AECOM
Consolidated Statements of Cash Flows
(in thousands)
|
|
|
|
|
|
|
|
|
|
|
|
|
Fiscal Year Ended
|
|
|
|
September 30,
2016
|
|
September 30,
2015
|
|
September 30,
2014
|
|
CASH FLOWS FROM OPERATING ACTIVITIES:
|
|
|
|
|
|
|
|
|
|
|
Net income (loss)
|
|
$
|
163,472
|
|
$
|
(71,233
|
)
|
$
|
232,764
|
|
Adjustments to reconcile net income (loss) to net cash provided by operating activities:
|
|
|
|
|
|
|
|
|
|
|
Depreciation and amortization
|
|
|
398,730
|
|
|
599,265
|
|
|
95,394
|
|
Equity in earnings of unconsolidated joint ventures
|
|
|
(104,032
|
)
|
|
(106,245
|
)
|
|
(57,924
|
)
|
Distribution of earnings from unconsolidated joint ventures
|
|
|
149,215
|
|
|
157,616
|
|
|
23,839
|
|
Non-cash stock compensation
|
|
|
73,406
|
|
|
85,852
|
|
|
34,438
|
|
Prepayment penalty on unsecured senior notes
|
|
|
|
|
|
55,639
|
|
|
|
|
Excess tax benefit from share-based payment
|
|
|
|
|
|
(3,642
|
)
|
|
(748
|
)
|
Foreign currency translation
|
|
|
(25,494
|
)
|
|
(19,632
|
)
|
|
(20,794
|
)
|
Write-off of debt issuance costs
|
|
|
7,749
|
|
|
8,997
|
|
|
|
|
Deferred income tax expense (benefit)
|
|
|
(110,122
|
)
|
|
(53,034
|
)
|
|
27,155
|
|
Pension curtailment and settlement gains
|
|
|
(7,818
|
)
|
|
|
|
|
|
|
Loss on disposal activities
|
|
|
42,589
|
|
|
|
|
|
|
|
Other
|
|
|
2,430
|
|
|
(18,248
|
)
|
|
1,460
|
|
Changes in operating assets and liabilities, net of effects of acquisitions:
|
|
|
|
|
|
|
|
|
|
|
Accounts receivable
|
|
|
337,291
|
|
|
369,600
|
|
|
(14,405
|
)
|
Prepaid expenses and other current and non-current assets
|
|
|
(16,257
|
)
|
|
7,988
|
|
|
(31,103
|
)
|
Accounts payable
|
|
|
16,616
|
|
|
142,126
|
|
|
91,955
|
|
Accrued expenses and other current liabilities
|
|
|
(154,096
|
)
|
|
(118,488
|
)
|
|
3,283
|
|
Billings in excess of costs on uncompleted contracts
|
|
|
(22,949
|
)
|
|
(128,371
|
)
|
|
3,095
|
|
Other long-term liabilities
|
|
|
53,411
|
|
|
(143,757
|
)
|
|
(23,702
|
)
|
Income taxes payable
|
|
|
10,014
|
|
|
|
|
|
(4,082
|
)
|
|
|
|
|
|
|
|
|
|
|
|
Net cash provided by operating activities
|
|
|
814,155
|
|
|
764,433
|
|
|
360,625
|
|
|
|
|
|
|
|
|
|
|
|
|
CASH FLOWS FROM INVESTING ACTIVITIES:
|
|
|
|
|
|
|
|
|
|
|
Payments for business acquisitions, net of cash acquired
|
|
|
(5,534
|
)
|
|
(3,293,284
|
)
|
|
(53,099
|
)
|
Cash acquired from consolidation of joint venture
|
|
|
|
|
|
|
|
|
18,955
|
|
Proceeds from disposal of businesses
|
|
|
39,699
|
|
|
15,127
|
|
|
3,646
|
|
Net investment in unconsolidated joint ventures
|
|
|
(71,547
|
)
|
|
(32,705
|
)
|
|
(52,173
|
)
|
Proceeds from sales of investments
|
|
|
11,745
|
|
|
126,370
|
|
|
58,076
|
|
Payments for purchase of investments
|
|
|
(214
|
)
|
|
(91,810
|
)
|
|
(55,349
|
)
|
Proceeds from disposal of property and equipment
|
|
|
54,622
|
|
|
44,906
|
|
|
4,396
|
|
Payments for capital expenditures
|
|
|
(191,386
|
)
|
|
(114,332
|
)
|
|
(67,248
|
)
|
|
|
|
|
|
|
|
|
|
|
|
Net cash used in investing activities
|
|
|
(162,615
|
)
|
|
(3,345,728
|
)
|
|
(142,796
|
)
|
|
|
|
|
|
|
|
|
|
|
|
CASH FLOWS FROM FINANCING ACTIVITIES:
|
|
|
|
|
|
|
|
|
|
|
Proceeds from borrowings under credit agreements
|
|
|
4,706,225
|
|
|
6,581,703
|
|
|
1,809,187
|
|
Repayments of borrowings under credit agreements
|
|
|
(5,199,961
|
)
|
|
(5,158,254
|
)
|
|
(1,976,352
|
)
|
Issuance of unsecured senior notes
|
|
|
|
|
|
1,600,000
|
|
|
|
|
Prepayment penalty on unsecured senior notes
|
|
|
|
|
|
(55,639
|
)
|
|
|
|
Cash paid for debt and equity issuance costs
|
|
|
(10,447
|
)
|
|
(89,567
|
)
|
|
(8,067
|
)
|
Proceeds from issuance of common stock
|
|
|
28,192
|
|
|
25,561
|
|
|
13,886
|
|
Proceeds from exercise of stock options
|
|
|
9,946
|
|
|
11,073
|
|
|
13,417
|
|
Payments to repurchase common stock
|
|
|
(25,892
|
)
|
|
(23,113
|
)
|
|
(34,924
|
)
|
Excess tax benefit from share-based payment
|
|
|
|
|
|
3,642
|
|
|
748
|
|
Net distributions to noncontrolling interests
|
|
|
(103,169
|
)
|
|
(144,269
|
)
|
|
(30,253
|
)
|
Other financing activities
|
|
|
(42,873
|
)
|
|
(31,373
|
)
|
|
(21,399
|
)
|
|
|
|
|
|
|
|
|
|
|
|
Net cash (used in) provided by financing activities
|
|
|
(637,979
|
)
|
|
2,719,764
|
|
|
(233,757
|
)
|
|
|
|
|
|
|
|
|
|
|
|
EFFECT OF EXCHANGE RATE CHANGES ON CASH
|
|
|
(5,309
|
)
|
|
(28,764
|
)
|
|
(10,561
|
)
|
NET INCREASE(DECREASE) IN CASH AND CASH EQUIVALENTS
|
|
|
8,252
|
|
|
109,705
|
|
|
(26,489
|
)
|
CASH AND CASH EQUIVALENTS AT BEGINNING OF YEAR
|
|
|
683,893
|
|
|
574,188
|
|
|
600,677
|
|
|
|
|
|
|
|
|
|
|
|
|
CASH AND CASH EQUIVALENTS AT END OF YEAR
|
|
$
|
692,145
|
|
$
|
683,893
|
|
$
|
574,188
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
SUPPLEMENTAL CASH FLOW INFORMATION:
|
|
|
|
|
|
|
|
|
|
|
Common stock issued in acquisitions
|
|
$
|
|
|
$
|
1,554,912
|
|
$
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Debt assumed from acquisitions
|
|
$
|
1,805
|
|
$
|
567,657
|
|
$
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Interest paid
|
|
$
|
216,125
|
|
$
|
179,939
|
|
$
|
43,362
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income (taxes paid) tax refunds received
|
|
$
|
(13,109
|
)
|
$
|
27,349
|
|
$
|
(68,797
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
See accompanying Notes to Consolidated Financial Statements.
77
Table of Contents
AECOM
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
1. Significant Accounting Policies
Organization
Effective January 5, 2015, the name of the Company changed from AECOM Technology Corporation to AECOM. AECOM and its
consolidated
subsidiaries design, build, finance
and operate infrastructure assets for governments, businesses and organizations around the world. The Company provides 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 markets. The Company also provides construction services,
including building construction and energy, infrastructure and industrial construction. In addition, the Company 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.
Fiscal Year
The Company reports results of operations based on 52 or 53-week periods ending on the Friday nearest September 30. For clarity of
presentation, all periods are presented as if the year ended on September 30. Fiscal years 2016, 2015 and 2014 contained 52, 52 and 53 weeks, respectively, and ended on
September 30, October 2, and October 3, respectively.
Use of Estimates
The preparation of financial statements in conformity with accounting principles generally accepted in the United States (GAAP)
requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial
statements and the reported amounts of revenues and expenses during the reporting period. The more significant estimates affecting amounts reported in the consolidated financial statements relate to
revenues under long-term contracts and self-insurance accruals. Actual results could differ from those estimates.
Principles of Consolidation and Presentation
The consolidated financial statements include the accounts of all majority-owned subsidiaries and
joint
ventures in which the Company is the primary beneficiary. All inter-company accounts have been eliminated in consolidation. Also see Note 6 regarding joint ventures and variable interest
entities.
Revenue Recognition
The Company generally utilizes a cost-to-cost approach in applying the percentage-of-completion method of revenue recognition.
Under this approach, revenue is earned in proportion to total costs incurred, divided by total costs expected to be incurred. 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, engineering progress, materials quantities, the achievement of milestones, penalty provisions, labor productivity and
cost estimates made at the balance sheet date. Due to uncertainties inherent in the estimation process, actual completion costs may vary from estimates. If estimated total costs on contracts indicate
a loss, the Company recognizes that estimated loss within cost of revenues in the period the estimated loss first becomes known. Liabilities recorded related to accrued contract losses were not
material as of September 30, 2016 and 2015.
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 industry practice and GAAP, are included in the Company's revenue and cost of revenue. Because subcontractor services and other direct costs can change significantly from
project to project and period to period, changes in revenue may not be indicative of business trends. These other direct costs for the years ended September 30, 2016, 2015 and 2014 were
$8.4 billion, $8.3 billion and $3.5 billion, respectively.
78
Table of Contents
AECOM
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
1. Significant Accounting Policies (Continued)
Cost-reimbursable contracts consists of two similar contract types: (1) cost-plus contracts and (2) time-and-materials price
contracts.
Cost-Plus Contracts.
The Company enters into two major types of cost-plus contracts:
Cost-Plus Fixed Fee.
Under cost-plus fixed fee contracts, the Company charges clients for its costs, including both direct and indirect
costs, plus a
fixed negotiated fee. The total estimated cost plus the fixed negotiated fee represents the total contract value. The Company recognizes revenue based on the actual labor and other direct costs
incurred, plus the portion of the fixed fee it has earned to date.
Cost-Plus Fixed Rate.
Under the Company's cost-plus fixed rate contracts, the Company charges clients for its direct and indirect costs
based upon a
negotiated rate. The Company recognizes revenue based on the actual total costs it has expended and the applicable fixed rate.
Certain
cost-plus contracts provide for award fees or a penalty based on performance criteria in lieu of a fixed fee or fixed rate. Other contracts include a base fee component plus a
performance-based
award fee. In addition, the Company may share award fees with subcontractors. The Company records accruals for fee-sharing as fees are earned. The Company generally recognizes revenue to the extent of
costs actually incurred plus a proportionate amount of the fee expected to be earned. The Company takes the award fee or penalty on contracts into consideration when estimating revenue and profit
rates, and it records revenue related to the award fees when there is sufficient information to assess anticipated contract performance. On contracts that represent higher than normal risk or
technical difficulty, the Company may defer all award fees until an award fee letter is received. Once an award fee letter is received, the estimated or accrued fees are adjusted to the actual award
amount.
Certain
cost-plus contracts provide for incentive fees based on performance against contractual milestones. The amount of the incentive fees varies, depending on whether the Company
achieves above, at, or below target results. The Company originally recognizes revenue on these contracts based upon expected results. These estimates are revised when necessary based upon additional
information that becomes available as the contract progresses.
Time-and-Materials Price Contracts.
Under time-and-materials 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 its actual out-of-pocket costs of materials and other direct incidental expenditures that it incurs in
connection with its performance under the contract. Profit margins on time-and-materials contracts fluctuate based on actual labor and overhead costs that it directly charges or allocates to contracts
compared to negotiated billing rates. Many of the Company's time-and-materials contracts are subject to maximum contract values and, accordingly, revenue relating to these contracts is recognized as
if these contracts were a fixed-price contract.
Guaranteed Maximum Price.
Guaranteed maximum price contracts (GMP) are common for design-build and commercial and residential projects.
GMP contracts
share many of the same contract provisions as cost-plus and fixed-price contracts. A contractor performing work pursuant to a cost-plus, GMP or
79
Table of Contents
AECOM
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
1. Significant Accounting Policies (Continued)
fixed-price
contract will all enter into trade contracts directly. Both cost-plus and GMP contracts generally include an agreed lump sum or percentage fee which is called out and separately identified
and the contracts are considered 'open' book providing the owner with full disclosure of the project costs. A fixed-price contract provides the owner with a single lump sum amount without specifically
identifying the breakdown of fee or costs and is typically 'closed' book thereby providing the owner with little detail as to the project costs. In a GMP contract, unlike the cost-plus contract, the
Company provides the owner with a guaranteed price for the overall construction (adjusted for change orders issued by the owner) and with a schedule which includes a completion date for the project.
In addition, cost overruns in a GMP contract would generally be the Company's responsibility and in the event the Company's actions or inactions result in delays to the project, the Company may be
responsible to the owner for costs associated with such delay. For many of the Company's commercial and residential GMP contracts, the final price is generally not established until the Company have
awarded a substantial percentage of the trade contracts and it has negotiated additional contractual limitations, such as mutual waivers of consequential damages as well as aggregate caps on
liabilities and liquidated damages.
Fixed-Price.
Fixed-price contracting is the predominant contracting method outside of the United States. There are typically two types
of fixed-price
contracts. The first and more common type, lump-sum, involves performing all of the work under the contract for a specified lump-sum fee. Lump-sum contracts are typically subject to price adjustments
if the scope of the project changes or unforeseen conditions arise. The second type, fixed-unit price, involves performing an estimated 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. The Company recognizes revenue on fixed-price contracts using the percentage-of-completion method described above.
Prior to completion, recognized profit margins on any fixed-price contract depend on the accuracy of the Company's estimates and will increase to the extent that its actual costs are below the
estimated amounts. Conversely, if the Company's costs exceed these estimates, its profit margins will decrease and the Company may realize a loss on a project. The Company recognizes anticipated
losses on contracts in the period in which they become evident.
During
the years ended September 30, 2016, 2015 and 2014, the types of contracts comprising the Company's revenue were as follows:
|
|
|
|
|
|
|
|
|
|
|
|
|
Fiscal Year Ended
|
|
|
|
September 30,
2016
|
|
September 30,
2015
|
|
September 30,
2014
|
|
Cost reimbursable
|
|
|
53
|
%
|
|
57
|
%
|
|
46
|
%
|
Guaranteed maximum price
|
|
|
15
|
%
|
|
15
|
%
|
|
14
|
%
|
Fixed price
|
|
|
32
|
%
|
|
28
|
%
|
|
40
|
%
|
Cost
reimburseable contracts include cost-plus and time-and-materials price contracts.
Contract Claims
Claims are amounts in excess of the agreed contract price (or amounts not included in the original contract price) that the Company
seeks to collect from customers or others for delays, errors in specifications and designs, contract terminations, change orders in dispute or unapproved as to both scope and price or other causes of
unanticipated additional costs. The Company
records contract revenue related to claims only if it is probable that the claim will result in additional contract revenue and if the
80
Table of Contents
AECOM
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
1. Significant Accounting Policies (Continued)
amount
can be reliably estimated. In such cases, the Company records revenue only to the extent that contract costs relating to the claim have been incurred. As of September 30, 2016 and 2015,
the Company had no significant net receivables related to contract claims.
Government Contract Matters
The Company's federal government and certain state and local agency contracts are subject to, among other regulations,
regulations issued under the Federal Acquisition Regulations (FAR). These regulations can limit the recovery of certain specified indirect costs on contracts and subjects the Company to ongoing
multiple audits by government agencies such as the Defense Contract Audit Agency (DCAA). In addition, most of the Company's federal and state and local contracts are subject to termination at the
discretion of the client.
Audits
by the DCAA and other agencies consist of reviews of the Company's overhead rates, operating systems and cost proposals to ensure that the Company accounted for such costs in
accordance with the Cost Accounting Standards of the FAR (CAS). If the DCAA determines the Company has not accounted for such costs consistent with CAS, the DCAA may disallow these costs. There can be
no assurance that audits by the DCAA or other governmental agencies will not result in material cost disallowances in the future.
Cash and Cash Equivalents
The Company's cash equivalents include highly liquid investments which have an initial maturity of three months or less.
Allowance for Doubtful Accounts
The Company records its accounts receivable net of an allowance for doubtful accounts. This allowance for doubtful
accounts is estimated based on management's evaluation of the contracts involved and the financial condition of its clients. The factors the Company considers in its contract evaluations include, but
are not limited to:
-
-
Client typefederal or state and local government or commercial client;
-
-
Historical contract performance;
-
-
Historical collection and delinquency trends;
-
-
Client credit worthiness; and
-
-
General economic conditions.
Derivative Financial Instruments
The Company accounts for its derivative instruments as either assets or liabilities and carries them at fair
value.
For
derivative instruments that hedge the exposure to variability in expected future cash flows that are designated as cash flow hedges, the effective portion of the gain or loss on the
derivative instrument is reported as a component of accumulated other comprehensive income in stockholders' equity and reclassified into income in the same period or periods during which the hedged
transaction affects earnings. The ineffective portion of the gain or loss on the derivative instrument, if any, is recognized in current income. To receive hedge accounting treatment, cash flow hedges
must be highly effective in offsetting changes to expected future cash flows on hedged transactions.
The
net gain or loss on the effective portion of a derivative instrument that is designated as an economic hedge of the foreign currency translation exposure generated by the
re-measurement of certain assets and liabilities denominated in a non-functional currency in a foreign operation is reported in the
81
Table of Contents
AECOM
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
1. Significant Accounting Policies (Continued)
same
manner as a foreign currency translation adjustment. Accordingly, any gains or losses related to these derivative instruments are recognized in current income.
Derivatives
that do not qualify as hedges are adjusted to fair value through current income.
Fair Value of Financial Instruments
The Company determines the fair values of its financial instruments, including short-term investments, debt
instruments and derivative instruments, and pension and post-retirement plan assets based on inputs or assumptions that market participants would use in pricing an asset or a liability. The Company
categorizes its instruments using a valuation hierarchy for disclosure of the inputs used to measure fair value. This hierarchy prioritizes the inputs into three broad levels as follows:
Level 1 inputs are quoted prices (unadjusted) in active markets for identical assets or liabilities; Level 2 inputs are quoted prices for similar assets and liabilities in active markets
or inputs that are observable for the asset or liability, either directly or indirectly through market corroboration, for substantially the full term of the financial instrument; Level 3 inputs
are unobservable inputs based on the Company's assumptions used to measure assets and liabilities at fair value. The classification of a financial asset or liability within the hierarchy is determined
based on the lowest level input that is significant to the fair value measurement.
The
carrying amounts of cash and cash equivalents, accounts receivable and accounts payable approximate fair value because of the short maturities of these instruments. The carrying
amount of the revolving credit facility approximates fair value because the interest rates are based upon variable reference rates.
The
Company's fair value measurement methods may produce a fair value calculation that may not be indicative of net realizable value or reflective of future fair values. Although the
Company believes its valuation methods are appropriate and consistent with those used by other market participants, the use of different methodologies or assumptions to determine fair value could
result in a different fair value measurement at the reporting date.
Property and Equipment
Property and equipment are recorded at cost and are depreciated over their estimated useful lives using the straight-line
method. Expenditures for maintenance and repairs are expensed as incurred. Typically, estimated useful lives range from three to ten years for equipment, furniture and fixtures. Leasehold improvements
are amortized on a
straight-line basis over the shorter of their estimated useful lives or the remaining terms of the underlying lease agreement.
Long-lived Assets
Long-lived assets to be held and used are reviewed for impairment whenever events or circumstances indicate that the assets may
be
impaired. For assets to be held and used, impairment losses are recognized based upon the excess of the asset's carrying amount over the fair value of the asset. For long-lived assets to be disposed,
impairment losses are recognized at the lower of the carrying amount or fair value less cost to sell.
Goodwill and Acquired Intangible Assets
Goodwill represents the excess of amounts paid over the fair value of net assets acquired from an
acquisition.
In order to determine the amount of goodwill resulting from an acquisition, the Company performs an assessment to determine the value of the acquired company's tangible and identifiable intangible
assets and liabilities. In its assessment, the Company determines whether identifiable intangible assets exist, which typically include backlog and customer relationships. Intangible assets are
amortized over the period in which the contractual or economic benefits of the intangible assets are expected to be realized.
82
Table of Contents
AECOM
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
1. Significant Accounting Policies (Continued)
The
Company tests goodwill for impairment annually for each reporting unit in the fourth quarter of the fiscal year, and between annual tests if events occur or circumstances change
which suggest that goodwill should be evaluated. Such events or circumstances include significant changes in legal factors and business climate, recent losses at a reporting unit, and industry trends,
among other factors. A reporting unit is defined as an operating segment or one level below an operating segment. The Company's impairment tests are performed at the operating segment level as they
represent the Company's reporting units.
