) days after receipt by Jacobs.

8. Confidential Information. It is recognized that in performing the services covered by this Consulting Agreement, and as result of Mr. Watson’s former employment with Jacobs, Mr. Watson may acquire from Jacobs certain proprietary, sensitive and confidential information. Mr. Watson, therefore, agrees to hold in confidence any and all such information disclosed to it by Jacobs, except (i) information which at the time of disclosure by Jacobs to him is in the public domain; (ii) information which, after its disclosure by Jacobs to him enters the public domain through no fault of his; (iii) information which he can show was in his possession at the time of Jacobs’s disclosure to him and which was not acquired, directly or indirectly, from Jacobs; and (iv) information which was received by him before or after the time of disclosure hereunder from a third party who did not require him to hold such information in confidence and who, to the best of his knowledge and belief did not acquire it, directly or indirectly, from Jacobs under an obligation to confidence. Notwithstanding anything in this Consulting Agreement to the contrary, Mr. Watson’s obligations of confidentiality shall continue to be governed by the Employee Invention and Confidential Information Agreement previously executed by him, the terms of which are incorporated herein by reference and shall survive the completion or cancellation of this Consulting Agreement.

9. Proprietary Rights. All materials prepared or developed by Mr. Watson in the performance and completion of services hereunder shall be and become the sole and exclusive property of Jacobs, without limitation, when made or prepared whether or not delivered to Jacobs, or subject to his right of use thereof to perform the tasks under this Consulting Agreement, and such materials, together with any materials furnished by Jacobs to him hereunder, shall be delivered to Jacobs upon request, and in any event upon completion or cancellation of this Consulting Agreement.

10. Termination. By thirty (30) days’ prior written notice to Jacobs, Mr. Watson may terminate this Consulting Agreement at any time. Jacobs may terminate this Consulting Agreement at any time for cause. For the purposes of this Consulting Agreement, “cause” shall be limited to the following actions of Mr. Watson:

a. Fraud, conviction of a felony, or any misdemeanor involving moral turpitude;

b. Material breach of any provision of this Consulting Agreement;

c. Material breach of, or willful failure to abide by, the provisions of Jacobs’ Business Conduct Policy or the Employee Invention and Confidential Information Agreement; or

d. His resignation or removal from the Board of Directors of Jacobs.

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11. Assignment. Neither party may assign this Consulting Agreement or any part thereof without the prior consent in writing of the other party, except that it may be assigned without such consent to a successor of Jacobs, or to a person, firm, or corporation acquiring all or substantially all of the business and assets of Jacobs. No assignment of this Consulting Agreement shall relieve the assignor until this Consulting Agreement shall have been assumed by the assignee. When duly assigned in accordance with the foregoing, this Assignment shall be binding upon and shall inure to the benefit of the assignee.

12. Subcontracts. Mr. Watson shall not be entitled to subcontract any portion of any services hereunder without the prior written consent of the Jacobs.

13. Warranty. Mr. Watson warrants that he shall perform such services as shall be submitted and accepted hereunder in accordance with recognized professional standards but Mr. Watson shall in no event be held liable for any loss or damage, consequential or otherwise, however sustained by Jacobs as a consequence of Jacobs’s application or utilization of the services or of the results of the services provided hereunder. The foregoing warranty shall constitute the sole liability of Mr. Watson with respect to the services provided hereunder and Jacobs hereby releases Mr. Watson from and against any further liability in connection therewith.

14. Indemnity. Since Mr. Watson is continuing as a non-employee Director of Jacobs during the term of this Agreement, Jacobs agrees that the terms and conditions of Mr. Watson’s Officers and Directors Indemnification Agreement dated February 11, 2003 shall apply to his services under this Agreement.

15. Independent Contractor. Nothing in this Consulting Agreement shall be deemed to constitute Mr. Watson to be an employee of Jacobs. Mr. Watson shall be an independent contractor and shall have responsibility for and control over the details and means of performing his services hereunder and shall be subject to the directions of Jacobs only with respect to the scope and general results required.

16. Integration. This Consulting Agreement contains the entire understanding between the parties with respect to the subject matter hereof, and there are no understandings or representations not set forth or incorporated by reference herein. No subsequent modifications of this Consulting Agreement shall be of any force or effect unless in writing and signed by both parties hereto.

IN WITNESS WHEREOF, the parties have executed this Consulting Agreement as of the day and year first above written.

JACOBS ENGINEERING GROUP INC.		NOEL G. WATSON
By:	/s/ CRAIG L. MARTIN		/s/ NOEL G. WATSON
	Craig L. Martin
	President and CEO
Date:	July 7, 2010	Date:	July 6, 2010

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EX-31.1

EXHIBIT 31.1

CERTIFICATION OF CHIEF EXECUTIVE OFFICER

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

I, Craig L. Martin, certify that:

1. I have reviewed this Quarterly Report on Form 10-Q for the quarter ended July 2, 2010 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/ Craig L. Martin

Craig L. Martin

Chief Executive Officer

July 30, 2010

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 quarter ended July 2, 2010 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/ John W. Prosser Jr.

John W. Prosser, Jr.

Chief Financial Officer

July 30, 2010

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 of Jacobs Engineering Group Inc. (the “Company”) on Form 10-Q for the quarter ended July 2, 2010 as filed with the Securities and Exchange Commission on the date hereof (the “Report”), I, Craig L. Martin, 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/ Craig L. Martin

Craig L. Martin

Chief Executive Officer

July 30, 2010

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 of Jacobs Engineering Group Inc. (the “Company”) on Form 10-Q for the quarter ended July 2, 2010 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

July 30, 2010

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.