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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
(Mark one)
☒ Quarterly Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
For the quarterly period ended April 1, 2022
☐ 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-
JACOBS ENGINEERING GROUP INC.
(Exact name of registrant as specified in its charter) Delaware 95- (State or other jurisdiction of incorporation or organization) (I.R.S. Employer Identification Number)
1999 Bryan Street Suite 1200 Dallas Texas 75201 (Address of principal executive offices) (Zip Code)
(Registrant’s telephone number, including area code)
Securities registered pursuant to Section 12(b) of the Act: _________________________________________________________________
Title of Each Class Trading Symbol(s) Name of Each Exchange on Which Registered Common Stock $1 par value J New York Stock Exchange
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: ☒ Yes ☐ No
Indicate by check-mark whether the registrant has submitted electronically every Interactive Data File required to be submitted 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 such files). ☒ Yes ☐ No
Indicate by check-mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.
Large accelerated filer ☒ Accelerated filer ☐ Non-accelerated filer ☐ Smaller reporting company ☐ Emerging growth company ☐
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐
Indicate by check-mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). ☐ Yes ☒ No
Number of shares of common stock outstanding at April 22, 2022: 128,627,
Part I - FINANCIAL INFORMATION
Item 1. Financial Statements.
CONSOLIDATED BALANCE SHEETS
(In thousands, except share information) April 1, 2022 October 1, 2021 (Unaudited) ASSETS Current Assets: Cash and cash equivalents $ 1,235,422 $ 1,014, Receivables and contract assets 3,302,868 3,101, Prepaid expenses and other 152,989 176, Total current assets 4,691,279 4,291, Property, Equipment and Improvements, net (^) 326,596 353, Other Noncurrent Assets: Goodwill 7,492,015 7,197, Intangibles, net 1,553,283 1,565, Deferred income tax assets 68,376 103, Operating lease right-of-use assets 556,686 650, Miscellaneous 495,057 471, Total other noncurrent assets (^) 10,165,417 9,987, $ 15,183,292 $ 14,632, LIABILITIES AND STOCKHOLDERS’ EQUITY Current Liabilities: Current maturities of long-term debt $ 52,911 $ 53, Accounts payable 921,372 908, Accrued liabilities 1,955,327 1,533, Operating lease liability 162,817 172, Contract liabilities 672,265 542, Total current liabilities (^) 3,764,692 3,209, Long-term Debt 3,196,374 2,839, Liabilities relating to defined benefit pension and retirement plans 366,788 418, Deferred income tax liabilities 211,341 214, Long-term operating lease liability 688,604 758, Other deferred liabilities 163,988 559, Commitments and Contingencies Redeemable Noncontrolling interests 669,527 657, 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 128,899,796 shares and 128,892, shares as of April 1, 2022 and October 1, 2021, respectively 128,900 128, Additional paid-in capital 2,667,256 2,590, Retained earnings 4,069,664 4,015, Accumulated other comprehensive loss (788,374) (794,442) Total Jacobs stockholders’ equity (^) 6,077,446 5,940, Noncontrolling interests 44,532 34, Total Group stockholders’ equity 6,121,978 5,974, $ 15,183,292 $ 14,632,
See the accompanying Notes to Consolidated Financial Statements – Unaudited.
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
Three and Six Months Ended April 1, 2022 and April 2, 2021 (In thousands) (Unaudited) For the Three Months Ended For the Six Months Ended April 1, 2022 April 2, 2021 April 1, 2022 April 2, 2021 Net Earnings (Loss) of the Group $ 109,115 $ (80,189) $ 262,084 $ 186, Other Comprehensive Income: Foreign currency translation adjustment (45,827) (15,450) (54,512) 70, Gain on cash flow hedges 46,491 27,604 55,346 31, Change in pension and retiree medical plan liabilities 12,036 1,490 20,075 (17,863) Other comprehensive income before taxes (^) 12,700 13,644 20,909 84, Income Tax (Expense) Benefit: Foreign currency translation adjustment (400) 3,409 2,590 (11,036) Cash flow hedges (12,290) (7,315) (15,235) (7,094) Change in pension and retiree medical plan liabilities (728) (838) (2,196) (1,664) Income Tax Expense: (^) (13,418) (4,744) (14,841) (19,794)
Net other comprehensive (loss) income (718) 8,900 6,068 64, Net Comprehensive Income (Loss) of the Group 108,397 (71,289) 268,152 251, Net Earnings Attributable to Noncontrolling Interests (10,261) (10,158) (19,514) (20,184) Net (Earnings) Loss Attributable to Redeemable Noncontrolling interests (10,038)^ 101,392^ (19,721)^ 101, Net Comprehensive Income Attributable to Jacobs (^) $ 88,098 $ 19,945 $ 228,917 $ 332,
See the accompanying Notes to Consolidated Financial Statements - Unaudited.
CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY
For the Three Months Ended April 1, 2022 and April 2, 2021 (In thousands) (Unaudited)
Common Stock
Additional Paid-in Capital
Retained Earnings
Accumulated Other Comprehensive Income (Loss)
Total Jacobs Stockholders’ Equity
Noncontrolling Interests
Total Group Stockholders’ Equity Balances at January 1, 2021 $ 130,035 $ 2,597,586 $ 4,249,408 $ (877,539) $ 6,099,490 $ 43,877 $ 6,143, Net earnings — — 11,045 — 11,045 10,158 21, Foreign currency translation adjustments, net of deferred taxes of $(3,409) — — — (12,041) (12,041) — (12,041) Pension liability, net of deferred taxes of $838 — — — 652 652 — 652 Gain on derivatives, net of deferred taxes of $7,315 — — — 20,289 20,289 — 20, Dividends — — (27,482) — (27,482) — (27,482) Redeemable Noncontrolling interests redemption value adjustment to Common Shareholders — — (107,238) — (107,238) — (107,238) Noncontrolling interests - distributions and other — — — — — (18,728) (18,728) Stock based compensation — 15,136 — — 15,136 — 15, Issuances of equity securities including shares withheld for taxes 137 8,732 (133) — 8,736 — 8, Repurchases of equity securities —^ —^ (148)^ —^ (148)^ —^ (148) Balances at April 2, 2021 $^ 130,172^ $^ 2,621,454^ $^ 4,125,452^ $^ (868,639)^ $^ 6,008,439^ $^ 35,307^ $^ 6,043,
Balances at December 31, 2021 $ 129,153 $ 2,641,059 $ 4,087,390 $ (787,656) $ 6,069,946 $ 29,999 $ 6,099, Net earnings — — 88,816 — 88,816 10,261 99, Foreign currency translation adjustments, net of deferred taxes of $400 — — — (46,227) (46,227) — (46,227) Pension liability, net of deferred taxes of $728 — — — 11,308 11,308 — 11, Gain on derivatives, net of deferred taxes of $12,290 — — — 34,201 34,201 — 34, Dividends — — (29,871) — (29,871) — (29,871) Redeemable Noncontrolling interests redemption value adjustment — — (35,117) — (35,117) — (35,117) Noncontrolling interests - distributions and other — — — — — 4,272 4, Stock based compensation — 18,147 — — 18,147 — 18, Issuances of equity securities including shares withheld for taxes 142 16,134 (33) — 16,243 — 16, Repurchases of equity securities (395)^ (8,084)^ (41,521)^ —^ (50,000)^ —^ (50,000) Balances at April 1, 2022 $^ 128,900^ $^ 2,667,256^ $^ 4,069,664^ $^ (788,374)^ $^ 6,077,446^ $^ 44,532^ $^ 6,121,
See the accompanying Notes to Consolidated Financial Statements – Unaudited.
