What changed in this filing

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Item 8. Financial Statements and Supplementary Data

2022-11-17 compared with 2021-11-17 · 166 added, 194 removed, 1220 unchanged (23% of the section changed)

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Audited Annual Consolidated Financial Statements

Reports of Independent Registered Public Accounting Firm

Reports of Independent Registered Public Accounting Firm (PCAOB ID:

Consolidated Balance Sheets at September 30, 2022 and 2021

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Opinion on the Financial Statements

We have audited the accompanying consolidated balance sheets of AECOM (the "Company") as of September 30, 2021 and 2020, the related consolidated statements of operations, comprehensive income (loss), stockholders' equity and cash flows for each of the three years in the period ended September 30, 2021, and the related notes and financial statement schedule listed in the Index at Item 15(a) (collectively referred to as the "consolidated financial statements").

We have audited the accompanying consolidated balance sheets of AECOM (the “ Company ” ) as of September 30, 2022 and 2021, the related consolidated statements of operations, comprehensive income (loss), stockholders ’ equity and cash flows for each of the three years in the period ended September 30, 2022, and the related notes and financial statement schedule listed in the Index at Item 15(a) (collectively referred to as the “ consolidated financial statements ” ).

In our opinion, the consolidated financial statements present fairly, in all material respects, the financial position of the Company at September 30, 2022 and 2021, and the results of its operations and its cash flows for each of the three years in the period ended September 30, 2022, in conformity with U.S.

generally accepted accounting principles.

We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) ("PCAOB"), the Company's internal control over financial reporting as of September 30, 2021, based on criteria established in Internal Control-Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (2013 framework) and our report dated November 17, 2021 expressed an unqualified opinion thereon.

Adoption of New Accounting Standard

As discussed in Notes 2 and 11 to the consolidated financial statements, the Company changed its method of accounting for leases in 2020 due to the adoption of ASU No.

2016-02, Leases .

We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) ( “ PCAOB ” ), the Company ’ s internal control over financial reporting as of September 30, 2022, based on criteria established in Internal Control-Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (2013 framework) and our report dated November 16, 2022 expressed an unqualified opinion thereon.

Basis for Opinion

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Critical Audit Matters

The critical audit matters communicated below are matters arising from the current period audit of the financial statements that were communicated or required to be communicated to the audit committee and that:

The critical audit matter communicated below is a matter arising from the current period audit of the financial statements that was communicated or required to be communicated to the audit committee and that:

(1) relate to accounts or disclosures that are material to the financial statements and (2) involved our especially challenging, subjective, or complex judgments.

The communication of critical audit matters does not alter in any way our opinion on the consolidated financial statements, taken as a whole, and we are not, by communicating the critical audit matters below, providing separate opinions on the critical audit matters or on the accounts or disclosures to which they relate.

The communication of the critical audit matter does not alter in any way our opinion on the consolidated financial statements, taken as a whole, and we are not, by communicating the critical audit matters below, providing separate opinions on the critical audit matters or on the accounts or disclosures to which it relates.

Revenue Recognition - Contract cost and claim recovery estimates

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For the year ended September 30, 2022, contract revenues recognized by the Company were $13.1 billion.

Contract revenues include $3.4 billion which relate to fixed price contracts.

Contract revenues include $3.4 billion which relate to fixed price contracts and $4.3 billion which relate to guaranteed maximum price contracts.

As described in Note 4 of the consolidated financial statements, the Company generally recognizes revenues for these contracts over time as performance obligations are satisfied.

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We also tested management ’ s estimation process by performing a lookback analysis to evaluate claims settled in the current year compared to management ’ s prior year estimates.

Valuation of goodwill

Description of the Matter

As of September 30, 2021, the Company ’ s goodwill was $3.5 billion.

As discussed in Note 1 of the consolidated financial statements, in the fourth quarter of each fiscal year the Company performs an annual goodwill impairment test for each reporting unit and between annual tests if events occur or circumstances change which suggest that goodwill should be evaluated.

Auditing management ’ s goodwill impairment tests is complex and highly judgmental due to the significant estimates required to determine the fair value of the reporting units.

These fair value estimates are affected by significant assumptions including revenue growth rate, profitability, weighted average cost of capital, and terminal values, which reflect management ’ s expectations about future market or economic conditions.

How We Addressed the Matter in Our Audit

We obtained an understanding, evaluated the design, and tested the operating effectiveness of controls over the Company ’ s goodwill impairment review process including management ’ s review of the significant assumptions used to determine the fair value of the reporting units.

To test the estimated fair value of its reporting units, with the support of a valuation specialist, we performed audit procedures that included, among others, assessing fair value methodologies and testing the significant assumptions discussed above and the underlying data used by the Company in its analysis.

We compared the significant assumptions used by management to current industry and economic trends, historical operating results, contract backlog, changes to the Company ’ s business operations and other relevant factors.

