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AECOM

1999 Avenue of the   Stars

Suite 2600

Los Angeles, CA 90067

www.aecom.com

213.593.8000

213.593.8730

tel

fax

January 20, 2016

VIA EDGAR

Terence O’Brien

Accounting Branch Chief

Securities and Exchange Commission

Division of Corporation Finance

1 Station Place, N.E., Stop 7010

Washington, D.C. 20549

Re:

AECOM

Form 10-K for Fiscal Year Ended   September 30, 2015

Filed November 25, 2015

File No. 0-52433

Dear Mr. O’Brien:

This letter is in response to the comment letter, dated December 17, 2015, of the Staff of the Division of Corporation Finance (the “Staff”) regarding the above-referenced filing (the “Filing”) for AECOM (the “Company”).  To assist your review, we have retyped the text of the Staff’s comments in italics below.

Form 10-K for the fiscal year ended September 30, 2015

Item 1. Business, page 2

1.              We note your disclosure that you have formed AECOM Capital as an investment fund to invest in public-private partnership and private-sector real estate projects for which you can provide a fully integrated solution including equity capital. Please tell us more about AECOM Capital’s business purpose and operations. It is unclear from the disclosures whether AECOM Capital is a member/partner of joint ventures created with other businesses, or if it creates funds and obtains capital commitments from equity investors with those capital commitments used to make investments on behalf of its partners/ members (i.e., asset management business). If AECOM Capital’s business is asset management, please tell us the number of funds created, the amount of capital commitments received from external investors, the amount of capital commitments called, and the amount of your commitments and called commitments in the funds.

AECOM’s Response to Question #1:

AECOM is one of the largest general architectural, construction services and engineering design firms in the world.  AECOM Capital, a consolidated subsidiary of AECOM, was formed in 2013 as an investment vehicle to directly invest AECOM’s capital in public-private partnerships and private-sector real estate projects.  AECOM Capital has directly invested in 14 real estate projects since 2013 as a member/partner of joint venture arrangements with other independent third parties.  AECOM Capital has not historically and  does not currently engage in the business of advising or managing securities or other assets for external investors.

Management’s Discussion and Analysis of Financial Condition and Results of Operations, page 36

Critical Accounting Policies, page 39

2.              We note your disclosures that your deferred tax assets are reduced by a valuation allowance when it is more likely than not that a portion of a deferred tax asset would not be realized. We further note that based on your Note 17, your valuation allowance increased significantly from $27.1 million as of September 30, 2014, to $239.4 million as of September 30, 2015, driven primarily by an increase related to a valuation allowance of $182 million that was recorded in relation to the URS acquisition. Please expand your disclosures to specifically describe the nature of the underlying deferred tax assets that had a corresponding valuation allowance recorded. Additionally, please expand your disclosures to specifically highlight the positive and negative evidence you considered in arriving at the conclusion that it is more likely than not that $182 million of acquired deferred tax assets would not be realized. To the extent applicable, please highlight any material jurisdictions you operate in that impacted your determination and total valuation allowance recorded. Please refer to Item 303 of Regulation S-K and Section 501.14 of the Financial Reporting Codification for guidance.

AECOM’s Response to Question #2:

As provided in Note 17 to our consolidated financial statements for fiscal year 2015, the valuation allowance increase of $239.4 million consists primarily of state and foreign net operating loss and credit carryforwards. In addition, the valuation allowance balance includes a reserve against a pension obligation deferred tax asset in the United Kingdom. As part of the business combination accounting for URS Corporation (“URS”), the Company evaluated the positive and negative evidence in certain tax jurisdictions to which URS was subject (primarily the United Kingdom, the United States, Australia and Canada). The evaluation consisted of reviewing the cumulative history of losses, including the lack of sustained earnings in these tax jurisdictions as well as the availability of any of the four possible sources of income pursuant to ASC 740-10-30-18. In addition, there are certain relevant tax law restrictions regarding the usage of some net operating losses and credit carry forwards in the United States and in the United Kingdom. Management of the Company determined that as of the balance sheet date of September 30, 2015, the negative evidence outweighed the positive evidence and therefore recorded a valuation allowance for the majority of URS’s foreign net deferred tax assets. The Company continues to pursue all four possible sources of income including tax planning strategies, and if and when a prudent and feasible tax planning strategy becomes available that management would be willing to implement to protect against a loss of a deferred tax asset that would otherwise expire, such event could cause a change in judgment regarding whether these deferred tax assets can be realized, which would cause a reduction in the associated valuation allowance in the future. The remaining increase in the valuation allowance balance during fiscal year 2015 was attributable to losses incurred by the legacy AECOM business and the URS Canadian and Australian businesses post-acquisition by AECOM for which no tax benefit has been recorded.