CONSOLIDATED STATEMENTS OF CASH FLOWS
For the Six Months Ended April 1, 2022 and April 2, 2021 (In thousands) (Unaudited) For the Six Months Ended April 1, 2022 April 2, 2021 Cash Flows from Operating Activities: Net earnings attributable to the Group $ 262,084 $ 186, Adjustments to reconcile net earnings to net cash flows provided by operations: Depreciation and amortization: Property, equipment and improvements 52,620 48, Intangible assets 95,338 53, Gain on sale of ECR business — (15,608) Gain on investment in equity securities — (114,443) Stock based compensation 25,161 26, Equity in earnings of operating ventures, net of return on capital distributions 13,280 6, Loss on disposals of assets, net 421 353 Impairment of long-lived assets and equity method investment 74,585 33, Deferred income taxes 16,040 41, Changes in assets and liabilities, excluding the effects of businesses acquired: Receivables and contract assets, net of contract liabilities (33,881) 73, Prepaid expenses and other current assets 15,916 14, Miscellaneous other assets 67,201 76, Accounts payable 18,448 (152,750) Accrued liabilities (119,982) 99, Other deferred liabilities (33,305) (22,490) Other, net (7,670)^ (4,797) Net cash provided by operating activities 446,256^ 350, Cash Flows from Investing Activities: Additions to property and equipment (48,223) (45,053) Disposals of property and equipment and other assets 1,064 427 Capital contributions to equity investees, net of return of capital distributions 1,082 (4,193) Acquisitions of businesses, net of cash acquired (412,748) (1,741,062) Disposal of investment in equity securities — 13, Proceeds related to sales of businesses —^ 36, Net cash used for investing activities (458,825)^ (1,740,494) Cash Flows from Financing Activities: Proceeds from long-term borrowings 1,519,000 3,118, Repayments of long-term borrowings (1,125,528) (1,328,283) Proceeds from short-term borrowings — — Repayments of short-term borrowings (6,359) (7,675) Debt issuance costs — (2,697) Proceeds from issuances of common stock 28,187 18, Common stock repurchases (50,000) (24,949) Taxes paid on vested restricted stock (28,398) (25,642) Cash dividends to shareholders (57,247) (52,438) Net (dividends) contributions associated with noncontrolling interests (9,416) (29,442) Repurchase of redeemable noncontrolling interests (35,095)^ — Net cash provided by financing activities 235,144^ 1,665, Effect of Exchange Rate Changes (12,792) 28, Net Increase in Cash and Cash Equivalents and Restricted Cash 209,783 304, Cash and Cash Equivalents, including Restricted Cash, at the Beginning of the Period 1,026,575 862, Cash and Cash Equivalents, including Restricted Cash, at the End of the Period $^ 1,236,358^ $^ 1,166,
See the accompanying Notes to Consolidated Financial Statements – Unaudited.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
1. 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 (“U.S. GAAP”) have been condensed or omitted. Readers of this Quarterly Report on Form 10-Q should also read our consolidated financial statements and the notes thereto included in our Annual Report on Form 10- K for the fiscal year ended October 1, 2021 (“2021 Form 10-K”).
In the opinion of management, the accompanying unaudited consolidated financial statements contain all adjustments (consisting of normal recurring adjustments) necessary for a fair presentation of our consolidated financial statements at April 1, 2022, and for the three and six month periods ended April 1, 2022.
Our interim results of operations are not necessarily indicative of the results to be expected for the full fiscal year.
On February 4, 2022, the Company acquired StreetLight Data, Inc. ("StreetLight"). StreetLight is a pioneer of mobility analytics who uses its data and machine learning resources to shed light on mobility and enable users to solve complex transportation problems. The Company paid total base consideration of approximately $190.7 million in cash, and issued $0.9 million in equity and $5.2 million in in-the-money stock options to the former owners of StreetLight. The Company also paid off StreetLight's debt of approximately $1.0 million simultaneously with the consummation of the acquisition. The Company has recorded its preliminary purchase price allocation associated with the acquisition, which is summarized in Note 16- Other Business Combinations.
On November 19, 2021, a subsidiary of Jacobs acquired all outstanding shares of common stock of BlackLynx ("BlackLynx"), a provider of high- performance software, to complement Jacobs' portfolio of cyber, intelligence and digital solutions. The Company paid total base consideration of approximately $235.4 million in cash to the former owners of BlackLynx. In addition, the transaction involved the potential payment of future consideration that is contingent upon the achievement of certain revenue and gross margin thresholds being achieved in calendar year 2022. The estimated fair value of the contingent consideration on the acquisition date is $0.4 million. The future contingent consideration will be paid, if and to the extent achieved, in the second quarter of fiscal 2023. In conjunction with the acquisition, the Company also paid off BlackLynx's debt of approximately $5.3 million simultaneously with the consummation of the acquisition. The Company has recorded its preliminary purchase price allocation associated with the acquisition, which is summarized in Note 16- Other Business Combinations.
