AECOM
Consolidated Statements of Cash Flows
(in thousands)
|
|
|
|
|
|
|
|
|
|
|
|
|
Fiscal Year Ended
|
|
|
|
September 30,
2017
|
|
September 30,
2016
|
|
September 30,
2015
|
|
CASH FLOWS FROM OPERATING ACTIVITIES:
|
|
|
|
|
|
|
|
|
|
|
Net income (loss)
|
|
$
|
421,476
|
|
$
|
163,472
|
|
$
|
(71,233
|
)
|
Adjustments to reconcile net income (loss) to net cash provided by operating activities:
|
|
|
|
|
|
|
|
|
|
|
Depreciation and amortization
|
|
|
278,631
|
|
|
398,730
|
|
|
599,265
|
|
Equity in earnings of unconsolidated joint ventures
|
|
|
(141,582
|
)
|
|
(104,032
|
)
|
|
(106,245
|
)
|
Distribution of earnings from unconsolidated joint ventures
|
|
|
137,031
|
|
|
149,215
|
|
|
157,616
|
|
Non-cash stock compensation
|
|
|
83,774
|
|
|
73,406
|
|
|
85,852
|
|
Prepayment penalty on unsecured senior notes
|
|
|
|
|
|
|
|
|
55,639
|
|
Excess tax benefit from share-based payment
|
|
|
|
|
|
|
|
|
(3,642
|
)
|
Foreign currency translation
|
|
|
6,007
|
|
|
(25,494
|
)
|
|
(19,632
|
)
|
Write-off of debt issuance costs
|
|
|
|
|
|
7,749
|
|
|
8,997
|
|
Deferred income tax benefit
|
|
|
(49,856
|
)
|
|
(110,122
|
)
|
|
(53,034
|
)
|
Pension curtailment and settlement gains
|
|
|
|
|
|
(7,818
|
)
|
|
|
|
(Gain) loss on disposal activities
|
|
|
(572
|
)
|
|
42,589
|
|
|
|
|
Other
|
|
|
(15,062
|
)
|
|
2,430
|
|
|
(18,248
|
)
|
Changes in operating assets and liabilities, net of effects of acquisitions:
|
|
|
|
|
|
|
|
|
|
|
Accounts receivable
|
|
|
(432,769
|
)
|
|
337,291
|
|
|
369,600
|
|
Prepaid expenses and other assets
|
|
|
(21,780
|
)
|
|
(16,257
|
)
|
|
7,988
|
|
Accounts payable
|
|
|
292,496
|
|
|
16,616
|
|
|
142,126
|
|
Accrued expenses and other current liabilities
|
|
|
(53,126
|
)
|
|
(154,096
|
)
|
|
(118,488
|
)
|
Billings in excess of costs on uncompleted contracts
|
|
|
234,116
|
|
|
(22,949
|
)
|
|
(128,371
|
)
|
Other long-term liabilities
|
|
|
(68,714
|
)
|
|
53,411
|
|
|
(143,757
|
)
|
Income taxes payable
|
|
|
26,584
|
|
|
10,014
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net cash provided by operating activities
|
|
|
696,654
|
|
|
814,155
|
|
|
764,433
|
|
|
|
|
|
|
|
|
|
|
|
|
CASH FLOWS FROM INVESTING ACTIVITIES:
|
|
|
|
|
|
|
|
|
|
|
Payments for business acquisitions, net of cash acquired
|
|
|
(103,075
|
)
|
|
(5,534
|
)
|
|
(3,293,284
|
)
|
Proceeds from disposal of businesses, net of cash disposed
|
|
|
2,200
|
|
|
39,699
|
|
|
15,127
|
|
Investment in unconsolidated joint ventures
|
|
|
(59,684
|
)
|
|
(76,707
|
)
|
|
(44,761
|
)
|
Return of investment in unconsolidated joint ventures
|
|
|
35,407
|
|
|
5,160
|
|
|
12,056
|
|
Proceeds from sales of investments
|
|
|
900
|
|
|
11,745
|
|
|
126,370
|
|
Payments for purchase of investments
|
|
|
|
|
|
(214
|
)
|
|
(91,810
|
)
|
Proceeds from disposal of property and equipment
|
|
|
7,895
|
|
|
54,622
|
|
|
44,906
|
|
Payments for capital expenditures
|
|
|
(86,354
|
)
|
|
(191,386
|
)
|
|
(114,332
|
)
|
|
|
|
|
|
|
|
|
|
|
|
Net cash used in investing activities
|
|
|
(202,711
|
)
|
|
(162,615
|
)
|
|
(3,345,728
|
)
|
|
|
|
|
|
|
|
|
|
|
|
CASH FLOWS FROM FINANCING ACTIVITIES:
|
|
|
|
|
|
|
|
|
|
|
Proceeds from borrowings under credit agreements
|
|
|
5,953,249
|
|
|
4,706,225
|
|
|
6,581,703
|
|
Repayments of borrowings under credit agreements
|
|
|
(7,071,602
|
)
|
|
(5,199,961
|
)
|
|
(5,158,254
|
)
|
Proceeds from issuance of unsecured senior notes
|
|
|
1,000,000
|
|
|
|
|
|
1,600,000
|
|
Redemption of unsecured senior notes
|
|
|
(179,208
|
)
|
|
|
|
|
|
|
Prepayment penalty on unsecured senior notes
|
|
|
|
|
|
|
|
|
(55,639
|
)
|
Cash paid for debt and equity issuance costs
|
|
|
(13,041
|
)
|
|
(10,447
|
)
|
|
(89,567
|
)
|
Proceeds from issuance of common stock
|
|
|
30,093
|
|
|
28,192
|
|
|
25,561
|
|
Proceeds from exercise of stock options
|
|
|
4,878
|
|
|
9,946
|
|
|
11,073
|
|
Payments to repurchase common stock
|
|
|
(25,078
|
)
|
|
(25,892
|
)
|
|
(23,113
|
)
|
Excess tax benefit from share-based payment
|
|
|
|
|
|
|
|
|
3,642
|
|
Net distributions to noncontrolling interests
|
|
|
(59,036
|
)
|
|
(103,169
|
)
|
|
(144,269
|
)
|
Other financing activities
|
|
|
(26,745
|
)
|
|
(42,873
|
)
|
|
(31,373
|
)
|
|
|
|
|
|
|
|
|
|
|
|
Net cash (used in) provided by financing activities
|
|
|
(386,490
|
)
|
|
(637,979
|
)
|
|
2,719,764
|
|
|
|
|
|
|
|
|
|
|
|
|
EFFECT OF EXCHANGE RATE CHANGES ON CASH
|
|
|
2,764
|
|
|
(5,309
|
)
|
|
(28,764
|
)
|
NET INCREASE IN CASH AND CASH EQUIVALENTS
|
|
|
110,217
|
|
|
8,252
|
|
|
109,705
|
|
CASH AND CASH EQUIVALENTS AT BEGINNING OF YEAR
|
|
|
692,145
|
|
|
683,893
|
|
|
574,188
|
|
|
|
|
|
|
|
|
|
|
|
|
CASH AND CASH EQUIVALENTS AT END OF YEAR
|
|
$
|
802,362
|
|
$
|
692,145
|
|
$
|
683,893
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
SUPPLEMENTAL CASH FLOW INFORMATION:
|
|
|
|
|
|
|
|
|
|
|
Common stock issued in acquisitions
|
|
$
|
36,611
|
|
$
|
|
|
$
|
1,554,912
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Debt assumed from acquisitions
|
|
$
|
31,353
|
|
$
|
1,805
|
|
$
|
567,657
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Interest paid
|
|
$
|
226,090
|
|
$
|
216,125
|
|
$
|
179,939
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income (taxes paid) tax refunds received
|
|
$
|
(11,540
|
)
|
$
|
(13,109
|
)
|
$
|
27,349
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
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|
See accompanying Notes to Consolidated Financial Statements.
78
Table of Contents
AECOM
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
1. Significant Accounting Policies
Organization
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. The Company also provides construction services, including building construction and energy, infrastructure and industrial construction, primarily in the
Americas. 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 2017, 2016 and 2015 each contained 52 weeks and ended on September 29,
September 30, and October 2, 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, material 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, 2017 and 2016.
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 subcontractor and other direct costs for the years ended September 30, 2017, 2016 and
2015 were $9.2 billion, $8.4 billion and $8.3 billion, respectively.
79
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
80
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, 2017, 2016 and 2015, the types of contracts comprising the Company's revenue were as follows:
|
|
|
|
|
|
|
|
|
|
|
|
|
Fiscal Year Ended
|
|
|
|
September 30,
2017
|
|
September 30,
2016
|
|
September 30,
2015
|
|
Cost reimbursable
|
|
|
48
|
%
|
|
53
|
%
|
|
57
|
%
|
Guaranteed maximum price
|
|
|
23
|
%
|
|
15
|
%
|
|
15
|
%
|
Fixed price
|
|
|
29
|
%
|
|
32
|
%
|
|
28
|
%
|
Cost
reimbursable 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
81
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, 2017 and 2016,
aggregate receivables related to contract claims were not significant to the overall receivable position of the Company and represented less than 5% of net receivables.
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
82
Table of Contents
AECOM
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
1. Significant Accounting Policies (Continued)
assets
and liabilities denominated in a non-functional currency in a foreign operation is reported in the 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 ten to forty-five years for buildings, three to ten years for furniture and
fixtures and three to twelve years for computer systems and equipment. 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
not
be recoverable. The carrying amount of an asset to be held and used is not recoverable if it exceeds the sum of the undiscounted cash flows expected from the use and eventual disposition of the asset.
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
83
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AECOM
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
1. Significant Accounting Policies (Continued)
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.
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 generally the U.S. dollar, except for foreign operations where the functional
currency is generally the local currency. 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
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AECOM
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
1. Significant Accounting Policies (Continued)
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.
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 of the new guidance on its consolidated financial statements, including the expected impact on our business processes, systems, and controls, and potential
differences in the timing or method of revenue recognition for its contracts. The Company expects to adopt the new standard on October 1, 2018, using the modified retrospective method that may
result in a cumulative effect adjustment as of the date of adoption.
In
February 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 was effective for the Company's fiscal year beginning October 1, 2016. The adoption of this guidance did not have a material impact on the Company's financial
statements.
85
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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 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. This guidance was effective for the Company's fiscal year beginning October 1, 2016,
which resulted in the reclassifications of $52.3 million and $56.8 million of unamortized debt issuance costs at September 30, 2017 and September 30, 2016, respectively,
from other non-current assets to long-term debt.
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. This guidance was effective for the Company's fiscal
year beginning October 1, 2016 and did not have a material impact on its consolidated financial statements.
In
February 2016, the FASB issued new accounting guidance which changes accounting requirements for leases. The new guidance requires lessees to recognize the assets and liabilities
arising from all leases, including those classified as operating leases under previous accounting guidance, on the balance sheet. It also requires disclosure of key information about leasing
arrangements to increase transparency and comparability among organizations. The new guidance will be effective for the Company's fiscal year beginning October 1, 2019 with early adoption
permitted. The new guidance must be adopted using a modified retrospective transition approach and provides for certain practical expedients. The Company is currently evaluating the impact that the
new guidance will have on its consolidated financial statements.
In
March 2016, the FASB issued new accounting guidance which simplifies the accounting for employee share-based payments. The new guidance requires all income tax effects of awards to be
recognized in the statement of operations when the awards vest or are settled. It also allows 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. The Company elected
early adoption of this standard beginning October 1, 2016. The adoption of this guidance did not have a material impact on the Company's consolidated financial statements.
In
June 2016, the FASB issued a new credit loss standard that changes the impairment model for most financial assets and certain 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 guidance will be effective for the Company's fiscal year starting October 1, 2020. The Company is currently evaluating the impact that the new guidance will have on its consolidated
financial statements.
In
August 2016, the FASB issued new accounting guidance clarifying how entities should classify certain cash receipts and cash payments on the statement of cash flows. The new guidance
also clarifies how the predominance principle should be applied when cash receipts and cash payments have aspects of more than one class of cash flows. The new guidance will be effective for the
Company in its fiscal year beginning October 1, 2018, and early adoption is permitted. The Company is currently evaluating the impact that the new guidance will have on its consolidated
statement of cash flows.
In
January 2017, the FASB issued new accounting guidance to simplify the test for goodwill impairment. This guidance eliminates step two from the goodwill impairment test. Under the new
86
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AECOM
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
2. New Accounting Pronouncements and Changes in Accounting (Continued)
guidance,
an entity should recognize an impairment charge for the amount by which the carrying amount of a reporting unit exceeds its fair value. However, the loss recognized should not exceed the
total amount of goodwill allocated to the reporting unit. This guidance is effective for the Company in the first quarter of fiscal 2021, and earlier adoption is permitted. The Company is currently
evaluating the impact that this guidance will have on its consolidated financial statements.
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 Company paid total consideration of approximately $2.3 billion in cash and issued approximately
$1.6 billion of AECOM common stock to the former stockholders and certain equity award holders of URS. In connection with the acquisition, the Company also assumed URS's senior notes totaling
$0.4 billion, net of Company repayments. The Company repaid in full URS's $0.6 billion 2011 term loan and $0.1 billion of URS's revolving line of credit.
The
Company acquired backlog and customer relationship intangible assets valued at $973.8 million representing the fair value of existing contracts and the underlying customer
relationships, that have lives ranging from 1 to 11 years (weighted average lives of approximately 3 years) in connection with the URS acquisition. Acquired accrued expenses and other
current liabilities include URS project liabilities and approximately $240 million related to estimated URS legal settlements and uninsured legal damages; see Note 18, Commitments and
Contingencies, including legal matters related to former URS affiliates.
Amortization
of intangible assets relating to URS, included in cost of revenue, was $83.6 million and $183.3 million during the twelve months ended September 30,
2017 and 2016, respectively. Additionally, included in equity in earnings of joint ventures and noncontrolling interests was intangible amortization expense of $9.4 million and $(8.5) million,
respectively, during the twelve months ended September 30, 2017 and $23.0 million and $(13.8) million, respectively, during the twelve months ended September 30, 2016 related to
joint venture fair value adjustments.
Billings
in excess of costs on uncompleted contracts includes a margin fair value liability associated with long-term contracts acquired in connection with the acquisition of URS. This
margin fair value liability was $149.1 million at the acquisition date, and its carrying value was $8.6 million at September 30, 2017, and is recognized as revenue on a
percentage-of-completion basis as the applicable projects progress. The majority of this liability was recognized over the first two years from the acquisition date. Revenue
and the related income from operations related to the margin fair value liability recognized during the twelve months ended September 30, 2017 and 2016 was $6.3 million and
$37.2 million, respectively.
