Delivering a
Better World
NATURAL CAPITAL LABORATORY (NCL)
United Kingdom
Established in 2019 by AECOM, the NCL is a unique project focused
on identifying, quantifying, and valuing the impacts of biodiversity
and re-wilding. Located in the Scottish Highlands, near Loch Ness,
for the next five years the NCL is restoring 100 acres of forest and
reintroducing lost species. See page 16 for additional information.
2021 ANNUAL REPORT
Deliver
Collaborate
Innovate
OUR VISION
We believe infrastructure creates opportunity for everyone—uplifting
communities, improving access and sustaining our planet.
By bringing together the best people, ideas, and technical expertise,
we partner with clients to turn their ambitions into action, and we
embrace our core values—Deliver, Collaborate, Innovate, Sustain,
Thrive and Safeguard—in everything we do.
Sustain
Thrive
Safeguard
Troy Rudd
Chief Executive Officer
Dear Stockholders:
As we begin the new year, I want to especially thank and
• Importantly, we continued to deliver for our clients and for
congratulate our people for all that we have accomplished
our professionals — our client satisfaction scores achieved
together throughout fiscal 2021. Without the contributions
a record high in the year and employee engagement across
and dedication of our global teams, we would not have
our firm remains strong. In fact, in an employee survey
accomplished what was an outstanding year. While the
conducted in September, 70% of our employees responded
effects of COVID-19 continued to impact our lives and
that they would recommend AECOM as a great place to work,
business, we remained agile and stayed focused on keeping
far exceeding industry benchmarks.
our people safe and enabling them to be successful.
These accomplishments have contributed to our ability
Against this backdrop, I could not be prouder of how we have
to create value for our stockholders. During the year, we
supported one another throughout 2021 to collaborate and
repurchased nearly $1 billion of stock, which reduced our
deliver for our clients, communities and stockholders.
shares outstanding by approximately 12%. While our stock
We celebrated numerous accomplishments this year
that underscore the strength of our firm, including the
following highlights:
• Our company’s performance exceeded our expectations
on every key financial metric for the year. We delivered
accelerating organic net service revenue (NSR) growth, set
new quarterly and annual records for margins, achieved
double-digit earnings growth and had another year of strong
free cash flow — all while increasing investments in our
teams and innovation.
• We launched our Think and Act Globally strategy to ensure
we fully leverage collaboration throughout our business to
bring the best of AECOM to each of our projects and gain
greater market share with our clients. Encouragingly, we are
price is not the only measure of our success, I am nonetheless
pleased to see AECOM set new all-time highs during the year
and outperform all major market indices by double digits.
As we look ahead, an improved funding environment highlighted
by the passing of the Infrastructure Investment and Jobs
Act in the U.S. and accelerating global investments in ESG-
related initiatives is increasing demand for AECOM’s technical,
advisory and program management capabilities. As a leading
Professional Services provider, including being the No. 1
transportation, facilities, and environmental engineering firm, as
well as the No. 2 water design firm, as ranked by ENR, we are well
positioned to capitalize on key growth opportunities across our
markets and to deliver another year of excellent performance in
fiscal 2022.
seeing early proof points of success against this strategy
Taken together, we made substantial progress in fiscal 2021
with 18% contracted backlog growth in fiscal 2021, as well as
and are better positioned than ever for long-term success. On
5% growth in total backlog within our design business.
behalf of all our nearly 50,000 professionals, I thank you for your
• Reflecting our leading position for ESG-related services,
we also launched our Sustainable Legacies strategy that
integrates four key pillars to embed sustainable development
and resilience across our work, improve social outcomes for
communities, achieve net zero carbon emissions at AECOM
and enhance our governance.
shared commitment to and passion for delivering a better world.
Troy Rudd
Chief Executive Officer
AECOM—2021 Annual Report
AECOM—2021 Annual Report
1
1
Think and Act Globally
AECOM is at its best when we collaborate globally to bring our
unrivaled expertise, capabilities and innovation to bear for each
of our clients. This focus is at the heart of our Think and Act
Globally strategy, launched in November 2020, which guides
our teams and business in achieving our strategic objectives
and setting new standards of excellence in the professional
services industry.
Industry-Leading Value Creation
Through the execution of our strategy, we expect to
create significant value for our employees, clients and
shareholders, including through the achievement of our
long-term fiscal 2024 financial targets:
Adjusted1 EPS
Free Cash Flow2
+120%
+100%
$4.75+
$680M+
$2.15
$341M
FY ‘20
FY ‘24E
FY ‘20
FY ‘24E
2
Our strategy comprises four main pillars:
1
2
Investing in our people
Our people are our greatest asset as a Professional Services
organization, and we have invested in their success and
momentum this past year. Through key initiatives across our
company, we have prioritized equity, diversity and inclusion so
our teams reflect the diversity of the clients and communities
we serve, implemented our Freedom to Grow flexible work policy
and continued to enable new ways of working through digital
solutions and redesigned office spaces.
In the last year, we have simplified our operating structure with
clearer lines of accountability, which deploys the best global
thinking and innovation on every project and promotes greater
connectivity and collaboration across our global regions and
business lines.
Above all, we remain committed to making our company the best
place to be in our industry where our professionals can grow
meaningful careers with even more opportunity to help shape
the future of infrastructure. We’ve advanced career development
programs and have seen a continued high retention rate,
especially among high performers.
Transforming how we work
We are transforming the way we deliver work through technology
and digital platforms to improve client experience and increase
efficiency. Our investments resulted in the launch of Digital
AECOM this past November to help clients accelerate their digital
journeys and achieve better project outcomes by leveraging more
than 2,000 integrated digital practitioners globally. Through our
digital consulting services and digital products, we are providing
the integrated solutions our clients demand to help advance
increasingly ambitious infrastructure and ESG-related initiatives.
As part of Digital AECOM, we have invested in innovation to bring
new digital tools to market, such as those that improve public
engagement on environmental reviews through our PlanEngage™
platform and help transit agencies hard-hit by COVID plan
for recovery through our Mobilitics for Pandemic Response
platform. We also began demonstration programs and validated
an addressable global market of over half a billion dollars for
our proprietary DE-FLUORO™ technology to eliminate PFAS
contamination.
3
4
Extending client relationships
We are driving growth by prioritizing our core markets, leaning
into our greatest strengths, and ensuring our best talent and
resources are focused on nurturing client relationships. With
industry-leading franchises and the premier technical experts in the
industry, we’ve focused our teams on fully leveraging our strengths
to gain market share, grow in adjacent markets and build durable,
long-term relationships with our clients, particularly in our top nine
geographies that represent more than 90% of our firm’s profitability.
By bringing together the best of AECOM through our global
Program Management business, we created new potential—
and captured significant wins—as the U.S., Canada, Australia
and other governments advance billions of dollars in stimulus
and infrastructure investment across markets where we have
leadership.
This year we have won and worked on industry-leading projects
both internationally and domestically, leveraging the collaboration
of our global business lines with our regional teams and business
groups. Some highlights include advancing $2.2 billion in terminal
upgrades at John F. Kennedy Airport in New York, winning our
fourth consecutive contract with the Dallas Independent School
District to provide PM services for its $3.5-billion bond program,
capturing a critical role on a $300 million flood mapping program
with FEMA, winning a first-in-the-U.S. new energy wind port project
and our selection to build the AECOM-designed Intuit Dome, the
future home of the NBA’s Los Angeles Clippers.
Leading in ESG
We are building upon our position as a leading ESG company
through our Sustainable Legacies strategy, and we have committed
to working toward a more sustainable and equitable future
through our own operational commitments and by helping our
clients achieve their bold ESG ambitions. We have set new, more
ambitious emissions reduction targets, including our commitment
to achieving science-based net zero by 2030, launched our
Thrive with AECOM initiative to advance our commitment to
Equity, Diversity and Inclusion (ED&I) and published our first ESG
report that includes our disclosures aligned with the SASB and
TCFD frameworks, reflecting our commitment to transparently
communicate our progress on our sustainability objectives.
Commitment to achieving
science-based
net zero
by 2030
Achieved operational
net zero
for fiscal 2021
AECOM—2021 Annual Report
3
Strength and
recognition
FY ’21 Financial Performance
Our fiscal 2021 results served as clear evidence of
the strength of our business and the benefits of our
focused strategy. Our full year adjusted EBITDA of
$830 million and adjusted EPS of $2.82 were both
at the high end of prior guidance ranges; full year
adjusted EPS also exceeded the high end of our
original fiscal 2021 guidance.
Our strong financial performance is creating increased
opportunities to invest in organic growth, while also
bolstering our confidence in delivering on our long-
term organic growth and financial goals.
Importantly, all of this was achieved while making
critical investments in people, teams and digital
capabilities that will sustain our advantages in fiscal
2022 and beyond.
$2.82
adjusted
EPS
Exceeded our original
FY’21 guidance
$830M
adjusted
EBITDA
At the high end of our
original FY’21 guidance
Performance Highlights
Continued Adjusted1
Operating Margin3
Expansion
Double-Digit
Adjusted1 EBITDA4
Growth
Double-Digit
Adjusted1 EPS
Growth
Strong Free
Cash Flow2
+150 bps
+11%
+31%
+71%
13.8%
12.3%
$830M
$746M
$2.82
$583M
$2.15
$341M
FY ‘20
FY ‘21
FY ‘20
FY ‘21
FY ‘20
FY ‘21
FY ‘20
FY ‘21
4
Throughout the year, we were recognized for our leadership and
received numerous industry awards that reflect our continued
commitment to excellence.
ACCOLADES
#1
Source: 2021 ENR Rankings,
reflecting global revenue
Environmental Engineering Firm
Environmental Science Firm
Transportation
Facilities
Airports
Bridges
Damns and Reservoirs
Education
Health Care
Water Treatment Lines
and Aqueducts
A leader in key markets helping our clients
deliver their most challenging projects
#2
Green Design Firm
Water Supply
Hazardous Waste
Chemical Remediation
Site Assessment and Compliance
#3
Marine and Ports
Sewer and Waste
Water Treatment
Clean Air Compliance
#5
Green Contractor
Program Management
Featured on Fortune’s “World’s Most
Admired Companies” seven years in a row
and ranked No. 1 in our industry
Named by Ethisphere one of 2021 World’s
Most Ethical Companies for its commitment
to integrity and making a positive impact
Received a perfect score for three years
in a row on the Human Rights Campaign
Foundation’s Corporate
Equality Index
AECOM—2021 Annual Report
5
Deliver
We grow our business through
relentless client focus, operational
excellence and exceptional project
execution.
6
Partnering with our clients, we are pushing the boundaries of
what’s possible—leveraging innovation, digital technology, and
the passion of our teams to deliver the world’s most technically-
challenging projects, more efficiently and more sustainably.
Delivering excellence
Whether it’s designing North America’s longest cable-stayed
bridge to connect countries and communities, or relocating Hong
Kong’s largest secondary wastewater treatment plant to unlock
land in one of the world’s most densely populated centers, the
impact of our commitment to technical excellence and quality
is transforming our industry, instilling pride in our people and
delivering a better world.
Our teams connected and collaborated across regions and
business lines to be part of something bigger: our Technical
Practice Network (TPN) is a thriving global community of technical
practice where knowledge is shared, skills are developed, careers
are grown, and where innovative, sustainable and resilient project
outcomes are borne. From data science to remediation, emerging
contaminants to next generation transportation, our TPN is driving
continuous improvement in project delivery.
On the conference stage, our people shared their ideas and
insights. Through our many industry associations and strategic
partnerships with universities and academic institutions,
meanwhile, we’ve cross-pollinated new technical project
approaches and helped accelerate research and development
efforts, shaping the technical leaders of tomorrow.
AECOM—2021 Annual Report
7
2
7
1
54
6
3
8
9
10
5.
New Jersey Wind Port
We are managing the construction
of the New Jersey Wind Port, the first
purpose-built offshore wind project
in the U.S. that will serve the unique
staging, manufacturing and assembly
needs of future offshore wind projects
on the East Coast.
6.
East Side Access
AECOM is providing structural engi-
neering and architectural design for
the new Long Island Rail Road terminal
within Grand Central Terminal, the largest
construction project ever undertaken by
the Metropolitan Transportation Authority
that will increase rail capacity into Man-
hattan by nearly 50%.
7.
Transport for London
AECOM has secured over 30 Lots
of the Transport for London (TfL)
Engineering Consultancy Framework
(ECF), expanding its range of services
to support maintenance, improvements
and upgrades to London infrastructure.
8.
NEOM
AECOM is program manager for NEOM,
a new model for urbanization and
sustainability located in the northwest
region of Saudi Arabia. Its scope includes
leading the design transport and utilities
backbone infrastructure as well as
environmental and geotechnical support.
9.
Keppel Marina Desalination
The Keppel Marina East Desalination
Plant (KMEDP) is an innovative large-scale
desalination facility and is the world’s first
dual-mode desalination plant, built with
the ability to treat both freshwater and sea
water depending on weather conditions.
10.
University of Technology Sydney
AECOM provided structural and civil
engineering services on faculty and
student space at the University’s city
campus.
WORK HIGHLIGHTS
1.
Intuit Dome/LA Clippers Arena
We are currently serving as lead designer
and construction manager of Intuit
Dome, future home of the LA Clippers,
an iconic new arena and event venue
designed for optimal and intimate
engagement of community and fans.
2.
Edmonton Valley Line Light Rail Transit
Our AECOM-led ConnectED Transit
Partnership continues its owner’s engineer
role on the Edmonton Valley Line Light Rail
Transit West extension, which is expected
to support post-pandemic economic
recovery and provide the region with
affordable public transit.
3.
FEMA Flood Mapping
AECOM was awarded a contract from
FEMA to provide architectural and engi-
neering services for various projects as
part of FEMA’s larger-scale efforts.
4.
COVID-19 Wastewater Testing
We’ve partnered with Bergen County
Utilities Authority (BCUA) and Columbia
University to monitor COVID-19 ribonu-
cleic acid (RNA) in wastewater in the BCUA
sewer shed, wastewater testing being a
leading indication of infection rates when
trends of COVID-19 RNA are monitored
over time.
8
1
3
4
6
2
5
7
8
9
10
AECOM—2021 Annual Report
9
Collaborate
We connect unrivaled expertise
from around the world to anticipate
and solve our clients’ most pressing
challenges.
10
Clients turn to AECOM for our proven ability to leverage our global
scale, insights, and capabilities on any project, anywhere. This
collaboration not only extends the lasting connections we build
with our clients, it defines the way we work, how we innovate, and
what we can achieve. It also reinforces our ability to be nimble to
meet changing conditions and emerging needs.
Drawing on the experiences of our teams and our clients during
the pandemic, we advanced our Workplace of the Future program,
developing a space and technology framework that allowed for
seamless connectivity between home offices, company offices
and client sites. We also advanced initiatives to enable the
digital delivery of our work by establishing best practices and
governance protocols for the digital reuse of core elements of the
design process.
Our emphasis on deepening collaboration in fiscal 2021 included
an enhanced focus on advising clients through global Program
Management. Throughout the year, we grew our teams with the
industry’s top talent to offer ongoing engagement through the
program lifecycle, from day zero to delivery and beyond.
GLOBAL PROGRAM MANAGEMENT
Together, we managed our clients’ biggest and most important
infrastructure delivery challenges, while helping them meet
their social, economic and environmental ambitions. From
planning, coordination, scheduling and cost control, to design,
construction and commissioning, our professionals collaborate
across business lines and regions to deliver programs of national
significance in transport, water, clean energy, environmental
clean-up, international development, disaster recovery and more.
We continue to shape the growth of the world’s major cities, while
envisioning entire new urban areas to meet future needs.
AlUla redevelopment program—
the world’s largest living museum,
Kingdom of Saudi Arabia
Our long-term strategic partnership with the Royal Commission
for AlUla (RCU) will accelerate the regeneration of AlUla, a
city located in the northwest of Saudi Arabia and a UNESCO
World Heritage Site referred to as “the world’s largest living
museum.” AlUla is a key element of the Kingdom of Saudi
Arabia’s Vision 2030—to develop a global culture and tourism
hub through significant public-private investment. Our global
Program Management team is providing a range of integrated
services to implement the $15-billion Phase 1 development
in AlUla’s core 20-kilometer historical area. In a global effort
involving five of AECOM’s regions and all business lines, we
are helping accelerate business and investment opportunities,
and demonstrate the pace of progress to revitalize AlUla as a
responsible, sustainable and community-inclusive destination.
Social, economic and sustainability projects across five unique
hubs will focus on infrastructure, hospitality, arts and culture, and
social and community development.
Dallas Independent School District, USA
We were selected to provide program management services for
Phase 1 of the $3.5 billion Dallas Independent School District
(DISD) 2020 Bond Program, our fourth consecutive contract with
the district having provided program management services for
DISD’s 2002, 2008, and 2015 Bond Programs. We will provide
oversight and coordination of designers, consultants, contractors,
and vendors as well as estimating, scheduling, and program
control services on projects encompassing the construction
of new facilities and upgrades to existing facilities. DISD is the
second-our largest public school district in Texas, serving more
than 150,000 students at 226 campuses. Goals of the 2020 Bond
Program include renovating or replacing aging schools, providing
technology for students to learn virtually, and creating resource
centers in neighborhoods identified as most in need.
AECOM—2021 Annual Report
11
Innovate
We think without limits and
embrace new ideas, shaping
digital solutions to help clients
address current and future
challenges.
12
The world is changing; our clients and communities are demanding fresh thinking and new solutions to their
challenges. Intelligent automation and artificial intelligence, more efficient data management and insights, and
innovative digital approaches to project delivery are driving productivity gains, accelerating progress towards
sustainability and net-zero goals, and re-shaping our industry. AECOM is at the forefront of this transformation.
Launched this past November, Digital AECOM is bringing together
the potential of AECOM’s digital technologies to deliver a better
world and provide greater connectivity between data, projects, and
communities.
As a part of AECOM’s sphere of innovation, Digital AECOM is an
expanding ecosystem of tools, systems, and processes — and a
team of over 2,000 digital practitioners who understand both the
urgency of the challenges facing the infrastructure industry, and
our responsibility to respond in an impactful and enduring way.
Integrated across the program and project lifecycle, and within
our multidisciplinary infrastructure consulting services offering,
Digital AECOM combines our leading industry knowledge with
digital consulting services and products to define, develop, and
implement personalized—and even disruptive—solutions that
accelerate our clients’ digital journeys and achieve better outcomes.
plan•engage
™
Accessible in the cloud, AECOM’s PlanEngage™ tool is an
interactive online platform that drives better project outcomes
via transparent communication and stakeholder engagement.
Powerful and flexible visualization, including interactive maps and
surveys, deliver insightful dashboards and analytics that invite
better understanding of new schemes, and clearer decision-
making for better outcomes.
plan•spend
™
AECOM’s PlanSpen™ tool is a cloud-based capital planning
platform that helps clients prioritize and manage their projects,
turning difficult choices around asset operation and maintenance
(which can account for 80% of an asset’s lifetime cost) into
informed spending decisions.
Capital planners and asset managers can consolidate and
organize asset condition data, analyze that data against the costs
and impacts of spending decisions and, through integration
with Google Maps, Street View, GIS, BIM, and Microsoft PowerBI,
make the right investments in a secure, informed and interactive
environment.
Digital Consulting Services
We offer digital consulting services across four key areas:
DIGITAL
STRATEGY
DIGITAL DESIGN
& OPERATIONS
DATA
ANALYSIS
& AI
DIGITAL
SOLUTIONS
DELIVERY
Digital Hosted Services
We have developed our own hosted services products, informed
by our core design and infrastructure services, that are generating
new revenue streams from our intellectual property.
AECOM—2021 Annual Report
13
Sustain
We take action to make a positive
impact on the planet, enrich the
communities we touch and build
legacies for future generations.
14
With ESG principles embedded into everything we do, the goal of
our Sustainable Legacies strategy is straightforward: to ensure
that the work we do in partnership with our clients leaves a
positive, lasting impact for communities and our planet.
Our approach to sustainability includes engaging team members
across every part of our organization to find collaborative ways
to achieve the highest environmental, social, and governance
standards. Our strategic values ultimately guide all of our
sustainability efforts and aspirations.
Our Sustainable Legacies strategy is organized around the following four pillars:
Achieve net zero carbon emissions: We have furthered our
own carbon emissions goals by achieving operational net zero
for FY ’21, while also committing to reach science-based net zero
carbon emissions by 2030.
Embed sustainable development and resilience across our
work: We introduced ScopeXTM, a first-of-its-kind initiative with
the goal of reducing carbon impact on major projects by at least
50%. We will also embed net-zero, resilience and social value
targets into our client account management program.
Improve social outcomes: We believe equity, diversity
and inclusion enable better outcomes for clients, a deeper
understanding of community challenges and more innovative
solutions that propel the industry forward. As part of this pledge,
we have set an industry-leading, near-term target of women
comprising at least 20% of senior leadership roles and at least
35% of the overall workforce. In addition, we have implemented
new required unconscious bias training and set specific targets
within each of our regions to advance our equity, diversity and
inclusion goals.
Enhance governance: To better assess ESG risk factors in
potential projects, we have deployed an enterprise framework
supported by leadership accountability and advocacy through
the audit of specific ESG targets and metrics on an annual basis.
How we’ve delivered Sustainable
Legacies through our operations
At AECOM, delivering sustainable legacies is at the core
of how we operate. A key element of our Sustainable
Legacies ESG strategy is our net zero targets:
Achieved operational
net zero
Committed to achieving
1.5ºC aligned
carbon emissions for FY ’21
science-based targets by 2030
Working towards our net zero targets, we continued to
right-size our office space, improve office energy efficiency,
including relocating to more efficient offices and switching
to renewable energy where possible. To further drive down
emissions and ensure consistency, we designed sustainability
guidelines for future office refurbishments and re-locations.
AECOM’s Workplace of the Future and Freedom to Grow
initiatives helped increase work flexibility and allowed
further real estate consolidation and travel reductions, and
we continue to encourage our staff who work from to follow
our guidance documentation on how to live and work more
sustainably at home.
For our vehicle fleet, we are developing a roadmap to transition
to electric vehicles, including installing charging infrastructure
at our owned offices. As part of the continuing initiative to
move to greener offices and consolidate real estate, we will
prioritize moving to leased offices that have electric vehicle
chargers where possible.
Acknowledging that the majority of our emissions are in
our supply chain, we are engaging with our most significant
suppliers to understand their roadmaps to decarbonize and
track progress against our target to further drive down supply
chain emissions. Our Sustainable Procurement Policy ensures
emissions reduction is a key part of our supplier onboarding
and other procurement processes.
47%
Decline in Scope
1+2 emissions
13%
Reduction in
total emissions
Category
Scope 1 + 2
FY ’18
FY ’21
tCO2e/yr
tCO2e/yr
138,025
73,485
Scope 3 - Supply chain
2,740,482
2,526,188
Scope 3 - Business travel
158,182
32,919
Totals
3,036,689
2,632,591
We are committed to reporting our carbon reductions
transparently, in line with best practice. We annually disclose
to CDP on climate change risk, scoring a B on our latest
submission, which is above the industry average. We have also
released our first global ESG report, in line with the SASB and
TCFD frameworks. Further, we will continue to manage ESG
project risks by ensuring our projects align with our Sustainable
Legacies strategy and follow the latest climate science.
AECOM—2021 Annual Report
15
SOCIAL IMPACT
At AECOM, we believe that investing in local communities to create positive social and economic outcomes is at the
heart of generating social value. We have worked with our clients, partners and suppliers to link the opportunities
presented by our projects to the needs of the local communities we operate in, delivering a positive, lasting legacy.
As we transition our economies to net zero carbon, we recognize
that businesses must deliver the employment, skills and business
outcomes to sustain this green economy. Social value is critical
to achieving our ESG strategy and making sure that no one is left
behind. As a result, we are:
• Ensuring a just and equitable transition that delivers sustainable
employment opportunities
.• Utilizing our technical expertise and STEM activity to develop a
skilled workforce of the future that represents the communities
we live and work in
• Supporting local economies by contracting with local subject
matter experts and building capacity within our supply chains
• Delivering on our core values by engaging with communities to
deliver projects that improve their wellbeing
SCOPEX™
As part of our Sustainable Legacies strategy, we have embedded
sustainable development and resiliency across our work,
including a commitment of a 50% reduction in carbon from major
projects. AECOM developed its proprietary ScopeX™ process
to reduce carbon embodied and operational carbon across
the entire project life cycle. We are the first construction and
engineering professional services firm of our size to set such
an ambitious global target. By pledging to decarbonize the built
environment, improve biodiversity and support our clients to
achieve their net-zero agendas, we’re striving to improve the
cities and communities we serve and delivering a better world.
CASE STUDIES
Natural Capital Laboratory
Scottish Highlands, Scotland
The Natural Capital Laboratory process that AECOM employed
in the Scottish Highlands, is supporting our five-year project to
restore 100 acres of forest and re-introduce lost species. Set up
in 2019 in partnership with the nonprofit, the Lifescape Project,
this process is being applied to a live environment to identify,
quantify and value the impacts of re-wilding, with scope to help
other organizations meet their carbon reduction and biodiversity
net gain targets.
We developed new digital tools and techniques for the Natural
Capital Laboratory process to track and communicate a vast
array of complex relationships and data at scale, helping asset
owners tackle two of the biggest challenges of our time: climate
change and biodiversity loss.
Using artificial intelligence, drone technology, earth observation
data and geographic information systems, the tools we created
are making it easier for organizations with land stewardship
responsibilities to make better decisions about how they interact
with and invest in natural systems and able to both track the living
environment more accurately and reduce the cost of repetitive
processes needed to acquire and analyze data on natural assets.
The data is captured in our natural capital accounting tool — a
web-based digital twin of the real site — and is accessible to land
and infrastructure owners through a digital dashboard. The Natural
Capital Laboratory process is providing our advisers with leading-
edge solutions developed in a living laboratory to help organizations
meet their net zero carbon and biodiversity net gain targets.
16
Brooklyn Bridge—Montgomery Coastal
Dasha River Ecological
Corridor, Asia
The Dasha River is of great importance to Shenzhen residents,
however rapid economic development and an increasing
population led to a sharp rise in river pollution. More recently
however, authorities in China have developed policies to
regenerate and manage contaminated rivers and the water
quality has since much improved. The Dasha River Ecological
Corridor is an example of how nature-based solutions can be
used to rejuvenate even highly polluted areas.
Inspired by the heritage, culture and urban characteristics
of Shenzhen, AECOM’s plan for the Dasha River created a
high-quality public space to enhance the city’s ecological
environment. Existing wetland areas were preserved, as well
as creating new river habitats and reintroducing indigenous
species. The design not only improved the quality of the existing
waterfront vegetation but also reconnected bike lanes and
walkways to encourage active travel and link a variety of pocket
spaces.
AECOM’s holistic approach and multi-disciplinary consideration
resulted in a comprehensive solution that not only ensured
the water quality and flood control of the Dasha River, but also
created a cohesive ecology and a series of multi-theming public
spaces that reconnect the originally fragmented urban areas.
Resilience (BMCR) New York City,
United States
The Brooklyn Bridge—Montgomery Coastal Resilience (BMCR)
project will protect residents, businesses and infrastructure in
Manhattan’s Two Bridges neighborhood from flooding due to
coastal storms and sea level rise. This immigrant neighborhood
with a high proportion of elderly and low-income residents is
especially vulnerable to the impacts of climate change. The
project will protect thousands of residents, including many
living in affordable housing, while continuing to promote access
to waterfront open space. This design-driven infrastructure
project negotiates the challenge of providing flood protection
while preserving views and access along 1.3km of public urban
waterfront with an innovative system of deployable flood gates.
Once constructed, BMCR will serve as a worldwide example of
how cities can prioritize public space, viewsheds and waterfront
access while implementing necessary climate adaptation
measures in densely built environments.
Implementing flood protection is a necessity for this community,
but simultaneously preserving view corridors, waterfront access
and public open space was a primary design challenge. Designed
with input collected over four years of community engagement,
the BMCR project ultimately provides a multi-layered approach to
resilience through a combination of permanent deployable and
passive flood protections.
BMCR meets the design criteria for a 100-year storm event in
2050, including 90th percentile sea level rise projection of 30
inches. The subsurface drainage components of BMCR, combined
with the above-grade flood protection system, will maintain
hydraulic neutrality in the event of a present day 100-year storm
surge combined with a five-year NOAA rain event.
AECOM—2021 Annual Report
17
Thrive
We build diverse teams,
create an inclusive
workplace and provide
opportunities where each
one of our people can
reach their full potential.
18
AECOM—2021 Annual Report
19
We are committed to being a leading employer in our industry—
the best place to be for technical experts and professionals.
With the vast majority of our nearly 50,000 employees
having technical and professional backgrounds and holding
undergraduate and/or advanced degrees, we believe that the
quality and level of service that our professionals deliver are
among the highest in our industry.
Fundamental to our ability to achieve our goals and deliver for our clients is our ability to attract,
recruit and retain the industry’s best, diverse talent by offering a compelling employee value
proposition that promises competitive pay and benefits, flexibility and a foundation for learning
and career growth, an inclusive culture that supports well-being and encourages collaboration
and innovation, and a shared commitment to our values and purpose.
Advancing efforts globally in four key areas:
1 BUILDING
DIVERSE TALENT
2 ENRICHING
COMMUNITIES
3 EXPANDING
UNDERSTANDING
4 THINKING
WITHOUT LIMITS
Equity, diversity and inclusion
We are committed to advancing equity, diversity and inclusion
in our organization and within our industry. We build safe and
respectful work environments where our employees are invited
to bring their talents, backgrounds and expertise to bear on some
of the world’s most complex challenges and where everyone can
thrive both personally and professionally.
The commitment to create a respectful, inclusive culture requires
effort from all of us to remember that there are many points of
view and tapping into this diversity of thought is what ultimately
contributes to better outcomes. In 2021, we made it a priority
for all employees to complete a global training on recognizing
the negative impacts of unconscious bias and non-inclusive
behaviors. In addition, we have established targets within each of
our regions to advance our equity, diversity and inclusion goals.
We are advancing efforts globally in four key areas:
1) Building diverse talent of the communities we serve through
our recruitment efforts, building leadership accountability, and
partnering with nonprofit organizations and universities to build
the talent pipeline for the future.
2) Enriching communities through pro-bono work, volunteerism,
philanthropy and strategic partnerships.
3) Expanding understanding and empathy among employees
through employee resource groups, ED&I events and
celebrations, unconscious bias training, and family-friendly
benefit policies.
4) Thinking without limits by prioritizing social equity and impact in
every project we pursue and the innovative solutions we deliver.
20
Our AECOM Voices network of employee resource groups (ERGs) ensures that diverse voices are represented and
heard, and provides opportunities for networking, career development, and community outreach for employees
at the local, regional, and global level. We have created better understanding and innovative thinking among
colleagues that impact our policies and business outcomes.
BeBOLD
Black Employees Bridge to Opportunity,
Leadership and Development
Ethnic Diversity Network
Europe
“ I am passionate about leading
BeBOLD because it gives me
the opportunity to help Black
employees build lasting community
partnerships and help shape
the future culture of a growing
company. I am honored to be that
resource for others that I often
wished I had.”
Donald O. Seward, Jr.,
VP, Regional Practice Leader
President, BeBOLD
“ The benefits of joining ERGs vary
for individuals but if there was
one thing that matters most, it’s a
sense of belonging in an inclusive
environment. Together we can
influence and lead meaningful
change through partnerships in
our industry and communities.”
Robert Hewitt
Principal Landscape Architect
Chair, Ethnic Diversity Network
JUNTOS
Justice, Unity, Networking, Togetherness,
Opportunity, Support for Hispanic & Latinx
employees
“ Being a leader for JUNTOS is
meaningful to me because it
allows me to help widen the
path of opportunities for others
so the future of AECOM is rich
with diverse perspectives and
contributions.”
Fernando Vazquez
VP, Regional Water Business Development
Leader, East/LATAM Region
MOSAIC
Magnifying opportunities, Overcoming
challenges, Supporting one another,
Amplifying Asian & Pacific Islander voices,
Increasing visibility, Creating awareness
“ I am passionate about leading this
employee resource group be-
cause with support from AECOM’s
leadership, we are making diversity
both approachable, actionable, and
meaningful in the company.”
Pride
LGBTQ+ Americas, Europe, and
Australia & New Zealand
“ The Pride ERG has created a
community that brings together
LGBTQ+ colleagues and our allies
through events and initiatives that
allow us to share our stories, learn
from each other, and help everyone
to feel comfortable bringing their
whole selves to work.”
Women’s Leadership Alliance
“ I’m passionate about the WLA and
ERGs generally because not only
do they help foster community and
caring, they clearly demonstrate
AECOM’s commitment to equity,
diversity and inclusion.”
Wendy Lau
Regional Practice Leader
President, Women’s Leadership Alliance
Pooja Mahajan
Project Engineer, West Region
President, MOSAIC
Cristian Bevington
Senior Analyst, Cities
President, Pride Americas
AECOM—2021 Annual Report
21
FREEDOM TO GROW
As a result of the pandemic, we have deepened our understanding of how the
way we work has changed, employee values have shifted, and offices are no
longer the only primary workplace. With flexible or hybrid work options, our
Freedom to Grow global framework was designed to support employees in
finding the balance and flexibility they need to do their best, deliver for clients
and bring their whole selves to work.
Starting with giving employees flexibility in where and when they work—a
desire expressed in surveys conducted during the pandemic—employees
and managers can evaluate work schedules and work locations and align on
an approach that prioritizes client and team responsibilities while supporting
individual needs.
Our Freedom to Grow framework has gone far beyond just when and where you
work. We considered our employees’ holistic experience, encouraged flexibility
and respected diversity in workstyles, communication and thinking styles. The
guiding rule is that if an arrangement works for the employee, the manager, the
team, and, most importantly, the client, it works for AECOM.
Being
We have common values at AECOM
but you are encouraged to express
who you are when you come to work.
This means all the little things that
make up your unique personality.
Time
Challenging the notion
that 9-5 are our core
hours of work.
The Key
Principles
Place
We are giving the freedom to work
wherever is best for the task you’re
undertaking, within the city and
country you’re employed in.
Thinking
You are free to think, problem
solve and challenge the status
quo in ways that you’re best at.
Task
You have freedom to do the task at
hand in the way that suits you and
your particular strengths.
Communicating
Life would be boring if we
were all the same. You are
encouraged to communicate in
a way that comes naturally.
Workstyle
Everyone is different and works
differently. You work in a way that
suits you while still meeting client
and team needs.
22
A WORLD OF OPPORTUNITY
We have continued to enhance our employee programs, workplace culture and digital technologies to support
employees and managers with the tools and resources they need to deliver for our clients, our communities
and each other. Throughout the year, we expanded access to and developed professional and technical training
programs through our online education portal, AECOM University, advanced frontline manager and leadership
development programs, and partnered with impactful nonprofit organizations aligned with our purpose.
Building rewarding careers
We have tailored career development to each employee’s unique
capabilities and needs, offered opportunities to develop in
current roles, grow skills and scope of work, explore mentorships
and new projects; broaden into new roles laterally. With lateral
moves becoming increasingly common in today’s workplace, our
employees are applying transferrable skills on another team or
part of our business; promoting from within to leadership roles
or deepening technical expertise; and creating opportunities
for geographic mobility, giving employees a chance to work in
another location or on a mobile assignment.
Cultivating life-long learners
We believe that learning new skills and refining existing ones is
essential to career growth and development. We are proud to
offer a variety of learning opportunities that are catered to our
employees’ unique development interests and can be accessed
through our enterprise learning platform, AECOM University.
Inspiring leadership at all levels
No matter the role at AECOM, we believe that each person can
make a positive, lasting impact on the projects they work on, the
teams and committees they join and in the communities they
serve. We’ve empowered and inspired leadership through our
leader and professional development programs, coaching and
networking. Aligned with our Think and Act Globally strategy and
core values, we introduced a set of aspirational but attainable
leadership capabilities that we expect from our leaders. These
behaviors provide the foundation for our leaders to help us
build the culture we are cultivating at AECOM—one of trust,
accountability, growth, inclusivity, excellence and innovation.
Purpose and impact
Through strategic nonprofit partnerships, pro-bono work, skills-
based volunteering and philanthropy, Blueprint for a Better World,
our corporate responsibility platform, has focused on delivering
access to safe and secure infrastructure to those who need it
most, created opportunity for the leaders of tomorrow and worked
towards protecting our planet so that our company can fulfill its
purpose to deliver a better world. As part of the Blueprint pro-
bono program, our technical experts partnered with nonprofit
organizations in their local communities to provide critical design,
engineering and infrastructure solutions. In addition, we have
maintained our commitment to our enterprise strategic nonprofit
partners—Engineers Without Borders and Water for People.
AECOM—2021 Annual Report
23
Safeguard
We operate ethically and
with integrity, while prioritizing
safety and security in all that
we do.
24
Safeguarding our people remains a core value at AECOM. Promoting and protecting the well-being of
our employees and those affected by our operations continued to be a critical focus in fiscal 2021.
SAFETY
0.07
0.06
0.05
0.04
0.03
0.02
0.01
0
Multi-Year LWCR Trend
0.06
0.05
50%
Reduction in
LWCR since FY ’18
0.03
0.03
Multi-Year TRIR Trend
0.15
0.16
40%
Reduction in
TRIR since FY ’18
0.11
0.09
0.20
0.16
0.12
0.08
0.04
0
FY ’18
FY ’19
FY ’20
FY ’21
FY ’18
FY ’19
FY ’20
FY ’21
LWCR
TRIR
In recognition of the right to a safe and healthy working envi-
ronment, keeping our people and stakeholders safe is our most
important measure of success. Through collective commitment
to our Culture of Caring and execution of AECOM’s Safety for
Life program, we proactively and aggressively identify, manage
and eliminate hazards and reduce risk in our workplaces. These
incident prevention efforts have continued to advance our jour-
ney toward a “zero” incident culture. Within fiscal year 2021, our
Total Recordable Incident Rate (TRIR) in our Professional Services
businesses improved by 40% over the previous four fiscal years
while our Lost Workday Case Rate (LWCR) improved by 50% over
the same period.
AECOM applies the U.S. Occupational Safety and Health
Administration (OSHA) recordable injury and illness definition to
our global operations, allowing for a standard record-keeping
approach across all regions. AECOM metrics include injury and
illness incidents associated with AECOM employees and do not
include contractor data.
TRIR = total number of recordable incidents X 200,000 hours
Total hours worked
LWCR = total number of lost time incidents X 200,000 hours
Total hours worked
SAFETY FOR LIFE
AECOM’s Safety for Life program, driven by demonstrated
leadership commitment while providing for empowered
employees, has delivered industry-leading performance and
subsequent recognition. AECOM was awarded the Royal Society
for the Prevention of Accidents (RoSPA) President’s Award for
having achieved 12 consecutive annual Gold Awards. RoSPA
defines Gold Award winners as having achieved a very high level
of performance, demonstrating well-developed occupational
health and safety management systems and culture, outstanding
control of risk and very low levels of error, harm and loss.
Collective commitment and active participation in executing
AECOM’s Safety for Life program have generated increased
communication, collaboration, and consultation, where our
people and stakeholders have embraced ownership for the
well-being of themselves and others. Initiatives such as our
first virtual global conference on Safeguard, Safeguard 360,
further supported employee engagement and promoted skills
and training in fiscal 2021. Safeguard 360: A virtual experience,
was developed through collaboration and partnership among
our Safeguard functions, including Safety Health & Environment,
Global Security and Resiliency, Ethics & Compliance, Global Well-
being and Global Cyber Security teams.
AECOM—2021 Annual Report
25
Data Security
We recognize that we face threats to our information
technology systems, including unauthorized access, computer
hackers, computer viruses, malicious code, cyber-attacks,
phishing, and other cybersecurity problems and system
disruptions, including possible unauthorized access to our and
our clients’ proprietary information.
As a result, we have developed a robust Information Security
Program comprised of robust policies, procedures and
standards governing data privacy and information security of
the company’s information and assets. We have a structured
unified security framework, aligned to industry-leading
standards and safeguards, including but not limited to ISO
27001, NIST CSF, and NIST 800-53. Security measures are
taken to guard against unauthorized access to, alteration,
disclosure, or destruction of data and systems.
This includes but is not limited to:
• A robust incident response plan and procedure that involves
proper notification, assessment and reporting requirements.