If relevant in the future reporting periods, the Company proposes to provide investors with additional valuation allowance details in the future, as requested by the Staff. The Company will continue to refer to Item 303 of Regulation S-K and Sections 501.14 of the Financial Reporting Codification for guidance. The below underlined text reflects the form of additional language that the Company proposes to include in its  income taxes footnote to its consolidated financial statements in its next Form 10-K, and comparable language will be included in future filings, if applicable:

As of September 30, 2015 and 2014, gross deferred tax assets were $896.7 million and $367.1 million, respectively. The Company has recorded a valuation allowance of approximately $239.4 million and $27.1 million at September 30, 2015 and 2014, respectively, primarily related to state and foreign net operating loss carry forwards, credits and certain pension obligations (primarily in the United Kingdom, Australia, Canada and the United States). 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 carry forward 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 $657.3 million will be realized and, as such, no additional valuation allowance has been provided. The increase in the valuation allowance of $212 million is primarily attributable to the acquisition of URS of $182 million which was recorded in business combination. The majority of the $182 million acquired balance is related to valuation allowances recorded against foreign net operating losses and credit carryforwards and the pension obligation, consistent with those described above. Material jurisdictions contributing to the acquired valuation allowance include the United Kingdom, Australia, Canada and the United States.

Consolidated Results, page 44

Results of Operations by Reportable Segment, page 47

3.              We note your discussion and analysis of the change in income tax (benefit) expense for fiscal year ended September 30, 2015, when compared to September 30, 2014, on page 47. Please expand your disclosures to quantify all the material factors disclosed and provide a more meaningful analysis discussing the reasons behind each and whether the material factors impacting the effective tax rate are expected to have a continuing impact. Please refer to Item 303(a)(3) of Regulation S-K and Sections 501.12.b.3 and 501.12.b.4. of the Financial Reporting Codification for guidance.

AECOM’s Response to Question #3:

The effective tax rate on the pretax loss in the year ended September 30, 2015  is higher than the effective tax rate on income in the year ended September 30, 2014 primarily due to the significant acquisition and integration costs related to the URS acquisition, which were largely incurred in the United States and are tax deductible at a relatively higher tax rate than our foreign jurisdictions, increased income attributable to non-controlling interests due to the acquisition of URS, and the extension of the research and development tax credit in the United States. The quantification of these material factors is presented in the Rate Reconciliation section of the Income Tax Footnote in Note 17 to our consolidated financial statements for fiscal year 2015. We also note that all of these factors are recurring, except for the acquisition and integration costs, which will decrease over time.

The Company proposes to include additional disclosure in the future, if relevant, as requested by the Staff  The Company will continue to refer to Item 303(a)(3) of Regulation S-K and Sections 501.12.b.3 and 501.12.b.4 of the Financial Reporting Codification for guidance. The below underlined text reflects the form  of additional language that the Company proposes to include in its next Form 10-K in its results of operations by reportable segment, and comparable language will be included for subsequent years in future filings, if applicable:

Our income tax benefit for the year ended September 30, 2015 was $80.3 million compared to income tax expense of $82.0 million for the year ended September 30, 2014. The effective tax rate was 53.0% and 26.1% for the years ended September 30, 2015 and 2014, respectively.

