SEC Filings

10-Q
AECOM filed this Form 10-Q on 02/06/2019
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Table of Contents

 

revenue is recognized using the percentage-of-completion method during the three months ended December 31, 2018 and 2017. In the first quarter of fiscal 2019, the Company commenced a restructuring plan to improve profitability. The Company expects to incur restructuring costs of $80 to $90 million in fiscal 2019 primarily related to personnel and real estate costs. During the first quarter of fiscal 2019, the Company incurred restructuring expenses of $63.3 million, including personnel and other costs of $46.0 million and real estate costs of $17.3 million, of which $41.2 million was accrued and unpaid at December 31, 2018. The Company incurred $22.4 million of severance expenses relating to restructuring activities during the three months ended December 31, 2017.

 

During the twelve months ended September 30, 2016, the Company recorded revenue related to the expected accelerated recovery of a pension related entitlement from the federal government of approximately $50 million, which is included in accounts receivable-net at December 31, 2018. The entitlement resulted from pension costs that are reimbursable through government contracts in accordance with Cost Accounting Standards. The accelerated recognition resulted from an amendment to freeze pension benefits under URS Federal Services, Inc. Employees Retirement Plan. The actual amount of reimbursement may vary from the Company’s expectation.

 

13.       Reclassifications out of Accumulated Other Comprehensive Loss

 

The accumulated balances and reporting period activities for the three months ended December 31, 2018 and 2017 related to reclassifications out of accumulated other comprehensive loss are summarized as follows (in millions):

 

 

 

Pension
Related
Adjustments

 

Foreign
Currency
Translation
Adjustments

 

Gain/(Loss) on
Derivative
Instruments

 

Accumulated
Other
Comprehensive
Loss

 

Balances at September 30, 2018

 

$

(202.3

)

$

(502.2

)

$

1.2

 

$

(703.3

)

Other comprehensive income (loss) before reclassification

 

3.8

 

(21.8

)

(6.8

)

(24.8

)

Amounts reclassified from accumulated other comprehensive (loss) income

 

1.5

 

 

0.5

 

2.0

 

Balances at December 31, 2018

 

$

(197.0

)

$

(524.0

)

$

(5.1

)

$

(726.1

)

 

 

 

Pension
Related
Adjustments

 

Foreign
Currency
Translation
Adjustments

 

Gain/(Loss) on
Derivative
Instruments

 

Accumulated
Other
Comprehensive
Loss

 

Balances at September 30, 2017

 

$

(281.9

)

$

(418.4

)

$

(0.4

)

$

(700.7

)

Other comprehensive (loss) income before reclassification

 

 

(6.8

)

0.5

 

(6.3

)

Amounts reclassified from accumulated other comprehensive loss

 

2.5

 

 

0.3

 

2.8

 

Balances at December 31, 2017

 

$

(279.4

)

$

(425.2

)

$

0.4

 

$

(704.2

)

 

14.       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.

 

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 some 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.

 

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