• Real-time email sand-boxing/filtering and protection to prevent
phishing attempts and malicious files
• Advance endpoint security solutions to prevent download /
installation of malicious software
• Proactive vulnerability management to mitigate security
weaknesses and prevent exploitation attempts
• Next-gen intrusion prevention system (IPS) to prevent network
cyber-attack and malicious activity
• Two-factor authentication to prevent use of stolen credentials to
access company applications, etc.
In addition to the security controls implemented throughout the
enterprise, we have established a global cyber defense team,
staffed with seasoned security professionals, who are dedicated
to daily security operations to detect and prevent cyber security
event. We are pleased to report that through these efforts we have
not suffered a data breach of customer or company data.
Ethics and Compliance
Promoting a culture of ethics and integrity helps us safeguard
our people and our company from potential wrongdoing while
strengthening our brand and reputation for flawless execution.
Our Code of Conduct outlines the legal guidelines we must follow
and general ethical principles to help each of us make the right
decisions when conducting business worldwide. Top leaders
at AECOM promote ethical behavior through a global ethics
committee as well as regional ethics committees. Our employees
take part in annual Code of Conduct training, which received a
third consecutive year of 100% completion in fiscal 2021.
Furthermore, we have a comprehensive cross-functional ethics
and compliance program focused on preventing issues from
occurring, detecting them if and when they happen, effectively
and expediently resolving issues and capturing lessons to prevent
them from repeating. As a result, we were named by Ethisphere
one of 2021 World’s Most Ethical Companies for our commitment
to integrity and making a positive impact.
Humans Rights Commitment
Provide equal employment
opportunities to all employees without
regard to any legally protected status
Uphold individual human rights and
follow employment laws in all the
locations where we conduct business
Zero-tolerance policy regarding
the use of forced labor or human
trafficking
26
Corporate Governance
AECOM LEADERSHIP
Troy Rudd
Chief Executive Officer
Shirley Adams
Chief Human
Resources Officer
Todd Battley
Chief Strategy Officer
David Gan
Chief Legal Officer
Gaurav Kapoor
Chief Financial Officer
Lara Poloni
President
BOARD OF DIRECTORS
Bradley W. Buss
Director
Robert G. Card
Director
Diane C. Creel
Director
Jacqueline C. Hinman*
Director
Clarence T. Schmitz
Director
Gen. Janet C. Wolfenbarger
Director
Lydia Kennard
Director
Troy Rudd
Director and
Chief Executive Officer
Douglas W. Stotlar
Director,
Chairman of the Board
Daniel R. Tishman
Director
Sander van’t Noordende
Director
*Director is not standing for re-election at the 2022 Annual Meeting
AECOM—2021 Annual Report
27
AECOM ON NYSE
DISCLAIMERS
AECOM’s common stock trades on the New York Stock
Exchange under the symbol ACM.
Investor materials
AECOM’s Investor Relations website contains background
on our company and our services, financial information,
frequently asked questions and our online annual report, as
well as other useful information. For investor information,
including additional copies of our Annual Report, Form 10-K,
Form 10-Q or other financial literature, please visit our
website at investors.aecom.com.
Copies of AECOM’s Form 10-K may be obtained free of
charge by contacting William Gabrielski in our Investor
Relations department via email at
AECOMInvestorRelations@aecom.com
or via phone at (212) 973-2982.
Independent registered public accounting firm
Ernst & Young LLP, Los Angeles, California, USA
Transfer Agent
Computershare
P.O. Box 30170,
College Junction, TX 77842
(800) 368-5948
www.computershare.com
Scope of report
The sustainability data and activities included in this report
cover the past several years to provide a clearer picture of
our performance. This report covers our owned or operated
businesses and does not address the performance of our
suppliers, contractors or partners unless otherwise noted.
We have prepared the information and case studies solely
to provide a general overview of our sustainability activities,
and this report should not be used by anyone making an
investment decision. In addition, the information in this
report is summarized and is not a complete description
of all of our activities; therefore, we have made qualitative
judgments as to certain information to include that could
be determined to be inaccurate or incomplete. We did not
employ any third party firm to audit this report.
Forward-looking information
This report contains forward-looking statements relating
to the manner in which we intend to conduct our activities
based on our current plans and expectations. These
statements are not promises of our future conduct or
policy and are subject to a variety of uncertainties and
other factors, many of which are beyond our control.
Therefore, the actual conduct of our activities, including
the development, implementation or continuation of any
program, policy or initiative discussed in this report, may
differ materially in the future. The statements of intention in
this report speak only as of the date of this report, and we
do not undertake to publicly update any statements in this
report. As used in this report, the term “AECOM” and such
terms as “the company,” “our,” “its,” “we,” and “us” may refer
to one or more of AECOM’s consolidated subsidiaries or
affiliates or to all of them taken as a whole. All these terms
are used for convenience only and are not intended as a
precise description of any of the separate entities, each of
which manages its own affairs.
FOOTNOTES
1 Excludes the impact of non-operating items, such as non-core operating losses and transaction-related expenses, restructuring costs and other items.
2 Free cash flow is defined as cash flow from operations less capital expenditures net of proceeds from disposals and includes the receipt of a favorable
$122 million net working capital purchase price adjustment collected in May 2020 in connection with the sale of the Management Services (MS) business.
The working capital adjustment represents the recovery of an operating cash flow shortfall of the MS business prior to its sale.
3 Reflects segment operating performance, excluding AECOM Capital.
4 Net income before interest expense, tax expense, depreciation and amortization.
28
Reconciliation of Adjusted Margin Calculation
Revenue, Americas Segment
Revenue, International Segment
Less: pass-through revenues, Americas Segment
Less: pass-through revenues, International Segment
NSR (Revenue, net of pass-through revenues)
Income from Operations, Americas Segment
Income from Operations, International Segment
Noncore operating losses & transaction related expenses
Amortization of intangible assets
Adjusted income from segment operations
Twelve Months Ended
Sep 30, 2020
Sep 30, 2021
$10,131.5
3,101.7
(6,440.6)
(622.5)
$ 6,170.1
$ 600.3
136.5
(0.1)
24.0
$ 760.7
$10,226.3
3,112.6
(6,629.4)
(603.1)
$ 6,106.4
$ 643.0
177.0
–
22.6
$ 842.6
NSR Operating Margin
12.3%
13.8%
Reconciliation of Adjusted EBITDA
Net income attributable to AECOM from continuing operations
Income tax expense
Depreciation and amortization
Interest income
Interest expense
Amortized bank fees included in interest expense
Noncore operating losses & transaction related expenses
Restructuring costs
Adjusted EBITDA
Reconciliation of Adjusted EPS
Net income attributable to AECOM from continuing operations
per diluted share
Per diluted share adjustments:
Noncore operating losses & transaction related expenses
Accelerated depreciation of project management tool
Restructuring costs
Amortization of intangible assets
Prepayment premium on debt
Financing charges in interest expense
Tax effect of the above adjustments
Valuation allowances and other tax only items
Adjusted net income attributable to AECOM from continuing
operations, per diluted share
Twelve Months Ended
Sep 30, 2020
Sep 30, 2021
$ 170.4
45.7
192.7
(10.3 )
159.8
(6.2 )
5.6
188.4
$ 746.1
$ 294.7
89.0
176.9
(6.7 )
238.3
(11.4 )
–
48.9
$ 829.7
Twelve Months Ended
Sep 30, 2020
Sep 30, 2021
$ 1.06
$ 1.97
0.03
0.18
1.17
0.15
0.10
0.04
(0.43)
(0.15)
–
–
0.33
0.15
0.79
0.08
(0.35)
(0.15)
$ 2.15
$ 2.82
Reconciliation of Net Cash Provided by Operating Activities to Free Cash Flow
Net cash provided by operating activities
Capital expenditures, net
Working capital adjustment from sale of Management
Services business
Free cash flow
Twelve Months Ended
Sep 30, 2020
Sep 30, 2021
$ 329.6
(110.8)
122.0
$ 340.8
$ 704.7
(121.4)
–
$ 583.3
AECOM—2021 Annual Report
29
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-K
(Mark one)
☒
☐
ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
FOR THE FISCAL YEAR ENDED SEPTEMBER 30, 2021
OR
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT
OF 1934
For the transition period from to
Commission file number 0-52423
AECOM
(Exact name of Registrant as specified in its charter)
Delaware
State or Other Jurisdiction Of Incorporation or Organization
61-1088522
I.R.S. Employer Identification Number
13355 Noel Road
Dallas, Texas
Address of Principal Executive Offices
75240
Zip Code
(972) 788-1000
Registrant’s Telephone Number, Including Area Code
Former Name, Former Address and Former Fiscal Year, if Changed Since Last Report
Securities registered pursuant to Section 12(b) of the Act:
Title of each class
Common Stock, $0.01 par value
Trading Symbol(s)
ACM
Name of each exchange on which registered
New York Stock Exchange
Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act. Yes ☐ No
Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Act. ☐ Yes No
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past
90 days. Yes ☐ No
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of
232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes
Regulation S-T (§
No
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an
emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule
12b-2 of the Exchange Act.
Large accelerated filer
Non-accelerated filer
☐
Accelerated filer
Smaller reporting company
Emerging growth company
☐
☐
☐
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or
revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Act). Yes ☐ No ☒
The aggregate market value of registrant’s common stock held by non-affiliates on April 2, 2021 (the last business day of the registrant’s most recently
completed second fiscal quarter), based upon the closing price of a share of the registrant’s common stock on such date as reported on the New York Stock Exchange was
approximately $9.4 billion.
Number of shares of the registrant’s common stock outstanding as of November 11, 2021: 142,202,244
DOCUMENTS INCORPORATED BY REFERENCE
Part III incorporates information by reference from the registrant’s definitive proxy statement for the 2022 Annual Meeting of Stockholders, to be filed within
120 days of the registrant’s fiscal 2021 year end.
TABLE OF CONTENTS
ITEM 1. BUSINESS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
ITEM 1A. RISK FACTORS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
ITEM 1B. UNRESOLVED STAFF COMMENTS. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
ITEM 2. PROPERTIES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
ITEM 3. LEGAL PROCEEDINGS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
ITEM 4. MINE SAFETY DISCLOSURE . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
ITEM 5. MARKET FOR REGISTRANT’S COMMON EQUITY, RELATED STOCKHOLDER MATTERS
AND ISSUER PURCHASES OF EQUITY SECURITIES. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
ITEM 6. [RESERVED] . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
ITEM 7. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK . . . . . . . . . . . . . .
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
FINANCIAL DISCLOSURE . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
ITEM 9A. CONTROLS AND PROCEDURES. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
ITEM 9B. OTHER INFORMATION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
ITEM 10. DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE . . . . . . . . . . . . . . . . . .
ITEM 11. EXECUTIVE COMPENSATION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND
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RELATED STOCKHOLDER MATTERS. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
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ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS, AND DIRECTOR
INDEPENDENCE . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
ITEM 14. PRINCIPAL ACCOUNTANT FEES AND SERVICES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
ITEM 15. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
ITEM 16. FORM 10-K SUMMARY . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
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2
ITEM 1. BUSINESS
PART I
In this report, we use the terms “the Company,” “we,” “us” and “our” to refer to AECOM and its consolidated
subsidiaries. Unless otherwise noted, references to years are for fiscal years. Our fiscal year consists of 52 or 53 weeks,
ending on the Friday closest to September 30. For clarity of presentation, we present all periods as if the year ended on
September 30. We refer to the fiscal year ended September 30, 2020 as “fiscal 2020” and the fiscal year ended September
30, 2021 as “fiscal 2021.”
Overview
We are a leading global provider of professional infrastructure consulting services for governments, businesses
and organizations throughout the world. We provide planning, consulting, architectural and engineering design,
construction and program management services and investment and development services to commercial and government
clients worldwide in major end markets such as transportation, facilities, environmental, energy, water and government.
According to Engineering News-Record’s (ENR’s) 2021 Design Survey, we are the second largest general
architectural and engineering design firm in the world, ranked by 2020 design revenue, and we are ranked as the largest
environmental engineering firm in the world. In addition, we are ranked by ENR as the leading firm in a number of design
end markets, including transportation, general building and certain water-related markets, as well as the number two green
design firm and the number five green contractor in the world. We utilize our scale and the strength of our workforce to
create innovative solutions for our clients, including investments to accelerate the expansion of our digital services and
solutions. Increasingly, clients are turning to us to shape solutions to achieve their Environmental, Social, and Governance
(ESG) objectives. With our market leading capabilities, we are uniquely well suited to address these challenges.
3
Our business focuses primarily on providing fee-based planning, consulting, architectural and engineering design
services and, therefore, our business is primarily driven by knowledge-based services. We primarily derive income from
our ability to generate revenue and collect cash from our clients through the billing of our employees’ time spent on client
projects and our ability to manage our costs. AECOM Capital primarily derives its income from real estate development
sales and management fees.
During the first quarter of fiscal 2020, we reorganized our operating and reporting structure to better align with
our ongoing professional services business. This reorganization better reflected our continuing operations after the sale of
our Management Services segment, the sale of our self-perform at-risk civil infrastructure and power construction
businesses and the planned disposal of our oil & gas construction business. Our Management Services and self-perform
at-risk construction businesses were part of our former Management Services segment and a substantial portion of our
former Construction Services segment, respectively. These businesses are classified as discontinued operations in all
periods presented.
We report our continuing business through three segments, each of which is described in further detail below:
Americas, International, and AECOM Capital (ACAP). Such segments are organized by the differing specialized needs of
the respective clients and how we manage the business. We have aggregated various operating segments into our 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.
• Americas: Planning, consulting, architectural and engineering design, and construction and program
management services to commercial and government clients in the United States, Canada, and Latin America
in major end markets such as transportation, water, government, facilities, environmental, and energy.
•
International: Planning, consulting, architectural and engineering design services and program management
to commercial and government clients in Europe, the Middle East, Africa, India and the Asia-Pacific regions
in major end markets such as transportation, water, government, facilities, environmental, and energy.
• AECOM Capital (ACAP): Investments primarily in real estate projects.
Our Americas and International Segments
Our Americas and International segments comprise a broad array of services, generally provided on a fee-for-
service basis. These services include planning, consulting, architectural and engineering design, program management and
construction management for industrial, commercial, institutional and government clients worldwide. For each of these
services, our technical expertise includes civil, structural, process, mechanical, geotechnical systems and electrical
engineering, architectural, landscape and interior design, urban and regional planning, project economics, cost consulting
and environmental, health and safety work. Our Americas segment provides services generally in the United States,
Canada and Latin America. Our International segment provides similar services generally in Europe, the Middle East,
Africa and Asia-Pacific regions.
With our technical, advisory and program management expertise, we are able to provide our clients a broad
spectrum of services. For example, within our environmental management service offerings, we provide remediation,
regulatory compliance planning and management, environmental modeling, climate adaptation and resilience,
environmental and social impact assessment and environmental permitting for major capital/infrastructure projects.
In addition, our industry is undergoing a digital transformation, and we are investing in digital capabilities to
extend our advantages, improve overall delivery, and create distinct solutions for clients that differentiate us from
competitors. Clients are asking for innovative and more advanced solutions to increasingly complex challenges, where
our digital suite of products and investments in innovation are creating a more holistic approach to our work.
Our services may be sequenced over multiple phases. For example, in the area of program management and
construction management services, our work for a client may begin with a small consulting or planning contract, and may
later develop into an overall management role for the project or a series of projects, which we refer to as a program.
4
Program and construction management contracts may employ small or large project teams and, in many cases, operate as
an outsourcing arrangement with our staff located at the project site.
We provide the services in these segments both directly and through joint ventures or similar arrangements to the
following end markets or business sectors:
Transportation.
• Transit and Rail. Light rail, heavy rail (including highspeed, commuter and freight) and multimodal transit
projects.
• Marine, Ports and Harbors. Wharf facilities and container port facilities for private and public port
operators.
• Highways, Bridges and Tunnels. Interstate, primary and secondary urban and rural highway systems and
bridge projects.
• Aviation. Landside terminal and airside facilities, runways and taxiways.
Facilities.
• Government. Emergency response services for the U.S. Department of Homeland Security, including the
Federal Emergency Management Agency and engineering and program management services for agencies
of the Department of Defense and Department of Energy.
•
Industrial. Industrial facilities for a variety of niche end markets such as manufacturing, distribution,
aviation, aerospace, communications, media, pharmaceuticals, renewable energy, chemical, and food and
beverage facilities.
• Urban Master Planning/Design. Strategic planning and master planning services for new cities and major
mixed-use developments in locations such as India, China, Southeast Asia, the Middle East, North Africa,
the United Kingdom and the United States.
5
• Commercial and Leisure Facilities. Corporate headquarters, high-rise office towers, historic buildings,
hotels, leisure, sports and entertainment facilities and corporate campuses.
• Educational. For example, college and university campuses and other educational facilities.
• Health Care. For example, private and public health facilities.
Environmental.
• Water and Wastewater. Treatment facilities as well as supply, distribution and collection systems,
stormwater management, desalinization, and other water reuse technologies.
• Environmental Management. Remediation, waste handling, testing and monitoring of environmental
conditions and environmental construction management.
• Water Resources. Regional-scale floodplain mapping and analysis for public agencies, along with the
analysis and development of protected groundwater resources for companies in the bottled water industry.
New Energy.
• Demand Side Management. Public K12 schools and universities, health care facilities, and courthouses and
other public buildings, as well as energy conservation systems for utilities.
• Transmission and Distribution. Power stations and electric transmissions and distribution and cogeneration
systems.
• Alternative/Renewable Energy. Production facilities such as ethanol plants, onshore and offshore wind farms
and micro hydropower and geothermal subsections of regional power grids.
• Hydropower/Dams. Hydroelectric power stations, dams, spillways, and flood control systems.
•
Solar. Solar photovoltaic projects and environmental permitting services.
Construction Management – We provide program and construction management services for large scale building
facility construction projects primarily in the Americas including:
• Sports arenas;
• Modern office and residential towers;
• Hotel and gaming facilities;
• Meeting and exhibition spaces;
• Performance venues;
• Aviation;
• Education facilities;
• Mass transit terminals; and
6
• Data centers.
Our AECOM Capital Segment
ACAP typically partners with investors and experienced developers as co-general partners. ACAP may, but is
not required to, enter into contracts with our other AECOM affiliates to provide design, engineering, construction
management, development and operations and maintenance services for ACAP funded projects. ACAP development
activity is conducted through joint ventures or subsidiaries that may be consolidated or unconsolidated for financial
reporting purposes depending on the extent and nature of our ownership interest. In addition, in connection with the
investment activities of ACAP, AECOM or an affiliate may provide guarantees of certain financial obligations, including
guarantees for completion of projects, repayment of debt, environmental indemnity obligations, and other lender required
guarantees. ACAP focuses on investing in co-general partner equity opportunities with high quality partners, primarily
targeting “build-to-core” investments in the top 25 U.S. markets across all property types.
Thinking and Acting Globally
AECOM is at its best when we think and act globally. Our strategy is focused on setting a new standard of
excellence in the professional services industry. First, our recently simplified operating structure promotes greater
connectivity and collaboration across our seven regions and five global business lines. We drive growth by prioritizing
our core markets, leaning into our greatest strengths and ensuring our best talent and resources are focused on nurturing
client relationships. We are transforming the way we deliver work through technology and digital platforms improving the
client experience and increasing efficiency. Lastly, we are building upon our position as a leading ESG company, unified
by our purpose to deliver a better world.
Environmental, Social and Governance Matters
We are committed to being a leader in environmental sustainability, social responsibility, and corporate
governance.
7
We embrace sustainability by striving to make a positive, lasting impact on society and the environment.
Sustainability is at the core of what we do and how we operate — focusing on the environmental, social and governance
impact of our business. Through our projects and our operations, we have both a significant opportunity and a
responsibility to protect, enhance and restore the world's natural and social systems.
We are committed to addressing the effects of climate change as a key priority for our sustainability program by
improving resilience and working to advance ambitious greenhouse gas emissions reduction targets. We were the first
company in the engineering sector to have set emissions reduction targets approved by the Science Based Targets Initiative
(SBTi), designed to meet the goals of the Paris Agreement on climate change. Through this and other enterprise initiatives,
we announced even more ambitious targets as part of our Sustainable Legacies strategy that include commitments to
becoming net-zero in our Scope 1, 2 and 3 emissions by 2030. These commitments build upon our commitments as a
signatory to the UN Global Compact.
In addition, we continue to invest in proprietary innovations and digital solutions. This includes a solution to
combat globally pervasive emerging contaminants, such as our proprietary DE-FLUOROTM water treatment solution to
destroy per and polyfluoroalkyl substances (PFAS) on-site. It also includes our SewerLogic solution, which is a machine
learning cloud-based digital tool that improves efficiencies of asset management and inspection services of sewer lines.
We have established an internal Global ESG Council to coordinate and drive our ESG initiatives across AECOM
worldwide, and our Board, including through its Committees, has oversight over ESG matters. Additional information
regarding our ESG initiatives is located on the investor relations section of our website, at https://investors.aecom.com/esg.
Human Capital Management
Our principal asset is our employees, and large percentages of our employees have technical and professional
backgrounds and undergraduate and/or advanced degrees. At the end of our fiscal 2021, we employed approximately
51,000 persons, of whom approximately 17,000 were employed in the United States. Over 2,000 of our domestic
employees are covered by collective bargaining agreements or by specific labor agreements, which expire upon completion
of the relevant project. We believe that the quality and level of service that our professionals deliver are among the highest
in our industry.
We are committed to enhancing our position as a leading employer in our industry. The foundation of our
continuing success is our ability to attract, recruit and retain the industry’s best, diverse talent by offering a compelling
employee value proposition that promises competitive pay and benefits, flexibility and a foundation of learning and career
growth, an inclusive culture that supports well-being and encourages collaboration and innovation, and a shared
commitment to our values and purpose. This understanding informs our approach to managing our human capital
resources. Our human capital objectives and initiatives are overseen by our Board as per our Corporate Governance
Guidelines.
Health and Safety. Core to our corporate values is safeguarding our people and fostering a culture of caring that
promotes the wellbeing of our employees, contractors and business partners. We safeguard our people, projects and
reputation by striving for zero employee injuries and illnesses, while operating and delivering our work responsibly and
sustainably. We maintain our industry’s best-in-class lost workday case and recordable incident rates, and our safety
performance is consistently recognized by key clients across the regions where we work as well as by recognized safety
organizations. AECOM supports community uptake of approved Covid-19 vaccines as the most effective measure to end
the current global pandemic and we strongly encourage that employees receive an approved vaccine. Employees
supporting clients through site visits and face-to-face meetings abide by client-worksite Covid-19 protocols, which may
include documentation establishing proof of immunization or proof of negative Covid-19 test. Throughout the pandemic
we have taken and will continue to take critical steps to keep our people, clients and communities safe from Covid-19.
Equity, diversity and inclusion. We are committed to advancing equity, diversity and inclusion in our
organization and within our industry. We build safe and respectful work environments where our employees are invited to
bring their talents, backgrounds and expertise to bear on some of the world’s most complex problems and where every
8
person has the opportunity to thrive personally and professionally. We are advancing efforts globally in four key areas: 1)
Building a workforce reflective of the communities we serve through our recruitment efforts, building leadership
accountability, and partnering with nonprofit organizations and universities to build the talent pipeline for the future, 2)
Enriching communities through pro-bono work, volunteerism, philanthropy and strategic partnerships, 3) Expanding
understanding and empathy among employees through employee resource groups, ED&I events and celebrations, and
family-friendly benefit policies, and 4) Prioritizing social equity and impact in every project we pursue and the innovative
solutions we deliver.
Freedom to Grow. As a result of the pandemic, the concept of work is changing, employee values are shifting,
and offices are no longer the only workplace. A key factor in our ability to attract and retain top talent is offering flexible
or hybrid work options. Freedom to Grow is our global framework designed to support employees in finding the balance
and flexibility they need to do their best, deliver for clients, and bring their whole selves to work. Starting with giving
employees flexibility in where and when they work – a desire expressed in surveys conducted during the pandemic –
employees and managers can evaluate work schedules and work locations and align on an approach that prioritizes client
and team responsibilities while supporting individual needs. The guiding rule is that if an arrangement works for the
employee, the manager, the team, and most importantly, the client, then the arrangement works for AECOM.
9
Workplace of the future. Drawing on the experiences of our teams and our clients during the pandemic, we
developed a space and technology framework that allows for seamless connectivity between home offices, company
offices and client sites, and a new global workplace design that accounts for reduced capacity requirements and prioritizes
sustainability, collaboration and engagement. We are also advancing initiatives to enable the digital delivery of our work
by establishing best practices and governance protocols for the digital reuse of core elements of the design process.
Employee experience. We continue to enhance our employee programs, workplace culture and digital
technologies to support employees and managers with tools and resources they need to deliver excellence for their clients
and teams. These efforts include employee safety, health and wellness programs to support employees and their families
during the Covid-19 pandemic and beyond, expanding access to and developing professional and technical training
programs through our online education portal, AECOM University, delivering new digital tools to enhance connectivity,
networking and collaborations among employees, and advancing frontline manager and leadership development
programs.
Purpose and impact. As the world’s trusted infrastructure consulting firm and a leader in environmental, social
and corporate governance (ESG), we are determined and well-positioned to deliver positive, impactful and Sustainable
Legacies for our company, our communities and our planet. Through strategic nonprofit partnerships, pro-bono work,
skills-based volunteering and philanthropy, and Blueprint for a Better World, our corporate responsibility platform, we
are focused on delivering access to safe and secure infrastructure to those who need it most, creating opportunity for the
leaders of tomorrow and protecting our planet so that our company can fulfill its purpose to deliver a better world. As part
of the Blueprint pro-bono program, our technical experts partnered with nonprofit organizations in their local communities
to provide critical design, engineering and infrastructure solutions. In addition, we have maintained our commitment to
our enterprise strategic nonprofit partners – Engineers Without Borders and Water for People.
10
Our Clients
Our clients consist primarily of national, state, regional and local governments, public and private institutions and
major corporations. The following table sets forth our total revenue attributable to these categories of clients for each of
the periods indicated:
Year Ended September 30,
($ in millions)
2020
2019
2021
U.S. Federal Government . . . . . . . . . . . . . . . . . . .
U.S. State and Local Governments . . . . . . . . . . .
Non-U.S. Governments . . . . . . . . . . . . . . . . . . . . .
Subtotal Governments . . . . . . . . . . . . . . . . . . . .
Private Entities (worldwide) . . . . . . . . . . . . . . . . .
Total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
$ 1,026.6
2,797.9
1,896.8
5,721.3
7,619.6
$ 13,340.9
8 % $ 1,027.8
21
14
43
57
2,709.7
1,869.0
5,606.5
7,633.5
100 % $ 13,240.0
8 % $ 1,273.7
20
14
42
58
2,696.6
2,031.5
6,001.8
7,640.7
100 % $ 13,642.5
9 %
20
15
44
56
100 %
No single client accounted for 10% or more of our revenue in any of the past five fiscal years. Approximately
8%, 8% and 9% of our revenue was derived through direct contracts with agencies of the U.S. federal government in the
years ended September 30, 2021, 2020 and 2019, respectively.
Contracts
The price provisions of the contracts we undertake can be grouped into several broad categories:
cost-reimbursable contracts, guaranteed maximum price contracts, and fixed-price contracts.
Cost-Reimbursable Contracts
Cost-reimbursable contracts include cost-plus fixed fee, cost-plus fixed rate, and time-and-materials price
contracts. Under cost-plus contracts, we charge clients for our costs, including both direct and indirect costs, plus a
negotiated fee or rate. We recognize revenues based on actual direct costs incurred and the applicable fixed rate or portion
of the fixed fee earned as of the balance sheet date. Under time-and-materials price contracts, we negotiate hourly billing
rates and charge clients based on the actual time we expend on the project. In addition, clients reimburse us for materials
and other direct incidental expenditures, including payments to subcontractors, incurred in connection with our
performance under the contract. Time-and-material price contracts may also have a fixed-price element in the form of not-
to-exceed or guaranteed maximum price provisions.
Some cost-plus contracts provide for award fees or a penalty based on performance criteria in lieu of a fixed fee
or fixed rate. Other contracts include a base fee component plus a performance-based award fee. In addition, we may share
award fees with subcontractors. We generally recognize revenue to the extent of costs actually incurred plus a proportionate
amount of the fee expected to be earned. We take the award fee or penalty on contracts into consideration when estimating
revenue and profit rates, and record revenue related to the award fees when there is sufficient information to assess
anticipated contract performance and a significant reversal of the award fee is not probable. Once an award is received,
the estimated or accrued fees are adjusted to the actual award amount.
Some cost-plus contracts provide for incentive fees based on performance against contractual milestones. The
amount of the incentive fees varies, depending on whether we achieve above, at, or below target results. We originally
recognize revenue on these contracts based upon expected results. These estimates are revised when necessary based upon
additional information that becomes available as the contract progresses.
11
Guaranteed Maximum Price Contracts
Guaranteed maximum price contracts (GMP) share many of the same contract provisions as cost-plus and fixed-
price contracts. As with cost-plus contracts, clients are provided a disclosure of all project costs, and a lump sum percentage
fee is separately identified. We provide clients with a guaranteed price for the overall project (adjusted for change orders
issued by clients) and a schedule including the expected completion date. Cost overruns or costs associated with project
delays in completion could generally be our responsibility. For many of our commercial or residential GMP contracts, the
final price is generally not established until we have subcontracted a substantial percentage of the trade contracts with
terms consistent with the master contract, and we have negotiated additional contract 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.
Fixed-Price Contracts
Fixed-price contracts include both lump-sum and fixed-unit price contracts. Under lump-sum contracts, we
perform all the work under the contract for a specified price. Lump-sum contracts are typically subject to price adjustments
if the scope of the project changes or unforeseen conditions arise. Under fixed-unit price contracts, we perform 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.
Some of our fixed-price contracts require us to provide surety bonds or parent company guarantees to assure our
clients that their project will be completed in accordance with the terms of the contracts as further disclosed in Note 18—
Commitments and Contingencies. In such cases, we may require our primary subcontractors to provide similar
performance bonds and guarantees and to be adequately insured, and we may flow down the terms and conditions set forth
in our agreement on to our subcontractors. There may be risks associated with completing these projects profitably if we
are not able to perform our services within the fixed-price contract terms.
For the year ended September 30, 2021, our revenue was comprised of 40%, 34%, and 26% cost-reimbursable,
guaranteed maximum price, and fixed-price contracts, respectively.
Joint Ventures
Some of our larger contracts may operate under joint ventures or other arrangements under which we team with
other reputable companies, typically companies with which we have worked for many years. This is often done where the
scale of the project dictates such an arrangement or when we want to strengthen either our market position or our technical
skills.
Backlog
Backlog represents revenue we expect to realize for work completed by our consolidated subsidiaries and our
proportionate share of work to be performed by unconsolidated joint ventures. Backlog is expressed in terms of gross
revenue and, therefore, may include significant estimated amounts of third party or pass-through costs to subcontractors
and other parties. We report transaction price allocated to remaining unsatisfied performance obligations (RUPO) of $18.7
billion, as described in Note 4, Revenue Recognition, in the notes to our consolidated financial statements. The most
significant differences between our backlog and RUPO are backlog contains revenue we expect to record in the future
where we have been awarded the work, but the contractual agreement has not yet been signed, unconsolidated joint venture
backlog where we expect to realize income through equity earnings rather than revenue, and revenue related to service
contracts that extend beyond the termination provision of those contracts, where RUPO requires us to assume the contract
will be terminated at its earliest convenience. Accordingly, RUPO is $19.9 billion lower than backlog. For non-government
contracts, our backlog includes future revenue at contract rates, excluding contract renewals or extensions that are at the
discretion of the client. For contracts with a not-to-exceed maximum amount, we include revenue from such contracts in
backlog to the extent of the remaining estimated amount. We calculate backlog without regard to possible project
reductions or expansions or potential cancellations until such changes or cancellations occur. No assurance can be given
that we will ultimately realize our full backlog. Backlog fluctuates due to the timing of when contracts are awarded and
12
contracted and when contract revenue is recognized. Many of our contracts require us to provide services over more than
one year. Our backlog for the year ended September 30, 2021 decreased $2.6 billion, or 6.3%, to $38.6 billion as compared
to $41.2 billion for the corresponding period last year, primarily due to a decrease in our construction management
business.
The following summarizes backlog (in billions):
Backlog:
Americas segment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
International segment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Total backlog . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
$
$
33.4 $
5.2
38.6 $
36.5
4.7
41.2
September 30,
2021
2020
Competition
The markets we serve are highly fragmented and we compete with a large number of regional, national and
international companies. We have numerous competitors, ranging from small private firms to multi-billion dollar
companies, some of which have greater financial resources or that are more specialized and concentrate their resources in
particular areas of expertise. The extent of our competition varies according to the particular markets and geographic area.
The degree and type of competition we face is also influenced by the type and scope of a particular project. The technical
and professional aspects of our services generally do not require large upfront capital expenditures and, therefore, provide
limited barriers against new competitors.
We believe that we are well positioned to compete in our markets because of our reputation, our cost effectiveness,
our long-term client relationships, our extensive network of offices, our employee expertise, and our broad range of
services. In addition, as a result of our extensive national and international network, we are able to offer our clients
localized knowledge and expertise, as well as the support of our worldwide professional staff. In addition, through
investments in technology and innovation, we are able to bring advanced solutions to clients.
Seasonality
We experience seasonal trends in our business. Our revenue is typically higher in the last half of the fiscal year.
The fourth quarter of our fiscal year (July 1 to September 30) is typically our strongest quarter. We find that the U.S.
federal government tends to authorize more work during the period preceding the end of our fiscal year, September 30. In
addition, many U.S. state governments with fiscal years ending on June 30 tend to accelerate spending during their first
quarter, when new funding becomes available. Further, our construction management revenue typically increases during
the high construction season of the summer months. Within the United States, as well as other parts of the world, our
business generally benefits from milder weather conditions in our fiscal fourth quarter, which allows for more productivity
from our on-site civil services. Our construction and project management services also typically expand during the high
construction season of the summer months. The first quarter of our fiscal year (October 1 to December 31) is typically our
lowest revenue quarter. The harsher weather conditions impact our ability to complete work in parts of North America and
the holiday season schedule affects our productivity during this period. For these reasons, coupled with the number and
significance of client contracts commenced and completed during a particular period, as well as the timing of expenses
incurred for corporate initiatives, it is not unusual for us to experience seasonal changes or fluctuations in our quarterly
operating results.
Risk Management and Insurance
Risk management is an integral part of our project management approach and our project execution process. We
have an Office of Risk Management that reviews and oversees the risk profile of our operations. Also, pursuant to our
internal delegations of authority, a group of senior members of our risk management team evaluates risk through internal
risk analyses of higher-risk projects, contracts or other business decisions. We maintain insurance covering professional
liability and claims involving bodily injury and property damage. Wherever possible, we endeavor to eliminate or reduce
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the risk of loss on a project through the use of quality assurance/control, risk management, workplace safety and similar
methods.
Regulations
Our business is impacted by environmental, health and safety, government procurement, anti-bribery and other
government regulations and requirements. Below is a summary of some of the significant regulations that impact our
business.
Environmental, Health and Safety. Our business involves the planning, design, program management,
construction management, and operations and maintenance at various project sites, including, but not limited to, nuclear
facilities, hazardous waste and Superfund sites, hydrocarbon production, distribution and transport sites, and other
infrastructure-related facilities. We also regularly perform work in and around sensitive environmental areas, such as
rivers, lakes and wetlands.
Significant fines, penalties and other sanctions may be imposed for non-compliance with environmental and
health and safety laws and regulations, and some laws provide for joint and several strict liabilities for remediation of
releases of hazardous substances, rendering a person liable for environmental damage, without regard to negligence or
fault on the part of such person. These laws and regulations may expose us to liability arising out of the conduct of
operations or conditions caused by others, or for our acts that were in compliance with all applicable laws at the time these
acts were performed. For example, there are a number of governmental laws that strictly regulate the handling, removal,
treatment, transportation and disposal of toxic and hazardous substances, such as the Comprehensive Environmental
Response Compensation and Liability Act of 1980, and comparable national and state laws, that impose strict, joint and
several liabilities for the entire cost of cleanup, without regard to whether a company knew of or caused the release of
hazardous substances. In addition, some environmental regulations can impose liability for the entire clean-up upon
owners, operators, generators, transporters and other persons arranging for the treatment or disposal of such hazardous
substances related to contaminated facilities or project sites. Other federal environmental, health and safety laws affecting
us include, but are not limited to, the Resource Conservation and Recovery Act, the National Environmental Policy Act,
the Clean Air Act, the Clean Air Mercury Rule, the Occupational Safety and Health Act, the Toxic Substances Control
Act, and the Superfund Amendments and Reauthorization Act, as well as other comparable national and state laws.
Liabilities related to environmental contamination or human exposure to hazardous substances, comparable national and
state laws or a failure to comply with applicable regulations could result in substantial costs to us, including cleanup costs,
fines and civil or criminal sanctions, third-party claims for property damage or personal injury, or cessation of remediation
activities.
Some of our business operations are covered by Public Law 85-804, which provides for indemnification by the
U.S federal government against claims and damages arising out of unusually hazardous or nuclear activities performed at
the request of the U.S. federal government. Should public policies and laws change, however, U.S. federal government
indemnification may not be available in the case of any future claims or liabilities relating to hazardous activities that we
undertake to perform.
Government Procurement. The services we provide to the U.S. federal government are subject to Federal
Acquisition Regulation, the Truth in Negotiations Act, Cost Accounting Standards, the Services Contract Act, export
controls rules and Department of Defense (DOD) security regulations, as well as many other laws and regulations. These
laws and regulations affect how we transact business with our clients and, in some instances, impose additional costs on
our business operations. A violation of specific laws and regulations could lead to fines, contract termination or suspension
of future contracts. Our government clients can also terminate, renegotiate, or modify any of their contracts with us at their
convenience; and many of our government contracts are subject to renewal or extension annually.
Anti-Bribery and other regulations. We are subject to the U.S. Foreign Corrupt Practices Act and similar anti-
bribery laws, which generally prohibit companies and their intermediaries from making improper payments to foreign
government officials for the purpose of obtaining or retaining business. The U.K. Bribery Act of 2010 prohibits both
domestic and international bribery, as well as bribery across both private and public sectors. In addition, an organization
that “fails to prevent bribery” committed by anyone associated with the organization can be charged under the U.K. Bribery
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Act unless the organization can establish the defense of having implemented “adequate procedures” to prevent bribery. To
the extent we export technical services, data and products outside of the U.S., we are subject to U.S. and international laws
and regulations governing international trade and exports, including, but not limited to, the International Traffic in Arms
Regulations, the Export Administration Regulations, and trade sanctions against embargoed countries. We provide services
to the DOD and other defense-related entities that often require specialized professional qualifications and security
clearances. In addition, as engineering design services professionals, we are subject to a variety of local, state, federal, and
foreign licensing and permit requirements and ethics rules.
Raw Materials
We purchase most of the raw materials and components necessary to operate our business from numerous sources.
However, the price and availability of raw materials and components may vary from year to year due to customer demand,
production capacity, market conditions, and material shortages. While we do not currently foresee the lack of availability
of any particular raw materials in the near term, prolonged unavailability of raw materials necessary to our projects and
services or significant price increases for those raw materials could have a material adverse effect on our business in the
near term.
Government Contracts
Generally, our government contracts are subject to renegotiation or termination of contracts or subcontracts at the
discretion of the U.S. federal, state or local governments, and national governments of other countries.
Trade Secrets and Other Intellectual Property
We rely principally on trade secrets, confidentiality policies and other contractual arrangements to protect much
of our intellectual property.
Available Information
The reports we file with the Securities and Exchange Commission, including annual reports on Form 10-K,
quarterly reports on Form 10-Q, current reports on Form 8-K and proxy materials, including any amendments, are available
free of charge on our website at www.aecom.com as soon as reasonably practicable after we electronically file such material
with or furnish it to the SEC. The SEC also maintains a website (www.sec.gov) containing reports, proxy and information
statements, and other information that we file with the SEC. Our Corporate Governance Guidelines and our Code of Ethics
are available on our website at www.aecom.com under the “Investors” section. Copies of the information identified above
may be obtained without charge from us by writing to AECOM, 13355 Noel Road, Suite 400, Dallas, Texas 75240,
Attention: Corporate Secretary.
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ITEM 1A. RISK FACTORS
We operate in a changing environment that involves numerous known and unknown risks and uncertainties that
could materially adversely affect our operations. The risks described below highlight some of the factors that have affected,
and in the future could affect our operations. Additional risks we do not yet know of or that we currently think are
immaterial may also affect our business operations. If any of the events or circumstances described in the following risks
actually occurs, our business, financial condition or results of operations could be materially adversely affected.