On March 2, 2021, Jacobs completed the strategic investment of a 65% interest in PA Consulting Group Limited ("PA Consulting"), a UK-based leading innovation and transformation consulting firm. The total consideration paid by the Company was $1.7 billion, funded through cash on hand, proceeds from a new term loan and draws on the Company's existing revolving credit facility. Further, in connection with the transaction, an additional $261 million in investment proceeds had not yet been distributed at the investment date due to continuing employment requirements of associated management owners. Consequently, this amount represented compensation expense incurred related to the investment that was expensed subsequent to the date of the transaction, and was reflected in selling, general and administrative expense and cash from operations for the fiscal year ended October 1, 2021. The remaining 35% interest was acquired by PA Consulting employees, whose redeemable noncontrolling interests had a fair value of $582.4 million on the closing date, including subsequent purchase accounting adjustments. PA Consulting is accounted for as a consolidated subsidiary and as a separate operating segment. See Note 15- PA Consulting Business Combination for more discussion on the investment and Note 12- Borrowings for more discussion on the financing for the transaction.
On November 24, 2020, a subsidiary of Jacobs completed the acquisition of Buffalo Group, a leader in advanced cyber and intelligence solutions, which allows Jacobs to further expand its cyber and intelligence solutions offerings to
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (CONTINUED)
The net carrying amounts of cash and cash equivalents, trade receivables and payables and short-term debt approximate fair value due to the short-term nature of these instruments. See Note 12- Borrowings for a discussion of the fair value of long-term debt.
Fair value measurements relating to our business combinations are made primarily using Level 3 inputs including discounted cash flow and to the extent applicable, Monte Carlo simulation techniques. Fair value for the identified intangible assets is generally estimated using inputs primarily for the income approach using the multiple period excess earnings method and the relief from royalties method. The significant assumptions used in estimating fair value include (i) revenue projections of the business, including profitability, (ii) attrition rates and (iii) the estimated discount rate that reflects the level of risk associated with receiving future cash flows. Other personal property assets, such as furniture, fixtures and equipment, are valued using the cost approach, which is based on replacement or reproduction costs of the asset less depreciation. The fair value of the contingent consideration is estimated using a Monte Carlo simulation and the significant assumptions used include projections of revenues and probabilities of meeting those projections. Key inputs to the valuation of the noncontrolling interests include projected cash flows and the expected volatility associated with those cash flows.
4. New Accounting Pronouncements
ASU 2020-04, Reference Rate Reform , (Topic 848): Facilitation of the Effects of Reference Rate Reform on Financial Reporting is intended to provide relief for entities impacted by reference rate reform and contains provisions and optional expedients designed to simplify requirements around designation of hedging relationships, probability assessments of hedged forecasted transactions and accounting for modifications of contracts that refer to LIBOR or other rates affected by reference rate reform. The guidance is elective and is effective on the date of issuance. ASU 2020-04 is applied prospectively to contract modifications and as of the effective date for existing and new eligible hedging relationships. The guidance is temporary and will generally not be applicable to contract modifications which occur after December 31, 2022. The adoption of the new guidance in the first quarter of fiscal 2022 allowed the Company to continue its British pound denominated interest rate hedge relationships which previously defined LIBOR as the benchmark interest rate and in December 2021 were amended to replace LIBOR with the Sterling Overnight Index Average rate ("SONIA").
ASU No. 2021-08, Business Combinations (Topic 805): Accounting for Contract Assets and Contract Liabilities from Contracts with Customers , is effective for fiscal years beginning after December 15, 2022. ASU 2021-08 requires contract assets and contract liabilities (i.e., deferred revenue) acquired in a business combination to be recognized and measured by the acquirer on the acquisition date in accordance with ASC 606, Revenue from Contracts with Customers. Generally, this new guidance will result in the acquirer recognizing contract assets and contract liabilities at the same amounts recorded by the acquiree. The Company adopted the new guidance in the first quarter of fiscal 2022 and the adoption had no impact on the Company's financial position, results of operations or cash flows.
5. Revenue Accounting for Contracts
Disaggregation of Revenues Our revenues are principally derived from contracts to provide a diverse range of technical, professional, and construction services to a large number of industrial, commercial, and governmental clients. We provide a broad range of engineering, design, and architectural services; construction
and construction management services; operations and maintenance services; and technical, digital, process, scien fic and systems consul ng services.
