UNITED STATES

~~UNITED STATES~~
SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

FORM 10-Q

~~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 ~~December 31, 2017~~June 30, 2021

OR☐

oTRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from to

Commission File Number ~~0-52423~~000-52423

AECOM

(Exact name of registrant as specified in its charter)

Delaware (		61-1088522
State or ~~other jurisdiction~~Other Jurisdiction Of Incorporation or Organization		I.R.S. Employer Identification Number

300 South Grand Avenue, Suite 900
Los Angeles, California		90071
Address of ~~incorporation or organization)~~ Principal Executive Offices		Zip Code

(213) 593-8100

Registrant’s Telephone Number, Including Area Code

Former Name, Former Address and Former Fiscal Year, if Changed Since Last Report

Securities registered pursuant to Section 12(b) of the Act:

Title of each class		Trading Symbol(s)		Name of each exchange on which registered
~~61-1088522~~ ~~(I.R.S. Employer~~ ~~Identification Number)~~Common Stock, $0.01 par value		ACM		New York Stock Exchange

~~1999 Avenue of the Stars, Suite 2600~~
~~Los Angeles, California 90067~~

~~(Address of principal executive office and zip code)~~

~~(213) 593-8000~~

~~(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. Yes x☒ No o☐

Indicate by check mark whether the registrant has submitted electronically ~~and posted on its corporate website, 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). Yes x No ☒ 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,” ~~“non-accelerated filer,”~~ “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act. ~~(Check one):~~


Large accelerated filer x	☒	Accelerated filer o	☐
Non-accelerated filer	☐	Smaller reporting company	☐
~~Non-accelerated filer~~ o		~~Smaller reporting company~~ o
~~(Do not check if a smaller reporting company)~~		Emerging growth companyo	☐

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. ~~Yes~~ o No o◻

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

☒

As of ~~January 31, 2018, 159,169,121~~August 5, 2021, 144,061,817 shares of the registrant’s common stock were outstanding.

Table of Contents

AECOM

INDEX

~~INDEX~~


PART I.		FINANCIAL INFORMATION	1

Item 1.	~~Item 1.~~	Financial Statements	1

		Consolidated Balance Sheets as of ~~December 31, 2017~~June 30, 2021 (unaudited) and September 30, ~~2017~~2020	1

		Consolidated Statements of Operations for the Three and Nine Months Ended ~~December 31, 2017~~June 30, 2021 (unaudited) and ~~December 31, 2016~~June 30, 2020 (unaudited)	2

		Consolidated Statements of Comprehensive (Loss) Income ~~(Loss)~~ for the Three and Nine Months Ended ~~December 31, 2017~~June 30, 2021 (unaudited) and ~~December 31, 2016~~June 30, 2020 (unaudited)	3

	Consolidated Statements of Stockholders’ Equity for the Three and Nine Months Ended June 30, 2021 (unaudited) and June 30, 2020 (unaudited)	4

	Consolidated Statements of Cash Flows for the ~~Three~~Nine Months Ended ~~December 31, 2017~~June 30, 2021 (unaudited) and ~~December 31, 2016~~June 30, 2020 (unaudited)	46

		Notes to Consolidated Financial Statements (unaudited)	57

Item 2.	~~Item 2.~~	Management’s Discussion and Analysis of Financial Condition and Results of Operations	2732

Item 3.	~~Item 3.~~	Quantitative and Qualitative Disclosures About Market Risk	3850

Item 4.	~~Item 4.~~	Controls and Procedures	3950

PART II.	OTHER INFORMATION	~~OTHER INFORMATION~~	3951

Item 1.	~~Item 1.~~Legal Proceedings	~~Legal Proceedings~~	3951

Item 1A.	~~Item 1A.~~Risk Factors	~~Risk Factors~~	3951

Item 2.	~~Item 2.~~	Unregistered Sales of Equity Securities and Use of Proceeds	51

Item 3.	Defaults Upon Senior Securities	52

Item 4.	~~Item 4.~~	Mine Safety Disclosure	52

Item 5.	~~Item 6.~~Other Information	~~Exhibits~~	52

Item 6.	Exhibits	53

SIGNATURES		54

Table of Contents

PART I. FINANCIAL INFORMATION

Item 1. Financial Statements

AECOM

Consolidated Balance Sheets

(unaudited - in thousands, except share data)

December 31,
2017

September 30,
2017

(Unaudited)

ASSETS

CURRENT ASSETS:

Cash and cash equivalents

$
616,127

$
665,871

Cash in consolidated joint ventures

197,039

136,491

Total cash and cash equivalents

813,166

802,362

Accounts receivable—net

5,313,672

5,127,743

Prepaid expenses and other current assets

676,951

696,718

Income taxes receivable

38,251

55,399

TOTAL CURRENT ASSETS

6,842,040

6,682,222

PROPERTY AND EQUIPMENT—NET

631,601

621,357

DEFERRED TAX ASSETS—NET

216,742

171,331

INVESTMENTS IN UNCONSOLIDATED JOINT VENTURES

370,294

364,223

GOODWILL

5,997,000

5,992,881

INTANGIBLE ASSETS—NET

411,759

415,096

OTHER NON-CURRENT ASSETS

153,515

149,846

TOTAL ASSETS

$
14,622,951

$
14,396,956

LIABILITIES AND STOCKHOLDERS’ EQUITY

CURRENT LIABILITIES:

Short-term debt

$
2,361

$
1,221

Accounts payable

2,426,469

2,249,872

Accrued expenses and other current liabilities

2,072,155

2,245,519

Income taxes payable

18,244

38,176

Billings in excess of costs on uncompleted contracts

995,914

902,812

Current portion of long-term debt

160,914

140,779

TOTAL CURRENT LIABILITIES

5,676,057

5,578,379

OTHER LONG-TERM LIABILITIES

296,578

322,199

DEFERRED TAX LIABILITY—NET

32,327

20,515

PENSION BENEFIT OBLIGATIONS

548,307

559,068

LONG-TERM DEBT

3,738,901

3,702,109

TOTAL LIABILITIES

10,292,170

10,182,270

COMMITMENTS AND CONTINGENCIES (Note 14)

AECOM STOCKHOLDERS’ EQUITY:

Common stock—authorized, 300,000,000 shares of $0.01 par value as of December 31 and September 30, 2017; issued and outstanding 159,132,336 and 157,529,419 shares as of December 31 and September 30, 2017, respectively

1,591

1,575

Additional paid-in capital

3,734,008

3,733,572

Accumulated other comprehensive loss

(704,184
)
(700,661
)
Retained earnings

1,072,954

961,640

TOTAL AECOM STOCKHOLDERS’ EQUITY

4,104,369

3,996,126

Noncontrolling interests

226,412

218,560

TOTAL STOCKHOLDERS’ EQUITY

4,330,781

4,214,686

TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY

$
14,622,951

$
14,396,956


	June 30,		September 30,
	2021		2020
ASSETS
CURRENT ASSETS:
Cash and cash equivalents	$	935,434	$	1,599,688
Cash in consolidated joint ventures		113,596		108,644
Total cash and cash equivalents		1,049,030		1,708,332
Accounts receivable—net		2,669,113		2,920,730
Contract assets		1,498,550		1,611,525
Prepaid expenses and other current assets		867,154		691,707
Current assets held for sale		127,017		562,435
Income taxes receivable		37,629		35,637
TOTAL CURRENT ASSETS		6,248,493		7,530,366
PROPERTY AND EQUIPMENT—NET		410,864		381,672
DEFERRED TAX ASSETS—NET		444,647		361,675
INVESTMENTS IN UNCONSOLIDATED JOINT VENTURES		331,994		297,595
GOODWILL		3,516,781		3,484,221
INTANGIBLE ASSETS—NET		61,666		76,917
OTHER NON-CURRENT ASSETS		311,333		160,036
OPERATING LEASE RIGHT-OF-USE ASSETS		637,313		652,115
NON-CURRENT ASSETS HELD FOR SALE		—		54,354
TOTAL ASSETS	$	11,963,091	$	12,998,951
LIABILITIES AND STOCKHOLDERS’ EQUITY
CURRENT LIABILITIES:
Short-term debt	$	2,876	$	223
Accounts payable		2,068,440		2,358,228
Accrued expenses and other current liabilities		2,335,077		2,249,704
Income taxes payable		50,118		47,103
Contract liabilities		1,080,271		996,922
Current liabilities held for sale		90,891		417,623
Current portion of long-term debt		52,358		20,651
TOTAL CURRENT LIABILITIES		5,680,031		6,090,454
OTHER LONG-TERM LIABILITIES		143,286		162,784
OPERATING LEASE LIABILITIES, NON-CURRENT		711,494		745,287
LONG-TERM LIABILITIES HELD FOR SALE		12,260		79,254
DEFERRED TAX LIABILITY-NET		6,157		3,491
PENSION BENEFIT OBLIGATIONS		439,073		463,001
LONG-TERM DEBT		2,153,812		2,041,136
TOTAL LIABILITIES		9,146,113		9,585,407

COMMITMENTS AND CONTINGENCIES (Note 15)

AECOM STOCKHOLDERS’ EQUITY:
Common stock—authorized, 300,000,000 shares of $0.01 par value as of June 30, 2021 and September 30, 2020; issued and outstanding 144,877,676 and 157,044,687 shares as of June 30, 2021 and September 30, 2020, respectively		1,449		1,570
Additional paid-in capital		4,100,482		4,035,414
Accumulated other comprehensive loss		(910,532)		(918,674)
(Accumulated deficits) / Retained earnings		(483,362)		174,248
TOTAL AECOM STOCKHOLDERS’ EQUITY		2,708,037		3,292,558
Noncontrolling interests		108,941		120,986
TOTAL STOCKHOLDERS’ EQUITY		2,816,978		3,413,544
TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY	$	11,963,091	$	12,998,951

See accompanying Notes to Consolidated Financial Statements.

Table of Contents

AECOM

Consolidated Statements of Operations

(unaudited - in thousands, except per share data)

Three Months Ended

December 31,
2017

December 31,
2016

Revenue

$
4,910,832

$
4,358,349

Cost of revenue

4,774,680

4,188,376

Gross profit

136,152

169,973

Equity in earnings of joint ventures

29,720

21,471

General and administrative expenses

(34,670
)
(32,639
)
Acquisition and integration expenses

—

(15,412
)
Income from operations

131,202

143,393

Other income

2,283

860

Interest expense

(56,165
)
(53,637
)
Income before income tax (benefit) expense

77,320

90,616

Income tax (benefit) expense

(47,093
)
24,838

Net income

124,413

65,778

Noncontrolling interests in income of consolidated subsidiaries, net of tax

(13,099
)
(18,599
)
Net income attributable to AECOM

$
111,314

$
47,179

Net income attributable to AECOM per share:

Basic

$
0.70

$
0.31

Diluted

$
0.69

$
0.30

Weighted average shares outstanding:

Basic

157,909

154,255

Diluted

161,847

157,993


	Three Months Ended				Nine Months Ended
	June 30,		June 30,		June 30,		June 30,
	2021		2020		2021		2020
Revenue	$	3,408,357	$	3,189,679	$	9,987,085	$	9,671,026
Cost of revenue		3,206,823		3,004,600		9,405,922		9,151,334
Gross profit		201,534		185,079		581,163		519,692

Equity in earnings of joint ventures		8,270		8,573		23,628		32,006
General and administrative expenses		(36,340)		(54,482)		(110,707)		(139,133)
Restructuring costs		(12,971)		(20,300)		(34,755)		(96,438)
Income from operations		160,493		118,870		459,329		316,127

Other income		4,482		3,119		11,812		9,557
Interest expense		(149,038)		(34,925)		(212,489)		(112,413)
Income from continuing operations before taxes		15,937		87,064		258,652		213,271
Income tax (benefit) expense for continuing operations		(17,938)		(7,184)		42,811		30,326
Net income from continuing operations		33,875		94,248		215,841		182,945
Net loss from discontinued operations		(15,502)		(126)		(119,168)		(112,695)
Net income		18,373		94,122		96,673		70,250

Net income attributable to noncontrolling interests from continuing operations		(5,901)		(3,138)		(16,160)		(12,428)
Net income attributable to noncontrolling interests from discontinued operations		(941)		(1,645)		(3,495)		(14,005)
Net income attributable to noncontrolling interests		(6,842)		(4,783)		(19,655)		(26,433)

Net income attributable to AECOM from continuing operations		27,974		91,110		199,681		170,517
Net loss attributable to AECOM from discontinued operations		(16,443)		(1,771)		(122,663)		(126,700)
Net income attributable to AECOM	$	11,531	$	89,339	$	77,018	$	43,817

Net income (loss) attributable to AECOM per share:
Basic continuing operations per share	$	0.19	$	0.57	$	1.35	$	1.07
Basic discontinued operations per share	$	(0.11)	$	(0.01)	$	(0.83)	$	(0.79)
Basic earnings per share	$	0.08	$	0.56	$	0.52	$	0.28

Diluted continuing operations per share	$	0.19	$	0.56	$	1.32	$	1.06
Diluted discontinued operations per share	$	(0.11)	$	(0.01)	$	(0.81)	$	(0.79)
Diluted earnings per share	$	0.08	$	0.55	$	0.51	$	0.27

Weighted average shares outstanding:
Basic		146,109		160,119		148,434		158,667
Diluted		148,859		161,835		150,707		161,070

See accompanying Notes to Consolidated Financial Statements.

Table of Contents

AECOM

Consolidated Statements of Comprehensive (Loss) Income ~~(Loss)~~

(unaudited—in thousands)

Three Months Ended

December 31,
2017

December 31,
2016

Net income

$
124,413

$
65,778

Other comprehensive income (loss), net of tax:

Net unrealized gain on derivatives, net of tax

785

1,367

Foreign currency translation adjustments

(5,983
)
(73,924
)
Pension adjustments, net of tax

2,468

16,973

Other comprehensive loss, net of tax

(2,730
)
(55,584
)
Comprehensive income, net of tax

121,683

10,194

Noncontrolling interests in comprehensive income of consolidated subsidiaries, net of tax

(13,892
)
(18,291
)
Comprehensive income (loss) attributable to AECOM, net of tax

$
107,791

$
(8,097
)


	Three Months Ended				Nine Months Ended
	June 30,		June 30,		June 30,		June 30,
	2021		2020		2021		2020

Net income	$	18,373	$	94,122	$	96,673	$	70,250

Other comprehensive (loss) income, net of tax:
Net unrealized gain on derivatives, net of tax		830		(18)		2,783		3,157
Foreign currency translation adjustments		(18,775)		71,595		13,111		28,113
Pension adjustments, net of tax		3,220		4,617		(7,491)		27,329
Other comprehensive (loss) income , net of tax		(14,725)		76,194		8,403		58,599
Comprehensive income, net of tax		3,648		170,316		105,076		128,849
Noncontrolling interests in comprehensive income of consolidated subsidiaries, net of tax		(6,913)		(5,016)		(19,916)		(26,448)
Comprehensive (loss) income attributable to AECOM, net of tax	$	(3,265)	$	165,300	$	85,160	$	102,401

See accompanying Notes to Consolidated Financial Statements.

Table of Contents

AECOM

Consolidated Statements of ~~Cash Flows~~Stockholders’ Equity

(~~unaudited -~~ unaudited—in thousands)

Three Months Ended December 31,

2017

2016

CASH FLOWS FROM OPERATING ACTIVITIES:

Net income

$
124,413

$
65,778

Adjustments to reconcile net income to net cash provided by operating activities:

Depreciation and amortization

62,835

66,916

Equity in earnings of unconsolidated joint ventures

(29,720
)
(21,471
)
Distribution of earnings from unconsolidated joint ventures

39,480

24,370

Non-cash stock compensation

16,540

21,337

Foreign currency translation

(16,018
)
(15,387
)
Other

(1,800
)
(3,077
)
Changes in operating assets and liabilities, net of effects of acquisitions:

Accounts receivable

(186,098
)
47,064

Prepaid expenses and other assets

(12,517
)
(14,728
)
Accounts payable

172,481

55,460

Accrued expenses and other current liabilities

(135,684
)
(144,301
)
Billings in excess of costs on uncompleted contracts

93,102

26,019

Other long-term liabilities

(21,291
)
(30,473
)
Income taxes payable

(53,295
)
—

Net cash provided by operating activities

52,428

77,507

CASH FLOWS FROM INVESTING ACTIVITIES:

Proceeds from purchase price adjustment to business acquisition

2,206

—

Cash acquired from consolidation of joint venture

7,630

—

Investment in unconsolidated joint ventures

(23,986
)
(18,372
)
Return of investment in unconsolidated joint ventures

5,030

239

Proceeds from sales of investments

161

300

Proceeds from disposal of property and equipment

10,967

2,557

Payments for capital expenditures

(29,510
)
(23,584
)
Net cash used in investing activities

(27,502
)
(38,860
)

CASH FLOWS FROM FINANCING ACTIVITIES:

Proceeds from borrowings under credit agreements

1,276,451

1,634,781

Repayments of borrowings under credit agreements

(1,236,242
)
(1,607,380
)
Proceeds from issuance of common stock

9,530

9,875

Proceeds from exercise of stock options

2,715

2,067

Payments to repurchase common stock

(26,701
)
(17,494
)
Net distributions to noncontrolling interests

(16,795
)
(21,938
)
Other financing activities

(25,962
)
(26,280
)
Net cash used in financing activities

(17,004
)
(26,369
)

EFFECT OF EXCHANGE RATE CHANGES ON CASH

2,882

(6,706
)
NET INCREASE IN CASH AND CASH EQUIVALENTS

10,804

5,572

CASH AND CASH EQUIVALENTS AT BEGINNING OF PERIOD

802,362

692,145

CASH AND CASH EQUIVALENTS AT END OF PERIOD

$
813,166

$
697,717


					Accumulated				Total
			Additional		Other		Retained		AECOM		Non-		Total
	Common		Paid-In		Comprehensive		Earnings		Stockholders’		Controlling		Stockholders’
	Stock		Capital		Loss		(Deficits)		Equity		Interests		Equity

BALANCE AT MARCH 31, 2021	$	1,468	$	4,054,089	$	(895,736)	$	(336,852)	$	2,822,969	$	103,731	$	2,926,700
Net income		—		—		—		11,531		11,531		6,842		18,373
Other comprehensive loss		—		—		(14,796)		—		(14,796)		71		(14,725)
Issuance of stock		5		34,913		—		—		34,918		—		34,918
Repurchases of stock		(24)		(111)		—		(158,041)		(158,176)		—		(158,176)
Stock based compensation		—		11,591		—		—		11,591		—		11,591
Distributions to noncontrolling interests		—		—		—		—		—		(1,703)		(1,703)
BALANCE AT JUNE 30, 2021	$	1,449	$	4,100,482	$	(910,532)	$	(483,362)	$	2,708,037	$	108,941	$	2,816,978


					Accumulated				Total
			Additional		Other		Retained		AECOM		Non-		Total
	Common		Paid-In		Comprehensive		Earnings		Stockholders’		Controlling		Stockholders’
	Stock		Capital		Loss		(Deficits)		Equity		Interests		Equity

BALANCE AT MARCH 31, 2020	$	1,589	$	3,960,123	$	(881,574)	$	451,364	$	3,531,502	$	134,021	$	3,665,523
Net income		—		—		—		89,339		89,339		4,783		94,122
Other comprehensive income		—		—		75,961		—		75,961		233		76,194
Issuance of stock		13		37,859		—		—		37,872		—		37,872
Repurchases of stock		—		(280)		—		—		(280)		—		(280)
Stock based compensation		—		10,500		—		—		10,500		—		10,500
Other transactions with noncontrolling interests		—		—		—		—		—		3,545		3,545
Contributions from noncontrolling interests		—		—		—		—		—		2,108		2,108
Distributions to noncontrolling interests		—		—		—		—		—		(3,715)		(3,715)
BALANCE AT JUNE 30, 2020	$	1,602	$	4,008,202	$	(805,613)	$	540,703	$	3,744,894	$	140,975	$	3,885,869

Table of Contents

AECOM

Consolidated Statements of Stockholders’ Equity

(unaudited—in thousands)


					Accumulated				Total
			Additional		Other		Retained		AECOM		Non-		Total
	Common		Paid-In		Comprehensive		Earnings		Stockholders’		Controlling		Stockholders’
	Stock		Capital		Loss		(Deficits)		Equity		Interests		Equity

BALANCE AT SEPTEMBER 30, 2020	$	1,570	$	4,035,414	$	(918,674)	$	174,248	$	3,292,558	$	120,986	$	3,413,544
Net income		—		—		—		77,018		77,018		19,655		96,673
Cumulative effect of accounting standard adoption		—		—		—		(7,979)		(7,979)		—		(7,979)
Other comprehensive income		—		—		8,142		—		8,142		261		8,403
Issuance of stock		24		51,908		—		—		51,932		—		51,932
Repurchases of stock		(145)		(23,053)		—		(726,649)		(749,847)		—		(749,847)
Stock based compensation		—		36,213		—		—		36,213		—		36,213
Other transactions with noncontrolling interests		—		—		—		—		—		580		580
Disposal of noncontrolling interest of business sold		—		—		—		—		—		(24,039)		(24,039)
Contributions from noncontrolling interests		—		—		—		—		—		226		226
Distributions to noncontrolling interests		—		—		—		—		—		(8,728)		(8,728)
BALANCE AT JUNE 30, 2021	$	1,449	$	4,100,482	$	(910,532)	$	(483,362)	$	2,708,037	$	108,941	$	2,816,978


					Accumulated				Total
			Additional		Other		Retained		AECOM		Non-		Total
	Common		Paid-In		Comprehensive		Earnings		Stockholders’		Controlling		Stockholders’
	Stock		Capital		Loss		(Deficits)		Equity		Interests		Equity

BALANCE AT SEPTEMBER 30, 2019	$	1,575	$	3,953,650	$	(864,197)	$	599,548	$	3,690,576	$	208,774	$	3,899,350
Net income		—		—		—		43,817		43,817		26,433		70,250
Cumulative effect of accounting standard adoption		—		—		—		(87,787)		(87,787)		—		(87,787)
Other comprehensive income		—		—		58,584		—		58,584		15		58,599
Issuance of stock		40		53,106		—		—		53,146		—		53,146
Repurchases of stock		(13)		(35,591)		—		(14,875)		(50,479)		—		(50,479)
Stock based compensation		—		37,037		—		—		37,037		—		37,037
Other transactions with noncontrolling interests		—		—		—		—		—		4,361		4,361
Disposal of noncontrolling interest of business sold		—		—		—		—		—		(60,089)		(60,089)
Contributions from noncontrolling interests		—		—		—		—		—		8,289		8,289
Distributions to noncontrolling interests		—		—		—		—		—		(46,808)		(46,808)
BALANCE AT JUNE 30, 2020	$	1,602	$	4,008,202	$	(805,613)	$	540,703	$	3,744,894	$	140,975	$	3,885,869

See accompanying Notes to Consolidated Financial Statements.

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AECOM

Consolidated Statements of Cash Flows

(unaudited - in thousands)


	Nine Months Ended June 30,
	2021		2020

CASH FLOWS FROM OPERATING ACTIVITIES:
Net income	$	96,673	$	70,250
Adjustments to reconcile net income to net cash provided by (used in) operating activities:
Depreciation and amortization		129,288		181,440
Equity in earnings of unconsolidated joint ventures		(28,294)		(4,084)
Distribution of earnings from unconsolidated joint ventures		26,554		47,675
Non-cash stock compensation		36,213		37,037
Prepayment premium on redemption of unsecured notes		117,500		—
Impairment of long-lived assets		105,194		89,288
Loss (gain) on sale of discontinued operations		56,222		(161,900)
Foreign currency translation		(33,318)		40,618
Other		11,162		14,265
Changes in operating assets and liabilities, net of effects of acquisitions:
Accounts receivable and contract assets		373,248		(315,983)
Prepaid expenses and other assets		(290,039)		(51,033)
Accounts payable		(271,947)		(385,479)
Accrued expenses and other current liabilities		58,901		(4,427)
Contract liabilities		134,815		82,212
Other long-term liabilities		(135,584)		40,391
Net cash provided by (used in) operating activities		386,588		(319,730)

CASH FLOWS FROM INVESTING ACTIVITIES:
(Payment for) proceeds from sale of discontinued operations, net of cash disposed		(265,876)		2,218,866
Investment in unconsolidated joint ventures		(51,852)		(89,283)
Return of investment in unconsolidated joint ventures		2,868		17,042
Proceeds from sale of investments		15,507		8,277
Proceeds from disposal of property and equipment		10,284		2,510
Payments for capital expenditures		(112,603)		(83,266)
Net cash (used in) provided by investing activities		(401,672)		2,074,146

CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from borrowings under credit agreements		2,848,244		4,203,556
Repayments of borrowings under credit agreements		(1,929,251)		(5,547,055)
Redemption of unsecured senior notes		(797,252)		—
Prepayment premium on redemption of unsecured senior notes		(117,500)		—
Cash paid for debt issuance costs		(10,284)		(3,179)
Proceeds from issuance of common stock		19,347		17,231
Proceeds from exercise of stock options		4,038		—
Payments to repurchase common stock		(749,847)		(50,479)
Net distributions to noncontrolling interests		(8,502)		(38,519)
Other financing activities		(13,882)		12,909
Net cash used in financing activities		(754,889)		(1,405,536)

EFFECT OF EXCHANGE RATE CHANGES ON CASH		6,591		(4,885)
NET (DECREASE) INCREASE IN CASH AND CASH EQUIVALENTS		(763,382)		343,995
CASH AND CASH EQUIVALENTS AT BEGINNING OF PERIOD		1,818,249		1,080,354
CASH AND CASH EQUIVALENTS AT END OF PERIOD		1,054,867		1,424,349
LESS CASH AND CASH EQUIVALENTS INCLUDED IN CURRENT ASSETS HELD FOR SALE		(5,837)		(93,081)
CASH AND CASH EQUIVALENTS OF CONTINUING OPERATIONS AT END OF PERIOD	$	1,049,030	$	1,331,268

See accompanying Notes to Consolidated Financial Statements.

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AECOM

Notes to Consolidated Financial Statements

(unaudited)

1.Basis of Presentation

The accompanying consolidated financial statements of AECOM (the Company) are unaudited and, in the opinion of management, include all adjustments, including all normal recurring items necessary for a fair statement of the Company’s financial position and results of operations for the periods presented. All intercompany balances and transactions are eliminated in consolidation.

The consolidated financial statements should be read in conjunction with the consolidated financial statements and notes thereto included in the Company’s Form 10-K for the fiscal year ended September 30, ~~2017~~2020 (the Annual Report). The accompanying unaudited consolidated financial statements and related notes have been prepared in accordance with generally accepted accounting principles (GAAP) in the United States (U.S.) for interim financial information and with the instructions to Form 10-Q and Rule 10-01 of Regulation S-X. Accordingly, they do not include all of the information and footnotes required by GAAP for complete financial statements.

The consolidated financial statements included in this report have been prepared consistently with the accounting policies described in the Annual Report, except as noted, and should be read together with the Annual Report. Certain reclassifications were made to the prior year to conform to current year presentation.

The results of operations for the three and nine months ended ~~December 31, 2017~~June 30, 2021 are not necessarily indicative of the results to be expected for the fiscal year ending September 30, ~~2018.~~2021.

On January 31, 2020, the Company completed the sale of its Management Services business to an affiliate of American Securities LLC and Lindsay Goldberg LLC. Additionally, as discussed in more detail in Note 3, the Company concluded that its self-perform at-risk construction businesses met the criteria for held for sale beginning in the first quarter of fiscal year 2020. Collectively, the Management Services business and the self-perform at-risk construction businesses met the criteria for discontinued operation classification. As a result, the Management Services business and the self-perform at-risk construction businesses are presented in the consolidated statements of operations as discontinued operations for all periods presented. Current and non-current assets and liabilities of these businesses are presented in the consolidated balance sheets as assets and liabilities held for sale.

The Company reports its annual results of operations based on 52 or 53-week periods ending on the Friday nearest September 30. The Company reports its quarterly results of operations based on periods ending on the Friday nearest December 31, March 31, and June 30. For clarity of presentation, all periods are presented as if the periods ended on September 30, December 31, March 31, and June 30.

2.New Accounting Pronouncements and Changes in Accounting

In ~~May 2014,~~February 2016, the Financial Accounting Standards Board (FASB) issued new accounting guidance which amended the existing accounting standards for revenue recognition. The new accounting guidance establishes principles for recognizing revenue upon the transfer of promised goods or services to customers, in an amount that reflects the expected consideration received in exchange for those goods or services. The amendments may be applied retrospectively to each prior period presented or retrospectively with the cumulative effect recognized as of the date of initial application. The Company continues to evaluate the impact of the new guidance on its consolidated financial statements, including the expected impact on its business processes, systems, and controls, and potential differences in the timing or method of revenue recognition for its contracts. The Company expects to adopt the new standard on October 1, 2018, using the modified retrospective method that may result in a cumulative effect adjustment as of the date of adoption.

~~In February 2016, the FASB~~ issued new accounting guidance which changes accounting requirements for leases. The new guidance requires lessees to recognize the assets and liabilities arising from all leases, including those classified as operating leases under previous accounting guidance, on the balance sheet. It also requires disclosure of key information about leasing arrangements to increase transparency and comparability among organizations. The new guidance will be effective for the Company’s fiscal year beginning October 1, 2019 with early adoption permitted. The new guidance must be adopted using a modified retrospective transition approach and provides for certain practical expedients. The Company is currently evaluating the impact that the new guidance will have on its consolidated financial statements.

In February 2016, the FASB issued new accounting guidance to clarify that a change in the counterparty to a derivative instrument that has been designated as a hedging instrument under previous guidance does not, in and of itself, require redesignation of that hedging relationship provided that all other hedge accounting criteria continue to be met. The Company adopted the new guidance onbeginning October 1, ~~2017, and~~2019 using the modified retrospective adoption method, which resulted in a downward adjustment to retained earnings of $87.8 million, net of tax. Detailed disclosures regarding the adoption and other required disclosures can be found in Note 12.

Table of ~~this guidance did not have a material impact on the Company’s consolidated financial statements.~~Contents

In March 2016, the FASB issued new accounting guidance which eliminates the requirement to apply the equity method of accounting retrospectively when a reporting entity obtains significant influence over a previously held investment. The Company adopted the new guidance on October 1, 2017, and the adoption of this guidance did not have a material impact on the Company’s consolidated financial statements.

In June 2016, the FASB issued a new credit loss standard that changes the impairment model for most financial assets and ~~certain~~some other instruments. The new guidance ~~will replace~~replaces the ~~current~~ “incurred loss” approach with an “expected loss” model for instruments measured at amortized cost. It also simplifies the accounting model for purchased credit-impaired debt securities and loans. The Company adopted the new guidance effective October 1, 2020 using a modified retrospective approach that resulted in an $8.0 million, net of tax, reduction to retained earnings without restating comparative periods. Additional disclosures regarding the adoption can be found in Note 4.

In February 2018, the FASB issued new accounting guidance which provides entities the option to reclassify certain tax effects from other comprehensive income to retained earnings. The guidance addresses a narrow-scope financial reporting issue related to the tax effects that may become stranded in accumulated other comprehensive income as a result of the enactment of the Tax Cuts and Jobs Act (Tax Act). Under the guidance, an entity may elect to reclassify the income tax effects of the Tax Act on items within accumulated other comprehensive income to retained earnings. The Company has determined that it will benot make this election.

In August 2018, the FASB issued new accounting guidance aligning the capitalization of certain implementation costs incurred in a hosting arrangement that is a service contract with previously existing guidance for capitalizing costs incurred to develop internal-use software. The new guidance was effective for the Company’s fiscal year starting October 1, 2020. The ~~Company is currently evaluating the impact that the new guidance will have on its consolidated financial statements.~~

In August 2016, the FASB issued new accounting guidance clarifying how entities should classify certain cash receipts and cash payments on the statement of cash flows. The new guidance also clarifies how the predominance principle should be applied when cash receipts and cash payments have aspects of more than one class of cash flows. The new guidance will be effective for the Company in its fiscal year beginning October 1, 2018, and early adoption is permitted. The Company is currently evaluating the impact that the new guidance will have on its consolidated statement of cash flows.

In October 2016, the FASB issued additional guidance on how a single decision maker considers its indirect interests when performing the primary beneficiary analysis under the variable interest model. Under the new guidance, the single decision maker will consider its indirect interests on a proportionate basis. The Company adopted the new guidance on October 1, 2017, and the adoption of this guidance did not have a material impact on the Company’s consolidated financial statements.

In ~~January 2017,~~August 2018, the FASB issued new accounting guidance ~~to simplify~~amending the ~~test~~disclosure requirements for ~~goodwill impairment. This guidance eliminates step two from the goodwill impairment test. Under~~fair value measurements. These improvements require more disclosure for amounts measured at fair value, and specifically unobservable inputs used in fair value measurements. The Company adopted the new guidance ~~an entity should recognize an impairment charge~~starting on October 1, 2020. Adoption of the new guidance did not have a significant impact on the Company’s financial reporting process.

In August 2018, the FASB issued new accounting guidance for the ~~amount~~disclosure requirements of defined benefit pension plans. The amended guidance eliminates certain disclosure requirements that were no longer considered to be cost beneficial. The Company expects to adopt the new guidance starting on October 1, 2021 and does not expect adoption of the new guidance will have a significant impact on its financial reporting process.

In March 2020, the Securities and Exchange Commission (SEC) adopted final rules that amend the financial disclosure requirement for guarantors of registered debt securities in Rule 3-10 of Regulation S-X. The new rules amend and streamline the disclosures required by ~~which~~guarantors and issuers of guaranteed securities. Among other things, the ~~carrying amount~~new disclosures may be located outside the financial statements. The new rule was effective January 4, 2021, and early adoption is permitted. The Company adopted the new rule on March 31, 2020. Accordingly, the revised condensed consolidating financial information is presented outside of ~~a reporting unit exceeds its fair value. However,~~these consolidated financial statements.

3. Discontinued Operations, Goodwill and Intangible Assets

During the ~~loss recognized should not exceed the total amount~~second quarter of ~~goodwill allocated to the reporting unit. This guidance is effective for~~fiscal 2020, the Company completed the sale of its Management Services business to Maverick Purchaser Sub, LLC (Purchaser), an affiliate of American Securities LLC and Lindsay Goldberg LLC. The Company received total cash consideration of $2.28 billion inclusive of the receipt in the third quarter of fiscal 2020 of $122.0 million received in connection with a favorable working capital purchase price adjustment and contingent consideration of approximately $120 million attributable to certain claims related to prior work and engagements. As a result of the sale, the Company recognized a pre-tax gain of $161.9 million. The gain on sale was included in the net loss from discontinued operations in the Consolidated Statements of Operations.

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Additionally, in the first quarter of fiscal ~~2021,~~2020, management approved a plan to dispose via sale the Company’s self-perform at-risk construction businesses within the next year. These businesses include the Company’s civil infrastructure, power, and ~~earlier adoption is permitted.~~oil and gas construction businesses that were previously reported in the Company’s Construction Services segment. After consideration of the relevant facts, the Company concluded the assets and liabilities of its Management Services business and its self-perform at-risk construction businesses met the criteria for classification as held for sale. The Company ~~is currently evaluating~~concluded the ~~impact~~actual and proposed disposal activities represented a strategic shift that ~~this guidance~~ will have a major effect on the Company’s operations and financial results and qualified for presentation as discontinued operations in accordance with FASB Accounting Standards Codification (ASC) 205-20. Accordingly, the financial results of the Management Services business and the self-perform at-risk construction businesses are presented in the Consolidated Statement of Operations as discontinued operations for all periods presented. Current and non-current assets and liabilities of these businesses not sold as of the balance sheet date are presented in the Consolidated Balance Sheet as assets and liabilities held for sale for both periods presented. Interest expense allocated to discontinued operations represents interest expenses for the discontinued operations’ finance leases and term loans, which were required to be settled upon the sale of the Management Services business.

During the first quarter of fiscal 2021, the Company completed the sale of its ~~consolidated financial statements.~~power construction business to CriticalPoint Capital, LLC. The Company recorded $17.3 million through the first nine months of fiscal 2021 related to payments for post-closing working capital adjustments.