Acquisition
and integration expenses, relating to business acquisitions, in the accompanying consolidated statements of operations are comprised of the following:
|
|
|
|
|
|
|
|
|
|
Fiscal Year Ended
|
|
|
|
Sept 30, 2017
|
|
Sept 30, 2016
|
|
|
|
(in millions)
|
|
Severance and personnel costs
|
|
$
|
32.0
|
|
$
|
23.4
|
|
Professional service, real estate-related, and other expenses
|
|
|
6.7
|
|
|
190.2
|
|
|
|
|
|
|
|
|
|
Total
|
|
$
|
38.7
|
|
$
|
213.6
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
87
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AECOM
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
3. Business Acquisitions, Goodwill, and Intangible Assets (Continued)
Included in severance and personnel costs for the twelve months ended September 30, 2017 and 2016 was $9.8 million and $21.8 million of severance expenses,
respectively, of which $6.9 million and $19.3 million was paid as of September 30, 2017 and 2016, respectively. All acquisition and integration expenses are classified within
Corporate, as presented in Note 19.
In
addition to URS, the Company completed two, one and one business acquisitions during the years ended September 30, 2017, 2016 and 2015, respectively. These other business
acquisitions did not meet the quantitative thresholds to require separate disclosures based on the Company's consolidated assets, investments and net income.
Business
acquisitions during the year ended September 30, 2017 included Shimmick Construction Company, Inc. (Shimmick), a leading heavy civil construction firm in
California and the Western U.S. for consideration of $165.5 million.
Excluding
URS, the aggregate value of all consideration for acquisitions consummated during the years ended September 30, 2017, 2016 and 2015 were $166.6 million,
$5.5 million and $27.3 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 year presented:
|
|
|
|
|
|
|
Fiscal Year Ended
Sept 30, 2017
|
|
|
|
(in millions)
|
|
Cash acquired
|
|
$
|
28.0
|
|
Other current assets
|
|
|
118.3
|
|
Identifiable intangible assets:
|
|
|
|
|
Customer relationships, contracts and backlog
|
|
|
24.5
|
|
Trademark / tradename
|
|
|
1.8
|
|
|
|
|
|
|
Total intangible assets
|
|
$
|
26.3
|
|
|
|
|
|
|
Goodwill
|
|
|
127.1
|
|
Other non-current assets
|
|
|
29.5
|
|
Current liabilities
|
|
|
(123.1
|
)
|
Non-current liabilities
|
|
|
(29.3
|
)
|
Noncontrolling interest
|
|
|
(10.2
|
)
|
|
|
|
|
|
Net assets acquired
|
|
$
|
166.6
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Consideration
for acquisitions above includes the following:
|
|
|
|
|
|
|
Fiscal Year Ended
Sept 30, 2017
|
|
|
|
(in millions)
|
|
Cash paid
|
|
$
|
130.0
|
|
Equity issued
|
|
|
36.6
|
|
|
|
|
|
|
Total consideration
|
|
$
|
166.6
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
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
88
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AECOM
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
3. Business Acquisitions, Goodwill, and Intangible Assets (Continued)
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. The initial accounting for the Shimmick acquisition is not complete as of September 30, 2017. 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 at the date of disposal. Income from operations included losses incurred by non-core businesses of $9.4 million and $36.9 million during the twelve months ended
September 30, 2017 and 2016, respectively.
The
changes in the carrying value of goodwill by reportable segment for the fiscal years ended September 30, 2017 and 2016 were as follows:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Fiscal Year 2017
|
|
|
|
September 30,
2016
|
|
Acquisitions
|
|
Disposed
|
|
Foreign
Exchange
Impact
|
|
September 30,
2017
|
|
|
|
(in millions)
|
|
Design and Consulting Services
|
|
$
|
3,198.2
|
|
$
|
3.8
|
|
$
|
(1.8
|
)
|
$
|
18.7
|
|
$
|
3,218.9
|
|
Construction Services
|
|
|
915.2
|
|
|
123.3
|
|
|
|
|
|
11.4
|
|
|
1,049.9
|
|
Management Services
|
|
|
1,710.4
|
|
|
|
|
|
|
|
|
13.7
|
|
|
1,724.1
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
|
|
$
|
5,823.8
|
|
$
|
127.1
|
|
$
|
(1.8
|
)
|
$
|
43.8
|
|
$
|
5,992.9
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Fiscal Year 2016
|
|
|
|
September 30,
2015
|
|
Post-
Acquisition
Adjustments
|
|
Disposed
|
|
Foreign
Exchange
Impact
|
|
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
|
|
|
(11.3
|
)
|
|
(0.7
|
)
|
|
915.2
|
|
Management Services
|
|
|
1,738.9
|
|
|
4.0
|
|
|
|
|
|
(32.5
|
)
|
|
1,710.4
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
|
|
$
|
5,820.7
|
|
$
|
39.4
|
|
$
|
(11.3
|
)
|
$
|
(25.0
|
)
|
$
|
5,823.8
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
89
Table of Contents
AECOM
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
3. Business Acquisitions, Goodwill, and Intangible Assets (Continued)
The
gross amounts and accumulated amortization of the Company's acquired identifiable intangible assets with finite useful lives as of September 30, 2017 and 2016, included in
intangible assetsnet, in the accompanying consolidated balance sheets, were as follows:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
September 30, 2017
|
|
September 30, 2016
|
|
|
|
|
Gross
Amount
|
|
Accumulated
Amortization
|
|
Intangible
Assets, Net
|
|
Gross
Amount
|
|
Accumulated
Amortization
|
|
Intangible
Assets, Net
|
|
Amortization
Period
(years)
|
|
|
(in millions)
|
|
|
Backlog and customer relationships
|
|
$
|
1,283.6
|
|
$
|
(870.2
|
)
|
$
|
413.4
|
|
$
|
1,247.1
|
|
$
|
(767.7
|
)
|
$
|
479.4
|
|
1 - 11
|
Trademark / tradename
|
|
|
18.3
|
|
|
(16.6
|
)
|
|
1.7
|
|
|
16.4
|
|
|
(16.4
|
)
|
|
|
|
0.3 - 2
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
|
|
$
|
1,301.9
|
|
$
|
(886.8
|
)
|
$
|
415.1
|
|
$
|
1,263.5
|
|
$
|
(784.1
|
)
|
$
|
479.4
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Amortization
expense of acquired intangible assets included within cost of revenue was $102.7 million, $202.4 million, and $391.0 million for the years ended
September 30, 2017, 2016 and 2015, respectively. The following table presents estimated amortization expense of existing intangible assets for the succeeding years:
|
|
|
|
|
Fiscal Year
|
|
(in millions)
|
|
2018
|
|
$
|
91.7
|
|
2019
|
|
|
84.5
|
|
2020
|
|
|
70.5
|
|
2021
|
|
|
59.5
|
|
2022
|
|
|
46.3
|
|
Thereafter
|
|
|
62.6
|
|
|
|
|
|
|
Total
|
|
$
|
415.1
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
4. Accounts ReceivableNet
Net accounts receivable consisted of the following:
|
|
|
|
|
|
|
|
|
|
Fiscal Year Ended
|
|
|
|
September 30,
2017
|
|
September 30,
2016
|
|
|
|
(in millions)
|
|
Billed
|
|
$
|
2,317.8
|
|
$
|
2,267.6
|
|
Unbilled
|
|
|
2,293.5
|
|
|
1,890.2
|
|
Contract retentions
|
|
|
568.6
|
|
|
434.1
|
|
|
|
|
|
|
|
|
|
Total accounts receivablegross
|
|
|
5,179.9
|
|
|
4,591.9
|
|
Allowance for doubtful accounts
|
|
|
(52.2
|
)
|
|
(60.4
|
)
|
|
|
|
|
|
|
|
|
Total accounts receivablenet
|
|
$
|
5,127.7
|
|
$
|
4,531.5
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
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,
90
Table of Contents
AECOM
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
4. Accounts ReceivableNet (Continued)
2017
and 2016 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, 2017 and 2016.
The
Company sold trade receivables to financial institutions, of which $325.2 million and $356.3 million were outstanding as of September 30, 2017 and 2016,
respectively. The Company does not retain financial or legal obligations for these receivables that would result in material losses. The Company's ongoing involvement is limited to the remittance of
customer payments to the financial institutions with respect to the sold trade receivables.
5. Property and Equipment
Property and equipment, at cost, consists of the following:
|
|
|
|
|
|
|
|
|
|
|
Fiscal Year Ended
|
|
|
|
|
September 30,
2017
|
|
September 30,
2016
|
|
Useful Lives
(years)
|
|
|
(in millions)
|
|
|
Building and land
|
|
$
|
63.6
|
|
$
|
57.9
|
|
10 - 45
|
Leasehold improvements
|
|
|
404.6
|
|
|
381.4
|
|
1 - 20
|
Computer systems and equipment
|
|
|
694.6
|
|
|
652.0
|
|
3 - 12
|
Furniture and fixtures
|
|
|
135.9
|
|
|
129.7
|
|
3 - 10
|
|
|
|
|
|
|
|
|
|
Total
|
|
|
1,298.7
|
|
|
1,221.0
|
|
|
Accumulated depreciation and amortization
|
|
|
(677.3
|
)
|
|
(576.0
|
)
|
|
|
|
|
|
|
|
|
|
|
Property and equipment, net
|
|
$
|
621.4
|
|
$
|
645.0
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Depreciation
expense for the fiscal years ended September 30, 2017, 2016 and 2015 were $157.1 million, $171.7 million, and $191.3 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.
6. Joint Ventures and Variable Interest Entities
The Company's joint ventures provide architecture, engineering, program management, construction management, operations and maintenance services and invests in real estate,
public-private partnership (P3) and infrastructure projects. Joint ventures, the combination of two or more partners, are generally formed for a specific project. Management of the joint
venture is typically controlled by a joint venture executive committee, comprised of representatives from the joint venture partners. The joint
91
Table of Contents
AECOM
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
6. Joint Ventures and Variable Interest Entities (Continued)
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 indicate a party has the power to direct the activities that most
significantly impact the joint venture's economic performance, including powers granted to the joint venture's program manager, powers contained in the joint venture governing board and, to a certain
extent, a company's economic interest in the joint venture. The Company analyzes its joint ventures and classifies them as either:
-
-
a VIE that must be consolidated because the Company is the primary beneficiary or the joint venture is not a VIE and the Company holds the
majority voting interest with no significant participative rights available to the other partners; or
-
-
a VIE that 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.
92
Table of Contents
AECOM
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
6. Joint Ventures and Variable Interest Entities (Continued)
Summary
of financial information of the consolidated joint ventures is as follows:
|
|
|
|
|
|
|
|
|
|
September 30,
2017
|
|
September 30,
2016
|
|
|
|
(in millions)
|
|
Current assets
|
|
$
|
832.1
|
|
$
|
684.1
|
|
Non-current assets
|
|
|
188.8
|
|
|
230.8
|
|
|
|
|
|
|
|
|
|
Total assets
|
|
$
|
1,020.9
|
|
$
|
914.9
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Current liabilities
|
|
$
|
524.9
|
|
$
|
407.4
|
|
Non-current liabilities
|
|
|
12.4
|
|
|
12.4
|
|
|
|
|
|
|
|
|
|
Total liabilities
|
|
|
537.3
|
|
|
419.8
|
|
Total AECOM equity
|
|
|
274.7
|
|
|
318.0
|
|
Noncontrolling interests
|
|
|
208.9
|
|
|
177.1
|
|
|
|
|
|
|
|
|
|
Total owners' equity
|
|
|
483.6
|
|
|
495.1
|
|
|
|
|
|
|
|
|
|
Total liabilities and owners' equity
|
|
$
|
1,020.9
|
|
$
|
914.9
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
revenue of the consolidated joint ventures was $1,933.5 million, $1,935.2 million, and $2,368.0 million for the years ended September 30, 2017, 2016 and
2015, 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.
Summary
of financial information of the unconsolidated joint ventures, as derived from their unaudited financial statements, is as follows:
|
|
|
|
|
|
|
|
|
|
September 30,
2017
|
|
September 30,
2016
|
|
|
|
(in millions)
|
|
Current assets
|
|
$
|
1,912.2
|
|
$
|
1,407.0
|
|
Non-current assets
|
|
|
749.8
|
|
|
499.4
|
|
|
|
|
|
|
|
|
|
Total assets
|
|
$
|
2,662.0
|
|
$
|
1,906.4
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Current liabilities
|
|
$
|
1,570.2
|
|
$
|
977.3
|
|
Non-current liabilities
|
|
|
185.1
|
|
|
146.2
|
|
|
|
|
|
|
|
|
|
Total liabilities
|
|
|
1,755.3
|
|
|
1,123.5
|
|
Joint ventures' equity
|
|
|
906.7
|
|
|
782.9
|
|
|
|
|
|
|
|
|
|
Total liabilities and joint ventures' equity
|
|
$
|
2,662.0
|
|
$
|
1,906.4
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
AECOM's investment in joint ventures
|
|
$
|
364.2
|
|
$
|
330.5
|
|
93
Table of Contents
AECOM
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
6. Joint Ventures and Variable Interest Entities (Continued)
|
|
|
|
|
|
|
|
|
|
Twelve Months Ended
|
|
|
|
September 30,
2017
|
|
September 30,
2016
|
|
|
|
(in millions)
|
|
Revenue
|
|
$
|
5,561.8
|
|
$
|
4,871.8
|
|
Cost of revenue
|
|
|
5,305.5
|
|
|
4,618.3
|
|
|
|
|
|
|
|
|
|
Gross profit
|
|
$
|
256.3
|
|
$
|
253.5
|
|
|
|
|
|
|
|
|
|
Net income
|
|
$
|
244.8
|
|
$
|
233.9
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Summary
of AECOM's equity in earnings of unconsolidated joint ventures is as follows:
|
|
|
|
|
|
|
|
|
|
|
|
|
Fiscal Year Ended
|
|
|
|
September 30,
2017
|
|
September 30,
2016
|
|
September 30,
2015
|
|
|
|
(in millions)
|
|
Pass through joint ventures
|
|
$
|
36.6
|
|
$
|
21.9
|
|
$
|
26.2
|
|
Other joint ventures
|
|
|
105.0
|
|
|
82.1
|
|
|
80.0
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
|
|
$
|
141.6
|
|
$
|
104.0
|
|
$
|
106.2
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Included
in equity of earnings above, the Company recorded a gain of $52 million from a sale of its 50% equity interest in Provost Square I LLC, an unconsolidated joint
venture that invested in a real estate development in New Jersey, in fiscal year ended September 30, 2017.
