Forward-Looking Statements

This Quarterly Report contains certain forward-looking statements, including the plans and objectives of management for our business, operations and economic performance. These forward-looking statements generally can be identified by the context of the statement or the use of forward-looking terminology, such as "believes," "estimates," "anticipates," "intends," "expects," "plans," "is confident that" or words of similar meaning, with reference to us or our management. Similarly, statements that describe our future operating performance, financial results, financial position, plans, objectives, strategies or goals are forward-looking statements. Although management believes that the assumptions underlying the forward-looking statements are reasonable, these assumptions and the forward-looking statements are subject to various factors, risks and uncertainties, many of which are beyond our control, including, but not limited to, our dependence on long-term government contracts, which are subject to uncertainties concerning the government's budgetary approval process, the possibility that our government contracts may be terminated by the government, our ability to successfully manage our joint ventures, the risk of employee misconduct or our failure to comply with laws and regulations, our ability to successfully execute our mergers and acquisitions strategy, including the integration of new companies into our business, our ability to attract and retain key technical and management personnel, our ability to complete our backlog of uncompleted projects as currently projected, our liquidity and capital resources and changes in regulations or legislation that could affect us. Accordingly, actual results could differ materially from those contemplated by any forward-looking statement. In addition to the other risks and uncertainties mentioned in connection with certain forward-looking statements throughout this Quarterly Report, please review "Part II, Item 1A - Risk Factors" in this Quarterly Report for a discussion of the factors, risks and uncertainties that could affect our future results.

Overview

We are a leading global provider of professional technical and management support services for commercial and government clients around the world. Through our network of approximately 41,000 employees, we provide our services in a broad range of end markets, including the transportation, facilities, environmental, and energy markets.

Our business focuses primarily on providing fee-based professional technical and support services and our operations are therefore labor and not capital intensive. We derive income from our ability to generate revenue and collect cash from our clients through the billing of our employees' time and our ability to manage our costs. We operate our business through two segments:
Professional Technical Services (PTS) and Management Support Services (MSS).

Our PTS segment delivers planning, consulting, architecture and engineering design, and program and construction management services to commercial and government clients worldwide in major end markets such as transportation, facilities environmental, and energy and power markets. PTS revenue is primarily derived from fees from services that we provide, as opposed to pass-through fees from subcontractors, or other direct costs.

Our MSS segment provides program and facilities management and maintenance, training, logistics, consulting, technical assistance and systems integration services, primarily for agencies of the U.S. government. MSS revenue typically includes a significant amount of pass-through fees from subcontractors, or other direct costs.

Our revenue is dependent on our ability to attract qualified and productive employees, identify business opportunities, allocate our labor resources to profitable markets, secure new contracts and renew existing client agreements. Moreover, as a professional services company, the quality of the work generated by our employees is integral to our generation of revenue and profits.

Our costs are driven primarily by the compensation we pay to our employees, including salaries, fringe benefits, the costs of hiring subcontractors and other project-related expenses, and sales, general and administrative overhead costs.

Components of Income and Expense

Our management internally analyzes the results of our operations using several non-GAAP measures. A significant portion of our revenue relates to services provided by subcontractors and other non-employees that we categorize as "other direct costs." Those pass-through costs are typically paid to service providers upon our receipt of payment from the client. Other direct costs are segregated from revenue resulting in revenue, net of other direct costs, which is a measure of work performed by AECOM employees. We have included information on revenue, net of other direct costs, as we believe that it is useful to view revenue, exclusive of costs associated with external service providers.

The following table presents, for the periods indicated, a presentation of the non-GAAP financial measures reconciled to the closest GAAP measures:

                                     Nine Months
                                    Ended June 30,                Year Ended September 30,
                                    2008      2007      2007      2006      2005      2004      2003
                                                             (in millions)
Other Financial Data:
Revenue                           $  3,566   $ 3,123   $ 4,237   $ 3,421   $ 2,395   $ 2,012   $ 1,915
Other direct costs                   1,286     1,387     1,832     1,521       933       776       725
Revenue, net of other direct
costs                                2,280     1,736     2,405     1,900     1,462     1,236     1,190
Cost of revenue, net of other
direct costs                         1,168       892     1,244       994       785       667       656
Gross profit                         1,112       844     1,161       906       677       569       534
Equity in earnings of joint
ventures                                12         8        12         6         2         3         2
Amortization expense of
acquired intangible assets               8         8        12        15         3         -         -
Other general and
administrative expenses                948       730     1,005       794       578       485       467
General and administrative
expenses                               956       738     1,017       809       581       485       467
Income from operations            $    168   $   114   $   156   $   103   $    98   $    87   $    69