We performed a lookback analysis to evaluate the accuracy of management ’ s prior year revenue and profitability estimates.

We performed sensitivity analyses of significant assumptions to evaluate the changes in the fair value of the reporting units that would result from changes in the assumptions.

We also tested the reconciliation of the fair value of the reporting units to the market capitalization of the Company.

/s/ Ernst & Young LLP

We have served as the Company ’ s auditor since 1990.

Los Angeles, CA

Los Angeles, California

November 16, 2022

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OPERATING LEASE RIGHT-OF-USE ASSETS

NON-CURRENT ASSETS HELD FOR SALE

LIABILITIES AND STOCKHOLDERS’ EQUITY

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Accumulated other comprehensive loss

(Accumulated deficits) / Retained earnings

Accumulated deficits

TOTAL AECOM STOCKHOLDERS’ EQUITY

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Restructuring costs

Gain on disposal activities

Impairment of long-lived assets

Income from operations

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Net income attributable to noncontrolling interests from continuing operations

Net income attributable to noncontrolling interests from discontinued operations

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

Net income attributable to noncontrolling interests

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Net income (loss)

Other comprehensive loss, net of tax:

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

Other comprehensive income (loss), net of tax:

Net unrealized gain on derivatives, net of tax

Foreign currency translation adjustments

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Stockholders’

Stockholder’s

Stockholders’

BALANCE AT SEPTEMBER 30, 2019

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Stock-based compensation

Other transactions with noncontrolling interests

Disposal of noncontrolling interest of business sold

Contributions from noncontrolling interests

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Cumulative effect of accounting standard adoption

Other comprehensive loss

Other comprehensive income

Issuance of stock

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Stock based compensation

Other transactions with noncontrolling interests

Disposal of noncontrolling interest of business sold

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BALANCE AT SEPTEMBER 30, 2021

Cumulative effect of accounting standard adoption

Other comprehensive income

Dividends declared

Other comprehensive loss

Issuance of stock

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Other transactions with noncontrolling interests

Disposal of noncontrolling interest of business sold

Contributions from noncontrolling interests

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Prepayment premium on redemption of unsecured senior notes

Impairment of long-lived assets, including goodwill

Loss on disposal activities

Impairment of long-lived assets

Loss (gain) on sale of discontinued operations

Foreign currency translation

Deferred income tax (benefit) expense

Changes in operating assets and liabilities, net of effects of acquisitions:

Deferred income tax expense (benefit)

Changes in operating assets and liabilities:

Accounts receivable and contract assets

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CASH FLOWS FROM INVESTING ACTIVITIES:

(Payment for) proceeds from sale of discontinued operations, net of cash disposed

Proceeds from disposal of businesses, net of cash disposed

(Payments for) proceeds from sale of discontinued operations, net of cash disposed

Investment in unconsolidated joint ventures

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Proceeds from sale of investments

Payments for purchase of investments

Proceeds from disposal of property and equipment

Payments for capital expenditures

Net cash (used in) provided by investing activities

Net cash used in by investing activities

CASH FLOWS FROM FINANCING ACTIVITIES:

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Cash paid for debt issuance costs

Dividends paid

Proceeds from issuance of common stock

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Interest paid

Net income taxes (paid) refund received

Net income taxes paid

See accompanying Notes to Consolidated Financial Statements.

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For clarity of presentation, all periods are presented as if the year ended on September 30.

Fiscal years 2021, 2020 and 2019 each contained 52 , 53 and 52 weeks, respectively, and ended on October 1, October 2, and September 27, respectively.

Fiscal years 2022, 2021 and 2020 each contained 52 , 52 and 53 weeks, respectively, and ended on September 30, October 1, 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.

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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.

Such events or circumstances include significant changes in legal factors and business climate, recent losses at a reporting unit, and industry trends, among other

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.

Prior to fiscal 2022, the Company performed its annual goodwill and intangible asset impairment test at the end of the fourth quarter.

In fiscal year 2022, the Company changed the date of its annual goodwill and intangible asset impairment assessment to the first day of the fourth quarter.

The Company believes this change does not represent a material change in method of applying an accounting principle.

This voluntary change is preferable under the circumstances as it results in better alignment with the timing of the Company’s long-range planning and forecasting process and provides the Company with additional time to complete its annual goodwill impairment testing in advance of its year-end reporting.

This change does not delay, accelerate or avoid an impairment of goodwill.

During the impairment test, 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.

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New Accounting Pronouncements and Changes in Accounting

In February 2016, the Financial Accounting Standards Board (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 Company adopted the new guidance beginning October 1, 2019 using the modified retrospective adoption method, which resulted in a downward adjustment to retained earnings of $ 87.8 million, net of tax.

Detailed disclosures regarding the adoption and other required disclosures can be found in Note 11.

In June 2016, the FASB issued a new credit loss standard that changes the impairment model for most financial assets and some other instruments.

