AECOMACM

AECOM Leases Disclosure

10-KFiled Nov 19, 20253 min read
Leases
The Company and its subsidiaries are lessees in non-cancelable leasing agreements for office buildings and equipment. Substantially all of the Company’s office building leases are operating leases, and its equipment leases are both operating and finance leases. The Company groups lease and non-lease components for its equipment leases into a single lease component but separates lease and non-lease components for its office building leases.
The Company recognizes a right-of-use asset and lease liability for its operating leases at the commencement date equal to the present value of the contractual minimum lease payments over the lease term. The present value is calculated using the rate implicit in the lease, if known, or the Company’s incremental secured borrowing rate. The discount rate used for operating leases is primarily determined based on an analysis of the Company’s incremental secured borrowing rate, while the discount rate used for finance leases is primarily determined by the rate specified in the lease.
The related lease payments are expensed on a straight-line basis over the lease term, including, as applicable, any free-rent period during which the Company has the right to use the asset. For leases with renewal options where the renewal is reasonably assured, the lease term, including the renewal period, is used to determine the appropriate lease classification and to compute periodic rental expense. Leases with initial terms shorter than 12 months are not recognized on the balance sheet, and lease expense is recognized on a straight-line basis.
During the fourth quarter of fiscal 2023, the Company approved a restructuring plan primarily to optimize its office real estate portfolio with its freedom to grow strategy, which initiated a review of the carrying value of right-of-use assets and leasehold improvements. In connection with the review, the Company identified leased assets that were no longer recoverable. The Company recorded an impairment charge of $86.2 million to reduce its right-of-use assets and leasehold improvements to their fair values and recorded the expense in restructuring costs on the Consolidated Statement of Operations. Fair value was determined primarily using Level 3 inputs, such as discounted cash flows.
The components of lease expenses are as follows:
Fiscal Year Ended
September 30, 2025September 30, 2024September 30, 2023
(in millions)
Operating lease cost$147.4 $149.1 $164.0 
Finance lease cost:
Amortization of right-of-use assets33.9 28.4 23.1 
Interest on lease liabilities3.7 2.9 2.6 
Variable lease cost32.0 34.6 34.1 
Total lease cost$217.0 $215.0 $223.8 
Additional balance sheet information related to leases is as follows:
(in millions except as noted)Balance Sheet ClassificationSeptember 30, 2025September 30, 2024
Assets:
Operating lease assetsOperating lease right-of-use assets$463.5 $432.2 
Finance lease assetsProperty and equipment – net74.4 62.1 
Total lease assets$537.9 $494.3 
Liabilities:
Current:
Operating lease liabilitiesAccrued expenses and other current liabilities$132.4 $135.1 
Finance lease liabilitiesCurrent portion of long-term debt31.9 25.5 
Total current lease liabilities164.3 160.6 
Non-current:
Operating lease liabilitiesOperating lease liabilities, noncurrent516.0 510.6 
Finance lease liabilitiesLong-term debt44.3 35.7 
Total non-current lease liabilities$560.3 $546.3 
As of
September 30, 2025September 30, 2024September 30, 2023
Weighted average remaining lease term (in years):
Operating leases6.16.26.4
Finance leases2.72.62.9
Weighted average discount rates:
Operating leases5.2 %5.1 %4.3 %
Finance leases4.8 %4.4 %4.1 %
Additional cash flow information related to leases is as follows:
Fiscal Year Ended
September 30,
2025		September 30,
2024		September 30,
2023
(in millions)
Cash paid for amounts included in the measurement of lease liabilities:
Operating cash flows from operating leases$172.6 $184.9 $188.3 
Operating cash flows from finance leases3.7 3.0 2.5 
Financing cash flows from finance leases32.4 28.9 23.7 
Right-of-use assets obtained in exchange for new operating leases130.9 90.1 96.6 
Right-of-use assets obtained in exchange for new finance leases47.2 26.6 37.5 
Total remaining lease payments under both the Company’s operating and finance leases are as follows:
Operating LeasesFinance Leases
Fiscal Year(in millions)
2026$163.6 $35.0 
2027135.7 26.1 
2028118.1 16.0 
202997.9 4.6 
203075.4 — 
Thereafter173.3 — 
Total lease payments$764.0 $81.7 
Less: Amounts representing interest$(115.6)$(5.5)
Total lease liabilities$648.4 $76.2 
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Historical Timeline

Fiscal YearFiled
2025Nov 19, 2025Showing above
2016Nov 16, 2016
2015Nov 25, 2015

About Leases Disclosures

Lease disclosures under ASC 842 provide a comprehensive view of a company's leased asset portfolio, including the split between operating and finance leases, discount rates used to present-value future payments, and the maturity schedule of lease obligations. This section reveals a significant source of off-balance-sheet commitments that were largely hidden before the current standard.

Key signals: the weighted-average discount rate affects the size of recorded lease liabilities — a higher rate reduces the reported obligation, so compare the chosen rate against the company's incremental borrowing rate. The operating versus finance lease mix affects both EBITDA and operating income presentation. Watch the maturity table for concentration risk: large payment cliffs in specific years may create cash flow pressure. Variable lease payments excluded from the liability measurement represent real obligations that do not appear on the balance sheet. Compare total lease costs against prior-year operating lease expense to assess the true economic burden.

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