3.~~Business Acquisitions, Goodwill and Intangible Assets~~

The Company also completed ~~one acquisition during~~ the ~~three months ended December 31, 2017,~~sale of its civil infrastructure construction business to affiliates of Oroco Capital in the second quarter of fiscal 2021. During the second quarter of fiscal 2021, the Company recorded a $32.8 million loss related to the sale of its civil infrastructure construction businesses. Under the terms of the sale agreement, the Company made the required cash payments and ~~two acquisitions during~~delivered the ~~year ended September 30, 2017 for a total consideration of $5.6 million~~cash and ~~$164.4 million, respectively. The business combinations did not meet the quantitative thresholds to require separate disclosures based~~cash equivalents, including cash in consolidated joint ventures, on the ~~Company’s consolidated~~balance sheet at closing. As a result, the Company recorded the net ~~assets, investments and net income.~~ cash movement of the sale as a use of cash in the investing section of its statement of cash flows.

The acquisitions were accounted for under the purchase method of accounting. As such, the purchase considerations were allocated to acquired tangible and intangible assets and liabilities based upon their fair values. The determination of fair valuesfollowing table represents summarized balance sheet information of assets and liabilities acquired requires the Company to make estimates and use valuation techniques when market value is not readily available. Transaction costs associated with business acquisitions are expensed as they are incurred.held for sale (in millions):


	June 30,		September 30,
	2021		2020

Cash and cash equivalents	$	5.8	$	109.9
Receivables and contract assets		70.9		414.3
Other		50.3		38.2
Current assets held for sale	$	127.0	$	562.4

Property and equipment, net	$	52.4	$	119.8
Other		19.0		181.8
Write-down of assets to fair value less cost to sell		(71.4)		(247.2)
Non-current assets held for sale	$	—	$	54.4

Accounts payable and accrued expenses	$	76.9	$	350.4
Contract liabilities		9.2		65.6
Other		4.8		1.6
Current liabilities held for sale	$	90.9	$	417.6

Long-term liabilities held for sale	$	12.3	$	79.3

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The following table represents summarized income statement information of discontinued operations (in millions):

On October 17, 2014, the Company completed the acquisition of the U.S. headquartered URS Corporation (URS), an international provider of engineering, construction, and technical services, by purchasing 100% of the outstanding shares of URS common stock.


	Three months ended				Nine months ended
	June 30,		June 30,		June 30,		June 30,
	2021		2020		2021		2020

Revenue	$	162.9	$	347.5	$	606.6	$	2,661.8
Cost of revenue		159.6		352.5		600.4		2,708.5
Gross profit (loss)		3.3		(5.0)		6.2		(46.7)
Equity in earnings (losses) of joint ventures		(3.4)		(11.1)		4.6		(28.0)
(Loss) gain on disposal activities		(6.1)		14.9		(56.2)		161.9
Transaction costs		(0.7)		—		(14.3)		(41.4)
Impairment of long-lived assets		(9.4)		—		(105.2)		(89.3)
Loss from operations		(16.3)		(1.2)		(164.9)		(43.5)
Other (expense) income		—		(0.2)		—		1.6
Interest expense		(0.1)		(1.5)		(0.4)		(40.2)
Loss before taxes		(16.4)		(2.9)		(165.3)		(82.1)
Income tax (benefit) expense		(0.9)		(2.8)		(46.1)		30.6
Net loss from discontinued operations	$	(15.5)	$	(0.1)	$	(119.2)	$	(112.7)

The Company paid total consideration of approximately $2.3 billion in cash and issued approximately $1.6 billion of AECOM common stock to the former stockholders and certain equity award holders of URS. In connection with the acquisition, the Company also assumed URS’s senior notes totaling $0.4 billion, net of Company repayments. The Company repaid in full URS’s $0.6 billion 2011 term loan and $0.1 billion of URS’s revolving line of credit.

The Company acquired backlog and customer relationship intangible assets valued at $973.8 million representing the fair value of existing contracts and the underlying customer relationships, that have lives ranging from 1 to 11 years (weighted average lives of approximately 3 years) in connection with the URS acquisition. Acquired accrued expenses and other current liabilities include URS project liabilities and approximately $240 million related to estimated URS legal settlements and uninsured legal damages; see Note 14, Commitments and Contingencies, including legal matters related to former URS affiliates.

~~Amortization of intangible assets relating to URS,~~significant components included in ~~cost~~the Consolidated Statement of ~~revenue, was $18.2~~ million and $20.9 million during the three months ended December 31, 2017 and 2016, respectively. Additionally, included in equity in earnings of joint ventures and noncontrolling interests was intangible amortization expense of $1.9 million and ($2.1) million, respectively, during the three months ended December 31, 2017 and $2.0 million and ($2.1) million, respectively, during the three months ended December 31, 2016 related to joint venture fair value adjustments.

~~Billings in excess of costs on uncompleted contracts includes a margin fair value liability associated with long~~-term contracts acquired in connection with the acquisition of URS. This margin fair value liability was $149.1 million at the acquisition date and its carrying value was $7.5 million at December 31, 2017 and $8.6 million at September 30, 2017, and is recognized as revenue on a percentage-of-completion basis as the applicable projects progress. The majority of this liability was recognized over the first two years from the acquisition date. Revenue and the related income from operations related to the margin fair value liability recognized during the three months ended December 31, 2017 and 2016 was $1.1 million and $1.6 million, respectively.

~~Acquisition and integration expenses, relating to business acquisitions, in the accompanying consolidated statements of operations comprised of the following:~~

Three months ended Dec 31,

2017

2016

(in millions)

Severance and personnel costs

$
—

$
11.5

Professional service, real estate-related, and other expenses

—

3.9

Total

$
—

$
15.4

~~Included in severance and personnel costs~~Cash Flows for the ~~three months ended December 31, 2016 was $8.7 million of severance expenses, which was substantially all paid~~discontinued operations are as ~~of December 31, 2017. All acquisition and integration expenses are classified within the Corporate segment, as presented in Note 15.~~follows (in millions):


	Three months ended				Nine months ended
	June 30,		June 30,		June 30,		June 30,
	2021		2020		2021		2020

Depreciation and amortization:
Property and equipment	$	—	$	—	$	—	$	4.6
Intangible assets and capitalized debt issuance costs	$	—	$	4.3	$	—	$	35.8
Payments for capital expenditures	$	(2.0)	$	(2.6)	$	(6.6)	$	(16.8)

The changes in the carrying value of goodwill by reportable segment for the ~~three~~nine months ended ~~December 31, 2017~~June 30, 2021 were as follows:

September 30,
2017

Acquisitions

Measurement
Period
Adjustments

Foreign
Exchange
Impact

December 31,
2017

(in millions)

Design and Consulting Services

$
3,218.9

$
—

$
—

$
4.3

$
3,223.2

Construction Services

1,049.9

—

(2.3
)
(1.6
)
1,046.0

Management Services

1,724.1

—

—

3.7

1,727.8

Total

$
5,992.9

$
—

$
(2.3
)
$
6.4

$
5,997.0


			Foreign
	September 30,		Exchange		June 30,
	2020		Impact		2021

	(in millions)
Americas	$	2,617.1	$	14.2	$	2,631.3
International		867.1		18.4		885.5
Total	$	3,484.2	$	32.6	$	3,516.8

The gross amounts and accumulated amortization of the Company’s acquired identifiable intangible assets with finite useful lives as of ~~December 31~~June 30, 2021 and September 30, ~~2017,~~2020, included in intangible assets—net, in the accompanying consolidated balance sheets, were as follows:

December 31, 2017

September 30, 2017

Gross
Amount

Accumulated
Amortization

Intangible
Assets, Net

Gross
Amount

Accumulated
Amortization

Intangible
Assets, Net

Amortization
Period

(in millions)

(years)

Backlog and customer relationships

$
1,304.0

$
(893.7
)
$
410.3

$
1,283.6

$
(870.2
)
$
413.4

1 – 11

Trademark / tradename

18.3

(16.8
)
1.5

18.3

(16.6
)
1.7

0.3 - 2

Total

$
1,322.3

$
(910.5
)
$
411.8

$
1,301.9

$
(886.8
)
$
415.1


	June 30, 2021						September 30, 2020
	Gross		Accumulated		Intangible		Gross		Accumulated		Intangible		Amortization
	Amount		Amortization		Assets, Net		Amount		Amortization		Assets, Net		Period

	(in millions)												(years)
Backlog and customer relationships	$	663.5	$	(601.8)	$	61.7	$	662.8	$	(585.9)	$	76.9	1 - 11

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Amortization expense of acquired intangible assets included within cost of revenue was ~~$23.7~~$15.9 million and ~~$25.4~~$18.3 million for the ~~three~~nine months ended ~~December 31, 2017~~June 30, 2021 and ~~2016,~~2020, respectively. The following table presents estimated amortization expense of existing intangible assets for the remainder of fiscal ~~2018~~2021 and for the succeeding years:

Fiscal Year

(in millions)

2018 (nine months remaining)

$
71.0

2019

87.8

2020

73.7

2021

62.8

2022

49.7

Thereafter

66.8

Total

$
411.8


Fiscal Year	(in millions)
2021 (three months remaining)	$	4.9
2022		19.8
2023		18.8
2024		17.4
2025		0.8
Total	$	61.7

4.~~Accounts Receivable—Net~~ Revenue Recognition

~~Net accounts receivable consisted~~The Company follows accounting principles for recognizing revenue upon the transfer of control of promised goods or services to customers, in an amount that reflects the expected consideration received in exchange for those goods or services. The Company generally recognizes revenues over time as performance obligations are satisfied. The Company generally measures its progress to completion using an input measure of total costs incurred divided by total costs expected to be incurred. In the course of providing its services, the Company routinely subcontracts for services and incurs other direct costs on behalf of its clients. These costs are passed through to clients and, in accordance with GAAP, are included in the Company’s revenue and cost of revenue. These pass through costs included in revenues for the nine months ended June 30, 2021 and 2020 were $5.4 billion and $5.1 billion, respectively.

Recognition of revenue and profit is dependent upon a number of factors, including the accuracy of a variety of estimates made at the balance sheet date, such as engineering progress, material quantities, the achievement of milestones, penalty provisions, labor productivity and cost estimates. Additionally, the Company is required to make estimates for the amount of consideration to be received, including bonuses, awards, incentive fees, claims, unpriced change orders, penalties, and liquidated damages. Variable consideration is included in the estimate of the ~~following:~~transaction price only to the extent that a significant reversal would not be probable. Management continuously monitors factors that may affect the quality of its estimates, and material changes in estimates are disclosed accordingly. Costs attributable to claims are treated as costs of contract performance as incurred.

December 31,
2017

September 30,
2017

(in millions)

Billed

$
2,511.6

$
2,317.8

Unbilled

2,254.5

2,293.5

Contract retentions

598.9

568.6

Total accounts receivable—gross

5,365.0

5,179.9

Allowance for doubtful accounts

(51.3
)
(52.2
)
Total accounts receivable—net

$
5,313.7

$
5,127.7

~~Billed~~The following summarizes the Company’s major contract types:

Cost Reimbursable Contracts

Cost reimbursable contracts include cost-plus fixed fee, cost-plus fixed rate, and time-and-materials price contracts. Under cost-plus contracts, the Company charges clients for its costs, including both direct and indirect costs, plus a negotiated fee or rate. The Company recognizes revenue based on actual direct costs incurred and the applicable fixed rate or portion of the fixed fee earned as of the balance sheet date. Under time-and-materials price contracts, the Company negotiates hourly billing rates and charges its clients based on the actual time that it expends on a project. In addition, clients reimburse the Company for materials and other direct incidental expenditures incurred in connection with its performance under the contract. The Company may apply a practical expedient to recognize revenue in the amount in which it has the right to invoice if its right to consideration is equal to the value of performance completed to date.

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Guaranteed Maximum Price Contracts (GMP)

GMP contracts share many of the same contract provisions as cost-plus and fixed-price contracts. As with cost-plus contracts, clients are provided a disclosure of all the project costs, and a lump sum or percentage fee is separately identified. The Company provides clients with a guaranteed price for the overall project (adjusted for change orders issued by clients) and a schedule including the expected completion date. Cost overruns or costs associated with project delays in completion could generally be the Company’s responsibility. For many of the Company’s commercial or residential GMP contracts, the final price is generally not established until the Company has subcontracted a substantial percentage of the trade contracts with terms consistent with the master contract, and it has negotiated additional contractual limitations, such as waivers of consequential damages as well as aggregate caps on liabilities and liquidated damages. Revenue is recognized for GMP contracts as project costs are incurred relative to total estimated project costs.

Fixed-Price Contracts

Fixed price contracts include both lump-sum and fixed-unit price contracts. Under lump-sum contracts, the Company performs all the work under the contract for a specified fee. Lump-sum contracts are typically subject to price adjustments if the scope of the project changes or unforeseen conditions arise. Under fixed-unit price contracts, the Company performs a number of units of work at an agreed price per unit with the total payment under the contract determined by the actual number of units delivered. Revenue is recognized for fixed-price contracts using the input method measured on a cost-to-cost basis.

The following tables present the Company’s revenues disaggregated by revenue sources:


	Three months ended				Nine months ended
	June 30,		June 30,		June 30,		June 30,
	2021		2020		2021		2020

	(in millions)
Cost reimbursable	$	1,309.2	$	1,369.3	$	4,041.8	$	4,252.5
Guaranteed maximum price		1,229.9		829.8		3,443.0		2,706.4
Fixed price		869.3		990.6		2,502.3		2,712.1
Total revenue	$	3,408.4	$	3,189.7	$	9,987.1	$	9,671.0


	Three months ended				Nine months ended
	June 30,		June 30,		June 30,		June 30,
	2021		2020		2021		2020

	(in millions)
Americas	$	2,619.0	$	2,471.8	$	7,645.7	$	7,400.5
Europe, Middle East, Africa		401.3		359.9		1,201.8		1,194.9
Asia Pacific		388.1		358.0		1,139.6		1,075.6
Total revenue	$	3,408.4	$	3,189.7	$	9,987.1	$	9,671.0

As of June 30, 2021, the Company had allocated $18.5 billion of transaction price to unsatisfied or partially satisfied performance obligations, of which approximately 55% is expected to be satisfied within the next twelve months.

Contract liabilities represent amounts billed to clients in excess of revenue recognized to date. The Company recognized revenue of $646.6 million and $563.1 million during the nine months ended June 30, 2021 and 2020, respectively, that was included in contract liabilities as of September 30, 2020 and 2019, respectively.

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The Company’s timing of revenue recognition may not be consistent with its rights to bill and collect cash from its clients. Those rights are generally dependent upon advance billing terms, milestone billings based on the completion of certain phases of work or when services are performed. The Company’s accounts ~~receivable represents~~receivables represent amounts billed to clients that have yet to be ~~collected. Unbilled accounts receivable represents~~collected and represent an unconditional right to cash from its clients. Contract assets represent the amount of contract revenue recognized but not yet billed pursuant to contract terms or accounts billed after the ~~period end.~~ balance sheet date. Contract liabilities represent billings as of the balance sheet date, as allowed under the terms of a contract, but not yet recognized as contract revenue pursuant to the Company’s revenue recognition policy.

Net accounts receivable consisted of the following:


	June 30,		September 30,
	2021		2020

	(in millions)
Billed	$	2,225.0	$	2,467.3
Contract retentions		541.6		531.3
Total accounts receivable—gross		2,766.6		2,998.6
Allowances for doubtful accounts and credit losses		(97.5)		(77.9)
Total accounts receivable—net	$	2,669.1	$	2,920.7

Substantially all ~~unbilled receivables~~contract assets as of ~~December 31, 2017~~June 30, 2021 and September 30, ~~2017~~2020 are expected to be billed and collected within twelve ~~months.~~months, except for claims. Significant claims recorded in contract assets and other non-current assets were approximately $170 million as of both June 30, 2021 and September 30, 2020. The asset related to the Deactivation, Demolition, and Removal Project retained from the Purchaser discussed in Note 15 is presented in prepaid expense and other current assets from continuing operations in the Consolidated Balance Sheet. Contract retentions represent amounts invoiced to clients where payments have been withheld ~~pending~~from progress payments until the ~~completion of certain milestones, other contractual conditions, or upon~~contracted work has been completed and approved by the ~~completion of a project.~~client. These retention agreements vary from project to project and could be outstanding for several months or years.

~~Allowances~~On October 1, 2020, the Company adopted accounting pronouncements issued by the FASB regarding the changes to the way in which entities estimate credit losses for ~~doubtful~~most financial assets, including accounts ~~have been determined through specific identification of amounts considered~~receivable and contract assets. The new guidance requires the Company to ~~be uncollectible and potential write-offs, plus a non-specific~~maintain an allowance for ~~other amounts for~~credit losses, which ~~some potential loss has been determined~~represent the portion of its financial assets that it does not expect to ~~be probable~~collect over their contractual life. The Company considers a broad range of information to estimate expected credit losses including the related ages of past due balances, projections of credit losses based on ~~current~~historical trends, and ~~past experience.~~collection history and credit quality of its clients. Negative macroeconomic trends or delays in payment of outstanding receivables could result in an increase in the estimated credit losses.

~~Other than the U.S. government, no~~No single client accounted for more than 10% of the Company’s outstanding receivables at ~~December 31, 2017~~June 30, 2021 and September 30, ~~2017.~~2020.

The Company sold trade receivables to financial institutions, of which ~~$314.7~~$243.7 million and ~~$325.2~~$166.6 million were outstanding as of ~~December 31, 2017~~June 30, 2021 and September 30, ~~2017,~~2020, respectively. The Company does not retain financial or legal obligations for these receivables that would result in material losses. The Company’s ongoing involvement is limited to the remittance of customer payments to the financial institutions with respect to the sold trade receivables.

5.Joint Ventures and Variable Interest Entities

The Company’s joint ventures provide architecture, engineering, program management, construction management, operations and maintenance services, and ~~invests~~invest in real estate ~~public-private partnership (P3) and infrastructure~~ projects. Joint ventures, the combination of two or more partners, are generally formed for a specific project. Management of the joint venture is typically controlled by a joint venture executive committee, comprised of representatives from the joint venture partners. The joint venture executive committee normally provides management oversight and controls decisions which could have a significant impact on the joint venture.

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Some of the Company’s joint ventures have no employees and minimal operating expenses. For these joint ventures, the Company’s employees perform work for the joint venture, which is then billed to a third-party customer by the joint venture. These joint ventures function as pass through entities to bill the third-party customer. For consolidated joint ventures of this type, the Company records the entire amount of the services performed and the costs associated with these services, including the services provided by the other joint venture partners, in the Company’s result of operations. For certain of these joint ventures where a fee is added by an unconsolidated joint venture to client billings, the Company’s portion of that fee is recorded in equity in earnings of joint ventures.

The Company also has joint ventures that have their own employees and operating expenses, and to which the Company generally makes a capital contribution. The Company accounts for these joint ventures either as consolidated entities or equity method investments based on the criteria further discussed below.

The Company follows guidance on the consolidation of variable interest entities (VIEs) that requires companies to utilize a qualitative approach to determine whether it is the primary beneficiary of a VIE. The process for identifying the primary beneficiary of a VIE requires consideration of the factors that indicate a party has the power to direct the activities that most significantly impact the joint venture’s economic performance, including powers granted to the joint venture’s program manager, powers contained in the joint venture governing board and, to a certain extent, a company’s economic interest in the joint venture. The Company analyzes its joint ventures and classifies them as either:

●

a VIE that must be consolidated because the Company is the primary beneficiary or the joint venture is not a VIE and the Company holds the majority voting interest with no significant participative rights available to the other partners; or

· a VIE that must be consolidated because the Company is the primary beneficiary or the joint venture is not a VIE and the Company holds the majority voting interest with no significant participative rights available to the other partners; or

●

a VIE that does not require consolidation and is treated as an equity method investment because the Company is not the primary beneficiary or the joint venture is not a VIE and the Company does not hold the majority voting interest.

· a VIE that does not require consolidation and is treated as an equity method investment because the Company is not the primary beneficiary or the joint venture is not a VIE and the Company does not hold the majority voting interest.

As part of the above analysis, if it is determined that the Company has the power to direct the activities that most significantly impact the joint venture’s economic performance, the Company considers whether or not it has the obligation to absorb losses or rights to receive benefits of the VIE that could potentially be significant to the VIE.

Contractually required support provided to the Company’s joint ventures is further discussed in Note ~~14.~~15.

Summary of ~~unaudited~~ financial information of the consolidated joint ventures is as follows:


					June 30,
					2021		September 30,
					(unaudited)		2020
	December 31, 2017		September 30, 2017
	(in millions)
					(in millions)
Current assets	$	914.6	$	832.1	$	530.2	$	536.3
Non-current assets	203.3		188.8			75.3		77.0
Total assets	$	1,117.9	$	1,020.9	$	605.5	$	613.3


Current liabilities	$	647.8	$	524.9	$	390.2	$	409.9
Non-current liabilities	12.4		12.4			1.5		1.5
Total liabilities	660.2		537.3			391.7		411.4
Total AECOM equity	241.6		274.7			118.1		113.9
Noncontrolling interests	216.1		208.9			95.7		88.0
Total owners’ equity	457.7		483.6			213.8		201.9
Total liabilities and owners’ equity	$	1,117.9	$	1,020.9	$	605.5	$	613.3

Total revenue of the consolidated joint ventures was ~~$623.0~~$604.7 million and ~~$456.9~~$602.1 million for the ~~three~~nine months ended ~~December 31, 2017~~June 30, 2021 and ~~2016,~~2020, respectively. The assets of the Company’s consolidated joint ventures are restricted for use only by the particular joint venture and are not available for the general operations of the Company.

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Summary of unaudited financial information of the unconsolidated joint ventures, as derived from their unaudited financial statements, is as follows:


					June 30,		September 30,
					2021		2020
	December 31, 2017		September 30, 2017
	(in millions)
					(in millions)
Current assets	$	2,069.6	$	1,912.2	$	1,345.7	$	1,374.3
Non-current assets	787.5		749.8			546.2		465.9
Total assets	$	2,857.1	$	2,662.0	$	1,891.9	$	1,840.2


Current liabilities	$	1,726.4	$	1,570.2	$	912.1	$	953.4
Non-current liabilities	177.0		185.1			57.2		58.9
Total liabilities	1,903.4		1,755.3			969.3		1,012.3
Joint ventures’ equity	953.7		906.7			922.6		827.9
Total liabilities and joint ventures’ equity	$	2,857.1	$	2,662.0	$	1,891.9	$	1,840.2


AECOM’s investment in joint ventures	$	370.3	$	364.2	$	332.0	$	297.6

Three Months Ended

December 31,
2017

December 31,
2016

(in millions)

Revenue

$
1,478.6

$
1,142.0

Cost of revenue

1,395.2

1,085.8

Gross profit

$
83.4

$
56.2

Net income

$
82.1

$
54.3


	Nine Months Ended
	June 30,		June 30,
	2021		2020

	(in millions)
Revenue	$	1,588.4	$	2,325.7
Cost of revenue		1,539.8		2,281.7
Gross profit	$	48.6	$	44.0
Net income	$	41.8	$	42.7

Summary of AECOM’s equity in earnings of unconsolidated joint ventures is as follows:


					Nine Months Ended
					June 30,		June 30,
					2021		2020
	Three Months Ended
	December 31, 2017		December 31, 2016
	(in millions)
					(in millions)
Pass through joint ventures	$	13.2	$	7.5	$	18.8	$	26.0
Other joint ventures	16.5		13.9			4.8		6.0
Total	$	29.7	$	21.4	$	23.6	$	32.0

6.Pension Benefit Obligations

In the U.S., the Company sponsors various qualified defined benefit pension plans. Benefits under these plans generally are based on the employee’s years of creditable service and compensation; however, all U.S. defined benefit plans are closed to new participants and have frozen accruals.

The Company also sponsors various non-qualified plans in the U.S.; all of these plans are frozen. Outside the U.S., the Company sponsors various pension plans, which are appropriate to the country in which the Company operates, some of which are government mandated.

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The components of net periodic benefit cost other than the service cost component are included in other income in the consolidated statement of operations. The following table details the components of net periodic benefit cost for the Company’s pension plans for the three and nine months ended ~~December 31, 2017~~June 30, 2021 and ~~2016:~~2020:


													Three Months Ended								Nine Months Ended
													June 30,2021				June 30,2020				June 30,2021				June 30,2020
													U.S.		Int’l		U.S.		Int’l		U.S.		Int’l		U.S.		Int’l
	Three Months Ended
	December 31, 2017						December 31, 2016
	U.S.			Int’l			U.S.			Int’l
	(in millions)
Components of net periodic (benefit) cost:
													(in millions)
Components of net periodic benefit cost:
Service costs	$	1.2		$	0.3		$	1.1		$	0.3		$	—	$	0.1	$	—	$	0.1	$	—	$	0.4	$	—	$	0.4
Interest cost on projected benefit obligation	5.2			7.9			4.8			7.0				1.1		5.5		1.6		5.4		3.2		16.2		4.8		16.7
Expected return on plan assets	(7.9		)	(10.7		)	(7.8		)	(10.2		)		(1.6)		(11.1)		(1.8)		(9.1)		(4.8)		(32.6)		(5.3)		(27.9)
Amortization of prior service cost	—			—			—			(0.1		)		—		0.1		—		—		—		0.1		0.1		—
Amortization of net loss	1.0			2.0			1.1			3.2				1.4		2.4		1.3		2.1		4.4		6.9		3.7		6.4
Curtailment loss recognized														—		—		0.5		—		—		—		0.5		—
Settlement loss recognized	—			0.1			—			—				0.1		—		—		—		0.1		—		0.5		0.2
Net periodic (benefit) cost	$	(0.5	)	$	(0.4	)	$	(0.8	)	$	0.2
Net periodic benefit cost													$	1.0	$	(3.0)	$	1.6	$	(1.5)	$	2.9	$	(9.0)	$	4.3	$	(4.2)

The total amounts of employer contributions paid for the ~~three~~nine months ended ~~December 31, 2017~~June 30, 2021 were ~~$2.5~~$10.1 million for U.S. plans and ~~$6.8~~$18.9 million for non-U.S. plans. The expected remaining scheduled annual employer contributions for the fiscal year ending September 30, ~~2018~~2021 are ~~$10.2~~$4.6 million for U.S. plans and ~~$19.9~~$7.8 million for non-U.S. plans.

7.Debt

Debt consisted of the following:

December 31,
2017

September 30,
2017

(in millions)

2014 Credit Agreement

$
962.3

$
908.7

2014 Senior Notes

1,600.0

1,600.0

2017 Senior Notes

1,000.0

1,000.0

URS Senior Notes

247.8

247.7

Other debt

141.6

140.0

Total debt

3,951.7

3,896.4

Less: Current portion of debt and short-term borrowings

(163.3
)
(142.0
)
Less: Unamortized debt issuance costs

(49.5
)
(52.3
)
Long-term debt

$
3,738.9

$
3,702.1


	June 30,		September 30,
	2021		2020

	(in millions)
Credit Agreement	$	1,156.9	$	248.5
2024 Senior Notes		—		797.3
2027 Senior Notes		997.3		997.3
Other debt		79.7		41.9
Total debt		2,233.9		2,085.0
Less: Current portion of debt and short-term borrowings		(55.2)		(20.9)
Less: Unamortized debt issuance costs		(24.9)		(23.0)
Long-term debt	$	2,153.8	$	2,041.1

The following table presents, in millions, scheduled maturities of the Company’s debt as of ~~December 31, 2017:~~June 30, 2021:


Fiscal Year
2018 (nine months remaining)	$	109.7
2019	152.2
2020	123.0
2021	686.9
2021 (three months remaining)			$	14.9
2022	258.2			48.2
2023				38.1
2024				39.4
2025				34.2
Thereafter	2,621.7			2,059.1
Total	$	3,951.7	$	2,233.9

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~~2014~~ Credit Agreement

The Company entered into a credit agreement (Credit Agreement) on October 17, 2014, which, as amended ~~consisting~~to date, consists of (i) a term loan A facility ~~in an aggregate principal amount of $1.925 billion,~~that included a $510 million (US) term loan A facility with a term that expired on March 13, 2021 and a $500 million Canadian dollar (CAD) term loan A facility and a $250 million Australian dollar (AUD) term loan A facility, each with terms expiring on March 13, 2023; (ii) a $600 million term loan B facility ~~in an aggregate principal amount of $0.76 billion,~~with a term expiring on March 13, 2025; and (iii) a revolving credit facility in an aggregate principal amount of ~~$1.05 billion. These facilities under the Credit Agreement may be increased by an additional amount of up to $500 million. The Credit Agreement’s~~$1.35 billion with a term extends to September 29, 2021 with respect to the revolving credit facility and the term loan A facility and October 17, 2021 with respect to the term loan B facility, although the term loan B facility was paid in fullexpiring on ~~February 21, 2017.~~March 13, 2023. Some subsidiaries of the Company (Guarantors) have guaranteed the obligations of the borrowers under the Credit Agreement. The borrowers’ obligations under the Credit Agreement are secured by a lien on substantially all of the assets of the Company and the Guarantors pursuant to a security and pledge agreement (Security Agreement). The collateral under the Security Agreement is subject to release upon fulfillment of ~~certain~~ conditions specified in the Credit Agreement and Security Agreement.

The Credit Agreement contains covenants that limit the ability of the Company and the ability of ~~certain~~some of its subsidiaries to, among other things: (i) create, incur, assume, or suffer to exist liens; (ii) incur or guarantee indebtedness; (iii) pay dividends or repurchase stock; (iv) enter into transactions with affiliates; (v) consummate asset sales, acquisitions or mergers; (vi) enter into ~~certain~~various types of burdensome agreements; or (vii) make investments.

On July 1, 2015, the Credit Agreement was amended to revise the definition of “Consolidated EBITDA” to increase the allowance for acquisition and integration expenses related to the Company’s acquisition of ~~URS.~~the URS Corporation (URS) in October 2014.

On December 22, 2015, the Credit Agreement was amended to further revise the definition of “Consolidated EBITDA” by further increasing the allowance for acquisition and integration expenses related to the acquisition of URS and to allow for an internal corporate restructuring primarily involving ~~its~~the Company’s international subsidiaries.

On September 29, 2016, the Credit Agreement and the Security Agreement were amended to (1) lower the applicable interest rate margins for the term loan A and the revolving credit facilities, and lower the applicable letter of credit fees and commitment fees to the revised consolidated leverage levels; (2) extend the term of the term loan A and the revolving credit facility to September 29, 2021; (3) add a new delayed draw term loan A facility tranche in the amount of $185.0 million; (4) replace the then existing $500 million performance letter of credit facility with a $500 million basket to enter into secured letters of credit outside the Credit Agreement; and (5) revise ~~certain~~ covenants, including the Maximum Consolidated Leverage Ratio so that the step down from a 5.00 to a 4.75 leverage ratio is effective as of March 31, 2017 as well as the investment basket for ~~its~~the Company’s AECOM Capital business.

On March 31, 2017, the Credit Agreement was amended to (1) expand the ability of restricted subsidiaries to borrow under “Incremental Term Loans;” (2) revise the definition of “Working Capital” as used in “Excess Cash Flow;” (3) revise the definitions for “Consolidated EBITDA” and “Consolidated Funded Indebtedness” to reflect the expected gain and debt repayment of an AECOM Capital disposition, which disposition was completed on April 28, 2017; and (4) amend provisions relating to the Company’s ability to undertake ~~certain~~ internal restructuring steps to accommodate changes in tax laws.

~~Under~~17

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On March 13, 2018, the Credit Agreement was amended to (1) refinance the existing term loan A facility to include a $510 million (US) term loan A facility with a term expiring on March 13, 2021 and a $500 million CAD term loan A facility and a $250 million AUD term loan A facility each with terms expiring on March 13, 2023; (2) issue a new $600 million term loan B facility to institutional investors with a term expiring on March 13, 2025; (3) increase the capacity of the Company’s revolving credit facility from $1.05 billion to $1.35 billion and extend its term until March 13, 2023; (4) reduce the Company’s interest rate borrowing costs as follows: (a) the term loan B facility, at the Company’s election, Base Rate (as defined in the Credit Agreement) plus 0.75% or Eurocurrency Rate (as defined in the Credit Agreement) plus 1.75%, (b) the (US) term loan A facility, at the Company’s election, Base Rate plus 0.50% or Eurocurrency Rate plus 1.50%, and (c) the Canadian (CAD) term loan A facility, the Australian (AUD) term loan A facility, and the revolving credit facility, an initial rate of, at the Company’s election, Base Rate plus 0.75% or Eurocurrency Rate plus 1.75%, and after the end of the Company’s fiscal quarter ended June 30, 2018, Base Rate loans plus a margin ranging from 0.25% to 1.00% or Eurocurrency Rate plus a margin from 1.25% to 2.00%, based on the Consolidated Leverage Ratio (as defined in the Credit Agreement); (5) revise covenants including increasing the amounts available under the restricted payment negative covenant and revising the Maximum Consolidated Leverage Ratio (as defined in the Credit Agreement) to include a 4.5 leverage ratio through September 30, 2019 after which the leverage ratio stepped down to 4.0.

On November 13, 2018, the Credit Agreement was amended to revise the definition of “Consolidated EBITDA” to increase corporate restructuring allowances and provide for additional flexibility under the covenants for non-core asset dispositions, among other changes.

On January 28, 2020, AECOM entered into Amendment No. 7 to the Credit Agreement which modifies the asset disposition covenant to permit the sale of our Management Services business and the mandatory prepayment provision so that only outstanding term loans are prepaid using the net proceeds from the sale.

On May 1, 2020, the Company entered into Amendment No. 8 to the Credit Agreement which allows for borrowings to be made, until three months after closing, up to an aggregate principal amount of $400,000,000 under a secured delayed draw term loan facility, the proceeds of which are permitted to be used to pay all or a portion of the amounts payable in connection with any tender for or redemption or repayment of the Company’s or its subsidiaries’ existing senior unsecured notes and any associated fees and expenses. The amendment also revised certain terms and covenants in the Credit Agreement, including by, among other things, the maximum leverage ratio covenant to 4.00:1.00, subject to increases to 4.50:1.00 for certain specified periods in connection with certain material acquisitions, increasing the potential size of incremental facilities under the Credit Agreement, revising the definition of “Consolidated EBITDA” to provide for additional flexibility in the calculation thereof and adding a Eurocurrency Rate floor of 0.75% to the interest rate under the revolving credit facility.

On July 30, 2020, the Company drew $248.5 million on its secured delayed draw term loan facility (Term A Facility) for the purpose of redeeming all of the 2022 URS Senior Notes.

On February 8, 2021, the Company entered into the 2021 Refinancing Amendment to the Credit Agreement, pursuant to which the maturity of the revolving credit facility and the term loans outstanding under the Credit Agreement were extended to February 8, 2026. In addition, the refinancing amendment reduced the size of the revolving credit facility to $1,150,000,000. The applicable interest rate under the Credit Agreement is calculated at a per annum rate equal to, at our option, (a) the Eurocurrency Rate (as defined in the Credit Agreement) plus an applicable margin (the “LIBOR Applicable Margin”), which is currently at 1.50% or (b) the Base Rate (as defined in the Credit Agreement) plus an applicable margin (the “Base Rate Applicable Margin” and together with the LIBOR Applicable Margin, the “Applicable Margins”), which is currently at 0.50%. The Credit Agreement includes certain environmental, social and governance (ESG) metrics relating to our CO² emissions and the Company’s percentage of employees who identify as women (each, a “Sustainability Metric”). The Applicable Margins and the commitment fees for the revolving credit facility will be adjusted on an annual basis based on the Company’s achievement of preset thresholds for each Sustainability Metric.

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On April 13, 2021, the Company entered into Amendment No. 10 to the Credit Agreement, pursuant to which the lenders thereunder provided a secured term “B” credit facility (Term B Facility) to the Company in an aggregate principal amount of $700,000,000. The Term B Facility matures on April 13, 2028. The proceeds of the Term B Facility were used to fund the purchase price, fees and expenses in connection with the Company’s cash tender offer to purchase up to $700,000,000 aggregate purchase price (not including any accrued and unpaid interest) of the Company’s outstanding 5.875% Senior Notes due 2024.

The Term B Facility is subject to the same affirmative and negative covenants and events of default as the existing term loans previously incurred pursuant to the existing Credit Agreement (except that the financial covenants in the existing Credit Agreement do not apply to the Term B Facility). The applicable interest rate for the Term B Facility is calculated at a ~~maximum consolidated leverage ratio~~per annum rate equal to, at the Company’s option, (a) the Eurocurrency Rate (as defined in the Credit Agreement) plus 1.75% or (b) the Base Rate (as defined in the Credit Agreement) plus 0.75%.

On June 25, 2021, the Company entered into Amendment No. 11 to the Credit Agreement, pursuant to which the lenders have provided to the Company an additional $215,000,000 in aggregate principal amount under the Term A Facility. The Term A Facility matures on February 8, 2026. The Company used the net proceeds from the increase in the Term A Facility (together with cash on hand), to (i) redeem all of the Company’s remaining 5.875% Senior Notes due 2024 and ~~minimum~~(ii) pay fees and expenses related to such redemption.