In June 2016, the Financial Accounting Standards Board (FASB) issued a new credit loss standard that changes the impairment model for most financial assets and some other instruments.

The new guidance replaces the “incurred loss” approach with an “expected loss” model for instruments measured at amortized cost.

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Additional disclosures regarding the adoption can be found in Note 4.

In February 2018, the FASB issued new accounting guidance which provides entities the option to reclassify certain tax effects from other comprehensive income to retained earnings.

The guidance addresses a narrow-scope financial reporting issue related to the tax effects that may become stranded in accumulated other comprehensive income as a result of the enactment of the Tax Cuts and Jobs Act (Tax Act).

Under the guidance, an entity may elect to reclassify the income tax effects of the Tax Act on items within accumulated other comprehensive income to retained earnings.

The Company has determined that it will not make this election.

In August 2018, the FASB issued new accounting guidance aligning the capitalization of certain implementation costs incurred in a hosting arrangement that is a service contract with previously existing guidance for capitalizing costs incurred to develop internal-use software.

The new guidance was effective for the Company’s fiscal year starting October 1, 2020.

The adoption of this guidance did not have a material impact on the Company’s consolidated financial statements.

In August 2018, the FASB issued new accounting guidance amending the disclosure requirements for fair value measurements.

These improvements require more disclosure for amounts measured at fair value, and specifically unobservable inputs used in fair value measurements.

The Company adopted the new guidance starting on October 1, 2020.

Adoption of the new guidance did not have a significant impact on the Company’s financial reporting process.

In August 2018, the FASB issued new accounting guidance for the disclosure requirements of defined benefit pension plans.

The amended guidance eliminates certain disclosure requirements that were no longer considered to be cost beneficial.

The Company expects to adopt the new guidance starting on October 1, 2021 and does not expect adoption of the new guidance will have a significant impact on its financial reporting process.

In March 2020, the Securities and Exchange Commission (SEC) adopted final rules that amend the financial disclosure requirement for guarantors of registered debt securities in Rule 3-10 of Regulation S-X.

The new rules amend and streamline the disclosures required by guarantors and issuers of guaranteed securities.

Among other things, the new disclosures may be located outside the financial statements.

The new rule was effective January 4, 2021, and early adoption is permitted.

The Company adopted the new rule on March 31, 2020.

Accordingly, the revised condensed consolidating financial information is presented outside of these consolidated financial statements.

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

Adoption of the new guidance did not have a significant impact on the Company’s financial statements.

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 (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.

The adoption of the new guidance did not have a significant impact on the Company’s consolidated financial statements.

In October 2021, the FASB issued final guidance to companies that apply ASC 606, Revenue from Contracts with Customers , to recognize and measure contract assets and contract liabilities from contracts with customers acquired in a business combination.

The new guidance creates an exception to the general requirement to measure acquired assets and liabilities at fair value on the acquisition date.

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 for any business combinations the Company undertakes.

Discontinued Operations, Goodwill, and Intangible Assets

During the second quarter of fiscal 2020, the Company completed the sale of its Management Services business to Maverick Purchaser Sub, LLC (Purchaser), an affiliate of American Securities LLC and Lindsay Goldberg LLC.

The Company received total cash consideration of $ 2.28 billion inclusive of the receipt in the third quarter of fiscal 2020 of $ 122.0 million received in connection with a favorable working capital purchase price adjustment and contingent consideration of approximately $ 120 million attributable to certain claims related to prior work and engagements.

As a result of the sale, the Company recognized a pre-tax gain of $ 161.9 million.

The gain on sale was included in the net loss from discontinued operations in the Consolidated Statements of Operations in fiscal year 2020.

Additionally, in the first quarter of fiscal 2020, management approved a plan to dispose via sale the Company’s self-perform at-risk construction businesses within the next year.

In the first quarter of fiscal 2020, management approved a plan to dispose via sale the Company’s self-perform at-risk construction businesses.

These businesses include the Company’s civil infrastructure, power, and oil and gas construction businesses that were previously reported in the Company’s Construction Services segment.

After consideration of the relevant facts, the Company concluded the assets and liabilities of its Management Services business and its self-perform at-risk construction businesses met the criteria for classification as held for sale.

The Company concluded the actual and proposed disposal activities represented a strategic shift that will have a major effect on the Company’s operations and financial results and qualified for presentation as discontinued operations in accordance with FASB Accounting Standards Codification (ASC) 205-20.

Accordingly, the financial results of the Management Services business and the self-perform at-risk construction businesses are presented in the Consolidated Statements of Operations as discontinued operations for all periods presented.

After consideration of the relevant facts, the Company concluded the assets and liabilities of its self-perform at-risk construction businesses met the criteria for classification as held for sale.

The Company concluded the actual and proposed disposal activities represented a strategic shift that would have a major effect on the Company’s operations and financial results and qualified for presentation as discontinued operations in accordance with FASB ASC 205-20.