Risks Related to Our Markets, Customers and Business
We face various risks related to health outbreaks such as the Covid-19 pandemic that may have material adverse effects
on our business, financial position, results of operations and/or cash flows.
Our business could be materially and adversely affected by the risk, or the public perception of risk, related to a
pandemic or widespread health crisis, such as the current Covid-19 pandemic. A significant outbreak, epidemic or
pandemic of contagious diseases in the human population could result in a widespread health crisis adversely affecting the
broader economies, financial markets and overall demand for our services. In addition, any preventative or protective
actions that governments implement or that we take in respect of a global health crisis, such as travel restrictions,
quarantines, or site closures, may interfere with the ability of our employees and vendors to perform their responsibilities.
Such results could have a material adverse effect on our operations, business, financial condition, results of operations, or
cash flows.
Our operations have been affected by a range of external factors related to the Covid-19 pandemic that are not
within our control. For example, many jurisdictions have imposed a wide range of restrictions on the physical movement
of our employees and vendors to limit the spread of Covid-19 and some non-essential construction and other client projects
temporarily halted as a result. Extended disruptions due to the Covid-19 pandemic could further delay or limit our ability
to perform services, make or receive timely payments, and impair our ability to win future contracts. Any cost increases
due to Covid-19 may not be fully recoverable or adequately covered by our insurance. Our management is focused on
mitigating the effects of Covid-19 on our business, which has required and will continue to require a substantial investment
of their time and may delay their other efforts.
We continue to closely monitor the impact of the Covid-19 pandemic and to assess its potential effects on our
business. In response to the Covid-19 pandemic, we implemented various measures to mitigate the impact of the pandemic
on our business but given the dynamic nature of these circumstances, the full impact of the Covid-19 pandemic cannot be
reasonably estimated at this time. The extent to which our business, financial condition, results of operations, or cash flows
are affected by Covid-19 will depend in part on future developments which cannot be accurately predicted and are
uncertain. The impact of the Covid-19 pandemic depends upon various uncertainties, including the ultimate geographic
spread of the virus, the severity of the virus, the duration of the outbreak, and actions that may be taken by governmental
authorities to contain the virus. This situation is changing continually, and additional effects may arise that we are not
presently aware of or that we currently do not consider to be significant risks to our operations. If we are not able to
respond to and manage the impact of such events effectively, our business and financial condition could be negatively
impacted.
Our industry is highly competitive, and we may be unable to compete effectively, which could result in reduced revenue,
profitability and market share.
We are engaged in a highly competitive business. The markets we serve are highly fragmented and we compete
with a large number of regional, national and international companies. These competitors may have greater financial and
other resources than we do. Others are smaller and more specialized, and concentrate their resources in particular areas of
expertise. The extent of our competition varies according to the particular markets and geographic area. In addition, the
technical and professional aspects of some of our services generally do not require large upfront capital expenditures and
provide limited barriers against new competitors.
The degree and type of competition we face is also influenced by the type and scope of a particular project. Our
clients make competitive determinations based upon qualifications, experience, performance, reputation, technology,
customer relationships, price and ability to provide the relevant services in a timely, safe and cost-efficient manner.
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Increased competition may result in our inability to win bids for future projects, increased margin pressure and loss of
revenue, profitability and market share.
Demand for our services is cyclical and vulnerable to sudden economic downturns and reductions in government and
private industry spending. If economic conditions remain uncertain and/or weaken, our revenue and profitability could
be adversely affected.
Demand for our services is cyclical and may be vulnerable to sudden economic downturns, interest rate
fluctuations and reductions in government and private industry spending that result in clients delaying, curtailing or
canceling proposed and existing projects. For example, the Covid-19 pandemic reduced demand for some of our services
and impacted certain client spending. Where economies are weakening, our clients may demand more favorable pricing
or other terms while their ability to pay our invoices or to pay them in a timely manner may be adversely affected. Our
government clients may face budget deficits that prohibit them from funding proposed and existing projects. If economic
conditions remain uncertain and/or weaken and/or government spending is reduced, our revenue and profitability could be
materially adversely affected.
We depend on long-term government contracts, some of which are only funded on an annual basis. If appropriations
for funding are not made in subsequent years of a multiple-year contract, we may not be able to realize all of our
anticipated revenue and profits from that project.
A substantial portion of our revenue is derived from contracts with agencies and departments of national, state,
and local governments. During fiscal 2021 and 2020, approximately 43% and 42%, respectively, of our revenue was
derived from contracts with government entities.
Most government contracts are subject to such government’s budgetary approval process. Legislatures typically
appropriate funds for a given program on an annual basis, even though contract performance may take more than one year.
In addition, public-supported financing such as state and local municipal bonds may be only partially raised to support
existing infrastructure projects. As a result, at the beginning of a program, the related contract is only partially funded, and
additional funding is normally committed only as appropriations are made in each fiscal year. These appropriations, and
the timing of payment of appropriated amounts, may be influenced by, among other things, the state of the economy, a
government shutdown, competing priorities for appropriation, changes in administration or control of legislatures, and the
timing and amount of tax receipts and the overall level of government expenditures. Similarly, the impact of an economic
downturn on governments, including as a result of the Covid-19 pandemic, may make it more difficult for them to fund
infrastructure projects. If appropriations are not made in subsequent years on our government contracts, then we will not
realize all of our potential revenue and profit from that contract.
If we are unable to win or renew government contracts during regulated procurement processes, our operations and
financial results would be harmed.
Government contracts are awarded through a regulated procurement process. The federal government has
awarded multi-year contracts with pre-established terms and conditions, such as indefinite delivery contracts, that
generally require those contractors that have previously been awarded the indefinite delivery contract to engage in an
additional competitive bidding process before a task order is issued. The federal government has also awarded federal
contracts based on a low-price, technically acceptable criteria emphasizing price over qualitative factors, such as past
performance. As a result of these competitive pricing pressures, our profit margins on future federal contracts may be
reduced and may require us to make sustained efforts to reduce costs in order to realize profits under government contracts.
If we are not successful in reducing the amount of costs we incur, our profitability on government contracts will be
negatively impacted. In addition, we may not be awarded government contracts because of existing government policies
designed to protect small businesses and under-represented minority contractors. Our inability to win or renew government
contracts during regulated procurement processes could harm our operations and reduce our profits and revenues.
Governmental agencies may modify, curtail or terminate our contracts at any time prior to their completion and, if we
do not replace them, we may suffer a decline in revenue.
Most government contracts may be modified, curtailed or terminated by the government either at its discretion or
upon the default of the contractor. If the government terminates a contract at its discretion, then we typically are able to
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recover only costs incurred or committed, settlement expenses and profit on work completed prior to termination, which
could prevent us from recognizing all of our potential revenue and profits from that contract. In addition, for some
assignments, the U.S. government may attempt to “insource” the services to government employees rather than outsource
to a contractor. If a government terminates a contract due to our default, we could be liable for excess costs incurred by
the government in obtaining services from another source.
Our contracts with governmental agencies are subject to audit, which could result in adjustments to reimbursable
contract costs or, if we are charged with wrongdoing, possible temporary or permanent suspension from participating
in government programs.
Our books and records are subject to audit by the various governmental agencies we serve and their
representatives. These audits can result in adjustments to the amount of contract costs we believe are reimbursable by the
agencies and the amount of our overhead costs allocated to the agencies. If such matters are not resolved in our favor, they
could have a material adverse effect on our business. In addition, if one of our subsidiaries is charged with wrongdoing as
a result of an audit, that subsidiary, and possibly our company as a whole, could be temporarily suspended or could be
prohibited from bidding on and receiving future government contracts for a period of time. Furthermore, as a government
contractor, we are subject to an increased risk of investigations, criminal prosecution, civil fraud actions, whistleblower
lawsuits, and other legal actions and liabilities to which purely private sector companies are not, the results of which could
materially adversely impact our business. For example, from time to time we may be subject to qui tam lawsuits, which
typically allege that we have made false statements or certifications in connection with claims for payment, or improperly
retained overpayments, from the government. These suits may remain under seal (and hence, be unknown to us) for some
time while the government decides whether to intervene on behalf of the qui tam plaintiff.
An extended government shutdown, payment delays or reduced demand for our services may have a material impact
on our results of operation and financial condition.
An extended government shutdown could significantly reduce demand for our services, delay payment and result
in workforce reductions that may have a material adverse effect on our results of operation and financial condition.
Moreover, a prolonged government shutdown could result in program cancellations, disruptions and/or stop work orders
and could limit the government’s ability to effectively process and our ability to perform government contracts and
successfully compete for new work.
Risks Related to our Capital Structure
The agreements governing our debt contain a number of restrictive covenants which will limit our ability to finance
future operations, acquisitions or capital needs or engage in other business activities that may be in our interest.
The Credit Agreement and the indentures governing our debt contain a number of significant covenants that
impose operating and other restrictions on us and our subsidiaries. Such restrictions affect or will affect and, in many
respects, limit or prohibit, among other things, our ability and the ability of some of our subsidiaries to:
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incur additional indebtedness;
create liens;
pay dividends and make other distributions in respect of our equity securities;
redeem or repurchase our equity securities;
distribute excess cash flow from foreign to domestic subsidiaries;
• make investments or other restricted payments;
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enter into transactions with affiliates; and
sell assets;
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effect mergers or consolidations.
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In addition, our Credit Agreement requires us to comply with a consolidated interest coverage ratio and
consolidated leverage ratio. Our ability to comply with these ratios may be affected by events beyond our control. These
restrictions could limit our ability to plan for or react to market or economic conditions or meet capital needs or otherwise
restrict our activities or business plans, and could adversely affect our ability to finance our operations, acquisitions,
investments or strategic alliances or other capital needs or to engage in other business activities that would be in our
interest. A breach of any of these covenants or our inability to comply with the required financial ratios could result in a
default under our debt instruments. If an event of default occurs, our creditors could elect to:
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declare all borrowings outstanding, together with accrued and unpaid interest, to be immediately due and
payable;
require us to apply all of our available cash to repay the borrowings; or
prevent us from making debt service payments on our borrowings.
If we were unable to repay or otherwise refinance these borrowings when due, the applicable creditors could sell
the collateral securing some of our debt instruments, which constitutes substantially all of our domestic and foreign, wholly
owned subsidiaries’ assets.
Our variable rate indebtedness subjects us to interest rate risk, which could cause our debt service obligations to
increase significantly.
Borrowings under our Credit Agreement are at variable rates of interest and expose us to interest rate risk. If
interest rates increase, our debt service obligations on the variable rate indebtedness will increase even though the amount
borrowed remains the same, and our net income and cash flows, including cash available for servicing our indebtedness,
will correspondingly decrease. A 1.00% increase in such interest rates would increase total interest expense under our
Credit Agreement for the year ended September 30, 2021 by $6.2 million, including the effect of our interest rate swaps.
We may, from time to time, enter into additional interest rate swaps that involve the exchange of floating for fixed rate
interest payments in order to reduce interest rate volatility. However, we may not maintain interest rate swaps with respect
to all of our variable rate indebtedness, and any swaps we enter into may not fully mitigate our interest rate risk and could
be subject to credit risk themselves.
If we are unable to continue to access credit on acceptable terms, our business may be adversely affected.
The changing nature of the global credit markets could make it more difficult for us to access funds, refinance
our existing indebtedness, enter into agreements for uncommitted debt bond facilities and new indebtedness, replace our
existing revolving and term credit agreements or obtain funding through the issuance of our securities. We use credit
facilities to support our working capital and other needs. There is no guarantee that we can continue to renew our credit
facility on terms as favorable as those in our existing credit facility and, if we are unable to do so, our costs of borrowing
and our business may be adversely affected.
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Risks Related to our International Operations
The uncertainty surrounding the implementation of and effects of the United Kingdom’s proposed withdrawal from the
European Union could have an adverse effect on our business and financial results.
The United Kingdom formally left the European Union on January 31, 2020, under the UK-EU Withdrawal
Agreement, which also included a transition period that concluded on December 31, 2020. On January 1, 2021, the UK
also left the EU Single Market and Customs Union, as well as all EU policies and international agreements. As a result,
the free movement of persons, goods, services and capital between the UK and the EU ended, and the EU and the UK
formed two separate markets. On December 24, 2020, the EU reached a trade agreement with the UK. The trade agreement
offers UK and EU companies preferential access to each other’s markets, ensuring imported goods will be free of tariffs
and quotas; however, economic relations between the UK and EU will now be on more restricted terms than existed
previously. The trade agreement does not incorporate the full scope of the services sector, and businesses such as banking
and finance face uncertainty. In March 2021, the UK and EU agreed on a framework for voluntary regulatory cooperation
and dialogue on financial services issues between the two countries in a memorandum of understanding, which is expected
to be signed after formal steps are completed, although this has not yet occurred. At this time, we cannot predict the impact
that the trade agreement, the memorandum of understanding or any future agreements on services, particularly financial
services, will have on our business. Our United Kingdom business is a significant part of our European operations with
approximately 6,000 employees and revenues representing approximately 6% of our total revenue for the fiscal year ended
September 30, 2021. The uncertainty created by Brexit may cause our customers to closely monitor their costs and reduce
demand for our services and may ultimately result in new regulatory and cost challenges for our United Kingdom and
global operations. Any of these events could adversely affect our United Kingdom, European and overall business and
financial results.
Our operations worldwide expose us to legal, political and economic risks in different countries as well as currency
exchange rate fluctuations that could harm our business and financial results.
During fiscal 2021, revenue attributable to our services provided outside of the United States to non-U.S. clients
was approximately 29% of our total revenue. There are risks inherent in doing business internationally, including:
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imposition of governmental controls and changes in laws, regulations or policies;
political and economic instability, including in the Middle East and Southeast Asia;
civil unrest, acts of terrorism, force majeure, war, or other armed conflict;
changes in U.S. and other national government trade policies affecting the markets for our services, such as
retaliatory tariffs between the United States and China;
political unrest in Hong Kong where we have a significant presence;
impact of the Covid-19 pandemic and its related economic impacts;
changes in regulatory practices, tariffs and taxes, such as Brexit;
potential non-compliance with a wide variety of laws and regulations, including anti-corruption, export
control and anti-boycott laws and similar non-U.S. laws and regulations;
changes in labor conditions;
logistical and communication challenges; and
currency exchange rate fluctuations, devaluations and other conversion restrictions.
Any of these factors could have a material adverse effect on our business, results of operations or financial
condition.
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We operate in many different jurisdictions and we could be adversely affected by violations of the U.S. Foreign Corrupt
Practices Act and similar worldwide anti-corruption laws.
The U.S. Foreign Corrupt Practices Act (FCPA) and similar worldwide anti-corruption laws, including the U.K.
Bribery Act of 2010, generally prohibit companies and their intermediaries from making improper payments to non-U.S.
officials for the purpose of obtaining or retaining business. Our internal policies mandate compliance with these anti-
corruption laws, including the requirements to maintain accurate information and internal controls which may fall within
the purview of the FCPA, its books and records provisions or its anti-bribery provisions. We operate in many parts of the
world that have experienced governmental corruption to some degree; and, in some circumstances, strict compliance with
anti-corruption laws may conflict with local customs and practices. Despite our training and compliance programs, we
cannot assure that our internal control policies and procedures always will protect us from reckless or criminal acts
committed by our employees or agents. In addition, from time to time, government investigations of corruption in
construction-related industries affect us and our peers. Violations of these laws, or allegations of such violations, could
disrupt our business and result in a material adverse effect on our results of operations or financial condition.
We work in international locations where there are high security risks, which could result in harm to our employees
and contractors or material costs to us.
Some of our services are performed in high-risk locations, such as the Middle East, Africa, and Southeast Asia,
where the location is suffering from political, social or economic problems, or war or civil unrest. In those locations where
we have employees or operations, we may incur material costs to maintain the safety of our personnel. Despite these
precautions, the safety of our personnel in these locations may continue to be at risk. Acts of terrorism and threats of armed
conflicts in or around various areas in which we operate could limit or disrupt markets and our operations, including
disruptions resulting from the evacuation of personnel, cancellation of contracts, or the loss of key employees, contractors
or assets.
Risks Related to Our Operations and Technology
Many of our project sites are inherently dangerous workplaces. Failure to maintain safe work sites and equipment
could result in environmental disasters, employee deaths or injuries, reduced profitability, the loss of projects or clients
and possible exposure to litigation.
Our project sites often put our employees and others in close proximity with mechanized equipment, moving
vehicles, chemical and manufacturing processes, and highly regulated materials. On some project sites, we may be
responsible for safety and, accordingly, we have an obligation to implement effective safety procedures. If we fail to
implement these procedures or if the procedures we implement are ineffective, we may suffer the loss of or injury to our
employees, as well as expose ourselves to possible litigation. As a result, our failure to maintain adequate safety standards
and equipment could result in reduced profitability or the loss of projects or clients, and could have a material adverse
impact on our business, financial condition, and results of operations.
Cybersecurity threats, information technology systems outages and data privacy incidents could adversely harm our
business.
We may experience errors, outages, or delays of service in our information technology systems, which could
significantly disrupt our operations, impact our clients and employees, damage our reputation, and result in litigation and
regulatory fines or penalties. Various privacy and securities laws pertaining to client and employee data usage require us
to manage and protect sensitive and proprietary information. For example, the European’s Union General Data Protection
Regulation extends the scope of the European Union data protection laws to all companies processing data of European
Union residents, regardless of the company’s location. In addition, the California Consumer Privacy Act increased the
penalties for data privacy incidents.
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We face threats to our information technology systems, including unauthorized access, computer hackers,
computer viruses, malicious code, cyber-attacks, phishing and other cybersecurity problems and system disruptions,
including possible unauthorized access to our and our clients’ proprietary information. We rely on industry-accepted
security measures and technology to securely maintain all proprietary information on our information technology systems.
In the ordinary course of business, we have been targeted by malicious cyber-attacks. Anyone who circumvents our
security measures could misappropriate proprietary information, including information regarding us, our employees and/or
our clients, or cause interruptions in our operations. Although we devote significant resources to our cybersecurity
programs and have implemented security measures to protect our systems and to prevent, detect and respond to
cybersecurity incidents, there can be no assurance that our efforts will prevent these threats. As these security threats
continue to evolve, we may be required to devote additional resources to protect, prevent, detect and respond against
system disruptions and security breaches.
We also rely in part on third-party software and information technology vendors to run our critical accounting,
project management and financial information systems. We depend on our software and information technology vendors
to provide long-term software and hardware support for our information systems. Our software and information technology
vendors may decide to discontinue further development, integration or long-term software and hardware support for our
information systems, in which case we may need to abandon one or more of our current information systems and migrate
some or all of our accounting, project management and financial information to other systems, thus increasing our
operational expense, as well as disrupting the management of our business operations.
Any of these events could damage our reputation and have a material adverse effect on our business, financial
condition, results of operations and cash flows. Furthermore, while we maintain insurance that specifically covers these
attacks, our coverage may not sufficiently cover all types of losses or claims that may arise.
Risks Related to Contracts and Joint Ventures
Our business and operating results could be adversely affected by losses under fixed-price or guaranteed maximum
price contracts.
Fixed-price contracts require us to either perform all work under the contract for a specified lump-sum or to
perform an estimated number of units of work at an agreed price per unit, with the total payment determined by the actual
number of units performed. In addition, we may enter guaranteed maximum price contracts where we guarantee a price or
delivery date. For the year ended September 30, 2021, our revenue was comprised of 40%, 34%, and 26% cost-
reimbursable, guaranteed maximum price, and fixed-price contracts, respectively. Fixed-price contracts expose us to a
number of risks not inherent in cost-reimbursable contracts, including underestimation of costs, ambiguities in
specifications, unforeseen increases in or failures in estimating the cost of raw materials, equipment or labor, problems
with new technologies, delays beyond our control, fluctuations in profit margins, failures of subcontractors to perform and
economic or other changes that may occur during the contract period. United States and foreign trade policy actions and
tariffs such as the 2018 tariffs on steel and aluminum imports in the United States could affect the profitability of our
fixed-price construction projects. Losses under fixed-price or guaranteed contracts could be substantial and adversely
impact our results of operations.
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Our failure to meet contractual schedule or performance requirements that we have guaranteed could adversely affect
our operating results.
In some circumstances, we can incur liquidated or other damages if we do not achieve project completion by a
scheduled date. If we or an entity for which we have provided a guarantee fails to complete the project as scheduled and
the matter cannot be satisfactorily resolved with the client, we may be responsible for cost impacts to the client resulting
from any delay or the cost to complete the project. Our costs generally increase from schedule delays and/or could exceed
our projections for a particular project. In addition, project performance can be affected by a number of factors beyond our
control, including unavoidable delays from governmental inaction, public opposition, inability to obtain financing, weather
conditions, unavailability of vendor materials, changes in the project scope of services requested by our clients, industrial
accidents, environmental hazards, labor disruptions, pandemics including the current coronavirus, and other factors.
Material performance problems for existing and future contracts could cause actual results of operations to differ from
those anticipated by us and also could cause us to suffer damage to our reputation within our industry and client base.
We may not be able to maintain adequate surety and financial capacity necessary for us to successfully bid on and win
contracts.
In line with industry practice, we are often required to provide surety bonds, standby letters of credit or corporate
guarantees to our clients that indemnify them should our affiliate fail to perform its obligations under the terms of a
contract. As of September 30, 2021 and September 30, 2020, we were contingently liable for $4.3 billion and $6.2 billion,
respectively, in issued surety bonds primarily to support project execution and we had outstanding letters of credit totaling
$483.0 million and $529.1 million, respectively. A surety may issue a performance or payment bond to guarantee to the
client that our affiliate will perform under the terms of a contract. If our affiliate fails to perform under the terms of the
contract, then the client may demand that the surety or another corporate affiliate provide the contracted services. In
addition, we would typically have obligations to indemnify the surety for any loss incurred in connection with the bond.
If a surety bond or a letter of credit is required for a particular project and we are unable to obtain an appropriate surety
bond or letter of credit, we may not be able to pursue that project, which in turn could have a material adverse impact on
our business, financial condition, results of operations, and cash flows.
We conduct a portion of our operations through joint venture entities, over which we may have limited control.
Approximately 10% of our fiscal 2021 revenue was derived from our operations through joint ventures or similar
partnership arrangements, where control may be shared with unaffiliated third parties. As with most joint venture
arrangements, differences in views among the joint venture participants may result in delayed decisions or disputes. We
also cannot control the actions of our joint venture partners and we typically have joint and several liability with our joint
venture partners under the applicable contracts for joint venture projects. These factors could potentially adversely impact
the business and operations of a joint venture and, in turn, our business and operations.
Operating through joint ventures in which we are minority holders results in us having limited control over many
decisions made with respect to projects and internal controls relating to projects. Sales of our services provided to our
unconsolidated joint ventures were approximately 4% of our fiscal 2021 revenue. We generally do not have control of
these unconsolidated joint ventures. These joint ventures may not be subject to the same requirements regarding internal
controls and internal control over financial reporting that we follow. As a result, internal control problems may arise with
respect to these joint ventures, which could have a material adverse effect on our financial condition and results of
operations and could also affect our reputation.
We participate in joint ventures where we provide guarantees and may be adversely impacted by the failure of the joint
venture or its participants to fulfill their obligations.
We have investments in and commitments to joint ventures with unrelated parties, including in connection with
construction services, government services, and the investment activities of ACAP. For example, real estate and
infrastructure joint ventures are inherently risky and may result in future losses since real estate markets are impacted by
economic trends and government policies that we do not control. These joint ventures from time to time may borrow
money to help finance their activities and in some circumstances, we are required to provide guarantees of obligations of
our affiliated entities. In addition, in connection with the investment activities of ACAP, we provide guarantees of
23
obligations, including guarantees for completion of projects, repayment of debt, environmental indemnity obligations and
other lender required guarantees.
AECOM Capital’s real estate development and investment activities are inherently risky and may result in a future loss.
ACAP’s real estate business involves managing, sponsoring, investing in and developing commercial real estate
projects and joint ventures (Real Estate Joint Ventures) that are inherently risky and may result in future losses since real
estate markets are significantly impacted by economic trends and government policies that we do not control. Our
registered investment adviser jointly manages and sponsors the AECOM-Canyon Equity Fund, L.P. (the “Fund”), in which
the Company indirectly holds an equity interest and which also invests in and develops Real Estate Joint Ventures on
behalf of its investors. Real Estate Joint Ventures rely on substantial amounts of third party borrowing to finance their
development activities including completion guarantees, repayment guarantees, environmental indemnities and other
lender required credit support guarantees that may be provided by AECOM or an affiliate to secure the Real Estate Joint
Venture financing. Although the Fund and such Real Estate Joint Ventures have reserves that will be used to share any
cost overruns of the Real Estate Joint Ventures, if such reserves are depleted, then AECOM may be required to make
support payments to fund non-budgeted cost overruns on behalf of the Fund (but not on behalf of the Fund’s co-partner or
any unaffiliated limited partners of the Real Estate Joint Ventures). Some of the Fund’s limited partners may be permitted
to make additional equity co-investments in certain Real Estate Joint Ventures for which AECOM will provide support
payments on behalf of the limited partner co-investor in the event of a cost overrun of the Real Estate Joint Venture after
additional specific reserves have been depleted. AECOM’s provision of lender guarantees is contingent upon the Real
Estate Joint Ventures meeting AECOM’s underwriting criteria, including an affiliate of AECOM acting as either the
construction manager at risk or the owner’s representative for the project, no material adverse change in AECOM’s
financial condition, and the guarantee not violating a covenant under a material AECOM agreement.
Risks Related to Laws and Regulations
Misconduct by our employees, subcontractors, partners or consultants or our failure to comply with laws or regulations
applicable to our business could cause us to lose customers or lose our ability to contract with government agencies.
As a government contractor, misconduct, fraud or other improper activities caused by our employees’,
subcontractors’, partners’ or consultants’ failure to comply with laws or regulations could have a significant negative
impact on our business and reputation. Such misconduct could include the failure to comply with procurement regulations,
environmental regulations, regulations regarding the protection of sensitive government information, legislation regarding
the pricing of labor and other costs in government contracts, regulations on lobbying or similar activities, and anti-
corruption, anti-competition, export control and other applicable laws or regulations. Our failure to comply with applicable
laws or regulations, misconduct by any of our employees, subcontractors, partners or consultants, or our failure to make
timely and accurate certifications to government agencies regarding misconduct or potential misconduct could subject us
to fines and penalties, loss of government granted eligibility, cancellation of contracts and suspension or debarment from
contracting with government agencies, any of which may adversely affect our business.
We may be subject to substantial liabilities under environmental laws and regulations.
Our services are subject to numerous environmental protection laws and regulations that are complex and
stringent. Our business involves in part the planning, design, program management, construction management, and
operations and maintenance at various sites, including but not limited to, nuclear facilities, hazardous waste and Superfund
sites, hydrocarbon production, distribution and transport sites, and other infrastructure-related facilities. We also regularly
perform work in and around sensitive environmental areas, such as rivers, lakes and wetlands. In addition, we have
contracts in support of U.S. federal government entities to destroy hazardous materials, including chemical agents and
weapons stockpiles, as well as to decontaminate and decommission nuclear facilities. These activities may require us to
manage, handle, remove, treat, transport and dispose of toxic or hazardous substances. We also own and operate several
properties in the U.S. and Canada that have been used for the storage and maintenance of construction equipment. In the
conduct of operations on these properties, and despite precautions having been taken, it is possible that there have been
accidental releases of individually relatively small amounts of fuel, oils, hydraulic fluids and other fluids while storing or
servicing this equipment. Such accidental releases though individually relatively small may have accumulated over time.
Past business practices at companies that we have acquired may also expose us to future unknown environmental liabilities.
24
Significant fines, penalties and other sanctions may be imposed for non-compliance with environmental laws and
regulations, and some environmental laws provide for joint and several strict liabilities for remediation of releases of
hazardous substances, rendering a person liable for environmental damage, without regard to negligence or fault on the
part of such person. These laws and regulations may expose us to liability arising out of the conduct of operations or
conditions caused by others, or for our acts that were in compliance with all applicable laws at the time these acts were
performed. For example, there are a number of governmental laws that strictly regulate the handling, removal, treatment,
transportation and disposal of toxic and hazardous substances, such as Comprehensive Environmental Response
Compensation and Liability Act of 1980, and comparable state laws, that impose strict, joint and several liabilities for the
entire cost of cleanup, without regard to whether a company knew of or caused the release of hazardous substances. In
addition, some environmental regulations can impose liability for the entire cleanup upon owners, operators, generators,
transporters and other persons arranging for the treatment or disposal of such hazardous substances related to contaminated
facilities or project sites. Other federal environmental, health and safety laws affecting us include, but are not limited to,
the Resource Conservation and Recovery Act, the National Environmental Policy Act, the Clean Air Act, the Clean Air
Mercury Rule, the Occupational Safety and Health Act, the Toxic Substances Control Act and the Superfund Amendments
and Reauthorization Act and the Energy Reorganization Act of 1974, as well as other comparable national and state laws.
Liabilities related to environmental contamination or human exposure to hazardous substances, or a failure to comply with
applicable regulations could result in substantial costs to us, including cleanup costs, fines and civil or criminal sanctions,
third-party claims for property damage or personal injury or cessation of remediation activities. Our continuing work in
the areas governed by these laws and regulations exposes us to the risk of substantial liability.
Risks Related to Acquisitions and Divestitures
AECOM is a smaller company after the sale of our Management Services and self-perform at-risk civil infrastructure
and power construction businesses and, as a result, may be more vulnerable to changing market conditions.
AECOM is a smaller company after the sale of our Management Services and self-perform at-risk civil
infrastructure and power construction businesses and more reliant on our remaining business segments. Our results of
operations, cash flows, working capital, effective tax rate, and financing requirements may be subject to increased volatility
and our ability to fund capital expenditures, investments and service debt may be diminished. In addition, any purchase
price adjustments could be unfavorable and other future proceeds owed to us as part of these transactions could be lower
than we expect. We are also obligated to incur ongoing costs and retain certain legal claims that were previously allocated
to the Management Services business. As a result, we may be more vulnerable to changing market conditions, which could
have a material adverse effect on our business, financial condition, and results of operations.
We may be unable to successfully execute or effectively integrate acquisitions and divestitures may not occur as
planned.
We regularly review our portfolio of businesses and pursue growth through acquisitions and seek to divest non-
core businesses. We may not be able to complete transactions on favorable terms, on a timely basis, or at all, and during
the integration of any acquisition, we may discover regulatory and compliance issues. In addition, our results of operations
and cash flows may be adversely impacted by (i) the failure of acquired businesses to meet or exceed expected returns; (ii)
the failure to integrate acquired businesses on schedule and/or to achieve expected synergies; (iii) the inability to dispose
of non-core assets and businesses on satisfactory terms and conditions; (iv) diversion of attention and increased burdens
on our employees; and (v) the discovery of unanticipated liabilities or other problems in acquired businesses for which we
lack contractual protections, insurance or indemnities, or with regard to divested businesses, claims by purchasers to whom
we have provided contractual indemnification. Additional difficulties we may encounter as part of the integration process
include the following:
•
•
•
the consequences of a change in tax treatment and the possibility that the full benefits anticipated from the
acquisition or disposition will not be realized;
any delay in the integration or disposition of management teams, strategies, operations, products and
services;
differences in business backgrounds, corporate cultures and management philosophies that may delay
successful integration;
25
•
•
•
•
•
•
the ability to retain key employees;
the ability to create and enforce uniform standards, controls, procedures, policies and information systems;
the challenge of restructuring complex systems, technology, networks and other assets in a seamless manner
that minimizes any adverse impact on customers, suppliers, employees and other constituencies;
potential unknown liabilities and unforeseen increased expenses or delays associated with the acquisition,
including costs to integrate beyond current estimates;
the ability to deduct or claim tax attributes or benefits such as operating losses, business or foreign tax credits;
and
the disruption of, or the loss of momentum in, each company’s ongoing businesses or inconsistencies in
standards, controls, procedures and policies.
Any of these factors could adversely affect our ability to maintain relationships with customers, suppliers,
employees and other constituencies or could reduce our earnings or otherwise adversely affect our business and financial
results.
Our plans to divest businesses are subject to various risks and uncertainties and may not be completed in accordance
with the expected plans or anticipated time frame, or at all, and will involve significant time and expense, which could
disrupt or adversely affect our business.
Divesting businesses involve risks and uncertainties, such as the difficulty separating assets related to such
businesses from the businesses we retain, employee distraction, the need to obtain regulatory approvals and other third-
party consents, which potentially disrupts customer and vendor relationships, and the fact that we may be subject to
additional tax obligations or loss of tax benefits. Because of these challenges, as well as market conditions or other factors,
anticipated divestitures may take longer or be costlier or generate fewer benefits than expected and may not be completed
at all. If we are unable to complete divestitures or to successfully transition divested businesses, our business and financial
results could be negatively impacted. After we dispose of a business, we may retain exposure on financial or performance
guarantees and other contractual, employment, pension and severance obligations, and potential liabilities that may arise
under law because of the disposition or the subsequent failure of an acquirer. As a result, performance by the divested
businesses or other conditions outside of our control could have a material adverse effect on our results of operations. In
addition, the divestiture of any business could negatively impact our profitability because of losses that may result from
such a sale, the loss of sales and operating income, or a decrease in cash flows.
Other Risks
An impairment charge of goodwill could have a material adverse impact on our financial condition and results of
operations.
Because we have grown in part through acquisitions, goodwill and intangible assets-net represent a substantial
portion of our assets. Under generally accepted accounting principles in the United States, we are required to test goodwill
carried in our consolidated balance sheets for possible impairment on an annual basis based upon a fair value approach
and whenever events occur that indicate impairment could exist. These events or circumstances could include a significant
change in the business climate, including a significant sustained decline in a reporting unit’s market value, legal factors,
operating performance indicators, competition, sale or disposition of a significant portion of our business, a significant
sustained decline in our market capitalization and other factors. For example, in the year ended September 30, 2020, we
recorded a noncash impairment of long-lived assets, including goodwill of $83.6 million primarily related to a decrease in
the estimated recovery and fair value of reporting units with self-perform at-risk construction.
In addition, if we experience a decrease in our stock price and market capitalization over a sustained period, we
would have to record an impairment charge in the future. The amount of any impairment could be significant and could
have a material adverse impact on our financial condition and results of operations for the period in which the charge is
taken.
26
We may be required to contribute additional cash to meet our significant underfunded benefit obligations associated
with pension benefit plans we manage or multiemployer pension plans in which we participate.
We have defined benefit pension plans for employees in the United States, United Kingdom, Canada, Australia,
and Ireland. At September 30, 2021, our defined benefit pension plans had an aggregate deficit (the excess of projected
benefit obligations over the fair value of plan assets) of approximately $345.5 million. In the future, our pension deficits
may increase or decrease depending on changes in the levels of interest rates, pension plan performance and other factors
that may require us to make additional cash contributions to our pension plans and recognize further increases in our net
pension cost to satisfy our funding requirements. If we are forced or elect to make up all or a portion of the deficit for
unfunded benefit plans, our results of operations could be materially and adversely affected.
A multiemployer pension plan is typically established under a collective bargaining agreement with a union to
cover the union-represented workers of various unrelated companies. Our collective bargaining agreements with unions
require us to contribute to various multiemployer pension plans; however, we do not control or manage these plans. For
the year ended September 30, 2021, we contributed $3.7 million to multiemployer pension plans. Under the Employee
Retirement Income Security Act, an employer who contributes to a multiemployer pension plan, absent an applicable
exemption, may also be liable, upon termination or withdrawal from the plan, for its proportionate share of the
multiemployer pension plan’s unfunded vested benefit. If we terminate or withdraw from a multiemployer plan, absent an
applicable exemption (such as for some plans in the building and construction industry), we could be required to contribute
a significant amount of cash to fund the multiemployer plan’s unfunded vested benefit, which could materially and
adversely affect our financial results; however, since we do not control the multiemployer plans, we are unable to estimate
any potential contributions that could be required.
We may experience disproportionately high levels of collection risk and nonpayment if clients in specific geographic
areas or industries are adversely affected by factors particular to their geographic area or industry.
Our clients include public and private entities that have been, and may continue to be, negatively impacted by the
changing landscape in the global economy. While no one client accounted for over 10% of our revenue for fiscal 2021,
we face collection risk as a normal part of our business where we perform services and subsequently bill our clients for
such services, or when we make equity investments in majority or minority controlled large-scale client projects and other
long-term capital projects before the project completes operational status or completes its project financing. In the event
that we have concentrated credit risk from clients in a specific geographic area or industry, continuing negative trends or
a worsening in the financial condition of that specific geographic area or industry could make us susceptible to
disproportionately high levels of default by those clients. Such defaults could materially adversely impact our revenues,
results of operations or accounts receivable.
Our services expose us to significant risks of liability and our insurance policies may not provide adequate coverage.
Our services involve significant risks of professional and other liabilities that may substantially exceed the fees
that we derive from such services. In addition, we sometimes contractually assume liability to clients on projects under
indemnification or guarantee agreements. We cannot predict the magnitude of potential liabilities from the operation of
our business. In addition, in the ordinary course of our business, we frequently make professional judgments and
recommendations about environmental and engineering conditions of project sites for our clients. We may be deemed to
be responsible for these professional judgments and recommendations if they are later determined to be inaccurate. Any
unfavorable legal ruling against us could result in substantial monetary damages or even criminal violations.
Our professional liability policies cover only claims made during the term of the policy. Additionally, our
insurance policies may not protect us against potential liability due to various exclusions in the policies and self-insured
retention amounts. Partially or completely uninsured claims, if successful and of significant magnitude, could have a
material adverse effect on our business.
Unavailability or cancellation of third-party insurance coverage would increase our overall risk exposure as well as
disrupt the management of our business operations.
We maintain insurance coverage from third-party insurers as part of our overall risk management strategy and
because some of our contracts require us to maintain specific insurance coverage limits. If any of our third-party insurers
fail, suddenly cancel our coverage or otherwise are unable to provide us with adequate insurance coverage, then our overall
27
risk exposure and our operational expenses would increase and the management of our business operations would be
disrupted. In addition, there can be no assurance that any of our existing insurance coverage will be renewable upon the
expiration of the coverage period or that future coverage will be affordable at the required limits.
If we do not have adequate indemnification for our services related to nuclear materials, it could adversely affect our
business and financial condition.
We provide services to the nuclear energy industry in the ongoing maintenance and modification, as well as the
decontamination and decommissioning, of nuclear energy plants. Indemnification provisions under the Price-Anderson
Act available to nuclear energy plant operators and contractors do not apply to all liabilities that we might incur while
performing services as a radioactive materials cleanup contractor for the nuclear energy industry. If the Price-Anderson
Act’s indemnification protection does not apply to our services or if our exposure occurs outside the U.S., our business
and financial condition could be adversely affected either by our client’s refusal to retain us, by our inability to obtain
commercially adequate insurance and indemnification, or by potentially significant monetary damages we may incur.
Our backlog of uncompleted projects under contract is subject to unexpected adjustments and cancellations and, thus
may not accurately reflect future revenue and profits.
At September 30, 2021, backlog was approximately $38.6 billion. We reported transaction price allocated to
remaining unsatisfied performance obligations (RUPO) of $18.7 billion, as described in Note 4, Revenue Recognition, in
the notes to our consolidated financial statements. The most significant differences between our backlog and RUPO are
backlog contains revenue we expect to record in the future where we have been awarded the work, but the contractual
agreement has not yet been signed, unconsolidated joint venture backlog where we expect to realize income through equity
earnings rather than revenue, and revenue related to service contracts that extend beyond the termination provisions of
those contracts, where guidance for the calculation of RUPO requires us to assume the contract will be terminated at its
earliest convenience. Accordingly, RUPO is $19.9 billion lower than backlog. We cannot guarantee that future revenue
will be realized from either category of backlog or, if realized, will result in profits. Many projects may remain in our
backlog for an extended period of time because of the size or long-term nature of the contract. In addition, from time to
time, projects are delayed, scaled back or canceled. These types of backlog reductions adversely affect the revenue and
profits that we ultimately receive from contracts reflected in our backlog.
We have submitted claims to clients for work we performed beyond the initial scope of some of our contracts. If these
clients do not approve these claims, our results of operations could be adversely impacted.
We typically have pending claims submitted under some of our contracts for payment of work performed beyond
the initial contractual requirements for which we have already recorded revenue. In general, we cannot guarantee that such
claims will be approved in whole, in part, or at all. Often, these claims can be the subject of lengthy arbitration or litigation
proceedings, and it is difficult to accurately predict when these claims will be fully resolved. When these types of events
occur and unresolved claims are pending, we have used working capital in projects to cover cost overruns pending the
resolution of the relevant claims. If these claims are not approved, our revenue may be reduced in future periods.