The Company is required to maintain a consolidated interest coverage ratio of at ~~the end~~least 3.00 to 1.00 and a consolidated leverage ratio of ~~each fiscal quarter.~~ less than or equal to 4.00 to 1.00 (subject to certain adjustments in connection with permitted acquisitions), tested on a quarterly basis.

The Company’s ~~Consolidated Leverage Ratio~~consolidated leverage ratio was ~~4.0~~2.5 at ~~December 31, 2017.~~June 30, 2021. The Company’s ~~Consolidated Interest Coverage Ratio~~consolidated interest coverage ratio was ~~4.7~~6.8 at ~~December 31, 2017.~~June 30, 2021. As of ~~December 31, 2017,~~June 30, 2021, the Company was in compliance with the covenants of the Credit Agreement.

At ~~December 31, 2017~~June 30, 2021 and September 30, ~~2017, outstanding standby~~2020, letters of credit totaled ~~$54.8~~$11.2 million and ~~$58.1~~$19.0 million, respectively, under the Company’s revolving credit facilities. As of ~~December 31, 2017~~June 30, 2021 and September 30, ~~2017,~~2020, the Company had ~~$915.2~~$1,138.8 million and ~~$991.9~~$1,331.0 million, respectively, available under its revolving credit facility.

~~2014~~2024 Senior Notes

On October 6, 2014, the Company completed a private placement offering of $800,000,000 aggregate principal amount of ~~its unsecured 5.750% Senior Notes due 2022 (2022 Notes) and $800,000,000 aggregate principal amount of its~~the unsecured 5.875% Senior Notes due 2024 (the 2024 Notes). On November 2, 2015, the Company completed an exchange offer to exchange the unregistered 2024 Senior Notes for registered notes, as well as all related guarantees.

On July 21, 2020, the Company completed a cash tender offer at par for up to $639 million in aggregate principal amount of the 2024 Notes and ~~together~~the 2027 Senior Notes. The Company accepted for purchase all of 2024 Notes validly tendered and not validly withdrawn pursuant to the cash tender offer, amounting to $2.7 million aggregate principal amount of the 2024 Notes at par. The Company made the cash tender offer at par to satisfy obligations under the indentures governing the 2024 Notes and the 2027 Senior Notes relating to the use of certain cash proceeds from its disposition of the Management Services business, which was completed on January 31, 2020.

On April 26, 2021, the Company completed a cash tender offer for up to $700 million in aggregate purchase price (not including any accrued and unpaid interest) of the 2024 Notes. The Company accepted for purchase all of 2024 Notes validly tendered and not validly withdrawn pursuant to the cash tender offer, amounting to $608.3 million aggregate principal amount of the 2024 Notes. The aggregate purchase price paid by the Company in connection with the ~~2022~~tender offer was $697.2 million (inclusive of the tender offer premiums paid pursuant to the terms of the tender offer), plus accrued and unpaid interest. The amounts paid were funded using the proceeds from the Term B Facility described above and cash on hand.

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On April 6, 2021, the Company, the guarantors with respect to the 2024 Notes, and the ~~2014~~trustee with respect to the 2024 Notes executed and delivered a supplemental indenture to the 2024 Notes (Supplemental Indenture), which became effective on April 6, 2021. The Supplemental Indenture became operative on April 13, 2021, upon the Company’s acceptance of the 2024 Notes for purchase and payment therefore at the early settlement date of the April 2021 tender offer.

With respect to the Supplemental Indenture, each of the following sections in the indenture relating to the 2024 Notes were deleted: (i) Section 4.03, “SEC Reports”; (ii) Section 4.04, “Compliance Certificate”; (iii) Section 4.05, “Taxes”; (iv) Section 4.06, “Stay, Extension and Usury Laws”; (v) Section 4.07, “Limitation on Restricted Payments”; (vi) Section 4.08, “Limitation on Restrictions on Distributions from Restricted Subsidiaries”; (vii) Section 4.09, “Limitations on Indebtedness”; (viii) Section 4.10, “Limitation on Sales of Assets and Subsidiary Stock”; (ix) Section 4.11, “Limitation on Transactions with Affiliates”; (x) Section 4.12, “Limitation on Liens”; (xi) Section 4.14, “Change of Control”; (xii) Section 4.18, “Future Subsidiary Guarantors”; (xiii) Section 4.19, “Suspension of Covenants”; (xiv) Section 4.20, “Additional Interest Notice”; and (xv) Section 6.01(a), “Events of Default” (subsections (3) through (7) thereof (inclusive)). Certain modifications to Section 3.01, “Notices to Trustee”; Section 3.02(a) “Selection of Notes to Be Redeemed”; Section 3.03(a) “Notice of Redemption”; Section 4.15 “Corporate Existence”; Section 5.01, “Merger and Consolidation”; and Section 5.02, “Successor Corporation” were also made.

On June 25, 2021, the Company redeemed its remaining 2024 Notes. The redemption price of the 2024 Notes was 115.108% of the remaining outstanding aggregate principal amount, amounting to $217.5 million, plus accrued and unpaid interest. The amounts paid were funded using the proceeds from the additional draw down from the Term A Facility described above and cash on hand. The redemption of the 2024 Notes in the third quarter of fiscal 2021 resulted in a $117.5 million prepayment premium, which was included interest expense.

2027 Senior Notes

On February 21, 2017, the Company completed a private placement offering of $1,000,000,000 aggregate principal amount of its unsecured 5.125% Senior Notes due 2027 (the 2027 Senior Notes). On June 30, 2017, the Company completed an exchange offer to exchange the unregistered 2027 Senior Notes for registered notes, as well as related guarantees.

As of ~~December 31, 2017,~~June 30, 2021, the estimated fair value of ~~its 2014~~the 2027 Senior Notes was approximately ~~$834.0 million for the 2022 Notes and $866.0 million for the 2024 Notes.~~$1,109.5 million. The fair value of the ~~2014~~2027 Senior Notes as of ~~December 31, 2017~~June 30, 2021 was derived by taking the mid-point of the trading prices from an observable market input (Level 2) in the secondary bond market and multiplying it by the outstanding balance of the ~~2014 Senior Notes.~~

The Company may redeem the 2022 Notes, in whole or in part, at once or over time, at the specified redemption prices plus accrued and unpaid interest thereon to the redemption date. At any time prior to July 15, 2024, the Company may redeem on one or more occasions all or part of the 2024 Notes at a redemption price equal to the sum of (i) 100% of the principal amount thereof, plus (ii) a “make-whole” premium as of the date of the redemption, plus any accrued and unpaid interest to the date of redemption. In addition, on or after July 15, 2024, the 2024 Notes may be redeemed at a redemption price of 100% of the principal amount thereof, plus accrued and unpaid interest to the date of redemption.

The indenture pursuant to which the 2014 Senior Notes were issued contains customary events of default, including, among other things, payment default, exchange default, failure to provide certain notices thereunder and certain provisions related to bankruptcy events. The indenture also contains customary negative covenants.

~~On November 2, 2015, the Company completed an exchange offer to exchange the unregistered 2014 Senior Notes for registered notes, as well as all related guarantees.~~

~~The Company was in compliance with the covenants relating to the 2014 Senior Notes as of December 31, 2017.~~

~~2017 Senior Notes~~

~~On February 21, 2017, the Company completed a private placement offering of $1,000,000,000 aggregate principal amount of its unsecured 5.125% Senior Notes due~~ 2027 (the 2017 Senior Notes) and used the note proceeds to immediately retire the remaining $127.6 million outstanding on the term loan B facility as well as repay $600 million of the term loan A facility and $250 million of the revolving credit facility under its Credit Agreement.

As of December 31, 2017, the estimated fair value of the Company’s 2017 Senior Notes was approximately $1,017.5 million. The fair value of the Company’s 2017 Senior Notes as of December 31, 2017 was derived by taking the mid-point of the trading prices from an observable market input (Level 2) in the secondary bond market and multiplying it by the outstanding balance of the 2017 Senior Notes. Interest ~~will be~~is payable on the ~~2017~~2027 Senior Notes at a rate of 5.125% per annum. Interest on the ~~2017~~2027 Senior Notes ~~will be~~is payable semi-annually on March 15 and September 15 of each year, commencing on September 15, 2017. The ~~2017~~2027 Senior Notes will mature on March 15, 2027.

At any time and from time to time prior to December 15, 2026, the Company may redeem all or part of the ~~2017~~2027 Senior Notes, at a redemption price equal to 100% of their principal amount, plus a “make whole” premium as of the redemption date, and accrued and unpaid interest to the redemption date.

In addition, at any time and from time to time prior to March 15, 2020, the Company may redeem up to 35% of the original aggregate principal amount of the 2017 Senior Notes with the proceeds of one or more qualified equity offerings, at a redemption price equal to 105.125%, plus accrued and unpaid interest. Furthermore, at any time on or after December 15, 2026, the Company may redeem on one or more occasions all or part of the 2017 Senior Notes at a redemption price equal to 100% of their principal amount, plus accrued and unpaid interest.

The indenture pursuant to which the ~~2017~~2027 Senior Notes were issued contains customary events of default, including, among other things, payment default, exchange default, failure to provide ~~certain~~ notices thereunder and ~~certain~~ provisions related to bankruptcy events. The indenture also contains customary negative covenants.

~~On June 30, 2017, the Company completed an exchange offer to exchange the unregistered 2017 Senior Notes for registered notes, as well as related guarantees.~~

The Company was in compliance with the covenants relating to ~~its 2017~~the 2027 Senior Notes as of ~~December 31, 2017.~~June 30, 2021.

URS Senior Notes

In connection with the 2014 acquisition of the URS ~~acquisition,~~Corporation (URS), the Company assumed ~~URS 3.85% Senior Notes due 2017 (2017 URS Senior Notes) and~~ the URS 5.00% Senior Notes due 2022 (2022 URS Senior Notes)~~, totaling $1.0 billion (URS Senior Notes)~~.

The ~~URS acquisition triggered change in control provisions in the URS Senior Notes that allowed the holders of the URS Senior Notes to redeem their URS Senior Notes at a cash price equal to 101% of the~~remaining $248.5 million principal amount and, accordingly, the Company redeemed $572.3 million of the URS Senior Notes on October 24, 2014. The remaining 2017 URS Senior Notes matured and were fully redeemed on April 3, 2017 for $179.2 million using proceeds from a $185 million delayed draw term loan A facility tranche under the Credit Agreement. The 2022 URS Senior Notes are general unsecured senior obligations of AECOM Global II, LLC (as successor in interest to URS) and are fully and unconditionally guaranteed on a joint-and-several basis by certain former URS domestic subsidiary guarantors.

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redemption price that was ~~approximately $258.5 million. The carrying value~~106.835% of the ~~2022 URS Senior Notes on~~principal amount outstanding plus accrued and unpaid interest. The August 31, 2020 redemption resulted in a $17.0 million prepayment premium, which was included in interest expense during the Company’s Consolidated Balance Sheets as of December 31, 2017 was $247.8 million. The fair value of the 2022 URS Senior Notes as of December 31, 2017 was derived by taking the mid-point of the trading prices from an observable market input (Level 2) in the secondary bond market and multiplying it by the outstanding balance of the 2022 URS Senior Notes.year ended September 30, 2020.

~~As of December 31, 2017, the Company was in compliance with the covenants relating to the 2022 URS Senior Notes.~~

Other Debtand Other Items

Other debt consists primarily of obligations under capital leases and loans, and unsecured credit facilities. The Company’s unsecured credit facilities are primarily used for standby letters of credit issued in connection with general and professional liability insurance programs and for ~~payment of~~contract performance guarantees. At ~~December 31, 2017~~June 30, 2021 and September 30, ~~2017,~~2020, these outstanding standby letters of credit totaled ~~$460.9~~$489.6 million and ~~$445.7~~$510.1 million, respectively. As of ~~December 31, 2017,~~June 30, 2021, the Company had ~~$489.4~~$443.1 million available under these unsecured credit facilities.

Effective Interest Rate

The Company’s average effective interest rate on its total debt, including the effects of the interest rate swap agreements and excluding the effects of prepayment premiums included in interest expense, during the ~~three~~nine months ended ~~December 31, 2017~~June 30, 2021 and ~~2016~~2020 was ~~4.8%~~4.7% and ~~4.2%~~5.2%, respectively.

Interest expense in the consolidated statements of operations ~~for the three months ended December~~ ~~31, 2017 and December 31, 2016~~ included amortization of deferred debt issuance costs for the three and nine months ended June 30, 2021 of ~~$2.9~~$4.6 million and ~~$2.8~~$9.0 million, respectively, and for the three and nine months ended June 30, 2020 of $1.3 million and $3.8 million, respectively.

8.Derivative Financial Instruments and Fair Value Measurements

The Company uses ~~certain~~ interest rate derivative contracts to hedge interest rate exposures on the Company’s variable rate debt. The Company enters into foreign currency derivative contracts with financial institutions to reduce the risk that its cash flows and earnings will be adversely affected by foreign currency exchange rate fluctuations. The Company’s hedging program is not designated for trading or speculative purposes.

The Company recognizes derivative instruments as either assets or liabilities on the accompanying consolidated balance sheets at fair value. The Company records changes in the fair value (i.e., gains or losses) of the derivatives that have been designated as accounting hedges in the accompanying consolidated statements of operations as cost of revenue, interest expense or to accumulated other comprehensive loss in the accompanying consolidated balance sheets.

Cash Flow Hedges

The Company uses interest rate swap agreements designated as cash flow hedges to fix the variable interest rates on portions of the Company’s debt. The Company ~~also uses foreign currency contracts designated as cash flow hedges to hedge forecasted~~ ~~revenue transactions denominated in currencies other than the U.S. dollar. The Company~~ initially reports any gain on the effective portion of a cash flow hedge as a component of accumulated other comprehensive loss. ~~Depending on the type of cash flow hedge, the~~The gain or loss is subsequently reclassified to ~~either~~ interest expense when the interest expense on the variable rate debt is ~~recognized, or to cost of revenue when the hedged revenues are recorded.~~recognized. If the hedged transaction becomes probable of not occurring, any gain or loss related to interest rate swap agreements ~~or foreign currency contracts~~ would be recognized in other income (expense). Further, the Company excludes the change in the time value of the foreign currency contracts from the assessment of hedge effectiveness. The Company records the premium paid or time value of a contract on the date of purchase as an asset. Thereafter, the Company recognizes any change to this time value in cost of revenue.income.

The notional principal, fixed rates, and related expiration dates of the Company’s outstanding interest rate swap agreements were as follows:

December 31, 2017

Notional Amount
(in millions)

Fixed
Rate

Expiration
Date

$
300.0

1.63
%
June 2018

300.0

1.54
%
September 2018


	June 30,2021
Notional Amount	Notional Amount	Fixed	Expiration
Currency	(in millions)	Rate	Date
USD	200.0	2.60%	February 2023

September 30, 2017

Notional Amount
(in millions)

Fixed
Rate

Expiration
Date

$
300.0

1.63
%
June 2018

300.0

1.54
%
September 2018

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	September 30, 2020
Notional Amount	Notional Amount	Fixed	Expiration
Currency	(in millions)	Rate	Date
USD	200.0	2.60%	February 2023

Subsequent to the end of the third quarter of fiscal 2021, the Company entered into new interest rate swap agreements with a notional value of $400.0 million to manage the interest rate exposure of its variable rate loans. The ~~notional principal~~new swaps will become effective February 2023 and terminate in March 2028. By entering into the swap agreements, the Company converted a portion of ~~outstanding foreign currency contracts to purchase Australian dollars (AUD) was AUD 13.2 million (or $9.9 million)~~the LIBOR rate-based liability into a fixed rate liability. The Company will pay a fixed rate of 1.349% and ~~AUD 15.1 million (or $11.3 million)~~receive payment at ~~December 31, 2017 and September 30, 2017, respectively.~~the prevailing one-month LIBOR.

Other Foreign Currency Forward Contracts

The Company uses foreign currency forward contracts which are not designated as accounting hedges to hedge intercompany transactions and other monetary assets or liabilities denominated in currencies other than the functional currency of a subsidiary. Gains and losses on these contracts were not material for the ~~three~~nine months ended ~~December 31, 2017~~June 30, 2021 and ~~2016.~~2020.

Fair Value Measurements

The Company’s non-pension financial assets and liabilities recorded at fair values relate to derivative instruments and were not material at ~~December 31, 2017~~June 30, 2021 or ~~2016.~~September 30, 2020.

See Note 1314 for accumulated balances and reporting period activities of derivatives related to reclassifications out of accumulated other comprehensive ~~income or~~ loss for the ~~three~~nine months ended ~~December 31, 2017~~June 30, 2021 and ~~2016.~~2020. Amounts recognized in accumulated other comprehensive loss from the Company’s foreign currency ~~contracts~~options were immaterial for all periods presented. Amounts reclassified from accumulated other comprehensive loss into income from the foreign currency options were immaterial for all periods presented. Additionally, there were no0 material losses recognized in income due to amounts excluded from effectiveness testing from the Company’s interest rate swap agreements.

During the year ended September 30, 2015, the Company entered into a contingent consideration arrangement in connection with a business acquisition. Under the arrangement, the Company agreed to pay cash to the sellers if certain financial performance thresholds are achieved in the future. The fair value of the contingent consideration liability, net of amounts paid, as of December 31, 2017 and September 30, 2017 was $12 million and $13 million, respectively. This liability is a Level 3 fair value measurement recorded within other accrued liabilities, and was valued based on estimated future net cash flows. Any future changes in the fair value of this contingent consideration liability will be recognized in earnings during the applicable period.

9.Share-based Payments

The fair value of the Company’s employee stock option awards is estimated on the date of grant. The expected term of awards granted represents the period of time the awards are expected to be outstanding. The risk-free interest rate is based on U.S. Treasury bond rates with maturities equal to the expected term of the stock option on the grant date. The Company uses historical data as a basis to estimate the probability of forfeitures.

Stock option activity for the ~~three~~nine months ended ~~December 31~~June 30 was as follows:

	2017				2016
	Shares of stock under options		Weighted average exercise price		Shares of stock under options		Weighted average exercise price
	(in millions)				(in millions)

									2021			2020
									Shares of stock	Weighted average		Shares of stock	Weighted average
									under options	exercise price		under options	exercise price
									(in millions)			(in millions)
Outstanding at September 30	0.7		$	31.11	0.9		$	30.36	0.4	$	36.41	0.1	$	31.62
Options granted	—		—		—		—		0		0	0		0
Options exercised	(0.1	)	27.67		(0.1	)	25.46		(0.1)		31.62	0		0
Options forfeited or expired	—		—		—		—		0		0	0		0
Outstanding at December 31	0.6		31.54		0.8		30.86

Vested and expected to vest in the future as of December 31	0.6		$	31.54	0.8		$	30.86
Outstanding at June 30									0.3		38.72	0.1		31.62

Vested and expected to vest in the future as of June 30									0.2	$	38.72	0.1	$	31.62

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The Company grants stock units to employees under its Performance Earnings Program (PEP), whereby units are earned and issued dependent upon meeting established cumulative performance objectives and vest over a three-year service period. Additionally, the Company issues restricted stock units to employees which are earned based on service conditions. The grant date fair value of PEP awards and restricted stock unit awards is that day’s closing market price of the Company’s common stock. The weighted average grant date fair value of PEP awards ~~were $37.90~~was $52.76 and ~~$38.16~~$42.99 during the ~~three~~nine months ended ~~December 31, 2017~~June 30, 2021 and ~~2016,~~2020, respectively. The weighted average grant date fair value of restricted stock unit awards ~~were $36.93~~was $49.21 and ~~$38.08~~ $42.25 during the ~~three~~nine months ended ~~December 31, 2017~~June 30, 2021 and ~~2016,~~2020, respectively. Total compensation expense related to these share-based payments including stock options ~~were $16.5~~was $36.2 million and ~~$21.3~~$37.0 million during the ~~three~~nine months ended ~~December 31, 2017~~June 30, 2021 and ~~2016,~~2020, respectively. Unrecognized compensation expense related to total share-based payments outstanding as of ~~December 31, 2017~~June 30, 2021 and September 30, ~~2017 were $148.5~~2020 was $56.2 million and ~~$96.8~~$50.0 million, respectively, to be recognized on a straight-line basis over the awards’ respective vesting periods which are generally three years.

1010. .Income Taxes

~~During the quarter ended December 31, 2017, President Trump signed what is commonly referred to as~~ ~~The Tax Cuts and Jobs Act~~ (Tax Act) into law. The Tax Act reduces the Company’s U.S. federal corporate tax rate from 35% to a blended tax rate of 24.5% for the Company’s fiscal year ending September 30, 2018 and 21% for fiscal years thereafter, requires companies to pay a one-time transition tax on accumulated earnings of foreign subsidiaries, creates new taxes on certain foreign sourced earnings and eliminates or reduces certain deductions.

Given the significance of the Tax Act, the SEC staff issued Staff Accounting Bulletin No. 118 (SAB 118), which allows registrants to record provisional amounts during a one year “measurement period” similar to that used when accounting for business combinations. However, the measurement period is deemed to have ended earlier when the registrant has obtained, prepared and analyzed the information necessary to finalize its accounting. During the measurement period, impacts of the law are expected to be recorded at the time a reasonable estimate for all or a portion of the effects can be made, and provisional amounts can be recognized and adjusted as information becomes available, prepared or analyzed.

At December 31, 2017, the Company has not completed its accounting for the tax effects of enactment of the Tax Act; however, the Company made a reasonable estimate of the effects on its existing deferred tax balances and certain other assets and liabilities and the one-time transition tax. The Company has not been able to make a reasonable estimate of the impact on its indefinite reinvestment of earnings of certain foreign subsidiaries and therefore will continue to account for those items based on its existing accounting under ASC 740. As further guidance and accounting interpretations are expected over the next 12 months, the Company’s analysis is considered incomplete.

Other significant provisions include a base erosion anti-abuse tax (BEAT) on excessive amounts paid to foreign related parties and a minimum tax on global intangible low-taxed income (GILTI). The Company has not elected a method of accounting for BEAT and GILTI and will only do so after completion of the analysis of the provisions and the impact to the Company.

The Company’s effective tax rate was ~~(60.9)%~~16.6% and ~~27.4%~~14.2% for the ~~three~~nine months ended ~~December 31, 2017~~June 30, 2021 and ~~2016,~~2020, respectively. The most significant items contributing to the difference between the statutory U.S. federal ~~income~~corporate tax rate of ~~24.5%~~21.0% and the Company’s effective tax rate for the ~~three month~~nine-month period ended ~~December 31, 2017~~June 30, 2021 were a ~~$41.7 million net benefit related to one-time U.S. federal~~ tax ~~law changes, a~~ benefit of ~~$11.2 million related to changes in uncertain tax positions primarily in the U.S. and Canada, and a benefit of $8.4~~$39.0 million related to income tax credits and ~~incentives. These~~incentives, a tax benefit of $25.9 million related to a corporate tax rate change in the United Kingdom, a tax expense of $30.7 million related to foreign residual income, a tax expense of $13.2 million related to an audit settlement, and a tax expense of $11.5 million related to state income taxes. All of these items are ~~not~~ expected to have a continuing impact on the effective tax rate for the remainder of the fiscal year except for the ~~benefits~~tax rate change and the audit settlement.

The most significant items contributing to the difference between the statutory U.S. federal income tax rate of 21.0% and the Company’s effective tax rate for the nine-month period ended June 30, 2020 were a tax benefit of $25.4 million related to the release of a valuation allowance on net operating losses and a benefit of $22.9 million related to income tax credits and ~~incentives.~~incentives, partially offset by tax expense of $21.7 million related to nondeductible costs and tax expense of $9.0 million related to state income tax.

~~The Company remeasured certain~~

During the third quarter of fiscal 2021, the United Kingdom enacted a corporate tax rate increase from 19% to 25% beginning April 2023 requiring deferred tax assets and liabilities ~~based on~~to be remeasured. The remeasurement resulted in a $25.9 million tax benefit.

During the ~~rates at which they are expected to reverse in the future, which is generally 21%. However,~~third quarter of fiscal 2021, the Company ~~is still analyzing certain aspects of the Tax Act~~partially settled its U.S. federal audit for fiscal 2015 and refining its calculations which could potentially affect the measurement of these balances. The provisional amount recorded related to the remeasurement of the Company’s deferred tax balance was a $36.1 million tax benefit. In addition, the Company released the deferred tax liability2016 and recorded a tax ~~benefit~~expense of ~~$77.0~~$13.2 million due primarily to changes in tax attributes.

During the third quarter of fiscal 2020, management approved a tax planning strategy and it began restructuring certain operations in Canada which resulted in the release of a valuation allowance related to ~~certain foreign subsidiaries for which the undistributed earnings are not intended to be reinvested indefinitely and accrued current tax on these earnings as part of the one-time transition tax.~~

~~The Company recorded a provisional amount for the one-time transition tax liability for its foreign subsidiaries resulting~~net operating losses in an increase in income tax expense of $71.4 million. The Company has not yet completed its calculation of the total foreign earnings and profits of its foreign subsidiaries. Further, the transition tax is based in part on the amount of those earnings held in cash and other specified assets at the end of the fiscal year. This amount may change when the Company finalizes the calculation of foreign earnings and finalize the amounts held in cash or other specified assets.$25.4 million.

The Company is utilizing the annual effective tax rate method under ASC 740 to compute its interim tax provision. The Company’s effective tax rate fluctuates from quarter to quarter due to various factors including the change in the mix of global income and expenses, outcomes of administrative audits, changes in the assessment of valuation allowances due to management’s consideration of new positive or negative evidence during the quarter, and changes in enacted tax ~~laws~~laws. The U.S. federal government has recently proposed significant legislation that would increase the U.S. corporate tax rate and ~~their interpretations which upon enactment include possible tax reform around the world arising from the result of the base erosion~~impact how corporations are taxed. In addition, many international legislative and ~~profit shifting project undertaken by the Organisation for Economic Co-operation Development which,~~regulatory bodies have proposed legislation that could significantly impact how our international business activities are taxed. These proposed changes, if ~~finalized and adopted,~~enacted, could have a material impact on the Company’s income tax expense and deferred tax balances.

The Company is currently under tax audit in several jurisdictions including the U.S. and believes the outcomes which are reasonably possible within the next twelve months, including lapses in statutes of limitations, could result in future adjustments, but will not result in a ~~decrease of approximately $15 million~~material change in the liability for uncertain tax positions.

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Generally, the Company does not provide for U.S. taxes or foreign withholding taxes on gross book-tax differences in its non-U.S. subsidiaries because such basis differences of approximately ~~$1.7~~$1.5 billion are able to and intended to be reinvested indefinitely. ~~At December 31, 2017~~If these basis differences were distributed, foreign tax credits could become available under current law to partially or fully reduce the Company has not determined whether it will continue to indefinitely reinvest the earnings of certain foreign subsidiaries and therefore will continue to account for these undistributed earnings based on existing accounting under ASC 740 and not accrue additionalresulting U.S. income tax ~~outside of the one-time transition tax described above.~~liability. There may also be additional U.S. or foreign income tax liability upon repatriation, although the calculation of such additional taxes is not practicable.

11.11. Earnings Per Share

Basic earnings per share (EPS) excludes dilution and is computed by dividing net income attributable to AECOM by the weighted average number of common shares outstanding for the period. Diluted EPS is computed by dividing net income attributable to AECOM by the weighted average number of common shares outstanding and potential common shares for the period. The Company includes as potential common shares the weighted average dilutive effects of equity awards using the treasury stock method. For the three and nine months ended ~~December 31, 2017~~June 30, 2021 and ~~2016,~~2020, equity awards excluded from the calculation of potential common shares were not significant.

The following table sets forth a reconciliation of the denominators for basic and diluted earnings per share:


			Three Months Ended		Nine Months Ended
			June 30,	June 30,	June 30,	June 30,
			2021	2020	2021	2020
	Three Months Ended
	December 31, 2017	December 31, 2016
	(in millions)
			(in millions)
Denominator for basic earnings per share	157.9	154.3	146.1	160.1	148.4	158.7
Potential common shares	3.9	3.7	2.8	1.7	2.3	2.4
Denominator for diluted earnings per share	161.8	158.0	148.9	161.8	150.7	161.1

12. Leases

On October 1, 2019, the Company adopted FASB ASC 842 on a modified retrospective basis, which amended the accounting standards for leases. Accordingly, the Company applied the new guidance as of the date of adoption with a cumulative-effect adjustment recorded through equity. Prior periods have not been restated as a result of the adoption. Retained earnings decreased $87.8 million due to the adoption, primarily from impairment of the right-of-use assets associated with office building leases.

The Company also applied transition elections that allow it to avoid reassessment of lease definition, classification, or direct costs relating to expired or expiring leases. Adoption of the new lease guidance did not significantly change the Company’s accounting for finance leases, which were previously referred to as capital leases.

The Company and its subsidiaries are lessees in non-cancelable leasing agreements for office buildings and equipment. Substantially all of the Company’s office building leases are operating leases, and its equipment leases are both operating and finance leases. The Company groups lease and non-lease components for its equipment leases into a single lease component but separates lease and non-lease components for its office building leases.

The Company recognizes a right-of-use asset and lease liability for its operating leases at the commencement date equal to the present value of the contractual minimum lease payments over the lease term. The present value is calculated using the rate implicit in the lease, if known, or the Company’s incremental secured borrowing rate. The discount rate used for operating leases is primarily determined based on an analysis the Company’s incremental secured borrowing rate, while the discount rate used for finance leases is primarily determined by the rate specified in the lease.

The related lease payments are expensed on a straight-line basis over the lease term, including, as applicable, any free-rent period during which the Company has the right to use the asset. For leases with renewal options where the renewal is reasonably assured, the lease term, including the renewal period, is used to determine the appropriate lease classification and to compute periodic rental expense. Leases with initial terms shorter than 12 months are not recognized on the balance sheet, and lease expense is recognized on a straight-line basis.

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The components of lease expenses are as follows:


	Three Months Ended				Nine Months Ended
	June 30,2021		June 30,2020		June 30,2021		June 30,2020

	(in millions)
Operating lease cost	$	46.3	$	49.3	$	141.0	$	144.7
Finance lease cost:
Amortization of right-of-use assets		3.9		4.2		10.3		13.9
Interest on lease liabilities		0.6		0.4		1.8		1.4
Variable lease cost		8.5		8.8		27.2		27.1
Total lease cost	$	59.3	$	62.7	$	180.3	$	187.1

Additional balance sheet information related to leases is as follows:


		As of		As of
(in millions except as noted)	Balance Sheet Classification	June 30,2021		September 30, 2020
Assets:
Operating lease assets	Operating lease right-of-use assets	$	637.3	$	652.1
Finance lease assets	Property and equipment – net		41.1		29.1
Total lease assets		$	678.4	$	681.2

Liabilities:
Current:
Operating lease liabilities	Accrued expenses and other current liabilities	$	162.8	$	168.4
Finance lease liabilities	Current portion of long-term debt		14.1		9.8
Total current lease liabilities		$	176.9	$	178.2

Non-current:
Operating lease liabilities	Operating lease liabilities, noncurrent		711.5		745.3
Finance lease liabilities	Long-term debt		30.5		22.0
Total non-current lease liabilities		$	742.0	$	767.3


	As of		As of
	June 30, 2021		September 30, 2020
Weighted average remaining lease term (in years):
Operating leases	7.0		7.3
Finance leases	3.3		3.3
Weighted average discount rates:
Operating leases	4.4	%	4.6	%
Finance leases	4.6	%	4.7	%

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Additional cash flow information related to leases is as follows:


	Nine Months Ended
	June 30,		June 30,
	2021		2020

	(in millions)
Cash paid for amounts included in the measurement of lease liabilities:
Operating cash flows from operating leases	$	165.9	$	168.3
Operating cash flows from finance leases		1.5		1.3
Financing cash flows from finance leases		10.1		11.9
Right-of-use assets obtained in exchange for new operating leases		77.3		90.8
Right-of-use assets obtained in exchange for new finance leases		22.2		17.5

Total remaining lease payments under both the Company’s operating and finance leases are as follows:


	Operating Leases		Finance Leases

Fiscal Year	(in millions)
2021 (three months remaining)	$	53.0	$	3.9
2022		188.6		15.6
2023		155.0		13.4
2024		132.9		9.8
2025		113.0		4.5
Thereafter		376.1		0.8
Total lease payments	$	1,018.6	$	48.0
Less: Amounts representing interest	$	(144.3)	$	(3.4)
Total lease liabilities	$	874.3	$	44.6

.13. Other Financial Information

Accrued expenses and other current liabilities consist of the following:

December 31,
2017

September 30,
2017

(in millions)

Accrued salaries and benefits

$
900.8

$
1,018.5

Accrued contract costs

833.5

911.9

Other accrued expenses

337.9

315.1

$
2,072.2

$
2,245.5


	June 30,		September 30,
	2021		2020

	(in millions)
Accrued salaries and benefits	$	702.2	$	675.7
Accrued contract costs		1,252.3		1,137.5
Other accrued expenses		380.6		436.5
	$	2,335.1	$	2,249.7

Accrued contract costs above include balances related to professional liability accruals of ~~$537.7~~$800.4 million and ~~$547.9~~$625.9 million as of ~~December 31, 2017~~June 30, 2021 and September 30, ~~2017,~~2020, respectively. The remaining accrued contract costs primarily relate to costs for services provided by subcontractors and other non-employees. Liabilities recorded related to accrued contract losses were not material as of ~~December 31, 2017~~June 30, 2021 and September 30, ~~2017~~.2020. The Company did not have material revisions to estimates for contracts where revenue is recognized using the percentage-of-completion method during the ~~three~~nine months ended ~~December 31, 2017.~~June 30, 2021 and 2020. In the first quarter of fiscal 2019, the Company commenced a restructuring plan to improve profitability. The Company expects to incur restructuring costs of $40 million to $50 million in fiscal year 2021 primarily related to costs associated with the advancing its previously announced actions to deliver margin improvement and efficiencies that result in a more agile organization. During the first nine months of fiscal 2021, the Company incurred ~~$22.4~~restructuring expenses of $34.8 million, including personnel and other costs of $25.8 million and real estate costs of $9.0 million, of ~~primarily severance expenses relating to restructuring activities during the three months ended December 31, 2017, of~~ which ~~$9.6~~$6.5 million was ~~paid as of December 31, 2017.~~

accrued and unpaid at June 30, 2021. During the ~~twelve~~first nine months ~~ended September 30, 2016,~~of fiscal 2020, the Company ~~recorded revenue related to the expected accelerated recovery~~incurred restructuring expenses of ~~a pension related entitlement from the federal government~~$96.4 million, including personnel and other costs of ~~approximately $50~~$83.5 million ~~which is included in accounts receivable-net at December 31, 2017. The entitlement resulted from pension~~and real estate costs that are reimbursable through certain government contracts in accordance with Cost Accounting Standards. The accelerated recognition resulted from an amendment to freeze pension benefits under URS Federal Services, Inc. Employees Retirement Plan. The actual amount of ~~reimbursement may vary from the Company’s expectation.~~$12.9 million.

