SEC Filings

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

Table of Contents

 

During the first quarter of 2018, President Trump signed the Tax Act into law. The Tax Act reduced our U.S. federal corporate tax rate from 35% to 21%, required companies to pay a one-time transition tax on accumulated earnings of foreign subsidiaries, created new taxes on certain foreign sourced earnings, and eliminated or reduced certain deductions.

 

In the first quarter of 2018, we remeasured certain deferred tax assets and liabilities based on the rates at which they were expected to reverse in the future, which is generally 21%. The amount recorded related to the remeasurement of our deferred tax balance was a $36.1 million tax benefit. In addition, we released the deferred tax liability and recorded a tax benefit related to certain foreign subsidiaries for which the undistributed earnings are not intended to be reinvested indefinitely for $77.0 million and accrued current tax on these earnings as part of the one-time transition tax.

 

Also during the first quarter 2018, we recorded a provisional amount for the one-time transition tax liability for our foreign subsidiaries resulting in an increase in income tax expense of $71.4 million. During the first quarter of fiscal 2019, we completed our calculation of the total foreign earnings and profits of our foreign subsidiaries and recorded a tax benefit of $1.5 million.

 

Certain operations in Canada continue to have losses and the associated valuation allowances could be reduced if and when our current and forecast profits trend turns and sufficient evidence exists to support the release of the related valuation allowance (approximately $41 million).

 

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 Income Attributable to AECOM

 

The factors described above resulted in net income attributable to AECOM of $51.5 million for the three months ended December 31, 2018 as compared to net income attributable to AECOM of $111.3 million for the three months ended December 31, 2017.

 

Results of Operations by Reportable Segment:

 

Design and Consulting Services

 

 

 

Three Months Ended

 

 

 

December 31,

 

December 31,

 

Change

 

 

 

2018

 

2017

 

$

 

%

 

 

 

(in millions)

 

Revenue

 

$

2,029.7

 

$

1,941.9

 

$

87.8

 

4.5

%

Cost of revenue

 

1,914.0

 

1,864.1

 

49.9

 

2.7

 

Gross profit

 

$

115.7

 

$

77.8

 

$

37.9

 

48.7

%

 

The following table presents the percentage relationship of statement of operations items to revenue:

 

 

 

Three Months Ended

 

 

 

December 31,
2018

 

December 31,
2017

 

Revenue

 

100.0

%

100.0

%

Cost of revenue

 

94.3

 

96.0

 

Gross profit

 

5.7

%

4.0

%

 

Revenue

 

Revenue for our DCS segment for the three months ended December 31, 2018 increased $87.8 million, or 4.5%, to $2,029.7 million as compared to $1,941.9 million for the corresponding period last year.

 

The increase in revenue for the three months ended December 31, 2018 was primarily attributable to an increase in the Americas of $110 million, largely due to increased work performed on a residential housing storm disaster relief program.

 

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