Reconciliation of Cost of
Revenue:
Other direct costs                $  1,286   $ 1,387   $ 1,832   $ 1,521   $   933   $   776   $   725
Cost of revenue, net of other
direct costs                         1,168       892     1,244       994       785       667       656
Cost of revenue                   $  2,454   $ 2,279   $ 3,076   $ 2,515   $ 1,718   $ 1,443   $ 1,381

Results of Operations



Consolidated Results



                                       Three Months Ended                               Nine Months Ended
                           June 30,      June 30,          Change          June 30,      June 30,           Change
                             2008          2007           $         %        2008          2007           $         %
                                                                 ($ in thousands)
Revenue                   $ 1,321,203   $ 1,100,656   $ 220,547    20.0 % $ 3,565,574   $ 3,122,914   $ 442,660     14.2 %
Other direct costs            467,919       456,965      10,954     2.4     1,285,952     1,386,607    (100,655 )   (7.3 )
Revenue, net of other
direct costs                  853,284       643,691     209,593    32.6     2,279,622     1,736,307     543,315     31.3
Cost of revenue, net of
other direct costs            437,263       331,600     105,663    31.9     1,167,614       891,926     275,688     30.9
Gross profit                  416,021       312,091     103,930    33.3     1,112,008       844,381     267,627     31.7
Equity in earnings of
joint ventures                  5,313         3,992       1,321    33.1        12,163         7,628       4,535     59.5
General and
administrative expenses       357,152       270,401      86,751    32.1       956,498       738,375     218,123     29.5
Income from operations         64,182        45,682      18,500    40.5       167,673       113,634      54,039     47.6
Minority interest in
share of earnings               4,862         3,824       1,038    27.1        10,939         9,058       1,881     20.8
Other income (expense)            756             -         756       -          (872 )           -        (872 )      -
Gain on sale of equity
investment                          -             -           -       -             -        11,286     (11,286 ) (100.0 )
Interest income
(expense) net                    (198 )      (6,312 )     6,114   (96.9 )       4,111        (9,615 )    13,726   (142.8 )
Income before income
tax expense                    59,878        35,546      24,332    68.5       159,973       106,247      53,726     50.6
Income tax expense             21,424        11,360      10,064    88.6        56,197        35,343      20,854     59.0
Net income                $    38,454   $    24,186   $  14,268    59.0 % $   103,776   $    70,904   $  32,872     46.4 %

The following table presents the percentage relationship of certain items to revenue, net of other direct costs:

                                       Three Months Ended        Nine Months Ended
                                     June 30,     June 30,     June 30,     June 30,
                                       2008         2007         2008         2007
Revenue, net of other direct
costs                                    100.0 %      100.0 %      100.0 %      100.0 %
Cost of revenue, net of other
direct costs                              51.2         51.5         51.2         51.4
Gross profit                              48.8         48.5         48.8         48.6
Equity in earnings of joint
ventures                                   0.6          0.6          0.5          0.4
General and administrative
expense                                   41.9         42.0         41.9         42.5
Income from operations                     7.5          7.1          7.4          6.5
Minority interest in share of
earnings                                   0.6          0.6          0.5          0.5
Gain on sale of equity investment          0.0          0.0          0.0          0.7
Non-operating income (expense)             0.1          0.0          0.0          0.0
Interest income (expense) and
other - net                                0.0         (1.0 )        0.1         (0.6 )
Income before income tax expense           7.0          5.5          7.0          6.1
Income tax expense                         2.5          1.7          2.4          2.0
Net income                                 4.5 %        3.8 %        4.6 %        4.1 %

Revenue

Our revenue for the three months ended June 30, 2008 increased $220.5 million, or 20.0%, to $1.3 billion as compared to $1.1 billion for the corresponding period last year. Of this increase, $102.8 million, or 46.6%, was provided by companies acquired in the past twelve months. Excluding the revenue provided by acquired companies, revenue increased $117.7 million, or 10.7%.