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13.14. Reclassifications out of Accumulated Other Comprehensive Loss

The accumulated balances and reporting period activities for the three and nine months ended ~~December 31, 2017~~June 30, 2021 and ~~2016~~2020 related to reclassifications out of accumulated other comprehensive loss are summarized as follows (in millions):

Pension
Related
Adjustments

Foreign
Currency
Translation
Adjustments

(Loss)/Gain on
Derivative
Instruments

Accumulated
Other
Comprehensive
Loss

Balances at September 30, 2017

$
(281.9
)
$
(418.4
)
$
(0.4
)
$
(700.7
)
Other comprehensive (loss) income before reclassification

—

(6.8
)
0.5

(6.3
)
Amounts reclassified from accumulated other comprehensive income (loss)

2.5

—

0.3

2.8

Balances at December 31, 2017

$
(279.4
)
$
(425.2
)
$
0.4

$
(704.2
)


			Foreign				Accumulated
	Pension		Currency		Gain/(Loss) on		Other
	Related		Translation		Derivative		Comprehensive
	Adjustments		Adjustments		Instruments		Loss
Balances at March 31, 2021	$	(353.5)	$	(535.6)	$	(6.6)	$	(895.7)
Other comprehensive income (loss) before reclassification		0.2		(18.8)		(0.1)		(18.7)
Amounts reclassified from accumulated other comprehensive loss		3.0		—		0.9		3.9
Balances at June 30,2021	$	(350.3)	$	(554.4)	$	(5.8)	$	(910.5)

Pension
Related
Adjustments

Foreign
Currency
Translation
Adjustments

Loss on
Derivative
Instruments

Accumulated
Other
Comprehensive
Loss

Balances at September 30, 2016

$
(368.9
)
$
(483.7
)
$
(5.0
)
$
(857.6
)
Other comprehensive (loss) income before reclassification

13.7

(73.5
)
0.7

(59.1
)
Amounts reclassified from accumulated other comprehensive loss

3.2

—

0.6

3.8

Balances at December 31, 2016

$
(352.0
)
$
(557.2
)
$
(3.7
)
$
(912.9
)


			Foreign				Accumulated
	Pension		Currency		Gain/(Loss) on		Other
	Related		Translation		Derivative		Comprehensive
	Adjustments		Adjustments		Instruments		Loss
Balances at March 31, 2020	$	(280.0)	$	(592.1)	$	(9.5)	$	(881.6)
Other comprehensive income (loss) before reclassification		1.7		71.4		(0.8)		72.3
Amounts reclassified from accumulated other comprehensive loss		2.9		—		0.8		3.7
Balances at June 30, 2020	$	(275.4)	$	(520.7)	$	(9.5)	$	(805.6)


			Foreign				Accumulated
	Pension		Currency		Gain/(Loss) on		Other
	Related		Translation		Derivative		Comprehensive
	Adjustments		Adjustments		Instruments		Loss
Balances at September 30, 2020	$	(342.8)	$	(567.3)	$	(8.6)	$	(918.7)
Other comprehensive (loss) income before reclassification		(16.5)		12.9		0.1		(3.5)
Amounts reclassified from accumulated other comprehensive loss		9.0		—		2.7		11.7
Balances at June 30,2021	$	(350.3)	$	(554.4)	$	(5.8)	$	(910.5)


			Foreign				Accumulated
	Pension		Currency		Gain/(Loss) on		Other
	Related		Translation		Derivative		Comprehensive
	Adjustments		Adjustments		Instruments		Loss
Balances at September 30, 2019	$	(302.7)	$	(548.7)	$	(12.8)	$	(864.2)
Other comprehensive (loss) income before reclassification		(2.0)		28.0		(5.3)		20.7
Amounts reclassified from accumulated other comprehensive loss		29.3		—		8.6		37.9
Balances at June 30, 2020	$	(275.4)	$	(520.7)	$	(9.5)	$	(805.6)

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14.15. Commitments and Contingencies

The Company records amounts representing its probable estimated liabilities relating to claims, guarantees, litigation, audits and investigations. The Company relies in part on qualified actuaries to assist it in determining the level of reserves to establish for insurance-related claims that are known and have been asserted against it, and for insurance-related claims that are believed to have been incurred based on actuarial analysis, but have not yet been reported to the Company’s claims administrators as of the respective balance sheet dates. The Company includes any adjustments to such insurance reserves in its consolidated results of operations. The Company’s reasonably possible loss disclosures are presented on a gross basis prior to the consideration of insurance recoveries. The Company does not record gain contingencies until they are realized. In the ordinary course of business, the Company may not be aware that it or its affiliates are under investigation and may not be aware of whether or not a known investigation has been concluded.

In the ordinary course of business, the Company ~~may enter~~enters into various arrangements providing financial or performance assurance to clients, lenders, or partners. Such arrangements include standby letters of credit, surety bonds, and corporate guarantees to support the creditworthiness or the project execution commitments of its affiliates, partnerships and joint ventures. Performance arrangements typically have various expiration dates ranging from the completion of the project contract and extending beyond contract completion in ~~certain~~some circumstances such as for warranties. The Company may also guarantee that a project, when complete, will achieve specified performance standards. If the project subsequently fails to meet guaranteed performance standards, the Company may incur additional costs, pay liquidated damages or be held responsible for the costs incurred by the client to achieve the required performance standards. The potential payment amount of an outstanding performance arrangement is typically the remaining cost of work to be performed by or on behalf of third parties. Generally, under joint venture arrangements, if a partner is financially unable to complete its share of the contract, the other partner(s) may be required to complete those activities.

At ~~December 31, 2017 and September~~June 30, ~~2017,~~2021, the Company was contingently liable in the amount of approximately ~~$515.7~~$500.2 million ~~and $503.8 million, respectively,~~ in issued standby letters of credit and ~~$5.7~~$3.8 billion ~~and $5.7 billion, respectively,~~ in issued surety bonds primarily to support project execution.

In the ordinary course of business, the Company enters into various agreements providing financial or performance assurances to clients on behalf of certain unconsolidated partnerships, joint ventures and other jointly executed contracts. These agreements are entered into primarily to support the project execution commitments of these entities.

The Company’s investment adviser jointly manages and sponsors the AECOM-Canyon Equity Fund, L.P. (the “Fund”), in which the Company indirectly holds an equity interest and has an ongoing capital commitment to fund investments. At June 30, 2021, the Company has capital commitments of $20.3 million to the Fund over the next 8 years.

In addition, in connection with the investment activities of AECOM Capital, the Company provides guarantees of ~~certain~~contractual obligations, including guarantees for completion of projects, repayment of debt, environmental indemnity obligations and other lender required guarantees.

~~DOE~~Department of Energy Deactivation, Demolition, and Removal Project

~~Washington Group International,~~AECOM Energy and Construction, Inc., an Ohio ~~company (WGI Ohio), an~~corporation, a former affiliate of ~~URS,~~the Company (“Former Affiliate”) executed a cost-reimbursable task order with the Department of Energy (DOE) in 2007 to provide deactivation, demolition and removal services at a New York State project site that, during 2010, experienced contamination and performance ~~issues and remains uncompleted.~~issues. In February 2011, ~~WGI Ohio~~the Former Affiliate and the DOE executed a Task Order Modification that changed some cost-reimbursable contract provisions to at-risk. The Task Order Modification, including subsequent amendments, ~~requires~~required the DOE to pay all project costs up to $106 million, ~~requires WGI Ohio~~required the Former Affiliate and the DOE to equally share in all project costs incurred from $106 million to $146 million, and ~~requires WGI Ohio~~required the Former Affiliate to pay all project costs exceeding $146 million.

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Due to unanticipated requirements and permitting delays by federal and state agencies, as well as delays and related ground stabilization activities caused by Hurricane Irene in 2011, ~~WGI Ohio has been~~the Former Affiliate was required to perform work outside the scope of the Task Order Modification. In December 2014, ~~WGI Ohio~~the Former Affiliate submitted an initial set of claims against the DOE pursuant to the Contracts Disputes Acts seeking recovery of $103 million, including additional fees on changed work ~~scope. WGI Ohio has incurred and continues to incur~~scope (the “2014 Claims”). On December 6, 2019, the Former Affiliate submitted a second set of claims against the DOE seeking recovery of an additional $60.4 million, including additional project costs and delays outside the scope of the contract as a result of differing site and ground conditions (the “2019 Claims”). The Former Affiliate also submitted three alternative breach of contract claims to the 2014 and 2019 Claims that may entitle the Former Affiliate to recovery of $148.5 million to $329.4 million. On December 30, 2019, the DOE denied the Former Affiliate’s 2014 Claims. On September 25, 2020, the DOE denied the Former Affiliate’s 2019 Claims. The Company filed an appeal of these decisions on December 20, 2020 in the Court of Federal Claims. Deconstruction, decommissioning and site restoration activities are complete.

On January 31, 2020, the Company completed the sale of its Management Services business to the Purchaser including the Former Affiliate who worked on the DOE project. The Company and the Purchaser agreed that all future DOE project claim recoveries and costs will be split 10% to the Purchaser and 90% to the Company with the Company retaining control of all future strategic legal decisions.

The Company intends to ~~submit additional formal claims against the DOE.~~

Due to significant delays and uncertainties about responsibilities for the scope of remaining work, final project completion costs and other associated costs have exceeded $100 million over the contracted andvigorously pursue all claimed amounts. WGI Ohio assets and liabilities, including the value of the above costs and claims, were measured at their fair value on October 17, 2014, the date AECOM acquired WGI Ohio’s parent company, see Note 3, which measurement has been reevaluated to account for developments pertaining to this matter.

~~WGI Ohio~~amounts but can provide no certainty that itthe Company will recover ~~the claims~~2014 and 2019 Claims submitted against the DOE, ~~in December 2014,~~or any ~~future~~additional incurred claims or ~~any other project costs after December 2014 that WGI Ohio may be obligated to incur including the remaining project completion~~ costs, which could have a material adverse effect on the Company’s results of operations.

~~SR-91~~

One of the Company’s wholly-owned subsidiaries, URS Corporation, entered into a partial fixed cost and partial time and material design agreement in 2012 with a design build contractor for a state route highway construction project in Riverside County and Orange County, California. On April 5, 2017, URS Corporation filed an $8.2 million amended complaint in the Superior Court of California against the design build contractor for its failure to pay for services performed under the design agreement. On July 3, 2017, the design build contractor filed an amended counterclaim in Superior Court alleging breaches of contract, negligent interference and professional negligence pertaining to URS Corporation’s performance of design services under the design agreement, seeking purported damages of $70 million. URS Corporation cannot provide assurances that it will be successful in the recovery of the amounts owed to it under the design agreement or in its defense against the amounts alleged under the counterclaim that URS Corporation believes are without merit and that it intends to vigorously defend against. The potential range of loss in excess of any current accrual cannot be reasonably estimated at this time, primarily because the matter involves multiple regulatory issues; there is substantial uncertainty regarding any alleged damages; and the matter is at a preliminary stage of litigation.

New York Department of Environmental Conservation

~~The following matter is disclosed pursuant to Regulation S-K, Item 103, Instruction 5.C pertaining to a government authority environmental claim exceeding $100,000 against an AECOM affiliate.~~ In September 2017, AECOM USA, Inc.~~, one of the Company’s wholly-owned subsidiaries,~~ was advised by the New York State Department of Environmental Conservation (DEC) of allegations that it committed environmental permit violations pursuant to the New York Environmental Conservation Law (ECL) associated with AECOM USA, Inc.’s oversight of a stream restoration project for Schoharie County which could result in substantial penalties if calculated under the ECL’s maximum civil penalty provisions. AECOM USA, Inc. disputes this claim and intends to continue to defend this matter vigorously; however, AECOM USA, Inc., cannot provide assurances that it will be successful in these efforts. The potential range of loss in excess of any current accrual cannot be reasonably estimated at this time primarily because the matter involves complex and unique environmental and regulatory issues; the project site involves the oversight and involvement of various local, state and federal government agencies; there is substantial uncertainty regarding any alleged damages; and the matter is in its preliminary ~~stage~~stages.

Refinery Turnaround Project

A Former Affiliate of the ~~government’s~~Company entered into an agreement to perform turnaround maintenance services during a planned shutdown at a refinery in Montana in December 2017. The turnaround project was completed in February 2019. Due to circumstances outside of the Company’s Former Affiliate’s control, including client directed changes and delays and the refinery’s condition, the Company’s Former Affiliate performed additional work outside of the original contract over $90 million and is entitled to payment from the refinery owner of approximately $144 million. In March 2019, the refinery owner sent a letter to the Company’s Former Affiliate alleging it incurred approximately $79 million in damages due to the Company’s Former Affiliate’s project performance. In April 2019, the Company’s Former Affiliate filed and perfected a $132 million construction lien against the refinery for unpaid labor and materials costs. In August 2019, following a subcontractor complaint filed in the Thirteen Judicial District Court of Montana asserting claims against the refinery owner and the Company’s Former Affiliate, the refinery owner crossclaimed against the Company’s Former Affiliate and the subcontractor. In October 2019, following the subcontractor’s dismissal of its claims, the Company’s Former Affiliate removed the matter to federal court and cross claimed against the refinery owner. In December 2019, the refinery owner claimed $93.0 million in damages and offsets against the Company’s Former Affiliate. The parties have agreed on a February 28, 2022 deadline for close of discovery in this matter.

Table of Contents

On January 31, 2020, the Company completed the sale of its Management Services business to the Purchaser including the Former Affiliate, however, the Refinery Turnaround Project, including related claims and liabilities, has been retained by the Company.

The Company intends to vigorously prosecute and defend this matter; however, the Company cannot provide assurance that the Company will be successful in these efforts. The resolution of this matter and any ~~negotiations~~potential range of ~~a consent order.~~loss cannot be reasonably determined or estimated at this time, primarily because the matter raises complex legal issues that Company is continuing to assess.

15.16. Reportable Segments

During the first quarter of fiscal 2020, the Company reorganized its operating and reporting structure to better align with its ongoing professional services business. This reorganization better reflects the continuing operations of the Company after the sale of its former Management Services reportable business segment and planned disposal of its self-perform at-risk construction businesses discussed in Note 3. The businesses that comprised the Company’s ~~operations are organized into four~~former Management Services reportable ~~segments:~~business segment and the civil infrastructure, power and oil and gas construction businesses in the former Construction Services reportable business segment were classified as discontinued operations. The former Design and Consulting Services ~~(DCS), Construction Services (CS), Management Services (MS),~~reportable business segment and AECOM Capital (ACAP). During the third quarter of fiscal 2017, operating activities of ACAP achieved a level of significance sufficient to warrant disclosure as a separate reportable segment. Prior to the third quarter of fiscal 2017, ACAP’s operating results were includedconstruction management business in the ~~corporate~~former Construction Services reportable business segment ~~and comparable periods~~ were ~~reclassified to reflect the change.~~reformed around geographic regions. The ~~Company’s DCS reportable~~Americas segment ~~delivers~~provides planning, consulting, architectural ~~environmental,~~ and engineering design services, and construction management services to commercial and government clients ~~worldwide.~~ in the United States, Canada, and Latin America, while the International segment provides similar professional services to commercial and government clients in Europe, the Middle East, Africa, and the Asia-Pacific regions.

The Company’s ~~CS reportable~~AECOM Capital (ACAP) segment ~~provides construction services~~ primarily in the Americas. The Company’s MS reportable segment provides program and facilities management and maintenance, training, logistics, consulting, technical assistance, and systems integration and information technology services, primarily for agencies of the U.S. government. The Company’s ACAP segment invests in and develops real estate ~~public-private partnership (P3) and infrastructure~~ projects. These reportable segments are organized by ~~the types of services provided,~~ the differing specialized needs of the respective clients, and how the Company manages its business. The Company has aggregated various operating segments into its reportable segments based on their similar characteristics, including similar long term financial performance, the nature of services provided, internal processes for delivering those services, and types of customers. The change in reportable segments was applied to all periods presented.

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The following tables set forth summarized financial information concerning the Company’s reportable segments:


																									AECOM
Reportable Segments:	Design and Consulting Services			Construction Services			Management Services			AECOM Capital			Corporate			Total			Americas			International			Capital		Corporate		Total
	(in millions)
Three Months Ended December 31, 2017:
																			(in millions)
Three Months Ended June 30, 2021:
Revenue	$	1,941.9		$	2,125.5		$	843.4		$	—		$	—		$	4,910.8		$	2,618.5		$	789.3		$	0.6	$	—	$	3,408.4
Gross profit	77.8			27.1			31.3			—			—			136.2				160.6			40.4			0.6		—		201.6
Equity in earnings of joint ventures	7.5			13.4			8.8			—			—			29.7				3.2			5.1			(0.1)		—		8.2
General and administrative expenses	—			—			—			(2.6		)	(32.1		)	(34.7		)		—			—			(2.4)		(33.9)		(36.3)
Operating income	85.3			40.5			40.1			(2.6		)	(32.1		)	131.2

Restructuring costs																				—			—			—		(13.0)		(13.0)
Operating income (loss)																				163.8			45.5			(1.9)		(46.9)		160.5
Gross profit as a % of revenue	4.0		%	1.3		%	3.7		%	—			—			2.8		%		6.1	%		5.1	%		—		—		5.9	%

Three Months Ended December 31, 2016:

Three Months Ended June 30, 2020:
Revenue	$	1,840.8		$	1,750.2		$	767.3		$	—		$	—		$	4,358.3		$	2,471.6		$	717.9		$	0.2	$	—	$	3,189.7
Gross profit	95.2			13.8			61.0			—			—			170.0				155.3			29.6			0.2		—		185.1
Equity in earnings of joint ventures	4.1			4.3			13.0			—			—			21.4				5.6			2.7			0.3		—		8.6
General and administrative expenses	—			—			—			(2.7		)	(29.9		)	(32.6		)		—			—			(1.1)		(53.4)		(54.5)
Acquisition and integration expenses	—			—			—			—			(15.4		)	(15.4		)
Restructuring costs																				—			—			—		(20.3)		(20.3)
Operating income (loss)																				160.9			32.3			(0.6)		(73.7)		118.9
Gross profit as a % of revenue																				6.3	%		4.1	%		—		—		5.8	%

Nine Months Ended June 30, 2021:
Revenue																			$	7,644.1		$	2,341.4		$	1.6	$	—	$	9,987.1
Gross profit																				457.3			122.3			1.6		—		581.2
Equity in earnings of joint ventures																				7.6			11.1			4.9		—		23.6
General and administrative expenses																				—			—			(5.8)		(104.9)		(110.7)
Restructuring costs																				—			—			—		(34.8)		(34.8)
Operating income	99.3			18.1			74.0			(2.7		)	(45.3		)	143.4				464.9			133.4			0.7		(139.7)		459.3

Gross profit as a % of revenue	5.2		%	0.8		%	7.9		%	—			—			3.9		%		6.0	%		5.2	%		—		—		5.8	%
Reportable Segments:
Total assets
December 31, 2017	$	7,118.1		$	4,270.6		$	2,679.7		$	205.6		$	349.0		$	14,623.0
September 30, 2017	6,992.6			4,114.5			2,704.6			199.1			386.2			14,397.0

Nine Months Ended June 30, 2020:
Revenue																			$	7,399.2		$	2,270.6		$	1.2	$	—	$	9,671.0
Gross profit																				430.3			88.2			1.2		—		519.7
Equity in earnings of joint ventures																				17.3			8.7			6.0		—		32.0
General and administrative expenses																				—			—			(5.3)		(133.9)		(139.2)
Restructuring costs																				—			—			—		(96.4)		(96.4)
Operating income																				447.6			96.9			1.9		(230.3)		316.1
Gross profit as a % of revenue																				5.8	%		3.9	%		—		—		5.4	%


Reportable Segments:
Total assets
June 30, 2021	$	7,695.0	$	2,503.8	$	221.7	$	1,415.5
September 30, 2020		8,104.4		2,454.0		198.0		1,625.8

~~16.~~~~Condensed Consolidating Financial Information~~

~~In connection with the registration~~

Table of the Company’s 2014 Senior Notes that were declared effective by the SEC on September 29, 2015, AECOM became subject to the requirements of Rule 3-10 of Regulation S-X regarding financial statements of guarantors and issuers of guaranteed securities. Both the 2014 Senior Notes and the 2017 Senior Notes are fully and unconditionally guaranteed on a joint and several basis by certain of AECOM’s directly and indirectly 100% owned subsidiaries (the Subsidiary Guarantors). Other than customary restrictions imposed by applicable statutes, there are no restrictions on the ability of the Subsidiary Guarantors to transfer funds to AECOM in the form of cash dividends, loans or advances.Contents

The following condensed consolidating financial information, which is presented for AECOM, the Subsidiary Guarantors on a combined basis and AECOM’s non-guarantor subsidiaries on a combined basis, is provided to satisfy the disclosure requirements of Rule 3-10 of Regulation S-X.

~~Condensed Consolidating Balance Sheets~~

~~(unaudited — in millions)~~

~~December 31, 2017~~

Parent

Guarantor
Subsidiaries

Non-Guarantor
Subsidiaries

Eliminations

Total

ASSETS

CURRENT ASSETS:

Total cash and cash equivalents

$
4.1

$
213.2

$
595.9

$
—

$
813.2

Accounts receivable—net

—

2,283.7

3,030.0

—

5,313.7

Intercompany receivable

733.6

91.0

128.0

(952.6
)
—

Prepaid expenses and other current assets

91.2

305.9

279.8

—

676.9

Income taxes receivable

11.0

—

27.2

—

38.2

TOTAL CURRENT ASSETS

839.9

2,893.8

4,060.9

(952.6
)
6,842.0

PROPERTY AND EQUIPMENT—NET

165.9

220.4

245.3

—

631.6

DEFERRED TAX ASSETS—NET

154.8

111.4

251.6

(301.0
)
216.8

INVESTMENTS IN CONSOLIDATED SUBSIDIARIES

6,775.5

2,756.7

—

(9,532.2
)
—

INVESTMENTS IN UNCONSOLIDATED JOINT VENTURES

8.6

52.4

309.3

—

370.3

GOODWILL

—

3,318.6

2,678.4

—

5,997.0

INTANGIBLE ASSETS—NET

—

257.4

154.4

—

411.8

OTHER NON-CURRENT ASSETS

8.7

21.2

123.6

—

153.5

TOTAL ASSETS

$
7,953.4

$
9,631.9

$
7,823.5

$
(10,785.8
)
$
14,623.0

LIABILITIES AND STOCKHOLDERS’ EQUITY

CURRENT LIABILITIES:

Short-term debt

$
2.4

$
—

$
—

$
—

$
2.4

Accounts payable

42.5

1,098.2

1,285.8

—

2,426.5

Accrued expenses and other current liabilities

76.5

955.8

1,039.9

—

2,072.2

Income taxes payable

—

—

18.2

—

18.2

Intercompany payable

93.8

761.7

170.0

(1,025.5
)
—

Billings in excess of costs on uncompleted contracts

2.9

355.2

637.8

—

995.9

Current portion of long-term debt

110.7

27.7

22.5

—

160.9

TOTAL CURRENT LIABILITIES

328.8

3,198.6

3,174.2

(1,025.5
)
5,676.1

OTHER LONG-TERM LIABILITIES

103.5

264.0

477.4

—

844.9

DEFERRED TAX LIABILITY—NET

—

—

333.3

(301.0
)
32.3

NOTE PAYABLE INTERCOMPANY—NON CURRENT

0.1

—

472.2

(472.3
)
—

LONG-TERM DEBT

3,422.0

276.9

40.0

—

3,738.9

TOTAL LIABILITIES

3,854.4

3,739.5

4,497.1

(1,798.8
)
10,292.2

TOTAL AECOM STOCKHOLDERS’ EQUITY

4,099.0

5,892.4

3,100.0

(8,987.0
)
4,104.4

Noncontrolling interests

—

—

226.4

—

226.4

TOTAL STOCKHOLDERS’ EQUITY

4,099.0

5,892.4

3,326.4

(8,987.0
)
4,330.8

TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY

$
7,953.4

$
9,631.9

$
7,823.5

$
(10,785.8
)
$
14,623.0

~~Condensed Consolidating Balance Sheets~~

~~(in millions)~~

~~September 30, 2017~~

Parent

Guarantor
Subsidiaries

Non-Guarantor
Subsidiaries

Eliminations

Total

ASSETS

CURRENT ASSETS:

Total cash and cash equivalents

$
32.6

$
251.6

$
518.2

$
—

$
802.4

Accounts receivable—net

—

2,159.2

2,968.5

—

5,127.7

Intercompany receivable

723.6

90.9

181.4

(995.9
)
—

Prepaid expenses and other current assets

67.5

338.4

290.8

—

696.7

Income taxes receivable

4.3

—

51.1

—

55.4

TOTAL CURRENT ASSETS

828.0

2,840.1

4,010.0

(995.9
)
6,682.2

PROPERTY AND EQUIPMENT—NET

160.2

207.1

254.1

—

621.4

DEFERRED TAX ASSETS—NET

239.7

55.2

171.0

(294.6
)
171.3

INVESTMENTS IN CONSOLIDATED SUBSIDIARIES

6,606.2

2,865.0

—

(9,471.2
)
—

INVESTMENTS IN UNCONSOLIDATED JOINT VENTURES

7.2

50.3

306.7

—

364.2

GOODWILL

—

3,318.6

2,674.3

—

5,992.9

INTANGIBLE ASSETS—NET

—

271.6

143.5

—

415.1

OTHER NON-CURRENT ASSETS

8.7

17.6

123.6

—

149.9

TOTAL ASSETS

$
7,850.0

$
9,625.5

$
7,683.2

$
(10,761.7
)
$
14,397.0

LIABILITIES AND STOCKHOLDERS’ EQUITY

CURRENT LIABILITIES:

Short-term debt

$
1.1

$
—

$
0.1

$
—

$
1.2

Accounts payable

33.8

1,023.7

1,192.4

—

2,249.9

Accrued expenses and other current liabilities

92.2

1,112.9

1,040.4

—

2,245.5

Income taxes payable

—

—

38.2

—

38.2

Intercompany payable

149.2

787.5

161.4

(1,098.1
)
—

Billings in excess of costs on uncompleted contracts

3.4

313.1

586.3

—

902.8

Current portion of long-term debt

110.9

14.9

15.0

—

140.8

TOTAL CURRENT LIABILITIES

390.6

3,252.1

3,033.8

(1,098.1
)
5,578.4

OTHER LONG-TERM LIABILITIES

102.3

285.7

493.3

—

881.3

DEFERRED TAX LIABILITY—NET

—

—

315.1

(294.6
)
20.5

NOTE PAYABLE INTERCOMPANY—NON CURRENT

0.1

—

467.2

(467.3
)
—

LONG-TERM DEBT

3,366.9

281.6

53.6

—

3,702.1

TOTAL LIABILITIES

3,859.9

3,819.4

4,363.0

(1,860.0
)
10,182.3

TOTAL AECOM STOCKHOLDERS’ EQUITY

3,990.1

5,806.1

3,101.6

(8,901.7
)
3,996.1

Noncontrolling interests

—

—

218.6

—

218.6

TOTAL STOCKHOLDERS’ EQUITY

3,990.1

5,806.1

3,320.2

(8,901.7
)
4,214.7

TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY

$
7,850.0

$
9,625.5

$
7,683.2

$
(10,761.7
)
$
14,397.0

~~Condensed Consolidating Statements of Operations~~

~~(unaudited - in millions)~~

For the three months ended December 31, 2017

Parent

Guarantor
Subsidiaries

Non-Guarantor
Subsidiaries

Eliminations

Total

Revenue

$
—

$
2,433.2

$
2,489.6

$
(12.0
)
$
4,910.8

Cost of revenue

—

2,317.1

2,469.5

(12.0
)
4,774.6

Gross profit

—

116.1

20.1

—

136.2

Equity in earnings from subsidiaries

206.1

26.4

—

(232.5
)
—

Equity in earnings of joint ventures

—

12.3

17.4

—

29.7

General and administrative expenses

(32.1
)
—

(2.6
)
—

(34.7
)
Income from operations

174.0

154.8

34.9

(232.5
)
131.2

Other income

0.2

5.3

2.8

(6.0
)
2.3

Interest expense

(52.3
)
(4.7
)
(5.2
)
6.0

(56.2
)
Income before income tax expense (benefit)

121.9

155.4

32.5

(232.5
)
77.3

Income tax expense (benefit)

10.6

28.9

(86.6
)
—

(47.1
)
Net income

111.3

126.5

119.1

(232.5
)
124.4

Noncontrolling interest in income of consolidated subsidiaries, net of tax

—

—

(13.1
)
—

(13.1
)
Net income attributable to AECOM

$
111.3

$
126.5

$
106.0

$
(232.5
)
$
111.3

For the three months ended December 31, 2016

Parent

Guarantor
Subsidiaries

Non-Guarantor
Subsidiaries

Eliminations

Total

Revenue

$
—

$
2,281.5

$
2,090.1

$
(13.3
)
$
4,358.3

Cost of revenue

—

2,161.2

2,040.4

(13.3
)
4,188.3

Gross profit

—

120.3

49.7

—

170.0

Equity in earnings from subsidiaries

117.6

25.0

—

(142.6
)
—

Equity in earnings of joint ventures

—

9.9

11.5

—

21.4

General and administrative expenses

(29.9
)
—

(2.7
)
—

(32.6
)
Acquisition and integration expenses

(15.4
)
—

—

—

(15.4
)
Income from operations

72.3

155.2

58.5

(142.6
)
143.4

Other income

0.4

7.6

2.9

(10.1
)
0.8

Interest expense

(47.8
)
(5.7
)
(10.2
)
10.1

(53.6
)
Income before income tax (benefit) expense

24.9

157.1

51.2

(142.6
)
90.6

Income tax (benefit) expense

(22.3
)
35.9

11.2

—

24.8

Net income

47.2

121.2

40.0

(142.6
)
65.8

Noncontrolling interest in income of consolidated subsidiaries, net of tax

—

—

(18.6
)
—

(18.6
)
Net income attributable to AECOM

$
47.2

$
121.2

$
21.4

$
(142.6
)
$
47.2

~~Consolidating Statements of Comprehensive Income (Loss)~~

~~(unaudited - in millions)~~

For the three months ended December 31, 2017

Parent

Guarantor
Subsidiaries

Non-Guarantor
Subsidiaries

Eliminations

Total

Net income

$
111.3

$
126.5

$
119.1

$
(232.5
)
$
124.4

Other comprehensive income (loss), net of tax:

Net unrealized gain on derivatives, net of tax

0.7

—

0.1

—

0.8

Foreign currency translation adjustments

—

—

(6.0
)
—

(6.0
)
Pension adjustments, net of tax

0.8

—

1.7

—

2.5

Other comprehensive income (loss), net of tax

1.5

—

(4.2
)
—

(2.7
)
Comprehensive income, net of tax

112.8

126.5

114.9

(232.5
)
121.7

Noncontrolling interests in comprehensive income of consolidated subsidiaries, net of tax

—

—

(13.9
)
—

(13.9
)
Comprehensive income attributable to AECOM, net of tax

$
112.8

$
126.5

$
101.0

$
(232.5
)
$
107.8

For the three months ended December 31, 2016

Parent

Guarantor
Subsidiaries

Non-Guarantor
Subsidiaries

Eliminations

Total

Net income

$
47.2

$
121.2

$
40.0

$
(142.6
)
$
65.8

Other comprehensive income (loss), net of tax:

Net unrealized gain (loss) on derivatives, net of tax

2.9

—

(1.5
)
—

1.4

Foreign currency translation adjustments

—

—

(73.9
)
—

(73.9
)
Pension adjustments, net of tax

0.6

—

16.3

—

16.9

Other comprehensive income (loss), net of tax

3.5

—

(59.1
)
—

(55.6
)
Comprehensive income (loss), net of tax

50.7

121.2

(19.1
)
(142.6
)
10.2

Noncontrolling interests in comprehensive income of consolidated subsidiaries, net of tax

—

—

(18.3
)
—

(18.3
)
Comprehensive income (loss) attributable to AECOM, net of tax

$
50.7

$
121.2

$
(37.4
)
$
(142.6
)
$
(8.1
)

~~Condensed Consolidating Statements of Cash Flows~~

~~(unaudited - in millions)~~

For the three months ended December 31, 2017

Parent

Guarantor
Subsidiaries

Non-Guarantor
Subsidiaries

Eliminations

Total

CASH FLOWS FROM OPERATING ACTIVITIES

$
(64.4
)
$
4.8

$
112.0

$
—

$
52.4

CASH FLOWS FROM INVESTING ACTIVITIES:

Proceeds from purchase price adjustment to business acquisition

—

—

2.2

—

2.2

Cash acquired from consolidation of joint venture

—

—

7.6

—

7.6

Net investment in unconsolidated joint ventures

—

(3.6
)
(15.4
)
—

(19.0
)
Proceeds from sale of investments

—

—

0.2

—

0.2

Payments for capital expenditures, net of disposals

3.4

(17.0
)
(4.9
)
—

(18.5
)
Net receipts from (investment in) intercompany notes

0.6

(5.1
)
28.8

(24.3
)
—

Other intercompany investing activities

(4.2
)
82.1

—

(77.9
)
—

Net cash (used in) provided by investing activities

(0.2
)
56.4

18.5

(102.2
)
(27.5
)
CASH FLOWS FROM FINANCING ACTIVITIES:

Proceeds from borrowings under credit agreements

1,240.8

—

35.7

—

1,276.5

Repayments of borrowings under credit agreements

(1,187.4
)
(4.7
)
(44.1
)
—

(1,236.2
)
Proceeds from issuance of common stock

9.5

—

—

—

9.5

Proceeds from exercise of stock options

2.7

—

—

—

2.7

Payments to repurchase common stock

(26.7
)
—

—

—

(26.7
)
Net distributions to noncontrolling interests

—

—

(16.8
)
—

(16.8
)
Other financing activities

0.9

(36.8
)
9.9

—

(26.0
)
Net (repayments) borrowings on intercompany notes

(3.7
)
(25.1
)
4.5

24.3

—

Other intercompany financing activities

—

(33.0
)
(44.9
)
77.9

—

Net cash provided by (used in) financing activities

36.1

(99.6
)
(55.7
)
102.2

(17.0
)
EFFECT OF EXCHANGE RATE CHANGES ON CASH

—

—

2.9

—

2.9

NET (DECREASE) INCREASE IN CASH AND CASH EQUIVALENTS

(28.5
)
(38.4
)
77.7

—

10.8

CASH AND CASH EQUIVALENTS AT BEGINNING OF YEAR

32.6

251.6

518.2

—

802.4

CASH AND CASH EQUIVALENTS AT END OF YEAR

$
4.1

$
213.2

$
595.9

$
—

$
813.2

~~Condensed Consolidating Statements of Cash Flows~~

~~(unaudited - in millions)~~

For the three months ended December 31, 2016

Parent

Guarantor
Subsidiaries

Non-Guarantor
Subsidiaries

Eliminations

Total

CASH FLOWS FROM OPERATING ACTIVITIES

$
(27.0
)
$
83.2

$
21.3

$
—

$
77.5

CASH FLOWS FROM INVESTING ACTIVITIES:

Net investment in unconsolidated joint ventures

—

(0.8
)
(17.3
)
—

(18.1
)
Proceeds from sale of investments

—

—

0.3

—

0.3

Payments for capital expenditures, net of disposals

(7.2
)
(9.7
)
(4.1
)
—

(21.0
)
Net investment in intercompany notes

(0.5
)
(8.7
)
(1.2
)
10.4

—

Other intercompany investing activities

32.1

14.4

—

(46.5
)
—

Net cash provided by (used in) investing activities

24.4

(4.8
)
(22.3
)
(36.1
)
(38.8
)
CASH FLOWS FROM FINANCING ACTIVITIES:

Proceeds from borrowings under credit agreements

1,634.2

—

0.6

—

1,634.8

Repayments of borrowings under credit agreements

(1,595.2
)
(6.4
)
(5.8
)
—

(1,607.4
)
Proceeds from issuance of common stock

9.9

—

—

—

9.9

Proceeds from exercise of stock options

2.1

—

—

—

2.1

Payments to repurchase common stock

(17.5
)
—

—

—

(17.5
)
Net distributions to noncontrolling interests

—

—

(21.9
)
—

(21.9
)
Other financing activities

(10.7
)
(65.5
)
49.8

—

(26.4
)
Net borrowings on intercompany notes

—

1.1

9.3

(10.4
)
—

Other intercompany financing activities

—

(31.8
)
(14.7
)
46.5

—

Net cash provided by (used in) financing activities

22.8

(102.6
)
17.3

36.1

(26.4
)
EFFECT OF EXCHANGE RATE CHANGES ON CASH

—

—

(6.7
)
—

(6.7
)
NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS

20.2

(24.2
)
9.6

—

5.6

CASH AND CASH EQUIVALENTS AT BEGINNING OF YEAR

1.8

183.7

506.6

—

692.1

CASH AND CASH EQUIVALENTS AT END OF YEAR

$
22.0

$
159.5

$
516.2

$
—

$
697.7

Item 2. Management’s Discussion And Analysis Of Financial Condition And Results Of Operations

Forward-Looking Statements

This Quarterly Report contains forward-looking statements within the meaning of the safe harbor provisions of the Private Securities Litigation Reform Act of 1995 that are not limited to historical facts, but reflect the Company’s current beliefs, expectations or intentions regarding future events. These statements include forward-looking statements with respect to the Company, including the Company’s business, operations and ~~operations,~~strategy, and the engineering and construction industry. Statements that are not historical facts, without limitation, including statements that use terms such as “anticipates,” “believes,” “expects,” “estimates,” “intends,” “may,” “plans,” “potential,” “projects,” and “will” and that relate to future impacts caused by the Covid-19 coronavirus pandemic and the related economic instability and market volatility, including the reaction of governments to the coronavirus, including any prolonged period of travel, commercial or other similar restrictions, the delay in commencement, or temporary or permanent halting of construction, infrastructure or other projects, requirements that we remove our employees or personnel from the field for their protection, and delays or reductions in planned initiatives by our governmental or commercial clients or potential clients; future revenues, expenditures and business trends; future reduction of our self-perform at-risk construction exposure; future accounting estimates; future contractual performance obligations; future conversions of backlog; future capital allocation priorities including ~~share~~common stock repurchases, future trade receivables, future debt pay downs; future post-retirement expenses; future tax benefits and ~~expenses;~~expenses , and the impacts of future tax legislation; future compliance with regulations; future legal claims and insurance coverage; future effectiveness of our disclosure and internal controls over financial reporting; future costs savings; and other future economic and industry conditions, are forward-looking statements. In light of the risks and uncertainties inherent in all forward-looking statements, the inclusion of such statements in this Quarterly Report should not be considered as a representation by us or any other person that our objectives or plans will be achieved. Although management believes that the assumptions underlying the forward-looking statements are reasonable, these assumptions and the forward-looking statements are subject to various factors, risks and uncertainties, many of which are beyond our control, including, but not limited to, ~~impacts of the Tax Act (including changes in interpretations and assumptions we have made, future guidance and other actions we may take as a result of the Tax Act), that~~ our business is cyclical and vulnerable to economic downturns and client spending reductions; ~~we are dependent on~~government shutdowns; long-term government contracts and subject to uncertainties related to government contract appropriations; governmental agencies may modify, curtail or terminate our contracts; government contracts are subject to audits and adjustments of contractual terms; ~~we may experience~~ losses under fixed-price contracts; ~~we have~~ limited control over operations run through our joint venture entities; ~~we may be liable~~liability for misconduct by our employees or ~~consultants or our~~consultants; failure to comply with laws or regulations applicable to our business; ~~we may not maintain~~maintaining adequate surety and financial capacity; ~~we are highly leveraged~~high leverage and ~~may not be able~~potential inability to service our debt and guarantees; ~~we have~~exposure to Brexit and tariffs; exposure to political and economic risks in different ~~countries where we operate as well as~~countries; currency exchange rate fluctuations; ~~we may not be able to retain~~retaining and ~~recruit~~recruiting key technical and management personnel; ~~we may be subject to~~ legal claims; ~~we may have~~ inadequate insurance coverage; ~~we are subject to~~ environmental law compliance and ~~may not have adequate~~inadequate nuclear indemnification; ~~there may be~~ unexpected adjustments and cancellations related to our backlog; ~~we are dependent on~~ partners and third parties who may fail to satisfy their legal obligations; ~~we may~~managing pension costs; AECOM Capital’s real estate development; cybersecurity issues, IT outages and data privacy; risks associated with the benefits and costs of the Management Services transaction, including the risk that the expected benefits of the Management Services transaction or any contingent purchase price will not be ~~able to manage pension costs; we may face cybersecurity issues and data loss;~~realized within the expected time frame, in full or at all; as well as other additional risks and factors discussed in this Quarterly Report on Form 10-Q and any subsequent reports we file with the SEC. Accordingly, actual results could differ materially from those contemplated by any forward-looking statement.