The
impairment test is a two-step process. During the first step, the Company estimates the fair value of the reporting unit using income and market approaches, and compares that amount
to the carrying value of that reporting unit. In the event the fair value of the reporting unit is determined to be less than the carrying value, a second step is required. The second step requires
the Company to perform a hypothetical purchase allocation for that reporting unit and to compare the resulting current implied fair value of the goodwill to the current carrying value of the goodwill
for that reporting unit. In the event that the current implied fair value of the goodwill is less than the carrying value, an impairment charge is recognized. See also Note 3.
Pension Plans
The Company has certain defined benefit pension plans. The Company calculates the market-related value of assets, which is used to
determine the return-on-assets component of annual pension expense and the cumulative net unrecognized gain or loss subject to amortization. This calculation reflects the Company's anticipated
long-term rate of return and amortization of the difference between the actual return (including capital, dividends, and interest) and the expected return over a five-year period. Cumulative net
unrecognized gains or losses that exceed 10% of the greater of the projected benefit obligation or the market related value of plan assets are subject to amortization.
Insurance Reserves
The Company maintains insurance for certain insurable business risks. Insurance coverage contains various retention and
deductible
amounts for which the Company accrues a liability based upon reported claims and an actuarially determined estimated liability for certain claims incurred but not reported. It is generally the
Company's policy not to accrue for any potential legal expense to be incurred in defending the Company's position. The Company believes that its accruals for estimated liabilities associated with
professional and other liabilities are sufficient and any excess liability beyond the accrual is not expected to have a material adverse effect on the Company's results of operations or financial
position.
Foreign Currency Translation
The Company's functional currency is the U.S. dollar. Results of operations for foreign entities are translated to
U.S.
dollars using the average exchange rates during the period. Assets and liabilities for foreign entities are translated using the exchange rates in effect as of the date of the balance sheet. Resulting
translation adjustments are recorded as a foreign currency translation adjustment into other accumulated comprehensive income/(loss) in stockholders' equity.
The
Company uses foreign currency forward contracts from time to time to mitigate foreign currency risk. The Company limits exposure to foreign currency fluctuations in most of its
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, the Company generally does not
need to hedge foreign currency cash flows for contract work performed. The functional currency of all significant foreign operations is the respective local currency.
83
Table of Contents
AECOM
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
1. Significant Accounting Policies (Continued)
Noncontrolling Interests
Noncontrolling interests represent the equity investments of the minority owners in the Company's joint ventures and other
subsidiary entities that the Company consolidates in its financial statements.
Income Taxes
The Company files a consolidated U.S. federal corporate income tax return and combined / consolidated state tax returns and
separate company state tax returns. The Company accounts for certain income and expense items differently for financial reporting and income tax purposes. Deferred tax assets and liabilities are
determined based on the difference between the financial statement and tax basis of assets and liabilities, applying enacted statutory tax rates in effect for the year in which the differences are
expected to reverse. In determining the need for a valuation allowance, management reviews both positive and negative evidence, including the nature, frequency, and severity of cumulative financial
reporting losses in recent years, the future reversal of existing temporary differences, predictability of future taxable income exclusive of reversing temporary differences of the character necessary
to realize the asset, relevant carryforward periods, taxable income in carry-back years if carry-back is permitted under tax law, and prudent and feasible tax planning strategies that would be
implemented, if necessary, to protect against the loss of the deferred tax asset that would otherwise expire. Based upon management's assessment of all available evidence, the Company has concluded
that it is more likely than not that the deferred tax assets, net of valuation allowance, will be realized.
2. New Accounting Pronouncements and Changes in Accounting
In May 2014, 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 and method of the adoption of the new accounting guidance on its consolidated financial statements and expects to adopt the new guidance on October 1, 2018.
In
February 2015, the FASB issued amended guidance to the consolidation standard which updates the analysis that a reporting entity must perform to determine whether it should
consolidate certain types of legal entities. The amendment modifies the evaluation of whether limited partnerships and similar legal entities are variable interest entities (VIEs) or voting interest
entities and affects the consolidation analysis of reporting entities that are involved with VIEs, particularly those that have fee arrangements and related party relationships, among other
provisions. This amended guidance will be effective for the Company's fiscal year beginning October 1, 2016. The Company does not expect the adoption of this amended guidance will have a
material impact on its consolidated financial statements.
In
April 2015, the FASB issued new accounting guidance which requires debt issuance costs to be presented in the balance sheet as a direct deduction from the carrying value of the
associated debt liability, consistent with the presentation of a debt discount. Prior to the issuance of the standard, debt issuance costs were required to be presented in the balance sheet as an
asset. The guidance requires retrospective application and represents a change in accounting principle. The Company does not expect the guidance to have a material impact on its consolidated financial
statements, as the application of this guidance affects classification only. This guidance will be effective for the Company's fiscal year beginning October 1, 2016.
84
Table of Contents
AECOM
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
2. New Accounting Pronouncements and Changes in Accounting (Continued)
In
April 2015, the FASB issued new accounting guidance which provides the use of a practical expedient that permits the entity to measure defined benefit plans assets and obligations
using the month-end date that is closest to the entity's fiscal year-end date and apply that practical expedient consistently from year to year. The adoption of this guidance will not have a material
impact on its consolidated financial statements. This guidance will be effective for the Company's fiscal year beginning October 1, 2016.
In
September 2015, the FASB issued new accounting guidance which simplifies the accounting for measurement-period adjustments in connection with business combinations. The new guidance
requires that the cumulative impact of a measurement-period adjustment (including the impact on prior periods) be recognized in the reporting period in which the adjustment amount is determined and,
therefore, eliminates the requirement to retrospectively account for the adjustment in prior periods presented. This guidance was effective for fiscal years and interim periods beginning after
December 15, 2015 and was to be applied prospectively to measurement-period adjustments that occur after the effective date. Early adoption was permitted. The Company early adopted this
guidance during the first quarter of fiscal 2016, which did not have a material impact on the Company's financial statements.
In
the first quarter of fiscal 2016, the Company adopted new accounting guidance which raises the threshold for a disposal to qualify as a discontinued operation and requires new
disclosures of both discontinued operations and certain other disposals that do not meet the definition of a discontinued operation. This adoption did not have a material impact on the Company's
consolidated financial statements.
In
November 2015, the FASB issued new accounting guidance which simplifies the presentation of deferred income taxes. This guidance requires that deferred tax assets and liabilities be
classified as non-current in the balance sheet. The Company has elected early adoption of this standard on a prospective basis in the first quarter of fiscal 2016. This resulted in a reclassification
of the Company's net current deferred tax asset and net current deferred tax liability to the net non-current deferred tax asset and to its net non-current deferred tax liability in the Company's
consolidated balance sheet as of December 31, 2015. Prior periods were not retrospectively adjusted. The adoption of this guidance had no impact on the Company's consolidated results of income
or comprehensive income.
In
February 2016, the FASB issued new accounting guidance which changes accounting 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 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
March 2016, the FASB issued new accounting guidance which simplifies the accounting for employee share-based payments. The new guidance will require all income tax effects of awards
to be recognized in the statement of operations when the awards vest or are settled. It will also allow an employer to repurchase more of an employee's shares for tax withholding purposes without
triggering liability accounting and to make a policy election to account for forfeitures as they occur. This guidance will be effective for the Company in its fiscal year beginning October 1,
2017 and early adoption is
85
Table of Contents
AECOM
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
2. New Accounting Pronouncements and Changes in Accounting (Continued)
permitted.
The Company is currently evaluating the impact that the new guidance will have on its 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 other instruments. The new guidance will replace 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 is
currently evaluating the impact that the new guidance will have on its consolidated financial statements.
In
August 2016, the FASB issued new guidance clarifying how entities should classify certain cash receipts and cash payments on the statement of cash flows. The 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 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.
3. Business Acquisitions, Goodwill, and Intangible Assets
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. The purpose of the acquisition was to further diversify the Company's market presence and accelerate the Company's strategy
to create an integrated delivery platform for customers. 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 $1.0 billion, and upon the
occurrence of a change in control of URS, the URS senior noteholders had the right to redeem their notes at a cash price equal to 101% of the principal amount of the notes. Accordingly, on
October 24, 2014, the Company purchased $0.6 billion of URS's senior notes from the noteholders. See also Note 8, Debt. Additionally, the Company repaid in full URS's
$0.6 billion 2011 term loan and $0.1 billion of URS's revolving line of credit.
86
Table of Contents
AECOM
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
3. Business Acquisitions, Goodwill, and Intangible Assets (Continued)
The
following summarizes the estimated fair values of URS assets acquired and liabilities assumed (in millions), as of the acquisition date:
|
|
|
|
|
Cash and cash equivalents
|
|
$
|
284.9
|
|
Accounts receivable
|
|
|
2,512.8
|
|
Prepaid expenses and other current assets
|
|
|
421.0
|
|
Property and equipment
|
|
|
570.9
|
|
Identifiable intangible assets:
|
|
|
|
|
Customer relationships, contracts and backlog
|
|
|
973.8
|
|
Tradename
|
|
|
7.8
|
|
|
|
|
|
|
Total identifiable intangible assets
|
|
|
981.6
|
|
Goodwill
|
|
|
4,059.8
|
|
Other non-current assets
|
|
|
329.8
|
|
Accounts payable
|
|
|
(656.7
|
)
|
Accrued expenses and other current liabilities
|
|
|
(1,403.7
|
)
|
Billings in excess of costs on uncompleted contracts
|
|
|
(398.8
|
)
|
Current portion of long-term debt
|
|
|
(47.4
|
)
|
Other long-term liabilities
|
|
|
(406.1
|
)
|
Pension benefit obligations
|
|
|
(406.3
|
)
|
Long-term debt
|
|
|
(520.2
|
)
|
Noncontrolling interests
|
|
|
(201.0
|
)
|
|
|
|
|
|
Net assets acquired
|
|
$
|
5,120.6
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Backlog
and customer relationships represent the fair value of existing contracts and the underlying customer relationships, and have lives ranging from 1 to 11 years (weighted
average lives of approximately 3 years). Other intangible assets primarily consist of the fair value of office leases. Goodwill recognized largely results from a substantial assembled
workforce, which does not qualify for separate recognition, as well as expected future synergies from combining operations. Accrued expenses
and other current liabilities above include URS project liabilities and approximately $240 million related to estimated URS legal settlements and uninsured legal damages; see Note 18,
Commitments and Contingencies including legal matters related to former URS affiliates.
The
following presents summarized unaudited pro forma operating results assuming that the Company had acquired URS at October 1, 2013. These pro forma operating results are
presented for
87
Table of Contents
AECOM
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
3. Business Acquisitions, Goodwill, and Intangible Assets (Continued)
illustrative
purposes only and are not indicative of the operating results that would have been achieved had the related events occurred.
|
|
|
|
|
|
|
|
|
|
Twelve Months
Ended
|
|
|
|
Sept 30,
2015
|
|
Sept 30,
2014
|
|
|
|
(in millions)
|
|
Revenue
|
|
$
|
18,288
|
|
$
|
18,776
|
|
Income from continuing operations
|
|
|
509
|
|
|
(144
|
)
|
Net income
|
|
|
325
|
|
|
1
|
|
Net income (loss) attributable to AECOM
|
|
|
229
|
|
|
(65
|
)
|
Net income (loss) attributable to AECOM per share:
|
|
|
|
|
|
|
|
Basic
|
|
$
|
1.51
|
|
$
|
(0.43
|
)
|
Diluted
|
|
$
|
1.50
|
|
$
|
(0.43
|
)
|
Amortization
of intangible assets relating to URS was $183.3 million and $361.6 million during the twelve months ended September 30, 2016 and 2015, respectively.
Additionally, included in equity in earnings of joint ventures and noncontrolling interests was intangible amortization expense of $23.0 million and $(13.8) million, respectively, during the
twelve months ended September 30, 2016 and $37.3 million and $(26.6) million, respectively, during the twelve months ended September 30, 2015 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 on
October 17, 2014. This margin fair value liability was $149.1 million at the acquisition date, and its carrying value was $14.9 million at September 30, 2016, and is
recognized as revenue on a percentage-of-completion basis as
the applicable projects progress. The Company anticipates the remaining liability will be recognized as revenue over five years, with the majority over the first two years. Revenue and the related
income from operations related to the margin fair value liability recognized during the twelve months ended September 30, 2016 and 2015 was $37.2 million and $96.9 million,
respectively.
Acquisition
and integration expenses, resulting from the acquisition of URS, in the accompanying consolidated statements of operations comprised of the following (in millions):
|
|
|
|
|
|
|
|
|
|
Twelve Months
Ended
|
|
|
|
Sept 30,
2016
|
|
Sept 30,
2015
|
|
Severance and personnel costs
|
|
$
|
23.4
|
|
$
|
223.8
|
|
Professional service, real estate-related, and other expenses
|
|
|
190.2
|
|
|
174.6
|
|
|
|
|
|
|
|
|
|
Total
|
|
$
|
213.6
|
|
$
|
398.4
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Included
in severance and personnel costs for the twelve months ended September 30, 2016 and 2015 was $21.8 million and $101.9 million of severance expenses,
respectively, of which $19.3 million and $83.6 million was paid as of September 30, 2016 and 2015, respectively. All acquisition and integration expenses are classified within
Corporate, as presented in Note 19.
88
Table of Contents
AECOM
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
3. Business Acquisitions, Goodwill, and Intangible Assets (Continued)
Interest
expense in the consolidated statements of operations for the twelve months ended September 30, 2015 included a $55.6 million penalty from the prepayment of the
Company's unsecured senior notes and $9.0 million related to the write-off of capitalized debt issuance costs from its unsecured senior notes, and 2014 Credit Agreement.
The
Company completed one, one and two business acquisitions during the years ended September 30, 2016, 2015 and 2014, respectively. These other business acquisitions did not meet
the quantitative thresholds to require pro forma disclosures of operating results, either individually or in the aggregate, based on the Company's consolidated assets, investments and net income. The
Company also obtained control of an unconsolidated joint venture that resulted in its consolidation during the year ended September 30, 2014, as further discussed in Note 6.
Business
acquisitions during the year ended September 30, 2014 included Hunt Construction Group, a United States-based commercial construction management firm which serves clients
in both the public and private sectors, and Spain-based ACE International Consultants S.L., a leading consulting firm specializing in economic and social development cooperation and private sector
development.
Excluding
URS, the aggregate value of all consideration for acquisitions consummated during the years ended September 30, 2016, 2015 and 2014 were $5.5 million,
$27.3 million and $88.5 million, respectively. The following table summarizes the estimated fair values of the assets acquired and liabilities assumed,
as of the acquisition dates, from acquisitions consummated during the fiscal years presented, excluding URS:
|
|
|
|
|
|
|
|
|
|
Fiscal Year Ended
|
|
|
|
September 30,
2015
|
|
September 30,
2014
|
|
|
|
(in millions)
|
|
Cash acquired
|
|
$
|
0.6
|
|
$
|
17.1
|
|
Other current assets
|
|
|
13.8
|
|
|
256.2
|
|
Identifiable intangible assets:
|
|
|
|
|
|
|
|
Customer relationships, contracts and backlog
|
|
|
1.3
|
|
|
10.4
|
|
Trademark / tradename
|
|
|
|
|
|
1.5
|
|
|
|
|
|
|
|
|
|
Total intangible assets
|
|
$
|
1.3
|
|
$
|
11.9
|
|
|
|
|
|
|
|
|
|
Goodwill
|
|
|
23.6
|
|
|
72.7
|
|
Other non-current assets
|
|
|
|
|
|
16.5
|
|
Current liabilities
|
|
|
(12.0
|
)
|
|
(274.1
|
)
|
Non-current liabilities
|
|
|
|
|
|
(11.8
|
)
|
|
|
|
|
|
|
|
|
Net assets acquired
|
|
$
|
27.3
|
|
$
|
88.5
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
89
Table of Contents
AECOM
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
3. Business Acquisitions, Goodwill, and Intangible Assets (Continued)
Consideration for acquisitions above, excluding URS, includes the following:
|
|
|
|
|
|
|
|
|
|
Fiscal Year Ended
|
|
|
|
September 30,
2015
|
|
September 30,
2014
|
|
|
|
(in millions)
|
|
Cash paid
|
|
$
|
4.8
|
|
$
|
70.2
|
|
Contingent consideration / promissory notes
|
|
|
22.5
|
|
|
18.3
|
|
|
|
|
|
|
|
|
|
Total consideration
|
|
$
|
27.3
|
|
$
|
88.5
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
All
of the above acquisitions were accounted for under the purchase method of accounting. As such, the purchase consideration of each acquired company was allocated to acquired tangible
and intangible assets and liabilities based upon their fair values. The excess of the purchase consideration over the fair value of the net tangible and identifiable intangible assets acquired was
recorded as goodwill. The determination of fair values of assets and liabilities acquired requires the Company to make estimates and use valuation techniques when market value is not readily
available. The results of operations of each company acquired have been included in the Company's financial statements from the date of acquisition. Transaction costs associated with business
acquisitions are expensed as they are incurred.
At
the time of acquisition, the Company preliminarily estimates the amount of the identifiable intangible assets acquired based upon historical valuations of similar acquisitions and the
facts and circumstances available at the time. The Company determines the final value of the identifiable intangible assets as soon as information is available, but not more than 12 months from
the date of acquisition. Post-acquisition adjustments primarily relate to project related liabilities.
Loss
on disposal activities of $42.6 million in the accompanying statements of operations for the twelve months ended September 30, 2016 included losses on the disposition
of non-core energy related businesses, equipment and other assets acquired with URS and reported within the Construction Services segment. Net assets related to the loss on disposal activities were
$112.8 million. Income from operations included losses incurred by non-core businesses of $36.9 million during the twelve months ended September 30, 2016.
The
changes in the carrying value of goodwill by reportable segment for the fiscal years ended September 30, 2016 and 2015 were as follows:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Fiscal Year 2016
|
|
|
|
September 30,
2015
|
|
Post-
Acquisition
Adjustments
|
|
Foreign
Exchange
Impact
|
|
Disposed
|
|
September 30,
2016
|
|
|
|
(in millions)
|
|
Design and Consulting Services
|
|
$
|
3,163.3
|
|
$
|
26.7
|
|
$
|
8.2
|
|
$
|
|
|
$
|
3,198.2
|
|
Construction Services
|
|
|
918.5
|
|
|
8.7
|
|
|
(0.7
|
)
|
|
(11.3
|
)
|
|
915.2
|
|
Management Services
|
|
|
1,738.9
|
|
|
4.0
|
|
|
(32.5
|
)
|
|
|
|
|
1,710.4
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
|
|
$
|
5,820.7
|
|
$
|
39.4
|
|
$
|
(25.0
|
)
|
$
|
(11.3
|
)
|
$
|
5,823.8
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
90
Table of Contents
AECOM
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
3. Business Acquisitions, Goodwill, and Intangible Assets (Continued)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Fiscal Year 2015
|
|
|
|
September 30,
2014
|
|
Post-
Acquisition
Adjustments
|
|
Foreign
Exchange
Impact
|
|
Acquired
|
|
September 30,
2015
|
|
|
|
(in millions)
|
|
Design and Consulting Services
|
|
$
|
1,479.2
|
|
$
|
5.5
|
|
$
|
(96.0
|
)
|
$
|
1,774.6
|
|
$
|
3,163.3
|
|
Construction Services
|
|
|
276.9
|
|
|
0.6
|
|
|
(34.0
|
)
|
|
675.0
|
|
|
918.5
|
|
Management Services
|
|
|
181.2
|
|
|
|
|
|
(38.1
|
)
|
|
1,595.8
|
|
|
1,738.9
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
|
|
$
|
1,937.3
|
|
$
|
6.1
|
|
$
|
(168.1
|
)
|
$
|
4,045.4
|
|
$
|
5,820.7
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
The
gross amounts and accumulated amortization of the Company's acquired identifiable intangible assets with finite useful lives as of September 30, 2016 and 2015, included in
intangible assetsnet, in the accompanying consolidated balance sheets, were as follows:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
September 30, 2016
|
|
September 30, 2015
|
|
|
|
|
Gross
Amount
|
|
Accumulated
Amortization
|
|
Intangible
Assets, Net
|
|
Gross
Amount
|
|
Accumulated
Amortization
|
|
Intangible
Assets, Net
|
|
Amortization
Period
(years)
|
|
|
(in millions)
|
|
|
Backlog and customer relationships
|
|
$
|
1,247.1
|
|
$
|
(767.7
|
)
|
$
|
479.4
|
|
$
|
1,224.7
|
|
$
|
(565.3
|
)
|
$
|
659.4
|
|
1 - 11
|
Trademark / tradename
|
|
|
16.4
|
|
|
(16.4
|
)
|
|
|
|
|
16.4
|
|
|
(16.4
|
)
|
|
|
|
0.3 - 2
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
|
|
$
|
1,263.5
|
|
$
|
(784.1
|
)
|
$
|
479.4
|
|
$
|
1,241.1
|
|
$
|
(581.7
|
)
|
$
|
659.4
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Amortization
expense of acquired intangible assets included within cost of revenue was $202.4 million, $391.0 million, and $24.0 million for the years ended
September 30, 2016, 2015 and 2014, respectively. The following table presents estimated amortization expense of existing intangible assets for the succeeding years:
|
|
|
|
|
Fiscal Year
|
|
(in millions)
|
|
2017
|
|
$
|
96.3
|
|
2018
|
|
|
82.1
|
|
2019
|
|
|
76.7
|
|
2020
|
|
|
64.8
|
|
2021
|
|
|
55.1
|
|
Thereafter
|
|
|
104.4
|
|
|
|
|
|
|
Total
|
|
$
|
479.4
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
91
Table of Contents
AECOM
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
4. Accounts Receivable
Accounts receivable consisted of the following:
|
|
|
|
|
|
|
|
|
|
Fiscal Year Ended
|
|
|
|
September 30,
2016
|
|
September 30,
2015
|
|
|
|
(in millions)
|
|
Billed
|
|
$
|
2,267.6
|
|
$
|
2,426.2
|
|
Unbilled
|
|
|
1,890.2
|
|
|
2,099.8
|
|
Contract retentions
|
|
|
434.1
|
|
|
379.6
|
|
|
|
|
|
|
|
|
|
Total accounts receivablegross
|
|
|
4,591.9
|
|
|
4,905.6
|
|
Allowance for doubtful accounts
|
|
|
(60.4
|
)
|
|
(64.1
|
)
|
|
|
|
|
|
|
|
|
Total accounts receivablenet
|
|
$
|
4,531.5
|
|
$
|
4,841.5
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Billed
accounts receivable represent amounts billed to clients that have yet to be collected. Unbilled accounts receivable represents the contract revenue recognized but not yet billed
pursuant to contract terms or accounts billed after the period end. Substantially all unbilled receivables as of September 30, 2016 and 2015 are expected to be billed and collected within
twelve months. Contract retentions represent amounts invoiced to clients where payments have been withheld pending the completion of certain milestones, other contractual conditions or upon the
completion of the project. These retention agreements vary from project to project and could be outstanding for several months or years.