In conducting our business, we depend on other contractors, subcontractors and equipment and material providers. If
these parties fail to satisfy their obligations to us or other parties or if we are unable to maintain these relationships,
our revenue, profitability and growth prospects could be adversely affected.
We depend on contractors, subcontractors and equipment and material providers in conducting our business.
There is a risk that we may have disputes with our subcontractors arising from, among other things, the quality and
timeliness of work performed by the subcontractor, customer concerns about the subcontractor, or our failure to extend
existing task orders or issue new task orders under a subcontract. Also, to the extent that we cannot acquire equipment and
materials at reasonable costs, or if the amount we are required to pay exceeds our estimates, our ability to complete a
project in a timely fashion or at a profit may be impaired. In addition, if any of our subcontractors fail to deliver on a timely
basis the agreed-upon supplies and/or perform the agreed-upon services, our ability to fulfill our obligations as a prime
contractor may be jeopardized; we could be held responsible for such failures and/or we may be required to purchase the
supplies or services from another source at a higher price. This may reduce the profit to be realized or result in a loss on a
project for which the supplies or services are needed.
28
We also rely on relationships with other contractors when we act as their subcontractor or joint venture partner.
Our future revenue and growth prospects could be adversely affected if other contractors eliminate or reduce their
subcontracts or joint venture relationships with us, or if a government agency terminates or reduces these other contractors’
programs, does not award them new contracts or refuses to pay under a contract. In addition, due to “pay when paid”
provisions that are common in subcontracts in many countries, including the U.S., we could experience delays in receiving
payment if the prime contractor experiences payment delays.
If clients use our reports or other work product without appropriate disclaimers or in a misleading or incomplete
manner, or if our reports or other work product are not in compliance with professional standards and other
regulations, our business could be adversely affected.
The reports and other work product we produce for clients sometimes include projections, forecasts and other
forward-looking statements. Such information by its nature is subject to numerous risks and uncertainties, any of which
could cause the information produced by us to ultimately prove inaccurate. While we include appropriate disclaimers in
the reports that we prepare for our clients, once we produce such written work product, we do not always have the ability
to control the manner in which our clients use such information. As a result, if our clients reproduce such information to
solicit funds from investors for projects without appropriate disclaimers and the information proves to be incorrect, or if
our clients reproduce such information for potential investors in a misleading or incomplete manner, our clients or such
investors may threaten to or file suit against us for, among other things, securities law violations. If we were found to be
liable for any claims related to our client work product, our business could be adversely affected.
In addition, our reports and other work product may need to comply with professional standards, licensing
requirements, securities regulations and other laws and rules governing the performance of professional services in the
jurisdiction where the services are performed. We could be liable to third parties who use or rely upon our reports and
other work product even if we are not contractually bound to those third parties. These events could in turn result in
monetary damages and penalties.
Failure to adequately protect, maintain, or enforce our rights in our intellectual property may adversely limit our
competitive position.
Our success depends, in part, upon our ability to protect our intellectual property. We rely on a combination of
intellectual property policies and other contractual arrangements to protect much of our intellectual property where we do
not believe that trademark, patent or copyright protection is appropriate or obtainable. Trade secrets are generally difficult
to protect. Although our employees are subject to confidentiality obligations, this protection may be inadequate to deter or
prevent misappropriation of our confidential information and/or the infringement of our patents and copyrights. Further,
we may be unable to detect unauthorized use of our intellectual property or otherwise take appropriate steps to enforce our
rights. Failure to adequately protect, maintain, or enforce our intellectual property rights may adversely limit our
competitive position.
Our ability to compete in our industry will be harmed if we do not retain the continued services of our senior
management and key technical personnel.
We rely heavily upon the expertise and leadership of our people. There is strong competition for qualified
technical and management personnel in the sectors in which we compete. We may not be able to continue to attract and
retain qualified technical and management personnel, such as engineers, architects and project managers, who are
necessary for the development of our business or to replace qualified personnel in the timeframe demanded by our clients.
Also, some of our personnel hold government granted eligibility that may be required to obtain government projects. Loss
of the services of, or failure to recruit senior management or key technical personnel could impact the long term
performance of the Company and limit our ability to successfully complete existing projects and compete for new projects.
29
Our revenue and growth prospects may be harmed if we or our employees are unable to obtain government granted
eligibility or other qualifications we and they need to perform services for our customers.
A number of government programs require contractors to have government granted eligibility, such as security
clearance credentials. Depending on the project, eligibility can be difficult and time-consuming to obtain. If we or our
employees are unable to obtain or retain the necessary eligibility, we may not be able to win new business, and our existing
customers could terminate their contracts with us or decide not to renew them. To the extent we cannot obtain or maintain
the required security clearances for our employees working on a particular contract, we may not derive the revenue or
profit anticipated from such contract.
Negotiations with labor unions and possible work actions could divert management attention and disrupt operations.
In addition, new collective bargaining agreements or amendments to agreements could increase our labor costs and
operating expenses.
We regularly negotiate with labor unions and enter into collective bargaining agreements. The outcome of any
future negotiations relating to union representation or collective bargaining agreements may not be favorable to us. We
may reach agreements in collective bargaining that increase our operating expenses and lower our net income as a result
of higher wages or benefit expenses. In addition, negotiations with unions could divert management attention and disrupt
operations, which may adversely affect our results of operations. If we are unable to negotiate acceptable collective
bargaining agreements, we may have to address the threat of union-initiated work actions, including strikes. Depending
on the nature of the threat or the type and duration of any work action, these actions could disrupt our operations and
adversely affect our operating results.
Our charter documents contain provisions that may delay, defer or prevent a change of control.
Provisions of our certificate of incorporation and bylaws could make it more difficult for a third party to acquire
control of us, even if the change in control would be beneficial to stockholders. These provisions include the following:
•
•
•
ability of our Board of Directors to authorize the issuance of preferred stock in series without stockholder
approval;
vesting of exclusive authority in our Board of Directors to determine the size of the board and to fill
vacancies; and
advance notice requirements for stockholder proposals and nominations for election to our Board of
Directors.
Changes in tax laws could increase our worldwide tax rate and materially affect our results of operations.
We are subject to tax laws in the U.S. and numerous foreign jurisdictions. The U.S. and many international
legislative and regulatory bodies continually propose and enact legislation that could significantly impact how U.S.
multinational corporations are taxed. In the U.S., the proposed legislation in the Build Back Better Act would impose a
15% minimum tax on corporate book income for corporations with profits over $1 billion, change the Global Intangible
Low-Taxed Income (GILTI) regime, reduce the deduction for Foreign-Derived Intangible Income (FDII), and create a
new limitation on interest deductions as well as other corporate tax reform. Due to the large scale of our U.S. and
international business activities, many of these proposed changes, if enacted into law, could have an adverse impact on
our worldwide effective tax rate, income tax expense and cash flows.
ITEM 1B. UNRESOLVED STAFF COMMENTS
None.
30
ITEM 2. PROPERTIES
Our corporate offices are located in approximately 9,000 square feet of space at 13355 Noel Road, Dallas, Texas.
Our other offices, including smaller administrative or project offices, consist of an aggregate of approximately 7.4 million
square feet worldwide. Virtually all of our offices are leased. See Note 11 in the notes to our consolidated financial
statements for information regarding our lease obligations. We may add additional facilities from time to time in the future
as the need arises.
ITEM 3. LEGAL PROCEEDINGS
As a government contractor, we are subject to various laws and regulations that are more restrictive than those
applicable to non-government contractors. Intense government scrutiny of contractors’ compliance with those laws and
regulations through audits and investigations is inherent in government contracting and, from time to time, we receive
inquiries, subpoenas, and similar demands related to our ongoing business with government entities. Violations can result
in civil or criminal liability as well as suspension or debarment from eligibility for awards of new government contracts
or option renewals.
We are involved in various investigations, claims and lawsuits in the normal conduct of our business. We are not
always aware if we or our affiliates are under investigation or the status of such matters. Although the outcome of our legal
proceedings cannot be predicted with certainty and no assurances can be provided, in the opinion of our management,
based upon current information and discussions with counsel, with the exception of the matters noted in Note 18,
Commitments and Contingencies, to the financial statements contained in this report to the extent stated therein, none of
the investigations, claims and lawsuits in which we are involved is expected to have a material adverse effect on our
consolidated financial position, results of operations, cash flows or our ability to conduct business. See Note 18,
Commitments and Contingencies, to the financial statements contained in this report for a discussion of certain matters to
which we are a party. The information set forth in such note is incorporated by reference into this Item 3. From time to
time, we establish reserves for litigation when we consider it probable that a loss will occur.
ITEM 4. MINE SAFETY DISCLOSURES
The Company does not act as the owner of any mines, but as concerning the fiscal year prior to January 2, 2021,
we may have acted as a mining operator as defined under the Federal Mine Safety and Health Act of 1977 where we may
have been a lessee of a mine, a person who operates, controls or supervises such mine, or an independent contractor
performing services or construction of such mine. Information concerning mine safety violations or other regulatory
matters required by Section 1503(a) of the Dodd-Frank Wall Street Reform and Consumer Protection Act and Item 104 of
Regulation S-K is included in Exhibit 95.
31
PART II
ITEM 5. MARKET FOR REGISTRANT’S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND
ISSUER PURCHASES OF EQUITY SECURITIES
Our common stock is listed on the New York Stock Exchange (NYSE) under the symbol “ACM.” According to
the records of our transfer agent, there were 1,666 stockholders of record as of November 11, 2021.
Unregistered Sales of Equity Securities
None.
Equity Compensation Plans
The following table presents certain information about shares of AECOM common stock that may be issued
under our equity compensation plans as of September 30, 2021:
Plan Category
Equity compensation plans not approved by stockholders: .
Equity compensation plans approved by stockholders:
AECOM Stock Incentive Plans . . . . . . . . . . . . . . . . . . . . .
AECOM Employee Stock Purchase Plan(3) . . . . . . . . . . .
Total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Column A
Column B
Column C
Number of securities
remaining available
Number of securities Weighted‑average
to be issued
upon exercise
of outstanding
options, warrants,
and rights(1)
exercise price of
Outstanding
options,
warrants, and
Rights
for future
issuance under
equity compensation
plans (excluding
securities reflected
in Column A)
N/A
N/A
N/A
2,759,268 (1) $
N/A
2,759,268
$
38.72 (2)
N/A
38.72
12,104,961
9,546,371
21,651,332
(1)
Includes 265,487 shares issuable upon the exercise of stock options, 1,321,928 shares issuable upon the vesting of
Restricted Stock Units and 1,171,853 shares issuable if specified performance targets are met under Performance
Earnings Program Awards (PEP).
(2) Weighted-average exercise price of outstanding options only.
(3) Amounts only reflected in column (c) and include all shares available for future issuance and subject to outstanding
rights.
Performance Measurement Comparison(1)
The following chart compares the cumulative total stockholder return of AECOM stock (ACM) with the
cumulative total return of the S&P MidCap 400, and the S&P Composite 1500 Construction & Engineering, from October
2, 2016 to October 1, 2021.
We believe the S&P 400 MidCap is an appropriate independent broad market index, since it measures the
performance of similar mid-sized companies in numerous sectors. In addition, we believe the S&P Composite 1500
Construction & Engineering index is an appropriate third party published industry index since it measures the performance
of engineering and construction companies.
(1) This section is not “soliciting material,” is not deemed “filed” with the SEC and is not incorporated by reference in
any of our filings under the Securities Act or Exchange Act whether made before or after the date hereof and
irrespective of any general incorporation language in any such filing.
32
Comparison of Cumulative Total Return
October 2rd, 2016 - October 1st, 2021
160.00
140.00
120.00
100.00
80.00
60.00
40.00
20.00
0.00
-20.00
-40.00
AECOM
S&P 1500 C&E Index
S&P Mid Cap 400
Stock Repurchase Program
On September 21, 2017, the Company’s Board of Directors announced a capital allocation policy that authorized
the repurchase of up to $1.0 billion in AECOM common stock. Stock repurchases can be made through open market
purchases or other methods, including pursuant to a Rule 10b5-1 plan. On November 13, 2020, the Board approved an
increase in the Company’s repurchase authorization to $1.0 billion. On September 22, 2021, the Board approved another
increase in the Company’s repurchase authorization to $1.0 billion. A summary of the repurchase activity for the three
months ended September 30, 2021 is as follows:
Period
July 1 – 31, 2021 . . . . . . . . . . . . . . . .
August 1 – 31, 2021 . . . . . . . . . . . . .
September 1 – 30, 2021 . . . . . . . . . .
Total . . . . . . . . . . . . . . . . . . . . . . . . . .
Total Number
of Shares
Purchased
750,685
802,878
296,508
1,850,071
$
Total Number of Shares
Maximum Approximate Dollar
Average Price Purchased as Part of Publicly Value that May Yet Be Purchased
Paid Per Share Announced Plans or Programs Under the Plans or Programs
545,448,000
494,571,000
1,000,000,000
$
750,685 $
802,878
296,508
1,850,071
61.89
63.37
66.14
63.21
ITEM 6. RESERVED
33
ITEM 7. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS
This Annual Report on Form 10-K contains forward-looking statements within the meaning of the safe harbor
provisions of the Private Securities Litigation Reform Act of 1995 that are not limited to historical facts, but reflect the
Company’s current beliefs, expectations or intentions regarding future events. These statements include forward-looking
statements with respect to the Company, including the Company’s business, operations and strategy, and the engineering
and construction industry. Statements that are not historical facts, without limitation, including statements that use terms
such as "anticipates," "believes," "expects," "estimates," "intends," "may," "plans," "potential," "projects," and "will" and
that relate to future impacts caused by the Covid-19 coronavirus pandemic and the related economic instability and
market volatility, including the reaction of governments to the coronavirus, including any prolonged period of travel,
commercial or other similar restrictions, the delay in commencement, or temporary or permanent halting of construction,
infrastructure or other projects, requirements that we remove our employees or personnel from the field for their
protection, and delays or reductions in planned initiatives by our governmental or commercial clients or potential clients;
future revenues, expenditures and business trends; future reduction of our self-perform at-risk construction exposure;
future accounting estimates; future contractual performance obligations; future conversions of backlog; future capital
allocation priorities, including common stock repurchases, future trade receivables, future debt pay downs; future post-
retirement expenses; future tax benefits and expenses, and the impact of future tax laws; future compliance with
regulations; future legal claims and insurance coverage; future effectiveness of our disclosure and internal controls over
financial reporting; future costs savings; and other future economic and industry conditions, are forward-looking
statements. In light of the risks and uncertainties inherent in all forward-looking statements, the inclusion of such
statements in this Annual Report should not be considered as a representation by us or any other person that our objectives
or plans will be achieved. Although management believes that the assumptions underlying the forward-looking statements
are reasonable, these assumptions and the forward-looking statements are subject to various factors, risks and
uncertainties, many of which are beyond our control, including, but not limited to, our business is cyclical and vulnerable
to economic downturns and client spending reductions; government shutdowns; long-term government contracts and
subject to uncertainties related to government contract appropriations; governmental agencies may modify, curtail or
terminate our contracts; government contracts are subject to audits and adjustments of contractual terms; losses under
fixed-price contracts; limited control over operations run through our joint venture entities; liability for misconduct by
our employees or consultants; failure to comply with laws or regulations applicable to our business; maintaining adequate
surety and financial capacity; high leverage and potential inability to service our debt and guarantees; exposure to Brexit
and tariffs; exposure to political and economic risks in different countries; currency exchange rate fluctuations; retaining
and recruiting key technical and management personnel; legal claims; inadequate insurance coverage; environmental
law compliance and inadequate nuclear indemnification; unexpected adjustments and cancellations related to our
backlog; partners and third parties who may fail to satisfy their legal obligations; managing pension costs; AECOM
Capital’s real estate development; cybersecurity issues, IT outages and data privacy; risks associated with the benefits
and costs of the sale of our Management Services and self-perform at-risk civil infrastructure and power construction
businesses, including the risk that any purchase adjustments from those transactions could be unfavorable and any future
proceeds owed to us as part of the transactions could be lower than we expect; as well as other additional risks and factors
discussed in this Annual Report on Form 10-K and any subsequent reports we file with the SEC. Accordingly, actual
results could differ materially from those contemplated by any forward-looking statement.
All subsequent written and oral forward-looking statements concerning the Company or other matters
attributable to the Company or any person acting on its behalf are expressly qualified in their entirety by the cautionary
statements above. You are cautioned not to place undue reliance on these forward-looking statements, which speak only
to the date they are made. The Company is under no obligation (and expressly disclaims any such obligation) to update
or revise any forward-looking statement that may be made from time to time, whether as a result of new information, future
developments or otherwise. Please review “Part I, Item 1A—Risk Factors” in this Annual Report for a discussion of the
factors, risks and uncertainties that could affect our future results.
Our fiscal year consists of 52 or 53 weeks, ending on the Friday closest to September 30. For clarity of
presentation, we present all periods as if the year ended on September 30. We refer to the fiscal year ended September 30,
2020 as “fiscal 2020” and the fiscal year ended September 30, 2021 as “fiscal 2021.” 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.
34
In this section, we discuss the results of our operations for the year ended September 30, 2021 compared to the
year ended September 30, 2020. For a discussion on the year ended September 30, 2020 compared to the year ended
September 30, 2019, please refer to Part II, Item 7. “Management’s Discussion and Analysis of Financial Condition and
Results of Operations” in our Annual Report on Form 10-K for the year ended September 30, 2020.
Overview
We are a leading global provider of professional, technical and management support services for governments,
businesses and organizations throughout the world. We provide planning, consulting, architectural and engineering design,
construction management services, and investment and development services to commercial and government clients
worldwide in major end markets such as transportation, facilities, environmental, energy, water and government.
Our business focuses primarily on providing fee-based planning, consulting, architectural and engineering design
services and, therefore, our business is labor intensive. We primarily derive income from our ability to generate revenue
and collect cash from our clients through the billing of our employees’ time spent on client projects and our ability to
manage our costs. AECOM Capital primarily derives its income from real estate development sales and management fees.
During the first quarter of fiscal 2020, we reorganized our operating and reporting structure to better align with
our ongoing professional services business. This reorganization better reflected our continuing operations after the sale of
our Management Services segment and planned disposal of our self-perform at-risk construction businesses, including our
civil infrastructure, power, and oil & gas construction businesses. Our Management Services and self-perform at-risk
construction businesses were part of our former Management Services segment and a substantial portion of our former
Construction Services segment, respectively. These businesses are classified as discontinued operations in all periods
presented.
We report our continuing business through three segments: Americas, International, and AECOM Capital
(ACAP). Such segments are organized by the differing specialized needs of the respective clients, and how we manage the
business. We have aggregated various operating segments into our 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.
Our Americas segment delivers planning, consulting, architectural and engineering design, and construction
management services to commercial and government clients in the United States, Canada, and Latin America in major end
markets such as transportation, water, government, facilities, environmental, and energy. Our International segment
delivers planning, consulting, and architectural and engineering design services to commercial and government clients in
Europe, the Middle East, Africa, and the Asia-Pacific regions in major end markets such as transportation, water,
government, facilities, environmental, and energy. Revenue for these two segments is primarily derived from fees for
services we provide.
Our ACAP segment primarily invests in and develops real estate projects. ACAP typically partners with investors
and experienced developers as co-general partners. ACAP may, but is not required to, enter into contracts with our other
AECOM affiliates to provide design, engineering, construction management, development and operations, and
maintenance services for ACAP funded projects.
Our revenue is dependent on our ability to attract and retain qualified and productive employees, identify business
opportunities, integrate and maximize the value of our recent acquisitions, allocate our labor resources to profitable and
high growth markets, secure new contracts, and renew existing client agreements. Demand for our services is cyclical and
may be vulnerable to sudden economic downturns and reductions in government and private industry spending, which
may result in clients delaying, curtailing or canceling proposed and existing projects. Moreover, as a professional services
company, maintaining the high quality of the work generated by our employees is integral to our revenue generation and
profitability.
Our costs consist primarily of the compensation we pay to our employees, including salaries, fringe benefits, the
costs of hiring subcontractors, other project-related expenses and sales, general and administrative costs.
35
The U.S. federal government, under the Biden Administration, has proposed significant legislative and executive
infrastructure initiatives that, if enacted, could have a positive impact to our infrastructure business.
Regarding our capital allocation policy, on September 22, 2021, the Board approved an increase in our repurchase
authorization to $1.0 billion. At September 30, 2021, we have approximately $1.0 billion remaining of the Board’s
repurchase authorization. We intend to deploy future available cash towards stock repurchases consistent with our capital
allocation policy.
We have exited substantially all of our self-perform at-risk construction business and expect to divest all of our
remaining non-core oil and gas markets. We have substantially completed our exit of 30 countries, subject to applicable
laws, as part of our ongoing plan to improve profitability and reduce our risk profile, and we continue to evaluate our
geographic exposure as part of such plan.
We expect to incur restructuring costs of approximately $20 million to $30 million in fiscal 2022 primarily related
to previously announced restructuring actions that are expected to deliver continued margin improvement and efficiencies.
Total cash costs for these restructuring actions are expected to be approximately $20 million to $30 million.
Covid-19 Coronavirus Impacts
The impact of the coronavirus pandemic and measures to prevent its spread are affecting our businesses in a
number of ways:
• The coronavirus and accompanying economic effects may reduce demand for our services and impact client
spending in certain circumstances; however, the uncertain nature of the coronavirus and its duration make it
difficult for us to predict and quantify such impact.
• We have restricted non-essential business travel, required or facilitated employees to work remotely where
appropriate.
• The coronavirus has made estimating the future performance of our business and mitigating the adverse
financial impact of these developments on our business operations more difficult.
• State and local budget shortfalls in the U.S. have negatively impacted our pipeline of pursuits and the pace
of award activity.
• Certain markets, such as the U.K., Middle East, and Southeast Asia, are experiencing project delays that have
impacted our performance and results.
Acquisitions
There were no acquisitions consummated during the years ended September 30, 2021, 2020 and 2019.
All of our acquisitions have been accounted for as business combinations and the results of operations of the
acquired companies have been included in our consolidated results since the dates of the acquisitions.
36
Components of Income and Expense
Other Financial Data:
Revenue . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Cost of revenue . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Gross profit . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Equity in earnings of joint ventures . . . . . . . . . . . . . . . . . . . .
General and administrative expenses . . . . . . . . . . . . . . . . . . .
Restructuring cost . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Gain on disposal activities . . . . . . . . . . . . . . . . . . . . . . . . . . .
Impairment of long-lived assets . . . . . . . . . . . . . . . . . . . . . . .
Acquisition and integration expenses . . . . . . . . . . . . . . . . . .
Income from operations . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Revenue
2021
$ 13,341
12,543
798
35
(155)
(48)
—
—
—
630
$
2020
Year Ended September 30,
2019
(in millions)
2018
$ 13,240
12,530
710
49
(190)
(188)
—
—
—
381
$
$ 13,642 $ 13,878
13,399
479
49
(135)
—
—
—
—
393
13,030
612
49
(148)
(95)
3
(25)
—
396 $
$
2017
$ 18,203
17,519
684
142
(134)
—
1
—
(39)
654
$
We generate revenue primarily by providing planning, consulting, architectural and engineering design services
to commercial and government clients around the world. Our revenue consists of both services provided by our employees
and pass-through fees from subcontractors and other direct costs. We generally recognize revenue over time as
performance obligations are satisfied and control over promised goods or services are transferred to our customers. We
generally measure progress to completion using an input measure of total costs incurred divided by total costs expected to
be incurred.
Cost of Revenue
Cost of revenue reflects the cost of our own personnel (including fringe benefits and overhead expense) and fees
from subcontractors and other direct costs associated with revenue.
Amortization Expense of Acquired Intangible Assets
Included in our cost of revenue is amortization of acquired intangible assets. We have ascribed value to
identifiable intangible assets other than goodwill in our purchase price allocations for companies we have acquired. These
assets include, but are not limited to, backlog and customer relationships. To the extent we ascribe value to identifiable
intangible assets that have finite lives, we amortize those values over the estimated useful lives of the assets. Such
amortization expense, although non-cash in the period expensed, directly impacts our results of operations. It is difficult
to predict with any precision the amount of expense we may record relating to acquired intangible assets.
Equity in Earnings of Joint Ventures
Equity in earnings of joint ventures includes our portion of fees charged by our unconsolidated joint ventures to
clients for services performed by us and other joint venture partners along with earnings we receive from our return on
investments in unconsolidated joint ventures.
General and Administrative Expenses
General and administrative expenses include corporate expenses, including personnel, occupancy, and
administrative expenses.
37
Acquisition and Integration Expenses
Acquisition and integration expenses are comprised of transaction costs, professional fees, and personnel costs,
including due diligence and integration activities, primarily related to business acquisitions.
Goodwill Impairment
See Critical Accounting Policies and Consolidated Results below.
Income Tax Expense (Benefit)
As a global enterprise, income tax expense/(benefit) and our effective tax rates can be affected by many factors,
including changes in our worldwide mix of pre-tax losses/earnings, the effect of non-controlling interest in income of
consolidated subsidiaries, the extent to which the earnings are indefinitely reinvested outside of the United States, our
acquisition strategy, tax incentives and credits available to us, changes in judgment regarding the realizability of our
deferred tax assets, changes in existing tax laws and our assessment of uncertain tax positions. Our tax returns are routinely
audited by the taxing authorities and settlements of issues raised in these audits can also sometimes affect our effective tax
rate.
Geographic Information
For geographic financial information, please refer to Note 4 and Note 19 in the notes to our consolidated financial
statements found elsewhere in the Form 10-K.
Critical Accounting Policies and Estimates
Our accounting policies, including those described below, often require management to make significant
estimates and assumptions using information available at the time the estimates are made. Such estimates and assumptions
significantly affect various reported amounts of assets, liabilities, revenue and expenses. If future experience differs
significantly from these estimates and assumptions, our results of operations and financial condition could be affected.
Our most critical accounting policies and estimates are described below. We have not materially changes our estimation
methodology during the period presented.
Revenue Recognition
Our accounting policies establish principles for recognizing revenue upon the transfer of control of promised
goods or services to customers. We generally recognize revenues over time as performance obligations are satisfied. We
generally measure our progress to completion using an input measure of total costs incurred divided by total costs expected
to be incurred. In the course of providing these services, we routinely subcontract for services and incur other direct cost
on behalf of our clients. These costs are passed through to clients and, in accordance with accounting rules, are included
in our revenue and cost of revenue.
Revenue recognition 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. Additionally, we are required to make estimates for the amount
of consideration to be received, including bonuses, awards, incentive fees, claims, unpriced change orders, penalties and
liquidated damages. Variable consideration is included in the estimate of transaction price only to the extent that a
significant reversal would not be probable. We continuously monitor factors that may affect the quality of our estimates,
and material changes in estimates are disclosed accordingly.
Claims Recognition
Claims are amounts in excess of the agreed contract price (or amounts not included in the original contract price)
that we seek to collect from customers or others for delays, errors in specifications and designs, contract terminations,
change orders in dispute or unapproved contracts as to both scope and price or other causes of unanticipated additional
costs. We record contract revenue related to claims only if it is probable that the claim will result in additional contract
revenue and only to the extent that a significant reversal would not be probable. The amounts recorded, if material, are
38
disclosed in the notes to the financial statements. Costs attributable to claims are treated as costs of contract performance
as incurred.
Government Contract Matters
Our federal government and certain state and local agency contracts are subject to, among other regulations,
regulations issued under the Federal Acquisition Regulations (FAR). These regulations can limit the recovery of certain
specified indirect costs on contracts and subject us to ongoing multiple audits by government agencies such as the Defense
Contract Audit Agency (DCAA). In addition, most of our federal and state and local contracts are subject to termination
at the discretion of the client.
Audits by the DCAA and other agencies consist of reviews of our overhead rates, operating systems and cost
proposals to ensure that we account for such costs in accordance with the Cost Accounting Standards of the FAR (CAS).
If the DCAA determines we have not accounted for such costs consistent with CAS, the DCAA may disallow these costs.
There can be no assurance that audits by the DCAA or other governmental agencies will not result in material cost
disallowances in the future.
Allowance for Doubtful Accounts and Expected Credit Losses
We record accounts receivable net of an allowance for doubtful accounts. This allowance for doubtful accounts
is estimated based on management’s evaluation of the contracts involved and the financial condition of our clients. The
factors we consider in our contract evaluations include, but are not limited to:
• Client type—federal or state and local government or commercial client;
• Historical contract performance;
• Historical collection and delinquency trends;
• Client credit worthiness; and
• General economic conditions.
In October 2020, we adopted the credit loss model that replaced the “incurred loss” approach with an “expected
loss” model for instruments measured at amortized cost. Under the credit loss model, we maintain an allowance for credit
losses, which represents the portion of our financial assets that we do not expect to collect over their contractual life.
Contract Assets and Contract Liabilities
Contract assets represent the contract revenue recognized but not yet billed pursuant to contract terms or accounts
billed after the period end.
Contract liabilities represent the billings to date, as allowed under the terms of a contract, but not yet recognized
as contract revenue using our revenue recognition policy.
39
Investments in Unconsolidated Joint Ventures
We have noncontrolling interests in joint ventures accounted for under the equity method. Fees received for and
the associated costs of services performed by us and billed to joint ventures with respect to work done by us for third-party
customers are recorded as our revenues and costs in the period in which such services are rendered. In certain joint ventures,
a fee is added to the respective billings from both us and the other joint venture partners on the amounts billed to the
third-party customers. These fees result in earnings to the joint venture and are split with each of the joint venture partners
and paid to the joint venture partners upon collection from the third-party customer. We record our allocated share of these
fees as equity in earnings of joint ventures.
Additionally, our ACAP segment primarily invests in real estate projects.
Income Taxes
We provide for income taxes in accordance with principles contained in ASC Topic 740, Income Taxes. Under
these principles, we recognize the amount of income tax payable or refundable for the current year and deferred tax assets
and liabilities for the future tax consequences of events that have been recognized in our financial statements or tax returns.
Deferred tax assets and liabilities are measured using enacted tax rates in effect for the year in which those
temporary differences are expected to be recovered or settled. The effect on deferred tax assets and liabilities of a change
in tax rates is recognized in earnings in the period when the new rate is enacted. Deferred tax assets are evaluated for future
realization and reduced by a valuation allowance if it is more likely than not that a portion will not be realized.
We measure and recognize the amount of tax benefit that should be recorded for financial statement purposes for
uncertain tax positions taken or expected to be taken in a tax return. With respect to uncertain tax positions, we evaluate
the recognized tax benefits for recognition, measurement, derecognition, classification, interest and penalties, interim
period accounting and disclosure requirements. Judgment is required in assessing the future tax consequences of events
that have been recognized in our financial statements or tax returns.
Valuation Allowance. Deferred income taxes are provided on the liability method whereby deferred tax assets
and liabilities are established for the difference between the financial reporting and income tax basis of assets and
liabilities, as well as for tax attributes such as operating loss and tax credit carryforwards. Deferred tax assets and liabilities
are adjusted for the effects of changes in tax laws and tax rates on the date of enactment of such changes to laws and tax
rates.
Deferred tax assets are reduced by a valuation allowance when, in our opinion, it is more likely than not that some
portion or all of the deferred tax assets may not be realized. The evaluation of the recoverability of the deferred tax asset
requires the Company to weigh all positive and negative evidence to reach a conclusion that it is more likely than not that
all or some portion of the deferred tax assets will not be realized. The weight given to the evidence is commensurate with
the extent to which it can be objectively verified. Whether a deferred tax asset may be realized requires considerable
judgment by us. In considering the need for a valuation allowance, we consider a number of factors 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. Whether a deferred tax asset will ultimately be realized is also
dependent on varying factors, including, but not limited to, changes in tax laws and audits by tax jurisdictions in which we
operate.
If future changes in judgment regarding the realizability of our deferred tax assets lead us to determine that it is
more likely than not that we will not realize all or part of our deferred tax asset in the future, we will record an additional
valuation allowance. Conversely, if a valuation allowance exists and we determine that the ultimate realizability of all or
part of the net deferred tax asset is more likely than not to be realized, then the amount of the valuation allowance will be
reduced. This adjustment will increase or decrease income tax expense in the period of such determination.
40
Undistributed Non-U.S. Earnings. The results of our operations outside of the United States are consolidated for
financial reporting; however, earnings from investments in non-U.S. operations are included in domestic U.S. taxable
income only when actually or constructively received. No deferred taxes have been provided on the undistributed gross
book-tax basis differences of our non-U.S. operations of approximately $1.5 billion because we have the ability to and
intend to permanently reinvest these basis differences overseas. If we were to repatriate these basis differences, additional
taxes could be due at that time.
We continually explore initiatives to better align our tax and legal entity structure with the footprint of our
non-U.S. operations and we recognize the tax impact of these initiatives, including changes in assessment of its uncertain
tax positions, indefinite reinvestment exception assertions and realizability of deferred tax assets, earliest in the period
when management believes all necessary internal and external approvals associated with such initiatives have been
obtained, or when the initiatives are materially complete.
Goodwill and Acquired Intangible Assets
Goodwill represents the excess of amounts paid over the fair value of net assets acquired from an acquisition. In
order to determine the amount of goodwill resulting from an acquisition, we perform an assessment to determine the value
of the acquired company’s tangible and identifiable intangible assets and liabilities. In our assessment, we determine
whether identifiable intangible assets exist, which typically include backlog and customer relationships.
We test goodwill for impairment annually for each reporting unit in the fourth quarter of the fiscal year and
between annual tests, if events occur or circumstances change which suggest that goodwill should be evaluated. Such
events or circumstances include significant changes in legal factors and business climate, recent losses at a reporting unit,
and industry trends, among other factors. A reporting unit is defined as an operating segment or one level below an
operating segment. Our impairment tests are performed at the operating segment level as they represent our reporting units.
During the impairment test, we estimate the fair value of the reporting unit using income and market approaches,
and compare that amount to the carrying value of that reporting unit. In the event the fair value of the reporting unit is
determined to be less than the carrying value, goodwill is impaired, and an impairment loss is recognized equal to the
excess, limited to the total amount of goodwill allocated to the reporting unit.
The impairment evaluation process includes, among other things, making assumptions about variables such as
revenue growth rates, profitability, discount rates, and industry market multiples, which are subject to a high degree of
judgment.
Material assumptions used in the impairment analysis included the weighted average cost of capital (WACC)
percent and terminal growth rates. For example, as of September 30, 2021, a 1% increase in the WACC rate represents a
$400 million decrease to the fair value of our reporting units. As of September 30, 2021, a 1% decrease in the terminal
growth rate represents a $200 million decrease to the fair value of our reporting units.
There are inherent uncertainties related to each of the above listed assumptions, and our judgment in applying
them. Changes in the assumptions used in our goodwill and intangible assets could result in impairment charges that could
be material to our consolidated financial statements in any given period. We have not materially changed our estimation
methodology during the periods presented.
41
Pension Benefit Obligations
A number of assumptions are necessary to determine our pension liabilities and net periodic costs. These liabilities
and net periodic costs are sensitive to changes in those assumptions. The assumptions include discount rates, long-term
rates of return on plan assets and inflation levels limited to the United Kingdom and are generally determined based on
the current economic environment in each host country at the end of each respective annual reporting period. We evaluate
the funded status of each of our retirement plans using these current assumptions and determine the appropriate funding
level considering applicable regulatory requirements, tax deductibility, reporting considerations and other factors. Based
upon current assumptions, we expect to contribute $24.8 million to our international plans in fiscal 2022. Our required
minimum contributions for our U.S. qualified plans are not significant. In addition, we may make additional discretionary
contributions. We currently expect to contribute $11.4 million to our U.S. plans (including benefit payments to
nonqualified plans and postretirement medical plans) in fiscal 2022. If the discount rate was reduced by 25 basis points,
plan liabilities would increase by approximately $75.2 million. If the discount rate and return on plan assets were reduced
by 25 basis points, plan expense would decrease by approximately $0.1 million and increase by approximately
$3.2 million, respectively. If inflation increased by 25 basis points, plan liabilities in the United Kingdom would increase
by approximately $28.8 million and plan expense would increase by approximately $1.7 million.
At each measurement date, all assumptions are reviewed and adjusted as appropriate. With respect to establishing
the return on assets assumption, we consider the long term capital market expectations for each asset class held as an
investment by the various pension plans. In addition to expected returns for each asset class, we take into account standard
deviation of returns and correlation between asset classes. This is necessary in order to generate a distribution of possible
returns which reflects diversification of assets. Based on this information, a distribution of possible returns is generated
based on the plan’s target asset allocation.
Capital market expectations for determining the long term rate of return on assets are based on forward-looking
assumptions which reflect a 20-year view of the capital markets. In establishing those capital market assumptions and
expectations, we rely on the assistance of our actuaries and our investment consultants. We and the plan trustees review
whether changes to the various plans’ target asset allocations are appropriate. A change in the plans’ target asset allocations
would likely result in a change in the expected return on asset assumptions. In assessing a plan’s asset allocation strategy,
we and the plan trustees consider factors such as the structure of the plan’s liabilities, the plan’s funded status, and the
impact of the asset allocation to the volatility of the plan’s funded status, so that the overall risk level resulting from our
defined benefit plans is appropriate within our risk management strategy.
Between September 30, 2020 and September 30, 2021, the aggregate worldwide pension deficit decreased from
$428.4 million to $345.5 million due to increased discount rates. If the various plans do not experience future investment
gains to reduce this shortfall, the deficit will be reduced by additional contributions.
Accrued Professional Liability Costs
We carry professional liability insurance policies or self-insure for our initial layer of professional liability claims
under our professional liability insurance policies and for a deductible for each claim even after exceeding the self-insured
retention. We accrue for our portion of the estimated ultimate liability for the estimated potential incurred losses. We
establish our estimate of loss for each potential claim in consultation with legal counsel handling the specific matters and
based on historic trends taking into account recent events. We also use an outside actuarial firm to assist us in estimating
our future claims exposure. It is possible that our estimate of loss may be revised based on the actual or revised estimate
of liability of the claims.
Foreign Currency Translation
Our functional currency is the U.S. dollar. Results of operations for foreign entities are translated to U.S. dollars
using the average exchange rates during the period. Assets and liabilities for foreign entities are translated using the
exchange rates in effect as of the date of the balance sheet. Resulting translation adjustments are recorded as a foreign
currency translation adjustment into other accumulated comprehensive income/(loss) in stockholders’ equity.
42
We limit exposure to foreign currency fluctuations in most of our contracts through provisions that require client
payments in currencies corresponding to the currency in which costs are incurred. As a result of this natural hedge, we
generally do not need to hedge foreign currency cash flows for contract work performed. However, we will use foreign
exchange derivative financial instruments from time to time to mitigate foreign currency risk. The functional currency of
all significant foreign operations is the respective local currency.
Fiscal year ended September 30, 2021 compared to the fiscal year ended September 30, 2020
Consolidated Results
Revenue . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Cost of revenue . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Gross profit . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Equity in earnings of joint ventures . . . . . . . . . . . . . . . . . . . . . . . . . . .
General and administrative expenses . . . . . . . . . . . . . . . . . . . . . . . . . .
Restructuring cost . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Income from operations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Other income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Interest expense . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Income from continuing operations before taxes . . . . . . . . . . . . . . . .
Income tax expense from continuing operations. . . . . . . . . . . . . . . . .
Net income from continuing operations . . . . . . . . . . . . . . . . . . . . . . .
Net loss from discontinued operations . . . . . . . . . . . . . . . . . . . . . . . . .
Net income (loss) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Net income attributable to noncontrolling interests from
Fiscal Year Ended
September 30, September 30,
Change
2021
2020
$
%
$ 13,340.9
12,542.5
798.4
35.0
(155.0)
(48.8)
629.6
17.6
(238.4)
408.8
89.0
319.8
(116.8)
203.0
($ in millions)
$ 13,240.0 $ 100.9
12.1
88.8
(13.8)
33.6
139.5
248.1
6.5
(78.4)
176.2
43.3
132.9
223.8
356.7
12,530.4
709.6
48.8
(188.6)
(188.3)
381.5
11.1
(160.0)
232.6
45.7
186.9
(340.6)
(153.7)
0.8 %
0.1
12.5
(28.3)
(17.8)
(74.1)
65.0
58.6
49.0
75.8
94.7
71.1
(65.7)
(232.1)
continuing operations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
(25.1)
(16.5)
(8.6)
52.1
Net income attributable to noncontrolling interests from
discontinued operations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Net income attributable to noncontrolling interests . . . . . . . . . . . . .