7. Pension Benefit Obligations
In the U.S., the Company sponsors various qualified defined benefit pension plans. Benefits under these plans generally are based on the employee's years of creditable service and
compensation; however, all U.S. defined benefit plans are closed to new participants and have frozen accruals. The Company 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.
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.
94
Table of Contents
AECOM
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
7. Pension Benefit Obligations (Continued)
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,
2017
|
|
September 30,
2016
|
|
September 30,
2015
|
|
|
|
U.S.
|
|
Int'l
|
|
U.S.
|
|
Int'l
|
|
U.S.
|
|
Int'l
|
|
|
|
(in millions)
|
|
Change in benefit obligation:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Benefit obligation at beginning of year
|
|
$
|
720.0
|
|
$
|
1,406.2
|
|
$
|
718.2
|
|
$
|
1,239.2
|
|
$
|
217.0
|
|
$
|
676.6
|
|
Service cost
|
|
|
4.3
|
|
|
1.3
|
|
|
4.3
|
|
|
1.0
|
|
|
6.8
|
|
|
1.1
|
|
Participant contributions
|
|
|
0.1
|
|
|
0.4
|
|
|
0.1
|
|
|
0.5
|
|
|
0.4
|
|
|
0.5
|
|
Interest cost
|
|
|
19.2
|
|
|
28.3
|
|
|
22.0
|
|
|
39.2
|
|
|
28.2
|
|
|
47.1
|
|
Benefits and expenses paid
|
|
|
(37.9
|
)
|
|
(48.3
|
)
|
|
(37.4
|
)
|
|
(41.9
|
)
|
|
(33.9
|
)
|
|
(41.0
|
)
|
Actuarial (gain) loss
|
|
|
(22.7
|
)
|
|
(98.6
|
)
|
|
52.3
|
|
|
377.1
|
|
|
(41.0
|
)
|
|
10.6
|
|
Plan settlements
|
|
|
|
|
|
|
|
|
(32.9
|
)
|
|
(0.7
|
)
|
|
(20.1
|
)
|
|
(2.5
|
)
|
Plan amendments
|
|
|
|
|
|
|
|
|
0.2
|
|
|
|
|
|
|
|
|
|
|
Plan curtailments
|
|
|
|
|
|
|
|
|
(6.8
|
)
|
|
|
|
|
|
|
|
|
|
Net transfer in/(out)/acquisitions
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
560.8
|
|
|
618.6
|
|
Foreign currency translation loss (gain)
|
|
|
|
|
|
44.2
|
|
|
|
|
|
(208.2
|
)
|
|
|
|
|
(71.8
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Benefit obligation at end of year
|
|
$
|
683.0
|
|
$
|
1,333.5
|
|
$
|
720.0
|
|
$
|
1,406.2
|
|
$
|
718.2
|
|
$
|
1,239.2
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Fiscal Year Ended
|
|
|
|
September 30,
2017
|
|
September 30,
2016
|
|
September 30,
2015
|
|
|
|
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
|
|
$
|
456.9
|
|
$
|
973.2
|
|
$
|
459.0
|
|
$
|
925.8
|
|
$
|
139.7
|
|
$
|
532.6
|
|
Actual return on plan assets
|
|
|
39.0
|
|
|
9.6
|
|
|
49.6
|
|
|
215.9
|
|
|
(2.8
|
)
|
|
49.9
|
|
Employer contributions
|
|
|
12.3
|
|
|
25.8
|
|
|
18.5
|
|
|
20.2
|
|
|
42.1
|
|
|
24.4
|
|
Participant contributions
|
|
|
0.1
|
|
|
0.4
|
|
|
0.1
|
|
|
0.5
|
|
|
0.4
|
|
|
0.5
|
|
Benefits and expenses paid
|
|
|
(37.9
|
)
|
|
(48.3
|
)
|
|
(37.4
|
)
|
|
(41.9
|
)
|
|
(33.9
|
)
|
|
(41.0
|
)
|
Plan settlements
|
|
|
|
|
|
|
|
|
(32.9
|
)
|
|
(0.7
|
)
|
|
(20.1
|
)
|
|
(2.5
|
)
|
Net transfer in/(out)/acquisitions
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
333.6
|
|
|
415.5
|
|
Foreign currency translation gain (loss)
|
|
|
|
|
|
32.4
|
|
|
|
|
|
(146.6
|
)
|
|
|
|
|
(53.6
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Fair value of plan assets at end of year
|
|
$
|
470.4
|
|
$
|
993.1
|
|
$
|
456.9
|
|
$
|
973.2
|
|
$
|
459.0
|
|
$
|
925.8
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
95
Table of Contents
AECOM
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
7. Pension Benefit Obligations (Continued)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Fiscal Year Ended
|
|
|
|
September 30, 2017
|
|
September 30, 2016
|
|
September 30, 2015
|
|
|
|
U.S.
|
|
Int'l
|
|
U.S.
|
|
Int'l
|
|
U.S.
|
|
Int'l
|
|
|
|
(in millions)
|
|
Reconciliation of funded status:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Funded status at end of year
|
|
$
|
(212.6
|
)
|
$
|
(340.4
|
)
|
$
|
(263.1
|
)
|
$
|
(433.0
|
)
|
$
|
(259.2
|
)
|
$
|
(313.4
|
)
|
Contribution made after measurement date
|
|
|
N/A
|
|
|
N/A
|
|
|
N/A
|
|
|
N/A
|
|
|
N/A
|
|
|
N/A
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net amount recognized at end of year
|
|
$
|
(212.6
|
)
|
$
|
(340.4
|
)
|
$
|
(263.1
|
)
|
$
|
(433.0
|
)
|
$
|
(259.2
|
)
|
$
|
(313.4
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
The
following table sets forth the amounts recognized in the consolidated balance sheets as of September 30, 2017, 2016 and 2015:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Fiscal Year Ended
|
|
|
|
September 30, 2017
|
|
September 30, 2016
|
|
September 30, 2015
|
|
|
|
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
|
|
$
|
2.3
|
|
$
|
13.9
|
|
$
|
2.0
|
|
$
|
5.3
|
|
$
|
1.6
|
|
$
|
1.7
|
|
Accrued expenses and other current liabilities
|
|
|
(10.1
|
)
|
|
|
|
|
(9.3
|
)
|
|
|
|
|
(10.6
|
)
|
|
|
|
Pension benefit obligations
|
|
|
(204.8
|
)
|
|
(354.3
|
)
|
|
(255.8
|
)
|
|
(438.3
|
)
|
|
(250.2
|
)
|
|
(315.1
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net amount recognized in the balance sheet
|
|
$
|
(212.6
|
)
|
$
|
(340.4
|
)
|
$
|
(263.1
|
)
|
$
|
(433.0
|
)
|
$
|
(259.2
|
)
|
$
|
(313.4
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
The
following table details the reconciliation of amounts in the consolidated statements of stockholders' equity for the fiscal years ended September 30, 2017, 2016 and 2015:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Fiscal Year Ended
|
|
|
|
September 30, 2017
|
|
September 30, 2016
|
|
September 30, 2015
|
|
|
|
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 (cost) credit
|
|
$
|
(0.2
|
)
|
$
|
4.4
|
|
$
|
(0.2
|
)
|
$
|
4.4
|
|
$
|
|
|
$
|
5.3
|
|
Net loss
|
|
|
(94.6
|
)
|
|
(263.7
|
)
|
|
(129.6
|
)
|
|
(343.3
|
)
|
|
(99.3
|
)
|
|
(183.6
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total recognized in accumulated other comprehensive loss
|
|
$
|
(94.8
|
)
|
$
|
(259.3
|
)
|
$
|
(129.8
|
)
|
$
|
(338.9
|
)
|
$
|
(99.3
|
)
|
$
|
(178.3
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
96
Table of Contents
AECOM
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
7. Pension Benefit Obligations (Continued)
The
following table details the components of net periodic benefit cost for the Company's pension plans for fiscal years ended September 30, 2017, 2016 and 2015:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Fiscal Year Ended
|
|
|
|
September 30, 2017
|
|
September 30, 2016
|
|
September 30, 2015
|
|
|
|
U.S.
|
|
Int'l
|
|
U.S.
|
|
Int'l
|
|
U.S.
|
|
Int'l
|
|
|
|
(in millions)
|
|
Components of net periodic (benefit) cost:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Service costs
|
|
$
|
4.3
|
|
$
|
1.3
|
|
$
|
4.3
|
|
$
|
1.0
|
|
$
|
6.8
|
|
$
|
1.1
|
|
Interest cost on projected benefit obligation
|
|
|
19.2
|
|
|
28.3
|
|
|
22.0
|
|
|
39.2
|
|
|
28.2
|
|
|
47.1
|
|
Expected return on plan assets
|
|
|
(31.0
|
)
|
|
(41.5
|
)
|
|
(30.8
|
)
|
|
(48.0
|
)
|
|
(29.4
|
)
|
|
(49.4
|
)
|
Amortization of prior service credits
|
|
|
|
|
|
(0.2
|
)
|
|
|
|
|
(0.2
|
)
|
|
|
|
|
(0.2
|
)
|
Amortization of net loss
|
|
|
4.3
|
|
|
13.0
|
|
|
4.0
|
|
|
5.4
|
|
|
4.3
|
|
|
5.9
|
|
Curtailment gain recognized
|
|
|
|
|
|
|
|
|
(6.8
|
)
|
|
|
|
|
|
|
|
|
|
Settlement (gain) loss recognized
|
|
|
|
|
|
|
|
|
(0.9
|
)
|
|
0.1
|
|
|
0.6
|
|
|
0.7
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net periodic (benefit) cost
|
|
$
|
(3.2
|
)
|
$
|
0.9
|
|
$
|
(8.2
|
)
|
$
|
(2.5
|
)
|
$
|
10.5
|
|
$
|
5.2
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
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 $27.6 million,
$26.2 million, and $6.9 million in the years ended September 30, 2017, 2016 and 2015, respectively.
Amounts
included in accumulated other comprehensive loss as of September 30, 2017 that are expected to be recognized as components of net periodic benefit cost during fiscal 2018
are (in millions):
|
|
|
|
|
|
|
|
|
|
U.S.
|
|
Int'l
|
|
Amortization of prior service credit
|
|
$
|
|
|
$
|
0.2
|
|
Amortization of net actuarial losses
|
|
|
(4.0
|
)
|
|
(8.2
|
)
|
|
|
|
|
|
|
|
|
Total
|
|
$
|
(4.0
|
)
|
$
|
(8.0
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
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,
2017
|
|
September 30,
2016
|
|
September 30,
2015
|
|
|
|
U.S.
|
|
Int'l
|
|
U.S.
|
|
Int'l
|
|
U.S.
|
|
Int'l
|
|
|
|
(in millions)
|
|
Projected benefit obligation
|
|
$
|
658.4
|
|
$
|
1,158.3
|
|
$
|
694.8
|
|
$
|
1,220.3
|
|
$
|
692.5
|
|
$
|
1,226.2
|
|
Accumulated benefit obligation
|
|
|
658.4
|
|
|
1,145.7
|
|
|
694.8
|
|
|
1,215.7
|
|
|
686.5
|
|
|
1,222.0
|
|
Fair value of plan assets
|
|
|
466.4
|
|
|
804.2
|
|
|
453.2
|
|
|
782.1
|
|
|
455.6
|
|
|
911.2
|
|
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 $26.8 million to the international plans in fiscal 2018. The required minimum
contributions for U.S. plans are not significant. In addition, the Company may make discretionary contributions. The Company currently intends to contribute $12.7 million to U.S. plans in
fiscal 2018.
97
Table of Contents
AECOM
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
7. Pension Benefit Obligations (Continued)
The table below provides the expected future benefit payments, in millions:
|
|
|
|
|
|
|
|
Year Ending September 30,
|
|
U.S.
|
|
Int'l
|
|
2018
|
|
$
|
43.0
|
|
$
|
47.4
|
|
2019
|
|
|
40.4
|
|
|
47.8
|
|
2020
|
|
|
41.5
|
|
|
47.2
|
|
2021
|
|
|
41.6
|
|
|
50.3
|
|
2022
|
|
|
41.8
|
|
|
52.1
|
|
2023 - 2027
|
|
|
205.0
|
|
|
291.9
|
|
|
|
|
|
|
|
|
|
Total
|
|
$
|
413.3
|
|
$
|
536.7
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
The
underlying assumptions for the pension plans are as follows:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Fiscal Year Ended
|
|
|
|
September 30,
2017
|
|
September 30,
2016
|
|
September 30,
2015
|
|
|
|
U.S.
|
|
Int'l
|
|
U.S.
|
|
Int'l
|
|
U.S.
|
|
Int'l
|
|
Weighted-average assumptions to determine benefit obligation:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Discount rate
|
|
|
3.64
|
%
|
|
2.67
|
%
|
|
3.41
|
%
|
|
2.35
|
%
|
|
4.10
|
%
|
|
3.80
|
%
|
Salary increase rate
|
|
|
N/A
|
|
|
2.76
|
%
|
|
N/A
|
|
|
2.61
|
%
|
|
3.81
|
%
|
|
2.51
|
%
|
Weighted-average assumptions to determine net periodic benefit cost:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Discount rate
|
|
|
3.41
|
%
|
|
2.35
|
%
|
|
4.10
|
%
|
|
3.80
|
%
|
|
3.88
|
%
|
|
3.92
|
%
|
Salary increase rate
|
|
|
N/A
|
|
|
2.61
|
%
|
|
N/A
|
|
|
2.65
|
%
|
|
4.50
|
%
|
|
2.65
|
%
|
Expected long-term rate of return on plan assets
|
|
|
7.00
|
%
|
|
5.10
|
%
|
|
6.72
|
%
|
|
5.74
|
%
|
|
6.73
|
%
|
|
6.00
|
%
|
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 2017 and pension plan asset allocation, both U.S. and international, as of September 30, 2017 and 2016:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Percentage of Plan Assets
as of September 30,
|
|
|
|
Target Allocations
|
|
2017
|
|
2016
|
|
|
|
U.S.
|
|
Int'l
|
|
U.S.
|
|
Int'l
|
|
U.S.
|
|
Int'l
|
|
Asset Category:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Equities
|
|
|
43
|
%
|
|
28
|
%
|
|
43
|
%
|
|
27
|
%
|
|
42
|
%
|
|
28
|
%
|
Debt
|
|
|
48
|
|
|
35
|
|
|
47
|
|
|
38
|
|
|
49
|
|
|
34
|
|
Cash
|
|
|
1
|
|
|
5
|
|
|
1
|
|
|
2
|
|
|
1
|
|
|
7
|
|
Property and other
|
|
|
8
|
|
|
32
|
|
|
9
|
|
|
33
|
|
|
8
|
|
|
31
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
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
98
Table of Contents
AECOM
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
7. Pension Benefit Obligations (Continued)
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 7.00% and 5.10% weighted-average long-term rate of return on
assets assumption for the fiscal year ended September 30, 2017 for U.S. and non-U.S. plans, respectively.