Allowances
for doubtful accounts have been determined through specific identification of amounts considered to be uncollectible and potential write-offs, plus a non-specific allowance
for other amounts for which some potential loss has been determined to be probable based on current and past experience.
Other
than the U.S. government, no single client accounted for more than 10% of the Company's outstanding receivables at September 30, 2016 and 2015.
The
Company sold trade receivables to financial institutions, of which $356.3 million and $240.8 million were outstanding as of September 30, 2016 and 2015,
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.
92
Table of Contents
AECOM
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
5. Property and Equipment
Property and equipment, at cost, consists of the following:
|
|
|
|
|
|
|
|
|
|
|
Fiscal Year Ended
|
|
|
|
|
September 30,
2016
|
|
September 30,
2015
|
|
Useful Lives
(years)
|
|
|
(in millions)
|
|
|
Building and land
|
|
$
|
57.9
|
|
$
|
105.7
|
|
10 - 45
|
Leasehold improvements
|
|
|
381.4
|
|
|
349.3
|
|
1 - 20
|
Computer systems and equipment
|
|
|
652.0
|
|
|
627.7
|
|
3 - 12
|
Furniture and fixtures
|
|
|
129.7
|
|
|
125.8
|
|
3 - 10
|
|
|
|
|
|
|
|
|
|
Total
|
|
|
1,221.0
|
|
|
1,208.5
|
|
|
Accumulated depreciation and amortization
|
|
|
(576.0
|
)
|
|
(509.2
|
)
|
|
|
|
|
|
|
|
|
|
|
Property and equipment, net
|
|
$
|
645.0
|
|
$
|
699.3
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Depreciation
expense for the fiscal years ended September 30, 2016, 2015 and 2014 were $171.7 million, $191.3 million, and $69.1 million, respectively.
Depreciation is calculated using primarily the straight-line method over the estimated useful lives of the assets, or in the case of leasehold improvements and capitalized leases, the lesser of the
remaining term of the lease or its estimated useful life. Included in payments for capital expenditures presented within the Consolidated Statements of Cash Flows, were proceeds from disposals of
property and equipment of $54.6 million, $44.9 million, and $4.4 million for the years ended September 30, 2016, 2015 and 2014, respectively.
6. Joint Ventures and Variable Interest Entities
The Company's joint ventures provide architecture, engineering, program management, construction management and operations and maintenance services. 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.
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
93
Table of Contents
AECOM
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
6. Joint Ventures and Variable Interest Entities (Continued)
indicate
a party has the power to direct the activities that most significantly impact the joint ventures' 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 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 discussed in Note 18.
Summary
of financial information of the consolidated joint ventures is as follows:
|
|
|
|
|
|
|
|
|
|
September 30,
2016
|
|
September 30,
2015
|
|
|
|
(in millions)
|
|
Current assets
|
|
$
|
684.1
|
|
$
|
727.8
|
|
Non-current assets
|
|
|
230.8
|
|
|
282.8
|
|
|
|
|
|
|
|
|
|
Total assets
|
|
$
|
914.9
|
|
$
|
1,010.6
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Current liabilities
|
|
$
|
407.4
|
|
$
|
441.5
|
|
Non-current liabilities
|
|
|
12.4
|
|
|
0.2
|
|
|
|
|
|
|
|
|
|
Total liabilities
|
|
|
419.8
|
|
|
441.7
|
|
Total AECOM equity
|
|
|
318.0
|
|
|
354.7
|
|
Noncontrolling interests
|
|
|
177.1
|
|
|
214.2
|
|
|
|
|
|
|
|
|
|
Total owners' equity
|
|
|
495.1
|
|
|
568.9
|
|
|
|
|
|
|
|
|
|
Total liabilities and owners' equity
|
|
$
|
914.9
|
|
$
|
1,010.6
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
revenue of the consolidated joint ventures was $1,935.2 million, $2,368.0 million, and $614.5 million for the years ended September 30, 2016, 2015 and
2014, 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.
94
Table of Contents
AECOM
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
6. Joint Ventures and Variable Interest Entities (Continued)
Summary
of financial information of the unconsolidated joint ventures, as derived from their unaudited financial statements, is as follows:
|
|
|
|
|
|
|
|
|
|
September 30,
2016
|
|
September 30,
2015
|
|
|
|
(in millions)
|
|
Current assets
|
|
$
|
1,407.0
|
|
$
|
1,200.7
|
|
Non-current assets
|
|
|
499.4
|
|
|
527.3
|
|
|
|
|
|
|
|
|
|
Total assets
|
|
$
|
1,906.4
|
|
$
|
1,728.0
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Current liabilities
|
|
$
|
977.3
|
|
$
|
936.7
|
|
Non-current liabilities
|
|
|
146.2
|
|
|
87.0
|
|
|
|
|
|
|
|
|
|
Total liabilities
|
|
|
1,123.5
|
|
|
1,023.7
|
|
Joint venturers' equity
|
|
|
782.9
|
|
|
704.3
|
|
|
|
|
|
|
|
|
|
Total liabilities and joint venturers' equity
|
|
$
|
1,906.4
|
|
$
|
1,728.0
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
AECOM's investment in joint ventures
|
|
$
|
330.5
|
|
$
|
321.6
|
|
|
|
|
|
|
|
|
|
|
|
Twelve Months Ended
|
|
|
|
September 30,
2016
|
|
September 30,
2015
|
|
|
|
(in millions)
|
|
Revenue
|
|
$
|
4,871.8
|
|
$
|
4,754.6
|
|
Cost of revenue
|
|
|
4,618.3
|
|
|
4,476.8
|
|
|
|
|
|
|
|
|
|
Gross profit
|
|
$
|
253.5
|
|
$
|
277.8
|
|
|
|
|
|
|
|
|
|
Net income
|
|
$
|
233.9
|
|
$
|
231.2
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Summary
of AECOM's equity in earnings of unconsolidated joint ventures is as follows:
|
|
|
|
|
|
|
|
|
|
|
|
|
Fiscal Year Ended
|
|
|
|
September 30,
2016
|
|
September 30,
2015
|
|
September 30,
2014
|
|
|
|
(in millions)
|
|
Pass through joint ventures
|
|
$
|
21.9
|
|
$
|
26.2
|
|
$
|
10.2
|
|
Other joint ventures
|
|
|
82.1
|
|
|
80.0
|
|
|
47.7
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
|
|
$
|
104.0
|
|
$
|
106.2
|
|
$
|
57.9
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Included
in equity in earnings above is a $37.4 million gain recognized upon change in control ($23.4 million, net of tax) of an unconsolidated joint venture in the year
ended September 30, 2014. The Company obtained control of the joint venture through modifications to the joint venture's operating agreement, which required the Company to consolidate the joint
venture. The acquisition date fair value of the previously held equity interest was $58.0 million, excluding the control premium. The measurement of the fair value of the equity interest
immediately before obtaining control of the joint venture resulted in the pre-tax gain of $37.4 million. The Company utilized income and market approaches, in addition to obtaining an
independent third party valuation, in determining the joint venture's fair value, which includes making assumptions about variables such as revenue growth rates, profitability, discount rates,
95
Table of Contents
AECOM
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
6. Joint Ventures and Variable Interest Entities (Continued)
and
industry market multiples. These assumptions are subject to a high degree of judgment. Total assets and liabilities of this entity included in the accompanying consolidated balance sheet at the
acquisition date were $207.8 million and $48.1 million, respectively. This acquisition did not meet the quantitative thresholds to require pro forma disclosures of operating results
based on the Company's consolidated assets, investments and net income. This joint venture performs engineering and program management services in the Middle East and is included in the Company's DCS
segment.
7. Pension Benefit Obligations
In the U.S., the Company sponsors various qualified defined benefit pension plans. The legacy AECOM defined benefit plan covers substantially all permanent AECOM employees hired as of
March 1, 1998. The other recently acquired plans cover employees of URS and the Hunt Corporation at the time of their acquisition. Benefits under these plans generally are based on the
employee's years of creditable service and compensation. The Company adopted an amendment to freeze benefits under the URS Federal Services, Inc. Employees Retirement Plan during the three
months ended December 31, 2015, which resulted in the curtailment gain listed below. All defined benefit plans are closed to new participants and all defined benefit plans 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.
The
following tables provide reconciliations of the changes in the U.S. and international plans' benefit obligations, reconciliations of the changes in the fair value of assets for the
last three years ended September 30, and reconciliations of the funded status as of September 30 of each year.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Fiscal Year Ended
|
|
|
|
September 30,
2016
|
|
September 30,
2015
|
|
September 30,
2014
|
|
|
|
U.S.
|
|
Int'l
|
|
U.S.
|
|
Int'l
|
|
U.S.
|
|
Int'l
|
|
|
|
(in millions)
|
|
Change in benefit obligation:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Benefit obligation at beginning of year
|
|
$
|
718.2
|
|
$
|
1,239.2
|
|
$
|
217.0
|
|
$
|
676.6
|
|
$
|
180.3
|
|
$
|
622.1
|
|
Service cost
|
|
|
4.3
|
|
|
1.0
|
|
|
6.8
|
|
|
1.1
|
|
|
|
|
|
0.7
|
|
Participant contributions
|
|
|
0.1
|
|
|
0.5
|
|
|
0.4
|
|
|
0.5
|
|
|
0.4
|
|
|
0.2
|
|
Interest cost
|
|
|
22.0
|
|
|
39.2
|
|
|
28.2
|
|
|
47.1
|
|
|
7.8
|
|
|
27.9
|
|
Benefits and expenses paid
|
|
|
(37.4
|
)
|
|
(41.9
|
)
|
|
(33.9
|
)
|
|
(41.0
|
)
|
|
(12.8
|
)
|
|
(23.3
|
)
|
Actuarial (gain) loss
|
|
|
52.3
|
|
|
377.1
|
|
|
(41.0
|
)
|
|
10.6
|
|
|
23.2
|
|
|
62.3
|
|
Plan settlements
|
|
|
(32.9
|
)
|
|
(0.7
|
)
|
|
(20.1
|
)
|
|
(2.5
|
)
|
|
|
|
|
(2.0
|
)
|
Plan amendments
|
|
|
0.2
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Plan curtailments
|
|
|
(6.8
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net transfer in/(out)/acquisitions
|
|
|
|
|
|
|
|
|
560.8
|
|
|
618.6
|
|
|
18.1
|
|
|
|
|
Foreign currency translation (gain) loss
|
|
|
|
|
|
(208.2
|
)
|
|
|
|
|
(71.8
|
)
|
|
|
|
|
(11.3
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Benefit obligation at end of year
|
|
$
|
720.0
|
|
$
|
1,406.2
|
|
$
|
718.2
|
|
$
|
1,239.2
|
|
$
|
217.0
|
|
$
|
676.6
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
96
Table of Contents
AECOM
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
7. Pension Benefit Obligations (Continued)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Fiscal Year Ended
|
|
|
|
September 30,
2016
|
|
September 30,
2015
|
|
September 30,
2014
|
|
|
|
U.S.
|
|
Int'l
|
|
U.S.
|
|
Int'l
|
|
U.S.
|
|
Int'l
|
|
|
|
(in millions)
|
|
Change in plan assets
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Fair value of plan assets at beginning of year
|
|
$
|
459.0
|
|
$
|
925.8
|
|
$
|
139.7
|
|
$
|
532.6
|
|
$
|
119.8
|
|
$
|
489.9
|
|
Actual return on plan assets
|
|
|
49.6
|
|
|
215.9
|
|
|
(2.8
|
)
|
|
49.9
|
|
|
14.2
|
|
|
60.4
|
|
Employer contributions
|
|
|
18.5
|
|
|
20.2
|
|
|
42.1
|
|
|
24.4
|
|
|
4.9
|
|
|
16.4
|
|
Participant contributions
|
|
|
0.1
|
|
|
0.5
|
|
|
0.4
|
|
|
0.5
|
|
|
0.4
|
|
|
0.2
|
|
Benefits and expenses paid
|
|
|
(37.4
|
)
|
|
(41.9
|
)
|
|
(33.9
|
)
|
|
(41.0
|
)
|
|
(12.8
|
)
|
|
(23.3
|
)
|
Plan settlements
|
|
|
(32.9
|
)
|
|
(0.7
|
)
|
|
(20.1
|
)
|
|
(2.5
|
)
|
|
|
|
|
(2.0
|
)
|
Net transfer in/(out)/acquisitions
|
|
|
|
|
|
|
|
|
333.6
|
|
|
415.5
|
|
|
13.2
|
|
|
|
|
Foreign currency translation (loss) gain
|
|
|
|
|
|
(146.6
|
)
|
|
|
|
|
(53.6
|
)
|
|
|
|
|
(9.0
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Fair value of plan assets at end of year
|
|
$
|
456.9
|
|
$
|
973.2
|
|
$
|
459.0
|
|
$
|
925.8
|
|
$
|
139.7
|
|
$
|
532.6
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Fiscal Year Ended
|
|
|
|
September 30,
2016
|
|
September 30,
2015
|
|
September 30,
2014
|
|
|
|
U.S.
|
|
Int'l
|
|
U.S.
|
|
Int'l
|
|
U.S.
|
|
Int'l
|
|
|
|
(in millions)
|
|
Reconciliation of funded status:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Funded status at end of year
|
|
$
|
(263.1
|
)
|
$
|
(433.0
|
)
|
$
|
(259.2
|
)
|
$
|
(313.4
|
)
|
$
|
(77.3
|
)
|
$
|
(144.0
|
)
|
Contribution made after measurement date
|
|
|
N/A
|
|
|
N/A
|
|
|
N/A
|
|
|
N/A
|
|
|
N/A
|
|
|
N/A
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net amount recognized at end of year
|
|
$
|
(263.1
|
)
|
$
|
(433.0
|
)
|
$
|
(259.2
|
)
|
$
|
(313.4
|
)
|
$
|
(77.3
|
)
|
$
|
(144.0
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
The
following table sets forth the amounts recognized in the consolidated balance sheets as of September 30, 2016, 2015 and 2014:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Fiscal Year Ended
|
|
|
|
September 30,
2016
|
|
September 30,
2015
|
|
September 30,
2014
|
|
|
|
U.S.
|
|
Int'l
|
|
U.S.
|
|
Int'l
|
|
U.S.
|
|
Int'l
|
|
|
|
(in millions)
|
|
Amounts recognized in the consolidated balance sheets:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Other non-current assets
|
|
$
|
2.0
|
|
$
|
5.3
|
|
$
|
1.6
|
|
$
|
1.7
|
|
$
|
|
|
$
|
1.1
|
|
Accrued expenses and other current liabilities
|
|
|
(9.3
|
)
|
|
|
|
|
(10.6
|
)
|
|
|
|
|
(1.7
|
)
|
|
|
|
Pension benefit obligations
|
|
|
(255.8
|
)
|
|
(438.3
|
)
|
|
(250.2
|
)
|
|
(315.1
|
)
|
|
(75.6
|
)
|
|
(145.1
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net amount recognized in the balance sheet
|
|
$
|
(263.1
|
)
|
$
|
(433.0
|
)
|
$
|
(259.2
|
)
|
$
|
(313.4
|
)
|
$
|
(77.3
|
)
|
$
|
(144.0
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
97
Table of Contents
AECOM
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
7. Pension Benefit Obligations (Continued)
The
following table details the reconciliation of amounts in the consolidated statements of stockholders' equity for the fiscal years ended September 30, 2016, 2015 and 2014:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Fiscal Year Ended
|
|
|
|
September 30,
2016
|
|
September 30,
2015
|
|
September 30,
2014
|
|
|
|
U.S.
|
|
Int'l
|
|
U.S.
|
|
Int'l
|
|
U.S.
|
|
Int'l
|
|
|
|
(in millions)
|
|
Reconciliation of amounts in consolidated statements of stockholders' equity:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Prior service credit (cost)
|
|
$
|
(0.2
|
)
|
$
|
4.4
|
|
$
|
|
|
$
|
5.3
|
|
$
|
|
|
$
|
5.8
|
|
Net (loss)
|
|
|
(129.6
|
)
|
|
(343.3
|
)
|
|
(99.3
|
)
|
|
(183.6
|
)
|
|
(113.0
|
)
|
|
(190.1
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total recognized in accumulated other comprehensive (loss)
|
|
$
|
(129.8
|
)
|
$
|
(338.9
|
)
|
$
|
(99.3
|
)
|
$
|
(178.3
|
)
|
$
|
(113.0
|
)
|
$
|
(184.3
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
The
following table details the components of net periodic benefit cost for the Company's pension plans for years ended 2016, 2015 and 2014:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Fiscal Year Ended
|
|
|
|
September 30,
2016
|
|
September 30,
2015
|
|
September 30,
2014
|
|
|
|
U.S.
|
|
Int'l
|
|
U.S.
|
|
Int'l
|
|
U.S.
|
|
Int'l
|
|
|
|
(in millions)
|
|
Components of net periodic (benefit) cost:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Service costs
|
|
$
|
4.3
|
|
$
|
1.0
|
|
$
|
6.8
|
|
$
|
1.1
|
|
$
|
|
|
$
|
0.7
|
|
Interest cost on projected benefit obligation
|
|
|
22.0
|
|
|
39.2
|
|
|
28.2
|
|
|
47.1
|
|
|
7.8
|
|
|
27.9
|
|
Expected return on plan assets
|
|
|
(30.8
|
)
|
|
(48.0
|
)
|
|
(29.4
|
)
|
|
(49.4
|
)
|
|
(8.6
|
)
|
|
(26.1
|
)
|
Amortization of prior service credits
|
|
|
|
|
|
(0.2
|
)
|
|
|
|
|
(0.2
|
)
|
|
|
|
|
(0.2
|
)
|
Amortization of net loss
|
|
|
4.0
|
|
|
5.4
|
|
|
4.3
|
|
|
5.9
|
|
|
4.0
|
|
|
4.9
|
|
Curtailment gain recognized
|
|
|
(6.8
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Settlement (gain) loss recognized
|
|
|
(0.9
|
)
|
|
0.1
|
|
|
0.6
|
|
|
0.7
|
|
|
|
|
|
0.4
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net periodic (benefit) cost
|
|
$
|
(8.2
|
)
|
$
|
(2.5
|
)
|
$
|
10.5
|
|
$
|
5.2
|
|
$
|
3.2
|
|
$
|
7.6
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
The
amount, net of applicable deferred income taxes, included in other comprehensive income arising from a change in net prior service cost and net gain/loss was $26.2 million,
$6.9 million, and $7.6 million in the years ended September 30, 2016, 2015 and 2014, respectively.
Amounts
included in accumulated other comprehensive loss as of September 30, 2016 that are expected to be recognized as components of net periodic benefit cost during fiscal 2017
are (in millions):
|
|
|
|
|
|
|
|
|
|
U.S.
|
|
Int'l
|
|
Amortization of prior service credit
|
|
$
|
|
|
$
|
0.2
|
|
Amortization of net actuarial losses
|
|
|
(4.3
|
)
|
|
(13.4
|
)
|
|
|
|
|
|
|
|
|
Total
|
|
$
|
(4.3
|
)
|
$
|
(13.2
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
98
Table of Contents
AECOM
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
7. Pension Benefit Obligations (Continued)
The table below provides additional year-end information for pension plans with accumulated benefit obligations in excess of plan assets.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Fiscal Year Ended
|
|
|
|
September 30,
2016
|
|
September 30,
2015
|
|
September 30,
2014
|
|
|
|
U.S.
|
|
Int'l
|
|
U.S.
|
|
Int'l
|
|
U.S.
|
|
Int'l
|
|
|
|
(in millions)
|
|
Projected benefit obligation
|
|
$
|
694.8
|
|
$
|
1,220.3
|
|
$
|
692.5
|
|
$
|
1,226.2
|
|
$
|
217.0
|
|
$
|
658.5
|
|
Accumulated benefit obligation
|
|
|
694.8
|
|
|
1,215.7
|
|
|
686.5
|
|
|
1,222.0
|
|
|
217.0
|
|
|
656.3
|
|
Fair value of plan assets
|
|
|
453.2
|
|
|
782.1
|
|
|
455.6
|
|
|
911.2
|
|
|
139.7
|
|
|
513.4
|
|
Funding
requirements for each pension plan are determined based on the local laws of the country where such pension plan resides. In certain countries, the funding requirements are
mandatory while in other countries, they are discretionary. The Company currently intends to contribute $24.0 million to the international plans in fiscal 2017. There is a required minimum
contribution of $0.4 million for one of the U.S. plans. In addition, the Company may make discretionary contributions. The Company currently intends to contribute $9.8 million to U.S.
plans in fiscal 2017.