The decrease in income tax expense for the year ended September 30, 2015 was primarily due to $29.3 million of the effect of non-controlling interests in income of consolidated subsidiaries from the acquisition of URS, $160 million of a change in the geographical mix of earnings/losses primarily attributable to the acquisition and integration costs incurred in the United States which attracts a higher tax rate than our foreign jurisdictions, $5.7 million of energy-related and other tax incentives, and an incremental tax benefit of $8.3 million related to the reinstatement of expiring tax provisions such as the research and development tax credit during the period,  partially offset by a $23.7 million increase in valuation allowances regarding realizability of certain current year foreign losses, and an $11.7 million decrease in the domestic production activities deduction.

4.              Comments 1 and 2 in our letter dated January 22, 2015, requested that your discussion and analysis of segment results provide investors with an understanding of all material factors contributing to the changes and quantify those changes when providing your analysis for revenue and gross profit for each period presented. In your response letter dated February 26, 2015, you stated, “The Company will continue to refer to Item 303(a)(3) of Regulation S-K and Section 501.12.b. of the Financial Reporting Codification for future filings to ensure that the Management’s Discussion and Analysis section discloses all events, transactions or changes that materially affect its results of operations.…” However, we continue to note areas where there appears to be a lack of disclosure and/or analysis around the factors impacting your revenue and gross profit for at the consolidated and segment levels. For example:

·                  Your analysis of revenue for Design and Consulting Services (DCS) for fiscal years 2015 versus 2014 notes the changes in revenues for your various regions but does not explain the facts and circumstances contributing to the $220 million decrease in Americas, the $110 million decrease in Asia Pacific, or the $100 million increase in EMEA.

·                  Your discussion for DCS gross profit margin provides sufficient information to understand the impact of the acquisition of URS but does not address the facts and circumstances impacting organic gross profit margin.

·                  Subcontractor services have increased from your disclosure on page 75, but you did not include a discussion of the impact this increase has had on your gross profit margin.

·                  Your discussion of gross profit did not mention the impact of the $96.9 million recognized from the margin fair value liability recognized in connection with the acquisition of URS, which positively impacted gross profit by 18.1% for fiscal year 2015.

As such, we continue to request that you provide investors with a more comprehensive analysis of your operating results at the consolidated and segment levels by quantifying and discussing the impact of all the material factors. Please refer to Item 303(A)(3)(iii) of Regulation S-K and Sections 501.12.b.3. and 501.12.b.4. of the Financial Reporting Codification for guidance.

AECOM’s Response to Question #4:

The Company will provide investors with a more comprehensive analysis of its operating results at the consolidated and segment levels as requested by the Staff by quantifying and discussing the impact of all the material factors. The Company will continue to refer to Item 303(A)(3)(iii) of Regulation S-K and Sections 501.12.b.3. and 501.12.b.4. of the Financial Reporting Codification for guidance. By way of example, the below underlined text reflects the form of revised language that the Company proposes to include in its next Form 10-K in its results of operations for its Design and Consulting Services reportable segment, and comparable language for each segment will be included for subsequent years in future filings, if applicable:

Revenue

Revenue for our DCS segment for the year ended September 30, 2015 increased $2,519.8 million, or 46.3%, to $7,962.9 million as compared to $5,443.1 million for the corresponding period last year. Revenue provided by acquired companies was $3,012.7 million. Excluding revenue provided by acquired companies, revenue decreased $492.9 million, or 9.1%, over the year ended September 30, 2014.

The decrease in revenue, excluding acquired companies, for the year ended September 30, 2015 was primarily attributable to a negative foreign currency impact of $260 million mostly due to the strengthening of the U.S. dollar against the Australian and Canadian dollars and the British pound. Additionally, we experienced a decrease in the DCS Americas region of $220 million across its end markets, including the transportation, water, and environment segments due to a decrease in public spending on capital projects, and a decrease in the DCS Asia Pacific region of approximately $110 million due to an economic slowdown in mainland China. These decreases were partially offs