What changed in this filing

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Item 1. Financial Statements

2022-08-10 compared with 2022-05-11 · 135 added, 129 removed, 699 unchanged (27% of the section changed)

39 unchanged sentences

AECOM STOCKHOLDERS’ EQUITY:

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

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

issued and outstanding 139,578,447 and 143,168,815 shares as of June 30, 2022 and September 30, 2021, respectively

Additional paid-in capital

9 unchanged sentences

Three Months Ended

Six Months Ended

Nine Months Ended

Cost of revenue

5 unchanged sentences

Income from continuing operations before taxes

Income tax expense for continuing operations

Income tax expense (benefit) for continuing operations

Net income from continuing operations

18 unchanged sentences

Three Months Ended

Six Months Ended

Nine Months Ended

Other comprehensive income (loss), net of tax:

5 unchanged sentences

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

Comprehensive income attributable to AECOM, net of tax

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

See accompanying Notes to Consolidated Financial Statements.

4 unchanged sentences

Stockholders’

BALANCE AT DECEMBER 31, 2021

BALANCE AT MARCH 31, 2022

Dividends declared

4 unchanged sentences

Other transactions with noncontrolling interests

Contributions from noncontrolling interests

Distributions to noncontrolling interests

BALANCE AT MARCH 31, 2022

BALANCE AT JUNE 30, 2022

Comprehensive

1 unchanged sentence

Stockholders’

BALANCE AT DECEMBER 31, 2020

BALANCE AT MARCH 31, 2021

Other comprehensive loss

2 unchanged sentences

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

BALANCE AT JUNE 30, 2021

Comprehensive

10 unchanged sentences

Distributions to noncontrolling interests

BALANCE AT MARCH 31, 2022

BALANCE AT JUNE 30, 2022

Comprehensive

11 unchanged sentences

Distributions to noncontrolling interests

BALANCE AT MARCH 31, 2021

BALANCE AT JUNE 30, 2021

See accompanying Notes to Consolidated Financial Statements.

1 unchanged sentence

(unaudited - in thousands)

Six Months Ended March 31,

Nine Months Ended June 30,

CASH FLOWS FROM OPERATING ACTIVITIES:

4 unchanged sentences

Non-cash stock compensation

Prepayment premium on redemption of unsecured notes

Impairment of long-lived assets

22 unchanged sentences

( 1,929,251 )

Redemption of unsecured senior notes

Prepayment premium on redemption of unsecured notes

Cash paid for debt issuance costs

23 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 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.

The results of operations for the three and nine months ended June 30, 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.

21 unchanged sentences

Under this exception, an acquirer applies ASC 606 to recognize and measure contract assets and contract liabilities on the acquisition date.

The Company expects to adopt the new guidance starting on October 1, 2022 on a prospective basis.

The Company is currently assessing the impact this guidance will have on its consolidated financial statements.

The Company expects to adopt the new guidance starting on October 1, 2022 on a prospective basis for any business combinations the Company undertakes.

Discontinued Operations, Goodwill and Intangible Assets

9 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 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.

15 unchanged sentences

Three months ended

Six months ended

Nine months ended

Cost of revenue

7 unchanged sentences

Loss before taxes

Income tax (benefit) expense

Income tax benefit

Net loss from discontinuing operations

1 unchanged sentence

Three months ended

Six months ended

Nine months ended

Payments for capital expenditures

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

The changes in the carrying value of goodwill by reportable segment for the nine months ended June 30, 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 March 31, 2022 and September 30, 2021, included in intangible assets—net, in the accompanying consolidated balance sheets, were as follows:

March 31, 2022

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

June 30, 2022

September 30, 2021

1 unchanged sentence

Backlog and customer relationships

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.

Amortization expense of acquired intangible assets included within cost of revenue were $ 14.2 million and $ 15.9 million for the nine months ended June 30, 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 (six months remaining)

2022 (three 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 six months ended March 31, 2022 and 2021 were $ 3.3 billion and $ 3.5 billion, respectively.

These pass-through revenues for the nine months ended June 30, 2022 and 2021 were $ 5.0 billion and $ 5.4 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

Nine months ended

(in millions)

3 unchanged sentences

Three months ended

Six months ended

Nine months ended

(in millions)

1 unchanged sentence

Total revenue

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 .

As of June 30, 2022, the Company had allocated $ 21.3 billion of transaction price to unsatisfied or partially satisfied performance obligations, of which approximately 60 % 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 $ 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 recognized revenue of $ 504.7 million and $ 646.6 million during the nine months ended June 30, 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 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.