The
table below provides the expected future benefit payments, in millions:
|
|
|
|
|
|
|
|
Year Ending September 30,
|
|
U.S.
|
|
Int'l
|
|
2017
|
|
$
|
40.6
|
|
$
|
38.9
|
|
2018
|
|
|
41.3
|
|
|
39.3
|
|
2019
|
|
|
40.9
|
|
|
42.1
|
|
2020
|
|
|
41.9
|
|
|
42.1
|
|
2021
|
|
|
42.0
|
|
|
44.2
|
|
2022 - 2026
|
|
|
207.5
|
|
|
240.2
|
|
|
|
|
|
|
|
|
|
Total
|
|
$
|
414.2
|
|
$
|
446.8
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
The
underlying assumptions for the pension plans are as follows:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Fiscal Year Ended
|
|
|
|
September 30,
2016
|
|
September 30,
2015
|
|
September 30,
2014
|
|
|
|
U.S.
|
|
Int'l
|
|
U.S.
|
|
Int'l
|
|
U.S.
|
|
Int'l
|
|
Weighted-average assumptions to determine benefit obligation:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Discount rate
|
|
|
3.41
|
%
|
|
2.35
|
%
|
|
4.10
|
%
|
|
3.80
|
%
|
|
4.00
|
%
|
|
3.94
|
%
|
Salary increase rate
|
|
|
N/A
|
|
|
2.61
|
%
|
|
3.81
|
%
|
|
2.51
|
%
|
|
N/A
|
|
|
2.38
|
%
|
Weighted-average assumptions to determine net periodic benefit cost:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Discount rate
|
|
|
4.10
|
%
|
|
3.80
|
%
|
|
3.88
|
%
|
|
3.92
|
%
|
|
4.40
|
%
|
|
4.44
|
%
|
Salary increase rate
|
|
|
N/A
|
|
|
2.65
|
%
|
|
4.50
|
%
|
|
2.65
|
%
|
|
N/A
|
|
|
2.58
|
%
|
Expected long-term rate of return on plan assets
|
|
|
6.72
|
%
|
|
5.74
|
%
|
|
6.73
|
%
|
|
6.00
|
%
|
|
7.50
|
%
|
|
5.40
|
%
|
99
Table of Contents
AECOM
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
7. Pension Benefit Obligations (Continued)
Pension
costs are determined using the assumptions as of the beginning of the plan year. The funded status is determined using the assumptions as of the end of the plan year.
The
following table summarizes the Company's target allocation for 2016 and pension plan asset allocation, both U.S. and international, as of September 30, 2016 and 2015:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Percentage of Plan Assets
as of September 30,
|
|
|
|
Target
Allocations
|
|
|
|
2016
|
|
2015
|
|
|
|
U.S.
|
|
Int'l
|
|
U.S.
|
|
Int'l
|
|
U.S.
|
|
Int'l
|
|
Asset Category:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Equities
|
|
|
42
|
%
|
|
28
|
%
|
|
42
|
%
|
|
28
|
%
|
|
37
|
%
|
|
27
|
%
|
Debt
|
|
|
48
|
|
|
30
|
|
|
49
|
|
|
34
|
|
|
59
|
|
|
30
|
|
Cash
|
|
|
1
|
|
|
10
|
|
|
1
|
|
|
7
|
|
|
1
|
|
|
4
|
|
Property and other
|
|
|
9
|
|
|
32
|
|
|
8
|
|
|
31
|
|
|
3
|
|
|
39
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
|
|
|
100
|
%
|
|
100
|
%
|
|
100
|
%
|
|
100
|
%
|
|
100
|
%
|
|
100
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
The
Company's domestic and foreign plans seek a competitive rate of return relative to an appropriate level of risk depending on the funded status and obligations of each plan and
typically employ both active and passive investment management strategies. The Company's risk management practices include diversification across asset classes and investment styles and periodic
rebalancing toward asset allocation targets. The target asset allocation selected for each plan reflects a risk/return profile that the Company believes is appropriate relative to each plan's
liability structure and return goals.
To
develop the expected long-term rate of return on assets assumption, the Company considered the historical returns and the future expectations for returns for each asset class, as well
as the target asset allocation of the pension portfolio and the diversification of the portfolio. This resulted in the selection of a 6.72% and 5.74% weighted-average long-term rate of return on
assets assumption for the fiscal year ended September 30, 2016 for U.S. and non-U.S. plans, respectively.
100
Table of Contents
AECOM
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
7. Pension Benefit Obligations (Continued)
As
of September 30, 2016, the fair values of the Company's post-retirement benefit plan assets by major asset categories were as follows:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Fair Value Measurement as of
September 30, 2016
|
|
|
|
Total
Carrying
Value as of
September 30,
2016
|
|
Quoted
Prices in
Active
Markets
(Level 1)
|
|
Significant
Other
Observable
Inputs
(Level 2)
|
|
Significant
Unobservable
Inputs
(Level 3)
|
|
|
|
(in millions)
|
|
Cash and cash equivalents
|
|
$
|
70.6
|
|
$
|
14.3
|
|
$
|
56.3
|
|
$
|
|
|
Equity securities
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Global equity securities
|
|
|
49.4
|
|
|
|
|
|
49.4
|
|
|
|
|
Domestic equity securities
|
|
|
57.1
|
|
|
|
|
|
57.1
|
|
|
|
|
Investment funds
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Diversified funds
|
|
|
223.1
|
|
|
|
|
|
223.1
|
|
|
|
|
Equity funds
|
|
|
362.0
|
|
|
5.1
|
|
|
356.9
|
|
|
|
|
Fixed income funds
|
|
|
548.5
|
|
|
3.7
|
|
|
544.8
|
|
|
|
|
Hedge funds
|
|
|
62.5
|
|
|
|
|
|
48.4
|
|
|
14.1
|
|
Assets held by insurance company
|
|
|
32.3
|
|
|
|
|
|
32.3
|
|
|
|
|
Other
|
|
|
24.6
|
|
|
|
|
|
24.6
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
|
|
$
|
1,430.1
|
|
$
|
23.1
|
|
$
|
1,392.9
|
|
$
|
14.1
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
As
of September 30, 2015, the fair values of the Company's post-retirement benefit plan assets by major asset categories are as follows:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Fair Value Measurement as of
September 30, 2015
|
|
|
|
Total
Carrying
Value as of
September 30,
2015
|
|
Quoted
Prices in
Active
Markets
(Level 1)
|
|
Significant
Other
Observable
Inputs
(Level 2)
|
|
Significant
Unobservable
Inputs
(Level 3)
|
|
|
|
(in millions)
|
|
Cash and cash equivalents
|
|
$
|
44.4
|
|
$
|
11.0
|
|
$
|
33.4
|
|
$
|
|
|
Equity securities
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Global equity securities
|
|
|
52.8
|
|
|
|
|
|
52.8
|
|
|
|
|
Domestic equity securities
|
|
|
60.0
|
|
|
|
|
|
60.0
|
|
|
|
|
Investment funds
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Diversified funds
|
|
|
287.4
|
|
|
|
|
|
287.4
|
|
|
|
|
Equity funds
|
|
|
309.6
|
|
|
|
|
|
309.6
|
|
|
|
|
Fixed income funds
|
|
|
542.5
|
|
|
|
|
|
542.5
|
|
|
|
|
Hedge funds
|
|
|
53.0
|
|
|
|
|
|
39.4
|
|
|
13.6
|
|
Assets held by insurance company
|
|
|
35.1
|
|
|
|
|
|
35.1
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
|
|
$
|
1,384.8
|
|
$
|
11.0
|
|
$
|
1,360.2
|
|
$
|
13.6
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
101
Table of Contents
AECOM
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
7. Pension Benefit Obligations (Continued)
Changes
for the year ended September 30, 2016, in the fair value of the Company's recurring post-retirement plan Level 3 assets are as follows:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
September 30,
2015
Beginning
balance
|
|
Actual return
on plan assets,
relating to
assets still held
at reporting
date
|
|
Actual return
on plan assets,
relating to
assets sold
during the
period
|
|
Purchases,
sales and
settlements
|
|
Transfer
into /
(out of)
Level 3
|
|
Change
due to
exchange
rate
changes
|
|
September 30,
2016
Ending
balance
|
|
|
|
(in millions)
|
|
Investment funds
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Hedge funds
|
|
$
|
13.6
|
|
$
|
0.5
|
|
$
|
|
|
$
|
|
|
$
|
|
|
$
|
|
|
$
|
14.1
|
|
Changes
for the year ended September 30, 2015, in the fair value of the Company's recurring post-retirement plan Level 3 assets are as follows:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
September 30,
2014
Beginning
balance
|
|
Actual return
on plan assets,
relating to
assets still held
at reporting
date
|
|
Actual return
on plan assets,
relating to
assets sold
during the
period
|
|
Purchases,
sales
and
settlements
|
|
Transfer
into /
(out of)
Level 3
|
|
Change
due to
exchange
rate
changes
|
|
September 30,
2015
Ending
balance
|
|
|
|
(in millions)
|
|
Investment funds
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Hedge funds
|
|
$
|
13.7
|
|
$
|
(0.1
|
)
|
$
|
|
|
$
|
|
|
$
|
|
|
$
|
|
|
$
|
13.6
|
|
Cash
equivalents are mostly comprised of short-term money-market instruments and are valued at cost, which approximates fair value.
For
equity investment funds not traded on an active exchange, or if the closing price is not available, the trustee obtains indicative quotes from a pricing vendor, broker, or investment
manager. These funds are categorized as Level 2 if the custodian obtains corroborated quotes from a pricing vendor or categorized as Level 3 if the custodian obtains uncorroborated
quotes from a broker or investment manager.
Fixed
income investment funds categorized as Level 2 are valued by the trustee using pricing models that use verifiable observable market data (e.g., interest rates and
yield curves observable at commonly quoted intervals), bids provided by brokers or dealers, or quoted prices of securities with similar characteristics.
Hedge
funds categorized as Level 3 are valued based on valuation models that include significant unobservable inputs and cannot be corroborated using verifiable observable market
data. Hedge funds are valued by independent administrators. Depending on the nature of the assets, the general partners or independent administrators use both the income and market approaches in their
models. The market approach consists of analyzing market transactions for comparable assets while the income approach uses earnings or the net present value of estimated future cash flows adjusted for
liquidity and other risk factors. As of September 30, 2016, there were no material changes to the valuation techniques.
Multiemployer Pension Plans
The Company participates in over 200 construction-industry multiemployer pension plans. Generally, the plans provide defined benefits to
substantially all employees covered by collective bargaining
102
Table of Contents
AECOM
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
7. Pension Benefit Obligations (Continued)
agreements.
Under the Employee Retirement Income Security Act, a contributor to a multiemployer plan is liable, upon termination or withdrawal from a plan, for its proportionate share of a plan's
unfunded vested liability. The Company's aggregate contributions to these multiemployer plans were $49.5 million and $54.5 million for the years ended September 30, 2016 and 2015,
respectively. At September 30, 2016 and 2015, none of the plans in which the Company participates are individually significant to its consolidated financial statements.
8. Debt
Debt consisted of the following:
|
|
|
|
|
|
|
|
|
|
September 30,
2016
|
|
September 30,
2015
|
|
|
|
(in millions)
|
|
2014 Credit Agreement
|
|
$
|
1,954.9
|
|
$
|
2,414.3
|
|
2014 Senior Notes
|
|
|
1,600.0
|
|
|
1,600.0
|
|
URS Senior Notes
|
|
|
427.7
|
|
|
429.4
|
|
Other debt
|
|
|
142.7
|
|
|
163.2
|
|
|
|
|
|
|
|
|
|
Total debt
|
|
|
4,125.3
|
|
|
4,606.9
|
|
Less: Current portion of debt and short-term borrowings
|
|
|
(366.3
|
)
|
|
(160.4
|
)
|
|
|
|
|
|
|
|
|
Long-term debt, less current portion
|
|
$
|
3,759.0
|
|
$
|
4,446.5
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
The
following table presents, in millions, scheduled maturities of the Company's debt as of September 30, 2016:
|
|
|
|
|
Fiscal Year
|
|
|
|
2017
|
|
$
|
366.3
|
|
2018
|
|
|
126.6
|
|
2019
|
|
|
117.4
|
|
2020
|
|
|
111.8
|
|
2021
|
|
|
1,455.2
|
|
Thereafter
|
|
|
1,948.0
|
|
|
|
|
|
|
Total
|
|
$
|
4,125.3
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
The Company entered into a credit agreement (Credit Agreement) on October 17, 2014, as amended, consisting of (i) a term loan A
facility in an aggregate principal amount of $1.925 billion, (ii) a term loan B facility in an aggregate principal amount of $0.76 billion 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 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.
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
103
Table of Contents
AECOM
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
8. Debt (Continued)
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 Company's ability and certain 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 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 acquisition of URS.
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 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 AECOM Capital business.
Under
the Credit Agreement, the Company is subject to a maximum consolidated leverage ratio and minimum consolidated interest coverage ratio at the end of each fiscal quarter. The
Company's Consolidated Leverage Ratio was 4.3 at September 30, 2016. As of September 30, 2016, the Company was in compliance with the covenants of the Credit Agreement.
At
September 30, 2016 and 2015, outstanding standby letters of credit totaled $92.3 million and $92.5 million, respectively, under the Company's revolving credit
facilities. As of September 30, 2016 and 2015, the Company had $888.4 million and $947.6 million, respectively, available under its revolving credit facility.
On October 6, 2014, the Company completed a private placement offering of $800,000,000 aggregate principal amount of its 5.750% Senior
Notes due 2022 (2022 Notes) and $800,000,000 aggregate principal amount of its 5.875% Senior Notes due 2024 (the 2024 Notes and, together with the 2022 Notes, the 2014 Senior Notes or Notes).
As
of September 30, 2016, the estimated fair value of its 2014 Senior Notes was approximately $838.0 million for the 2022 Notes and $850.0 million for the 2024
Notes. The fair value of the Notes as of
104
Table of Contents
AECOM
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
8. Debt (Continued)
September 30,
2016 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 its Notes.
At
any time prior to October 15, 2017, the Company may redeem all or part of the 2022 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 (subject to the rights of holders of record on the relevant record date to receive interest due on the relevant interest payment
date). In addition, at any time prior to October 15, 2017, the Company may redeem up to 35% of the original aggregate principal amount of the 2022 Notes with the proceeds of one or more equity
offerings, at a redemption price equal to 105.750%, plus accrued and unpaid interest. Furthermore, at any time on or after October 15, 2017, 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.
In
connection with the offering of the Notes, the Company and the Guarantors entered into a Registration Rights Agreement, dated as of October 6, 2014 to exchange the Notes for
registered notes having terms substantially identical in all material respects (except certain transfer restrictions, registration rights and additional interest provisions relating to the Notes will
not apply to the registered notes). The Company filed an initial registration statement on Form S-4 with the SEC on July 6, 2015 that was declared effective by the SEC on
September 29, 2015. On November 2, 2015, the Company completed its exchange offer which exchanged the Notes for the registered notes, as well as all related guarantees.
The
Company was in compliance with the covenants relating to the Notes as of September 30, 2016.
In connection with the URS acquisition, the Company assumed URS's 3.85% Senior Notes due 2017 (2017 URS Senior Notes) and its 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 principal amount and, accordingly, the Company redeemed $572.3 million of the URS Senior Notes on
October 24, 2014. The
URS Senior Notes are general unsecured senior obligations of AECOM Global II, LLC (as successor in interest to URS) and URS Fox US LP and are fully and unconditionally guaranteed on a
joint-and-several basis by certain former URS domestic subsidiary guarantors.
As
of September 30, 2016, the estimated fair value of the URS Senior Notes was approximately $180.1 million for the 2017 URS Senior Notes and $243.6 million for the
2022 URS Senior Notes. The carrying value of the URS Senior Notes on the Company's Consolidated Balance Sheets as of
105
Table of Contents
AECOM
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
8. Debt (Continued)
September 30,
2016 was $180.1 million for the 2017 URS Senior Notes and $247.6 million for the 2022 URS Senior Notes. The fair value of the URS Senior Notes as of
September 30, 2016 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 URS Senior Notes.
As
of September 30, 2016, the Company was in compliance with the covenants relating to the URS Senior Notes.
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 for payment of performance guarantees. At September 30, 2016 and 2015, these outstanding standby letters of credit totaled
$382.2 million and $344.0 million, respectively. As of September 30, 2016, the Company had $546.2 million available under these unsecured credit facilities.
The Company's average effective interest rate on its total debt, including the effects of the interest rate swap agreements, during the year
ended September 30, 2016 and 2015 was 4.4% and 4.2%, respectively.
9. 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.
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 gain 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. 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
106
Table of Contents
AECOM
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
9. Derivative Financial Instruments and Fair Value Measurements (Continued)
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.
The
notional principal, fixed rates and related expiration dates of the Company's outstanding interest rate swap agreements were as follows:
|
|
|
|
|
|
|
|
|
|
|
|
|
September 30, 2016
|
|
|
|
|
Notional Amount
(in millions)
|
|
Fixed
Rate
|
|
Expiration
Date
|
|
|
|
|
$
|
300.0
|
|
|
1.63
|
%
|
June 2018
|
|
|
|
|
|
300.0
|
|
|
1.54
|
%
|
September 2018
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
September 30, 2015
|
|
|
|
|
Notional Amount
(in millions)
|
|
Fixed
Rate
|
|
Expiration
Date
|
|
|
|
|
$
|
300.0
|
|
|
1.63
|
%
|
June 2018
|
|
|
|
|
|
300.0
|
|
|
1.54
|
%
|
September 2018
|
|
|
The
notional principal of outstanding foreign currency contracts to purchase Australian dollars (AUD) was AUD 58.6 million (or $43.4 million) at September 30, 2016.
The notional principal of outstanding foreign currency contracts to purchase Australian dollars with U.S. dollars was AUD 98.1 million (or $74.1 million) at September 30,
2015.
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 years ended
September 30, 2016, 2015 and 2014.
The Company's non-pension financial assets and liabilities recorded at fair values relate to derivative instruments and were not material at
September 30, 2016 or 2015.
See
Note 17 for accumulated balances and reporting period activities of derivatives related to reclassifications out of accumulated other comprehensive income or loss for the
years ended September 30, 2016, 2015 and 2014. Amounts recognized in accumulated other comprehensive loss from the Company's foreign currency options were immaterial for all years presented.
Amounts reclassified from accumulated other comprehensive loss into income from the foreign currency options were immaterial for all years presented. Additionally, there were no losses recognized in
income due to amounts excluded from effectiveness testing from the Company's interest rate swap agreements.
During
the years ended September 30, 2016 and 2015, the Company entered into two contingent consideration arrangements in connection with business acquisitions. Under the
arrangements, 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 as of
September 30, 2016 and 2015 was $39 million and $39 million, respectively, and is a Level 3 fair value measurement recorded within other
107
Table of Contents
AECOM
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
9. Derivative Financial Instruments and Fair Value Measurements (Continued)
accrued
liabilities. It was valued based on estimated future net cash flows. After the initial recording of this liability as a part of purchase accounting, there were no material subsequent changes
in fair value through September 30, 2016. Any future changes in the fair value of this contingent consideration liability will be recognized in earnings during the applicable period.
10. Concentration of Credit Risk
Financial instruments which potentially subject the Company to concentrations of credit risk consist principally of cash investments and trade receivables. The Company's cash balances
and short-term investments are maintained in accounts held by major banks and financial institutions located primarily in the U.S., Canada, Europe, Australia, Middle East and Hong Kong. If the Company
extends significant credit to clients in a specific geographic area or industry, the Company may experience disproportionately high levels of default if those clients are adversely affected by factors
particular to their geographic area or industry. Concentrations of credit risk with respect to trade receivables are limited due to the large number of customers comprising the Company's customer
base, including, in large part, governments, government agencies and quasi-government organizations, and their dispersion across many different industries and geographies. See Note 19 regarding
the Company's foreign revenues. In order to mitigate credit risk, the Company continually reviews the credit worthiness of its major private clients.
11. Leases
The Company and its subsidiaries are lessees in non-cancelable leasing agreements for office buildings
and equipment. The related 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. The following table presents, in millions, amounts payable under non-cancelable operating lease commitments during the following fiscal years:
|
|
|
|
|
Year Ending September 30,
|
|
|
|
2017
|
|
$
|
279.4
|
|
2018
|
|
|
232.4
|
|
2019
|
|
|
195.0
|
|
2020
|
|
|
161.5
|
|
2021
|
|
|
131.9
|
|
Thereafter
|
|
|
464.1
|
|
|
|
|
|
|
Total
|
|
$
|
1,464.3
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Rent
expense for leases for the years ended September 30, 2016, 2015 and 2014 was approximately $383.7 million, $395.9 million, and $210.4 million,
respectively. When the Company is required to restore leased facilities to original condition, provisions are made over the period of the lease.
108
Table of Contents
AECOM
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
12. Stockholders' Equity
Common Stock Units
Common stock units are only redeemable for common stock. In the event of liquidation of the Company, holders of stock units are
entitled to no greater rights than holders of common stock. See also Note 13.
13. Share-Based Payments
Defined Contribution Plans
Substantially all permanent employees are eligible to participate in defined contribution plans provided by the
Company.
Under these plans, participants may make contributions into a variety of funds, including a fund that is fully invested in Company stock. Employees are not required to allocate any funds to Company
stock. Employees may generally reallocate their account balances on a daily basis; however, employees classified as insiders are restricted under the Company's insider trading policy. Compensation
expense relating to these employer contributions under defined contribution plans for fiscal years ended September 30, 2016, 2015 and 2014 was $26.8 million, $13.3 million, and
$14.4 million, respectively.