All subsequent written and oral forward-looking statements concerning the Company or other matters attributable to the Company or any person acting on its behalf are expressly qualified in their entirety by the cautionary statements above. You are cautioned not to place undue reliance on these forward-looking statements, which speak only to the date they are made. The Company is under no obligation (and expressly disclaims any such obligation) to update or revise any forward-looking statement that may be made from time to time, whether as a result of new information, future developments or otherwise. Please review “Part II, Item ~~1A —~~ 1A—Risk Factors” in this Quarterly Report for a discussion of the factors, risks and uncertainties that could affect our future results.

Table of Contents

Overview

We are a leading ~~fully integrated firm positioned to design, build, finance~~global provider of professional technical and ~~operate infrastructure assets~~management support services for governments, businesses and organizations ~~in more than 150 countries.~~throughout the world. We provide planning, consulting, architectural and engineering design, construction management services and investment and development services to commercial and government clients worldwide in major end markets such as transportation, facilities, environmental, energy, water and government markets. We also provide construction services, including building construction and energy, infrastructure and industrial construction. In addition, we provide program and facilities management and maintenance, training, logistics, consulting, technical assistance, and systems integration and information technology services, primarily for agencies of the U.S. government and also for national governments around the world.

Our business focuses primarily on providing fee-based planning, consulting, architectural and engineering design services and, therefore, our business is labor intensive. We primarily derive income from our ability to generate revenue and collect cash from our clients through the billing of our employees’ time spent on client projects and our ability to manage our costs. AECOM Capital primarily derives its income from real estate development ~~sales.~~sales and management fees.

During the first quarter of fiscal 2020, we reorganized our operating and reporting structure to better align with our ongoing professional services business. This reorganization better reflected our continuing operations after the sale of our Management Services segment, our self-perform at-risk construction businesses, including our civil infrastructure and power construction businesses and the planned disposal of our oil & gas construction business. Our Management Services and self-perform at-risk construction businesses were part of our former Management Services segment and a substantial portion of our former Construction Services segment, respectively. These businesses are classified as discontinued operations in all periods presented.

We report our continuing business through ~~four segments: Design and Consulting Services (DCS), Construction Services (CS), Management Services (MS),~~three segments, each of which is described in further detail below: Americas, International, and AECOM Capital (ACAP). Such segments are organized by ~~the types of services provided,~~ the differing specialized needs of the respective clients, and how we manage the business. We have aggregated various operating segments into our reportable segments based on their similar characteristics, including similar long-term financial performance, the nature of services provided, internal processes for delivering those services, and types of customers.

Our DCS segment delivers planning, consulting, architectural and engineering design services to commercial and government clients worldwide in major end markets such as transportation, facilities, environmental, energy, water and government. DCS revenue is primarily derived from fees from services that we provide, as opposed to pass-through costs from subcontractors.

●

Americas: Planning, consulting, architectural and engineering design, and construction management services to commercial and government clients in the United States, Canada, and Latin America in major end markets such as transportation, water, government, facilities, environmental, and energy.

●

International: Planning, consulting, architectural and engineering design services to commercial and government clients in Europe, the Middle East, Africa and the Asia-Pacific regions in major end markets such as transportation, water, government, facilities, environmental, and energy.

●

AECOM Capital (ACAP): Invests primarily in real estate projects.

Our CS segment provides construction services, including building construction and energy, infrastructure and industrial construction, primarily in the Americas. CS revenue typically includes a significant amount of pass-through costs from subcontractors.

Our MS segment provides program and facilities management and maintenance, training, logistics, consulting, technical assistance, and systems integration and information technology services, primarily for agencies of the U.S. government and also for national governments around the world. MS revenue typically includes a significant amount of pass-through costs from subcontractors.

~~Our ACAP segment invests in real estate, public-private partnership (P3) and infrastructure projects.~~ ACAP typically partners with investors and experienced developers ~~in the United States and Europe~~ as co-general partners. ~~In addition,~~ ACAP may, but is not required to, enter into contracts with our other AECOM affiliates to provide design, engineering, construction management, development and operations and maintenance services for ACAP funded projects.

Our revenue is dependent on our ability to attract and retain qualified and productive employees, identify business opportunities, integrate and maximize the value of our recent acquisitions, allocate our labor resources to profitable and high growth markets, secure new contracts and renew existing client agreements. Demand for our services is cyclical and may be vulnerable to sudden economic downturns and reductions in government and private industry spending, which may result in clients delaying, curtailing or canceling proposed and existing projects. Moreover, as a professional services company, maintaining the high quality of the work generated by our employees is integral to our revenue generation and profitability.

Our costs consist primarily of the compensation we pay to our employees, including salaries, fringe benefits, the costs of hiring subcontractors, other project-related expenses and sales, general and administrative costs.

~~During our first quarter ended December 31, 2017, President Trump signed the~~ ~~Tax Cuts and Jobs Act~~ ~~legislation that went into law (Tax Act).~~ Table of Contents

The ~~Tax Act reduces the Company’s~~ U.S. federal ~~corporate tax rate from 35% to a blended tax rate of 24.5% for~~government, in connection with the Company’s fiscal year ending September 30, 2018 and 21% for fiscal years thereafter, requires companies to pay a one-time transition tax on accumulated earnings of foreign subsidiaries, creates new taxes on certain foreign sourced earnings and eliminates or reduces certain deductions. We have not completed our accounting for the tax effects of the Tax Act. We have made a reasonable estimate of the effects on our existing deferred tax balances and the one-time transition tax but we have not made any reasonable estimate of the impact on our indefinite reinvestment of earnings of certain of our foreign subsidiaries.

In December 2015, the federal legislation referred to as the Fixing America’s Surface Transportation Act (the FAST Act) was authorized. The FAST Act is a five-year federal program expected to provide infrastructure spending on roads, bridges, and public transit and rail systems. While client spending patterns are likely to remain uneven, we expect that the passage of the FAST Act will positively impact our transportation services business in the next several years.

~~In 2017, the U.S. federal government~~Biden Administration, has proposed significant legislative and executive infrastructure initiatives that, if enacted, could have a positive impact to our infrastructure business.

~~In September 2017,~~Regarding our capital allocation policy, on November 13, 2020, the Board approved an increase in our repurchase authorization to $1.0 billion. At June 30, 2021, we ~~announced~~have approximately $590 million remaining of the Board’s repurchase authorization. We intend to deploy future available cash towards stock repurchases consistent with our capital allocation policy.

We have exited substantially all of our self-perform at-risk construction business and expect to exit all of our non-core oil and gas markets. We have substantially completed our exit of 30 countries, subject to applicable laws, as part of our ongoing plan to ~~allocate free cash from operations to~~improve profitability and reduce our ~~long-term debt~~risk profile, and ~~lower~~we continue to evaluate our ~~overall leverage ratio. After significantly reducing~~geographic exposure as part of such plan.

We expect to incur restructuring costs of $40 to $50 million in fiscal year 2021 primarily related to previously announced restructuring actions that are expected to deliver continued margin improvement and efficiencies. Total cash costs for these restructuring actions are expected to be approximately $40 million to $50 million.

Coronavirus Impacts

The impact of the coronavirus pandemic and measures to prevent and mitigate its spread are affecting our ~~leverage ratio, we plan to allocate free cash from operations to engage~~businesses in a ~~stock repurchase program.~~number of ways:

●

The coronavirus and accompanying economic effects may reduce demand for our services and impact client spending in certain circumstances; however, the uncertain nature of the coronavirus and its duration make it difficult for us to predict and quantify such impact.

●

We have restricted non-essential business travel, required or facilitated employees to work remotely where appropriate.

We cannot determine if future climate change and greenhouse gas laws and policies, such as the United Nation’s COP-21 Paris Agreement, will have a material impact on our business or our clients’ business; however, we expect future environmental laws and policies could negatively impact demand for our services related to fossil fuel projects and positively impact demand for our services related to environmental, infrastructure, nuclear and alternative energy projects.

●

Non-essential construction and work on other client projects has been temporarily halted in certain jurisdictions.

●

Some contractual agreements are unable to be performed preventing us from making or receiving payments.

●

The coronavirus has made estimating the future performance of our business and mitigating the adverse financial impact of these developments on our business operations more difficult.

●

State and local budget shortfalls in the U.S. have negatively impacted our pipeline of pursuits and the pace of award activity.

●

Certain markets, such as the U.K., Middle East, and Southeast Asia, are experiencing project delays that have impacted our performance and results.

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Results of Operations

Three and nine months ended ~~December 31, 2017~~June 30, 2021 compared to the three and nine months ended ~~December 31, 2016~~June 30, 2020

Consolidated Results


												Three Months Ended								Nine Months Ended
												June 30,		June 30,		Change				June 30,		June 30,		Change
												2021		2020		$		%		2021		2020		$		%
	Three Months Ended
	December 31,			December 31,			Change
	2017			2016			$			%
	(in millions)
												(unaudited - in millions)
Revenue	$	4,910.8		$	4,358.3		$	552.5		12.7	%	$	3,408.4	$	3,189.7	$	218.7	6.9	%	$	9,987.1	$	9,671.0	$	316.1	3.3	%
Cost of revenue	4,774.6			4,188.3			586.3			14.0			3,206.8		3,004.6		202.2	6.7			9,405.9		9,151.3		254.6	2.8
Gross profit	136.2			170.0			(33.8		)	(19.9	)		201.6		185.1		16.5	8.9			581.2		519.7		61.5	11.8
Equity in earnings of joint ventures	29.7			21.4			8.3			38.8			8.2		8.6		(0.4)	(4.7)			23.6		32.0		(8.4)	(26.3)
General and administrative expenses	(34.7		)	(32.6		)	(2.1		)	6.4			(36.3)		(54.5)		18.2	(33.4)			(110.7)		(139.2)		28.5	(20.5)
Acquisition and integration expenses	—			(15.4		)	15.4			(100.0	)
Restructuring costs													(13.0)		(20.3)		7.3	(36.0)			(34.8)		(96.4)		61.6	(63.9)
Income from operations	131.2			143.4			(12.2		)	(8.5	)		160.5		118.9		41.6	35.0			459.3		316.1		143.2	45.3
Other income	2.3			0.8			1.5			187.5			4.5		3.1		1.4	45.2			11.9		9.5		2.4	25.3
Interest expense	(56.2		)	(53.6		)	(2.6		)	4.9			(149.0)		(34.9)		(114.1)	326.9			(212.5)		(112.4)		(100.1)	89.1
Income before income tax (benefit) expense	77.3			90.6			(13.3		)	(14.7	)
Income tax (benefit) expense	(47.1		)	24.8			(71.9		)	(289.9	)
Income from continuing operations before taxes													16.0		87.1		(71.1)	(81.6)			258.7		213.2		45.5	21.3
Income tax (benefit) expense for continuing operations													(17.8)		(7.1)		(10.7)	150.7			42.9		30.3		12.6	41.6
Net income from continuing operations													33.8		94.2		(60.4)	(64.1)			215.8		182.9		32.9	18.0
Net loss from discontinued operations													(15.4)		(0.1)		(15.3)	NM*			(119.1)		(112.7)		(6.4)	5.7
Net income	124.4			65.8			58.6			89.1			18.4		94.1		(75.7)	(80.4)			96.7		70.2		26.5	37.7
Noncontrolling interests in income of consolidated subsidiaries, net of tax	(13.1		)	(18.6		)	5.5			(29.6	)
Net income attributable to noncontrolling interests from continuing operations													(5.9)		(3.1)		(2.8)	90.3			(16.2)		(12.4)		(3.8)	30.6
Net income attributable to noncontrolling interests from discontinued operations													(1.0)		(1.7)		0.7	(41.2)			(3.5)		(14.0)		10.5	(75.0)
Net income attributable to noncontrolling interests													(6.9)		(4.8)		(2.1)	43.8			(19.7)		(26.4)		6.7	(25.4)
Net income attributable to AECOM from continuing operations													27.9		91.1		(63.2)	(69.4)			199.6		170.5		29.1	17.1
Net loss attributable to AECOM from discontinued operations													(16.4)		(1.8)		(14.6)	NM*			(122.6)		(126.7)		4.1	(3.2)
Net income attributable to AECOM	$	111.3		$	47.2		$	64.1		135.8	%	$	11.5	$	89.3	$	(77.8)	(87.1)	%	$	77.0	$	43.8	$	33.2	75.8	%

*NM - Not Meaningful

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The following table presents the percentage relationship of ~~certain~~statement of operations items to revenue:

	Three Months Ended
	December 31, 2017		December 31, 2016

					Three Months Ended				Nine Months Ended
					June 30,		June 30,		June 30,		June 30,
					2021		2020		2021		2020
Revenue	100.0	%	100.0	%	100.0	%	100.0	%	100.0	%	100.0	%
Cost of revenue	97.2		96.1		94.1		94.2		94.2		94.6
Gross margin	2.8		3.9
Gross profit					5.9		5.8		5.8		5.4
Equity in earnings of joint ventures	0.6		0.5		0.2		0.3		0.2		0.3
General and administrative expenses	(0.7	)	(0.7	)	(1.0)		(1.8)		(1.1)		(1.4)
Acquisition and integration expenses	0.0		(0.4	)
Restructuring costs					(0.4)		(0.6)		(0.3)		(1.0)
Income from operations	2.7		3.3		4.7		3.7		4.6		3.3
Other income	0.0		0.0		0.1		0.1		0.1		0.1
Interest expense	(1.1	)	(1.2	)	(4.3)		(1.1)		(2.1)		(1.2)
Income before income tax (benefit) expense	1.6		2.1
Income tax (benefit) expense	(0.9	)	0.6
Income from continuing operations before taxes					0.5		2.7		2.6		2.2
Income tax (benefit) expense for continuing operations					(0.5)		(0.3)		0.4		0.3
Net income from continuing operations					1.0		3.0		2.2		1.9
Net loss from discontinued operations					(0.5)		0.0		(1.2)		(1.2)
Net income	2.5		1.5		0.5		3.0		1.0		0.7
Noncontrolling interests in income of consolidated subsidiaries, net of tax	(0.2	)	(0.4	)
Net income attributable to noncontrolling interests from continuing operations, net of tax					(0.2)		(0.1)		(0.2)		(0.1)
Net income attributable to noncontrolling interests from discontinued operations, net of tax					0.0		0.0		0.0		(0.2)
Net income attributable to noncontrolling interests					(0.2)		(0.1)		(0.2)		(0.3)
Net income attributable to AECOM from continuing operations					0.8		2.9		2.0		1.8
Net loss attributable to AECOM from discontinued operations					(0.5)		0.0		(1.2)		(1.4)
Net income attributable to AECOM	2.3	%	1.1	%	0.3	%	2.9	%	0.8	%	0.4	%

Revenue

Our revenue for the three months ended ~~December 31, 2017~~June 30, 2021 increased ~~$552.5~~$218.7 million, or ~~12.7%~~6.9%, to ~~$4,910.8~~$3,408.4 million as compared to ~~$4,358.3~~$3,189.7 million for the corresponding period last year.

Our revenue for the nine months ended June 30, 2021 increased $316.1 million, or 3.3%, to $9,987.1 million as compared to $9,671.0 million for the corresponding period last year.

The increase in revenue for the three months ended ~~December 31, 2017~~June 30, 2021 was primarily attributable to ~~increases~~an increase in our ~~DCS segment~~Americas and International segments of ~~$101.1 million, our CS segment of $375.3~~$146.9 million and ~~our MS segment of $76.1~~$71.4 million, respectively, as discussed further below.

The increase in revenue for the nine months ended June 30, 2021 was primarily attributable to an increase in our Americas and International segments of $244.9 million and $70.8 million, respectively, as discussed further below.

In the course of providing our services, we routinely subcontract for services and incur other direct costs on behalf of our clients. These costs are passed through to clients and, in accordance with industry practice and GAAP, are included in our revenue and cost of revenue. Because ~~subcontractor and other direct~~pass through costs included in revenues can change significantly from project to project and period to period, changes in revenue may not be indicative of business trends. ~~Subcontractor and other direct~~Pass through costs included in revenues for the ~~quarters~~three months ended ~~December 31, 2017~~June 30, 2021 and ~~2016~~2020 were ~~$2.6~~$1.9 billion and ~~$2.3~~$1.7 billion, respectively. ~~Subcontractor~~Pass through costs included in revenues for the nine months ended June 30, 2021 and ~~other direct~~2020 were $5.4 billion and $5.1 billion, respectively. Pass through costs included in revenues as a percentage of total revenue ~~increased to~~were 55% and 53% during the ~~quarter~~three months ended ~~December 31, 2017 from~~June 30, 2021 and 2020, respectively. Pass through costs included in revenues as a percentage of total revenue were 54% and 52% during the ~~quarter~~nine months ended ~~December 31, 2016 due to increased building construction in our CS segment, as discussed below.~~June 30, 2021 and 2020, respectively.

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Gross Profit

Our gross profit for the three months ended ~~December 31, 2017 decreased $33.8~~June 30, 2021 increased $16.5 million, or ~~19.9%~~8.9%, to ~~$136.2~~$201.6 million as compared to ~~$170.0~~$185.1 million for the corresponding period last year. For the three months ended ~~December 31, 2017,~~June 30, 2021, gross profit, as a percentage of revenue, ~~decreased~~increased to ~~2.8%~~5.9% from ~~3.9%~~5.8% in the three months ended ~~December 31, 2016. The decrease was primarily due~~June 30, 2020.

Our gross profit for the nine months ended June 30, 2021 increased $61.5 million, or 11.8%, to $581.2 million as compared to $519.7 million for the corresponding period last year. For the nine months ended June 30, 2021, gross profit, as a ~~the absence~~percentage of ~~an approximately $35 million benefit recorded~~revenue, increased to 5.8% from 5.4% in the ~~three~~nine months ended ~~December 31, 2016 from the settlement of the Waste Treatment Plant qui tam civil lawsuit filed pursuant to the federal False Claims Act, net of legal fees.~~June 30, 2020.

Billings in excess of costs on uncompleted contracts includes a margin fair value liability associated with long-term contracts acquired in connection with the acquisition of URS on October 17, 2014. Revenue and the related income from operations related to the margin fair value liability recognized during the three months ended December 31, 2017 was $1.1 million, compared with $1.6 million during the three months ended December 31, 2016. This is offset by amortization of intangible assets of $23.7 million during the three months ended December 31, 2017, compared with $25.4 million during the three months ended December 31, 2016. We do not expect the margin fair value liability recognized in recent business acquisitions will have a significant impact to gross margin in future periods.

Gross profit changes were ~~also~~ due to the reasons noted in ~~DCS, CS~~Americas and MSInternational reportable segments below.

Equity in Earnings of Joint Ventures

Our equity in earnings of joint ventures for the three months ended ~~December 31, 2017~~June 30, 2021 was ~~$29.7~~$8.2 million as compared to ~~$21.4~~$8.6 million in the corresponding period last year.

~~Equity~~Our equity in earnings of joint ventures for the nine months ended June 30, 2021 was $23.6 million as compared to $32.0 million in the corresponding period last year.

The decrease in earnings of joint ventures for the three and nine months ended ~~December 31, 2017 benefited from a gain from~~June 30, 2021 compared to the ~~acquisition~~same period in the prior year is primarily due to the completion of a ~~previously unconsolidated joint venture~~sports arena construction project in ~~our CS segment.~~the Americas.

General and Administrative Expenses

Our general and administrative expenses for the three months ended ~~December 31, 2017 increased $2.1~~June 30, 2021 decreased $18.2 million, or ~~6.4%~~33.4%, to ~~$34.7~~$36.3 million as compared to ~~$32.6~~$54.5 million for the corresponding period last year. AsFor the three months ended June 30, 2021, general and administrative expenses, as a percentage of revenue, decreased to 1.0% from 1.8% in the three months ended June 30, 2020.

Our general and administrative expenses ~~was 0.7% of revenue~~ for the ~~three~~nine months ended ~~December 31, 2017 and~~June 30, 2021 decreased $28.5 million, or 20.5%, to $110.7 million as compared to $139.2 million for the corresponding period last year. For the nine months ended June 30, 2021, general and administrative expenses, as a percentage of revenue, decreased to 1.1% from 1.4% in the nine months ended June 30, 2020.

The decreases in general and administrative expenses were primarily due to the execution of restructuring actions taken by management to increase profitability and simplify our operating structure.

~~Acquisition~~Restructuring Costs

Since the first quarter of fiscal 2019, we have been implementing a restructuring plan to improve profitability. During the three and ~~Integration Expenses~~

~~Acquisition~~nine months ended June 30, 2020, we incurred restructuring expenses of $20.3 million and ~~integration expenses, resulting from business acquisitions, were comprised of the following:~~

Three months ended

December 31, 2017

December 31, 2016

(in millions)

Severance and personnel costs

$
—

$
11.5

Professional service, real estate-related, and other expenses

—

3.9

Total

$
—

$
15.4

~~Our acquisition and integration expenses~~$96.4 million, respectively, primarily related to personnel costs associated with recent executive transitions. During the ~~URS integration are complete.~~three and nine months ended June 30, 2021, we incurred restructuring expenses of $13.0 million and $34.8 million, respectively, primarily related to personnel costs. We expect to incur additional restructuring costs in the last quarter of fiscal 2021 primarily related to costs optimizing our cost structure and reducing overhead costs.

Other Income

Our other income for the three months ended ~~December 31, 2017~~June 30, 2021 increased to ~~$2.3~~$4.5 million from ~~$0.8~~$3.1 million for the corresponding period last year.

Our other income for the nine months ended June 30, 2021 increased to $11.9 million from $9.5 million for the corresponding period last year.

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Other income is primarily comprised of interest income.

Interest Expense

Our interest expense for the three months ended ~~December 31, 2017 increased to $56.2~~June 30, 2021 was $149.0 million as compared to ~~$53.6~~$34.9 million for the corresponding period last year.

Our interest expense for the nine months ended June 30, 2021 was $212.5 million as compared to $112.4 million for the corresponding period last year.

The increase in interest expense for the three and nine months ended June 30, 2021 was primarily due to a $117.5 million prepayment premium related to the redemption of our remaining unsecured 5.875% Senior Notes due 2024 during the three months ended June 30, 2021.

Income Tax (Benefit) Expense

Our income tax ~~(benefit)/expense~~benefit for the three months ended ~~December 31, 2017~~June 30, 2021 was ~~$(47.1)~~$17.8 million as compared to ~~$24.8~~$7.1 million in the corresponding period last year. The increase in tax benefit for the current period compared to the corresponding period last year is due primarily to a tax benefit of $25.9 million related to a corporate tax rate change in the United Kingdom and the tax impacts of a decrease in overall pre-tax income of $71.1 million, partially offset by tax expense of $13.2 million due to a partial settlement of an audit in the U.S. and a tax benefit of $25.4 million related to the release of a valuation allowance in the third quarter of fiscal 2020.

Our income tax expense for the nine months ended June 30, 2021 was $42.9 million as compared to $30.3 million in the corresponding period last year. The increase in tax expense for the current period compared to the corresponding period last year is due primarily to a tax benefit of ~~$41.7~~$25.4 million related to ~~one-time U.S. federal~~the release of a valuation allowance during fiscal 2020 and the tax ~~law changes,~~impacts of an increase in overall pre-tax income of $45.5 million, partially offset by a ~~$11.2~~tax benefit of $25.9 million ~~benefit~~ related to ~~changes in uncertain tax positions primarily in the U.S. and Canada,~~ a ~~$8.4 million benefit related to income tax credits and incentives, and a $6.3 million benefit related to the reduction of the U.S. federal~~ corporate tax rate ~~from 35% to a blended tax rate of 24.5%. These items are not expected to have a continuing impact on~~change in the ~~effective tax rate for the remainder of the fiscal year except for the benefits related to income tax credits and incentives.~~United Kingdom.

During the ~~first~~third quarter of ~~2018, President Trump signed what is commonly referred to as~~ ~~The Tax Cuts and Jobs Act~~ ~~(the Tax Act) into law. The Tax Act reduces our U.S. federal~~fiscal 2021, the United Kingdom enacted a corporate tax rate increase from ~~35%~~19% to a blended tax rate of 24.5% for the Company’s fiscal year ending September 30, 2018 and 21% for fiscal years thereafter, requires companies to pay a one-time transition tax on accumulated earnings of foreign subsidiaries, creates new taxes on certain foreign sourced earnings and eliminates or reduces certain deductions.

~~In the first quarter of 2018, we remeasured certain~~25% beginning April 2023 requiring deferred tax assets and liabilities ~~based on the rates at which they are expected~~ to ~~reverse~~be remeasured. The remeasurement resulted in the future, which is generally 21%. However, we are still analyzing certain aspects of the Tax Act and refining our calculations which could potentially affect the measurement of these balances. The provisional amount recorded related to the remeasurement of our deferred tax balance was a ~~$36.1~~$25.9 million tax benefit. ~~In addition,~~

During the third quarter of fiscal 2021, we ~~released the deferred tax liability~~partially settled our U.S. federal audit for fiscal 2015 and ~~recorded a tax benefit related to certain foreign subsidiaries for which the undistributed earnings are not intended to be reinvested indefinitely for $77.0 million~~2016 and ~~accrued current tax on these earnings as part of the one-time transition tax.~~

~~Also during the first quarter 2018, we~~ recorded ~~a provisional amount for the one-time transition tax liability for our foreign subsidiaries resulting in an increase in income~~ tax expense of ~~$71.4 million. We have not yet completed our calculation~~$13.2 million due primarily to changes in tax attributes.

During the third quarter of fiscal 2020, management approved a tax planning strategy and we began restructuring certain operations in Canada which resulted in the ~~total foreign earnings and profits~~release of ~~our foreign subsidiaries. Further, the transition tax is based~~a valuation allowance related to net operating losses in ~~part on~~ the amount of those earnings held in cash and other specified assets at the end of the current fiscal year. This amount may change when we finalize the calculation of foreign earnings and finalize the amounts held in cash or other specified assets.

Certain operations in Canada continue to have losses and the associated valuation allowances could be reduced if and when our current and forecast profits trend turns and sufficient evidence exists to support the release of the related valuation allowance (approximately $27 million).

$25.4 million.

We regularly integrate and consolidate our business operations and legal entity structure, and such internal initiatives could impact the assessment of uncertain tax positions, indefinite reinvestment assertions and the realizability of deferred tax assets.

Net Loss From Discontinued Operations

During the first quarter of fiscal 2020, management approved a plan to dispose via sale our Management Services business and our self-perform at-risk construction businesses. As a result of these strategic actions, the Management Services and self-perform at-risk construction businesses were classified as discontinued operations. That classification was applied retrospectively for all periods presented.

Net loss from discontinued operations increased $15.3 million to a loss of $15.4 million from a loss of $0.1 million for the three months ended June 30, 2021 and 2020, respectively. The increase in net loss from discontinued

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operations for the three months ended June 30, 2021 compared to the three months ended June 30, 2020 was primarily due to losses recorded on a potential transaction in our oil and gas business during the three months ended June 30, 2021.

Net loss from discontinued operations increased $6.4 million to a loss of $119.1 million from a loss of $112.7 million for the nine months ended June 30, 2021 and 2020, respectively. The increase in net loss from discontinued operations for the nine-month period ended June 30, 2021 compared to the nine-month period ended June 30, 2020 was primarily due to losses recorded in fiscal year 2021 on the sales of our power and civil infrastructure construction businesses compared to prior year losses on a combined cycle power plant, offset by the prior year gain on disposal of the Management Services business recorded in fiscal year 2020.

Net Income Attributable to AECOM

The factors described above resulted in net income attributable to AECOM of ~~$111.3~~$11.5 million and $77.0 million for the three and nine months ended ~~December 31, 2017~~June 30, 2021, respectively, as compared to net income attributable to AECOM of ~~$47.2~~$89.3 million and $43.8 million for the three and nine months ended ~~December 31, 2016.~~June 30, 2020, respectively.

Results of Operations by Reportable Segment:

~~Design and Consulting Services~~Americas

Three Months Ended

December 31,

December 31,

Change

2017

2016

$

%

(in millions)

Revenue

$
1,941.9

$
1,840.8

$
101.1

5.5
%
Cost of revenue

1,864.1

1,745.6

118.5

6.8

Gross profit

$
77.8

$
95.2

$
(17.4
)
(18.3
)%


	Three Months Ended								Nine Months Ended
	June 30,		June 30,		Change				June 30,		June 30,		Change
	2021		2020		$		%		2021		2020		$		%


Revenue	$	2,618.5	$	2,471.6	$	146.9	5.9	%	$	7,644.1	$	7,399.2	$	244.9	3.3	%
Cost of revenue		2,457.9		2,316.3		141.6	6.1			7,186.8		6,968.9		217.9	3.1
Gross profit	$	160.6	$	155.3	$	5.3	3.4	%	$	457.3	$	430.3	$	27.0	6.3	%

The following table presents the percentage relationship of ~~certain~~statement of operations items to revenue:

	Three Months Ended
	December 31, 2017		December 31, 2016

					Three Months Ended				Nine Months Ended
					June 30,		June 30,		June 30,		June 30,
					2021		2020		2021		2020
Revenue	100.0	%	100.0	%	100.0	%	100.0	%	100.0	%	100.0	%
Cost of revenue	96.0		94.8		93.9		93.7		94.0		94.2
Gross profit	4.0	%	5.2	%	6.1	%	6.3	%	6.0	%	5.8	%

Revenue

Revenue for our ~~DCS~~Americas segment for the three months ended ~~December 31, 2017~~June 30, 2021 increased ~~$101.1~~$146.9 million, or ~~5.5%~~5.9%, to ~~$1,941.9~~$2,618.5 million as compared to ~~$1,840.8~~$2,471.6 million for the corresponding period last year.

Revenue for our Americas segment for the nine months ended June 30, 2021 increased $244.9 million, or 3.3%, to $7,644.1 million as compared to $7,399.2 million for the corresponding period last year.

The increase in revenue for the ~~three~~nine months ended ~~December 31, 2017~~June 30, 2021 was ~~attributable~~ ~~to increases~~primarily driven by increased activity in ~~Europe, Middle East, India and Africa (EMIA), Asia Pacific (APAC), and the Americas, totaling approximately $70 million, as well as a favorable impact from foreign currency~~our construction management of ~~approximately $30 million.~~high-rise buildings in New York City.

Gross Profit

Gross profit for our ~~DCS~~Americas segment for the three months ended ~~December 31, 2017 decreased $17.4~~June 30, 2021 increased $5.3 million, or ~~18.3%~~3.4%, to ~~$77.8~~$160.6 million as compared to ~~$95.2~~$155.3 million for the corresponding period last year. As a percentage of revenue, gross profit decreased to ~~4.0%~~6.1% of revenue for the three months ended ~~December 31, 2017~~June 30, 2021 from ~~5.2%~~6.3% in the corresponding period last year.

~~The decrease in gross profit and gross profit as a percentage~~39

Table of ~~revenue for the quarter ended December 31, 2017 was primarily attributable to approximately $21 million in severance costs, primarily in the Americas and EMIA.~~Contents

~~Construction Services~~

Three Months Ended

December 31,

December 31,

Change

2017

2016

$

%

(in millions)

Revenue

$
2,125.5

$
1,750.2

$
375.3

21.4
%
Cost of revenue

2,098.4

1,736.4

362.0

20.8

Gross profit

$
27.1

$
13.8

$
13.3

96.4
%

~~The following table presents the percentage relationship of certain items to revenue:~~

Three Months Ended

December 31,
2017

December 31,
2016

Revenue

100.0
%
100.0
%
Cost of revenue

98.7

99.2

Gross profit

1.3
%
0.8
%

~~Revenue~~

~~Revenue~~Gross profit for our CSAmericas segment for the ~~three~~nine months ended ~~December 31, 2017~~June 30, 2021 increased ~~$375.3~~$27.0 million, or ~~21.4%~~6.3%, to ~~$2,125.5~~$457.3 million as compared to ~~$1,750.2 million for the corresponding period last year.~~

~~The increase in revenue for the three months ended December 31, 2017 was primarily attributable to~~ approximately $240 million in increased revenue due to the construction of residential high-rise buildings in the city of New York and sports arenas in the Americas. Additionally, the increase was due to the inclusion of approximately $160 million of revenue from entities acquired during fiscal year 2018 and 2017.

~~Gross Profit~~

~~Gross profit for our CS segment for the three months ended December 31, 2017 increased $13.3 million, or 96.4%, to $27.1 million as compared to $13.8~~$430.3 million for the corresponding period last year. As a percentage of revenue, gross profit increased to ~~1.3%~~6.0% of revenue for the ~~three~~nine months ended ~~December 31, 2017~~June 30, 2021 from ~~0.8%~~5.8% in the corresponding period last year.

The increase in gross profit and gross profit as a percentage of revenue for the three and nine months ended ~~December 31, 2017~~June 30, 2021 was primarily due to ~~improved project performance on an energy contract~~reduced costs and a more efficient operating structure resulting from a realigned overhead and delivery structure, investments in ~~the United States,~~technology, and ~~due~~shared service centers to ~~the revenue increases in our construction businesses noted above.~~enhance efficiencies.