As
of September 30, 2017, the fair values of the Company's pension plan assets by major asset categories were as follows:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Fair Value Measurement as of
September 30, 2017
|
|
|
|
Total
Carrying
Value as of
September 30,
2017
|
|
Quoted
Prices
in Active
Markets
(Level 1)
|
|
Significant
Other
Observable
Inputs
(Level 2)
|
|
Significant
Unobservable
Inputs
(Level 3)
|
|
|
|
(in millions)
|
|
Cash and cash equivalents
|
|
$
|
22.9
|
|
$
|
13.1
|
|
$
|
9.8
|
|
$
|
|
|
Equity securities
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Global equity securities
|
|
|
0.8
|
|
|
|
|
|
0.8
|
|
|
|
|
Domestic equity securities
|
|
|
7.1
|
|
|
6.2
|
|
|
0.9
|
|
|
|
|
Investment funds
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Diversified funds
|
|
|
212.8
|
|
|
|
|
|
212.8
|
|
|
|
|
Equity funds
|
|
|
467.9
|
|
|
6.4
|
|
|
461.5
|
|
|
|
|
Fixed income funds
|
|
|
610.6
|
|
|
3.5
|
|
|
607.1
|
|
|
|
|
Hedge funds
|
|
|
110.1
|
|
|
|
|
|
69.9
|
|
|
40.2
|
|
Assets held by insurance company
|
|
|
31.3
|
|
|
|
|
|
31.3
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
|
|
$
|
1,463.5
|
|
$
|
29.2
|
|
$
|
1,394.1
|
|
$
|
40.2
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
99
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 are 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
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Changes
for the year ended September 30, 2017, in the fair value of the Company's recurring post-retirement plan Level 3 assets are as follows:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
September 30,
2016
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,
2017
Ending
balance
|
|
|
|
(in millions)
|
|
Investment funds
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Hedge funds
|
|
$
|
14.1
|
|
$
|
(0.2
|
)
|
$
|
|
|
$
|
|
|
$
|
26.3
|
|
$
|
|
|
$
|
40.2
|
|
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
|
|
100
Table of Contents
AECOM
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
7. Pension Benefit Obligations (Continued)
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, 2017, 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 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 $48.8 million and
$49.5 million for the years ended September 30, 2017 and 2016, respectively. At September 30, 2017 and 2016, none of the plans in which the Company participates are individually
significant to its consolidated financial statements.
101
Table of Contents
AECOM
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
8. Debt
Debt consisted of the following:
|
|
|
|
|
|
|
|
|
|
September 30,
2017
|
|
September 30,
2016
|
|
|
|
(in millions)
|
|
2014 Credit Agreement
|
|
$
|
908.7
|
|
$
|
1,954.9
|
|
2014 Senior Notes
|
|
|
1,600.0
|
|
|
1,600.0
|
|
2017 Senior Notes
|
|
|
1,000.0
|
|
|
|
|
URS Senior Notes
|
|
|
247.7
|
|
|
427.7
|
|
Other debt
|
|
|
140.0
|
|
|
142.7
|
|
|
|
|
|
|
|
|
|
Total debt
|
|
|
3,896.4
|
|
|
4,125.3
|
|
Less: Current portion of debt and short-term borrowings
|
|
|
(142.0
|
)
|
|
(366.3
|
)
|
Less: Unamortized debt issuance costs
|
|
|
(52.3
|
)
|
|
(56.8
|
)
|
|
|
|
|
|
|
|
|
Long-term debt
|
|
$
|
3,702.1
|
|
$
|
3,702.2
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
The
following table presents, in millions, scheduled maturities of the Company's debt as of September 30, 2017:
|
|
|
|
|
Fiscal Year
|
|
|
|
2018
|
|
$
|
142.0
|
|
2019
|
|
|
154.4
|
|
2020
|
|
|
122.6
|
|
2021
|
|
|
603.7
|
|
2022
|
|
|
256.7
|
|
Thereafter
|
|
|
2,617.0
|
|
|
|
|
|
|
Total
|
|
$
|
3,896.4
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
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,
although the term loan B facility was paid in full on February 21, 2017. Some subsidiaries of the Company (Guarantors) have guaranteed the obligations of the borrowers under the Credit
Agreement. The borrowers' obligations under the Credit Agreement are secured by a lien on substantially all of the assets of the Company and the Guarantors pursuant to a security and pledge agreement
(Security Agreement). The collateral under the Security Agreement is subject to release upon fulfillment of certain conditions specified in the Credit Agreement and Security Agreement.
The
Credit Agreement contains covenants that limit the ability of the Company and 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;
102
Table of Contents
AECOM
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
8. Debt (Continued)
(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.
On
March 31, 2017, the Credit Agreement was amended to (1) expand the ability of restricted subsidiaries to borrow under "Incremental Term Loans"; (2) revise the
definition of "Working Capital" as used in "Excess Cash Flow"; (3) revise the definitions for "Consolidated EBITDA" and "Consolidated Funded Indebtedness" to reflect the expected gain and debt
repayment of an AECOM Capital disposition, which disposition was completed on April 28, 2017; and (4) amend provisions relating to the Company's ability to undertake certain internal
restructuring steps to accommodate changes in tax laws.
Under
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 4.0 at September 30, 2017. The Company's Consolidated Interest Coverage Ratio was 4.7 at September 30, 2017. As of September 30, 2017,
the Company was in compliance with the covenants of the Credit Agreement.
At
September 30, 2017 and 2016, outstanding standby letters of credit totaled $58.1 million and $92.3 million, respectively, under the Company's revolving credit
facilities. As of September 30, 2017 and 2016, the Company had $991.9 million and $888.4 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 unsecured 5.750%
Senior Notes due 2022 (2022 Notes) and $800,000,000 aggregate principal amount of its unsecured 5.875% Senior Notes due 2024 (the 2024 Notes and, together with the 2022 Notes, the 2014 Senior Notes).
As
of September 30, 2017, the estimated fair value of its 2014 Senior Notes was approximately $836.0 million for the 2022 Notes and $884.0 million for the 2024
Notes. The fair value of the 2014 Senior
103
Table of Contents
AECOM
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
8. Debt (Continued)
Notes
as of September 30, 2017 was derived by taking the mid-point of the trading prices from an observable market input (Level 2) in the secondary bond market and multiplying it by the
outstanding balance of the 2014 Senior 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.
On
November 2, 2015, the Company completed an exchange offer to exchange the unregistered 2014 Senior Notes for registered notes, as well as all related guarantees.
The
Company was in compliance with the covenants relating to the 2014 Senior Notes as of September 30, 2017.
On February 21, 2017, the Company completed a private placement offering of $1,000,000,000 aggregate principal amount of its unsecured
5.125% Senior Notes due 2027 (the 2017 Senior Notes) and used the note proceeds to immediately retire the remaining $127.6 million outstanding on the term loan B facility as well as repay
$600 million of the term loan A facility and $250 million of the revolving credit facility under its Credit Agreement.
As
of September 30, 2017, the estimated fair value of the Company's 2017 Senior Notes was approximately $1,031.3 million. The fair value of the Company's 2017 Senior Notes
as of September 30, 2017 was derived by taking the mid-point of the trading prices from an observable market input (Level 2) in the secondary bond market and multiplying it by the
outstanding balance of the 2017 Senior Notes. Interest will be payable on the 2017 Senior Notes at a rate of 5.125% per annum. Interest on the 2017 Senior Notes will be payable semi-annually on
March 15 and September 15 of each year, commencing on September 15, 2017. The 2017 Senior Notes will mature on March 15, 2027.
At
any time and from time to time prior to December 15, 2026, the Company may redeem all or part of the 2017 Senior Notes, at a redemption price equal to 100% of their principal
amount, plus a "make whole" premium as of the redemption date, and accrued and unpaid interest to the redemption date.
104
Table of Contents
AECOM
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
8. Debt (Continued)
In
addition, at any time and from time to time prior to March 15, 2020, the Company may redeem up to 35% of the original aggregate principal amount of the 2017 Senior Notes with
the proceeds of one or more qualified equity offerings, at a redemption price equal to 105.125%, plus accrued and unpaid interest. Furthermore, at any time on or after December 15, 2026, the
Company may redeem on one or more occasions all or part of the 2017 Senior Notes at a redemption price equal to 100% of their principal amount, plus accrued and unpaid interest.
The
indenture pursuant to which the 2017 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.
The
Company and the Guarantors filed a registration statement on Form S-4 with the SEC on May 11, 2017 that was declared effective by the SEC on May 25, 2017 to
exchange the unregistered 2017 Senior Notes for registered notes and guarantees having terms substantially identical in all material respects. On June 30, 2017, the Company completed its
exchange offer by exchanging $999,074,000 aggregate principal amount of the unregistered 2017 Senior Notes with registered notes, as well as all related guarantees. $926,000 aggregate principal amount
of the unregistered 2017 Senior Notes remained outstanding as of September 30, 2017.
The
Company was in compliance with the covenants relating to its 2017 Senior Notes as of September 30, 2017.
In connection with the URS acquisition, the Company assumed the URS 3.85% Senior Notes due 2017 (2017 URS Senior Notes) and the URS 5.00% Senior
Notes due 2022 (2022 URS Senior Notes), totaling $1.0 billion (URS Senior Notes). The URS acquisition triggered change in control provisions in the URS Senior Notes that allowed the holders of
the URS Senior Notes to redeem their URS Senior Notes at a cash price equal to 101% of the principal amount and, accordingly, the Company redeemed $572.3 million of the URS Senior Notes on
October 24, 2014. The remaining 2017 URS Senior Notes matured and were fully redeemed on April 3, 2017 for $179.2 million using proceeds from a $185 million delayed draw
term loan A facility tranche under the Credit Agreement. The 2022 URS Senior Notes are general unsecured senior obligations of AECOM Global II, LLC (as successor in interest to URS) and are
fully and unconditionally guaranteed on a joint-and-several basis by certain former URS domestic subsidiary guarantors.
As
of September 30, 2017, the estimated fair value of the 2022 URS Senior Notes was approximately $259.7 million. The carrying value of the 2022 URS Senior Notes on the
Company's Consolidated Balance Sheets as of September 30, 2017 was $247.7 million. The fair value of the 2022 URS Senior Notes as of September 30, 2017 was derived by taking the
mid-point of the trading prices from an observable market input (Level 2) in the secondary bond market and multiplying it by the outstanding balance of the 2022 URS Senior Notes.
As
of September 30, 2017, the Company was in compliance with the covenants relating to the 2022 URS Senior Notes.
105
Table of Contents
AECOM
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
8. Debt (Continued)
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, 2017 and 2016, these outstanding standby letters of credit totaled
$445.7 million and $382.2 million, respectively. As of September 30, 2017, the Company had $502.3 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 years
ended September 30, 2017, 2016 and 2015 was 4.6%, 4.4% and 4.2%, respectively.
Interest
expense in the consolidated statements of operations for the years ended September 30, 2017 and 2016 included amortization of deferred debt issuance costs of
$17.5 million and $30.9 million, 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 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.
106
Table of Contents
AECOM
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
9. Derivative Financial Instruments and Fair Value Measurements (Continued)
The notional principal, fixed rates and related expiration dates of the Company's outstanding interest rate swap agreements were as follows:
|
|
|
|
|
|
|
|
|
|
|
|
|
September 30, 2017
|
|
|
|
|
Notional Amount
(in millions)
|
|
Fixed
Rate
|
|
Expiration
Date
|
|
|
|
|
$
|
300.0
|
|
|
1.63
|
%
|
June 2018
|
|
|
|
|
|
300.0
|
|
|
1.54
|
%
|
September 2018
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
September 30, 2016
|
|
|
|
|
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 15.1 million (or $11.3 million) at September 30, 2017.
The notional principal of outstanding foreign currency contracts to purchase Australian dollars with U.S. dollars was AUD 58.6 million (or $43.4 million) at September 30,
2016.
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, 2017, 2016 and 2015.
The Company's non-pension financial assets and liabilities recorded at fair values relate to derivative instruments and were not material at
September 30, 2017 or 2016.
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, 2017, 2016 and 2015. 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 year ended September 30, 2015, the Company entered into a contingent consideration arrangement in connection with a business acquisition. Under the arrangement, the
Company agreed to pay cash to the sellers if certain financial performance thresholds are achieved in the future. The fair value of the contingent consideration liability, net of amounts paid, as of
September 30, 2017 and 2016 was $13 million and $39 million, respectively, which decreased due to payments of approximately $21 million, and a change in estimated fair
value during the year ended September 30, 2017. This liability is a Level 3 fair value measurement recorded within other accrued liabilities, and was valued based on estimated future
107
Table of Contents
AECOM
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
9. Derivative Financial Instruments and Fair Value Measurements (Continued)
net
cash flows. 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,
|
|
|
|
2018
|
|
$
|
259.1
|
|
2019
|
|
|
214.8
|
|
2020
|
|
|
174.2
|
|
2021
|
|
|
139.7
|
|
2022
|
|
|
114.9
|
|
Thereafter
|
|
|
460.1
|
|
|
|
|
|
|
Total
|
|
$
|
1,362.8
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Rent
expense for leases for the years ended September 30, 2017, 2016 and 2015 was approximately $265.9 million, $383.7 million, and $395.9 million,
respectively. When the Company is required to restore leased facilities to original condition, provisions are made over the period of the lease.
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.
108
Table of Contents
AECOM
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
13. Share-Based Payments
Defined Contribution Plans
Substantially all permanent domestic 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; however, the Company does provide an annual Company match in AECOM shares. 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 to purchase AECOM stock under defined contribution plans for fiscal
years ended September 30, 2017, 2016 and 2015 was $32.9 million, $26.8 million, and $13.3 million, respectively.
