What changed in this filing

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Item 1. Financial Statements

2022-05-11 compared with 2022-02-09 · 191 added, 108 removed, 637 unchanged (32% of the section changed)

19 unchanged sentences

OPERATING LEASE RIGHT-OF-USE ASSETS

NON-CURRENT ASSETS HELD FOR SALE

LIABILITIES AND STOCKHOLDERS’ EQUITY

17 unchanged sentences

AECOM STOCKHOLDERS’ EQUITY:

Common stock-authorized, 300,000,000 shares of $ 0.01 par value as of December 31, 2021 and September 30, 2021;

issued and outstanding 141,335,424 and 143,168,815 shares as of December 31, 2021 and September 30, 2021, respectively

Common stock-authorized, 300,000,000 shares of $ 0.01 par value as of March 31, 2022 and September 30, 2021;

issued and outstanding 140,742,683 and 143,168,815 shares as of March 31, 2022 and September 30, 2021, respectively

Additional paid-in capital

9 unchanged sentences

Three Months Ended

Six Months Ended

Cost of revenue

9 unchanged sentences

Net income attributable to noncontrolling interests from continuing operations

Net loss (income) attributable to noncontrolling interests from discontinued operations

Net loss (income) attributable to noncontrolling interests

Net (income) loss attributable to noncontrolling interests from discontinued operations

Net income attributable to noncontrolling interests

Net income attributable to AECOM from continuing operations

13 unchanged sentences

Three Months Ended

Other comprehensive income, net of tax:

Six Months Ended

Other comprehensive income (loss), net of tax:

Net unrealized gain on derivatives, net of tax

1 unchanged sentence

Pension adjustments, net of tax

Other comprehensive income, net of tax

Comprehensive income

Noncontrolling interests in comprehensive loss (income) of consolidated subsidiaries, net of tax

Comprehensive income attributable to AECOM

Other comprehensive income (loss), net of tax

Comprehensive income, net of tax

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

Comprehensive income attributable to AECOM, net of tax

See accompanying Notes to Consolidated Financial Statements.

4 unchanged sentences

Stockholders’

BALANCE AT SEPTEMBER 30, 2020

Cumulative effect of accounting standard adoption

BALANCE AT DECEMBER 31, 2021

Dividends declared

Other comprehensive income

3 unchanged sentences

Other transactions with noncontrolling interests

Distributions to noncontrolling interests

BALANCE AT MARCH 31, 2022

Comprehensive

Stockholders’

BALANCE AT DECEMBER 31, 2020

Other comprehensive loss

Issuance of stock

Repurchases of stock

Stock-based compensation

Other transactions with noncontrolling interests

Disposal of noncontrolling interest of business sold

1 unchanged sentence

Distributions to noncontrolling interests

BALANCE AT DECEMBER 31, 2020

BALANCE AT MARCH 31, 2021

Comprehensive

3 unchanged sentences

Dividends declared

Other comprehensive income (loss)

Other comprehensive income

Issuance of stock

4 unchanged sentences

Distributions to noncontrolling interests

BALANCE AT DECEMBER 31, 2021

BALANCE AT MARCH 31, 2022

Comprehensive

Stockholders’

BALANCE AT SEPTEMBER 30, 2020

Cumulative effect of accounting standard adoption

Other comprehensive income

Issuance of stock

Repurchases of stock

Stock-based compensation

Other transactions with noncontrolling interests

Disposal of noncontrolling interest of business sold

Contributions from noncontrolling interests

Distributions to noncontrolling interests

BALANCE AT MARCH 31, 2021

See accompanying Notes to Consolidated Financial Statements.

1 unchanged sentence

(unaudited - in thousands)

Three Months Ended December 31,

Six Months Ended March 31,

CASH FLOWS FROM OPERATING ACTIVITIES:

5 unchanged sentences

Impairment of long-lived assets

Loss on disposal activities

Loss on sale of discontinued operations

Foreign currency translation

18 unchanged sentences

Repayments of borrowings under credit agreements

( 1,363,012 )

( 1,229,856 )

Cash paid for debt issuance costs

Dividends paid

Proceeds from issuance of common stock

Proceeds from exercise of stock options

Payments to repurchase common stock

19 unchanged sentences

Prior period's disaggregated revenue by geographic region reclassifies the India business to Europe, Middle East and Africa to conform with current operations.

The results of operations for the three months ended December 31, 2021 are not necessarily indicative of the results to be expected for the fiscal year ending September 30, 2022.