We provide our services through offices and subsidiaries located primarily in North America, Europe, the Middle East, India, Australia, Africa, and Asia. We provide our services under cost-reimbursable and fixed-price contracts. Our contracts are with many different customers in numerous industries. Refer to Note 20- Segment Information for additional information on how we disaggregate our revenues by reportable segment.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (CONTINUED)
The following table further disaggregates our revenue by geographic area for the three and six months ended April 1, 2022 and April 2, 2021 (in thousands):
Three Months Ended Six Months Ended April 1, 2022 April 2, 2021 April 1, 2022 April 2, 2021 Revenues: United States $ 2,499,737 $ 2,474,672 $ 4,648,289 $ 4,931, Europe 937,864 756,474 1,804,216 1,395, Canada 67,152 53,687 132,192 109, Asia 36,533 28,650 68,620 56, India 28,844 16,463 50,992 31, Australia and New Zealand 181,650 159,778 359,302 297, Middle East and Africa 82,279^ 58,149^ 151,073^ 108, Total $^ 3,834,059^ $^ 3,547,873^ $^ 7,214,684^ $^ 6,929,
Contract Liabilities Contract liabilities represent amounts billed to clients in excess of revenue recognized to date. Revenue recognized for the three and six months ended April 1, 2022 that was previously included in the contract liability balance on October 1, 2021 was $79.6 million and $371.0 million, respectively. Revenue recognized for the three and six months ended April 2, 2021 that was included in the contract liability balance on October 2, 2020 was $96. million and $355.6 million respectively.
Remaining Performance Obligation The Company’s remaining performance obligations as of April 1, 2022 represent a measure of the total dollar value of work to be performed on contracts awarded and in progress. The Company had approximately $15.2 billion in remaining performance obligations as of April 1, 2022. The Company expects to recognize approximately 57% of our remaining performance obligations into revenue within the next twelve months and the remaining 43% thereafter.
Although remaining performance obligations reflect business that is considered to be firm, cancellations, scope adjustments, foreign currency exchange fluctuations or deferrals may occur that impact their volume or the expected timing of their recognition. Remaining performance obligations are adjusted to reflect any known project cancellations, revisions to project scope and cost, foreign currency exchange fluctuations and project deferrals, as appropriate.
6. Earnings Per Share and Certain Related Information
Basic and diluted earnings per share (“EPS”) are computed using the two-class method, which is an earnings allocation method that determines EPS for common shares and participating securities. The undistributed earnings are allocated between common shares and participating securities as if all earnings had been distributed during the period. Participating securities and common shares have equal rights to undistributed earnings. Net earnings used for the purpose of determining basic and diluted EPS is determined by taking net earnings less earnings available to participating securities.
The following table reconciles the denominator used to compute basic EPS to the denominator used to compute diluted EPS for the three and six months ended April 1, 2022 and April 2, 2021 (in thousands):
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (CONTINUED)
As of April 1, 2022, the Company has $732.9 million remaining under the 2020 Repurchase Authorization.
Our share repurchase program does not obligate the Company to purchase any shares. Share repurchases may be executed through various means including, without limitation, accelerated share repurchases, open market transactions, privately negotiated transactions, purchases pursuant to Rule 10b5-1 plans or otherwise. The authorization for the share repurchase programs may be terminated, increased or decreased by the Company’s Board of Directors in its discretion at any time. The timing, amount and manner of share repurchases may depend upon market conditions and economic circumstances, availability of investment opportunities, the availability and costs of financing, currency fluctuations, the market price of the Company's common stock, other uses of capital and other factors.
Dividends On April 28, 2022, the Company’s Board of Directors declared a quarterly dividend of $0.23 per share of the Company’s common stock to be paid on June 24, 2022, to shareholders of record on the close of business on May 27, 2022. Future dividend declarations are subject to review and approval by the Company’s Board of Directors. Dividends paid through the second fiscal quarter of 2022 and the preceding fiscal year are as follows:
Declaration Date Record Date Payment Date Cash Amount (per share) January 26, 2022 February 25, 2022 March 25, 2022 $0. September 23, 2021 October 15, 2021 October 29, 2021 $0. July 14, 2021 July 30, 2021 August 27, 2021 $0. April 22, 2021 May 28, 2021 June 25, 2021 $0. January 27, 2021 February 26, 2021 March 26, 2021 $0. September 17, 2020 October 2, 2020 October 30, 2020 $0.