Stock Incentive Plans
Under the 2016 Stock Incentive Plan, the Company has up to 13.6 million securities remaining available for future
issuance as of September 30, 2017. 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, 2017, option activity was as follows:
|
|
|
|
|
|
|
|
|
|
Number of
Options
(in millions)
|
|
Weighted
Average
Exercise Price
|
|
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
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Granted
|
|
|
|
|
|
|
|
Exercised
|
|
|
(0.2
|
)
|
|
26.42
|
|
Cancelled
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance, September 30, 2017
|
|
|
0.7
|
|
|
31.11
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Exercisable as of September 30, 2015
|
|
|
0.7
|
|
|
25.04
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Exercisable as of September 30, 2016
|
|
|
0.3
|
|
|
26.99
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Exercisable as of September 30, 2017
|
|
|
0.1
|
|
|
27.79
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
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, 2017:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Options Outstanding
|
|
|
|
Options Exercisable
|
|
|
|
Number
Outstanding
as of
September 30,
2017
(in millions)
|
|
Weighted
Average
Remaining
Contractual
Life
|
|
Weighted
Average
Exercise
Price
|
|
Aggregate
Intrinsic
Value
(in millions)
|
|
Number
Exercisable
as of
September 30,
2017
(in millions)
|
|
Weighted
Average
Remaining
Contractual
Life
|
|
Weighted
Average
Exercise
Price
|
|
Range of Exercise Prices
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$27.54 - $28.44
|
|
|
0.1
|
|
|
0.27
|
|
$
|
27.79
|
|
$
|
0.9
|
|
|
0.1
|
|
|
0.27
|
|
$
|
27.79
|
|
$31.62
|
|
|
0.6
|
|
|
6.43
|
|
|
31.62
|
|
|
3.3
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
0.7
|
|
|
5.61
|
|
|
31.11
|
|
$
|
4.2
|
|
|
0.1
|
|
|
0.27
|
|
|
27.79
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
The
remaining contractual life of options outstanding at September 30, 2017 range from 0.19 to 6.43 years and have a weighted average remaining contractual life of
5.61 years. The aggregate intrinsic value of stock options exercised during the years ended September 30, 2017, 2016 and 2015 was $1.2 million, $0.6 million, and
$2.1 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, 2017 and 2016.
The
Company grants stock units to employees under its Performance Earnings Program (PEP), whereby units are earned and issued dependent upon meeting established cumulative performance
objectives and vest over a three-year service period. Additionally, the Company issues restricted stock units to employees which are earned based on service conditions. The grant date fair value of
PEP awards and restricted stock unit awards is that day's closing market price of the Company's common stock. The weighted average grant date fair value of PEP awards was $38.15, $29.91, and $32.32
during the years ended September 30, 2017, 2016 and 2015, respectively. The weighted average grant date fair value of restricted stock unit awards was $37.96, $29.82, and $31.05 during the
years ended September 30, 2017, 2016 and 2015, 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 $83.8 million, $73.4 million, and
$112.2 million during the years ended September 30, 2017, 2016 and 2015, 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, 2017 and 2016 was $96.8 million and $91.8 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)
14. Income Taxes
Income before income taxes included income (loss) from domestic operations of $322.2 million, $51.6 million, and $(214.6) million for fiscal years ended
September 30, 2017, 2016 and 2015 and income from foreign operations of $107.0 million, $74.0 million, and $63.1 million for fiscal years ended September 30, 2017,
2016 and 2015.
Income
tax (benefit) expense was comprised of:
|
|
|
|
|
|
|
|
|
|
|
|
|
Fiscal Year Ended
|
|
|
|
September 30,
2017
|
|
September 30,
2016
|
|
September 30,
2015
|
|
|
|
(in millions)
|
|
Current:
|
|
|
|
|
|
|
|
|
|
|
Federal
|
|
$
|
10.3
|
|
$
|
33.7
|
|
$
|
(67.1
|
)
|
State
|
|
|
17.9
|
|
|
12.4
|
|
|
2.6
|
|
Foreign
|
|
|
29.3
|
|
|
26.1
|
|
|
37.2
|
|
|
|
|
|
|
|
|
|
|
|
|
Total current income tax expense (benefit)
|
|
|
57.5
|
|
|
72.2
|
|
|
(27.3
|
)
|
|
|
|
|
|
|
|
|
|
|
|
Deferred:
|
|
|
|
|
|
|
|
|
|
|
Federal
|
|
|
(8.3
|
)
|
|
(63.4
|
)
|
|
(44.2
|
)
|
State
|
|
|
10.4
|
|
|
(5.4
|
)
|
|
1.2
|
|
Foreign
|
|
|
(51.9
|
)
|
|
(41.3
|
)
|
|
(10.0
|
)
|
|
|
|
|
|
|
|
|
|
|
|
Total deferred income tax (benefit) expense
|
|
|
(49.8
|
)
|
|
(110.1
|
)
|
|
(53.0
|
)
|
|
|
|
|
|
|
|
|
|
|
|
Total income tax expense (benefit)
|
|
$
|
7.7
|
|
$
|
(37.9
|
)
|
$
|
(80.3
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
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,
2017
|
|
September 30,
2016
|
|
September 30,
2015
|
|
|
|
Amount
|
|
%
|
|
Amount
|
|
%
|
|
Amount
|
|
%
|
|
|
|
(in millions)
|
|
Tax at federal statutory rate
|
|
$
|
150.3
|
|
|
35.0
|
%
|
$
|
43.9
|
|
|
35.0
|
%
|
$
|
(53.0
|
)
|
|
35.0
|
%
|
State income tax, net of federal benefit
|
|
|
24.3
|
|
|
5.7
|
|
|
5.6
|
|
|
4.5
|
|
|
(2.3
|
)
|
|
1.5
|
|
Income tax credits and incentives
|
|
|
(56.8
|
)
|
|
(13.2
|
)
|
|
(24.6
|
)
|
|
(19.6
|
)
|
|
(21.2
|
)
|
|
14.0
|
|
Valuation allowance
|
|
|
(51.2
|
)
|
|
(11.9
|
)
|
|
(54.8
|
)
|
|
(43.6
|
)
|
|
30.0
|
|
|
(19.8
|
)
|
Exclusion of tax on non-controlling interests
|
|
|
(28.2
|
)
|
|
(6.6
|
)
|
|
(24.7
|
)
|
|
(19.7
|
)
|
|
(29.3
|
)
|
|
19.3
|
|
Foreign tax rate differential
|
|
|
(19.2
|
)
|
|
(4.5
|
)
|
|
(19.7
|
)
|
|
(15.7
|
)
|
|
(24.8
|
)
|
|
16.4
|
|
Tax exempt income
|
|
|
(17.9
|
)
|
|
(4.2
|
)
|
|
(17.6
|
)
|
|
(14.0
|
)
|
|
(13.2
|
)
|
|
8.7
|
|
Foreign residual income
|
|
|
(9.2
|
)
|
|
(2.1
|
)
|
|
17.8
|
|
|
14.2
|
|
|
20.1
|
|
|
(13.3
|
)
|
Change in uncertain tax positions
|
|
|
9.5
|
|
|
2.2
|
|
|
(5.0
|
)
|
|
(4.0
|
)
|
|
6.6
|
|
|
(4.3
|
)
|
Nondeductible costs
|
|
|
5.8
|
|
|
1.4
|
|
|
6.1
|
|
|
4.8
|
|
|
2.8
|
|
|
(1.8
|
)
|
Other items, net
|
|
|
0.3
|
|
|
|
|
|
0.5
|
|
|
0.3
|
|
|
1.2
|
|
|
(0.9
|
)
|
Change in tax rates
|
|
|
|
|
|
|
|
|
34.6
|
|
|
27.6
|
|
|
|
|
|
|
|
Nondeductible transaction costs
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2.8
|
|
|
(1.8
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total income tax expense
|
|
$
|
7.7
|
|
|
1.8
|
%
|
$
|
(37.9
|
)
|
|
(30.2
|
)%
|
$
|
(80.3
|
)
|
|
53.0
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
During
the years 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,
2017
|
|
September 30,
2016
|
|
|
|
(in millions)
|
|
Deferred tax assets:
|
|
|
|
|
|
|
|
Compensation and benefit accruals not currently deductible
|
|
$
|
144.2
|
|
$
|
150.5
|
|
Net operating loss carryforwards
|
|
|
338.2
|
|
|
378.0
|
|
Self insurance reserves
|
|
|
23.8
|
|
|
24.7
|
|
Research and experimentation and other tax credits
|
|
|
167.5
|
|
|
125.3
|
|
Pension liability
|
|
|
142.1
|
|
|
180.9
|
|
Accrued liabilities
|
|
|
160.7
|
|
|
221.0
|
|
Other
|
|
|
25.0
|
|
|
4.3
|
|
|
|
|
|
|
|
|
|
Total deferred tax assets
|
|
|
1,001.5
|
|
|
1,084.7
|
|
|
|
|
|
|
|
|
|
Deferred tax liabilities:
|
|
|
|
|
|
|
|
Unearned revenue
|
|
|
(190.8
|
)
|
|
(212.6
|
)
|
Depreciation and amortization
|
|
|
(158.6
|
)
|
|
(113.0
|
)
|
Acquired intangible assets
|
|
|
(121.7
|
)
|
|
(155.5
|
)
|
Investment in subsidiaries
|
|
|
(241.2
|
)
|
|
(261.4
|
)
|
|
|
|
|
|
|
|
|
Total deferred tax liabilities
|
|
|
(712.3
|
)
|
|
(742.5
|
)
|
|
|
|
|
|
|
|
|
Valuation allowance
|
|
|
(138.4
|
)
|
|
(183.8
|
)
|
|
|
|
|
|
|
|
|
Net deferred tax assets
|
|
$
|
150.8
|
|
$
|
158.4
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
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. During the first quarter of 2017, the Company adopted
a new accounting standard that amended certain aspects of the accounting for employee share-based payments and as a result recorded an adjustment of $3.8 million to equity to recognize net
operating loss carryforwards attributable to excess tax benefits on stock compensation that had not been previously recognized to additional paid in capital.
As
of September 30, 2017, the Company has available unused federal, state and foreign net operating loss (NOL) carryforwards of $368.8 million, $899.6 million and
$843.8 million, respectively, which expire at various dates over the next several years; some foreign NOL carryforwards never expire. In addition, as of September 30, 2017, the Company
has unused federal and state research and development credits of $83.5 million and $21.8 million, respectively, foreign tax credits of $74.8 million, and California Enterprise Zone Tax
Credits of $6.6 million which expire at various dates over the next several years.
As
of September 30, 2017 and 2016, gross deferred tax assets were $1,001.5 million and $1,084.7 million, respectively. The Company has recorded a valuation allowance
of $138.4 million and $183.8 million at September 30, 2017 and 2016, 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
113
Table of Contents
AECOM
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
14. Income Taxes (Continued)
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.
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 $863.1 million will be realized and, as such, no additional valuation allowance has been provided. The net decrease in the valuation allowance of $45.3 million is
primarily attributable to the release of $59.9 million of valuation allowances for the United Kingdom and the utilization of $4.1 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.
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.
Valuation
allowances in the amount of $59.9 million in the United Kingdom were released due to sufficient positive evidence obtained during the second quarter of 2017. The
Company evaluated the new positive evidence against any negative evidence and determined that it is more likely than not that the deferred tax assets will be realized. This positive evidence includes
an improvement in earnings, the use of net operating losses on a taxable basis, and better management of pension liabilities due to positive effects of pension asset management and stabilization of
interest rates.
Valuation
allowances in the amount of $23.3 million in the United Kingdom were released due to sufficient positive evidence obtained during the third quarter of 2016. The
Company evaluated the new positive evidence against any negative evidence and determined the valuation allowance was no longer necessary. This new positive evidence included 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.
114
Table of Contents
AECOM
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
14. Income Taxes (Continued)
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.
Certain
operations in Canada continue to forecast losses and the valuation allowances could be reduced if 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.
In
the fourth quarter of 2017, the Company executed international restructuring transactions that resulted in a distribution of current year earnings and profits and the associated
foreign tax credits. The distribution resulted in the recognition of a benefit of $25.2 million related to excess foreign tax credits expected to be realized in the foreseeable future. These
current year earnings had previously been forecasted to qualify for the indefinite reinvestment criterion. The Company's change in assertion for these investments is a one-time event and does not
impact the Company's past or future assertions regarding intent and ability to reinvest indefinitely.
In
the third quarter of 2017, the Company recapitalized one of its European subsidiaries which resulted in the Company indefinitely reinvesting a portion of its
non-U.S. undistributed earnings that U.S. tax had previously been provided for and released the associated $21.2 million deferred tax liability. These non-U.S. earnings are
now intended to be reinvested indefinitely outside of the U.S. to meet the Company's current and future cash needs of its European operations.
Generally,
the Company does not provide for U.S. taxes or foreign withholding taxes on gross book-tax differences in its non-U.S. subsidiaries because such basis
differences of approximately $1.7 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 U.S. or foreign income tax liability upon repatriation, although the
calculation of such additional taxes is not practicable. The Company's deferred tax liability related to certain foreign subsidiaries for which the undistributed earnings are not intended to be
reinvested indefinitely was $77.0 million and $113.2 million for the years ended September 30, 2017 and 2016, respectively.
As
of September 30, 2017 and 2016, the Company had a liability for unrecognized tax benefits, including potential interest and penalties, net of related tax benefit, totaling
$109.5 million and $96.8 million, respectively. The gross unrecognized tax benefits as of September 30, 2017 and 2016 were $102.1 million and $87.9 million,
respectively, excluding interest, penalties, and related tax benefit. Of the
115
Table of Contents
AECOM
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
14. Income Taxes (Continued)
$102.1 million,
approximately $86.1 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,
2017
|
|
September 30,
2016
|
|
|
|
(in millions)
|
|
Balance at the beginning of the year
|
|
$
|
87.9
|
|
$
|
95.2
|
|
Gross increase due to acquisitions
|
|
|
|
|
|
|
|
Gross increase in current period's tax positions
|
|
|
10.8
|
|
|
7.6
|
|
Gross increase in prior years' tax positions
|
|
|
5.3
|
|
|
5.2
|
|
Gross decrease in prior years' tax positions
|
|
|
|
|
|
(16.6
|
)
|
Decrease due to settlement with tax authorities
|
|
|
(1.0
|
)
|
|
(3.2
|
)
|
Decrease due to lapse of statute of limitations
|
|
|
(1.1
|
)
|
|
(1.8
|
)
|
Gross change due to foreign exchange fluctuations
|
|
|
0.2
|
|
|
1.5
|
|
|
|
|
|
|
|
|
|
Balance at the end of the year
|
|
$
|
102.1
|
|
$
|
87.9
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
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, 2017, the accrued interest and penalties were $15.1 million and $4.1 million, respectively, excluding any related income tax benefits. At September 30, 2016,
the accrued interest and penalties were $12.5 million and $2.6 million, respectively, excluding any related income tax benefits.