As discussed in more detail in Note 3, the Company concluded that its self-perform at-risk construction businesses met the criteria for held for sale beginning in the first quarter of fiscal year 2020 and met the criteria for discontinued operation classification.

The results of operations for the three and six months ended March 31, 2022 are not necessarily indicative of the results to be expected for the fiscal year ending September 30, 2022.

As discussed in more detail in Note 3, the Company concluded that its self-perform at-risk construction businesses met the criteria for held for sale beginning in the first quarter of fiscal 2020 and met the criteria for discontinued operation classification.

As a result, the self-perform at-risk construction businesses are presented in the consolidated statements of operations as discontinued operations for all periods presented.

14 unchanged sentences

In December 2019, the FASB issued new accounting guidance which simplifies the accounting for income taxes.

The guidance amends certain exceptions to the general principles of Accounting Standards Codification (ACS) 740, Income Taxes , and simplifies several areas such as accounting for a franchise tax or similar tax that is partially based on income.

The guidance amends certain exceptions to the general principles of Accounting Standards Codification (ASC) 740, Income Taxes , and simplifies several areas such as accounting for a franchise tax or similar tax that is partially based on income.

The Company adopted the new guidance starting on October 1, 2021.

16 unchanged sentences

During the second quarter of fiscal 2021, the Company recorded a $ 32.8 million loss related to the sale of its civil infrastructure construction business.

In the first quarter of fiscal 2022, the Company recorded an additional $ 40.0 million loss primarily related to revisions of estimates for its working capital obligation to be paid and contingent consideration receivable.

In the first half of fiscal 2022, the Company recorded an additional $ 43.9 million loss primarily related to revisions of estimates for its working capital obligation to be paid and contingent consideration receivable.

Under the terms of the sale agreement, the Company made the required cash payments and delivered the cash and cash equivalents, including cash in consolidated joint ventures, on the balance sheet at closing.

As a result, the Company recorded the net cash movement of the sale as a use of cash in the investing section of its statement of cash flows.

As a result, the Company recorded the net cash impact of the sale as a use of cash in the investing section of its statement of cash flows.

On January 28, 2022, the Company completed the sale of its oil and gas construction business to affiliates of Graham Maintenance Services LP for a purchase price of $ 14 million, subject to cash, debt and working capital adjustments.

The Company recorded a pre-tax gain of approximately $ 3.0 million on the sale, net of transaction costs.

The following table represents summarized balance sheet information of assets and liabilities held for sale (in millions):

7 unchanged sentences

Accounts payable and accrued expenses

Contract liabilities

Current liabilities held for sale

2 unchanged sentences

Three months ended

Six months ended

Cost of revenue

Gross (loss) profit

Gross profit (loss)

Equity in earnings of joint ventures

5 unchanged sentences

Loss before taxes

Income tax benefit

Income tax (benefit) expense

Net loss from discontinuing operations

1 unchanged sentence

Three months ended

Depreciation and amortization:

Property and equipment

Intangible assets and capitalized debt issuance costs

Six months ended

Payments for capital expenditures

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

The changes in the carrying value of goodwill by reportable segment for the six months ended March 31, 2022 were as follows:

September 30,

1 unchanged sentence

International

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

December 31, 2021

The gross amounts and accumulated amortization of the Company’s acquired identifiable intangible assets with finite useful lives as of March 31, 2022 and September 30, 2021, included in intangible assets—net, in the accompanying consolidated balance sheets, were as follows:

March 31, 2022

September 30, 2021

1 unchanged sentence

Backlog and customer relationships

Amortization expense of acquired intangible assets included within cost of revenue were $ 4.7 million and $ 5.4 million for the three months ended December 31, 2021 and 2020, respectively.

Amortization expense of acquired intangible assets included within cost of revenue were $ 9.5 million and $ 10.7 million for the six months ended March 31, 2022 and 2021, respectively.

The following table presents estimated amortization expense of existing intangible assets for the remainder of fiscal 2022 and for the succeeding years:

(in millions)

2022 (nine months remaining)

2022 (six months remaining)

Revenue Recognition

4 unchanged sentences

These costs are passed through to clients and, in accordance with GAAP, are included in the Company’s revenue and cost of revenue.

These pass through revenues for the three months ended December 31, 2021 and 2020 were $ 1.7 billion and $ 1.8 billion, respectively.

These pass-through revenues for the six months ended March 31, 2022 and 2021 were $ 3.3 billion and $ 3.5 billion, respectively.

Recognition of revenue and profit is dependent upon a number of factors, including the accuracy of a variety of estimates made at the balance sheet date, such as engineering progress, material quantities, the achievement of milestones, penalty provisions, labor productivity and cost estimates.