Net income attributable to AECOM from continuing operations . . .
Net loss attributable to AECOM from discontinued operations . . . .
Net income (loss) attributable to AECOM . . . . . . . . . . . . . . . . . . . .
$
(4.7)
(29.8)
294.7
(121.5)
173.2
$
11.5
(16.2)
(32.7)
2.9
124.3
170.4
(356.8)
235.3
(186.4) $ 359.6
(71.0)
(8.9)
72.9
(65.9)
(192.9)%
43
The following table presents the percentage relationship of statement of operations items to revenue:
Revenue . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Cost of revenue . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Gross profit . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Equity in earnings of joint ventures . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
General and administrative expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Restructuring costs . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Income from operations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Other income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Interest expense . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Income from continuing operations before taxes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Income tax expense from continuing operations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Net income from continuing operations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Net loss from discontinued operations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Net income (loss) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
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 income attributable to AECOM from continuing operations . . . . . . . . . . . . . . . . . . . . . . . . .
Net loss attributable to AECOM from discontinued operations . . . . . . . . . . . . . . . . . . . . . . . . . .
Net income (loss) attributable to AECOM . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Revenue
Fiscal Year Ended
September 30,
2021
September 30,
2020
100.0 %
94.0
6.0
0.3
(1.2)
(0.4)
4.7
0.1
(1.7)
3.1
0.7
2.4
(0.9)
1.5
(0.2)
0.0
(0.2)
2.2
(0.9)
1.3 %
100.0 %
94.6
5.4
0.4
(1.5)
(1.4)
2.9
0.1
(1.2)
1.8
0.4
1.4
(2.6)
(1.2)
(0.1)
(0.1)
(0.2)
1.3
(2.7)
(1.4)%
Our revenue for the year ended September 30, 2021 increased $100.9 million, or 0.8%, to $13,340.9 million as
compared to $13,240.0 million for the corresponding period last year.
The increase in revenue for the year ended September 30, 2021 was primarily attributable to increases in our
Americas segment of $94.8 million and in our International segment of $10.9 million, as discussed further below.
In the course of providing our services, we routinely subcontract for services and incur other direct costs on behalf
of our clients. These costs are passed through to clients and, in accordance with industry practice and GAAP, are included
in our revenue and cost of revenue. Because these pass through revenues can change significantly from project to project
and period to period, changes in revenue may not be indicative of business trends. Pass through revenues for the years
ended September 30, 2021 and 2020 were $7.2 billion and $7.1 billion, respectively. Pass through revenue as a percentage
of total revenue was 54% during the year ended September 30, 2021 and the year ended September 30, 2020.
Gross Profit
Our gross profit for the year ended September 30, 2021 increased $88.8 million, or 12.5%, to $798.4 million as
compared to $709.6 million for the corresponding period last year. For the year ended September 30, 2021, gross profit,
as a percentage of revenue, increased to 6.0% from 5.4% in the year ended September 30, 2020.
Gross profit changes were due to the reasons noted in Americas and International reportable segments below.
Equity in Earnings of Joint Ventures
Our equity in earnings of joint ventures for the year ended September 30, 2021 was $35.0 million as compared
to $48.8 million in the corresponding period last year.
44
The decrease in earnings of joint ventures for the year ended September 30, 2021 compared to the same period
in the prior year is primarily due to decreased earnings in our Americas and AECOM Capital segments.
General and Administrative Expenses
Our general and administrative expenses for the year ended September 30, 2021 decreased $33.6 million, or
17.8%, to $155.0 million as compared to $188.6 million for the corresponding period last year. For the year ended
September 30, 2021, general and administrative expenses as a percentage of revenue decreased to 1.2% from 1.5% in the
year ended September 30, 2020.
The decrease in general and administrative expenses was primarily due to the execution of restructuring actions
taken by management to increase profitability and simplify our operating structure as well as accelerated depreciation of
a project management tool recorded in the prior year that did not repeat in the current year.
Restructuring Costs
Since the first quarter of fiscal 2019, we have been implementing a restructuring plan to improve profitability.
During the fiscal year ended September 30, 2021, we incurred restructuring expenses of $48.8 million, primarily related
to costs optimizing our cost structure and reducing overhead costs. During the year ended September 30, 2020, we incurred
restructuring expenses of $188.3 million, primarily related to the same matters.
Other Income
Our other income for the year ended September 30, 2021 increased $6.5 million to $17.6 million as compared to
$11.1 million for the corresponding period last year.
Other income is primarily comprised of interest income and net periodic pension adjustments.
Interest Expense
Our interest expense for the year ended September 30, 2021 was $238.4 million as compared to $160.0 million
for the corresponding period last year.
The increase in interest expense for the year ended September 30, 2021 was primarily due to a $117.5 million
prepayment premium related to the redemption of our remaining unsecured 5.875% Senior Notes due 2024 during the
three months ended June 30, 2021.
Income Tax Expense
Our income tax expense for the year ended September 30, 2021 was $89.0 million compared to $45.7 million for
the year ended September 30, 2020. The increase in tax expense for the current period compared to the corresponding
period last year was due primarily to the tax impacts of an increase in overall pre-tax income of $176.2 million, tax expense
of $13.2 million related to an audit settlement, and a tax benefit of $31.7 million related to the release of a valuation
allowance during fiscal 2020, partially offset by a tax benefit of $25.9 million related to a corporate tax rate change in the
United Kingdom.
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, we partially settled our U.S. federal audit for fiscal 2015 and 2016 and
recorded tax expense of $13.2 million due primarily to changes in tax attributes.
45
During fiscal 2020, management approved a tax planning strategy and we restructured certain operations in
Canada which resulted in the release of a valuation allowance related to net operating losses and other deferred tax assets
in the amount of $31.7 million.
We are 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 future
adjustments, but will not result in a material change in the liability for uncertain tax positions.
We regularly integrate and consolidate our business operations and legal entity structure, and such internal
initiatives could impact the assessment of uncertain tax positions, indefinite reinvestment assertions and the realizability
of deferred tax assets.
Net Loss From Discontinued Operations
During the first quarter of fiscal 2020, management approved a plan to dispose via sale our Management Services
business and our self-perform at-risk construction businesses. As a result of these strategic actions, the Management
Services and self-perform at-risk construction businesses were classified as discontinued operations. That classification
was applied retrospectively for all periods presented.
Net loss from discontinued operations decreased $223.8 million to $116.8 million from $340.6 million for the
years ended September 30, 2021 and 2020, respectively. The decrease in net loss from discontinued operations for the year
ended September 30, 2021 was primarily due to fewer losses recorded on sales of the power and civil infrastructure
businesses in fiscal year 2021 than impairment losses recorded in fiscal year 2020. Net loss from discontinued operations
for the year ended September 30, 2020 was primarily due to a $161.9 million gain recorded on the disposal of our
Management Services business. The gain was offset by impairment of goodwill of approximately $83.6 million related to
the self-perform at-risk construction business, and a $247.2 million loss related to the remeasurement of the businesses
within discontinued operations based on estimated fair values less costs to sell.
Net Income (Loss) Attributable to AECOM
The factors described above resulted in the net income attributable to AECOM of $173.2 million for the year
ended September 30, 2021, as compared to the net loss attributable to AECOM of $186.4 million for the year ended
September 30, 2020.
Results of Operations by Reportable Segment
Americas
Fiscal Year Ended
September 30, September 30,
Change
2021
2020
$
%
( in millions)
Revenue . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Cost of revenue . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Gross profit . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
$ 10,226.3
9,594.7
631.6
$
$ 10,131.5 $
9,551.0
$
580.5 $
94.8
43.7
51.1
0.9 %
0.5
8.8 %
The following table presents the percentage relationship of statement of operations items to revenue:
Revenue . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Cost of revenue . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Gross profit . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Fiscal Year Ended
September 30, September 30,
2021
100.0 %
93.8
6.2 %
2020
100.0 %
94.3
5.7 %
46
Revenue
Revenue for our Americas segment for the year ended September 30, 2021 increased $94.8 million, or 0.9%, to
$10,226.3 million as compared to $10,131.5 million for the corresponding period last year.
The increase in revenue for the year ended September 30, 2021 was primarily driven by increased activity in our
construction management of high-rise buildings in New York City.
Gross Profit
Gross profit for our Americas segment for the year ended September 30, 2021 increased $51.1 million, or 8.8%,
to $631.6 million as compared to $580.5 million for the corresponding period last year. As a percentage of revenue, gross
profit increased to 6.2% of revenue for the year ended September 30, 2021 from 5.7% in the corresponding period last
year.
The increase in gross profit and gross profit as a percentage of revenue for the year ended September 30, 2021
were primarily due to reduced costs and a more efficient operating structure resulting from a realigned overhead and
delivery structure, better operational execution, investments in technology, and shared service centers to enhance
efficiencies.
International
Fiscal Year Ended
September 30, September 30,
Change
2021
2020
$
%
Revenue . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Cost of revenue . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Gross profit . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
$
$
3,112.6
2,947.8
164.8
$
$
(in millions)
3,101.7 $
2,979.5
122.2 $
10.9
(31.7)
42.6
0.4 %
(1.1)
34.9 %
The following table presents the percentage relationship of statement of operations items to revenue:
Revenue . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Cost of revenue . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Gross profit . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
100.0 %
94.7
5.3 %
100.0 %
96.1
3.9 %
Fiscal Year Ended
September 30,
2021
September 30,
2020
Revenue
Revenue for our International segment for the year ended September 30, 2021 increased $10.9 million, or 0.4%,
to $3,112.6 million as compared to $3,101.7 million for the corresponding period last year.
The increase in revenue for the year ended September 30, 2021 was primarily attributable to increases in the
Middle East and Australia as well as the benefit of changes in the foreign exchange rates.
Gross Profit
Gross profit for our International segment for the year ended September 30, 2021 increased $42.6 million, or
34.9%, to $164.8 million as compared to $122.2 million for the corresponding period last year. As a percentage of revenue,
gross profit increased to 5.3% of revenue for the year ended September 30, 2021 from 3.9% in the corresponding period
last year.
47
The increase in gross profit and gross profit as a percentage of revenue for the year ended September 30, 2021
was primarily due to reduced costs resulting from actions taken to improve efficiency, including consolidating real estate,
implementing a streamlined overhead structure, better operational execution, and exiting lower-returning countries.
AECOM Capital
Revenue . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Equity in earnings of joint ventures . . . . . . . . . . . . . . . . . . . . . .
General and administrative expenses . . . . . . . . . . . . . . . . . . . . .
$
$
$
$
2.0
11.4
$
(11.1) $
(in millions)
6.8 $
14.7 $
(8.6) $
(4.8)
(3.3)
(2.5)
(70.6)%
(22.4)
29.1 %
Fiscal Year Ended
September 30, September 30,
Change
2021
2020
$
%
Liquidity and Capital Resources
Cash Flows
Our principal sources of liquidity are cash flows from operations, borrowings under our credit facilities, and
access to financial markets. Our principal uses of cash are operating expenses, capital expenditures, working capital
requirements, acquisitions, repurchases of common stock, and refinancing or repayment of debt. We believe our
anticipated sources of liquidity including operating cash flows, existing cash and cash equivalents, borrowing capacity
under our revolving credit facility and our ability to issue debt or equity, if required, will be sufficient to meet our projected
cash requirements for at least the next twelve months. We expect to spend approximately $30 million to $40 million in
restructuring costs in fiscal 2022 associated with previously announced restructuring actions that are expected to deliver
continued margin improvement and efficiencies.
Generally, we do not provide for U.S. taxes or foreign withholding taxes on gross book-tax basis differences in
our non-U.S. subsidiaries because such basis differences are able to and intended to be reinvested indefinitely. At
September 30, 2021, we have determined that we will continue to indefinitely reinvest the earnings of some foreign
subsidiaries and, therefore, we will continue to account for these undistributed earnings based on our existing accounting
under ASC 740 and not accrue additional tax outside of the one-time transition tax required under the Tax Cuts and Jobs
Act that was enacted on December 22, 2017. Determination of the amount of any unrecognized deferred income tax liability
on this temporary difference is not practicable because of the complexities of the hypothetical calculation. Based on the
available sources of cash flows discussed above, we anticipate we will continue to have the ability to permanently reinvest
these remaining amounts.
At September 30, 2021, cash and cash equivalents, including cash and cash equivalents included in current assets
held for sale, were $1,234.8 million, a decrease of $583.4 million, or 32.1%, from $1,818.2 million at September 30, 2020.
The decrease in cash and cash equivalents was primarily attributable to cash used to repurchase common stock and cash
disposed with the sales of the at-risk power and civil infrastructure construction businesses.
Net cash provided by operating activities was $704.7 million for the year ended September 30, 2021 as compared
to $329.6 million for the year ended September 30, 2020. The year over year improvement in operating cash flow was
partly due to sales of the Management Services business in the second quarter of fiscal 2020, the power construction
business in the first quarter of 2021 and the civil infrastructure business in the second quarter of fiscal 2021, which led to
a net favorable year over year impact to operating cash flow of approximately $284.1 million when comparing the year
ended September 30, 2021 with the prior year. The remaining increase in operating cash flow in the year ended September
30, 2021 compared to the prior year was attributable to an increase in earnings adjusted for non-cash items of
approximately $132.8 million offset by a decrease in the change in working capital of approximately $41.9 million for the
year ended September 30, 2021 compared to the prior year. The sale of trade receivables to financial institutions during
the year ended September 30, 2021 provided a net benefit of $90.2 million as compared to a net unfavorable impact of
$143.3 million during the year ended September 30, 2020. We expect to continue to sell trade receivables in the future as
long as the terms continue to remain favorable to us.
48
Net cash used in investing activities was $421.1 million for the year ended September 30, 2021, as compared to
net cash provided by investing activities of $2,037.4 million for the year ended September 30, 2020. Cash flow from
investing activities decreased primarily due to the change in proceeds, net of cash disposed, from the sales of the at-risk
power and civil infrastructure construction businesses during the year ended September 30, 2021, which was an outflow
of $265.9 million, compared to the $2,218.9 million of proceeds, net of cash disposed, received from the sale of the
Management Services business in year ended September 30, 2020. Capital expenditures, net of proceeds from disposals,
were $121.4 million in the year ended September 30, 2021 compared to $110.8 million in the year ended September 30,
2020. The increase in net capital expenditures in fiscal year 2021 was primarily due to an increase in investments in
information technology compared to the prior year.
Net cash used in financing activities was $872.5 million for the year ended September 30, 2021, as compared to
$1,628.0 million for the year ended September 30, 2020. The decrease from the prior year was primarily attributable to
debt repayment using the proceeds from the sale of the Management Services business in the year ended September 30,
2020, offset by increased stock repurchases under the Stock Repurchase Program during the year ended September 30,
2021. Total borrowings under our credit agreement may vary during the period as we regularly draw and repay amounts
to fund working capital.
Working Capital
Working capital, or current assets less current liabilities, decreased $788.1 million, or 54.7%, to $651.8 million
at September 30, 2021 from $1,439.9 million at September 30, 2020. Net accounts receivable and contract assets, net of
contract liabilities, decreased to $2,929.9 million at September 30, 2021 from $3,535.3 million at September 30, 2020.
The change in working capital is primarily due to the change in cash and cash equivalents during the year ended September
30, 2021, as described above.
Days Sales Outstanding (DSO), which includes net accounts receivable and contract assets, net of contract
liabilities, was 76 days at September 30, 2021 compared to 93 days at September 30, 2020.
In Note 4, Revenue Recognition, in the notes to our consolidated financial statements, a comparative analysis of
the various components of accounts receivable is provided. Except for claims, substantially all contract assets are expected
to be billed and collected within twelve months.
Contract assets related to claims are recorded only if it is probable that the claim will result in additional contract
revenue and if the amount can be reliably estimated. In such cases, revenue is recorded only to the extent that contract
costs relating to the claim have been incurred. Award fees in contract assets are accrued only when there is sufficient
information to assess contract performance. On contracts that represent higher than normal risk or technical difficulty,
award fees are generally deferred until an award fee letter is received.
Because our revenue depends to a great extent on billable labor hours, most of our charges are invoiced following
the end of the month in which the hours were worked, the majority usually within 15 days. Other direct costs are normally
billed along with labor hours. However, as opposed to salary costs, which are generally paid on either a bi-weekly
or monthly basis, other direct costs are generally not paid until payment is received (in some cases in the form of advances)
from the customers.
49
Debt
Debt consisted of the following:
September 30,
2021
September 30,
2020
Credit Agreement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
2024 Senior Notes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
2027 Senior Notes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Other debt . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Total debt. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Less: Current portion of debt and short-term borrowings . . . . . . . . . .
Less: Unamortized debt issuance costs . . . . . . . . . . . . . . . . . . . . . . . . .
Long-term debt . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
$
$
(in millions)
1,155.3 $
—
997.3
83.0
2,235.6
(53.8)
(24.1)
2,157.7 $
248.5
797.3
997.3
41.9
2,085.0
(20.9)
(23.0)
2,041.1
The following table presents, in millions, scheduled maturities of our debt as of September 30, 2021:
Fiscal Year
2022 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $
2023 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
2024 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
2025 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
2026 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Thereafter . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
53.8
45.9
41.0
35.1
400.4
1,659.4
Total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 2,235.6
Credit Agreement
On February 8, 2021, we entered into the 2021 Refinancing Amendment to the Credit Agreement (the “Credit
Agreement”), pursuant to which we amended and restated our 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. The outstanding loans under the Term A Facility were borrowed in U.S. dollars. 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 pay related fees and expenses. The Credit Agreement permits us to designate certain of its
subsidiaries as additional co-borrowers from time to time. Currently, there are no co-borrowers under the Credit Facilities.
The applicable interest rate under the Credit Agreement is calculated at a per annum rate equal to, at our option,
(a) the Eurocurrency Rate (as defined in the Credit Agreement) plus an applicable margin (the “LIBOR Applicable
Margin”), which is currently at 1.50% or (b) the Base Rate (as defined in the Credit Agreement) plus an applicable margin
(the “Base Rate Applicable Margin” and together with the LIBOR Applicable Margin, the “Applicable Margins”), which
is currently at 0.50%. The Credit Agreement includes certain environmental, social and governance (ESG) metrics relating
to our CO2 emissions and our percentage of employees who identify as women (each, a “Sustainability Metric”). The
Applicable Margins and the commitment fees for the revolving credit facility will be adjusted on an annual basis based on
our achievement of preset thresholds for each Sustainability Metric.
50
Some of our material subsidiaries (the “Guarantors”) have guaranteed the 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 our assets and our Guarantors’ assets, subject to certain exceptions.
The Credit Agreement contains customary negative covenants that include, among other things, limitations or
restrictions on our ability and certain of our 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.
We are 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”). Our consolidated leverage ratio was 2.4 at September 30, 2021. As of
September 30, 2021, we were 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. The Credit Agreement contains customary events of default, including, among other things, nonpayment of
principal, interest or fees, cross-defaults to other debt, inaccuracies of representations and warranties, failure to perform
covenants, events of bankruptcy and insolvency, change of control and unsatisfied judgments, subject in certain cases to
notice and cure periods and other exceptions.
On April 13, 2021, we entered into Amendment No. 10 to the Credit Agreement, pursuant to which the lenders
thereunder provided a secured term “B” credit facility (the “Term B Facility”) to the Company in an aggregate principal
amount of $700,000,000. The Term B Facility matures on April 13, 2028. The proceeds of the Term B Facility were used
to fund the purchase price, fees and expenses in connection with our cash tender offer to purchase up to $700,000,000
aggregate purchase price (not including any accrued and unpaid interest) of our outstanding 5.875% Senior Notes due
2024.
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 our 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, we entered into Amendment No. 11 to the Credit Agreement, pursuant to which lenders have
provided us with an additional $215,000,000 in aggregate principal amount under the Term A Facility. We used the net
proceeds from the increase in the Term A Facility (together with cash on hand), to (i) redeem all of our 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 our revolving credit facilities. As of September 30, 2021 and September 30, 2020, we had $1,144.8
million and $1,331.0 million, respectively, available under our revolving credit facility.
2024 Senior Notes
On October 6, 2014, we 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, we 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.
51
2027 Senior Notes
On February 21, 2017, we completed a private placement offering of $1,000,000,000 aggregate principal amount
of our unsecured 5.125% Senior Notes due 2027 (the “2027 Senior Notes”). On June 30, 2017, we completed an exchange
offer to exchange the unregistered 2027 Senior Notes for registered notes, as well as related guarantees.
As of September 30, 2021, the estimated fair value of the 2027 Senior Notes was approximately $1,104.5 million.
The fair value of the 2027 Senior Notes as of September 30, 2021 was derived by taking the mid-point of the trading prices
from an observable market input (Level 2) in the secondary bond market and multiplying it by the outstanding balance of
the 2027 Senior Notes. Interest is payable on the 2027 Senior Notes at a rate of 5.125% per annum. Interest on the 2027
Senior Notes is payable semi-annually on March 15 and September 15 of each year, commencing on September 15, 2017.
The 2027 Senior Notes will mature on March 15, 2027.
At any time and from time to time prior to December 15, 2026, we 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, we 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
to 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. The indenture also contains customary negative covenants.
We were in compliance with the covenants relating to the 2027 Senior Notes as of September 30, 2021.
URS Senior Notes
In connection with the 2014 acquisition of the URS Corporation (URS), we 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
Other debt consists primarily of obligations under capital leases and loans, and unsecured credit facilities. Our
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. As of September 30,
2021, we had $463.6 million available under these unsecured credit facilities.
Effective Interest Rate
Our average effective interest rate on our total debt, including the effects of the interest rate swap agreements and
excluding the effects of prepayment premiums included in interest expense, during the years ended September 30, 2021,
2020 and 2019 was 4.4%, 5.3% and 5.1%, respectively.
Interest expense in the consolidated statements of operations included amortization of deferred debt issuance
costs for the years ended September 30, 2021, 2020 and 2019 of $10.2 million, $5.4 million and $5.0 million, respectively.
52
Other Commitments
We enter into various joint venture arrangements to provide architectural, engineering, program management,
construction management and operations and maintenance services. The ownership percentage of these joint ventures is
typically representative of the work to be performed or the amount of risk assumed by each joint venture partner. Some of
these joint ventures are considered variable interest. We have consolidated all joint ventures for which we have control.
For all others, our portion of the earnings is recorded in equity in earnings of joint ventures. See Note 6, Joint Ventures
and Variable Interest Entities, in the notes to our consolidated financial statements.
Other than normal property and equipment additions and replacements, expenditures to further the
implementation of our various information technology systems, commitments under our incentive compensation programs,
amounts we may expend to repurchase stock under our stock repurchase program and acquisitions from time to time and
disposition costs, we currently do not have any significant capital expenditures or outlays planned except as described
below. However, if we acquire additional businesses in the future or if we embark on other capital-intensive initiatives,
additional working capital may be required.
Under our secured revolving credit facility and other facilities discussed in Other Debt and Other Items above, as
of September 30, 2021, there was approximately $483.0 million including both continuing and discontinued operations,
outstanding under standby letters of credit primarily issued in connection with general and professional liability insurance
programs and for contract performance guarantees. For those projects for which we have issued a performance guarantee,
if the project subsequently fails to meet guaranteed performance standards, we may either incur significant additional costs
or be held responsible for the costs incurred by the client to achieve the required performance standards.
We recognized on our balance sheet the funded status of our pension benefit plans, measured as the difference
between the fair value of plan assets and the projected benefit obligation. At September 30, 2021, our defined benefit
pension plans had an aggregate deficit (the excess of projected benefit obligations over the fair value of plan assets) of
approximately $345.5 million. The total amounts of employer contributions paid for the year ended September 30, 2021
were $13.7 million for U.S. plans and $25.2 million for non-U.S. plans. Funding requirements for each plan are determined
based on the local laws of the country where such plan resides. In some countries, the funding requirements are mandatory
while in other countries, they are discretionary. There is a required minimum contribution for one of our domestic plans;
however, we may make additional discretionary contributions. In the future, such pension funding may increase or decrease
depending on changes in the levels of interest rates, pension plan performance and other factors. In addition, we have
collective bargaining agreements with unions that require us to contribute to various third party multiemployer pension
plans that we do not control or manage. For the year ended September 30, 2021, we contributed $3.7 million to
multiemployer pension plans.
Condensed Combined Financial Information
In connection with the registration of the Company’s 2014 Senior Notes that were declared effective by the SEC
on September 29, 2015, AECOM became subject to the requirements of Rule 3-10 of Regulation S-X, as amended,
regarding financial statements of guarantors and issuers of guaranteed securities. Both the 2024 Senior Notes and the 2027
Senior Notes are fully and unconditionally guaranteed on a joint and several basis by some of AECOM’s directly and
indirectly 100% owned subsidiaries (the Subsidiary Guarantors). Other than customary restrictions imposed by applicable
statutes, there are no restrictions on the ability of the Subsidiary Guarantors to transfer funds to AECOM in the form of
cash dividends, loans or advances.
The following tables present condensed combined summarized financial information for AECOM and the
Subsidiary Guarantors. All intercompany balances and transactions are eliminated in the presentation of the combined
financial statements. Amounts provided do not represent our total consolidated amounts as of September 30, 2021 and for
the twelve months then ended.
53
Condensed Combined Balance Sheets
Parent and Subsidiary Guarantors
(unaudited - in millions)
Current assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Non-current assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Total assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
$
September 30, 2021
3,054.8
3,206.2
6,261.0
$
Current liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Non-current liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Total liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Total stockholders' equity . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Total liabilities and stockholders' equity . . . . . . . . . . . . . . . . . . . . . . . . . . .
$
$
2,789.7
2,797.3
5,587.0
674.0
6,261.0
Condensed Combined Statement of Operations
Parent and Subsidiary Guarantors
(unaudited - in millions)
For the twelve months ended
September 30, 2021
Revenue . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Cost of revenue . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Gross profit . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Net loss from continuing operations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Net loss from discontinued operations . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Net loss . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Net loss attributable to AECOM . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
$
$
$
7,497.1
7,106.6
390.5
(51.6)
(88.9)
(140.5)
(140.5)
Commitments and Contingencies
We record amounts representing our probable estimated liabilities relating to claims, guarantees, litigation, audits
and investigations. We rely in part on qualified actuaries to assist us in determining the level of reserves to establish for
insurance-related claims that are known and have been asserted against us, and for insurance-related claims that are
believed to have been incurred based on actuarial analysis, but have not yet been reported to our claims administrators as
of the respective balance sheet dates. We include any adjustments to such insurance reserves in our consolidated results of
operations. Our reasonably possible loss disclosures are presented on a gross basis prior to the consideration of insurance
recoveries. We do not record gain contingencies until they are realized. In the ordinary course of business, we may not be
aware that we or our affiliates are under investigation and may not be aware of whether or not a known investigation has
been concluded.
54
In the ordinary course of business, we may enter into various arrangements providing financial or performance
assurance to clients, lenders, or partners. Such arrangements include standby letters of credit, surety bonds, and corporate
guarantees to support the creditworthiness or the project execution commitments of our 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 some circumstances such as for warranties. We may also guarantee
that a project, when complete, will achieve specified performance standards. If the project subsequently fails to meet
guaranteed performance standards, we may incur additional costs, pay liquidated damages or be held responsible for the
costs incurred by the client to achieve the required performance standards. The potential payment amount of an outstanding
performance arrangement is typically the remaining cost of work to be performed by or on behalf of third parties.
Generally, under joint venture arrangements, if a partner is financially unable to complete its share of the contract, the
other partner(s) may be required to complete those activities.
At September 30, 2021, we were contingently liable in the amount of approximately $483.0 million in issued
standby letters of credit and $4.3 billion in issued surety bonds primarily to support project execution.
In the ordinary course of business, we enter into various agreements providing financial or performance
assurances to clients on behalf of certain unconsolidated partnerships, joint ventures and other jointly executed contracts.
These agreements are entered into primarily to support the project execution commitments of these entities.
Our investment adviser jointly manages and sponsors the AECOM-Canyon Equity Fund, L.P. (the “Fund”), in
which we indirectly hold an equity interest and have an ongoing capital commitment to fund investments. At September
30, 2021, we have capital commitments of $19.3 million to the Fund over the next 7 years.
In addition, in connection with the investment activities of AECOM Capital, we provide guarantees of certain
contractual obligations, including guarantees for completion of projects, repayment of debt, environmental indemnity
obligations and other lender required guarantees.
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. In February 2011, the Former Affiliate and the DOE executed a Task Order Modification that changed
some cost-reimbursable contract provisions to at-risk. The Task Order Modification, including subsequent amendments,
required the DOE to pay all project costs up to $106 million, required the Former Affiliate and the DOE to equally share
in all project costs incurred from $106 million to $146 million, and required the Former Affiliate to pay all project costs
exceeding $146 million.
Due to unanticipated requirements and permitting delays by federal and state agencies, as well as delays and
related ground stabilization activities caused by Hurricane Irene in 2011, the Former Affiliate was required to perform
work outside the scope of the Task Order Modification. In December 2014, the Former Affiliate submitted an initial set of
claims against the DOE pursuant to the Contracts Disputes Acts seeking recovery of $103 million, including additional
fees on changed work scope (the “2014 Claims”). On December 6, 2019, the Former Affiliate submitted a second set of
claims against the DOE seeking recovery of an additional $60.4 million, including additional project costs and delays
outside the scope of the contract as a result of differing site and ground conditions (the “2019 Claims”). The Former
Affiliate also submitted three alternative breach of contract claims to the 2014 and 2019 Claims that may entitle the Former
Affiliate to recovery of $148.5 million to $329.4 million. On December 30, 2019, the DOE denied the Former Affiliate’s
2014 Claims. On September 25, 2020, the DOE denied the Former Affiliate’s 2019 Claims. The Company filed an appeal
of these decisions on December 20, 2020 in the Court of Federal Claims. Deconstruction, decommissioning and site
restoration activities are complete.
55
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.
New York Department of Environmental Conservation
In September 2017, AECOM USA, Inc. was advised by the New York State Department of Environmental
Conservation (DEC) of allegations that it committed environmental permit violations pursuant to the New York
Environmental Conservation Law (ECL) associated with AECOM USA, Inc.’s oversight of a stream restoration project
for Schoharie County which could result in substantial penalties if calculated under the ECL’s maximum civil penalty
provisions. AECOM USA, Inc. disputes this claim and intends to continue to defend this matter vigorously; however,
AECOM USA, Inc. cannot provide assurances that it will be successful in these efforts. The potential range of loss in
excess of any current accrual cannot be reasonably estimated at this time primarily because the matter involves complex
and unique environmental and regulatory issues; the project site involves the oversight and involvement of various local,
state and federal government agencies; there is substantial uncertainty regarding any alleged damages; and the matter is in
its preliminary stages.
Refinery Turnaround Project
A Former Affiliate of the Company entered into an agreement to perform turnaround maintenance services during
a planned shutdown at a refinery in Montana in December 2017. The turnaround project was completed in February 2019.
Due to circumstances outside of the Company's Former Affiliate’s control, including client directed changes and delays
and the refinery’s condition, the Company's Former Affiliate performed additional work outside of the original contract
over $90 million and is entitled to payment from the refinery owner of approximately $144 million. In March 2019, the
refinery owner sent a letter to the Company’s Former Affiliate alleging it incurred approximately $79 million in damages
due to the Company’s Former Affiliate’s project performance. In April 2019, the Company’s Former Affiliate filed and
perfected a $132 million construction lien against the refinery for unpaid labor and materials costs. In August 2019,
following a subcontractor complaint filed in the Thirteen Judicial District Court of Montana asserting claims against the
refinery owner and the Company’s Former Affiliate, the refinery owner crossclaimed against the Company’s Former
Affiliate and the subcontractor. In October 2019, following the subcontractor’s dismissal of its claims, the Company’s
Former Affiliate removed the matter to federal court and cross claimed against the refinery owner. 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.
The Company intends to vigorously prosecute and defend this matter; however, the Company cannot provide
assurance that the Company will be successful in these efforts. The resolution of this matter and any potential range of
loss cannot be reasonably determined or estimated at this time, primarily because the matter raises complex legal issues
that Company is continuing to assess.
56
Contractual Obligations and Commitments
The following summarizes our contractual obligations and commercial commitments as of September 30, 2021:
Contractual Obligations and Commitments
Total
Less than
One Year
Debt . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Interest on debt . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Operating leases . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Pension funding obligations(1) . . . . . . . . . . . . . . . . . . .
Total contractual obligations and commitments . . . . .
$ 2,235.6
497.3
974.2
36.2
$ 3,743.3
$
$
53.8
91.8
190.0
36.2
371.8
Three Years
(in millions)
$
86.9 $
179.4
290.9
—
557.2 $
$
435.5
169.1
206.5
—
811.1
$ 1,659.4
57.0
286.8
—
$ 2,003.2
One to
Three to
Five Years
More than
Five Years
(1) Represents expected fiscal 2022 contributions to fund our defined benefit pension and other postretirement plans.
Contributions beyond one year have not been included as amounts are not determinable.
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. We 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. The new guidance replaces the “incurred loss” approach with an “expected loss” model
for instruments measured at amortized cost. It also simplifies the accounting model for purchased credit-impaired debt
securities and loans. We adopted the new guidance effective October 1, 2020 using a modified retrospective approach that
resulted in an $8.0 million, net of tax, reduction to retained earnings without restating comparative periods. 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. We determined
that we 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 our fiscal year starting October 1, 2020.
The adoption of this guidance did not have a material impact on our 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. We adopted the new guidance starting on October 1, 2020. Adoption
of the new guidance did not have a significant impact on our 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. We expect to adopt the new guidance starting on October 1, 2021 and do not expect adoption of the new
guidance will have a significant impact on our financial reporting process.
57
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. We adopted the new rule on March 31, 2020. Accordingly, the revised condensed consolidating financial
information is presented outside of these consolidated financial statements.
Off-Balance Sheet Arrangements
We enter into various joint venture arrangements to provide architectural, engineering, program management,
construction management and operations and maintenance services. The ownership percentage of these joint ventures is
typically representative of the work to be performed or the amount of risk assumed by each joint venture partner. Some of
these joint ventures are considered variable interest entities. We have consolidated all joint ventures for which we have
control. For all others, our portion of the earnings are recorded in equity in earnings of joint ventures. See Note 6 in the
notes to our consolidated financial statements. We do not believe that we have any off-balance sheet arrangements that
have or are reasonably likely to have a current or future effect on our financial condition, changes in financial condition,
revenues or expenses, results of operations, liquidity, capital expenditures or capital resources that would be material to
investors.
ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
Financial Market Risks
We are exposed to market risk, primarily related to foreign currency exchange rates and interest rate exposure of
our debt obligations that bear interest based on floating rates. We actively monitor these exposures. Our objective is to
reduce, where we deem appropriate to do so, fluctuations in earnings and cash flows associated with changes in foreign
exchange rates and interest rates. In order to accomplish this objective, we sometimes enter into derivative financial
instruments, such as forward contracts and interest rate hedge contracts. It is our policy and practice to use derivative
financial instruments only to the extent necessary to manage our exposures. We do not use derivative financial instruments
for trading purposes.
Foreign Exchange Rates
We are exposed to foreign currency exchange rate risk resulting from our operations outside of the U.S. We use
foreign currency forward contracts from time to time to mitigate foreign currency risk. We limit exposure to foreign
currency fluctuations in most of our contracts through provisions that require client payments in currencies corresponding
to the currency in which costs are incurred. As a result of this natural hedge, we generally do not need to hedge foreign
currency cash flows for contract work performed. The functional currency of our significant foreign operations is the
respective local currency.
Interest Rates
Our Credit Agreement and certain other debt obligations are subject to variable rate interest which could be
adversely affected by an increase in interest rates. As of September 30, 2021 and 2020, we had $1,155.3 million and $248.5
million, respectively, in outstanding borrowings under our term credit agreements and our revolving credit facility. Interest
on amounts borrowed under these agreements is subject to adjustment based on specified levels of financial performance.
The applicable margin that is added to the borrowing in the base rate can range from 0.25% to 1.00% and the applicable
margin that is added to borrowings in the eurocurrency rate can range from 1.25% to 2.00%. For the year ended September
30, 2021, our weighted average floating rate borrowings were $819.0 million, or $619.0 million excluding borrowings
with effective fixed interest rates due to interest rate swap agreements. If short term floating interest rates had increased
by 1.00%, our interest expense for the year ended September 30, 2021 would have increased by $6.2 million. We invest
our cash in a variety of financial instruments, consisting principally of money market securities or other highly liquid,
short-term securities that are subject to minimal credit and market risk.
58
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
AECOM
Index to Consolidated Financial Statements
September 30, 2021
Audited Annual Consolidated Financial Statements
Reports of Independent Registered Public Accounting Firm. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Consolidated Balance Sheets at September 30, 2021 and 2020. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Consolidated Statements of Operations for the Years Ended September 30, 2021, 2020 and 2019 . . . . . . . . . . . . . . .
Consolidated Statements of Comprehensive Income (Loss) for the Years Ended September 30, 2021, 2020,
and 2019 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Consolidated Statements of Stockholders’ Equity for the Years Ended September 30, 2021, 2020, and 2019 . . . . . .
Consolidated Statements of Cash Flows for the Years Ended September 30, 2021, 2020, and 2019 . . . . . . . . . . . . . .
Notes to Consolidated Financial Statements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
60
64
65
66
67
68
69
59
Report of Independent Registered Public Accounting Firm
The Board of Directors and Stockholders of AECOM
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"). In our
opinion, the consolidated financial statements present fairly, in all material respects, the financial position of the Company
at September 30, 2021 and 2020, and the results of its operations and its cash flows for each of the three years in the period
ended September 30, 2021, 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.
Basis for Opinion
These financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion
on the Company's financial statements based on our audits. We are a public accounting firm registered with the PCAOB
and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and
the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.
We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and
perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement,
whether due to error or fraud. Our audits included performing procedures to assess the risks of material misstatement of
the financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such
procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements.
Our audits also included evaluating the accounting principles used and significant estimates made by management, as well
as evaluating the overall presentation of the financial statements. We believe that our audits provide a reasonable basis for
our opinion.
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: (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.
60
Description of the
Matter
Revenue Recognition - Contract cost and claim recovery estimates
For the year ended September 30, 2021, contract revenues recognized by the Company were $13.3
billion. Contract revenues include $3.4 billion which relate to fixed 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. The Company generally measures its
progress to completion using an input measure of total costs incurred divided by total costs expected
to be incurred. In addition, the Company’s estimate of transaction price includes variable
consideration associated with claims only to the extent that a significant reversal would not be
probable.
Recognition of revenue and profit over time as performance obligations are satisfied for long-term
fixed price contracts is highly judgmental as it requires the Company to prepare estimates of total
contract revenue and total contract costs, including costs to complete in-process contracts. These
estimates are dependent upon a number of factors, including the accuracy 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.
As of September 30, 2021, significant claims included in contract assets and other non-current assets
on the consolidated balance sheet were approximately $140 million. Revenue recognition relating to
claims is highly judgmental as the amount has been disputed by the customer and it requires the
Company to prepare estimates of amounts expected to be recovered. Changes in recovery estimates
can have a material effect on the amount of revenue recognized.
Auditing contract revenue recognition is complex and highly judgmental due to the variability and
uncertainty associated with estimating the costs to complete and amounts expected to be recovered
from claims. Changes in these estimates would have a significant effect on the amount of contract
revenue recognized.
How We Addressed
the Matter in Our
Audit
We obtained an understanding, evaluated the design, and tested the operating effectiveness of
controls that address the risk of material misstatement of contract revenue including those associated
with cost to complete estimates for long-term fixed price contracts and estimates of amounts
expected to be recovered from claims. For example, we tested controls over the Company’s review
of estimated direct and indirect costs to be incurred and estimates of claim recovery amounts.
To evaluate the Company’s determination of estimated costs to complete, we selected a sample of
contracts and, among other things, inspected the executed contracts including any significant
amendments; conducted interviews with and inspected questionnaires prepared by project personnel;
tested key components of the cost to complete estimates, including materials, labor, and
subcontractors costs; reviewed support for estimates of project contingencies; compared actual
project margins to historical and expected results; and recalculated revenues recognized.
To test revenue recognized relating to claims, we selected a sample of projects and evaluated the
estimates made by management by reviewing documentation from management’s specialists and
external counsel to support the amount of the claim. 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.