Accordingly, the financial results of the self-perform at-risk construction businesses are presented in the Consolidated Statement of Operations as discontinued operations for all periods presented.

Current and non-current assets and liabilities of these businesses not sold as of the balance sheet date are presented in the Consolidated Balance Sheets as assets and liabilities held for sale for both periods presented.

Interest expense allocated to discontinued operations represents interest expenses for the discontinued operations’ finance leases and term loans, which were required to be settled upon the sale of the Management Services business.

During the first quarter of fiscal 2021, the Company completed the sale of its power construction business to CriticalPoint Capital, LLC.

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The Company also completed the sale of its civil infrastructure construction business to affiliates of Oroco Capital in the second quarter of fiscal 2021.

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

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 a 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.

During the second quarter of fiscal 2020, the Company identified indicators of impairment for the self-perform at-risk construction business.

Specifically, the Company's forecast for its Oil and Gas business decreased significantly from the prior period due primarily to the volatility in global oil prices, which negatively impacted forecasts for future revenues and earnings.

As a result, the Company assessed the Oil and Gas business for impairment and determined the fair value of the disposal group was lower than its carrying value.

Fair value was estimated using Level 3 inputs, such as forecasted cash flows.

Accordingly, the Company recorded impairment losses for that business' goodwill of approximately $ 83.6 million and intangible assets of approximately $ 5.7 million.

These impairment losses were recorded in net loss from discontinued operations on the Consolidated Statements of Operations in fiscal year 2020.

During the fourth quarter of fiscal 2020, the Company recorded a $ 247.2 million loss related to the remeasurement of its self-perform at-risk construction businesses to fair value less cost to sell.

Fair value was estimated using Level 3 inputs, such as forecasted cash flows, and Level 2 inputs, including bid prices from potential buyers.

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):

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Accounts payable and accrued expenses

Contract liabilities

Current liabilities held for sale

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September 30,

Cost of revenue

Gross profit (loss)

Equity in earnings (losses) of joint ventures

(Loss) gain on disposal activities

Gross (loss) profit

Equity in earnings of joint ventures

Loss on disposal activities

Transaction costs

Impairment of long-lived assets, including goodwill

Impairment of long-lived assets

Loss from operations

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Loss before taxes

Income tax (benefit) expense

Income tax expense (benefit)

Net loss from discontinued operations

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September 30,

Depreciation and amortization:

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International

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

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

September 30, 2022

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(in millions)

Backlog and customer relationships

Customer relationships

Amortization expense of acquired intangible assets included within cost of revenue was $ 18.9 million and $ 22.6 million for the years ended September 30, 2022 and 2021, respectively.

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The Company generally recognizes revenues over time as performance obligations are satisfied.

The Company generally measures its progress to completion using an input measure of total costs incurred divided by total costs expected to be incurred.

The Company generally measures its progress to completion using an input measure of total costs incurred divided by total costs expected to be incurred, which it believes to be the best measure of progress towards completion of the performance obligation.

In the course of providing its services, the Company routinely subcontracts for services and incurs other direct costs on behalf of its clients.

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In addition, clients reimburse the Company for materials and other direct incidental expenditures incurred in connection with its performance under the contract.

The Company may apply a practical expedient to recognize revenue in the amount in which it has the right to invoice if its right to consideration is equal to the value of performance completed to date.

The Company may apply a practical expedient to recognize

revenue in the amount in which it has the right to invoice if its right to consideration is equal to the value of performance completed to date.

Guaranteed Maximum Price Contracts (GMP)

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For many of the Company’s commercial or residential GMP contracts, the final price is generally not established until the Company has subcontracted a substantial percentage of the trade contracts with terms consistent with the master contract, and it has negotiated additional contractual limitations, such as waivers of consequential damages as well as aggregate caps on liabilities and liquidated damages.

Revenue is recognized for GMP contracts as project costs are incurred relative to total estimated project costs.

Revenue is recognized for GMP contracts as project costs are incurred relative to total estimated project costs as the Company believes this is the best measure of progress towards completion.

Fixed-Price Contracts

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Under fixed-unit price contracts, the Company performs a number of units of work at an agreed price per unit with the total payment under the contract determined by the actual number of units delivered.

Revenue is recognized for fixed-price contracts using the input method measured on a cost-to-cost basis.

Revenue is recognized for fixed-price contracts using the input method measured on a cost-to-cost basis as the Company believes this is the best measure of progress towards completion.

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

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(in millions)

Europe, Middle East, Africa

Europe, Middle East, India, Africa

Asia-Australia-Pacific

Total revenue

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Those rights are generally dependent upon advance billing terms, milestone billings based on the completion of certain phases of work or when services are performed.

The Company’s accounts receivable represent amounts billed to clients that have yet to be collected and represent an unconditional right to cash from its clients.

The Company’s accounts receivables represent amounts billed to clients that have yet to be collected and represent an unconditional right to cash from its clients.