26 unchanged sentences

Three months ended

Six months ended

(in millions)

3 unchanged sentences

Three months ended

Six months ended

(in millions)

1 unchanged sentence

Total revenue

As of December 31, 2021, the Company had allocated $ 22.2 billion of transaction price to unsatisfied or partially satisfied performance obligations, of which approximately 50 % is expected to be satisfied within the next twelve months .

As of March 31, 2022, the Company had allocated $ 22.3 billion of transaction price to unsatisfied or partially satisfied performance obligations, of which approximately 55 % is expected to be satisfied within the next twelve months .

Contract liabilities represent amounts billed to clients in excess of revenue recognized to date.

The Company recognized revenue of $ 466.2 million and $ 464.3 million during the three months ended December 31, 2021 and 2020, respectively, that was included in contract liabilities as of September 30, 2021 and 2020, respectively.

The Company recognized revenue of $ 458.5 million and $ 584.3 million during the six months ended March 31, 2022 and 2021, respectively, that was included in contract liabilities as of September 30, 2021 and 2020, respectively.

The Company’s timing of revenue recognition may not be consistent with its rights to bill and collect cash from its clients.

10 unchanged sentences

Total accounts receivable—net

Substantially all contract assets as of December 31, 2021 and September 30, 2021 are expected to be billed and collected within twelve months , except for claims.

Significant claims recorded in contract assets and other non-current assets were approximately $ 140 million and $ 140 million as of December 31, 2021 and September 30, 2021, respectively.

Substantially all contract assets as of March 31, 2022 and September 30, 2021 are expected to be billed and collected within twelve months , except for claims.

Significant claims recorded in contract assets and other non-current assets were approximately $ 140 million as of both March 31, 2022 and September 30, 2021.

The asset related to the Deactivation, Demolition, and Removal Project retained from the MS Purchaser as defined in and discussed in Note 15 is presented in prepaid expense and other current assets from continuing operations in the Consolidated Balance Sheet.

2 unchanged sentences

On October 1, 2020, the Company adopted accounting pronouncements issued by the FASB regarding the changes to the way in which entities estimate credit losses for most financial assets, including accounts receivable and contract assets.

The new guidance requires the Company to maintain an allowance for credit losses, which represent the portion of its financial assets that it does not expect to collect over their contractual life.

The new guidance requires the Company to maintain an allowance for credit losses, which represent the portion of its financial assets that it does not

expect to collect over their contractual life.

The Company considers a broad range of information to estimate expected credit losses including the related ages of past due balances, projections of credit losses based on historical trends, and collection history and credit quality of its clients.

Negative macroeconomic trends or delays in payment of outstanding receivables could result in an increase in the estimated credit losses.

No single client accounted for more than 10 % of the Company’s outstanding receivables at December 31, 2021 and September 30, 2021.

The Company sold trade receivables to financial institutions, of which $ 230.9 million and $ 263.6 million were outstanding as of December 31, 2021 and September 30, 2021, respectively.

No single client accounted for more than 10 % of the Company’s outstanding receivables at March 31, 2022 and September 30, 2021.

The Company sold trade receivables to financial institutions, of which $ 223.7 million and $ 263.6 million were outstanding as of March 31, 2022 and September 30, 2021, respectively.

The Company does not retain financial or legal obligations for these receivables that would result in material losses.

31 unchanged sentences

Total liabilities and owners’ equity

Total revenue of the consolidated joint ventures was $ 301.2 million and $ 189.2 million for the three months ended December 31, 2021 and 2020, respectively.

Total revenue of the consolidated joint ventures was $ 627.3 million and $ 379.8 million for the six months ended March 31, 2022 and 2021, 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.

10 unchanged sentences

AECOM’s investment in unconsolidated joint ventures

Three Months Ended

Six Months Ended

(in millions)

1 unchanged sentence

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

Three Months Ended

Six Months Ended

(in millions)

10 unchanged sentences

The components of net periodic benefit cost other than the service cost component are included in other income in the consolidated statement of operations.

The following table details the components of net periodic benefit cost for the Company’s pension plans for the three months ended December 31, 2021 and 2020:

The following table details the components of net periodic benefit cost for the Company’s pension plans for the three and six months ended March 31, 2022 and 2021:

Three Months Ended

December 31, 2021

December 31, 2020

Six Months Ended

March 31, 2022

March 31, 2021

March 31, 2022

March 31, 2021

(in millions)

4 unchanged sentences

Amortization of net loss

Settlement loss recognized

Net periodic benefit cost

The total amounts of employer contributions paid for the three months ended December 31, 2021 were $ 2.4 million for U.S.