Our revenue for the nine months ended June 30, 2008 increased $442.7 million, or 14.2%, to $3.6 billion as compared to $3.1 billion for the corresponding period last year. Of this increase, $166.3 million, or 37.6%, was provided by companies acquired in the past twelve months. Excluding the revenue provided by acquired companies, revenue increased $276.4 million, or 8.9%.

The increases in the three and nine month periods ended June 30, 2008 were primarily attributable to higher government spending for highway and transit infrastructure projects in Australia, an increase in demand for work performed in our planning and urban design business, greater volumes of work performed in our environmental management services business in all of our geographic markets, and continued strength in our engineering design services business in the United Arab Emirates. Increased demand in these markets was partially offset by a decline in our design/build services business due to the completion of a significant educational facility project in the fourth quarter of fiscal 2007. The increase for the three months ended June 30, 2008 as compared to the corresponding period last year was further attributable to growth in our combat support and global maintenance and supply services for the United States government in the Middle East.

Revenue, Net of Other Direct Costs

Our revenue, net of other direct costs for the three months ended June 30, 2008 increased $209.6 million, or 32.6%, to $853.3 million as compared to $643.7 million in the corresponding period last year. Of this increase, $81.1 million, or 38.7%, was provided by companies acquired in the past twelve months. Excluding the revenue, net of other direct costs provided by acquired companies, revenue, net of other direct costs increased $128.5 million, or 20.0%.

Our revenue, net of other direct costs for the nine months ended June 30, 2008 increased $543.3 million, or 31.3%, to $2.3 billion as compared to $1.7 billion in the corresponding period last year. Of this increase, $131.8 million, or 24.3%, was provided by companies acquired in the past twelve months. Excluding the revenue, net of other direct costs provided by acquired companies, revenue, net of other direct costs increased $411.5 million, or 23.7%.

The increases for both periods were primarily due to strong demand in the markets noted above, resulting in increased project staffing. The larger percentage increases in revenue, net of other direct costs, compared to the increases in revenue during the same period resulted from the decline in our design/build services business which contains a proportionately higher component of subcontractor costs.

Gross Profit

Our gross profit for the three months ended June 30, 2008 increased $103.9 million, or 33.3%, to $416.0 million as compared to $312.1 million in the corresponding period last year. Of this increase, $40.6 million, or 39.1% was provided by companies acquired in the past 12 months. Excluding gross profit provided by acquired companies, gross profit increased $63.3 million, or 20.3%. For the three months ended June 30, 2008, gross profit, as a percentage of revenue, net of other direct costs, was 48.8% as compared to 48.5% in the corresponding period last year.

Our gross profit for the nine months ended June 30, 2008 increased $267.6 million, or 31.7%, to $1.1 billion as compared to $844.4 million in the corresponding period last year. Of this increase, $69.3 million, or 25.9% was provided by companies acquired in the past 12 months. Excluding gross profit provided by acquired companies, gross profit increased $198.3 million, or 23.5%. For the nine months ended June 30, 2008, gross profit, as a percentage of revenue, net of other direct costs, was 48.8% as compared to 48.6% in the corresponding period last year.

The increases for both periods in gross profit for the three and nine months ended June 30, 2008 were primarily attributable to the increases in revenue, net of other direct costs for the respective periods. The increases in gross profit, as a percentage of revenue, net of other direct costs, were primarily attributable to the increased demand for our environmental management and planning and urban design services which typically experience higher gross profit margins, and the favorable resolution in March 2008 of a claim on a United States government project, partially offset by lower margins in our design/build services business resulting from a decline in revenue for that business.

Equity in Earnings of Joint Ventures

Our equity in earnings of joint ventures for the three months ended June 30, 2008 increased $1.3 million, or 33.1%, to $5.3 million as compared to $4.0 million in the corresponding period last year.

Our equity in earnings of joint ventures for the nine months ended June 30, 2008 increased $4.6 million, or 59.5%, to $12.2 million as compared to $7.6 million in the corresponding period last year.

The increases for both periods were primarily attributable to increased joint venture activity in the Middle East and improved performance in a European joint venture that was in its initial phase in the prior year's corresponding periods.