Contract assets represent the amount of contract revenue recognized but not yet billed pursuant to contract terms or accounts billed after the balance sheet date.

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Substantially all contract assets as of September 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 and $ 170 million as of September 30, 2021 and September 30, 2020, respectively.

The asset related to the Deactivation, Demolition, and Removal Project retained from the Purchaser discussed in Note 18 is presented in prepaid expense and other current assets from continuing operations in the Consolidated Balance Sheet.

Contract retentions represent amounts invoiced to clients where payments have been withheld from progress payments until the contracted work has been completed and approved by the client.

These retention agreements vary from project to project and could be outstanding for several months or years.

Significant claims recorded in contract assets and other non-current assets were approximately $ 110 million and $ 140 million as of September 30, 2022 and 2021, respectively.

In fiscal year 2022, the Company reduced its exposure to a significant claim by approximately $ 30 million.

The change reflected the Company’s current estimated recovery on the claim.

The asset related to the Deactivation, Demolition, and Removal Project retained from the MS Purchaser as defined in discussed in Note 18 is presented in prepaid expense and other current assets from continuing operations in the Consolidated Balance Sheet.

Contract retentions represent amounts invoiced to clients where payments have been withheld from progress payments until the contracted work has been completed and approved by the client but nonetheless represent an unconditional right to cash.

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.

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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 September 30, 2021 and September 30, 2020.

The Company sold trade receivables to financial institutions, of which $ 263.6 million and $ 166.6 million were outstanding as of September 30, 2021 and September 30, 2020, respectively.

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

The Company sold trade receivables to financial institutions, of which $ 240.3 million and $ 263.6 million were outstanding as of September 30, 2022 and 2021, respectively.

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

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Plan settlements

Foreign currency translation gain (loss)

Foreign currency translation (loss) gain

Fair value of plan assets at end of year

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Reconciliation of amounts in consolidated statements of stockholders’ equity:

Prior service (cost) credit

Prior service cost

Total recognized in accumulated other comprehensive loss

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

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 fiscal years ended September 30, 2022, 2021 and 2020:

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Expected return on plan assets

Amortization of prior service costs (credits)

Amortization of prior service costs

Amortization of net loss

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Settlement loss recognized

Net periodic benefit cost

Net periodic benefit cost (credit)

The amount of applicable deferred income taxes included in other comprehensive income arising from a change in net prior service cost and net gain/loss was $ 18.8 million, $ 9.3 million, and $ 15.5 million in the years ended September 30, 2022, 2021 and 2020, respectively.

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Amortization of prior service cost

Amortization of net actuarial losses

Amortization of net actuarial (losses) gain

The table below provides additional year-end information for pension plans with accumulated benefit obligations in excess of plan assets.

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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.

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, 2022, there were no material changes to the valuation techniques.

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Accordingly, these NAV-based investments have been excluded from the fair value hierarchy.

These collective investment funds have minimal redemption notice periods and are redeemable daily at the NAV, less transaction fees, without significant restrictions.

These collective investment funds have redemption notice periods and are redeemable at the NAV, less transaction fees.

There are no significant unfunded commitments related to these investments.

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2027 Senior Notes

Current portion of debt and short-term borrowings

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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.

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.

dollars or certain foreign currencies.

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

dollars or in certain foreign currencies.

The proceeds of the Revolving Credit Facility may be used from time to time for ongoing working capital and for other general corporate purposes.

The proceeds of the Revolving Credit Facility and the Term A Loan facility borrowed on February 8, 2021 were used to refinance the existing revolving credit facility and the existing term loan facility under the Original Credit Agreement and to pay related fees and expenses.

The Credit Agreement permits and the Company to designate certain of its subsidiaries as additional co-borrowers from time to time.

The Credit Agreement permits the Company to designate certain of its subsidiaries as additional co-borrowers from time to time.

Currently, there are no co-borrowers under the Credit Facilities.

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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.

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.

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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 2.4 at September 30, 2021.

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

As of September 30, 2022, the Company was in compliance with the covenants of the Credit Agreement.

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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.

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 lenders thereunder have provided 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 September 30, 2021 and September 30, 2020, letters of credit totaled $ 5.2 million and $ 19.0 million, respectively, under the Company’s revolving credit facilities.

As of September 30, 2021 and September 30, 2020, the Company had $ 1,144.8 million and $ 1,331.0 million, respectively, available under its revolving credit facility.

2024 Senior Notes

On October 6, 2014, the Company completed a private placement offering of $ 800,000,000 aggregate principal amount of the unsecured 5.875 % Senior Notes due 2024 (the “2024 Notes”).

On June 25, 2021, the Company redeemed the remaining principal amount of the 2024 Notes outstanding at such time.

The redemption price of the 2024 Notes was 115.108 % of the remaining outstanding aggregate principal amount, amounting to $ 217.5 million, plus accrued and unpaid interest.