The total amounts of employer contributions paid for the six months ended March 31, 2022 were $ 4.8 million for U.S.

plans and $ 12.2 million for non-U.S.

9 unchanged sentences

Long-term debt

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

2022 (nine months remaining)

The following table presents, in millions, scheduled maturities of the Company’s debt as of March 31, 2022:

2022 (six months remaining)

Credit Agreement

12 unchanged sentences

The Applicable Margins and the commitment fees for the Revolving Credit Facility will be adjusted on an annual basis based on the Company’s achievement of preset thresholds for each Sustainability Metric.

The Credit Agreement contains provisions addressing the end of the use of LIBOR as a benchmark rate of interest and a mechanism for determining an alternative benchmark rate of interest.

If the provisions are triggered, LIBOR would be replaced by a secured overnight financing rate (SOFR)-based rate, if one can be determined, or, if not, LIBOR may be replaced by a rate selected by the Company and the administrative agent under the Credit Agreement.

Any replacement rate would also be subject to a spread adjustment which may be positive, negative or zero.

Some of the Company's material subsidiaries (the "Guarantors") have guaranteed the Company's obligations of the borrowers under the Credit Agreement, subject to certain exceptions.

2 unchanged sentences

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

The Company's consolidated leverage ratio was 2.40 to 1.00 at December 31, 2021.

As of December 31, 2021, the Company was in compliance with the covenants of the Credit Agreement.

The Company's consolidated leverage ratio was 2.30 to 1.00 at March 31, 2022.

As of March 31, 2022, the Company was in compliance with the covenants of the Credit Agreement.

The Credit Agreement contains customary affirmative covenants, including, among other things, compliance with applicable law, preservation of existence, maintenance of properties and of insurance, and keeping proper books and records.

5 unchanged sentences

The Term B Facility is subject to the same affirmative and negative covenants and events of default as the Term A Facility previously incurred pursuant to the existing Credit Agreement (except that the Financial Covenants in the Credit Agreement do not apply to the Term B Facility).

The applicable interest rate for the Term B Facility is calculated at a per annum rate equal to, at the Company’s option, (a) the Eurocurrency Rate (as defined in the Credit Agreement) plus 1.75 % or (b) the Base Rate (as defined in the Credit Agreement) plus 0.75 %.

The applicable interest rate for the Term B Facility is calculated at a per annum rate equal to, at the

Company’s option, (a) the Eurocurrency Rate (as defined in the Credit Agreement) plus 1.75 % or (b) the Base Rate (as defined in the Credit Agreement) plus 0.75 %.

On June 25, 2021, the Company entered into Amendment No.

1 unchanged sentence

The Company used the net proceeds from the increase in the Term A Facility (together with cash on hand), to (i) redeem all of the Company’s remaining 5.875 % Senior Notes due 2024 and (ii) pay fees and expenses related to such redemption.

At December 31, 2021 and September 30, 2021, letters of credit totaled $ 5.2 million and $ 5.2 million, respectively, under the Company’s Revolving Credit Facility.

As of December 31, 2021 and September 30, 2021, the Company had $ 1,144.8 million and $ 1,144.8 million, respectively, available under its Revolving Credit Facility.

At March 31, 2022 and September 30, 2021, letters of credit totaled $ 4.5 million and $ 5.2 million, respectively, under the Company’s Revolving Credit Facility.

As of March 31, 2022 and September 30, 2021, the Company had $ 1,145.5 million and $ 1,144.8 million, respectively, available under its Revolving Credit Facility.

2027 Senior Notes

1 unchanged sentence

On June 30, 2017, the Company completed an exchange offer to exchange the unregistered 2027 Senior Notes for registered notes, as well as related guarantees.

As of December 31, 2021, the estimated fair value of the 2027 Senior Notes was approximately $ 1,052.1 million.

The fair value of the 2027 Senior Notes as of December 31, 2021 was derived by taking the mid-point of the trading prices from an observable market input (Level 2) in the secondary bond market and multiplying it by the outstanding balance of the 2027 Senior Notes.

As of March 31, 2022, the estimated fair value of the 2027 Senior Notes was approximately $ 1,017.2 million.

The fair value of the 2027 Senior Notes as of March 31, 2022 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 2027 Senior Notes.

Interest is payable on the 2027 Senior Notes at a rate of 5.125 % per annum.

5 unchanged sentences

The indenture also contains customary negative covenants.

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

The Company was in compliance with the covenants relating to the 2027 Senior Notes as of March 31, 2022.