General and Administrative Expenses

Our general and administrative expenses for the three months ended June 30, 2008 increased $86.8 million, or 32.1%, to $357.2 million as compared to $270.4 million in the corresponding period last year. Of this increase, $35.7 million, or 41.1%, was incurred by companies acquired in the past twelve months. Excluding general and administrative expenses associated with acquired companies, general and administrative expenses increased $51.1 million, or 18.9%. For the three months ended June 30, 2008, general and administrative expenses, as a percentage of revenue, net of other direct costs was 41.9% as compared to 42.0% in the corresponding period last year.

Our general and administrative expenses for the nine months ended June 30, 2008 increased $218.1 million, or 29.5%, to $956.5 million as compared to $738.4 million in the corresponding period last year. Of this increase, $59.1 million, or 27.1%, was incurred by companies acquired in the past twelve months. Excluding general and administrative expenses associated with acquired companies, general and administrative expenses increased $159.0 million, or 21.5%. For the nine months ended June 30, 2008, general and administrative expenses, as a percentage of revenue, net of other direct costs was 41.9% as compared to 42.5% in the corresponding period last year.

These increases in general and administrative expenses for both periods were primarily attributable to increased staffing and other expenses related to the growth in our business noted above, continued investments throughout the organization to support strategic initiatives and expenses incurred related to our becoming a public reporting company, including compliance efforts related to the requirements of Section 404 of the Sarbanes-Oxley Act of 2002. The decreases in general and administrative expenses, as a percentage of revenue, net of other direct costs, reflect the benefits realized from our continuing cost efficiency initiatives.

Gain on Sale of Equity Investment

In December 2006, we sold our minority interest in an equity investment in the United Kingdom for 7.5 million GBP, or approximately $14.7 million. We recorded a gain on the sale of $11.3 million.

Interest Income / Expense

Our net interest expense for the three months ended June 30, 2008 decreased to $0.2 million as compared to $6.3 million in the corresponding period last year.

Our net interest income for the nine months ended June 30, 2008 was $4.1 million as compared to $9.6 million of net interest expense in the corresponding period last year.

The decrease in net interest expense for the three months ended June 30, 2008 as compared to the corresponding period last year is primarily due to lower borrowings. The increase in net interest income in the nine months ended June 30, 2008 was primarily attributable to higher investment balances and lower borrowings. These changes resulted from the use of proceeds received in our initial public offering completed in May 2007.

Income Tax Expense

For the three and nine months ended June 30, 2008, income tax expense increased $10.1 million, or 88.6%, and $20.9 million, or 59.0%, compared to the same periods last year, respectively. The effective tax rate for the three and nine months ended June 30, 2008 was 35.8% and 35.1%, respectively, as compared to 32.0% and 33.3% for each respective corresponding period last year. The increases in the effective tax rate for both periods was due to proportionately less income in tax exempt jurisdictions and the expiration of federal research and development credits during the current periods.

Net Income

Net income for the three and nine months ended June 30, 2008 increased $14.3 million, or 59.0%, to $38.5 million and $32.9 million, or 46.4%, to $103.8 million, respectively, as compared to the corresponding periods last year.

Results of Operations by Reportable Segment:



Professional Technical Services



                                    Three Months Ended                            Nine Months Ended
                         June 30,     June 30,         Change         June 30,      June 30,          Change
                           2008         2007          $        %        2008          2007           $        %
                                                            ($ in thousands)
Revenue                 $ 1,096,986   $ 904,349   $ 192,637   21.3 % $ 2,945,494   $ 2,501,436   $ 444,058   17.8 %
Other direct costs          287,271     291,799      (4,528 ) (1.6 )     776,623       844,980     (68,357 ) (8.1 )
Revenue, net of other
direct costs                809,715     612,550     197,165   32.2     2,168,871     1,656,456     512,415   30.9
Cost of revenue, net
of other direct costs       411,416     312,196      99,220   31.8     1,100,597       844,771     255,826   30.3
Gross profit            $   398,299   $ 300,354   $  97,945   32.6 % $ 1,068,274   $   811,685   $ 256,589   31.6 %

The following table presents the percentage relationship of certain items to revenue, net of other direct costs:

                                               Three Months Ended       Nine Months Ended
                                              June 30,     June 30,    June 30,    June 30,
                                                2008         2007        2008        2007
Revenue, net of other direct costs                100.0 %     100.0 %     100.0 %     100.0 %
Cost of revenue, net of other direct costs         50.8        51.0        50.7        51.0
Gross profit                                       49.2 %      49.0 %      49.3 %      49.0 %

Revenue

Revenue for our PTS segment for the three months ended June 30, 2008 increased $192.6 million, or 21.3%, to $1.1 billion as compared to $904.3 million in the corresponding period last year. Of this increase, $102.7 million, or 53.3%, was provided by companies acquired in the past twelve months. Excluding revenue provided by acquired companies, PTS' revenue increased $89.9 million, or 9.9%.

Revenue for our PTS segment for the nine months ended June 30, 2008 increased $444.1 million, or 17.8%, to $2.9 billion as compared to $2.5 billion in the corresponding period last year. Of this increase, $166.3 million, or 37.4%, was provided by companies acquired in the past twelve months. Excluding revenue provided by acquired companies, PTS' revenue increased $277.8 million, or 11.1%.

The increases for both periods were primarily attributable to higher government spending for highway and transit infrastructure projects in Australia, an increase in demand for our environmental management services in all of our geographic markets, greater volumes of work performed in our planning and urban design business continued strength in our engineering design services business in the United Arab Emirates, and the start up of program management services on the Libya Housing and Infrastructure Board project. Increased demand in these markets was partially offset by a decline in our design/build services business due to the completion of a significant educational facility project in the fourth quarter of fiscal 2007.

Revenue, Net of Other Direct Costs

Revenue, net of other direct costs for our PTS segment for the three months ended June 30, 2008 increased $197.1 million, or 32.2%, to $809.7 million as compared to $612.6 million in the corresponding period last year. Of this increase, $81.1 million, or 41.1%, was provided by companies acquired in the past twelve months. Excluding revenue, net of other direct costs provided by acquired companies, PTS' revenue, net of other direct costs increased $116.0 million, or 18.9%.

Revenue, net of other direct costs for our PTS segment for the nine months ended June 30, 2008 increased $512.4 million, or 30.9%, to $2.2 billion as compared to $1.7 billion in the corresponding period last year. Of this increase, $131.8 million, or 25.7%, was provided by companies acquired in the past twelve months. Excluding revenue, net of other direct costs provided by acquired companies, PTS' revenue, net of other direct costs increased $380.6 million, or 23.0%.

The increases for both periods were primarily attributable to the revenue growth factors mentioned above, partially offset by the decline in design/build services business in the United States.

Gross Profit

Gross profit for our PTS segment for the three months ended June 30, 2008 increased $97.9 million, or 32.6%, to $398.3 million as compared to $300.4 million in the corresponding period last year. Of this increase, $40.6 million, or 41.5%, was provided by companies acquired in the past 12 months. Excluding gross profit provided by acquired companies, gross profit increased $57.3 million, or 19.1%. For the three months ended June 30, 2008, gross profit, as a percentage of revenue, net of other direct costs, was 49.2% as compared to 49.0% in the corresponding period last year.

Gross profit for our PTS segment for the nine months ended June 30, 2008 increased $256.6 million, or 31.6%, to $1.1 billion as compared to $811.7 million in the corresponding period last year. Of this increase, $69.3 million, or 27.0%, was provided by companies acquired in the past 12 months. Excluding gross profit provided by acquired companies, gross profit increased $187.3 million, or 23.1%. For the nine months ended June 30, 2008, gross profit, as a percentage of revenue, net of other direct costs, was 49.3% as compared to 49.0% in the corresponding period last year.

The increases for both periods in gross profit for the three and nine months ended June 30, 2008 were primarily attributable to the increases in revenue, net of other direct costs for the respective periods. The increases in gross profit, as a percentage of revenue, net of other direct costs, were primarily attributable to the increased demand for our environmental management and planning and urban design services which typically experience higher gross profit margins, partially offset by lower margins in our design/build services business in the United States resulting from a decline in revenue in that business.

Equity in Earnings of Joint Ventures

Equity in earnings of joint ventures for our PTS segment for the three months ended June 30, 2008 increased $1.8 million to $2.9 million as compared to $1.1 million in the corresponding period last year.

. . .