International

~~Management Services~~


	Three Months Ended								Nine Months Ended
	June 30,		June 30,		Change				June 30,		June 30,		Change
	2021		2020		$		%		2021		2020		$		%


Revenue	$	789.3	$	717.9	$	71.4	9.9	%	$	2,341.4	$	2,270.6	$	70.8	3.1	%
Cost of revenue		748.9		688.3		60.6	8.8			2,219.1		2,182.4		36.7	1.7
Gross profit	$	40.4	$	29.6	$	10.8	36.5	%	$	122.3	$	88.2	$	34.1	38.7	%

Three Months Ended

December 31,

December 31,

Change

2017

2016

$

%

(in millions)

Revenue

$
843.4

$
767.3

$
76.1

9.9
%
Cost of revenue

812.1

706.3

105.8

15.0

Gross profit

$
31.3

$
61.0

$
(29.7
)
(48.7
)%

The following table presents the percentage relationship of ~~certain~~statement of operations items to revenue:

	Three Months Ended
	December 31, 2017		December 31, 2016

					Three Months Ended				Nine Months Ended
					June 30,		June 30,		June 30,		June 30,
					2021		2020		2021		2020
Revenue	100.0	%	100.0	%	100.0	%	100.0	%	100.0	%	100.0	%
Cost of revenue	96.3		92.1		94.9		95.9		94.8		96.1
Gross profit	3.7	%	7.9	%	5.1	%	4.1	%	5.2	%	3.9	%

Revenue

Revenue for our MSInternational segment for the three months ended ~~December 31, 2017~~June 30, 2021 increased ~~$76.1~~$71.4 million, or 9.9%, to ~~$843.4~~$789.3 million as compared to ~~$767.3~~$717.9 million for the corresponding period last year.

Revenue for our International segment for the nine months ended June 30, 2021 increased $70.8 million, or 3.1% to $2,341.4 million as compared to $2,270.6 million for the corresponding period last year.

The increase in revenue for the ~~quarter~~three and nine months ended ~~December 31, 2017~~June 30, 2021 was primarily due to ~~various projects with~~increases in the ~~U.S. government.~~United Kingdom and Australia as well as the benefit of changes in the foreign exchange rates.

Gross Profit

Gross profit for our MSInternational segment for the three months ended ~~December 31, 2017 decreased $29.7~~June 30, 2021 increased $10.8 million, or ~~48.7%~~36.5%, to ~~$31.3~~$40.4 million as compared to ~~$61.0~~$29.6 million for the corresponding period last year. As a percentage of revenue, gross profit ~~decreased~~increased to ~~3.7%~~5.1% of revenue for the three months ended ~~December 31, 2017~~June 30, 2021 from ~~7.9%~~4.1% in the corresponding period last year.

Gross profit for our International segment for the nine months ended June 30, 2021 increased $34.1 million, or 38.7%, to $122.3 million as compared to $88.2 million for the corresponding period last year. As a percentage of revenue, gross profit increased to 5.2% of revenue for the nine months ended June 30, 2021 from 3.9% in the corresponding period last year.

The increase in gross profit and gross profit as a percentage of revenue for the three and nine months ended ~~December 31, 2017 decreased~~June 30, 2021 was primarily due to ~~the absence~~reduced costs resulting from actions taken to improve efficiency, including consolidating real estate, implementing a streamlined overhead structure, and exiting lower-returning countries.

Table of an approximately $35 million benefit recorded in the three months ended December 31, 2016, from the settlement of the Waste Treatment Plant qui tam civil lawsuit filed pursuant to the federal False Claims Act, net of legal fees.Contents

AECOM Capital


	Three Months Ended								Nine Months Ended
	June 30,		June 30,		Change				June 30,		June 30,		Change
	2021		2020		$		%		2021		2020		$		%


Revenue	$	0.6	$	0.2	$	0.4	200.0	%	$	1.6	$	1.2	$	0.4	33.3	%
Equity in earnings of joint ventures	$	(0.1)	$	0.3	$	(0.4)	(133.3)		$	4.9	$	6.0	$	(1.1)	(18.3)
General and administrative expenses	$	(2.4)	$	(1.1)	$	(1.3)	118.2	%	$	(5.8)	$	(5.3)	$	(0.5)	9.4	%

~~AECOM Capital~~Seasonality

Three Months Ended

December 31,

December 31,

Change

2017

2016

$

%

(in millions)

Equity in earnings of joint ventures

$
—

$
—

$
—

—
%
General and administrative expenses

(2.6
)
(2.7
)
0.1

(3.7
)

~~Results of operations for ACAP did not significantly change for the three months ended December 31, 2017 compared to the same period in the prior year.~~

~~Seasonality~~

We experience seasonal trends in our business. The first quarter of our fiscal year (October 1 to December 31) is typically our weakest quarter. The harsher weather conditions impact our ability to complete work in parts of North America and the holiday season schedule affects our productivity during this period. Our revenue is typically higher in the last half of the fiscal year. Many U.S. state governments with fiscal years ending on June 30 tend to ~~accelerate~~increase spending during their first quarter, when new funding becomes available. In addition, we find that the U.S. federal government tends to authorize more work during the period preceding the end of our fiscal year, September 30. Further, our construction management revenue typically increases during the high construction season

of the summer months. Within the United States, as well as other parts of the world, our business generally benefits from milder weather conditions in our fiscal fourth quarter, which allows for more productivity from our on-site civil services. For these reasons, coupled with the number and significance of client contracts commenced and completed during a period, as well as the time of expenses incurred for corporate initiatives, it is not unusual for us to experience seasonal changes or fluctuations in our quarterly operating results.

Liquidity and Capital Resources

Cash Flows

Our principal sources of liquidity are cash flows from operations, borrowings under our credit facilities, and access to financial markets. Our principal uses of cash are operating expenses, capital expenditures, working capital requirements, acquisitions, repurchases of common stock, and refinancing or repayment of debt. We believe our anticipated sources of liquidity including operating cash flows, existing cash and cash equivalents, borrowing capacity under our revolving credit facility and our ability to issue debt or equity, if required, will be sufficient to meet our projected cash requirements for at least the next 12twelve months. We expect to spend approximately $75 million to $95 million in restructuring costs in fiscal 2021 associated with previously announced restructuring actions that are expected to deliver continued margin improvement and efficiencies.

Generally, we do not provide for U.S. taxes or foreign withholding taxes on gross book-tax basis differences in our non-U.S. subsidiaries because such basis differences are able to and intended to be reinvested indefinitely. At ~~December 31, 2017~~June 30, 2021, we have ~~not~~ determined ~~whether~~that we will continue to indefinitely reinvest the earnings of ~~certain~~some foreign subsidiaries and, therefore, we will continue to account for these undistributed earnings based on our existing accounting under ASC 740 and not accrue additional tax outside of the one-time transition tax required under the Tax Cuts and Jobs Act that was enacted on December 22, 2017. Determination of the amount of any unrecognized deferred income tax liability on this temporary difference is not practicable because of the complexities of the hypothetical calculation. Based on the available sources of cash flows discussed above, we anticipate we will continue to have the ability to permanently reinvest these remaining amounts.

At ~~December 31, 2017,~~June 30, 2021, cash and cash equivalents, including cash and cash equivalents included in current assets held for sale, were ~~$813.2~~$1,054.9 million, ~~an increase~~a decrease of ~~$10.8~~$763.3 million, or ~~1.3%~~42.0%, from ~~$802.4~~$1,818.2 million at September 30, ~~2017.~~2020. The ~~increase~~decrease in cash and cash equivalents was primarily attributable to cash ~~provided by operating activities~~used to repurchase common stock and ~~net borrowings under our debt agreements, partially offset by capital expenditures net~~cash disposed with the sales of ~~proceeds from disposals, net distributions to noncontrolling interest, net investment in unconsolidated joint ventures,~~the at-risk power and ~~repurchases~~civil infrastructure construction businesses.

Table of ~~common stock.~~Contents

Net cash provided by operating activities was ~~$52.4~~$386.6 million for the ~~three~~nine months ended ~~December 31, 2017, a decrease from $77.5~~June 30, 2021, compared to net cash used in operating activities of $319.7 million for the ~~three~~nine months ended ~~December 31, 2016.~~June 30, 2020. The ~~decrease~~year over year improvement in operating cash flow was ~~primarily~~partly due to sales of the Management Services business in the second quarter of fiscal 2020, the power construction business in the first quarter of 2021 and the civil infrastructure business in the second quarter of fiscal 2021, which led to a favorable year over year impact to operating cash flow of approximately $223.9 million when comparing the nine months ended June 30, 2021 with the prior year. The remaining increase in operating cash flow in the nine-month period ended June 30, 2021 compared to the prior year was attributable to ~~the timing of receipts and payments of~~improvements in working capital ~~which include accounts receivable, accounts payable, accrued expenses,~~of approximately $415.1 million and ~~billings~~an increase in ~~excess~~earnings adjusted for non-cash items of ~~costs on uncompleted contracts.~~approximately $67.3 million for the nine months ended June 30, 2021 compared to the nine months ended June 30, 2020. The sale of trade receivables to financial institutions during the ~~three~~nine months ended ~~December 31, 2017~~June 30, 2021 provided a net benefit of ~~$29.6~~$73.7 million as compared to ~~$19.3~~a net unfavorable impact of $156.9 million during the ~~three~~nine months ended ~~December 31, 2016.~~June 30, 2020. We expect to continue to sell trade receivables in the future as long as the terms continue to remain favorable to ~~the Company.~~us.

Net cash used in investing activities was ~~$27.5~~$401.7 million for the ~~three~~nine months ended ~~December 31, 2017,~~June 30, 2021, as compared to ~~$38.8~~net cash provided by investing activities of $2,074.1 million for the ~~three~~nine months ended ~~December 31, 2016.~~

June 30, 2020. Cash flow from investing activities decreased primarily due to the change in proceeds, net of cash disposed, from the sales of the at-risk power and civil infrastructure construction businesses during the nine months ended June 30, 2021, which was an outflow of $265.9 million, compared to the $2,218.9 million of proceeds, net of cash disposed, received from the sale of the Management Services business in the nine months ended June 30, 2020.

Net cash used in financing activities was ~~$17.0~~$754.9 million for the ~~three~~nine months ended ~~December 31, 2017~~June 30, 2021 as compared to ~~$26.4~~$1,405.5 million for the ~~three~~nine months ended ~~December 31, 2016. This change~~June 30, 2020. The decrease from the prior year was primarily attributable to ~~net~~debt repayment using the proceeds from the sale of the Management Services business in the nine months ended June 30, 2020, offset by increased stock repurchases under the Stock Repurchase Program during the nine months ended June 30, 2021. Total borrowings under our credit ~~agreements of $40.3 million for~~agreement may vary during the ~~three months ended December 31, 2017~~period as ~~compared~~we regularly draw and repay amounts to ~~$27.4 million for the three months ended December 31, 2016.~~fund working capital.

~~Acquisition and Integration Expenses~~

~~Acquisition and integration expenses, resulting from business acquisitions, comprised of the following (in millions):~~

Three months ended Dec 31,

2017

2016

Severance and personnel costs

$
—

$
11.5

Professional service, real estate-related, and other expenses

—

3.9

Total

$
—

$
15.4

~~Our acquisition and integration expenses associated with the URS integration are complete.~~

Working Capital

Working capital, or current assets less current liabilities, ~~increased $62.2~~decreased $871.4 million, or ~~5.6%~~60.5%, to ~~$1,166.0~~$568.5 million at ~~December 31, 2017~~June 30, 2021 from ~~$1,103.8~~$1,439.9 million at September 30, ~~2017.~~2020. Net accounts receivable ~~which includes billed~~ and ~~unbilled costs and fees,~~contract assets, net of ~~billings in excess of costs on uncompleted contracts, increased $92.9 million, or 2.2%,~~contract liabilities, decreased to ~~$4,317.8~~$3,087.4 million at ~~December 31, 2017~~June 30, 2021 from ~~$4,224.9~~$3,535.3 million at September 30, ~~2017.~~

2020. The change in working capital is primarily due to the change in cash and cash equivalents during the nine months ended June 30, 2021, as described above.

Days Sales Outstanding (DSO), which includes net accounts receivable and contract assets, net of ~~billings in excess of costs on uncompleted contracts, and excludes the effects of recent acquisitions,~~contract liabilities, was 8079 days at ~~December 31, 2017~~June 30, 2021 compared to 7793 days at September 30, ~~2017.~~

2020.

In Note 4, ~~Accounts Receivable—Net,~~Revenue Recognition, in the notes to our consolidated financial statements, a comparative analysis of the various components of accounts receivable is provided. ~~Substantially~~Except for claims, substantially all ~~unbilled receivables~~contract assets are expected to be billed and collected within twelve months.

~~Unbilled receivables~~Contract assets related to claims are recorded only if it is probable that the claim will result in additional contract revenue and if the amount can be reliably estimated. In such cases, revenue is recorded only to the extent that contract costs relating to the claim have been incurred. ~~Other than as disclosed, there are no material net receivables related to contract claims as of December 31, 2017 and September 30, 2017.~~ Award fees in ~~unbilled receivables~~contract assets are accrued only when there is sufficient information to assess contract performance. On contracts that represent higher than normal risk or technical difficulty, award fees are generally deferred until an award fee letter is received.

Because our revenue depends to a great extent on billable labor hours, most of our charges are invoiced following the end of the month in which the hours were worked, the majority usually within 15 days. Other direct costs are normally billed along with labor hours. However, as opposed to salary costs, which are generally paid on either a bi-weekly or monthly basis, other direct costs are generally not paid until payment is received (in some cases in the form of advances) from the customers.

Table of Contents

Debt

~~Debt~~

Debt consisted of the following:

									��
							June 30,		September 30,
							2021		2020
	December 31, 2017			September 30, 2017
	(in millions)
2014 Credit Agreement	$	962.3		$	908.7
2014 Senior Notes	1,600.0			1,600.0
2017 Senior Notes	1,000.0			1,000.0
URS Senior Notes	247.8			247.7
							(in millions)
Credit Agreement							$	1,156.9	$	248.5
2024 Senior Notes								—		797.3
2027 Senior Notes								997.3		997.3
Other debt	141.6			140.0				79.7		41.9
Total debt	3,951.7			3,896.4				2,233.9		2,085.0
Less: Current portion of debt and short-term borrowings	(163.3		)	(142.0		)		(55.2)		(20.9)
Less: Unamortized debt issuance costs	(49.5		)	(52.3		)		(24.9)		(23.0)
Long-term debt	$	3,738.9		$	3,702.1		$	2,153.8	$	2,041.1

The following table presents, in millions, scheduled maturities of our debt as of ~~December 31, 2017:~~June 30, 2021:


Fiscal Year
2018 (nine months remaining)	$	109.7
2019	152.2
2020	123.0
2021	686.9
2021 (three months remaining)			$	14.9
2022	258.2			48.2
2023				38.1
2024				39.4
2025				34.2
Thereafter	2,621.7			2,059.1
Total	$	3,951.7	$	2,233.9

~~2014~~ Credit Agreement

We entered into a credit agreement (Credit Agreement) on October 17, 2014, which, as amended ~~consisting~~to date, consists of (i) a term loan A facility ~~in an aggregate principal amount of $1.925 billion,~~that included a $510 million (US) term loan A facility with a term that expired on March 13, 2021 and a $500 million Canadian dollar (CAD) term loan A facility and a $250 million Australian dollar (AUD) term loan A facility, each with terms expiring on March 13, 2023; (ii) a $600 million term loan B facility ~~in an aggregate principal amount of $0.76 billion,~~with a term expiring on March 13, 2025; and (iii) a revolving credit facility in an aggregate principal amount of ~~$1.05 billion. These facilities under the Credit Agreement may be increased by an additional amount of up to $500 million. The Credit Agreement’s~~$1.35 billion with a term extends to September 29, 2021 with respect to the revolving credit facility and the term loan A facility and October 17, 2021 with respect to the term loan B facility, although the term loan B facility was paid in fullexpiring on ~~February 21, 2017.~~March 13, 2023. Some of our subsidiaries (Guarantors) have guaranteed the obligations of

the borrowers under the Credit Agreement. The borrowers’ obligations under the Credit Agreement are secured by a lien on substantially all of ~~the~~our assets ~~of the Company~~ and ~~the Guarantors~~our Guarantors’ assets pursuant to a security and pledge agreement (Security Agreement). The collateral under the Security Agreement is subject to release upon fulfillment of ~~certain~~ conditions specified in the Credit Agreement and Security Agreement.

The Credit Agreement contains covenants that limit our ability and the ability of ~~certain~~some of our subsidiaries to, among other things: (i) create, incur, assume, or suffer to exist liens; (ii) incur or guarantee indebtedness; (iii) pay dividends or repurchase stock; (iv) enter into transactions with affiliates; (v) consummate asset sales, acquisitions or mergers; (vi) enter into ~~certain~~various types of burdensome agreements; or (vii) make investments.

On July 1, 2015, the Credit Agreement was amended to revise the definition of “Consolidated EBITDA” to increase the allowance for acquisition and integration expenses related to ~~the~~our acquisition of ~~URS.~~the URS Corporation (URS) in October 2014.

Table of Contents

On March 31, 2017, the Credit Agreement was amended to (1) expand the ability of restricted subsidiaries to borrow under “Incremental Term Loans;” (2) revise the definition of “Working Capital” as used in “Excess Cash Flow;” (3) revise the definitions for “Consolidated EBITDA” and “Consolidated Funded Indebtedness” to reflect the expected gain and debt repayment of an AECOM Capital disposition, which disposition was completed on April 28, 2017; and (4) amend provisions relating to the our ability to undertake ~~certain~~ internal restructuring steps to accommodate changes in tax laws.

~~Under~~On March 13, 2018, the Credit Agreement was amended to (1) refinance the existing term loan A facility to include a $510 million (US) term loan A facility with a term expiring on March 13, 2021 and a $500 million CAD term loan A facility and a $250 million AUD term loan A facility each with terms expiring on March 13, 2023; (2) issue a new $600 million term loan B facility to institutional investors with a term expiring on March 13, 2025; (3) increase the capacity of the our revolving credit facility from $1.05 billion to $1.35 billion and extend its term until March 13, 2023; (4) reduce our interest rate borrowing costs as follows: (a) the term loan B facility, at our election, Base Rate (as defined in the Credit Agreement) plus 0.75% or Eurocurrency Rate (as defined in the Credit Agreement) plus 1.75%, (b) the (US) term loan A facility, at our election, Base Rate plus 0.50% or Eurocurrency Rate plus 1.50%, and (c) the Canadian (CAD) term loan A facility, the Australian (AUD) term loan A facility, and the revolving credit facility, an initial rate of, at our election, Base Rate plus 0.75% or Eurocurrency Rate plus 1.75%, and after the end of our fiscal quarter ended June 30, 2018, Base Rate loans plus a margin ranging from 0.25% to 1.00% or Eurocurrency Rate plus a margin from 1.25% to 2.00%, based on the Consolidated Leverage Ratio (as defined in the Credit Agreement); and (5) revise covenants including increasing the amounts available under the restricted payment negative covenant and revising the Maximum Consolidated Leverage Ratio (as defined in the Credit Agreement) to include a 4.5 leverage ratio through September 30, 2019 after which the leverage ratio stepped down to 4.0.

On January 28, 2020, we entered into Amendment No. 7 to the Credit Agreement which modifies the asset disposition covenant to permit the sale of our Management Services business and the mandatory prepayment provision so that only outstanding term loans are prepaid using the net proceeds from the sale.

On May 1, 2020, we entered into Amendment No. 8 to the Credit Agreement which allows for borrowings to be made, until three months after closing, up to an aggregate principal amount of $400,000,000 under a secured delayed draw term loan facility, the proceeds of which are permitted to be used to pay all or a portion of the amounts payable in connection with any tender for or redemption or repayment of our or our subsidiaries’ existing senior unsecured notes and any associated fees and expenses. The amendment also revised certain terms and covenants in the Credit Agreement, including by, among other things, the maximum leverage ratio covenant to 4.00:1.00, subject to increases to 4.50:1.00 for certain specified periods in connection with certain material acquisitions, increasing the potential size of incremental facilities under the Credit Agreement, revising the definition of “Consolidated EBITDA” to provide for additional flexibility in the calculation thereof and adding a ~~maximum consolidated leverage ratio~~Eurocurrency Rate floor of 0.75% to the interest rate under the revolving credit facility.

On July 30, 2020, we drew $248.5 million on its secured delayed draw term loan facility (Term A Facility) for the purpose of redeeming all of the 2022 URS Senior Notes.

Table of Contents

On February 8, 2021, we entered into the 2021 Refinancing Amendment to the Credit Agreement, pursuant to which the maturity of the revolving credit facility and ~~minimum~~the term loans outstanding under the Credit Agreement were extended to February 8, 2026. In addition, the refinancing amendment reduced the size of the revolving credit facility to $1,150,000,000. The applicable interest rate under the Credit Agreement is calculated at a per annum rate equal to, at our option, (a) the Eurocurrency Rate (as defined in the Credit Agreement) plus an applicable margin (the “LIBOR Applicable Margin”), which is currently at 1.50% or (b) the Base Rate (as defined in the Credit Agreement) plus an applicable margin (the “Base Rate Applicable Margin” and together with the LIBOR Applicable Margin, the “Applicable Margins”), which is currently at 0.50%. The Credit Agreement includes certain environmental, social and governance (ESG) metrics relating to our CO² emissions and our percentage of employees who identify as women (each, a “Sustainability Metric”). The Applicable Margins and the commitment fees for the revolving credit facility will be adjusted on an annual basis based on our achievement of preset thresholds for each Sustainability Metric.

On April 13, 2021, we entered into Amendment No. 10 to the Credit Agreement, pursuant to which the lenders thereunder provided a secured term “B” credit facility (Term B Facility) to the Company in an aggregate principal amount of $700,000,000. The Term B Facility matures on April 13, 2028. The proceeds of the Term B Facility were used to fund the purchase price, fees and expenses in connection with our cash tender offer to purchase up to $700,000,000 aggregate purchase price (not including any accrued and unpaid interest) of our outstanding 5.875% Senior Notes due 2024.

The Term B Facility is subject to the same affirmative and negative covenants and events of default as the existing term loans previously incurred pursuant to the existing Credit Agreement (except that the financial covenants in the existing Credit Agreement do not apply to the Term B Facility). The applicable interest rate for the Term B Facility is calculated at a per annum rate equal to, at our option, (a) the Eurocurrency Rate (as defined in the Credit Agreement) plus 1.75% or (b) the Base Rate (as defined in the Credit Agreement) plus 0.75%.

On June 25, 2021, we entered into Amendment No. 11 to the Credit Agreement, pursuant to which the lenders have provided to the Company an additional $215,000,000 in aggregate principal amount under the Term A Facility. The Term A Facility matures on February 8, 2026. We used the net proceeds from the increase in the Term A Facility (together with cash on hand), to (i) redeem all of the Company’s remaining 5.875% Senior Notes due 2024 and (ii) pay fees and expenses related to such redemption.

We are required to maintain a consolidated interest coverage ratio of at ~~the end~~least 3.00 to 1.00 and a consolidated leverage ratio of ~~each fiscal quarter.~~ less than or equal to 4.00 to 1.00 (subject to certain adjustments in connection with permitted acquisitions), tested on a quarterly basis.

Our ~~Consolidated Leverage Ratio~~consolidated leverage ratio was ~~4.0~~2.5 at ~~December 31, 2017.~~June 30, 2021. Our ~~Consolidated Interest Coverage Ratio~~consolidated interest coverage ratio was ~~4.7~~6.8 at ~~December 31, 2017.~~June 30, 2021. As of ~~December 31, 2017,~~June 30, 2021, we were in compliance with the covenants of the Credit Agreement.

At ~~December 31, 2017~~June 30, 2021 and September 30, ~~2017, outstanding standby~~2020, letters of credit totaled ~~$54.8~~$11.2 million and ~~$58.1~~$19.0 million, respectively, under our revolving credit facilities. As of ~~December 31, 2017~~June 30, 2021 and September 30, ~~2017,~~2020, we had ~~$915.2~~$1,138.8 million and ~~$991.9~~$1,331.0 million, respectively, available under our revolving credit facility.

~~2014~~2024 Senior Notes

On October 6, 2014, we completed a private placement offering of $800,000,000 aggregate principal amount of the unsecured ~~5.750% Senior Notes due 2022 (2022 Notes) and $800,000,000 aggregate principal amount of the unsecured~~ 5.875% Senior Notes due 2024 (the 2024 Notes). On November 2, 2015, we completed an exchange offer to exchange the unregistered 2024 Senior Notes for registered notes, as well as all related guarantees.

On July 21, 2020, we completed a cash tender offer at par for up to $639 million in aggregate principal amount of the 2024 Notes and ~~together~~the 2027 Senior Notes. We accepted for purchase all of 2024 Notes validly tendered and not validly withdrawn pursuant to the cash tender offer, amounting to $2.7 million aggregate principal amount of the 2024 Notes at par. We made the cash tender offer at par to satisfy obligations under the indentures governing the 2024 Notes and the 2027 Senior Notes relating to the use of certain cash proceeds from the disposition of our Management Services business, which was completed on January 31, 2020.

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On April 26, 2021, we completed a cash tender offer for up to $700 million in aggregate purchase price (not including any accrued and unpaid interest) of the 2024 Notes. We accepted for purchase all of 2024 Notes validly tendered and not validly withdrawn pursuant to the cash tender offer, amounting to $608.3 million aggregate principal amount of the 2024 Notes. The aggregate purchase price paid in connection with the ~~2022~~tender offer was $697.2 million (inclusive of the tender offer premiums paid pursuant to the terms of the tender offer), plus accrued and unpaid interest. The amounts paid were funded using the proceeds from the Term B Facility described above and cash on hand.

On April 6, 2021, we, the guarantors with respect to the 2024 Notes, and the ~~2014~~trustee with respect to the 2024 Notes executed and delivered a supplemental indenture to the 2024 Notes (Supplemental Indenture), which became effective on April 6, 2021. The Supplemental Indenture became operative on April 13, 2021, upon our acceptance of the 2024 Notes for purchase and payment therefore at the early settlement date of the April 2021 tender offer.

With respect to the Supplemental Indenture, each of the following sections in the indenture relating to the 2024 Notes were deleted: (i) Section 4.03, “SEC Reports”; (ii) Section 4.04, “Compliance Certificate”; (iii) Section 4.05, “Taxes”; (iv) Section 4.06, “Stay, Extension and Usury Laws”; (v) Section 4.07, “Limitation on Restricted Payments”; (vi) Section 4.08, “Limitation on Restrictions on Distributions from Restricted Subsidiaries”; (vii) Section 4.09, “Limitations on Indebtedness”; (viii) Section 4.10, “Limitation on Sales of Assets and Subsidiary Stock”; (ix) Section 4.11, Limitation on Transactions with Affiliates”; (x) Section 4.12, “Limitation on Liens”; (xi) Section 4.14, “Change of Control”; (xii) Section 4.18, “Future Subsidiary Guarantors”; (xiii) Section 4.19, “Suspension of Covenants”; (xiv) Section 4.20, “Additional Interest Notice”; and (xv) Section 6.01(a), “Events of Default” (subsections (3) through (7) thereof (inclusive)). Certain modifications to Section 3.01, “Notices to Trustee”; Section 3.02(a) “Selection of Notes to Be Redeemed”; Section 3.03(a) “Notice of Redemption”; Section 4.15 “Corporate Existence”; Section 5.01, “Merger and Consolidation”; and Section 5.02, “Successor Corporation” were also made.

On June 25, 2021, we redeemed the remaining 2024 Notes. The redemption price of the 2024 Notes was 115.108% of the remaining outstanding aggregate principal amount, amounting to $217.5 million, plus accrued and unpaid interest. The amounts paid were funded using the proceeds from the additional draw down from the Term A Facility described above and cash on hand. The redemption of the 2024 Notes in the third quarter of fiscal 2021 resulted in a $117.5 million prepayment premium, which was included interest expense.

2027 Senior Notes

On February 21, 2017, we completed a private placement offering of $1,000,000,000 aggregate principal amount of our unsecured 5.125% Senior Notes due 2027 (the 2027 Senior Notes). On June 30, 2017, we completed an exchange offer to exchange the unregistered 2027 Senior Notes for registered notes, as well as related guarantees.

As of ~~December 31, 2017,~~June 30, 2021, the estimated fair value of the ~~2014~~2027 Senior Notes was approximately ~~$834.0 million for the 2022 Notes and $866.0 million for the 2024 Notes.~~$1,109.5 million. The fair value of the ~~2014~~2027 Senior Notes as of ~~December 31, 2017~~June 30, 2021 was derived by taking the mid-point of the trading prices from an observable market input (Level 2) in the secondary bond market and multiplying it by the outstanding balance of the ~~2014 Senior Notes.~~

We may redeem the 2022 Notes, in whole or in part, at once or over time, at the specified redemption prices plus accrued and unpaid interest thereon to the redemption date. At any time prior to July 15, 2024, we may redeem on one or more occasions all or part of the 2024 Notes at a redemption price equal to the sum of (i) 100% of the principal amount thereof, plus (ii) a “make-whole” premium as of the date of the redemption, plus any accrued and unpaid interest to the date of redemption. In addition, on or after July 15, 2024, the 2024 Notes may be redeemed at a redemption price of 100% of the principal amount thereof, plus accrued and unpaid interest to the date of redemption.

~~On November 2, 2015, we completed an exchange offer to exchange the unregistered 2014 Notes for registered notes, as well as all related guarantees.~~

~~We were in compliance with the covenants relating to the 2014 Senior Notes as of December 31, 2017.~~

~~2017 Senior Notes~~

~~On February 21, 2017, we completed a private placement offering of $1,000,000,000 aggregate principal amount of our unsecured 5.125% Senior Notes due~~ 2027 (the 2017 Senior Notes) and used the proceeds to immediately retire the remaining $127.6 million outstanding on the term loan B facility as well as repay $600 million of the term loan A facility and $250 million of the revolving credit facility under our Credit Agreement.

As of December 31, 2017, the estimated fair value of the 2017 Senior Notes was approximately $1,017.5 million. The fair value of the 2017 Senior Notes as of December 31, 2017 was derived by taking the mid-point of the trading prices from an observable market input (Level 2) in the secondary bond market and multiplying it by the outstanding balance of the 2017 Senior Notes. Interest ~~will be~~is payable on the ~~2017~~2027 Senior Notes at a rate of 5.125% per annum. Interest on the ~~2017~~2027 Senior Notes ~~will be~~is payable semi-annually on March 15 and September 15 of each year, commencing on September 15, 2017. The ~~2017~~2027 Senior Notes will mature on March 15, 2027.

At any time and from time to time prior to December 15, 2026, we may redeem all or part of the ~~2017~~2027 Senior Notes, at a redemption price equal to 100% of their principal amount, plus a “make whole” premium as of the redemption date, and accrued and unpaid interest to the redemption date.

In addition, at any time and from time to time prior to March 15, 2020, we may redeem up to 35% of the original aggregate principal amount of the 2017 Senior Notes with the proceeds of one or more qualified equity offerings, at a redemption price equal to 105.125%, plus accrued and unpaid interest. Furthermore, at any time on or after December 15, 2026, we may redeem on one or more occasions all or part of the 2017 Senior Notes at a redemption price equal to 100% of their principal amount, plus accrued and unpaid interest.

~~On June 30, 2017, we completed an exchange offer to exchange the unregistered 2017 Senior Notes for registered notes, as well as related guarantees.~~

We were in compliance with the covenants relating to ~~our 2017~~the 2027 Senior Notes as of ~~December 31, 2017.~~June 30, 2021.

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URS Senior Notes

In connection with the 2014 acquisition of the URS ~~acquisition,~~Corporation (URS), we assumed ~~the URS 3.85% Senior Notes due 2017 (2017 URS Senior Notes) and~~ the URS 5.00% Senior Notes due 2022 (2022 URS Senior Notes)~~, totaling $1.0 billion (URS Senior Notes)~~.

The ~~URS acquisition triggered change in control provisions in the URS Senior Notes that allowed the holders of the URS Senior Notes to redeem their URS Senior Notes at a cash price equal to 101% of the~~remaining $248.5 million principal amount and, accordingly, we redeemed $572.3 million of the URS Senior Notes on October 24, 2014. The remaining 2017 URS Senior Notes matured and were fully redeemed on April 3, 2017 for $179.2 million using proceeds from a $185 million delayed draw term loan A facility tranche under the Credit Agreement. The 2022 URS Senior Notes are general unsecured senior obligations of AECOM Global II, LLC (as successor in interest to URS) and are fully and unconditionally guaranteed on a joint-and-several basis by certain former URS domestic subsidiary guarantors.

~~As of December 31, 2017, the estimated fair value~~ of the 2022 URS Senior Notes were fully redeemed on August 31, 2020 using proceeds from a $248.5 million secured delayed draw term loan facility under the Credit Agreement, at a redemption price that was ~~approximately $258.5 million. The carrying value~~106.835% of the ~~2022 URS Senior Notes on our Consolidated Balance Sheets as of December~~principal amount outstanding plus accrued and unpaid interest. The August 31, ~~2017~~2020 redemption resulted in a $17.0 million prepayment premium, which was ~~$247.8 million. The fair value of~~included in interest expense during the ~~2022 URS Senior Notes as of December 31, 2017 was derived by taking the mid-point of the trading prices from an observable market input (Level 2) in the secondary bond market~~year ended September 30, 2020.

Other Debt and ~~multiplying it by the outstanding balance of the 2022 URS Senior Notes.~~

~~As of December 31, 2017, we were in compliance with the covenants relating to the 2022 URS Senior Notes.~~

Other ~~Debt~~Items

Other debt consists primarily of obligations under capital leases and loans, and unsecured credit facilities. Our unsecured credit facilities are primarily used for standby letters of credit issued in connection with general and professional liability insurance programs and for ~~payment of~~contract performance guarantees. At ~~December 31, 2017~~June 30, 2021 and September 30, ~~2017,~~2020, these outstanding standby letters of credit totaled ~~$460.9~~$489.6 million and ~~$445.7~~$510.1 million, respectively. As of ~~December 31, 2017,~~June 30, 2021, we had ~~$489.4~~$443.1 million available under these unsecured credit facilities.

Effective Interest Rate

Our average effective interest rate on our total debt, including the effects of the interest rate swap agreements and excluding the effects of prepayment premiums included in interest expense, during the ~~three~~nine months ended ~~December 31, 2017~~June 30, 2021 and ~~2016~~2020 was ~~4.8%~~4.7% and ~~4.2%~~5.2%, respectively.

Interest expense in the consolidated statements of operations ~~for the three months ended December 30, 2017 and 2016~~ included amortization of deferred debt issuance costs for the three and nine months ended June 30, 2021 of ~~$2.9~~$4.6 million and ~~$2.8~~$9.0 million, respectively, and for the three and nine months ended June 30, 2020 of $1.3 million and $3.8 million, respectively.
Other Commitments

We enter into various joint venture arrangements to provide architectural, engineering, program management, construction management and operations and maintenance services. The ownership percentage of these joint ventures is typically representative of the work to be performed or the amount of risk assumed by each joint venture partner. Some of these joint ventures are considered variable interest. We have consolidated all joint ventures for which we have control. For all others, our portion of the earnings is recorded in equity in earnings of joint ventures. See Note 5, Joint Ventures and Variable Interest Entities, in the notes to our consolidated financial statements.

Other than normal property and equipment additions and replacements, expenditures to further the implementation of our ~~Enterprise Resource Planning system,~~various information technology systems, commitments under our incentive compensation programs, amounts we may expend to repurchase stock under our stock repurchase program and acquisitions from time to time and disposition costs, we currently do not have any significant capital expenditures or outlays planned except as described below. However, if we acquire additional businesses in the future or if we embark on other capital-intensive initiatives, additional working capital may be required.

Under our secured revolving credit facility and other facilities discussed in Other Debt and Other Items above, as of ~~December 31, 2017,~~June 30, 2021, there was approximately ~~$515.7~~$500.2 million, including both continuing and discontinued operations, outstanding under standby letters of credit primarily issued ~~primarily~~ in connection with general and professional liability insurance programs and for contract performance guarantees. For those projects for which we have issued a performance guarantee, if the project subsequently fails to meet guaranteed performance standards, we may either incur significant additional costs or be held responsible for the costs incurred by the client to achieve the required performance standards.

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We recognized on our balance sheet the funded status ~~(measured~~of our pension benefit plans, measured as the difference between the fair value of plan assets and the projected benefit ~~obligation)~~obligation. At June 30, 2021, our defined benefit pension plans had an aggregate deficit (the excess of ~~our pension~~projected benefit ~~plans.~~obligations over the fair value of plan assets) of approximately $400.0 million. The total amounts of employer contributions paid for the ~~three~~nine months ended ~~December 31, 2017~~June 30, 2021 were ~~$2.5~~$10.1 million for U.S. plans and ~~$6.8~~$18.9 million for non-U.S. plans. Funding requirements for each plan are determined based on the local laws of the country where such plan resides. In ~~certain~~some countries, the funding requirements are mandatory while in other countries, they are discretionary. There is a required minimum contribution for one of our domestic plans; however, we may make additional discretionary contributions. In the future, such pension funding may increase or decrease depending on changes in the levels of interest rates, pension plan performance and other factors. In addition, we have collective bargaining agreements with unions that require us to contribute to various third party multiemployer pension plans that we do not control or manage. For the year ended September 30, 2020, we contributed $4.0 million to multiemployer pension plans.

