SEC Filings

10-Q
AECOM filed this Form 10-Q on 02/06/2019
Entire Document
 

Table of Contents

 

Given the significance of the Tax Act, the SEC staff issued Staff Accounting Bulletin No. 118 (SAB 118), which allowed registrants to record provisional amounts during a one year “measurement period” similar to that used when accounting for business combinations. As of December 31, 2018, the Company has completed its accounting for the tax effects of enactment of the Tax Act.

 

The Company is utilizing the annual effective tax rate method under ASC 740 to compute its interim tax provision. The Company’s effective tax rate fluctuates from quarter to quarter due to various factors including the change in the mix of global income and expenses, outcomes of administrative audits, changes in the assessment of valuation allowances due to management’s consideration of new positive or negative evidence during the quarter, and changes in enacted tax laws and their interpretations which upon enactment include possible tax reform around the world arising from the result of the base erosion and profit shifting project undertaken by the Organisation for Economic Co-operation Development which, if finalized and adopted, could have a material impact on the Company’s income tax expense and deferred tax balances.

 

The Company is currently under tax audit in several jurisdictions and believes 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 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 $1.8 billion are able to and intended to be reinvested indefinitely. At December 31, 2018, the Company has determined it will continue to indefinitely reinvest the earnings of certain foreign subsidiaries and therefore will continue to account for these undistributed earnings based on existing accounting under ASC 740 and not accrue additional tax outside of the one-time transition tax described above. There may also be additional U.S. or foreign income tax liability upon repatriation, although the calculation of such additional taxes is not practicable.

 

11.       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 three months ended December 31, 2018 and 2017, equity awards excluded from the calculation of potential common shares were not significant.

 

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

 

 

 

Three Months Ended

 

 

 

December 31,
2018

 

December 31,
2017

 

 

 

(in millions)

 

Denominator for basic earnings per share

 

156.4

 

157.9

 

Potential common shares

 

3.2

 

3.9

 

Denominator for diluted earnings per share

 

159.6

 

161.8

 

 

12.       Other Financial Information

 

Accrued expenses and other current liabilities consist of the following:

 

 

 

December 31,
2018

 

September 30,
2018

 

 

 

(in millions)

 

Accrued salaries and benefits

 

$

923.0

 

$

1,035.9

 

Accrued contract costs

 

881.8

 

861.0

 

Other accrued expenses

 

376.0

 

370.1

 

 

 

$

2,180.8

 

$

2,267.0

 

 

Accrued contract costs above include balances related to professional liability accruals of $528.0 million and $519.5 million as of December 31, 2018 and September 30, 2018, 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 December 31, 2018 and September 30, 2018. The Company did not have material revisions to estimates for contracts where

 

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