5.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, public-private partnership (P3) and infrastructure 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.

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 further discussed in Note 14.

Summary of unaudited financial information of the consolidated joint ventures is as follows:

	March 31, 2018		September 30, 2017
	(in millions)
Current assets	$	933.1	$	832.1
Non-current assets	196.5		188.8

Total assets	$	1,129.6	$	1,020.9


Current liabilities	$	632.7	$	524.9
Non-current liabilities	12.3		12.4

Total liabilities	645.0		537.3
Total AECOM equity	261.3		274.7
Noncontrolling interests	223.3		208.9

Total owners’ equity	484.6		483.6

Total liabilities and owners’ equity	$	1,129.6	$	1,020.9

Total revenue of the consolidated joint ventures was $1,202.6 million and $910.8 million for the six months ended March 31, 2018 and 2017, 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 unaudited financial information of the unconsolidated joint ventures is as follows:

	March 31, 2018		September 30, 2017
	(in millions)
Current assets	$	1,839.2	$	1,912.2
Non-current assets	846.2		749.8

Total assets	$	2,685.4	$	2,662.0


Current liabilities	$	1,528.1	$	1,570.2
Non-current liabilities	217.7		185.1

Total liabilities	1,745.8		1,755.3
Joint ventures’ equity	939.6		906.7

Total liabilities and joint ventures’ equity	$	2,685.4	$	2,662.0


AECOM’s investment in joint ventures	$	384.9	$	364.2

	Six Months Ended
	March 31, 2018		March 31, 2017
	(in millions)
Revenue	$	2,814.8	$	2,529.8
Cost of revenue	2,683.0		2,396.0

Gross profit	$	131.8	$	133.8

Net income	$	127.7	$	125.5

Summary of AECOM’s equity in earnings of unconsolidated joint ventures is as follows:

	Six Months Ended
	March 31, 2018		March 31, 2017
	(in millions)
Pass through joint ventures	$	20.2	$	17.9
Other joint ventures	22.6		25.3

Total	$	42.8	$	43.2