61
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
November 17, 2021
62
Report of Independent Registered Public Accounting Firm
To the Board of Directors and Stockholders of AECOM
Opinion on Internal Control over Financial Reporting
We have audited AECOM’s (the “Company”) 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) (the “COSO criteria”). In our opinion, AECOM maintained, in all material
respects, effective internal control over financial reporting as of September 30, 2021, based on the COSO criteria.
We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United
States) (“PCAOB”), the 2021 consolidated financial statements of the Company and our report dated November 17, 2021
expressed an unqualified opinion thereon.
Basis for Opinion
The Company’s management is responsible for maintaining effective internal control over financial reporting and for its
assessment of the effectiveness of internal control over financial reporting included in the accompanying Management’s
Report on Internal Control over Financial Reporting. Our responsibility is to express an opinion on the Company’s internal
control over financial reporting based on our audit. We are a public accounting firm registered with the PCAOB and are
required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the
applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.
We conducted our audit in accordance with the standards of the PCAOB. Those standards require that we plan and perform
the audit to obtain reasonable assurance about whether effective internal control over financial reporting was maintained
in all material respects.
Our audit included obtaining an understanding of internal control over financial reporting, assessing the risk that a material
weakness exists, testing and evaluating the design and operating effectiveness of internal control based on the assessed
risk, and performing such other procedures as we considered necessary in the circumstances. We believe that our audit
provides a reasonable basis for our opinion.
Definition and Limitations of Internal Control Over Financial Reporting
A company’s internal control over financial reporting is a process designed to provide reasonable assurance regarding the
reliability of financial reporting and the preparation of financial statements for external purposes in accordance with
generally accepted accounting principles. A company’s internal control over financial reporting includes those policies
and procedures that (1) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the
transactions and dispositions of the assets of the company; (2) provide reasonable assurance that transactions are recorded
as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles,
and that receipts and expenditures of the company are being made only in accordance with authorizations of management
and directors of the company; and (3) provide reasonable assurance regarding prevention or timely detection of
unauthorized acquisition, use, or disposition of the company’s assets that could have a material effect on the financial
statements.
Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also,
projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate
because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.
/s/ Ernst & Young LLP
Los Angeles, California
November 17, 2021
63
AECOM
Consolidated Balance Sheets
(in thousands, except share data)
September 30, September 30,
2021
2020
CURRENT ASSETS:
ASSETS
Cash and cash equivalents . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Cash in consolidated joint ventures . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Total cash and cash equivalents . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Accounts receivable—net . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Contract assets. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Prepaid expenses and other current assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Current assets held for sale . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Income taxes receivable . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
TOTAL CURRENT ASSETS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
PROPERTY AND EQUIPMENT—NET . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
DEFERRED TAX ASSETS—NET . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
INVESTMENTS IN UNCONSOLIDATED JOINT VENTURES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
GOODWILL . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
INTANGIBLE ASSETS—NET . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
OTHER NON-CURRENT ASSETS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
OPERATING LEASE RIGHT-OF-USE ASSETS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
NON-CURRENT ASSETS HELD FOR SALE . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
TOTAL ASSETS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
$
1,120,790
108,406
1,229,196
2,619,491
1,369,031
739,044
139,426
77,355
6,173,543
398,876
360,260
328,906
3,502,499
54,867
307,927
607,076
—
$ 11,733,954
$
1,599,688
108,644
1,708,332
2,920,730
1,611,525
691,707
562,435
35,637
7,530,366
381,672
361,675
297,595
3,484,221
76,917
160,036
652,115
54,354
$ 12,998,951
CURRENT LIABILITIES:
LIABILITIES AND STOCKHOLDERS’ EQUITY
Short-term debt . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Accounts payable . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Accrued expenses and other current liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Income taxes payable . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Contract liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Current liabilities held for sale . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Current portion of long-term debt . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
TOTAL CURRENT LIABILITIES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
OTHER LONG-TERM LIABILITIES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
OPERATING LEASE LIABILITIES, NON-CURRENT . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
LONG-TERM LIABILITIES HELD FOR SALE . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
DEFERRED TAX LIABILITY-NET . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
PENSION BENEFIT OBLIGATIONS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
LONG-TERM DEBT . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
TOTAL LIABILITIES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
$
$
4,369
2,090,479
2,174,201
50,511
1,058,643
94,043
49,469
5,521,715
145,444
679,059
11,095
5,420
383,904
2,157,740
8,904,377
223
2,358,228
2,249,704
47,103
996,922
417,623
20,651
6,090,454
162,784
745,287
79,254
3,491
463,001
2,041,136
9,585,407
COMMITMENTS AND CONTINGENCIES (Note 18)
AECOM STOCKHOLDERS’ EQUITY:
Common stock—authorized, 300,000,000 shares of $0.01 par value as of September 30, 2021 and 2020;
issued and outstanding 143,168,815 and 157,044,687 shares as of September 30, 2021 and 2020,
respectively . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Additional paid-in capital . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Accumulated other comprehensive loss . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
(Accumulated deficits) / Retained earnings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
TOTAL AECOM STOCKHOLDERS’ EQUITY . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Noncontrolling interests . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
TOTAL STOCKHOLDERS’ EQUITY . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
1,432
4,115,541
(900,377)
(504,126)
2,712,470
117,107
2,829,577
$ 11,733,954
1,570
4,035,414
(918,674)
174,248
3,292,558
120,986
3,413,544
$ 12,998,951
See accompanying Notes to Consolidated Financial Statements.
64
AECOM
Consolidated Statements of Operations
(in thousands, except per share data)
September 30, September 30, September 30,
Fiscal Year Ended
Revenue . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Cost of revenue . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Gross profit . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
$ 13,340,852 $ 13,239,976 $
12,542,431
798,421
12,530,416
709,560
2021
2020
Equity in earnings of joint ventures . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
General and administrative expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Restructuring costs . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Gain on disposal activities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Impairment of long-lived assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Income from operations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Other income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Interest expense . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Income from continuing operations before taxes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Income tax expense for continuing operations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Net income from continuing operations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Net loss from discontinued operations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Net income (loss) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
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 income attributable to AECOM from continuing operations . . . . . . . . . . . . . . . . . . . . . . . .
Net loss attributable to AECOM from discontinued operations . . . . . . . . . . . . . . . . . . . . . . . . .
Net income (loss) attributable to AECOM . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Net income (loss) attributable to AECOM per share:
Basic continuing operations per share . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Basic discontinued operations per share . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Basic earnings per share . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Diluted continuing operations per share . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Diluted discontinued operations per share . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Diluted earnings per share . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
2019
13,642,455
13,030,800
611,655
49,320
(148,123)
(95,446)
3,590
(24,900)
396,096
14,556
(161,482)
249,170
13,498
235,672
(419,662)
(183,990)
(24,710)
(52,350)
(77,060)
35,044
(155,072)
(48,840)
—
—
629,553
17,603
(238,352)
408,804
89,011
319,793
(116,813)
202,980
(25,109)
(4,686)
(29,795)
48,781
(188,535)
(188,345)
—
—
381,461
11,056
(159,914)
232,603
45,753
186,850
(340,591)
(153,741)
(16,398)
(16,231)
(32,629)
294,684
(121,499)
173,185 $
170,452
(356,822)
(186,370) $
210,962
(472,012)
(261,050)
2.00 $
(0.82) $
1.18 $
1.97 $
(0.81) $
1.16 $
1.07 $
(2.24) $
(1.17) $
1.06 $
(2.22) $
(1.16) $
1.34
(3.00)
(1.66)
1.32
(2.95)
(1.63)
$
$
$
$
$
$
$
Weighted average shares outstanding:
Basic . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Diluted . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
147,279
149,676
159,005
161,292
157,044
159,684
See accompanying Notes to Consolidated Financial Statements.
65
AECOM
Consolidated Statements of Comprehensive Income (Loss)
(in thousands)
Fiscal Year Ended
September 30, September 30, September 30,
2020
2021
2019
Net income (loss) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
$
202,980 $
(153,741) $
(183,990)
Other comprehensive loss, net of tax:
Net unrealized gain (loss) on derivatives, net of tax . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Foreign currency translation adjustments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Pension adjustments, net of tax . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Other comprehensive income (loss), net of tax . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Comprehensive income (loss), net of tax . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Noncontrolling interests in comprehensive income of consolidated subsidiaries, net of tax. . . . . . . . . . . . . .
Comprehensive income (loss) attributable to AECOM, net of tax . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
$
4,541
(12,601)
26,591
18,531
221,511
(30,029)
191,482 $
4,094
(18,206)
(40,051)
(54,163)
(207,904)
(32,943)
(240,847) $
(13,972)
(46,628)
(100,367)
(160,967)
(344,957)
(76,960)
(421,917)
See accompanying Notes to Consolidated Financial Statements.
66
AECOM
Consolidated Statements of Stockholders’ Equity
(in thousands)
BALANCE AT SEPTEMBER 30, 2018 . . . . . . . . . . . . $
Net loss . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Cumulative effect of accounting standard
Stock
1,570
—
Common
adoption . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Other comprehensive loss . . . . . . . . . . . . . . . . . . . . . .
Issuance of stock . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Repurchases of stock . . . . . . . . . . . . . . . . . . . . . . . . .
Stock based compensation . . . . . . . . . . . . . . . . . . . . .
Other transactions with noncontrolling interests . . . . . . .
Contributions from noncontrolling interests . . . . . . . . .
Distributions to noncontrolling interests . . . . . . . . . . . .
BALANCE AT SEPTEMBER 30, 2019 . . . . . . . . . . . .
Net loss . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Cumulative effect of accounting standard
adoption . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Other comprehensive loss . . . . . . . . . . . . . . . . . . . . . .
Issuance of stock . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Repurchases of stock . . . . . . . . . . . . . . . . . . . . . . . . .
Stock based compensation . . . . . . . . . . . . . . . . . . . . .
Disposal of noncontrolling interest of business
sold . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Contributions from noncontrolling interests . . . . . . . . .
Distributions to noncontrolling interests . . . . . . . . . . . .
BALANCE AT SEPTEMBER 30, 2020 . . . . . . . . . . . .
Net income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Cumulative effect of accounting standard
adoption . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Other comprehensive income . . . . . . . . . . . . . . . . . . .
Issuance of stock . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Repurchases of stock . . . . . . . . . . . . . . . . . . . . . . . . .
Stock based compensation . . . . . . . . . . . . . . . . . . . . .
Other transactions with noncontrolling interests . . . . . . .
Disposal of noncontrolling interest of business
—
—
44
(39)
—
—
—
—
1,575
—
—
—
43
(48)
—
—
—
—
1,570
—
—
—
25
(163)
—
—
Additional
Paid-In
Capital
$ 3,846,392
—
—
—
66,517
(23,071)
63,812
—
—
—
3,953,650
—
—
—
63,297
(35,762)
54,229
—
—
—
4,035,414
—
—
—
58,733
(23,348)
44,742
—
Accumulated
Retained
Other
Earnings
Comprehensive
Loss
(Deficits)
(703,330) $ 948,148
(261,050)
—
$
Total
AECOM
Non-
Stockholders’ Controlling Stockholder’s
Interests
$ 4,092,780 $ 185,594
77,060
Equity
$ 4,278,374
(183,990)
(261,050)
Equity
Total
—
(160,867)
—
—
—
—
—
—
(864,197)
—
—
(54,477)
—
—
—
—
—
—
(918,674)
—
—
18,297
—
—
—
—
(12,452)
—
—
(75,098)
—
—
—
—
599,548
(186,370)
(87,787)
—
—
(151,143)
—
—
—
—
174,248
173,185
(7,979)
—
—
(843,580)
—
—
(12,452)
(160,867)
66,561
(98,208)
63,812
—
—
—
3,690,576
(186,370)
(87,787)
(54,477)
63,340
(186,953)
54,229
—
—
—
3,292,558
173,185
(7,979)
18,297
58,758
(867,091)
44,742
—
—
(100)
—
—
—
16,208
5,069
(75,057)
208,774
32,629
—
314
—
—
—
(60,089)
9,917
(70,559)
120,986
29,795
—
234
—
—
—
405
(12,452)
(160,967)
66,561
(98,208)
63,812
16,208
5,069
(75,057)
3,899,350
(153,741)
(87,787)
(54,163)
63,340
(186,953)
54,229
(60,089)
9,917
(70,559)
3,413,544
202,980
(7,979)
18,531
58,758
(867,091)
44,742
405
sold . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Contributions from noncontrolling interests . . . . . . . . .
Distributions to noncontrolling interests . . . . . . . . . . . .
BALANCE AT SEPTEMBER 30, 2021 . . . . . . . . . . . . $
—
—
—
1,432
—
—
—
$ 4,115,541
$
—
—
—
—
—
—
(900,377) $ (504,126)
(24,039)
271
(10,545)
$ 2,712,470 $ 117,107
—
—
—
(24,039)
271
(10,545)
$ 2,829,577
See accompanying Notes to Consolidated Financial Statements.
67
AECOM
Consolidated Statements of Cash Flows
(in thousands)
Fiscal Year Ended
September 30, September 30,
September 30,
2021
2020
2019
$
202,980 $
(153,741)
$
(183,990)
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income (loss) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Adjustments to reconcile net income (loss) to net cash provided by operating activities:
Depreciation and amortization . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Equity in earnings of unconsolidated joint ventures . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Distribution of earnings from unconsolidated joint ventures . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Non-cash stock compensation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Prepayment premium on redemption of unsecured senior notes. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Impairment of long-lived assets, including goodwill . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Loss on disposal activities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Loss (gain) on sale of discontinued operations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Foreign currency translation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Deferred income tax (benefit) expense . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Other . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Changes in operating assets and liabilities, net of effects of acquisitions:
Accounts receivable and contract assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Prepaid expenses and other assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Accounts payable . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Accrued expenses and other current liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Contract liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Other long-term liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Net cash provided by operating activities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
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 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Investment in unconsolidated joint ventures . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Return of investment in unconsolidated joint ventures . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
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 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
176,400
(39,104)
46,358
44,742
117,500
105,194
—
52,532
(42,728)
(48,265)
16,063
533,006
(100,526)
(250,142)
(84,073)
103,999
(129,266)
704,670
(265,876)
—
(57,388)
8,110
15,507
—
14,822
(136,262)
(421,087)
CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from borrowings under credit agreements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Repayments of borrowings under credit agreements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Redemption of unsecured senior notes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Prepayment premium on redemption of unsecured senior notes. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Cash paid for debt issuance costs . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Proceeds from issuance of common stock . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Proceeds from exercise of stock options . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Payments to repurchase common stock . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Net distributions to noncontrolling interests . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Other financing activities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Net cash used in financing activities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
3,638,916
(2,726,347)
(797,252)
(117,500)
(11,280)
25,686
4,038
(867,091)
(10,274)
(11,429)
(872,533)
237,376
(23,279)
90,158
54,229
16,986
336,472
—
(161,900)
(31,919)
11,130
32,028
(136,955)
(31,815)
(192,980)
118,441
128,312
37,079
329,622
2,218,866
—
(111,077)
28,047
12,392
—
3,800
(114,591)
2,037,437
4,452,078
(5,568,320)
(248,522)
(16,986)
(4,228)
26,388
—
(186,953)
(60,642)
(20,785)
(1,627,970)
EFFECT OF EXCHANGE RATE CHANGES ON CASH . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
NET (DECREASE) INCREASE IN CASH AND CASH EQUIVALENTS. . . . . . . . . . . . . . . . . . . . . . . . . . . . .
CASH AND CASH EQUIVALENTS AT BEGINNING OF YEAR. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
CASH AND CASH EQUIVALENTS AT END OF YEAR . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
LESS: CASH AND CASH EQUIVALENTS INCLUDED IN CURRENT ASSETS HELD FOR SALE . . . . . . . . .
CASH AND CASH EQUIVALENTS OF CONTINUING OPERATIONS AT END OF YEAR . . . . . . . . . . . . . .
SUPPLEMENTAL CASH FLOW INFORMATION:
Interest paid . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Net income taxes (paid) refund received . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
5,493
(583,457)
1,818,249
1,234,792
(5,596)
1,229,196 $
(1,194)
737,895
1,080,354
1,818,249
(109,917)
1,708,332
(255,679) $
(114,464) $
(201,402)
(71,031)
$
$
$
$
$
$
See accompanying Notes to Consolidated Financial Statements.
68
261,185
(80,990)
65,954
63,812
—
615,400
10,381
—
(19,099)
(98,015)
5,899
(316,487)
(16,576)
251,410
259,572
7,559
(48,399)
777,616
—
46,490
(141,769)
22,750
12,365
(3,223)
17,291
(100,664)
(146,760)
7,700,774
(7,984,624)
—
—
—
30,448
—
(98,208)
(69,988)
(11,681)
(433,279)
(3,956)
193,621
886,733
1,080,354
(194,715)
885,639
(222,263)
2,500
AECOM
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
1. Significant Accounting Policies
Organization—AECOM and its consolidated subsidiaries provide planning, consulting, architectural and
engineering design services to commercial and government clients worldwide in major end markets such as transportation,
facilities, environmental, energy, water and government. The Company also provides construction services, including
building construction and energy, infrastructure and industrial construction, primarily in the Americas.
Fiscal Year—The Company reports results of operations based on 52 or 53-week periods ending on the Friday
nearest September 30. For clarity of presentation, all periods are presented as if the year ended on September 30. Fiscal
years 2021, 2020 and 2019 each contained 52, 53 and 52 weeks, respectively, and ended on October 1, October 2, and
September 27, respectively.
Use of Estimates—The preparation of financial statements in conformity with accounting principles generally
accepted in the United States (GAAP) requires management to make estimates and assumptions that affect the reported
amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements
and the reported amounts of revenues and expenses during the reporting period. The more significant estimates affecting
amounts reported in the consolidated financial statements relate to revenues under long-term contracts and self-insurance
accruals. Actual results could differ from those estimates.
Principles of Consolidation and Presentation—The consolidated financial statements include the accounts of
all majority-owned subsidiaries and joint ventures in which the Company is the primary beneficiary. All inter-company
accounts have been eliminated in consolidation. Also see Note 6 regarding joint ventures and variable interest entities.
Government Contract Matters—The Company’s federal government and certain state and local agency contracts
are subject to, among other regulations, regulations issued under the Federal Acquisition Regulations (FAR). These
regulations can limit the recovery of certain specified indirect costs on contracts and subjects the Company to ongoing
multiple audits by government agencies such as the Defense Contract Audit Agency (DCAA). In addition, most of the
Company’s federal and state and local contracts are subject to termination at the discretion of the client.
Audits by the DCAA and other agencies consist of reviews of the Company’s overhead rates, operating systems
and cost proposals to ensure that the Company accounted for such costs in accordance with the Cost Accounting Standards
of the FAR (CAS). If the DCAA determines the Company has not accounted for such costs consistent with CAS, the
DCAA may disallow these costs. There can be no assurance that audits by the DCAA or other governmental agencies will
not result in material cost disallowances in the future.
Cash and Cash Equivalents—The Company’s cash equivalents include highly liquid investments which have an
initial maturity of three months or less.
69
Allowance for Doubtful Accounts—The Company records its accounts receivable net of an allowance for
doubtful accounts. This allowance for doubtful accounts is estimated based on management’s evaluation of the contracts
involved and the financial condition of its clients. The factors the Company considers in its contract evaluations include,
but are not limited to:
• Client type—federal or state and local government or commercial client;
• Historical contract performance;
• Historical collection and delinquency trends;
• Client credit worthiness; and
• General economic conditions.
Derivative Financial Instruments—The Company accounts for its derivative instruments as either assets or
liabilities and carries them at fair value.
For derivative instruments that hedge the exposure to variability in expected future cash flows that are designated
as cash flow hedges, the effective portion of the gain or loss on the derivative instrument is reported as a component of
accumulated other comprehensive income in stockholders’ equity and reclassified into income in the same period or
periods during which the hedged transaction affects earnings. The ineffective portion of the gain or loss on the derivative
instrument, if any, is recognized in current income. To receive hedge accounting treatment, cash flow hedges must be
highly effective in offsetting changes to expected future cash flows on hedged transactions.
The net gain or loss on the effective portion of a derivative instrument that is designated as an economic hedge
of the foreign currency translation exposure generated by the re-measurement of certain assets and liabilities denominated
in a non-functional currency in a foreign operation is reported in the same manner as a foreign currency translation
adjustment. Accordingly, any gains or losses related to these derivative instruments are recognized in current income.
Derivatives that do not qualify as hedges are adjusted to fair value through current income.
Fair Value of Financial Instruments—The Company determines the fair values of its financial instruments,
including short-term investments, debt instruments and derivative instruments, and pension and post-retirement plan assets
based on inputs or assumptions that market participants would use in pricing an asset or a liability. The Company
categorizes its instruments using a valuation hierarchy for disclosure of the inputs used to measure fair value. This
hierarchy prioritizes the inputs into three broad levels as follows: Level 1 inputs are quoted prices (unadjusted) in active
markets for identical assets or liabilities; Level 2 inputs are quoted prices for similar assets and liabilities in active markets
or inputs that are observable for the asset or liability, either directly or indirectly through market corroboration, for
substantially the full term of the financial instrument; Level 3 inputs are unobservable inputs based on the Company’s
assumptions used to measure assets and liabilities at fair value. The classification of a financial asset or liability within the
hierarchy is determined based on the lowest level input that is significant to the fair value measurement.
The carrying amounts of cash and cash equivalents, accounts receivable and accounts payable approximate fair
value because of the short maturities of these instruments. The carrying amount of the revolving credit facility
approximates fair value because the interest rates are based upon variable reference rates.
The Company’s fair value measurement methods may produce a fair value calculation that may not be indicative
of net realizable value or reflective of future fair values. Although the Company believes its valuation methods are
appropriate and consistent with those used by other market participants, the use of different methodologies or assumptions
to determine fair value could result in a different fair value measurement at the reporting date.
70
Property and Equipment—Property and equipment are recorded at cost and are depreciated over their estimated
useful lives using the straight-line method. Expenditures for maintenance and repairs are expensed as incurred. Typically,
estimated useful lives range from ten to forty-five years for buildings, three to ten years for furniture and fixtures and three
to twelve years for computer systems and equipment. Leasehold improvements are amortized on a straight-line basis over
the shorter of their estimated useful lives or the remaining terms of the underlying lease agreement.
Long-Lived Assets—Long-lived assets to be held and used are reviewed for impairment whenever events or
circumstances indicate that the assets may not be recoverable. The carrying amount of an asset to be held and used is not
recoverable if it exceeds the sum of the undiscounted cash flows expected from the use and eventual disposition of the
asset. For assets to be held and used, impairment losses are recognized based upon the excess of the asset’s carrying
amount over the fair value of the asset. For long-lived assets to be disposed, impairment losses are recognized at the lower
of the carrying amount or fair value less cost to sell.
Goodwill and Acquired Intangible Assets—Goodwill represents the excess of amounts paid over the fair value
of net assets acquired from an acquisition. In order to determine the amount of goodwill resulting from an acquisition, the
Company performs an assessment to determine the value of the acquired company’s tangible and identifiable intangible
assets and liabilities. In its assessment, the Company determines whether identifiable intangible assets exist, which
typically include backlog and customer relationships. Intangible assets are amortized over the period in which the
contractual or economic benefits of the intangible assets are expected to be realized.
The Company tests goodwill for impairment annually for each reporting unit in the fourth quarter of the fiscal
year and between annual tests, if events occur or circumstances change which suggest that goodwill should be evaluated.
Such events or circumstances include significant changes in legal factors and business climate, recent losses at a reporting
unit, and industry trends, among other factors. A reporting unit is defined as an operating segment or one level below an
operating segment. The Company’s impairment tests are performed at the operating segment level as they represent the
Company’s reporting units.
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. In the event the fair value of the reporting
unit is determined to be less than the carrying value, goodwill is impaired, and an impairment loss is recognized equal to
the excess, limited to the total amount of goodwill allocated to the reporting unit. See also Note 3.
Pension Plans—The Company has certain defined benefit pension plans. The Company calculates the
market-related value of assets, which is used to determine the return-on-assets component of annual pension expense and
the cumulative net unrecognized gain or loss subject to amortization. This calculation reflects the Company’s anticipated
long-term rate of return and amortization of the difference between the actual return (including capital, dividends, and
interest) and the expected return over a five-year period. Cumulative net unrecognized gains or losses that exceed 10% of
the greater of the projected benefit obligation or the fair market related value of plan assets are subject to amortization.
Insurance Reserves—The Company maintains insurance for certain insurable business risks. Insurance coverage
contains various retention and deductible amounts for which the Company accrues a liability based upon reported claims
and an actuarially determined estimated liability for certain claims incurred but not reported. It is generally the Company’s
policy not to accrue for any potential legal expense to be incurred in defending the Company’s position. The Company
believes that its accruals for estimated liabilities associated with professional and other liabilities are sufficient and any
excess liability beyond the accrual is not expected to have a material adverse effect on the Company’s results of operations
or financial position.
Foreign Currency Translation—The Company’s functional currency is generally the U.S. dollar, except for
foreign operations where the functional currency is generally the local currency. Results of operations for foreign entities
are translated to U.S. dollars using the average exchange rates during the period. Assets and liabilities for foreign entities
are translated using the exchange rates in effect as of the date of the balance sheet. Resulting translation adjustments are
recorded as a foreign currency translation adjustment into other accumulated comprehensive income/(loss) in
stockholders’ equity.
71
The Company uses foreign currency forward contracts from time to time to mitigate foreign currency risk. The
Company limits exposure to foreign currency fluctuations in most of its contracts through provisions that require client
payments in currencies corresponding to the currency in which costs are incurred. As a result of this natural hedge, the
Company generally does not need to hedge foreign currency cash flows for contract work performed.
Noncontrolling Interests—Noncontrolling interests represent the equity investments of the minority owners in
the Company’s joint ventures and other subsidiary entities that the Company consolidates in its financial statements.
Income Taxes—The Company files a consolidated U.S. federal corporate income tax return and combined /
consolidated state tax returns and separate company state tax returns. The Company accounts for certain income and
expense items differently for financial reporting and income tax purposes. Deferred tax assets and liabilities are determined
based on the difference between the financial statement and tax basis of assets and liabilities, applying enacted statutory
tax rates in effect for the year in which the differences are expected to reverse. In determining the need for a valuation
allowance, management reviews both positive and negative evidence, including the nature, frequency, and severity of
cumulative financial reporting losses in recent years, the future reversal of existing temporary differences, predictability
of future taxable income exclusive of reversing temporary differences of the character necessary to realize the asset,
relevant carryforward periods, taxable income in carry-back years if carry-back is permitted under tax law, and prudent
and feasible tax planning strategies that would be implemented, if necessary, to protect against the loss of the deferred tax
asset that would otherwise expire. Based upon management’s assessment of all available evidence, the Company has
concluded that it is more likely than not that the deferred tax assets, net of valuation allowance, will be realized.
2. New Accounting Pronouncements and Changes in Accounting
In 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. The new guidance replaces the “incurred loss” approach with an “expected loss” model
for instruments measured at amortized cost. It also simplifies the accounting model for purchased credit-impaired debt
securities and loans. The Company adopted the new guidance effective October 1, 2020 using a modified retrospective
approach that resulted in an $8.0 million, net of tax, reduction to retained earnings without restating comparative periods.
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.
72
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.
3. 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. 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. 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. The Company recorded an additional pre-tax loss on the sale of $17.3 million in fiscal 2021
related to payments for post-closing working capital adjustments.
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. 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.
73
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.
The following table represents summarized balance sheet information of assets and liabilities held for sale (in
millions):
Cash and cash equivalents . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Receivables and contract assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Other . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Current assets held for sale . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Property and equipment, net . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Other . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Write-down of assets to fair value less cost to sell . . . . . . . . . . . . . .
Non-current assets held for sale . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Accounts payable and accrued expenses . . . . . . . . . . . . . . . . . . . . . .
Contract liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Other . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Current liabilities held for sale . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Long-term liabilities held for sale . . . . . . . . . . . . . . . . . . . . . . . . . .
September 30, September 30,
2021
2020
$
$
$
$
$
$
$
5.6 $
90.3
43.5
139.4 $
109.9
414.3
38.2
562.4
52.9 $
18.5
(71.4)
— $
119.8
181.8
(247.2)
54.4
88.5 $
—
5.5
94.0 $
350.4
65.6
1.6
417.6
11.1 $
79.3
74
The following table represents summarized income statement information of discontinued operations (in
millions):
Fiscal Year Ended
September 30, September 30,
2021
2020
Revenue . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Cost of revenue . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Gross profit (loss) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Equity in earnings (losses) of joint ventures . . . . . . . . . . . . . . . . . . .
(Loss) gain on disposal activities . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Transaction costs . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Impairment of long-lived assets, including goodwill . . . . . . . . . . . .
Loss from operations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Other income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Interest expense . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Loss before taxes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Income tax (benefit) expense . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Net loss from discontinued operations . . . . . . . . . . . . . . . . . . . . . . .
$
$
771.5 $
760.5
11.0
4.0
(52.5)
(15.3)
(105.2)
(158.0)
—
(0.5)
(158.5)
(41.7)
(116.8) $
3,150.8
3,179.2
(28.4)
(25.5)
161.9
(43.2)
(336.5)
(271.7)
1.8
(40.5)
(310.4)
30.2
(340.6)
The significant components included in the Consolidated Statement of Cash Flows for the discontinued operations
are as follows (in millions):
Fiscal Year Ended
September 30, September 30,
2021
2020
Depreciation and amortization:
Property and equipment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Intangible assets and capitalized debt issuance costs. . . . . . . . . . .
Payments for capital expenditures . . . . . . . . . . . . . . . . . . . . . . . . . . .
$
— $
—
(7.3)
4.6
26.0
(19.6)
The changes in the carrying value of goodwill by reportable segment for the year ended September 30, 2021 were
as follows:
Americas . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
International . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Foreign
September 30, Exchange September 30,
Impact
(in millions)
$
2020
2021
$
2,617.1
867.1
3,484.2
9.3 $
9.0
$ 18.3 $
2,626.4
876.1
3,502.5
$
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:
Gross
Amount
September 30, 2021
Accumulated
Amortization Assets, Net Amount
Intangible
Gross
September 30, 2020
Accumulated
Amortization Assets, Net
Intangible Amortization
Period
(years)
1 - 11
Backlog and customer relationships . . $
663.4 $
(608.5) $
(in millions)
54.9
$
662.8
$
(585.9) $
76.9
75
Amortization expense of acquired intangible assets included within cost of revenue was $22.6 million and $24.1
million for the years ended September 30, 2021 and 2020, respectively. The following table presents estimated
amortization expense of existing intangible assets for the succeeding years:
Fiscal Year
2022 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $
2023 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
2024 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
2025 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $
(in millions)
18.6
18.2
17.4
0.7
54.9
4. Revenue Recognition
The Company follows accounting principles for recognizing revenue upon the transfer of control of promised
goods or services to customers, in an amount that reflects the expected consideration received in exchange for those goods
or services. 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. In the course of providing its services, the Company routinely subcontracts for services and incurs other
direct costs on behalf of its clients. These costs are passed through to clients and, in accordance with GAAP, are included
in the Company’s revenue and cost of revenue. These pass through revenues for the years ended September 30, 2021, 2020
and 2019 were $7.2 billion, $7.1 billion and $7.4 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. Additionally, the Company is required to make estimates for the
amount of consideration to be received, including bonuses, awards, incentive fees, claims, unpriced change orders,
penalties, and liquidated damages. Variable consideration is included in the estimate of the transaction price only to the
extent that a significant reversal would not be probable. Management continuously monitors factors that may affect the
quality of its estimates, and material changes in estimates are disclosed accordingly. Costs attributable to claims are treated
as costs of contract performance as incurred.
The following summarizes the Company’s major contract types:
Cost Reimbursable Contracts
Cost reimbursable contracts include cost-plus fixed fee, cost-plus fixed rate, and time-and-materials price
contracts. Under cost-plus contracts, the Company charges clients for its costs, including both direct and indirect costs,
plus a negotiated fee or rate. The Company recognizes revenue based on actual direct costs incurred and the applicable
fixed rate or portion of the fixed fee earned as of the balance sheet date. Under time-and-materials price contracts, the
Company negotiates hourly billing rates and charges its clients based on the actual time that it expends on a project. In
addition, clients reimburse the Company for 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.
76
Guaranteed Maximum Price Contracts (GMP)
GMP contracts share many of the same contract provisions as cost-plus and fixed-price contracts. As with cost-
plus contracts, clients are provided a disclosure of all the project costs, and a lump sum or percentage fee is separately
identified. The Company provides clients with a guaranteed price for the overall project (adjusted for change orders issued
by clients) and a schedule including the expected completion date. Cost overruns or costs associated with project delays
in completion could generally be the Company’s responsibility. 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.
Fixed-Price Contracts
Fixed price contracts include both lump-sum and fixed-unit price contracts. Under lump-sum contracts, the
Company performs all the work under the contract for a specified fee. Lump-sum contracts are typically subject to price
adjustments if the scope of the project changes or unforeseen conditions arise. 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.
The following tables present the Company’s revenues disaggregated by revenue sources:
September 30,
2021
Fiscal Year Ended
September 30, September 30,
2020
(in millions)
2019
Cost reimbursable . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Guaranteed maximum price . . . . . . . . . . . . . . . . . . . .
Fixed price . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Total revenue . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
$
5,319.4
4,582.7
3,438.8
$ 13,340.9
$
5,734.5 $
3,896.8
3,608.7
5,958.2
3,962.6
3,721.7
$ 13,240.0 $ 13,642.5
September 30,
2021
Fiscal Year Ended
September 30, September 30,
2020
(in millions)
2019
Americas . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Europe, Middle East, Africa . . . . . . . . . . . . . . . . . . . .
Asia Pacific . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Total revenue . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
$ 10,228.3
1,588.1
1,524.5
$ 13,340.9
$ 10,138.3 $ 10,390.8
1,752.1
1,499.6
$ 13,240.0 $ 13,642.5
1,620.3
1,481.4
As of September 30, 2021, the Company had allocated $18.7 billion of transaction price to unsatisfied or partially
satisfied performance obligations, of which approximately 55% is expected to be satisfied within the next twelve months.
Contract liabilities represent amounts billed to clients in excess of revenue recognized to date. The Company
recognized revenue of $692.0 million and $592.7 million during the years ended September 30, 2021 and 2020,
respectively, that was included in contract liabilities as of September 30, 2020 and 2019, respectively.
77
The Company’s timing of revenue recognition may not be consistent with its rights to bill and collect cash from
its clients. 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. 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. Contract liabilities represent billings as of the balance sheet date, as allowed under the terms of a contract, but
not yet recognized as contract revenue pursuant to the Company’s revenue recognition policy.
Net accounts receivable consisted of the following:
Fiscal Year Ended
September 30, September 30,
Billed . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Contract retentions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Total accounts receivable—gross . . . . . . . . . . . . . . . . . . . . . . . . .
Allowance for doubtful accounts and credit losses. . . . . . . . . . . . . .
Total accounts receivable—net . . . . . . . . . . . . . . . . . . . . . . . . . . .
$
$
2021
2020
(in millions)
2,181.1 $
531.2
2,712.3
(92.8)
2,619.5 $
2,467.3
531.3
2,998.6
(77.9)
2,920.7
Substantially all contract assets as of September 30, 2021 and September 30, 2020 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.
On October 1, 2020, the Company adopted accounting pronouncements issued by the FASB regarding the
changes to the way in which entities estimate credit losses for most financial assets, including accounts receivable and
contract assets. The new guidance requires the Company to maintain an allowance for credit losses, which represent the
portion of its financial assets that it does not expect to collect over their contractual life. The Company considers a broad
range of information to estimate expected credit losses including the related ages of past due balances, projections of credit
losses based on historical trends, and collection history and credit quality of its clients. Negative macroeconomic trends or
delays in payment of outstanding receivables could result in an increase in the estimated credit losses.
No single client accounted for more than 10% of the Company’s outstanding receivables at 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. The Company does not retain financial or
legal obligations for these receivables that would result in material losses. The Company’s ongoing involvement is limited
to the remittance of customer payments to the financial institutions with respect to the sold trade receivables.
78
5. Property and Equipment
Property and equipment, at cost, consists of the following:
Fiscal Year Ended
September 30, September 30, Useful Lives
2021
2020
(years)
Building and land . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Leasehold improvements . . . . . . . . . . . . . . . . . . . . . . . .
Computer systems and equipment . . . . . . . . . . . . . . . . .
Furniture and fixtures . . . . . . . . . . . . . . . . . . . . . . . . . . .
Total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Accumulated depreciation and amortization. . . . . . . . .
Property and equipment, net . . . . . . . . . . . . . . . . . . .
$
$
11.5 10 - 45
343.2 1 - 20
557.4 3 - 12
134.8 3 - 10
$
(in millions)
14.4
351.2
602.1
112.7
1,080.4
(681.5)
398.9
$
1,046.9
(665.2)
381.7
Depreciation expense for the fiscal years ended September 30, 2021, 2020 and 2019 were $143.6 million,
$163.4 million, and $137.5 million, respectively. Depreciation is calculated using primarily the straight-line method over
the estimated useful lives of the assets, or in the case of leasehold improvements and capitalized leases, the lesser of the
remaining term of the lease or its estimated useful life.
6. Joint Ventures and Variable Interest Entities
The Company’s joint ventures provide architecture, engineering, program management, construction
management, operations and maintenance services and invest in real estate projects. Joint ventures, the combination of
two or more partners, are generally formed for a specific project. Management of the joint venture is typically controlled
by a joint venture executive committee, comprised of representatives from the joint venture partners. The joint venture
executive committee normally provides management oversight and controls decisions which could have a significant
impact on the joint venture.
Some of the Company’s joint ventures have no employees and minimal operating expenses. For these joint
ventures, the Company’s employees perform work for the joint venture, which is then billed to a third-party customer by
the joint venture. These joint ventures function as pass through entities to bill the third-party customer. For consolidated
joint ventures of this type, the Company records the entire amount of the services performed and the costs associated with
these services, including the services provided by the other joint venture partners, in the Company’s result of operations.
For certain of these joint ventures where a fee is added by an unconsolidated joint venture to client billings, the Company’s
portion of that fee is recorded in equity in earnings of joint ventures.
The Company also has joint ventures that have their own employees and operating expenses, and to which the
Company generally makes a capital contribution. The Company accounts for these joint ventures either as consolidated
entities or equity method investments based on the criteria further discussed below.
The Company follows guidance on the consolidation of variable interest entities (VIEs) that requires companies
to utilize a qualitative approach to determine whether it is the primary beneficiary of a VIE. The process for identifying
the primary beneficiary of a VIE requires consideration of the factors that indicate a party has the power to direct the
activities that most significantly impact the joint venture’s economic performance, including powers granted to the joint
venture’s program manager, powers contained in the joint venture governing board and, to a certain extent, a company’s
economic interest in the joint venture. The Company analyzes its joint ventures and classifies them as either:
•
•
a VIE that must be consolidated because the Company is the primary beneficiary or the joint venture is not
a VIE and the Company holds the majority voting interest with no significant participative rights available
to the other partners; or
a VIE that does not require consolidation and is treated as an equity method investment because the Company
is not the primary beneficiary or the joint venture is not a VIE and the Company does not hold the majority
voting interest.
79
As part of the above analysis, if it is determined that the Company has the power to direct the activities that most
significantly impact the joint venture’s economic performance, the Company considers whether or not it has the obligation
to absorb losses or rights to receive benefits of the VIE that could potentially be significant to the VIE.
Contractually required support provided to the Company’s joint ventures is discussed in Note 18.
Summary of financial information of the consolidated joint ventures is as follows:
Current assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Non-current assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Total assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Current liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Non-current liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Total liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Total AECOM equity . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Noncontrolling interests . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Total owners’ equity . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Total liabilities and owners’ equity. . . . . . . . . . . . . . . . . . . . . . . .
September 30, September 30,
2021
2020
(in millions)
$
$
$
$
503.9 $
74.8
578.7 $
400.3 $
1.5
401.8
74.0
102.9
176.9
578.7 $
536.3
77.0
613.3
409.9
1.5
411.4
113.9
88.0
201.9
613.3
Total revenue of the consolidated joint ventures was $826.8 million, $787.6 million, and $1,095.2 million for the
years ended September 30, 2021, 2020 and 2019, respectively. The assets of the Company’s consolidated joint ventures
are restricted for use only by the particular joint venture and are not available for the general operations of the Company.
Summary of financial information of the unconsolidated joint ventures, as derived from their unaudited financial
statements, is as follows:
Current assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Non-current assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Total assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Current liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Non-current liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Total liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Joint ventures’ equity . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Total liabilities and joint ventures’ equity . . . . . . . . . . . . . . . . . .
