JACOBS SOLUTIONS INC.J
JACOBS SOLUTIONS INC. Commitments Disclosure
Commitments and Contingencies and Derivative Financial Instruments
Derivative Financial Instruments
The Company is exposed to interest rate risk under its variable rate borrowings and additionally, due to the nature of the Company's international operations, we are at times exposed to foreign currency risk. As such, we sometimes enter into foreign exchange hedging contracts and interest rate hedging contracts in order to limit our exposure to fluctuating foreign currencies and interest rates.
During fiscal 2022, the Company entered into two treasury lock agreements with a total notional value of $500.0 million to manage its interest rate exposure to the anticipated issuance of fixed rate debt before December 2023. On February 13, 2023, the Company settled these treasury lock agreements and issued the 5.90% Bonds in the aggregate principal amount of $500.0 million, which resulted in the receipt of cash and a pre-tax gain of $37.4 million, which is being amortized to interest expense and recognized over the term of the 5.90% Bonds. See Note 9- Borrowings for further discussion relating to the terms of the 5.90% Bonds. The unrealized net gain on these instruments was $20.9 million and $23.6 million, net of tax, and is included in accumulated other comprehensive loss as of September 26, 2025 and September 27, 2024, respectively.
In fiscal 2020 we entered into interest rate swap agreements to manage the interest rate exposure on our variable rate loans. By entering into the swap agreements, the Company converted the variable rate based liabilities into fixed rate liabilities for a period of to ten years. During the fiscal 2023 transition from LIBOR to SOFR, the terms of the swaps
were amended accordingly and remained designated as cash-flow hedges in accordance with ASC 815, Derivatives and Hedging.
During the fourth quarter of fiscal 2024, in connection with the Separation Transaction, the Company terminated two interest rate swaps with an aggregate notional value of $554.7 million for a realized gain of $35.2 million. This realized gain previously recorded as a component of accumulated other comprehensive loss was recognized in miscellaneous income (expense) in the current period as the related interest payments are no longer expected to occur. As of September 26, 2025 and September 27, 2024, the Company has one ten-year outstanding instrument with a notional value of $200.0 million.
The fair value of the interest rate swap at September 26, 2025 and September 27, 2024 was $20.5 million and $23.0 million, respectively, included within miscellaneous other assets on the Consolidated Balance Sheet. The unrealized net gain on the interest rate swap as of September 26, 2025 and September 27, 2024 was $15.6 million and $17.4 million, respectively, net of tax, and was included in accumulated other comprehensive income.
Additionally, the Company held foreign exchange forward contracts in currencies that support our operations, including Australian Dollar, British Pound and other currencies, with notional values of $491.9 million at September 26, 2025 and $827.3 million at September 27, 2024. The length of these contracts currently ranges from to three months. The fair value of the foreign exchange contracts at September 26, 2025 was $(0.3) million, of which $(2.3) million is included within current liabilities and $2.0 million is included within current assets on the Consolidated Balance Sheet as of September 26, 2025. The fair value of the contracts as of September 27, 2024 was $15.3 million, of which $15.8 million is included within current assets and $(0.5) million is included within current liabilities on the Consolidated Balance Sheet as of September 27, 2024. Associated income statement impacts are included in miscellaneous income (expense) in the Consolidated Statements of Earnings for both periods.
The fair value measurements of these derivatives are being made using Level 2 inputs under ASC 820, Fair Value Measurement, as the measurements are based on observable inputs other than quoted prices in active markets. We are exposed to risk from credit-related losses resulting from nonperformance by counterparties to our financial instruments. We perform credit evaluations of our counterparties under forward exchange and interest rate contracts and expect all counterparties to meet their obligations. We have not experienced credit losses from our counterparties.
Letters of Credit
At September 26, 2025 and September 27, 2024, the Company had issued and outstanding approximately $217.0 million and $306.2 million, respectively, in LOCs and $2.8 billion and $2.3 billion, respectively, in surety bonds. Of the outstanding LOC amount, $0.3 million has been issued under the Revolving Credit Facility and $216.7 million are issued under separate, committed and uncommitted letter-of-credit facilities.
Historical Timeline
| Fiscal Year | Filed | |
|---|---|---|
| 2025 | Nov 20, 2025 | Showing above |
| 2024 | Nov 25, 2024 | |
| 2023 | Nov 21, 2023 | |
| 2022 | Nov 21, 2022 | |
| 2021 | Nov 23, 2021 | |
| 2020 | Nov 24, 2020 | |
| 2019 | Nov 25, 2019 | |
| 2018 | Nov 21, 2018 | |
| 2017 | Nov 21, 2017 | |
| 2016 | Nov 22, 2016 | |
| 2015 | Nov 24, 2015 | |
About Commitments Disclosures
Commitments and contingencies disclosures catalog a company's off-balance-sheet obligations and legal exposures — purchase commitments, guarantee arrangements, pending litigation, and regulatory proceedings. These items represent potential future cash outflows that may not appear as liabilities on the balance sheet until they become probable and estimable.
Key signals: litigation reserves and disclosed loss ranges quantify management's estimate of legal exposure, but unquantified "reasonably possible" losses often represent the larger risk. Watch for changes in language around pending cases — shifts from "remote" to "reasonably possible" or increases in estimated loss ranges signal deteriorating outcomes. Unconditional purchase obligations and take-or-pay contracts create fixed cost structures that reduce operational flexibility. Guarantee arrangements for subsidiaries or joint ventures can create cascading obligations. Compare the total commitment schedule against projected free cash flow to assess whether the company can meet its obligations without additional financing.