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 attributable to AECOM by the weighted average number of common shares outstanding for the period.
Diluted EPS is computed by dividing net income attributable to AECOM by the weighted average number of common shares outstanding and potential common shares for the period. The Company includes as
potential common shares the weighted average dilutive effects of equity awards using the treasury stock method. For
116
Table of Contents
AECOM
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
15. Earnings Per Share (Continued)
the
periods presented, equity awards 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,
2017
|
|
September 30,
2016
|
|
September 30,
2015
|
|
|
|
(in millions)
|
|
Denominator for basic earnings per share
|
|
|
155.7
|
|
|
154.8
|
|
|
149.6
|
|
Potential common shares
|
|
|
3.4
|
|
|
1.3
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Denominator for diluted earnings per share
|
|
|
159.1
|
|
|
156.1
|
|
|
149.6
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
16. Other Financial Information
Accrued expenses and other current liabilities consist of the following:
|
|
|
|
|
|
|
|
|
|
Fiscal Year Ended
|
|
|
|
September 30,
2017
|
|
September 30,
2016
|
|
|
|
(in millions)
|
|
Accrued salaries and benefits
|
|
$
|
1,018.5
|
|
$
|
964.9
|
|
Accrued contract costs
|
|
|
911.9
|
|
|
1,009.8
|
|
Other accrued expenses
|
|
|
315.1
|
|
|
410.1
|
|
|
|
|
|
|
|
|
|
|
|
$
|
2,245.5
|
|
$
|
2,384.8
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Accrued
contract costs above include balances related to professional liability accruals of $547.9 million and $611.0 million as of September 30, 2017 and 2016,
respectively. The remaining accrued contract costs primarily relate to costs for services provided by subcontractors and other non-employees. Liabilities recorded related to accrued contract losses
were not material as of September 30, 2017 and 2016. 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, 2017.
During
the twelve months ended September 30, 2016, the Company recorded revenue related to the expected accelerated recovery of a pension related entitlement from the federal
government of approximately $50 million, which is included in accounts receivable-net at September 30, 2017. The entitlement resulted from pension costs that are reimbursable through
certain government contracts in accordance with Cost Accounting Standards. The accelerated recognition resulted from an amendment to freeze pension benefits under URS Federal Services, Inc.
Employees Retirement Plan. The actual amount of reimbursement may vary from the Company's expectation.
117
Table of Contents
AECOM
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
17. Reclassifications out of Accumulated Other Comprehensive Loss
The accumulated balances and reporting period activities for the years ended September 30, 2017, 2016 and 2015 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, 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
|
|
|
7.2
|
|
|
|
|
|
4.1
|
|
|
11.3
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
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
|
|
|
6.6
|
|
|
|
|
|
4.8
|
|
|
11.4
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balances at September 30, 2016
|
|
$
|
(368.9
|
)
|
$
|
(483.7
|
)
|
$
|
(5.0
|
)
|
$
|
(857.6
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Pension
Related
Adjustments
|
|
Foreign
Currency
Translation
Adjustments
|
|
Loss on
Derivative
Instruments
|
|
Accumulated
Other
Comprehensive
Loss
|
|
Balances at September 30, 2016
|
|
$
|
(368.9
|
)
|
$
|
(483.7
|
)
|
$
|
(5.0
|
)
|
$
|
(857.6
|
)
|
Other comprehensive income (loss) before reclassification
|
|
|
73.8
|
|
|
65.3
|
|
|
2.3
|
|
|
141.4
|
|
Amounts reclassified from accumulated other comprehensive loss
|
|
|
13.2
|
|
|
|
|
|
2.3
|
|
|
15.5
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balances at September 30, 2017
|
|
$
|
(281.9
|
)
|
$
|
(418.4
|
)
|
$
|
(0.4
|
)
|
$
|
(700.7
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
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
118
Table of Contents
AECOM
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
18. Commitments and Contingencies (Continued)
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 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, 2017, the Company was contingently liable in the amount of approximately $503.8 million in issued standby letters of credit and $5.7 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 other lender required guarantees.
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
119
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AECOM
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
18. Commitments and Contingencies (Continued)
$103 million,
including additional fees on changed work scope. WGI Ohio has incurred and continues to incur additional project costs outside the scope of the contract as a result of differing
site and ground conditions and intends to submit additional formal claims against the DOE.
Due
to significant delays and uncertainties about responsibilities for the scope of remaining work, final project completion costs and other associated costs have exceeded
$100 million over the contracted and claimed amounts. WGI Ohio assets and liabilities, including the value of the above costs and claims, were measured at their fair value on October 17,
2014, the date AECOM acquired WGI Ohio's parent company, see Note 3, which measurement has been reevaluated to account for developments pertaining to this matter.
WGI
Ohio can provide no certainty that it will recover the claims submitted against the DOE in December 2014, any future claims or any other project costs after December 2014 that WGI
Ohio may be obligated to incur including the remaining project completion costs, which could have a material adverse effect on the Company's results of operations.
One of our wholly-owned subsidiaries, URS Corporation, entered into a partial fixed cost and partial time and material design agreement in 2012
with a design build contractor for a state route highway construction project in Riverside County and Orange County, California. On March 9, 2017, URS Corporation filed a
$8.9 million complaint in the Superior Court of California against the design build contractor for its failure to pay for services performed under the design agreement. On April 17,
2017, the design build contractor filed a counterclaim in Superior Court alleging breaches of contract, negligent interference and professional negligence pertaining to URS Corporation's performance
of design services under the design agreement, seeking purported damages of $70 million. URS Corporation cannot provide assurances that it will be successful in the recovery of the amounts owed
to it under the design agreement or in its defense against the amounts alleged under the counterclaim that URS Corporation believes are without merit and that it intends to vigorously defend against.
The potential range of loss in excess of any current accrual cannot be reasonably estimated at this time, primarily because the matter involves unique regulatory issues; there is substantial
uncertainty regarding any alleged damages; and the matter is at a preliminary stage of litigation.
The following matter is disclosed pursuant to Regulation S-K, Item 103, Instruction 5.C pertaining to a government
authority environmental claim exceeding $100,000 against an AECOM affiliate. In September 2017, AECOM USA, Inc., one of our wholly-owned subsidiaries, was advised by the New York State
Department of Environmental Conservation ("DEC") of allegations that it committed environmental permit violations pursuant to the New York Environmental Conservation Law ("ECL")
associated with AECOM USA, Inc.'s oversight of a water restoration project for Schoharie County which could result in substantial fines if calculated under the ECL's maximum
civil penalty provisions. AECOM USA, Inc. disputes this claim and intends to continue to defend these matters vigorously; however, AECOM USA, Inc., cannot provide assurances that it will
be successful in these efforts. The potential range of loss in excess of any current accrual cannot be reasonably estimated at this time, primarily because the matter involves complex and unique
environmental and regulatory issues; the project site involves the
120
Table of Contents
AECOM
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
18. Commitments and Contingencies (Continued)
oversight
and involvement of various local, state and federal government agencies; substantial uncertainty regarding any alleged damages; and the preliminary stage of the government's claims.
19. Reportable Segments and Geographic Information
The Company's operations are organized into four reportable segments: Design and Consulting Services (DCS), Construction Services (CS), Management Services (MS), and AECOM Capital
(ACAP). During the third quarter of fiscal 2017, operating activities of ACAP achieved a level of significance sufficient to warrant disclosure as a separate reportable segment. Prior to the third
quarter of fiscal 2017, ACAP's operating results were included in the corporate segment, and comparable periods were reclassified to reflect the change. 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, technical assistance, and systems
integration and information technology services, primarily for agencies of the U.S. government. The Company's ACAP segment invests in real estate, public-private partnership (P3) and infrastructure
projects. These reportable segments are organized by the types of services provided, the differing specialized needs of the respective clients, and how the Company manages its business. The Company
has aggregated various operating segments into its reportable segments based on their similar characteristics, including similar long term financial performance, the nature of services provided,
internal processes for delivering those services, and types of customers.
During
the first quarter of fiscal year 2017, an operation and maintenance related entity previously reported within the CS segment was realigned within the MS segment to reflect present
management oversight. Accordingly, approximately $130 million and $137 million of revenue and $124 million and $130 million of cost of revenue for the years ended
September 30, 2016 and 2015, respectively, were reclassified to conform to the current period presentation.
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
|
|
AECOM
Capital
|
|
Corporate
|
|
Total
|
|
|
|
(in millions)
|
|
Fiscal Year Ended September 30, 2017:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Revenue
|
|
$
|
7,566.8
|
|
$
|
7,295.6
|
|
$
|
3,341.0
|
|
$
|
|
|
$
|
|
|
$
|
18,203.4
|
|
Gross profit
|
|
|
394.8
|
|
|
92.9
|
|
|
196.0
|
|
|
|
|
|
|
|
|
683.7
|
|
Equity in earnings of joint ventures
|
|
|
16.4
|
|
|
22.4
|
|
|
45.1
|
|
|
57.7
|
|
|
|
|
|
141.6
|
|
General and administrative expenses
|
|
|
|
|
|
|
|
|
|
|
|
(8.7
|
)
|
|
(124.7
|
)
|
|
(133.4
|
)
|
Acquisition and integration expenses
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(38.7
|
)
|
|
(38.7
|
)
|
Gain on disposal activities
|
|
|
0.6
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
0.6
|
|
Operating income
|
|
|
411.8
|
|
|
115.3
|
|
|
241.1
|
|
|
49.0
|
|
|
(163.4
|
)
|
|
653.8
|
|
Segment assets
|
|
|
6,992.6
|
|
|
4,114.5
|
|
|
2,704.6
|
|
|
199.1
|
|
|
386.2
|
|
|
14,397.0
|
|
Gross profit as a % of revenue
|
|
|
5.2
|
%
|
|
1.3
|
%
|
|
5.9
|
%
|
|
|
|
|
|
|
|
3.8
|
%
|
Fiscal Year Ended September 30, 2016:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Revenue
|
|
$
|
7,655.8
|
|
$
|
6,371.1
|
|
$
|
3,383.9
|
|
$
|
|
|
$
|
|
|
$
|
17,410.8
|
|
Gross profit
|
|
|
382.5
|
|
|
25.4
|
|
|
234.9
|
|
|
|
|
|
|
|
|
642.8
|
|
Equity in earnings of joint ventures
|
|
|
8.9
|
|
|
18.2
|
|
|
76.9
|
|
|
|
|
|
|
|
|
104.0
|
|
General and administrative expenses
|
|
|
|
|
|
|
|
|
|
|
|
(6.0
|
)
|
|
(109.1
|
)
|
|
(115.1
|
)
|
Acquisition and integration expenses
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(213.6
|
)
|
|
(213.6
|
)
|
Loss on disposal activities
|
|
|
|
|
|
(42.6
|
)
|
|
|
|
|
|
|
|
|
|
|
(42.6
|
)
|
Operating income
|
|
|
391.4
|
|
|
1.0
|
|
|
311.8
|
|
|
(6.0
|
)
|
|
(322.7
|
)
|
|
375.5
|
|
Segment assets
|
|
|
6,655.7
|
|
|
3,556.2
|
|
|
2,692.7
|
|
|
179.1
|
|
|
586.2
|
|
|
13,669.9
|
|
Gross profit as a % of revenue
|
|
|
5.0
|
%
|
|
0.4
|
%
|
|
6.9
|
%
|
|
|
|
|
|
|
|
3.7
|
%
|
Fiscal Year Ended September 30, 2015:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Revenue
|
|
$
|
7,962.9
|
|
$
|
6,539.3
|
|
$
|
3,487.7
|
|
$
|
|
|
$
|
|
|
$
|
17,989.9
|
|
Gross profit
|
|
|
299.3
|
|
|
35.9
|
|
|
200.0
|
|
|
|
|
|
|
|
|
535.2
|
|
Equity in earnings of joint ventures
|
|
|
6.6
|
|
|
23.0
|
|
|
76.6
|
|
|
|
|
|
|
|
|
106.2
|
|
General and administrative expenses
|
|
|
|
|
|
|
|
|
|
|
|
(4.3
|
)
|
|
(109.7
|
)
|
|
(114.0
|
)
|
Acquisition and integration expenses
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(398.4
|
)
|
|
(398.4
|
)
|
Operating income
|
|
|
305.9
|
|
|
58.9
|
|
|
276.6
|
|
|
(4.3
|
)
|
|
(508.1
|
)
|
|
129.0
|
|
Segment assets
|
|
|
7,118.2
|
|
|
3,382.4
|
|
|
2,903.9
|
|
|
111.7
|
|
|
498.1
|
|
|
14,014.3
|
|
Gross profit as a % of revenue
|
|
|
3.8
|
%
|
|
0.5
|
%
|
|
5.7
|
%
|
|
|
|
|
|
|
|
3.0
|
%
|
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, 2017
|
|
September 30, 2016
|
|
September 30, 2015
|
|
|
|
Revenue
|
|
Long-Lived
Assets
|
|
Revenue
|
|
Long-Lived
Assets
|
|
Revenue
|
|
Long-Lived
Assets
|
|
|
|
(in millions)
|
|
United States
|
|
$
|
13,042.6
|
|
|
4,779.0
|
|
$
|
12,567.0