Other debt consists primarily of obligations under finance leases and loans and unsecured credit facilities.

Effective Interest Rate

The Company’s average effective interest rate on its total debt, including the effects of the interest rate swap agreements, during the three months ended December 31, 2021 and 2020 was 3.4% and 5.2% , respectively.

Interest expense in the consolidated statements of operations included amortization of deferred debt issuance costs for the three months ended December 31, 2021 and 2020 of $ 1.2 million and $ 1.8 million, respectively.

The Company’s average effective interest rate on its total debt, including the effects of the interest rate swap agreements, during the six months ended March 31, 2022 and 2021 was 3.3% and 5.1% , respectively.

Interest expense in the consolidated statements of operations included amortization of deferred debt issuance costs for the three and six months ended March 31, 2022 of $ 1.2 million and $ 2.5 million, respectively, and for the three and six months ended March 31, 2021 of $ 2.6 million and $ 4.4 million, respectively.

Derivative Financial Instruments and Fair Value Measurements

3 unchanged sentences

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 records changes in the fair value (i.e., gains or losses) of the derivatives that have been designated as

accounting hedges in the accompanying consolidated statements of operations as cost of revenue, interest expense or to accumulated other comprehensive loss in the accompanying consolidated balance sheets.

Cash Flow Hedges

1 unchanged sentence

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 interest expense when the interest expense on the variable rate debt is recognized.

Depending on the type of cash flow hedge, the gain is subsequently reclassified against interest expense when the interest expense on the variable rate debt is recognized.

If the hedged transaction becomes probable of not occurring, any gain or loss related to interest rate swap agreements would be recognized in other income.

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

December 31, 2021

March 31, 2022

Notional Amount

15 unchanged sentences

The Company uses foreign currency forward contracts which are not designated as accounting hedges to hedge intercompany transactions and other monetary assets or liabilities denominated in currencies other than the functional currency of a subsidiary.

Gains and losses on these contracts were not material for the three months ended December 31, 2021 and 2020.

Gains and losses on these contracts were not material for the six months ended March 31, 2022 and 2021.

Fair Value Measurements

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

See Note 14 for accumulated balances and reporting period activities of derivatives related to reclassifications out of accumulated other comprehensive loss for the three months ended December 31, 2021 and 2020.

The Company’s non-pension financial assets and liabilities recorded at fair value relate to the interest rate swap agreements included in other current assets, other non-current assets, and other current liabilities on March 31, 2022 and were $ 0.7 million, $ 23.9 million, and $ 1.5 million, respectively.

The fair values of the interest rate swap agreements included in other non-current assets, other current liabilities, and other long-term liabilities on September 30, 2021 were $ 1.2 million, $ 5.0 million, and $ 1.8 million, respectively.

The fair values of the interest rate swap agreements were derived by taking the net present value of the expected cash flows using observable market inputs (Level 2) such as LIBOR or SOFR rate curves, futures, volatilities and basis spreads (when applicable).

See Note 14 for accumulated balances and reporting period activities of derivatives related to reclassifications out of accumulated other comprehensive loss for the six months ended March 31, 2022 and 2021.

Additionally, there were no material losses recognized in income due to amounts excluded from effectiveness testing from the Company’s interest rate swap agreements.

5 unchanged sentences

The Company uses historical data as a basis to estimate the probability of forfeitures.

Stock option activity for the three months ended December 31 was as follows:

Stock option activity for the six months ended March 31 was as follows:

Shares of stock

12 unchanged sentences

Options forfeited or expired

Outstanding at December 31

Vested and expected to vest in the future as of December 31

Outstanding at March 31

Vested and expected to vest in the future as of March 31

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.

1 unchanged sentence

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 $ 85.48 and $ 52.50 during the three months ended December 31, 2021 and 2020, respectively.

The weighted average grant date fair value of restricted stock unit awards was $ 74.70 and $ 47.87 during the three months ended December 31, 2021 and 2020, respectively.

Total compensation expense related to these share-based payments including stock options was $ 9.8 million and $ 15.4 million during the three months ended December 31, 2021 and 2020, respectively.

Unrecognized compensation expense related to total share-based payments outstanding as of December 31, 2021 and September 30, 2021 was $ 69.7 million and $ 45.6 million, respectively, to be recognized on a straight-line basis over the awards’ respective vesting periods which are generally three years .

The Company’s effective tax rate was 15.5 % and 22.4 % for the three months ended December 31, 2021 and 2020, respectively.

The weighted average grant date fair value of PEP awards was $ 85.48 and $ 52.52 during the six months ended March 31, 2022 and 2021, respectively.