Substantially all contract assets as of June 30, 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 June 30, 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.

6 unchanged sentences

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 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.

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

The Company sold trade receivables to financial institutions, of which $ 199.1 million and $ 263.6 million were outstanding as of June 30, 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 $ 627.3 million and $ 379.8 million for the six months ended March 31, 2022 and 2021, respectively.

Total revenue of the consolidated joint ventures was $ 980.1 million and $ 604.7 million for the nine months ended June 30, 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

Six Months Ended

Nine Months Ended

(in millions)

1 unchanged sentence

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

Six Months Ended

Nine 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 and six months ended March 31, 2022 and 2021:

The following table details the components of net periodic benefit cost for the Company’s pension plans for the three and nine months ended June 30, 2022 and 2021:

Three Months Ended

Six Months Ended

March 31, 2022

March 31, 2021

March 31, 2022

March 31, 2021

Nine Months Ended

June 30, 2022

June 30, 2021

June 30, 2022

June 30, 2021

(in millions)

3 unchanged sentences

Expected return on plan assets

Amortization of prior service cost

Amortization of net loss

1 unchanged sentence

Net periodic benefit cost

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

The total amounts of employer contributions paid for the nine months ended June 30, 2022 were $ 6.8 million for U.S.

plans and $ 18.2 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 March 31, 2022:

2022 (six months remaining)

The following table presents, in millions, scheduled maturities of the Company’s debt as of June 30, 2022:

2022 (three months remaining)

Credit Agreement

On February 8, 2021, the Company entered into the 2021 Refinancing Amendment to the Credit Agreement (the "Credit Agreement"), pursuant to which the Company amended and restated its Syndicated Credit Facility Agreement, dated as of October 17, 2014 (as amended prior to February 8, 2021, the "Original Credit Agreement"), between the Company, as borrower, Bank of America, N.A., as administrative agent, and other parties thereto.

The Credit Agreement consists of a $ 1,150,000,000 revolving credit facility (the "Revolving Credit Facility") and a $ 246,968,737.50 term loan A facility (the "Term A Facility,"

together with the Revolving Credit Facility, the "Credit Facilities"), each of which mature on February 8, 2026.

On February 8, 2021, the Company entered into the 2021 Refinancing Amendment to the Credit Agreement (the “Credit Agreement”), pursuant to which the Company amended and restated its Syndicated Credit Facility Agreement, dated as of October 17, 2014 (as amended prior to February 8, 2021, the “Original Credit Agreement”), between the Company, as borrower, Bank of America, N.A., as administrative agent, and other parties thereto.

At the time of amendment, the Credit Agreement consisted of a $ 1,150,000,000 revolving credit facility (the “Revolving Credit Facility”) and a $ 246,968,737.50 term loan A facility (the “Term A Facility,” together with the Revolving Credit Facility, the “Credit Facilities”), each of which mature on February 8, 2026.

The outstanding loans under the Term A Facility were borrowed in U.S.

Loans under the Revolving Credit Facility may be borrowed, and the letters of credit thereunder may be issued, in U.S.

Loans under the Revolving Credit Facility may be borrowed, and letters of credit thereunder may be issued, in U.S.

dollars or certain foreign currencies.

7 unchanged sentences

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.

When the provisions are triggered, LIBOR would be replaced by a secured overnight financing rate (SOFR)-based rate, which will 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.

The borrowers’ obligations under the Credit Agreement are secured by a lien on substantially all of the Company’s assets and its Guarantors’ assets, subject to certain exceptions.

The Credit Agreement contains customary negative covenants that include, among other things, limitations on the ability of the Company and certain of its subsidiaries, subject to certain exceptions, to incur liens and debt, make investments, dispositions, and restricted payments, change the nature of their business, consummate mergers, consolidations and the sale of all or substantially all of their respective assets, taken as a whole, and transact with affiliates.

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 2.30 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 Company’s consolidated leverage ratio was 2.30 to 1.00 at June 30, 2022.

As of June 30, 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.

8 unchanged sentences

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

11 to the Credit Agreement, pursuant to which the lenders have provided to the Company an additional $ 215,000,000 in aggregate principal amount under the Term A Facility.

11 to the Credit Agreement, pursuant to which the lenders thereunder have provided to the Company an additional $ 215,000,000 in aggregate principal amount under the Term A Facility.

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 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.

At June 30, 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 June 30, 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 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.

As of June 30, 2022, the estimated fair value of the 2027 Senior Notes was approximately $ 935.0 million.