Contractual Obligations

Refer to our Annual Report on Form 10-K for the year ended September 30, 2020 for a discussion of our contractual obligations. There have been no changes, outside of the ordinary course of business, to these contractual obligations during the nine months ended June 30, 2021.

Condensed Combined Financial Information

In connection with the registration of the Company's 2014 Senior Notes that were declared effective by the SEC on September 29, 2015, AECOM became subject to the requirements of Rule 3-10 of Regulation S-X, as amended, regarding financial statements of guarantors and issuers of guaranteed securities. Both the 2014 Senior Notes and the 2027 Senior Notes are fully and unconditionally guaranteed on a joint and several basis by some of AECOM's directly and indirectly 100% owned subsidiaries (the Subsidiary Guarantors). Other than customary restrictions imposed by applicable statutes, there are no restrictions on the ability of the Subsidiary Guarantors to transfer funds to AECOM in the form of cash dividends, loans or advances.

The following tables present condensed combined summarized financial information for AECOM and the Subsidiary Guarantors. All intercompany balances and transactions are eliminated in the presentation of the combined financial statements. Amounts provided do not represent our total consolidated amounts as of June 30, 2021 and September 30, 2020, and for the nine months ended June 30, 2021.

Condensed Combined Balance Sheets

Parent and Subsidiary Guarantors

(unaudited - in millions)

June 30, 2021

September 30, 2020
Current assets

$
3,063.2

$
3,801.9
Non-current assets

3,357.0

3,620.1
Total assets

$
6,420.2

$
7,422.0

Current liabilities

$
2,890.1

$
3,175.1
Non-current liabilities

2,827.1

2,806.8
Total liabilities

5,717.2

5,981.9

Total stockholders’ equity

703.0

1,440.1
Total liabilities and stockholders’ equity

$
6,420.2

$
7,422.0

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Condensed Combined Statement of Operations

Parent and Subsidiary Guarantors

(unaudited - in millions)

For the nine months ended

June 30, 2021
Revenue

$
5,597.5
Cost of revenue

5,275.7
Gross profit

321.8

Net loss from continuing operations

(83.1)
Net loss from discontinued operations

(87.0)
Net loss

$
(170.1)

Net loss attributable to AECOM

$
(170.1)

New Accounting Pronouncements and Changes in Accounting

For information regarding recent accounting pronouncements, see Notes to Consolidated Financial Statements included in Part I, Item 1.

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Item 3. Quantitative and Qualitative Disclosures About Market Risk

Financial Market Risks

Financial Market Risks

We are exposed to market risk, primarily related to foreign currency exchange rates and interest rate exposure of our debt obligations that bear interest based on floating rates. We actively monitor these exposures. Our objective is to reduce, where we deem appropriate to do so, fluctuations in earnings and cash flows associated with changes in foreign exchange rates and interest rates. In order to accomplish this objective, we sometimes enter into derivative financial instruments, such as forward contracts and interest rate hedge contracts. It is our policy and practice to use derivative financial instruments only to the extent necessary to manage our exposures. We do not use derivative financial instruments for trading purposes.

Foreign Exchange Rates

We are exposed to foreign currency exchange rate risk resulting from our operations outside of the U.S. We use foreign currency forward contracts from time to time to mitigate foreign currency risk. We limit exposure to foreign currency fluctuations in most of our contracts through provisions that require client payments in currencies corresponding to the currency in which costs are incurred. As a result of this natural hedge, we generally do not need to hedge foreign currency cash flows for contract work performed. The functional currency of our significant foreign operations is the respective local currency.

Interest Rates

Our Credit Agreement and ~~certain~~ other debt obligations are subject to variable rate interest which could be adversely affected by an increase in interest rates. As of ~~December 31, 2017,~~June 30, 2021 and September 30, 2020, we had ~~$962.3~~$1,156.9 million and $248.5 million, respectively, in outstanding borrowings under our term credit agreements and ~~our~~ revolving credit facility. Interest on amounts borrowed under these agreements is subject to adjustment based on ~~certain~~specified levels of financial performance. The applicable margin that is added to the borrowing’s base rate can range from ~~0.75%~~0.25% to ~~2.25%~~2.00%. For the ~~three~~nine months ended ~~December 31, 2017,~~June 30, 2021, our weighted average floating rate borrowings were ~~$1,514.8 million, or $914.8~~$446.7 million, excluding borrowings with effective fixed interest rates due to ~~interest~~ rate swap ~~agreements.~~agreement. If short-term floating interest rates had increased by 1.00%, our interest expense for the ~~three~~nine months ended ~~December 31, 2017~~June 30, 2021 would have increased by ~~$2.3~~$3.4 million. We invest our cash in a variety of financial instruments, consisting principally of money market securities or other highly liquid, short-term securities that are subject to minimal credit and market risk.

Item 4. Controls and Procedures

Evaluation of Disclosure Controls and Procedures

Based on anmanagement’s evaluation, ~~under the supervision and~~ with the participation of our ~~management,~~Chief Executive Officer (CEO) and Chief Financial Officer (CFO), our ~~principal executive officer~~CEO and ~~principal financial officer~~CFO have concluded that our disclosure controls and procedures as defined in Rules 13a-15(e) and ~~15d-15(e)~~15(d)-15(e) under the Securities Exchange Act of 1934, as amended (Exchange Act), were effective as of ~~December 31, 2017~~June 30, 2021 to ensure that information required to be disclosed by us in ~~reports that we file~~this Quarterly Report on Form 10-Q or ~~submit~~submitted under the Exchange Act is (i) recorded, processed, summarized and reported within the time periods specified in the Securities and Exchange Commission rules and forms and (ii) accumulated and communicated to our management, including our principal executive officer and principal financial officer, as appropriate, to allow timely decisions regarding required disclosures.

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Changes in Internal Control Over Financial Reporting

There were no changes in our internal control over financial reporting during the fiscal quarter ended ~~December 31, 2017~~ ~~which were~~June 30, 2021 identified in connection with ~~management’s~~the evaluation required by paragraph (d) of Rules 13a-15 and 15d-15 under the Exchange Act that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

PART II.OTHER INFORMATION

Item 1. Legal Proceedings

As a government contractor, we are subject to various laws and regulations that are more restrictive than those applicable to non-government contractors. Intense government scrutiny of contractors’ compliance with those laws and regulations through audits and investigations is inherent in government contracting; and from time to time, we receive inquiries, subpoenas, and similar demands related to our ongoing business with government entities. Violations can result in civil or criminal liability as well as suspension or debarment from eligibility for awards of new government contracts or option renewals.

We are involved in various investigations, claims and lawsuits in the normal conduct of our business. We are not always aware ~~that~~if we or our affiliates are under investigation or the status of such matters. Although the outcome of our legal proceedings cannot be predicted with certainty and no assurances can be provided, in the opinion of our management, based upon current information and discussions with counsel, with the exception of the matters noted in Note ~~14, “Commitments~~15, Commitments and Contingencies,” to the financial statements contained in this report to the extent stated therein, none of the investigations, claims and lawsuits in which we are involved is expected to have a material adverse effect on our consolidated financial position, results of operations, cash flows or our ability to conduct business. See Note ~~14, “Commitments~~15, Commitments and Contingencies,” to the financial statements contained in this report for a discussion of certain matters to which we are a party. The information set forth in such note is incorporated by reference into this Item 1. From time to time, we establish reserves for litigation when we consider it probable that a loss will occur.

Item 1A. Risk Factors
We operate in a changing environment that involves numerous known and unknown risks and uncertainties that could materially adversely affect our operations. The risks described below highlight some of the factors that have affected, and in the future could affect our operations. Additional risks we do not yet know of or that we currently think are immaterial may also affect our business operations. If any of the events or circumstances described in the following risks actually occurs, our business, financial condition or results of operations could be materially adversely affected.
We have not completed our accounting for the tax effects of the United States Tax Cuts and Jobs Act legislation and the final impact of this new tax legislation on our reported results may differ materially from our current estimates.

~~During the first quarter of 2018, President Trump signed the~~ ~~Tax Cuts and Jobs Act~~ legislation into law (Tax Act). We have not completed our accounting for the tax effects of the Tax Act. We have made a reasonable estimate of the effects on our existing deferred tax balances and the one-time transition tax but we have not made any reasonable estimate of the impact on our indefinite reinvestment of earnings of some foreign subsidiaries. The final impact of the Tax Act on our reported results in fiscal year 2018 and beyond may differ from the estimates provided in this periodic report, possibly materially, due to, among other things, changes in interpretations and assumptions we have made, future guidance that may be issued, and other actions we may take as a result of the Tax Act that are different from that presently contemplated.
Demand for our services is cyclical and may be vulnerable to sudden economic downturns and reductions in government and private industry spending. If economic conditions remain uncertain and/or weaken, our revenue and profitability could be adversely affected.
Demand for our services is cyclical and may be vulnerable to sudden economic downturns and reductions in government and private industry spending that result in clients delaying, curtailing or canceling proposed and existing projects. For example, commodity price volatility has previously impacted our oil and gas business and business regions whose economies are substantially dependent on commodities prices such as the Middle East and has also impacted North American oil and gas clients’ investment decisions. In addition, our clients may find it more difficult to raise capital in the future to fund their projects due to uncertainty in the municipal and general credit markets.
Where economies are weakening, our clients may demand more favorable pricing or other terms while their ability to pay our invoices or to pay them in a timely manner may be adversely affected. Our government clients may face budget deficits that prohibit them from funding proposed and existing projects. If economic conditions remain uncertain and/or weaken and/or government spending is reduced, our revenue and profitability could be adversely affected.
We depend on long-term government contracts, some of which are only funded on an annual basis. If appropriations for funding are not made in subsequent years of a multiple-year contract, we may not be able to realize all of our anticipated revenue and profits from that project.
A substantial majority of our revenue is derived from contracts with agencies and departments of national, state and local governments. During fiscal 2017 and 2016, approximately 48% and 47%, respectively, of our revenue was derived from contracts with government entities.
Most government contracts are subject to the government’s budgetary approval process. Legislatures typically appropriate funds for a given program on a year-by-year basis, even though contract performance may take more than one year. In addition, public-supported financing such as state and local municipal bonds may be only partially raised to support existing infrastructure projects. As a result, at the beginning of a program, the related contract is only partially funded, and additional funding is normally committed only as appropriations are made in each fiscal year. These appropriations, and the timing of payment of appropriated amounts, may be influenced by, among other things, the state of the economy, competing priorities for appropriation, changes in administration or control of legislatures and the timing and amount of tax receipts and the overall level of government expenditures. Similarly, the impact of an economic downturn on state and local governments may make it more difficult for them to fund infrastructure projects. If appropriations are not made in subsequent years on our government contracts, then we will not realize all of our potential revenue and profit from that contract.
~~If we are unable to win or renew government contracts during regulated procurement processes, our operations and financial results would be harmed.~~
Government contracts are awarded through a regulated procurement process. The federal government has awarded multi-year contracts with pre-established terms and conditions, such as indefinite delivery contracts, that generally require those contractors that have previously been awarded the indefinite delivery contract to engage in an additional competitive bidding process before a task order is issued. In addition, the federal government has also awarded federal contracts based on a low-price, technically acceptable criteria emphasizing price over qualitative factors, such as past performance. As a result of these competitive pricing pressures, our profit margins on future federal contracts may be reduced and may require us to make sustained efforts to reduce costs in order to realize revenues and profits under government contracts. If we are not successful in reducing the amount of costs we incur, our profitability on government contracts will be negatively impacted. In addition, we may not be awarded government contracts because of existing government policies designed to protect small businesses and under-represented minority contractors. Our inability to win or renew government contracts during regulated procurement processes could harm our operations and reduce our profits and revenues.
~~Governmental agencies may modify, curtail or terminate our contracts at any time prior to their completion and, if we do not replace them, we may suffer a decline in revenue.~~
Most government contracts may be modified, curtailed or terminated by the government either at its discretion or upon the default of the contractor. If the government terminates a contract at its discretion, then we typically are able to recover only costs incurred or committed, settlement expenses and profit on work completed prior to termination, which could prevent us from recognizing all of our potential revenue and profits from that contract. In addition, for certain assignments, the U.S. government may attempt to “insource” the services to government employees rather than outsource to a contractor. If a government terminates a contract due to our default, we could be liable for excess costs incurred by the government in obtaining services from another source.
Our contracts with governmental agencies are subject to audit, which could result in adjustments to reimbursable contract costs or, if we are charged with wrongdoing, possible temporary or permanent suspension from participating in government programs.
Our books and records are subject to audit by the various governmental agencies we serve and their representatives. These audits can result in adjustments to the amount of contract costs we believe are reimbursable by the agencies and the amount of our overhead costs allocated to the agencies. If such matters are not resolved in our favor, they could have a material adverse effect on our business. In addition, if one of our subsidiaries is charged with wrongdoing as a result of an audit, that subsidiary, and possibly our company as a whole, could be temporarily suspended or could be prohibited from bidding on and receiving future government contracts for a period of time. Furthermore, as a government contractor, we are subject to an increased risk of investigations, criminal prosecution, civil fraud actions, whistleblower lawsuits and other legal actions and liabilities to which purely private sector companies are not, the results of which could materially adversely impact our business. For example, a qui tam lawsuit related to our affiliate, URS Energy and Construction, was unsealed in 2016. Qui tam lawsuits typically allege that we have made false statements or certifications in connection with claims for payment, or improperly retained overpayments, from the government. These suits may remain under seal (and hence, be unknown to us) for some time while the government decides whether to intervene on behalf of the qui tam plaintiff.
~~Our substantial leverage and significant debt service obligations could adversely affect our financial condition and our ability to fulfill our obligations and operate our business.~~
We had approximately $4.0 billion of indebtedness (excluding intercompany indebtedness) outstanding as of December 31, 2017, of which $1.1 billion was secured obligations (exclusive of $54.8 million of outstanding undrawn letters of credit) and we have an additional $915.2 million of availability under our Credit Agreement (after giving effect to outstanding letters of credit), all of which would be secured debt, if drawn. Our financial performance could be adversely affected by our substantial leverage. We may also incur significant additional indebtedness in the future, subject to certain conditions.
~~This high level of indebtedness could have important negative consequences to us, including, but not limited to:~~
·                  ~~we may have difficulty satisfying our obligations with respect to outstanding debt obligations;~~
·                  ~~we may have difficulty obtaining financing in the future for working capital, acquisitions, capital expenditures or other purposes;~~
·                  we may need to use all, or a substantial portion, of our available excess cash flow to pay interest and principal on our debt, which will reduce the amount of money available to finance our operations and other business activities, including, but not limited to, working capital requirements, acquisitions, capital expenditures or other general corporate or business activities;
·                  ~~our debt level increases our vulnerability to general economic downturns and adverse industry conditions;~~
·                  ~~our debt level could limit our flexibility in planning for, or reacting to, changes in our business and in our industry in general;~~
·                  ~~our substantial amount of debt and the amount we must pay to service our debt obligations could place us at a competitive disadvantage compared to our competitors that have less debt;~~
·                  ~~we may have increased borrowing costs;~~
·                  ~~our clients, surety providers or insurance carriers may react adversely to our significant debt level;~~
·                  we may have insufficient funds, and our debt level may also restrict us from raising the funds necessary, to retire certain of our debt instruments tendered to us upon maturity of our debt or the occurrence of a change of control, which would constitute an event of default under certain of our debt instruments; and
·                  our failure to comply with the financial and other restrictive covenants in our debt instruments which, among other things, require us to maintain specified financial ratios and limit our ability to incur debt and sell assets, could result in an event of default that, if not cured or waived, could have a material adverse effect on our business or prospects.
Our high level of indebtedness requires that we use a substantial portion of our cash flow from operations to pay principal of, and interest on, our indebtedness, which will reduce the availability of cash to fund working capital requirements, future acquisitions, capital expenditures or other general corporate or business activities.
In addition, a portion of our indebtedness bears interest at variable rates, including borrowings under our Credit Agreement. If market interest rates increase, debt service on our variable-rate debt will rise, which could adversely affect our cash flow, results of operations and financial position. Although we may employ hedging strategies such that a portion of the aggregate principal amount of our term loans carries a fixed rate of interest, any hedging arrangement put in place may not offer complete protection from this risk. Additionally, the remaining portion of borrowings under our Credit Agreement that is not hedged will be subject to changes in interest rates.
~~The Budget Control Act of 2011 could significantly reduce U.S. government spending for the services we provide.~~
Under the Budget Control Act of 2011, an automatic sequestration process, or across-the-board budget cuts (half of which were defense-related), was triggered when the Joint Select Committee on Deficit Reduction, a committee of twelve members of Congress, failed to agree on a deficit reduction plan for the U.S. federal budget. Although the Bipartisan Budget Act of 2013 provides some sequester relief until the end of 2018, absent additional legislative or other remedial action, the sequestration requires reduced U.S. federal government spending from fiscal 2018 through fiscal 2025. A significant reduction in federal government spending or a change in budgetary priorities could reduce demand for our services, cancel or delay federal projects, and result in the closure of federal facilities and significant personnel reductions, which could have a material adverse effect on our results of operations and financial condition.
~~Our operations worldwide expose us to legal, political and economic risks in different countries as well as currency exchange rate fluctuations that could harm our business and financial results.~~
~~During fiscal 2017, revenue attributable to our services provided outside of the United States to non-U.S. clients was approximately 28% of our total revenue.~~ There ~~are risks inherent in doing business internationally, including:~~
·                  ~~imposition of governmental controls and changes in laws, regulations or policies;~~
·                  ~~political and economic instability, such as in the Middle East and Africa;~~
·                  ~~civil unrest, acts of terrorism, force majeure, war, or other armed conflict;~~
·                  ~~changes in U.S. and other national government trade policies affecting the markets for our services;~~
·                  ~~changes in regulatory practices, tariffs and taxes;~~
·                  ~~potential non-compliance with a wide variety of laws and regulations, including anti-corruption, export control and anti-boycott laws and similar non-U.S. laws and regulations;~~
·                  ~~changes in labor conditions;~~
·                  ~~logistical and communication challenges; and~~
·                  ~~currency exchange rate fluctuations, devaluations and other conversion restrictions.~~
~~Any of these factors could have a material adverse effect on our business, results of operations or financial condition.~~
In addition, Saudi Arabia, the United Arab Emirates (UAE), Bahrain and Egypt have cut diplomatic ties and restricted business with Qatar by closing off access to that country with an air, sea and land traffic embargo. During the economic embargo, products cannot be shipped directly to Qatar from the UAE, Saudi Arabia or Bahrain and financial services may be limited. Our Qatarian business is a significant part of our Middle East operations with approximately one thousand employees. The economic embargo may make it difficult to complete ongoing Qatarian projects and could reduce future demand for our services.
~~We operate in many different jurisdictions and we could be adversely affected by violations of the U.S. Foreign Corrupt Practices Act and similar worldwide anti-corruption laws.~~
The U.S. Foreign Corrupt Practices Act (FCPA) and similar worldwide anti-corruption laws, including the U.K. Bribery Act of 2010, generally prohibit companies and their intermediaries from making improper payments to non-U.S. officials for the purpose of obtaining or retaining business. Our internal policies mandate compliance with these anti-corruption laws, including the requirements to maintain accurate information and internal controls which may fall within the purview of the FCPA, its books and records provisions or its anti-bribery provisions. We operate in many parts of the world that have experienced governmental corruption to some degree; and, in certain circumstances, strict compliance with anti-corruption laws may conflict with local customs and practices. Despite our training and compliance programs, we cannot assure that our internal control policies and procedures always will protect us from reckless or criminal acts committed by our employees or agents. Our continued expansion outside the U.S., including in developing countries, could increase the risk of such violations in the future. In addition, from time to time, government investigations of corruption in construction-related industries affect us and our peers. Violations of these laws, or allegations of such violations, could disrupt our business and result in a material adverse effect on our results of operations or financial condition.
~~We work in international locations where there are high security risks, which could result in harm to our employees and contractors or material costs to us.~~
Some of our services are performed in high-risk locations, such as the Middle East, Africa, and Southwest Asia, where the country or location is suffering from political, social or economic problems, or war or civil unrest. In those locations where we have employees or operations, we may incur material costs to maintain the safety of our personnel. Despite these precautions, the safety of our personnel in these locations may continue to be at risk. Acts of terrorism and threats of armed conflicts in or around various areas in which we operate could limit or disrupt markets and our operations, including disruptions resulting from the evacuation of personnel, cancellation of contracts, or the loss of key employees, contractors or assets.
Many of our project sites are inherently dangerous workplaces. Failure to maintain safe work sites and equipment could result in environmental disasters, employee deaths or injuries, reduced profitability, the loss of projects or clients and possible exposure to litigation.
Our project sites often put our employees and others in close proximity with mechanized equipment, moving vehicles, chemical and manufacturing processes, and highly regulated materials. On some project sites, we may be responsible for safety and, accordingly, we have an obligation to implement effective safety procedures. If we fail to implement these procedures or if the procedures we implement are ineffective, we may suffer the loss of or injury to our employees, as well as expose ourselves to possible litigation. As a result, our failure to maintain adequate safety standards and equipment could result in reduced profitability or the loss of projects or clients, and could have a material adverse impact on our business, financial condition, and results of operations.
~~Cyber security breaches of our systems and information technology could adversely impact our ability to operate.~~
We develop, install and maintain information technology systems for ourselves, as well as for customers. Client contracts for the performance of information technology services, as well as various privacy and securities laws, require us to manage and protect sensitive and confidential information, including federal and other government information, from disclosure. We also need to protect our own internal trade secrets and other business confidential information from disclosure. We face the threat to our computer systems of unauthorized access, computer hackers, computer viruses, malicious code, organized cyber-attacks and other security problems and system disruptions, including possible unauthorized access to our and our clients’ proprietary or classified information. We rely on industry-accepted security measures and technology to securely maintain all confidential and proprietary information on our information systems. We have devoted and will continue to devote significant resources to the security of our computer systems, but they may still be vulnerable to these threats. A user who circumvents security measures could misappropriate confidential or proprietary information, including information regarding us, our personnel and/or our clients, or cause interruptions or malfunctions in operations. As a result, we may be required to expend significant resources to protect against the threat of these system disruptions and security breaches or to alleviate problems caused by these disruptions and breaches. Any of these events could damage our reputation and have a material adverse effect on our business, financial condition, results of operations and cash flows.
~~An impairment charge of goodwill could have a material adverse impact on our financial condition and results of operations.~~
Because we have grown in part through acquisitions, goodwill and intangible assets-net represent a substantial portion of our assets. Under generally accepted accounting principles in the United States (GAAP), we are required to test goodwill carried in our Consolidated Balance Sheets for possible impairment on an annual basis based upon a fair value approach and whenever events occur that indicate impairment could exist. These events or circumstances could include a significant change in the business climate, including a significant sustained decline in a reporting unit’s market value, legal factors, operating performance indicators, ~~competition, sale or disposition of a significant portion of our business, a significant sustained decline in our market capitalization and other factors.~~
In addition, if we experience a decrease in our stock price and market capitalization over a sustained period, we would have to record an impairment charge in the future. The amount of any impairment could be significant and could have a material adverse impact on our financial condition and results of operations for the period in which the charge is taken.
~~Our business and operating results could be adversely affected by losses under fixed-price or guaranteed maximum price contracts.~~
Fixed-price contracts require us to either perform all work under the contract for a specified lump-sum or to perform an estimated number of units of work at an agreed price per unit, with the total payment determined by the actual number of units performed. In addition, we may enter guaranteed maximum price contracts where we guarantee a price or delivery date. At September 30, 2017, our contracted backlog was comprised of 42%, 30%, and 28% cost-reimbursable, guaranteed maximum price, and fixed-price contracts, respectively. Fixed-price contracts expose us to a number of risks not inherent in cost-plus and time and material price contracts, including underestimation of costs, ambiguities in specifications, unforeseen costs or difficulties, problems with new technologies, delays beyond our control, fluctuations in profit margins, failures of subcontractors to perform and economic or other changes that may occur during the contract period. In addition, our exposure to construction cost overruns may increase over time as we increase our construction services. Losses under fixed-price or guaranteed contracts could be substantial and adversely impact our results of operations.
~~Our failure to meet contractual schedule or performance requirements that we have guaranteed could adversely affect our operating results.~~
In certain circumstances, we can incur liquidated or other damages if we do not achieve project completion by a scheduled date. If we or an entity for which we have provided a guarantee subsequently fails to complete the project as scheduled and the matter cannot be satisfactorily resolved with the client, we may be responsible for cost impacts to the client resulting from any delay or the cost to complete the project. Our costs generally increase from schedule delays and/or could exceed our projections for a particular project. In addition, project performance can be affected by a number of factors beyond our control, including unavoidable delays from governmental inaction, public opposition, inability to obtain financing, weather conditions, unavailability of vendor materials, changes in the project scope of services requested by our clients, industrial accidents, environmental hazards, labor disruptions and other factors. Material performance problems for existing and future contracts could cause actual results of operations to differ from those anticipated by us and also could cause us to suffer damage to our reputation within our industry and client base.
~~We may not be able to maintain adequate surety and financial capacity necessary for us to successfully bid on and win contracts.~~
In line with industry practice, we are often required to provide surety bonds, standby letters of credit or corporate guarantees to our clients that indemnify the customer should our affiliate fail to perform its obligations under the terms of a contract. As of December 31, 2017 and September 30, 2017, we were contingently liable for $5.7 billion and $5.7 billion, respectively, in issued surety bonds primarily to support project execution. A surety may issue a performance or payment bond to guarantee to the client that our affiliate will perform under the terms of a contract. If our affiliate fails to perform under the terms of the contract, then the client may demand that the surety provide the contracted services under the performance or payment bond. In addition, we would typically have obligations to indemnify the surety for any loss incurred in connection with the bond. If a surety bond or a letter of credit is required for a particular project and we are unable to obtain an appropriate surety bond or letter of credit, we may not be able to pursue that project which in turn could have a material adverse impact on our business, financial condition, results of operations, and cash flows.
~~We conduct a portion of our operations through joint venture entities, over which we may have limited control.~~
Approximately 13% of our fiscal 2017 revenue was derived from our operations through joint ventures or similar partnership arrangements, where control may be shared with unaffiliated third parties. As with most joint venture arrangements, differences in views among the joint venture participants may result in delayed decisions or disputes. We also cannot control the actions of our joint venture partners; and we typically have joint and several liability with our joint venture partners under the applicable contracts for joint venture projects. These factors could potentially adversely impact the business and operations of a joint venture and, in turn, our business and operations.
Operating through joint ventures in which we are minority holders results in us having limited control over many decisions made with respect to projects and internal controls relating to projects. Sales of our services provided to our unconsolidated joint ventures were approximately 2% of our fiscal 2017 revenue. We generally do not have control of these unconsolidated joint ventures. These joint ventures may not be subject to the same requirements regarding internal controls and internal control over financial reporting that we follow. As a result, internal control problems may arise with respect to these joint ventures, which could have a ~~material adverse effect on our financial condition and results of operations and could also affect our reputation in the industries we serve.~~
~~We participate in certain joint ventures where we provide guarantees and may be adversely impacted by the failure of the joint venture or its participants to fulfill their obligations.~~
We have investments in and commitments to certain joint ventures with unrelated parties, including in connection with construction services, government services, and the investment activities of ACAP. Real estate and infrastructure joint ventures are inherently risky and may result in future losses since real estate markets are impacted by economic trends and government policies that we do not control. These joint ventures from time to time may borrow money to help finance their activities and in certain circumstances, we are required to provide guarantees of certain obligations of our affiliated entities. In addition, in connection with the investment activities of ACAP, the Company provides guarantees of certain obligations, including guarantees for completion of projects, repayment of debt, environmental indemnity obligations and other lender required guarantees. If these entities are not able to honor their obligations under the guarantees, we may be required to expend additional resources or suffer losses, which could be significant.
~~Systems and information technology interruption and unexpected data or vendor loss could adversely impact our ability to operate.~~
We rely heavily on computer, information and communications technology and related systems to properly operate. From time to time, we experience occasional system interruptions and delays. If we are unable to effectively upgrade our systems and network infrastructure and take other steps to protect our systems, the operation of our systems could be interrupted or delayed. Our computer and communications systems and operations could be damaged or interrupted by natural disasters, telecommunications failures, acts of war or terrorism and similar events or disruptions. Any of these or other events could cause system interruption, delays and loss of critical data, or delay or prevent operations, and adversely affect our operating results.
We also rely in part on third-party software and information technology vendors to run our critical accounting, project management and financial information systems. We depend on our software and information technology vendors to provide long-term software and hardware support for our information systems. Our software and information technology vendors may decide to discontinue further development, integration or long-term software and hardware support for our information systems, in which case we may need to abandon one or more of our current information systems and migrate some or all of our accounting, project management and financial information to other systems, thus increasing our operational expense, as well as disrupting the management of our business operations.
Misconduct by our employees, partners or consultants or our failure to comply with laws or regulations applicable to our business could cause us to lose customers or lose our ability to contract with government agencies.
As a government contractor, misconduct, fraud or other improper activities caused by our employees’, partners’ or consultants’ failure to comply with laws or regulations could have a significant negative impact on our business and reputation. Such misconduct could include the failure to comply with procurement regulations, environmental regulations, regulations regarding the protection of sensitive government information, legislation regarding the pricing of labor and other costs in government contracts, regulations on lobbying or similar activities, and anti-corruption, anti-competition, export control and other applicable laws or regulations. Our failure to comply with applicable laws or regulations, misconduct by any of our employees or consultants or our failure to make timely and accurate certifications to government agencies regarding misconduct or potential misconduct could subject us to fines and penalties, loss of government granted eligibility, cancellation of contracts and suspension or debarment from contracting with government agencies, any of which may adversely affect our business.
We may be required to contribute additional cash to meet our significant underfunded benefit obligations associated with pension benefit plans we manage or multiemployer pension plans in which we participate.
We have defined benefit pension plans for employees in the United States, United Kingdom, Canada, Australia, and Ireland. At September 30, 2017, our defined benefit pension plans had an aggregate deficit (the excess of projected benefit obligations over the fair value of plan assets) of approximately $553.0 million. In the future, our pension deficits may increase or decrease depending on changes in the levels of interest rates, pension plan performance and other factors that may require us to make additional cash contributions to our pension plans and recognize further increases in our net pension cost to satisfy our funding requirements. If we are forced or elect to make up all or a portion of the deficit for unfunded benefit plans, our results of operations could be materially and adversely affected.
A multiemployer pension plan is typically established under a collective bargaining agreement with a union to cover the union-represented workers of various unrelated companies. Our collective bargaining agreements with unions will require us to contribute to various multiemployer pension plans; however, we do not control or manage these plans. For the year ended September 30, 2017, we contributed $48.8 million to multiemployer pension plans. Under the Employee Retirement Income Security Act, an employer who contributes to a multiemployer pension plan, absent an applicable exemption, may also be liable, upon termination or withdrawal from the plan, for its proportionate share of the multiemployer pension plan’s unfunded vested benefit. If we terminate or withdraw from a multiemployer plan, absent an applicable exemption (such as for some plans in the building and construction industry), we could be required to contribute a significant amount of cash to fund the multiemployer plan’s unfunded vested benefit, which could materially and adversely affect our financial results; however, since we do not control the multiemployer plans, we are unable to estimate any potential contributions that could be required.
~~New legal requirements could adversely affect our operating results.~~
Our business and results of operations could be adversely affected by the passage of new climate change, defense, environmental, infrastructure and other laws, policies and regulations. Growing concerns about climate change and greenhouse gases, such as those adopted under the United Nations COP-21 Paris Agreement or the EPA Clean Power Plan, may result in the imposition of additional environmental regulations for our clients’ fossil fuel projects. For example, legislation, international protocols, regulation or other restrictions on emissions regulations could increase the costs of projects for our clients or, in some cases, prevent a project from going forward, thereby potentially reducing the need for our services. In addition, relaxation or repeal of laws and regulations, or changes in governmental policies regarding environmental, defense, infrastructure or other industries we serve could result in a decline in demand for our services, which could in turn negatively impact our revenues. We cannot predict when or whether any of these various proposals may be enacted or what their effect will be on us or on our customers.
~~We may be subject to substantial liabilities under environmental laws and regulations.~~
Our services are subject to numerous environmental protection laws and regulations that are complex and stringent. Our business involves in part the planning, design, program management, construction and construction management, and operations and maintenance at various sites, including but not limited to, pollution control systems, nuclear facilities, hazardous waste and Superfund sites, contract mining sites, hydrocarbon production, distribution and transport sites, military bases and other infrastructure-related facilities. We also regularly perform work, including oil field and pipeline construction services in and around sensitive environmental areas, such as rivers, lakes and wetlands. In addition, we have contracts with U.S. federal government entities to destroy hazardous materials, including chemical agents and weapons stockpiles, as well as to decontaminate and decommission nuclear facilities. These activities may require us to manage, handle, remove, treat, transport and dispose of toxic or hazardous substances. We also own and operate several properties in the U.S. and Canada that have been used for the storage and maintenance of equipment and upon which hydrocarbons or other wastes may have been disposed or released. Past business practices at companies that we have acquired may also expose us to future unknown environmental liabilities.
Significant fines, penalties and other sanctions may be imposed for non-compliance with environmental laws and regulations, and some environmental laws provide for joint and several strict liabilities for remediation of releases of hazardous substances, rendering a person liable for environmental damage, without regard to negligence or fault on the part of such person. These laws and regulations may expose us to liability arising out of the conduct of operations or conditions caused by others, or for our acts that were in compliance with all applicable laws at the time these acts were performed. For example, there are a number of governmental laws that strictly regulate the handling, removal, treatment, transportation and disposal of toxic and hazardous substances, such as Comprehensive Environmental Response Compensation and Liability Act of 1980, and comparable state laws, that impose strict, joint and several liabilities for the entire cost of cleanup, without regard to whether a company knew of or caused the release of hazardous substances. In addition, some environmental regulations can impose liability for the entire cleanup upon owners, operators, generators, transporters and other persons arranging for the treatment or disposal of such hazardous substances related to contaminated facilities or project sites. Other federal environmental, health and safety laws affecting us include, but are not limited to, the Resource Conservation and Recovery Act, the National Environmental Policy Act, the Clean Air Act, the Clean Air Mercury Rule, the Occupational Safety and Health Act, the Toxic Substances Control Act and the Superfund Amendments and Reauthorization Act and the Energy Reorganization Act of 1974, as well as other comparable national and state laws. Liabilities related to environmental contamination or human exposure to hazardous substances, or a failure to comply with applicable regulations could result in substantial costs to us, including cleanup costs, fines and civil or criminal sanctions, third-party claims for property damage or personal injury or cessation of remediation activities. Our continuing work in the areas governed by these laws and regulations exposes usno material changes to the risk ~~of substantial liability.~~factors as disclosed in Part I, Item 1A, Risk Factors in our most recent Annual Report on Form 10-K.