|
|
|
4,763.9
|
|
$
|
12,599.6
|
|
|
4,852.5
|
|
Asia Pacific
|
|
|
1,352.7
|
|
|
382.9
|
|
|
1,278.3
|
|
|
394.0
|
|
|
1,385.3
|
|
|
426.4
|
|
Canada
|
|
|
1,159.9
|
|
|
600.4
|
|
|
866.5
|
|
|
615.7
|
|
|
1,308.3
|
|
|
641.0
|
|
Europe
|
|
|
1,869.9
|
|
|
1,362.8
|
|
|
1,904.2
|
|
|
1,368.4
|
|
|
1,796.9
|
|
|
1,496.2
|
|
Other foreign countries
|
|
|
778.3
|
|
|
418.3
|
|
|
794.8
|
|
|
412.5
|
|
|
899.8
|
|
|
352.1
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
|
|
$
|
18,203.4
|
|
|
7,543.4
|
|
$
|
17,410.8
|
|
|
7,554.5
|
|
$
|
17,989.9
|
|
|
7,768.2
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
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 22%, 23%, and 24% of the
Company's revenue was derived through direct contracts with agencies of the U.S. federal government in the years ended September 30, 2017, 2016 and 2015, respectively. One of these contracts
accounted for approximately 3%, 3%, and 2% of the Company's revenue in the years ended September 30, 2017, 2016 and 2015, 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 2017:
|
|
First
Quarter
|
|
Second
Quarter
|
|
Third
Quarter
|
|
Fourth
Quarter
|
|
|
|
(in millions, except per share data)
|
|
Revenue
|
|
$
|
4,358.3
|
|
$
|
4,427.2
|
|
$
|
4,561.5
|
|
$
|
4,856.4
|
|
Cost of revenue
|
|
|
4,188.3
|
|
|
4,258.8
|
|
|
4,386.3
|
|
|
4,686.3
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Gross profit
|
|
|
170.0
|
|
|
168.4
|
|
|
175.2
|
|
|
170.1
|
|
Equity in earnings of joint ventures
|
|
|
21.4
|
|
|
21.8
|
|
|
66.5
|
|
|
31.9
|
|
General and administrative expenses
|
|
|
(32.6
|
)
|
|
(29.9
|
)
|
|
(34.0
|
)
|
|
(36.9
|
)
|
Acquisition and integration expenses
|
|
|
(15.4
|
)
|
|
(20.0
|
)
|
|
|
|
|
(3.3
|
)
|
Gain on disposal activities
|
|
|
|
|
|
0.6
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Income from operations
|
|
|
143.4
|
|
|
140.9
|
|
|
207.7
|
|
|
161.8
|
|
Other income
|
|
|
0.8
|
|
|
1.3
|
|
|
2.1
|
|
|
2.5
|
|
Interest expense
|
|
|
(53.6
|
)
|
|
(61.8
|
)
|
|
(61.6
|
)
|
|
(54.3
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Income before income tax expense
|
|
|
90.6
|
|
|
80.4
|
|
|
148.2
|
|
|
110.0
|
|
Income tax expense (benefit)
|
|
|
24.8
|
|
|
(35.4
|
)
|
|
12.1
|
|
|
6.2
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income
|
|
|
65.8
|
|
|
115.8
|
|
|
136.1
|
|
|
103.8
|
|
Noncontrolling interest in income of consolidated subsidiaries, net of tax
|
|
|
(18.6
|
)
|
|
(13.4
|
)
|
|
(34.8
|
)
|
|
(15.3
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income attributable to AECOM
|
|
$
|
47.2
|
|
$
|
102.4
|
|
$
|
101.3
|
|
$
|
88.5
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income attributable to AECOM per share:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic
|
|
$
|
0.31
|
|
$
|
0.66
|
|
$
|
0.65
|
|
$
|
0.56
|
|
Diluted
|
|
$
|
0.30
|
|
$
|
0.65
|
|
$
|
0.64
|
|
$
|
0.55
|
|
Weighted average common shares outstanding:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic
|
|
|
154.3
|
|
|
155.4
|
|
|
155.8
|
|
|
157.5
|
|
Diluted
|
|
|
158.0
|
|
|
158.7
|
|
|
158.8
|
|
|
161.1
|
|
124
Table of Contents
AECOM
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
21. Quarterly Financial InformationUnaudited (Continued)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
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
|
|
|
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
|
|
22. Condensed Consolidating Financial Information
In connection with the registration of the Company's 2014 Senior Notes that were declared effective by the SEC on September 29, 2015, AECOM became subject to the requirements of
Rule 3-10 of Regulation S-X regarding financial statements of guarantors and issuers of guaranteed securities. Both the 2014 Senior Notes and the 2017 Senior Notes are fully and
unconditionally guaranteed on a joint and several basis by certain of AECOM's directly and indirectly 100% owned subsidiaries (the Subsidiary Guarantors). Other than customary restrictions imposed by
applicable statutes, there are no restrictions on the ability of the Subsidiary Guarantors to transfer funds to AECOM in the form of cash dividends, loans or advances.
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, 2017
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Parent
|
|
Guarantor
Subsidiaries
|
|
Non-
Guarantor
Subsidiaries
|
|
Eliminations
|
|
Total
|
|
ASSETS
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
CURRENT ASSETS:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total cash and cash equivalents
|
|
$
|
32.6
|
|
$
|
251.6
|
|
$
|
518.2
|
|
$
|
|
|
$
|
802.4
|
|
Accounts receivablenet
|
|
|
|
|
|
2,159.2
|
|
|
2,968.5
|
|
|
|
|
|
5,127.7
|
|
Intercompany receivable
|
|
|
723.6
|
|
|
90.9
|
|
|
181.4
|
|
|
(995.9
|
)
|
|
|
|
Prepaid expenses and other current assets
|
|
|
67.5
|
|
|
338.4
|
|
|
290.8
|
|
|
|
|
|
696.7
|
|
Income taxes receivable
|
|
|
4.3
|
|
|
|
|
|
51.1
|
|
|
|
|
|
55.4
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
TOTAL CURRENT ASSETS
|
|
|
828.0
|
|
|
2,840.1
|
|
|
4,010.0
|
|
|
(995.9
|
)
|
|
6,682.2
|
|
PROPERTY AND EQUIPMENTNET
|
|
|
160.2
|
|
|
207.1
|
|
|
254.1
|
|
|
|
|
|
621.4
|
|
DEFERRED TAX ASSETSNET
|
|
|
239.7
|
|
|
55.2
|
|
|
171.0
|
|
|
(294.6
|
)
|
|
171.3
|
|
INVESTMENTS IN CONSOLIDATED JOINT VENTURES
|
|
|
6,606.2
|
|
|
2,865.0
|
|
|
|
|
|
(9,471.2
|
)
|
|
|
|
INVESTMENTS IN UNCONSOLIDATED JOINT VENTURES
|
|
|
7.2
|
|
|
50.3
|
|
|
306.7
|
|
|
|
|
|
364.2
|
|
GOODWILL
|
|
|
|
|
|
3,318.6
|
|
|
2,674.3
|
|
|
|
|
|
5,992.9
|
|
INTANGIBLE ASSETSNET
|
|
|
|
|
|
271.6
|
|
|
143.5
|
|
|
|
|
|
415.1
|
|
OTHER NON-CURRENT ASSETS
|
|
|
8.7
|
|
|
17.6
|
|
|
123.6
|
|
|
|
|
|
149.9
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
TOTAL ASSETS
|
|
$
|
7,850.0
|
|
$
|
9,625.5
|
|
$
|
7,683.2
|
|
$
|
(10,761.7
|
)
|
$
|
14,397.0
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
LIABILITIES AND STOCKHOLDERS' EQUITY
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
CURRENT LIABILITIES:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Short-term debt
|
|
$
|
1.1
|
|
$
|
|
|
$
|
0.1
|
|
$
|
|
|
$
|
1.2
|
|
Accounts payable
|
|
|
33.8
|
|
|
1,023.7
|
|
|
1,192.4
|
|
|
|
|
|
2,249.9
|
|
Accrued expenses and other current liabilities
|
|
|
92.2
|
|
|
1,112.9
|
|
|
1,040.4
|
|
|
|
|
|
2,245.5
|
|
Accrued taxes payable
|
|
|
|
|
|
|
|
|
38.2
|
|
|
|
|
|
38.2
|
|
Intercompany payable
|
|
|
149.2
|
|
|
787.5
|
|
|
161.4
|
|
|
(1,098.1
|
)
|
|
|
|
Billings in excess of costs on uncompleted contracts
|
|
|
3.4
|
|
|
313.1
|
|
|
586.3
|
|
|
|
|
|
902.8
|
|
Current portion of long-term debt
|
|
|
110.9
|
|
|
14.9
|
|
|
15.0
|
|
|
|
|
|
140.8
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
TOTAL CURRENT LIABILITIES
|
|
|
390.6
|
|
|
3,252.1
|
|
|
3,033.8
|
|
|
(1,098.1
|
)
|
|
5,578.4
|
|
OTHER LONG-TERM LIABILITIES
|
|
|
102.3
|
|
|
285.7
|
|
|
493.3
|
|
|
|
|
|
881.3
|
|
DEFERRED TAX LIABILITYNET
|
|
|
|
|
|
|
|
|
315.1
|
|
|
(294.6
|
)
|
|
20.5
|
|
NOTE PAYABLE INTERCOMPANYNON CURRENT
|
|
|
0.1
|
|
|
|
|
|
467.2
|
|
|
(467.3
|
)
|
|
|
|
LONG-TERM DEBT
|
|
|
3,366.9
|
|
|
281.6
|
|
|
53.6
|
|
|
|
|
|
3,702.1
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
TOTAL LIABILITIES
|
|
|
3,859.9
|
|
|
3,819.4
|
|
|
4,363.0
|
|
|
(1,860.0
|
)
|
|
10,182.3
|
|
TOTAL AECOM STOCKHOLDERS' EQUITY
|
|
|
3,990.1
|
|
|
5,806.1
|
|
|
3,101.6
|
|
|
(8,901.7
|
)
|
|
3,996.1
|
|
Noncontrolling interests
|
|
|
|
|
|
|
|
|
218.6
|
|
|
|
|
|
218.6
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
TOTAL STOCKHOLDERS' EQUITY
|
|
|
3,990.1
|
|
|
5,806.1
|
|
|
3,320.2
|
|
|
(8,901.7
|
)
|
|
4,214.7
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY
|
|
$
|
7,850.0
|
|
$
|
9,625.5
|
|
$
|
7,683.2
|
|
$
|
(10,761.7
|
)
|
$
|
14,397.0
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
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, 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
|
|
|
2,681.5
|
|
|
|
|
|
(8,713.2
|
)
|
|
|
|
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
|
|
|
8.2
|
|
|
71.5
|
|
|
139.2
|
|
|
|
|
|
218.9
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
TOTAL ASSETS
|
|
$
|
7,365.0
|
|
$
|
9,364.3
|
|
$
|
6,941.7
|
|
$
|
(10,001.1
|
)
|
$
|
13,669.9
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
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
|
|
|
3,411.2
|
|
|
273.4
|
|
|
17.6
|
|
|
|
|
|
3,702.2
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
TOTAL LIABILITIES
|
|
|
3,999.3
|
|
|
4,228.2
|
|
|
3,857.7
|
|
|
(1,967.8
|
)
|
|
10,117.4
|
|
TOTAL AECOM STOCKHOLDERS' EQUITY
|
|
|
3,365.7
|
|
|
5,136.1
|
|
|
2,898.4
|
|
|
(8,033.3
|
)
|
|
3,366.9
|
|
Noncontrolling interests
|
|
|
|
|
|
|
|
|
185.6
|
|
|
|
|
|
185.6
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
TOTAL STOCKHOLDERS' EQUITY
|
|
|
3,365.7
|
|
|
5,136.1
|
|
|
3,084.0
|
|
|
(8,033.3
|
)
|
|
3,552.5
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY
|
|
$
|
7,365.0
|
|
$
|
9,364.3
|
|
$
|
6,941.7
|
|
$
|
(10,001.1
|
)
|
$
|
13,669.9
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
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, 2017
|
|
|
|
Parent
|
|
Guarantor
Subsidiaries
|
|
Non-Guarantor
Subsidiaries
|
|
Eliminations
|
|
Total
|
|
Revenue
|
|
$
|
|
|
$
|
9,367.1
|
|
$
|
8,905.0
|
|
$
|
(68.7
|
)
|
$
|
18,203.4
|
|
Cost of revenue
|
|
|
|
|
|
9,000.3
|
|
|
8,588.1
|
|
|
(68.7
|
)
|
|
17,519.7
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Gross profit
|
|
|
|
|
|
366.8
|
|
|
316.9
|
|
|
|
|
|
683.7
|
|
Equity in earnings from subsidiaries
|
|
|
439.3
|
|
|
217.2
|
|
|
|
|
|
(656.5
|
)
|
|
|
|
Equity in earnings of joint ventures
|
|
|
|
|
|
25.4
|
|
|
116.2
|
|
|
|
|
|
141.6
|
|
General and administrative expenses
|
|
|
(124.7
|
)
|
|
|
|
|
(8.7
|
)
|
|
|
|
|
(133.4
|
)
|
Acquisition and integration expenses
|
|
|
(38.7
|
)
|
|
|
|
|
|
|
|
|
|
|
(38.7
|
)
|
Gain on disposal activities
|
|
|
|
|
|
|
|
|
0.6
|
|
|
|
|
|
0.6
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Income from operations
|
|
|
275.9
|
|
|
609.4
|
|
|
425.0
|
|
|
(656.5
|
)
|
|
653.8
|
|
Other income
|
|
|
2.2
|
|
|
31.7
|
|
|
9.3
|
|
|
(36.5
|
)
|
|
6.7
|
|
Interest expense
|
|
|
(203.7
|
)
|
|
(26.5
|
)
|
|
(37.6
|
)
|
|
36.5
|
|
|
(231.3
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Income before income tax (benefit) expense
|
|
|
74.4
|
|
|
614.6
|
|
|
396.7
|
|
|
(656.5
|
)
|
|
429.2
|
|
Income tax (benefit) expense
|
|
|
(264.9
|
)
|
|
175.8
|
|
|
65.1
|
|
|
31.7
|
|
|
7.7
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income
|
|
|
339.3
|
|
|
438.8
|
|
|
331.6
|
|
|
(688.2
|
)
|
|
421.5
|
|
Noncontrolling interests in income of consolidated subsidiaries, net of tax
|
|
|
|
|
|
|
|
|
(82.1
|
)
|
|
|
|
|
(82.1
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income attributable to AECOM
|
|
$
|
339.3
|
|
$
|
438.8
|
|
$
|
249.5
|
|
$
|
(688.2
|
)
|
$
|
339.4
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
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
|
|
|
243.6
|
|
|
|
|
|
(681.0
|
)
|
|
|
|
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 from operations
|
|
|
109.8
|
|
|
587.9
|
|
|
358.8
|
|
|
(681.0
|
)
|
|
375.5
|
|
Other income
|
|
|
0.8
|
|
|
34.7
|
|
|
12.7
|
|
|
(40.0
|
)
|
|
8.2
|
|
Interest expense
|
|
|
(231.7
|
)
|
|
(23.6
|
)
|
|
(42.8
|
)
|
|
40.0
|
|
|
(258.1
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Income (loss) before income tax expense
|
|
|
(121.1
|
)
|
|
599.0
|
|
|
328.7
|
|
|
(681.0
|
)
|
|
125.6
|
|
Income tax (benefit) expense
|
|
|
(217.3
|
)
|
|
114.3
|
|
|
27.8
|
|
|
37.3
|
|
|
(37.9
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income
|
|
|
96.2
|
|
|
484.7
|
|
|
300.9
|
|
|
(718.3
|
)
|
|
163.5
|
|
Noncontrolling interests in income of consolidated subsidiaries, net of tax
|
|
|
|
|
|
|
|
|
(67.4
|
)
|
|
|
|
|
(67.4
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income attributable to AECOM
|
|
$
|
96.2
|
|
$
|
484.7
|
|
$
|
233.5
|
|
$
|
(718.3
|
)
|
$
|
96.1
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
128
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
|
|
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
|
|
|
198.9
|
|
|
|
|
|
(520.2
|
)
|
|
|
|
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
|
)
|
|
428.7
|
|
|
358.3
|
|
|
(520.2
|
)
|
|
129.0
|
|
Other income
|
|
|
5.1
|
|
|
34.9
|
|
|
14.7
|
|
|
(35.6
|
)
|
|
19.1
|
|
Interest expense
|
|
|
(275.4
|
)
|
|
(20.4
|
)
|
|
(39.4
|
)
|
|
35.6
|
|
|
(299.6
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(Loss) income before income tax expense
|
|
|
(408.1
|
)
|
|
443.2
|
|
|
333.6
|
|
|
(520.2
|
)
|
|
(151.5
|
)
|
Income tax (benefit) expense
|
|
|
(253.3
|
)
|
|
66.7
|
|
|
61.0
|
|
|
45.3
|
|
|
(80.3
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net (loss) income
|
|
|
(154.8
|
)
|
|
376.5
|
|
|
272.6
|
|
|
(565.5
|
)
|
|
(71.2
|
)
|
Noncontrolling interests in income of consolidated subsidiaries, net of tax
|
|
|
|
|
|
|
|
|
(83.6
|
)
|
|
|
|
|
(83.6
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net (loss) income attributable to AECOM
|
|
$
|
(154.8
|
)
|
$
|
376.5
|
|
$
|
189.0
|
|
$
|
(565.5
|
)
|
$
|
(154.8
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Consolidating Statements of Comprehensive Income (Loss)
(in millions)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
For the Fiscal Year Ended September 30, 2017
|
|
|
|
Parent
|
|
Guarantor
Subsidiaries
|
|
Non-Guarantor
Subsidiaries
|
|
Eliminations
|
|
Total
|
|
Net income
|
|
$
|
339.3
|
|
$
|
438.8
|
|
$
|
331.6
|
|
$
|
(688.2
|
)
|
$
|
421.5
|
|
Other comprehensive income (loss), net of tax:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net unrealized gain (loss) on derivatives, net of tax
|
|
|
4.9
|
|
|
|
|
|