Stock Incentive Plans
Under the 2016 Stock Incentive Plan, the Company has up to 10.9 million securities remaining available for future
issuance as of September 30, 2016. Stock options may be granted to employees and non-employee directors with an exercise price not less than the fair market value of the stock on the date of
grant. Unexercised options expire seven years after date of grant.
During
the three years in the period ended September 30, 2016, option activity was as follows:
|
|
|
|
|
|
|
|
|
|
Number of
Options
(in millions)
|
|
Weighted
Average
Exercise Price
|
|
Balance, September 30, 2013
|
|
|
1.6
|
|
|
24.73
|
|
Granted
|
|
|
0.6
|
|
|
31.62
|
|
Exercised
|
|
|
(0.5
|
)
|
|
23.64
|
|
Cancelled
|
|
|
(0.1
|
)
|
|
26.87
|
|
|
|
|
|
|
|
|
|
Balance, September 30, 2014
|
|
|
1.6
|
|
|
27.69
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Granted
|
|
|
|
|
|
|
|
Exercised
|
|
|
(0.3
|
)
|
|
24.98
|
|
Cancelled
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance, September 30, 2015
|
|
|
1.3
|
|
|
28.26
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Granted
|
|
|
|
|
|
|
|
Exercised
|
|
|
(0.4
|
)
|
|
23.96
|
|
Cancelled
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance, September 30, 2016
|
|
|
0.9
|
|
|
30.36
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Exercisable as of September 30, 2014
|
|
|
0.9
|
|
|
25.16
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Exercisable as of September 30, 2015
|
|
|
0.7
|
|
|
25.04
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Exercisable as of September 30, 2016
|
|
|
0.3
|
|
|
26.99
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
109
Table of Contents
AECOM
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
13. Share-Based Payments (Continued)
The
following table summarizes information concerning outstanding and exercisable options as of September 30, 2016:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Options Outstanding
|
|
|
|
Options Exercisable
|
|
|
|
Number
Outstanding
as of
September 30,
2016
(in millions)
|
|
Weighted
Average
Remaining
Contractual
Life
|
|
Weighted
Average
Exercise
Price
|
|
Aggregate
Intrinsic
Value
(in millions)
|
|
Number
Exercisable
as of
September 30,
2016
(in millions)
|
|
Weighted
Average
Remaining
Contractual
Life
|
|
Weighted
Average
Exercise
Price
|
|
Range of Exercise Prices
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$24.45 - $27.67
|
|
|
0.2
|
|
|
0.76
|
|
$
|
26.21
|
|
$
|
0.5
|
|
|
0.2
|
|
|
0.76
|
|
$
|
26.21
|
|
28.04 - 31.62
|
|
|
0.7
|
|
|
6.72
|
|
|
31.27
|
|
|
0.1
|
|
|
0.1
|
|
|
1.05
|
|
|
28.52
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
0.9
|
|
|
5.65
|
|
|
30.36
|
|
$
|
0.6
|
|
|
0.3
|
|
|
0.86
|
|
|
26.99
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
The
remaining contractual life of options outstanding at September 30, 2016 range from 0.76 to 6.72 years and have a weighted average remaining contractual life of
5.65 years. The aggregate intrinsic value of stock options exercised during the years ended September 30, 2016, 2015 and 2014 was $0.6 million, $2.1 million, and
$4.3 million, respectively.
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 option on the grant date. The Company uses historical data as a
basis to estimate the probability of forfeitures. No stock options were granted during the years ended September 30, 2016 and 2015.
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 vesting over a three-year 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 was $29.91, $32.32, and $29.32 during
the years ended September 30, 2016, 2015 and 2014, respectively. The weighted average grant date fair value of restricted stock unit awards was $29.82, $31.05, and $29.60 during the years ended
September 30, 2016, 2015 and 2014, respectively. Included in the restricted stock unit grants during the twelve months ended
September 30, 2015 were 2.6 million restricted stock units with a grant date fair value of $30.04 per share that were converted from unvested URS service based restricted stock awards
assumed by the Company in connection with the acquisition of URS. Total compensation expense related to these share-based payments including stock options was $73.4 million,
$112.2 million, and $34.4 million during the years ended September 30, 2016, 2015 and 2014, respectively. Included in total compensation expense during the twelve months ended
September 30, 2015 was $43.9 million related to the settlement of accelerated URS equity awards with $17.6 million of Company stock and $26.3 million in cash which was
classified as acquisition and integration expense. Unrecognized compensation expense related to total share-based payments outstanding as of September 30, 2016 and 2015 was $91.8 million
and $115.5 million, respectively, to be recognized on a straight-line basis over the awards' respective vesting periods which are generally three years.
110
Table of Contents
AECOM
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
13. Share-Based Payments (Continued)
Cash
flow attributable to tax benefits resulting from tax deductions in excess of compensation cost recognized for those stock options (excess tax benefits) is classified as financing
cash flows. Excess tax benefits of $0.0 million, $3.6 million, and $0.7 million for the years ended September 30, 2016, 2015 and 2014, respectively, have been classified as
financing cash inflows in the Consolidated Statements of Cash Flows.
14. Income Taxes
Income before income taxes included income (loss) from domestic operations of $51.6 million, $(214.6) million, and $138.2 million for fiscal years ended
September 30, 2016, 2015 and 2014 and income from foreign operations of $74.0 million, $63.1 million, and $176.6 million for fiscal years ended September 30, 2016,
2015 and 2014.
Income
tax (benefit) expense was comprised of:
|
|
|
|
|
|
|
|
|
|
|
|
|
Fiscal Year Ended
|
|
|
|
September 30,
2016
|
|
September 30,
2015
|
|
September 30,
2014
|
|
|
|
(in millions)
|
|
Current:
|
|
|
|
|
|
|
|
|
|
|
Federal
|
|
$
|
33.7
|
|
$
|
(67.1
|
)
|
$
|
5.3
|
|
State
|
|
|
12.4
|
|
|
2.6
|
|
|
3.3
|
|
Foreign
|
|
|
26.1
|
|
|
37.2
|
|
|
46.3
|
|
|
|
|
|
|
|
|
|
|
|
|
Total current income tax (benefit) expense
|
|
|
72.2
|
|
|
(27.3
|
)
|
|
54.9
|
|
|
|
|
|
|
|
|
|
|
|
|
Deferred:
|
|
|
|
|
|
|
|
|
|
|
Federal
|
|
|
(63.4
|
)
|
|
(44.2
|
)
|
|
27.7
|
|
State
|
|
|
(5.4
|
)
|
|
1.2
|
|
|
5.6
|
|
Foreign
|
|
|
(41.3
|
)
|
|
(10.0
|
)
|
|
(6.2
|
)
|
|
|
|
|
|
|
|
|
|
|
|
Total deferred income tax (benefit) expense
|
|
|
(110.1
|
)
|
|
(53.0
|
)
|
|
27.1
|
|
|
|
|
|
|
|
|
|
|
|
|
Total income tax (benefit) expense
|
|
$
|
(37.9
|
)
|
$
|
(80.3
|
)
|
$
|
82.0
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
111
Table of Contents
AECOM
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
14. Income Taxes (Continued)
The
major elements contributing to the difference between the U.S. federal statutory rate of 35.0% and the effective tax rate are as follows:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Fiscal Year Ended
|
|
|
|
September 30, 2016
|
|
September 30, 2015
|
|
September 30, 2014
|
|
|
|
Amount
|
|
%
|
|
Amount
|
|
%
|
|
Amount
|
|
%
|
|
|
|
(in millions)
|
|
Tax at federal statutory rate
|
|
$
|
43.9
|
|
|
35.0
|
%
|
$
|
(53.0
|
)
|
|
35.0
|
%
|
$
|
110.2
|
|
|
35.0
|
%
|
State income tax, net of federal benefit
|
|
|
5.6
|
|
|
4.5
|
|
|
(2.3
|
)
|
|
1.5
|
|
|
5.0
|
|
|
1.6
|
|
Valuation allowance
|
|
|
(54.8
|
)
|
|
(43.6
|
)
|
|
30.0
|
|
|
(19.8
|
)
|
|
6.3
|
|
|
2.0
|
|
Exclusion of tax on non-controlling interests
|
|
|
(24.7
|
)
|
|
(19.7
|
)
|
|
(29.3
|
)
|
|
19.3
|
|
|
|
|
|
|
|
Income tax credits and incentives
|
|
|
(24.6
|
)
|
|
(19.6
|
)
|
|
(21.2
|
)
|
|
14.0
|
|
|
(18.8
|
)
|
|
(6.0
|
)
|
Foreign tax rate differential
|
|
|
(19.7
|
)
|
|
(15.7
|
)
|
|
(24.8
|
)
|
|
16.4
|
|
|
(38.8
|
)
|
|
(12.3
|
)
|
Tax exempt income
|
|
|
(17.6
|
)
|
|
(14.0
|
)
|
|
(13.2
|
)
|
|
8.7
|
|
|
(1.9
|
)
|
|
(0.6
|
)
|
Change in uncertain tax positions
|
|
|
(5.0
|
)
|
|
(4.0
|
)
|
|
6.6
|
|
|
(4.3
|
)
|
|
(4.5
|
)
|
|
(1.4
|
)
|
Change in tax rates
|
|
|
34.6
|
|
|
27.6
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Foreign residual income
|
|
|
17.8
|
|
|
14.2
|
|
|
20.1
|
|
|
(13.3
|
)
|
|
16.9
|
|
|
5.4
|
|
Nondeductible costs
|
|
|
6.1
|
|
|
4.8
|
|
|
2.8
|
|
|
(1.8
|
)
|
|
2.8
|
|
|
0.9
|
|
Nondeductible transaction costs
|
|
|
|
|
|
|
|
|
2.8
|
|
|
(1.8
|
)
|
|
2.8
|
|
|
0.9
|
|
Other items, net
|
|
|
0.5
|
|
|
0.3
|
|
|
1.2
|
|
|
(0.9
|
)
|
|
2.0
|
|
|
0.6
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total income tax expense
|
|
$
|
(37.9
|
)
|
|
(30.2
|
)%
|
$
|
(80.3
|
)
|
|
53.0
|
%
|
$
|
82.0
|
|
|
26.1
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
During
the year ended September 30, 2016 and 2015, the Company recognized a $10.1 million and $19.4 million tax benefit related to U.S. tax incentives and credits
that previously expired on December 31, 2014 and 2013, respectively, and were subsequently extended due to a change in tax law.
112
Table of Contents
AECOM
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
14. Income Taxes (Continued)
The
deferred tax assets (liabilities) are as follows:
|
|
|
|
|
|
|
|
|
|
Fiscal Year Ended
|
|
|
|
September 30,
2016
|
|
September 30,
2015
|
|
|
|
(in millions)
|
|
Deferred tax assets:
|
|
|
|
|
|
|
|
Compensation and benefit accruals not currently deductible
|
|
$
|
150.5
|
|
$
|
166.7
|
|
Net operating loss carryforwards
|
|
|
378.0
|
|
|
195.9
|
|
Self insurance reserves
|
|
|
24.7
|
|
|
46.8
|
|
Research and experimentation and other tax credits
|
|
|
125.3
|
|
|
43.0
|
|
Pension liability
|
|
|
180.9
|
|
|
165.6
|
|
Accrued liabilities
|
|
|
221.0
|
|
|
267.3
|
|
Other
|
|
|
4.3
|
|
|
11.4
|
|
|
|
|
|
|
|
|
|
Total deferred tax assets
|
|
|
1,084.7
|
|
|
896.7
|
|
|
|
|
|
|
|
|
|
Deferred tax liabilities:
|
|
|
|
|
|
|
|
Unearned revenue
|
|
|
(212.6
|
)
|
|
(101.9
|
)
|
Depreciation and amortization
|
|
|
(113.0
|
)
|
|
(76.5
|
)
|
Acquired intangible assets
|
|
|
(155.5
|
)
|
|
(219.2
|
)
|
Investment in subsidiaries
|
|
|
(261.4
|
)
|
|
(239.2
|
)
|
|
|
|
|
|
|
|
|
Total deferred tax liabilities
|
|
|
(742.5
|
)
|
|
(636.8
|
)
|
|
|
|
|
|
|
|
|
Valuation allowance
|
|
|
(183.8
|
)
|
|
(239.4
|
)
|
|
|
|
|
|
|
|
|
Net deferred tax assets
|
|
$
|
158.4
|
|
$
|
20.5
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
As
a result of certain realization requirements of ASC 718, the table of deferred tax assets and liabilities does not include certain deferred tax assets as of September 30, 2016,
that arose directly from tax deductions related to equity compensation that are greater than the compensation recognized for financial reporting. Equity will be increased by $3.8 million if and
when such deferred tax assets are ultimately realized.
As
of September 30, 2016, the Company has available unused federal, state and foreign net operating loss (NOL) carryforwards of $503.8 million, $960.1 million and
$789.6 million, respectively, which expire at various dates over the next several years; some foreign NOL carryforwards never expire. In addition, as of September 30, 2016, the Company
has unused federal and state research and development credits of $67.4 million and $19.2 million, respectively, and California Enterprise Zone Tax Credits of $6.2 million.
As
of September 30, 2016 and 2015, gross deferred tax assets were $1,084.7 million and $896.7 million, respectively. The Company has recorded a valuation allowance
of approximately $183.8 million and $239.4 million at September 30, 2016 and 2015, respectively, primarily related to state and foreign net operating loss carryforwards and
credits and deferred tax assets related to certain pension obligations (primarily in the United Kingdom and Canada). The Company has performed an assessment of positive and negative evidence,
including the nature, frequency, and severity of cumulative financial reporting losses in recent years, the future reversal of existing temporary differences, predictability of future taxable income
exclusive of reversing temporary differences of the character necessary to realize the asset, relevant
113
Table of Contents
AECOM
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
14. Income Taxes (Continued)
carryforward
periods, taxable income in carry-back years if carry-back is permitted under tax law, and prudent and feasible tax planning strategies that would be implemented, if necessary, to protect
against the loss of the deferred tax asset that would otherwise expire. Although realization is not assured, based on the Company's assessment, the Company has concluded that it is more likely than
not that the remaining gross deferred tax asset (exclusive of deferred tax liabilities) of $900.9 million will be realized and, as such, no additional valuation allowance has been provided. The
net decrease in the valuation allowance of $55.6 million is primarily attributable to the release of $36.2 million of valuation allowances for the United Kingdom and Australia, $27.2
million impact from the change in the United Kingdom tax rate and the utilization of $10.7 million of foreign net operating loss carryforwards in the current year, partially offset by increases
in valuation allowances for unbenefitable losses.
Upon
the acquisition of URS in October 2014, the Company had previously recorded a valuation allowance primarily against foreign net operating losses and deferred tax assets related to
the pension obligation, consistent with those described above. Tax jurisdictions largely contributing to the URS related valuation allowance included $92.8 million recorded for the United
Kingdom, $22.5 million recorded for Canada, $9.3 million recorded for the United States and $2.9 million recorded for Australia. In its determination of the realizability of its
deferred tax assets, the Company evaluated positive evidence consisting of positive earnings trends over a sustainable period, positive economic conditions in the industries we operate in, possible
prudent and feasible tax planning strategies (net of costs to implement the tax planning strategies) and actual usage of net operating loss and tax credit carryforwards. The Company also evaluated
negative evidence consisting of significant net operating loss carryforwards, the cumulative history of losses in recent years, restriction on usage of losses under relevant tax laws, projections of
future operations and economic downturns in the industries that we operate in. This evaluation was conducted on a tax jurisdictional basis or legal entity basis, as applicable, and based on the
weighing of all positive and negative evidence, a determination was made as to the realizability of the deferred tax assets on that same basis.
Certain
valuation allowances in the amount of $23.3 million in the United Kingdom have been released due to sufficient positive evidence obtained during the year ended
September 30, 2016. We evaluated the new positive evidence against any negative evidence and determined the valuation allowance was no longer necessary. This new positive evidence includes
reaching a position of cumulative income over a
three year period and the use of net operating losses on a taxable basis. In addition, the Company's United Kingdom affiliate has strong projected earnings in the United Kingdom.
During
the third quarter of 2016, the Company's Australian affiliate made an election in Australia to combine the tax results of the URS Australia business with the AECOM Australia
business. This election resulted in the ability to utilize the URS Australia businesses' deferred tax assets against the combined future earnings of the Australian group and accordingly, the valuation
allowance of $12.9 million was released.
Generally,
the Company would reverse its valuation allowance in a particular tax jurisdiction if the positive evidence examined, such as projected and sustainable earnings or a
tax-planning strategy that allows for the usage of the deferred tax asset, is sufficient to overcome significant negative evidence, such as large net operating loss carryforwards or a cumulative
history of losses in recent years. Given the current and forecasted earnings trend in the United Kingdom, sufficient positive evidence in the form of sustained earnings may become available in 2017 to
release all or a portion of the related valuation allowance. Certain operations in Canada continue to forecast losses and the valuation allowances could be reduced if
114
Table of Contents
AECOM
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
14. Income Taxes (Continued)
the
earnings trends reverse. In the United States, the valued deferred tax assets have a restricted life or use under relevant tax law and, therefore, it is unlikely that the valuation allowance
related to these assets will reverse. In addition, the Company is continually investigating tax planning strategies that, if prudent and feasible, may be implemented to realize a deferred tax asset
that would otherwise expire unutilized. The identification and internal/external approval (as relevant) of such a prudent and feasible tax planning strategy could cause a reduction in the valuation
allowance.
As
of September 30, 2016 and 2015, the Company has remaining tax-deductible goodwill of $210.8 million and $261.2 million, respectively, resulting from acquisitions.
The amortization of this goodwill is deductible over various periods ranging up to 15 years.
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 $1.6 billion are able to and intended to be reinvested indefinitely. If these basis differences were distributed, foreign tax credits could become available under current law to
partially or fully reduce the resulting U.S. income tax liability. There may also be additional US or foreign income tax liability upon repatriaton, although the calculation of such additional taxes
is not practicable. The Company has recorded a deferred tax liability in the amount of $113.2 million relating to certain foreign subsidiaries for which the basis differences are not intended
to be reinvested indefinitely.
As
of September 30, 2016 and 2015, the Company had a liability for unrecognized tax benefits, including potential interest and penalties, net of related tax benefit, totaling
$96.8 million and $107.6 million, respectively. The gross unrecognized tax benefits as of September 30, 2016 and 2015 were $87.9 million and $95.2 million,
respectively, excluding interest, penalties, and related tax benefit. Of the $87.9 million, approximately $71.6 million would be included in the effective tax rate if recognized. A
reconciliation of the beginning and ending amount of gross unrecognized tax benefits is as follows:
|
|
|
|
|
|
|
|
|
|
Fiscal Year Ended
|
|
|
|
September 30,
2016
|
|
September 30,
2015
|
|
|
|
(in millions)
|
|
Balance at the beginning of the year
|
|
$
|
95.2
|
|
$
|
47.5
|
|
Gross increase due to acquisitions
|
|
|
|
|
|
49.4
|
|
Gross increase in current period's tax positions
|
|
|
7.6
|
|
|
6.0
|
|
Gross increase in prior years' tax positions
|
|
|
5.2
|
|
|
6.4
|
|
Gross decrease in prior years' tax positions
|
|
|
(16.6
|
)
|
|
(0.2
|
)
|
Decrease due to settlement with tax authorities
|
|
|
(3.2
|
)
|
|
(2.0
|
)
|
Decrease due to lapse of statute of limitations
|
|
|
(1.8
|
)
|
|
(4.6
|
)
|
Gross change due to foreign exchange fluctuations
|
|
|
1.5
|
|
|
(7.3
|
)
|
|
|
|
|
|
|
|
|
Balance at the end of the year
|
|
$
|
87.9
|
|
$
|
95.2
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
The
Company classifies interest and penalties related to uncertain tax positions within the income tax expense line in the accompanying consolidated statements of operations. As of
September 30, 2016, the accrued interest and penalties were $12.5 million and $2.6 million, respectively, excluding any related income tax benefits. At September 30, 2015,
the accrued interest and penalties, including balances acquired in the URS acquisition, were $13.9 million and $3.5 million, respectively, excluding any related income tax benefits.
115
Table of Contents
AECOM
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
14. Income Taxes (Continued)
The
Company files income tax returns in numerous tax jurisdictions, including the U.S., and numerous U.S. states and non-U.S. jurisdictions around the world. The statute of limitations
varies by jurisdiction in which the Company operates. Because of the number of jurisdictions in which the Company files tax returns, in any given year the statute of limitations in certain
jurisdictions may expire without examination within the 12-month period from the balance sheet date.
The
Company concluded its examination by the U.S. Internal Revenue Service for the fiscal years ended September 30, 2010 and September 30, 2011 in the fourth quarter of
2016, with no material adjustments. The U.S. Internal Revenue Service initiated an examination of URS for the years ended December 31, 2012, December 31, 2013 and October 17, 2014
in August 2016. With a few exceptions, the Company is no longer subject to U.S. state or non-U.S. income tax examinations by tax authorities for years before fiscal 2011.
While
it is reasonably possible that the total amounts of unrecognized tax benefits could significantly increase or decrease within the next twelve months, an estimate of the range of
possible change cannot be made.
15. Earnings Per Share
Basic earnings per share (EPS) excludes dilution and is computed by dividing net income available for common stockholders by the weighted average number of common shares outstanding for
the period. Diluted EPS is computed by dividing net income 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 outstanding stock options and restricted stock units using the treasury stock method. For the periods presented, options excluded from the calculation
of potential common shares were not significant. The computation of diluted loss per share for the year ended September 30, 2015 excludes 1.7 million of potential common shares due to
their antidilutive effect.