~~Demand for our oil and gas services fluctuates.~~
Demand for our oil and natural gas services fluctuates, and we depend on our customers’ willingness to make future expenditures to explore for, develop and produce oil and natural gas in the U.S. and Canada. For example, the past volatility in the price of oil and natural gas has significantly decreased existing and future projects. Our customers’ willingness to undertake future projects depends largely upon prevailing industry conditions that are influenced by numerous factors over which we have no control, such as the anticipated future prices for natural gas and crude oil.
~~Failure to successfully integrate acquisitions could harm our operating results.~~
We have grown in part as a result of acquisitions. For example, in July 2017 we acquired Shimmick Construction Company, Inc. We cannot assure that suitable acquisitions or investment opportunities will continue to be identified or that any of these transactions can be consummated on favorable terms or at all. Any future acquisitions will involve various inherent risks, such as:
·                  ~~our ability to accurately assess the value, strengths, weaknesses, liabilities and potential profitability of acquisition candidates;~~
·                  ~~the potential loss of key personnel of an acquired business;~~
·                  ~~increased burdens on our staff and on our administrative, internal control and operating systems, which may hinder our legal and regulatory compliance activities;~~
·                  ~~liabilities related to pre-acquisition activities of an acquired business and the burdens on our staff and resources to comply with, conduct or resolve investigations into such activities;~~
·                  ~~post-acquisition integration challenges; and~~
·                  ~~post-acquisition deterioration in an acquired business that could result in lower or negative earnings contribution and/or goodwill impairment charges.~~
Furthermore, during the acquisition process and thereafter, our management may need to assume significant transaction-related responsibilities, which may cause them to divert their attention from our existing operations. If our management is unable to successfully integrate acquired companies, our operating results could be harmed. In addition, even if the operations of an acquisition are integrated successfully, we may not realize the full benefits of the acquisition, including the synergies, cost savings, or sales or growth opportunities that we expect. These benefits may not be achieved within the anticipated time frame, or at all.
Although we expect to realize certain benefits as a result of our acquisitions, there is the possibility that we may be unable to successfully integrate our businesses in order to realize the anticipated benefits of the acquisitions or do so within the intended timeframe.
We have been, and will continue to be, required to devote significant management attention and resources to integrating the business practices and operations of the acquired companies with our business. Difficulties we may encounter as part of the integration process include the following:
·                  ~~the consequences of a change in tax treatment, including the costs of integration and compliance and the possibility that the full benefits anticipated from the acquisition will not be realized;~~
·                  ~~any delay in the integration of management teams, strategies, operations, products and services;~~
·                  ~~diversion of the attention of each company’s management as a result of the acquisition;~~
·                  ~~differences in business backgrounds, corporate cultures and management philosophies that may delay successful integration;~~
·                  ~~the ability to retain key employees;~~
·                  ~~the ability to create and enforce uniform standards, controls, procedures, policies and information systems;~~
·                  the challenge of integrating complex systems, technology, networks and other assets into those of ours in a seamless manner that minimizes any adverse impact on customers, suppliers, employees and other constituencies;
·                  ~~potential unknown liabilities and unforeseen increased expenses or delays associated with the acquisition, including costs to integrate beyond current estimates;~~
·                  ~~the ability to deduct or claim certain tax attributes or benefits such as operating losses, business or foreign tax credits; and~~
·                  ~~the disruption of, or the loss of momentum in, each company’s ongoing businesses or inconsistencies in standards, controls, procedures and policies.~~
Any of these factors could adversely affect each company’s ability to maintain relationships with customers, suppliers, employees and other constituencies or our ability to achieve the anticipated benefits of the acquisition or could reduce each company’s earnings or otherwise adversely affect our business and financial results.
The agreements governing our debt contain a number of restrictive covenants which will limit our ability to finance future operations, acquisitions or capital needs or engage in other business activities that may be in our interest.
The Credit Agreement and the indentures governing our debt contain a number of significant covenants that impose operating and other restrictions on us and our subsidiaries. Such restrictions affect or will affect, and in many respects limit or prohibit, among other things, our ability and the ability of certain of our subsidiaries to:
·                  ~~incur additional indebtedness;~~
·                  ~~create liens;~~
·                  ~~pay dividends and make other distributions in respect of our equity securities;~~
·                  ~~redeem our equity securities;~~
·                  ~~distribute excess cash flow from foreign to domestic subsidiaries;~~
·                  ~~make certain investments or certain other restricted payments;~~
·                  ~~sell certain kinds of assets;~~
·                  ~~enter into certain types of transactions with affiliates; and~~
·                  ~~effect mergers or consolidations.~~
In addition, our Credit Agreement also requires us to comply with a consolidated interest coverage ratio and consolidated leverage ratio. Our ability to comply with these ratios may be affected by events beyond our control.
These restrictions could limit our ability to plan for or react to market or economic conditions or meet capital needs or otherwise restrict our activities or business plans, and could adversely affect our ability to finance our operations, acquisitions, investments or strategic alliances or other capital needs or to engage in other business activities that would be in our interest.
A breach of any of these covenants or our inability to comply with the required financial ratios could result in a default under all or certain of our debt instruments. If an event of default occurs, our creditors could elect to:
·                  ~~declare all borrowings outstanding, together with accrued and unpaid interest, to be immediately due and payable;~~
·                  ~~require us to apply all of our available cash to repay the borrowings; or~~
·                  ~~prevent us from making debt service payments on certain of our borrowings.~~
If we were unable to repay or otherwise refinance these borrowings when due, the applicable creditors could sell the collateral securing certain of our debt instruments, which constitutes substantially all of our domestic and foreign, wholly owned subsidiaries’ assets.
~~Our variable rate indebtedness subjects us to interest rate risk, which could cause our debt service obligations to increase significantly.~~
Borrowings under our Credit Agreement are at variable rates of interest and expose us to interest rate risk. If interest rates increase, our debt service obligations on the variable rate indebtedness will increase even though the amount borrowed remains the same, and our net income and cash flows, including cash available for servicing our indebtedness, will correspondingly decrease. A 1.00% increase in such interest rates would increase total interest expense under our Credit Agreement for the three months ended December 31, 2017 by $2.3 million, including the effect of our interest rate swaps. We may, from time to time, enter into additional interest rate swaps that involve the exchange of floating for fixed rate interest payments in order to reduce interest rate volatility. However, we may not maintain interest rate swaps with respect to all of our variable rate indebtedness, and any swaps we enter into may not fully mitigate our interest rate risk and could be subject to credit risk themselves.
~~If we are unable to continue to access credit on acceptable terms, our business may be adversely affected.~~
The changing nature of the global credit markets could make it more difficult for us to access funds, refinance our existing indebtedness, enter into agreements for uncommitted bond facilities and new indebtedness, replace our existing revolving and term credit agreements or obtain funding through the issuance of our securities. We use credit facilities to support our working capital and acquisition needs. There is no guarantee that we can continue to renew our credit facility on terms as favorable as those in our existing credit facility and, if we are unable to do so, our costs of borrowing and our business may be adversely affected.
Our ability to grow and to compete in our industry will be harmed if we do not retain the continued services of our key technical and management personnel and identify, hire, and retain additional qualified personnel.
There is strong competition for qualified technical and management personnel in the sectors in which we compete. We may not be able to continue to attract and retain qualified technical and management personnel, such as engineers, architects and project managers, who are necessary for the development of our business or to replace qualified personnel in the timeframe demanded by our clients. Our planned growth may place increased demands on our resources and will likely require the addition of technical and management personnel and the development of additional expertise by existing personnel. In addition, we may occasionally enter into contracts before we have hired or retained appropriate staffing for that project. Also, some of our personnel hold government granted eligibility that may be required to obtain certain government projects. If we were to lose some or all of these personnel, they would be difficult to replace. In addition, we rely heavily upon the expertise and leadership of our senior management. If we are unable to retain executives and other key personnel, the roles and responsibilities of those employees will need to be filled, which may require that we devote time and resources to identify, hire and integrate new employees. Loss of the services of, or failure to recruit, key technical and management personnel could limit our ability to successfully complete existing projects and compete for new projects.
Our revenue and growth prospects may be harmed if we or our employees are unable to obtain government granted eligibility or other qualifications we and they need to perform services for our customers.
A number of government programs require contractors to have certain kinds of government granted eligibility, such as security clearance credentials. Depending on the project, eligibility can be difficult and time-consuming to obtain. If we or our employees are unable to obtain or retain the necessary eligibility, including local ownership requirements, we may not be able to win new business, and our existing customers could terminate their contracts with us or decide not to renew them. To the extent we cannot obtain or maintain the required security clearances for our employees working on a particular contract, we may not derive the revenue or profit anticipated from such contract.
~~Our industry is highly competitive and we may be unable to compete effectively, which could result in reduced revenue, profitability and market share.~~
We are engaged in a highly competitive business. The markets we serve are highly fragmented and we compete with a large number of regional, national and international companies. Certain of these competitors have greater financial and other resources than we do. Others are smaller and more specialized, and concentrate their resources in particular areas of expertise. The extent of our competition varies according to the particular markets and geographic area. In addition, the technical and professional aspects of some of our services generally do not require large upfront capital expenditures and provide limited barriers against new competitors.
The degree and type of competition we face is also influenced by the type and scope of a particular project. Our clients make competitive determinations based upon qualifications, experience, performance, reputation, technology, customer relationships and ability to provide the relevant services in a timely, safe and cost-efficient manner. Increased competition may result in our inability to win bids for future projects and loss of revenue, profitability and market share.
If we extend a significant portion of our credit to clients in a specific geographic area or industry, we may experience disproportionately high levels of collection risk and nonpayment if those clients are adversely affected by factors particular to their geographic area or industry.
Our clients include public and private entities that have been, and may continue to be, negatively impacted by the changing landscape in the global economy. While outside of the U.S. federal government, no one client accounted for over 10% of our revenue for fiscal 2017, we face collection risk as a normal part of our business where we perform services and subsequently bill our clients for such services, or when we make equity investments in majority or minority controlled large-scale client projects and other long-term capital projects before the project completes operational status or completes its project financing. In the event that we have concentrated credit risk from clients in a specific geographic area or industry, continuing negative trends or a worsening in the financial condition of that specific geographic area or industry could make us susceptible to disproportionately high levels of default by those clients. Such defaults could materially adversely impact our revenues and our results of operations.
~~Our services expose us to significant risks of liability and our insurance policies may not provide adequate coverage.~~
Our services involve significant risks of professional and other liabilities that may substantially exceed the fees that we derive from our services. In addition, we sometimes contractually assume liability to clients on projects under indemnification agreements. We cannot predict the magnitude of potential liabilities from the operation of our business. In addition, in the ordinary course of our business, we frequently make professional judgments and recommendations about environmental and engineering conditions of project sites for our clients. We may be deemed to be responsible for these judgments and recommendations if such judgments and recommendations are later determined to be inaccurate. Any unfavorable legal ruling against us could result in substantial monetary damages or even criminal violations.
Our professional liability policies cover only claims made during the term of the policy. Additionally, our insurance policies may not protect us against potential liability due to various exclusions in the policies and self-insured retention amounts. Partially or completely uninsured claims, if successful and of significant magnitude, could have a material adverse effect on our business.
~~Unavailability or cancellation of third-party insurance coverage would increase our overall risk exposure as well as disrupt the management of our business operations.~~
We maintain insurance coverage from third-party insurers as part of our overall risk management strategy and because some of our contracts require us to maintain specific insurance coverage limits. If any of our third-party insurers fail, suddenly cancel our coverage or otherwise are unable to provide us with adequate insurance coverage, then our overall risk exposure and our operational expenses would increase and the management of our business operations would be disrupted. In addition, there can be no assurance that any of our existing insurance coverage will be renewable upon the expiration of the coverage period or that future coverage will be affordable at the required limits.
~~If we do not have adequate indemnification for our services related to nuclear materials, it could adversely affect our business and financial condition.~~
We provide services to the Department of Energy and the nuclear energy industry in the ongoing maintenance and modification, as well as the decontamination and decommissioning, of nuclear energy plants. Indemnification provisions under the Price-Anderson Act available to nuclear energy plant operators and Department of Energy contractors do not apply to all liabilities that we might incur while performing services as a radioactive materials cleanup contractor for the Department of Energy and the nuclear energy industry. If the Price-Anderson Act’s indemnification protection does not apply to our services or if our exposure occurs outside the U.S., our business and financial condition could be adversely affected either by our client’s refusal to retain us, by our inability to obtain commercially adequate insurance and indemnification, or by potentially significant monetary damages we may incur.
We also provide services to the United Kingdom’s Nuclear Decommissioning Authority (NDA) relating to clean-up and decommissioning of the United Kingdom’s public sector nuclear sites. Indemnification provisions under the Nuclear Installations Act 1965 available to nuclear site licensees, the Atomic Energy Authority, and the Crown, and contractual indemnification from the NDA do not apply to all liabilities that we might incur while performing services as a clean-up and decommissioning contractor for the NDA. If the Nuclear Installations Act 1965 and contractual indemnification protection does not apply to our services or if our exposure occurs outside the United Kingdom, our business and financial condition could be adversely affected either by our client’s refusal to retain us, by our inability to obtain commercially adequate insurance and indemnification, or by potentially significant monetary damages we may incur.
~~Our backlog of uncompleted projects under contract is subject to unexpected adjustments and cancellations and, thus may not accurately reflect future revenue and profits.~~
At December 31, 2017, our contracted backlog was approximately $23.4 billion, our awarded backlog was approximately $22.0 billion and our unconsolidated joint venture backlog was approximately $3.4 billion for a total backlog of $48.8 billion. Our contracted backlog includes revenue we expect to record in the future from signed contracts and, in the case of a public sector client, where the project has been funded. Our awarded backlog includes revenue we expect to record in the future where we have been awarded the work, but the contractual agreement has not yet been signed. We cannot guarantee that future revenue will be realized from either category of backlog or, if realized, will result in profits. Many projects may remain in our backlog for an extended period of time because of the size or long-term nature of the contract. In addition, from time to time, projects are delayed, scaled back or canceled. These types of backlog reductions adversely affect the revenue and profits that we ultimately receive from contracts reflected in our backlog.
We have submitted claims to clients for work we performed beyond the initial scope of some of our contracts. If these clients do not approve these claims, our results of operations could be adversely impacted.
We typically have pending claims submitted under some of our contracts for payment of work performed beyond the initial contractual requirements for which we have already recorded revenue. In general, we cannot guarantee that such claims will be approved in whole, in part, or at all. Often, these claims can be the subject of lengthy arbitration or litigation proceedings, and it is difficult to accurately predict when these claims will be fully resolved. When these types of events occur and unresolved claims are pending, we have used working capital in projects to cover cost overruns pending the resolution of the relevant claims. If these claims are not approved, our revenue may be reduced in future periods.
In conducting our business, we depend on other contractors, subcontractors and equipment and material providers. If these parties fail to satisfy their obligations to us or other parties or if we are unable to maintain these relationships, our revenue, profitability and growth prospects could be adversely affected.
We depend on contractors, subcontractors and equipment and material providers in conducting our business. There is a risk that we may have disputes with our subcontractors arising from, among other things, the quality and timeliness of work performed by the subcontractor, customer concerns about the subcontractor, or our failure to extend existing task orders or issue new task orders under a subcontract. Also, to the extent that we cannot acquire equipment and materials at reasonable costs, or if the amount we are required to pay exceeds our estimates, our ability to complete a project in a timely fashion or at a profit may be impaired. In addition, if any of our subcontractors fail to deliver on a timely basis the agreed-upon supplies and/or perform the agreed-upon services, our ability to fulfill our obligations as a prime contractor may be jeopardized; we could be held responsible for such failures and/or we may be required to purchase the supplies or services from another source at a higher price. This may reduce the profit to be realized or result in a loss on a project for which the supplies or services are needed.
We also rely on relationships with other contractors when we act as their subcontractor or joint venture partner. Our future revenue and growth prospects could be adversely affected if other contractors eliminate or reduce their subcontracts or joint venture relationships with us, or if a government agency terminates or reduces these other contractors’ programs, does not award them new contracts or refuses to pay under a contract. In addition, due to “pay when paid” provisions that are common in subcontracts in certain countries, including the U.S., we could experience delays in receiving payment if the prime contractor experiences payment delays.
If clients use our reports or other work product without appropriate disclaimers or in a misleading or incomplete manner, or if our reports or other work product are not in compliance with professional standards and other regulations, our business could be adversely affected.
The reports and other work product we produce for clients sometimes include projections, forecasts and other forward-looking statements. Such information by its nature is subject to numerous risks and uncertainties, any of which could cause the information produced by us to ultimately prove inaccurate. While we include appropriate disclaimers in the reports that we prepare for our clients, once we produce such written work product, we do not always have the ability to control the manner in which our clients use such information. As a result, if our clients reproduce such information to solicit funds from investors for projects without appropriate disclaimers and the information proves to be incorrect, or if our clients reproduce such information for potential investors in a misleading or incomplete manner, our clients or such investors may threaten to or file suit against us for, among other things, securities law violations. For example, in August 2016, AECOM Australia and other parties entered into a settlement related to, among other things, alleged deficiencies in AECOM Australia’s traffic forecast. If we were found to be liable for any claims related to our client work product, our business could be adversely affected.
In addition, our reports and other work product may need to comply with professional standards, licensing requirements, securities regulations and other laws and rules governing the performance of professional services in the jurisdiction where the services are performed. We could be liable to third parties who use or rely upon our reports and other work product even if we are not contractually bound to those third parties. These events could in turn result in monetary damages and penalties.
~~Failure to adequately protect, maintain, or enforce our rights in our intellectual property may adversely limit our competitive position.~~
Our success depends, in part, upon our ability to protect our intellectual property. We rely on a combination of intellectual property policies and other contractual arrangements to protect much of our intellectual property where we do not believe that trademark, patent or copyright protection is appropriate or obtainable. Trade secrets are generally difficult to protect. Although our employees are subject to confidentiality obligations, this protection may be inadequate to deter or prevent misappropriation of our confidential information and/or the infringement of our patents and copyrights. Further, we may be unable to detect unauthorized use of our intellectual property or otherwise take appropriate steps to enforce our rights. Failure to adequately protect, maintain, or enforce our intellectual property rights may adversely limit our competitive position.
Negotiations with labor unions and possible work actions could divert management attention and disrupt operations. In addition, new collective bargaining agreements or amendments to agreements could increase our labor costs and operating expenses.
We regularly negotiate with labor unions and enter into collective bargaining agreements. The outcome of any future negotiations relating to union representation or collective bargaining agreements may not be favorable to us. We may reach agreements in collective bargaining that increase our operating expenses and lower our net income as a result of higher wages or benefit expenses. In addition, negotiations with unions could divert management attention and disrupt operations, which may adversely affect our results of operations. If we are unable to negotiate acceptable collective bargaining agreements, we may have to address the threat of union-initiated work actions, including strikes. Depending on the nature of the threat or the type and duration of any work action, these actions could disrupt our operations and adversely affect our operating results.
~~Our charter documents contain provisions that may delay, defer or prevent a change of control.~~
Provisions of our certificate of incorporation and bylaws could make it more difficult for a third party to acquire control of us, even if the change in control would be beneficial to stockholders. These provisions include the following:
·                  ~~ability of our Board of Directors to authorize the issuance of preferred stock in series without stockholder approval;~~
·                  ~~vesting of exclusive authority in our Board of Directors to determine the size of the board (subject to limited exceptions) and to fill vacancies;~~
·                  ~~advance notice requirements for stockholder proposals and nominations for election to our Board of Directors; and~~
·                  ~~prohibitions on our stockholders from acting by written consent.~~
~~Changes in tax laws could increase our worldwide tax rate and materially affect our results of operations.~~
Many international legislative and regulatory bodies have proposed and/or enacted legislation and begun investigations of the tax practices of multinational companies and, in the European Union (EU), the tax policies of certain EU member states. Since 2013, the European Commission (EC) has been investigating tax rulings granted by tax authorities in a number of EU member states with respect to specific multinational corporations to determine whether such rulings comply with EU rules on state aid, as well as more recent investigations of the tax regimes of certain EU member states. If the EC determines that a tax ruling or tax regime violates the state aid restrictions, the tax authorities of the affected EU member state may be required to collect back taxes for the period of time covered by the ruling. Due to the large scale of our U.S. and international business activities, many of these proposed and enacted changes to the taxation of our activities could increase our worldwide effective tax rate and harm results of operations. Tax changes, including limitations on the ability to defer U.S. taxation on earnings outside of the U.S., could increase our worldwide effective tax rate and harm results of operations.
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds

Stock Repurchase Program

On September 21, 2017, the Company’s Board of Directors announced a new capital allocation policy that authorized the repurchase of up to $1.0 billion in AECOM common ~~stock.~~stock (the “Program”). Stock repurchases can be made through open market purchases or other methods, including pursuant to a Rule 10b5-1 plan. ~~Since August 2011,~~On November 13, 2020, the ~~Company has purchased a total~~Board approved an increase in the Company’s repurchase authorization to $1.0 billion. A summary of ~~27.4 million shares at an average price of $24.10 per share,~~the repurchase activity for ~~a total cost of $660.1 million under a previous stock repurchase program. No stock repurchases were made under the new or the previous stock repurchase program in~~ the three months ended ~~December 31, 2017.~~June 30, 2021 is as follows:

Total Number of

Maximum

Shares Purchased

Approximate Dollar

Total Number

as Part of Publicly

Value that May Yet Be

of Shares

Average Price

Announced Plans

Purchased Under the
Period

Purchased

Paid Per Share

or Programs

Plans or Programs

April 1 - 30, 2021

754,198

$
66.32

754,198

699,961,000
May 1 - 31, 2021

348,219

64.60

348,219

677,465,000
June 1 - 30, 2021

1,348,840

63.43

1,348,840

591,911,000
Total

2,451,257

$
64.48

2,451,257

Table of Contents

Item 3. Defaults Upon Senior Securities

None.

Item 4. Mine Safety Disclosure

None.

Item 5. Other Information

~~The Company does not act as the owner~~None.

Table of any mines, but we may act as a mining operator as defined under the Federal Mine Safety and Health Act of 1977 where we may be a lessee of a mine, a person who operates, controls or supervises such mine, or an independent contractor performing services or construction of such mine. Information concerning mine safety violations or other regulatory matters required by Section 1503(a) of the Dodd-Frank Wall Street Reform and Consumer Protection Act and Item 104 of Regulation S-K is included in Exhibit 95.Contents

Item 6. Exhibits

The following documents are filed as Exhibits to the Report:

Incorporated by Reference

(Exchange Act Filings Located

at File No. 0-52423)

Exhibit

Filing

Filed
Numbers

Description

Form

Exhibit

Date

Herewith
3.1

Amended and Restated Certificate of Incorporation

Form 10-K

3.1

11/21/2011

3.2

Certificate of Amendment to Amended and Restated Certificate of Incorporation

Form S-4

3.2

8/1/2014

3.3

Certificate of Correction of Amended and Restated Certificate of Incorporation

Form 10-K

3.3

11/17/2014

3.4

Certificate of Amendment to the Certificate of Incorporation

Form 8-K

3.1

1/9/2015

3.5

Certificate of Amendment to the Certificate of Incorporation

Form 8-K

3.1

3/3/2017

3.6

Amended and Restated Bylaws of the Company

Form 8-K

3.2

11/20/2020

10.1

Amendment No. 10 to Credit Agreement (Incremental Term B Facility), dated as of April 13, 2021, by and among the Company, each guarantor party thereto, the lenders party thereto and Bank of America, N.A., as administrative agent

Form 8-K

10.1

4/13/2021

10.2

Amendment No. 11 to Credit Agreement (Incremental Term A Facility Increase), dated as of June 25, 2021, by and among the Company, each guarantor party thereto, the lenders party thereto and Bank of America, N.A., as administrative agent

Form 8-K

10.1

6/25/2021

31.1

Certification of the Company’s Chief Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002

X

31.2

Certification of the Company’s Chief Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002

X

32

Certification of the Company’s Chief Executive Officer and Chief Financial Officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002

X

101

The following financial statements from the Company’s Quarterly Report on Form 10-Q for the quarter ended June 30, 2021 were formatted in iXBRL (Inline eXtensible Business Reporting Language): (i) Consolidated Balance Sheets, (ii) Consolidated Statements of Operations, (iii) Consolidated Statements of Comprehensive Income (Loss), (iv) Consolidated Statements of Stockholders’ Equity, (v) Condensed Consolidated Statements of Cash Flows, and (vi) the Notes to Condensed Consolidated Financial Statements, tagged as blocks of text and including detailed tags.

X

104

The cover page from the Company’s Quarterly Report on Form 10-Q for the quarter ended June 30, 2021, formatted in Inline XBRL

X

Table of Contents

Incorporated by Reference
(Exchange Act Filings Located
at File No. 0-52423)

Exhibit

Filing

Filed
Numbers

Description

Form

Exhibit

Date

Herewith

3.1

Amended and Restated Certificate of Incorporation

Form 10-K

3.1

11/21/2011

3.2

Certificate of Amendment to Amended and Restated Certificate of Incorporation

Form S-4

3.2

8/1/2014

3.3

Certificate of Correction of Amended and Restated Certificate of Incorporation

Form 10-K

3.3

11/17/2014

3.4

Certificate of Amendment to the Certificate of Incorporation

Form 8-K

3.1

1/9/2015

3.5

Certificate of Amendment to the Certificate of Incorporation

Form 8-K

3.1

3/3/2017

3.6

Amended and Restated Bylaws of the Company

Form 8-K

3.2

11/16/2017

10.1#

AECOM Technology Corporation Change in Control Severance Policy for Key Executives — Revised Schedule A

X

31.1

Certification of the Company’s Chief Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002

X

31.2

Certification of the Company’s Chief Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002

X

32*

Certification of the Company’s Chief Executive Officer and Chief Financial Officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002

X

95

Mine Safety Disclosure

X

101.INS

XBRL Instance Document

X

101.SCH

XBRL Taxonomy Extension Schema Document

X

101.CAL

XBRL Taxonomy Extension Calculation Linkbase Document

X

101.LAB

XBRL Taxonomy Extension Label Linkbase Document

X

101.PRE

XBRL Taxonomy Extension Presentation Linkbase Document

X

101.DEF

XBRL Taxonomy Extension Definition Linkbase Document

X
~~# Management contract or compensatory plan or arrangement.~~
*Document has been furnished and not filed.
SIGNATURES
~~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.

AECOM

Date: ~~February 7, 2018~~August 11, 2021
By:
/S/ ~~W. TROY RUDD~~GAURAV KAPOOR

~~W. Troy Rudd~~Gaurav Kapoor

~~Executive Vice President and~~ Chief Financial Officer

54

	Three Months Ended December 31,
	2017			2016
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income	$	124,413		$	65,778
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization	62,835			66,916
Equity in earnings of unconsolidated joint ventures	(29,720		)	(21,471		)
Distribution of earnings from unconsolidated joint ventures	39,480			24,370
Non-cash stock compensation	16,540			21,337
Foreign currency translation	(16,018		)	(15,387		)
Other	(1,800		)	(3,077		)
Changes in operating assets and liabilities, net of effects of acquisitions:
Accounts receivable	(186,098		)	47,064
Prepaid expenses and other assets	(12,517		)	(14,728		)
Accounts payable	172,481			55,460
Accrued expenses and other current liabilities	(135,684		)	(144,301		)
Billings in excess of costs on uncompleted contracts	93,102			26,019
Other long-term liabilities	(21,291		)	(30,473		)
Income taxes payable	(53,295		)	—
Net cash provided by operating activities	52,428			77,507

CASH FLOWS FROM INVESTING ACTIVITIES:
Proceeds from purchase price adjustment to business acquisition	2,206			—
Cash acquired from consolidation of joint venture	7,630			—
Investment in unconsolidated joint ventures	(23,986		)	(18,372		)
Return of investment in unconsolidated joint ventures	5,030			239
Proceeds from sales of investments	161			300
Proceeds from disposal of property and equipment	10,967			2,557
Payments for capital expenditures	(29,510		)	(23,584		)
Net cash used in investing activities	(27,502		)	(38,860		)

CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from borrowings under credit agreements	1,276,451			1,634,781
Repayments of borrowings under credit agreements	(1,236,242		)	(1,607,380		)
Proceeds from issuance of common stock	9,530			9,875
Proceeds from exercise of stock options	2,715			2,067
Payments to repurchase common stock	(26,701		)	(17,494		)
Net distributions to noncontrolling interests	(16,795		)	(21,938		)
Other financing activities	(25,962		)	(26,280		)
Net cash used in financing activities	(17,004		)	(26,369		)

EFFECT OF EXCHANGE RATE CHANGES ON CASH	2,882			(6,706		)
NET INCREASE IN CASH AND CASH EQUIVALENTS	10,804			5,572
CASH AND CASH EQUIVALENTS AT BEGINNING OF PERIOD	802,362			692,145
CASH AND CASH EQUIVALENTS AT END OF PERIOD	$	813,166		$	697,717

	Three months ended Dec 31,
	2017		2016
	(in millions)
Severance and personnel costs	$	—	$	11.5
Professional service, real estate-related, and other expenses	—		3.9
Total	$	—	$	15.4

	September 30, 2017		Acquisitions		Measurement Period Adjustments			Foreign Exchange Impact			December 31, 2017
	(in millions)
Design and Consulting Services	$	3,218.9	$	—	$	—		$	4.3		$	3,223.2
Construction Services	1,049.9		—		(2.3		)	(1.6		)	1,046.0
Management Services	1,724.1		—		—			3.7			1,727.8
Total	$	5,992.9	$	—	$	(2.3	)	$	6.4		$	5,997.0

	December 31, 2017							September 30, 2017
	Gross Amount		Accumulated Amortization			Intangible Assets, Net		Gross Amount		Accumulated Amortization			Intangible Assets, Net		Amortization Period
	(in millions)														(years)
Backlog and customer relationships	$	1,304.0	$	(893.7	)	$	410.3	$	1,283.6	$	(870.2	)	$	413.4	1 – 11
Trademark / tradename	18.3		(16.8		)	1.5		18.3		(16.6		)	1.7		0.3 - 2
Total	$	1,322.3	$	(910.5	)	$	411.8	$	1,301.9	$	(886.8	)	$	415.1

December 31, 2017
Notional Amount (in millions)		Fixed Rate		Expiration Date
$	300.0	1.63	%	June 2018
300.0		1.54	%	September 2018

	Pension Related Adjustments			Foreign Currency Translation Adjustments			(Loss)/Gain on Derivative Instruments			Accumulated Other Comprehensive Loss
Balances at September 30, 2017	$	(281.9	)	$	(418.4	)	$	(0.4	)	$	(700.7	)
Other comprehensive (loss) income before reclassification	—			(6.8		)	0.5			(6.3		)
Amounts reclassified from accumulated other comprehensive income (loss)	2.5			—			0.3			2.8
Balances at December 31, 2017	$	(279.4	)	$	(425.2	)	$	0.4		$	(704.2	)

	Pension Related Adjustments			Foreign Currency Translation Adjustments			Loss on Derivative Instruments			Accumulated Other Comprehensive Loss
Balances at September 30, 2016	$	(368.9	)	$	(483.7	)	$	(5.0	)	$	(857.6	)
Other comprehensive (loss) income before reclassification	13.7			(73.5		)	0.7			(59.1		)
Amounts reclassified from accumulated other comprehensive loss	3.2			—			0.6			3.8
Balances at December 31, 2016	$	(352.0	)	$	(557.2	)	$	(3.7	)	$	(912.9	)

	Parent		Guarantor Subsidiaries		Non-Guarantor Subsidiaries		Eliminations			Total
ASSETS
CURRENT ASSETS:
Total cash and cash equivalents	$	4.1	$	213.2	$	595.9	$	—		$	813.2
Accounts receivable—net	—		2,283.7		3,030.0		—			5,313.7
Intercompany receivable	733.6		91.0		128.0		(952.6		)	—
Prepaid expenses and other current assets	91.2		305.9		279.8		—			676.9
Income taxes receivable	11.0		—		27.2		—			38.2
TOTAL CURRENT ASSETS	839.9		2,893.8		4,060.9		(952.6		)	6,842.0
PROPERTY AND EQUIPMENT—NET	165.9		220.4		245.3		—			631.6
DEFERRED TAX ASSETS—NET	154.8		111.4		251.6		(301.0		)	216.8
INVESTMENTS IN CONSOLIDATED SUBSIDIARIES	6,775.5		2,756.7		—		(9,532.2		)	—
INVESTMENTS IN UNCONSOLIDATED JOINT VENTURES	8.6		52.4		309.3		—			370.3
GOODWILL	—		3,318.6		2,678.4		—			5,997.0
INTANGIBLE ASSETS—NET	—		257.4		154.4		—			411.8
OTHER NON-CURRENT ASSETS	8.7		21.2		123.6		—			153.5
TOTAL ASSETS	$	7,953.4	$	9,631.9	$	7,823.5	$	(10,785.8	)	$	14,623.0

LIABILITIES AND STOCKHOLDERS’ EQUITY
CURRENT LIABILITIES:
Short-term debt	$	2.4	$	—	$	—	$	—		$	2.4
Accounts payable	42.5		1,098.2		1,285.8		—			2,426.5
Accrued expenses and other current liabilities	76.5		955.8		1,039.9		—			2,072.2
Income taxes payable	—		—		18.2		—			18.2
Intercompany payable	93.8		761.7		170.0		(1,025.5		)	—
Billings in excess of costs on uncompleted contracts	2.9		355.2		637.8		—			995.9
Current portion of long-term debt	110.7		27.7		22.5		—			160.9
TOTAL CURRENT LIABILITIES	328.8		3,198.6		3,174.2		(1,025.5		)	5,676.1
OTHER LONG-TERM LIABILITIES	103.5		264.0		477.4		—			844.9
DEFERRED TAX LIABILITY—NET	—		—		333.3		(301.0		)	32.3
NOTE PAYABLE INTERCOMPANY—NON CURRENT	0.1		—		472.2		(472.3		)	—
LONG-TERM DEBT	3,422.0		276.9		40.0		—			3,738.9
TOTAL LIABILITIES	3,854.4		3,739.5		4,497.1		(1,798.8		)	10,292.2
TOTAL AECOM STOCKHOLDERS’ EQUITY	4,099.0		5,892.4		3,100.0		(8,987.0		)	4,104.4
Noncontrolling interests	—		—		226.4		—			226.4
TOTAL STOCKHOLDERS’ EQUITY	4,099.0		5,892.4		3,326.4		(8,987.0		)	4,330.8
TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY	$	7,953.4	$	9,631.9	$	7,823.5	$	(10,785.8	)	$	14,623.0


	For the nine months ended
	June 30, 2021
Revenue	$	5,597.5
Cost of revenue		5,275.7
Gross profit		321.8

Net loss from continuing operations		(83.1)
Net loss from discontinued operations		(87.0)
Net loss	$	(170.1)

Net loss attributable to AECOM	$	(170.1)


				Total Number of	Maximum
				Shares Purchased	Approximate Dollar
	Total Number			as Part of Publicly	Value that May Yet Be
	of Shares	Average Price		Announced Plans	Purchased Under the
Period	Purchased	Paid Per Share		or Programs	Plans or Programs

April 1 - 30, 2021	754,198	$	66.32	754,198		699,961,000
May 1 - 31, 2021	348,219		64.60	348,219		677,465,000
June 1 - 30, 2021	1,348,840		63.43	1,348,840		591,911,000
Total	2,451,257	$	64.48	2,451,257

			Incorporated by Reference
			(Exchange Act Filings Located
			at File No. 0-52423)
Exhibit				Filing	Filed
Numbers	Description	Form	Exhibit	Date	Herewith
3.1	Amended and Restated Certificate of Incorporation	Form 10-K	3.1	11/21/2011

3.2	Certificate of Amendment to Amended and Restated Certificate of Incorporation	Form S-4	3.2	8/1/2014

3.3	Certificate of Correction of Amended and Restated Certificate of Incorporation	Form 10-K	3.3	11/17/2014

3.4	Certificate of Amendment to the Certificate of Incorporation	Form 8-K	3.1	1/9/2015

3.5	Certificate of Amendment to the Certificate of Incorporation	Form 8-K	3.1	3/3/2017

3.6	Amended and Restated Bylaws of the Company	Form 8-K	3.2	11/20/2020

10.1	Amendment No. 10 to Credit Agreement (Incremental Term B Facility), dated as of April 13, 2021, by and among the Company, each guarantor party thereto, the lenders party thereto and Bank of America, N.A., as administrative agent	Form 8-K	10.1	4/13/2021

10.2	Amendment No. 11 to Credit Agreement (Incremental Term A Facility Increase), dated as of June 25, 2021, by and among the Company, each guarantor party thereto, the lenders party thereto and Bank of America, N.A., as administrative agent	Form 8-K	10.1	6/25/2021

31.1	Certification of the Company’s Chief Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002				X

31.2	Certification of the Company’s Chief Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002				X

32	Certification of the Company’s Chief Executive Officer and Chief Financial Officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002				X

101	The following financial statements from the Company’s Quarterly Report on Form 10-Q for the quarter ended June 30, 2021 were formatted in iXBRL (Inline eXtensible Business Reporting Language): (i) Consolidated Balance Sheets, (ii) Consolidated Statements of Operations, (iii) Consolidated Statements of Comprehensive Income (Loss), (iv) Consolidated Statements of Stockholders’ Equity, (v) Condensed Consolidated Statements of Cash Flows, and (vi) the Notes to Condensed Consolidated Financial Statements, tagged as blocks of text and including detailed tags.				X

104	The cover page from the Company’s Quarterly Report on Form 10-Q for the quarter ended June 30, 2021, formatted in Inline XBRL				X


	AECOM


Date: ~~February 7, 2018~~August 11, 2021	By:	/S/ ~~W. TROY RUDD~~GAURAV KAPOOR
		~~W. Troy Rudd~~Gaurav Kapoor
			~~Executive Vice President and~~ Chief Financial Officer