The amounts paid were funded using the proceeds from the additional draw down from the Term A Facility described above and cash on hand.

The redemption of the 2024 Notes in the third quarter of fiscal 2021 resulted in a $ 117.5 million prepayment premium, which was included in interest expense.

At September 30, 2022 and 2021, letters of credit totaled $ 4.4 million and $ 5.2 million, respectively, under the Company’s Revolving Credit Facility.

As of September 30, 2022 and 2021, the Company had $ 1,145.6 million and $ 1,144.8 million, respectively, available under its revolving credit facility.

2027 Senior Notes

7 unchanged sentences

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

On or after December 15, 2026, the Company may redeem all or part of the 2027 Notes at a redemption price equal to 100 % of their principal amount, plus accrued and unpaid interest on the redemption date.

On or after December 15, 2026, the Company may redeem all or part of the 2027 Senior Notes at a redemption price equal to 100 % of their principal amount, plus accrued and unpaid interest on the redemption date.

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

1 unchanged sentence

The Company was in compliance with the covenants relating to the 2027 Senior Notes as of September 30, 2022.

URS Senior Notes

In connection with the 2014 acquisition of the URS Corporation (URS), the Company assumed the URS 5.00 % Senior Notes due 2022 (the “2022 URS Senior Notes”).

The remaining $ 248.5 million principal amount of the 2022 URS Senior Notes were fully redeemed on August 31, 2020 using proceeds from a $ 248.5 million secured delayed draw term loan facility under the Credit Agreement, at a redemption price that was 106.835 % of the principal amount outstanding plus accrued and unpaid interest.

The August 31, 2020 redemption resulted in a $ 17.0 million prepayment premium, which was included in interest expense during the year ended September 30, 2020.

Other Debt and Other Items

1 unchanged sentence

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

At September 30, 2021 and September 30, 2020, these outstanding standby letters of credit totaled $ 478.5 million and $ 510.1 million, respectively.

At September 30, 2022 and 2021, these outstanding standby letters of credit totaled $ 640.3 million and $ 478.5 million, respectively.

As of September 30, 2022, the Company had $ 427.4 million available under these unsecured credit facilities.

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The Company uses 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 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.

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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.

The gain or loss is subsequently reclassified to 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.

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 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:

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February 2023

Subsequent to the end of the third quarter of fiscal 2021, the Company entered into new interest rate swap agreements with a notional value of $ 400.0 million to manage the interest rate exposure of its variable rate loans.

February 2023

In the fourth quarter of fiscal 2021, the Company entered into new interest rate swap agreements with a notional value of $ 400.0 million to manage the interest rate exposure of its variable rate loans.

The new swaps will become effective February 2023 and terminate in March 2028.

1 unchanged sentence

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.

The interest rate swap agreements and the interest rate cap agreements contain provisions that address the use of LIBOR as a benchmark rate.

Consistent with the Company’s variable rate loans, the provisions provide for a replacement of LIBOR to a SOFR-based rate.

Other Foreign Currency Forward Contracts

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Fair Value Measurements

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

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 and other non-current assets on September 30, 2022 and were $ 9.4 million and $ 41.8 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 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 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, 2022, 2021 and 2020.

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September 30, 2021

September 30, 2020

(in millions)

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September 30, 2021

September 30, 2020

Weighted average remaining lease term (in years):

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September 30,

(in millions)

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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 grant date fair value of PEP awards and restricted stock unit awards is primarily based on that day’s closing market price of the Company’s common stock.

The weighted average grant date fair value of PEP awards was $ 85.46 , $ 52.76 , and $ 42.99 during the years ended September 30, 2022, 2021 and 2020, respectively.

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Foreign residual income

Valuation allowance

Audit settlement

Foreign tax rate differential

Change in uncertain tax positions

Nondeductible costs

Change in uncertain tax positions

Foreign tax rate differential

Income tax credits and incentives

Valuation allowance

Tax exempt income

Exclusion of tax on non-controlling interests

Tax rate changes

Audit settlement

Return to provision

Exclusion of tax on non-controlling interests

Tax exempt income

Other items, net

Total income tax expense

During fiscal 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.

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

During 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.

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The positive evidence was evaluated against any negative evidence to determine the valuation allowance was no longer needed.

During fiscal 2019, the Company reevaluated a valuation allowance of $ 38.1 million against foreign tax credits in the U.S.

based on new positive evidence related to the issuance of regulations related to The Tax Cuts and Jobs Act (Tax Act) and forecasting the utilization of the foreign tax credits within the foreseeable future.

Based on the weighing of all positive and negative evidence the Company determined that a valuation allowance was no longer needed and released the valuation allowance resulting in a tax benefit of $ 38.1 million.