AECOM’s investment in joint ventures . . . . . . . . . . . . . . . . . . . . . .
Revenue . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Cost of revenue . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Gross profit . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Net income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
September 30, September 30,
2021
2020
(in millions)
1,323.2 $
1,001.6
2,324.8 $
1,374.3
465.8
1,840.2
845.8 $
537.2
1,383.0
941.8
2,324.8 $
953.4
58.9
1,012.3
827.9
1,840.2
328.9 $
297.6
$
$
$
$
$
Twelve Months Ended
September 30,
2021
September 30,
2020
(in millions)
$
$
$
2,096.5 $
2,051.2
45.3 $
37.0 $
3,058.9
2,993.1
65.8
59.8
80
Summary of AECOM’s equity in earnings of unconsolidated joint ventures is as follows:
September 30, September 30, September 30,
Fiscal Year Ended
Pass through joint ventures . . . . . . . . . . . . . . . . . . . . . $
Other joint ventures . . . . . . . . . . . . . . . . . . . . . . . . . . .
Total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
$
23.6
11.4
35.0
2021
7. Pension Benefit Obligations
2020
(in millions)
$
34.1 $
14.7
48.8 $
$
2019
31.6
17.7
49.3
In the U.S., the Company sponsors various qualified defined benefit pension plans. Benefits under these plans
generally are based on the employee’s years of creditable service and compensation; however, all U.S. defined benefit
plans are closed to new participants and have frozen accruals.
The Company also sponsors various non-qualified plans in the U.S.; all of these plans are frozen. Outside the
U.S., the Company sponsors various pension plans, which are appropriate to the country in which the Company operates,
some of which are government mandated.
The following tables provide reconciliations of the changes in the U.S. and international plans’ benefit
obligations, reconciliations of the changes in the fair value of assets for the last three years ended September 30, and
reconciliations of the funded status as of September 30 of each year.
September 30,
2021
U.S.
Int’l
Fiscal Year Ended
September 30,
2020
U.S.
Int’l
(in millions)
September 30,
2019
U.S.
Int’l
Change in benefit obligation:
Benefit obligation at beginning of year . . .
Service cost . . . . . . . . . . . . . . . . . . . . . . . . . .
Participant contributions . . . . . . . . . . . . . . .
Interest cost . . . . . . . . . . . . . . . . . . . . . . . . . .
Benefits and expenses paid . . . . . . . . . . . . .
Actuarial (gain) loss . . . . . . . . . . . . . . . . . . .
Plan settlements . . . . . . . . . . . . . . . . . . . . . .
Plan amendments . . . . . . . . . . . . . . . . . . . . .
Foreign currency translation (gain) loss . . .
Benefit obligation at end of year . . . . . . . . .
$
$
283.9
—
0.1
4.3
(18.5)
(3.7)
(0.7)
—
—
265.4
$ 1,440.3
0.5
0.3
21.6
(48.6)
(4.7)
(5.9)
0.4
66.9
$ 1,470.8
$
$
275.6
—
—
6.8
(18.4)
22.0
(2.1)
—
—
283.9
$ 1,311.3 $
0.6
0.3
22.4
(42.9)
82.8
(4.1)
—
69.9
$ 1,440.3 $
257.1
—
0.1
9.5
(17.6)
27.8
(1.3)
—
—
275.6
$ 1,188.8
0.5
0.3
29.7
(41.3)
206.5
(3.7)
5.2
(74.7)
$ 1,311.3
81
Change in plan assets
Fair value of plan assets at beginning
of year . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Actual return on plan assets . . . . . . . . . . . . .
Employer contributions . . . . . . . . . . . . . . . .
Participant contributions . . . . . . . . . . . . . . .
Benefits and expenses paid . . . . . . . . . . . . .
Plan settlements . . . . . . . . . . . . . . . . . . . . . .
Foreign currency translation gain (loss) . . .
Fair value of plan assets at end of year . . . .
Reconciliation of funded status:
Funded status at end of year . . . . . . . . . . . . . .
Contribution made after measurement date .
Net amount recognized at end of year . . . . . .
September 30,
2021
Fiscal Year Ended
September 30,
2020
September 30,
2019
U.S.
Int’l
U.S.
Int’l
U.S.
Int’l
(in millions)
$
$
129.6
14.7
13.7
0.1
(18.5)
(0.7)
—
138.9
$ 1,166.2
61.1
25.2
0.3
(48.6)
(5.9)
53.5
$ 1,251.8
$
$
129.3
11.7
9.1
—
(18.4)
(2.1)
—
129.6
$ 1,068.8 $
59.5
27.7
0.3
(42.9)
(4.1)
56.9
$ 1,166.2 $
131.4
4.5
12.2
0.1
(17.6)
(1.3)
—
129.3
$
965.9
180.3
28.2
0.3
(41.3)
(3.7)
(60.9)
$ 1,068.8
September 30, 2021
Int’l
U.S.
Fiscal Year Ended
September 30, 2020
Int’l
U.S.
(in millions)
September 30, 2019
Int’l
U.S.
$ (126.5) $ (219.0) $ (154.3) $ (274.1) $ (146.3) $ (242.5)
N/A
$ (126.5) $ (219.0) $ (154.3) $ (274.1) $ (146.3) $ (242.5)
N/A
N/A
N/A
N/A
N/A
The following table sets forth the amounts recognized in the consolidated balance sheets as of September 30,
2021, 2020 and 2019:
Amounts recognized in the consolidated
balance sheets:
Other non-current assets . . . . . . . . . . . . . . .
Accrued expenses and other current
liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . .
Pension benefit obligations . . . . . . . . . . . . .
Net amount recognized in the balance
September 30, 2021
Int’l
U.S.
Fiscal Year Ended
September 30, 2020
Int’l
U.S.
(in millions)
September 30, 2019
Int’l
U.S.
$
— $
47.5
$
— $
44.0 $
— $
28.3
(9.1)
(117.4)
—
(266.5)
(9.4)
(144.9)
—
(318.1)
(9.0)
(137.3)
—
(270.8)
sheet . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
$ (126.5) $ (219.0) $ (154.3) $ (274.1) $ (146.3) $ (242.5)
The following table details the reconciliation of amounts in the consolidated statements of stockholders’ equity
for the fiscal years ended September 30, 2021, 2020 and 2019:
Reconciliation of amounts in consolidated
statements of stockholders’ equity:
Prior service (cost) credit . . . . . . . . . . . . . . .
Net loss . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Total recognized in accumulated other
September 30, 2021
Int’l
U.S.
Fiscal Year Ended
September 30, 2020
Int’l
U.S.
(in millions)
September 30, 2019
Int’l
U.S.
$
(0.1) $
(1.6) $
(0.1) $
(1.2) $
(0.7) $
(116.5)
(279.5)
(134.5)
(297.7)
(122.4)
(1.2)
(233.0)
comprehensive loss . . . . . . . . . . . . . . . . . .
$ (116.6) $ (281.1) $ (134.6) $ (298.9) $ (123.1) $ (234.2)
82
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 following table details the components of net periodic benefit
cost for the Company’s pension plans for fiscal years ended September 30, 2021, 2020 and 2019:
Components of net periodic benefit cost:
Service costs . . . . . . . . . . . . . . . . . . . . . . . . $
Interest cost on projected benefit
obligation . . . . . . . . . . . . . . . . . . . . . . . . .
Expected return on plan assets . . . . . . . . . .
Amortization of prior service costs
(credits) . . . . . . . . . . . . . . . . . . . . . . . . . . .
Amortization of net loss . . . . . . . . . . . . . . .
Curtailment loss recognized . . . . . . . . . . . .
Settlement loss recognized . . . . . . . . . . . . .
Net periodic benefit cost . . . . . . . . . . . . . . . $
September 30, 2021
Int’l
U.S.
Fiscal Year Ended
September 30, 2020
Int’l
U.S.
(in millions)
September 30, 2019
Int’l
U.S.
— $
0.5
$
— $
0.6 $
— $
0.5
4.3
(6.5)
—
5.9
—
0.2
3.9
$
21.6
(43.5)
0.1
9.2
—
0.8
(11.3)
$
6.8
(7.0)
22.4
(37.5)
9.5
(9.0)
29.7
(38.1)
0.1
4.7
0.5
0.6
5.7
$
0.1
8.6
—
0.5
(5.3) $
0.1
3.7
—
0.2
4.5
(0.1)
4.1
—
0.8
$ (3.1)
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 $9.3 million, $15.5 million, and $16.3 million in the years ended September
30, 2021, 2020 and 2019, respectively.
Amounts included in accumulated other comprehensive loss as of September 30, 2021 that are expected to be
recognized as components of net periodic benefit cost during fiscal 2022 are (in millions):
Amortization of prior service cost . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Amortization of net actuarial losses. . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
$
$
U.S.
Int’l
— $
(5.6)
(5.6) $
(0.1)
(7.4)
(7.5)
The table below provides additional year-end information for pension plans with accumulated benefit obligations
in excess of plan assets.
September 30,
2021
Fiscal Year Ended
September 30,
2020
September 30,
2019
U.S.
Int’l
U.S.
Int’l
U.S.
Int’l
(in millions)
Projected benefit obligation . . . . . . . . . . . . . $ 247.8
Accumulated benefit obligation . . . . . . . . . .
247.8
138.9
Fair value of plan assets . . . . . . . . . . . . . . . .
$ 1,248.8
1,243.9
982.4
$ 265.1
265.1
129.6
$ 1,216.6 $ 257.3
257.3
129.3
1,211.5
898.5
$ 1,141.9
1,132.7
871.2
Funding requirements for each pension plan are determined based on the local laws of the country where such
pension plan resides. In certain countries, the funding requirements are mandatory while in other countries, they are
discretionary. The Company currently intends to contribute $24.8 million to the international plans in fiscal 2022. The
required minimum contributions for U.S. plans are not significant. In addition, the Company may make discretionary
contributions. The Company currently intends to contribute $11.4 million to U.S. plans in fiscal 2022.
83
The table below provides the expected future benefit payments, in millions:
Year Ending September 30,
2022 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
2023 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
2024 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
2025 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
2026 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
2027-2031 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
The underlying assumptions for the pension plans are as follows:
U.S.
$ 21.0 $
21.4
20.0
19.7
19.6
83.6
Int’l
58.6
57.4
58.6
60.1
61.9
339.1
$ 185.3 $ 635.7
September 30,
2021
U.S.
Int’l
Fiscal Year Ended
September 30,
2020
U.S.
Int’l
(in millions)
September 30,
2019
U.S.
Int’l
Weighted-average assumptions to determine
benefit obligation:
Discount rate . . . . . . . . . . . . . . . . . . . . . . . . .
Salary increase rate. . . . . . . . . . . . . . . . . . . .
Weighted-average assumptions to determine
net periodic benefit cost:
Discount rate . . . . . . . . . . . . . . . . . . . . . . . . .
Salary increase rate. . . . . . . . . . . . . . . . . . . .
Expected long-term rate of return on plan
assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
2.46 %
N/A
1.98 %
3.13 %
2.20 %
N/A
1.67 %
2.68 % N/A
2.92 %
1.81 %
2.52 %
2.20 %
N/A
1.67 %
2.68 %
2.92 %
N/A
1.81 %
2.52 % N/A
4.10 %
2.91 %
2.79 %
6.80 %
3.95 %
7.30 %
4.03 %
7.00 %
4.43 %
Pension costs are determined using the assumptions as of the beginning of the plan year. The funded status is
determined using the assumptions as of the end of the plan year.
The following table summarizes the Company’s target allocation for 2021 and pension plan asset allocation, both
U.S. and international, as of September 30, 2021 and 2020:
Target Allocations
Int’l
U.S.
Percentage of Plan Assets
as of September 30,
2021
2020
U.S.
Int’l
U.S.
Int’l
Asset Category:
Equities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Debt . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Cash . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Property and other . . . . . . . . . . . . . . . . . . . . . . . . . .
Total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
40 %
48
2
10
34 %
54
2
10
41 %
44
5
10
100 %
100 %
100 %
34 %
53
3
10
100 %
47 %
42
1
10
100 %
26 %
54
4
16
100 %
The Company’s domestic and foreign plans seek a competitive rate of return relative to an appropriate level of
risk depending on the funded status and obligations of each plan and typically employ both active and passive investment
management strategies. The Company’s risk management practices include diversification across asset classes and
investment styles and periodic rebalancing toward asset allocation targets. The target asset allocation selected for each
plan reflects a risk/return profile that the Company believes is appropriate relative to each plan’s liability structure and
return goals.
84
To develop the expected long-term rate of return on assets assumption, the Company considered the historical
returns and the future expectations for returns for each asset class, as well as the target asset allocation of the pension
portfolio and the diversification of the portfolio. This resulted in the selection of a 6.80% and 3.95% weighted-average
long-term rate of return on assets assumption for the fiscal year ended September 30, 2021 for U.S. and non-U.S. plans,
respectively.
As of September 30, 2021, the fair values of the Company’s pension plan assets by major asset categories were
as follows:
Fair Value Measurement as of
September 30, 2021
Significant
Other
Significant
Observable Unobservable
Total
Carrying
Value as of
September 30,
2021
Quoted
Prices in
Active
Markets
(Level 1)
Inputs
(Level 2)
(in millions)
$
24.7 $
—
16.7
4.3
—
7.1
52.8 $
$
Inputs
(Level 3)
Investments
measured at
NAV
$
—
—
—
—
4.0
—
—
—
4.0
$
—
—
734.8
—
734.8
Cash and cash equivalents . . . . . . . . . . . . . . . . . . .
Equity and debt securities . . . . . . . . . . . . . . . . . . . .
Investment funds:
Diversified and equity funds . . . . . . . . . . . . . . . .
Fixed income funds. . . . . . . . . . . . . . . . . . . . . . . .
Common collective funds . . . . . . . . . . . . . . . . . . .
Derivative instruments . . . . . . . . . . . . . . . . . . . . . .
Total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
$
$
49.8
488.5
$
81.2
29.3
734.8
7.1
1,390.7
$
25.1
488.5
60.5
25.0
—
—
599.1
As of September 30, 2020, the fair values of the Company’s pension plan assets by major asset categories were
as follows:
Fair Value Measurement as of
September 30, 2020
Significant
Other
Significant
Observable Unobservable
Total
Carrying
Value as of
September 30,
2020
Quoted
Prices in
Active
Markets
(Level 1)
Inputs
(Level 2)
(in millions)
$
30.4 $
—
15.1
13.1
—
27.7
86.3 $
$
Investments
measured at
Inputs
(Level 3)
NAV
—
—
—
—
707.5
—
707.5
—
—
3.4
—
—
—
3.4
$
$
Cash and cash equivalents . . . . . . . . . . . . . . . . . . .
Equity and debt securities . . . . . . . . . . . . . . . . . . . .
Investment funds:
Diversified and equity funds . . . . . . . . . . . . . . .
Fixed income funds . . . . . . . . . . . . . . . . . . . . . .
Common collective funds . . . . . . . . . . . . . . . . .
Derivative instruments . . . . . . . . . . . . . . . . . . . . . .
Total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
$
$
50.6
442.3
$
31.5
36.2
707.5
27.7
1,295.8
$
20.2
442.3
13.0
23.1
—
—
498.6
85
Changes for the year ended September 30, 2021 in the fair value of the Company’s recurring post-retirement plan
Level 3 assets are as follows:
Actual return Actual return
on plan assets, on plan assets,
September 30,
2020
Beginning
balance
relating to
assets still
held at
reporting date
relating to
assets sold
during the
period
Purchases,
sales and
Transfer
into /
(out of)
settlements Level 3
exchange September 30,
rate
2021
changes Ending balance
Change
due to
Level 3 Assets . . . . . . . . . . . . . $
3.4 $
0.4
$
— $
0.2
$ — $
— $
4.0
Changes for the year ended September 30, 2020, in the fair value of the Company’s recurring post-retirement
plan Level 3 assets are as follows:
(in millions)
Actual return Actual return
on plan assets, on plan assets,
September 30,
2019
Beginning
balance
relating to
assets still
held at
reporting date
relating to
assets sold
during the
period
Purchases,
sales and
Transfer
into /
(out of)
settlements Level 3
exchange September 30,
rate
2020
changes Ending balance
Change
due to
(in millions)
Level 3 Assets . . . . . . . . . . . . . $
26.8 $
(0.2) $
(2.1) $ (25.4) $ 3.2 $
1.1 $
3.4
Cash equivalents are mostly comprised of short-term money-market instruments and are valued at cost, which
approximates fair value.
For investment funds not traded on an active exchange, or if the closing price is not available, the trustee obtains
indicative quotes from a pricing vendor, broker, or investment manager. These funds are categorized as Level 2 if the
custodian obtains corroborated quotes from a pricing vendor or categorized as Level 3 if the custodian obtains
uncorroborated quotes from a broker or investment manager.
Fixed income investment funds, not traded on an active exchange, categorized as Level 2 are valued by the trustee
using pricing models that use verifiable observable market data (e.g., interest rates and yield curves observable at
commonly quoted intervals), bids provided by brokers or dealers, or quoted prices of securities with similar characteristics.
Hedge funds categorized as Level 3 are valued based on valuation models that include significant unobservable
inputs and cannot be corroborated using verifiable observable market data. Hedge funds are valued by independent
administrators. Depending on the nature of the assets, the general partners or independent administrators use both the
income and market approaches in their models. The market approach consists of analyzing market transactions for
comparable assets while the income approach uses earnings or the net present value of estimated future cash flows adjusted
for liquidity and other risk factors. As of September 30, 2021, there were no material changes to the valuation techniques.
Common collective funds are valued based on net asset value (NAV) per share or unit as a practical expedient as
reported by the fund manager, multiplied by the number of shares or units held as of the measurement date. 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. There are no significant unfunded commitments related to these investments.
86
Multiemployer Pension Plans
The Company participates in construction-industry multiemployer pension plans. Generally, the plans provide
defined benefits to substantially all employees covered by collective bargaining agreements. Under the Employee
Retirement Income Security Act, a contributor to a multiemployer plan is liable, upon termination or withdrawal from a
plan, for its proportionate share of a plan’s unfunded vested liability. The Company’s aggregate contributions to these
multiemployer plans were $3.7 million and $4.0 million for the years ended September 30, 2021 and 2020, respectively.
At September 30, 2021 and 2020, none of the plans in which the Company participates are individually significant to its
consolidated financial statements.
8. Debt
Debt consisted of the following:
September 30, September 30,
Credit Agreement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
2024 Senior Notes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
2027 Senior Notes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Other debt . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Total debt . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Less: Current portion of debt and short-term borrowings . . . . . . . .
Less: Unamortized debt issuance costs . . . . . . . . . . . . . . . . . . . . . . .
Long-term debt . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
$
$
2021
2020
(in millions)
1,155.3 $
—
997.3
83.0
2,235.6
(53.8)
(24.1)
2,157.7 $
248.5
797.3
997.3
41.9
2,085.0
(20.9)
(23.0)
2,041.1
The following table presents, in millions, scheduled maturities of the Company’s debt as of September 30, 2021:
Fiscal Year
2022 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $
2023 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
2024 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
2025 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
2026 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Thereafter . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
53.8
45.9
41.0
35.1
400.4
1,659.4
Total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 2,235.6
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. The outstanding loans under the Term A Facility were borrowed in U.S. dollars. 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. 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. Currently, there are
no co-borrowers under the Credit Facilities.
87
The applicable interest rate under the Credit Agreement 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 an applicable margin (the “LIBOR
Applicable Margin”), which is currently at 1.50% or (b) the Base Rate (as defined in the Credit Agreement) plus an
applicable margin (the “Base Rate Applicable Margin” and together with the LIBOR Applicable Margin, the “Applicable
Margins”), which is currently at 0.50%. The Credit Agreement includes certain environmental, social and governance
(ESG) metrics relating to the Company’s CO2 emissions and its percentage of employees who identify as women (each, a
“Sustainability Metric”). 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.
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 2.4 at September
30, 2021. As of September 30, 2021, 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. The Credit Agreement contains customary events of default, including, among other things, nonpayment of
principal, interest or fees, cross-defaults to other debt, inaccuracies of representations and warranties failure to perform
covenants, events of bankruptcy and insolvency, change of control and unsatisfied judgments, subject in certain cases to
notice and cure periods and other exceptions.
On April 13, 2021, the Company entered into Amendment No. 10 to the Credit Agreement, pursuant to which the
lenders thereunder provided a secured term “B” credit facility (the “Term B Facility”) to the Company in an aggregate
principal amount of $700,000,000. The Term B Facility matures on April 13, 2028. The proceeds of the Term B Facility
were used to fund the purchase price, fees and expenses in connection with the Company’s cash tender offer to purchase
up to $700,000,000 aggregate purchase price (not including any accrued and unpaid interest) of its outstanding 5.875%
Senior Notes due 2024.
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%.
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. 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.
88
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.
2027 Senior Notes
On February 21, 2017, the Company completed a private placement offering of $1,000,000,000 aggregate
principal amount of its unsecured 5.125% Senior Notes due 2027 (the “2027 Senior Notes”). 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 September 30, 2021, the estimated fair value of the 2027 Senior Notes was approximately $1,104.5 million.
The fair value of the 2027 Senior Notes as of September 30, 2021 was derived by taking the mid-point of the trading prices
from an observable market input (Level 2) in the secondary bond market and multiplying it by the outstanding balance of
the 2027 Senior Notes. Interest is payable on the 2027 Senior Notes at a rate of 5.125% per annum. Interest on the 2027
Senior Notes is payable semi-annually on March 15 and September 15 of each year, commencing on September 15, 2017.
The 2027 Senior Notes will mature on March 15, 2027.
At any time and from time to time prior to December 15, 2026, the Company may redeem all or part of the 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.
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. The indenture also contains customary negative covenants.
The Company was in compliance with the covenants relating to the 2027 Senior Notes as of September 30, 2021.
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.
89
Other Debt and Other Items
Other debt consists primarily of obligations under capital leases and loans, and unsecured credit facilities. The
Company’s unsecured credit facilities are primarily used for standby letters of credit issued 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. As of
September 30, 2021, the Company had $463.6 million available under these 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 and excluding the effects of prepayment premiums included in interest expense, during the years ended
September 30, 2021, 2020 and 2019 was 4.4%, 5.3% and 5.1%, respectively.
Interest expense in the consolidated statements of operations included amortization of deferred debt issuance
costs for the years ended September 30, 2021, 2020 and 2019 of $10.2 million, $5.4 million and $5.0 million, respectively.
9. Derivative Financial Instruments and Fair Value Measurements
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’s
hedging program is not designated for trading or speculative purposes.
The Company recognizes derivative instruments as either assets or liabilities on the accompanying consolidated
balance sheets at fair value. The Company records changes in the fair value (i.e., gains or losses) of the derivatives that
have been designated as accounting hedges in the accompanying consolidated statements of operations as cost of revenue,
interest expense or to accumulated other comprehensive loss in the accompanying consolidated balance sheets.
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 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.
The notional principal, fixed rates and related effective and expiration dates of the Company’s outstanding interest
rate swap agreements were as follows:
Notional Amount
Currency
USD
USD
Notional Amount
(in millions)
200.0
400.0
September 30, 2021
Fixed
Rate
Effective
Date
2.60 % March 2018
1.349 % February 2023
Notional Amount
Currency
USD
Notional Amount
(in millions)
200.0
September 30, 2020
Fixed
Rate
Effective
Date
2.60 % March 2018
Expiration
Date
February 2023
March 2028
Expiration
Date
February 2023
90
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. The new
swaps will become effective February 2023 and terminate in March 2028. By entering into the swap agreements, the
Company converted a portion of the LIBOR rate-based liability into a fixed rate liability. The Company will pay a fixed
rate of 1.349% 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 years ended September 30, 2021,
2020 and 2019.
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.
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, 2021, 2020 and 2019.
Additionally, there were no material losses recognized in income due to amounts excluded from effectiveness testing from
the Company’s interest rate swap agreements.
10. Concentration of Credit Risk
Financial instruments which potentially subject the Company to concentrations of credit risk consist principally
of cash investments and trade receivables. The Company’s cash balances and short-term investments are maintained in
accounts held by major banks and financial institutions located primarily in the U.S., Canada, Europe, Australia, Middle
East and Hong Kong. If the Company extends significant credit to clients in a specific geographic area or industry, the
Company may experience disproportionately high levels of default if those clients are adversely affected by factors
particular to their geographic area or industry. Concentrations of credit risk with respect to trade receivables are limited
due to the large number of customers comprising the Company’s customer base, including, in large part, governments,
government agencies and quasi-government organizations, and their dispersion across many different industries and
geographies. See Note 4 regarding the Company’s foreign revenues. In order to mitigate credit risk, the Company
continually reviews the credit worthiness of its major private clients.
11. Leases
On October 1, 2019, the Company adopted FASB ASC 842 on a modified retrospective basis, which amended
the accounting standards for leases. Accordingly, the Company applied the new guidance as of the date of adoption with
a cumulative-effect adjustment recorded through equity. Prior periods have not been restated as a result of the adoption.
Retained earnings decreased $87.8 million due to the adoption, primarily from impairment of the right-of-use assets
associated with office building leases.
The Company also applied transition elections that allow it to avoid reassessment of lease definition,
classification, or direct costs relating to expired or expiring leases. Adoption of the new lease guidance did not significantly
change the Company’s accounting for finance leases, which were previously referred to as capital leases.
The Company and its subsidiaries are lessees in non-cancelable leasing agreements for office buildings and
equipment. Substantially all of the Company’s office building leases are operating leases, and its equipment leases are
both operating and finance leases. The Company groups lease and non-lease components for its equipment leases into a
single lease component but separates lease and non-lease components for its office building leases.
91
The Company recognizes a right-of-use asset and lease liability for its operating leases at the commencement date
equal to the present value of the contractual minimum lease payments over the lease term. The present value is calculated
using the rate implicit in the lease, if known, or the Company’s incremental secured borrowing rate. The discount rate used
for operating leases is primarily determined based on an analysis the Company’s incremental secured borrowing rate,
while the discount rate used for finance leases is primarily determined by the rate specified in the lease.
The related lease payments are expensed on a straight-line basis over the lease term, including, as applicable, any
free-rent period during which the Company has the right to use the asset. For leases with renewal options where the renewal
is reasonably assured, the lease term, including the renewal period, is used to determine the appropriate lease classification
and to compute periodic rental expense. Leases with initial terms shorter than 12 months are not recognized on the balance
sheet, and lease expense is recognized on a straight-line basis.
The components of lease expenses are as follows:
Fiscal Year Ended
September 30, 2021 September 30, 2020
Operating lease cost . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Finance lease cost:
Amortization of right-of-use assets . . . . . . . . . . . . . . . . . .
Interest on lease liabilities . . . . . . . . . . . . . . . . . . . . . . . . .
Variable lease cost . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Total lease cost . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
$
$
(in millions)
186.5
$
13.0
2.0
35.5
237.0
$
191.6
17.1
1.9
36.5
247.1
Additional balance sheet information related to leases is as follows:
(in millions except as noted)
Assets:
Operating lease assets . . . . . . . . . . . Operating lease right-of-use assets
Finance lease assets . . . . . . . . . . . . . Property and equipment – net
Balance Sheet Classification
Total lease assets . . . . . . . . . . . . . .
September 30, 2021 September 30, 2020
As of
$
$
607.1 $
44.4
651.5 $
Liabilities:
Current:
Operating lease liabilities . . . . . . . . Accrued expenses and other current liabilities $
Finance lease liabilities . . . . . . . . . . Current portion of long-term debt
Total current lease liabilities . . . .
Non-current:
Operating lease liabilities . . . . . . . . Operating lease liabilities, noncurrent
Finance lease liabilities . . . . . . . . . . Long-term debt
157.3 $
13.4
170.7
679.1
32.1
Total non-current lease
liabilities . . . . . . . . . . . . . . . . . . .
$
711.2 $
652.1
29.1
681.2
168.4
9.8
178.2
745.3
22.0
767.3
Weighted average remaining lease term (in years):
Operating leases . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Finance leases . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Weighted average discount rates:
Operating leases . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Finance leases . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
6.9
3.5
4.3 %
4.3 %
7.3
3.3
4.6 %
4.7 %
As of
September 30, 2021 September 30, 2020
92
Additional cash flow information related to leases is as follows:
Fiscal Year Ended
September 30, September 30,
2021
2020
(in millions)
Cash paid for amounts included in the measurement of lease
liabilities:
Operating cash flows from operating leases . . . . . . . . . . . . . . . . . . . $
Operating cash flows from finance leases. . . . . . . . . . . . . . . . . . . . .
Financing cash flows from finance leases. . . . . . . . . . . . . . . . . . . . .
Right-of-use assets obtained in exchange for new operating leases .
Right-of-use assets obtained in exchange for new finance leases . . .
221.4 $
2.0
13.7
102.7
28.5
208.7
1.8
14.7
126.9
26.4
Total remaining lease payments under both the Company’s operating and finance leases are as follows:
Operating Leases Finance Leases
Fiscal Year
2022 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
2023 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
2024 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
2025 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
2026 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Thereafter . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Total lease payments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Less: Amounts representing interest . . . . . . . . . . . . . . . . . . . . . .
Total lease liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
$
$
$
$
(in millions)
190.0 $
156.2
134.7
114.9
91.6
286.8
974.2 $
(137.8) $
836.4 $
15.2
14.9
11.7
5.8
1.5
—
49.1
(3.6)
45.5
12. Stockholders’ Equity
Common Stock Units—Common stock units are only redeemable for common stock. In the event of liquidation
of the Company, holders of stock units are entitled to no greater rights than holders of common stock. See also Note 13.
13. Share-Based Payments
Defined Contribution Plans—Substantially all permanent domestic employees are eligible to participate in
defined contribution plans provided by the Company. Under these plans, participants may make contributions into a variety
of funds, including a fund that is fully invested in Company stock. Employees are not required to allocate any funds to
Company stock; however, the Company does provide an annual Company match in AECOM shares. Employees may
generally reallocate their account balances on a daily basis; however, employees classified as insiders are restricted under
the Company’s insider trading policy. Compensation expense for the employer contributions related to AECOM stock
issued under defined contribution plans during fiscal years ended September 30, 2021, 2020 and 2019 was $26.1 million,
$33.7 million, and $32.3 million, respectively.
Stock Incentive Plans—Under the 2020 Stock Incentive Plan, the Company has up to 12.1 million securities
remaining available for future issuance as of September 30, 2021. Stock options may be granted to employees and
non-employee directors with an exercise price not less than the fair market value of the stock on the date of grant.
Unexercised options expire seven years after date of grant.
93
During the three years in the period ended September 30, 2021, option activity was as follows:
Balance, September 30, 2018 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Granted . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Exercised . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Cancelled . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Balance, September 30, 2019 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Granted . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Exercised . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Cancelled . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Balance, September 30, 2020 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Granted . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Exercised . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Cancelled . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Balance, September 30, 2021 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Exercisable as of September 30, 2019 . . . . . . . . . . . . . . . . . . . . . . . . . . .
Exercisable as of September 30, 2020 . . . . . . . . . . . . . . . . . . . . . . . . . . .
Exercisable as of September 30, 2021 . . . . . . . . . . . . . . . . . . . . . . . . . . .
Number of Weighted
Options
Average
(in millions) Exercise Price
31.62
—
—
(31.62)
31.62
38.72
—
—
36.41
—
31.62
—
38.72
31.62
31.62
—
0.6
—
—
(0.5)
0.1
0.3
—
—
0.4
—
(0.1)
—
0.3
0.1
0.1
—
The fair value of the Company’s employee stock option awards is estimated on the date of grant. The expected
term of awards granted represents the period of time the awards are expected to be outstanding. The risk-free interest rate
is based on U.S. Treasury bond rates with maturities equal to the expected term of the option on the grant date. The
Company uses historical data as a basis to estimate the probability of forfeitures. The weighted average grant-date fair
value of stock options granted during the year ended September 30, 2020 was $11.30.
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. Additionally, the Company issues restricted stock units to employees which are earned based on service
conditions. The grant date fair value of PEP awards and restricted stock unit awards is that day’s closing market price of
the Company’s common stock. The weighted average grant date fair value of PEP awards was $52.76, $42.99, and $27.53
during the years ended September 30, 2021, 2020 and 2019, respectively. The weighted average grant date fair value of
restricted stock unit awards was $49.21, $41.90 and $27.73 during the years ended September 30, 2021, 2020 and 2019,
respectively. Total compensation expense related to these share-based payments including stock options was $44.7 million,
$54.2 million, and $63.8 million during the years ended September 30, 2021, 2020 and 2019, respectively. Unrecognized
compensation expense related to total share-based payments outstanding as of September 30, 2021 and 2020 was $45.6
million and $50.0 million, respectively, to be recognized on a straight-line basis over the awards’ respective vesting periods
which are generally three years.
14. Income Taxes
Income before income taxes included income from domestic operations of $98.6 million, $52.9 million, and
$133.0 million for fiscal years ended September 30, 2021, 2020 and 2019 and income from foreign operations of $310.2
million, $179.7 million, and $116.2 million for fiscal years ended September 30, 2021, 2020 and 2019.
94
Income tax expense was comprised of:
Current:
Federal . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
State . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Foreign . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Total current income tax expense . . . . . . . . . . .
Deferred:
Federal . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
State . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Foreign . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Total deferred income tax benefit. . . . . . . . . . . .
Total income tax expense . . . . . . . . . . . . . . . . . .
Fiscal Year Ended
September 30, September 30, September 30,
2021
2020
(in millions)
2019
$
$
32.2
6.8
53.2
92.2
(28.8)
18.8
6.8
(3.2)
89.0
$
$
21.8 $
12.7
55.7
90.2
(21.8)
12.8
(35.4)
(44.4)
45.8 $
(17.3)
29.8
41.7
54.2
(26.1)
(24.6)
10.0
(40.7)
13.5
The major elements contributing to the difference between the U.S. federal statutory rate of 21% for fiscal years
ended September 30, 2021, 2020 and 2019 and the effective tax rate are as follows:
September 30,
2021
Fiscal Year Ended
September 30,
2020
September 30,
2019
Amount %
Amount %
Amount %
Tax at federal statutory rate . . . . . . . . . . . . . . . .
State income tax, net of federal benefit . . . . . . .
Foreign residual income . . . . . . . . . . . . . . . . . . .
Valuation allowance . . . . . . . . . . . . . . . . . . . . . .
Audit settlement . . . . . . . . . . . . . . . . . . . . . . . . .
Foreign tax rate differential . . . . . . . . . . . . . . . .
Change in uncertain tax positions . . . . . . . . . . .
Nondeductible costs . . . . . . . . . . . . . . . . . . . . . .
Income tax credits and incentives . . . . . . . . . . .
Tax rate changes . . . . . . . . . . . . . . . . . . . . . . . . .
Return to provision . . . . . . . . . . . . . . . . . . . . . . .
Exclusion of tax on non-controlling interests . .
Tax exempt income . . . . . . . . . . . . . . . . . . . . . . .
Other items, net . . . . . . . . . . . . . . . . . . . . . . . . . .
Total income tax expense . . . . . . . . . . . . . . . . .
$
$
85.8
8.0
45.6
12.4
10.4
8.8
8.5
6.0
(51.3)
(26.8)
(9.5)
(6.1)
(5.4)
2.6
89.0
21.0 % $
2.0
11.1
3.0
2.5
2.1
2.1
1.5
(12.5)
(6.5)
(2.3)
(1.5)
(1.3)
0.6
21.8 % $
(in millions)
48.8
8.4
39.5
(15.9)
—
3.2
(8.3)
15.8
(47.8)
(0.5)
5.1
(3.4)
(5.1)
6.0
45.8
21.0 % $
3.6
17.0
(6.9)
—
1.4
(3.6)
6.8
(20.6)
(0.2)
2.2
(1.5)
(2.2)
2.7
19.7 % $
52.0
7.0
35.8
(26.5)
(4.6)
(3.1)
5.6
7.6
(44.7)
(1.9)
(0.2)
(5.3)
(3.9)
(4.3)
13.5
21.0 %
2.8
14.5
(10.7)
(1.9)
(1.3)
2.3
3.1
(18.1)
(0.8)
(0.1)
(2.1)
(1.6)
(1.7)
5.4 %
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. The remeasurement resulted in a $25.9 million tax
benefit, which is included in tax rate changes above.
During 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.
During fiscal 2020, the Company approved a tax planning strategy and restructured certain operations in Canada
which resulted in a release of a valuation allowance related to net operating losses and other deferred tax assets of $31.7
million. The Company is now forecasting the utilization of the net operating losses within the foreseeable future. The
positive evidence was evaluated against any negative evidence to determine the valuation allowance was no longer needed.
95
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.
Generally, the Company would reverse its valuation allowance in a particular tax jurisdiction if the positive
evidence examined, such as projected and sustainable earnings or a tax-planning strategy that allows for the usage of the
deferred tax asset, is sufficient to overcome significant negative evidence, such as large net operating loss carryforwards
or a cumulative history of losses in recent years. In the United States, the valued deferred tax assets have a restricted life
or use under relevant tax law and, therefore, it is unlikely that the valuation allowance related to these assets will reverse.
In addition, the Company is continually investigating tax planning strategies that, if prudent and feasible, may be
implemented to realize a deferred tax asset that would otherwise expire unutilized. The identification and internal/external
approval (as relevant) of such a prudent and feasible tax planning strategy could cause a reduction in the valuation
allowance.
The deferred tax assets (liabilities) are as follows:
Fiscal Year Ended
September 30, September 30,
2021
2020
(in millions)
Deferred tax assets:
Compensation and benefit accruals not currently deductible . . .
Net operating loss carryforwards . . . . . . . . . . . . . . . . . . . . . . . . .
Self-insurance reserves . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Research and experimentation and other tax credits . . . . . . . . . .
Pension liability . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Accrued liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Capital loss carryforward . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Other . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Total deferred tax assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Deferred tax liabilities:
Unearned revenue . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Depreciation and amortization . . . . . . . . . . . . . . . . . . . . . . . . . . .
Acquired intangible assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Investment in subsidiaries . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Right of use assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Contingent consideration . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Total deferred tax liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Valuation allowance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Net deferred tax assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
$
$
130.0 $
169.8
12.3
117.2
87.7
284.7
62.0
37.3
901.0
(19.8)
(116.5)
(19.4)
(13.4)
(145.6)
(33.8)
(348.5)
(197.7)
354.8 $
119.4
173.2
17.6
112.9
95.1
307.6
104.8
26.0
956.6
(40.3)
(106.7)
(24.5)
(10.9)
(164.9)
(33.6)
(380.9)
(217.5)
358.2
96
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; 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.
As of September 30, 2021, and 2020, gross deferred tax assets were $901.0 million and $956.6 million,
respectively. The Company has recorded a valuation allowance of $197.7 million and $217.5 million as of September 30,
2021 and 2020, respectively, primarily related to foreign and state net operating loss carryforwards, capital loss
carryforwards, tax credits and other deferred tax assets. 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.
Generally, the Company does not provide for U.S. taxes or foreign withholding taxes on gross book-tax
differences in its non-U.S. subsidiaries because such basis differences of approximately $1.5 billion are able to and
intended to be reinvested indefinitely. If these basis differences were distributed, foreign tax credits could become available
under current law to partially or fully reduce the resulting U.S. income tax liability. There may also be additional U.S. or
foreign income tax liability upon repatriation, although the calculation of such additional taxes is not practicable.
As of September 30, 2021, and 2020, the Company had a liability for unrecognized tax benefits, including
potential interest and penalties, net of related tax benefit, totaling $62.8 million and $65.8 million, respectively. The gross
unrecognized tax benefits as of September 30, 2021 and 2020 were $46.4 million and $47.1 million, respectively,
excluding interest, penalties, and related tax benefit. Of the $46.4 million, approximately $40.1 million would be included
in the effective tax rate if recognized. A reconciliation of the beginning and ending amount of gross unrecognized tax
benefits is as follows:
Fiscal Year Ended
September 30, September 30,
2021
2020
Balance at the beginning of the year . . . . . . . . . . . . . . . . . . . . . . . . .
Gross increase in current period’s tax positions . . . . . . . . . . . . . . . .
Gross increase in prior years’ tax positions. . . . . . . . . . . . . . . . . . . .
Gross decrease in prior years’ tax positions . . . . . . . . . . . . . . . . . . .
Decrease due to settlement with tax authorities . . . . . . . . . . . . . . . .
Decrease due to lapse of statute of limitations . . . . . . . . . . . . . . . . .