The weighted average grant date fair value of restricted stock unit awards was $ 74.32 and $ 48.78 during the six months ended March 31, 2022 and 2021, respectively.

Total compensation expense related to these share-based payments including stock options was $ 21.7 million and $ 24.6 million during the six months ended March 31, 2022 and 2021, respectively.

Unrecognized compensation expense related to total share-based payments outstanding as of March 31, 2022 and September 30, 2021 was $ 65.7 million and $ 45.6 million, respectively, to be recognized on a straight-line basis over the awards’ respective vesting periods which are generally three years .

The Company’s effective tax rate was 24.8 % and 25.0 % for the six months ended March 31, 2022 and 2021, respectively.

The most significant items contributing to the difference between the statutory U.S.

federal corporate tax rate of 21.0 % and the Company’s effective tax rate for the three-month period ended December 31, 2021 were a tax benefit of $ 21.9 million related to changes in valuation allowances, tax expense of $ 16.1 million primarily related to changes in foreign uncertain tax positions, a tax benefit of $ 13.3 million related to income tax credits and incentives,and a tax expense of $ 11.6 million related to foreign residual income.

All of these items are expected to have a continuing impact on the effective tax rate for the remainder of the fiscal year except for the changes in valuation allowance and uncertain positions.

federal corporate tax rate of 21.0 % and the Company’s effective tax rate for the six-month period ended March 31, 2022 were a tax benefit of $ 26.5 million related to income tax credits and incentives, tax expense of $ 19.5 million related to foreign residual income, a tax benefit of $ 13.9 million related to changes in valuation allowances, tax expense of $ 14.9 million primarily related to changes in foreign uncertain tax positions, and tax expense of $ 11.1 million related to state income taxes.

All of these items are expected to have a continuing impact on the effective tax rate for the remainder of the fiscal year except for the changes in valuation allowance and uncertain tax positions.

The most significant items contributing to the difference between the statutory U.S.

federal corporate tax rate of 21.0 % and the Company’s effective tax rate for the three-month period ended December 31, 2020 were a tax benefit of $ 10.9 million related to income tax credits and incentives, tax expense of $ 7.2 million related to foreign residual income, and tax expense of $ 4.5 million related to state income taxes.

During the three-month period ended December 31, 2021, valuation allowances in the amount of $ 21.9 million primarily related to net operating losses in certain foreign entities were released due to sufficient positive evidence obtained during the quarter.

The positive evidence included a realignment of the Company’s global transfer pricing methodology that was implemented during the quarter which resulted in forecasting the utilization of the net operating losses within the foreseeable future.

federal corporate tax rate of 21.0 % and the Company’s effective tax rate for the six-month period ended March 31, 2021 were a tax benefit of $ 28.4 million related to income tax credits and incentives, tax expense of $ 20.7 million related to foreign residual income, tax expense of $ 10.7 million related to state income taxes, and tax expense of $ 3.2 million related to nondeductible costs.

During the six-month period ended March 31, 2022, valuation allowances in the amount of $ 21.9 million primarily related to net operating losses in certain foreign entities were released due to sufficient positive evidence obtained during the first quarter.

The positive evidence included a realignment of the Company’s global transfer pricing methodology that was implemented during the first quarter which resulted in forecasting the utilization of the net operating losses within the foreseeable future.

During the six-month period ended March 31, 2022, valuation allowances in the amount of $ 6.4 million on the net deferred tax assets of the Company’s Russia business were recorded due to the Company exiting all business operations in Russia.

It is now more likely than not the net deferred tax assets will not be realized.

The Company is utilizing the annual effective tax rate method under ASC 740 to compute its interim tax provision.

The Company’s effective tax rate fluctuates from quarter to quarter due to various factors including the change in the mix of global income and expenses, outcomes of administrative audits, changes in the assessment of valuation allowances due to management’s consideration of new positive or negative evidence during the quarter, and changes in enacted tax laws.

The U.S.and many

international legislative and regulatory bodies have proposed legislation that could significantly impact how our business activities are taxed.

The U.S.and many international legislative and regulatory bodies have proposed legislation that could significantly impact how our business activities are taxed.

These proposed changes could have a material impact on the Company’s income tax expense and deferred tax balances.

12 unchanged sentences

The Company includes as potential common shares the weighted average dilutive effects of equity awards using the treasury stock method.

For the three months ended December 31, 2021 and 2020, equity awards excluded from the calculation of potential common shares were not significant.

For the three and six months ended March 31, 2022 and 2021, equity awards excluded from the calculation of potential common shares were not significant.