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

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Net deferred tax assets

As of September 30, 2021, and 2020, the Company has available unused foreign and state net operating loss (NOL) carryforwards of $ 667.0 million and $ 710.2 million, respectively, which expire at various dates over the next several years and capital loss carryforwards of $ 184.1 million and $ 355.7 million, respectively, which expire in 2025 and 2026;

As of September 30, 2022, and 2021, the Company has available unused foreign and state net operating loss (NOL) carryforwards of $ 848.0 million and $ 667.0 million, respectively, which expire at various dates over the next several years and capital loss carryforwards of $ 205.2 million and $ 184.1 million, respectively, which mostly expire in 2025;

some foreign NOL carryforwards never expire.

In addition, as of September 30, 2021, the Company has unused federal and state research and development credits of $ 75.7 million and $ 23.4 million, respectively, and other credits of $ 18.1 million which expire at various dates over the next several years.

In addition, as of September 30, 2022, the Company has unused federal, state, and foreign research and development credits of $ 61.2 million, $ 25.1 million, and $ 7.3 million, respectively, and other credits of $ 21.9 million which expire at various dates over the next several years.

As of September 30, 2022 and 2021, gross deferred tax assets were $ 723.4 million and $ 901.0 million, respectively.

1 unchanged sentence

The Company has performed an assessment of positive and negative evidence, including the nature, frequency, and severity of cumulative financial reporting losses in recent years, the future reversal of existing temporary differences, predictability of future taxable income exclusive of reversing temporary differences of the character necessary to realize the asset, relevant 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 $ 703.3 million will be realized and, as such, no additional valuation allowance has been provided.

The net decrease in the valuation allowance of $ 19.8 million is primarily attributable to a decrease in valuation allowances of $ 49.5 million related to capital losses, partially offset by increases in valuation allowances of $ 29.6 million for foreign unbenefitable losses.

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 $ 569.0 million will be realized and, as such, no additional valuation allowance has been

The net decrease in the valuation allowance of $ 43.3 million is primarily attributable to a decrease in valuation allowances of $ 44.6 million related to valuation allowance releases on foreign net operating losses and currency translation adjustments, and a decrease in valuation allowances of $ 4.6 million related to capital losses, partially offset by increases in valuation allowances of $ 5.9 million related to state net operating losses and credits.

Generally, the Company does not provide for U.S.

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

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, 2021.

In the first quarter of fiscal 2019, the Company commenced a restructuring plan to improve profitability.

The Company incurred restructuring expenses of $ 48.8 million, including personnel and other costs of $ 37.8 million and real estate costs of $ 11.0 million during the year ended September 30, 2021, of which $ 5.2 million was accrued and unpaid at September 30, 2021.

The Company incurred restructuring expenses of $ 188.3 million, including personnel and other costs of $ 149.2 million and real estate costs of $ 39.1 million during the year ended September 30, 2020, of which $ 56.2 million was accrued and unpaid at September 30, 2020.

In connection with this restructuring plan, the Company evaluated its real estate portfolio to better align with the ongoing business.

The Company identified certain long-lived assets that were no longer recoverable, and recorded an impairment of $ 27.4 million in Impairment of long-lived assets, including goodwill during the fourth quarter of fiscal 2019.

Fair value of the long-lived assets was determined primarily using Level 3 inputs, such as discounted cash flows.

The Company did not have material revisions to estimates for contracts where revenue is recognized using the input method during the twelve months ended September 30, 2022 and 2021.

For the year ended September 30, 2022, the Company incurred restructuring expenses of $ 107.5 million, of which $ 69.1 million was related to the exit of our Russia-related businesses and is discussed further below.

The remaining $ 38.4 million related to actions to improve margins and deliver efficiencies.

These expenses included personnel and other costs of $ 27.5 million and real estate costs of $ 10.9 million, of which $ 7.9 million was accrued and unpaid at September 30, 2022.

During the year ended September 30, 2021, the Company incurred restructuring expenses of $ 48.8 million, including personnel and other costs of $ 37.8 million and real estate costs of $ 11.0 million, of which $ 5.2 million was accrued and unpaid at September 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 $ 2.1 million was accrued and unpaid at September 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 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 September 30, 2022, accrued and unpaid dividends totaled $ 22.0 million and were classified within other accrued expenses on the consolidated balance sheet.

Reclassifications out of Accumulated Other Comprehensive Loss

2 unchanged sentences

Balances at September 30, 2019

Other comprehensive income (loss) before reclassification

Other comprehensive loss before reclassification

Amounts reclassified from accumulated other comprehensive loss

19 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.

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’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 September 30, 2022 and 2021, these outstanding standby letters of credit totaled $ 640.3 million and $ 478.5 million, respectively.

As of September 30, 2022, the Company had $ 427.4 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.

The Company may also guarantee that a project, when complete, will achieve specified performance standards.

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Department of Energy Deactivation, Demolition, and Removal Project

AECOM Energy and Construction, Inc., an Ohio corporation, a former affiliate of the Company (“Former Affiliate”) executed a cost-reimbursable task order with the Department of Energy (DOE) in 2007 to provide deactivation, demolition and removal services at a New York State project site that, during 2010, experienced contamination and performance issues.