The
following table sets forth a reconciliation of the denominators of basic and diluted earnings per share:
|
|
|
|
|
|
|
|
|
|
|
|
|
Fiscal Year Ended
|
|
|
|
September 30,
2016
|
|
September 30,
2015
|
|
September 30,
2014
|
|
|
|
(in millions)
|
|
Denominator for basic earnings per share
|
|
|
154.8
|
|
|
149.6
|
|
|
97.2
|
|
Potential common shares
|
|
|
1.3
|
|
|
|
|
|
1.5
|
|
|
|
|
|
|
|
|
|
|
|
|
Denominator for diluted earnings per share
|
|
|
156.1
|
|
|
149.6
|
|
|
98.7
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
116
Table of Contents
AECOM
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
16. Other Financial Information
Accrued expenses and other current liabilities consist of the following:
|
|
|
|
|
|
|
|
|
|
Fiscal Year Ended
|
|
|
|
September 30,
2016
|
|
September 30,
2015
|
|
|
|
(in millions)
|
|
Accrued salaries and benefits
|
|
$
|
964.9
|
|
$
|
852.2
|
|
Accrued contract costs
|
|
|
1,009.8
|
|
|
993.1
|
|
Other accrued expenses
|
|
|
410.1
|
|
|
322.5
|
|
|
|
|
|
|
|
|
|
|
|
$
|
2,384.8
|
|
$
|
2,167.8
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Accrued
contract costs above included professional liability accruals of $611.0 million as of September 30, 2016. 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 September 30, 2016 and 2015. The Company
did not have material revisions to estimates for contracts where revenue is recognized using the percentage-of-completion method during the twelve months ended September 30, 2016.
During
the twelve months ended September 30, 2016, the Company recorded revenue and a noncurrent asset related to the expected accelerated recovery of a pension related
entitlement from the federal government of approximately $50 million. The actual amount of reimbursement may vary from the Company's expectation.
17. Reclassifications out of Accumulated Other Comprehensive Loss
The accumulated balances and reporting period activities for the years ended September 30, 2016, 2015 and 2014 related to reclassifications out of accumulated other comprehensive
loss are summarized as follows (in millions):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Pension
Related
Adjustments
|
|
Foreign
Currency
Translation
Adjustments
|
|
Loss on
Derivative
Instruments
|
|
Accumulated
Other
Comprehensive
Loss
|
|
Balances at September 30, 2013
|
|
$
|
(192.8
|
)
|
$
|
(66.4
|
)
|
$
|
(2.1
|
)
|
$
|
(261.3
|
)
|
Other comprehensive (loss) before reclassification
|
|
|
(30.3
|
)
|
|
(71.4
|
)
|
|
(1.4
|
)
|
|
(103.1
|
)
|
Amounts reclassified from accumulated other comprehensive loss:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Actuarial losses, net of tax
|
|
|
6.1
|
|
|
|
|
|
|
|
|
6.1
|
|
Cash flow hedge losses, net of tax
|
|
|
|
|
|
|
|
|
1.7
|
|
|
1.7
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balances at September 30, 2014
|
|
$
|
(217.0
|
)
|
$
|
(137.8
|
)
|
$
|
(1.8
|
)
|
$
|
(356.6
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
117
Table of Contents
AECOM
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
17. Reclassifications out of Accumulated Other Comprehensive Loss (Continued)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Pension
Related
Adjustments
|
|
Foreign
Currency
Translation
Adjustments
|
|
Loss on
Derivative
Instruments
|
|
Accumulated
Other
Comprehensive
Loss
|
|
Balances at September 30, 2014
|
|
$
|
(217.0
|
)
|
$
|
(137.8
|
)
|
$
|
(1.8
|
)
|
$
|
(356.6
|
)
|
Other comprehensive income (loss) before reclassification
|
|
|
5.8
|
|
|
(282.3
|
)
|
|
(13.3
|
)
|
|
(289.8
|
)
|
Amounts reclassified from accumulated other comprehensive loss:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Actuarial losses, net of tax
|
|
|
7.2
|
|
|
|
|
|
|
|
|
7.2
|
|
Cash flow hedge losses, net of tax
|
|
|
|
|
|
|
|
|
4.1
|
|
|
4.1
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balances at September 30, 2015
|
|
$
|
(204.0
|
)
|
$
|
(420.1
|
)
|
$
|
(11.0
|
)
|
$
|
(635.1
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Pension
Related
Adjustments
|
|
Foreign
Currency
Translation
Adjustments
|
|
Loss on
Derivative
Instruments
|
|
Accumulated
Other
Comprehensive
Loss
|
|
Balances at September 30, 2015
|
|
$
|
(204.0
|
)
|
$
|
(420.1
|
)
|
$
|
(11.0
|
)
|
$
|
(635.1
|
)
|
Other comprehensive income (loss) before reclassification
|
|
|
(171.5
|
)
|
|
(63.6
|
)
|
|
1.2
|
|
|
(233.9
|
)
|
Amounts reclassified from accumulated other comprehensive loss:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Actuarial gains, net of tax
|
|
|
6.6
|
|
|
|
|
|
|
|
|
6.6
|
|
Cash flow hedge gains, net of tax
|
|
|
|
|
|
|
|
|
4.8
|
|
|
4.8
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balances at September 30, 2016
|
|
$
|
(368.9
|
)
|
$
|
(483.7
|
)
|
$
|
(5.0
|
)
|
$
|
(857.6
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
18. 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 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 circumstances such as for
warranties. The Company may also
118
Table of Contents
AECOM
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
18. Commitments and Contingencies (Continued)
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
September 30, 2016, the Company was contingently liable in the amount of approximately $474.5 million in issued standby letters of credit and $3.3 billion 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.
In
addition, in connection with the investment activities of AECOM Capital, the Company provides guarantees of certain obligations, including guarantees for completion of projects,
repayment of debt, environmental indemnity obligations and acts of willful misconduct.
DOE Deactivation, Demolition, and Removal Project
Washington Group International, an Ohio company (WGI Ohio), an affiliate of URS, 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. In February 2011, WGI Ohio 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 the DOE to pay all project costs up to $106 million, requires WGI Ohio and the DOE to equally share in all project costs incurred from $106 million to
$146 million, and requires WGI Ohio to pay all project costs exceeding $146 million.
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 required to perform work outside the scope of the Task Order Modification. In December 2014, WGI Ohio submitted claims against the DOE pursuant to the Contracts Disputes Acts seeking
recovery of $103 million, including additional fees on changed work scope.
Due
to significant delays and uncertainties about responsibilities for the scope of remaining work, final project completion costs and other associated costs may exceed
$100 million over the contracted amounts. In addition, WGI Ohio assets and liabilities, including the value of the above costs and claims, were also measured at their fair value on
October 17, 2014, the date AECOM acquired WGI Ohio's parent company, see Note 3, which is reevaluated to account for developments pertaining to this matter.
WGI
Ohio can provide no certainty that it will recover the DOE claims and fees submitted in December 2014, as well as 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.
119
Table of Contents
AECOM
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
18. Commitments and Contingencies (Continued)
In 2005 and 2006, the Company's main Australian subsidiary, AECOM Australia Pty Ltd (AECOM Australia), performed a traffic forecast
assignment for a client consortium as part of the client's project to design, build, finance and operate a tolled motorway tunnel in Australia. To fund the motorway's design and construction, the
client formed certain special purpose vehicles (SPVs) that raised approximately $700 million Australian dollars through an initial public offering (IPO) of equity units in 2006 and
approximately an additional $1.4 billion Australian dollars in long term bank loans. The SPVs went into insolvency administrations in February 2011.
KordaMentha,
the receivers for the SPVs (the RCM Applicants), caused a lawsuit to be filed against AECOM Australia by the RCM Applicants in the Federal Court of Australia on
May 14, 2012. Portigon AG (formerly WestLB AG), one of the lending banks to the SPVs, filed a lawsuit in the Federal Court of Australia against AECOM Australia on May 18,
2012. Separately, a class action lawsuit, which has been amended to include approximately 770 of the IPO investors, was filed against AECOM Australia in the Federal Court of Australia on
May 31, 2012.
All
of the lawsuits claim damages that purportedly resulted from AECOM Australia's role in connection with the above described traffic forecast. On July 10, 2015, AECOM Australia,
the RCM Applicants and Portigon AG entered into a Deed of Release settling the respective lawsuits for $205 million (U.S. dollars).
On
May 31, 2016, AECOM Australia and other parties to the class action lawsuit entered into a conditional settlement aggregating to $91 million (U.S. Dollars) with the
class action applicants on a "no admissions" basis. The Federal Court of Australia conducted a hearing on August 10, 2016 and approved the settlement amount and all claims between the parties
have been released. The class action settlement did not have a material impact on the Company's financial results.
URS Energy and Construction, Washington River Protection Solutions LLC and Washington Closure Hanford LLC (collectively the URS
Affiliates) perform services under multiple contracts (including under the Waste Treatment Plant contract, the Tank Farm contract and the River Corridor contract) at the DOE's Hanford nuclear
reservation that have been subject to various government investigations or litigation matters:
-
-
Waste Treatment Plant government investigation: The federal government is conducting an investigation into the Company's affiliate, URS
Energy & Construction, a subcontractor on the Waste Treatment Plant, regarding contractual compliance and various technical issues in the design, development and construction of the Waste
Treatment Plant. The federal government and URS Energy & Construction have engaged in settlement discussions towards a resolution of this matter.
-
-
Tank Farms government investigation: The federal government is conducting an investigation regarding the time keeping of employees at the
Company's joint venture, Washington River Protection Solutions LLC, when the joint venture took over as the prime contractor from another federal contractor. The federal government and
Washington River Protection Solutions LLC have engaged in advanced settlement discussions and Washington River Protection Solutions LLC reassessed its estimate of the matter, which is
not expected to have a material impact.
120
Table of Contents
AECOM
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
18. Commitments and Contingencies (Continued)
-
-
River Corridor litigation: The federal government has partially intervened with a relator in a Qui Tam complaint filed in the Eastern District
of Washington in December 2013 against the Company's joint venture, Washington Closure Hanford LLC, alleging that its contracting procedures under the Small Business Act violated the False
Claims Act. On October 2015, Washington Closure Hanford LLC's motion to dismiss the claim was partially denied.
The
URS Affiliates periodically reevaluate the estimated fair value of liabilities assumed from URS Corporation, including the legal related liabilities described above and in
Note 3, to account for developments related to the Hanford matters. The URS Affiliates dispute the Waste Treatment Plant and River Corridor matters and intend to continue to defend these
ongoing matters vigorously, although the URS Affiliates are engaging in the settlement discussions noted above. The URS Affiliates cannot provide assurances that they will be successful in these
defense or settlement efforts. The potential range of loss and any difference from the current accrual cannot be reasonably estimated at this time, primarily due to the fact that these matters involve
complex and unique environmental and regulatory issues; each project site contains multiple parties, including various local, state and federal government agencies; conflicts of law between local,
state and federal regulations; substantial uncertainty regarding any alleged damages; and the various stages of the government investigations or litigation matters.
On September 1, 2016, William Graves, an AECOM stockholder, filed a securities class action complaint in the United States District Court
for the Central District of California alleging that the Company and its senior executives made materially false and misleading statements in violation of the federal securities laws. The Company
believes the complaint is without merit and intends to vigorously defend against it. While no assurance can be given as to the ultimate outcome of this action, the Company believes that the final
resolution of this action will not have a material adverse effect on its consolidated financial position, results of operations, cash flows or ability to conduct business.
19. Reportable Segments and Geographic Information
The Company's operations are organized into three reportable segments: Design and Consulting Services (DCS), Construction Services (CS), and Management Services (MS). The Company's DCS
reportable segment delivers planning, consulting, architectural, environmental, and engineering design services to commercial and government clients worldwide. The Company's CS reportable segment
provides construction services primarily in the Americas. The Company's MS reportable segment provides program and facilities management and maintenance, training, logistics, consulting, and technical
assistance and systems integration services, primarily for agencies of the U.S. government. 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.
121
Table of Contents
AECOM
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
19. Reportable Segments and Geographic Information (Continued)
The
following tables set forth summarized financial information concerning the Company's reportable segments:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Reportable Segments:
|
|
Design and
Consulting
Services
|
|
Construction
Services
|
|
Management
Services
|
|
Corporate
|
|
Total
|
|
Fiscal Year Ended September 30, 2016:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Revenue
|
|
$
|
7,655.8
|
|
$
|
6,501.3
|
|
$
|
3,253.7
|
|
$
|
|
|
$
|
17,410.8
|
|
Gross profit
|
|
|
382.5
|
|
|
31.1
|
|
|
229.2
|
|
|
|
|
|
642.8
|
|
Equity in earnings of joint ventures
|
|
|
8.9
|
|
|
18.2
|
|
|
76.9
|
|
|
|
|
|
104.0
|
|
General and administrative expenses
|
|
|
|
|
|
|
|
|
|
|
|
(115.1
|
)
|
|
(115.1
|
)
|
Acquisition and integration expenses
|
|
|
|
|
|
|
|
|
|
|
|
(213.6
|
)
|
|
(213.6
|
)
|
Loss on disposal activities
|
|
|
|
|
|
(42.6
|
)
|
|
|
|
|
|
|
|
(42.6
|
)
|
Operating income (loss)
|
|
|
391.4
|
|
|
6.7
|
|
|
306.1
|
|
|
(328.7
|
)
|
|
375.5
|
|
Segment assets
|
|
|
6,655.7
|
|
|
3,556.2
|
|
|
2,692.7
|
|
|
822.1
|
|
|
13,726.7
|
|
Gross profit as a % of revenue
|
|
|
5.0
|
%
|
|
0.5
|
%
|
|
7.0
|
%
|
|
|
|
|
3.7
|
%
|
Fiscal Year Ended September 30, 2015:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Revenue
|
|
$
|
7,962.9
|
|
$
|
6,676.7
|
|
$
|
3,350.3
|
|
$
|
|
|
$
|
17,989.9
|
|
Gross profit
|
|
|
299.3
|
|
|
42.8
|
|
|
193.1
|
|
|
|
|
|
535.2
|
|
Equity in earnings of joint ventures
|
|
|
6.6
|
|
|
23.0
|
|
|
76.6
|
|
|
|
|
|
106.2
|
|
General and administrative expenses
|
|
|
|
|
|
|
|
|
|
|
|
(114.0
|
)
|
|
(114.0
|
)
|
Acquisition and integration expenses
|
|
|
|
|
|
|
|
|
|
|
|
(398.4
|
)
|
|
(398.4
|
)
|
Operating income (loss)
|
|
|
305.9
|
|
|
65.8
|
|
|
269.7
|
|
|
(512.4
|
)
|
|
129.0
|
|
Segment assets
|
|
|
7,118.2
|
|
|
3,382.4
|
|
|
2,903.9
|
|
|
609.8
|
|
|
14,014.3
|
|
Gross profit as a % of revenue
|
|
|
3.8
|
%
|
|
0.6
|
%
|
|
5.8
|
%
|
|
|
|
|
3.0
|
%
|
Fiscal Year Ended September 30, 2014:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Revenue
|
|
$
|
5,443.1
|
|
$
|
2,004.3
|
|
$
|
909.4
|
|
$
|
|
|
$
|
8,356.8
|
|
Gross profit
|
|
|
330.3
|
|
|
29.3
|
|
|
43.6
|
|
|
|
|
|
403.2
|
|
Equity in earnings of joint ventures
|
|
|
35.5
|
|
|
6.0
|
|
|
16.4
|
|
|
|
|
|
57.9
|
|
General and administrative expenses
|
|
|
|
|
|
|
|
|
|
|
|
(80.9
|
)
|
|
(80.9
|
)
|
Acquisition and integration expenses
|
|
|
|
|
|
|
|
|
|
|
|
(27.3
|
)
|
|
(27.3
|
)
|
Operating income (loss)
|
|
|
365.8
|
|
|
35.3
|
|
|
60.0
|
|
|
(108.2
|
)
|
|
352.9
|
|
Segment assets
|
|
|
4,064.5
|
|
|
1,256.4
|
|
|
437.5
|
|
|
365.0
|
|
|
6,123.4
|
|
Gross profit as a % of revenue
|
|
|
6.1
|
%
|
|
1.5
|
%
|
|
4.8
|
%
|
|
|
|
|
4.8
|
%
|
122
Table of Contents
AECOM
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
19. Reportable Segments and Geographic Information (Continued)
Geographic Information:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Fiscal Year Ended
|
|
|
|
September 30, 2016
|
|
September 30, 2015
|
|
September 30, 2014
|
|
|
|
Revenue
|
|
Long-Lived
Assets
|
|
Revenue
|
|
Long-Lived
Assets
|
|
Revenue
|
|
Long-Lived
Assets
|
|
|
|
(in millions)
|
|
United States
|
|
$
|
12,567.0
|
|
|
4,763.9
|
|
$
|
12,599.6
|
|
|
4,852.5
|
|
$
|
4,933.7
|
|
|
1,603.7
|
|
Asia Pacific
|
|
|
1,278.3
|
|
|
394.0
|
|
|
1,385.3
|
|
|
426.4
|
|
|
1,338.2
|
|
|
340.5
|
|
Canada
|
|
|
866.5
|
|
|
615.7
|
|
|
1,308.3
|
|
|
641.0
|
|
|
561.1
|
|
|
146.7
|
|
Europe
|
|
|
1,904.2
|
|
|
1,368.4
|
|
|
1,796.9
|
|
|
1,496.2
|
|
|
788.2
|
|
|
270.8
|
|
Other foreign countries
|
|
|
794.8
|
|
|
412.5
|
|
|
899.8
|
|
|
352.1
|
|
|
735.6
|
|
|
209.5
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
|
|
$
|
17,410.8
|
|
|
7,554.5
|
|
$
|
17,989.9
|
|
|
7,768.2
|
|
$
|
8,356.8
|
|
|
2,571.2
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
The
Company attributes revenue by geography based on the external customer's country of origin. Long-lived assets consist of noncurrent assets excluding deferred tax assets.
20. Major Clients
Other than the U.S. federal government, no single client accounted for 10% or more of the Company's revenue in any of the past five fiscal years. Approximately 23%, 24%, and 15% of the
Company's revenue was derived through direct contracts with agencies of the U.S. federal government in the years ended September 30, 2016, 2015 and 2014, respectively. One of these contracts
accounted for approximately 3%, 2%, and 3% of the Company's revenue in the years ended September 30, 2016, 2015 and 2014, respectively.