The fair value of the 2027 Senior Notes as of June 30, 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 March 31, 2022.

The Company was in compliance with the covenants relating to the 2027 Senior Notes as of June 30, 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 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.

The Company’s average effective interest rate on its total debt, including the effects of the interest rate swap agreements, during the nine months ended June 30, 2022 and 2021 was 3.4% and 4.7% , respectively.

Interest expense in the consolidated statements of operations included amortization of deferred debt issuance costs for the three and nine months ended June 30, 2022 of $ 1.2 million and $ 3.7 million, respectively, and for the three and nine months ended June 30, 2021 of $ 4.6 million and $ 9.0 million, respectively.

Derivative Financial Instruments and Fair Value Measurements

6 unchanged sentences

Cash Flow Hedges

The Company uses interest rate swap agreements designated as cash flow hedges to fix the variable interest rates on portions of the Company’s debt.

The Company uses interest rate swap and interest rate cap agreements designated as cash flow hedges to limit exposure to variable interest rates on portions of the Company’s debt.

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 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.

If the hedged transaction becomes probable of not occurring, any gain or loss related to interest rate swap or interest rate cap 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:

March 31, 2022

June 30, 2022

Notional Amount

13 unchanged sentences

The Company will pay a fixed rate of 1.349 % and receive payment at the prevailing one-month LIBOR.

In the third quarter of fiscal 2022, the Company purchased interest rate cap agreements with a notional value of $ 300.0 million to manage interest rate exposure of its variable rate loans.

The caps became effective on June 30, 2022 and terminate in March 2028.

The caps reduce the Company’s exposure to one-month LIBOR.

In the event one-month LIBOR exceeds 3.5 %, the Company will pay a fixed rate of 3.5 % and receive payment at the prevailing one-month LIBOR.

Other Foreign Currency Forward Contracts

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

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

Gains and losses on these contracts were not material for the nine months ended June 30, 2022 and 2021.

Fair Value Measurements

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 Company’s non-pension financial assets and liabilities recorded at fair value relate to the interest rate swap and interest rate cap agreements included in other current assets, other non-current assets, other current liabilities, and other long-term liabilities on June 30, 2022 and were $ 3.5 million, $ 23.7 million, $ 1.7 million,and $ 3.2 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.

The fair values of the interest rate swap and interest rate cap 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 nine months ended June 30, 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 six months ended March 31 was as follows:

Stock option activity for the nine months ended June 30 was as follows:

Shares of stock

12 unchanged sentences

Options forfeited or expired

Outstanding at March 31

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

Outstanding at June 30

Vested and expected to vest in the future as of June 30

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 $ 52.52 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 weighted average grant date fair value of PEP awards was $ 85.46 and $ 52.76 during the nine months ended June 30, 2022 and 2021, respectively.

The weighted average grant date fair value of restricted stock unit awards was $ 74.30 and $ 49.21 during the nine months ended June 30, 2022 and 2021, respectively.

Total compensation expense related to these share-based payments including stock options was $ 27.4 million and $ 36.2 million during the nine months ended June 30, 2022 and 2021, respectively.

Unrecognized compensation expense related to total share-based payments outstanding as of June 30, 2022 and September 30, 2021 was $ 54.4 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 26.0 % and 16.6 % for the nine months ended June 30, 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 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.

federal corporate tax rate of 21.0 % and the Company’s effective tax rate for the nine-month period ended June 30, 2022 were a tax benefit of $ 36.4 million related to income tax credits and incentives, tax expense of $ 31.4 million related to foreign residual income, tax expense of $ 16.4 million related to state income taxes, tax expense of $ 15.7 million related to uncertain tax positions, tax expense of $ 11.9 million related to nondeductible costs, and tax benefit of $ 11.6 million related to changes in valuation allowances.

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 one-time changes in valuation allowances 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 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.

federal corporate tax rate of 21.0 % and the Company’s effective tax rate for the nine-month period ended June 30, 2021 were a tax benefit of $ 39.0 million related to income tax credits and incentives, a tax benefit of $ 25.9 million related to a corporate tax rate change in the United Kingdom, a tax expense of $ 30.7 million related to foreign residual income, a tax expense of $ 13.2 million related to an audit settlement, and a tax expense of $ 11.5 million related to state income taxes.

During the nine-month period ended June 30, 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.

During the nine-month period ended June 30, 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.

During the third quarter of fiscal 2021, the United Kingdom enacted a corporate tax rate increase from 19 % to 25 % beginning April 2023 requiring deferred tax assets and liabilities to be remeasured.