A former affiliate of the Company, Amentum Environment & Energy, Inc., f/k/a AECOM Energy and Construction, Inc.

(“Former Affiliate”), executed a cost-reimbursable task order with the Department of Energy (DOE) in 2007 to provide deactivation, demolition and removal services at a New York State project site that, during 2010, experienced contamination and performance issues.

In February 2011, the Former Affiliate and the DOE executed a Task Order Modification that changed some cost-reimbursable contract provisions to at-risk.

8 unchanged sentences

Deconstruction, decommissioning and site restoration activities are complete.

On January 31, 2020, the Company completed the sale of its Management Services business to the Purchaser including the Former Affiliate who worked on the DOE project.

The Company and the Purchaser agreed that all future DOE project claim recoveries and costs will be split 10 % to the Purchaser and 90 % to the Company with the Company retaining control of all future strategic legal decisions.

The Company intends to vigorously pursue all claimed amounts but can provide no certainty that the Company will recover 2014 and 2019 Claims submitted against the DOE, or any additional incurred claims or costs, which could have a material adverse effect on the Company’s results of operations.

On January 31, 2020, the Company completed the sale of its Management Services business, including the Former Affiliate who worked on the DOE project, to Maverick Purchaser Sub LLC (MS Purchaser), an affiliate of American Securities LLC and Lindsay Goldberg LLC.

The Company and the MS Purchaser agreed that all future DOE project claim recoveries and costs will be split 10 % to the MS Purchaser and 90 % to the Company with the Company retaining control of all future strategic legal decisions.

The Company intends to vigorously pursue all claimed amounts but can provide no certainty that the Company will recover 2014 Claims and 2019 Claims submitted against the DOE, or any additional incurred claims or costs, which could have a material adverse effect on the Company’s results of operations.

New York Department of Environmental Conservation

18 unchanged sentences

In December 2019, the refinery owner claimed $ 93.0 million in damages and offsets against the Company’s Former Affiliate.

The parties have agreed on a February 28, 2022 deadline for close of discovery in this matter.

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

On January 31, 2020, the Company completed the sale of its Management Services business, including the Former Affiliate, to the MS Purchaser;

however, the Refinery Turnaround Project, including related claims and liabilities, has been retained by the Company.

The Company intends to vigorously prosecute and defend this matter;

2 unchanged sentences

Reportable Segments and Geographic Information

During the first quarter of fiscal 2020, the Company reorganized its operating and reporting structure to better align with its ongoing professional services business.

This reorganization better reflects the continuing operations of the Company after the sale of its former Management Services reportable segment and planned disposal of its self-perform at-risk construction businesses discussed in Note 3.

The businesses that comprised the Company's former Management

Services reportable segment and the civil infrastructure, power and oil and gas construction businesses in the former Construction Services reportable segment were classified as discontinued operations.

The former Design and Consulting Services reportable segment and construction management business in the former Construction Services reportable segment were reformed around geographic regions.

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 reportable segments are presented according to their geographic regions and business activities.

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

1 unchanged sentence

The Company has aggregated various operating segments into its reportable segments based on their similar characteristics, including similar long term financial performance, the nature of services provided, internal processes for delivering those services, and types of customers.

The change in reportable segments was applied to all periods presented.

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

20 unchanged sentences

Restructuring costs

Gain on disposal activities

Impairment of long lived assets

Operating income

8 unchanged sentences

(in millions)

Europe, Middle East, Africa

Europe, Middle East, India, Africa

Asia-Australia-Pacific

Long-lived assets consist of noncurrent assets excluding deferred tax assets.

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Income from continuing operations before taxes

Income tax expense (benefit) for continuing operations

Income tax expense for continuing operations

Net income from continuing operations

1 unchanged sentence

Net income attributable to noncontrolling interests from continuing operations

Net income attributable to noncontrolling interests from discontinued operations

Net income attributable to noncontrolling interests

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

Net loss (income) attributable to noncontrolling interests

Net income attributable to AECOM from continuing operations

20 unchanged sentences

Net income from continuing operations

Net income (loss) from discontinued operations

Net income (loss)

Net loss from discontinued operations

Net income attributable to noncontrolling interests from continuing operations

1 unchanged sentence

Net income attributable to noncontrolling interests

Net income (loss) attributable to AECOM from continuing operations

Net income (loss) attributable to AECOM from discontinued operations

Net income (loss) attributable to AECOM

Net income attributable to AECOM per share:

Net income attributable to AECOM from continuing operations

Net (loss) income attributable to AECOM from discontinued operations

Net income attributable to AECOM

Net income (loss) attributable to AECOM per share:

Basic continuing operations per share

18 unchanged sentences

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-K

Item 8. Financial Statements and Supplementary Data