123
Table of Contents
AECOM
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
21. Quarterly Financial InformationUnaudited
In the opinion of management, the following unaudited quarterly data reflects all adjustments necessary for a fair statement of the results of operations. All such adjustments are of a
normal recurring nature.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Fiscal Year 2016:
|
|
First
Quarter
|
|
Second
Quarter
|
|
Third
Quarter
|
|
Fourth
Quarter
|
|
|
|
(in millions, except per share data)
|
|
Revenue
|
|
$
|
4,297.7
|
|
$
|
4,381.2
|
|
$
|
4,408.8
|
|
$
|
4,323.1
|
|
Cost of revenue
|
|
|
4,156.8
|
|
|
4,197.8
|
|
|
4,237.5
|
|
|
4,175.9
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Gross profit
|
|
|
140.9
|
|
|
183.4
|
|
|
171.3
|
|
|
147.2
|
|
Equity in earnings of joint ventures
|
|
|
25.2
|
|
|
39.1
|
|
|
18.5
|
|
|
21.2
|
|
General and administrative expenses
|
|
|
(28.7
|
)
|
|
(29.5
|
)
|
|
(28.7
|
)
|
|
(28.2
|
)
|
Acquisition and integration expenses
|
|
|
(41.0
|
)
|
|
(50.7
|
)
|
|
(50.7
|
)
|
|
(71.2
|
)
|
Loss on disposal activities
|
|
|
(41.0
|
)
|
|
(1.6
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Income from operations
|
|
|
55.4
|
|
|
140.7
|
|
|
110.4
|
|
|
69.0
|
|
Other income (expenses)
|
|
|
3.0
|
|
|
0.8
|
|
|
1.5
|
|
|
2.9
|
|
Interest expense
|
|
|
(59.5
|
)
|
|
(62.7
|
)
|
|
(62.6
|
)
|
|
(73.3
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(Loss) / income before income tax expense
|
|
|
(1.1
|
)
|
|
78.8
|
|
|
49.3
|
|
|
(1.4
|
)
|
Income tax (benefit) expense
|
|
|
(0.7
|
)
|
|
12.2
|
|
|
(35.1
|
)
|
|
(14.3
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net (loss) / income
|
|
|
(0.4
|
)
|
|
66.6
|
|
|
84.4
|
|
|
12.9
|
|
Noncontrolling interest in income of consolidated subsidiaries, net of tax
|
|
|
(20.0
|
)
|
|
(24.7
|
)
|
|
(17.0
|
)
|
|
(5.7
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net (loss) / income attributable to AECOM
|
|
$
|
(20.4
|
)
|
$
|
41.9
|
|
$
|
67.4
|
|
$
|
7.2
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net (loss) / income attributable to AECOM per share:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic
|
|
$
|
(0.13
|
)
|
$
|
0.27
|
|
$
|
0.44
|
|
$
|
0.05
|
|
Diluted
|
|
$
|
(0.13
|
)
|
$
|
0.27
|
|
$
|
0.43
|
|
$
|
0.05
|
|
Weighted average common shares outstanding:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic
|
|
|
153.6
|
|
|
154.3
|
|
|
154.9
|
|
|
156.3
|
|
Diluted
|
|
|
153.6
|
|
|
155.4
|
|
|
156.2
|
|
|
157.9
|
|
124
Table of Contents
AECOM
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
21. Quarterly Financial InformationUnaudited (Continued)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Fiscal Year 2015:
|
|
First
Quarter
|
|
Second
Quarter
|
|
Third
Quarter
|
|
Fourth
Quarter
|
|
|
|
(in millions, except per share data)
|
|
Revenue
|
|
$
|
4,210.5
|
|
$
|
4,506.2
|
|
$
|
4,549.5
|
|
$
|
4,723.7
|
|
Cost of revenue
|
|
|
4,075.7
|
|
|
4,403.0
|
|
|
4,422.9
|
|
|
4,553.1
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Gross profit
|
|
|
134.8
|
|
|
103.2
|
|
|
126.6
|
|
|
170.6
|
|
Equity in earnings of joint ventures
|
|
|
23.9
|
|
|
24.7
|
|
|
27.7
|
|
|
29.9
|
|
General and administrative expenses
|
|
|
(34.3
|
)
|
|
(29.8
|
)
|
|
(24.4
|
)
|
|
(25.5
|
)
|
Acquisition and integration expenses
|
|
|
(138.5
|
)
|
|
(91.6
|
)
|
|
(88.5
|
)
|
|
(79.8
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Income from operations
|
|
|
(14.1
|
)
|
|
6.5
|
|
|
41.4
|
|
|
95.2
|
|
Other income (expenses)
|
|
|
2.6
|
|
|
(1.0
|
)
|
|
10.1
|
|
|
7.4
|
|
Interest expense
|
|
|
(118.7
|
)
|
|
(60.7
|
)
|
|
(60.2
|
)
|
|
(60.0
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(Loss) income before income tax expense
|
|
|
(130.2
|
)
|
|
(55.2
|
)
|
|
(8.7
|
)
|
|
42.6
|
|
Income tax (benefit) expense
|
|
|
(12.1
|
)
|
|
(75.8
|
)
|
|
(8.5
|
)
|
|
16.1
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net (loss) income
|
|
|
(118.1
|
)
|
|
20.6
|
|
|
(0.2
|
)
|
|
26.5
|
|
Noncontrolling interest in income of consolidated subsidiaries, net of tax
|
|
|
(20.9
|
)
|
|
(20.3
|
)
|
|
(17.0
|
)
|
|
(25.4
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net (loss) income attributable to AECOM
|
|
$
|
(139.0
|
)
|
$
|
0.3
|
|
$
|
(17.2
|
)
|
$
|
1.1
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net (loss) income attributable to AECOM per share:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic
|
|
$
|
(0.98
|
)
|
$
|
|
|
$
|
(0.11
|
)
|
$
|
0.01
|
|
Diluted
|
|
$
|
(0.98
|
)
|
$
|
|
|
$
|
(0.11
|
)
|
$
|
0.01
|
|
Weighted average common shares outstanding:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic
|
|
|
141.9
|
|
|
151.1
|
|
|
151.7
|
|
|
153.8
|
|
Diluted
|
|
|
141.9
|
|
|
152.8
|
|
|
151.7
|
|
|
155.2
|
|
22. Condensed Consolidating Financial Information
As discussed in Note 8, on October 6, 2014, AECOM issued $800.0 million aggregate principal amount of its 2022 Notes and $800.0 million aggregate principal
amount of its 2024 Notes in a transaction exempt from the registration requirements of the Securities Act of 1933, as amended (the Securities Act). AECOM filed a Registration Statement on
Form S-4 relating to the offer to exchange the Notes for new 5.75% Senior Notes due 2022 and 5.875% Senior Notes due 2024 that was declared effective by the SEC on September 29, 2015.
The 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.
In
connection with the registration of the exchange offer, AECOM became subject to the requirements of Rule 3-10 of Regulation S-X regarding financial statements of
guarantors and issuers of guaranteed securities registered or being registered with the Securities and Exchange Commission. 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.
125
Table of Contents
AECOM
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
22. Condensed Consolidating Financial Information (Continued)
Condensed Consolidating Balance Sheets
(in millions)
September 30, 2016
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Parent
|
|
Guarantor
Subsidiaries
|
|
Non-
Guarantor
Subsidiaries
|
|
Eliminations
|
|
Total
|
|
ASSETS
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
CURRENT ASSETS:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total cash and cash equivalents
|
|
$
|
1.8
|
|
$
|
183.7
|
|
$
|
506.6
|
|
$
|
|
|
$
|
692.1
|
|
Accounts receivablenet
|
|
|
|
|
|
2,034.0
|
|
|
2,497.5
|
|
|
|
|
|
4,531.5
|
|
Intercompany receivable
|
|
|
760.7
|
|
|
151.7
|
|
|
152.0
|
|
|
(1,064.4
|
)
|
|
|
|
Prepaid expenses and other current assets
|
|
|
98.7
|
|
|
336.2
|
|
|
295.2
|
|
|
|
|
|
730.1
|
|
Income taxes receivable
|
|
|
28.7
|
|
|
|
|
|
18.4
|
|
|
|
|
|
47.1
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
TOTAL CURRENT ASSETS
|
|
|
889.9
|
|
|
2,705.6
|
|
|
3,469.7
|
|
|
(1,064.4
|
)
|
|
6,000.8
|
|
PROPERTY AND EQUIPMENTNET
|
|
|
169.3
|
|
|
236.5
|
|
|
239.2
|
|
|
|
|
|
645.0
|
|
DEFERRED TAX ASSETSNET
|
|
|
265.2
|
|
|
|
|
|
129.8
|
|
|
(223.5
|
)
|
|
171.5
|
|
INVESTMENTS IN CONSOLIDATED SUBSIDIARIES
|
|
|
6,031.7
|
|
|
1,408.4
|
|
|
58.4
|
|
|
(7,498.5
|
)
|
|
|
|
INVESTMENTS IN UNCONSOLIDATED JOINT VENTURES
|
|
|
0.7
|
|
|
48.6
|
|
|
281.2
|
|
|
|
|
|
330.5
|
|
GOODWILL
|
|
|
|
|
|
3,286.6
|
|
|
2,537.2
|
|
|
|
|
|
5,823.8
|
|
INTANGIBLE ASSETSNET
|
|
|
|
|
|
334.0
|
|
|
145.4
|
|
|
|
|
|
479.4
|
|
OTHER NON-CURRENT ASSETS
|
|
|
65.2
|
|
|
71.4
|
|
|
139.1
|
|
|
|
|
|
275.7
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
TOTAL ASSETS
|
|
$
|
7,422.0
|
|
$
|
8,091.1
|
|
$
|
7,000.0
|
|
$
|
(8,786.4
|
)
|
$
|
13,726.7
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
LIABILITIES AND STOCKHOLDERS' EQUITY
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
CURRENT LIABILITIES:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Short-term debt
|
|
$
|
3.1
|
|
$
|
7.3
|
|
$
|
15.9
|
|
$
|
|
|
$
|
26.3
|
|
Accounts payable
|
|
|
45.8
|
|
|
907.0
|
|
|
958.1
|
|
|
|
|
|
1,910.9
|
|
Accrued expenses and other current liabilities
|
|
|
201.2
|
|
|
1,137.1
|
|
|
1,046.5
|
|
|
|
|
|
2,384.8
|
|
Accrued taxes payable
|
|
|
|
|
|
|
|
|
10.8
|
|
|
|
|
|
10.8
|
|
Intercompany payable
|
|
|
114.1
|
|
|
857.9
|
|
|
208.8
|
|
|
(1,180.8
|
)
|
|
|
|
Billings in excess of costs on uncompleted contracts
|
|
|
|
|
|
237.5
|
|
|
394.4
|
|
|
|
|
|
631.9
|
|
Current portion of long-term debt
|
|
|
108.2
|
|
|
222.1
|
|
|
9.7
|
|
|
|
|
|
340.0
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
TOTAL CURRENT LIABILITIES
|
|
|
472.4
|
|
|
3,368.9
|
|
|
2,644.2
|
|
|
(1,180.8
|
)
|
|
5,304.7
|
|
OTHER LONG-TERM LIABILITIES
|
|
|
115.7
|
|
|
349.3
|
|
|
632.4
|
|
|
|
|
|
1,097.4
|
|
DEFERRED TAX LIABILITYNET
|
|
|
|
|
|
236.6
|
|
|
|
|
|
(223.5
|
)
|
|
13.1
|
|
NOTE PAYABLE INTERCOMPANYNON CURRENT
|
|
|
|
|
|
|
|
|
563.5
|
|
|
(563.5
|
)
|
|
|
|
LONG-TERM DEBT
|
|
|
3,468.0
|
|
|
273.4
|
|
|
17.6
|
|
|
|
|
|
3,759.0
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
TOTAL LIABILITIES
|
|
|
4,056.1
|
|
|
4,228.2
|
|
|
3,857.7
|
|
|
(1,967.8
|
)
|
|
10,174.2
|
|
TOTAL AECOM STOCKHOLDERS' EQUITY
|
|
|
3,365.9
|
|
|
3,862.9
|
|
|
2,956.7
|
|
|
(6,818.6
|
)
|
|
3,366.9
|
|
Noncontrolling interests
|
|
|
|
|
|
|
|
|
185.6
|
|
|
|
|
|
185.6
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
TOTAL STOCKHOLDERS' EQUITY
|
|
|
3,365.9
|
|
|
3,862.9
|
|
|
3,142.3
|
|
|
(6,818.6
|
)
|
|
3,552.5
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY
|
|
$
|
7,422.0
|
|
$
|
8,091.1
|
|
$
|
7,000.0
|
|
$
|
(8,786.4
|
)
|
$
|
13,726.7
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
126
Table of Contents
AECOM
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
22. Condensed Consolidating Financial Information (Continued)
Condensed Consolidating Balance Sheets
(in millions)
September 30, 2015
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Parent
|
|
Guarantor
Subsidiaries
|
|
Non-
Guarantor
Subsidiaries
|
|
Eliminations
|
|
Total
|
|
ASSETS
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
CURRENT ASSETS:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total cash and cash equivalents
|
|
$
|
1.3
|
|
$
|
162.5
|
|
$
|
520.1
|
|
$
|
|
|
$
|
683.9
|
|
Accounts receivablenet
|
|
|
|
|
|
2,165.5
|
|
|
2,675.9
|
|
|
|
|
|
4,841.4
|
|
Intercompany receivable
|
|
|
771.3
|
|
|
187.3
|
|
|
262.7
|
|
|
(1,221.3
|
)
|
|
|
|
Prepaid expenses and other current assets
|
|
|
36.7
|
|
|
127.4
|
|
|
224.9
|
|
|
|
|
|
389.0
|
|
Income taxes receivable
|
|
|
68.7
|
|
|
|
|
|
12.5
|
|
|
|
|
|
81.2
|
|
Deferred tax assetsnet
|
|
|
36.6
|
|
|
|
|
|
276.9
|
|
|
(62.9
|
)
|
|
250.6
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
TOTAL CURRENT ASSETS
|
|
|
914.6
|
|
|
2,642.7
|
|
|
3,973.0
|
|
|
(1,284.2
|
)
|
|
6,246.1
|
|
PROPERTY AND EQUIPMENTNET
|
|
|
93.4
|
|
|
240.0
|
|
|
365.9
|
|
|
|
|
|
699.3
|
|
DEFERRED TAX ASSETSNET
|
|
|
27.1
|
|
|
|
|
|
7.3
|
|
|
(34.4
|
)
|
|
|
|
INVESTMENTS IN CONSOLIDATED SUBSIDIARIES
|
|
|
6,739.4
|
|
|
1,343.7
|
|
|
67.4
|
|
|
(8,150.5
|
)
|
|
|
|
INVESTMENTS IN UNCONSOLIDATED JOINT VENTURES
|
|
|
0.8
|
|
|
73.4
|
|
|
247.4
|
|
|
|
|
|
321.6
|
|
GOODWILL
|
|
|
|
|
|
3,291.1
|
|
|
2,529.6
|
|
|
|
|
|
5,820.7
|
|
INTANGIBLE ASSETSNET
|
|
|
|
|
|
459.4
|
|
|
200.0
|
|
|
|
|
|
659.4
|
|
OTHER NON-CURRENT ASSETS
|
|
|
88.7
|
|
|
26.8
|
|
|
151.7
|
|
|
|
|
|
267.2
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
TOTAL ASSETS
|
|
$
|
7,864.0
|
|
$
|
8,077.1
|
|
$
|
7,542.3
|
|
$
|
(9,469.1
|
)
|
$
|
14,014.3
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
LIABILITIES AND STOCKHOLDERS' EQUITY
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
CURRENT LIABILITIES:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Short-term debt
|
|
$
|
2.3
|
|
$
|
|
|
$
|
0.5
|
|
$
|
|
|
$
|
2.8
|
|
Accounts payable
|
|
|
28.0
|
|
|
834.1
|
|
|
991.9
|
|
|
|
|
|
1,854.0
|
|
Accrued expenses and other current liabilities
|
|
|
229.5
|
|
|
1,001.6
|
|
|
936.7
|
|
|
|
|
|
2,167.8
|
|
Intercompany payable
|
|
|
119.9
|
|
|
960.3
|
|
|
319.8
|
|
|
(1,400.0
|
)
|
|
|
|
Billings in excess of costs on uncompleted contracts
|
|
|
|
|
|
255.7
|
|
|
398.2
|
|
|
|
|
|
653.9
|
|
Deferred tax liabilitynet
|
|
|
|
|
|
62.9
|
|
|
|
|
|
(62.9
|
)
|
|
|
|
Current portion of long-term debt
|
|
|
105.6
|
|
|
24.5
|
|
|
27.5
|
|
|
|
|
|
157.6
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
TOTAL CURRENT LIABILITIES
|
|
|
485.3
|
|
|
3,139.1
|
|
|
2,674.6
|
|
|
(1,462.9
|
)
|
|
4,836.1
|
|
OTHER LONG-TERM LIABILITIES
|
|
|
63.6
|
|
|
299.5
|
|
|
507.6
|
|
|
|
|
|
870.7
|
|
DEFERRED TAX LIABILITYNET
|
|
|
|
|
|
122.6
|
|
|
141.9
|
|
|
(34.4
|
)
|
|
230.1
|
|
NOTE PAYABLE INTERCOMPANYNON CURRENT
|
|
|
|
|
|
|
|
|
669.1
|
|
|
(669.1
|
)
|
|
|
|
LONG-TERM DEBT
|
|
|
3,914.0
|
|
|
482.7
|
|
|
49.8
|
|
|
|
|
|
4,446.5
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
TOTAL LIABILITIES
|
|
|
4,462.9
|
|
|
4,043.9
|
|
|
4,043.0
|
|
|
(2,166.4
|
)
|
|
10,383.4
|
|
TOTAL AECOM STOCKHOLDERS' EQUITY
|
|
|
3,401.1
|
|
|
4,033.2
|
|
|
3,276.1
|
|
|
(7,302.7
|
)
|
|
3,407.7
|
|
Noncontrolling interests
|
|
|
|
|
|
|
|
|
223.2
|
|
|
|
|
|
223.2
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
TOTAL STOCKHOLDERS' EQUITY
|
|
|
3,401.1
|
|
|
4,033.2
|
|
|
3,499.3
|
|
|
(7,302.7
|
)
|
|
3,630.9
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY
|
|
$
|
7,864.0
|
|
$
|
8,077.1
|
|
$
|
7,542.3
|
|
$
|
(9,469.1
|
)
|
$
|
14,014.3
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
127
Table of Contents
AECOM
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
22. Condensed Consolidating Financial Information (Continued)
Condensed Consolidating Statements of Operations
(in millions)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
For the Fiscal Year Ended September 30, 2016
|
|
|
|
Parent
|
|
Guarantor
Subsidiaries
|
|
Non-Guarantor
Subsidiaries
|
|
Eliminations
|
|
Total
|
|
Revenue
|
|
$
|
|
|
$
|
9,227.5
|
|
$
|
8,265.3
|
|
$
|
(82.0
|
)
|
$
|
17,410.8
|
|
Cost of revenue
|
|
|
|
|
|
8,909.4
|
|
|
7,940.6
|
|
|
(82.0
|
)
|
|
16,768.0
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Gross profit
|
|
|
|
|
|
318.1
|
|
|
324.7
|
|
|
|
|
|
642.8
|
|
Equity in earnings from subsidiaries
|
|
|
437.4
|
|
|
43.8
|
|
|
3.2
|
|
|
(484.4
|
)
|
|
|
|
Equity in earnings of joint ventures
|
|
|
|
|
|
27.3
|
|
|
76.7
|
|
|
|
|
|
104.0
|
|
General and administrative expenses
|
|
|
(114.0
|
)
|
|
(1.1
|
)
|
|
|
|
|
|
|
|
(115.1
|
)
|
Acquisition and integration expenses
|
|
|
(213.6
|
)
|
|
|
|
|
|
|
|
|
|
|
(213.6
|
)
|
Loss on disposal activities
|
|
|
|
|
|
|
|
|
(42.6
|
)
|
|
|
|
|
(42.6
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Income (loss) from operations
|
|
|
109.8
|
|
|
388.1
|
|
|
362.0
|
|
|
(484.4
|
)
|
|
375.5
|
|
Other income (expense)
|
|
|
0.8
|
|
|
34.7
|
|
|
12.7
|
|
|
(40.0
|
)
|
|
8.2
|
|
Interest (expense) income
|
|
|
(231.7
|
)
|
|
(23.6
|
)
|
|
(42.8
|
)
|
|
40.0
|
|
|
(258.1
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Income (loss) before income tax expense
|
|
|
(121.1
|
)
|
|
399.2
|
|
|
331.9
|
|
|
(484.4
|
)
|
|
125.6
|
|
Income tax (benefit) expense
|
|
|
(217.3
|
)
|
|
114.3
|
|
|
27.8
|
|
|
37.3
|
|
|
(37.9
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income (loss)
|
|
|
96.2
|
|
|
284.9
|
|
|
304.1
|
|
|
(521.7
|
)
|
|
163.5
|
|
Noncontrolling interests in income of consolidated subsidiaries, net of tax
|
|
|
|
|
|
|
|
|
(67.4
|
)
|
|
|
|
|
(67.4
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income (loss) attributable to AECOM
|
|
$
|
96.2
|
|
$
|
284.9
|
|
$
|
236.7
|
|
$
|
(521.7
|
)
|
$
|
96.1
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
For the Fiscal Year Ended September 30, 2015
|
|
|
|
Parent
|
|
Guarantor
Subsidiaries
|
|
Non-Guarantor
Subsidiaries
|
|
Eliminations
|
|
Total
|
|
Revenue
|
|
$
|
|
|
$
|
8,749.5
|
|
$
|
9,463.6
|
|
$
|
(223.2
|
)
|
$
|
17,989.9
|
|
Cost of revenue
|
|
|
|
|
|
8,486.4
|
|
|
9,191.5
|
|
|
(223.2
|
)
|
|
17,454.7
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Gross profit
|
|
|
|
|
|
263.1
|
|
|
272.1
|
|
|
|
|
|
535.2
|
|
Equity in earnings from subsidiaries
|
|
|
321.3
|
|
|
(95.4
|
)
|
|
(1.4
|
)
|
|
(224.5
|
)
|
|
|
|
Equity in earnings of joint ventures
|
|
|
|
|
|
20.0
|
|
|
86.2
|
|
|
|
|
|
106.2
|
|
General and administrative expenses
|
|
|
(112.2
|
)
|
|
(1.8
|
)
|
|
|
|
|
|
|
|
(114.0
|
)
|
Acquisition and integration expenses
|
|
|
(346.9
|
)
|
|
(51.5
|
)
|
|
|
|
|
|
|
|
(398.4
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(Loss) income from operations
|
|
|
(137.8
|
)
|
|
134.4
|
|
|
356.9
|
|
|
(224.5
|
)
|
|
129.0
|
|
Other income (expense)
|
|
|
5.1
|
|
|
34.9
|
|
|
14.7
|
|
|
(35.6
|
)
|
|
19.1
|
|
Interest (expense) income
|
|
|
(275.4
|
)
|
|
(20.4
|
)
|
|
(39.4
|
)
|
|
35.6
|
|
|
(299.6
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(Loss) income before income tax expense
|
|
|
(408.1
|
)
|
|
148.9
|
|
|
332.2
|
|
|
(224.5
|
)
|
|
(151.5
|
)
|
Income tax (benefit) expense
|
|
|
(253.3
|
)
|
|
66.7
|
|
|
61.0
|
|
|
45.3
|
|
|
(80.3