Gross change due to foreign exchange fluctuations . . . . . . . . . . . . .
Balance at the end of the year . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
$
$
(in millions)
47.1 $
4.3
7.5
—
(1.3)
—
(11.2)
46.4 $
55.7
2.8
—
(7.9)
(0.5)
(3.5)
0.5
47.1
The Company classifies interest and penalties related to uncertain tax positions within the income tax expense
line in the accompanying consolidated statements of operations. As of September 30, 2021, the accrued interest and
penalties were $20.0 million and $3.9 million, respectively, excluding any related income tax benefits. As of September
30, 2020, the accrued interest and penalties were $18.9 million and $2.7 million, respectively, excluding any related income
tax benefits.
97
The Company files income tax returns in numerous tax jurisdictions, including the U.S., and numerous U.S. states
and non-U.S. jurisdictions around the world. The statute of limitations varies by jurisdiction in which the Company
operates. Because of the number of jurisdictions in which the Company files tax returns, in any given year the statute of
limitations in certain jurisdictions may expire without examination within the 12-month period from the balance sheet
date.
While it is reasonably possible that the total amounts of unrecognized tax benefits could significantly increase or
decrease within the next twelve months, an estimate of the range of possible change cannot be made.
15. Earnings Per Share
Basic earnings per share (EPS) excludes dilution and is computed by dividing net income attributable to AECOM
by the weighted average number of common shares outstanding for the period. Diluted EPS is computed by dividing net
income attributable to AECOM by the weighted average number of common shares outstanding and potential common
shares for the period. The Company includes as potential common shares the weighted average dilutive effects of equity
awards using the treasury stock method. For the periods presented, equity awards excluded from the calculation of potential
common shares were not significant.
The following table sets forth a reconciliation of the denominators of basic and diluted earnings per share:
Denominator for basic earnings per share . . . . . . . . .
Potential common shares . . . . . . . . . . . . . . . . . . . . . .
Denominator for diluted earnings per share . . . . . . .
September 30, September 30, September 30,
Fiscal Year Ended
2021
2020
(in millions)
147.3
2.4
149.7
159.0
2.3
161.3
2019
157.0
2.7
159.7
16. Other Financial Information
Accrued expenses and other current liabilities consist of the following:
Accrued salaries and benefits . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Accrued contract costs . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Other accrued expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Fiscal Year Ended
September 30, September 30,
2021
2020
(in millions)
661.8 $
1,202.1
310.3
2,174.2 $
675.7
1,137.5
436.5
2,249.7
$
$
Accrued contract costs above include balances related to professional liability accruals of $736.4 million and
$596.0 million as of September 30, 2021 and 2020, respectively. The remaining accrued contract costs primarily relate to
costs for services provided by subcontractors and other non-employees. Liabilities recorded related to accrued contract
losses were not material as of September 30, 2021 and 2020. 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.
98
17. Reclassifications out of Accumulated Other Comprehensive Loss
The accumulated balances and reporting period activities for the years ended September 30, 2021, 2020 and 2019
related to reclassifications out of accumulated other comprehensive loss are summarized as follows (in millions):
Balances at September 30, 2018 . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Other comprehensive income (loss) before reclassification. . . . . .
Amounts reclassified from accumulated other comprehensive
Pension
Related
Adjustments
$
(202.3) $
(107.2)
Foreign
Currency
Translation
Adjustments Instruments
Loss on
Accumulated
Other
Derivative Comprehensive
(502.2) $
(46.5)
1.2 $
(17.2)
Loss
(703.3)
(170.9)
loss . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Balances at September 30, 2019 . . . . . . . . . . . . . . . . . . . . . . . . . . . .
6.8
(302.7) $
—
(548.7) $
3.2
(12.8) $
$
10.0
(864.2)
Pension
Related
Foreign
Currency
Loss on
Translation Derivative Comprehensive
Accumulated
Other
Balances at September 30, 2019 . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Other comprehensive income (loss) before reclassification. . . . . . .
Amounts reclassified from accumulated other comprehensive
loss . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Balances at September 30, 2020 . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
$ (302.7) $ (548.7) $
(72.5)
(18.6)
(12.8) $
(5.3)
32.4
—
$ (342.8) $ (567.3) $
9.5
(8.6) $
(864.2)
(96.4)
41.9
(918.7)
Adjustments Adjustments Instruments
Loss
Pension
Related
Foreign
Currency
Loss on
Translation Derivative Comprehensive
Accumulated
Other
Balances at September 30, 2020 . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Other comprehensive income (loss) before reclassification. . . . . . .
Amounts reclassified from accumulated other comprehensive
loss . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Balances at September 30, 2021 . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
$ (342.8) $ (567.3) $
14.6
12.0
(12.8)
—
$ (316.2) $ (580.1) $
(8.6) $
0.8
3.7
(4.1) $
(918.7)
2.6
15.7
(900.4)
Adjustments Adjustments Instruments
Loss
18. Commitments and Contingencies
The Company records amounts representing its probable estimated liabilities relating to claims, guarantees,
litigation, audits and investigations. The Company relies in part on qualified actuaries to assist it in determining the level
of reserves to establish for insurance-related claims that are known and have been asserted against it, and for insurance-
related claims that are believed to have been incurred based on actuarial analysis, but have not yet been reported to the
Company’s claims administrators as of the respective balance sheet dates. The Company includes any adjustments to such
insurance reserves in its consolidated results of operations. The Company’s reasonably possible loss disclosures are
presented on a gross basis prior to the consideration of insurance recoveries. The Company does not record gain
contingencies until they are realized. In the ordinary course of business, the Company may not be aware that it or its
affiliates are under investigation and may not be aware of whether or not a known investigation has been concluded.
99
In the ordinary course of business, the Company may enter into various arrangements providing financial or
performance assurance to clients, lenders, or partners. Such arrangements include standby letters of credit, surety bonds,
and corporate guarantees to support the creditworthiness or the project execution commitments of its affiliates, partnerships
and joint ventures. Performance arrangements typically have various expiration dates ranging from the completion of the
project contract and extending beyond contract completion in certain circumstances such as for warranties. The Company
may also guarantee that a project, when complete, will achieve specified performance standards. If the project subsequently
fails to meet guaranteed performance standards, the Company may incur additional costs, pay liquidated damages or be
held responsible for the costs incurred by the client to achieve the required performance standards. The potential payment
amount of an outstanding performance arrangement is typically the remaining cost of work to be performed by or on behalf
of third parties. Generally, under joint venture arrangements, if a partner is financially unable to complete its share of the
contract, the other partner(s) may be required to complete those activities.
At September 30, 2021, the Company was contingently liable in the amount of approximately $483.0 million in
issued standby letters of credit and $4.3 billion in issued surety bonds primarily to support project execution.
In the ordinary course of business, the Company enters into various agreements providing financial or
performance assurances to clients on behalf of certain unconsolidated partnerships, joint ventures and other jointly
executed contracts. These agreements are entered into primarily to support the project execution commitments of these
entities.
The Company’s investment adviser jointly manages and sponsors the AECOM-Canyon Equity Fund, L.P. (the
“Fund”), in which the Company indirectly holds an equity interest and has an ongoing capital commitment to fund
investments. At September 30, 2021, the Company has capital commitments of $19.3 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.
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. In February 2011, the Former Affiliate and the DOE executed a Task Order Modification that changed
some cost-reimbursable contract provisions to at-risk. The Task Order Modification, including subsequent amendments,
required the DOE to pay all project costs up to $106 million, required the Former Affiliate and the DOE to equally share
in all project costs incurred from $106 million to $146 million, and required the Former Affiliate to pay all project costs
exceeding $146 million.
Due to unanticipated requirements and permitting delays by federal and state agencies, as well as delays and
related ground stabilization activities caused by Hurricane Irene in 2011, the Former Affiliate was required to perform
work outside the scope of the Task Order Modification. In December 2014, the Former Affiliate submitted an initial set of
claims against the DOE pursuant to the Contracts Disputes Acts seeking recovery of $103 million, including additional
fees on changed work scope (the “2014 Claims”). On December 6, 2019, the Former Affiliate submitted a second set of
claims against the DOE seeking recovery of an additional $60.4 million, including additional project costs and delays
outside the scope of the contract as a result of differing site and ground conditions (the “2019 Claims”). The Former
Affiliate also submitted three alternative breach of contract claims to the 2014 and 2019 Claims that may entitle the Former
Affiliate to recovery of $148.5 million to $329.4 million. On December 30, 2019, the DOE denied the Former Affiliate’s
2014 Claims. On September 25, 2020, the DOE denied the Former Affiliate’s 2019 Claims. The Company filed an appeal
of these decisions on December 20, 2020 in the Court of Federal Claims. Deconstruction, decommissioning and site
restoration activities are complete.
100
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.
New York Department of Environmental Conservation
In September 2017, AECOM USA, Inc. was advised by the New York State Department of Environmental
Conservation (DEC) of allegations that it committed environmental permit violations pursuant to the New York
Environmental Conservation Law (ECL) associated with AECOM USA, Inc.’s oversight of a stream restoration project
for Schoharie County which could result in substantial penalties if calculated under the ECL’s maximum civil penalty
provisions. AECOM USA, Inc. disputes this claim and intends to continue to defend this matter vigorously; however,
AECOM USA, Inc. cannot provide assurances that it will be successful in these efforts. The potential range of loss in
excess of any current accrual cannot be reasonably estimated at this time primarily because the matter involves complex
and unique environmental and regulatory issues; the project site involves the oversight and involvement of various local,
state and federal government agencies; there is substantial uncertainty regarding any alleged damages; and the matter is in
its preliminary stages.
Refinery Turnaround Project
A Former Affiliate of the Company entered into an agreement to perform turnaround maintenance services during
a planned shutdown at a refinery in Montana in December 2017. The turnaround project was completed in February 2019.
Due to circumstances outside of the Company’s Former Affiliate’s control, including client directed changes and delays
and the refinery’s condition, the Company’s Former Affiliate performed additional work outside of the original contract
over $90 million and is entitled to payment from the refinery owner of approximately $144 million. In March 2019, the
refinery owner sent a letter to the Company’s Former Affiliate alleging it incurred approximately $79 million in damages
due to the Company’s Former Affiliate’s project performance. In April 2019, the Company’s Former Affiliate filed and
perfected a $132 million construction lien against the refinery for unpaid labor and materials costs. In August 2019,
following a subcontractor complaint filed in the Thirteen Judicial District Court of Montana asserting claims against the
refinery owner and the Company’s Former Affiliate, the refinery owner crossclaimed against the Company’s Former
Affiliate and the subcontractor. In October 2019, following the subcontractor’s dismissal of its claims, the Company’s
Former Affiliate removed the matter to federal court and cross claimed against the refinery owner. 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.
The Company intends to vigorously prosecute and defend this matter; however, the Company cannot provide
assurance that the Company will be successful in these efforts. The resolution of this matter and any potential range of
loss cannot be reasonably determined or estimated at this time, primarily because the matter raises complex legal issues
that Company is continuing to assess.
19. 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
101
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 AECOM Capital (ACAP) segment primarily invests in and develops real estate projects. These
reportable segments are organized by the differing specialized needs of the respective clients, and how the Company
manages its business. The Company has aggregated various operating segments into its reportable segments based on their
similar characteristics, including similar long term financial performance, the nature of services provided, internal
processes for delivering those services, and types of customers. 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:
Reportable Segments:
Fiscal Year Ended September 30, 2021:
Revenue . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Gross profit . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Equity in earnings of joint ventures . . . . . . . . . . . . . .
General and administrative expenses . . . . . . . . . . . . .
Restructuring costs . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Operating income . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Segment assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Gross profit as a % of revenue . . . . . . . . . . . . . . . . . . .
Americas
International Capital Corporate
(in millions)
Total
AECOM
$ 10,226.3
631.6
11.4
—
—
643.0
7,204.6
$ 3,112.6
164.8
12.2
—
—
177.0
2,764.5
$
2.0 $
2.0
11.4
(11.1)
—
2.3
234.6
— $ 13,340.9
—
798.4
35.0
—
(155.0)
(143.9)
(48.8)
(48.8)
(192.7)
629.6
1,390.9
6.2 %
5.3 %
6.0 %
Fiscal Year Ended September 30, 2020:
Revenue . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Gross profit . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Equity in earnings of joint ventures . . . . . . . . . . . . . .
General and administrative expenses . . . . . . . . . . . . .
Restructuring costs . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Operating income . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Segment assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Gross profit as a % of revenue . . . . . . . . . . . . . . . . . . .
$ 10,131.5
580.5
19.8
—
—
600.3
8,104.4
$ 3,101.7
122.2
14.3
—
—
136.5
2,454.0
5.7 %
3.9 %
Fiscal Year Ended September 30, 2019:
Revenue . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Gross profit . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Equity in earnings of joint ventures . . . . . . . . . . . . . .
General and administrative expenses . . . . . . . . . . . . .
Restructuring costs . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Gain on disposal activities . . . . . . . . . . . . . . . . . . . . . .
Impairment of long lived assets . . . . . . . . . . . . . . . . . .
Operating income . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Segment assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Gross profit as a % of revenue . . . . . . . . . . . . . . . . . . .
$ 10,382.6
511.5
17.7
—
—
—
(10.8)
518.4
7,437.3
$ 3,251.7
91.9
13.9
—
—
3.6
(4.4)
105.0
2,247.1
$
$
6.8 $
6.9
14.7
(8.6)
—
13.0
198.0
— $ 13,240.0
—
709.6
48.8
—
(188.6)
(180.0)
(188.3)
(188.3)
381.5
(368.3)
1,625.8
5.4 %
8.2 $
8.3
17.7
(5.0)
—
—
—
21.0
197.8
— $ 13,642.5
—
611.7
49.3
—
(148.2)
(143.2)
(95.4)
(95.4)
3.6
—
(24.9)
(9.7)
(248.3)
396.1
718.4
4.9 %
2.8 %
4.5 %
102
Geographic Information:
Long-Lived Assets
Americas . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Europe, Middle East, Africa . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Asia Pacific . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
September 30, September 30, September 30,
Fiscal Year Ended
2021
3,922.8
872.3
405.0
5,200.1
2020
(in millions)
3,733.2
875.8
375.3
4,984.3
2019
3,399.1
738.8
272.4
4,410.3
Long-lived assets consist of noncurrent assets excluding deferred tax assets.
20. Major Clients
No single client accounted for 10% or more of the Company’s revenue in any of the past five fiscal years.
Approximately 8%, 8%, and 9% of the Company’s revenue was derived through direct contracts with agencies of the U.S.
federal government in the years ended September 30, 2021, 2020 and 2019, respectively.
103
21. Quarterly Financial Information—Unaudited
In the opinion of management, the following unaudited quarterly data reflects all adjustments necessary for a fair
statement of the results of operations. All such adjustments are of a normal recurring nature.
Fiscal Year 2021:
First
Quarter
Second
Quarter
Third
Quarter
Fourth
Quarter
Revenue . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Cost of revenue . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Gross profit . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
$
3,313.2
3,128.8
184.4
(in millions, except per share data)
$
$
3,265.5
3,070.3
195.2
3,408.4 $
3,206.8
201.6
Equity in earnings of joint ventures . . . . . . . . . . . . . . . . . . .
General and administrative expenses . . . . . . . . . . . . . . . . . .
Restructuring costs . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Income from operations . . . . . . . . . . . . . . . . . . . . . . . . . .
Other income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Interest expense . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Income from continuing operations before taxes. . . . . .
Income tax expense (benefit) for continuing operations . .
Net income from continuing operations . . . . . . . . . . . . . . .
Net loss from discontinued operations . . . . . . . . . . . . . . . . .
Net income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Net income attributable to noncontrolling interests from
continuing operations . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Net income attributable to noncontrolling interests from
discontinued operations . . . . . . . . . . . . . . . . . . . . . . . . . . .
Net income attributable to noncontrolling interests . . . .
8.2
(38.4)
(13.0)
141.2
3.9
(30.7)
114.4
25.6
88.8
(55.8)
33.0
(5.4)
(1.5)
(6.9)
7.2
(36.0)
(8.8)
157.6
3.5
(32.8)
128.3
35.1
93.2
(47.9)
45.3
(4.9)
(1.0)
(5.9)
8.2
(36.3)
(13.0)
160.5
4.5
(149.0)
16.0
(17.8)
33.8
(15.4)
18.4
(5.9)
(1.0)
(6.9)
Net income attributable to AECOM from continuing
operations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
83.4
88.3
27.9
Net loss attributable to AECOM from discontinued
operations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Net income attributable to AECOM . . . . . . . . . . . . . . . .
Net income (loss) attributable to AECOM per share:
Basic continuing operations per share . . . . . . . . . . . . . . . .
Basic discontinued operations per share . . . . . . . . . . . . . .
Basic earnings per share. . . . . . . . . . . . . . . . . . . . . . . . . .
Diluted continuing operations per share . . . . . . . . . . . . . .
Diluted discontinued operations per share . . . . . . . . . . . .
Diluted earnings per share . . . . . . . . . . . . . . . . . . . . . . . .
$
$
$
$
$
$
$
(57.3)
26.1
$
(48.9)
39.4
$
(16.4)
11.5 $
0.55
$
(0.38) $
$
0.17
0.54
$
(0.37) $
$
0.17
0.60
$
(0.33) $
$
0.27
0.59
$
(0.33) $
$
0.26
0.19 $
(0.11) $
0.08 $
0.19 $
(0.11) $
0.08 $
3,353.8
3,136.6
217.2
11.4
(44.3)
(14.0)
170.3
5.7
(25.9)
150.1
46.1
104.0
2.3
106.3
(8.9)
(1.2)
(10.1)
95.1
1.1
96.2
0.66
0.01
0.67
0.65
0.01
0.66
Weighted average shares outstanding:
Basic . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Diluted . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
151.4
153.7
147.8
149.5
146.1
148.9
143.8
146.6
104
Fiscal Year 2020:
First
Quarter
Second
Quarter
Third
Quarter
Fourth
Quarter
Revenue . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Cost of revenue . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Gross profit . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
$
3,235.6
3,069.8
165.8
Equity in earnings of joint ventures . . . . . . . . . . . . . . . . . . .
General and administrative expenses . . . . . . . . . . . . . . . . . .
Restructuring costs . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Income from operations . . . . . . . . . . . . . . . . . . . . . . . . . .
Other income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Interest expense . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Income from continuing operations before taxes. . . . . .
Income tax expense (benefit) for continuing operations . .
Net income from continuing operations . . . . . . . . . . . . .
Net income (loss) from discontinued operations. . . . . . . . .
Net income (loss) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
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 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:
Basic continuing operations per share . . . . . . . . . . . . . . . .
Basic discontinued operations per share . . . . . . . . . . . . . .
Basic earnings per share . . . . . . . . . . . . . . . . . . . . . . . . . . .
Diluted continuing operations per share . . . . . . . . . . . . . .
Diluted discontinued operations per share . . . . . . . . . . . .
Diluted earnings per share . . . . . . . . . . . . . . . . . . . . . . . .
$
$
$
$
$
$
$
9.9
(43.6)
(44.9)
87.2
4.0
(40.4)
50.8
15.9
34.9
18.2
53.1
(4.0)
(8.5)
(12.5)
30.9
9.7
40.6
0.20
0.06
0.26
0.19
0.06
0.25
(in millions, except per share data)
$
$
3,245.7
3,076.9
168.8
3,189.7 $
3,004.6
185.1
13.5
(41.0)
(31.2)
110.1
2.4
(37.1)
75.4
21.7
53.7
(130.7)
(77.0)
(5.2)
(3.9)
(9.1)
8.6
(54.5)
(20.3)
118.9
3.1
(35.0)
87.0
(7.2)
94.2
(0.1)
94.1
(3.1)
(1.6)
(4.7)
3,569.0
3,379.1
189.9
16.8
(49.5)
(91.9)
65.3
1.6
(47.5)
19.4
15.3
4.1
(228.0)
(223.9)
(4.2)
(2.2)
(6.4)
48.5
91.1
(0.1)
(134.6)
(86.1) $
(1.7)
89.4 $
(230.2)
(230.3)
0.31
$
(0.85) $
(0.54) $
0.30
$
(0.84) $
(0.54) $
0.57 $
(0.01) $
0.56 $
0.56 $
(0.01) $
0.55 $
—
(1.44)
(1.44)
—
(1.44)
(1.44)
$
$
$
$
$
$
$
Weighted average shares outstanding:
Basic . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Diluted . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
157.3
160.6
158.6
160.7
160.1
161.8
160.0
160.0
105
AECOM Technology Corporation
Schedule II: Valuation and Qualifying Accounts
(amounts in millions)
Balance at
Beginning Charged to Cost
Additions
Other and
Foreign
of Year
of Revenue
Deductions(a) Exchange Impact
Balance at
the End of
the Year
Allowance for Doubtful Accounts
Fiscal Year 2021 . . . . . . . . . . . . . . . . . . . . . . . . . .
Fiscal Year 2020 . . . . . . . . . . . . . . . . . . . . . . . . . .
Fiscal Year 2019 . . . . . . . . . . . . . . . . . . . . . . . . . .
$
$
$
77.9
56.5
54.2
$
$
$
29.1
37.6
23.9
$
$
$
(14.9) $
(16.4) $
(21.0) $
$
0.7
0.2
$
(0.6) $
92.8
77.9
56.5
(a) Primarily relates to accounts written-off and recoveries
106
ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
FINANCIAL DISCLOSURE
None.
ITEM 9A. CONTROLS AND PROCEDURES
Evaluation of Disclosure Controls and Procedures
Based on management’s evaluation, with the participation of our Chief Executive Officer (CEO) and Chief
Financial Officer (CFO), our CEO and CFO have concluded that our disclosure controls and procedures as defined in
Rules 13a-15(e) and 15(d)-15(e) under the Securities Exchange Act of 1934, as amended (Exchange Act), were effective
as of September 30, 2021 to ensure that information required to be disclosed by us in this Annual Report on Form 10-K
or submitted under the Exchange Act is (i) recorded, processed, summarized and reported within the time periods specified
in the Securities and Exchange Commission rules and forms, and (ii) accumulated and communicated to our management,
including our principal executive and principal financial officer, as appropriate, to allow timely decisions regarding
required disclosures.
Management’s Report on Internal Control over Financial Reporting
Our management is responsible for establishing and maintaining adequate internal control over financial
reporting. Internal control over financial reporting is defined in Rule 13a-15(f) or 15d-15(f) promulgated under the
Securities Exchange Act of 1934, as amended, as a process designed by, or under the supervision of, the company’s
principal executive and principal financial officers and effected by the company’s board of directors, management and
other personnel, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of
financial statements for external purposes in accordance with generally accepted accounting principles. Internal control
over financial reporting includes those policies and procedures that (i) pertain to the maintenance of records that in
reasonable detail accurately and fairly reflect the transactions and dispositions of the assets of the company; (ii) provide
reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance
with generally accepted accounting principles, and that receipts and expenditures of the company are being made only in
accordance with authorizations of management and directors of the company; and (iii) provide reasonable assurance
regarding prevention or timely detection of unauthorized acquisition, use or disposition of the company’s assets that could
have a material effect on the financial statements.
Because of its inherent limitations, internal control over financial reporting may not prevent or detect
misstatements. Projections of any evaluation of the effectiveness to future periods are subject to the risk that controls may
become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may
deteriorate.
Our management, with the participation of our CEO and CFO, assessed the effectiveness of our internal control
over financial reporting as of September 30, 2021, the end of our fiscal year. Our management based its assessment on
criteria established in Internal Control—Integrated Framework (2013) issued by the Committee of Sponsoring
Organizations of the Treadway Commission. Our management’s assessment included evaluation and testing of the design
and operating effectiveness of key financial reporting controls, process documentation, accounting policies, and our overall
control environment.
Based on our management’s assessment, our management has concluded that our internal control over financial
reporting was effective as of September 30, 2021. Our management communicated the results of its assessment to the
Audit Committee of our Board of Directors.
Our independent registered public accounting firm, Ernst & Young LLP, audited our financial statements for the
fiscal year ended September 30, 2021 included in this Annual Report on Form 10-K, and has issued an audit report with
respect to the effectiveness of the Company’s internal control over financial reporting, a copy of which is included earlier
in this Annual Report on Form 10-K.
107
Changes in Internal Control Over Financial Reporting
There were no changes in our internal control over financial reporting during the fiscal quarter ended September
30, 2021 identified in connection with the evaluation required by paragraph (d) of Rules 13a-15 and 15d-15 under the
Exchange Act that have materially affected, or are reasonably likely to materially affect, our internal control over financial
reporting.
ITEM 9B. OTHER INFORMATION
The Company expects to incur restructuring costs of approximately $20 million to $30 million in fiscal year 2022
primarily related to previously announced restructuring actions that are expected to deliver continued margin improvement
and efficiencies. Total cash costs for the restructuring are expected to be approximately $20 million to $30 million.
PART III
ITEM 10. DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE
Incorporated by reference from our definitive proxy statement for the 2022 Annual Meeting of Stockholders, to
be filed within 120 days of our fiscal 2021 year end.
ITEM 11. EXECUTIVE COMPENSATION
Incorporated by reference from our definitive proxy statement for the 2022 Annual Meeting of Stockholders, to
be filed within 120 days of our fiscal 2021 year end.
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND
RELATED STOCKHOLDERS MATTERS
Other than with respect to the information relating to our equity compensation plans, which is incorporated herein
by reference to Part II, Item 5, “Equity Compensation Plans” of this Form 10-K, the information required by this item is
incorporated by reference from our definitive proxy statement for the 2022 Annual Meeting of Stockholders, to be filed
within 120 days of our fiscal 2021 year end.
ITEM 13.
INDEPENDENCE
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS, AND DIRECTOR
Incorporated by reference from our definitive proxy statement for the 2022 Annual Meeting of Stockholders, to
be filed within 120 days of our fiscal 2021 year end.
ITEM 14. PRINCIPAL ACCOUNTANT FEES AND SERVICES
Incorporated by reference from our definitive proxy statement for the 2022 Annual Meeting of Stockholders, to
be filed within 120 days of our fiscal 2021 year end.
108
PART IV
ITEM 15. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES
(a)
Documents filed as part of this report:
(1)
(2)
The Company’s Consolidated Financial Statements at September 30, 2021 and 2020 and for
each of the three years in the period ended September 30, 2021 and the notes thereto, together
with the report of the independent auditors on those Consolidated Financial Statements are
hereby filed as part of this report.
Financial Statement Schedule II—Valuation and Qualifying Accounts for the Years Ended
September 30, 2021, 2020 and 2019.
(3)
See Exhibits and Index to Exhibits, below.
(b)
Exhibits.
Exhibit
Number
Exhibit Description
3.1 Amended and Restated Certificate of
Incorporation of AECOM Technology
Corporation.
3.2 Certificate of Amendment to Amended and
Restated Certificate of Incorporation of
AECOM Technology Corporation.
3.3 Certificate of Correction of Amended and
Restated Certificate of Incorporation of
AECOM Technology Corporation.
Incorporated by
Reference (Exchange Act
Filings Located at File
No. 0-52423)
Form
10-K
Exhibit
3.1
Filing Date
11/21/2011
Filed
Herewith
S-4
3.2
8/1/2014
10-K
3.3
11/17/2014
3.4 Certificate of Amendment to the Company’s
8-K
Certificate of Incorporation.
3.5 Certificate of Amendment to the Company’s
8-K
Certificate of Incorporation.
3.6 Amended and Restated Bylaws.
4.1 Form of Common Stock Certificate.
4.2 Description of Registrant’s Securities.
4.3
Indenture, dated as of February 21, 2017, by
and among AECOM, the Guarantors party
thereto and U.S. Bank, National Association,
as trustee.
4.4 First Supplemental Indenture, dated as of
March 13, 2018, by and among AECOM, the
guarantors party thereto and U.S. Bank
National Association.
4.5 Second Supplemental Indenture, dated as of
April 23, 2020, by and among AECOM, the
guarantors party thereto and U.S. Bank
National Association.
3.1
3.1
3.2
4.1
4.2
4.1
1/9/2015
3/3/2017
11/15/2018
1/29/2007
11/19/2020
2/21/2017
8-K
Form 10
10-K
8-K
8-K
10.3
3/14/2018
10-Q
10.2
5/6/2020
109
Exhibit
Number
Exhibit Description
4.6 Credit Agreement, dated as of October 17,
2014,
Technology
among AECOM
Corporation and certain of its subsidiaries, as
borrowers, certain lenders, Bank of America,
N.A., as Administrative Agent, Swing Line
Lender and L/C Issuer, MUFG Union Bank,
N.A., BNP Paribas, JPMorgan Chase Bank,
N.A., and the Bank of Nova Scotia, as
Co-Syndication Agents,
and BBVA
Compass, Credit Agricole Corporate and
Investment Bank, HSBC Bank USA, National
Association, Sumitomo Mitsui Banking
Corporation and Wells Fargo Bank, National
Association, as Co-Documentation Agents.
4.7 Amendment No. 1 to the Credit Agreement,
dated as of July 1, 2015, by and among
AECOM and certain of its subsidiaries, as
borrowers, certain lenders, Bank of America,
N.A., as Administrative Agent, Swing Line
Lender and L/C Issuer.
4.8 Amendment No. 2 to Credit Agreement, dated
as of December 22, 2015, among
the
Company, the Lenders party thereto, and
Bank of America, N.A., as Administrative
Agent, Swing Line Lender, and an L/C Issuer.
4.9 Amendment No. 3 to Credit Agreement and
Amendment No. 1 to the Security Agreement,
dated as of September 29, 2016, among the
Company, the Lenders party thereto, and
Bank of America, N.A., as Administrative
Agent, Swing Line Lender, and an L/C Issuer.
4.10 Amendment No. 4 to Credit Agreement dated
as of March 31, 2017, among the Company,
the Lenders party thereto, and Bank of
America, N.A., as Administrative Agent,
Swing Line Lender, and an L/C Issuer.
4.11 Amendment No. 5 to Credit Agreement dated
as of March 13, 2018, among AECOM, the
Lenders party thereto, and Bank of America,
N.A., as Administrative Agent, Swing Line
Lender, and an L/C Issuer.
4.12 Amendment No. 6 to Credit Agreement, dated
as of November 12, 2018, among AECOM,
the Lenders party thereto, and Bank of
America, N.A., as Administrative Agent,
Swing Line Lender, and an L.C. Issuer.
Incorporated by
Reference (Exchange Act
Filings Located at File
No. 0-52423)
Form
8-K
Exhibit
10.1
Filing Date
10/17/2014
Filed
Herewith
8-K
10.1
7/7/2015
8-K
10.1
12/22/2015
8-K
10.1
9/30/2016
8-K
10.1
4/6/2017
8-K
10.1
3/14/2018
10-K
4.21
11/13/2018
110
Exhibit
Number
Exhibit Description
4.13 Amendment No. 7 to Credit Agreement, dated
as of January 28, 2020, by and among
AECOM, each borrower and guarantor party
thereto, the lenders party thereto, and Bank of
America, N.A, as administrative agent.
4.14 Amendment No. 8 to the Credit Agreement,
dated as of May 1, 2020, by and among
AECOM, each borrower and guarantor party
thereto, the lenders party thereto, and Bank of
America, N.A., as of administrative agent.
4.15 2021 Refinancing Amendment to Credit
Agreement, dated as of February 8, 2021, by
and among AECOM, each borrower and
guarantor party thereto, the lenders party
thereto, and Bank of America, N.A., as
administrative Agent.
4.16 Amendment No. 10 to Credit Agreement,
dated as of April 13, 2021, by and among
AECOM, each borrower and guarantor party
thereto, the lenders party thereto, and Bank of
America, N.A., as administrative Agent.
4.17 Amendment No. 11 to Credit Agreement,
dated as of June 25, 2021, by and among
AECOM, each borrower and guarantor party
thereto, the lenders party thereto, and Bank of
America, N.A., as administrative Agent.
10.1# AECOM Technology Corporation Change in
Control Severance Policy for Key Executives.
10.2# Employment Agreement between AECOM
Technology Corporation and Randall A.
Wotring, dated as of January 1, 2015.
10.3# Amended and Restated 2006 Stock Incentive
Plan.
10.4# Form of Stock Option Standard Terms and
Conditions under 2006 Stock Incentive Plan.
10.5# Form of Restricted Stock Unit Standard
Terms and Conditions under 2006 Stock
Incentive Plan.
10.6# Standard Terms
and Conditions
for
Performance Earnings Program
under
AECOM Technology Corporation 2006
Stock Incentive Plan.
10.7# AECOM Amended & Restated 2016 Stock
Incentive Plan.
10.8# Form Standard Terms and Conditions for
Restricted Stock Units for Non-Employee
Directors under the 2016 Stock Incentive.
Incorporated by
Reference (Exchange Act
Filings Located at File
No. 0-52423)
Form
8-K
Exhibit
10.1
Filing Date
2/3/2020
Filed
Herewith
10-Q
10.3
5/6/2020
10-Q
10.2
2/10/2021
8-K
10.1
4/13/2021
8-K
10.1
6/25/2021
10-Q
10-Q
10.1
10.2
2/7/2018
2/11/2015
Schedule
14A
8-K
8-K
8-K
Schedule
14A
10-Q
Annex B
1/21/2011
10.1
10.2
12/5/2008
12/21/2012
10.3
12/5/2008
Annex B
1/19/2017
10.3
5/11/2016
10.9# Form Standard Terms and Conditions for
Restricted Stock Units under the 2016 Stock
Incentive Plan.
10-Q
10.4
5/11/2016
111
Exhibit
Number
10.10# Form Standard Terms and Conditions for
Performance Earnings Program under the
2016 Stock Incentive Plan.
Exhibit Description
10.11# Form Standard Terms and Conditions for
Non-Qualified Stock Options under the 2016
Stock Incentive Plan.
10.12# Standard Terms
and Conditions
Performance
Performance Criteria.
Earnings
Program
for
and
Incorporated by
Reference (Exchange Act
Filings Located at File
No. 0-52423)
Form
10-Q
Exhibit
10.5
Filing Date
5/11/2016
Filed
Herewith
10-Q
10.6
5/11/2016
8-K
10.1
12/15/2016
10.13# AECOM Technology Corporation Executive
8-K
Deferred Compensation Plan.
10.14# First Amendment to the AECOM Executive
10-Q
10.1
10.3
12/21/2012
2/10/2016
Deferred Compensation Plan.
10.15# AECOM Technology Corporation Executive
Incentive Plan.
10.16# Form of Special LTI Award Stock Option
Terms and Conditions under the 2006 Stock
Incentive Plan.
Schedule
14A
8-K
Annex A
1/22/2010
10.2
3/12/2014
10.17# AECOM Retirement & Savings Plan
(amended and restated effective July 1, 2016).
10.18# AECOM Amended and Restated Employee
Stock Purchase Plan.
10.19# Form Standard Terms and Conditions for
Performance Earnings Program under the
2016 Stock Incentive Plan (Fiscal Year 2019).
10.20# Form Standard Terms and Conditions for
Performance Earnings Program under the
2016 Stock Incentive Plan (Fiscal Year 2020).
10.21 Agreement, dated as of November 22, 2019,
by and among AECOM and Starboard Value
LP and the other parties set forth therein.
10-Q
DEF
14A
10-Q
10.1
8/10/2016
Annex A
1/23/2019
10.1
2/6/2019
10-Q
10.1
2/5/2020
8-K
10.1
11/22/2019
10.22# Letter Agreement between AECOM and
10-Q
10.4
5/6/2020
Michael S. Burke effective March 11, 2020.
10.23# AECOM 2020 Stock Incentive Plan.
10.24# Letter Agreement between AECOM and W.
Troy Rudd dated June 13, 2020.
DEF
14A
10-Q
10.25# Letter Agreement between AECOM and Lara
10-Q
10-Q
10-K
Poloni dated June 13, 2020.
10.26# Senior Leadership Severance Plan.
10.27# Employment Agreement, dated October 19,
2020, by and between AECOM Australia Pty
Ltd and Lara Poloni.
10.28# Separation and Release Agreement, dated as
of October 2, 2020, by and between AECOM
and Steve Morriss.
10.29# Separation and Release Agreement, dated
October 2, 2020, by and between AECOM
and Randall A. Wotring.
Annex A
1/23/2020
10.1
10.2
10.3
10.33
8/5/2020
8/5/2020
8/5/2020
11/19/2020
10-K
10.34
11/19/2020
10-K
10.35
11/19/2020
112
Incorporated by
Reference (Exchange Act
Filings Located at File
No. 0-52423)
Form
10-Q
Exhibit
10.1
Filing Date
2/10/21
Filed
Herewith
X
X
X
X
X
X
X
X
Exhibit
Number
10.30# Form Standard Terms and Conditions for
Performance Earnings Program under the
2020 Stock Incentive Plan (Fiscal Year 2021)
Exhibit Description
21.1 Subsidiaries of AECOM.
23.1 Consent of Independent Registered Public
Accounting Firm.
31.1 Certification of
the Company’s Chief
Executive Officer pursuant to Section 302 of
the Sarbanes-Oxley Act of 2002.
31.2 Certification of
the Company’s Chief
Financial Officer pursuant to Section 302 of
the Sarbanes-Oxley Act of 2002.
32* Certification of
the Company’s Chief
Executive Officer and Chief Financial Officer
pursuant
the
Section
Sarbanes-Oxley Act of 2002.
906
of
to
in
Reporting
95 Mine Safety Disclosure.
101 The following financial statements from the
Company’s Annual Report on Form 10-K for
the year ended September 31, 2021 were
iXBRL (Inline eXtensible
formatted
(i)
Business
(ii)
Balance
Consolidated
Consolidated Statements of Operations, (iii)
Consolidated Statements of Comprehensive
Income (Loss), (iv) Consolidated Statements
of Stockholders’ Equity, (v) Condensed
Consolidated Statements of Cash Flows, and
(vi) the Notes to Condensed Consolidated
Financial Statements, tagged as blocks of text
and including detailed tags.
Language):
Sheets,
104 The cover page from the Company’s Annual
Report on Form 10-K for the year ended
September 31, 2021, formatted in Inline
XBRL.
# Management contract or compensatory plan or arrangement.
* Document has been furnished and not filed.
ITEM 16. FORM 10-K SUMMARY
None.
113
Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the Registrant has
duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.
SIGNATURE
AECOM
By:
Date:
/s/ GAURAV KAPOOR
Gaurav Kapoor
Chief Financial Officer
(Principal Financial Officer)
November 17, 2021
114
Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the
following persons on behalf of the Registrant in the capacities and on the date indicated.
Signature
Title
Date
/s/ W. TROY RUDD
W. Troy Rudd
Chief Executive Officer
(Principal Executive Officer)
November 17, 2021
/s/ GAURAV KAPOOR
Gaurav Kapoor
/s/ BRADLEY W. BUSS
Bradley W. Buss
/s/ ROBERT G. CARD
Robert G. Card
/s/ DIANE C. CREEL
Diane C. Creel
/s/ JACQUELINE C. HINMAN
Jacqueline C. Hinman
/s/ LYDIA H. KENNARD
Lydia H. Kennard
/s/ CLARENCE T. SCHMITZ
Clarence T. Schmitz
/s/ DOUGLAS W. STOTLAR
Douglas W. Stotlar
/s/ DANIEL R. TISHMAN
Daniel R. Tishman
/s/ SANDER VAN’T NOORDENDE
Sander van’t Noordende
/s/ GEN. JANET C. WOLFENBARGER, USAF
RET.
Gen. Janet C. Wolfenbarger, USAF Ret.
Chief Financial Officer
(Principal Financial Officer,
Principal Accounting Officer)
Director
Director
Director
Director
Director
Director
November 17, 2021
November 17, 2021
November 17, 2021
November 17, 2021
November 17, 2021
November 17, 2021
November 17, 2021
Director (Chairman)
November 17, 2021
November 17, 2021
November 17, 2021
November 17, 2021
Director
Director
Director
115
About AECOM
AECOM (NYSE: ACM) is the world’s trusted infrastructure consulting firm, delivering professional services throughout the
project lifecycle – from planning, design and engineering to program and construction management. On projects spanning
transportation, buildings, water, new energy, and the environment, our public- and private-sector clients trust us to solve their
most complex challenges. Our teams are driven by a common purpose to deliver a better world through our unrivaled technical
expertise and innovation, a culture of equity, diversity and inclusion, and a commitment to environmental, social and governance
priorities. AECOM is a Fortune 500 firm and its Professional Services business had revenue of $13.3 billion in fiscal year 2021.
See how we are delivering sustainable legacies for generations to come at aecom.com and @AECOM.