(1) Includes commissions paid and calculated at the average price per share
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (CONTINUED)
7. Goodwill and Intangibles
The carrying value of goodwill and appearing in the accompanying Consolidated Balance Sheets at April 1, 2022 and October 1, 2021 was as follows (in thousands):
Critical Mission Solutions People & Places Solutions PA Consulting Total Balance October 1, 2021 $ 2,550,631 $ 3,240,783 $ 1,405,586 $ 7,197, Acquired 199,587 147,568 — 347, Foreign currency translation (3,477) (7,165) (47,481) (58,123) Post-Acquisition Adjustments — — 5,983 5, Balance April 1, 2022 $^ 2,746,741^ $^ 3,381,186^ $^ 1,364,088^ $^ 7,492,
The following table provides certain information related to the Company’s acquired intangibles in the accompanying Consolidated Balance Sheets at April 1, 2022 and October 1, 2021 (in thousands):
Customer Relationships, Contracts and Backlog Developed Technology Trade Names Total Balances October 1, 2021 $ 1,309,061 $ 40,020 $ 216,677 $ 1,565, Amortization (86,394) (3,312) (5,632) (95,338) Acquired 69,574 42,787 — 112, Foreign currency translation (22,484) (190) (6,824) (29,498) Balances April 1, 2022 $^ 1,269,757^ $^ 79,305^ $^ 204,221^ $^ 1,553,
The following table presents estimated amortization expense of intangible assets for the remainder of fiscal 2022 and for the succeeding years. The amounts below include preliminary amortization estimates for the Streetlight and BlackLynx opening balance sheet fair values that are still subject to change.
Fiscal Year (in millions) 2022 $ 98. 2023 196. 2024 196. 2025 196. 2026 180. Thereafter 684. Total $^ 1,553.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (CONTINUED)
10. Income Taxes
The Company’s effective tax rates from continuing operations for the three months ended April 1, 2022 and April 2, 2021 were 29.7% and 18.5%, respectively, with the change due primarily to the absence of a $7.7 million benefit the Company recognized in the three months ended April 2, 2021 associated with a change in the Company’s assertion about the indefinite reinvestment of certain foreign unremitted earnings in India, other discrete foreign tax items and higher state taxes, partly offset by the absence in the current year of certain nondeductible compensation related charges associated with our PA Consulting investment that occurred in the three month period of fiscal 2021. The Company's effective tax rates from continuing operations for the six months ended April 1, 2022 and April 2, 2021 were 19.1% and 27.4%, respectively, with the decrease primarily due to a tax benefit of $15.7 million related to the release of valuation allowance on foreign tax credits for the six months ended April 1, 2022 and the absence of certain non-deductible pre-tax compensation charges associated with our investment in PA Consulting for the six month period in fiscal 2021, partly offset by the absence of the 2021 period benefit from the India unremitted earnings reinvestment item mentioned above. The amount of income taxes the Company pays is subject to ongoing audits by tax jurisdictions around the world. In the normal course of business, the Company is subject to examination by tax authorities throughout the world, including such major jurisdictions as Australia, Canada, India, the Netherlands, the United Kingdom and the United States. Our estimate of the potential outcome of any uncertain tax issue is subject to our assessment of the relevant risks, facts, and circumstances existing at the time. The Company believes that it has adequately provided for reasonably foreseeable outcomes related to these matters. However, future results may include favorable or unfavorable adjustments to our estimated tax liabilities in the period the assessments are made or resolved, which may impact our effective tax rate.
11. Joint Ventures, VIEs and Other Investments
We execute certain contracts jointly with third parties through various forms of joint ventures. 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. Many of these joint ventures are formed for a specific project. The assets of our joint ventures generally consist almost entirely of cash and receivables (representing amounts due from clients), and the liabilities of our joint ventures generally 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. Many of the joint ventures are deemed to be variable interest entities (“VIE”) because they lack sufficient equity to finance the activities of the joint venture.