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

Three Months Ended

Six Months Ended

(in millions)

13 unchanged sentences

Three Months Ended

Six Months Ended

March 31, 2022

March 31, 2021

March 31, 2022

March 31, 2021

(in millions)

8 unchanged sentences

Balance Sheet Classification

December 31, 2021

March 31, 2022

September 30, 2021

14 unchanged sentences

Total non-current lease liabilities

December 31, 2021

March 31, 2022

September 30, 2021

6 unchanged sentences

Additional cash flow information related to leases is as follows:

Three Months Ended

Six Months Ended

(in millions)

9 unchanged sentences

(in millions)

2022 (nine months remaining)

2022 (six months remaining)

Total lease payments

8 unchanged sentences

Other accrued expenses

Accrued contract costs above include balances related to professional liability accruals of $ 744.0 million and $ 736.4 million as of December 31, 2021 and September 30, 2021, respectively.

Accrued contract costs above include balances related to professional liability accruals of $ 742.3 million and $ 736.4 million as of March 31, 2022 and September 30, 2021, respectively.

The remaining accrued contract costs primarily relate to costs for services provided by subcontractors and other non-employees for which the Company has not received an invoice.

Liabilities recorded related to accrued contract losses were not material as of December 31, 2021 and September 30, 2021.

The Company did not have material revisions to estimates for contracts where revenue is recognized using the input method during the three months ended December 31, 2021 and 2020.

During the first quarter of fiscal 2022, the Company incurred restructuring expenses of $ 3.4 million, including personnel and other costs of $ 2.2 million and real estate costs of $ 1.2 million, of which $ 0.3 million was accrued and unpaid at December 31, 2021.

During the first quarter of fiscal 2021, the Company incurred restructuring expenses of $ 13.0 million, including personnel and other costs of $ 10.2 million and real estate costs of $ 2.8 million, of which $ 1.7 million was accrued and unpaid at December 31, 2020.

On December 13, 2021, the Company's Board of Directors declared a quarterly cash dividend of $ 0.15 per share, which was paid on January 21, 2022 to stockholders of record as of January 5, 2022.

As of December 31, 2021, accrued and unpaid dividends totaled $ 21.5 million and were classified within other accrued expenses on the consolidated balance sheet.

Liabilities recorded related to accrued contract losses were not material as of March 31, 2022 and September 30, 2021.

The Company did not have material revisions to estimates for contracts where revenue is recognized using the input method during the six months ended March 31, 2022 and 2021.

During the first half of fiscal 2022, the Company incurred restructuring expenses of $ 76.7 million, of which $ 69.1 million was related to the exit of our Russia-related businesses and is discussed further below.

The remaining $ 7.6 million related to actions to improve margins and deliver efficiencies.

These expenses included personnel and other costs of $ 5.4 million and real estate costs of $ 2.2 million, of which $ 0.6 million was accrued and unpaid at March 31, 2022.

During the first half of fiscal 2021, the Company incurred restructuring expenses of $ 21.8 million, including personnel and other costs of $ 16.8 million and real estate costs of $ 5.0 million, of which $ 3.7 million was accrued and unpaid at March 31, 2021.

In March 2022, the Company substantially completed the previously announced exit of all business operations in Russia.

The Company incurred a $ 69.1 million pre-tax expense during the three-month period ended March 31, 2022 related to the exit of its Russia-related businesses, which comprised of asset impairment charges, personnel and real estate costs, of which $ 5.8 million was accrued and unpaid at March 31, 2022.

Approximately $ 19.5 million of that expense was due to the recognition in earnings of the Company’s cumulative translation adjustment related to the Russian ruble, which was previously reported as a component of Stockholders’ Equity.

The financial contribution to the Company from its business related to Russia was not material.

On March 3, 2022, the Company's Board of Directors declared a quarterly cash dividend of $ 0.15 per share, which was paid on April 21, 2022 to stockholders of record as of April 6, 2022.

As of March 31, 2022, accrued and unpaid dividends totaled $ 21.8 million and were classified within other accrued expenses on the consolidated balance sheet.