(0.3
|
)
|
|
|
|
|
4.6
|
|
Foreign currency translation adjustments
|
|
|
|
|
|
|
|
|
65.4
|
|
|
|
|
|
65.4
|
|
Pension adjustments, net of tax
|
|
|
7.1
|
|
|
13.8
|
|
|
66.1
|
|
|
|
|
|
87.0
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Other comprehensive income, net of tax
|
|
|
12.0
|
|
|
13.8
|
|
|
131.2
|
|
|
|
|
|
157.0
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Comprehensive income, net of tax
|
|
|
351.3
|
|
|
452.6
|
|
|
462.8
|
|
|
(688.2
|
)
|
|
578.5
|
|
Noncontrolling interests in comprehensive income of consolidated subsidiaries, net of tax
|
|
|
|
|
|
|
|
|
(82.2
|
)
|
|
|
|
|
(82.2
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Comprehensive income attributable to AECOM, net of tax
|
|
$
|
351.3
|
|
$
|
452.6
|
|
$
|
380.6
|
|
$
|
(688.2
|
)
|
$
|
496.3
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
129
Table of Contents
AECOM
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
22. Condensed Consolidating Financial Information (Continued)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
For the Fiscal Year Ended September 30, 2016
|
|
|
|
Parent
|
|
Guarantor
Subsidiaries
|
|
Non-Guarantor
Subsidiaries
|
|
Eliminations
|
|
Total
|
|
Net income
|
|
$
|
96.2
|
|
$
|
484.7
|
|
$
|
300.9
|
|
$
|
(718.3
|
)
|
$
|
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
|
|
|
469.8
|
|
|
92.3
|
|
|
(718.3
|
)
|
|
(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
|
|
$
|
469.8
|
|
$
|
26.6
|
|
$
|
(718.3
|
)
|
$
|
(126.4
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
For the Fiscal Year Ended September 30, 2015
|
|
|
|
Parent
|
|
Guarantor
Subsidiaries
|
|
Non-Guarantor
Subsidiaries
|
|
Eliminations
|
|
Total
|
|
Net (loss) income
|
|
$
|
(154.8
|
)
|
$
|
376.5
|
|
$
|
272.6
|
|
$
|
(565.5
|
)
|
$
|
(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
|
)
|
|
382.9
|
|
|
(11.3
|
)
|
|
(565.5
|
)
|
|
(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
|
)
|
$
|
382.9
|
|
$
|
(91.6
|
)
|
$
|
(565.5
|
)
|
$
|
(433.3
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
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, 2017
|
|
|
|
Parent
|
|
Guarantor
Subsidiaries
|
|
Non-Guarantor
Subsidiaries
|
|
Eliminations
|
|
Total
|
|
CASH FLOWS FROM OPERATING ACTIVITIES
|
|
$
|
(5.9
|
)
|
$
|
691.2
|
|
$
|
11.4
|
|
$
|
|
|
$
|
696.7
|
|
CASH FLOWS FROM INVESTING ACTIVITIES:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Payments for business acquisitions, net of cash acquired
|
|
|
|
|
|
|
|
|
(103.1
|
)
|
|
|
|
|
(103.1
|
)
|
Proceeds from disposal of business, net of cash disposed
|
|
|
|
|
|
|
|
|
2.2
|
|
|
|
|
|
2.2
|
|
Net investment in unconsolidated joint ventures
|
|
|
|
|
|
(2.6
|
)
|
|
(21.7
|
)
|
|
|
|
|
(24.3
|
)
|
Net purchases of investments
|
|
|
|
|
|
|
|
|
0.9
|
|
|
|
|
|
0.9
|
|
Payments for capital expenditures, net of disposals
|
|
|
(21.7
|
)
|
|
(29.3
|
)
|
|
(27.4
|
)
|
|
|
|
|
(78.4
|
)
|
Net investment in intercompany notes
|
|
|
(4.6
|
)
|
|
102.8
|
|
|
12.2
|
|
|
(110.4
|
)
|
|
|
|
Other intercompany investing activities
|
|
|
139.0
|
|
|
(221.0
|
)
|
|
|
|
|
82.0
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net cash provided by (used in) investing activities
|
|
|
112.7
|
|
|
(150.1
|
)
|
|
(136.9
|
)
|
|
(28.4
|
)
|
|
(202.7
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
CASH FLOWS FROM FINANCING ACTIVITIES:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Proceeds from borrowings under credit agreements
|
|
|
5,903.5
|
|
|
13.1
|
|
|
36.6
|
|
|
|
|
|
5,953.2
|
|
Repayments of borrowings under credit agreements
|
|
|
(6,956.3
|
)
|
|
(51.1
|
)
|
|
(64.2
|
)
|
|
|
|
|
(7,071.6
|
)
|
Issuance of unsecured senior notes
|
|
|
1,000.0
|
|
|
|
|
|
|
|
|
|
|
|
1,000.0
|
|
Redemption of unsecured senior notes
|
|
|
|
|
|
(179.2
|
)
|
|
|
|
|
|
|
|
(179.2
|
)
|
Cash paid for debt and equity issuance costs
|
|
|
(13.0
|
)
|
|
|
|
|
|
|
|
|
|
|
(13.0
|
)
|
Proceeds from issuance of common stock
|
|
|
30.1
|
|
|
|
|
|
|
|
|
|
|
|
30.1
|
|
Proceeds from exercise of stock options
|
|
|
4.9
|
|
|
|
|
|
|
|
|
|
|
|
4.9
|
|
Payments to repurchase common stock
|
|
|
(25.1
|
)
|
|
|
|
|
|
|
|
|
|
|
(25.1
|
)
|
Net distributions to noncontrolling interests
|
|
|
|
|
|
|
|
|
(59.0
|
)
|
|
|
|
|
(59.0
|
)
|
Other financing activities
|
|
|
(24.1
|
)
|
|
(38.3
|
)
|
|
35.6
|
|
|
|
|
|
(26.8
|
)
|
Net borrowings (repayments) on intercompany notes
|
|
|
4.0
|
|
|
(16.3
|
)
|
|
(98.1
|
)
|
|
110.4
|
|
|
|
|
Other intercompany financing activities
|
|
|
|
|
|
(201.4
|
)
|
|
283.4
|
|
|
(82.0
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net cash (used in) provided by financing activities
|
|
|
(76.0
|
)
|
|
(473.2
|
)
|
|
134.3
|
|
|
28.4
|
|
|
(386.5
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
EFFECT OF EXCHANGE RATE CHANGES ON CASH
|
|
|
|
|
|
|
|
|
2.8
|
|
|
|
|
|
2.8
|
|
NET INCREASE IN CASH AND CASH EQUIVALENTS
|
|
|
30.8
|
|
|
67.9
|
|
|
11.6
|
|
|
|
|
|
110.3
|
|
CASH AND CASH EQUIVALENTS AT BEGINNING OF YEAR
|
|
|
1.8
|
|
|
183.7
|
|
|
506.6
|
|
|
|
|
|
692.1
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
CASH AND CASH EQUIVALENTS AT END OF YEAR
|
|
$
|
32.6
|
|
$
|
251.6
|
|
$
|
518.2
|
|
$
|
|
|
$
|
802.4
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
131
Table of Contents
AECOM
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
22. Condensed Consolidating Financial Information (Continued)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
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
|
)
|
|
|
|
|
|
|
|
|
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|
|
|
|
|
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|
EFFECT OF EXCHANGE RATE CHANGES ON CASH
|
|
|
|
|
|
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|
(5.3
|
)
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|
|
|
|
(5.3
|
)
|
NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS
|
|
|
0.5
|
|
|
21.2
|
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|
(13.5
|
)
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|
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|
8.2
|
|
CASH AND CASH EQUIVALENTS AT BEGINNING OF YEAR
|
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|
1.3
|
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|
162.5
|
|
|
520.1
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|
683.9
|
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|
|
|
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|
|
|
|
|
|
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CASH AND CASH EQUIVALENTS AT END OF YEAR
|
|
$
|
1.8
|
|
$
|
183.7
|
|
$
|
506.6
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|
$
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|
|
$
|
692.1
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132
Table of Contents
AECOM
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
22. Condensed Consolidating Financial Information (Continued)
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For the Fiscal Year Ended September 30, 2015
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Parent
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Guarantor
Subsidiaries
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|
Non-Guarantor
Subsidiaries
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Eliminations
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Total
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CASH FLOWS FROM OPERATING ACTIVITIES
|
|
$
|
(551.2
|
)
|
$
|
816.9
|
|
$
|
498.7
|
|
$
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$
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764.4
|
|
CASH FLOWS FROM INVESTING ACTIVITIES:
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Payments for business acquisitions, net of cash acquired
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(3,564.2
|
)
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109.2
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161.7
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(3,293.3
|
)
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Proceeds from disposal of businesses and property
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9.5
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5.6
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15.1
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Net investment in unconsolidated joint ventures
|
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(4.0
|
)
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(28.7
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)
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(32.7
|
)
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Sales (purchases) of investments
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37.3
|
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(2.7
|
)
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34.6
|
|
Payments for capital expenditures, net of disposals
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(51.9
|
)
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|
(15.8
|
)
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|
(1.7
|
)
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(69.4
|
)
|
Receipts from intercompany notes receivable
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95.6
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|
128.6
|
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(224.2
|
)
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Other intercompany investing activities
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|
1,085.8
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160.9
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(1,246.7
|
)
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Net cash (used in) provided by investing activities
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(2,387.9
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)
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|
384.5
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128.6
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(1,470.9
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)
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(3,345.7
|
)
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CASH FLOWS FROM FINANCING ACTIVITIES:
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Proceeds from borrowings under credit agreements
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6,464.6
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29.9
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87.2
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6,581.7
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|
Repayments of borrowings under credit agreements
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(5,031.9
|
)
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(31.2
|
)
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(95.2
|
)
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(5,158.3
|
)
|
Issuance of unsecured senior notes
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1,600.0
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1,600.0
|
|
Prepayment penalty on Unsecured Senior Notes
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|
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(55.6
|
)
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(55.6
|
)
|
Cash paid for debt and equity issuance costs
|
|
|
(89.6
|
)
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|
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(89.6
|
)
|
Proceeds from issuance of common stock
|
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|
25.6
|
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25.6
|
|
Proceeds from exercise of stock options
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11.1
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|
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11.1
|
|
Payments to repurchase common stock
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(23.1
|
)
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(23.1
|
)
|
Excess tax benefit from share-based payment
|
|
|
3.6
|
|
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3.6
|
|
Net distributions to noncontrolling interests
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(144.3
|
)
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(144.3
|
)
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Other financing activities
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2.3
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(4.1
|
)
|
|
(29.5
|
)
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(31.3
|
)
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Intercompany notes repayments
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(224.2
|
)
|
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224.2
|
|
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Other intercompany financing activities
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|
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(1,119.3
|
)
|
|
(127.4
|
)
|
|
1,246.7
|
|
|
|
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|
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|
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|
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Net cash provided by (used in) financing activities
|
|
|
2,907.0
|
|
|
(1,124.7
|
)
|
|
(533.4
|
)
|
|
1,470.9
|
|
|
2,719.8
|
|
|
|
|
|
|
|
|
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|
|
|
|
|
|
|
|
|
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
|
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133
Table of Contents