The remeasurement resulted in a $ 25.9 million tax benefit.

During the third quarter of fiscal 2021, the Company partially settled its U.S.

federal audit for fiscal 2015 and 2016 and recorded tax expense of $ 13.2 million due primarily to changes in tax attributes.

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

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

For the three and nine months ended June 30, 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

Nine 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

Nine Months Ended

June 30, 2022

June 30, 2021

June 30, 2022

June 30, 2021

(in millions)

8 unchanged sentences

Balance Sheet Classification

March 31, 2022

June 30, 2022

September 30, 2021

14 unchanged sentences

Total non-current lease liabilities

March 31, 2022

June 30, 2022

September 30, 2021

6 unchanged sentences

Additional cash flow information related to leases is as follows:

Six Months Ended

Nine Months Ended

(in millions)

9 unchanged sentences

(in millions)

2022 (six months remaining)

2022 (three months remaining)

Total lease payments

8 unchanged sentences

Other accrued expenses

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.

Accrued contract costs above include balances related to professional liability accruals of $ 751.2 million and $ 736.4 million as of June 30, 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 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.

Liabilities recorded related to accrued contract losses were not material as of June 30, 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 nine months ended June 30, 2022 and 2021.

During the first nine months of fiscal 2022, the Company incurred restructuring expenses of $ 88.9 million, of which $ 69.1 million was related to the exit of our Russia-related businesses and is discussed further below.

The remaining $ 19.8 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.

These expenses included personnel and other costs of $ 16.5 million and real estate costs of $ 3.3 million, of which $ 1.1 million was accrued and unpaid at June 30, 2022.

During the first nine months of fiscal 2021, the Company incurred restructuring expenses of $ 34.8 million, including personnel and other costs of $ 25.8 million and real estate costs of $ 9.0 million, of which $ 6.5 million was accrued and unpaid at June 30, 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.

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 $ 3.8 million was accrued and unpaid at June 30, 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.

On June 8, 2022, the Company’s Board of Directors declared a quarterly cash dividend of $ 0.15 per share, which was paid on July 22, 2022 to stockholders of record as of July 6, 2022.

As of June 30, 2022, accrued and unpaid dividends totaled $ 21.9 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 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

The accumulated balances and reporting period activities for the three and nine months ended June 30, 2022 and 2021 related to reclassifications out of accumulated other comprehensive loss are summarized as follows (in millions):

Gain/(Loss)on

Comprehensive

Balances at December 31, 2021

Balances at March 31, 2022

Other comprehensive income (loss) before reclassification

Amounts reclassified from accumulated other comprehensive loss

Balances at March 31, 2022

Balances at June 30, 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

Other comprehensive income (loss) before reclassification

Amounts reclassified from accumulated other comprehensive loss

Balances at June 30, 2021

(Loss)/Gain on

1 unchanged sentence

Balances at September 30, 2021

Other comprehensive (loss) income before reclassification

Other comprehensive income (loss) before reclassification

Amounts reclassified from accumulated other comprehensive loss

Balances at March 31, 2022

Balances at June 30, 2022

(Loss)/Gain on

3 unchanged sentences

Amounts reclassified from accumulated other comprehensive loss

Balances at March 31, 2021

Balances at June 30, 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 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.

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 June 30, 2022 and September 30, 2021, these outstanding standby letters of credit totaled $ 640.9 million and $ 478.5 million, respectively.

As of June 30, 2022, the Company had $ 438.1 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 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.

At June 30, 2022, the Company was contingently liable in the amount of approximately $ 645.4 million in issued standby letters of credit and $ 3.7 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.

2 unchanged sentences

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

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

At June 30, 2022, the Company has capital commitments of $ 15.3 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.

50 unchanged sentences

($ in millions)

Three Months Ended March 31, 2022:

Three Months Ended June 30, 2022:

Equity in earnings of joint ventures

3 unchanged sentences

Gross profit as a % of revenue

Three Months Ended March 31, 2021:

Three Months Ended June 30, 2021:

Equity in earnings of joint ventures

3 unchanged sentences

Gross profit as a % of revenue

Six Months Ended March 31, 2022:

Nine Months Ended June 30, 2022:

Equity in earnings of joint ventures

1 unchanged sentence

Restructuring costs

Operating income (loss)

Operating income

Gross profit as a % of revenue

Six Months Ended March 31, 2021:

Nine Months Ended June 30, 2021:

Equity in earnings of joint ventures

4 unchanged sentences

Reportable Segments:

March 31, 2022

June 30, 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