Reclassifications out of Accumulated Other Comprehensive Loss

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

The accumulated balances and reporting period activities for the three and six months ended March 31, 2022 and 2021 related to reclassifications out of accumulated other comprehensive loss are summarized as follows (in millions):

(Loss)/Gain on

Comprehensive

Balances at September 30, 2021

Balances at December 31, 2021

Other comprehensive income (loss) before reclassification

Amounts reclassified from accumulated other comprehensive (loss) income

Amounts reclassified from accumulated other comprehensive loss

Balances at March 31, 2022

(Loss)/Gain on

Comprehensive

Balances at December 31, 2020

Other comprehensive (loss) income before reclassification

Amounts reclassified from accumulated other comprehensive loss

Balances at March 31, 2021

(Loss)/Gain on

2 unchanged sentences

Other comprehensive (loss) income before reclassification

Amounts reclassified from accumulated other comprehensive (loss) income

Balances at December 31, 2020

Amounts reclassified from accumulated other comprehensive loss

Balances at March 31, 2022

(Loss)/Gain on

Comprehensive

Balances at September 30, 2020

Other comprehensive (loss) income before reclassification

Amounts reclassified from accumulated other comprehensive loss

Balances at March 31, 2021

Commitments and Contingencies

7 unchanged sentences

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.

The Company's unsecured credit arrangements are used for standby letters of credit issued in connection with general and professional liability insurance programs and for contract performance guarantees.

At December 31, 2021 and September 30, 2021, these outstanding standby letters of credit totaled $ 465.9 million and $ 478.5 million, respectively.

As of December 31, 2021, the Company had $ 466.5 million available under these unsecured credit facilities.

The Company's

unsecured credit arrangements are used for standby letters of credit issued in connection with general and professional liability insurance programs and for contract performance guarantees.

At March 31, 2022 and September 30, 2021, these outstanding standby letters of credit totaled $ 487.5 million and $ 478.5 million, respectively.

As of March 31, 2022, the Company had $ 432.3 million available under these unsecured credit facilities.

Performance arrangements typically have various expiration dates ranging from the completion of the project contract and extending beyond contract completion in some circumstances such as for warranties.

3 unchanged sentences

Generally, under joint venture arrangements, if a partner is financially unable to complete its share of the contract, the other partner(s) may be required to complete those activities.

At December 31, 2021, the Company was contingently liable in the amount of approximately $ 470.4 million in issued standby letters of credit and $ 3.4 billion in issued surety bonds primarily to support project execution.

At March 31, 2022, the Company was contingently liable in the amount of approximately $ 492.0 million in issued standby letters of credit and $ 3.4 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.

2 unchanged sentences

(the “Fund”), in which the Company indirectly holds an equity interest and has an ongoing capital commitment to fund investments.

At December 31, 2021, the Company has capital commitments of $ 20.9 million to the Fund over the next 7 years .

At March 31, 2022, the Company has capital commitments of $ 19.1 million to the Fund over the next 7 years .

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

29 unchanged sentences

The turnaround project was completed in February 2019.

Due to circumstances outside of the Company’s Former Affiliate’s control, including client directed changes and delays and the refinery’s condition, the

Company’s Former Affiliate performed additional work outside of the original contract over $ 90 million and is entitled to payment from the refinery owner of approximately $ 144 million.

Due to circumstances outside of the Company’s Former Affiliate’s control, including client directed changes and delays and the refinery’s condition, the Company’s Former Affiliate performed additional work outside of the original contract over $ 90 million and is entitled to payment from the refinery owner of approximately $ 144 million.

In March 2019, the refinery owner sent a letter to the Company’s Former Affiliate alleging it incurred approximately $ 79 million in damages due to the Company’s Former Affiliate’s project performance.

10 unchanged sentences

The Company's reportable segments are presented according to their geographic regions and business activities.

The Americas segment provides planning, consulting, architectural and engineering design services, and construction management services to commercial and government clients in the United States, Canada, and Latin America, while the International segment provides similar professional services to commercial and government clients in Europe, the Middle East, Africa, and the Asia-Pacific regions.

The Company’s AECOM Capital (ACAP) segment primarily invests in and develops real estate projects.

5 unchanged sentences

($ in millions)

Three Months Ended December 31, 2021:

Three Months Ended March 31, 2022:

Equity in earnings of joint ventures

1 unchanged sentence

Restructuring costs

Operating income

Gross profit as a % of revenue

Three Months Ended March 31, 2021:

Equity in earnings of joint ventures

General and administrative expenses

Restructuring costs

Operating income

Gross profit as a % of revenue

Six Months Ended March 31, 2022:

Equity in earnings of joint ventures

General and administrative expenses

Restructuring costs

Operating income (loss)

Gross profit as a % of revenue

Three Months Ended December 31, 2020:

Six Months Ended March 31, 2021:

Equity in earnings of joint ventures

4 unchanged sentences

Reportable Segments:

December 31, 2021

March 31, 2022

September 30, 2021

Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-Q

Item 1. Financial Statements