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net (loss) income
|
|
|
(154.8
|
)
|
|
82.2
|
|
|
271.2
|
|
|
(269.8
|
)
|
|
(71.2
|
)
|
Noncontrolling interests in income of consolidated subsidiaries, net of tax
|
|
|
|
|
|
|
|
|
(83.6
|
)
|
|
|
|
|
(83.6
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net (loss) income attributable to AECOM
|
|
$
|
(154.8
|
)
|
$
|
82.2
|
|
$
|
187.6
|
|
$
|
(269.8
|
)
|
$
|
(154.8
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
128
Table of Contents
AECOM
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
22. Condensed Consolidating Financial Information (Continued)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
For the Fiscal Year Ended September 30, 2014
|
|
|
|
Parent
|
|
Guarantor
Subsidiaries
|
|
Non-Guarantor
Subsidiaries
|
|
Eliminations
|
|
Total
|
|
Revenue
|
|
$
|
|
|
$
|
3,609.4
|
|
$
|
4,781.9
|
|
$
|
(34.5
|
)
|
$
|
8,356.8
|
|
Cost of revenue
|
|
|
|
|
|
3,451.6
|
|
|
4,536.5
|
|
|
(34.5
|
)
|
|
7,953.6
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Gross profit
|
|
|
|
|
|
157.8
|
|
|
245.4
|
|
|
|
|
|
403.2
|
|
Equity in earnings from subsidiaries
|
|
|
346.7
|
|
|
40.9
|
|
|
|
|
|
(387.6
|
)
|
|
|
|
Equity in earnings of joint ventures
|
|
|
|
|
|
15.0
|
|
|
42.9
|
|
|
|
|
|
57.9
|
|
General and administrative expenses
|
|
|
(80.9
|
)
|
|
|
|
|
|
|
|
|
|
|
(80.9
|
)
|
Acquisition and integration expenses
|
|
|
(27.3
|
)
|
|
|
|
|
|
|
|
|
|
|
(27.3
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Income (loss) from operations
|
|
|
238.5
|
|
|
213.7
|
|
|
288.3
|
|
|
(387.6
|
)
|
|
352.9
|
|
Other income (loss)
|
|
|
0.5
|
|
|
0.9
|
|
|
2.0
|
|
|
(0.7
|
)
|
|
2.7
|
|
Interest expense income
|
|
|
(37.7
|
)
|
|
(0.7
|
)
|
|
(3.1
|
)
|
|
0.7
|
|
|
(40.8
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Income (loss) before income tax expense
|
|
|
201.3
|
|
|
213.9
|
|
|
287.2
|
|
|
(387.6
|
)
|
|
314.8
|
|
Income tax (benefit) expense
|
|
|
(28.6
|
)
|
|
34.3
|
|
|
69.5
|
|
|
6.8
|
|
|
82.0
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income (loss)
|
|
|
229.9
|
|
|
179.6
|
|
|
217.7
|
|
|
(394.4
|
)
|
|
232.8
|
|
Noncontrolling interests in income of consolidated subsidiaries, net of tax
|
|
|
|
|
|
|
|
|
(2.9
|
)
|
|
|
|
|
(2.9
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income (loss) attributable to AECOM
|
|
$
|
229.9
|
|
$
|
179.6
|
|
$
|
214.8
|
|
$
|
(394.4
|
)
|
$
|
229.9
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Consolidating Statements of Comprehensive Income (Loss)
(in millions)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
For the Fiscal Year Ended September 30, 2016
|
|
|
|
Parent
|
|
Guarantor
Subsidiaries
|
|
Non-Guarantor
Subsidiaries
|
|
Eliminations
|
|
Total
|
|
Net income (loss)
|
|
$
|
96.2
|
|
$
|
284.9
|
|
$
|
304.1
|
|
$
|
(521.7
|
)
|
$
|
163.5
|
|
Other comprehensive income (loss), net of tax:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net unrealized gain on derivatives, net of tax
|
|
|
2.6
|
|
|
|
|
|
3.4
|
|
|
|
|
|
6.0
|
|
Foreign currency translation adjustments
|
|
|
|
|
|
|
|
|
(65.3
|
)
|
|
|
|
|
(65.3
|
)
|
Pension adjustments, net of tax
|
|
|
(3.3
|
)
|
|
(14.9
|
)
|
|
(146.7
|
)
|
|
|
|
|
(164.9
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Other comprehensive loss, net of tax
|
|
|
(0.7
|
)
|
|
(14.9
|
)
|
|
(208.6
|
)
|
|
|
|
|
(224.2
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Comprehensive income (loss), net of tax
|
|
|
95.5
|
|
|
270.0
|
|
|
95.5
|
|
|
(521.7
|
)
|
|
(60.7
|
)
|
Noncontrolling interests in comprehensive income of consolidated subsidiaries, net of tax
|
|
|
|
|
|
|
|
|
(65.7
|
)
|
|
|
|
|
(65.7
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Comprehensive income (loss) attributable to AECOM, net of tax
|
|
$
|
95.5
|
|
$
|
270.0
|
|
$
|
29.8
|
|
$
|
(521.7
|
)
|
$
|
(126.4
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
129
Table of Contents
AECOM
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
22. Condensed Consolidating Financial Information (Continued)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
For the Fiscal Year Ended September 30, 2015
|
|
|
|
Parent
|
|
Guarantor
Subsidiaries
|
|
Non-Guarantor
Subsidiaries
|
|
Eliminations
|
|
Total
|
|
Net (loss) income
|
|
$
|
(154.8
|
)
|
$
|
82.2
|
|
$
|
271.2
|
|
$
|
(269.8
|
)
|
$
|
(71.2
|
)
|
Other comprehensive income (loss), net of tax:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net unrealized loss on derivatives, net of tax
|
|
|
(6.1
|
)
|
|
|
|
|
(3.1
|
)
|
|
|
|
|
(9.2
|
)
|
Foreign currency translation adjustments
|
|
|
|
|
|
|
|
|
(285.6
|
)
|
|
|
|
|
(285.6
|
)
|
Pension adjustments, net of tax
|
|
|
1.8
|
|
|
6.4
|
|
|
4.8
|
|
|
|
|
|
13.0
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Other comprehensive (loss) income, net of tax
|
|
|
(4.3
|
)
|
|
6.4
|
|
|
(283.9
|
)
|
|
|
|
|
(281.8
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Comprehensive (loss) income, net of tax
|
|
|
(159.1
|
)
|
|
88.6
|
|
|
(12.7
|
)
|
|
(269.8
|
)
|
|
(353.0
|
)
|
Noncontrolling interests in comprehensive income of consolidated subsidiaries, net of tax
|
|
|
|
|
|
|
|
|
(80.3
|
)
|
|
|
|
|
(80.3
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Comprehensive (loss) income attributable to AECOM, net of tax
|
|
$
|
(159.1
|
)
|
$
|
88.6
|
|
$
|
(93.0
|
)
|
$
|
(269.8
|
)
|
$
|
(433.3
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
For the Fiscal Year Ended September 30, 2014
|
|
|
|
Parent
|
|
Guarantor
Subsidiaries
|
|
Non-Guarantor
Subsidiaries
|
|
Eliminations
|
|
Total
|
|
Net income (loss)
|
|
$
|
229.9
|
|
$
|
179.6
|
|
$
|
217.7
|
|
$
|
(394.4
|
)
|
$
|
232.8
|
|
Other comprehensive income (loss), net of tax:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net unrealized gain on derivatives, net of tax
|
|
|
0.3
|
|
|
|
|
|
|
|
|
|
|
|
0.3
|
|
Foreign currency translation adjustments
|
|
|
|
|
|
|
|
|
(72.7
|
)
|
|
|
|
|
(72.7
|
)
|
Pension adjustments, net of tax
|
|
|
(9.9
|
)
|
|
|
|
|
(14.3
|
)
|
|
|
|
|
(24.2
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Other comprehensive loss, net of tax
|
|
|
(9.6
|
)
|
|
|
|
|
(87.0
|
)
|
|
|
|
|
(96.6
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Comprehensive income (loss), net of tax
|
|
|
220.3
|
|
|
179.6
|
|
|
130.7
|
|
|
(394.4
|
)
|
|
136.2
|
|
Noncontrolling interests in comprehensive income of consolidated subsidiaries, net of tax
|
|
|
|
|
|
|
|
|
(1.6
|
)
|
|
|
|
|
(1.6
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Comprehensive income (loss) attributable to AECOM, net of tax
|
|
$
|
220.3
|
|
$
|
179.6
|
|
$
|
129.1
|
|
$
|
(394.4
|
)
|
$
|
134.6
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
130
Table of Contents
AECOM
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
22. Condensed Consolidating Financial Information (Continued)
Condensed Consolidating Statements of Cash Flows
(in millions)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
For the Fiscal Year Ended September 30, 2016
|
|
|
|
Parent
|
|
Guarantor
Subsidiaries
|
|
Non-Guarantor
Subsidiaries
|
|
Eliminations
|
|
Total
|
|
CASH FLOWS FROM OPERATING ACTIVITIES
|
|
$
|
(273.6
|
)
|
$
|
623.7
|
|
$
|
464.1
|
|
$
|
|
|
$
|
814.2
|
|
CASH FLOWS FROM INVESTING ACTIVITIES:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Payments for business acquisitions, net of cash acquired
|
|
|
|
|
|
(1.0
|
)
|
|
(4.5
|
)
|
|
|
|
|
(5.5
|
)
|
Proceeds from disposal of businesses and property
|
|
|
|
|
|
|
|
|
39.7
|
|
|
|
|
|
39.7
|
|
Net investment in unconsolidated joint ventures
|
|
|
|
|
|
(3.9
|
)
|
|
(67.6
|
)
|
|
|
|
|
(71.5
|
)
|
Net sales of investments
|
|
|
|
|
|
|
|
|
11.5
|
|
|
|
|
|
11.5
|
|
Payments for capital expenditures, net of disposals
|
|
|
(82.0
|
)
|
|
(58.7
|
)
|
|
3.9
|
|
|
|
|
|
(136.8
|
)
|
Net receipts from (investment in) intercompany notes
|
|
|
5.3
|
|
|
176.1
|
|
|
(13.5
|
)
|
|
(167.9
|
)
|
|
|
|
Other intercompany investing activities
|
|
|
791.2
|
|
|
140.3
|
|
|
|
|
|
(931.5
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net cash provided by (used in) investing activities
|
|
|
714.5
|
|
|
252.8
|
|
|
(30.5
|
)
|
|
(1,099.4
|
)
|
|
(162.6
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
CASH FLOWS FROM FINANCING ACTIVITIES:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Proceeds from borrowings under credit agreements
|
|
|
4,673.0
|
|
|
17.6
|
|
|
15.6
|
|
|
|
|
|
4,706.2
|
|
Repayments of borrowings under credit agreements
|
|
|
(5,124.1
|
)
|
|
(22.8
|
)
|
|
(53.1
|
)
|
|
|
|
|
(5,200.0
|
)
|
Cash paid for debt and equity issuance costs
|
|
|
(10.4
|
)
|
|
|
|
|
|
|
|
|
|
|
(10.4
|
)
|
Proceeds from issuance of common stock
|
|
|
28.2
|
|
|
|
|
|
|
|
|
|
|
|
28.2
|
|
Proceeds from exercise of stock options
|
|
|
9.9
|
|
|
|
|
|
|
|
|
|
|
|
9.9
|
|
Payments to repurchase common stock
|
|
|
(25.9
|
)
|
|
|
|
|
|
|
|
|
|
|
(25.9
|
)
|
Excess tax benefit from share-based payment
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net distributions to noncontrolling interests
|
|
|
|
|
|
|
|
|
(103.2
|
)
|
|
|
|
|
(103.2
|
)
|
Other financing activities
|
|
|
7.9
|
|
|
(4.5
|
)
|
|
(46.3
|
)
|
|
|
|
|
(42.9
|
)
|
Net borrowings (repayments) on intercompany notes
|
|
|
1.0
|
|
|
12.5
|
|
|
(181.4
|
)
|
|
167.9
|
|
|
|
|
Other intercompany financing activities
|
|
|
|
|
|
(858.1
|
)
|
|
(73.4
|
)
|
|
931.5
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net cash used in financing activities
|
|
|
(440.4
|
)
|
|
(855.3
|
)
|
|
(441.8
|
)
|
|
1,099.4
|
|
|
(638.1
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
EFFECT OF EXCHANGE RATE CHANGES ON CASH
|
|
|
|
|
|
|
|
|
(5.3
|
)
|
|
|
|
|
(5.3
|
)
|
NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS
|
|
|
0.5
|
|
|
21.2
|
|
|
(13.5
|
)
|
|
|
|
|
8.2
|
|
CASH AND CASH EQUIVALENTS AT BEGINNING OF YEAR
|
|
|
1.3
|
|
|
162.5
|
|
|
520.1
|
|
|
|
|
|
683.9
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
CASH AND CASH EQUIVALENTS AT END OF YEAR
|
|
$
|
1.8
|
|
$
|
183.7
|
|
$
|
506.6
|
|
$
|
|
|
$
|
692.1
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
131
Table of Contents
AECOM
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
22. Condensed Consolidating Financial Information (Continued)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
For the Fiscal Year Ended September 30, 2015
|
|
|
|
Parent
|
|
Guarantor
Subsidiaries
|
|
Non-Guarantor
Subsidiaries
|
|
Eliminations
|
|
Total
|
|
CASH FLOWS FROM OPERATING ACTIVITIES
|
|
$
|
(551.2
|
)
|
$
|
816.9
|
|
$
|
498.7
|
|
$
|
|
|
$
|
764.4
|
|
CASH FLOWS FROM INVESTING ACTIVITIES:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Payments for business acquisitions, net of cash acquired
|
|
|
(3,564.2
|
)
|
|
109.2
|
|
|
161.7
|
|
|
|
|
|
(3,293.3
|
)
|
Proceeds from disposal of businesses and property
|
|
|
9.5
|
|
|
5.6
|
|
|
|
|
|
|
|
|
15.1
|
|
Net investment in unconsolidated joint ventures
|
|
|
|
|
|
(4.0
|
)
|
|
(28.7
|
)
|
|
|
|
|
(32.7
|
)
|
Sales (purchases) of investments
|
|
|
37.3
|
|
|
|
|
|
(2.7
|
)
|
|
|
|
|
34.6
|
|
Payments for capital expenditures, net of disposals
|
|
|
(51.9
|
)
|
|
(15.8
|
)
|
|
(1.7
|
)
|
|
|
|
|
(69.4
|
)
|
Receipts from intercompany notes receivable
|
|
|
95.6
|
|
|
128.6
|
|
|
|
|
|
(224.2
|
)
|
|
|
|
Other intercompany investing activities
|
|
|
1,085.8
|
|
|
160.9
|
|
|
|
|
|
(1,246.7
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net cash (used in) provided by investing activities
|
|
|
(2,387.9
|
)
|
|
384.5
|
|
|
128.6
|
|
|
(1,470.9
|
)
|
|
(3,345.7
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
CASH FLOWS FROM FINANCING ACTIVITIES:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Proceeds from borrowings under credit agreements
|
|
|
6,464.6
|
|
|
29.9
|
|
|
87.2
|
|
|
|
|
|
6,581.7
|
|
Repayments of borrowings under credit agreements
|
|
|
(5,031.9
|
)
|
|
(31.2
|
)
|
|
(95.2
|
)
|
|
|
|
|
(5,158.3
|
)
|
Issuance of unsecured senior notes
|
|
|
1,600.0
|
|
|
|
|
|
|
|
|
|
|
|
1,600.0
|
|
Prepayment penalty on Unsecured Senior Notes
|
|
|
(55.6
|
)
|
|
|
|
|
|
|
|
|
|
|
(55.6
|
)
|
Cash paid for debt and equity issuance costs
|
|
|
(89.6
|
)
|
|
|
|
|
|
|
|
|
|
|
(89.6
|
)
|
Proceeds from issuance of common stock
|
|
|
25.6
|
|
|
|
|
|
|
|
|
|
|
|
25.6
|
|
Proceeds from exercise of stock options
|
|
|
11.1
|
|
|
|
|
|
|
|
|
|
|
|
11.1
|
|
Payments to repurchase common stock
|
|
|
(23.1
|
)
|
|
|
|
|
|
|
|
|
|
|
(23.1
|
)
|
Excess tax benefit from share-based payment
|
|
|
3.6
|
|
|
|
|
|
|
|
|
|
|
|
3.6
|
|
Net distributions to noncontrolling interests
|
|
|
|
|
|
|
|
|
(144.3
|
)
|
|
|
|
|
(144.3
|
)
|
Other financing activities
|
|
|
2.3
|
|
|
(4.1
|
)
|
|
(29.5
|
)
|
|
|
|
|
(31.3
|
)
|
Intercompany notes repayments
|
|
|
|
|
|
|
|
|
(224.2
|
)
|
|
224.2
|
|
|
|
|
Other intercompany financing activities
|
|
|
|
|
|
(1,119.3
|
)
|
|
(127.4
|
)
|
|
1,246.7
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net cash provided by (used in) financing activities
|
|
|
2,907.0
|
|
|
(1,124.7
|
)
|
|
(533.4
|
)
|
|
1,470.9
|
|
|
2,719.8
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
EFFECT OF EXCHANGE RATE CHANGES ON CASH
|
|
|
|
|
|
|
|
|
(28.8
|
)
|
|
|
|
|
(28.8
|
)
|
NET (DECREASE) INCREASE IN CASH AND CASH EQUIVALENTS
|
|
|
(32.1
|
)
|
|
76.7
|
|
|
65.1
|
|
|
|
|
|
109.7
|
|
CASH AND CASH EQUIVALENTS AT BEGINNING OF YEAR
|
|
|
33.4
|
|
|
85.8
|
|
|
455.0
|
|
|
|
|
|
574.2
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
CASH AND CASH EQUIVALENTS AT END OF YEAR
|
|
$
|
1.3
|
|
$
|
162.5
|
|
$
|
520.1
|
|
$
|
|
|
$
|
683.9
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
132
Table of Contents
AECOM
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
22. Condensed Consolidating Financial Information (Continued)
Condensed Consolidating Statements of Cash Flows
(in millions)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
For the Fiscal Year Ended September 30, 2014
|
|
|
|
Parent
|
|
Guarantor
Subsidiaries
|
|
Non-Guarantor
Subsidiaries
|
|
Eliminations
|
|
Total
|
|
CASH FLOWS FROM OPERATING ACTIVITIES
|
|
$
|
(33.3
|
)
|
$
|
206.5
|
|
$
|
187.4
|
|
$
|
|
|
$
|
360.6
|
|
CASH FLOWS FROM INVESTING ACTIVITIES:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Payments for business acquisitions, net of cash acquired
|
|
|
|
|
|
(55.0
|
)
|
|
1.9
|
|
|
|
|
|
(53.1
|
)
|
Cash acquired from consolidation of joint venture
|
|
|
|
|
|
|
|
|
19.0
|
|
|
|
|
|
19.0
|
|
Proceeds from disposal of businesses and property
|
|
|
|
|
|
|
|
|
3.6
|
|
|
|
|
|
3.6
|
|
Net investment in unconsolidated joint ventures
|
|
|
|
|
|
9.4
|
|
|
(61.6
|
)
|
|
|
|
|
(52.2
|
)
|
Sales of investments
|
|
|
|
|
|
|
|
|
2.7
|
|
|
|
|
|
2.7
|
|
Payments for capital expenditures, net of disposals
|
|
|
(14.3
|
)
|
|
(17.8
|
)
|
|
(30.7
|
)
|
|
|
|
|
(62.8
|
)
|
Receipts from intercompany notes receivable
|
|
|
146.7
|
|
|
|
|
|
|
|
|
(146.7
|
)
|
|
|
|
Other intercompany investing activities
|
|
|
116.7
|
|
|
55.7
|
|
|
|
|
|
(172.4
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net cash provided by (used in) investing activities
|
|
|
249.1
|
|
|
(7.7
|
)
|
|
(65.1
|
)
|
|
(319.1
|
)
|
|
(142.8
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
CASH FLOWS FROM FINANCING ACTIVITIES:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Proceeds from borrowings under credit agreements
|
|
|
1,769.3
|
|
|
|
|
|
39.9
|
|
|
|
|
|
1,809.2
|
|
Repayments of borrowings under credit agreements
|
|
|
(1,918.6
|
)
|
|
(15.8
|
)
|
|
(42.0
|
)
|
|
|
|
|
(1,976.4
|
)
|
Cash paid for debt and equity issuance costs
|
|
|
(8.1
|
)
|
|
|
|
|
|
|
|
|
|
|
(8.1
|
)
|
Proceeds from issuance of common stock
|
|
|
13.9
|
|
|
|
|
|
|
|
|
|
|
|
13.9
|
|
Proceeds from exercise of stock options
|
|
|
13.4
|
|
|
|
|
|
|
|
|
|
|
|
13.4
|
|
Payments to repurchase common stock
|
|
|
(34.9
|
)
|
|
|
|
|
|
|
|
|
|
|
(34.9
|
)
|
Excess tax benefit from share-based payment
|
|
|
0.7
|
|
|
|
|
|
|
|
|
|
|
|
0.7
|
|
Net distributions to noncontrolling interests
|
|
|
|
|
|
|
|
|
(30.2
|
)
|
|
|
|
|
(30.2
|
)
|
Other financing activities
|
|
|
(22.5
|
)
|
|
0.8
|
|
|
0.3
|
|
|
|
|
|
(21.4
|
)
|
Intercompany notes repayments
|
|
|
|
|
|
|
|
|
(146.7
|
)
|
|
146.7
|
|
|
|
|
Other intercompany financing activities
|
|
|
|
|
|
(178.2
|
)
|
|
5.8
|
|
|
172.4
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net cash used in financing activities
|
|
|
(186.8
|
)
|
|
(193.2
|
)
|
|
(172.9
|
)
|
|
319.1
|
|
|
(233.8
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
EFFECT OF EXCHANGE RATE CHANGES ON CASH
|
|
|
|
|
|
|
|
|
(10.5
|
)
|
|
|
|
|
(10.5
|
)
|
NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS
|
|
|
29.0
|
|
|
5.6
|
|
|
(61.1
|
)
|
|
|
|
|
(26.5
|
)
|
CASH AND CASH EQUIVALENTS AT BEGINNING OF YEAR
|
|
|
4.4
|
|
|
80.2
|
|
|
516.1
|
|
|
|
|
|
600.7
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
CASH AND CASH EQUIVALENTS AT END OF YEAR
|
|
$
|
33.4
|
|
$
|
85.8
|
|
$
|
455.0
|
|
$
|
|
|
$
|
574.2
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
133
Table of Contents