The assets of a joint venture are restricted for use to the obligations of the particular joint venture and are not available for general operations of the Company. Our risk of loss on these arrangements is usually shared with our partners. The liability of each partner is usually joint and several, which means that each partner may become liable for the entire risk of loss on the project. Furthermore, on some of our projects, the Company has granted guarantees that may encumber both our contracting subsidiary company and the Company for the entire risk of loss on the project. The Company is unable to estimate the maximum potential amount of future payments that we could be required to make under outstanding performance guarantees related to joint venture projects due to a number of factors, including but not limited to, the nature and extent of any contractual defaults by our joint venture partners, resource availability, potential performance delays caused by the defaults, the location of the projects, and the terms of the related contracts. Refer to Note 19 - Commitments and Contingencies and Derivative Financial Instruments for further discussion relating to performance guarantees.
For consolidated joint ventures, the entire amount of the services performed, and the costs associated with these services, including the services provided by the other joint venture partners, are included in the Company's results of operations. Likewise, the entire amount of each of the assets and liabilities are included in the Company’s Consolidated Balance Sheets. For the consolidated VIEs, the carrying value of assets and liabilities was $386. million and $255.8 million, respectively, as of April 1, 2022 and $289.8 million and $220.8 million, respectively, as of October 1, 2021. There are no consolidated VIEs that have debt or credit facilities.
On March 2, 2021, Jacobs completed the strategic investment of a 65% interest in PA Consulting, a UK-based leading innovation and transformation consulting firm. The remaining 35% interest was acquired by PA Consulting employees. PA Consulting is accounted for as a consolidated subsidiary under U.S. GAAP accounting rules. See Note 15 - PA Consulting Business Combination for more discussion on the acquisition.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (CONTINUED)
Unconsolidated joint ventures are accounted for under proportionate consolidation or the equity method. Proportionate consolidation is used for joint ventures that include unincorporated legal entities and activities of the joint venture that are construction-related. For those joint ventures accounted for under proportionate consolidation, only the Company’s pro rata share of assets, liabilities, revenue, and costs are included in the Company’s balance sheet and results of operations.
For the proportionate consolidated VIEs, the carrying value of assets and liabilities was $119.5 million and $146.1 million, respectively, as of April 1, 2022, and $115.1 million and $129.5 million, respectively, as of October 1, 2021. For those joint ventures accounted for under the equity method, the Company's investment balances for the joint venture are included in Other Noncurrent Assets: Miscellaneous on the balance sheet and the Company’s pro rata share of net income is included in revenue. In limited cases, there are basis differences between the equity in the joint venture and the Company's investment created when the Company purchased its share of the joint venture. These basis differences are amortized based on an internal allocation to underlying net assets, excluding allocations to goodwill. As of April 1, 2022, the Company’s equity method investments exceeded its share of venture net assets by $36.3 million. Our investments in equity method joint ventures on the Consolidated Balance Sheets as of April 1, 2022 and October 1, 2021 were $105.4 million and $121.3 million, respectively. During the three months ended April 1, 2022 and April 2, 2021, we recognized income from equity method joint ventures of $12.5 million and $11.9 million, respectively. During the six months ended April 1, 2022 and April 2, 2021, we recognized income from equity method joint ventures of $19.3 million and $30.2 million, respectively.
Accounts receivable from unconsolidated joint ventures accounted for under the equity method is $22.4 million and $19.7 million as of April 1, 2022 and October 1, 2021, respectively.
The Company held a 24.5% interest in AWE Management Ltd ("AWE ML") that was accounted for under the equity method. AWE ML was previously under a contractual operating arrangement with the UK Ministry of Defence (MoD) with multiple years remaining under the arrangement, and during fiscal 2021, the MoD unexpectedly announced plans to change its operating agreements with AWE ML that resulted in the early termination of the current contract in 2021. During the six months ended April 2, 2021, the Company recorded an other-than-temporary impairment charge on its investment in AWE ML in the amount of $33.2 million, which was included in miscellaneous income (expense), net in the consolidated statement of earnings as a result of the contract termination.
The Company held a cost method investment in C3.ai, Inc. ("C3") and in the first quarter of fiscal 2021, C3 completed an initial public offering and as a result the Company carried its investment in C3 at fair value, with changes reflected in net income as it is an investment in equity securities with a readily determinable fair value based on quoted market prices. During fiscal 2021 and subsequent to the IPO, the Company sold all shares owned in C3. Dividend income, unrealized gains and related realized gains on disposal of these shares of $48.6 million were recognized in miscellaneous income (expense), net, in the consolidated statement of earnings for the six months ended April 2, 2021.
